Recording of webcast presenting the Q2 2022 results
Referring to our Company announcement No. 86, here is the recording of the webcast presenting our H1 results for 2022, presented by CEO Peter Lauring and CFO Mads Skovgaard August 23rd.
A live Q and A was also held during the webcast, and here is the summary of the questions asked and the answers given.
Referring to organic growth in finance & accounting (F&A), what are your expectations for the rest of the year?
I think I can say like this: We actually have an overall growth target year over year of five and a half percent, and I think the F&A division will not disappoint us and will support us to reach the growth that we expect to have overall. We don`t actually tell about the division growth, organic growth, in specific figures.
Given the number of acquisitions completed so far in the year, is it still the ambition to meet the NOK 350M target of annualized revenue ?
Absolutely, always, but the problem is I could easily have too little this year, or maybe too much, and then suddenly in January, lie I said, we cannot really control, we can negotiate and negotiate,negotiate, and have problems, and suddenly we actually find a solution, so it is a bit difficult to put it into a specific period, but I think we will keep this ambition quite for some time going forward.
Has the share buy-back been initiated because there is fewer M&A-targets, or too high pricing of targets?
No, we need shares to the incentive programme we have initiated, and we also need shares to use as part payments when we do acquisitions.
How is cost inflation managed in ECIT?
As I mentioned previously, mitigating cost inflation is high on our agena in ECIT, where we work together with the local operations, trying to manage this in the best possible way. Focus on cost control in general, which has always been on our agenda in ECIT from the start, together with utilizing our nearshoring centres, and in general looking into efficiency and automate our processes, I believe that is one of the key areas. And on top of that a reasonable price increase towards our customers is also a part of that equation.
I think I can add to this question. Being on the margin pressure, being on the price pressure from our customers is a normal thing when we are building this business. And what do we do, we automate, we make more efficient processes, we use nearshoring, we use other kind of tools, good management, to actually mitigate the pressure we are under constantly. I think the real change here is that we have to look into, more price increases more than one time a year, on one hand and adjusted price models going forward. Up to now this has been managed locally in ECIT, for the second half year we expect to take this as part of a more overall managed action in ECIT.
Can you talk about the organic growth prospects for the various divisions? What organic growth levels could we expect for IT and F&A respectively, given your organic growth targets?
As for now, we expect that the IT-division overall will deliver a higher growth than the F&A -division, whereas the F&A-division probably will deliver on par with the basic target we have. However, the F&A-division is more affected by that we have done acquisitions where we have to reorganize, and to consolidate and to change things in order to build profitability into companies acquired with a minus EBITDA. Which we have done not with the newest acquisitions, but if you go half a year, a year back, we have actually acquired some F&A-companies with negative earnings, and that affects the growth in a way that we actually have to first get profitability in place and then start to build the organic growth. But, We expect the F&A to deliver on par with our overall expectations.
Can we start to expect positive EBITDA-margins from tech from here on?
No. I expect it will take a couple of years more with zero EBITDA. Actually we have seen months with positive EBITDA, so to speak, so we have seen it, but to promise it, and to say it on screen, and in public, I will be careful.
But we can say it is going in the right direction. And we may be a little bit negative here, however we do not know where we are to invest tomorrow and what we acquire tomorrow, and that division, we are still building there, that`s the message.
Do you expect the high level of organic growth to continue in the short term?
Yes. We hope, that`s a better answer.
What will the revenue growth contribution from M&A be in the coming quarters?
We expect to fulfil the targets, in 2022, but I do not really know if it is 2022 or in February 2023, we have to include February. For now we expect to deliver in 2022.