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Interim report 1-6/2015 3.8.2015
Interim report 1-6/2015
3.8.2015
Forward-Looking Statements
Certain sections of this presentation contain forward-looking statements based on the Affecto’s
current expectations, estimates, projections and assumptions.
Words such as 'forecasts', ‘estimates’, ‘expects’, ‘plans’, and variations of these words and similar
expressions are intended to identify forward-looking statements, which include, but are not limited
to, Affecto's performance and profitability, market growth and industry developments.
These statements involve certain risks and uncertainties, which are difficult to predict, and therefore
actual future results and trends may differ materially from what is forecast in forward-looking
statements. Affecto undertakes to update such statements with respect to new information and
future events only within the limits of its statutory obligation to disclose information.
2
33
Overview to Q2/2015
Net sales 30.8 M€ (33.0 M€)
- Decrease 7%
- Weaker demand for traditional IT offering, more
interest in new business technology solutions
- Baltic net sales grew by 20 %
Operational segment result 2.9 M€ (3.0 M€)
- Excellent profitability 20 % in Baltic
- Profitability 10 % in Finland, 8 % in Norway and
7 % in Sweden
- Poor profitability -3 % in Denmark
Operating profit 2.9 M€ / 9% (2.5 M€ / 7,5%)
0
10
20
30
40
Q1/1
3
Q2/1
3
Q3/1
3
Q4/1
3
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Net Sales (M€)
0
1
2
3
4
5
Q1/1
3
Q2/1
3
Q3/1
3
Q4/1
3
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Operational segment result (M€)
-4
-3
-2
-1
0
1
2
3
Q1/1
3
Q2/1
3
Q3/1
3
Q4/1
3
Q1/1
4
Q2/1
4
Q3/1
4
Q4/1
4
Q1/1
5
Q2/1
5
Operating profit (M€)
4
Income statement
License sales halved compared to the second quarter 2014. Utilization rate continued to be low in Denmark and Finland.
Materials and services have decreased in line with decreased sales
No IFRS3 amortisation, as that was completed in Q4/2014
(1 000 EUR) 4-6/15 4-6/14 1-6/15 1-6/14 2014
Last
12m
Net sales 30 812 33 018 59 874 64 205 122 693 118 361
Other operating income 1 23 1 23 27 5
Changes in inventories of
finished goods and work in
progress 69 17 110 26 -83 1
Materials and services -6 611 -8 172 -11 467 -14 171 -26 560 -23 856
Personnel expenses -16 765 -17 081 -34 329 -37 216 -67 630 -64 743
Other operating expenses -4 354 -4 472 -8 653 -9 096 -17 221 -16 777
Other depreciation and
amortisation -271 -309 -549 -622 -1 218 -1 145
Operational segment result 2 881 3 024 4 988 3 149 10 009 11 847
IFRS3 amortisation - -549 - -1 098 -1 753 -655
Goodwill impairment - - - - -7 423 -7 423
Operating profit/loss 2 881 2 475 4 988 2 051 833 3 769
Net financial income/expenses -83 -183 -202 -363 -563 -402
Profit before income tax 2 798 2 292 4 785 1 688 270 3 367
Income tax -446 -445 -993 -392 -1 861 -2 462
Profit for the period 2 353 1 847 3 792 1 297 -1 591 905
Basic EPS 0.11 0.09 0.18 0.06 -0.07 0.04
Finland40 %
Norway18 %
Sweden16 %
Denmark9 %
Baltic17 %
Net sales per region 1-6/2015
5
Segment comparison
Net SalesBy segment 4-6/15 4-6/14 Growth 2014 Last 12m
Finland 12 439 13 810 -10 % 50 564 48 750
Norway 5 540 7 005 -21 % 25 028 22 725
Sweden 5 526 5 452 1 % 19 985 18 820
Denmark 2 734 3 127 -13 % 12 038 11 049
Baltic 5 639 4 696 20 % 19 032 20 928
Other -1 067 -1 072 -3 954 -3 911
Total 30 812 33 018 -7 % 122 693 118 361
Result
By segment 4-6/15 Margin 4-6/14 Margin 2014 Margin
Last
12m Margin
Finland 1 281 10 % 1 359 10 % 5 441 11 % 5 141 11 %
Norway 455 8 % 714 10 % 1 966 8 % 2 586 11 %
Sweden 366 7 % 311 6 % 304 2 % 752 4 %
Denmark -80 -3 % 260 8 % 865 7 % 290 3 %
Baltic 1 129 20 % 597 13 % 2944 15 % 4 625 22 %
Other -270 -217 -1 511 -1 546
Operational Segment
Result
2 881 9 % 3 024 9 % 10 009 8 % 11 847 10 %
IFRS3 amortisation - -549 -1 753 -655
Goodwill impairment - - -7 423 -7 423
Operating profit 2 881 9 % 2 475 7 % 833 1 % 3 769 3 %
0
2
4
6
8
10
12
14
16
M€
Net Sales
Q2/14
Q2/15
-0,2
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
M€
Operational Segment Result
Q2/14
Q2/15
Business areas - Finland
Net sales 12.4 M€ (13.8 M€), 10% decrease
Operational segment result 1.3 M€ / 10%, (1.4 M€ / 10%)
Low resource utilisation
Lower net sales partially offset by expected lower incentives
Order backlog is below last year
Weaker demand for core offering, more interest in new
business technology solutions
Net Sales
Operational Segment Result
6
0
3
6
9
12
15
Q1/13Q2/13Q3/13Q4/13Q1/14Q2/14Q3/14Q4/14Q1/15Q2/15
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Q1/13Q2/13Q3/13Q4/13Q1/14Q2/14Q3/14Q4/14Q1/15Q2/15
Development actions in Finland
Especially the Finnish market is experiencing growing interest in new business technology areas
and on the other hand declining trend in new orders related to traditional IT market.
Therefore, in Finland we are
investing in growth capabilities and culture,
streamlining our operations and
restructuring our organization and personnel structure to align with market demand.
We are evaluating the need for personnel reductions in Finland combined with both organizational
changes and ongoing competence development.
These actions are estimated to reduce current personnel in Affecto Finland Oy and Karttakeskus Oy
up to 50 employees.
We are strongly following the group strategic direction published in February 2015. We continue to
invest and better answer to the needs of customers and the new technology areas.
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Business areas - Norway
Net sales 5.5 M€ (7.0 M€), 21% decrease
Operational segment result 0.5 M€ / 8%, (0.7 M€ / 10%)
Lower number of employees partly offset by use of
nearshoring
Improved order intake
Order backlog is above last year
Net Sales
Operational Segment Result
8
0
3
6
9
12
15
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
Business areas - Sweden
Net sales 5.5 M€ (5.5 M€), 1% increase
Operational segment result 0.4 M€ / 7% (0.3 M€ / 6%)
Net sales increased due to a significant license deal
Lower amount of employees and high people churn
resulted to the lower consulting revenue
Order backlog is below last year
Search for the new country managing director and group
leadership team member is also in process
Net Sales
Operational Segment Result
9
0
3
6
9
12
15
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
Business areas - Denmark
Net sales 2.7 M€ (3.1 M€), 13% decrease
Operational segment profit -0.1 M€ / -3% (0.3 M€ / 8%)
Low utilisation and low license sales
Significant business recovery actions ongoing
Order intake continued to decline
Order backlog below last year
Net Sales
Operational Segment Result
10
0
3
6
9
12
15
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
Business areas - Baltic
Net sales 5.6 M€ (4.7 M€), 20% increase
Operational segment result 1.1 M€ / 20% (0.6 M€ / 13%)
Insurance business and Estonia performing well
High utilization due to the few large projects in final stages
Slow preparation of new EU funded projects still negatively
impacts the public sector market in Lithuania
Order backlog is below last year
Net Sales
Operational Segment Result
11
0
3
6
9
12
15
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
Balance sheet
IFRS3 amortisation has been completed
Interest-bearing net debt3.3 M€ (1.1 M€ 12/2014)
Gearing 5% (2%)
Equity ratio 58% (55%)
Increase in current liabilities based on the current terms according to which the loan from financial institutions will be due in June 2016
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(1 000 EUR) 6/2015 6/2014 12/2014
Property, plant and equipment 1 349 1 745 1 505
Goodwill 63 384 71 377 62 814
Other intangible assets 192 988 254
Other long-term assets 1 061 1 590 1 263
Long-term assets 65 986 75 701 65 836
Receivables and inventories 33 689 35 976 37 622
Cash and cash equivalents 17 161 14 308 21 380
Current assets 50 849 50 284 59 002
Total assets 116 835 125 985 124 838
Equity for shareholders 61 459 64 559 60 437
Non-current liabilities 95 20 621 18 642
Current liabilities 55 281 40 805 45 759
Total equity and liabilities 116 835 125 985 124 838
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Cash flow
Change in working capital more positive than year ago
(1 000 EUR) 1-6/2015 1-6/2014 2014
Cash flows from operating activities
Profit for the period 3 792 1 297 -1 591
Adjustments to profit for the period 1 692 2 471 12 878
Change in working capital -2 199 -3 543 348
Interest and other financial cost paid -169 -228 -418
Interest and other financial income
received 35 35 68
Income taxes paid -1 768 -1 511 -2 946
Net cash from operating activities 1 384 -1 479 8 339
Net cash used in investing activities -325 -440 -739
Net cash from financing activities -5 453 -5 172 -7 172
Decrease/(increase) in cash and
cash equivalents -4 395 -7 092 429
Ownership structure – 27 July 2015
Flagging notices in 2015
- None
Treasury shares 3.9%
22.5 million shares in total
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Registered owners %
Cantell Oy 10,2 %
Lombard International Assurance S.A. 6,5 %
Danske Suomi Kasvuosake Fund 6,4 %
Säästöpankki Kotimaa Fund 5,8 %
Evli Suomi Fund 4,9 %
OP-Suomi Pienyhtiöt Fund 4,8 %
Ilmarinen Mutual Pension 4,0 %
OP-Suomi Arvo Fund 3,4 %
Taaleritehdas Arvo Markka Fund 2,7 %
State Pension Fund 2,7 %
Other shareholders 44,8 %
Treasury shares 3,9 %
Total 100,0 %
Annual General Meeting - 8 April 2015
Dividend: 0.16 eur/share
- Last year 0.16 eur/share
Board members:
- Existing board members re-elected: Aaro Cantell, Jukka Ruuska,
Tuija Soanjärvi, Lars Wahlström, Magdalena Persson, Olof Sand
Other issues
- Board fees: chairman 3500 €/month, vice chair 2750 €/month, member 2000 €/month.
To be partially paid with shares
- Same authorizations as last year
- Nominations committee for board member selection
0,00
0,04
0,08
0,12
0,16
0,20
2009 2011 2013
Div
idend (
€/s
hare
)
15
Changes in Management
Julius Manni started as the country managing director for Finland on 1 March 2015.
Hellen Wohlin Lidgard, the country managing director for Sweden and Rene Lykkeskov, the chief
strategy officer, left Affecto during second quarter.
Mikko Eerola has been appointed as managing director, B2C and Customer Front-Office
Reinvention and the member of the group management team. Eerola will lead Affecto’s business
technology and design services in these growing areas and he will start on 10 August 2015.
CFO Satu Kankare has decided to resign and she will leave Affecto on 7 August 2015. Sami
Lehtinen will be the interim CFO and will serve in the position during the CFO recruitment process.
Sakari Knuutti started as the Director, Legal & IR on 27 July 2015.
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Outlook
Business development actions
Good progress in converting the strategic direction into operational changes
Positive feedback on increased focus on industry knowledge and value in customer work
Capability development on several fronts:
- Evolution meeting practise with employees
- Recruitment to new hybrid roles both from inside and outside Affecto
- Affecto Industrial program with focus on IoT & analytics for selected industries
- Design / user interface / usability solutions
- Near-shore capability development boost
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Outlook
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0
10
20
30
40
50
60
70
Q1 Q2 Q3 Q4
Order backlog (M€)
2010
2011
2012
2013
2014
2015
Order backlog 43 M€, 4.8 M€ below Q2/2014
Year 2015 net sales are estimated to be below last year’s level.
Operating profit is estimated to grow in 2015.
0
10
20
30
40
50
60
70Q
1/1
3
Q2
/13
Q3
/13
Q4
/13
Q1
/14
Q2
/14
Q3
/14
Q4
/14
Q1
/15
Q2
/15
Order backlog (M€)
Thank you.
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