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Enento Group’s Interim Financial Report 1.1. – 30.9.2022: Quarter of good growth and improved profitability
ENENTO GROUP PLC, STOCK EXCHANGE RELEASE 28 OCTOBER 2022 AT 11.00 A.M. EEST
Enento Group’s Interim Financial Report 1.1. – 30.9.2022: Quarter of good growth and improved profitability
SUMMARY
July – September 2022 in brief
Net sales amounted to EUR 40,5 million (EUR 38,6 million), an increase of 4,9 % (at comparable exchange rates an increase of 7,1 %).
Adjusted EBITDA excluding items affecting comparability was EUR 16,2 million (EUR 14,5 million), an increase of 12,3 % (at comparable exchange rates increase of 14,4 %).
Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 13,6 million (EUR 11,9 million), an increase of 13,9 %.
Operating profit (EBIT) was EUR 10,5 million (EUR 8,9 million). Operating profit included amortisation from fair value adjustments of EUR -2,9 million (EUR -3,1 million) related to acquisitions and EUR -0,1 million (EUR 0,1 million) items affecting comparability mainly arising from redundancy related costs and integration costs.
New services represented 4,0 % (7,6 %) of net sales.
Free cash flow amounted to EUR 10,0 million (EUR 9,9 million). The effect of items affecting comparability on free cash flow was EUR 0,0 million (EUR -0,0 million).
Earnings per share was EUR 0,33 (EUR 0,27).
Comparable earnings per share were EUR 0,42 (EUR 0,37)1.
A new long-term financing agreement that replaces the previous long-term financing agreement was completed. The financing agreement consists of a EUR 150 million long-term loan as well as a EUR 30 million revolving credit facility. The agreement is for the next three years and includes two one-year options for extension of the loan period.
January – September 2022 in brief
Net sales amounted to EUR 124,6 million (EUR 120,4 million), an increase of 3,5 % (at comparable exchange rates an increase of 5,4 %).
Adjusted EBITDA excluding items affecting comparability was EUR 45,3 million (EUR 44,5 million), an increase of 1,8 % (at comparable exchange rates an increase of 3,5 %).
Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 35,9 million (EUR 36,9 million), a decrease of 2,8 %. Adjusted EBIT includes an impairment and reversal of work-in-progress of EUR 1,6 million relating to Tambur service due to future transfer of the service.
Operating profit (EBIT) was EUR 26,3 million (EUR 27,5 million). Operating profit included amortisation from fair value adjustments of EUR -9,0 million (EUR -9,5 million) and items affecting comparability of EUR -0,5 million (EUR 0,0 million) related to redundancy costs and integration costs. Operating profit also includes the above mentioned Tambur service related impairment.
New products and services represented 4,9 % (7,3 %) of net sales.
Free cash flow amounted to EUR 23,4 million (EUR 19,8 million). The effect of items affecting comparability on free cash flow was EUR -0,2 million (EUR -0,3 million).
Earnings per share were EUR 0,80 (EUR 0,85).
Comparable earnings per share were EUR 1,22 (EUR 1,17)1.
1 The comparable earnings per share does not contain amortisation from fair value adjustments related to acquisitions or their tax impact.
KEY FIGURES
EUR million | 1.7. – | 1.7. – | 1.1. – 30.9.2022 | 1.1. – 30.9.2021 | 1.1. – |
Net sales | 40,5 | 38,6 | 124,6 | 120,4 | 163,5 |
Net sales growth, % (comparable fx rates) | 7,1 | 4,0 | 5,4 | 5,9 | 5,9 |
Net sales growth, % (reported fx rates) | 4,9 | 5,2 | 3,5 | 8,4 | 8,1 |
Operating profit (EBIT) | 10,5 | 8,9 | 26,3 | 27,5 | 35,2 |
EBIT margin, % | 26,0 | 23,0 | 21,1 | 22,8 | 21,6 |
Adjusted EBITDA | 16,2 | 14,5 | 45,3 | 44,5 | 59,1 |
Adjusted EBITDA margin, % | 40,1 | 37,5 | 36,3 | 37,0 | 36,2 |
Adjusted operating profit (EBIT) | 13,6 | 11,9 | 35,9 | 36,9 | 49,0 |
Adjusted EBIT margin, % | 33,6 | 30,9 | 28,8 | 30,7 | 30,0 |
New services of net sales, % | 4,0 | 7,6 | 4,9 | 7,3 | 7,3 |
Free cash flow | 10,0 | 9,9 | 23,4 | 19,8 | 29,8 |
Net debt to adjusted EBITDA, x | 2,4 | 2,6 | 2,4 | 2,6 | 2,4 |
FUTURE OUTLOOK
The general macroeconomic risks are increasing due to the war in Ukraine as well as continued uncertainty from the pandemic. These developments may have a negative impact on the demand of our services. However, the increased market demand for Enento Group’s services is expected to continue. This, combined with introduction of new services are expected to support growth in 2022. However, the volatility of Swedish Krona can cause uncertainty in relation to growth outlook and may impact the net sales growth with reported exchange rates in 2022.
Enento Group expects that the platform transformation–related costs will continue to impact the results in 2022.
GUIDANCE
Net Sales: Enento Group expects its net sales growth in 2022 at comparable exchange rates to be around the lower end of the long-term target range (5-10 %).
EBITDA: Enento Group expects its adjusted EBITDA margin at comparable exchange rates to improve somewhat in 2022 compared to previous year.
Comparable exchange rates mean that the effects of any changes in currencies are eliminated by calculating the figures for the previous period using current period’s exchange rates.
JEANETTE JÄGER, CEO
The third quarter in 2022 was a period of good growth for Enento. Despite the challenging and uncertain operating environment, our net sales at comparable exchange rates grew by 7,1% to EUR 40,5 million. Consumer credit services were the main driver for the net sales growth. Profitability started improving according to plans, and adjusted EBITDA margin improved to 40,1%. We act proactively to secure and improve our profitability and we have successfully implemented several efficiency measures during the third quarter that have a positive impact on our profitability short-term.
Net sales increased in two out of the three business areas. Consumer Insight continued to grow in line with strong demand for consumer credit services in Finland and Sweden. In Business Insight, the net sales development was also positive with a higher growth rate than the first two quarters. Real estate and collateral information services at Digital Processes had a weak quarter due to the expected negative development in the housing markets especially in Sweden and the previously communicated negative impact from the discontinuance of the service development of the Tambur service. On the other hand, compliance services continued to grow at significantly higher volumes compared to the previous year as the situation with the imposed sanctions related to the war in Ukraine continues.
As we are witnessing high energy prices, rising interest rates and high inflation in Europe and in the Nordic countries, the economic outlook for the coming months and next year is very uncertain. Currently, GDP is expected to decline in our operating markets in 2023 and we are facing a recession in the Nordic countries. Despite the resilient nature of our business model, we are expecting a challenging growth outlook in the near-term future. We are adjusting our priorities and executing both short and mid-term activities to secure the profitability of our business through operational excellence and tight cost control.
Our long-term strategy remains, but we need to adapt to a changing and more challenging market environment. Rather than prioritizing short-term growth, I think it is important to strengthen our operations to secure profitability in an economic downturn and thereby free up capacity for future growth. To align our business toward this objective and increase our execution power, we have defined four strategic focus areas which will direct our planning and prioritization of efforts and resources going forward - operational excellence, customer first, one Enento and empowered people.
We have operational excellence as the main priority for 2023 and we are reshaping our IT platform transformation program. Our IT platform transformation program has so far mainly focused on investing in new capabilities that will enable the future growth of our business, but with a weakening economic outlook we will now refocus our activities to secure a profitable development. We are finalizing the reshaped plan of the program and as an outcome, we will have a sequenced program that will reduce complexity and decrease risk levels in relation to customer migrations. Operational excellence at Enento means that we run cost-efficient, scalable and well-managed operations, but it also means we are willing to invest in modernization of our business, which in turn will generate benefits going forward and allow us to grow together with our customers.
It is good to note that our business model and our services have resulted in economic resiliency over challenging macro periods in the past, as we have pro-cyclical and anti-cyclical elements in our offering. For more than a century, we have been building trust and developing data-driven solutions that power societies with intelligence. We provide mission-critical services that are always needed. Our purpose is to build trust in the everyday, and in uncertain times, this is more important than ever.
NEWS CONFERENCE: WEBCAST AND CONFERENCE CALL
Enento Group will hold a webcast and conference call for analysts, investors and media in English on Friday, October 28, 2022 at 2.00 pm EEST where CEO Jeanette Jäger and CFO Elina Stråhlman will present the results.
You can follow the English webcast and conference call at:
https://cloud.webcast.fi/enento/2022-10-28-enento-q3
To participate in the conference call, please dial in using one of the numbers below:
Finland: +358 9 2319 5437
Sweden: +46 (0) 8 50520424
United Kingdom: +44 (0) 33 0551 0200
United States, Local: +1 (0) 786 697 3501
The conference ID code: 018269
The presentation material will be available on the company’s investor website at 1.30 pm EEST and a recording of the webcast later during the day.
Helsinki, 28 October 2022
ENENTO GROUP PLC
Board of Directors
For further information:
Jeanette Jäger
CEO
Enento Group Plc
Tel. +46 72 141 00 00
Distribution:
Nasdaq Helsinki
Major media
enento.com/investors
Enento Group is a Nordic knowledge company powering society with intelligence since 1905. We collect and transform data into intelligence and knowledge used in interactions between people, businesses and societies. Our digital services, data and information empower companies and consumers in their daily digital decision processes, as well as financial processes and sales and marketing processes. Approximately 432 people are working for Enento Group in Finland, Norway, Sweden and Denmark. The Group’s net sales for 2021 was 163.5 MEUR. Enento Group is listed on Nasdaq Helsinki with the trading code ENENTO.
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