Helsinki, 2014-10-30 11:30 CET (GLOBE NEWSWIRE) -- AFFECTO PLC -- INTERIM REPORT -- 30 OCTOBER 2014 at 12.30
Affecto Plc's Interim Report 1-9/2014
Group key figures
| MEUR | 7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m |
| Net sales | 25.7 | 27.5 | 89.9 | 96.7 | 132.9 | 126.1 |
| Operational segment result | 2.9 | 2.5 | 6.1 | 7.5 | 10.3 | 8.8 |
| % of net sales | 11.4 | 9.0 | 6.8 | 7.8 | 7.7 | 7.0 |
| Operating profit | 2.5 | 2.0 | 4.5 | 6.0 | 8.3 | 6.8 |
| % of net sales | 9.7 | 7.1 | 5.0 | 6.2 | 6.2 | 5.4 |
| Profit before taxes | 2.3 | 2.0 | 4.0 | 5.8 | 8.0 | 6.2 |
| Profit for the period | 1.8 | 1.4 | 3.1 | 4.1 | 5.6 | 4.6 |
| Equity ratio, % | 59.2 | 55.5 | 59.2 | 55.5 | 53.0 | - |
| Net gearing, % | 14.5 | 19.8 | 14.5 | 19.8 | 7.4 | - |
| Earnings per share, eur | 0.08 | 0.07 | 0.15 | 0.20 | 0.26 | 0.21 |
| Earnings per share (diluted), eur | 0.08 | 0.07 | 0.15 | 0.19 | 0.26 | 0.21 |
| Equity per share, eur | 3.11 | 3.16 | 3.11 | 3.16 | 3.14 | - |
CEO Juko Hakala comments:
In the third quarter our net sales decreased by 7% to 25.7 MEUR (27.5 MEUR). Net sales decreased in all Nordic countries. Net sales grew in Baltic, where especially the insurance business and Estonia performed well.
On a positive note, our operating profit grew to 2.5 MEUR (2.0 MEUR) and profitability improved to 10% (7%). Baltic had an excellent 19% profitability. Finland had 15% profitability and Norway improved to 12% profitability. Profitability decreased in Denmark and Sweden.
During my first weeks as the CEO we have launched several actions to improve our sales performance, to update our strategy and to seek new growth opportunities both in and around our core business areas. Our business area and our customers' industries are under transformation due to the rapid technological changes and we are going to tailor our offering in order to be able fulfill the changing needs of our customers.
The order backlog was 41.1 MEUR, somewhat below last year (45.0 MEUR). The economic uncertainty still affects our customers, whose investment decision making is cautious and whose preferences are for smaller solutions and for phased implementation.
Year 2014 net sales and operating profit are estimated to be below last year's level.
Additional information:
SVP, M&A, IR, Hannu Nyman, +358 205 777 761
CEO Juko Hakala, + 358 205 777 450
CFO Satu Kankare, +358 205 777 202
This release is unaudited. The amounts in this report have been rounded from exact numbers.
NET SALES
Affecto's net sales in 1-9/2014 were 89.9 MEUR (1-9/2013: 96.7 MEUR). Net sales in Finland were 36.7 MEUR (38.3 MEUR), in Norway 18.5 MEUR (22.2 MEUR), in Sweden 15.2 MEUR (17.0 MEUR), in Denmark 9.2 MEUR (11.2 MEUR) and 13.4 MEUR (11.5 MEUR) in Baltic.
Net sales by reportable segments
| Net sales, MEUR | 7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m |
| Finland | 10.3 | 11.3 | 36.7 | 38.3 | 53.2 | 51.6 |
| Norway | 5.3 | 6.2 | 18.5 | 22.2 | 29.6 | 25.9 |
| Sweden | 3.9 | 4.7 | 15.2 | 17.0 | 23.2 | 21.3 |
| Denmark | 2.6 | 3.1 | 9.2 | 11.2 | 15.4 | 13.3 |
| Baltic | 4.5 | 3.3 | 13.4 | 11.5 | 16.0 | 17.9 |
| Other | -0.9 | -1.1 | -3.1 | -3.5 | -4.4 | -4.0 |
| Group total | 25.7 | 27.5 | 89.9 | 96.7 | 132.9 | 126.1 |
Net sales decreased by 7% in the third quarter. Largest decreases were seen in Sweden, Denmark and Norway. Baltic grew by 36% mainly thanks to the insurance business. Resource utilization was low especially in Denmark, but also in Sweden. Sales of both consultant work and licenses decreased.
Net sales of Information Management Solutions business in 1-9/2014 were 83.4 MEUR (90.1 MEUR) and net sales of Karttakeskus GIS business were 8.9 MEUR (8.8 MEUR).
Customers continue to show interest mainly in shorter and smaller projects, especially true for mid-sized customers, and investment decisions take a long time. The general market sentiment continues cautious in all Nordic countries. The order backlog decreased to 41.1 MEUR (45.0 MEUR).
PROFIT
Affecto's operating profit in 1-9/2014 was 4.5 MEUR (6.0 MEUR) and the operational segment result was 6.1 MEUR (7.5 MEUR). Operational segment result was in Finland 3.7 MEUR (4.9 MEUR), in Norway 1.0 MEUR (2.2 MEUR), in Sweden -0.0 MEUR (-0.3 MEUR), in Denmark 0.7 MEUR (1.3 MEUR) and in Baltic 1.6 MEUR (0.4 MEUR).
Operational segment result by reportable segments
|
Operational segment result, MEUR |
7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m |
| Finland | 1.5 | 1.8 | 3.7 | 4.9 | 6.9 | 5.7 |
| Norway | 0.6 | 0.5 | 1.0 | 2.2 | 2.7 | 1.5 |
| Sweden | -0.1 | 0.0 | -0.0 | -0.3 | -0.2 | 0.0 |
| Denmark | 0.2 | 0.5 | 0.7 | 1.3 | 1.9 | 1.4 |
| Baltic | 0.9 | 0.0 | 1.6 | 0.4 | 0.2 | 1.4 |
| Other | -0.2 | -0.3 | -1.0 | -1.0 | -1.2 | -1.2 |
| Operational segment result | 2.9 | 2.5 | 6.1 | 7.5 | 10.3 | 8.8 |
| IFRS3 Amortization | -0.4 | -0.5 | -1.5 | -1.5 | -2.0 | -2.0 |
| Operating profit | 2.5 | 2.0 | 4.5 | 6.0 | 8.3 | 6.8 |
In 7-9/2014 operating profit increased to 2.5 MEUR (2.0 MEUR) and profitability increased to 10% (7%). Finland had 15% profitability and Norway improved to 12% profitability. Profitability in Baltic improved to 19% thanks to the insurance business and Estonia. Denmark's profitability decreased to 6% due to decreased net sales. Sweden made a small loss.
According to the IFRS3 requirements, in 1-9/2014 operating profit includes 1.5 MEUR (1.5 MEUR) of amortization on intangible assets related to acquisitions. The other intangible assets impacting in the IFRS3 amortization totaled 0.2 MEUR at the end of the reporting period and the amortization will end during year 2014.
Taxes corresponding to the profit of the period have been entered as tax expense. Net profit for the period was 3.1 MEUR, while it was 4.1 MEUR last year.
FINANCE AND INVESTMENTS
At the end of the reporting period Affecto's balance sheet totaled 121.5 MEUR (12/2013: 139.5 MEUR). Equity ratio was 59.2% (12/2013: 53.0%) and net gearing was 14.5% (12/2013: 7.4%).
The financial loans were 24.5 MEUR (12/2013: 26.5 MEUR) at the end of reporting period. The company's cash and liquid assets were 14.7 MEUR (12/2013: 21.5 MEUR). The interest-bearing net debt was 9.7 MEUR (12/2013: 5.0 MEUR).
Cash flow from operating activities for the reported period was -1.0 MEUR (2.1 MEUR) and cash flow from investing activities was -0.6 MEUR (-1.4 MEUR). Investments in tangible and intangible assets were 0.6 MEUR (1.4 MEUR).
The Annual General Meeting held in April decided to distribute a dividend of 3.6 MEUR (3.4 MEUR).
EMPLOYEES
The number of employees was 1015 persons at the end of the reporting period (1083). 410 employees were based in Finland (436), 95 in Norway (124), 133 in Sweden (146), 66 in Denmark (71) and 311 in the Baltic countries (306). The average number of employees during the period was 1047 (1080).
Board member Lars Wahlström served as the interim CEO in 1 January - 7 September 2014. Juko Hakala started as the CEO on 8 September 2014.
REVIEW OF MARKET DEVELOPMENTS
Weak economic development in our operating area continued to affect Affecto's business negatively. Customers' decision-making pace was slow and they are ordering short and small projects. Order backlog has decreased in all Nordic countries compared to last year, but it has clearly grown in Baltic.
Market development in our BI/EIM market segments is twofold: some technology and solution areas grow well, but some see only very slow growth. E.g. demand for basic data warehouse solutions is not growing much, while demand for appliances and other next-generation data warehouse solutions is growing clearly. We are shifting our offerings and resources to match the changing needs. In Norway we have had emphasis on next-generation data warehouses, while in Sweden and Finland we have had more focus on collaboration and digitalization solutions.
Cloud adoption is progressing in the Business Intelligence & Data Warehouse markets. The Industrial Internet / Internet of Things will create significant new analysis possibilities for our customers. We are actively looking into development of new solutions to satisfy the customer needs.
In general, we believe that the information technology markets and buying are building into several separate markets. IT buying continues to change, cloud and commodity-like services will grow and the roles of customers' IT organizations are changing. Price competition continues tight and the global service companies will continue to grow in this market. Small local companies can develop their competitiveness by specializing, for example into the new fields in analytics mentioned above.
At the same time new business technology markets are emerging, where information technology solutions and the information generated by them form an integral part of customer organizations' own products and services. From our customers' perspective these solutions will be elemental for their business and will have close connection to their own competitiveness and profit. So, the decisions regarding these solutions will be made in proximity of or within the business itself. Business capabilities based on Internet of Things offer examples of this kind of solutions that may transform products and business models in various industries. We are actively investigating various possibilities in this emerging market and believe that prospering in this market will require close relations to the customers. So, we aim to grow in this market together with our customers.
BUSINESS REVIEW BY AREAS
The group's business is managed through five country units. Finland, Norway, Sweden, Denmark and Baltic are also the reportable segments.
In 7-9/2014 the net sales in Finland decreased by 8% to 10.3 MEUR (11.3 MEUR). Operational segment result was 1.5 MEUR (1.8 MEUR) and profitability was 15%. Net sales decreased mainly due to smaller sales of consultancy work. General mood is still cautious in Finland and customers are slow with their investment decisions. Order backlog is below last year's level.
In 7-9/2014 the net sales of Karttakeskus GIS business, reported as part of Finland, decreased by 13% to 2.6 MEUR (3.0 MEUR) and its profitability was good.
In 7-9/2014 the net sales in Norway were 5.3 MEUR (6.2 MEUR) and operational segment result was 0.6 MEUR (0.5 MEUR). Net sales decreased by 14% due to smaller sales of both consultant work and licenses. Profitability increased to 12% as utilization rate improved somewhat. Streamlining actions done earlier this year have helped to decrease the cost base and have improved profitability. Order backlog is below last year's level.
In 7-9/2014 the net sales in Sweden were 3.9 MEUR (4.7 MEUR) and operational segment result -0.1 MEUR (0.0 MEUR). Net sales decreased by 18%, to which both the decreased utilization rate and the weakened SEK contributed. Profitability was slightly negative -2%. Development actions continue and the goal is to achieve normal profitability, but structural and operational changes for the business will take some time. Order backlog is below last year's level.
In 7-9/2014 the net sales in Denmark were 2.6 MEUR (3.1 MEUR) and operational segment result was 0.2 MEUR (0.5 MEUR). Net sales decreased by 17%. Profitability decreased to 6%. Order backlog is below last year's level.
In 7-9/2014 the net sales in Baltic (Lithuania, Latvia, Estonia, Poland, South Africa) were 4.5 MEUR (3.3 MEUR). Operational segment result was 0.9 MEUR (0.0 MEUR). Net sales increased by 36% and profitability increased to 19%. The Lithuanian public sector has not yet recovered, as the preparations of new EU funded projects has progressed slower than we have anticipated. The entrance of Lithuania into the Euro zone in January 2015 has had some positive impact. Estonian market situation is normal. The insurance business is performing well. Order backlog is above last year's level.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of Affecto Plc, held on 10 April 2014, adopted the financial statements for 1.1.-31.12.2013 and discharged the members of the Board of Directors and the CEO from liability. Approximately 33 percent of Affecto's shares and votes were represented at the Meeting. The Annual General Meeting decided on a dividend distribution of EUR 0.16 per share for the year 2013.
Aaro Cantell, Magdalena Persson, Jukka Ruuska, Olof Sand, Tuija Soanjärvi and Lars Wahlström were elected as members of the Board of Directors. The organization meeting of the Board of Directors re-elected Aaro Cantell as Chairman and Jukka Ruuska as Vice-Chairman. KPMG Oy Ab was elected as the auditor of the company.
The Meeting approved the Board's proposal for appointing a Nomination Committee to prepare proposals concerning members of the Board of Directors and their remunerations for the following Annual General Meeting. The Nomination Committee will consist of the representatives of the three largest shareholders and the Chairman of the Board of Directors, acting as an expert member, if he/she is not appointed representative of a shareholder. The members representing the shareholders will be appointed by the three shareholders whose share of ownership of the shares of the company is largest on 31 October preceding the Annual General Meeting.
According to the Articles of Association, the General Meeting of Shareholders annually elects the Board of Directors by a majority decision. The term of office of the board members expires at the end of the next Annual General Meeting of Shareholders following their election. The Board appoints the CEO. The Articles of Association do not contain any special rules for changing the Articles of Association or for issuing new shares.
THE AUTHORIZATIONS GIVEN TO THE BOARD OF DIRECTORS
The Board has not used in the review period the authorizations given by the Annual General Meeting in 2013, that expired on 10 April 2014.
The complete contents of the new authorizations given by the Annual General Meeting held on 10 April 2014 have been published in the stock exchange release regarding the Meetings' decisions. Key facts about the authorizations:
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.
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 consideration or without consideration on terms to be determined by the Board of Directors and in relation to a share issue against consideration at a price to be determined by the Board of Directors. A maximum of 4 200 000 new shares may be issued. A maximum of 2 100 000 own shares held by the company may be conveyed. In addition, the authorization includes the right to decide on a share issue without consideration to the company itself so that the amount of own shares held by the company after the share issue is a maximum of one-tenth (1/10) of all shares in the company. The authorization shall be in force until the next Annual General Meeting. Based on the authorization a total of 20 333 shares have been conveyed in August to the Board members as a partial payment of their fees, in accordance to the decision made by the Annual General Meeting.
SHARES AND TRADING
During the review period a total of 132 141 new shares have been subscribed with the 2008C options.
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. The company owned directly 44 219 shares and a fully owned subsidiary Affecto Management Oy owned 823 000 shares. Thus there are 867 219 treasury shares in total, approx. 3.9 % of the total amount of the shares.
In 1-9/2014 the highest share price was 4.62 euro, the lowest price 2.90 euro, the average price 3.36 euro and the closing price 3.16 euro. The trading volume was 2.9 million shares, corresponding to annualized 17% of the number of shares at the end of the period. The market value of shares was 68.2 MEUR at the end of the period excluding the treasury shares.
2008C options' exercise period ended on 31 May 2014. A total of 306 000 shares were subscribed with the options.
SHAREHOLDERS
The company had a total of 3 011 owners on 30 September 2014 and the foreign ownership was 12%. The list of the largest owners can be found in the company's web site. Information about the ownership structure and option programs is included as a separate section in the financial statements. The ownership of the board members, CEO and their controlled corporations totaled approx. 10.5%.
According to the flagging announcement made on 21 May 2014, the ownership of Evli Pankki and funds managed by Evli Rahastoyhtiö has decreased below 5%.
ASSESSMENT OF RISKS AND UNCERTAINTIES
Affecto's order backlog has traditionally been only for a few months, which decreases the reliability of longer-term forecasts. The changes in the general economic conditions and the operating environment of customers have direct impact in Affecto's markets. The uncertain economy may affect Affecto's customers negatively, and their slower investment decision making, postponing or cancellation of IT investments may have negative impact on Affecto. Slower decision making by customers may decrease the predictability of the business and may decrease the utilisation rate of resources.
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 reported profit and value of assets. The greatest uncertainty is related to Sweden, where the recoverable amount exceeds the carrying amount only by a narrow margin.
Affecto sells third party software licenses as part of its solutions. Typically the license sales have most impact on the last month of each quarter and especially in the fourth quarter. This increases the fluctuation in net sales between quarters and increases the difficulty of accurately forecasting the quarters. Additionally the increase of cloud services and other similar market trends may affect the license sales negatively. Affecto had license sales of approx. 10 MEUR in 2013.
Affecto's success depends also on good customer relationships. Affecto has a well-diversified customer base. In 2013 the largest customer generated 3% of Affecto's net sales, while the 10 largest together generated 17%. Although none of the customers is critically large for the whole group, there are large customers in various countries who are significant for local business in the country.
Approximately a 40% of Affecto's net sales is generated in Sweden and Norway, thus the development of the currencies of these countries (SEK and NOK) may have impact on Affecto's profitability. The main part of the companies' income and costs are within the same currency, which decreases the risks.
EVENTS AFTER THE REVIEW PERIOD
According to flagging announcements the ownership of Mika Laine has decreased below 5% on 17 October 2014 and the ownership of Lombard International Assurance S.A. has exceeded 5% on 17 October 2014.
FUTURE OUTLOOK
Year 2014 net sales and operating profit are estimated to be below last year's level.
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
You can 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 14.00 at Restaurant Savoy, Eteläesplanadi 14, Helsinki.
www.affecto.com
-----
Financial information:
1. Consolidated income statement, consolidated comprehensive income statement, balance sheet, cash flow statement and statement of changes in equity
2. Notes
3. Key figures
1. Consolidated income statement, consolidated comprehensive income statement, balance sheet, cash flow statement and statement of changes in equity
CONSOLIDATED INCOME STATEMENT
| (1 000 EUR) | 7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m |
| Net sales | 25 664 | 27 499 | 89 869 | 96 702 | 132 896 | 126 064 |
| Other operating income | -10 | - | 13 | 7 | 65 | 71 |
|
Changes in inventories of finished goods and work in progress |
-53 | -53 | -27 | 305 | 306 | -27 |
| Materials and services | -5 106 | -5 266 | -19 277 | -20 467 | -29 952 | -28 762 |
| Personnel expenses | -13 549 | -15 222 | -50 764 | -54 996 | -74 031 | -69 799 |
| Other operating expenses | -3 727 | -4 162 | -12 823 | -13 098 | -17 803 | -17 528 |
| Other depreciation and amortisation | -300 | -327 | -921 | -936 | -1 230 | -1 215 |
| IFRS3 amortisation | -439 | -507 | -1 536 | -1 547 | -1 989 | -1 978 |
| Operating profit | 2 481 | 1 961 | 4 532 | 5 970 | 8 262 | 6 824 |
| Financial income and expenses | -139 | -3 | -502 | -126 | -289 | -665 |
| Profit before income tax | 2 342 | 1 959 | 4 030 | 5 844 | 7 973 | 6 159 |
| Income tax | -521 | -566 | -913 | -1 709 | -2 407 | -1 610 |
| Profit for the period | 1 821 | 1 392 | 3 118 | 4 134 | 5 566 | 4 549 |
|
Profit for the period attributable to: |
||||||
| Owners of the parent company | 1 821 | 1 399 | 3 118 | 4 059 | 5 493 | 4 551 |
| Non-controlling interest | - | -7 | - | 75 | 73 | -2 |
|
Earnings per share (EUR per share): |
||||||
| Basic | 0.08 | 0.07 | 0.15 | 0.20 | 0.26 | 0.21 |
| Diluted | 0.08 | 0.07 | 0.15 | 0.19 | 0.26 | 0.21 |
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
||||||
| (1 000 EUR) | 7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m |
| Profit for the period | 1 821 | 1 392 | 3 118 | 4 134 | 5 566 | 4 549 |
| Other comprehensive income | ||||||
| Items that may be reclassified subsequently to the statement of income: | ||||||
| Translation difference | 622 | -228 | -186 | -2 045 | -3 074 | -1 216 |
|
Total Comprehensive income for the period |
2 444 | 1 164 | 2 932 | 2 090 | 2 491 | 3 333 |
|
Total Comprehensive income attributable to: |
||||||
| Owners of the parent company | 2 444 | 1 171 | 2 932 | 2 014 | 2 419 | 3 336 |
| Non-controlling interest | - | -7 | - | 75 | 73 | -2 |
CONSOLIDATED BALANCE SHEET
| (1 000 EUR) | 9/2014 | 9/2013 | 12/2013 |
| Non-current assets | |||
| Property, plant and equipment | 1 665 | 2 014 | 1 947 |
| Goodwill | 71 917 | 73 062 | 72 166 |
| Other intangible assets | 506 | 2 563 | 2 072 |
| Deferred tax assets | 1 522 | 1 566 | 1 606 |
| Trade and other receivables | 2 | 411 | 4 |
| 75 612 | 79 616 | 77 795 | |
| Current assets | |||
| Inventories | 574 | 626 | 622 |
| Trade and other receivables | 29 873 | 32 982 | 38 969 |
| Current income tax receivables | 699 | 785 | 615 |
| Cash and cash equivalents | 14 739 | 15 211 | 21 469 |
| 45 884 | 49 604 | 61 675 | |
| Total assets | 121 496 | 129 221 | 139 470 |
|
Equity attributable to owners of the parent Company |
|||
| Share capital | 5 105 | 5 105 | 5 105 |
|
Reserve of invested non-restricted equity |
47 718 |
47 354 |
47 448 |
| Other reserves | 818 | 742 | 763 |
| Treasury shares | -2 111 | -2 202 | -2 165 |
| Translation differences | -2 315 | -1 099 | -2 128 |
| Retained earnings | 17 867 | 16 396 | 18 184 |
| 67 083 | 66 295 | 67 207 | |
| Non-controlling interest | - | 386 | - |
| Total equity | 67 083 | 66 681 | 67 207 |
| Non-current liabilities | |||
| Loans and borrowings | 20 444 | 24 411 | 22 420 |
| Deferred tax liabilities | 118 | 599 | 505 |
| 20 562 | 25 011 | 22 924 | |
| Current liabilities | |||
| Loans and borrowings | 4 000 | 4 000 | 4 000 |
| Trade and other payables | 27 702 | 30 989 | 42 788 |
| Current income tax liabilities | 1 661 | 2 302 | 1 913 |
| Provisions | 488 | 238 | 638 |
| 33 851 | 37 529 | 49 339 | |
| Total liabilities | 54 413 | 62 539 | 72 264 |
| Equity and liabilities | 121 496 | 129 221 | 139 470 |
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
| (1 000 EUR) | 1-9/2014 | 1-9/2013 | 2013 |
| Cash flows from operating activities | |||
| Profit for the period | 3 118 | 4 134 | 5 566 |
| Adjustments to profit for the period | 3 981 | 4 553 | 6 271 |
| 7 098 | 8 688 | 11 837 | |
| Change in working capital | -5 907 | -3 931 | 2 863 |
| Interest and other financial cost paid | -325 | -426 | -566 |
| Interest and other financial income received | 49 | 121 | 123 |
| Income taxes paid | -1 964 | -2 324 | -3 343 |
| Net cash from operating activities | -1 049 | 2 127 | 10 915 |
| Cash flows from investing activities | |||
| Acquisition of tangible and intangible assets |
-611 |
-1 355 | -1 566 |
|
Proceeds from sale of tangible and intangible assets |
1 |
1 |
1 |
| Net cash used in investing activities | -611 | -1 354 | -1 564 |
| Cash flows from financing activities | |||
| Repayments of non-current borrowings | -2 000 | -2 000 | -4 000 |
| Proceeds from share options exercised | 262 | 711 | 781 |
| Acquisition of non-controlling interest | - | - | -30 |
|
Dividends paid to the owners of the parent company |
-3 434 |
-3 444 |
-3 444 |
| Net cash from financing activities | -5 172 | -4 734 | -6 694 |
| (Decrease)/increase in cash and cash equivalents | -6 831 | -3 961 | 2 657 |
|
Cash and cash equivalents at the beginning of the period |
21 469 |
19 767 |
19 767 |
| Foreign exchange effect on cash | 100 | -595 | -954 |
|
Cash and cash equivalents at the end of the period |
14 739 |
15 211 |
21 469 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Equity attributable to owners of the parent company |
||||||||
| (1 000 EUR) | Share capital | Reserve of invested non-restricted equity | Other reserves | Treasury shares |
Trans lat. diff. |
Ret. earnings | Non-controlling interest | Total equity |
| Equity at 1 January 2014 | 5 105 | 47 448 | 763 | -2 165 | -2 128 | 18 184 | - | 67 207 |
| Profit | 3 118 | - | 3 118 | |||||
| Translation differences | -186 | -186 | ||||||
| Total compre-hensive income | -186 | 3 118 | - | 2 932 | ||||
| Share-based payments | 55 | 55 | ||||||
| Exercise of share options | 262 | 262 | ||||||
| Treasury shares as compensation to the Board | 8 | 54 | 62 | |||||
| Dividends paid | -3 434 | -3 434 | ||||||
| Equity at 30 September 2014 | 5 105 | 47 718 | 818 | -2 111 | -2 315 | 17 867 | - | 67 083 |
|
Equity attributable to owners of the parent company |
||||||||
| (1 000 EUR) | Share capital | Reserve of invested non-restricted equity | Other reserves | Treasury shares |
Trans lat. diff. |
Ret. earnings | Non-controlling interest | Total equity |
| Equity at 1 January 2013 | 5 105 | 46 643 | 693 | -2 202 | 946 | 15 781 | 311 | 67 277 |
| Profit | 4 059 | 75 | 4 134 | |||||
| Translation differences | -2 045 | -2 045 | ||||||
| Total compre-hensive income | -2 045 | 4 059 | 75 | 2 090 | ||||
| Share-based payments | 49 | 49 | ||||||
| Exercise of share options | 711 | 711 | ||||||
| Dividends paid | -3 444 | -3 444 | ||||||
| Equity at 30 September 2013 | 5 105 | 47 354 | 742 | -2 202 | -1 099 | 16 396 | 386 | 66 681 |
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 2013. In material respects, the same accounting policies have been applied as in the 2013 annual consolidated financial statements. The amendments to and interpretations of IFRS standards that entered into force on 1 January 2014 had no material impact on this interim report.
2.2. Segment information
Affecto's reporting segments are based on geographical locations and are Finland, Norway, Sweden, Denmark and Baltic.
Segment net sales and result
| (1 000 EUR) | 7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m |
| Total net sales | ||||||
| Finland | 10 322 | 11 253 | 36 715 | 38 287 | 53 175 | 51 604 |
| Norway | 5 268 | 6 160 | 18 547 | 22 234 | 29 554 | 25 867 |
| Sweden | 3 874 | 4 706 | 15 152 | 16 979 | 23 152 | 21 325 |
| Denmark | 2 604 | 3 127 | 9 189 | 11 223 | 15 363 | 13 329 |
| Baltic | 4 532 | 3 322 | 13 363 | 11 488 | 16 018 | 17 893 |
| Other | -935 | -1 069 | -3 097 | -3 509 | -4 366 | -3 953 |
| Group total | 25 664 | 27 499 | 89 869 | 96 702 | 132 896 | 126 064 |
| Operational segment result | ||||||
| Finland | 1 515 | 1 764 | 3 735 | 4 928 | 6 863 | 5 670 |
| Norway | 610 | 531 | 1 031 | 2 241 | 2 718 | 1 508 |
| Sweden | -76 | 27 | -43 | -303 | -229 | 31 |
| Denmark | 168 | 470 | 722 | 1 251 | 1 884 | 1 354 |
| Baltic | 867 | 5 | 1 624 | 393 | 193 | 1 424 |
| Other | -165 | -329 | -1 000 | -992 | -1 177 | -1 184 |
| Total operational segment result | 2 919 | 2 469 | 6 069 | 7 517 | 10 251 | 8 803 |
| IFRS3 amortisation | -439 | -507 | -1 536 | -1 547 | -1 989 | -1 978 |
| Operating profit | 2 481 | 1 961 | 4 532 | 5 970 | 8 262 | 6 824 |
| Financial income and expenses | -139 | -3 | -502 | -126 | -289 | -665 |
| Profit before income tax | 2 342 | 1 959 | 4 030 | 5 844 | 7 973 | 6 159 |
Net sales by business lines
| (1 000 EUR) | 7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m |
| Information Management Solutions | 23 781 | 25 339 | 83 362 | 90 080 | 123 608 | 116 891 |
| Karttakeskus GIS business | 2 637 | 3 037 | 8 866 | 8 769 | 12 239 | 12 336 |
| Other | -754 | -878 | -2 359 | -2 147 | -2 950 | -3 163 |
| Group total | 25 664 | 27 499 | 89 869 | 96 702 | 132 896 | 126 064 |
2.3. Changes in intangible and tangible assets
| (1 000 EUR) | 1-9/14 | 1-9/13 | 1-12/13 |
| Carrying amount at the beginning of period | 76 185 | 80 460 | 80 460 |
| Additions | 611 | 1 355 | 1 566 |
| Disposals | -1 | -1 | -1 |
| Depreciation and amortization for the period | -2 458 | -2 483 | - 3 219 |
| Exchange rate differences | -249 | -1 692 | -2 621 |
| Carrying amount at the end of period | 74 088 | 77 639 | 76 185 |
2.4. Share capital, reserve of invested non-restricted equity and treasury shares
| (1 000 EUR) | Number of shares outstanding | Share capital | Reserve of invested non-restricted equity |
Treasury shares |
| 1.1.2013 | 20 641 641 | 5 105 | 46 643 | -2 202 |
|
Exercise of share options |
350 667 |
- |
659 52 |
- |
| 30.9.2013 | 20 992 308 | 5 105 | 47 354 | -2 202 |
| 1.1.2014 | 21 431 052 | 5 105 | 47 448 | -2 165 |
| Exercise of share options | 132 141 | - | 260 | - |
| Payment for share options | - | - | 2 | - |
| Treasury shares of compensation to the Board of Directors | 13 875 | - |
8 |
54 |
| 30.9.2014 | 21 583 526 | 5 105 | 47 718 | -2 111 |
At the end of reporting period Affecto Plc owned 44 219 treasury shares. In addition to that Affecto Management Oy, a fully owned subsidiary, owned 823 000 shares in Affecto Plc. In total these 867 219 shares correspond to 3.9% of the total amount of the shares. The amount of registered shares was 22 450 745 shares.
2.5. Interest-bearing liabilities
| (1 000 EUR) | 30.9.2014 | 31.12.2013 |
| Interest-bearing non-current liabilities | ||
|
Loans from financial institutions, non-current portion |
20 444 | 22 420 |
|
Loans from financial institutions, current portion |
4 000 | 4 000 |
| 24 444 | 26 420 |
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) | 30.9.2014 | 31.12.2013 |
| Not later than one (1) year | 3 313 | 3 675 |
|
Later than one (1) year, but not later than five (5) years |
3 767 | 3 719 |
| Later than five (5) years | - | - |
| Total | 7 080 | 7 394 |
Guarantees given:
| (1 000 EUR) | 30.9.2014 | 31.12.2013 |
| Liabilities secured by a mortgage | ||
| Financial loans | 24 500 | 26 500 |
The above-mentioned liabilities are secured by bearer bonds with a nominal value of 52.5 million euro. The bonds are held by Nordea Pankki Suomi Oyj and secured by a mortgage on company assets of the group companies. In addition, the shares in Affecto Finland Oy and Affecto Norway AS have been pledged to secure the financial liabilities above.
Other securities given on own behalf:
| (1 000 EUR) | 30.9.2014 | 31.12.2013 |
| Pledges | 36 | 36 |
| Other guarantees | 2 767 | 2 836 |
Other guarantees are mostly securities issued for customer projects. These guarantees include both bank guarantees secured by parent company of the group and guarantees issued by the parent company and subsidiaries.
2.7. Related party transactions
Key management compensation and remunerations to the board of directors:
| (1 000 EUR) | 1-9/2014 | 1-9/2013 | 1-12/2013 |
| Salaries and other short-term employee benefits |
1 705 |
1 589 |
2 017 |
| Post-employment benefits | 203 | 222 | 288 |
| Termination benefits | 80 | -15 | 85 |
| Share-based payments | 2 | 4 | 6 |
| Total | 1 991 | 1 800 | 2 395 |
Loans to related party:
| (1 000 EUR) | 30.9.2014 | 30.9.2013 | 31.12.2013 |
| Loans to key management of the group | - | 1 519 | - |
Purchases from related party:
| (1 000 EUR) | 1-9/2014 | 1-9/2013 | 1-12/2013 |
| Purchases from the entity that are controlled by key management personnel of the group | - |
5 |
5 |
3. Key figures
| 7-9/14 | 7-9/13 | 1-9/14 | 1-9/13 | 2013 | last 12m | |
| Net sales, 1 000 eur | 25 664 | 27 499 | 89 869 | 96 702 | 132 896 | 126 064 |
| EBITDA, 1 000 eur | 3 219 | 2 796 | 6 990 | 8 453 | 11 481 | 10 018 |
|
Operational segment result, 1 000 eur |
2 919 | 2 469 | 6 069 | 7 517 | 10 251 | 8 803 |
| Operating result, 1 000 eur | 2 481 | 1 961 | 4 532 | 5 970 | 8 262 | 6 824 |
| Result before taxes, 1 000 eur | 2 342 | 1 959 | 4 030 | 5 844 | 7 973 | 6 159 |
|
Profit attributable to the owners of the parent company, 1 000 eur |
1 821 | 1 399 | 3 118 | 4 059 | 5 493 | 4 551 |
| EBITDA, % | 12.5 % | 10.2 % | 7.8 % | 8.7 % | 8.6 % | 7.9 % |
| Operational segment result, % | 11.4 % | 9.0 % | 6.8 % | 7.8 % | 7.7 % | 7.0 % |
| Operating result, % | 9.7 % | 7.1 % | 5.0 % | 6.2 % | 6.2 % | 5.4 % |
| Result before taxes, % | 9.1 % | 7.1 % | 4.5 % | 6.0 % | 6.0 % | 4.9 % |
|
Net income for equity holders of the parent company, % |
7.1 % | 5.1 % | 3.5 % | 4.2 % | 4.1 % | 3.6 % |
| Equity ratio, % | 59.2 % | 55.5 % | 59.2 % | 55.5 % | 53.0 % | |
| Net gearing, % | 14.5 % | 19.8 % | 14.5 % | 19.8 % | 7.4 % | |
|
Interest-bearing net debt, 1 000 eur |
9 705 | 13 201 | 9 705 | 13 201 | 4 950 | |
|
Gross investment in non-current assets (excl. acquisitions), 1 000 eur |
170 | 293 | 611 | 1 355 | 1 566 | |
| Gross investments, % of net sales | 0.7 % | 1.1 % | 0.7 % | 1.4 % | 1.2 % | |
|
Order backlog, 1 000 eur |
41 073 | 44 955 | 41 073 | 44 955 | 48 682 | |
| Average number of employees | 1 021 | 1 074 | 1 047 | 1 080 | 1 081 | |
| Earnings per share, eur | 0.08 | 0.07 | 0.15 | 0.20 | 0.26 | 0.21 |
|
Earnings per share (diluted), eur |
0.08 | 0.07 | 0.15 | 0.19 | 0.26 | 0.21 |
| Equity per share, eur | 3.11 | 3.16 | 3.11 | 3.16 | 3.14 | |
|
Average number of shares, 1 000 shares |
21 574 | 20 992 | 21 479 | 20 802 | 20 906 | 21 425 |
|
Number of shares at the end of period, 1 000 shares |
21 584 | 20 992 | 21 584 | 20 992 | 21 431 | 21 584 |
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 and cash equivalents __________________________________ |
*100 |
| 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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Additional information:
SVP, M&A, IR, Hannu Nyman, +358 205 777 761
CEO Juko Hakala, + 358 205 777 450
CFO Satu Kankare, +358 205 777 202
