2017-05-11 08:00:02 CEST
2017-05-11 08:00:02 CEST
REGULATED INFORMATION
Affecto Oyj - Interim report (Q1 and Q3)
Affecto Plc's Interim Report 1-3/2017
AFFECTO PLC - INTERIM REPORT - 11 MAY 2017 at 9:00
Affecto Plc's Interim Report 1-3/2017
Q1 at a Glance (January-March 2017)
-- Order intake decreased by 2% and was 24.4 MEUR (24.8 MEUR).
-- Order backlog increased by 8% and was 52.0 MEUR (48.2 MEUR).
-- Revenue increased by 10% and was 30.2 MEUR (27.3 MEUR).
-- The Company commences the reporting of Comparable operating profit.
-- Comparable operating profit increased to 2.1 MEUR (1.0 MEUR) and was 7.1%
(3.7%) of revenue.
-- Operating profit increased to 1.9 MEUR (1.0 MEUR) and was 6.2% (3.7%) of
revenue.
-- Cash flow from operating activities was -2.1 MEUR (-1.3 MEUR).
-- The acquisition of BIGDATAPUMP was completed and the business is reported
as a part of the Finnish segment.
-- The Company changed its 2017 Outlook on 8 May 2017.
Key Figures
MEUR 1-3/17 1-3/16 2016 last 12m
Revenue 30.2 27.3 112.5 115.3
Operational segment result 2.1 1.0 6.7 7.8
% of revenue 7.1 3.7 5.9 6.8
Comparable operating profit¹ 2.1 1.0 6.3 7.5
% of revenue 7.1 3.7 5.6 6.5
Operating profit 1.9 1.0 6.7 7.5
% of revenue 6.2 3.7 5.9 6.5
Profit before taxes 1.8 0.9 6.1 7.0
Profit for the period 1.3 0.7 4.7 5.3
Equity ratio, % 62.7 61.8 59.6 -
Net gearing, % 1.0 -4.0 -6.7 -
Earnings per share, EUR 0.06 0.03 0.22 0.24
Earnings per share (diluted), EUR 0.06 0.03 0.22 0.24
Equity per share, EUR 3.01 2.93 2.96 -
1. Items affecting comparability in the first quarter include amortization of
intangible assets from a business acquisition of 0.0 MEUR (0.0 MEUR) and costs
associated with the earn-out element from a business acquisition of 0.3 MEUR
(0.0 MEUR). Additional items affecting comparability include the gain on the
sale of a disposed business in Q4/2016 of 0.3 MEUR.
CEO Juko Hakala comments:
We had a strong sales quarter in Q1 almost matching the order intake of Q1/2016
when we closed several multiyear deals. Our order intake was strong in Finland
and Denmark. Our Baltic portfolio order intake grew organically, Sweden grew
slightly and Norway weakened. Our order backlog is up 8% y-o-y.
Overall, we delivered positive organic revenue growth of 10% in the quarter and
our profitability improved driven by the revenue growth. Also, our Finland and
Baltic segments continued their recovery step-by-step. More specifically, in
Finland, Baltic and Sweden, FY ‘16 multi-year sales outcomes drove high
chargeability. This impacted positively our revenue and profitability in Q1.
Revenue and profitability decreased in Denmark in connection to our Danish
business building its skill base to match changing market demand.
The second phase of our evolution progressed in Q1. We closed the acquisition
of BIGDATAPUMP, establishing it as one of our key growth platforms. We started
the BIGDATAPUMP geographical co-operation with Scandinavian Affecto businesses
and continued to build required enabling capabilities, like stronger people
operations, to help drive our transformation in the rapidly changing markets.
We will organize a Capital Markets Day 29 September 2017 to present further
information of Affecto and our direction.
2017 Outlook
Affecto expects its FY ’17 revenue to be above the previous year (2016: 112.5
MEUR), and its FY ’17 operating profit to be at the same level or below the
previous year (2016: 6.7 MEUR).
The respective FY ‘17 operating profit outlook assumes IFRS3 related costs of
approximately 1.6 MEUR during FY ‘17 due to the acquisition of BIGDATAPUMP. The
respective IFRS3 related costs are based on the earn out element of the
acquisition and the amortization of the intangible assets and the costs didn’t
exist in FY ’16.
Analyst and Press Conference
The Company will arrange a briefing for analysts and media 11 May 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 unaudited.
AFFECTO FINANCIALS
Order Intake
In 1-3/2017, Affecto’s order intake decreased by 2% and was 24.4 MEUR (24.8
MEUR). Order intake increased significantly in Denmark and increased slightly
in Finland and Sweden. Order intake decreased significantly in Norway and
Baltic.
Order Backlog
In 1-3/2017, the order backlog increased by 8% and was 52.0 MEUR (48.2 MEUR) at
the end of the reporting period. Order backlog increased significantly in
Baltic, Sweden and Denmark, stayed stable in Finland and decreased
significantly in Norway.
Revenue
Revenue, MEUR 1-3/17 1-3/16 2016 last 12m
Finland 14.0 11.2 48.1 50.8
Norway 5.7 5.6 21.8 21.9
Sweden 5.5 4.6 19.1 19.9
Denmark 3.0 3.2 13.0 12.8
Baltic 3.5 4.2 16.6 15.9
Other -1.5 -1.5 -6.1 -6.1
----------------------------------------------
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Group total 30.2 27.3 112.5 115.3
In 1-3/2017, Affecto’s revenue increased by 10 % to 30.2 MEUR (27.3 MEUR).
Revenue increased in Finland, Norway and Sweden and decreased in Denmark and
Baltic. The decline in Baltic revenue was due to the divestment of the Estonian
subsidiary in Q4/2016. In Q1/2016, revenue in Estonia was 1.2 MEUR.
Profitability
Operational segment result by reportable segments:
Operational segment 1-3/17 1-3/16 2016 last 12m
result, MEUR
Finland 1.4 0.1 2.6 3.9
Norway 0.4 0.3 1.3 1.4
Sweden 0.4 0.3 1.7 1.8
Denmark 0.1 0.3 1.3 1.2
Baltic 0.6 0.4 1.2 1.4
Other -0.8 -0.3 -1.4 -1.9
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-----------------------------------------------------------
Operational segment result 2.1 1.0 6.7 7.8
-----------------------------------------------------------
Comparable operating profit 2.1 1.0 6.3 7.5
-----------------------------------------------------------
IFRS 3 related costs 0.3 0.0 0.0 0.3
-----------------------------------------------------------
Operating profit 1.9 1.0 6.7 7.5
The Company commences the reporting of comparable operating profit to give its
stakeholders additional, more relevant and comparable information on the
underlying business performance of the Company. For the same reason, the
Company has amended the definition of Operational segment result to exclude
expenses related to earn-out elements of purchase price on acquisitions, due to
the acquisition of BIGDATAPUMP.
In 1-3/2017, comparable operating profit increased to 7.1% and was 2.1 MEUR
(1.0 MEUR).
Measures of Profit and Items Affecting Comparability
MEUR 1-3/17 1-3/16 2016 last 12m
Comparable operating profit 2.1 1.0 6.3 7.5
Items affecting comparability:
IFRS 3 amortization -0.0 0.0 0.0 -0.0
Earn-out from acquisition -0.3 0.0 0.0 -0.3
Gain on the sale of disposed business 0.0 0.0 0.3 0.3
---------------------------------------------------------------------
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Items affecting comparability, total -0.3 0.0 0.3 0.0
---------------------------------------------------------------------
Operating profit 1.9 1.0 6.7 7.5
In 1-3/2017, Affecto's operating profit increased to 6.2% and was 1.9 MEUR (1.0
MEUR). The profitability increased in Finland, Baltic, Norway and Sweden while
profitability in Denmark decreased.
Taxes corresponding to the profit of the period have been entered as tax
expense. Net profit for the period was 1.3 MEUR, while it was 0.7 MEUR last
year.
Business Performance by Segment
The group's business is managed through five reportable segments: Finland,
Norway, Sweden, Denmark and Baltic.
In 1-3/2017, the Company completed the acquisition of BIGDATAPUMP and the
Company stated that BIGDATAPUMP will be reported as its own reportable segment.
However, the company has subsequently decided that BIGDATAPUMP will be reported
as part of the Finnish segment.
Finland
Continued stable demand for services in traditional IT & Analytics, especially
Managed Services. Increasingly positive development of demand for Business
Technology & Analytics.
-- Order intake grew slightly and order backlog stayed on the same level:
-- Established new capabilities and industry focus impacted sales
significantly
-- Strong organic performance. Almost at the same level as Q1/2016 (highest
Q1 recorded).
-- Further order intake contribution by BIGDATAPUMP for two months
contributed to overall increase in sales
-- Revenue and operational segment result improved substantially:
-- Organic revenue growth +13% y-o-y, BIGDATAPUMP revenue 1.3 MEUR and
Karttakeskus revenue 2.7 MEUR, or +11% y-o-y
-- FY ‘16 multi-year sales outcomes drove chargeability in Q1/2017.
Improved quality and optimized subcontracting structure of services
improved profitability
-- Business development focus:
-- Continued investment into new capability areas, e.g. machine learning,
artificial intelligence, cognitive and robotic process automation
-- Efficient and agile co-operation within Affecto’s PowerGrid providing
both skills and scalability
Norway
Increased interest in Master Data Management within Financial Services and
Business to Consumers (B2C) sectors, while Big Data buyers drive demand towards
Public to Citizen (P2C).
-- Order intake and order backlog decreased significantly:
-- Poor sales quarter partly because of big deal timing and partly because
customers postponed decisions on new software and consultancy contracts
-- Exceptionally strong software sales performance in Q1/2016
-- Revenue and operational segment result improved:
-- Revenue growth driven by delivery of FY ‘16 large professional services
wins and increased usage of nearshore
-- Improved utilization impacted profitability favorably
-- Business development focus:
-- Strengthening the skillset in business technology e.g. recruitment of
data scientists and value architects
-- Continue to strengthen capabilities for managed services, customer and
product master data management, big data and unstructured data
Sweden
Positive market development continued, creating high demand for the Company’s
services in both the Traditional IT & Analytics and Business Technology &
Analytics.
-- Order intake and Order backlog improved:
-- Order intake increased due to high demand in all focus industries
-- Positive development of Managed Services and Digital Workplace solutions
-- Revenue increased significantly and operational segment result improved:
-- Growth in Managed Services and Business Technology & Analytics
solutions
-- High utilization of local consultants combined with increased usage of
nearshoring resources
-- Business development focus:
-- Hiring key people such as value architects and senior consultants
-- BIGDATAPUMP ramp-up focusing on recruitment, investing in activities to
grow the pipeline in new focus areas such as EU General Data Protection
Regulation (GDPR) and advanced analytics
Denmark
High demand in data driven business initiatives by customers in Financial and
Industrial industries.
-- Both order intake and order backlog increased significantly:
-- Growth at existing key customers through Self Service Analytics
-- Revenue and operational segment result decreased:
-- Revenue and profitability decreased due to building its skill base to
match changing market demand
-- Self Service Analytics drove revenue and profitability favorably
-- Business development focus:
-- Investing into capabilities in the Financial Services and Industrial
industries, e.g. Internet of Things (IoT) and cloud analytics;
BIGDATAPUMP ramp-up focusing on recruitment and pipeline building
-- Continuing the close cooperation with Malmö boosts capabilities and
growth in the region
Baltic
All ongoing businesses improved in terms of order intake, revenue and
profitability. Steering the Baltic business to continue to transform,
strengthening capabilities for private sectors and go-to-market.
-- Order intake decreased significantly and order backlog increased
significantly:
-- Significant organic growth driven by Lithuania local business while
decreasing TIA order intake
-- Order backlog growth also driven by signing of multi-year agreements
with AmberGrid, Litgrid and Codan in FY ‘16
-- Revenue decreased significantly, operational segment result improved:
-- Organic revenue growth +17% y-o-y, organic operational segment result
growth +0.3 MEUR y-o-y
-- Delivering on multi-year agreements signed in FY ‘16, combined with
Nearshore growth drove revenue and operational segment result favorably
-- Business development focus:
-- Developing capabilities for private and energy sectors and continued
focus on nearshore development according to the Affecto PowerGrid model
-- Strengthening go-to-market co-operation with the partners in insurance
sector
Affecto Evolution
In 01-03/2017, the most significant evolution activities across Affecto’s
offices were the following:
-- Closed the acquisition of BIGDATAPUMP and kicked off the related
integration activities, including expansion to Scandinavia
-- Launched go-to-market co-operation between BIGDATAPUMP, Weave and Affecto
for seamless and agile business decision maker value proposition.
-- Continued to build required enabling capabilities to drive strong
transformation in the rapidly changing markets, e.g.
-- Recruiting, staffing and onboarding key roles in enabling functions both
in Affecto countries and group
-- Introducing a strong change agent network in Affecto offices to better
connect its people and customers to the evolution
Industry Growth Topics: growing market to bridge the physical and digital
worlds in real-time, enabling data driven organizations and additional customer
value. In Q1/2017, the Company continued emerging technology implementations
and prototypes across the Nordics. One of the latest wins was an advanced
industrial solution for analyzing engine data for AGCO Power.
Expertise Growth Topics: increasing market with technology expertise areas like
self service analytics, service design, cloud analytics, managed services,
machine learning, modern software development, unstructured data. In Q1/2017,
the Company continued to win and deliver new cases in different expertise
growth areas, e.g. in cloud analytics space with customers such as HMD and
Cint.
Financial Position and Cash Flow
At the end of the reporting period Affecto's balance sheet totaled 115.8 MEUR
(12/2016: 117.5 MEUR). Equity ratio was 62.7% (12/2016: 59.6%) and net gearing
was 1.0% (12/2016: -6.7%).
The financial loans were 16.5 MEUR (12/2016: 16.5 MEUR) at the end of the
reporting period. The Company's cash and liquid assets were 15.8 MEUR (12/2016:
20.8 MEUR). The interest-bearing net debt was 0.7 MEUR (12/2016: -4.3 MEUR).
Cash flow from operating activities for the reported period was -2.1 MEUR (-1.3
MEUR) and cash flow from investing activities was -2.8 MEUR (-0.2 MEUR).
Investments in tangible and intangible assets were 0.1 MEUR (0.2 MEUR). The
cash flow from operating activities was affected by a negative change in
working capital driven by the Swedish segment.
Mergers & Acquisition
The acquisition of BIGDATAPUMP was completed on 2 February 2017. The net debt
free, base purchase price paid in cash was 3.5 MEUR. In addition, based on the
closing accounts of BIGDATAPUMP, an approximately 1.0 MEUR purchase price
adjustment is to be paid in cash based on the cash and net working capital of
the acquired entity. The purchase agreement also includes an earn-out element
worth a maximum of 3.0 MEUR, to be paid in cash, subject to the achievement of
defined financial targets in three years, at the latest five years.
Based on the preliminary purchase price allocation, net assets of 4.5 MEUR were
acquired in the acquisition which included 3.3 MEUR in goodwill, 0.1 MEUR in
intangible assets related to customer relationships, 0.1 MEUR in intangible
assets related to trademarks, 1.3 MEUR in accounts receivable, 0.8 MEUR in cash
and 1.1 MEUR in liabilities primarily related to trade and other payables and
taxes. The intangible assets will be amortized over their useful life of three
years.
Personnel
The number of employees was 988 (972) persons at the end of the reporting
period. 484 (389) employees were based in Finland, 90 (99) in Norway, 110 (101)
in Sweden, 69 (65) in Denmark and 235 (318) in the Baltic countries where the
Company divested its Estonian business in Q4/2016. The average number of
employees during the period was 967 (984).
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 2016 in the Financial Statements and Annual Report 2016, and on
the Company website www.affecto.com.
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.
On 2 January 2017, the Company announced that the market making for Affecto is
transferred to Nordea Bank AB (publ) as of 2 January 2017 due to the merger
between Nordea Bank Finland Plc and its parent company Nordea Bank AB (publ).
On 24 March 2017, the Company announced that the Board of Directors has
resolved to establish a new share-based incentive plan directed to Affecto’s
non-executive employees. Any rewards paid based on the plan will be paid partly
in Affecto Plc shares and partly in cash, and the combined maximum amount to be
paid corresponds to the value of 88,011 Affecto Plc shares, including the
proportion paid in cash. The new share-based incentive plan includes one
vesting period commencing 1 May 2017 and ending on 30 April 2019. The rewards
are based on selected program participants’ valid and continuing employment
during the vesting period.
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 the 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. 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
Annual General Meeting
Annual General Meeting of Affecto Plc (“AGM”) was held on 7 April 2017. The AGM
adopted the financial statements and discharged the members of the Board of
Directors and the CEO from liability for the financial year 2016. The meeting
approved the Board of Directors’ proposal to pay a dividend of EUR 0.16 per
share and the dividend was paid on 20 April 2017.
Aaro Cantell, Magdalena Persson, Olof Sand and Tuija Soanjärvi were re-elected
and Mikko Kuitunen and Timo Vaajoensuu were elected to the Board. Magdalena
Persson was elected as the Chairperson and Aaro Cantell as the Vice-Chairperson
of the Board.
Audit Committee: Tuija Soanjärvi (chairman) and Timo Vaajoensuu
People, Nomination and Compensation Committee: Magdalena Persson (chairperson)
Aaro Cantell and Olof Sand
The AGM approved all proposals made by the Board as described in the invitation
published on 10 March 2017. The resolutions of the AGM were published as a
stock exchange release on 7 April 2017 and can be found on the Company’s
website www.affecto.com.
Leadership Team Update
On 12 April 2017, the Company announced a Leadership Team Update according to
which Stig Sandberg, Håvard Ellefsen and Mikko Eerola left the Leadership Team.
With these changes, the Affecto Leadership Team is presently:
-- Juko Hakala, CEO
-- Iikka Lindroos, People Operations, Growth and Transformation, Deputy CEO
-- Martti Nurminen, CFO
-- Charlotte Darth, Managing Director, Sweden
-- Henri Engström, Managing Director, Affecto Industrial and Interim Managing
Director, Finland
Financial Calendar 2017
Affecto will publish the following financial reports during the course of the
year:
Interim Report 1 January – 30 June: 22 August 2017
Interim Report 1 January – 30 September: 7 November 2017
In addition, the Capital Markets Day 2017 will be held on 29 September 2017.
2017 Outlook
Affecto expects its FY ’17 revenue to be above the previous year (2016: 112.5
MEUR), and its FY ’17 operating profit to be at the same level or below the
previous year (2016: 6.7 MEUR).
The respective FY ‘17 operating profit outlook assumes IFRS3 related costs of
approximately 1.6 MEUR during FY ‘17 due to the acquisition of BIGDATAPUMP. The
respective IFRS3 related costs are based on the earn out element of the
acquisition and the amortization of the intangible assets and the costs didn’t
exist in FY ’16.
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) 1-3/17 1-3/16 2016 last
12m
---------------------------------
---------------------------------
Revenue 30 172 27 344 112 505 115 333
Other operating income - - 347 347
Changes in inventories of finished 31 40 86 77
goods and work in progress
Materials and services -5 907 -5 800 -26 271 -26 377
Personnel expenses -17 -16 -62 612 -63 826
733 518
Other operating expenses -4 501 -3 806 -16 528 -17 224
Other depreciation and amortization -205 -248 -861 -818
Operating profit 1 856 1 012 6 667 7 511
Financial income and expenses -31 -124 -586 -493
Profit before income tax 1 824 888 6 081 7 017
Income tax -572 -198 -1 359 -1 734
Profit for the period 1 252 690 4 721 5 283
Profit for the period
attributable to:
Owners of the parent company 1 252 690 4 721 5 283
Earnings per share
(EUR per share):
Basic 0.06 0.03 0.22 0.24
Diluted 0.06 0.03 0.22 0.24
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(1 000 EUR) 1-3/17 1-3/16 2016 last
12m
---------------------------------
---------------------------------
Profit for the period 1 252 690 4 721 5 283
Other comprehensive income
Items that may be reclassified subsequently to
the statement of income:
Translation difference -167 247 466 52
Total Comprehensive income 1 086 937 5 187 5 336
for the period
Total Comprehensive income
attributable to:
Owners of the parent company 1 086 937 5 187 5 336
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 3/2017 3/2016 12/2016
-------------------------------------------------------------
-------------------------------------------------------------
Non-current assets
Property, plant and equipment 1 225 1 035 1 295
Goodwill 65 385 62 560 62 215
Other intangible assets 274 100 63
Deferred tax assets 534 909 552
Trade and other receivables 112 122 93
67 531 64 726 64 218
Current assets
Inventories 424 344 390
Trade and other receivables 31 275 27 697 31 305
Current income tax receivables 779 1 065 787
Cash and cash equivalents 15 811 21 044 20 756
48 288 50 150 53 239
-------------------------------------------------------------
-------------------------------------------------------------
Total assets 115 819 114 876 117 456
Equity attributable to owners
of the parent Company
Share capital 5 105 5 105 5 105
Reserve of invested non-restricted 47 737 47 731 47 737
equity
Other reserves 858 858 858
Treasury shares -1 993 -2 056 -1 993
Translation differences -4 619 -4 671 -4 452
Retained earnings 18 116 16 289 16 864
-------------------------------------------------------------
-------------------------------------------------------------
Total equity 65 204 63 257 64 118
Non-current liabilities
Loans and borrowings 12 484 - 12 483
Deferred tax liabilities 42 176 4
12 526 176 12 487
Current liabilities
Loans and borrowings 4 000 18 492 4 000
Trade and other payables 33 273 32 086 36 104
Current income tax liabilities 591 465 529
Provisions 226 401 218
38 090 51 444 40 851
Total liabilities 50 616 51 620 53 338
-------------------------------------------------------------
-------------------------------------------------------------
Equity and liabilities 115 819 114 876 117 456
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 1-3/2017 1-3/2016 2016
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Cash flows from operating activities
Profit for the period 1 252 690 4 721
Adjustments to profit for the period 849 523 2 364
2 101 1 213 7 085
Change in working capital -3 727 -2 071 -2 283
Interest and other financial cost paid -12 -58 -225
Interest and other financial income received 13 18 55
Income taxes paid -483 -377 -1 026
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Net cash from operating activities -2 107 -1 275 3 606
Cash flows from investing activities
Acquisition of tangible and intangible assets -146 -154 -1 043
Proceeds from sale of tangible and - - 6
intangible assets - - 1 029
Proceeds from disposal of business
Acquisition of a business, net of cash received -2 683 - -
-----------------------------------------------------------------------------
Net cash from investing activities -2 829 -154 -8
Cash flows from financing activities
Repayments of current borrowings - - -20 500
Repayments of non-current borrowings - - -
Proceeds from non-current borrowings - - 18 482
Dividends paid to the owners - - -3 457
of the parent company
-----------------------------------------------------------------------------
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Net cash from financing activities - - -5 475
(Decrease)/increase in cash and cash equivalents -4 936 -1 429 -1 878
Cash and cash equivalents 20 756 22 375 22 375
at the beginning of the period
Foreign exchange effect on cash -9 98 259
Cash and cash equivalents 15 811 21 044 20 756
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 reserve y lat. earnin equity
l non-restricted s shares diff. gs
equity
Equity at 1 5 105 47 737 858 -1 993 -4 452 16 864 64 118
January
2017
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 1 252 1 252
Translation -167 -167
difference
s
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -167 1 252 1 086
compre-hen
sive income
--------------------------------------------------------------------------------
Equity at 5 105 47 737 858 -1 993 -4 619 18 116 65 204
31 March
2017
Equity attributable to owners of the parent
company
-------------------------------------------------------------
-------------------------------------------------------------
(1 000 EUR) Share Reserve of Other Treasur Trans Ret. Total
capita invested reserve y lat. earnin equity
l non-restricted s shares diff. gs
equity
Equity at 1 5 105 47 731 858 -2 056 -4 919 15 599 62 319
January
2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit 690 690
Translation 247 247
difference
s
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total 247 690 937
compre-hen
sive income
Share-based
payments
--------------------------------------------------------------------------------
Equity at 5 105 47 731 858 -2 056 -4 671 16 289 63 257
31 March
2016
2. Notes
2.1. Basis of preparation
This interim report has been prepared in accordance with the IFRS recognition
and measurement principles and in accordance with IAS 34, Interim Financial
reporting. The interim report should be read in conjunction with the annual
financial statements for the year ended 31 December 2016. In material respects,
the same accounting policies have been applied as in the 2016 annual
consolidated financial statements. The amendments to and interpretations of
IFRS standards that entered into force on 1 January 2017 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 revenue and result
(1 000 EUR) 1-3/17 1-3/16 2016 last 12m
----------------------------------
----------------------------------
Total revenue
Finland 13 978 11 206 48 061 50 834
Norway 5 682 5 579 21 816 21 919
Sweden 5 470 4 636 19 098 19 932
Denmark 3 038 3 197 12 998 12 839
Baltic 3 539 4 192 16 596 15 943
Other -1 535 -1 467 -6 065 -6 134
-------------------------------------------------------------------
Group total 30 172 27 344 112 505 115 333
Operational segment result
Finland 1 448 104 2 561 3 904
Norway 382 296 1 330 1 417
Sweden 431 324 1 652 1 760
Denmark 131 267 1 301 1 165
Baltic 560 355 1 233 1 437
Other -803 -334 -1 411 -1 880
-------------------------------------------------------------------
-------------------------------------------------------------------
Total operational segment result 2149 1 012 6 667 7 804
-------------------------------------------------------------------
IFRS 3 related costs 293 0 0 293
-------------------------------------------------------------------
Operating profit 1 856 1 012 6 667 7 511
Financial income and expenses -31 -124 -586 -493
-------------------------------------------------------------------
-------------------------------------------------------------------
Profit before income tax 1 824 888 6 081 7 017
Revenue by business lines
(1 000 EUR) 1-3/17 1-3/16 2016 last 12m
----------------------------------
----------------------------------
Information Management Solutions 29 103 26 112 107 293 110 284
Karttakeskus 2 675 2 412 10 449 10 712
Other -1 606 -1 180 -5 237 -5 663
-------------------------------------------------------------------
-------------------------------------------------------------------
Group total 30 172 27 344 112 505 115 333
2.3. Changes in intangible and tangible assets
(1 000 EUR) 1-3/2017 1-3/2016 1-12/2016
------------------------------
------------------------------
Carrying amount at the beginning of period 63 573 63 594 63 594
Additions 3 602 154 1 043
Disposals - - -342
Depreciation and amortization for the period -205 -248 -861
Exchange rate differences -84 195 139
---------------------------------------------------------------------------
Carrying amount at the end of period 66 885 63 695 63 573
2.4. Share capital, reserve of invested non-restricted equity and treasury
shares
(1 000 Number of shares Share Reserve of invested Treasury
EUR) outstanding capital non-restricted equity shares
----------------------------------------------------------------------
----------------------------------------------------------------------
1.1.2016 21 604 510 5 105 47 731 -2 056
31.3.2016 21 604 510 5 105 47 731 -2 056
1.1.2017 21 628 771 5 105 47 737 -1 993
31.3.2017 21 628 771 5 105 47 737 -1 993
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) 31.3.2017 31.12.2016
Loans from financial institutions, 12 484 12 483
non-current portion
Loans from financial institutions, 4 000 4 000
current portion
---------------------------------------------------------
---------------------------------------------------------
16 484 16 483
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) 31.3.2017 31.12.2016
Not later than one (1) year 2 652 2 807
Later than one (1) year, 4 418 4 410
but not later than five (5) years
Later than five (5) years 360 484
--------------------------------------------------------
Total 7 430 7 701
Other securities given on own behalf:
(1 000 EUR) 31.3.2017 31.12.2016
Pledges 52 31
Other guarantees 1 008 1 000
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) 1-3/2017 1-3/2016 1-12/2016
Salaries and other short-term employee benefits 731 523 1 995
Post-employment benefits 129 61 246
Termination benefits - - 112
Share-based payments - - -
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total 860 584 2 353
Purchases from related party:
(1 000 EUR) 1-3/20 1-3/20 1-12/2
17 16 016
Purchases from the entity that are controlled by key - 13 13
management personnel of the group
Outstanding balance of purchases from the entity that - - -
are controlled by key management personnel of the group
3. Key figures
1-3/17 1-3/16 2016 last 12m
----------------------------------
----------------------------------
Revenue, 1 000 eur 30 172 27 344 112 505 115 333
EBITDA, 1 000 eur 2 061 1 260 7 528 8 328
Comparable operating profit, 1 000 eur 2 149 1 012 6 347 7 484
Operational segment result, 2 149 1 012 6 667 7 804
1 000 eur
Operating result, 1 000 eur 1 856 1 012 6 667 7 511
Result before taxes, 1 000 eur 1 824 888 6 081 7 017
Profit attributable to the owners 1 252 690 4 721 5 283
of the parent company, 1 000 eur
EBITDA, % 6.8 % 4.6 % 6.7 % 7.2 %
Comparable operating profit % 7.1 % 3.7 % 5.6 % 6.5 %
Operational segment result, % 7.1 % 3.7 % 5.9 % 6.8 %
Operating result, % 6.2 % 3.7 % 5.9 % 6.5 %
Result before taxes, % 6.0 % 3.2 % 5.4 % 6.1 %
Net income for equity holders 4.2 % 2.5 % 4.2 % 4.6 %
of the parent company, %
Equity ratio, % 62.7 % 61.8 % 59.6 %
Net gearing, % 1.0 % -4.0 % -6.7 %
Interest-bearing net debt, 674 -2 552 -4 273
1 000 eur
Gross investment in non-current 146 154 1 043
assets (excl. acquisitions),
1 000 eur
Gross investments, % of revenue 0.5 % 0.6 % 0.9 %
Order backlog, 1 000 eur 52 002 48 151 55 033
Average number of employees 967 984 987
Earnings per share, eur 0.06 0.03 0.22 0.24
Earnings per share (diluted), 0.06 0.03 0.22 0.24
eur
Equity per share, eur 3.01 2.93 2.96
Average number of shares, 21 629 21 605 21 613 21 619
1 000 shares
Number of shares at the end of 21 629 21 605 21 629 21 629
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), expenses related to the
earn-out from acquisitions 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
Comparable operating profit = Operating profit – Items affecting
comparability.
Items affecting comparability Items affecting comparability are related to
restructuring measures and charges for events
or activities, which are not part of the
normal business operations such as, but not
limited to, IFRS 3 related costs and goodwill
impairments.
IFRS 3 related costs IFRS 3 related costs are amortizations on fair
value adjustments due to business
combinations and expenses related to the
earn-out from acquisitions.
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