ECIT AS — Audit Report / Information 2023

Feb 28, 2024

Division performance

Acquisitions

5 Review

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Peter Lauring CEO

Mads Skovgaard CFO

ECIT Drivers

• 2023 marks the 10th anniversary of ECIT
• Integrating IT, Accounting & Software
• Buy companies & build a Group
• Managed by entrepreneurs
• Tech driven Services provider

10 years performance

Mid-to-long term financial targets

Highlights

• FY – 21.7% growth / 3.8% organic
• Macroeconomic – political conditions affected IT revenue, whereas F&A has done well
• Growth – next 3 – 6 months
• EBITDA result – group costs
• Cost savings program

2023 results

Revenue: 3.4bn (21,7%)

Organic growth: 3.8%

EBITDA: 497m (14.5%)

EBIT: 267m (7.8%)

EPS: 0.25 NOK (0.21)

Free cash flow: 308m (221)

10 largest companies: ~60% (revenue)

Mcap: 3.5bn

shares: 454m

Subsidiary ownership – update

2024 going towards 85% ownership in the relevant subsidiaries

Comments

• Increase Group share of Cash Flow.
• Acquisitions after June 2022 not affected for now.
• Building a Group – not a group of companies.

Divisions

F&A division

Financial overview – FY 2023
(NOKm)	FY 2023	FY 2022
Revenue	1,950	1,543
EBITDA	336	263
Total revenue growth	26.5%	19.3%
EBITDA-margin	17.2%	17.0%

• Good organic growth.

• M&A activity 6 companies acquired.
• 5 companies ~ 50% of revenue.

• Nearshoring.

Financial overview – Q4 2023

	EBITDA and margin development

(NOKm)	Q4 2023	Q4 2022
Revenue	482	410
EBITDA	85	77
Total revenue growth	17.5%	29.2%
EBITDA-margin	17.6%	18.6%

Notes: EBITDA = EBITDA before transactions- and restructuring costs

IT division

Financial overview – FY 2023
(NOKm)	FY 2023	FY 2022
Revenue	1,461	1,275
EBITDA	189	163
Total revenue growth	14.5%	20.1%
EBITDA-margin	12.9%	12.8%

• Macroeconomic and local political conditions – organic growth.
• Specialized equipment (general) Consultants for hire (Norway).
• Remaining business expected performance.

Financial overview – Q4 2023

(NOKm)	Q4 2023	Q4 2022
Revenue	433	373
EBITDA	61	55
Total revenue growth	16.4%	20.2%
EBITDA-margin	14.0%	14.9%

EBITDA and margin development

• 5 companies ~ 66% of revenue

Tech division

Financial overview – FY 2023
------------------------------------

(NOKm)	FY 2023	FY 2022
Revenue	165	122
SaaS revenue	115	81
Consultancy services	50	41
EBITDA	12	8
Total revenue growth	34.3%	49.0%
EBITDA-margin	7.3%	6.5%

Annual recurring revenue (own software) Comments

Revenue development

• ECIT Software revenue and directly related consulting revenue.
• ARR development ECIT core software revenue only.

Financial overview – Q4 2023

(NOKm)	Q4 2023	Q4 2022
Revenue	52	34
SaaS revenue	36	22
Consultancy services	16	11
EBITDA	7	3
Total revenue growth	59.8%	1.8%
EBITDA-margin	13.3%	10.3%

Acquisitions in 2023

M&A – Acquisitions in 2023

Financial review

Financial review

Profit & loss summarized Comments

	Q4	Q4		FY	FY
(NOKm)	2023	2022	Growth	2023	2022	Growth
Revenue	933	792	17.9%	3,438	2,826	21.7%
EBITDA	142	135	5.2%	497	418	18.9%
EBIT	79	84	-5.6%	267	230	16.0%
Profit for the period	51	67	-23.9%	174	177	-1.5%
Adj. profit for the period	54	62	-13.0%	184	159	15.8%
P&L items:
Retructuring & transaction costs	-13	-2	729.2%	-20	-13	50.8%
Financial income	17	13	30.4%	37	48	-23.1%
Financial expenses	-15	-8	89.0%	-53	-38	39.4%
KPIs
Total revenue growth	17.9%	25.9%	-8 p.p.	21.7%	21.9%	-0.3 p.p.
Organic revenue growth	-3.9%	16.2%	-20.1 p.p.	3.8%	10.0%	-6.2 p.p.
M&A revenue growth	18.2%	9.6%	8.6 p.p.	14.6%	13.0%	1.6 p.p.
Currency impact	3.6%	0.1%	3.5 p.p.	3.3%	-1.1%	4.4 p.p.
EBITDA-margin	15.2%	17.0%	-1.8 p.p.	14.5%	14.8%	-0.3 p.p.
EBIT-margin	8.5%	10.5%	-2.1 p.p.	7.8%	8.1%	-0.4 p.p.
Adj. diluted EPS	0.09	0.08	15.3%	0.25	0.21	20.8%

• Good performance across most metrics.
• Macroeconomic headwind impacted certain parts of our IT business.

• Remaining business in ECIT performed in accordance with expectations.

• Higher group costs lowering the EBITDA margin. Cost savings program initiated.
• Proposed dividend NOK 0.06 per share

Cash Flow & financial position

(NOKm)	FY 2023	FY 2022
EBITDA	497	418
Restructuring & transaction costs	-20	-13
Corporation tax, paid	-69	-58
Change in NWC	15	-20
Cash flow from operations	423	327
Cash flow from investing	-284	-314
Cash flow from financing	-137	-96
Cash flow for the period	2	-83
Cash flow from operations	423	327
Restructuring & transaction costs	20	13
Net investments in tangible assets	-26	-20
Repayment of lease liabilities	-109	-98
Free cash flow	308	221

Financial position (NOK million)

(NOKm)	FY 2023	FY 2022
NIBD ex. leasing debt	354	125
NIBD	637	350
Leverage ratio	1.2x	0.8x
Undrawn revolving facility	216	423

• Solid cash flow from operations increased EBITDA and positive change in net working capital.
• NIBD ex. Leasing at NOK 354 million (125)

• Leverage ratio at 1.2x.

Key financial targets (mid-to-long term ambitions)

Key Financial targets	FY 2023	Mid-to-long term targets
Growth
Total revenue growth	21.7%	> 15.0%
Organic revenue growth	3.8%	> 5.5%
Recurring & repeatable revenue	79.0%	> 75.0%
Earnings EBITDA-margin	14.5%	>17.0%
Leverage Leverage ratio (NIBD/EBITDA)	1.2x	< 2.5x
Mergers & acquisitions
M&A acq. revenue	372	364

• Based on an assumption of stable macro economic development.

Management comments

• Financial targets unchanged except of M&A target.
• New dynamic M&A target measured as 10% of proforma revenue LTM.
• The 17% EBITDA margin target is excluding the potential impact from large acquisitions.

Review