Good morning and welcome to this presentation of the Results for Multiconsult for the Second Quarter 2025 and the Half-Year 2025. My name is Grethe Bergly , I'm the CEO, and with me today is also our CFO, Ove Haupberg, who will take part of this presentation. Before I start, just a short reminder of who Multiconsult is. We are a Norwegian consulting and architecture firm with a century of history. With our primary operations in Norway, we also have a presence in Denmark, Sweden, Poland, and the U.K. With our projects, we have a footprint in 45 countries spanning from Europe, Africa, and Asia.
Our business is divided into four segments: Regions Oslo, which is the office and surrounding offices around the capital, Oslo; Regions Norway, which contains the remainder of the offices outside Oslo; segment architecture that contains our four architecture companies; and international, that has our Swedish subsidiary, Iterio, and Multiconsult Polska. In the market, we operate in four business areas: building and properties, mobility and infrastructure, energy and industry, and water and environment. In our portfolio, it's a roughly 50-50 split between public and private customers. In recent years, we have delivered a profitable growth based on a robust business model with a diverse project portfolio and strong professional environment. We have more than 3,900 employees in the company. Moving over to the summary for the quarter. In comparing Q2 2025 with the second quarter of 2024, it is largely affected by when in the year Easter falls.
The results in the quarter are somewhat weaker than we had wanted. There is a satisfactory growth in revenue and good sales, but the EBITDA margin picture is moderate, and we have some drop in the billing ratio, although in the second quarter in 2024, it was particularly strong. Over time, we have established effective cost control measures. The trend of cost increasing more than the revenue has intensified in this quarter. We continue to conduct measures to mitigate this issue. Looking at market and sales, it's been a good sale in the quarter, with sales well distributed across our various business areas, and we maintain a strong order book. Our strong position in hospitals is confirmed by our involvement in the Telemark Hospital project. Additionally, the positive trend in energy and industry is evident by successful assignment of a new hydropower plant and our involvement in carbon capture.
We are also pleased to announce that LINK has secured the project for a new headquarter for the Deep Ocean headquarters project in Haugesund, indicating some progress within the building and energy building and the property sector. Looking at people and organization, we continue to have a high level of engagement and employment satisfaction. We are 3,971 employees, and we also continue to hand out shares to people who enter the company. In the quarter, we have issued 3,840 shares. When it comes to the organization, we had the announcement that Kristin Augestad is appointed Managing Director of Multiconsult Norge. Up to now, I've had the role both as CEO and the Managing Director of Norway, and we are now strengthening the leadership of this very important subsidiary. I will maintain in my CEO role until the board has found my successor, as was announced in March.
Gunilla Borgen is also appointed Managing Director in Sweden, Iterio. She has a long history with the company and is well on her way to take a good position here. We also had the summer program in Multiconsult Norge with 100 students, and it's a great opportunity for us to get to know future employees. When it comes to excellence, Multiconsult Norge has again been awarded the preferred employer among technical students. It's an important position to have, making us able to recruit some of the best heads that leave the university. Anders Liese, you probably remember his name from the last quarter. We announced that he was nominated for the prize. This time, we can tell you that he actually won, and he now got the first prize in the EFCO Future Leadership Competition.
It's a great honor to the testament to Anders' professional excellence, and we are honored to attract individuals who aspire to excel in their profession. When it comes to strategy, we have announced that we are growing our footprint, and ViaNova is a great addition to our portfolio. We announced that we have issued a letter of intent to buy all the shares in ViaNova. ViaNova is a company we know for its quality and innovation, and this will be our largest acquisition since 2021. The acquisition is expected to be completed during the third quarter. Established in 1998, ViaNova has been involved with the entire life cycle of projects and has been one of the pioneers when it comes to using and developing digital tools in engineering. The company has a total of 129 employees, with the Sandvika office just outside Oslo being the largest one, housing 78 employees.
We have clear goals on what we want to achieve together. We're looking at enhanced expertise, where the combination of the experts from the two companies will build a strong position within road design, water and wastewater, and BIM digital collaboration. There is a good cultural match between the companies. We know each other. We have worked together for a number of years, and we share similar values and perspective to the company's contribution to society. Together, we will be a very attractive employer and have a good value proposition to our customers. It will also give us access to more growth opportunities. We have a little bit different positions within the markets that we can now share, and it gives us a more robust market position. As a part of a multidisciplinary group with four business areas, ViaNova will gain access to growth opportunities.
It will also strengthen us together on large projects. There are numerous opportunities within rail renewal and upgrades, and with ViaNova on board, we can gain access to capacity, broader expertise, and the ability to pursue projects independent where we previously partnered up with others. All these four points together will also then release some collaboration synergies, both when it comes to clients and skill development. With that, I hand you over to Ove.
Thank you, Grethe, and good morning. We will now have a closer look at the numbers for Q2 and then the first half of 2025. We start with Q2 numbers. Net operating revenue for the quarter ends at NOK 1.415.9 billion. That is a decrease of 0.6% from last year. In this, the organic growth is positive by 4.2%, and we have M&A activity building on top of that, a total of 1.1%. This is for M&A activities from last year and this year. The calendar effect is negative by 6% or NOK 85.5 million. This is the impact of four fewer working days in this quarter compared to the same quarter last year due to Easter moving into Q2 in 2025. The main drivers behind the growth are a higher number of employees, 186 or 231 FTEs.
We see this in the graph as an increased capacity, and we also have increased billing rates. That is part of the revenue effects. The positive growth in FTEs above the growth in number of employees is caused by the calendar effect also applied to our operations outside of Norway. The growth is offset by the calendar effect and by a lower billing ratio. As Grethe already has commented, the billing ratio was at the historic high level in last year's Q2. We also continue to see differences in the ratio between our different geographies and business areas. This billing ratio is also somewhat affected by the change in the project portfolio when you have some large projects that are ramping down, and we are faced with startup costs in new frame agreements.
Also, as reported in Q1, the expected normal level of project write-offs is unchanged and below 1% also this year on net operating revenues. This quarter, we had costs of a total of NOK 4.7 million reported as write-downs on the Sultra project. This is adding to a total of NOK 13.7 million this year. These are costs related to the preparations for the core trial planned to start in September this year. Bear in mind that the accounting risk on this is unchanged from last quarter. EBITDA in Q2 is NOK 67.4 million. That is a decrease from last year, NOK 118.3 million. The margin for the quarter is 4.8%, also decreased from 13% last year. The margin underlying adjusted for a calendar effect is 10.2%.
This EBITDA is impacted by the negative calendar effect, also increased benefit expenses caused by the growth in the number of employees and also normal salary adjustments, and also on other operating expenses, primarily due to higher IT costs. In this graph you also see this directly in this picture. As also commented in Q1, the discontinuation of the temporary employer's contribution resulted in reduced costs to the level of NOK 5 million this quarter compared to the same quarters of the two last years. On the cost side, we are somewhat affected by the new frame agreements that require new investments in offices and also mainly security rooms and also some expertise. Also, the role of the revenue group strategy and increased focus on growth has necessitated some increased costs.
To compensate for this and to ensure that we have a cost structure that is adapted to the development in rates and billing ratios, we are now reinforcing the focus we have always had on costs. This will require different measures in different parts of the organization as it's not a one-size-fits-all approach. Also, as Grethe commented, good sales, the order intake is about NOK 1.5 billion and a solid order backlog of about NOK 4.5 billion. The reported profit, NOK 40.3 million, is affected in comparison by an income on net finance last year that was on a revaluation of a put option obligation on the acquisition of ARLab, and the effect was NOK 25.4 million. This adds up then to earnings per share of NOK 1.45 for Q2. I guess you are waiting for the first half, and here it is.
We have net operating revenues for this first half of close to NOK 3 billion, NOK 2,939 million. That is an increase of 5.3% from last year. Organic growth also here 4.2%, and the M&A activity is 1.2%. Calendar effect, same number of calendar days, so the effect is only 0.1% due to the different values on the different days. The main drivers also are the first half, half number of employees has increased and also increased rates. We see also for this first a lower billing ratio. We explained Q2 on the previous page, and the first half rate was also affected by a higher focus on competence network activities in the first months of the year and also the low activity and few available hours the two first days of January. I ended up with an EBITDA of NOK 257.8 million, and the margin is 8.8%.
We have a solid order intake first half, NOK 3.2 billion. A highlight on development over time, and starting top left, we see that the growth in net operating revenue is slightly negative at 0.6%, and the rolling throw is also negative by 0.2%. That is in the blue line. Billing ratio 72.2%, decrease of 0.9%, but bear in mind we are still at a historic high level also when you compare to the previous quarters on this graph. Growth in number of employees, 4.9%. In combination with the change in other revenue effects and the employee benefits and other costs, we end up, as you see down left, EBITDA margin of 4.8% for this quarter. We take a closer look at our four segments, and all numbers are compared Q2 this year with Q2 last year.
To the left, Regions Oslo, net operating revenue NOK 527.8 million, and that is a decrease from last year of 1.8%. On that, we have a positive drive on the improved billing rates and improved capacity. That is 45 full-time equivalents. This is offset by the negative calendar effect. That is NOK 36 million and a lower billing ratio by 1.5%. We explain the differences on the first page. We also share the Sultra costs, 50% of this segment and segment's region Nordkapp. Compared to previous year, there is also a small negative effect due to a change in this segment when 15 full-time equivalents are moved to non-allocated. That is business support. Operating expenses NOK 476.3 million, increase of 7.1%, a normal increase on employee benefits and also on operating expenses by NOK 8.4 million. We end then an EBITDA of NOK 38.3 million in this segment.
Moving one step to the right, Regions Norway, net operating revenue NOK 583.4 million, an increase of NOK 8 million from last year. Also here, we see improved rates and increased capacity. It's 75 FTEs in this segment, but also offset effects on negative calendar effect. That is NOK 40 million and lower billing ratio that is reduced by 1%. Operating expenses have increased by 13.8%, and that is also including the acquisition of this company, Petterud Rasmussen. Employee benefits have increased due to ordinary salary adjustment and change in staffing level, but also recruitment of more senior personnel due to the growth and to have increased capacity. Other operating expenses also increased, and that is a number of one-time costs here due to preparing for the new frame agreements, increased capacity, and also new ways of working.
EBITDA in these segments ends then at NOK 29.9 million for this quarter. Two to go, going to architecture. Net operating revenue NOK 206.4 million. That is a decrease from last year. Also on EBITDA, we see a decrease from last year, but the underlying performance has really increased here due to a negative calendar effect of NOK 9.4 million, and that we last year had one-time effects on sale of our royalty rights in Denmark and also one-time write-offs. Currency is positive in the segment by NOK 3 million on net operating revenue and positive on EBITDA by NOK 1.2 million. Some small comments per company, starting with LINK Norway: underlying performance is in line with the same quarter previous year, and the market conditions still differ in this company due to geography and business areas. It is a challenging part of the country, especially in the Oslo market.
Like we saw last quarters, we characterize the Oslo market by delayed project startups, but bear in mind the sentiment is now slightly more positive than we saw previous quarters. Total capacity has also increased from last year, and there were no temporary layoffs at the end of Q2. Going to LINK Sweden, we are still faced with weaker results this quarter due to changes in the project portfolio in Northern Sweden, and this is causing reduced operating revenues and also billing ratios. The ability to keep more favorable rates in the remaining portfolio, also good performance in the Stockholm and Gothenburg market, that is very demanding at the moment for our competitors. In LINK, their market improvement in performance continues. We have improved rates and ratios and also solid cost control, and we have the ability to attract new customers due to our attractive competence in this company.
As already commented, we had a one-time effect last year on the sale of this royalty rights. ARLab has a significant improvement from last year. Improved rates, improved ratios, and also reduced costs. Here, no temporary layoffs this quarter. We see clear signs of improvements in the market, but it's a still demanding situation, high competition, and focus on rates. In total, an increase of 14 FTEs, and we are happy to inform there are no temporary layoffs in this segment. International, the last segment, net operating revenue has increased from last year by 7.6% and a positive currency effect of 4.3%, no calendar effect, and also an increase in EBITDA. The increased performance is both from Iterio and Polska. Last year, we had a negative effect on a bad debt provision that was reversed in Q4 last year. That is a part of the growth in this segment.
The financial position: you see on the left the change in cash, starting with a positive NOK 165 million at the beginning of January. We are creating a positive cash from our appropriation, NOK 297 million. We have a normal change in the working capital, but no increased risk there. We have invested NOK 48 million in combination with M&A activity and normal investment in the operation. We have paid dividend to a U.S. shareholder that is creating NOK 270 million of this negative cash from financing. We end up then with a negative cash situation, NOK 197 million. That is included in the graph to the right, where interest-bearing debt still is at a very low level, NOK 467 million. That means that the gearing ratio is just above 1 % and well in line with our strategy.
We also have refinanced the company this quarter with Nordea, and we have increased our capacity from NOK 1.1 billion to NOK 2.5 billion. That creates a solid fundament for further growth in the company. The last on cash, this quarter from the operation, positive cash on NOK 116 million that you can see in the blue diagram to the right. Sorry, net investment effect is NOK 16 million. So total cash created NOK 100 million, and rolling throw is NOK 455 million that you can see on top in the black. Grethe, I hand it back to you.
Thank you. Looking at the gross revenue, it's the, sorry, I have to get my notes. Gross revenue stays at the same level for the second quarter 2025 as it did for 2024. The trend where energy and the industry and water and environment are increasing is also confirmed in this quarter. I'd just like to inform you that revenue on our frame agreements with the defense authorities is largely entered into the building and property. We are working systematically on realizing our strategy. Just a short reminder to you all of the five ambitions that we have. I'm not going to go through them, but I just want to inform that we are seeing that the contracts that we are currently winning are well aligned with the ambitions that we have set out in our strategy.
Also, in Norway, there was a big report called the State of the Nation. It is an important one, and it's receiving a lot of attention because critical infrastructure is an important part of civil society's preparedness. Multiconsult has a lot of expertise to close the gaps that have been identified in this report. Also, the frame agreements that we have within defense are strategically important to us. They represent a large future investment. It represents stability in our project portfolio, and it is an opportunity to maintain a very strong market position. Finishing off with outlook. The outlook remains stable. There are continued investments in key public sectors like defense and infrastructure. The building and property market continues to face low investment levels, but we are seeing some improvements. There are projects now going from planning to actually realization.
In particular, within hospitals, we see that there are several hospitals now being planned. The infrastructure market is solid. The competitive landscape continues to evolve with pressure on margin and pricing sensitivity. On the other hand, geopolitical uncertainty and U.S. tariff schemes are expected to have minimal impact on the short term for our business. A healthy pipeline and several frame agreements support stability for Multiconsult going forward. Just finishing off, reminding you on some of the dates going forward. The next presentation from us will be in November. With that, we open up for questions.
Yes, thank you. We had some questions on the Norwegian presentation this morning. I translated them over for you. Some of these you already mentioned in the presentation. There are quite a lot of them, so maybe you should be quite short on this. Magnus Rasmussen in SEB, the billing ratio is slightly down compared to the comparable quarter. When will you be back on the same level as the comparison quarters?
What we have seen that we have lifted the level of our billing ratio. The level that we saw in the first quarter in 2024 is record high. We expect to stay at least on the level that we see at the moment, but it depends quite a lot on the portfolio that we have with projects. Large projects, the billing ratio goes up. A number of smaller projects, the billing ratio will have some downturn, but normally the rates are then higher. The effect on the business is the same level.
Thank you. Costs are increasing, especially in Region Norway. Is this a one-time cost just for the second quarter, or is this something we can expect going forward?
That's a combination of that since we have recruited more senior personnel and has allocated IT costs as well. We have some one-time effect due to preparation for the frame agreement. This is a combination. We have, as reported, focused on cost, and we take action that is actually specific for our different part of the organization.
Thank you. His last question is regarding the outlook. You are making a small change to the outlook by including that there is a greater margin pressure. What is the reason for including this?
That is what we experience in the market. As I've explained previously, the solid backlog that we have has meant that we could be more selective in the market for the projects that we go for. We do see when we enter locally in some places, it is very, very competitive on pricing.
Thank you. Bengt Jonassen in ABG Sundal Collier. Can you comment on the order backlog and its development?
Yes. We have had over a number of years now an unusually high order backlog. It relates back to the sales that we made on the hospital in Oslo, where we got NOK 1 billion in. We have prepared the market for the expected downturn to somewhat more normal levels. We still have a record high order backlog, a very healthy backlog.
The last question from Bengt is, can you say what the revenue recognition of one-time income in our architecture last year was in this quarter?
We haven't been specific on that. I also commented on the Norwegian road cost.
Yep. Martine Kverne, Nordea, can you say something about the expected level of other operational costs going forward, also with regards to the integration of ViaNova?
Yes. The integration of ViaNova, we need to plan for. Logically, there will be some synergies there as well on the cost side, but that is not dealt with yet or agreed upon. That is a combination of that. Others who are working specifically with like IT costs and other costs, and that refers back to the last answer I gave also.
Yes. Second question from Martina. Can you say something about the result in ViaNova for 2024, and if there are any extraordinary items here?
Not that we are aware of. We have a due diligence going on right now, and we will have further communication on that when we hopefully then sign a sales purchase agreement by the end of this quarter.
Great. Thank you. She also had a question about increased competition. Can you say something about in which area this specifically applies to?
What we're seeing is primarily it's in building and property. Traditionally, when you get one area with high competition, they try to move into other business areas. That's what we're seeing now, that we're meeting higher competition also in some of the other business areas.
Good. You commented on new projects from the framework agreements. How will the new projects' compensation affect the billing ratio when we're looking at the development over the last or next 12 months?
That's what we expect because we are just at the beginning of a number of frame agreements. We have a client who needs to organize itself to get the call off, to get the projects going. It is quite normal that there is a bit of a delay on getting production high. We expect within the next six months, we will start to see the effect of higher billing ratios here.
Good. The question from Simon Mortensen, who we did not be able to take in the first session this morning: Can you comment on the pricing and margin profile in the order backlog? Are these projects profitable enough to support the earnings improvement, or should investors expect continued pressure despite solid volumes?
It's a mixed picture. I think that's where you find that our business model, the strength in it is that we can move to more profitable markets. We are very careful when we do our bidding to make sure that we have a good mix of the margins that we can expect in the various projects.
We commented in this presentation that we all the time have a focus on costs and also other effects to compensate if there are changes. We still are committed to deliver 10% on EBITDA as communicated as part of our strategy.
Okay. Last question from Simon. Employee costs per head increased further in the second quarter while billable rates lagged. What specific measures, pricing, project mix, or productivity are you implementing to ensure that wage inflation does not continue to exceed revenue per FTE in the second half of the year?
Yeah. That is a mixed picture on that and also goes back that we are specific on that. Going forward, we need to be very precise on this and to bear in mind this. As Grethe already commented on, we have a mix in the portfolio and need to bear this in mind also planning for the right staffing level. Yeah,
that concludes all the questions.
Okay, we say thank you from Oslo and have a nice day.
Thank you.