Talenom Oyj

My name is Otto-Pekka Huhtala. I'm a CEO. And today, here are some other people who are explaining our things. Matti Eilonen, our chief financial officer, will open up our financial figures. And after that, Juho Ahosola, our new deputy CEO, will tell more about accounting business strategy. He has just nominated for this role. and this means that I can as a CEO focus more about separating our software business and leading that one. And then Lourdes Sandistepan who is our Country Director here in Spain will open more about accounting business opportunities and then after that Anxo Barreiro will speak about our software business opportunities here in Spain market. Some highlights from Q3. Our comparable net sales increased 2.4% and our cash flow improved significantly. to improve EBITDA and lower investment level. Matti will open more about this later on. Customer base in software business increased 4.7% annually. And as we have told, a strategic review of the potential separation of the Azure software business into an independent public listed company was initiated. And here you can see also figures and how this really gas flow after investments has improved. But Matti will open more about that later on. Some strategy review. We released it one year ago in October that we are going to start selling our software also for other accounting firms. And the beginning of this year, we started to, uh, we separated the software business as own business. And we started to invoice our own clients directly. And in, in February, we separated our management team that we have just, um, you host led, uh, accounting business management team. And I have led, um, this software business after that. And then of course we have the group management team. We had a good pilot sales project in Finland in spring. At the end of spring, we launched our brand easier. And our board made the decision in summer of a finalized strategy for the both businesses. And in September, Telenom initiated a strategy review of the potential separation of the Azure software businesses into an independent publicly listed company. This is a short strategy review and now I will give Juho. It's your time to go.

Thank you. Thanks, Otto, and good morning, everyone, also from my behalf. My name is Juho Ahosola, and as Otto said, I'm the one who's leading this Talenom's accounting business. And I'm going to now give a short presentation overview of this accounting business. And when I'm talking about Talenom, I mean this accounting business to be specific. Our agenda for this short overview, let's start look at Talanum in general. After that, a couple of points of strategy, our strengths after this potential carve-out. After that, let's cover this market, what kind of market potential do we see, and what kind of sources of growth we have identified. After that, as a last section, a couple of points of our accounting business as an investment. But let's move on. So about Talenam, who we are, what we do. So Talenam is an accounting company and long term partner for our clients, which are mostly SMEs. We have the same customer segment basically in all our countries, operating countries. And we help our customers with accounting services, payroll services, and different kind of advisory services as well, including, for example, HR services. We have been operating in Finland, as we know, for quite some time, since 1972, more than 50 years history from this industry. In Sweden, we started our operations in 2019, and here in Spain, 2021. Our mission in accounting business side is to help entrepreneurs succeed. Quite simple, but powerful mission. That's why we exist. And as a vision, what we want to be, we want to be most recommended financial partner by the people we serve and the people we work with. And that covers both our employees, which are super important to us and our clients as well. And there on the right hand side, you can see the main figures in terms of revenue and in terms of number of personnel right now after Q3. But that's Talenum in brief. Let's then have a look at our strengths after this potential carve-out. So first of all, we have a long history as an accounting company, as an accounting firm. We are established in 72. We have operated in this industry for more than 50 years. And that means that we have quite some knowledge about how to run an accounting office, how to run an accounting business. So this is basically not anything that's new to us. Then something I would like to point out what's important and not already mentioned. We have established management teams in all countries. We have management structures on place. And in addition to that, we have now this global management team in accounting business, which I'm leading. Second point is super crucial when it comes to our strategy. So during a couple of last years, we have clarified our operating model, which we call OneTalenum. And it covers our main processes, practices, ways of doing things. As an example, our leadership promise to our employees. And of course, we have also tested how this concept works and does it make sense. And there on the right hand side, you can see correlations between one index, as we call it, and customer experience, employee experience and profitability as well. And one dot there represents one team. And it means that when we apply these processes, these practices, we follow this one thing, so to say, our employee experience is higher, our customer experience is higher, and we are also more profitable. So this concept truly works. We also can see from this visualization that we have a lot of work to do, and we are working super hard in all countries with these processes and practices. Then third point I would like to talk about is the strong commercial capabilities. So we have been doing new customer acquisition quite a long time in Thailand. We have a lot of knowledge in terms of sales, in terms of marketing, how to acquire and attract new clients. And this is not that common in this industry. And we strongly believe in this and are willing also to further develop it. So to summarize, long experience from this industry, we have a concept that truly works, and then these strong commercial capabilities. These are strengths that we are seeing. Of course, in addition to these, we have many other things as well. These are the ones that I would like to point out. Let's move on to market potential. So accounting market, as we have previously explained, it's sort of fragmented. We can also recognize that trend of consolidation in this industry. And let's look at different markets that we are currently operating. So in Finland, market size is roughly 1.4 billion euros, and we have a relatively strong market share, almost 5%. And that's quite natural since we have been operating in Finland for quite some time. In Sweden, market is a bit bigger, 2 billion, and our market share is roughly 1%. And here in Spain, as we can see, market is quite massive. 12 billion an hour market share is super small. So a lot of potential here. But I would like to say that we have a lot of room for growth in basically in all our countries. And we definitely want to grow in Finland, in Sweden over time and in Spain as well. Then how we are planning to leverage this market potential and how we are planning to grow. So we have identified three sources of growth. So first of all, organic growth. So as I explained, we have a long history in selling new clients in this industry. And that's what we are going to do in the future as well. focusing on new customer acquisition in all countries. It's the hardest way of growth, but it's super important to us. Then second point, acquisitions. As we know, we have conducted multiple acquisitions during the last years in all of our operating countries. And in the future, we are going to do acquisitions, selective acquisitions as well. I also would like to say that we have learned a lot during past years and we have good learnings how to identify good companies where our values are aligned and what truly works with us. But acquisitions, selective acquisitions, they play a crucial role in our strategy. And then last but not least, we have a strong customer base. our current customers and we want to grow with them as well. Different kind of services, upselling, cross-selling, helping our clients in different kind of situations that they are facing. That's important for growth for us as well. So to summarize organic growth, selective acquisitions, and then also our current clients. Then last slide from my behalf. So Talanom accounting business as an investment. So a couple of points how this accounting business could look from investor perspective. So first of all, our business model, it's quite defensive. So to say revenues are largely recurring and these services, payroll services, accounting services, are mandatory in a way to our clients so our business is quite defensive also our profitability in this business is solid we have a good cash flow positive cash flow and in the future that enables both dividend and investments in growth as well And when thinking about investment, my last point is something I would like to point out, is that when we are investing, we're investing especially in growth. So sales, organic growth, and these M&A activities as well. And important thing is that these investments generate quite rapidly new cash flow to us. And this might be an important thing from investor perspective. And our target mid-term goal is plus 10% growth by those elements that we covered in previous slides. That was all from my behalf. Thank you very much and next Lourdes.

Good morning. Thank you. I'm Lourdes Santisteban, the country director of Spain since 2022, so three years or now. I'm really happy to have this presentation from Spain today. As we have seen already, there are huge opportunities in the market, and I'm going to talk a bit about market size, accounting market, digital maturity level that we are here now in as a country, and also the M&A opportunities and talent in Spain as a summary. So first of all, let's start with the market size. Here we can see the number of companies that are in the country and also the distribution of the size of the companies around Spain. And also aligned with our strategy, as you have mentioned before, our target market is the mid-sized customers, and we can see that it's almost 70% of the market already. When we see also the figures and the numbers of the total addressable market that we have in Spain, we can see these huge opportunities we have been mentioning up to now. Together with the number of potential customers we have, and we are constantly analyzing the accounting business itself, and we can see with these numbers in the screen that it is really automized nowadays. and there is still a lot of concentration in the companies which really low revenue it means uh headcounts of from one to three people more or less and it's starting to be a concentration in the market but slowly so there is a large number of companies addressing this market but huge opportunities especially because with the changes that the country is addressing with the digital changes also and this groups are stalling on coming to the country to change the industry um the opportunities are more on the bigger and higher accounting firm especially for searching for good quality services uh digitalization the level of investment of smaller companies is really limited and we will see a change on the tendency here soon Together with this, we would like just to have a few comments on the digital maturity of the customer. This is one of the reasons that Talenum decided four years ago to come to the country, knowing that the digitalization of the customers is still really low, as we can see from a barometer from the industry. The level of digitalization of these companies is still in the medium or even low site and only six percent of the customers consider to be on a high level of digitalization there are opportunities here also from our point of view because we can gain efficiency once the customers start to apply and use many often the tools that they will find in the market So, regarding the Talenum Spain timeline, just a short recap of our short history here in Spain. It's just for years that Talenum decided to come, as mentioned. It was in 2021 that we had the first acquisition, August, in fact, and it was one year later that we started to grow inorganically as we are mentioning here but also our strategy here as a part of the learning of Talenom of going abroad was starting by establishing the pillars or the core pillars of the company. It was in 2022 that we created the areas regarding HR, for example, IT, product marketing, sales. And with these pillars, we, the following year, in 2023, started to spread around the country and put layers of services on top of that because we were prepared to handle this this fast growth, in fact, in a year. 2024, it was our year of consolidation, as we mentioned here. We needed to consolidate the integration of this amount of companies and also starting to organize the whole Spanish organization in the Talenom way. Also appointing the managers, training the managers, focusing on maintaining, it was very important for us to focus on maintaining the organic growth of these companies that we had selected. to join Telenom while having before and our goal was to keep that level and also to strengthen the organic growth through establishing a potent marketing and sales team in Spain. 2025, it's aligned with the strategy of Telenom of the One Telenom concept. meaning to implementing in our offices the way of working together with the culture of the company also for the engagement of our employees and pushing on the same direction all of us organic growth as i mean driven always for us and inorganic growth that it's still continuing in spain and it's planned to continue as the country as we have seen and we will see also now it's really big and there are many opportunities These are the numbers for Spain now. So we can see the speed of the country in terms of revenue and in terms of number of employees. In 2025, the figures here are up to Q3. So that's why the revenue line is still not there. Where are we now in Tainom in Spain? So as a summary, we have presence in seven out of 17 regions, so still a lot of place. For us in the country, 16 acquisitions up to now, 330 people, 307 FITs. 6.5 thousand customers and the local management as commented in the history timeline are structured and established. So there is a strong organization already in place in Spain. This is a map of Spain to see the potentiality also and a small summary of where we are with our offices. But as we can see, there are still many spaces for Talenom to be present in the main cities and main provinces of the country. And the last point of my presentation is about the OneTalenom in Spain, aligned with Juho's presentation, or a short summary of what it does mean for us in Spain, the OneTalenom concept. So we summarized that in the way of working. So as mentioned, how we are as a company, what is important for us, for this integration concept that we have in Telenom, which is really important and different in the market, I have to say. So we have a clear objective for the organization, through the whole organization, a culture which is present in the teamwork, in the everyday of our accountants and our specialists. Of course, we put a lot of focus in the excellent customer experience. It's basic for us always, not to forget that it is through our customers that we grow, and it's the best way of growing, demonstrating that we have strong capacities on the customer experience and quality of our services. Processes and practices, we have a lot of experience as a company, 50 years of experience in making efficiency processes and working constantly on how to do our work best. and finally but not less important the stroke commercial capabilities as mentioned in before we have focused our growth in organic growth also on these companies that were growth driven already and we are here to maintain that this is our focus so now we have otto again from so is our site