Welcome to the Prevas Q2 report 2023 Conference Call. For the first part of the conference call, the participants will be in listen-only mode. During the question-and-answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers. CEO Magnus Welén, please go ahead.
Okay. Hello, everybody, and welcome to the presentation of Prevas Q2 Report. My name is Magnus Welén, and I am the CEO of Prevas. Today, the plan was that our CFO, Helena Burström, should join in the meeting as well, but unfortunately, she's home ill. Instead of Helena, I have with me Linda Södergren, our Financial Manager, who can support if you have specific questions regarding the financial situation and so on. We continue. I would like to first start with a brief introduction of Prevas, the company, that you are visiting today. We are an engineering company founded in 1985, in Västerås, Sweden. We are today above 900 coworkers working in the Nordic markets. Our main market is Sweden, we are present in Norway and also in Denmark.
We work in two different areas. We work in product development, and we work in production development. This means that we support our customers with their core processes and supporting them with things that are truly important for our customers. Who are our customers? We work with high-end industrial companies, normally working on the global level, which means that they are competing on a global base. We are supporting them with their core processes, thus means that we need to be at par with their high level. We support with world-class solutions, world-class services to our customers. To summarize what we do, we co-create technology, technological advancement for the betterment of all, for the people, for the planet, and also for the profit.
Talking about profit, I think that is a good way to move over to the actual Q2 report. This is the agenda for the presentation today. We will start with a brief introduction, which is now, more or less. We will have review of the financial performance, some comments about that, then we'll be looking to the market, the way forward, and we will finalize this session with a Q&A session, where you have the opportunities to ask questions to me and to Linda. Okay, let's go. The first slide here is about a major change in Prevas. This is because our former CEO, Johan Strid, has decided to resign as CEO after 5 successful years. Johan and Prevas have made a fantastic journey over these five years.
The good news is, in this, is that Johan is elected to the board of Prevas, so he will continue to be a part of the Prevas family and to work together with the team at Prevas and me . Johan will also support us with M&A activities. Thus, it means that we will maintain our progress in that important area as well. As I'm new in this role, Johan will support me in these areas, so we will keep the pace that we're used to here in Prevas. This means that I'm the new CEO from the first of June, and this is naturally my first presentation of a quarterly report, so I'm very happy to be here. As I'm new, I take the opportunity to give a brief introduction of who I am.
This will not be a 20-minute-long presentation. I think it's two minutes. I hope it can be like that. I have an industrial background. I'm an engineer from the beginning, from the Royal Institute of Technology. I've been working with industrial companies like ABB, Sandvik, and Snap-on Incorporated. I've been working in our customer base since 2008. I've been working in the consultancy industry. I've been working at a company called DEVA, Deva Mecanyes , where I started as a in a small consultancy company with 20 employees. Since 2008, I was the managing director of that company, growing that into well above 100 employees, and the company was acquired into Prevas in 2001, when we, Prevas acquired the Evotech Group.
After that, I've been working as a regional manager in Mälardalen for Prevas, and the operations that I've been running here in Prevas since 2001 is well above 200 employees. It's a rather big part of Prevas that I've been responsible for before I got the opportunity to move into this position. Since the start, I've been traveling around Prevas, visiting all the sites and learning more about Prevas, and I must say that I'm impressed about many things about Prevas now, when I get to learn more about the company . The people and what we do for our customers, we really deliver world-class solutions and services and make a difference for real, for our customers.
We're creating enormous customer value, but also for the people, for the planet. We do good things with technology. I'm proud of that. That was the introduction. Now, let's move into the part where you actually, I believe, is more interesting: the financial performance. How did we perform during Q2? What we see is that Prevas continued to grow. We actually grew with 13% in the top line. We maintained the operating profit in SEK, more or less, but what is important to emphasize in this is that for the quarter, we had one working day less than compared to last year. If we adjust for that difference, we actually maintain our operating margin for Q2 compared to Q2 2022, which I believe is a strong quarter.
What we can also see in this quarter, which I would like to emphasize, is that the operational cash flow has increased quite substantially from SEK 31 million to SEK 15 million. We have a strong operational cash flow for this quarter. Moving on, this is another PowerPoint slide where you can see during the quarter, the same figures, more or less. What I would like to emphasize here is a quarter is a quarter. If you look into quarter one, we had one working day more. We've had a record quarter in Q1. We made a good quarter in Q2, and if we add those together, I believe this gives a good view upon how Prevas performed. What you can see here, that for the first half year, we grew the turnover with 19%.
We grow the EBITDA with 19%. We maintain our EBITDA margin of 12.2% for the first half year 2023, compared to the first half year 2022, which I believe is fantastic, and also it's an all-time high for Prevas. This first half year is an all-time high. I'm very proud to be able to present that, and it's a good platform for the journey ahead. As I said, looking one quarter, looking at half a year, we need to zoom out a little bit more to see how the company is developing over time.
On this slide, you can see. Here, you can see the 12-month rolling EBIT and the EBITDA margin, and you can see that Prevas has gone through a tremendous change over the years, since 2017, where we struggled quite hard. Today we are up at, I would say, rather healthy profit margins, and also we have a continued growth over this time in terms of EBIT. This is something that we at Prevas are proud of to show. Looking into the highlights of the cash flow. As I mentioned , the cash flow from operating activities increased rather substantially. That is partly due to that we have invoiced larger projects.
It's also whether we're going back to a more normal level of the cash flow for the quarter compared to last year. What you also can see in these figures is that the cash flow from investment activities is actually low. Why is that? The reason for that is last year, we acquired a company, BitSim NOW and factor10. This quarter, we did not do that. That is the rationale , and the reason that the cash flow is lower this year compared to last year in the investment activity. Looking into financial activities, we actually have a larger negative cash flow, and the reason for that is, of course, our increased dividend.
That is a good thing, actually, paradoxically, now, that the financial activity is, the cash flow is increasing negatively, that is due to dividends, which is a good thing, because that's an important part for us at Prevas in order to pay a good dividend. Explaining the cash situation, you can see some of the major things we've been doing, since the end of last quarter, two, 2022, the end of this quarter. We have made an amortization of SEK 23 million, which relates to loan that we took 2001, due to the acquisition of Evotech. That loan was SEK 90 million.
We are now down to SEK 33 million, which means that our debt will go down even further in the coming quarters. We paid the dividend of SEK 59 million, which is well above 2022, when it was SEK 45 million. During this period, we also had SEK 90 million of cash outflow due to acquisitions. One thing also that I would like to mention is that we had an effect for the cash flow of synthetic options of SEK 12 million. This program has now ended and will not affect the cash flow from Q3 and forward for Prevas, and will not also even and not affect the margins, et cetera, and the profit of the tax and so on.
That program has now ended. Looking into the debt situation, you can see that our net debt has been reduced from SEK 20 million to SEK 9 million, which means that we are well in line with our financial goal. The frame that we set up was that we shouldn't exceed 2 x of the net debt/EBITDA ratio. We are now down to 0.04, so we have a strong financial position. Our equity ratio is 59%, which I believe is really strong. As to summarize, my view of our financial position within Prevas, we have a strong operational cash flow, we have a low net debt, we have increased our dividend, and we have a strong balance sheet, we have a solid financial situation.
In summary, we have a great financial platform moving forward and taking Prevas to the next level, which I believe is exciting. That is a little bit about the financial position. What is our view on the market and the way forward? Before I go into that, I would like to emphasize some highlights for the quarter, which I'm extra proud of course, that we have been achieving within Prevas. We got an award from the company Hexagon in Las Vegas, on their fair HxGN LIVE. We got the award, Outstanding Channel Partner, which I believe is fantastic, a good sign of long-term cooperation with Hexagon and the value that we provide for our customers.
is we're very proud of that, and thank you, the team, working with EAM within Prevas, for actually achieved that award. We signed a framework agreement with a global industrial leader. This is something that a bit frustrating in my position, that we do so many good things that we can't talk about. Yeah, I understand it sounds strange, but it's, we need to take care of our customers' information in the perfect manner, and we respect that 100%. We can't actually tell who this is, but it's an international global industry leader that had chosen Prevas to continue to work with and then improve their partnership.
We made a spearhead acquisition within the Life Science area, a company called SDS MedteQ, where we have acquired a team of experts within regulatory compliance in Life Science and Medtech. Fantastic. Very warm welcome to Prevas. We have taken in several important orders for the quarter. We have an order for a complete automated production line for a weekly company based in Norway, which is we are proud of. That order will actually be delivered in 2024, and some parts of that in 2025, so we're talking about long-term order intake in this case. We've been awarded to develop a safety system for mobility, for two-wheel mobility, which includes software and hardware, and we will save many, many lives with this system.
I'm super proud of that we got that project. Talking about good things, we have an order for an advanced control system for furnaces called FOCS, which will reduce the carbon emissions for Uddeholm. Uddeholm is a global leader in the steel manufacturing business, and together now we will reduce their carbon footprint, which I believe is fantastic. I can continue, and continue, and continue. I will take one thing before I quit the highlights. We have been awarded to develop a large test system for the defense industry. We'll come back to the defense industry, but unfortunately, I would say, there we see a major demand increase from the defense industry.
We are there, and we are helping the defense industry in many areas, and this is one of the examples where we get awarded very advanced projects for the defense industry. Looking into our customer base, what we can see here is that Prevas has a strong and diversified customer base, where we have good distribution between different industries, as you can see, between Engineering, Life Science, Energy, Defense, et cetera, which I believe is a strong thing, so it's diversified. Our customers range from startups. We work with SMEs, we work with large global companies, and large corporations that are competing on the international market.
Another good thing with our customer base is that our five largest customers make up less than 25% of our turnover, which is good from a risk point of view. It is important for you as investors to know that. Our largest customers in Q2 are companies that I believe all of you know, is Saab, Ericsson, ABB, Sandvik, and Atlas Copco. Strong customers, extremely great to work with, and long, stable partnerships. Also, we got many new customers, of course, as well, in the journey of Prevas. Looking into the market, as I mentioned , we see high demand in many sectors, like within the electrification area, within sustainability, with automation, within energy, and also defense, where we see that the demand for our services and advanced solutions is increasing.
Generally, our view is that demand regarding advanced and complex assignments is greater than the supply in the marketplace, at least from our position. What we also see is that the competition on traditional consultancy assignments has increased in some areas, not in all areas. In some areas, it's still extremely high demand, but in some areas, we can see that the competition has increased. What do we do then in order to meet this dynamic market? We focus on growing in the areas where we see increased demand. The areas where you see on top of this is the electrification, sustainability, automation, energy, and defense, and these are areas where Prevas is now focusing to grow in order to meet that kind of demand.
I would also like to emphasize that the long-term demand for advanced technology and the ability to take on these complex problems is increasing. That is our belief, and that we have seen over the years, and we will see that moving on as well. Even though you can see short bumps on the road, so to say, in demands in different areas and so on, we strongly believe that the demand is growing over time for the high level of services and assignments that Prevas can deliver. Moving into the final slide now after 17 minutes. A summary: We see continued profitable growth in Prevas. We see stable margins, and compared in the market, I would say they are rather good.
We are in line with our financial targets of 12% EBITDA margin. We made all-time high for the first half year of 2023. Very proud of that, of course. We see strong demands in several sectors, and we work actively in order to meet those demands, and we are cooperating within the Prevas group in order to meet these demands in an even better way. We're working together in the company to meet these customers and demands they see. What does all of this? It's a way of executing our long-term endeavor to be perceived as a premium, a premium company from our employees, from our customers, from you as investors, and from the society. Finally, I would like to finalize this presentation with just something very personal.
I personally looking forward to execute on our strategy and develop Prevas into the future. We looking forward for the autumn. It sounds a little bit crazy to say, but I'm really keen on getting back to work after the vacation. That was the presentation. Now we open up for questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Okay. Was everything crystal clear then? No, no questions at this time. Sorry, we have one question.
Yes. Thanks for the webcast. How do you see the dynamic going in terms of value, volume, as well as price increased ability? Some Finland consultancy firm have recently published profit warnings. What is your view of the quarter to come?
I have a positive view upon on the quarter to come, based on the customer base we have, the diversified customer base we have, and the kind of services and projects that we run. I have a positive view upon on quarter three. Saying that, of course, we are active and we are feeling the market, and we're transferring the resources into the areas where we see the demands. We are humble but positive. I hope that answers your question. I would say that Prevas is an attractive employer, which we can see in our ability to grow through organic growth.
I can also say that we need to work even. We are good today, but we need to be even better in that area. We need to be the best employer in the market. We are competing with product companies, with other consultancy companies, and I'm super proud to see that there's so many people every year that chooses to work within Prevas. We have an excellent team, we have strong values, we have fantastic customers. We are an attractive employer today, but we need to be even more attractive in the future in order to attract the best, and we are simply after the best.
In context of the current it is. Additionally, do you have a specific target range for the EV/EBITDA ratio when considering acquisitions?
We don't have a specific range in that sense when we look into acquisitions. When we think about acquisition, we think that we were really picky, and we want the acquisitions to do something good for Prevas. Do we need to build Prevas in a good way. We are picky, and we are looking for quality in terms of acquisitions, but we have not set a range. We are working with small companies. We have discussions with rather big companies in terms of acquisitions in order to move forward. We have no fixed range in terms of how much we can pay for the companies and so on.
Saying that, we have a strong balance sheet, we have a strong financial situation. We are ready, and we are open to finding interesting acquisitions moving ahead. Yes.
Could you please share the number of days expected for the two remaining quarters versus last year?
I can do that, but I need to look into that. Can you give us? Linda, can you look into that? We have those figures, of course. I don't have them in. I know that the number of working days for Q3 and Q4 this year, has one working day less per quarter. I don't know the absolute figure, but it's one less per quarter compared to last year. Soon we will have the figures. We take another question.
Some of your peers have recently issued warnings with regarding to market overcapacity, with demanding a slowdown and have eventually recruited too much during the post-pandemic period. Is that something you're seeing as well?
I'm humble, of course, about the situation, but we don't see that today in Prevas. We have a more normal market situation, but we are positioned in projects and in customers where we see that there are high demands. We have units within Prevas that actually are overbooked, so to say, with major project development or long-term development projects, and the demand is driven by the global trends, like electrification, and also within the defense industry. There we see strong demands. There are areas where we at Prevas also see that the market is weaker . We have increased our marketing and our sales activities in order to meet that.
I feel positive for the quarter to come, actually, in terms of the demand. We will not have the same situation as we had last year with the super high business climate, but we have a more normal situation. Prevas is a big company. Yes, I agree. Looking into the total market, Prevas is not so huge yet. We have opportunities in order. If we can do the, we have the best, most qualified engineers, and we work closely with our partners and our customers, then we are hopeful for the quarter to come.
It's the same working days, 2022 and 2023.
It is?
Yes.
Okay. Good. It was the same number of working days for the whole report. I was confident it was the opposite, actually. Okay. Thank you, Linda, for actually having the facts.
Definitely meant more big going forward.
I will put it like this, in some areas, it's been easier to recruit. In these areas, it's also the areas where we, our competitors and also we see that the demands is slowing down. In those areas, it's quite easy to recruit. There are still areas, competence areas, where we see that it's extremely hard to recruit, but it's also different regions, the situation. Generally speaking, I would say that it's getting easier to recruit moving ahead. We are picking that area as well, and it's important for us not to over-recruit, as you were talking about. We need to recruit and feel confident that we will get the demands.
We are not in this in order to grow at the huge expense of the profits. We want to grow with quality. That was all the questions? The last chance, some more questions. No. Then I thank you all for this quarterly report. I also want to wish you a nice and fantastic summer. Thank you.