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Etteplan Oyj — Interim / Quarterly Report 2021
Oct 28, 2021
3264_rns_2021-10-28_cd0f62b1-2f03-49c4-96fa-7f36c22c8ae0.pdf
Interim / Quarterly Report
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03
2021
INTERIM REPORT
JANUARY-SEPTEMBER
Good growth continued
Etteplan
Etteplan
ETTEPLAN Oyj Interim Report October 28, 2021, at 9:00 am
ETTEPLAN Q3 2021: Good growth continued
Key points July-September 2021
- The Group's revenue grew by 21.1 per cent and was EUR 66.9 million (7-9/2020: EUR 55.2 million). At comparable exchange rates, revenue increased by 20.9 per cent.
- Operating profit (EBITA) improved by 9.2 per cent and was EUR 5.7 (5.2) million, or 8.5 (9.5) per cent of revenue.
- Operating profit (EBIT) improved by 7.6 per cent and was EUR 4.6 (4.3) million, or 6.9 (7.7) per cent of revenue.
- Operating cash flow was EUR 0.2 (0.2) million.
- Basic earnings per share were EUR 0.14 (0.13).
Key points January-September 2021
- The Group's revenue grew by 13.4 per cent and was EUR 214.9 million (1-9/2020: EUR 189.4 million). At comparable exchange rates, revenue increased by 12.6 per cent.
- Operating profit (EBITA) improved by 17.1 per cent and was EUR 21.2 (18.1) million, or 9.9 (9.5) per cent of revenue.
- Operating profit (EBIT) improved by 17.2 per cent and was EUR 17.9 (15.3) million, or 8.3 (8.1) per cent of revenue.
- Operating cash flow was EUR 13.9 (20.5) million.
- Basic earnings per share were EUR 0.55 (0.46).
- Etteplan specifies its financial guidance concerning Revenue for 2021: Revenue in 2021 is estimated to be EUR 295-310 million.
Etteplan also monitors non-IFRS performance measures, because they provide additional information on Etteplan's development. More information on performance measures is provided at the end of the release.
Key figures
| EUR 1,000 | 7-9/2021 | 7-9/2020 | 1-9/2021 | 1-9/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Revenue | 66,860 | 55,221 | 214,853 | 189,408 | 259,702 |
| Operating profit (EBITA) | 5,701 | 5,222 | 21,174 | 18,087 | 26,172 |
| EBITA, % | 8.5 | 9.5 | 9.9 | 9.5 | 10.1 |
| Operating profit (EBIT) | 4,597 | 4,274 | 17,921 | 15,289 | 22,380 |
| EBIT, % | 6.9 | 7.7 | 8.3 | 8.1 | 8.6 |
| Basic earnings per share, EUR | 0.14 | 0.13 | 0.55 | 0.46 | 0.69 |
| Equity ratio, % | 42.1 | 40.1 | 42.1 | 40.1 | 40.5 |
| Operating cash flow | 227 | 206 | 13,937 | 20,485 | 37,997 |
| ROCE, % | 12.0 | 12.6 | 15.6 | 14.9 | 16.0 |
| Personnel at end of the period | 3,625 | 3,291 | 3,625 | 3,291 | 3,267 |
Etteplan Interim Report January-September 2021
Etteplan Interim Report January-September 2021
President and CEO Juha Näkki:
The third quarter of the year got off to a slower start than we expected. After a busy first half of the year, our personnel and customers took a lot of time off, which meant that the start of projects took longer than expected. The pandemic continued to have a slight impact on the market situation and the global shortage of components began to be reflected in the demand for engineering services. Some engineering projects were postponed and some were cancelled. Nevertheless, the general demand situation remained fairly good.
Our growth rate remained good in spite of minor hindrances in the market. We invested in organic growth by establishing several new teams and we continued to develop our service offering. We also made two acquisitions during the review period: we acquired Adina Solutions Oy in Finland and BST Buck Systemtechnik GmbH in Germany. Growth was particularly strong in the Software and Embedded Solutions service area, again exceeding 30 per cent.
Market hindrances and organic investments affected our operational efficiency and our profitability declined slightly. Managed services - and continuous services in particular - represent a large share of business in the Technical Documentation Solutions service area. For this reason, the impacts of the market conditions were minor and the service area again reached an excellent level of profitability that exceeded our target.
Even though the pandemic and the component shortage maintain uncertainty in the markets, the fourth quarter started in a relatively good market situation. In the beginning of the fourth quarter, pandemic-related restrictions have been lifted in most of our operating countries and the transition to the new normal has begun. Due to the slow start of the third quarter we are specifying our financial guidance regarding Revenue. Towards the end of the review period the number of new engineering projects grew at accelerated pace and our operating efficiency improved. This creates the conditions for continued profitable growth in the final quarter of the year.
Market outlook 2021
The most important factor affecting Etteplan's business is the global development of the machinery and metal industry. The prolongation of the COVID-19 pandemic continues to have an impact on the global economy and market situation. In addition, the global component shortage is also reflected in the demand for engineering services. Our customers continue to invest in digital services and engineering solutions, which is why we expect the demand situation to remain at a fairly good level during the rest of the year in spite of the uncertainties.
Specified financial guidance 2021
Etteplan changed its financial guidance practice at the beginning of 2021. Going forward, Etteplan issues guidance for revenue and operating profit (EBIT) as a numerical range. Etteplan specifies its previous guidance for Revenue and issues the following estimate:
Revenue in 2021 is estimated to be EUR 295-310 million, and
operating profit (EBIT) in 2021 is estimated to be EUR 25-28 million.
Previous financial guidance 2021 (updated on August 11, 2021)
Revenue in 2021 is estimated to be EUR 295-315 million, and
operating profit (EBIT) in 2021 is estimated to be EUR 25-28 million.
Etteplan Interim Report January-September 2021
Operating environment
The majority of Etteplan's customers are industrial companies, with several global megatrends currently influencing the development of their operating environment. For example, structural changes in the global economy, urbanization and climate change are all influencing companies, national economies and people's lives. In addition to these megatrends, the engineering industry is influenced primarily by three trends: digitalization, accelerating technological development and the lack of engineering resources. These trends are creating a need for intelligent and efficient engineering solutions in all industrial sectors. The trend of centralizing service purchasing continues as customer demand becomes increasingly international, presenting growth opportunities for global engineering companies. The continued trend of service outsourcing has a positive effect on the industry's development and it supports Etteplan's growth. As the market situation improves, competition for employees and specialized experts in certain areas is becoming tighter and affecting the development of the sector as a whole in all market areas.
The most important factor affecting Etteplan's business is the global development of the machinery and metal industry. The prolongation of the COVID-19 pandemic continues to have an impact on the global economy and market situation. Although travel restrictions have been eased, the remaining travel restrictions affect the development of demand to some degree. The situation is improving as vaccination coverage improves. In addition, the global component shortage began to be reflected in the demand for engineering services as the focus of customers' operations shifted increasingly to deliveries.
While the pandemic and the component shortage maintain uncertainty in the markets, we expect the demand situation to remain fairly good.
Development of demand by customer industry
The pandemic continues to affect demand in all customer industries, but the effects of the component shortage on different customer segments vary. Demand in the Forest, Pulp and Paper industry was at a moderate level. Demand in the Energy industry was at a moderate level. Demand in the Mining industry was at a good level. Demand in the Lifting and Hoisting industry was at a good level. Demand in the ICT industry remained good. Demand in the Automotive and Transportation industry was at a moderate level. Demand in the Chemical industry was at a good level.
Development of demand in Etteplan's operating countries
The pandemic continued to affect the market situation in many European countries. In Finland, the overall market situation remained fairly good, although the pandemic and the global component shortage affected demand and increased uncertainty.
The amount of requests for quotes received by technology industry companies continued to grow during the summer and reached a record high level. Based on the order development in the early part of the year, it is estimated that the combined revenue of technology industry companies during the remainder of the year will be higher compared to last year.
Market uncertainty also affected demand slightly in Sweden, Denmark, the Netherlands, Germany and Poland. Demand was at a good level in China.
Etteplan Interim Report January-September 2021
Revenue
Etteplan's revenue grew by 21.1 per cent in July-September and was EUR 66.9 million (7-9/2020: EUR 55.2 million). Revenue increased by 20.9 per cent at comparable exchange rates. The organic growth of revenue was 13.8 per cent. At comparable exchange rates, organic growth was 13.1 per cent. Revenue from key accounts grew by 12.0 per cent in July-September.
Etteplan's revenue grew by 13.4 per cent in January-September and was EUR 214.9 million (1-9/2020: EUR 189.4 million). Revenue increased by 12.6 per cent at comparable exchange rates. Organic growth was 6.7 per cent. At comparable exchange rates, organic growth was 5.7 per cent. Revenue from key accounts grew by 3.7 per cent in January-September.
The demand situation was fairly good during the review period. After a busy first half of the year, our personnel and customers took a lot of time off, which meant that the start of projects took longer than expected. The pandemic continued to have a slight impact on the market situation and the global shortage of components began to be reflected in the demand for engineering services. We invested in organic growth by recruiting personnel and establishing new teams. The number of subcontractors also increased, particularly in the software business. Previously completed acquisitions and outsourcing agreements had a positive effect on our development.
Etteplan's business is subject to periodic fluctuation due to the number of working days, holiday seasons and the timing of product development and investment projects in customer companies, which mainly take place in the spring and the latter part of the year. The revenue in the third quarter is typically lower than that of other quarters.
The revenue of acquired companies is not included in the organic growth of revenue for the 12 months following the acquisition. Tegema increased revenue starting from September 1, 2020, TekPartner starting from January 1, 2021, F.I.T. Fahrzeug Ingenieurtechnik GmbH starting from May 1, 2021, Skyrise.tech starting from June 1, 2021, Adina Solutions Oy starting from August 1, 2021, and BST Buck Systemtechnik GmbH starting from October 1, 2021.
Result
The slow start of projects after the summer and our investments in organic growth had an impact on our operational efficiency and profitability in the third quarter. The efficiency of our operations improved toward the end of the review period as projects got going again after the summer and holidays. At the same time, the transition to the new normal is under way and affects our cost structure.
Operating profit (EBITA) improved by 9.2 per cent in July-September and was EUR 5.7 (5.2) million, or 8.5 (9.5) per cent of revenue.
Operating profit (EBITA) improved by 17.1 per cent in January-September and was EUR 21.2 (18.1) million, or 9.9 (9.5) per cent of revenue.
Operating profit (EBIT) improved by 7.6 per cent in July-September and was EUR 4.6 (4.3) million, or 6.9 (7.7) per cent of revenue.
Operating profit (EBIT) improved by 17.2 per cent in January-September and was EUR 17.9 (15.3) million, or 8.3 (8.1) per cent of revenue.
The combined effect of non-recurring items on operating profit (EBITA) and operating profit (EBIT) was EUR -0.2 (-0.1) million in July-September and EUR -0.6 (-0.6) million in January-September. The non-recurring costs were related to acquisitions and organizational restructuring.
Etteplan Interim Report January-September 2021
5
Etteplan
In January-September, financial expenses amounted to EUR 1.0 (1.1) million.
Profit before taxes for January-September was EUR 17.2 (14.5) million. Taxes in the income statement amounted to 20.5 (21.6) per cent of the result before taxes. The amount of taxes was EUR 3.5 (3.1) million.
The profit for January-September was EUR 13.7 (11.4) million.
Basic earnings per share were EUR 0.14 (0.13) in July-September and EUR 0.55 (0.46) in January-September. Equity per share was EUR 3.72 (3.18) at the end of September. Return on capital employed (ROCE) before taxes was 12.0 (12.6) per cent in July-September and 15.6 (14.9) per cent in January-September.
Cash flow and financial position
Operating cash flow in the third quarter was on a par with the comparison period, amounting to EUR 0.2 (0.2) million in July-September. Cash flow after investments was EUR -1.8 (-4.4) million in July-September.
Operating cash flow was EUR 13.9 million (20.5) in January-September. Cash flow after investments was EUR -1.7 (13.3) million in January-September. Operating cash flow was exceptionally strong in the second quarter in 2020 due to pandemic related adjustment measures.
Operating cash flow accrues unevenly over the four quarters of the year due to periodic fluctuation in business.
The Group's cash and cash equivalents stood at EUR 9.2 (15.4) million at the end of September.
The Group's interest-bearing debt amounted to EUR 66.7 (66.9) million at the end of September. Lease liabilities represented EUR 23.0 (21.2) million of interest-bearing liabilities.
The total of unused short-term credit facilities stood at EUR 7.8 (13.0) million.
Total assets on September 30, 2021, were EUR 223.8 (201.3) million. Goodwill on the balance sheet was EUR 93.0 (82.0) million.
At the end of September, the equity ratio was 42.1 (40.1) per cent.
Capital expenditure
The Group's gross investments in January-September were EUR 27.0 (22.3) million. The gross investments mainly consisted of acquisition-related items, increases in lease liabilities and equipment purchases.
Personnel
The number of personnel stood at 3,625 employees at the end of September 2021 (September 30, 2020: 3,291 employees). The number of personnel increased by 11.0 per cent compared to the end of 2020 and by 10.1 per cent compared to the end of September 2020. The Group employed 3,429 (3,337) people on average in January-September.
The number of people employed by the Group outside of Finland increased and stood at 1,614 (1,340) at the end of September.
Etteplan Interim Report January-September 2021
As the demand situation improved at the end of the 2020 and in 2021, we have called most of the temporarily laid off employees back to work. At the end of September 2021, only 17 employees were temporarily laid off. The number of temporarily laid off employees in Finland, Sweden and Germany reached 402 at its highest in 2020.
As vaccination coverage has improved and the remote work recommendations are no longer in effect, the transition to the new normal has begun. We expect our personnel to return partly to in-office work, but remote work will remain a part of our flexible work model. We have invested in the management and development of remote work and we will benefit from these investments as business settles into the new normal when the pandemic abates.
Business review
Etteplan published its renewed strategy, Increasing value for customers, and updated its financial targets in December 2019. Etteplan began preparations and planning related to the renewed strategy, but many projects were suspended due to attention being shifted to the COVID-19 pandemic. Measures aimed at implementing the strategy have continued again after the pandemic eased up slightly starting from late 2020. In the third quarter of 2021, investments in organic growth were continued by establishing several new teams and developing the service offering. We believe the renewed strategy will drive the success of the company also after the pandemic.
The key objective of the company's strategy is to create even higher value for customers and support them in the industrial change. The three key elements of our strategy are customer value, service solutions and success with people. The most important focus areas of growth are the continuous development of service solutions, digitalization and international growth.
Etteplan's customers are investing in digitalization and intelligent devices, which presents significant growth opportunities for the company. In recent years, Etteplan has also invested in digitalization and software development with the aim of expanding its service offering and competence capital in order to respond to the digitalization needs of customers. At the same time, we are investing in organic growth as well as the development of our own business and increasing its rate of digitalization.
We continue the development of technology solutions as part of our service solutions. We are strengthening our expertise in areas such as additive manufacturing, digital twin solutions, artificial intelligence and other digital technologies.
Etteplan's target is to achieve revenue of EUR 500 million by 2024. We seek growth organically and by acquisitions. In the third quarter of the year, we continued recruitment and carried out two acquisitions.
Etteplan's goal is to grow internationally, provide solutions from all of the company's service areas in all of its market areas and increase the share of revenue accumulated outside Finland to 50 per cent. In July-September, revenue accumulated outside Finland amounted to EUR 29.7 (21.6) million, or 44 (39) per cent of the Group's total revenue. In January-September, revenue accumulated outside Finland amounted to EUR 92.9 (71.7) million, or 43 (38) per cent of the Group's total revenue.
The development of the Chinese market was excellent, with the number of hours sold increasing by 46.8 per cent in July-September and by 66.2 per cent in January-September.
Etteplan's target is to increase the share of revenue represented by Managed Services to 75 per cent. The share of Managed Services remained largely unchanged and stood at 63 (60) per cent in July-September and 63 (60) per cent in January-September.
Etteplan Interim Report January-September 2021
Etteplan
The company targets an operating profit (EBITA) level of 10 per cent of revenue. The growth in the share of Managed Services enhances Etteplan's capacity management and improves profitability.
Acquisitions
In September 2021, Etteplan acquired BST Buck Systemtechnik GmbH, a company located in Brunsbüttel in the northern part of Germany. The company specializes in Software Development, Process Automation & Hardware Engineering and employs slightly more than 30 specialists. BST Buck Systemtechnik GmbH's customers operate in the Chemical, Pharmaceutical, Energy and Food & Beverage industries.
In August 2021, Etteplan strengthened its know-how in the technical documentation of software by acquiring Adina Solutions Oy from Finland. Established in 2016, Adina Solutions Oy specializes in the planning and implementation of technical documentation for software, content localization as well as consulting and training. Originating from Tampere, Finland, Adina Solutions Oy employs a total of 13 content producers and technical communications professionals. Its clientele consists mainly of software companies and equipment manufacturers.
In June 2021, Etteplan acquired the Polish software development company Skyrise.tech. In 2020, Skyrise.tech's revenue amounted to approximately EUR 3.5 million and it employed approximately 80 specialists and partners. The acquisition involves a directed share issue to the owners of the acquired company. Read more on page 13.
In May 2021, Etteplan strengthened its position in the technical documentation market in Germany by acquiring F.I.T. Fahrzeug Ingenieurtechnik GmbH. The company employs approximately 15 specialists.
In January 2021, Etteplan acquired the Denmark-based software development company TekPartner. The company's revenue in 2019 amounted to approximately EUR 8 million and it delivers its services through a combination of its own team of 19 highly qualified professionals and a network of partners.
In September 2020, Etteplan started the provision of engineering services in the Netherlands by acquiring the Netherlands-based company Tegema, which employs approximately 100 people.
Etteplan
Development of the service areas
Engineering Solutions
Engineering Solutions refer to the innovation, engineering and calculations of the technical attributes of machinery or equipment for the purpose of product development and manufacturing. Assignments are typically product development projects for a new product, plant engineering projects or Engineering-to-Order projects, involving the customization of the product in accordance with end customer requirements and the market area's legislation.
| EUR 1,000 | 7-9/2021 | 7-9/2020 | Change | 1-9/2021 | 1-9/2020 | Change | 1-12/2020 |
|---|---|---|---|---|---|---|---|
| Revenue | 36,931 | 31,036 | 19.0% | 120,355 | 108,292 | 11.1% | 148,884 |
| Operating profit (EBITA) | 3,040 | 2,797 | 8.7% | 11,605 | 10,430 | 11.3% | 14,679 |
| EBITA, % | 8.2 | 9.0 | 9.6 | 9.6 | 9.9 | ||
| Managed Services index | 64 | 58 | 64 | 58 | 59 | ||
| Personnel at end of the period | 2,071 | 1,946 | 6.4% | 2,071 | 1,946 | 6.4% | 1,922 |
The figures for Tegema, acquired in September 2020, are included in the Engineering Solutions service area's figures starting from September 1, 2020, and BST Buck Systemtechnik GmbH starting from October 1, 2021.
The share of Etteplan's revenue represented by Engineering Solutions was 55 (56) per cent in July-September and 56 (57) per cent in January-September.
The service area's revenue increased by 19.0 per cent in July-September and amounted to EUR 36.9 (31.0) million. In January-September, revenue increased by 11.1 per cent and was EUR 120.4 (108.3) million.
The demand situation in the Engineering Solutions service area remained fairly good in the third quarter, although development was affected by the component shortage and the slow start of projects after the summer. We invested in recruitment and established new teams. We have also been successful in the sales of our outsourcing solutions and signed several outsourcing agreements during the year.
The Engineering Solutions service area's operating profit (EBITA) in July-September was EUR 3.0 (2.8) million, or 8.2 (9.0) per cent of revenue. The slow start of projects after the summer weakened operational efficiency and also affected the service area's profitability. Challenges in one project continued to affect profitability to a slight extent. In January-September, operating profit (EBITA) was EUR 11.6 (10.4) million, or 9.6 (9.6) per cent of revenue.
The Engineering Solutions service area had 2,071 (1,946) employees at the end of September.
The Managed Services Index (MSI), which reflects the share of the service area's revenue represented by Managed Services, was 64 (58) per cent in July-September and 64 (58) per cent in January-September.
Etteplan and Digital Metal, a global leader in the development and manufacturing of high-precision metal binder jetting systems for industrial use, have agreed to enter into a strategic partnership in additive manufacturing. The partnership aims to offer design optimization solutions for Digital Metal binder jetting processes and to offer manufacturing companies the full benefit of the technology – from idea to complete component with volume production in mind.
Etteplan Interim Report January-September 2021
Etteplan
Software and Embedded Solutions
Software and Embedded Solutions provides product development services as well as software and technology solutions that enable the digitalization of customers' business processes along with the intelligence and connectivity of machinery and equipment. A typical challenge involves the need to increase the efficiency of business processes or manufacturing or create new products for the market. Through system integration, we can ensure better customer service, cost-efficiency or the creation of new income streams through digitalization.
| EUR 1,000 | 7-9/2021 | 7-9/2020 | Change | 1-9/2021 | 1-9/2020 | Change | 1-12/2020 |
|---|---|---|---|---|---|---|---|
| Revenue | 18,081 | 13,814 | 30.9% | 56,755 | 46,014 | 23.3% | 63,694 |
| Operating profit (EBITA) | 1,638 | 1,441 | 13.7% | 5,898 | 4,667 | 26.4% | 7,101 |
| EBITA, % | 9.1 | 10.4 | 10.4 | 10.1 | 11.1 | ||
| Managed Services index | 49 | 52 | 49 | 52 | 51 | ||
| Personnel at end of the period | 762 | 627 | 21.5% | 762 | 627 | 21.5% | 628 |
The figures for TekPartner, acquired in January 2021, are included in the Software and Embedded Solutions service area's figures starting from January 1, 2021. The figures for Skyrise.tech, acquired in June 2021, are included in the service area's figures starting from June 1, 2021.
The share of the Group's total revenue represented by Software and Embedded Solutions was 27 (25) per cent in July-September and 27 (24) per cent in January-September.
The service area's revenue increased by 30.9 per cent July-September and was EUR 18.1 (13.8) million. In January-September, revenue increased by 23.3 per cent and was EUR 56.8 (46.0) million.
The demand situation in the Software and Embedded Solutions service area remained good, although development was affected to some degree by the component shortage and the slow start of projects after the summer. We invested in organic growth through recruitment and by establishing several new teams, in Sweden for example.
We acquired the Polish software development company Skyrise.tech in June 2021. The acquisition significantly strengthened our capability to deliver applications and cloud software solutions and opens up many interesting growth opportunities. The integration of the company into Etteplan is progressing as planned. TekPartner, which we acquired in Denmark in January, now operates under the Etteplan brand and the other aspects of integration are progressing as planned.
Our customers are investing in digital solutions and, for Etteplan, this represents a growth opportunity and an increased need for recruitment as the reduced availability of competent professionals influences the service area's business operations. For this reason, we have increased the use of subcontractors. We currently have over 200 subcontractors and partners. The operating models of TekPartner and Skyrise.tech have also increased the share of subcontracting of the service area's revenue.
The Software and Embedded Solutions service area's operating profit (EBITA) improved by 13.7 per cent in the third quarter and amounted to EUR 1.6 (1.4) million, or 9.1 (10.4) per cent of revenue, in July-September. Profitability was affected by our investments in growth and the increased use of subcontracting. Operational efficiency declined slightly from the previous good level due to the slow start of projects after the summer and the component shortage.
Etteplan Interim Report January-September 2021
Etteplan
In January-September, operating profit (EBITA) improved by 26.4 per cent and amounted to EUR 5.9 (4.7) million.
The number of personnel in the Software and Embedded Solutions service area increased due to acquisitions and recruitment and stood at 762 (627) at the end of September.
The Managed Services Index (MSI), which reflects the share of the service area's revenue represented by Managed Services, was 49 (52) per cent in July-September and 49 (52) per cent in January-September.
Technical Documentation Solutions
Technical Documentation Solutions refer to the user manuals for individual products or the documentation and information management of the technical attributes of production facilities, such as factories. The service also covers content production and distribution in print and digital form. For an industrial customer, good technical documentation can lift the value of their products and ensure their products are used in the right way. We provide customers ways to improve cost efficiency and lead times, increase quality, and decrease the environmental footprint.
| EUR 1,000 | 7-9/2021 | 7-9/2020 | Change | 1-9/2021 | 1-9/2020 | Change | 1-12/2020 |
|---|---|---|---|---|---|---|---|
| Revenue | 11,762 | 10,222 | 15.1% | 37,282 | 34,661 | 7.6% | 46,531 |
| Operating profit (EBITA) | 1,202 | 955 | 25.9% | 4,211 | 3,279 | 28.4% | 4,583 |
| EBITA, % | 10.2 | 9.3 | 11.3 | 9.5 | 9.8 | ||
| Managed Services index | 83 | 80 | 83 | 80 | 80 | ||
| Personnel at end of the period | 669 | 620 | 7.9% | 669 | 620 | 7.9% | 616 |
The figures for F.I.T. Fahrzeug Ingenieurtechnik GmbH, acquired in May 2021, are included in the Technical Documentation Solutions service area's figures starting from May 1, 2021, and the figures for Adina Solutions, acquired in August 2021, are included starting from August 1, 2021.
The share of the Group's total revenue represented by Technical Documentation Solutions was 18 (19) per cent in July-September and 17 (19) per cent in January-September.
The slow start of projects that affected the development of the other service areas did not have the same impact on the Technical Documentation Solutions service area due to the high share of Managed Services and continuous services in particular. The component shortage had a slight effect on the service area's development.
The Technical Documentation Solutions service area's demand situation was good and revenue increased by 15.1 per cent in July-September, amounting to EUR 11.8 (10.2) million. In January-September, revenue increased by 7.6 per cent and was EUR 37.3 (34.7) million.
The Technical Documentation Solutions service area's operating profit (EBITA) improved by 25.9 per cent in July-September and was EUR 1.2 (1.0) million, or 10.2 (9.3) per cent of revenue. In January-September, operating profit (EBITA) improved by 28.4 per cent and was EUR 4.2 (3.3) million, or 11.3 (9.5) per cent of revenue. Profitability was at a good level thanks to good operational efficiency. The Managed Services Index (MSI), which reflects the share of the service area's revenue represented by Managed Services, grew and amounted to 83 (80) per cent in July-September and 83 (80) per cent in January-September. The increased share of revenue represented by Managed Services had a positive effect on profitability.
Etteplan Interim Report January-September 2021
Etteplan
We strengthened our know-how in the technical documentation of software in August by acquiring Adina Solutions Oy from Finland. The integration of Adina into Etteplan is progressing quickly as planned. In May 2021, we strengthened our position in the technical documentation market in Germany by acquiring F.I.T. Fahrzeug Ingenieurtechnik GmbH. The integration of F.I.T. into Etteplan is progressing as planned.
The Etteplan HowTo service we launched at the beginning of March has attracted widespread interest. We have created several test versions and implemented two full-scale solutions. This completely new cloud-based solution enables the efficient creation, secure hosting and on-demand multi-channel global distribution of technical information for industrial equipment and other needs of the manufacturing industry.
The Technical Documentation Solutions service area had 669 (620) employees at the end of September.
GOVERNANCE
Simplifying the Group structure
As a result of acquisitions made in the past few years, Etteplan has several legal entities in different countries. We aim to improve the efficiency of our operations by simplifying the Group's legal structure. We have started projects this year in the Netherlands, Germany and Finland. The changes will improve the efficiency of our internal operations, simplify the implementation of our customer projects and ensure equal treatment for our personnel.
GENERAL MEETING
Etteplan Oyj's Annual General Meeting was held on April 8, 2021. The Annual General Meeting approved the financial statements and discharged the members of the Board of Directors and the President and CEO from liability for the financial year 2020.
The Annual General Meeting resolved, in accordance with the proposal of the Board of Directors, to pay a dividend of EUR 0.34 per share for the financial year 2020 and to leave the remaining funds in unrestricted equity. The dividend decided on by the Annual General Meeting was paid to the shareholders registered on the record date in the shareholders' register maintained by Euroclear Finland Ltd. The record date for the dividend payout was April 12, 2021, and the date of dividend payout was April 19, 2021.
In accordance with the proposal of Etteplan's Nomination and Remuneration Committee, the Annual General Meeting resolved that the Board of Directors shall consist of five members. In accordance with the proposal of the Nomination and Remuneration Committee, the Annual General Meeting resolved on the annual remuneration of the members of the Board of Directors, the Chairman of the Board and the members of the Nomination and Remuneration Committee and the Audit Committee.
In accordance with the proposal of the Nomination and Remuneration Committee of the Board of Directors, the Annual General Meeting re-elected Matti Huttunen, Robert Ingman, Päivi Lindqvist, Leena Saarinen and Mikko Tepponen as members of the Board of Directors. KPMG Oy Ab, Authorized Public Accountants, with Authorized Public Accountant Kim Järvi as the main responsible auditor, was elected as the Company's auditor.
In its organization meeting subsequent to the Annual General Meeting, the Board of Directors of Etteplan Oyj elected Robert Ingman as Chairman of the Board of Directors. Matti Huttunen was
Etteplan Interim Report January-September 2021
Etteplan
elected the Chairman and Robert Ingman and Leena Saarinen as members of the Nomination and Remuneration Committee of Etteplan Oyj. Leena Saarinen was elected the Chairman and Päivi Lindqvist and Mikko Tepponen as members of the Audit Committee of Etteplan Oyj.
Board authorizations
The Annual General Meeting 2021 authorized the Board of Directors to resolve on the repurchase of the company's own shares in one or more tranches using the company's unrestricted equity. A maximum of 2,000,000 shares in the company may be repurchased. The company may deviate from the obligation to repurchase shares in proportion to the shareholders' current holdings, i.e. the Board has the right to decide on a directed repurchase of the company's own shares.
The authorization includes the right for the Board to resolve on the repurchase of the Company's own shares through a tender offer made to all shareholders on equal terms and conditions and at the price determined by the Board, or in public trading organized by the Nasdaq Helsinki Ltd at the market price valid at any given time, so that the company's total holding of own shares does not exceed ten (10) per cent of all the shares in the company. The minimum price for the shares to be repurchased is the lowest market price quoted for the shares in the company in public trading and, correspondingly, the maximum price is the highest market price quoted for the shares in the company in public trading during the validity of the authorization.
Should the shares in the company be repurchased in public trading, such shares will not be purchased in proportion to the shareholders' current holdings. In that case, there must be a weighty financial reason for the company to repurchase its own shares. The shares may be repurchased in order to be used as consideration in potential acquisitions or in other structural arrangements. The shares may also be used for carrying out the company's incentive schemes for its personnel. The repurchased shares may be retained by the company, invalidated or transferred further. The repurchase of the company's own shares will reduce the non-restricted equity of the company.
The authorization is valid for 18 months from the date of the resolution of the Annual General Meeting starting on April 8, 2021, and ending on October 7, 2022. The authorization replaces the corresponding previous authorization.
The Annual General Meeting 2021 decided to authorize the Board of Directors to resolve on the issuance of a maximum of 2,500,000 shares through issuance of shares, option rights or other special rights entitling to shares under Chapter 10, Section 1 of the Finnish Companies Act in one or more issues. The authorization includes the right to decide to issue either new shares or shares held by the company.
The authorization includes the right to deviate from the existing shareholders' pre-emptive subscription right as set forth in Chapter 9, Article 3 of the Companies Act. Therefore, the Board of Directors has the right to direct the share issue, or issuance of the option rights or other special rights conferring entitlement to shares. The authorization also includes the right to decide on all the terms of share issue, option rights or other special rights conferring entitlement to shares. The authorization therefore includes the right to determine share subscription prices, persons entitled to subscribe the shares and other terms and conditions applicable to the subscription. In order to deviate from the shareholders' pre-emptive subscription right, the company must have a
Etteplan Interim Report January-September 2021
Etteplan Interim Report January-September 2021
weighty financial reason such as financing of a company acquisition, other arrangement in connection with the development of the company's business or equity or an incentive scheme to the personnel. In connection with the share issuance, the Board of Directors is entitled to decide that the shares may be subscribed against contribution in kind or otherwise under special terms and conditions. The authorization includes the right to determine whether the subscription price will be entered into the share capital or into the unrestricted equity fund.
The authorization is valid for two (2) years from the date of the resolution of the Annual General Meeting, starting on April 8, 2021, and ending on April 7, 2023.
SHARES
Etteplan's shares are listed in Nasdaq Helsinki Ltd's Mid Cap market capitalization group in the Industrials sector under the ETTE ticker. The company has one series of shares. All shares confer an equal right to a dividend and the company's funds.
The company's share capital on September 30, 2021, was EUR 5,000,000.00 and the total number of shares was 25,083,308.
In a stock exchange release published on June 14, 2021, Etteplan announced it had acquired the Polish software development company Skyrise.tech and would carry out a directed share issue to the owners of the acquired company. In accordance with the terms of the share issue, Etteplan offered 120,000 new Etteplan shares for subscription to the owners of Skyrise.tech.
In its meeting on June 17, 2021, Etteplan's Board of Directors resolved on the final terms of the directed share issue pursuant to the share issue authorization granted to it by the Annual General Meeting of Shareholders held on April 8, 2021. The key terms of the share issue were announced in a stock exchange release on June 17, 2021.
The shares were entered in the trade register on August 18, 2021, and issued in the form of book-entry securities in the book-entry securities system maintained by Euroclear Finland Oy in the beginning of September.
The shares were conveyed and they bear all shareholder rights starting from their entry into the trade register. However, trading in the new shares will only be possible after the expiration of the three-year lock-up period agreed upon at the time of the transaction.
After the directed share issue, Etteplan's Board of Directors may, based on the authorization granted by the Annual General Meeting 2021, decide on the issuance of a maximum of 2,380,000 more shares through issuance of shares or in another manner specified in the authorization. The Annual General Meeting 2021 decided to authorize the Board of Directors to resolve on the issuance of a maximum of 2,500,000 shares through issuance of shares or option rights.
Trading in shares
The number of Etteplan Oyj shares traded in January-September was 1,263,705 (1-9/2020: 1,112,119), for a total value of EUR 20.36 (9.92) million. The share price low was EUR 12.95, the high EUR 19.45, the average EUR 16.13 and the closing price EUR 18.05. Market capitalization on September 30, 2021, was EUR 450.18 (230.43) million. On September 30, 2021, Etteplan had 3,596 shareholders (September 30, 2020: 3,319).
Etteplan Interim Report January-September 2021
Share repurchase program
In its meeting on May 21, 2021, Etteplan Oyj's Board of Directors decided to initiate a share repurchase program of Etteplan's own shares in accordance with the authorization given to it at the Annual General Meeting on April 8, 2021. The shares are repurchased in order to be used to fulfill obligations pertaining to the share-based incentive plan for the Group's key personnel. The number of repurchased shares will not exceed 80,000 shares and the corresponding number of voting rights, which corresponds to approximately 0.32 per cent of the current total number of Etteplan's shares. According to the Board's decision, the maximum repurchase price is EUR 19.00 per share. Shares will be repurchased on NASDAQ OMX Helsinki at the market price quoted at the time of the repurchase, as provided by the regulations on public trading of shares.
The repurchasing of shares began on May 21, 2021, and ended on October 12, 2021, when the maximum amount of repurchased shares was reached.
Etteplan repurchased a total of 63,769 of the company's own shares in January-September 2021. The company held 142,815 of its own shares on September 30, 2021 (September 30, 2020: 79,046), which corresponds to 0.57 per cent of all shares and voting rights. After the end of the share repurchase program on October 12, 2021, the company holds 159,046 of its own shares, which corresponds to 0.63 per cent of all shares and voting rights.
Flaggings
Etteplan Oyj received no flagging notices in January-September 2021.
Etteplan Oyj's incentive plan for key personnel 2020-2022
On February 5, 2020, Etteplan's Board of Directors resolved to establish a new share-based incentive plan for the Group key personnel. The aim of the plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the company, to commit the key personnel to the company, and to offer them a competitive reward plan based on holding the company shares.
The plan includes one earning period which comprises calendar years 2020-2022. The earning period covers the same years as Etteplan's strategy update published in March 2019. The plan is in line with Etteplan's strategy and supports the achievement of the company's financial targets.
The earning criteria are Etteplan Group's revenue increase and the development of Total Shareholder Return (TSR). The potential reward will be paid partly in the company's shares and partly in cash after the end of the earning period. The proportion to be paid in cash is intended to cover taxes and tax-related costs arising from the reward to the key personnel.
Approximately 25 people belong to the plan, including the Management Group of Etteplan. The rewards to be paid on the basis of the plan will correspond to the value of an approximate maximum total of 390,000 Etteplan Oyj shares (including also the proportion to be paid in cash). The shares to be paid out as potential rewards will be transferred from the shares held by the company or shares acquired from the market, and therefore the incentive plan will have no diluting effect on the share value.
Etteplan Interim Report January-September 2021
Operating risks and uncertainty factors
Etteplan's financial results are exposed to a number of strategic, operational and financial risks. The uncertainties caused by the general economic development continue to constitute risks for Etteplan's business. The possibility of changes in customers' business operations is a significant risk to Etteplan's operations. The company's operations are based on skilled staff. The availability of competent professionals is an important factor for ensuring profitable growth and operations. The increased difficulties in recruiting professional staff, particularly in certain expert disciplines, continues to present a business risk. The COVID-19 pandemic continues to have an impact on Etteplan's business and the prolongation of the situation would have a negative impact on the company's development. The component shortage prevailing around the world is slowing down the market.
Etteplan assesses business risks annually and actively monitors their development during the year. The focus of the assessment is particularly on monitoring changes in already identified risks, identifying new business risks and developing proactive risk management. The results of the assessment are presented in Etteplan's Corporate Governance Statement.
Financial information in 2022
Financial Statements Release: Thursday, February 10, 2022
Financial Statements and Annual Report: week 11/2022
Annual General Meeting 2022: Wednesday, April 6, 2022
January-March 2022 Interim Report: Thursday, May 5, 2022
January-June 2022 Half Year Financial Report: Wednesday, August 10, 2022
January-September 2022 Interim Report: Friday, October 28, 2022
Espoo, October 28, 2021
Etteplan Oyj
Board of Directors
Additional information:
Juha Näkki, President and CEO, tel. +358 10 307 2077
Outi Torniainen, SVP, Communications and Marketing, tel. +358 10 307 3302
The information presented herein has not been audited.
Releases and other corporate information are available on Etteplan's website at www.etteplan.com.
Etteplan Interim Report January-September 2021
Etteplan
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| EUR 1,000 | 7-9/2021 | 7-9/2020 | 1-9/2021 | 1-9/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Revenue | 66,860 | 55,221 | 214,853 | 189,408 | 259,702 |
| Other operating income | 310 | 1,184 | 841 | 2,138 | 3,622 |
| Materials and services | -7,384 | -5,009 | -22,083 | -16,378 | -23,317 |
| Employee benefits expenses | -44,045 | -37,935 | -142,883 | -130,499 | -177,301 |
| Other operating expenses | -6,619 | -4,345 | -19,509 | -15,966 | -22,300 |
| Depreciation and amortization | -4,524 | -4,842 | -13,299 | -13,415 | -18,026 |
| Operating profit (EBIT) | 4,597 | 4,274 | 17,921 | 15,289 | 22,380 |
| Financial income | 77 | 118 | 302 | 286 | 422 |
| Financial expenses | -251 | -403 | -1,016 | -1,053 | -1,722 |
| Profit before taxes | 4,423 | 3,989 | 17,206 | 14,521 | 21,080 |
| Income taxes | -981 | -740 | -3,531 | -3,135 | -4,003 |
| Profit for the review period | 3,442 | 3,249 | 13,675 | 11,386 | 17,077 |
| Other comprehensive income, that may be reclassified to profit or loss | |||||
| Currency translation differences | -332 | -336 | -487 | -599 | 1,415 |
| Other comprehensive income, that will not be reclassified to profit or loss | |||||
| Change in fair value of equity investments at fair value through other comprehensive income | 10 | -7 | 29 | -2 | -7 |
| Other comprehensive income, net of tax | -322 | -343 | -458 | -601 | 1,409 |
| Total comprehensive income for the review period | 3,120 | 2,906 | 13,217 | 10,785 | 18,486 |
| Profit for the review period attributable to | |||||
| Equity holders of the parent company | 3,442 | 3,249 | 13,675 | 11,386 | 17,077 |
| Total comprehensive income for the review period attributable to | |||||
| Equity holders of the parent company | 3,120 | 2,906 | 13,217 | 10,785 | 18,486 |
| Earnings per share calculated from the profit attributable to equity holders of the parent company | |||||
| Basic earnings per share, EUR | 0.14 | 0.13 | 0.55 | 0.46 | 0.69 |
| Diluted earnings per share, EUR | 0.14 | 0.13 | 0.55 | 0.46 | 0.69 |
Etteplan Interim Report January-September 2021
Etteplan
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR 1,000 | Sep 30, 2021 | Sep 30, 2020 | Dec 31, 2020 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 92,965 | 82,002 | 83,685 |
| Other intangible assets | 29,204 | 27,206 | 26,011 |
| Tangible assets | 24,825 | 22,365 | 25,698 |
| Investments at fair value through other comprehensive income | 414 | 384 | 378 |
| Other non-current receivables | 54 | 54 | 54 |
| Deferred tax assets | 648 | 305 | 493 |
| Non-current assets, total | 148,110 | 132,315 | 136,320 |
| Current assets | |||
| Inventory | 358 | 345 | 336 |
| Work in progress | 31,017 | 25,555 | 17,764 |
| Trade and other receivables | 35,009 | 27,460 | 38,883 |
| Current tax assets | 43 | 272 | 208 |
| Cash and cash equivalents | 9,215 | 15,353 | 24,407 |
| Current assets, total | 75,642 | 68,985 | 81,598 |
| TOTAL ASSETS | 223,752 | 201,300 | 217,918 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 5,000 | 5,000 | 5,000 |
| Share premium account | 6,701 | 6,701 | 6,701 |
| Unrestricted equity fund | 22,037 | 20,101 | 20,101 |
| Own shares | -1,050 | -347 | -124 |
| Cumulative translation adjustment | -3,371 | -4,898 | -2,884 |
| Other reserves | 130 | 106 | 101 |
| Retained earnings | 63,392 | 52,486 | 58,178 |
| Equity, total | 92,839 | 79,149 | 87,074 |
| Non-current liabilities | |||
| Deferred tax liabilities | 7,227 | 6,457 | 6,502 |
| Loans from financial institutions | 8,100 | 14,600 | 12,900 |
| Lease liabilities | 8,726 | 8,660 | 8,608 |
| Other non-current liabilities | 1,236 | 27 | 27 |
| Non-current liabilities, total | 25,290 | 29,744 | 28,038 |
| Current liabilities | |||
| Loans from financial institutions | 35,581 | 31,167 | 27,583 |
| Lease liabilities | 14,278 | 12,517 | 15,883 |
| Advances received | 3,060 | 3,777 | 2,770 |
| Trade and other payables | 50,450 | 42,847 | 54,608 |
| Current income tax liabilities | 2,254 | 2,098 | 1,962 |
| Current liabilities, total | 105,623 | 92,406 | 102,806 |
| Liabilities, total | 130,913 | 122,150 | 130,844 |
| TOTAL EQUITY AND LIABILITIES | 223,752 | 201,300 | 217,918 |
Etteplan Interim Report January-September 2021
Etteplan
CONSOLIDATED STATEMENT OF CASH FLOWS
| EUR 1,000 | 7-9/2021 | 7-9/2020 | 1-9/2021 | 1-9/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Operating cash flow | |||||
| Cash receipts from customers | 66,454 | 58,592 | 209,142 | 200,664 | 267,784 |
| Operating expenses paid | -64,888 | -57,502 | -190,328 | -175,620 | -223,600 |
| Operating cash flow before financial items and taxes | 1,566 | 1,090 | 18,814 | 25,044 | 44,184 |
| Interests and other payments for financial expenses | -330 | -206 | -840 | -869 | -1,257 |
| Interest received | 14 | 27 | 70 | 60 | 79 |
| Income taxes paid | -1,023 | -704 | -4,107 | -3,749 | -5,010 |
| Operating cash flow (A) | 227 | 206 | 13,937 | 20,485 | 37,997 |
| Investing cash flow | |||||
| Purchase of tangible and intangible assets | -360 | -397 | -1,505 | -1,372 | -1,639 |
| Acquisition of subsidiaries, net of cash acquired | -1,624 | -4,258 | -14,255 | -5,885 | -5,885 |
| Proceeds from sale of tangible and intangible assets | 2 | 0 | 65 | 36 | 30 |
| Proceeds from repayment of loans | 0 | 0 | 74 | 0 | 0 |
| Investing cash flow (B) | -1,983 | -4,656 | -15,622 | -7,221 | -7,494 |
| Cash flow after investments (A+B) | -1,756 | -4,450 | -1,685 | 13,264 | 30,503 |
| Financing cash flow | |||||
| Proceeds from directed share issue | 0 | 0 | 1,936 | 0 | 0 |
| Purchase of own shares | -754 | 0 | -1,085 | 0 | 0 |
| Proceeds from current loans | 3,501 | 2,482 | 6,955 | 13,339 | 11,698 |
| Repayments of current loans | -2,273 | -4,572 | -15,175 | -8,587 | -12,217 |
| Proceeds from non-current loans | 0 | 0 | 11,000 | 0 | 0 |
| Repayments of non-current loans | 0 | -695 | 0 | -695 | -695 |
| Payment of lease liabilities | -2,603 | -3,370 | -8,666 | -9,077 | -12,131 |
| Dividend paid | 0 | 0 | -8,461 | -8,682 | -8,682 |
| Financing cash flow (C) | -2,129 | -6,155 | -13,496 | -13,702 | -22,028 |
| Variation in cash (A+B+C) increase (+) / decrease (-) | -3,885 | -10,605 | -15,181 | -439 | 8,475 |
| Assets at the beginning of the period | 13,105 | 26,162 | 24,407 | 15,878 | 15,878 |
| Exchange gains or losses | -5 | -204 | -11 | -86 | 55 |
| Assets at the end of the period | 9,215 | 15,353 | 9,215 | 15,353 | 24,407 |
Etteplan Interim Report January-September 2021
Etteplan
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Legends for table columns
A) Share Capital
E) Own Shares
B) Share Premium Account
F) Cumulative Translation Adjustment
C) Unrestricted Equity Fund
G) Retained Earnings
D) Other Reserves
H) Capital attributable to equity holders of the parent company, total
| EUR 1,000 | A | B | C | D | E | F | G | H |
|---|---|---|---|---|---|---|---|---|
| Equity Jan 1, 2020 | 5,000 | 6,701 | 20,101 | 108 | -700 | -4,299 | 49,829 | 76,740 |
| Comprehensive income | ||||||||
| Profit for the review period | 0 | 0 | 0 | 0 | 0 | 0 | 17,077 | 17,077 |
| Other comprehensive income | ||||||||
| Change in fair value of equity investments at fair value through other comprehensive income | 0 | 0 | 0 | -7 | 0 | 0 | 0 | -7 |
| Cumulative translation adjustment | 0 | 0 | 0 | 0 | 0 | 1,415 | 0 | 1,415 |
| Other comprehensive income, net of tax | 0 | 0 | 0 | -7 | 0 | 1,415 | 0 | 1,409 |
| Total comprehensive income for the review period | 0 | 0 | 0 | -7 | 0 | 1,415 | 17,077 | 18,486 |
| Transactions with owners | ||||||||
| Dividends | 0 | 0 | 0 | 0 | 0 | 0 | -8,682 | -8,682 |
| Share-based incentive plan | 0 | 0 | 0 | 0 | 576 | 0 | -45 | 531 |
| Transactions with owners, total | 0 | 0 | 0 | 0 | 576 | 0 | -8,728 | -8,152 |
| Equity Dec 31, 2020 | 5,000 | 6,701 | 20,101 | 101 | -124 | -2,884 | 58,178 | 87,074 |
| EUR 1,000 | A | B | C | D | E | F | G | H |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Equity Jan 1, 2021 | 5,000 | 6,701 | 20,101 | 101 | -124 | -2,884 | 58,178 | 87,074 |
| Comprehensive income | ||||||||
| Profit for the review period | 0 | 0 | 0 | 0 | 0 | 0 | 13,675 | 13,675 |
| Other comprehensive income | ||||||||
| Change in fair value of equity investments at fair value through other comprehensive income | 0 | 0 | 0 | 29 | 0 | 0 | 0 | 29 |
| Cumulative translation adjustment | 0 | 0 | 0 | 0 | 0 | -487 | 0 | -487 |
| Other comprehensive income, net of tax | 0 | 0 | 0 | 29 | 0 | -487 | 0 | -458 |
| Total comprehensive income for the review period | 0 | 0 | 0 | 29 | 0 | -487 | 13,675 | 13,217 |
| Transactions with owners | ||||||||
| Dividends | 0 | 0 | 0 | 0 | 0 | 0 | -8,461 | -8,461 |
| Directed share issue | 0 | 0 | 1,936 | 0 | 0 | 0 | 0 | 1,936 |
| Purchase of own shares | 0 | 0 | 0 | 0 | -1,085 | 0 | 0 | -1,085 |
| Share-based incentive plan | 0 | 0 | 0 | 0 | 158 | 0 | 0 | 158 |
| Transactions with owners, total | 0 | 0 | 1,936 | 0 | -927 | 0 | -8,461 | -7,452 |
| Equity Sep 30, 2021 | 5,000 | 6,701 | 22,037 | 130 | -1,050 | -3,371 | 63,392 | 92,839 |
| EUR 1,000 | A | B | C | D | E | F | G | H |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Equity Jan 1, 2020 | 5,000 | 6,701 | 20,101 | 108 | -700 | -4,299 | 49,829 | 76,740 |
| Comprehensive income | ||||||||
| Profit for the review period | 0 | 0 | 0 | 0 | 0 | 0 | 11,386 | 11,386 |
| Other comprehensive income | ||||||||
| Change in fair value of equity investments at fair value through other comprehensive income | 0 | 0 | 0 | -2 | 0 | 0 | 0 | -2 |
| Cumulative translation adjustment | 0 | 0 | 0 | 0 | 0 | -599 | 0 | -599 |
| Other comprehensive income, net of tax | 0 | 0 | 0 | -2 | 0 | -599 | 0 | -601 |
| Total comprehensive income for the review period | 0 | 0 | 0 | -2 | 0 | -599 | 11,386 | 10,785 |
| Transactions with owners | ||||||||
| Dividends | 0 | 0 | 0 | 0 | 0 | 0 | -8,682 | -8,682 |
| Share-based incentive plan | 0 | 0 | 0 | 0 | 353 | 0 | -45 | 307 |
| Transactions with owners, total | 0 | 0 | 0 | 0 | 353 | 0 | -8,728 | -8,375 |
| Equity Sep 30, 2020 | 5,000 | 6,701 | 20,101 | 106 | -347 | -4,898 | 52,486 | 79,149 |
Etteplan Interim Report January-September 2021
Etteplan Interim Report January-September 2021
NOTES
General
Etteplan provides solutions for software and embedded solutions, industrial equipment and plant engineering and technical documentation solutions to the world's leading companies in the manufacturing industry. Our services are geared to improve the competitiveness of our customers' products, services and engineering processes throughout the product life cycle. The results of Etteplan's innovative engineering can be seen in numerous industrial solutions and everyday products.
In 2020, Etteplan had a turnover of approximately EUR 260 million. The company currently has over 3,600 professionals in Finland, Sweden, the Netherlands, Germany, Poland, Denmark and China. Etteplan's shares are listed on Nasdaq Helsinki Ltd under the ETTE ticker.
The Etteplan Oyj Board of Directors has approved this Interim Report for publication at its meeting on October 28, 2021.
Basis for preparation
Figures are presented in thousands or millions of euros as described in connection with each figure. The figures presented are rounded from exact figures and consequently, the sum of figures presented individually can deviate from the presented sum figure. Key figures have been calculated using exact figures.
This Interim Report has not been prepared in accordance with all the requirements in IAS 34 (Interim Financial Reporting) standard. The Interim Report has been prepared according to the recognition and valuation principles presented in the 2020 Annual Financial Statements.
Accounting policies requiring management's judgment and key sources of uncertainty concerning estimates
This release includes forward-looking statements, which are based on the current expectations, known factors, decisions and plans of the management. The management believes that the expectations reflected in such forward looking statements are reasonable. However, outcomes could differ materially from those implied in the forward-looking statements as a result of, among other factors, changes in economic, market and competitive conditions as well as changes in the regulatory environment and fluctuations in exchange rates. The Group's management may also have to make judgment-based decisions relating to the choice and application of accounting policies. This particularly concerns situations, where effective IFRS standards allow alternative valuation, recording and presenting manners.
The key sources of estimation uncertainty, as well as areas requiring judgment-based decisions, were the same as those that applied to the 2020 consolidated financial statements.
Management pays special attention to fair value measurements in connection with acquisitions and revenue recognition for fixed price projects.
Etteplan Interim Report January-September 2021
Key Figures
| EUR 1,000 | 1-9/2021 | 1-9/2020 | 1-12/2020 | Change |
|---|---|---|---|---|
| Revenue | 214,853 | 189,408 | 259,702 | 13.4% |
| Operating profit (EBITA) | 21,174 | 18,087 | 26,172 | 17.1% |
| EBITA, % | 9.9 | 9.5 | 10.1 | |
| Operating profit (EBIT) | 17,921 | 15,289 | 22,380 | 17.2% |
| EBIT, % | 8.3 | 8.1 | 8.6 | |
| Profit before taxes | 17,206 | 14,521 | 21,080 | 18.5% |
| Profit before taxes, % | 8.0 | 7.7 | 8.1 | |
| Return on equity, % | 20.3 | 19.5 | 20.8 | |
| ROCE, % | 15.6 | 14.9 | 16.0 | |
| Equity ratio, % | 42.1 | 40.1 | 40.5 | |
| Gross interest-bearing debt | 66,685 | 66,944 | 64,974 | -0.4% |
| Net gearing, % | 61.9 | 65.2 | 46.6 | |
| Balance sheet, total | 223,752 | 201,300 | 217,918 | 11.2% |
| Gross investments | 26,999 | 22,333 | 29,697 | 20.9% |
| Operating cash flow | 13,937 | 20,485 | 37,997 | -32.0% |
| Basic earnings per share, EUR | 0.55 | 0.46 | 0.69 | 19.6% |
| Diluted earnings per share, EUR | 0.55 | 0.46 | 0.69 | 19.6% |
| Equity per share, EUR | 3.72 | 3.18 | 3.50 | 17.0% |
| Personnel, average | 3,429 | 3,337 | 3,320 | 2.7% |
| Personnel at end of the period | 3,625 | 3,291 | 3,267 | 10.1% |
21
Etteplan Interim Report January-September 2021
Revenue
The table below presents the disaggregation of external revenue by geographical area and by timing of revenue recognition. The external revenue of each geographical area is presented according to the location of the seller. The Group's operations in China sell their services both locally and through other Group companies thus this revenue is partly included in the revenue from other areas.
| EUR 1,000 | 7-9/2021 | 7-9/2020 | 1-9/2021 | 1-9/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Primary geographical location | |||||
| Finland | 37,198 | 33,608 | 121,953 | 117,678 | 159,277 |
| Scandinavia | 14,427 | 11,059 | 49,752 | 42,174 | 57,519 |
| Central Europe | 11,986 | 8,567 | 34,334 | 24,482 | 35,705 |
| China | 3,248 | 1,987 | 8,814 | 5,073 | 7,201 |
| Total | 66,860 | 55,221 | 214,853 | 189,408 | 259,702 |
| Timing of revenue recognition | |||||
| Transferred at a point in time | 560 | 530 | 1,666 | 1,454 | 2,044 |
| Transferred over time | 66,300 | 54,691 | 213,187 | 187,954 | 257,658 |
| Total | 66,860 | 55,221 | 214,853 | 189,408 | 259,702 |
Revenue and Operating profit (EBIT) by quarter
| EUR 1,000 | 1-3/2021 | 1-3/2020 | 4-6/2021 | 4-6/2020 | 7-9/2021 | 7-9/2020 |
|---|---|---|---|---|---|---|
| Revenue | 72,950 | 71,292 | 75,043 | 62,895 | 66,860 | 55,221 |
| Operating profit (EBIT) | 6,594 | 5,656 | 6,729 | 5,359 | 4,597 | 4,274 |
| EBIT, % | 9.0 | 7.9 | 9.0 | 8.5 | 6.9 | 7.7 |
Non-recurring items
Items that are material either because of their size or their nature, and that are non-recurring, are considered as non-recurring items and are presented within the line items to which they best relate. The line items in which they are included in the income statement are specified in the table below.
| EUR 1,000 | 7-9/2021 | 7-9/2020 | 1-9/2021 | 1-9/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Other operating income | 0 | 318 | 0 | 318 | 652 |
| Employee benefits expenses and other operating expenses | -180 | -384 | -572 | -890 | -1,568 |
| Operating profit (EBIT) | -180 | -66 | -572 | -572 | -916 |
Etteplan Interim Report January-September 2021
Business combinations
TekPartner A/S
Etteplan expanded its business in the Nordics and opened up a new country, Denmark, by acquiring TekPartner, an engineering and IT company specialized in electronics and software on January 7, 2021. TekPartner, founded 2009, covers development of all core disciplines within embedded software, intelligent electronics, FPGA (field-programmable gate array) and IoT (Internet of things). In 2019 TekPartner’s revenue was approximately 8 million euros. TekPartner delivers its services through a combination of its own team of 19 highly qualified engineering professionals and a vast network of international project partners and over 30 freelancers working in Denmark. TekPartner is located in Herlev and Odense in Denmark.
The acquisition consideration recognized at the time of the acquisition, paid in cash, was EUR 5,833 thousand in total. In addition to this payment a contingent consideration of EUR 0-1,900 thousand (undiscounted amount) is agreed upon. The contingent consideration will be paid in full provided that TekPartner A/S’s result in the financial years 2021 and 2022 reaches the thresholds set in the share transfer agreement. The fair value of the contingent consideration is estimated by applying the income approach.
The provisional goodwill of EUR 3,530 thousand arising from the acquisition is attributable to the technical know-how of the acquiree's personnel, and the company's operating model. None of the goodwill recognized is expected to be deductible for income tax purposes.
Costs related to the acquisition, EUR 99 thousand, were included in other operating expenses in the consolidated statement of comprehensive income for the financial year 2020.
F.I.T. Fahrzeug Ingenieurtechnik GmbH
Etteplan strengthened its position in technical documentation in Germany through the acquisition of F.I.T. Fahrzeug Ingenieurtechnik GmbH on May 17, 2021. Founded in 1972, F.I.T. specializes in technical documentation solutions for governmental utility vehicles and the defense industry. It is located in Koblenz and employs some 15 technical documentation specialists.
The acquisition consideration recognized at the time of the acquisition, paid in cash, was EUR 560 thousand in total.
The provisional goodwill of EUR 456 thousand arising from the acquisition is attributable to the technical know-how of the acquiree's personnel, and the company's operating model. None of the goodwill recognized is expected to be deductible for income tax purposes.
Costs related to the acquisition, EUR 16 thousand, are included in other operating expenses in the consolidated statement of comprehensive income.
Skyrise.tech Sp. z o.o. sp.k.
Etteplan acquired Skyrise.tech, a Polish software development company on June 14, 2021. Through the acquisition, Etteplan will significantly strengthen its capability to deliver applications and cloud software solutions. Skyrise.tech, founded in 2008, is a fast-growing modern software development company working mostly with customers in logistics, mobility, healthcare and enterprise industries.
In 2020 Skyrise.tech’s revenue was some EUR 3.5 million. The acquired company has some 80 software specialists in Katowice and Gdansk in Poland.
The acquisition consideration recognized at the time of the acquisition, paid in cash, was EUR 7,105 thousand in total.
The provisional goodwill of EUR 4,226 thousand arising from the acquisition is attributable to the technical know-how of the acquiree's personnel, and the company's operating model. None of the goodwill recognized is expected to be deductible for income tax purposes.
Costs related to the acquisition, EUR 196 thousand, are included in other operating expenses in the consolidated statement of comprehensive income.
Adina Solutions Oy
Etteplan strengthened its know-how in technical documentation of software by acquiring Adina Solutions Oy from Finland on August 2, 2021. Adina Solutions Oy, founded in 2016 specializes on planning and implementation of technical documentation of software, localization of the content as well as consulting and
Etteplan
training. Originating from Tampere, Finland, Adina Solutions Oy employs a total of 13 content producers and technical communications professionals. Its clientele consists of software companies and equipment manufacturers.
The acquisition consideration recognized at the time of the acquisition, paid in cash, was EUR 941 thousand in total.
The provisional goodwill of EUR 457 thousand arising from the acquisition is attributable to the technical know-how of the acquiree's personnel, and the company's operating model. None of the goodwill recognized is expected to be deductible for income tax purposes.
Costs related to the acquisition, EUR 20 thousand, are included in other operating expenses in the consolidated statement of comprehensive income.
BST Buck Systemtechnik GmbH
Etteplan acquired BST Buck Systemtechnik GmbH in Brunsbüttel in the Northern part of Germany on September 29, 2021. The company specializes in Software Development, Process Automatization & Hardware Engineering and employs slightly more than 30 specialists. BST Buck Systemtechnik GmbH's customers operate in Chemical, Pharmaceutical, Energy and Food & beverage industries. The acquisition of BST Buck Systemtechnik GmbH complements our current operations in industrial automation and process engineering and creates a stronger and wider growth platform for us in the important engineering market in Germany.
The acquisition consideration recognized at the time of the acquisition, paid in cash, was EUR 932 thousand in total, and it is recognized fully as goodwill until the provisional acquisition calculations are drawn up.
Acquisitions in total
The following table summarizes the provisional values of acquisition considerations, assets acquired and liabilities assumed for the acquisitions in total.
| Consideration transferred: | EUR 1,000 |
|---|---|
| Cash payment | 15,370 |
| Contingent consideration | 1,209 |
| Total consideration transferred | 16,579 |
| Assets and liabilities | |
| Tangible assets | 592 |
| Intangible assets | 7 |
| Customer relationships (intangible assets) | 6,776 |
| Contractual intangible assets | 250 |
| Trade and other receivables | 2,178 |
| Cash and cash equivalents | 1,249 |
| Total assets | 11,052 |
| Non-current liabilities | 394 |
| Current liabilities | 2,197 |
| Deferred tax liability | 1,482 |
| Total liabilities | 4,073 |
| Total identifiable net assets | 6,979 |
| Formation of Goodwill: | |
| Consideration transferred | 16,579 |
| Total identifiable net assets | -6,979 |
| Goodwill | 9,601 |
Etteplan Interim Report January-September 2021
Etteplan Interim Report January-September 2021
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Non-IFRS key figures
Etteplan presents non-IFRS key figures to supplement its consolidated financial statements which are prepared in accordance with IFRS. These key figures are designed to measure growth and provide insight into the company's underlying operational performance. This section describes the most important non-IFRS key figures used by the Group. Formulas for key figures (IFRS and Non-IFRS) are presented at the end of this release.
Operating profit (EBITA) and EBITA, %
Operating profit (EBITA) is presented, because it reflects the Group's operational performance better than Operating profit (EBIT). Operating profit (EBITA) does not include amortization of fair value adjustments at acquisitions. EBITA, % presents Operating profit (EBITA) as a percentage share of revenue. The table below shows a reconciliation between Operating profit (EBITA) and Operating profit (EBIT).
| EUR 1,000 | 7-9/2021 | 7-9/2020 | 1-9/2021 | 1-9/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Operating profit (EBIT) | 4,597 | 4,274 | 17,921 | 15,289 | 22,380 |
| Amortization on fair value adjustments at acquisitions | 1,104 | 949 | 3,253 | 2,799 | 3,791 |
| Operating profit (EBITA) | 5,701 | 5,222 | 21,174 | 18,087 | 26,172 |
Organic/un-organic growth and growth in comparable currencies
Organic (revenue) growth is presented in addition to total revenue growth, because it improves the comparability of revenue growth between periods by presenting the revenue growth without the effects of the last 12 months' acquisitions. Organic growth is calculated by comparing revenue between comparison periods excluding revenue from acquisitions that have taken place in the past 12 months. The revenue growth created by the last 12 months' acquisitions is presented as un-organic growth. Revenue growth in comparable currencies is presented, because it improves the comparability of revenue growth between periods by presenting the revenue growth with comparable exchange rates. For the calculation of growth in comparable currencies, revenue for the current period is calculated by using the comparable period's exchange rates. The figure is presented for Group revenue and organic growth.
The share of revenue represented by Managed Services
Etteplan measures the share of revenue represented by Managed Services (MSI Index). Managed Services are service solutions, such as projects and continuous services, where the customer pays for results instead of resources. The share of revenue represented by Managed Services is presented, because it describes Etteplan's strategy implementation and explains, in part, the changes in profitability.
Etteplan
Formulas for key figures
IFRS key figures
Basic earnings per share = (Profit for the review period attributable to equity holders of the parent company) x 100
Issue adjusted average number of shares during the review period
Diluted earnings per share = (Profit for the review period attributable to equity holders of the parent company adjusted with dilutive effect) x 100
Issue adjusted average number of shares during the review period adjusted with dilutive effect
Non-IFRS key figures
Operating profit (EBITA) = Operating profit (EBIT) + amortization on fair value adjustments in acquisitions
Organic growth = (Revenue current year - Revenue comparison year - Revenue from acquires current year) x 100
Revenue comparison year
Revenue growth from key accounts = (Revenue from key accounts current year - Revenue from key accounts comparison year) x 100
Revenue from key accounts comparison year
The share of revenue represented by Managed Services = Revenue from Managed Services x 100
Revenue
Return on equity (ROE), % = Profit for the review period x 100
(Equity, total) average
Return on capital employed (ROCE), before taxes, % = (Profit before taxes + Financial expenses) x 100
(Total equity and liabilities - non-interest bearing liabilities) average
Equity ratio, % = Equity, total x 100
Total equity and liabilities - Advances received
Gross investments = Total investments made to non-current assets including acquisitions and capitalized development costs
Net gearing, % = (Interest-bearing liabilities - Cash and cash equivalents) x 100
Equity, total
Equity per share = Equity, total
Adjusted number of shares at the end of the review period
Market capitalization = Number of outstanding shares at the end of the review period x last traded share price of the review period
Etteplan Interim Report January-September 2021