Enento Oyj : Interim Report Q1 / 2021

ENENTO GROUP PLC

INTERIM REPORT

1.1.-31.3.2021

Building trust in the everyday.

Enento Group's

Interim Release 1.1. - 31.3.2021

ENENTO GROUP PLC, STOCK EXCHANGE RELEASE 29 APRIL 2021 AT 12.00 EEST

Enento Group's Interim Release 1.1. - 31.3.2021: Net sales growth was supported by new services and a business model that adapts well to exceptional circumstances

SUMMARY

January - March 2021 in brief

• Net sales amounted to EUR 39,7 million (EUR 37,6 million), an increase of 5,4 % (at comparable exchange rates an increase of 2,4 %).
• Adjusted EBITDA excluding items affecting comparability was EUR 13,9 million (EUR 12,4 million), an increase of 12,4 % (at comparable exchange rates an increase of 9,9 %).
• Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 11,5 million (EUR 10,5 million), an increase of 10,0 %.
• Operating profit (EBIT) was EUR 8,5 million (EUR 7,1 million). Operating profit included items affecting comparability of EUR 3,0 million (EUR 3,3 million), mainly arising from amortisation from fair value adjustments of EUR 3,2 million (EUR 3,0 million) related to acquisitions as well as M&A related expenses, reversal of excess redudancy accruals and received insurance compensation.
• New products and services represented 6,9 % (4,4 %) of net sales.
• Free cash flow amounted to EUR 5,7 million (EUR 7,3 million). The effect of items affecting comparability on free cash flow was EUR -0,0 million (EUR -0,1 million).
• Earnings per share were EUR 0,27 (EUR 0,23).
• Comparable earnings per share were EUR 0,37 (EUR 0,32)1.

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KEY FIGURES

	1.1. -	1.1. -	1.1. -
EUR million	31.3.2021	31.3.2020	31.12.2020
Net sales	39,7	37,6	151,3
Net sales growth, %	5,4	9,0	3,7
Operating profit (EBIT)	8,5	7,1	27,8
EBIT margin, %	21,3	18,9	18,4
Adjusted EBITDA	13,9	12,4	54,0
Adjusted EBITDA margin, %	35,2	33,0	35,7
Adjusted operating profit (EBIT)	11,5	10,5	45,0
Adjusted EBIT margin, %	29,0	27,8	29,7
New products and services of net sales, %	6,9	4,4	5,6
Free cash flow	5,7	7,3	32,6
Net debt to adjusted EBITDA, x	2,5	2,8	2,6

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

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Net sales, EUR million

• The growth of net sales in the first quarter was 5,4 % at reported exchange rates and 2,4 % at comparable exchange rates compared with the corresponding quarter of the previous year.
• Digital Processes business area saw very strong growth thanks to the continued high demand for real estate information services and the digital housing transaction service.
• In the SME and Consumers business area, the strong development of online consumer services continued in both of the main markets, Finland and Sweden
• Growth of the Customer Data Management business area continued, driven by B2C customer management services in Finland.
• In the Risk Decisions business area, the demand for consumer-related risk management services continued to decline moderately year-on-year, but the sales volumes of the services clearly recovered during the first quarter in spite of the unusual market conditions.
• Successful service development investments supported the development of net sales in all business areas.

Adjusted EBITDA, EUR million

• The growth of adjusted EBITDA in the first quarter was 12,4 % at reported exchange rates and 9,9 % at comparable exchange rates compared with the corresponding quarter of the previous year.
• Adjusted EBITDA increased year-on-year due to positive net sales development, the cost prioritisation actions implemented due to macroeconomic uncertainty and cost synergies.
• Adjusted EBITDA margin was 35,2 % (33,0 %).

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Adjusted operating profit (EBIT), EUR million

• Compared with the reference period, adjusted operating profit (EBIT) for the first quarter increased by 10,0 % at reported exchange rates and 7,6 % at comparable exchange rates.
• Amortisation related to capitalised development costs increased from the comparison period by EUR 0,5 million.
• Adjusted EBIT margin was 29,0 % (27,8 %).

New services' share of net sales, %

• New services accounted for 6,9 % of net sales in the first quarter.
• The Group has remained active in making service development investments in spite of the impacts of the coronavirus pandemic, and the investments are focused on the priorities outlined in the revised strategy.
• A total of 11 new services were launched in the first quarter.

Free cash flow, EUR million

• Operating cash flow before change in working capital developed strongly in the first quarter, supported by the good profitability. Negative change in net working capital was mainly caused by prepaid expenses at the beginning of the fiscal year. High investment cash flow and final tax payment in Sweden affected the free cash flow.
• Items affecting comparability increased cash flow from operating activities in the first quarter by EUR -0,0 million (EUR -0,1 million).

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FUTURE OUTLOOK

Net Sales: Enento Group expects its net sales growth in 2021 to be in the long-term target range (5- 10%) but somewhat lower than the mid-point of the target range.

EBITDA: Enento Group expects its adjusted EBITDA margin to improve somewhat in 2021 compared to previous year.

Capital Expenditure: Enento Group expects its capitalised product development and software expenses in 2021 to exceed the previous year's level.

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

JUKKA RUUSKA, CEO

Enento Group's net sales in the first quarter amounted to EUR 39,7 million, representing a year-on-year increase of 5,4 % (at comparable exchange rates 2,4 %) in spite of the continued challenges in the operating environment. The progress of COVID-19 vaccinations and support measures in society nevertheless create positive expectations for the future. The Group's adjusted EBITDA increased by 12,4 % (at comparable exchange rates 9,9 %) and amounted to EUR 13,9 million. Adjusted EBIT excluding non-recurring items and other items affecting comparability grew by 10,0 % (at comparable exchange rates 7,6 %) and amounted to EUR 11,5 million. Innovative service development and new services are an important source of growth for us. With this in mind, I am very pleased that the share of net sales represented by new services continues to grow and was 6.9 % for the period.

The development of net sales was influenced in the Finnish and Swedish markets by a slight decrease in the net sales of the Risk Decisions business area due to a reduction in the use of our services caused by the COVID-19 pandemic. In addition, the interest rate cap regulations on unsecured consumer credit will remain in effect at least until the end of September, which reduces the demand for our services in the Finnish market. In the SME & Consumers business area, growth was achieved in both markets in services sold directly to consumers. The net sales of the Customer Data Management business area were higher than in the previous year thanks to the good growth of services aimed at B-to-C customers. The housing transaction services of the Digital Processes business area saw continued strong growth in both markets, supported by strong market demand.

Advanced information acquisition and our information processing capabilities and competencies are among Enento's competitive advantages. We continuously seek new information, or new and unique data sources, as raw material for our service development. In line with our strategy, we invest in the use of unstructured data. Our ability to combine this type of data with the services, service development and customer needs creates many new growth opportunities for us. One example of a new service area in which we have taken advantage of entirely new data sources and data acquisition methods is ESG information on companies. Another example is our Consumer Credit Inquiry System, which caters to a need created by the lack of a national positive credit information register in Finland. In addition, we launched a new service during the first quarter that enables the use of positive credit information in the business segment.

I have on 21 April 2021 given notice of my resignation from the company. After nearly a decade as CEO, it's time for personal renewal and time to move towards new. It has been a great opportunity to develop Asiakastieto to Enento Group together with great Enento employees committed to business development. I am proud of the results we have achieved and would like to thank all my excellent colleagues. Meeting customers is one of the best parts of this work and I want to express my gratitude to our customers for the opportunity for a real dialogue.

I strongly believe that innovative service development, the synergies achieved through acquisitions and highly competent employees give Enento a great opportunity to achieve success by providing customers with even better services to support even better and more sustainable decision-making.