Positive start to the year with steady profitable growth trajectory continuing

On Apr 24, 2023

ENENTO GROUP PLC, STOCK EXCHANGE RELEASE 24 APRIL 2023 AT 12.15 P.M. EEST

Enento Group’s Interim Report 1.1. – 31.3.2023: Positive start to the year with steady profitable growth trajectory continuing

SUMMARY

January – March 2023 in brief

Net sales amounted to EUR 40,0 million (EUR 40,7 million), a decrease of 1,7% (at comparable exchange rates an increase of 2,3%).
Net sales growth excluding the impact from the discontinued Tambur service was 2,3% at comparable exchange rates.
Adjusted EBITDA excluding items affecting comparability was EUR 14,7 million (EUR 13,5 million), an increase of 8,6% (at comparable exchange rates increase of 12,3%).
Adjusted EBIT excluding items affecting comparability and amortization from fair value adjustments related to acquisitions was EUR 12,0 million (EUR 9,5 million), an increase of 26,6%.
Operating profit (EBIT) was EUR 6,9 million (EUR 6,1 million). Operating profit included amortization from fair value adjustments of EUR -2,4 million (EUR -3,1 million) related to acquisitions and EUR -2,6 million (EUR -0,3 million) items affecting comparability mainly arising from restructuring and other efficiency program related costs.
New services represented 8,3% (5,9%) of net sales.
Free cash flow amounted to EUR 10,1 million (EUR 7,1 million). The effect of items affecting comparability on free cash flow was EUR -1,2 million (EUR 0,1 million).
Earnings per share was EUR 0,18 (EUR 0,18).
Comparable earnings per share were EUR 0,26 (EUR 0,28)¹.
The efficiency program targeting at least 8-million-euro efficiencies by the end of 2024, has progressed according to the plan. The measures implemented by the end of first quarter are estimated to have an annual run-rate impact on the profitability of around EUR 4 million.

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

KEY FIGURES

EUR million	1.1. – 31.3.2023	1.1. – 31.3.2022	1.1. – 31.12.2022
Net sales	40,0	40,7	167,5
Net sales growth, % (comparable fx rates)	2,3	4,4	5,1
Net sales growth, % (reported fx rates)	-1,7	2,6	2,5
Operating profit (EBIT)	6,9	6,1	25,8
EBIT margin, %	17,3	14,9	15,4
Adjusted EBITDA	14,7	13,5	61,2
Adjusted EBITDA margin, %	36,8	33,3	36,6
Adjusted operating profit (EBIT)	12,0	9,5	49,1
Adjusted EBIT margin, %	29,9	23,3	29,3
New services of net sales, %	8,3	5,9	4,6
Free cash flow	10,1	7,1	33,9
Net debt to adjusted EBITDA, x	2,1	2,3	2,2

FUTURE OUTLOOK (UNCHANGED)

The general macroeconomic environment remains uncertain and unpredictable and is expected to impact negatively on the growth outlook of the Group. The weakening demand for sales and marketing and direct-to-consumer services is expected to negatively impact the net sales development. Enento expects increased demand for risk management and compliance services, which together with the introduction of new services will offset the decline. The discontinuance of the Swedish housing transaction service Tambur from second quarter onwards is estimated to have a negative impact up to -1.5% of the Group’s net sales at comparable exchange rates.

Enento expects cost inflation to increasingly burden the profitability level of the Group and is mitigating the impact by the introduction of the efficiency program.

GUIDANCE (UNCHANGED)

Net Sales: Enento Group expects net sales in 2023 to grow between 0% – 5% excluding the impact from the discontinued Tambur service at comparable exchange rates as compared to 2022.

Adjusted EBITDA: Enento Group expects its adjusted EBITDA margin to be in the range of 36,0% – 37,0%.

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

As we look back on the first quarter of the year, it is with great satisfaction that we report on a strong start to the year. Enento has maintained a steady profitable growth trajectory, fueled by our commitment to deliver value-added data and analytics services and solutions to our customers, and supported by the successful implementation of our efficiency program.

During the first quarter, Enento has demonstrated strong business performance, despite the ongoing challenges in the economic environment and the hard decisions we had to make to reduce the number of employees as part of the efficiency program. Our financial results for Q1 were satisfactory, with net sales increasing by 2,3% at comparable exchange rates compared to the same period last year. This was driven by the solid performance by Business Insight (+4,7%), particularly by Enterprise Solutions and Freemium Solutions. Obviously, the increased economic uncertainty impacts our customers in all industries and in some markets more than others, but simultaneously it has a positive impact on the demand of our risk management offering as the counterparty risks are something most of our customers closely monitor. This is reflected in the good performance of Enterprise Solutions, and we believe the trend will continue. The performance in Consumer Insights was more modest (+2,2%), and consumer lending volume growth especially in Sweden is clearly slowing down as higher interest rates and inflation are impacting consumer behavior. The net sales of Digital Processes (-10,8%) was impacted by the negative development in housing transaction volumes, but partially mitigated by successful sales efforts from value-added real estate information services and supported by double-digit growth from compliance services in Finland.

Our profitability improved…