Enento Group’s Half Year Financial Report 1.1. – 30.6.2020: Asiakastieto’s new brand strengthens its Nordic offering – the business proved its resilience in challenging market environment

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ENENTO GROUP PLC, STOCK EXCHANGE RELEASE 6 AUGUST 2020 AT 11:00 A.M. EEST

Enento Group’s Half Year Financial Report 1.1. – 30.6.2020: Asiakastieto’s new brand strengthens its Nordic offering – the business proved its resilience in challenging market environment

SUMMARY

April – June 2020 in brief

  • Net sales amounted to EUR 36,7 million (EUR 35,6 million), an increase of 3,3 % (at comparable exchange rates an increase of 3,4 %).
  • Adjusted EBITDA excluding items affecting comparability was EUR 12,5 million (EUR 12,2 million), an increase of 2,1 % (at comparable exchange rates an increase of 2,3 %).
  • Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 10,2 million (EUR 9,2 million), an increase of 11,2 %.
  • Operating profit (EBIT) was EUR 5,4 million (EUR 5,0 million). Operating profit included items affecting comparability of EUR 4,8 million (EUR 4,1 million), mainly arising from amortisation from fair value adjustments of EUR 3,0 million (EUR 2,7 million) related to acquisitions as well as M&A and integration expenses.
  • New products and services represented 4,9 % (4,0 %) of net sales.
  • Free cash flow amounted to EUR 5,2 million (EUR 5,3 million). The effect of items affecting comparability on free cash flow was EUR -1,3 million (EUR -0,5 million).
  • Earnings per share were EUR 0,15 (EUR 0,15).
  • Comparable earnings per share were EUR 0,25 (EUR 0,24)1.
  • Enento Group updated its guidance on 6 August 2020.

January – June 2020 in brief

  • Net sales amounted to EUR 74,4 million (EUR 70,1 million), an increase of 6,1 % (at comparable exchange rates an increase of 6,9 %).
  • Adjusted EBITDA excluding items affecting comparability was EUR 24,9 million (EUR 24,0 million), an increase of 3,8 % (at comparable exchange rates an increase of 4,5 %).
  • Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 20,6 million (EUR 19,0 million), an increase of 8,7 %.
  • Operating profit (EBIT) was EUR 12,5 million (EUR 11,7 million). Operating profit included items affecting comparability of EUR 8,1 million (EUR 7,3 million), mainly arising from amortisation from fair value adjustments of EUR 6,0 million (EUR 5,5 million) related to acquisitions as well as M&A and integration expenses.
  • New products and services represented 4,6 % (4,2 %) of net sales.
  • Free cash flow amounted to EUR 12,5 million (EUR 12,6 million). The effect of items affecting comparability on free cash flow was EUR -1,4 million (EUR -1,2 million).
  • Earnings per share were EUR 0,38 (EUR 0,35).
  • Comparable earnings per share were EUR 0,58 (EUR 0,53)1.

1 The comparable earnings per share does not contain amortisation from fair value adjustments related to the acquisitions or their tax impact.

KEY FIGURES

  1.4. –
30.6.2020
1.4. –
30.6.2019
1.1. – 30.6.2020 1.1. – 30.6.2019 1.1. –
31.12.2019
EUR million
           
Net sales 36,7 35,6 74,4 70,1 146,0
Net sales growth, % 3,3 126,1 6,1 127,4 48,7
Operating profit (EBIT) 5,4 5,0 12,5 11,7 27,8
EBIT margin, % 14,8 14,1 16,9 16,7 19,0
Adjusted EBITDA 12,5 12,2 24,9 24,0 51,5
Adjusted EBITDA margin, % 33,9 34,3 33,4 34,2 35,3
Adjusted operating profit (EBIT) 10,2 9,2 20,6 19,0 42,6
Adjusted EBIT margin, % 27,8 25,8 27,8 27,1 29,2
New products and services of net sales, % 4,9 4,0 4,6 4,2 4,0
Free cash flow 5,2 5,3 12,5 12,6 32,1
Net debt to adjusted EBITDA, x 3,0  

3,2
3,0  

3,3
2,9

FUTURE OUTLOOK

Net sales: Enento Group expects its net sales to grow in full year 2020, the growth rate however remaining below the long-term target range of 5–10 %.

EBITDA: Enento Group expects its adjusted EBITDA margin in full year 2020 to remain at the previous year’s level.

Capital expenditure: Enento Group expects its capitalised product development and software expenses in full year 2020 to be at the previous year’s level.

The outlook is based on the assumption that exchange rates remain at the current level.

JUKKA RUUSKA, CEO

Asiakastieto Group is now Enento Group. The Group has a long history, with its roots going all the way back to 1905. Through acquisitions, the company has grown from a local operator to one of the leading companies specialising in digital business and consumer information services in the Nordic region, with EUR 146 million in net sales in 2019 and 420 employees in eight cities in Finland, Sweden, Norway and Denmark. Enento Group brings together the strengths of Asiakastieto, UC and Proff and helps build trust in daily life. The change of name supports our goals of continuing growth, increasing our service offering in the Nordic region and creating a foundation for strengthening our Nordic presence. The new name makes us an even more cohesive and stronger Nordic operator.

Thanks to our business model – which adapts to exceptional circumstances – and the quick action we have taken, our business has adapted fairly well to the diverse impacts of the coronavirus pandemic. Net sales in the second quarter continued to grow in spite of the pandemic and amounted to EUR 36,7 million, representing year-on-year growth of 3,4 % at comparable exchange rates.

The development of the Group’s net sales was particularly influenced by the SME & Consumers business area, where growth was accelerated by the Proff acquisition. The Digital Processes business area grew in both markets. In the Finnish market, growth was boosted by the new housing valuation service and the positive development of Compliance services.  In the Swedish market, the Tambur housing transaction service contributed to growth. The net sales of the Risk Decisions business area turned to a decline in both markets as the decrease in economic activity reduced the use of our services. The temporary 10 per cent interest rate ceiling on consumer credit introduced due to the coronavirus crisis also reduced demand in the Finnish market. The net sales of the Customer Data Management business area continued to decline in the Swedish market and remained on a par with the previous year in Finland.

Adjusted EBITDA increased by 2,3 % at comparable exchange rates and amounted to EUR 12,5 million. The development of profitability lagged behind the growth of net sales due to the Proff business acquired in July 2019 having a diluting effect on the EBITDA margin. The Group’s IT expenses also increased from the previous year. The Group’s adjusted operating profit excluding non-recurring items and other adjustable items grew in the second quarter by 11,6 % and amounted to EUR 10,2 million. The share of net sales represented by new services increased to 4,9 %. Overall, the number of newly launched services was in line with our targets in the second quarter as we continued our determined efforts to provide a service offering that suits customer needs and is continuously developed.

In early May, we announced Enento Group’s strategy for 2020–2023. The three main goals for the strategy period are as follows: to retain and strengthen the leading position in the credit information business, to become the number one choice in data-driven business processes as a service, and to become the leader in business information in the Nordic region. We will achieve these goals through service innovation, an organisational structure that corresponds to future challenges and the development of a Nordic IT platform. Our focus areas in future service development will include, for example, the development of Nordic sustainability services and the digitalisation of housing-related processes. The goal for Nordic sustainability services is to develop the sustainability service market and become a leading provider of ESG services with a comprehensive range of sustainability services that are needed by customers for risk management, credit processes and customer management. In the digitalisation of housing-related processes, our focus will be on the development of housing transaction services.

The coronavirus pandemic has affected our business starting from the second quarter. In spite of the global efforts to stop the pandemic, we are prepared for the potential prolongation of the exceptional circumstances and have taken proactive measures to secure our business. We are working in accordance with the requirements of the exceptional situation, in all of our functions. In March, we established four coronavirus working groups that assess the prevailing situation from different perspectives.

The key actions taken by the coronavirus working groups: 1) People: Starting from mid-March, the employees of all of our offices have worked remotely if their duties allow it. The plans and actions concerning the return to the workplace will be confirmed in August. 2) Business Continuity: Comprehensive business continuity plans have been prepared. Back-up mechanisms and procedures ensure our ability to maintain high-quality operations at all times and in all situations. 3) Customers and offering: We want our services to help our customers through this period and respond to special customer needs arising from the present situation. We have quickly launched services related to the coronavirus situation in the market and increased our financial communication. In the spring, we also began to document additional information about the effects of the coronavirus pandemic on companies’ payment default entries. This way, the credit information provides a more comprehensive picture of the causes and duration of insolvency. 4) Finance: We have secured our business financially by ensuring the Group’s financial sustainability and short-term cash flow. We have also developed various scenarios to understand the potential impacts and various consequences of the situation.

NEWS CONFERENCE: WEBCAST AND CONFERENCE CALL

Enento Group will hold a webcast for analysts, investors and media in English on Thursday, 6 August 2020 at 2.00 p.m. EEST where CEO Jukka Ruuska and CFO Elina Stråhlman will present the performance and events of the second quarter 2020.

You can follow the English webcast and conference call at:
https://cloud.webcast.fi/enento/2020_0806_enento_q2/

To participate in the conference call, please dial in using one of the numbers below
Finland: +358 (0)9 7479 0360
Sweden: +46 (0)8 5033 6573
United Kingdom: +44 (0)330 336 9104
United States, LA: +1 323-701-0223
The conference ID code: 909535

The presentation material will be available on the company’s investor website at 1.45 p.m. EEST and a recording of the webcast later during the day.

Helsinki, 6 August 2020

ENENTO GROUP PLC
Board of Directors

For further information:
Jukka Ruuska
CEO
Enento Group Plc
Tel. +358 10 270 7111

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 420 people are working for Enento Group in Finland, Norway, Sweden and Denmark. The Group’s net sales for 2019 was 146 MEUR. Enento Group is listed on Nasdaq Helsinki with the trading code ENENTO.

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