AFFECTO PLC STOCK EXCHANGE RELEASE 29 OCTOBER 2007 at 11:00
AFFECTO PLC'S INTERIM REPORT 1-9/2007
GROUP KEY FIGURES
MEUR 7-9/2007 7-9/2006 1-9/2007 1-9/2006 2006
Net sales 21.8 10.9 59.6 33.6 50.2
Operating result before 2.8 1.2 8.4 2.1 4.1
IFRS3 items
% of net sales 13.0 10.7 14.1 6.2 8.1
Operating result 2.2 1.1 7.1 1.9 3.6
% of net sales 10.1 10.1 12.0 5.7 7.3
Result before taxes 1.6 1.1 6.3 1.7 3.5
Result for the period 1.3 0.8 4.7 1.2 2.6
Equity ratio, % 42.5 62.4 42.5 62.4 52.0
Net gearing, % 64.2 12.1 64.2 12.1 35.2
Earnings per share, eur 0.07 0.05 0.27 0.08 0.16
Earnings per share
(diluted), eur 0.07 0.05 0.27 0.08 0.16
Equity per share, eur 2.92 2.19 2.92 2.19 2.30
CEO Pekka Eloholma comments the third quarter 2007:
"The clearly most significant event for Affecto in third quarter was the
completion of the Component Software acquisition at end of August. The
acquisition raised our service capabilities to a genuinely Nordic-wide level."
"Our net sales grew to 21.8 MEUR (10.9 MEUR) and growth was 99%. The quarter
was the highest in group history regarding net sales thanks to the Component
Software acquisition, although the summer vacations had a negative impact on
the quarter. The growth was especially strong in Baltic (66%), but it was also
good in Finland (16%). The acquisitions done in late 2006 created a good
foundation for growth, but the business grew also organically."
"The quarter had good profitability and EBIT was 2.2 MEUR (1.1 MEUR) i.e. 10%
of net sales. Profitability was especially good in the Baltic. The operating
result before IFRS3 depreciation was 2.8 MEUR i.e. 13% of net sales."
"Positive development is expected to continue during year 2007. The company
seeks to reach net sales of over 90 MEUR in 2007. The profitability of the
whole year 2007 is also expected to improve from 2006."
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 1-9/2007
Affecto builds versatile IT solutions for companies and organizations in
Nordic countries 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, Finland. The company has subsidiaries in
Sweden, Norway, Denmark, Lithuania, Latvia, Estonia and Poland.
NET SALES
The most significant event in the review period was the acquisition of
Component Software Group ASA through a public tender offer in August 2007.
Component Software has been included in Affecto's consolidated accounts since
1 September 2007.
Affecto's net sales in 7-9/2007 was 21.8 MEUR (7-9/2006 10.9 MEUR). Net sales
in Finland was 9.0 MEUR (7-9/2006 7.8 MEUR), in Baltic area 5.3 MEUR (3.2
MEUR), 4.2 MEUR in Sweden (0.0 MEUR) and 3.3 MEUR (0.0 MEUR) in Norway &
Denmark. Sales growth was 99%. In Finland growth was 16% and in Baltic it was
66%.
Sales of geographical segments based on location of assets
Total sales, MEUR 7-9/2007 7-9/2006 1-9/2007 1-9/2006 2006
Finland 9.0 7.8 30.1 25.2 36.3
Baltic 5.3 3.2 15.4 8.5 13.1
Sweden 4.2 0.0 10.7 0.0 0.9
Norway & Denmark 3.3 0.0 3.3 0.0 0.0
Eliminations 0.0 0.0 0.0 0.0 0.0
Group total 21.8 10.9 59.6 33.6 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. As anticipated, the summer vacations affected net sales negatively
during third quarter. From business perspective, the quarter was a typical
summer quarter without major events.
Intellibis, acquired in December 2006, and the Swedish operations of Component
Software, acquired in August 2007, form the Swedish segment. Component
Software's business in Norway and Denmark forms the Norway & Denmark segment.
During the corresponding period last year Affecto did not have operations in
Sweden, Norway or Denmark.
In 7-9/2007 net sales of BI segment was 10.6 MEUR (2.2 MEUR), Operational
solutions 8.8 MEUR (6.4 MEUR) and Cartographic solutions 2.4 MEUR (2.3 MEUR).
The acquisitions done in 2006 and 2007 have had impact mostly on the BI
segment.
PROFIT
Affecto's EBIT was 2.2 MEUR (1.1 MEUR). EBIT in Finland was 0.6 MEUR (1.2
MEUR), Baltic EBIT was 1.4 MEUR (0.2 MEUR), EBIT in Sweden was 0.4 MEUR and
EBIT in Norway & Denmark was 0.2 MEUR.
Operating result of geographical segments based on location of assets
Operating result, MEUR 7-9/2007 7-9/2006 1-9/2007 1-9/2006 2006
Finland 0.6 1.2 3.1 3.0 4.6
Baltic 1.4 0.2 3.9 -0.2 0.5
Sweden 0.4 0.0 1.1 0.0 0.0
Norway & Denmark 0.2 0.0 0.2 0.0 0.0
Group management -0.4 -0.2 -1.2 -0.9 -1.5
Group total 2.2 1.1 7.1 1.9 3.6
According to IFRS requirements, 1-9/2007 EBIT includes 1,2 MEUR (0.1 MEUR) of
depreciation of intangible assets related to acquisitions. A significant part
of the depreciation is related to Sweden and Norway & Denmark segments. In
whole year 2006, such depreciation totaled 0.4 MEUR. In year 2007, such
depreciation is estimated to amount to 2.5 MEUR including the effects of the
acquisition of Component Software. In year 2008 the IFRS3 depreciation is
estimated to total 2.8 MEUR and in 2009 approx 2.6 MEUR.
The profit in Baltic improved significantly thanks to good resource
utilization rate. The profit decreased in Finland due to the investments in
growth and the weak profitability in cartographic solutions.
R&D expenditure in 1-9/2007 totaled 0.4 MEUR (0.3 MEUR), i.e. 0.8% of net
sales (0.8%). The expenditure has been booked as costs, except in Component
software's ECM business, where 0.02 MEUR has been capitalized in balance sheet
in September according to the company's practice.
Taxes for the period have been booked as taxes. Net profit for the period was
4.7 MEUR, while it was 1.2 MEUR last year.
Order backlog totaled 25.0 MEUR at the end of period (21.6 MEUR at 30
September 2006 and 24.2 MEUR at 31 December 2006).
FINANCE AND INVESTMENTS
At the end of the reporting period, Affecto's balance sheet totaled 152.4 MEUR
(Q3/2006: 61.5 MEUR). Significant part of the growth is due to the acquisition
of Component Software Group ASA in August 2007. Equity ratio was 42.5% (62.4%)
and net gearing was 64.2% (12.1%).
The additional consideration for ZenPark, acquired in 2006, was determined to
be 0.67 MEUR and it was paid during third quarter.
The financial loans were 48.4 MEUR as at 30 September 2007. The interest-
bearing net debt was 40.3 MEUR. For the Component Software acquisition, the
company negotiated a financing package, which also included the rearrangement
of the previous debts.
The company's cash and liquid assets were 8.2 MEUR (Q3/2006: 6,5 MEUR), of
which cash and cash equivalents were 8.1 MEUR and available-for-sale financial
assets 0.1 MEUR. Cash flow from operating activities for the reported period
was 2.3 MEUR (1.8 MEUR) and cash flow from investments was -27.2 MEUR (-4.1
MEUR).
The acquisition cost of Component Software ASA, acquired in August 2007, has
been determined provisionally in the end of the quarter. The estimated
acquisition cost totals to 52.8 MEUR and it had 25.6 MEUR effect on cash flow.
Of the amount, allocations have been made to intangible assets in respect of
customer relationships, technology and order backlog totaling 8.9 MEUR, net of
deferred taxes. 38.6 MEUR has been recorded as goodwill.
Investments in non-current assets excluding acquisitions were 0.9 MEUR (0.8
MEUR) during the period.
EMPLOYEES
The number of employees was 1101 persons at the end of the reporting period
(639 persons). Approx. 370 persons were based in Finland, 160 in Sweden, 160
in Norway and Denmark, and 415 in Baltic states. The average number of
employees during the period was 835 persons (577). The growth of personnel was
significantly impacted by the acquisition of Component Software, which
increased the personnel by over 200 employees. The number of emplyees has
grown organically in third quarter especially in Baltic.
BUSINESS REVIEW
The group's business is managed through four country units. Finland, Baltic,
Sweden and Norway & Denmark are also the primary IFRS segments.
Finland
In 7-9/2007 net sales in Finland was 9.0 MEUR (7.8 MEUR) and it grew by 16%.
EBIT was 0.6 MEUR (1.2 MEUR). 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. The profitability of the cartographic solutions was
weak.
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. New orders were
received from, among others, Church of Finland and Aurinkomatkat.
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 7-9/2007 the Baltic net sales grew 66% and was 5.3 MEUR (3.2 MEUR). Baltic
EBIT was 1.4 MEUR (0.2 MEUR). The net sales include one large (approx. 0.8
MEUR) license sales in Latvia. The business has developed very favorably
compared to last year, and the resource utilization rate and profitability is
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 order
backlog offers stable resource utilization for the next few months. New orders
were received e.g. from the insurance company Commercial Union Polska, Latvian
Social Insurance Institution and Estonian Ministry of Economy.
The company is actively recruiting more employees. During the third quarter,
the number of employees in Baltic grew by over 60 persons. The Baltic
countries enjoy a high demand for competent workforce, which is predicted to
increase salary levels. 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.
Affecto has founded a new subsidiary in Poland, where the insurance and
utilities sectors are initially targeted as the customers. The plan is to grow
the number of employees to approx. 15 in initial phase during the next few
quarters.
Sweden
Affecto has expanded its business to the Sweden by acquiring Intellibis AB in
December 2006. In addition, the segment covers the Swedish operations of
Component Software. The integration of Swedish operations is estimated to
cause approx 0.2 MEUR costs in Q4.
In 7-9/2007 the net sales in Sweden was 4.2 MEUR and EBIT 0.4 MEUR. The
reported EBIT includes approx. 0.2 MEUR IFRS3 depreciation. Year ago, Affecto
did not have business in Sweden.
The business in Sweden has developed positively during year 2007. The price
development has been positive and the utilization rate has remained high. New
orders were received from e.g. SKF, Lindex, Comhem, Svenska Spel and IKEA.
Norway & Denmark
The segment comprises Component Software's, acquired at the end of August,
operations in Norway and Denmark. Only the business in September has been
reported as part of Affecto.
The net sales was 3.3 MEUR in September and EBIT was 0.2 MEUR. The reported
EBIT was negatively affected by an IFRS3 depreciation of 0.3 MEUR.
Business Intelligence business developed steadily and especially the demand
for consulting services was good. During the quarter, new orders were received
from e.g. Forca, Nykredit and Telenor Broadcast.
The Contempus business, an ECM business reported as part of Operational
Solutions, also developed steadily.
Business review by secondary segments 7-9/2007
Business intelligence (BI) net sales was 10.6 MEUR (2.2 MEUR). The growth is
largely explained by the acquisitions of ZenPark and Intellibis in late 2006
and of Component Software since September 2007, but also the organic growth
has been good. Customers' interest is increasingly focusing on larger
solutions and continuous service.
According to Datamonitor's recent research, the BI solution market is expected
to grow annually by over 12% and to double in size by 2012. The recent
acquisitions where the largest global software companies have acquired BI
software producers highlight the interest for the sector. The most recent
acquisition is the SAP's offer to buy Business Objects.
Acquisition of Component Software 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 reliably forecasting the quarters. In 2006 Component Software's
license sales totaled approx. 66 MNOK (over 8 MEUR). The license sales have
mostly impact on the last month of each quarter and especially on the fourth
quarter.
Net sales of Operational Solutions grew by 38% and was 8.8 MEUR (6.4 MEUR).
The growth is to a large extent explained by the strong growth of the Baltic
operations, where large projects continued steadily. The insurance solution
project in South Africa continued, the project in Sweden ended and the project
in Poland was ramped up. 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 services remained moderately good in Baltic
and in Finland.
Cartographic Solutions businesses net sales was 2.4 MEUR (2.3 MEUR). The
demand for digital geographic content and related services grew. After the
review period it was published that Affecto continues to operate the Finnish
land parcel identification system for the next three years. The sales of maps
and other printed products remained at last year's level.
CHANGES IN GROUP STRUCTURE
In August 2007, Affecto has acquired Component Software Group ASA from Norway.
The acquisition of Component Software is described more closely in
"ACQUISITION OF COMPONENT SOFTWARE GROUP ASA".
Affecto has founded a subsidiary in Poland.
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.
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. The Board re-elected Aaro Cantell as Chairman. 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 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 group management team was modified at the end of September due to the
acquisition in Norway. Since 1 October 2007 the members are Pekka Eloholma,
Satu Kankare, Hannu Nyman, Hilkka Remes-Hyvärinen, Tuula Wäyrynen, Kestutis
Uzpalis, Martin Hultqvist and Åge Lönning.
EXTRAORDINARY GENERAL MEETING
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, and elected Mr. Haakon Skaarer as a board
member conditional to the completion of the Component Software acquisition.
Mr. Skaarer is a board member since 28 August 2007.
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. Based on
this authorization, 4 499 947 new shares were issued to shareholders of
Component Software. The share issue was registered at the trade register on 28
August 2007.
SHARES AND TRADING
The company has only one share series, and all shares have similar rights. As
at 30 September 2007, 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 1-9/2007, the highest share price was 5.18 euro, lowest price 2.90 euro,
average price 4.02 euro and closing price 4.57 euro. Trading volume was 11.2
million shares, corresponding to 70 % (annualized) of the number of shares at
the end of period. The market value of shares was 98.2 MEUR at the end of the
period.
SHAREHOLDERS
The following flaggings related to the Component Software acquisition were
made on 27 August 2007: ownership of funds managed by Eqvitec Partners Oy
decreased below 15%, Fenno Rahasto Ky's ownership decreased below 10%, Mika
Laine's ownership decreased below 5% and the ownership of Arendals
Fossekompani ASA group increased to over 5%.
The company had total of 1149 shareholders on 30 September 2007 and the
foreign ownership was 36%. The list of the largest shareholders can be viewed
in the company's web site.
ACQUISITION OF 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.
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 and ended on 22 August 2007. Affecto's board of directors
decided on 27 August 2007 to complete the tender offer.
As a consequence of the tender offer, the number of Component Software shares
transferred to Affecto at completion of the tender offer was 5,551,442 shares
representing about 95.3% of all issued shares in Component Software. In
accordance with the terms and conditions of the public tender offer, the
consideration for one Component Software share was NOK 40.03 in cash and
0.81063 new Affecto shares.
A total of 4,499,947 new Affecto shares were subscribed and issued. Affecto's
new shares were registered in the trade register on 28 August 2007 and the
trading of new shares together with Affecto's old shares started on 28 August
2007 at OMX Nordic Exchange Helsinki Oy. The new shares give the same
shareholders' rights as Affecto's old shares.
Oslo Börs approved the offer document related to the mandatory offer and the
compulsory acquisition on 19 September 2007. The mandatory offer period began
on 19 September 2007 and ended on 17 October 2007. The trading with the share
in Oslo Börs ended on 19 September 2007, when all shares were transferred to
Affecto. Component Software's listing officially ended 24 October 2007.
The name of Component Software Group has been changed to Affecto Norway ASA.
If Component Software had been part of Affecto the whole period 1-9/2007, the
pro forma net sales would have been approx. 89.9 MEUR, operating profit before
IFRS3 depreciation approx. 10.6 MEUR and EBIT approx. 7.6 MEUR.
EVENTS AFTER THE REVIEW PERIOD
The events after the review period related to the acquisition of Component
Software have been described above in "ACQUISITION OF COMPONENT SOFTWARE GROUP
ASA".
The company announced on 2 October that it starts co-operation procedure in
Finland due to financial and productional reasons in its HR solutions business
belonging to company's Operational solutions segment and in Karttakeskus unit
belonging to company's Cartographic segment. The negotiations will apply to
less than 10 employees in Finland.
The company received on 2 October 2007 flagging announcements according to
which the ownership of Fenno Rahasto and fund managed by Eqvitec had decresed
to 0%. Mika Laine flagged on 2 October 2007 that his ownership exceeded 5%.
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 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 2007. The company
seeks to reach net sales of over 90 MEUR in 2007. The profitability of the
whole year 2007 is also expected to improve from 2006.
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 12:30 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) 7-9/07 7-9/06 1-9/07 1-9/06 2006
Net sales 21 763 10 921 59 567 33 628 50 194
Other operating income 7 9 68 109 138
Changes in inventories of 15 103 161 394 287
finished goods and work in
progress
Materials and services -4 569 -3 005 -11 281 -9 509 -13 177
Personnel expenses -11 069 -4 848 -30 202 -16 150 -23 996
IFRS3 depreciation -638 -65 -1 248 -175 -409
Other depreciation, amortization -275 -236 -875 -683 -963
and impairment charges
Other operating expenses -3 039 -1 770 -9 062 -5 709 -8 432
Operating result 2 195 1 108 7 127 1 906 3 642
Finance costs (net) -594 -41 -811 -158 -184
Result before income tax 1 601 1 066 6 316 1 748 3 458
Income tax -318 -282 -1 583 -517 -824
Result for the period 1 283 784 4 733 1 230 2 633
Attributable to:
Equity holders of the Company 1 283 784 4 733 1 230 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 0.07 0.05 0.27 0.08 0.16
Diluted 0.07 0.05 0.27 0.08 0.16
CONSOLIDATED BALANCE SHEET
(1 000 EUR) 9/2007 9/2006 12/2006
Non-current assets
Tangible assets 2 584 2 049 2 110
Goodwill 85 594 33 342 43 579
Other intangible assets 19 336 3 807 7 550
Deferred tax assets 2 748 560 594
Available-for-sale financial assets 54 57 57
Other non-current receivables 137 82 93
110 453 39 898 53 983
Current assets
Inventories 2 004 2 400 2 095
Trade receivables 20 650 7 136 11 508
Other receivables 8 964 4 593 4 230
Current income tax receivables 1 392 650 1 036
Available-for-sale financial assets 108 0 578
Financial assets at fair value through 10 0 24
profit or loss
Restricted cash 649 265 381
Cash and cash equivalents 8 127 6 511 4 906
41 904 21 555 24 758
Total assets 152 356 61 453 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 21 188 0 1 960
equity
Other reserves 66 4 11
Treasury shares -106 -509 -106
Retained earnings 11 035 5 713 6 717
62 693 35 554 39 092
Minority interest 0 0 0
Total shareholders' equity 62 693 35 554 39 092
Non-current liabilities
Borrowings 45 401 8 859 14 014
Deferred tax liabilities 5 335 680 2 007
Other long-term liabilities 265 95 2 232
51 002 9 633 18 252
Current liabilities
Borrowings 3 000 1 863 5 032
Trade payables 5 683 2 699 2 627
Other liabilities 28 006 11 286 12 580
Current income tax liabilities 1 973 419 1 158
38 662 16 267 21 397
Total liabilities 89 664 25 899 39 649
Total shareholders' equity and 152 356 61 453 78 741
liabilities
CONSOLIDATED CASH FLOW STATEMENT
(1 000 EUR) 1-9/07 1-9/06 2006
Cash flows from operating activities
Result for the period 4 733 1 230 2 633
Adjustments to profit for the period 4 621 1 494 2 442
9 354 2 724 5 076
Change in working capital
Decrease (+) / increase (-) in trade and -6 880 -385 -1 814
other receivables
Decrease (+) / increase (-) in inventories 91 -275 30
Decrease (-) / increase (+) in trade and 1 896 479 475
other payables
Change in working capital -4 894 -181 -1 309
Interest and other finance cost paid -1 006 -311 -429
Interest and dividend received 121 235 289
Income taxes paid -1 323 -623 -1 024
Net cash generated by operating activities 2 252 1 844 2 604
Cash flows from investing activities
Acquisition of subsidiaries, net of cash -26 329 -3 450 -13 262
acquired
Purchases of tangible and intangible assets -945 -771 -1 118
Proceeds from sale of tangible assets 26 32 41
Sale of business/subsidiaries 44 0 45
Proceeds from sale of financial assets 0 39 39
Increase of other non-current 0 40 30
receivables/liabilities
Net cash used in investing activities -27 205 -4 110 -14 225
Cash flow from financing activities
Issue of share capital -155 2 2
Increase of interest-bearing liabilities 48 400 2 447 12 447
Repayments of interest-bearing liabilities -19 031 -4 263 -5 938
Purchase of treasury shares 0 -509 -509
Change in other long-term liabilities 0 0 0
Dividends paid to company's shareholders -1 698 -1 540 -1 540
Net cash generated in financing activities 27 516 -3 862 4 462
(Decrease)/increase in cash and cash 2 563 -6 129 -7 159
equivalents
Cash and cash equivalents at the beginning 5 485 12 639 12 639
of the period
Translation adjustment 188 0 -1
Change in fair value of financial assets 0 0 6
Cash and cash equivalents at the end of the 8 236 6 511 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 1 283 1 284
differences
Share options 58 58
Available-for- -3 -3
sale financial
assets
Result for the 4 733 4 733
period
Dividends -1 698 -1 698
Share issue 19 228 19 228
Shareholders' 5 105 25 404 21 188 66 -106 11 035 0 62 693
equity 30
September 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 -51 55 4
Result for the 1 230 1 230
period
Dividends -1 540 -1 540
Purchase of -509 -509
treasury shares
Issue of share 322 322
capital
Put/Call -56 -56
treatment
Acquisition of 2 548 -20 2 528
minority
Shareholders' 4 941 25 404 0 4 -509 5 713 0 35 554
equity 30
September 2006
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
2006 annual consolidated financial statements. 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 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) 7-9/07 7-9/06 1-9/07 1-9/06 1-12/06
Total sales
Finland 9 015 7 770 30 095 25 194 36 267
Baltic countries 5 255 3 160 15 432 8 455 13 083
Sweden 4 201 0 10 748 0 881
Norway & Denmark 3 291 0 3 291 0 0
Eliminations 0 -9 0 - 21 -36
Group total 21 763 10 921 59 567 33 628 50 194
Segment result (operating
result)
Finland 589 1 222 3 081 3 029 4 641
Baltic countries 1 400 174 3 870 - 176 497
Sweden 431 0 1 134 0 -22
Norway & Denmark 195 0 195 0 0
Group management -419 -288 -1 152 - 948 -1 474
Group total 2 195 1 108 7 128 1 906 3 642
Secondary reporting format - business segments
Segment revenue:
(1 000 EUR) 7-9/07 7-9/06 1-9/07 1-9/06 1-12/06
Total sales
BI 10 557 2 228 26 378 7 126 11 863
Operational Solutions 8 833 6 405 26 031 19 353 28 715
Cartographic Solutions 2 372 2 297 7 157 7 169 9 652
Other (incl. 0 -9 0 - 21 -36
eliminations)
Group total 21 763 10 921 59 567 33 628 50 194
2.4. 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, additional consideration of
up to 4.0 MEUR is payable in 2008. At the end of the reporting period an
additional consideration has been estimated to amount to 4.0 MEUR, which has
been recorded as non-interest-bearing liability.
The future aggregate minimum lease payments under non-cancelable operating
leases as of 30 September 2007:
1 000 EUR 30.9.2007 31.12.2006
Not later than one (1) year 3 146 2 346
Later than one (1) year, but not later than 5 948 3 792
five (5) years
Later than five (5) years 560 0
9 653 6 138
Guarantees:
1 000 EUR 30.9.2007 31.12.2006
Debt secured by a mortgage
Financial loans 48 500 19 031
Mortgages 105 000 14 367
The shares in Affecto Finland Oy and Affecto Norway ASA have been pledged to
secure the financial loans above.
Other securities given on own behalf:
Guarantees 142 0
Pledges 5 103 696
Pledges given on own behalf are secured by restricted cash of 0.3 MEUR (0.4
MEUR), time deposits of 0.3 MEUR (0.0 MEUR) and short term receivables at an
amount of 4.8 MEUR (0.3 MEUR).
Derivative contracts
1 000 EUR 30.9.2007 31.12.2006
Interest rate swaps:
Nominal value 25 000 5 000
Fair value 10 24
3. Key figures
7-9/07 7-9/06 1-9/07 1-9/06 2006
Net sales, 1 000 eur 21 763 10 921 59 567 33 628 50 194
EBITDA, 1 000 eur 3 109 1 409 9 251 2 764 5 014
Operating result before IFRS3 2 834 1 172 8 375 2 081 4 051
depreciation, 1 000 eur
Operating result, 1 000 eur 2 195 1 108 7 127 1 906 3 642
Result before taxes, 1 000 eur 1 601 1 066 6 316 1 748 3 458
Net income for equity holders 1 282 784 4 733 1 230 2 633
of the parent company, 1 000
eur
EBITDA, % 14.3 % 12.9 % 15.5 % 8.2 % 10.0 %
Operating profit before IFRS3 13.0 % 10.7 % 14.1 % 6,2 % 8.1 %
depreciation, %
Operating result, % 10.1 % 10.1 % 12.0 % 5.7 % 7.3 %
Result before taxes, % 7.4 % 9.8 % 10.6 % 5.2 % 6.9 %
Net income for equity holders 5.9 % 7.2 % 7.9 % 3.7 % 5.2 %
of the parent company, %
Equity ratio, % 42.5 % 62.4 % 42.5 % 62.4 % 52.0 %
Net gearing, % 64.2 % 12.1 % 64.2 % 12.1 % 35.2 %
Interest-bearing net debt, 40 275 4 305 40 275 4 305 13 743
1 000 eur
Gross investment in non-current 150 155 945 796 1 118
assets (excl. acquisitions),
1 000 eur
Gross investments, % of sales 0.7 % 1.4 % 1.6 % 2.4 % 2.2 %
Research and development costs, 176 87 450 353 476
1 000 eur
R&D -costs, % of sales 0.8 % 0.8 % 0.8 % 1.0 % 0.9 %
Order backlog, 1 000 eur 25 004 21 558 25 004 21 558 24 167
Average number of employees 936 587 835 577 605
Earnings per share, eur 0.07 0.05 0.27 0.08 0.16
Earnings per share (diluted), 0.07 0.05 0.27 0.08 0.16
eur
Equity per share, eur 2.92 2.19 2.92 2.19 2.30
Average number of shares, 1 000 18 643 16 338 17 540 15 932 16 058
shares
Number of shares at the end of 21 480 16 268 21 480 16 268 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
-----
