Continued growth and profitability at a good level
Solwers Plc’s Financial Statements Release 1 January–31 December 2023
Solwers Plc Company release March 11, 2024 at 10.05 a.m. EET
This release is a summary of Solwers Plc's financial statements bulletin January-December 2023.The full financial statements bulletin is attached to this company release and available on the company's website at https://solwers.com/for-investors/reports-and-presentations/
The figures for the financial year (1 January–31 December 2023) are unaudited (IFRS)
Continued growth and profitability on a good level
July–December 2023 in brief
The figures in brackets refer to the corresponding period in 2022 and are expressed in the same unit, except where otherwise noted.
- Revenue was EUR 32.8 (30.2) million, which is an increase of +8.5% vs on the corresponding period last year
- EBITA was EUR 3.5 (3.4) million, which is 10.7% (11.3) of revenue
- EBIT was EUR 2.4 (2.3) million which is 7.2% (7.6) of revenue
- The invoicing rate was 81.3% (79.5)
- Earnings per share (EPS) was EUR 0.18 (0.17)
January–December 2023 in brief
- Revenue amounted to EUR 66,0 (62,8) million, showing a year-on-year increase of EUR 3.2 million, which is +5.1% (40.6)
- EBITA was EUR 7.0 (7.2) million, which is 10.7% (11.5) of revenue
- EBIT was EUR 4.8 (5.1) million, which is 7.3% (8.1) of revenue
- The invoicing rate was 81.5% (80.0)
- Equity ratio was 46.4% (46.7)
- Equity ratio was above the mid-term target, revenue growth and profitability below the mid-term targets
- The execution of the growth strategy continued with four acquisitions: two in Finland and two in Sweden.
- Earnings per share (EPS) is EUR 0.32 (0.38)
- The Board of Directors proposes to the Annual General Meeting a dividend distribution of EUR 0,064 per share to be paid, corresponding to EUR 640,281.92 in total.
The deviation in the reconciliation calculation of the change in equity announced on 27 February 2024 has been identified and allocated in significant parts. The remaining unallocated portion of the equity reconciliation is EUR 242 thousand, which is considered non-material by the company. Also, it will not impact the Auditor's statement.
Key figures
CEO Stefan Nyström’s review
Throughout the years, Solwers has shown consistent performance and strong growth. In just three years, we have doubled the revenue and profitability is close to the mid-term target. In 2023, despite a challenging market environment, our performance was again good. Our EBIT improved in the second half of 2023 where we also made several acquisitions to support the existing subsidiaries.
In 2023 Solwers’ revenue was on a good level and grew by 5.1 per cent to EUR 66.0 million, of which around 50 per cent was organic growth. Profitability and order stock were also at a good level, although the revenue was negatively impacted by the weak Swedish krona. Equity ratio remained above the mid-term target while growth and profitability were behind the mid-term target.
Solwers’ concept of light integration of subsidiaries retains the unique subcultures, offering space for creativity and innovation. The concept enables the agility of a small company while being part of a bigger group of diverse competences. In 2023 we conducted a job satisfaction survey collectively in the group. The employee net promoter score (eNPS) was +33, which is classified as very good. We will do our best to further improve job satisfaction as we acknowledge the positive impact on our performance. Light integration is considered as one of the factors attracting companies to join Solwers over other options.
In total, four acquisitions and one merger took place in 2023. We were happy to welcome Transport Consultancy Group Nordic AB, North 68 Consulting AB, Arkman Arkkitehtuuri Oy and LVI-Insinööritoimisto Plan-Air Oy to become part of the Solwers team. The last three acquisitions were executed by Solwers subsidiaries to strengthen their business position with a solid client base and experienced professionals. Kalliosuunnittelu Rockplan Ltd merged with Finnmap Infra, enabling a wide range of services for large infrastructure projects under one roof.
In addition, two other acquisitions were lined up in Sweden for the beginning of 2024: WiseGate AB and Relitor Engineering AB. Their combined turnover in 2023 is estimated to be around SEK 117 million. Furthermore, Solwers agreed on a shareholding partnership in an environmental consulting company Kari & Pantsar Oy in Finland.
Broad client base and interesting projects throughout the year
Solwers companies have in total over 500 active clients, more than 3,500 ongoing projects and over 150 frame agreements. Most of the projects, around 70 per cent, are below EUR 10,000 in sales value, thus less prone to interruptions, postponements or price competition caused by economic fluctuations. Some of the most significant clients are Trafikverket - Swedish Transport Administration, Väylävirasto - Finnish Transport Infrastructure Agency, LKAB and Senate Properties.
About half of Solwers’ revenue comes from public projects and the other half from the private sector. The Infra projects represent around half of the public sector project revenue.
Solwers’ subsidiaries are involved in many projects related to the green transition. An interesting project to mention is Solwers company Licab AB assisting H2 Green Steel AB in the upcoming low-emission steel plant project in Sweden. Licab provides project management, links the operations and constructions teams, plans, drives, coordinates the sub-projects, and offers project management of the headquarters. Licab also designs the railway solutions and offers technical solutions for the project.
ELE Engineering AB has been involved in several projects that strengthen Sweden's national grid, which connects wind farms, solar power plants and battery energy storage systems (BESS).
An example from Finland is an energy-efficient planning is the Original Sokos Hotel Royal, opened in Vaasa in February of this year. Solwers company Polyplan, together with the client and developer organization, has been brainstorming the content of the project right from the project and draft design phase. In addition to the main, architectural, and interior design (Huippu spa facilities) carried out by Polyplan, the project utilised the extensive know-how of other Solwers companies: Contria Oy was responsible for the structural design of the site, Insinööritoimisto W. Zenner for the acoustic design, and Finnmap Infra/Rockplan consulted on rock construction issues.
Some of the interesting infrastructure projects in Finland include Laurila-Haukipudas track renovation by Finnmap Infra. The track section of 90 km is exceptionally long and geotechnically challenging. It includes several soft-lands and frost protection sites. Finnmap Infra plans track geometry and drainage and improves grade crossing safety. Another big infrastructure project is removal of 15 grade crossings between Jyväskylä-Pieksämäki, including road design for the new connections, design of a total of 10 bridges, geotechnical design, water drainage planning as well as planning of cable transfers, traffic control, lighting, and the fairway environment. Both projects, assigned by The Finnish Transport Infrastructure Agency are scheduled to be completed in 2025.
Lukkaroinen Architects has been involved with several large hospital and school design projects in 2023, including Laakso Hospital, Old Vaasa Hospital, Ahmo School Center and Siilinlahti Elementary School. The Old Vaasa Hospital project also involves several other Solwers companies, HVAC by LVI-Insinööritoimisto Meskanen, acustic design by Insinööritoimisto W. Zenner and infra design by Finnmap Infra.
Continued growth strategy
Solwers continues to implement the growth strategy, which is mainly based on acquisitions but also organic growth. The acquisitions focus on areas where new production is booming, such as energy, automation, and power transmission. Many of these are related to security and the reduction of CO2 emissions. Other strategic competences complementing the service portfolio are also considered.
Strategy and Mid-term targets
Solwers’ vision is to be the preferred partner for its customers in the visionary and sustainable design and engineering. The company’s goal is to continue to grow and expand in at least two countries.
The growth strategy is based on acquisitions, organic growth, and the attractiveness as a good employer for professionals in various fields as well as continuous development and competence. The company aims to balance its sources of revenue so that significant part of its revenue comes from public and infrastructure projects.
The company maintains its mid-term financial targets as follows:
· Growth: Revenue growth over 20% (12 months)
· Profitability: EBITA margin over 12%
· Equity ratio: Over 40%
Market outlook
The current market visibility is short, which makes forecasting challenging.
In Finland, the workload is expected to drop in some areas for the next six months. However, the market is anticipated to pick up towards the end of 20241 if the interest rates drop and the willingness to invest increases.
There is an increase in new orders in multiple segments both in Finland and Sweden, such as infrastructure, industry, and office projects.1,2 However, the Company anticipates that possible challenges in public finance can have an impact on the infrastructure projects in Finland whereas in Sweden the start of the infrastructure projects have been accelerated by the government.
The tightening EU regulation regarding biodiversity will open new business opportunities. Circular economy projects will start to push through.
We see that the transition to fossil-free energy and industrial production will keep growing. A variety of new energy production alternatives, energy storage, power transmission grids and automation solutions will increase the demand for engineering and project management services in these fields. We anticipate the industrial investments to further increase, particularly in North of Sweden, where shortage of skilled professionals remains to be a challenge.
Our business sector has suffered from a chronic shortage of skilled professionals over the past decade. Due to the challenging market climate, some layoffs have taken place but the share of laid off professionals is still relatively low in the consultancy and planning sector.1,2
Sources: 1Suhdannekatsaus 01/2024 – SKOL (Teknologiateollisuus), 2Investeringssignalen Februari 2024 – Investeringsföretagen.
Solwers outlook
Solwers’ business is supported by the megatrend of urbanization, the green transition in Europe, tightening regulation on biodiversity, self-sufficiency in energy production, and especially in Sweden the increased orders of the defense equipment industry which create new business opportunities.
In the ongoing year 2024 the acquisitions continue to support our existing business. We focus on areas where new production and investments are booming such as energy, automation, and power transmission.
Solwers has a good order backlog in the public sector and infrastructure projects and long assignments also in hospital and school design projects. The company has a wide client base and a diverse service portfolio - around 70 per cent are small, under EUR 10 000 projects. In addition, we continue to manage business risk by operating in multiple locations in at least two countries.
Solwers’ business climate is expected to improve towards the end of 2024 with the general market pick-up.
The Board’s proposal for the distribution of profit
At the end of the financial year 2023, Solwers Plc’s distributable funds amounted to EUR 37,367,260.68, of which the loss for the financial year was EUR 348,380.72.
The Board of Directors proposes to the Annual General Meeting that the loss for the financial year be transferred to retained earnings and that a dividend of EUR 0.064 per share, corresponding to EUR 640,281.92 in total, be paid from retained earnings.
Financial reporting
The Annual Report 2023, Financial Statements and the Report of the Board of Directors for 2023 will be published as a company release latest on 29 March and will be available digitally on the company website at https://solwers.com/for-investors/reports-and-presentations.
The Annual General Meeting will be held on April 25, 2024. The official notice of the AGM will be presented later.
Solwers publishes three interim reports in 2024:
31.05.2024 Business Review January-March
30.08.2024 Half-year Report for January-June
29.11.2024 Business Review January-September
Webcast
The company will hold a briefing in English for investors, media, and analysts on March 11, 2024 at 13:00 am EET. The webcast can be followed by registering at https://solwers.videosync.fi/financial-statement-release2023/register. Audience may submit questions through the webcast chat. A recording of the webcast and the presentation materials will be subsequently available at https://solwers.com/for-investors/reports-and-presentations/.
Espoo, March 11, 2024
Solwers Plc
Board of Directors
For further information, please contact:
Solwers Plc, Jasmine Jussila, Head of Group Communications, tel. +358 40 500 4760
Certified Advisor: UB Corporate Finance Oy, ubs@unitedbankers.fi
Solwers Plc
Solwers is a growth-oriented group of expert companies. Solwers Plc acts as a growth platform for its subsidiaries and challenges the traditional practices of the built environment consulting industry. More than 25 Solwers companies operate under their own brands and offer a wide range of design, engineering, and project management services. The group employs over 700 experts in Finland and Sweden.
Distribution:
Nasdaq Helsinki
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