Year of strong growth

Solwers Plc’s Financial Statements Release 1 January–31 December 2021
Solwers Plc Company release 15 March 2022 at 10:00

This release is a summary of Solwers Financial Statement release January-December 2021. The figures for the financial year (1 January–31 December 2021) are unaudited (IFRS). The full release is attached to this company release and also available on our webpage at solwers.fi/en/for-investors/.

July–December 2021 in brief

The figures in brackets refer to the corresponding period in 2020 and are expressed in the same unit, except where otherwise noted. 

• Revenue was EUR 22.7 (18.8) million
• EBITA was EUR 2.0 (2.5) million
• Profitability during the period under review was reduced by project postponements and completions in a few subsidiaries.
• The impacts of the COVID-19 pandemic were reflected on business especially in the second half of the year
• Three acquisitions were made during the period. The effect of the last of the three acquisitions, ELE Engineering, will be reflected in the Company’s results in 2022

January–December 2021 in brief

• Revenue amounted to EUR 44.7 (32.6) million, with the year-on-year increase of 36.8% being mainly attributable to acquisitions 
• EBITA was EUR 4.7 (4.4) million, or 10.5% (13.6%) of revenue.
• The invoicing rate was 82.2% (85.7%)
• The Company continued to execute its growth strategy by acquiring three companies in Finland and two in Sweden
• Profitability remained at a good level but declined somewhat year-on-year due to a temporary reduction in business volume in a couple of companies and increased sickness-related absences due to the COVID-19 pandemic.
• The net profit, EUR 1.7 (2.7) million, and earnings per share, EUR 0.20 (0.40), were weighed down by expenses related to interest accumulated the last 3,5 years of EUR 0.7 million paid to creditors in connection with the conversion of capital loans to equity, and expenses of EUR 0.4 million arising from a change in a debt financing agreement and foreign exchange losses
• The balance sheet total increased to EUR 70.4 (40.0) million due to share issues carried out during the year for the purpose of the Company’s expansion and increased debt financing for the same purpose
• The capital structure remains strong, with the adjusted equity ratio being 45.2% (44.7%) at the end of the year
• Solwers was listed on the First North Growth Market Finland marketplace in June. Trading in the Company’s shares started on 18 June 2021 
• The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.04 per share be paid, corresponding to EUR 350,343.36 in total. According to the dividend policy, Solwers distributes dividends corresponding to 20–40% of its profit.

Key figures

SOLWERS CONSOLIDATED
EUR thousand	2021		2020		Change		H2/2021		H2/2020		Change
Revenue	44 662		32 649		12 013		22 700		18 755		3 945
EBITDA	5 495		4 970		525		2 482		2 850		-368
EBITDA-%	12,3%		15,2%		-2,9%		10,9%		15,2%		-4,3%
EBITA	4 708		4 427		281		2 044		2 490		-446
EBITA-%	10,5%		13,6%		-3,0%		9,0%		13,3%		-4,3%
EBIT	3 371		3 539		-168		1 353		2 004		-651
EBIT-%	7,5%		10,8%		-3,3%		6,0%		10,7%		-4,7%
Net Profit	1 672		2 675		-1 004		644		1 606		-962
Net Profit-%	3,7%		8,2%		-4,5%		2,8%		8,6%		-5,7%
Earnings per share (EPS)1), EUR	0,20		0,40		-0,20		0,07		0,25		-0,17
Revenue per employee	112		110		3		57		63		-6
Revenue growth	36,8%		26,5%		10,3%		21,0%		40,4%		-19,4%
Billing rate	82,2%		85,7%		-3,5%		82,7%		87,9%		-5,2%
Adjusted equity	31 750		17 869		13 882		31 750		17 869		13 882
Net debt	14 119		12 741		1 378		14 119		12 741		1 378
Equity ratio, %	45,2%		31,8%		13,4%		45,2%		31,8%		13,4%
Adjusted equity ratio, % 2)	45,2%		44,7%		0,6%		45,2%		44,7%		0,6%
Total assets	70 195		40 017		30 178		70 195		40 017		30 178
Headcount, average	397		297		100		397		297		100
Headcount, at period end	571		371		200		571		371		200
1)Comparison period and year 2020 adjusted for share split executed during review period
2)Capital loans categorized as equity

Outlook and mid-term financial targets

The level of investment varies from one year to the next and in different ways in different sectors. Public and private sector investments affect employment and profitability in the entire design and engineering sector, including Solwers. Expanding the service portfolio and the diversification of business and the geographical scope of operations through the Solwers companies provides balance and supports the achievement of the targets set by the Company. The demand for infrastructure design and engineering services in Finland is stable, and the demand for industrial and infrastructure design and project management services in Northern Sweden is expected to remain strong.

The Solwers companies do not operate in Russia or Ukraine, but the change in the geopolitical situation may affect customers’ willingness to invest in Finland and Sweden.

The acquisitions made last year will increase Solwers’ revenue in 2022 and strengthen the Company’s expertise and market position. Solwers intends to make further acquisitions. The Company’s priorities in its business operations are growth and improving profitability. The project portfolios of the few subsidiaries that previously suffered from a temporarily reduced order backlog have returned to normal and profitability has improved in the first couple of months of the year.

The COVID-19 pandemic has continued and, in the early part of the year, the number of sickness-related absences among the Company’s personnel has increased substantially compared to previous years due to Omicron infections. This will affect the Company’s revenue and profit performance for as long as the COVID-19-related absences continue.

The Company will keep a close eye on the effects of the developing geopolitical situation, but nevertheless maintains its mid-term financial targets as set out in the prospectus published on 3 June 2021 in connection with the IPO. The targets are as follows: 

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

· Profitability: EBITA margin over 12% 

· Equity ratio: Over 40%

CEO Stefan Nyström’s review

Solwers had a busy year of significant achievements in 2021. I am pleased with our efforts, and I want to take this opportunity to thank our personnel for supporting our strong growth through their commitment and professionalism.

Our revenue grew by nearly 37 percent and amounted to EUR 44.7 million. We strengthened the Solwers network by acquiring five companies and had 200 new professionals join our ranks. Two of the acquired companies are located in Sweden and three in Finland. The combined revenue of the acquired companies exceeded EUR 19 million in 2021. Lukkaroinen Architects increases our expertise in the architectural design of public facilities, such as hospitals and schools, while ELE Engineering is an experienced engineering service provider focusing on electrical and automation solutions for industrial customers. Falk Construction Management and Inmeco Building Consultants strengthen our expertise in project management, and LVI-insinööritoimisto Meskanen specializes in HVAC engineering. In addition, we moved Rockplan’s structural engineering business to Pontek, which better enables both companies to focus on their core business.

Our EBITA for 2021 was 10.5%. Profitability was reduced by the cancellation of a significant project in one subsidiary, the postponement of a few smaller projects and the temporarily lower order backlog during the financial year. In the latter part of the year, the Omicron variant of COVID-19 increased sickness-related absences, and the same trend has continued in early 2022. This will affect revenue and profit performance in a few of the Company’s subsidiaries for as long as the COVID-19-related absences continue.

Our listing on the First North Growth Market Finland marketplace maintained by Nasdaq Helsinki in the spring was a large project that kept much of our organization busy. As part of the project, we negotiated the acquisition of minority interests in our subsidiaries. Following these arrangements, Solwers now has a shareholding of more than 90% in all of its subsidiaries except Taitotekniikka and Contria. The successful IPO saw Solwers issue 1.2 million new shares and raise gross proceeds of EUR 9.0 million, which supports the execution of our strategy. In connection with the IPO, the Company’s financing structure was also changed by converting the capital loans on the Company’s balance sheet into equity and by signing a new financing agreement with the Company’s primary financing bank, which made it possible to finance new acquisitions partly with debt. We also streamlined our group structure in the fall by transferring ownership of all of our Swedish subsidiaries under Solwers Sweden AB at the end of September.

Solwers companies had over 3,800 (2,100) projects during the year, with most of these being relatively small assignments valued at less than EUR 10,000. Examples of major projects during the year included Architects Davidsson Tarkela designing the renovation projects of Lahti City Hall and the National Museum of Finland in Helsinki. The same company also participated in the architectural and conceptual design competition for Elielinaukio and Asema-aukio as part of the partnership that submitted the winning proposal, “Klyyga”, which was described as distinctive and full of character.

Insinööritoimisto Pontek won a competition organized by the City of Oulu for designing Hartaansilta bridge. Pontek is also involved in designing the construction of the new main police station in Vantaa. Finnmap Infra was responsible for the construction plan for the Turku Ring Road development project. One good example of active cooperation between the Company’s subsidiaries is a project related to the excavation and development of a large sports center in former caves in Kuopio’s Savilahti district. Of the Solwers companies, Architects Davidsson Tarkela, Rockplan and Pontek are involved in the architectural and structural design of the project.

In the Swedish market, demand was stable and strong throughout the year. In Northern Sweden, Licab is involved in a large battery industry project and, in the developing region of Norrbotten, Licab’s customers include the Swedish Transport Administration and the local municipalities. In Southern Sweden, Dreem Architects has several design projects under way, including the conversion of abandoned old shopping centers in small concrete towns built in the 1960s into offices, schools and active urban centers.

We continued to make progress in the area of sustainability by making a commitment to the UN Sustainable Development Goals (SDGs) and joining the Global Compact in the spring. Together with the shared Code of Conduct, mission, vision and values of the Solwers companies, this commitment provides a framework for our operations. The Pasila circular economy project is pending a decision by the City of Helsinki to transfer the property in question.  In addition, we have put together operating practices and models, and we share best practices in order to strengthen our vision of being the preferred partner in visionary and sustainable design and engineering.

In 2022, we will continue to develop our subsidiaries, we will seek growth and improved profit performance, and we will strengthen our existing and new competencies. We intend to continue to make acquisitions in Sweden and Finland and, possibly, in new markets. We may also make smaller acquisitions to strengthen local expertise and capacity. 

Our view is that the sudden change in the geopolitical situation may affect the willingness to invest in our operating segments, and we need to prepare for this.

The Board’s proposal for the distribution of profit

At the end of the financial year 2021, Solwers Plc’s distributable funds amounted to EUR 32,490,306.98, of which the loss for the financial year was EUR 883,403.88.

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 0.04 per share be paid, corresponding to EUR 350,343.36 in total, be paid from retained earnings.

Financial reporting

The financial statements and the report by the Board of Directors will be published on 29 March 2022. The Annual General Meeting is planned to be held on 21 April 2022.

The Company will publish its half-year report for the period 1 January–30 June 2022 on 15 September 2022. 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 Reports and presentations — Solwers Plc. 

Briefing

The Company will hold a briefing in English for investors, media and analysts on 15 March 2022 at 11:00 a.m. The webcast will be available at https://solwers.videosync.fi/results-2021. A recording of the webcast and the presentation materials will be subsequently available at www.solwers.fi/.

Espoo, 15 March 2022

Solwers Plc

Board of Directors

For further information, please contact:

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

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

Distribution: 

Nasdaq Helsinki 

Key media 

www.solwers.fi