ECIT : Interim Report Q1 2024

Interim Q1 Report 2024

Q1 2024

• Q1 2024 performance was affected by the timing of Easter 2024 due to fewer working days. Three working days equal ~4% less working time (plus the effect from Easter vacation) in Q1 2024 compared to Q1 2023.
• Revenue was NOK 999 million (862), with a revenue growth of 15.8% (25.9%). Organic growth was 3.8% (10.8%), and M&A growth was 10.5% (12.1%).
• Despite Easter's impact, organic revenue growth was supported by reasonable growth in the F&A and Tech divisions, whereas parts of the IT business continue to face macroeconomic and local political headwinds.
• During Q1 2024, three companies were acquired, one of which is an associated company. Acquired annualised revenue, including acquired customer portfolios, represents NOK 39 million (NOK 37 million).
• With an EBITDA margin of 11.2% (13.4%), the estimated financial impact of fewer working days is at NOK +15 million.
• The cost-saving program announced in late February 2024 is in progress as planned.

Total revenue (NOKm)

(NOKm)

Revenue

EBITDA

EBITA

EBIT

Profit for the period

Free cash flow

Adjusted diluted EPS

Total revenue growth

Organic revenue growth

M&A revenue growth

EBITDA-margin

EBIT-margin

EBITDA (NOKm)

Q1	Q1
2024	2023	Growth
999	862	15.8%
112	115	-2.9%
77	86	-9.9%
49	65	-24.1%
28	49	-42.4%

70 111 -37.1%

0.05 0.07 -32.3%

15.8%	25.9%	-10.1 p.p.
3.8%	10.8%	-7 p.p.
10.5%	12.1%	-1.6 p.p.
11.2%	13.4%	-2.2 p.p.
4.9%	7.5%	-2.6 p.p.

01 | ECIT INTERIM Q1 2024

Management Report

Financial performance in Q1 2024 was impacted by the timing of Easter. The production hours were ~4% lower than in Q1 2023. Also, the vacation attached to Easter 2024 affects the March hours.

Despite Easter 2024, organic revenue growth was 3.8%, which is perceived as reasonable. The F&A and Tech Divisions delivered acceptable organic revenue growth and are the main contributors to the organic growth in the quarter.

Part of the IT business - hardware/projects and IT consultancy

• continues to be affected by challenging market conditions due to the macroeconomic conditions. Although we see signs of stabilisation, the outlook remains somewhat uncertain. Other parts of the IT Division are performing in line with expectations.

The announced cost-saving program in late February is in progress as planned. However, the financial impact in Q1 2024 is limited.

As of 31 March 2024, the ownership share in subsidiaries (measured 50% / 50% by revenue and EBITDA) was 74.6% (68.8%). The ownership share is expected to increase gradually throughout 2024, as the ambition is 85% at year-end.

In April 2024, the credit facility increased by NOK 250 million, totaling NOK 1 billion, with bank covenants unchanged. The increased credit facility, combined with a solid cash flow, provides ECIT with a good financial position to continue to invest in business development, build organic growth, improve margins, and continue the M&A activity going forward.

Financial review

Q1 2024 revenue at NOK 999 million (862), representing a revenue growth of 15.8% (25.9%). Organic growth accounted for 3.8% (10.8%), while acquired revenue growth was 10.5% (12.1%). Currency development was positive by 1.5% (2.9%).

Q1 2024 EBITDA at NOK 112 million (115) with a margin of 11.2% (13.4%). The estimated impact of Easter timing (lower EBITDA) is approximately NOK +15 million. Also, parts of the IT Division continue to face macroeconomic and political local headwinds, which affect IT spending at our customers and, in turn, affect EBITDA.

Free cash flow at NOK 70 million (111). Net working capital was impacted by the timing of Easter, with delayed payments. The free cash flow generated in Q1 2023 was positively impacted by positive NWC fluctuations between Q4 2022 and Q1 2023.

Profit for Q1 2024 was NOK 28 million (49). Again, it was affected by the timing of Easter and by increased financial expenses due to increased debt. The result for the quarter explains the development of the adjusted diluted earnings per share at NOK 0.05 (NOK 0.07). ECITs share of profit for the quarter represents 64.0% (58.4%).

Net-interest-bearing debt, excluding the leasing effect, represents NOK 396 million (42). The increase was mainly attributed to acquisitions completed in the last twelve months and executing the strategy of increasing subsidiary ownership.

M&A activities

During the first quarter of 2024, three companies were acquired, two consolidated into ECIT and one associated company.

• Zirius AS (~25%)
• Frejs Konsulenter AB (100%)
• Företagsbyrån i Luleå AB (75%)

Zirius AS is a Norwegian ERP software company for customers in the upper SME segment. The investment strengthens ECIT`s position within accounting software in Norway and is a good fit for digital development in ECIT. Zirius AS has 13 employees and a NOK ~23 million revenue.

Frejs Konsulent AB is a Swedish F&A company with 12 employees and a revenue of NOK ~17million. The acquisition strengthens ECIT's presence within F&A in one of the largest cities in Sweden.

Företagsbyrån i Luleå AB is our second Swedish acquitision within the F&A business segment in Q1 2024 . The company has seven employees and a revenue of NOK ~11 million. The acquisition strengthens ECIT's presence within F&A in Northern Sweden.

Acquired companies (consolidated only) for the first quarter of 2024, including acquired customer portfolios in Iceland, represent NOK 39 million (37) in annualised revenue.

02 | ECIT INTERIM Q1 2024

Financial Highlights 2024

	Q1	Q1	Q1
(NOKm)	2024	2023	2022
Condensed Income Statement
Revenue	999	862	685
EBITDA	112	115	87
EBITA	77	86	58
EBIT	49	65	42
Transaction and restructuring costs	-5	-1	-4
Financial items, net	-8	0	3
Profit for the period	28	49	32
Adjusted profit for the period	33	50	25
Profit for the period attributable to
ECIT AS' shareholders, NOKm	18	29	18
Non-controlling interests, NOKm	10	20	14
Financial position
Total assets	3,918	3,233	2,747
ECIT shareholdes' share of equity	1,359	1,324	1,199
Non-controlling interest	466	356	207
Net working capital	-129	-77	-79
Net Interest-bearing debt ex. IFRS 16	396	42	-33
Net interest-bearing debt (NIBD)	658	260	184
Estimated option debt (not part of NIBD)	575	550	470
Net debt to EBITDA (Leverage ratio)	1.3x	0.6x	0.5x
Solvency ratio, %	46.6%	52.0%	51.2%
Cash Flow
Operating activities	102	140	80
Free cash flow	70	111	58
Investing activities	-72	-36	-105
Financing activities	-65	-70	56
Cash flow for the period	-35	34	31
CAPEX in % of revenue	0.9%	0.7%	0.6%
Software development in % of revenue	1.5%	1.7%	1.3%

	Q1	Q1	Q1
(NOKm)	2024	2023	2022
Key figures
Total revenue growth, %	15.8%	25.9%	26.6%
Total organic revenue growth, %	3.8%	10.8%	4.4%
Total M&A revenue growth, %	10.5%	12.1%	23.6%
Currency effect on growth, %	1.5%	2.9%	-1.5%
EBITDA margin, %	11.2%	13.4%	12.8%
EBITA margin, %	7.8%	10.0%	8.9%
EBIT margin, %	4.9%	7.5%	6.1%
Effective tax rate, %	23.4%	22.8%	22.7%
Other financial ratios
Recurring & repeatable revenue share	79%	78%	73%
Proforma revenue, last 12 months	3,707	3,145	2,586
Proforma EBITDA, last 12 months	508	461	378
Proforma EBITDA-%, last 12 months	13.7%	14.7%	14.6%
ESG Data (selected)
Full-time workforce (FTEs)	2,611	2,391	2,236
Gender diversity (F/M)	58/42	60/40	59/41
Gender diversity, managerial (F/M)	59/41	51/49	55/45
Employee engagement score (EES)	84	83	83
Ownership structure
Average majority share of revenue & EBITDA, %	74.6%	68.8%	68.8%
Majority share of profit for the year, %	64.0%	58.4%	56.9%
Majority share of adjusted profit for the year, %	67.4%	57.8%	57.2%
Stock-related key figures
Diluted EPS, NOK	0.04	0.06	0.04
Adjusted diluted EPS, NOK	0.05	0.07	0.03
Total number of shares issued ('000)	465,008	452,853	448,330
Total number of treasury shares ('000)	1,758	2,772	1,137

Notes:

EBITDA. EBITA and EBIT are shown before transaction and restructuring costs.

For definitions of APM's and other ratios, please refer to the section "Definition of Financial Highlights and Ratios".

03 | ECIT Interim Q1 2024

Financial Review - Group Performance

Results for the period

For the first three months of 2024, ECIT achieved a revenue growth of 15.8% (25.9%) with a total group revenue of NOK 999 million (862).

Organic growth was 3.8% (10.8%), and acquired growth was 10.8% (12.1%). Currency effects affected revenue growth by 1.5% (2.9%). The acquired revenue growth of 10.8% resulted from acquisitions made last year and the two companies acquired in the first quarter of 2024.

ECIT operates in 10 countries, with Norway being the most significant contributor to revenue, representing approx. 71% (69%). The second-largest country is Sweden, representing approx. 13% (15%) of revenue.

EBITDA before transaction and restructuring costs amounted to NOK 112 million for the first quarter of 2024 (115). The EBITDA result was negatively impacted by a lower number of working days due to the timing of Easter.

EBIT came out at NOK 44 million (64), representing a decrease of minus ~31%. The main reasons for the lower operating result are the Easter impact on the operating result and increased amortisation and depreciations, mainly from software investments and right-of-use assets (leasing).

In Q1 2024, financial items, net was minus NOK 8 million (-2), attributed to increased debt and higher interest rates than last year.

The profit for the period was NOK 28 million (49). Excluding one-off items, the profit for the period amounts to NOK 33 million, compared to NOK 50 million last year. With one-off items excluded, the adjusted diluted earnings per share amount to NOK 0.05 (0.07).

	Q1	Q1
(NOKm)	2024	2023
Profit for the period	28	49
Transaction & restructuring costs	5	1
Divestment profit	0	0
One-off items, total	5	1
Adjusted profit for the period	33	50
Attributeable to:
Shareholders in ECIT AS, NOKm	22	29
Non-controlling interests, NOKm	11	21
Shareholders in ECIT AS, %	67.4%	57.8%
Non-controlling interests, %	32.6%	42.2%
Diluted EPS, NOK 1	0.04	0.06
Adj. diluted EPS, NOK 1	0.05	0.07

The increase in our subsidiary ownership share is reflected in ECIT's profit share (adjusted), which now represents 67.4% (57.8%).

Cash flow summary

Cash flow from operating activities in Q1 2024 came out at NOK 102 million compared to NOK 140 million last year, representing a decrease of 27%.

The decrease can partly be explained by Easter timing's impact on earnings and last year's unusually high positive change in working capital. This was influenced by working capital development fluctuations between Q4 2022 and Q1 2023.

Cash flow from investing activities amounted to NOK negative 72 million compared to NOK negative 36 million last year. The acquisitions completed during the quarter mainly influenced the investing activities.

Free cash flow, adjusted for transaction & restructuring costs, net investments in tangible assets, and lease payments, amounted to NOK 70 million in the first quarter of 2024 (111). The development in free cash flow can mainly be attributed to the lower operating cash flow.

Cash from financing activities was NOK negative 65 million compared to negative 70 million last year. Transactions with minority shareholders mainly impacted the financing activities, including the exercise of increased ownership during the first quarter of 2024.

04 | ECIT Interim Q1 2024

Capital structure & finances

ECIT shareholder's share of equity

On 31 March 2024, ECIT AS shareholders' equity share amounted to NOK 1,365 million (1,324).

ECIT's portfolio of treasury shares amounted to 1,757,578 shares on 31 March 2024 (2,772,484).

The ordinary annual dividend for 2023 was NOK 0.06 per share and was paid out to the shareholders in April 2024.

Net interest-bearing debt ('NIBD')

As of 31 March 2024, the net interest-bearing debt amounted to NOK 658 million, compared to NOK 260 million last year.

The increase in net interest-bearing debt can mainly be attributed to acquisitions completed in the last twelve months and executing the strategy of increasing subsidiary ownership. Additionally, lease liabilities have increased, primarily due to the lease of our new headquarters in Fornebu, Oslo.

The financial gearing ratio (NIBD/EBITDA) was 1.3x on 31 March 2024, compared to 0.6x last year.

Leasing liabilities (IFRS16 lease accounting) have a material impact on the financial liabilities of ECIT and consist mainly of office rentals.

ECIT has the option to acquire the minority shares in its partly owned subsidiaries within an agreed period. Most options can be utilised at a price based on last year's EBITDA multiplied by a fixed factor.

The minority option obligation (i.e., the price to exercise all options to 100%) as of 31 March 2024 is estimated to be NOK ~575 million compared to NOK ~550 million as of 31 March 2023.

05 | ECIT Interim Q1 2024

	Q1	Q1
(NOKm)	2024	2023
Cash flow from operations	102	140
Cash flow from investing	-72	-36
Cash flow from financing	-65	-70
Cash flow for the period	-35	34
Cash flow from operations	102	140
Transaction & restructuring costs	5	1
Net investments, tangible assets	-9	-6
Repayment of lease liabilities	-28	-24
Free cash flow	70	111

Credit facility

As of 31 March 2024, NOK 612 million (302) of the credit facility has been utilised, leaving an undrawn balance of NOK 138 million (448).

The leasing facility has been utilised for NOK 7 million (12); the total available amount is NOK 43 million (38).

The credit facility has been increased by NOK 250 million in April 2024 to a total of NOK 1 billion. The bank covenants remain unchanged.

	Q1	Q1
(NOKm)	2024	2023
Revolving facility gross	750	750
Revolving facility utilised	-612	-302
Net revolving facility available	138	448
Leasing facility gross	50	50
Leasing facility utilised	-7	-12
Net leasing facility available	43	38

F&A Division	Total revenue (NOKm)
Highlights			12.5%
		30.8%	573
• The F&A division delivered a total revenue of NOK 573
30.0 %
million (509) for the first quarter, representing a growth
	509
of 12.5% (30.8%).
390
• Despite the impact of Easter timing, we continue to
observe good demand for our services in the F&A
division across countries. Organic growth remains
satisfactory, supported by up-sales and new customers.	Q1 2022	Q1 2023	Q1 2024

EBITDA & EBITDA margin (%)

		15.6 %
	16.9 %	90
15.7 %
	86
61
Q1 2022	Q1 2023	Q1 2024

• EBITDA was NOK 90 million (86), representing a margin of 15.7% (16.9%). The EBITDA result for the quarter was negatively impacted by a lower number of working days due to the timing of Easter.
• During Q1 2024, two new Swedish companies were acquired within the F&A division:
• • Frejs Konsulent AB strengthens our presence within F&A in one of the largest cities in Sweden.
  • Företagsbyrån i Luleå AB Progresso AS. The acquisition strengthens our presence within F&A in Northern Sweden.
• Consolidation and integration of acquired and merged businesses remain top priorities for us, along with implementing nearshoring in our subsidiaries' production setup.

(NOKm)	Q1	%	Q1	%
	2024	2024	2023	2023
Revenue growth	12.5%		30.8%
EBITDA growth	4.4%		39.2%
Revenue	573	100%	509	100%
COGS	-47	8.2%	-39	7.7%
Gross Profit	526	91.8%	470	92.3%
Personnel expenses	-362	63.1%	-315	61.9%
Other operating costs	-74	13.0%	-69	13.6%
EBITDA	90	15.7%	86	16.9%
EBITDA-%	15.7%		16.9%

06| ECIT Interim Q1 2024

IT Division	Total revenue (NOKm)
Highlights			13.7%
		18.7%
	15.0 %		404
• The IT division delivered a total revenue of NOK 404		355
299
million (355) for the first quarter, amounting to a growth
of 13.7% (18.7%).
• Challenging market conditions persist due to
macroeconomic headwinds and general uncertainty,
resulting in lower IT revenue growth. The timing of	Q1 2022	Q1 2023	Q1 2024
Easter also explains the lower organic revenue growth.

EBITDA & EBITDA margin (%)

	13.2 %
10.7 %	42
		7.5 %
32		30
Q1 2022	Q1 2023	Q1 2024

• We experience increased pressure on IT spending in the business areas of IT consultancy and hardware project revenue.
• On a positive note, the remaining business is meeting our expectations. Particularly our largest IT company within the division, which was formed in 2022 (representing +500 million in yearly revenue). The positive effects of the consolidation work are gradually becoming visible in the financials.
• EBITDA was NOK 30 million (42) for the first quarter, representing a margin of 7.5% (11.8%). The margin decline is partly attributable to the impact of Easter timing and the effects of Macroeconomic conditions.

07| ECIT Interim Q1 2024

(NOKm)	Q1	%	Q1	%
	2024	2024	2023	2023
Revenue growth	13.7%		18.7%
EBITDA growth	-28.3%		29.0%
Revenue	404	100%	355	100%
COGS	-147	36.3%	-111	31.3%
Gross Profit	258	63.7%	244	68.7%
Personnel expenses	-192	47.4%	-178	50.1%
Other operating costs	-36	8.8%	-25	7.0%
EBITDA	30	7.5%	42	11.8%
EBITDA-%	7.5%		11.8%

Note: Personnel expenses include cost to external consultants

Tech Division	Total revenue (NOKm)	Annual Recurring Revenue (ARR)
Highlights			55.9%		+24.1%
• Revenue for the quarter was NOK 54 million (35),		23.6%	54		103
representing a growth rate of 55.9% (23.6%). Annual	93.5 %
recurring revenue, which measures only software	35		83
revenue, has increased by 24.1%.	28
• The high revenue growth last year is attributed to M&A
activity from acquisitions completed last year.
• The Tech division continues to grow steadily during	Q1 2022	Q1 2023	Q1 2024	Q1 2023	Q1 2024
the first quarter. Revenue growth is primarily driven by
increased demand for software solutions, along with
a steady growth within our accounting and payroll

software services.	(NOKm)	Q1	%	Q1	%
• In Q1 2024, the Norwegian ERP software company Zirius		2024	2024	2023	2023
AS was acquired with an ownership share of almost 25%.	Revenue growth	55.9%		23.6%
The company offers ERP software for customers in the
Total EBITDA growth	n/a		n/a
upper SME segment. The investment strengthens ECIT's
position within accounting software in Norway and	Revenue	54	100%	35	100%
aligns well with our digital development goals.
Cost of HW and SW	-10	17.8%	-7	20.0%
	Contribution margin	45	82.2%	28	80.0%
	Personnel expenses	-37	67.5%	-20	57.1%
	Other operating costs	-9	16.4%	-7	20.0%
	EBITDA	-1	-1.7%	2	5.7%
	Capitalized Software	-15	27.6%	-15
	EBITDA-%	-1.7%		5.7%	42.9%

Note: ARR = Annual recurring revenue (ARR) refers to revenue, normalised on an annual basis 08| ECIT Interim Q1 2024

Shareholder Information

Share capital

Shareholders

Shareholders per country

As of 31 March 2024, the total share capital comprises 465,007,773 shares with a nominal value of NOK 1 each. The share capital consists of three share classes, with the B- shares traded on the Euronext Growth stock exchange.

Treasury shares

A total of 349,872 treasury shares were sold during the first three months of 2024.

A total of 908,967 treasury shares were acquired during the first three months of 2024.

On 31 March 2024, 1,757,578 shares were held as treasury shares, corresponding to 0.4% of the share capital.

Incentive scheme

During the first three months of 2024, costs related to the incentive scheme amounted to NOK 2.1 million.

An additional share-based incentive scheme was approved at the Annual General Meeting in March 2024.

Our shareholders are primarily located in the Nordic countries, with 59% of them based in Norway.

More than 65% of the shares are still owned by employees and management, with the top management representing 20% and employees and partners accounting for over 45%.

Per 31 March 2024, ECIT AS has no majority shareholders. Peter Lauring holds 49.9% of the voting shares of the Group.

Financial calendar

The financial calendar for 2024 is as follows:

Event	Date
Annual Report 2023	28 February 2024
Annual General Meeting	21 March 2024
Interim financial report Q1 2024	8 May 2024
Interim financial report H1 2024	22 August 2024
Interim financial report Q3 2024	7 November 2024

09 | ECIT Interim Q1 2024