Digia Plc Financial Statement Bulletin 2017: Digia's growth accelerated - net sales up 18% in the fourth quarter

Digia Plc
Financial Statement Bulletin
6 February 2018 at 8:00 am

Digia Plc's Financial Statement Bulletin 2017
Digia's growth accelerated - net sales up 18% in the fourth quarter

Unless otherwise stated, the comparison figures provided in parentheses always refer to the corresponding period of the previous year. The demerger of Digia Plc and Qt Group Plc came into force on 1 May 2016. This financial statement bulletin presents the business operations of Digia Plc, the former Domestic segment (continuing operations).

October-December

• Net sales EUR 28.0 (23.7) million, increase 18.0%
• Operating profit EUR 1.1 (1.6) million, 3.9% (6.6%) of net sales
• Earnings per share EUR 0.03 (0.05)

January-December

• Net sales EUR 96.2 (86.5 million, increase 11.3 %
• Operating profit EUR 1.8 (5.4) million,1.9% (6.3%) of net sales
• Earnings per share EUR 0.04 (0.20)
• Rights issue generated gross proceeds of about EUR 12.5 million
• Digia's Board of Directors proposes the payment of a dividend of EUR 0.04 per share (EUR 0.08 in 2016)
• Guidance for 2018: Digia's net sales continues to increase and operating profit improves significantly compared to 2017

KEY FIGURES

DIGIA'S PRESIDENT AND CEO TIMO LEVORANTA

"Digia's fourth-quarter net sales saw year-on-year growth of 18 per cent. Strong net sales growth was supported by good demand, particularly in e-commerce solutions, customised digital solutions, service monitoring solutions, and Microsoft Dynamics systems. Progress on the Income Register project that we are implementing with the Tax Administration also contributed to net sales growth. 

Our long-term customer relationships and deliveries of more extensive project and service packages can be seen in our fourth-quarter net sales growth. Digia's customers are increasingly viewing service development and harnessing technology as a part of wider-reaching aspect of business development instead of developing single service or process. They are seeking a more comprehensive renewal of their business in which operating methods are remodelled to create a better customer experience and generate greater operational efficiency. The greatest benefits will be achieved through the systematic development of the whole, not just development projects as separate parts.

A more comprehensive view of digitalisation creates IT service companies a requirement to understand and deliver more extensive service packages, and to handle their continual development and maintenance. This trend is supporting growth in Digia's business. Digia stands out from its competitors by offering diversity and compatibility, and providing modern, continually developing expertise. We offer reliable and evolving partnerships in which we support our customers' business operations with continual service maintenance and their agile development.

The correct integration of digital services, such as web stores, into a company's back-end systems is a critical aspect of both service quality and flexibility for further development. Smart integration is one of the keys to a company's capacity for technological change. We are a pioneer in integration solutions and we have recognised status in the integration market. During the fourth quarter, we further strengthened our expertise as a supplier of modern integration solutions (such as APIs) with the acquisition of Integration House Oy. One of our competitive advantages is our ability to help our customers increase the smoothness of their operations.

Full-year net sales rose by 11 per cent in 2017. In line with our strategy, we are seeking growth in, for example, the delivery of end-to-end digital services. Net sales from end-to-end solutions have risen noticeably faster than Digia's net sales in general.

In order to improve profitability, we launched enhanced quality-improvement measures and changes to our operating methods during the third quarter. Fourth-quarter operating profit remained below the target, but improved clearly on the third quarter, and was EUR 1.1 million.

Digia's operating profit for 2017 totalled EUR 1.8 million, equivalent to 1.9 per cent of net sales. There were favourable trends in operating profit in all of the most important service areas. Operating profit was significantly burdened by delivery challenges in three projects (EUR 3.5 million loss in 2017) during the second half of the year. Strong investments in the development of digital and financial services as well as in personnel competences also impacted the result.

In 2017, we continued non-organic investments in two service areas: Digital Services, and Integration and Information Management. We strengthened our position in the digital services market with the acquisition of Omni Partners Oy, and bolstered our expertise in integration and API solutions with the acquisition of Integration House Oy. We also renewed and simplified the Digia operating model to safeguard growth. As part of this change, we restructured our organisation and the composition of our Management Team.

Digia is a reliable, agile and growth-focused professional in the Finnish IT sector. During 2017, we invested in creating the foundations for profitable growth. Our goal in 2018 is to further strengthen the company's position, particularly in the growing markets for digital services, process digitalisation and the service business. We are also actively seeking suitable acquisitions in order to accelerate our growth. We are expecting our operating profit to improve significantly compared to 2017."

CHANGE OF DIVIDEND POLICY

Digia's Board of Directors decided in 5 February 2018 to change the company's dividend policy. According to the renewed dividend policy, Digia goal is to distribute at least 30 per cent of the Group's annual result in dividends.

PROPOSAL FOR DIVIDEND DISTRIBUTION

According to the balance sheet dated 31 December 2017, Digia Plc's unrestricted shareholders' equity was EUR 44,593,144, of which EUR 142,318 was profit for the financial year.  At the Annual General Meeting, the Board of Directors will propose that a dividend of EUR 0.04 per share be paid according to the confirmed balance sheet for the fiscal year ending 31 December 2017. Shareholders listed in the shareholder register maintained by Euroclear Finland Oy on the dividend reconciliation date, 19 March 2018, will be eligible for the dividend. Dividends will be paid on 28 March 2018.

INVITATION TO THE FINANCIAL STATEMENT BULLETIN BRIEFING

Digia will hold a briefing for analysts on Tuesday 6 February 2018 at 11 am, in the Roba cabinet at Hotel Scandic Simonkenttä, Simonkatu 9, 00100 Helsinki, Finland. Welcome.

The material and presentation for the event will be available from 11 am on 6 February 2018 in the Investors section of the company's website: www.digia.com/en/investors/reports-and-presentations.

FINANCIAL STATEMENTS AND ANNUAL REPORT 2017

Digia Plc's 2017 Annual Report will be published on 22 February 2018 in electronic format on the company's website: www.digia.com.

The Report of the Board of Directors and the 2017 Financial Statements will be published as part of the Annual Report.

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 approximately 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 96,2 million. The company is listed on Nasdaq Helsinki (DIGIA). www.digia.com