Digia Plc’s Half Year Financial Report 2018

Digia Plc’s Half Year Financial Report 2018
Net sales were up 20% and operating profit improved 148% during the first half of the year

April-June 2018

• Net sales EUR 28.9 (24.4) million; increase 18.3%
• Operating profit EUR 1.9 (1.4) million; increase 38.8%, operating margin 6.7% (5.7%) of net sales
• Earnings per share EUR 0.06 (0.05)

January-June 2018

• Net sales EUR 55.7 (46.5) million; increase 19.8%
• Operating profit EUR 3.5 (1.4) million; increase 147.5%, operating margin 6.3% (3.1%) of net sales
• Earnings per share EUR 0.10 (0.05)
• Return on investment 11.8 (5.0) per cent
• Equity ratio 52.5 (52.3) per cent
• Acquisition of Avarea Oy, which specialises in analytics solutions
• Profit guidance for 2018 remains unchanged: Digia's net sales will continue to grow and operating profit will improve significantly compared to 2017.

GROUP KEY FIGURES
(Figures for 2017 adjusted)

Change % figures have been calculated from IFRS-adjusted figures.
1) IFRS 15 adjustment to consolidated net sales: 4-6/2017 EUR -451 thousand, 1-6/2017 EUR -808 thousand and full-year 2017 net sales EUR -1,685 thousand.
2) IFRS 15 adjustment to consolidated operating profit: 4-6/2017 EUR +25 thousand, 1-6/2017 EUR -14 thousand and full-year 2017 operating profit EUR 6 thousand.

DIGIA’S PRESIDENT & CEO TIMO LEVORANTA

“Digia’s net sales developed strongly during the second quarter and the review period. Second quarter net sales saw year-on-year growth of 18.3 per cent and were EUR 28.9 million. Net sales for January-June were EUR 55.7 million and grew in the beginning of the year by 19.8 per cent, of which 12.6 per cent was organic growth. Demand and net sales developed favourably in all of Digia’s service areas during the review period, and the Income Register project that Digia is implementing with the Tax Administration supported net sales growth.

Second quarter operating profit amounted to EUR 1.9 (1.4) million and operating profit for January-June to EUR 3.5 (1.4) million. The second quarter operating margin was 6.7 (5.7) per cent and 6.3 (3.1) per cent in January-June. Operating profit was improved by efficiency measures launched at the end of last year and investments in project management.

Digia’s strategy is to renew its customers’ business operations through digitalisation. Our strength is to be able to offer comprehensive digital services for business systems and their integration. Our goal is profitable growth that is faster than the IT services market. During the review period, new customer deliveries of digital services progressed as planned, and we continued develop deliveries and collaboration models which are creating business-value for our customers. Demand has remained strong in both customised and e-commerce solutions.

Demand for our solutions for integration and data utilisation is supported by the growing role of data in building digital services. The networking of business operations and information exchange between organisations are on the rise, which increases demand for software interface solutions in particular. Integration and Information Management is one of our strongest-growing service areas. Avarea Oy, which we acquired in the first quarter, has continued to bolster our position in this growing demand area. Avarea specialises in analytics solutions.

Our customers are currently modernising their ERPs to support the digitalisation of their business in the customer interface. An extensive offering and in-depth knowledge are our strengths in this area. Microsoft selected Digia as its Digitalisation Partner of the Year, which shows that we’re the leading player in this area. After the end of the review period, we strengthened our expertise by agreeing on a deal in which Mavisystems Oy and its wholly-owned subsidiary Mirosys Oy were acquired by Digia Plc as from 1 August 2018. The companies are specialising in demanding Microsoft Dynamics ERP and CRM solutions.

Demand for Financial Sector’s solutions and services remained steady. Demand was maintained by the development of operating models and systems to respond to the changes in digitalisation, regulation in the sector and customer behaviour. We were also involved in many projects related to changes in the financial markets, such as Mifid II, T2S and the EU General Data Protection Regulation (GDPR).

In January-June the service and maintenance business grew by 9.4 per cent and accounted for 46.3 (49.8) per cent of net sales. Digia's long-term goal is to increase the service business’s share of net sales through service contracts that involve the tracking of project phases and which cover the entire lifecycle of the service. During the review period, we signed multiyear agreements for continuous services with Gasum and St1, which supports the growth of the service business.

According to our strategy, our aim is further strengthen Digia’s position in the Finnish IT service market and to keep growing profitably at a faster rate than the IT service market. I believe that we are well-poised to do so thanks to the knowhow of Digia’s experts and extensive service offering and their continuous development.”

NET SALES AND OPERATING PROFIT

Net sales for January–June 2018 totalled EUR 55.7 (46.5) million, up 19.8 per cent on the previous year. In January–June 2018, earnings after taxes were EUR 2.6 (0.9) million and earnings per share EUR 0.10 (0.05).

OUTLOOK 2018

Profit guidance for 2018 remains unchanged: “Digia's net sales will continue to grow and operating profit will improve significantly compared to 2017.”

BRIEFING INVITATION

Digia will hold a briefing for analysts on Friday 10 August 2017 at 11 am, in the Tapiola cabinet at Hotel Scandic Simonkenttä, Simonkatu 9, 00100 Helsinki, Finland. Welcome.

The material and presentation for the event will be available from about 11 am on 10 August 2018 in the Investors section of the company’s website: www.digia.com/en/investors/reports-and-presentations.

FURTHER INFORMATION

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

DISTRIBUTION

Nasdaq Helsinki
Key media
www.digia.com

Digia is a profitably growing IT service company that helps its customers harness digital opportunities. As a visionary partner, Digia develops and innovates solutions that support business operations together with its customers. We adapt our expertise to their specific industries to help them develop digital services, manage operations and utilise information. We employ over 1,000 experts in Finland and Sweden. We are expanding our international presence together with our customers. Digia's net sales in 2017 totalled EUR 94.5 million. The company is listed on Nasdaq Helsinki (DIGIA). www.digia.com

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