Etteplan Oyj - Half Year financial report

ETTEPLAN 1-6/2016: REVENUE AT RECORD LEVELS

ETTEPLAN OYJ HALF YEAR FINANCIAL REPORT
AUGUST 10, 2016 AT 2:00 PM

ETTEPLAN 1-6/2016: REVENUE AT RECORD LEVELS

Review period April-June 2016

-The Group’s revenue increased by 46.6 per cent and was EUR 50.2 million
(4-6/2015: EUR 34.2 million). Organic growth accounted for 10.1 per cent. 
- EBIT from business operations* was EUR 2.9 million (EUR 2.5 million), or 5.8
per cent (7.3 per cent) of revenue. EBIT from business operations included
exceptional items with a combined negative effect of EUR 1.0 million (EUR 0.2
million). 
- Operating profit (EBIT) was EUR 2.4 million (EUR 2.3 million), or 4.7 per
cent (6.7 per cent) of revenue. 
- The profit for the review period was EUR 1.8 million (EUR 1.7 million).
- Operating cash flow decreased and was EUR 1.1 million (EUR 3.7) million.
- Earnings per share, adjusted for the share issue, were EUR 0.08 (EUR 0.08).
- The number of personnel increased and the Group had 2,487 employees at the
end of the review period (1,900). 
- Etteplan acquired Espotel and Soikea Solutions and expanded its business
operations in Embedded Systems and into the Internet of Things (IoT) as of
April 4, 2016. In addition to Engineering services and Technical Documentation
services, Embedded Systems and IoT represents Etteplan’s third service area.
The acquired companies are included in reporting starting from April 1, 2016,
and the reporting of the third service area begins with this interim report. 
- Etteplan carried out a rights offering in May 2016. The company raised gross
proceeds of approximately EUR 14.4 million through the offering. As a result of
the offering, the total number of shares in Etteplan increased to 24,771,492
shares. 
- Etteplan is updating its estimate of market outlook and keeping its financial
guidance unchanged. 

Review period January-June 2016

- The Group’s revenue increased by 28.9 per cent and was EUR 88.8 million
(1-6/2015: EUR 68.9 million). Organic growth accounted for 5.2 per cent. 
- EBIT from business operations* was EUR 5.1 million (EUR 4.8 million), or 5.7
per cent (6.9 per cent) of revenue. EBIT from business operations included
exceptional items with a combined negative effect of EUR 1.2 million (EUR 0.3
million). 
- Operating profit (EBIT) was EUR 4.2 million (EUR 4.4 million), or 4.8 per
cent (6.3 per cent) of revenue. 
- The profit for the review period was EUR 3.2 million (EUR 3.1 million).
- Operating cash flow was EUR -0.5 million (EUR 3.8 million). The decrease in
cash flow was caused by the company’s strong growth. 
- Earnings per share, adjusted for the share issue, were EUR 0.15 (EUR 0.14).

*EBIT from business operations reflects the Company’s operational performance:
it does not include acquisition-related items such as amortization on PPA
allocations and earn out revaluations. 

Market outlook

The most important factor in the development of Etteplan's business is the
global development of the machinery and metal industry. The relatively good
growth expectations for Europe in 2016 were weakened by the result of the
Brexit vote in the United Kingdom. In the Finnish market, the market situation
is expected to remain weaker than in the rest of Europe. In Asia, the service
market development is expected to continue. We expect that the good market
situation in North America will continue. 

Previous estimate of market outlook

The most important factor in the development of Etteplan's business is the
global development of the machinery and metal industry. In 2016, there are
signs of improvement of European growth. Uncertainty has increased in the
Finnish market, and the market situation is expected to remain weaker than in
the rest of Europe. In spite of the slowing down of growth in Asian markets and
increased uncertainty, the service market development is expected to continue.
We expect that the good market situation in North America will continue. The
demand for engineering services and technical documentation services got off to
a slow start at the beginning of the year. 

Financial guidance March 15, 2016

We expect the revenue and operating profit for the full year 2016 to grow
significantly compared to 2015. 

Key figures

(EUR 1,000)                 4-6/201  4-6/201     1-6/201  1-6/201     1-12/20   
                                  6        5           6        5          15   
------------------------------------------------------------------------------  
Revenue                      50,211   34,240      88,814   68,890     141,143   
EBIT from business            2,911    2,509       5,090    4,763       9,540   
 operations                                                                     
EBIT from business              5.8      7.3         5.7      6.9         5.6   
 operations, %                                                                  
Operating profit (EBIT)       2,352    2,305       4,248    4,356       8,594   
EBIT, %                         4.7      6.7         4.8      6.3         6.0   
Basic earnings per share,      0.08     0.08  *     0.15     0.14  *     0.28  *
 EUR                                                                            
Equity ratio, %                38.1     38.4        38.1     38.4        37.8   
Operating cash flow           1,148    3,695        -533    3,832       9,932   
ROCE, %                        13.9     19.8        12.8     18.3        17.4   
Personnel at end of the       2,487    1,900       2,487    1,900       2,074   
 period                                                                         
*Comparison periods' earnings per share have been issue adjusted. The rights    
 issue factor was 1.050.                                                        

President and CEO Juha Näkki:

“The second quarter changed Etteplan as a company. We entered a new size
category and our service offering was significantly strengthened by
acquisitions in the areas of embedded systems and digitization. Going forward,
we can provide industrial customers with a full range of engineering and
digitization services for product and service businesses. This will further
strengthen our market position and support our profitable growth. Having
completed the acquisitions, we established Embedded Systems and IoT as our
third service area. The key figures for the new service area will be published
starting from this report. 

There were no significant changes in the demand situation during the review
period. Our revenue grew by a record-high 47 per cent in the second quarter,
exceeding EUR 50 million for a single quarter for the first time in the Group’s
history. While much of this growth was attributable to acquisitions, we also
achieved strong organic growth in excess of 10 per cent. This proves that our
service portfolio is effective even in the prevailing challenging market
situation. Our operating profit remained at the same level as in the comparison
period, mainly due to substantial exceptional items related to acquisitions.
Taking exceptional items into consideration, our profitability nevertheless
developed in the right direction. The implementation of strategy progressed and
the share of revenue represented by high value-added services exceeded our
target of 50 per cent in the second quarter. 

Business development varied by service area. In the area of Engineering
Services, growth continued and profitability improved from the preceding
quarter. There were small signs of recovery in demand in engineering services,
particularly in plant engineering. However, new projects were still slow to
start. Business in China developed favorably as the engineering service market
continues to open up. The number of working hours sold in the Chinese market
grew by nearly 30 per cent in the second quarter. 

In Technical Documentation, strong business growth continued and we won several
small outsourcing contracts. Profitability continued to be burdened by the
Company’s business operations in Germany, the small share represented by the
software business and the weak market situation in certain units. Nevertheless,
the demand for Etteplan’s service solutions, particularly outsourcing
solutions, is at a good level and the acquired digitization expertise creates
entirely new growth opportunities also in the area of documentation. 

The development of our Embedded Systems and IoT business was excellent. Revenue
grew and profitability was at a very good level. The service area’s demand was
at a good level. In particular, the demand for industrial internet applications
and other digitization services was strong. The integration of Espotel Oy and
Soikea Solutions Oy into the Etteplan Group has started according to plan. Our
customers are very interested in our new services, which presents good growth
opportunities going forward. 

During the review period, we carried out a successful rights offering to
finance acquisitions, and I would like to take this opportunity to thank our
shareholders for the trust they have shown in the Company. Etteplan is on the
path of profitable growth and we will continue to move forward with three
excellent service areas.” 

Disclosure procedure

Etteplan follows the disclosure procedure enabled by Disclosure obligation of
the issuer (7/2013) published by the Finnish Financial Supervision Authority.
This stock exchange release is a summary of Etteplan's January-June 2016 half
year financial report. The complete half year financial report is attached to
this stock exchange release in pdf format and is also available on Etteplan's
website at www.etteplan.com. Investors are advised to review the complete half
year financial report with tables. 

Conference call and live webcast today, August 10, 2016

Etteplan’s President and CEO Juha Näkki will present Company’s results for
January-June 2016 in a conference call and a live webcast for analysts and
investors, held in English language, on August 10, 2016 starting at 3.30 p.m.
Finnish time (EEST). 

To participate in the conference call please dial 5-10 minutes prior to the
start of the conference to +358 (0)9 2310 1675, the event password is 512101.
Questions can be asked in English after President and CEO’s presentation only
through conference call connection. 

Juha Näkki’s presentation can be followed as a live webcast on
http://www.goodmood.fi/webcaster/accounts/etteplan/live/. The webcast starts at
3.30 p.m. Finnish time (EEST). A recording of the webcast will be later
available at www.etteplan.com/Investors. 

Vantaa, August 10, 2016

Etteplan Oyj

Board of Directors

Additional information:
Juha Näkki, President and CEO, tel. +358 400 606 372

The information presented herein has not been audited.

Releases and other corporate information are available on Etteplan's Web site
at www.etteplan.com. 

DISTRIBUTION:
Nasdaq Helsinki
Major media
www.etteplan.com

Etteplan's services cover engineering, technical documentation, embedded
systems and IoT solutions. Our customers are the world's leading companies in
the manufacturing industry. Our services are geared to improve the
competitiveness of our customers' products and engineering processes throughout
the product life cycle. The results of Etteplan's innovative engineering can be
seen in numerous industrial solutions and everyday products. 

In 2015, Etteplan had turnover of EUR 141.1 million. The company has about
2,500 professionals in Finland, Sweden, the Netherlands, Germany, Poland and
China. Etteplan's shares are listed on Nasdaq Helsinki Ltd under the ETT1V
ticker.

Bifogade filer:

Etteplan_2016_Q2_EN.pdf