DIGITALIST GROUP’S HALF-YEAR REVIEW, 1 JANUARY–30 JUNE 2022
DIGITALIST GROUP PLC
HALF-YEAR REVIEW 26 AUGUST 2022, 9:00
AM
DIGITALIST GROUP’S HALF-YEAR REVIEW, 1 JANUARY–30 JUNE
2022
SUMMARY
April–June 2022 (comparable figures for 2021 in
parentheses):
- Turnover: EUR 5.3 million (EUR 4.8 million),
increase: 10,0%.
- EBITDA: EUR -1.0 million
(EUR -1.1 million), -19.3% of turnover (-24.0%).
- EBIT: EUR -1,0 million (EUR -2.2 million*),
-19.5% of turnover (-45.7%).
- Net income: EUR -1.8 million
(EUR -2.8 million*), -33.5% of turnover (-57.8%).
- Earnings per share (diluted and undiluted): EUR -0.00 (EUR
-0.00).
January–June 2022 (comparable figures for 2021 in
parentheses):
- Turnover: EUR 10,4 million (EUR 9.6 million),
increase: 8.5%.
- EBITDA: EUR -1.4 million
(EUR -1.8 million), -13.4% of turnover (-19.1%).
- EBIT: EUR -2.3 million (EUR -3.4 million*),
-22.0% of turnover (-35.9%).
- Net income: EUR -3.1 million
(EUR -3.5 million*), -30.2% of turnover (-36.7%).
- Earnings per share (diluted and undiluted): EUR -0.00
(EUR -0.01).
- Cash flow from operations: EUR -1.3 million
(EUR -1.9 million).
- Number of employees at the end of the review period: 161 (175),
decrease of 8.0%.
*) In the comparison period 2021 there was a 0,5 million EUR
write-down of the company’s goodwill.
Future prospects
In 2022, turnover and EBITDA are expected to
improve in comparison with 2021.
CEO’s review
Despite new turbulence in the market due to the
geopolitical situation, rising inflation and increasing cost
pressure, Digitalist Group succeeded in increasing the turnover by
8,5 percent from EUR 9.6 million to EUR 10.4 million compared to
the first half of the last year. The share of turnover earned
outside Finland increased to 84 percent in the review period.
The EBITDA also slightly improved during the
review period compared to the first half of the last year. We are
continuing our work to reach positive numbers, including primarily
a stronger topline, but also keeping a constant focus on costs and
improving our ways of working. In addition to cutting Group and
overhead costs, we have implemented detailed savings initiatives
across the Group companies which have reduced the cost base for the
second half of the year.
We have during the year continued to invest in
and build our LeanLab SaaS service, which is now growing to become
a state-of-the-art customer collaboration platform for
CX-innovation.
Our business area FutureLab connects innovative
start-ups working with new sustainable materials with commercial
clients in search for sustainable packaging. FutureLab has during
the review period gained increased interest among its potential
customers and we are continuing investments to grow the sustainable
packaging business further.
Strengthening the topline remains our top
priority. As we are entering the second half of the year, we work
with new exciting projects to future-proof our clients’ businesses
using our unique competences in branding, design and technology. In
addition, we are aiming to further expand our Open source
technology offering both on the Finnish and Swedish markets.
Our market is very competitive not only when it
comes to attracting new clients, but even more so when it comes to
competing for the best talent. We believe that our culture and
focus on people is fundamental for our ability to retain the best
people. With the first half of the year behind us, I want to thank
our fantastic and talented people in all our studios for focusing
on what we do best: delivering value to our clients.
/ CEO, Magnus Leijonborg
SEGMENT REPORTING
Digitalist Group reports its business in a single segment.
TURNOVER
In the second quarter, the Group’s turnover was
EUR 5.3 million (EUR 4.8 million), which is
10.0% more than in the previous year. Increase in turnover is
reached by sales to new customers as well as by new projects with
existing customers.
The Group’s turnover for the review period
totalled EUR 10.4 million (EUR 9.6 million), which is
8.5% increase to the previous year. Active customer work is
starting to show promising signs in turnover. The share of turnover
earned outside Finland has increased to 84% (78%).
RESULT
In the second quarter, EBITDA was
EUR -1.0 million (EUR -1.1 million), EBIT was
EUR -1.0 million (EUR -2.2 million), and profit
before taxes was EUR -1.8 million
(EUR -2.8 million). EBITDA was decreased by 0.2 million
EUR one-off costs (EUR 0.3 million). Net income for the second
quarter amounted to EUR -1.8 million
(EUR -2.8 million), earnings per share were
EUR -0.00 (EUR -0.00). The EBIT and the net result of the
second quarter in the comparison year were impacted by a write-down
of the company’s goodwill of EUR 0,5 million.
In the review period, EBITDA came to
EUR -1.4 million (EUR -1.8 million), EBIT was
EUR -2.3 million (EUR -3.4 million), and profit
before taxes was EUR -3.2 million
(EUR -3.4 million). The positive development of EBITDA in
the review period was influenced by the increase in turnover and
cost savings. The net financial income and expenses, EUR -0.9
million (EUR -0.0 million), were significantly improved during the
comparison period in 2021 by the exchange gains booked on balance
sheet items. Net income for the financial period amounted to
EUR -3.1 million (EUR -3.5 million), earnings per
share were EUR 0.00 (EUR -0.01) and cash flow from
operating activities per share was EUR -0.00 (EUR 0.00).
The EBIT and net result of the comparison review period were
impacted by a write-down of the goodwill of EUR 0.5 million.
RETURN ON EQUITY
The Group’s shareholders’ equity amounted to
EUR -28.1 million (EUR -20.9 million). The
Group’s equity considering the capital loans was EUR -13.1 million
(EUR -20.9 million). More information of capital loans in the
section of the review entitled related-party transactions. Return
on equity (ROE) was negative. Return on investment (ROI) was -31.3
(-64.2) per cent.
INVESTMENTS
There were no major investments during the review period (EUR
0.0 million).
BALANCE SHEET AND FINANCING
The balance sheet total was
EUR 13,2 million (EUR 16.6 million). The equity
ratio was -212.2% (-126.5%). At the end of the review period, the
Group’s liquid assets totalled EUR 0.4 million
(EUR 0.5 million).
At the end of the review period, the Group’s
balance sheet recognised EUR 10.8 million
(EUR 10.3 million) in loans from financial institutions,
including the overdrafts in use.
On 30 June 2022, the Group’s interest-bearing
liabilities amounted to EUR 34.3 million
(EUR 30.9 million). The loans from related parties amount
to EUR 21.8 (EUR 20.1 million). EUR 15.0 million related party
loans are capital loans, EUR 5.8 million (EUR 20.1 million) are
convertible bonds and EUR 1.1 million (EUR 0.0) are short term
loan. The loan agreements made with related-party companies during
the review period are in the section of the review entitled
related-party transactions.
CASH FLOW
The Group’s cash flow from operating activities
during the review period was EUR -1.3 million (EUR -1.9
million), improvement being EUR 0.6 million. The development of the
company’s liquid assets was influenced by the improved
profitability and change in working capital.
In order to fasten the rate of turnover of trade
receivables, the Group sells some of its trade receivables from
Finnish customers. In the second quarter, EUR 1.5 million
(EUR 0.8 million) of trade receivables were sold.
GOODWILLOn 30 June 2022, the consolidated
balance sheet recognised EUR 4.9 million
(EUR 6.9 million) in goodwill. The company conducted an
IAS 36 impairment test on its goodwill to reflect the status
on 30 June 2022, and stated that there is no need to an impairment
charge.
PERSONNEL
The average number of employees during the
period under review was 166 (177), and the Group had 161 (175) at
the end of the period. At the end of the review period, 61 (64) of
the Group’s personnel were employed by the Finnish companies, and
100 (111) were employed in the Group’s foreign companies. During
the period under review, the number of personnel decreased by 4
persons.
SHARES AND SHARE CAPITAL
Share turnover and price
During the review period, the company’s share
price hit a high of EUR 0.04 (EUR 0.05) and a low of
EUR 0.02 (EUR 0.03), and the closing price on 30 June
2022 was EUR 0.02 (EUR 0.05). The average price during
the review period was EUR 0.03 (EUR 0.04). During the
period under review, 32 568 458 (47 442 662) shares were traded,
corresponding to 5.00 (7.29) per cent of the number of shares in
circulation at the end of the review period. The Group’s market
capitalisation at the closing share price on 30 June 2022 was
EUR 13 671 478 (EUR 30 337 660).
Share capital
At the beginning of the period under review, the
company’s registered share capital was EUR 585 394.16, and
there were 651 022 746 shares. At the end of the period, the share
capital was EUR 585 394.16, and there were 651 022 746 shares.
The company has one class of shares. At the end of the reporting
period, the company held a total of 7 664 943 treasury shares, 1,2%
of all shares.
Option programmes 2019 and 2021
A total of 1,302,000 stock options belonging to
the 2019A1 and 2019A2 series have been distributed among the
options included in the company's stock option program 2019, based
on which it is possible to subscribe for a maximum of 1,302,000 new
shares of the Company according to the terms of the stock option
program. The other option rights belonging to the option program
2019 have expired.
The option rights belonging to the company's
option program 2021 are marked with the codes 2021A1, 2021A2,
2021B1, 2021B2 and 2021C1. A maximum of 60,000,000 stock options
can be issued and they entitle to subscribe for a maximum of
60,000,000 new shares of the Company. A total of 38,450,000 options
belonging to the 2021A1 and 2021A2 series have been distributed
among the options included in the option program. 7,200,000 of the
distributed options have expired, so based on the terms of the
option program, it is possible to subscribe for a maximum of
31,250,000 new shares of the Company.
The theoretical value of the options allocated
by the end of review period is approximately EUR 1.0 million, which
is recognised as an expense in accordance with IFRS 2 for the years
2021-2025. The expense recognition for 2022 is EUR 0.3 million. The
expense recognition does not have cash flow impact.
Terms and conditions of option programs can be
found at the Company’s web site https://digitalist.global.
Shareholders
The number of shareholders on 30 June 2022 was 5 298 (4 813).
Private individuals owned 10,3 (9,3) per cent of the shares, and
institutions held 89,7 (90,7) per cent. Nominee-registered shares
accounted for 3,6 (2,7) per cent of the total.
RELATED-PARTY TRANSACTIONS AND MANAGERS’
TRANSACTIONS
Financing arrangements with related
parties:
Capital loan Holdix Oy Ab 23.3.2022
In March the Board decided to exercise the right
granted to Digitalist Group Plc by Holdix Oy Ab and convert
three-quarters of the Convertible Bonds into Converted Bonds and to
convert the capital thereof, altogether EUR 4,545,827.70, and the
unpaid interest on the capital of the Converted Bonds set out in
the Terms of the convertible bond into a capital loan meeting the
requirements of chapter 12, sections 1 and 2 of the Limited
Liability Companies Act, with the terms otherwise remaining the
same, where applicable. Holdix Oy Ab is the second largest
shareholder of Digitalist Group.
Loan Agreement with Turret Oy Ab 24.3.2022
Digitalist Group Plc has made an agreement with
Turret Oy Ab on a loan amounting to EUR 500,000. The loan was
granted on market terms, and it will fall due on 30 April 2023.
Turret Oy Ab is the largest shareholder of Digitalist Group.
Digitalist Group agreed on an arrangement
regarding Yangi AB, registered in Sweden. Digitalist Group's
Swedish subsidiary, Grow AB, subscribed for a total of 11,111
shares in Yangi AB at a total subscription price of SEK 5,000,000.
To increase financial flexibility, Grow AB sold the total of 7,778
Yangi AB shares to Turret Oy Ab for the total purchase price of SEK
6,300,000. The Company has issued a stock exchange release relating
to the arrangement on March 24th, 2022.
Loan Agreement with Turret Oy Ab 27.6.2022
Digitalist Group Plc agreed with Turret Oy Ab on
a short-term loan amounting to EUR 1,200,000. The loan was granted
on market terms, and it will fall due on 31 October 2022.Turret Oy
Ab is the largest shareholder of Digitalist Group.The Company has
issued a stock exchange release relating to the arrangement on June
27th, 2022.
OTHER EVENTS DURING THE SECOND QUARTER
Changes in the Management of Digitalist Group 31.5.2022
Digitalist Group Plc and its Chief Financial Officer agreed that
the CFO will leave the Company as of May 31, 2022. For the time
being, the Company’s CEO is also responsible for performing the
duties of the CFO.
Digitalist Group’s registration document approved 28.6.2022
The Finnish Financial Supervisory Authority has
approved Digitalist Group Plc’s registration document
(”Registration Document”) pursuant to the Finnish Securities Market
Act. The Registration Document contains information on the Company
and its business and financial position. The Registration Document
is valid for 12 months after its approval.For its entire period of
validity, the Prospectus will be available in Finnish as an
electronic version on the Company’s website at the address
https://investor.digitalistgroup.com/fi/investor/shares/share-issues.
Upon request, a free hard copy of the Registration Document can be
obtained by ordering it by email from the address
communications@digitalistgroup.com or by mail to the address
Digitalist Group Plc, Pohjoisesplanadi 35 A, 00100 Helsinki. The
Prospectus is only available in the Finnish language.
The stock exchange releases for the review period are on the
company’s website at
https://digitalist.global/investors/releases
Annual General Meeting 26 April 2022
The company held its Annual General Meeting on
26 April 2022. The minutes of the Annual General Meeting and the
decisions made are on the company’s website at
https://digitalist.global/investors/hallinnointi/yhtiökokous
The Annual General Meeting elected Johan
Almquist, Paul Ehrnrooth, Peter Eriksson, Esa Matikainen, Maria
Olofsson and Andreas Rosenlew as ordinary members of the Board of
Directors. At the Board meeting held on 26 April 2021 after the
Annual General Meeting, the Board of Directors elected Esa
Matikainen as the Chair of the Board and Andreas Rosenlew as the
Deputy Chair of the Board. The Board resolved to establish an Audit
Committee. Esa Matikainen was elected as a chairman and Peter
Eriksson and Maria Olofsson as members of the Audit Committee.
The Board of Directors evaluated on the date of
half-year review the independence of the Committee members in
compliance with the recommendations of the Finnish Corporate
Governance Code 2020 as follows. Esa Matikainen and Maria Olofsson
are independent of the company and independent of a significant
shareholder. Peter Eriksson is independent of the company and
dependent on a significant shareholder.
Authorization of the Board of Directors to
decide on share issues and on granting special rights entitling to
shares
The Annual General Meeting authorized the Board
to decide on a paid share issue and the issuance of stock options
and other special rights entitling to shares referred to in Chapter
10, Section 1 of the Companies Act or a combination of all or some
of the above in one or more tranches under the following
conditions:The total number of new shares to be issued under the
authorization may not exceed 325,511,370 shares.
The Board of Directors was given the right to
decide, within the limits of the above authorization, on all terms
and conditions of the share issue and special rights entitling to
shares, such as payment of the subscription price not only in cash
but also by offsetting the receivable from the company. The Board
of Directors was entitled to decide on the subscription of the
subscription price either as an increase in share capital or in the
fully or partially invested unrestricted equity fund.The share
issue and the issuance of special rights entitling to shares may
also take place in a directed manner deviating from the
shareholder's pre-emptive right, if there is a compelling financial
reason for this in accordance with the Companies Act. The
authorization can then be used to finance acquisitions or other
investments related to the company's business, as well as to
maintain and increase the Group's solvency and to implement an
incentive scheme.The authorization is valid until the Annual
General Meeting to be held in 2023, but not later than June 30,
2023. The authorization has not been used by the date of
publication of the half-year review.
Authorisation of the Board of Directors to decide on the
acquisition of own shares
The Annual General Meeting authorized the Board
to decide on the repurchase or pledge of a maximum of 65,102,000 of
the company's own shares with the company's distributable funds.
Acquisition can take place in one or more batches. The acquisition
price of the shares is the highest price to be paid for the share
in public trading at the time of acquisition. In carrying out the
repurchase of own shares, ordinary derivative, share lending or
other agreements may be entered into on the capital market within
the framework of law and regulations. The authorization entitles
the Board of Directors to decide on the repurchase other than in
proportion to the shares held by the shareholders (directed
repurchase).The shares may be acquired for use in the
implementation of acquisitions or other arrangements related to the
company's business, to improve the company's financial structure or
otherwise for further transfer or cancellation.
The authorization includes the right of the
Board of Directors to decide on all other matters related to the
acquisition of shares. The authorization is valid until the Annual
General Meeting to be held in 2023, but not later than June 30,
2023. The authorization has not been used by the date of
publication of the half-year review.
EVENTS SINCE THE REVIEW
PERIOD
There are no remarkable events after the review period.
RISK MANAGEMENT AND SHORT-TERM
UNCERTAINTIES
The objectives of Digitalist Group Plc’s risk
management are to ensure the undisrupted continuity and development
of the company’s operations, support the achievement of the
company’s business objectives and increase the company’s value. For
more details about the organisation of risk management, processes
and identified risks, see the company’s website at
https://digitalist.global.
The company has been making a loss despite the
efficiency measures it has taken. However, the efficiency measures
taken in 2019 - 2022 have created a more sustainable cost
structure. The company’s loss-making performance directly affects
its working capital and the sufficiency of its financing. This risk
is managed by maintaining the capacity to use different financing
solutions. The company aims to continuously assess and monitor the
amount of necessary business financing to ensure that it has
sufficient liquid assets to finance its operations and repay
maturing loans. Any disruptions in the financial arrangements would
weaken Digitalist Group’s financial position.
The ongoing Covid-19 pandemic in 2022 and the
restrictive measures taken to prevent its spread will continue to
affect the business of the company's customers. Although the
majority of restrictive measures have already been waived in the
Company's main market areas in Finland, Sweden and Canada, a
possible new acceleration of the coronavirus pandemic and possible
other pandemics with restrictive measures by the authorities may
significantly expose the Company to risks arising from the
recession and indebtedness of the world, Finland, general business
life or public finances. The company tries to prepare for the
aforementioned risk as much as possible, but predicting future
developments is still uncertain.
Economic fluctuations may reduce the demand for
the Company's customers' services and products and thus their
product development budgets. In addition, economic fluctuations may
affect the length of time it takes to make purchase decisions
regarding the services and products offered by the Company. In
addition, a possible acceleration of inflation would cause pressure
to raise staff salaries, which could weaken profitability, unless
the increase in cost level can be transferred to the prices charged
to the customers.
The company is currently dependent on external
financing, most of which has been obtained from related-party
companies and financial institutions. Digitalist Group’s ability to
finance its operations and reduce the amount of its debt depends on
several factors, such as the cash flow from operations and the
availability of debt and equity financing, and there is no
certainty that such financing will be available in the future.
Similarly, there can be no certainty that Digitalist Group will be
able to obtain additional debt or refinance its current debt on
acceptable terms, if at all. During the review period 2022, the
company agreed on new short-term loans with the main owner and
rearranged its older short-term loans with the main owner and a
financial institution. The rearranged loans are now company’s long
term debt.
A significant proportion of the Group’s turnover
is generated by its 20 largest customers. Changes in key customer
accounts could adversely affect Digitalist Group’s operations,
earning capacity and financial position. If one of Digitalist
Group’s largest customers decided to switch to a competing company
or drastically altered its operating model, the chances of finding
customer volumes to replace the shortfall in the near term would be
limited.
The Group’s business consists mainly of
individual customer agreements, which are often relatively
short-term. In addition, some of the project contracts have fixed
or target prices. The length of delivery contracts makes it
difficult to reliably estimate the longer-term development of the
Group’s business operations, earnings and financial position. With
regard to fixed-price projects, it is essential to be able to
estimate the workload and/or contractual risks of the project
correctly in order to ensure an adequate level of profitability.
The aforementioned aspects related to customer contracts can lead
to unpredictable fluctuations in turnover and, thereby, in
profitability.
Irrespective of the market situation, there is a
shortage of certain experts in the Digitalist Group’s sector.
Furthermore, the aggressive recruitment policies that are prevalent
in Digitalist Group’s sector may increase the risk of personnel
moving to competitors. There is no guarantee that the company will
be able to retain its current personnel and recruit new employees
to maintain growth. If Digitalist Group loses its current
personnel, it would be more difficult to complete existing projects
and acquire new ones. This could have an adverse impact on
Digitalist Group’s business, earnings and financial position.
A significant part of the Group’s turnover is
invoiced in currencies other than the euro. The risk associated
with changes in exchange rates can be managed in various ways,
including net positioning and currency hedging contracts. No
hedging contracts have been used in 2022 or 2021.
The Group has no business activities in Russia
or Ukraine. The political and military situation in Russia and
Ukraine may affect the business activities of some of the Group’s
customers, thereby indirectly affecting the Group’s business. If
the situation becomes more strained or expands, it could affect
business in Finland and the EU in general, but these impacts are
currently difficult to estimate.
The Group’s balance sheet contains goodwill that
is subject to impairment risk in the event that the Group’s future
yield expectations decrease due to internal or external factors.
The goodwill is tested for impairment every six months and whenever
the need arises.
LONG-TERM GOALS AND
STRATEGY
Digitalist Group aims to achieve a profit margin
of at least 10 per cent over the long term. In order to
achieve its long-term goals, Digitalist Group strives for
profitable, international growth by shaping new forms of thinking,
services and technological solutions for digitalising sectors.
These sectors include the technology industry, energy industry,
transport and logistics, as well as consumer services in the public
and private sectors. Digitalist Group’s strategy focuses on
enhancing its service and solution business and seamlessly
integrating user and operational research, branding, design and
technology.
NEXT REVIEW
The next interim report, for January–September
2021, will be published on Thursday 28 October 2022.
DIGITALIST GROUP PLCBoard of Directors
Further information:Digitalist Group Plc- CEO
Magnus Leijonborg, tel. +46 76 315 8422,
magnus.leijonborg@digitalistgroup.com- Chairman of the Board Esa
Matikainen, tel. +358 40 506 0080,
esa.matikainen@digitalistgroup.com
Distribution:NASDAQ Helsinki Ltd.Key
mediahttps://digitalist.global
DIGITALIST GROUP
SUMMARY OF THE HALF-YEAR REPORT AND NOTES, 1 JANUARY –
30 JUNE 2022
CONSOLIDATED INCOME STATEMENT, EUR THOUSAND
|
1 Apr - 30 Jun 22 |
1 Apr - 30 Jun 21 |
Change (%) |
1 Jan - 30 Jun 22 |
1 Jan - 30 Jun 21 |
Change (%) |
Turnover |
5,257 |
4,781 |
10 % |
10,390 |
9,574 |
9 % |
Other operating income |
76 |
150 |
|
204 |
295 |
|
Operating expenses |
-6,357 |
-7,116 |
11 % |
-12,883 |
-13,302 |
-3 % |
|
|
|
|
|
|
|
EBIT |
-1,024 |
-2,185 |
53 % |
-2,289 |
-3,433 |
-33 % |
Financial income and expenses |
-774 |
-651 |
-19 % |
-888 |
-4 |
22088 % |
Profit before taxes |
-1,797 |
-2,836 |
37 % |
-3,177 |
-3,437 |
-8 % |
Income taxes |
37 |
60 |
39 % |
38 |
-90 |
-141 % |
PROFIT/LOSS FOR FINANCIAL PERIOD |
-1,761 |
-2,776 |
37 % |
-3,140 |
-3,527 |
-11 % |
Distribution: |
|
|
|
|
|
|
Parent company shareholders |
-1,723 |
-2,721 |
37 % |
-3,149 |
-3,373 |
-7 % |
Non-controlling interests |
38 |
-55 |
|
9 |
-154 |
|
Earnings per share: |
|
|
|
|
|
|
Undiluted (EUR) |
-0.00 |
-0.00 |
0 % |
-0.00 |
-0.01 |
-100 % |
Diluted (EUR) |
-0.00 |
-0.00 |
0 % |
-0.00 |
-0.01 |
-100 % |
COMPREHENSIVE INCOME STATEMENT, EUR
THOUSAND
|
1 Apr - 30 Jun 22 |
1 Apr - 30 Jun 21 |
Change (%) |
1 Jan - 30 Jun 22 |
1 Jan - 30 Jun 21 |
Change (%) |
Profit/loss for the financial period |
-1,761 |
-2,776 |
-37 % |
-3,140 |
-3,527 |
-11 % |
Translation difference |
-135 |
277 |
-149 % |
-368 |
-804 |
-54 % |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
-1,896 |
-2,499 |
-24 % |
-3,508 |
-4,331 |
-19 % |
Parent company shareholders |
-1,839 |
-2,446 |
-25 % |
-3,492 |
-4,208 |
-17 % |
Non-controlling interests |
-58 |
-53 |
9% |
-15 |
-123 |
-88% |
CONSOLIDATED BALANCE SHEET, EUR THOUSAND
ASSETS |
30 June 2022 |
30 June 2021 |
31 December 2021 |
NON-CURRENT ASSETS |
|
|
|
Intangible assets |
336 |
2,120 |
857 |
Goodwill |
4,888 |
6,937 |
5,166 |
Tangible assets |
1,706 |
676 |
1,631 |
Buildings and structures, rights-of-use |
1,631 |
555 |
2 |
Machinery and equipment |
44 |
80 |
66 |
Other tangible assets |
31 |
41 |
36 |
Investments |
105 |
0 |
0 |
Other non-current financial assets |
1,196 |
1,410 |
1,172 |
NON-CURRENT ASSETS |
8,231 |
11,143 |
8,825 |
|
|
|
|
CURRENT ASSETS |
|
|
|
Trade and other receivables |
4,617 |
4,698 |
4,157 |
Income tax asset |
11 |
192 |
154 |
Cash and cash equivalents |
368 |
523 |
984 |
CURRENT ASSETS |
4,996 |
5,413 |
5,295 |
ASSETS |
14,119 |
16,556 |
14,120 |
|
|
|
|
SHAREHOLDERS’ EQUITY AND LIABILITIES |
|
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
Parent company shareholders |
|
|
|
Share capital |
585 |
585 |
585 |
Share premium account |
219 |
219 |
219 |
Invested non-restricted equity fund |
72,972 |
72,972 |
72,971 |
Retained earnings |
-99,076 |
-92,492 |
-93,069 |
Profit/loss for the financial period |
-3 ,149 |
-3,373 |
-5,797 |
Non-controlling interests |
380 |
1,139 |
506 |
Parent company shareholders |
-28,448 |
-22,088 |
-25,091 |
SHAREHOLDERS’ EQUITY |
-28,069 |
-20,950 |
-24,585 |
NON-CURRENT LIABILITIES |
24,502 |
23,328 |
23,846 |
CURRENT LIABILITIES |
16,794 |
14,178 |
14,860 |
SHAREHOLDERS’ EQUITY AND LIABILITIES |
13,227 |
16,556 |
14,120 |
CALCULATION OF CHANGES IN CONSOLIDATED SHAREHOLDERS’
EQUITY, EUR
THOUSANDA: Share
capitalB: Share
premium
accountC: Invested
unrestricted equity
fundD: Translation
differenceE: Retained
earningsF: Total
shareholders’ equity attributable to the parent
company’sG: Total
shareholders’ equity
|
A |
B |
C |
D |
E |
F |
G |
H |
Shareholders’ equity 1 Jan 2021 |
585 |
219 |
72,972 |
1,062 |
-92,786 |
-17,948 |
1,262 |
-16,686 |
Other changes |
|
|
|
|
332 |
332 |
-332 |
|
Profit/loss for the financial period |
|
|
|
|
-5,797 |
-5,797 |
-2 |
-5,799 |
Translation difference |
|
|
|
-1,546 |
|
-1,546 |
-14 |
-1,559 |
Share-based remuneration |
|
|
|
|
201 |
201 |
|
201 |
Transactions with non-controlling interests |
|
|
|
|
-333 |
-333 |
-409 |
-742 |
Shareholders’ equity 31 Dec 2021 |
585 |
219 |
72,972 |
-484 |
-98,384 |
-25,091 |
506 |
-24,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity 1 Jan 2021 |
585 |
219 |
72,972 |
1,062 |
-92,786 |
-17,948 |
1,262 |
-16,686 |
Profit/loss for the financial period |
|
|
|
|
-3,373 |
-3,373 |
-154 |
-3,527 |
Translation difference |
|
|
|
-835 |
|
-835 |
31 |
-804 |
Share-based remuneration |
|
|
|
|
67 |
67 |
|
67 |
Shareholders’ equity 30 June 2021 |
585 |
219 |
72,972 |
227 |
-96,092 |
-22,089 |
1,139 |
-20,950 |
|
A |
B |
C |
D |
E |
F |
G |
H |
Shareholders’ equity 1 Jan 2022 |
585 |
219 |
72,972 |
-484 |
-98,382 |
-25,091 |
506 |
-24,585 |
Profit/loss for the financial period |
|
|
|
|
-3,149 |
-3,149 |
9 |
-3,140 |
Translation difference |
|
|
|
-344 |
|
-344 |
-24 |
-368 |
Share-based remuneration |
|
|
|
|
134 |
134 |
|
134 |
Dividends paid |
|
|
|
|
|
|
-111 |
-111 |
Shareholders’ equity 30 June 2022 |
585 |
219 |
72,972 |
-827 |
-101,397 |
-28,448 |
380 |
-28,069 |
CONSOLIDATED CASH FLOW STATEMENT, EUR
THOUSAND
|
1 Jan - 30 Jun 2022 |
1 Jan - 30 Jun 2021 |
1 Jan - 31 Dec 2021 |
Cash flow from operations |
|
|
|
Earnings before taxes in the period |
-3,177 |
-3,437 |
-5,794 |
Adjustments to cash flow from operations: |
|
|
|
Other income and expenses with no payment transactions |
134 |
-711 |
-1,146 |
Depreciation, impairment |
891 |
1,601 |
3,538 |
Unrealised foreign exchange gains and losses |
-60 |
912 |
67 |
Financial income and expenses |
888 |
4 |
479 |
Other adjustments |
0 |
916 |
0 |
|
|
|
|
Cash flow financing before changes in working
capital |
-1,324 |
-1,628 |
-2,856 |
|
|
|
|
Change in working capital |
353 |
-243 |
-811 |
Interest received |
0 |
6 |
14 |
Interest paid |
-54 |
-24 |
-64 |
Taxes paid |
-240 |
-24 |
-12 |
Net cash flow from operations |
-1,264 |
-1,913 |
-3,730 |
|
|
|
|
Cash flow from investments |
|
|
|
Sales of subsidiaries net of cash acquired |
0 |
0 |
2,565 |
Investments in tangible and intangible assets |
-23 |
-18 |
-48 |
Investments in other shares |
-466 |
0 |
0 |
Sales of property, plant and equipment |
0 |
0 |
6 |
Proceeds from sale of other shares |
587 |
0 |
0 |
Cash flow from investments |
-98 |
-18 |
2,523 |
|
|
|
|
Net cash flow before financial items |
-1,167 |
-1,931 |
-1,206 |
|
|
|
|
Cash flow from financing activities |
|
|
|
Transactions with non-controlling interests |
-111 |
0 |
0 |
Drawdown of long-term loans |
0 |
1,000 |
1,000 |
Repayment of long-term loans |
0 |
-33 |
-380 |
Drawdown of short-term loans |
1,275 |
1,087 |
1,803 |
Repayment of short-term loans |
|
|
|
Interest and other charges |
-208 |
-196 |
-416 |
Repayment of lease liabilities |
-405 |
-412 |
-826 |
Net cash flow from financing |
551 |
1,446 |
1,183 |
|
|
|
|
Change in cash and cash equivalents |
-616 |
-485 |
-24 |
Liquid assets, beginning of period |
984 |
1,008 |
1,008 |
Liquid assets, end of period |
368 |
523 |
984 |
Accounting principles
This interim report release has been prepared in
accordance with IAS 34 – Interim Financial Reporting. Exchange rate
differences from receivables and liabilities between group
companies have been treated as a net investment as a translation
difference in equity.In other respects the interim report release
complies with the same accounting principles and calculation
methods as the annual financial statements. New and revised
standards have been implemented from the beginning of year 2022.
They have no material impact on the Half-Year review.
The preparation of a financial statement release
in accordance with IFRS requires the management to use certain
estimates and assumptions that affect the amounts recognised in
assets and liabilities when the balance sheet was prepared, as well
as the amounts of income and expenses in the period. In addition,
discretion must be used in applying the accounting policies. As the
estimates and assumptions are based on outlooks on the balance
sheet date, they contain risks and uncertainties. The realised
values may deviate from the original assessments and
assumptions.
The original release is in Finnish. The English
release is a translation of the original.
The figures in the release have been rounded, so
the sums of individual figures may deviate from the presented
totals. This interim report is unaudited.
Going concernThe Half-Year
review was prepared in accordance with the principle of the
business as a going concern. The assumption of continuity is based
management assumptions on several factors, including the
following:
- In addition to earlier cost-saving
programs the Group started in early 2022 a new cost-saving program,
which is expected to result in improvements to the Group’s
profitability from the second half of 2022 onwards. The operating
expenses have decreased by EUR 0.4 million in comparison
with the review period.
- The Group has invested in its key
customers in line with its strategy, and this is expected to have a
positive impact on sales trends.
- The company has restructured its
financing in the review period by transforming convertible bonds to
capital loan. Repayment for loans from financial institutions has
also been extended.
- The company has negotiated new
loans of EUR 1,7 million with the related parties.
When the financial statements were published,
the company expected its working capital to be sufficient to cover
its requirements over the next 12 months based on the financing
support provided by the main owner if needed.
Goodwill impairment testing and
recognised impairment
Digitalist Group tested its goodwill for
impairment on 30 June 2022. The goodwill is allocated to one
cash-generating unit.
The value in use of the tested property exceeded
the tested amount by EUR 1.6 million. The present value of the cash
flows given by the calculation, EUR 6.6 million, is lower than the
sum of the company's financial liabilities of EUR 32.7 million and
the market price of the shares of EUR 13.7 million on June 30,
2022. The amount of goodwill in the balance sheet at the end of the
review period is EUR 4.9 million.
The company tests its goodwill based on the
utility value of the assets. In the testing conducted on 30 June
2022 in conjunction with the financial statements, the cash flow
forecasting period was from 2022 to 2026. During the 2022–2026
forecasting period, average growth in revenue of
20 per cent is expected to be achieved as digitalisation
spreads to an increasing share of business life. The EBITDA margin
is expected to rise to about 10 per cent by the end of
the forecasting period.
The method involves comparing the tested assets
with their cash flow over the selected period, taking into account
the discount rate and the growth factor of the cash flows after the
forecast period. The discount rate is 11 per cent per
cent. The growth factor used to calculate the cash flows after the
forecast period is 2,35 per cent. The weighted average
operating profit margin for the forecast period was used to
calculate the value of the terminal period. A significant negative
change in individual assumptions used in the calculations can
necessitate a goodwill impairment charge.
KEY INDICATORS
|
1 Jan - 30 Jun 2022 |
1 Jan - 30 Jun 2021 |
1 Jan - 31 Dec 2021 |
Earnings per share (EUR) diluted |
-0.00 |
-0.01 |
-0.01 |
Earnings per share (EUR) |
-0.00 |
-0.01 |
-0.01 |
Shareholders’ equity per share (EUR) |
-0.04 |
-0.03 |
-0.04 |
Cash flow from operations per share (EUR) diluted |
-0.00 |
0.00 |
-0.01 |
Cash flow from operations per share (EUR) |
-0.00 |
0.00 |
-0.01 |
Return on capital employed (%) |
-31.3 |
-64.2 |
-54.4 |
Return on equity (%) |
Neg |
neg |
neg |
Operating profit/turnover (%) |
-22.0 |
-19.1 |
-28.8 |
Gearing as a proportion of shareholders’ equity (%) |
-120.9 |
-145.1 |
-128.9 |
Equity ratio as a proportion of shareholders’ equity (%) |
-212.2 |
-126.5 |
-174.1 |
EBITDA (EUR thousand) |
-1,399 |
-1,832 |
-1,778 |
MATURITY OF FINANCIAL LIABILITIES AND INTEREST ON
LOANS
31 December 2021 |
Balance sheet value |
Cash flow |
Under 1 year |
1-5 years |
Over 5 years |
Loans from financial institutions |
3,461 |
3,575 |
1,339 |
2,236 |
0 |
Credit limits |
7,191 |
7,191 |
7,191 |
0 |
0 |
Convertible bonds |
10,314 |
12,142 |
0,000 |
12,142 |
0 |
Related-party capital loans |
10,169 |
11,643 |
0 |
11,643 |
0 |
Other related-party loans |
0 |
0 |
0 |
0 |
0 |
Lease liabilities IFRS 16 |
1,535 |
1,556 |
575 |
981 |
0 |
Accounts payable |
1,348 |
1,348 |
1,348 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2022 |
Balance sheet value |
Cash flow |
Under 1 year |
1-5 years |
Over 5 years |
Loans from financial institutions |
3,579 |
3,864 |
1,044 |
2,820 |
0 |
Credit limits |
7,244 |
7,244 |
0 |
0 |
0 |
Convertible bonds |
5,768 |
6,431 |
0 |
6,431 |
0 |
Related-party capital loans |
14,973 |
17,123 |
0 |
17,123 |
0 |
Other related-party loans |
1,100 |
1,137 |
1,137 |
0 |
0 |
Lease liabilities IFRS 16 |
1,637 |
1,695 |
645 |
1,050 |
0 |
Accounts payable |
1,459 |
1,459 |
1,459 |
0 |
0 |
The Company has agreed with the main financier of financial
institution loans that the installment of EUR 2 million loan is due
on 30.4.2025. The installments of convertible bonds will start in
2024. Credit limits are valid until further notice.
OTHER INFORMATION
|
1 Jan - 30 Jun 2022 |
1 Jan - 30 Jun 2021 |
1 Jan - 31 Dec 2021 |
NUMBER OF EMPLOYEES, average |
166 |
177 |
172 |
Personnel at the end of the period |
161 |
175 |
165 |
|
|
|
|
LIABILITIES, EUR THOUSAND |
|
|
|
Pledges made for own obligations |
|
|
|
Corporate mortgages |
13,300 |
13,300 |
13,300 |
|
|
|
|
Total interest-bearing liabilities |
|
|
|
Long-term loans from financial institutions |
2,690 |
2,837 |
2,232 |
Other long-term liabilities |
21,749 |
20,127 |
21,445 |
Short-term interest-bearing liabilities |
9,862 |
7,950 |
8,992 |
Total |
34,301 |
30,914 |
32,669 |
CALCULATION OF KEY FINANCIAL FIGURES
EBITDA = earnings before interest, tax, depreciation and
amortisation
Diluted earnings per share = Profit for the financial period /
Average number of shares, adjusted for share issues and for the
effect of dilution
Earnings per share = Profit for the financial period / Average
number of shares adjusted for share issues
Shareholders’ equity per share = Shareholders’ equity / Number
of undiluted shares on the balance sheet date
Cash flow from operations per share (EUR) diluted = Net cash
flow from operations / Average number of shares, adjusted for share
issues and for the effect of dilution
Return on investment (ROI) =(Profit before taxes + Interest
expenses + Other financial expenses) /(Balance sheet total -
non-interest-bearing liabilities (average)) x 100
Return on equity (ROE) = Net profit / Total shareholders’ equity
(average) x 100
Gearing = interest-bearing liabilities - liquid assets / total
shareholders’ equity x 100
- Digitalist Group Oyj Half-year review 1.1.-30.6.2022
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