Sitowise Group Oyj (SITOWS) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. My name is Mari Reponen, and I'm Head of IR here in Sitowise. It's my pleasure to welcome you to our first Capital Markets Day, both here in Espoo and online, of course. On this slide, you see our agenda for today. And before we go to the first part that discusses our solid foundation for future growth, I go through some practicalities. You can ask questions here on site or during the webcast in writing. We kindly ask you to give your names. And if you are wishing someone to particularly answer the question, to address the question to that person. We have 2 Q&A sessions, the first after this first part and then at the end of the whole event. And now I hand over to our CEO, Heikki Haasmaa, who will open the event.

Thank you, Mari, and welcome all to our Capital Market Day. So my name is Heikki Haasmaa. I've been now leading Sitowise for a bit over a year. And I can say that it has been really great to see such a strong foundation, what we have as a company. During this 13 months, I've been getting to know our clients, several of our stakeholders, investors and also actually almost all of our 2,200 experts who are passionate about solving our clients' complex challenges every day. I'm very inspired about the new vision what we have, redefining smartness in cities and the new strategy we launched in February. This will help us to capture the several growth opportunities, and you will be hearing more about this today. Next, I want to introduce our team presenting our story today. So Jonas Larsson, heading our business in Sweden; Taija Lehtola, Human Resources; Hanna Masala, CFO; Jannis Mikkola, leading the Infra business; Turo Tinkanen, CIO; Minttu Vilander, Sustainability, Communications and Brand; Anna Wäck, leading the Digital Solutions; and then Sami Lankiniemi, Head of Innovation. To get started, let's have a look at an inspiring video showcasing what we have done in the past. [Presentation]

So on the video, you saw some examples of projects Sitowise experts have been working with in the past. When you think about where we are today in Accountor Tower here in Keilaniementie, Espoo, Finland, a lot what you see around here are actually designed by our experts. For example, the roads, junctions, tunnels, metro, Jokeri light rail and so on. And actually also here in Accountor Tower, we've done the structural engineering, geotechnical planning and also the design for the electrics of this building. The designs and solutions created by our experts impact the life of millions of citizens in Finland and Sweden. And we intend to have a significant impact in the future, too. As outlined in our vision, we want to redefine the smartness in cities. In addition, we want to maintain our position as the most profitable company in our industry, and today is all about these topics. But let's first recap where we are today and how we got here. We are a technical consulting company with a strong focus on digitality. We have 4 business areas: Building and Infra have been our strong foothold for long, and Digital Solutions and Sweden, our strategic growth areas. During our previous strategy period, we successfully doubled our revenue to over EUR 200 million and had, last year, an EBITDA -- adjusted EBITDA margin of 10%. We employed over 2,200 experts and have a broad and diverse client base, covering both public and private customers. And our Net Promoter Score is 32. Looking then back, we have actually a long history. Actually, the oldest parts of our current business date back to 1910 when one of our Swedish companies started operations. In 2017, Sitowise was established with the merger of Sito, which had focused on infrastructure; and Wise, with expertise in buildings. And since then, Sitowise has been expanding and strengthening its presence. Altogether, we have done 25 acquisitions during the Sitowise time to support the growth of existing business and also build a platform for our Swedish business and digital business areas. Along the way, we have built capabilities and scalable platform, and to grow with Smart City solutions. Digital services, our special strength and that's what also setting us apart from our competitors. Sustainability has become part of our everyday activities, and we have been -- even managed to raise a bar in the construction industry. And we have built a solid digital platform operating model for expertise, volume and capabilities to be able to grow profitably in the coming years. Then looking at the net sales. We have grown steadily and consistently over several years, both in an organic way, but also through acquisitions. We have also grown profitably. Unlike some other industries, the COVID years were actually really good for us. We successfully made the transition to remote work, and our experts almost really focused on client work. Also, the sick leaves were in a very low level during that time. These factors helped us to reach the 12% EBITDA margin. Last year, we faced higher sick leave absences, and during the second half of last year, we started to see negative impact from the construction market downturn in our Buildings business area. Now we face a different reality, with the construction market giving a heavy headwind and we need to focus on maintaining around 10% adjusted EBITDA margin this year. We'll discuss what are the concrete actions on this, but the market development obviously has a key role in reaching our long-term target of 12% margin. On the other hand, the new strategy and other business areas give us several great opportunities. If we then compare our performance with relevant peers, we have been the most efficient company in the industry. The parameters on these metrics are revenue growth and then profitability. One of the key drivers of our profitability has been our utilization rate, that has been clearly higher than what our big peers have had. Profitability has also been supported by acquisitions as our strategies to acquire companies with as high -- or higher profitability than our EBITDA percentage target has been. Let's then spend a moment on looking at what the current market environment looks like. And actually, it's quite different in different business areas. In Buildings, the consulting market continues to be impacted by the low construction market activity, especially in the new build residential buildings. Lately, we've also seen the slowdown also in the renovation market. And we can say that this year will be a challenging one overall in the Buildings segment. Our focus is on maintaining the share of market with good profitability. Then moving to Infrastructure. So the underlying market growth in Finland shows low single-digit growth for the next few years. Due to the increasing technical consulting penetration in the market and our strong competitive position in the market, we expect our Infra business to continue its stable and profitable growth. In the Digital Solutions, we have seen and also expect to see continued rapid growth. We are in a position to also create the market. And also being able to disrupt market practices. Our focus is both on the growth and then the profitability. In Sweden, the market is overall in a bit better shape than in Finland. However, economic uncertainty is also seeing the market activity in Sweden. We have strong expertise in selected service areas, and those are growing, which is, of course, a good sign for our business. Regardless of the current market environment, we see also in -- actually, in all business areas, some opportunities with new kind of services, and we will be discussing about those later today. Our ability to answer client needs is crucial in this respect. And we focus on that as we strive to provide the best value for our clients. Firstly, we need to master the basics to get further work. This means focus on the quality of the work, keeping schedules, active communication and also ensuring long-lasting relationships. Secondly, we help clients to succeed with their main targets and objectives and quantify this. This means helping with the cost efficiency, productivity targets, and then, in concrete terms, showing also the difference of alternatives in monetary value to explain the value of the service we are providing. Sustainability is also a second point here, so challenging and helping our customers to make sustainable choices for the future. And then thirdly, we help our clients to also differentiate and build something new. Examples of this are leaning with data and overall data modeling, focusing on green transition and biodiversity, and then providing life cycle solutions and to support the maintenance phase of Buildings and Infra. The needs of our clients are very much driven by 5 mega trends shaping our industry, so urbanization, renovation backlog, sustainability, digitalization and also security. They all create demand for our services. Let's go through them one by one, starting with urbanization. So as more and more people are moving to cities, traffic volumes are increasing. This, paired with the ambitious climate goals and new legislation, create need to think of completely new solutions for both construction and transport. There is also demand for new buildings that are suitable for many different purposes. For us, this means the significance of public transport, rail transport actually, in particular, will increase. In cities, then also functioning bike lanes are more and more important, as well as accommodating the needs of growing number of people utilizing very different transportation methods. And the need for following also traffic flows will be increasing, and this is like a source of opportunity for our Digital Solutions business. Renovation backlog. So the challenges of urbanization and also to create comfortable spaces for daily life, we must also naturally cherish the existing Buildings and Infra. And of course, this is not just about overall buildings, but yes, Infra as well. According to calculations, only in Finland, maintenance and renovation investments in residential buildings and traffic routes should be almost doubled. And investments in water supply network should be actually tripled. So often when renovating the existing, the planning has to take into account also the needs for the next decades. How will people use their properties in 30 years from now on, or what kind of vehicles will be used in the roads. So the designing and planning creates demand for the expertise we have. Climate change is a key growth driver also in the development of the built environment, and it will [ force ] cities to find new solutions or buildings as well as to exploit digitalization in the development of new sustainable solutions. Some examples. So maximizing energy efficiency of buildings and also minimizing the emissions related to people and traffic flows, optimizing life cycle costs of built environment and then conserving biodiversity and use of sustainable materials. And we are providing all of these services, so there's increasing need for them in the future. Digitalization. So the amount of data in the world is growing at an exponential rate. In our industry, a large amount of data are still largely like unutilized potential. We see a big opportunity in digitality, knowledge-based management and also use of artificial intelligence and analytics. In our industry and for us, this means, firstly, increasing the technology content in built environments and smart systems to collect data from Buildings and Infra. Secondly, services for geospatial asset management, which is our strength. And then actually, just to give an example, a lot is also especially happening in the public sector, for example, the Smart City development, which is also accelerated by regulation changes. And thirdly, increasing importance of data and cybersecurity in built environments, which also leads to fifth mega trend, so security, covering both security -- cybersecurity and also physical and mental security. So security threats affect the built environment on a large scale, such as energy plants and other critical infrastructure of society. And overall, we can say that there has been like a rather lax attitude towards data management in real estate. But more and more property and asset owners have awakened to think about how, for example, sensitive information is handled and stored in real estate. We are addressing these recently raised needs with our newly established security critical services. And as a highlight, I want to still also share that Sitowise is the largest operator of the built environment, which has been granted to ISO27001 information security certificate, and we are really happy about that one. But then let's move on to the strategy and recapping that one, and then also showing how we address these mega trends. So our strategy, first, to build on our client needs, our core competencies and also the achievements of the previous strategy period. This is like a logical continuation. As a part of our strategy process, we, first time, defined our company purpose, which is empowering passionate experts to solve complex challenges. It means that we at Sitowise go to work to solve problems for our clients. Then our 5 values on the left-hand side remain unchanged and build the foundation for our company culture. And our vision, obviously, reflects the direction we want to grow. And to reach this vision, we will build our expertise on innovation, sustainability and also efficiency. Our people, the 2,200 experts, they really believe in our future. In our internal strategy day, we also challenge our people to think big, what could redefine smartness in cities in '25? What kind of headlines could we make? And here are some examples. The conclusion of this quite bold headings is that, firstly, I believe that our people are clearly inspired by our new vision. Secondly, also that our people are visionary experts, and they are also are curious about the future and have a lot to share. And thirdly, we definitely have great opportunities ahead of us. And some of these can be true when we execute well with our strategy. So our 3 strategic themes and what they mean concretely will be discussed extensively in the second part of today's program. But therefore, I'll just share some of the key targets for each of them. So the most innovative means that our goal is to engage our people and partners to innovate smart solutions and services that accelerate the industry transition. The most sustainable means that we want to lead the way to a sustainable future by understanding our clients, existing and also the emerging needs and by solving them. And sustainability is an integral part of our expertise and all client projects and also project -- client projects, and they also provide also significant business potential. The most efficient means that we want to optimize our ways of working, including sales, customer processes, tools, meaningful data creation and usage and, overall, to provide the best value for our customers and to maintain the industry-leading profitability, to be able to further grow and also develop. And then we have 6 focus areas that -- they guide our strategy execution. So the first 3 ones are the growth engines. So creating new smart services, accelerating growth in Sweden, expanding digital solutions business. And then the next 3 ones are more like enablers for these growth engines. So we want to become a thought leader in sustainability being the most well-known and desired employer and then also finding the smartest ways to work. And all of these topics will be gone through in much more detail during today. We've also set clear strategic goals that relate to our clients, personnel and also like a business metrics, and all of them have linked to our strategic pillars. So we measure our success with clients, with KPIs, such as how we are seen as a forerunner in the industry and also how sustainable and reliable partner we are. With employees, the key KPIs are related to how we encourage people to seek new ideas, how we implement sustainability, development goals to our projects and in the daily work, and how customers would then recommend us. In the business metrics, we want our recurring revenue to exceed 10% of our business as this brings stability, but also we are looking at higher profitability. At the same time, we are looking at doubling our sustainability service revenue, which is roughly EUR 5 million at the moment. And then we want to definitely maintain the most efficient in our industry. So the business KPIs complement our financial KPIs, which will be also shared today, and they remain unchanged. But they are then used to measure how we progress with our strategy overall. So to sum up, we want to redefine the smartness in cities, and we want to maintain our position as the most profitable company in our industry. And now I'd like to welcome Taija Lehtola, so Human Resources, to the stage. You will be then sharing at how do we empower our people to achieve all of these goals. Taija, please, welcome.

Thank you, Heikki. Hi, everyone. I'm Taija Lehtola, and I lead the Human Resources in Sitowise. I have been almost a year in the company, and I'm amazed on the expertise we have. I meet every day with our passionate experts, and we have so wide range of them. We have cloud architects. We have [ butterfly and fish ] specialists. We have information security experts, HVAC designers designing heliports, and [indiscernible] designers and what else. It's so amazing. I will go through in my presentations, 3 key topics: firstly, about the trends, changing work life and how we address them; secondly, what are the key focus areas for us to become the most desirable and equitable employer and to keep our employees and attract new ones; and then thirdly, how we build the culture that supports our strategic targets that Heikki presented. So to these trends first. We all know that the working life is changing, and there's a transformation of work. The trends, what you see in this slide, are affecting the whole working life, but more pronouncedly businesses like ours where the whole business is dependent on the people. The changing work patterns, such as the continuation of the remote and hybrid work, the need to continuously learn the importance of work-life balance and how to keep the employees motivated, those really require strong and purpose-driven culture and new kind of leadership skills, structures and tools. And of course, we need the right people to work with us. And by right, we mean the right combination of the kind of like more- and less-experienced professionals with versatile backgrounds, with curious and ambitious mindsets. And we, of course, need that they stay with us. Therefore, we have set ourselves targets that will guide us in the right direction. We already believe we are the best community, where values guide our work, we have great team spirits and our leaders are doing a superb job. In the future, we will focus even more in the well-being and creating psychological safety in the teams. Our best experts, they are proud of their work, they are trusted by our clients, by the organization and they really need the -- they understand the needs of the clients. In the future, we are giving them even more possibilities to become the forerunners in the industry. We are offering meaningful projects for our experts, which is really important for them. We are taking in young talents in our NextGen program. In our journey ahead, our focus will be even more in increasing the development and career opportunities for our talent. In order to be innovative and the forerunner in the industry, we need a strong culture. We measure that via our personnel survey. And what I'm really proud of is that our e-NPS has been on a very high level and increasing. That means that our employees are recommending Sitowise as an employer. Also, the results for the supervisors on the questions asking about how they are doing have been on high level. And this has a direct link to the NPS, so to the customer satisfaction, and that has been on high level already, like Heikki said. You will later hear more from Sami, who's leading our innovation, that how this culture is really being built or will be built in concrete steps. With new solutions to our clients, we also need very different kind of experts and diverse thinking. This means that in our recruitment, we are open-minded, and we have, for example, hundreds of different backgrounds, educational backgrounds with our experts. Minttu, who is leading our sustainability brand and communication, will tell you later on what we do concretely in the sustainability part. But what I'm really proud of is that most of our experts understand how their work is affecting the sustainability. Typical experts, they work about 90% of their time in client projects, and that is measured with utilization rate. Heikki was already talking about utilization rate. The other 10% goes, for example, the trainings, making offers to supervisory work and balancing the level of utilization rate is very important, because our experts, they need to have the right competencies, the right information, but they need to be able to spend most of their time with client projects. We empower our experts by finding the smartest way to work, allowing them to really focus on the meaningful tasks, while leveraging the technology collaboration and knowledge sharing. We are working with our sales excellence to be able to meet with the changing market demands and be more proactive and efficient in sales. The main tools, they are increasing the overall sales activity level and also improving process account management and pricing. And one of the big factors affecting the invoicing level is sick leaves, as Heikki was mentioning when talking about the past. We are working with well-being very holistically. And we believe that the work is actually giving more well-being when the role, tools, processes are in order, the expert feels that they can be themselves at work and the work community is supporting them. So all in all, I say that we are inspiring, enabling our expert to perform at their best every day, so they can solve the complex challenges our clients have. Next, I would like to introduce my dear colleague, Hanna, our CFO, who will tell about the journey where we are.

Thanks, Taija. I'm really delighted to be here and attend our first CMD together with all of you here and online. Now after Heikki and Taija, my aim is to deepen your understanding of Sitowise through numbers, as would be expected for the CFO, to open up our actions around the cost efficiency and also talk about how we are growing through M&As. I'll then finish with comments about us improving our profitability towards the 12% EBITDA margin target that we have. Heikki outlined the key milestones from past years. And also from our numbers, we can conclude that Sitowise group has indeed changed quite a bit during the last 4 years. We've done acquisitions also before this time frame. But during the last years since 2018, we've done 25 acquisitions. Besides them being a significant contributor to the growth overall, these are, for example, created the Swedish business from scratch. Number wise, most of the acquisitions have been in Buildings, where we have focused, especially on renovation and special services, and also acted as a clear consolidator of the market, most often through smaller add-on acquisitions. In the Infra business, the growth has been mostly organic, but there, we also done some acquisitions, which have, for example, created a significant increase in our environmental business. Since year 2018, Digi has business doubled its size. It has grown fast, supported by acquisitions, but also organically. So all of our 4 business areas have a very important role in our group. And especially the portions of Digi and Sweden have grown in recent years, as you saw in slide before, and we expect this to continue. So the colors on the left-hand side of the page should develop into more balanced direction. We also wanted to open up a bit about the type of business we do in our group. You've seen the client mix also in -- already in Heikki's slides, but if we talk about the revenue model, currently, 46% of our net sales is based on hourly billing, a bit less than 1/3 is based on fixed price projects, meaning that the accuracy of estimating the project work needed is really crucial. This is where the experience of our people really comes into play. And of course, the project management needs to be also very, very strong. As of today, the smallest part is this recurring revenue services, the pink 4% you can see in the slide. This includes SaaS, software-as-a-service, and other digital products and also some continuous service agreements. A big part of this, but not all, is in the Digital Solutions business area. Many of our strategic initiatives that Heikki talked about are targeting to grow new business in this category. And therefore, we target this part to grow from 4% to 10%, as Heikki mentioned. This means that in the future, a bigger part of our revenue will not follow the traditional consulting business formula, where you have the hourly price and the amount of hours worked, but there will be a different earnings logic included. Then if we look at a bit how the top line is built up, complementing the points on the previous graph. The graph here shows our net sales and the gross margin, which have been -- has been relatively stable between 90% to 92%. Depending on the project mix at any given time, the sales may include a varying component of subcontracting, this we use to complement our competencies and the execution capacity when needed. When we are engaged in cooperation projects and work side by side with another consultant, the client often wants to have the invoice only from one of us. And in that case, there can be like a pass-through sales in our top line. And this, of course, is then eliminated above the gross margin. The main drivers for the top line as of today are, as said, pricing and personnel availability. But of course, in the future, more and more of this recurring revenue business, which is not so much dependent on those. When it comes to the pricing, we need to have good skills, that was mentioned already before. And this is, of course, not only just setting the [ only ] price in the right level, but the overall project pricing. Meaning, for example, in the longer-term contracts where we have price indexation, we need to put an effort on making sure that all the increases are done, which we are entitled to according to the contract terms. Having the experts available and able to work is, of course, another crucial element, and Taija talked about how we work to be a desirable employer and keep the well-being of our experts in a good shape. On the bottom of the slide, we also wanted to give some numerical guidance on the sensitivities that impact our business. The number of working days we discussed quite a bit actually in the Q1 release and here now also putting it into numbers. So if there is 1 day more or less of working days during the year, we expect or estimate that it means some EUR 700,000 to EUR 900,000 of revenue more or less. And obviously, this is because the salaries are not dependent on the number of working days. It's a fixed monthly salary, but the billing and the working hours is then, of course, this goes directly also into the bottom line. So it's a top line and bottom line impact. Sickness absences, they are away from our project delivery capacity and have been a key factor, especially in 2022, which Heikki mentioned. We've estimated that 1 percentage point difference in the sickness absences means some EUR 2 million of revenue. And also, this comes directly to the EBITDA. So when we take into account our EBITDA margin level, this is as much as 1 percentage point -- this 1 percentage point difference in the sickness absences with the current scale. And the last sensitivity is around the currency. As you know, since the end of '21, the Swedish krona has been on a declining trend against euros and still continues, and this is diluting our Swedish business when we present or report it in euros in the group level. However, both invoicing and the cost in Sweden are almost fully in the local currency, though this is not impacting the performance, but it's a top line impact. So before the work ends up in the sales and gross margin, it typically appears in the order book. And why do I say typically, that's because some of the projects and work is so fast and short term that it doesn't even make it to the order book, but this is, of course, a small portion. We can't really define an ideal order book level. If it's too high, then we may have like delivery issues. And actually, some years ago, we thought that something like 6 months order book is a good level. Now we have more long products, and this makes the order book higher. And currently, the order book length by business area varies between 7 and [ 13 months ], a bit depending on what type of project scale or project size there is in each of the business areas. As you can see from the graph, the order book increased quite fast, especially during '21, and this was the time of very high market activity. And now the order book has been a bit more stable. We consider that the current level is good, but there is some increased uncertainty on the time of the realization of projects in Buildings, where clients delay their projects. Therefore, we put a strong emphasis on sales to counter the impact of this more tight market. Some of the characteristics of the order book and our projects, you can see in the blue area in the slide, so wide client-base, durations ranging from less than 1 month to several years even up to 10 years. And the biggest projects have been close to EUR 10 million or even above, and the biggest ones are typically municipal projects and quite often rail projects. A few notes about the cost structure then. This is, of course, pretty basic, but as we really need to pay attention to our cost structure and efficiency, a couple of things to highlight. As was outlined already, the materials and services primarily relate to project work and subcontractor usage, and this varies by the project mix. As is easily kind of guessed, the personnel costs are the biggest part, roughly 2/3 of the cost base. And here, of course, the collective bargaining agreements set the basis, but then also we need to pay a lot of attention to having a good salary policy to make sure that we keep people engaged and, at the same time, have a good efficiency. And then that's also the case for this light blue part, the other employee expenses, where we need to balance carefully to stay efficient, but to have like attractive employee experience, for example, health care, trainings and that sort of things, so that our employees, our most valuable assets, are kind of well taken care of. The bottom part, other costs, consists mainly of premises and ICT. And then obviously, there are some administrative marketing and so forth, costs in the green -- dark green part. In the premises cost, there is -- there has been quite substantial pressure. Index increases, we all know about the energy cost increases, but we are countering this with selective reductions of the space usage. This year, we've actually reduced EUR 0.5 million in the premises-related costs by decreasing the underutilized spaces and moving teams which we have acquired together with their new colleagues. IT costs, we also need to constantly monitor. There is inflation pressure. There is pressure from cybersecurity. And obviously, the IT Infra needs to be able to take on board new companies and new employees. But we are then managing our application space really carefully, thinking underutilization, how do we manage the licenses and so on so that we can go into these upward trends in the ICT. As the next item, let's then deep dive into our M&A activities. We have defined a clear acquisition principles that help us focus our pipeline management and target evaluation. Of course, first and foremost, we need to have targets which are closely tied with our strategic priorities. The financial profile is a key criteria for us, which we look deeply into when we evaluate the potential targets. Especially when it's the case of a small add-on acquisitions, we really want them to beat or -- meet or beat our -- cross this target level of 12% target, and sometimes that happens also quite clearly. If the profitability is less than our target level, then there needs to be a credible path to improve within a relatively short time frame. In our type of business, the importance of a cultural fit cannot be overemphasized. In most cases, the main asset or almost the only asset we acquire are the people, and they become our new colleagues. So we need to be sure that they find a new, good home in our company and stay committed after the transaction. For this reason, the role of the frontline managers is crucial in the acquisition process. The business leaders have a central role and ownership in acquisitions and are supported by the expertise from the group functions. When it comes to valuation, we apply a conservative approach, we rather leave the targets to others than pay too much. In our add-on acquisitions, we've typically paid between 4x and 6x EBITDA. In the larger and more transformative and new strategic areas, we sometimes deviated from this and can do so when we see that there is an especially good growth momentum, clear improvement possibilities or other really weighted strategic reasons. In almost all acquisitions, we also use part of -- as part of the payment, our own shares, and this is really to commit the sellers, who typically become key persons in Sitowise, to their future in the new group. I'll then talk about a couple of recent acquisitions, which illustrate our acquisition-driven strategy execution. The first example is Convia, which we acquired last autumn. And this is a really good example of an add-on acquisition, which is a key element in our growth path. Convia is a technical consulting company, mostly operating in Stockholm region and focusing on infra projects. They started originally in bridges and have expanded to other types of infra, where the concrete structure knowledge is essential. When companies in our industry reach a certain scale, often roughly 20 employees, the entrepreneur needs to make a choice, do they add structures and admin and maybe go to new expertise areas or do they find a new home where the future of the business can then be. In Convia, they were in this crossroad situation. They were very profitable and have been growing nicely. We saw, together with the owners this combination, as a good opportunity for accelerating our growth in Sweden and building the Infra business also there. Here, we had a bilateral process, as in many other cases, and we're able to create the trust on the personal level and create a common view of the future. We've actually noticed that we are quite a good acquirer of companies in this development phase. We have structures and we have processes, but are still relatively small and agile and can be then accommodating new colleagues from this kind of a background. The other example is Bitcomp, which we acquired quite exactly 1 year ago. This expanded our digital geospatial expertise into a new client area, forest industry. And more than doubled our SaaS business. Anna, our Digital Solutions leader, will in the next slot come back to the business potential that is built on this. But anyways, Bitcomp had been growing fast, and they were finalizing a new type of SaaS solution for forest asset management, a product called LeafPoint. They were in the ramp-up phase, and that means that the profitability of Bitcomp was kind of expected to increase with the sales growth. And this was the reason that we paid a bit more than the typical multiple for Bitcomp. We'd be very happy to see that these expectations are materializing, and the collaboration has been really good. For example, we've taken the digital product management process from Bitcomp and applied it into the whole Sitowise product universe. Also, the scalable AI solutions we've taken from Bitcomp to other businesses. Now we are looking into new opportunities, including potentially expanding a Bitcomp into new geographical markets. At the end of my section, before the coffee break, a few words about the cash flow and financial targets. Our operations generate cash flow well and the working capital changes are usually relatively modest following the business scope development and a seasonal pattern within a year. Year 2020 was very good for us in terms of operating profit and also net working capital developed favorably, so the cash flow was exceptionally strong then. As you can see in the middle, unsurprisingly, the acquisitions are the biggest use of cash for us. There's been also and there will be also some other investments, typically ICT or premises related. When it comes to the leverage, following the several acquisitions in '22, our net debt leverage increased during that year, but already the Q1 level was a bit more modest. And then coming back to the financial targets, which already as said, are unchanged and commenting also how we perform against those. The sales growth target is 10%. And this includes, of course, the acquisitions and the organic growth. The last 12 months growth was 14% profitability, 12% adjusted EBITDA margin target, and now we are at 10.3% after the Q1, looking at the last 12 months. So there is room to improve. This level is good in the current market environment, but we, of course, aim higher. And next slide, which is my last, I'll talk a bit more about how we go closer to 12%. Leverage, as said, currently in line with our target level. And then to conclude my part, some words about how we achieve our long-term profitability goals. We see 3 main levers here. First, the organic growth. We grow our core businesses, being -- including also these higher-margin recurring revenue and new smart services, which we mentioned and which are a key part of our strategy. So this should bring us an improvement in the margin. The M&As, when they are aligned with our strategic priorities and integrating the acquired companies in efficient way, should also contribute to this. We are looking at opportunities in all business areas, but especially digital solutions, and Sweden will be in the core of our M&A strategy. And then thirdly, operational efficiencies. For example, we are considering -- reconsidering our sales model and have looked -- put a lot of effort into our pricing excellence work. I already mentioned some of the cost efficiency actions and that we will continue. Furthermore, we can be even smarter when using our data, for example, when we do internal resourcing and use the project data. Now we have an ERP project, an implementation ongoing or coming later this year, and this should help in that. Obviously, the construction market situation normalization, which we hope to see should be helping and will be important in achieving the higher margins. So concluding my part, what I want you to remember, we are continuing on our growth path. Secondly, we are the most efficient player in our field. And thirdly, even if the market is giving us now some headwind, we do have levers to fight back and maintain good profitability. Thank you.

And now we have time for questions for the presenters of the first part. So let's start with the audience if there are any.

Olli Koponen from Inderes. I have a few questions here. And I could start from the market outlook. Could you kind of elaborate a bit the kind of market growth you see in Sweden and Finland here in the next few years? Or are you kind of able to say that because the kind of market we know is uncertain, but would like to hear more from you?

Yes, sure. Maybe I'll still divide it between the different business areas, it's probably more logical like that. Maybe starting from the more positive ones. So we see that the Infra market in Finland will be pretty stable and growing steadily. Same kind of thinking for Sweden as well. Then what comes to the construction market, that's clearly more challenging one. I would say that it's pretty uncertain how the next year would look like. Of course, now we don't see like big change compared to the past month. So I would say that it's a pretty dim outlook for the next month. Hopefully, we will see the turnaround quite quickly. That's the only thing I can say. Then maybe for the Digital Solutions, as has been also said earlier today, there we see a growing demand for the services overall. And actually, we have -- we also have a strong position there, in that sense that we are able to create also the market. So that's a completely different story than compared to other business areas.

Okay. Just next on the profitability here. There's a nice bridge on the EBITDA margin there from Hanna. But could you kind of talk us through -- do you think you can achieve the 10% -- 12% EBITDA margin target before 2025? Or should we kind of assume that, that is your road map here?

Yes. Maybe I'll comment first, then I'll let Hanna to complement. But I would say, of course, as said, we see that there's a potential, especially this Digital Solutions with higher profitability. Then also like focusing on the Infra business, which is good with our business model and how it's led today. But then, of course, coming to your point, so there's kind of like a 12% margin, we would also really need the help from the construction market. So if it's such -- in such weak levels, of course, it makes our path also to the 12%, more challenging.

Yes, not so much to add. I think it's not the answer you would want to hear, but I think it will depend a bit on the market. So we are doing what we can to counter the impacts. But of course, it's like really also dependent on how the construction market, especially now, turns around and hopefully not -- hopefully, that wouldn't take so long. But we'll see.

Okay. Then on the strategy side, I don't know if I should ask this here, but I'll try now. You're seeking to double the sustainability service revenue, but could you kind of elaborate what are these kind of services here that you mean?

Yes. Yes. So today, we already have like roughly EUR 5 million. They are more related to environmental design, but also energy-related consulting work. And overall, where we see the growth is coming from are those ones, but then also, of course, renewable energy that's providing us several opportunities and like the circular economy overall and also the work, consulting work related to biodiversity. Those are the big areas there overall. And then on top of the pure consulting work, we are also looking for these kind of new services there. So how do we use the data of -- related to all of what I just mentioned and then package it and are able to serve our clients even better in the future.

Thank you, Olli. And let's take one question to Taija from online. The people are important assets for -- to Sitowise. What do you do to attract young people from universities to join the company?

We are quite active with the universities. We have a lot of kind of like free time activities, but we are also working a lot with kind of like the universities and the other schools we feel important on topics. We also have a kind of like pool for kind of like master thesis and assignment, so kind of like being active. And I think the kind of like the sustainability is a trend also among the young ones, so kind of like I think that is helping us. And of course, we have our trainee program, NextGen, where we built all of this. So that's quite known in Finland, and we need to start working in Sweden to do the same.

Thank you, Taija. And I think we now take the break and then take the rest of the questions at the end of the day when we have a wider Q&A session. So thank you for the questions so far. Thank you, presenters. And let's be back quarter past 2. [Break]

Welcome to the second part of our CMD Day. Next, we will dive into our strategic pillar [Technical Difficulty] efficient, sustainable [Technical Difficulty]. We will guide you through [Technical Difficulty] Sami, and later also, our business area leaders will join the stage. My name is Minttu Vilander and I lead Sitowise's Sustainability, Communications and Marketing team. I have been in the company for 3 years.

Hi, everyone. My name is Sami Lankiniemi and I work as the Head of Innovation at Sitowise, and I have been with the company since August '22.

Hello. My name is Turo Tinkanen [Technical Difficulty] IT.

And now to start the segment, we'll start with a short video introducing our Voima platform and how it helps us to become the most efficient in our field. [Presentation]

Now, we all know what Voima is. Was it something that was built from scratch at Sitowise or was it something already on the market that we could utilize?

Yes, it's built from scratch for Sitowise. We did actually quite extensive research from the market and didn't find anything that could fit our need or actually fulfill our vision for Voima. We also realized that actually, we have a couple of the critical [ puzzle ] business already, for example, with Microsoft Teams. Of course, we don't want to build another Teams. So we decided to do it from scratch, but utilize as much as we can these existing tools and technologies.

Turo, we can see here the most efficient and our 3 focus areas. Voima is, of course contributing to all of this. But the second part where we have the competitive advantage to tools and data, how do you see that Voima helps us to be the most efficient?

I would actually dare to say that Voima is the way we do our work and projects. So it's actually in the core of Sitowise. And in having like unified processes, I would say that it's the main driver of our efficiency.

The next topic that we will have is sustainability. Do you think that Voima has a role in making us forerunners in sustainability?

Yes. I think one big part of Voima is actually that it brings transparency and visibility to project management, for example, and that is part of our sustainability and responsibility. And then, of course, we have built a sustainability tool that you will -- there was more.

Thank you, Turo. Okay. Then we will continue to the most sustainable. And as said, my name is Minttu Vilander and I lead Sitowise's sustainability team and also communications. And sometimes, I've been -- people ask me, why do we combine sustainability and communications together. Well, I think that it's because sustainability is a huge change in our society and also in organizations, and when you have huge change processes, you need lots of communications. So kind of combining those 2 is really no-brainer, as said. In Sitowise, we've taken huge leaps in sustainability during last couple of years, but sustainability has always been part of our work. It is part of making better cities. So you always need to take sustainability into consideration. But let's get started. So here, you can see a pretty simplified picture of yield of sustainability. They are just few things. There are more. But we just want to emphasize with this picture that there are lots of things going on in sustainability field at once. Because we want to be a forerunner, we also need to take into considerations all different kinds of sustainability focuses. So first, on the kind of -- on the surface, you can see things that have been on the agenda for already -- during last years. These are things like energy efficiency that has been trending for many years already. In those kind of things, we need to be the best. We need to be -- we need to have the best expertise in our company, to be the forerunners. Then underneath the surface, there are things that are soon coming. There may be something that everybody is already talking about, but nobody really yet understands what it means. Well, to be a forerunner, we need to understand, we need to learn and we need to master all those things underneath the surface. Then on the deeper there, there are the things that we need to scan all the time to understand how the different kind of themes and topics will shape our business. And to be a forerunner, as we want to be, we need to understand this whole picture and everything and how all these things are concerning us and how we need to develop as a company. Here, you can see Sitowise's sustainability road map from 2019. I'm not going to go through everything here. The most important thing in this picture is that we started pretty late from the kind of as a group sustainability function. 2019, we didn't have a group-level sustainability team. We didn't have any sustainability reporting. We just launched our first sustainability program. But since that, we have taken a huge leaps to being the company who understands how sustainability is affecting us. And the reason for this is that the sustainability field is moving really fast. It's really fast. All the time, you have to -- there are new things coming. And the way you need to work is that you need to do and you need to develop while you are doing. We can't know what is happening in the future. We can't really know how the regulation will affect us and what are the new things that will come. But that is why we need to keep moving all the time. We need to be able to do things and also do mistakes and learn from them because if we don't do that, we will be left behind. And if we wait others to show us how to do it, we will be late. We have come a long way, but now we will look into the future next. So as said, as part of our strategy, we have one pillar, that is that we want to be the most sustainable. The target is that our experts understand how sustainability affects their work. How we can be in all our projects more sustainable, what kind of sustainability targets our clients have and how we can help with that. It's also about understanding how sustainability affects our company culture, as Taija mentioned before. We need to have everyone in Sitowise on board. And because the change is done by people, we can always have like cool technologies and all these kind of things, and we can have a cool reporting and we can have programs and all that, but if we don't have the people on board, we won't be successful. So when we talk about the most sustainable, we talk about 3 different focus areas. And I will shortly go through this all. The first one is that we aim to be -- or aim that all our expertise is sustainable, all our projects take into consideration the sustainability matters. We need to understand our clients, but it's not just understanding what they need. It's also challenging them. It's challenging the old ways of working and being brave enough to do that. Then secondly, we see that sustainability in built environment has a significant business opportunities. There are new needs that our clients have because of the regulation but -- and legislation, but also from the climate crisis, biodiversity decline, from also social sustainability is something that will shape future cities. And thirdly, we need to meet the requirements of new regulation. So we need to understand how they affect us as a company. And also, we need to meet the standards that ex-employees put to us. So the ones who already work with us, but also for the future talents, sustainability is really important to them. If we talk about our own operations, Turo was just mentioning about our sustainability tool on our Voima platform. 2020, we started talking that, okay, it's really good thing that we are doing all this, like carbon footprint calculation of our own operations, then we have green offices and all these kind of things. It's really important. We need to have that. But the most important thing is that we need to understand what is our handprint in our projects, and that's really hard to measure. So we started thinking how we will do that. And shortly, we understood that we need some kind of tool, and we need to do it so that we are able to measure and also make people discuss about sustainability in our organization. So we made our own tool to Voima platform. The tool is pretty simple. It's based on United Nations Sustainability Development Goals. And when a project starts, the project team comes together,and they need to first set a couple of targets based on SDGs, and then they need to talk how they will -- what are the actions that they need to meet that target. And also, it is emphasized that they should have this discussion with the clients. And afterwards, when the project is finished, that project team discuss and goes through did they meet the targets, did they do the actions that they were planning to do. And the idea here is, of course, that we do it in all our projects. So we want to have like all the projects that start, they need to also set the goals. Benefits of the tool are now, as I said here, that 86% of our projects nowadays use the tool. We have a little bit more to go to hit the 100%. But still, the benefits are that we have lots of communications inside our company. The know-how about sustainability has been rising a lot and people understand better how the product -- how the projects -- what kind of sustainability handprint they have. We are able to follow all the projects and all the sustainability effects that they have. And we also have -- can have interaction with clients about sustainability, and that's really important. There is also a possibility when having the conversations with clients to have some additional sales concerning sustainability. Then the second thing is that we want to grow new services. So we see a significant business opportunity in sustainability, in built environment. We are facing asset new requirements, new legislation, societies are changing, sustainability atmosphere is rising in every way. There are global challenges that we are facing together and we need to also solve here in Finnish and the Swedish cities. So there is a need for high-level sustainability know-how. And one important thing is that we can combine this kind of strategic sustainability road maps, but we don't just do that. We also understand how they are implemented in a technical matter. So how they are implemented also at the same time. So it's not just about doing some strategy work, it's also about how to make it happen. We -- our aim is to double the revenue for strategic data-based sustainability services. We believe that this is done organically and also via M&A. We have the 4 focus areas that are here in the slide. So renewable energy, climate change mitigation, climate change adaptation and biodiversity and circular economy. And then last but not least, is developing our own operations. So we need to walk the talk. So if we say that to our clients that you need to do your projects more sustainable way, of course, we need to do it also ourselves. And this is -- these targets here are from our sustainability program that was done together with all the Sitowise employees and approved by the Board of Directors. We have 4 different goals and 2 of them are internal. So we want to be carbon neutral. And we want to have, as Taija said, before, we want to have the best work in community that is inclusive and equal. Then we have 2 external goals. And the other one is that we want to grow sustainably. But then the other one is that we want to lead the discussion that -- the sustainability discussion around built environment. So we want to be the company that discuss about these matters that wants to rise things and wants to make a difference. But here were the 3 points. So firstly, existing expertise and projects, we want to make them more sustainable. We have a lot of new business opportunities, and then we need to be as sustainable as possible as a company. And we also believe that sustainability go together with innovation. So in the future, we only need sustainable innovation. We don't need anything else and we tie these 2 things together. And now Sami will lead you to our innovation work and tell more about that. So Sami, the stage is yours.

Thank you, Minttu. So my name is Sami Lankiniemi and I work as the Head of Innovation at Sitowise and I also lead our Smart City Lab. Prior to joining Sitowise around 9 months ago, I have spent a decade in the built environment, helping companies and public organizations in their digital transformation, in climate crisis adaptation and growing sustainability business in the built environment. So at Sitowise, I lead the Smart City Lab, which is our home and community for all research, development and innovation. The Lab was launched 2 years ago with our first innovation competition and has grown since. The Lab builds on our vast cross-sector expertise, our track record in information modeling and geospatial services, but also deploy sustainability and digital capabilities all across Sitowise. And then what actually happens in the Lab. Here, you can see some of the activities going on in the Lab, enabling and empowering us to create ideas for smart services, but also we improve the way we work and how we use our design tools. This is also where we experiment with new technologies to prepare us for the future. The lab is also the place where we scan the market and the changes in the operational environment to understand how different trends and phenomena emerging in the industry reshape the way our business runs. And maybe from here, some of the key highlights are, of course, our annual innovation competition or the way we accelerate these new ideas, but also the collaboration with universities and other research bodies, in addition, of course, the constant internal development we do across business areas. And lastly, I would also like to highlight our Open Lab, where we have started to invite more and more customers to collaborate with us in creating new solutions and tools. The Open Lab also supports our ambitions to bring Voima closer to our clients. And then with all this in mind, we have aimed at becoming the most innovative in our field. And under this strategic stream, we have 3 distinct goals. Firstly, we want to strengthen our innovation culture and expand smart city solutions in all of our business areas. Secondly, we continue to build scalable Software as a Service business. Thirdly, we want to enrich design environments and processes to help our experts. Basically, this means removing some of the white noise and repetitive tasks from the everyday, something Taija was talking on earlier. So let's continue to dig deeper into these 3 themes and goals. So innovation is all about building a culture around it and giving it structure. By doing this, we look to empower our experts and capture new growth opportunities in working side by side. This is something I'm really excited about, because it also allows us to leverage our strong competencies across the company to create value-adding services. And while this says digital services, we also keep a close eye on redesigning and developing our current service offering, adding digital components where needed or by simply alternating the concept or defining how we deliver the services. We also look to improve efficiency in our own operations, discovering Ideas project by project and working towards our clients, aspiring to solve their productivity issues and essentially simply making them and us work easier. And as mentioned, for example, giving our clients access to Voima or our digital heart, as Turo put it. It is one step we intend to take during this strategy period and which will open new data and tools for our clients. So to summarize all of this, this will be based on our open innovation culture, our innovation playbook that guides our development and our funnel management, where we selectively push new ideas and guide their production and deployment of smart city solutions. Going further, as mentioned, we want to scale -- build scalable Software as a Service business. And here is where we look to leverage our product expertise, now also throughout the whole life cycle of built environment. We will continue to engage our experts and our partners to collaborate closely with our clients, identifying emerging needs, but also pain points they may have. And we actually look to cover the major aspects of the life cycle, be more present and to serve our customers in new ways. Anna will later tell some exciting examples about our own digital products. But a great case example of cross-industry collaboration that we do is our co-innovation project with Nokia, VTT and Loihde Advance and others titled DataMust, aiming to create data markets for sustainable cities, utilizing data marketplaces and edge computing as a foundation to scale our solutions to a wider customer base. And then going forward, we'll look to enrich design environments and process with new solutions. We are constantly researching new technologies and tools available on the market or being just developed to essentially -- to cater to the needs of our engineers and designers and to implement new customer applications powered by Voima. Here, Voima is our foundation and can operate as a platform for the applications we develop, helping us to interact with the client or doing efficient project work. We are also becoming better and better in utilizing the vast amounts of data we gather from our processes and analyzing the output. And this makes us capable to understand how and what to improve in the future and how we can create new use cases for design data to optimize our workflows, of our experts or remove the repetitive tasks, letting them to be the real experts that they are. And here on the slide, you can see one example of a tool that we created running on top of Voima. The tool utilized existing design data to augment the design process in our buildings business area in structural engineering. It automates element design by generating and prefabricating the design of the elements needed for a new project based on our existing design data. So this is one of the ways our data and analytics capabilities are enabling us to use artificial intelligence in supporting our experts in their work. And then as my final point, I would like to share where we are now with the Smart City Lab and our innovation activities in concrete terms and numbers. So during a year or so, we have had 31 customers involved in some of these development projects for new business ideas, but we have also mapped with over 700 people across Sitowise 200-plus ideas for new business opportunities. And currently, we have 37 of these in development and in screening mostly. And where do we focus in the lab? Some of the research topics can be seen here on the slide. And maybe to finalize as much as innovation is about new business, it is also about risk management, it's about sales excellence, and it's about constant learning in becoming better and to react to the changes in the market and business environment. So whether about -- whether we are talking about cybersecurity or climate risks, data driven circularity or location intelligence, the Smart City Lab operates as our platform for creating new sustainable business innovation and essentially helping us to redefine smartness in cities. Thank you.

Thank you, Sami. Okay. We've now heard about The Most Efficient and The Most Innovative and The Most Sustainable. Tell me, how can these 3 pillars complement each other?

Yes. If I think about from the efficient point of view and from Voima's point of view, I really think that when you actually think about sustainability and the innovation, there is usually a remarkable digital or data side to those. And of course, at Voima, we can get to those needs being developing rapid proof of concept or a new tool for customers, for example.

Yes. And maybe as a mindset, innovation give us opportunity to actually reassess the way we work and then to reorganize some of the engineering and design work that we do. And then kind of also finding new ways of delivering our services. And we all know that, as you presented sustainability is a key thing for us, and it is the foundation for innovation as well. And then on the other side, this means that the most innovative pillar gives sustainability a solid and sound innovation model to push those ideas and the way for managing the pipeline of creating these new services.

Thank you. I think that the most important thing is that we all kind of need each other. We need to collaborate. And then we need also all Sitowise employees to be part of this, all business areas and also clients. So we need to kind of work together in everything and not be in silos and trying to take our pillars forward. Thank you. And we will soon continue discussion here at the sofas. Next, we will get our business area leaders here on stage, and they will tell us how these strategic pillars meet their everyday work.

Yes. So now I would like to invite to the stage, Jannis, who is leading our Infra Solutions business.

Hello, everybody. My name is Jannis Mikkola and I'm Head of Infra, and I'm very proud to present you the Infra, the second biggest business area in Sitowise. I have been working in this company 18 years. So I think I'm an adult at Sitowise and I know the company and also the industry very well. My background is from the urban development projects like Kamppi and Redi they are the city center project in middle of Helsinki, and they are combined the infrastructure and the building. So I have been always working between these 2 areas. I have been also working in traditional Infra projects like metro and road tunnels and so on. Since 2017, I have been the Head of the Infrastructure. So this is nothing new to me. My main point in this presentation, they are that we are leading player in our field. We are very well known in our infrastructure market, and we have more than 600 experts in our house. We have been able to expand our expertise, and we are truly the multi-talent company in the infrastructure area. We operate productively and we make good profit-making capacity and we are stable. We have a stable cash flow. And I think that we have succeeded because we have the good customer and personal satisfaction. That is important for us. And sustainability, like Minttu told, it's deep in our operation. It's nothing new. We have been -- done that for decades, not just the 2 years where everybody have been talking about it. So the present situation, I think that our service range is the widest in the Finnish markets. 75% of our sales comes from the public sector and 25% from the private sector. Half of our net sales or more come from the long-term [ framework ] agreements. They are [indiscernible] 2 plus 2 years long. We have divided our operations into 4 divisions, but those divisions are only to lead people. The projects, they go matrix to our organization. But our divisions, they are municipalities and traffic, geotechnics, tunnels and structures, urban development and environment and the project management. The customers, they are important to us. We have long-term supplier relationship with many of our big customers. Top 10 customers bring us more than 50% from our revenue. Customer satisfaction. This is important because we have those big clients. And it's been in a good level for a long time. And I'm proud to say that the level is above the average Sitowise level. Like Taija said, the most important thing is the clients are important, but the most important are the employees. They are our assets. Their satisfaction is critical to us. And also, we have been -- succeeded in that area. There always are people leaving our company, it's normal, but we have these interviews and over 90% of people that are leaving from Infra are thinking that in some day, they can come back. So why we have succeeded? I think that couldn't -- projects are becoming more and more complex, and they need lots and lots of expertise, and we have that. Because of the projects are complex, more than 80% of our projects need more than one expertise. And that's why the projects go like matrix through our organization. And we have the knowledge and we have a lot of expertise. And that's our advantage. And in Infra, the clients want mostly one partner to deliver all the expertise in one project. So when you are a big house, you get big projects and you get big clients. We have been able to respond well of the growth drivers for Infra and Heikki already told you them, but I'll repeat. Urbanization, people have to move from places to places, they have to travel. And also, there are big changes in mobility. And of course, the climate awareness. Everybody is talking just the climate change, but there is something more. It's not just the climate change, it's the biodiversity, [indiscernible] et cetera. And like Minttu said, sustainability is part of our DNA. Our footprint is very small, like a children's foot, but our handprints is like of Mauno Koivisto, the former President of Finland, the handprint is huge. We can really change the world. So why I'm thinking we are going to succeed in the future? The consultant market are still growing even the total Infra market in the next few years isn't growing. I think that the consulting companies are taking a bigger share from the cake. And why is that? The client organization, they are getting thinner. They need our expertise, our people and our time. The complexity of projects is increasing, so there is much more consulting to do in one project. And of course, the interaction between the stakeholder is growing. You must talk with the people, and we have the people and we have the time. So we are also solving many burning topics, example, adaptation to the climate change. And of course, in future, you must build a lot and lot of Infra to renewable energy. You have to build roads. You have to build foundations to them and also the energy lines to the people, who use the energy. And I think, again, the most important, the people. They enjoy to working in our company. And why? Because we know how to offer them the interesting projects. The project work is 80% of our work, so that is important. And also, we have the path, how can they develop themselves. So that's why they are with us, with this road. So what we are going to do in the future? We are not getting our basic activities. They will be the foundation of our operation for a long time. But to those foundation, we are building new services, and that's where we are going to grow. Also, we are going to do more projects to the private sector, because we are seeing that the market is growing there faster than in the public sector. We are expanding our operation more broadly to the entire life cycle of the projects, not just the building phase, the whole life cycle of the projects. And like Minttu said, but I repeat, that also that we are continuing to invest to a sustainable development. And our priorities, they are the climate change and the mitigation -- climate change mitigation and adaptation, the biodiversity, the circular economy and renewable energy. And we will continue to roll out the latest tools as soon as possible. We have good examples, like in 40 years ago, we designed our own CAD system to design the rails and the roads and the streets. And we used the computers, when others used the pencils and paper. So this is almost the end, but because I know the human memory isn't so like Internet, it forgets. So I hope that you remember these 3 things after my presentation. We are very well known in our market, we operate efficiently, and we are making strong financial results. And the last -- least -- not the last, but not the least, the trends of the future, they really are our friends. Thank you.

So we heard about the Infra business. But maybe kind of continuing from the presentation, could you tell us a bit more about, in concrete terms, what have we actually done to reshape the built environment with our Infra Solutions?

So I have this video in the screens and we are now in the Keilaniemi. And when you look -- where we're under the lawns, you can look from the tower all around, and we see like a hundreds of projects, which we have been going on. And this -- right now, you see in the screen is the Tapiola. It's the -- I think the Tapiola is the capital of the Espoo. And it's the old city center from the '50s and now it's growing. And we have been in this project like 10 years, and there is a 50 different projects. There you can see now we are going forward. And -- but there is you can see the Accountor Tower where we are, and we see the Ring Road I. And we have this plan that the Ring Road I between Tapiola and Otaniemi is going to tunnel. And there is going to be new house for 5,000 new people in Espoo. So we are getting the traffic underground and the people on the ground, and they have clean air and they are not hearing any noises and we are going to do that. And also, we are -- soon, we are moving back to Tapiola. And the Tapiola, there were like 20,000 people living in Tapiola, but it decreases in '90s and we think that what we can do. And then we have to keep the part of the Tapiola, which is the green areas above the center. And we put the bus terminal underground and under the bus terminal, there's a metro station. And all the cars are going to the parking hole through this new traffic circle. And from the traffic circle, cars are going underground and people are in the ground level. And it's -- I think it's the largest pedestrian area in Finland, the Tapiola. And now we are building new residential houses. And I think that in this time, these are the only houses that are going to sell in this year, but I think this is a fantastic project.

So we have done a lot here.

Yes.

I know it's hard to pick, but what could maybe be some of the highlights you would select from these projects? Maybe regarding [ the values ] or something else...

I think that I already said, but that we kept the historical green areas, we can bring the ground level back to the pedestrians, and the clean air and the traffic hub, like buses and metros, I think. I'm so excited of this project.

Good to hear. And a lot of these projects. So maybe finally, how has Voima helped in organizing and managing these projects?

Like I said, there is 100 different projects in the small area. Without Voima, we are having 200 people doing those projects. And if they are having own systems, it's total mess. The Voima is keeping things straight.

Thank you, Jannis. This was really interesting and also a concrete example of how we redefine cities. You stay here with us on the sofas and we will continue to our digital solutions. Anna will now join us on stage and walks us through how digitalization saves the possibilities of built environment.

Thank you, Minttu. So my name is Anna Wäck and I have been heading the Digital Solutions business unit since the start of May. I have my background in management consulting and in agile software development, from Capgemini Consulting and from Siili Solutions. And for the past, around 6 years, I have been working at KONE, where I have been working in the field of international service business and quite concretely building new digital solutions, SaaS solutions, commercializing them, bringing them to market and accelerating sales. And of course, I'm really happy that now at the start of my journey at Sitowise, I can join in the CMD and share more about what the Digital Solutions business is about and how we will be adding value in the future. Okay. So where are we today? Sitowise is traditionally known as a major planning and consulting company, but we actually have a solid self-sustaining digital solutions business already. We are specialized in geospatial information and asset management solutions. We have a very strong foundation. We've actually been in the Digi business for over 2 decades. And as you can see, our growth has been rapid, the least to say, for the past 5 years, supported by both organic growth and acquisitions. Put together our Digital Solutions business unit and the digital business that we have in Sweden, in total, our Digital Solutions accounts for over 15% of Sitowise's net sales. It's clearly above our industry peers. So we have 3 main service areas. First, we provide consulting to help our customers lead with geospatial intelligence and with data to position themselves in the smart city landscape and to develop business around smart infrastructure, logistics and smart transportation. Then we have a very solid and large IT consulting and custom software development business. And our projects that we do span over the entire life cycle of our customers. And finally, we have a portfolio of SaaS products, a handful of them, all of which have very loyal customer base and high retention and also quite nice growth potential moving forward. Our customer profile is balanced. 55% comes from public sector from government and municipalities. Traditionally, these are long projects, frame agreements with steady sales and steady profits. Our customers, as Jannis was also saying earlier, they really value our understanding on their operating environment, on their systems, on their data. Our private sector has been increasing, especially lately through the Bitcomp acquisition. As Heikki was mentioning earlier, Bitcomp has been very successful in creating new markets in the forest sector and we aim to take advantage of this moving forward. And we have very strong knowledge or subject matter expertise in our -- from our 3 segments, Land use, Buildings and Utilities, Infrastructure and Traffic, and Forest and Natural Resources. And then finally, I hear all of my colleagues have been talking about people. Of course, for us in digital business, culture is key. The recruitment market remains heated. We are really fighting for talent. And what I have learned is that our people do really value the culture, the kind of value-based culture that we have. And they see that they have a lot of opportunities to develop themselves as IT professionals at Sitowise. So what do we do in practice? I thought I would share 2 very concrete case examples, one from the project business, one from the product side. To set the scene on the project and consulting business, essentially, we are today working with all of -- almost all of the major national IT projects, where geospatial information is in the core and that relates to the built environment or transportation. One of these, a really exciting example, it's the built environment information system, [ RYTJ ]. It's essentially a new national home like suomi.fi for citizens, but for information related to Buildings and Land use. And well, previously, this information has been scattered in the systems of municipalities and other official systems. Now the ambition for this new system is to gather all of this together in a standardized format following a standard data model and so that it will be accessible for many stakeholder groups, government, municipalities, ministries, individual businesses, citizens, authorities. it will be used a lot in the future. We have been engaged in this project together with Solita. The total prices will be during this 4-year period around EUR 6 million. And it's, in many ways, a quite typical project for us. So it's a transformative project. It crosses over the systems and moves data of over 300 stakeholders. And in a way, it could be considered as a life cycle project in the sense that after this initial build phase, of course, there's a room to continue supporting the customer throughout the upkeep and further maintenance. Next, I'll soon give the voice to one of our customers related to an example from our product business. But again, to set the scene, we have been in SaaS business for many, many years. What we have recently done is sharpened our product portfolio so that today, we focus on the products with clear business case, strong profitability, strong already proven customer value proposition and room for further growth. And I won't go through all of our solutions today. But instead, you will hear a customer testimonial from -- regarding Leafpoint. It's a leading AI-powered forest asset management solution. And Petri Takalo, who is the Executive Director of a Forest Owner Association of Päijänne, will be sharing his story. He's also a very active Leafpoint user.

[Foreign Language]

So as you've heard from Petri, Leafpoint has a very clear customer value, not least because it was developed with customers -- for customers. We have been very focused on ensuring smooth rollout for all of the Finnish forest owner associations. Out of the 56, we have 3 left to complete during Q3. And after that, we will start generating solid recurring revenue, and we have over 1,000 users. So next, I'll share how we will be adding value in the future. So as you heard already from Heikki, we have a very strong growth ambition for future, and we have a great foundation. So the market conditions continue to be on our side. We are witnessing strong pool, both from the public and private sector clients. Our business mix is well balanced. So the long projects and frame agreements allow us to generate solid predictable cash flow, whilst we are complementing this with not the kind of traditional billable time-based business model, but instead Software as a Service, potentially in the future, also Data as a Service business models. And of course, this allows us to be more scalable and also will increase our profitability. We continue also to disrupt influence and disrupt the industry. And with this, I mean that we actually have a very solid R&D pipeline with products and services that are in the different phases of their -- or different stages of their life cycle. And finally, we are ultimately a people business. So we continue to provide meaningful opportunities for our employees and also ensure that our digital solutions and capabilities can add value through the other business areas and their projects. So what you can expect from us concretely as actions. If I start first from the software development and consulting business, the market is hot. So we need to focus on sales excellence. In practice, this means that we want to select the right projects, tender with good price and we have also been tuning recently our sales organization so that we can further support sales towards our key account customers or key account clients. We continue to take full advantage from Voima to minimize project overruns and to secure strong margins. And as Taija mentioned, we also believe that the voluntary employee turnover in the IT sector is to some extent here to stay. So we take very strong actions to still maintain high utilization rate. These include things like proactive recruitment, successor planning and increasing the efficiency of our onboarding. In SaaS business, we are looking for growth. We have a -- or lever -- we are now leveraging a dedicated sales force. We are addressing to new customer groups and we will also be expanding to new geographical areas starting from Sweden. And we continue, of course, to develop our solutions together with customers. As Sami was explaining earlier, simultaneously we keep our eyes open for potential acquisition targets. So to sum up, we have a strong foundation. Organic growth, successful -- also successful acquisitions, and we have showed that we can generate demand and create new markets. We aim for profit, continuous profitable growth supported by our balanced business mix. We will continue influencing and disrupting the market with our solutions, services and new business models. And we will further accelerate our SaaS business. And this way, we will also play a key role in ensuring that Sitowise will achieve the target of 10% of the recurring revenue coming from -- or 10% of the group sales coming from recurring revenue services.

Thank you, Anna.

Thank you.

It was a great presentation. And I'm interesting to hear from you that you said that we want to accelerate growth by investing in new solutions and services. But how do we ensure that we also see a return on our investments?

It's a great question. Well, firstly, this is nothing new to us. So as I said, we've been in the SaaS business for a long time. And now through this Bitcomp acquisition, we actually cemented or solidified our capabilities related to SaaS sales and product management. We are not throwing money around. We have a very focused approach and we continue testing the markets and creating the services together with our customers. And as I said, we actually have a great R&D pipeline already today. Maybe I can give a sneak peek. We have, for instance -- or we are now experimenting how we can harness the AI that you saw on the Leafpoint video to analyze the impact of changes made in the built environment to the local carbon storage. It's something that our clients and potential clients have shown great interest for.

You also said that we are a people business and the competition for talent is fierce. What do we do to differentiate from other IT companies?

During my first weeks here, I've had the chance to visit most of our offices around Finland. I've had hours and hours of discussions with the people. And based on this, I learned that we don't have a traditional engineering culture nor we have the traditional IT culture, but we actually have quite an interesting mix of both. Our people seem to be very purpose-driven. So they value the possibility to work with experts from different business areas and different fields and also to be able to leave their fingerprint in the built environment through the projects. But then -- I mean, I'm leading tech. Our people are interested also in the technology. So they also value the fact that they're able to work with leading technology with the solutions that we provide. So it's long answer, but shortly, it's about the culture and the purpose and the technology.

Thank you. Then a short question to the other ones here on the sofa. How do you see the collaboration between digital solutions and other functions at Sitowise?

If I start, it is not the silo. We are working together. Example, in many, almost every big Infra projects, they are our Louhi product is there. And we are putting all the information from the project there, and the client can use it, we can use it. And also the residents can do the feedback using that tool. So we are using a lot of -- and lot of. And that was just one example.

Yes. If I continue from Heikki's point of view, I think we share a lot of critical capabilities between digi and together, we can help other BAs to fulfill their targets. And actually, the Louhi is a good example that part of the Louhi is also implemented in Voima. So basically, we share with all peers.

Yes. And of course, also in the part of most innovative developing digital solutions is nothing new to us. So we are kind of utilizing the proven concepts and technologies for our existing products while we produce some new ones to the market and we understand how to grow them. But moving further also, like in the projects, even in the expert services, we can utilize these digital solutions for some of their components to become more efficient and quicker and create better value for our clients. Yes. So thank you, Anna, for your presentation. And now it's time to invite to the stage, Jonas, who has been leading our Sweden operations since 2002.

Yes. Thank you. Nice to be here. I could have a Capital Markets Day of my own to be able to present everything about Sweden. I will nevertheless give it a try. Before entering into this company, I spent 24 or so years with one of our larger competitors. I actually decided to leave for reasons that is obvious. Actually, I got the opportunity to join Sitowise and I've never regretted that and actually the opportunities in this company is huge. The opportunities in Sweden is also big. We have built a strong core, since we started out in 2019 by the acquisition of Byggnadstekniska Byrån, the company that Heikki already told you have a massive history, a strong actor within building design and structural engineering. Since then, we have done several acquisitions, all of them with a purpose, actually, a purpose of building a platform, bringing the core and the knowledge we need to take on the Swedish market. We have managed to gather now 330 experts. We have 12 locations and actually, if I would select this location without any legacy, probably I will have chosen 8 of them still. And that is actually rather impressive. When you acquire companies, you get what's in them. But actually, we have a good footprint. We are lacking a bit of presence in the northern part. We will fix that eventually. So being on the road, starting out now integrating this into a strong company. I will try to explain to you, where we are at, at the moment and what we are up to and why we think that is good for Sitowise. We have a strong growth momentum, as you can see. And of course, most of it is driven by acquisition. But actually, we have an above market average organic growth underlying. And that is important. We are acquiring cores to build on. And the organic growth is sort of the evidence that we can handle the competition. Today, we are starting to get a sort of a little bit of similar footprint in Sweden, as we have in Finland, meaning actually that we have a fair share of building business, we have a fair share or a growing share of Infra business, and we also have a Digital Solutions core implemented in Sweden and that is good. That makes also collaboration between Finland and Sweden all the more easy to make. 3/4 of our clients are in the private sector today. We have a growing part of infrastructure business. And as you well-educated people have seen, we are not free from market headwind in the building sector in Sweden. So of course, we are looking for also having a little bit more of public clients. But on the other hand, in the counterpart from sort of residential building, our footprint is very good. We are not so exposed to residential building. We are more into institutional buildings, infrastructural buildings and industrial buildings, meaning actually that we are coping rather well with the Building segment. On the other hand, we are also growing the pure infra sector. So we are rather happy about that. Actually, up until today, we are proud to say that we have an established platform with the Sitowise brand. That makes us -- it's possible for us to grow further at Sitowise in Sweden. We have the strong core we need. These companies we have bought are excellent in their line of expertise. We are not competing with everyone everywhere. We are in selected niches. But there, we have a strong core. And we are positioned in the front of our current offerings, and I will tell you more about that. And our idea is actually buy and build, not only buy and collect, actually buy and build. To give you a little bit of flavor of what we actually are doing in Sweden, I will flip through a couple of projects that is rather typical. This is the Citygate Project. Citygate Project, the Citygate is a high-rise building in Göteborg. And it showcases a couple of things. One is actually that we are one of the most competent structural engineering [ actors ] in the consultant market in Sweden. But that is not the only thing. Here, we have a brilliant example of our strong commitment into true sustainability and true efficiency. And that is actually when we get to predesign, we actually see. Our experts see that this predesign is not up to spec. It is actually made in too big of a hurry and we can see actually that they have designed in a couple of solutions and a lot of concrete actually. That is not really good. So again, being brave enough to contradict the client that hasn't asked us and tell them actually, client, there is a better solution here. We were able to let -- give -- they actually let us do a bit of a redesign recalculations, and the completely new design saved up 900 of cubic meters of concrete, 260 tonnes of CO2 and actually a lot of confidence built with our clients. And the next step would be, actually, I want to get a part of this 900 cubic meters of concrete savings into our pockets, but that's the next phase. Another case of actually what we do a lot, as you saw in one of the pie chart of what we do in Sweden is actually prefab design. And prefab design, a lot of the houses you see, almost every one of them have a fair share of prefab elements in the build. That means actually that parts of the building is manufactured on a factory chip to the site and establish and build it together as Legos. That is driven by a couple of needs, actually, higher quality, lower risk and lower cost. And that means that this is typically price pressured market but it is a growing market. So how do you do? In our way, we have tackled this in 2 ways. One is, as also pointed out before, we used our innovation capabilities and our R&D skills to develop our Tekla environment, meaning that we can increase reuse, shorten and squeeze the project together. That is one point. The other point is actually that we are doing a fair share of off-shoring. This is something we have been doing in the Swedish companies now for a decade, working with off-shoring to Latvia and to India. And that makes some of our business units specialized on prefab are actually our most profitable units, even though it is actually a challenged market segment but that means actually that we get to keep it alone because the big ones don't dare to go there because they always lose money on it, but we prevail. So this is a good example of innovation and efficiency. Then again, being a Smart City company, a Sitowise also in Sweden, we have all the ambition to be sort of a good Sitowise operation in Sweden and we are on our route. And we have the infracontrol online. Infracontrol is a Swedish entity, integrated operationally into the Swedish sort of core. On the other hand, operating as part of our digital offering but in this case, this is actually a cloud-based IoT platform for municipalities. So actually taking care of a lot of reporting main tenants and controlling needs of all sorts of system, both new systems and legacy systems. In this case, we added value to this by adding AI-driven cameras on garbage trucks. What can you do then? You can actually screen and scan the whole road network of Helsingborg in 2 weeks while picking up the garbage. So cost savings of 80% compared to the usual way of doing it, actually sending out people or trucks to actually just monitor the roads, but also getting the data into the same system they already having used. Infracontrol online is used by over 120 muncipalities in Sweden. This is actually showcasing the potential of the system when we actually take it further. Good example of both innovation, efficiency and sustainability. The last case is about industrial installations. In this case, our pharma knowledge gives us an edge. We have been a selected partner for clients, in this case, KeyPlants for several projects. KeyPlants is a world leader in creating modular pharma production units or labs, and in this case, it was about the vaccine factory for Senegal in Africa, 300 million doses of vaccine per year but this modular off-site construction makes it possible to actually build them in a factory in Sweden, ship them to Africa, build them together and start production in weeks. That puts high demand on the consultant. We need to not only know installations and HVAC and utility piping and 3D modeling, we also need to actually understand how to document quality assure and validate and pre-validate in creating technical files for the pharma industry. That is not given when you are just doing installations for daycare centers. This is actually tough but this means actually that we have the capabilities and we have a growing market for pharma clients, but also other industrial clients that we intend to explore. We have a good starting point. We have done a lot of work creating in -- actually, we have been on this M&A streak for a long period of time. And we are being on this creating Sitowise value streak only for 1.5 years. So we have the organic growth. We have done the acquisitions that we really need. We have made an entry into Infra. We have the stable operations. We have married these companies together into a strong starting point with the Sitowise label on it. So now we are ready to take on the future and we want to be one of the contenders. We want to be the challenger and the disruptor. You know -- you all know that we have competitors in Sweden. Some of them a lot bigger than us with a solid track record and good performance. So we have to beat them and we have to beat them by being better than they're not being bigger and then we have to select and we want to select the areas that grows and we want to select the areas that is either hard, meaning actually that if we are good, we can get it alone or actually profitable. We will take possession in Sweden based on our strategic pillars because they fits us like a glove. We want to be the challenger that implements new routines, new design, waste new materials, a lot is about materials and reuse and optimization. We want to be the efficient player that is really strong in the segments we have wanted selected and also internally in our project execution, our resourcing using off-shoring. And we want to disrupt also in business modeling, what if I could have kept 100 tonnes of concrete for myself. I think we have a bright future. We are not alone in Sweden, not by a long shot, but we have a great potential, and I am absolutely confident that we actually can do something really good in Sweden in the coming years. Thank you.

Thank you, Jonas. And please join the conversation here on the couches. We just heard the story of Sitowise in Sweden, but maybe to go a bit beyond Sweden, how has been the collaboration being Finland and Sweden on this journey.

We have an excellent -- actually, we are talking about silos. I see no silos in Sitowise and I think that is so good. I only see focus. I see the silos that we sometimes are referring to is the needed focus not to actually lose track on the ball, but actually, everyone is very open and we are sort of seamlessly leveraging the competence, the references and the experience that we have over the Baltic City and I think it makes us unique. I don't think actually our competitors are that good at that.

Yes. And Turo, you've been quite heavily involved with all of this, but your kind of thoughts about the collaboration between Finland and Sweden.

It is really -- has been really good. Of course, it's a lot of work from ITs point of view, especially and complex projects with a lot of moving parts. For example, we are consolidating smaller companies to the Swedish entity. At the same time, we are trying to adjust the EDA platform to this Nordic level. We are in the process of bringing Voima to Sweden. Hopefully, it will bring the same point if it's there. And of course, there's a lot of synergies. For example, I think cybersecurity is one of these where we can together answer the needs of the clients.

That is actually one of our strong points. To be relevant in Sweden tomorrow, actually, I think the Swedish market is as requiring as the Finnish market when it comes to cybersecurity and sustainability. And actually building up that competence ourselves, while growing into our custom, that would be immensely expensive. Now you can just got Turo here on.

Get the speech?

That's how we do it in Sitowise.

That is true. But still, Sweden is no walk in the park. So what makes us distinct a...

A big park.

A big park. So what makes us stand out from the competition in Sweden?

Yes. I think actually, we have no legacy and that is a good thing. We don't have to defend what we did a decade ago in Sweden. Of course, we have the legacy of our companies and we should be aware of that. They should be proud of what ever done but we could be more to the point and I think we could focus on the stuff that makes us relevant tomorrow and by being a little bit more point than some of our already maybe too big competitors, I think actually we could push the envelope a bit for our clients, bringing value to the clients, and they like that and they don't like too big self-conscious actors. I think they like Hungry, challenging actors that actually is committed to bring value and that is what we're going to do.

Passionate experts.

Yes. Thank you, Jonas. You showed us the many opportunities that we have in Sweden and that was really interesting. Next, we will learn about our buildings business area. Heikki will come here and present us about combining expertise and efficiency in building specs.

Thank you, Minttu. Yes, exactly. Let's have a look, then at what's cooking in our building business and I'll do the presentation as we are just recruiting a new leader for the building business, but I can say that it's progressing well. So buildings business has been growing really well in the last years. The growth in the recent years has been driven very much by the acquisitions. Also -- actually also the market has been really good until late or like mid-'22 last year. Some parts of the business are facing very hard time right now, as I just explained earlier today. And -- of course, due to the low construction market activity, we are also seeing now the slowness also like starting in the renovation market. And there, the -- some of our customers are also postponing investment decisions. I'll explain this a little bit more in detail later on but then let's first discuss what do we do in buildings and what sets us apart from the competition in this area? So service offering covers everything needed during the life cycle of a building including design, engineering, surveys, project management and then expert services. And actually, to reduce the dependency from the cyclically strong new construction market, we've been taking active steps to diversify both our offering to both renovation, but also to these special services, such as fire safety services and then also acoustics planning. Already today, we offer services to a very diverse client base, real estate investors, municipalities, cities, housing corporations, government and basically the whole market, except private citizens are covered. So what is then our competitive advantage and the reason for our clients to choose us? The short answer is that we are the expert making buildings smarter and also more sustainable. So our expertise, sustainability and digital abilities create a combination that allows us to create new and also smarter solutions for the construction industry. We have expertise in exceptionally challenging construction projects, such as the complex high-rise apartment buildings that are planned here in Keilaniemi, Espoo you saw pictures earlier today. And then also the Kaisa Tunnel underground Metro line and so on. We have also expertise in overall underground building and then a good example of that is like the Meilahti Hospital area, which has been done earlier. But at the same time, we are also very customer-oriented and also efficient for smaller and more conventional project. The second reason for our clients to choose us is efficiency. Actually, buildings story is all about efficiency. We help to optimize and also enhance real estate industry value chain. And thanks to the widespread of clients and also projects we have a lot of data on the build environment overall. This means that actually, in some cases, we might actually have more data on real estate assets than their owners. And this enables us to offer them well thought through a holistic services. Based on this data and our expertise, we can also challenge our clients to be more ambitious in their plans. And third angle related to value creation is that our growth in buildings has very much been driven by M&A's that have added to our geographical reach, but also the service portfolio in Finland total. And we have now a comprehensive presence in whole Finland and, of course, capabilities and to deliver our services. And we are really local at the same time. So that helps to meet the customer needs well. So then let's move on to see what are our focus areas in buildings in the future. So first of all, we cannot ignore the market as I said. So despite the megatrends that are supporting the short-term outlook today for the construction market looks pretty challenging. So we want to, of course, mitigate the impacts of the current market and they are very straightforward things. So on client project work, our focus is on sales and taking care of our good margins. In the downward market, the price competition has clearly increased and we try to mitigate the price reductions there and naturally to keep the good margins that we've had. So this overall means that we are looking very carefully at the sales pricing project management and also internal processes. At the same time, we also -- as I also said earlier, so we continue to look at possibilities to reduce the cyclicality of our buildings business. So last year, we took an important step already by acquiring the renovation company called Rakennuttajakaari. And now we are the biggest renovation company in Finland. Then also, we are providing this expert services or special services more and more, and they are coming with better margins, such as this acoustic planning and fire safety service, what I explained. And then also to further diversify our client base, especially in the private sector. So we've been quite much in the public one, but the private brings also further opportunities for us. And then the third clear focus is that the new smart services. So of course, all of the Sitowise management team have already set great examples of this kind of new services and I believe that, that's also the future in the buildings. And those can then come on top of the business what we have already today. So in future, we will drive value with high demand services and smart buildings, initiatives and there's a focus on 3 different things. So first, developing proprietary tools to improve efficiency of design processes even further. And the key to succeed here is to keep our people innovating even in more challenging times and it also requires time. It's very important also to engage our clients and other stakeholders to take part. And together, we really have a real chance to improve and even disrupt the processes for the whole real estate base. The second is to continue on our path in helping our clients to lengthen the life and sustainability of their properties. So sustainability impacts are considered in each design phase and decision from building material optimization to energy-efficient solutions. We also help our clients to lengthen the life cycle of the assets and make them more energy efficient. We'll also address the growing needs for security of buildings and here, again, the links to digitization of policies and solutions are very close. And then the third focus area is efficiency. So we'll focus on 2 different ways. So both to bring further efficiencies to our clients and then, of course, secondly, to provide efficiencies for our own base of working. So here was a building business in a nutshell. So I'll move on here.

So has the share of turnover from construction companies declined with the market and what is our response to that?

Yes. Naturally, it has been now declining a bit. At the same time, actually, as I just explained. So we have a wide customer base or client base and there we can, of course, further expand that one as well. And then we have this new market like new opportunities in the market, which are more growing, such as energy logistics or building automation and so on. So of course, addressing those ones is a clear priority for us.

We have here on the Slide 1 renovation construction project but how do you see the renovation sector and refer debt affecting Sitowise building operations in the next few years?

Yes. So the renovation debt overall is clearly stacking. And then, of course, a consequence of that the buildings get into a worse condition and then normally, it leads to a situation that there are some unplanned repairs and they are probably quite costly as well. So of course, we should be avoided and thinking about this smart services, what I also explained. So we already have one new solution or service actually, which would be then tackling this issue and it's about like it's renovation debt management tool and service. So then helping the property owners to also make wise choices so investing in the right moment.

So renovation backlog is our French 2 as the trend.

Yes.

Then the last question to all of you. So how do we ensure that top-notch client experience and information flow across BAs is happening?

Maybe I can start with that one. I would anyhow say that actually, we today see several cases where that has been happening. So in probably there on of course, now the team has been showing those cases, middle Pasila development, including Tripla and projects. So there are several of them. So we've been working a lot gross business area. And then, of course, still thinking about the future, now this innovation culture is something that I'm very much looking forward to that one. So that should be then, of course, further boosting the cross-business area initiatives.

And I think you're absolutely right. I think this is actually the culture we build. We build the culture wherever one is, of course, meeting clients. Most of our people are meeting clients every week. And again, if we can get it in from the beginning that our only purpose here is actually to cater for our clients. And then when information and knowledge flows free through Voima and other tools that we have, we can almost every time bring something to the client. And that is actually a spirit that I already see. I think we can improve it, but I think we are fairly good at it.

Building on that we can maybe raise the bar regarding our sales excellence as well that is something that goes across business areas than we are currently working on. And then a very pragmatic example from my business area, but as you mentioned earlier, many of the digital solutions, the products that we have today, they actually cater to our customers' needs throughout the life cycle. They're integrated into their operations. So I feel, as you mentioned our product portfolio can also support other business areas in providing their services along the full life cycle.

And we are having the sales teams, horizontal sales teams that are following the leads for all the business areas, that's not the one.

And exactly. And even last week, we just had an open lab day in the Smart City lab, discussing circularity and infrastructural construction taking sustainability expertise from the building side, taking sustainability expertise from the infrastructure side, they've been getting data knowledge from the digital solutions, you need and also expertise and the tools from low to solve one big problem in land mass management. So that's a good example of where we kind of bring a ton of expertise in one meeting.

Thank you all. We got a pretty heavy information package here now during the last almost 2 hours and now it's time for break, isn't it Sami?

Exactly. So we will continue with summarizing insights and Q&As. But now with the break, take your time and get back at 1600 finish time sharp. Thank you. [Break]

And then it's time for the final session here. So I hope you have enjoyed the day already since this moment and also got some new insights about Sitowise but now it's time to recap. So what has been discussed? Then what is our target state for each of the businesses going further? And then how do we plan to maintain the industry-leading profitability. Let's go through business area by business area. So as Jannis described infra focus will be on the profitable growth with market-leading, leading client and also employee satisfaction. And this will be achieved by continuing the existing business growth and also providing new smart infra services. Expanding operations more broadly to the entire life cycle and investing in sustainable development initiatives and then implementing also the smartest ways to work. And our target for the future is that Infra continues to have the widest service portfolio, is known, especially for its environmental services continues to have the industry-leading profitability and also has created new business with smart infra services. Digital solutions focused will be as you heard from Anna on continuing the strong growth with special focus on SaaS business, which is coming with higher margins. The key actions include generating growth by influencing and also disrupting the industry with new product, services and business models. Also winning profitably in our number 1 owned niche and then accelerating growth in the SaaS business geographical expansion, new customer groups and also focused M&A are the directions. Our target for the future is that the Digital Solutions has established its position as the digital disruptor of technical consulting and at the same time, maintain it's already leading position in the Geospatial solutions. Also, our target is that Digital Solutions has scalable and efficient business model with rapid growth and high profitability. And that Digital Solutions has significant SaaS business, then contributing well to our 10% recurring revenue target in the future. In Sweden, we'll continue to grow by strengthening our position in selected segments as Jonas explained and also continue to focus on the M&A. The key directions include, first of all, being innovative in our own area. Also by utilizing the cross-border opportunities between Sweden and Finland and then challenging the existing business models, both in our own and also in client ends. Secondly, we focus on gaining a position as the preferred sustainability partner for selected clients. And our third focus area is to push project efficiency further to create value for our clients. And this we do by leveraging the use of tools and using off-shoring than suitable. So in '25, we want to be the preferred partner in our core expertise, a focused approach that allows us to take even stronger market position, how scalable, efficient operations be known and also attractive employer in Sweden and be the challenger and disrupt in selected segments and also then grow further into the industry side. And then buildings, so buildings will focus on driving value with high demand services and then smart building initiatives. Concretely, this means that buildings will develop proprietary tools to improve efficiency of design processes even further continuing the path in helping the clients to lengthen their life and sustainability of their properties and focusing on efficiency. And that will be done in 2 manners: efficiency of our clients' process, but then also our own base of work. And the target for '25 is that we have succeeded in increasing the resilience of the business by focusing on selected higher margins segments and we have the best client experience, and then we are the forerunner in the sustainable building design. Smart buildings also having life cycle solutions, providing new businesses and that we have efficient business overall with good profitability. Then let's have a look at our outlook in general and also targeted margin levels by business area. And I'll comment then also business area by business area. So firstly, building, we expect the growth overall to be low single digit in giga, mainly because of the current market environment but we see that the margin can improve to double digit when the market picks up and we are able to capture the growth with the new business opportunities, what we have been going through today. Infra growth, we expect to be good during the coming years and we expect to outpace market growth there as we have also done so far. And also there having a solid profitability, especially when we are getting the growth from the environmental design and overall sustainability services. Digital solutions will continue to grow in a strong manner. There's a demand for our services. We are creating market. We are targeting at clearly higher margin for that business area, mainly with the help of the SaaS business. And then in Sweden, we expect to see decent growth during the coming years and also having a double-digit margin business there. And then finally, just wrapping up that yes, why to invest in us overall. So key points. We are clearly leading player in a growing market. We have a new clear strategy, clear directions, actions, how to move on. We have approach service offering and also client base as well. And our strategic pillars are over the part of our DNA as you've heard today and those are the items that will continue to focus heavily during our strategy period. And they are then bringing us competitive advantage. We have a successful platform, also financial track record cash flow, which is strong and that will be helping us to grow further also with the acquisitions. And overall, we are an attractive employer. So we have all the elements to grow profitably going further. Now ending the presentation part of today and I think it's time for the questions.

Robin from Carnegie. Couple of questions. Have you changed your thinking around M&A and/or leverage now that interest rates have clearly increased?

Let's put it so that, of course, we are keeping an eye on these opportunities all the time and managing our M&A pipeline. Of course, in this kind of situation, we need to keep clear eye also on the leverage and that we are making wise choices. But as Hanna also explained earlier today, so naturally, we continue to focus on those kind of attractive cases where we have a clear investment case, higher EBITDA margin than what we basically have and then that there would be a natural culture of it, which will be also then supporting with the integrations. Anything to complement maybe.

Yes. Well, I think it's, of course, true that the interest rate environment has changed quite a bit during the bad year. And of course, we need to take that into account and the acquisitions need to provide sufficient yield into the money that we invest but I wouldn't say that it's a big mentality change. I think we balance between the leverage, keeping our balance sheet in shape and then finding the right investments. And as I said, our kind of typical valuation multiples have been pretty modest. So then we can tolerate a bit more of the kind of debt cost as well.

Okay. And salary inflation is quite high this year, higher than normally. How well do you think you can raise prices in order to compensate for that impact?

Yes. When it comes to pricing, we've had a heavy focus, I would say, the last year on pricing in many different ways. And I would say in all of the businesses that's been a high priority item, especially in the digital business and also infra segment, we've been able to manage it pretty well. Then, maybe it's good to say also that, of course, now in the building business, because of the construction market downturn, actually also increasing prices is not so easy because there's like a big competition on this works that are available. So there, it has been a bit tougher.

Okay. And then related to the Swedish business, you are still not that big player in Sweden, in what kind of time frame do you think you can become a more established player over there?

Yes. I would say that we have always, like Jonas today explained, we've taken several steps already doing our story. Now we have a Sitowise brand there, and we've been growing actually really both in the organic way, but also with the acquisitions lately and also thinking about way further. So we will continue to have focus on the M&A's and then we have ways also for the organic growth, as Jonas explained, several different cases where we see the selected segments where there are higher margin cases. So I would say that, of course, we are aiming at that next big milestone now already like very close to our strategic period.

Okay. And then finally, valuation levels for consultants including Sitowise have obviously declined here during the past year and what is your thinking around doing buybacks instead of acquisitions?

Do you want to take this one?

Yes. That's a good and relevant question, of course -- well, we shouldn't and we are not going to comment on our share price that much but you're right that the multiples are not at their peak. I think in any case, we've been able to do acquisitions even at a lower multiple than our own. So there is this kind of multiple arbitrage, if you want to call that. So then they are still attractive. Share buybacks, obviously, we consider we have an authorization but as you pointed out now, we haven't done such, I think we kind of seem to have good ideas for other uses for cash. We are not lacking ideas but let's see, nothing going on at the moment.

Concerning the utilization rates, you have said that the sort of in the past, you had good utilization rates compared to peers, but now fortunately Q1, we saw some pressure. So are you ready to do, if needed, to keep them up? And then how do you generally see that the sort of what will happen at the utilization rates?

Yes. Yes, exactly. Of course, in the past, we've had a high utilization rate and our goal is at 78% that as today shared, and okay, during the first quarter, we are having a bit of a gap there. Still, of course, now thinking about the different ways how we improve the situation is that natural. Today, we talk about this smartest ways of working. That's all about process efficiency. So we remove waste from all of our internal processes, then we are able to focus on the customer and project work. And that's a key thing. And of course, it's like a continuous work at the same time. Of course, now also in this kind of market environment, we are pretty selective also with all kind of like internal events and this kind of happening also partially with the trainings and so on. So that -- of course, balancing between the employee satisfaction and excitement and inspiration and then the utilization rate but those are the key things there.

Olli Koponen from Inderes. A few questions from my side. First, on the mega trends and specifically on the kind of sustainability, how would you say the kind of sustainability or green investments could kind of affect your market outlook and are you kind of seeing any effects from the kind of sustainability trend at the moment in the market?

Yes. I would say that, of course, overall, of course, the green transition is like clearly accelerating the overall market growth and that's a fact. And we already have like a good share of that one. And of course, all of what we today explained is about taking like even bigger share of that growth overall. And as I said, where we are going to focus a lot is the renewable energy, climate change mitigation and then also like circular economy biodiversity. All of them are providing significant possibilities for us and we're going to heavily focus on those ones. Anything maybe wanted to comment.

I think that's good and complete this but of course, it's a lot of investment activity in the Nordics as in other parts of the world but I think in the Nordics, we get the fair share of that. And of course, we want to be part of that movement.

Relating to data, do you think that you're missing out opportunities here now that you are not doing kind of broad business in the kind of energy or industrial deals of this business?

Yes. Of course, in the -- yes, in the past, we haven't been in the -- like the process industry business. And that's -- and that's also for a good reason and that's not going to be in our focus in the near future either. Then of course, what comes to the other business areas related to energy. We need to, of course, strengthen also our presence there and we've also today mentioned the sales excellence overall. So we are winning our sales excellence model and there will be a heavy focus on energy, especially renewable energy solutions. So we see that there's something where we need to just focus on more.

Maybe I can say that, of course, even if the kind of the core of the process industries, those designs are not our core, but then of course, there are complementing areas like electrical design to like industrial establishment. I think we have projects like these. So kind of around like the core industrial process, we still do have expertise and of course, that's beneficial in this environment.

Okay. And last one from me. You showed the kind of EBITDA margin kind of targets for the business areas. How much you have kind of -- how much you have to kind of improve in different business areas from this point to the kind of target that you kind of outlined there in the presentation? Your answer?

Yes. So obviously, as you well know, we are not disclosing our business area profitability. These were like indication of the target, which we see realistic and achievable during the time frame. I think it's kind of maybe fair to say that in this market environment, buildings has maybe most to kind of work on but obviously, I think we didn't put the numbers, therefore, switches didn't invent them from Finnair. So there is some thinking behind those but I think that's maybe more kind of what we can say, unless you want to complement.

Maybe just complementing and what I already said earlier, of course, in Infra and Digital solutions, we have a profitable business and that already explains quite a lot.

So let's take a couple of questions from online. Next, first is about megatrends. Regarding digitalization and cybersecurity drivers. What are the main revenue and or operational expense drivers in this field?

Yes. Of course, I would say, okay, what comes to basically both, but especially digitalization. So naturally, as I said also earlier, so looking at the whole industry, actually, the industry is not very digitalized yet, especially compared to some other industries. So there's like a huge potential in the whole industry and it means basically 2 different things. So firstly, of course, several companies are looking at ways to improve the operations. So automating processes, getting with us the waste and digital solutions are helping with that one. That's number 1 thing. Then of course, the second thing is that naturally providing new kind of total services, so helping the customers providing value-added services for the customers. And that using data in a wise manner, using artificial intelligence like also Hanna showed examples today. So these are the big drivers overall. And of course, we see that we are strong there and those are the items where we also want to focus a lot, then maybe cybersecurity overall. We are also having several clients already today from to which we are providing basically like planning of those kind of spaces where they can also work with security critical services and those kind of opportunities start to be more and more on our table as well.

And then related to the expenses here is also a question about how do you finance the investments to these new initiatives? And Hanna was mentioning that we are not sort of spending money here and there. So a question about how we finance the growth in this area.

Yes. Well, obviously, we do generate good cash flow, as said and then it's just up to us as a team to choose where we put those -- that money. Obviously, it's -- you can have like M&A targets, you can have other investments like traditional investments and then you can have a let's say, digital or other innovation initiatives kind of fighting for the capital. And then I think it's up to us to choose where do we get the best out of our money. So I think that's what I would say.

And we also have a question to Hanna, about the new pricing logic for our services that you mentioned in your presentation. So could you elaborate a bit more what they are.

And now I think that maybe refers to this recurring revenue businesses. Yes, I think my business colleagues maybe would be even better but I guess what I can just say then you can complement is that obviously, traditionally, we get paid by the hour or then by project where it's based on estimated hours. But if we are, for example, selling a SaaS product, that they could be like annual fee and then that's paid and then the service or product is kind of delivered and then that's like detached from the actual work during that year but I don't know if Heikki want to complement anything on that.

No. No. I would also assume that the question is related to that one, that's anyhow. So this, of course, yes, recurring revenue also, but in addition to that one, okay, we've been talking about the SaaS business models, but of course, there could be also like DaaS/ data as a service. So maybe Platform as a Service when going further and all those kind of things or then also when we are able to take full advantage of the artificial intelligence also in our current engineering or designing work. So naturally, we also need to then think about different kind of business logic there. So these are something, which we are working.

Yes. And of course, the difference is that then you do more of the work beforehand you kind of put in efforts to develop that product or whatever service that is. And then once it's up and running, then you leverage it, then you can scale it up to hopefully, more clients and then just kind of continue putting some development therefore, but mostly then enjoy the returns.

Thank you. Do we have any following questions from the audience hearing on site. Let's take a question then to Jonas and Sweden. We have received a question related to the competitive position of Sitowise in Sweden. How are you going to differentiate from your large competitors and beat them in Sweden?

Yes. In one way, you can say the easy answer is we won't differentiate from our competitors because they are already very good and they are saying pretty much the same thing that we are saying here. I'm sure. And they are investing in AI and they are investing in sustainability, and they are investing in SaaS and whatever. So again, I think that is not the game. The game is to be better at the game and that means that we have to be even more selective, where do we want to play. And if we want to play there, how can we take it one notch further, how can we actually ensure that if we are going for SaaS, we are going for SaaS in a more efficient way than the others. So I think again, we need to be selective and focused and take every consequence of our wishes. And that is something that is very hard to do when you are 12,000 people in Sweden as probably , they are past that focused approach. So I think our competitiveness comes from us being as skilled, more focused and actually more agile than the others. And that will carry us for a while, not forever, but for a while.

Thank you, Jonas. If we don't have further questions here on-site or online, then this concludes our Q&A for today.

Thank you all. It has been a great day.