Welcome to Solwers Financial Statement Release webcast. My name is Jasmine Jussila. I'm the head of Group Communications at Solwers, and we are here today with Solwers CEO, Stefan Nyström.
Hello.
CFO, Teemu Kraus.
Hello.
The agenda for today is following: Stefan will first share the business review for 2023 and events after the financial year, and then Teemu will walk you through the financial review 2023, and in the end, there is outlook and strategic targets. During the webcast, you have a chance to present questions in the chat, and in the end, we will have time to go through them. Stefan, go ahead.
Thanks. First, I would like to apologize for the delay in our reporting, but now we are ready, and we can present our review. First, a few words about Solwers. You can now see on the right side our companies that belong to Solwers. We are all Solwers, and actually we have a different concept compared to other consulting companies. We are not integrating our subsidiaries. They are actually operating on their own brand and identity. And we think this is good for the business, and it's also good for the working environment, that we don't have a lot of organization changes and things like that. We are operating in two countries. We have now 26 subsidiaries and more than 700 professionals.
If you go to the numbers for 2023, we had a revenue growth of 5.1%, of which about half was organic. Growth and profitability was on a good level, but a little bit below our mid-term targets. We also had the weak Swedish krona that has impacted our revenue, and then the equity ratio was above the midterm target. We made four acquisitions and one merger, and among the staff, we had an eNPS of 33. That is actually considered as very good. We have a new CFO and new head of communications, and they are both here today, and they have already presented themselves.
In brief, last year, the order stock has decreased, but it's still on a good level. On the other hand, our invoice rating has increased, and that is, of course, positive. And then we have a very wide customer base, which actually help us to survive in this a little bit challenging times. 25 offices in two countries helps keep the workload up. We are actually doing about 3,500 projects a year, and of these projects, 2,500 are below EUR 10,000, which means that our workload is divided into very many small pieces, which I consider very good. And about half of the sales come from the public sector, and the half of that is actually infrastructure projects.
Then if you look at how our revenue has been growing, we had. We didn't have a very fast growth this year, but we have since year end, we have already had acquisitions for more than EUR 10 million. These are, of course, not in the figures for last year, but we can see that on average, we have been growing at 27.5% in three years every year, and actually our target is 20%. So we are good on that target. Then if you look at the EBIT, it has grown, but this year it was a little bit lower than last year, and mostly because of quite tough times on the market that we have seen on the market.
Then, equity ratio has remained on same good level actually since we started. Here about our acquisitions. TCG Nordic was in the beginning of the year. It's a rail and transport consulting service, so those who needs trains can call TCG Nordic, and there will be project management, quality management, documentation management, et cetera, to actually make these train deals. Then we have a small architectural company in Kokkola, Finland, which actually will be merged into Lukkaroinen, and the thinking is to strengthen their competencies in this region. Then we have North 68 Consulting in Kiruna, Sweden. They are mainly working for LKAB and doing project management.
And then we have the last is, Insinööritoimisto Plan-Air in Oulu, and that will be, merged into our existing, Meskanen Oy in Oulu, and will strengthen our HVAC, competencies in that region. Then something about our projects. We are, of course, living from projects. That is what we do, and we said that we had 3,500 active projects and, now here is some of them, of course, a little bit bigger ones. We have been involved in Svenska kraftnät, strengthening their grid for electricity transfer. And, it's our company, ELE Engineering in Västerås, that has been doing-- we working with this client. There is a lot of, such projects in Sweden.
The demand for electricity is all the time growing, and the transmission and distribution is a bottleneck. How to move the electricity from point A to B, or from North Sweden to South Sweden, for example. And then, Green Steel project, it's actually a manufacturing of steel and a process that will be less CO2 or will be less emission of CO2. And then, there are many similar projects there in north of Sweden, but this is one there where we are involved. H2 Green Steel is the name of the project. And then, we are also doing infra projects. Here you can see a typical crossing level crossing that is changed to two-level crossing.
There is a lot of both rail project and also rail design and road design. These kind of crossings, totally in Finland and Sweden, are about 9,000 or more. So there is a lot of them still left. Also the track is in both Finland and Sweden in many places not in good shape, and there is an example of a renovation of a track in Finland. Then probably those who are living in the capital region of Finland knows this project will which will be built in Espoo, Finland. In Keilaniemi, there will be a hotel, the high one, and there will be this conference center, the lower one, and then there behind, also the residential house.
It's our architects, ADT, who are actually working on this high-rise building. You have... Maybe you can see that it's a little bit similar to the Clarion Hotel in Jätkäsaari, and that is actually also from our ADT design. So, we are very much looking forward to see this project rise. Then we are doing a lot of school projects. Here is two different schools, actually close to each other, and, we have ongoing school projects, about four right now. And other type of, public buildings what we are designing is hospitals. We are involved in the Laakso Hospital, which will be continuing for a long time. And, then we are also involved in Old Vaasa Hospital, which actually, started recently, and there we have a lot of, different Solwers companies involved.
We have Lukkaroinen, who is our, let's say, the architectural design for hospitals. They are very famous for that. So they have the architectural design, and then we have for HVAC design, Meskanen, and Zenner for acoustic, and Finnmap Infra for infra design. And then if you look what has happened after this year, the year we are present in. As I said, we had many acquisitions in the beginning of this year, and these acquisitions represent more than EUR 10 million revenue, which will come next year, this year, sorry. And the first one was WiseGate. They are actually consulting in engineering for energy and process industry. They're about 50 persons.
They have also a company called Demab, which is actually producing small kind of electrical equipment for industry. Then we have Kari Pantsar, which is in environmental consulting. There we have a minority, a third of the company, but we think that this competence is for us, will be for us, and is for us, very important. And then Relitor in Luleå, North Sweden, they are actually performing plant engineering. And actually both Relitor and WiseGate and our existing company, ELE, will support each other and actually strengthen our services in engineering for the energy sector and industry sector. And then I will give the word to Teemu-
Thank you
for the finance, financial review.
So Solwers finance 2023. In the big picture, comparison to 2022, we can see that we were able to grow on top line, but did not quite reach the last year level on bottom line, even though we went quite close. Turnover was EUR 66 million, and in H2, it was EUR 32.8 million. Financial year growth in revenue was 5.1%, and in H2, it was 8.5%. In H1, the growth was 1.9%. Drivers for the growth were, of course, acquisitions. We had four of them, two in Finland and two in Sweden. But then also in the second half, we saw slightly improving market. In absolute terms, H1 was higher than H2, but we need to remind that July is typically a very low month.
Financial year EBITDA was EUR 8 million and 12%, and H2 3.9 million and also 12%. Financial year EBITDA was EUR 7 million and 10.7%, while H2 was EUR 3.5 million, and again, as H2 full year 10.7% . There was a slight drop from last year, when EBITDA was 11.5%. Financial year EBIT was EUR 4.8 million and 7.3%, while H2 was 3.4 million and 7.2%. Net result was EUR 3.2 million, while H2 was EUR 1.7 million, and at least our earnings per share were EUR 0.32. Turnover per employee grew to 108,000 EUR compared to last year, 105,000 EUR per employee.
Also, billing rate had a good evolution, and it grew from 80 to 81.5%. Equity added up to EUR 40.4 million. Net debt increased from EUR 30.4 million last year to EUR 17.4 million, and equity ratio was 46.4%. Personnel increased by 53 from 2022, being 635 in 2023. Average was 611. Profit and loss, as already stated, revenue was EUR 66 million. Other operating income, EUR 1.1 million. Material and services fell by 2%, where especially external subcontracting reduced. Personnel expenses increased 8.3%, and it ended up to EUR 42 million, while average number of employees increased by 1.8%. Depreciation remained on last year level and being EUR 3.1 million.
Operating profit fell by 4.8% and ended up to EUR 4.8 million. Financial net expenses increased in 2023 by EUR 0.5 million, driven by interest expenses increase. Net expenses were EUR 1 million. Financial year taxes were EUR 0.4 million less than 2022. Balance sheet assets. In 2023, total assets grew by EUR 5.4 million and ended up to EUR 87 million. Intangible assets grew by EUR 1.6 million, and current asset receivables increased by EUR 2 million. Current asset investments grew by EUR 0.6 million. Cash and cash equivalents decreased by EUR 2.5 million, but still remained on a high level, facilitating our acquisition strategy to continue. Total current assets remained on a last year level. Liabilities. In liabilities, equity increase was EUR 2.4 million and ended up to EUR 39.9 million.
Non-controlling interest fell by EUR 0.1 million and is now EUR 0.5 million. In December, a bank loan of EUR 2.3 million was drawn down. Net effect in non-current liabilities after loan repayment and other items was an increase of EUR 0.4 million. Current liabilities increased by EUR 2.7 million, driven by change in IFRS 16 application. Liabilities in total grew by EUR 2.7 million and ended up to EUR 46.6 million. Cash flow. Net cash flow from operating activities remained at a good level, EUR 5.2 million, where paid taxes amounted EUR 0.6 million, and the change of current receivables was -EUR 1.1 million, and total working capital effect was EUR 1.3 million. Net cash flow from investment activities included an acquisition-related cash flow of EUR 3 million.
Net cash flow from financing activities totaled EUR 3.7 million. Total cash at the end of the year was EUR 60 million and reduced by EUR 2.5 million. We also introduced cash pool during H2, and this will improve our cash management tools in future. Okay, thank you. I give the speech back to Stefan.
Thanks. I think this is not the one. I think everybody in this business knows that the forecasting is now challenging, and there is a short market visibility. We still expect the workload on the market to drop in some areas for the next six months in Finland, but the general pickup in the market can be anticipated towards the end of 2024, when the interest rate starts to drop and investment willingness increase. As we know, the forecast has been that this interest will go down, and we see already that new orders are increasing in many segments. Actually, the last barometer in Finland shows that it's actually new orders are growing in all segments, infra, industry, and office.
Also in Sweden, there is a positive belief in increase of new orders. But on the other hand, there is a challenge, at least in Finland, for about the already announced infrastructure project in Finland because of the problems that the government had to with savings. So there might be some changes in these already made decisions. Then if we look at... We believe that industrial investments are expected to increase, especially in North Sweden. There is actually the problem, more or less, shortage of skilled professionals. And in other regions, there might be easier to get professionals, but in North Sweden, it's very difficult.
And then we believe that, or then we think that, that in the market there will be a variety of new energy production alternatives. It's energy storages, power transmission, grids, and automation solution will increase the demand for engineering and project management service in these fields. And then, of course, the EU regulation in biodiversity will- is tightening and, and opens new business opportunities. Circular economy projects are upcoming. And then if we look at... Sorry. Then if you look at Solwers outlook 2024, of course, we are still, living from the megatrends: urbanization, the green transition in Europe, and of course, the tightening regulation of biodiversity. So I, actually, this will help us, many of our companies, to, to, to have a good workload.
We will continue with acquisitions that support our existing business and focus area where the new production is booming: green transition, energy, automation, power transmission, et cetera. And Solwers has a good backlog in infrastructure projects, as well as long-lasting project in hospital and school design. So in that sense, it looks quite good. And then we have this wide client base. Every subsidiary have their own clients, and mainly these managing directors of these small companies has been there for a long, long time, and they are entrepreneurs, so we have a very huge client base. Our biggest, biggest clients are Trafikverket in Sweden, Väylävirasto in Finland, LKAB North Sweden Mining Company, and then Senaatti Properties in Finland.
As said before, we are 50%, working for the public sector projects, of which half is infra projects. We have a diverse service portfolio consisting of many small projects, and as said before, 70% of the projects are below 10,000 sales value. We continue to manage our businesses by operating in multiple locations in at least two countries. Additional to that, we also have different kind of services. We are not... We have 26 companies, and they are not all providing the same kind of services. They are technical consulting, project management, finance services, et cetera. We think that the business climate is expected to improve towards the end of 2024, if the general market pickup takes place.
And I think we see already some signs that this year at least, will be-- seems to be at least the beginning better than the last year. We will, our mid-term financial targets will remain on the same level. Revenue growth, this is, average by year. We saw earlier that we are 27, last three year on average, and it will be the target more than 20. We have still the EBITDA target, more than 12. We have not reached 12, but not so far away. And then, equity target, we are better than the target. So this will remain as before. And then, I think I will give back to Teemu, and he can present the reporting for 2024.
Okay.
Go ahead.
So, our financial statements will be reported, at least on 29th of March, and annual general meeting will be held on the 25th of April. What comes as a difference compared to 2023 is that we will also publish business reviews for quarters. So 31st of May, we will have the business review for January, March, and 29th of November, we will have the business review January, September. Half-year report will be published on 13th of August. Thank you.
Thank you, Stefan and Teemu. We have a couple of questions. Let's start. A question for Stefan: Why is the number of small projects significant?
Well, it's typically when we have a recession and different difficulties with the investment willingness, the big projects will actually be postponed or canceled, but the small ones will continue. This is my experience for the last 20 years, that this is how it goes. The big ones stop first, and then the small will continue. So that's why it's from risk perspective, it's good to have many small, it will secure our workload.
... Okay, and then a question for Teemu: What is the revenue split between Finland and Sweden after the recent M&As?
We have not calculated the split so far and published it.
Can you comment what is the reason other operating income grew significantly from the levels seen before and compared to the comparison period?
There has been some changes in the conditional acquisition debt, and that has a effect on profit and loss.
Okay. A question for Stefan: What is the reason that you have managed to grow profitably to a group of 26 companies?
I think there are actually two things. Our concept with not integrating anything else, but the business itself. We have a common management team in both Finland and Sweden, and we are there focusing on mainly on common sales, common projects, what we can actually offer together, but we are not integrating the systems and the on the admin side. Of course, so much that we can report, but otherwise we will not integrate the organization and things like that. That is one thing, and the other thing I think is that we have a very good acquisition strategy, where we actually have very good incentives for those who are selling the companies to continue to make good profit. So I think these two actually is the main reason for.
Okay. Then a question for Teemu, final question that we have time today is: What is the driver of lower IFRS 16 payments in your cash flow statement? Have you combined office spaces in some businesses?
We have made a change of application of IFRS 16 regarding rental agreements that are valid without any expiration date, and that's the reason why there's a change for last year.
Okay. Thank you.
Thank you.
Thank you.