Strong growth continued and profitability improved

Solwers Plc Company release 28 February 2023 at 08.00 am EET
Solwers Plc’s Financial Statements Release 1 January–31 December 2022

This release is a summary of Solwers Plc's financial statements bulletin January-December 2021.The full financial statements bulletin is attached to this company release and available on the company's website at https://solwers.com/for-investors/reports-and-presentations/
 

Strong growth continued and profitability improved

July–December 2022 in brief

The figures in brackets refer to the corresponding period in 2021 and are expressed in the same unit, except where otherwise noted. The figures for the financial year (1 January–31 December 2022) are unaudited (IFRS)

• Revenue was EUR 30.2 (22.7) million, which is an increase of +33.2% vs on corresponding period last year.
• EBITA was EUR 3.4 (2.0) million, which is 11.3 (9.0)% of revenue
• EBIT was EUR 2.3 (1,4) million which is 7.6 (6.0)% of revenue
• Solwers issued 1,020,000 new shares, for selected investors in December and raised EUR 4.5 million before transaction costs.

January–December 2022 in brief

• Revenue amounted to EUR 62.8 (44.7) million, showing a year-on-year increase of EUR 18.1 million, which is +40.6 (36.8)%
• EBITA was EUR 7.2 (4.7) million, which is 11.5 (10.5)% of revenue.
• EBIT was EUR 5.1 (3.4) million, which is 8.1 (7.5)% of revenue.
• The invoicing rate was 80.0 (82.2)%
• Equity ratio was 46.7(45.2) %
• Revenue growth and equity ratio above, and profitability at the level of the mid-term targets.
• The execution of the growth strategy continued with two acquisitions: one in Finland and one in Sweden
• The Board of Directors proposes to the Annual General Meeting a dividend of EUR 0,073 per share to be paid, corresponding to EUR 723,799.89 in total.

Key figures EUR thousand	2022	2021	H2/2022	H2/2021
Revenue	62 796	44 662	30 234	22 700
EBITDA	8 156	5 495	3 911	2 482
EBITDA-%	13,0%	12,3%	12,9%	10,9%
EBITA	7 218	4 708	3 417	2 044
EBITA-%	11,5%	10,5%	11,3%	9,0%
EBIT	5 091	3 371	2 283	1 353
EBIT-%	8,1%	7,5%	7,6%	6,0%
Net Profit	3 574	1 894*	1 656	844*
Net Profit-%	5,7%	4,2%*	5,5%	3,7%*
Earnings per share (EPS), EUR	0,38	0,23*	0,18	0,09*
Revenue per employee	105	112	50	52
Revenue Growth-%	40,6%	36,8%	33,2%	21,0%
Billing rate-%	80,0%	82,2%	79,3%	82,7%
Adjusted equity	38 158	31 909	38 158	31 909
Net debt	13 366	14 119	13 366	14 119
Equity ratio-%	46,7%	45,4%	46,7%	45,4%
Adjusted equity ratio-%	46,7%	45,4%	46,7%	45,4%
Total assets	81 682	70 354	81 682	70 354
Headcount, average	600	397	607	441
Headcount, at period end	582	571	582	571

* Comparison period has been restated for treatment of foreign exchange differences from net investments in foreign subsidiaries.

Market outlook

The changes in society bring new opportunities in addition to challenges.

The transition to fossil-free energy and industrial production will bring significant new investments. A variety of new energy sources, energy storage, power transmission systems and automation solutions will increase the demand for engineering and project management services. Circular economy projects, which will continue to grow rapidly, will also bring more customer engagements, as the reuse of buildings requires more engineering and project management than new construction. A good example of expertise in circular economy is our winning project in a competition organised by the City of Espoo to find concepts for the reuse of building materials and parts in the Kera area. Solwers' multidisciplinary team won the competition in early 2023 with the design "To the Next Level". The winning proposal offers a concept that aims to take the circular economy in construction to the next level from a Finnish perspective.

It is likely that residential and office construction will decrease during 2023. This change is the result of high inflation, higher interest rates and construction costs, resulting in the weakening of purchasing power and willingness to invest. This will naturally also affect the engineering and design sector. With less than 10% of Solwers' revenue estimated to come from residential and office projects, we believe that if the downturn is mild as forecasted, the impact on Solwers will not be significant.

Our business sector has suffered from a chronic shortage of skilled professionals over the past decade. However, a mild recession is likely to ease and balance out labor demand.

Outlook 2023

Solwers' good order backlog at the beginning of the year will support the positive development of the revenue. The M&A market has remained active, and acquisitions are planned to be continued further.

The diverse service portfolio, operations in the two countries, as well as the large number of small projects balance and support the achievement of the set mid-term targets. Demand for engineering and project management work related to energy production, energy efficiency and circular economy projects is also expected to grow. We expect revenue to grow and profitability to remain at a good level.

The company maintains its mid-term financial targets as follows: 

· Growth: Revenue growth over 20% (12 months) 

· Profitability: EBITA margin over 12% 

· Equity ratio: Over 40%

CEO Stefan Nyström’s review

The year 2022 was a good one for Solwers, despite the market uncertainty, and both the order stock and invoicing rate remained at a stable level. Our growth was strong, mainly due to the acquisitions made. In Sweden we acquired Establish Schening, a logistics solutions consultancy. In Finland, we acquired Arkkitehtitoimisto Sabelström Arkitektkontor, a well-known player in the Southwest Finland region, to strengthen the position of our subsidiary Lukkaroinen Arkkitehdit in the area. The new companies will expand both their own and other Solwers companies' service offerings and customer base. However, due to the circumstances we were cautious in our acquisitions and looked for businesses with less cyclical activity.

Solwers companies have a large client base in different locations in two countries and we deliver thousands of projects every year, with services ranging from design services to project management, financial management and other specialist services. During the review year, our company handled an estimated 3,300 projects, the vast majority of which were orders of less than EUR 10,000. About half of our order book is for public projects – such as hospitals, schools and museums – and infrastructure projects – such as roads, bridges, streets and tunnels.

Interesting projects throughout the year

Projects during the review year included the Lukkaroinen Architects' ongoing large hospital projects in Oulu, Helsinki and Espoo as well as the Savilahti campus, designed following the swan ecolabel criteria, and the Kuopio Senior High School of Arts (Lumit) based on an architecture competition won by Lukkaroinen team. A good example of cooperation between the Solwers companies is the Savilahti Multipurpose Centre in Kuopio. The project involves extending the old storage tunnels previously used by the Finnish Defence Forces into one large multi-purpose hall. Architects Davidsson Tarkela are responsible for the architectural design, Pontek for the structural engineering, Rockplan for the rock engineering and Kalliotekniikka for the noise and vibration measurements.

The Norrbotnia line is planned between Umeå and Luleå, and in the project our Swedish subsidiary Licab is responsible for project management, technical support, and safety issues, for example. Licab plays a major role in the implementation of the ERTMS system (European Rail Traffic Management System), in which the customer, Swedish Trafikverket, utilizes Licab expertise for design, contracting, commissioning, construction management and supervision. ELE Engineering's experts were employed by well-known major clients to develop industrial process solutions and train coupling systems, while other projects ranged from cable management for offshore wind farms to next-generation substations and power transmission solutions.

Aiming at further growth

To support our growth strategy, we agreed in May with our main bank on an extension and changes to our financing agreement. A EUR 15 million loan limit for acquisitions was added to the agreement and investment restrictions were eased. At the end of year, in December, we also carried out a directed share issue, which increased our invested capital by EUR 4.5 million, with the participation of Familjen Kamprads stiftelse, Mutual Pension Fund Elo, Säästöpankki Pienyhtiöt Sijoitusrahasto, Sijoitusrahasto eQ Europa Pienyhtiö, Handelsbanken Finska Småbolags Fonden, Mutual Pension Fund Varma, Fondita European Micro Cap Placeringsfond, Aktia Mikro Markka and CEB Invest Oy.

In 2023, we aim to continue our growth through acquisitions and keep profitability on a good level, further develop cooperation between our subsidiaries, and strengthen our competencies. A good early-year order stock together with our diversified service portfolio and operations in two countries support and balance the achievement of our medium-term objectives.

The Board’s proposal for the distribution of profit

At the end of the financial year 2022, Solwers Plc’s distributable funds amounted to EUR 38,045,715.09, of which the loss for the financial year was EUR -416,329.75.

The Board of Directors proposes to the Annual General Meeting that the loss for the financial year be transferred to retained earnings and that a dividend of EUR 0.073 per share, corresponding to EUR 723,799.89 in total, be paid from retained earnings.

Financial reporting

The financial statements and the report by the Board of Directors will be published on 24 March 2023. The Annual General Meeting is planned to be held on 21 April 2023.

The company will publish its half-year report for the period 1 January–30 June 2023 on 31 August 2023. The financial statements, the report by the Board of Directors and the half-year report will be published as a company release and on the company’s website at https://solwers.com/for-investors/reports-and-presentations/

Webcast

The company will hold a briefing in English for investors, media and analysts on 28 February 2023 at 12:00 noon EEST. The webcast will be available at https://solwers.videosync.fi/2022-results. A recording of the webcast and the presentation materials will be subsequently available at https://solwers.com/for-investors/reports-and-presentations/

Espoo, 28 February 2023

Solwers Plc

Board of Directors

For further information, please contact:

Solwers Plc, Taina Erkkilä, Group Head of Communications, tel. +358 400 153 099

Certified Adviser: UB Securities Oy, Ville Väisänen, CEO, tel. +358 405 886 769 

Solwers in brief

Solwers started operations in 2017, and today it is a fast-growing group of companies with 24 subsidiaries operating under their own names and almost 600 experts offering various design services for more sustainable living environments. The group companies offer architectural design, technical consulting, electrical, automation and transmission engineering, project management, environmental monitoring and circular economy, financial management services, digital and logistics solutions in Finland and Sweden.

Distribution: 

Nasdaq Helsinki 

Key media 

www.solwers.com