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2007-10-29 10:00:00 CET 2007-10-29 10:00:00 CET REGULATED INFORMATION Affecto Oyj - Quarterly reportAFFECTO PLC'S INTERIM REPORT 1-9/2007AFFECTO PLC STOCK EXCHANGE RELEASE 29 OCTOBER 2007 at 11:00 AFFECTO PLC'S INTERIM REPORT 1-9/2007 GROUP KEY FIGURES MEUR 7-9/2007 7-9/2006 1-9/2007 1-9/2006 2006 Net sales 21.8 10.9 59.6 33.6 50.2 Operating result before 2.8 1.2 8.4 2.1 4.1 IFRS3 items % of net sales 13.0 10.7 14.1 6.2 8.1 Operating result 2.2 1.1 7.1 1.9 3.6 % of net sales 10.1 10.1 12.0 5.7 7.3 Result before taxes 1.6 1.1 6.3 1.7 3.5 Result for the period 1.3 0.8 4.7 1.2 2.6 Equity ratio, % 42.5 62.4 42.5 62.4 52.0 Net gearing, % 64.2 12.1 64.2 12.1 35.2 Earnings per share, eur 0.07 0.05 0.27 0.08 0.16 Earnings per share (diluted), eur 0.07 0.05 0.27 0.08 0.16 Equity per share, eur 2.92 2.19 2.92 2.19 2.30 CEO Pekka Eloholma comments the third quarter 2007: "The clearly most significant event for Affecto in third quarter was the completion of the Component Software acquisition at end of August. The acquisition raised our service capabilities to a genuinely Nordic-wide level." "Our net sales grew to 21.8 MEUR (10.9 MEUR) and growth was 99%. The quarter was the highest in group history regarding net sales thanks to the Component Software acquisition, although the summer vacations had a negative impact on the quarter. The growth was especially strong in Baltic (66%), but it was also good in Finland (16%). The acquisitions done in late 2006 created a good foundation for growth, but the business grew also organically." "The quarter had good profitability and EBIT was 2.2 MEUR (1.1 MEUR) i.e. 10% of net sales. Profitability was especially good in the Baltic. The operating result before IFRS3 depreciation was 2.8 MEUR i.e. 13% of net sales." "Positive development is expected to continue during year 2007. The company seeks to reach net sales of over 90 MEUR in 2007. The profitability of the whole year 2007 is also expected to improve from 2006." Additional information: CEO Pekka Eloholma, +358 205 777 737 CFO Satu Kankare, +358 205 777 202 SVP, M&A, Hannu Nyman, +358 205 777 761 This report is unaudited. The amounts in this report have been rounded from exact numbers. INTERIM REPORT 1-9/2007 Affecto builds versatile IT solutions for companies and organizations in Nordic countries and the Baltic States to improve their efficiency in business and to support the related decision-making. The company's IT solutions are always customised to meet the specific needs of each customer. Affecto offers business intelligence (BI) solutions that enable an efficient way of utilizing and refining the data from ERP systems. The company develops also geographic information systems (GIS) solutions and enterprise content management (ECM) solutions that help companies to collect, organise and analyse digital information in support of their business processes. Affecto is headquartered in Helsinki, Finland. The company has subsidiaries in Sweden, Norway, Denmark, Lithuania, Latvia, Estonia and Poland. NET SALES The most significant event in the review period was the acquisition of Component Software Group ASA through a public tender offer in August 2007. Component Software has been included in Affecto's consolidated accounts since 1 September 2007. Affecto's net sales in 7-9/2007 was 21.8 MEUR (7-9/2006 10.9 MEUR). Net sales in Finland was 9.0 MEUR (7-9/2006 7.8 MEUR), in Baltic area 5.3 MEUR (3.2 MEUR), 4.2 MEUR in Sweden (0.0 MEUR) and 3.3 MEUR (0.0 MEUR) in Norway & Denmark. Sales growth was 99%. In Finland growth was 16% and in Baltic it was 66%. Sales of geographical segments based on location of assets Total sales, MEUR 7-9/2007 7-9/2006 1-9/2007 1-9/2006 2006 Finland 9.0 7.8 30.1 25.2 36.3 Baltic 5.3 3.2 15.4 8.5 13.1 Sweden 4.2 0.0 10.7 0.0 0.9 Norway & Denmark 3.3 0.0 3.3 0.0 0.0 Eliminations 0.0 0.0 0.0 0.0 0.0 Group total 21.8 10.9 59.6 33.6 50.2 The sales growth was based on good demand for services in all our market areas. Especially the Baltic business developed very positively compared to last year. As anticipated, the summer vacations affected net sales negatively during third quarter. From business perspective, the quarter was a typical summer quarter without major events. Intellibis, acquired in December 2006, and the Swedish operations of Component Software, acquired in August 2007, form the Swedish segment. Component Software's business in Norway and Denmark forms the Norway & Denmark segment. During the corresponding period last year Affecto did not have operations in Sweden, Norway or Denmark. In 7-9/2007 net sales of BI segment was 10.6 MEUR (2.2 MEUR), Operational solutions 8.8 MEUR (6.4 MEUR) and Cartographic solutions 2.4 MEUR (2.3 MEUR). The acquisitions done in 2006 and 2007 have had impact mostly on the BI segment. PROFIT Affecto's EBIT was 2.2 MEUR (1.1 MEUR). EBIT in Finland was 0.6 MEUR (1.2 MEUR), Baltic EBIT was 1.4 MEUR (0.2 MEUR), EBIT in Sweden was 0.4 MEUR and EBIT in Norway & Denmark was 0.2 MEUR. Operating result of geographical segments based on location of assets Operating result, MEUR 7-9/2007 7-9/2006 1-9/2007 1-9/2006 2006 Finland 0.6 1.2 3.1 3.0 4.6 Baltic 1.4 0.2 3.9 -0.2 0.5 Sweden 0.4 0.0 1.1 0.0 0.0 Norway & Denmark 0.2 0.0 0.2 0.0 0.0 Group management -0.4 -0.2 -1.2 -0.9 -1.5 Group total 2.2 1.1 7.1 1.9 3.6 According to IFRS requirements, 1-9/2007 EBIT includes 1,2 MEUR (0.1 MEUR) of depreciation of intangible assets related to acquisitions. A significant part of the depreciation is related to Sweden and Norway & Denmark segments. In whole year 2006, such depreciation totaled 0.4 MEUR. In year 2007, such depreciation is estimated to amount to 2.5 MEUR including the effects of the acquisition of Component Software. In year 2008 the IFRS3 depreciation is estimated to total 2.8 MEUR and in 2009 approx 2.6 MEUR. The profit in Baltic improved significantly thanks to good resource utilization rate. The profit decreased in Finland due to the investments in growth and the weak profitability in cartographic solutions. R&D expenditure in 1-9/2007 totaled 0.4 MEUR (0.3 MEUR), i.e. 0.8% of net sales (0.8%). The expenditure has been booked as costs, except in Component software's ECM business, where 0.02 MEUR has been capitalized in balance sheet in September according to the company's practice. Taxes for the period have been booked as taxes. Net profit for the period was 4.7 MEUR, while it was 1.2 MEUR last year. Order backlog totaled 25.0 MEUR at the end of period (21.6 MEUR at 30 September 2006 and 24.2 MEUR at 31 December 2006). FINANCE AND INVESTMENTS At the end of the reporting period, Affecto's balance sheet totaled 152.4 MEUR (Q3/2006: 61.5 MEUR). Significant part of the growth is due to the acquisition of Component Software Group ASA in August 2007. Equity ratio was 42.5% (62.4%) and net gearing was 64.2% (12.1%). The additional consideration for ZenPark, acquired in 2006, was determined to be 0.67 MEUR and it was paid during third quarter. The financial loans were 48.4 MEUR as at 30 September 2007. The interest- bearing net debt was 40.3 MEUR. For the Component Software acquisition, the company negotiated a financing package, which also included the rearrangement of the previous debts. The company's cash and liquid assets were 8.2 MEUR (Q3/2006: 6,5 MEUR), of which cash and cash equivalents were 8.1 MEUR and available-for-sale financial assets 0.1 MEUR. Cash flow from operating activities for the reported period was 2.3 MEUR (1.8 MEUR) and cash flow from investments was -27.2 MEUR (-4.1 MEUR). The acquisition cost of Component Software ASA, acquired in August 2007, has been determined provisionally in the end of the quarter. The estimated acquisition cost totals to 52.8 MEUR and it had 25.6 MEUR effect on cash flow. Of the amount, allocations have been made to intangible assets in respect of customer relationships, technology and order backlog totaling 8.9 MEUR, net of deferred taxes. 38.6 MEUR has been recorded as goodwill. Investments in non-current assets excluding acquisitions were 0.9 MEUR (0.8 MEUR) during the period. EMPLOYEES The number of employees was 1101 persons at the end of the reporting period (639 persons). Approx. 370 persons were based in Finland, 160 in Sweden, 160 in Norway and Denmark, and 415 in Baltic states. The average number of employees during the period was 835 persons (577). The growth of personnel was significantly impacted by the acquisition of Component Software, which increased the personnel by over 200 employees. The number of emplyees has grown organically in third quarter especially in Baltic. BUSINESS REVIEW The group's business is managed through four country units. Finland, Baltic, Sweden and Norway & Denmark are also the primary IFRS segments. Finland In 7-9/2007 net sales in Finland was 9.0 MEUR (7.8 MEUR) and it grew by 16%. EBIT was 0.6 MEUR (1.2 MEUR). The business developed steadily during the quarter and the demand for various services was reasonably good and was increasing especially regarding BI services. The unit prices of consultant work have remained stable. The profitability of the cartographic solutions was weak. The growth of IT services market in Finland is rather slow, but the growth of our specialty segments (BI, ECM, GIS) is expected to exceed the average market growth. The customers' activity has continued to be good. New orders were received from, among others, Church of Finland and Aurinkomatkat. Baltic (Lithuania, Latvia, Estonia, Poland) The Baltic business mostly consists of projects related to large customer- specific systems. Projects are typically larger and tender processes longer than in Finland or in Nordic. The business is mostly classified to Operational solutions, but also includes BI solutions. In 7-9/2007 the Baltic net sales grew 66% and was 5.3 MEUR (3.2 MEUR). Baltic EBIT was 1.4 MEUR (0.2 MEUR). The net sales include one large (approx. 0.8 MEUR) license sales in Latvia. The business has developed very favorably compared to last year, and the resource utilization rate and profitability is high in all countries. The steady continuing work on large projects has helped to keep the utilization rate very high during the whole period. The order backlog offers stable resource utilization for the next few months. New orders were received e.g. from the insurance company Commercial Union Polska, Latvian Social Insurance Institution and Estonian Ministry of Economy. The company is actively recruiting more employees. During the third quarter, the number of employees in Baltic grew by over 60 persons. The Baltic countries enjoy a high demand for competent workforce, which is predicted to increase salary levels. EITO (European Information Technology Observatory) forecasts that the IT services will grow by over 13% p.a. in the next few years in all three Baltic countries. Affecto has founded a new subsidiary in Poland, where the insurance and utilities sectors are initially targeted as the customers. The plan is to grow the number of employees to approx. 15 in initial phase during the next few quarters. Sweden Affecto has expanded its business to the Sweden by acquiring Intellibis AB in December 2006. In addition, the segment covers the Swedish operations of Component Software. The integration of Swedish operations is estimated to cause approx 0.2 MEUR costs in Q4. In 7-9/2007 the net sales in Sweden was 4.2 MEUR and EBIT 0.4 MEUR. The reported EBIT includes approx. 0.2 MEUR IFRS3 depreciation. Year ago, Affecto did not have business in Sweden. The business in Sweden has developed positively during year 2007. The price development has been positive and the utilization rate has remained high. New orders were received from e.g. SKF, Lindex, Comhem, Svenska Spel and IKEA. Norway & Denmark The segment comprises Component Software's, acquired at the end of August, operations in Norway and Denmark. Only the business in September has been reported as part of Affecto. The net sales was 3.3 MEUR in September and EBIT was 0.2 MEUR. The reported EBIT was negatively affected by an IFRS3 depreciation of 0.3 MEUR. Business Intelligence business developed steadily and especially the demand for consulting services was good. During the quarter, new orders were received from e.g. Forca, Nykredit and Telenor Broadcast. The Contempus business, an ECM business reported as part of Operational Solutions, also developed steadily. Business review by secondary segments 7-9/2007 Business intelligence (BI) net sales was 10.6 MEUR (2.2 MEUR). The growth is largely explained by the acquisitions of ZenPark and Intellibis in late 2006 and of Component Software since September 2007, but also the organic growth has been good. Customers' interest is increasingly focusing on larger solutions and continuous service. According to Datamonitor's recent research, the BI solution market is expected to grow annually by over 12% and to double in size by 2012. The recent acquisitions where the largest global software companies have acquired BI software producers highlight the interest for the sector. The most recent acquisition is the SAP's offer to buy Business Objects. Acquisition of Component Software has increased the amount of (third party) licenses sold and their relative share of Affecto's net sales. This will increase the fluctuation in sales between quarters and will increase the difficulty of reliably forecasting the quarters. In 2006 Component Software's license sales totaled approx. 66 MNOK (over 8 MEUR). The license sales have mostly impact on the last month of each quarter and especially on the fourth quarter. Net sales of Operational Solutions grew by 38% and was 8.8 MEUR (6.4 MEUR). The growth is to a large extent explained by the strong growth of the Baltic operations, where large projects continued steadily. The insurance solution project in South Africa continued, the project in Sweden ended and the project in Poland was ramped up. Affecto has established a subsidiary in Poland in order to be able to offer its insurance sector related services also there. In Finland, the demand for solutions was good and the utilization rate of project resources was good. The demand for services remained moderately good in Baltic and in Finland. Cartographic Solutions businesses net sales was 2.4 MEUR (2.3 MEUR). The demand for digital geographic content and related services grew. After the review period it was published that Affecto continues to operate the Finnish land parcel identification system for the next three years. The sales of maps and other printed products remained at last year's level. CHANGES IN GROUP STRUCTURE In August 2007, Affecto has acquired Component Software Group ASA from Norway. The acquisition of Component Software is described more closely in "ACQUISITION OF COMPONENT SOFTWARE GROUP ASA". Affecto has founded a subsidiary in Poland. ANNUAL GENERAL MEETING AND GOVERNANCE The Annual General Meeting of AffectoGenimap Plc, which was held on March 28, 2007, adopted the financial statements for 1.1.-31.12.2006 and discharged the members of the Board of Directors and the CEO from liability. The Annual General Meeting decided that a dividend of EUR 0.10 per share be distributed for the year 2006. Aaro Cantell, Heikki Lehmusto, Pasi Mäenpää, Jukka Norokorpi and Esko Rytkönen were re-elected and Pyry Lautsuo was elected as members of the Board of Directors. The Board re-elected Aaro Cantell as Chairman. The APA firm PricewaterhouseCoopers Oy was re-elected auditor of the company with Merja Lindh, APA, as auditor in charge. The Annual General Meeting accepted the Board's proposal for changing the company name and Articles of Association. The changes were registered at the Finnish trade register on 2 April 2007. The Annual General Meeting accepted the Board's proposals for the authorizations given to the Board of Directors. 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. The group management team was modified at the end of September due to the acquisition in Norway. Since 1 October 2007 the members are Pekka Eloholma, Satu Kankare, Hannu Nyman, Hilkka Remes-Hyvärinen, Tuula Wäyrynen, Kestutis Uzpalis, Martin Hultqvist and Åge Lönning. EXTRAORDINARY GENERAL MEETING The Extraordinary General Meeting held on 10 July 2007 authorized the Board to decide on the directed share issue (max. 4 800 000 shares) needed for the acquisition of Component Software, and elected Mr. Haakon Skaarer as a board member conditional to the completion of the Component Software acquisition. Mr. Skaarer is a board member since 28 August 2007. THE AUTHORIZATIONS GIVEN TO THE BOARD OF DIRECTORS During 1-3/2007 the Board did not use the authorizations given by the previous Annual General Meeting. Those authorizations ended on 28 March 2007. The complete contents of the new authorizations given by the Annual General Meeting held on 28 March 2007 have been published in the stock exchange release regarding the Meetings' decisions. 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 payment or without consideration on terms to be determined by the Board of Directors and in relation to a share issue against payment at a price to be determined by the Board of Directors. A maximum of 3 400 000 new shares may be issued. A maximum of 1 700 000 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. 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 1 700 000 shares may be acquired. The authorization shall be in force until the next Annual General Meeting. In addition, the Extraordinary General Meeting held after the review period on 10 July 2007 authorized the Board to decide on the directed share issue (max. 4 800 000 shares) needed for the acquisition of Component Software. Based on this authorization, 4 499 947 new shares were issued to shareholders of Component Software. The share issue was registered at the trade register on 28 August 2007. SHARES AND TRADING The company has only one share series, and all shares have similar rights. As at 30 September 2007, Affecto Plc's share capital consisted of 21 516 468 shares. The company owns 36 738 treasury shares, which corresponds to 0.2% of all shares. In 1-9/2007, the highest share price was 5.18 euro, lowest price 2.90 euro, average price 4.02 euro and closing price 4.57 euro. Trading volume was 11.2 million shares, corresponding to 70 % (annualized) of the number of shares at the end of period. The market value of shares was 98.2 MEUR at the end of the period. SHAREHOLDERS The following flaggings related to the Component Software acquisition were made on 27 August 2007: ownership of funds managed by Eqvitec Partners Oy decreased below 15%, Fenno Rahasto Ky's ownership decreased below 10%, Mika Laine's ownership decreased below 5% and the ownership of Arendals Fossekompani ASA group increased to over 5%. The company had total of 1149 shareholders on 30 September 2007 and the foreign ownership was 36%. The list of the largest shareholders can be viewed in the company's web site. ACQUISITION OF COMPONENT SOFTWARE GROUP ASA Affecto published on 11 June 2007 that the company had made a combination agreement with Component Software and had intention to make a public tender offer for Component Software's shareholders. Oslo Börs approved the Offer document and the Finnish Financial Supervision approved the prospectus on 20 July 2007. The public tender offer period began on 25 July 2007 and ended on 22 August 2007. Affecto's board of directors decided on 27 August 2007 to complete the tender offer. As a consequence of the tender offer, the number of Component Software shares transferred to Affecto at completion of the tender offer was 5,551,442 shares representing about 95.3% of all issued shares in Component Software. In accordance with the terms and conditions of the public tender offer, the consideration for one Component Software share was NOK 40.03 in cash and 0.81063 new Affecto shares. A total of 4,499,947 new Affecto shares were subscribed and issued. Affecto's new shares were registered in the trade register on 28 August 2007 and the trading of new shares together with Affecto's old shares started on 28 August 2007 at OMX Nordic Exchange Helsinki Oy. The new shares give the same shareholders' rights as Affecto's old shares. Oslo Börs approved the offer document related to the mandatory offer and the compulsory acquisition on 19 September 2007. The mandatory offer period began on 19 September 2007 and ended on 17 October 2007. The trading with the share in Oslo Börs ended on 19 September 2007, when all shares were transferred to Affecto. Component Software's listing officially ended 24 October 2007. The name of Component Software Group has been changed to Affecto Norway ASA. If Component Software had been part of Affecto the whole period 1-9/2007, the pro forma net sales would have been approx. 89.9 MEUR, operating profit before IFRS3 depreciation approx. 10.6 MEUR and EBIT approx. 7.6 MEUR. EVENTS AFTER THE REVIEW PERIOD The events after the review period related to the acquisition of Component Software have been described above in "ACQUISITION OF COMPONENT SOFTWARE GROUP ASA". The company announced on 2 October that it starts co-operation procedure in Finland due to financial and productional reasons in its HR solutions business belonging to company's Operational solutions segment and in Karttakeskus unit belonging to company's Cartographic segment. The negotiations will apply to less than 10 employees in Finland. The company received on 2 October 2007 flagging announcements according to which the ownership of Fenno Rahasto and fund managed by Eqvitec had decresed to 0%. Mika Laine flagged on 2 October 2007 that his ownership exceeded 5%. STRATEGIC OBJECTIVES The company has two strong business lines: the strongest growth expectations are focused on the growing business intelligence market but at the same time the company wants to further strengthen its position in delivering demanding and customer specific operational IT solutions. The company aims to be the leading business intelligence solution provider in the Nordic, Baltic and CEE regions. Furthermore, the company aims to be the most competent and quality focused provider of geographic information systems (GIS), enterprise content management (ECM) and other operational solutions in selected industries and regions. The growth target for the company for 2007-2009 is that net sales exceed 160 million euros in 2009. The growth target will be reached through organic growth supplemented by acquisitions. At the same time the company seeks to be one of the most profitable IT services company within its market region. FUTURE OUTLOOK Positive development is expected to continue during year 2007. The company seeks to reach net sales of over 90 MEUR in 2007. The profitability of the whole year 2007 is also expected to improve from 2006. 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 Investor pages of the company website: http://www.affecto.com A briefing for analysts and media will be arranged at 12:30 at Restaurant G.W.Sundmans, Eteläranta 16, Helsinki. ----- Financial information: 1. Income statement, balance sheet, cash flow statement and statement of changes in shareholders' equity 2. Notes 3. Key figures 4. Calculation of key figures 1. Income statement, balance sheet, cash flow statement and statement of changes in shareholders' equity CONSOLIDATED INCOME STATEMENT (1 000 EUR) 7-9/07 7-9/06 1-9/07 1-9/06 2006 Net sales 21 763 10 921 59 567 33 628 50 194 Other operating income 7 9 68 109 138 Changes in inventories of 15 103 161 394 287 finished goods and work in progress Materials and services -4 569 -3 005 -11 281 -9 509 -13 177 Personnel expenses -11 069 -4 848 -30 202 -16 150 -23 996 IFRS3 depreciation -638 -65 -1 248 -175 -409 Other depreciation, amortization -275 -236 -875 -683 -963 and impairment charges Other operating expenses -3 039 -1 770 -9 062 -5 709 -8 432 Operating result 2 195 1 108 7 127 1 906 3 642 Finance costs (net) -594 -41 -811 -158 -184 Result before income tax 1 601 1 066 6 316 1 748 3 458 Income tax -318 -282 -1 583 -517 -824 Result for the period 1 283 784 4 733 1 230 2 633 Attributable to: Equity holders of the Company 1 283 784 4 733 1 230 2 633 Minority interest 0 0 0 0 0 Earnings per share for result attributable to the equity holders of the Company (expressed in EUR per share) Basic 0.07 0.05 0.27 0.08 0.16 Diluted 0.07 0.05 0.27 0.08 0.16 CONSOLIDATED BALANCE SHEET (1 000 EUR) 9/2007 9/2006 12/2006 Non-current assets Tangible assets 2 584 2 049 2 110 Goodwill 85 594 33 342 43 579 Other intangible assets 19 336 3 807 7 550 Deferred tax assets 2 748 560 594 Available-for-sale financial assets 54 57 57 Other non-current receivables 137 82 93 110 453 39 898 53 983 Current assets Inventories 2 004 2 400 2 095 Trade receivables 20 650 7 136 11 508 Other receivables 8 964 4 593 4 230 Current income tax receivables 1 392 650 1 036 Available-for-sale financial assets 108 0 578 Financial assets at fair value through 10 0 24 profit or loss Restricted cash 649 265 381 Cash and cash equivalents 8 127 6 511 4 906 41 904 21 555 24 758 Total assets 152 356 61 453 78 741 Equity attributable to equity holders of the Company Share capital 5 105 4 941 5 105 Share premium 25 404 25 404 25 404 Reserve of invested non-restricted 21 188 0 1 960 equity Other reserves 66 4 11 Treasury shares -106 -509 -106 Retained earnings 11 035 5 713 6 717 62 693 35 554 39 092 Minority interest 0 0 0 Total shareholders' equity 62 693 35 554 39 092 Non-current liabilities Borrowings 45 401 8 859 14 014 Deferred tax liabilities 5 335 680 2 007 Other long-term liabilities 265 95 2 232 51 002 9 633 18 252 Current liabilities Borrowings 3 000 1 863 5 032 Trade payables 5 683 2 699 2 627 Other liabilities 28 006 11 286 12 580 Current income tax liabilities 1 973 419 1 158 38 662 16 267 21 397 Total liabilities 89 664 25 899 39 649 Total shareholders' equity and 152 356 61 453 78 741 liabilities CONSOLIDATED CASH FLOW STATEMENT (1 000 EUR) 1-9/07 1-9/06 2006 Cash flows from operating activities Result for the period 4 733 1 230 2 633 Adjustments to profit for the period 4 621 1 494 2 442 9 354 2 724 5 076 Change in working capital Decrease (+) / increase (-) in trade and -6 880 -385 -1 814 other receivables Decrease (+) / increase (-) in inventories 91 -275 30 Decrease (-) / increase (+) in trade and 1 896 479 475 other payables Change in working capital -4 894 -181 -1 309 Interest and other finance cost paid -1 006 -311 -429 Interest and dividend received 121 235 289 Income taxes paid -1 323 -623 -1 024 Net cash generated by operating activities 2 252 1 844 2 604 Cash flows from investing activities Acquisition of subsidiaries, net of cash -26 329 -3 450 -13 262 acquired Purchases of tangible and intangible assets -945 -771 -1 118 Proceeds from sale of tangible assets 26 32 41 Sale of business/subsidiaries 44 0 45 Proceeds from sale of financial assets 0 39 39 Increase of other non-current 0 40 30 receivables/liabilities Net cash used in investing activities -27 205 -4 110 -14 225 Cash flow from financing activities Issue of share capital -155 2 2 Increase of interest-bearing liabilities 48 400 2 447 12 447 Repayments of interest-bearing liabilities -19 031 -4 263 -5 938 Purchase of treasury shares 0 -509 -509 Change in other long-term liabilities 0 0 0 Dividends paid to company's shareholders -1 698 -1 540 -1 540 Net cash generated in financing activities 27 516 -3 862 4 462 (Decrease)/increase in cash and cash 2 563 -6 129 -7 159 equivalents Cash and cash equivalents at the beginning 5 485 12 639 12 639 of the period Translation adjustment 188 0 -1 Change in fair value of financial assets 0 0 6 Cash and cash equivalents at the end of the 8 236 6 511 5 485 period STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (1 000 EUR) Share Share Reserve of Other Trea- Ret. Mino- Total capital premium invested reserve sury earn- rity equity non- s shares ings & inte- restricted trans- rest equity lat. diff. Shareholders' 5 105 25 404 1 960 11 -106 6 717 0 39 092 equity 1 January 2007 Translation 1 283 1 284 differences Share options 58 58 Available-for- -3 -3 sale financial assets Result for the 4 733 4 733 period Dividends -1 698 -1 698 Share issue 19 228 19 228 Shareholders' 5 105 25 404 21 188 66 -106 11 035 0 62 693 equity 30 September 2007 (1 000 EUR) Share Share Reserve of Other Trea- Ret. Mino- Total capital premium invested reserve sury earn- rity equity non- s shares ings & inte- restricted trans- rest equity lat. diff. Shareholders' 4 619 22 856 0 55 0 6 023 20 33 573 equity 1 January 2006 Translation 1 1 differences Share options -51 55 4 Result for the 1 230 1 230 period Dividends -1 540 -1 540 Purchase of -509 -509 treasury shares Issue of share 322 322 capital Put/Call -56 -56 treatment Acquisition of 2 548 -20 2 528 minority Shareholders' 4 941 25 404 0 4 -509 5 713 0 35 554 equity 30 September 2006 2. Notes 2.1. Basis of preparation This interim report has been prepared in accordance with the IFRS recognition and measurement principles and applying the same accounting policies as in the 2006 annual consolidated financial statements. This interim report does not comply with all of the requirements of 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 2006. 2.2. Accounting policies The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2006, as described in the annual financial statements for the year ended 31 December 2006. The group has adopted the following standards and interpretations from the beginning of 2007: IFRS 7 Financial instruments - Disclosures, and Amendment to IAS 1 - Capital disclosures. The adoption of IFRS 7 and the amendment to IAS 1 will expand disclosures presented in the annual financial statements. 2.3. Segment information Primary reporting format - geographical segments based on location of assets Segment result: (1 000 EUR) 7-9/07 7-9/06 1-9/07 1-9/06 1-12/06 Total sales Finland 9 015 7 770 30 095 25 194 36 267 Baltic countries 5 255 3 160 15 432 8 455 13 083 Sweden 4 201 0 10 748 0 881 Norway & Denmark 3 291 0 3 291 0 0 Eliminations 0 -9 0 - 21 -36 Group total 21 763 10 921 59 567 33 628 50 194 Segment result (operating result) Finland 589 1 222 3 081 3 029 4 641 Baltic countries 1 400 174 3 870 - 176 497 Sweden 431 0 1 134 0 -22 Norway & Denmark 195 0 195 0 0 Group management -419 -288 -1 152 - 948 -1 474 Group total 2 195 1 108 7 128 1 906 3 642 Secondary reporting format - business segments Segment revenue: (1 000 EUR) 7-9/07 7-9/06 1-9/07 1-9/06 1-12/06 Total sales BI 10 557 2 228 26 378 7 126 11 863 Operational Solutions 8 833 6 405 26 031 19 353 28 715 Cartographic Solutions 2 372 2 297 7 157 7 169 9 652 Other (incl. 0 -9 0 - 21 -36 eliminations) Group total 21 763 10 921 59 567 33 628 50 194 2.4. Contingencies and commitments The group has a contingent asset of 87 thousand Latvian lats (EUR 123 thousand) relating to a court case in Latvia. Riga Regional Court published a judgement, according to which adverse party was sentenced to pay 87 thousand Latvian lats to a group company of Affecto (Mebius IT). The adverse party has appealed to the Supreme court of the Republic of Latvia and demanded to change the decision. The adverse party has demanded a compensation of 51 thousand Latvian lats (EUR 72 thousand) from Mebius IT. In respect of the acquisitions of Intellibis AB, additional consideration of up to 4.0 MEUR is payable in 2008. At the end of the reporting period an additional consideration has been estimated to amount to 4.0 MEUR, which has been recorded as non-interest-bearing liability. The future aggregate minimum lease payments under non-cancelable operating leases as of 30 September 2007: 1 000 EUR 30.9.2007 31.12.2006 Not later than one (1) year 3 146 2 346 Later than one (1) year, but not later than 5 948 3 792 five (5) years Later than five (5) years 560 0 9 653 6 138 Guarantees: 1 000 EUR 30.9.2007 31.12.2006 Debt secured by a mortgage Financial loans 48 500 19 031 Mortgages 105 000 14 367 The shares in Affecto Finland Oy and Affecto Norway ASA have been pledged to secure the financial loans above. Other securities given on own behalf: Guarantees 142 0 Pledges 5 103 696 Pledges given on own behalf are secured by restricted cash of 0.3 MEUR (0.4 MEUR), time deposits of 0.3 MEUR (0.0 MEUR) and short term receivables at an amount of 4.8 MEUR (0.3 MEUR). Derivative contracts 1 000 EUR 30.9.2007 31.12.2006 Interest rate swaps: Nominal value 25 000 5 000 Fair value 10 24 3. Key figures 7-9/07 7-9/06 1-9/07 1-9/06 2006 Net sales, 1 000 eur 21 763 10 921 59 567 33 628 50 194 EBITDA, 1 000 eur 3 109 1 409 9 251 2 764 5 014 Operating result before IFRS3 2 834 1 172 8 375 2 081 4 051 depreciation, 1 000 eur Operating result, 1 000 eur 2 195 1 108 7 127 1 906 3 642 Result before taxes, 1 000 eur 1 601 1 066 6 316 1 748 3 458 Net income for equity holders 1 282 784 4 733 1 230 2 633 of the parent company, 1 000 eur EBITDA, % 14.3 % 12.9 % 15.5 % 8.2 % 10.0 % Operating profit before IFRS3 13.0 % 10.7 % 14.1 % 6,2 % 8.1 % depreciation, % Operating result, % 10.1 % 10.1 % 12.0 % 5.7 % 7.3 % Result before taxes, % 7.4 % 9.8 % 10.6 % 5.2 % 6.9 % Net income for equity holders 5.9 % 7.2 % 7.9 % 3.7 % 5.2 % of the parent company, % Equity ratio, % 42.5 % 62.4 % 42.5 % 62.4 % 52.0 % Net gearing, % 64.2 % 12.1 % 64.2 % 12.1 % 35.2 % Interest-bearing net debt, 40 275 4 305 40 275 4 305 13 743 1 000 eur Gross investment in non-current 150 155 945 796 1 118 assets (excl. acquisitions), 1 000 eur Gross investments, % of sales 0.7 % 1.4 % 1.6 % 2.4 % 2.2 % Research and development costs, 176 87 450 353 476 1 000 eur R&D -costs, % of sales 0.8 % 0.8 % 0.8 % 1.0 % 0.9 % Order backlog, 1 000 eur 25 004 21 558 25 004 21 558 24 167 Average number of employees 936 587 835 577 605 Earnings per share, eur 0.07 0.05 0.27 0.08 0.16 Earnings per share (diluted), 0.07 0.05 0.27 0.08 0.16 eur Equity per share, eur 2.92 2.19 2.92 2.19 2.30 Average number of shares, 1 000 18 643 16 338 17 540 15 932 16 058 shares Number of shares at the end of 21 480 16 268 21 480 16 268 16 980 period, 1 000 shares Calculation of key figures EBITDA = Earnings before interest, taxes, depreciation and amortization Equity ratio, % = Shareholders' equity + minority *100 interest ________________________________ Total assets - advances received Gearing, % = Interest-bearing liabilities - *100 cash, bank receivables and securities held as financial asset __________________________________ Shareholders' equity + minority interest 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 = Shareholders' equity _______________________________________ _________ Adjusted number of shares at the end of the period Market capitalization = Number of shares at the end of period (excluding treasury shares) x share price at closing date ----- |
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