Interim Report Q3 / 2021

ENENTO GROUP PLC

INTERIM REPORT

1.1.-30.9.2021

Building trust in the everyday.

Enento Group's

Interim Report 1.1. - 30.9.2021

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

Enento Group's Interim Report 1.1. - 30.9.2021: Quarter with moderate growth after Covid-19 spurt

SUMMARY

July - September 2021 in brief

• Net sales amounted to EUR 38,6 million (EUR 36,7 million), an increase of 5,2 % (at comparable exchange rates an increase of 4,0%).
• Adjusted EBITDA excluding items affecting comparability was EUR 14,5 million (EUR 14,8 million), a decrease of 2,2 % (at comparable exchange rates an decrease of 3,1 %).
• Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 11,9 million (EUR 12,4 million), a decrease of 3,6 %.
• Operating profit (EBIT) was EUR 8,9 million (EUR 9,2 million). Operating profit included items affecting comparability of EUR 3,0 million (EUR 3,2 million), mainly arising from amortisation from fair value adjustments of EUR 3,1 million (EUR 3,1 million) related to acquisitions as well as M&A related expense adjustment.
• New services represented 7,6 % (6,3 %) of net sales.
• Free cash flow amounted to EUR 9,9 million (EUR 11,0 million). The effect of items affecting comparability on free cash flow was EUR -0,0 million (EUR -0,6 million).
• Earnings per share was EUR 0,27 (EUR 0,28).
• Comparable earnings per share were EUR 0,37 (EUR 0,38)1.

January - September 2021 in brief

• Net sales amounted to EUR 120,4 million (EUR 111,1 million), an increase of 8,4 % (at comparable exchange rates an increase of 5,9 %).
• Adjusted EBITDA excluding items affecting comparability was EUR 44,5 million (EUR 39,7 million), an increase of 12,2 % (at comparable exchange rates an increase of 10,2 %).
• Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 36,9 million (EUR 33,0 million), an increase of 11,8 %.
• Operating profit (EBIT) was EUR 27,5 million (EUR 21,7 million). Operating profit included items affecting comparability of EUR 9,4 million (EUR 11,3 million), mainly arising from amortisation from fair value adjustments of EUR 9,5 million (EUR 9,1 million) related to acquisitions as well as M&A related expenses, reversal of excess redundancy provisions and received insurance compensation.
• New services represented 7,3 % (5,2 %) of net sales.
• Free cash flow amounted to EUR 19,8 million (EUR 23,5 million). The effect of items affecting comparability on free cash flow was EUR -0,3 million (EUR -2,0 million).
• Earnings per share was EUR 0,85 (EUR 0,66).
• Comparable earnings per share were EUR 1,17 (EUR 0,96)1.

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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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KEY FIGURES

		1.7. -	1.7. -	1.1. -	1.1. -	1.1. -
	EUR million	30.9.2021	30.9.2020	30.9.2021	30.9.2020	31.12.2020
	Net sales	38,6	36,7	120,4	111,1	151,3
	Net sales growth, %	5,2	0,1	8,4	4,1	3,7
	Operating profit (EBIT)	8,9	9,2	27,5	21,7	27,8
	EBIT margin, %	23,0	25,1	22,8	19,6	18,4
	Adjusted EBITDA	14,5	14,8	44,5	39,7	54,0
	Adjusted EBITDA margin, %	37,5	40,3	37,0	35,7	35,7
	Adjusted operating profit (EBIT)	11,9	12,4	36,9	33,0	45,0
	Adjusted EBIT margin, %	30,9	33,7	30,7	29,7	29,7
	New services of net sales, %	7,6	6,3	7,3	5,2	5,6
	Free cash flow	9,9	11,0	19,8	23,5	32,6
	Net debt to adjusted EBITDA, x	2,6	2,4	2,6	2,7	2,6

Net sales, EUR million

• Net sales growth in the third quarter was 5,2 % at reported exchange rates and 4,0 % at comparable exchange rates compared with the corresponding quarter of the previous year.
• Consumer Insight -business area grew moderately. Consumer information services begun to recover in the Finnish market but in the Swedish market the growth in demand for Consumer services slowed down.
• Business Insight -business area net sales grew especially due to Freemium services as advertising market recovered but Enterprise services for large customers remained on prior year level.
• Digital Processes -business area grew due to high demand for real estate information services and digital housing transaction services, however the record high comparables moderated the growth rate.
• Successful service development investments supported the development of net sales in all business areas.

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Adjusted EBITDA, EUR million

• The decrease of adjusted EBITDA in the third quarter was 2,2 % at reported exchange rates and 3,1 % at comparable exchange rates compared with the corresponding quarter of the previous year.
• Negative adjusted EBITDA development is mainly caused by expensed investments made to support future growth. Comparison period cost levels were exceptionally low due to cost saving measures taken in the prior year. The future growth investments together with third quarter relatively modest net sales development had an impact on profitability.
• Adjusted EBITDA margin was 37,5 % (40,3 %).

Adjusted operating profit (EBIT), EUR million

• Compared with the reference period, adjusted operating profit (EBIT) for the third quarter decreased by 3,6 % at reported exchange rates and 4,5 % at comparable exchange rates. Decrease was in line with adjusted EBITDA development.
• Depreciations related to capitalised development costs increased from the comparison period by EUR 0,1 million.
• Adjusted EBIT margin was 30,9 % (33,7 %).

New services' share of net sales, %

• New services accounted for 7,6 % of net sales in the third quarter.
• The Group has remained active in investing in the service development in spite of the impacts of the coronavirus pandemic, and the investments are focused on the priorities outlined in the strategy.
• A total of 6 new services were launched in the third quarter.

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Free cash flow, EUR million

• Operating cash flow before change in working capital was on comparison period level. Impact of change in net working capital on cash flow was slightly positive mainly due to decrease in accounts receivable.
• Free cash flow decreased compared to prior year due to high service development investments in new services, service platform and IT environment consolidation.
• Items affecting comparability affected cash flow from operating activities in the third quarter by EUR 0,0 million (EUR 0,6 million).

FUTURE OUTLOOK

Net Sales: Enento Group expects its net sales growth in 2021 to be in the long-term target range (5- 10%), exceeding the mid-point of that 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 assumes that exchange rates remain approximately on the same level as in the first half of 2021.

JUKKA RUUSKA, CEO

The global economy continues its post-pandemic recovery, but the growth outlook has been dampened during early autumn. The Delta variant that brought uncertainty to the markets in August has been accompanied by supply chain problems, higher inflation figures and rising energy prices. The supply chain problems have restricted the growth outlook. The pandemic continues to perpetuate uncertainty in the economy and in the markets, which may be reflected in increased credit losses .

The third quarter in 2021 was a quarter of low growth for Enento Group. The Group's net sales amounted to EUR 38,6 million, representing a year-on-year increase of 5,2 % (at comparable exchange rates 4,0 %). Adjusted EBITDA decreased by 2,2 % (at comparable exchange rates 3,1 %) and amounted to EUR 14,5 million. The Group's adjusted operating profit excluding items affecting comparability declined by 3,6 % (at comparable exchange rates 4,5 %) and amounted to EUR 11,9 million. Continuous and innovative service development and new services are an important source of growth. The new service development portfolio remains strong and its share of net sales is now at 7,6 % and growing.

Net sales grew in all our three business areas in the third quarter, but the growth rate was much more moderate than in the previous quarter. Consumer information services in the Finnish market began to recover during the period under review and their volume is expected to grow going forward, but the growth of demand for consumer services slowed down in Sweden. Business in the Norwegian market has grown throughout 2021 and continued strong growth was seen in the third quarter. The growth rate of real estate and collateral information services in the Digital Processes business area levelled off. In 2020, the growth in the housing market started accelerating in the third quarter, which is the primary