Interim report 1-6/215 3.8.215
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
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Overview to Q2/215 4 3 Net Sales (M ) Net sales 3.8 M (33. M ) - Decrease 7% - Weaker demand for traditional IT offering, more interest in new business technology solutions - Baltic net sales grew by 2 % Operational segment result 2.9 M (3. M ) - Excellent profitability 2 % in Baltic - Profitability 1 % 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%) 2 1 5 4 3 2 1 3 2 1-1 -2-3 -4 Operational segment result (M ) Operating profit (M ) 3 3
Income statement (1 EUR) 4-6/15 4-6/14 1-6/15 1-6/14 214 Last 12m Net sales 3 812 33 18 59 874 64 25 122 693 118 361 Other operating income 1 23 1 23 27 5 Changes in inventories of finished goods and work in progress 69 17 11 26-83 1 Materials and services -6 611-8 172-11 467-14 171-26 56-23 856 Personnel expenses -16 765-17 81-34 329-37 216-67 63-64 743 Other operating expenses -4 354-4 472-8 653-9 96-17 221-16 777 Other depreciation and amortisation -271-39 -549-622 -1 218-1 145 Operational segment result 2 881 3 24 4 988 3 149 1 9 11 847 IFRS3 amortisation - -549 - -1 98-1 753-655 Goodwill impairment - - - - -7 423-7 423 Operating profit/loss 2 881 2 475 4 988 2 51 833 3 769 Net financial income/expenses -83-183 -22-363 -563-42 Profit before income tax 2 798 2 292 4 785 1 688 27 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 95 Basic EPS.11.9.18.6 -.7.4 License sales halved compared to the second quarter 214. 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 Q4/214 Net sales per region 1-6/215 Denmark 9 % Sweden 16 % Baltic 17 % Norway 18 % Finland 4 % 4
M M Segment comparison Net Sales By segment 4-6/15 4-6/14 Growth 214 Last 12m Finland 12 439 13 81-1 % 5 564 48 75 Norway 5 54 7 5-21 % 25 28 22 725 Sweden 5 526 5 452 1 % 19 985 18 82 Denmark 2 734 3 127-13 % 12 38 11 49 Baltic 5 639 4 696 2 % 19 32 2 928 Other -1 67-1 72-3 954-3 911 Total 3 812 33 18-7 % 122 693 118 361 16 14 12 1 8 6 4 2 Net Sales Q2/14 Q2/15 Result By segment 4-6/15 Margin 4-6/14 Margin 214 Margin 5 Last 12m Margin Finland 1 281 1 % 1 359 1 % 5 441 11 % 5 141 11 % Norway 455 8 % 714 1 % 1 966 8 % 2 586 11 % Sweden 366 7 % 311 6 % 34 2 % 752 4 % Denmark -8-3 % 26 8 % 865 7 % 29 3 % Baltic 1 129 2 % 597 13 % 2944 15 % 4 625 22 % Other -27-217 -1 511-1 546 Operational Segment 2 881 9 % 3 24 9 % 1 9 8 % 11 847 1 % Result 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 % 1,6 1,4 1,2 1,,8,6,4,2, -,2 Operational Segment Result Q2/14 Q2/15
Business areas - Finland Net sales 12.4 M (13.8 M ), 1% decrease Operational segment result 1.3 M / 1%, (1.4 M / 1%) 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 Q1/13Q2/13Q3/13Q4/13Q1/14Q2/14Q3/14Q4/14Q1/15Q2/15 Operational Segment Result 15 12 9 6 3 Q1/13Q2/13Q3/13Q4/13Q1/14Q2/14Q3/14Q4/14Q1/15Q2/15 3, 2,5 2, 1,5 1,,5, 6
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 5 employees. We are strongly following the group strategic direction published in February 215. We continue to invest and better answer to the needs of customers and the new technology areas. 7
Business areas - Norway Net sales 5.5 M (7. M ), 21% decrease Operational segment result.5 M / 8%, (.7 M / 1%) Lower number of employees partly offset by use of nearshoring Improved order intake Order backlog is above last year Net Sales Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 15 12 9 6 3 Operational Segment Result Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 2, 1,5 1,,5, -,5-1, 8
Business areas - Sweden Net sales 5.5 M (5.5 M ), 1% increase Operational segment result.4 M / 7% (.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 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Operational Segment Result Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 15 12 9 6 3 2, 1,5 1,,5, -,5-1, 9
Business areas - Denmark Net Sales Net sales 2.7 M (3.1 M ), 13% decrease Operational segment profit -.1 M / -3% (.3 M / 8%) Low utilisation and low license sales Significant business recovery actions ongoing Order intake continued to decline Order backlog below last year Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Operational Segment Result Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 15 12 9 6 3 3, 2,5 2, 1,5 1,,5, 1
Business areas - Baltic Net Sales Net sales 5.6 M (4.7 M ), 2% increase Operational segment result 1.1 M / 2% (.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 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Operational Segment Result 15 12 9 6 3 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 2, 1,5 1,,5, -,5-1, 11
Balance sheet (1 EUR) 6/215 6/214 12/214 Property, plant and equipment 1 349 1 745 1 55 Goodwill 63 384 71 377 62 814 Other intangible assets 192 988 254 Other long-term assets 1 61 1 59 1 263 Long-term assets 65 986 75 71 65 836 Receivables and inventories 33 689 35 976 37 622 Cash and cash equivalents 17 161 14 38 21 38 Current assets 5 849 5 284 59 2 Total assets 116 835 125 985 124 838 Equity for shareholders 61 459 64 559 6 437 Non-current liabilities 95 2 621 18 642 Current liabilities 55 281 4 85 45 759 IFRS3 amortisation has been completed Interest-bearing net debt 3.3 M (1.1 M 12/214) 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 216 Total equity and liabilities 116 835 125 985 124 838 12
Cash flow (1 EUR) 1-6/215 1-6/214 214 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 Change in working capital more positive than year ago Net cash used in investing activities -325-44 -739 Net cash from financing activities -5 453-5 172-7 172 Decrease/(increase) in cash and cash equivalents -4 395-7 92 429 13
Ownership structure 27 July 215 Registered owners % Cantell Oy 1,2 % 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, % OP-Suomi Arvo Fund 3,4 % Taaleritehdas Arvo Markka Fund 2,7 % State Pension Fund 2,7 % Other shareholders 44,8 % Flagging notices in 215 - None Treasury shares 3.9% 22.5 million shares in total Treasury shares 3,9 % Total 1, % 14
Dividend ( /share) Annual General Meeting - 8 April 215 Dividend:.16 eur/share - Last year.16 eur/share,2,16,12 Board members: - Existing board members re-elected: Aaro Cantell, Jukka Ruuska, Tuija Soanjärvi, Lars Wahlström, Magdalena Persson, Olof Sand,8,4, 29 211 213 Other issues - Board fees: chairman 35 /month, vice chair 275 /month, member 2 /month. To be partially paid with shares - Same authorizations as last year - Nominations committee for board member selection 15
Changes in Management Julius Manni started as the country managing director for Finland on 1 March 215. 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 1 August 215. CFO Satu Kankare has decided to resign and she will leave Affecto on 7 August 215. 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 215. 16
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 18
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Outlook Order backlog 43 M, 4.8 M below Q2/214 Order backlog (M ) Order backlog (M ) 7 7 6 5 4 3 2 1 6 5 4 3 2 1 Q1 Q2 Q3 Q4 21 211 212 213 214 215 Year 215 net sales are estimated to be below last year s level. Operating profit is estimated to grow in 215. 19
2 Thank you.