Sitowise Group Plc    Financial Statements Release      27 February 2024 at 8.30 a.m. EET

This release is a summary of Sitowise Group's financial statements release January-December 2023. The complete financial statements release is attached, and also available on the company's website at www.sitowise.com/investors/reports-and-presentations

• Net sales decreased by 8.3% to EUR 52.8 (57.6) million. In constant currency the net sales growth was -7%.
• Organic net sales growth was -6% (5%).
• Adjusted EBITA was EUR 2.4 (5.3) million, or 4.6% (9.2%) of net sales.
• Operating profit decreased to EUR 0.3 (3.8) million, or 0.6% (6.6%) of net sales.
• Sitowise acquired Positive Impact Finland Oy in November and announced the acquisition of the expert business of Ahlman Group Oy in December.

• Net sales increased by 3.2% to EUR 210.9 (204.4) million. In constant currency the net sales growth was 5%.
• Organic net sales growth was 1% (5%).
• Adjusted EBITA was EUR 17.0 (20.4) million, or 8.1% (10.0%) of net sales.
• Operating profit declined to EUR 11.7 (13.2) million, or 5.5% (6.4%) of net sales.
• The order book decreased by 10% to EUR 164 (181) million.
• Leverage (net debt / adjusted EBITDA) was 3.0x (2.6x).
• In addition to the acquisitions announced in Q4, Sitowise acquired the Finnish company Infrasuunnittelu Oy in May.
• Sitowise published its new strategy for 2023-2025 in February with unchanged long-term financial targets.
• Considering the current market environment, and to preserve capital for future growth initiatives, the Board of Directors proposes that no dividend be paid based on the balance sheet to be adopted for the financial year 2023. The Board will consider using the authorization for share buy-backs during 2024.

The figures in the financial statements release are audited. Comparative figures for the corresponding period of the previous year are in brackets. The figures disclosed in the financial statements release are rounded so the sum of individual figures can deviate from the reported sum. This report has been published in Finnish and English. If there are any differences between the English translation and the original Finnish version, the Finnish report shall prevail.

EUR million 10 10 Change, 1-12 202 1-12 2022 Change,
-12 2023 -12 2022 % 3 %

Net sales 52.8 57.6 -8.3 % 210.9 204.4 3.2 %
EBITA, adjusted 2.4 5.3 -54.6 % 17.0 20.4 -16.5 %
% of net sales 4.6 % 9.2 % 8.1 % 10.0 %
EBITA 1.3 4.7 -73.5 % 15.1 16.1 -5.9 %
Operating profit 0.3 3.8 -91.1 % 11.7 13.2 -11.1 %
Result for the -0.9 2.4 -135.7 5.5 7.9 -29.9 %
period %
Cash flow from 11.3 13.1 -13.4 % 23.9 22.7 5.4 %
operating
activities
before financial
items
and taxes
Net debt 55.3 56.6 -2.2 %
Net debt / 3.0x 2.6x 16.6 %
EBITDA, adjusted
Equity ratio, % 42.9 % 41.6 %
Earnings per -0.02 0.07 -133.0 0.16 0.22 -28.4 %
share (EPS), EUR %
Number of 2,169 2,237 -3.0 % 2,211 2,151 2.8 %
personnel,
average

CEO Heikki Haasmaa:  Strong performance in Infra and Digi shadowed by challenges in Buildings and the ERP and CRM implementations in Q4

In Q4, Sitowise's Infra and Digital Solutions businesses continued their strong performance and Sweden showed some progress towards a right direction from the Q3 low. Buildings business, however, suffered from the continued market deterioration of the Finnish construction industry, offsetting the good progress made in other business areas. The negative calendar effect of one working day less further slowed the growth. The Group's net sales were down by 8.3 percent (by -7 percent in constant currency) and organic growth totaled -6 percent in year-on-year.

In the quarter, we completed a significant investment into modernizing our system landscape. While bringing long-term benefits, during the quarter, the implementation of the new ERP and CRM systems in Finland affected net sales and profitability significantly. The impact was equivalent to the loss of approximately two working days on Group level, which equals to roughly -2 percent in Q4 net sales growth and -2.5 percentage points in Q4 EBITA margin. The Q4 adjusted EBITA decreased to EUR 2.4 million, corresponding an adjusted EBITA margin of 4.6%. The operating profit was further burdened by the one-time costs mainly related to the personnel reductions in Buildings in Q4, which have been eliminated in the adjusted EBITA. The Q4 highlights included the announced acquisitions related to growing our sustainability services.

Even with the headwinds in the Buildings business, our full-year net sales increased by 3.2 percent in 2023 and adjusted EBITA margin was 8.1 percent. Infra outpaced the market growth throughout the year, reaching its targets each quarter. Also Digital Solutions had an excellent year with significant performance improvement and successful streamlining of its SaaS and product portfolio. Both businesses benefited from the growing demand in green transition and security related services. Sweden had more of an interim year in terms of growth, but measures taken in 2023 to build one-Sitowise platform in Sweden are expected to clearly strengthen our future growth prospects in Sweden. In Buildings year 2023 proved to be even more challenging than foreseen at the start of the year. Following the proactive measures taken in adapting to the downturn we now have a more streamlined Buildings organization and focused service proposition for clients, which will benefit us when the market picks up again.

I truly believe that Sitowise is today better positioned to meet our clients' needs and face the competition than a year ago. One of the 2023 key events was the launch of our revised strategy, that has been well received by our employees and external stakeholders. I'm pleased of the progress made in strategy execution in 2023 and in targets of increasing the share of recurring revenue to 10% in 2025 and doubling our sustainability services revenue to EUR 10 million by the end of 2025.

Sitowise employees showed a strong commitment in providing our services and developing new designs and solutions for our clients last year, even if we needed to make some tough decisions, especially in Buildings, during the year. I want to express my warmest thanks to all Sitowise employees for their continued dedication and good work.

We expect the market environment to remain mixed in 2024. Demand for services related to green transition, security and digitalization of the built environment is expected to remain as the key driver for growth especially in Infra and Digital Solutions. In Buildings, the first part of the year will still be challenging, and the market is expected to show signs of recovery towards the end of 2024 at the earliest. There are already some weak positive signals when it comes to the Swedish market environment, but predicting the timing of a clear improvement in our markets is very difficult.

Our priority in 2024 is to improve Sitowise's profitability. Key actions in all business areas include moving our sales culture to the next level, pricing excellence, directing our efforts to the growing segments in the market, further actions to mitigate cost inflation and increasing internal efficiencies.

OUTLOOK, GUIDANCE, AND FINANCIAL TARGETS

Outlook for the year 2024

The stable long-term growth in the demand for design, consulting and digital services to create sustainable societies is supported by megatrends such as urbanization, renovation backlog, sustainability, digitalization and security.

The weakened macro-economic outlook, high interest rates and high inflation have slowed down growth in both Finland and Sweden and impacted the short-term decision-making of Sitowise's clients especially in the private sector and most of all in residential building projects. The general economic environment also has an impact on larger public sector investments. A key factor impacting Sitowise's market environment in 2024 will be the timing of the anticipated central banks' decisions to lower interest rates, and whether those will be, when materialized, sufficient to drive increasing demand for new construction and investment projects and thereby technical consulting services.

We expect the market environment to remain mixed in 2024. Key driver for growth will be increasing demand for services related to green transition, security, and digitalization of the built environment. In Buildings, the first part of the year will still be challenging due to the difficult construction market in Finland, which is expected to show signs of recovery earliest towards to the end of 2024. There are some positive signals in the Swedish technical consulting market environment, which has overall remained more stable than in Finland.

Entering the year 2024, orderbooks were at good level in Infra, Digital Solutions and Sweden. In Buildings, the workload was on an insufficient level, which has led to a start of selective temporary layoffs in Buildings in early 2024.

In addition to the market development, cost inflation (e.g., relating to salary increases), higher number of working days in 2024 than in the previous year (-1 day in Q1, +1 day in both Q2 and Q3 and equal number of days in Q4), potential currency fluctuations (EUR/SEK) and higher interest expenses are expected to impact Sitowise's financial performance during 2024.

Guidance

Sitowise Group's net sales is expected to slightly decline in 2024, driven by the Buildings business decline. Adjusted EBITA margin (%) is expected to be at the 2023 level or above in 2024.

Long-term financial targets

• Growth: Annual growth in net sales of more than 10 percent, including acquisitions
• Profitability: Adjusted EBITA margin of at least 12 percent
• Leverage: Net debt / adjusted EBITDA should not exceed 2.5x, except temporarily in conjunction with acquisitions

According to its dividend policy, Sitowise's objective is to pay annually a dividend corresponding to 30-50 percent of net profit to its shareholders.  When distributing a possible dividend, business acquisitions, the company's financial situation, cash flow and future growth opportunities are taken into account.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

Directed share issue and a change in the number of Sitowise shares

On 9 January 2024, the Board of Directors of Sitowise Group Plc decided on, by virtue of the authorization granted by the Annual General Meeting on 25 April 2023, to issue 48,675 own shares held by Sitowise Group Plc and 179,738 new shares in a directed share issue. The directed share issue relates to a transaction where Sitowise Oy acquired the expert operations of Ahlman Group Oy, a provider of nature and environmental services. The acquisition was completed on 9 January 2024.

The new shares subscribed for in the issue were registered with the Finnish Trade Register on 11 January 2024, after which the total number of shares in the Company is 35,845,665 shares. The Company does not hold own shares.

Proposals of the Shareholders' Nomination Board of Sitowise for the Annual General Meeting 2024

On 30 January 2024, the proposals of the Shareholders' Nomination Board for the Annual General Meeting were published. The Annual General Meeting is planned to be held on 4 April 2024. According to the proposal the members of the Board of Directors and its committees will be paid the same fees for the term of office ending at the Annual General Meeting 2025 as for their previous term of office.

The Shareholders' Nomination Board further proposes that for the term of office ending at the Annual General Meeting 2025, the current members of the company's Board of Directors Eero Heliövaara, Mirel Leino-Haltia, Elina Piispanen, Niklas Sörensen, Tomi Terho and Mats Åström be re-elected and Anni Ronkainen be elected as a new member to the Board of Directors. 

Proposals in full are available on Sitowise's investor site at Annual General Meeting 2024 | Sitowise.

BOARD OF DIRECTORS' PROPOSAL CONCERNING THE USE OF THE PARENT COMPANY'S PROFIT

On 31 December 2023, the distributable funds of Sitowise Group Plc amounted to EUR 108.2 million, of which profit of the parent company for the 2023 financial period was EUR 4,014,150.

According to its dividend policy, Sitowise's objective is to pay annually a dividend corresponding to 30-50 percent of net profit to its shareholders. When distributing a possible dividend, business acquisitions, the company's financial situation, cash flow and future growth opportunities are taken into account. Considering the current market environment, and to preserve capital for future growth initiatives, the Board of Directors proposes that no dividend be paid based on the balance sheet to be adopted for the financial year 2023. The Board will consider using the authorization for share buy-backs during 2024.

Espoo, 27 February 2024

Sitowise Group Plc

Board of Directors

Additional information

Heikki Haasmaa, CEO, heikki.haasmaa@sitowise.com,tel. +358 50 304 7765
Hanna Masala, CFO, hanna.masala@sitowise.com,tel. +358 40 558 1323
Mari Reponen, Head of IR, mari.reponen@sitowise.com,tel. +358 40 702 5869

Financial calendar 2024

• Annual and Sustainability Report, and the Report of

• Interim Report for January-March 2024:                                        8 May 2024
• Half-year financial report for January-June 2024:                           13 August 2024
• Interim Report for January-September 2024:                                 7 November 2024

Webcast for analysts, media and investors

Sitowise's Q4 2023 earnings webcast will be held today, 27 February 2024, at 12 pm EEST. The webcast can be accessed either live or as a replay available at https://livekatsomo.fi/streams/sitowise-q4-2023-result-webcast/ (https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Flivekatsomo.fi%2Fstreams%2Fsitowise-q4-2023-result-webcast%2F&data=05%7C02%7Cmari.reponen%40sitowise.com%7Cef4c42e9f96b4eddc6ce08dc3385be95%7Cb67da565e2fb4473b9db83695070d988%7C0%7C0%7C638441896723864282%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=th9IxlPbxsjZ01Ts%2FzK62uNg5B41VgYvRlQND8mh0AQ%3D&reserved=0)

Distribution:

Nasdaq Helsinki Ltd
Key media
www.sitowise.com

SITOWISE IN BRIEF:

Sitowise is a Nordic expert in the built environment with strong focus on digitality. We provide design and consulting knowhow to enable more sustainable and smarter urban development as well as smooth transportation. Sitowise offers services related to real estate and buildings, infrastructure, and digital solutions both in Finland and in Sweden. Global megatrends drive huge changes that require a re-evaluation of the smartness in the built environment - therefore we have set our vision to be Redefining Smartness in Cities. The Group's net sales were EUR  211 million in 2023 and the company employs more than 2,100 experts. Sitowise Group Plc is listed on Nasdaq Helsinki under the trading symbol SITOWS.