Report of the Board of Directors
In 2023, Mantena has continued its efforts to transform the company, and this work will proceed with full force in the coming years. The company's contract portfolio will change from 2025, creating a clear need to adapt the business. The board is working to strengthen the company's liquidity and profitability, which is essential to implement the necessary changes.
Largest in Maintenance Services
Mantena provides services related to the maintenance and management of rolling stock, including technical services. The company is the largest provider of such services in Norway and is also established in the Swedish market.
The company's customers include passenger and freight train operators, material owners/leasing companies, train manufacturers, and other maintenance companies. Mantena maintains trains that transport 240,000 passengers daily in Norway and Sweden, as well as freight traffic and work machines on the railway network in Norway.
The company's vision is to be the Nordic region's most innovative total provider of maintenance services.
The headquarters are located in Oslo, but services are delivered from various locations in Norway and Sweden. Mantena currently consists of Mantena AS and its wholly-owned subsidiary Mantena Sverige AB. Mantena AS is 100% owned by the Norwegian state, with ownership managed by the Ministry of Trade, Industry, and Fisheries.
Financial Performance
Mantena AS and Mantena Sverige AB are consolidated in the group accounts of Mantena. The revenues for 2023 in the Mantena Group are NOK 1,723 million (NOK 1,538 million in 2022), an increase of 12%. Of this, Mantena AS accounts for NOK 1,353 million (NOK 1,195 million in 2022). The increased activity in 2023 compared to 2022 is due to higher activity in Sweden and increased project activity in Norway. The operating result for the group is NOK -147 million (NOK 46 million in 2022), and for Mantena AS NOK -160 million (NOK 55 million in 2022). The net result after tax for the group is NOK -143 million (NOK 38 million in 2022) and for Mantena AS NOK -151 million (NOK 101 million in 2022).
The change in operating result is mainly due to losses on individual contracts, while other areas have shown good progress. The net result after tax is negatively impacted by changes in pension obligations, write-downs in the spare parts inventory, and uncertain receivables.
Investments in fixed assets amounted to NOK 23 million in 2023.
Cash flows from operational activities were NOK -49 million, from investment activities NOK 8 million, and from financing activities NOK 39 million in 2023. The difference between the cash flow from operational activities and the operating result is influenced by payments to the pension scheme and an increase in outstanding receivables.
The board proposes that the annual result of NOK -143 million be transferred from other equity. After year-end appropriations, the group's equity is 9% (22% in 2022), and the equity in Mantena AS is 14% (29% in 2022).
Continued Operations
The group has an equity of NOK 103 million as of December 31, 2023. Mantena AS has an equity of NOK 153 million as of December 31, 2023. The annual financial statements for 2023 have been prepared on the assumption of continued operations and that a capital injection from the owner will be made during 2024, as proposed in the revised national budget. If the company does not receive new equity, the board will have to consider a significant restructuring of the operating model and strategy, including structural solutions.
Financial market risk
Currency Risk
Mantena primarily buys and sells in Norwegian kroner. There is limited currency exposure related to Swedish kroner through the operations of Mantena Sverige AB in 2023. Mantena mainly has exposure related to the purchase of parts in Swedish kroner, Danish kroner, and Euros.
Interest Rate Risk
The group is exposed to changes in interest rates, as the company has interest-bearing debt in the form of a utilized credit facility with a fixed credit limit.
Liquidity Risk
The company has a credit facility with a credit limit that covered the company's ongoing liquidity needs throughout 2023. The liquidity situation became strained in 2024 due to a loss-making contract where the customer has not paid for work performed in 2023 and 2024. This situation has resulted in activities related to cost adjustments and other measures to strengthen the company's liquidity in the short term.
Credit Risk
The main customers of Mantena are publicly owned companies. The company assesses that these customers, even after the COVID-19 pandemic, still have liquid funds available. Therefore, the credit risk is still considered low for most customers. However, there is credit risk associated with one contract, as mentioned in relation to liquidity risk.
Market Risk
Market analyses for the railway industry and national transport plans project an annual growth rate of 3-5% in Norway and 5-8% in Sweden. The volume of traffic in terms of kilometers driven is expected to grow, with maintenance frequency anticipated to remain stable but with more individualized follow-up per train set. Technological changes and market competition are expected to reduce the price per activity. Increased technology in trains may lead to an increase in activities for the monitoring of central IT systems.
In the Norwegian market, it is expected that there will be a tender competition and opportunities related to the new local trains in Eastern Norway. The major contracts related to passenger traffic will be put out for new tender competitions in the period 2027-2029, covering the current traffic packages 1, 2, and 3. In the Swedish market, several significant and important tender competitions are ongoing in a deregulated and open market, with several large contracts being put out for tender in the period 2024-2028. In Finland and Denmark, the deregulation of the train maintenance market has been postponed. Overall, this implies low market risk for Mantena.
Climate Risk
Extreme weather in the Nordic region can cause significant damage to railway infrastructure. This can have a direct impact on Mantena's economy if it leads to a reduction in train traffic. Extreme weather can also halt or delay access to input factors from more vulnerable areas, which in turn will affect Mantena's ability to fulfill contractual obligations. While Mantena cannot influence the probability directly, the company can take steps to create a more robust business model to cope with the consequences of climate change.
The Future
In recent years, Mantena has implemented several measures to improve profitability, including reducing the number of employees, renegotiating contracts, and cutting costs. While profitability has shown positive development, there is still a significant need for restructuring. A new business plan has been developed for the company, and the board has requested an injection of new equity from the owner. This is primarily to establish a financial basis for realizing the business plan but also an acknowledgment that the company, when spun off as a separate entity in connection with the railway reform, may have been undercapitalized given the business's risks. These risks include an increasing inventory of obsolete parts that need to be written down as older train types are phased out in Norway. The company's overarching plan includes efficiency improvements in Norway, growth in Sweden, and a new component workshop to contribute to cost savings. The board aims to ensure that progress in implementing the measures outlined in the business plan is strengthened to secure profitability.
The market for railway vehicle maintenance is expected to grow in line with the increase in public transport and freight traffic on the railway. Trains will continue to require maintenance, and there is a growing need for Mantena's expertise in the Nordic market. Competence requirements will change as maintenance becomes more data-driven. Mantena's ambition is to be the Nordic region's leading center of expertise for rolling stock. The strategy for the coming years focuses on the Norwegian and Swedish markets, which are familiar territories for Mantena.
Sustainability
Mantena has a sustainable business model and strategy. Mantena is committed to conducting its operations in a manner that is responsible towards the environment, employees, customers, and society at large. For the first time, the group is delivering a combined annual and sustainability report, in which the company outlines its efforts towards sustainable value creation and responsible corporate governance.
Environmental Impact
Mantena continuously works to reduce its environmental impact. In 2023, the focus was on better handling of hazardous waste and reduction of environmental emissions. In 2023, Mantena had 6 environmental incidents, compared to 9 in 2022. There were no reported non-compliance issues in the handling of hazardous waste.
People and Competence
The average number of full-time equivalents (FTEs) at Mantena in 2023 was 781, compared to 818 in 2022. The reduction is the result of planned departures.
The company takes social responsibility by bringing in apprentices and offering employees without trade certificates the opportunity to earn one on the job. This is to ensure access to necessary and good competence in train maintenance for the future. Through Mantena's learning portal, a variety of training programs are offered, ranging from project management and "lean" to technical courses.
The sick leave rate in 2023 was 7.4% in total (7.3% in 2022). Several specific measures were implemented in 2023 to reduce sick leave. Examples of these measures include training leaders in sick leave follow-up and offering flu vaccines to all employees.
Equality and Diversity
Mantena is a diverse and inclusive workplace, characterized by an environment of openness and trust. In 2023, the company placed extra emphasis on inclusion, bullying, and harassment.
The company ensures equality and fairness in terms of pay, hiring, promotions, and competence development. Mantena has a conscious strategy to encourage equality when recruiting new employees. Everyone is given equal opportunities to participate in the company’s various tasks.
While Mantena is diverse in terms of language and cultural background, the proportion of women is low. In 2023, there were 77 women employed at Mantena, representing 9.6% of all employees (6.2% in 2022). Most women in the company hold leadership or administrative positions. In Mantena’s executive management, there are two women, accounting for 29%. In Mantena's board, there are two women and six men.
HSE and Traffic Security
At Mantena, safety always comes first. The H1 factor in 2023 ended at 11.8 (down from 12.4 in 2022). A total of 75 personal injuries were reported in 2023, compared to 54 the previous year. The increase in reported injuries can largely be attributed to a heightened focus on reporting and the introduction of a simplified electronic incident registration system. Unfortunately, the numbers are still too high, and Mantena will continue to work actively to reduce the number of injuries going forward.
The Work of the Board
The board held 15 meetings during the year. There were no board committees in 2023. Directors' and officers' liability insurance has been secured for the board members and the CEO.
Corporate Governance
As a fully owned company of the Norwegian state, the board adheres to the state's principles for good corporate governance. The company strives for transparent and responsible management in all aspects of its operations. Read more about the board's statement on corporate governance on Mantena's website.
Transparency Act
Mantena accounts for its handling of the Transparency Act on Mantena's website.
Finally, the board would like to extend a big thank you to all employees who have made significant efforts to build and develop the company throughout 2023.