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Enento Group Oyj Earnings Release 2016
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Earnings Release
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asiakastieto.fi
- Asiakastieto Group Plc
FINANCIAL STATEMENTS 1.1. – 31.12.2016
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Asiakastieto Group's Financial Statement Release 1.1. – 31.12.2016
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ASIAKASTIETO GROUP PLC, STOCK EXCHANGE RELEASE 16 FEBRUARY 2017 AT 12.00 EET
Asiakastieto Group’s Financial Statement Release 1.1. – 31.12.2016: Year of Strong Growth
SUMMARY
The figures presented in this financial statement release are based on audited 2016 financial statement.
October – December 2016 in short:
- Net sales amounted to EUR 12,6 million (EUR 11,4 million), an increase of 11,2 %.
- Adjusted EBIT excluding non-recurring and other adjusted items was EUR 4,4 million (EUR 4,9 million), a decrease of 9,4 %.
- Operating profit (EBIT) was EUR 4,3 million (EUR 4,9 million). Operating profit included non-recurring expenses and other adjusted items of EUR 0,1 million (EUR 0,0 million).
- The share of new products and services of net sales was 5,0 % (8,8 %).
- The share of value-added services of net sales was 66,9 % (59,7 %).
- Free cash flow amounted to EUR 4,6 million (EUR 4,7 million). The impact of non-recurring and other adjusted items on free cash flow was EUR -0,1 million (EUR -0,0 million).
- Earnings per share were EUR 0,21 (EUR 0,24).
January – December 2016 in short:
- Net sales amounted to EUR 49,2 million (EUR 43,7 million), an increase of 12,5 %.
- Adjusted EBIT excluding non-recurring and adjusted items was EUR 19,2 million (EUR 18,3 million), an increase of 5,1 %.
- Operating profit (EBIT) was EUR 20,0 million (EUR 15,8 million). Operating profit included non-recurring expenses and other adjusted items of EUR 0,3 million (EUR 2,5 million) as well as EUR 1,1 million (EUR 0,0 million) non-recurring, adjusted profit on sale of office premises.
- The share of new products and services of net sales was 7,4 % (8,6 %).
- The share of value-added services of net sales was 65,4 % (59,4 %).
- Free cash flow amounted to EUR 17,2 million (EUR 13,8 million). The impact of non-recurring and other adjusted items on free cash flow was EUR -0,4 million (EUR -2,9 million).
- Earnings per share were EUR 1,01 (EUR 0,76).
- Profit of non-recurring sale of shares of office premises was EUR 1,1 million
Future outlook
Asiakastieto Group expects its net sales growth rate to be within the range of long term target. Adjusted euro-nominated net operating profit is expected to grow from last year but at a slower pace than net sales.
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
| KEY FIGURES | ||||
|---|---|---|---|---|
| EUR million | 1.10.- | 1.10.- | 1.1.- | 1.1.- |
| 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 | |
| Net sales | 12,6 | 11,4 | 49,2 | 43,7 |
| Net sales growth, % | 11,2 | 7,7 | 12,5 | 5,6 |
| Adjusted EBITDA² | 5,1 | 5,4 | 21,7 | 20,5 |
| Adjusted EBITDA margin, %² | 40,2 | 47,5 | 44,1 | 47,0 |
| Adjusted operating profit (EBIT)² | 4,4 | 4,9 | 19,2 | 18,3 |
| Adjusted EBIT margin, %² | 34,8 | 42,7 | 39,1 | 41,8 |
| New products and services of net sales, %¹ | 5,0 | 8,8 | 7,4 | 8,6 |
| Free cash flow³ | 4,6 | 4,7 | 17,2 | 13,8 |
| Net debt to EBITDA, x | 2,3 | 2,2 | 2,2 | 2,4 |
1 The method used for calculating the share of new products and services, the comparative figures for 1 October – 31 December 2015 and the financial year 2015 have been changed into rolling starting from 1 January 2016, so that the share include sales of products, which have been launched during the past 24 months. Earlier the share was calculated from the sales of products launched during the previous and current financial year. Figures based on the old calculation method were 4,8 % for the fourth quarter 1 October – 31 December 2016, 9,0 % for the comparative period 1 October – 31 December 2015, 6,1 % for the financial year 2016 and 7,6 % for the comparative period 1 January – 31 December 2015.
2 Adjusted key figures are adjusted by following items: management fees which the Company has paid to Investcorp, the former owner of the Company, until the listing of the Company for certain ongoing advisory services, costs relating to the listing, an expense relating to the discount given to the personnel in the personnel offering, M&A related fees for legal and other advisory services, redundancy payments and compensations paid. The above listed adjusted items were EUR -0,1 million for the fourth quarter 1 October – 31 December 2016, EUR -0,0 million for the comparative period 1 October – 31 December 2015, EUR -0,3 million for the financial year 2016 and EUR -2,5 million for the comparative period 2015. Adjusted key figures for the financial year 2016 are also adjusted by the non-recurring profit on the sale of shares of office premises EUR 1,1 million.
3 The impact of adjusted items on free cash flow was EUR -0,1 million for the fourth quarter 1 October – 31 December 2016, EUR -0,0 million for the comparative period 1 October – 31 December 2015, EUR -0,4 million for the financial year 2016 and EUR -2,9 million for the financial year 2015.
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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Net sales, EUR million
Adjusted operating profit, EUR million
New services' share of net sales, %
Free cash flow, EUR million
- Net sales grew in all product areas, especially in Consumer Information.
-
Net sales was affected by the net sales of new services, volume component and acquisition of Intellia Oy.
-
The information gathering expenses increased compared to the corresponding period due to changes in the product mix.
- Rental agreement of the office premises has been effective from the beginning of March 2016.
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Actual incentives were higher than estimated.
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Development portfolio of new services is strong.
- Share of new services in the third and fourth quarter was lower due to ordinary fluctuation in the timing of projects.
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During the fourth quarter new company analysis reports were launched, new features to international politically exposed persons (PEP) service were added and CRM service was extended by CRM installation package combining data and technique.
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Free cash flow was at the same level as in the corresponding quarter last year.
- Cash flow impact of tangible and intangible assets was EUR -1,4 million in fourth quarter.
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Asiakastieto Group's Financial Statement Release 1.1. – 31.12.2016
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JUKKA RUUSKA, CEO
"2016 was a year of strong growth for Asiakastieto Group. The most important components in the growth of net sales of 12,5 % were the new services launched in the course of the year and the increase in inquiry volumes generated by the general economic growth. The need for our services rises along with the growing trade of our clients. Further, our clients have automatized their decision-making and started to use our processed services, which can also be seen in the growth of net sales. In the financial year 2016, Asiakastieto Group's net sales amounted to EUR 49,2 million (EUR 43,7 million).
The adjusted operating profit was EUR 19,2 million (EUR 18,3 million), and it grew by 5,2 %. The difference in the speed of growth between the net sales and operating profit is due to several factors, the most important one being the increase in data acquisition costs. The increase in this item of expenditure is caused by the brisk growth in the real estate and consumer information services in which we are not able to use the information in our own database to quite the same extent as in our other services. In addition, the transfer to rented premises impacted the margin's speed of growth in the financial year 2016. Especially in the last quarter, the bigger than anticipated actuals of incentives due to successful financial period had an impact on the operating profit as well as margin level of acquired Intellia Oy. The earnings per share for the whole financial year 2016 EUR 1,01 (EUR 0,76) improved strongly, increasing 33 % compared to previous year.
We see the year 2017 as a kind of breakthrough for the automation of compliance functions. The more profound knowing of the customer and own supply chain as well as conformance to the ever more complex legislation require that companies invest strongly in the unification of processes. Among others, politically exposed persons or persons on international sanction lists and so-called beneficial owners must be identified more and more often when concluding contracts. Asiakastieto Group's current service selection expanding in 2017 supports the companies' growing need to automatize their checks relating to the knowing of customers and the verification of the conformity to law of their operations. Consistent background analyses which are made saving the time and effort of the client enterprises' customers also reinforce the customer experience."
NET SALES
October – December
Asiakastieto Group's net sales in the fourth quarter amounted to EUR 12,6 million (EUR 11,4 million) and increased by 11,2 % compared to the corresponding quarter of the previous year. Net sales from new products and services were EUR 0,6 million (EUR 1,0 million), which was 5,0 % (8,8 %) of the total net sales for the fourth quarter. The growth of net sales was especially effected by consolidation of Intellia Oy to Group accounts from 1 October 2016 and development of economic volume. One off type of project revenue recognitions were in lesser amount than in the corresponding quarter of the previous year.
Business Information's net sales in the fourth quarter amounted to EUR 6,5 million (EUR 6,5 million) and increased by 0,0 % compared to the corresponding quarter of the previous year. The increase in net sales resulted mainly from more clients continually becoming users of value-added products and services and growth of volume. One off type of project revenue recognitions in Business Information product are were in lesser amount than in the corresponding period of the previous year which decreased revenue growth.
Consumer Information's net sales in the fourth quarter amounted to EUR 4,1 million (EUR 3,4 million) and increased by 19,2 % compared to the corresponding period of the previous year. In the fourth quarter sales performance was good in the majority of services especially due to the continued general economic volume growth. Sales performance was particularly good in the fourth quarter in customer-specific decision-making solutions and in real estate information services.
Customer Management's net sales in the fourth quarter amounted to EUR 1,4 million (EUR 0,8 million), and increased by 69,0 % compared to the corresponding quarter of the previous year. The product area includes revenue of Intellia Oy which was consolidated to the Group from 1 October 2016.
Net sales of the Certificates and Analyses product area in the fourth quarter amounted to EUR 0,7 million (EUR 0,7 million) and increased by 11,7 % compared to the corresponding quarter of the previous year.
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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January – December
Asiakastieto Group's net sales in the interim period amounted to EUR 49,2 million (EUR 43,7 million) and increased by 12,5 % compared to the corresponding period of the previous year. Net sales from new products and services were EUR 3,6 million (EUR 3,8 million), which was 7,4 % (8,6 %) of the total net sales of the interim period. The growth of net sales was affected especially by the share of new products and services and development of economic volume. Also the acquisition of Intellia Oy affected sales growth. Net sales of the interim period included, to a lesser extent than for the corresponding period of the previous year, revenue from long-term service development projects which was recognised on the stage of completion.
Business Information's net sales in the interim period amounted to EUR 26,4 million (EUR 25,0 million) and increased by 5,7 % compared to the corresponding period of the previous year. The increase in net sales resulted mainly from the good success of new products and services introduced to the market during the years 2015 and 2016, growth of economic volume as well as from more clients continually becoming users of value-added products and services.
Consumer Information's net sales in the interim period amounted to EUR 15,7 million (EUR 12,6 million) and increased by 24,3 % compared to the corresponding quarter of the previous year. In the interim period sales performance was good in the majority of services due to the continued general volume growth. Sales performance continued particularly good in customer-specific decision making solutions and in real estate information services.
Customer Management's net sales in the interim period amounted to EUR 3,7 million (EUR 3,0 million), and increased by 24,4 % compared to the corresponding period of the previous year. Product Area includes sales of Intellia Oy which was consolidated to Group from 1 October 2016.
Net sales of the Certificates and Analyses product area in the interim period amounted to EUR 3,3 million (EUR 3,1 million) and increased by 7,6 % compared to the corresponding period of the previous year. The growth of net sales was caused by the increase of certificates' net sales.
FINANCIAL RESULTS
October – December
Asiakastieto Group's operating profit (EBIT) for the fourth quarter amounted to EUR 4,3 million (EUR 4,9 million). Operating profit included non-recurring and adjusted items of EUR 0,1 million (EUR 0,0 million). The expertise fees linked to the acquisition of Intellia Oy were booked to non-recurring costs.
Adjusted EBIT excluding non-recurring and adjusted items for the fourth quarter amounted to EUR 4,4 million (EUR 4,9 million).
Adjusted operating profit margin for the fourth quarter was decreased by relatively lower margin of Intellia's services, increase in information gathering expenses as a result of change in sales mix due to the growth in net sales in real estate information services and link services, rental costs based on the rental agreement effective from the beginning of March, as well as actual incentives for the full year 2016 which were on a higher level than estimated due to strong growth in the financial year.
The Group's depreciation and amortisation for the fourth quarter amounted to EUR 0,7 million (EUR 0,5 million).
Net financial expenses during the fourth quarter were EUR 0,3 million (EUR 0,3 million).
The Group's result before income taxes in the fourth quarter was EUR 4,1 million (EUR 4,6 million).
The change in deferred taxes in the fourth quarter amounted to EUR -0,4 million (EUR -0,9 million).
The Group's result in the fourth quarter was EUR 3,2 million (EUR 3,6 million).
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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January – December
Asiakastieto Group's operating profit (EBIT) for the interim period amounted to EUR 20,0 million (EUR 15,8 million). Operating profit included non-recurring and adjusted items of EUR 0,3 million (EUR 2,5 million) as well as a non-recurring profit on the sale of shares of office premises EUR 1,1 million (EUR 0,0 million). The expertise fees linked to the acquisition of Intellia Oy were booked to non-recurring costs.
Adjusted EBIT excluding non-recurring and adjusted items for the interim period amounted to EUR 19,2 million (EUR 18,3 million).
Adjusted operating profit margin for the interim period was increased by good net sales development and scalable cost structure. On the other hand, adjusted operating profit margin was still negatively affected by increase in information gathering expenses as a result of the growth in net sales in real estate information services and link services, relatively lower margin services of Intellia Oy products transferred to product portfolio as well as rental costs recognized from the beginning of March and strategy process which has increased administrative costs.
Profit on the sale of shares of office premises EUR 1,1 million was recognised in the second quarter. A stock exchange release on completing the sale of office premises was published on 17 May 2016.
The Group's depreciation and amortisation for the interim period amounted to EUR 2,5 million (EUR 2,3 million).
Net financial expenses during the interim period were EUR 1,1 million (EUR 1,4 million).
The Group's result before income taxes in the interim period was EUR 18,9 million (EUR 14,4 million).
The change in deferred taxes in the interim period amounted to EUR -3,1 million (EUR -2,9 million).
The Group's result in the interim period was EUR 15,3 million (EUR 11,5 million).
CASH FLOW
In the financial year the cash flow from operating activities amounted to EUR 20,8 million (EUR 15,3 million). Cash flow's increase in the financial year was mainly due to the lower level of non-recurring and adjusted items in cash flow (EUR -0,4 million) compared to the comparative period (EUR -2,9 million). The change in the Group's working capital was EUR 0,1 million (EUR -1,7 million).
The cash flow from investing activities for the interim period amounted to EUR -4,0 million (EUR -2,6 million). The cash flow from investing activities was affected by the acquisition of subsidiary and received payment from the sales of the office premises.
The cash flow from financing activities for the interim period amounted to EUR -15,1 million (EUR 1,3 million). The Group paid a dividend and return of capital during the interim period for a total of EUR 15,1 million, of which the actual distribution of profit was EUR 11,6 million.
STATEMENT OF FINANCIAL POSITION
At the end of the fourth quarter, the Group's total assets were EUR 156,6 million (EUR 155,5 million). Total equity amounted to EUR 78,5 million (EUR 78,2 million) and total liabilities to EUR 78,1 million (EUR 77,4 million). Of the total liabilities, EUR 69,7 million (EUR 69,6 million) was non-current interest-bearing liabilities, EUR 0,3 million (EUR 0,1 million) non-current, non-interest-bearing liabilities and EUR 8,1 million (EUR 7,8 million) current, non-interest-bearing liabilities. Goodwill amounted to EUR 113,9 million (EUR 111,4 million) at the end of the fourth quarter. Goodwill was increased due to goodwill which resulted from the acquisition of Intellia Oy.
Asiakastieto Group's cash and cash equivalents at the end of the fourth quarter were EUR 22,6 million (EUR 21,0 million) and net debt EUR 47,0 million (EUR 48,5 million). Both the revolving credit facility and the bank account overdraft were unused.
Leasing liabilities related to the office premises arrangement have been described in the note 2.4 Lease Commitments. Within the office premises arrangement, the Group has sold the shares entitling to the
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Asiakastieto Group's Financial Statement Release
1.1. - 31.12.2016
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holding of its current premises to an outside investor and executed at the same time a leasehold agreement on the use of the premises. The Group also executed a leasehold agreement on new office premises currently being under construction.
CAPITAL EXPENDITURE
The majority of Asiakastieto Group's capital expenditure is related to the development of products and services as well as investments in IT infrastructure. Other capital expenditure mainly comprises purchases of company cars and office equipment. The Group's gross capital expenditure in the interim period amounted to EUR 3,9 million (EUR 3,6 million). Capital expenditure on intangible assets was EUR 3,6 million (EUR 2,4 million) and capital expenditure on tangible assets was EUR 0,3 million (EUR 1,2 million).
The Group resigned the shares entitling to the holding of its current premises in May, when the conditions in the sales agreement expired and thus the sale of office premises was conclusively completed. A non-recurring profit on the sale of shares of office premises EUR 1,1 million was recognised.
RESEARCH AND DEVELOPMENT
The development activities of Asiakastieto Group relate to the development of product and service offering. During the interim period the capitalised development and software costs of the Group amounted to EUR 3,6 million (EUR 2,4 million). The capitalised development and software costs relate to the development of the Group's products and services as well as to intangible IT infrastructure. The Group had no material research activities.
PERSONNEL
The average number of personnel employed by Asiakastieto Group during the final quarter of the year was 167 (150) and during the financial year 2016 159 (149). At the end of the financial year 2016 the number of personnel was 170 (152).
During the financial year 2016, the personnel expenses of the Group amounted to EUR 12,1 million (EUR 10,8 million) and included an accrued cost of EUR 328 thousand (EUR 140 thousand) from the management's long-term incentive plan. See further details in the section "Transactions with related parties" in the notes to the condensed financial statements.
PERSONNEL 31.12.2016
- Experts 53%
- White-collar employees 35%
- Managers 7%
- Group's management 5%
Personnel costs of the comparative period 1 January – 31 December 2015 include cost of EUR 151 thousand, which was generated in the personnel offering where the Group's personnel subscribed for shares with 10% discount.
Key figures describing the Group's personnel:
| PERSONNEL | ||||
|---|---|---|---|---|
| 1.10. - 31.12.2016 | 1.10 - 31.12.2015 | 1.1. - 31.12.2016 | 1.1. - 31.12.2015 | |
| Average number of personnel | 167 | 150 | 159 | 149 |
| Full time | 159 | 139 | 146 | 138 |
| Part time and temporary | 8 | 11 | 13 | 11 |
| Wages and salaries for the period (EUR million) | 2,9 | 2,0 | 9,8 | 8,8 |
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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OTHER EVENTS DURING THE INTERIM PERIOD
Changes in Asiakastieto's Executive Team
On 5 January 2016, Asiakastieto Group published a stock exchange release informing that Heikki Koivula will be in charge also of the product area of Customer Management in addition to Business Information, as the current Business Director Teija Rantanen-Leppo transferred to development project tasks in internal processes. At the same time, Teija Rantanen-Leppo left her position in the Company's Executive Team.
On 29 August 2016, the Board of Directors gave a mandate to CEO to sign a deed to acquire shares of Intellia Oy and nominated Esa Kumpu from Intellia Oy as a member of the Executive Team. He was also nominated as Business Director responsible for the Customer Management product area. The responsibilities were transferred from Heikki Koivula to Esa Kumpu. The nominations required the transaction to be confirmed, so Kumpu started in this position on 1 October 2016.
On 14 September 2016, the Board of Directors nominated Heikki Ylipekkala as member of the Executive Team and on 19 October 2016 the Board of Directors decided on the following changes in the product areas. At the beginning of 2017, the product area of Certificates and Analyses will be incorporated in Business Information. In addition, a new product area will be established, which focuses on real estate information, collateral management services and housing company data services. Heikki Ylipekkala will be in charge of the new product area. He started as member of the Executive Team on 15 December 2016 and as head of the product area on 1 January 2017.
Investment in start-up surveying company
Asiakastieto Group signed a contract on 11 February 2016 and made an investment in the start-up company Hupparihörhö Oy (Hoodie Dude). Hupparihörhö is an interesting start-up as it develops collection and utilizing methods of unstructured information. After the investment the companies entered into business cooperation.
Asiakastieto Group Plc's General Meeting of shareholders on 1 April 2016
The General Meeting of shareholders held on 1 April 2016 confirmed the financial statements for the financial period ended on 31 December 2015, discharged the members of the Board of Directors and the Chief Executive Officer from liability.
The Meeting approved the Board of Directors' proposal to pay a dividend of EUR 0,77 per share. The dividend was paid to shareholders registered in the Company's shareholder register held by Euroclear Finland Ltd on the payment record date of 5 April 2016. The dividend was decided to be paid on 12 April 2016.
The Annual General Meeting also authorised the Board, at its discretion, to resolve the distribution of funds to shareholders as return of capital from the reserve for invested unrestricted equity of no more than EUR 0,23 per share.
The General Meeting of shareholders decided that the annual remuneration is EUR 40 000 for the chairman of the Board of Directors and EUR 25 000 for the members. No separate fees will be paid for meetings. The Chairman of the Committee shall receive an attendance fee of EUR 500 and members of the Committee EUR 400 per committee meeting.
In accordance with the proposal of the Shareholders' Nomination Board Petri Carpén, Bo Harald and Anni Ronkainen were re-elected as members of the Board of Directors and Patrick Lapveteläinen and Carl-Magnus Månsson were elected as new members.
Authorised Public Accountants firm PricewaterhouseCoopers Oy was elected as the auditor of the Company, and Authorised Public Accountant Juha Tuomala as the auditor in charge.
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Authorisation for issue of shares
The Annual General Meeting authorised the Board of Directors to resolve on one or more issuances, which contain the right to issue new shares or dispose of the shares in the possession of the company. The authorisation would consist of up to 1 000 000 shares in the aggregate. The Board of Directors was authorised to decide on a directed issue. The authorisation is proposed to be used for material arrangements from the company's point of view, such as financing or implementing business arrangements or investments or for other such purposes determined by the Board of Directors in which case a weighty financial reason for issuing shares would exist.
The Board of Directors was authorised to resolve on all other terms and conditions of the issuance of shares, including the payment period, grounds for the determination of the subscription price and subscription price or allocation of shares free of charge or that the subscription price may be paid besides in cash also by other assets either partially or entirely.
The authorisation is effective for 18 months from the close of the Annual General Meeting. The authorisation cancelled the share issue authorisation granted to the Board of Directors by the written resolution of the sole shareholder of the company on 10 March 2015. The authorisation has not been used by 16 February 2017.
Authorisation for repurchasing own shares
The Annual General Meeting authorised the Board of Directors to decide on the repurchase of maximum of 1 000 000 company's own shares, in one or several instalments. The shares will be repurchased with the company's unrestricted shareholders' equity, and the repurchases will reduce funds available for distribution of profits. The shares can be repurchased for example to develop the company's capital structure, carry out or finance potential corporate acquisitions or other business arrangements, to be used as a part of the company's incentive programme or to be otherwise conveyed further, retained as treasury shares, or cancelled.
Shares may be repurchased in accordance with the resolution of the Board of Directors also in a proportion other than in which shares are owned by the shareholders (directed acquisition), using funds belonging to the company's unrestricted equity and at the market price of the shares quoted on regulated market organized by Nasdaq Helsinki Ltd or otherwise established on the market at the time of the repurchase. The Board of Directors will decide how shares will be repurchased. Among other means, derivatives may be used in acquiring the shares. According to the authorisation, the Board of Directors decides on all other matters related to the repurchase of the shares.
The authorisation is effective for 18 months from the close of the Annual General Meeting. The authorisation cancelled the authorisation to repurchase the company's shares granted to the Board of Directors by the written resolution of the sole shareholder of the company on 10 March 2015. The authorisation has not been used by 16 February 2017.
Meeting of the Board of Directors on 1 April 2016
The organizational meeting of the Board of Directors elected among its members Patrick Lapveteläinen as Chairman of the Board of Directors and Bo Harald as Vice-Chairman of the Board of Directors.
Board of Directors appointed Petri Carpén, Anni Ronkainen and Carl-Magnus Månsson as members of the Audit Committee. All the members are independent of the Company and independent of significant shareholders. Petri Carpén was elected chairman of the committee.
The Board of Directors has in its organization meeting evaluated the independence of the Directors according to the Finnish Corporate Governance Code. The Board noted that all members of the Board are independent of the Company and all except Patrick Lapveteläinen are independent of the significant shareholders. The Board of Directors noted the Company is in compliance with the recommendation 10 of the CG Code.
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Sale of premises
Suomen Asiakastieto Oy signed in December 2015 a sales agreement of the shares in its current office premises. The conditional agreement became effective in the spring 2016 and starting from March, the Group hired its current premises for approximately two years, after which it will move as a leaseholder to premises being built. The conditions in the sales agreement, which would have entitled the buyer to annul the transaction, expired in May, and thus the sale of 24 % ownership in Helsingin Yrittäjätalo Oy was conclusively completed. A non-recurring profit on the sale of shares of office premises was EUR 1,1 million.
Meeting of the Board of Directors on 1 June 2016
The Board of Directors resolved the distribution of funds to shareholders as return of capital from the reserve for invested unrestricted equity of EUR 0,23 per share, as authorised by the Annual General Meeting on 1 April 2016. The return of capital was paid to shareholders registered in the Company's shareholders' register held by Euroclear Finland Ltd on the payment record date of 3 June 2016. The funds were paid on 10 June 2016.
Meeting of the Board of Directors on 22 June 2016
The Board of Directors resolved to continue the key employee Performance Share Plan as resolved by the Board in March 2015. The members of the Executive Team of the Group belong to the target group of the plan. For more detailed description on the Share Plan please see the note "Transactions with related parties".
Acquisition of Intellia Oy shares
Asiakastieto Group Plc acquired all shares of Intellia Oy, a company offering sales and marketing services. The agreement was signed on 30 August 2016 and on 1 October 2016 the transaction entered into force. The transaction price was EUR 3,3 million. A post transaction price of EUR 0,2 million will be paid 1 of October 2017. The acquisition has no essential impact on the Group's business activities or key ratios.
Asiakastieto Group strengthened the market share of the customer management services by the acquisition of Intellia and in the future its comprehensive databases combined with Intellia's expertise enable companies to build better service entities for the needs of sales and marketing. Intellia also provides consumer marketing services which have not been part of Asiakastieto Group's current service portfolio.
Based on the purchase price allocation calculation EUR 0,4 million were allocated to customer base, which will be depreciated in 5 years, and EUR 1,0 million to IT systems and database, which will be depreciated in 7 years. The acquisition generated goodwill of EUR 2,5 million. Goodwill is not deductible in taxation.
Intellia was consolidated to Group accounts from 1 October 2016. The group and Intellia Oy had no substantial business transactions, which should have been taken into account when merging the businesses. During 2017 Intellia will be merged to Suomen Asiakastieto Oy.
| CONSIDERATION TRANSFERRED | |
|---|---|
| EUR thousand | |
| Cash paid | 3 103 |
| Post transaction price | 225 |
| Total cost of acquisition | 3 328 |
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
| NET ASSETS ACQUIRED | |
|---|---|
| EUR thousand | |
| Customer relations and contract portfolios | 374 |
| IT systems and database | 979 |
| Other intangible assets | 154 |
| Tangible assets | 5 |
| Account and other receivables | 253 |
| Cash and cash equivalents | 174 |
| Deferred tax liabilities | -162 |
| Interest-bearing liabilities | -47 |
| Advances received | -58 |
| Account and other payables | -858 |
| 814 | |
| EFFECTS OF ACQUISITION ON CASH FLOW | |
| --- | --- |
| EUR thousand | |
| Purchase price paid in cash | -3 328 |
| Cash and cash equivalents of the acquired entity | 174 |
| -3 154 | |
| GOODWILL ARISING FROM BUSINESS COMBINATION | |
| --- | --- |
| EUR thousand | |
| Consideration transferred | 3 328 |
| Net assets acquired | 814 |
| Goodwill | 2 514 |
Transaction expenses of EUR 0,2 million relating to the acquisition of Intellia Oy shares, have been booked in February-September 2016 in the line of the group's profit and loss statement "other operating expenses". The expenses are mainly linked with expert fees for purchase of the shares and transaction. The purchase of the shares caused EUR 53 thousand transfer tax fee, which has been booked to other operating expenses in October 2016.
EVENTS AFTER THE REPORTING DATE
Asset Deal
Asiakastieto Group has decided to outsource by asset deal functions related to financial statements information and financial statements analysis to BHS Partners Oy from 1 January 2017. Change concerns 12 employees and has no major financial impact.
Change in Asiakastieto Group Executive team
Jari Julin has been nominated as a new CIO and member of the executive team of Asiakastieto Group from 20 February 2017. The company's current CIO Pertti Vahermaa will leave the company 31 March 2017.
SHARES AND SHAREHOLDERS
The Company has one share class. Each share carries one vote at the General Meeting of shareholders and each share confers equal right to dividends and net assets of the Company. The shares have no nominal value. The shares of the Company are incorporated in the book-entry securities system maintained by Euroclear Finland Ltd.
asiakastieto.fi
Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
12 (24)
On 31 December 2016, the total number of shares was 15 102 178 (15 102 178), and the share capital of the Company amounted to EUR 80 000 (EUR 80 000).
According to the book-entry securities system, the Company had 2 286 (1 852) shareholders at 31 December 2016. A list of the largest shareholders is available on the Company's investor pages at investors.asiakastieto.fi.
SHAREHOLDER STRUCTURE BY SECTORS
31.12.2016 % of shares
- Finance and insurance institutions 41,8 %
- Foreign shareholders 36,1 %
- General government 10,4 %
- Households 5,7 %
- Companies and housing companies 4,8 %
- Non-profit organisations 1,2 %
| SHARE-RELATED KEY FIGURES | ||
|---|---|---|
| 1.1. - | 1.1. - | |
| EUR thousand (unless otherwise stated) | 31.12.2016 | 31.12.2015 |
| Share price development | ||
| Highest price | 22,00 | 15,90 |
| Lowest price | 13,15 | 13,80 |
| Average price | 16,59 | 14,88 |
| Closing price | 19,25 | 14,98 |
| Market capitalisation, EUR million | 290,7 | 226,2 |
| Trading volume, pcs¹ | 2 249 787 | 24 194 331 |
| Total exchange value of shares, EUR million | 37,5 | 356,4 |
RISKS AND UNCERTAINTIES IN THE NEAR FUTURE
The demand for the Group's products and services depends on the activity of the business operations of its customers. Slow economic growth or a declining economy may result in a weakening demand for the services of Asiakastieto Group.
A general tendency to seek cost savings in business activities and tightening competition in the Group's business sector may cause downward pricing pressure, which may have a negative effect on revenue and profit.
Asiakastieto Group believes that its continued success will be influenced by its ability to meet customers' needs through the development of products and services that are easy to use and that seek to increase customers' business process efficiency, offer cost savings, and facilitate better business decisions. Potential deficiencies in the management of the product development portfolio as well as a shortage of development resources may delay the introduction of new services or enhancements to the market and therefore weaken the Group's results.
Well-functioning information technology and good availability of services are essential conditions for the business operations of Asiakastieto Group. Notwithstanding the current solutions for high availability and protection solutions in accordance with best practices, the realisation of external or internal threats can never be completely eliminated. The realisation of risks of this kind could result in misuse, modification or illegal publication of information and could have legal consequences or cause reputational harm, loss of revenue, claims or regulatory action.
Asiakastieto Group's competitor has in October 2015 filed an action against Asiakastieto Group Plc with the Finnish Market Court for an alleged breach of the Unfair Business Practices Act. Asiakastieto Group Plc did not consider the claims to be justifiable. In September 2016 the parties made an agreement on this matter. The issue has no substantial financial impact on the Company.
¹ The financial year 2015 figures include the sale of 13 225 000 shares in the connection with the listing carried out by AKT Holdings S.à r.l.
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
13 (24)
BOARD'S PROPOSAL CONCERNING THE DISPOSAL OF PROFITS
Asiakastieto Group Plc's distributable funds as at 31 December 2016 amounted to EUR 127 200 834,88, of which the profit for the financial year was EUR 14 724 140,11. The Board of Directors proposes to the Annual General Meeting convening on 30 March 2017 that funds EUR 0,90 per share, totaling EUR 13 591 960,20 shall be distributed as follows:
| EUR / share | EUR | |
|---|---|---|
| From the profit of the financial year as dividend | 0,90 | 13 591 960,20 |
| To be retained in unrestricted equity | 113 608 874,68 | |
| Total | 127 200 834,88 |
FUTURE OUTLOOK
Asiakastieto Group expects its net sales growth rate to be within the range of long term target. Adjusted euro-nominated net operating profit is expected to grow from last year but at a slower pace than net sales.
The outlook is subject to risks related to, among other factors, the development of the Finnish economy and the business operations of the Group. The most significant risks related to business operations include, for example, risks related to the success of product and service development activities, launches of new products and services and risks related to competitive tenders and to losing significant customer accounts.
Asiakastieto Group's business risks have been described in more detail on the Company's investor pages at investors.asiakastieto.fi.
Helsinki, on 16 February 2017
ASIAKASTIETO GROUP PLC
Board of Directors
For further information:
Jukka Ruuska, CEO
Asiakastieto Group Plc
tel. +358 10 270 7111
Distribution:
Nasdaq Helsinki Ltd
major media
investors.asiakastieto.fi
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Asiakastieto Group's Financial Statement Release
1.1. - 31.12.2016
14 (24)
CONDENSED FINANCIAL STATEMENTS AND NOTES 1.1. - 31.12.2016
The figures presented in this financial statement release are based on the audited 2016 financial statement. The amounts presented in the financial statement release are rounded and the sum of individual figures may thus differ from the sum reported.
1. Consolidated statement of comprehensive income, financial position, cash flows and changes in equity
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
|---|---|---|---|---|
| EUR thousand | 1.10. - 31.12.2016 | 1.10. - 31.12.2015 | 1.1. - 31.12.2016 | 1.1. - 31.12.2015 |
| Net sales | 12 631 | 11 357 | 49 178 | 43 729 |
| Other operating income | 15 | 10 | 1 150 | 79 |
| Materials and services | -2 386 | -2 104 | -9 200 | -7 522 |
| Personnel expenses^{1} | -3 563 | -2 447 | -12 091 | -10 759 |
| Other operating expenses | -2 091 | -1 792 | -7 870 | -8 736 |
| Work performed by the entity and capitalised | 398 | 368 | 1 296 | 1 235 |
| Depreciation and amortisation | -677 | -538 | -2 450 | -2 259 |
| Operating profit | 4 328 | 4 854 | 20 013 | 15 767 |
| Finance income | 3 | 2 | 7 | 4 |
| Finance expenses | -279 | -306 | -1 093 | -1 365 |
| Finance income and expenses | -277 | -304 | -1 086 | -1 361 |
| Profit before income tax | 4 051 | 4 550 | 18 927 | 14 406 |
| Income tax expense | -860 | -915 | -3 612 | -2 946 |
| Profit for the period | 3 192 | 3 636 | 15 316 | 11 459 |
| Total comprehensive income for the period | 3 192 | 3 636 | 15 316 | 11 459 |
| Profit attributable to: | ||||
| Owners of the parent company | 3 192 | 3 636 | 15 316 | 11 459 |
| Total comprehensive income attributable to: | ||||
| Owners of the parent company | 3 192 | 3 636 | 15 316 | 11 459 |
| Earnings per share attributable to the owners of the parent during the period: | ||||
| Basic | 0,21 | 0,24 | 1,01 | 0,76 |
| Diluted | 0,21 | 0,24 | 1,01 | 0,76 |
1 Personnel expenses include an accrued expense related to the long-term incentive plan to the management for the fourth quarter 1 October – 31 December 2016 EUR 108 thousand, the comparative period 1 October – 31 December 2015 EUR 49 thousand, the financial year 2016 EUR 328 thousand and the comparative period 2015 EUR 140 thousand. The financial year 2015 include also an expense EUR 151 thousand relating to the discount given to the personnel in the personnel offering.
15 (24)
asiakastieto.fi
Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||
|---|---|---|
| EUR thousand | 31.12.2016 | 31.12.2015 |
| ASSETS | ||
| Non-current assets | ||
| Goodwill | 113 872 | 111 358 |
| Other intangible assets | 8 217 | 5 461 |
| Property, plant and equipment | 1 388 | 4 331 |
| Deferred tax assets | 2 973 | 6 255 |
| Loan and other receivables | 167 | 0 |
| Total non-current assets | 126 617 | 127 405 |
| Current assets | ||
| Account and other receivables | 7 338 | 7 094 |
| Cash and cash equivalents | 22 632 | 21 042 |
| Total current assets | 29 970 | 28 136 |
| Total assets | 156 587 | 155 541 |
| EUR thousand | 31.12.2016 | 31.12.2015 |
| EQUITY AND LIABILITIES | ||
| Equity attributable to owners of the parent | ||
| Share capital | 80 | 80 |
| Invested unrestricted equity reserve | 112 355 | 116 584 |
| Accumulated losses | -49 250 | -49 962 |
| Profit for the period | 15 316 | 11 459 |
| Total equity | 78 501 | 78 161 |
| Liabilities | ||
| Non-current liabilities | ||
| Interest-bearing liabilities | 69 661 | 69 549 |
| Account and other payables | 278 | 76 |
| Total non-current liabilities | 69 940 | 69 625 |
| Current liabilities | ||
| Advances received | 1 261 | 1 937 |
| Account and other payables | 6 886 | 5 818 |
| Total current liabilities | 8 147 | 7 755 |
| Total liabilities | 78 087 | 77 380 |
| Total equity and liabilities | 156 587 | 155 541 |
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to owners of the parent | ||||
|---|---|---|---|---|
| EUR thousand | Share capital | Invested unrestricted equity reserve | Accumulated losses | Total |
| Equity at 1.1.2016 | 80 | 116 584 | -38 502 | 78 161 |
| Total comprehensive income for the period | - | - | 15 316 | 15 316 |
| Distribution of dividend | - | - | -10 874 | -10 874 |
| Return of capital | - | -4 229 | - | -4 229 |
| Management's incentive plan | - | - | 126 | 126 |
| Equity at 31.12.2016 | 80 | 112 355 | -33 935 | 78 501 |
| EUR thousand | Share capital | Invested unrestricted equity reserve | Accumulated losses | Total |
| Equity at 1.1.2015 | 80 | 115 266 | -50 177 | 65 169 |
| Total comprehensive income for the period | - | - | 11 459 | 11 459 |
| Share issue to the personnel | - | 1 318 | - | 1 318 |
| Share issue discount given to personnel | - | - | 151 | 151 |
| Management's incentive plan | - | - | 64 | 64 |
| Equity at 31.12.2015 | 80 | 116 584 | -38 502 | 78 161 |
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asiakastieto.fi
Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||
|---|---|---|---|---|
| 1.10. - | 1.10. - | 1.1. - | 1.1. - | |
| EUR thousand | 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 |
| Cash flows from operating activities | ||||
| Profit before income tax | 4 051 | 4 550 | 18 927 | 14 406 |
| Adjustments for | ||||
| Depreciation and amortisation | 677 | 538 | 2 450 | 2 259 |
| Finance income and expenses | 277 | 304 | 1 086 | 1 361 |
| Profit (-) / loss (+) on disposal of property, plant and equipment | -6 | 5 | -20 | -50 |
| Other adjustments | 108 | 49 | -778 | 291 |
| Cash flows before change in working capital | 5 107 | 5 446 | 21 666 | 18 267 |
| Change in working capital: | ||||
| Increase (-) / decrease (+) in account and other receivables | 2 087 | -6 | 6 | -2 107 |
| Increase (+) / decrease (-) in account and other payables | -1 185 | -462 | 98 | 415 |
| Change in working capital | 902 | -468 | 104 | -1 691 |
| Interest and other finance expenses paid | -255 | -281 | -988 | -1 266 |
| Interest and other finance income received | 3 | 2 | 7 | 4 |
| Income taxes paid | -10 | - | -10 | - |
| Net cash from operating activities | 5 746 | 4 700 | 20 779 | 15 314 |
| Cash flows from investing activities | ||||
| Purchases of property, plant and equipment | -113 | -34 | -1 074 | -535 |
| Purchases of intangible assets | -1 288 | -277 | -3 492 | -2 254 |
| Purchases of subsidiaries, net of cash acquired | -2 929 | - | -2 929 | - |
| Proceeds from sale of property, plant and equipment | 7 | 30 | 3 622 | 152 |
| Purchase of investments | 3 | - | -100 | - |
| Non-current receivables | - | - | -67 | - |
| Loan repayments | - | - | - | 48 |
| Net cash from investing activities | -4 321 | -282 | -4 040 | -2 589 |
| Cash flows from financing activities | ||||
| Share issue | - | - | - | 1 356 |
| Costs of share issue | - | - | - | -48 |
| Short-term financing, net increase (+) / decrease (-) | -47 | - | -47 | - |
| Dividends paid and other profit distribution | - | - | -15 102 | - |
| Net cash from financing activities | -47 | - | -15 149 | 1 308 |
| Net increase / decrease in cash and cash equivalents | 1 379 | 4 418 | 1 589 | 14 033 |
| Cash and cash equivalents at the beginning of the period | 21 253 | 16 624 | 21 042 | 7 009 |
| Cash and cash equivalents at the end of the period | 22 632 | 21 042 | 22 632 | 21 042 |
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
18 (24)
2. Notes
2.1. Accounting policies
This financial statement release has been prepared in accordance with IAS 34 Interim Financial Reporting. The accounting policies and methods applied in financial statement release are the same as those applied in the financial statements for the financial year ended 31 December 2016.
The preparation of financial statements in accordance with IFRS requires Asiakastieto Group's management to use estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported amounts of income and expenses for the interim period. In addition, it is necessary to exercise judgment in applying the accounting policies. Because estimates and assumptions are based on the understanding as at the end of the interim period, they include risks and uncertainties. The actual results may differ from the estimates and assumptions made. Critical accounting estimates and judgments are disclosed in more detail under the note 3 to the consolidated financial statements for the year 2016.
In its financial statement release Asiakastieto Group Plc discloses alternative performance measures to depict the financial development of its business operations and to improve comparability between different periods. Alternative performance measures are not included in IFRS based consolidated financial statement as such, but they are derived from IFRS based consolidated financial statements or Interim Reports by amending parts of main calculations or notes and/or making them proportional. Alternative measures should not be considered replacing indicators compared to the performance measures defined in the IFRS financial statements norms. All companies do not calculate alternative performance measures in the same way, and therefore alternative performance measures used by the Company are not necessarily comparable with other companies, even if named in the same way. Alternative performance measures shown in this financial statement release have been calculated according to the same principles described in group financial statement 2016 disclosed under the note 2.
The amounts presented in the income statement and in the balance sheet are consolidated figures. The amounts presented in the financial statement release are rounded and the sum of individual figures may thus differ from the sum reported. The figures presented in this Interim Report are based on the audited 2016 financial statement.
2.2. Net sales
| NET SALES BY PRODUCT AREA | ||||
|---|---|---|---|---|
| EUR thousand | 1.10. - 31.12.2016 | 1.10. - 31.12.2015 | 1.1. - 31.12.2016 | 1.1. - 31.12.2015 |
| Business Information | 6 486 | 6 484 | 26 416 | 25 001 |
| Consumer Information | 4 057 | 3 403 | 15 713 | 12 645 |
| Customer Management | 1 376 | 814 | 3 730 | 2 998 |
| Certificates and Analyses | 711 | 655 | 3 319 | 3 085 |
| Total | 12 631 | 11 357 | 49 178 | 43 729 |
2.3. Interest-bearing liabilities
| INTEREST-BEARING LIABILITIES OF THE GROUP | ||
|---|---|---|
| EUR thousand | 31.12.2016 | 31.12.2015 |
| Loans from financial institutions | 69 661 | 69 549 |
| Total | 69 661 | 69 549 |
All interest-bearing liabilities are denominated in euros.
The Group has entered into a term loan and revolving credit facility agreement with Danske Bank Plc and Pohjola Bank Plc EUR 75,0 million consisting of a EUR 70,0 million term loan and a EUR 5,0 million revolving credit facility including EUR 0,5 million bank account overdraft. The loan from a financial institution matures on 28 November 2019.
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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The loan from a financial institution includes a financial covenant that is Net debt to EBITDA, calculated as defined under the financing agreement. The covenants are monitored on a quarterly basis. The Net debt to EBITDA, which is adjusted as defined under the financing agreement, was 2,2 as at 31 December 2016. According to the financing agreement, the covenant limit was 4,0 during the financial year 1 January 2016 – 31 December 2016 and 3,5 from 1 January 2017 onwards.
The parent company of the Group, Asiakastieto Group Plc, and its subsidiary, Suomen Asiakastieto Oy, have guaranteed EUR 70,0 million of loans from financial institutions and EUR 5,0 million of undrawn facilities on behalf of each other.
2.4. Lease commitments
| MINIMUM RENTS BASED ON NON-CANCELLABLE LEASE | ||
|---|---|---|
| EUR thousand | 31.12.2016 | 31.12.2015 |
| No later than 1 year | 470 | - |
| Later than 1 year and no later than 5 years | 2 958 | - |
| Later than 5 years | 4 611 | - |
| Total | 8 040 | - |
2.5. Transactions with related parties
Related parties of the Group consist of group entities, shareholders using control or substantial control. In addition, the key management persons, including the Board of Directors, managing director and management team are related parties of the Group, as well as their close family members and companies, where above mentioned persons exercise controlling power.
| THE FOLLOWING TRANSACTIONS WERE CARRIED OUT WITH RELATED PARTIES | |||
|---|---|---|---|
| 1.1.-31.12.2016 | |||
| EUR thousand | Sales of | ||
| goods and | |||
| services | Purchases | ||
| of goods | |||
| and services | Finance | ||
| income and | |||
| expenses | |||
| Companies influenced by the Management | 395 | -61 | - |
| Total | 395 | -61 | - |
| 31.12.2016 | |||
| EUR thousand | Saamiset | Velat | |
| Companies controlled by the Management | - | 56 | |
| Companies influenced by the Management | 38 | 1 | |
| Total | 38 | 57 | |
| 1.1.-31.12.2015 | |||
| EUR thousand | Sales of | ||
| goods and | |||
| services | Purchases | ||
| of goods | |||
| and services | Finance | ||
| income and | |||
| expenses | |||
| Investcorp Financial and Investment Services S.A.¹ | - | -25 | - |
| Management of the Company | - | - | 1 |
| Companies influenced by the Management | 368 | -3 | - |
| Total | 368 | -28 | 1 |
| 31.12.2015 | |||
| EUR thousand | Saamiset | Velat | |
| Companies influenced by the Management | 62 | 2 | |
| Total | 62 | 2 |
Transactions with related parties were carried out on an arm's length basis.
¹ Until the listing, companies belonging to Investcorp Group controlled the Group through the parent company, AKT Holdings S.à r.l. AKT Holdings S.à r.l. owned all the shares of Asiakastieto Group Plc until the listing in March 2015. AKT Holdins S.à r.l. transferred its whole shareholding in Asiakastieto Group Plc during the year 2015.
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Asiakastieto Group's Financial Statement Release 1.1. - 31.12.2016
20 (24)
Long-term incentive plan to the management
In March 2015, the Board of Directors of the Company established an incentive plan for the management of the Group. The plan is based on the Group's management making individual investments in Asiakastieto Group Plc's shares and the opportunity for the Group's management to be awarded further shares on the basis of meeting long-term performance criteria and a commitment to the company. In order to participate in the plans and receive an award from the plans, the members of the Group's management acquired, in the personnel offering, the number of shares determined by the Board of Directors. Any shares acquired above the amount of shares determined by the Board of Directors are not entitled to an award. The long-term incentive plan contains two elements: a performance based share plan and a matching share plan.
In general, no award shall be paid if the employment or service contract terminates before the award payment. Any awards shall be paid partly in shares and partly in cash. The cash proportion is intended to cover taxes and tax-related costs arising from the award to the participants.
The participants must retain at least 50 per cent of all net shares received on the basis of the plan until the participant's share ownership equals his/her annual gross base salary. Such number of shares must be held as long as the participant's employment or service at Asiakastieto Group continues.
The plan is directed to approximately ten key members of the Group's personnel, including all members of the executive team. The awards to be paid out through the performance based share plan and the matching share plan, correspond to the value of 108 000 shares at a maximum including also the cash proportion and with the assumption that the criteria for the performance based share plan are achieved to its maximum.
In June 2016 the Board of Directors of Asiakastieto Group Plc resolved to continue the key employee performance share plan as resolved by the Board in March 2015. Should the targets of the plan resolved in June be attained in full, the payable rewards will correspond to a maximum total of 72 000 Asiakastieto Group shares, including also the cash proportion.
Long-term incentive plan to the management is in the scope of IFRS 2. For the financial year 2016, an accrued expense EUR 328 thousand (EUR 140 thousand) has been recognised in personnel expenses.
Matching Share Plan 2015
In the personnel offering, the members of the Group's management subscribed Personnel Shares, the ownership of which is a prerequisite for participating in the long-term incentive plan. The acquisition of Personnel Shares within the matching share plan entitles the participant to be awarded one additional share for each Personnel Share within the plan in four years' time, provided that the participant's employment or service at the company continues and the Personnel Shares acquired within the plan are still held by the participant at such time.
Performance Based Share Plan 2015
The long-term incentive plan includes the possibility to be awarded with further shares based on a set of performance criteria. The performance-based award for the period March 2015 – March 2018 shall be based on the total shareholder return calculated on the Asiakastieto Group Plc's share, adjusted for dividends paid. Any earned award shall be paid out to participants after the end of the performance period.
Performance Based Share Plan 2016
The long-term incentive plan includes the possibility to be awarded with further shares based on a set of performance criteria. The performance-based award for the period July 2016 – December 2018 shall be based on the total shareholder return calculated on the Asiakastieto Group Plc's share, adjusted for dividends paid. Any earned award shall be paid out to participants in 2019.
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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3. Quarterly consolidated statements of income
| CONSOLIDATED STATEMENT OF INCOME | ||||||
|---|---|---|---|---|---|---|
| EUR thousand | Q4 2016 | Q3 2016 | Q2 2016 | Q1 2016 | Q4 2015 | Q3 2015 |
| Net sales | 12 631 | 11 697 | 12 867 | 11 983 | 11 357 | 10 480 |
| Other operating income | 15 | 4 | 1 125 | 5 | 10 | 5 |
| Materials and services | -2 386 | -2 148 | -2 475 | -2 191 | -2 104 | -1 769 |
| Personnel expenses | -3 563 | -2 812 | -3 108 | -2 606 | -2 447 | -2 550 |
| Other operating expenses | -2 091 | -1 856 | -2 058 | -1 866 | -1 792 | -1 498 |
| Work performed by the entity and capitalised | 398 | 290 | 315 | 293 | 368 | 343 |
| Depreciation and amortisation | -677 | -552 | -635 | -586 | -538 | -576 |
| Operating profit | 4 328 | 4 624 | 6 032 | 5 030 | 4 854 | 4 436 |
| Finance income | 3 | 4 | 0 | 0 | 2 | 1 |
| Finance expenses | -279 | -265 | -259 | -290 | -306 | -337 |
| Finance income and expenses | -277 | -261 | -259 | -289 | -304 | -336 |
| Profit before income tax | 4 051 | 4 362 | 5 773 | 4 741 | 4 550 | 4 099 |
| Income tax expense | -860 | -874 | -928 | -950 | -915 | -830 |
| Profit for the period | 3 192 | 3 489 | 4 845 | 3 790 | 3 636 | 3 269 |
| Total comprehensive income for the period | 3 192 | 3 489 | 4 845 | 3 790 | 3 636 | 3 269 |
| Profit attributable to: | ||||||
| Owners of the parent company | 3 192 | 3 489 | 4 845 | 3 790 | 3 636 | 3 269 |
| Total comprehensive income attributable to: | ||||||
| Owners of the parent company | 3 192 | 3 489 | 4 845 | 3 790 | 3 636 | 3 269 |
| Earnings per share attributable to the owners of the parent during the period: | ||||||
| Basic | 0,21 | 0,32 | 0,25 | 0,24 | 0,22 | 0,21 |
| Diluted | 0,21 | 0,32 | 0,25 | 0,24 | 0,22 | 0,21 |
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Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
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4. Key financial information for the Group
| KEY INCOME STATEMENT AND CASH FLOW FIGURES AND RATIOS | ||||
|---|---|---|---|---|
| EUR million | 1.10. – 31.12.2016 | 1.10. – 31.12.2015 | 1.1. – 31.12.2016 | 1.1. – 31.12.2015 |
| Net sales | 12,6 | 11,4 | 49,2 | 43,7 |
| Growth of net sales, % | 11,2 | 7,7 | 12,5 | 5,6 |
| EBITDA | 5,0 | 5,4 | 22,5 | 18,0 |
| EBITDA margin, % | 39,6 | 47,5 | 45,7 | 41,2 |
| Adjusted EBITDA¹ | 5,1 | 5,4 | 21,7 | 20,5 |
| Adjusted EBITDA margin, %¹ | 40,2 | 47,5 | 44,1 | 47,0 |
| EBIT | 4,3 | 4,9 | 20,0 | 15,8 |
| EBIT margin, % | 34,3 | 42,7 | 40,7 | 36,1 |
| Adjusted EBIT¹ | 4,4 | 4,9 | 19,2 | 18,3 |
| Adjusted EBIT margin, %¹ | 34,8 | 42,7 | 39,1 | 41,8 |
| Free cash flow² | 4,6 | 4,7 | 17,2 | 13,8 |
| Cash conversion, %² | 92,1 | 86,6 | 76,6 | 76,5 |
| Net sales from new products and services³ | 0,6 | 1,0 | 3,6 | 3,8 |
| New products and services share of net sales, %³ | 5,0 | 8,8 | 7,4 | 8,6 |
| Net sales from value-added services | 8,4 | 6,8 | 32,2 | 26,0 |
| Value-added services share of net sales, % | 66,9 | 59,7 | 65,4 | 59,4 |
| Earnings per share, basic, EUR | 0,21 | 0,24 | 1,01 | 0,76 |
| Earnings per share, diluted, EUR | 0,21 | 0,24 | 1,01 | 0,76 |
| KEY BALANCE SHEET RATIOS | ||||
| --- | --- | --- | --- | --- |
| EUR million | 1.10. – 31.12.2016 | 1.10. – 31.12.2015 | 1.1. – 31.12.2016 | 1.1. – 31.12.2015 |
| Balance sheet total | 156,6 | 155,5 | 156,6 | 155,5 |
| Net debt | 47,0 | 48,5 | 47,0 | 48,5 |
| Net debt to adjusted EBITDA, x | 2,3 | 2,2 | 2,2 | 2,4 |
| Return on equity, % | 16,6 | 19,1 | 19,6 | 16,0 |
| Return on capital employed, % | 11,8 | 13,3 | 13,5 | 11,2 |
| Gearing, % | 59,9 | 62,1 | 59,9 | 62,1 |
| Equity ratio, % | 50,5 | 50,9 | 50,5 | 50,9 |
| Gross investments | 1,5 | 1,2 | 3,8 | 3,6 |
¹ Adjusted key figures are adjusted by following items: management fees which the Company has paid to Investcorp, the former owner of the Company, until the listing of the Company for certain ongoing advisory services, costs relating to the listing, an expense relating to the discount given to the personnel in the personnel offering, M&A related fees for legal and other advisory services, redundancy payments and compensations paid. The above listed adjusted items were EUR -0,1 million for the fourth quarter 1 October – 31 December 2016, EUR -0,0 million for the comparative period 1 October – 31 December 2015, EUR -0,3 million for the financial year 2016 and EUR -2,5 million for the comparative period 2015. Adjusted key figures for the financial year 2016 are also adjusted by the non-recurring profit on the sale of shares of office premises EUR 1,1 million.
² The impact of adjusted items on free cash flow was EUR -0,1 million for the fourth quarter 1 October – 31 December 2016, EUR -0,0 million for the comparative period 1 October – 31 December 2015, EUR -0,4 million for the financial year 2016 and EUR -2,9 million for the financial year 2015.
³ The method used for calculating the share of new products and services, the comparative figures for 1 October – 31 December 2015 and the financial year 2015 have been changed into rolling starting from 1 January 2016, so that the share include sales of products, which have been launched during the past 24 months. Earlier the share was calculated from the sales of products launched during the previous and current financial year. Figures based on the old calculation method were 4,8 % for the fourth quarter 1 October – 31 December 2016, 9,0 % for the comparative period 1 October – 31 December 2015, 6,1 % for the financial year 2016 and 7,6 % for the comparative period 1 January – 31 December 2015.
8
asiakastieto.fi
Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
23 (24)
Matching of the alternative key figures to the closest IFRS
| EBIT AND ADJUSTED EBIT | ||||
|---|---|---|---|---|
| EUR thousand | 1.10. – 31.12.2016 | 1.10. – 31.12.2015 | 1.1. – 31.12.2016 | 1.1. – 31.12.2015 |
| EBIT | 4 328 | 4 854 | 20 013 | 15 767 |
| Profit on sale of shares of office premises | - | - | -1 106 | - |
| Management fees | - | - | - | 25 |
| Listing expenses | - | - | - | 2 079 |
| Discount related to personnel offering | - | - | - | 151 |
| Fees of legal and other advisors, redundancy payments and paid compensations for damages | 69 | - | 307 | 269 |
| Adjusted EBIT | 4 397 | 4 854 | 19 214 | 18 290 |
| EBITDA AND ADJUSTED EBITDA | ||||
| --- | --- | --- | --- | --- |
| EUR thousand | 1.10. – 31.12.2016 | 1.10. – 31.12.2015 | 1.1. – 31.12.2016 | 1.1. – 31.12.2015 |
| EBIT | 4 328 | 4 854 | 20 013 | 15 767 |
| Depreciation and amortisation | 677 | 538 | 2 450 | 2 259 |
| EBITDA | 5 005 | 5 392 | 22 463 | 18 026 |
| Profit on sale of shares of office premises | - | - | -1 106 | - |
| Management fees | - | - | - | 25 |
| Listing expenses | - | - | - | 2 079 |
| Discount related to personnel offering | - | - | - | 151 |
| Fees of legal and other advisors, redundancy payments and paid compensations for damages | 69 | - | 307 | 269 |
| Adjusted EBITDA | 5 074 | 5 392 | 21 664 | 20 549 |
| FREE CASH FLOW | ||||
| --- | --- | --- | --- | --- |
| EUR thousand | 1.10. – 31.12.2016 | 1.10. – 31.12.2015 | 1.1. – 31.12.2016 | 1.1. – 31.12.2015 |
| Cash flow from operating activities | 5 746 | 4 700 | 20 779 | 15 314 |
| Paid interests and other financing expenses | 255 | 281 | 988 | 1 266 |
| Received interests and other financing income | -3 | -2 | -7 | -4 |
| Paid income taxes | 10 | - | 10 | - |
| Acquisition of tangible assets and intangible assets | -1 401 | -311 | -4 565 | -2 789 |
| Free cash flow | 4 608 | 4 667 | 17 204 | 13 787 |
asiakastieto.fi
Asiakastieto Group's Financial Statement Release
1.1. – 31.12.2016
24 (24)
FORMULAS FOR KEY FIGURES
EBITDA
Operating profit + Depreciation and amortisation
Adjusted EBITDA
EBITDA + (i) Management fees paid by the Company to Investcorp, the former owner of the Company, until the listing of the Company for advisory services, (ii) costs relating to the listing, (iii) M&A related fees for legal and other advisory services, (iv) redundancy payments, (v) compensations and (vi) expenses relating to the discount given to the personnel in the personnel offering – (vii) profit on sale of shares of office premises.
Adjusted EBIT
EBIT + (i) Management fees paid by the Company to Investcorp, the former owner of the Company, until the listing of the Company for advisory services, (ii) costs relating to the listing, (iii) M&A related fees for legal and other advisory services, (iv) redundancy payments, (v) compensations and (vi) expenses relating to the discount given to the personnel in the personnel offering – (vii) profit on sale of shares of office premises.
Net sales from new products and services
Net sales of new products and services is calculated as net sales of those products and services introduced within the past twelve months together with the increase or decrease in the past twelve months' net sales of those products and services introduced within the preceding twelve months as compared to the net sales of those products and services in the preceding twelve months.
Net sales from value-added services
Net sales generated from value-added products and services during the period
Free cash flow
Cash flow from operating activities added by paid interests and other financing expenses, deducted by received interests and other financing income, added by paid taxes and deducted by acquisition of tangible and intangible assets
Cash conversion, %
$$
\frac{\text{Free cash flow}}{\text{EBITDA}} \times 100
$$
Net debt
Interest-bearing liabilities - Cash and cash equivalents
Net debt to adjusted EBITDA, x
$$
\frac{\text{Net debt}}{\text{Adjusted EBITDA}}
$$
Return on equity, %
$$
\frac{\text{Profit (loss) for the period}}{\text{Total equity (average for the period)}} \times 100
$$
Return on capital employed, %
$$
\frac{\text{Profit (loss) before taxes + Financial expenses}}{\text{Total assets - Non-interest-bearing liabilities (average for the period)}} \times 100
$$
Gearing, %
$$
\frac{\text{Interest-bearing liabilities - Cash and cash equivalents}}{\text{Total equity}} \times 100
$$
Equity ratio, %
$$
\frac{\text{Total equity}}{\text{Total assets - Advances received}} \times 100
$$
asiakastieto.fi
Asiakastieto Group Plc | tel. +358 10 270 7000
Työpajankatu 10 A, PO Box 16, FI-00581 Helsinki
I
investors.asiakastieto.fi
Business ID: 2194007-7