Revenue for 2018 are expected to be EUR million, and EBITDA is expected to be EUR million.

Transcription

1 1 The company has published a stock exchange release on 27th of February, 2018 and this is a translation of it. In case of any discrepancies between the Finnish text and the English translation, the Finnish text shall prevail. Financial statements bulletin 1 January 31 December 2017 (audited) SIILI S REVENUE INCREASED BY 19% AND EBITDA BY 21% IN 2017 Siili Solutions Plc, Financial statements bulletin, 27 February 2018, 8:45 a.m. January December 2017: - Revenue was EUR 57,810 (48,415) thousand an increase of 19.4% - EBITDA was EUR 5,771 (4,770) thousand an increase of 21.0% - The EBITDA margin was 10.0% (9.9%) of revenue - Operating profit (EBIT) was 5,010 (4,144) thousand an increase of 20.9% - The profit for the period was EUR 3,970 (3,180) thousand an increase of 24.8% - Earnings per share were EUR 0.57 (0.48) an increase of 18.8% - Cash flow from operations amounted to EUR 4,856 (5,156) thousand a change of -5.8% - The statement of the financial position total was EUR 33,861 (30,596) thousand - The Board of Directors proposes a dividend of EUR 0.39 (0.30) per share an increase of 30.0% - International operations accounted for 11.5% (7.9%) of revenue - The company made three business acquisitions during the financial year, the first of which was the acquisition of Stormbit Oy s 3D, AR and VR businesses by an agreement signed on 18 May On 31 May 2017, the company acquired the entire share capital of the software automation specialist Omenia Oy. As part of the purchase price, the company carried out a share issue directed at the shareholders of Omenia Oy. A total of 81,949 new shares were subscribed in the share issue at a price of EUR per share. The share issue had an effect of EUR 840 thousand on the Group s shareholders equity. In the second half of the year, on 29 November 2017, the company acquired the software services business of Comia Software Oy. July December 2017: - Revenue was EUR 28,823 (7 12/2016: 24,551) thousand an increase of 17.4% - EBITDA was EUR 3,417 (2,906) thousand an increase of 17.6% - The EBITDA margin was 11.9% (11.8%) of revenue - Operating profit (EBIT) was EUR 2,995 (2,541) thousand an increase of 17.9% - The profit for the period was EUR 2,431 (2,014) thousand an increase of 20.7% - Earnings per share were EUR 0.35 (0.29) an increase of 19.4% - Cash flow from operations amounted to EUR 3,159 (6,197) thousand a change of -49.0% Outlook for 2018 Revenue for 2018 are expected to be EUR million, and EBITDA is expected to be EUR million. Key figures 7 12/ / / /2016 Revenue, EUR 1,000 28,823 24,551 57,810 48,415 EBITDA, EUR 1,000 3,417 2,906 5,771 4,770 EBITDA, % of revenue 11.9% 11.8% 10.0% 9.9% Operating profit (EBIT), EUR 1,000 2,995 2,541 5,010 4,144 EBIT, % of revenue 10.4% 10.3% 8.7% 8.6% Profit for the period, EUR 1,000 2,431 2,014 3,970 3,180 Profit for the period, % of revenue 8.4% 8.2% 6.9% 6.6% Equity ratio, % 62.5% 61.2% 62.5% 61.2% Gearing ( * -39.3% -47.5% -39.3% -47.5% Earnings per share (EPS), EUR

2 2 EPS adjusted for dilution, EUR Average number of employees during the period ** Number of employees at the end of the period * Gearing does not include the contingent consideration related to the acquisitions **) The average of the number at the beginning and the number at the end of the review period Siili Solutions Plc takes into account the Alternative Performance Measures Guidelines published by the European Securities and Markets Authority (ESMA) on 3 July The company uses EBITDA as a guideline for reviewing its profit for the period. EBITDA is calculated by adding depreciation to the operating profit. Gearing does not take into account the contingent considerations that have previously been related to the earn-outs for the company s acquisitions. TIMO LUHTANIEMI, CEO: Siili had its best-ever year in 2017, as we built on our long tradition of strong growth and stable profitability. The seamless cooperation between our experts and customers was reflected in 19% year-on-year growth in our revenue and our continued stable profitability in relation to revenue (EBITDA 10%). Our growth and profitability were in line with our previous guidance despite the fact that we fell short of our recruitment targets for the second half of the year. Our focus areas in 2017 were growth through acquisitions, accelerating our internationalisation and developing our processes and competencies. Our acquisition of Stormbit in the Oulu region in the spring brought in strong 3D and augmented reality expertise. Also in the spring, we were joined by Finland s leading experts in software automation when we acquired Omenia. Late in the year, we expanded our operations to Seinäjoki by buying the software services business of Comia Software. The expertise of Comia Software s personnel further strengthens Siili s service offering. After a two-year break, these three acquisitions activated one of the cornerstones of our strategy. We continuously screen companies whose competencies expand or reinforce our competence portfolio and whose organisational culture is compatible with Siili s culture. We will continue to strive to acquire the best of these candidates and thereby maintain our other channel of growth alongside recruitment. Inorganic growth is also a potential path to geographical expansion, both in Finland and internationally. Our international operations grew to account for 12% of our revenue in 2017, boosted by strong demand in the automotive industry in Germany and, in particular, the United States. In response to this positive outlook, we opened two new international offices in the latter part of the year. We established an office in Detroit in the United States to be close to our local customers there. We also opened our second centre of excellence in Szczecin, Poland, with a focus on serving our customers in the automotive industry. We expect that the growth of our international business will continue to outpace that of our domestic operations. Continuous improvement is one of Siili s core values. In 2017, we focused on improving our business control and increasing the efficiency of operations by developing duplicable competence components. We also expanded the training provided by the Siili Academy to include new competence areas, we had dozens of Apprentices trained by our Masters, and we increased our skill sets, especially in the areas of artificial intelligence, software automation, robotic process automation, 3D modelling and augmented reality, all of which are seeing strong growth in international demand. As the digital transformation continues, leading companies in various sectors are turning to Siili for insight and expertise to support their business development. Our growth is driven by not only the competence of our experts, but also the number of experts we have. Recognising this, we aim to be the most attractive employer in our field by offering our experts the most interesting customer assignments and diverse opportunities for professional development.

3 3 Our strategy has proved to be effective. We will further develop our management structures and services in 2018 to ensure that in the coming years, we can continue our rapid growth and improve our profitability while still maintaining the entrepreneurial culture that characterises our organisation. In line with our long-term growth target, we estimate our revenue in 2018 to be EUR million, and EBITDA to be EUR million. REVENUE AND PERFORMANCE In 2017, the Group s revenue increased by 19.4% (15.6%) compared to the previous year. Revenue grew by EUR 9,395 thousand and amounted to EUR 57,810 (48,415) thousand. In the second half of the year, 7 12/2017, the Group s revenue increased by 17.4% (16.8%) year-on-year. The three acquisitions made by the Group in 2017 had a combined effect of approximately EUR 1,926 (0) thousand on revenue for the financial year. This effect primarily took place in the latter half of the year. The subcontracting, server and licence costs arising from the use of external services totalled EUR 10,097 (7,846) thousand, or 17.5% (16.2%) of revenue. Employee benefit expenses for the period amounted to EUR 35,149 (30,384) thousand, or 60.8% (62.8%) of revenue. The total number of employees at the end of the period was 563 (440), representing a year-on-year increase of 28.0% (19.6%). Employees transferred to the company in acquisitions accounted for slightly more than one third of the total increase in personnel, or 48 out of 123 employees. The total cost arising from employees and the use of external services was 78.3% (79.0%) of revenue, slightly lower than in the previous year. Other operating expenses amounted to EUR 6,952 (5,464) thousand, or 12.0% (11.3%) of revenue. Other operating expenses included acquisitionrelated expert fees and restructuring costs totalling approximately EUR 121 thousand. The Group s EBITDA for the financial year 2017 was EUR 5,771 (4,770) thousand, or 10.0% (9.9%) of revenue. Acquisitions increased the Group s EBITDA by EUR 568 thousand. Taking the expert fees related to acquisitions into account, the net effect of the acquisitions on EBITDA was EUR 448 thousand. EBITDA for the second half of the year was EUR 3,417 (2,906) thousand, or 11.9% (11.8%) of revenue. The company improved its full-year profitability during the second half of the year, and its euro-denominated EBITDA grew by 17.9% (31.8%) year-on-year. Operating profit for the full year amounted to EUR 5,010 (4,144) thousand. Net financial expenses decreased year-on-year due to the absence of accrued interest expenses related to the discounting of acquisition costs. The profit before taxes was EUR 4,993 (4,019) thousand, up 24.2% (27.2%) year-on-year, and earnings per share were EUR 0.57 (0.48). FINANCING AND INVESTMENTS The Group s statement of the financial position total stood at EUR 33,861 (30,596) thousand at the end of the financial year. The company s equity ratio was 62.5% (61.2%), return on investment (ROI) was 24.7% (24.2%) and gearing was -39.3% (-47.5%). During the 2017 financial year, the Group s cash flow from operations was EUR 4,856 (5,156) thousand, down 5.8% (26.1%) year-on-year. In the second half of the year, cash flow from operations amounted to EUR 3,159 (6,197) thousand. Capital expenditure during the financial year totalled EUR -3,271 (1,747) thousand. The capital expenditure mainly consisted of the acquisitions of Stormbit, Omenia and Comia. The remainder of the capital expenditure were related to fixed assets and the enterprise resource planning system renewal project. Cash flow from financing activities was EUR -2,354 (1,400) thousand, mostly consisting of the dividends paid for the 2016 financial year, which amounted to EUR 2,076 (1,410) thousand. At the end of the financial year, the Group s cash and cash equivalents totalled EUR 8,954 (9,718) thousand and the company had EUR 1,500 thousand in unused credit facilities. The company s interest-bearing liabilities

4 4 totalled EUR 778 (1,166) thousand at the end of the financial year, including EUR 390 (390) thousand in current interest-bearing liabilities. ACQUISITIONS AND DIRECTED SHARE ISSUES During the first half of the year, the company made two acquisitions and carried out one directed share issue. In the first acquisition, the company acquired the 3D, AR and VR operations of Stormbit Oy on 18 May Stormbit is one of Finland s most experienced 3D specialists and virtual and augmented reality solution providers. In connection with the acquisition, 13 employees were transferred to Siili s Oulu office from Stormbit. This acquisition further strengthened Siili s position in the utilisation of 3D expertise, development of digital car dashboards and user interfaces and augmented reality solutions and also supported international growth by expanding Siili s internet of everything (IoE) expertise, among other things. With the acquisition, the Siili s Oulu unit became the company s centre of excellence in 3D expertise and augmented reality. Upon conclusion of the transaction on 18 May 2017, a total of EUR 150 thousand was paid for the business operations. The terms of the acquisition also included a contingent consideration based on the growth and profitability of the business in The contingent consideration was carried out in the amount of EUR 30 thousand. The Stormbit business had an effect of EUR 170 thousand on Siili Solutions Group s revenue and EUR 42 thousand on operating profit. Had the acquisition been completed on 1 January 2017, the Group s revenue would have amounted to EUR 58,140 thousand and operating profit EUR 5,003 thousand. The company acquired the entire share capital of the software automation specialist Omenia Oy by an agreement signed on 31 May Omenia s core competence strengthens the company s and its customers software development process competence and also pioneership in software robotics. Omenia has grown rapidly and profitably into one of Finland s most distinguished experts in automating software development processes. At the time of the acquisition, the company had 28 employees. Omenia has been reported as part of Siili Solutions Group as of 1 June The purchase price paid upon conclusion of the Omenia acquisition on 31 May 2017 was EUR 2.1 million, which included approximately EUR 0.4 million of compensation for the acquiree s cash assets. Approximately 40% of the purchase price was paid as Siili Solutions Plc shares, and the new shares issued represented around 1.2% of all shares in Siili Solutions Plc before the issue of the new shares. The cash consideration of the transaction was financed using Siili s cash assets. In connection with the payment of the share-based part of the transaction price, the company s Board of Directors decided on a directed share issue to Omenia Oy s sellers on 31 May During the directed share issue, a total of 206,273 new shares were offered at a subscription price of EUR per share, which was in line with the terms and conditions of the contract of sale and the volume-weighted average trading price of shares in Siili Solutions Plc between 3 April and 26 May Omenia Oy s shareholders agreed to a transfer restriction concerning their shares in Siili Solutions Plc. The new shares were subscribed for in conjunction with this, and their subscription price is deemed to have been paid for by means of shares in Omenia Oy transferred in kind in accordance with the terms and conditions of the contract of sale. The total subscription price for the new shares, EUR 840 thousand, was recognised in its entirety in the invested non-restricted equity fund of Siili Solutions Plc. The decision on the directed share issue was based on the authorisation granted to the Board of Directors by the Annual General Meeting of 30 March As the share issue was connected to an acquisition that supports the company s strategy, the company had a significant financial reason for deviating from the shareholders pre-emptive subscription right. The contingent consideration related to the acquisition of Omenia Oy s shares was determined by the growth and profitability indicators of Omenia Oy s financial period that ended on 30 September The contingent consideration was realised in full, in the amount of EUR 1,578 thousand. The acquired business had an effect of EUR 1,716 thousand on Siili Solutions Group s revenue and EUR 519 thousand on operating profit. Had the acquisition been completed on 1 January 2017, the Group s revenue would have amounted to EUR 60,886 thousand and operating profit EUR 5,938 thousand.

5 5 In the second half of the year, the company acquired the software services business of Comia Software Oy. The robust expertise of Comia s personnel further strengthens Siili s service offering. The acquisition agreement was signed on 29 November 2017, and seven Comia employees were transferred to Siili Solutions Plc on 1 December 2017 under their existing terms of employment. A major customer of Siili Solutions, the Agency for Rural Affairs, is located in Seinäjoki. The business acquisition saw Siili expand its operations to the town in which the Agency for Rural Affairs is based, which gives Siili the ability to provide even better and more local service to this significant customer. At the closing of the transaction on 29 November 2017, a total of EUR 300 thousand was paid for the business. The terms of the acquisition did not include a contingent consideration. The acquired business had an effect of EUR 30 thousand on Siili Solutions Group s revenue and EUR 5 thousand on operating profit. Had the acquisition been completed on 1 January 2017, the Group s revenue would have amounted to EUR 58,169 thousand and operating profit EUR 5,077 thousand. The company did not carry out any directed share issues during the second half of the year. The cash and share considerations of the Stormbit, Omenia and Comia acquisitions (including earn-outs) totalled EUR 4,158 (0) thousand in the 2017 financial year. The expert, transaction and other similar costs arising from the acquisitions, totalling EUR 121 (0) thousand, are included in other operating expenses for the period in the comprehensive income statement. The fair values of the acquired companies assets and adopted liabilities amounted to EUR 1,216 (0) thousand at the time of the acquisition, which included EUR 610 (0) thousand in allocations of fair value to customer relationships. In other respects, the book values of the acquired companies net assets were considered to correspond to their fair values. The goodwill recognised on the acquisitions was EUR 2,942 (0) thousand. The goodwill is comprised of assets that cannot be separately classified, such as synergy benefits and competent personnel. EMPLOYEES, MANAGEMENT AND GOVERNANCE The total number of employees at the end of the financial year was 563 (440), representing an increase of 123 employees, or 28.0% (19.6%) year-on-year. The average number of employees during the financial year was 502 (404). The Annual General Meeting of 30 March 2017 confirmed the number of members of the Board of Directors as five (5). Timo Luhtaniemi, Anu Nissinen, Björn Mattsson, Kati Hagros and Harry Brade were re-elected to serve as members of the Board of Directors. Timo Luhtaniemi was elected as Chair of the Board at its constitutive meeting, which was held immediately after the Annual General Meeting. Timo Luhtaniemi (Chair), Kati Hagros and Harry Brade were elected to serve as members of the Board s Nomination and Remuneration Committee. Anu Nissinen (Chair), Björn Mattsson and Harry Brade were elected to serve as members of the Audit Committee. At the end of the review period, Siili s Management Team consisted of the following members: Seppo Kuula (CEO), Samuli Siljamäki (CFO), Kari Pirttikangas (COO), Pasi Ropponen (Sales Director), Erkka Niemi (CTO, service development) and Kristiina Burtsoff (CHRO). During the review period, Kristiina Burtsoff joined the Management Team on 1 March Markku Seraste (CBO) left the Management Team on 26 February 2017, Perttu Monthan (Director, Project Business Operations and Continuous Services) on 31 May 2017 and Seppo Kuula (CEO) on 31 December 2017 after seeking employment elsewhere. On 18 December 2017, the company announced that Väinö Leskinen, Head of International Operations, was to join the Management Team as of 1 January Timo Luhtaniemi left his position as the Chair of the company s Board of Directors and became the CEO as of 1 January The Board of Directors elected Harry Brade as the new Chair to replace Timo Luhtaniemi. He became the Chair of the Board of Directors and the Chair of the Nomination and Remuneration Committee on 1 January The company s accounts are audited by KPMG Oy Ab (Business ID: ), Authorised Public Accountants, with Toni Aaltonen, APA, as the responsible auditor.

6 6 RISKS AND UNCERTAINTY FACTORS The risks and uncertainty factors to which the company is exposed over the short term are related to general economic development and the ensuing uncertainty in its customers operating environment. The general economic cycle and changes in customers operating environment may have negative effects on the company s business operations, financial position and performance through delayed or postponed decisionmaking or cancelled decisions related to IT investments. A significant portion of the company s revenue consist of sales to its ten largest clients. Consequently, the loss of one or more key clients, a considerable decrease in purchases or financial difficulties experienced by clients could have an effect on the company s business operations, financial position and performance. The simultaneous maintenance of growth and profitability involves a continuous risk related to the achievement of recruitment targets in terms of quality and quantity and the timely adjustment of supply to demand. Any failure in the planning and implementation of client projects may also have a negative effect on the company s profitability. In addition, the company s management and employees have a significant effect on its level of success. The loss of the input of key employees could have a negative effect on the company s business operations and achievement of its targets. The recruitment and retention of highly competent people is key to the successful implementation of the company s strategy and vital to its success. Growth through business arrangements involves risks related to the retention of the customer relationships of the acquired company, the integration of the acquired business operations and employees, and the level of commitment among transferred employees. If the company fails to implement some of the measures mentioned above, this may have an adverse effect on the implementation of the company s strategy and on its business operations, performance and financial position. The risks related to acquisitions are managed by choosing businesses in accordance with specific criteria and by investing in careful integration processes. In line with its strategy, the company is also seeking growth in international markets. International operations typically involve more significant risks than those to which the company is exposed in its home market. The company seeks to ensure the efficient management of these risks to prevent the expansion of its international operations from jeopardising the Group s performance and growth. The company s balance sheet includes significant goodwill resulting from business acquisitions. If the company s performance and growth take a downward turn, this may cause goodwill to decrease and have an unfavourable effect on the company s operating result and shareholders equity. As Siili s business has grown and become increasingly international, business risks such as dependence on information systems, cybersecurity and external service providers have increased. The company is currently investing in a new ERP system. OUTLOOK FOR 2018 AND LONG-TERM TARGET Revenue for 2018 are expected to be EUR million, and EBITDA is expected to be EUR million. In the long term, the company is aiming for an annual growth rate of 20% on average while also maintaining a good level of profitability (EBITDA more than 10% on average). GENERAL MEETING Annual General Meeting

7 7 Siili Solutions Plc s Annual General Meeting was held in Helsinki on 30 March The Annual General Meeting adopted the financial statements and consolidated financial statements for the financial year 2016, discharged the CEO and the members of the Board of Directors from liability and decided to distribute a dividend of EUR 0.30 per share, or a total sum of EUR 2,076 thousand. The Annual General Meeting resolved to authorise the Board of Directors to decide on the acquisition of a maximum of 480,000 own shares in one or more tranches using the company s non-restricted equity. Shares are acquired in a manner other than in proportion to the existing holdings of shareholders in public trading organised by Nasdaq Helsinki Ltd at the market price at the time of acquisition. The Board will decide on other terms and conditions related to the acquisition of own shares. The authorisation will be valid until the end of the next Annual General Meeting, but not beyond 30 June This authorisation revokes earlier unused acquisition authorisations. The Annual General Meeting authorised the Board of Directors to decide on an issue of shares and on an issue of special rights entitling their holders to shares in accordance with Chapter 10, Section 1 of the Limited Liability Companies Act, in one or more tranches and either with or without payment. The maximum total number of shares issued, including shares issued on the basis of special rights, is 750,000. The Board of Directors may decide to issue new shares or to transfer any treasury shares held by the company. The authorisation entitles the Board of Directors to decide on all terms and conditions for an issue of shares and an issue of special rights entitling their holders to shares, including the right to deviate from the shareholders pre-emptive subscription right. The authorisation may be used for strengthening the company s balance sheet and financial position, for paying transaction prices related to acquisitions, in incentive plans or for other purposes decided by the Board of Directors. The authorisation will be valid until the end of the next Annual General Meeting, but not beyond 30 June This authorisation revokes earlier unused authorisations related to an issue of shares or an issue of stock options or other special rights entitling their holders to shares, excluding the authorisation for the above-mentioned increase of the number of shares through a share issue without payment. During the financial year, based on the share issue authorisation granted, the Board of Directors decided on a directed share issue of a total of 81,949 shares related to the payment of the purchase price of the Omenia acquisition. SHARE AND SHARE-BASED INCENTIVE PLANS The company has one series of shares, and all of its shares entitle their holders to equal rights. On 31 December 2017, the total number of shares in Siili Solutions Plc in the Trade Register was 7,000,316. The company or its subsidiaries did not hold any treasury shares at the end of the review period. On 31 December 2017, the members of the company s Board of Directors and Management Team owned a total of 1,081,723 shares in the company, either directly or through related parties. In addition, an entity under the control of a Board member owns 481,240 shares. At the end of the review period, the members of the Management Team held 104,000 stock options. During the financial year, a total of 81,949 new shares were issued related to the payment of the purchase price for the Omenia acquisition completed in May, and the shares were registered in the Trade Register on 6 June During the financial year, the highest price of the company share was EUR 13.48, the lowest price was EUR 7.91 and the average price was EUR The closing price at the end of the review period was EUR The company s market capitalisation grew by 35.5% from the end of 2016, totalling EUR 77.4 (51.4) million on 31 December The Siili Solutions Plc share s market-making agreement with S-Bank Ltd meeting the requirements of Nasdaq Helsinki Ltd for Liquidity Providing (LP) operations terminated on 31 May The company estimates that the liquidity of the share is sufficient without LP market-making operations. The company had a total of 4,280 shareholders on 31 December 2017, representing an increase of 18.1% from the end of A list of the largest shareholders is available on the company website at

8 8 The company has one valid option plan, decided on by the company s Board of Directors at its meeting on 8 June In the option plan, it has been decided that the maximum total number of stock options issued is 337,000, and they entitle their holders to subscribe for a maximum total of 337,000 new shares in the company or existing shares held by the company. The share subscription period for stock options will be 30 September 2019 to 31 December However, the subscription period for shares subscribed for with stock options will not be implemented unless the 60-day volume-weighted average trading price of the share on the Nasdaq Helsinki is at least EUR between 1 January 2019 and 30 June The subscription price for shares subscribed for on the basis of stock options is EUR 7.50 per share. The subscription price is based on the fair value of the share, which corresponds to the volume-weighted average trading price of the company s share on the Nasdaq Helsinki between 9 May 2016 and 3 June For the members of the Group s Management Team and the CEO of the Polish subsidiary, the prerequisite for receiving any 2016 stock options is that they own or acquire the company s shares up to the number determined by the Board of Directors. The shares must be held until the option plan ends on 31 December As part of the option plan, the company s Board of Directors decided to provide the key employees required to own shares with an opportunity to fund their share acquisitions with an interest-bearing loan granted by the company. The loan offered by the company for funding share acquisitions matures on 31 December On 19 December 2017, the company announced that it is planning to implement a share savings plan available to all employees. The plan is to offer the share savings plan to all Siili employees. The purpose of the share savings plan is to offer the Group s employees the opportunity to save part of their regular salary to acquire shares in the company. By encouraging employees to acquire and hold the company s shares, the company looks to strengthen the connection between Siili s shareholders and employees and help a growing number of employees become shareholders. The aim is to further increase employee motivation and commitment to the company. The Board of Directors believes the share savings plan will have a positive impact on the Group s future development, which is why the plan is in the interests of shareholders as well as employees. The intention is to start the share savings plan in the course of EVENTS AFTER THE END OF THE FINANCIAL YEAR After the end of the financial year, on 1 January 2018, Timo Luhtaniemi left his position as the Chair of the company s Board of Directors and became the CEO, replacing Seppo Kuula, who left the company at the end of The Board of Directors elected Harry Brade as the new Chair to replace Timo Luhtaniemi. He became the Chair of the Board of Directors on 1 January Väinö Leskinen, Head of International Operations, joined the Management Team on 1 January PROPOSED DIVIDEND In line with the dividend policy approved by its Board of Directors, Siili seeks to distribute 30 70% of its profit for the period to shareholders. Additional dividends may also be distributed. On 31 December 2017, the non-restricted equity of the parent company of Siili Solutions Plc stood at EUR 17,533,164.72, of which the profit for the period was EUR 3,670, The Board proposes to the Annual General Meeting that a dividend of EUR 0.39 per share, or EUR 2,730, in total based on the number of outstanding shares, be paid for the financial year The proposed dividend represents approximately 68.8% of the Group s result for No significant changes have taken place in the company s financial position since the end of the financial year. The company has a good level of liquidity, and the Board believes that the proposed dividend will not pose a risk to liquidity. CORPORATE RESPONSIBILITY AND NON-FINANCIAL REPORTING

9 9 Siili Solutions provides information on corporate responsibility and reports on non-financial matters as part of the Report by the Board of Directors, which will be published no later than 5 March 2018 as part of the company s Annual Report The corporate responsibility section of the Report by the Board of Directors will cover material issues related to corporate responsibility and disclose the company s most significant economic, social and environmental impacts. The section on corporate responsibility and non-financial information in the Report by the Board of Directors will also describe the company s risks and significant trends influencing the industry in which the company operates. ACCOUNTING PRINCIPLES These financial statements were prepared in accordance with the recognition and valuation principles of the IFRS standards. The figures have been rounded off from the exact figures. The figures for 2017 and 2016 presented in this financial statements bulletin have been audited. The Group has one reporting segment, which provides its clients with information system development services. The single-segment structure is based on Siili s current business model, product portfolio and corporate governance structure, as well as the nature of its operations. For this reason, the figures for the segment are equal to those for the Group. In 2017, the company analysed the impact of the adoption of IFRS 15 Revenue from Contracts with Customers on the company s consolidated financial statements. Siili applies IFRS 15 in full with retroactive effect from 1 January 2018, which means that the comparison data presented in 2018 is adjusted in accordance with IFRS 15. The company has identified the following revenue streams from customer contracts: sale of work, project deliveries, licence sales, and maintenance and other services. Sale of work and project deliveries account for a majority of the company s revenue, and the adoption of the standard is not expected to have effects on their recognition, as they are recognised as revenue over time or in accordance with the degree to which they satisfy the performance obligation, both currently and according to IFRS 15. The potential impacts of the new standard on the recognition of revenue from licence sales and maintenance and other services will not have a substantial effect on the timing or amount of the company s revenue recognition, as they represent a minor share of the company s revenue. Siili does not have substantial incremental costs of obtaining customer contracts that would meet the criteria for capitalisation. Potential incremental costs are recognised as expenses when they are realised, because the asset item capitalised on the basis of the costs would be recognised as an expense within one year of the incremental cost occurring. Siili also does not have any costs incurred to fulfil contracts that would need to be capitalised. The impact of the new standard on Siili s revenue and operating profit for 2017, which will be presented as comparison data in 2018, will be less than EUR 200 thousand. The adoption of IFRS 9 on 1 January 2018 will not change the classification or measurement of Siili s financial assets and liabilities. The company will apply the IFRS 9 simplified approach for trade receivables, contract assets and lease receivables, whereby impairment is recognised at an amount equal to lifetime expected impairment. As Siili s realised credit losses have been very insignificant, recognising impairment losses on trade receivables in accordance with IFRS 9 is expected to have only a minor impact on the company s result. FINANCIAL CALENDAR FOR 2018 In line with the stock exchange release published on 7 February 2018, Siili Solutions will hold a results announcement event for analysts, portfolio managers and the media on 27 February 2018 at 9:00 a.m. The presentation materials will be published on the company website after the event.

10 10 The Annual Report 2017 will be published on 2 March 2018 in electronic format on the company website at The Annual General Meeting will be held on 26 March The half-year report for the period 1 January 30 June 2018 will be published on 14 August 2018.

11 11 Consolidated income statement, IFRS 1 July 31 December July 31 December January 31 December January 31 December 2016 EUR 1,000 REVENUE 28,823 24,551 57,810 48,415 Other operating income Materials and services -5,122-4,135-10,097-7,846 Employee benefit expenses -16,851-14,763-35,149-30,384 Depreciation and amortisation Other operating expenses -3,564-2,762-6,952-5,464 OPERATING PROFIT (LOSS) 2,995 2,541 5,010 4,144 Financial income Financial expenses PROFIT BEFORE TAXES 2,990 2,506 4,993 4,019 Income taxes , PROFIT FOR THE PERIOD 2,431 2,014 3,970 3,180 Attributable to Shareholders of the parent company 100% 2,431 2,014 3,970 3,180 Non-controlling interest 0% Earnings per share based on the profit attributable to shareholders of the parent company: Undiluted earnings per share (EUR), profit for the period Earnings per share adjusted for dilution (EUR), profit for the period Consolidated statement of comprehensive income 1 July 31 December July 31 December January 31 December January 31 December 2016 EUR 1,000 PROFIT FOR THE PERIOD 2,431 2,014 3,970 3,180 Other comprehensive income Items that may later be recognised through profit or loss Translation differences TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 2,421 2,050 3,996 3,175 Distribution of total comprehensive income for the period Shareholders of the parent company 100% 2,421 2,050 3,996 3,175 Non-controlling interest 0%

12 12 Consolidated statement of financial position, IFRS 31 Dec Dec 2016 EUR 1,000 ASSETS Non-current assets Fixed assets 1, Goodwill 11,593 8,646 Other intangible assets 1,890 1,629 Receivables Total non-current assets 15,468 12,076 Current assets Sales receivables 7,921 7,324 Other receivables 1,518 1,475 Tax assets based on the taxable income for the period 0 3 Cash and cash equivalents 8,954 9,718 Total current assets 18,392 18,520 TOTAL ASSETS 33,861 30,596 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity Share capital Reserve of invested non-restricted equity 12,874 12,034 Translation differences Retained earnings 7,806 5,883 Total shareholders equity 20,795 18,006 Non-current liabilities Financial liabilities Deferred tax liabilities Total non-current liabilities 811 1,135 Current liabilities Financial liabilities Trade and other payables 11,529 10,599 Tax liabilities based on the taxable income for the period Provisions 4 39 Total current liabilities 12,255 11,455 Total liabilities 13,066 12,591 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 33,861 30,596

13 13 Consolidated cash flow statement, IFRS EUR 1,000 1 July 31 December July 31 December January 31 December January 31 December 2016 Cash flows from operations Profit for the period 2,431 2,014 3,970 3,180 Adjustments: Non-cash transactions and other adjustments Interest expenses and other financial expenses Interest income Taxes , Changes in working capital: Change in sales and other receivables 292 1, ,460 Change in trade and other payables 401 2, ,562 Interest paid Interest received Taxes paid , Net cash flow from operations 3,159 6,197 4,856 5,156 Cash flows from investing activities Acquisition of subsidiaries -1,578-2,068-1,193 Proceeds from the sale of tangible and intangible assets 8 8 Investment in fixed assets Investment in intangible assets Net cash flow from investing activities -2, ,271-1,747 Cash flows from financing activities Loans granted Repayments of loan receivables Loan withdrawals Loan repayments Share issue 3,672 Dividend paid -2,076-1,410 Net cash flow from financing activities ,354 1,400 Change in cash and cash equivalents 715 5, ,809 Cash and cash equivalents at the beginning of the period 8,240 4,607 9,718 4,911 Effect of changes in currency exchange rates Cash and cash equivalents at the end of the period 8,954 9,718 8,954 9,718

14 14 Changes in consolidated equity, IFRS EUR 1,000 Equity attributable to shareholders of the parent company Share capital Reserve of invested non-restricted equity Translation differences Retained earnings Total shareholders equity Shareholders equity on 1 Jan 2016 Comprehensive income Profit for the period Other comprehensive income (adjusted for tax effects) 100 7, ,151 11,343 3,180 3,180 Translation differences -5-5 Total comprehensive income for the period ,180 3,175 Transactions with owners Distribution of dividends Share issue Share-based bonus scheme Other changes Total transactions with owners Shareholders equity on 31 Dec 2016 Shareholders equity on 1 Jan 2017 Comprehensive income Profit for the period Other comprehensive income (adjusted for tax effects) -1,410-1,410 4,936 4, , ,448 3, , ,883 18, , ,883 18,006 3,970 3,970 Translation differences Total comprehensive income for the period ,970 3,996 Transactions with owners Distribution of dividends Share issues Share-based bonus scheme Other changes Total transactions with owners Shareholders equity on 31 Dec ,076-2, ,047-1, , ,806 20,795 0

15 15 Financial liabilities, collateral and contingent liabilities Financial liabilities Non-current financial liabilities, EUR 1, Financial liabilities measured at amortised acquisition cost Contingent consideration measured at fair value 0 0 Total Current financial liabilities, EUR 1, Financial liabilities measured at amortised acquisition cost Contingent consideration measured at fair value 30 0 Total The Group has one bank loan, which was withdrawn in September The loan has a variable interest rate: 1.5% + three-month Euribor (minimum interest rate: 0%). The loan has a maturity of five years and is repaid in equal instalments every six months. Siili s bank loans include covenants that entitle the financial institution to terminate the loan agreement if the covenants are not met. The covenants are based on the company s interest-bearing liabilities in relation to its EBITDA and on its equity ratio. These key figures are examined every six months, and the covenants were met at the time of examination. In the 2017 financial year, the Group made an earn-out payment related the Omenia Oy acquisition in the amount of EUR 1,578 thousand. The actual amount was in line with the previous estimation. During the 2017 financial year, the Group also recognised contingent consideration of EUR 80 thousand on the earn-out related to the Stormbit business acquisition. The terms of the earn-out were not satisfied in full on 31 December The actual contigent consideration of EUR 30 thousand will be paid in early The earn-outs on acquisitions made in 2017 were not discounted because they became due within one year of acquisition. Commitments The Group s lease agreements mainly concern office facilities occupied by Group companies. In addition to office facilities, the Group has leased IT and office equipment and vehicles. The durations of the facility lease agreements mainly vary between three and four years. Some of the lease agreements on office facilities include an index clause. Minimum lease payments based on non-cancellable other lease agreements: EUR 1, Within one year 1, In one to five years 579 1,200 In more than five years Total 1,647 2,165 In 2017, a total of EUR 1,365 (2016: 1,074) thousand in lease expenses based on other lease agreements was recognised through profit or loss. The lease expenses do not include variable leases. Collateral On own behalf EUR 1, Collateral for leases Corporate mortgages (* 3,600 3,600 Corporate cards Lease guarantees *) A total of EUR 3.6 million was put up in corporate mortgages as collateral for a credit facility and a bank loan.

16 16 The bearer bonds are with Nordea Bank AB (publ), Finnish branch. Related-party transactions All share transactions carried out by Siili s management and the members of the Board of Directors have been announced by means of stock exchange releases since 3 July Helsinki, 27 February 2018 Board of Directors, Siili Solutions Plc More information: Timo Luhtaniemi, CEO Tel Samuli Siljamäki, CFO Tel Siili Solutions in brief: Siili Solutions Plc is a leading software integrator and digital service partner that provides leading Finnish and global companies with technology-independent IT expert services that cover their entire information systems. Siili has offices in Finland, Germany, Poland and the United States. Siili Solutions Plc shares are listed on Nasdaq Helsinki. Siili has grown rapidly and profitably since its establishment in