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
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