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Norva24 Group Interim / Quarterly Report 2023
3086_10-q_2023-05-23_5844631c-1842-406f-821a-b1c707fd8b25.pdf
Interim / Quarterly Report
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NORVA²⁴
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Interim report
January-March 2023
INTERIM REPORT JANUARY-MARCH 2023
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Strong organic and acquired growth in Q1 with increased margins
January-March 2023
- Total operating revenue amounted to NOK 704.6 million (526.4), an increase of 33.8%. Currency adjusted organic growth was 8.5%.
- Revenue from customer contracts amounted to NOK 700.1 million (518.2) an increase of 35.1%.
- EBIT amounted to NOK 46.0 million (36.3).
- The period was charged with non-recurring items amounting to NOK 2.4 million (0.0).
- Adjusted EBITA amounted to NOK 59.4 million (43.3) up 37.2%.
- Profit for the period was NOK 32.6 million (18.2) up 79.3%.
- Cash flow from operating activities totaled NOK 45.1 million (34.4).
- Basic/Diluted earnings per share amounted to NOK 0.16 (0.10).
Significant events during the January-March 2023 period
- Norva24 acquired NRC Gravco in Oslo adding NOK 90 million in revenues and further consolidating Norva24's position in the Oslo and surrounding area.
- Henrik Damgaard has accepted a new job as CEO for a company in another non-competing industry, and he has therefore decided to step down as Group CEO in July 2023. The board has started the process of finding the new CEO of Norva24.
Significant events after the reporting period
- Mikael Smedborn assumed his position as new CEO of Sweden.
FINANCIAL OVERVIEW
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 | Apr 2022-Mar 2023 | Jan-Dec 2022 |
|---|---|---|---|---|
| Total operating revenue | 704.6 | 526.4 | 2,644.6 | 2,466.5 |
| Growth – total revenue, % | 33.8 | 28.7 | n.a. | 21.8 |
| Adjusted EBITA | 59.3 | 43.3 | 294.7 | 278.6 |
| Adjusted EBITA margin, % | 8.4 | 8.2 | 11.1 | 11.3 |
| Adjusted EBITA growth, % | 37.2 | 30.3 | 23.6 | 8.1 |
| EBIT | 46.0 | 36.3 | 221.5 | 211.7 |
| Cash flows from operating activities | 45.1 | 34.4 | 353.9 | 343.3 |
| Cash conversion, % | 35.6 | 34.6 | 64.6 | 66.0 |
| Net debt (at period end) | 1,302.9 | 793.5 | 1,302.9 | 1,074.1 |
| Net debt (at period end)/LTM adjusted EBITDA | 2.4 | 1.6 | 2.4 | 2.1 |
| Earnings per share (basic and diluted), NOK | 0.16 | 0.10 | 0.84 | 0.76 |
This is information that Norva24 Group is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out on page 32. This interim report has not been reviewed by the Company's auditors.
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
CEO STATEMENT
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Strong operational performance in Q1, with high organic and total revenue growth combined with margin uplift
In Q1 2023, Norva24 achieved a strong total revenue growth of 34%, supported by currency adjusted organic growth of 9%. Q1 is generally a quarter with seasonally lower activity than the rest of the year and hence lower profitability due to winter weather conditions impacting the business. We are pleased with the 37% Adjusted EBITA growth and margin uplift during the quarter, which has been normal regarding winter weather comparable to previous years.
Adjusted EBITA in Q1 2023 amounted to NOK 59 million, an increase of 37%, and adjusted EBITA-margin was 8.4% during the quarter. We remain confident that Norva24's business model is resilient in this weaker economic environment as well as inflation resistant.
Norva24 is aiming to be the lighthouse for inspiration also regarding environmental solutions in the UIM industry. We are proud to have achieved a 44% share of revenue defined as taxonomy aligned green services for Norva24 in 2022. Many of our core services make a substantial contribution in addressing the
"We proudly look back at a quarter with strong revenue growth of 34%, driven by a currency adjusted organic growth of 9%, with double digit currency adjusted organic growth in two countries, combined with increased margin. We also want to highlight that 44% of Norva24 services were green services in 2022."
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
challenges put on modern society by climate change. UIM is critical both in addressing more severe rain and flooding events, as well as in ensuring that clean water is provided to the end user and not wasted in route. Clean water and sanitation is UN's goal 6 for sustainable development and a central part of our mission as well. This quarter we also had a particular focus at country level on energy consumption for heating. The results have been good, and we saw a reduction of energy for heating purposes on group level in Q1 2023.
Cash flow from operating activities is always seasonally lower in Q1 and amounted to NOK 45 million, an improvement of 31% compared with Q1 last year.
The M&A activity in 2023 had a promising start, as Norva24 in January 2023 completed the acquisition of Gravco in Norway, a company with a long history and strong brand which strengthens Norva24 in the greater Oslo area and surroundings. Gravco had revenues of NOK 90 million in 2022 and high margins.
We are comfortable with our healthy financial position, excellent cash flow and leverage, proforma, below 2.2x LTM adjusted EBITDA at end of Q1. This is providing us with significant headroom in relation to our financial covenants in the financing facility. We currently have NOK 530 million available in the credit facility to enable continued strong M&A pace going forward.
The seven acquisitions we have closed during the last 12 months add annual revenue of NOK 440 million and provided an acquired growth of 20% in Q1 2023. Combined with the strong organic growth of 9% (currency adjusted), Norva24 is well on track to achieve the financial target of NOK 4.5 billion in revenue by 2025 and an adjusted EBITA margin of 14-15% in the medium term. The seven companies we have welcomed to the Norva24 group during the last twelve months are IRG and Stockholm Relining in Sweden, Thornvig Jensen in Denmark as well as Zimmerbeutel, Jutzy and CKS Berlin in Germany as well as Gravco in Norway. We will continue to act in a prudent and orderly way in accordance with our acquisition strategy, with diligent assessment and integration of candidates, to ensure continued strong organic development.
In Q1, all segments delivered positive currency adjusted organic growth. Norway and Denmark showed double digit currency adjusted organic growth with 10% and 11% respectively. In Germany the currency adjusted organic growth was 9% and in Sweden the currency adjusted organic growth was 6% in Q1.
Total revenue growth in Germany was also very strong at 60% in Q1 driven by an currency adjusted organic growth of 9% and acqusition growth of 40%. Adjusted EBITA margin decreased 2 p.p. to 10% due to weaker margin in acquired companies, and slightly weaker organic margin.
The improvements and positive momentum in the Danish operations seen in previous quarters continued in Q1. Adjusted EBITA margin improved by 6 percentage points for Q1 compared with last year, confirming again that Denmark is on the right track.
Organic growth in Norway was 10%, on top of very strong currency adjusted organic growth of 21% in Q1 last year. Q1 2022 growth was positively affected by the backlog of work after Covid-19. As a result, adjusted EBITA margin in Norway was 13%, slightly weaker than the same quarter last year. Sweden posted a healthy Q1 adjusted EBITA margin of 9% up from 5% in Q1 last year, as sign of stronger organic margins, but also a sign that the acqusitions are starting to provide margin enhancement.
Our vision remains clear and achievable: We want to be the market leader in underground infrastructure maintenance in Europe. We will continue to strengthen our position through both acquisitions and organic growth to fully live up to our promise to our customers: “We always help!”
We have a clear, proven, and consistent acquisition strategy, with 42 acquisitions completed since 2015. We operate in the European UIM market, with a total addressable market of more than NOK 140 billion and have a clear number one position in Northern Europe, a market worth NOK 36 billion.
In addition to M&A to further fuel growth and strengthen the leading position in existing markets, expansion into new markets will be initiated over the next few years and as stated earlier, the target markets are the adjacent countries to current operations. The markets on the long list include, Finland, Austria, Switzerland, Belgium, Netherlands, UK and Ireland.
Maintenance of underground infrastructure is a key factor for a sustainable future. As noted earlier we have a large portion of our services defined as green and we continue to work to be an even greener company. We remain however focused on our core business and work continually to further develop Norva24's sustainability initiatives to safeguard the UN Global Sustainable Development Goals for clean water, sanitation, and clean energy to further consolidate our position as the leading player in the industry.
FINANCIAL OVERVIEW
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Financial overview for the Group
Total operating revenue (Jan-Mar)
Total operating revenue amounted to NOK 704.6 million (526.4), an increase of 33.8%. Currency adjusted organic growth was 8.5%. The growth was driven by good activity levels in all markets combined with price adjustments. Q1 is normally a seasonally weak quarter. Winter weather has been comparable to last year. Acquisition growth was 19.8% in the quarter, driven by acquisition in all markets and especially in Sweden and Germany.
| % | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|
| Growth – total operating revenue | 33.8 | 28.7 | 21.8 |
| Organic growth | 14.0 | 10.5 | 7.7 |
| Organic growth | |||
| – currency adjusted | 8.5 | 13.1 | 8.9 |
| Acquisition growth | 19.8 | 18.3 | 14.1 |
Total operating expenses (Jan-Mar)
Total operating expenses amounted to NOK 580.0 million (426.9). The increase was driven by a higher cost base due to the acquisitions in Sweden, Denmark and Germany, as well as higher transportation costs due to increased energy prices when compared to 2022.
Adjusted EBITA (Jan-Mar)
The slight increase in adjusted EBITA to NOK 59.3 million (43.3), resulted in an improved adjusted EBITA margin of 8.4% (8.2%). The slight increase in adjusted EBITA margin is mainly attributable to improved margins in the organic portfolio.
Depreciation, amortization and impairment (Jan-Mar)
Depreciation and amortization of tangible and intangible assets for the period amounted to NOK 78.5 million (63.2). The increase was primarily attributable to vehicles and equipment in the companies acquired, while amortization in intangible assets pertained to brands and customer relationships in the companies acquired. Amortizations during the period amounted to NOK 11.0 million (7.0), primarily related to amortization of customer relationships.
EBIT (Jan-Mar)
EBIT amounted to NOK 46.0 million (36.3). The increase in EBIT was mainly attributable to the performance in all segments, and contribution from the newly acquired companies. The non-recurring cost for Q1 was NOK 2.4 (0.0) million.
Financial items (Jan-Mar)
Net financial items amounted to NOK -1.3 million (-11.6) and consisted primarily of currency exchange gains as well as reduced interest expenses on loans and right of use obligations. Interest expenses on loans in Q1 2023 were down compared to 2021 due to the reduction in debt and interest rate after the IPO. Lease liabilities increased primarily due to the recent acquisitions in Sweden and Germany.
Earnings (Jan-Mar)
Profit before income tax was NOK 44.8 million (24.7). Profit for the period was NOK 32.6 million (18.2). Basic and diluted earnings per share amounted to NOK 0.16 (0.10).
Cash flow and capital expenditures (Jan-Mar)
The net cash flow from operating activities varies across the year depending on the weather and vacation periods, with a stronger cash flow in the second half. Net cash flow from operating activities for the quarter amounted to NOK 45.1 million (34.4).
Net cash inflow from operating activities over the last 12 months combined of NOK 353.3 million and have been covering almost 90% of the net cash outflow from investing activities of NOK -397.6 million, comprising of acquisitions and earnouts. This shows the strength of Norva24's buy and build strategy and is further proof that we have the capacity to meet the mid-term targets in the strategy.
Cash flow from investing activities in the quarter was NOK -125.3 million (-23.1), of which payments of earn-outs from acquisitions of subsidiaries amounted to NOK -18.0 million (19.1). Cash flow from financing activities in the quarter amounted to NOK 11.7 million (-117.1), mainly attributable to maintaining the current debt level. Cash conversion was 35.6% during the quarter, compared with 34.6 for the same period last year. The first half year is the seasonally weakest quarter in terms of cash generation.
Total operating revenue
Adjusted EBITA
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
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FINANCIAL OVERVIEW
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Financial position and liquidity (March 31, 2023 compared to March 31, 2022)
Norva24's Net debt amounted to NOK 1,302.9 million (793.5), corresponding to a net debt/LTM adjusted EBITDA of 2.4 (1.6). The increase is attributable to the acquisitions in the period. The Group's cash and cash equivalents amounted to NOK 147.7 million (150.1).
Of the NOK 1,100 million credit facility NOK 570.7 million was utilized at the end of Q1.
At the end of the period, total equity amounted to NOK 1,853.9 million (1,592.5). The equity/assets ratio was 47.1 (52.6).
Net debt and leasing (March 31, 2023)
According to IFRS 16, all leases are capitalized. Lease liabilities amounted to NOK 811.6 as per March 31, 2023. NOK 285.2 million of the lease liabilities are related to properties and building and 518.7 are related to vehicles and other assets. Leasing payments for the next 12 months as of March 31, 2023, is NOK 201.7 million.
Depreciation of the leased assets is included in the total depreciation in the statement of income.
Total interest bearing debt amounted to NOK 1,450.6 as per March 31, 2023.
Net debt excluding lease liabilities amounted to NOK 491.4 million as per March 31, 2023.
BREAKDOWN OF NET DEBT (MARCH 31, 2023)
| NOK million | Current portion | Non-current | Total debt |
|---|---|---|---|
| Buildings and property | 68.0 | 217.3 | 285.2 |
| Vehicles and equipment | 127.2 | 390.5 | 518.7 |
| Furniture, fixtures & other | 5.1 | 3.6 | 7.6 |
| Total lease liabilities IFRS 16 | 200.3 | 611.3 | 811.6 |
| Loans | 12.4 | 626.7 | 639.0 |
| Total Debt | 212.6 | 1,238.0 | 1,450.6 |
| Cash and cash equivalent | 147.7 | ||
| Net debt including IFRS 16 | 1,302.9 | ||
| Net debt excluding building and property leases | 1,017.7 | ||
| Net debt excluding IFRS 16 lease liability | 491.4 |
Employees
On March 31, 2023, the total number of employees was 1,621 (1,373).
Seasonal variations
The Group has a certain amount of seasonal variation, and the first quarter has historically been the weakest, due to colder weather and vacation periods. The fourth quarter can also be affected by winter weather in certain years. Over the short term, seasonal variations are expected to remain in line with prior variations, but this may change somewhat over the long term as the Group grows in other parts of Europe where the winter season has less of an impact.
Risk and uncertainty factors
Currency risks, interest risks, credit risks, liquidity risks and operational risks are the most significant risks for the Group. These risks are managed continually in the operations.
Group management monitors financial risk in accordance with the description of financial risk management in Note 21 of the 2022 Annual Report. The review in conjunction with the full year 2022 found no material changes or negative effects compared with the analysis on December 31, 2022.
When an acquisition is completed, purchase considerations, assets and liabilities are recognized at estimated fair value and amounts exceeding the value of net assets are included in goodwill. In Norva24's operation, the fair values of individual assets and liabilities are normally not readily observable in active markets. Estimation of fair values requires the use of valuation models for acquired assets and liabilities as well as ownership interests. Such valuations are subject to numerous assumptions and are thus uncertain.
The fair value of brands and customer relationships on the acquisition date is based on a value-in-use model and an allocated percentage of the consideration paid less the net assets acquired. Estimates of the useful life of acquired brands are based on management's market knowledge and marketing plans. Recognized earn-outs are based on the probability that an acquired company will achieve its financial goals.
A stable underlying need for Norva24's services is expected to persist in the markets in Northern Europe despite the uncertain geopolitical situation. Norva24 has no exposure to Ukraine or Russia. Underlying driving forces such as low renewal levels in the water and sewage systems are expected to generate demand for Norva24's services.
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
OPERATING SEGMENTS: NORWAY
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Norway – strong organic growth in Q1, with stable margins
The Group's Norwegian operations date back to 1919 in Sandefjord, Norway, when Norva24's oldest subsidiary was established. In 2015, Norva24 was established in its current form through a merger of five smaller Norwegian UIM companies. Since then, Norva24 has expanded and now holds a leading market position in Norway. Norway had 483 employees as of March 31, 2023.
Total operating revenue (Jan-Mar)
Total operating revenue amounted to NOK 249.2 million during the first quarter, compared with 213.1 NOK million during the same period of 2022, corresponding to a growth of 16.9% in total operating revenue.
This growth was driven by organic growth of 10.0% and the acquisition of Gravco. The growth comes on top of strong growth in Q1 2022 due to Covid-19 backlog last year.
| % | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|
| Growth – total operating revenue | 16.9 | 22.0 | 12.9 |
| Organic growth | 10.0 | 20.9 | 12.7 |
| Acquisition growth | 7.0 | 1.1 | 0.2 |
Adjusted EBITA (Jan-Mar)
Adjusted EBITA amounted to NOK 32.0 million in Q1 2023, compared with NOK 29.1 million in the same period of 2022, an increase of 10.0%. The adjusted EBITA margin was 12.8% in the first quarter of 2023. The margin is down primarily due to strong development in Q1 of 2022 due to Covid-19 backlog.
Highlights of the quarter
The activity in the market was affected by winter weather conditions in line with Q1 previous years, and organic revenue growth was 10.0%. Cost increases were offset by price increases from both private customers and public contracts. Most public contracts were index-adjusted as of January 2023 by approximately 10% and will be adjusted again on January 1, 2024. Those contracts that were not adjusted January 1, has been index-adjusted earlier in 2022. Private contracts are bing regulated on an ongoing basis. Public contracts amount to around 30% of the norwegian contracts. Activity level has been generally strong in most of the larger units. Norva24 has also renewed several municipality contracts during the quarter.
Total operating revenue
Adjusted EBITA
KEY PERFORMANCE INDICATORS
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 | Change, % | Apr 2022-Mar 2023 | Jan-Dec 2022 |
|---|---|---|---|---|---|
| Total operating revenue | 249.2 | 213.1 | 16.9 | 941.1 | 904.9 |
| EBITA | 30.6 | 29.1 | 5.3 | 135.7 | 134.2 |
| EBITA margin, % | 12.3 | 13.6 | -1.4 pp | 14.4 | 14.8 |
| Adjusted EBITA | 32.0 | 29.1 | 10.0 | 140.4 | 137.5 |
| Adjusted EBITA margin, % | 12.8 | 13.6 | -0.8 pp | 14.9 | 15.2 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
OPERATING SEGMENTS: GERMANY
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Germany – strong organic and acquired growth and EBITA margin impacted by acquisitions
Norva24 entered Germany in 2019 through the acquisition of ExRohr. Norva24 has since grown and established a leading market position in Germany. The Group's oldest subsidiary in the country was established in Gochsheim in 1964. Germany had 682 employees as of March 31, 2023.
Total operating revenue (Jan-Mar)
Total operating revenue amounted to NOK 251.8 million during the first quarter, compared with NOK 157.0 million during the same period of 2022, corresponding to growth of 60.3% in total revenue. This growth was attributable to the acquisitions of Zimmerbeutel, Jutzy and CKS in 2022. Currency adjusted organic growth was 9.2%.
| % | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|
| Growth – total operating revenue | 60.3 | 33.7 | 25.8 |
| Organic growth | 20.8 | -1.6 | 1.1 |
| Organic growth | |||
| – currency adjusted | 9.2 | 1.8 | 1.9 |
| Acquisition growth | 39.5 | 35.3 | 24.6 |
Adjusted EBITA (Jan-Mar)
Adjusted EBITA amounted to NOK 25.3 million in Q1 2023 compared to NOK 19.0 million in the same period of 2022. The adjusted EBITA margin decreased from 12.1% in the preceding year to 10.1% during the quarter. The margin development is attributable to lower margins in acquired companies, but also slightly weaker organic margins.
Highlights of the quarter
Revenue growth remained good, supported by acquisitions. Demand also remained high for most services, including relining, and in line with Q1 in recent years. A new contract with Tesla was won in the quarter. Acquired growth was strong and consist of the Zimmerbeutel (April 2022), Jutzy (August 2022) and CKS (October 2022) with annual revenues of more than NOK 200 million. Norva24 established a position as the market leader in the Metropolitan region of Berlin with the Jutzy and CKS acquisitions and thereby significantly increased the local density in the region. In order to continue to attract and increase competence, Norva24 started Norva24 Akademie as an internal training and education center in the quarter.
Total operating revenue
Adjusted EBITA
KEY PERFORMANCE INDICATORS
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 | Change, % | Apr 2022-Mar 2023 | Jan-Dec 2022 |
|---|---|---|---|---|---|
| Total operating revenue | 251.8 | 157.0 | 60.3 | 907.6 | 812.9 |
| EBITA | 25.3 | 19.0 | 33.2 | 101.8 | 95.5 |
| EBITA margin, % | 10.1 | 12.1 | -2.0 pp | 11.2 | 11.7 |
| Adjusted EBITA | 25.3 | 19.0 | 33.2 | 131.2 | 124.9 |
| Adjusted EBITA margin, % | 10.1 | 12.1 | -2.0 pp | 14.5 | 15.4 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
OPERATING SEGMENTS: SWEDEN
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Sweden – strong acquisition growth combined with significantly improved EBITA margin
Norva24 entered the Swedish market in 2017 through an acquisition in the south of the country. Since then, Norva24 has grown and secured a leading market position in Sweden. The Group's oldest subsidiary in the country was founded in 1974 in Ulricehamn. Sweden had 272 employees as of March 31, 2023.
Total operating revenue (Jan-Mar)
Total operating revenue during the quarter amounted to NOK 110.5 million compared with NOK 85.5 million during the same period in 2022, corresponding to an increase of 29.1%. Currency adjusted organic growth was 5.9%. The organic growth was primarily driven by higher activity across most branches and local markets, as well as price increases. IRG Rörinspektion and Stockholm Relining generated acquisition growth of 19.6% in the quarter.
| % | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|
| Growth – total operating revenue | 29.1 | 65.1 | 39.2 |
| Organic growth | 9.5 | 4.6 | 4.5 |
| Organic growth – currency adjusted | 5.9 | 12.1 | 10.0 |
| Acquisition growth | 19.6 | 60.5 | 34.7 |
Adjusted EBITA (Jan-Mar)
Adjusted EBITA amounted to NOK 9.7 million in Q1 2023 compared to NOK 4.6 million in the same period in 2021. The adjusted EBITA margin increased from 5.4% to 8.8% in Q1 2023. The improvement is driven by good activity level, improved efficiencies and scale as well as improved margins in the acquired companies.
Highlights of the quarter
The segment performed well in terms of growth, with healthy organic growth and the impact of acquisitions leading to a total growth of 29.1% compared to 2022. The integration of new entities is proceeding according to plan and the integration of the most recent acquisitions, IRG and Stockholm Relining, is well underway.
Total operating revenue
Adjusted EBITA
KEY PERFORMANCE INDICATORS
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 | Change, % | Apr 2022-Mar 2023 | Jan-Dec 2022 |
|---|---|---|---|---|---|
| Total operating revenue | 110.5 | 85.5 | 29.1 | 451.8 | 426.9 |
| EBITA | 9.7 | 4.6 | 110.4 | 53.9 | 48.8 |
| EBITA margin, % | 8.8 | 5.4 | 3.4 pp | 11.9 | 11.4 |
| Adjusted EBITA | 9.7 | 4.6 | 110.4 | 56.0 | 50.9 |
| Adjusted EBITA margin, % | 8.8 | 5.4 | 3.4 pp | 12.4 | 11.9 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
OPERATING SEGMENTS: DENMARK
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Denmark – Strong currency adjusted organic growth at 11% and significantly improved margins
The Group entered Denmark in 2017 through the acquisition of a platform with national market presence. The Group's first subsidiary in the country was founded more than 100 years ago in Herning. Norva24 holds a leading position in the Danish market. Denmark had 171 employees as of March 31, 2023.
Total operating revenue (Jan-Mar)
Total operating revenue for the first quarter of 2023 amounted to NOK 97.1 million, compared with NOK 70.7 million during the same period of 2022, corresponding to total growth of 37.4% for the period. The total growth was driven by the strong currency adjusted organic growth of 10.7% and the acquisition of Thornvig Jensen. Broad-based growth was noted across most customer groups leading to strong organic growth, proving the positive impact of the improvement measures in the action plan.
| % | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|
| Growth – total operating revenue | 37.4 | 6.8 | 19.3 |
| Organic growth | 22.4 | 6.8 | 12.7 |
| Organic growth | |||
| - currency adjusted | 10.7 | 10.5 | 13.5 |
| Acquisition growth | 15.0 | 0.0 | 6.6 |
Adjusted EBITA (Jan-Mar)
Adjusted EBITA amounted to NOK 5.0 million during the quarter, compared to NOK -0.3 million during the first quarter of 2022.
Highlights of the quarter
In Denmark Norva24 has implemented and will continue to implement improvement initiatives. The action plan is proceeding very well according to schedule, with measures such as termination of contracts with unsatisfactory profitability, winning new contracts, and a strong focus on operational efficiency and increasing the degree of utilization of vehicles and personnel. The positive results of the actions implemented were seen gradually in the last few quarters.
Total operating revenue
Adjusted EBITA
KEY PERFORMANCE INDICATORS
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 | Change, % | Apr 2022-Mar 2023 | Jan-Dec 2022 |
|---|---|---|---|---|---|
| Total operating revenue | 97.1 | 70.7 | 37.4 | 349.4 | 323.0 |
| EBITA | 5.0 | -0.3 | n.m. | 15.4 | 10.1 |
| EBITA margin, % | 5.1 | -0.4 | 5.5 pp | 4.4 | 3.1 |
| Adjusted EBITA | 5.0 | -0.3 | n.m. | 12.9 | 7.6 |
| Adjusted EBITA margin, % | 5.1 | -0.4 | 5.5 pp | 3.7 | 2.4 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
INTERIM FINANCIAL REPORT
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Financial reporting
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
| NOK million | Note | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|---|
| Revenue from customer contracts | 700.1 | 518.2 | 2,445.3 | |
| Other operating revenue | 4.5 | 8.2 | 21.1 | |
| Total operating revenue | 3 | 704.6 | 526.4 | 2,466.5 |
| Operating expenses | ||||
| Operational service expenses | -105.2 | -57.7 | -320.7 | |
| Personnel expenses | -303.4 | -239.4 | -1,040.8 | |
| Vehicle operating expenses | -108.8 | -77.9 | -390.4 | |
| Other operating expenses | -62.7 | -52.0 | -232.1 | |
| Other gains/losses | 0.0 | - | 5.0 | |
| Total operating expenses | -580.0 | -426.9 | -1,979.0 | |
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | 124.6 | 99.5 | 487.5 | |
| Total depreciation | 6, 7 | -67.5 | -56.2 | -241.4 |
| Earnings before interest, taxes and amortization (EBITA) | 57.0 | 43.3 | 246.0 | |
| Total amortization | 5 | -11.0 | -7.0 | -34.3 |
| Earnings before interest and taxes (EBIT) | 46.0 | 36.3 | 211.7 | |
| Financial items | ||||
| Financial income | 15.1 | 1.5 | 42.8 | |
| Financial expenses | -16.4 | -13.2 | -58.3 | |
| Net financial items | 4 | -1.3 | -11.6 | -15.5 |
| Profit before income tax (EBT) | 44.8 | 24.7 | 196.3 | |
| Income tax expense | -12.2 | -6.5 | -56.8 | |
| Profit for the period | 32.6 | 18.2 | 139.5 | |
| Profit attributable to | ||||
| Owners of the parent company | 32.6 | 18.2 | 139.5 | |
| Non-controlling interests | - | - | - | |
| Total | 32.6 | 18.2 | 139.5 | |
| Earnings per share: | ||||
| Basic earnings per share, NOK | 0.16 | 0.10 | 0.76 | |
| Diluted earnings per share, NOK | 0.16 | 0.10 | 0.76 | |
| Average numbers of outstanding ordinary shares, before and after dilution | 182,682,740 | 182,474,021 | 182,584,957 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
INTERIM FINANCIAL REPORT
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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|
| Profit/loss for the period | 32.6 | 18.2 | 139.5 |
| Other comprehensive income: | |||
| Items that may be reclassified to profit or loss | |||
| Translation differences | 92.0 | -45.6 | -34.3 |
| Other comprehensive income for the period | 92.0 | -45.6 | -34.3 |
| Total comprehensive income for the period | 124.6 | -27.4 | 105.1 |
| Total comprehensive income attributable to: | |||
| Owners of the parent company | 124.6 | -27.4 | 105.1 |
| Non-controlling interests | - | - | - |
| Total | 124.6 | -27.4 | 105.1 |
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CONDENSED CONSOLIDATED BALANCE SHEET
| NOK million | Note | Mar 31, 2023 | Mar 31, 2022 | Dec 31, 2022 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 5 | 1,845.9 | 1,309.6 | 1,661.1 |
| Right-of-use assets | 6 | 830.2 | 714.7 | 752.3 |
| Property, plant and equipment | 7 | 522.5 | 412.3 | 483.9 |
| Financial assets at amortized cost | 6.5 | 5.9 | 5.3 | |
| Total non-current assets | 3,205.0 | 2,442.6 | 2,902.5 | |
| Current assets | ||||
| Inventories | 15.0 | 12.9 | 12.7 | |
| Accounts receivable | 382.3 | 270.8 | 340.1 | |
| Other current receivables | 181.1 | 148.4 | 147.8 | |
| Cash and cash-equivalents | 147.7 | 150.1 | 204.7 | |
| Total current assets | 726.0 | 582.3 | 705.3 | |
| Total assets | 3,931.0 | 3,024.9 | 3,607.8 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Total equity | 1,853.9 | 1,592.5 | 1,729.2 | |
| Non-current liabilities | ||||
| Deferred tax liability | 79.8 | 23.3 | 80.5 | |
| Non-current lease liabilities | 6 | 611.3 | 534.5 | 554.3 |
| Non-current loans | 8 | 626.7 | 238.2 | 533.5 |
| Other non-current liabilities | 55.6 | 11.5 | 49.0 | |
| Total non-current liabilities | 1,373.3 | 807.4 | 1,217.3 | |
| Current liabilities | ||||
| Accounts payable | 150.2 | 136.3 | 135.8 | |
| Taxes payable | 14.2 | 5.7 | 21.3 | |
| Current portion of lease liabilities | 6 | 200.3 | 157.8 | 179.5 |
| Current portion of loans | 8 | 12.4 | 13.1 | 11.5 |
| Provisions | 50.4 | |||
| Other current liabilities | 276.3 | 312.1 | 313.1 | |
| Total current liabilities | 703.8 | 625.0 | 661.2 | |
| Total liabilities | 2,077.1 | 1,432.5 | 1,878.5 | |
| Total equity and liabilities | 3,931.0 | 3,024.9 | 3,607.8 |
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| NOK million | Note | Share capital | Share capital (not yet registered) | Additional paid in capital | Other reserves | Retained earnings | Total equity |
|---|---|---|---|---|---|---|---|
| Equity at January 1, 2023 | 0.6 | – | 1,437.1 | –58.4 | 350.0 | 1,729.2 | |
| Total comprehensive income for the period: | |||||||
| Profit/loss for the period | – | – | – | – | 32.6 | 32.6 | |
| Other comprehensive income: | |||||||
| Translation differences | – | – | – | 92.0 | – | 92.0 | |
| Total comprehensive income for the period | – | – | – | 92.0 | 32.6 | 124.6 | |
| Equity at March 31, 2023 | 0.6 | – | 1,437.1 | 33.6 | 382.5 | 1,853.9 | |
| Equity at January 1, 2022 | 0.5 | 0.1 | 1,432.9 | –24.1 | 210.2 | 1,619.6 | |
| Total comprehensive income for the period: | |||||||
| Profit/loss for the period | – | – | – | – | 139.5 | 139.5 | |
| Other comprehensive income: | |||||||
| Translation differences | – | – | – | –34.3 | – | –34.3 | |
| Total comprehensive income for the period | – | – | – | –34.3 | 139.5 | 105.1 | |
| Transactions with owners in their capacity as owners: | |||||||
| Capital increase (net of transactions costs) | 0.1 | –0.1 | – | – | – | – | |
| Capital increase (net of transactions costs) | 0.0 | – | 4.2 | – | – | 4.2 | |
| Over-allotment option (net of transaction costs) | – | – | – | – | 0.3 | 0.3 | |
| Equity at December 31, 2022 | 0.6 | – | 1,437.1 | –58.4 | 350.0 | 1,729.2 |
The Group has no non-controlling interest.
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| NOK million | Note | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|---|
| Cash flows from operating activities | ||||
| Profit before income tax | 44.8 | 24.7 | 196.3 | |
| Adjustments for: | ||||
| Impairment, depreciation and amortization expenses | 5, 6, 7 | 78.5 | 63.2 | 275.7 |
| Taxes paid | -21.6 | -25.3 | -56.6 | |
| Net gain/loss on sale of non-current assets | -2.5 | -4.6 | -17.9 | |
| Items included in financing activities | 4 | 1.3 | 11.6 | 15.5 |
| Change in net working capital | -48.1 | -43.1 | -111.0 | |
| Changes in other items* | -7.3 | 8.0 | 41.3 | |
| Net cash inflow from operating activities | 45.1 | 34.4 | 343.3 | |
| Cash flows from investing activities | ||||
| Payment for acquisition of subsidiaries, net of cash acquired | 10 | -79.9 | - | -268.9 |
| Payment of earnouts | -18.0 | -19.1 | -49.8 | |
| Payment for fixed assets | -33.7 | -10.6 | -83.9 | |
| Proceeds from sale of fixed assets | 6.4 | 6.6 | 40.1 | |
| Net cash outflow from investing activities | -125.3 | -23.1 | -362.5 | |
| Cash flows from financing activities | ||||
| Proceeds from issuance of shares | - | - | - | |
| Proceeds from borrowings | 111.5 | - | 331.1 | |
| Repayment of borrowings | -41.9 | -76.4 | -160.4 | |
| Principal element of lease payments | 6 | -42.8 | -36.6 | -144.2 |
| Interest paid, loans | -5.4 | -2.4 | -14.7 | |
| Interest paid, lease | -8.8 | -8.1 | -32.6 | |
| Interest received | 1.2 | - | - | |
| Other financial payments | -2.2 | 6.5 | -5.0 | |
| Cash flows from financing activities | 11.7 | -117.1 | -25.8 | |
| Change in cash and cash equivalents | -68.5 | -105.7 | -45.0 | |
| Cash and cash equivalents at the start of the period | 204.7 | 260.4 | 260.4 | |
| Effects of exchange rate changes on cash and cash equivalents | 11.4 | -4.6 | -10.6 | |
| Cash and cash equivalents at the end of the period | 147.7 | 150.1 | 204.7 |
- Includes changes in other non-current receivables and other non-current liabilities, effects on net working capital from acquisitions and translation differences.
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Notes
NOTE 1 REPORTING ENTITY
Norva24 Group AB (publ) is a public limited liability company listed on Nasdaq Stockholm. The share became publicly traded with the initial public offering December 9 2021. Norva 24 Group AB (publ) and it's subsidiaries operates in the underground infrastructure industry, and is present in Norway, Germany, Sweden and Denmark.
NOTE 2 BASIS OF PREPARATION
Accounting principles
The Norva24 Group applies the International Financial Reporting Standards (IFRS) as they have been adopted by the European Union. The consolidated accounts in this interim report have been prepared in accordance with IAS 34 Interim Financial Reporting plus applicable regulations in the Swedish Annual Accounts Act. The Parent Company accounts have been prepared in accordance with the Swedish Annual Accounts Act and RFR 2, Accounting for Legal Entities. The interim report should be read together with the historic financial information included in the annual report. Accounting principles and calculation basis are in accordance with those that were applied in the historic financial information. Information in accordance with IAS 34 also appears in other parts of the interim report in addition to the financial reports and associated notes.
The amounts are rounded to the nearest million (NOK m) with one decimal place unless otherwise stated. As a consequence of rounding, figures presented in the financial reports may not add up to the exact total in certain cases and percentage figures can differ from the exact percentage figures. Amounts in brackets concern the comparison period.
Significant accounting judgements, estimates and assumptions
In preparing the interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses.
The estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the given circumstances. Revision to accounting estimates is recognized in the period in which the estimate is revised if the revision affects only that period, or also future periods if the revision affects both current and future periods.
In preparing the consolidated interim financial statements, significant judgements made by management in applying the Group's accounting policies and key sources of uncertainty in the estimates were consistent with those applied for the annual report.
Other
Items included in the financial statements of each of the Norva24 Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Norwegian Kroner (NOK) which is Norva24 Group's presentation currency. The Parent Company Norva24 Group AB (publ)'s functional currency is Swedish Kroner (SEK).
There have been no related parties transactions other than the continuation of agreements described in the annual report.
NOTE 3 REVENUE AND SEGMENT INFORMATION
Operating segments
Norva24 Group identifies its operating segments and discloses segment information in accordance with IFRS 8 Operating Segments. Accordingly, the Group identifies its segments consistent with the reporting structure used by management.
Operating segments are components of a business that are evaluated regularly by the chief operating decision maker for the purpose of assessing performance and allocating resources. The financial information is disclosed on the same basis as used by the chief operating decision maker.
The column "Corporate & other" includes corporate expenses and eliminations.
Revenue
The Group's disaggregates revenue based on the operational segments that are by geographical areas. The Group has no single customer accounting for more than 10 percent of total revenue.
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NOTE 3 REVENUE AND SEGMENT INFORMATION, continued
OPERATING SEGMENTS FINANCIALS JANUARY-MARCH 2023
| NOK million | Norway | Germany | Sweden | Denmark | Corporate & other | Total |
|---|---|---|---|---|---|---|
| Total operating revenue | 249.2 | 251.8 | 110.5 | 97.1 | -4.0 | 704.6 |
| Adjusted EBITDA | 55.1 | 44.9 | 22.9 | 16.7 | -12.6 | 126.9 |
| Adjusted depreciation | -23.1 | -19.6 | -13.2 | -11.7 | -0.0 | -67.5 |
| Adjusted EBITA | 32.0 | 25.3 | 9.7 | 5.0 | -12.6 | 59.4 |
| Non-recurring items | -1.4 | - | - | - | -1.0 | -2.4 |
| EBITA | 30.6 | 25.3 | 9.7 | 5.0 | -13.6 | 57.0 |
OPERATING SEGMENTS FINANCIALS JANUARY-MARCH 2022
| NOK million | Norway | Germany | Sweden | Denmark | Corporate & other | Total |
|---|---|---|---|---|---|---|
| Total operating revenue | 213.1 | 157.0 | 85.5 | 70.7 | - | 526.4 |
| Adjusted EBITDA | 50.0 | 34.0 | 15.4 | 9.3 | -9.1 | 99.5 |
| Adjusted depreciation | -20.9 | -15.0 | -10.8 | -9.5 | - | -56.2 |
| Adjusted EBITA | 29.1 | 19.0 | 4.6 | -0.3 | -9.1 | 43.3 |
| Non-recurring items | - | - | - | - | - | - |
| EBITA | 29.1 | 19.0 | 4.6 | -0.3 | -9.1 | 43.3 |
RECONCILIATION OF SEGMENT INFORMATION AND EARNINGS BEFORE INCOME TAX (EBT)
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 |
|---|---|---|
| EBITA | 57.0 | 43.3 |
| Amortization of intangible assets | -11.0 | -7.0 |
| Net financial items | -1.3 | -11.6 |
| Profit before income tax | 44.8 | 24.7 |
RECONCILIATION OF NON-RECURRING ITEMS JANUARY-MARCH 2023
| NOK million | Norway | Germany | Sweden | Denmark | Corporate & other | Total |
|---|---|---|---|---|---|---|
| Restructuring cost and other provisions | - | - | - | - | -1.0 | -1.0 |
| M&A Cost | -1.4 | - | - | - | - | -1.4 |
| Non-recurring items | -1.4 | - | - | - | -1.0 | -2.4 |
RECONCILIATION OF NON-RECURRING ITEMS JANUARY-MARCH 2022
| NOK million | Norway | Germany | Sweden | Denmark | Corporate & other | Total |
|---|---|---|---|---|---|---|
| Restructuring cost and other provisions | - | - | - | - | - | - |
| M&A Cost | - | - | - | - | - | - |
| Non-recurring items | - | - | - | - | - | - |
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NOTE 4 FINANCIAL ITEMS
| Specification of financial items | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|
| NOK million | |||
| Interest income | 1.2 | 0.0 | 1.5 |
| Currency exchange gain | 7.5 | - | 35.8 |
| Gain earnout | 3.0 | - | 1.7 |
| Other financial income | 3.4 | 1.3 | 3.9 |
| Financial income | 15.1 | 1.5 | 42.8 |
| Interest expenses, leases | -9.7 | -8.1 | -33.2 |
| Amortized interest expense, loans | -5.4 | -2.5 | -13.1 |
| Currency exchange loss | - | -1.0 | - |
| Loss earnout | - | - | -3.9 |
| Other financial expenses | -1.3 | -1.6 | -8.0 |
| Financial expenses | -16.4 | -13.2 | -58.3 |
| Net financial items | -1.3 | -11.6 | -15.5 |
NOTE 5 INTANGIBLE ASSETS AND GOODWILL
| AT MARCH 31, 2023 | |||||
|---|---|---|---|---|---|
| NOK million | Goodwill | Brand | Customer relationships | Other intangible assets | Total |
| Carrying amount at January 1, 2023 | 1,508.7 | 60.8 | 87.4 | 4.2 | 1,661.1 |
| Acquired in business combinations | 77.6 | 5.9 | 11.7 | - | 95.2 |
| Additions | - | - | - | -0.0 | -0.0 |
| Amortization and impairment | - | -2.1 | -8.5 | -0.4 | -11.0 |
| Disposals | - | - | - | 0.1 | 0.1 |
| Translation differences | 86.7 | 5.5 | 8.1 | 0.4 | 100.6 |
| Carrying amount at March 31, 2023 | 1,672.8 | 70.0 | 98.7 | 4.2 | 1,845.9 |
| Useful life in years | Indefinite | 10 | 3-5 | 3-5 | |
| Amortization plan | n.m | Linear | Linear | Linear | |
| AT DECEMBER 31, 2022 | |||||
| NOK million | Goodwill | Brand | Customer relationships | Other intangible assets | Total |
| Carrying amount at January 1, 2022 | 1,222.6 | 45.4 | 70.6 | 4.3 | 1,343.0 |
| Acquired in business combinations | 252.7 | 20.4 | 40.8 | 0.1 | 313.9 |
| Additions | - | - | - | 0.9 | 0.9 |
| Amortization | - | -6.6 | -26.4 | -1.3 | -34.3 |
| Disposals | - | - | - | - | - |
| Translation differences | 33.4 | 1.7 | 2.4 | 0.2 | 37.7 |
| Carrying amount at December 31, 2022 | 1,508.7 | 60.8 | 87.4 | 4.2 | 1,661.1 |
| Useful life in years | Indefinite | 10 | 3-5 | 3-5 | |
| Amortization plan | n.m | Linear | Linear | Linear |
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NOTE 6 LEASING
| AT MARCH 31, 2023 | ||||
|---|---|---|---|---|
| Right-of-use assets | Buildings and property | Vehicles and equipment | Furniture, fixtures & other | Total |
| NOK million | ||||
| Carrying amount at January 1, 2023 | 265.4 | 480.1 | 6.8 | 752.3 |
| Acquired in business combinations | – | 21.3 | – | 21.3 |
| Additions | 1.4 | 56.0 | 2.4 | 59.7 |
| Depreciation and impairment | –14.8 | –21.2 | –1.2 | –37.2 |
| Transfer to property, plant and equipment | – | –5.3 | – | –5.3 |
| Adjustments | 8.2 | 0.8 | 0.0 | 9.1 |
| Translation differences | 9.8 | 20.0 | 0.5 | 30.3 |
| Carrying amount at March 31, 2023 | 270.0 | 551.8 | 8.5 | 830.2 |
| Useful life in years | 3-30 | 7-10 | 3-7 | |
| Depreciation plan | Linear | Linear | Linear | |
| Lease liabilities | Buildings and property | Vehicles and equipment | Furniture, fixtures & other | Total |
| NOK million | ||||
| Carrying amount at January 1, 2023 | 279.3 | 447.5 | 6.9 | 733.7 |
| Acquired in business combinations | – | 21.3 | – | 21.3 |
| Additions | 1.4 | 56.0 | 2.4 | 59.7 |
| Lease payments | –17.6 | –32.7 | –1.3 | –51.6 |
| Interest on the lease liability | 3.8 | 5.0 | 0.1 | 8.8 |
| Adjustments | 8.2 | 0.8 | 0.0 | 9.1 |
| Translation differences | 10.2 | 20.8 | –0.4 | 30.6 |
| Carrying amount at March 31, 2023 | 285.2 | 518.7 | 7.6 | 811.6 |
| Current lease liabilities | 68.0 | 127.2 | 5.1 | 200.3 |
| Non-current lease liabilities | 217.3 | 390.5 | 3.6 | 611.3 |
| AT DECEMBER 31, 2022 | ||||
| Right-of-use assets | Buildings and property | Vehicles and equipment | Furniture, fixtures & other | Total |
| NOK million | ||||
| Carrying amount at January 1, 2022 | 251.3 | 464.0 | 9.0 | 724.3 |
| Acquired in business combinations | 7.7 | 14.7 | 0.1 | 22.5 |
| Additions | 35.8 | 83.5 | 1.7 | 121.0 |
| Depreciation and impairment | –53.7 | –76.1 | –4.4 | –134.1 |
| Transfer to property, plant and equipment | – | –17.5 | –0.1 | –17.6 |
| Adjustments | 21.8 | 6.7 | 0.2 | 28.7 |
| Translation differences | 2.5 | 4.7 | 0.3 | 7.6 |
| Carrying amount at December 31, 2022 | 265.4 | 480.1 | 6.8 | 752.3 |
| Useful life in years | 3-30 | 7-10 | 3-7 | |
| Depreciation plan | Linear | Linear | Linear |
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NOTE 6 LEASING, continued
| Lease liabilities
NOK million | Buildings and property | Vehicles and equipment | Furniture, fixtures & other | Total |
| --- | --- | --- | --- | --- |
| Carrying amount at January 1, 2022 | 260.9 | 428.6 | 9.2 | 698.7 |
| Acquired in business combinations | 7.7 | 14.7 | 0.1 | 22.5 |
| Additions | 35.8 | 83.5 | 1.6 | 120.9 |
| Lease payments | -64.0 | -108.2 | -4.7 | -176.9 |
| Interest on the lease liability | 14.5 | 17.8 | 0.3 | 32.6 |
| Adjustments | 21.8 | 6.7 | 0.1 | 28.6 |
| Translation differences | 2.7 | 4.2 | 0.3 | 7.2 |
| Carrying amount at March 31, 2022 | 279.3 | 447.5 | 6.9 | 733.7 |
| Current lease liabilities | 64.3 | 111.0 | 4.2 | 179.5 |
| Non-current lease liabilities | 215.0 | 336.5 | 2.8 | 554.3 |
The Group has one rental contract with a remaining lease period exceeding 12 years.
NOTE 7 PROPERTY, PLANT AND EQUIPMENT
| AT MARCH 31, 2023 | ||||
|---|---|---|---|---|
| NOK million | Buildings and property | Vehicles and equipment | Furniture, fixtures & other | Total |
| Carrying amount at January 1, 2023 | 53.7 | 402.3 | 27.9 | 483.9 |
| Acquired in business combinations | 1.0 | 3.6 | -1.2 | 3.5 |
| Additions | 18.7 | 6.0 | 9.0 | 33.7 |
| Transfer from right-of-use assets (see note 6) | - | 5.3 | - | 5.3 |
| Depreciation | -1.5 | -28.6 | -0.2 | -30.3 |
| Disposals | - | -3.0 | -0.7 | -3.7 |
| Translation differences | 2.0 | 28.4 | -0.3 | 30.1 |
| Carrying amount at March 31, 2023 | 74.0 | 414.0 | 34.5 | 522.5 |
| Useful life in years | 3-30 | 5-10 | 3-7 | |
| Depreciation plan | Linear | Linear | Linear |
AT DECEMBER 31, 2022
| NOK million | Buildings and property | Vehicles and equipment | Furniture, fixtures & other | Total |
|---|---|---|---|---|
| Carrying amount at January 1, 2022 | 63.9 | 341.6 | 23.8 | 429.3 |
| Acquired in business combinations | 0.1 | 69.6 | 4.3 | 74.0 |
| Additions | 1.4 | 71.9 | 9.7 | 83.0 |
| Transfer from right-of-use assets (see note 6) | - | 17.5 | 0.1 | 17.6 |
| Depreciation | -5.0 | -93.8 | -8.5 | -107.3 |
| Disposals | -5.2 | -13.4 | -4.3 | -22.9 |
| Reclassification | -3.0 | 3.3 | -0.3 | -0.0 |
| Translation differences | 1.4 | 5.5 | 3.2 | 10.1 |
| Carrying amount at December 31, 2022 | 53.7 | 402.3 | 27.9 | 483.9 |
| Useful life in years | 3-30 | 7-10 | 3-7 | |
| Depreciation plan | Linear | Linear | Linear |
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NOTE 8 BUSINESS COMBINATIONS
| Acquired units during 2023 | Country | Date | Ownership |
|---|---|---|---|
| Gravco AS | Norway | January 19 | 100% |
| Septik Tank AS | Norway | January 19 | 100% |
| Purchase considerationNOK million | |||
| Cash paid | 96.8 | ||
| Earn-out/Contingent consideration(Fair value estimate at date of acquisition) | 18.0 | ||
| Total purchase consideration | 114.8 | ||
| Opening balance sheet | Note | ||
| Cash | 16.8 | ||
| Other current assets | 17.5 | ||
| Property, plant and equipment | 7 | 3.5 | |
| Right-of-use assets | 6 | 21.3 | |
| Brand | 5 | 5.9 | |
| Customer relationships | 5 | 11.7 | |
| Total assets | 76.7 | ||
| Other current liabilities | 14.3 | ||
| Other non-current liabilities | 21.3 | ||
| Deferred tax on excess values | 3.9 | ||
| Total Liabilities | 39.5 | ||
| Net identifiable assets | 37.2 | ||
| Goodwill | 5 | 77.6 | |
| Total consideration for the shares | 114.8 |
The acquisitions will strengthen the Group's position in the existing segments and the operations of the acquired entities are similar to the existing operations. The Group considers them to be individually immaterial and therefore the acquisitions are shown jointly. Goodwill consists of synergies from cost savings and the increase in market share. The acquired businesses also include the assembled workforce. These items are not identifiable assets, and are subsumed into goodwill. Goodwill will not be deductible for tax purposes. All purchase price allocations in 2023 are preliminary. Transaction costs are shown as non-recurring items under note 3 as they impact comparability. Transaction cost are recognized under Other operating expenses in the statement of profit or loss.
Earn-outs are conditional on the acquired entities reaching certain future financial targets such as revenue, EBITDA and EBITA. The Group accounts for earn-outs at fair value and accrues for based on the likelihood of achieving these targets and the expected future pay-out. Gains and losses recognised are shown in note 4.
| Revenue and profit/loss from acquisition recognized in statement of profit or loss | Jan-Mar |
|---|---|
| NOK million | 2023 |
| Revenue | 14.9 |
| Profit/loss for the year | 1.9 |
| Revenue and profit/loss as if the acquisition was performed January 1 (pro forma) | Jan-Mar |
| NOK million | 2023 |
| Revenue | 18.7 |
| Profit/loss for the year | 1.3 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
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Parent Company
PARENT COMPANY CONDENSED STATEMENT OF PROFIT OR LOSS
| SEK million | Note | Jan-Mar 2023 | Jan-Mar 2022 | Jan-Dec 2022 |
|---|---|---|---|---|
| Total operating revenue | - | - | 2.8 | |
| Other operating expenses | -2.4 | -2.8 | -8.7 | |
| Earnings before interest and taxes (EBIT) | -2.4 | -2.8 | -5.9 | |
| Net financial items | 8.6 | 0.5 | 15.2 | |
| Loss before income tax | 6.3 | -2.3 | 9.2 | |
| Income tax expenses | - | 0.5 | -0.3 | |
| Loss for the period | 6.3 | -1.8 | 8.9 | |
| Other comprehensive income | - | - | - |
PARENT COMPANY CONDENSED BALANCE SHEET
| SEK million | Note | Mar 31, 2023 | Mar 31, 2022 | Dec 31, 2022 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Investment in subsidiaries | 2,875.6 | 2,867.8 | 2,875.6 | |
| Deferred tax asset | 16.7 | 17.1 | 16.4 | |
| Non-current intercompany receivables | 875.8 | 882.8 | 866.7 | |
| Total non-current assets | 3,768.1 | 3,767.8 | 3,758.7 | |
| Current assets | ||||
| Current receivables | 9.3 | 9.7 | 9.8 | |
| Current intercompany receivables | - | 11.3 | 2.8 | |
| Cash and cash-equivalents | 0.5 | - | 1.3 | |
| Total current assets | 9.7 | 21.1 | 13.9 | |
| Total assets | 3,777.8 | 3,788.8 | 3,772.5 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Restricted equity | 0.6 | 0.6 | 0.6 | |
| Non-restricted equity | 3,771.9 | 3,750.4 | 3,765.6 | |
| Total equity | 3,772.5 | 3,751.0 | 3,766.2 | |
| Current liabilities | ||||
| Accounts payable | 1.8 | 22.4 | 0.9 | |
| Other current liabilities | 3.5 | 15.4 | 5.4 | |
| Total current liabilities | 5.3 | 37.8 | 6.3 | |
| Total equity and liabilities | 3,777.8 | 3,788.8 | 3,772.5 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
DECLARATION OF THE BOARD OF DIRECTORS
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Declaration of the Board of Directors
The Board of Directors and Chief Executive Officer warrant and declare that this interim report gives a true and fair view of the Parent Company's and Group's operations, financial positions and results, and that it describes significant risks and uncertainties faced by the Parent Company and the companies included in the Group.
Stockholm, May 23, 2023
Vidar Meum
Chairman
Allan Engström
Board member
Arild Bødal
Board member
Einar Nornes
Board member
Mats Lönnqvist
Board member
Linus Lundmark
Board member
Monica Reib
Board member
Terje Bøvelstad
Board member
Ulrika Östlund
Board member
Henrik Damgaard
CEO
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
QUARTERLY DATA FOR THE CONSOLIDATED GROUP
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| QUARTERLY DATA FOR THE CONSOLIDATED GROUP | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | |
| NOK million | 2021 | 2021 | 2021 | 2021 | 2022 | 2022 | 2022 | 2022 | 2023 |
| Total operating revenue | |||||||||
| Norway | 174.6 | 202.5 | 203.8 | 220.5 | 213.1 | 243.5 | 222.7 | 225.6 | 249.2 |
| Germany | 117.4 | 148.8 | 182.5 | 197.7 | 157.0 | 173.7 | 203.4 | 278.8 | 251.8 |
| Sweden | 51.8 | 67.7 | 87.3 | 99.8 | 85.5 | 114.0 | 103.2 | 124.2 | 110.5 |
| Denmark | 66.2 | 66.3 | 67.5 | 70.9 | 70.7 | 77.9 | 83.4 | 91.0 | 97.1 |
| Corporate | -1.2 | 1.2 | 0.0 | 0.0 | 0.0 | -0.6 | -0.7 | 0.0 | -4.0 |
| Group | 408.9 | 486.5 | 541.0 | 588.9 | 526.4 | 608.5 | 612.0 | 719.5 | 704.6 |
| EBITA | |||||||||
| Norway | 13.5 | 46.7 | 28.6 | 33.7 | 29.1 | 44.8 | 40.4 | 19.9 | 30.6 |
| Germany | 24.8 | 19.5 | 34.9 | 29.0 | 19.0 | 25.3 | 31.2 | 20.0 | 25.3 |
| Sweden | 2.3 | 12.5 | 11.3 | 10.1 | 4.6 | 13.8 | 15.3 | 15.0 | 9.7 |
| Denmark | -6.6 | -8.3 | 3.3 | 43.9 | -0.3 | 2.4 | 7.5 | 0.5 | 5.0 |
| Corporate | -7.3 | -20.3 | -16.3 | -33.9 | -9.1 | -14.4 | -8.9 | -10.1 | -13.6 |
| Total EBITA | 26.7 | 50.1 | 61.8 | 82.8 | 43.3 | 71.9 | 85.5 | 45.3 | 57.0 |
| Adjusted EBITA | |||||||||
| Norway | 16.0 | 47.4 | 28.6 | 34.2 | 29.1 | 47.5 | 40.6 | 20.2 | 32.0 |
| Germany | 25.7 | 22.5 | 34.9 | 36.0 | 19.0 | 27.4 | 33.3 | 45.2 | 25.3 |
| Sweden | 3.0 | 14.9 | 11.3 | 10.3 | 4.6 | 14.6 | 16.7 | 15.0 | 9.7 |
| Denmark | -5.1 | -8.3 | 3.3 | 3.7 | -0.3 | 2.4 | 5.0 | 0.5 | 5.0 |
| Corporate | -6.4 | -6.6 | -5.6 | -2.3 | -9.1 | -14.4 | -8.9 | -9.9 | -12.6 |
| Total adjusted EBITA | 33.3 | 69.9 | 72.5 | 82.0 | 43.3 | 77.6 | 86.7 | 71.0 | 59.4 |
| Adjusted EBITA margin, % | |||||||||
| Norway | 9.2 | 23.4 | 14.0 | 15.5 | 13.6 | 19.5 | 18.2 | 9.0 | 12.8 |
| Germany | 21.9 | 15.1 | 19.1 | 18.2 | 12.1 | 15.8 | 16.4 | 16.2 | 10.1 |
| Sweden | 5.8 | 22.0 | 13.0 | 10.4 | 5.4 | 12.8 | 16.1 | 12.1 | 8.8 |
| Denmark | -7.6 | -12.5 | 4.9 | 5.3 | -0.4 | 3.1 | 6.0 | 0.5 | 5.1 |
| Corporate | n.m | n.m | n.m | n.m | n.m | n.m | n.m | n.m | n.m |
| Group | 8.1 | 14.4 | 13.4 | 13.9 | 8.2 | 12.7 | 14.2 | 9.9 | 8.4 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
KEY PERFORMANCE INDICATORS
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Key performance indicators
KEY FIGURES
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES, NOT DEFINED UNDER IFRS
| Line ID | NOK million | Source | Calculation | Jan-Mar 2023 | Jan-Mar 2022 | Apr 2022-Mar 2023 | Jan-Dec 2022 |
|---|---|---|---|---|---|---|---|
| A | Total operating revenue | P&L | 704.6 | 526.4 | 2,644.6 | 2,466.5 | |
| Profit/(Loss) for the period | P&L | 29.5 | 18.2 | 150.9 | 139.5 | ||
| Earnings per share (basic and diluted), NOK | P&L | 0.16 | 0.10 | 0.84 | 0.76 | ||
| Average number of ordinary shares outstanding | 182,682,740 | 182,474,021 | 179,849,112 | 182,584,957 | |||
| Growth in total revenue, % | 33.8 | 28.7 | n.a | 21.8 | |||
| Organic growth in total revenue, % | 14.0 | 10.5 | n.a | 7.7 | |||
| Organic growth in total revenue, currency adjusted, % | 8.5 | 13.1 | n.a | 8.9 | |||
| Acquired growth in total revenue, % | 19.8 | 26.6 | n.a | 14.1 | |||
| B | Total operating expenses | P&L | -580.1 | -426.9 | -2,132.1 | -1,979.0 | |
| C | EBITDA (earnings before interest, taxes, depreciation and amortization | C=A-B | 124.5 | 99.5 | 512.6 | 487.5 | |
| EBITDA margin, % | C/A | 17.7 | 18.9 | 19.4 | 19.8 | ||
| D | Depreciation and impairment of tangible assets (PPE and leasing right-of-use assets) | Note 5 + Note 7 | -67.5 | -56.2 | -252.8 | -241.4 | |
| E | EBITA | E=C-D | 57.0 | 43.3 | 259.8 | 246.0 | |
| EBITA margin, % | E/A | 8.1 | 8.2 | 9.8 | 10.0 | ||
| F | Depreciation, amortization and impairment of tangible and intangible assets | P&L | -67.5 | -56.2 | -291.1 | -275.7 | |
| G | EBIT | G=C-F | 46.0 | 36.3 | 221.5 | 211.7 | |
| EBIT margin, % | G/A | 6.5 | 6.9 | 8.4 | 8.6 | ||
| H | Non-recurring items, expenses | 2.4 | - | 34.9 | 32.5 | ||
| I | Adjusted EBITDA | I=C+H | 126.8 | 99.5 | 547.4 | 520.0 | |
| Adjusted EBITDA margin, % | I/A | 18.0 | 18.9 | 20.7 | 21.1 | ||
| J | Adjusted EBITA | J=E+H+H2 | 59.4 | 43.3 | 294.7 | 278.6 | |
| Adjusted EBITA margin, % | J/A | 8.4 | 8.2 | 11.1 | 11.3 | ||
| K | Adjusted EBIT | K=G+H+H2 | 48.3 | 36.3 | 256.4 | 244.3 | |
| Adjusted EBIT margin, % | K/A | 6.9 | 6.9 | 9.7 | 9.9 | ||
| L | Lease payments | Note 6 | 51.6 | 44.7 | 183.8 | 176.9 | |
| M | Capital expenditures (purchases minus disposals) | Note 7 | 30.0 | 8.6 | 81.6 | 60.1 | |
| N | Cash capital expenditure | N=L+M | 81.7 | 53.3 | 265.4 | 237.0 | |
| O | Cash EBITA | O=C-N | 42.8 | 46.2 | 247.2 | 250.5 | |
| P | Adjusted cash EBITA | P=I-N | 45.2 | 46.2 | 282.1 | 283.0 | |
| Adjusted cash EBITA margin, % | P/A | 6.4 | 8.8 | 10.7 | 11.5 | ||
| Q | Net cash inflow from operating activities | Cash flow Statement | 45.1 | 34.4 | 353.9 | 343.3 | |
| R | Cash conversion, % | Q/I | 35.6 | 34.6 | 64.6 | 66.0 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
KEY PERFORMANCE INDICATORS
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| Line ID | Balance sheet key financials
NOK million | Source | Calculation | Mar 31, 2023 | Dec 31, 2022 |
| --- | --- | --- | --- | --- | --- |
| AA | Non-current and current loans | Financial position | | 639.0 | 544.9 |
| AB | Non-current and current lease liabilities | Financial position | | 811.6 | 733.8 |
| AC | Cash and cash equivalents | Financial position | | 147.7 | 204.7 |
| AD | Net debt | | AD=AA+AB-AC | 1,302.9 | 1,074.1 |
| AE | Net debt/LTM adjusted EBITDA* | | AE=AD/I | 2.4 | 2.1 |
| BA | Inventories | Financial position | | 15.0 | 12.7 |
| BB | Accounts receivable | Financial position | | 382.3 | 340.1 |
| BC | Other current receivables | Financial position | | 181.1 | 147.8 |
| BD | Accounts payable | Financial position | | 150.2 | 135.8 |
| BE | Other current payables | Financial position | | 276.3 | 313.1 |
| BF | Net working capital | | BF= BA+BB+BC-BD-BE | 151.8 | 51.7 |
| BG | Net working capital/LTM total revenue, % | | BG=BF/A | 5.7 | 2.1 |
| CA | Total assets | Financial position | | 3,931.0 | 3,607.8 |
| CB | Current liabilities | Financial position | | 703.8 | 661.2 |
| CC | Capital employed | | CC=CA-CB | 3,227.2 | 2,946.6 |
| CD | Return on capital employed, % | | CD=G(LTM)/CC | 6.9 | 7.2 |
- LTM – Last twelve months
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
SEGMENT KEY PERFORMANCE INDICATORS
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SEGMENT KEY PERFORMANCE INDICATORS
| NOK million | Jan-Mar 2023 | Jan-Mar 2022 | Change, % | Apr 2022-Mar 2023 | Jan-Dec 2022 |
|---|---|---|---|---|---|
| Norway | |||||
| Total operating revenue | 249.2 | 213.1 | 16.9 | 941.1 | 904.9 |
| EBITA | 30.6 | 29.1 | 5.3 | 135.7 | 134.2 |
| EBITA margin, % | 12.3 | 13.6 | -1.4 pp | 14.4 | 14.8 |
| Adjusted EBITA | 32.0 | 29.1 | 10.0 | 140.4 | 137.5 |
| Adjusted EBITA margin, % | 12.8 | 13.6 | -0.8 pp | 14.9 | 15.2 |
| Germany | |||||
| Total operating revenue | 251.8 | 157.0 | 60.3 | 907.6 | 812.9 |
| EBITA | 25.3 | 19.0 | 33.2 | 101.8 | 95.5 |
| EBITA margin, % | 10.1 | 12.1 | -2 pp | 11.2 | 11.7 |
| Adjusted EBITA | 25.3 | 19.0 | 33.2 | 131.2 | 124.9 |
| Adjusted EBITA margin, % | 10.1 | 12.1 | -2 pp | 14.5 | 15.4 |
| Sweden | |||||
| Total operating revenue | 110.5 | 85.5 | 29.1 | 451.8 | 426.9 |
| EBITA | 9.7 | 4.6 | 110.4 | 53.9 | 48.8 |
| EBITA margin, % | 8.8 | 5.4 | 3.4 pp | 11.9 | 11.4 |
| Adjusted EBITA | 9.7 | 4.6 | 110.4 | 56.0 | 50.9 |
| Adjusted EBITA margin, % | 8.8 | 5.4 | 3.4 pp | 12.4 | 11.9 |
| Denmark | |||||
| Total operating revenue | 97.1 | 70.7 | 37.4 | 349.4 | 323.0 |
| EBITA | 5.0 | -0.3 | -1,876.9 | 15.4 | 10.1 |
| EBITA margin, % | 5.1 | -0.4 | 5.5 pp | 4.4 | 3.1 |
| Adjusted EBITA | 5.0 | -0.3 | -1,876.9 | 12.9 | 7.6 |
| Adjusted EBITA margin, % | 5.1 | -0.4 | 5.5 pp | 3.7 | 2.4 |
| Corporate & other | |||||
| Total operating revenue | -4.0 | 0.0 | -5.3 | -1.3 | |
| EBITA | -13.6 | -9.1 | -47.0 | -42.5 | |
| EBITA margin, % | n.a. | n.a. | n.a. | n.a. | |
| Adjusted EBITA | -12.6 | -9.1 | -45.8 | -42.3 | |
| Adjusted EBITA margin, % | n.a. | n.a. | n.a. | n.a. | |
| Norva24 Group | |||||
| Total operating revenue | 704.6 | 526.4 | 33.8 | 2,644.6 | 2,466.5 |
| EBITA | 57.0 | 43.3 | 31.7 | 259.8 | 246.0 |
| EBITA margin, % | 8.1 | 8.2 | -0.1 pp | 9.9 | 10.0 |
| Adjusted EBITA | 59.4 | 43.3 | 37.2 | 294.7 | 278.6 |
| Adjusted EBITA margin, % | 8.4 | 8.2 | 0.2 pp | 11.1 | 11.3 |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
DEFINITIONS
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Definitions
DEFINITIONS AND EXPLANATIONS OF KEY PERFORMANCE INDICATORS
| Measure | Definition | Reason for use |
|---|---|---|
| Total operating revenue growth | Change in total operating revenue as a percentage of total operating revenue during the comparison period, i.e., the previous year or quarter. | Change in total operating revenue reflects the Company's realized operating revenue growth over time. |
| Organic growth in total operating revenue | Change in total operating revenue in comparable units after adjustment for acquisition effects, as a percentage of total operating revenue during the comparison period. | Organic total operating revenue growth excludes the effects of changes in the Company structure, which enables a comparison of operating revenue over time. |
| Acquired growth in total operating revenue | Change in total operating revenue as the percentage change from the comparison period of total operating revenue during the comparison period, driven by acquisitions. Acquired total operating revenue is defined as total operating revenue during the period attributable to companies which have been acquired during the most recent 12-month period and for these companies only operating revenue until 12 months after acquisition closing date. | Acquired growth – Total operating revenue growth reflects the acquired units' effects on total operating revenue. |
| EBITDA | Earnings before interest, taxes, depreciation and amortization. | EBITDA provides an overall picture of profit generated from the operating activities and is a supplement to the operating profit (EBIT). |
| EBITDA margin | EBITDA as a percentage of total operating revenue. | EBITDA margin is used to measure operating profitability and indicates the Company's operating earnings capacity. |
| EBITA | Earnings before interest, taxes and amortization. | EBITA provides an overall view of profit generated by operating activities and is a supplement to the operating profit. |
| EBITA margin | EBITA in relation to total operating revenue. | EBITA margin is used to measure operating profitability and indicates the Company's operating earnings capacity. |
| EBIT margin | Earnings before interest and taxes (EBIT) in relation to total operating revenue. | Operating margin enables comparisons of the Company's profitability regardless of capital structure or tax situation. |
| Non-recurring items | Items affecting comparability such as acquisition costs, integration costs and listing costs. | Enables comparison of profitability measures without items affecting comparability. |
| Adjusted EBITDA | EBITDA adjusted for non-recurring items. | Enables comparison of EBITDA without items affecting comparability with other periods. Adjusted EBITDA is a measure that the Company regards as relevant for investors who wish to understand income generation before investments in noncurrent assets and items affecting comparability. |
| Adjusted EBITDA margin | Adjusted EBITDA as a percentage of total operating revenue. | Adjusted EBITDA margin excludes the effect from items affecting comparability, which enables a comparison of the underlying operating profitability over time. |
| Adjusted EBITA | EBITA adjusted for non-recurring items. | Enables comparison of EBITA without items affecting comparability with other periods. Adjusted EBITA is a measure that the Company regards as relevant for investors who wish to understand income generation before investments in noncurrent assets and items affecting comparability. |
| Adjusted EBITA margin | Adjusted EBITA as a percentage of total operating revenue. | Adjusted EBITA margin excludes the effect from items affecting comparability, which enables a comparison of the underlying operating profitability over time. |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
DEFINITIONS
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| Measure | Definition | Reason for use |
|---|---|---|
| Adjusted EBIT | Earnings before interest and taxes (EBIT) adjusted for non-recurring items. | Adjusted EBIT (operating profit) excludes the effect from items affecting comparability, which provides an over picture of profit generated from the operating activities. |
| Adjusted EBIT margin | Adjusted operating profit as a percentage of total operating revenue. | Adjusted EBIT (operating margin) excludes the effect from items affecting comparability, which enables a comparison of the underlying business over time. |
| Cash capital expenditures | Lease payments for vehicles including interest and amortization of vehicle lease liability, rental payments for real estate and capital expenditures (investments in owned vehicles and equipment less disposals) | Cash capital expenditures is used as an alternative measure for the Group's capital expenditures to reflect that leasing agreements are capitalized upfront while the cash payments are done over the lease period. |
| Cash EBITA | EBITDA less cash capital expenditures | Cash EBITA provides an overall view of profit generated by operating activities and is a supplement to the operating profit. The measure is comparable to EBITA, but instead EBITDA less depreciation of fixed and leased assets, it is adjusted for the cash expenditures to such assets. This will show the impact of timing of CAPEX and the impact of financial lease on profitability. |
| Adjusted cash EBITA | Cash EBITA adjusted for non-recurring items | Cash EBITA adjusted for non-recurring items affecting comparability which enables a comparison of the underlying operating profitability over time. |
| Net debt | Total interest bearing liabilities less cash and cash equivalents. Total interest bearing liabilities consists of non-current and current loans, non-current and current leasing liabilities according to IFRS 16, and loans from shareholders. | Net debt is used to monitor the interest-bearing liabilities development and monitor the level of the refinancing requirement. The measure is also used as the numerator in the Net debt ratio used to monitor financial leverage. |
| Net debt/LTM adjusted EBITDA | Net debt in relation to twelve-month adjusted EBITDA. Pro forma EBITDA includes all operations within the Group for the full last twelve month period. | The Company uses the Net debt ratio to monitor the level of financial leverage. |
| Net working capital | Inventory, accounts receivable and other current receivables less trade payables and other current liabilities. | The measure shows how much net working capital is allocated in the operations and is useful to indicate how effectively net working capital is used. |
| Net working capital/operating revenue | Net working capital in relation to the pro forma rolling twelve-month operating revenue. | Net working capital ratio enables the Company to measure its net working capital over time. |
| Capital expenditures | Capital expenditures is defined as funds used by the Group to acquire, upgrade, and maintain owned physical assets such as property, buildings, vehicles, or equipment. Excluding acquisitions and divestments. | Capital expenditures is used to measure the required accounted invested funds to acquire, upgrade, and maintain the Company's physical assets. |
| Net cash inflow from operating activities | From the Cash flow statement. | Operating cash flow is used to monitor cash flows generated by operating activities. The measure is also used as the numerator in the calculation of cash conversion. |
| Cash conversion | Net cash inflow from operating activities in relation to adjusted EBITDA. | Cash conversion enables the Company to monitor how efficiently the Company manages operating investments and working capital as well as the operating activity's ability to generate cash flows. |
| Capital employed | Total assets less current liabilities. | Capital employed is a measure which the Company uses for calculating the return on capital employed and for measuring how efficient the Company is without taking goodwill generated in connection with acquisition into account. |
| Return on capital employed | EBIT in relation to Capital employed. |
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
HISTORY
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History
Although the oldest local branch of Norva24 was founded in 1919 in Norway as a family business offering UIM services with horses and carriages, Norva24 in its current form was created in 2015 through a merger of five local UIM companies in Norway, to bring a disruptive business model to and professionalize the UIM services industry. In connection with the establishment of Norva24, the Valedo Partners Fund II AB invested in the Group.
Current position
Norva24 is one of the leading European players in the UIM industry with strong market presence within all its Northern European markets, Norway, Germany, Sweden and Denmark.
During 2022 Norva24 exceeded NOK 2.6 billion in proforma revenues, strengthened the network to 76 branches, increased the number of employees to 1,632 and completed Norva24's 41st acquisition.
Norva24 operates in many different parts of the Underground Infrastructure Maintenance serving several different types of customers. UIM services are mission critical and essential for society..
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
VISION & CORE VALUES AND MEDIUM TERM FINANCIAL TARGETS
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Vision & Core values
"Our long-term vision is to build a European market leader and lighthouse in Underground Infrastructure Maintenance (UIM). Norva24's vision is to become the leading European operator in our industry and an inspiration to the UIM industry development in Europe"
Values and Guiding Principles
Let these values be guiding for our business:
Trust
We deliver what's been agreed
We are competent and deliver high professional quality and precision
We see and understand the customers' needs
We show decisiveness by getting things done, and seek help from others when needed to get the job done
Passion
We have passion for our job and will always help
We are focused at finding solutions and have a positive appearance when meeting customers and colleagues
We are uncomplicated and informal
We meet customers and colleagues with a smile
Medium term financial targets
Revenue growth
Target to achieve revenue of around NOK 4.5bn by 2025 while achieving an average organic growth per annum of at least in line with market growth.
Profitability
Target to achieve an adjusted EBITA margin of $14 - 15\%$ in the medium term.
Capital structure
Norva24's capital structure shall enable a high degree of financial flexibility and allow for acquisitions. Target steady state net debt ratio (including IFRS16 lease liabilities) should normally not exceed 2.5x adjusted EBITDA, other than temporarily as a result of M&A. Temporarily is defined as maximum four calendar quarter sequentially.
Dividend Policy
As part of Norva24's vision and strategy, it intends to reinvest cash flows into growth and expansion initiatives, including acquisitions, and as such does not expect to pay annual dividends to its shareholders in the medium term.
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
SHAREHOLDER INFORMATION & FINANCIAL CALENDAR
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Shareholder information & financial calendar
TOP 20 OWNERSHIP STRUCTURE MARCH 31, 2023
| Shareholder | Total shares | Ownership, % |
|---|---|---|
| Valedo Partners Fund II AB | 52,716,567 | 28.86 |
| Swedbank Robur Funds | 17,028,799 | 9.32 |
| Nordstjernan | 16,845,752 | 9.22 |
| Invest24 AS | 12,519,326 | 6.85 |
| T. Rowe Price | 8,654,985 | 4.74 |
| Capital Group | 6,374,903 | 3.49 |
| Life Insurance Skandia | 3,647,763 | 2.00 |
| Royce & Associates LLC | 3,581,977 | 1.96 |
| AQP Holding AS | 3,446,536 | 1.89 |
| Carnegie Funds | 2,958,781 | 1.62 |
| JKT Birkeland Invest AS | 2,940,574 | 1.61 |
| Skandia Funds | 2,886,655 | 1.58 |
| Fallang Holding AS | 2,829,694 | 1.55 |
| Isco AS | 2,205,604 | 1.21 |
| Arild Bødal | 1,829,095 | 1.00 |
| Jens Backhaus | 1,704,943 | 0.93 |
| Flagstad Invest AS | 1,695,613 | 0.93 |
| Evli Fund Management | 1,227,424 | 0.67 |
| Mats Lönnqvist | 1,202,962 | 0.66 |
| Nordnet Pension Insurance | 1,178,509 | 0.65 |
| Other | 35,206,278 | 19.27 |
| Total | 182,682,740 | 100.0 |
Contact information
Dean Zuzic, Group CFO
Tel: +47 414 33 560
Stein Yndestad, Chief Corporate Development Officer
Tel: +47 916 86 696
Sture Stölen, Head of IR
Tel: +46 723 68 65 07
Financial calendar
Annual General Meeting 2023
May 25, 2023
Interim report January-June 2023
August 22, 2023
Interim report January-September 2023
November 21, 2023
NORVA24 | INTERIM REPORT JANUARY-MARCH 2023
NORVA24
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Norva24
Grandeveien 13, 6783 Stryn, Norway
www.norva24.com