SECOND QUARTER 2017 RESULTS
Christian Nørgaard Madsen, CEO | Anne Harris, CFO
DISCLAIMER
This presentation includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this presentation, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as "believe," "expect," "anticipate," "may," "assume," "plan," "intend," "will," "should," "estimate," "risk" and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forwardlooking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this presentation.
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INTRODUCTION AND HIGHLIGHTS
Christian Nørgaard Madsen, CEO
Highlights
- Second quarter revenue growth of 3.9%, driven by acquisitions
- Negative calendar effect on revenue and earnings in the quarter as expected
- YTD 2017 revenue growth of 12.7%
- Order backlog remains strong
- Acquisition of Hjellnes Consult and Johs Holt proceeds according to plan
Acquisition of Hjellnes Consult AS and Johs Holt AS
- In line with 3-2-1 GO strategic objectives
- ─ Strong strategic and cultural fit
- ─ Close cooperation through a long-standing relationship
- ─ Strengthens bridge and construction expertise
- ─ Increases competitive advantage within health buildings and urban developement
- ─ Strengthens market position in the Greater Oslo area
- Very attractive company and brand in the industry
- The closing date is planned by September 2017
- Balance sheet consolidated 30 September
- Earnings consolidated from 4Q 2017
- Included in the Greater Oslo area segment
Acquisition of Hjellnes Consult AS and Johs Holt AS
- Norwegian multidisciplinary engineering company established in 1946
- ‒ Revenues NOK 298 million in 2016
- ‒ At year-end 2016, the two companies had a combined total of 229 employees
- ‒ Hjellnes Consult AS has a solid expertise within buildings and properties, construction, infrastructure and environment
-
‒ Johs Holt AS provides advisory services globally, within all types of bridges and heavier structures
-
Purchase price of NOK 184 million
- Enterprise value NOK 170 million
- 35% shares, 65% cash settlement
Financial summary 2Q and YTD 2017
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• 2Q 2017
- Net operating revenue up 3.9% y-o-y to NOK 738.9 million
- EBIT of NOK 15.8 million, 2.1% margin
• YTD 2017
- Net operating revenue up 12.7% y-o-y to NOK 1 538.6 million
- Organic growth 4.4%
- Increased workforce due to net recruitment and acquisitions
- Impacted by a lower billing ratio
- EBIT fell 14.6% y-o-y to NOK 110.2 million
- Operating expenses increase in line with growth, excluding non-recurring expenses
- Increased employee cost in Norway not fully reflected in billing rates
- EBIT margin at 7.2%
Håhammaren bridge and walking trail, Rogaland. | Photo: Jo Gaute Fornes, Multiconsult,.
Key ongoing projects 2Q 2017
• Campus Ås
- New Tønsberg Hospital
- Prinsensgate 26 Rehabilitation
- New Airbase Ørland
• Mount Coffee Hydropower Project
Order intake 2Q 2017
Highlights
- Order intake NOK 866.9 million, -4.6% y-o-y
- Solid sales in a quarter with seven less working days in Norway
- Majority of the order intake came from smaller and mid-size new contracts
- New contribution from Iterio AB and aarhus arkitekterne A/S
- Continued strong tender pipeline in Transportation
Key order intake
- Campus Ås
- Holsfjorden water supply
- Prinsensgate 26
- Ulven commercial real estate
- Five tunnels E39
Order backlog development per business area
- Strong order backlog up 8.5% y-o-y to NOK 1 995.0 million
- Call-offs on frame agreements included when signed
- ─ New and important frame agreement for consulting services to Statens vegvesen for a ferry-free E39 between Kristiansand and Trondheim
Organisation
• Planning of integration for Hjellnes Consult and Johs Holt initiated
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- Stable organisation
- Group employee turnover at 7.1%
- New legal structure for the Multiconsult group implemented 25 August
- Attractive employer position further confirmed
- 2017 Karrierebarometeret for engineering students:
- 1st place among consultants
- 2nd place in Norway overall
- MUST summer internships successfully completed
- 1 738 applicants for 33 positions
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FINANCIAL REVIEW
Anne Harris, CFO
Financial highlights 2Q 2017
- NOK 738.9 million
- Net recruitment and acquisitions
- Negative calendar effect
- Good project execution
*Underlying
Financial highlights YTD 2017
- Net operating revenue up 12.7% to NOK 1 538.6 million
- ‒ Higher production due to net recruitment and acquisition of Iterio AB, aarhus arkitekterne A/S and Akvator AS
- ‒ Billing ratio fell to 68.9%
- EBIT amounted to NOK 110.2 million, a decrease of 14.6%
- Higher net operating revenues were more than offset by the increase in operating expenses
- Increased employee cost not reflected in billing rates in Norway
- Non-recurring expenses, including implementation of new ERP system, impacted the period
- EBIT margin at 7.2%
Segments YTD 2017
Greater
Oslo Area |
H1 2017 |
H1 2016 |
Change |
| EBIT MNOK |
59.5 |
87.9 |
32.3% |
| EBIT margin % |
9.0% |
14.0% |
5.0 pp |
Billing
ratio |
68.1% |
72.1% |
4.0 pp |
Number
of
employees |
903 |
854 |
5.7% |
| Regions Norway |
H1 2017 |
H1 2016 |
Change |
| EBIT MNOK |
29.4 |
35.6 |
17.3% |
| EBIT margin % |
5.3% |
7.1% |
1.8
pp |
Billing
ratio |
67.9% |
69.3% |
1.4 pp |
Number
of
employees |
827 |
788 |
4.9% |
| International |
H1 2017 |
H1 2016 |
Change |
| EBIT MNOK |
15.9 |
1.5 |
>100% |
| EBIT margin % |
17.1% |
3.3% |
13.8 pp |
Billing
ratio |
72.6% |
61.1% |
11.5
pp |
Number
of
employees |
197 |
127 |
55.1% |
LINK
arkitektur |
H1 2017 |
H1 2016 |
Change |
| EBIT MNOK |
7.6 |
3.7 |
>100% |
| EBIT margin % |
3.2% |
2.0% |
1.2 pp |
Billing
ratio |
71.8% |
70.4% |
1.4 pp |
Number
of
employees |
454 |
337 |
34.7% |
Operating revenues by business area YTD 2017
Cash flows YTD 2017
- Improved cash flow from operations
- Change in working capital driven by
- Increased production
- Increased trade receivables and work in progress
- Investments
- Acquisition of Iterio AB
- Ordinary asset replacement
- Financing
- Increased debt due to acquisitions
- Dividend payment
Industry outlook
- Recent market report from RIF spring 2017 *
- Expectations for employment over the next 6 months are greater than all previous measurements
- Order backlog expectations the next 6 months at a stable level Some regional variations – weak in northern and southern Norway
- The oil and gas sector continues the stabilising trend
- The results of the economic survey in spring 2017 draw a picture of an industry with a bright outlook
*Rådgivende ingeniørers forening/Association of Consulting Engineers, Norway
Outlook
- The overall market outlook for 2017 remains fairly positive
- Confirmed by industry reports
- Continued strong competition and price pressure on large projects
- Market rates have stabilised in Norway, regional variations
- Increased employee cost in Norway not fully reflected in billing rates
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- Stronger combination of professional capability and solid order backlog
- Active and systematic implementation of the 3-2-1 GO strategy
- Continued focus on sales efforts, project execution and billing ratio
FINANCIAL CALENDAR
| 2Q 2017 results: |
31
Aug
2017 |
| 3Q 2017 results: |
9
Nov 2017 |
| 4Q 2017 results: |
28 Feb
2018 |
| 1Q 2018 results: |
23 May
2018 |
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Q&A
SECOND QUARTER 2017 RESULTS | Christian Nørgaard Madsen, CEO Anne Harris, CFO
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