SIILI S NET SALES INCREASED BY 22% AND EBITDA BY 26% DURING THE FIRST HALF OF 2017

Transcription

1 The company has published a stock exchange release on 15th of August, 2017 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. HALF-YEAR REPORT 1 January e 2017 (unaudited) SIILI S NET SALES INCREASED BY 22% AND EBITDA BY 26% DURING THE FIRST HALF OF 2017 Siili Solutions Plc, half-year report, 15 August 2017, 8:45 a.m. January June 2017: - Net sales were 28,987 (1 6/: 23,865) thousand an increase of 21.5% - EBITDA was EUR 2,355 (1,864) thousand an increase of 26.3% - EBITDA was 8.1% (7.8%) of net sales - Operating profit (EBIT) was EUR 2,015 (1,604) thousand an increase of 25.6% - The profit for the period was EUR 1,539 (1,167) thousand an increase of 31.9% - Earnings per share were EUR 0.22 (0.18) an increase of 22.2% - Cash flow from operations amounted to EUR 1,698 (-1,041) thousand an increase of 263.1% - The balance sheet total was EUR 32,946 (26,276) thousand - The company acquired the 3D operations of Stormbit Oy on 18 May The company acquired all of the shares in software automation specialist Omenia Oy on 31 May 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 it at a price of EUR per share. The new shares were entered into the Trade Register on 6 June Omenia Oy has been consolidated as of 1 June Outlook for 2017 Net sales for 2017 are expected to be EUR million, and EBITDA is expected to be EUR million. Consolidated key figures Key figures 1 January e January e 1 January 31 December Net sales, 28,987 23,865 48,415 EBITDA, 2,355 1,864 4,770 EBITDA, % of net sales 8.1 % 7.8 % 9.9 % Operating profit (EBIT), 2,015 1,604 4,144 EBIT, % of net sales 7.0 % 6.7 % 8.6 % Profit for the period, 1,539 1,167 3,180 Profit for the period, % of net sales 5.3 % 4.9 % 6.6 % Equity ratio, % 56.0 % 61.8 % 61.2 % Gearing ** % % % Earnings per share (EPS), EUR *** EPS adjusted for dilution, EUR *** Average number of employees during the period * Number of employees at the end of the period *) The average of the number at the beginning and the number at the end of the review period **) Gearing does not include the contingent consideration related to acquisitions ***) Stock split in March. The figures in the table have been adjusted retrospectively for comparability.

2 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 related to the earn-outs for the company s acquisitions. The consolidated balance sheet included EUR 1,380 (: 0) thousand of contingent consideration on e SEPPO KUULA, CEO: We continued our strong and profitable organic growth for the seventh consecutive year. Towards the end of the period under review, we also strengthened our portfolio in growing areas of demand through acquisitions. Compared to last year s figures, the growth in EBITDA (26 %) was higher than the growth in net sales (22 %), which signals that the growth pains experienced early last year are over. The acquisitions made towards the end of the period were relatively small, considering Siili s size, and they are only included in the figures for the period under review for June, so they have not had a significant effect on the figures for the period under review. However, we expect the direct and indirect effects of the acquisitions to further contribute to our profitable growth during the second half of the year. The number of our professionals amounted to 535 at the end of the period under review, increasing by 125 year-on-year. Maintaining profitability in strong organic growth requires efficient competence management and complete transparency of value generation in cooperation with our customers. We have succeeded in developing both our competence- and account management sustainably to respond to our strong growth. They make up our core expertise alongside talent attraction, competence development and, in particular, combination of different competencies. The other one of our recent acquisitions, Omenia, significantly strengthened our development and automation competence in software development processes while laying down a foundation for the increasing need for expertise in robotic process automation. In line with our objective, we have grown into a digital system integrator whose competence is acknowledged not only in Finland but increasingly also internationally. Our internationalization continued according to our plans. In Germany, the utilisation rate still varies due to the low number of local employees, but the German market as a whole already employs over half of our experts in Poland, which was our original objective. To balance the growing demand from the automotive segment, we expanded our automotive user interface design competence to Oulu, which was also strengthened through the acquisition of Stormbit, a specialist in 3D user interface design. The human-machine interfaces of cars evolve, and in addition, augmented reality, is beginning to find its way into business applications, such as in remote maintenance solutions. In Germany, we have succeeded in strengthening our position in the automotive industry s supply chain. In the United States, we have succeeded in finding a corresponding position, first in the modern supply chains of the electric vehicle industry and gradually approaching the supplier environment of the conventional automotive industry towards the end of the period under review. In order to understand the behavior and future development of the United States automotive market, we launched a research project together with the University of California, Los Angeles (UCLA) with which we will ensure the availability and attractiveness of the market during the second half of the year before the next steps in the United States. Based on public discussions, our talent acquisition worked clearly better than in the industry on average during the period under review. Our interesting modern customer projects and broad competence needs contribute to recruiting, and our internal competence development (Siili Academy) ensures continuous development and combination of our competencies. We are a widely respected employer among data, technology and design experts. Our low hierarchy as well as internal and external transparency and trust are appreciated. The outlook of talent acquisition for the second half of the year will be specified further during the autumn, but we already know that we have the sufficient personnel resources for meeting our net sales guidance for the full year. In

3 addition, we aim to continue our inorganic growth by actively looking for the best companies in their area of expertise to strengthen our portfolio. NET SALES AND PERFORMANCE During the first half of 2017, the Group s net sales increased by 21.5% (14.3%) compared to the corresponding period last year. Its net sales grew by EUR 5,213 thousand million to EUR 28,987 (23,865) thousand. The subcontracting expenses arising from the use of external services totalled EUR 4,975 (3,711) thousand, or 17.2% of net sales (15.6%). Employee benefit expenses for the period totalled EUR 18,298 (15,621) thousand, or 63.1% of net sales (65.5%). The total number of employees at the end of the period was 535 (410), representing a year-on-year increase of 30.5% (16.1%). The total cost arising from subcontracting and employee benefits was slightly lower in relation to net sales when compared to the corresponding period last year, at 80.3% (81.0%). Other operating expenses totalled EUR 3,388 (2,702) thousand, or 11.7% (11.3%) of net sales. The profit for the period includes acquisition-related expert and transaction fees of approximately EUR 113 thousand. The Group s EBITDA for the review period was EUR 2,355 (1,864) thousand, or 8.1% of net sales (7.8%). The operating profit (EBIT) was EUR 2,015 (1,604) thousand an increase of 25.6% year-on-year. Net financial expenses amounted to EUR 12 (91) thousand. The net financial expenses decreased because there were no accrued interest expenses related to the discounting of acquisition costs during the period under review. The profit before taxes was EUR 2,003 (1,513) thousand and earnings per share were EUR 0.22 (0.18). FINANCING AND INVESTMENTS The Group s balance sheet total stood at EUR 32,946 (26,276) thousand at the end of the period, representing an increase of 25.4%. The company s equity ratio was 56.0% (61.8%). Its annualised return on investment (ROI) was 20.4% (20.0%), and its gearing was -39.6% (-20.4%). During the first half of the year, the Group s cash flow from operations was EUR 1,698 (-1,041) thousand. The company s cash flow from operations improved significantly year-on-year as the result of more efficient working capital management and better operating result. Investments during the review period totalled EUR 1,022 (1,378) thousand. The investments were mainly due to the acquisition of Omenia Oy shares and the Stormbit acquisition. A total of EUR 1,410 thousand was paid in cash consideration for acquisitions, and the cash and cash equivalents of the acquired companies totalled EUR 770 thousand at the time of acquisition. The preliminary effect of the acquisitions on the cash flow from investing activities for the period totals EUR -640 thousand. Cash flow from financing activities was EUR -2,159 (2,117) thousand, and it was mainly comprised of dividends paid, EUR -2,076 (-1,410) thousand. At the end of the review period, the Group s cash and cash equivalents totalled EUR 8,240 (4,607) thousand, and the company had EUR 1,500 thousand in unused credit facilities. The company s interest-bearing liabilities totalled EUR 972 (1,360) thousand at the end of the review period, including EUR 390 (390) thousand in current interest-bearing liabilities. In addition, the company s current financial liabilities include the contingent considerations on earn-outs of the Stormbit and Omenia acquisitions, totalling EUR 1,380 thousand, which are non-interest-bearing liabilities.

4 ACQUISITIONS AND DIRECTED SHARE ISSUES The company made two acquisitions during the review period. In the first acquisition, the company acquired the 3D/AR/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 joined Siili s Oulu office from Stormbit. The net sales of the acquired business operations amounted to approximately EUR 355 thousand in, and their EBITDA was approximately 12% of net sales. This acquisition will further increase the company s position in the utilisation of 3D expertise, development of digital car dashboards and user interfaces and augmented reality solutions as well as support international growth by expanding Siili s internet of everything (IoE) expertise, among other things. With the acquisition, the company s Oulu unit will become a centre of excellence in 3D expertise and augmented reality. At the closing of the transaction on 18 May 2017, a total of EUR 150 thousand was paid for the business operations. The terms and conditions of the transaction also include a possible earn-out of a maximum of EUR 80 thousand. It has been agreed that the purchase price will be paid entirely in cash. The company also made another acquisition in May, purchasing all of the shares in software automation specialist Omenia Oy 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. The company s net sales outlook for the 2017 financial year is approximately EUR 3,0 (: 1.9) million and EBITDA outlook approximately EUR 0.5 (: 0.3) million. 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 acquisition will improve Siili s net sales and profitability, but it is not considered to have effects on the guidance for The purchase price paid at the closing 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 terms and conditions of the transaction also include an earn-out of a maximum of EUR 1.3 million to be paid in cash after Omenia s financial statements for the 2017 financial year have been adopted. The cash consideration of the transaction will be 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 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 was recorded 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 The share issue is connected with an acquisition to support the company s strategy, meaning that the company had a significant financial reason for deviating from the shareholders pre-emptive subscription right. The cash and share considerations of the Stormbit and Omenia acquisitions (including earn-outs) total EUR 3,633 thousand. The expert, transaction and other similar costs arising from the acquisitions, totalling EUR 113 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 1,196 thousand at the time of the acquisition, which included EUR 580 thousand of allocations of fair value to customer relationships. In other respects, the book amounts of the acquired companies net assets were considered to correspond to their fair values. The preliminary goodwill on the acquisitions was EUR 2,437 thousand. The

5 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 June was 535 (410), representing an increase of 125 employees, or 30.5%, when compared to the corresponding period last year. The average number of employees during the first half of the year was 488 (389). 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 period under review, Kristiina Burtsoff joined the Management Team on 1 March 2017, while Markku Seraste (CBO) left the Management Team on 26 February 2017 and Perttu Monthan (Director, Project Business Operations and Continuous Services) on 31 May 2017 after seeking employment elsewhere. The company s accounts are audited by KPMG Oy Ab (Business ID: ), Authorised Public Accountants, with Toni Aaltonen, APA, as the responsible auditor. RISKS AND UNCERTAINTY FACTORS There are several different uncertainty factors that may affect Siili Solutions Plc s business, net sales and profitability. It is the company s understanding that no essential changes have occurred in near-term risks, and the company has described risks related to the operating environment, business operations, economy and financing in more detail in its annual report and financial statements bulletin and its prospectus published on 30 March that can be found on the company s investor website at OUTLOOK FOR 2017 AND LONG-TERM TARGET Net sales for 2017 are expected to be EUR million, and EBITDA is expected to be EUR million. In the long term, the company aims 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 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, 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

6 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 e 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 e 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 first half of the year, based on the share issue authorisation granted, the Board of Directors decided on a directed share issues of a total of 81,949 shares related to paying 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 e 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 e 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 period under review, the members of the Management Team held 116,000 stock options. During the review period, a total of 81,949 new shares were issued related to paying the purchase price for the Omenia acquisition completed in May, and the shares were registered in the Trade Register on 6 June During the first half of the year, the highest price of the company share was EUR 12.25, the lowest price was EUR 7.91 and the average price was EUR Its closing price at the end of the review period was EUR The company s market capitalisation grew by 44.7% from the end of, totalling EUR 83.7 (51.4) million on e 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 4,021 shareholders on e 2017, representing an increase of 11.0% from the end of. A list of the company s largest shareholders is available on its website at 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 e 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

7 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 and 3 June. For the members of the Group s Management Team and the CEO of the Polish subsidiary, the prerequisite for receiving any 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 EVENTS AFTER THE END OF THE REVIEW PERIOD The company has not had any significant events after the end of the review period. ACCOUNTING PRINCIPLES This half-year report was prepared in accordance with IAS 34 (Interim Financial Reporting) and applies the same accounting principles and calculation methods as in the previous financial statements. The figures have been rounded off from the exact figures. The figures included in this report have not been audited. The company has been analysing during 2017 how the adoption of the IFRS 15 Revenue from Contracts with Customers standard will influence the company s consolidated financial statements. The company has identified the following income streams from customer agreements: 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 net sales, 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 of satisfying 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 substantial effects on the timing or amount of the company s revenue recognition as they represent a minor share of the company s net sales. FINANCIAL CALENDAR FOR 2017 In line with its company release of 1 August 2017, Siili Solutions will hold a results announcement event for analysts, portfolio managers and the media on 15 August 2017 at 9:00 a.m. The presentation materials will be published on the company website after the event. The financial statements bulletin for 2017 will be published on 27 February As for other financial releases in 2018, their schedule will be published by the end of 2017.

8 Consolidated income statements, IFRS 1 January 30 June January 30 June 1 January 31 December NET SALES 28,987 23,865 48,415 Other operating income Materials and services -4,975-3,711-7,846 Employee benefit expenses -18,298-15,621-30,384 Depreciation and amortization Other operating expenses -3,388-2,702-5,464 OPERATING PROFIT (LOSS) 2,015 1,604 4,144 Financial income Financial expenses PROFIT BEFORE TAXES 2,003 1,513 4,019 Income taxes PROFIT FOR THE PERIOD 1,539 1,167 3,180 Attributable to Shareholders of the parent company 100% 1,539 1,167 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 IFRS 1 January 30 June January 30 June 1 January 31 December PROFIT FOR THE PERIOD 1,539 1,167 3,180 Other comprehensive income Items that may later be recognised through profit or loss Translation differences TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 1,575 1,125 3,175 Distribution of total comprehensive income for the period Shareholders of the parent company 100% 1,575 1,125 3,175 Non-controlling interest 0% 0 0 0

9 Consolidated statement of financial position, IFRS Dec ASSETS assets Fixed assets 1, Goodwill 11,083 8,646 8,646 Other intangible assets 2,042 1,788 1,629 Receivables Total non-current assets 14,975 11,118 12,076 assets Sales receivables 8,554 9,053 7,324 Other receivables 1,177 1,498 1,475 Tax assets based on the taxable income for the period Cash and cash equivalents 8,240 4,607 9,718 Total current assets 17,972 15,157 18,520 TOTAL ASSETS 32,946 26,276 30,596 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity Share capital Reserve of invested non-restricted equity 12,874 12,034 12,034 Translation differences Retained earnings 5,361 3,854 5,883 Total shareholders equity 18,360 15,941 18,006 liabilities Financial liabilities Deferred tax liabilities Total non-current liabilities 1,029 1,356 1,135 liabilities Financial liabilities 1, Trade and other payables 10,903 8,503 10,599 Tax liabilities based on the taxable income for the period Provisions Total current liabilities 13,558 8,979 11,455 Total liabilities 14,587 10,335 12,591 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 32,946 26,276 30,596

10 Consolidated cash flow statement, IFRS 1 January 30 June January 30 June 1 January 31 December Cash flows from operations Profit for the period 1,539 1,167 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 ,860-1,460 Change in trade and other payables ,562 Interest paid Interest received Taxes paid Net cash flow from operations 1,698-1,041 5,156 Cash flows from investing activities Acquisition of subsidiaries ,193-1,193 Investment in fixed assets Investment in intangible assets Net cash flow from investing activities -1,022-1,378-1,747 Cash flows from financing activities Loans granted Repayments of loan receivables Loan withdrawals Loan repayments Share issue 0 3,672 3,672 Dividend paid -2,076-1,410-1,410 Net cash flow from financing activities -2,159 2,117 1,400 Change in cash and cash equivalents -1, ,809 Cash and cash equivalents at the beginning of the period 9,718 4,911 4,911 Effect of changes in currency exchange rates Cash and cash equivalents at the end of the period 8,240 4,607 9,718

11 Changes in consolidated equity, IFRS Share capital Equity attributable to shareholders of the parent company Reserve of Other Translation invested nonrestricted funds differences equity Retained earnings Total shareholders equity Shareholders equity on 1 Jan Comprehensive income Profit for the period Other comprehensive income (adjusted for tax effects) 100 7, ,151 11,343 1,167 1,167 Translation differences Total comprehensive income for the period ,167 1,125 Transactions with owners Distribution of dividends Share issue Share-based bonus scheme Other changes Total transactions with owners Shareholders equity on e 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, , ,463 3, , ,854 15, , ,883 18,006 1,539 1,539 Translation differences Total comprehensive income for the period ,539 1,575 Transactions with owners Distribution of dividends Share issues Share-based bonus scheme Other changes Total transactions with owners Shareholders equity on e ,076-2, ,061-1, , ,361 18,360 0 NOTES TO THE HALF-YEAR REPORT Changes in consolidated fixed assets 1 6/ / 1 12/ Book value at the beginning of the period Increases Exchange differences Amortisation and impairment Book value at the end of the period 1,

12 Changes in consolidated intangible assets 1 6/ / 1 12/ Book value at the beginning of the period 10,275 10,593 10,593 Increases 3, Decreases -2 Exchange differences 0 0 Amortisation and impairment Book value at the end of the period 13,124 10,434 10,275 Provisions and contingent liabilities Provisions Lossmaking agreements Warranty provisions Total 1 Jan Increases Provisions used -4-4 Unused provision cancellations Lossmaking agreements Warranty provisions Total 1 Jan Increases Provisions used Unused provision cancellations Lossmaking agreements Warranty provisions Total 1 Jan Increases Provisions used Unused provision cancellations Dec A warranty provision is recorded when a product or service containing a warranty clause is sold and the size of the potential warranty provision can be predicted accurately enough. A provision is recorded for loss-making agreements when the expenses required for fulfilling the obligations exceed the profit yielded by the agreement. The Group has provided a 12-month warranty for certain projects. During the warranty, the company is committed to correcting defects that occur during the warranty period, without delay and free of charge. On 30 June 2017, the total amount of warranty provisions was EUR 22 (62) thousand. A warranty provision is determined according to the best estimate of future expenses and is based on the company s earlier experience in similar projects.

13 On e 2017, the company had a total of EUR 1,380 thousand of contingent considerations due to the earn-outs of the Stormbit and Omenia acquisitions. Fair values of financial assets and liabilities 2017 Book value Fair value Fair value hierarchy Financial assets Loans and other receivables Receivables Sales receivables 8,554 8,554 2 Other receivables 1,177 1,177 2 Cash and cash equivalents 8,240 8,240 2 Total financial assets 18,734 18,734 Financial liabilities Measured at amortised acquisition cost Bank loans* Bank loans* Trade and other payables 3,374 3,374 Recognised at fair value through profit or loss Contingent consideration* Contingent consideration* 1,380 1,380 3 Total financial liabilities 5,726 5,726 *Included in the balance sheet item Financial liabilities. Book value Fair value Fair value hierarchy Financial assets Loans and other receivables Receivables Sales receivables 9,053 9,053 2 Other receivables Cash and cash equivalents 4,607 4,607 2 Total financial assets 14,204 14,204 Financial liabilities Measured at amortised acquisition cost Bank loans* Bank loans* Trade and other payables 4,197 4,197 Recognised at fair value through profit or loss

14 Contingent consideration* Contingent consideration* Total financial liabilities 5,556 5,556 *Included in the balance sheet item Financial liabilities. 31 Dec Book value Fair value Fair value hierarchy Financial assets Loans and other receivables Receivables Sales receivables 7,324 7,324 2 Other receivables 1,399 1,399 2 Cash and cash equivalents 9,718 9,718 2 Total financial assets 19,316 19,316 Financial liabilities Measured at amortized acquisition cost Bank loans* Bank loans* Trade and other payables 4,728 4,728 Recognised at fair value through profit or loss Contingent consideration* Contingent consideration* Total financial liabilities 5,894 5,894 *Included in the balance sheet item Financial liabilities. Fair value hierarchy levels During the review period, no instruments were transferred from one fair value hierarchy level to another. Level 1 The fair values of the hierarchy level 1 are based on the quoted (unadjusted) prices of identical assets or liabilities in active markets. Level 2 The fair values of the level 2 instruments are based, to a significant extent, on inputs other than quoted prices but still on information that is observable for the asset or liability in question, either directly or indirectly. Level 3 The fair values of the level 3 instruments are based on inputs about the asset or liability that are not based on observable market information but instead, to a significant extent, on estimates by the management and their utilisation in generally accepted valuation models. Reconciliation of financial liabilities measured according to level 3 Contingent consideration

15 31 Dec 2017 At the beginning of the period 0 2,298 2,298 Increase from business acquisition 1, Effect of the reversal of discounting Realisations 0-2,367-2,367 Unrealised fair value change At the end of the period 1,

16 Financial liabilities, collateral and contingent liabilities Financial liabilities Dec Financial liabilities measured at amortized acquisition cost Contingent consideration measured at fair value 0 0 Total Dec Financial liabilities measured at amortized acquisition cost Contingent consideration measured at fair value 1, Total 1, 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. On e 2017, the balance sheet included contingent considerations of a total of EUR 1,380 (0) thousand associated with the earn-outs of the Stormbit and Omenia acquisitions. 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: Dec Within one year 1, Within one to five years ,200 Within more than five years Total 2,144 1,145 2,165 The company did not have lease agreements classified as financial leases during the review period. Collateral On own behalf Dec Collateral for leases Corporate mortgages* 3,600 3,600 3,600 Corporate cards Lease guarantees

17 *) A total of EUR 3.6 million was put up in corporate mortgages as collateral for a credit facility and a bank loan. The bearer bonds are with Nordea Bank Finland Plc. Related-party transactions There were no related party transactions during the review period. Helsinki, 15 August 2017 Board of Directors, Siili Solutions Plc More information: Seppo Kuula, 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 the Nasdaq Helsinki. Siili has grown rapidly and profitably since its establishment in