Sitowise’s Half-year Report January – June 2021: Strong Profitability, Record High Order Book

Sitowise Group Plc, Half-year Report January 1 – June 30, 2021, 25 August 2021 at 08.30 am (EEST)

Q2: STRONG PROFITABILITY, RECORD HIGH ORDER BOOK

Highlights from April – June

• Order book increased by 20 percent and amounted to EUR 140 (117) million
• Net sales increased by 8 percent to EUR 46.5 (43.2) million
• Adjusted EBITA was EUR 5.9 (7.2) million, or 12.7 (16.6) percent of net sales
• Sitowise acquired Enco Oy, who are specialists of digital real estate management in Finland
• Personnel survey conducted in May showed a strong trust in Sitowise’s future success and a high satisfaction of supervisors’ work

Highlights from January – June

• Net sales increased by 7 percent to EUR 89.3 (83.3) million
• Adjusted EBITA was EUR 10.6 (12.3) million, or 11.9 (14.8) percent of net sales
• Net debt/adjusted EBITDA declined to 1.5 (2.2) x
• Listing on Nasdaq Helsinki Ltd’s main list in March
• Five acquisitions strengthened Sitowise's position in digital solutions and in sustainability services both in Finland and Sweden
• 94 percent of Sitowise’s clients feel that the COVID-19 pandemic has not impacted the quality of the services

CEO Pekka Eloholma

Sitowise’s order book grew to a record high also in the second quarter due to market revitalization and active sales work. The order book grew in all business areas in Finland and remained on the previous, good level in Sweden. Our order book was 22 percent higher compared to the year end of 2020. Sitowise’s clients both in public and private sector have become more active. Uncertainty is still visible in the market, which is partly due to increased material costs in the construction industry.

April–June was in line with our expectations. Our second quarter net sales of EUR 46.5 million grew 8 percent compared to last year, and we reported a strong adjusted EBITA of 5.9 million euros, which was 12.7% of net sales. The profitability was lower than last year, but this is explained by the exceptional nature of spring 2020. At that time, the COVID-19 pandemic shifted the focus fully to project execution, as calls for tenders waned, and personnel vacations were postponed due to COVID-19 restrictions. This increased the number of working hours and the utilization rate above normal levels.

As expected, our utilization rate improved significantly in the second quarter from the first quarter of 2021, increasing from 75 percent to 78 percent. Towards summer the continued market revitalization affected the utilization rate favorably. The utilization rate was temporarily lowered by Sitowise’s IPO in the beginning of the year.

The most significant new projects during the second quarter include the renovation of Itsenäisyydenkatu bridge and station tunnel in Tampere, Finland, where Sitowise’s Buildings and Infrastructure businesses are both involved. Respectively, Sitowise’s Digital Solutions business area entered into a significant software solutions delivery agreement with Landis+Gyr, who have been the market leader of energy management solutions for over 125 years.

According to the personnel survey conducted during spring, our specialists’ satisfaction has remained high. Despite of the COVID-19 pandemic’s effects on work, our personnel’s willingness to recommend Sitowise (eNPS score) increased by 12 percent and was 28. According to the personnel survey – which reached a high response rate of 80 percent – Sitowise’s strengths are especially the highly rated supervisor work and our specialists’ strong confidence in the company’s future. The results prove a strong commitment of our personnel.

Based on our strategy, we seek growth both especially in Sweden and digital business. The Infracontrol acquisition, which was prepared during the review period and completed in July, furthers our goals in both areas. The Swedish company Infracontrol provides real-time digital solutions for traffic and infrastructure, offering solutions for over 120 Swedish municipalities as well as the national transport and infrastructure authorities in Sweden. The acquisition further expands the market for Sitowise’s digital expertise. We also strengthened our wide range of special expertise in Finland when the digital real estate management specialist Enco Oy joined our group. We continue executing our growth strategy actively both in Finland and in other Nordics.

Key figures

*) Not comparable because of the changes in number of shares due to the initial public offering.

Market outlook

The stable growth in the demand of design and consulting services to create sustainable societies is supported by megatrends such as urbanization, renovation backlog, sustainability, and digitalization.

In the short-term, there is still uncertainty related to market development as well as the initiation and progress of projects. However, the market revitalization noticed in the beginning of the year has continued, as the clients have been more active, and the order book has been growing.

Guidance

Sitowise Group has not published financial targets for 2021.

Long-term financial targets

The Board of Directors of Sitowise Group has set the following long-term financial targets:

• Growth: Annual net sales growth of over 10 percent, including acquisitions;
• Profitability: Adjusted EBITA margin of at least 12 percent;
• Leverage: Net debt / adjusted EBITDA should not exceed 2.5x, except temporarily in conjunction with acquisitions; and
• Dividend policy: Sitowise targets paying a dividend corresponding to 30–50 percent of net profit.

Main events after period-end

The company’s Board of Directors decided on 29 June 2021, by virtue of the authorization granted by the unanimous resolution of the shareholders on 3 March 2021, to issue in a directed issue 250,000 new Sitowise shares to the company itself. The number of shares issued in the share issue corresponds to approximately 0.7 percent of shares in Sitowise after the registration of the new Shares. Sitowise carried out the share Issue to itself in order to have a sufficient number of shares available for use in reinvestments and as consideration in future corporate acquisitions and in the company’s incentive plans and to increase commitment of key personnel. The shares were registered in the Trade Register on 9 July 2021 and admitted for trading on the official list of Nasdaq Helsinki Ltd on 12 July 2021. As a result of the share issue, the number of shares in Sitowise increased to 35,415,927.

Sitowise announced on 9 July 2021 that it has acquired the Swedish traffic and infrastructure IT company Infracontrol. Infracontrol provides digital services and SaaS solutions currently for about 120 Swedish municipalities as well as the national transport and infrastructure authorities. Infracontrol employs 29 specialists and is a subsidiary of Sitowise Group after the acquisition.

Sitowise announced on 18 August 2021 that it has appointed Jonas Larsson as Head of Sitowise’s Swedish operations and member of the Group Management Team. He has an extensive experience of over 24 years in multiple executive roles and has a broad understanding about leading a project-oriented organization. Larsson will be responsible for the Sitowise’s business operations in Sweden and its comprehensive development. He will start in his new position no later than in January 2022.

Sitowise Group’s financial reporting in 2021

Planned publication dates for the Sitowise Group’s financial reports in 2021 are as follows: 

• Interim Report, January-September 2021, 10 November 2021

Webcast for analysts, media, and investors

Sitowise's CEO Pekka Eloholma and CFO Heidi Karlsson will present the company's results in English in a conference call and live webcast on 25/08/2021 starting at 11:00 am (EEST).

Webcast

The briefing will be streamed at https://sitowise.videosync.fi/2021-08-25-sitowise-q2. Written questions can be submitted through the webcast. Presentation material and a recording of the event will be available at www.sitowise.com after the event.

Conference call

It is also possible to dial-in to the briefing 5–10 minutes before the start of the event by calling a number below and entering the PIN code 90192211#

• Finland Toll-Free: 0800 523 163
• Finland Toll: +358 9 8171 0310
• United Kingdom Toll-Free: 0800 358 9473
• United Kingdom Toll: +44 3333 000 804
• US Toll-Free: +1 855 85 70686
• US Toll: +1 631 913 1422
• Sweden Toll-Free: 0200 883 685
• Sweden Toll: +46 856 642 651

International access numbers and further instructions available here.

Additional information

Pekka Eloholma, CEO, pekka.eloholma@sitowise.com, m +358 50 555 5590
Heidi Karlsson, CFO, heidi.karlsson@sitowise.com, m +358 40 759 3320
Minttu Vilander, Chief Communications and Corporate Responsibility Officer, minttu.vilander@sitowise.com, m +358 40 575 6660

About Sitowise

Sitowise is a Nordic expert in the built environment that offers sustainable design and consulting services. Sitowise operates in various size projects to enable more responsible and smarter urban development as well as smooth transportation. Sitowise offers its services in the following areas: Buildings, Infrastructure and Digital Solutions. Sitowise’s operations are primarily in Finland and Sweden, and it also has competence centers in Estonia and Latvia mainly serving Sitowise’s projects in Finland and Sweden. The group’s net sales was approximately EUR 160 million in 2020 and the company employs about 2,000 experts.

This release is a summary of Sitowise Group’s Half-year Report January–June 2021. The complete Half-year Report is attached, and also available on the company’s website at www.sitowise.com/investors/reports-and-presentations

The figures in this report are unaudited. Comparative figures for the corresponding period of the previous year are in brackets. This report has been published in Finnish and English. In the event of any differences between the English translation and the Finnish original, the Finnish report will prevail.