Helsinki, 2015-04-29 10:00 CEST (GLOBE NEWSWIRE) -- AFFECTO PLC -- INTERIM REPORT -- 29 APRIL 2015 at 11.00
Affecto Plc's Interim Report 1-3/2015
Group key figures
| MEUR | 1-3/15 | 1-3/14 | 2014 | last 12m |
| Net sales | 29.1 | 31.2 | 122.7 | 120.6 |
| Operational segment result | 2.1 | 0.1 | 10.0 | 12.0 |
| % of net sales | 7.2 | 0.4 | 8.2 | 9.9 |
| Operating profit | 2.1 | -0.4 | 0.8 | 3.4 |
| % of net sales | 7.2 | -1.4 | 0.7 | 2.8 |
| Profit before taxes | 2.0 | -0.6 | 0.3 | 2.9 |
| Profit for the period | 1.4 | -0.6 | -1.6 | 0.4 |
| Equity ratio, % | 59.2 | 56.0 | 54.6 | - |
| Net gearing, % | 0.9 | 14.1 | 1.8 | - |
| Earnings per share, eur | 0.07 | -0.03 | -0.07 | 0.02 |
| Earnings per share (diluted), eur | 0.07 | -0.03 | -0.07 | 0.02 |
| Equity per share, eur | 2.90 | 3.11 | 2.80 | - |
CEO Juko Hakala comments:
In the first quarter Affecto's net sales decreased by 7% to 29.1 MEUR (31.2 MEUR). Net sales decreased in all Nordic countries. Net sales grew in Baltic, where especially the insurance business performed well thanks to the positive impact on resource utilization from a few projects at their end stages.
The quarter’s operational result clearly improved from the previous year. Operational segment result was 2.1 MEUR (0.1 MEUR). Baltic had excellent 26% profitability. Norway improved to 11% profitability, while Finland decreased to 5% profitability. We reached 2% profitability in Sweden. Profitability in Denmark decreased to 2%.
Our business area and our customers' industries are under transformation due to the rapid technological changes and we are developing our operations to be able to fulfill the changing needs of our customers. We published an update to our strategic direction in February. Since then we have been actively working with refocusing our employees and operations according to the new strategic direction and also with engaging our customers. Based on direct feedback from customers, I believe that we are developing Affecto to the right direction.
Customers show active interest in the new business technology solutions, but their needs are still in forming up in this market. Uncertainty and customers' preference for smaller projects continued on the IT market.
Our sales performance in the first quarter was not good enough. Order intake was smaller than year ago, and caused the order backlog of 41.5 MEUR to be clearly lower than year ago (47.5 MEUR).
Net sales and operating profit are estimated to grow in 2015, but there is uncertainty especially related to the net sales development.
Additional information:
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 1-3/2015 were 29.1 MEUR (1-3/2014: 31.2 MEUR). Net sales in Finland were 12.1 MEUR (12.6 MEUR), in Norway 5.4 MEUR (6.3 MEUR), in Sweden 4.6 MEUR (5.8 MEUR), in Denmark 2.9 MEUR (3.5 MEUR) and 5.1 MEUR (4.1 MEUR) in Baltic.
Net sales by reportable segments
| Net sales, MEUR | 1-3/15 | 1-3/14 | 2014 | last 12m |
| Finland | 12.1 | 12.6 | 50.6 | 50.1 |
| Norway | 5.4 | 6.3 | 25.0 | 24.2 |
| Sweden | 4.6 | 5.8 | 20.0 | 18.7 |
| Denmark | 2.9 | 3.5 | 12.0 | 11.4 |
| Baltic | 5.1 | 4.1 | 19.0 | 20.0 |
| Other | -1.1 | -1.1 | -4.0 | -3.9 |
| Group total | 29.1 | 31.2 | 122.7 | 120.6 |
Net sales decreased by 7% in the first quarter. Largest decreases were seen in Denmark and Sweden. Baltic grew by 23% mainly thanks to the insurance business. Resource utilization was low especially in Denmark and also in Finland. Net sales in the Nordic countries decreased mainly regarding consultant work, while license sales were at last year's level.
Net sales of Information Management Solutions business in 1-3/2015 were 27.2 MEUR (29.1 MEUR) and net sales of Karttakeskus GIS business were 2.9 MEUR (3.0 MEUR).
Affecto's customers in the IT market continued to show interest mainly in shorter and smaller projects, especially true for mid-sized customers, and investment decisions took a long time. Customers' show more active interests in the new business technology solutions, but their needs are still forming up, and we can observe numerous activities inside the customers to find the determination and direction. Affecto's development to serve this market has started well, but is still ongoing. Due to these reasons, there is uncertainty related to turning interest into concrete projects. The order intake remained below last year and the order backlog decreased to 41.5 MEUR (47.5 MEUR).
PROFIT
Affecto's operating profit in 1-3/2015 was 2.1 MEUR (-0.4 MEUR) and the operational segment result was 2.1 MEUR (0.1 MEUR). Operational segment result was in Finland 0.6 MEUR (0.9 MEUR), in Norway 0.6 MEUR (-0.3 MEUR), in Sweden 0.1 MEUR (-0.3 MEUR), in Denmark 0.1 MEUR (0.3 MEUR) and in Baltic 1.3 MEUR (0.2 MEUR).
Operational segment result by reportable segments
|
Operational segment result, MEUR |
1-3/15 | 1-3/14 | 2014 | last 12m |
| Finland | 0.6 | 0.9 | 5.4 | 5.2 |
| Norway | 0.6 | -0.3 | 2.0 | 2.8 |
| Sweden | 0.1 | -0.3 | 0.3 | 0.7 |
| Denmark | 0.1 | 0.3 | 0.9 | 0.6 |
| Baltic | 1.3 | 0.2 | 2.9 | 4.1 |
| Other | -0.6 | -0.6 | -1.5 | -1.5 |
| Operational segment result | 2.1 | 0.1 | 10.0 | 12.0 |
| IFRS3 Amortization | - | -0.5 | -1.8 | -1.2 |
| Impairment of goodwill | - | - | -7.4 | -7.4 |
| Operating profit | 2.1 | -0.4 | 0.8 | 3.4 |
Operational result in 1-3/2015 was moderately good. Operational segment result 2.1 MEUR was clearly above the previous year's result (0.1 MEUR, including approx. 0.9 MEUR non-recurring streamlining costs). Profitability in Baltic improved to 26%. Profitability in Finland decreased to 5% due to low utilization rate. Norway improved to 11% profitability. Largest negative change was seen in Denmark, where profitability decreased to 2% due to low utilization. Sweden reached 2% profitability.
Taxes corresponding to the profit of the period have been entered as tax expense. Net profit for the period was 1.4 MEUR, while it was -0.6 MEUR last year.
FINANCE AND INVESTMENTS
At the end of the reporting period Affecto's balance sheet totaled 118.2 MEUR (12/2014: 124.8 MEUR). Equity ratio was 59.2% (12/2014: 54.6%) and net gearing was 0.9% (12/2014: 1.8%).
The financial loans were 22.5 MEUR (12/2014: 22.5 MEUR) at the end of reporting period. The company's cash and liquid assets were 21.9 MEUR (12/2014: 21.4 MEUR). The interest-bearing net debt was 0.5 MEUR (12/2014: 1.1 MEUR).
Cash flow from operating activities for the reported period was 0.4 MEUR (-4.4 MEUR) and cash flow from investing activities was -0.2 MEUR (-0.1 MEUR). Investments in tangible and intangible assets were 0.2 MEUR (0.1 MEUR).
EMPLOYEES
The number of employees was 1014 persons at the end of the reporting period (1068). 426 employees were based in Finland (442), 88 in Norway (120), 120 in Sweden (143), 68 in Denmark (68) and 312 in the Baltic countries (295). The average number of employees during the period was 1017 (1078).
Julius Manni started as the country director for Finland on 1 March 2015. Hellen Wohlin Lidgard, the country director for Sweden, and Rene Lykkeskov, the chief strategy officer, are leaving Affecto.
BUSINESS DEVELOPMENT ACTIONS
Affecto published in February an update to its strategic direction and defined five themes to guide the development actions. Context for the strategic direction is the current, digitally transforming world. Affecto will address this with a focus on increasing value for customers and for their customers. The company will also actively develop its core business, expand to emerging new business technology areas, and further develop its people to help customers succeed.
Actions have been taken during the spring to convert the strategy into operational changes. Strategy workshops for employees have been organised in most of the offices, in order to activate employees for taking development actions in line with the strategy. Recruitment of persons, both from inside and outside Affecto, to the new hybrid roles at the junction of business and technology has also been started. We have received direct positive feedback from the customers on the increased focus on industry verticals and customer value in the practical customer work.
In Finland and Sweden the development of IoT capabilities has continued, and so has also the development of capabilities for B-to-C industry solutions in Sweden. A new "Affecto Industrial" growth program is being launched for Finland, Sweden and Denmark focusing on developing the IoT and analytics capabilities for manufacturing, technology, energy and process industries. Development of capabilities in design, user interface and usability solutions have been intensified in the Nordic countries.
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 1-3/2015 net sales in Finland decreased by 4% to 12.1 MEUR (12.6 MEUR). Operational segment result was 0.6 MEUR (0.9 MEUR) and profitability was 5%. Resource utilization remained low, which negatively affected both net sales and result. General mood is still cautious in Finland and customers are slow with their investment decisions. Order backlog is below last year's level.
In 1-3/2015 net sales of Karttakeskus GIS business, reported as part of Finland, decreased by 3% to 2.9 MEUR (3.0 MEUR) and its profitability was good.
In 1-3/2015 net sales in Norway were 5.4 MEUR (6.3 MEUR) and operational segment result was 0.6 MEUR (-0.3 MEUR). Net sales decreased by 13% to which both the decreased amount of employees and the weakened NOK have contributed. Profitability was 11%. Streamlining actions done last year have helped to decrease the cost base and have improved profitability. Order backlog is below last year's level.
In 1-3/2015 net sales in Sweden were 4.6 MEUR (5.8 MEUR) and operational segment result 0.1 MEUR (-0.3 MEUR). Net sales decreased by 21%, to which both the decreased amount of employees and the weakened SEK have contributed. Sweden had slightly positive 2% profitability. Resource utilisation has been on a reasonably good level, but there has been some employee churn and the decreased amount of employees has increased the negative impact from fixed costs. Development actions in Sweden will continue and the search for the new country director is ongoing. Order backlog is above last year's level.
In 1-3/2015 net sales in Denmark were 2.9 MEUR (3.5 MEUR) and operational segment result was 0.1 MEUR (0.3 MEUR). Net sales decreased by 17% mainly due to low resource utilization. Profitability decreased to 2%. Competition in Denmark is tight. Order backlog is below last year's level.
In 1-3/2015 net sales in Baltic (Lithuania, Latvia, Estonia, Poland, South Africa) were 5.1 MEUR (4.1 MEUR). Operational segment result was 1.3 MEUR (0.2 MEUR). Net sales increased by 23% and profitability increased to 26%. A few large projects are in final stages, which has increased resource utilisation and has also impacted positively on profit. The insurance business and Estonia are performing well. The local business in Lithuania has recovered somewhat, although the slow preparation of new EU funded projects still negatively impacts the public sector market. Order backlog is below last year's level.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of Affecto Plc, held on 8 April 2015, adopted the financial statements for 1.1.-31.12.2014 and discharged the members of the Board of Directors and the CEO from liability. Approximately 48 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 2014.
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 elected Aaro Cantell as Chairman and Olof Sand as Vice-Chairman. Authorised Public Accountants Ernst & Young Oy was elected as the auditor of the company with Mikko Järventausta, APA, as auditor in charge.
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 2014 that expired on 8 April 2015.
The complete contents of the new authorizations given by the Annual General Meeting held on 8 April 2015 have been published in the stock exchange release regarding the Meetings' decisions. Key facts about the authorizations:
The Annual General Meeting authorized 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 authorized 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.
SHARES AND TRADING
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 867 219 treasury shares, approx. 3.9 % of the total amount of the shares.
During the review period the highest share price was 3.84 euro, the lowest price 2.91 euro, the average price 3.43 euro and the closing price 3.61 euro. The trading volume was 1.3 million shares, corresponding to 23% (annualised) of the number of shares at the end of the period. The market value of shares was 77.9 MEUR at the end of the period excluding the treasury shares.
SHAREHOLDERS
The company had a total of 3 023 owners on 31 March 2015 and the foreign ownership was 14%. 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. 10.6%.
ASSESSMENT OF RISKS AND UNCERTAINTIES
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. Slower IT investment decision making and uncertainty on starting investments to new business technology solutions may have negative impact on Affecto. Affecto's order backlog has traditionally been only for a few months. Slower decision making by customers decreases the predictability of the business and may decrease the utilisation rate of resources.
Affecto's success depends also on good customer relationships. Affecto has a well-diversified customer base. In 2014 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. On the other hand, too large amount of customers can decrease the effectiveness of the sales and delivery efforts.
Affecto also needs to be seen as an interesting employer in order to recruit skilled employees. If Affecto is not seen as progressive and modern enough, the potential to recruit right employees and future builders may decrease.
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. 9 MEUR in 2014.
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.
Approximately 35% 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
The Annual General Meeting, held on 8 April 2015, has been reported in this interim report.
Affecto signed in April a 2.3 MEUR agreement with a Scandinavian public sector customer regarding the maintenance and development of their Business Intelligence and Data Warehouse solutions during the next four years. The agreement includes option for development projects to be agreed separately.
FUTURE OUTLOOK
Net sales and operating profit are estimated to grow in 2015, but there is uncertainty especially related to the net sales development.
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 12.30 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) | 1-3/15 | 1-3/14 | 2014 | last 12m |
| Net sales | 29 062 | 31 187 | 122 693 | 120 568 |
| Other operating income | 0 | 0 | 27 | 27 |
|
Changes in inventories of finished goods and work in progress |
41 | 9 | -83 | -51 |
| Materials and services | -4 856 | -5 999 | -26 560 | -25 416 |
| Personnel expenses | -17 564 | -20 134 | -67 630 | -65 059 |
| Other operating expenses | -4 298 | -4 625 | -17 221 | -16 894 |
| Other depreciation and amortisation | -278 | -312 | -1 218 | -1 184 |
| IFRS3 amortisation | - | -549 | -1 753 | -1 204 |
| Impairment | - | - | -7 423 | -7 423 |
| Operating profit | 2 107 | -424 | 833 | 3 363 |
| Financial income and expenses | -120 | -180 | -563 | -503 |
| Profit before income tax | 1 987 | -604 | 270 | 2 861 |
| Income tax | -547 | 53 | -1 861 | -2 461 |
| Profit for the period | 1 440 | -551 | -1 591 | 400 |
|
Profit for the period attributable to: |
||||
| Owners of the parent company | 1 440 | -551 | -1 591 | 400 |
|
Earnings per share (EUR per share): |
||||
| Basic | 0.07 | -0.03 | -0.07 | 0.02 |
| Diluted | 0.07 | -0.03 | -0.07 | 0.02 |
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
||||
| (1 000 EUR) | 1-3/15 | 1-3/14 | 2014 | last 12m |
| Profit for the period | 1 440 | -551 | -1 591 | 400 |
| Other comprehensive income | ||||
| Items that may be reclassified subsequently to the statement of income: | ||||
| Translation difference | 696 | -43 | -2 141 | -1 401 |
|
Total Comprehensive income for the period |
2 136 | -594 | -3 732 | -1 002 |
|
Total Comprehensive income attributable to: |
||||
| Owners of the parent company | 2 136 | -594 | -3 732 | -1 002 |
CONSOLIDATED BALANCE SHEET
| (1 000 EUR) | 3/2015 | 3/2014 | 12/2014 |
| Non-current assets | |||
| Property, plant and equipment | 1 456 | 1 777 | 1 505 |
| Goodwill | 63 391 | 72 117 | 62 814 |
| Other intangible assets | 226 | 1 519 | 254 |
| Deferred tax assets | 1 188 | 1 649 | 1 263 |
| Trade and other receivables | - | 2 | - |
| 66 261 | 77 064 | 65 836 | |
| Current assets | |||
| Inventories | 536 | 622 | 493 |
| Trade and other receivables | 28 757 | 35 039 | 36 736 |
| Current income tax receivables | 731 | 1 063 | 393 |
| Cash and cash equivalents | 21 914 | 17 054 | 21 380 |
| 51 938 | 53 779 | 59 002 | |
| Total assets | 118 199 | 130 844 | 124 838 |
|
Equity attributable to owners of the parent Company |
|||
| Share capital | 5 105 | 5 105 | 5 105 |
|
Reserve of invested non-restricted equity |
47 718 |
47 516 |
47 718 |
| Other reserves | 852 | 784 | 835 |
| Treasury shares | -2 111 | -2 165 | -2 111 |
| Translation differences | -3 573 | -2 172 | -4 269 |
| Retained earnings | 14 598 | 17 633 | 13 159 |
| Total equity | 62 590 | 66 701 | 60 437 |
| Non-current liabilities | |||
| Loans and borrowings | 18 460 | 22 428 | 18 452 |
| Deferred tax liabilities | 185 | 397 | 190 |
| 18 645 | 22 824 | 18 642 | |
| Current liabilities | |||
| Loans and borrowings | 4 000 | 4 000 | 4 000 |
| Trade and other payables | 31 516 | 35 150 | 40 254 |
| Current income tax liabilities | 997 | 1 631 | 927 |
| Provisions | 451 | 537 | 578 |
| 36 964 | 41 318 | 45 759 | |
| Total liabilities | 55 609 | 64 143 | 64 401 |
| Equity and liabilities | 118 199 | 130 844 | 124 838 |
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
| (1 000 EUR) | 1-3/2015 | 1-3/2014 | 2014 |
| Cash flows from operating activities | |||
| Profit for the period | 1 440 | -551 | -1 591 |
| Adjustments to profit for the period | 874 | 973 | 12 878 |
| 2 314 | 423 | 11 287 | |
| Change in working capital | -1 024 | - 3 991 | 348 |
| Interest and other financial cost paid | -78 | -104 | -418 |
| Interest and other financial income received | 17 | 22 | 68 |
| Income taxes paid | -784 | -736 | -2 946 |
| Net cash from operating activities | 445 | - 4 386 | 8 339 |
| Cash flows from investing activities | |||
| Acquisition of tangible and intangible assets | -193 | -135 | -740 |
|
Proceeds from sale of tangible and intangible assets |
- |
- |
1 |
| Net cash from investing activities | -193 | -135 | -739 |
| Cash flows from financing activities | |||
| Repayments of non-current borrowings | - | - | -4 000 |
| Proceeds from share options exercised | - | 68 | 262 |
|
Dividends paid to the owners of the parent company |
- |
- |
-3 434 |
| Net cash from financing activities | - | 68 | -7 172 |
| (Decrease)/increase in cash and cash equivalents | 252 | -4 453 | 429 |
|
Cash and cash equivalents at the beginning of the period |
21 380 |
21 469 |
21 469 |
| Foreign exchange effect on cash | 282 | 38 | -518 |
|
Cash and cash equivalents at the end of the period |
21 914 |
17 054 |
21 380 |
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 | Total equity |
| Equity at 1 January 2015 | 5 105 | 47 718 | 835 | -2 111 | -4 269 | 13 159 | 60 437 |
| Profit | 1 440 | 1 440 | |||||
| Translation differences | 696 | 696 | |||||
| Total compre-hensive income | 696 | 1 440 | 2 136 | ||||
| Share-based payments | 17 | 17 | |||||
| Equity at 31 March 2015 | 5 105 | 47 718 | 852 | -2 111 | -3 573 | 14 598 | 62 590 |
|
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 | Total equity |
| Equity at 1 January 2014 | 5 105 | 47 448 | 763 | -2 165 | -2 128 | 18 184 | 67 207 |
| Profit | -551 | -551 | |||||
| Translation differences | -43 | -43 | |||||
| Total compre-hensive income | -43 | -551 | -594 | ||||
| Share-based payments | 21 | 21 | |||||
| Exercise of share options | 68 | 68 | |||||
| Equity at 31 March 2014 | 5 105 | 47 516 | 784 | -2 165 | -2 172 | 17 633 | 66 701 |
2. Notes
2.1. Basis of preparation
This financial statement bulletin has been prepared in accordance with the IFRS recognition and measurement principles and in accordance with IAS 34, Interim Financial reporting. The interim report should be read in conjunction with the annual financial statements for the year ended 31 December 2014. In material respects, the same accounting policies have been applied as in the 2014 annual consolidated financial statements. The amendments to and interpretations of IFRS standards that entered into force on 1 January 2015 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) | 1-3/15 | 1-3/14 | 2014 | last 12m |
| Total net sales | ||||
| Finland | 12 140 | 12 582 | 50 564 | 50 122 |
| Norway | 5 436 | 6 274 | 25 028 | 24 190 |
| Sweden | 4 588 | 5 827 | 19 985 | 18 746 |
| Denmark | 2 862 | 3 458 | 12 038 | 11 442 |
| Baltic | 5 087 | 4 135 | 19 032 | 19 985 |
| Other | -1 051 | -1 090 | -3 954 | -3 916 |
| Group total | 29 062 | 31 187 | 122 693 | 120 568 |
| Operational segment result | ||||
| Finland | 638 | 861 | 5 441 | 5 218 |
| Norway | 585 | -293 | 1 966 | 2 844 |
| Sweden | 114 | -279 | 304 | 697 |
| Denmark | 60 | 294 | 865 | 631 |
| Baltic | 1 309 | 160 | 2 944 | 4 093 |
| Other | -600 | -618 | -1 511 | -1 493 |
| Total operational segment result | 2 107 | 125 | 10 009 | 11 990 |
| IFRS3 amortisation | - | -549 | -1 753 | -1 204 |
| Impairment of goodwill | - | - | -7 423 | -7 423 |
| Operating profit | 2 107 | -424 | 833 | 3 363 |
| Financial income and expenses | -120 | -180 | -563 | -503 |
| Profit before income tax | 1 987 | -604 | 270 | 2 861 |
In 2014, the impairment of goodwill allocated to assets of Sweden segment.
Net sales by business lines
| (1 000 EUR) | 1-3/15 | 1-3/14 | 2014 | last 12m |
| Information Management Solutions | 27 162 | 29 055 | 114 008 | 112 115 |
| Karttakeskus GIS business | 2 876 | 2 965 | 11 868 | 11 780 |
| Other | -976 | -832 | -3 183 | -3 327 |
| Group total | 29 062 | 31 187 | 122 693 | 120 568 |
2.3. Changes in intangible and tangible assets
| (1 000 EUR) | 1-3/2015 | 1-3/2014 | 1-12/2014 |
| Carrying amount at the beginning of period | 64 573 | 76 185 | 76 185 |
| Additions | 193 | 135 | 740 |
| Disposals | - | - | -1 |
| Depreciation and amortization for the period | -278 | -861 | -2 971 |
| Impairments | - | - | -7 423 |
| Exchange rate differences | 584 | -46 | -1 957 |
| Carrying amount at the end of period | 65 073 | 75 413 | 64 573 |
In 2014, an impairment of 7 423 thousand euro has been recognized on assets allocated to Sweden cash-generating unit. The impairment has been fully recognized on goodwill.
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 |
| 1.1.2014 | 21 431 052 | 5 105 | 47 448 | -2 165 |
|
Exercise of share options Payment for share options |
31 617 - |
- - |
66 2 |
- - |
| 31.3.2014 | 21 462 669 | 5 105 | 47 516 | -2 165 |
| 1.1.2015 | 21 583 526 | 5 105 | 47 718 | -2 111 |
| 31.3.2015 | 21 583 526 | 5 105 | 47 718 | -2 111 |
Affecto Plc owns 867 219 treasury shares, which correspond to 3.9% 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) | 31.3.2015 | 31.12.2014 |
| Interest-bearing non-current liabilities | ||
|
Loans from financial institutions, non-current portion |
18 460 | 18 452 |
|
Loans from financial institutions, current portion |
4 000 | 4 000 |
| 22 460 | 22 452 |
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) | 31.3.2015 | 31.12.2014 |
| Not later than one (1) year | 3 317 | 3 333 |
|
Later than one (1) year, but not later than five (5) years |
3 112 | 3 421 |
| Later than five (5) years | - | - |
| Total | 6 429 | 6 755 |
Guarantees given:
| (1 000 EUR) | 31.3.2015 | 31.12.2014 |
| Liabilities secured by a mortgage | ||
| Financial loans | 22 500 | 22 500 |
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) | 31.3.2015 | 31.12.2014 |
| Pledges | 37 | 33 |
| Other guarantees | 1 971 | 2 118 |
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) | 1-3/2015 | 1-3/2014 | 1-12/2014 |
| Salaries and other short-term employee benefits |
700 |
645 |
2 312 |
| Post-employment benefits | 88 | 77 | 283 |
| Termination benefits | 121 | - | 80 |
| Share-based payments | 1 | 2 | 3 |
| Total | 909 | 724 | 2 678 |
Purchases from related party:
| (1 000 EUR) | 1-3/2015 | 1-3/2014 | 1-12/2014 |
| Purchases from the entity that are controlled by key management personnel of the group | - | - | 3 |
3. Key figures
| 1-3/15 | 1-3/14 | 2014 | last 12m | |
| Net sales, 1 000 eur | 29 062 | 31 187 | 122 693 | 120 568 |
| EBITDA, 1 000 eur | 2 384 | 437 | 11 227 | 13 174 |
|
Operational segment result, 1 000 eur |
2 107 | 125 | 10 009 | 11 990 |
| Operating result, 1 000 eur | 2 107 | -424 | 833 | 3 363 |
| Result before taxes, 1 000 eur | 1 987 | -604 | 270 | 2 861 |
|
Profit attributable to the owners of the parent company, 1 000 eur |
1 440 | -551 | -1 591 | 400 |
| EBITDA, % | 8.2 % | 1.4 % | 9.2 % | 10.9 % |
| Operational segment result, % | 7.2 % | 0.4 % | 8.2 % | 9.9 % |
| Operating result, % | 7.2 % | -1.4 % | 0.7 % | 2.8 % |
| Result before taxes, % | 6.8 % | -1.9 % | 0.2 % | 2.4 % |
|
Net income for equity holders of the parent company, % |
5.0 % | -1.8 % | -1.3 % | 0.3 % |
| Equity ratio, % | 59.2 % | 56.0 % | 54.6 % | |
| Net gearing, % | 0.9 % | 14.1 % | 1.8 % | |
|
Interest-bearing net debt, 1 000 eur |
546 | 9 373 | 1 071 | |
|
Gross investment in non-current assets (excl. acquisitions), 1 000 eur |
193 | 135 | 740 | |
| Gross investments, % of net sales | 0.7 % | 0.4 % | 0.6 % | |
|
Order backlog, 1 000 eur |
41 527 | 47 523 | 49 645 | |
| Average number of employees | 1 017 | 1 078 | 1 041 | |
| Earnings per share, eur | 0.07 | -0.03 | -0.07 | 0.02 |
|
Earnings per share (diluted), eur |
0.07 | -0.03 | -0.07 | 0.02 |
| Equity per share, eur | 2.90 | 3.11 | 2.80 | |
|
Average number of shares, 1 000 shares |
21 584 | 21 437 | 21 519 | 21 555 |
|
Number of shares at the end of period, 1 000 shares |
21 584 | 21 463 | 21 584 | 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:
CEO Juko Hakala, + 358 205 777 450
CFO Satu Kankare, +358 205 777 202
