AFFECTO PLC STOCK EXCHANGE RELEASE 6 AUGUST 2007 at 09:30
AFFECTO PLC'S INTERIM REPORT 1-6/2007
GROUP KEY FIGURES
MEUR 4-6/2007 4-6/2006 1-6/2007 1-6/2006 2006
Net sales 20.2 12.3 37.8 22.7 50.2
Operating result before 3.2 1.1 5.5 0.9 4.1
IFRS3 items
% of net sales 15.8 8.9 14.7 4.0 8.1
Operating result 2.9 1.0 4.9 0.8 3.6
% of net sales 14.5 8.4 13.0 3.5 7.3
Result before taxes 2.9 1.0 4.7 0.7 3.5
Result for the period 2.0 0.7 3.5 0.4 2.6
Equity ratio, % 49.9 62.4 49.9 62.4 52.0
Net gearing, % 31.0 5.6 31.0 5.6 35.2
Earnings per share, eur 0.12 0.05 0.20 0.03 0.16
Earnings per share
(diluted), eur 0.12 0.05 0.20 0.03 0.16
Equity per share, eur 2.39 2.14 2.39 2.14 2.30
CEO Pekka Eloholma comments the second quarter 2007:
"I am very satisfied with the developments in second quarter. Our net sales
grew by 65%. The quarter was the best in group history regarding both net
sales and operating profit."
"Our net sales grew to 20.2 MEUR (12.3 MEUR). The growth was especially strong
in Baltic (81%), but it was also good in Finland (24%). The acquisitions done
in late 2006 (ZenPark & Intellibis) created a good foundation for growth, but
the business grew also organically. The Swedish business generated 3.3 MEUR
net sales. The quarter had very good profitability and EBIT was 2.9 MEUR i.e.
14% of net sales. Profitability improved especially in the Baltic. "
"The demand for our solutions has remained good in Finland. The Baltic
business has grown significantly and during the second quarter we increased
our Baltic delivery capacity by hiring approx. 15 new employees. The Swedish
business has also developed positively."
"Positive development is expected to continue during year 2007. Based on the
acquisitions done in 2006 and good order backlog the company seeks to reach
net sales of approx. 70 MEUR in 2007 (Affecto without Component Software). The
profitability is also expected to improve from year 2006. However, as a
normal seasonality effect, the summer vacations will clearly weaken net sales
and profitability in the third quarter. The possible completion of the public
tender offer for Component Software will have an impact on the year 2007
earnings, but both the completion and the timing are still uncertain."
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 1-6/2007
Affecto builds versatile IT solutions for companies and organizations in
Finland, Sweden and the Baltic States to improve their efficiency in business
and to support the related decision-making. The company's IT solutions are
always customised to meet the specific needs of each customer. Affecto offers
business intelligence (BI) solutions that enable an efficient way of utilizing
and refining the data from ERP systems. The company develops also geographic
information systems (GIS) solutions and enterprise content management (ECM)
solutions that help companies to collect, organise and analyse digital
information in support of their business processes.
Affecto is headquartered in Helsinki, with other offices in Finland located in
Joensuu, Jyväskylä, Rauma, Tampere and Turku. The company has subsidiaries in
Estonia, Lithuania, Latvia and Sweden.
NET SALES AND PROFIT
Affecto's net sales in 4-6/2007 was 20.2 MEUR (4-6/2006 12.3 MEUR). Net sales
in Finland was 11.3 MEUR (4-6/2006 9.2 MEUR), in Baltic area 5.6 MEUR (3.1
MEUR) and 3.3 MEUR in Nordic (0.0 MEUR). Sales growth was 65%. In Finland
growth was 24% and in Baltic it was 81%.
Sales of geographical segments based on location of assets
Total sales, MEUR 4-6/2007 4-6/2006 1-6/2007 1-6/2006 2006
Finland 11.3 9.2 21.1 17.4 36.3
Baltic 5.6 3.1 10.2 5.3 13.1
Nordic 3.3 0.0 6.5 0.0 0.9
Eliminations 0.0 0.0 0.0 0.0 0.0
Group total 20.2 12.3 37.8 22.7 50.2
The sales growth was based on good demand for services in all our market
areas. Especially the Baltic business developed very positively compared to
last year.
Intellibis in Sweden, acquired in December 2006, forms the Nordic segment.
During the corresponding period last year Affecto did not have operations in
Sweden.
In 4-6/2007 net sales of BI segment were 8.4 MEUR (2.4 MEUR), Operational
solutions 8.9 MEUR (7.0 MEUR) and Cartographic solutions 2.9 MEUR (2.9 MEUR).
The acquisitions done in 2006 had impact mostly on the BI segment.
Affecto's EBIT was 2.9 MEUR (1.0 MEUR). EBIT in Finland was 1.6 MEUR (1.2
MEUR), Baltic EBIT was 1.4 MEUR (0.1 MEUR) and Nordic EBIT was 0.3 MEUR.
Operating result of geographical segments based on location of assets
Operating result, MEUR 4-6/2007 4-6/2006 1-6/2007 1-6/2006 2006
Finland 1.6 1.2 2.5 1.8 4.6
Baltic 1.4 0.1 2.5 -0.4 0.5
Nordic 0.3 0.0 0.7 0.0 0.0
Group management -0.4 -0.3 -0.7 -0.7 -1.5
Group total 2.9 1.0 4.9 0.8 3.6
According to IFRS requirements, 1-6/2007 EBIT includes 0.6 MEUR (0.1 MEUR) of
depreciation of intangible assets related to acquisitions. A significant part
of the depreciation is related to Nordic segment. In whole year 2006, such
depreciation totaled 0.4 MEUR. In year 2007, such depreciation is estimated to
amount to 1.2 MEUR excluding the possible acquisition of Component Software.
The profitability developed positively during the second quarter both in
Finland and in the Baltic countries. The profit in Baltic improved
significantly thanks to good resource utilization rate. The profit improved
also in Finland.
R&D expenditure in 1-6/2007 totaled 0.3 MEUR (0.3 MEUR), i.e. 0.7% of net
sales (1.2%). The expenditure has been booked as costs.
Taxes for the period have been booked as taxes. Net profit for the period was
3.5 MEUR, while it was 0.4 MEUR last year.
Order backlog totaled 20.3 MEUR at the end of period (17.1 MEUR in 30 June
2006 and 24.2 MEUR in 31 December 2006).
FINANCE AND INVESTMENTS
At the end of the reporting period, Affecto's balance sheet totaled 84.3 MEUR
(Q2/2006: 60.4 MEUR). Significant part of the growth is due to the acquisition
of Intellibis AB at the end of 2006. Equity ratio was 49.9% (62.4%) and net
gearing was 31.0% (5.6%).
The financial loans were 18.6 MEUR as at 30 June 2007. The interest-bearing
net debt was 12.6 MEUR.
For the Component Software acquisition, the company has negotiated a financing
package for 48.5 MEUR, which also includes the rearrangement of the previous
debts.
The company's cash and liquid assets were 6.1 MEUR (Q2/2006: 8.8 MEUR), of
which cash and cash equivalents were 6.0 MEUR and available-for-sale financial
assets 0.1 MEUR. Cash flow from operating activities for the reported period
was 3.8 MEUR (1.6 MEUR) and cash flow from investments was -0.8 MEUR (-1.9
MEUR).
Investments in non-current assets excluding acquisitions were 0.8 MEUR (0.6
MEUR) during the period.
Affecto has distributed dividends of 1.7 MEUR (previous year 1.5 MEUR) from
the profit of the year 2006. Dividend was paid on 11 April 2007.
EMPLOYEES
The number of employees was 816 persons at the end of the reporting period
(590 persons). The average number during the period was 784 persons (566). 442
employees, i.e. 54% of the employees are located outside of Finland. Personnel
have grown in second quarter in Finland, in Baltic and in Sweden.
BUSINESS REVIEW
The group's business is managed through three country units. Finland, Baltic
and Nordic are the primary IFRS segments.
Finland
In 4-6/2007 net sales in Finland was 11.3 MEUR (9.2 MEUR) and it grew by 24%.
EBIT was 1.6 MEUR (1.2 MEUR). The year has started somewhat better than the
previous year. The business developed steadily during the quarter and the
demand for various services was reasonably good and was increasing especially
regarding BI services. The unit prices of consultant work have remained stable
or even slightly increased.
The number of employees has grown by 15 during the period 4-6/2007.
The growth of IT services market in Finland is rather slow, but the growth of
our specialty segments (BI, ECM, GIS) is expected to exceed the average market
growth. The customers' activity has continued to be good. We received new
orders from, among others, Nokia, Finnair, ABB, the Finnish Road
Administration and various ministries.
Baltic (Lithuania, Latvia, Estonia)
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 4-6/2007 the Baltic net sales grew 81% and was 5.6 MEUR (3.1 MEUR). Baltic
EBIT was 1.4 MEUR (0.1 MEUR). The business has developed very favorably
compared to last year, and the resource utilization rate and profitability is
high in all three countries. The steady continuing work on large projects has
helped to keep the utilization rate very high during the whole period. The
order backlog offers stable resource utilization for the next few months.
The company is actively recruiting more employees. During the second quarter,
the number of employees in Baltic grew by approx. 15 persons. The Baltic
countries enjoy a high demand for competent workforce, which is predicted to
increase salary levels during the year. EITO (European Information Technology
Observatory) forecasts that the IT services will grow by over 13% p.a. in the
next few years in all three Baltic countries.
Nordic (Sweden)
Affecto has expanded its business to the other Nordic countries by acquiring
Intellibis AB in Sweden in December 2006.
In 4-6/2007 the net sales in Sweden was 3.3 MEUR and EBIT 0.3 MEUR. Year ago,
Affecto did not have business in Sweden.
The business in Sweden has developed positively during the early part of 2007.
The price development has been positive and the utilization rate has remained
high. New customers like Fortum, Stockholm Water and Moderna Försäkringar have
been obtained. The delivery capacity has been increased by recruitments and we
aim to continue increasing number of employees during the year.
Business review by secondary segments 4-6/2007
In the beginning of 2007 the secondary segments were modified by separating BI
(Business Intelligence), which previously was included in XBI, to its own
segment. GIS and ECM, which were included in XBI, were combined with
Customized solutions, which was renamed Operational solutions.
Business intelligence (BI) net sales was 8.4 MEUR (2.4 MEUR). The growth is
largely explained by the acquisitions of ZenPark and Intellibis in late 2006,
but the also the organic growth has been good. Customers' interest is
increasingly focusing on larger solutions and continuous service. Demand for
BI services has continuously grown and the utilization rate of project work
improved compared to last year. Also the public sector entities in Finland and
Sweden show growing interest for BI solutions. The research reports by various
research companies speak about the growing significance of BI as an IT
investment target for organizations. For example, Gartner expects the BI
license market to grow by 10% p.a. during the next few years.
Net sales of Operational Solutions grew by 28% and was 8.9 MEUR (7.0 MEUR).
The growth is explained by the strong growth of the Baltic operations, where
large projects continued steadily. The insurance solution projects in South
Africa and Sweden continued. Affecto is establishing 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 services remained moderately good in Baltic
and in Finland.
Cartographic Solutions businesses net sales was 2.9 MEUR (2.9 MEUR). The
demand for digital geographic content and related services grew. The Finnish
Road Administration has selected Affecto as the operator of the national road
and street database, Digiroad, for the next three years. The sales of maps and
other printed products remained roughly at the level of last year.
CHANGES IN GROUP STRUCTURE
The Annual General Meeting held on 28 March 2007 decided to change the name of
the parent company to Affecto Plc.
The wholly owned subsidiary ZenPark Oy has merged to Affecto Finland Oy at 30
June 2007. Zenpark Media Oy has been liquidated on 20.6.2007.
In line with the strategy, the company has continued to evaluate M&A
prospects. During the review period, the company has published its intention
to make a public tender offer for Component Software.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of AffectoGenimap Plc, which was held on March 28,
2007, adopted the financial statements for 1.1.-31.12.2006 and discharged the
members of the Board of Directors and the CEO from liability.
The Annual General Meeting decided that a dividend of EUR 0.10 per share be
distributed for the year 2006. The record date of the dividend payment was
April 2, 2007 and the dividend was paid on April 11, 2007.
Aaro Cantell, Heikki Lehmusto, Pasi Mäenpää, Jukka Norokorpi and Esko Rytkönen
were re-elected and Pyry Lautsuo was 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 proposal for changing the
company name and Articles of Association. The name of the company and the
Article 1 of the Articles of Association were changed. The new name of the
company is Affecto Oyj in Finnish, Affecto Abp in Swedish and Affecto Plc in
English. The current Articles of Association were amended so that Article 3,
which concerns the minimum and maximum share capital, Article 4, which
concerns the nominal value of the shares, Article 6, which concerns the
transfer of the shares into the book-entry system, were removed and Article 5
and the last sentence of the second paragraph of Article 12 were amended. The
Article 9 concerning the right to represent the company was amended to reflect
the terminology in the Companies Act and the requirement of a deputy auditor
was abolished and consequently Articles 11 and 13 were amended. In addition,
the numbering of Articles of Association was amended. The changes were
registered at the Finnish trade register on 2 April 2007.
The Annual General Meeting accepted the Board's proposals for the
authorizations 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.
THE AUTHORIZATIONS GIVEN TO THE BOARD OF DIRECTORS
During 1-3/2007 the Board did not use the authorizations given by the previous
Annual General Meeting. Those authorizations ended on 28 March 2007.
The complete contents of the new authorizations given by the Annual General
Meeting held on 28 March 2007 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 3 400 000 new
shares may be issued. A maximum of 1 700 000 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 1 700 000 shares may be acquired. The authorization shall be in force until
the next Annual General Meeting.
In addition, the Extraordinary General Meeting held after the review period on
10 July 2007 authorized the Board to decide on the directed share issue (max.
4 800 000 shares) needed for the acquisition of Component Software.
SHARES AND TRADING
The company has only one share series, and all shares have similar rights. As
at 30 June 2007, Affecto Plc's share capital consisted of 17 016 521 shares
and the share capital was EUR 5 104 956.30. The company owns 36 738 treasury
shares, which corresponds to 0.2% of all shares.
In 1-6/2007, the highest share price was 4.81 euro, lowest price 2.90 euro,
average price 3.69 euro and closing price 4.52 euro. Trading volume was 6.5
million shares, corresponding to 77 % (annualized) of the number of shares at
the end of period. The market value of shares was 76.7 MEUR at the end of the
period.
SHAREHOLDERS
The company has received a flagging announcement that the ownership of Mr.
Mika Laine has exceeded 5% on 5 April 2007.
The company had total of 1129 owners on 30 June 2007 and the foreign ownership
was 20%. The list of the largest owners can be viewed in the company's web
site.
OPTIONS
During the review period, 268 900 options 2006B have been given to key
personnel. The share subscription price with 2006B options is 3.24 eur per
share after the dividends paid in April 2007.
PUBLIC TENDER OFFER FOR COMPONENT SOFTWARE GROUP ASA
Affecto published on 11 June 2007 that the company had made a combination
agreement with Component Software and had intention to make a public tender
offer for Component Software's shareholders.
After the review period, the Extraordinary General Meeting held on 10 July
2007 authorized the Board to decide on the directed share issue (max. 4 800
000 shares) needed for the acquisition of Component Software. The Meeting also
elected Mr. Haakon Skaarer as a new board member with effective date from the
closing date of the tender offer. The election is conditional upon the
completion of the tender offer.
Oslo Börs approved the Offer document and the Finnish Financial Supervision
approved the prospectus on 20 July 2007. The public tender offer period began
on 25 July 2007. The public tender offer will end on 22 August 2007, assuming
that the offer period is not prolonged.
If the tender offer is completed on planned schedule, Component Software will
be consolidated to Affecto most likely as of 1 September 2007.
EVENTS AFTER THE REVIEW PERIOD
The events after the review period related to the acquisition of Component
Software have been described above in "PUBLIC TENDER OFFER FOR COMPONENT
SOFTWARE GROUP ASA".
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 2007-2009 is that net sales exceed 100
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 2007. Based on the
acquisitions done in 2006 and good order backlog the company seeks to reach
net sales of approx. 70 MEUR in 2007 (Affecto without Component Software). The
profitability is also expected to improve from year 2006. However, as a
normal seasonality effect, the summer vacations will clearly weaken net sales
and profitability in the third quarter. The possible completion of the public
tender offer for Component Software will have an impact on the year 2007
earnings, but both the completion and the timing are still uncertain.
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 Investor pages of the company
website: http://www.affecto.com
A briefing for analysts and media will be arranged at 11:00 at Restaurant
G.W.Sundmans, Eteläranta 16, 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) 4-6/07 4-6/06 1-6/07 1-6/06 2006
Net sales 20 227 12 264 37 803 22 707 50 194
Other operating income 61 16 61 101 138
Changes in inventories of -27 151 146 291 287
finished goods and work in
progress
Materials and services -4 023 -3 560 -6 712 -6 504 -13 177
Personnel expenses -9 615 -5 510 -19 133 -11 302 -23 996
IFRS3 depreciation -280 -60 -639 -110 -409
Other depreciation, amortization -295 -228 -571 -447 -963
and impairment charges
Other operating expenses -3 122 -2 044 -6 022 -3 939 -8 432
Operating result 2 926 1 029 4 932 798 3 642
Finance costs (net) -70 -56 -217 -117 -184
Result before income tax 2 856 974 4 715 682 3 458
Income tax -843 -246 -1 264 -236 -824
Result for the period 2 013 727 3 451 446 2 633
Attributable to:
Equity holders of the Company 2 013 727 3 451 446 2 633
Minority interest 0 0 0 0 0
Earnings per share for result
attributable to the equity
holders of the Company
(expressed in EUR per share)
Basic 0.12 0.05 0.20 0.03 0.16
Diluted 0.12 0.05 0.20 0.03 0.16
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 6/2007 6/2006 12/2006
Non-current assets
Tangible assets 2 351 2 022 2 110
Goodwill 45 847 31 036 43 579
Other intangible assets 6 796 3 175 7 550
Deferred tax assets 630 560 594
Available-for-sale financial assets 53 57 57
Other non-current receivables 47 87 93
55 724 36 937 53 983
Current assets
Inventories 2 640 2 292 2 095
Trade receivables 12 378 7 072 11 508
Other receivables 6 057 4 858 4 230
Current income tax receivables 944 404 1 036
Available-for-sale financial assets 108 0 578
Financial assets at fair value through 176 0 24
profit or loss
Restricted cash 225 6 381
Cash and cash equivalents 6 042 8 791 4 906
28 570 23 423 24 758
Total assets 84 294 60 360 78 741
Equity attributable to equity holders
of the Company
Share capital 5 105 4 941 5 105
Share premium 25 404 25 404 25 404
Reserve of invested non-restricted 1 960 0 1 960
equity
Other reserves 32 1 11
Treasury shares -106 -212 -106
Retained earnings 8 203 4 929 6 717
40 598 35 062 39 092
Minority interest 0 0 0
Total shareholders' equity 40 598 35 062 39 092
Non-current liabilities
Borrowings 12 355 8 859 14 014
Deferred tax liabilities 1 836 503 2 007
Other long-term liabilities 226 35 2 232
14 417 9 397 18 252
Current liabilities
Borrowings 6 260 1 848 5 032
Trade payables 3 090 3 027 2 627
Other liabilities 18 682 10 878 12 580
Current income tax liabilities 1 247 147 1 158
29 279 15 901 21 397
Total liabilities 43 696 25 297 39 649
Total shareholders' equity and 84 294 60 360 78 741
liabilities
CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 1-6/07 1-6/06 2006
Cash flows from operating activities
Result for the period 3 451 446 2 633
Adjustments to profit for the period 2 789 837 2 442
6 240 1 283 5 076
Change in working capital
Decrease (+) / increase (-) in trade and -2 401 -1 000 -1 814
other receivables
Decrease (+) / increase (-) in inventories -546 -168 30
Decrease (-) / increase (+) in trade and 1 927 1 730 475
other payables
Change in working capital -1 020 562 -1 309
Interest and other finance cost paid -440 -207 -429
Interest and dividend received 87 172 289
Income taxes paid -1 099 -208 -1 024
Net cash generated by operating activities 3 768 1 602 2 604
Cash flows from investing activities
Acquisition of subsidiaries, net of cash -107 -1 424 -13 262
acquired
Purchases of tangible and intangible assets -795 -556 -1 118
Proceeds from sale of tangible assets 22 30 41
Sale of business/subsidiaries 44 0 45
Proceeds from sale of financial assets 0 39 39
Increase of other non-current 0 35 30
receivables/liabilities
Net cash used in investing activities -836 -1 875 -14 225
Cash flow from financing activities
Proceeds from issue of share capital 0 0 2
Increase of interest-bearing liabilities 0 2 415 12 447
Repayments of interest-bearing liabilities -432 -4 263 -5 938
Purchase of treasury shares 0 -187 -509
Change in other long-term liabilities 8 0 0
Dividends paid to company's shareholders -1 698 -1 540 -1 540
Net cash generated in financing activities -2 130 -3 575 4 462
(Decrease)/increase in cash and cash 802 -3 848 -7 159
equivalents
Cash and cash equivalents at the beginning 5 485 12 639 12 639
of the period
Translation adjustment -17 0 -1
Change in fair value of financial assets 0 0 6
Cash and cash equivalents at the end of the 6 271 8 791 5 485
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 1 960 11 -106 6 717 0 39 092
equity 1
January 2007
Translation -267 -267
differences
Share options 26 26
Available-for- -5 -5
sale financial
assets
Result for the 3 451 3 451
period
Dividends -1 698 -1 698
Shareholders' 5 105 25 404 1 960 32 -106 8 203 0 40 598
equity 30 June
2007
(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' 4 619 22 856 0 55 0 6 023 20 33 573
equity 1
January 2006
Translation 1 1
differences
Share options -54 55 1
Result for the 446 446
period
Dividends -1 540 -1 540
Purchase of -212 -212
treasury shares
Issue of share 322 2 548 2 870
capital
Acquisition of -20 -20
minority
Put/Call -56 -56
treatment
Shareholders' 4 941 25 404 0 1 -212 4 929 0 35 062
equity 30 June
2006
2. Notes
2.1. Basis of preparation
This condensed interim financial information has been prepared in accordance
with IAS 34, Interim financial reporting. The condensed interim financial
report should be read in conjunction with the annual financial statements for
the year ended 31 December 2006.
2.2. Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 December 2006, as described in the
annual financial statements for the year ended 31 December 2006.
The group has adopted the following standards and interpretations from the
beginning of 2007: IFRS 7 Financial instruments - Disclosures, and Amendment
to IAS 1 - Capital disclosures. The adoption of IFRS 7 and the amendment to
IAS 1 will expand disclosures presented in the annual financial statements.
2.3. Segment information
Primary reporting format - geographical segments based on location of assets
Segment result:
(1 000 EUR) 4-6/07 4-6/06 1-6/07 1-6/06 1-12/06
Total sales
Finland 11 326 9 167 21 080 17 424 36 267
Baltic countries 5 607 3 100 10 177 5 294 13 083
Nordic 3 297 0 6 547 0 881
Eliminations -3 -3 -1 -11 -36
Group total 20 227 12 264 37 803 22 707 50 194
Segment result (operating
result)
Finland 1 560 1 246 2 492 1 808 4 641
Baltic countries 1 424 66 2 470 -350 497
Nordic 305 0 703 0 -22
Group management -363 -283 -733 -660 -1 474
Group total 2 926 1 029 4 932 798 3 642
Secondary reporting format - business segments
Segment revenue:
(1 000 EUR) 4-6/07 4-6/06 1-6/07 1-6/06 1-12/06
Total sales
BI 8 406 2 404 15 822 4 898 11 863
Operational Solutions 8 922 6 970 17 198 12 948 28 715
Cartographic Solutions 2 903 2 893 4 785 4 872 9 652
Other (incl. -3 -3 -1 -11 -36
eliminations)
Group total 20 227 12 264 37 803 22 707 50 194
The Baltic revenue is classified to both BI and Operational solutions
segments. Nordic revenue is classified to the BI segment.
2.4. Changes in intangible and tangible assets
(1 000 EUR) 1-6/07 1-6/06 1-12/06
Carrying amount at the beginning of period 53 239 35 652 35 652
Acquisition of subsidiaries 1 237 18 522
Additions 3 250 548 1 093
Disposals -9 -648 -651
Depreciation and amortization for the period -1 210 -557 -1 372
Translation differences -277 0 -6
Carrying amount at the end of period 54 994 36 233 53 239
2.5. Share capital, share premium, reserve of invested non-restricted equity
and treasury shares
(1 000 EUR) Number of Share Share Reserve of Treasury
out- capital premium invested shares
standing non-
shares restricted
equity
1 January 2006 15 396 373 4 619 22 856 0 0
Directed share issue 1 074 148 322 2 548 0 0
Treasury shares -90 400 0 0 0 -212
purchased
30 June 2006 16 380 121 4 941 25 404 0 -212
1 January 2007 16 979 783 5 105 25 404 1 960 -106
30 June 2007 16 979 783 5 105 25 404 1 960 -106
At the end of reporting period the company owned 36 738 treasury shares. The
amount of registered shares was 17 016 521 shares.
2.6. Interest-bearing liabilities
(1 000 EUR) 1-6/07 1-6/06
At the beginning of period 19 046 12 554
Acquisition of subsidiaries 0 0
Increase of liabilities 0 2 415
Repayments of liabilities -432 -4 263
At the end of period 18 615 10 707
2.7. Earnings per share
Calculation of earnings per share and diluted earnings per share is based on
the figures below.
4-6/07 4-6/06 1-6/07 1-6/06 1-12/06
Profit attributable to equity 2 013 727 3 451 446 2 633
holders of the company (1 000 EUR)
Weighted average number of
shares(1 000):
In calculation of earnings per share 16 980 16 051 16 980 15 726 16 058
Dilution effect of share options 0 0 0 0 0
In calculation of diluted earnings 16 980 16 051 16 980 15 726 16 058
per share
2.8. Contingencies and commitments
The group has a contingent asset of 87 thousand Latvian lats (EUR 123
thousand) relating to a court case in Latvia. Riga Regional Court published a
judgement, according to which adverse party was sentenced to pay 87 thousand
Latvian lats to a group company of Affecto (Mebius IT). The adverse party has
appealed to the Supreme court of the Republic of Latvia and demanded to change
the decision. The adverse party has demanded a compensation of 51 thousand
Latvian lats (EUR 72 thousand) from Mebius IT.
In respect of the acquisitions of Intellibis AB and ZenPark Oy, additional
consideration of up to 4.7 MEUR may be payable. The additional consideration
of ZenPark Oy (maximum 0.7 MEUR) is payable in 2007 and the additional
consideration of Intellibis AB (maximum 4.0 MEUR) in 2008. At the end of the
reporting period an additional consideration has been estimated to amount to
4.7 MEUR, which has been recorded as liability.
The future aggregate minimum lease payments under non-cancelable operating
leases as of 30 June 2007:
1 000 EUR 30.6.2007 31.12.2006
Not later than one (1) year 2 184 2 346
Later than one (1) year, but not later than 3 677 3 792
five (5) years
Later than five (5) years 6 0
5 867 6 138
Guarantees:
1 000 EUR 30.6.2007 31.12.2006
Debt secured by a mortgage
Financial loans 18 614 19 031
Mortgages 14 367 14 367
Other securities given on own behalf:
Pledges 786 696
Pledges given on own behalf are secured by restricted cash of 0.2 MEUR (0.4
MEUR), time deposits of 0.3 MEUR (0.0 MEUR) and short term receivables at an
amount of 0.3 MEUR (0.3 MEUR).
Derivative contracts
1 000 EUR 30.6.2007 31.12.2006
Interest rate swaps:
Nominal value 5 000 5 000
Fair value 176 24
2.9. Related party transactions
(1 000 EUR) 1-6/07 1-6/06
Salaries and other short-term employee 853 678
benefits
Post-employment benefits 129 102
Share-based payments 4 1
986 781
4. Key figures
IFRS 4-6/07 4-6/06 1-6/07 1-6/06 2006
Net sales, 1 000 eur 20 227 12 264 37 803 22 707 50 194
EBITDA, 1 000 eur 3 501 1 317 6 143 1 355 5 014
Operating result before IFRS3 3 205 1 089 5 571 908 4 051
depreciation, 1 000 eur
Operating result, 1 000 eur 2 926 1 029 4 932 798 3 642
Result before taxes, 1 000 eur 2 856 974 4 715 682 3 458
Net income for equity holders 2 012 727 3 451 446 2 633
of the parent company, 1 000
eur
EBITDA, % 17.3 % 10.7 % 16.2 % 6.0 % 10.0 %
Operating profit before IFRS3 15.8 % 8.9 % 14.7 % 4.0 % 8.1 %
depreciation, %
Operating result, % 14.5 % 8.4 % 13.0 % 3.5 % 7.3 %
Result before taxes, % 14.1 % 7.9 % 12.5 % 3.0 % 6.9 %
Net income for equity holders 10.0 % 5.9 % 9.1 % 2.0 % 5.2 %
of the parent company, %
Equity ratio, % 49.9 % 62.4 % 49.9 % 62.4 % 52.0 %
Net gearing, % 31.0 % 5.6 % 31.0 % 5.6 % 35.2 %
Interest-bearing net debt, 12 572 1 951 12 572 1 951 13 743
1 000 eur
Gross investment in non-current 423 365 795 641 1 118
assets (excl. acquisitions),
1 000 eur
Gross investments, % of sales 2.1 % 3.0 % 2.1 % 2.8 % 2.2 %
Research and development costs, 117 130 274 266 476
1 000 eur
R&D -costs, % of sales 0.6 % 1.1 % 0.7 % 1.2 % 0.9 %
Order backlog, 1 000 eur 20 298 17 127 20 298 17 127 24 167
Average number of employees 802 574 784 566 605
Earnings per share, eur 0.12 0.05 0.20 0.03 0.16
Earnings per share (diluted), 0.12 0.05 0.20 0.03 0.16
eur
Equity per share, eur 2.39 2.14 2.39 2.14 2.30
Average number of shares, 1 000 16 980 16 051 16 980 15 726 16 058
shares
Number of shares at the end of 16 980 16 380 16 980 16 380 16 980
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
-----
