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Talenom Plc Financial Statement Bulletin 2020 (audited): Operating profit improved by 23.8% and net sales grew by 12.4% - Outlook for growth broadens and profitability remains excellent

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Talenom Plc, Financial Statement Release, 8 February 2021 at 13:30 EET

Talenom Plc Financial Statement Bulletin 2020 (audited): Operating profit improved by 23.8% and net sales grew by 12.4% - Outlook for growth broadens and profitability remains excellent


Year 2020 in brief:

  • Net sales 65.2 (58.0) million euros, increase 12.4% (18.6%)
  • Operating profit (EBIT) 12.9 (10.4) million euros, 19.8% (18.0%) of net sales
  • Net profit 9.6 (7.6) million euros
  • Earnings per share 0.22 (0.18) euros
  • Board of Directors' proposal for dividend 0.15 euros/share (0.125 euros/share)
  • Guidance for 2021: Net sales for 2021 are expected to amount to 75–80 million euros and operating profit to 14–16 million euros.

Group1–12/
2020
1–12/
2019
Change
Net sales, thousands of euro65,16157,9557,206
Net sales, increase %12.4%18.6%-6.2 percentage points
Operating profit (EBIT), thousands of euro12,88110,4092,473
Operating profit (EBIT), as % of net sales19.8%18.0%1.8 percentage points
Return on investment (ROI), % (rolling 12 months)19.6%20.2%-0.6 percentage points
Liquid assets, thousands of euro9,1047,7861,317
Earnings per share, euro0.220.180.04
Net profit, thousands of euro9,5797,6151,964


Group10–12/
2020
10–12/
2019
Change
Net sales, thousands of euro16,46314,9131,550
Net sales, increase %10.4%19.8%-9.4 percentage points
Operating profit (EBIT), thousands of euro2,4251,458968
Operating profit (EBIT), as % of net sales14.7%9.8%5.0 percentage points
Return on investment (ROI), % (rolling 12 months)19.6%20.2%-0.6 percentage points
Liquid assets, thousands of euro9,1047,7861,317
Earnings per share, euro0.040.020.02
Net profit, thousands of euro1,8031,016787


Guidance for 2021

Net sales for 2021 are expected to amount to 75–80 million euros and operating profit to 14–16 million euros.

CEO Otto-Pekka Huhtala:

We will remember 2020 as an eventful year of development in exceptional circumstances. At the beginning of the year, I predicted that this will be the decade of consulting. The coronavirus pandemic accelerated our journey of evolving from accountants to consultants. On this journey, we want to support the business operations of our entrepreneur customers by providing them not only with accounting services, but also a range of expert services such as financial and tax advisory services and financing services. In the exceptional circumstances of 2020, entrepreneurs found our support and advisory services especially valuable.

In the autumn, we launched TiliJaska, a new concept for the small customer segment, and unveiled our new banking services. Our goal for this year is to offer Talenom bank accounts and Talenom bank cards to all our customers. The digital distribution of the TiliJaska concept will enable us to sell our services efficiently to small entrepreneurs. We estimate that the new small customer concept has almost doubled the market potential of our services in Finland. Furthermore, we believe that the concept has substantial potential also in other markets, and we intend to launch a similar service, KontoKalle, in Sweden this year.

Our business developed favourably during the review year. We continued to grow and improved our profitability in spite of the coronavirus pandemic. Operating profit for January–December 2020 saw year-on-year improvement of 23.8% and amounted to 12.9 million euros. Operating profit was 19.8% of net sales. Net sales for January–December increased year-on-year by only 12.4% to 65.2 million euros. The relative growth of net sales slowed down as the pandemic weakened sales to new customers and transaction-based invoicing. However, we successfully adjusted costs and stepped up automation, and as a result our relative profitability developed favourably.

In addition to organic growth, Talenom aims to pursue growth through acquisitions as well. In this respect, too, 2020 was a successful year, as we carried out several acquisitions in Finland. Our positive experiences of the Swedish market encouraged us to accelerate the growth of our business there. Through acquisitions, we expanded to new locations, Gothenburg, Malmö and, in January after the review year, to Växjö. Following the growth of our business operations in Sweden, we have achieved a sufficient level of net sales there to enable us to profitably localise and deploy our software in the country. We believe that the introduction of our own software will significantly boost the efficiency of our operations while making everyday life easier for our customers.

During the review year, we further increased our investments in software development. Our in-house software development combined with our accounting expertise is our strategic strength. We believe that this enables us to provide an excellent customer experience to our entrepreneur customers while automating our own routines. Cutting down on routines gives our experts more time to provide services with higher added value.

The boundaries between different sectors in our market are undergoing a transformation. The Payment Services Directive challenges the earnings logic of traditional banks and the EU’s new e-Invoicing Directive spurs companies to digitalise their financial management. On the other hand, the digitalisation of financial management improves the transparency of business operations, boosts efficiency in tax collection and also plays a key role in the EU’s green policy. We want to remain at the forefront of our industry and in October updated our vision: unbeatable accounting and banking services for SMEs. At the same time, we are building our future as a company that is going international and venturing into the European market by relying on our strategic cornerstones – automation, making entrepreneurship easy and care.


Financial development

Key figures

Group1–12/
2020
1–12/
2019
Change
Net sales, thousands of euro65,16157,9557,206
Net sales, increase %12.4%18.6%-6.2 percentage points
Operating profit (EBIT), thousands of euro12,88110,4092,473
Operating profit (EBIT), as % of net sales19.8%18.0%1.8 percentage points
Return on investment (ROI), % (rolling 12 months)19.6%20.2%-0.6 percentage points
Interest-bearing net liabilities, thousands of euro29,32829,204124
Net gearing ratio, %91%124%-33 percentage points
Equity ratio, %38.1%33.2%4.9 percentage points
Working capital, thousands of euro-6,039-3,780-2,259
Net investments, thousands of euro20,29515,4394,856
Liquid assets, thousands of euro9,1047,7861,317
Earnings per share, euro*0.220.180.04
Weighted average number of shares during the period*42,654,21441,574,9521,079,262
Net profit, thousands of euro9,5797,6151,964


*) 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

During the period from January to December, Talenom’s net sales increased by 12.4% year-on-year. Amounting to 65.2 (58.0) million euros, net sales grew by around 7.2 million euros. The growth in net sales was mainly due to the increase in the number of accounting service customers – around half came from the company’s proactive new customer acquisition efforts and half via company acquisitions.

In January-December, personnel expenses amounted to 33.9 (29.9) million euros, 52.1% (51.6%) of net sales.

Other operating expenses, including materials and services, totalled 8.1 (9.5) million euros, accounting for 12.4% (16.4%) of net sales.

In January–December, operating profit (EBIT) was 12.9 (10.4) million euros, 19.8% (18.0%) of net sales, and net profit was 9.6 (7.6) million euros. Operating profit improved by 23.8%. Savings on fixed costs and advances in automation enabled year-to-year improvement in profitability. Profitability in the review period was burdened by lower invoicing of transaction-based products and a slowdown in new customer acquisition due to pandemic-related restrictions. As Talenom’s growth is based on acquisitions to a greater extent than before, the weaker profitability of the acquirees and integration costs weakened the profit.

During the period from October to December, Talenom’s net sales increased by 10.4% year-on-year. Amounting to 16.5 (14.9) million euros, net sales grew by around 1.6 million euros. In October–December, operating profit (EBIT) was 2.4 (1.5) million euros, 14.7% (9.8%) of net sales, and net profit was 1.8 (1.0) million euros. Operating profit (EBIT) for October–December improved by 66.4% year-on-year.

Balance sheet, financing and investments

On 31 December 2020, the consolidated balance sheet total was 84.9 (71.3) million euros. The Group’s equity ratio was 38.1% (33.2%) and the net gearing ratio was 91% (124%).

The Group’s interest-bearing non-current 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 0.1 (0.2) million euros and other current interest-bearing liabilities (instalment debts) were 0.2 (0.2) 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 5.9 (6.6) million euros and current lease liabilities at 2.3 (1.9) million euros on 31 December 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 4.2 (4.6) million euros in the review period. Investments concerning software and digital services amounted to 10.1 (5.3) million euros.

The company’s total net investments in the review period 1 January–31 December 2020 were 20.3 (15.4) million euros. 

In February 2020, the company acquired the business operations of the accounting firm Addvalue Advisors Oy, in May the share capital of Niva Ekonomi AB, in September the entire share capital of Frivision AB and the entire business of Larsen & Co Tilitoimisto Oy, and in December the business operations of E-P:n Yrityspalvelu Oy. In addition, Talenom acquired Vanaja Technologies Oy's software business in August. In January 2021, after the end of the review period, the ownership of the Swedish accounting firms Ekonomianalys KL AB and Persson & Thorin AB transferred to Talenom. More information on these acquisitions is presented under “Events after the review period”.

The purchase prices of the share transactions carried out in Sweden during the review year totalled 2.5 million euros and the purchase prices of asset deals in Finland amounted to 1.9 million euros. In the acquisitions, part of the purchase price was paid with new Talenom Plc shares subscribed for in a directed issue. These business acquisitions accounted for EUR 4.4 (4.2) million of Talenom’s net investments.

Thousand euroShare transactions (Sweden)Asset deals (Finland)
Purchase prices, total2,5001,878
12-month net sales at the time of acquisition, total2,8302,387
12-month operating profit at the time of acquisition, total166387


Talenom’s liquid assets at 31 December 2020 were 9.1 (7.8) 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 is an agile and progressive accounting firm established in 1972. Our business idea is to make day-to-day life easier for entrepreneurs with the easiest-to-use digital tools on the market and highly automated services. In addition to comprehensive accounting services, we support our customers’ business with a wide range of expert services as well as financing and banking services. Our vision is to provide unbeatable accounting and banking services for SMEs.

Talenom has a history of strong growth – the average annual increase in net sales was approximately 15.5% between 2005 and 2020. At the end of 2020, Talenom had 912 employees in Finland and Sweden at a total of 47 locations. Talenom’s share is quoted on the main list of the Helsinki Stock Exchange.

DISTRIBUTION:
Nasdaq Helsinki
Main media
www.talenom.fi

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