Hello, everybody. Welcome to NYAB's webcast on the half-yearly report. My name is Marko Peltonen, and I am the Director of Investor Relations at NYAB. We have released our half-yearly report this morning, and we'll now present significant events and financial information for the H1 of the year. First, our CEO, Johan Larsson, will go through our key figures, market outlook, and examples of our progress and new contracts for the H1. After that, we take a more detailed look at our financials that will be presented by our CFO, Aku Väliaho. And to conclude, Johan will say a few words about our long-term targets and focus areas going forward. If you have any questions for our management, please submit them through the event chat box during the presentation, and we will then go through them at the end.
To get started with the presentation, I am now handing over to Johan Larsson, CEO.
Thank you, Marko. Next slide, please. So, welcome. Key figures for H1 and Q2. As you can see, revenue, EUR 104 million. Reported figures, we have a growth exceeding 42.7%. Q2 revenue increase with 17.2%. We have improved our margin slightly for H1 and quite significantly for Q2, with an EBIT for Q2 amounting to EUR 4 million. Our balance sheet is at EUR 256 million, and our equity ratio stands at 68.6%. So, as we enter the H2, we are in a strong and good position. Next slide, please. And our financial guidance for full year 2023, revenues EUR 290 million-EUR 315 million, and an EBIT margin of EUR 16 million to EUR 24 million.
Since entering 2023, and during the period of intense order intake that typically continues until Q3, we have experienced a small change and shift in sentiment on the market, where our perception is that the peak of inflation on high interest rates environment will be somewhat later than previously expected. And that leads to some risk management measures and to some extent, delayed investment decisions from our clients. So, we choose to recognize and acknowledge the macroeconomic headwinds. Next slide, please. So for the market outlook, in total, total construction in Sweden are going down heavily. Largest parts of the total construction market outlook is residential buildings and housing. House figures from Sweden are declining with approximately 60% in comparison to last year.
We can only be glad that we are not directly exposed to that market, and we have the same tendency in Finland, although it looks like from 2024, from then lower level, it will move sideways in Finland. If we go to what's more relevant for NYAB business, it looks a lot better. Infrastructure in Sweden as a whole moves sideways. Worth mentioning is, of course, because of the decline in housing and residential buildings, in that particular sub-segment or sub-niche of new infrastructure to new house areas and residential areas, etc., the market is heavily declining. But in all, the shift is... it creates movement on the market, but it remains all in all in a good level and moves sideways from a high level for both 2023 and 2024 in Sweden.
In Finland, we have pretty much the same scenario. Industry and energy in northern parts of Sweden, we move sideways, 2023, from a quite high level, and it goes more upwards in 2024. Industry and energy in Finland is a really good market this year, 2023, but there are not many new energy projects starting, so it's ongoing projects that keeps the total volume up... and we see a quite significant decrease in 2024. That's what's expected. So, all in all, fairly good markets for us going forward. Next slide, please. So NYAB made significant progress during the H1 of the year 2023. When it comes to listing and domicile, we make progress in the evaluation concerning the company's future listing and domicile.
As earlier mentioned and announced, we have our advisors on this area, and we are working with it and hoping to present more about this and conclusions shortly. We have made the transition to IFRS, which is very good and important for our progress. Our order backlog, it amounts to EUR 252 million. Of course, we have an extended focus on profitabilities because of uncertainties on the market, and there is a significant negative impact due to the weak development of the Swedish krona. Of course, our largest markets are in Sweden with the Swedish krona, and we report in euro. Next slide, please. Some selection on new contracts, Svenska kraftnät. We are happy to have Svenska kraftnät as client.
We are working with the preparation and critical purchases for the coming Aurora Line, which is a really important contract. It enables the transmission capacity between Sweden and Finland, and are important for the ongoing green transition. We have won a couple of contracts with Fingrid as well. NYAB Finland was approved to Fingrid's supplier register last year. One of the contracts we have won is expansion of two substations in Northern Ostrobothnia. Then our subsidiary, Sitema, has contracts with Fingrid. That's more engineering work and design. With Swedavia, we are one of few qualified bidders for projects like this, widening of taxi runways at the Arlanda Airport.
In the northern part of Sweden, the Swedish government have very high prioritization on railway work in the northern regions for the future, and this contract with Infranord is one of the contracts we are executing on at the moment. All in all, our markets look good. Next slide, please. I'll leave over financial performance to Aku.
Thank you. So good afternoon on my behalf also. It has been some time when we last had this webcast, and a lot has happened since then. So I thought it would make sense to go through some key information relating to our IFRS transition, which we published at the end of June. So, in the IFRS conversion, the transition date was set in the early 2021, and we republished our financial history based on the IFRS. The main impact in the IFRS conversion was that NYAB Sverige AB, which is a legal subsidiary of NYAB Plc, was treated as accounting acquirer. In other words, NYAB Skarta merger, which happened at the end of Q1 last year, was deemed as reverse acquisition.
This effectively led to a situation where financial year 2021 and Q1 2022 Skarta financials were replaced with NYAB Sverige AB financials. In that merger, there was also a positive impact to our balance sheet, namely, that the goodwill was recorded significantly lower compared to Finnish accounting standard. The impact from that was approximately EUR 100 million less goodwill in our IFRS balance sheet. Goodwill stands at the moment roughly 120 million EUR. In addition, this of course meant that the reversal of goodwill depreciations for our P&L for 2022. For the main running impacts from the IFRS conversions are that in our P&L, we now book share incentive scheme costs which totaled 1.3 million EUR for rolling twelve months.
We can expect some increase to that cost due to the new performance period we launched in the June for the share incentive scheme. Then, in addition, we got, instead of goodwill depreciations, the depreciations from fair value allocations, and they amounted roughly EUR 2 million for rolling twelve months. Good to notice that the majority of those depreciations will vanish after Q1 next year. So on the right-hand side, you can see the illustrative picture of the IFRS transition impact. So comparing local accounting to IFRS, of course, main impact for FY 2022 was that the Q1 Skarta financials were replaced with NYAB Sverige financials.
On the EBITDA level, it's also good to notice that the sales gain we recorded from Skarta Energy sale last year was a few million EUR less in IFRS compared to local accounting. All in all, net impact to EBIT from the IFRS conversion was EUR 13.5 million positive, and our IFRS EBIT landed to EUR 25.7 million. In the balance sheet, this transition had an impact to equity ratio, so the equity ratio decreased by 9 percentage points. For the financial performance for the H1, so as already stated, reported growth was approximately 43%, and in Q2, 17.2%. When calculating comparable revenue growth, with constant currencies for the H1, it was approximately 29%.
That comparison is calculated in the way that Skarta's financials were included as a pro forma calculation for the Q1 last year. On the profitability side, H1, we recorded EUR 2 million positive EBIT, and in Q2, EUR 4 million. This was impacted by the settlement of Mikkeli case, and the net impact to EBIT was EUR 3.3 million. The remainder, EUR 300,000, were recorded to financial income as a gain from penalty interest relating to that settlement. It's good to also notice that when comparing to reported figures last year, this year we occurred approximately EUR 1.2 million more from group administration costs, and also the share incentive scheme costs of EUR 700,000.
So net impact from Mikkeli group administration costs and share incentive costs was plus EUR 1.4 million to H1 EBIT. Looking a bit further ahead and looking for the comparison period, it's good to notice that for the Q3 last year, we had exceptionally high amount of project margin reductions, for example, relating to Hanhikivi project last year. So it should be relatively easy to beat that one. But of course, on the Q4, we had a quite sizable positive impact from Skarta Energy sale. Then, I think, at least in the eyes of the CFO, this is the highlight of our H1. So we had extremely good free cash flow development for the H1. It totaled EUR 9.3 million, of which, of course, EUR 9.2 million was deriving from Mikkeli settlement.
However, when we look at the comparison period, our free cash flow then was -EUR 8.3 million. So in our underlying operations, we had an improvement of over EUR 8 million on free cash flow generation. And I think this is a good testament of Finnish turnaround we have implemented, and also, throughout all operations, the good working capital management we are conducting, in the project level each and every day. Order backlogs, as Johan mentioned, although it was increasing from the end of the year and ended to EUR 252 million, it was still somewhat behind of comparison period. Majority of the decline is explained from depreciation of Swedish krona, but also that in Finland, we have slightly, smaller order book, which comes from the lack of new renewable energy projects.
Also, good to bear in mind that in our operations, during these volatile times, it has been focus on quality and profitability of order intake, which guides us also in the future. Then, revenue split. So proportionally, Finnish share of revenue has increased. However, it's good to understand that due to the business dynamics, when we go further ahead in the year, we estimate that the share of Sweden will increase, and currently, we are estimating that the end-of-year situation would be somewhere around 70-30, Sweden, Finland. And the same applies to revenue by customer groups. As in Finland, we have the majority in private sector clients, and other way around in Sweden, we have more public sector clients.
So most probably, at the end of the year, we can see the increase in the share of public sector clients when we next time report these figures. Then looking at the balance sheet, equity ratio has remained on the stable level, 69%. And net debt to EBITDA came down to 0.2x, which is, of course, driven by our good free cash flow development. So that was my part in a nutshell, so I hand it back to you, Johan Larsson.
Thank you, Aku. So, our executions and performance in comparison and in relation to our long-term financial targets, this is by rolling twelve. As you see, our annual organic growth heavily exceeds our target. Our EBIT margin somewhat exceeds our annual target, but bear in mind, we see the uncertainties we see on the market, so still, we don't expect to reach our target, but we will try to get as close as possible, of course, during this year. Equity ratio, we are in good shape with 69%. And since this is rolling twelve, dividend is nothing to declare at the moment. What I can say is that, we do this revise when we...
In accordance to our IFRS transition as well, and what's markedly changed is that we raised our annual organic growth that earlier was 7% to now exceed 15%. And as you see from our H1 numbers and the position we are in, we are quite comfortable that we will reach that, both this year and over time. But of course, we have to pay attention to the market, and the volatile landscape that are in the macroeconomic market at the moment, so, but, as far as we can see now, it looks very good, our performance. So next slide, please. Right, I'll try to sum it up. Nothing new, you've seen it all. But, we can state that despite the macroeconomic headwinds, we have achieved another six months of profitable growth.
Of course, NYAB's background is more than a decade of profitable growth each year. As I mentioned earlier, the revised organic growth that reflects our current position and market outlook. During temporary challenging market conditions, we must extend our focus on sustainable, profitable growth, and the thing is that as we view the market now, we can only grow at the pace we have capacity to do with increasing risk, and we don't want to increase risk. That's where we are at the moment, and when it comes to the market, we have the long-term mega trends that creates an underlying demand within our markets. It's even a growing demand in some parts of the market. So, it looks good and favorable. So, that's where we are. Thank you.
Thank you, Johan, and thank you, Aku. Our next financial report will be the business review for the third quarter, and that will be released on 10 November 2023. Now it's time for the questions, and first question is about acquisitions, that when can we expect to have those?
Yeah. About acquisitions, of course, I'm not allowed to say too much about anything, but we have put quite a great effort, which we always do, but a little extra effort during H1, since it's in many aspects the buyer's market for the first time when it comes to acquisitions and not the sellers. But it's an ongoing work, so we have stated and announced that we aim to make 1-3 acquisitions annually, and I can't really say much more than that at this moment.
I can only say that we are very selective since we are an industrial buyer, and it's very important that it's right with our strategy, and goes well together with us, both when it comes to soft value and hard value. So, yeah.
Okay, then we have several questions regarding the potential listing to Sweden. Are you able to give an update how the processing is going, and what would be the possible timetable?
Yeah, when it comes to both re-domiciliation and potential listing in Sweden, those two questions are, of course, related. I can only say and state that it's an ongoing work. Measures are taking all the time. We have our selected and announced advisors in these areas, and we hope to be able to present a decision quite shortly, but everything is not in our hands. And we are, of course, attached to the re-domiciliation plans. There are, like, pre-advanced decisions from authorities and so on. So, we're working on it, and hopefully, very soon, but I can't really give a timeframe, and the decision of exactly what to do are not made until we have a little more fact.
We will get back to that, and we will announce it, and it will get to the market's knowledge as soon as the decision is made.
Okay, then, if we compare the H1 revenue and result to the guidance, it looks a bit modest. So can you walk through and elaborate a little bit more about the seasonality of our business?
Yeah. First of all, that question is, of course, very relevant since we have very good outcome in H1, but it's more like, we see the tendencies on the market. We see that inflation are not like moving the right way, which will lead to more increased interests, which doesn't affect us too much directly in our projects, but it affects our clients, and it affects our subcontractors, and eventually it will also hit us. So that's the background. But when it comes to the seasonality, what's different with us, and the important context to understand, and I think this is very good for investors to realize, is that close to all Nordic industry-related peers has seasonality in what we are doing.
But our seasonality is more significant, and that is, of course, due to our large presence in the north, with ground frost and snow, that makes January to April, most work related to land improvement and infrastructure is not preferable to execute. It's as simple as that. Then comes May, and you start a lot of projects, simultaneously, and that means a lot of costs. Then comes the first high season month that exists in H1, and that is June, and in June, we have a very good outcome. You can see that also in, in, our figures, and that's the difference really between Q1 and Q2 in many ways, that, you have June and Q2...
And then we have that seasonality throughout, that good seasonality throughout all of H2. July to December are months with that are very active, high execution on projects, vastly higher both revenue and especially earnings during H2. So that's, like, really the background of seasonality. And if you want to have some more color to it, like, as long as we are growing and getting bigger, we are increasing our fixed cost and the personnel cost during low season H1. So the natural outcome would be that we should have less good result when it comes to earning H1, and clearly improved results in H2. So taking that into account, we, of course, have a really good performance this H1.
So, I think that puts the most color I am able to put on it to describe the seasonality, but, it's an important part to really understand NYAB and to interpret our outcomes, and earnings, and revenues the right way, so.
Okay. Then, question that, revenue in Sweden has decreased slightly compared to the last year in Q2. Of course, there was headwind from the Swedish krona, but what were the other factors behind the development?
I don't think that our revenue has declined in Sweden. The percentage of revenue compared to Finland has declined. So, but all in all, with both our revenue and earnings that come from Sweden's, we are, of course, hurt by the weak krona.
Okay. Then how do you see your growth opportunities versus growth targets in Finland?
Well, most important, of course, when it comes to Finland, is that we have made a turnaround. We have a clear and stable profitability. Very happy and glad to see that. And, we don't prioritize markets out of from what country it is. When we see the right opportunity, that suits us, who we are, and we can do it with, not too much risk, and it's, a good, good business, both short term and long term, we will grasp those opportunities, in Finland as well as in Sweden. And Finland. Of course, Sweden are performing good, but we have, we have a history of good performance. Finland is now. They have made the best improvement and, and are improving and performing so much better than last year.
So they, that's the answer to that.
Okay. It looks like that was all questions for now. So I want to thank everybody for participating, and we'll see you next time.
Thank you.
Thank you.
Thank you.