Digitalist Group Plc’s Business Review, 1 January – 30 September
2023
Digitalist Group Plc’s Business Review, 1 January – 30
September 2023
SUMMARY
July–September 2023 (comparable figures for 2022 in
parentheses):
- Turnover: EUR 3.6 million
(EUR 3.9 million), decrease: -8.0%.
- EBITDA: EUR 0.4 million* (EUR -0.6 million),
12.1% of turnover (-15.7%).
- EBIT: EUR 0.2 million* (EUR -1.1 million),
6.6% of turnover (-29.1%).
- Net income: EUR -0.4 million*
(EUR -1.9 million), -11.9% of turnover (-47.5%).
- Earnings per share (diluted and undiluted): EUR -0.00 (EUR
-0.00).
*) EBIT, EBITDA and net income of the period were impacted by a
booked gain of EUR 0.6 million from the FutureLab Share
transaction. The sales gain of approximately EUR 1.0 million (as
released on July 4, 2023) has been reduced by a goodwill allocation
of EUR 0.4 million associated with the divested operation.
January–September 2023 (comparable figures for 2022 in
parentheses):
- Turnover: EUR 12.5 million
(EUR 14.3 million), decrease: -12.6%.
- EBITDA: EUR -0.5 million*
(EUR -2.0 million), -3.9% of turnover (-14.1%).
- EBIT: EUR -1.1 million* (EUR -3.4 million),
-8.8% of turnover (-24.0%).
- Net income: EUR -2.5 million*
(EUR -5.0 million), -19.8% of turnover (-35.0%).
- Earnings per share (diluted and undiluted): EUR -0.00 (EUR
-0.00).
- Number of employees at the end of the review period: 138 (159),
decrease of -13.2%.
*) EBIT, EBITDA and net income of the period were impacted by a
booked gain of EUR 0.6 million from the FutureLab Share
transaction. The sales gain of approximately EUR 1.0 million (as
released on July 4, 2023) has been reduced by a goodwill allocation
of EUR 0.4 million associated with the divested operation.
CEO’s review
The third quarter started with major events, as we sold our
fully-owned subsidiary FutureLab & Partners AB, acquired a
Swedish brand, strategy, and communications company Open
Communications International AB, and decreased business operations
in Canada to focus on our core businesses in the European
markets.
Our turnover for the first nine months of 2023 experienced a
decline compared to the same period last year, registering at 12.5
MEUR as opposed to 14.3 MEUR for the same period in 2022. In spite
of the positive revenue impact of acquiring Open Communications
International AB in Sweden, the revenue impact of selling FutureLab
and downgrading expectations regarding our operations in Canada
jointly resulted in decreasing our guidance regarding the turnover
as announced in early July.
The EBIT, EBITDA, and net income for the period felt the
positive impact of a booked gain of 0.6 million EUR from the
FutureLab sale. Nevertheless, even without this factor, our results
showed improvement over the previous year with a EBITDA of -0.5
MEUR compared to -2.0 MEUR in the first nine months. Despite this
progress, it's clear we have much more work ahead to reach a
satisfactory level of profitability.
Our primary markets, Sweden and Finland, have been affected by
challenging general economic conditions, which has undoubtedly
impacted segments of our business. This necessitates that we remain
agile and responsive to the market's fluctuations.
To forge ahead towards profitability, we've instituted several
strategic measures this year, including:
- The acquisition of Open Communications International to
strengthen our Brand strategy and communications offerings in
Sweden and at the same time open up for synergies with Grow.
- Further savings programs have been implemented in Grow AB and
in Digitalist Finland Oy to adapt the cost to the current market
outlook.
- Selling FutureLab & Partners AB, which supports our equity,
increased the financial flexibility and the focus on our core
business.
- Downsizing our business operations in Canada, focusing
increasingly on our core businesses in the European markets,
especially in Sweden and Finland.
We are constantly looking for new ways of running our business
more effectively and are implementing even more actions during the
fourth quarter.
This said our most important task is to improve our topline.
LeanLab, our SaaS business, is growing with new clients and
recurring revenue. Adding to our open tech offering, we have also
launched a new SaaS offering, Open Cloud, where we offer open
technology products as a service. This opens up a new way for
companies to leverage the strengths of open technology.
We are continuing to serve both the private and public sector
and are proud to have closed deals with clients like City of
Helsinki, EQT, Pembroke, Business Sweden and Finnish VTT during the
third quarter.
While our profitability indicators reflect an upward momentum,
we acknowledge that the pace of transformation needs acceleration.
Every individual within our organisation is relentlessly committed
to driving our business forward and enhancing value.
/CEO, Magnus Leijonborg
FUTURE PROSPECTS
In 2023, turnover is expected to decrease and
EBITDA is expected to improve in comparison with 2022.
EVENTS DURING THE THIRD
QUARTER
Digitalist Group reorganized its business operations and
decreased its earlier guidance regarding turnover
4.7.2023
Digitalist Group sold its fully-owned subsidiary FutureLab &
Partners AB
Digitalist Group signed 4.7.2023 a share
purchase agreement to divest its fully-owned subsidiary FutureLab
& Partners AB. The Share transaction was completed by selling
all FutureLab shares in Digitalist Group’s possession to Turret Oy
Ab. Turret is Digitalist Group’s largest shareholder (49.33%).
Sales price was EUR 1.2 million and it was paid in cash.
FutureLab was spun off from Grow AB in November
2022. FutureLab’s turnover January - June 2023 was EUR 0.5 million
and EBITDA EUR 0.0 million. FutureLab’s equity was EUR 0.1 million,
balance sheet total EUR 0.3 million and the amount of personnel was
6 on 30.6.2023. Digitalist Group has booked in other operating
income a capital gain of EUR 0.6 million of the Share transaction.
The sales gain of approximately EUR 1.0 million (as released on
July 4, 2023) was reduced by a goodwill allocation of EUR 0.4
million associated with the divested operation.
Board members Esa Matikainen, Johan Almquist,
Maria Olofsson and Andreas Rosenlew, who are independent of Turret,
participated in the evaluation of Share transaction. Independent
board members asked an external impartial assessor for a valuation
of FutureLab. According to the valuation the sales price was
considered fair. According to company law legislation relating to
related party transactions Digitalist Group’s board members Paul
Ehrnrooth and Peter Eriksson did not participate in the decision
making of Share transaction.
Digitalist Group signed the final agreement to
acquire Open Communications International AB
Digitalist Group signed 4.7.2023 the final
agreement for a Transaction in which Digitalist Group acquired Open
Communications International AB (“OC”) (www.open.se). Digitalist
Group informed about the letter of intent on the Transaction on
10.5.2023.
Digitalist Group acquired 70 percent of the
shares in OC for a consideration consisting of SEK 2.5 million paid
in cash, and by issuing 11.007.709 new Digitalist Group shares to
be directed to David Gray through his holding company. In addition,
Digitalist Group acquired the remaining 30 percent of the shares in
OC with shares of its fully-owned subsidiary Grow AB transferred as
consideration to the sellers (David Gray and Gunilla Lundström
through their holding companies) as part of the total
consideration. The total consideration for the full acquisition was
SEK 10.6 million. The Transaction resulted in 10% minority
ownership of the Sellers and 90% majority ownership of Digitalist
Group remaining in Grow AB post transaction.
As part of the Transaction described the Company
issued new shares as payment for the purchase price. The Board
resolved to issue a maximum of 11.007.709 new shares of the Company
and directed them to David Gray Communications AB in accordance
with the terms of the Directed Share Issue. The Share subscription
price in the Directed Share Issue was approximately EUR 0.023 per
Share.
David Gray Communications AB subscribed for the
Shares offered for subscription in the Directed Share Issue in
full, and the Board of Directors of Digitalist Group accepted David
Gray Communication AB's share subscription. The subscription price
of the Shares was EUR 254 119 in total.The Shares issued in the
Directed Share Issue correspond to altogether approximately 1.6
percent of all Company shares and votes after the Directed Share
Issue.
Digitalist Group informed to focus on its core
business in the European markets
As part of the efforts to improve Digitalist
Group’s profitability, adjust the cost structure, and prepare for
the changed market situation, the Company announced having
downsized business operations in Canada. Digitalist Group focuses
increasingly on its core businesses in the European markets,
especially in Sweden and Finland.
Change in turnover guidance 4.7.2023
Digitalist Group Plc decreased its earlier
guidance regarding future prospects.
The new guidance is:In 2023, turnover is
expected to decrease and EBITDA is expected to improve in
comparison with 2022.
The previous guidance of the company was:In
2023, turnover and EBITDA are expected to improve in comparison
with 2022.
Digitalist Group Plc’s new shares registered in
the trade register 24.7.2023Digitalist Group Plc announced on July
4th, 2023 about a directed share issue of 11.007.709 shares to
David Gray’s holding company. The new shares subscribed were
registered into the Finnish Trade Register on July 24th, 2023.
After the registration of the new shares, the company has
693.430.455 shares in total.The new shares produced the shareholder
rights as of the registration date to Euroclear Finland Ltd
book-entry system on July 25th, 2023. The new shares were admitted
to trading together with the old shares on the official list of
Nasdaq Helsinki Ltd on July 25th, 2023.
The stock exchange releases are on the company’s website at
https://digitalist.global/investors/releases
Despite the
implemented efficiency measures and financial arrangements, the
cash flow for the next 12 months is likely to be negative,
according to the forecast. However, at the time of publishing the
business reviews, the company estimates that its working capital is
sufficient for the needs of the next 12 months, taking into account
the financing support provided by the main owner if needed.
DIGITALIST GROUP OYJBoard of Directors
Additional information:Digitalist Group PlcCEO Magnus
Leijonborg, tel. +46 76 315 8422,
magnus.leijonborg@digitalistgroup.comChairman of the Board Esa
Matikainen, tel. +358 40 506 0080,
esa.matikainen@digitalistgroup.com
Distribution:Nasdaq Helsinki LtdMajor
mediahttps://digitalist.global
- Digitalist Group Plc’s Business Review, 1 January – 30
September 2023
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