Digia Oyj — Interim / Quarterly Report 2021

May 4, 2021

Digia Plc’s business review January–March 2021

Digia Plc’s business review January–March 2021

Digia Plc
Stock exchange release
4 May 2021 at 3:00 pm

Net sales up 7.6 per cent, operating profit (EBITA) improves by 65 per cent

January–March 2021

· Net sales: EUR 39.4 (36.6) million, up 7.6 per cent
· Operating profit (EBITA): EUR 5.3 (3.2) million, up 65.1 per cent; EBITA
margin: 13.4 (8.7) per cent of net sales
· Operating profit (EBIT): EUR 4.5 (2.7) million, up 63.3 per cent; EBIT
margin: 11.3 (7.5) per cent of net sales
· Earnings per share: EUR 0.13 (0.08)
· Return on investment: 15.8 (13.8) per cent
· Equity ratio: 42.4 (46.2) per cent
· Acquisition of Climber International AB
· Profit guidance for 2021 remains unchanged: Growth in Digia’s net sales will
outpace the previous year (5.5% in 2020) and the EBITA margin will be at a level
of about 10%.

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

GROUP KEY FIGURES

+---------------------------------+--------+--------+--------+---------+
|EUR 1,000 |1–3/2021|1–3/2020|Change %|1–12/2020|
+---------------------------------+--------+--------+--------+---------+
|Net sales | 39,357| 36,565| 7.6%| 139,049|
+---------------------------------+--------+--------+--------+---------+
|Operating profit (EBITA) | 5,256| 3,184| 65.1%| 16,000|
+---------------------------------+--------+--------+--------+---------+
|- as a % of net sales | 13.4%| 8.7%| | 11.5%|
+---------------------------------+--------+--------+--------+---------+
|Operating profit (EBIT) | 4,456| 2,729| 63.3%| 14,102|
+---------------------------------+--------+--------+--------+---------+
|- as a % of net sales | 11.3%| 7.5%| | 10.1%|
+---------------------------------+--------+--------+--------+---------+
|Result for the period | 3,544| 2,187| 62.0%| 10,627|
+---------------------------------+--------+--------+--------+---------+
|- as a % of net sales | 9.0%| 6.0%| | 7.6%|
+---------------------------------+--------+--------+--------+---------+
| | | | | |
+---------------------------------+--------+--------+--------+---------+
|Return on equity, % | 23.5%| 16.6%| | 18.7%|
+---------------------------------+--------+--------+--------+---------+
|Return on investment, % | 19.5%| 13.8%| | 16.5%|
+---------------------------------+--------+--------+--------+---------+
|Interest-bearing net liabilities | 15,826| 20,762| -23.8%| 10,531|
+---------------------------------+--------+--------+--------+---------+
|Net gearing, % | 26.2%| 39.8%| | 17.3%|
+---------------------------------+--------+--------+--------+---------+
|Equity ratio, % | 42.4%| 46.2%| | 50.7%|
+---------------------------------+--------+--------+--------+---------+
| | | | | |
+---------------------------------+--------+--------+--------+---------+
|Number of personnel at period-end| 1,323| 1,260| 5.0%| 1,258|
+---------------------------------+--------+--------+--------+---------+
|Average number of personnel | 1,322| 1,260| 4.9%| 1,261|
+---------------------------------+--------+--------+--------+---------+
|Shareholders' equity | 60,301| 52,155| 15.6%| 60,737|
+---------------------------------+--------+--------+--------+---------+
|Balance sheet total | 144,134| 115,131| 25.2%| 121,078|
+---------------------------------+--------+--------+--------+---------+
|Earnings per share, EUR  | 0.13| 0.08| 62.5%| 0.40|
+---------------------------------+--------+--------+--------+---------+

PRESIDENT & CEO TIMO LEVORANTA:

“The first quarter of 2021 went according to plan. Our net sales were up 7.6 per
cent on the previous year and amounted to EUR 39.4 million. Our good financial
performance continued.  Our operating profit (EBITA) grew by 65.1 per cent to
EUR 5.3 (3.2) million. Our liquidity is at a good level and our financial
position is stable.

Our operating profit (EBITA) slightly outperformed expectations; it was
increased by savings made during the coronavirus pandemic, systematic
operational development, and the dissolution of a EUR 0.4 million risk provision
for project activities.  Our service and maintenance business generated about 66
(65) per cent of net sales in January–March, and the project business about 34
(35) per cent.

Demand during early 2021 reflected customers’ need to develop and renew their
digital business. In particular, uncertainty arising from coronavirus pandemic
has increased the importance of data utilisation and having a good understanding
of the current situation. All sectors require modern core systems in order to
successfully digitalise their business. This has been reflected as increased
demand for ERP systems. Our orders for Microsoft cloud ERPs have tripled on the
previous year.

Walki is just one example of these new system deliveries: the international
packaging company has chosen Digia as their system renewal partner, and the ERP
will be implemented using Microsoft Dynamics cloud-based technology. The Indoor
Group has also chosen Digia to supply Finland’s first retail solution based on
Microsoft Dynamics 365 Commerce. This solution will help the Indoor Group to
provide an even better multichannel customer experience and to standardise the
IT systems used by a total of 92 stores in the Sotka and Asko chains. There has
been strong growth in demand for Digia’s own Enterprise ERP system. Net sales of
financial-sector services based on our own product solutions also rose.

One of the most significant projects to be completed during the review period
was the Incomes Register, a large-scale project that we implemented for the Tax
Administration. We will continue to be responsible for the system’s maintenance
and will also be involved in its further development.

As part of our growth strategy, we acquired the entire share capital of the
Swedish company Climber International AB on 7 January 2021. The acquisition
concerns Climber’s operations in Sweden, Finland, Denmark and the Netherlands.
Climber’s (https://www.climber.fi/) business is largely based on the use of
advanced Qlik technologies and an operating model that strongly focuses on
consulting. After the acquisition, Digia now employs more than 300 professionals
in the fields of data integration and business analytics. I am very pleased to
say that the first steps in Digia and Climber’s shared journey have been in line
with our expectations. Joint sales projects have already been launched in all of
our operating countries, and our personnel’s expertise is highly
complementary. Our strategy is to harness our synergies and work together as a
single unit, so as to provide customers with an even wider range of knowledge
-based management solutions.

At Digia, we anticipate that analytics solutions, ERPs and an increasing number
of new applications will be transferring to the cloud. For Digia, this
transition is both a growth opportunity and one of the focal areas of our
strategy. During the first quarter, we therefore recruited new experts to
strengthen our sales and delivery capacity in cloud platform solutions for major
customers. Cloud expertise was also our focus in personnel development. More
than 100 Digia employees took training at the Digia Cloud Academy during early
2021. In addition to our own expertise, we also actively utilised our Digia HUB
network in customer projects. We are seeking to further accelerate the creation
of new capabilities in cloud service solutions. As Digia does not own any of its
own datacentres, the transition to the cloud is a clear business opportunity for
us.

The upgrade of our business platform (Digia Business Engine) is proceeding as
planned. We are building a smart growth platform to support future growth and
productivity. During the review period, we capitalised EUR 0.4 million in costs
from the programme, which had an impact of approximately EUR -0.1 million on
earnings. We have capitalised a total of EUR 1.2 million from this programme to
date. Digia Business Engine will be introduced in 2022.

As part of our continual efforts to improve quality, an external audit of
Digia’s operations and quality system was carried out in March and resulted in
the renewal of our ISO 9001 quality certification. During early 2021, we also
updated our key principles, targets and indicators for responsibility. In
addition to environmental responsibility and digital expertise, our principles
highlight the responsible utilisation of data. Through our customers, we want to
promote the safe and sustainable digitalisation of society, while taking the
environment into consideration.

We predict that market uncertainty will gradually ease and that our customer
base will gain stronger confidence to make investments. The digitalisation trend
in the market remains strong. Our success in the market is supported by our
extensive product and service portfolio, which is not tied to any single field
of business or customer account, and by the fact that a significant share of our
operations is accounted for by continuous services. Digia has also successfully
positioned itself in growth areas in the IT industry, and the firm foundation
that our systematic developments have created over the past few years will
provide a good springboard for the future.

We believe in a world in which value is created in ecosystems through smart data
management.”

PROFIT GUIDANCE FOR 2021

Profit guidance for 2021 remains unchanged: Growth in Digia’s net sales will
outpace the previous year (5.5% in 2020) and the EBITA margin will be at a level
of about 10%.

BRIEFING INVITATION

A briefing for analysts will be held at 3:30 pm on Tuesday, 4 May 2021 as a
Teams meeting. Attendance instructions have been emailed to participants.

The material and presentation for the event will be available from 3:30 pm on 4
May 2021 on the company’s website: digia.com/en/investors/reports-and
-presentations (https://www.digia.com/sijoittajat/raportit-ja-presentaatiot/).

FURTHER INFORMATION

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 1,200 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 net sales were EUR 139.0 million in 2020. The
company is listed on Nasdaq Helsinki (DIGIA). digia.com

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