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2007-08-02 07:34:48 CEST 2007-08-02 07:34:48 CEST REGULATED INFORMATION Satama Interactive - Quarterly reportSATAMA INTERACTIVE GROUP'S INTERIM REPORT FOR 1 JANUARY - 30 JUNE 2007Satama's Profitability Improved and Growth Continued Satama's net sales grew by 14.2% in the first half of 2007 in comparison with the previous year. Net sales amounted to EUR 19.5 million (EUR 17.0 million). Operating profit increased by EUR 2.4 million from the previous year's comparative, amounting to EUR 1.5 million, 7.6% of net sales (EUR -0.9 million,-5.4%). In the second quarter of 2006, a restructuring provision was made in the amount of EUR 1.3 million. Excluding the provision, Satama's operating profit increased by EUR 1.1 million in the period under review in comparison with the previous year. In the second quarter, Satama's net sales grew by 8.1% in comparison with the previous year's level. Net sales amounted to EUR 9.7 million (EUR 9.0 million). Satama's operating profit was the best ever in history, amounting to EUR 0.9 million, or 9.6% of net sales (EUR -0.7 million, -7.5%). At the end of the period under review, the equity-to-assets ratio was 74.7 (72.1%). Financial information for 2006 has been adjusted to comply with the new accounting principles applied to media services, as explained below. CEO Jarmo Lönnfors on the interim report: “Satama has been developing to positive direction. Our efforts to clarify strategy, improve sales and refocus operations are producing the planned results. In the first half of 2007 practically all growth was organic. Better operational efficiency improved Satama's profitability considerably in comparison with that of the previous year. In the first half of 2007 the operating profit was the best ever being EUR 1.1 million above the comparable figure of the previous year. According to our strategy, alongside with customer projects we have continued the development work of the ASP-model-based (Application Service Provider), continuous services that support marketing and sales. The first service, developed in co-operation with Trainers' House, a business critical growth control system BLARP, is ready to be delivered for customers in the last quarter of 2007. Following services are being announced in the beginning of 2008. In the second quarter, we achieved yet further major recognition when Microsoft selected Satama as its 2007 Finnish Solution Partner of the Year. This is in recognition of our longstanding and fruitful cooperation with Microsoft. This year the selection criteria included, for example, high customer satisfaction and the innovative use of technology to serve people and organisations. Growth and profitability have been developing well within Satama's Productivity business area, which specializes in Microsoft implementations. The market situation and our ability to deliver customer projects successfully provide a good starting point for developing Satama by creating enduring long-term added value for our customers. For more information, please contact: Jarmo Lönnfors, CEO, at +358 (0)207 581 717 Martti Ojala, CFO, at +358 (0)207 581 637 Press conference: Satama will hold a press and analyst conference regarding the interim report on 2 August, at noon-1pm, at Satama's head office, Henry Fordin katu 6, Helsinki. Those wishing to participate should contact Nina Pakalen (tel. +358 (0)40 772 3415, e-mail nina.pakalen@satama.com). SATAMA INTERACTIVE GROUP'S INTERIM REPORT FOR 1 JANUARY - 30 JUNE 2007 REVIEW OF OPERATIONS Satama is a marketing technology services company. The company's strength lies in combining marketing with information work expertise and technology. In the period under review, Satama provided its services through offices located in Helsinki, Tampere, Turku, Amsterdam, Düsseldorf and Stockholm. The market outlook for Satama's industry remained good throughout the period under review. In comparison with the previous year, Satama Group's net sales grew by 14.2%. Net sales increased to EUR 19.5 million (EUR 17.0 million). The Group's operating profit amounted to EUR 1.5 million, or 7.6% of net sales (EUR -0.9 million, -5.4% of net sales). Growth from the previous year amounted to EUR 2.4 million. Financial performance in 2006 was hampered by a non-recurring restructuring provision of EUR 1.3 million. In the second quarter, the Group's net sales amounted to EUR 9.7 million and the operating profit was EUR 0.9 million, 9.6% of net sales (net sales EUR 9.0 million, operating profit -0.7 million or -7.5% of net sales). In Finland (Satama Finland, Satama MST, Fimentor, and The Uncles), net sales grew by 14.1%, coming to EUR 15.6 million (EUR 13.7 million). Practically all growth was organic. The Finnish units were profitable. In the second quarter, net sales amounted to EUR 7.7 million, showing an increase of 4.5% from the previous year's level, and the units were profitable. Satama's international units (Satama Amsterdam and OER in the Netherlands, NeoMotion in Germany, and Satama Sverige in Sweden) grew by 13.9%. The growth was entirely organic. Net sales amounted to EUR 4.0 million (EUR 3.5 million). The international units were profitable. In the second quarter, net sales totalled EUR 2.0 million, an increase of 22.0% from the previous year, and the units were profitable. MARKET REVIEW No significant changes have taken place in the market since the release of the previous interim report. Market demand is expected to continue growing in Satama's key markets in the Nordic region and in Western Europe. Satama's business operations are influenced by the following market trends in particular: increasing and diversifying use of the Internet for business and entertainment, growth in mobile services, and the resulting shift of marketing investments from traditional media to new channels. The change in consumer behaviour resulting from the development of Internet services and the performance requirements in information work are also important for Satama's future development. Marketing According to a recent forecast by eMarketer, online marketing as a proportion of marketing budgets worldwide will exceed 10% by 2010 (2006: 5.4%). In the UK, the figure is already 12.4%. In the EU, 45% of online marketing is focused on search engine optimisation and marketing, but significant growth is expected to take place in other areas also, such as video marketing. Productivity According to a report published by IDC, investments related to IT systems are expected to increase by 7% in Europe in 2007. We also believe that the major investments made by Microsoft in new network platforms and user interface technologies will encourage companies to make new investments in the coming years. Mobility Growth in the use of 3G mobile phones is continuing especially in Europe. We believe that the growing popularity of tie-in sales and new, more powerful mobile phones will accelerate utilisation of the mobile channel among consumers. Sources: OECD 2006, Forrester 2006-2007, IDC 2006, ComScore 2007, eMarketer 2007, Gartner 2006. STRATEGY AND BUSINESS OPERATIONS Services provided by Satama today are organised into three complementary business areas: Marketing, Productivity and Mobility. The Marketing division offers services for the design, implementation and continuous performance monitoring and analysis of marketing communications. A typical delivery by the division is a digital marketing campaign aimed at the launch of a new mobile phone model and at increased product sales. The Productivity division designs and implements services that improve productivity in the areas of sales management and marketing, business intelligence, e-business and e-services, as well as portals and content management. A typical delivery in this division is an electronic working environment or a sales and service channel on the Internet.Microsoft technology is Productivity's focal field of know-how. The Mobility division offers services that utilise the latest technology in mobile channels in the areas of 1) marketing and activation campaigns, 2) e-commerce and e-service solutions and 3) performance measurement and analysis. A typical delivery by the division is a marketing and activation campaign targeted at consumers to improve sales of services for 3G mobile phones. Aiming for a new business model The need to improve the performance of marketing, sales and information work will also change Satama's operating model in the future. Our goal is to increase the proportion of Satama's net sales created by tools that improve productivity, especially in sales and marketing, and to sell these tools to customers as a continuous service. Developing such services requires strong expertise in marketing, sales, sales management and technology. In the second quarter, we continued the development of such services. We expect to launch the first continuous service by the end of 2007 and additional services in 2008. These services will not have a significant impact on the net sales of Satama in 2007. Long-term goals Satama has the following long-term strategic and financial objectives: Net sales: annual growth of more than 20% Profitability: operating profit accounting for over 10% of net sales Return on capital employed: more than 20% Satama aims to complement organic growth with strategic business acquisitions. CUSTOMERS In the second quarter, Satama's net sales were divided among customer industries as follows (the percentage of net sales in the first quarter is given in brackets): - Telecommunications 57% (59%) - Media 6% (5%) - Tourism 1% (1%) - Finance 8% (9%) - Public administration 2% (2%) - Other 26% (24%) Satama's customer projects won several awards and special mentions in industry competitions during the second quarter. Satama was recognised in the Best of the Year competition, in which the Color the World online campaign developed for Nokia in April won first prize in the Digital Media category. Organised by the Association of Professional Graphic Designers in Finland, the Best of the Year competition is the most important competition for graphic design and advertising in Finland. In April, the Mobile Travel Guide service developed by Satama for Finnmatkat won first prize in the Best Mobile Service in Finland 2006 competition in the Best Convenience Service for Consumers category. The competition is organised by Teleforum and key operators in the mobile phone industry in Finland: DNA, Sonera, Elisa, Saunalahti, Nokia and Samsung. In May, the marketing and activation campaign Harakat Online Challenge developed and implemented by Satama for Wataniya Telecom received an honourable mention in the Huippusuora competition in the CRM category (B-to-C). Organised by the Finnish Direct Marketing Association, Huippusuora is the only competition in Finland focusing on direct marketing, CRM and interactive marketing. In May, Satama was chosen as Microsoft's 2007 Finnish Solution Partner of the Year. OUTLOOK FOR THE FUTURE The market outlook for Satama's operational environment remains good. We reform the forecast that was outlined in the financial statement estimating both net sales and operating profit in 2007 to be better compared to previous year. Equivalent net sales of third quarter is estimated to amount higher in comparison to previous year. Operating profit is estimated to be positive. SHORT-TERM BUSINESS RISKS AND FACTORS OF UNCERTAINTY Satama's operations focus on projects. In Satama's business areas, projects typically involve short order books, the risk of poor profitability in individual projects, and major fluctuations in the utilisation rate of human resources between quarters. The market outlook presented above under ‘Outlook for the Future' is based on forecasts by international analyst firms. With respect to Satama's operations, the outlook is based on our current order book, confirmed forecasts and experience of the purchasing cycles of our long-term customers gathered over the years. REPORTING PRINCIPLES Accounting principles for media services Satama's service offering includes an increasing amount of media services related to, for example, measurement and analytics, which are purchased from external service providers. According to IFRS, such external services could in Satama's case be recorded on a gross or net basis. As the portion of these services in Satama's service offering is increasing, the company decided to change the accounting principles for media services from gross to net basis as of 1 January 2007. Under these principles, only the mark-up portion of media services is included in net sales. The financial information for 2006 has been adjusted to comply with the new accounting principles. NET SALES AND PROFIT DEVELOPMENT During the period under review, Satama's net sales increased by 14.2%, totalling EUR 19.5 million (EUR 17.0 million). Operating profit (EBIT) was EUR 1.5 million (EUR -0.9 million). Net profit for the period under review was EUR 1.1 million (EUR -0.7 million). In Finland (Satama Finland, Satama MST, Fimentor and The Uncles), net sales for the period under review amounted to EUR 15.6 million (EUR 13.7 million), and the business made a profit. Net sales of the international units (Satama Amsterdam, NeoMotion, and OER) came to EUR 4.0 million (EUR 3.5 million), and the business made a profit. The following table itemises the Group's key figures (in thousands of euros): 1-6/2007 1-6/2006 Net sales 19,472 17,045 Expenses Personnel-related expenses -11,610 -11,319 Other expenses -5,955 -6,224 EBITDA 1,907 -498 Depreciation -437 -420 EBIT 1,471 -917 % of net sales 7.6 -5.4 Financial income and expenses 5 14 Profit/loss before tax 1,476 -903 Tax -389*) 171*) Net profit/loss 1,088 -732 % of net sales 5.6 -4.3 *) The tax included in the income statement is deferred. The calculations are based on the management's estimate of the weighted average annual income tax rate. The following table itemises net sales in terms of Group Satama Finland and the subsidiaries operating abroad and shows the quarterly profits or losses from the beginning of 2006 (in thousands of euros). In the table, net sales are adjusted to comply with Satama's new accounting principles for media services, as adopted on 1 January 2007. Q106 Q206 Q306 Q406 2006 Q107 Q207 Finland 6,284 7,395 5,578 8,561 27,818 7,881 7,727 International 1,798 1,679 1,684 2,029 7,189 1,911 2,047 Eliminations -51 -61 -185 -169 -466 -60 -34 Net sales total 8,031 9,013 7,076 10,421 34,542 9,732 9,741 Operating profit/loss -244 -673 377 743 203 536 935 The change in the accounting principles applied to media services reduced the net sales for Q2/2006 by EUR 22,000 and for the year 2006 by EUR 1,237 million. FINANCING, SOLVENCY AND RISKS At the end of the period, the Group's equity-to-assets ratio was 74.7% (72.1%) and its liquid assets amounted to EUR 0.5 million (EUR 0.2 million). The Group had EUR 0.7 million of interest-bearing debt (EUR 0.3 million). As Satama operates primarily within the euro zone, there are no substantial exchange rate fluctuation risks. A bad debt provision, which is booked on the basis of ageing and case-specific risk analyses, covers risks to accounts receivable. In the period under review, cash flow was EUR -0.0 million. Cash from operating activities totalled EUR 0.2 million, and cash from investments totalled EUR -0.7 million. AUTHORISATIONS BY THE BOARD OF DIRECTORS The Annual General Meeting authorised the Board of Directors to decide on a share issue, which may be either liable to charge or free of charge, including issuing of new shares and the transfer of own shares possibly in the company's possession. Under the authorisation, the Board of Directors has a right to decide on an issue of option rights and other special rights that entitle, against payment, to receive new shares or shares possibly in the company's possession. With these authorisations related to share issue and/or issue of special rights, whether on one or on several occasions, a maximum of 8,000,000 new shares may be issued and/or own shares possessed by the company may be transferred, which corresponds to approximately 19.4% of the issued and outstanding shares of the company. The Board of Directors is otherwise authorised to decide on all terms regarding the share issue and issue of special rights, including the right to also decide on a directed share issue and a directed issue of special rights. Shareholders' pre-emptive subscription rights can be deviated from, provided that there is significant financial reason for the company to do so. The authorisation is, however, not to be used for incentive schemes for the personnel. The authorisations shall remain in force until 30 June 2008. The authorisations had not been exercised on 30 June 2007. The Annual General Meeting also authorised the Board of Directors to decide on the repurchase of the company's own shares. The shares could be acquired for the value decided by the Board of Directors, which value is based on the fair value at the time of the acquisition as determined in public trading. Own shares may be acquired only with free equity. Under the authorisation, whether on one or on several occasions, a maximum of 4,000,000 own shares, which corresponds to approximately 9.7% of the issued and outstanding shares of the company, may be acquired. The Board of Directors is otherwise authorised to decide on all conditions related to the acquisition of own shares, including the manner of acquisition of shares. The authorisation does not exclude the right of the Board of Directors to decide on a directed acquisition of own shares as well, if there is significant financial reason for the company to do so. The authorisation shall remain in force until 30 June 2008. The authorisation had not been exercised on 30 June 2007. PERSONNEL The average number of personnel employed by Satama during the period under review was 373 (384). At the end of the period under review, Satama employed 379 (394) people, of whom 318 (345) were employed in Finland and 61 (49) abroad. INVESTMENTS The Group's gross investments amounted to EUR 0.7 million (EUR 1.5 million), representing 3.8% (8.7%) of net sales. The investments consisted primarily of IT hardware acquisitions. SHARES AND SHARE CAPITAL At the end of the period under review, Satama Interactive Plc had issued 41,236,808 shares and the company's registered share capital amounted to EUR 866,941.67. Satama's share capital increased by a total of EUR 7,883.81 during the period under review, as a result of subscriptions made on account of the 2003B warrants issued under the personnel's option programme. The total number of new shares subscribed for was 375,000. Satama Interactive's shares (SAI1V) have been listed on the Helsinki Stock Exchange since 2000. PERSONNEL OPTION PROGRAMMES Satama Interactive has two option programmes for its personnel, included in the personnel's commitment and incentive scheme. The Annual General Meeting held on 26 March 2003 decided to commence an employee option programme involving 2,000,000 warrants. Due to the resulting subscriptions, Satama Interactive's share capital can rise by a maximum of EUR 42,046.98 and the number of shares by a maximum of 2,000,000. One million of the warrants are titled 2003B and the other million 2003C. The subscription price was EUR 0.36 per share and the subscription period for shares converted under the 2003B warrants ended on 1 February 2007. The subscription period for shares converted under the 2003C warrants runs from 1 February 2006 to 1 February 2008, and the subscription price is EUR 1.11 per share. The Annual General Meeting held on 29 March 2006 decided to commence an employee option programme involving 2,000,000 warrants. Due to the resulting subscriptions, the Satama Interactive share capital may increase by a maximum of EUR 42,046.98 and the number of shares by a maximum of 2,000,000. Half of the warrants are titled 2006A and the other half 2006B. The subscription period for shares converted under the 2006A warrant is to begin on a date determined by the Board of Directors after publication of the interim report for the second quarter of 2008, but not later than on 1 September 2008, and to end on 28 February 2009. The subscription period for the shares converted under the 2006B warrant is to begin on a date determined by the Board of Directors after publication of the interim report for the second quarter of 2009, but not later than on 1 September 2009, and end on 28 February 2010. The subscription price for shares converted under the 2006A warrant is EUR 1.02. The subscription price for shares converted under the 2006B warrant is the average rate for Satama Interactive shares on the Helsinki Stock Exchange, weighted by the trade rate of the share and rounded to the nearest cent, for the six-month period immediately following publication of the 2006 financial statements, however not less than EUR 1.08 per share. CHANGES IN OWNERSHIP In the period under review, Satama became aware of four notices of change in ownership exceeding the disclosure threshold. Information on notices of change in ownership is available on the company's Website at www.satama.com. Ownership of the company's shares is spread widely. On 30 June 2007, the largest shareholder was Nordea Pankki Suomi Oyj with 20.1% of the share capital. - - - The forecasts and estimates given in this report are based on the current views of the management. Actual performance may differ from the projections. - - - NOTES REGARDING THE FIGURES The interim report was compiled in accordance with the IAS 34 standard. In preparing this interim report, Satama has applied the same accounting principles as in its Financial Statements for 2006, with the exception that financial information also for 2006 has been adjusted to comply with the new accounting principles applied to media services as explained above. The changes and interpretations published as well as the new accounting principles, which entered into force on 1 January 2007, are in detail presented in the 2006 Annual Report. The implementation of these regulations did not cause any such impact on the financial statements, which would have caused retroactive changes to previous years' figures. In producing this interim report, Satama has applied the same accounting principles for key figures as in its Financial Statements for 2006. The calculation of key figures is described on page 76 of the Annual Report 2006. The figures given in the interim report are unaudited. INCOME STATEMENT, IFRS (kEUR) Group Group Group Group Group 01.04.- 01.04.- 01.01.- 01.01.- 01.01.- 30.06.07 30.06.06 30.06.07 30.06.06 31.12.06 Net sales 9,741 9,013 19,472 17,045 34,542 Other operating income 5 71 8 97 175 Costs: Materials and services 1,434 1,218 2,778 2,267 4,949 Personnel-related expenses 5,583 6,001 11,610 11,319 21,609 Depreciation 225 197 437 420 814 Other operating expenses 1,568 2,342 3,185 4,054 7,141 Operating profit/loss 935 -673 1,471 -917 203 Financial income and expenses 11 -16 5 14 13 Share of profit/loss in associated companies -4 Profit/loss before tax 946 -689 1,476 -903 212 Tax -262*) 137*) -389*) 171*) -129*) Net profit/loss 684 -552 1,088 -732 83 Attributable to equity holders of the parent company 684 -552 1,088 -732 83 Earnings per share as calculated from the profit attributable to shareholders of the parent company: Earnings/share, undiluted (EUR) 0.02 -0.01 0.03 -0.02 0.00 Earnings/share, diluted (EUR) 0.02 -0.01 0.03 -0.02 0.00 *) The tax included in the income statement is deferred. BALANCE SHEET, IFRS (kEUR) Group Group Group 30.06.07 30.06.06 31.12.06 ASSETS Non-current assets Tangible assets 1,540 1,711 1,591 Goodwill 10,020 9,506 9,953 Other intangible assets 433 92 148 Other financial assets 54 43 43 Other receivables 101 155 160 Deferred tax receivables 5,306 6,035 5,689 Total non-current assets 17,454 17,542 17,583 Current assets Accounts receivable and other receivables 12,691 10,831 12,150 Cash and cash equivalents 534 221 547 Total current assets 13,225 11,052 12,697 Total assets 30,680 28,593 30,280 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity attributable to shareholders of the parent company Share capital 867 848 859 Share premium fund 13,228 12,919 13,101 Translation differences -1 -1 -1 Retained earnings 8,832 6,830 7,704 Total shareholders' equity 22,925 20,596 21,663 Long-term liabilities Other long-term liabilities 658 736 373 Accounts payable and other liabilities 7,096 7,261 8,245 Total liabilities 7,755 7,997 8,618 Total shareholders' equity and liabilities 30,680 28,593 30,280 CASH FLOW STATEMENT, IFRS (kEUR) Group Group Group 01.01.- 01.01.- 01.01.- 30.06.07 30.06.06 31.12.06 Profit/loss for the period 1,088 -732 83 Adjustments to profit/loss for the period 904 1,130 1,151 Change in working capital -1,749 -2,435 -1,918 Financial items -7 32 43 Cash flow from operations 236 -2,005 -640 Investments in tangible and intangible assets -661 -1,324 -2,368 Change in the additional trade price -67 -125 -424 Cash flow from investments -728 -1,449 -2,792 New share issue 135 118 345 Repurchase of own shares -103 Own shares used in purchase of shares 103 Increase/decrease in long-term receivables 59 2 295 Increase/decrease in loans 285 280 62 Cash flow from financing 479 399 703 Change in cash and cash equivalents -12 -3,055 -2,729 Opening balance of cash and cash equivalents 547 3,276 3,276 Closing balance of cash and cash equivalents 534 221 547 CHANGE IN SHAREHOLDERS' EQUITY (kEUR) Equity attributable to equity holders of the parent company Share Share Premium Translation Retained capital issue fund difference earnings Total Shareholders' equity 01/01/2006 843 14 12,792 -1 7,545 21,193 Stock options used 4 -14 127 118 Share-based payments 17 17 Profit/loss for the period -732 -732 Shareholders' equity 30/06/2006 848 12,919 -1 6,830 20,596 Shareholders' equity 01/01/2007 859 13,101 -1 7,704 21,663 Translation differences -1 -1 Stock options used 8 127 135 Share-based payments 40 40 Profit/loss for the period 1,088 1,088 Shareholders' equity 30/06/2007 867 13,228 -1 8,832 22,925 INVESTMENTS (kEUR) Group Group Group 01.01.- 01.01.- 01.01- 30.06.07 30.06.06 31.12.06 Gross investments in tangible and intangible assets and shares 739 1,479 2,394 Gross investments % of net sales 3.8 8.7 6.9 RELATED-PARTY TRANSACTIONS (kEUR) Management's emoluments Group Group Group 01.01.- 01.01.- 01.01- 30.06.07 30.06.06 31.12.06 Salaries and other short-term employee benefits 452 469 744 Salary and benefits in connection with dismissals 287 287 Share-based payments 18 Satama has carried out market-based trading with one of its shareholders Trainers' House. However, the volume of trading has not been significant. PROVISIONS FOR LIABILITIES AND CHARGES (kEUR) Satama implemented a major restructuring programme in the second quarter of 2006. A provision of EUR 1.3 million was made in the financial statements of the second quarter of 2006 to cover the expenses arising from the restructuring programme. In 2006, EUR 0.8 million of the provision was used to cover actual expenses, while EUR 0.3 million was recognised as income. On 31 December 2006, EUR 0.2 million of the provision remained unused. In 2007, EUR 0.1 million has been used to cover actual expenses. On 30 June 2007, EUR 0.1 million of the provision remained unused. Exact figures are presented in the table below. Restructuring provision (kEUR) 2006 2007 Provisions 1 January 160 Additions to provisions 1,277 Provisions used -390 -60 Provisions 30 June 887 100 PERSONNEL Group Group Group 01.01.- 01.01.- 01.01- 30.06.07 30.06.06 31.12.06 Average number of personnel 373 384 370 Personnel at the end of the period 379 394 366 COMMITMENTS AND CONTINGENT LIABILITIES (kEUR)Group Group Group 30.06.07 30.06.06 31.12.06 Collaterals and contingent liabilities given for own commitments 5,255 5,987 5,752 OTHER KEY FIGURES Group Group Group 01.01.- 01.01.- 01.01- 30.06.07 30.06.06 31.12.06 Equity-to-assets ratio (%) 74.7 72.1 71.9 Shareholders' equity/share (EUR) 0.56 0.51 0.53 Helsinki, 2 August 2007 SATAMA INTERACTIVE PLC BOARD OF DIRECTORS For more information, please contact: Jarmo Lönnfors, CEO, at +358 (0)207 581 717 Martti Ojala, CFO, at +358 (0)207 581 637 DISTRIBUTION: OMX Major media http://www.satama.com |
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