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Eniro Group

Quarterly Report Oct 30, 2018

3156_10-q_2018-10-30_69e923e0-6af3-4ee6-bfe8-5e694ea257c0.pdf

Quarterly Report

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  • Total operating revenue amounted to SEK 356 M (388), a decrease of 8%. Excluding Print, which was discontinued during 2017, total operating revenue decreased 7%.
  • EBITDA amounted to SEK 60 M (62). The EBITDA margin was 16.9% (16.0%).
  • Net income for the period was SEK -21 M (-32).
  • Earnings per ordinary share for the period were SEK -0.33 (-5.08) before and after dilution.
  • At the end of the quarter, about 85% of the customers in Sweden, Norway and Denmark were included in the new business model with a broader offering based on subscription-based contracts.
  • In September 2018, Eniro entered a binding agreement to sell its wholly owned Polish subsidiary, Eniro Polska, to the Polish company Equinox Investments. The transaction is expected to be completed by the end of October at the latest.

  • Total operating revenue amounted to SEK 1,073 M (1,265), a decrease of 15%. Excluding Print, which was discontinued during 2017, total operating revenue decreased 12%.

  • EBITDA decreased by 7% to SEK 169 M (182). The EBITDA margin was 15.8% (14.4%).
  • Net income for the period was SEK -31 M (-108).
  • Earnings per ordinary share for the period were SEK -0.51 (-18.53) before and after dilution.
  • Operating costs were SEK 175 M lower than in the year-earlier period, largely due to the completed cost-saving program.
  • Eniro Finland acquired Finnish company Elisa's outsourcing operation for customer service and corporate switchboard outsourcing business. This acquisition strengthens Eniro's position as the leading developer and provider of customer service solutions in Finland.

At the beginning of October, all of Eniro's bank loans of a nominal value of SEK 925 M were replaced with a bond loan in Eniro AB of SEK 989 M, which means an additional financing of approximately SEK 64 M. The bond loan will extend with no negative effects on liquidity in the form of repayment or coupon payments until the end of 2021.

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017* 2018 2017* 2017/18 2017*
Operating revenue 356 388 1,073 1,265 1,457 1,649
EBITDA 60 62 169 182 213 226
Adjusted EBITDA 62 80 171 234 233 296
Operating income 21 19 52 -16 54 -14
Net income for the period
Cash flow from operating
-21 -32 -31 -108 201 124
activities 9 -5 18 -1 24 5
Interest-bearing net debt
excluding convertible bond and
pension obligations -668 -1,268 -668 -1,268 -668 -575

* Retrospective restatement of financial statements in accordance with IFRS 15 Revenue from Contracts with Customers

Eniro is a leading search company for individuals and businesses in the Nordic region. With quality-assured content and an unrivaled user experience, Eniro inspires local discoveries and makes local communities thrive. Eniro's content is available through Internet and mobile services, directory assistance and SMS services. Each week, Eniro Group's digital services have about seven million unique visitors. Eniro Group has about 1,700 employees and operations in Sweden, Norway, Denmark, Finland and Poland. The company is listed on Nasdaq Stockholm [ENRO] and headquartered in Stockholm. More about Eniro at enirogroup.com.

The financial solution that was negotiated, and which resulted in Eniro's bank loans being replaced by a bond loan, has now been completed. For Eniro's financial position, this represents a substantial improvement since no loan or interest repayments will be made until the bond loan matures on December 31, 2021. There are also significant improvements with regard to covenants and other restrictions compared with the previous bank loans.

The bond was offered to the public and certain investors with priority for holders of Eniro's ordinary shares and 88% was placed, while 12% was covered by the underwriting guarantee. I perceive this as a sign of strength.

The Group's finances have been strained for a number of years and the current financial situation is the best it has been for the company for some time. We can now direct our full attention to our core operations.

Our business operations in Poland are being divested and the sale is expected to be completed during the fourth quarter. We are selling the company to focus our activities on the important core markets in the Nordic region. Poland has a different business logic and the synergies are small. We will retain a small unit in Poland with about 45 employees who work on platform development and accounting services for our subsidiaries.

We are in the final phase of the transformation of Eniro. Our new offering, which enables small businesses to manage most of their digital marketing in a single platform and interface, is very strong. In addition to our

own offering on eniro.se, the platform handles Google search-word advertising, Facebook advertising, websites, presence management and targeted banner advertisements in a cohesive solution. Our "Mitt Eniro" portal provides customers with information on the effects of their digital activities in one place and they can evaluate where the various activities generate the greatest return and make adjustments to optimize this.

During the quarter, we have begun to see the effects of how our offering, our systems and our way of working are being received. It is too early to see the full potential of the changes implemented, but what we see strengthens our belief in our journey of change. The curves are not yet pointing upward, but we are seeing a certain leveling off.

A new Eniro is emerging from this. We have a positive offering in the Digital Marketing segment for small and medium-sized enterprises. Our challenge lies in getting this offering to genuinely create growth through the strength that the offering brings to our customers. We operate in a mass market in which our customers spend a modest amount on average on digital marketing. The low level of investment inhibits our possibilities to show what we can do, since the selling costs must always be offset against results. With a subscription solution, which we now have, this is improved considerably. Our next important step is to deliver the message to our customers that we actually have something new and exciting that really makes a difference.

In terms of our offering, we are already the marketing partner for small and medium-sized enterprises. It is now important to take our unique position in the market so the our customers' perception of Eniro reflects what we are now offering.

The subscription solution radically changes our prerequisites for working with our customers. Our skilled sales staff can now focus completely on matters other than endeavoring to retain customers by way of a classic customer call once a year. We can now spend more time on sales, for which the offering we have developed will stand us in good stead. We are reserving dedicated resources for the cultivation of new customers. We have a special unit that exclusively and expertly manages customers who no longer want to renew their subscription and remain our customers.

So far, our experiences are positive. Our loss of customers is declining and the average order per customer is increasing successively. This is a solid platform as the company takes the next step to shift up a gear and turn the agenda from declining revenue to growth.

Operations in B2B (Proff), Poland and Finland (Voice) are developing in line with, or better than, our expectations.

Poland is under divestment, but nonetheless, it closed the third quarter favorably.

In line with expectations, Proff had certain challenges in 2017, particularly in Sweden, but it is currently somewhat ahead of plan.

Finland has a stronger position following the successful acquisition of Elisa's Contact Center business during the second quarter. While the structural decline of directory information services is continuing, this is occurring at a slower pace than previously. This is more than offset by Contact Center operations in terms of sales volumes. However, the margins are lower in this segment, which is why the key performance indicators have declined somewhat.

Operating revenue during the third quarter amounted to SEK 356 M (388), which is down 8% compared with the same period a year ago. EBITDA for the third quarter amounted to SEK 60 M (62), while adjusted EBITDA amounted to SEK 62 M (80). However, the work to reduce the cost base remains successful and the EBITDA margin increased to 16.9% from 16.0% in the same period a year ago.

The outlook for a turnaround is favorable. We are not there yet, but with the leveling-off that we are seeing in our customer base, we are looking forward to the time when we can announce growth. The next quarters will be highly intense and exciting, particularly because we now have the financial capacity to be more aggressive than we have been to date.

Kista, October 30, 2018

Örjan Frid, President and CEO

Operating revenue for the third quarter amounted to SEK 356 M (388), a decrease of 8%.

Currency effects on revenue were positive in an amount of SEK 17 M (0).

Geographically, operating revenue is broken down into Sweden SEK 120 M (148), Norway SEK 81 M (101), Denmark SEK 49 M (53), Finland SEK 54 M (37), and Poland SEK 52 M (49).

Eniro has applied the new accounting standard IFRS 15 (Revenue from Contracts with Customers) as of January 2018.

Eniro has applied a retroactive transition period, with the opening balance established on January 1, 2017 and the comparative year restated in accordance with IFRS 15.

For further information, see Note 1 Accounting Policies.

Digital search includes the Desktop/Mobile search and Complementary digital marketing products revenue categories. Eniro's Desktop/Mobile search services are among the most visited sites in their respective markets and include eniro.se, gulesider.no, krak.dk, dgs.dk and panoramafirm.pl along with the mobile apps, including Eniro's local search app, Eniro Navigation and "Eniro På Sjön". Eniro's sites: proff.se, proff.no and proff.dk contain business information. Eniro's advertisers pay for rankings and exposure on hit lists. In Complementary digital marketing products, Eniro offers, for example, advertising solutions via third-party suppliers such as Google and Bing, display advertising via external networks and website products.

Operating revenue from Digital search amounted to SEK 276 M (311), a decrease of 11%. Of operating revenue, SEK 234 M (274) came from Desktop/Mobile search and SEK 42 M (37) from Complementary digital marketing products.

Eniro has a new strategy and business model that entail that Eniro will proceed from mainly offering exposure through its own channels to working with its customers' presence in all digital channels. The aim is to become the marketing partner for small and medium-size companies.

The transition to the new strategy of a broadened product offering and subscription-based contracts continues. Collectively, approximately 85% of the customer base in Sweden, Norway and Denmark has changed to the new subscription-based contracts.

In the preceding year, Finland initiated sales of digital search under the 0100100 trademark. During the startup, this operation was jointly recognized with Voice. Since the business has grown, it has now been separated and is recognized under digital search. For correct comparison, the segment information for 2017 has been adjusted.

Digital marketing currently accounts for approximately 50% of the media market in Sweden and according to IRM's forecasts for 2018, the expectation is that this will grow further by more than 10%. During Q3 2018, the majority of Eniro's sites had a continued stable traffic trend. Each week, Eniro's sites in Sweden, Norway, Denmark and Poland have about seven million unique visitors. This creates favorable conditions for Eniro's future development.

Eniro's new strategy and business model entail that Eniro will proceed from mainly offering exposure through its own channels to working with its customers' presence in all digital channels. The aim is to become the marketing partner for small and medium-size companies. These companies often lack the time and knowledge to be able to market themselves digitally. By supplementing Eniro's traditional Desktop/Mobile search digital services with "Närvarokollen", a product from our partner Yext, and other partner products such as Google AdWords/Bing Ads in Complementary digital marketing products, Eniro can help the customer to optimize their investment, thereby generating the best possible result.

In addition, the new business model is subscription based. The goal is that the sales staff will be able to increase focus on demonstrating the strength and advantages of Eniro's new offering to both new and existing customers.

The total number of customers for "Digital search" in the three Scandinavian countries amounts to approximately 88,000. At the beginning of the quarter, the number of customers amounted to approximately 90,000 and the customer base thus declined by 2% during the quarter. This is a smaller decrease compared with earlier quarters.

The sales organization has successively been adapted to meet new conditions with a new offering, new business model and a more value-generating approach. The aim is to create greater confidence and loyalty among customers. In this change, it has been necessary to implement several structural adaptations, which has led to a more efficient organization and a focus on growth, competence and customer value.

In "Voice", Eniro offers directory information via phone call and text messaging (SMS), and certain contact center activities. In Sweden, Eniro is the market leader with its 118 118 directory information service. In addition to this, incoming phone calls are handled for other companies. In Finland, apart from the 0100100 directory information service, Eniro has a contact center operation that provides switchboard services and customer service on a contract basis. During the third quarter, Eniro acquired an customer service and corporate switchboard outsourcing businesses in Finland, thereby strengthening Eniro's position in the market. In Norway, Eniro is the majority owner of "1880

Nummeropplysningen AS" (the 1880 and 1888 directory information services).

Operating revenue from Voice amounted to SEK 80 M (73), an increase of 10% as a result of the Finnish acquisition.

Market volumes for directory information services continue to decline due to increased digitalization. The contact center operation that Voice conducts under contract from customers in Finland is growing and partly compensating for the decline in the directory information business, a development that is also occurring to some extent in Sweden.

The cost saving program implemented in December 2017 resulted in reduced operating expenses. Compared with the corresponding period a year ago, costs declined by SEK 175 M for the January-September 2018 period.

EBITDA for the Group was SEK 60 M (62), corresponding to an EBITDA margin of 16.9% (16.0%). EBITDA is broken down as follows: SEK 46 M (49) for Local search, SEK 18 M (23) for Voice, and SEK -4 M (-10) pertained to other Group functions.

The Group's operating expenses, that is, expenses excluding amortization and impairment losses, totaled SEK -299 M (-329), where expenses for the period include SEK -2 M (-18) in items affecting comparability. Of these, SEK 0 M (-13) pertained to restructuring costs, SEK 0 M (-5) pertained to advisory costs mainly concerning work on Eniro's recapitalization and SEK -2 M (0) in severance payments.

After adjustment for items affecting comparability, adjusted EBITDA for the Group amounted to SEK 62 M (80), a decrease of 23%. The adjusted EBITDA margin was 17.4 per cent (20.6).

After amortization and impairment losses totaling SEK - 39 M (-43), consolidated operating income amounted to SEK 21 M (19).

The Group's total amortization amounted to SEK -38 M (-42) during the third quarter of 2018. Amortization of the Gule Sider trademark totaled SEK -15 M (-14) and amortization of the Krak trademark totaled SEK -4 M (-3).

The remaining amortization of SEK -19 M (-25) consists mainly of amortization of capitalized costs for product development.

Testing of the value of all of the Group's intangible assets is conducted annually or when indications of significant changes in assumptions have been identified, however, there has been no changes to material prerequisites since the assessment for the six-month report was conducted. However, similar to previous quarters, goodwill related to Voice Norway was impaired by SEK -1 M (-1). Further impairment of goodwill pertaining to Voice is likely as higher cash flows in real time are replaced by lower future cash flows.

Net financial items amounted to SEK -52 M (-33). The quarter includes a financing cost of SEK -38 M related to the refinancing process. Refer also to the section on refinancing on page 8. Exchange rate differences affected net financial items by SEK -1 M (0).

Income before tax amounted to SEK -31 M (-14). Reported tax totaled SEK 10 M (-18).

Net income for the period was SEK -21 M (-32). Earnings per ordinary share were SEK -0.33 (-5.08) before and after dilution.

Operating revenue amounted to SEK 1,073 M (1,265), a decrease of 15%.

Currency effects on revenue were positive in an amount of SEK 36 M (25).

Geographically, operating revenue is broken down into Sweden SEK 371 M (479), Norway SEK 260 M (338), Denmark SEK 149 M (187), Finland SEK 139 M (110), and Poland SEK 154 M (151).

Eniro has applied the new accounting standard IFRS 15 (Revenue from Contracts with Customers) as of January 2018.

Eniro has applied a retroactive transition period, with the opening balance established on January 1, 2017 and the comparative year restated in accordance with IFRS 15.

For further information, see Note 1 Accounting Policies.

Operating revenue from Digital search amounted to SEK 851 M (994), a decrease of 14%. Of operating revenue, SEK 726 M (873) came from Desktop/Mobile search and SEK 125 M (121) from Complementary digital marketing products.

Operating revenue from Voice amounted to SEK 222 M (224), a decrease of 1%.

EBITDA for the Group was SEK 169 M (182), corresponding to an EBITDA margin of 15.8% (14.4%). EBITDA is broken down as follows: SEK 144 M (186) pertained to Local Search, SEK 45 M (45) pertained to Voice, and SEK -20 M (-49) pertained to other Group functions.

The Group's operating expenses, that is, expenses excluding amortization and impairment losses, totaled SEK -911 M (-1,086), where expenses for the period include SEK -2 M (-52) in items affecting comparability, of which SEK -2 M (-18) in restructuring costs, SEK 0 M (-22) in advisory expenses mainly related to the work on Eniro's recapitalization, and SEK 0 M (-12) in costs relating to a dispute lost in arbitration against Fonecta in Finland.

After adjustment for items affecting comparability, adjusted EBITDA for the Group amounted to SEK 171 M (234), a decrease of 27%. The adjusted EBITDA margin was 15.9% (18.5).

After amortization and impairment losses totaling SEK -117 M (-198), consolidated operating income amounted to SEK 52 M (-16).

The Group's total amortization amounted to SEK -114 M (-188) during the January-September 2018 period. Amortization of the Gule Sider trademark totaled SEK -44 M (-43) and amortization of the Krak trademark totaled SEK -10 M (-9).

Against the background of the decision to discontinue publication of printed directories during the first half of 2017, the useful life of the Ditt Distrikt trademark has been changed. During the first quarter 2017, the trademark was amortized by SEK -53 M, after which the trademark has been fully amortized. The remaining amortization of SEK -60 M (-83) consists mainly of amortization of capitalized costs for product development.

Testing of the value of all of the Group's intangible assets is conducted annually or when indications of significant changes in assumptions have been identified, however, there has been no changes to material prerequisites since the assessment for the six-month report was conducted. However, goodwill related to Voice Norway was impaired by SEK -3 M (-10). Further impairment of goodwill pertaining to Voice is likely as higher cash flows in real time are replaced by lower future cash flows.

Net financial items amounted to SEK -77 M (-107). The strong improvement is a result of the reduction in bank debt, combined with a lower interest-rate level. The quarter includes a financing cost of SEK -38 M related to the refinancing process. Refer also to the section on refinancing on page 8. Exchange rate differences affected net financial items by SEK 2 M (-3).

Income before tax amounted to SEK -25 M (-123). Reported tax totaled SEK -6 M (15).

Net income for the period was SEK -31 M (-108). Earnings per ordinary share were SEK -0.51 (-18.53) before and after dilution.

GROUP REVENUE PER CATEGORY YTD 2018

Digitalt sök - Kompletterande produkter

Voice

GROUP REVENUE PER COUNTRY YTD 2018

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017* % 2018 2017* % 2017/18 2017*
Desktop/Mobile search** 234 274 -15 726 873 -17 983 1,130
Complementary digital marketing products 42 37 14 125 121 3 177 173
Digital search 276 311 -11 851 994 -14 1,160 1,303
Print - 4 -100 - 47 -100 3 50
Local search 276 315 -12 851 1,041 -18 1,163 1,353
Voice** 80 73 10 222 224 -
1
294 296
Total revenue 356 388 -
8
1,073 1,265 -15 1,457 1,649

** Retrospective split in 2017 between Local search and Voice for the operations in Finland

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017* % 2018 2017* % 2017/18 2017*
Operating income 21 19 11 52 -16 425 54 -14
Depreciation/amortization 38 42 114 188 154 228
Impairment losses 1 1 3 10 5 12
Total EBITDA 60 62 -
3
169 182 -
7
213 226
Whereof Local search** 46 49 -
6
144 186 -23 186 228
Whereof Voice** 18 23 -22 45 45 0 62 62
Whereof Other -
4
-10 60 -20 -49 59 -35 -64
EBITDA margin % 16.9 16.0 15.8 14.4 14.6 13.7
Items affecting comparability
Restructuring costs 0 13 1 18 14 31
Other items affecting comparability 2 5 1 34 6 39
Total adjusted EBITDA 62 80 -23 171 234 -27 233 296
Adjusted EBITDA margin % 17.4 20.6 15.9 18.5 16.0 18.0

* Retrospective restatement of financial statements in accordance with IFRS 15 Revenue from Contracts with Customers ** Retrospective split in 2017 between Local search and Voice for the operations in Finland

Sep. 30 Sep. 30 Dec. 31
SEK M
Note
2018 2017 2017
Borrow
ing
-921 -1,493 -828
Finance lease -
8
-10 -10
Other current interest-bearing receivables 0 0 0
Other non-current interest-bearing receivables 1) 213 200 212
Cash and cash equivalents 48 35 51
Interest-bearing net debt excluding convertible bond
and pension obligations -668 -1,268 -575

1)Included in financial assets. SEK 200 M pertains to pledged bank funds for future pension obligations, referred to as an enhanced pension guarantee. The remaining amount pertains to pledged bank funds as collateral for leases in Norway and Finland and as guarantee against Volvo Finans.

Total assets in the Group amounted to SEK 3,373 M (3,289), an increase of 3%.

Intangible assets amounted to SEK 2,577 M (2,573), of which SEK 2,054 M (1,997) pertained to goodwill.

The Group's interest-bearing net debt excluding the convertible bond and pension obligations amounted to SEK 668 M (1,268) as per September 30.

The Group's indebtedness, expressed as interestbearing net debt excluding the convertible bond and pension obligations in relation to EBITDA, was 3.1 (5.0) as per September 30.

As per September 30, the Group's outstanding debt under existing credit facilities was NOK 199 M (199), DKK 49 M (49) and SEK 637 M (1,250). At the end of the period, Eniro had an unutilized credit facility of SEK 0 M (57). Cash and cash equivalents, and unutilized credit facilities amounted to SEK 48 M (92).

The convertible bond is recognized at cost and amounted to SEK 27 M (229) as per September 30. The nominal debt at the same point in time was SEK 29 M (261), entailing that 471 (239) of the total 500 convertibles have been converted to ordinary shares.

The Group's pension obligations amounted to SEK 568 M (479) at September 30. In 2016, Eniro changed over to paying periodic premiums for defined benefit pension plans in Sweden, entailing no new additional vesting.

Eniro has credit insurance with PRI Pensionsgaranti (PRI) which remains in force until December 31, 2018. Eniro has pledged bank funds for future obligations (a so-called enhanced pension guarantee). Eniro pledged SEK 0 M (11) during the January - September 2018 period. As per September 30, total pledged funds amounted to SEK 200 M (200), including returns.

Prepaid revenue amounted to SEK 396 M (458) at the end of the period. Prepaid revenue arises mainly in Desktop/Mobile search, where certain customers pay one year in advance, and also in Print in Sweden, where customers pay in advance, but the revenue is not recognized until the directories have been printed and distributed. The 14% decrease compared with September 30, 2017, is mainly attributable to lower sales, but also to the decision to discontinue the print business.

Cash flow from operating activities amounted to SEK 18 M (-1). Lower EBITDA of SEK 169 M (182) and a negative change in working capital of SEK -89 M (-85), of which exchange rate effects of SEK -17 M (4), were countered by lower financial items of SEK -15 M (-49), continued low tax payments of SEK -18 M (-13) and lower other non-cash items of SEK -29 M (-36), which mainly pertain to changes in provisions.

Eniro's tax payments are made mainly during the first half of the year. Eniro has loss carryforwards in Sweden, Denmark, Finland and Poland, which is why tax payments have been low.

Cash flow from investing activities amounted to SEK -58 M (-27), where net investments in operations amounted to SEK -58 M (-27).

Cash flow from financing activities amounted to SEK 40 M (16). New borrowing amounted to SEK 52 M (44), while amortizations totaled SEK -10 M (0). Pursuant to AGM resolutions in 2017 and 2018 not to pay a dividend on preference shares, the dividend on preference shares amounted to SEK 0 M (-12). Long-term investments remain unchanged at SEK 0 M (-11), which pertains to pledged funds for continued credit insurance with PRI Pensionsgaranti. A cash issue of SEK 3 M (0) was made. Dividends to minority shareholders amounted to SEK -5 M (-5).

Cash flow for the period amounted to SEK 0 M (-12).

In September 2018, Eniro entered a binding agreement to sell its wholly owned Polish subsidiary, Eniro Polska, to the Polish company Equinox Investments. The sale was part of the effort to focus on the Nordic operations and entails the following nonrecurring effects for Eniro: a positive cash-flow effect of approximately SEK 20 M and a positive earnings effect of SEK 10 M at Group level. Total assets declined by nearly SEK 140 M and the equity/assets ratio improved marginally. In January-October 2017, the Polish company contributed sales of SEK 170 M and had a marginal impact on the Group's earnings and cash flow. At the end of 2017, Eniro Polska had slightly more than 500 employees. Eniro will retain certain internal Group service functions in Poland. The transaction is expected to be completed by the end of October at the latest and is subject the customary terms of completion.

In July 2018, Eniro announced that the Board of Directors and some shareholders in the company had drawn up a financing solution essenti ally entailing that Eniro's bank loans would be replaced by a bond loan with Eniro simultaneously receiving a liquidity injection, as well as renewing the exchange offers to holders of preference shares or convertible bonds, enabling them to convert their instruments into Class A ordinary shares and thereby participate in the new financing solution by also being able to purchase bonds with priority from Beata Intressenter.

The bonds, with a nominal value of SEK 1,000 each, were initially subscribed for by shareholder Tedde Jeansson through Beata Intressenter AB and thereafter primarily offered to Eniro's ordinary shareholders. The sale occurred at a substantial discount (approximately 32.87% of the bond's nominal amount), which was made possible by Beata Intressenter's agreement with Eniro's lending banks to purchase the bank loans at a discount.

The exchange offers were accepted by preference shareholders with a total holding of corresponding to approximately 1.30% of all preference shares outstanding and by holders of convertible bonds with a total holding corresponding to approximately 0.44% of the nominal convertible amount outstanding in Eniro.

Within the framework of the exchange offers to preference shareholders, a total of 3,368 preference shares were repurchased by the company. As a result of the exchange offers, Eniro issued a total of 47,576 Class A ordinary shares, of which 43,784 to holders of preference shares and 3,792 to holders of convertible bonds, corresponding to an increase in the company's share capital of SEK 853,082.70.

Of the bond offering, approximately 40% was allocated to existing holders of Class A ordinary shares pro rata, approximately 47% was allocated to other parties who registered interest in acquiring bonds in the offering and approximately 12% was allocated to guarantors who also registered for acquisitions under the bond offering. The bonds started trading on Nasdaq Stockholm on September 27, 2018.

Through the financing solution, which was finalized at the beginning of October 2018, all of Eniro's bank loans of a nominal value of SEK 925 M were replaced with a bond loan in Eniro AB of SEK 989 M, representing an extension of financing of SEK 64 M. The bond loan will extend with no negative effects on liquidity in the form of repayment or coupon payments until the end of 2021. Combined with a possible agreement with the Pensions Registration Institute (PRI) regarding secured funds for the company's pension obligations, which is expected to provide Eniro with additional proceeds of approximately SEK 18 M, the best conditions will be created for Eniro to devote its full attention to the company's business in the coming years.

The customary prospectus was prepared for the exchange offers and bond offering and is available on the company's website.

Operating revenue amounted to SEK 13 M (17), which pertains to intra-Group services. Income for the period was SEK -19 M (-68). At September 30, the Parent Company's equity amounted to SEK 1,419 M (497), of which unrestricted equity amounted to SEK 221 M (-34).

As of September 30, the total number of shares was 66,832,187, of which 61,734,701 are ordinary Class A shares, 4,838,709 are ordinary Class B shares and 258,777 are preference shares. The total number of votes as per September 30, was 62,244,449.6, of which ordinary Class A shares correspond to 61,734,701 votes, ordinary Class B shares correspond to 483,870.9 votes and preference shares to 25,877.7 votes.

Upon full dilution resulting from conversion to shares, the number of shares will amount to a maximum of 67,296,961.

Eniro held 17,037 treasury shares on September 30, 2018, of which 17,034 are ordinary Class A shares and three are ordinary Class B shares. The average holding of treasury shares during the period was 17,037.

Within the framework of the exchange offers to preference shareholders, the company repurchased 3,368 preference shares, corresponding to 336.8 voting rights.

The Annual General Meeting 2018, decided not pay any dividends – neither for ordinary nor preference shares.

Eniro's 2017 Annual Report is available on the company's website www.enirogroup.com.

Sep. 30 Sep. 30
2018 2017
Sw
eden
225 281
Norw
ay
159 197
Denmark 115 119
Poland 559 559
Local search including Other 1,058 1,156
Sw
eden
54 93
Norw
ay
22 26
Finland 244 168
Voice 320 287
Total Group 1,378 1,443

Eniro conducts risk analysis in an annual Enterprise Risk Management (ERM) process, covering all parts of the business operations. A detailed description of factors that could affect Eniro's business, financial position and results is provided in the 2017 Annual Report, pages 35-37.

Risks and uncertainties in the annual risk analysis that are judged to potentially affect the Group's performance in 2018 are related to high personnel turnover and recruitment difficulties, a negative media image affecting customers, higher competition from global actors in local search, a lack of digital expertise among the sales representatives, difficulties in conveying customer benefit, delays in the ongoing implementation of joint CRM and finance systems and liquidity and financing risks.

The Annual General Meeting on April 25, 2018 resolved in accordance with the Nomination Committee's recommendations to re-elect Board member Joachim Berner and to elect Johnny Sommarlund, Henrik Salwén and Magdalena Bonde as new Board members. The Meeting also resolved to elect Joachim Berner as Chairman of the Board.

At the Extraordinary General Meeting in Eniro AB on August 15, the meeting resolved in accordance with the Board of Director's resolution on the repurchase of own preference shares through an acquisition offer to all

FOR FURTHER INFORMATION, PLEASE CONTACT: Örjan Frid, Hassan Tabrizi, President and CEO CFO Tel: +46 8 553 310 00 Tel: +46 8 553 310 00

remaining preference shareholders and a directed new share issue of ordinary shares of Class A to preference shareholders and to holders of convertible instruments (exchange offers). The exchange offers had the same exchange terms as those that applied for the exchange offers in 2017.

At the beginning of October, Eniro's bank loans of SEK 925 M were settled, through the raising of a bond loan totaling SEK 989 M, upon which security in shares and trademarks was released. The refinancing has thus been completed.

In conjunction with the refinancing, Eniro AB has taken over Eniro Treasury AB's external liabilities by submitting a shareholder contribution with the corresponding amount.

In October, at the request of shareholders, Eniro converted all Class B ordinary shares to Class A ordinary shares in accordance with the conversion provision in the Articles of Association. The conversion resulted in the total number of votes in the company increasing by 4,354,838.1 votes of Class A and the number of ordinary shares of Class A increased by 4,838,709. However, the total number of shares remains unchanged.

Eniro's Annual General Meeting will be held on Thursday, May 9, 2019 in Kista. The Nomination Committee ahead of the 2019 Annual General Meeting has been appointed in accordance with the guidelines decided at Eniro's 2018 Annual General Meeting and consists of the following individuals:

Johnny Sommarlund (appointed by MGA Placeringar AB), Ilija Batljan (own holding and via companies), Theodor Jeansson (own holding and via companies), Arne Myhrman, Chairman of the Nomination Committee (appointed by Hajskäret Invest AB) and Joachim Berner (Chairman of the Board of Eniro).See also www.enirogroup.com

This nine-month report has not been reviewed by the auditors.

The information in this report is such that Eniro AB (publ) is obligated to disclose pursuant to EU Market Abuse Regulation. This information was submitted for publication, by agency of the contact persons below, at 08:30 (CET) on October 30, 2018.

Kista, October 30, 2018

Örjan Frid

FINANCIAL CALENDAR

President and CEO Year-end report 2018 February 12, 2019 Interim report Jan- Mar 2019 May 9, 2019 Annual General Meeting 2019 May 9, 2019 Half-year report 2019 July 18, 2019 Interim report Jan- Sept 2019 October 29, 2019

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M Note 2018 2017* 2018 2017* 2017/18 2017*
Operating revenue 356 388 1,073 1,265 1,457 1,649
Production costs -105 -95 -297 -308 -401 -412
Sales costs -119 -140 -377 -444 -508 -575
Marketing costs -25 -30 -78 -148 -99 -169
Administration costs -54 -54 -161 -198 -234 -271
Product development costs -34 -52 -112 -176 -165 -229
Other income/costs 3 3 7 3 9 5
Impairment of non-current assets -
1
-
1
-
3
-10 -
5
-12
Operating income 2 21 19 52 -16 54 -14
Financial items, net -52 -33 -77 -107 143 113
Income before tax -31 -14 -25 -123 197 99
Income tax 10 -18 -
6
15 4 25
Net income -21 -32 -31 -108 201 124
Of which, attributable to:
Ow
ners of the Parent Company
-22 -34 -34 -112 197 119
Non-controlling interests 1 2 3 4 4 5
Net Income -21 -32 -31 -108 201 124
Earnings per ordinary share before dilution, SEK 3 -0.33 -5.08 -0.51 -18.53 3.57 10.09
Earnings per ordinary share after dilution, SEK 3 -0.33 -5.08 -0.51 -18.53 3.50 10.09
Average number of ordinary shares after deduction of
treasury shares before dilution and adjusted for bonus
issue effect on new
issue, 000s **
66,522 6,692 66,392 6,692 55,259 10,606
Average number of ordinary shares after deduction of
treasury shares after dilution and adjusted for bonus
issue effect on new
issue, 000s **
66,987 8,229 66,857 8,229 55,724 11,073
Preference shares on closing date, 000s 259 1,000 259 1,000 259 259

** During the period, a merger of shares at the 1:100 conditions has been implemented, so the comparative figures of previous periods have been recalculated

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017* 2018 2017* 2017/18 2017*
Net income -21 -32 -31 -108 201 124
Other comprehensive income
Items that cannot be reclassified to income
statement
Revaluation of pension obligations -17 -23 -52 -54 -98 -100
Tax attributable to revaluation pension obligations 3 5 11 12 21 22
Total -14 -18 -41 -42 -77 -78
Items that have been or can be reclassified to the
income statement
Exchange rate differences -13 -
6
56 -11 72 5
Hedge of net investments 4 -
1
-19 7 -17 9
Tax attributable to hedge of net investments -
1
0 4 -
2
4 -
2
Total -10 -
7
41 -
6
59 12
Other comprehensive income, net after tax -24 -25 0 -48 -18 -66
Total comprehensive income -45 -57 -31 -156 183 58
Of which, attributable to:
Ow
ners of the Parent Company
-45 -59 -37 -158 177 56
Non-controlling interests 0 2 6 2 6 2
Total comprehensive income -45 -57 -31 -156 183 58
Sep. 30 Sep. 30 Dec. 31
SEK M Note 2018 2017* 2017*
Assets
Non-current assets
Tangible assets 14 21 20
Intangible assets 5 2,577 2,573 2,548
Deferred tax assets 207 123 165
Financial assets 259 247 258
Total non-current assets 3,057 2,964 2,991
Current assets
Accounts receivable - trade 165 165 163
Current tax assets 17 19 14
Other current receivables 86 106 107
Other interest-bearing receivables 0 0 0
Cash and cash equivalents 48 35 51
Total current assets 316 325 335
TOTAL ASSETS 3,373 3,289 3,326
Shareholders' equity and liabilities
Shareholders' equity
Share capital 1,198 531 1,192
Additional paid in capital 5,829 5,554 5,829
Reserves -275 -332 -313
Retained earnings -5,781 -5,585 -5,702
Shareholders' equity, owners of the Parent Company 971 168 1,006
Non-controlling interests 40 39 39
Total Shareholders' equity 1,011 207 1,045
Non-current liabilities
Borrow
ing
0 8 760
Convertible bond 27 229 26
Deferred tax liabilities 149 113 124
Pension obligations 568 479 520
Provisions 0 1 0
Other non-current liabilities 24 0 0
Total non-current liabilities 768 830 1,430
Current liabilities
Accounts payable - trade 69 37 60
Current tax liabilities 6 5 8
Prepaid revenues 396 458 469
Other current liabilities 188 241 216
Provisions 6 16 20
Borrow
ing
929 1,495 78
Total current liabilities 1,594 2,252 851
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 3,373 3,289 3,326
SEK M Share
Capital
Additional
paid in
capital
Reserves Retained
earnings
Total
equity,
owners of
the Parent
Company
Non
controlling
interest
Total
equity
Opening balance, January 1, 2017 as
originally presented 531 5,554 -328 -5,331 426 42 468
Change of accounting principle * - - - -100 -100 - -100
Restated opening balance, January 1, 2017 531 5,554 -328 -5,431 326 42 368
Change of accounting principle * - - - 40 40 - 40
Total comprehensive income - - -
4
-194 -198 2 -196
Dividend non-controlling interest - - - - - -
5
-
5
Restated closing balance, September 30, 2017 531 5,554 -332 -5,585 168 39 207
Opening balance, January 1, 2017 as
originally presented 531 5,554 -328 -5,331 426 42 468
Change of accounting principle * - - - -100 -100 - -100
Restated opening balance, January 1, 2017 531 5,554 -328 -5,431 326 42 368
Change of accounting principle * - - - 48 48 - 48
Total comprehensive income - - 15 -
7
8 2 10
Reduction of share capital -436 - - 436 0 - 0
Set-off issue 259 187 - -296 150 - 150
Set-off issue of issue expenses 49 - - -24 25 - 25
Cash issue 668 - - -390 278 - 278
Cash issue, issue expenses - - - -55 -55 - -55
Cash issue, deferred tax issue expenses - - - 12 12 - 12
Conversion of convertible bonds 121 88 - 5 214 - 214
Dividend non-controlling interest - - - - - -
5
-
5
Restated closing balance, December 31,
2017 1,192 5,829 -313 -5,702 1,006 39 1,045
Closing balance, December 31, 2017 as
originally presented 1,192 5,829 -313 -5,650 1,058 39 1,097
Change of accounting principle* - - - -52 -52 - -52
Restated Closing balance, December 31,
2017 / Opening balance, January 1, 2018 1,192 5,829 -313 -5,702 1,006 39 1,045
Total comprehensive income - - 38 -75 -37 6 -31
Set-off issue of issue expenses 5 - - -
3
2 - 2
Set-off issue 1 - - -
1
0 - 0
Dividend non-controlling interest - - - - - -
5
-
5
Closing balance, September 30, 2018 1,198 5,829 -275 -5,781 971 40 1,011
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M Note 2018 2017* 2018 2017* 2017/18 2017*
Operating income 21 19 52 -16 54 -14
Adjustments for
Depreciation, amortization and impairment 39 43 117 198 159 240
Capital gain/loss and other non-cash items -
4
10 -29 -36 -27 -34
Financial items, net -
5
0 -15 -49 -105 -139
Income tax paid -
2
0 -18 -13 -10 -
5
Cash flow from operating activities before
changes in working capital 49 72 107 84 71 48
Changes in w
orking capital
-40 -77 -89 -85 -47 -43
Cash flow from operating activities 9 -
5
18 -
1
24 5
Investments in non-current assets, net -
6
-
7
-58 -27 -65 -34
Cash flow from investing activities -
6
-
7
-58 -27 -65 -34
Proceeds from borrow
ings
18 10 52 44 73 65
Repayment of borrow
ings
0 - -10 - -293 -283
Long-term investments - 0 - -11 - -11
Dividend on preference shares - 0 - -12 - -12
Dividend non controlling interests -
2
-
2
-
5
-
5
-
5
-
5
Rights issue 1 - 3 - 281 278
Cash flow from financing activities 17 8 40 16 56 32
Cash flow for the period 20 -
4
0 -12 15 3
Cash and cash equivalents at start of period 29 39 51 48 35 48
Cash flow
for the period
20 -
4
0 -12 15 3
Exchange rate differences in cash and cash equivalents -
1
0 -
3
-
1
-
2
0
Cash and cash equivalents at end of period 48 35 48 35 48 51
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017 2018 2017 2017/18 2017
Operating revenue 4 6 13 17 12 16
Administration costs -11 -14 -36 -65 -52 -81
Other income/costs 0 -
1
-
1
-
1
0 0
Operating income -
7
-
9
-24 -49 -40 -65
Financial items, net 1 -17 4 -24 332 304
Income before tax -
6
-26 -20 -73 292 239
Income tax -
2
-12 1 5 3 7
Net income -
8
-38 -19 -68 295 246
Sep. 30 Sep. 30 Dec. 31
SEK M 2018 2017 2017
Non-current assets 1,501 2,516 1,499
Current assets 36 107 60
TOTAL ASSETS 1,537 2,623 1,559
Shareholders' equity 1,419 497 1,435
Provisions 73 75 73
Non-current liabilities 27 2,027 26
Current liabilities 18 24 25
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,537 2,623 1,559

This interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations, as endorsed by the European Union (EU). The application of the accounting policies corresponds with those contained in the Annual Report for the financial year ended December 31, 2017 and should be read in combination with these. This quarterly report has been prepared in accordance with IAS 34.

New standards that came into force in 2018 are IFRS 15 and IFRS 9. IFRS 16 is to be applied from 2019. The respective effects are described below.

Eniro's sales commission meets the criteria to be recognized as contract costs, since they are costs that Eniro would not have incurred if the contract had not been secured. The amortization period initially adopted was 12 months; the amortization period will be reviewed regularly.

Eniro recognizes Work in progress for both Print and Online products. These costs for Online products do not meet the criteria to be recognized as contract costs in accordance with IFRS 15.

Eniro is applying a retroactive transition method, with an opening balance established on January 1, 2017 and the comparative year restated in accordance with IFRS 15.

Since Eniro's customers pay for certain services in advance, some of Eniro's contracts contain a financing component. Eniro has chosen to apply the practical exception and not adjust the transaction price for the effects of a financing component because the period between the transfer of service and payment is one year or less. (IFRS 15p 63).

The retroactive application of IFRS 15 for the period January-September 2017, has in the Income Statement resulted in improved operating revenue of SEK 44 M, increased operating expense of SEK -1 M which gave a positive impact on operating profit before tax of SEK 43 M and reduced tax expense of SEK -2 M which gave a total improvement in net income of SEK 41 M. The application of IFRS 15 in the period January-September 2017, has in the Balance Sheet resulted in an increase in current receivables of SEK 18 M, increased deferred tax assets net of SEK 28 M, a negative effect on shareholder's equity, Closing Balance of SEK -59 M, increased prepaid revenues of SEK 94 M and increased staff accruals of SEK 11 M. The total effect impacted the segment Local Search.

The application of IFRS 15 for the January-September 2017 period, resulted in an increase in operating revenue of SEK 44 M, which is distributed among the following markets:

SEK M 2017
Sw
eden
33
Norw
ay
6
Denmark 6
Finland -
Poland -1
Total Group 44

The complete version of IFRS 9 replaces most of the guidance contained in IAS 39. IFRS 9 updates classification, recognition and impairment testing of financial assets, and places new requirements in the application of hedge accounting. The Group will apply IFRS 9 retroactively as of the required application date, January 1, 2018, and will not restate comparative information.

The transition to IFRS 9 is estimated to have only a marginal impact on the Group's financial position.

IFRS 16 Leases is a new leasing standard that will replace IAS 17 Leases along with the accompanying interpretations IFRIC 4, SIC-15 and SIC-17. The standard will entail that nearly all leases will be recognized in the balance sheet since no difference is made between operational and financial leases. This accounting is based on the notion that the lessee has a right the use the asset during a specific period of time, and at the same time has an obligation to pay for this right. Contracts with short terms and contracts of small value are exempted. The standard is applicable for financial years beginning on January 1, 2019, and later. Prospective application is permitted.

Significant leases in Eniro are recognized in accordance with this standard. Other contracts are deemed to be small and the transition to IFRS 16 is expected to have only a marginal impact on the Group's financial position.

Eniro will apply IFRS 16 retroactively as of the required application date, January 1, 2019, and will not restate comparative information.

Eniro reports its financial results distributed among the Local search and Voice business areas. Local search has cross-border functions for Products & Technology (formerly Digital Solutions), Sales and Marketing (formerly Nordic Sales), Human Resources, and Finance. The Voice business area is governed separately and is not an integrated part of the function-based organization.

Local search
Voice
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jul-Sep Jul-Sep Jan-Sep Jan-Sep
SEK M 2018 2017* 2018 2017* 2018 2017* 2018 2017*
Operating revenue
Sw
eden
99 118 302 386 21 30 69 93
Norw
ay
72 91 233 308 9 10 27 30
Denmark 49 53 149 187 - - - -
Finland** 4 4 13 9 50 33 126 101
Poland 52 49 154 151 - - - -
Total 276 315 851 1,041 80 73 222 224
Adjusted EBITDA 46 61 144 202 18 23 46 51
Items affecting comparability1) 0 -12 0 -16 - -
1
-
6
EBITDA 46 49 144 186 18 23 45 45
Depreciation/amortization -35 -40 -107 -183 -
3
7 -
7
-
5
Impairment losses - - - -
1
-10 -
3
-10
Operating income 11 9 37 3 14 20 35 30
Other Total
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jul-Sep Jul-Sep Jan-Sep Jan-Sep
SEK M 2018 2017* 2018 2017* 2018 2017* 2018 2017*
Operating revenue
Sw
eden
- - - - 120 148 371 479
Norw
ay
- - - - 81 101 260 338
Denmark - - - - 49 53 149 187
Finland** - - - - 54 37 139 110
Poland - - - - 52 49 154 151
Total - - - - 356 388 1,073 1,265
Adjusted EBITDA
Items affecting comparability1)
-
2
-
4
-19 -19 62 80 171 234
-
2
-
6
-
1
-30 -
2
-18 -
2
-52
EBITDA -
4
-10 -20 -49 60 62 169 182
Depreciation/amortization 0 0 0 0 -38 -33 -114 -188
Impairment losses - - - - -
1
-10 -
3
-10
Operating income -
4
-10 -20 -49 21 19 52 -16
Net financial items -52 -33 -77 -107
Taxes 10 -18 -
6
15
Net income for the period -21 -32 -31 -108

1)Items affecting comparability consists of restructuring costs. In addition to restructuring costs, 2017 also includes advisory and legal costs.

* Retrospective restatement of financial statements in accordance with IFRS 15 Revenue from Contracts with Customers

** Retrospective split in 2017 between Local search and Voice for the operations in Finland

Earnings per share before dilution are calculated as income for the period attributable to owners of the Parent Company less the set dividend on preference shares for the period, divided by the average number of ordinary shares, excluding treasury shares, before dilution and adjusted for the bonus issue effect on new issue.

In calculating earnings per share after dilution, the average number of shares is adjusted for the effects of the potential dilution of ordinary shares associated with the convertible bond and the warrant program. This entails that earnings per share after dilution are calculated by dividing income for the period attributable to owners of the Parent Company plus interest expense after tax pertaining to the convertible loan, less the set dividend on preference shares for the period, by the average number of ordinary shares, excluding treasury shares, after full conversion and adjusted for the bonus issue effect on new issue.

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017* 2018 2017* 2017/18 2017*
Earnings attributable to ow
ners of the Parent Company
Dividend established for cumulative preference shares
-22 -34 -34 -112 197 119
during the period
Earnings used for calculating earnings per
- - - -12 - -12
ordinary share, before dilution -22 -34 -34 -124 197 107
Cupon rate for convertible bonds
Earnings used for calculating earnings per
1 3 1 9 -
2
6
ordinary share, after dilution -21 -31 -33 -115 195 113
Average number of ordinary shares after deduction of
treasury shares before dilution and adjusted for bonus
issue effect on new
issue, 000s **
66,522 6,692 66,392 6,692 55,259 10,606
Adjustments for the calculation of earnings per ordinary
share after dilution:
- Convertible bonds ** 207 1,338 207 1,338 207 209
- Warrants **
Average number of ordinary shares after deduction of
treasury shares after dilution and adjusted for bonus
257 199 257 199 257 257
issue effect on new
issue, 000s **
66,987 8,229 66,857 8,229 55,724 11,073
Earnings per ordinary share before dilution, SEK -0.33 -5.08 -0.51 -18.53 3.57 10.09
Earnings per ordinary share after dilution, SEK 1) -0.33 -5.08 -0.51 -18.53 3.50 10.09
Preference shares on closing date, 000s 259 1,000 259 1,000 259 259

1) As earnings per ordinary share after dilution, in July-Sept 2017 and Jan-Sept 2017, resulted in a reduced loss, and Jan-Dec 2017 an increased profit, the ordinary shares did not have any dilution effect.

* Retrospective restatement of financial statements in accordance with IFRS 15 Revenue from Contracts with Customers

** During the period, a merger of shares at the 1:100 conditions has been implemented, so the comparative figures of previous periods have been recalculated

Assets and liabilities on the balance sheet Sep. 30 Sep. 30 Dec. 31
SEK M 2018 2017 2017
Loans and accounts receivables
Non-current assets
Interest-bearing receivables, blocked bank funds 213 200 212
Current assets
Accounts receivable - trade and other receivables 172 178 176
Cash and cash equivalents 48 35 51
TOTAL 433 413 439
Other financial liabilities
Non-current liabilities
Borrow
ing
0 0 752
Convertible bond 27 229 26
Finance lease 0 8 8
Current liabilities
Borrow
ing
921 1,493 76
Finance lease 8 2 2
Accounts payable - trade 69 37 60
TOTAL 1,025 1,769 924
Sep. 30 Sep. 30 Dec. 31
SEK M 2018 2017 2017
At start of year 2,006 2,018 2,018
Impariment loss for the year -
3
-10 -12
Exchange rate difference 51 -11 0
Carrying amount 2,054 1,997 2,006

Accumulated impairment losses for goodwill amounted to SEK -3 M (-10) as per September 30 and are entirely attributable to Voice. Further impairment of goodwill pertaining to Voice is likely, as higher cash flows in real time are replaced by lower future cash flows. In the impairment testing, a determination is made as to whether a need to recognize impairment exists by comparing the cashgenerating unit's carrying amount, including goodwill and other consolidated surplus value, with the recoverable amount. If the carrying amount exceeds the recoverable amount, the carrying amount is written down to the recoverable amount. Eniro's lowest cash-generating units consist of the operating segments per country, i.e., Local search and Voice, which corresponds to the monitoring that is conducted in both the internal and external reporting. The recoverable amount consists of the value in use. A discount rate before tax has been determined for the respective cash-generating units. Testing of the value of all of the Group's intangible assets is conducted annually or when indications of significant changes in assumptions have been identified, however, there has been no changes to material prerequisites since the assessment for the six-month report. Eniro has assessed that the market in 2018 will accept the new business model and that growth in Local Search will subsequently gain momentum in the 2019-2021 period, thereafter falling to 2% in perpetual growth in 2022. Furthermore in the test for the years following 2018, Eniro has assessed the new business model to be scalable and that the EBITDA margin will increase in pace with growth in sales. Sales growth and scalability constitute material assessments in the impairment test and, should the future outcome deviate from these assessments, the impairment of intangible assets cannot be ruled out.

Discount rate after tax by cash generating unit, % Sep. 30 Sep. 30 Dec. 31
2018 2017 2017
Sw
eden, Local search
12.49 12.49 12.49
Sw
eden, Voice
15.60 15.60 15.60
Norw
ay, Local search
11.67 11.67 11.67
Norw
ay, Voice
15.00 15.00 15.00
Denmark, Local search 12.52 12.52 12.52
Poland, Local search 15.30 15.30 15.30
Finland, Voice 14.20 14.20 14.20

At the beginning of October, Eniro's bank loans of SEK 925 M were settled, through the raising of a bond loan totaling SEK 989 M, upon which security in shares and trademarks was released. The refinancing has thus been completed.

In October, at the request of shareholders, Eniro converted all Class B ordinary shares to Class A ordinary shares in accordace with the conversion provision in the Articles of Association. The conversion resulted in the total number of votes in the company increasing by 4,354,838.1 votes of Class A and the number of ordinary shares of Class A increased by 4,838,709. However, the total number of shares remains unchanged.

In conjunction with the refinancing, Eniro AB has taken over Eniro Treasury AB's external liabilities by submitting a shareholder contribution with the corresponding amount.

Sep. 30 Sep. 30 Dec. 31
2018 2017* 2017*
Equity, average 12 months, SEK M 915 284 338
Return on equity (ROE), 12 months, % 21.5 -53.5 35.2
Return on Assets (ROA), 12 months, % 10.1 0.3 7.6
Earnings per ordinary share before dilution, SEK -0.51 -18.53 10.09
Earnings per ordinary share after dilution, SEK -0.51 -18.53 10.09
Interest-bearing net debt excluding convertible bond and pension
obligations, SEK M -668 -1,268 -575
Debt/equity ratio, times 0.66 6.13 0.55
Equity/assets ratio, % 30 6 31
Interest-bearing net debt excluding convertible bond and pension
obligations/EBITDA 12 months, times 3.1 5.0 2.5
Interest-bearing net debt excluding convertible bond and pension
obligations/adjusted EBITDA 12 months, times 2.9 4.1 1.9
Average number full-time employees 1,404 1,550 1,492
Number of full-time employees on closing date 1,378 1,443 1,429
Number of ordinary shares before dilution on closing
date after deduction of treasury shares, 000s ** 66,556 5,284 66,227
Number of ordinary shares after dilution on closing
date after deduction of treasury shares, 000s ** 67,021 6,821 66,694
Number of preference shares on closing
date, 000s 259 1,000 259
Sep. 30 Sep. 30 Dec. 31
2018 2017* 2017*
Equity per share, SEK 14.53 26.74 15.13
Share price for ordinary shares at end of period, SEK 1) 2.04 8.52 5.40

1) Share price at end of periods 201706 and 201712 adjusted for new issue of shares and reverse split

* Retrospective restatement of financial statements in accordance with IFRS 15 Revenue from Contracts with Customers

** During the period, a merger of shares at the 1:100 conditions has been implemented, so the comparative figures of previous periods have been recalculated

Eniro presents certain financial measures that are not defined in IFRS. Eniro believes that these measures provide valuable, complementary information to investors and to company management, as they enable assessment of Group's earnings and financial position. Since not all companies calculate financial measures in the same way, these are not always comparable with measures used by other companies. These financial measures shall therefore not be regarded as a substitute for the measures defined in IFRS.

Name Definition Calculation
Earnings per ordinary share for the
period before dilution
Income for the period attributable to owners
of the Parent Company less the portion of
the approved dividend for the period for
preference shares, divided by the average
number of ordinary shares before dilution.
(Income for the period attributable to
owners of the Parent Company - the portion
of the approved dividend for the period for
preference shares)/(Average number of
ordinary shares before dilution) x 1,000.
Earnings per ordinary share for the
period after dilution
Income for the period attributable to owners
of the Parent Company less the portion of
the approved dividend for the period for
preference shares and interest expenses
after tax pertaining to the convertible bond,
divided by the average number of ordinary
shares after full conversion.
(Income for the period attributable to
owners of the Parent Company – the
portion of the approved dividend for the
period for preference shares + interest
expenses after tax pertaining to the
convertible bond)/ (Average number of
ordinary shares after full conversion)
x 1,000.
Average number of ordinary shares
before dilution
The average number of ordinary shares
outstanding, excluding treasury shares.
Average number of ordinary shares
outstanding, excluding treasury shares,
calculated on a daily basis.
Average number of ordinary shares after
dilution
The average number of ordinary shares
excluding treasury shares, adjusted for full
conversion of all potential ordinary shares in
the convertible bond and warrant program.
Average number of ordinary shares
outstanding, excluding treasury shares,
calculated on a daily basis + Adjustment for
full conversion of all potential ordinary
shares in the convertible bond and warrant
program
Name Definition Calculation Purpose
Return on shareholders'
equity (%)
Moving 12-month earnings
attributable to owners of the
Parent Company divided by
average shareholders' equity.
(Moving 12-month earnings
attributable to owners of the
Parent Company)/ (Average
shareholders' equity)
Return on shareholders' equity
measures the Group's return on
the capital the owners have
invested in the business and
thereby how profitable the
Group is for its shareholders.
Return on total assets (%) Moving 12-month operating
income and financial income
less exchange rate losses on
financial items divided by
average total assets
(Moving 12-month operating
income + financial income -
exchange rate losses on
financial items)/(Average total
assets) x 1,000.
Return on total capital shows
the business's effectiveness
independent from how the
capital is financed. This
measure is used to assess
whether the Group's business
generates an acceptable return
on its resources.
EBITDA Operating income before
depreciation, amortization and
impairment losses.
Operating income excluding
depreciation, amortization and
impairment losses. See the
calculation in "Reconciliation of
operating income and adjusted
EBITDA".
EBITDA is a measure of
operating income before
interest, taxes, depreciation,
amortization and impairment
losses and is used to monitor
the operating activities. EBITDA
is the measure that best
coincides with cash flow.
EBITDA margin (%) EBITDA divided by operating
revenue.
(EBITDA/Operating revenue) x
100 See "Calculation of EBITDA
margin".
EBITDA in relation to operating
revenues is used to measure
the profitability of operations
and shows the Group's cost
effectiveness.
Shareholders' equity per
share
Shareholders' equity
attributable to owners of the
Parent Company divided by the
number of shares at the end of
the period, excluding treasury
shares.
(Shareholders' equity
attributable to owners of the
Parent Company)/(Number of
shares at the end of the period,
excluding treasury shares) x
1,000
Shareholders' equity per share
measures the Group's net value
per share.
Name Definition Calculation Purpose
Adjusted EBITDA EBITDA excluding restructuring
costs and other items affecting
comparability. Other items
affecting comparability include,
gain/loss from the divestment of
companies, legal expenses
from disputes that are not part
of ordinary operations,
severance expenses for
persons in executive
management and other major
nonrecurring items.
EBITDA excluding restructuring
costs and other items affecting
comparability. See
"Reconciliation of operating
income and adjusted EBITDA".
Adjusted EBITDA increases
comparability by adjusting for
restructuring costs, the effect of
acquisitions/divestments and
other nonrecurring items.
Adjusted EBITDA margin (%) Adjusted EBITDA divided by
operating revenue.
(Adjusted EBITDA/Operating
revenue) x 100. See
"Calculation of adjusted
EBITDA margin".
Adjusted EBITDA in relation to
operating revenues shows a
more comparable measure of
the profitability of operations
and the Group's cost
effectiveness.
Operating cash flow Cash flow from operating
activities and cash flow from
investing activities excluding
company acquisitions and
divestments.
Cash flow from operating
activities + cash flow from
investing activities - company
acquisitions and divestments.
Operating cash flow measures
the cash flow that is generated
before the effects of
acquisitions and divestments,
and cash flows attributable to
the Company's financing.
Interest-bearing net debt
excluding convertible bond
and pension obligations
Borrowings less cash and cash
equivalents and interest-bearing
assets.
Borrowings - cash and cash
equivalents - interest-bearing
assets. See "Reconciliation of
interest-bearing net debt after
convertible bond and pension
obligations".
Interest-bearing net debt shows
the Group's liabilities to lenders
less cash and cash equivalents
and interest-bearing assets.
Interest-bearing net debt
excluding convertible bond
and pension
obligations/EBITDA
Interest-bearing net debt
excluding convertible bond and
pension obligations/EBITDA.
(Interest-bearing net debt
excluding convertible bond and
pension obligations)/(EBITDA,
12 months). See "Calculation of
interest-bearing net
debt/EBlTDA margin".
Net debt in relation to EBITDA
gives an estimation of the
Group's capacity to reduce its
debt. It represents the number
of years it would take to pay
back its loans if net debt and
EBITDA were to remain
constant, without taking into
account cash flow pertaining to
interest and tax.
Debt/equity ratio Interest-bearing net debt
excluding the convertible bond
and pension obligations divided
by shareholders' equity,
including non-controlling
interests.
(Interest-bearing net debt
excluding the convertible bond
and pension obligations)/(Total
shareholders' equity).
The debt/equity ratio measures
the extent to which the Group is
financed by debt.
Equity/assets ratio (%) Shareholders' equity including
non-controlling interests divided
by total assets.
(Total shareholders'
equity)/(Total assets)
The equity/assets ratio indicates
how much the Group's assets
are financed by shareholders'
equity. The size of
shareholders' equity in relation
to other liabilities describes the
Group's long-term ability to pay.
Total operating expenses Costs for production, sales,
marketing, administration and
product development, excluding
depreciation, amortization and
impairment losses.
See "Reconciliation of operating
expenses"
Average total assets Total assets for the last four
quarters divided by four
(Total assets for the last four
quarters)/4
Average shareholders' equity Average shareholders' equity
attributable to owners of the
Parent Company per quarter,
based on the opening and
closing balance for each
quarter.
(Average shareholders' equity
attributable to owners of the
Parent Company per quarter
(OB+CB)/2 for the last four
quarters/4.
Name Definition Calculation Purpose
Average number of full-time
employees
Calculated as the average
number of full-time employees
at the start and end of the
period.
(Average number of full-time
employees at the start and end
of the period)/2
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017* 2018 2017* 2017/18 2017*
Operating income 21 19 52 -16 54 -14
Depreciation/amortization 38 42 114 188 154 228
Impairment losses 1 1 3 10 5 12
Total EBITDA 60 62 169 182 213 226
Items affecting comparability
Restructuring costs 0 13 1 18 14 31
Other items affecting comparability 2 5 1 34 6 39
Total adjusted EBITDA 62 80 171 234 233 296
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
2018 2017* 2018 2017* 2017/18 2017*
EBITDA 60 62 169 182 213 226
Operating revenue 356 388 1,073 1,265 1,457 1,649
EBITDA margin % 16.9 16.0 15.8 14.4 14.6 13.7
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
2018 2017* 2018 2017* 2017/18 2017*
Adjusted EBITDA 62 80 171 234 233 296
Operating revenue 356 388 1,073 1,265 1,457 1,649
Adjusted EBITDA margin % 17.4 20.6 15.9 18.5 16.0 18.0
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
SEK M 2018 2017* 2018 2017* 2017/18 2017*
Production costs -105 -95 -297 -308 -401 -412
Sales costs -119 -140 -377 -444 -508 -575
Marketing costs -25 -30 -78 -148 -99 -169
Administration costs -54 -54 -161 -198 -234 -271
Product development costs -34 -52 -112 -176 -165 -229
Deduction of depreciation 3 4 10 9 13 12
Deduction of amortization 35 38 104 179 141 216
Operating expenses -299 -329 -911 -1,086 -1,253 -1,428
Sep. 30 Sep. 30 Dec. 31
SEK M 2018 2017 2017
Borrow
ing
-921 -1,493 -828
Finance lease -
8
-10 -10
Other current interest-bearing receivables 0 0 0
Other non-current interest-bearing receivables 1) 213 200 212
Cash and cash equivalents 48 35 51
Interest-bearing net debt excluding
convertible bond and pension obligations -668 -1,268 -575

1 ) Included in financial assets. SEK 200 M pertains to pledged bank funds for future pension obligations, referred to as an enhanced pension guarantee. The remaining amount pertain to pledged bank funds as a security for leases in Norway and Finland and as guarantee against Volvo Finans.

Sep. 30
2018
Sep. 30
2017*
Dec. 31
2017*
Interest-bearing net debt excluding convertible
bond and pension obligations -668 -1,268 -575
EBITDA 12 month 213 254 226
Interest-bearing net debt excluding
convertible bond and pension
obligations/EBITDA 12 months, times
3.1 5.0 2.5
Sep. 30 Sep. 30 Dec. 31
2018 2017* 2017*
Interest-bearing net debt excluding convertible
bond and pension obligations -668 -1,268 -575
Adjusted EBITDA 12 month 233 311 296
Interest-bearing net debt excluding
convertible bond and pension
obligations/adjusted EBITDA 12 months,
times 2.9 4.1 1.9

* Retrospective restatement of financial statements in accordance with IFRS 15 Revenue from Contracts with Customers

Eniro AB

Box 7044 Telephone +46 8 553 310 00 Website www.enirogroup.com SE-164 07 Kista E-mail [email protected] Corp. Reg. No. 556588-0936

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