Digia Oyj - Interim report (Q1 and Q3)

Digia Plc's Business Review January-September 2017: Net sales rose by 10 per cent in the third quarter.

Digia Plc
Stock exchange release
25 October 2017 at 8:00 am

Digia Plc's Business Review January-September 2017
Net sales rose by 10 per cent in the third quarter.

June-September 2017
  * Net sales EUR 20,9 (18,9) million, increase 10.3%
  * Operating result EUR -0.7 (1.1) million, -3.3% (6.0%) of net sales. The
    booking of one-off loss provision for the quarter and investments in the
    development of digital services burdened the result.
  * Earnings per share EUR -0.03 (0.04)

January-September 2017
  * Net sales EUR 68,3 (62,8) million, increase 8,7%
  * Operating result EUR 0,7 (3,8) million, 1,1% (6,1%) of net sales
  * Earnings per share EUR 0,01 (0,15)
  * Rights issue generated gross proceeds of about EUR 12,5 Million
  * Digia's net sales growth is expected to accelerate in 2017 (2016: net sales
    up 6.8%). The company expects its operating result to decline compared to
    2016 (2016: EUR 5.4 million).

Unless otherwise stated, the comparison figures provided in parentheses always
refer to the corresponding period of the previous year.

DIGIA PRESIDENT AND CEO TIMO LEVORANTA COMMENTS ON THE THIRD QUARTER OF 2017

"Digia's third-quarter net sales saw year-on-year growth of 10.3 per cent.
Demand for our projects and services has remained at a good level. Net sales
growth was particularly supported by good demand for both e-commerce and ERP
solutions, and progress with the income register project. In addition, the Omni
Partners Oy acquisition in the second quarter increased net sales in digital
services, in particular, compared to the previous year. Through the acquisition,
Digia strengthened its expertise in the digital marketing and e-business
development areas, as well as custom-designed solutions based on open source
technologies.

The project business accounted for EUR 50.6 (41.8) per cent and the service and
maintenance business for 49.4 (58.2) per cent of net sales. Share of the project
business increased due to our digital services projects and progress with the
income register project. Digia's long-term goal is to increase the service
business's share of net sales through service contracts that follow project
phases. The net sales of the product business generated 27.0 (28.7) per cent of
the company's net sales.

Due to delivery challenges in certain projects, we lowered our profitability
outlook for 2017. We booked a one-off loss provision for the third quarter, due
to which we posted a loss for that quarter. Our investments in the development
of digital services also burdened the result. Digia's operating result for the
third quarter was EUR -0.7 million and its operating margin stood at -3.3 per
cent. The required quality improvement measures and changes in practices have
been launched as corrective measures. We believe that the third-quarter loss was
a one off and that we will achieve a clearly positive operating result for the
fourth quarter.

The digitalisation megatrend is still gaining momentum. In this market, Digia is
a comprehensive provider from business design to service implementation. Digia's
competitive advantages are consultative dialogue with our customers and strong
technological expertise. Our strength is our deep understanding of the benefits
that digitalisation yields for our customers' business operations. Combined with
our wide-ranging understanding of how different services and solutions are
integrated into back-end systems and external data sources, this enables the
development of our customers' multichannel business operations. Digia is a
pioneer in modern integration solutions, such as API management.

Digia is a growth-focused, trustworthy and agile Finnish professional in the
Finnish IT sector. In 2017, we have invested in creating the foundations of
profitable growth. Our goal is to strengthen the company's position,
particularly in the growing markets for digital services, process digitalisation
and the service business. We are also actively seeking suitable acquisitions in
order to accelerate our growth."

KEY FIGURES

+---------------------------+------+------+------+------+------+--------+------+
|                           |  7-9/|  7-9/|Muutos|  1-9/|  1-9/|  Muutos|  2016|
|EUR 1,000                  |  2017|  2016|     %|  2017|  2016|       %|      |
+---------------------------+------+------+------+------+------+--------+------+
|Net sales                  |20,899|18,939| 10.3%|68,255|62,768|    8.7%|86,463|
+---------------------------+------+------+------+------+------+--------+------+
|Operating result           |  -691| 1,132|      |   749| 3,819|  -80.4%| 5,419|
+---------------------------+------+------+------+------+------+--------+------+
|- as a % of net sales      | -3.3%|  6.0%|      |  1.1%|  6.1%|        |  6.3%|
+---------------------------+------+------+------+------+------+--------+------+
|Result for the period      |  -805|   818|      |   156| 3,034|  -94.8%| 4,064|
+---------------------------+------+------+------+------+------+--------+------+
|- as a % of net sales      | -3.9%|  4.3%|      |  0.2%|  4.8%|        |  4.7%|
+---------------------------+------+------+------+------+------+--------+------+
|                           |      |      |      |      |      |        |      |
+---------------------------+------+------+------+------+------+--------+------+
|Return on equity, %        |      |      |      |  0.5%| 10.3%|        | 11.0%|
+---------------------------+------+------+------+------+------+--------+------+
|Return on investment, %    |      |      |      |  1.9%| 11.1%|        | 11.0%|
+---------------------------+------+------+------+------+------+--------+------+
|Interest-bearing           |      |      |      |17,040|14,709|   15.8%|13,686|
|liabilities                |      |      |      |      |      |        |      |
+---------------------------+------+------+------+------+------+--------+------+
|Cash and cash equivalents  |      |      |      |11,948| 1,027|1,063.0%| 1,994|
+---------------------------+------+------+------+------+------+--------+------+
|Net gearing, %             |      |      |      | 11.7%| 43.2%|        | 35.6%|
+---------------------------+------+------+------+------+------+--------+------+
|Equity ratio, %            |      |      |      | 53.2%| 50.1%|        | 49.8%|
+---------------------------+------+------+------+------+------+--------+------+
|                           |      |      |      |      |      |        |      |
+---------------------------+------+------+------+------+------+--------+------+
|Employees, end of period   |      |      |      |   978|   839|   16.6%|   872|
+---------------------------+------+------+------+------+------+--------+------+
|Employees, average         |   970|   822| 18.0%|   942|   790|   19.3%|   810|
+---------------------------+------+------+------+------+------+--------+------+
|Total shareholders' equity |      |      |      |43,439|31,691|   37.1%|32,814|
+---------------------------+------+------+------+------+------+--------+------+
|Balance sheet total        |      |      |      |82,389|64,400|   27.9%|66,390|
+---------------------------+------+------+------+------+------+--------+------+
|Earnings per share         | -0.03|  0.04|      |  0.01|  0.15|  -95.4%|  0.20|
+---------------------------+------+------+------+------+------+--------+------+

OUTLOOK FOR 2017

Digia's net sales growth is expected to accelerate in 2017 (2016: net sales up
6.8%). The company expects its operating result to decline compared to 2016
(2016: EUR 5.4 million).

BRIEFING INVITATION

Digia will hold a briefing for analysts on Wednesday 25 October 2017 at 11 am,
in the Tapiola cabinet at Hotel Scandic Simonkenttä, Simonkatu 9, 00100
Helsinki, Finland. Welcome.

The material and presentation for the event will be available from 11 am on 25
October 2017 in the Investors section of the company's website:
www.digia.com/en/investors/reports-and-presentations.

FURTHER INFORMATION

President and CEO Timo Levoranta, tel. (exchange) +358 (0)10 313 3000

DISTRIBUTION

Nasdaq Helsinki
Key media
www.digia.com

Digia is a profitably growing IT service company that helps its customers
harness digital opportunities. As a visionary partner, Digia develops and
innovates solutions that support business operations together with its
customers. We adapt our expertise to their specific industries to help them
develop digital services, manage operations and utilise information. We employ
nearly 1,000 experts in Finland and Sweden. We are expanding our international
presence together with our customers. Digia's net sales in 2016 totalled EUR
86.5 million. The company is listed on Nasdaq Helsinki (DIGIA). www.digia.com


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