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Talenom Plc’s Business Review January–March 2022: Strong growth continued with excellent profitability
Talenom Plc, stock exchange release on 26 April 2022 at 9:00 EEST
TALENOM PLC’S BUSINESS REVIEW JANUARY–MARCH 2022: STRONG GROWTH CONTINUED WITH EXCELLENT PROFITABILITY
JANUARY–MARCH 2022 IN BRIEF:
Net sales EUR 25.2 million (20.3), growth 24.1% (17.0)
EBITDA EUR 8.9 million (7.2), 35.2% (35.4) of net sales
Operating profit (EBIT) EUR 4.9 million (4.4), 19.3% (21.7) of net sales
Net profit EUR 3.7 million (3.3)
Earnings per share EUR 0.09 (0.08)
KEY FIGURES
Group | 1–3/2022 | 1–3/2021 | Change, % |
Net sales, EUR 1,000 | 25,209 | 20,307 | 24.1% |
Net sales, increase % | 24.1% | 17.0% | |
EBITDA, EUR 1,000 | 8,864 | 7,196 | 23.2% |
EBITDA of net sales, % | 35.2% | 35.4% | |
Operating profit (EBIT), EUR 1,000 | 4,861 | 4,412 | 10.2% |
Operating profit (EBIT), as % of net sales | 19.3% | 21.7% | |
Return on investment (ROI), % (rolling 12 months) | 16.8% | 19.9% | |
Interest-bearing net liabilities, EUR 1,000 | 46,573 | 35,643 | 30.7% |
Net gearing ratio, % | 106% | 115% | |
Equity ratio, % | 34.6% | 32.3% | |
Net investments, EUR 1,000 | 7,402 | 9,784 | -24.3% |
Liquid assets, EUR 1,000 | 12,891 | 10,265 | 25.6% |
Earnings per share, EUR | 0.09 | 0.08 | 10.4% |
Weighted average number of shares during the period | 43,731,739 | 43,195,636 | 1.2% |
Net profit, EUR 1,000 | 3,748 | 3,348 | 11.9% |
GUIDANCE FOR 2022 UNCHANGED (PUBLISHED 16 DECEMBER 2021)
Talenom expects 2022 net sales to be EUR 100–110 million and operating profit (EBIT) to be EUR 15–18 million.
CEO OTTO-PEKKA HUHTALA
The first quarter of 2022 began with general economic acceleration caused by recovery from the COVID pandemic and the effects of the war in Ukraine on the operating environment. The rise in energy prices has accelerated because of the war, workforce availability problems have intensified since the pandemic, and at the same time various supply chain challenges have increased the imbalance in demand and supply, accelerating inflation. The change in the operating environment challenges our customers and increases demand for Talenom's extensive value-added services. If the war in Ukraine is not significantly prolonged, its impact on our business is expected to be limited.
In the first quarter, the company’s net sales grew by 24.1% (17.0) to EUR 25.2 million (20.3). One-third of the growth was organic and two-thirds came from acquisitions. The EBITDA margin was 35.2% (35.4) and the EBIT margin 19.3% (21.7). Profitability remained excellent despite weaker profitability in the acquired businesses than in other Talenom units, the integration costs of the acquisitions and the increased depreciation level.
The Finnish business continued its excellent performance. Net sales grew by 16.5% (8.0) in the first quarter to EUR 21.0 million (18.0), driven by both organic growth and acquisitions. Organic growth was driven by new customer acquisition and sales of value-added services. The EBITDA margin improved slightly to an excellent level of 40.1% (39.4). Automation development had a positive and acquisition targets a negative short-term effect on relative profitability.
Swedish net sales grew by 73.1% (241.7) in the first quarter to EUR 4.0 million (2.3) mainly due to acquisitions. EBITDA was 13.0% (4.5) of net sales. Based on good experiences, we strengthened our new customer acquisition and continue to accelerate organic growth. Profitability continued its positive development. We expect the development to accelerate as we move customers to our own software platform in the autumn of 2022.
We continued to implement the strategy in the first quarter. Investments continued in introducing own software in Sweden, where the project has progressed in line with the planned schedule. We have increased the number of pilot customers and aim for extensive software implementation in the autumn of 2022. We have improved digital sales in the small customer segment in Finland and will start marketing the service during the second quarter. We have also continued to prepare the small customer concept in Spain. We continued to sell new service packages in Finland to new and existing customers. New service packages are an important part of the transition in which our business shifts toward a more consulting direction as routine tasks are automated. As planned, we have continued to examine new accounting service markets. Finland has been a pioneer in the digital transformation of the financial administration industry, where we have been involved in creating and developing a new era of financial administration. The same digital transition will also take place in Europe in the coming years. We want to be involved in the digitalisation of the European accounting services market, utilising our accumulated expertise.
We have accelerated our growth with acquisitions and the intention is to continue to do so. The focus of acquisitions is increasingly shifting to Sweden and new markets. At the same time, we want to strengthen our organic growth. We believe that the small customer segment and digital distribution are of great importance in this change.
We reiterate our guidance and expect 2022 net sales to be around EUR 100-110 million and EBIT to be EUR 15-18 million.
GROUP FINANCIAL DEVELOPMENT JANUARY-MARCH 2022
Net sales increased by 24.1% to EUR 25.2 million (20.3). Some two-thirds of the increase in net sales came from acquisitions and one-third organically through growth in customer numbers and sales of value-added services in Finland.
Personnel costs amounted to EUR 13.4 million (10.8) representing 53.2% (53.2) of net sales. Other operating expenses, including materials and services, totalled EUR 3.4 million (2.4) or 13.5% (11.7) of net sales.
Operating profit increased by 10.2% and amounted to EUR 4.9 million (4.4) or 19.3% (21.7) of net sales. Relative profitability was depressed by lower profitability of the acquired businesses compared to other units, integration costs of acquisitions, increased personnel cost level, and higher depreciation. Net profit grew by 11.9% to EUR 3.7 million (3.3).
COUNTRY-SPECIFIC FINANCIAL DEVELOPMENT JANUARY-MARCH 2022
FINLAND
1–3/2022 | 1–3/2021 | Change, % | |
Net sales, EUR 1,000 | 20,965 | 18,002 | 2,962 |
Net sales growth, % | 16.5% | 8.0% | 8.5% |
EBITDA, EUR 1000 | 8,405 | 7,093 | 1,312 |
EBITDA of net sales, % | 40.1% | 39.4% | 0.7% |
Net sales for January–March 2022 in Finland increased by 16.5% to EUR 21.0 million (18.0). One-half of the growth was organic and one-half came from acquisitions. Organic growth was driven by increased customer numbers and sales of value-added services.
EBITDA was at an excellent level. Automation development had a positive and acquisitions a negative effect on relative profitability.
SWEDEN
1–3/2022 | 1–3/2021 | Change, % | |
Net sales, EUR 1,000 | 3,989 | 2,305 | 1,684 |
Net sales growth, % | 73.1% | 241.7% | -168.6% |
EBITDA, EUR 1,000 | 520 | 103 | 417 |
EBITDA of net sales, % | 13.0% | 4.5% | 8.6% |
Net sales for January–March 2022 in Sweden increased by 73.1% to EUR 4.0 million (2.3). Net sales growth came mainly from acquisitions.
Profitability has been depressed by our investments in sales, building support functions and developing management structures. However, because of the growth, the relative share of these in net sales has decreased, which explains the positive profitability development from the comparison period.
OTHER COUNTRIES
1–3/2022 | 1–3/2021 | Change, % | |
Net sales, EUR 1,000 | 256 | ||
Net sales growth, % | |||
EBITDA, EUR 1,000 | -61 | ||
EBITDA of net sales, % | -24.1% |
Talenom expanded to the Spanish accounting business market through an acquisition in August 2021. After the deal, we have analysed Spanish accounting processes in more detail. We launched market research on how to utilise our most scalable product on the Spanish market and started developing a digital sales channel. We are also investigating possible acquisition targets to strengthen our accounting firm operations.
INVESTMENTS AND ACQUISITIONS
The total net investments during the review period were EUR 7.4 (9.8) million.
Investments | 1–3/2022 | 1–3/2021 | Change |
New customer agreements, EUR 1,000 | 886 | 890 | -3 |
Software and digital services, EUR 1,000 | 3,172 | 2,778 | 394 |
Acquisitions in Finland, EUR 1,000 | 282 | 1,319 | -1,038 |
Acquisitions abroad, EUR 1,000 | 2,897 | 4,345 | -1,449 |
Other investments | 166 | 452 | -286 |
Total net investments, EUR 1,000 | 7,402 | 9,784 | -2,382 |
Business acquisitions during the review period:
Saarijärven Tilipalvelu Oy, Finland
Tilitoimisto Kuopion Tili-Consults Oy, Finland
Accodome Oy, Finland
Share transactions during the review period:
Kjell Wengbrand Redovisnings AB, Sweden
MH Konsult Väst AB, Sweden
Purchase prices, net sales and operating profit of the acquisition targets during the review period:
EUR 1,000 | Share transactions | Business acquisitions |
Total purchase prices | 2,158 | 236 |
Maximum contingent consideration | 923 | 46 |
Net sales, previous 12 months at time of purchase, total | 3,000 | 962 |
Operating profit, previous 12 months at time of purchase, total | 159 | 43 |
Share transactions after the review period:
Lindgren & Lindgren Ekonomi AB, Sweden
Confido Redovisning AB, Sweden
Redovisningsbyrån Öckerö AB, Sweden
Purchase prices, net sales and operating profit of the acquisition targets after the review period:
EUR 1,000 | Share transactions | Business acquisitions |
Total purchase prices | 2,203 | 0 |
Maximum contingent consideration | 963 | 0 |
Net sales, previous 12 months at time of purchase, total | 3,058 | 0 |
Operating profit, previous 12 months at time of purchase, total | 289 | 0 |
In acquisitions, part of the purchase price was paid with new Talenom Plc shares subscribed for in directed issues. A total of 72,301 shares were subscribed for in directed share issues related to acquisitions during the review period and 90,169 after the review period.
WEBCAST
The company's CEO Otto-Pekka Huhtala will present the main points of the release in a live webcast today Tuesday 26 April 2022 at 10:00 EEST. The live webcast will be in Finnish, but a recording of the event will be published also in English on Talenom’s website https://sijoittajat.talenom.fi/en
You can watch the webcast live at https://talenom.videosync.fi/2022-q1
Participants will have the opportunity to present questions during the briefing over the webcast platform.
The presentation materials will be published before the start of the briefing on the company’s website at https://sijoittajat.talenom.fi/en/
TALENOM PLC
BOARD OF DIRECTORS
Further information:
Otto-Pekka Huhtala
CEO, Talenom Plc
+358 40 703 8554
otto-pekka.huhtala@talenom.fi
Talenom is an agile and progressive accounting firm established in 1972. Our business idea is to make daily life easier for entrepreneurs with the easiest-to-use digital tools on the market and highly automated services. In addition to comprehensive accounting services, we support our customers’ business with a wide range of expert services, as well as financing, account and payment traffic services. Our vision is to provide superior accounting, account and payment traffic services for SMEs.
Talenom’s growth history is strong – average annual net sales growth was approximately 16.2% between 2005 and 2021. In 2021, Talenom had on average 1,012 employees in Finland, Sweden and Spain at a total of 52 locations. Talenom’s share is quoted on the Main Market of Nasdaq Helsinki. Read more: sijoittajat.talenom.fi/en/
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