Vmp Plc’s Interim Report January 1 – September 30, 2019: Vmp and Smile Combined

VMP PLC  -- COMPANY ANNOUNCEMENT  --  NOVEMBER 12, 2019 AT 8.00

VMP PLC’S INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2019: VMP AND SMILE COMBINED

July–September 2019 in brief

• The Group’s revenue was EUR 55.7 million (EUR 31.1 million in July–September 2018). Revenue increased by 79.0%.
• The Group’s EBITDA was EUR 4.5 million (2.8). EBITDA increased by 61.3%.
• The Group’s adjusted¹ EBITDA was EUR 4.7 million (2.8). Adjusted EBITDA increased by 68.5%.
• The Group’s earnings per share (EPS) was EUR 0.00 (0.04). The result was weakened by amortizations of goodwill amounting to EUR 3.0 million². Earnings per share excluding amortizations of goodwill was EUR 0.17 (0.16).
• VMP acquired Smile in August and Smile has been reported as part of VMP group since September.

January–September 2019 in brief

• The Group’s revenue was EUR 138.2 million (EUR 91.6 million in January–September 2018). Revenue increased by 51.0%.
• The Group’s EBITDA was EUR 11.1 million (7.2). EBITDA increased by 53.1%.
• The Group’s adjusted³ EBITDA was EUR 10.5 million (7.8). Adjusted EBITDA increased by 34.4%.
• The Group’s earnings per share (EPS) was EUR 0.01 (-0.23). The result was weakened by amortizations of goodwill amounting to EUR 7.4 million². Earnings per share excluding amortizations of goodwill was EUR 0.47 (0.11).
• VMP has strengthened its business with several acquisitions during the period. Smile is the most significant one, but also Extraajat and Corporate Spirit have complemented VMP’s business portfolio.

Outlook for 2019

VMP expects adjusted EBITDA to grow significantly during the financial period ending December 31, 2019 compared to the financial period ended December 31, 2018.

Key figures

Sami Asikainen, CEO

“COMBINATION OF TWO STRONG PLAYERS PROGRESSING AT FULL SPEED, GOAL TO BECOME THE MARKET LEADER”

“Combining VMP and Smile is without doubt the most significant event in 2019 so far. The acquisition was announced in July and was completed in late August. The acquisition has doubled the annual revenue of our staffing business. The combined company is a significant player in the HR services market and seeks to become the market leader.

The acquisition has naturally affected the operations of the combined company after the summer, as we have planned the combined organization and prepared a strategy and brand renewal, which we will announce later this year.

In the next few months our focus will be on combining the VMP and Smile businesses in practice. We work to ensure that our local units all around Finland work as unified teams, so that we can achieve the positive business synergies from the combination. Our main business, staffing services, is based on understanding the current needs of our corporate customers as well as fulfilling the employment wishes of our staffing employees. By operating in a united way, we can ensure that we serve both our corporate customers and our employees using the resources of the whole company.

During September-October we have renewed the group management team and modified our organization, so that we can efficiently manage the daily business in the new larger context. As part of the process, we initiated employee co-operation negotiations in October for re-organising the operations of the company. We seek to improve operational efficiency by centralizing our support functions, by harmonizing IT systems, and operating under fewer brands than earlier. We estimate that the combination will deliver cost synergy benefits of approximately EUR 5 million. A significant part of the synergies will materialize during the first year, and the remaining part during 2020-2021.

In the third quarter, our revenue grew by 79% to EUR 55.7 million (31.1). EBITDA was EUR 4.5 million (2.8). Adjusted EBITDA amounted to EUR 4.7 million (2.8). Smile’s revenue and results have been reported in VMP’s consolidated statements as of September. HR services market has continued growing, but growth has slowed down from previous years. Our own business has developed positively especially in HoReCa and retail sectors.

Our revenue for January–September increased by 51% and totaled EUR 138.2 million (91.6). Revenue increased particularly due to the acquisitions carried out at the end of last year and during this year. EBITDA was EUR 11.1 million (7.2). Adjusted EBITDA amounted to EUR 10.5 million (7.8).

During 2019, we have been actively developing our business also with M&A activities in line with our strategy. We have strengthened our staffing business by acquiring Smile, the third largest player in the market, as well as the retail sector specialist Extraajat. Additionally, we have acquired Corporate Spirit to expand our portfolio with organizational development services. We have divested Alina Hoivatiimi to increasingly focus on our core business. Acquisitions will be part of our growth path also in the future,

Eezy, our self-employment service, renews the ways you can work. The unit has developed positively and has grown significantly during the review period.

Our goal is improve our services for our employees and customers, among other things by investing in digital solutions. Our growth and scale benefits from acquisitions also provide us good possibilities to continuously increase our operational efficiency.

I strongly believe in the success of the combined company in the developing HR services market. We have the necessary resources to develop the market itself, as well as a positive attitude for doing something new, which provide us a good base to become a frontrunner in the market.”

Result publication event

A press conference for analysts and media will be held on Tuesday, November 12, 2019 at 10.00 a.m. Finnish time as an audiocast at . The conference will be held in Finnish. The conference will be hosted by Sami Asikainen, CEO, and Hannu Nyman, CFO. During the presentation, there will be an opportunity to ask questions.

The presentation material will be available at company website before the conference at

A recording of the audiocast will be available at the same website later on the same day.

More information:

Sami Asikainen, CEO

tel. +358 (0)40 700 9915

Hannu Nyman, CFO

tel. +358 (0)50 306 9913

Certified Adviser: Danske Bank A/S, Finland branch, tel. 4

Attachments: VMP Plc Interim Report January–September 2019

¹ In July–September 2019, EUR 0.2 million in personnel expenses relating to severance payments have been entered as items affecting comparability.

² The financial statements and interim reports of VMP Plc are made pursuant to Finnish Accounting Standards (FAS).

³ In January–September 2019, a capital gain of EUR 1.2 million from Alina divestment and EUR 0.6 million in personnel expenses relating to severance payments have been entered as items affecting comparability.

⁴ Adjusted EBITDA is estimated combined pro forma EBITDA of last 12 months (FAS).

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