Digia Oyj — Earnings Release 2021

Feb 8, 2022

Digia Plc Financial Statement Bulletin 2021

Digia Plc Financial Statement Bulletin 2021

Digia Plc
Financial Statement Bulletin
8 February 2022 at 3:00 pm

A strong fourth quarter – full-year net sales rise by 12.1% with an EBITA margin
of 11.4%

October–December 2021

· Net sales: EUR 44.8 (37.9) million, up 18.2 per cent
· Operating profit (EBITA): EUR 5.0 (4.6) million, up 7.8 per cent; EBITA
margin: 11.1 (12.1) per cent of net sales
· Operating profit: EUR 4.2 (4.1) million, up 3.8 per cent; operating margin:
9.4 (10.7) per cent of net sales
· Earnings per share: EUR 0.13 (0.11)
· Share buyback programme started 16 December

January–December 2021

· Net sales: EUR 155.9 (139.0) million, up 12.1 per cent
· Operating profit (EBITA): EUR 17.7 (16.0) million, up 10.9 per cent; EBITA
margin: 11.4 (11.5) per cent of net sales
· Operating profit: EUR 14.7 (14.1) million, up 4.1 per cent; operating
margin: 9.4 (10.1) per cent of net sales
· Earnings per share: EUR 0.44 (0.40)
· Return on investment: 16.3 (16.5) per cent
· Equity ratio: 48.0 (50.7) per cent
· Acquisition of Climber International AB and Solasys Oy
· Major investments: Availability and scalability of competence, future
working environment and Digia Business Engine, and cloud capabilities
· Digia’s Board of Directors will propose to the Annual General Meeting that a
dividend of EUR 0.17 per share be paid (EUR 0.15 per share in 2020).
· Profit guidance for 2022: Digia’s net sales will grow year-on-year and its
EBITA margin will be over 10 per cent of net sales.

Unless otherwise stated, the comparison figures provided in parentheses refer to
the corresponding period of the previous year.

Group key figures

+----------------+------+------+---------+-------+-------+---------+
|EUR 1,000 |10–12/|10–12/|Change, %|1–12/ |1–12/ |Change, %|
| |2021 |2020 | |2021 |2020 | |
+----------------+------+------+---------+-------+-------+---------+
|Net sales |44,751|37,867|18.2% |155,939|139,049|12.1% |
+----------------+------+------+---------+-------+-------+---------+
|Operating profit|4,967 |4,591 |7.8% |17,739 |16,000 |10.9% |
|(EBITA) | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|- as a % of net |11.1% |12.1% | |11.4% |11.5% | |
|sales | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Operating profit|4,213 |4,060 |3.8% |14,680 |14,102 |4.1% |
|(EBIT) | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|- as a % of net |9.4% |10.7% | |9.4% |10.1% | |
|sales | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Result for the |3,469 |2,961 |17.1% |11,772 |10,627 |10.8% |
|period | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|- as a % of net |7.8% |7.8% | |7.5% |7.6% | |
|sales | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
| | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Return on | | | |18.3% |18.7% | |
|equity, % | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Return on | | | |16.3% |16.5% | |
|investment, % | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Cash flow from | | | |16,648 |23,589 |-29.4% |
|operations | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Interest-bearing| | | |10,663 |10,531 |1.2% |
|net liabilities | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Net gearing, % | | | |15.7% |17.3% | |
+----------------+------+------+---------+-------+-------+---------+
|Equity ratio, % | | | |48.0% |50.7% | |
+----------------+------+------+---------+-------+-------+---------+
| | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Number of | | | |1,339 |1,258 |6.4% |
|personnel at | | | | | | |
|period-end | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Average number |1,347 |1,266 |6.4% |1,334 |1,261 |5.7% |
|of personnel | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Shareholders' | | | |68,072 |60,737 |12.1% |
|equity | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Balance sheet | | | |143,040|121,078|18.1% |
|total | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Earnings per |0.13 |0.11 |17.5% |0.44 |0.40 |10.9% |
|share | | | | | | |
+----------------+------+------+---------+-------+-------+---------+
|Earnings per |0.13 |0.11 |17.2% |0.44 |0.39 |11.4% |
|share, diluted | | | | | | |
+----------------+------+------+---------+-------+-------+---------+

CEO’s Review

“I’m very pleased with our strong growth and good profitability in the last
quarter – especially since at the same time we continued to invest in increasing
our future competitiveness. Our net sales were up 18.2 per cent in October
-December and amounted to EUR 44.8 million. Net sales growth gained momentum in
the second half of the year compared to the first. In July-December, our net
sales grew by 15.8 per cent to EUR 78.0 million. Our full-year net sales grew by
12.1 per cent to EUR 155.9 million. It is a positive and encouraging development
that almost all of our business units increased their net sales in the last
quarter.

The fourth-quarter EBITA margin fell slightly short of the comparison period,
but was at a good level of 11.1 per cent. The full-year EBITA margin was almost
unchanged at 11.4 per cent.

Demand for our own key products – Digia Enterprise and Digia Financial Systems
– remained steady throughout the fiscal year. In 2021, our cooperation with S
-Bank Fund Management in the outsourcing of its fund functions expanded to cover
private equity fund management processes, for instance. In December, we signed
an agreement with the Savings Banks Group under which Digia will provide the
Group with a savings and investment service package consisting of a system based
on the Digia Financial Systems product family, service management and selected
back-office functions.

In the second half of the year, customers’ need to develop and renew their
business operations remained evident in demand. In our view, there are growing
needs in digital business, knowledge-based management, business continuity and
efficiency. As a result, Digia’s net sales grew by more than 40 per cent in the
fourth quarter in both knowledge-based management solutions and Microsoft ERP
and CRM solutions. Climber, the Swedish business analytics group we acquired
early in the year, has also developed in line with our expectations. During the
last quarter, we bolstered our position as a leading integration provider and
announced customer agreements with DigiFinland Oy and Valtori. Integrations are
at the heart of data-based management and networked digital business.

In the fourth quarter, our service and maintenance business generated about 64
(62) per cent of net sales, and the project business about 36 (38) per cent. The
service and maintenance business accounted for 67 per cent and the project
business for 33 per cent of full-year net sales. Our ongoing service and
maintenance business brings stability to our net sales – in addition, our wide
-ranging expertise and long customer relationships provide a good basis for
growth. The result of Digia’s customer satisfaction survey improved once again
in 2021.

It testifies to our strong expertise and extensive offering that Digia was
selected as Microsoft’s Smart Business Solutions / Dynamics 365 Partner of the
Year in July. The main reasons for their choice were our strengths in providing
wide-ranging service to our customers by combining Azure cloud, Dynamics
technology and analytics utilisation with our extensive industry and development
expertise. In addition, Microsoft selected Digia as a member of the Microsoft
Business Applications 2021/2022 Inner Circle partner network as the only Finnish
company. Microsoft honoured Digia due to our achievements last year, commitment
to customers and innovations around Microsoft cloud services.

Fourth-quarter operating profit (EBITA) totalled EUR 5.0 (4.6) million, with an
EBITA margin of 11.1 (12.1) per cent of net sales. Our full-year operating
profit (EBITA) totalled EUR 17.7 (16.0) million, with an EBITA margin of 11.4
(11.5) per cent of net sales. In the comparison year, our travel, meeting and
office work expenses were lower than usual, while in the fiscal year now ended
we invested heavily in our business platform and management system, Digia
Business Engine, further building up our capabilities in cloud platform
solutions and recruitment.

At the end of the year, we stepped up our ability to scale our expertise to
customer projects by agreeing on a new cooperation model with the U.S. company
Fulcrum Digital. With this agreement, Digia will be utilising Fulcrum Digital’s
offshore professionals in its customer projects going forward. Digia and Fulcrum
Digital have worked together in the past already, but the new agreement deepens
the partnership and makes it more systematic. Shared values and corporate
responsibility commitments also play an important role.

In addition to our own expertise, we already harness our Digia Hub network in
our customer projects – at the end of the review period, more than 80 Digia Hub
experts worked on Digia customer projects through this network. Also, 132
subcontractors worked in our projects alongside our own professionals. Our
personnel at period-end amounted to 1,339. Surveys indicate that Digia’s
employee experience developed favourably in 2021 as well.

We announced the updated priorities and objectives of our corporate
responsibility in early 2021. In the autumn, we built Digia’s climate roadmap to
reduce emissions. Our own operations have been carbon neutral since 2020 and our
objective is to be carbon neutral throughout our entire value chain by 2030.

2022 is the last year of Digia’s 2020–2022 strategy period. Our key individual
modernisation project during this period involves the deployment of Digia’s own
business platform and management system, Digia Business Engine. This project is
an investment in Digia’s future competitiveness, as it renews our operations by
combining technological possibilities with human expertise. In early 2022, we
will increase the intensity of our development work and proceed to deploy the
platform in phases. The deployment project will still affect our result in early
2022.

Digia expects to see further growth in the Finnish IT service market over the
long term, even though the coronavirus pandemic will continue to generate
uncertainty in our operating environment. Harnessing technology is a key tool in
business renewal in both the public and private sectors. This trend remains
strong. Our customers’ needs dovetail into three main areas: digital business,
knowledge-based management, and operational continuity and efficiency. Digia’s
offering and competence profile are a good match for this demand.  Together with
our customers, we build shared growth stories.

Profit guidance for 2022

Profit guidance for 2022: Digia’s net sales will grow year-on-year and its EBITA
margin will be over 10 per cent of net sales.

Briefing invitation

A briefing for analysts will be held at 4:00 pm on Friday, 8 February 2022 as a
Teams meeting. Attendance instructions have been emailed to participants.

The material and presentation for the event will be available from 4:00 pm on 8
February 2022 on the company’s website: digia.com/en/investors/reports-and
-presentations.

Financial Statements and Annual Report 2021

Digia Plc’s 2021 Annual Report will be published in digital format on 24
February 2022 on the company’s website: digia.com/en/investors/reports-and
-presentations (https://digia.com/sijoittajat/raportit-ja-presentaatiot/).

The Report of the Board of Directors and the Financial Statements for 2021 will
be published as part of the Annual Report.

For further information, please contact:

President & CEO Timo Levoranta, tel. (exchange) +358 (0)10 313 3000

Distribution

Nasdaq Helsinki
Key media
digia.com

Digia is a software and service company that helps its customers renew
themselves in the networked world. There are more than 1,300 of us working at
Digia. Our roots are in Finland and we operate both in Finland and abroad. We
are building a world in which digitalisation makes a difference – together with
our customers and partners. Digia’s net sales totalled EUR 156 million in 2021.
The company is listed on Nasdaq Helsinki (DIGIA). digia.com

Digia is a software and service company that helps its customers renew
themselves in the networked world. There are more than 1,300 of us working at
Digia. Our roots are in Finland and we operate both in Finland and abroad. We
are building a world in which digitalisation makes a difference – together with
our customers and partners. Digia’s net sales totalled EUR 156 million in 2021.
The company is listed on Nasdaq Helsinki (DIGIA). digia.com

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