Welcome to Solwers Half-year January June 2025 Webcast. My name is Jasmine Jussila. I'm the Chief Communications Officer, and we are here today with CEO Stefan Nyström and CFO Teemu Kraus. Hello. Today we will shortly look at Solwers as a company. Stefan will continue with the H1 highlights and the market situation, interesting projects, and Teemu will continue with the financial review in the H1. In the end, Stefan sheds some light on the outlook for 2025 and the investor calendar. We will have some time for your questions, so please submit your questions via webcast chat, and we will go through them in the end. First, about Solwers, we are a group of consultancy companies that offer architectural design, technical, and other consulting, as well as project management services, locally close to clients. We operate in two countries, Finland and Sweden, and we have also opened a third country subsidiary in Poland and are looking to expand there at some point. We are today 27 companies, 13 in Sweden, 14 in Finland. We are 700 experts, and our revenue at the end of 2024 was EUR 78 million with 7% EBIT. Stefan will continue with the Solwers concept. Go ahead. Thank you. Yes, I'm Stefan, and the CEO of the company. Welcome also on my behalf to this presentation. Some words about the Solwers concept. We have a light integration. That means actually that we don't change everything in the organization, and a big part of the administration remains as before. We are more focusing on collaboration. For us, it's important: common project marketing and sales offering and things like that. We have a common management team in both Finland, for the Finnish companies, and in Sweden, for the Swedish companies, where we are handling these collaboration issues and, of course, other group issues as well. We also have, for this collaboration, set up two different groups for industry projects, a common cross-selling group, and then in Finland for architectural design. We are in Finland the second largest architectural office, and we have a lot of potential there to sell larger ranges of services. Solwers is a growth platform for the different companies, and we develop them together with the subsidiaries' management and also set up strategies for the coming years. A little bit about our growth. Growth has been very important for us, and we have been growing very fast. You can see that it has been quite on the same level, the growth all the time, and now we are up to EUR 78.3 million. It has been a yearly growth of 25.3%. A little bit about where we are. We want to be local and close to the clients, so we have a lot of offices, in fact, 28 offices in Finland and Sweden. We have a well-established client network. Every subsidiary has their own client base, and they have in the past only been selling their own services to these clients. Now they can sell a much larger range of services to the same clients. The biggest clients we have are Trafikverket in Sweden and, following by Väylävirasto in Finland. We have some projects that are in Helsinki, this Laakso Hospital, and then HUS Real Estate and other. We can say that half of our clients are from the private sector, and the other half is public, and half of the public is infra, and the other half is then hospitals, schools, daycare, buildings, etc. We have a lot of projects, small ones. We are more than 5,500 active projects last year, and up to 70% of them were below EUR 10,000. A lot of small projects make our order stock less risky. We have a lot of frame agreements, 250, and about 60% of our projects are based on running price. We have two analysts who are following what we are doing. Inderes is doing that in both Finnish and English, and Nordea in English. If you look at the highlights of the first half year, we had a revenue growth of 6%, and we ended up at EUR 42.3 million. We see that in Finland, we have improvement in the business, more stable performance. In Sweden, it varies a little bit more. We have some very good performing units, and we have others who have faced challenges. The billing rate has been increased, so it's now over 80%, and it's actually on a quite good level. Order backlog has remained at a good level also. Actually, it has increased, and we see that it goes in the right direction. We have had challenges with the profit, and the reasons are price competition. It has continued. We still have a difficult market situation. There are not enough investments, and salary increases have not yet been fully transferred to the prices. We had some one-offs. In Sweden, actually, a project was delayed, and the impact for us was EUR 0.4 million. We have additional cost that is actually impacted by additional purchase price for three companies. We have this, let's say, investment to the future, mainly transferring related investments, and they were totally EUR 0.6 million. What we are doing now is, of course, action to improve our profitability. First is sell as hell, but it means actually for us to sell more joint projects with broader scope of work. For that, we have these sales teams, both in Finland and Sweden, as I mentioned before. We are reducing the group cost, and it will start to impact all in H2, the figures. Same applies for our cost reduction programs in the subsidiaries. If nothing else helps, then we have to adjust the capacity. At the same time, where possible, we will grow organically and, of course, increase the price where it is possible. Some interesting projects. The first one was actually received after the H1, a few days after. It's the Helsinki Port Tunnel Alliance. It's a huge project. It will last for seven years. We have from Finnmap Infra Oy, the project manager there. It is the tunnel from Länsiväylä to the port for all lorries and big, actually, all trucks that are transporting load to the harbor. We have in North Sweden, we are involved in the North Botnia Line railway line. It's a huge project, and it's also seven years is the duration. We have more than 10 people involved in that project. We have actually our first cross-border project. It's this Chillar H2Q factory in Tuusula. It's a Finnish project, but the electrical engineering is actually coming from Sweden. In Turku, we have seven new daycare centers. As I said earlier, we are doing a lot of schools and daycare centers and hospitals and things like that. Lukkaroinen Arkkitehdit Oy is responsible for that project. Some words about two mergers that have happened. I think the most interesting is now the architect Davidsson & Tarkela and Siren Arkkitehdit Oy. The new name will be Davidsson & Tarkela Siren Arkitekti Oy. Siren is the oldest acting architectural company in Finland. They have a lot of very interesting buildings they have designed, and together they have very impressing references. Together they are 30, and the new brand will be launched in mid-September. We have also HVAC company LVI Ingenjör i Torgmästar Västkanen, which has been merged into Plan Air Oy. The new name is Plan Air Oy. They have 15 people in Oulu. We will have a new CEO that has been appointed. He will start on the 24th of November. He has actually been working more than 20 years in the same branch as Solwers Oyj is in. He has maybe more focus on industry. He also speaks fluently Swedish and Finnish. That is, of course, important for us when we only have the business at present in Finland and Sweden. We can use mother tongue in our management teams. He has a lot of experience also from industry, and we believe that will help us also to access the paper and pulp industry both in Finland and Sweden. I will give the word to Teemu, please, the numbers. Thank you, Stefan. Also, welcome from my side to this webcast. I will present you the financial review. Let's start from the highlights. Financial highlights. First of all, revenue at the first half was EUR 42.3 million, and the revenue growth for H1 was 6% and for Q2 5.9% respectively. Growth was mainly driven by acquisitions, and the growth was a little bit stronger in Finland than it was in Sweden. In H1, EBITDA was EUR 1.8 million and 4.3%. The market situation has been challenging, but we are not satisfied with the current performance. We have initiated several savings programs and sales boost programs to reach back mid-term target levels. In the end of June, we had a breach of our financial agreement net debt/EBITDA covenant. A waiver has just been agreed, and relaxed covenant will take place until the end of June 2026, when we assume that we are back on the original covenant level at latest. Due to the breach, our long-term loans have been reclassified as short-term, despite no changes in the maturity of the financial agreement that has occurred. Net cash flow from operating activities is EUR 1.5 million, and the cash balance at the end of the measurement period was EUR 11.2 million. Key figures. EBITDA in H1 was EUR 2.2 million. In the same period last year, EBITDA was EUR E 3.8 million. Respective EBITDA percentages were 5.4% and 9.4% in 2024. Q2 EBITDA was EUR EI1.2 million and 5.3%, and in 2024, it was EUR 2 million and 9.5%. EBIT at the first year half was EUR EI173,000 and EUR 121,000 at the quarter two. We believe that we have hit the bottom in Q1 during this year. EBIT margin was low, being 0.6% in the first year half. Last year, at the same period, it was 4.9%. Headcount at the end of the period was 703. It was 713 at the end of Q1 period and 724 at the end of the year 2024. We have made some reductions in the companies where reductions have been necessary. On top of these reductions, we have also made some temporary layoffs. Reduction made does not hinder our potential to grow when the market recovers. Equity ratio at the end of the measurement period was 42.3%, which is about our mid-term target of 40%. At the end of the year 2024, equity ratio was 33.4%. Net profit turned negative in H1, being -EUR 559,000. Net profit percentage was -1.3%. Last year, at the same period, net profit was +EUR 750,000, and net profit percentage was 1.9%. In H1, our billing rate was 82.6%, which we considered fairly good. Last year, at the same period, the billing rate was 81.5%. Full year 2024, billing rate was 79.9%. Equity at the end of the measurement period ended up to EUR EI40.7 million, and change from the year-end 2024 was marginal. Net debt in the end of June was EUR 25.1 million, which is as well very close to the year-end 2024. Balance sheet liabilities. Non-current liabilities have decreased, and current liabilities have increased, mainly due to the reclassification of bank loans due to the covenant breach. Reclassification does not mean that the original maturity of the loans has changed. Some pickups from the cash flow. Reduced profit has affected negatively our operating cash flow. Change in the net working capital is less than last year. To speed this development, we have started a project to reduce working capital in subsidiaries. Net cash flow from operating activities was positive, and it was EUR 524,000. We have also paid contingent considerations and withdrawn loans to cover this cash outflow. At the end of the measurement period, cash was EUR 11.2 million. That was all from finance. Thank you. Thank you. There is a lot to improve, of course. As Teemu said, I think we have reached the bottom in last quarter. A little bit about the market outlook. It's still quite tough. There has been uncertainty that makes investment that they don't start. They are pending. We see that it's at least going in the right direction. It's still challenging in residential, commercial, and office sector, and partly also in the industry project. The reason, of course, for all these challenges is that first we had started inflation, then we had interest that went up, and after that, the consumers were actually not anymore consuming, and that makes less investment. Also less apartments needed, and maybe they are needed, but they are not built right now. As I said, we have seen that our order stock has increased, but we cannot see it in the figures yet. In public infrastructure and building, there is still a positive momentum, and the green transitions will continue, which means actually transmission and distribution, and also energy production and carbon capture, etc. As I said, the number of new orders are increasing also in residential now sector and infrastructure projects. In Sweden, the real estate market is still challenging, and in some of the industry projects, we see that there are delays. The megatrends continue, and they are, of course, urbanization, self-subvention in energy production, and increased order from the defense industry. If we then look at our outlook, the market is still uncertain, and it's difficult to predict what's going to happen in the future. Our operation is actually depending on investment, and when the investments start again to increase, it will also automatically increase our results and figures. It can happen fast. It has happened before. I have seen it already two times when some big players are starting to invest, many other are then following. We think that that will start to happen, but we don't know when. Of course, our focus areas for 2025 is to increase the profitability and then cost cutting and organic growth where it is possible. We are still scanning potential acquisition targets continues. I think Jasmine can tell about these coming dates. Yes. The next Q3 business report will be published on the 21st of November. Before that, we are having quite a few investor events. Also, after the Q3 report, we have a couple coming up. I think we can go to your questions. We have quite a few. We didn't cover anything about Poland. Do you have any updates on this? Yeah, I can tell that we have established the Polish country company, and we are negotiating with some companies, but we have not yet reached any agreements. Do you have an estimate of organic growth in H1? In H1, it was slightly negative. Okay. Stefan, you say that the order stock is in a good level. However, what kind of margin have you agreed on the deals? Of course, it differs when we have 5,000 projects, but in some cases, the margin is a challenge. As I said earlier, there is a hard price competition. I think we also have received very good orders, and in some companies, they are not affected by lower prices. It's a kind of a mix, but as a whole, we would like, of course, to increase the prices, and we are doing that wherever it is possible. I think that when order stock starts to grow, also the price will start to rise. That's what usually happens. Okay. Stefan, you mentioned that the Swedish project loss was EUR 0.4 million in H1. Will losses continue to accumulate in H2? No, I don't think so. This had more to do with people that were changed in the project organization, and they were not able to handle it in a good way. I think that it will not, it was a one occurrence. It's one-off cost. How much one-off cost in Q1 and Q2, respectively? Teemu, do you have an insight on this? I don't have the distribution, but totally we had this EUR 1.4 million plus EUR 1.6 million, so EUR 1 million altogether. There are some questions about the waiver. Will you be able to make M&A despite the waiver? Your cash position is relatively strong, isn't it? Which one was? Maybe you. The waiver itself does not hinder us making acquisitions. Of course, we need to be more cautious than previously, so we need to consider every acquisition target very carefully. Continuing with the waiver, net debt/EBITDA covenant of 3.5. Does the covenant include contingent liabilities? The covenant as a net debt does not include the contingent liabilities, as they are non-interest-bearing. Will you reach 5.5 by the end of Q3? Our estimation is that we will reach the 3.5 level, which was the original level, at the end of June 2026 at latest. Okay. Maybe one comment that our debt amount has not increased, but it has increased from non-interest-bearing to interest-bearing. I think this is important. Net debt is quite stable. Yeah. What can be derived from the closing? Yes. There is a question about the cost savings. Where will the nearly EUR1 million cost saving versus 2024 come from, and what is the timing? Do you want to take it? There are various sources. First of all, there has been some project nature intensives that have generated cost, and those will not maintain any longer. We have several programs in the subsidiaries where we try to cut the cost wherever it's possible. There is a question about the biggest shareholders. Why don't you update the shareholder list monthly as many of the other companies do? I can answer this. It's because the biggest shareholders don't change that often, so we have decided to update it quarterly. If it will start updating more, then of course, we will consider to do more updates as well. I think this was all. We have a question in the audience. Yes, good morning. Sauli Vilén from Inderes. About the Swedish market, you said that it has been kind of downbeat lately. Do you think this is more of a temporary thing, or do you see this as a more longer-term issue for you? Yeah, I think that it's actually different parts. The real estate that has been, of course, very low, and it has actually a little bit improved. There are some industrial projects that have been kind of not canceled, but a little bit pending. Of course, the automobile industry, they have also maybe reduced a little bit what they need for services. The big ones in North Sweden, they are still continuing as they have been before. We know that there are huge projects ongoing there in North Sweden, and we are involved in many of them. I would say that, yes, in some parts of the industry, we have seen that it's pending, and there's not maybe the demand so big as it has been before. What about if you reflect the market situation when you reported Q1 before summer? Summer, you were kind of hopeful that the market will recover during H2. If you reflect that comparing to the current situation, obviously, I guess it has been at least postponed, but are you still like fairly optimistic that the market will recover the% of the year? Yeah, I think it really has been. We all know that there has been a lot of things that have maybe not improved the uncertainty on the market, and we think that it will in H2 improve. About the cost savings still, does the $1 million cost savings also include the subsidiaries? Yes. Okay, that's the total figure. Okay, thanks. That's all. Thank you. Thanks.