Helsinki, Finland, 2017-08-23 08:00 CEST (GLOBE NEWSWIRE) --
DIGITALIST GROUP PLC Stock Exchange Release 23 August 2017 at 09:00
THE DIGITALIST GROUP HALF-YEAR REPORT 1.1.-30.6.2017
THE TURNOVER GREW AND THE RESULT IMPROVED
April - June 2017 (the figures for 2016 in brackets):
Report period January - June 2017 (the figures for 2016 in brackets):
Prospects for the future
The operating result is expected to improve compared to 2016.
“During the second quarter of 2017 we continued our renewal process and implemented changes in our company. At the end of March, we announced the acquisition of InterQuest Oy. The integration that followed has gone very well, and we are pleased at how fast and successfully it has started. With this acquisition, we extended our offering concerning user experience research to include quantitive services based on LeanLabTM tools. Based on customer demand we believe that the user experience research offering will continue to grow and it will help us to develop this business area further. In April, the Company bought the #Digitalist business from Rome Advisors and consequently our company’s name was changed from Ixonos Oyj to Digitalist Group Oyj. We aimed at several benefits with this transaction.
Firstly, we wanted to enforce the consultative development and marketing skills by appointing Ville Tolvanen, one of the most important names in the field, as our Chief Digital Officer (CDO). Secondly, we wish to support the Digitalist Network formed around Digitalist, helping to further the entire digitalisation process in Finland. We will continue to arrange, together with our partners, the well-recognised Digitalist Network events in Finland and abroad. This is a way to benefit the network with our input. Thirdly, we believe that the new name, Digitalist Group, better tells what our company does and produces for its customers. That is, in short, high-class and innovative digital services and products that enable our customers to strengthen their existing business and to create new solutions.
Our turnover continued to grow, as it increased by about one fifth compared to the same period last year. The increase in turnover was based both on deepening the collaboration with existing customers as well as on favourable development on new customers side. Concerning profitability, we are in the right direction, even though there was an influence on profitability by, among other things, the corporate and business transactions performed during the period under survey, as they brought with them one-time expenses. As a company, we aim at profitable growth, and we believe that the projects implemented now will help with this goal. We will continue our determined work to build an international company, and we believe that this work will benefit, for example, our customers in Finland, as we can bring to them international insight and experience.
We will keep on developing our company, and we strongly believe in our high-class line of offerings that ranges from user and user experience planning to digital design and strong technological knowhow. We offer the modules mentioned above both separately and as packages. Especially, the synergy brought by packaged service offering is a substantial asset to our customers. We aim at being a unique partner to our customers. This means combining innovativeness, trustworthiness, flexibility and a willingness to develop things together with our customers by way of challenging them to demand more from us and from themselves. Our strengthening international operations give us ‘excellent tools for this purpose.”
/ Sami Paihonen, CEO
REPORTING BY SEGMENT
Digitalist Group reports its business operations as one segment.
During the second quarter, the Group’s turnover was 4.7 (3.8) MEUR, that is 21.9 % more than during the previous year.
During the period under survey, the Group’s turnover was 8.9 (7.7) MEUR, that is 15.2 % more than during the previous year.
The business operations in Finland and in Great Britain have developed positively, and the company believes that the business operations in the United States shall develop positively.
During the period under survey, the share of any one customer has not been decisive and has not been more than 10 % of the turnover.
During the second quarter, the operating result was -1.2 (-2.4) MEUR and the result before taxes was -2.1 (-2.9) MEUR. The net loss for the second quarter was -1.8 (-2.9) MEUR, the earnings per share were -0.00 (-0.01) euros and the cash flow from operations/share was -0.01 (-0.01) euros.
The operating result for the period under survey was -2.0 (-4.6) MEUR and the result before taxes was -3.3 (-5.7) MEUR. The net loss for the period under survey was -3.1 (-5.7) MEUR. The deferred tax liablity items reversed during the period under survey, a total of 0.2 euros, had a positive effect on the net result. In addition, the impact from the changes in the exchange rates in the intra-group balance sheet items of 9.6 (7.7) MEUR, totalling to -0.5 (-0.5) million euros, was taken into account. The result of the period under survey include impact from expenses related to business acquisitions, total of -0.3 million euros.
The earnings per share were -0.01 (-0.01) euros and the cash flow from operations/share was -0.01 (-0.01) euros. The result for the period under survey improved compared to the previous year due to both the growth in sales and the reduced amount of costs.
RETURN ON CAPITAL
The Group’s equity was negative -4.7 (-0.4) MEUR. As the Group’s equity was negative, the return on equity (ROE) was not calculated for the period under survey. The equity was negative only for the Group consolidated accounts, not for the parent company.
The return on investment (ROI) was -26.1 (-2.3) per cent.
The investments during the period under survey were 2.0 (0.0) MEUR. The investments concerned the business combination transactions done. All the product development costs are included in the Group’s result and no product development costs were activated into the balance sheet during the period under survey.
BALANCE SHEET AND FINANCING
The balance sheet net total was 18.6 (16.9) MEUR. The shareholders’ equity was -4.7 (-0.4) MEUR. The equity ratio for the entire shareholders’ equity was -26.1 (-2.3) %. The Group’s liquid assets at the end of the financial period were 1.0 (0.4) MEUR. The minority share of the shareholders’ equity was 0.0 (0.2) MEUR.
The change in the company shareholders’ equity during the period under survey was caused by the result showing a loss. As well the shareholders’ equity was impacted be the shares emissions done, total of 2.0 MEUR related to acquisition arrangements during the period under survey.
At the end of the period under survey, the Group balance included 2.8 (3.0) MEUR worth of financing institute loans that included the bank account limits in use. Some of the financing loan agreements contain covenant clauses concerning the company’s solvency. These are looked at for the first time on 31/12/2017.
In addition to this, the company has loans and a convertible bond from its principal owner. The overall loans carrying interest on 30 June 2017 were 16.8 (10.4) MEUR. Out of these, 13.9 (7.1) MEUR were related party company loans. The loan agreements concluded with related party companies during the period under survey are included in this report under “Related party events”.
The Group’s cash flow from operations during the period under survey was -4.2 (-3.4) MEUR, a change of -23.4%. The worsening of the cash flow from operations was mainly caused by non-profitable result and change in net working capital. The prepayments received on comparison period as well as less amount of sold receivables during the period under survey contributed to adverse development in net working capital.
In order to shorten the turnover of sales receivables the Group sells part of its account receivables in Finland. During the period under survey, a total of 1.4 (3.0) MEUR of sales receivables were sold.
On 30/06/2017, the Group’s balance sheet included 11.9 (11.5) MEUR worth of goodwill.
The following parameters were used for testing goodwill:
- The length of the review period was 4 years
- The WACC discount rate was 11 per cent
- The growth estimate of 1 per cent was applied to terminal value calculation.
On 30/06/2017 the goodwill testing did not indicate a need to impair goodwill. The present value of the future cash flows surpassed the carrying value of the assets by 22.7 MEUR.
On 30/06/2017, the net present value of the discounted cash flow indicated by the calculation, 35.0 MEUR, is lower than the total sum consisting of the company’s financing debts of 16.8 MEUR and the 41.9 MEUR market price of the shares.
The average number of personnel during the period under survey was 178 (197), and it was 189 (191) at the end of the period. At the end of the period under survey, 156 (156) of the Group’s personnel was employed by the companies in Finland and 33 (35) were employed by the Group’s companies abroad. During the period under survey, the personnel grew by 20 employees.
THE SHARES AND THE SHARE CAPITAL
Trading and share prices
During the period under survey, the highest price of the company’s shares was 0.160 (0.07) euros, the lowest price was 0.104 (0.06) euros and the closing rate on 30/06/2017 was 0.113 (0.06) euros. The average share price for the period under survey was 0.129 (0.06) euros. During the period under survey, a total of 25,872,350 (6,912,701) shares were traded, which represents 6.98 (1.96) % of the number of shares at the end of the period. The market value of the share capital indicated by the survey period’s closing rate on 30/06/2017 was €41,872,104 (€21,213,894).
At the beginning of the period under survey, the company’s registered share capital was €585,394.16 and the number of shares was 353,564,898. At the end of the period, the share capital was €585,394.16 and the number of shares was 370,549,597.
The option programmes in 2011, 2014 and 2016
Digitalist Group Oyj has three option programmes: The programmes for 2011, 2014 and 2016, the maximum number of shares for subscription in these is 42,018,526 new company shares. The details of the option programmes are available on the company’s pages at www.digitalistgroup.com.
The number of shareholders on 30/06/2017 was 3,873 (3,081). Private persons own 13.7% (12.6%), corporations own 85.8% (86.8%) and foreigners own 0.5% (0.5%). The administrative register contained 1.3% (1.8%) of the shares.
The share of ownership of Tremoko Oy Ab, a related party of the company, is 78.4%. The share of ownership can be raised to 78.5 %, if options are utilised.
Related party events
On 03/02/2017, the company concluded an agreement with Tremoko Oy Ab about additional financing for working capital. The loan agreement to be made enables a maximum of 1.0 MEUR of additional financing, if necessary.
On 03/03/2017, the company approved the binding offer by its principal owner Tremoko Oy Ab concerning a financing arrangement of a maximum of 2.0 MEUR (“Financing Arrangement”). The additional financing arrangement concluded before between Digitalist Group Oyj and Tremoko Oy, worth 1.0 MEUR, shall be combined with the Financing Arrangement. The previous arrangement was publicised on 03/02/2017. The Financing Arrangement now concluded enables thus Digitalist Group Oyj to have 1.0 MEUR more additional financing compared to the situation before, if so required. The additional financing according to the Financing Arrangement is due for repayment at the latest on 31/01/2019.
On 23/05/2017, the company agreed with its principal owner Tremoko Oy Ab, that the financing limit now in force (announced on 03/03/2017) shall be raised from 2.0 MEUR to 4.6 MEUR (“Financing Arrangement”). This means that the Financing Arrangement now concluded enables Digitalist Group Oyj to have 2.6 MEUR more additional financing compared to the situation before, if so required. The additional financing according to the Financing Arrangement is due for payment at the latest on 31/01/2019.
OTHER EVENTS DURING THE SECOND QUARTER
The Interquest Oy company acquisition was finalised and the acquired company became a part of the Group. With the acquisition, the Group further strengthened its global position as a leading producer of comprehensive digital transformation services, and it enables to its customers a wider, deeper and quicker global service. After the company acquisition, the Group became the biggest user insight firm in the Nordic countries that is capable of modern user experience research.
The company bought the Digitalist business of the Finnish company Rome Advisors Oy, together with the intellectual property rights and the brands involved. The company acquisition complements the carrying out of the company’s strategy, and the renewed company shall work as a pathfinder in deploying digitalisation knowhow in various fields.
The company’s extraordinary general meeting on 19/05/2015 decided, as proposed by the board of directors, to amend Section 1 of the company’s articles of association to read as follows:
The company name is Digitalist Group Oyj, Digitalist Group Abp in Swedish and Digitalist Group Plc in English. The registered office of the company is Helsinki.
Annual General Meeting on 29/03/2017, Extraordinary General Meeting on 19/05/2017
The company held its annual general meeting on 29/03/2017 and an extraordinary general meeting was held on 19/05/2017. The minutes of the general meetings, together with the decisions made, are available at the company’s pages at www.digitalistgroup.com.
The stock exchange releases for the period under survey are available at the company’s pages at www.digitalistgroup.com/investors/releases.
EVENTS AFTER THE REPORTING PERIOD
On 12/07/2017, Hans Parvikoski was appointed as the Chief Financial Officer (CFO) and as a member of the management group of Digitalist Group. He will start in his post on 11/10/2017. In his new assignment, Mr. Parvikoski joins the existing upper management’s incentive programme.
On 06/07/2017, Digitalist Group Oyj (“Digitalist Group”) signed an agreement by which NodeOne Group AB, the Swedish parent company of Wunderkraut Sweden AB (“Wunderkraut Sweden”), becomes a part of the Digitalist Group. This requires that certain execution terms of the transaction be met. In case the transaction is finalised, Digitalist Group expands its activities to Sweden and strengthens its internet pages’ design and development service line to a marked extent. With the transaction being finalised, Digitalist Group will bring to the Swedish market its complete “Discover – Design – Deliver” offering through which the customers can get their digitalisation services from one place. Wunderkraut Sweden has a strong reputation as a leading company in Sweden specialising in digital and internet page development. Its customer satisfaction is rated as very high and its excellent team is constantly involved in assignments and projects. NodeOne Group ABs turnover in 2016 totalled to SEK 37.3 million and net result SEK 2.7 million. The group employs 45 heads at the moment.
On 04/07/2017, the Finnish Financial Supervisory Authority approved Digitalist Group Oyj’s registration document as required by the Securities Markets Act (“Registration Document”). The Registration Document contains information about the company, its business activities and financial standing. The Registration Document is in force for 12 months after its approval.
The Group has received an advance payment of around EUR 1 million from Savox Communications Oy on basis of a product development agreement between the companies, announced on 20/6/2016.
RISK MANAGEMENT AND MATTERS LEADING TO UNCERTAINTY IN THE NEAR FUTURE
The goal of Digitalist Group Oyj’s risk management is to ensure the undisturbed continuation of the company’s operations and development, and to support the realizing of the business goals set by the company, as well as to support the increase of the company’s value. More exact information about the risk management organisation, processes and identified risks are available at the company’s pages at www.dgitalistgroup.com.
As of late, the company’s result has shown a loss, even despite the activities made to intensify operations. The unprofitable result has had an immediate effect on the sufficient level of the company’s working capital. This risk is managed by keeping up a preparedness for various financing solutions.
Any changes in the key customer relations might have a negative effect on Digitalist Group’s operations, ability to produce a profit and financial standing. In case any of the biggest customers was to divert its acquisitions from Digitalist Group to its competitors, or would change its operation model radically, the possibilities to find compensatory customer volume at a short notice would be restricted.
The structure of the Group’s turnover and its contents have changed. The Group’s operations are mainly made up of individual customer agreements, which often comprise of a relatively short term. The predicting of the launching and extent of new projects is challenging at times, while at the same time the cost structure is for the most part a fixed one. The matters mentioned above may cause unpredicted fluctuation in the turnover and, because of this, in the profitability.
A certain part of the Group’s business operations is made up of fixed-price project deliveries. The fixed-price project deliveries form a risk related to time and content. The aim is to manage this risk by using contract and project management tools.
Part of the Group’s turnover is invoiced for in other currencies than euros. The exchange rate risk is managed by various means, amongst other things through optimizing net positions and hedging agreements.
The Group has a subsidiary in England. Estimations about the effects of Brexit on the subsidiary’s operations have been assessed, and the estimate is that the effect is limited.
The Group has in its balance sheet a substantial amount of goodwill that is prone to the risk of impairment in case the future expectations for yield from the Group’s cash flow go down due to either inner or outer factors. The goodwill is tested for impairment each quarter, and at other times, if needed.
Some of the Group’s bank loans (EUR 0.4 million) contain financing covenants, the breaching of which could lead to, either, the rising of the company’s financing expenses, or to a demand for the partial or complete rapid repayment of the bank loans. The biggest risks for the covenants entering into force are to do with the fluctuation of the operating margin due to the market situation, or to an eventual need to increase the company’s working capital by using liabilities-based financing. This risk is managed through negotiations and by keeping up a preparedness for various financing solutions.
THE LONG-TERM GOALS AND STRATEGY
The long-term goal of Digitalist Group is to reach an operating profit level of at least 10 per cent. In order to reach the long-term goals, Digitalist Group concentrates in its strategy to deepen its service and solution businesses, as well as on the seamless unifying of user and usage research, design and technology. We aim at new customer relationships within the various segments by always using our unique way of producing business benefits to our customers by way of digital and mobile services.
THE NEXT REPORTS
Interim report 1-9/2017 on Friday 03/11/2017.
DIGITALIST GROUP OYJ
Board of Directors
For more information:
Digitalist Group Oyj
- Sami Paihonen, CEO, telephone 050 502 1111, firstname.lastname@example.org
- Pekka Pylkäs, CFO, telephone 040 538 1821, email@example.com
NASDAQ OMX Helsinki
The relevant media sources
A SUMMARY OF THE INTERIM REPORT WITH NOTES 1.1.-30.6.2017
CONSOLIDATED INCOME STATEMENT, 1000 EUR
|1. 4. -30.6. 17||1. 4. -30.6. 16||Change %||1. 1. -30.6. 17||1. 1. -30.6. 16||Change %||1. 1. -31.12. 2016|
|Turnover||4 667||3 830||21.9||8 903||7 730||15.2||15 256|
|Operating expenses||-5 896||-6 229||5.3||-10 929||-12 370||11.6||-22 993|
|OPERATING RESULT||-1 229||-2 400||48.8||-2 027||-4 640||56.3||-7 736|
|Financing income and expenses||-826||-506||-63.2||-1 265||-1 084||-16.7||-1 811|
|Result before taxes||-2 055||-2 905||29.3||-3 292||-5 724||42.5||-9 547|
|NET RESULT FOR THE FINANCIAL PERIOD||-1 818||-2 906||37.4||-3 055||-5 725||46.6||-9 550|
|To parent company owners||-1 818||-2 906||37.4||-3 055||-5 723||46.6||-9 550|
|To owners without authority||0||0||0||-2||0|
|Earnings per share:|
EXTENSIVE INCOME STATEMENT, 1000 EUR
|1. 4. -30.6. 17||1. 4. -30.6. 16||Change %||1. 1. -30.6. 17||1. 1. -30.6. 16||Change %||1. 1. -31.12. 2016|
|Net result for the financial period||-1 818||-2 906||37.4||-3 055||-5 725||46.6||-9 550|
|Other extensive income statement items|
|Change in translation difference||370||156||137.2||403||530||24.0||538|
|RESULT FOR THE FINANCIAL PERIOD, extensive statement||-1 448||-2 751||47.4||-2 652||-5 195||49.0||-9 012|
CONSOLIDATED BALANCE SHEET, 1000 EUR
|Goodwill||11 876||11 543||11 543|
|Other intangible assets||1 781||393||323|
|Tangible fixed assets||318||325||340|
|TOTAL LONG-TERM ASSETS||14 058||12 269||12 370|
|Account receivables and other receivables||3 622||4 278||3 304|
|TOTAL SHORT-TERM ASSETS||4 586||4 625||3 726|
|TOTAL ASSETS||18 645||16 894||16 096|
|SHAREHOLDERS’ EQUITY AND LIABILITIES||30.06.2017||30.06.2016||31.12.2016|
|Invested unrestricted equity fund||49 200||46 969||47 191|
|Retained earnings||-51 687||-42 665||-42 645|
|Net result for the financial period||-3 055||-5 723||-9 550|
|Equity attributable to equity holders of the parent||-4 738||- 614||-4 199|
|Non-controlling interests||0||- 219||0|
|TOTAL SHAREHOLDERS’ EQUITY||-4 738||- 395||-4 199|
|Long-term liabilities||14 278||7 493||10 215|
|Short-term liabilities||9 105||9 796||10 078|
|TOTAL LIABILITIES||23 383||17 288||20 294|
|TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES||18 645||16 894||16 095|
CALCULATION ABOUT THE CHANGES IN THE CONSOLIDATED SHAREHOLDERS’ EQUITY, 1000 EUR
A: Share capital
B: Premium fund
C: Share issue
D: Invested unrestricted equity fund
E: Translation difference
F: Retained earnings
G: Total shareholders’ equity belonging to parent company owners
H: Share of the owners without authority
I: Total shareholders’ equity
|Shareholders’ equity 01/01/2016||585||219||0||46 994||- 258||-45054||2 487||221||2 708|
|Net result for the financial period||-5723||-5 723||- 2||-5 725|
|Other extensive result items|
|Change in translation difference||530||530||530|
|Events pertaining to the shareholders|
|Share issue||2114||2 114||2 114|
|Shareholders’ equity acquisition expenses||- 25||- 25||- 25|
|Rewards based on shares||3||3||3|
|Shareholders’ equity 30/06/2016||585||219||0||46 969||272||-48660||- 614||219||- 395|
|Shareholders’ equity 01/01/2017||585||219||0||47 190||280||-52475||-4 199||0||-4 199|
|Net result for the financial period||-3055||-3 055||-3 055|
|Other extensive result items|
|Change in translation difference||403||403||403|
|Events pertaining to the shareholders:|
|Share issue||2 031||2 031||2 031|
|Shareholders’ equity acquisition expenses||- 23||- 23||- 23|
|Rewards based on shares||104||104||104|
|Shareholders’ equity 30/06/2017||585||219||2 031||47 169||684||-55426||-4 738||0||-4 738|
CONSOLIDATED CASH FLOW STATEMENT, 1000 EUR
|Cash flow from business operations|
|Net result for the financial period||-3 055||-5 725||-9 550|
|Adjustments of the cash flow from business operations|
|Income tax||- 237||1||1|
|Other income and expenses without payments||0||0||500|
|Depreciation and write-downs||271||743||505|
|Financing income and expenses||1 265||873||1 511|
|Other adjustments||- 446||- 469||- 997|
|Funds from operations before change in working capital||-2 201||-4 577||-8 029|
|Change in working capital||-1 317||1 366||2 841|
|Interests paid||- 661||- 194||- 280|
|Taxes paid||- 25||- 1||- 1|
|Net cash flow from business operations||-4 201||-3 405||-5 467|
|Compensation from the M&A transactions||0||400||550|
|Acquisition of subsidiaries, net of funds at acquisition||305||0||0|
|Investments into tangible and intangible assets||- 106||- 47||- 364|
|Sales of tangible assets||0||0||47|
|Net cash flow from investments||199||353||233|
|Net cash flow before financing||-4 001||-3 052||-5 234|
|Cash flow from financing|
|Long-term loan withdrawals||4 440||1 894||4 394|
|Short-term loan withdrawals||2 003||48||47|
|Short-term loan instalments||-2 127||- 127||- 253|
|Payments from share subscriptions||300||0||0|
|Shareholders’ equity acquisition expenses||- 23||- 25||24|
|Financial leasing payments||- 48||- 292||- 457|
|Net cash flow from financing||4 545||1 498||3 755|
|Change in funds||543||-1 554||-1 479|
|Funds at the beginning of the financial period||422||1 901||1 901|
|Funds at the end of the financial period||965||347||422|
The principles for drawing up the statements
These financial statements were drawn up according to IAS 34, Interim Reports standards and the principles for Interim Financial Statements. The changes in the IFRS standards that entered into force on 01/01/2017, and their interpretations, did not have an essential effect on the consolidated financial statements.
In order to apply the IFRS 15 standard, the Group has gone through all the agreements that were implemented during the period under survey. Based on the said agreements, the IFRS 15 standard does not have an essential effect on the income recognition of sales proceeds. The company continues the efforts in connection with implementing the said standard.
Drawing up the financial statements according to the IFRS standards requires that the company’s management use such estimates and suppositions that have an effect on the amount of the assets, debts, revenues and expenses at the time when the balance sheet is drawn up. Additionally, special care must be taken when the principles for drawing up the financial statements are applied. Since the estimates and suppositions are based on the views at the time when the report on the financial statements is released, they include risks and uncertainties. The actual final outcome may differ from the estimates and suppositions made.
The figures in the income statement and balance sheet apply for the entire Group. The consolidated balance sheet is a combination of all the Group companies. The original interim report is in Finnish. The English-language report is a translation of the original.
The figures in the report are rounded up. This means that the sum total of the single figures might differ from the sum totals that are presented. The interim report has not been audited.
The continuation of activities
This interim report was drawn up according to the principle of continuing activities, taking into account the company’s financing arrangements and forecast for the business operations in 2017. The forecasts take into account the probable, or foreseeable, changes in the future expectations, both for the part of the income flow and the expected expenses.
At the time of announcing the financial statements the company estimates that its working capital will be sufficient for the next 12 months.
Some of the company’s bank loans include covenant terms that will be reviewed for the next time on 31/12/2017.
The impairment testing of the goodwill
On 30/06/2017, Digitalist Group performed the impairment test for the loss in value of the goodwill. Starting from 01/11/2013, the goodwill has been attributed to one cash generating unit.
According to the goodwill testing, the present value of the future cash flows surpassed the tested amount by 22.7 MEUR, meaning that there was no need for impairment. At the end of the financial period, the carrying value of the goodwill amounted to 11.9 MEUR. On 30/06/2017, the present value of the cash flow indicated by the calculation, at 35.0 MEUR, is lower than the sum total made up of the company’s financing debts of 16.8 MEUR and the 41.9 MEUR market price of the shares.
The company tests its goodwill against discounted cash flow value of the operation. The impairment testing made on 30/06/2017 included the cash flow forecasting period of Q3 2017 – Q2 2021.
For the part of 2017, the estimate was based on a moderate growth rate. During 2018-2021 a growth of an average 15 per cent is predicted as digitalisation will include an increasing part of the business world. The forecast assumes that the operating profit will rise to 9 per cent on average.
The assets tested by this method are compared to the value of discounted cash flow that they produce during a chosen period, taking into account the discount rate and the growth coefficient of the cash flow after the prediction period. The discount rate applied is 11 per cent p.a. The growth coefficient for the cash flow after the prediction period is 1 per cent p.a. The weighted average operating profit rate for the period is used when calculating the terminal period value.
The most important sensitivity factors for testing goodwill are, in addition to the cash flow predictions and suppositions, the terminal value growth per cent and the discount rate used. In case the terminal value growth per cent used were -85 per cent, instead of one per cent, the goodwill would have corresponded to the tested amount. In case the discount rate used were 29.5 per cent, instead of 11 per cent, the goodwill would have corresponded to the tested amount. In case the business profit per cent were 0.1 per cent on average, instead of 9 per cent, the goodwill would have corresponded to the tested amount.
On 30/06/2017, the company had a total of 2.8 MEUR of financing loans. The capital amount of the loans that included a covenant clause was 0.4 (0.6) MEUR on 30/06/2017.
The said loan agreements contain covenant concerning the company’s equity ratio, defined so that included in the equity calculation are also the loans and the financing limits received from the principal owner. The covenant clause will be reviewed for the next time on 31/12/2017 after which it shall be reviewed semi-annually. In case the company does not fulfil the covenant determined in the agreement, the financier has the right to terminate for repayment the loans under the covenant terms. The equity ratio calculated according to the covenant of the loan agreements must be at least 30 per cent. On 30/06/2017, the company’s equity ratio, according to the covenant definition was 49.4 per cent.
The due dates of the loans under covenant terms:
Amount of the instalment
|01/01/ - 31/12/2018||253|
CONSOLIDATED INCOME STATEMENT FOR EACH QUARTER, 1000 EUR
|Turnover||4 667||4 236||4 489||3 037||3 830||3 901|
|Operating expenses||-5 896||-5 034||-5 572||-5 050||-6 229||-6 141|
|OPERATING RESULT||-1 229||- 798||-1 083||-2 014||-2 400||-2 240|
|Financing income and expenses||- 826||- 440||- 231||- 495||- 506||- 578|
|Result before taxes||-2 055||-1 237||-1 341||-2 510||-2 905||-2 818|
|Income tax||237||0||- 1||0||- 1||0|
|RESULT FOR THE COMPARISON PERIOD||-1 818||-1 237||-1 315||-2 510||-2 906||-2 819|
CHANGES IN FIXED ASSETS, 1000 EUR
|Goodwill||Intangible assets||Tangible fixed asset commodities||Saleable investments||Total|
|Book value 01/01/2016||12 043||548||372||23||12 986|
|Exchange rate changes||0||0||- 3||- 15||- 18|
|Deductions and transfers||0||0||0||0||0|
|Business divestments||- 500||0||0||0||- 500|
|Reductions in value||0||0||0||0||0|
|Depreciations during the reporting period||0||- 156||- 87||0||- 243|
|Book value 30/06/2016||11 543||393||325||8||12 269|
|Book value 01/01/2017||11 543||323||340||8||12 214|
|Additions||333||1 675||37||0||2 045|
|Exchange rate changes||0||0||- 4||0||- 4|
|Deductions and transfers||0||0||0||0||0|
|Reductions in value||0||0||0||0||0|
|Depreciations during the reporting period||0||- 217||- 55||0||- 272|
|Book value 30/06/2017||11 876||1 781||318||8||13 983|
|Earnings per share, EUR, diluted||0.00||-0.01||- 0,03|
|Earnings per share, EUR||0.00||-0,01||-0 03|
|Shareholders’ equity per share, EUR||-0,02||0,00||-0,01|
|Cash flow from business operations per share, EUR, diluted||0,00||-0,05||-0,01|
|Cash flow from business operations per share, EUR||-0,01||-0,005||-0,01|
|Return on investment, %||-54,2||-34,8||-70,1|
|Return on equity, %||309,6||-900,8||1,5|
|Operating profit/turnover, %||-18,8||-57,4||-50,7|
|Gearing for the entire equity, %||-259,7||4 424.2||-288,3|
|Equity ratio for the entire equity, %||-33,5||1,3||-26,1|
|Equity ratio without minority share, %||-33,5||0,1||-26,1|
|Earnings before interests and taxes (EBITDA), 1000 EUR||- 697||-2 113||-7 231|
|PERSONNEL on average||178||197||188|
|Personnel at the end of the financial period||189||191||174|
|SECURITIES, 1000 EUR|
|Securities for own commitments|
|Company mortgages||23 500||23 500||23 500|
|Leasing and other rent responsibilities|
|Due within 1 year||962||1 203||831|
|Due within 1-5 years||1 334||764||1 307|
|Due after 5 years||0||0||0|
|Total||2 296||1 967||2 138|
|Nominal value of the interest rate swap agreement|
|Due within 1 year||253||253||253|
|Due within 1-5 years||127||380||253|
|Due after 5 years||0||0||0|
|Book value||- 4||- 11||- 7|
THE BASIS FOR CALCULATING THE KEY FIGURES
EBITDA Earnings before interests, taxes, depreciations and amortizations
Diluted result per share = Net profit for the financial period / the average amount of share issue adjusted shares, adjusted by the dilution effect.
Result per share = Profit for the financial period / average amount of share issue adjusted shares.
Equity per share = Equity / the undiluted number of shares on the day the books were closed.
Cash flow from business operations / share, EUR diluted = net cash flow from business operations / the average amount of share issue adjusted shares, adjusted by the dilution effect.
Return on investment (ROI) = (Profit before taxes + interest expenses + other financing expenses) /
(Balance sheet total - debts without interest (average)) x 100
Return on equity (ROE) = net result / total shareholders’ equity (average) x 100
Gearing = debts with interest - liquid assets / total shareholders’ equity x 100