Asiakastieto Group's Interim Report 1.1. - 31.3.2019: Integration continues in line with targets

10/05/2019

Asiakastieto Group Plc_Interim Report_Q1_2019

ASIAKASTIETO GROUP PLC, STOCK EXCHANGE RELEASE 10 MAY 2019 AT 11.00 EEST

Asiakastieto Group's Interim Report 1.1. - 31.3.2019:  Integration continues in line with targets

SUMMARY

Asiakastieto Group Plc acquired on 29 June 2018 the shares in UC AB. As a result of the acquisition, UC AB's consolidated balance sheet has been consolidated as part of Asiakastieto Group Plc's consolidated balance sheet from 30 June 2018 and UC AB's consolidated income statement as part of Asiakastieto Group Plc's consolidated income statement from 1 July 2018. In this Interim Report, the reported figures for the review periods 1 January-31 March 2018 and 1 January-30 June 2018 do not include UC AB's figures.

The figures presented in this Interim Report are unaudited.

January - March 2019 in brief

  • Net sales amounted to EUR 34,5 million (EUR 15,1 million), an increase of 128,8 %.
  • Adjusted EBITDA excluding items affecting comparability was EUR 11,7 million (EUR 6,4 million), an increase of 82,9 %.
  • Adjusted EBITDA excluding IFRS 16 impact was EUR 11,2 million (EUR 6,4 million), an increase of 74,2 %.
  • Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to the acquisitions was EUR 9,8 million (EUR 5,6 million), an increase of 75,2 %.
  • Operating profit (EBIT) was EUR 6,7 million (EUR 4,2 million). Operating profit included items affecting comparability of EUR 3,2 million (EUR 1,3 million), mainly arising from amortisation from fair value adjustments of EUR 2,8 million (EUR 0,1 million) related to acquisitions, M&A expenses and redundancy-related expenses associated with the restructuring of operations.
  • New products and services represented 4,4 % (9,6 %) of net sales.
  • Free cash flow amounted to EUR 7,3 million (EUR 1,5 million). The effect of items affecting comparability on free cash flow was EUR -0,6 million (EUR -0,5 million).
  • Earnings per share were EUR 0,20 (EUR 0,21).
  • Comparable earnings per share were EUR 0,29 (EUR 0,21)1.

KEY FIGURES

  1.1. - 1.1. - 1.1. -
EUR million 31.3.2019 31.13.2018 31.12.2018
Net sales 34,5 15,1 98,1
Net sales growth, % 128,8 8,9 74,6
Operating profit (EBIT) 6,7 4,2 16,7
EBIT margin, % 19,3 27,7 17,0
Adjusted EBITDA 11,7 6,4 36,1
Adjusted EBITDA margin, % 34,0 42,6 36,8
Adjusted EBITDA excluding IFRS 16 impact 11,2 6,4 36,1
Adjusted EBITDA excluding IFRS 16 impact margin, % 32,4 42,6 36,8
Adjusted operating profit (EBIT) 9,8 5,6 32,0
Adjusted EBIT margin, % 28,5 37,2 32,7
New products and services of net sales, % 4,4 9,6 8,8
Free cash flow 7,3 1,5 15,9
Net debt to adjusted EBITDA, x  

3,0
1,9 pro forma
3,3
         
         

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

Asiakastieto Group has prepared unaudited pro forma financial information to demonstrate the impacts of the UC acquisition, completed on 29 June 2018, on the result of operations and financial position of the Group and to improve the comparability of financial information. In this interim report, unaudited pro forma financial information is shown for the year 2018 as if the share transaction had been completed already on 1 January 2017. The pro forma financial information is indicated as Pro forma information in each instance where it appears in this interim report. The pro forma financial reporting principles are described in Note 1 to this interim report.

The figures in the pro forma summary for the comparison periods 1 January-31 March 2018 and 1 January-31 December 2018 are presented as pro forma figures, as if the acquisition of UC had taken place already at the beginning of 2017. The second half-year figures for 1 July-31 December 2018 are presented as actual reported figures.

 Pro forma January - March 2019 in brief

  • Net sales amounted to EUR 34,5 million (EUR 32,8 million), an increase of 5,2 % (at comparable exchange rates an increase of 7,7 %).
  • Adjusted EBITDA excluding items affecting comparability was EUR 11,7 million (EUR 9,3 million), an increase of 26,8 % (at comparable exchange rates an increase of 28,5 %).
  • Adjusted EBITDA excluding IFRS 16 impact was EUR 11,2 million (EUR 9,3 million), an increase of 20,8 % (at comparable exchange rates an increase of 22,4 %).
  • Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to the acquisitions was EUR 9,8 million (EUR 8,3 million), an increase of 18,5 %.
  • Operating profit (EBIT) was EUR 6,7 million (EUR 4,5 million). Operating profit included items affecting comparability of EUR 0,4 million (EUR 1,0 million) and amortisation from fair value adjustments related to the acquisitions of EUR 2,8 million (EUR 2,8 million).
  • New products and services represented 4,4 % (6,7 %) of net sales.
  • Earnings per share were EUR 0,20 (EUR 0,13).
  • Comparable earnings per share were EUR 0,29 (EUR 0,22)1.

PRO FORMA KEY FIGURES

  1.1. - 1.1. - 1.1. -
EUR million 31.3.2019 31.13.2018 31.12.2018
Net sales 34,5 32,8 134,3
Net sales growth, % 5,2 n/a 3,6
Operating profit (EBIT) 6,7 4,5 19,2
EBIT margin, % 19,3 13,6 14,3
Adjusted EBITDA 11,7 9,3 42,1
Adjusted EBITDA margin, % 34,0 28,2 31,3
Adjusted EBITDA excluding IFRS 16 impact 11,2 9,3 42,1
Adjusted EBITDA excluding IFRS 16 impact, % 32,4 28,2 31,3
Adjusted operating profit (EBIT) 9,8 8,3 37,7
Adjusted EBIT margin, % 28,5 25,3 28,1
New products and services of net sales, % 4,4 6,7 7,8
Net debt to adjusted EBITDA, x 3,0 n/a 3,3
         
         

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

JUKKA RUUSKA, CEO

"In the first quarter of the financial year 2019, Asiakastieto Group grew in accordance with our expectations. Net sales increased at comparable exchange rates by 7,7 % to EUR 34,5 million. The Group's net sales grew particularly in the consumer credit information services of the Risk Decisions business area in both markets. In addition, the Group's net sales were increased by new service launches, representing 4,4 % of net sales for the first quarter. However, because of the integration phase, service development was less active compared with previous quarters.

Adjusted EBITDA excluding IFRS 16 impact saw exceptionally strong growth of 22,4 % at comparable exchange rates, amounting to EUR 11,2 million. In addition to the scalable business model, the increase was attributable to the considerable decrease in IT expenses and the lower level of personnel expenses, which was due to efficiency improvement measures and the high number of vacancies.

The year 2019 has started off with positive expectations. Our customers' need to utilise our services in their business decisions continues to increase. Thanks to our strong market position, reliable brands and customer-driven services, our situation is advantageous. After the intensive integration phase, we have once again been able to concentrate on developing our services, providing even better customer service and improving the customer experience.

We measure the success of integration in three areas in accordance with our strategic themes: Skilled and competent personnel, improvement of customer experience and efficient service development. Originally, we estimated that at least EUR 17 million of cost, sales and investment synergies will be achieved through the integration by the end of 2021, and the achievement of this objective is advancing in accordance with the integration plan. 

In 2019, Asiakastieto's Real Estate and Collateral Information Services will expand into housing information services, services related to apartment exchange and price estimation services for banks. We will introduce in the Finnish market a service similar to the Tambur service portal that is already in use in Sweden.  This service allows real estate agencies and banks to exchange information and conclude deals through a joint service portal, instead of having to make phone calls, send emails and have meetings.  The similar service has been a great success in Sweden: it saves a significant amount of time for real estate agencies and banks, and there is no need to go to the bank's office to conclude a deal.

In addition, service development has focused on services that take advantage of the new EU Payment Services Directive (PSD2) and on building Income Intelligence, a service related to the processing of income information. Launched in early 2019, Income Intelligence is a machine learning-based solution for the verification of income information for loan applications, among other uses.

The development of a uniform company culture began in 2018 and continues in 2019. To carry out this work in practice, we have established a company culture team. Its objective this spring is to create a proposal for the company's joint values and policies to be applied in our everyday work, both internally and in encounters with customers and partners.

We defined the material themes of our corporate responsibility in 2018 as follows: maintaining trust in the market, having a needs-driven and continuously evolving product and service offering, improving competitiveness, being perceived as an attractive investment and being a good corporate citizen. In accordance with our stock exchange release we will publish a report of our non-financial information for 2018 on our investor pages latest by the end of June 2019. In addition to acting responsibly as a company, it is important for us to help our customers to act responsibly and sustainably by launching services that support corporate responsibility."

FUTURE OUTLOOK

Net sales: Asiakastieto Group expects its net sales growth in 2019 to be in the middle of the range of its long-term target (5-10 %) or slightly below it compared to the previous year's pro forma net sales.

EBITDA: Asiakastieto Group expects its adjusted EBITDA, excluding the effect of IFRS 16 transition, to grow in 2019 at a percentage rate that exceeds the rate of net sales growth compared to the previous year's pro forma adjusted EBITDA.

Capital expenditure: Asiakastieto Group expects its capitalised product development and software expenses in 2019 to exceed the previous year's level on a pro forma basis.

The outlook is subject to risks related to, among other factors, the development of the Finnish and Swedish economy and the business operations of the Group. The most significant risks related to business operations include, for example, risks related to the success of product and service development activities, launches of new products and services and risks related to competitive tenders and to losing significant customer accounts.

Asiakastieto Group's business risks have been described in more detail on the Company's investor pages at investors.asiakastieto.fi and in the company's listing prospectus, approved by the Financial Supervisory Authority on 10 September 2018 and also available on the investor pages of the company website.

Helsinki, 10 May 2019

ASIAKASTIETO GROUP PLC
Board of Directors

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

Distribution:
Nasdaq Helsinki Ltd
Major media
investors.asiakastieto.fi

Asiakastieto Group is one of the leading providers of digital business and consumer information services in the Nordic countries. The Group's products and services are primarily used for risk management, finance and administration, decision-making and sales and marketing purposes. We are operating in Finland under the brand Suomen Asiakastieto and in Sweden under the brand UC. Our pro forma annual net sales for 2018 was EUR 134 million and the number of employees was approximately 450. The Group serves several industries, the largest ones including finance and banking as well as wholesale and retail sectors and expert service companies. Asiakastieto Group is listed on Nasdaq Helsinki with the trading code ATG1V. More information about Asiakastieto Group is available at www.asiakastieto.fi and www.uc.se.