2014-10-30 11:30:00 CET
2014-10-30 11:30:08 CET
REGULATED INFORMATION
Affecto Oyj - Interim report (Q1 and Q3)
Affecto Plc's Interim Report 1-9/2014
Helsinki, 2014-10-30 11:30 CET (GLOBE NEWSWIRE) -- AFFECTO PLC -- INTERIM
REPORT -- 30 OCTOBER 2014 at 12.30
Affecto Plc's Interim Report 1-9/2014
Group key figures
MEUR 7-9/14 7-9/13 1-9/14 1-9/13 2013 last 12m
Net sales 25.7 27.5 89.9 96.7 132.9 126.1
Operational segment result 2.9 2.5 6.1 7.5 10.3 8.8
% of net sales 11.4 9.0 6.8 7.8 7.7 7.0
Operating profit 2.5 2.0 4.5 6.0 8.3 6.8
% of net sales 9.7 7.1 5.0 6.2 6.2 5.4
Profit before taxes 2.3 2.0 4.0 5.8 8.0 6.2
Profit for the period 1.8 1.4 3.1 4.1 5.6 4.6
Equity ratio, % 59.2 55.5 59.2 55.5 53.0 -
Net gearing, % 14.5 19.8 14.5 19.8 7.4 -
Earnings per share, eur 0.08 0.07 0.15 0.20 0.26 0.21
Earnings per share (diluted), 0.08 0.07 0.15 0.19 0.26 0.21
eur
Equity per share, eur 3.11 3.16 3.11 3.16 3.14 -
CEO Juko Hakala comments:
In the third quarter our net sales decreased by 7% to 25.7 MEUR (27.5 MEUR).
Net sales decreased in all Nordic countries. Net sales grew in Baltic, where
especially the insurance business and Estonia performed well.
On a positive note, our operating profit grew to 2.5 MEUR (2.0 MEUR) and
profitability improved to 10% (7%). Baltic had an excellent 19% profitability.
Finland had 15% profitability and Norway improved to 12% profitability.
Profitability decreased in Denmark and Sweden.
During my first weeks as the CEO we have launched several actions to improve
our sales performance, to update our strategy and to seek new growth
opportunities both in and around our core business areas. Our business area and
our customers' industries are under transformation due to the rapid
technological changes and we are going to tailor our offering in order to be
able fulfill the changing needs of our customers.
The order backlog was 41.1 MEUR, somewhat below last year (45.0 MEUR). The
economic uncertainty still affects our customers, whose investment decision
making is cautious and whose preferences are for smaller solutions and for
phased implementation.
Year 2014 net sales and operating profit are estimated to be below last year's
level.
Additional information:
SVP, M&A, IR, Hannu Nyman, +358 205 777 761
CEO Juko Hakala, + 358 205 777 450
CFO Satu Kankare, +358 205 777 202
This release is unaudited. The amounts in this report have been rounded from
exact numbers.
NET SALES
Affecto's net sales in 1-9/2014 were 89.9 MEUR (1-9/2013: 96.7 MEUR). Net sales
in Finland were 36.7 MEUR (38.3 MEUR), in Norway 18.5 MEUR (22.2 MEUR), in
Sweden 15.2 MEUR (17.0 MEUR), in Denmark 9.2 MEUR (11.2 MEUR) and 13.4 MEUR
(11.5 MEUR) in Baltic.
Net sales by reportable segments
Net sales, MEUR 7-9/14 7-9/13 1-9/14 1-9/13 2013 last 12m
Finland 10.3 11.3 36.7 38.3 53.2 51.6
Norway 5.3 6.2 18.5 22.2 29.6 25.9
Sweden 3.9 4.7 15.2 17.0 23.2 21.3
Denmark 2.6 3.1 9.2 11.2 15.4 13.3
Baltic 4.5 3.3 13.4 11.5 16.0 17.9
Other -0.9 -1.1 -3.1 -3.5 -4.4 -4.0
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Group total 25.7 27.5 89.9 96.7 132.9 126.1
Net sales decreased by 7% in the third quarter. Largest decreases were seen in
Sweden, Denmark and Norway. Baltic grew by 36% mainly thanks to the insurance
business. Resource utilization was low especially in Denmark, but also in
Sweden. Sales of both consultant work and licenses decreased.
Net sales of Information Management Solutions business in 1-9/2014 were 83.4
MEUR (90.1 MEUR) and net sales of Karttakeskus GIS business were 8.9 MEUR (8.8
MEUR).
Customers continue to show interest mainly in shorter and smaller projects,
especially true for mid-sized customers, and investment decisions take a long
time. The general market sentiment continues cautious in all Nordic countries.
The order backlog decreased to 41.1 MEUR (45.0 MEUR).
PROFIT
Affecto's operating profit in 1-9/2014 was 4.5 MEUR (6.0 MEUR) and the
operational segment result was 6.1 MEUR (7.5 MEUR). Operational segment result
was in Finland 3.7 MEUR (4.9 MEUR), in Norway 1.0 MEUR (2.2 MEUR), in Sweden
-0.0 MEUR (-0.3 MEUR), in Denmark 0.7 MEUR (1.3 MEUR) and in Baltic 1.6 MEUR
(0.4 MEUR).
Operational segment result by reportable segments
Operational segment 7-9/14 7-9/13 1-9/14 1-9/13 2013 last 12m
result, MEUR
Finland 1.5 1.8 3.7 4.9 6.9 5.7
Norway 0.6 0.5 1.0 2.2 2.7 1.5
Sweden -0.1 0.0 -0.0 -0.3 -0.2 0.0
Denmark 0.2 0.5 0.7 1.3 1.9 1.4
Baltic 0.9 0.0 1.6 0.4 0.2 1.4
Other -0.2 -0.3 -1.0 -1.0 -1.2 -1.2
--------------------------------------------------------------------------
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Operational segment result 2.9 2.5 6.1 7.5 10.3 8.8
IFRS3 Amortization -0.4 -0.5 -1.5 -1.5 -2.0 -2.0
Operating profit 2.5 2.0 4.5 6.0 8.3 6.8
--------------------------------------------------------------------------
In 7-9/2014 operating profit increased to 2.5 MEUR (2.0 MEUR) and profitabilityincreased to 10% (7%). Finland had 15% profitability and Norway improved to 12%
profitability. Profitability in Baltic improved to 19% thanks to the insurance
business and Estonia. Denmark's profitability decreased to 6% due to decreased
net sales. Sweden made a small loss.
According to the IFRS3 requirements, in 1-9/2014 operating profit includes 1.5
MEUR (1.5 MEUR) of amortization on intangible assets related to acquisitions.
The other intangible assets impacting in the IFRS3 amortization totaled 0.2
MEUR at the end of the reporting period and the amortization will end during
year 2014.
Taxes corresponding to the profit of the period have been entered as tax
expense. Net profit for the period was 3.1 MEUR, while it was 4.1 MEUR last
year.
FINANCE AND INVESTMENTS
At the end of the reporting period Affecto's balance sheet totaled 121.5 MEUR
(12/2013: 139.5 MEUR). Equity ratio was 59.2% (12/2013: 53.0%) and net gearing
was 14.5% (12/2013: 7.4%).
The financial loans were 24.5 MEUR (12/2013: 26.5 MEUR) at the end of reporting
period. The company's cash and liquid assets were 14.7 MEUR (12/2013: 21.5
MEUR). The interest-bearing net debt was 9.7 MEUR (12/2013: 5.0 MEUR).
Cash flow from operating activities for the reported period was -1.0 MEUR (2.1
MEUR) and cash flow from investing activities was -0.6 MEUR (-1.4 MEUR).
Investments in tangible and intangible assets were 0.6 MEUR (1.4 MEUR).
The Annual General Meeting held in April decided to distribute a dividend of
3.6 MEUR (3.4 MEUR).
EMPLOYEES
The number of employees was 1015 persons at the end of the reporting period
(1083). 410 employees were based in Finland (436), 95 in Norway (124), 133 in
Sweden (146), 66 in Denmark (71) and 311 in the Baltic countries (306). The
average number of employees during the period was 1047 (1080).
Board member Lars Wahlström served as the interim CEO in 1 January - 7
September 2014. Juko Hakala started as the CEO on 8 September 2014.
REVIEW OF MARKET DEVELOPMENTS
Weak economic development in our operating area continued to affect Affecto's
business negatively. Customers' decision-making pace was slow and they are
ordering short and small projects. Order backlog has decreased in all Nordic
countries compared to last year, but it has clearly grown in Baltic.
Market development in our BI/EIM market segments is twofold: some technology
and solution areas grow well, but some see only very slow growth. E.g. demand
for basic data warehouse solutions is not growing much, while demand for
appliances and other next-generation data warehouse solutions is growing
clearly. We are shifting our offerings and resources to match the changing
needs. In Norway we have had emphasis on next-generation data warehouses, while
in Sweden and Finland we have had more focus on collaboration and
digitalization solutions.
Cloud adoption is progressing in the Business Intelligence & Data Warehouse
markets. The Industrial Internet / Internet of Things will create significant
new analysis possibilities for our customers. We are actively looking into
development of new solutions to satisfy the customer needs.
In general, we believe that the information technology markets and buying are
building into several separate markets. IT buying continues to change, cloud
and commodity-like services will grow and the roles of customers' IT
organizations are changing. Price competition continues tight and the global
service companies will continue to grow in this market. Small local companies
can develop their competitiveness by specializing, for example into the new
fields in analytics mentioned above.
At the same time new business technology markets are emerging, where
information technology solutions and the information generated by them form an
integral part of customer organizations' own products and services. From our
customers' perspective these solutions will be elemental for their business and
will have close connection to their own competitiveness and profit. So, the
decisions regarding these solutions will be made in proximity of or within the
business itself. Business capabilities based on Internet of Things offer
examples of this kind of solutions that may transform products and business
models in various industries. We are actively investigating various
possibilities in this emerging market and believe that prospering in this
market will require close relations to the customers. So, we aim to grow in
this market together with our customers.
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.
In 7-9/2014 the net sales in Finland decreased by 8% to 10.3 MEUR (11.3 MEUR).
Operational segment result was 1.5 MEUR (1.8 MEUR) and profitability was 15%.
Net sales decreased mainly due to smaller sales of consultancy work. General
mood is still cautious in Finland and customers are slow with their investment
decisions. Order backlog is below last year's level.
In 7-9/2014 the net sales of Karttakeskus GIS business, reported as part of
Finland, decreased by 13% to 2.6 MEUR (3.0 MEUR) and its profitability was
good.
In 7-9/2014 the net sales in Norway were 5.3 MEUR (6.2 MEUR) and operational
segment result was 0.6 MEUR (0.5 MEUR). Net sales decreased by 14% due to
smaller sales of both consultant work and licenses. Profitability increased to
12% as utilization rate improved somewhat. Streamlining actions done earlier
this year have helped to decrease the cost base and have improved
profitability. Order backlog is below last year's level.
In 7-9/2014 the net sales in Sweden were 3.9 MEUR (4.7 MEUR) and operational
segment result -0.1 MEUR (0.0 MEUR). Net sales decreased by 18%, to which both
the decreased utilization rate and the weakened SEK contributed. Profitability
was slightly negative -2%. Development actions continue and the goal is to
achieve normal profitability, but structural and operational changes for the
business will take some time. Order backlog is below last year's level.
In 7-9/2014 the net sales in Denmark were 2.6 MEUR (3.1 MEUR) and operational
segment result was 0.2 MEUR (0.5 MEUR). Net sales decreased by 17%.
Profitability decreased to 6%. Order backlog is below last year's level.
In 7-9/2014 the net sales in Baltic (Lithuania, Latvia, Estonia, Poland, South
Africa) were 4.5 MEUR (3.3 MEUR). Operational segment result was 0.9 MEUR (0.0
MEUR). Net sales increased by 36% and profitability increased to 19%. The
Lithuanian public sector has not yet recovered, as the preparations of new EU
funded projects has progressed slower than we have anticipated. The entrance of
Lithuania into the Euro zone in January 2015 has had some positive impact.
Estonian market situation is normal. The insurance business is performing well.
Order backlog is above last year's level.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of Affecto Plc, held on 10 April 2014, adopted the
financial statements for 1.1.-31.12.2013 and discharged the members of the
Board of Directors and the CEO from liability. Approximately 33 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
2013.
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 re-elected Aaro Cantell as
Chairman and Jukka Ruuska as Vice-Chairman. KPMG Oy Ab was elected as the
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
The Board has not used in the review period the authorizations given by the
Annual General Meeting in 2013, that expired on 10 April 2014.
The complete contents of the new authorizations given by the Annual General
Meeting held on 10 April 2014 have been published in the stock exchange release
regarding the Meetings' decisions. Key facts about the authorizations:
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. Based on the
authorization a total of 20 333 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
During the review period a total of 132 141 new shares have been subscribed
with the 2008C options.
The company has one share series and all shares have similar rights. At the end
of the review period Affecto Plc's share capital consisted of 22 450 745
shares. The company owned directly 44 219 shares and a fully owned subsidiary
Affecto Management Oy owned 823 000 shares. Thus there are 867 219 treasury
shares in total, approx. 3.9 % of the total amount of the shares.
In 1-9/2014 the highest share price was 4.62 euro, the lowest price 2.90 euro,
the average price 3.36 euro and the closing price 3.16 euro. The trading volume
was 2.9 million shares, corresponding to annualized 17% of the number of shares
at the end of the period. The market value of shares was 68.2 MEUR at the end
of the period excluding the treasury shares.
2008C options' exercise period ended on 31 May 2014. A total of 306 000 shares
were subscribed with the options.
SHAREHOLDERS
The company had a total of 3 011 owners on 30 September 2014 and the foreign
ownership was 12%. The list of the largest owners can be found in the company's
web site. Information about the ownership structure and option programs is
included as a separate section in the financial statements. The ownership of
the board members, CEO and their controlled corporations totaled approx. 10.5%.
According to the flagging announcement made on 21 May 2014, the ownership of
Evli Pankki and funds managed by Evli Rahastoyhtiö has decreased below 5%.
ASSESSMENT OF RISKS AND UNCERTAINTIES
Affecto's order backlog has traditionally been only for a few months, which
decreases the reliability of longer-term forecasts. The changes in the general
economic conditions and the operating environment of customers have direct
impact in Affecto's markets. The uncertain economy may affect Affecto's
customers negatively, and their slower investment decision making, postponing
or cancellation of IT investments may have negative impact on Affecto. Slower
decision making by customers may decrease the predictability of the business
and may decrease the utilisation rate of resources.
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 uncertainty is related to Sweden, where the recoverable
amount exceeds the carrying amount only by a narrow margin.
Affecto sells third party software licenses as part of its solutions. Typically
the license sales have most 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
approx. 10 MEUR in 2013.
Affecto's success depends also on good customer relationships. Affecto has a
well-diversified customer base. In 2013 the largest customer generated 3% of
Affecto's net sales, while the 10 largest together generated 17%. 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.
Approximately a 40% of Affecto's net sales is generated in Sweden and Norway,
thus the development of the currencies of these countries (SEK and NOK) may
have impact on Affecto's profitability. The main part of the companies' income
and costs are within the same currency, which decreases the risks.
EVENTS AFTER THE REVIEW PERIOD
According to flagging announcements the ownership of Mika Laine has decreased
below 5% on 17 October 2014 and the ownership of Lombard International
Assurance S.A. has exceeded 5% on 17 October 2014.
FUTURE OUTLOOK
Year 2014 net sales and operating profit are estimated to be below last year's
level.
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
You can 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 14.00 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) 7-9/14 7-9/13 1-9/14 1-9/13 2013 last
12m
----------------------------------------------------
----------------------------------------------------
Net sales 25 664 27 499 89 869 96 702 132 896 126
064
Other operating income -10 - 13 7 65 71
Changes in inventories of -53 -53 -27 305 306 -27
finished
goods and work in progress
Materials and services -5 106 -5 266 -19 277 -20 467 -29 952 -28
762
Personnel expenses -13 549 -15 222 -50 764 -54 996 -74 031 -69
799
Other operating expenses -3 727 -4 162 -12 823 -13 098 -17 803 -17
528
Other depreciation and -300 -327 -921 -936 -1 230 -1 215
amortisation
IFRS3 amortisation -439 -507 -1 536 -1 547 -1 989 -1 978
Operating profit 2 481 1 961 4 532 5 970 8 262 6 824
Financial income and -139 -3 -502 -126 -289 -665
expenses
Profit before income tax 2 342 1 959 4 030 5 844 7 973 6 159
Income tax -521 -566 -913 -1 709 -2 407 -1 610
Profit for the period 1 821 1 392 3 118 4 134 5 566 4 549
Profit for the period
attributable to:
Owners of the parent 1 821 1 399 3 118 4 059 5 493 4 551
company
Non-controlling interest - -7 - 75 73 -2
Earnings per share
(EUR per share):
Basic 0.08 0.07 0.15 0.20 0.26 0.21
Diluted 0.08 0.07 0.15 0.19 0.26 0.21
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(1 000 EUR) 7-9/14 7-9/13 1-9/14 1-9/13 2013 last
12m
----------------------------------------------------
----------------------------------------------------
Profit for the period 1 821 1 392 3 118 4 134 5 566 4 549
Other comprehensive income
Items that may be
reclassified subsequently
to the statement of
income:
Translation difference 622 -228 -186 -2 045 -3 074 -1 216
Total Comprehensive income 2 444 1 164 2 932 2 090 2 491 3 333
for the period
Total Comprehensive income
attributable to:
Owners of the parent 2 444 1 171 2 932 2 014 2 419 3 336
company
Non-controlling interest - -7 - 75 73 -2
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 9/2014 9/2013 12/2013
-------------------------------------------------------------
-------------------------------------------------------------
Non-current assets
Property, plant and equipment 1 665 2 014 1 947
Goodwill 71 917 73 062 72 166
Other intangible assets 506 2 563 2 072
Deferred tax assets 1 522 1 566 1 606
Trade and other receivables 2 411 4
75 612 79 616 77 795
Current assets
Inventories 574 626 622
Trade and other receivables 29 873 32 982 38 969
Current income tax receivables 699 785 615
Cash and cash equivalents 14 739 15 211 21 469
45 884 49 604 61 675
-------------------------------------------------------------
-------------------------------------------------------------
Total assets 121 496 129 221 139 470
Equity attributable to owners
of the parent Company
Share capital 5 105 5 105 5 105
Reserve of invested non-restricted 47 718 47 354 47 448
equity
Other reserves 818 742 763
Treasury shares -2 111 -2 202 -2 165
Translation differences -2 315 -1 099 -2 128
Retained earnings 17 867 16 396 18 184
-------------------------------------------------------------
-------------------------------------------------------------
67 083 66 295 67 207
Non-controlling interest - 386 -
Total equity 67 083 66 681 67 207
Non-current liabilities
Loans and borrowings 20 444 24 411 22 420
Deferred tax liabilities 118 599 505
20 562 25 011 22 924
Current liabilities
Loans and borrowings 4 000 4 000 4 000
Trade and other payables 27 702 30 989 42 788
Current income tax liabilities 1 661 2 302 1 913
Provisions 488 238 638
33 851 37 529 49 339
Total liabilities 54 413 62 539 72 264
-------------------------------------------------------------
-------------------------------------------------------------
Equity and liabilities 121 496 129 221 139 470
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 1-9/2014 1-9/2013 2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flows from operating activities
Profit for the period 3 118 4 134 5 566
Adjustments to profit for the period 3 981 4 553 6 271
7 098 8 688 11 837
Change in working capital -5 907 -3 931 2 863
Interest and other financial cost paid -325 -426 -566
Interest and other financial income received 49 121 123
Income taxes paid -1 964 -2 324 -3 343
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net cash from operating activities -1 049 2 127 10 915
Cash flows from investing activities
Acquisition of tangible and intangible assets -611 -1 355 -1 566
Proceeds from sale of tangible and 1 1 1
intangible assets
Net cash used in investing activities -611 -1 354 -1 564
----------------------------------------------------------------------------
Cash flows from financing activities
Repayments of non-current borrowings -2 000 -2 000 -4 000
Proceeds from share options exercised 262 711 781
Acquisition of non-controlling interest - - -30
Dividends paid to the owners -3 434 -3 444 -3 444
of the parent company
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net cash from financing activities -5 172 -4 734 -6 694
(Decrease)/increase in cash and cash equivalents -6 831 -3 961 2 657
Cash and cash equivalents 21 469 19 767 19 767
at the beginning of the period
Foreign exchange effect on cash 100 -595 -954
Cash and cash equivalents 14 739 15 211 21 469
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. Non-con Total
capita invested reserv ry lat. earnin trollin equity
l non-restri es shares diff. gs g
cted interes
equity t
--------------------------------------------
Equity at 1 5 105 47 448 763 -2 165 -2 128 18 184 - 67 207
January
2014
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 3 118 - 3 118
Translation -186 -186
difference
s
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -186 3 118 - 2 932
compre-hen
sive income
Share-based 55 55
payments
Exercise of 262 262
share
options
Treasury 8 54 62
shares as
compensati
on to the
Board
Dividends -3 434 -3 434
paid
Equity at 5 105 47 718 818 -2 111 -2 315 17 867 - 67 083
30
September
2014
--------------------------------------------------------------------------------
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 46 643 693 -2 202 946 15 781 311 67 277
at 1
January
2013
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 4 059 75 4 134
Translat -2 045 -2 045
ion
differe
nces
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -2 045 4 059 75 2 090
compre-
hensive
income
Share-ba 49 49
sed
payment
s
Exercise 711 711
of
share
options
Dividend -3 444 -3 444
s paid
Equity 5 105 47 354 742 -2 202 -1 099 16 396 386 66 681
at 30
Septemb
er 2013
--------------------------------------------------------------------------------
2. Notes
2.1. Basis of preparation
This interim report has been prepared in accordance with the IFRS recognition
and measurement principles and in accordance with IAS 34, Interim Financial
reporting. The interim report should be read in conjunction with the annual
financial statements for the year ended 31 December 2013. In material respects,
the same accounting policies have been applied as in the 2013 annual
consolidated financial statements. The amendments to and interpretations of
IFRS standards that entered into force on 1 January 2014 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) 7-9/14 7-9/13 1-9/14 1-9/13 2013 last 12m
--------------------------------------------------
--------------------------------------------------
Total net sales
Finland 10 322 11 253 36 715 38 287 53 175 51 604
Norway 5 268 6 160 18 547 22 234 29 554 25 867
Sweden 3 874 4 706 15 152 16 979 23 152 21 325
Denmark 2 604 3 127 9 189 11 223 15 363 13 329
Baltic 4 532 3 322 13 363 11 488 16 018 17 893
Other -935 -1 069 -3 097 -3 509 -4 366 -3 953
Group total 25 664 27 499 89 869 96 702 132 896 126 064
--------------------------------------------------------------------------------
Operational segment result
Finland 1 515 1 764 3 735 4 928 6 863 5 670
Norway 610 531 1 031 2 241 2 718 1 508
Sweden -76 27 -43 -303 -229 31
Denmark 168 470 722 1 251 1 884 1 354
Baltic 867 5 1 624 393 193 1 424
Other -165 -329 -1 000 -992 -1 177 -1 184
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Total operational segment 2 919 2 469 6 069 7 517 10 251 8 803
result
IFRS3 amortisation -439 -507 -1 536 -1 547 -1 989 -1 978
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--------------------------------------------------------------------------------
Operating profit 2 481 1 961 4 532 5 970 8 262 6 824
Financial income and expenses -139 -3 -502 -126 -289 -665
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit before income tax 2 342 1 959 4 030 5 844 7 973 6 159
Net sales by business lines
(1 000 EUR) 7-9/14 7-9/13 1-9/14 1-9/13 2013 last 12m
--------------------------------------------------
--------------------------------------------------
Information Management 23 781 25 339 83 362 90 080 123 608 116 891
Solutions
Karttakeskus GIS business 2 637 3 037 8 866 8 769 12 239 12 336
Other -754 -878 -2 359 -2 147 -2 950 -3 163
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Group total 25 664 27 499 89 869 96 702 132 896 126 064
2.3. Changes in intangible and tangible assets
(1 000 EUR) 1-9/14 1-9/13 1-12/13
------------------------
------------------------
Carrying amount at the beginning of period 76 185 80 460 80 460
Additions 611 1 355 1 566
Disposals -1 -1 -1
Depreciation and amortization for the period -2 458 -2 483 - 3 219
Exchange rate differences -249 -1 692 -2 621
Carrying amount at the end of period 74 088 77 639 76 185
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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
------------------------------------------------------
------------------------------------------------------
1.1.2013 20 641 641 5 105 46 643 -2 202
Exercise of share options 350 667 - 659 -
52
30.9.2013 20 992 308 5 105 47 354 -2 202
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 13 875 - 8 54
compensation to the
Board of Directors
30.9.2014 21 583 526 5 105 47 718 -2 111
At the end of reporting period Affecto Plc owned 44 219 treasury shares. In
addition to that Affecto Management Oy, a fully owned subsidiary, owned 823 000
shares in Affecto Plc. In total these 867 219 shares correspond to 3.9% of the
total amount of the shares. The amount of registered shares was 22 450 745
shares.
2.5. Interest-bearing liabilities
(1 000 EUR) 30.9.2014 31.12.2013
Interest-bearing non-current liabilities
Loans from financial institutions, 20 444 22 420
non-current portion
Loans from financial institutions, 4 000 4 000
current portion
---------------------------------------------------------------
---------------------------------------------------------------
24 444 26 420
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.
2.6. Contingencies and commitments
The future aggregate minimum lease payments under non-cancelable operating
leases:
(1 000 EUR) 30.9.2014 31.12.2013
Not later than one (1) year 3 313 3 675
Later than one (1) year, 3 767 3 719
but not later than five (5) years
Later than five (5) years - -
Total 7 080 7 394
--------------------------------------------------------
Guarantees given:
(1 000 EUR) 30.9.2014 31.12.2013
Liabilities secured by a mortgage
Financial loans 24 500 26 500
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) 30.9.2014 31.12.2013
Pledges 36 36
Other guarantees 2 767 2 836
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) 1-9/2014 1-9/2013 1-12/2013
Salaries and other short-term employee benefits 1 705 1 589 2 017
Post-employment benefits 203 222 288
Termination benefits 80 -15 85
Share-based payments 2 4 6
------------------------------------------------------------------------------
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Total 1 991 1 800 2 395
Loans to related party:
(1 000 EUR) 30.9.2014 30.9.2013 31.12.2013
Loans to key management of the group - 1 519 -
Purchases from related party:
(1 000 EUR) 1-9/20 1-9/20 1-12/2
14 13 013
Purchases from the entity that are controlled by key - 5 5
management personnel of the group
3. Key figures
7-9/14 7-9/13 1-9/14 1-9/13 2013 last 12m
--------------------------------------------------
--------------------------------------------------
Net sales, 1 000 eur 25 664 27 499 89 869 96 702 132 896 126 064
EBITDA, 1 000 eur 3 219 2 796 6 990 8 453 11 481 10 018
Operational segment result, 2 919 2 469 6 069 7 517 10 251 8 803
1 000 eur
Operating result, 1 000 eur 2 481 1 961 4 532 5 970 8 262 6 824
Result before taxes, 1 000 2 342 1 959 4 030 5 844 7 973 6 159
eur
Profit attributable to the 1 821 1 399 3 118 4 059 5 493 4 551
owners
of the parent company, 1 000
eur
EBITDA, % 12.5 % 10.2 % 7.8 % 8.7 % 8.6 % 7.9 %
Operational segment result, % 11.4 % 9.0 % 6.8 % 7.8 % 7.7 % 7.0 %
Operating result, % 9.7 % 7.1 % 5.0 % 6.2 % 6.2 % 5.4 %
Result before taxes, % 9.1 % 7.1 % 4.5 % 6.0 % 6.0 % 4.9 %
Net income for equity holders 7.1 % 5.1 % 3.5 % 4.2 % 4.1 % 3.6 %
of the parent company, %
Equity ratio, % 59.2 % 55.5 % 59.2 % 55.5 % 53.0 %
Net gearing, % 14.5 % 19.8 % 14.5 % 19.8 % 7.4 %
Interest-bearing net debt, 9 705 13 201 9 705 13 201 4 950
1 000 eur
Gross investment in 170 293 611 1 355 1 566
non-current
assets (excl. acquisitions),
1 000 eur
Gross investments, % of net 0.7 % 1.1 % 0.7 % 1.4 % 1.2 %
sales
Order backlog, 1 000 eur 41 073 44 955 41 073 44 955 48 682
Average number of employees 1 021 1 074 1 047 1 080 1 081
Earnings per share, eur 0.08 0.07 0.15 0.20 0.26 0.21
Earnings per share (diluted), 0.08 0.07 0.15 0.19 0.26 0.21
eur
Equity per share, eur 3.11 3.16 3.11 3.16 3.14
Average number of shares, 21 574 20 992 21 479 20 802 20 906 21 425
1 000 shares
Number of shares at the end 21 584 20 992 21 584 20 992 21 431 21 584
of
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
-----
Additional information:
SVP, M&A, IR, Hannu Nyman, +358 205 777 761
CEO Juko Hakala, + 358 205 777 450
CFO Satu Kankare, +358 205 777 202
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