CEO's Review

Strategic acquisition

At the beginning of November, we signed an agreement on acquiring the entire share capital of BLC Turva Oy. This is a strategically significant acquisition for us. With the acquisition, Loihde will become Finland’s largest service provider in security technology services and strengthen its position as a leading expert in the comprehensive security of businesses. We expect the transaction to generate significant annual cost synergies of approximately EUR 3 million, and we are confident that the acquisition will have a positive impact on earnings per share once the integration project has been completed. The finalisation of the acquisition requires the approval of the Finnish Competition and Consumer Authority, and the matter is still pending.

Good progress in security solutions and continuous services

In the Security Solutions business, the latter part of the year was excellent in terms of financial performance, with revenue increasing by 11%. Growth was driven by both continuous services and the project business. Projects under several frame agreements signed earlier in the year began during the autumn and began to be reflected in revenue from the fourth quarter onward. In continuous services, considerable growth has been achieved in nurse call services in particular. Loihde is an important security partner for most of the wellbeing services counties and companies providing care services.

In the Cyber, Cloud & Connect business, revenue was on a par with the previous year. Performance was mixed: among continuous services, the growth of the Cyber Security Operations Centre (CSOC) continued, while the retail sales of network devices, for example, declined as expected and were weak for the year as a whole. The good growth seen in identity and access management (IAM) consulting for several years has slowed down, but our view is that the market opportunities are still positive, as demonstrated by the significant IAM delivery we agreed on with a public sector customer in the latter part of the year.

The comprehensive security and network business offer good growth opportunities and our ability to operate at the intersection of physical and digital security is a good fit with rising trends. The physical security becomes increasingly digital and the significance of cyber security and modern networks as part of the resilience of companies increases.

The profitability of IT consulting has reached a fairly good level, but the market remains challenging

Revenue from IT consulting decreased slightly year-on-year as the market conditions remained fairly subdued. However, the invoicing rate was at a good level. The prevailing general economic uncertainty is evident in companies being cautious about starting development investments. Customers are looking to AI and digital solutions for support in improving the efficiency of their operations and streamlining processes in particular.  

On the whole, the year under review was considerably better in IT consulting than the previous year and, in spite of the slight decrease in revenue, we are cautiously satisfied with our financial results for the full year and our strong customer relationships. 

Profitable growth

The revenue for the year increased by 3% year-on-year to EUR 144.4 (139.7) million. Adjusted EBITDA improved by 14% to EUR 12.5 (11.0) million, representing 8.6% (7.9%) of revenue. Adjusted operating profit (EBIT) improved by as much as 44% and amounted to EUR 4.5million.

Revenue from continuous services increased by 9% to EUR 40.1 (36.9) million, corresponding to 27.8% (26.4%) of total consolidated revenue. At the end of the financial year, the annualised contract backlog for continuous services amounted to EUR 41.9 (38.7) million.

I would like to thank our highly skilled professionals for their good work and commitment, and our customers and shareholders for the trust they have shown in Loihde.