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Asiakastieto Group’s Interim Report 1.1. – 30.9.2019: Strong growth driven by the consumer business

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ASIAKASTIETO GROUP PLC, STOCK EXCHANGE RELEASE 7 NOVEMBER 2019 AT 11.00 EET

Asiakastieto Group’s Interim Report 1.1. – 30.9.2019: Strong growth driven by the consumer business

SUMMARY

Asiakastieto Group Plc acquired on 29 June 2018 the shares in UC AB. As a result of the acquisition, UC’s consolidated balance sheet has been consolidated as part of Asiakastieto Group Plc’s consolidated balance sheet from 30 June 2018 and UC’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 period 1 January–30 June do not include UC’s figures.

The figures presented in this interim report are unaudited.

July – September 2019 in brief

  • Net sales amounted to EUR 36,7 million (EUR 31,4 million), an increase of 16,8 % (at comparable exchange rates an increase of 18,3 %).
  • Adjusted EBITDA excluding items affecting comparability was EUR 14,0 million (EUR 10,9 million), an increase of 28,6 % (at comparable exchange rates an increase of 29,8 %).
  • Adjusted EBITDA excluding IFRS 16 impact was EUR 13,4 million (EUR 10,9 million), an increase of 23,2 % (at comparable exchange rates an increase of 24,1 %).
  • Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 12,0 million (EUR 9,8 million), an increase of 22,6 %.
  • Operating profit (EBIT) was EUR 8,3 million (EUR 4,4 million). Operating profit included items affecting comparability of EUR 3,7 million (EUR 5,4 million), mainly arising from amortisation from fair value adjustments of EUR 3,0 million (EUR 2,8 million) related to acquisitions, M&A expenses and redundancy-related expenses associated with the restructuring of operations.
  • New products and services represented 3,4 % (8,6 %) of net sales.
  • Free cash flow amounted to EUR 12,5 million (EUR 4,1 million). The effect of items affecting comparability on free cash flow was EUR -0,9 million (EUR -3,7 million).
  • Earnings per share were EUR 0,25 (EUR 0,12).
  • Comparable earnings per share were EUR 0,35 (EUR 0,21) 1.

January – September 2019 in brief

  • Net sales amounted to EUR 106,8 million (EUR 62,2 million), an increase of 71,6 %.
  • Adjusted EBITDA excluding items affecting comparability was EUR 37,9 million (EUR 23,9 million), an increase of 58,8 %.
  • Adjusted EBITDA excluding IFRS 16 impact was EUR 36,2 million (EUR 23,9 million), an increase of 51,6 %.
  • Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to acquisitions was EUR 31,0 million (EUR 21,2 million), an increase of 46,6 %.
  • Operating profit (EBIT) was EUR 20,0 million (EUR 9,6 million). Operating profit included items affecting comparability of EUR 11,0 million (EUR 11,6 million), mainly arising from amortisation from fair value adjustments of EUR 8,5 million (EUR 3,0 million) related to acquisitions, M&A expenses and redundancy-related expenses associated with the restructuring of operations.
  • The UC KYC was closed down in the second quarter in Sweden. The effect of closing down the service was EUR -0,3 million on adjusted EBITDA and EUR -1,5 million on adjusted EBIT.
  • New products and services represented 3,9 % (9,3 %) of net sales.
  • Free cash flow amounted to EUR 25,2 million (EUR 8,0 million). The effect of items affecting comparability on free cash flow was EUR -2,0 million (EUR -5,9 million).
  • Earnings per share were EUR 0,60 (EUR 0,33).
  • Comparable earnings per share were EUR 0,88 (EUR 0,45) 1.

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

KEY FIGURES

  1.7. – 1.7. – 1.1. – 1.1. – 1.1. –
EUR million 30.9.2019 30.9.2018 30.9.2019 30.9.2018 31.12.2018
           
Net sales 36,7 31,4 106,8 62,2 98,1
Net sales growth, % 16,8 135,4 71,6 49,5 74,6
Operating profit (EBIT) 8,3 4,4 20,0 9,6 16,7
EBIT margin, % 22,7 14,0 18,8 15,4 17,0
Adjusted EBITDA 14,0 10,9 37,9 23,9 36,1
Adjusted EBITDA margin, % 38,1 34,6 35,5 38,4 36,8
Adjusted EBITDA excluding
IFRS 16 impact
13,4 10,9 36,2 23,9 36,1
Adjusted EBITDA excluding
IFRS 16 impact margin, %
36,5 34,6 33,9 38,4 36,8
Adjusted operating profit (EBIT) 12,0 9,8 31,0 21,2 32,0
Adjusted EBIT margin, % 32,8 31,3 29,1 34,0 32,7
New products and services of
net sales, %
3,4 8,6 3,9 9,3 8,8
Free cash flow 12,5 4,1 25,2 8,0 15,9
Net debt to adjusted
EBITDA, x
 

2,7
pro forma
3,5
3,0 pro forma
3,5
pro forma
3,3

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–30 September 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-September 2019 in brief

  • Net sales amounted to EUR 106,8 million (EUR 98,4 million), an increase of 8,6 % (at comparable exchange rates an increase of 10,4 %).
  • Adjusted EBITDA excluding items affecting comparability was EUR 37,9 million (EUR 29,8 million), an increase of 27,2 % (at comparable exchange rates an increase of 28,3 %).
  • Adjusted EBITDA excluding IFRS 16 impact was EUR 36,2 million (EUR 29,8 million), an increase of 21,4 % (at comparable exchange rates an increase of 22,5 %).
  • Adjusted EBIT excluding items affecting comparability and amortisation from fair value adjustments related to the acquisitions was EUR 31,0 million (EUR 26,8 million), an increase of 15,8 %.
  • Operating profit (EBIT) was EUR 20,0 million (EUR 12,1 million). Operating profit included items affecting comparability of EUR 2,5 million (EUR 6,5 million) and amortisation from fair value adjustments related to the acquisitions of EUR 8,5 million (EUR 8,2 million).
  • The UC KYC was closed down in Sweden. The effect of closing down the service was EUR -0,3 million on adjusted EBITDA and EUR -1,5 million on adjusted EBIT.
  • New products and services represented 3,9 % (7,8 %) of net sales.
  • Earnings per share were EUR 0,60 (EUR 0,33).
  • Comparable earnings per share were EUR 0,88 (EUR 0,60)1.

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

PRO FORMA KEY FIGURES

      Actual
1.1. –
1.1. – 1.1. –
EUR million     30.9.2019 30.9.2018 31.12.2018
           
Net sales     106,8 98,4 134,3
Net sales growth, %     8,6 3,5 3,6
Operating profit (EBIT)     20,0 12,1 19,2
EBIT margin, %     18,8 12,3 14,3
Adjusted EBITDA     37,9 29,8 42,1
Adjusted EBITDA margin, %     35,5 30,3 31,3
Adjusted EBITDA excluding IFRS 16 impact   36,2 29,8 42,1
Adjusted EBITDA excluding IFRS 16 impact, % 33,9 30,3 31,3
Adjusted operating profit (EBIT)     31,0 26,8 37,7
Adjusted EBIT margin, %     29,1 27,3 28,1
New products and services of net sales, % 3,9 7,8 7,8
Net debt to adjusted EBITDA, x 3,0 3,5 3,3

JUKKA RUUSKA, CEO

“Asiakastieto Group achieved strong growth in net sales in the third quarter of the financial year. Net sales totalled EUR 36,7 million (EUR 31,4 million), an increase of 18,3 % at comparable exchange rates. The Group’s net sales were accelerated by, among other things, the strong growth of the B2C consumer business and the completion of the Proff acquisition on 1 July 2019.

Adjusted EBITDA excluding the impact of IFRS 16 continued to see strong growth at comparable exchange rates, up 24,1 % to EUR 13,4 million (EUR 10,9 million). The increase in EBITDA was attributable to, among other things, cost-efficiencies derived from synergies, our scalable business model and the effect of the Proff acquisition. Adjusted operating profit excluding non-recurring items and other adjustable items amounted to EUR 12,0 million (EUR 9,8 million). 

More and more buying situations today involve credit. In addition, the number of different types of credit providers is growing, and Nordic consumers are becoming increasingly indebted. This has caused concern among the authorities and regulators. The Bank of Finland and the European Banking Authority are concerned about household debt, and a Ministry of Finance working group led by Leena Mörttinen published its proposals on 1 October regarding corrective measures. Asiakastieto Group shares this concern, with the number of consumers with payment defaults having again risen to a new high. During the past few years in Sweden, legislation has been drafted concerning housing loans and unsecured loans with the aim of curbing the rapid growth in borrowing and protecting consumers from high costs as well as controlling rising housing prices and the growth of borrowing volumes. The Swedish financial supervisory authority, for example, introduced the following regulations in 2018: A second amendment concerning minimum amortisation requirements for mortgages and a legislative provision stating that the interest rate on consumer credit may not be more than 40 % higher than the reference rate.

Companies are required to be increasingly responsible, transparent and reliable. This naturally also applies to the entire financial industry, including the provision of consumer credit. Responsibility in lending promotes better financial management among companies as well as consumers throughout society. Asiakastieto Group helps its customers operate responsibly. In the area of consumer credit activities, our existing services, such as positive credit information, and our new services UC Risk Blanco and the PSD2 service improve the quality of credit decisions and support responsible lending. UC Risk Blanco, a product customised for the provision of unsecured credit, helps creditors make better credit decisions based on more accurate credit ratings. The PSD2 service makes it possible to use credit applicants’ bank account information in assessing their solvency. By preventing over-indebtedness, these services are also beneficial for consumers.

Positive credit information is very valuable with respect to responsible credit granting and putting a stop to the circle of debt. This is supported by Asiakastieto Group’s efficient systems in both countries. In Finland, the inquiry system developed by Asiakastieto discloses any alarmingly high debt loads of a person as well as any problems with due repayment of existing debts. The credit information file used in Sweden contains both payment default information and positive data related to a person’s open credits. Thanks to the register, the number of people with payment defaults has decreased in recent years, even though consumers have incurred more debt at the same time.”

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 %) 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 economic development of the operating countries of the Group as well as the development of 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, 7 November 2019

ASIAKASTIETO GROUP PLC
Board of Directors

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

Distribution:
Nasdaq Helsinki
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.

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