Earnings release
Page 1
BUSINESS REVIEW JANUARY–MARCH 2025
Page 2
BUSI NESS REVIEW J ANUAR Y –MARCH 2025 www.administergroup.com 2 Administer Plc: Business review January–March 2025 Administer Plc: Good profitability development continued Figures in parentheses refer to the comparison period in the previous year, unless otherwise stated. January–March 2025 Key figures • Net sales were EUR 19.0 million (19.0). Net sales remained unchanged in the challenging market environment. • EBITDA was EUR 2.0 million (1.7), or 10.7% (9.1%) of the net sales. EBITDA improved by 17.4%. • Operating profit was EUR 0.5 million (0.2), or 2.9% (1.3%) of the net sales. The operating profit was weighed down by amortisation of goodwill from the acquisitions, amounting to EUR -1.0 million (-1.0) in total. KEY FIGURES 1‒3/ 2025 1‒3/ 2024 Change, % EUR million unless otherwise stated 1‒12/ 2024 Net sales 19.0 19.0 -0.3% 74.7 EBITDA 2.0 1.7 +17.4% 5.5 % of net sales 10.7% 9.1% 7.4% Operating profit (EBITA) adjusted with amortisation of goodwill 1.6 1.3 +25.6% 2.9 % of net sales 8.3% 6.6% 3.9% Operating profit/loss 0.5 0.2 +120.4% -1.3 Profit/loss before appropriations and tax 0.4 0.0 +836.6% -1.9 Result adjusted with amortisation of goodwill 1.4 1.0 +35.3% 1.9 % of net sales 7.2% 5.3% 2.6% Earnings per share (EPS) 0.02 -0.00 -0.16 Return on equity (ROE), % -7.8% -12.1% -8.8% Equity ratio, % 45.8% 45.1% 44.6% Debt-to-equity ratio, % 49.4% 53.6% 47.2% Personnel on average 1,042 1,029 +1.3% 1,046
Page 3
BUSI NESS REVIEW J ANUAR Y –MARCH 2025 www.administergroup.com 3 CEO’s review Our good profitability development continued, and our EBITDA improved by 17.4%. Finland's economic growth has continued to be weak, and it is currently impacted by the rather turbulent global market. The Group's net sales remained unchanged despite the market environment. Among our business areas, Silta managed to increase its net sales. The weak economic situation has impacted Econia's staffing services in particular, and Econia's net sales have continued on a downward trend. In contrast, Econia’s grey economy prevention services, or the so-called Compliance services, have experienced a visible boost. In preventing grey economy, we offer both project-based solutions for large industrial and construction investments, among others, and continuous services with the Sedatus software. When it comes to the preventive and comprehensive model in preventing grey economy, Econia is centrally responsible for the subscriber’s obligations and liability, including permits, as well as cooperation between authorities and stakeholders, supervision of subcontracting chains, and training. Econia is Finland's leading expert in these operations and can also offer its services to international markets. In the accounting firm business, the decrease in net sales was due to customers’ reduced transaction volumes, increased bankruptcies and integration challenges for some of the acquired companies, which have contributed to increased customer churn. We have not been completely successful in the integration of all acquired targets, which means we have especially invested in and developed our processes in regard to this. Administer acquired the majority of shares in Kuntalaskenta last autumn. The year 2024 was heavily loss- making for Kuntalaskenta due to management and resource problems. The company's business has now taken a successful turn for the better and the company's determined financial recovery continues. The Group’s financial development in January–March 2025 In January–March, net sales were EUR 19.0 million (19.0). Net sales remained unchanged in the challenging market environment. In January–March, EBITDA was EUR 2.0 million (1.7), or 10.7% (9.1%) of the net sales. EBITDA improved by 17.4%. Business area review The net sales of Silta, which offers payroll and HR services, grew by 0.8% and were EUR 6.6 million in January–March. The commissioning project for a new customer in the financial sector started in March, and Silta already has a strong foothold in this sector. The expert rental services continued on a good growth path. The sales pipeline has remained at a good level.
Page 4
BUSI NESS REVIEW J ANUAR Y –MARCH 2025 www.administergroup.com 4 The net sales of Econia, which offers HR services and staffing, international services, as well as domestic financial management services, declined by 8.4% and were EUR 5.0 million in January–March. Sales of expert services aimed at preventing grey economy picked up in the early part of the year and new customers were obtained from international markets in addition to Finland. The generally weak economic climate in Finland was reflected in Econia's operations, most significantly in staffing, and this continues to have a negative impact on the development of net sales. The net sales of Administer’s accounting firm business declined by 4.8% and were EUR 4.7 million in January–March. The decline in net sales was driven by customers’ lower transaction volumes, increased bankruptcies, customer attrition, and integration challenges for some of the acquired companies. The business area made three new acquisitions, which will strengthen the regional operations of the accounting firm business in different parts of Finland. As a new service, Alisa Bank's banking services were introduced to the accounting firm customers. Cooperation with Intrum expanded, and customers are now also offered credit information services as part of the eFina financial management system. The net sales of EmCe, which provides software services, declined by 0.4% and were EUR 2.1 million in January–March. In terms of our own software products, more new deals were made during the early part of the year. Good successes in cross-selling with other business units of the Group have continued. We utilise artificial intelligence in different businesses operations, using it both in the development of the Group's software products and in the development of operations and process efficiency. In line with our strategy, we strongly believe in good partnerships. A good example of this is our payroll services, where we utilize partnerships with system suppliers, such as having CGI as the main partner of Silta. Our accounting firm business also develops services together with partners: we started cooperation with Alisa Bank and expanded our cooperation with Intrum during the review period. In early spring, the Ministry of Economic Affairs and Employment's request for an opinion on the proposal to amend the Act on Public Procurement and Concession Contracts gave rise to a record number of opinions. Administer also submitted its opinion on the matter. We see the proposal’s stated goals as particularly desirable and also critical in terms of making tendering processes more efficient and improving the competitive field. We warmly support the creation of an operating environment that would genuinely enable all companies to participate in public tendering processes. Our Group already acts as a reliable service partner for the public sector, and we see a potential growth opportunity here. As a whole, the year has started favourably for us, and we can continue to celebrate the Group's 40th anniversary year with a positive direction. Kimmo Herranen CEO
Page 5
BUSI NESS REVIEW J ANUAR Y –MARCH 2025 www.administergroup.com 5 Outlook Administer seeks to continue growth investments as well as organic and inorganic growth in 2025. Administer estimates that its net sales will be EUR 72–78 million and its EBITDA margin will be 7–10% in 2025. Significant events in the review period The arbitration decision on the purchase price of Econia acquisition Administer Oyj acquired Econia Oy in 2022. The dispute over the purchase price of the acquisition was processed in arbitration. On 24 March 2025, the arbitrator issued an arbitral award obliging the former principal owners to pay Administer Plc a price reduction of a total of EUR 0.7 million and interest on returns and arrears for this amount, as well as to bear most of the arbitration proceeding costs. The arbitration decision reduced the purchase price of the acquisition, which reduced Econia's purchase price debt and goodwill recorded in Administer's balance sheet by an equal amount. The decision has no effect on the company's guidance for 2025. Significant events after the review period Change in the Administer Group Management Team The composition of the Administer Group Management Team changed after the role of Business Area Director for Consultancy Services was terminated and the consultancy services business was transferred as a part of other Group functions. The change aims to streamline operations and clarify the current matrix organisation in terms of consultancy services. As of 28 April 2025, the Administer Group Management Team consists of the following members: Kimmo Herranen, CEO Toni Leppänen, Silta Oy Arttu Eräpalo, Econia Oy Peter Aho, Administer, Financial Management Services Markus Backlund, EmCe Solution Partner Oy Kalle Lehtonen, Finances Paula Niemi, Personnel
Page 6
BUSI NESS REVIEW J ANUAR Y –MARCH 2025 www.administergroup.com 6 In addition, Heimo Alatalo is a Senior Advisor in the Group Management Team. Administer Plc Board of Directors More information Kimmo Herranen, CEO, kimmo.herranen@administer.fi, tel. +358 50 560 6322 Kalle Lehtonen, CFO, kalle.lehtonen@administer.fi, tel. +358 40 053 9968 Webinar CEO Kimmo Herranen and CFO Kalle Lehtonen will present the result in a webinar on 7 May 2025 at 11:00 a.m. EEST. Questions can be sent during the event via the chat function. You can join the webinar at https://administer.events.inderes.com/q1-2025. A recording will be available after the event at https://administergroup.com/en/investors/.