Fondia Plc: Financial Statements Release 2023 – growth despite market challenges, productivity to be improved
Fondia Plc
Company relase
15.2.2024 at 8.30 a.m. EET
FINANCIAL DEVELOPMENT IN BRIEF
Figures in parentheses refer to the corresponding period of the previous year, unless otherwise stated.
July–December 2023 summary:
- Net sales EUR 12.6 million (12.3), a change of 1.8%
- EBITDA EUR 1.4 million (1.7)
- EBITDA-% 11.4% (13.5)
- Operating profit (EBIT) EUR 1.0 million (1.2)
- Operating profit-% (EBIT-%) 7.9% (10.0)
- Profit for the period EUR 0.7 million (1.0)
- Continuous monthly invoicing accounted for 47% (47) of net sales
- Personnel (period average FTE) 168 (149), a change of 12.8%
No non-recurring expenses were recorded in July–December 2023 and 2022.
January–December 2023 summary:
- Net sales 26.1 million (24.6), a change of 6.2%
- EBITDA was EUR 2.6million (2.9)
- EBITDA-% was 10.1% (11.7)
- Operating profit (EBIT) was EUR 1.8 million (2.1)
- Operating profit-% (EBIT-%) was 7.0 % (8.5)
- Profit for the period was EUR 1.4 million (1.6)
- Continuous monthly invoicing accounted for 46% (47) of net sales
- Personnel (period average FTE) was 163 (147), a change of 10.9%
- Net earnings per share was EUR 0.34 (0.42)
- The Board of Directors’ (hereafter ”the Board”) dividend proposal is an actual dividend of EUR 0.32 and an additional dividend of EUR 0.20 per share. The additional dividend is proposed to mark the 20th anniversary of Fondia.
No non-recurring expenses were recorded in the financial year 2023 and 2022.
KEY FIGURES
| Fondia Plc Group | 7–12/2023 | 7–12/2022 | Change, % | 1–12/2023 | 1–12/2022 | Change, % |
| Net sales, 1000 euros | 12,554 | 12,331 | 1.8% | 26,094 | 24,580 | 6.2% |
| EBITDA, 1000 euros | 1,432 | 1,664 | –14.0% | 2,642 | 2,873 | –8.0% |
| % of net sales | 11.4% | 13.5% | 10.1% | 11.7% | ||
| Operating profit (EBIT), 1 000 euros | 990 | 1,237 | –19.9% | 1,827 | 2,099 | –13.0% |
| % of net sales | 7.9% | 10.0% | 7.0% | 8.5% | ||
| Profit for the period, 1000 euros | 748 | 959 | –22.0% | 1,353 | 1,642 | –17.6% |
| % of net sales | 6.0% | 7.8% | 5.2% | 6.7% | ||
| Net gearing % | –83.9% | –94.1% | –83.9% | –94.1 | ||
| Equity ratio % | 52.0% | 49.7% | 52.0% | 49.7% | ||
| Return on equity (ROE) % | 27.1% | 32.3% | 27.1% | 32.3% | ||
| Average number of employees, full time equivalent (FTE) | 168 | 149 | 12.8% | 163 | 147 | 10.9% |
| Balance sheet total, 1000 euros | 9,514 | 10,327 | 9,514 | 10,327 | ||
| Net earnings per share, euros | 0.19 | 0.24 | 0.34 | 0.42 |
No non-recurring expenses were recorded in the financial year 2023 and 2022.
OUTLOOK FOR 2024
Fondia expects growth, with net sales for 2024 of EUR 27–29 million and an operating profit of 7–10%. The market situation remains uncertain, and this has weakening impact on the ability to assess future business development and the factors affecting it.
CEO HARRI SAVOLAINEN:
“In the financial year 2023, we broadened our focus beyond sales, customer work and personnel to include clearer operational performance management and commercial capability development. Our goal was to ensure profitable growth, in addition to good customer and employee experience, and to expand our customer base in all business areas. We succeeded in managing the customer and employee experience, and to some extent in expanding our customer base, but there was still room for improvement in our profitability.
The Group’s net sales for the financial year increased by 6.2% compared to the comparison period. International net sales increased by 3.3% compared to the comparison period, with Sweden and the Baltics increasing by 2.8% and 8.7% respectively. The development of the Swedish krona exchange rate affected net sales in Sweden, which increased by 10.6% in krona during the financial year. In Finland, net sales increased by 8.0% compared to the comparison period. However, the Group’s operating profit (EBIT) decreased and was 7.0% (8.5).
Legal services sales were in line with our targets for the financial year and developed well compared to the comparison period. However, good sales performance was not sufficient to compensate for the loss of net sales from our ongoing customers. The economic uncertainty was reflected through our customers and was reflected in partial reductions in resource reservations, a decrease in specific projects and, unfortunately, an increase in customer churn. Despite the difficult economic situation, demand for legal advice also increased in ESG, employment law and legal technology. Our strategic goal is to increase the share of our Legal Department Service (LDaaS) and other productised ongoing services in all our market areas and thus also increase the share of international business in our total net sales. We only partially succeeded in this during the financial year. All ongoing services represented 46% (47) of Group net sales. Total invoicing of Legal Department Service (LDaaS) customers and other customers covered by ongoing services represented 76% (77) of net sales. In Sweden, all ongoing services represented 39% (40) of net sales and in the Baltics, all ongoing services represented 28% (28) of net sales. In Finland, all ongoing services represented 48% (48) of net sales. International net sales represented 25% (25) of Group total net sales for the financial year.
We remain at an excellent level in managing customer value and experience. The results of the customer satisfaction survey and the net promoter score (NPS) of 61 (64) showed the effectiveness of our proactive service concept, which is a good basis to develop our operations.
Our attractiveness as an employer remained excellent during the financial year. This was demonstrated by our successful recruitment and the Future Workplaces certificate, which we received for the third year in a row in recognition of our high level of employee understanding and satisfaction. In addition, the still excellent employee net promoter score (eNPS) of 48 (50) showed that the sharpening of our approach and our way of doing things resonates well with our personnel. During the financial year, we continued to improve the efficiency of our operations, although we have not yet achieved results. Our average productivity for the financial year declined and was –4.3% compared to the comparison period. One of most significant factors behind the productivity decline was the slow start to customer work of lawyers recruited in Finland which affected particularly the third quarter.
During the financial year, we successfully completed our first customer projects supporting more advanced AI deployments. We also recruited additional technology capabilities to better meet the growing customer demand in the Legal Tech & Design. In addition to our existing tax specialists in Sweden and the Baltics, we also recruited tax specialists in Finland to provide customers with comprehensive legal service in all our business areas, including tax. We also acquired Intels UAB, a small Lithuanian company specialising in intellectual property services, to expand our service offering and customer base, particularly in the Baltic market. Our Legal Health Check and Fondia Insights functionalities previously launched on the MyFondia platform have been well received by our existing and potential customers. In addition, we were the first Finnish business law firm to launch a legal content service in Finnish using AI and a large language model (LLM) for a wide range of users. We will continue to develop the functionalities of the MyFondia platform and phase in new features as planned, with the aim of creating a single digital service channel and experience.
The growth in the financial year was not sufficient to support the favourable development of operating profit. Changes in the operating environment contributed to weakened customer demand and cost increase. In addition to the productivity challenge, our operating profit was burdened by front-loaded recruitment and impact of inflation in our cost structure. Our performance of the financial year was disappointing for us in an otherwise quite decent year.
We will continue on the journey of change we have started and continue to focus on things and actions that are relevant to the business: legal customer work, sales, creating added value for customers, and the well-being of our employees.
We will closely monitor possible changes in the market situation and respond to them as appropriate, without compromising the quality of our customer service or the good customer and employee experience. We strive to keep our business straightforward and approachable. Despite the market uncertainty, we are confident about the start of the financial year.”
INVESTOR COMMUNICATIONS
Fondia will publish the financial statements release for January–December 2023 on Thursday 15 February 2024 at 08.30 a.m. EET. The financial statements release and a video of the CEO’s presentation as well as the presentation material will be available later on the company’s website Fondia.com/investors.
An investor call will be held on Thursday 15 February 2024 at 10.00 a.m. EET. The investor call will be held in Finnish and can be accessed online by registering on the company’s website at the address https://fondia.videosync.fi/tilinpaatos-2023/register.
Helsinki, 15 February 2024
Fondia Plc
Board of Directors
For further information, please contact:
Group CEO Harri Savolainen
tel. +358 40 502 1919
Certified Adviser Aktia Alexander Corporate Finance Oy
tel. +358 50 520 4098
FONDIA IN BRIEF
Fondia solves the legal needs of companies by combining the best services from internal legal departments and law firms. Fondia operates in Finland, Sweden, Estonia, and Lithuania, and the Group’s net sales in 2023 were EUR 26.1 million. Fondia employs over 190 people.
Distribution:
Nasdaq Helsinki Ltd
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