Talenom Plc, Financial Statement Release, 3 February 2020 at 13:30
Talenom Plc. financial statement 2019 (audited): operating profit improves by 20.5% and net sales grow by 18.6% – strong development is expected to continue in 2020
Year 2019 in brief:
- Net sales 58.0 (48.9) million euros, an increase of 18.6% (18.0%)
- Operating profit (EBIT) 10.4 (8.5) million euros, 18.0% (17.5%) of net sales *)
- Net profit 7.6 (6.4) million euros *)
- Earnings per share 1.10 (0.93) euros
- Board of Directors' proposal for dividend 0.75 euros/share (0.55 euros/share)
- 2020 is expected to be in line with 2019 in terms of relative growth in net sales and relative profitability.
| Group | 1–12/2019 | 1–12/2018 | Change |
| Net sales, thousands of euro | 57,955 | 48,871 | 9,084 |
| Net sales, increase % | 18.6% | 18.0% | 0.6 percentage points |
| Operating profit, thousands of euro *) | 10,409 | 8,545 | 1,864 |
| Operating profit, as % of net sales *) | 18.0% | 17.5% | 0.5 percentage points |
| Return on investment (ROI), % (rolling 12 months) *) | 20.2% | 21.4% | -1.2 percentage points |
| Liquid assets, thousands of euro | 7,786 | 5,914 | 1,873 |
| Earnings per share, euro | 1.10 | 0.93 | 0.17 |
| Net profit, thousands of euro *) | 7,615 | 6,363 | 1,251 |
*) The Talenom Group adopted IFRS 16 Leases on 1 January 2019, due to which the review periods are not fully comparable. During the period 1-12/2019, the standard had a positive effect on operating profit (+115 thousand euros) and a negative effect on net profit (-73 thousand euros) and return on investment (-2.4 percentage points). The effects of adopting the standard on the Group’s financial information are described in detail under the section Basis of Preparation.
| Group | 10–12/2019 | 10–12/2018 | Change |
| Net sales, thousands of euro | 14,913 | 12,449 | 2,464 |
| Net sales, increase % | 19.8% | 16.4% | 3.4 percentage points |
| Operating profit (EBIT), thousands of euro **) | 1,458 | 1,466 | -8 |
| Operating profit (EBIT), as % of net sales **) | 9.8% | 11.8% | -2.0 percentage points |
| Return on investment (ROI), % (rolling 12 months) **) | 20.2% | 21.4% | -1.2 percentage points |
| Liquid assets, thousands of euro | 7,786 | 5,914 | 1,873 |
| Earnings per share, euro | 0.15 | 0.15 | 0.00 |
| Net profit, thousands of euro **) | 1,016 | 1,001 | 15 |
**) The Talenom Group adopted IFRS 16 Leases on 1 January 2019, due to which the review periods are not fully comparable. During the period 10-12/2019, the standard had a positive effect on operating profit (+41 thousand euros) and a negative effect on net profit (-11 thousand euros) and return on investment (-2.4 percentage points). The effects of adopting the standard on the Group’s financial information are described in detail under the section Basis of Preparation.
The financial statements presented in the Financial Statements Bulletin are based on the audited financial statements of the company. The audit report was issued on 3 February 2020.
Guidance for 2020
2020 is expected to be in line with 2019 in terms of relative growth in net sales and relative profitability.
CEO Otto-Pekka Huhtala
Our mission and the foundation of our business is encapsulated in the phrase: “the joy of entrepreneurship!” We want to make the world into a better place to be an entrepreneur. We are committed to making the working days of entrepreneurs as easy as possible by providing exceptionally good services. Thanks to our services, our customers can experience the joy of entrepreneurship – we free up their time from routine work so they can do more interesting and inspiring things.
We have successfully implemented our strategy, which has three core elements: effortlessness, automation and value-added services. We have created a unique service concept guided by the concept of making daily life effortless for our customers. We have received excellent feedback on our intuitive customer user interfaces and financial routines that save time for entrepreneurs. Thanks to our own software development, we have been able to harness digitalisation to step up the degree of automation in our operations to a far higher degree than others in our field of business. We are heading towards fully paperless operations – we are proud of both the business and environmental benefits this yields. Effortless user interfaces and automated service provision give us even more time to provide customer service and value-added services to our customers. This is evident in the improvement in our customer satisfaction for the fifth year running, which we are particularly pleased about.
2019 was a year of strong growth and forward-looking investments. Net sales grew by 18.6% and our strong profitability improved further, with our operating profit rising by 20.5%. Most of our growth was organic – our own sales staff and franchise entrepreneurs acquired a record number of new customers. We have been investing in automation and process development for about ten years now, which has raised our profitability to the top of our field. In 2019, too, we made substantial investments in automation and customer user interfaces. We introduced the latest version of our bookkeeping production line, thanks to which we are well poised to expand our services to even smaller companies. I would like to warmly thank our excellent Talenom staff for this! We also successfully launched our new financial services.
In 2019, we initiated our internationalisation by acquiring a firm in Sweden. We started up service production automation projects and organic growth efforts in Sweden. Based on our experiences to date, we expect to be able to harness our strong sectoral expertise in Sweden. We also carried out an acquisition in Finland, buying two firms in the Vaasa region. This bolsters our ability to provide Swedish-language services in Finland.
We believe that our sector will increasingly adopt a consultative approach – during the course of this journey, accountants will become consultants. Customers want ever-more proactive and effortless solutions for their needs. A comprehensive service experience is key – and technology functions in the background as an enabler. Those who can seamlessly combine services and technology into a single end-to-end solution in many channels will come out on top. We believe that, heading into the 2020s, we are in great shape as our sector evolves in a more consultative and comprehensive direction. We will continue to make investments in effortless customer experience, further development of automation and the creation of new solutions to enable our customers to pursue the joy of entrepreneurship!
Financial development
Key figures
| Group | 1–12/2019 | Effect of IFRS 16 **) | Adjusted 1–12/2019 | 1–12/2018 | Adjusted change |
| Net sales, thousands of euro | 57,955 | 0 | 57,955 | 48,871 | 9,084 |
| Net sales, increase % | 18.6% | 0.0 percentage points | 18.6% | 18.0% | 0.6 percentage points |
| Operating profit (EBIT), thousands of euro | 10,409 | +115 | 10,294 | 8,545 | 1,749 |
| Operating profit (EBIT), as % of net sales | 18.0% | +0.2 percentage points | 17.8% | 17.5% | 0.3 percentage points |
| Return on investment (ROI), % (rolling 12 months) | 20.2% | -2.4 percentage points | 22.6% | 21.4% | 1.2 percentage points |
| Interest-bearing net liabilities, thousands of euro | 29,204 | +8,492 | 20,711 | 18,250 | 2,461 |
| Net gearing ratio, % | 124% | +36 percentage points | 88% | 98% | -10 percentage points |
| Equity ratio, % | 33.2% | -4.6 percentage points | 37.7% | 36.7% | 1.1 percentage points |
| Working capital, thousands of euro | -3,780 | 0 | -3,780 | -2,712 | -1,068 |
| Net investments, thousands of euro | 15,439 | 0 | 15,439 | 9,503 | 5,936 |
| Liquid assets, thousands of euro | 7,786 | 0 | 7,786 | 5,914 | 1,873 |
| Earnings per share, euro | 1.10 | -0.01 | 1.11 | 0.93 | 0.18 |
| Weighted average number of shares during the period *) | 6,929,159 | 0 | 6,929,159 | 6,861,476 | 67,683 |
| Net profit, thousands of euro | 7,615 | -73 | 7,688 | 6,363 | 1,324 |
*) Weighted average of treasury shares held by the company during the period has been deducted from the figure
**) The Talenom Group adopted IFRS 16 Leases on 1 January 2019; its impacts are presented
in this column
Net sales, profitability and financial performance
January–December 2019
In the period from January to December, Talenom’s net sales increased by 18.6% compared to the corresponding period of the preceding year. Amounting to 58.0 (48.9) million euros, net sales grew by about 9.1 million euros. The growth was mainly due to the increase in the number of accounting service customers.
In the review period, personnel expenses were 29.9 (26.2) million euros, amounting to 51.6% (53.7%) of net sales. The ratio of the personnel expenses to net sales decreased year on year.
Other operating expenses, including materials and services, totalled 9.5 million euros, being 16.4% of net sales. Due to the adoption of IFRS 16 Leases, other operating expenses are not directly comparable in periods 1–12/2018 and 1–12/2019 (see Tables: Consolidated statement of comprehensive income).
In the review period, operating profit (EBIT) was 10,409 thousand euros (18.0% of net sales), with a net profit of 7,615 thousand euros. Adoption of IFRS 16 Leases had a positive effect on operating profit (+115 thousand euros) and a negative effect on net profit (-73 thousand euros). Operating profit (EBIT) adjusted to ignore the standard’s effects was 10,294 (8,545) thousand euros (17.8% (17.5%) of net sales) and net profit 7,688 (6,363) thousand euros.
The improved profitability was due to the increased efficiency of bookkeeping.
In the period from October to December, Talenom’s net sales increased by 19.8% compared to the corresponding period of the preceding year. Amounting to 14.9 (12.4) million euros, net sales grew by about 2.5 million euros. In the review period, operating profit (EBIT) was 1,458 thousand euros (9.8% of net sales), with a net profit of 1,016 thousand euros. *)
Fourth-quarter profitability was depressed relative to the comparison period due to the more even spread of net sales from annual declarations over the financial period as a result of the introduction of the Incomes Register, as described earlier. This change had an effect of 330 thousand euros on net sales and operating profit in the fourth quarter.
*) Adoption of IFRS 16 had a positive effect on operating profit in the 10-12/2019 period (+41 thousand euros) and a negative effect on net profit (-11 thousand euros).
Balance sheet, financing and investments
On 31 December 2019, the consolidated balance sheet total was 71.3 (51.2) million euros. The Group’s equity ratio was 33.2% and the net gearing ratio was 124%.
With the adoption of IFRS 16, the Group’s equity ratio has decreased by 4.6 percentage points, and its net gearing ratio increased by 36 percentage points. Equity ratio adjusted to ignore the effects of IFRS 16 stood at 37.7% (36.7%) and net gearing ratio at 88% (98%).
The Group’s interest-bearing financial loans at the end of the review period were 28.0 million euros, excluding instalment debts. Other non-current interest-bearing liabilities (instalment debts) stood at 0.2 million euros, with other current interest-bearing liabilities (instalment debts) amounting to 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 6.6 million euros and current lease liabilities at 1.9 million euros on 31 December 2019.
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 4.6 (3.7) million euros in the review period. Investments concerning software and digital services amounted to 5.3 (4.0) million euros.
The company’s total net investments in the review period were 15.4 (9.5) million euros.
During the review period, the company acquired the share capital of Wakers Consulting Ab in Stockholm and the business operations of Oy Wasa tilit Ab and Företagstjänster Ab Oy. These transactions accounted for 4.2 million euros of net investments and half was paid for with new Talenom Plc shares subscribed for in a directed issue.
On 31 December 2019, liquid assets amounted to 7.8 (5.9) million euros. In addition, the company had unused overdraft limits of 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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