Yahoo Finance Talenom Plc Half-Year Report January–June 2020 (unaudited): Net sales grew by 15% and operating profit improved by 11% – Strong profitable growth continued in line with the strategy
Talenom Plc, Half Year financial report 3 August 2020 at 13:30
Talenom Plc Half-Year Report January–June 2020 (unaudited): Net sales grew by 15% and operating profit improved by 11% – Strong profitable growth continued in line with the strategy
January–June 2020 in brief:
Net sales 33.9 (29.5) million euros, increase 14.6% (16.9%)
Operating profit (EBIT) 7.3 (6.6) million euros, 21.6% (22.3%) of net sales
Net profit 5.5 (4.9) million euros
Earnings per share 0.13 (0.12) euros
Talenom’s guidance for 2020 remains unchanged: Net sales for 2020 are expected to amount to 64–68 million euros and operating profit to 12–14 million euros.
Group | 1–6/2020 | 1–6/2019 | Change |
Net sales, thousands of euro | 33,852 | 29,545 | 4,307 |
Net sales, increase % | 14.6% | 16.9% | -2.3 percentage points |
Operating profit (EBIT), thousands of euro | 7,312 | 6,600 | 712 |
Operating profit (EBIT), as % of net sales | 21.6% | 22.3% | -0.7 percentage points |
Return on investment (ROI), % (rolling 12 months) | 17.9% | 20.2% | -2.3 percentage points |
Liquid assets, thousands of euro | 9,627 | 8,423 | 1,204 |
Earnings per share, euro | 0.13 | 0.12 | 0.01 |
Net profit, thousands of euro | 5,456 | 4,924 | 532 |
Group | 4–6/2020 | 4–6/2019 | Change |
Net sales, thousands of euro | 16,503 | 14,762 | 1,741 |
Net sales, increase % | 11.8% | 17.7% | -5.9 percentage points |
Operating profit (EBIT), thousands of euro | 3,594 | 3,158 | 436 |
Operating profit (EBIT), as % of net sales | 21.8% | 21.4% | 0.4 percentage points |
Return on investment (ROI), % (rolling 12 months) | 17.9% | 20.2% | -2.3 percentage points |
Liquid assets, thousands of euro | 9,627 | 8,423 | 1,204 |
Earnings per share, euro | 0.06 | 0.06 | 0.01 |
Net profit, thousands of euro | 2,650 | 2,339 | 311 |
Guidance for 2020 remains unchanged
In its business review January-March 2020, published on 27 April 2020, Talenom revised its guidance for 2020:
Net sales for 2020 are expected to amount to 64–68 million euros and operating profit to 12–14 million euros.
CEO Otto-Pekka Huhtala
The past six months were one of the most memorable periods in Talenom’s history. The year started on a stable note as we continued our years-long development of operations and growth. In March, the world faced the coronavirus epidemic – and also Talenom had to learn to live with it. In spite of exceptional circumstances, the mood remained confident at Talenom, as evident in the oversubscription of the share issue to personnel in May. Our employees demonstrated their strong commitment and trust in our company and its future.
Our net sales for January-June grew by 15% year-on-year to 33.9 million euros and operating profit improved by 11% to 7.3 million euros. The strategic drivers of our profitable growth have remained unchanged. We seek to ensure that our customers enjoy effortless day-to-day operations, to automate our routines with our bookkeeping production line and to provide care services to our customers.
In our Business Review January-March 2020, we reported on coronavirus-related uncertainties, which particularly concern the acquisition of new customers, bankruptcies among customer companies and our transaction based invoicing. Sales to new customers have continued at the top end of the expectations we set for coronavirus epidemic, albeit falling short of the sales targets we set before the coronavirus hit. The trend in the number of bankruptcies among customer companies was also in line with expectations during the second quarter, but performance in transaction based invoicing has been in the lower range of our coronavirus-adjusted forecasts. For instance, layoffs at customer companies have been reflected in payroll service volumes sooner than during earlier financial crises. The uncertainties posed by the coronavirus remain unchanged. Our full-year financial outlook has not changed significantly, and our guidance for 2020 net sales and operating profit issued in April remains unchanged.
During the review period, we continued our planned investments in customer user interfaces, automation and new customer acquisition. Talenom Online will be renewed during the present year, making the day-to-day lives of our customers even easier. Even though we have invested in automation for a long time, there are still untapped opportunities in this area – and we will continue to invest in them. We will continue our efforts to acquire new customers with our own sales and franchising team, and we will also seek to support growth by means of corporate acquisitions.
In our Business Review January-March 2020, we mentioned that we are developing a new small customer concept that will be a major milestone in Talenom’s future. Talenom has not previously engaged in significant business in the small customer segment, as in our view it was not possible to generate growth sufficiently cost-effectively. We believe that the small customer concept we are now piloting will enable a digital, even more efficient way of distributing our services. We are currently piloting the concept in-house and are very satisfied with the results. Our aim is to release the first version of the product in connection with the publication of our next business review in October.
We want to play a major role at the forefront of the digital transformation of the accounting sector. We have invested heavily in our own processes and software over the long term. Now is a good time to harness our strengths to benefit a wider range of customers and users. In February, we acquired the business operations of Addvalue Advisors Oy in Vantaa, and in May we expanded our operations also in Sweden by purchasing the share capital of Niva Ekonomi Ab. Based on our experience in the Swedish market and favourable outlook, we want to expand our presence and accelerate our growth in this market.
Financial development
Key figures
Group | 1–6/2020 | 1–6/2019 | Change |
Net sales, thousands of euro | 33,852 | 29,545 | 4,307 |
Net sales, increase % | 14.6% | 16.9% | -2.3 percentage points |
Operating profit (EBIT), thousands of euro | 7,312 | 6,600 | 712 |
Operating profit (EBIT), as % of net sales | 21.6% | 22.3% | -0.7 percentage points |
Return on investment (ROI), % (rolling 12 months) | 17.9% | 20.2% | -2.3 percentage points |
Interest-bearing net liabilities, thousands of euro | 29,365 | 29,260 | 105 |
Net gearing ratio, % | 110% | 137% | -27 percentage points |
Equity ratio, % | 34.3% | 30.5% | 3.8 percentage points |
Working capital, thousands of euro | -5,240 | -4,323 | -917 |
Net investments, thousands of euro | 9,027 | 9,520 | -493 |
Liquid assets, thousands of euro | 9,627 | 8,423 | 1,204 |
Earnings per share, euro | 0.13 | 0.12 | 0.01 |
Weighted average number of shares during the period *) | 42,303,612 | 41,421,138 | 882,474 |
Net profit, thousands of euro | 5,456 | 4,924 | 532 |
*) The number of shares outstanding has been adjusted due to the share issue carried out free of charge during the review period by multiplying the preceding figures by six.
Net sales, profitability and financial performance, January–June 2020
During the period from January to June, Talenom’s net sales increased by 14.6% year-on-year. Amounting to 33.9 (29.5) million euros, net sales grew by around 4.3 million euros. The growth in net sales was mainly due to the increase in the number of accounting service customers. In addition, net sales grew due to acquisitions.
In January-June, personnel expenses amounted to 17.3 (15.0) million euros, 51.2% (50.9%) of net sales.
Other operating expenses, including materials and services, totalled 4.2 (4.2) million euros, accounting for 12.3% (14.4%) of net sales.
In January-June, operating profit (EBIT) was 7.3 (6.6) million euros, 21.6% (22.3%) of net sales, and net profit was 5.5 (4.9) million euros. Operating profit improved by 10.8%.
During the period from April to June, Talenom’s net sales increased by 11.8% year-on-year. Amounting to 16.5 (14.8) million euros, net sales grew by around 1.7 million euros. In April-June, operating profit (EBIT) was 3.6 (3.2) million euros, 21.8% (21.4%) of net sales, and net profit was
2.7 (2.3) million euros. Operating profit (EBIT) for April-June improved by 13.8% year-on-year. Net sales and relative profitability for the last quarter were weakened by lower invoicing of transaction-based products and the lower profitability of acquired businesses in the early stage of the post-acquisition period.
Balance sheet, financing and investments
On 30 June 2020, the consolidated balance sheet total was 78.0 (70.0) million euros. The Group’s equity ratio was 34.3% (30.5%) and the net gearing ratio was 110% (137%).
The Group’s interest-bearing financial loans at the end of the review period were 30.0 (28.0) million euros, excluding instalment debts. Other non-current interest-bearing liabilities (instalment debts) were 0.2 (0.2) million euros and other current interest-bearing liabilities (instalment debts) were 0.2 (0.3) million euros.
In accordance with IFRS 16 Leases, as of 1 January 2019, the Group recognises leases of business premises in the balance sheet mainly as assets and liabilities. In accordance with IFRS 16, non-current lease liabilities stood at 6.3 (7.3) million euros and current lease liabilities at 2.2 (1.7) million euros on 30 June 2020.
The Group recognises the costs of new customer contracts, such as costs of obtaining and fulfilling a contract, as investments as specified in IFRS 15. These costs are presented in the balance sheet under “capitalised contract costs”. Furthermore, the Group recognises a part of the development costs related to software and digital services as investments according to the requirements outlined in IAS 38. These costs are presented in the balance sheet under “other intangible assets”. Investments stemming from new customer contracts amounted to 2.2 (2.3) million euros in the review period. Investments concerning software and digital services amounted to 4.9 (2.3) million euros.
The company’s total net investments in the review period 1 January-30 June 2020 were 9.0 (9.5) million euros.
In February 2020, the company acquired the business operations of the accounting firm Addvalue Advisors Oy and in May the share capital of Niva Ekonomi AB. The purchase price of Addvalue Advisors Oy totalled 0.3 million euros and the purchase price of Niva Ekonomi AB totalled 1.3 million euros. In both acquisitions, part of the purchase price was paid with new Talenom Plc shares subscribed for in a directed issue. These business acquisitions accounted for 1.6 (4,2) million euros of Talenom’s net investments.
Liquid assets at 30 June 2020 were 9.6 (8.4) million euros. In addition, the company had unused overdraft limits of 3.0 (1.0) million euros at the end of the review period.
Disclaimer
Certain statements in this bulletin are forecasts based on the company's and management's views at the time the forecasts were made. For this reason, they involve risks and uncertainties. The forecasts may also change, if significant changes occur in the general economic situation or the company's business environment.
TALENOM PLC
BOARD OF DIRECTORS
Further information:
Otto-Pekka Huhtala
CEO, Talenom Plc
tel. +358 40 703 8554
otto-pekka.huhtala@talenom.fi
Talenom Plc is an accounting firm established in 1972. Talenom offers a wide range of accounting services as well as other expert and advisory services to support its clients’ business. The company has its own software development and it provides its clients with electronic financing tools.
Talenom Group’s net sales in 2019 amounted to EUR 58.0 million, with an increase of 18.6% compared to 2018. Talenom has a history of strong growth – the average annual increase in net sales was approximately 15.7% between 2005 and 2019.
DISTRIBUTION:
Nasdaq Helsinki
Main media
www.talenom.fi
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