Enero Group (EGG) H2 2024 earnings summary

Executive summary

• Net revenue for FY 2024 declined 6% like-for-like to AUD 189.7 million, with strong Australian agency growth offset by weakness in international technology and ad tech markets.

• EBITDA fell 10% like-for-like to AUD 37.4 million, reflecting challenging sector conditions and cost initiatives in Q4.

• Net profit after tax grew 7% like-for-like to AUD 10.3 million, driven by lower interest expense and stronger earnings in wholly owned businesses, despite a statutory net loss of AUD 44.2 million due to a non-cash impairment charge of AUD 70.8 million.

• Earnings per share increased 8% like-for-like to AUD 0.113, and free cash flow reached AUD 21.7 million with 88% cash conversion.

• The Board declared a fully franked final dividend of AUD 0.02 per share, with a payout ratio of 51% for H2 and 44% for the full year.

Financial highlights

• EBITDA margin declined to 19.7% from 32.6% year-over-year, with cash conversion at 88% and economic interest cash conversion at 97%.

• Staff costs were AUD 133.4 million, representing a 70% staff ratio, with an increase at OBMedia from 22% to 39%.

• Operating cost ratio rose to 10% from 9% in FY 2023, with group-wide cost discipline offsetting inflationary pressures.

• Statutory loss of AUD 44.2 million due to significant items of AUD 54.5 million, including non-cash impairment losses.

• Free cash flow was AUD 21.7 million, with net cash position of AUD 38.2 million at June 2024, up from AUD 13 million in June 2023.

Outlook and guidance

• Trading for July 2024 remained consistent with H2 FY 2024, with continued challenges in the international technology sector.

• Cost initiatives taken in Q4 FY 2024 are expected to benefit margins in FY 2025.

• OBMedia sale process is ongoing, with contractual negotiations anticipated in Q2 FY 2025.

• Continued focus on proactive cost management and margin improvement.