Welcome to the North Media Q3 report. Throughout the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. I'll now hand the call over to our speakers. Please begin your meeting.
Hello, everyone, and welcome to this presentation of North Media's nine-month result and the full year outlook. Next slide, please. My name is Kåre Wigh. I'm Group Executive Director and CFO, and I'm joined today by Executive Director Henrik Løvig Jensen. Henrik is here in his brand-new capacity as Executive Director for Business Development and Acquisitions, but he will cover his former responsibilities, the online businesses BoligPortal and Ofir. We will kick off the presentation with a couple of Q3 highlights, and we will then detail the business' performance and outlook. The second part of the presentation include group financials, full year outlook, and a brief update on how we're progressing with our strategy, followed by a Q&A session. With these opening remarks, let's go to the highlights from Q3 on next slide, please.
Overall, group results are as expected in Q3 and allow us to upgrade full year guidance. We're narrowing the outlook ranges by raising the low ends in the ranges for both expected revenue and EBIT. Consolidated revenue in Q3 is down 5% for two reasons. Firstly, FK Distribution had one extra distribution week last year. Secondly, Q3 last year saw some positive impact from the reopening of Danish business life and society after COVID-19, whereas Q3 this year was business as usual. Revenue in Last Mile declines by 8%, while all three businesses in Digital Services record growth, so that combined growth in Digital Services is 13%. Group EBIT is just shy of DKK 56 million versus DKK 60 million last year.
All businesses except Wiki are profitable, and Ofir delivers solid margin improvements, while margins in FK Distribution and BoligPortal softens but remain at attractive levels of around 25% and 31% respectively. Cash flows from operations total DKK 60 million versus DKK 41 million in Q3 last year. A solid evidence of the normalization of working capital from June and onwards after a period where deadline extensions for public payments muddied the picture. We will detail all this during the presentation. First, let's turn to FK Distribution on the next slide, please. FK Distribution, as just mentioned, had one extra distribution week last year, a total of 40 weeks last year versus 39 weeks this year, and the absent week aggravated the structural volume decline. Consequently, revenue was down 5% year- to- date, where revenue amounted to DKK 641 million.
We expect full year volumes to decline by 5% and 4% on a like-for-like basis, disregarding the impact from the number of distribution weeks. The large supermarket chains, electronic chains, builders, merchants, and other large retailers continue to rely on leaflets to drive customers into stores. In August, FK Distribution extended the agreement with one of Denmark's leading retailers, Salling Group, through 2024. Contract negotiations with other large retailers proceed as planned. Volumes from large customers this year are either unchanged or even higher than last year. Oppositely, smaller customers reduce volumes. They may be more exposed to structural changes in retail, or they may have been hit harder by COVID-19 lockdowns, forcing them to reduce marketing spend. The extended contract with Deutsche Post was effective as of July first, where FK Distribution started packing leaflets for 480,000 households in northern Germany.
Due to COVID-19, the actual number of leaflets per household was slightly lower than expected. We continue to explore the potential for packing up to 2 million German households, and the dialogue with Deutsche Post on this is ongoing. I would also like to mention that we have just entered into an agreement regarding installation of solar panels with battery energy storage system at the FK Distribution property in Taastrup. Once the facility is installed, 39% of the power consumption will be generated by in-house solar panels. The investment will be approximately 15 million DKK. A similar system is planned for the FK facility in Tilst, Jutland. Earnings year- to- date was 175 million DKK. Despite the lower top line, FK Distribution succeeded in lifting its EBIT margin slightly on continued cost savings and optimizations across operations.
Moving to outlook, we narrowed the guidance range in May, we upgraded the outlook in August, and today we're narrowing the EBIT outlook within the range while we're upgrading revenue guidance. I will detail more on this later. First, I'll hand you over to Henrik Løvig for a review of BoligPortal results on the next slide.
Thank you, Kåre. Revenue from our home rental platform, BoligPortal, is up 3% year- to- date, and revenue increases to 64 million DKK. In Q3 growth is 1%. As you probably already know, we are in the process of refining BoligPortal's business model and platform. We're introducing new subscription-based SaaS products and services, but we're also giving away certain products for free to solidify the new platform. These changes were expected to leave a mark on performance this year, and so they did. Furthermore, the introduction of new SaaS products and services is slightly behind schedule. We've almost completed the worksheet for 2021, and I'll detail that in a little while. The worksheet was very ambitious, and maybe it was a little bit too ambitious.
Finally, we also see that the home rental market in Denmark in Q3 experienced the biggest drop in supply in 10 years on the Danish market. We see fewer available rental homes, reduced vacancies, and a decline in the number of relocations. This also impacted the advertising fees from landlords and tenants on the marketplace. If you combine these three adverse factors, giving away products for free, slightly delayed product launches, and reduced market supply, you will miss your targets. On this basis, we are pleased that BoligPortal produced healthy profit margins of more than 31% year to date and close to 31% in Q3, a testament to the solid foundation of the business we run. Considering the market setback, we have lowered guidance slightly.
We still expect full-year revenue to exceed that of 2020, but we now expect an EBIT result on par with last year, around DKK 20 million-DKK 28 million. Next slide, please. Now, I would like to sum up how we're progressing with the new platform. Basically, we are adding three new revenue streams with significant commercial potential in addition to the traditional marketplace we've run on, up until now. The marketplaces in Denmark and Sweden remain our focal points. This is where we match home seekers and landlords in a controlled environment with validated rental supply. The addition of new revenue streams are designed to create latter and more stable income and cash flows from new SaaS products and services, even in periods with market fluctuations. What have we accomplished this year?
Well, starting with the marketplace, the basis for all changes is a powerful new back-end motor, a completely new data platform which we implemented earlier this year. This is where we grow from. Moving to the second item, the market data. We have recently added the data insights product to the platform. This product combines all intelligence and supply and demand generated on the platform. We show pricing sensitivity and tenant profiles, et cetera. We have also launched a new customer-specific solution, allowing user to access data virtually and gather information even down to street level. The first clients have signed up and the pipeline is growing. Turning to the third revenue stream, landlord s ervices. We have this year launched two new freemium products intended to drive more users to the marketplace.
A brand-new digital rental contract was launched in Q2, and a new digital move-in inspection report was launched in Q3. Further to this, we will add a range of subscription-based services to help landlords administer their properties and portfolios. The last and fourth revenue stream is tenant services from third party providers. We offer various services to tenants who found their new home on BoligPortal's marketplace. Services currently include electricity, insurance and broadband. All service providers pay BoligPortal a reference fee for the lead or customer, and we've seen good traction and high conversion rates within especially electricity, which was the first service that we launched.
To sum all of this up, we have almost completed the long worksheet for 2021, and we are working hard to settle the outstanding items within landlord services one way or the other. With the current service offering, however, we do believe that we are very well positioned to see growth in the subscription-based business going forward. Next slide, please. Our job platform, Ofir, had an excellent Q3 with revenue growth of 71%. Q3 was in fact the fifth consecutive quarter with high double or even triple digit growth.
Looking at the figure on the top, you may get the impression that growth is slowing, but please bear in mind that the comparative period in the first half year of 2020 was impacted heavily by COVID-19 lockdowns, whereas Q3 2020 was a high growth quarter for Ofir last year although Q3 is actually off season. The Danish job market remains strong. The economy is recovering rapidly after COVID. Unemployment is very low, and qualified labor is high in demand in many industries. Accordingly, Ofir is able to expand the momentum, which started to build up last year after Ofir's investments in infrastructure and the job universe.
Growth year- to- date is 79%, elevating revenue to almost DKK 26 million, while EBIT improves to a profit of more than DKK 4 million. Our progress is driven by higher volumes of job postings at better prices and a higher share of larger job advertising packages. Oppositely, income from SaaS software licenses continues to decline, and that is fully as expected. To illustrate the growth in the core business, Ofir initially targeted 36,000 job postings this year. We now may be looking at around 42,000 job postings, a growth of close to 30% over last year and around 6,000 more jobs compared to our expectations. Ofir has attracted many new customers, particularly small and medium-sized private companies, but also larger enterprises.
There's a growing willingness among employers to apply new methods to attract the right candidates, and Ofir is very, very well positioned in this context with its recruitment marketing approach and its groundbreaking use of social media to attract passive job seekers. We are now calibrating the company to sustain sustainable growth. Investments in growth capabilities include a new data team and other new hires. These investments subdue margins slightly in Q3 and will also impact Q4. We've nevertheless upgraded the full year outlook to a record EBIT result between DKK 4 million and DKK 5 million and a top line of DKK 34 million-DKK 36 million. This implies more than a doubling of revenue in two years. Back to you, Kåre, with a review of Bekey. Next slide, please.
Thank you, Henrik. Bekey's business with digital key solutions for home care in municipalities was stable year to date, and recurring license and service income did in fact grow by 20% in Q3. Overall revenue nevertheless declined 11% year- to- date to DKK 7.5 million. This was due to a decline in one-off hardware-related income. Last year, Bekey onboarded three new home care customers, and they all paid an upfront fee to access Bekey systems and installations in private households that need home care. This year, Bekey had planned to extend the cooperation with three existing home care customers during the first half year, and these extensions were meant to trigger similar upfront fees. All three implementations were postponed, and this weakened results year- to- date.
Two of the postponed installations implementations will start in November and finish in January, February, while the third has been rescheduled to 2022. Commercial traction increased in the new market segments distributors, where Bekey caters to the needs of suppliers of grocery, grocers, parcels, post, and et cetera. In the segment properties, which addresses property administrators and others with legitimate business in secured multi-story buildings. Two new clients were onboarded in Q3, a large property administrator and a nationwide distributor of groceries, while a third newcomer, the online supermarket nemlig.com, contributed to growth in Q3. Despite these progresses, it's obvious that Bekey must accelerate commercial build-up in these segments. EBIT was a loss of DKK 5.9 million year to date and DKK 2.4 million in Q3. We adjusted the full year outlook slightly and now expect full year EBIT to be on par with last year.
Next slide, please. Now, let's turn to the group's financial highlights year to date. Revenue in the first three quarters was down 3% to DKK 748 million. Lower volumes in Last Mile were partly offset by 11% growth in the Digital Services. EBIT was up DKK 5 million to DKK 187 million. The profit margin increased by 1.5 percentage points to 25.1%, and both Last Mile and Digital Services improved margins. Share of profit in associated companies was a plus of DKK 2.6 million. The 50% owned company, Lead Supply, is progressing well, and the fintech platform recently celebrated its best ever quarter, driven by high growth in both lending volumes and the number of visitors to the different sites.
Group net profit was DKK 207 million versus DKK 218 million last year. The drop was mainly due to lower return on securities. Net profit, excluding return on securities, was DKK 147 million, an increase of DKK 5 million. Cash flows from operations were DKK 127 million, down from DKK 221 million. Last year, we benefited from postponed payments of VAT, employee taxes, and corporate taxes due to COVID. This year, we settled both last year's outstanding payments and ordinary payments scheduled for 2021. As of June, the working capital is back to normal and cash conversion remains high while investments remain low. Finally, the capital resources increased to DKK 840 million despite dividend payments of DKK 91 million and despite settling last year's postponed payments.
All in all, solid results enabling us to clarify the full year outlook on the next slide, please. Starting with Last Mile, we're raising revenue guidance to DKK 875 million-DKK 885 million, and we're narrowing the EBIT range to two hundred and forty to two hundred and forty-five million DKK. The upgrade is driven by FK's good results so far and the prospects of a solid Q4. Hence, Last Mile is expected to improve earnings relative to last year despite a small revenue drop. Moving to Digital Services, we're lowering the bar slightly. We now expect revenue to come out between hundred and forty-five and hundred and fifty million DKK, yielding an EBIT result of 23-27 million DKK. A decent improvement over last year, but somewhat below our original target, as BoligPortal and Bekey fell short of expectations.
On this basis, we now see group revenue between DKK 1.02 billion and DKK 1.035 billion, while group EBIT is projected at DKK 255-265 million. Hence, earnings are expected to exceed last year's record result of DKK 240 million. A satisfactory outcome considering this year's minor hiccups in Bekey and BoligPortal. The outlook is subject to COVID-19 and other risks. Currently, the pandemic does not affect Danish business life. We assume this will also be the case in the remainder of the year. Next slide, please. Now, let's end this presentation with a wrap-up of the progress we're making with the strategic priorities which we announced in February. FK Distribution is in the process of extending its contracts with major Danish clients, and this will solidify the business platform going forward.
The cooperation with Deutsche Post has been extended, and that's one of the efforts needed to offset the modest structural volume decline in Denmark. Other efforts include adding new products to the portfolio, developing new offerings, and strengthening the digital activities. There is potential for more business with Deutsche Post in Germany, and the German contract could eventually be a stepping stone for additional business outside of Denmark. This is important to say, we take one step at a time, and this will take time. BoligPortal is expanding its addressable markets by rolling out the new platform. Despite the delayed product launches, BoligPortal is well-positioned to accelerate growth of subscription-based SaaS products and services going forward. Ofir is ahead of plan.
The strengthening of social media and data research capabilities, as well as the extra sales and marketing muscles, aim to sustain Ofir progress, particularly among private employers. Bekey's transformation from hardware to software business is progressing, and recurring license and service income constituted 63% of revenue in Q3. Still, it is obvious that Bekey needs to speed up the onboarding of new customers to gain critical mass. Bekey is currently in the process of refining its go-to-market strategy to better capitalize on the positive feedback from potential customers. All in all, we continue to add initial check marks to some of the important priorities. We will provide a thorough update on strategy and financial ambitions in the annual report in February. Next slide, please. This is what we had planned. Henrik and I are now ready to take your questions.
Operator, please go ahead with the instructions for the Q&A session. Thank you.
Thank you. If you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial 02 to cancel. Our first question comes from the line of Lars Kjærgaard of ABG. Please go ahead. Your line is open.
Thank you, Kåre and Henrik, and congratulations on your strong Q3 results. I have a question first on the BoligPortal. You mentioned that there's a decrease in the volumes of the Danish rental market. If we assume that this decrease will continue, can the new services that you're rolling out in BoligPortal compensate for this on both the growth and the margin level? Thank you.
Yeah. Let me answer that question. It is actually the plan that the new services and the new revenue streams should help us have a more sustainable business so that we're not dependent on market fluctuations. Because what we actually are going to do, we are just moving further than only having business once a rental is advertised and available on the market. Hopefully, we can have business running between those periods. That's basically at the heart of our plan.
Are these services already fully initiated next year? I appreciate that you've previously given some comments that you expect, you know, rollout to continue and BoligPortal continue to make new products. Can we already expect next year that you will be able to compensate for perhaps a decreasing market with the new services?
Yes, I think so that we have launched part of those services this year. The new data platform, we can continue adding customers to that. I think especially when it comes to the subscription for subscription services for landlords, basically helping them administer their portfolios, it would be services rolled out over the coming years would not end next year. Hopefully we have ideas and plans and products that we can launch for a number of years.
Thank you very much for that commentary. Perhaps on FK Distribution, you mentioned there's a strong retention rate among the larger customers that you have, but perhaps some of the smaller contracts within FK Distribution or clients are reducing their volumes slightly. Could you talk a little bit about the levels of those two, let's say fluctuations?
It is as we have have said earlier that we in past years have saw around 8% volume decline year-on-year. While we going forward we see a more sort of a lower rate of volume decline of around, say, this year we see this 4% on an equal number of distribution weeks. What we see is on the stronger and the bigger clients, they, as we have written, actually maintain the volume or even increase it. While some of the smaller customers reduce volumes more than that would be more than 4% and more than 8%. Either because they are struggling with the development in general or because they are more hit by the COVID-19.
It's more, we think, and the continued contract with, for example, Salling Group, a three-year contract, we think understates that the leaflets continue to be the most important media to drive customers into your stores.
Among the smaller customers, would you say that the share of wallet for physical advertisements is the same for FK Distribution, or have they reduced expenditures on physical advertisement and then perhaps spent their marketing capital on something else, for example, digital advertisements?
I think it's difficult to put all the smaller retailers under sort of one. In general, we know that the digital advertising becomes more and more complicated with the GDPR regulation and pricing going up. In terms of share of wallet, it's difficult. I think for some it may have reduced, but on the other hand, because digital advertising gets more and more expensive, on the other hand for others it could also be on the same where they sort of just reduce the general spending. I think it's difficult to put everybody in the same sort of group.
That's clear. Perhaps just as a last question, it's now one and a half years since FK Distribution appealed the ruling from the Danish Competition and Consumer Authority in regards to misusing a market leading position. I was just wondering if there's an update on this case.
There's no news on this case.
Is there any, you know, prospects of when we can expect some news? How long does it typically take?
No. I mean, it will take a couple of years. When the ruling came last year, we immediately changed the contracts and split the contracts between the physical distribution and the digital distribution. There's no impact. A few customers opted out of the digital business. As we've said before, the impact of the ruling was quite small, but this could take years. It's more like a matter of principle that we think since the ruling implies that there will be no competition from, for example, Facebook or Google in the Danish market for showing digital leaflets. We simply don't agree with that.
As a principle, we sort of have asked for a second opinion on that, and it will take a couple of years.
That's super. Thank you very much for your time, both of you, and have a great day.
Thank you.
Thank you. Next question comes from the line of Steve Silver at Argus Research. Please go ahead, your line is open.
Good morning, and thanks for taking the question. My main question is about Bekey. Thank you for the color in terms of giving the timeline for the conversion of the delays for these new home care customers. I'm just trying to get a sense into looking ahead to 2022, whether the need to bring on new customers, whether that's more of a factor of just closing maybe interest in the pipeline that's already in place, or if building out the customer base in that segment will require just more initiatives in terms of building out the overall pipeline in that segment. Thanks.
Yeah. Thanks, Steve. I think for Bekey we cannot really comment on 2022 yet, of course. We will do that together with the annual report. Bekey is two things really, right? We have the home care business where, as we have said before, we don't really see that as a growth business. It's a stable, good business where we are right now servicing more than 70 municipality home care customers in Denmark and Norway. We can't really control when they decide to implement and when it fits into their time schedule. It is going up and down. That being said, what we're doing to reduce the impact from delays is to increase the license and the recurring license.
Also, the home care customers pay to utilize our service. We begin to see some impact from that, as we have also written in the Q3. That being said, we are in constant contact with municipalities and home care customers whenever they go into the market and ask for potential providers of our services. We opt in to those, and we don't really know when they're going into the market and they are ready to seek for digital locking solutions on the home care. On the other part of Bekey, the property and the distributors, that's where we change the way we go to the market.
The distributors and the property administrators have different needs and use of the Bekey solution. We need to, and we are working on changing the way we go to the market to get some more speed on this because it is not going fast enough.
Okay, that's helpful, Greg. Given, I guess the recent changes, I guess, to the executive team, just in terms of the focus on M&A, I just wanted to ask if there's any change in strategy, just in terms of your thoughts, big picture in terms of the potential for M&A to expand the Digital Services unit. Thanks.
Well, the overall acquisition strategy is unchanged. We have in the strategy we launched in February set aside DKK 200 million for acquisitions over the next three years. That ambition and strategy is not changed. It's also completely the same that we will do acquisitions maybe within areas where we are already operating. We are not going into something completely new. Acquisitions will most likely be within Digital Services and should be within the areas where we can see we can add some.
Yeah, it's an old word, the synergy word, but it really has to be something where we can add something to that business and accelerate the scalability, because this is what we sort of aim at in all our businesses, is the scalability. If you can find something within, most likely Digital Services, add the scalability, and thereby grow our businesses faster, we are willing to do acquisitions. Not at any cost. We are not in a hurry. Things are quite expensive right now, but we are looking.
Okay, great. Thank you for the additional color. Congratulations.
Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypads now. There seem to be no further questions from the phone line, so I'll hand back to our speakers.
Well, with these good questions, I just would like to thank you all for dialing in today. As always, you're more than welcome to reach out to Henrik and myself. If there's any other questions coming up, do reach out and we will be happy to have a one-to-one meeting or answer any other questions you may have. Thank you for today.