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Siili Solutions Oyj
Interim / Quarterly Report • Aug 13, 2024
3340_ir_2024-08-13_3c2df8b9-b67b-488c-b24b-ce83a97f93c5.pdf
Interim / Quarterly Report
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Half-year report, 1 January–30 June 2024
Signs of improvement in Siili's profitability, despite the decreased revenue
JANUARY–JUNE 2024
- Revenue EUR 59,186 (65,288) thousand
- Revenue growth EUR -6,103 thousand, or -9.3%
- Adjusted EBITA EUR 3,309 (5,010) thousand, -34.0%
- Adjusted EBITA margin 5.6% (7.7%) of revenue
APRIL–JUNE 2024
- Revenue EUR 29,362 (31,664) thousand
- Revenue growth EUR -2,302 thousand, or -7.3%
- Adjusted EBITA EUR 1,719 (1,661) thousand, +3.5%
- Adjusted EBITA margin 5.9% (5.2%) of revenue
| H1/2024 | H1/2023 | 2023 | |
|---|---|---|---|
| Revenue, EUR 1,000 | 59,186 | 65,288 | 122,702 |
| Revenue growth, % | -9.3% | 10.9% | 3.7% |
| Organic revenue growth, % | -9.3% | 5.6% | 0.1% |
| Share of international revenue, % | 28.0% | 25.9% | 26.7% |
| Adjusted EBITA, EUR 1,000 | 3,309 | 5,010 | 8,742 |
| Adjusted EBITA, % of revenue | 5.6% | 7.7% | 7.1% |
| EBITA, EUR 1,000 | 2,694 | 5,010 | 8,409 |
| EBITA, % of revenue | 4.6% | 7.7% | 6.9% |
| EBIT, EUR 1,000 | 2,110 | 4,149 | 6,909 |
| Number of employees at the end of the period | 966 | 1,061 | 1,007 |
| Average number of employees during the period | 987 | 1,053 | 1,026 |
| Number of full-time employees and subcontractors (FTE) at the end of the period | 1,072 | 1,1941 | 1,091 |
1 The figure for the comparison period has been retroactively corrected.
| Q2/2024 | Q2/2023 | |
|---|---|---|
| Revenue, EUR 1,000 | 29,362 | 31,664 |
| Revenue growth, % | -7.3% | 7.3% |
| Organic revenue growth, % | -7.3% | 2.7% |
| Adjusted EBITA, EUR 1,000 | 1,719 | 1,661 |
| Adjusted EBITA, % of revenue | 5.9% | 5.2% |
| EBITA, EUR 1,000 | 1,319 | 1,661 |
| EBITA, % of revenue | 4.5% | 5.2% |
| Number of employees at the end of the period | 966 | 1,061 |
| Average number of employees during the period | 970 | 1,058 |
| Number of full-time employees and subcontractors (FTE) at the end of the period | 1,072 | 1,1941 |
1 The figure for the comparison period has been retroactively corrected.
OUTLOOK FOR 2024 AND FINANCIAL TARGETS FOR 2024−2026
The financial guidance of revenue for 2024 is estimated to be EUR 120-140 million and adjusted EBITA EUR 7.5–10.5 million.
Long-term financial targets for the period 2024–2026 are as follows:
- Annual revenue growth of 20%, with organic growth accounting for about half.
- EBITA 12% of revenue. Operating profit before amortisation and impairment for fair value adjustments on acquisitions.
- Net debt / EBITDA < 2. The target for the ratio of net debt and EBITDA below two.
- Dividend policy: target to pay a dividend corresponding to 30–70% of net profit annually.
CEO TOMI PIENIMÄKI:
In the first half of 2024, our profitability already showed signs of improvement, although in terms of revenue growth, the period was challenging for Siili, as expected.
Siili's first year-half included several successes that lay a solid foundation for growth once the conditions strengthen again. In June, Siili got selected as one of Yle's contract suppliers in the competitive tender for a framework agreement amounting to EUR 35 million. The subject of the tender was application development, design and maintenance services in the period 2024–2028. This contract offers us an outstanding opportunity to continue and extend cooperation with an interesting existing customer. As one example of our cooperation with Yle, I could mention Yle's Viki & Köpi show, where we used AI last year in a completely new way in the entertainment industry.
The revenue for the year-half amounted to EUR 59 million, representing a decline of some 9% from a strong comparison period. Adjusted EBITA ended up at EUR 3.3 million and 5.6% of revenue. We adjusted capacity to the market conditions, leading to a decline in revenue. Despite the reduction in revenue, profitability in the second quarter came in higher than in the comparison period and in the previous quarter. The higher profitability in the second quarter stemmed in particular from improved efficiency, in which we have quite successfully taken measures over the past months in order to secure our competitiveness. In practice, this has meant, for example, development of an offering aligned with market demand, reinforcement of the capability to forecast demand, accurate timing of recruitments and flexibility in capacity through partners. For the second half of the year, the objective is to accelerate growth, and hence we have resumed a more active stance in recruitment. strengthen our position as a leading company in the utilization of artificial intelligence. 1) Significant growth in data and AI business 2) Forerunner in AI-assisted software development 3) Community of top experts Siili's skilled and committed personnel plays a key role in the implementation of the new strategy. Siilis contributed actively to the new strategy in internal strategy workshops arranged over the spring. In the first half of the year, we continued to invest in AIassisted software development, and we have trained over 400 of our employees in generative artificial intelligence during the year. Going forward, the core of our activities will also be shaped by
Today, we published a new strategy for Siili, putting artificial intelligence into the core of Siili's business. We aim to be leading in AI-assisted software development and a leading provider of data and AI solutions. Siili's competitive advantage comprises
solid expertise in software development, artificial intelligence and industry understanding. This unique combination makes us a frontrunner in developing generative AI solutions and in strengthening business competitiveness for our customers.
Going forward, Siili will have three strategic priorities that
our strong corporate culture, fair conduct and drive to reduce our carbon emissions even further from their already-low level. Going forward, we will communicate more extensively on our sustainability targets and efforts. We are making great strides to prepare for the EU's corporate sustainability reporting requirements. We will publish our first sustainability report for the financial year 2024.
According to our view, the demand of digital services continues to be strong in the long term, as artificial intelligence creates new growth opportunities. We believe in the normalization of the market, although the turnaround has been delayed from the initial expectations.
I want to extend my thanks to the Siili team and our customers for the past first half of the year. We are in a good place to embark on the rest of the year with confidence.
REVENUE
In the first half of the year, the Group's revenue decreased by 9.3% (+10.9%) year-on-year. Revenue decreased by EUR 6,103 (+6,413) thousand, totalling EUR 59,186 (65,288) thousand. Organic revenue change was -9.3% (5.6%), or EUR -6,103 (3,484) thousand. The share of international operations of the Group's revenue for the review period was 28.0% (25.9%). The decline in revenue was driven by challenging market conditions and a decline in the number of personnel due to efficiency-improvement measures.
PROFITABILITY
Adjusted EBITA in the first year-half totalled EUR 3,309 (5,010) thousand, representing a decline of EUR 1,701 year-on-year. The Group's profitability weakened, and adjusted EBITA was 5.6% (7.7%) of revenue. Most significantly, the decline in profitability was driven by the reduction in revenue. The company continued the efficiency-improvement measures launched in the previous financial year to improve profitability, and adjusted EBITA improved in the second quarter year-on-year. The calculation of adjusted EBITA is shown under Reconciliations of alternative performance measures.
EBITA for the review period was EUR 2,694 (5,010) thousand, or 4.6% (7.7%) of revenue.
Subcontracting costs arising from the use of external services in the review period totalled EUR 12,131 (14,236) thousand, or 20.5% of revenue (21.8%). Employee benefit expenses for the review period decreased to EUR 36,588 (37,826) thousand and amounted to 61.8% (57.9%) of revenue. The decrease in employee benefit expenses was driven by the reduction in number of the Group's personnel. At the end of the year-half, the Group's number of personnel totalled 966 (1,061).
Other operating expenses decreased from the previous year to EUR 6,100 (6,541) thousand, or 10.3% (10.0%) of revenue. The largest expense items were IT expenses, voluntary personnel expenses and purchased expert services.
EBIT for the year-half was EUR 2,110 (4,149) thousand, or 3.6% (6.3%) of revenue. Net financial income totalled EUR 343 (415) thousand. In the review period, the Group recognised net financial income of EUR 695 (1,522) thousand due to fair value adjustment on contingent consideration liabilities. The profit for the period before taxes was EUR 2,453 (4,564) thousand and earnings per share were EUR 0.22 (0.44).
FINANCING AND CAPITAL EXPENDITURE
The Group's statement of financial position totalled EUR 86,524 (100,267) thousand at the end of the first year-half. The Group's equity ratio was 46.6% (40.9%), return on investment (ROI) was 9.3% (15.5%), and the net debt to EBITDA ratio was 0.44 (0.29).
The Group's cash flow from operations year grew by 46.9% year-on-year to EUR 4,851 (3,301) thousand. The growth of the cash flow from operations was driven by the significantly lower operating capital than in the comparison period.
Cash flow from investing activities for the first year-half was EUR -10,127 (-4,488) thousand, including contingent considerations totalling EUR 9,422 thousand paid to the minority interest for the acquisition of additional stakes in Supercharge Kft and Vala Group Oy.
Cash flow from financing activities in the review period amounted to EUR -6,240 (-6,112) thousand. The shareholders of Siili Solutions Plc were paid a dividend of EUR 2,109 thousand, and the noncontrolling shareholders of Supercharge Kft and Vala Group Oy were paid a total of EUR 884 thousand.
At the end of the review period, the Group's cash and cash equivalents totalled EUR 17,497 (28,953) thousand, and the Group had EUR 2,500 thousand in unused credit facilities. At the end of
the review period, the Group's interest-bearing bank loans stood at EUR 7,487 (10,000) thousand, of which EUR 2,513 thousand consisted of short-term loans. EMPLOYEES, MANAGEMENT AND GOVERNANCE
The total number of employees at the end of June was 966 (1,061). The average number of employees during the period was 987 (1,053).
At the end of the review period, the company's Leadership Team included Tomi Pienimäki (CEO), Aleksi Kankainen (CFO), Taru Salo (CHRO) and Andras Tessenyi (CEO, Supercharge Kft).
At the end of the review period, the Board of Directors of the company included Harry Brade (Chair), Jesse Maula (Deputy Chair), Tero Ojanperä, Katarina Cantell and Henna Mäkinen.
KEY EVENTS DURING THE REVIEW PERIOD
Increased ownership in Vala Group Oy and Supercharge Kft
In early May, Siili completed a transaction that increased Siili's ownership in its subsidiary Vala Group Oy to over 95%. The purchase price of the shares was approximately 5.3 million euros, which includes e.g. about 1.6 million euros as compensation from the company's net cash. In the end of May, Siili completed a transaction that increased Siili's ownership in its Hungarian subsidiary Supercharge Kft to 70%. The purchase price of the shares was approximately 4.2 million euros, which includes about 0.5 million euros as compensation from Supercharge Kft's net cash.
Changes in Leadership Team
Siili streamlined its organisational structure and COO Kari Pirttikangas and CCO Kenneth Lindfors left their positions in Siili and Siili management team during the spring.
RISK FACTORS AND UNCERTAINTIES
Siili may be exposed to various risk factors relating to Siili's operations and operative environment. Realization of such risks may have adverse effect to Siili's business, economic position or to the company's valuation. Key risks relating to Siili's business have been described below. In addition, Siili has identified other risks that may become material in the future. Furthermore, there exists risk of which Siili is not necessarily aware of and which may become material.
- Losing one or more key customers, material decline in customer demand, customer's economic difficuties or changes in their strategy that have adverse effects to Siili.
- Failure to meet quantitative or qualitative recruitment objectives or failure to meet customer demand in a timely manner.
- Failures in customer pricing, planning, delivery or improving cost efficiency. The propability and potential adverse effects of the aforementioned risks increase during the economically uncertain operational environment.
- Losing key personnel or decline in employee brand image.
- Realisation of information security risks, e.g. due human errors.
- General negative or weakened economical development and related uncertainties in customers' operative environment.
- General economic cycle and changes in customers' operating environment may have adverse effects in IT investments, e.g. due to postponed decision-making or postponed or terminated projects. These risks are mitigated by focusing on customer satisfaction and cost-efficiency.
The war in Ukraine neither has nor is anticipated to have a direct impact on Siili's business.
More information on the company's risks and risk management are presented in the Annual Review 2023 as well as the Report of the Board of Directors and the Consolidated Financial Statements.
GENERAL MEETING
Annual General Meeting
Siili Solutions Plc's Annual General Meeting was held in Helsinki, Finland, on 3 April 2024.
Adoption of the financial statements and release from liability
The Annual General Meeting adopted the financial statements and consolidated financial statements for the financial year 2023 and granted release from liability to the members of the Board of Directors and the Chief Executive Officer.
Dividend
The Annual General Meeting resolved that a dividend of EUR 0.26 per share be paid from the company's distributable funds on the adopted balance sheet for financial year 2023, totaling approximately EUR 2,1 million, and that the remaining part of the distributable funds be retained in shareholders' equity.
Remuneration report and remuneration policy
The Annual General Meeting confirmed the remuneration policy and report on remunerations paid to the governing bodies of the company. The decisions of the General Meeting were of advisory nature.
Board of Directors and its remuneration, auditor and its remuneration
The number of members of the Board of Directors was confirmed as five (5). Harry Brade, Tero Ojanperä and Jesse Maula were re-elected to the Board and Katarina Cantell and Henna Mäkinen were elected as new members of the Board. The Annual General Meeting decided on the remuneration of the Board of Directors and its Committees as follows: the Chair of the Board of Directors is paid EUR 3,850 per month, the Vice Chair of the Board of decide on the acquisition and/or acceptance as collateral of the company's own shares, subject to the following terms:
Directors and Chair of the Audit Committee EUR 2,500 per month and the other members EUR 2,000 per month. The Chairpersons of the Board's Committees are paid EUR 200 per month for their work on the committees, in addition to which all Committee members are paid a meeting fee of EUR 300 per meeting. In addition, the Board members will receive compensation for travel expenses in line with the company's business travel policy. Finnish Companies Act, in one or more tranches, either against consideration or free of charge. The maximum total number of shares issued, including shares issued on the basis of special rights, is 813,800, which corresponds to approximately 10 per cent of all shares in the company.
A maximum of 813,800 shares may be acquired and/or accepted as collateral pursuant to the authorisation, corresponding to approximately 10 percent of all shares in the company. The shares will be acquired in public trading arranged by Nasdaq Helsinki Ltd at the market price at the time of purchase. The company's own shares can be acquired in a manner other than in proportion to the existing holdings of shareholders in public trading (directed repurchase). The acquisition of shares will reduce the company's non-restricted equity. The Board of Directors will decide on other terms and conditions related to the acquisition and/or acceptance as collateral of the shares. The authorisation is valid until the end of the next Annual General Meeting, but not beyond 30 June 2025.
KPMG Oy AB, Authorized Public Accountants, were re-elected as the company's auditor, with Leenakaisa Winberg, APA, continuing as the company's responsible auditor. KPMG Oy Ab will also carry out the assurance of the Company's sustainability reporting. Authorised sustainability auditor (ASA) Leenakaisa Winberg will act as the responsible sustainability auditor. The Annual General Meeting decided, in accordance with the Board of Directors' proposal, that the auditor shall be paid a fee against the auditor's reasonable invoice. Authorisations of the Board of Directors The Annual General Meeting authorised the Board of Directors to The Board of Directors may decide to issue new shares or to transfer treasury shares held by the company. The authorisation entitles the Board of Directors to decide on all terms and conditions for an issue of shares and an issue of special rights entitling their holders to shares, including the right to derogate from the shareholders' preferential subscription right (directed issue). The authorisation may be used for strengthening the company's statement of financial position, for paying transaction prices related to acquisitions, in incentive plans or for other purposes decided by the Board of Directors. The authorisation is valid until the end of the next Annual General Meeting, but not beyond 30 June 2025.
The Board of Directors was also authorised to decide on an issue of shares and on an issue of special rights carrying entitlement to shares in accordance with Chapter 10, Section 1 of the
SHARE AND SHAREHOLDERS
The company has one series of shares, and all of its shares carry entitlement to equal rights. On 30 June 2024, the total number of shares in Siili Solutions Plc entered in the Trade Register was 8,140,263. The number of outstanding shares in the company increased by 2,183 shares during the review period. New shares were subscribed with option rights 2020A during the review period.
The company or its subsidiaries held 27,954 shares in Siili Solutions Plc at the end of the review period. On 30 June 2024, the members of the company's Board of Directors and Management Team owned a total of 35,283 shares in the company. In addition, an entity under the control of a Board member owns 1,301,267 shares.
During the review period, the highest price of the company share was EUR 9.90, the lowest price was EUR 7.52 and the average price was EUR 8.84. The closing price at the end of the review period was EUR 7.92. The company's market capitalisation decreased by 17.7% from the end of 2023 and amounted to MEUR 64.2 (78.0) on 30 June 2024.
The company had a total of 6,201 (6,481) shareholders on 30 June 2024. The number of shareholders decreased by 4.32% from the end of 2023. A list of the largest shareholders is available on the company website at https://sijoittajille.siili.com/en/.
EVENTS AFTER THE REVIEW PERIOD
On 13 August 2024 the company announced its new strategy. Further information on the renewed strategy can be found in the stock exchange release published on 13 August 2024 and on the company website at https://sijoittajille.siili.com/en/.
The company's management is not aware of any other events of material importance after the review period that might have affected the preparation of the half-year report.
FINANCIAL CALENDAR FOR 2024
The company will publish a business review for 1 January–30 September 2024 (Q3) on 22 October 2024.
The company intends to organise a Captal Markets Day in late November 2024.
The company will expand the content of its business reviews to include an income statement and a statement of comprehensive income, a statement of financial position and a cash flow statement from the Q3 business review onwards.
| H1/2024 | H1/2023 | 2023 | Siili Solutions Plc. uses alternative performance measures to descripe the trend of the Group's profitability. The alternative performance | ||||
|---|---|---|---|---|---|---|---|
| Revenue, EUR 1,000 | 59,186 | 65,288 | 122,702 | measures should be reviewed parallel with the IFRS key figures. EBITDA is calculated by adding depreciation, amortisation and impairment to operating profit. EBITA is calculated by adding amortisation and impairment for fair value adjustments on acquisitions to operating profit. Adjusted EBITA is calculated by adding items affecting comparability to EBITA, such as direct costs of acquisitions. Organic revenue growth is calculated based on comparable revenue, reflecting changes in the corporate structure. The management uses these key figures for the monitoring and analysis of business development, profitability, and our financial position. |
|||
| Revenue growth, % | -9.3% | 10.9% | 3.7% | ||||
| Organic revenue growth, % | -9.3% | 5.6% | 0.1% | ||||
| Share of international revenue, % | 28.0% | 25.9% | 26.7% | ||||
| EBITDA, EUR 1,000 | 4,462 | 6,814 | 12,107 | ||||
| EBITDA, % of revenue | 7.5% | 10.4% | 9.9% | Organic revenue growth, % | |||
| EBITA, EUR 1,000 | 2,694 | 5,010 | 8,409 | EUR 1,000 | H1/2024 | H1/2023 | 2023 |
| EBITA, % of revenue | 4.6% | 7.7% | 6.9% | Revenue | 59,186 | 65,288 | 122,702 |
| Adjusted EBITA | 3,309 | 5,010 | 8,742 | Comparable pro forma -revenue in the comparison period | 65,288 | 61,805 | 122,561 |
| Adjusted EBITA, % of revenue | 5.6% | 7.7% | 6.9% | Organic revenue growth, % | -9.3% | 5.6% | 0.1% |
| EBIT, EUR 1,000 | 2,110 | 4,149 | 6,909 | ||||
| EBIT, % of revenue | 3.6% | 6.4% | 5.6% | ||||
| Profit for the period, EUR 1,000 | 1,804 | 3,542 | 4,986 | EBITA, Adjusted EBITA and EBITDA EUR 1,000 |
H1/2024 | H1/2023 | 2023 |
| Profit for the period, % of revenue | 3.0% | 5.4% | 4.1% | EBIT | 2,110 | 4,149 | 6,909 |
| Equity ratio, % | 46.6% | 40.9% | 42.6% | Amortisation and impairment for fair value adjustments on acquisitions | 584 | 861 | 1,500 |
| Gearing, % | 10.6% | 9.7% | 8.7% | EBITA | 2,694 | 5,010 | 8,409 |
| Net debt/EBITDA | 0.44 | 0.29 | 0.30 | Transaction costs / income (+/-) from business combinations | 77 | - | - |
| ROE, % | 8.8% | 17.5% | 12.1% | Restructuring costs | 538¹ | - | 183 |
| ROI, % | 9.3% | 15.5% | 10.7% | Other items affecting comparability | - | - | 150 |
| Basic earnings per share (EPS), EUR | 0.22 | 0.44 | 0.61 | Adjusted EBITA | 3,309 | 5,010 | 8,742 |
| Diluted EPS, EUR | 0.22 | 0.44 | 0.61 | ¹ Expenses from the termination of employment relationships. | |||
| Average number of employees during the period | 987 | 1,053 | 1,026 | ||||
| Number of employees at the end of the period | 966 | 1,061 | 1,007 | EBIT | 2,110 | 4,149 | 6,909 |
| Number of full-time employees (FTE) at the end of the period | 934 | 1,035 | 956 | Depreciation, amortisation and impairment EBITDA |
2,352 4,462 |
2,665 6,814 |
5,198 12,107 |
| Number of full-time subcontractors (FTE) at the end of the period | 138 | 159¹ | 135 | ||||
| Total full-time employees and subcontractors (FTE) at the end of the period | 1,072 | 1,194¹ | 1,091 |
¹ The figures for the comparison period have been retroactively corrected.
Key figures
Gearing, %
| EUR 1,000 | H1/2024 | H1/2023 | 2023 |
|---|---|---|---|
| Financial liabilities measured at amortized cost | 12,122 | 14,524 | 13,047 |
| Contingent considerations measured at fair value through profit or loss | 9,628 | 18,369 | 19,658 |
| Liquid funds | -17,497 | -28,953 | -29,022 |
| Net debt | 4,252 | 3,940 | 3,682 |
| Equity | 40,029 | 40,699 | 42,083 |
| Gearing, % | 10.6% | 9.7% | 8.7% |
| EUR 1,000 | H1/2024 | H1/2023 | 2023 | EUR 1,000 | H1/2024 | H1/2023 | 2023 | ||
|---|---|---|---|---|---|---|---|---|---|
| REVENUE | 59,186 | 65,288 | 122,702 | PROFIT FOR THE PERIOD | 1,804 | 3,542 | 4,986 | ||
| Other operating income | 96 | 128 | 444 | Other comprehensive income | |||||
| Materials and services | -12,131 | -14,236 | -26,215 | Items that may later be recognised through profit or loss | |||||
| Employee benefit expenses | -36,588 | -37,826 | -72,180 | Translation differences | -270 | 650 | 300 | ||
| Depreciation and amortization | -2,352 | -2,665 | -5,198 | ||||||
| Other operating expenses | -6,100 | -6,541 | -12,645 | TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 1,534 | 4,192 | 5,285 | ||
| OPERATING PROFIT | 2,110 | 4,149 | 6,909 | Total comprehensive income for the period attributable to: | |||||
| Shareholders of the parent company | 100% | 1,534 | 4,192 | 5,285 | |||||
| Financial income | 1,064 | 1,753 | 1,250 | Non-controlling interest | 0% | - | - | - | |
| Financial expenses | -721 | -1,338 | -2,623 | ||||||
| PROFIT BEFORE TAXES | 2,453 | 4,564 | 5,536 | ||||||
| Income taxes | -649 | -1,022 | -551 | ||||||
| PROFIT FOR THE PERIOD | 1,804 | 3,542 | 4,986 | ||||||
| Attributable to: | |||||||||
| Shareholders of the parent company | 100% | 1,804 | 3,542 | 4,986 | |||||
| Non-controlling interest | 0% | - | - | - | |||||
| Earnings per share based on the profit attributable to shareholders of the parent company: |
|||||||||
| Basic earnings per share (EUR), profit for the period | 0.22 | 0.44 | 0.61 | ||||||
| Diluted earnings per share (EUR), profit for the period | 0.22 | 0.44 | 0.61 |
Consolidated income statement and consolidated statement of comprehensive income
| EUR 1,000 | 30 Jun 2024 | 30 Jun 2023 | 31 Dec 2023 | EUR 1,000 | 30 Jun 2024 | 30 Jun 2023 | 31 Dec 2023 |
|---|---|---|---|---|---|---|---|
| ASSETS | SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||
| Non-current assets | Shareholders' equity | ||||||
| Goodwill | 32,211 | 32,762 | 32,490 | Share capital | 100 | 100 | 100 |
| Intangible assets | 8,062 | 8,942 | 8,404 | Reserve for invested unrestricted equity | 26,765 | 26,741 | 26,748 |
| Tangible assets | 1,090 | 1,332 | 1,259 | Treasury shares | -461 | -461 | -461 |
| Right-of-use assets | 4,538 | 4,470 | 4,220 | Translation differences | -794 | -174 | -524 |
| Other investments | 1 | 1 | 1 | Retained earnings | 14,420 | 14,493 | 16,219 |
| Deferred tax assets | 17 | 93 | 17 | Total shareholders' equity | 40,029 | 40,699 | 42,083 |
| Receivables | 158 | 168 | 159 | ||||
| Total non-current assets | 46,077 | 47,768 | 46,549 | Non-current liabilities | |||
| Financial liabilities | 4,974 | 7,487 | 6,230 | ||||
| Current assets | Lease liabilities | 2,289 | 2,219 | 1,841 | |||
| Trade receivables | 16,112 | 17,215 | 19,118 | Other non-current interest-bearing liabilities | 9,628 | 17,982 | 10,177 |
| Other receivables | 5,780 | 5,856 | 4,654 | Deferred tax liabilities | 1,040 | 1,213 | 1,118 |
| Current tax assets | 1,058 | 475 | 826 | Total non-current liabilities | 17,931 | 28,901 | 19,366 |
| Liquid funds | 17,497 | 28,953 | 29,022 | ||||
| Total current assets | 40,447 | 52,499 | 53,620 | Current liabilities | |||
| Financial liabilities | 2,513 | 2,513 | 2,513 | ||||
| TOTAL ASSETS | 86,524 | 100,267 | 100,170 | Lease liabilities | 2,346 | 2,306 | 2,463 |
| Trade and other payables | 23,246 | 24,748 | 33,612 | ||||
| Current tax liabilities | 451 | 946 | 121 | ||||
| Provisions | 7 | 154 | 12 | ||||
| Total current liabilities | 28,563 | 30,667 | 38,721 | ||||
| Total liabilities | 46,494 | 59,568 | 58,087 | ||||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 86,524 | 100,267 | 100,170 |
Consolidated statement of financial position
| EUR 1,000 | H1/2024 | H1/2023 | 2023 | EUR 1,000 | H1/2024 | H1/2023 | 2023 |
|---|---|---|---|---|---|---|---|
| Cash flow from operating activities | Cash flows from financing activities | ||||||
| Profit for the period | 1,804 | 3,542 | 4,986 | Loan repayments | -1,259 | -1,259 | -2,518 |
| Adjustments: | Repayments of lease liabilities | -1,394 | -1,471 | -2,965 | |||
| Depreciation and amortisation | 2,352 | 2,665 | 5,198 | Share subscriptions with share options | 17 | 45 | 53 |
| Share-based incentive scheme | 0 | 131 | 269 | Acquisition of treasury shares | - | -495 | -495 |
| Other adjustments | -16 | 42 | 48 | Divideds paid | -2,109 | -1,622 | -1,622 |
| Interest expenses and other financial expenses | 721 | 1,338 | 2,623 | Distribution of dividends to non-controlling interests | -884 | -731 | -1,270 |
| Interest income | -1,064 | -1,753 | -1,250 | Transactions with non-controlling interests | -610 | -580 | -437 |
| Taxes | 649 | 1,022 | 551 | Net cash flow from financing activities | -6,240 | -6,112 | -9,254 |
| Changes in working capital: | |||||||
| Change in trade and other receivables | 1,822 | -301 | -1,015 | Change in liquid funds | -11,516 | -7,300 | -7,173 |
| Change in trade and other payables | -800 | -2,055 | -1,792 | Liquid funds at the beginning of the period | 29,022 | 36,315 | 36,315 |
| Interest paid | -264 | -499 | -869 | Effect of changes in currency exchange rates | -9 | -62 | -119 |
| Interest received | 269 | 174 | 428 | Liquid funds at the end of the period | 17,497 | 28,953 | 29,022 |
| Taxes paid | -622 | -1,005 | -1,686 | ||||
| Net cash flow from operating activities | 4,851 | 3,301 | 7,489 | ||||
| Cash flow from investing activities | |||||||
| Acquisitions of businesses and subsidiaries, net of cash acquired | -9,462 | -3,869 | -4,172 | ||||
| Proceeds from the sale of tangible and intangible assets | 9 | 1 | 24 | ||||
| Investments in tangible assets | -205 | -424 | -756 | ||||
| Investments in intangible assets | -470 | -216 | -523 | ||||
| Investments in and return of capital from an associated company | - | 19 | 19 | ||||
| Net cash flow from investing activities | -10,127 | -4,488 | -5,409 |
Consolidated cash flow statement
Equity attributable to shareholders of the parent company
| EUR 1,000 | Share capital | Reserve for invested unrestricted equity |
Tresury shares | Transaltion differences | Retained earnings | Total shareholders' equity | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Shareholders' equity on 1 January 2024 | 100 | 26,748 | -461 | -524 | 16,219 | 42,083 | ||||
| Comprehensive income | ||||||||||
| Profit for the period | - | - | - | - | 1,804 | 1,804 | ||||
| Other comprehensive income (net of tax) | ||||||||||
| Translation differences | - | - | - | -270 | - | -270 | ||||
| Total comprehensive income for the period | - | - | - | -270 | 1,804 | 1,534 | ||||
| Transactions with owners | ||||||||||
| Distribution of dividends | - | - | - | - | -2,109 | -2,109 | ||||
| Share-based incentive scheme | - | - | - | - | 0 | 0 | ||||
| Share subcriptions with share options | - | 17 | - | - | - | 17 | ||||
| Distribution of dividends to non-controlling interests | - | - | - | - | -884 | -884 | ||||
| Transactions with non-controlling interests | - | - | - | - | -610 | -610 | ||||
| Total transactions with owners | - | 17 | - | - | -3,604 | -3,587 | ||||
| Shareholders' equity on 30 June 2024 | 100 | 26,765 | -461 | -794 | 14,419 | 40,029 | ||||
| Shareholders' equity on 1 January 2023 | 100 | 26,695 | - | -824 | 14,349 | 40,321 | ||||
| Comprehensive income | ||||||||||
| Profit for the period | - | - | - | - | 3,542 | 3,542 | ||||
| Other comprehensive income (net of tax) | ||||||||||
| Translation differences | - | - | - | 650 | - | 650 | ||||
| Total comprehensive income for the period | - | - | - | 650 | 3,542 | 4,192 | ||||
| Transactions with owners | ||||||||||
| Distribution of dividends | - | - | - | - | -1,622 | -1,622 | ||||
| Share-based incentive scheme | - | - | 33 | - | 77 | 110 | ||||
| Share subcriptions with share options | - | 45 | - | - | - | 45 | ||||
| Share issue net of transaction costs | - | - | -495 | - | - | -495 | ||||
| Distribution of dividends to non-controlling interests | - | - | - | - | -1,273 | -1,273 | ||||
| Transactions with non-controlling interests | - | - | - | - | -580 | -580 | ||||
| Total transactions with owners | - | 45 | -461 | - | -3,398 | -3,814 | ||||
| Shareholders' equity on 30 June 2023 | 100 | 26,741 | -461 | -174 | 14,493 | 40,699 |
Consolidated statement of changes in shareholders' equity
NOTES TO THE HALF-YEAR REPORT
Accounting principles
The half-year report is prepared in accordance with IAS 34 (Interim Financial Reporting) applying the same accounting principles as in the previous financial statements. The figures presented have been rounded off from the exact figures. The figures included in the halfyear report are unaudited.
The Group has one reportable segment, which provides its clients with information system development services. The single-segment presentation is based on Siili's current business model, product portfolio and corporate governance structure, as well as the nature of its operations. For this reason, the figures for the reported segment are equal to those for the Group.
BREAKDOWN OF REVENUE
Geographical breakdown of revenue
| EUR 1,000 | H1/2024 | H1/2023 | 2023 |
|---|---|---|---|
| Sales in Finland | 42,603 | 48,361 | 89,885 |
| Sales to abroad | 16,583 | 16,927 | 32,817 |
| Total | 59,186 | 65,288 | 122,702 |
CHANGES IN GOODWILL AND INTANGIBLE AND TANGIBLE ASSETS
| EUR 1,000 | Goodwill | Intangible assets |
Tangible assets |
Right-of-use assets |
|---|---|---|---|---|
| Cost 1 Jan 2024 | 32,490 | 18,066 | 5,960 | 11,120 |
| Translation differences | -279 | -179 | -31 | 19 |
| Additions | - | 462 | 207 | 2,076 |
| Disposals | - | - | -5 | -4,398 |
| Cost 30 Jun 2024 | 32,211 | 18,349 | 6,131 | 8,817 |
| Acc. depreciation/amortisation and impairment 1 Jan. 2024 | - | -9,662 | -4,701 | -6,901 |
| Translation differences | - | 54 | 25 | -9 |
| Depreciation/amortisation and impairment for the period | - | -679 | -370 | -1,303 |
| Acc. depreciation/amortisation on disposals and reclassifications | - | - | 4 | 3,933 |
| Acc. depreciation/amortisation and impairment 30 Jun 2024 | - | -10,288 | -5,041 | -4,279 |
| Book value 1 Jan 2024 | 32,490 | 8,404 | 1,259 | 4,220 |
| Book value 30 Jun 2024 | 32,211 | 8,062 | 1,090 | 4,538 |
assets assets
| Sales to abroad | 16,583 | 16,927 | 32,817 | Intangible | Tangible | Right-of-use | ||
|---|---|---|---|---|---|---|---|---|
| Total | 59,186 | 65,288 | 122,702 | EUR 1,000 | Goodwill | assets | assets | assets |
| Cost 1 Jan 2023 | 31,866 | 17,231 | 5,186 | 11,583 | ||||
| Breakdown by revenue category | Translation differences | 666 | 420 | 132 | 195 | |||
| Additions through business combinations | 230 | - | - | - | ||||
| EUR 1,000 | H1/2024 | H1/2023 | 2023 | Additions | - | 262 | 424 | 1,682 |
| Sales of work | 51,184 | 56,835 | 107,021 | Disposals | - | - | - | -1,746 |
| Project deliveries | 4,477 | 5,044 | 9,323 | Cost 30 Jun 2023 | 32,762 | 17,914 | 5,743 | 11,713 |
| Licence sales | 999 | 1,026 | 1,740 | Acc. depreciation/amortisation and impairment 1 Jan 2023 | - | -7,980 | -3,955 | -6,802 |
| Maintenance and other services | 2,525 | 2,384 | 4,619 | Translation differences | - | -84 | -90 | -130 |
| Total | 59,186 | 65,288 | 122,702 | Depreciation/amortisation and impairment for the period | - | -908 | -365 | -1,392 |
| Acc. depreciation/amortisation on disposals and reclassifications | - | - | - | 1,080 | ||||
| Acc. depreciation/amortisation and impairment 30 Jun 2023 | - | -8,972 | -4,410 | -7,244 | ||||
| Book value 1 Jan 2023 | 31,866 | 9,251 | 1,231 | 4,781 | ||||
| Book value 30 Jun 2023 | 32,762 | 8,942 | 1,332 | 4,470 |
Non-current financial liabilities and other interest-bearing liabilities
| EUR 1,000 | 30 Jun 2024 |
30 Jun 2023 |
31 Dec 2023 |
|---|---|---|---|
| Financial liabilities measured at amortized cost |
7,263 | 9,706 | 8,071 |
| Contingent consideration measured at fair value |
9,628 | 17,982 | 10,177 |
| Total | 16,891 | 27,688 | 18,248 |
Current financial liabilities and other interest-bearing liabilities
| EUR 1,000 | 30 Jun 2024 |
30 Jun 2023 |
31 Dec 2023 |
|---|---|---|---|
| Financial liabilities measured at amortized cost |
4,858 | 4,818 | 4,975 |
| Contingent consideration measured at fair value |
- | 387 | 9,481 |
| Total | 4,858 | 5,206 | 14,456 |
Siili has three bank loans with equal instalment with a maturity of seven years. Two of the loans, drawn down in the financial period 2021, are hedged by interest rate collars, and one loan drawn down in the financial period 2018 is hedged by an interest rate swap. At the end of the first year-half, the Group's bank loans totalled EUR 7,487 (10,000) thousand.
Siili's bank loans include covenants that entitle the financial institution to terminate the loan agreement if the covenants are not met. The covenants are based on the company's interest-bearing net debt in relation to its EBITDA and on its equity ratio. These key figures are examined every six months, and the covenants were met throughout the review period.
Changes in contingent considerations
| EUR 1,000 | Supercharge Kft. | Vala Group Oy | Haallas Finland Oy | Talentree Oy | Total |
|---|---|---|---|---|---|
| 1 Jan 2024 | 12,495 | 7,122 | - | 40 | 19,657 |
| Effect of the unwinding of discounting | 464 | - | - | - | 464 |
| Fair value change on the agreement | 37 | -732 | - | - | -695 |
| Paid contingent consideration for the acquisition | - | - | - | -40 | -40 |
| Payment to minority interest for additional stake | -4,167 | -5,255 | - | - | -9,422 |
| Exchange rate fluctuation impact on the contingent liability | -336 | - | - | - | -336 |
| 30 Jun 2024 | 8,493 | 1,135 | - | - | 9,628 |
| Of which at the end of the financial year: | |||||
| Non-current | 8,493 | 1,135 | - | - | 9,628 |
| Current | - | - | - | - | - |
| EUR 1,000 | Supercharge Kft. | Vala Group Oy | Haallas Finland Oy | Total | |
|---|---|---|---|---|---|
| 1 Jan 2023 | 10,514 | 7,748 | 3,749 | - | 22,011 |
| Effect of the unwinding of discounting | 648 | 52 | - | - | 700 |
| Fair value change on the agreement | -624 | -82 | -815 | - | -1,522 |
| Paid contingent consideration for the acquisition | - | - | -2,546 | - | -2,546 |
| Payment to minority interest for additional stake | - | -1,093 | - | - | -1,093 |
| Exchange rate fluctuation impact on the contingent liability | 819 | - | - | - | 819 |
| 30 Jun 2023 | 11,357 | 6,625 | 387 | - | 18,369 |
| Of which at the end of the financial year: | |||||
| Non-current | 11,357 | 6,625 | - | - | 17,982 |
| Current | - | - | 387 | - | 387 |
Contingent consideration liabilities
In the first year-half, Siili paid EUR 9,422 thousand to the minority interests of Supercharge Kft and Vala Group Oy for the acquisition of additional stakes. Financial income due to fair value adjustment on contingent consideration liabilities under the acquisition agreements recognised in the review period totalled EUR 695 (1,522) thousand. Measurement differences arising from the discounting of contingent consideration liabilities totalled EUR 464 (700) thousand, recognised in interest expenses.
| 30 Jun 2024 | 30 Jun 2023 | 31 Dec 2023 | |||||
|---|---|---|---|---|---|---|---|
| EUR 1,000 | Book value | Fair value | Book value | Fair value | Book value | Fair value | Fair value hierarchy |
| Financial assets | |||||||
| Recognized at amortized cost | |||||||
| Non-current | |||||||
| Receivables | 158 | 158 | 168 | 168 | 159 | 159 | 2 |
| Current | |||||||
| Trade receivables | 16,112 | 16,112 | 17,215 | 17,215 | 19,118 | 19,118 | 2 |
| Other receivables | 590 | 590 | 877 | 877 | 537 | 537 | 2 |
| Liquid funds | 17,497 | 17,497 | 28,953 | 28,953 | 29,022 | 29,022 | 2 |
| Recognized at fair value through profit or loss | |||||||
| Current | |||||||
| Interest rate swap | 50 | 50 | 119 | 119 | 78 | 78 | 2 |
| Total financial assets | 34,407 | 34,407 | 47,332 | 47,332 | 48,915 | 48,915 | |
| Financial liabilities | |||||||
| Measured at amortized cost | |||||||
| Non-current | |||||||
| Bank loans 1 | 4,974 | 4,974 | 7,487 | 7,487 | 6,230 | 6,230 | 2 |
| Other interest-bearing liabilities 1 | 2,289 | 2,289 | 2,219 | 2,219 | 1,841 | 1,841 | |
| Current | |||||||
| Bank loans 1 | 2,513 | 2,513 | 2,513 | 2,513 | 2,513 | 2,513 | 2 |
| Other interest-bearing liabilities 1 | 2,346 | 2,346 | 2,306 | 2,306 | 2,463 | 2,463 | |
| Trade and other payables | 11,525 | 11,525 | 12,179 | 12,179 | 13,196 | 13,196 | |
| Financial liabilities at fair value through profit or loss | |||||||
| Non-current | |||||||
| Contingent consideration 1 | 9,628 | 9,628 | 17,982 | 17,982 | 10,177 | 10,177 | 3 |
| Current | |||||||
| Contingent consideraion 1 | - | - | 387 | 387 | 9,481 | 9,481 | 3 |
| Total financial liabilities | 33,275 | 33,275 | 45,072 | 45,072 | 45,900 | 45,900 |
1Included in the statement of financial position item Financial liabilities.
-
Fair value hierarchy levels
During the review period, no instruments were transferred from one fair value hierarchy level to another.
Level 1
The fair values of the hierarchy level 1 are based on the quoted (unadjusted) prices of identical assets or liabilities in active markets.
Level 2
The fair values of the level 2 instruments are based, to a significant extent, on inputs other than quoted prices but still on information that is observable for the asset or liability in question, either directly or indirectly.
Level 3
The fair values of the level 3 instruments are based on inputs about the asset or liability that are not based on observable market information but instead, to a significant extent, on estimates by the management and their utilization in generally accepted valuation models.
Related -party transactions
There were no significant changes involving relationships or transactions with related parties during the review period. The salaries and fees paid to the company's Board of Directors and Management Team are published annually in connection with the financial statements.
Helsinki, 13 August 2024
Board of Directors, Siili Solutions Plc
Further information:
CEO Tomi Pienimäki tel. +358 40 834 1399
CFO Aleksi Kankainen tel. +358 40 534 2709
Siili Solutions in brief:
Siili Solutions Plc is a unique combination of a digital agency and a technology powerhouse. We believe in human-centricity in everything we deliver. Siili is the go-to partner for clients seeking growth, efficiency and competitive advantage through digital transformation. Siili has offices in Finland, Germany, Poland, Hungary, Netherlands, United Kingdom, Austria and USA. Siili Solutions Plc shares are listed on Nasdaq Helsinki Ltd. Siili has grown profitably since it was founded in 2005. www.siili.com
