2016-02-19 12:15:01 CET
2016-02-19 12:15:01 CET
REGULATED INFORMATION
Affecto Oyj - Financial Statement Release
Affecto Plc's Financial Statements Bulletin 2015
AFFECTO PLC -- FINANCIAL STATEMENTS BULLETIN -- 19 FEBRUARY 2016 at 13:15
Affecto Plc's Financial Statements Bulletin 2015
Group key figures
MEUR 10-12/15 10-12/14 2015 2014
Net sales 31.3 32.8 116.0 122.7
Operational segment result 3.2 3.9 7.5 10.0
% of net sales 10.3 12.0 6.4 8.2
Operating profit 3.2 -3.7 7.5 0.8
% of net sales 10.3 -11.3 6.4 0.7
Profit before taxes 3.3 -3.8 7.5 0.3
Profit for the period 2.6 -4.7 5.9 -1.6
Equity ratio, % 58.5 54.6 58.5 54.6
Net gearing, % -6.2 1.8 -6.2 1.8
Earnings per share, eur 0.12 -0.22 0.27 -0.07
Earnings per share (diluted), eur 0.12 -0.22 0.27 -0.07
Equity per share, eur 2.88 2.80 2.88 2.80
Dividend proposal, eur/share 0.16 0.16
CEO Juko Hakala comments:
We closed 2015 with several important engagements with our customers yielding
improved H2 order intake year-on-year. This also produced a slightly increased
order backlog for starting 2016.
We continued to pursue our updated strategic direction published in February
2015. We have actively focused and invested into our customers, our people and
our two new business development areas B2C & Industrial. During the year, we
recruited 159 new experts into our network of 15 offices across the Northern
Europe. At the same time, we continued profitability improvement measures
started in Q3 in all our operating markets.
Our full year net sales performance was impacted by weaker order intake in H1.
Also, our operational segment result was below last year’s level. Baltic
segment and Swedish profitability improved as a result of their sustained sales
and delivery successes. In the Danish segment, our order intake improved while
net sales and operational segment result were weaker. Finnish and Norwegian
segments were weaker overall.
All of our operating markets continue to show growing interest in new business
technology & analytics areas. In these markets, our customers are prototyping
with us and investing into e.g. advanced analytics, machine learning, soft
sensors and custom software solutions. On the other hand, we also see slight
improvement of demand on the traditional IT market and the related skills.
We will organize a Capital Markets Day in May 2016 to present further
information of Affecto and our direction.
Net sales are estimated to stay on the same level or grow slightly and
operating profit is estimated to grow in 2016.
Additional information:
CEO Juko Hakala, + 358 205 777 450
CFO Martti Nurminen, +358 40 751 7194
This release is unaudited. The amounts in this report have been rounded from
exact numbers.
NET SALES 10-12/2015
Affecto's net sales in 10-12/2015 were 31.3 MEUR (10-12/2014: 32.8 MEUR). Net
sales in Finland were 14.3 MEUR (13.8 MEUR), in Norway 5.5 MEUR (6.5 MEUR), in
Sweden 4.8 MEUR (4.8 MEUR), in Denmark 3.2 MEUR (2.8 MEUR) and 4.7 MEUR (5.7
MEUR) in Baltic.
Net sales by reportable segments
Net sales, MEUR 10-12/15 10-12/14 2015 2014
Finland 14.3 13.8 49.5 50.6
Norway 5.5 6.5 21.1 25.0
Sweden 4.8 4.8 18.2 20.0
Denmark 3.2 2.8 11.3 12.0
Baltic 4.7 5.7 20.1 19.0
Other -1.2 -0.9 -4.2 -4.0
-------------------------------------------------
-------------------------------------------------
Group total 31.3 32.8 116.0 122.7
Net sales decreased by 5% in the fourth quarter. Net sales increased in Finland
by 3% and in Denmark 12%. The net sales decreased in Sweden by 1%, in Norway by
15% and in Baltic by 17 %.
The increase in net sales for Finland and Denmark was driven by improved sales
performance in H2 with especially Denmark having improved order intake. The
decrease in net sales in Norway was mainly driven by decrease in license sales.
Net sales decreased in Baltic, mainly due to insurance business performance
returning to a more normalized level.
Net sales of Information Management Solutions business in 10-12/2015 were 29.0
MEUR (30.6 MEUR) and net sales of Karttakeskus GIS business were 3.5 MEUR (3.0
MEUR).
PROFIT 10-12/2015
Affecto's operating profit in 10-12/2015 was 3.2 MEUR (-3.7 MEUR) and the
operational segment result was 3.2 MEUR (3.9 MEUR). Operational segment result
was in Finland 1.9 MEUR (1.7 MEUR), in Norway 0.3 MEUR (0.9 MEUR), in Sweden
0.5 MEUR (0.3 MEUR), in Denmark 0.3 MEUR (0.1 MEUR) and in Baltic 0.7 MEUR (1.3
MEUR).
Operational segment result by reportable segments
Operational segment 10-12/15 10-12/14 2015 2014
result, MEUR
Finland 1.9 1.7 3.5 5.4
Norway 0.3 0.9 1.5 2.0
Sweden 0.5 0.3 0.7 0.3
Denmark 0.3 0.1 0.4 0.9
Baltic 0.7 1.3 3.9 2.9
Other -0.5 -0.5 -2.5 -1.5
----------------------------------------------------------
----------------------------------------------------------
Operational segment result 3.2 3.9 7.5 10.0
IFRS3 Amortization - -0.2 - -1.8
Impairment of goodwill - -7.4 - -7.4
----------------------------------------------------------
Operating profit 3.2 -3.7 7.5 0.8
Operational segment result in 10-12/2015 was 3.2 MEUR (3.9 MEUR). Profitability
in Baltic was 15% (23%), Finland 13% (12 %), Sweden 11 % (7%), Denmark 10 % (5
%) and Norway 5% (14%).
Affecto’s operating profit was 3.2 MEUR (-3.7 MEUR).
YEAR 2015
NET SALES 2015
Affecto's net sales in 2015 were 116.0 MEUR (2014: 122.7 MEUR). Net sales in
Finland were 49.5 MEUR (50.6 MEUR), in Norway 21.1 MEUR (25.0 MEUR), in Sweden
18.2 MEUR (20.0 MEUR), in Denmark 11.3 MEUR (12.0 MEUR) and 20.1 MEUR (19.0
MEUR) in Baltic.
Net sales of Information Management Solutions business were 107.9 MEUR (114.0
MEUR) and net sales of Karttakeskus GIS business were 12.2 MEUR (11.9 MEUR).
The order backlog increased to 50.7 MEUR (49.6 MEUR).
PROFIT 2015
Affecto's operating profit was 7.5 MEUR (0.8 MEUR) and the operational segment
result was 7.5 MEUR (10.0 MEUR). Operational segment result was in Finland 3.5
MEUR (5.4 MEUR), in Norway 1.5 MEUR (2.0 MEUR), in Sweden 0.7 MEUR (0.3 MEUR),
in Denmark 0.4 MEUR (0.9 MEUR) and in Baltic 3.9 MEUR (2.9 MEUR).
Operational segment result was 7.5 MEUR (10.0 MEUR). Profitability in Baltic
was 20% (15%), Finland 7 % (11 %), Norway 7% (8%), Sweden 4% (2%) and Denmark
3% (7%). In Sweden the profitability improved towards the end of the year and
in Baltic the high profitability was driven by high utilization. In Finland the
profitability was impacted by the restructuring expense provision of
approximately 0.8 MEUR with respect to the conclusion of the personnel
negotiations in Q3. The Company’s results were also negatively affected by the
non-recurring item of 1.0 MEUR related to the fraud incident presented in the
Other segment.
R&D costs totaled 0.5 MEUR (0.3 MEUR), i.e. 0.4% of net sales (0.3%). These
costs have been recognized as an expense in the income statement.
Taxes corresponding to the profit of the period have been entered as tax
expense. Net profit for the period was 5.9 MEUR, while it was -1.6 MEUR last
year.
FINANCE AND INVESTMENTS
At the end of the reporting period Affecto's balance sheet totaled 120.3 MEUR
(12/2014: 124.8 MEUR). Equity ratio was 58.5% (54.6%) and net gearing was -6.2%
(1.8%).
The financial loans were 18.5 MEUR (22.5 MEUR) at the end of reporting period.
The Company's cash and liquid assets were 22.4 MEUR (21.4 MEUR). The
interest-bearing net debt was -3.9 MEUR (1.1 MEUR).
At the end of the reporting period the Company had existing loans of 18.5 MEUR.
The existing loans will be re-financed by the end of Q2/16.
Cash flow from operating activities for the reported period was 9.3 MEUR (8.3
MEUR) and cash flow from investing activities was -0.6 MEUR (-0.7 MEUR).
Investments in tangible and intangible assets were 0.6 MEUR (0.7 MEUR).
The Annual General Meeting held in April 2015 decided to distribute a dividend
of 3.5 MEUR (3.6 MEUR).
EMPLOYEES
The number of employees was 985 (1028) persons at the end of the reporting
period. 398 (426) employees were based in Finland, 102 (93) in Norway, 106
(129) in Sweden, 64 (68) in Denmark and 315 (312) in the Baltic countries. The
average number of employees during the period was 1010 (1041). Wages and
salaries were 52.1 MEUR (54.1 MEUR in 2014, 59.1 MEUR in 2013).
Affecto concluded personnel negotiations in Finland with respect to
Karttakeskus Oy and Affecto Finland Oy during the third quarter. As a
conclusion of the employee negotiations Affecto reduced approximately 30
positions. In relation to the conclusion of the employee negotiations Affecto
made restructuring expense provision of approximately 0.8 MEUR in Q3/2015.
BUSINESS DEVELOPMENT ACTIONS
In February, Affecto published an update to its strategic direction and defined
five themes to steer the direction of its business. This strategic direction is
based on the observation that digital transformation is changing the world and
that the line between the physical and digital worlds is blurring. Traditional
industries and business models are challenged, as new entrants introduce novel
digital business models or established entities cross over to new areas.
Central to these changes is the progressively growing use of information and
analytics to make better decisions and to automate decision making. Analytics
is the home ground of Affecto.
Actions were taken during the H1 to convert the new direction into operational
changes. Evolution meetings practice with employees were implemented in order
to activate and continually involve everyone for being part of the change in
line with the strategic direction. Recruitment of people with new
business-technology-hybrid skills was performed both from inside and outside
Affecto. Affecto received direct positive feedback from customers on the
increased focus on industry knowledge and customer value oriented solutions
created in the day-to-day services. Development of capabilities in design, user
interface and usability solutions were intensified especially in the Nordic
countries.
Affecto launched the Affecto Industrial growth program during the first quarter
of 2015. The program focuses on developing IoT and analytics capabilities for
manufacturing, technology, energy and process industries. During the second
quarter the Company conducted discussions with new customers in Finland, Sweden
and Denmark and in the third quarter established a team of professionals in the
field of advanced analytics. During the third quarter the Company also started
prototype services to concretize the applications of the Internet of Things,
soft sensors and machine learning for the customers. Finally, in the fourth
quarter Affecto started several new prototypes and delivered solutions
leveraging real-time big data applications of augmented reality. The Company
has also started addressing a wider market with the new capabilities. This has
been well received by markets in Finland, Denmark, Sweden and Lithuania. The
new capabilities are also boosting Affecto’s core business by creating new
value and new services around the existing customer solutions. Value to
Affecto’s customers has been proven by prototypes while net sales from the
growth program has been minor during 2015.
Affecto launched a B2C growth program during the third quarter of 2015. Under
this program, the Company builds new business value for its customers through
advanced behavioral & video analytics, machine learning and consumer 360°
analytics capabilities. Focus industries are consumer goods, retail, media,
telecoms, and healthcare. During the year 2015, the Company has produced
prototypes validating the business value potential of emerging technologies
such as video analytics in retail consumer context. During the fourth quarter
Affecto developed and validated the business value proposition of behavioral
analytics with retail industry customers. The value proposition includes video
analytics, wifi analytics, and beacon technologies. Value to Affecto’s
customers is being verified by prototypes while net sales from the growth
program has been minor during 2015.
BUSINESS REVIEW BY AREAS
The group's business is managed through five reportable segments: Finland,
Norway, Sweden, Denmark and Baltic.
The net sales in Finland decreased by 2% to 49.5 MEUR (50.6 MEUR). Operational
segment result was 3.5 MEUR (5.4 MEUR) and profitability was 7% (11%).
Declining sales trend impacted the utilization rate and thus the profitability
in the beginning of the year. In Q3, sales focus actions were initiated and the
restructuring actions were completed. In Q4, Affecto signed several new
customer contracts, the major one with Finnish broadcasting company Yle with
respect to the maintenance and development of Yle’s Internet services. 2015
order intake decreased slightly and order backlog is below last year's level.
The net sales of Karttakeskus GIS business, reported as part of Finland,
increased by 3% to 12.2 MEUR (11.9 MEUR). As a major Q3 win, Karttakeskus
continues to operate the Land Parcel Authentication system in Finland for year
2016-2018. Karttakeskus also lost some important contracts during Q2 and Q3.
During 2015, the focus area of Karttakeskus has been shifting more strongly to
the location applications and to the digitalization of the traditional product
business.
In Finland, the Company sees a growing market and increased competition in new
business technology & analytics areas. New digital channels and sensor & cloud
technologies, combined with increased awareness of the business potential in
analytics, create a new type of business demand across industries. There is
also slow development of demand in the traditional IT market and customers are
more price sensitive as many established IT services and solutions are being
commoditized.
The net sales in Norway were 21.1 MEUR (25.0 MEUR) and operational segment
result was 1.5 MEUR (2.0 MEUR). Net sales decreased by 16% and profitability
was 7% (8%). Affecto’s net sales and order intake were negatively impacted by
the weakening NOK. Postponed customer projects and investment into new skills
in Q3 resulted into weak profitability. In Q4 the postponed customer projects
were started which led into improved utilization and consulting revenue.
However, at the same time the licence revenue weakened and the license sales in
2015 were weak as compared to 2014. The order intake weakened but the order
backlog remains above last year's level.
The net sales in Sweden were 18.2 MEUR (20.0 MEUR) and operational segment
result 0.7 MEUR (0.3 MEUR). Net sales decreased by 9% and the profitability was
4% (2%). Affecto conducted recovery actions in Sweden throughout the year 2015.
High people churn in the beginning of the year as well as weak sales impacted
the profitability in Q3. Continued recovery actions and improved sales in Q4
helped to improve the operational segment result compared to 2014. In Q4,
Affecto signed several new customer contracts, the major ones with a Swedish
Bank. Order intake was below and order backlog was above last year's level.
The net sales in Denmark were 11.3 MEUR (12.0 MEUR) and operational segment
result was 0.4 MEUR (0.9 MEUR). Net sales decreased by 6%. Profitability
decreased to 3% (7%). Weaker consulting revenue in the beginning of the year,
combined with reduced license sales resulted into lower profitability in Q1-3.
During the year Affecto started and progressed with recovery actions, including
alignment of customer and industry focus. Improved sales performance in H2
resulted into higher revenue and profitability in Q4. In Q4, Affecto signed
several new customer contracts, the major ones with a Danish Pharmaceutical
company. Both order intake and order backlog were above last year's level.
Across the Scandinavian markets, the Company sees a growing interest in the new
business technologies & analytics, as well as an improvement in demand for
traditional BI solutions and Master Data Management.
The net sales in Baltic (Lithuania, Latvia, Estonia, Poland, South Africa) were
20.1 MEUR (19.0 MEUR). Operational segment result was 3.9 MEUR (2.9 MEUR). Net
sales increased by 6% and profitability increased to 20% (15%). Key insurance
business projects were completed during 2015 and the related revenue and
profitability returned towards normalized level by the end of the year. Estonia
performed well throughout the year and the good performance continued into Q4.
Baltics based near-shoring business was increased across all markets. Order
intake and order backlog were below last year's level.
The Company sees that Estonian market demand continues strong while Lithuanian
market is neutral. Insurance market demand continues to be influenced by e.g.
weakening ZAR in the South African part of business.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of Affecto Plc, held on 8 April 2015, adopted the
financial statements for 1.1.-31.12.2014 and discharged the members of the
Board of Directors and the CEO from liability. Approximately 48 percent of
Affecto's shares and votes were represented at the Meeting. The Annual General
Meeting decided on a dividend distribution of EUR 0.16 per share for the year
2014.
Aaro Cantell, Magdalena Persson, Jukka Ruuska, Olof Sand, Tuija Soanjärvi and
Lars Wahlström were elected as members of the Board of Directors. The
organization meeting of the Board of Directors elected Aaro Cantell as Chairman
and Olof Sand as Vice-Chairman. Authorised Public Accountants Ernst & Young Oy
was elected as the auditor of the Company with Mikko Järventausta, APA, as
auditor in charge.
The Meeting approved the Board's proposal for appointing a Shareholders’
Nomination Committee to prepare proposals concerning members of the Board of
Directors and their remunerations for the following Annual General Meeting. The
Nomination Committee consists of the representatives of the three largest
shareholders and the Chairman of the Board of Directors, acting as an expert
member, if he/she is not appointed representative of a shareholder. On 26
November 2015, the Company announced that Cantell Oy, Danske Invest Suomen
Pienyhtiöt Fund and Säästöpankki Kotimaa Fund have appointed Aaro Cantell,
Chairman of Affecto's Board of Directors, Tuomas Virtala, Head of Danske
Capital Finland, and Petteri Vaarnanen, Head of Asset Management in
SP-Rahastoyhtiö, as members of the Nomination Committee. Lombard International
Assurance S.A. did not use its right to appoint a member.
According to the Articles of Association, the General Meeting of Shareholders
annually elects the Board of Directors by a majority decision. The term of
office of the board members expires at the end of the next Annual General
Meeting of Shareholders following their election. The Board appoints the CEO.
The Articles of Association do not contain any special rules for changing the
Articles of Association or for issuing new shares
The Company will issue a Corporate Governance Statement for the year 2015. The
Corporate Governance Statement will be issued separately from the report of the
board of directors and it will be available on the Company’s website.
THE AUTHORIZATIONS GIVEN TO THE BOARD OF DIRECTORS
The complete contents of the new authorizations given by the Annual General
Meeting held on 8 April 2015 have been published by stock exchange release
regarding the Meetings' decisions. Key facts about the authorizations:
The Annual General Meeting authorized the Board of Directors to decide to
acquire the Company's own shares with distributable funds. A maximum of 2 100
000 shares may be acquired. The authorization is in force until the next Annual
General Meeting.
The Annual General Meeting authorized the Board of Directors to decide to issue
new shares and to convey the Company's own shares held by the Company in one or
more tranches. The share issue may be carried out as a share issue against
consideration or without consideration on terms to be determined by the Board
of Directors and in relation to a share issue against consideration at a price
to be determined by the Board of Directors. A maximum of 4 200 000 new shares
may be issued. A maximum of 2 100 000 own shares held by the Company may be
conveyed. In addition, the authorization includes the right to decide on a
share issue without consideration to the Company itself so that the amount of
own shares held by the Company after the share issue is a maximum of one-tenth
(1/10) of all shares in the Company. The authorization is in force until the
next Annual General Meeting. Based on the authorization a total of 20 984
shares have been conveyed in August to the Board members as a partial payment
of their fees, in accordance to the decision made by the Annual General
Meeting.
SHARES AND TRADING
2013 options have been listed on NASDAQ Helsinki since 11 May 2015. During the
review period no shares have been subscribed with the 2013 options.
On 13 August 2015 Affecto conducted a directed share issue of 20 984 shares to
the board members. The directed share issue was conducted using the treasury
shares and it was based on the resolution of the Annual General Meeting
according to which 40 per cent of the annual Board remuneration will be paid in
Company shares during August 2015.
The Company has one share series and all shares have similar rights. At the end
of the review period the total number of shares was 22 450 745 shares. The
Company held 846 235 shares in the treasury which represents approximately 3.8%
of the total amount of the shares.
During the review period the highest share price was 3.84 euro, the lowest
price 2.64 euro, the average price 3.14 euro and the closing price 2.95 euro.
The trading volume was 4.3 million shares, corresponding to 20% (annualised) of
the number of shares at the end of the period. The market value of shares was
63.7 MEUR at the end of the period excluding the treasury shares.
SHAREHOLDERS
The Company had a total of 3 750 shareholders on 31 December 2015 and the
foreign ownership was 14%. The list of the largest owners is available at the
Company's web site. Information about the ownership structure and option
programs is included as a separate section in the financial statements. The
shareholding of the board members, CEO and their controlled corporations
totaled approximately 10.7%.
ASSESSMENT OF RISKS AND UNCERTAINTIES
The markets where Affecto operates are going through change. Historically,
Affecto has concentrated on the traditional IT market solutions, demand for
which has moderated. However, at the same time there is growing market in new
business technology & analytics. There is a risk as well as an opportunity with
respect to the speed of which Affecto is able to develop the new emerging areas
in proportion to the traditional areas
Affecto's success depends also on good customer relationships. Affecto has a
diverse customer base. In 2015, the largest customer generated approximately 2%
and the 10 largest customers together approximately 18% of Affecto's net sales.
Although none of the customers is critically large for the whole group, there
are large customers in various countries that are significant for local
business in the relevant country. On the other hand, the diverse customer base
may decrease the effectiveness of the sales & delivery efforts and overall
agility of the company.
Affecto also needs to be seen as an interesting employer in order to recruit
and retain skilled employees. It is important for Affecto to be seen as an
employer our employees can be proud of. High people churn may create
inefficiencies in the business and temporarily decrease the utilization rate.
The changes in the general economic conditions and the operating environment of
customers have direct impact on Affecto's markets. The uncertain economic
outlook may affect Affecto's customers negatively. Slower IT investment
decision making and uncertainty on new investments with respect to new business
technology solutions may have negative impact on Affecto. Affecto's order
backlog has traditionally been only a few months long. Slower decision making
of the customers decreases the predictability of the business and may decrease
the utilization rate.
Affecto sells third party software licenses and maintenance as part of its
solutions. Typically, the license sales have the highest impact on the last
month of each quarter and especially in the fourth quarter. This increases the
fluctuation in net sales between quarters and increases the difficulty of
accurately forecasting the quarters. Additionally, the increase of cloud
services and other similar market trends may affect the license sales
negatively. Affecto had license sales of approximately 7 MEUR in 2015.
The Company recognizes that the risks of frauds and cyber security threats have
increased. The Company aims to mitigate the increased risks with internal
controls, IT-security, training, awareness and security minded culture.
Approximately 35% of Affecto's net sales are generated in Sweden and Norway,
thus the development of the currencies of these countries (SEK and NOK) may
have an impact on Affecto's profitability. The main part of the companies'
income and costs are within the same currency, which decreases the risks. In
addition, the Company also has business in South Africa and therefore the
development of the South African Rand (ZAR) may also affect the business
environment in South Africa and thus the Company’s business.
Affecto’s balance sheet includes a material amount of goodwill. Goodwill has
been allocated to cash generating units. Cash generating units, to which
goodwill has been allocated, are tested for impairment both annually and
whenever there is an indication that the unit may be impaired. Potential
impairment losses may have material effect on the reported profit and value of
assets.
OTHER EVENTS
On 21 August 2015, Affecto announced that it has become a target of a fraud.
The perpetrators committed an identity theft and managed to induce Affecto’s
subsidiary making an unwarranted payment of approximately 1.0 MEUR. The loss of
1.0 MEUR has been booked as a non-recurring item. The Company is not able to
reclaim the lost amount via its insurance coverage.
EVENTS AFTER THE REVIEW PERIOD
M.Sc. (Econ.) Martti Nurminen, 36, started as the Chief Financial Officer of
Affecto and member of the Leadership Team in January 2016.
On 25 January 2016, the Company announced the proposals of Affecto
Shareholders’ Nomination Committee to the Annual General Meeting. According to
the proposal, all the current Board members would continue in the Board of
Directors and their remuneration would remain the same as in 2015.
DIVIDEND PROPOSAL
Distributable funds of the group parent company on 31 December 2015 are 60 067
173.40 euros, of which the distributable profit is 16 559 615.51 euros. Board
of Directors proposes that from the financial year 2015 a dividend of 0.16
euros per share will be paid, a total of 3 456 721.60 euros with the
outstanding number of shares at the end of the financial period, and the rest
is carried forward to the retained earnings account. No material changes have
taken place in respect of the company’s financial position after the balance
sheet date. The liquidity of the company is good and in the opinion of the
Board of Directors proposed distribution of profit does not risk the liquidity
of the Company.
FUTURE OUTLOOK
Affecto expects its net sales to stay at the same level or grow slightly and
its operating profit to grow in 2016.
The company does not provide an exact quarterly guidance for revenue or
operating profit development, as single projects and timing of license sales
may have large impact on quarterly sales and profit.
Affecto Plc
Board of Directors
A briefing for analysts and media will be arranged at 14:30 at Restaurant
Savoy, Eteläesplanadi 14, Helsinki.
www.affecto.com
-----
Financial information:
1. Consolidated income statement, consolidated comprehensive income statement,
balance sheet, cash flow statement and statement of changes in equity
2. Notes
3. Key figures
1. Consolidated income statement, consolidated comprehensive income statement,
balance sheet, cash flow statement and statement of changes in equity
CONSOLIDATED INCOME STATEMENT
(1 000 EUR) 10-12/1 10-12/1 2015 2014
5 4
-----------------------------------
-----------------------------------
Net sales 31 305 32 823 116 026 122 693
Other operating income 21 15 22 27
Changes in inventories of finished -366 -55 -195 -83
goods and work in progress
Materials and services -6 706 -7 283 -23 978 -26 560
Personnel expenses -16 089 -16 865 -64 957 -67 630
Other operating expenses -4 671 -4 398 -18 352 -17 221
Other depreciation and amortisation -273 -297 -1 089 -1 218
IFRS3 amortisation - -216 - -1 753
Impairment - -7 423 - -7 423
Operating profit 3 221 -3 699 7 475 833
Financial income and expenses 115 -61 4 -563
Profit before income tax 3 336 -3 760 7 479 270
Income tax -780 -948 -1 585 -1 861
Profit for the period 2 556 -4 708 5 894 -1 591
Profit for the period
attributable to:
Owners of the parent company 2 556 -4 708 5 894 -1 591
Earnings per share
(EUR per share):
Basic 0.12 -0.22 0.27 -0.07
Diluted 0.12 -0.22 0.27 -0.07
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(1 000 EUR) 10-12/1 10-12/1 2015 2014
5 4
-----------------------------------
-----------------------------------
Profit for the period 2 556 -4 708 5 894 -1 591
Other comprehensive income
Items that may be reclassified subsequently
to the statement of income:
Translation difference 126 -1 955 -649 -2 141
Total Comprehensive income 2 682 -6 663 5 245 -3 732
for the period
Total Comprehensive income
attributable to:
Owners of the parent company 2 682 -6 663 5 245 -3 732
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 12/2015 12/2014
----------------------------------------------------
----------------------------------------------------
Non-current assets
Property, plant and equipment 1 095 1 505
Goodwill 62 367 62 814
Other intangible assets 132 254
Deferred tax assets 976 1 263
Trade and other receivables 242 -
64 813 65 836
Current assets
Inventories 300 493
Trade and other receivables 32 067 36 736
Current income tax receivables 778 393
Cash and cash equivalents 22 375 21 380
55 520 59 002
----------------------------------------------------
----------------------------------------------------
Total assets 120 333 124 838
Equity attributable to owners
of the parent Company
Share capital 5 105 5 105
Reserve of invested non-restricted 47 731 47 718
equity
Other reserves 858 835
Treasury shares -2 056 -2 111
Translation differences -4 919 -4 269
Retained earnings 15 599 13 159
----------------------------------------------------
----------------------------------------------------
Total equity 62 319 60 437
Non-current liabilities
Loans and borrowings - 18 452
Deferred tax liabilities 177 190
177 18 642
Current liabilities
Loans and borrowings 18 484 4 000
Trade and other payables 38 476 40 254
Current income tax liabilities 420 927
Provisions 456 578
57 836 45 759
Total liabilities 58 013 64 401
----------------------------------------------------
----------------------------------------------------
Equity and liabilities 120 333 124 838
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 2015 2014
----------------------------------------------------------------
----------------------------------------------------------------
Cash flows from operating activities
Profit for the period 5 894 -1 591
Adjustments to profit for the period 2 850 12 878
8 744 11 287
Change in working capital 2 949 348
Interest and other financial cost paid -305 -418
Interest and other financial income received 50 68
Income taxes paid -2 107 -2 946
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----------------------------------------------------------------
Net cash from operating activities 9 332 8 339
Cash flows from investing activities
Acquisition of tangible and intangible assets -566 -740
Proceeds from sale of tangible and 6 1
intangible assets
----------------------------------------------------------------
Net cash used in investing activities -561 -739
Cash flows from financing activities
Repayments of non-current borrowings -4 000 -4 000
Proceeds from share options exercised - 262
Dividends paid to the owners -3 453 -3 434
of the parent company
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----------------------------------------------------------------
Net cash from financing activities -7 453 -7 172
(Decrease)/increase in cash and cash equivalents 1 318 429
Cash and cash equivalents 21 380 21 469
at the beginning of the period
Foreign exchange effect on cash -324 -518
Cash and cash equivalents 22 375 21 380
at the end of the period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the parent
company
---------------------------------------------------------
---------------------------------------------------------
(1 000 EUR) Share Reserve of Other Treasu Trans Ret. Total
capita invested reserv ry lat. earnin equity
l non-restricted es shares diff. gs
equity
Equity at 1 5 105 47 718 835 -2 111 -4 269 13 159 60 437
January 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 5 894 5 894
Translation -649 -649
differences
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -649 5 894 5 245
compre-hensive
income
Share-based 23 23
payments
Treasury shares 14 55 68
as
compensation
to the Board
Dividends paid -3 453 -3 453
--------------------------------------------------------------------------------
Equity at 31 5 105 47 731 858 -2 056 -4 919 15 599 62 319
December 2015
Equity attributable to owners of the parent
company
---------------------------------------------------------
---------------------------------------------------------
(1 000 EUR) Share Reserve of Other Treasu Trans Ret. Total
capita invested reserv ry lat. earnin equity
l non-restricted es shares diff. gs
equity
Equity at 1 5 105 47 448 763 -2 165 -2 128 18 184 67 207
January 2014
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit -1 591 -1 591
Translation -2 141 -2 141
differences
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -2 141 -1 591 -3 732
compre-hensive
income
Share-based 72 72
payments
Exercise of 262 262
share options
Treasury shares 8 54 62
as
compensation
to the Board
Dividends paid -3 434 -3 434
--------------------------------------------------------------------------------
Equity at 31 5 105 47 718 835 -2 111 -4 269 13 159 60 437
December 2014
2. Notes
2.1. Basis of preparation
This financial statement bulletin has been prepared in accordance with the IFRS
recognition and measurement principles and in accordance with IAS 34, Interim
Financial reporting. The financial statement bulletin should be read in
conjunction with the annual financial statements for the year ended 31 December
2014. In material respects, the same accounting policies have been applied as
in the 2014 annual consolidated financial statements. The amendments to and
interpretations of IFRS standards that entered into force on 1 January 2015 had
no material impact on this interim report.
2.2. Segment information
Affecto's reporting segments are based on geographical locations and are
Finland, Norway, Sweden, Denmark and Baltic.
Segment net sales and result
(1 000 EUR) 10-12/15 10-12/14 2015 2014
-------------------------------------
-------------------------------------
Total net sales
Finland 14 285 13 849 49 539 50 564
Norway 5 512 6 481 21 068 25 028
Sweden 4 795 4 833 18 219 19 985
Denmark 3 194 2 850 11 297 12 038
Baltic 4 723 5 669 20 128 19 032
Other -1 203 -857 -4 226 -3 954
----------------------------------------------------------------------
Group total 31 305 32 823 116 026 122 693
Operational segment result
Finland 1 874 1 706 3 528 5 441
Norway 266 935 1 451 1 966
Sweden 526 347 718 304
Denmark 314 143 355 865
Baltic 706 1 320 3 930 2 944
Other -465 -512 -2 507 -1 511
----------------------------------------------------------------------
----------------------------------------------------------------------
Total operational segment result 3 221 3 940 7 475 10 009
IFRS3 amortisation - -216 - -1 753
Impairment of goodwill - -7 423 - -7 423
----------------------------------------------------------------------
----------------------------------------------------------------------
Operating profit 3 221 -3 699 7 475 833
Financial income and expenses 115 -61 4 -563
----------------------------------------------------------------------
----------------------------------------------------------------------
Profit before income tax 3 336 -3 760 7 479 270
In 2014, the impairment of goodwill allocated to assets of Sweden segment.
Net sales by business lines
(1 000 EUR) 10-12/15 10-12/14 2015 2014
-------------------------------------
-------------------------------------
Information Management Solutions 28 965 30 645 107 887 114 008
Karttakeskus GIS business 3 453 3 002 12 201 11 868
Other -1 112 -824 -4 062 -3 183
----------------------------------------------------------------------
----------------------------------------------------------------------
Group total 31 305 32 823 116 026 122 693
2.3. Changes in intangible and tangible assets
(1 000 EUR) 1-12/2015 1-12/2014
---------------------
---------------------
Carrying amount at the beginning of period 64 573 76 185
Additions 566 740
Disposals -2 -1
Depreciation and amortization for the period -1 089 -2 971
Impairments - -7 423
Exchange rate differences -454 -1 957
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Carrying amount at the end of period 63 594 64 573
In 2014, an impairment of 7 423 thousand euro has been recognized on assets
allocated to Sweden cash-generating unit. The impairment has been fully
recognized on goodwill.
2.4. Share capital, reserve of invested non-restricted equity and treasury
shares
(1 000 EUR) Number of Share Reserve of Treasury
shares capital invested shares
outstanding non-restricted
equity
------------------------------------------------------
------------------------------------------------------
1.1.2014 21 431 052 5 105 47 448 -2 165
Exercise of share options 132 141 - 260 -
Payment for share options - - 2 -
Treasury shares of 20 333 - 8 54
compensation to the
Board of Directors
31.12.2014 21 583 526 5 105 47 718 -2 111
1.1.2015 21 583 526 5 105 47 718 -2 111
Treasury shares of 20 984 - 14 55
compensation to the
Board of Directors
31.12.2015 21 604 510 5 105 47 731 -2 056
Affecto Plc owns 846 235 treasury shares, which correspond to 3.8% of the total
amount of the shares. The amount of registered shares is 22 450 745 shares.
2.5. Interest-bearing liabilities
(1 000 EUR) 31.12.2015 31.12.2014
Interest-bearing non-current liabilities
Loans from financial institutions, - 18 452
non-current portion
Loans from financial institutions, 18 484 4 000
current portion
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18 484 22 452
Affecto's loan facility agreement includes financial covenants, breach of which
might lead to an increase in cost of debt or cancellation of the facility
agreement. The covenants are based on total net debt to earnings before
interest, taxes, depreciation and amortization and total net debt to total
equity. The covenants will be measured quarterly, and these terms and
conditions of covenants were met at the end of the reporting period. According
to the current terms, the loan from financial institution will be due in June
2016. The company has started the negotiations regarding to the loan renewal.
2.6. Contingencies and commitments
The future aggregate minimum lease payments under non-cancelable operating
leases:
(1 000 EUR) 31.12.2015 31.12.2014
Not later than one (1) year 3 167 3 333
Later than one (1) year, 1 911 3 421
but not later than five (5) years
Later than five (5) years - -
---------------------------------------------------------
Total 5 078 6 755
Guarantees given:
(1 000 EUR) 31.12.2015 31.12.2014
Liabilities secured by a mortgage
Financial loans 18 500 22 500
The above-mentioned liabilities are secured by bearer bonds with a nominal
value of 52.5 million euro. The bonds are held by Nordea Pankki Suomi Oyj and
secured by a mortgage on company assets of the group companies. In addition,
the shares in Affecto Finland Oy and Affecto Norway AS have been pledged to
secure the financial liabilities above.
Other securities given on own behalf:
(1 000 EUR) 31.12.2015 31.12.2014
Pledges 36 33
Other guarantees 1 925 2 118
Other guarantees are mostly securities issued for customer projects. These
guarantees include both bank guarantees secured by parent company of the group
and guarantees issued by the parent company and subsidiaries.
2.7. Related party transactions
Key management compensation and remunerations to the board of directors:
(1 000 EUR) 1-12/2015 1-12/2014
Salaries and other short-term employee benefits 2 219 2 312
Post-employment benefits 268 283
Termination benefits 275 80
Share-based payments 1 3
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Total 2 763 2 678
Purchases from related party:
(1 000 EUR) 1-12/2 1-12/2
015 014
Purchases from the entity that are controlled by key management 289 3
personnel of the group
Outstanding balance of purchases from the entity that are 36 -
controlled by key management personnel of the group
3. Key figures
10-12/15 10-12/14 2015 2014
-------------------------------------
-------------------------------------
Net sales, 1 000 eur 31 305 32 823 116 026 122 693
EBITDA, 1 000 eur 3 493 4 237 8 565 11 227
Operational segment result, 3 221 3 940 7 475 10 009
1 000 eur
Operating result, 1 000 eur 3 221 -3 699 7 475 833
Result before taxes, 1 000 eur 3 336 -3 760 7 479 270
Profit attributable to the owners 2 556 -4 708 5 894 -1 591
of the parent company, 1 000 eur
EBITDA, % 11.2 % 12.9 % 7.4 % 9.2 %
Operational segment result, % 10.3 % 12.0 % 6.4 % 8.2 %
Operating result, % 10.3 % -11.3 % 6.4 % 0.7 %
Result before taxes, % 10.7 % -11.5 % 6.4 % 0.2 %
Net income for equity holders 8.2 % -14.3 % 5.1 % -1.3 %
of the parent company, %
Equity ratio, % 58.5 % 54.6 % 58.5 % 54.6 %
Net gearing, % -6.2 % 1.8 % -6.2 % 1.8 %
Interest-bearing net debt, -3 891 1 071 -3 891 1 071
1 000 eur
Gross investment in non-current 118 129 566 740
assets (excl. acquisitions),
1 000 eur
Gross investments, % of net sales 0.4 % 0.4 % 0.5 % 0.6 %
Order backlog, 1 000 eur 50 672 49 645 50 672 49 645
Average number of employees 1 005 1 022 1 010 1 041
Earnings per share, eur 0.12 -0.22 0.27 -0.07
Earnings per share (diluted), 0.12 -0.22 0.27 -0.07
eur
Equity per share, eur 2.88 2.80 2.88 2.80
Average number of shares, 21 605 21 584 21 592 21 519
1 000 shares
Number of shares at the end of 21 605 21 584 21 605 21 584
period, 1 000 shares
Calculation of key figures
EBITDA = Earnings before interest, taxes,
depreciation, amortization and impairment losses
Operational segment result = Operating profit before amortizations on
fair value adjustments due to business
combinations (IFRS3) and goodwill
impairments
Equity ratio, % = Total equity *100
________________________________
Total assets – advance payments
Gearing, % = Interest-bearing liabilities – cash *100
and cash equivalents
__________________________________
Total equity
Interest-bearing net debt = Interest-bearing liabilities – cash and
cash equivalents
Earnings per share (EPS) = Profit attributable to owners of the parent
company
______________________________________
Weighted average number of ordinary shares in
issue during the period
Equity per share = Total equity
______________________________________
Adjusted number of shares at the end of
the period
Market capitalization = Number of shares at the end of period
(excluding company’s own shares held by
the company) x share price at closing date
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