Talenom Oyj (TNOM) Earnings Call Transcript & Summary

Hello, everybody. You are welcome to Talenom Annual Report Release of 2019. I'm going to speak Finnish. And after me, Antti Aho, our CFO, will continue in English. [Foreign Language]

Hello, everybody. I'm Antti Aho, CFO at Talenom. And in this short presentation, I'd like to highlight some of the main points from the past financial year. There we go. Okay. So financially, the year was really good. Our net sales grew by 18.6% and the EBIT by 20.5%. And the Board proposes that we would deliver EUR 0.75 per share as a dividend for the year. So very nice figures for the past year. The year was also historical when we expanded to Swedish market. 9 months ago, we acquired there an office, and now after 9 months, we still feel comfortable in -- being in Sweden. Also, we continued our investments in future. We invested heavily on the customer interface and our production line. And thanks to these latest investments we made in our production line, we can now expand more easily in the smallest segments, and serve better and more profitably, the smallest customers as well. Here in Finland, we also carried out a strategic acquisition in Vaasa region, which is a Swedish speaking region in Finland. Finland, as you know, is a bilingual country. And through this acquisition, we can better serve our Swedish speaking customers in Finland. And this also opens us new market potential here. Our strategy has remained the same. It has these 3 phases. In the first phase, we want to digitalize the -- all these accounting routines, all the receipts that we got from the customer. This makes the lives of our customers easier when they don't have to deal with the paper. And now in the second phase, when we have digitalized everything, we can make the lives of the accountants easier, save their time, so that they can, in the third phase, focus on deeper consultation and value-added services to our customers. So as I already mentioned, we grew 18.6% last year. The net sales totaled at EUR 58 million, and most of the growth came from our own sales force and our franchise entrepreneurs, who really had a good year and did a great job, broke all their past records and also made these 2 acquisitions, one in Sweden and one in Vaasa region. As we can see from these figures, our growth is very scalable. We could maintain and even improve our profitability during the past year. The EBIT increased by 20.5%. The relative EBIT improved from 17.5% to 18%. And all this happened despite the fact that we acquired businesses in Vaasa region and in Sweden. They were operating at a lower margin than the business in Finland. So we are really, really happy with that. Also, I would like to point out, maybe somebody wonders why the last quarter, the EBIT was on the same level than it was the year before. That comes mainly from the fact that we adopted, in Finland, this income register in the beginning of this year, which means that the yearly statements from payroll when they -- last year, where -- or the year before, they were invoiced in the -- or part of them were invoiced in the fourth quarter. This year, we didn't have this income, which was EUR 330,000 altogether on the fourth quarter. So -- but now it's distributed evenly throughout the year. Yes. And then a few more points to mention from the past year. As already told, we can now -- due to the latest improvements in our production line, we can grow our market potential among the smallest customers. And it's good to note that actually, almost half of the Finnish market comes from these segments in which we have not been so active in the past. So this really offers us new opportunities for growth. Also, I'd like to point out that we want to do our own share to save the environment at Talenom. We became the first green office in our industry. And in our environment program, we -- mainly, we focus in digitalizing our customers' processes, which, of course, means a whole bunch of paper to be saved in their operations. What I am personally most enthusiastic about the past year is that we could keep on improving our customer satisfaction level. Actually, this was already the fifth year in a row when we saw the customer satisfaction growing. I'd like to see that there is a strong correlation with the customer satisfaction and our employee satisfaction, which also remained on the -- on a very high level. In Sweden, yes, we have taken the first steps in automization there. We have hired first sales people and now -- and the integration so far has gone smoothly. It takes, of course, a lot of time, but we are proceeding according to our plans in Sweden. These figures saw, quite nicely, our strategy in action and in figures. As we see during the past 3 years, our personnel expense has come down by 6 percent points in relation to net sales, at the same time when we have kept growing our net sales by 40%. And all this resulted in our operating profit to be doubled during this 3-year period. So seems pretty good to me. The number of our shareholders has increased steadily in the past. We have now some 4,000 shareholders. And also, the total value of the stock exchange has increased its total -- year 2019, it totaled to EUR 51.1 million. The market capitalization at the end of the year was EUR 313.8 million. When it comes to future, our guidance for the year 2020 is the same, which we gave out in the last release. So we expect the year 2020 to be in line with the past year in terms of relative growth in net sales and the profitability. And to stay on this track, we are going to continue on this -- our path where accountants become consultants, as stated in our strategy, focusing more and more on time spent with customers and delivering new value-added services to them. And we also keep on investing in customer interface and our production line to enhance both profitability and customer experience. And we are happy to say that now since we have both the service and also the software development, we can improve both of them, both the service part and also the software part together and make it a seamless customer experience. And yes, we also continue in looking for new services that we can deliver to our customers and continue improvement and delivering the financial services, which we have started earlier. The business environment, no major changes there. The accounting market in Finland is about EUR 1 billion in size, steadily growing, even when there is some turmoil in the economics, as we can see in the history. The market is very fragmented. More than 4,000 accounting offices operating in Finland usually employing 1 to 3 people there. So we believe that this gives us room for growth even in the future. Yes. Thank you very much. For more information, please visit our investor pages or keep in touch with us. Thank you.