To the North Media Interim Report Q1 2022. Throughout the call, all participants will be in a listen-only mode, and afterwards there will be a question and answer session. I'll now hand the call over to speakers. Please begin the meeting.
Hello, good afternoon, and welcome to this presentation of North Media's Q1 report and the full year outlook. First of all, my name is Lasse, and I'm Group CEO. With me today is CFO Kåre Wigh. Kåre and I will take you through the presentation, which will end with a Q&A session. Let's head on. Q1 results was expected, and we made good progress with some of our strategic priorities during the quarter. For the total group, the revenue was up 2% to DKK 248 million. We saw a 20% growth in our Digital Services for the Q1 , and you can say that this is the kind of growth that we want to see in this business going forward.
In our other line of business, Last Mile, we see a stable revenue with a top-line decrease by 0.5%. As a whole, the group EBIT results of DKK 48 million was down DKK 16 million year-on-year, which is in line with our expectations for the full year. EBIT for Last Mile and FK Distribution was impacted by external factors, which I think impacts companies around the whole world right now. Primarily, we saw higher distribution and packaging costs in our line of business. In Digital Services, EBIT was impacted by investments to accelerate growth going forward, primarily new hires in IT and sales, platform investments, and the acquisition of Boligmanager. Finally, group net profit was down to -DKK 35 million following a negative return on securities.
First of all, return on securities was a minus of DKK 95 million in the aftermath of the Ukraine war, high inflation, and more volatile financial markets. Still, the past year's positive return on securities illustrates that investing excess capital in listed securities does create more value to shareholders over time than paying negative interest rates to banks. Our free cash flow was largely stable as plus DKK 35 million, and the cash conversion remains high. With these highlights, let's turn to FK Distribution on slide 3. Looking into FK's revenue in Q1 was relatively stable at DKK 208 million.
As you know, we are always focused on volumes, and we saw volumes decrease by 2%, which we see as a solid indication that national supermarket chains and other large retailers continue to rely on leaflets as the most efficient way to attract customers. Furthermore, consumers' interest in leaflets is growing amidst high inflation and booming prices for energy, food, and other necessities. Again, the booming prices will lower the loyalty and increase the competition in the retail market, which is good for us. In reply to this, large supermarket chains increased their focus on special offers, private labels, and affordable product categories. This is obviously good news for the demand for FK's products and services, but we need to see this development sustained beyond a single quarter of course. Earnings in Q1 were down.
Earnings in Q1 were down as expected following significant cost increase across the entire value chain. Still, the EBIT margin was 23%. Despite the increase in cost, the outlook for 2022 is unchanged. That means that revenue is down 3% to DKK 850 million-DKK 870 million, and we expect that volume declines around 4%, partly offset by moderate price increases combined with changes in product and customer mix. In our other line of business at FK, we expect higher revenue from minetilbud platform and the packaging operation for Deutsche Post. EBIT results for FK Distribution is expected between DKK 190 million and DKK 210 million following significant cost inflation within distribution and packaging.
That means that we are looking into higher fuel prices, higher wages for deliveries, and higher expenses for recruiting and retaining deliveries. In the market, higher prices for paper and raw material shortages prompting customers to print on thinner paper, and that again will challenge the efficiency in our packaging operation. Even though, so far, cost inflation is manageable and within our projections for the full year. With this, I'll hand you over to Kåre and BoligPortal on slide four. Kåre?
Thank you, Lasse. In BoligPortal, we are now back on double-digit growth in Q1 after last year's significant changes to both the business model, data platform, and the product offering. We saw 11% growth in Q1 and an all-time high revenue of almost DKK 23 million. This growth was driven by new products. That is service offerings to tenants from partners and BoligPortal's own unique Data Insights market data solution. We also saw some growth in income from Danish landlords as well. In Q1, we did make the Data Insights product available in modules to potentially address a broader customer group and thereby fast-track the market uptake. EBIT margins, as expected, they softened by the acquisition of Boligmanager which we took over as from February 1st.
This is a very important acquisition where we add housing and real estate administration to portfolio, and we thus turn BoligPortal into a one-stop provider where we are capable of meeting all significant needs of landlords and real estate administrators. This integration of Boligmanager is on track. For the full year 2022, the expectations are unchanged. We expect double-digit growth around 13%. Boligmanager and other SaaS solutions for landlords will not impact sales before the late part of 2022. Revenue expectations of between 93-99 million DKK and lower earnings despite the revenue growth as we are investing. EBIT unchanged. Result expected between DKK 18 and 22 million.
We see higher IT and wage costs, and more than half of this increase in wages are full year effects from hirings we did in 2021, also in more salespeople. The Boligmanager acquisition is expected to burden EBIT with DKK 8 million. It consists of costs from upscaling growth as well as depreciation of the purchase price and provisions for the remaining purchase price for the 49%. I should say also that by the end of 2026, the entire purchase price of Boligmanager will have been expensed directly to the P&L. We remain confident that this money is well spent and that this will contribute to an acceleration of growth on the other side of 2022. Next slide, please.
In Ofir, we continue to deliver very high growth rates, and we saw all-time high quarterly revenue in Ofir. Revenue was up 47% to 11 million DKK, and within the core business job ads, we even grew by 54%. This is the seventh successive quarter with double- or even triple-digit growth. In this quarter, Q1, we also did an exclusive agreement to handle all job ads from a very large Danish company nationwide. We did also see a record number of job ads in March, and this we see as a testament to the growing acceptance of Ofir's recruitment marketing approach, where we, Ofir, actively turned to potential candidates, the passive job seekers, rather than waiting for the job seekers visit our Ofir job portal, i.e. the active job seekers.
In this quarter, we also saw a higher share of premium ads at better prices. In the quarter, earnings were up but margins slightly down as expected, with the full effect of last year new hires within sales, marketing and data analysis. For 2022, as a full year, we expect continued double-digit growth in this attractive market. Revenue will be between DKK 42 million and DKK 46 million, equaling a 22% growth. This means that we expect for the latter part of the year, we expect growth rates to normalize compared to Q1. Earnings will be on par or slightly above last year. That is between DKK 5 million and DKK 7 million due to new hires, and the work to develop a completely new data platform.
This new data platform is important because it will further strengthen the data and analytical work, which is very important for Ofir's trajectory and preparing for the next jump. Next slide please. After last year's disappointing results in Bekey, in Q1, it was an okay performance. Revenue was up 12%, driven by municipality customers. There were two installations that were originally scheduled from last year that took place now in Q1, and there also was implementation of one new municipality customer. We continue to have a relentless focus on building high volume business in all customer segments. That is municipalities, distributors and properties. We added an important new customer in the property segment in Q1, CEJ Ejendomsadministration, which is one of Denmark's largest property administrators with a portfolio of around 1,500 properties.
We also added a minor customer in the distributor segment in Q1. We have a number of initiatives to crack the code going as planned, but it will take time. The 2022 outlook is unchanged. We expect revenue to grow to between DKK 25 million and DKK 30 million, driven by municipalities and properties, and the EBIT will be a minus between minus DKK 12 million and minus DKK 14 million. Remember that all development and installation costs will be expensed. Next slide please. Now let's take a look at Lead Supply, which is our 50% owned fintech company, where we had an excellent quarter with all-time high results. Revenue grew by 83% to DKK 19 million. EBIT was a result of DKK 5 million, which is an EBIT margin of 26%.
Our share results in Q1 is DKK 1.9 million, as we consolidate 50% of the net result after tax as an associated company. Lead Supply enjoyed a broad-based progress across all markets, with higher volumes and better prices for leads from the banks. The continued focus on optimization, data insight, and focused on customer acquisition. Looking ahead for the full year, we work on entries into new high volume markets, and the first steps have been taken into, for example, Germany, France, and Spain. We expect continued double-digit growth in 2022 with further earnings improvements. Lead Supply is well positioned to continue progress. And I should mention that the inflationary consequences of the war in Ukraine does leave a question mark. Will higher inflation rates impact the bank's granting of credits and consumers' appetite for loans?
We don't know. Only time will tell. So far we see no signs of that. Next slide, please. To sum it up, the full year outlook for 2022 for the group is completely unchanged compared to what we said after the annual report 2021. Last Mile, we expect revenue between DKK 850 million and DKK 870 million, which is around 3% down from last year. EBIT will be between DKK 190 million and DKK 210 million for Last Mile, and the result lower, as Lasse explained, driven by cost increases. For Digital Services, revenue will be between DKK 160 million and DKK 175 million, which is a 16% combined growth for BoligPortal, Ofir, and Bekey. EBIT result is expected to be between DKK 9 million and DKK 17 million.
That is an improvement from last year, where we wrote off DKK 20 million in the capitalized expenses in Bekey. If you adjust for this one-off write-down, we're looking at slightly weaker results in 2022, but that's primarily due to the acquisition of Boligmanager, as I mentioned before. On top of that, we are investing more in BoligPortal and Ofir to grow the revenue further, and we expense all cost in Bekey this year. For the group, revenue largely on par with last year, slightly above DKK 1 million in revenue, and EBIT result between 190 and 220 million DKK. I'll now hand you over to Lasse for a final note.
Perfect. Thank you, Kåre. As you might have noticed, we changed the management structure in North Media the second of April. Let's take a look into our way of thinking. First, we formed our new group executive board with a more powerful position in the group. The new group executive board comprises myself as CEO, Kåre as CFO, and Lisbeth as Chief Human Resources Officer. Lisbeth's position is new, and it underlines our constant focus on infrastructure management at all levels, which is crucial to a volume business, from the most senior executive to the most junior staff member. These changes in the group executive board were designed to boost execution power, to get to the point, hasten decision-making, and strengthen coherence across the group. We think that we can build a lot of value in that matter.
Furthermore, it was the latest initiative to create a faster, simpler, and more dynamic process where we shorten the route to decisions, both in the parent company and in our 100%-owned subsidiaries. From this point, we are confident that these changes will ensure that our companies are run and developed even more to the point and according to uniform principles, which is focused on volumes, quality growth, and value creation. Next slide, please. That's it from us for now. We are ready to take our questions. Please follow the operator's instructions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. We have a question from the line of Søren Kron from Gudme Raaschou. Please go ahead.
Yeah. Hi. A couple of questions. First of all, on BoligPortal, it just seems like you keep on postponing the SaaS revenue or the data driven part of BoligPortal. Now you're saying not until the end of this year. So could you perhaps talk a bit about what's happening there and why it seems to be postponed again? Yeah, it could be the first one.
Yeah. Yeah. Thank you, Søren. Actually, we don't see it as another postponement of the SaaS revenue. Remember that we acquired Boligmanager first of February, and as and when we acquired it, we did say that there's hardly no revenue in the company when we acquired it. The focus right now is on integrating them to BoligPortal as well as developing the Boligmanager business further.
Exactly where Boligmanager and BoligPortal fit so well together is that Boligmanager has this platform, where we can service and make this one-stop solution for the property administrators, while BoligPortal, as the market leader on the marketplace has the contact to more than 3,000 property owners and administrators that we have worked with for years. This is the reason why we acquired Boligmanager, and it has speeded up actually our route to this SaaS solution because we don't have to develop so much of it ourselves. It does take time to develop it. We don't really see it as another delay in that sense.
Well, I mean, perhaps I misunderstood it because, I mean, you talked about this software for property owners for a couple of years now, and you've also shown it on a couple of presentations. I got the feeling that actually you should have start selling it already last year.
Um, maybe-
Is that dependent on Boligmanager or?
What we have talked about is that we develop and we are en route to develop BoligPortal from being the marketplace where we sort of put a landlord together with an apartment seeker. That's the old BoligPortal business where we add-
Yeah
These new revenue streams where, for example, on this Data Insights which we have started selling and it's going as well as planned. As I talked about, we have sort of made it into some modules now in Q1 to make it interesting to even more potential customers. That's going as planned. We also have this, what we call the partnerships, where we get this referral fee from providers that offer services to tenants, for example, under electricity and internet connections. That's also something that we have talked about before and that continues to grow. The last part of this, the new revenue streams is this property administration where we had to speed it up compared to what we have talked about before.
We've talked about before that we want to do it, but not that we were already doing it other than the other two revenue streams.
Would you say that it's a problem still that the rent market is not normalized yet? Is that still holding back the revenue in the Q1 ?
I couldn't hear. Which market, sorry? I couldn't hear.
Yeah, the rent market. You had the problem in the H2 of last year that a sudden drop in available rents or tenants.
No, but the rent market has no impact in Q1 and has sort of normalized in that sense.
Okay. All right.
All in all.
Just another one.
BoligPortal is on track.
Yeah
... with what we expected from the beginning of the year.
Yeah. Okay. Just a question on FK Distribution. Have you heard that for instance Netto had stopped at least for a period of time their leaflets and due to higher prices for paper. You're talking about a better market now as competition is increasing among the supermarket and the retail part. I've just wonder. I mean, you on one side you hear that market is going better. On the other side, you hear that some is actually stopping the leaflet. You also, I think it was Lidl in the København area also stopping theirs. How do you see these two things, two factors?
I think that, first of all, let's look into the Netto leaflet discussion. Netto did, you can say, a non-leaflet distribution. They didn't distribute their normal leaflets for one week seven. The week where everybody's going skiing. This was a one-off happening from Netto and from week 8eight and going forward, they were back on track. So I don't see that as an unusual situation. A lot of our clients are testing their marketing mix and their marketing channels all the time. Sometimes don't get leaflets distributed at Fyn to see how the stores are impacted by that comparing to Zealand and Jutland. In this week, Netto decided not to push out a leaflet in week seven.
As far as we know, they are just, and according to our plans, back on track, moving forward. I think for further details, I'm not the right person to speak to in that matter, but I'm convinced that the leaflet for Netto is a very strong marketing tool and drives the customers to the stores, as the most important tool in their toolbox.
Okay.
I think Lidl I know that Lidl had an increase in their cost for buying papers in the whole of Europe and a significant rise in prices. I think that was a European decision to save some cost and not something about the effectiveness. When we're doing our sales modeling, which we're doing each quarter, you can say that the effect on the leaflet distributions are unaffected. We cannot see that the effectiveness has decreased at all.
Okay. All right. Thanks a lot, guys.
We have one more question from the line of Steve Silver from Argus Research. Please go ahead.
Good afternoon, and thanks for taking the question. My question is mainly regarding the scale-up in costs during 2022. Without giving any guidance for 2023 or beyond, just trying to get a sense as to the levels of investment or the scale-up of costs, and whether you think that most of these costs to invest in the long-term growth of the business will be taken in 2022, or this period of investment for long-term growth will be more of a longer term process. Thank you.
I think for the 2023 and the 2024 ambitions, things are unchanged. We had already at that time included that we expected higher costs in FK this year in 2022. We expect going forward that cost increases will sort of slow down and also that we, by that time, will have a more sort of on par development with prices to customers and our costs. This year, costs increased more than we could and would increase prices in FK. That's why the EBIT margin went down from last year's 28% to this year's 23%. Going forward for FK, we expect that cost and prices will sort of more follow each other as it has been originally.
For the Digital Services, we have also included in our forward plans that to go for the growth and to grow and scale our businesses, we need to increase cost. That has also been included. We don't expect any changes to that as we see the markets right now.
Great. Thank you very much.
As there are no further audio questions, I'll hand it back to the speakers.
All right. If no more questions, thank you very much for your interest, and your questions. As always, please don't hesitate to contact us if you have any additional questions. You can find my contact details on the slide. Call us, email us, and we'll get back to you, very shortly. Thank you very much, and have a nice day.
Good afternoon. Bye.
This concludes our conference call. Thank you all for attending. You may now disconnect.