Good morning. My name is Hans Peter Melerud. I am the CEO of Solaris. Please do also welcome our CFO, Gunnar Manan, who is here with me today for this webcast presentation of Solaris Q1 2021 results. That we will respond to at the end of the presentation.
Please observe that the presentation is being recorded. You will find a link to the recording on the investor part of our website. Without further ado, let's move on to the presentation. CFO. Despite short term impacts from the COVID-nineteen pandemic, team Salaris continued weathering the storm delivering Q1 on all customer commitments, still with the majority of our employees working from home.
Our revenue is slightly impacted by some temporary lower volumes and changed orders that can be attributed to COVID-nineteen. And it is still too early to see the effects of our new deals. Our continued EBIT focus is continuing to pay off. Our EBIT margin was 7.2%, up 5 points from 6 0.7% last year. We signed several new agreements including a landmark deal with Finnish CFO's company, Mezza, to provide payroll for their 10,000 employees in 28 countries based on our people have solution.
Analysts communicated yesterday, our first platform deal in Germany to serve Telefonica O2's 8200 employees with our outsourced payroll services. In sum, our awarded agreements amounts to about 40,000,000 in recurring revenue when fully implemented. Our operative cash flow continued being strong ending the quarter at 118,000,000. CFO. And last but not least, subject to approval on the Annual General Meeting in May, a dividend of NOK1 per share will be paid out on June 1st.
CFO. Taking a closer look at the figures quarter by quarter, consolidated revenue for Q1 amounted to 290 2,800,000 down from 200,600,000 in the same quarter last year. The lower revenue compared to last year is mainly due to COVID related temporary reductions within Banda Services in the Northern European region. I will comment on this a couple of slides ahead when looking at Banda Analyst in more detail. EBIT continued to improve with €300,000 in absolute terms to 13 point €8,000,000 and with 5.27.2 percent compared to Q1 last year.
We continue optimizing our cost base as also exemplified through our FTE levels, decreasing 5.4% CFO as sold with our new agreements. As these use existing platform and infrastructure capacity, they will have a significant marginal contribution to our EBIT in excess of our target client margins. Our business model with long term agreements and recurring revenue is one of the favorites among investors. We have offered software as a service, business process as a service and outsourcing delivery models since we were founded 21 years ago. More than 90% of our revenue in managed services and 55% of revenue in professional services is recurring.
Delivering payroll and HR services on the basis of one common IT platform, the Solaris Peoplehub supported by local competent resources has been key to our success and 20 years of uninterrupted growth. Our approximately 800 employees deliver services from 12 countries. In addition, we can deliver to 150 plus countries 3 partners with our people have concept. Our short term aim is to deliver services with own solutions and people for all EU and European Economic Area Countries. From the outset, our goal was to help customers reduce their direct process cost by 20% to 30% by outsourcing their payroll and HR processes to us.
At the same time enabling them to operate seamlessly across borders. With COVID-nineteen, large companies across the globe CFO reprioritizing their investments towards solutions that enable unified access to payroll and HR data for analytical purposes, digitalization of workflows, reduction of cost and securing business continuity of business critical payroll. Working from anywhere has become the new normal, driving the need for fully digitized people processes. Even though we see many are delaying large new investments also in HR technology, needed projects to support working from anywhere and secure business continuity are being prioritized. Team Savaris is extremely well positioned to existing and new customers navigate and position themselves in this situation.
Our innovative products and Services portfolio cover the whole payroll and HR value chain. Our customer base on medium and large sized customers. It's diverse in all our market facing countries. The number and value of customers impacted directly by COVID-nineteen in transportation and tourism CFO is limited, even though as previously mentioned, we see some reduction in business volumes as processing of Travel Expenses and some reduction in employees. Our largest market unit is Germany, delivering 32% of our revenue.
CFO. Germany and the U. K. Are our markets with the largest potential. Poland and U.
K. Are our fastest growing market units. Poland has doubled revenues since our acquisitions in 2017 and is now 100 employees strong. However, we shall not forget that our potential in the Nordic is still large. If we were to achieve the same penetration in Sweden, Denmark and Finland as we have in Norway.
We could double our total revenue. Now let's look at our segments. As previously mentioned in Nanoservices, we continue to see the impact of temporary lower volume of travel controls and other services resulting from COVID-nineteen related business activity and volumes amounted to about 3,000,000 to 4,000,000. CFO compared to Q1 last year. The capacity last year used for chain shortages has in Q1 CFP news to implement new outsourcing projects with both revenue and costs capitalized.
The revenue to be recognized from the go live date for these new contracts. Revenue from new signed agreements in Q1 and also Q4 last year will first start to materialize now in Q2. There was no material churn in revenue within managed services for the quarter year by year. CFO. In the previous quarters, we reported the build up of our strong pipeline.
It was just with great pleasure that we can communicate a number of new signings providing the potential of our platform based solutions. In the quarter, we signed new long term customer agreements with as previously mentioned approximately NOK40 1,000,000 of annual contract value when fully implemented. Including our landmark agreement with Finnish Forest Company, MedSert to deliver payroll for their 10,000 ROACE in 28 countries based on our Peoplehub solution. With multi country payroll being a market experiencing strong growth, Adding to this, Solaris has been awarded a groundbreaking agreement with German mobile phone operator Telefonica Deutschland 02 CFO to provide fully outsourced payroll for their 8,200 German employees. I will cover this deal in some more detail on my next slide.
CFO. It was with great pleasure that we yesterday could announce our latest win of Telefonica in Germany. This is our 1st platform based sale in Germany since our acquisitions. It's a fantastic example of how increased focus on sales and corporation across the group create tangible results. The excitement expressed from both customers and their advisors after seeing the digitization and automation capabilities of the Solaris platform is a promising sign with respect to growth opportunities in the German markets and we already see the interest materializing in new inquiries.
As part of the agreement, Solaris will consolidate Telefonica's 2 SAP payroll solutions to the Solaris people have concept with a goal of maximizing quality and efficiency through automation and digital workflows. The solution will be integrated with Telefonica SuccessFactors based global HR solution with a production start date in January 2022. We will deliver a comprehensive suite of mobile apps to partner payroll outsourcing services from our Leipzig based service center to their 8,200 employees. As exemplified with this project, Solaris' cloud based transformational payroll and approach, support customers consolidating multiple solutions into 1 cloud based system in a timely and cost effective manner. The services are perfect for companies that want to future proof their investments in SAP payroll and time moving this to the Solaris cloud platform located here in Europe.
There are approximately 10,000 SAP payroll implementation globally and 3,000 200 in Germany, a huge market. Add to this that we take responsibility for the maintenance and perform future upgrades, mobile app functionality for our processes, include advanced analytics and use extensive automation, including robotics process Automation to deliver it all as a business process as a service, priced on a consumption basis on a monthly basis. As integration is a foundation for efficient processes. We provide integrations to whatever global HR solution their customer has, including leading solutions as success factors used by Telefonica, Workday, Oracle, Catalyst 1 and a wide range of others. CFO.
This combined with our full service payroll offering allows customers as Telefonica to rapidly reap the benefits while leaving all the complexity of implementation and maintenance with us. Then let's take a closer look at Professional Services or our consulting practice. Professional Services continued developing positively, in particular supported by CFO of positive developments in the UK and Poland. Despite COVID, revenue was slightly up to 64,300,000 driven by both high focus on project work as well as positive development in application maintenance services. EBIT levels were somewhat down to €55,000,000 for the quarter, mainly due to increased usage of sub contractors to secure proper staffing levels as we are aiming to adjust our demographics mix, CFD mining resource utilization across the group and to build new capacity with competitive cost.
The market for skilled resources is particularly fierce in Germany and increasingly in Poland. The long termism of professional services customer relationships was again confirmed with 84% of revenue coming from customers that were also customers in Q4 last year. CFO, we organized professional services as a group wide business unit to improve resource utilization across the group and strengthen our profile as a player of delivering global HCM and payroll projects. That is Human Capital Management Projects. As access to competent resources as previously mentioned in many market is a key limiter to growth, Rettmann Group wide initiatives as trainee and training programs is a key element to future success.
This is also where we see huge benefits working closely with managed services to provide a very attractive career model. Professional services continued its positive development including selling a number of new agreements including a new contract with Thyssenkrupp Elevator for the implementation of a new payroll solution in Germany and the frame agreement to deliver up to 6,000 man days of consulting support over the next 3 years to one of our large German customers in the public sector together with partner T Systems International. All in all, more than €5,000,000 worth of contract value. In Poland, we continued expanding our relationship with ABB, being responsible for application maintenance serving 150,000 employees in 97 countries. Our Polish team also continued their win streak closing a number of smaller deals.
In the UK, we continued our positive trend of expanding our relationships with existing customers. In professional services, we see that application maintenance services helping customers maintain their payroll and HR system, mostly on long term or subscription basis, continuing at around 55% of the total revenue in Q1. As the absolute value of these services are relatively stable, CFO per share is mainly affected by overall positive revenue development. The AMS revenue stream particularly important in times as this when customers are looking to work with proven unknown suppliers. For smaller projects with defined outcomes.
Developing AMS services as a group wide offering is a key focus area for professional services. This is also a super farming ground for cloud and outsourcing projects. So important to acknowledge when evaluating our professional services business CFOs that contrary to many consulting businesses, around 55% to 60% of revenue is recurring. And as mentioned, as the previous on the previous slide, this is a key contributor to that 84% of our Q1 revenue in this segment CFO customers that were also customers in Q1 last year. I hand over to our CFO, Gunnar, who will take you through the financial part of the presentation.
Thank you, Alstetter. I thank you all for listening in to this webcast. Revenue for the quarter was 193,000,000, which was somewhat lower than last year's figure of 201,000,000. CFO. As mentioned by Hans Petter, we had some COVID-nineteen related reductions, which I have also pointed out from the last few quarters.
In managed services, in the Q1 this year versus last year, we had a €3,000,000 reduction in volume based revenue, that is revenue from travel expense processing, and number of employees etcetera and the 4,000,000 reduction in change orders. This explains most of the reduction in total revenue for the quarter CFO. And for most parts, we see this as an effect of COVID-nineteen. There was no material churn in revenue for managed services year on year. Revenue from professional services was approximately in line with last year when we adjust for some customer reclassifications between managed services and professional services.
Marginal over revenue in Germany was offset by increased revenue in Poland, which is still experiencing very good growth. CFO. Adjusted EBIT was 13,800,000 compared to 13,400,000 last year, an increase of 3%. And there was a slight improvement in adjusted EBIT margin of 7.2%. CFO.
As mentioned, the EBIT margin was slightly higher than the same quarter last year as seen in the figure on the left. And we saw a small increase in the margin for the last 4 months CFO as seen in the figure on the right. We continue to target an EBIT margin of 10%. CFO. Looking at the P and L, we are now implementing more new BPO contracts compared to the same time last year.
CFO. As a result, more resources are being utilized on these new contracts, resulting in increased deferred revenue and costs, which will materialize in increased revenue as the projects go live. This is reflected in the reduced personnel costs as more costs are being deferred CFO as shown in the P and L with a 5% reduction in personnel expenses year on year. Net financial income for the quarter was 11,200,000 compared to negative 7,200,000 last year. This includes an annualized currency gain of 17,400,000 on the €35,000,000 bond loan and other foreign currency denominated items.
Last year, the unrealized loss on these items was €66,300,000. This resulted in a net profit for the quarter of 17,500,000 compared to a loss of 48,600,000 last year. CFO. Moving on to the cash flow. There were some significant movements in other receivables and payables during the quarter, including an increase in pre payments as a result of annual licenses paid and all the working capital changes, including a reduction in the IT payable, 31 March is 30,100,000 higher than the same time last year after the repayment of interest bearing debt of 17,000,000.
CFO. Quickly looking at the balance sheet, the net interest bearing debt decrease from NOK 252,200,000 at 31 December to NOK 242,400,000 at 31 March. CFO. The reduction is primarily due to a stronger NOK Norwegian kroner, which is euro, which impacts the NOK value of the €35,000,000 bond loan. CFO.
The company will pay a dividend of NOK1 per share for 2.20 on 1 June CFO to approve by the Annual General Meeting to be held on the 20th May. That concludes the financial section and I'll hand it over to of Altaq for Salaes.
Thank you, Gunnar. CFO. So, yes, as you know, non organic growth has been an important element in developing Solaris into the company and capabilities that we currently represent. Our acquisitions of Jernus Sumarum, an UK based rock in 2017 has transformed us from being a Nordic about €100,000,000 per quarter revenue company Chief to a leading European player with approximately twice the revenue and a significant presence in the key German and UK markets. We are now operating under one common brand, common IT infrastructure and solutions.
We have many of the leading global NIM organizations as customers. Reaching our communicated 10% EBIT target is well within reach as we continue scaling our solutions as reflected in our new signings and landmark deals. Integrating the acquisitions has taken time and with our recent improvements, admins, we have started also harvesting the results of our hard work now seeing also through increased revenue. We are constantly being asked about our M and A strategy, what deals and timelines are we looking at, etcetera. And as also explained in previous presentations, CFO.
We are actively pursuing non organic growth options. Our prioritized focus is on companies that can either help us utilize our scale in existing markets or that can help us expand into the rest of the EU countries. In terms of utilizing scale, this can either come from cost synergies or utilizing our platform infrastructure capacity to the fullest potential. As I have mentioned previously, the incremental cost of adding new customers on our platform is limited to additional license costs but less additional hardware and operational costs. As a second dimension, we are looking at additions to our portfolio HR technology, preferably solutions that are natural add ons to expand our relationship in the payroll and transactional HR space.
CFO. In terms of size, we do prefer small and easier digestible beers. However, we are open for more transformative options. Strategy also required capital discipline and a clear path on value realization. There are other smaller processes that we are part of Cassidy to make some smaller acquisitions.
This we believe would contribute nicely to our financials if executed right. Signals from the capital market are very positive in terms of our ability to raise additional financing, including equity bonds and debt if that becomes necessary for any potential larger transactions. So compared to what we were yesterday, represented by our hashtag besting ourselves. We will continue our focus on creating satisfied customers at every customer touch point and journey. We also believe that happy employees is key to have happy customers.
CFO. We will continue driving margin improvement through improving operational efficiency, including maximizing the use of our near, off Shore and Automation and to sell the right deals leveraging the scalability of our existing platform. Our goal is to continue our growth streak and deliver our 21st year of continuous growth. And as just mentioned on my previous slide, we are actively exploring acquisition opportunities. And with this, we are open for questions.
So, Gunnar, do we have questions?
CFO. We do have some questions. You state high pipeline compared to the same period last year. For what
is the level compared to previous quarter. Yes, the current pipeline is higher than compared to the previous quarter. So we have a very promising pipeline dotcom and we'll do the best we can to respond to you as soon as possible. Thank you again for watching this webcast.