Hello everybody and welcome to this presentation of Prevas Year End Report 2023 and also, of course, the Q4 results. The agenda for this rather short meeting is that we will start with a brief introduction, we will review the financial performance with some comments from us, and also we will present the market and the way forward. I am, sorry, sorry, my name is Magnus Welén, I'm the CEO of Prevas, and with me I have Helena Burström, who is the CFO of Prevas. Okay, so we start with the introduction. Prevas in brief, we are an engineering consultancy company founded in 1985. We are today, we celebrate actually 2023 that we reached the milestone of 900 employees in Scandinavia. We are present in Sweden, Denmark, and Norway. What do we do? We work with sustainable product and production development from startups to leading industries.
What is common for customers is that they have extremely high demands. From an investor point of view, what do you see in Prevas? We see that Prevas has performed the last years strong profitability and continuous growth. We also see that Prevas has performed some successful acquisitions during the last years. We also see that Prevas is well positioned in the market. As we all are aware, the market has been rather dynamic during 2023, and we are strong in the segments that are growing, and we also have a low customer dependency, which is very, very good. The five largest customers we have represent less than 25% of our total turnover. We are well positioned in this dynamic market. Then we have also a strong financial position where we have a strong balance sheet, a low debt, and also high cash flow.
Okay, that was a little bit about Prevas in brief. Now towards more interesting, of course, the financial performance for this quarter. I would say that this quarter, we say that it was a stable quarter in a dynamic market. We grew a little bit on the turnover, but our focus for this quarter has been to maintain our margins. And the fact that it was one less working day this year compared to last year, we actually managed to achieve and deliver EBITDA margins in line with our financial target of 12%, which I believe is in this dynamic market is rather good, actually. So we are a little bit proud of this quarter considering the situation we are in right now. We also see that the operational cash flow for this quarter was strong, an increase of 48% compared to last year. But this was one quarter.
Looking into the year, how did that look? We actually made all-time high during 2023 with 12% increase of the turnover. We managed to increase the EBITDA. Once again, looking into the effect of the working days, if you add that difference of SEK 10 million to the EBITDA, we actually are in line with our financial targets. This means that for 2023, we grew the turnover, we grew the profit, and we aligned with our financial targets. Looking into EPS, it was more or less similar to last year. What is really strong for Prevas during this year was the operational cash flow. So we had good conversion from the profit into the cash flow, which of course is very, very good. So that was one year. But how does it look if we zoom out a little bit and see the bigger picture?
What we can see here are two different graphs where you can see the growth on one side. As you can see in this, Prevas has during the last year been able to continuously grow the company. Have we grown with profit? Yes, we have. Since 2017, you can see that the trend has been rather decent, rather upwards. We are now on a profitability level where we are close or on the financial target we have set up during last year of 12% EBITDA. This is rolling 12 months you see on these pictures. Looking into the development of earnings per share, you can see it also followed the positive trend. 2023 was in line with 2022. Given the market circumstances during 2023, I believe that we delivered rather well during 2023. To be honest, we look forward to 2024. We come back to that.
Helena, a little bit about the financial situation.
Yes, if we look into the cash flow, we increased cash flow from operating activities to SEK 41 million compared to SEK 28 million in Q4 2022. And this is mainly driven by a reduction of operating receivables. Cash flow from financing is slightly higher since the final day in Q3 was during the weekend and amortization was reduced in October, affecting financing activities negatively with approximately SEK 6 million. And cash amounted to SEK 112 million at the end of Q4 2023 compared to SEK 83 million in Q4 2022. And Prevas' financial position remains strong. We can see that Prevas is well below target of maximum 2x EBITDA. And net debt in relation to EBITDA is still negative. Our equity ratio is strong and amounts to 60.3%. And our 2022 equity ratio amounted to 56.9%.
To summarize, we have low net debt, strong operational cash flow, and strong balance sheet. The board of directors proposes to the annual general meeting to increase the dividend to SEK 4.75 per share compared to previous year SEK 4.5 per share. This is an increase of 5.6%. The proposed dividend ensures a continued good financial position and enables room for acquisitions. In all, it's a great financial platform moving forward. With that, Magnus, I hand over to you again for some business update.
Thank you very much, Helena, for that. A brief business update. During this quarter, we welcomed the fantastic team of DVel, a company based in Lund, Sweden, a team of experts in advanced tests and measurement working for the same customer groups that Prevas is actually working with. It's 25 qualified experts coming into the Prevas team. 30% of those are actually with a PhD degree. So this is a high-end team coming into Prevas. And we consolidated the figures from 2nd of October into Prevas. Another positive thing about this team is they have been working quite intensively also with diversity and equality. And they are 33% female coworkers in the team, which is actually good in our business. And it's one of the prioritizations for Prevas is to be better in quality and also increase the percentage of female coworkers within Prevas.
So they are a little bit ahead of the rest of Prevas, but we are chasing up, of course. Some important orders during this quarter for Prevas. We got the order for a MES system. It's a manufacturing execution system for the steel industry. What is interesting with this is it's a control system that controls the production in a steel manufacturing facility. It's a very advanced system, but it's also that we're working together within Prevas with different teams. The way we were able to take this largely large order was that we were cooperating between our different nodes in Prevas. And then we're combining our expertise in steel manufacturing, in software development, and in UX, actually. So it was the team in Malmö combined with the team in Karlstad working together in order to deliver this system, which I believe is really great.
We also have gotten an order from a battery material producer within something called EAM. It's Enterprise Asset Management. We're helping the customer to improve their asset management and their maintenance, how they work in a more efficient way. And this is actually a SaaS solution. So we are delivering not only services, but also software connected to this, which will give us a recurring revenue over time and a long-term relationship with this customer. We also have signed an order for a major support agreement within software for the vehicle industry. Within Prevas, we have quite many businesses where we take care of critical systems for the customer. So the customer is more or less outsourcing these systems to Prevas. And we are maintaining them. We are developing them.
And we also see too that we have support for these softwares, which means that we have a long-term relationship with the customer because these systems, like in one case, we have a system within traceability, is crucial for our customers. So it's a long-term relationship that we've built over time with our customers, which is examples of what we do in Prevas. We have also talked about the increase in demand from the defense side. And we see that we have increased in terms of services at the customer. But we also have grown in terms of assignments and projects that we are working in-house from the Prevas facilities for the defense industry as well, which is really good because we at Prevas, we like to do the more advanced things. And for the defense industry, we are growing in projects that we are running from our own facilities.
So a little bit going forward, what do we think about the market? What we still see is a high demand in the green transition area within the energy area, electrification, automation. The green transition is driving a lot of change within the industry as we speak. We also see increased demands in cybersecurity and in defense, as I was mentioning. But there are also areas where we see rather high competition. And one area is within more general IT consultancies. It's not a big part of Prevas, but we see that the competition in some areas is a little bit higher than it used to be a year ago or something like that. Generally, Prevas is very well positioned in this dynamic market. And we are transferring the resources to the areas where we see the demands, of course. Generally, we continue to view the market as normal.
As I wrote down in this slide as well, the long-term demand will increase for the advanced solutions and technology that Prevas is providing. That is for sure. Then a little bit update about the green transition that is going on in the world. We see the Hello transition because this is a huge opportunity for Prevas. Sustainability is integrated in the DNA of Prevas since many, many, many years. We're working hard with that. So we have set up an internal target to reduce the carbon dioxide emissions with 50% within Prevas until 2030. But that is one part. That is important what we do inside of Prevas. But the big changes we can do is actually out in the customer place. What we do together with our customers is actually driving this process towards an emission-free world.
On the picture, you can see actually that is from a steel manufacturing mill. As we speak, engineers within Prevas are developing control systems that, to make it simple, you push in more oxygen in the gas heating process in steel. The result is that you really reduce the emissions of carbon oxides. It's called syrgaslansning, actually, in Swedish. I don't know the English word for it. Today we run two different projects in the same area. If we accumulate the potential savings in carbon oxide, it's 150,000 tons of carbon oxide that we see that we can support the customer together with the customer to reduce the emissions. That is huge. It's way far beyond the emissions that Prevas actually are doing internally. So we do the major things out in our customer place. Then we have the EU legislation CSRD.
It's a new legislation that is coming into the business as we speak right now. Prevas will not have a mandatory reporting for this year, but we're working very hard now in order to meet the demands for next year. But so is our customers. And that is actually driving needs for us to support our customers. And we see big potential in helping them in this green transformation in order to reduce the carbon oxide footprint within the industry. So we see big opportunities in this area. As a summary, we made an all-time high in 2023, more or less in line with our financial targets, despite this rather dynamic market. We have a strong cash flow, as Helena was mentioning, a solid financial platform. So we are ready to look into the future and to gather these opportunities that come up in the future.
So we are more or less ready to see when the market is actually moving upwards again, we are ready to change into organic growth in a more strong way as well. We have suggested an increase of the dividend as a result of our strong cash flow, which I believe is a positive sign from a shareholder perspective. We have made successful acquisitions. We look at new acquisitions right now, of course. We are well positioned in the growing sectors. I was mentioning that before. That is very important for us. And we have an agile organization that is working, a decentralized agile organization working to meet and take care of the opportunities we see. And long-term, we will continue to execute on our long-term endeavor to strengthen our position as a premium company. We want to be a premium company. We are a premium company.
We need to be a premium company for our employees, for our customers, for the society, and for you all as shareholders to create an everlasting growth in shareholder value. That is really important for us at Prevas as well. As a summary, our tagline in Prevas is "Hello Possibility." With this, I would like to say hello 2024. We really look forward to a fantastic year 2024. That was the presentation. Now we move into the Q&A. I hope that you have a lot of challenging questions for me.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Stefan Knutsson from ABG. Please go ahead.
Good morning, Magnus and Helena. Thank you for the presentation. Just firstly on the growth, sort of, you said, I think you said that you had sort of lower utilization rate here in Q4. Can you mention anything how much that affected and if you are seeing any sort of pressure on prices as well?
The effect of the lower utilization, I can't comment on that, how big that was. But I can put it like this. We will get a higher result, of course, when we increase the utilization. We have potential in Prevas today to increase the utilization as such. And then the second question was, please repeat that.
Yeah, regarding prices, realized prices to customers and your ability to offset sort of wage increases.
I believe we have good opportunities to offset wage increases. It's a little bit tougher, generally speaking, compared to some years ago. We are very positive in that sense. We work hard with that. A big part of that is actually business development as well so that we're not just offering the same, but we are changing the way we work with our customers and finding new business models, which also increases the net pricing as well. We estimate that we will be able to offset the cost development in terms of pricing. Of course, in some areas, as I was mentioning, it's a tougher business. There we see price pressure. Generally speaking, we see that we have good opportunities to offset the cost increases.
Okay, perfect. I will do a follow-up as well. If you can say anything about the order situation looking ahead and if you view that your visibility is normal or if it's harder to tell right now?
I would say that the order intake is normal for this situation. It's not extremely high. It's not extremely low. We have some units. It's very different between our different units. We have units that more or less are fully booked for 2024 with the projects we already have. But we also have units in some area where we have a little bit tougher situation where we actually are transforming and using their resources in other regions as well. But generally speaking, I believe that the order situation is normal. It's not particularly bad and not particularly good.
Okay, perfect. And then just finally on, I had a look at some market data from Konjunkturinstitutet. It seems that Q4 was a challenging market overall in your industry. But then Innovationsföretagen released a rather optimistic update just a couple of days ago. Looking ahead, do you agree with their view that you see improvements already initially here in 2024, or do you think they are too optimistic?
I would say that I share their view. But once again, it's quite diversified. It's different between different business segments, different regions, and so on. But generally speaking, I think that it's a more positive discussion now. But I don't really see that we have that in terms of firm order intake, increases in that sense. But the discussions, I believe, are very positive. And we have a positive view in that sense of 2024. I believe that Q1 and Q2 more or less will be a little bit tougher. And then we believe that Q3, Q4 will actually improve because we have positive signs from many aspects. Looking into the key performance indicators like Inköpschefsindex , etc., and those, they are more positive. The inflation is going down. The stock market is going up.
It's a lot of signs that we believe that we will get improvements during this year. But the question is when.
Okay, very good answer. That was all from me.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.
Thank you. Can you comment on your M&A pipeline?
Yes. We have today, I would say, rather good pipeline in terms of M&A. Many interesting discussions going on. Of course, I can't be concrete and tell you what it is. We have a good pipeline and also strong financial positions. We are working in that area. We are picky, as we've been mentioning before. It's very, very important for us that the companies that we acquire that come into Prevas that we have a good fit because in the consultancy industry, it's about people. It's about culture. We need to see too that we have an extremely good match. So that is important for us. That was a long answer on a short question. Yes, we have a good pipeline.
How do you see the new regulation from 1st October 2022 that your customer needs to offer your on-site consultants an offer of employment or cancel the contract on the consultant after 24 months? How do you plan to handle the regulation? Do you see any risk that your consultant will transition to your customer?
That was a very good question. That is something that we work with in Prevas. We also work with our employer organizations and other general organizations in Sweden how to handle the new legislation that is coming up because it's not tested in the law area, so to say. So it's open now for quite a lot of different judgments. But we have taken mitigations actions in that. And the key there is to have a dialogue with our customers because from our point of view, and also from our customer point of view, we have a good partnership. And we want to continue to have a good partnership with our customers. So we are adapting now and taking mitigations action in order to secure, of course, reduce the risk in that area.
But I also want to say like this, even now, today, before this legislation, it's a free market. So all of our employees could actually, today, they are already a question from our customers to be employed by them. So in that sense, it's a new thing, but it's not dramatic, actually, in that perspective. We already live in this world with a free labor market so that our customers are very interested in recruiting our consultants.
I realize that you won't give a forecast, but do you think that you will deliver on the financial goals 2024?
That's my ultimate target, of course. I strongly believe that we can do that. But as I say, we don't live any forecasting. It's a long year. It's much that can happen during this year. We managed to reach the financial target during 2023. We will work extremely hard. That I can promise you to deliver on the financial targets for 2024.
Do you still intend to continue hiring in 2024?
Oh, yes. We are actually, as I was mentioning, we are an agile organization. In some of our regions, we are actually fewer now than two quarters ago. So we are less people because we are adapting the staff to the actual need. In some regions, we are growing right now and employing. And we will absolutely recruit during 2024. That is for sure, given, of course, that the market continues to have demands as we hope and see. Many questions. Good. More questions.
No more questions.
No more questions. Okay. All right. Thank you, everybody, for listening. Thank you for very good questions. I look forward to 2024 together with all of you. Thank you very much. Bye-bye.
Bye.