Digia Plc – Correction to the Financial Statement Bulletin 2022

Digia Plc Stock Exchange Release February 10, 2023 at 4:35 pm.

This notification corrects The Digia Plc's Financial Statements 2022 bulletin announced on 10.2.2023 at 3.30 p.m., which lacked the Financial Statement Bulletin 2022 supplement (pdf).

October–December 2022

• Net sales: EUR 48.7 (44.8) million, up 8.9 per cent 
• Operating profit (EBITA): EUR 5.1 (5.0) million, change 3.1 per cent;
  EBITA margin: 10.5 (11.1) per cent of net sales
• Operating profit: EUR 4.2 (4.2) million, change 0.2 per cent;
  operating margin: 8.7 (9.4) per cent of net sales 
• Earnings per share: EUR 0.09 (0.13)
• Acquisition of the entire share capital of Avalon Oy on 1 October 2022

January–December 2022

• Net sales: EUR 170.8 (155.9) million, up 9.5 per cent
• Operating profit (EBITA): EUR 15.7 (17.7) million, change -11.3 per cent; 
  EBITA margin: 9.2 (11.4) per cent of net sales
• Operating profit (EBIT): EUR 12.7 (14.7) million, change -13.3 per cent; 
  operating margin: 7.5 (9.4) per cent of net sales
• Earnings per share: EUR 0.36 (0.44) 
• Return on investment: 12.9 (16.3) per cent
• Equity ratio: 45.9 (48.0) per cent
• Development and deployment of the Digia Business Engine system
• Acquisition of Most Digital Oy, Productivity Leap Oy and Avalon Oy 
• The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.17 per share be paid (EUR 0.17 per share in 2021).
• Profit guidance for 2023: Digia’s net sales (MEUR 170.8 in 2022) and operating profit (EBITA) (MEUR 15.7 in 2022) will grow year-on-year.

Updated strategy

The updated strategy and financial objectives will be published after the review period on 10 February 2023: 

• Net sales growth: over 10 per cent annually, including organic and inorganic growth 
• Operating profit (EBITA): over 12 per cent of net sales at the end of the strategy period

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

Group key figures 

Digia’s updated strategy and financial objectives for 2023–2025

In the strategy period 2023–2025, Digia seeks annual net sales growth exceeding over 10 per cent including organic growth and acquisitions. The target is an EBITA margin of over 12 per cent by the end of the strategy period. 

Digia also seeks to expand its international operations such that they will account for over 15 per cent (8%) of net sales by the end of the strategy period. 

For more information on Digia’s strategy for 2023–2025, see the stock exchange release published on 10 February 2023.

CEO’s Review 

“2022 was a year of renewal and growth investments at Digia. We carried out Digia’s largest-ever modernisation in order to support our future growth – the Digia Business Engine – and successfully kept our net sales on a stable growth track and posted good profitability. Fourth-quarter net sales grew by 8.9 per cent to EUR 4 (44.8)8.7 million. Our full-year net sales grew by 9.5 per cent to EUR 170.8 (155.9) million. 

Fourth-quarter operating profit (EBITA) was EUR 5.1 (5.0) million with an EBITA margin of 10.5 (11.1) per cent. Our full-year operating profit (EBITA) amounted to EUR 15.7 (17.7) million, which means an EBITA margin of 9.2 (11.4) per cent. Due to our growth investments, our profitability fell short of the previous year.

Mounting general economic uncertainty was reflected in both our profitability and net sales towards the end of the year – this uncertainty caused some of Digia’s customers to delay projects that had been agreed on and were already in progress. I am very pleased that our profitability developed favourably and our net sales continued to grow in the fourth quarter in spite of market uncertainty. Furthermore, the trend in sales even exceeded expectations in the fourth quarter.

Full-year profitability was significantly impacted by the deployment of the Digia Business Engine (DBE), a strategic in-house system that boosts our growth. The core of DBE is a smart technology platform that supports our management system and renewal of operational models.  The modernisation project had a cost impact of EUR 2.8 million during the fiscal period. A total of EUR 3.7 million has been capitalised on this project. The benefits of the modernisation project can be seen in the gradually rising efficiency of operations.   

In all sectors, today’s business is increasingly driven by knowledge-based management and reliable digital solutions that are being constantly enhanced in terms of automation and smart functionalities with a variety of technological means. Demand for implementations harnessing data utilisation as well as integration and API solutions remained strong during the entire year. This trend was also evident in the substantial growth in sales of cloud-based ERPs to small and medium-sized enterprises. The business operations of our subcontracting network Digia Hub also developed well. 

Major customer agreements made in the fourth quarter include the development of customer relationship management with the City of Helsinki and the delivery of a grain trade solution to Lantmännen Agro Oy, which is based on Digia Envision ERP software. Digia was also selected to provide the Finnish Defence Forces with secure communication solutions. Visit Finland’s project in which Digia and Positive Impact Oy are developing a carbon footprint calculator for sustainable tourism was also launched in the last quarter. In addition, we signed a cooperation agreement with Kuntien Tiera Oy for an open source, Saas-based solution for robotic process automation. 

During the fiscal year, we made further outlays on growth by carrying out acquisitions in three areas.  In spring, we acquired MOST Digital Oy, which provides scalable robotic process automation services – a scalable platform was a natural step in enriching Digia’s offering. As part of Digia, Most Digital’s new sales of platform services were over twice as high as Most Digital’s net sales for 2021. In summer, we expanded our expertise in knowledge management and the social welfare and healthcare sector with the acquisition of Productivity Leap Oy.  We believe that growth in knowledge management will remain strong and that demand in the social welfare and healthcare market will increase as the wellbeing service counties are started up. The last acquisition of the fiscal year was carried out on 1 October 2022, when Avalon Oy, which focuses on digital marketing and customer experience development, joined the Digia Group.

During the fiscal year, we were heavily involved in ensuring the functionality of society’s critical systems. For instance, during the year, we deepened our cooperation with customers in the energy, banking and social welfare and healthcare sectors as well as the defence administration. In December, the Finnish Defence Forces granted Digia national facility security clearance. Also in December, we were granted international ISO 27001 information security certification in recognition of our long-term information security work. 

For the second year running, we were the only independent Finnish IT company chosen by Microsoft as a Smart Business Solutions/Dynamics 365 Partner of the Year and as a member of the Microsoft Business Applications Inner Circle partner network – this testifies to our strong Microsoft expertise. 

2022 was the last year in our three-year strategy period. The main theme of the period was “renew and grow”. In line with our strategic objectives, we continued to pursue profitable growth, bolstered our expertise and offering for the intelligent and responsible utilisation of data and cloud technologies, and strengthened the share accounted for by our service business.

In the fourth quarter, our service business generated about 55.4 per cent of net sales, and the project business about 44.6 per cent. In the 2022 fiscal year, these figures were 60.3 and 39.7 per cent, correspondingly. 

One of our strategic objectives is to be a desired workplace. We have continued to use our flexible hybrid working model while supporting communal interaction and developed Digia’s approach to leadership. The most significant training package in 2022 covered the deployment of the Digia Business Engine. At year-end, there were 1,426 of us Digia employees – our personnel count grew by 87 during the year. 
In February, after the end of the review period, we published our strategy for 2023–2025. The updated strategy is based on our delivery capabilities that are valued by customers and our ability to engage in continuous renewal. Our mission is to ensure that our customers are at the forefront of digital evolution, with an operational model and rhythm that are right for them. We seek to achieve further strong and profitable growth and internationalise our business. In early 2023, we invested in the operationalisation of our strategy among all of Digia’s personnel. 

In spite of the short-term macroeconomic uncertainty, we at Digia believe in the growth of the IT service market: Digitalisation is a vigorous long-term trend and greater automation and smart functionalities in solutions represents the next level in digital evolution. It is our task to ensure that our customers stay at the forefront of digital evolution, listening to their needs. Automated and AI-assisted processes and services are based on reliable data and its secure availability. In our view, user-oriented and secure solutions are still gaining ground. Instead of isolated solutions, the renewal of entire businesses as a whole is being considered. Business is becoming networked – and so, too, are applications and IT systems. The utilisation of digital technologies and data is also key to solving sustainability challenges.

I would like to warmly thank all Digia employees, customers, partners and investors for their good cooperation during 2022, a very busy year. The smart solutions of the future will be built together.” 

Profit guidance for 2023

Profit guidance for 2023: Digia’s net sales (MEUR 170.8 in 2022) and operating profit (EBITA) (MEUR 15.7 in 2022) will grow year-on-year.

Events after the review period

There have been no significant events since the reporting period.

Briefing invitation

A briefing for analysts will be held at 4:00 pm on Friday, 10 February 2023 as a Teams meeting. Attendance instructions have been emailed to participants.

CEO Timo Levoranta will give a webcast on the results starting at 5:15 pm at digia.videosync.fi/2022-tilinpaatostiedote.

The material and presentation for the event will be available from 4:00 pm on 10 February 2023 on the company’s website: digia.com/en/investors/reports-and-presentations/

Financial reporting in 2023 

In 2023, Digia will publish its Financial Statement Bulletin, two business reviews, and half-year interim report as follows:

-    Business Review 1–3/2023: Thursday, 4 May 2023 at 3:00 pm
-    Half-year Report 1–6/2023: Thursday, 10 August 2023 at 3:00 pm
-    Business Review 1–9/2023: Friday, 27 October 2023 at 3:00 pm

The Annual Report will be published on the company’s website on Wednesday, 1 March 2023.
Digia Plc's Annual General Meeting will be held on Thursday, 23 March 2023. 

For further information, please contact:

President & CEO Timo Levoranta,
tel. (exchange) +358 (0)10 313 3000
 

Distribution:
Nasdaq Helsinki
Key media
digia.com
 

Digia_Financial_Statement_Bulletin_2022_20230210.pdf