2017-02-17 08:00:02 CET
2017-02-17 08:00:02 CET
REGULATED INFORMATION
Affecto Oyj - Financial Statement Release
Affecto Plc's Financial Statements Bulletin 2016
AFFECTO PLC - FINANCIAL STATEMENTS BULLETIN - 17 FEBRUARY 2017 at 9:00
Affecto Plc's Financial Statements Bulletin 2016
Q4 at a Glance (October-December 2016)
-- Order intake increased by 8% and was 46.1 MEUR (42.6 MEUR).
-- Order backlog increased by 9% and was 55.0 MEUR at the end of the review
period (50.7 MEUR).
-- Revenue decreased by 1% and was 31.1 MEUR (31.3 MEUR).
-- Operating profit decreased to 2.8 MEUR (3.2 MEUR) and was 9.1% (10.3 %) of
revenue.
-- Cash flow from operating activities was 7.5 MEUR (9.7 MEUR).
-- The Company agreed to purchase BIGDATAPUMP, a privately held cloud
analytics company based in Finland.
-- The Company launched Weave BCE, an independent and agile business unit
focused on service design and modern software development.
-- The Company sold its Estonian subsidiary for 1.8 MEUR. The transaction
positively affected cash flow by 1.0 MEUR and operating profit by 0.3 MEUR.
Review Period at a Glance (January-December 2016)
-- Order intake was at the same level as in the prior year and was 117.3 MEUR
(117.1 MEUR).
-- Revenue decreased by 3% and was 112.5 MEUR (116.0 MEUR).
-- Operating profit decreased to 6.7 MEUR (7.5 MEUR) and was 5.9% (6.4%) of
revenue.
-- Cash flow from operating activities was 3.6 MEUR (9.3 MEUR).
-- Substantial change in portfolio: Growth in multi-year contracts and in
Business Technology, reduction in Traditional engagements.
-- The Company estimates that approximately 45% of its 2016 revenue is now
recurring revenue. Previously the Company estimated that 40% of its 2015
revenue was recurring revenue.
-- The Board proposes a dividend of EUR 0.16 per share for the year 2016.
-- The Company publishes its Outlook for 2017.
Key Figures
MEUR 10-12/16 10-12/15 2016 2015
Revenue 31.1 31.3 112.5 116.0
Operational segment result 2.8 3.2 6.7 7.5
% of revenue 9.1 10.3 5.9 6.4
Operating profit 2.8 3.2 6.7 7.5
% of revenue 9.1 10.3 5.9 6.4
Profit before taxes 2.7 3.3 6.1 7.5
Profit for the period 2.4 2.6 4.7 5.9
Equity ratio, % 59.6 58.5 59.6 58.5
Net gearing, % -6.7 -6.2 -6.7 -6.2
Earnings per share, EUR 0.11 0.12 0.22 0.27
Earnings per share (diluted), EUR 0.11 0.12 0.22 0.27
Equity per share, EUR 2.96 2.88 2.96 2.88
Dividend proposal, EUR/share 0.16 0.16
CEO Juko Hakala comments:
In Q4, our sales performance improved, producing an increased order backlog for
the beginning of 2017. We saw continued growth in our focus areas, e.g. Self
Service Analytics, Business Intelligence as a Managed Service and select
Industries. However, our business also continued to decrease in select
traditional areas such as new implementations of structured data warehouses.
Our revenue and operating profit decreased, driven by transformation in Finland
and Baltics segment portfolios.
In Q4, we also established capabilities in growing market areas. BIGDATAPUMP
(www.bigdatapump.com) acquisition will serve as the basis for a cross-Nordic
cloud analytics growth unit for Affecto. Weave (www.weave.fi) represents a
similar action. Weave was launched in Q4 by spinning off a service design and
custom development team into a separate unit. At the same time, we completed
the sale of our Estonian subsidiary, addressing particular challenges within
the Estonian customer market.
Our full year 2016 order intake was at the same level as in 2015, with the
order intake of Sweden increasing significantly while being offset by those of
Norway and the Baltics. Our full year 2016 revenue and operating profit
declined compared to 2015 This is a result attributable to the Baltics, Finland
and to incremental evolution-spending in all our offices. By contrast, Sweden
and Denmark had a strong year, growing both revenue and operating profit.
During 2016, we moved significantly forward with our business portfolio,
people, capabilities and co-operation. We grew a new business platform out of,
among other areas, self-service analytics and analytics-as-a-service to offset
the decrease in demand in select traditional areas. 200 new Affectones joined
our teams to be part of the Affecto family of talent. At the same time, we
boosted skill-building and collaboration within our network.
We are now locally industry-organized and stronger in technology skills. During
the year we also signed essential new Analytics as a Service contracts which
further contribute to our recurring revenue base which is now estimated to be
approximately 45% of our revenue.
We will organize a Capital Markets Day on the 29th of September, 2017.
2017 Outlook
Affecto expects its FY’17 revenue to be at the same level or above the previous
year, and its FY’17 operating profit to be at the same level or below the
previous year.
The Company is going through a transformation period.
In 2016, Affecto divested its Estonian business and acquired a Finnish cloud
analytics company BIGDATAPUMP. The divested Estonian business had a revenue of
EUR 4.5 million and EUR 0.4 million operating profit in 2016 in addition to the
EUR 0.3 million gain from the divestment. BIGDATAPUMP will be its own
reportable segment in 2017 and the earn out element of the acquisition will be
treated as an IFRS3 cost that will affect the Company’s operating profit.
Analyst and Press Conference
The Company will arrange a briefing for analysts and media 17 February 2017 at
15:00 at the Company’s Espoo premises, Keilaranta 17 C, FI-02150 Espoo.
For additional information, please contact:
Juko Hakala
CEO
juko.hakala@affecto.com
Martti Nurminen
CFO
+358 40 751 7194
martti.nurminen@affecto.com
This release is based on audited figures.
AFFECTO FINANCIALS
Order Intake
In 10-12/2016, Affecto’s order intake increased by 8% and was 46.1 MEUR (42.6
MEUR). Order intake increased significantly in Sweden and Baltics and increased
in Denmark. The order intake decreased slightly for Norway and decreased in
Finland.
In 1-12/2016, Affecto’s order intake was at the same level as in the prior year
and was 117.3 MEUR (117.1 MEUR). Order intake increased significantly in Sweden
and slightly increased in Denmark. The order intake in Finland remained on the
same level as last year. Order intake decreased slightly in Baltic and
decreased in Norway.
Order Backlog
The order backlog increased significantly by 9% and was 55.0 MEUR (50.7 MEUR)
at the end of the reporting period. Order backlog increased significantly in
Sweden and Baltic and increased in Norway. Order backlog decreased in Finland
and decreased significantly in Denmark.
Revenue
Revenue, MEUR 10-12/16 10-12/15 2016 2015
Finland 13.4 14.3 48.1 49.5
Norway 5.7 5.5 21.8 21.1
Sweden 5.6 4.8 19.1 18.2
Denmark 3.7 3.2 13.0 11.3
Baltic 4.3 4.7 16.6 20.1
Other -1.7 -1.2 -6.1 -4.2
-----------------------------------------------
-----------------------------------------------
Group total 31.1 31.3 112.5 116.0
In 10-12/2016, Affecto’s revenue decreased by 1% to 31.1 MEUR (31.3 MEUR).
Revenue increased significantly in Sweden and Denmark and increased in Norway.
Revenue decreased significantly in Baltic and Finland.
In 1-12/2016, Affecto’s revenue decreased by 3% to 112.5 MEUR (116.0 MEUR).
Revenue increased significantly in Denmark and increased in Norway and Sweden.
Revenue decreased in Finland and decreased significantly in Baltic.
Profitability
Operational segment result by reportable segments:
Operational segment 10-12/16 10-12/15 2016 2015
result, MEUR
Finland 1.4 1.9 2.6 3.5
Norway 0.3 0.3 1.3 1.5
Sweden 0.7 0.5 1.7 0.7
Denmark 0.6 0.3 1.3 0.4
Baltic 0.1 0.7 1.2 3.9
Other -0.3 -0.5 -1.4 -2.5
----------------------------------------------------------
----------------------------------------------------------
Operational segment result 2.8 3.2 6.7 7.5
----------------------------------------------------------
Operating profit 2.8 3.2 6.7 7.5
In 10-12/2016, Affecto's operating profit decreased to 9.1% and was 2.8 MEUR
(3.2 MEUR). The profitability increased in Denmark and increased slightly in
Sweden. Norway remained on the same level as last year while Finland
profitability decreased and Baltic profitability decreased significantly. Net
profit for the period was 2.4 MEUR while it was 2.6 MEUR last year. Affecto
also completed the sale of its Estonian subsidiary in Q4 for 1.8 MEUR, with a
positive impact to Cash Flow of 1.0 MEUR. The sale positively affected the
operating profit by 0.3 MEUR in the Other segment
In 1-12/2016, Affecto's operating profit decreased to 5.9% and was 6.7 MEUR
(7.5 MEUR). The profitability increased significantly in Denmark and increased
in Sweden. The profitability decreased slightly in Finland and Norway and
decreased significantly in Baltic. Net profit for the period was 4.7 MEUR while
it was 5.9 MEUR last year. The Company had two non-recurring items that
impacted the profitability negatively by approximately 1.9 MEUR in total during
FY2015: A restructuring provision of approximately 0.9 MEUR was booked in
Finland and a non-recurring item of 1.0 MEUR related to the fraud incident
impacted the Other segment. Finally, profitability was also impacted by first
phase evolution activities carried out during 2016. These activities have
represented essential incremental investments into Affecto’s people, building
improved collaboration in our PowerGrid, and building capabilities for
competitiveness in the transforming market place.
Taxes corresponding to the profit have been entered as tax expense.
Business Performance by Segment
The group's business is managed through five reportable segments: Finland,
Norway, Sweden, Denmark and Baltic.
Finland
In 10-12/2016, the Finnish market displayed continued demand for services in
the area of Traditional IT & Analytics market, especially in the areas of
managed services and custom software development. Affecto also observed a
positive development of demand for Business Technology & Analytics. Affecto
continued transitioning towards Business Technology & Analytics market,
renewing its portfolio.
In 10-12/2016, order intake decreased from last year. The total order backlog
decreased from last year. Revenue decreased significantly by 6% to 13.4 MEUR
(14.3 MEUR). Operational segment result was 1.4 MEUR (1.9 MEUR) or 11 % (13 %)
of revenue.
Order intake performance was driven by the Company’s transitioning into larger
and more complex deals which drives the performance of individual quarters more
than before as well as by customers postponing major deals into 2017. On the
other hand, existing long-term customers contributed a number of significant
deals. The Q4 ’16 y-o-y order intake performance was also impacted by the
signing of the Yle Areena contract and the stock clearance of nautical charts
in Q4 ’15.
In 10-12/2016, revenue and operating profit performance was impacted by decline
in the traditional areas of the business which was partially offset by
increases across new business areas. Affecto estimates a 30% y-o-y run rate
growth within the growing areas of the portfolio and a 35% y-o-y run rate
reduction within the declining areas. Professional Services revenue also
slightly increased. The stock clearance of nautical charts in 2015 equally
impacted revenue and profitability as order intake. The Company also continued
ramping up a significant new Managed Service for a Nordic telecom operator with
a temporary lower profitability related to first phases of the service period,
continued until the end of December. Compared with the prior year,
profitability was also impacted by a reversal of restructuring costs in 2015.
Finland progressed in renewing its portfolio through transitioning into new
demand areas and continued its decided investments into its people and
capabilities to drive improvements in business performance. This was further
contributed by steering the leadership practices, driving the new, more
customer industry focused go-to-market model for improved sales and by a liquid
and transparent internal job market for improved consultant utilization. The
launch of Weave and the acquisition of BIGDATAPUMP are also seen as
contributing to growth going forward.
In 10-12/2016, revenue of Karttakeskus geographical information system (“GIS”)
business, reported as part of Finland, decreased by 18% to 2.8 MEUR (3.5 MEUR).
Karttakeskus lost large contracts in 2015 which continued to negatively affect
the revenue. Affecto expects the effect of the lost deals to have ceased at
the end of 2016. Business development actions for strengthening the Company’s
capabilities in digital content and services to complement the traditional
cartographic offerings were continued.
In 1-12/2016, the Finnish market displayed a continued demand for solutions
with respect to the Traditional IT & Analytics market, especially in the areas
of managed services and custom software development. Development and piloting
demand in the Business Technology & Analytics market progressed positively.
In 1-12/2016, order intake remained on the same level as last year. Revenue
decreased to 48.1 MEUR (49.5 MEUR). Operational segment result was 2.6 MEUR
(3.5 MEUR) or 5% (7%) of revenue.
In 1-12/2016, the decline in order intake of Karttakeskus geographical
information system (“GIS”) business was offset by an increase in order intake
in the area of Business Technology and Analytics market which resulted the
order intake to be on the same level as the year before. The decline in order
backlog is mainly attributable to an essential multi-year contract secured in
2015 for the geographical information systems business, delivered during years
2016-2018. Revenue decrease was mainly driven by two large lost contracts
during 2015 in the geographical information system business area. During the
year, the Company also experienced a decrease in the traditional areas of the
business which was partially offset by increases across new business areas.
Professional Services revenue remained on the same level as previous year.
Operational segment result was impacted especially in Q1-3 by Finland
transitioning with larger contracts and into new demand areas and recruitment
and onboarding of new technology-business hybrid roles.
In 1-12/2016, revenue of Karttakeskus geographical information system (“GIS”)
business, reported as part of Finland, decreased by 14% to 10.5 MEUR (12.2
MEUR).
Norway
In 10-12/2016, Affecto continued to experience a shift in demand towards
Managed Services and modernization of Information Management platforms within
the Traditional IT & Analytics market, and a continuous interest in
Self-Service Analytics from the Business Technology & Analytics market.
Noticeable in the quarter was an increase of interest in solutions for handling
big data and analytics.
In 10-12/2016, order intake decreased slightly and order backlog increased
compared to last year’s level. Revenue increased to 5.7 MEUR (5.5 MEUR).
Operational segment result was 0.3 MEUR (0.3 MEUR) or 5% (5%) of revenue.
The reduced order intake was caused mainly by customers postponing purchasing
decisions on software within the quarter, and some key customers committing to
shorter contract periods for professional services work than before. Important
new managed services deal was won at Norwegian Telecommunications company
Telenor, building a stable base of multi-year managed service. Longer term
managed services contracts at important customers and an increase in recurring
software contracts ensured a positive order backlog development despite a
slight decline in order intake. Increased revenue from recurring software
contracts was the main driver for revenue growth in the quarter. Profitability
was low as consultant utilization continued to be challenged by the
transformation of the Company’s delivery capabilities to meet changing market
requirements and more complex delivery models.
Affecto continued to build its capabilities to sell and deliver solutions
within Managed Services, Customer and Product Master Data Management (MDM) as
well as big data and unstructured information. The go to market model was
changed at the end of the period to strengthen focus on developing the customer
segments Business to Consumer (B2C), Financial Services and Public to Citizen.
In 1-12/2016, the Norwegian economy was marked by uncertainty. In the
Traditional IT & Analytics market, Affecto continued to experience a shift in
demand towards improving the performance of existing solutions, combined with a
willingness to explore managed services and nearshoring opportunities. In the
Business Technology & Analytics market, buyers continued to be interested in
Self-Service Analytics in order to increase their organizations’ broader use of
data and analytics. Managed services and digitalization initiatives continued
to increase potential deal sizes.
In 1-12/2016, the order intake decreased. Revenue increased by 4% to 21.8 MEUR
(21.1 MEUR). Operational segment result decreased slightly to 1.3 MEUR (1.5
MEUR) or 6% (7%) of revenue.
Year-over-year order intake comparison is influenced negatively by large
multi-year managed services deal won in Q2 2015. Order backlog is up due to
increasing recurring software revenue, new and existing managed services
contracts. Revenue increased based on a shift from traditional license sales to
recurring models, particularly connected to Self-Service Analytics and other
modern software solutions. Profitability was low as consultant utilization
continued to be challenged by the transformation of the Company’s delivery
capabilities to meet changing market requirements and more complex delivery
models through the year.
Sweden
In 10-12/2016, activity level continued to be high in both the Traditional IT &
Analytics market, as well as the developing Business Technology & Analytics
market. Activity level on existing managed services customers increased to an
all-time high level. In the Business Technology & Analytics market the interest
in Digital Workplace solutions and Self-Service Analytics continued to develop
favorably.
In 10-12/2016, order intake and order backlog increased significantly. Revenue
increased significantly by 16% and was 5.6 MEUR (4.8 MEUR). Operational segment
result was 0.7 MEUR (0.5 MEUR) or 13% (11%) of revenue.
Order intake increased due to strong development of customer engagements within
Financial Services segment and Digital Workplace solutions within the Business
Technology & Analytics market. Also year-end license sales helped increase
order intake, while order backlog was also helped by longer term managed
services contracts. Revenue growth was driven by all-time high revenue from
managed services customers, and a general high utilization of consultants
including increased usage of near-shoring. Software sales increased with
extensions of traditional solutions at existing customers as well as
introducing Self-Service Analytics to new customers. High consultant
utilization and growing software revenue ensured good profitability.
The Company strengthened its efforts to recruit consultants to meet market
demand, and managed to increase the number of consultants. Use of near-shoring
of resources from the rest of the Affecto network grew during the quarter. The
close co-operation between the offices in Malmö, Copenhagen and Århus is
ongoing with positive results as the Company now has more scalable operation in
the region, and the possibility to deliver a broader set of competencies to
local customers. Charlotte Darth was appointed as the Managing Director of
Affecto Sweden and a member of the Affecto Leadership Team, starting 9 January
2017.
In 1-12/2016, the activity in the Swedish economy was high, and the demand for
Affecto’s skills and solutions within both the Traditional IT and Analytics and
Business Technology and Analytics market likewise. The high demand led to
strong competition for talent, but the Company was able to attract new talent
and grow its number of local consultants during the year, in addition to
increasing usage of near-shoring and resources from the rest of Affecto’s
network.
In 1-12/2016, order intake increased significantly. Revenue increased by 5% and
was 19.1 MEUR (18.2 MEUR). Operational segment result increased to 1.7 MEUR
(0.7 MEUR) or 9% (4%) of revenue.
Order intake increased significantly due to new and existing managed services
contracts being won and extended. Also, important new contracts were signed
expanding the Company’s customer base for Digital Workplace solutions, adding
new healthcare customers, and new contracts opening Self-Service Analytics and
big data opportunities. The Company’s Malmö office have been working in close
cooperation with the Company’s offices in Copenhagen and Århus to open up new
customers within both Financial Sector and Industrial, bringing in new
capabilities in areas such as anti-money laundering and Internet of Things.
Revenue increased from high utilization of consultants, while software sales
were down as the Company is transforming to meet the changing software market
demand in Sweden. The growing revenue from high consultant utilization
throughout the year ensured a positive development of profitability.
Denmark
In 10-12/2016, while the Company continued to focus on customers in the
Financial Services and Industrial & Energy sectors, new contracts were won also
within Public Sector through self-service analytics. Within the area of
Business Technology & Analytics market, self-service concepts were extended
into the CFO Services concept through new solutions for cloud based performance
management and planning.
In 10-12/2016, order intake increased and order backlog decreased significantly
from last year. Revenue increased significantly by 17% and was 3.7 MEUR (3.2
MEUR). Operational segment result increased to 0.6 MEUR (0.3 MEUR) or 16% (10%)
of revenue.
Order intake increased while order backlog decreased as growing sales of
software, including self-service analytics, increased order intake but not
order backlog. Several new contracts were won as pilots in emerging areas where
the initial contract value is relatively low with limited effect on order
backlog. Revenue increased significantly due to high consultant utilization and
growing software sales. Focus on customers within Financial Services and
Industrial segments have increased the Company’s ability to meet Industry
specific demands and grow at key customers. Working with innovation and
co-creation of new opportunities at new and existing customers are adding to
the growth. High utilization of resources combined with software sales ensured
improved profitability.
Account management practices continues to drive growth at Financial Services
accounts, while Affecto’s Innolab concept (http://www.affecto.com/innolab/)
have created a good pipeline and the first pilot cases for Internet of Things
related big data and analytics cases within the Industrial segment.
The Company has strengthened its focus and account management practices towards
the Financial Services and Industrial customer segments. This has increased the
ability to understand and target customer segment specific demands, and
bringing in advanced analytics and big data. Continued close cooperation with
the Company’s office in Malmö have boosted capabilities to meet customer
demands in the region, and contributed to the positive development.
In 1-12/2016, the Company’s industry oriented focus and improved account
management practices has created positive development within the selected
Industries where key customers have grown and the Company’s capabilities have
been better tailored to meet the changing demands and growth opportunities
within both the Traditional IT and Analytics and the Business Technology and
Analytics markets.
In 1-12/2016, order intake increased slightly and order backlog decreased
significantly. Revenue increased significantly by 15% and was 13.0 MEUR (11.3
MEUR). Operational segment result increased significantly to 1.3 MEUR (0.4
MEUR) or 10% (3%) of revenue.
Order intake increased slightly from a combination of increased orders from key
customers, growth in software orders and orders of smaller pilots within
emerging areas. Self-Service Analytics contributed to the positive development
of software orders. The high activity level at key customers contributed to
growing revenue from professional services and growth in software revenue, also
ensuring improved profitability.
Baltic
In 10-12/2016, in the Lithuanian market, the Company saw continued interest by
energy companies to invest into the area of Traditional IT & Analytics while
the public sector continued to invest modestly into new IT solutions. In
Estonia the public sector investments have been modest causing increased price
competition. The Company sold its Estonian subsidiary in December to the
subsidiary’s acting members of staff. Across the segment, the private sector
was mainly interested in investing into Traditional IT & Analytics, renewal
projects and solutions while the impact for Affecto is minor in 2016. The
Company also saw that the decisiveness within insurance customers for systems
upgrades remained low. On the other hand, the Company saw growing interest for
renewal of insurance core systems. The demand for nearshore is increasing as
Nordic companies are increasingly investing into managed services.
In 10-12/2016, the Baltic (Lithuania, Latvia, Estonia, Poland and South Africa)
order intake increased significantly and order backlog has increased
significantly from last year’s level. Revenue decreased significantly by 8% and
was 4.3 MEUR (4.7 MEUR). Operational segment result was 0.1 MEUR (0.7 MEUR) or
3% (15%) of revenue.
Order intake performance improved significantly as compared to the previous
quarters and compared with Q4 2015. Consequently, also order backlog is on the
highest level of the year and almost on the same level as year before. The
Company signed a multi-year agreement for implementation of Enterprise Asset
Management solution for Lithuanian gas transmission system operator AB
AmberGrid. The value of the agreement is approximately 1.1 MEUR. The Company
signed an agreement with Codan Norway for implementing a core insurance system.
The value of the agreement is approximately 2.2 MEUR. The revenue decline was
due to modest investments into IT solutions and services by the public sector
customers in Estonia and Lithuania during the previous quarters and insurance
customers postponing their investments into systems upgrades. The same drivers
impacted profitability. The Company continued to focus on local business
development in Baltic, on nearshoring boost for all Affecto countries and on
strong co-operation with its partners within the insurance sector.
In 1-12/2016, the Company invested into meeting new demand areas such as asset
management solutions in Lithuania, as the Lithuanian public sector continued to
invested modestly into new IT solutions. In Estonia the public sector
investments have been modest causing increased price competition. Across the
segment, the private sector was mainly interested in investing into Traditional
IT & Analytics, renewal projects and solutions while the impact for Affecto was
minor in 2016. The Company also saw that the decisiveness within insurance
customers for systems upgrades remained low. On the other hand, the Company saw
towards the end of the year a growing interest for renewal of insurance core
systems. The demand for nearshoring is increasing as Nordic companies are
increasingly investing into managed services.
In 1-12/2016, the Baltic order intake decreased slightly. Revenue decreased
significantly by 18% and was 16.6 MEUR (20.1 MEUR). Operational segment result
was 1.2 MEUR (3.9 MEUR) or 7% (20%) of revenue.
Order intake was on a lower level during the first nine months of the year
compared with the previous year. In the last quarter the order intake was
significantly better than the during the previous quarters resulting into an
order backlog that is almost on the same level as the year before. The Company
signed during the year two multi-year agreements for implementation of
Enterprise Asset Management solution (Ab LitGrid and AB AmberGrid) and one
major agreement for implementation of insurance core system (Codan Norway). The
revenue decline was due to modest investments into IT solutions and services by
the public sector customers in Estonia and Lithuania during the previous
quarters and insurance customers postponing their investments into systems
upgrades. The revenue development y-o-y was also unfavorably impacted by the
successful completion of key insurance sector projects in 2015. The same
drivers impacted profitability. The Company continued to focus on local
business development in Baltic, especially towards telecommunications, retail
and industrial customers, on nearshoring boost for all Affecto countries, and
on strong co-operation with its partners within the insurance sector.
Affecto Evolution
Affecto has traditionally operated with a holding company model that consists
of independent and heterogeneous business segments. As the Company’s market has
shifted, Affecto has responded by defining its Strategic Direction and Choices
in February 2015 and in May 2016, as part of its Capital Markets Day (“CMD”).
The Company’s presented direction forms an evolution glide path happening in
three phases. In the second half of 2016 the first phase of evolution was
finalized. Within this phase the Company’s focus was: customer value creation
and evolving Affecto’s core capabilities, activating collaboration and
leadership, introducing and executing B2C & Industrial growth initiatives and
updating Affecto’s brand.
In 10-12/2016, the most significant evolution activities across Affecto’s
offices were the following:
-- Recruited new people and achieved new wins in focus growth expertise areas
like Self-Service Analytics
-- Continued to execute customer pilots and capability developments, but
started also actual delivery projects in the Company’s select growth
programs in B2C and industrial segments
-- Launched Affecto’s “Weave BCE” (www.weave.fi), an independent and agile
business unit focused on service design and modern software development.
Weave complemented and further built Affecto’s PowerGrid, the collaboration
network Affecto’s offices and business nodes.
-- Sold of its subsidiary business in Estonia (Affecto Estonia OÜ) to the
subsidiary’s acting members of staff.
-- Announced to acquire BIGDATAPUMP (www.bigdatapump.com) a privately held
cloud analytics company based in Finland. BIGDATAPUMP as a joint business
with Affecto has to offer an exclusive suite of cloud data analytics
offerings with managed service capabilities, including nearshore delivery,
as well as service design capabilities. The business will drive a plan of
expansion across Finland & Scandinavia in 2017 and further develop and
strengthen the PowerGrid.
-- Moved and renovated offices and workplaces in Helsinki and Tampere, and
continued to investigate workplace developments in Oslo and Stockholm to
improve collaboration and its value for employees.
-- Prepared for the second phase of its evolution by e.g. establishing
evolution champion network in its offices
The above reported Q4 activities are in addition to the activities which have
been reported as part of the Company’s Half Year and Q3 ‘16 Interim Reports.
During Q2 and Q3 key focus has been on investments to the Company’s people and
leadership, boosting collaboration and capabilities within the Affecto
PowerGrid and continuing to win new contracts within the focus areas of the
Company, e.g. in Self Service Analytics and Business Intelligence as a Managed
Service.
During Q1 2017 Affecto will launch the second phase of its evolution. Within
this phase Affecto will: Boost cooperation in its PowerGrid and unite its
purposes together with its people and customers, continue to develop its
approach and leadership towards the transforming market, step up and scale its
growth initiatives with customers, and Begin the implementation of new IT
platforms to integrate its operating model.
Growth Programs
Industry growth topics: Focus industries and selected industry growth programs
With the Industry growth topics, Affecto sees a growing market to connect
physical world with the digital world in real-time, enabling data driven
business models for the customer companies. The Company aligned most of its
offices by selected focus industries and focus clients resulting larger deal
sizes in focus expertise areas. With industry growth programs (B2C and
Industrial) The Company worked with customers such as Empower Group’s Industry
division, City of Tampere Electricity Utility (TKS), Grundfos, Expert ASA and
Nokian Tyres with Vianor and Futurice. The total revenue from the industry
growth programs in 2016 has been relatively low because of the piloting
approach, still growing towards the end of the year.
Expertise growth topics:
In October Affecto launched Weave BCE, its independent and agile business unit
to capture the fast growing market of service design and modern software
development. During the first quarter of its existence Weave managed to
establish its independent, yet Affecto connected business and increased its
headcount by 20%. In December Affecto formed a joint cloud analytics business
by acquiring BIGDATAPUMP to seize the fast growing Microsoft Cloud Analytics
market and ecosystem across the Nordics. During the year Affecto formed
cross-office expertise teams resulting in many key wins in areas like Managed
Services and Self-Service Analytics.
Through the continuous focus with growth programs and its evolution Affecto has
been able to balance the accelerated revenue decline of more traditional
expertise areas.
Financial Position and Cash Flow
At the end of the reporting period Affecto's balance sheet totaled 117.5 MEUR
(12/2015: 118.3 MEUR). Equity ratio was 59.6% (12/2015: 58.5%) and net gearing
was -6.7% (12/2015: -6.2%).
The financial loans were 16.5 MEUR (12/2015: 18.5 MEUR) at the end of reporting
period. The Company's cash and liquid assets were 20.8 MEUR (12/2015: 22.4
MEUR). The interest-bearing net debt was -4.3 MEUR (12/2015: -3.9 MEUR). On 17
June 2016, Affecto announced that it has entered into a new 18.5 MEUR term loan
agreement. The new loan replaced the previous loan of 18.5 MEUR that expired in
the end of June 2016. Affecto will repay the loan in semi-annual instalments of
2.0 MEUR starting in December 2016.
In 10-12/2016, the cash flow from operating activities was 7.5 MEUR (9.7 MEUR)
and cash flow from investing activities was 0.5 MEUR (-0.1 MEUR). Investments
in tangible and intangible assets were -0.6 MEUR (-0.1 MEUR). The weakened cash
flow from operating activities was driven by a negative change in working
capital in Norway.
In 1-12/2016, the cash flow from operating activities was 3.6 MEUR (9.3 MEUR)
and cash flow from investing activities was 0.0 MEUR (-0.6 MEUR). Investments
in tangible and intangible assets were -1.0 MEUR (-0.6 MEUR). The weakened cash
flow from operating activities was driven by the negative change in working
capital in Norway and Sweden and lower profitability for the period.
Mergers & Acquisitions
On 8 December 2016, the Company announced that it has agreed to sell its
subsidiary business in Estonia (Affecto Estonia OÜ) to the subsidiary’s acting
members of staff. The transaction was a mutually beneficial decision and is in
line with Affecto’ s strategic direction. The selling price was 1.8 MEUR. The
transaction positively affected cash flow by 1.0 MEUR and operating profit by
0.3 MEUR in 2016. The Company announced on 21 December 2016 that it has
finalized the transaction. Affecto continues to partner with the entity in
Estonia which enables joint local delivery solutions to continue for Affecto’s
international customers.
On 20 December 2016, the Company announced that it has agreed to purchase
BIGDATAPUMP, a privately held cloud analytics company based in Finland. The
purchase price consists of a 3.5 MEUR cash payment upon closing of the
transaction and an earn-out element worth a maximum of 3.0 MEUR. The earn-out
element is also paid in cash, subject to the achievement of defined financial
targets in 3 years, at the latest in 5 years. This overall purchase price is on
a net debt free basis. The transaction will result in the establishment of a
joint business with a suite of cloud data analytics offerings with managed
service capabilities, including nearshore delivery, as well as service design
capabilities. The business will drive a plan of expansion across Finland &
Scandinavia in 2017. This acquisition represents the joining of Affecto’s
existing Northern European office network with BIGDATAPUMP’s growing
international business footprint. BIGDATAPUMP will retain its brand and focus,
while its personnel, customers, and partners will belong to newly formed
BIGDATAPUMP under the Affecto Group. Revenue of BIGDATAPUMP was 1.8 MEUR in
2015 and 3.4 MEUR in 2016. BIGDATAPUMP will be its own reportable segment on a
going forward basis.
Personnel
The number of employees was 930 (985) persons at the end of the reporting
period. 428 (398) employees were based in Finland, 92 (102) in Norway, 108
(106) in Sweden, 70 (64) in Denmark and 232 (315) in the Baltic countries. The
average number of employees during the period was 987 (1010).
The decrease in employees in Affecto and the Baltic segment between 2016 and
2015 was due to the sale of its subsidiary business in Estonia in December
2016. The comparable numbers that take into account the sale of the Estonian
subsidiary was 930 (910) for the Affecto level and 232 (240) for the Baltic
segment.
Corporate Governance
Affecto’s corporate governance practices comply with Finnish laws and
regulations, Affecto’s Articles of Association, the rules of NASDAQ Helsinki
and the Finnish Corporate Governance Code issued by the Securities Market
Association of Finland in 2015. The code is publicly available at
http://cgfinland.fi/en/. Affecto has published its corporate governance
statement for 2015 in the Financial Statements 2015 and on the Company website
www.affecto.com.
The Annual General Meeting
Annual General Meeting of Affecto Plc (“AGM”) was held on 8 April 2016. The AGM
adopted the financial statements and discharged the members of the Board of
Directors and the CEO from liability for the financial year 2015. The meeting
approved the Board of Directors’ proposal to pay a dividend of EUR 0.16 per
share and the dividend was paid on 19 April 2016.
Aaro Cantell, Magdalena Persson, Jukka Ruuska, Olof Sand, Tuija Soanjärvi and
Lars Wahlström were re-elected to the Board. The Board of Directors elected
from among its members Aaro Cantell as its Chairman and Olof Sand as
Vice-Chairman and the following members to the Committees:
Audit Committee: Tuija Soanjärvi (chairman), Lars Wahlström and Jukka Ruuska
People, Nomination and Compensation Committee: Magdalena Persson (chairman)
Aaro Cantell and Olof Sand
The AGM approved all proposals made by the Board as described in the invitation
published on 11 March 2016. The resolutions of the AGM were published as a
stock exchange release on 8 April 2016 and can be found on the Company’s
website www.affecto.com.
Additionally, the AGM established the Shareholders’ Nomination Board that
consists of the representatives of the three largest shareholders of Affecto at
31 October 2016 and the Chairman of the Board of Directors if he is not
appointed as a representative of a shareholder. On 16 November 2016, the
Company announced that Cantell Oy, Säästöpankki Kotimaa Fund and Ilmarinen have
appointed Aaro Cantell, Chairman of Affecto's Board of Directors, Petteri
Vaarnanen, Head of Asset Management in SP-Rahastoyhtiö and Mikko Mursula, CIO
of Ilmarinen, as members of the Nomination Board. Lombard International
Assurance S.A. did not use its right to appoint a member.
Shares and Shareholders
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
and the Company owned 821 974 treasury shares, approximately 3.7% of the total
amount of the shares. Additional information with respect to the shares,
shareholding and trading can be found on the Company’s website www.affecto.com.
Risks and Uncertainties
The markets where Affecto operates are going through change. Historically,
Affecto has concentrated on the traditional IT market solutions for a broad
customer space and mainly on moderate deal sizes and shapes. Affecto’s demand
is growing within larger and more complex deal sizes and shapes as well as
within the emerging business technology & analytics market. There is a risk as
well as an opportunity with respect to the speed of which Affecto is able to
develop and build capability in the new emerging areas in proportion to the
traditional areas.
Affecto’s success depends also on good customer relationships. Affecto has a
diverse customer base. In 2016, the largest customer generated approximately 3%
and the 10 largest customers together approximately 20% of Affecto’s revenue.
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 & delivery efforts and overall
agility of the Company.
Affecto also needs to be seen as an interesting employer in order to recruit
and retain skilled employees. It is important for Affecto to be seen as an
employer our employees can be proud of. High people churn may create
inefficiencies in the business and temporarily decrease the utilization rate.
Affecto executed its first acquisition since 2007 at the end of 2016. The
Company recognizes the risk with regards to its ability to complete an
effective post-merger integration to achieve the anticipated benefits while
maintaining the continuity of the growth track of the acquired company.
The changes in the general economic conditions and the operating environment of
customers have direct impact on Affecto’s markets. Recently, the US elections
and the Brexit have increased global uncertainty. If the macroeconomic
environment remains weak, some countries may introduce new regulations. 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,
especially in the public sector. 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.
Specifically, the insurance sector has been impacted by slower than expected
investments, mainly due to product cycle related issues, which may continue to
have an effect on the Company in Baltic. While the Company sees revitalizing
demand for traditional IT system investments in Lithuania especially in energy
sector, the Lithuanian public sector investments into IT remains modest which
may have an effect on the Company’s business.
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 revenue 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 revenue
negatively. Affecto had license revenue of approximately 7 MEUR in 2016.
The Company recognizes that the risks of frauds and cyber security threats have
increased. The Company aims to mitigate the increased risks with internal
controls, IT-security, training, awareness and security minded culture.
The Company recognizes the disintegration of its IT systems and process. Given
the number of separate systems, there is low group wide transparency and risk
of suboptimal management of the respective businesses.
Approximately 36% of Affecto’s revenue is 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. In addition, the
Company also has business in South Africa and therefore the development of the
South African Rand (ZAR) may also affect the business environment in South
Africa and thus the Company’s business.
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.
Events after the Review Period
On 27 January 2017, the Company announced the proposals of the Shareholder’s
Nomination Board. It was proposed that Aaro Cantell, Magdalena Persson, Olof
Sand and Tuija Soanjärvi shall be re-elected and Mikko Kuitunen and Timo
Vaajoensuu shall be elected as new members to the Board. Jukka Ruuska and Lars
Wahlström have announced that they are no longer available for re-election. The
monthly remuneration of the Chairman of the Board was proposed to be increased
from EUR 3,500 to EUR 4,000 and the monthly remuneration of the Chairman of the
Audit Committee was proposed to be increased to EUR 2,750 from EUR 2,000. The
monthly remuneration of the Deputy Chairman and the other Board members was
proposed to remain unchanged at EUR 2,750 and EUR 2,000, respectively. In
addition, a fee of EUR 300 was proposed to be paid for participation in each
committee meeting and participation in person in Board meetings that are
outside the country of residence of the relevant Board member. The
Shareholders’ Nomination Board proposed that 40 % of the Board remuneration is
paid in Affecto’s shares.
On 2 February 2017, the Company completed its acquisition of BIGDATAPUMP.
BIGDATAPUMP will be its own reportable segment on a going forward basis. The
purchase price consists of a 3.5 MEUR cash payment upon closing of the
transaction and an earn-out element worth a maximum of 3.0 MEUR. The earn-out
element is also paid in cash, subject to the achievement of defined financial
targets in 3 years, at the latest 5 years. The overall purchase price is on a
net debt free basis. The purchase price allocation has not yet been prepared.
The preliminary purchase price allocation will be prepared during the first
quarter of 2017.
Dividend Proposal
Distributable funds of the group parent company on 31 December 2016 are
58,676,860.61 euros, of which the distributable profit is 15,163,635.13 euros.
Board of Directors proposes that from the financial year 2016 a dividend of
0.16 euros per share will be paid, a total of 3,460,603.16 euros with the
outstanding number of shares at the end of the financial period, and the rest
is carried forward to the retained earnings account. No material changes have
taken place in respect of the Company’s financial position after the balance
sheet date. The liquidity of the Company is good and in the opinion of the
Board of Directors the proposed distribution of profit does not risk the
liquidity of the Company.
Financial Calendar 2017
Interim Report January-March 2017: 11 May 2017
Half-yearly Report January-June 2017: 22 August 2017
Interim Report January-September 2017: 7 November 2017
The Financial Statements and the Corporate Governance Statement will be
published during the week starting on 13 March 2017. The Annual General Meeting
is scheduled to be held 7 April 2017.
2017 Outlook
Affecto expects its FY’17 revenue to be at the same level or above the previous
year, and its FY’17 operating profit to be at the same level or below the
previous year.
The Company is going through a transformation period.
In 2016, Affecto divested its Estonian business and acquired a Finnish cloud
analytics company BIGDATAPUMP. The divested Estonian business had a revenue of
EUR 4.5 million and EUR 0.4 million operating profit in 2016 in addition to the
EUR 0.3 million gain from the divestment. BIGDATAPUMP will be its own
reportable segment in 2017 and the earn out element of the acquisition will be
treated as an IFRS3 cost that will affect the Company’s operating profit.
Affecto Plc
Board of Directors
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) 10-12/1 10-12/1 2016 2015
6 5
-----------------------------------
-----------------------------------
Revenue 31 087 31 305 112 505 116 026
Other operating income 347 21 347 22
Changes in inventories of finished -1 -366 86 -195
goods and work in progress
Materials and services -7 653 -6 706 -26 271 -23 978
Personnel expenses -16 412 -16 089 -62 612 -64 957
Other operating expenses -4 326 -4 671 -16 528 -18 352
Other depreciation and amortisation -209 -273 -861 -1 089
Operating profit 2 832 3 221 6 667 7 475
Financial income and expenses -142 115 -586 4
Profit before income tax 2 690 3 336 6 081 7 479
Income tax -243 -780 -1 359 -1 585
Profit for the period 2 448 2 556 4 721 5 894
Profit for the period
attributable to:
Owners of the parent company 2 448 2 556 4 721 5 894
Earnings per share
(EUR per share):
Basic 0.11 0.12 0.22 0.27
Diluted 0.11 0.12 0.22 0.27
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(1 000 EUR) 10-12/1 10-12/1 2016 2015
6 5
-----------------------------------
-----------------------------------
Profit for the period 2 448 2 556 4 721 5 894
Other comprehensive income
Items that may be reclassified subsequently
to the statement of income:
Translation difference 227 126 466 -649
Total Comprehensive income 2 675 2 682 5 187 5 245
for the period
Total Comprehensive income
attributable to:
Owners of the parent company 2 675 2 682 5 187 5 245
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 12/2016 12/2015
----------------------------------------------------
----------------------------------------------------
Non-current assets
Property, plant and equipment 1 295 1 095
Goodwill 62 215 62 367
Other intangible assets 63 132
Deferred tax assets 552 976
Trade and other receivables 93 242
64 218 64 813
Current assets
Inventories 390 300
Trade and other receivables 31 305 29 992
Current income tax receivables 787 778
Cash and cash equivalents 20 756 22 375
53 239 53 445
----------------------------------------------------
----------------------------------------------------
Total assets 117 456 118 258
Equity attributable to owners
of the parent Company
Share capital 5 105 5 105
Reserve of invested non-restricted 47 737 47 731
equity
Other reserves 858 858
Treasury shares -1 993 -2 056
Translation differences -4 452 -4 919
Retained earnings 16 864 15 599
----------------------------------------------------
----------------------------------------------------
Total equity 64 118 62 319
Non-current liabilities
Loans and borrowings 12 483 -
Deferred tax liabilities 4 177
12 487 177
Current liabilities
Loans and borrowings 4 000 18 484
Trade and other payables 36 104 36 401
Current income tax liabilities 529 420
Provisions 218 456
40 851 55 761
Total liabilities 53 338 55 938
----------------------------------------------------
----------------------------------------------------
Equity and liabilities 117 456 118 258
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 10-12/ 10-12/2015 2016 2015
2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from operating activities
Profit for the period 2 447 2 556 4 721 5 894
Adjustments to profit for the period 79 1 026 2 364 2 850
2 527 3 582 7 085 8 744
Change in working capital 4 705 6 283 -2 283 2 949
Interest and other financial cost paid -92 -68 -225 -305
Interest and other financial income 11 10 55 50
received
Income taxes paid 369 -95 -1 026 -2 107
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash from operating activities 7 520 9 712 3 606 9 332
Cash flows from investing activities
Acquisition of tangible and intangible -578 -118 -1 043 -566
assets
Proceeds from sale of tangible and 6 6 6 6
intangible assets
Proceeds from disposal of business 1 029 - 1 029 -
--------------------------------------------------------------------------------
Net cash from investing activities 457 -112 -8 -561
Cash flows from financing activities
Repayments of current borrowings -2 000 - -20 500 -
Repayments of non-current borrowings - -2 000 - -4 000
Proceeds from non-current borrowings - - 18 482 -
Dividends paid to the owners - - -3 457 -3 453
of the parent company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash from financing activities -2 000 -2 000 -5 475 -7 453
(Decrease)/increase in cash and cash 5 976 7 600 -1 878 1 318
equivalents
Cash and cash equivalents 14 671 14 877 22 375 21 380
at the beginning of the period
Foreign exchange effect on cash 107 -102 259 -324
Cash and cash equivalents 20 756 22 375 20 756 22 375
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 Treasur Trans Ret. Total
capita invested reserv y lat. earnin equity
l non-restricted es shares diff. gs
equity
Equity at 1 5 105 47 731 858 -2 056 -4 919 15 599 62 319
January 2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 4 721 4 721
Translation 466 466
differences
Total 466 4 721 5 187
compre-hensive
income
Treasury shares 6 63 68
as
compensation
to the Board
Dividends paid -3 457 -3 457
--------------------------------------------------------------------------------
Equity at 31 5 105 47 737 858 - 1 993 -4 452 16 864 64 118
December 2016
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 5 894 5 894
Translation -649 -649
differences
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -649 5 894 5 245
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 31 5 105 47 731 858 -2 056 -4 919 15 599 62 319
December 2015
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 financial statement bulletin should be read in
conjunction with the annual financial statements for the year ended 31 December
2015. In material respects, the same accounting policies have been applied as
in the 2015 annual consolidated financial statements. The amendments to and
interpretations of IFRS standards that entered into force on 1 January 2016 had
no material impact on this financial statement bulletin.
2.2. Segment information
Affecto's reporting segments are based on geographical locations and are
Finland, Norway, Sweden, Denmark and Baltic.
Segment revenue and result
(1 000 EUR) 10-12/16 10-12/15 2016 2015
-------------------------------------
-------------------------------------
Total revenue
Finland 13 375 14 285 48 061 49 539
Norway 5 732 5 512 21 816 21 068
Sweden 5 584 4 795 19 098 18 219
Denmark 3 738 3 194 12 998 11 297
Baltic 4 338 4 723 16 596 20 128
Other -1 680 -1 203 -6 065 -4 226
---------- --------
----------------------------------------------------------------------
Group total 31 087 31 305 112 505 116 026
Operational segment result
Finland 1 435 1 874 2 561 3 528
Norway 290 266 1 330 1 451
Sweden 709 526 1 652 718
Denmark 582 314 1 301 355
Baltic 131 706 1 233 3 930
Other -315 -465 -1 411 -2 507
----------------------------------------------------------------------
----------------------------------------------------------------------
Total operational segment result 2 832 3 221 6 667 7 475
----------------------------------------------------------------------
Operating profit 2 832 3 221 6 667 7 475
Financial income and expenses -142 115 -586 4
----------------------------------------------------------------------
----------------------------------------------------------------------
Profit before income tax 2 690 3 336 6 081 7 479
Revenue by business lines
(1 000 EUR) 10-12/16 10-12/15 2016 2015
-------------------------------------
-------------------------------------
Information Management Solutions 29 859 28 965 107 293 107 887
Karttakeskus GIS business 2 824 3 453 10 449 12 201
Other -1 596 -1 112 -5 237 -4 062
--------------------------------- -------------------
----------------------------------------------------------------------
Group total 31 087 31 305 112 505 116 026
2.3. Changes in intangible and tangible assets
(1 000 EUR) 1-12/16 1-12/15
-----------------
-----------------
Carrying amount at the beginning of period 63 594 64 573
Additions 1 043 566
Disposals -342 -2
Depreciation and amortization for the period -861 -1 089
Exchange rate differences 139 -454
--------------------------------------------------------------
Carrying amount at the end of period 63 573 63 594
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 January 2016 21 604 510 5 105 47 731 -2 056
Treasury shares of 24 261 - 6 63
compensation to the
Board of Directors
31 December 2016 21 628 771 5 105 47 737 -1 993
1 January 2015 21 583 526 5 105 47 718 -2 111
Treasury shares of 20 984 - 14 55
compensation to the
Board of Directors
31 December 2015 21 604 510 5 105 47 731 -2 056
Affecto Plc owns 821 974 treasury shares, which correspond to 3.7% 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) 31.12.2016 31.12.2015
Interest-bearing non-current liabilities
Loans from financial institutions, 12 483 -
non-current portion
Loans from financial institutions, 4 000 18 484
current portion
----------------------------------------------------------------
----------------------------------------------------------------
16 483 18 484
On 17 June 2016, the Company announced that it has entered into a new 18.5 MEUR
term loan agreement. The new loan replaced the previous loan of 18.5 MEUR that
expired in the end of June 2016. Affecto will repay the loan in semi-annual
instalments of 2.0 MEUR starting in December 2016.
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) 31.12.2016 31.12.2015
Not later than one (1) year 2 807 3 167
Later than one (1) year, 4 410 1 911
but not later than five (5) years
Later than five (5) years 484 -
---------------------------------------------------------
Total 7 701 5 078
Guarantees given:
(1 000 EUR) 30.12.2016 31.12.2015
Financial loans - 18 500
The Company renewed its long term financing in 2016. As a part of the
termination of the previous loan agreement, Affecto was able to release the
guarantees given in relation to the previous loan.
Other securities given on Affecto’s behalf:
(1 000 EUR) 31.12.2016 31.12.2015
Pledges 31 36
Other guarantees 1 000 1 925
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) 1-12/16 1-12/15
Salaries and other short-term employee benefits 1 995 2 219
Post-employment benefits 246 268
Termination benefits 112 275
Share-based payments - 1
-----------------------------------------------------------------
-----------------------------------------------------------------
Total 2 353 2 763
Purchases from related party:
(1 000 EUR) 1-12/1 1-12/1
6 5
Purchases from the entity that are controlled by key management 13 289
personnel of the group
Outstanding balance of purchases from the entity that are - 36
controlled by key management personnel of the group
3. Key figures
10-12/16 10-12/15 2016 2015
-------------------------------------
-------------------------------------
Revenue, 1 000 eur 31 087 31 305 112 505 116 026
EBITDA, 1 000 eur 3 041 3 493 7 528 8 565
Operational segment result, 2 832 3 221 6 667 7 475
1 000 eur
Operating result, 1 000 eur 2 832 3 221 6 667 7 475
Result before taxes, 1 000 eur 2 690 3 336 6 081 7 479
Profit attributable to the owners 2 448 2 556 4 721 5 894
of the parent company, 1 000 eur
EBITDA, % 9.8 % 11.2 % 6.7 % 7.4 %
Operational segment result, % 9.1 % 10.3 % 5.9 % 6.4 %
Operating result, % 9.1 % 10.3 % 5.9 % 6.4 %
Result before taxes, % 8.7 % 10.7 % 5.4 % 6.4 %
Net income for equity holders 7.9 % 8.2 % 4.2 % 5.1 %
of the parent company, %
Equity ratio, % 59.6 % 58.5 % 59.6 % 58.5 %
Net gearing, % -6.7 % -6.2 % -6.7 % -6.2 %
Interest-bearing net debt, -4 273 -3 891 -4 273 -3 891
1 000 eur
Gross investment in non-current 578 118 1 043 566
assets (excl. acquisitions),
1 000 eur
Gross investments, % of revenue 1.9 % 0.4 % 0.9 % 0.5 %
Order backlog, 1 000 eur 55 033 50 672 55 033 50 672
Average number of employees 1 001 1 005 987 1 010
Earnings per share, eur 0.11 0.12 0.22 0.27
Earnings per share (diluted), 0.11 0.12 0.22 0.27
eur
Equity per share, eur 2.96 2.88 2.96 2.88
Average number of shares, 21 629 21 605 21 613 21 592
1 000 shares
Number of shares at the end of 21 629 21 605 21 629 21 605
period, 1 000 shares
Affecto has revised the terminology used in its financial reporting. Prior to
Q1-2016 release, the Company used the term ‘net sales’. In this report and
going forward, the term ‘net sales’ is replaced with ‘revenue’, however, the
meaning of the two terms is identical.
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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