Helsinki, 2013-08-01 10:00 CEST (GLOBE NEWSWIRE) -- AFFECTO PLC -- INTERIM REPORT -- 1 AUGUST 2013 at 11.00
Affecto Plc's Interim report 1-6/2013
Group key figures
| MEUR | 4-6/13 | 4-6/12 | 1-6/13 | 1-6/12 | 2012 | Last 12m |
| Net sales | 34.8 | 33.1 | 69.2 | 66.7 | 133.4 | 135.9 |
| Operational segment result | 2.5 | 3.2 | 5.0 | 5.8 | 12.5 | 11.8 |
| % of net sales | 7.1 | 9.7 | 7.3 | 8.6 | 9.4 | 8.7 |
| Operating profit | 2.0 | 2.7 | 4.0 | 4.7 | 10.5 | 9.7 |
| % of net sales | 5.7 | 8.2 | 5.8 | 7.1 | 7.8 | 7.2 |
| Profit before taxes | 1.8 | 2.6 | 3.9 | 4.5 | 10.0 | 9.5 |
| Profit for the period | 1.2 | 2.0 | 2.7 | 3.5 | 7.6 | 6.8 |
| Equity ratio, % | 53.5 | 50.1 | 53.5 | 50.1 | 50.6 | - |
| Net gearing, % | 21.1 | 31.6 | 21.1 | 31.6 | 15.8 | - |
| Earnings per share, eur | 0.05 | 0.09 | 0.13 | 0.17 | 0.37 | 0.33 |
| Earnings per share (diluted), eur | 0.05 | 0.09 | 0.13 | 0.16 | 0.36 | 0.33 |
| Equity per share, eur | 3.10 | 3.00 | 3.10 | 3.00 | 3.24 | - |
CEO Pekka Eloholma comments:
We continued to grow in the second quarter. Net sales grew by 5% to 34.8 MEUR (33.1 MEUR). Denmark grew by 17% and Norway by 15%, and also Sweden and Finland achieved growth. Net sales in Baltic decreased by 3% as the local market slowed down especially in Lithuania.
Operating profit was 2.0 MEUR (2.7 MEUR) and profitability decreased to 6% (8%). Profit improved in Denmark and Norway. Profit decreased in Finland, but was still on a good level. Profitability in Baltic decreased clearly and Sweden continued at loss.
Order backlog decreased to 48.8 MEUR (53.8 MEUR), as customers slowed down their decision making and made investment decisions in smaller lots than earlier. The development of the order backlog in the second quarter, especially in June, was a disappointment for us and reflects the weakened general economic outlook.
We have decreased our operating profit growth estimate due to the general economic development, our performance in the first half of 2013 and the development of our order backlog.
Net sales are estimated to grow in 2013. Operating profit is estimated to be near last year's level. Earlier guidance was: Operating profit and net sales are estimated to grow in 2013.
Additional information: CEO Pekka Eloholma, +358 205 777 737 CFO Satu Kankare, +358 205 777 202 SVP, M&A, IR, Hannu Nyman, +358 205 777 761
This release is unaudited. The amounts in this report have been rounded from exact numbers.
NET SALES
Affecto's net sales in 1-6/2013 were 69.2 MEUR (1-6/2012: 66.7 MEUR). Net sales in Finland were 27.0 MEUR (27.2 MEUR), in Norway 16.1 MEUR (13.3 MEUR), in Sweden 12.3 MEUR (12.3 MEUR), in Denmark 8.1 MEUR (7.3 MEUR) and 8.2 MEUR (7.8 MEUR) in Baltic.
Net sales by reportable segments
| Net sales, MEUR | 4-6/13 | 4-6/12 | 1-6/13 | 1-6/12 | 2012 | Last 12m |
| Finland | 14.3 | 13.7 | 27.0 | 27.2 | 52.6 | 52.4 |
| Norway | 7.6 | 6.6 | 16.1 | 13.3 | 27.2 | 30.0 |
| Sweden | 6.2 | 5.8 | 12.3 | 12.3 | 24.0 | 23.9 |
| Denmark | 4.3 | 3.6 | 8.1 | 7.3 | 16.0 | 16.8 |
| Baltic | 3.9 | 4.0 | 8.2 | 7.8 | 16.7 | 17.0 |
| Other | -1.4 | -0.6 | -2.4 | -1.3 | -3.0 | -4.2 |
| Group total | 34.8 | 33.1 | 69.2 | 66.7 | 133.4 | 135.9 |
Net sales grew by 5% in the second quarter. Denmark grew by 17% and Norway by 15%, and also Sweden and Finland achieved growth. Net sales in Baltic decreased by 3% as the local market slowed down especially in Lithuania. Customers' interest was toward shorter and smaller projects than earlier and the investment decisions take a long time. Sales of the third-party licenses, sold with the solutions, somewhat exceeded last year's level.
Net sales of Information Management Solutions business in 1-6/2013 were 64.7 MEUR (61.2 MEUR) and net sales of Karttakeskus GIS business were 5.7 MEUR (6.1 MEUR).
After rather brisk April and May, the sales performance in June was muted and as a consequence the order backlog decreased to 48.8 MEUR, below last year (53.8 MEUR). Normally June is a good sales month and the order backlog grows, but this year the customers apparently postponed decisions over the summer.
PROFIT
Affecto's operating profit in 1-6/2013 was 4.0 MEUR (4.7 MEUR) and the operational segment result was 5.0 MEUR (5.8 MEUR). Operational segment result was in Finland 3.2 MEUR (4.0 MEUR), in Norway 1.7 MEUR (1.3 MEUR), in Sweden -0.3 MEUR (-0.3 MEUR), in Denmark 0.8 MEUR (0.5 MEUR) and in Baltic 0.4 MEUR (0.9 MEUR).
Operating profit in the second quarter decreased to 6% of net sales (8%). Profitability improved in Denmark, was stable in Norway, but decreased elsewhere. The largest negative impact came from Baltic and Finland. On average the quarter had one more available workday than last year.
In Baltic especially the Lithuanian market slowed down and a four-day work week has been partially adopted there. Finland made a good 12% result, but did not achieve last year's level. Other business areas performed well, but the profit of the Karttakeskus GIS business decreased clearly.
Operational segment result by reportable segments
| Operational segment result, MEUR | 4-6/13 | 4-6/12 | 1-6/13 | 1-6/12 | 2012 | Last 12m |
| Finland | 1.7 | 2.1 | 3.2 | 4.0 | 7.7 | 6.9 |
| Norway | 0.8 | 0.7 | 1.7 | 1.3 | 3.3 | 3.7 |
| Sweden | -0.2 | -0.1 | -0.3 | -0.3 | -0.9 | -1.0 |
| Denmark | 0.5 | 0.3 | 0.8 | 0.5 | 1.8 | 2.1 |
| Baltic | 0.1 | 0.5 | 0.4 | 0.9 | 2.0 | 1.5 |
| Other | -0.4 | -0.2 | -0.7 | -0.6 | -1.4 | -1.4 |
| Operational segment result | 2.5 | 3.2 | 5.0 | 5.8 | 12.5 | 11.8 |
| IFRS3 Amortization | -0.5 | -0.5 | -1.0 | -1.0 | -2.1 | -2.1 |
| Operating profit | 2.0 | 2.7 | 4.0 | 4.7 | 10.5 | 9.7 |
According to the IFRS3 requirements, 1-6/2013 operating profit includes 1.0 MEUR (1.0 MEUR) of amortization on intangible assets related to acquisitions. The IFRS3 amortization is estimated to be approx. 2.0 MEUR per year until 2014, as the other intangible assets impacting in the IFRS3 amortization totaled 2.7 MEUR at the end of the reporting period.
Taxes corresponding to the profit of the period have been entered as tax expense. Net profit for the period was 2.7 MEUR, while it was 3.5 MEUR last year.
FINANCE AND INVESTMENTS
At the end of the reporting period Affecto's balance sheet totaled 132.8 MEUR (12/2012: 147.9 MEUR). Equity ratio was 53.5% (12/2012: 50.6%) and net gearing was 21.1% (12/2012: 15.8%).
The financial loans were 28.5 MEUR (12/2012: 30.5 MEUR) at the end of reporting period. The company's cash and liquid assets were 14.6 MEUR (12/2012: 19.8 MEUR). The interest-bearing net debt was 13.8 MEUR (12/2012: 10.6 MEUR).
Cash flow from operating activities for the reported period was 1.1 MEUR (-0.2 MEUR) and cash flow from investing activities was -1.1 MEUR (-0.7 MEUR). Investments in tangible and intangible assets were 1.1 MEUR (0.6 MEUR).
The Annual General Meeting held in April decided to distribute a dividend of 3.4 MEUR (2.4 MEUR).
EMPLOYEES
The number of employees was 1082 persons at the end of the reporting period (1100). 430 employees were based in Finland, 126 in Norway, 140 in Sweden, 67 in Denmark and 319 in the Baltic countries. The average number of employees during the period was 1082 (1082).
Hellen Wohlin Lidgard started as the country manager in Sweden in April. Rene Lykkeskov returned to his role as Affecto's chief strategy officer.
REVIEW OF MARKET DEVELOPMENTS
Uncertainty about the general economic development continued to affect Affecto's business negatively. Customers' decision-making pace was slower than normally, which decreased Affecto's growth. Additionally the customers are ordering shorter projects than earlier, which has decreased the size of the order backlog in most countries.
In general, there has been no significant negative change in the market situation regarding our core markets. The demand for EIM solutions, including Business Intelligence (BI) and Enterprise Content Management (ECM), is estimated to continue growing more rapidly than the general IT services. The analyst forecasts for the average annual growth of BI and analytics software license markets are approx. 6-8% in the next few years. The Nordic EIM services markets are estimated to grow annually by 6-8% on average. However, market growth estimates for 2013 are smaller.
BUSINESS REVIEW BY AREAS
The group's business is managed through five country units. Finland, Norway, Sweden, Denmark and Baltic are also the reportable segments.
In 4-6/2013 the net sales in Finland grew by 4% to 14.3 MEUR (13.7 MEUR). Operational segment result was 1.7 MEUR (2.1 MEUR). Profitability was 12%. The business development was rather stable, but customers were cautious with their orders. Despite that, the order backlog is at last year's level.
In 4-6/2013 the net sales of Karttakeskus GIS business, reported as part of Finland, decreased by 9% to 3.0 MEUR (3.2 MEUR) and its profitability was lower than last year. Largest deals in the period were made with the Finnish Agency for Rural Affairs and the Finnish Transport Authority.
In 4-6/2013 the net sales in Norway were 7.6 MEUR (6.6 MEUR) and operational segment result was 0.8 MEUR (0.7 MEUR). Net sales grew by 15% and profitability was 10%. Business development was mainly good, but customers prefer shorter and smaller projects than earlier, which has decreased the order backlog.
In 4-6/2013 the net sales in Sweden were 6.2 MEUR (5.8 MEUR) and operational segment result -0.2 MEUR (-0.1 MEUR). The net sales grew by 8%. There was still loss and the development actions taken contributed to that. The new country manager Hellen Wohlin Lidgard started in late April. Development actions continue and the goal is to achieve normal profitability, but structural and operational changes for the business will take some time. The share of employees doing billable work is being increased. Order backlog grew during the quarter, but is below last year's level. Largest deal in the period was the agreement with the Länsförsäkringar Bank.
In 4-6/2013 the net sales in Denmark were 4.3 MEUR (3.6 MEUR) and operational segment result was 0.5 MEUR (0.3 MEUR). Net sales grew by 17% and profitability grew to 11%. Generally the business developed well. Sales performed well and the order backlog exceeds last year's level.
In 4-6/2013 the net sales in Baltic (Lithuania, Latvia, Estonia, Poland, South Africa) were 3.9 MEUR (4.0 MEUR). Operational segment result was 0.1 MEUR (0.5 MEUR). Net sales decreased by 3% and profitability decreased to 2%. The sales mix of consultant work was less profitable than last year. Especially in Lithuania the market has slowed down and public sector customers' launch new projects very slowly. In order to improve profitability the Lithuanian organization has partially adopted a 4-day work week.
ANNUAL GENERAL MEETING AND GOVERNANCE
The Annual General Meeting of Affecto Plc, held on 9 April 2013, adopted the financial statements for 1.1.-31.12.2012 and discharged the members of the Board of Directors and the CEO from liability. Approximately 35 percent of Affecto's shares and votes were represented at the Meeting. The Annual General Meeting decided on a dividend distribution of EUR 0.16 per share for the year 2012.
Aaro Cantell, Magdalena Persson, Jukka Ruuska, Olof Sand, Tuija Soanjärvi and Lars Wahlström were elected as members of the Board of Directors. The organization meeting of the Board of Directors re-elected Aaro Cantell as Chairman and Jukka Ruuska as Vice-Chairman. KPMG Oy Ab was elected as the auditor of the company.
The Meeting approved the Board's proposal for appointing a Nomination Committee to prepare proposals concerning members of the Board of Directors and their remunerations for the following Annual General Meeting. The Nomination Committee will consist of the representatives of the three largest shareholders and the Chairman of the Board of Directors, acting as an expert member, if he/she is not appointed representative of a shareholder. The members representing the shareholders will be appointed by the three shareholders whose share of ownership of the shares of the company is largest on 31 October preceding the Annual General Meeting.
The Meeting approved the Board's proposal for issuing stock options 2013. The maximum total number of stock options issued will be 400 000 and they will be issued gratuitously or for consideration determined by 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.
THE AUTHORIZATIONS GIVEN TO THE BOARD OF DIRECTORS
The Board has not used in the review period the authorizations given by the Annual General Meeting in 2012, which authorizations expired on 9 April 2013.
The complete contents of the new authorizations given by the Annual General Meeting held on 9 April 2013 have been published in the stock exchange release regarding the Meetings' decisions. Key facts about the authorizations:
The Annual General Meeting decided to authorize the Board of Directors to decide to acquire the company's own shares with distributable funds. A maximum of 2 100 000 shares may be acquired. The authorization shall be in force until the next Annual General Meeting.
The Annual General Meeting decided to authorize the Board of Directors to decide to issue new shares and to convey the company's own shares held by the company in one or more tranches. The share issue may be carried out as a share issue against consideration or without consideration on terms to be determined by the Board of Directors and in relation to a share issue against consideration at a price to be determined by the Board of Directors. A maximum of 4 200 000 new shares may be issued. A maximum of 2 100 000 own shares held by the company may be conveyed. In addition, the authorization includes the right to decide on a share issue without consideration to the company itself so that the amount of own shares held by the company after the share issue is a maximum of one-tenth (1/10) of all shares in the company. The authorization shall be in force until the next Annual General Meeting.
SHARES AND TRADING
During the review period a total of 349 667 new shares have been subscribed with the 2008B and 2008C options.
The company has only one share series and all shares have similar rights. At the end of the review period Affecto Plc's share capital consisted of 21 892 735 shares. The company owned 78 427 treasury shares and Affecto Management Oy owned 823 000 shares.
In 1-6/2013 the highest share price was 4.55 euro, the lowest price 2.98 euro, the average price 3.77 euro and the closing price 3.92 euro. The trading volume was 2.6 million shares, corresponding to 24% of the number of shares at the end of the period. The market value of shares was 85.5 MEUR at the end of the period including the shares owned by Affecto Management Oy but excluding the treasury shares.
2008C options have been listed on Nasdaq OMX Helsinki since 2 April 2013. 2008B options expired in May.
SHAREHOLDERS
The company had a total of 2708 owners on 30 June 2013 and the foreign ownership was 13%. The list of the largest owners can be found in the company's web site. Information about the ownership structure and option programs is included as a separate section in the financial statements. The ownership of the board members, CEO and their controlled corporations totaled approx. 14.3%.
ASSESSMENT OF RISKS AND UNCERTAINTIES
The changes in the general economic conditions and the operating environment of customers have direct impact in Affecto's markets. The uncertain economy may affect Affecto's customers negatively, and their slower investment decision making, postponing or cancellation of IT investments may have negative impact on Affecto. Slower decision making by customers may decrease the predictability of the business and may decrease the utilisation rate of resources.
Affecto's order backlog has traditionally been only for a few months, which decreases the reliability of longer-term forecasts. Affecto sells third party software licenses as part of its solutions. Typically the license sales have most impact on the last month of each quarter and especially in the fourth quarter. This increases the fluctuation in net sales between quarters and increases the difficulty of accurately forecasting the quarters. Affecto had license sales of approx. 10 MEUR in 2012.
Affecto’s balance sheet includes a material amount of goodwill. Goodwill has been allocated to cash generating units. Cash generating units, to which goodwill has been allocated, are tested for impairment both annually and whenever there is an indication that the unit may be impaired. Potential impairment losses may have material effect on reported profit and value of assets. The greatest uncertainty is related to Sweden.
Approximately a half of Affecto's business is in Sweden, Norway and Denmark, thus the development of the currencies of these countries (SEK, NOK and DKK) may have impact on Affecto's profitability. The main part of the companies' income and costs are within the same currency, which decreases the risks.
Affecto's success depends also on good customer relationships. Affecto has a well-diversified customer base. Although none of the customers is critically large for the whole group, there are large customers in various countries who are significant for local business in the country.
Affecto's bank loan has covenants, the breach of which may lead to higher financing costs or even the termination of the loan. The covenants are based on total net debt to earnings before interest, taxes, depreciation and amortization and total net debt to total equity.
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.
FUTURE OUTLOOK
Net sales are estimated to grow in 2013. Operating profit is estimated to be near last year's level. Earlier guidance was: Operating profit and net sales are estimated to grow in 2013.
As a normal seasonality effect, the summer vacations will weaken the third quarter.
The company does not provide exact guidance for net sales or EBIT development, as single projects and timing of license sales may have large impact on quarterly sales and profit.
Affecto Plc Board of Directors
You can order Affecto's stock exchange releases to be delivered automatically by e-mail. Please visit the Investors section of the company website: www.affecto.com
A briefing for analysts and media will be arranged at 12.30 at Restaurant Savoy, Eteläesplanadi 14, Helsinki.
www.affecto.com
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Financial information:
1. Consolidated income statement, consolidated comprehensive income statement, balance sheet, cash flow statement and statement of changes in equity 2. Notes 3. Key figures
1. Consolidated income statement, consolidated comprehensive income statement, balance sheet, cash flow statement and statement of changes in equity
CONSOLIDATED INCOME STATEMENT
| (1 000 EUR) | 4-6/2013 | 4-6/2012 | 1-6/2013 | 1-6/2012 | 2012 | Last 12m |
| Net sales | 34 810 | 33 138 | 69 203 | 66 678 | 133 400 | 135 925 |
| Other operating income | 6 | 13 | 7 | 18 | 221 | 210 |
| Changes in inventories of finished goods and work in progress | -79 | -44 | 358 | -1 | -94 | 265 |
| Materials and services | -7 357 | -6 149 | -15 201 | -12 209 | -27 072 | -30 063 |
| Personnel expenses | -19 992 | -19 177 | -39 774 | -39 421 | -75 542 | -75 895 |
| Other operating expenses | -4 587 | -4 244 | -8 936 | -8 662 | -17 106 | -17 380 |
| Other depreciation and amortisation | -314 | -325 | -608 | -648 | -1 290 | -1 250 |
| IFRS3 amortisation | -517 | -510 | -1 040 | -1 021 | -2 067 | -2 086 |
| Operating profit | 1 971 | 2 702 | 4 008 | 4 733 | 10 451 | 9 726 |
| Financial income and expenses | -150 | -112 | -123 | -264 | -408 | -267 |
| Profit before income tax | 1 821 | 2 590 | 3 885 | 4 469 | 10 042 | 9 459 |
| Income tax | -616 | -574 | -1 143 | -996 | -2 467 | -2 614 |
| Profit for the period | 1 205 | 2 016 | 2 742 | 3 473 | 7 575 | 6 844 |
| Profit for the period attributable to: | ||||||
| Owners of the parent company | 1 113 | 1 950 | 2 660 | 3 430 | 7 552 | 6 782 |
| Non-controlling interest | 92 | 66 | 82 | 43 | 23 | 63 |
| Earnings per share (EUR per share): | ||||||
| Basic | 0.05 | 0.09 | 0.13 | 0.17 | 0.37 | 0.33 |
| Diluted | 0.05 | 0.09 | 0.13 | 0.16 | 0.36 | 0.33 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||
| (1 000 EUR) | 4-6/2013 | 4-6/2012 | 1-6/2013 | 1-6/2012 | 2012 | Last 12m |
| Profit for the period | 1 205 | 2 016 | 2 742 | 3 473 | 7 575 | 6 844 |
| Other comprehensive income | ||||||
| Items that may be reclassified subsequently to the statement of income: | ||||||
| Translation difference | -1 961 | 362 | -1 817 | 870 | 1 723 | -964 |
| Total Comprehensive income for the period | -756 | 2 378 | 926 | 4 343 | 9 298 | 5 880 |
| Total Comprehensive income attributable to: | ||||||
| Owners of the parent company | -849 | 2 312 | 843 | 4 300 | 9 275 | 5 818 |
| Non-controlling interest | 92 | 66 | 82 | 43 | 23 | 63 |
CONSOLIDATED BALANCE SHEET
| (1 000 EUR) | 6/2013 | 6/2012 | 12/2012 |
| Non-current assets | |||
| Property, plant and equipment | 2 037 | 1 986 | 1 711 |
| Goodwill | 73 157 | 73 850 | 74 651 |
| Other intangible assets | 3 091 | 5 100 | 4 098 |
| Available-for-sale financial assets | - | 41 | - |
| Deferred tax assets | 1 500 | 1 615 | 1 506 |
| Trade and other receivables | 7 | 11 | 11 |
| 79 792 | 82 604 | 81 977 | |
| Current assets | |||
| Inventories | 677 | 429 | 317 |
| Trade and other receivables | 37 193 | 39 333 | 45 529 |
| Current income tax receivables | 579 | 794 | 325 |
| Cash and cash equivalents | 14 566 | 12 651 | 19 767 |
| 53 015 | 53 207 | 65 937 | |
| Total assets | 132 807 | 135 811 | 147 914 |
| Equity attributable to owners of the parent Company | |||
| Share capital | 5 105 | 5 105 | 5 105 |
| Reserve of invested non-restricted equity | 47 300 | 46 611 | 46 643 |
| Other reserves | 718 | 651 | 693 |
| Treasury shares | -2 202 | -2 262 | -2 202 |
| Translation differences | -871 | 93 | 946 |
| Retained earnings | 14 996 | 11 711 | 15 781 |
| 65 046 | 61 909 | 66 965 | |
| Non-controlling interest | 394 | 420 | 311 |
| Total equity | 65 439 | 62 329 | 67 277 |
| Non-current liabilities | |||
| Loans and borrowings | 24 403 | 28 371 | 26 387 |
| Deferred tax liabilities | 707 | 1 297 | 987 |
| 25 110 | 29 668 | 27 374 | |
| Current liabilities | |||
| Loans and borrowings | 4 000 | 4 000 | 4 000 |
| Derivative financial instruments | - | 260 | - |
| Trade and other payables | 35 940 | 36 899 | 46 745 |
| Current income tax liabilities | 2 068 | 2 027 | 2 159 |
| Provisions | 249 | 629 | 359 |
| 42 257 | 43 814 | 53 263 | |
| Total liabilities | 67 367 | 73 482 | 80 638 |
| Equity and liabilities | 132 807 | 135 811 | 147 914 |
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
| (1 000 EUR) | 1-6/2013 | 1-6/2012 | 2012 |
| Cash flows from operating activities | |||
| Profit for the period | 2 742 | 3 473 | 7 575 |
| Adjustments to profit for the period | 3 100 | 3 053 | 6 449 |
| 5 842 | 6 526 | 14 024 | |
| Change in working capital | -2 904 | -4 762 | -1 340 |
| Interest and other financial cost paid | -289 | -612 | -1 207 |
| Interest and other financial income received | 100 | 75 | 165 |
| Income taxes paid | -1 660 | -1 434 | -2 525 |
| Net cash from operating activities | 1 089 | -207 | 9 117 |
| Cash flows from investing activities | |||
| Acquisition of tangible and intangible assets | -1 063 | -648 | -1 008 |
| Acquisition of available-for-sale financial assets | - | -35 | - |
| Proceeds from sale of tangible and intangible assets | 1 | 8 | 49 |
| Net cash used in investing activities | -1 061 | -675 | -959 |
| Cash flows from financing activities | |||
| Repayments of non-current borrowings | -2 000 | -2 000 | -4 000 |
| Acquisition of treasury shares | - | -266 | -266 |
| Proceeds from share options exercised | 657 | 20 | 49 |
| Acquisition of non-controlling interest | - | - | -134 |
| Dividends paid to the owners of the parent company | -3 444 | -2 367 | -2 367 |
| Net cash from financing activities | -4 788 | -4 614 | -6 718 |
| (Decrease)/increase in cash and cash equivalents | -4 760 | -5 495 | 1 440 |
| Cash and cash equivalents at the beginning of the period | 19 767 | 17 964 | 17 964 |
| Foreign exchange effect on cash | -440 | 182 | 363 |
| Cash and cash equivalents at the end of the period | 14 566 | 12 651 | 19 767 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Equity attributable to owners of the parent company | ||||||||
| (1 000 EUR) | Share capital | Reserve of invested non-restricted equity | Other reserves | Treasury shares | Trans lat. diff. | Ret. earnings | Non-controlling interest | Total equity |
| Equity at 1 January 2013 | 5 105 | 46 643 | 693 | -2 202 | 946 | 15 781 | 311 | 67 277 |
| Profit | 2 660 | 82 | 2 742 | |||||
| Translation differences | -1 817 | -1 817 | ||||||
| Total compre-hensive income | - 1 817 | 2 660 | 82 | 926 | ||||
| Share-based payments | 25 | 25 | ||||||
| Exercise of share options | 657 | 657 | ||||||
| Dividends paid | -3 444 | -3 444 | ||||||
| Equity at 30 June 2013 | 5 105 | 47 300 | 718 | -2 202 | -871 | 14 996 | 394 | 65 439 |
| Equity attributable to owners of the parent company | ||||||||
| (1 000 EUR) | Share capital | Reserve of invested non-restricted equity | Other reserves | Treasury shares | Trans lat. diff. | Ret. earnings | Non-controlling interest | Total equity |
| Equity at 1 January 2012 | 5 105 | 46 591 | 593 | -1 996 | -777 | 10 642 | 376 | 60 535 |
| Profit | 3 430 | 43 | 3 473 | |||||
| Translation differences | 870 | 870 | ||||||
| Total compre-hensive income | 870 | 3 430 | 43 | 4 343 | ||||
| Share-based payments | 58 | 58 | ||||||
| Exercise of share options | 20 | 20 | ||||||
| Acquisition of treasury shares | -266 | -266 | ||||||
| Other movements | 6 | 6 | ||||||
| Dividends paid | -2 367 | -2 367 | ||||||
| Equity at 30 June 2012 | 5 105 | 46 611 | 651 | -2 262 | 93 | 11 711 | 420 | 62 329 |
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 2012. The same accounting policies have been applied as in the annual consolidated financial statements with the exception of the amendments to the IFRS standards that have entered into force and have been applied on 1 January 2013, which amendments have been presented in the previous annual financial statements. These amendments had no material impact on this interim report.
The non-controlling interest has been presented separately after net profit for the period and in total equity.
2.2. Segment information
Affecto's reporting segments are based on geographical locations and are Finland, Norway, Sweden, Denmark and Baltic.
Segment net sales and result
| (1 000 EUR) | 4-6/2013 | 4-6/2012 | 1-6/2013 | 1-6/2012 | 2012 | Last 12m |
| Total net sales | ||||||
| Finland | 14 253 | 13 729 | 27 034 | 27 181 | 52 570 | 52 423 |
| Norway | 7 609 | 6 607 | 16 074 | 13 255 | 27 161 | 29 980 |
| Sweden | 6 206 | 5 772 | 12 273 | 12 343 | 23 984 | 23 914 |
| Denmark | 4 263 | 3 634 | 8 097 | 7 339 | 16 038 | 16 795 |
| Baltic | 3 912 | 4 045 | 8 166 | 7 818 | 16 684 | 17 032 |
| Other | -1 433 | -649 | -2 441 | -1 257 | -3 036 | -4 220 |
| Group total | 34 810 | 33 138 | 69 203 | 66 678 | 133 400 | 135 925 |
| Operational segment result | ||||||
| Finland | 1 747 | 2 134 | 3 164 | 3 962 | 7 747 | 6 948 |
| Norway | 766 | 654 | 1 710 | 1 317 | 3 317 | 3 710 |
| Sweden | -187 | -101 | -330 | -297 | -945 | -978 |
| Denmark | 471 | 269 | 781 | 524 | 1 800 | 2 057 |
| Baltic | 74 | 495 | 388 | 853 | 1 981 | 1 516 |
| Other | -384 | -239 | -664 | -604 | -1 382 | -1 441 |
| Total operational segment result | 2 488 | 3 212 | 5 048 | 5 754 | 12 518 | 11 812 |
| IFRS3 amortisation | -517 | -510 | -1 040 | -1 021 | -2 067 | -2 086 |
| Operating profit | 1 971 | 2 702 | 4 008 | 4 733 | 10 451 | 9 726 |
Net sales by business lines
| (1 000 EUR) | 4-6/2013 | 4-6/2012 | 1-6/2013 | 1-6/2012 | 2012 | Last 12m |
| Information Management Solutions | 32 575 | 30 209 | 64 740 | 61 203 | 122 892 | 126 429 |
| Karttakeskus GIS business | 2 964 | 3 241 | 5 732 | 6 106 | 11 884 | 11 510 |
| Other | -728 | -313 | -1 269 | -630 | -1 376 | -2 014 |
| Group total | 34 810 | 33 138 | 69 203 | 66 678 | 133 400 | 135 925 |
2.3. Changes in intangible and tangible assets
| (1 000 EUR) | 1-6/2013 | 1-6/2012 | 1-12/2012 |
| Carrying amount at the beginning of period | 80 460 | 81 127 | 81 127 |
| Additions | 1 063 | 648 | 1 008 |
| Disposals | -1 | -3 | -30 |
| Depreciation and amortization for the period | - 1 648 | - 1 699 | - 3 357 |
| Exchange rate differences | -1 588 | 833 | 1 711 |
| Carrying amount at the end of period | 78 285 | 80 936 | 80 460 |
2.4. Share capital, reserve of invested non-restricted equity and treasury shares
| (1 000 EUR) | Number of shares outstanding | Share capital | Reserve of invested non-restricted equity | Treasury shares |
| 1.1.2012 | 20 693 468 | 5 105 | 46 591 | -1 996 |
| Exercise of share options | 10 500 | - | 20 | - |
| Acquisition of treasury shares | -100 000 | - | - | -266 |
| 30.6.2012 | 20 603 968 | 5 105 | 46 611 | -2 262 |
| 1.1.2013 | 20 641 641 | 5 105 | 46 643 | -2 202 |
| Exercise of share options | 349 667 | - | 657 | - |
| 30.6.2013 | 20 991 308 | 5 105 | 47 300 | -2 202 |
At the end of reporting period Affecto Plc owned 78 427 treasury shares. In addition to that Affecto Management Oy, included in consolidated accounts, owned 823 000 shares in Affecto Plc. In total these 901 427 shares correspond to 4.1% of the total amount of the shares. The amount of registered shares was 21 892 735 shares.
2.5. Interest-bearing liabilities
| (1 000 EUR) | 30.6.2013 | 31.12.2012 |
| Interest-bearing non-current liabilities | ||
| Loans from financial institutions, non-current portion | 24 403 | 26 387 |
| Loans from financial institutions, current portion | 4 000 | 4 000 |
| 28 403 | 30 387 |
Affecto's loan facility agreement includes financial covenants, breach of which might lead to an increase in cost of debt or cancellation of the facility agreement. The covenants are based on total net debt to earnings before interest, taxes, depreciation and amortization and total net debt to total equity. The covenants will be measured quarterly, and these terms and conditions of covenants were met at the end of the reporting period.
2.6. Contingencies and commitments
The future aggregate minimum lease payments under non-cancelable operating leases:
| (1 000 EUR) | 30.6.2013 | 31.12.2012 |
| Not later than one (1) year | 3 734 | 3 966 |
| Later than one (1) year, but not later than five (5) years | 4 859 | 6 594 |
| Later than five (5) years | - | - |
| Total | 8 593 | 10 561 |
Guarantees given:
| (1 000 EUR) | 30.6.2013 | 31.12.2012 |
| Liabilities secured by a mortgage | ||
| Financial loans | 28 500 | 30 500 |
The above-mentioned liabilities are secured by bearer bonds with a nominal value of 52.5 million euro. The bonds are held by Nordea Pankki Suomi Oyj and secured by a mortgage on company assets of the group companies. In addition, the shares in Affecto Finland Oy and Affecto Norway AS have been pledged to secure the financial liabilities above.
Other securities given on own behalf:
| (1 000 EUR) | 30.6.2013 | 31.12.2012 |
| Pledges | 8 | 6 |
| Other guarantees | 2 946 | 3 559 |
Other guarantees are mostly securities issued for customer projects. These guarantees include both bank guarantees secured by parent company of the group and guarantees issued by the parent company and subsidiaries.
2.7. Related party transactions
Key management compensation and remunerations to the board of directors:
| (1 000 EUR) | 1-6/2013 | 1-6/2012 | 1-12/2012 |
| Salaries and other short-term employee benefits | 1 061 | 1 157 | 2 184 |
| Post-employment benefits | 152 | 170 | 279 |
| Termination benefits | 6 | - | 245 |
| Share-based payments | 2 | 8 | 13 |
| Total | 1 221 | 1 334 | 2 721 |
Loans to related party:
| (1 000 EUR) | 30.6.2013 | 30.6.2012 | 31.12.2012 |
| Loans to key management of the group | 1 600 | 1 600 | 1 624 |
Purchases from related party:
| (1 000 EUR) | 1-6/2013 | 1-6/2012 | 1-12/2012 |
| Purchases from the entity that are controlled by key management personnel of the group | 5 | - | - |
3. Key figures
| 4-6/2013 | 4-6/2012 | 1-6/2013 | 1-6/2012 | 2012 | Last 12m | |
| Net sales, 1 000 eur | 34 810 | 33 138 | 69 203 | 66 678 | 133 400 | 135 925 |
| EBITDA, 1 000 eur | 2 802 | 3 537 | 5 657 | 6 403 | 13 808 | 13 062 |
| Operational segment result, 1 000 eur | 2 488 | 3 212 | 5 048 | 5 754 | 12 518 | 11 812 |
| Operating result, 1 000 eur | 1 971 | 2 702 | 4 008 | 4 733 | 10 451 | 9 726 |
| Result before taxes, 1 000 eur | 1 821 | 2 590 | 3 885 | 4 469 | 10 042 | 9 459 |
| Profit attributable to the owners of the parent company, 1 000 eur | 1 113 | 1 950 | 2 660 | 3 430 | 7 552 | 6 782 |
| EBITDA, % | 8.1 % | 10.7 % | 8.2 % | 9.6 % | 10.4 % | 9.6 % |
| Operational segment result, % | 7.1 % | 9.7 % | 7.3 % | 8.6 % | 9.4 % | 8.7 % |
| Operating result, % | 5.7 % | 8.2 % | 5.8 % | 7.1 % | 7.8 % | 7.2 % |
| Result before taxes, % | 5.2 % | 7.8 % | 5.6 % | 6.7 % | 7.5 % | 7.0 % |
| Net income for equity holders of the parent company, % | 3.2 % | 5.9 % | 3.8 % | 5.1 % | 5.7 % | 5.0 % |
| Equity ratio, % | 53.5 % | 50.1 % | 53.5 % | 50.1 % | 50.6 % | |
| Net gearing, % | 21.1 % | 31.6 % | 21.1 % | 31.6 % | 15.8 % | |
| Interest-bearing net debt, 1 000 eur | 13 837 | 19 720 | 13 837 | 19 720 | 10 621 | |
| Gross investment in non-current assets (excl. acquisitions), 1 000 eur | 568 | 239 | 1 063 | 648 | 1 008 | |
| Gross investments, % of net sales | 1.6 % | 0.8 % | 1.5 % | 1.0 % | 0.8 % | |
| Order backlog, 1 000 eur | 48 824 | 53 842 | 48 824 | 53 842 | 61 359 | |
| Average number of employees | 1 081 | 1 088 | 1 082 | 1 082 | 1 089 | |
| Earnings per share, eur | 0.05 | 0.09 | 0.13 | 0.17 | 0.37 | 0.33 |
| Earnings per share (diluted), eur | 0.05 | 0.09 | 0.13 | 0.16 | 0.36 | 0.33 |
| Equity per share, eur | 3.10 | 3.00 | 3.10 | 3.00 | 3.24 | |
| Average number of shares, 1 000 shares | 20 768 | 20 655 | 20 706 | 20 674 | 20 642 | 20 629 |
| Number of shares at the end of period, 1 000 shares | 20 991 | 20 604 | 20 991 | 20 604 | 20 642 | 20 991 |
Calculation of key figures
| EBITDA | = | Earnings before interest, taxes, depreciation, amortization and impairment losses | |
| Operational segment result | = | Operating profit before amortizations on fair value adjustments due to business combinations (IFRS3) and goodwill impairments | |
| Equity ratio, % | = | Total equity ________________________________ | *100 |
| Total assets – advance payments | |||
| Gearing, % | = | Interest-bearing liabilities – cash and cash equivalents __________________________________ | *100 |
| Total equity | |||
| Interest-bearing net debt | = | Interest-bearing liabilities – cash and cash equivalents | |
| Earnings per share (EPS) | = | Profit attributable to owners of the parent company ______________________________________ | |
| Weighted average number of ordinary shares in issue during the period | |||
| Equity per share | = | Total equity ______________________________________ | |
| Adjusted number of shares at the end of the period | |||
| Market capitalization | = | Number of shares at the end of period (excluding company’s own shares held by the company) x share price at closing date | |
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CEO Pekka Eloholma, +358 205 777 737 CFO Satu Kankare, +358 205 777 202 SVP, M&A, IR, Hannu Nyman, +358 205 777 761
