Good morning, everyone, and welcome to today's presentation of Norconsult's fourth quarter results. My name is Egil Hogna. I'm the Chief Executive Officer, and today's presentation will be by me and our CFO, Dag Fladby. Before we start, I would like to remind you that after the presentation, we will have a question and answer session. We will start with taking questions from the audience here in Oslo, and then we will move on to questions received to our email address, ir@norconsult.com. And please put as the heading of your email, question Q4 presentation. And if there are too many questions, we will prioritize the ones in the audience. But first, let's start with our presentation.
On our front page, you can see the beautiful new Sotra Bridge, which is the largest hanging bridge under construction in the Nordic region right now, and the world's largest fully digital bridge. It is also the winner of the digitalization category in Norconsult Awards, as we have designed and engineered this bridge. The fourth quarter was characterized by continued solid performance. Today, I will present the highlights of the group, then say a bit about current markets and give you some examples of our current projects, and then our CFO will continue to present the financial details. But first, as we were listed on November 10, and are still a fairly new company to the stock exchange, I'd like to just remind you about some of the basic facts about Norconsult.
We are the largest design and engineering company in Norway. Our purpose is every day, we improve everyday life. We have six business areas, and about two-thirds of our business in Norway. Most of our customers are public, but we have a large number of private customers as well. We have three main markets: buildings and architecture, infrastructure, and energy and industry. And we have a 95-year history as a company and a solid track record with strong growth and stable margins. At the end of the fourth quarter, we had 6,003 employees, spread around 140 offices, so local presence is really important to us. In the fourth quarter, we saw 11% growth in revenues to a bit more than NOK 2.3 billion.
7% organic growth means that we continue our trend with roughly two-thirds of our growth being organic, about one-third relating to acquisitions. Our result, our adjusted EBITA, was very much stable, ending at NOK 209 million for the fourth quarter, NOK 1 million up from the same quarter last year. Our adjusted EBITDA margin was slightly down from 9.9%, fourth quarter last year, to 9.0% this year. The reason for that was a slightly reduced billing ratio and slightly higher personnel expenses, including the employer tax in Norway, which has been increased this year. Our CFO will take you through the details, but in terms of our business areas, regions, Norway were slightly down, while Head Office Norway, slightly up, as well as Denmark and Technogarden.
For 2023, the board of directors of the company proposed a dividend of NOK 1.20 per share. The picture is from an award-winning building in Denmark, which we have engineered. It's a lab building at the Technical University of Denmark, a winner of the Gold Award in the DGNB environmental certification and a very innovative use of materials. In our industry, it's really not so much about the numbers, it's very much about the people. Because our people are not only our most important asset, it is in many ways the only assets of our business.
So for us, again, being recognized as the most attractive employer in the industry is extremely important to us, and in November, we were ranked as number one by the Universum Professional 2023 classification. Last year, we had a turnover amongst our employees of 8.7%, which is significantly lower than both last year and lower than what our peers are having. Our annual employee survey was also conducted during the fourth quarter, the so-called LiVE survey . We had stable results with a continued high satisfaction and engagement amongst our employees, supported by the high degree of autonomy, which we are recognized for. Employee ownership has been a key feature of the Norconsult culture throughout our 95-year history.
It is still extremely important to us, and at the end of the fourth quarter, 4,100 employees, so approximately two-thirds of our employees, own shares, and in total, they own 70% of the company. The pictures are from one of our student events in Trondheim, where we both had the, you know, table tennis matches with some Norwegian celebrities called Bordtenniskameratene, for those of you who are familiar with those. We had a curling game, and we had a number of student events, where they were also able to practice some of their skills relating to design and engineering. I mentioned that roughly one third of our growth is relating to acquisitions. Last year, we announced 5 of those.
The last one we have closed was SQM, which is a Norwegian real estate development company. The agreement was signed just before Christmas, and they were consolidated from the thirty-first January this year. Then onto some of our projects. And I'll also say a few words about how the market is doing. First, the picture, a picture from Bergen, beautiful city on the west coast of Norway, where we have designed and engineered the new terminal and headquarters for the local waste collection company. As a matter of fact, this building is a huge vacuum cleaner, where garbage is transported through large pipes, sorted and in this building, it's transported in the segregated components.
In addition, it is an office building, and as you can see, it's quite a remarkable use of an extremely small piece of land, about 1,000 square meters, where a fairly large and environmentally BREEAM Excellent certified building has been put up on eight stories. In terms of markets, we experienced strong demand within infrastructure and energy, and the industry, where we did also experience a weaker private building and architecture market. The buildings and architecture market for the private sector continues to be influenced by a high interest rate and higher costs. This has created an uncertain market center during the fourth quarter, and that means that this segment is where we have seen some weakness.
However, that weakness has been compensated by the strength in energy and industry, where we continue to see a strong demand. When it comes to infrastructure, which is road and rail, yeah, a number of other elements linked to water and environment related infrastructure, we see a stable investment level, and I will get later—I will get back later to the outlook for these segments. Then a few examples of projects which have been initiated during the fourth quarter. This is a so-called rendering, a drawing of the new C block of the government quarter in Oslo. It is the first office building in phase two.
Our architects in our fully owned subsidiary, Nordic Office of Architecture, they continue to work on the government quarter, and this is then the new building, which will house four ministries of the new government center. Another project is a powerline project in northern Sweden with a very high voltage, 400 kV, between Letsi and Svartbyn. It's quite an innovative project where the lead time of the project is expected to be cut in half. Where some of the actions taken to achieve that is to make sure that the design of the access roads are designed at the beginning of the project, together with the power line, to make sure things are as much as possible in parallel instead of the normal sequential order.
Then we have seen an influx of new projects in Denmark for our architects. Here we have quite a nice project with a combination of a swimming pool and the housing development in what is called the Beauvais Grounds in Copenhagen in Denmark. And then we have a Swedish project, which is the expansion of the Halmstad Central Station, where we signed an agreement with Trafikverket or the Swedish Transport Administration. We will work both on railway, the geotechnics, the landscaping, bridge construction, geology, and the land development. And with that, I would like to give the word to our CFO, Dag Fladby, who will tell you more about the numbers.
Thank you, Egil. In fourth quarter, our net revenue ended at NOK 2.33 billion, which is up from NOK 2.11 billion the same quarter last year. This is an 11% increase in net revenue, and our organic growth was 7% in the quarter. There are no calendar effect in this quarter. The drivers behind the growth is increased FTEs and also increased average billing rates. Our EBITA, EBITDA ended at NOK 209 million, which is up from NOK 208 million, resulting in an EBITA margin of 9%, which is down from 9.9% the same quarter last year. The reduction is mainly due to slightly lower billing ratio, but also we had a positive write-up effect in the fourth quarter, 2022 of NOK 17 million.
Our billing ratio ended at 72.3%, as I mentioned, and that is mainly due to a slow building and architecture market, but also slightly affected by senior recruitment in Sweden, where we have hired quite over 100 people in second half, 2023. Profit after tax, NOK 74 million, up NOK 56 million, and that includes also IPO costs of NOK 59 million in the quarter, and also estimated expenses for our gift shares, which we have announced for 2023 of NOK 43 million. Our full year net revenue, NOK 8.5 billion, up from NOK 7.5 billion, which is a 13% growth, and our organic growth is 10% in 2023. The drivers behind the growth is increased FTEs and also increased average billing rates.
Calendar effects for the full year is negative, with NOK 34 million affecting both the revenue and also the EBITDA. Our EBITDA ended at NOK 810 million, which is up from NOK 741 million, and at the adjusted EBITDA margin, corrected for the calendar effect, ended at 9.9%. At same level as last year. I would also like to point out that we have also in this figure included the additional temporary social security tax of NOK 41 million. The billing ratio ended at 73.5, slightly down from 73.9 the year in 2022, and that is mainly due to the weak markets we have seen in building and architecture throughout the year. But it's also slightly affected by the senior recruitment we have done in Sweden.
Pre-tax profit, NOK 516 million, up from NOK 454 million. Included in pre-tax profit is all IPO costs of NOK 76 million, and estimated expenses for employee share program of NOK 41 million. Our full year figures and LTM figures has, over time, been quite stable, both in terms of revenue growth and also in terms of stable, healthy margins. However, it's important to understand that our business is influenced by seasonality, as shown in this picture. I will not go through the details of the drivers behind the seasonality now, but I would like to put focus on the workdays on bottom right there when we're going into first quarter 2024, and second quarter 2024.
And as you will see from the graph, first quarter have five less working days compared with the same quarter in 2023, and that is due to that Easter will be in first quarter this year. Second quarter, we'll have four more days, and this is important to understand as, for example, five less working days will affect the revenues and the EBITDA, approximately -NOK 175 million in that quarter, compared with the same quarter last year. For the plus four days, it's estimated that the revenue effect will be +NOK 140 million, and the same for the EBITDA. Now, in a few words about our reporting segments, and I will start with the two largest.
On the left side, we have Norway Head Office, and we continue in Head Office with solid organic growth and also improved profitability. The organic growth in the quarter was 10%, 10%, and the drivers behind the growth is increased FTEs and also increased average billing rates. EBITDA, NOK 83 million, up from NOK 66 million the same quarter last year, and the improved profitability is mainly due to increased revenue and some scale effects, and also slightly reduced other operating costs. Moving down to Norway Region, on the right side of this page, continue solid revenue growth. The revenue growth and organic growth this quarter was 7%, and the drivers behind the growth is increased FTEs and also increased average billing rate, rates. The growth in region is slightly lower than the previous quarters this year.
The main reason for that is that regions are more exposed to the building and architecture market segment, compared with, for example, Norway Head Office. That means also that the billing ratio is somewhat lower this quarter, compared with the same quarter last year. The EBITDA ended then at NOK 41 million, affected by the lower billing ratio, compared with NOK 50 million the same quarter last year. However, if you look at the full year results for Region, they have a strong result in 2023, with a revenue growth of 13% and an adjusted EBITA, corrected for the calendar effect of 10.9%, which is up from 10.1%. A strong year for Norway region. Moving to Sweden, continued solid organic growth with 16% Sweden, and the net revenue ended at NOK 394 million.
That is an increase in net revenue of 23%, also affected slightly by currency. The EBITA in the quarter was NOK 40 million, down from NOK 47 million, and it's two major item affecting that. First of all, we have the senior recruitments, as we have guided to the market throughout the autumn. That has a negative effect of -NOK 9 million. And the other effect is a reversal in fourth quarter 2022, since Sweden did not meet their bonus targets that year, while this year we have reached the bonus target. That has a comparison effect of approximately NOK 10 million. So the underlying performance in Sweden is still improved profitability and strong.
Denmark, solid growth and, the growth is driven by M&As, and some currency effect in Europe. The organic growth is -8%, and that is mainly due to a weak architecture market in Denmark. Adjusted EBITA, NOK 14 million, up from NOK 10 million, and slightly improved profitability to 7.7% in the quarter. The market is still affected by a weak architecture market, and that is also showing in the profitability. Then into renewable energy. And renewable energy has really a strong underlying organic growth of 27% in the quarter when you adjust for the write-up we had in quarter four, 2022. The EBITA ended at NOK 33 million, more or less in line with the same quarter last year.
But remember that the same quarter last year was affected by a write-up of NOK 17 million. So EBITA margin this quarter, 16.2%, which is strong, and it's driven by good performance in hydro power and transmission, but also good improvement in wind and solar units. And finally, Technogarden and Digital. Net revenue ended at NOK 210 million, up from NOK 205 million, and slightly improved EBITA ended at NOK 13 million, up from NOK 11 million. And the major explanation for the improvement is increased sale of licensed software. We are not satisfied with the result in digital. We are still working on measures to improve the profitability in that segment.
Then moving to our cash flow, and the cash flow, as you know, is dependent on the seasonality in our business. So quarter four should be a cash release quarter, and that is also the case for us in fourth quarter. Our cash flow from operation ended at NOK 492 million, slightly lower than last year, but there are two major effects which needs to be taken into account. And first of all, it's payment cutoffs, where in 2023, the last banking day was 29 of December, meaning that our due receivables at the 31 of December came in 2 of January. That has an estimated effect of approximately NOK 70 million. In addition, we have reported IPO costs paid into operational cash flow, and that amounts to NOK 51 million.
Taking these two into account, our cash conversion is really solid and in line with previous years. Cash flow from investing activities, -NOK 21 million, nearly NOK 100 million lower than last year, and that is mainly explained by lower M&A activity in the quarter. Finally, the cash flow from financing activities, -NOK 638 million, which is so obviously affected by the extraordinary dividend we paid out in quarter three of NOK 597 million. Our balance sheet is strong. We have a cash position, including the market securities, of NOK 947 million. Our net working capital is minus, and taken into the effect, which I mentioned on the previous slide, the cut-off effect, that we have received the payments, second of January instead of 31 of December.
The net working capital is at normal level, also taking into account the revenue growth. Our leverage ratio, -1.13, slightly up from third quarter, but that is due to extraordinary dividend payment of nearly NOK 600 million in the quarter. As you have seen, and as Egil mentioned, our board of directors has proposed to pay out a dividend of NOK 1.20 per share for 2023. That is in line with our dividend policy, paying out more than 50% of the net result yearly. It's also in line with our historical payments, or payment, ratios the last year, which has been between 60% and 80%. We underline that the dividend may fluctuate over time, based on our financial situation, but also based on our investment opportunities.
Finally, from my side, our order book, NOK 6.2 billion, that is, up from NOK 6.1 billion in quarter three. We have a good order momentum in the quarter, or order intake momentum. As you see from this page, these are selected project for our order intake in the quarter, where we have on the left, we have a public project, or building a public project hospital. In the middle, we have energy, and on the right side, we have industry project. Before I leave the word to you, Egil, I also am happy to mention that, as from last week, we are also included in the MSCI Small Cap Index . So with that, Egil?
Thank you, Dag. So, let's have a look at the outlook, but first, another Norconsult award winner, this time in the category of collaboration. This is a picture from the pre-feasibility study for a green ammonia plant by Fortescue Future Industries at Holmaneset or Svelgen in Norway. This is a large project, which continues to be developed, where we've had colleagues both from Norway and Sweden working together. We have used extensive competence from our digital division, and the cooperation, both internally and together with the customer, ended up in the Norconsult Collaboration Award. And maybe before I talk about the outlook, our last winner this time, this is the winner in project management.
Our project manager, Andreas, and his team won the award for a project at the center of Førde, again, in Norway, where they've had a high-performance team completing a very important project in a busy environment in a short time with an excellent result. Then, about the outlook. All in all, we see a relatively stable market outlook going forward. There is still a fairly low activity within the private residential and non-residential building markets, but there are also signs of improvement, meaning that we see that the sentiment is shifting, probably related to the fact that the expectation relating to the interest rate is that it will no longer continue to increase, but rather stabilize and potentially drop.
So there are signs that the market is improving, but we still to see this materialize into a larger number of significant projects in this segment. When it comes to public buildings and infrastructure, we see a stable demand, and we continue to see a very strong demand within energy and industry. As our CFO said, the order book has remained stable throughout the fourth quarter, and we also expect it to continue in that way in the short-term future. So with that, we open up for questions, and we start with questions from the audience. And you were quite quick, a number of you. I think Johan Strom from Carnegie, you were the first one.
Maybe not the first, but thank you for taking my questions. Two questions from my side. I'd like to pick up where you left off, the order book. Curious to hear your thinking and what you're seeing in terms of pricing in the order book during Q4. And then secondly, employees seems very satisfied with Norconsult. Very low employee turnover, so some color on that. What trends are you seeing? How important was the IPO for the numbers that we're seeing today? Thank you.
Would you like to start with the first one, and then I can talk about?
Yeah
... our colleagues?
Order book, I will say it's quite normal also in terms of pricing. It has been more competition on building and architecture, of course, but in total, we are very satisfied with our order book as such.
In terms of our colleagues, as I talked a bit about during my presentation, we see a very low turnover. We see a high employee satisfaction based on our employee survey. I would also like to say that the transition onto the stock exchange has been so far very good. We have had close to 700 colleagues who have bought shares in the company for the first time, and as I think all of you know, we've seen a good development in terms of the share price and the liquidity of the shares. So that has also resulted in the next generation of Norconsult employees feeling that, you know, this seems to be a good start of a new era as a listed company.
Then Simen from DNB.
Yeah. I have three questions, if it's possible. One, the billing ratio keeps, or has fallen year-over-year. What are the main drivers behind it, and what could we expect, perhaps, on terms of in the short term going forward on this?
Mm. Should we start with that?
Start with that.
So the question is about the billing ratio and the drop from last year to this year. That drop is, as you probably saw in the numbers, mainly related to a drop in regions Norway. That is 30% of our business, so it is the business area having the largest impact on the billing ratio. And again, that is the segment which is the most exposed to buildings and architecture, private buildings and architecture. So that is the reason for why it has dropped: weakness, which we see in the private buildings and architecture market. In terms of how it will develop, we will have to see.
I mentioned that we see some signs of improvement now, and then, we will see how it develops. But all in all, I would say the main situation is that we continue to have a high billing ratio, compared to a number of our peers, and we are happy about the total level of billing and invoice ability.
I would also like to add that it's also partly affected by senior recruitment in Sweden. During the second half, it's improving, since the senior-recruited people are getting more up to speed on the billing ratio.
My second question is on the Social Security Tax, or the temporarily increased Social Security Tax. That threshold increased this year to NOK 850,000 per employee. Have you looked into how much that increased threshold for that Social Security Tax will impact costs?
It will reduce the cost of approximately NOK 10 million.
In case you didn't hear, the question was about the Social Security Tax in Norway which will have a decreased impact of NOK 10 million.
Last question is, in terms of M&A, what kind of objects are you looking at at the moment? What areas of expertise and regions are most likely key focus points going forward?
In terms of M&A, we continue to look at bolt-on acquisitions. Our main focus is small to medium-sized companies. The most interesting companies to us are the ones where we see an opportunity to complement our existing skills. That means that in some regions, we might actually be interested in making an acquisition because we lack a certain skill in the region. Typically, it can also be in other areas or skills that are related to what we do, but not necessarily identical.
Thank you.
Okay. I think Jenny?
Thank you.
Yeah.
I was just wondering, if you could talk a little bit about where you currently stand in the ramp-up of the senior employees in Sweden?
In terms of the ramp-up of the new senior employees in Sweden, I would like to say it's going better than expected. We are very happy to have gotten some very qualified people who also have, I would say, a good business acumen in terms of how they develop projects. So we see a invoice ability or billing ratio, which is slightly better than we had expected after such a short period.
Great, thank you. And then a second question. I was wondering if you could give some color on how you view the midterm demand for infrastructure projects going forward.
We continue to see a stable market for infrastructure. We know that in Norway, not so long from now, there will be a new so-called National Transport Plan. The National Transport Plan, which is a, you know, 10-year plan, which will set new expectations. I think, like everyone in the industry, we are also looking forward with excitement to see what is coming there. But, in the meantime, we continue to see a stable level of infrastructure investment.
Thank you.
Yeah.
Last question from me. You guys covered most of it, but in terms of when you say you see improvements in the private building market, do you see that near term? So we could see like, for example, in Norway regions, we see an improvement in the billing ratio going into Q1, for example.
So the question is about the signs of improvement in the private building and architecture market?
The horizon.
Yes. I think it's fair to say that there is a mix of some projects that have been waiting for some time, where it might be fairly quick to sort of pull the trigger and start the project. But what we see is also some new ideas which come up, which might take a little bit longer to deliver. So I think the answer to your question is that there is a mix. Some improvement might actually happen in the fairly short term, but it might also drag out a little bit. So I think here we simply will have to wait and see a bit how it develops.
Great, thank you.
Okay, we will wait a little bit and see if there are any more questions, popping up. No?
Okay.
Okay. There does not seem to be any more questions. Then I would like to thank you all for your attention, both you who have joined us here in Oslo, and also you following us on the web. We look forward to being back in May with, hopefully another quarter of solid performance.
Thank you.
Thank you.