AFFECTO PLC STOCK EXCHANGE RELEASE 6 MAY 2008 at 09:30 AFFECTO PLC'S INTERIM REPORT 1-3/2008 GROUP KEY FIGURES MEUR 1-3/2008 1-3/2007 2007 Net sales 33.6 17.6 97.5 Operating result before 3.6 2.4 13.3 IFRS3 items % of net sales 10.8 13.5 13.6 Operating result 2.9 2.0 10.8 % of net sales 8.7 11.4 11.0 Result before taxes 2.0 1.9 9.5 Result for the period 1.5 1.4 7.0 Equity ratio, % 42.1 50.1 41.9 Net gearing, % 60.1 29.9 53.9 Earnings per share, eur 0.07 0.08 0.38 Earnings per share (diluted), eur 0.07 0.08 0.38 Equity per share, eur 2.82 2.26 2.93 CEO Pekka Eloholma comments the first quarter 2008: "The first quarter was characterized by strong organic growth (approx. 16%). We grew clearly faster than markets. Due to last year's Component Software acquisition, the total growth in net sales was 91%, as net sales reached 33.6 MEUR. Operating result grew also and was 2.9 MEUR (9% of net sales)." "During the quarter, net sales grew organically compared to Q1/2007 in all our reported geographical segments. Sales growth in Finland and Baltic was approx. 20%. Especially delighting was the good growth in sales of Business Intelligence solutions in all Nordic countries. Profitability improved clearly in Finland and weakened somewhat in Baltic." "The order backlog grew strongly during the quarter to an all-time-high level of over 50 MEUR. This contributes to our belief in positive development of our business." "Positive development is expected to continue during year 2008, but the effects of the global economic developments on Affecto's business environment are hard to estimate. The company seeks to reach net sales of approx. 140 MEUR in 2008. The profitability (EBIT margin) of the whole year 2008 is expected not to materially change from 2007." Additional information: CEO Pekka Eloholma, +358 205 777 737 CFO Satu Kankare, +358 205 777 202 SVP, M&A, Hannu Nyman, +358 205 777 761 This report is unaudited. The amounts in this report have been rounded from exact numbers. INTERIM REPORT 1-3/2008 Affecto builds versatile IT solutions for companies and organisations to improve their efficiency in business and to support the related decision- making. With Affecto's Business Intelligence solutions organisations are able to integrate strategic targets with their business management. Business Intelligence solutions enable the further processing and utilisation of information generated by ERP and other IT systems. The company also develops operational solutions, such as Geographic Information Systems (GIS), Enterprise Content Management (ECM) and versatile customer specific software services. These solutions assist organisations in collecting, organising and analysing available digital information in support of their business processes. Affecto offers Business Intelligence solutions in its operating areas in the Nordic countries and Baltic countries. In operational solutions, the company has a presence in Finland, Norway and in the Baltic region. Affecto is headquartered in Helsinki, Finland. The company has subsidiaries in Finland, Sweden, Norway, Denmark, Estonia, Lithuania, Latvia and Poland. NET SALES Affecto's net sales in 1-3/2008 was 33.6 MEUR (1-3/2007: 17.6 MEUR). Net sales in Finland was 11.7 MEUR (9.8 MEUR), in Baltic area 5.5 MEUR (4.6 MEUR), 6.1 MEUR in Sweden (3.3 MEUR) and 10.3 MEUR (0.0 MEUR) in Norway & Denmark. Sales growth was 91%. The sales grew organically in Finland and in Baltic by approx. 20%. In line with the normal annual cycle, the net sales in first quarter was clearly below the fourth quarter. Additionally Easter clearly decreased the number of available workdays in the first quarter. Sales by geographical segments based on location of assets Net sales, MEUR 1-3/2008 1-3/2007 2007 Finland 11.7 9.8 41.7 Baltic 5.5 4.6 22.9 Sweden 6.1 3.3 17.7 Norway & Denmark 10.3 0.0 15.2 Eliminations 0.0 0.0 0.0 Group total 33.6 17.6 97.5 The sales growth was based on good demand for services in all our market areas. Net sales of BI segment was 19.4 MEUR (7.5 MEUR), Operational Solutions 11.3 MEUR (8.3 MEUR) and Geographic Information Services 3.0 MEUR (1.9 MEUR). The acquisition done in 2007 has had impact mostly on the BI segment and to some extent also to Operational solutions. PROFIT Affecto's EBIT was 2.9 MEUR (2.0 MEUR). EBIT in Finland was 1.9 MEUR (0.9 MEUR), Baltic EBIT was 0.7 MEUR (1.0 MEUR), EBIT in Sweden was 0.4 MEUR (0.4 MEUR) and EBIT in Norway & Denmark was 0.4 MEUR (0.0 MEUR). Operating result by geographical segments based on location of assets Operating result, MEUR 1-3/2008 1-3/2007 2007 Finland 1.9 0.9 4.4 Baltic 0.7 1.0 5.4 Sweden 0.4 0.4 1.5 Norway & Denmark 0,4 0.0 1.2 Group management -0.6 -0.4 -1.7 Group total 2.9 2.0 10.8 According to IFRS3 requirements, 1-3/2008 EBIT includes 0.7 MEUR (0.4 MEUR) of amortization of intangible assets related to acquisitions. A significant part of the amortization is related to Sweden and Norway & Denmark segments. In year 2008 the IFRS3 amortization is estimated to total 2.9 MEUR and in 2009 approx. 2.8 MEUR. The profitability improved especially in Finland. The Baltic profitability returned to more normal level from last year's exceptionally good level and the quarter was also burdened by certain one-off items. R&D expenditure totaled 0.6 MEUR (0.2 MEUR), i.e. 1.7% of net sales (0.9%). The expenditure has been booked as costs, except in Contempus ECM business, where 0.1 MEUR has been capitalized in balance sheet and a similar amount of earlier capitalizations has been amortized. The financial costs grew by over 0.2 MEUR due to change in the fair value of the interest swap taken for the bank loans. The change has no effect on cash flow. Taxes for the period have been booked as taxes. Net profit for the period was 1.5 MEUR, while it was 1.4 MEUR last year. The net profit increased less than EBIT partially due to growth in non-cash financial costs and due to increase in effective tax rate. Order backlog totaled 51.2 MEUR at the end of period (23.2 MEUR). Compared to net sales, Baltic has longer order backlog than other parts of the group. Affecto has a well diversified customer base. Ten largest customers generated approx. 20% of group revenue in 2007. FINANCE AND INVESTMENTS At the end of the reporting period, Affecto's balance sheet totaled 154.2 MEUR (Q1/2007: 80.2 MEUR). Significant part of the growth is due to the acquisition of Component Software Group ASA in August 2007. Equity ratio was 42.1 (50.1%) and net gearing was 60.1% (29.9%). The additional consideration for Intellibis AB, acquired in 2006, was determined to be 3.92 MEUR and it was paid during first quarter. The financial loans were 46.9 MEUR as at 31 March 2008. The interest-bearing net debt was 36.4 MEUR. The dividend of 3.4 MEUR decided in AGM on 31 March 2008 is booked as non-interest bearing debt. The company's cash and liquid assets were 10.5 MEUR (7.0 MEUR). Cash flow from operating activities for the reported period was 2.0 MEUR (2.5 MEUR) and cash flow from investments was -4.4 MEUR (-0.5 MEUR). Investments in non-current assets excluding acquisitions were 0.8 MEUR (0.4 MEUR) during the period. Affecto has distributed dividends of 3.4 MEUR (previous year 1.7 MEUR) from the profit of the year 2007. Dividend was paid on 10 April 2008 and has been booked as non-interest bearing debt in this interim report. EMPLOYEES The number of employees was 1136 persons at the end of the reporting period (778 persons). Approx. 370 persons were based in Finland, 160 in Sweden, 180 in Norway & Denmark, and 430 in Baltic countries. The average number of employees during the period was 1129 persons (767). The acquisition of Component Software last year increased the personnel by over 200 employees. BUSINESS REVIEW During year 2008 Affecto has continued to implement its growth strategy. The group's business is managed through four country units. Finland, Baltic, Sweden and Norway & Denmark are also the primary IFRS segments. Finland In 1-3/2008 net sales in Finland grew organically by approx. 20% to 11.7 MEUR (9.8 MEUR). EBIT clearly improved from last year and was 1.9 MEUR (0.9 MEUR). The business developed steadily during the period. The demand for various services was reasonably good and was increasing especially regarding BI services. The unit prices of consultant work have risen somewhat. The profitability of the Geographic Information Services (formerly Cartographic solutions) was clearly better than last year. The growth of IT services market in Finland is rather moderate, but the growth of our specialty segments like BI is expected to exceed the average market growth. The customers' activity has continued to be good. New orders were received from, among others, Ministry of Education, Finnish Defense Forces and Nokia. Baltic (Lithuania, Latvia, Estonia, Poland) The Baltic business mostly consists of projects related to large customer- specific systems. Projects are typically larger and tender processes longer than in Finland or in Nordic. The business is mostly classified to Operational solutions, but also includes BI solutions. In 1-3/2008 the Baltic net sales grew organically by approx. 20% and was 5.5 MEUR (4.6 MEUR). Baltic EBIT was weaker than last year and was 0.7 MEUR (1.0 MEUR). The profitability was weaker especially in Latvia, where the company received a negative verdict from Supreme court in the litigation mentioned in our annual report. The cost impact of approx. 0.1 MEUR was booked to Q1 result. The subsidiary in Poland, being in build-up phase, made minor loss. General wage inflation in Baltic countries is estimated to be around 15%, which also contributes to cost pressure. The business has developed favorably, and the resource utilization rate was high in all countries. The steady continuing work on large projects has helped to keep the utilization rate very high during the whole period. The public sector entities in Baltic have continued to invest in IT systems. The order backlog offers stable resource utilization for near future. Affecto will deliver an IT solution to Lithuanian Ministry of Education to improve processes of education institutions and an EMCS system to Latvian State Revenue Service. Sweden In addition of Affecto's previous Swedish operations, the segment includes the Swedish BI operations of Component Software since September 2007. In 1-3/2008 the net sales in Sweden was 6.1 MEUR (3.3 MEUR) and EBIT 0.4 MEUR (0.4 MEUR). The reported EBIT includes approx. 0.3 MEUR IFRS3 amortization. The integration of Swedish operations and the adoption of the name "Affecto" is estimated to have caused approx. 0.2 MEUR costs in Q1. The integration work was finalized during the quarter, when the BI units in Stockholm moved to common premises. The business in Sweden has developed positively in 2008. Prices have slightly increased and the utilization rate has remained high. The customers' activity has remained good with the exception of weakened finance sector. Demand for experienced workforce is tight. During the period new orders were received from e.g. Svenska Spel, Folksam and Astra Zeneca. The demand for general IT services in Sweden is expected to grow by some 5%, while the BI services are expected to grow faster. Demand for experienced BI resources is high, which may increase personnel turnover in the market. Norway & Denmark The net sales was 10.3 MEUR in 1-3/2008 and EBIT was 0.4 MEUR. The reported EBIT was negatively affected by an IFRS3 amortization of 0.3 MEUR. Business Intelligence business developed positively and especially the growth of consulting services was good. The price development has been mildly positive thanks to good demand for services. The Affecto name has been adopted both in Denmark and Norway. During the period, new orders were received from e.g. Bank Santander and Kredittillsynet. The Contempus business, an ECM business reported as part of Operational Solutions, also developed steadily and grew compared to previous year. The sales efforts were increasingly aimed outside Nordic countries. Business review by secondary segments Q1/2008 Business intelligence (BI) net sales grew by 161% to 19.4 MEUR (7.4 MEUR). The growth is explained to some extent by the acquisition of Component Software since September 2007, but also the organic growth has been good in all countries. Customers' interest is increasingly focusing on larger solutions. Customers see BI solutions as tools for improving their own efficiency and controllability. According to Gartner's recent research, the global BI solution market is expected to grow annually by over 8% until 2012. The recent acquisitions where the largest global software companies have acquired BI software producers highlight the interest for the sector. The most recent examples are the SAP's acquisition of Business Objects and IBM's acquisition of Cognos. Net sales of Operational Solutions grew by 36% and was 11.3 MEUR (8.3 MEUR). There was growth both in Finland and in Baltic, as large projects continued steadily. The insurance solution project in South Africa continued and may lead to a new project to the same client, and also the project in Poland continued. Affecto has established a subsidiary in Poland in order to be able to offer its insurance sector related services also there. In Finland, the demand for solutions was good and the utilization rate of project resources was good. The demand for Norwegian Contempus solutions grew moderately. Net sales of the Geographic Information Services business was 3.0 MEUR (1.9 MEUR). The demand for digital geographic content and related services grew. Also the sales of printed map products developed well. The profitability of the unit improved from last year's level. ASSESSMENT OF RISKS AND UNCERTAINTIES Affecto operates in the market that is directly affected by changes in the general economic conditions and the operating environments of its customers. A general economic downturn may lead to a decrease in overall customer demand for services. The competition in market tightens continuously. This could have a negative effect on the business, operating results and financial condition of Affecto. Affecto's continued success is very much dependent on its management team and personnel. The loss of the services of any member of its senior management or other key employee could have a negative impact on Affecto's business and the ability of the company to implement its strategy. In addition, Affecto's success depends on its ability to hire, develop, train, motivate and retain skilled professionals on its staff. Affecto's success depends also on good customer relationship. Affecto has a well diversified customer base. Ten largest customers generated approx. 20% of group revenue in 2007. Acquisition of Component Software in 2007 has increased the amount of (third party) licenses sold and their relative share of Affecto's net sales. This will increase the fluctuation in sales between quarters and will increase the difficulty of accurately forecasting the quarters. In 2007 Component Software's license sales totaled approx. 7 MEUR. Other parts of Affecto had license sales of approx. 6 MEUR in 2007. The license sales have mostly impact on the last month of each quarter and especially on the fourth quarter. The damage risks of Affecto are normally related to personnel, property, processes and data processing. The realization of these risks might lead to injuries of personnel, property damages or interruption of business. In the operations the target of Affecto is to prevent these risks to realize by quality operations and anticipatory risk management actions. The realization of such risks is mainly prevented by guidelines for occupational health, work safety and information security as well as emergency plan. The damage risks, which can not be prevented by own actions, are covered with adequate insurances. Currently, corporate tax rates in Latvia and Lithuania are below those of several other member states of the European Union, and therefore Latvia and Lithuania provide a favorable environment for commercial enterprises. Furthermore, the income tax regulation of Latvia and Lithuania allow for local businesses to structure their operations in a cost-efficient way. For example, certain software development activities are treated as so-called creative activities, which is cost beneficial for the enterprises. When joining the European Union on 1 May 2004, Latvia and Lithuania committed to the ongoing harmonization of the laws and regulations of the member states. At present, the European Union leaves regulation relating to taxation to the discretion of its member states. However, there can be no assurances that the European Union will not impose requirements on its member states to harmonize their taxation system which, in the case of Latvia and Lithuania, could result in an increase in corporate tax rates and restrictions on the opportunities of local business to structure their operations to the extent currently possible. Furthermore, there can be no assurances that Latvia and Lithuania will not independently decide to implement tax reforms or that the interpretation of current tax laws by courts or fiscal authorities will not be changed retroactively with similar effects. Harmonization imposed by the European Union or domestic tax reforms or changes in the interpretation of current tax laws by courts or fiscal authorities in Latvia and Lithuania could have a material adverse effect on the business, operating results and financial condition of Affecto. In seeking future growth, the strategy of Affecto is partially based on expansion through acquisitions of other operators in the IT services market. The inability to find new target companies or the lower than expected profitability of acquisitions made, could have a material adverse effect on the business, operating results and financial condition of Affecto. The board of directors and the audit committee is responsible for Affecto's internal control and risk management. Company's management is responsible for and performs practically the internal control and risk management. ANNUAL GENERAL MEETING AND GOVERNANCE The Annual General Meeting of Affecto Plc, which was held on March 31, 2008, adopted the financial statements for 1.1.-31.12.2007 and discharged the members of the Board of Directors and the CEO from liability. Approximately 31 percent of Affecto's shares and votes were represented in the Meeting. The Annual General Meeting decided that a dividend of EUR 0.16 per share be distributed for the year 2007. Aaro Cantell, Pyry Lautsuo, Heikki Lehmusto, Esko Rytkönen and Haakon Skaarer were re-elected as members of the Board of Directors. Immediately after the Annual General Meeting the organization meeting of the Board of Directors was held and Aaro Cantell was re-elected Chairman of the Board. The APA firm PricewaterhouseCoopers Oy was re-elected auditor of the company with Merja Lindh, APA, as auditor in charge. The Annual General Meeting accepted the Board's proposals for issuing stock options (Stock options 2008) and for changing the terms of the Stock options 2006. The Annual General Meeting accepted the Board's proposals for the authorisations given to the Board of Directors. According to the Articles of Association, the General Meeting of Shareholders annually elects the Board of Directors by a majority decision. The term of office of the board members expires at the end of the next Annual General Meeting of Shareholders following their election. The Board appoints the CEO. The Articles of Association do not contain any special rules for changing the Articles of Association or for issuing new shares. Mr. Darius Lazauskas has been appointed as a member of the group management team as of 1 February 2008. THE AUTHORIZATIONS GIVEN TO THE BOARD OF DIRECTORS The Board did not use the authorizations given by the previous Annual General Meeting. Those authorizations ended on 31 March 2008. The complete contents of the new authorizations given by the Annual General Meeting held on 31 March 2008 have been published in the stock exchange release regarding the Meetings' decisions. The Annual General Meeting decided to authorize the Board of Directors to decide to issue new shares and to convey the company's own shares held by the company in one or more tranches. The share issue may be carried out as a share issue against payment or without consideration on terms to be determined by the Board of Directors and in relation to a share issue against payment at a price to be determined by the Board of Directors. A maximum of 4 200 000 new shares may be issued. A maximum of 2 100 000 own shares held by the company may be conveyed. In addition, the authorization includes the right to decide on a share issue without consideration to the company itself so that the amount of own shares held by the company after the share issue is a maximum of one-tenth (1/10) of all shares in the company. The authorization shall be in force until the next Annual General Meeting. The Annual General Meeting decided to authorize the Board of Directors to decide to acquire the company's own shares with distributable funds. A maximum of 2 100 000 shares may be acquired. The authorization shall be in force until the next Annual General Meeting. SHARES AND TRADING The company has only one share series, and all shares have similar rights. As at 31 March 2008, Affecto Plc's share capital consisted of 21 516 468 shares. The company owns 36 738 treasury shares, which corresponds to 0.2% of all shares. In 1-3/2008, the highest share price was 4.33 euro, lowest price 3.35 euro, average price 3.79 euro and closing price 3.86 euro. Trading volume was 1.9 million shares, corresponding to 35% (annualized) of the number of shares at the end of period. The market value of shares was 82.9 MEUR at the end of the period. SHAREHOLDERS No flagging announcements have been published during 2008. The company had total of 1288 owners on March 31, 2008 and the foreign ownership was 30%. The list of the largest owners can be viewed in the company's web site. Information about ownership structure and option program is included as a separate section in the financial statements. The ownership of board members, CEO and their controlled corporations totaled approx. 6.0% (5.7% shares and 0.3% options). EVENTS AFTER THE REVIEW PERIOD Affecto has sold its office in Vilnius, Lithuania at end of April for approx. 1.3 MEUR. The company will book a capital gain of approx. 0.6 MEUR in second quarter results. Since 31 December 2007, the property has been booked in the balance sheet under "Assets held for sale". After the sale Affecto does not own real estate property. STRATEGIC OBJECTIVES The company has two strong business lines: the strongest growth expectations are focused on the growing Business Intelligence market but at the same time the company wants to further strengthen its position in delivering demanding and customer specific operational IT solutions. The company aims to be the leading Business Intelligence solution provider in the Nordic, Baltic and CEE regions. Furthermore, the company aims to be the most competent and quality focused provider of geographic information systems (GIS), enterprise content management (ECM) and other operational solutions in selected industries and regions. The growth target for the company for 2008-2009 is that net sales exceed 160 million euros in 2009. The growth target will be reached through organic growth supplemented by acquisitions. At the same time the company seeks to be one of the most profitable IT services company within its market region. FUTURE OUTLOOK Positive development is expected to continue during year 2008, but the effects of the global economic developments on Affecto's business environment are hard to estimate. The company seeks to reach net sales of approx. 140 MEUR in 2008. The profitability (EBIT margin) of the whole year 2008 is expected not to materially change from 2007. The company does not provide exact guidance for net sales or EBIT development, as single projects and timing of license sales may have large impact on quarterly sales and profit. Affecto Plc Board of Directors It is possible to order Affecto's stock exchange releases to be delivered automatically by e-mail. Please visit the Investors section of the company website: www.affecto.com A briefing for analysts and media will be arranged at 11:00 at Restaurant Savoy, Eteläesplanadi 14, Helsinki. ----- Financial information: 1. Income statement, balance sheet, cash flow statement and statement of changes in shareholders' equity 2. Notes 3. Key figures 4. Calculation of key figures 1. Income statement, balance sheet, cash flow statement and statement of changes in shareholders' equity CONSOLIDATED INCOME STATEMENT (1 000 EUR) 1-3/08 1-3/07 2007 Net sales 33 599 17 576 97 474 Other operating income 203 0 80 Changes in inventories of 66 173 109 finished goods and work in progress Materials and services -6 020 -2 689 -19 851 Personnel expenses -18 636 -9 518 -48 635 IFRS3 amortization -719 -361 -2 536 Other depreciation, amortization -414 -275 -1 231 and impairment charges Other operating expenses -5 171 -2 900 -14 651 Operating result 2 907 2 006 10 758 Finance costs (net) -867 -147 -1 300 Result before income tax 2 040 1 860 9 458 Income tax -530 -422 -2 477 Result for the period 1 510 1 438 6 981 Attributable to: Equity holders of the Company 1 510 1 438 6 981 Minority interest 0 0 0 Earnings per share for result attributable to the equity holders of the Company (EUR per share) Basic 0.07 0.08 0.38 Diluted 0.07 0.08 0.38 CONSOLIDATED BALANCE SHEET (1 000 EUR) 3/2008 3/2007 12/2007 Non-current assets Tangible assets 2 255 2 260 1 939 Goodwill 83 629 43 845 84 196 Other intangible assets 17 401 7 009 18 249 Deferred tax assets 2 298 634 2 297 Available-for-sale financial assets 33 57 64 Other non-current receivables 169 96 190 105 785 53 900 106 936 Current assets Inventories 1 839 2 186 1 792 Trade receivables 23 723 9 799 28 848 Other receivables 10 373 5 885 9 876 Current income tax receivables 480 1 057 166 Available-for-sale financial assets 106 560 106 Financial assets at fair value through 0 56 35 profit or loss Restricted cash 645 395 659 Cash and cash equivalents 10 530 6 330 12 974 47 697 26 267 54 455 Assets held for sale 679 0 679 Total assets 154 161 80 167 162 070 Equity attributable to equity holders of the Company Share capital 5 105 5 105 5 105 Share premium 25 404 25 404 25 404 Reserve of invested non-restricted 21 188 1 960 21 188 equity Other reserves 140 15 108 Treasury shares -106 -106 -106 Retained earnings 8 795 6 025 11 265 60 526 38 402 62 964 Minority interest 0 0 0 Total shareholders' equity 60 526 38 402 62 964 Non-current liabilities Borrowings 43 911 14 014 43 906 Deferred tax liabilities 4 961 1 901 5 159 Other long-term liabilities 612 2 815 532 49 484 18 730 49 597 Current liabilities Borrowings 3 000 4 616 3 000 Trade payables 5 293 2 259 6 965 Financial liabilities at fair value 190 0 0 through profit or loss Other liabilities 33 563 14 771 38 138 Current income tax liabilities 2 104 1 390 1 407 44 151 23 036 49 510 Total liabilities 93 635 41 765 99 107 Total shareholders' equity and 154 161 80 167 162 070 liabilities CONSOLIDATED CASH FLOW STATEMENT (1 000 EUR) 1-3/2008 1-3/2007 2007 Cash flows from operating activities Result for the period 1 510 1 438 6 981 Adjustments to profit for the period 2 431 1 233 7 842 3 941 2 671 14 823 Change in working capital -964 260 -1 312 Interest and other finance cost paid -707 -153 -1 689 Interest and dividend received 99 16 364 Income taxes paid -324 -308 -1 751 Net cash generated by operating activities 2 045 2 486 10 434 Cash flows from investing activities Acquisition of subsidiaries, net of cash -3 925 -107 -26 967 acquired Purchases of tangible and intangible assets -760 -372 -1 410 Proceeds from sale of tangible and 270 0 35 intangible assets Sale of business/subsidiaries 0 0 44 Net cash used in investing activities -4 415 -479 -28 299 Cash flow from financing activities Issue of share capital 0 0 -777 Increase of interest-bearing liabilities 0 0 48 400 Repayments of interest-bearing liabilities 0 -417 -20 531 Dividends paid to company's shareholders 0 0 -1 698 Net cash generated in financing activities 0 -417 25 394 (Decrease)/increase in cash and cash -2 370 1 590 7 530 equivalents Cash and cash equivalents at the beginning 12 974 5 485 5 485 of the period Translation adjustment -73 -55 -42 Cash and cash equivalents at the end of the 10 530 7 020 12 974 period STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (1 000 EUR) Share Share Reserve of Other Trea- Ret. Mino- Total capital premium invested reserve sury earn- rity equity non- s shares ings & inte- restricted trans- rest equity lat. diff. Shareholders' 5 105 25 404 21 188 108 -106 11 265 0 62 964 equity 1 January 2008 Translation -543 -543 differences Share options 32 32 Result for the 1 510 1 510 period Dividends -3 437 -3 437 Shareholders' 5 105 25 404 21 188 140 -106 8 795 0 60 526 equity 31 March 2008 (1 000 EUR) Share Share Reserve of Other Trea- Ret. Mino- Total capital premium invested reserve sury earn- rity equity non- s shares ings & inte- restricted trans- rest equity lat. diff. Shareholders' 5 105 25 404 1 960 11 -106 6 717 0 39 092 equity 1 January 2007 Translation -433 -433 differences Share options 3 3 Result for the 1 438 1 438 period Dividends -1 698 -1 698 Shareholders' 5 105 25 404 1 960 15 -106 6 025 0 38 402 equity 31 March 2007 2. Notes 2.1. Basis of preparation This interim report has been prepared in accordance with the IFRS recognition and measurement principles and applying the same accounting policies as in the 2007 annual consolidated financial statements. Forthcoming standards and interpretations are presented in the accounting policies in Annual Report 2007 This interim report does not comply with all of the requirements of IAS 34 Interim Financial Reporting. The condensed interim financial report should be read in conjunction with the annual financial statements for the year 2007. The accounting for Component Software Group ASA, acquired in August 2007, has been determined provisionally in this report. The allocation of purchase consideration to identifiable assets and liabilities has not been completed. 2.2. Segment information Primary reporting format - geographical segments based on location of assets Segment result: (1 000 EUR) 1-3/08 1-3/07 1-12/07 Total sales Finland 11 749 9 754 41 707 Baltic countries 5 487 4 570 22 918 Sweden 6 090 3 250 17 654 Norway & Denmark 10 273 0 15 195 Eliminations 0 2 0 Group total 33 599 17 576 97 474 Segment result (operating result) Finland 1 920 933 4 406 Baltic countries 733 1 046 5 390 Sweden 420 398 1 468 Norway & Denmark 400 0 1 199 Group management -566 -371 -1 705 Group total 2 907 2 006 10 758 Secondary reporting format - business segments Segment revenue: (1 000 EUR) 1-3/08 1-3/07 1-12/07 Total sales BI 19 357 7 416 48 093 Operational Solutions 11 289 8 276 39 900 Geographic Information 2 953 1 882 9 481 Services Other (incl. 0 2 0 eliminations) Group total 33 599 17 576 97 474 2.3. Contingencies and commitments The future aggregate minimum lease payments under non-cancelable operating leases: 1 000 EUR 31.3.2008 31.12.2007 Not later than one (1) year 2 897 3 013 Later than one (1) year, but not later than 4 706 5 197 five (5) years Later than five (5) years 0 0 7 603 8 210 Guarantees: 1 000 EUR 31.3.2008 31.12.2007 Debt secured by a mortgage Financial loans 47 000 47 000 The above-mentioned debts are secured by bearer bonds with capital value of 52.5 million euro. The bonds are held by Nordea Pankki Suomi Oyj and secured by a mortgage on company assets of the group companies. In addition, the shares in Affecto Finland Oy and Affecto Norway AS have been pledged to secure the financial loans above. Other securities given on own behalf: 31.3.2008 31.12.2007 Pledges 762 855 Pledges given on own behalf consist of restricted cash of 0.2 MEUR (0.3 MEUR), time deposits of 0.3 MEUR (0.3 MEUR) and short term receivables at an amount of 0.3 MEUR (0.3 MEUR). Derivative contracts 1 000 EUR 31.3.2008 31.12.2007 Interest rate swaps: Nominal value 23 500 23 500 Fair value -190 35 3. Key figures 1-3/08 1-3/07 2007 Net sales, 1 000 eur 33 599 17 576 97 474 EBITDA, 1 000 eur 4 040 2 642 14 525 Operating result before IFRS3 3 626 2 367 13 294 amortization, 1 000 eur Operating result, 1 000 eur 2 907 2 006 10 758 Result before taxes, 1 000 eur 2 040 1 860 9 458 Net income for equity holders 1 510 1 438 6 981 of the parent company, 1 000 eur EBITDA, % 12.0 % 15.0 % 14.9 % Operating profit before IFRS3 10.8 % 13.5 % 13.6 % depreciation, % Operating result, % 8.7 % 11.4 % 11.0 % Result before taxes, % 6.1 % 10.6 % 9.7 % Net income for equity holders 4.5 % 8.2 % 7.2 % of the parent company, % Equity ratio, % 42.1 % 50.1 % 41.9 % Net gearing, % 60.1 % 29.9 % 53.9 % Interest-bearing net debt, 36 381 11 480 33 933 1 000 eur Gross investment in non-current 760 372 1 410 assets (excl. acquisitions), 1 000 eur Gross investments, % of sales 2.3 % 2.1 % 1.4 % Research and development costs, 567 157 910 1 000 eur R&D -costs, % of sales 1.7 % 0.9 % 0.9 % Order backlog, 1 000 eur 51 192 23 207 41 560 Average number of employees 1 129 767 897 Earnings per share, eur 0.07 0.08 0.38 Earnings per share (diluted), 0.07 0.08 0.38 eur Equity per share, eur 2.82 2.26 2.93 Average number of shares, 1 000 21 480 16 980 18 533 shares Number of shares at the end of 21 480 16 980 21 480 period, 1 000 shares Calculation of key figures EBITDA = Earnings before interest, taxes, depreciation and amortization Equity ratio, % = Shareholders' equity + minority *100 interest ________________________________ Total assets - advances received Gearing, % = Interest-bearing liabilities - *100 cash, bank receivables and securities held as financial asset __________________________________ Shareholders' equity + minority interest Interest-bearing net debt = Interest-bearing liabilities - cash and bank receivables Earnings per share (EPS) = Result for the period to equity holders of the Company ______________________________________ Adjusted average number of shares during the period Equity per share = Shareholders' equity _______________________________________ _________ Adjusted number of shares at the end of the period Market capitalization = Number of shares at the end of period (excluding treasury shares) x share price at closing date -----