Welcome to the Multiconsult 2019 third quarter presentation and Capital Markets Day. I'm very happy to see that so many of you have taken time to attend and be with us today. Here at Felix Conference Center, we do not have any fire drills planned for today. In case there is a fire alarm, please exit through the door there and go out, follow the signs. My name is Mirza Koristovic, and I'm head of investor relations and finance in Multiconsult. To the agenda. We will begin with the third quarter presentation, followed by a Q&A session with the CEO and the CFO. After a short break, we will present to you our strategic update. We will begin with the CEO and the CFO, followed by two of our EVPs that are in their new position from this fall.
They will present some parts of Multiconsult in more detail, and then two of our project managers will give you an insight into some of our most exciting projects. Let's begin. I will leave the word to our CEO, Grethe Bergly.
Thank you. Good morning. I will present to you now the highlights. Then my CFO, Hans-Jørgen Wibstad, will take you through more of the details. Looking at the third quarter, we have a quarter with a solid order intake of NOK 945 million. We have remaining a strong backlog at NOK 2.7 billion. We have a solid net revenue and a growth of 6.7%. Despite all these good figures, we are not experiencing the EBIT that we would like to see. As I have previously told you, we have intensified our work on getting control of our project portfolio. Going through the project in the third quarter, we are revealing risk levels that we are not satisfied with. This has led to write-downs. The write-downs are also related to projects that go back in time.
They are not all related to projects started and executed in 2019. We will continue this work on getting control of the project portfolio. We have also, in this quarter, settled quite a few disputes that we've had with clients, which again, also affect the bottom line. Meaning that by the end of this quarter, for this quarter, our margin is 2.9%. Looking at the year to date, we also see, again, a positive figure of growth in the net revenue. We see an EBIT of NOK 97.6 million, which gives us a margin of 3.9%. We are also, as I'm sure most of you have seen on the material we have issued, now launching a program called nextLEVEL, where our aim is to achieve an improvement on the bottom line of NOK 115 million. We will give you more details on this later on today.
Looking at the order intake, this is a good balance for us. We can see that there are good improvements in the order intake in the building and properties area. Which is also the biggest area that we have, but also it's a good and sound intake in transportation, and a good balance between the business areas. It's a good order intake of NOK 945 million, good balance. We also still see a good and solid pipeline. There are, although, some uncertainties mainly related to the pipeline within transportation. There are, as I'm sure most of the Norwegian participants here, they know that there are some reorganizations going on. There's been a reform where a lot of the roads are now going to be transferred to local government. We have previously experienced when that happens, new jobs are not coming out into the market.
It's a delay. In the long term, this change will lead to, is our assumption and our belief, lead to more work for us as consultants. There is a shortage just at the moment that we are now preparing to stand up to with other kind of projects. Our main order intake is Västerås Hospital in Sweden. It's a good new railway station at Gol. There are also some add-on sales to three major projects, one at the Mjøsa Bridge, one in the Tønsberg Hospital, and one at Fornebubanen. Looking at our order backlog, it remains strong, and it remains at the same level in this quarter. It's strong at NOK 2.3 billion. I would like to remind you again that we do not include frame agreements in this order backlog. In reality, our backlog is larger than we are showing you here.
There are three major frame agreements that will affect our work in the next periods. That's Fornebubanen. Also, we got a really nice frame agreement with Kystverket. This is a frame agreement that we did not have in the previous four years. To be back here is of major importance, not least for our business units in the north. We have a frame agreement with Forsvarsbygg that will give us some substantial work in the periods ahead. We were 3,000 employees by the end of the quarter, and we are continuing to winning prizes, seeing that the work that we do is being appreciated. We've been nominated for a prize with the Vestfold Hospital, and we've had two of our employees being awarded prizes for their excellent work. Bjørn Thorud awarded Well, how would you say it in English?
The Sun Ray of the Year with his work and enthusiasm related to solar power. We have a very strong position in this area. Also Reinhard Tann, who was awarded the FoU prize, for his PhD. Really just showing how important it is for us to have these excellent capacities within our company. With that, I leave the word to Hans-Jørgen.
Good morning, everyone. Nice to see so many of you here. I will go through the financial status as of the third quarter of this year, in the usual manner. Grethe has touched upon that, but we had a good growth in the quarter, 6.7% compared with the same period last year, which we're quite happy with, to NOK 720.4 million. That growth is purely organic. The EBIT came in at NOK 21 million, which, as also mentioned, is a very disappointing figure, it's reflecting the significant write-downs that Grethe mentioned at the introduction. To add a little bit of flavor on that, it's related to, in particular within the energy sector, as well as areas within the regions Norway.
We have spent a lot of time on this topic over the past few months to look at what is the risk picture and do what is prudent for the company to do. As also was mentioned, many of these projects is related to projects that were started several years back. It's unfortunate, it's disappointing, but it is necessary to do those kind of exercises when it's prudent to do it. In the quarter, there is also a calendar effect comparing with the same quarter last year, just of NOK 10 million, and we have the usual IFRS effect of NOK 5.4 million. Comparing the quarterly result for this quarter compared with the same quarter last year, we start with the NOK 21 million. We have the calendar effect, the IFRS effect, and we end up actually with a margin which is similar to the same quarter in 2018.
Keeping in mind that the write-downs is at a significantly higher level, in this quarter compared with the same quarter last year. The OpEx is also quite high in this quarter, 9.2% up, relative to a growth of 6.7%. As was mentioned, that also has to do with certain claims settlements that were undertaken during the quarter. For the year-to-date figure, 4.5% increase compared with last year, purely organic. Also the underlying with 5.3%, the way we are recording the settlement with Stortinget. That is a pretty solid growth for the first nine months. The EBIT is the NOK 97.6 million, equivalent to a margin of 3.9%. Again, we have impact by the legal settlement that were made in the second quarter. We have IFRS effect and severance agreements relating to the first quarter.
If we make the bridge from last year to this year, we end up with a margin of 4.4% compared with 3.7%, indicating that there is an underlying improvement in the operation. That is not to say that we're happy, which is why we're introducing the nextLEVEL that we will talk a lot about during the Capital Markets Day. We'll be introducing, as a part of the same exercise, new financial targets that we will review during the Capital Markets Day later today. There is nothing in particular on this slide other than to say that the billing ratio is at a reasonably low level in this quarter, below 70%. It's seasonal, so you can see that it's seasonal comparing with the same quarter last year.
It is at a rate that we are not satisfied with, and we will also part of the nextLEVEL improvement program. We will address that in detail, and it's one of the key initiatives that we will focus on over the next 18 months as we move forward. Employees. Number of employees went up during the 12 months period by 4.5%. It's pretty much the same as our underlying growth. That creates an EBIT bridge for the year-to-date figure, where it's pretty much self-explanatory. What I would like to mention is that the billing rates are up, as you can see, the NOK 14.2. That is more than has on the negative side is the billing ratio, which is impacting us negatively NOK 16.6 million. The net of that is unfortunately a negative figure, which is also part of our focus during the nextLEVEL improvement program.
Going into the business areas. Greater Oslo Area has a reasonably good year-to-date figure. We're seeing the growth is 2.3% and the EBIT is slightly higher than last year at NOK 54.5 million, which is a moderate increase from the same nine-month period in 2018. If we, which we did in the second quarter, also adjust for the Stortinget settlement, we see that the, let's say, the underlying profitability is up from NOK 52.4 million to NOK 73.1 million. The Greater Oslo Area is doing well. There are some issues, as I mentioned, with the energy business, which is impacting these figures negatively, and also on utilization rates. The billing ratio is also down, partially impacted by the reasonably quite low level in the energy sector. That is the picture for Greater Oslo Area doing quite good, and we're happy with that.
Also in this area, except for the energy, the underlying write-downs within the projects is also in control. That's a good sign. Moving over to Norway, which is the region outside Oslo and Buskerud, Vestfold, Telemark and Østfold. Again, high activity level, 14.6% growth, which is a good figure. The EBIT margin is down. Also if you look at the underlying within the square there, some adjustments there. We see that it's a reduction and that is driven basically by a lower billing ratio going to 68.1% only from 71.4%, as well as significant write-downs in particular in one area of the Region Norway. That is the main reason why this is kind of underperforming compared with last year on the figure side.
We see that the business as such, if you don't look at figure, it's a solid growth, even though there are variations between the regions. International business is doing well. It's a small portion of the total business, but it's growing 17.3%, which is a strong figure. We're seeing that our business in Sweden, Iterio, is doing well, as well as the Multiconsult in Poland. That's exciting, and we're seeing solid growth both on the top line and on the bottom line. Looking at the adjusted EBIT figure, which is pretty similar as the reported EBIT figure. We're seeing a growth to NOK 14.4 million from NOK 5.7 million. That's a solid growth. We're also seeing that the activity level increases quite considerably, 23% up in number of employees, largely driven by a higher activity level in Poland. LINK has another quarter.
The quarter as such for LINK is seasonally lower. We have certain challenges in Sweden in particular, but the underlying profitability and the performance of LINK is good. Has a growth of 7.6%, and also quite a reasonable margin there of 6%, despite actually LINK making a loss, reporting a loss in the third quarter. Which as I said, is seasonal and fundamentally the challenge is in Sweden, and we're working very hard to fix that. The other business in particular Norway, is doing very well in LINK. We're happy with the overall performance of LINK. LINK is not just a side comment, but LINK is not currently part of the nextLEVEL improvement program. Cash flow, quite as expected. We have quite a strong negative cash flow in the third quarter, impacted by seasonal working capital adjustments.
That is the main thing, and our investment level is pretty much on par with our depreciation. We have slightly higher investments due to some investments in some ships that we're doing on the geo side. Other than that, it's a pretty much expected level for our working capital, weak in the third quarter. We expect that to improve in the fourth quarter. We're seeing that as a consequence of that, our net interest-bearing debt goes from NOK 167 million at the end of the second quarter to NOK 283 million at the end of the third quarter. To summarize, a mixed quarter. We're seeing that we have strong order intake, solid order intake, and we have coming out with the order book, which is a little bit higher than it was at the beginning of the period. We're happy with that.
We're seeing that it is solid revenue growth, but we still have significant project write-downs that we have talked about, that we have had a lot of focus on, and also as a consequence of improved routines. We have taken what we believe is prudent. As a consequence of that, the EBIT margin and EBIT performance in the third quarter is weak. We're excited to announce today the nextLEVEL Improvement program, which has a ambition of NOK 150 million improvement over the next 18 months, with full year effect 18 months from now. We think that is exciting. We've worked extremely hard in the organization during the last three or four months to get this going and get all the initiatives going and also get both the top-down and a bottom-up approach to it.
We have our management level committed to this program, and we're excited to present that later in the day. Thank you.
Thank you, Hans-Jørgen and Grethe. We will open up for questions from the audience here in Oslo before we take on the ones on webcast. Please state the name and the company that you're representing, and please also use the microphone.
Good morning. Rune Sand, Nordea Markets. You state that part of the project write-downs this quarter is related to projects started several years ago. Are they still ongoing projects?
It's a mixture. Some of them have come to an end, and some of them are ongoing, and most of them are ongoing. It's a good mixture. What we're saying that some of them started, which is in fact true for many of our projects started, has a tenure of maybe 2-4 years.
These aren't guarantees or very old projects that you have finished many quarters ago?
No, no.
No. Okay.
It's either ongoing or have been completed.
This quarter
Settled during this quarter.
Yeah. Okay.
Yes.
I see.
Yeah.
Also the claim settlements that you have in this quarter. Can you say a little bit more about what this is and how much this figure is?
Well, it's kind of in the ordinary course of business that we have claim settlements. That's kind of normal in our business. The amount we're talking about in this quarter is NOK 4 million-NOK 5 million. That is the amount. These are claim settlements on projects that have been completed.
Okay. like NOK 15, NOK 20 million a year, is that then a normal level per year?
No. As an ongoing ambition, it's not. It's coincidentally, you can say that many came in the third quarter.
You would expect a lower figure per year than NOK 15, NOK 20?
That is certainly our ambition.
Yeah. Okay. Thank you.
On billing ratio, could you give some more details on that? I'm thinking how many non-billable people versus billable people and distribution of billable people and how that affects runs in the different divisions and geographically as well.
Yes. It varies, in particular if you look at the Oslo business and the regions business, because in Oslo the geo business is not really a billable business. It's a different way of being paid for those services. To that extent, it's not always easy to give an aim on what should be the billing ratio. We don't have a lot of people who are not billable, but it's two areas in particular. It's the south region in the regions Norway that has had a lower activity level. Also, as Hans-Jørgen said, we are seeing some challenges with the energy department in Oslo.
Clearly, we will also address that during the nextLEVEL presentation. It's one of the key focus areas to have more billable time. Right now we're 70% approximately billable and 30% non-billable time. That's one of the key focus areas for us going forward to improve that. Not to talk about what we're going to talk about later today, but we're seeing that when we're benchmarking our level to the peers, we are at a lower level than comparable companies. This is one of the reasons why we're addressing that quite heavily.
All right. I do not see any more questions here in Oslo. Let me see. Nothing on webcast. That concludes the Q&A session and the third quarter presentation. We will have a break now. We'll get back here and start the Capital Markets Day presentation at 9:30, which is six minutes from now.