2011-08-02 08:30:00 CEST
2011-08-02 08:30:09 CEST
REGULATED INFORMATION
Affecto Oyj - Interim report (Q1 and Q3)
AFFECTO PLC'S INTERIM REPORT 1-6/2011
Helsinki, 2011-08-02 08:30 CEST (GLOBE NEWSWIRE) -- AFFECTO PLC -- INTERIM
REPORT -- 2 AUGUST 2011 at 9.30
AFFECTO PLC'S INTERIM REPORT 1-6/2011
GROUP KEY FIGURES
MEUR 4-6/11 4-6/10 1-6/11 1-6/10 2010
Net sales 32.6 28.4 62.7 54.2 114.1
Operational segment result 2.2 0.6 4.3 0.7 5.3
% of net sales 6.7 2.2 6.9 1.3 4.6
Operating profit/loss 1.7 0.1 3.3 -0.3 3.3
% of net sales 5.2 0.4 5.3 -0.5 2.9
Profit/loss before taxes 1.2 -0.3 2.7 -1.4 1.5
Profit/loss for the period 0.8 -0.1 2.0 -1.1 0.9
Equity ratio, % 45.3 44.1 45.3 44.1 43.1
Net gearing, % 39.2 45.5 39.2 45.5 40.4
Earnings per share, eur 0.04 -0.01 0.10 -0.05 0.05
Earnings per share (diluted), eur 0.04 -0.01 0.10 -0.05 0.05
Equity per share, eur 2.71 2.50 2.71 2.50 2.69
CEO Pekka Eloholma comments:"Second quarter net sales grew by 15% to 32.6 MEUR. Net sales grew in all
countries, Baltic and Sweden having the highest growth rate. EBIT grew to 1.7
MEUR and was 5% of net sales. The quarter was better than the same quarter in
the previous two years regarding both the net sales and EBIT.""The first half of year 2011 was rather good. The market situation and demand
for our services was on a normal level and we believe that the market in our
focus areas (BI and ECM) continues to grow by 6-8%/year. Our main goal for this
year, profit improvement, has actualized in other countries, but the ongoing
growth-oriented development actions caused the result in Sweden to remain
negative. We believe that also the Swedish business turns profitable during the
year.""Affecto's order backlog is 50.7 MEUR, which is 12% higher than in Q2/2010
(45.4 MEUR). The order backlog and the good level of customer activity
strengthen our belief in continuing positive business conditions.""In 2011 the main focus is on profit improvement. Operating profit is estimated
to at least double compared to year 2010. The net sales are estimated to grow
at least by 10% in year 2011."
Additional information:
CEO Pekka Eloholma, +358 205 777 737
CFO Satu Kankare, +358 205 777 202
SVP, M&A, IR, Hannu Nyman, +358 205 777 761
This release is unaudited. The amounts in this report have been rounded from
exact numbers.
INTERIM REPORT 1-6/2011
Affecto is the largest Business Intelligence solution provider in the Nordic
countries. We help our customers to improve productivity and competitiveness by
superior use of information for decision making. We build IT solutions that
enable organisations to integrate their strategic targets with their business
management. Affecto also delivers operational solutions for improving and
simplifying processes at customer organizations and offers geographic
information services.
Affecto is headquartered in Helsinki, Finland. The company has subsidiaries in
Finland, Sweden, Norway, Denmark, Estonia, Lithuania, Latvia, Poland and South
Africa.
NET SALES
Affecto's net sales in 1-6/2011 were 62.7 MEUR (1-6/2010: 54.2 MEUR). Net sales
in Finland were 24.1 MEUR (22.8 MEUR), in Norway 14.3 MEUR (12.1 MEUR), in
Sweden 9.9 MEUR (7.6 MEUR), in Denmark 7.2 MEUR (5.9 MEUR) and 8.4 MEUR (7.0
MEUR) in Baltic.
The business developed steadily in the Nordic countries and the Nordic BI
market remained strong during the period. However, Easter was this year in
April, which decreased the number of available work days in the second quarter.
The economic situation in the Baltic countries has improved, but the local IT
market has not yet fully recovered from the effects of the financial crisis.
Net sales by reportable segments
Net sales, MEUR 4-6/11 4-6/10 1-6/11 1-6/10 2010
Finland 12.6 11.8 24.1 22.8 46.5
Norway 7.1 6.2 14.3 12.1 25.8
Sweden 5.1 4.1 9.9 7.6 15.3
Denmark 3.5 3.2 7.2 5.9 15.4
Baltic 4.9 3.8 8.4 7.0 13.7
Other -0.6 -0.8 -1.2 -1.3 -2.7
------------------------------------------------------
------------------------------------------------------
Group total 32.6 28.4 62.7 54.2 114.1
Net sales of Information Management Solutions business in 1-6/2011 were 57.5
MEUR (48.9 MEUR) and net sales of Geographic Information Services were 5.7 MEUR
(5.5 MEUR).
The order backlog was 50.7 MEUR, which is 12% higher than the Q2/2010 order
backlog (45.4 MEUR) and roughly at the same level as Q1/2011. Affecto has a
well-diversified customer base. The ten largest customers generated approx. 20%
of group revenue in 2010 and the largest customer corresponded to 4% of net
sales.
PROFIT
Affecto's EBIT in 1-6/2011 was 3.3 MEUR (-0.3 MEUR) and the operational segment
result was 4.3 MEUR (0.7 MEUR). Operational segment result was in Finland 2.6
MEUR (1.6 MEUR), in Norway 1.4 MEUR (0.8 MEUR), in Sweden -1.0 MEUR (-0.5
MEUR), in Denmark 0.7 MEUR (0.4 MEUR) and in Baltic 1.4 MEUR (-0.1 MEUR).
Profitability was excellent in Baltic, good in Finland, adequate in Norway and
Denmark, and weak in Sweden. Compared to last year, profitability improved in
all other countries except Sweden, which remained loss-making due to the
ongoing development actions, as the local organization and processes have been
developed in search of strong growth in 2011. A 25% growth was reached in the
second quarter in Sweden, but the result did not yet turn positive. The
business in Sweden is estimated to turn profitable in the second year-half.
Operational segment result by reportable segments
Operational segment 4-6/11 4-6/10 1-6/11 1-6/10 2010
result, MEUR
Finland 1.4 1.0 2.6 1.6 5.1
Norway 0.6 0.3 1.4 0.8 2.4
Sweden -0.5 -0.2 -1.0 -0.5 -1.7
Denmark 0.3 0.3 0.7 0.4 1.2
Baltic 0.8 -0.0 1.4 -0.1 0.6
Other -0.3 -0.8 -0.7 -1.4 -2.4
----------------------------------------------------------------
----------------------------------------------------------------
Operational segment result 2.2 0.6 4.3 0.7 5.3
IFRS3 Amortization -0.5 -0.5 -1.0 -1.0 -2.0
----------------------------------------------------------------
Operating profit/loss 1.7 0.1 3.3 -0.3 3.3
According to IFRS3 requirements, 1-6/2011 EBIT includes 1.0 MEUR (1.0 MEUR) of
amortization of intangible assets related to acquisitions. In year 2011 the
IFRS3 amortization is estimated to total 2.0 MEUR and in 2012 approx. 2.0 MEUR.
R&D costs 1-6/2011 totaled 0.5 MEUR (0.5 MEUR), i.e. 0.9% of net sales (1.0%).
The costs have been recognized as an expense in the income statement.
The fluctuation in financial costs is explained to a large extent by changes in
the fair value of the interest swap taken, which changes have no effect on
actual cash flow. The interest rate changes have caused 0.2 MEUR income in
1-6/2011 (0.2 MEUR in Q1, 0.0 MEUR in Q2).
Taxes corresponding to the profit of the period have been entered as tax
expense. Net profit for the period was 2.0 MEUR, while it was -1.1 MEUR last
year.
FINANCE AND INVESTMENTS
At the end of the reporting period, Affecto's balance sheet totaled 135.3 MEUR
(12/2010: 142.9 MEUR). Equity ratio was 45.3% (12/2010: 43.1%) and net gearing
was 39.2% (12/2010: 40.4%).
The financial loans were 36.5 MEUR (12/2010: 36.5 MEUR) at the end of reporting
period. The company's cash and liquid assets were 14.4 MEUR (12/2010: 13.8
MEUR). The interest-bearing net debt was 22.1 MEUR (12/2010: 22.6 MEUR).
Affecto has renegotiated the bank loan in June 2011 and loan agreement is valid
until June 2016. The refinanced bank loan has covenants, breach of which may
lead to higher financing costs or even the termination of the loan. 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.
Cash flow from operating activities for the reported period was 2.5 MEUR (-2.2
MEUR) and cash flow from investing activities was -0.7 MEUR (-0.5 MEUR).
Investments in non-current assets were 0.7 MEUR (0.6 MEUR).
Based on decision by the Annual General Meeting held on 31 March 2011, Affecto
has distributed dividends of 1.3 MEUR (previous year 1.3 MEUR).
EMPLOYEES
The number of employees was 1008 persons at the end of the reporting period
(907). 395 employees were based in Finland, 130 in Norway, 145 in Sweden, 64 in
Denmark and 274 in the Baltic countries. The average number of employees during
the period was 987 (909).
Stig-Göran Sandberg was appointed in June as Country Manager for Finland. He
also continues as the Area Manager for Baltic.
BUSINESS REVIEW BY AREAS
The group's business is managed through five country units. Finland, Norway,
Sweden, Denmark and Baltic are also the reportable segments.
Finland
In 4-6/2011 the net sales in Finland were 12.6 MEUR (11.8 MEUR). Operational
segment result was 1.4 MEUR (1.0 MEUR). The business developed rather steadily
and net sales grew by 7%. Customers' activity has remained good especially
regarding BI and GIS solutions. The GIS outsourcing agreement with the Finnish
Agency for Rural Affairs was prolonged by a year in April. During the period
new orders were received diversifiedly, e.g. from VR, SOK, Nokia and
TeliaSonera.
Norway
In 4-6/2011 the net sales in Norway were 7.1 MEUR (6.2 MEUR) and operational
segment result was 0.6 MEUR (0.3 MEUR). The net sales grew by 15% and
profitability improved compared to last year. During the period new orders were
received e.g. from Det Norske Veritas, Santander, Statoil and Telenor.
Sweden
In 4-6/2011 the net sales in Sweden were 5.1 MEUR (4.1 MEUR) and operational
segment result -0.5 MEUR (-0.2 MEUR). The net sales grew by 25%, partially due
to currency effect, but also the organic growth was good.
Number of employees has grown by over 30% during year 2011. The forward-looking
building of the local organization, targeting a significant growth in net sales
in 2011, has clearly lowered profitability. The business in Sweden is estimated
to turn profitable in second year-half. Expectations are supported by the
improving utilization rate and the order backlog's significant growth compared
to the previous year. During the period new orders were received e.g. from
Göteborg Energi and Pernod Ricard.
Denmark
In 4-6/2011 the net sales in Denmark were 3.5 MEUR (3.2 MEUR) and operational
segment result was 0.3 MEUR (0.3 MEUR). In Denmark the net sales grew by 9%,
while profitability remained at the previous year's level. The market situation
has developed moderately positively. During the period new orders were received
e.g. from Velux, SDC and BEC.
Baltic (Lithuania, Latvia, Estonia, Poland, South Africa)
The Baltic business mostly consists of projects related to large
customer-specific systems. Public sector entities in the Baltic countries and
insurance companies also outside Baltic area are significant customer segments.
In 4-6/2011 the Baltic net sales were 4.9 MEUR (3.8 MEUR). Operational segment
result was 0.8 MEUR (-0.0 MEUR). Net sales grew by 27% and profitability was
excellent. The national economies in the Baltic countries have already returned
to growth path, but the local IT markets have not yet fully recovered from the
effects of the financial crisis. The price competition continues tight and the
EU continues to have great importance in financing both public and also private
investments. New projects were received during the period mostly from public
sector entities, e.g. Lithuanian railways and Regitra.
REVIEW OF MARKET DEVELOPMENTS
The demand for Enterprise Information Management (EIM) solutions, including
Business Intelligence (BI) and Enterprise Content Management (ECM), is
estimated to develop positively along the general economy. The average annual
global growth of BI and analytics software license markets is estimated to
exceed 8% until year 2013. The Nordic BI/DW services markets have been
estimated to grow annually by 6-8% in 2011-2013. Also the ECM solutions market
is estimated to grow correspondingly.
The market situation in the Baltic countries has continued to improve and the
effects of the recession are being overcome.
Geographic Information Services business developed favorably during the period
and the customers' interest for GIS solutions is estimated to have grown. The
outsourcing agreement with the Finnish Agency for Rural Affairs was prolonged
by a year in April.
CHANGES IN GROUP STRUCTURE
Affecto has formed a separate subsidiary company Karttakeskus Oy for conducting
the Geographic Information Services (GIS) business in Finland. The GIS services
business was separated from Affecto Finland Ltd through a partial de-merger on
1 January 2011. Both Affecto Finland Ltd and the new Karttakeskus Oy are wholly
owned subsidiaries of the parent company Affecto Plc.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of Affecto Plc, which was held on 31 March 2011,
adopted the financial statements for 1.1.-31.12.2010 and discharged the members
of the Board of Directors and the CEO from liability. Approximately 41 percent
of Affecto's shares and votes were represented at the Meeting. The Annual
General Meeting decided that a dividend of EUR 0.06 per share will be
distributed for the year 2010.
Aaro Cantell, Heikki Lehmusto, Jukka Ruuska and Haakon Skaarer were re-elected
as members of the Board of Directors, and Tuija Soanjärvi and Lars Wahlström
were elected as new members. Immediately after the Annual General Meeting the
organization meeting of the Board of Directors was held and Aaro Cantell was
re-elected Chairman of the Board and Jukka Ruuska as Vice-Chairman. KPMG Oy Ab
was elected auditor of the company.
The Meeting approved the Board's proposal for appointing a Nomination Committee
to prepare proposals concerning members of the Board of Directors and their
remunerations for the following Annual General Meeting. The Nomination
Committee will consist 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. The members
representing the shareholders will be appointed by the three shareholders whose
share of ownership of the shares of the company is largest on 31 October
preceding the Annual General Meeting.
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 AUTHORIZATIONS GIVEN TO THE BOARD OF DIRECTORS
In 2011 the Board has not used the authorizations given by the previous Annual
General Meeting. Those authorizations ended on 31 March 2011.
The complete contents of the new authorizations given by the Annual General
Meeting held on 31 March 2011 have been published in the stock exchange release
regarding the Meetings' decisions. The Board did not use the authorizations by
the end of the review period.
The Annual General Meeting decided to authorize 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 shall be in force until
the next Annual General Meeting.
The Annual General Meeting decided to authorize 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
shall be in force until the next Annual General Meeting.
SHARES AND TRADING
The company has only one share series, and all shares have similar rights. As
at 30 June 2011, Affecto Plc's share capital consisted of 21 516 468 shares
including the shares owned by Affecto Management Oy. The company does not own
treasury shares. Affecto Management Oy owns 823 000 shares.
In 1-6/2011, the highest share price was 2.97 euro, lowest price 2.37 euro,
average price 2.54 euro and closing price 2.63 euro. Trading volume was 6.3
million shares, corresponding to 58% of the number of shares at the end of
period (annualized). The market value of shares was 56.6 MEUR at the end of the
period including the shares owned by Affecto Management Oy.
SHAREHOLDERS
The company had a total of 1795 owners on 30 June 2011 and the foreign
ownership was 20%. The list of the largest owners can be viewed in the
company's web site. Information about ownership structure and option programs
is included as a separate section in the financial statements. The ownership of
board members, CEO and their controlled corporations totaled approx. 13.4%
(13.1% shares and 0.4% options).
According to the flagging announcements made on 12 January 2011, the ownership
of Capman Public Market Investment has decreased below 5% and the ownership of
OP-Pohjola (OP-Rahastoyhtiö funds) has exceeded 5%.
According to the flagging announcement made on 17 February 2011, the ownership
of Nordea Rahastoyhtiö Suomi has exceeded 5%.
According to the flagging announcement made on 11 April 2011, the ownership of
Nordea Rahastoyhtiö Suomi has decreased below 5%.
According to the flagging announcement made due to a technical change on 13
June 2011, the ownership of OP-Pohjola has decreased below 5% and the ownership
of OP-Rahastoyhtiö funds has exceeded 5%.
ASSESSMENT OF RISKS AND UNCERTAINTIES
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 reported profit and value of
assets. The greatest risk is related to Sweden, where Affecto has invested in
reforming the organization and processes, which has weakened profitability in
the short term.
The changes in the general economic conditions and the operating environments
of its customers have direct impact in Affecto's markets. The competition in
the markets also tightens continuously. This could have a negative effect on
the business, operating results and financial condition of Affecto.
Affecto's success depends also on good customer relationships. Affecto has a
well-diversified customer base. Although none of the customers is critically
large for the whole group, there are large customers in various countries who
are significant for local business in the country.
Affecto's order backlog has traditionally been only for a few months, which
decreases the reliability of longer-term forecasts. Slower investment decision
making, postponing or cancellation of customers' IT investments may have
negative impact on Affecto's profitability.
Approximately a half of Affecto's business is in Sweden, Norway and Denmark,
thus the development of the currencies of these countries (SEK, NOK and DKK)
may have impact on Affecto's profitability.
Affecto's bank loan has covenants, the breach of which may lead to higher
financing costs or even the termination of the loan. The covenants are based on
total net debt to earnings before interest, taxes, depreciation and
amortization and total net debt to total equity.
Affecto's continued success is very much dependent on its management team and
personnel. The loss of the services of any member of its senior management or
other key employee could have a negative impact on Affecto's business and the
ability of the company to implement its strategy. In addition, Affecto's
success depends on its ability to hire, develop, train, motivate and retain
skilled professionals on its staff.
Affecto sells third party software licenses as part of its solutions. The
license sales have most impact on the last month of each quarter and especially
in the fourth quarter. This increases the fluctuation in sales between quarters
and increases the difficulty of accurately forecasting the quarters. Affecto
had license sales of approx. 13 MEUR in 2010.
EVENTS AFTER THE REPORTING PERIOD
Affecto has acquired in July the remaining shares of Affecto Estonia from the
minority shareholders. The transaction had no material impact on the group
financials.
FUTURE OUTLOOK
In 2011 the main focus is on profit improvement. Operating profit is estimated
to at least double compared to year 2010. The net sales are estimated to grow
at least by 10% in year 2011.
As a normal seasonality effect, the summer vacations will weaken the third
quarter, especially the net sales.
The company does not provide exact guidance for net sales or EBIT development,
as single projects and timing of license sales may have large impact on
quarterly sales and profit.
Affecto Plc
Board of Directors
It is possible to order Affecto's stock exchange releases to be delivered
automatically by e-mail. Please visit the Investors section of the company
website: www.affecto.com
A briefing for analysts and media will be arranged at 11.00 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) 4-6/11 4-6/10 1-6/11 1-6/10 2010
--------------------------------------------
--------------------------------------------
Net sales 32 608 28 423 62 730 54 155 114 078
Other operating income 49 - 86 14 57
Changes in inventories of 11 -98 40 -47 -181
finished goods and work in
progress
Materials and services -7 209 -5 978 -12 773 -10 462 -25 393
Personnel expenses -18 625 -16 946 -36 437 -33 696 -64 838
Other operating expenses -4 301 -4 440 -8 637 -8 570 -17 106
Other depreciation and amortisation -348 -341 -695 -694 -1 352
IFRS3 amortisation -505 -499 -1 018 -990 -1 990
Operating profit/loss 1 681 122 3 296 -290 3 275
Net financial expenses -443 -398 -585 -1 062 -1 797
Profit/loss before income tax 1 238 -276 2 711 -1 352 1 479
Income tax -407 161 -706 295 -546
Profit/loss for the period 832 -115 2 005 -1 057 933
Profit/loss for the period
attributable to:
Owners of the parent company 808 -114 1 994 -1 056 955
Non-controlling interest 24 - 11 -1 -22
Earnings per share
(EUR per share):
Basic 0.04 -0.01 0.10 -0.05 0.05
Diluted 0.04 -0.01 0.10 -0.05 0.05
CONSOLIDATED COMPREHENSIVE
INCOME STATEMENT
(1 000 EUR) 4-6/11 4-6/10 1-6/11 1-6/10 2010
--------------------------------------------
--------------------------------------------
Profit/loss for the period 832 -115 2 005 -1 057 933
Other comprehensive income:
Translation difference -502 541 -512 2 393 4 214
Total Comprehensive income 329 426 1 493 1 336 5 146
for the period
Total Comprehensive income
attributable to:
Owners of the parent company 305 427 1 482 1 337 5 169
Non-controlling interest 24 -1 11 -1 -22
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 6/2011 6/2010 12/2010
--------------------------
--------------------------
Non-current assets
Property, plant and equipment 2 045 2 016 1 908
Goodwill 72 406 71 340 72 866
Other intangible assets 6 910 8 931 8 099
Deferred tax assets 1 482 1 994 1 506
Available-for-sale financial assets - 19 19
Trade and other receivables 17 116 36
82 861 84 416 84 434
Current assets
Inventories 531 634 482
Trade and other receivables 36 647 30 994 43 662
Current income tax receivables 915 1 145 505
Cash and cash equivalents 14 356 14 021 13 818
52 448 46 794 58 468
--------------------------------------------------------------
--------------------------------------------------------------
Total assets 135 309 131 210 142 901
Equity attributable to owners
of the parent Company
Share capital 5 105 5 105 5 105
Share premium - 25 404 -
Reserve of invested non-restricted 46 591 21 188 46 591
equity
Other reserves 518 346 417
Treasury shares -1 996 -365 -1 996
Translation differences -1 540 -2 849 -1 028
Retained earnings 7 308 4 611 6 605
--------------------------------------------------------------
--------------------------------------------------------------
55 987 53 439 55 695
Non-controlling interest 391 204 380
Total equity 56 378 53 643 56 074
Non-current liabilities
Borrowings 32 472 34 453 32 462
Derivative financial instruments 543 973 784
Deferred tax liabilities 2 000 2 875 2 288
Trade and other payables - 786 -
35 014 39 086 35 535
Current liabilities
Borrowings 4 000 4 000 4 000
Trade and other payables 37 696 33 308 45 290
Current income tax liabilities 1 248 875 953
Provisions 973 298 1 049
43 917 38 481 51 292
Total liabilities 78 931 77 567 86 827
--------------------------------------------------------------
--------------------------------------------------------------
Equity and liabilities 135 309 131 210 142 901
CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 1-6/2011 1-6/2010 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flows from operating activities
Profit/loss for the period 2 005 -1 057 933
Adjustments to profit for the period 2 974 2 548 5 737
4 979 1 491 6 670
Change in working capital -627 -2 932 -3 314
Interest and other finance cost paid -828 -774 -1 651
Interest and other finance income received 74 67 144
Income taxes paid -1 075 -20 -335
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net cash from operating activities 2 523 -2 168 1 514
Cash flows from investing activities
Acquisition of tangible and intangible -713 -586 -1 072
assets
Proceeds from sale of tangible and 45 6 6
intangible assets
Proceeds from sale of Available-for-sale - 41 41
financial assets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net cash used in investing activities -667 -539 -1 025
Cash flows from financing activities
Related party investments* - 203 402
Repayments of borrowings - -2 000 -4 000
Acquisition and disposal of treasury - -83 -1 906
shares**
Dividends paid to the owners -1 291 -1 289 -1 289
of the parent company
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net cash from financing activities -1 291 -3 169 -6 792
(Decrease)/increase in cash and cash equivalents 565 -5 876 -6 304
Cash and cash equivalents 13 818 19 525 19 525
at the beginning of the period
Foreign exchange effect on cash -27 372 597
Cash and cash equivalents 14 356 14 021 13 818
at the end of the period
* Affecto Group management's investment to incentive arrangement
** Includes shares in Affecto Plc acquired by Affecto Management Oy.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the parent
company
------------------------------------------------------
------------------------------------------------------
(1 000 Share Reserve of Other Treasu Trans Ret. Non-cont Total
EUR) capita invested reserv ry lat. earnin rolling equity
l non-restrict es shares diff. gs interest
ed equity
Equity 5 105 46 591 417 -1 996 -1 028 6 605 380 56 074
at 1
January
2011
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 1 994 11 2 005
Translat -512 -512
ion
differe
nces
Total -512 1 994 11 1 493
compre-
hensive
income
Share-ba 101 101
sed
payment
s
Dividend -1 291 -1 291
s paid
--------------------------------------------------------------------------------
Equity 5 105 46 591 518 -1 996 -1 540 7 308 391 56 378
at 30
June
2011
Equity attributable to owners of the parent
company
---------------------------------------------------------
---------------------------------------------------------
(1 000 Share Share Reserve Other Treasu Transl Ret. Non-co Total
EUR) capita premiu of reserv ry at. earnin ntroll equity
l m investe es shares diff. gs ing
d intere
non-res st
tricted
equity
Equity 5 105 25 404 21 188 264 -106 -5 242 6 955 - 53 568
at 1
Januar
y 2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit -1 056 -1 -1 057
Transla 2 393 2 393
tion
differ
ences
Total 2 393 -1 056 -1 1 336
compre
-hensiv
e
income
Share-b 82 82
ased
paymen
ts
Acquisi -60 -60
tion
and
dispos
al of
treasu
ry
shares
Dividen -1 289 -1 289
ds paid
Managem -199 205 6
ent
incent
ive
plan *
--------------------------------------------------------------------------------
Equity 5 105 25 404 21 188 346 -365 -2 849 4 611 204 53 643
at 30
June
2010
* Group management's incentive plan (Affecto Management Oy)
2. Notes
2.1. Basis of preparation
This condensed interim financial information has been prepared in accordance
with IAS 34, Interim Financial Reporting. The condensed interim financial
report should be read in conjunction with the annual financial statements for
the year ended 31 December 2010. In material respects, the same accounting
policies have been applied as in the 2010 annual consolidated financial
statements. The amendments to and interpretations of IFRS standards that
entered into force on 1 January had no impact on this interim report.
The non-controlling interest has been presented separately after net profit for
the period and in total equity.
2.2. Segment information
Affecto's reporting segments are based on geographical locations and are
Finland, Norway, Sweden, Denmark and Baltic.
Segment sales and result
(1 000 EUR) 4-6/11 4-6/10 1-6/11 1-6/10 2010
----------------------------------------
----------------------------------------
Total sales
Finland 12 622 11 840 24 124 22 824 46 522
Norway 7 146 6 217 14 259 12 129 25 845
Sweden 5 069 4 069 9 942 7 617 15 276
Denmark 3 502 3 217 7 159 5 891 15 411
Baltic 4 851 3 833 8 398 6 969 13 694
Other -581 -753 -1 152 -1 275 -2 669
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Group total 32 608 28 423 62 730 54 155 114 078
Operational segment result
Finland 1 370 1 035 2 570 1 585 5 073
Norway 561 344 1 411 769 2 405
Sweden -454 -183 -975 -549 -1 666
Denmark 290 268 685 430 1 226
Baltic 768 -8 1 351 -109 595
Other -350 -836 -728 -1 425 -2 367
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total operational segment result 2 186 620 4 314 700 5 265
IFRS amortisation -505 -499 -1 018 -990 -1 990
-------------------------------------------------------------------------
Operating profit/loss 1 681 -122 3 296 -290 3 275
Sales by business lines
(1 000 EUR) 4-6/11 4-6/10 1-6/11 1-6/10 2010
----------------------------------------
----------------------------------------
Information Management Solutions 29 920 25 578 57 464 48 913 103 579
Geographic Information Services 2 926 2 967 5 749 5 465 10 950
Other -238 -122 -484 -222 -451
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Group total 32 608 28 423 62 730 54 155 114 078
2.3. Changes in intangible and tangible assets
(1 000 EUR) 1-6/11 1-6/10 2010
------------------------
------------------------
Carrying amount at the beginning of period 82 873 81 104 81 104
Additions 713 589 1 072
Disposals -8 -1 -3
Depreciation and amortization for the period -1 713 -1 687 - 3 342
Exchange rate differences -502 2 283 4 043
---------------------------------------------------------------------
Carrying amount at the end of period 81 362 82 286 82 873
2.4. Share capital, share premium, reserve of invested non-restricted equity
and treasury shares
(1 000 EUR) Number of Share Share Reserve of invested Treasury
shares capita premiu non-restricted shares
outstanding l m equity
-----------------------------------------------------------------
-----------------------------------------------------------------
1.1.2010 21 479 730 5 105 25 404 21 188 -106
Purchase of -113 318 - - - -259
treasury
shares
30.6.2010 21 366 412 5 105 25 404 21 188 -365
1.1.2011 20 693 468 5 105 - 46 591 -1 996
30.6.2011 20 693 468 5 105 - 46 591 -1 996
At the end of reporting period Affecto Management Oy, included in consolidated
accounts, owned 823 000 shares in Affecto Plc. The amount of registered shares
was 21 516 468 shares.
2.5. Interest-bearing liabilities
(1 000 EUR) 30.6.2011 31.12.2010
Interest-bearing non-current liabilities
Loans from financial institutions, 32 472 32 462
non-current portion
Loans from financial institutions, 4 000 4 000
current portion
---------------------------------------------------------------
---------------------------------------------------------------
36 472 36 462
Affecto has renegotiated the bank loan in June 2011. The refinanced 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.
2.6. Contingencies and commitments
The future aggregate minimum lease payments under non-cancelable operating
leases:
(1 000 EUR) 30.6.2011 31.12.2010
Not later than one (1) year 3 013 2 788
Later than one (1) year, 3 100 2 788
but not later than five (5) years
Later than five (5) years 240 268
--------------------------------------------------------
Total 6 352 5 844
Guarantees:
(1 000 EUR) 30.6.2011 31.12.2010
Debt secured by a mortgage
Financial loans 36 500 36 500
The above-mentioned debts are secured by bearer bonds with capital 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 loans above.
Other securities given on own behalf:
(1 000 EUR) 30.6.2011 31.12.2010
Pledges 82 39
Other guarantees 1 896 1 526
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. Derivative contracts
(1 000 EUR) 30.6.2011 31.12.2010
Interest rate swaps:
Nominal value 20 250 20 250
Fair value -543 -784
2.8. Related party transactions
Key management compensation and remunerations to the board of directors:
(1 000 EUR) 1-6/2011 1-6/2010 1-12/2010
Salaries and other short-term employee benefits 1 598 1 506 2 168
Post-employment benefits 319 220 320
Termination benefits - 604 527
Share-based payments 22 23 48
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total 1 939 2 353 3 063
Loans to related party:
(1 000 EUR) 6/2011 6/2010 12/2010
Loans to key management of the group 1 646 - 1 620
3. Key figures
4-6/11 4-6/10 1-6/11 1-6/10 2010
----------------------------------------
----------------------------------------
Net sales, 1 000 eur 32 608 28 423 62 730 54 155 114 078
EBITDA, 1 000 eur 2 533 962 5 009 1 394 6 617
Operational segment result, 2 186 621 4 314 700 5 265
1 000 eur
Operating result, 1 000 eur 1 681 122 3 296 -290 3 275
Result before taxes, 1 000 eur 1 238 -276 2 711 -1 352 1 479
Net income for equity holders 808 -114 1 994 -1 056 955
of the parent company,
1 000 eur
EBITDA, % 7.8 % 3.4 % 8.0 % 2.6 % 5.8 %
Operational segment result, % 6.7 % 2.2 % 6.9 % 1.3 % 4.6 %
Operating result, % 5.2 % 0.4 % 5.3 % -0.5 % 2.9 %
Result before taxes, % 3.8 % -1.0 % 4.3 % -2.5 % 1.3 %
Net income for equity holders 2.5 % -0.4 % 3.2 % -1.9 % 0.8 %
of the parent company, %
Equity ratio, % 45.3 % 44.1 % 45.3 % 44.1 % 43.1 %
Net gearing, % 39.2 % 45.5 % 39.2 % 45.5 % 40.4 %
Interest-bearing net debt, 22 116 24 432 22 116 24 432 22 645
1 000 eur
Gross investment in non-current 223 236 713 586 1 072
assets (excl. acquisitions),
1 000 eur
Gross investments, % of sales 0.7 % 0.8 % 1.1 % 1.1 % 0.9 %
Research and development costs, 235 273 538 537 1 178
1 000 eur
R&D -costs, % of sales 0.7 % 1.0 % 0.9 % 1.0 % 1.0 %
Order backlog, 1 000 eur 50 670 45 422 50 670 45 422 54 354
Average number of employees 1 001 906 987 909 919
Earnings per share, eur 0.04 -0.01 0.10 -0.05 0.05
Earnings per share (diluted), 0.04 -0.01 0.10 -0.05 0.05
eur
Equity per share, eur 2.71 2.50 2.71 2.50 2.69
Average number of shares, 20 693 21 472 20 693 21 476 21 146
1 000 shares
Number of shares at the end of 20 693 21 366 20 693 21 366 20 693
period, 1 000 shares
Calculation of key figures
EBITDA = Earnings before interest, taxes,
depreciation, amortization and impairment
Operational segment result = Operating profit before amortisations on
fair value adjustments due to business
combinations (IFRS3) and Goodwill
impairments
Equity ratio, % = Total equity *100
________________________________
Total assets - advances received
Gearing, % = Interest-bearing liabilities - *100
cash, bank receivables and
securities held as financial asset
__________________________________
Total equity
Interest-bearing net debt = Interest-bearing liabilities - cash and
bank receivables
Earnings per share (EPS) = Result for the period to equity holders
of the Company
______________________________________
Adjusted average number of shares 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
-----
CEO Pekka Eloholma, +358 205 777 737
CFO Satu Kankare, +358 205 777 202
SVP, M&A, IR, Hannu Nyman, +358 205 777 761
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