Significant events during quarter 2, 2024 

• The Annual General Meeting was held on 23 April. The Annual General Meeting resolved in accordance with the submitted proposals, including the re-election of all members of the Board of Directors.

Significant events after the end of the period 

• In July, a 5-year framework agreement was received within the Power business area of SEK 500 million, an initial order of approximately SEK 100 million is planned to be placed in August. 

Other important during the period 

• In April 2024, an order of SEK 32 million was received in the Live-fire product area, as well as an option worth SEK 48 million. 
• In April 2024, a framework agreement for target equipment worth SEK 60 million was obtained, also in the Live-fire product area.
• In June, it was announced that a new business area structure will be established and that new managers will be appointed. 
• In June, it was announced a strategic partnership with French Exail regarding flight simulators. 
• In June, a 7-year framework agreement was received for advanced live-fire training systems for the Latvian Armed Forces, with an initial order of SEK 7 million. 

APRIL-JUNE 2024 

• Operating income for the quarter amounted to SEK 99.7 (114.3) million, a decrease with 6 %. 
• Profit, EBITA, for the quarter amounted to SEK -2.7 (22.4) million a decrease of SEK 25.1 million.
• Cash flow from operating activities amounted to SEK -11,4 (-4.1) million.
• Orders received during the period amounted to SEK 115 (86) million with an order book at the end of the period of SEK 221 (256) million. 

JANUARY-JUNE 2024 

• Operating income for the period amounted to SEK 196.8 (186.0) million, an increase with 6 %.
• Profit, EBITA, for the period amounted to SEK -0.7 (33.1) million a decrease of SEK 33.8 million.
• Cash flow from operating activities amounted to SEK -34.9 (21.5) million.
• Orders received during the period amounted to SEK 190 (128) million with an order book at the end of the period of SEK 221 (256) million. 

CEO EVELINA HEDSKOG COMMENTS

Anticipated challenges
As we approach the end of the first six months of 2024, it’s with mixed feelings. Our
performance has not met expectations, but we can still find reasons to be positive about
the future. The main reason for our weak financial results, both in terms of revenue and
profitability, can be attributed to a decline in order intake in 2023, which is now manifesting
its consequences. While this situation was not entirely unforeseen, it necessitates a careful
and balanced response.

Fortunately, the decline in order intake is not due to losing business, but rather delays
in contract decisions from several significant prospects. When these delays occur
simultaneously across multiple potential deals, it naturally impacts our operations.
Alongside the low turnover, we are also facing profitability challenges for various reasons.

Profitability affected in the short term
In the short term, our profitability has been impacted by the decision to undertake a group
restructuring and to establish three distinct business areas - Integration, Training, and
Power - to lay the foundation for future growth, both organically and through acquisitions.
This restructuring has incurred one-time costs in the second quarter.
We also have several ongoing and recently completed projects where cost increases have
affected profitability, and we are actively working with cost control in these projects with
good hopes of being able to reverse the negative trend.

As mentioned in the first quarter, the occupancy rate has remained too low, leading
to excessively high wage costs. This situation stems from both a poor order intake in
2023 and our deliberate choice to retain our staff and skills. We are confident that a
period of higher occupancy is imminent. This strategy aligns with macro trends in the
defence industry. Currently, the large system houses and ammunition manufacturers
experience immediate increase in business volumes, while smaller companies are
still awaiting a significant upswing. This trend has been confirmed by a recent report
from the Swedish defence industry trade association SOFF.

Positive messages for the second half of the year
Looking ahead to the second half of the year, there are promising developments on
the horizon. We recently secured a significant five-year framework agreement for
generators, with an initial order worth approximately SEK 100 million in August. This
marks a positive turning point, and we anticipate further growth in our order book in
the latter half of the year.

Additionally, our investment in battery manufacturing has already yielded results,
such as a framework agreement with French Thales, reflecting the increasing
demand for European-manufactured batteries in the defence industry. Our enhanced
focus on the export market has also led to positive outcomes, including long-term
agreements for products in the Live Fire segment with customers like the Latvian
Armed Forces and cooperation with French Exail for flight simulators.

In conclusion, despite the challenges we have faced in the first half of 2024, we are
optimistic about the future. While significant effort will be required to improve our
results, we believe there are strong prospects for sustainable growth in line with our
ambitious targets.

The Interim report is available for download at: https://w5solutions.com/investor-relations/