FINANCIAL STATEMENTS 2012 - Digitalist Group · Focusing of strategy and continuation of cost...

FINANCIAL STATEMENTS 2012

IXONOS | FINANCIAL STATEMENTS 2012 1

Table of contents Report of the Board of Directors 2Key fi gures 7Calculation of key fi gures 8Information about shares, shareholders and options 9

CONSOLIDATED FINANCIAL STATEMENTS, IFRS Consolidated income statement 12Consolidated balance sheet 13Consolidated cash fl ow statement 14Consolidated statement of changes in shareholders’ equity 15Accounting policies for the consolidated fi nancial statements 16

PARENT COMPANY FINANCIAL STATEMENTS, FAS Parent company income statement 40Parent company balance sheet 41Parent company cash fl ow statement 42Parent company statement of changes in shareholders’ equity 43Accompanying notes to the parent company fi nancial statements 43Information about shares, shareholders and options 44Signatures to the fi nancial statements and to the report of the Board of Directors 49Auditors´ report 50

2 IXONOS | FINANCIAL STATEMENTS 2012

Report of the Board of Directors

A YEAR OF CHANGE BEHIND US, RENEWAL CONTINUES IN 2013. The key activities of the Board of Directors during 2012 were related to advancing the company’s strong transition process and securing the fi nancial position of the company. In addition, during the fourth quarter, the CEO of Ixonos Plc changed and a new CFO was recruited.

We were largely successful in growing the company’s new business opera-tions during the year. However, our costs remained too high in relation to op-erations, despite the adaptation measures we had taken. We were unable to execute cost saving measures as planned, and the company continued to make a loss in the fourth quarter. The Board of Directors started the search for a new CEO in November and was able to complete the process very rapidly, within a few weeks. In addition to good leadership qualities, the key selection criteria for the new CEO included knowledge of international sales as well as strong evidence of executing change processes and operating profi tably in challenging environments. At the same time, the Board also had to recruit a new CFO. This process was also swi� . The selection criteria included strong hands-on knowl-edge and experience in project operations, an area important to the company.

Because of the clearly unprofi table operations in 2012 and the one-time ex-penses related to the major restructuring of the company, the fi nancial position of the company deteriorated signifi cantly towards the end of the year. To correct the situation, the Board of Directors initiated action to carry out a rights issue. At the same time, the company took additional economy measures while nonethe-less striving to ensure its ability to gain new revenue.

EVENTS DURING THE FINANCIAL PERIOD

Focusing of strategy and continuation of cost saving activities. On 25 July 2012, Ixonos announced that it will refocus strategy as well as the continue of its cost saving activities. Due to changes in the technology strategy of the company’s single most signifi cant customer, demand for Ixonos’ mobile so� ware develop-ment services in Finland had decreased substantially. The company’s acquisition of new customers and its new product and service launches did not compensate for the lost business.

Ixonos announced that because of these changes, it would further focus its ef-forts to seek growth opportunities with European and North American customers. The company also reported that it would sharpen its solution and service off ering in the Connected Devices, Online Solutions and User Experience Design service areas, catering especially for the telecommunications, automotive and media industries.

As part of the strategy refocus, Ixonos carried out cooperation negotiations with its personnel in the Connected Devices service area in Finland. The reasons for the negotiations were related to fi nances, production and reorganisation. Action to re-organise operations and improve effi ciency was also taken in Estonia, Slovakia and Asia, in accordance with local legislation and practice.

Changes in the Management Team. The following changes have occurred in the Management Team during the fi nancial period:• Vice President Taina Makkonen lest the company in August. • Senior Vice President Timo Kaisla returned from his sabbatical leave and re sumed his position as member of the Management Team. • Senior Vice President Kari Liuska lest the company on 31 October 2012. • Senior Vice President Pasi Iljin was appointed to the Management Team on 1 November 2012. • Kari Happonen acted as President and CEO until 5 November 2012.• Timo Kaisla acted as the company’s interim CEO from 6 November to 31 December 2012.

• Esa Harju was appointed as President and CEO on 14 November 2012. He took up his duties on 1 January 2013.• CFO Timo Leinonen resigned on 23 October 2012 and lest the company on 22 January 2013. • Teppo Talvinko took up his duties as CFO on 1 February 2013.

Cooperation negotiations. During 2012, Ixonos adjusted its cost structure to the new market situation so as to ensure the competitiveness of the company, and cooperation negotiations were carried out for reasons relating to fi nances, production and reorganisation. These negotiations applied to all personnel in Finland except those employed in the User Experience Design business unit. As a result of the negotiations, 39 employees were laid off temporarily and 121 were made redundant during the year.

Non-recurring expenses. In September and December, Ixonos recorded approxi-mately EUR 3.8 million in one-time restructuring expenses through profi t and loss. These expenses were related to e.g. redundancy payments, lease-related provisions, adjustment of international operations and depreciation of capitalised R&D expenses.

OPERATIONS. Ixonos designs and delivers creative mobile and online solutions. We develop technologies, so� ware and solutions for mobile devices and ser-vices. Together with our corporate customers, we design products and services that provide inspiring user experiences. We also improve the competitiveness of our client organisations by shortening the time to market for their devices and services. Our strategy is to position ourselves as a strategic partner to the lead-ing innovators in the mobile and online industry.

We have offi ces in Finland, China, Denmark, Estonia, Germany, Great Britain, Slovakia, South Korea and the United States.

Our Connected Devices service area comprises products and services for R&D of mobile devices:• Expert services in mobile sost ware development and system integration.• Testing services for devices and sost ware (websites and Android applications), also on a stand-alone basis for products developed elsewhere.• Ixonos Smartphone Platform™: A device platform engineered for powerful chipsets, high-quality components and 3D user interfaces.• Ixonos Smartphone Reference Design: A reference phone implemented on Ixonos’ device platform and featuring the Qualcomm Snapdragon chipset as well as the Android Ice Cream Sandwich operating system.• Ixonos IVI Connect™: A sost ware product integratesing in-car infotainment systems with the user’s mobile devices and cloud services, supporting the MirrorLink standard as well as iOS and Android devices.• Device Design Services: Comprehensive device creation services from concept development to manufacturing and maintenance: hardware design, electronics design, mechanical engineering, so� ware development, production and testing.

The clientele of the service area comprises wireless technology suppliers, mobile device manufacturers, telecommunications companies, automotive in-dustry companies and entertainment electronics manufacturers operating on the international market. Customers include Bang & Olufsen, Cargotec, Hewl-ett-Packard, Huawei, Intel, Nokia, Polycom, Qualcomm, Renesas, Broadcom, Volkswagen, Pioneer, Firstbeat, Polar, Samsung and Vodafone. In addition, we provide testing services to Finnish customers wanting to take advantage of the proximity of our state-of-the-art laboratories.

The Online Solutions service area encompasses global products and services for development of cloud services and mobile applications:


• System integration and expert services for online services.• Ixonos Elastic Cloud™: A Red Hat certifi ed scalable and secure enterprise cloud solution, developed especially as a platform for R&D and for online services.• Ixonos App Agency™: Provides services ranging from mobile business consulting to application production, deployment, maintenance and analysis, on all mobile platforms.• Ixonos Experience Store™: An e-commerce platform for marketing and sales of digital as well as physical products.• Ixonos Media Spark™: A set of services and product components to help media businesses face the challenges of digitalisation.

In Finland, the off ering is supplemented by online solutions for e-commerce, e-government and service operations:• Ixonos City Online™: A cloud service that enables municipalities to develop and deploy e-government services in a rapid, standardised and cost-effi cient manner.• System integration and expert services for e-commerce, e-government and service operations.

The clientele of this area consists of companies in the publishing, communica-tions, telecommunications and service sectors and also includes Finnish public administration organisations. International customers comprise, among others, National Geographic, the Middle East Broadcasting Company, Al Jazeera, the BBC, eBay India, Evri, eZ Systems, Groupon, Hotels.com, the National Health Service, Nokia, Nokia Siemens Networks, Procter & Gamble and Time Out. Finn-ish customers include Dimcos, Elisa, Fonecta, Kone, Kuntien Tiera, Numpac, OP-Pohjola, the cities of Oulu, Tampere, Lahti and Turku, TeliaSonera, Neste Oil, Sanoma Pro and the Ministry of Finance.

Our User Experience Design service area includes concept development and im-plementation services for brand-supporting comprehensive user experiences as well as user interface products and services for wireless devices, multi-channel online services and mobile applications:• Expert services in service design, user experience design, user interface design and implementation.• Ixonos 3D Engine™: A user interface platform that enables customised 3D user interfaces to be developed for devices of all shapes and sizes, regardless of platform and chipset.• Ixonos Super App™: This next-generation application platform creates a seamless and user-friendly combination of the contents and functionalities of multiple online services, integrating them with social network services.

The customers of this service area include the BBC, ESPN, Intel, National Geo-graphic, the Middle East Broadcasting Company, Nokia, Samsung, ScanLife, Sony, Turner Broadcasting, Vodafone and Yamaha.

A year of strong product launches. Ixonos launched a multitude of new products and productised services during 2012. These launches have enabled Ixonos to off er tangible, value-adding solutions to new customer segments, and they have also given the company entirely new visibility in Finnish and international media. Ixonos’ press releases on new products and customers were reproduced in in-ternational digital media more than 3,200 times.

Ixonos products and services launched in 2012:• Ixonos IVI Connect, February 2012• Ixonos Smartphone Platform, February 2012• Ixonos 3D Engine, April 2012• Ixonos SuperApp, April 2012

• Ixonos’ authorised testing services for MirrorLink products, together with Nemko, May 2012• Ixonos Experience Store for Automotive, July 2012• a self-service tool for the Ixonos Elastic Cloud service, September 2012.

Partnerships for a strengthened market position. In 2011, Ixonos joined the Car Connectivity Consortium to make new contacts with automotive companies. Ixonos has succeeded well in gaining industry visibility, e.g. as crowd-pleasing speakers at international events. In spring 2012, Ixonos joined the Genivi alliance to grow its networks in the automotive industry.

Ixonos uses the Red Hat technology platform in its Elastic Cloud service, and the two companies have cooperated intensively in marketing. Ixonos won the valued Red Hat Nordic Channel Project of The Year award in 2012.

SEGMENTS. Since the beginning of 2012, Ixonos reports its operations as a sin-gle segment. The reporting segment comprises the three service areas described above: Connected Devices, Online Solutions and User Experience Design. The prod-uct and service off ering of the service areas make up the company’s core business, which focuses on wireless devices, online services and mobile-application R&D.

TURNOVER. Consolidated turnover for the fi nancial period was EUR 56.9 million (2011: EUR 81.4 million), which is 30.2 per cent less than in the previous year.

FINANCIAL RESULT. Consolidated operating profi t before goodwill impairment and non-recurring items was EUR −9.3 million (2011: EUR 1.9 million) and profi t before tax was EUR −25.0 million (2011: EUR 1.4 million). Profi t for the fi nancial period was EUR −21.9 million (2011: EUR 0.9 million). Earnings per share were EUR −1.45 (2011: EUR 0.06). Cash fl ow from operating activities was EUR −0.07 (2011: EUR 0.34) per share. The company incurred one-time operational restructuring expenses of some EUR 3.8 million and recognised EUR 11.2 million in goodwill impairment; these items aff ect the result for the fi nancial period.

RETURN ON CAPITAL. Consolidated return on equity was −119.0 per cent (2011: 3.2 per cent) and return on investment was −81.6 per cent (2011: 5.4 per cent).

INVESTMENTS. Investments during the fi nancial period totalled EUR 3.2 million (2011: EUR 2.9 million). They consisted mostly of hardware investments into the development of cloud and hosting services as well as EUR 0.9 million (2011: EUR 1.1 million) in R&D expenses for new product platforms and solutions.

BALANCE SHEET, FINANCING AND CASH FLOW. The balance sheet total was EUR 33.3 million (2011: EUR 53.0 million). Shareholders’ equity was EUR 7.5 mil-lion (2011: EUR 29.4 million). The equity ratio was 22.6 per cent (2011: 55.6 per cent). The group’s liquid assets at the end of the fi nancial period amounted to EUR 0.5 million (2011: EUR 1.5 million).

At the end of the review period, the balance sheet showed EUR 10.4 million (2011: EUR 7.3 million) in bank loans. This amount includes overdrast in use.

The company announced in September that it had signed an agreement on changing the maturities of its interest-bearing liabilities as well as on additional funding. In accordance with the agreement, the fi nanciers granted Ixonos a EUR 3 million non-equity loan. Additionally, EUR 3.5 million in short-term fi nancing was converted into a fi ve-year loan. Thus, the overall value of the fi nancial package was approximately EUR 6.5 million. A fi ve-year debt-servicing programme was agreed on, and the loan is non-amortising during the fi rst year. The bank loans have cov-enants attached to them. These covenants are based on the equity ratio and on the proportion of interest-bearing bank loans to the 12-month rolling operating profi t.

At 31 December 2012, the company did not meet the terms of the covenants. The company’s non-current borrowings are therefore presented as current li-


abilities, in accordance with IFRS. However, the company has received covenant waivers for the next 6–12 months from its lenders.

As one way to improve the company’s balance sheet and fi nancial position, preparations for a share issue were started. The issue was completed success-fully during January and February 2013.

Consolidated cash fl ow from operating activities was EUR −1.0 million (2011: EUR 5.1 million) during the fi nancial period. By 31 December 2012, the company had sold EUR 2.3 million (2011: EUR 3.0 million) in accounts receivable so as to reduce their turnaround time.

GOODWILL. On 31 December 2012, the consolidated balance sheet included EUR 12.4 million in goodwill. This is EUR 11.2 million less than at the end of the fi nancial period 2011. Goodwill has decreased due to impairment recognised in March and December.

In February, the company published its fi nancial statement release, in which it estimated that the risk of goodwill impairment had increased substantially. The company noted that should its projections regarding that year’s developments and the rationalisation program fail to materialise, goodwill might be impaired. At the end of March, the company tested for impairment the goodwill distributed among the new cash generating service areas of the group. The refi ned estimates of the company’s turnover and profi t were lower than the ones made at the pre-vious turn of the year, and because of this, the company recognised in the fi rst quarter a goodwill impairment of EUR 9.2 million.

In December, the company decided to recognise a EUR 2 million goodwill im-pairment. This impairment was due to a weakened near-future profi tability outlook caused by slower than expected recovery from the market changes in 2011 and 2012.

PERSONNEL. The number of personnel averaged 824 (2011: 1,118) during the fi nancial period. At the end of the period, the company had 610 (2011: 1,031) em-ployees. Staff decreased in Finland as well as abroad. At the end of the fi nancial period, the Ixonos Group had 410 employees (2011: 609) in Finnish companies, while group companies in other countries employed 200 (2011: 422). During the fourth quarter, the number of employees decreased by 73.

Salaries and fees during 2012 came to EUR 33.7 million (2011: EUR 39.2 mil-lion), pension expenses to EUR 4.9 million (2011: EUR 6.3 million) and other in-direct personnel costs to EUR 2.9 million (2011: EUR 3.1 million). The company’s personnel expenses totalled EUR 41.5 million (2011: EUR 48.6 million), which is approximately 50.9 per cent of all expenses (2011: 61.1 per cent).

RESEARCH AND DEVELOPMENT. The group’s R&D expenses during the fi -nancial period 2012 were EUR 2.4 million (2011: EUR 2.2 million). The profi t for the fi nancial period includes EUR 1.5 million (2011: EUR 1.1 million) in R&D ex-penses. A total of EUR 0.9 million (2009: EUR 1.1 million) in R&D expenses was capitalised during the fi nancial period. The R&D expenses are associated with new products and services launched in 2012.

SHARES AND SHARE CAPITAL

Share turnover and price . During the fi nancial period, the highest price of the com-pany’s share was EUR 1.20 (2011: EUR 2.79) and the lowest EUR 0.47 (2011: EUR 0.66). The closing price on 31 December 2012 was EUR 0.48 (2011: EUR 0.80). The average price over the fi nancial period was EUR 0.87 (2011: EUR 1.30). The number of shares traded during the fi nancial period was 3,661,398 (2011: 7,065,258), which corresponds to 24.2 per cent (2011: 46.8 per cent) of the total number of shares at the end of the period. Based on the closing price at 31 December 2012, the market value of the company’s shares was EUR 7,249,192 (2011: EUR 12,081,987).

Ixonos announced on 21 December 2012 that it was preparing a share issue directed at its present shareholders. The company intended to raise a maximum

of EUR 4.3 million through the issue, which was successfully completed during January and February 2013.

Share capital. At the beginning as well as the end of the review period, the com-pany’s registered share capital was EUR 585,394.16 and the number of shares was 15,102,484.

Option plan 2011. The Board of Directors of Ixonos Plc decided on 30 November 2011 to grant new options. This decision was based on the authorisation given by the An-nual General Meeting on 29 March 2011.

The options were issued by 31 December 2011, free of charge, to a subsidiary wholly owned by Ixonos Plc. This subsidiary will distribute the options, as the Board decides, to employees of Ixonos Plc and other companies in the Ixonos Group, to increase their commitment and motivation. Options will not be issued to members of the Board of Directors of Ixonos Plc or to the Ixonos Group’s senior management (Ixonos Management Invest Oy shareholders).

The options will be marked IV/A, IV/B and IV/C. A total of 600,000 options will be issued. According to the terms of the options, the Board of Directors decides how the options will be divided between option series and, if needed, how undis-tributed options will be converted from one series to another.

Each option entitles its holder to subscribe for one new or treasury share in Ixonos Plc. The shares that can be subscribed for with options comprise 3.82 per cent of all Ixonos Plc shares and votes on a fully diluted basis.

The exercise period for the IV/A options will begin on 1 October 2014, for the IV/B options on 1 October 2015 and for the IV/C options on 1 October 2016. The ex-ercise periods for all options will end on 31 December 2018. The exercise price for each option series is a trade volume weighted average price at NASDAQ OMX Hel-sinki. The period during which this average price is determined is 1 September – 30 November 2011 for the IV/A options (resulting in an exercise price of EUR 0.86), 1 June – 31 August 2012 for the IV/B options and 1 June – 31 August 2013 for the IV/C options. The exercise prices will be reduced by the amount of dividends, and they can also be adjusted under other circumstances specifi ed in the option terms.

At the end of the year, 410,000 options have been allocated to series IV/A and granted to employees of group companies in accordance with the terms of the option plan.

Shareholders. On 31 December 2012, the company had 2,988 shareholders (2011: 3,201). Private persons owned 55.5 per cent (2011: 56.6 per cent) and institutions 44.5 per cent (2011: 43.4 per cent) of the shares. Foreign ownership was 7.6 per cent (2011: 7.2 per cent) of all shares.

Board authorisations. On 4 April 2012, the Annual General Meeting of Ixonos Plc authorised the Board of Directors to decide on a rights issue and on issuing stock options and other special rights entitling to shares pursuant to chapter 10, sec-tion 1 of the Limited Liability Companies Act (624/2006) as well as on transferring treasury shares in one or more lots under the following terms:

The number of shares to be issued under the authorisation may not exceed 1,500,000, which corresponds to approximately 10 per cent of all company shares at the time of convening the Annual General Meeting.

Within the limits of the authorisation, the Board of Directors may decide on all terms of the rights issue, of the issue of special rights entitling to shares and of the treasury share transfers.

The meeting also granted the Board of Directors authority to decide on cred-iting the subscription price to the share capital or, in whole or in part, to the invested non-restricted equity fund.

Shares as well as special rights entitling to shares may also be issued in a way that deviates from the pre-emptive rights of shareholders, if a weighty


fi nancial reason for this exists as laid out in the Limited Liability Companies Act. In such a case, the authorisation may be used to fi nance corporate acquisitions or other investments related to the operations of the company as well as to maintain and improve the solvency of the group of companies.

The Annual General Meeting also authorised the Board of Directors to decide on acquiring, or accepting as pledge, a maximum of 1,500,000 own shares, us-ing the company’s non-restricted equity. This amount of shares corresponds to approximately 10 per cent of all company shares at the time of convening the meeting. The acquisition may take place in one or more lots. The acquisition price will not exceed the highest market price in public trading at the time of the acquisition. In executing the acquisition of its own shares, the company may enter into derivative, share lending and other contracts customary on the capital market, within the limits set by law and regulations. The authorisation also en-titles the Board to decide on a directed acquisition, i.e. on acquiring shares in a proportion other than that of the shares held by the shareholders.

The shares may be acquired to execute corporate acquisitions or other busi-ness arrangements related to the company’s operations, to improve the capital structure of the company, to otherwise transfer the shares or to cancel them.

The authorisation includes the right for the Board of Directors to decide on all other matters related to the acquisition of shares.

The authorisations are eff ective until the Annual General Meeting 2013.

EVENTS AFTER THE FINANCIAL PERIOD

Market events in early 2013. At the beginning of 2013, Ixonos announced new ac-counts, including the National Geographic Society and Firstbeat Technologies. Ixonos and Sharp Europe reported that they would collaborate to create a mobile device for a mutual customer. Ixonos announced that Samsung Electronics had chosen Ixonos as its innovation partner, particularly to develop the Android user experience.

Ixonos Media Spark™ was launched in January 2013. In February, Ixonos launched technology components for embedded systems. These components include a modern embedded Linux solution as well as a fast HD video streaming solution suitable e.g. for closed-circuit TV.

New registration document and working capital statement. On 21 January 2013, Ixonos published its registration document, which the Financial Supervi-sory Authority had approved on 17 January 2013, as provided in the Securities Market Act (746/2012). The registration document contains information about the company, its operations and its fi nancial position. It is valid for 12 months from the date of approval. The new registration document includes a working capital statement noting that the company’s present working capital will not be suffi cient for the company’s needs over the next twelve months, but that the company’s working capital will be suffi cient for the company’s needs over the next twelve months if the company’s cash fl ow develops as forecast and planned and the share issue is completed in its entirety. However, there is no guarantee that the company will be able to fulfi l its fi nancial covenants under all circum-stances. If the company cannot comply with its covenants, the fi nanciers are en-titled to e.g. call in the loans or renegotiate the terms of the loans. The company and its fi nanciers have begun negotiations on additional fi nancing. The manage-ment of the company trusts that should the working capital requirements cause a need for additional fi nancing, the company will be able to meet that need.

Share issue. The rights issue of Ixonos Plc ended on 7 February 2013. All 20,136,645 shares off ered were subscribed for. The number of shares a� er the issue is 35,239,129. A total of 19,052,212 shares were subscribed for with subscription rights. This amount corresponds to approximately 94.6 per cent of the shares off ered. In the secondary subscription, 5,358,879 shares were subscribed for without subscrip-tion rights, and subscriptions for 1,084,433 shares were accepted. The subscriptions

thus correspond to approximately 121.2 per cent of the shares off ered. Ixonos raised approximately EUR 4.23 million gross through the issue. As all off ered shares were subscribed for, none of the underwriting commitments was utilised.

On 16 January 2013, because of the rights issue, Ixonos’ Board of Directors adjusted the subscription ratio and exercise price associated with the option rights in the 2011 option plan, in accordance with the terms of the options. The adjustment was made to ensure equal treatment of option holders and share-holders, and it was announced in a stock exchange release on 13 February 2013.

Cooperation negotiations, rationalisation of the group structure. Ixonos an-nounced that it would commence cooperation negotiations with its employees for reasons related to fi nances, production and reorganisation.

The company’s operational reorientation and the rationalisation of the group structure began in 2012, but the speed and realised extent of these measures have been insuffi cient. The goal of the negotiations is to adjust the cost structure of the Finnish companies to the new situation and the desired direction as well as to ensure the competitiveness and profi tability of the company.

The negotiations apply to all personnel in Finland. The results of the negotia-tions are estimated to aff ect not more than 87 employees in Finland.

At the same time, the company announced that it would discontinue its operations in China and relocate its production activities in Tallinn to Košice, Slovakia during 2013.

RISK MANAGEMENT AND NEAR�FUTURE UNCERTAINTY FACTORS. The risk management of Ixonos Plc aims to ensure undisturbed continuity and develop-ment of the company’s operations, support attainment of the commercial tar-gets set by the company and promote increasing company value. Details on the risk management organisation and process as well as on recognised risks are presented on the company’s website at www.ixonos.com.

Changes in key customer accounts may have adverse eff ects on Ixonos’ op-erations, earning power and fi nancial position. Should a major customer switch its purchases from Ixonos to its competitors or make forceful changes to its own operating model, Ixonos would have limited ability to acquire, in the short term, new customer volume to compensate for such changes.

The reduction and rationalisation of the company’s operations cause one-time expenses, such as redundancy payments in various countries. This increases the company’s need for short-term fi nancing. The company manages this need by creating, together with fi nanciers, adequate buff ers to ensure suffi cient funds as well as by facilitating the circulation of working capital.

The balance sheet of the company includes a signifi cant amount of goodwill, which may still be impaired should internal or external factors reduce the profi t expectations of the company or any of its cash generating units. Goodwill is tested during the fi nal quarter of each year and, if necessary, at other times.

The company’s fi nancial agreements include covenants. A covenant breach may increase the company’s fi nancial expenses or lead to a call for swi� par-tial or full repayment of non-equity loans. The main risks related to covenant breaches are associated with operating profi t fl uctuation due to the market situation and with a potential need to increase the company’s working capital through non-equity funding. The company manages these risks by negotiating with fi nanciers and by maintaining readiness for various fi nancing methods.

There is a risk that the working capital of the company will not be suffi cient to fund the company’s operations over the next twelve months. Although the company considers itself able to cover its need for working capital over the next twelve months through various means, there is no guarantee that the company will be able to ensure suffi cient working capital under all circumstances. A short-age of working capital may have a substantial adverse eff ect on the operations, result and fi nancial position of the company.


LONG�TERM GOALS AND STRATEGY. In the long term, Ixonos aims to achieve an operating profi t of at least 10 per cent. To reach its long-term goals, Ixonos focuses its strategy on deepening the company’s product, solution and service operations as well as on new accounts in selected industries.

Our value proposition – Dream, Design, Deliver – works best for customers for whom a short time to market and a well thought-through user experience are crucial. Our ability to combine design studio skills, productised solutions, advanced online services and device deliveries is at the top level globally.

CORPORATE GOVERNANCE. Ixonos complies with the Finnish Corporate Gov-ernance Code, issued by the Securities Market Association (Arvopaperimark-kinayhdistys ry), as entered into force on 1 October 2010. The Corporate Govern-ance Statement required by the Finnish Corporate Governance Code was issued on 16 March 2012. The statement is presented as an appendix to the Report of the Board of Directors and it is available on the website of the company. The statement will be updated in March 2013 with information for 2012.

LOANS TO RELATED PARTIES. During the fi nancial period 2010, members of Ixonos’ management established the limited liability company Ixonos Manage-ment Invest Oy for the purpose of share ownership pertaining to the management incentive plan. As part of this arrangement, Ixonos Plc granted Ixonos Management Oy a EUR 920,000 loan to fund the share acquisition. The interest rate of the loan corresponds to the twelve-month Euribor plus one per cent. The 467,630 shares acquired have been pledged to Ixonos Plc as security for the loan.

PARENT COMPANY. The turnover of the parent company Ixonos Plc in 2012 was EUR 5.1 million (2011: EUR 5.2 million), a 1.4 per cent decrease from the previous year. Operating profi t was EUR −4.7 million (2011: EUR −3.4 million). Profi t before tax was negative, EUR −19.2 million (2011: EUR −5 thousand). This amount includes a EUR 0.1 million depreciation of the loan receivable from Ixonos Management Invest Oy. Profi t for the fi nancial period was negative, EUR −19.2 million (2011: EUR −0.2 million).

The balance sheet total was EUR 40.6 million (2011: EUR 66.2 million). Share-holders’ equity was EUR 5.5 million (2011: EUR 24.7 million). The equity ratio was 13.6 per cent (2011: 37.3 per cent). The liquid assets of the parent company at the end of the fi nancial period stood at EUR 9 thousand (2011: EUR 0.6 million).

The number of personnel averaged 27 (2011: 34) during the fi nancial period. At the end of the period, the company had 21 (2011: 30) employees. Salaries and fees came to EUR 2.5 million (2011: EUR 2.2 million), pension expenses to EUR 0.4 million (2011: EUR 0.5 million) and other indirect personnel costs to EUR 0.1 million (2011: EUR 0.1 million). The personnel expenses of the company totalled EUR 3.0 million (2011: EUR 2.9 million), approximately 29.8 per cent of total ex-penses (2011: 33.3 per cent).

Cash fl ow from operating activities during the fi nancial period was EUR −3.8 million (2011: EUR 2.3 million).

FUTURE PROSPECTS. In accordance with its strategy, Ixonos continues to strengthen and expand its clientele by focusing on products, solutions and ser-vices for technology suppliers, mobile device manufacturers, consumer elec-tronics manufacturers, the automotive industry and other customers in Finland as well as internationally.

Ixonos aims to restore positive cash fl ow and profi tability by rationalising its operations.

The company estimates turnover for 2013 at EUR 40–50 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the entire year are predicted to be positive, and operating profi t in the second half of the year is estimated to be better than in the fi rst.

THE BOARD OF DIRECTORS’ PROPOSAL TO THE ANNUAL GENERAL MEET�ING. The Board of Directors of Ixonos Plc proposes to the Annual General Meet-ing that the distributable funds will be le� in shareholders’ equity and that no dividend for the fi nancial period 2012 will be paid to shareholders. The parent company’s distributable funds on 31 December 2012 are EUR 4,729,568.43.


Consolidated key fi gures

IFRS IFRS IFRS IFRS IFRS

1 January – 1 January – 1 January – 1 January – 1 January –

31 December 2012 31 December 2011 31 December 2010 31 December 2009 31 December 2008

Turnover, 1000 € 56 852 81 408 84 944 67 059 75 115

Turnover increase -30,2 % -4,2 % 26,7 % -10,7 % 26,8 %

Operating profi t, 1000 € -24 317 1 937 5 331 -3 993 6 123

Percentage of turnover -42,8 % 2,4 % 6,3 % -6,0 % 8,2 %

Profi t before tax, 1000 € -25 018 1 409 4 550 -5 464 4 717

Percentage of turnover -44,0 % 1,7 % 5,4 % -8,1 % 6,3 %

Balance sheet total 33 331 52 970 56 693 52 140 62 719

Return on equity -119,0 % 3,2 % 13,7 % -27,0 % 15,1 %

Return on investment -81,6 % 5,4 % 14,1 % -9,4 % 15,9 %

Interest-bearing liabilities, 1000 € 12 606 9 555 11 641 17 883 21 715

Financial assets, cash and cash equivalents. 1000 € 477 1 466 1 226 2 278 2 913

Gearing 162,0 % 27,5 % 36,6 % 81,4 % 74,8 %

Equity ratio 22,5 % 55,6 % 50,2 % 36,8 % 40,1 %

Investments, 1000 € 3 157 2 940 4 205 2 400 16 279

Percentage of turnover 5,6 % 3,6 % 5,0 % 3,6 % 21,7 %

Average number of employees 824 1118 1120 985 930

Number of employees at the end of the period 610 1031 1138 1063 957

1 January – 1 January – 1 January – 1 January – 1 January –

Key fi gures on shares 31 December 2012 31 December 2011 31 December 2010 31 December 2009 31 December 2008

Earnings per share, diluted, EUR* -1,46 0,06 0,25 -0,51 0,31

Earnings per share, basic, EUR* -1,46 0,06 0,25 -0,51 0,31

P/E ratio* -0,33 12,98 10,28 -5,33 4,53

Share price at the end of the period 0,48 0,80 2,53 2,72 2,23

Number of shares, adjusted for issues, average* 15 102 484 15 102 484 13 220 524 11 756 655 11 413 956

Number of shares at the end of the period 15 102 484 15 102 484 15 102 484 9 313 089 9 253 089

Number of shares, adjusted for option dilution, average* 15 102 484 15 102 484 13 220 524 11 756 655 11 458 787

Number of shares, adjusted for option dilution, at the end of the period 15 102 484 15 102 484 15 102 484 9 313 089 9 285 561

Dividend per earnings 0,00% 0,00% 0,00% 0,00% 0,00%

Dividend per share, EUR 0,00 0,00 0,00 0,00 0,00

Eff ective dividend yield 0,00 0,00 0,00 0,00 0,00

Equity per share, EUR 0,48 1,94 1,87 2,06 2,72

* The comparative key fi gures on shares have been adjusted for the share issue in 2010.


Calculation of key fi gures :

Return on equity = Profi t for the period

Equity, average x 100

Return on investment = (Profi t before tax + fi nancial expenses)

Balance sheet total − non-interest-bearing liabilities, average x 100

Equity ratio, per cent =

Shareholders’ equity

Balance sheet total − advances received x 100

Gearing = Interest-bearing liabilities − interest-bearing assets


Diluted earnings per share =

Profi t for the period, attributable to equity holders of the parent

Number of shares, adjusted for issues and for option dilution, average

Equity per share =

Equity attributable to equity holders of the parent

Amount of shares on the closing date

Dividend/earnings =

Dividends for the period

Profi t for the period

P/E ratio =

Share price at the end of the period

Diluted earnings per share

Eff ective dividend yield =

Dividend/share

Share price at the end of the period x 100

Dilution =

Number of shares plus allocated options − number of shares obtainable with the exercise price for

options, according to the turnover-weighted average price


SHARESShare capital and sharesThe share capital of Ixonos Plc at 31 December 2012 was EUR 585,394.16.The total number of shares at 31 December 2011 was 15,102,484.

STOCK EXCHANGE PRICES

Ixonos Plc is listed at NASDAQ OMX Helsinki.

The company has one listed series of shares: XNS1V.

2012 2011

Share subscription price at listing on 1 October 1999 5,75 EUR 5,75 EUR

Highest share price during the period 1,20 EUR 2,79 EUR

Lowest share price during the period 0,47 EUR 0,66 EUR

Closing price on 31 December 0,48 EUR 0,80 EUR

Market value at 31 December 7 249 192 EUR 12 081 987 EUR

Turnover of shares 1 January – 31 December 3 661 398 shares 7 065 258 shares

3 180 865 EUR 9 158 584 EUR

Average price 1 January – 31 December 0,87 EUR 1,30 EUR

Share turnover, percentage of number of shares, adjusted for issues 24,2 % 46,8 %

Number of shares on 31 December, adjusted for issues 15 102 484 shares 15 102 484 shares

SHAREHOLDING

Shares Percentage of shares Shareholders

Private investors 8 386 633 55,5 % 2 823

Institutions 6 715 851 44,5 % 165

Total 15 102 484 100,00 % 2 988

Institutional shareholders

Companies 5 443 217 81,05 %

Financial institutions and insurance companies 74 232 1,11 %

Non-profi t institutions 56 199 0,84 %

Foreign shareholders 1 142 203 17,01 %

Total 6 715 851 100,00 %

Nominee-registered shares 222 867 1,48 %

Information about shares, shareholders and options


MAJOR SHAREHOLDERS

Shares Percentage of shares

Turret Oy Ab 3 440 471 22,78 %

Seb Life International Invest Oy 875 508 5,80 %

Ixonos Management Invest Oy 467 630 3,10 %

Jokinen Matti Markku Kalervo 463 710 3,07 %

Koskelo Ilari 443 616 2,94 %

Terho Risto Vilhelm 351 120 2,32 %

Kaisla Timo Antero 263 530 1,74 %

Kemilä Hannu 256 117 1,70 %

Rantala Lasse 235 888 1,56 %

Svp-Invest Oy 203 606 1,35 %

Nieminen Jorma 168 000 1,11 %

Puranen Tommi Petteri 131 450 0,87 %

Nyyssönen Tuomo 141 432 0,94 %

Jm Ventures Oy 127 817 0,85 %

Helenius Mika Johannes 123 149 0,82 %

Gripenberg Jarl Dödsbo 110 000 0,73 %

Lusa Risto 105 912 0,70 %

Erikoissijoitusrahasto Quorum Nordic Spe 104 565 0,69 %

Smartum Oy 100 000 0,66 %

Medipromotion Oy 94 372 0,62 %

Others 6 894 591 45,65 %

Total 15 102 484 100,00 %

DISTRIBUTION OF OWNERSHIP

Percentage of

Shareholders shareholders Shares Percentage of shares

1-100 shares 464 15,5 % 29 279 0,2 %

101-1000 shares 1 535 51,4 % 722 551 4,8 %

1001-10000 shares 851 28,5 % 2 600 534 17,2 %

10001-100000 shares 137 4,6 % 8 309 649 55,0 %

Over 100000 shares 1 0,0 % 3 440 471 22,8 %

Total 2 988 100 % 15 102 484 100 %

MANAGEMENT OWNERSHIP AND OPTION RIGHTS

Ownership in 2012 Percentage of votes Ownership in 2011

Ownership by the President and CEO and the members of the Board of Directors 3 812 065 25,2 % 3 406 842

Option rights of the President and CEO and the members of the Board of Directors 0 0,0 % 26 250

At 31 December 2012, members of the Ixonos Group’s management held 467,630 shares through Ixonos Management Invest Oy.

Shares owned through Ixonos Management Invest Oy are included in the share information provided.

The company did not hold any treasury shares. The shareholding of Ixonos Man-agement Invest Oy has been eliminated in the consolidated fi nancial statements.


Options

Option plan 2011. The Board of Directors of Ixonos Plc decided on 30 November 2011 to grant new options. This decision was based on the authorisation given by the Annual General Meeting on 29 March 2011. The options were issued by 31 December 2011, free of charge, to a subsidiary wholly owned by Ixonos Plc. This subsidiary will distribute the options, as the Board decides, to employees of Ixonos Plc and other companies in the Ixonos Group.

The options will be marked IV/A, IV/B and IV/C. A total of 600,000 options will be issued. According to the terms of the options, the Board of Directors decides how the options will be divided between option series and, if needed, how undistributed options will be converted from one series to another. Each option entitles its holder to subscribe for one new or treasury share in Ixonos Plc. The shares that can be subscribed for with options comprise 3.82 per cent of all Ixonos Plc shares and votes on a fully diluted basis.

The exercise period for the IV/A options will begin on 1 October 2014, for the IV/B options on 1 October 2015 and for the IV/C options on 1 October 2016. The ex-ercise periods for all options will end on 31 December 2018. The exercise price for each option series is a trade volume weighted average price at NASDAQ OMX Hel-sinki. The period during which this average price is determined is 1 September – 30 November 2011 for the IV/A options (resulting in an exercise price of EUR 0.86), 1 June – 31 August 2012 for the IV/B options and 1 June – 31 August 2013 for the IV/C options. The exercise prices will be reduced by the amount of dividends and can also be adjusted under the other circumstances specifi ed in the option terms.

A total of 410,000 options have been allocated to series IV/A (2011: 495,000) and granted to employees of group companies in accordance with the terms of the option plan. The diff erence of 85,000 options less derives from lost options of employees no longer in service.


Consolidated income statement �IFRS�

Statement of comprehensive income

1 January – 1 January –

1 000 € Notes 31 December 2012 31 December 2011

Turnover 2,4 56 852 81 408

Other operating income 5 361 86

Materials and services 6 -5 674 -9 949

Employee benefi t costs 7 -41 464 -48 577

Depreciation and amortisation 9 -5 623 -4 209

Goodwill impairment 9,13 -11 200 0

Other operating expenses 10 -17 569 -16 822

Total expenses -81 530 -79 557

Operating profi t -24 317 1 937

Financial income 203 178

Financial expenses -903 -706

Total fi nancial income and expenses 11 -700 -528

Profi t before tax -25 018 1 409

Income tax 12 3 043 -478

Profi t for the period -21 975 931

Attributable to

Equity holders of the parent -21 948 955

Non-controlling interests -27 -24

Earnings per share, basic, € 24 -1,46 0,06

Earnings per share, adjusted for dilution, € 24 -1,46 0,06

1 January – 1 January –

1 000 € 31 December 2012 31 December 2011


Other comprehensive income

Change in translation diff erence -11 58

Comprehensive income for the period -21 987 988

Total comprehensive income attributable to

Equity holders of the parent -21 976 1 012

Non-controlling interests -11 -24


Consolidated balance sheet �IFRS�

1 000 € Notes 31 Dec 2012 31 Dec 2011

ASSETS

Non-current assets

Goodwill 13 12 447 23 647

Other intangible assets 13 2 646 5 138

Tangible assets 14 3 410 3 391

Deferred tax assets 12 2 780 27

Available-for-sale investments 14 19 110

Total non-current assets 21 303 32 314

Current assets

Trade receivables 4,15 8 952 16 598

Other receivables 15 2 599 2 592

Cash and cash equivalents 16 477 1 466

Total current assets 12 028 20 656

TOTAL ASSETS 33 331 52 970

1 000 € Notes 31 Dec 2012 31 Dec 2011

EQUITY AND LIABILITIES



Share capital 17 585 585

Share premium reserve 17 219 219

Invested non-restricted equity fund 17 20 247 20 313

Retained earnings 8 214 7 176


Total equity attributable to equity holders of the parent 7 317 29 248

Non-controlling interests 172 200

Total equity 7 489 29 448

Non-current liabilities

Financial liabilities 20,21 946 3 395

Provisions 18 87 0

Deferred tax liabilities 12,19 576 1 006

Total non-current liabilities 1 608 4 400

Current liabilities

Trade payables 21 1 929 2 889

Current fi nancial liabilities 19,20,21 11 748 6 160

Provisions 18 979 0

Liabilities for current tax 21 15 26

Other liabilities 21 9 562 10 047

Total current liabilities 24 233 19 122

TOTAL EQUITY AND LIABILITIES 33 331 52 970


Consolidated cash fl ow statement

1 January 1 January

1 000 € Notes 31 December 2012 31 December 2011

Cash fl ow from operating activities


Adjustments to cash fl ow from operating activities

Tax 12 -3 043 478

Depreciation and amortisation 9 5 623 4 209

Change in provisions 18 1 066 0

Goodwill impairment 9,13 11 200 0

Other adjustments -13 -36

Financial income and expenses 11 700 528

Net cash generated before working capital changes, interest and tax -6 441 6 110

Change in working capital 22 6 491 196

Interest received 11 79 10

Interest paid 11 -796 -599

Tax paid 12 -372 -606

Net cash fl ow from operating activities -1 039 5 110

Cash fl ow from investing activities

Investments in property, plant and equipment and in intangible assets 13,14 -1 366 -2 217

Proceeds from sale of property, plant and equipment 14 91 10

Dividends received 11 4 8

Net cash fl ow from investment activities -1 271 -2 199

Cash fl ow before fi nancing -2 310 2 911

Cash fl ow from fi nancing activities

Increase in long-term borrowings 19,20 4 415 0

Repayment of long-term borrowings 19,20 -1 920 -2 825

Increase in short-term borrowings 19,20 588 1 548

Repayment of short-term borrowings 19,20 -1 740 -1 391

Expenses for equity procurement -17 -30

Net cash fl ow from fi nancing activities 1 326 -2 699

Change in cash and cash equivalents -985 212

Cash and cash equivalents at the beginning of the period 16 1 466 1 226

Exchange rate gains / losses 4 28

Cash and cash equivalents at the end of the period 16 477 1 466


Consolidated statement of changes in equity


Invested

non-

Share restricted Non-

Share premium equity Treasury Retained controlling Total

1 000 € capital reserve fund shares earings Total interest equity

Shareholders’ equity at 1 January 2012 585 219 20 313 86 8 045 29 248 200 29 448

Comprehensive income for the period -11 -21 948 -21 959 -28 -21 986

Transactions with shareholders

Rights issue -66 -66 -66

Share-based remuneration 93 93 93

Shareholders’ equity at 31 December 2012 585 219 20 247 75 -13 810 7 317 172 7 489

Invested

non-

Share restricted Non

Share premium equity Translation Retained controlling Total

1 000 € capital reserve fund diff erence earningst Total interes equity

Shareholders’ equity at 1 January 2011 585 219 20 343 29 7 058 28 234 224 28 457

Comprehensive income for the period 58 955 1 012 -24 988

Transactions with shareholders

Rights issue -30 -30 -30

Share-based remuneration 33 33 33

Shareholders’ equity at 31 December 2011 585 219 20 313 86 8 045 29 248 200 29 448

16 IXONOS | TILINPÄÄTÖS 2012

1 Accounting policies forthe consolidated fi nancialstatemantsBASIC DATA OF THE GROUP. Ixonos Plc is a Finnish public company established in accordance with Finland’s legislation. The company’s domicile is Helsinki. The shares of the parent company Ixonos Plc are listed on NASDAQ OMX Helsinki since 1999.

Ixonos is an ICT service company providing innovative solutions for mobile communications, so� ware, terminal equipment and multi-channel services as well as mobile applications. Together with its cus-tomers, the company develops products and services that inspire the digital experience regardless of place and time.

The company’s client organisations benefi t from new business oppor-tunities and new productivity. By off ering services that range from concept design, consulting and project management to so� ware production and maintenance, Ixonos strives to be a strategic partner to leading innovators.

Ixonos has offi ces in Finland, China, Denmark, Estonia, Germany, Great Britain, South-Korea, Slovakia and the U.S.

Ixonos’ business operations are organised into three segments: Connected Devices, Online Solutions ja User Experience Design. The Connected Devices service area includes products and services of mo-bile product development. The Online Solutions service area includes products and services of global cloud services and mobile applications. The User Experience Design service area includes comprehensive concept and implementation services of future customer brands, the user interface products and services for mobile devices, multi-channel online-services and mobile applications.

The Board has approved the fi nancial statement to be published on 20 March 2012. According to the Finnish Limited-liability Companies Act, the shareholders have an opportunity to approve or reject the fi nan-cial statement in the annual meeting a� er the publishing. The annual meeting has also the right for making a decision on changing the fi -nancial statement.

BASIS OF PREPARATION. Ixonos’ consolidated fi nancial statements have been prepared in accordance with International Financial Report-ing Standards (IFRS). The fi nancial statements follow the IAS and IFRS standards, as well as the SIC and IFRIC interpretations, that were eff ec-tive on 31 December 2012. For the purposes of Finland’s Accounting Act (1336/1997) and the statutes enacted by virtue of it, international ac-counting standards’ refers to standards approved for application within the European Union according to the procedure enacted by Regulation (EC) No 1606/2002 of the European Parliament and of the Council as well as to interpretations of such standards. The accompanying notes to the consolidated fi nancial statements also comply with Finnish accounting and corporate legislation complementary to IFRS regulations.

The information in the consolidated fi nancial statements is pre-sented in thousand euros and the information of the parent company fi nancial statements in euros, if not otherwise mentioned. It is based on the historical cost convention, except for fi nancial assets recorded at fair value through profi t and loss.

Standards, interpretations and changes that have entered into force during 2012 did not infl uence the Group fi nancial statement.

Since 2013, the Group has applied the following new or revised standards and interpretations that came into eff ect on 1 January 2011:

IFRS 9 Financing instruments* This is the fi rst part of a wider project, the purpose is to replace IAS 39 with a new standard. The group will implement the new standard in 2015 at the earliest. The Group man-agement will clarify the potential eff ects of the change on the Group’s fi nancial statement.

* The standard, interpretation or change has not yet been approved to be applied in the EU.

No other already published yet not eff ective standard or interpretation has infl uence on the Group’s fi nancial statement.

CONSOLIDATION PRINCIPLES. The consolidated fi nancial statements include the parent Ixonos Plc and all subsidiaries in which the parent directly or indirectly holds more than 50 per cent of the votes or which it otherwise controls.

Mutual share ownership between Group companies has been elimi-nated through the cost method. Acquired subsidiaries are integrated in the consolidated fi nancial statements from the moment the Group obtains control. All transactions, receivables, liabilities and unrealised profi ts within the Group as well as internal profi t distribution are elimi-nated when preparing the consolidated fi nancial statements. The com-pany’s assets and liabilities are appreciated to their current values at the purchase moment and the remaining part is the goodwill from the diff erence of the purchase price and net assets.

CHANGES IN GROUP LEGAL STRUCTURE. During the fi nancial period 2011 there has been established the new subsidiaries Ixonos UK Ltd in Great Britain and Ixonos Hong Kong Limited in Hong Kong, China. The parent company, Ixonos Plc owns 100 per cent of the shares.

SPECIAL PURPOSE ENTITY. Ixonos Management Invest Oy is combined to the Group’s fi nancial stement. It has been establihsed for the share rewarding of the Group management. Ixonos Plc controls Ixonos Man-agement Invest Oy based on the shareholder and loan agreement and therefore the company is joined to the Group Financial statement. Ixonos Plc does not own any Ixonos Management Invest Oy shares. The income statement and balance sheet of Ixonos Management Invest Oy have been integrated in the consolidated fi nancial statements since the beginning of the arrangement. In the consolidated fi nancial statements, the Ixonos Plc shares that Ixonos Management Invest Oy holds have been deducted from the Group’s equity. In the consolidated fi nancial statements the ownership of the management in Ixonos Management Invest Oy is pre-sented as non-controlling interests.

The incentive plan is in force until spring 2013. At that time, it is intended to be dissolved in a manner to be decided. However, should the price of Ixonos’ share in April and May 2013 and 2014 be lower than the average price at which Ixonos Management Invest Oy acquired its shares, the plan will be continued one year at a time. The system will be annulled on 1 July 2015. The loan that Ixonos has granted will be paid back in its entirety no later than 1 July 2015, when the incentive plan will be dissolved.

SEGMENT REPORTING. Ixonos reports its business operations in one segment from 2012 on. The segment to be reported consists of the three operation segments described above: Connected Devices, Online

IXONOS | TILINPÄÄTÖS 2012 17

Solutions and User Experience Design. The product and service port-folio of the operation segments forms the core business of the mobile devices, online services and mobile applications.

FOREIGN CURRENCY ITEMS. The fi gures related to the result and fi nancial status of the Group’s units are determined in the currency of each unit’s main operating environment, i.e. in the unit’s functional currency. The con-solidated fi nancial statements are presented in euros. Euro is the functional and presentation currency of the Group’s parent company.

Foreign currency transactions are recorded in the functional currency using the exchange rate prevailing on the transaction dates. Monetary items in foreign currencies are translated into the functional currency using the exchange rates prevailing on the closing date. Non-monetary items that are denominated in a foreign currency and measured at fair value are translated into the functional currency using the exchange rates prevailing on the measurement date. Other non-monetary items are measured at the exchange rate prevailing on the transaction date.

Gains and losses resulting from transactions in a foreign currency and from the translation of monetary items are recognised as fi nancial items in the income statement. Foreign exchange gains and losses re-lated to business operations are included in the corresponding items above the operating profi t.

The profi t and loss items in the income statements of the foreign Group companies have been translated to euros using the average rate during the fi nancial period. Changing the profi t of the fi nancial period and the extensive result with various exchange rates in the profi t and loss account and in the extensive profi t and loss account and the bal-ance causes a translation diff erence to the equity, which is recognised in the other items of the extensive result.

GOODWILL. Goodwill represents the excess of the cost over the Group’s share of the net fair value, at the time of acquisition, of identifi -able assets, liabilities and conditional liabilities of companies acquired a� er 1 January 2004.

Goodwill is allocated to cash generating units. It is not subject to depreciation. Goodwill is tested for impairment annually and whenever an event or a change in circumstances indicates that a carrying amount may not be recoverable.

OTHER INTANGIBLE ASSETS. Intangible assets acquired in a business combination are capitalised at their fair value at the time of acquisi-tion. Intangible assets deriving from an integration of Group operations normally pertain to customer relationships and contracts with known useful lives.

Other intangible assets are recognised originally in the acquisition cost of the balance sheet in case the acquisition cost can be defi ned reliably and it is likely that benefi t from the asset item will benefi t the Group.

An intangible asset with a limited useful life is recorded as a depre-ciation expense on a straight-line basis through profi t and loss during its known or estimated useful life. The group does not have other in-tangible assets during its fi nancial period.

RESEARCH AND DEVELOPMENT COSTS. Research costs are record-ed as expenses in the income statement. Development costs arising from the design of new or more advanced products are capitalised as intangible assets when the product is technically feasible, can be ex-ploited commercially and is expected to bring future fi nancial benefi ts that cover those development costs. Intangible assets are measured

at cost less depreciation and impairment losses. The useful lives of capitalised development expenses is 2–4 years, during which time the capitalised expenses are entered as depreciation costs on a straight-line basis.

Previously expensed development expenditure will not be capitalised.

PROPERTY, PLANT AND EQUIPMENT. Machinery and equipment form the major part of the company’s tangible assets. They have been recognised in the balance sheet at historical cost less accrued depre-ciation and any impairment.

Gains or losses from the sales or transfer of tangible assets are entered into the income statement.

THE GROUP OBSERVES THE FOLLOWING DEPRECIATION CONVENTIONS:

Intangible assets acquired through

business combinations 5 - 10 years straight-line

Intangible rights 3 - 4 years straight-line

Internally generated

intangible assets 3 - 4 years straight-line

Other long-term expenses 3 - 5 years straight-line

Machinery and equipment 4 - 5 years straight-line

Machinery acquired through

fi nancial leasing 3 - 5 years straight-line

Intangible assets acquired

through fi nancial leasing 3 - 5 years straight-line

GOVERNMENT GRANTS. Government grants are entered as a reduc-tion of the carrying amount of other intangible assets when it is fairly certain that the grants will be received and that the Group meets the conditions attached to them. The grants are recognised in the income statement as lower depreciation on the respective asset during its use-ful time. Grants received as compensation for costs already realised are recorded through profi t and loss for the period during which the right to the grant arises. Such grants are recorded in other operating income or netting expenses. The amount of the government grants are presented in the note 5.

IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS. On each balance sheet date, the Group assesses whether there are indications that any asset has been impaired. If such indications exist, the recoverable amount of the asset is assessed. In addition, the recoverable amount of goodwill as well as of intangible assets with infi nite useful lives is assessed annually, regardless of whether there are indications of impairment. The impairment tests are performed separately for each cash generating unit.

The recoverable amount is either the asset’s fair value less costs to sell or its value in use, whichever is higher. The value in use is defi ned as the projected future net cash fl ow for the asset or the cash generating unit, discounted to its present value. The discount rate used is a pre-tax rate that refl ects current market assessments of the time value of money as well as of the risks specifi c to the asset.

An impairment loss is recognised if the balance sheet value of an as-set exceeds the recoverable amount for the asset. Losses from impair-ment are entered into the income statement. When an impairment loss is entered, the useful life of the depreciated asset is re-estimated. Any other depreciation loss recognised from any other property item than goodwill is cancelled in the case that there has been a change in those


estimations that were used when defi ning the cash mount from the asset item. However, such a reversal will not exceed the carrying amount that would prevail if no impairment loss had been recognised. An impairment loss entered for goodwill is never reversed.

LEASES. A lease of property, plant and equipment where a substantial part of the risks and rewards of ownership lies with the Group is classifi ed as a fi nance lease. Assets acquired through fi nance leases are recorded in the balance sheet when the lease period begins, either at the fair value of the asset or at the lower present value of the minimum lease payments. As-sets acquired through fi nance leases are depreciated over their useful lives or a shorter lease term. Leases to be paid are divided into fi nancial cost and a decrease in debt during the lease term so that the interest rate on the remaining debt is the same each fi nancial period.

Leases in which the risks and rewards of ownership remain with the lessor are treated as other leases. Rent paid under other leases is recognised as an expense in the income statement in equal amounts over the term of the lease.

FINANCIAL ASSETS AND LIABILITIES. The Group has classifi ed its fi nancial assets into the following categories: fi nancial assets recorded at fair value through profi t and loss; investments held to maturity; loans and other receivables; and fi nancial assets available for sale. The clas-sifi cation, which is performed at the time of the original acquisition, is based on the purpose of acquiring the fi nancial asset.

Financial assets are initially recorded at fair value. Transaction costs are included in the original carrying amount of the fi nancial assets when the item is not measured at fair value through profi t and loss. All purchases and sales of fi nancing assets are recognised on the date of trade.

Financial assets are derecognised when the Group has lost its con-tractual right to the cash fl ow or transferred a substantial part of the risks and rewards outside the Group. The defi nition of the fi nancing assets and liabilities in note 23.

Financial assets and liabilities recorded at fair value through profi t and loss. The Group records interest rate swaps at fair value through profi t and loss. They are recognised in the balance sheet as current assets or liabilities. Changes in fair value are entered in the income statement as fi nancial income or expenses. The fair value of swaps has been calculated by discounting the future cash fl ows. The agreements are presented in the fi nancing assets or liabilities of the balance and they were acquired for pro-tective purposes. The company does not apply hedge accounting.

Loans and other receivables. A� er their initial recording, loans and other receivables are measured at amortised cost using the eff ective interest rate method. Loans and other receivables include trade and other receiva-bles. They are included in current and non-current assets.

The category includes sales and other receivables. Trade receivables are recorded at their original value. The Group estimates the amount of receivables in each fi nancial statement and records an impairment if there is objective evidence that individual items have been impaired.

Such evidence includes the debtor’s considerable fi nancial problems, high probability of bankruptcy and defaulted or signifi cantly overdue pay-ments. Impairment is recognised as an expense in the income statement.

Available-for-sale investments. The Group classifi es shares in hous-ing companies as well as other shares, such as golf shares, as avail-able-for-sale investments. These shares are unlisted and their fair

value cannot be reliably determined. Consequently, such investments are measured at cost.

On each closing date, the Group assesses whether there is objective evidence that any individual fi nancial asset or any group of fi nancial assets has been impaired. If such evidence exists, the impairment is entered as an expense in the income statement.

Cash and cash equivalents. Cash and cash equivalents comprise cash as well as bank deposits payable on demand.

Financial liabilities. Financial liabilities are initially recognised at the origi-nal value corresponding to the consideration received. Transaction costs are included in the original carrying amount of the fi nancial liability. Non-derivative fi nancial liabilities are subsequently measured at amortised cost using the eff ective interest rate method. The non-current and current liabili-ties include fi nancial liabilities. Borrowing costs are recorded as interest expense for the period during which they are incurred.

PENSION PLANS. The Group currently uses defi ned-contribution pen-sion plans only. The payments for these plans are expensed in the in-come statement for the period during which they occur.

The Group has no legal or constructive obligation to make additional contributions should the recipient of the contributions be unable to pay the relevant retirement benefi ts.

SHARE�BASED PAYMENTS. The Group operates incentive schemes in which payments are made as equity instruments. Any benefi ts ad-mitted in the arrangements will be appreciated to a current value at the moment of their admission and recognised as cost in the fi nancial statement evenly during the generation period. The impact of these ar-rangements on the fi nancial results is shown in the income statement under employee benefi t costs.

The cost determined at the time of granting options is based on the Group’s estimate of the amount of options that are expected to be vested at the end of the investing period., The Group updates its assumption of the fi nal amount of options on each closing date. Changes in the estimates are recorded in the income statement. The fair value of the option arrangements is determined according to the Black–Scholes option pricing model.

When options are exercised, the proceeds are recognised in sharehold-ers’ equity, net of any transaction costs. The proceeds from exercise of op-tions granted have been recognised in the share capital and in the share premium reserve, in accordance with the terms of the option plan.

The President and CEO of the company as well as nine other mem-bers of the Group’s management were awarded a share-based incen-tive plan during the period. The plan was carried out through Ixonos Management Invest Oy. 467,630 shares were awarded to members of management. The subscription price, EUR 2.44 per share, corresponds to the average price of Ixonos shares between 5 and 11 August 2010. Transfer of shares owned by Ixonos Management Invest is restricted during the term of the plan. Should the employee’s employment with the Group company end due to a reason arising from the employee and before the plan is dissolved, his or her share may be redeemed before dissolution without providing him or her with fi nancial benefi t through the plan. The incentive system will be annulled on 1 July 2013.

INCOME TAXES. The tax expense in the consolidated income statement consists of performance-based tax corresponding to the result of Group companies for the period and based on the taxable income recognised by


each Group company according to local tax regulations as well as of tax adjustments for previous periods and of changes in deferred tax.

Deferred tax is recognised for all temporary diff erences between car-rying amounts and taxable values. However, a deferred tax liability is not recorded if it arises from initial recognition of an asset or liability in a transaction other than a business combination and this recognition does not aff ect the accounting result or the taxable income at the time of car-rying out the transaction. Deferred tax is not recognised for goodwill that is not tax-deductible. Deferred tax on retained earnings of subsidiaries is not recognised for the portion of the diff erence that is not estimated to dissolve during the foreseeable future.

Deferred tax is determined using the tax rates enacted by the clos-ing date. Deferred tax assets are recognised to the extent that future taxable profi t against which the temporary diff erences can be utilised is likely to become available.

EQUITY, DIVIDENDS AND TREASURY SHARES. The dividend distribu-tion proposal of the Board of Directors is not recorded in the fi nancial statements.

When purchasing Ixonos Plc’s own shares, the amount paid for them will be recognised as deduction from equity.

REVENUE RECOGNITION. Turnover includes income from services provided. It is measured at the fair value of the consideration received, and it is corrected for indirect taxes as well as for discounts. Turno-ver is recognized for the fi nancial period during which the service is provided. The revenues from services are entered as income for the fi nancial period when the service is provided.

If the fi nal result of a long-term project can be evaluated reliably, any income and costs from the project are recognised as income and costs during the project. The Group uses an income etnry method according to the production degree for defi ning the income and costs of each period.

The stage of completion for a specifi c contract is defi ned as the percent-age of completed working hours at the time of review in proportion to the estimated total working hours and as the share of the costs due to work completed at the time of review in proportion to the estimated total costs for the contract the total expenses for a contract are likely to exceed the total income from the contract, the expected loss is expensed immediately.

INTEREST AND DIVIDEND INCOME. Interest income is recorded using the eff ective interest rate method. Dividend income is recorded when the right to receive dividend is established.

OTHER OPERATING INCOME. Other operating income includes gains from the sale of assets as well as other income unrelated to the sales of services, such as government grants.

Accounting policies requiring consideration by management; essential uncertainty factors related to estimations. Preparing the fi nancial state-ments requires the company’s management to make estimations and assumptions that aff ect the amounts of assets, liabilities, income and expenses recorded in the fi nancial statements as well as the amount of contingent assets and liabilities presented in the accompanying notes. Al-though these estimations are based on the management’s best judgment of current events and actions, actual results may diff er from estimates.

The Group’s management exercises judgment in selecting and apply-ing accounting policies. This particularly concerns cases in which the IFRS norms in force provide mutually alternative recording, measurement or

presentation methods. The most essential estimations and assumptions in the context of the fi nancial statements are related to impairment testing, cost allocation, recognition of income from construction contracts.

UNCERTAINTIES RELATED TO ESTIMATIONS. The estimates made when preparing the fi nancial statements are based on the management’s best assumptions at that time. Previous experience is applied, and such as-sumptions regarding the future as are considered the most probable at the time of preparing the fi nancial statements are used. These assumptions relate to, among others, the expected development of the Group’s eco-nomic operating environment in terms of sales and cost-level. The Group and its business units regularly use various internal and external informa-tion sources to monitor the realisation of the estimates and assumptions as well as any changes in background factors. Changes in estimates and assumptions are entered into the accounts for the period during which they occur and for all subsequent periods.

Such critical estimations of the future, as well as essential uncertainty factors related to estimations on the closing date, as pose a signifi cant risk of substantial changes in the carrying amounts of the Group’s as-sets and liabilities within the next fi nancial period are disclosed below. The Group’s management has considered these portions of the fi nancial statements the most central ones, as their related accounting policies are the most complex from the Group’s viewpoint and as applying them requires the most use of estimations and assumptions, such as when measuring asset items. These areas of the fi nancial statements are also the ones in which any changes in the assumptions and estimations used are assumed to have the greatest impact.

IMPAIRMENT TESTING. The Group annually tests goodwill and intan-gible assets for potential impairment. Any indicators of impairment are evaluated according to the above accounting policies. The recoverable amounts for the cash generating units have been defi ned using calcula-tions based on value in use. These calculations require the use of esti-mations. Further information on impairment testing is presented in note 13. Goodwill at the end of 2012 was EUR 12.4 million.

The most critical factors in the calculation of the segments’ fair values are the expansion of business operations as well as cost-eff ectiveness or cost management, which are emphasised because of the fl uctuating economic situation. In practice, cost-eff ectiveness or cost management implies that a certain level of operating profi t is maintained irrespective of whether operations expand during the forecast period.

RECOGNITION OF CONSTRUCTION CONTRACTS. The Group uses the stage of completion method in recognizing turnover from construction contracts. The management estimates the fi nal result of the project regularly.

The income entry according to the preparation is based on the to-tal hourly estimates of the project. Recognised earnings and profi ts may change if the estimate of the total income from and expenses for a contract is adjusted. The cumulative eff ect of adjusted estimates is recognised for the period during which the change becomes probable and can be estimated reliably. The turnover for 2012 includes EUR 1.3 million based on the stage of completion of construction contracts.

CAPITALISATION OF DEVELOPMENT COSTS. The Group recognises the product development costs that meet the activation requirements. The board estimates the fulfi lliment of the activation criteria and the progress of product development projects regularly.


Turnover and construction contracts 2012 2011

Turnover 56 852 81 408

Revenue from services 55 529 73 878

Revenue recognised for construction contracts 1 323 7 530

Revenue recognised for contracts in progress 853 2 209

Advanced payments EUR 194 thousand in 2012 have been received from construction contracts in progress (2011: EUR 1 589 thousand)

At 31 December 2012 revenue has been recognized from construction contracts in progress amounting up to expenses due to the uncertainty of the project profi tability

Other operating income 2012 2011

Gains on sales of fi xed assets 77 6

Government grants 203 67

Other items 80 13

Total 361 86

Group has received government grants totalled kEUR 465 during the fi nancial year 2012 (2011: kEUR 1.011 )

Government grants relates mainly to product development. Part of the grants has been recorded to profi t and loss as expense reduction,

mainly to personnel expenses.

The business operations are reported to the Board of Directors in three operational segments: Connected Devices, Online Solutions and User Experience Design. Operational segments have been changed to correspond the current structure from the beginning of 2012. During year 2011 operational segments were Mobile Solutions and Business Solutions. From the beginning of 2012 Ixonos has com-bined operational segments into one reporting segment. The opera-tions and business model of Ixonos is more and more integrated. The operational segments have common resources, sales, customers and more integrated decision making process. Product and service off ering creates the core business of the company’s mobile devises, online solutions and mobile application development business for the various end-customers and industries.

More than 10 per cent of the turnover accrues from one external customer during the fi nancial periods 2012 and 2011 and this cus-tomer’s proportion of the Group’s turnover was over the 50 per cent.

Geographical information. The Group operates in three geographical areas: Europe, North America and Asia.

2. Segment-information

Turnover for the geographical areas is presented according to the location of the customers. The assets for the geographical areas are presented according to the location of the assets. Proceeds from sales to external customers are determined according to IFRS.

2012 Turnover Non-current assets

EUR 1,000

Europe 48 031 21 262

from which Finland 41 809 20 792

North America 7 256 9

Asia 1 478 32

Group total 56 852 21 303

2011 Turnover Non-current assets

EUR 1,000

Europe 78 951 31 925

from which Finland 58 206 31 741

North America 1 797 8

Asia 660 380

Group total 81 408 32 314

Acquired business operations

There has not been any acquired business operations during 2012 and 2011.

3.

4.

5.


Materials and services

2012 2011

Materials -399 -299

Services -5 275 -9 650

Total -5 674 -9 949

Employee benefi t expenses 2012 2011

Salaries and remuneration of the President and CEO and the Board of Directors -483 -501

Option rights -93 -33

Salaries and remuneration -33 140 -38 644

Total -33 716 -39 178

Defi ned contribution pension costs -4 851 -6 253

Other personnel expenses -2 897 -3 146

Personnel expenses in the income statement -41 464 -48 577

Related party transactions: note 28.

Personnel Average employed 2012 2011

Specialists 712 996

Administrative and sales personnel 112 115

Summer trainees 0 7

824 1 118

- Working outside Finland 327 449

Employed at the end of the period 2012 2011

Specialists 517 936

Administrative and sales personnel 93 90

Summer trainees 0 5

610 1 031

- Working outside Finland 200 422

Depreciation and impairment 2012 2011

Impairment of goodwill -11 200 0

Depreciation and amortisation of intangible assets acquired in business combinations -613 -861

Depreciation and amortisation of intangible assets -2 040 -1 779

Impairment of intangible assets -913

Depreciation and amortisation of property, plant and equipment -2 057 -1 569

Total depreciation and amortisation -16 823 -4 209

6.

7.

8.

9.


Other operating expenses

2012 2011

Employee-related expenses -1 691 -2 179

Premises expenses -6 596 -5 764

Machinery and equipment expenses -1 700 -2 544

Travel expenses -1 795 -2 294

Marketing and sales expenses -497 -931

Credit losses -602 -11

Other operating expenses -4 688 -3 050

-17 569 -16 773

The income statement includes EUR 1,521 thousand (2011: EUR 1,093 thousand) in expensed R&D costs..

Auditor’s fees

PricewaterhouseCoopers Oy, KHT fi rm

Audit fee 61 73

Tax advice 0 1

Other services 36 7

97 81

Others

Audit fee 16 22

16 22

Financial income and expenses 2012 2011

Interest income from loans and other receivables 3 8

Foreign exchange gains 195 162

Other fi nancial income 5 8

Total fi nancial income 203 178

Interest expense for borrowings measured at amortised cost -448 -246

Value changes in fi nancial assets recorded at fair value through profi t and loss

- Derivative interest rate contracts 65 31

Foreign exchange losses -190 -129

Interest on fi nancial leasing debt -124 -112

Other fi nancial expenses -206 -250

Total fi nancial expenses -903 -706

Total fi nancial income and expenses -700 -528

10.

11.


Income tax

Income tax in the income statement 2012 2011

Tax for the period -105 -339

Tax for previous periods -1 -37

Deferred tax 3 149 -102

Total income tax 3 043 -478

Deferred tax in the balance sheet 2012 2011

Deferred tax assets 2 780 27

Deferred tax liabilities -576 -1 006

Net deferred tax 2 204 -978

Change in deferred tax assets and liabilities during the period

Items recorded in the

1 January income statement 31 December

Deferred tax assets and liabilities in 2012

Deferred tax asset arising from the loss of the period 4 2 489 2 493

Derivative interest rate contracts 5 -16 21

Capitalized R&D expenses -486 197 -290

Recognition of intangible assets at fair value -244 161 -82,8

Other items -257 318 62

Net deferred tax liability -978 3 149 2 204

Deferred tax assets and liabilities in 2011

Derivative interest rate contracts 14 -9 5

Capitalized R&D expenses -373 -113 -486

Recognition of intangible assets at fair value -465 221 -244

Other items -52 -201 -253

Net deferred tax liability -876 -102 -978

Deferred tax is determined on the temporary diff erences in full using the local tax rate.

The company estimates that tax losses can be utilised before expiry. Judgement is made every quartal.

Synchronisation of the Group’s tax rate with Finland’s tax rate 2012 2011

Profi t before tax -25 018 1 409

Income tax according to Finland’s tax rate (24,5 per cent) 6 129 -366

Other non-deductible items -2 831 -63

Non-taxble items 1 17

Tax for previous periods -1 -37

Diff erent tax rate of foreign subsidiaries -54 33

Unrecorded deferred tax assets from losses -291 -61

Change in tax rate 0 22

Other diff erences 89 -23

Consolidated income tax 3 043 -478

12.


13. Intangible assets

Internally generated Other intangible intangible Intangible assets in 2012 Goodwill assets assets Total

Cost at 1 January 2012 33 639 2 757 15 111 51 507

Additions 888 186 1 074

Disposals and transfers 0

Exchange rate diff erence -3 -3

Cost at 31 December 2012 33 639 3 645 15 294 52 578

Accumulated depreciation and impairment at 1 Jan 2012 -9 992 -772 -11 957 -22 721

Depreciation for the period -778 -1 875 -2 653

Impairment -11 200 -913 -12 113

Exchange rate diff erence 3 3

Accumulated depreciation and impairment at 31 Dec 2012 -21 192 -2 463 -13 829 -37 484

Carrying amount at 1 Jan 2012 23 647 1 985 3 154 28 786

Carrying amount at 31 Dec 2012 12 447 1 182 1 465 15 093

Internally

generated

Other

intangible intangible

Intangible assets in 2011 Goodwill assets assets Total

Cost at 1 January 2011 33 639 1 650 13 998 49 287

Additions 0 1 107 1 160 2 267

Disposals and transfers 0 0 -74 -74

Exchange rate diff erence 27 27

Cost at 31 December 2011 33 639 2 757 15 111 51 507

0

Accumulated depreciation and impairment at 1 Jan 2011 -9 992 -216 -9 852 -20 060

Depreciation for the period 0 -556 -2 084 -2 640

Exchange rate diff erence 0 0 -21 -21

Accumulated depreciation and impairment at 31 Dec 2011 -9 992 -772 -11 957 -22 721

Carrying amount at 1 Jan 2011 23 647 1 434 4 146 29 227

Carrying amount at 31 Dec 2011 23 647 1 985 3 154 28 785

Other intangible assets comprise intangible rights formed through corporate acquisitions, license fees and other long-term expenses.

Goodwill impairment testing. Goodwill related to business combi-nations is allocated to cash generating units in accordance with the reporting structure used in monitoring the Group’s business opera-tions. This structure was amended at the beginning of 2012, a� er which the company’s cash generating units have been Online Solu-tions and Connected Devisces. In year 2011 the cash generating units were Business Solutions and Mobile Solutions. Goodwill is attributed to the new CGUs in relation to the discounted cash fl ows.

Each CGU’s recoverable amount is based on the value in use. The value in use is the present value of the future cash fl ows of a CGU. The impairment test is done by comparing value in use to CGU carry-ing value. The fi rst year cash fl ow estimates are based on the fi nancial plans approved by management. The four following years in Connected Devices CGU has been determined by the management as follows: in-

crease in turnover during 2014 and 2017 is 5 percent. EBIT is estimated to increase from 2014 2,4 percent to 6,6 percent in 2017 when the dis-counting factor is 12,0 percent. Online Solutions CGU has the following assumptions: increase in turnover is 5 percent during 2014 and 2016 and 3 percent in 2017, EBIT is expected to increase from 2014 7,4 per-cent to 9,5 percent in 2017 when discounting factor is 12 percent. The increase in turnover corresponds to the forecasted industry average. The discounted terminal values are based on the above mentioned forecasts and having the growth rate of one percent.

Cash fl ow forecasts are discounted by using the WACC before tax-es. Discounting rate has been derived from the external assesment of the required return on equity as well as the cost of debt increased by risk spread. Used discounting factor is 12 percent.


In 2012 the company made impairment test every quartal in all CGUs. The company recognised impairment of goodwill in the fi rst quartal by EUR 9,2 million attributed to Online Solutions unit. The reason for the impairment was decreased future prospects of Finnish public sector customer segment. During the last quartal the company im-paired EUR 2,0 million attributable to Connected Devices unit. This was due to slower than estimated recovery of market changes dur-ing 2011 and 2012.

The most critical factors in the calculation of the segments’ fair values are the expansion of business operations as well as cost-eff ectiveness or cost management, which are emphasised because of the fl uctuating economic situation. In practice, cost-eff ectiveness or cost management implies that a certain level of operating profi t is maintained irrespective of whether operations expand during the forecast period. A rationalisation programme seeking to achieve remarkable savings is underway in the company. Should the reali-sation of this programme be delayed, or should the company’s as-sumptions regarding turnover diff er signifi cantly from the forecast for 2013, goodwill would be depreciated even if long-term demand

for the company’s services would remain substantially unchanged.Sensitivity analysis have been made to CGUs by analysing the

break-even of carrying value and value in use. The factors were in-crease in turnover, EBIT during the fi ve years forecast period and dis-counting rate. Analysis were made by changing individual the factors and remaining the other components unchanged.

Increase in Avarage Discounting turnover EBIT factor

Connected Devices 5,0 % 3,2 % 12,0 %

Online Solutions 4,0 % 7,2 % 15,3 %

At 31 December 2012 value in use for Connected Devices unit ex-ceeds carrying value by EUR 2,3 million and for Online Solutions VIU exceeds carrying value by EUR 5,8 million.

The following CGUs have been attriduted goodwill:

Connected Online

Devices Solutions Total

Goodwill 1.1.2012 6 667 16 980 23 647

Impairment -2 000 -9 200 -11 200

Goodwill 31.12.2012 4 667 7 780 12 447

Mobile Business

Solutions Solutions Yhteensä

Goodwill 1.1.2011 14 117 9 529 23 647

Impairment 0 0 0

Goodwill 31.12.2011 14 117 9 529 23 647

Key assumptions used when testing goodwill 2012 2011

Forecast period 5 5

Annual growth in turnover 3-5 % 2-6 %

Growth factor of cash fl ows a� er the forecast period 1 % 1 %

Discount rate 12 % 13 %


Tangible assets and other assets

Machinery and Other tangible Available-for-sale

Available-for-sale investments equipment assets investments Total

Cost at 1 Jan 2012 8 486 11 110 8 608

Additions 2 083 0 0 2 083

Disposals and transfers -5 0 -91 -96

Exchange rate diff erence -3 0 0 -3

Cost at 31 Dec 2012 10 561 11 19 10 592

Accumulated depreciation at 1 Jan 2012 -5 107 0 0 -5 107

Depreciation for the period -2 057 0 0 -2 057

Exchange rate diff erence 2 0 0 2

Accumulated depreciation at 31 December 2012 -7 162 0 0 -7 162

Carrying amount at 1 January 2012 3 379 11 110 3 501

Carrying amount at 31 December 2012 3 399 11 19 3 430

Tangible Assets 2011

Cost at 1 Jan 2011 7 725 11 110 7 846

Additions 672 0 0 672

Disposals and transfers 57 0 0 57

Exchange rate diff erence 32 0 0 32

Cost at 31 Dec 2011 8 486 11 110 8 608

Accumulated depreciation at 1 Jan 2011 -3 526 0 0 -3 526

Depreciation for the period -1 569 0 0 -1 569

Exchange rate diff erence -12 0 0 -12

Accumulated depreciation at 31 Dec 2011 -5 107 0 0 -5 107

Carrying amount at 1 Jan 2011 4 199 11 110 4 320

Carrying amount at 31 Dec 2011 3 379 11 110 3 501

Trade and other receivables Current receivables 2012 2011

Trade receivables 8 952 16 598

Other receivables 2 599 2 592

Total current receivables 11 551 19 190

Other receivables 2012 2011

Loan receivables 0 13

Other receivables 827 1 110

Accruals 1 772 1 468

Total other receivables 2 599 2 592

Breakdown of trade receivables by maturity 2012 2011

Not due for payment 6 910 15 513

Due since 1–30 days 482 323




Due since more than 180 days 184 124

8 952 16 598

14.

15.


Cash and cash equivalents 2012 2011

Cash and cash equivalents 477 1 466

The cash and cash equivalents comprise cash on hand as well as bank deposits in current accounts.

Equity

Share Invested non- Number of premium restricted shares Share capital reserve equity fund Total

1 Jan 2012 15 102 484 585 219 20 313 21 117

Expenses for equity procurement 0 0 0 -66 -66

31 Dec 2012 15 102 484 585 219 20 247 21 051

Share

Invested non-

Number of premium restricted

shares Share capital reserve equity fund Total

1 Jan 2011 15 102 484 585 219 20 343 21 147

Expenses for equity procurement 0 0 0 -30 -30

31 Dec 2011 15 102 484 585 219 20 313 21 117

The fi nancial assets do not include due items.The current receivables include EUR 658 thousand (2010: EUR 673

thousand) in receivables for construction contracts.The company has written off EUR 602 thousand (2011: EUR 110

thousand) in credit losses during the period.The methods used to estimate the fair value of the receivables are

disclosed in note 232.

Credit risk management is part of Ixonos’ risk management. Of the company’s turnover, 85 per cent is derived from the company’s 20 largest customers. Ixonos’ major customers are companies based or operating in Finland in the telecommunications, information tech-nology, banking and insurance sectors and in public administration. Majority of these customers are billed in euros. The receivables do not include any signifi cant concentration of credit risk. The counter-parties in external fi nancing transactions are the major Nordic banks.

Ixonos Plc has one class of shares. The share capital has been paid in full. Pursuant to the Articles of Association, there is no maximum to the number of shares or the share capital. Ixonos Plc does not hold any treasury shares. Shareholding of Ixonos Management Invest Oy, 467.630 shares, has eliminated in preparation of group fi nancial statements.

Descriptions of reserves:

Share premium reserve. The income from exercise of options grant-ed under Finland’s repealed Companies Act (734/1978) has been re-corded in share capital and in the share premium reserve according to the terms of the plans, net of transaction costs.

16.

17.

Invested non-restricted equity fund. The invested non-restricted equity fund includes other equity-type investments as well as the subscription price of shares to the extent that a specifi c decision to recognise it in share capital has not been made. The income from exercise of options granted a� er 1 September 2006, when Finland’s new Limited Liability Companies Act (624/2006) became eff ective, is recorded entirely in the invested non-restricted equity fund.


Provisions

2012 2011

Long-term provisions 87 0

Short-term provisions 979 0

Total 1 066 0

Restructuring provision

1.1.2012 0

Increase in provisions 1 066

31.12.2012 1066

Increase in privisions is related to restructuring premises, operations and permanent lay off costs.

Non-current liabilities Borrowings from Deferred tax Other non-current fi nancial institutions liabilities liabilities Total

Non-current liabilities at 1 Jan 2012 2 317 1 006 1 078 4 400

New loans from fi nancial institutions 4 415 0 0 4 415

Change in fi nance leasing debt 0 0 -133 -133

Repayment of borrowings -109 0 0 -109

Carried forward to current liabilities -6 623 0 0 -6 623

Deferred tax liabilities 0 -430 0 -430

Non-current liabilities at 31 Dec 2012 0 576 945 1 521

Borrowings from Deferred tax Other non-current

fi nancial institutions liabilities liabilities Total

Non-current liabilities at 1 Jan 2011 5 142 984 1 807 7 934

Change in fi nance leasing debt 0 0 -729 -729

Carried forward to current liabilities -2 825 0 0 -2 825

Deferred tax liabilities 0 22 0 22

Non-current liabilities at 31 Dec 2011 2 317 1 006 1 078 4 400

The methods used to estimate the fair values of liabilities are disclosed in note 23.

18.

19.


20.

The bank accounts overdra� s in use EUR 2.773 thousand on Decem-ber 31 2012 are not included in the specifi cation.

At 31 December 2012 Ixonos did not fulfi ll the terms of loan cov-enants. Following the IFRS regulations loans under the covenants

have been disclosured as short term loans. More information about covenant terms can be found in note 32.

Financial liabilities

Non-current 2012 2011

Borrowings from fi nancial institutions 0 2 317

Financial leasing debt 946 1 078

Non-current fi nancial liabilities 946 3 395

Current 2012 2011

Borrowings from fi nancial institutions 10 410 5 010

Financial leasing debt 1 251 1 151

Financial liabilities recorded at fair value through profi t and loss* 87 23

Current fi nancial liabilities 11 748 6 184

*The fi nancial liabilities recorded at fair value through profi t and loss are derivatives. The balance is included in other liabilities.

The methods used to estimate the fair values of fi nancial liabilities are disclosed in note 23.

Instalment scheme for interest-bearing borrowings at 31 December 2012:

Borrowings from fi nancial institutions at 31.12.2012 -7 637

Instalments 2013 -1 192





During the period, the average interest rate on the borrowings was 3.44 per cent.


21.

22.

Trade and other payables Current liabilities 2012 2011

Trade payables 1 929 2 879

Tax liabilities 15 26

Borrowings from fi nancial institutions 10 410 5 010

Financial leasing liabilities 1 251 1 151

Provisions 979 0

Other liabilities 3 733 3 837

Accrued expenses 5 916 6 219

Total current liabilities 24 233 19 122

Breakdown of other liabilities 2012 2011

Withholding tax debt 1 586 774

Social security contribution debt 273 237

Value added tax debt 1 722 2 276

Other liabilities 152 550

Total other liabilities 3 733 3 837

Breakdown of accrued expenses 2012 2011

Provision for holiday pay 3 534 5 148

Pension insurance contribution liabilities 1 012 15

Other accrued expenses 1 385 1 056

Total accrued expenses 5 931 6 219

Cash fl ow statement 2012 2011

Change in working capital 6 491 196

Trade receivables and other receivables 7 817 2 577

Trade payables and other payables -1 326 -2 381


Earnings per share 2012 2011

Profi t attributable to equity holders of the parent company, KEUR -21 948 955

Number of shares during the period, adjusted for issues, average 15 102 484 15 102 484

Earnings per share, basic, EUR -1,46 0,06

Diluted weighted average number of shares during the period 15 102 484 15 102 484

Earnings per share, diluted, EUR -1,46 0,06

Dilution eff ect, number of shares 0 0

24.

At 31 December 2012 market value of the share is below the option exercise price thus no dilution is recorded.

A� er the 31 December 2012 there has been a rights issue that aff ects the dilution in 2013.

Dividend per shareThe Board of Directors proposes to the Annual General Meeting that the distributable funds will be le� in shareholders’ equity and that no

25.

23. Book and fair values of fi -nancial assets and liabilities

METHODS USED TO ESTIMATE FAIR VALUE

Financial liabilities. Liabilities are discounted at the rate the Group would pay for an equivalent borrowing on the closing date. As most interest-bear-ing liabilities have fl oating rates, the eff ect of discounting is not material.

Trade and other receivables. As the terms of payment for trade and other receivables are short, the eff ect of discounting is not material. Consequently, the original values of trade and other receivables cor-respond to their fair values. Note 15 contains a breakdown of trade receivables by maturity.

Other liabilities. Other liabilities, i.e. trade payables and other non-interest-bearing liabilities, are recorded at their original values. Con-sidering the maturity of such liabilities, the eff ect of discounting is not material. Accordingly, the original values correspond to the fair values.

Nominal values of derivative contracts

Interest rate swaps 2012 2011

Falling due within 1 year 0 1 375

Falling due within 1–5 years 5 270 1 493

Falling due a� er 5 years 0 0

Total 5 270 2 868

Fair value -87 -23

All interest rate swaps are classifi ed at level 2.

The fair value of a fi nancial instrument that is not traded in an ac-tive market is determined by using valuation techniques. These techniques maximise the use of observable market data where it is available and they rely as little as possible on entity-specifi c esti-

mates. If all signifi cant inputs required to fair value an instrument are observable, the instrument is at level 2.

dividend for the fi nancial period 2012 will be paid to shareholders. No dividend for the fi nancial period 2011 was paid to shareholders.


Leasing and rental liabilities

Operating leasing liabilities 2012 2011

Operating leasing liabilities, 12 months 415 591

Operating leasing liabilities, more than 12 months but less than 60 months 278 576

Total 693 1 167

The company’s leases give the company a temporary right to use themachinery and equipment included in the leases. The company has no leasing liabilities with a maturity of more than 60 months.

Rental and other liabilities 2012 2011

Rental and other liabilities, 12 months 2 256 5 075

Rental and other liabilities, more than 12 months but less than 60 months 3 019 2 827

Rental and other liabilities, more than 60 months 243 0

Total 5 517 7 902

The rental liabilities are mainly due to the rental liability arising from the com-pany’s head offi ce. The lease has a fi xed term extending until 31 May 2018.

26.

MAJOR LEASES

Kiinteistö Oy Opus 1 (Hitsaajankatu 24): The lease has a fi xed term extending until 31 May 2018.

The rent consists of absolute net rent as well as maintenance charges. It is linked to the cost-of-living index (1951:10=100) produ-ced by Statistics Finland.

The rent adjustments are based on rent excluding value added tax. The rent is adjusted twice annually. The term of notice is six months for both the lessor and the lessee. The fi rst day on which notice can be given is 30 November 2017. The rent, excluding tax, is EUR 54,661 per month from 1 January 2013.

Kiviharjunlenkki 1 E, Oulu: The lease has a fi xed term extending until 1 June 2014.

The rent for the premises is based on the fl oor area and paid monthly. It is linked to the cost-of-living index (1951:10=100) pro-duced by Statistics Finland. The rent is adjusted annually.

The adjustment index is the index for November each year. The term of notice is six months for both the lessor and the lessee. The fi rst day on which notice can be given is 1 December 2013. The rent, excluding tax, is EUR 34,318,74 per month from 1 Jan 2013 and EUR 24,807,92 from 1 April 2013.

Group companies Name Parent ownership Domicile, City and country

Ixonos Plc Parent Helsinki, Finland

Ixonos Finland Ltd. 100 % Helsinki, Finland

Ixonos Business Solutions Ltd *) 100 % Espoo, Finland

Ixonos Estonia OÜ 100 % Tallinn, Estonia

Ixonos Germany GmbH 100 % Berlin, Germany

Ixonos Slovakia s.r.o. 100 % Kosice, Slovakia

Beijing Ixonos Technology Co., Ltd. 100 % Beijing, China

Chengdu Ixonos Technology Co., Ltd. **) 100 % Chengdu, China

Ixonos Denmark ApS 100 % Copenhagen, Denmark

Ixonos USA Ltd. 100 % San Jose, USA

Ixonos UK Ltd 100 % London, United Kingdom

Ixonos Hong Kong Limited 100 % Hong Kong, China

27.

The consolidated fi nancial statements includes Ixonos Management Invest Oy, a company owned by members of Ixonos’ management.

Group’s ownership of the company is zero per cent and it has been represented as non-controlling interest in the group.

Changes in the Group structure

* Ixonos Business Solutions Ltd has been merged into Ixonos Finland Ltd

at 30 June 2012.

** The company in China, Chengdu has been decided to close down in 2011.

.


Related party disclosuresThe related parties of Ixonos Plc comprise the members of the Board of Directors as well as the President and CEO and the members of the Group’s Management Team.

28.

The pension arrangements of the President and CEO conform to Fin-land’s employee pension legislation. In addition, the President and CEO has a voluntary supplementary pension arrangement to which EUR 8,500 was contributed in 2012 (2011: EUR 8,500).

The term of notice of the President and CEO is six months. If the company dismisses the President and CEO, he is entitled to a sever-ance payment equivalent to 12 months’ salary.

Compensation for terminating employment agreement for presi-dent and CEO and management team was EUR 568 380. (2011: EUR 0 )

Loans to related parties: During the fi nancial period 2010, an incen-tive plan for the Group’s management was announced. The plan had been decided on by the Board of Directors of Ixonos Plc. President

and CEO Kari Happonen and nine other members of Ixonos’ manage-ment participate in the incentive plan. For the purpose of the share ownership, members of the management established the limited li-ability company Ixonos Management Invest Oy, whose entire share capital they own. As part of the arrangement, the Board of Direc-tors of Ixonos Plc decided to grant Ixonos Management Invest Oy an interest-bearing loan of EUR 1.2 million to fund the share acquisition. At the end of the fi nancial period 2012, EUR 920,000 of the loan had been drawn down (2011: EUR 920,000). The interest rate of the loan corresponds to the twelve-month Euribor plus 1 per cent. The ac-quired shares have been pledged to Ixonos Plc as security for the loan. Ixonos Management Invest Oy has been consolidated to fi nan-cial statements.

Salaries and other short-term employee benefi ts 2012 2011

Kari Happonen,president and CEO untill 6 Nov 2012 254 550 353 568

Timo Kaisla, interim CEO between 7 Nov 2012 -31 Dec 2012 26 040

Board of Directors

Pertti Ervi (Chairman) 45 915 45 000

Paul Ehrnrooth (Vice Chairman) (since 23 March 2010) 34 000 33 000

Matti Järvinen 26 083 24 750

Kirsi-Marja Kuivalainen (since 23 March 2010) 23 333 24 000

Matti Heikkonen (since29 March 2011) 24 833 15 083

Samu Konttinen (since 29 March 2011) 23 083 16 750

Tero Laaksonen (Chairman until 29 March 2011) 0 12 750

Matti Makkonen (until 29 March 2011) 0 6 000

Markku Toivanen (until 29 March 2011) 0 6 250

Peter Eriksson (until 29 March 2011) 0 6 000

Management Team 680 470 883 907

1 138 307 € 1 427 058

Option rights of Board members, the President and CEO and Management Team 2012 2011

President and CEO 0 26 250

Board of Directors 0 0

Management Team 0 45 000

0 71 250

Ownership by the members of the Board of Directors, the President and CEO and the Management Team 2012 2011

President and CEO 263 530 179 456

Board of Directors 3 548 535 3 227 386

Management Team 471 202 * 164 864

4 283 267 3 571 706

* Includes ownership through Ixonos Management Invest Oy.


Share-based paymentsOption Plan 2011. The Board of Directors of Ixonos Plc decided on 30 November 2011 to grant new options. The decision was based on the authorisation given by the Annual General Meeting on 29 March 2011. The options were issued by 31 December 2011, free of charge, to a subsidiary wholly owned by Ixonos Plc. This subsidiary will distribute the options, as the Board decides, to employees of Ixonos Plc and other companies in the Ixonos Group.

The options will be marked IV/A, IV/B and IV/C. A total of 600,000 options will be issued. According to the terms of the options, the Board of Directors decides how the options will be divided between option series and, if needed, how undistributed options will be converted from one series to another. Each option entitles its holder to subscribe for one new or treasury share in Ixonos Plc. At 30 November 2011, the shares that can be subscribed for with options comprise 3.82 per cent of all Ixonos Plc shares and votes on a fully diluted basis.

The exercise period for the IV/A options will begin on 1 October 2014, for the IV/B options on 1 October 2015 and for the IV/C options on 1 October 2016. The exercise period for all options will end on 31 December 2018. The exercise price for each option series is a trade volume weighted average price at NASDAQ OMX Helsinki. The period during which this average price is determined is 1 September – 30

29. November 2011 for the IV/A options (resulting in an exercise price of EUR 0.86), 1 June – 31 August 2012 for the IV/B options and 1 June – 31 August 2013 for the IV/C options. The exercise prices will be reduced by the amount of dividends and can also be adjusted under the other circumstances specifi ed in the option terms.

The optios have been allocated into IV/A serie totalling 410,000 options (2011: 495,000), and have been distributed to the person-nel according to the terms of the plan. The change of 85,000 options arises from the cancelled options of the le� personnel.

The options are valued using the Black–Scholes pricing model. Dur-ing the fi nancial period, an expense of EUR 66,000 (2011: EUR 5,500) for stock options and share-based compensation EUR 27,074 (2011: EUR 27,074) was entered in the consolidated income statement. Share-based compensation during the fi nancial period 2012 and 2011 has been arranged through Ixonos Management Invest Oy, owned by mem-bers of the management. Further information is available in note 1.

Key assumptions used in measuring the fair value of options

2012 2011

Dividend yield 0,00 % 0,00 %

Volatility 24 % 35 %

End of exercise period 31.12.2018 31.12.2018

Interest rate level 3,50 % 3,56 %

30.

31.

Commitments and contingent liabilitiesAt 31 December 2011, the Group had pledged nineteen company mortgages of EUR 1,000,000 each, one company mortgage of EUR 800,000 and one company mortgage of EUR 100,000 as security for

its own borrowings and credit limits with fi nancial institutions, as well as guarantee for leasing and other commitments. The mortgages are pledged as security for EUR 8,250,631 in borrowings from fi nancial institutions and EUR 3,000,000 in credit limits. The total amount of company mortgages is EUR 19,800,000.

The company is not aware of any substantial civil action to which it would be a party.

Events a� er the fi nancial period

THE NEW REGISTRATION DOCUMENT. Ixonos published 21 January 2013 the registration document which the Finnish Financial Supervisory Authority approved 17 January 2013, pursuant to the Finnish Securi-ties Market Act. The Registration Document contains information on the Company and its fi nancial position. The Registration Document is valid for 12 months a� er its approval. The new registration document contains the statement concerning the working capital. The working capital of the company will not be suffi cient for the company’s needs during following 12 months. The working capital is however suffi cient for the needs of the following 12 months if the company’s cash fl ow develops according to the plans and forecasts and the share issue is completed in it’s entirety. However there is no guarantee that the company will in all circumstanc-es, fulfi ll the fi nancial covenanats according to it’s loan agreements. In such situation the fi nanciers have eg. the right to demand the immediate payback of loans or the renegotiations of loan terms and conditions. The company has started negotiations with fi nanciers conserning possible additional funding. The company is confi dent that it can fulfi ll the possible need for excess fi nancing to satisfy the working capital needs.

SHARE ISSUE. All off ered 20,136,645 shares were subscribed for in Ixonos Plc rights issue completed on 7 February 2013. A total of 19,052,212 shares were subscribed for with subscription rights rep-resenting approximately 94.6 per cent of the shares off ered. A total of 5,358,879 shares were subscribed for in the secondary subscrip-tion without subscription rights, of which subscriptions for 1,084,433 shares were approved. The subscriptions amounted thus to approxi-mately 121.2 per cent of the shares off ered in total. The gross pro-ceeds raised by Ixonos in the rights issue were approximately EUR 4.23 million. As all shares off ered in the rights issue were subscribed for, the underwriting commitments were thus not used. The Board of Directors of Ixonos approved all subscriptions based upon subscrip-tion rights made in the rights issue between 24 January 2013 and 7 February 2013, and decided to approve the secondary subscriptions made without subscription rights by Ixonos’ shareholders or other investors in accordance with the terms and conditions of the rights issue. In order to ensure the equal treatment of shareholders and the 2011 stock option holders the Board of Directors of Ixonos has on 16 January 2013, due to the rights off ering, adjusted the subscription ra-tio and the subscription price of the 2011 stock options in accordance with the terms and conditions of the 2011 stock options.


Financial risk managementThe company is exposed to several fi nancial risks in the course of its normal business operations. The management of fi nancial risks aims to minimise any adverse eff ects that changes on the fi nance market might have on the company’s profi t. The main fi nancial risks of the Ixonos Group are capital adequacy risk and interest rate risk.

The long-term funding of the Ixonos Group has chiefl y been arranged through two main fi nanciers. Later, the company may also resolve to is-sue shares. Should the general economic situation tumble into an excep-tionally long decline, the Ixonos Group’s fi nancial expenses in proportion to the earnings from the Group’s operations would be likely to increase, as the Group’s earning power as well as the cash fl ow from its business operations presumably would decrease during a general recession. The same circumstances might also reduce the availability of external fund-ing for the Ixonos Group and weaken the Group’s fi nancial standing.

The fi nancing function of the parent company is responsible for the implementation of risk management. It is tasked with identifying and estimating as well as hedging against fi nancial risk in co-operation with the business units.

32. Interest rate risk. The company’s income and its operational cash fl ow are largely independent from fl uctuations in market rates. The company is exposed to cash fl ow interest rate risk through its loan portfolio, which consists of short- and long-term variable rate bor-rowings. In respect of interest rate risk, the company’s risk manage-ment aims to minimise any adverse eff ects that changes in interest rates may infl ict on the company’s profi t. The company applies the use of various protective interest instruments as a methof of interest risk management. The company has interest rate swaps for a total loan capital of EUR 5.3 million. The company has used interest rate swaps to convert a fl oating rate to a fi xed rate plus margin. The fi xed rate of the interest rate swaps is 0,94 per cent plus margin. On 31 December 2011, the company has EUR 4,0 million (2011: EUR 2,2 million) in unhedged fl oating rate loan capital, which consist of over-dra� s in use. The company’s average interest rate between 1 Janu-ary and 31 December 2012 has been 3.44 per cent (2011: 3,24 per cent). An interest rate rise of one percentage point would increase the interest costs for the company’s fl oating-rate borrowings from fi nancial institutions by approximately EUR 40 thousand per year. The realisation of credit risks would make the availability of fi nancing outside the company more diffi cult and weaken its fi nancial situation.

Interest rate risk of borrowings from fi nancial institutions should the interest rate rise by one percentage point during the next year

1 000 € Amount Avarage rate, per cent Interest rate sensitivity

31.12.2012 10.410 3,44 -39,9

31.12.2011 7.727 3,38 -21,8

Loans’ interest rate hedgings have been taken into account in calculations.

The company does not use IAS 39 hedge accounting. Changes in the fair value of derivatives acquired for hedging are recorded through profi t and loss as fi nancial income and expenses. The changes of current value of the registered derivative instruments were EUR -65.000 1 January 31 December 2012 and +31.000 at the end of the fi nancial period on 31 December 2011. Profi t and loss entries re-lated to hedging can cause substantial variation in fi nancial income and expenses from one fi nancial period to another. On 31 December 2012, an interest rate rise of one percentage point would have had a positive eff ect of approximately EUR 53,000 (2011: EUR 32.000). The eff ect of taxes has not been considered in the sensitivity analyses.

Of the company’s borrowings at 31 December 2012, a portion of 89 per cent (2011: 70 per cent) have fl oating rates. Considering the eff ect of derivative interest-rate contracts, 38 per cent of the borrow-ings have fl oating rates (2011: 28 per cent). The fi gures include the overdra� s in use.

Liquidity risk. In respect of liquidity risk, the company’s risk man-agement aims to ensure suffi cient liquid assets for fi nancing the company’s operations and repaying loans due. The company aims to continuously evaluate and follow the amount of fi nancing required by the business in order to meet the goal described above. On 31 December 2012, almost all the company’s liquid assets consisted of funds in bank accounts. The function responsible for the Group’s fi nancing continuously monitors the company’s liquidity and the adequacy of the company’s funding. Possible disruption in the cash fl ow from basic business operations would weaken the company’s fi nancial position.

A bank limits of EUR 3 million has been admitted for the company, of which EUR 2,8 million is in use on 31 December.

The current working capital of the company is not suffi cient for a 12-month need. However, the company’s working capital will be suffi cient for the need of the next 12 months in case the Company’s cash fl ow will develop in accordance with the company’s progno-

CO�OPERATION NEGOTIATIONS AND STREAMLINING GROUP STRUCTURE. Ixonos commenced co-operation negotiations with its personnel for reasons related to production, fi nancial position and reorganization of operations.

The eff orts to re-focus the business and to streamline the corporate structure have not progressed fast enough and to the needed extent dur-ing year 2012. In order to restore profi tability, Ixonos will implement fur-ther effi ciency measures in its global operations during year 2013. The

co-operation negotiations aim to adapt the cost structure of the Finnish companies to meet the changed situation and the desired direction, as well as to improve the competitiveness and profi tability of the company.

The negotiations apply to all Ixonos personnel in Finland. The ac-tions are estimated to impact maximum of 87 employees in Finland.

At the same time, the company announces that it will discontinue its operations in China, and plans to transfer its so� ware production operations in Tallinn to the Kosice branch in Slovakia during 2013.


ses and plans. The fully realised share issue January-February 2013 helps with this. However, there is not certainty that the company will reach the minimum values of the covenants according to its fi nancial agreements in all circumstances when the fi nanciers have the right for example premature cancellation of the loans and renegotiaitons of the terms.

The company manages the working capital by aiming to slow down the circulation of the accounts payable by extending the payment terms of purchase agreements and decreasing the amount of accounts re-ceivable by fastening their circulation time by shortening the payment terms and selling the accounts receivable when needed. On 31 De-cember the company had sold EUR 2,3 million of accounts receivable.

Should the company’s cash fl ow not develop according to the com-pany’s prognoses and plans, the shortfall shall be covered with additional fi nancing and other operations. The potential need for additional fi nances are planned to be covered (i) by using the share issue authorisations valid for the Company, (ii) by boosting the Company’s operations and reorganisation, (iii) postponing the realisation of planned investments, (iv) with the assets from the company’s business operations and sale of property items or (v) combinations of what was said before. As a part of the management of working capital of the company the company’s management has started negotiations with the fi nanciers about potential additional fi nancing. The company will continue the operations in order to ease the cost structure and simplify the operational structure.

Maturity of fi nancial liabilities

Balance sheet value

31.12.2012 including interest Less than a year 1-2 years 2-5 years over 5 years

Bank loans 11 105 11 105 0 0 0

Financial leasing debt 2 311 1 330 749 232 0

Trade creditors 1 929 1 929 0 0 0

Balance sheet value

31.12.2011 including interest Less than a year 1-2 years 2-5 years over 5 years

Bank loans 7 624 5 217 1 623 784 0

Financial leasing debt 2 351 1 234 837 281 0

Trade creditors 2 899 2 899 0 0 0

Loans granted by the company’s main fi nanciers have covenants at-tached. Should the company not be within the limits of a covenant, the fi nanciers are entitled to call in the loans to which that covenant applies. The covenant level is adjusted semi-annually on a rolling twelve-month basis:

Depending on the point in time, the equity ratio must be at least 35 per cent. For some loans, the ratio of interest-bearing liabilities (i.e. interest-bearing liabilities in the adjusted balance sheet, exclud-ing leasing liabilities and subordinated loans) to operating profi t may not exceed 3.0:1 (31st January 2012) and 2,5 on 30 June 2013 and onward. The ratio of interest-bearing liabilities to operating profi t as well as the ratio of interest-bearing net liabilities to operating profi t is calculated according to the formula defi ned by the Committee for Corporate Analysis.

The interest rate according to the fl oating rate loan agreements var-ies between the three and twelve month Euribor rates plus a margin in the range of 1,26–4.00 per cent.

The amount of those fi nancing loans for the covenants had a capi-tal of EUR 7,5 million on 31 December (31 January 2011: EUR 4,5 million). On 31 January the company’s equity ratio was 22,5 per-cent (2011: 55,6 percent), the ratio of interest-bearing liabilities and operating profi t was negative (2011: 0,95). Thus, the company does

not fullfi ll the covenant terms on 31 December and the loans under convents are presented as short-term current liabilities. However, the company has received releasing covenant statements from its fi nanciers for the next 6 to 12 months.

Credit risk. Of the company’s turnover, 85 per cent is derived from net sales to the company’s 20 largest customers. Major customers are companies based or operating in Finland in the telecommunica-tions, information technology, banking and insurance sectors and in public administration. Apart for isolated exceptions, these customer groups are billed in euros. The receivables do not include any sig-nifi cant concentration of credit risk. The counterparties in external fi nancing transactions are the major Nordic banks.

The Group’s credit risk is managed through regular monitoring of every customer’s outstanding receivables and payment behaviour. The Group always checks the credit status of its customers before entering into a binding agreement.

The maximum amount of the company’s credit risk corresponds to the carrying amount of the receivables.

During the fi nancial period, the credit losses recorded through profi t and loss amounted to EUR 601.817 (EUR 11.361 in 2011). Note 15 contains a breakdown of trade receivables by maturity.


The functional currency of the parent is the euro. The assets and li-abilities in foreign currencies, translated to euros at the exchange rates prevailing at the closing date, are presented below.

2012 2011

TEUR USD CNY DKK GBP HKK USD CNY DKK GBP HKK

Current assets

Other fi nancial assets 160 167 9 29 3 222 115 3 19 4

Trade and

other receivables 2 029 173 83 116 0 243 453 55 132 0

Current liabilities

Interest-bearing liabilities 0 0 0 0 0 0 0 0 0 0

Non-interest-bearing liabilities 121 189 266 44 0 36 350 161 9 0

Open position 2 068 151 -174 100 3 429 218 -103 142 4

Foreign exchange risk. The company mainly operates in the euro area and either in euros or in currencies pegged to the euro. The company is not exposed to signifi cant currency position risks or to risks that arise when investments denominated in other currencies are converted into the functional currency of the parent company. All the company’s borrowings are in euros. However, the company’s international operations have grown and are expected to continue growing, in which case the number of currencies not pegged to the euro will increase. The company strives to hedge against currency risks by using forward foreign-exchange contracts and other possi-ble means for decreasing the fl uctuation of exchange rates between the euro and other currencies. At the end of the fi nancial period, the Group had no contracts hedging against foreign exchange risks.

At the end of 2012, the translation exposure of equity was TEUR -190. This exposure includes exposure to translation diff erence re-garding the share capital, restricted capital and non-restricted capital of subsidiaries in non-euro countries as well as their profi t for the fi nancial period. The Group has not hedged these investments.

1 000 EUR Exposure

CNY

31.12.2012 -36

31.12.2011 562

DKK

31.12.2012 196

31.12.2011 126

GBP

31.12.2012 -1 070

31.12.2011 -15

HKD

31.12.2012 -12

31.12.2011 3

USD

31.12.2012 732

31.12.2011 579

A sensitivity analysis of the foreign currency translation risk associ-ated with the United States dollar, the Chinese yuan renminbi, the Danish krone, the Great Britain pound and the Hong Kong dollar is presented in the following table. The eff ects of 5 per cent exchange

rate changes on assets and liabilities in foreign currencies at the closing date have been taken into account in the analysis. The analy-sis does not include net investments in foreign units.

2012 2011

TEUR USD CNY DKK GBP HKK USD CNY DKK GBP HKK

Eff ect on profi t before tax 103 8 -9 5 0 21 11 -5 7 0


Capital management. With the help of an optimal capital structure, Ixonos’ capital management strives to support the Group’s business operations by safeguarding normal operational conditions as well as to increase shareholder value with a view to achieving the best possible profi t. An optimal capital structure also ensures smaller capital costs.

The company considers as capital both shareholders’ equity and borrowings from fi nancial institutions.

The capital structure is infl uenced e.g. through distribution of divi-dends and through share issues. The Group may vary and adjust the amount of dividends or capital refunds paid to shareholders as well as the number of shares to be issued. The Group may also resolve to sell assets in order to reduce debt.

The company monitors its capital structure by means of the eq-

uity ratio. Depending on the point in time, the equity ratio must be at least 35 per cent (31 January 2012 = 22,5 %). In the situation of 31 January 2012 the company did not meet the terms of the fi nancial covenants. Therefore the long-term fi nancing loans are presented as short-term in the fi nancial statement in accordance with the rules of the Committee for Corporate Analysis . However, the company has received releasing covenant statements from its fi nanciers for the next 6 to 12 months.

The calculation of the equity ratio is available on page 16 of the fi nancial statements.

In order to improve the balance and fi nancing situations, a share issue was prepared. The share issue was realised succesfully during January-February.

The Group’s gearing on 31 December 2012 and 31 December 2011:

TEUR 2012 2011

Interest-bearing liabilities 12 606 9 555

Cash and cash equivalents 477 1 466

Interest-bearing net liabilities 12 129 8 089

Capital and reserves total 7 489 29 448

Gearing, percentage 162,0 % 27,5 %

Borrowings from fi nancial institutions have covenants attached. Those covenants are described under ‘Liquidity risk’.


Financial lease agreements

2012 2011

Initial carrying value of intangible assets

under fi nancing lease agreements 850 663

Accumulated depreciations -620 -323

Carrying amount at the end of the fi nancial period 230 340

Initial carrying value of tangible assets

under fi nancing lease agreements 3 902 4 981

Accumulated depreciations -1 647 -2 945

Carrying amount at the end of the fi nancial period 2 255 2 036

The PV of the minimum lease payments at the end of the period

non-cancellable fi nancial lease agreements

Future minimum lease payments, total 2 311 2 352

Less interest expenses -114 -124

Present value of the minimum lease payments 2 197 2 228

The gross liability of fi nancial leases - minimum lease payments

by maturity

Within a year 1 330 1 234

A� er a year to 5 years 749 837

A� er 5 years 232 281

2 311 2 352

Future fi nancing expenses -114 -124

PV of the fi nancing lease liabilities 2 197 2 228

Maturity of PV of the fi nancing lease liabilities

Within 1 year 1 251 1 151

A� er a year to 5 years 720 803

A� er 5 years 226 274

2 197 2 228

33.


€ 1.1.-31.12.2012 1.1.-31.12.2011

Turnover 5 095 260,00 5 169 065,97

Other operating income 262 357,92 23 854,73

Materials and services

Raw materials and consumables -1 437,55 -17 127,12

External services -59 951,28 -636 417,21

Total materials and services -61 388,83 -653 544,33

Personnel expenses

Salaries and remuneration -2 514 467,83 -2 220 926,68

Indirect employee costs

Pension costs -371 181,94 -507 968,74

Other indirect employee costs -103 834,06 -138 945,76

Total indirect employee costs -475 016,00 -646 914,50

Total personnel costs -2 989 483,83 -2 867 841,18

Depreciation and impairment

Depreciation on

tangible and intangible assets -633 857,03 -454 724,66

-633 857,03 -454 724,66

Other operating expenses -6 358 452,14 -4 628 825,71

Total expenses -10 043 181,83 -8 604 935,88

Operating profi t -4 685 563,91 -3 412 015,18

Financial income and expenses

Interest and fi nancial income

Interest income 61 045,13 96 156,39

Income from non-current fi nancial assets 3 910,72 7 821,44

Other fi nancial income 817,49 3 019,06

Total interest and fi nancial income 65 773,34 106 996,89

Interest and other fi nancial expenses

Interest expenses -344 696,63 -345 414,26

Impairment of non-current assests -14 098 863,60 -766 913,20

Other fi nancial expenses -94 230,55 -137 817,54

Total interest and fi nancial expenses -14 537 790,78 -1 250 145,00

Total fi nancial income and expenses -14 472 017,44 -1 143 148,11

Profi t before extraordinary items -19 157 581,35 -4 555 163,29

Extraordinary items

Extraordinary income 0,00 4 549 938,06

Total extraordinary items 0,00 4 549 938,06

Profi t before appropriations and tax -19 157 581,35 -5 225,23

Income tax 0,00 -194 947,91

Profi t for the period -19 157 581,35 -200 173,14

Income statement of the parent company (FAS)


€ 31.12.2012 31.12.2011

ASSETS

FIXED ASSETS

Intangible assets

Intangible rights 450 780,47 631 351,97

Other long-term expenses 25 933,76 416 005,04

Total intangible assets 476 714,23 1 047 357,01

Tangible assets

Machinery and equipment 132 044,52 254 986,35

Other tangible assets 11 477,26 11 477,26

Total tangible assets 143 521,78 266 463,61

Investments

Shares in Group companies 24 986 321,13 38 935 543,13

Other shares 19 231,37 19 231,37

Total investments 25 005 552,50 38 954 774,50

TOTAL FIXED ASSETS 25 625 788,51 40 268 595,12

CURRENT ASSETS

Current receivables

Trade receivables 3 924 186,93 2 917 092,71

Loan receivables 8 675 550,24 9 545 910,70

Accruals 864 005,44 355 931,48

Other receivables 1 537 003,66 12 601 555,76

Current receivables, total 15 000 746,27 25 420 490,65

Cash and cash equivalents

Cash on hand and in banks 9 264,92 555 575,50

TOTAL CURRENT ASSETS 15 010 011,19 25 976 066,15

TOTAL ASSETS 40 635 799,70 66 244 661,27

SHAREHOLDERS’ EQUITY AND LIABILITIES 31.12012 31.12.2011

SHAREHOLDERS’ EQUITY

Share capital 585 394,16 585 394,16

Share premium reserve 218 725,00 218 725,00

Invested non-restricted equity fund 20 596 197,46 20 596 197,46

Retained earnings 3 290 952,32 3 491 125,46

Profi t for the period -19 157 581,35 -200 173,14

TOTAL SHAREHOLDERS’ EQUITY 5 533 687,59 24 691 268,94

LIABILITIES

Provisions

Non-current provisions 390 000,00 0

Non-current liabilities

Non-current borrowings 6 092 406,00 1 164 263,00

Total non-current liabilities 6 092 406,00 1 164 263,00

Current liabilities

Borrowings from fi nancial institutions 3 164 627,76 4 112 562,00

Trade payables 565 275,04 1 704 870,73

Other current liabilities 24 070 847,13 34 045 270,06

Accrued expenses 818 956,18 526 426,54

Total current liabilities 28 619 706,11 40 389 129,33

TOTAL LIABILITIES 34 712 112,11 41 553 392,33

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 40 635 799,70 66 244 661,27

Balance sheet of the parent company (FAS)


€ 1.1.-31.12.2012 1.1.-31.12.2011

Cash fl ow from operating activities

Profi t for the period -19 157 581 -200 173

Adjustments to cash fl ow from operations 0 0

Tax 0 194 947

Depreciation and amortisation 633 857 454 724

Impairment of subsidiary shares 13 949 222 0

Group contributions received 0 -4 549 938

Write-down on loan receivable 149 642 766 913

Dividends received -3 911 -7 821

Other adjustments 330 666 0

Financial income and expenses 405 351 384 055

Net cash generated before working capital changes, interest and tax -3 692 754 -2 957 293

Change in working capital 469 114 5 881 732

Interest received 28 920 99 176

Interest paid -434 271 -521 081

Tax paid -220 500 -182 022

Net cash fl ow from operating activities -3 849 491 2 320 512

Cash fl ow from investing activities

Investments in property, plant and equipment and in intangible assets -30 939 -346 386

Cash from tangible and intangible assets 150 000 0

Dividends received 3 911 7 821

Acquisitions of subsidiaries 0 -155 487

Total cash fl ow from investing activities 122 973 -494 052

Cash fl ow before fi nancing -3 726 519 1 826 460

Cash fl ow from fi nancing activities

Increase in long term loans 4 414 660 0

Payment of long term loans -1 119 645 -2 025 004

Increase in short term loans 685 194 1 450 567

Payment of short term loans 0 0

Intercompany loans granted 0 0

Repayment of intercompany loans -800 000 -900 000

Paid share capital 0 0

Net cash fl ow from fi nancing activities 3 180 209 -1 474 437

Change in cash and cash equivalents -546 310 352 023

Cash and cash equivalents at the beginning of the period 555 575 203 552

Cash and cash equivalents at the end of the period 9 265 555 575

Cash fl ow statement of the parent company


Invested non-

restricted

Share premium equity Retained

€ Share capital reserve fund earnings Total

Shareholders equity at 1 Jan 2012 585 394 218 725 20 596 197 3 290 953 24 691 269

Profi t for the period -19 157 581 -19 157 581

Shareholders equity at 31 Dec 2012 585 394 218 725 20 596 197 -15 866 629 5 533 687

Shareholders equity at 1 Jan 2011 585 394 218 725 20 596 197 3 491 126 24 891 442

Profi t for the period -200 173 -200 173

Shareholders equity at 31 Dec 2011 585 394 218 725 20 596 197 3 290 953 24 691 269

Changes in equity of the parent company

The parent company’s distributable funds at 31 Dec 2012 were EUR 4 729 568,43 (2011: EUR 23 887 150,26).

Accounting policies

Tangible and intangible assets.Tangible and intangible assets are shown in the balance sheet at historical cost less depreciation and impairment according to plan. Depreciations begin from the com-missioning date of each asset.

Depreciation periods

Machinery and equipment 25 per cent, reducing balance

Intangible rights 4 years, straight-line

Other long-term expenses 3–5 years, straight-line

INVESTMENTSLong term investments are valued at acquisition cost or lower esti-mated discounted future value.

Sudsidiary shares have been impaired by EUR 13,949,222 due to decreased estimated future value.

VALUATION OF FINANCIAL ASSETS

Derivatives. The derivatives of the company include interest rate swaps, which are used to convert the fl oating rate of the borrowings from fi nancial institutions to a fi xed rate. The fair value of swaps are included characteristically either to current receivables or liabilities.

Retirement benefi ts. The pension cover of parent employees is han-dled by external pension companies. Pension expenditure is expensed in the year of accrual.

Foreign currency items. Receivables and liabilities denominated in foreign currencies have been translated into euros using the ex-change rate prevailing on the closing date.

The notes of the parent company has been presented as euros, unless mentioned otherwise.

1.


Accompanying notes to the income statement of the parent company

TURNOVER 2012 2011

Turnover by market area

Finland, concists totally of management service fees 5 095 260 5 169 066

OTHER OPERATING INCOME

Government grants 203 024 23 855

Other items 59 334 0

Total 262 358 23 855

ACCOMPANYING NOTES ON PERSONNEL AND OFFICERS

Number of parent employees during the period, average 27 34

Number of parent employees at the end of the period 21 30

Personnel expenses

Salaries and remuneration of the management and the Board of Directors -482 708 -500 939

Salaries and remuneration -2 031 760 -1 719 988

Pension costs -371 182 -507 969

Other personnel expenses -103 834 -138 946

Total personnel expenses in the income statement -2 989 484 -2 867 841

Cash value of fringe benefi ts of the management and the Board of Directors -17 460 -17 280

Cash value of other fringe benefi ts -75 648 -74 031

Total fringe benefi ts -93 108 -91 311

Total -3 082 592 -2 959 152

OTHER OPERATING EXPENSES

Income statement does not include expensed R&D costs (2011: EUR 111 thousand was expensed).

Auditor’s fees

PricewaterhouseCoopers Oy, KHT fi rm

Audit fees -46 278 -53 018

Tax advice -1 355

Other services -36 286 -1 038

-82 564 -55 411

DEPRECIATION AND IMPAIRMENT

Depreciation and amortisation of intangible rights -200 674 -150 935

Depreciation and amortisation of tangible assets -43 112 -53 881

Depreciation and amortisation of other long-term expenses -390 071 -249 908

-633 857 -454 724

2.


FINANCIAL INCOME AND EXPENSES

Interest and fi nancial income

From group companies 59 430 94 369

From others 2 433 4 807

Interest and fi nancial income total 61 863 99 175

Interest and fi nancial expenses

From group companies -90 634 -225 381

Impairment of non-current assets -14 098 864 -766 913

To others -348 294 -257 851

Interest and fi nancial expenses total -14 537 791 -1 250 145

EXTRAORDINARY INCOME

Group contributions received 0 4 549 938

Merger profi t 0 0

0 4 549 938

INCOME TAX

From normal operations 0 988 036

From extraordinary items 0 -1 182 984

Total 0 -194 948

ACCOMPANYING NOTES ON OFFICERS 2012 2011

Salaries and remuneration

Kari Happonen, CEO untill 6 Nov 2012 *) 254 550 353 568

Timo Kaisla, interim CEO 7 Nov 2012 -31 Dec 2012 26 040 0

Board of Directors

Pertti Ervi (Chairman) 45 915 45 00

Paul Ehrnrooth (Vice Chairman) (since 23 March 2010) 34 000 33 000

Matti Järvinen 26 083 24 750

Kirsi-Marja Kuivalainen (since 23 March 2010) 23 333 24 000

Matti Heikkonen (since29 March 2011) 24 833 15 083

Samu Konttinen (since 29 March 2011) 23 083 16 750

Tero Laaksonen (Chairman until 29 March 2011) 0 12 750

Matti Makkonen (until 29 March 2011) 0 6 000

Markku Toivanen (until 29 March 2011) 0 6 250

Peter Eriksson (until 29 March 2011) 0 6 000

Total salaries and remuneration of offi cers 457 838 543 151

* Including fringe benefi ts.

The President and CEO has a voluntary supplementary pension ar-rangement. Please refer to note 28.

Ixonos Management Invest Oy has been granted a loan in connection with the bonus arrangement of the Group’s management. The arrange-

ment is disclosed in detail in notes 28, ‘Related party transactions’, and 1, ‘Accounting policies for the consolidated fi nancial statement’.


Accompanying notes to the parent company balance sheet

ASSETS 2012 2011

Intangible assets

Other long-term expenses

Cost at the begining of the fi nancial period 7 004 939 7 004 939

Disposals during the fi nancial period 0 0

Cost at the end of the fi nancial period 7 004 939 7 004 93

Accumulated depreciations -6 588 934 -6 339 026

Depreciation and amortisation for the fi nancial period -390 071 -249 908

Deductions of depreciations according to the plan 0 0

Accumulated depreciations at the end of the fi nancial period -6 979 005 -6 588 934


Intangible rights

Cost at the beginning of the fi nancial period 1 541 616 1 184 974

Additions during the fi nancial period 20 103 356 642

Disposals during the fi nancial period 0 0





Accumulated depreciations at the end of the fi nancial period -1 110 938 -910 264


Tangible assets

Machinery and equipment

Cost at the begining of the fi nancial period 900 685 884 592

Additions during the fi nancial period 10 836 16 093

Disposals during the fi nancial period -90 666 0

Cost at the end of the fi nancial period 820 855 900 685




Accumulated depreciations at the end of the fi nancial period -677 33 -634 221


Investments in Group companies

Cost at the beginning of the fi nancial period 38 935 543 38 780 056

Additions during the fi nancial period 0 155 487

Disposals during the fi nancial period -13 949 222 0


3.


2012 2011

Receivables from Group companies

Trade receivables 3 893 632 1 654 768

Loan receivables and group account receivables 8 675 550 9 389 624

Other receivables 1 177 833 12 227 231

Total, receivables from Group companies 13 747 015 23 271 623

Receivables from others

Trade receivables 30 555 1 262 324

Loan receivables 0 156 287

Accruals 864 005 355 931

Other receivables 359 171 374 325

Receivables from others total 1 253 731 2 148 867

Current receivables total 15 000 746 25 420 490

Accruals and other receivables

Prepaid expenses 392 916 257 013

Rent guarantees 357 170 373 081

Value added tax receivables 0 0

Income tax 220 500 0

Pension insurance 220 979 86 718

Others 31 611 13 444

Total 1 223 176 730 256

NON-CURRENT LIABILITIES

Borrowings from fi nancial institutions 6 092 406 1 164 263

- With a maturity of more than fi ve years 0 0

CURRENT LIABILITIES

Borrowings from fi nancial institutions 3 164 628 4 112 562

Liabilities to Group companies

Trade payables 35 414 1 282 571

Loans and group account liabilities 23 591 106 29 756 745

Other liabilities 20 341 4 109 827

Liabilities to Group companies total 23 646 860 35 149 143

Liabilities to others

Trade payables 529 861 422 300

Other current liabilities 459 401 178 698

Accrued expenses 818 956 526 426

Liabilities to others total 1 808 218 1 127 424

Current liabilities total 28 619 706 40 389 129

Accrued expenses

Provision for holiday pay 206 821 440 026

Interest rate hedge 87 208 22 704

Salaries 465 527 0

Others 59 400 63 697

Total, accrued expenses 818 956 526 427


2012 2011

CONTINGENT LIABILITIES AND GUARANTEES

Leasing and rental liabilities

Leasing liabilities, 12 months 281 498 829 769

Leasing liabilities, over 12 months 124 978 726 523

Total leasing liabilities 406 476 1 556 292

Rental liabilities 4 456 064 3 838 297

Other liabilities 9 898 10 018

Financial guarantee contracts on behalf of Group companies 3 404 153 3 409 258

Mortgages. At 31 December 2012, the company had pledged nine company mortgages of EUR 1,000,000 each and one company mort-gage of EUR 800,000 as collateral for its own borrowings from fi -

nancial institutions. The total amount of company mortgages is EUR 9,800,000. The mortgages are collateral for EUR 9,257,034 in borrow-ings and overdra� s limits from fi nancial institutions.

SUBSIDIARIES

Name Domicile Parent

City and country ownership

Ixonos Business Solutions Oy merged 30 June 2012 into Ixonos Finland Oy Helsinki, Finland 100 %

Ixonos Estonia OÜ Tallinn, Estonia 100 %

Ixonos Germany GmbH Berlin, Germany 100 %

Ixonos Slovakia s.r.o. Košice, Slovakia 100 %

Beijing Ixonos Technology Co., Ltd. Beijing, China 100 %

Chengdu Ixonos Technology Co., Ltd. Chengdu, China 100 %

Ixonos Denmark ApS Alborg, Denmark 100 %

Ixonos USA Ltd. San Jose, United States 100 %

Ixonos Hong Kong Ltd Hong Kong, China 100 %

Ixonos UK Ltd London, United Kingdom 100 %


Signatures to the fi nancial statements and to the report of the Board of Directors

Helsinki, ____ , ____ 2013

Esa Harju Pertti Ervi President and CEO Chairman of the Board of Directors

Paul Ehrnrooth Matti Heikkonen Vice Chairman of the Board of Directors Member of the Board of Directors

Matti Järvinen Samu Konttinen Member of the Board of Directors Member of the Board of Directors

Kirsi-Marja Kuivalainen Member of the Board of Directors

Tilinpäätösmerkintä

Suoritetusta tilintarkastuksesta on tänään annettu kertomus.

Helsingissä 20. päivänä maaliskuuta 2013

PricewaterhouseCoopers OyKHT- Yhteisö

Markku KatajistoKHT


Auditor’s Report

To the Annual General Meeting of Ixonos Oyj. We have audited the accounting records, the fi nancial statements, the report of the Board of Directors and the administration of Ixonos Oyj for the year ended 31 December, 2012. The fi nancial statements comprise the consolidated statement of fi nancial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash fl ows, and notes to the consolidated fi nancial statements, as well as the parent company’s balance sheet, income statement, cash fl ow statement and notes to the fi nancial statements.

Responsibility of the Board of Directors and the Managing Director. The Board of Directors and the Managing Director are responsible for the preparation of con-solidated fi nancial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of fi nancial statements and the report of the Board of Direc-tors that give a true and fair view in accordance with the laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and fi nances, and the Man-aging Director shall see to it that the accounts of the company are in compliance with the law and that its fi nancial aff airs have been arranged in a reliable manner.

Auditor’s Responsibility. Our responsibility is to express an opinion on the fi -nancial statements, on the consolidated fi nancial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice re-quires that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or whether they have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements and the report of the Board

of Directors. The procedures selected depend on the auditor’s judgment, in-cluding the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of fi nancial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements and the report of the Board of Directors.

We believe that the audit evidence we have obtained is suffi cient and appro-priate to provide a basis for our audit opinion.

Opinion on the Consolidated Financial Statements. In our opinion, the consoli-dated fi nancial statements give a true and fair view of the fi nancial position, fi nancial performance, and cash fl ows of the group in accordance with Interna-tional Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the Company’s Financial Statements and the Report of the Board of Directors. In our opinion, the fi nancial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent com-pany’s fi nancial performance and fi nancial position in accordance with the laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the fi nancial statements.

Helsinki, 20 March, 2013

PricewaterhouseCoopers OyAuthorised Public Accountants

Markku KatajistoAuthorised Public Accountant


Business ID: 0997039-6

Ixonos Plc | P.O. Box 284, FI-00811 Helsinki | www.ixonos.com

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