2015-10-29 12:00:00 CET
2015-10-29 12:00:06 CET
REGULATED INFORMATION
Affecto Oyj - Interim report (Q1 and Q3)
Affecto Plc's Interim Report 1-9/2015
AFFECTO PLC -- INTERIM REPORT -- 29 OCTOBER 2015 at 13:00
Affecto Plc's Interim Report 1-9/2015
Group key figures
MEUR 7-9/15 7-9/14 1-9/15 1-9/14 2014 last 12m
Net sales 24.8 25.7 84.7 89.9 122.7 117.5
Operational segment result -0.7 2.9 4.3 6.1 10.0 8.2
% of net sales -2.9 11.4 5.0 6.8 8.2 7.0
Operating profit -0.7 2.5 4.3 4.5 0.8 0.6
% of net sales -2.9 9.7 5.0 5.0 0.7 0.5
Profit before taxes -0.6 2.3 4.1 4.0 0.3 0.4
Profit for the period -0.5 1.8 3.3 3.1 -1.6 -1.4
Equity ratio, % 59.7 59.2 59.7 59.2 54.6 -
Net gearing, % 9.4 14.5 9.4 14.5 1.8 -
Earnings per share, EUR -0.02 0.08 0.15 0.15 -0.07 -0.06
Earnings per share (diluted), -0.02 0.08 0.15 0.15 -0.07 -0.06
EUR
Equity per share, EUR 2.76 3.11 2.76 3.11 2.80 -
CEO Juko Hakala comments:
Our Q3 net sales decreased by 3% to 24.8 MEUR (25.7 MEUR). Baltic and Finland
net sales grew by 3% but net sales declined in Sweden 15 %, in Norway by 13%
and in Denmark by 4%. The decrease in net sales was mainly driven by weak sales
performance during earlier quarters especially in our consulting business.
The Q3 operational segment result was -0.7 MEUR (2.9 MEUR). Profitability in
Baltic was excellent 17% (19%), Norway 3% (12%), Denmark 2 % (6%), Finland -2%
(15%) and in Sweden -9% (-2%).
The Q3 operational segment result was affected by two major expense items.
Affecto became a target of a fraud during the third quarter. The losses caused
by the fraud affected our results as a non-recurring item of 1.0 MEUR.
Secondly, we also concluded the personnel negotiations in Finland which
resulted into a reduction of 32 employees, in relation to which we made a
restructuring expense provision of approximately 1.0 MEUR in Q3/15.
The market is experiencing growing interest in new business technology areas
and on the other hand we continue to see a declining trend in new orders
related to traditional IT market and related skills. We were able to secure
essential contracts e.g. the maintenance and operation contract of the
electricity billing and invoicing system in Lithuania and the continuation of
the contract with respect to the maintenance and operation of the Land Parcel
Identification System in Finland. Our order intake increased from a year ago
and the order backlog of 39.4 MEUR is also lower than year ago (41.1 MEUR). We
continue our renewal process and build capabilities to answer the market demand
also in the growth areas. We will also increase cost control measures to
sharpen our focus and to enable continuous investments to focus areas.
Year 2015 net sales are estimated to be below last year's level. Operating
profit is estimated to grow in 2015.
Additional information:
CEO Juko Hakala, +358 205 777 450
Interim CFO Sami Lehtinen, +358 40 377 5915
This release is unaudited. The amounts in this report have been rounded from
exact numbers.
NET SALES
Affecto's net sales in 1-9/2015 were 84.7 MEUR (1-9/2014: 89.9 MEUR). Net sales
in Finland were 35.3 MEUR (36.7 MEUR), in Norway 15.6 MEUR (18.5 MEUR), in
Sweden 13.4 MEUR (15.2 MEUR), in Denmark 8.1 MEUR (9.2 MEUR) and 15.4 MEUR
(13.4 MEUR) in Baltic.
Net sales by reportable segments
Net sales, MEUR 7-9/15 7-9/14 1-9/15 1-9/14 2014 last 12m
Finland 10.7 10.3 35.3 36.7 50.6 49.1
Norway 4.6 5.3 15.6 18.5 25.0 22.0
Sweden 3.3 3.9 13.4 15.2 20.0 18.3
Denmark 2.5 2.6 8.1 9.2 12.0 11.0
Baltic 4.7 4.5 15.4 13.4 19.0 21.1
Other -0.9 -0.9 -3.0 -3.1 -4.0 -3.9
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Group total 24.8 25.7 84.7 89.9 122.7 117.5
In the third quarter the net sales decreased by 3%. Net sales grew by 3 % in
Baltic and Finland but decreased in Sweden by 15 %, Norway by 13%, in Denmark
by 4%.
Net sales of Information Management Solutions business in 1-9/2015 were 78.9
MEUR (83.4 MEUR) and net sales of Karttakeskus GIS business were 8.7 MEUR (8.9
MEUR).
PROFIT
Affecto's operating profit in 1-9/2015 was 4.3 MEUR (4.5 MEUR) and the
operational segment result was 4.3 MEUR (6.1 MEUR). Operational segment result
was in Finland 1.7 MEUR (3.7 MEUR), in Norway 1.2 MEUR (1.0 MEUR), in Sweden
0.2 MEUR (-0.0 MEUR), in Denmark 0.0 MEUR (0.7 MEUR) and in Baltic 3.2 MEUR
(1.6 MEUR).
Operational segment result by reportable segments
Operational segment 7-9/15 7-9/14 1-9/15 1-9/14 2014 last 12m
result, MEUR
Finland -0.3 1.5 1.7 3.7 5.4 3.4
Norway 0.1 0.6 1.2 1.0 2.0 2.1
Sweden -0.3 -0.1 0.2 -0.0 0.3 0.5
Denmark 0.1 0.2 0.0 0.7 0.9 0.2
Baltic 0.8 0.9 3.2 1.6 2.9 4.5
Other -1.2 -0.2 -2.0 -1.0 -1.5 -2.6
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Operational segment result -0.7 2.9 4.3 6.1 10.0 8.2
IFRS3 Amortization - -0.4 - -1.5 -1.8 -0.2
Impairment of goodwill - - - - -7.4 -7.4
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Operating profit -0.7 2.5 4.3 4.5 0.8 0.6
In the third quarter the operational segment result was -0.7 MEUR (2.9 MEUR).
Profitability in Baltic was excellent 17% (19%), Norway 3% (12%), Denmark 2 %
(6%), Finland -2% (15%) and in Sweden -9% (-2%). In Finland the profitability
was impacted by the restructuring expense provision of approximately 1.0 MEUR
with respect to the conclusion of the personnel negotiations. Affecto's results
were also negatively affected by the non-recurring item of 1.0 MEUR related to
the fraud incident presented in the Other segment. Affecto's operating profit
was -0.7 MEUR (2.5 MEUR).
Taxes corresponding to the profit of the period have been entered as tax
expense. Net profit for the period was 3.3 MEUR, while it was 3.1 MEUR last
year.
FINANCE AND INVESTMENTS
At the end of the reporting period Affecto's balance sheet totaled 108.8 MEUR
(12/2014: 124.8 MEUR). Equity ratio was 59.7% (12/2014: 54.6%) and net gearing
was 9.4% (12/2014: 1.8%).
The financial loans were 20.5 MEUR (12/2014: 22.5 MEUR) at the end of reporting
period. According to the current terms, the loan from financial institution
will be due in June 2016. The company's cash and liquid assets were 14.9 MEUR
(12/2014: 21.4 MEUR). The interest-bearing net debt was 5.6 MEUR (12/2014: 1.1
MEUR).
Cash flow from operating activities for the reported period was -0.4 MEUR (-1.0
MEUR) and cash flow from investing activities was -0.4 MEUR (-0.6 MEUR).
Investments in tangible and intangible assets were 0.4 MEUR (0.6 MEUR).
The annual general meeting held in April decided to distribute a dividend of
3.5 MEUR (3.6 MEUR).
EMPLOYEES
The number of employees was 1018 (1015) persons at the end of the reporting
period. 425 (410) employees were based in Finland, 96 (95) in Norway, 112 (133)
in Sweden, 63 (66) in Denmark and 322 (311) in the Baltic countries. The
average number of employees during the period was 1012 (1047).
Affecto concluded personnel negotiations in Finland with respect to
Karttakeskus Oy and Affecto Finland Oy during the third quarter. As a
conclusion of the employee negotiations Affecto reduced 32 positions. In
relation to the conclusion of the employee negotiations Affecto made
restructuring expense provision of approximately 1.0 MEUR in Q3/2015. This was
split between an approximately 0.8 MEUR provision related to the employee
contracts' termination period expenses and approximately 0.2 MEUR provision
covering other restructuring expenses.
BUSINESS DEVELOPMENT ACTIONS
Affecto published in February an update to its strategic direction and defined
five themes to guide the development actions. Context for the strategic
direction is the current, digitally transforming world. Affecto will address
this with a focus on increasing value for customers and for their customers.
The company will also actively develop its core business, expand to emerging
new business technology areas, and further develop its people to help customers
succeed.
Actions have been taken during the Spring to convert the new direction into
operational changes. Evolution meetings practice with employees has been
implemented in order to activate and continually involve everyone for being
part of the change in line with the strategic direction. Recruitment of people
with new business-technology-hybrid skills has been performed both from inside
and outside Affecto. The Company has received direct positive feedback from
customers on the increased focus on industry knowledge and customer value
oriented solutions created in Affecto's day-to-day services. Development of
capabilities in design, user interface and usability solutions have been
intensified especially in the Nordic countries.
During the first quarter, Affecto launched the Affecto Industrial growth
program, focusing on developing IoT and analytics capabilities for
manufacturing, technology, energy and process industries. During the third
quarter Affecto has established a team of highly skilled professionals in the
field of advanced analytics. The Company has been able to use prototype service
to concretize the applications of the Internet of Things and digitalization of
the physical world in the Company's customers' product development and
manufacturing processes and also as a part of their product range.
A new Affecto B2C growth program has been launched during the third quarter. As
Affecto's customers are increasingly investing into developing their consumer
experiences, the Company has decided to invest into building technology,
design, and analytics capabilities in order to help the customers in this area.
Affecto is approaching this with prototypes aimed at validating the business
value potential for Affecto's 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 7-9/2015 net sales in Finland increased by 3% to 10.7 MEUR (10.3 MEUR). This
was mainly due to increased license sales. Operational segment result was -0.3
MEUR (1.5 MEUR) and profitability was -2% (15%). The order intake increased but
the order backlog remains below last year's level. The operational segment
result was affected by the restructuring expense provision of approximately 1.0
MEUR with respect to the conclusion of the personnel negotiations.
In 7-9/2015 net sales of Karttakeskus GIS business, reported as part of
Finland, decreased by 4% to 2.5 MEUR (2.6 MEUR). Karttakeskus has lost
important contracts during the second and the third quarters and its focus area
is shifting more strongly to the location applications and to the
digitalization of the traditional product business.
In Finland, the Company is experiencing a growing market interest in new
business technology areas and customers are interested in utilizing advanced
analytics in creating new business opportunities. However, the decision cycles
of the customers in the new areas are long and the projects materialize mostly
as experimental pilot programs. Affecto sees a declining sales trend and
increased price competition in the traditional IT market due to more agile
competitors increasing their market share by increased price competition or
more evolved value proposal. Therefore Affecto is investing in growth
capabilities, streamlining operations and restructuring its organization and
personnel structure to align with market demand.
In 7-9/2015 net sales in Norway were 4.6 MEUR (5.3 MEUR) and operational
segment result was 0.1 MEUR (0.6 MEUR). Net sales decreased by 13% and
profitability was 3% (12%). The weakened net sales and profitability were
caused by postponed customer projects and partly due to lack of consultancy
resources, which led into lower consulting revenue. The license revenue
increased. The order intake weakened but the order backlog remains above last
year's level. Consultancy capacity was increased near the end of the quarter.
In 7-9/2015 net sales in Sweden were 3.3 MEUR (3.9 MEUR) and operational
segment result -0.3 MEUR (-0.1 MEUR). Net sales decreased by 15%. The decrease
was caused by sales challenges and people churn, which led into decreased
consulting revenue. The same reasons affected the profitability that was -9%
(-2%). Order intake and order backlog were at last year's level. Recovery
activities have been commenced including activities to align the Swedish sales
activities with Affecto's focus industries and to recruit and develop new
consultant capacities to meet market demand.
In 7-9/2015 net sales in Denmark were 2.5 MEUR (2.6 MEUR) and operational
segment result was 0.1 MEUR (0.2 MEUR). Net sales decreased by 4%. The
profitability was 2% (6%). Significant business recovery actions including
alignment of customer and industry focus are progressing. The order intake was
above and order backlog is below last year's level.
In 7-9/2015 net sales in Baltic (Lithuania, Latvia, Estonia, Poland, South
Africa) were 4.7 MEUR (4.5 MEUR). Operational segment result was 0.8 MEUR (0.9
MEUR). The net sales increased by 3% and profitability was at excellent level
17% (19%). The effect of the large projects that affected positively on
resource utilization and profit during the previous quarters of the year
decreased. The insurance business and Estonia performed well. The slow
preparation of new EU funded projects still negatively impacts the public
sector IT market in Lithuania. Order intake was above and order backlog is
below last year's level.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of Affecto Plc, held on 8 April 2015, adopted the
financial statements for 1.1.-31.12.2014 and discharged the members of the
Board of Directors and the CEO from liability. Approximately 48 percent of
Affecto's shares and votes were represented at the Meeting. The Annual General
Meeting decided on a dividend distribution of EUR 0.16 per share for the year
2014.
Aaro Cantell, Magdalena Persson, Jukka Ruuska, Olof Sand, Tuija Soanjärvi and
Lars Wahlström were elected as members of the Board of Directors. The
organization meeting of the Board of Directors elected Aaro Cantell as Chairman
and Olof Sand as Vice-Chairman. Authorised Public Accountants Ernst & Young Oy
was elected as the auditor of the company with Mikko Järventausta, APA, as
auditor in charge.
The Meeting approved the Board's proposal for appointing a 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 complete contents of the new authorizations given by the Annual General
Meeting held on 8 April 2015 have been published by stock exchange release
regarding the Meetings' decisions. Key facts about the authorizations:
The Annual General Meeting authorized the Board of Directors to decide to
acquire the company's own shares with distributable funds. A maximum of 2 100
000 shares may be acquired. The authorization is in force until the next Annual
General Meeting.
The Annual General Meeting authorized the Board of Directors to decide to issue
new shares and to convey the company's own shares held by the company in one or
more tranches. The share issue may be carried out as a share issue against
consideration or without consideration on terms to be determined by the Board
of Directors and in relation to a share issue against consideration at a price
to be determined by the Board of Directors. A maximum of 4 200 000 new shares
may be issued. A maximum of 2 100 000 own shares held by the company may be
conveyed. In addition, the authorization includes the right to decide on a
share issue without consideration to the company itself so that the amount of
own shares held by the company after the share issue is a maximum of one-tenth
(1/10) of all shares in the company. The authorization is force until the next
Annual General Meeting.
SHARES AND TRADING
2013 options have been listed on NASDAQ Helsinki since 11 May 2015. During the
review period no shares have been subscribed with the 2013 options.
On 13 August 2015 Affecto conducted a directed share issue of 20 984 shares to
the board members. The directed share issue was conducted using the treasury
shares and it was based on the resolution of the Annual General Meeting
according to which 60 per cent of the annual Board remuneration will be paid in
company shares during August 2015.
The company has one share series and all shares have similar rights. At the end
of the review period Affecto the total number of shares was 22 450 745 shares.
The company held 846 235 shares in the treasury which represents approximately
3.8% of the total amount of the shares.
During the review period 1-9/2015 the highest share price was 3.84 euro, the
lowest price 2.74 euro, the average price 3.31 euro and the closing price 2.79
euro. The trading volume was 2.9 million shares, corresponding to 17%
(annualised) of the number of shares at the end of the period. The market value
of shares was 60.3 MEUR at the end of the period excluding the treasury shares.
SHAREHOLDERS
The company had a total of 3 465 owners on 30 September 2015 and the foreign
ownership was 15%. The list of the largest owners can be found on 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 approximately
10.7%.
ASSESSMENT OF RISKS AND UNCERTAINTIES
The changes in the general economic conditions and the operating environment of
customers have direct impact on Affecto's markets. The uncertain economic
outlook may affect Affecto's customers negatively. Slower IT investment
decision making and uncertainty on new investments with respect to new business
technology solutions may have negative impact on Affecto. Affecto's order
backlog has traditionally been only a few months long. Slower decision making
of the customers decreases the predictability of the business and may decrease
the utilization rate.
Affecto's balance sheet includes a material amount of goodwill. Goodwill has
been allocated to cash generating units. Cash generating units, to which
goodwill has been allocated, are tested for impairment both annually and
whenever there is an indication that the unit may be impaired. Potential
impairment losses may have material effect on the reported profit and value of
assets.
Affecto's success depends also on good customer relationships. Affecto has a
well-diversified customer base. In 2014, the largest customer generated
approximately 3% and the 10 largest customers together approximately 17% of
Affecto's net sales. Although none of the customers is critically large for the
whole group, there are large customers in various countries that are
significant for local business in the relevant country. On the other hand, the
diverse customer base may decrease the effectiveness of the sales and delivery
efforts.
Affecto also needs to be seen as an interesting employer in order to recruit
skilled employees. If Affecto is not seen as progressive and modern enough, the
ability to recruit right employees and future builders may decrease. High
people churn may create inefficiencies in the business and temporarily decrease
the utilization rate.
Affecto sells third party software licenses and maintenance as part of its
solutions. Typically, the license sales have the highest impact on the last
month of each quarter and especially in the fourth quarter. This increases the
fluctuation in net sales between quarters and increases the difficulty of
accurately forecasting the quarters. Additionally, the increase of cloud
services and other similar market trends may affect the license sales
negatively. Affecto had license sales of approximately 9 MEUR in 2014.
Approximately 35% of Affecto's net sales are generated in Sweden and Norway,
thus the development of the currencies of these countries (SEK and NOK) may
have an impact on Affecto's profitability. The main part of the companies'
income and costs are within the same currency, which decreases the risks.
Historically, Affecto has concentrated on the traditional IT market solutions,
demand for which has moderated. However, at the same time there is growing
interest in new business technology areas. There is a risk with respect to the
speed of which Affecto is able to develop the new emerging areas in proportion
to the traditional areas.
OTHER EVENTS
On 21 August 2015, Affecto announced that it has become a target of a fraud.
The perpetrators committed an identity theft and managed to induce Affecto's
subsidiary making an unwarranted payment of approximately 1.0 MEUR. The loss of
1.0 MEUR has been booked as a non-recurring item. The company is not able to
reclaim the lost amount via its insurance coverage.
EVENTS AFTER THE REVIEW PERIOD
On 7 October 2015, Affecto announced that Håvard Ellefsen has been appointed as
Managing Director, Scandinavia & Partners. Mr Ellefsen served before as the
Country Managing Director of Affecto in Norway.
On 28 October 2015, Affecto announced that Martti Nurminen has been appointed
as the Chief Financial Officer and member of the Executive Leadership Team.
Nurminen will start in his new position in February 2016 at the latest.
Nurminen has a wide international experience in various financial management
positions of major international companies such as Johnson Controls and IBM.
FUTURE OUTLOOK
Year 2015 net sales are estimated to be below last year's level. Operating
profit is estimated to grow in 2015.
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
A briefing for analysts and media will be arranged at 14:15 at Restaurant
Savoy, Eteläesplanadi 14, Helsinki.
www.affecto.com
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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) 7-9/201 7-9/201 1-9/201 1-9/201 2014 last
5 4 5 4 12m
-----------------------------------------------------
-----------------------------------------------------
Net sales 24 847 25 664 84 720 89 869 122 693 117 544
Other operating income 0 -10 1 13 27 15
Changes in inventories of 61 -53 171 -27 -83 116
finished
goods and work in progress
Materials and services -5 805 -5 106 -17 272 -19 277 -26 560 -24 555
Personnel expenses -14 539 -13 549 -48 868 -50 764 -67 630 -65 733
Other operating expenses -5 028 -3 727 -13 -12 823 -17 221 -18 079
681
Other depreciation and -268 -300 -817 -921 -1 218 -1 113
amortisation
IFRS3 amortisation - -439 - -1 536 -1 753 -216
Impairment - - - - -7 423 -7 423
Operating profit -733 2 481 4 255 4 532 833 556
Financial income and 90 -139 -112 -502 -563 -173
expenses
Profit before income tax -643 2 342 4 143 4 030 270 382
Income tax 188 -521 -805 -913 -1 861 -1 753
Profit for the period -455 1 821 3 338 3 118 -1 591 -1 371
Profit for the period
attributable to:
Owners of the parent -455 1 821 3 338 3 118 -1 591 -1 371
company
Earnings per share
(EUR per share):
Basic -0.02 0.08 0.15 0.15 -0.07 -0.06
Diluted -0.02 0.08 0.15 0.15 -0.07 -0.06
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(1 000 EUR) 7-9/201 7-9/201 1-9/201 1-9/201 2014 last
5 4 5 4 12m
-----------------------------------------------------
-----------------------------------------------------
Profit for the period -455 1 821 3 338 3 118 -1 591 -1 371
Other comprehensive income
Items that may be
reclassified subsequently
to the statement of
income:
Translation difference -1 435 622 -775 -186 -2 141 -2 730
Total Comprehensive income -1 890 2 444 2 563 2 932 -3 732 -4 100
for the period
Total Comprehensive income
attributable to:
Owners of the parent -1 890 2 444 2 563 2 932 -3 732 -4 100
company
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 9/2015 9/2014 12/2014
-------------------------------------------------------------
-------------------------------------------------------------
Non-current assets
Property, plant and equipment 1 227 1 665 1 505
Goodwill 62 161 71 917 62 814
Other intangible assets 155 506 254
Deferred tax assets 1 086 1 522 1 263
Trade and other receivables 190 2 -
64 819 75 612 65 836
Current assets
Inventories 665 574 493
Trade and other receivables 27 166 29 873 36 736
Current income tax receivables 1 281 699 393
Cash and cash equivalents 14 877 14 739 21 380
43 989 45 884 59 002
-------------------------------------------------------------
-------------------------------------------------------------
Total assets 108 808 121 496 124 838
Equity attributable to owners
of the parent Company
Share capital 5 105 5 105 5 105
Reserve of invested non-restricted 47 731 47 718 47 718
equity
Other reserves 857 818 835
Treasury shares -2 056 -2 111 -2 111
Translation differences -5 044 -2 315 -4 269
Retained earnings 13 043 17 867 13 159
-------------------------------------------------------------
-------------------------------------------------------------
Total equity 59 637 67 083 60 437
Non-current liabilities
Loans and borrowings - 20 444 18 452
Deferred tax liabilities 142 118 190
142 20 562 18 642
Current liabilities
Loans and borrowings 20 476 4 000 4 000
Trade and other payables 27 626 27 702 40 254
Current income tax liabilities 423 1 661 927
Provisions 503 488 578
49 028 33 851 45 759
Total liabilities 49 170 54 413 64 401
-------------------------------------------------------------
-------------------------------------------------------------
Equity and liabilities 108 808 121 496 124 838
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 1-9/2015 1-9/2014 2014
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Cash flows from operating activities
Profit for the period 3 338 3 118 -1 591
Adjustments to profit for the period 1 824 3 981 12 878
5 162 7 098 11 287
Change in working capital -3 334 -5 907 348
Interest and other financial cost paid -237 -325 -418
Interest and other financial income received 41 49 68
Income taxes paid -2 012 -1 964 -2 946
----------------------------------------------------------------------------
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Net cash from operating activities -380 -1 049 8 339
Cash flows from investing activities
Acquisition of tangible and intangible assets -448 -611 -740
Proceeds from sale of tangible and - 1 1
intangible assets
----------------------------------------------------------------------------
Net cash from investing activities -448 -611 -739
Cash flows from financing activities
Repayments of non-current borrowings -2 000 -2 000 -4 000
Proceeds from share options exercised - 262 262
Dividends paid to the owners -3 453 -3 434 -3 434
of the parent company
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Net cash from financing activities -5 453 -5 172 -7 172
(Decrease)/increase in cash and cash equivalents -6 282 -6 831 429
Cash and cash equivalents 21 380 21 469 21 469
at the beginning of the period
Foreign exchange effect on cash -222 100 -518
Cash and cash equivalents 14 877 14 739 21 380
at the end of the period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the parent
company
---------------------------------------------------------
---------------------------------------------------------
(1 000 EUR) Share Reserve of Other Treasu Trans Ret. Total
capita invested reserv ry lat. earnin equity
l non-restricted es shares diff. gs
equity
Equity at 1 5 105 47 718 835 -2 111 -4 269 13 159 60 437
January 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 3 338 3 338
Translation -775 -775
differences
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -775 3 338 2 563
compre-hensive
income
Share-based 23 23
payments
Treasury shares 14 55 68
as
compensation
to the Board
Dividends paid -3 453 -3 453
--------------------------------------------------------------------------------
Equity at 30 5 105 47 731 858 -2 056 -5 044 13 043 59 637
September 2015
Equity attributable to owners of the parent
company
---------------------------------------------------------
---------------------------------------------------------
(1 000 EUR) Share Reserve of Other Treasu Trans Ret. Total
capita invested reserv ry lat. earnin equity
l non-restricted es shares diff. gs
equity
Equity at 1 5 105 47 448 763 -2 165 -2 128 18 184 67 207
January 2014
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 3 118 3 118
Translation -186 -186
differences
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -186 3 118 2 932
compre-hensive
income
Share-based 55 55
payments
Exercise of 262 262
share options
Treasury shares 8 54 62
as
compensation
to the Board
Dividends paid -3 434 -3 434
--------------------------------------------------------------------------------
Equity at 30 5 105 47 718 818 -2 111 -2 315 17 867 67 083
September 2014
2. Notes
2.1. Basis of preparation
This financial statement bulletin has been prepared in accordance with the IFRS
recognition and measurement principles and in accordance with IAS 34, Interim
Financial reporting. The interim report should be read in conjunction with the
annual financial statements for the year ended 31 December 2014. In material
respects, the same accounting policies have been applied as in the 2014 annual
consolidated financial statements. The amendments to and interpretations of
IFRS standards that entered into force on 1 January 2015 had no material impact
on this interim report.
2.2. Segment information
Affecto's reporting segments are based on geographical locations and are
Finland, Norway, Sweden, Denmark and Baltic.
Segment net sales and result
(1 000 EUR) 7-9/201 7-9/201 1-9/201 1-9/20 2014 last
5 4 5 14 12m
----------------------------------------------------
----------------------------------------------------
Total net sales
Finland 10 675 10 322 35 254 36 715 50 564 49 103
Norway 4 579 5 268 15 556 18 547 25 028 22 037
Sweden 3 310 3 874 13 424 15 152 19 985 18 257
Denmark 2 508 2 604 8 104 9 189 12 038 10 953
Baltic 4 679 4 532 15 405 13 363 19 032 21 074
Other -905 -935 -3 023 -3 097 -3 954 -3 880
--------------------------------------------------------------------------------
Group total 24 847 25 664 84 720 89 869 122 693 117 544
Operational segment result
Finland -266 1 515 1 654 3 735 5 441 3 360
Norway 145 610 1 185 1 031 1 966 2 120
Sweden -288 -76 192 -43 304 539
Denmark 62 168 41 722 865 185
Baltic 786 867 3 224 1 624 2 944 4 544
Other -1 172 -165 -2 042 -1 000 -1 511 -2 554
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total operational segment -733 2 919 4 255 6 069 10 009 8 195
result
IFRS3 amortisation - -439 - -1 536 -1 753 -216
Impairment of goodwill - - - - -7 423 -7 423
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating profit -733 2 481 4 255 4 532 833 556
Financial income and 90 -139 -112 -502 -563 -173
expenses
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit before income tax -643 2 342 4 143 4 030 270 382
In 2014, the impairment of goodwill allocated to assets of Sweden segment.
Net sales by business lines
(1 000 EUR) 7-9/201 7-9/201 1-9/201 1-9/20 2014 last
5 4 5 14 12m
----------------------------------------------------
----------------------------------------------------
Information Management 23 239 23 781 78 922 83 362 114 008 109 567
Solutions
Karttakeskus GIS business 2 533 2 637 8 748 8 866 11 868 11 750
Other -925 -754 -2 950 -2 359 -3 183 -3 773
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Group total 24 847 25 664 84 720 89 869 122 693 117 544
2.3. Changes in intangible and tangible assets
(1 000 EUR) 1-9/2015 1-9/2014 1-12/2014
------------------------------
------------------------------
Carrying amount at the beginning of period 64 573 76 185 76 185
Additions 448 611 740
Disposals -2 -1 -1
Depreciation and amortization for the period -816 -2 458 -2 971
Impairments - - -7 423
Exchange rate differences -661 -249 -1 957
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Carrying amount at the end of period 63 542 74 088 64 573
In 2014, an impairment of 7 423 thousand euro has been recognized on assets
allocated to Sweden cash-generating unit. The impairment has been fully
recognized on goodwill.
2.4. Share capital, reserve of invested non-restricted equity and treasury
shares
(1 000 EUR) Number of Share Reserve of Treasury
shares capital invested shares
outstanding non-restricted
equity
------------------------------------------------------
------------------------------------------------------
1.1.2014 21 431 052 5 105 47 448 -2 165
Exercise of share options 132 141 - 260 -
Payment for share options - - 2 -
Treasury shares of 20 333 - 8 54
compensation to the
Board of Directors
30.9.2014 21 583 526 5 105 47 718 -2 111
1.1.2015 21 583 526 5 105 47 718 -2 111
Treasury shares of 20 984 - 14 55
compensation to the
Board of Directors
30.9.2015 21 604 510 5 105 47 731 -2 056
Affecto Plc owns 846 235 treasury shares, which correspond to 3.8% of the total
amount of the shares. The amount of registered shares is 22 450 745 shares.
2.5. Interest-bearing liabilities
(1 000 EUR) 30.9.2015 31.12.2014
Interest-bearing non-current liabilities
Loans from financial institutions, - 18 452
non-current portion
Loans from financial institutions, 20 476 4 000
current portion
---------------------------------------------------------------
---------------------------------------------------------------
20 476 22 452
Affecto's loan facility agreement includes financial covenants, breach of which
might lead to an increase in cost of debt or cancellation of the facility
agreement. The covenants are based on total net debt to earnings before
interest, taxes, depreciation and amortization and total net debt to total
equity. The covenants will be measured quarterly, and these terms and
conditions of covenants were met at the end of the reporting period. According
to the current terms, the loan from financial institution will be due in June
2016.
2.6. Contingencies and commitments
The future aggregate minimum lease payments under non-cancelable operating
leases:
(1 000 EUR) 30.9.2015 31.12.2014
Not later than one (1) year 3 086 3 333
Later than one (1) year, 2 144 3 421
but not later than five (5) years
Later than five (5) years - -
--------------------------------------------------------
Total 5 231 6 755
Guarantees given:
(1 000 EUR) 30.9.2015 31.12.2014
Liabilities secured by a mortgage
Financial loans 20 500 22 500
The above-mentioned liabilities are secured by bearer bonds with a nominal
value of 52.5 million euro. The bonds are held by Nordea Pankki Suomi Oyj and
secured by a mortgage on company assets of the group companies. In addition,
the shares in Affecto Finland Oy and Affecto Norway AS have been pledged to
secure the financial liabilities above.
Other securities given on own behalf:
(1 000 EUR) 30.9.2015 31.12.2014
Pledges 36 33
Other guarantees 1 953 2 118
Other guarantees are mostly securities issued for customer projects. These
guarantees include both bank guarantees secured by parent company of the group
and guarantees issued by the parent company and subsidiaries.
2.7. Related party transactions
Key management compensation and remunerations to the board of directors:
(1 000 EUR) 1-9/2015 1-9/2014 1-12/2014
Salaries and other short-term employee benefits 1 829 1 705 2 312
Post-employment benefits 227 203 283
Termination benefits 134 80 80
Share-based payments 1 2 3
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total 2 190 1 991 2 678
Purchases from related party:
(1 000 EUR) 1-9/20 1-9/20 1-12/2
15 14 014
Purchases from the entity that are controlled by key 189 - 3
management personnel of the group
Outstanding balance of purchases from the entity that 103 - -
are controlled by key management personnel of the group
3. Key figures
7-9/201 7-9/201 1-9/201 1-9/201 2014 last
5 4 5 4 12m
-----------------------------------------------------
-----------------------------------------------------
Net sales, 1 000 eur 24 847 25 664 84 720 89 869 122 693 117 544
EBITDA, 1 000 eur -465 3 219 5 071 6 990 11 227 9 308
Operational segment -733 2 919 4 255 6 069 10 009 8 195
result,
1 000 eur
Operating result, 1 000 -733 2 481 4 255 4 532 833 556
eur
Result before taxes, 1 000 -643 2 342 4 143 4 030 270 382
eur
Profit attributable to the -455 1 821 3 338 3 118 -1 591 -1 371
owners
of the parent company, 1
000 eur
EBITDA, % -1.9 % 12.5 % 6.0 % 7.8 % 9.2 % 7.9 %
Operational segment -2.9 % 11.4 % 5.0 % 6.8 % 8.2 % 7.0 %
result, %
Operating result, % -2.9 % 9.7 % 5.0 % 5.0 % 0.7 % 0.5 %
Result before taxes, % -2.6 % 9.1 % 4.9 % 4.5 % 0.2 % 0.3 %
Net income for equity -1.8 % 7.1 % 3.9 % 3.5 % -1.3 % -1.2 %
holders
of the parent company, %
Equity ratio, % 59.7 % 59.2 % 59.7 % 59.2 % 54.6 %
Net gearing, % 9.4 % 14.5 % 9.4 % 14.5 % 1.8 %
Interest-bearing net debt, 5 599 9 705 5 599 9 705 1 071
1 000 eur
Gross investment in 123 170 448 611 740
non-current
assets (excl.
acquisitions),
1 000 eur
Gross investments, % of 0.5 % 0.7 % 0.5 % 0.7 % 0.6 %
net sales
Order backlog, 1 000 eur 39 423 41 073 39 423 41 073 49 645
Average number of 1 008 1 021 1 012 1 047 1 041
employees
Earnings per share, eur -0.02 0.08 0.15 0.15 -0.07 -0.06
Earnings per share -0.02 0.08 0.15 0.15 -0.07 -0.06
(diluted),
eur
Equity per share, eur 2.76 3.11 2.76 3.11 2.80
Average number of shares, 21 595 21 574 21 587 21 479 21 519 21 586
1 000 shares
Number of shares at the 21 605 21 584 21 605 21 584 21 584 21 605
end 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
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