20 14 ANNUAL REPORT
06 Services
08
BUSINESS OPERATIONS
09 IT services and outsourcing
10 Financial process services
11 Consulting Services
20
RESPONSIBILITY
21 Services designed for customers
50
12 Case Forex 14 Case Pohjolan Voima
16 Case Outokumpu 18 Case Esab
25 Wellbeing for
all stakeholders
22 People enjoy
working in an open corporate culture
26
CORPORATE GOVERNANCE
26 Corporate
governance
30 Enfo Group’s
Board of Directors
Enfo has 50 years of experience in developing effective IT solutions and services.
vision and values
34
FINANCIAL STATEMENTS
BUSINESS OPERATIONS
04 CEO’s review
07 Strategy,
32 Enfo Group’s
Management
RENSPONSIBILITY
Our services range from IT services and outsourcing to financial process and consulting services. Our services are produced by 800 professionals.
02 Enfo in 2014
CORPORATE GOVERNANCE
Enfo is a Nordic IT service company. We make our customers’ business processes simpler, smoother and smarter. Our objective is to help our customers focus on their core business.
ENFO IN 2014
FINANCIAL STATEMENT
ENFO
01
Enfo in 2014
ENFO | Annual Report 2014
Enfo in 2014
15
BUSINESS OPERATIONS
Enfo was selected as one of the best workplaces in Finland in the survey organised by Great Place to Work Institute Finland. Enfo came in 15th in the general series.
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
RENSPONSIBILITY
GREAT PLACE TO WORK
1
97
BUSINESS OPERATIONS
%
01
January Marketvisio and Enfo conducted a survey of various financial administration processes and came to the conclusion that the incompetence of finance leaders slows down outsourcing projects in financial administration.
02
February Enfo celebrated its 50th anniversary in February. Its predecessor Tietosavo Oy was established as a computer centre for seven
companies in Kuopio on 12 February 1964.
03
March Pohjolan Voima outsourced its financial administration service centre to Enfo. The agreement was a significant step in the market of financial administration outsourcing services.
04
APRIL Mainio Vire, a provider of social and care services selected Enfo as the supplier of its IT services. The five-year partnership agreement
includes workstation, server, data communications and Service Desk services, and local support. Its purpose is to develop systems and applications that support business operations as part of the partnership.
05
MAY The Central Administration of the Evangelical Lutheran Church of Finland chose Enfo as their IT partner for the Church’s Central Fund and as the supplier of their capacity services. The agreement includes capacity services for the
Central Administration and, therefore, for all the 428 Finnish parishes responsible for parish registers.
06
JUNE Espoon office moved to Alberga Business Park in June.
08
AUGUST Swedish Framsteg- a company specialising in Business Intelligence and Service and Asset Management solutions, was merged with Enfo in August. Through the acquisition, 50 new data management profes-
sionals and consultants joined Enfo.
09
SEPTEMBER Enfo’s Topias Laaksonen was selected as the Service Desk Specialist of the Year. Topias received special thanks for his social intelligence, empathetic qualities and will to develop his work and working methods.
10
OCTOBER Enfo organised the Smarter Outsourcing 2014 event in Helsinki on 22 October 2014.
11
NOVEMBER According to the survey conducted by Market visio together with Enfo, too much time is still spent on balancing information and resolving problems in data system projects.
12
DECEMBER Organised in Stockholm the Enfo EvolutionDay attracted an impressive number of participants to listen to the ideas of Sir Richard Branson about challenges in Swedish business life and the development of competitiveness in global markets
CORPORATE GOVERNANCE
Year 2014
RENSPONSIBILITY
According to the Net Promoter Score (NPS), 97% of our customers would choose Enfo as their partner again.
FINANCIAL STATEMENT
The economy developed at a different pace in Enfo’s main markets in Finland and Sweden. While Finland was at a standstill, Sweden showed more positive development. Demand for Enfo’s services remained at the previous year’s level and success in customer projects was stable, whereas turnover reduced slightly due to adaptation activities and the end of automatic meter management (AMM) projects.
Enfo in 2014
A steady year
2
OPERATING PROFIT
9.7 EUR million
(11.2)
simpler smoother smarter
PERSONNEL
802
We are passionate about helping our customers focus on their core business. That’s why we do what we do: simpler, smoother and smarter business processes.
802
46% 54%
TURNOVER,
IFRS, EUR million
145.3
2014
150.9
2013
145.2
2012
IFRS, EUR million
9.7
2014
11.2
2013
Turnover (EUR million)
Sweden
OPERATING PROFIT
at the year end
KEY FIGURES
Finland
BUSINESS OPERATIONS
(150.9)
IFRS 2014
IFRS 2013
145.3
150.9
Operating profit (EUR million)
9.7
11.2
Profit for the period (EUR million)
6.4
7.6
Financial expenses, net, (EUR million)
1.6
1.3
Return on investment %
11.3
14.3
Return on equity %, (ROE)
12.4
15.2
Equity ratio, %
42.9
46.6
Net gearing, %
55.1
54.8
Interest-bearing net liabilities (EUR million)
28.7
28.4
Balance sheet total (EUR million)
121.9
111.7
7.9
2012
145.3 EUR million
Enfo has personnel funds
EARNINGS PER SHARE IFRS, EUR
in Finland and Sweden. They cover the entire per-
8.5
2014
10.7
2013 2012
5.2
sonnel, apart from the top management. The incentive bonus scheme consists of profit-sharing items and
turnover by segments
74% 26%
Personnel funds in Finland and Sweden
RENSPONSIBILITY
EUR million
CORPORATE GOVERNANCE
145.3
PERSONNEL at the year end
result-based bonuses paid into the personnel fund.
EQUITY RATIO IT-services and outsourcing
IFRS, %
Financial process services
2013
2014
2012
Enfo’s Board of Directors
42.9 46.6 42.7
decides upon the criteria for determining the profit-shar-
FINANCIAL STATEMENT
TURNOVER
Enfo in 2014
ENFO | Annual Report 2014
ing items and result-based bonuses annually upon the approval of the budget.
3
BUSINESS OPERATIONS CORPORATE GOVERNANCE
Arto Herranen CEO, ENFO OYJ
FINANCIAL STATEMENT
Enfo celebrated its 50th anniversary in 2014. Reaching the milestone made Enfo employees take a look back and think of what they could learn from history. Enfo’s business operations are still based on the same idea as they were when the company took its first steps: IT outsourcing, IT consulting and financial process services that allow customers to focus on their core business. Arto Herranen, Enfo’s CEO, summarises the past year’s key events and focuses his eyes on the year ahead.
RENSPONSIBILITY
Focus on customer needs
Enfo in 2014
ENFO | Annual Report 2014
4
ENFO | Annual Report 2014
What was the past year like for Enfo?
The year 2014 was more stable, but we can’t say it was a dull year. Even though our market was challenging, we were able to succeed with our customers, develop our operations and service range, and strengthen a number of our competence areas. We made impressive progress in several sectors. Enfo’s operating area covers Finland and Sweden. Were the markets similar in both of these countries?
There were many similarities between the Finnish and Swedish markets – but there were also differences. The better economic situation in Sweden kept demand for services high, whereas development in Finland was slower. I believe that the prevailing situation will continue in Finland, and there is no going back to the high demand of previous years. Competition over prices was fierce in both markets. Outsourcing supporting functions is more common in Finland, while interest towards consulting services is higher in Sweden. Enfo’s service range is also focused on consulting in Sweden, but demand for outsourcing is also moving up.
In the beginning, you mentioned that you devel-
Enfo has a good reputation both among customers and as an employer. We are a well-known brand in the Finnish markets but remain a challenger in Sweden. Being a Nordic service provider, we are an attractive partner for potential customers. We are considered to be skilled, reliable and agile. Above all, we are here for our customers and always aim to maintain focus on the customer. For this, we have been recognised in customer satisfaction surveys and this is something we want to be known for. We will continue our work to develop our service ability. How is corporate responsibility visible at Enfo?
We make sure that we act responsibly towards all of our stakeholders. A particularly significant responsibility is associated with our role in supporting the success of our customers. We are a supplier of services, thanks to which our customers are able to focus on the development of their key operations. The objective of our services is to improve the efficiency of our customers’ operations, but it is also good to see that IT can often significantly reduce the environmental load of various functions. Of course, we are aware of our responsibilities as an employer, partner and corporate citizen. What expectations does Enfo have
oped your operations and service range. Could
for the current year?
you tell us more about that?
We are assuming that there will be no significant changes in the economic situation. That is why it is more important to all business parties to take care of their competitiveness by boosting their operations. I believe that demand for our services is increasing and customers will continue to outsource functions that are outside the scope of their key business.
We are continuously examining the efficiency of our operations and attempting to find the tools and processes that best support our business. Naturally, we seek to utilise the opportunities presented by the latest IT. During the year, we increased the level of automation in our operations and developed our IT infrastructure. Our focus in terms of service devel-
Enfo in 2014
current position?
BUSINESS OPERATIONS
of the year?
There were many and I will point out only a few. In March, Pohjolan Voima outsourced their financial administration to us. We will produce external accounting services for Pohjolan Voima, ranging from purchase and sales invoices to financial reporting. The agreement was a significant lead for us in terms of financial administration outsourcing where the market is on the verge of expanding to mediumsized companies. Through the agreement, we also gained 12 new Enfo employees. In August, we completed a significant business transaction by acquiring Swedish Framsteg Ab. Through the acquisition, we obtained 50 new professionals, together with strong expertise in Business Intelligence and Service and Asset Management – areas where our objectives for growth are ambitious.
How would you describe Enfo’s
RENSPONSIBILITY
What were Enfo’s biggest achievements
opment was particularly placed on cloud services, mobile solutions and information security.
CORPORATE GOVERNANCE
Despite the fierce competition, we were able to slightly strengthen our position. We obtained a number of new customers, but it is as important that we were able to extend agreements with our existing customers. Generally, our customer relationships are long-standing and deep partnerships. We consider it important that we are, every single day, worthy of our customers’ trust and sensitive to recognising our customers’ needs.
FINANCIAL STATEMENT
How did your market position develop?
5
ENFO | Annual Report 2014
SERVICES
ENFO SWEDEN
Espoo Stockholm
Gotenburgh Karlskrona
351 professionals
Financial process services
IT-services and outsourcing
Malmö
IT services and outsourcing
• • • •
IT-infrastructure Workstation and device management Licences and life cycle services Capacity and cloud services Network and security services Service Desk and user support Application services
Consulting SERVICES Integrations Workstation management & self-service Information security & identity management SAP Business Intelligence Business process management
Financial process services Outsourcing services for financial processes Information logistics and invoice processing services Specialised services for energy sector
trends that maintain demand for services Outsourcing as a trend
Technological development
A stronger need among customers to focus on developing their core business. By outsourcing support functions, high-quality services can be produced cost-effectively. In Finland, the outsourcing of IT services is a general practice, but outsourcing financial processes is only taking its first steps. In Sweden, interest in outsourcing is increasing.
Developments in IT are constantly presenting new ways of acting, and the significance of the Internet continues to grow. Terminal devices are also becoming more varied, and their use is increasing exponentially. The industrial Internet, analytics and mobile solutions are all just beginning their journeys.
BUSINESS OPERATIONS
IT-services and outsourcing
RENSPONSIBILITY
professionals
Consulting services
CORPORATE GOVERNANCE
429
PERSONNEL
FINANCIAL STATEMENT
PERSONNEL
ENFO FINLAND
Enfo in 2014
Kuopio
6
ENFO | Annual Report 2014
STRATEGY
Superior Nordic competence Enfo’s third strategic target is to utilize Nordic expertize in the most effective way. Enfo will allocate its personnel resources in Finland and Sweden to demanding expert assignments. The internationalization of customers’ business operations and the company’s ability to remain competitive require that a significant part of Enfo’s services will be produced in countries with lower cost levels.
of companies operating in the Nordics consider Enfo as the benchmark in making business processes simpler, smoother, and smarter.
Enfo in 2014 BUSINESS OPERATIONS
80%
VALUES
BE BRAVE, ALWAYS, ALWAYS, keep the promise and let’s enjoy!
RENSPONSIBILITY
Selective new markets Enfo’s second strategic target is to expand its operations in the Baltic Sea region following thorough consideration. Expansion will be carried out organically on the basis of customer needs. The launch of outsourcing operations in Sweden acts as the most central expansion project.
YEAR 2024
CORPORATE GOVERNANCE
Excellent profitability Enfo’s first strategic target is to achieve excellent profitability. This requires significant process improvement and offshoring of low value added tasks to subcontractors in low cost countries in Eastern Europe and India.
FINANCIAL STATEMENT
mind your own business
VISION
7
ISO
BUSINESS OPERATIONS RENSPONSIBILITY CORPORATE GOVERNANCE
Enfo’s information security management system and Enfo’s Data Center services in Kuopio and Karlskrona data centres were granted an ISO 27001 information security certificate. The certificate shows that Enfo takes information security risks seriously and continuously develops its information security to be ready for evolving threats.
FINANCIAL STATEMENT
27001
Enfo IN 2014
ENFO | Annual Report 2014
8
ENFO | Annual Report 2014
Fiercer competition in Finland Enfo is the market leader in Finland, being an outsourcing partner for large and mediumsized companies that employ 300–6,000 people. In 2014, competition became clearly fiercer in Finland, with customers becoming more cautious. Services are also offered in Sweden where they have been enthusiastically accepted. In Finland, the outsourcing of IT services has been a general practice for years and using a new partner serves to improve the efficiency of business operations. Instead, Sweden is only now taking its first steps in outsourcing.
Satisfied customers Outsourcing agreements are long-standing, often ranging from three to five years, and nearly all of Enfo’s customers extend their agreements. As a result, Enfo has long-term customer relationships based on confidential partnerships. A significant number of customers have outsourced all of their IT functions to Enfo. Enfo monitors the development of customer satisfaction through annual surveys. The survey results are at a high level. Enfo’s Service Desk has received exceptional recognition, being selected several times as the Help Desk of the Year. The aim of customer cooperation is to
Communications services Service Desk and user support services Workstation and device management services Hardware, licences and life cycle services Capacity and cloud services Network and security services
achieve as high a level of openness as possible. One of Enfo’s operation methods is its service management system where every assignment issued by each customer organisation is recorded. From the system, customers obtain real-time information about the progress of their processes.
The significance of information security is increasing The Finnish IT service market is showing signs of slight growth in 2015. Instead, the outlook in Sweden is clearly more positive. Enfo has an excellent competitive position in both countries because of its being a Nordic company, having significant references and being in the correct size category make it an attractive partner for potential customers. In order to reach its growth objectives, Enfo focuses on strengthening the profitability of its operations, for example, by boosting its subcontracting networks. However, the main focus of development activities is placed on the ability to respond to customer needs. Various technological expertise branches will remain at a high level. The significance of information security, cloud integrations and service management will increase in IT services.
BUSINESS OPERATIONS
Regardless of market challenges, Enfo’s business operations stayed solid in both IT services and outsourcing. New customer agreements were signed with the following parties, among others: Forex, Mölnlycke Health Care, the Central Administration of the Evangelical Church of Finland, Mainio Vire, Kemijoki and Pharmadata. The core of Enfo’s operations lies in continuous service development according to customer needs. During 2014, IT service development especially focused on cloud services, mobile solutions and improved end user experiences.
Integration services
RENSPONSIBILITY
IT services offered by Enfo cover all key areas related to information technology. Enfo has productized its services, from among which customers can select the most suitable package. As a result, customers may outsource specific tasks or their entire IT administration and its development to Enfo. Enfo’s services are based on solid technological expertise, knowledge of service processes and continuous development. The entire outsourcing process and operating methods are streamlined. In this way, outsourcing allows customers to focus on their core business, while improving cost-efficiency.
Application services
CORPORATE GOVERNANCE
Full responsibility for customer IT services
Development services for customer environments
Enfo IN 2014
Enfo services:
FINANCIAL STATEMENT
IT services and outsourcing
9
ENFO | Annual Report 2014
Outsourcing projects making progress The outsourcing of financial processes in medium-sized and large companies is a fairly new but an increasingly popular operating method. As the business environment becomes ever more digitalized, companies are forced to focus on developing their core business and ensuring their competitiveness. At the same time they must decide how to best take care of and develop their financial processes, whether by using their own resources or those of their partner networks. The use of electronic invoicing increased, with nearly half of all companies using e-invoices. Furthermore, up to 20% of all consumers are already using the system.
The year 2014 was in many ways a successful one in financial process services, even though turnover fell slightly. In addition to a slowly moving market, the turnover was reduced by the end of automatic meter management projects as energy companies were able complete the commissioning of remotely read meters. The most significant new customer agreement was signed with Pohjolan Voima on outsourcing its entire financial administration. Through the agreement, 13 Pohjolan Voima employees were transferred to Enfo. Another notable achievement was the success of the ZmartScan financial process mapping service launched the year before. The service was positively received on the market, with dozens of mapping service being carried out. The mapping processes provided customers with valuable information and, in many cases, have already led to further negotiations. Furthermore, the development of new service models and already productised financial processes was actively continued.
A diverse customer base Enfo is a customer-oriented and dynamic service provider that possesses not only strong process expertise, but also diverse business
Purchase invoicing services Payslip services Business information logistics services Automatic measurement services Intelligent data processing and BI services Consulting services
branch competence. Its potential customers include medium-sized and large companies with head offices in Finland. Its customers represent a wide variety of sectors, while focusing more strongly on energy, water and waste management companies, and the telecom, media, trade, logistics and municipal sectors.
Up from a slump through more effective operations Forecasts on Finnish economic development estimate that the downward trend will continue. What is more, digitalisation is still significantly shaping the earnings logic of many business functions. In order to keep up with the competition, companies need to focus more strongly on developing their business and improving its efficiency. Outsourcing supporting functions helps maintain competitiveness, especially if it results in a higher quality level at lower costs. The outsourcing market is expected to continue its growth. Competition over customers between invoicing operators is expected to continue to be fierce. Enfo will respond to this competition by launching new services that utilise opportunities presented by digitalisation.
BUSINESS OPERATIONS
New service models and customers
Sales invoicing services
RENSPONSIBILITY
Enfo offers comprehensive services for improving the efficiency of its customers’ financial and information logistics processes, their outsourcing and electronic invoicing in Finland. They allow customers to focus on their core business. The high-quality and cost-efficient services that utilise intelligent data processing refine information collected from different systems into a summary, on the basis of which customers can make even better decisions and, therefore, develop their competitiveness.
Mapping service
CORPORATE GOVERNANCE
Efficiency in financial processes
Outsourcing services for financial processes
Enfo IN 2014
Our services
FINANCIAL STATEMENT
Financial process services
10
ENFO | Annual Report 2014
Framsteg expanded the portfolio The consulting market was stable throughout 2014, but price competition became increasingly fierce. All in all, it was an average year for Enfo. The turnover decreased slightly and profitability also fell a little short of the targets. There was, however, clear progress in developing services, expanding the service portfolio and acquiring new customer contracts. The acquisition of Framsteg AB in August strengthened the market position of our consulting services. Framsteg focuses on Busi-
self-service solutions Information security &
identity management SAP Business Intelligence Business process management
Aiming at growth The consulting service market in Sweden looks fairly positive in 2015, and we expect demand to grow steadily. Enfo’s goal is to grow using our existing service portfolio, but also to expand into new service fields. The aim is to shift project tasks that are typical in consulting services towards continuous service agreements. In addition, we are looking for closer cooperation between business functions and aim to offer consulting services more to existing outsourcing service customers in a more proactive manner.
BUSINESS OPERATIONS
ness Intelligence (BI) and Service and Asset Management solutions, and it has vast experience in IT services that support their customers’ decision-making and business operations. Through the acquisition, 50 new data management professionals and consultants joined Enfo. Demand for BI solutions is particularly increasing in Sweden, and Enfo’s objective is to become the largest BI expert in Sweden. Operations in other fields also developed in a positive direction and the customer base expanded due to significant new contracts made with companies such as Bisnode, Mercedes Benz, Saab, Ambea and Cybercom. Service development particularly focused on the industrial Internet, and mobile and process solutions. The Enfo Evolution Day event held in December gathered a large group of customers to listen to and discuss possible measures to maintain the competitiveness of Swedish businesses both in the present and the future. The keynote speaker at the event was Sir Richard Branson. The event inspired the audience and, based on feedback, Enfo will also organise similar events in the future.
RENSPONSIBILITY
Enfo’s Consulting services provide customers with strong expertise and specialised solutions for the Swedish market. The service offering is based on applying focus to selected areas of expertise and on strengthening expertise by hiring the best professionals in the field. The consulting services have also been expanded by the acquisition of companies with expertise that support this development. Special expertise in Sweden is also utilised for the benefit of Finnish customers. Enfo’s strong expertise and solutions allow customers to focus on their core businesses.
Workstation management &
CORPORATE GOVERNANCE
Strong expertise BY specialisation
Integrations
Enfo IN 2014
Our services
FINANCIAL STATEMENT
Consulting Services
11
Established in 1965. Received a banking license in 2003. Market-leading travel money and easy-to-use banking services operating in the Nordic region. The company provides diverse banking services: travel money, deposits, loans, payment services and transaction services, as well as credit and debit cards.
BUSINESS OPERATIONS
Enfo IN 2014
FOREX BANK
RENSPONSIBILITY
of security and service 24/7
CORPORATE GOVERNANCE
Strictest standards
Number of personnel in 2014: 1,400 employees working in 120 offices in Sweden, Finland, Denmark and Norway.
www.forex.com
FINANCIAL STATEMENT
CASE
ENFO | Annual Report 2014
12
ENFO | Annual Report 2014
According to Jonas Broman, in the future, IT management will focus more on governance and finding the right partnership with leading IT vendors in their respective areas. In his opinion, user experience and quality of service will be more on the agenda than technology. “Another reason for choosing Enfo was their size and the company culture, which was seen as bring similar to ours in many ways. Enfo’s project team is very competent, and we are working in good cooperation with them. I’m looking forward to hearing their suggestions for improvements and discussing new services with the team”, comments Broman.
BUSINESS OPERATIONS
”
Another reason for choosing Enfo was their size and the company culture, which was seen as being similar to ours in many ways. Enfo’s project team is very competent, and we are working in good cooperation with them”
RENSPONSIBILITY
Quality of service on the agenda
Jonas Broman CIO, Forex Bank
CORPORATE GOVERNANCE
The company has created a multi-sourcing model that promotes making agreements for defined service areas with prominent companies that fit the FOREX Bank’s business and size. Enfo will serve as the focal point for all IT-related issues and will provide FOREX Bank with a service that is reliable and predictable, as well as proactive in nature: a service that lets FOREX Bank concentrate on its own core business. According to this strategy, Enfo is putting every effort into developing the security of their service, and the company has an ISO 27001 certificate. The certificate represents a systematic approach to managing company information so that it remains secure. It includes people, processes and IT systems by applying a risk management process. The standard covers Enfo’s IT services and outsourcing information management system, including server management in Kuopio and Karlskrona.
Enfo IN 2014
Reliable, predictable and proactive
FINANCIAL STATEMENT
The Nordic region’s market leader in travel money and easy-to-use banking services, FOREX Bank operates in four countries with a 24/7 service model that must be available without interruption, regardless of time or day. Being a bank, the company must adhere to strict regulatory and information security requirements, and requires round-the-clock IT support. Enfo is a strategic supplier of IT services for FOREX Bank, and is responsible for its workstation, network, Service Desk, local support and server services. FOREX Bank’s successful business concept is to provide travel money for people who are travelling abroad or to visitors from overseas. Since 2003, the business has also included easy-to-use banking services such as deposits, loans, payment services, transaction services, and credit and debit cards. This means that the business must be available at convenient times and in convenient locations – providing service to customers from all parts of the world. The company is growing rapidly, and it now has 1,400 personnel in 120 outlets across the Nordic countries. “Our business has demanding regulatory requirements, which requires clear and well-defined IT support for our different business areas – all day, every day. We chose Enfo as our supplier because of their service workflow processes and tools, which were seen as key to creating a successful user experience and quality of service for FOREX Bank’s end users”, says Jonas Broman, CIO of FOREX Bank.
13
Enfo IN 2014
Pohjolan Voima is a unifier of resources which increases the competitiveness of its customers by producing effective and innovative energy services at cost price – skilfully, boldly, together. Our shareholders are also our customers, representing a large group of Finnish industrial and energy companies. Our operations focus on hydropower, thermal power and nuclear power. Indirectly, we increase employment and wellbeing in Finland. Turnover in 2014: EUR 650 million Number of personnel in 2014: approximately 200
www.pohjolanvoima.fi
RENSPONSIBILITY
pohjolan voima
CORPORATE GOVERNANCE
resources utilised in strategic work
BUSINESS OPERATIONS
Financial MANAGEMENT
FINANCIAL STATEMENT
CASE
ENFO | Annual Report 2014
14
The first year of partnership between Pohjolan Voima and Enfo is now behind us. The work at the turn of every month has been carried out on schedule and according to every standard. “We are very satisfied with the operating model. The financial administration professionals who transferred from us to Enfo have served us well, allowing our business partners to focus on working in management teams of business functions and supporting business operations,” Korkeaoja says.
According to Korkeaoja, Enfo and Pohjolan Voima share a similar background and a similar set of values, producing benefits in their partnership, such as in the ongoing replacement of the finance and accounting application. Enfo is building the brain of the financial administration service centre, where the operations of all of Pohjolan Voima’s more than 30 connections need to be secured seamlessly. “In the replacement of the finance and accounting application, Enfo can truly shine through their expertise and experience in other customers and projects. I believe that the Enfo way – Simpler, Smoother, Smarter – can really be seen in practice,” Korkeaoja says.
MINNA KORKEAOJA CFO of Pohjolan Voima.
BUSINESS OPERATIONS
Smarter and more effective
Minna Korkeaoja sees that the pace of change is also picking up within the energy industry, which has traditionally been slower to follow trends. “We need to be always ready to predict what the future holds and perceive different scenarios in the event of changes. For example, if interest rates in money markets suddenly increase by 2 per cent, what will its impact be on us? For this purpose, we need to have data and systems in order to analyse the future. When we face efficiency pressures, we cannot increase the number of personnel, so we need to automate and standardise all of our routines,” Korkeaoja says.
”
Before revising the operating model, we conducted a current state analysis where our business controllers estimated that up to 70% of their working hours are spent on validating historical data, balancing income statements and balance sheets, and correcting errors. Our aim was to turn this ratio on its head”
RENSPONSIBILITY
The smart finance comprises forecasting and management by knowledge
Predicting change requires data
Enfo produces external accounting services for Pohjolan Voima. The outsourced services cover the entire financial administration process chain, from purchase and sales invoices to financial reporting.
CORPORATE GOVERNANCE
Enfo employees are talking about smart finance, which means continuous forecasting and management by knowledge. In order to be actually able to change the focus of operations, financial routines must be standardised, measured and developed by utilising all options offered by digital and automatic systems. This is the only way the financial management can focus on what is essential.
FINANCIAL STATEMENT
In recent years, the strategy of Pohjolan Voima has emphasised a stronger focus on the company’s key areas and being the most competitive large-scale energy producer for its customers. Through a business transaction completed in 2014, Pohjolan Voima sold its external financial administration accounting services to Enfo. This released financial management resources for strategic development, forecasting and, therefore, increasing the company’s value. Pohjolan Voima has been developing its financial administration for years through standardisation and centralisation. In connection with the revised strategy, the company also considered what its key competence areas are and what expert services could be acquired from partners for which the specific services constitute their key competence. “Before revising the operating model, we conducted a current state analysis where our business controllers estimated that up to 70% of their working hours are spent on validating historical data, balancing income statements and balance sheets, and correcting errors. Our aim was to turn this ratio on its head,” says Minna Korkeaoja, CFO of Pohjolan Voima.
Enfo IN 2014
ENFO | Annual Report 2014
15
OUTOKUMPU Outokumpu is one of the world’s leading manufacturers of stainless steel. Its vision is to be the market leader. Customers in a variety of industrial fields all over the world use stainless steel made by Outokumpu. Steel is a 100 per cent recyclable, corrosion-resistant, hygienic and strong material which needs no maintenance. It helps to build a sustainable future. Outokumpu’s head office is located in Espoo. Outokumpu is listed on the NASDAQ OMX Helsinki. Turnover in 2014: EUR 6.8 billion Number of personnel in 2014: 12,500 employees in more than 30 countries
www.outokumpu.com
Enfo IN 2014 BUSINESS OPERATIONS RENSPONSIBILITY
lower costs with the help of Enfo
CORPORATE GOVERNANCE
Outokumpu has increased its production at
FINANCIAL STATEMENT
CASE
ENFO | Annual Report 2014
16
ENFO | Annual Report 2014
Getting more from machinery The main focus of the project has been placed on improving the efficiency of the entire design and manufacturing process, covering all materials, tools and, above all, internal and external personnel resources. The company’s management has set this project as their first priority, with directors receiving training throughout the project. “We have systematically and effectively reviewed all questions, thanks to which we now have access to an excellent tool. After the turn of the year, our focus shifted fully to implementing the solution and offering training to all employees about the new way of working and its importance to the company,” Mikael Larsson says. The company is now working more systematically, and has clearer processes and more clearly divided areas of responsibility. As the number of production errors has fallen while design and manufacturing processes
Preventive maintenance is key Outokumpu will develop its maintenance activities, particularly preventive maintenance that serves to minimise production stoppages and improve the efficiency of production even further. The new analysis potential allows the company to focus on the right things and take any necessary action.
Hela vägen till värde™ “Hela vägen till värde™ is a concept developed by Enfo in 2012–2014 which has proven its capabilities in theory and practice,” says Mats Eliasson, managing director of Enfo Framsteg. “It has been a true pleasure to take part in a project where Outokumpu played an active and expert part, and where its key management and project employees have had a strong input. We have been involved in development and also witnessed the financial results,” Mats says in conclusion.
Enfo IN 2014 BUSINESS OPERATIONS
Outokumpu and Enfo have designed a key indicator application which is nearly ready for use. The application will be used in the QlikView system, which supports decision-making processes. The system will be connected to the IBM MAXIMO Asset Management maintenance system. These system-supporting components have been developed utilising Enfo’s expertise in analysis, maintenance and systems. “We have defined best practices for key indicators and analysis. We have strongly emphasised key indicators related to quality that help us carry out changes within the company and effectively monitor the quality of data,” Larsson says.
”
Even though it is still too early to measure the impact of the project, there is not a single doubt that production is now more effective.
MIKAEL LARSSON Warehouse manager Outokumpu
RENSPONSIBILITY
At Avesta, Outokumpu has invested in the long-term development of maintenance activities using both internal and external resources. Mikael Larsson, Outokumpu’s warehouse manager, says that the various earlier initiatives did not have the desired effect. Mikael’s curiosity was therefore awakened when he heard a presentation about Enfo Framsteg’s new Hela vägen till värde™ concept. “The name of the concept represents where we want to be,” Mikael says. Comprehensive thinking seemed like the right way forward at Outokumpu.
Key indicators of quality
CORPORATE GOVERNANCE
Bringing the concept into use
have evolved, production efficiency has improved and the company gets more from their machinery at lower cost. Outokumpu has only positive things to say about their cooperation with Enfo. Mikael Larsson says that, even though it is still too early to measure the impact of the project, there is not a single doubt that production is now more effective. Cooperation will also continue in new development areas.
FINANCIAL STATEMENT
Currently, maintenance processes hold priority at Outokumpu and the Avesta Järnverk foundry, where Enfo Framsteg has helped in rationalising production. Enfo Framsteg’s highly successful Hela vägen till värde™ (All the way to value) concept utilises knowledge of business and processes, analyses and best practices in a project covering the entire organisation. The diverse expertise of Enfo’s employees together with a thorough analysis of Outokumpu’s business operations has produced results worthy of the concept’s name – all the way up to the production of value.
17
ESAB is the world’s leading manufacturer of welding and cutting equipment and filler materials. Its innovative and world-renowned equipment and solutions are developed on the basis of customer feedback and manufactured with the expertise and experience of the world’s leading manufacturer. Established more than 100 years ago, ESAB has a presence in nearly every country in the world through its subsidiaries and representatives. Sales and support are offered in 80 countries, and the company has 26 production facilities on four continents.
www.esab.fi
BUSINESS OPERATIONS
Enfo IN 2014
ESAB
RENSPONSIBILITY
ESAB make digital innovations
CORPORATE GOVERNANCE
Enfo helps
FINANCIAL STATEMENT
CASE
ENFO | Annual Report 2014
18
Process optimisation Welding is a seaming technique which has been developed in stages during the past 100 years, and the industry is tightly regulated. Digitalisation offers new ways to improve processes and working methods, and to develop products. In cooperation with Enfo, ESAB has linked physical devices with various data systems, which facilitates the collection of data for analysis and processing. “Our cooperation has proceeded smoothly as we at ESAB have been responsible for welding-related expertise, while Enfo has taken care of integration,” Lindh says.
Accurate results Having a connection to the digital dimension puts processes together and serves to better integrate ESAB’s product and service range with its various production and maintenance processes. Structural programs, processing, production planning and drawing tools can be fully integrated, which benefits end customers through improved efficiency, traceability and quality. For example, it is possible to track down any structural failures and view accurate process results. In terms of structure, traceability extends from the drawing board to the entire production process. The collection of overall information concerning welders will also increase the level of automation. By ensuring that cooperation with Enfo continues, ESAB is also convinced that it will reach a leading position in this new and growing business area, bringing added value through the digitalisation of functions. Customers have already noticed the new opportunities and have started to request analyses. They are no longer with the same old service, and ESAB is happy to be able to offer quickly tailored products. “I am expecting our cooperation with Enfo to continue. After all, its expertise and ability to innovate have impressed us greatly,” Anders Lindh says.
Anders Lindh Director of strategy at ESAB
BUSINESS OPERATIONS RENSPONSIBILITY
ESAB is one of the world’s leading manufacturers of welding and cutting equipment and filler materials. It has more than 100 years of experience in R&D and modifications. Currently, the company is going through a development phase where welding is a central factor in a system which makes the entire production process easier and more effective. Enfo is leading this development phase together with Anders Lindh, director of strategy at ESAB. Enfo’s experience and ways of thinking play a significant part in raising digitalisation to a new level. “Enfo is not a supplier – it has acted as a partner from the get-go,” Anders Lindh says.
”
I have been greatly impressed by how quickly Enfo understands what we are looking for. Now, we are able to develop our operating platform in order to produce a number of new services for our customers. Development has proceeded at an incredible pace, and a lot of new things have taken place over the past six months.”
CORPORATE GOVERNANCE
100 years of welding
By gathering up all information about welding processes in a single system, it is possible to improve the efficiency of working methods and optimise processes. As the information is collected from more than 10,000 customers, the system offers a valuable source for R&D and measurements. What is more, it is an important tool in preventive maintenance. “I have been greatly impressed by how quickly Enfo understands what we are looking for. Now, we are able to develop our operating platform in order to produce a number of new services for our customers. Development has proceeded at an incredible pace, and a lot of new things have taken place over the past six months.” – Anders Lindh, director of strategy at ESAB.
FINANCIAL STATEMENT
Valuable ideas, business opportunities and services are created when traditional products are combined with smart networks and available services in a cloud. The integration of the physical and digital world is referred to as the Internet of Things. The number of connected units will increase to 4.9 billion in 2015, with the figure being expected to rise to 25 billion by 2020. In the manufacturing industry, operating methods are changing as, through the integration of units, processes and systems, digitalisation revolutionises the production of products and services.
Enfo IN 2014
ENFO | Annual Report 2014
19
BUSINESS OPERATIONS RENSPONSIBILITY CORPORATE GOVERNANCE
VR conductors replaced paper with tablets. Cooperation between Enfo and VR has already resulted in new ways of working. Mobile work and the working environment require an efficient flow of information and the ability to react quickly to changes. That is why VR conductors are now checking their shifts, tasks and schedules from tablets or smartphones instead of their previous paper bundles. Not all users were familiar with smart devices, which was taken into account in service planning and training. Conductors have eagerly accepted the clear and easy-touse program.
FINANCIAL STATEMENT
e.g.
Enfo IN 2014
ENFO | Annual Report 2014
20
ENFO | Annual Report 2014
Competitive services Increasing digitalisation enables the production and distribution of a number of commodities and services to be less expensive, faster, safer and eco-friendlier than when using traditional methods. Electronic solutions and
An award-winning service centre Open and flexible cooperation with customers is what makes Enfo stand out from the competition. A significant part of daily contacts are handled through the customer service centre, i.e. Service Desk. The customer service centre receives assignments and registers then in the service management system, from where customers are able to monitor the progress of their projects. The system also displays customer devices and any deviations in service quality. Enfo’s customer service centre has been recognised annually as the help desk of
Responsible production Enfo improves the cost-efficiency and ecofriendliness of its services by investing in energy efficiency. In particular, energy consumption is minimised by building modern data centres that utilise the best practices of the field. The energy efficiency of data centres is significant because their service lives are counted in tens of years. Energy consumption is reduced by minimising the area requiring cooling, using effective cooling solutions, recovering any waste heat, and utilising as purely produced energy as possible. The average PUE value (Power Usage Effectiveness) which measures the energy efficiency of Enfo’s data centres in Kuopio and Karlskrona was 1.25 in 2014 (1.28 in 2013). Enfo favours recycled materials and organises its waste management and recycling effectively in its operations and its service production. Enfo’s range covers a service where it bears responsibility for the entire life cycle of its customers’ devices. Through the service, all devices and accessories, such as ink cartridges, are recycled or reused in compliance with requirements and in cooperation with reliable partners.
BUSINESS OPERATIONS
the year or for the performance of individual employees.
RENSPONSIBILITY
new terminals are taking over various parts of our everyday lives. Smartphones and tables are used by more and more people, e-invoices are becoming more popular and the use of cloud services is increasing rapidly. The development of new solutions to fulfil every customer need and the properties of existing services is the cornerstone of Enfo’s operations. As customers have outsourced their key supporting functions to Enfo, Enfo must be able to produce high-quality and reliable services. Enfo is closely monitoring customers’ satisfaction in order to improve its quality. Furthermore, quality is maintained according to the ISO 9001 quality standard, and Enfo follows the ITIL framework of best practices.
CORPORATE GOVERNANCE
Enfo’s objective is to offer and develop services that serve to carry out customers’ business processes in a simple, flexible and smart way. Customers and their needs lie at the core of Enfo’s business, enabling continuous productive operations. Strong customer-orientation in products and services guides Enfo’s everyday operations. That is why customer satisfaction is measured continuously and, on the basis of survey results, operations are developed determinedly to be closer to customers and serve them even better. The operating environment of customers is changing rapidly and continuously. Digitalisation, globalisation and new technologies give birth to new earning models, requiring new operating methods. Enfo’s objective is to support its customers in adapting to these changes and to guarantee future success by producing services according to customer needs in a responsible, competitive and high-quality manner.
FINANCIAL STATEMENT
Services designed for customers
Enfo IN 2014
responsibility
21
ENFO | Annual Report 2014
Focus on competence development Enfo’s service range is based on wide-ranging expertise – from technologies to processes and from information security to customer service. After all, competence development is the starting point for all business. All employees are encouraged and supported to develop their professional skills. Performance appraisals held
A working community that feels well Enfo is a place where people enjoy their work. According to personnel surveys, Enfo employees are proud of their workplace. As an indication, Enfo was selected for the Great Place to Work Finland list in 2014. Wellbeing at work is also studied in teams, and any defects observed are corrected quickly. Wellbeing at work is made of a number of different factors. Teamwork plays an important part as well-functioning teams offer support to one another and divided workloads as evenly as possible. Experts require a high level of
An attractive employer The valuation shown towards Enfo can also be seen in surveys concerning employer images. In the listing of Great Place to Work Finland, Enfo was 15th in the general series. Correspondingly, Universum, a company which studies the images of students and recent graduates, characterised Enfo as an attractive employer. The interest shown towards Enfo is also reflected in job applications that are received in ever growing numbers for all open positions. Particularly in Finland, Enfo is highly respected among experts. In Sweden, general visibility is not as high and competition over professionals is fiercer.
BUSINESS OPERATIONS
leadership. Therefore, Enfo is determined in investing in the development of supervisory work. It is as important to give out rewards fairly. At Enfo, rewarding is based on performance monitored through various systems and indicators. Furthermore, up-to-date tools and ergonomic workstations are important in everyday work.
RENSPONSIBILITY
twice a year serve to prepare plans on competence development and career paths. What is more, career plans are not prepared according to any fixed mould – extensive expertise is available through various career paths. Challenging tasks offer means towards continuous development, and customer operations can only be learned through experience. Furthermore, various training channels are used actively and, for example, rewards are granted for carrying out certificates for technology suppliers.
CORPORATE GOVERNANCE
Enfo’s objective is to be a pioneer in the development and production of IT services. To reach this goal, Enfo requires strong and large-scale expertise, continuous service development and an energetic working community. Enfo aims to be an open, encouraging and fair employer. Customer satisfaction is the key to future success, and only motivated and skilled personnel can produce the best results. Enfo’s objective is to build a flexible and curious corporate culture full of discussion where information and expertise are shared. An expert organisation is continuously building new service models and operating methods that cannot be developed without flexible teamwork and interaction, or without questioning established practices.
FINANCIAL STATEMENT
People enjoy working in an open corporate culture
Enfo IN 2014
Responsibility
22
Enfo IN 2014 BUSINESS OPERATIONS RENSPONSIBILITY
Fruit instead of buns Enfo pays attention to the comprehensive wellbeing of its employees by encouraging individuals to follow a healthy life style. Occupational healthcare supports the physical and mental wellbeing of personnel, but healthier options have also been made available in many other areas. For example in 2014, personnel members requested that the buns offered at weekly meetings be replaced by smoothies, and to replace soft drinks with spring water in vending machines.
CORPORATE GOVERNANCE
e.g.
FINANCIAL STATEMENT
ENFO | Annual Report 2014
23
Enfo IN 2014 BUSINESS OPERATIONS RENSPONSIBILITY
Enfo employees working for children and young people. Enfo and its employees are actively involved in various charity campaigns. In Finland, donations were made to the Emergency Youth Shelter, the nationwide help line and the New Children’s Hospital project, while in Sweden a donation was made to the Swedish Childhood Cancer Foundation.
CORPORATE GOVERNANCE
e.g.
FINANCIAL STATEMENT
ENFO | Annual Report 2014
24
IMPACT ON SOCIETY
EUR million
Enfo is a responsible corporate citizen, the operations of which touch, not only its customers and personnel, but also various partners, shareholders, financiers and the entire society. In a world where networking is proceeding quickly and boundaries between economies and societies are dispersing, the significance of cooperation increases. Enfo’s success is based on its ability to work closely with various parties. This increases the wellbeing of all stakeholders.
A networked actor The extensive and expert partnership network significantly strengthens Enfo’s ability to develop and produce services. Through its network, Enfo is able to provide its customers with a service package larger than that what they independently have, together with standard services that make customers’ operations easier. Enfo’s objective is to be a fair and reliable partner and, for this purpose, it selects its partners thoroughly. Partnerships are governed by detailed agreements, while operations are monitored and close cooperation is developed. Enfo’s partnership network consists of technology suppliers, service providers, educational institutes and universities. Being a ser-
vice producer, Enfo acts as a service integrator, utilising the expertise of various leading technology suppliers. Enfo’s technological partners include Microsoft, IBM, HP, Oracle, SAP, Qlik, Mulesoft and Symantec.
corporate tax expenses
2.5 EUR million
Benefits from being from the Nordic Enfo aims to increase its shareholder value by securing the profitable growth of its business operations in the long-term. Enfo’s roots lie deep in Finland, but it has expanded to Sweden and other Nordic countries. Its objective is to produce services locally, mainly using local resources, and for local operators. Developing Nordic expertise and competitiveness is important to Enfo which wants to challenge its major international competitors. Being under Finnish ownership also has its own value. Responsible ownership is reflected in natural interaction and the exchange of expertise between the company’s management and Board of Directors. Compliance with good corporate governance limits operational risks. Enfo’s responsibility towards society is emphasised in open interaction with various authorities, the financial effects of its operations, and the minimisation of any negative environmental impact. Enfo is continuously reviewing
dividends to shareholders
3.2
RENSPONSIBILITY
52.1
BUSINESS OPERATIONS
salaries to employees
EUR million
the impact its operations have on surrounding society, and acts responsible according to the best information available. Enfo reduces the environmental impact of its operations by favouring Finnish communications solutions, reducing the number of unnecessary printouts, carefully planned travels, and the efficient use of premises. Furthermore, it monitors emission levels of vehicles and sets strict requirements for any vehicles acquired. Thanks to these actions, Enfo has been able to continuously reduce its negative environmental impact.
CORPORATE GOVERNANCE
Wellbeing for all stakeholders
ENFO’s
FINANCIAL STATEMENT
responsibility
Enfo IN 2014
ENFO | Annual Report 2014
25
CORPORATE GOVERNANCE FINANCIAL STATEMENT
Enfo Oyj’s administration and management complies with the company’s Articles of Association, the Finnish Companies Act, and the 2010 Corporate Governance code of Finnish listed companies issued by the Securities Market Association on 1 October 2010, apart from Recommendations 9 (Insider administration) and 18 (Establishing a committee). The code is available on the Securities Market Association’s website at: www.cgfinland.fi.
RENSPONSIBILITY
BUSINESS OPERATIONS
Corporate Governance
Enfo IN 2014
ENFO | Annual Report 2014
26
Annual General Meeting The Annual General Meeting constitutes Enfo Oyj’s highest decisionmaking body where shareholders participate in the management and supervision of the company. The company must hold one Annual General Meeting during a single financial period. An Extraordinary General Meeting will be held if required. Shareholders exercise their speaking and voting rights in the Annual General Meeting. The Annual General Meeting is attended by the Managing Director, the Chairman of the Board of Directors, and a sufficient number of members of the Board. The auditor also attends the Annual General Meeting. Those who are nominated as members of the Board for the first time must attend the Annual General Meeting where the election is decided on, unless there is a good reason for being absent.
The Board of Directors of Enfo Oyj is responsible for the company’s management and for the appropriate organization of its operations. The Board of Directors steers and supervises the company’s executive management, decides on appointing or dismissing the managing director, reviewing and approving the company’s strategic goals and risk management principles as well as ensuring the functioning of the integrated management system. Good corporate governance also means the Board of Directors ensures the company agrees on the values that will be followed in its operations. The task of the Board of Directors is to promote the benefits of the company and all of its shareholders. The members of the Board do not represent the parties who put them forward for appointment. The majority of the Board members must be independent of the company. In addition, at least two of the members of the majority must be independent of the company’s major shareholders. Enfo Oyj’s Board of Directors consists of six members. In 2014, the Board of Directors convened 11 times, and the overall attendance rate of the Board members was 100%.
The Boards of Directors’ agenda Every six months, the Board of Directors produces a written agenda that covers a schedule
Evalution of the Board’s performance The Board of Directors of Enfo Oyj evaluates its own performance once a year.
Appointing Board members The shareholders appoint the members of the Board of Directors at the Annual General Meeting. By appointing the Board of Directors, the shareholders have a say in the way the company is run and therefore in the company’s business in general. The members of the Board of Directors are appointed for one year at a time.
BUSINESS OPERATIONS
The application guidelines for good corporate governance were revised and approved by the Board of Directors of Enfo Oyj on 26 September 2014. The information was posted on the company’s website at www.enfo.fi under Investor Relations. Articles of Association Enfo’s Articles of Association are available on the company’s website under Corporate Governance.
The Boards of Directors
for meetings and a plan of issues to be addressed in the meetings, including the following: • Financial reviews • Strategic planning • Shareholder affairs • Management evaluation and remuneration schemes • Assessment of the Board’s performance • Business reviews • Personnel issues • Customer satisfaction • Risk management In addition to the issues listed in the agenda, the Board of Directors of Enfo Oyj addresses and decides on matters that may potentially have a significant impact on the company’s finances, business or operating principles.
RENSPONSIBILITY
Group administration
Enfo Oyj publishes the notice of the Annual General Meeting, and presents the meeting agenda and any documents presented to the AGM on its website at least three weeks prior to the Annual General Meeting. According to its discretion, the Board of Directors may also publish the notice in a national newspaper. After the meeting, Enfo will publish the decisions made by the Annual General Meeting.
CORPORATE GOVERNANCE
Enfo Oyj’s administration and management complies with the company’s Articles of Association, the Finnish Companies Act, and the 2010 Corporate Governance code of Finnish listed companies issued by the Securities Market Association on 1 October 2010, apart from Recommendations 9 (Insider administration) and 18 (Establishing a committee). The code is available on the Securities Market Association’s website at: www.cgfinland.fi.
Independence of the Board members The majority of the Board members must be independent of the company. In addition, at least two of the members belonging to the said majority must be independent of all of the company’s major shareholders. The Board has assessed the independence of its members and concluded that all members of the Board are independent both from the company and from its major shareholders.
FINANCIAL STATEMENT
Corporate Governance
Enfo IN 2014
ENFO | Annual Report 2014
27
ENFO | Annual Report 2014
Nomination Committee The company has a Nomination Committee consisting of four people elected by the Annual General Meeting, which also appoints the chairman of the committee. The majority of the Nomination Committee members must be independent of the company. The Managing Director or another person within the company’s management cannot be a member of the Nomination Committee. The Nomination Committee prepares the election of Board members and the auditor, as well as reward-related matters for a proposal to be presented to the Annual General Meeting. The Nomination Committee reports regularly to the Board of Directors. The chairman of the Nomination Committee is elected by the Annual General Meeting. The Nomination Committee is convened annually by the Chairman of Enfo Oyj’s Board of Directors well in advance of the Annual General
Profit-sharing system Enfo Group’s personnel in Finland, apart from the upper management, are members of the personnel fund established in 2006. The bonus scheme for the entire personnel consists of profit-sharing items and result-based bonuses
Enfo IN 2014
Incentive scheme for the management and key personnel Enfo Group uses an annual bonus scheme directed at the Group’s management and key personnel. The amount of bonus varies individually or is group-specific, and accounts for, at most, 20–50% of a person’s annual salary. The company’s Board of Directors makes the decisions about the incentive scheme for the management and key personnel. In 2015, the annual bonus scheme involves about 30 persons. The central determining criteria for the bonus include the operating profit of the Group and each business segment. In addition to the annual bonus scheme, the Group uses a long-term incentive scheme directed at the management and key personnel. There is also such an entity (“vinstandelstiftelse”) in Sweden that corresponds to the Finnish personnel fund. The share-based incentive scheme contains three one-year earning periods, i.e. calendar years 2014, 2015 and 2016. The company’s Board of Directors decides on the earning criteria for the earning period and their objectives upon approval of the budget. Any bonus for the 2014 earning period is based on the operating profit and increased turnover of each segment and unit. The scheme’s target group consists of circa 50 key persons.
BUSINESS OPERATIONS
Taking into account the extent of business operations, it has not been deemed necessary to establish committees other than the Nomination Committee. Enfo Oyj’s Board of Directors performs the duties of the Audit Committee.
As per the Finnish Companies Act, the Managing Director is responsible for the day-to-day running of the company in compliance with the principles and guidelines devised by the Board of Directors. The Managing Director ensures that the company’s accounts and reporting practices are in line with the law and other regulations, and that they are dependably organised. The Managing Director is also responsible for strategic planning, financial administration and risk management. The Group’s Executive Management Team assists the Managing Director in his duties. Arto Herranen, M.Sc.(Eng.), has been Enfo Oyj’s Managing Director since 1 July 2007. In 2014, Enfo Group paid a total of EUR 259,134 in salaries and fees to Arto Herranen, the parent company’s Managing Director, of which the share of bonuses paid on the basis of the 2013 financial period was EUR 0. The Managing Director must give three months’ notice to resign his duties. If the company decides to dismiss the Managing Director, he is entitled to a lump sum equivalent to 12 months’ pay in addition. The Managing Director is entitled to retire once he has reached the age of 60, at which point his pension will be 60% of the total pension allowance. The Managing Director of Enfo Oyj is not, and cannot
Incentive scheme
RENSPONSIBILITY
Committees
Managing Director
be appointed as, a member or the chairman of the Board of Directors.
CORPORATE GOVERNANCE
The Chairman of the Board of Directors is entitled to a remuneration of 2,000 euros per month and each member to 1,000 euros per month. In addition, each participant receives a fee of 600 euros per meeting. The remuneration cannot be claimed in shares. The Appointments Committee proposes that the travel expenses of the member of the Board of Directors be remunerated in accordance with the company’s general travel policy.
Meeting. Otherwise, the Nomination Committee is convened by its chairman as required. At Enfo Oyj’s Annual General Meeting on 19 March 2014, Tapio Hakakari, Pekka Kantanen and Ossi Saksman, Esko Torsti and Ossi Saksman (Chairman) were elected to the Nomination Committee. In 2014, the Nomination Committee convened once, and the overall attendance rate was 100%.
FINANCIAL STATEMENT
Remuneration of the Board of Directors
28
ENFO | Annual Report 2014
Risk management The objective of risk management is to ensure that the company operates efficiently and profitably, that information is reliable, and regulations and operating principles are complied with. The aim is to identify, assess and monitor any risks related to business operations. Enfo Oyj has conducted an extensive survey of the probability of threats and risks related to business operations, the impact of
Insider regulations do not apply to the company because the company’s shares are not traded on the Helsinki Stock Exchange.
Auditing According to Enfo Oyj’s Articles of Association, the company has a minimum of one and a maximum of two auditors who must work for an auditing firm approved by the Central Chamber of Commerce. The 2007 Extraordinary General Meeting elected PricewaterhouseCoopers Oy, an authorised public accounting firm, as the company’s auditor until furthernotice, and Pekka Loikkanen, Authorised Public Accountant, as the main auditor. In the period of 1 January–31 December 2013, Enfo Group paid the auditor a total of EUR 196,101.57 in auditing fees and EUR 89,159.89 in fees not related to auditing. The auditor has an important position as an auditing body appointed by the shareholders. Auditing provides the shareholders with an independent statement on how the company’s accounting, financial statements and administration have been organized. Enfo Oyj’s Nomination Committee prepares a proposal for an auditor to the Annual General Meeting.
Timetable for financial reporting in 2015 Enfo’s Annual General Meeting will be held on 25 of March 2015. The 2013 financial statements and annual report is published on Enfo Oyj’s website on 3 March 2015 at noon. Enfo Oyjs Annual General Meeting will be held on 25 March 2015. The 2015 Q1 interim report will be published on 30 April 2015, the Q2 interim report on 20 August 2015 and the Q3 interim report on 28 October 2015.
Enfo IN 2014 BUSINESS OPERATIONS
Insider administration
The purpose of communication at Enfo Group is to provide internal and external target groups with reliable and up-to-date information about the company’s operations and operating environment so that the target groups can create a correct and accurate image of the company’s operations. Communication from Enfo is based on openness and reliability, comprising understandable, active and preventive activities. The objective of Enfo’s communication is to support the fulfillment of the company’s strategy through the means of communication, and to improve the visibility and appeal of the company’s operations. Enfo Oyj publishes five public financial reports annually: the financial statements bulletin, the annual report and three interim reports. In its communication, Enfo follows the principle of equality and publishes its financial reports in Finnish and English. The most important medium for Enfo is the company’s website at www.enfo.fi. It contains all financial information and bulletins published by the company, as well as the company’s code of Corporate Governance.
RENSPONSIBILITY
Supervision and control of the company’s operations and management are based on regular financial reporting and active work by the Board of Directors. The Board of Directors has defined the key risk management principles. The results of the annual risk surveys are reported to the company’s Board of Directors. Issues related to data security are reported to the Board of Directors every six months. The Group’s financing decisions are performed centrally within the parent company following the investment policy approved by the Board of Directors, and the Board receives a quarterly report on the company’s financial standing. Internal audits are carried out within different Group units by external service providers on a rotating basis. Internal auditors report directly to the Board of Directors.
Communications
CORPORATE GOVERNANCE
Internal supervision and audit
the threats and risks actually taking place, and risk management. The risk management plan prepared on the basis of the survey is updated and developed in an active and determined manner in order to control the risks related to business operations. Enfo Oyj’s Board of Directors assesses any known risks and uncertainties, and issues reports on them regularly in interim reports, the financial statements bulletin and annual report published by the company.
FINANCIAL STATEMENT
paid to the personnel fund. Enfo Oyj’s Board of Directors decides upon the criteria for determining the profit-sharing items and resultbased bonuses annually, upon approval of the budget. The personnel fund invests 50–75% of the profit-sharing items in Enfo Oyj shares. The personnel fund is one of Enfo Oyj’s largest shareholders.
29
Mammu Kaario
M.Sc. (Technology), Deputy Chairman of the Board (born 1947)
Member of the Board, Master of Laws, MBA (born 1963)
• Managing Director of Webstor Oy. Deputy Chairman of the Board of Directors of Cargotec Oyj, member of the Board of Directors of Etteplan Oyj, Martela Oyj, Hollming Oy and Opteam Yhtiöt Oy. Main work experience: Managing Director of Cargotec Oyj in 10/2012–2/2013, Director at KONE Oyj, Secretary of the Board of Directors 1998–2006, Administrative Director at KCI Konecranes Oyj 1994–1998, and in other positions at KONE Oyj 1983–1994. • Member of Enfo Oyj’s Board of Directors since 26 June 2007. Holds 1,636 shares in Enfo Oyj. Independent of the company and significant shareholders.
• Chairman of the Board of Directors of Lujatalo Oy. Member of the Board of Directors of DNA Oy and Aholansaari Foundation, member of Nordea’s Advisory Board. Main work experience: Managing Director of Lujatalo Oy 1972–2006. • Member of Enfo Oyj’s Board of Directors since 26 June 2007. Holds 1,690 shares in Enfo Oyj. Independent of the company and significant shareholders.
• Investment Director at Korona Invest Oy. Chairman of the Board of Directors of Kissankulman muksut Oy. Member of the Board of Directors of Aspo Plc, Ponsse Plc and Invalidiliiton Asumispalvelut Oy. Main work experience: Partner at Unicus Oy from 2005-2011, director of Conventum Corporate Finance Oy 1998–2005, director of Prospectus Oy 1994–1998, expert at KansallisOsake-Pankki 1988–1994. • Member of Enfo Oyj’s Board of Directors since 25 March 2010. Holds 1,617 shares in Enfo Oyj. Independent of the company and significant shareholders.
CORPORATE GOVERNANCE
Hannu Isotalo
Chairman of the Board, Master of Laws (born 1953)
FINANCIAL STATEMENT
Tapio Hakakari
RENSPONSIBILITY
BUSINESS OPERATIONS
Enfo Group’s Board of Directors
Enfo IN 2014
ENFO | Annual Report 2014
30
SOILI MÄKINEN
Member of the Board, M.Sc. (Economics) (born 1967)
Member of the Board, M.Sc. (Economics) (born 1960)
• Senior Portfolio Manager at Ilmarinen Mutual Pension Insurance Company. Member of the Board of Directors of Ekokem Oy Ab, Mustavaaran Kaivos Oy and Tieyhtiö Valtatie 7 Oy. Main work experience: Pension Fund agent, Group Treasurer and Head of Treasury Operations at Neste Oil Oyj 2005–2010, Fortum Oyj Treasury Manager, Head of Treasury Operations 2000–2005. Finance, electricity pricing and forwarding duties at Imatran Voima Oy 1987–2000. • Member of Enfo Oyj’s Board of Directors since 24 March 2011. Holds no shares in Enfo Oyj. Independent of the company and significant shareholders.
• Managing Director at Osuuskunta KPY. Member of the Board of Directors of Enfo Plc, Voimatel Oy, Vetrea Terveys Oy, Hoivakymppi Oy, ItäSuomen Rahasto Oy and Kiinteistö Oy Lentokapteeni. Main work experience: Director of Icecapital Banking, Partner at Iridium Corporate Finance, Portfolio Manager at Ilmarinen Mutual Pension Insurance Company. • Member of Enfo Oyj’s Board of Directors since 19 March 2014. Holds no shares in Enfo Oyj. Dependent of the company and a significant shareholder.
• CIO at Cargotec Oyj. Main work experience: CIO at MacGREGOR Oy (2004-2006). Since 1993 number of positions in system and project management at MacGREGOR Oy´s IT management. • Member of Enfo Oyj’s Board of Directors since 21 March 2013. Holds no shares in Enfo Oyj. Independent of the company and significant shareholders.
CORPORATE GOVERNANCE
Lauri Kerman
Member of the Board, M.Sc. (Economics) (born 1963)
FINANCIAL STATEMENT
TIMO KÄRKKÄINEN
RENSPONSIBILITY
BUSINESS OPERATIONS
Enfo IN 2014
ENFO | Annual Report 2014
31
Tero Kosunen
CFO, M.Sc. (Economics) (born 1973)
Senior Vice President, Business Development, M.Sc. (Tech.) (born 1978)
• Arto Herranen has previously acted as the Managing Director of Savon Voima Oyj, a Head of Department at Kuopion Puhelin Oyj, an Account Manager at Oracle Finland Oy, and a Production Director at P.T.A. Group Oy.
• Christian Homén has previously worked at Microsoft as Director, Finance & Control. He has also worked as Director in several financial management positions at Nokia, including business planning, reporting, business control and treasury.
• Chairman of the Executive Management Team of Enfo Oyj since 2007. Holds 2,712 shares in Enfo Oyj.
• Member of the Executive Management Team of Enfo Oyj since 1st February, 2015.
• Tero Kosunen has previously worked at Oy Danfoss Ab as CFO, business development director and local manager. In addition, Kosunen has worked as IT consultant at Tieto Corporation. • Member of the Executive Management Team of Enfo Oyj since 1st October 2011. Holds 808 shares in Enfo Oyj.
CORPORATE GOVERNANCE
Christian Homén
Chairman of the Executive Management Team, CEO, M.Sc. (Tech.) (born 1963)
FINANCIAL STATEMENT
ARTO Herranen
RENSPONSIBILITY
BUSINESS OPERATIONS
Enfo Group’S management
Enfo IN 2014
ENFO | Annual Report 2014
32
lars aabol
Adam Ritzèn
Managing Director, Enfo Zender Oy, BBA (born 1976)
Executive Vice President, Consulting Services, (born 1965)
Senior Vice President, Marketing, Enfo Group, Engineer (born 1964)
• Lars Aabol has previously acted as the Managing Director of Hogia Infra AB, and as a Sales Manager for Framfab.
• Adam Ritzèn has previous acted as Marketing Manager at Enfo Sweden, Sales and Marketing Manager at Enfo Zystems. He has acted as Sales and Marketing Director at Aircall AB, and marketing director at STC AB, and as CEO at GBL AB.
• Maria Lundell has previously acted as the Director of Human Resources at NasdaqOMX, L’Oréal Finland Oy and as a Manager of Human Resources at Palace Kämp Group. • Member of the Executive Management Team since 2009. Holds 404 shares in Enfo Oyj
• Tero Saksman has previously acted as a controller at Kuopion Puhelin Oyj and Enfo Oyj. In Enfo Oyj’s Information Logistics Services, he has acted as a sales director, sales manager and service manager. He is member of the Board of Kasve Oy. • Member of the Executive Management Team of Enfo Oyj since 1st of January 2011. Holds 928 shares in Enfo Oyj.
• Member of the Executive Management Team of Enfo Oyj since 1st of July, 2012. Holds 404 shares in Enfo Oyj.
• Member of the Executive Management Team of Enfo Oyj since 1st of July, 2012. Holds 404 shares in Enfo Oyj.
Beside these members, The Enfo Management Team includes Nina Annila (Outsourcing Services), Fredrik Bergman (Consulting Services), Erik Brügge (Consulting Services), Mats Eliasson (Consulting Services), Åsa Landén Ericsson (Consulting Services) and Matti Seppänen (Outsourcing Services).
CORPORATE GOVERNANCE
tero saksman
Senior Vice President, HR M.A. (born 1966)
FINANCIAL STATEMENT
Maria lundell
RENSPONSIBILITY
BUSINESS OPERATIONS
Enfo IN 2014
ENFO | Annual Report 2014
33
Key figures Consolidated financial statements (IFRS)
Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet
Consolidated cash flow statement Consolidated statement of changes in equity
46
NOTES
46 1. General information about the company 46 2. Accounting principles for the consolidated financial statements 54 3. Financial risk management 56 4. Segment reporting 57 5. Other operating income 57 6. Materials and services 58 7. Salaries and other employment benefits 58 8. Depreciation and amortisation 58 9. Other operating expenses 58 10. Financial income and expenses 59 11. Income tax 59 12. Earnings per share 60 13. Tangible assets 60 14. Intangible assets 62 15. Available-for-sale investments 62 16. Non-current receivables 63 17. Deferred tax assets and liabilities 64 18. Inventories 64 19. Trade receivables and other receivables 64 20. Cash and cash equivalents 64 21. Equity 65 22. Share-based payments 66 23. Financial liabilities 67 24. Trade and other payables 67 25. Information on related parties 68 26. Responsibilities
BUSINESS OPERATIONS RENSPONSIBILITY
Report of the Board of Directors
CORPORATE GOVERNANCE
35 39 41 41 41 42 43 44
FINANCIAL STATEMENT
Consolidated Financial Statements (ifrs)
Enfo IN 2014
ENFO | Annual Report 2014
34
Business operations Enfo is a Nordic IT service company which offers IT and financial process services to its customers in Finland, Sweden, Norway and Denmark. Enfo’s services allow its customers to focus on their key operations. Enfo has 50 years of experience developing proven IT solutions and concepts, along with the deep expertise of 800 top IT professionals.
Market development Hopes of the economic situation taking a turn for the better were not realised in 2014. On the contrary, economic development in many European countries was negative, with the situation becoming worse by an increase in political uncertainty. Economies in Enfo’s main markets in Finland and Sweden developed at a different pace. While Finland was at a standstill waiting for an upward trend, Sweden showed more positive development.
Turnover and result Enfo Group’s turnover decreased by 3.7% to EUR 145.3 million (150.9). The decrease in turnover is caused by adjustment measures in infrastructure consulting in Sweden and the end of automatic meter management (AMM) projects in Financial Process Services. Operating profit stood at EUR 9.7 million, showing a decline of 13.7%. The ratio between operating profit and turnover was 6.7%. The
operating profit includes non-recurring costs arising from a loss-producing customer projects in Swedish Consulting Services and business reorganisation costs in Finland, totalling EUR 2.5 million. Profit before taxes was EUR 8.1 million, comprising 5.5% of turnover (10.0 and 6.6%). The Group’s net financing costs were EUR 1.6 million (1.3). Profit for the period was EUR 6.4 million and 4.4% of turnover (7.6 and 5.0%). Earnings per share were EUR 8.50 (10.69).
Development by reporting segment Enfo’s business operations are divided into two separately reported lines of business – IT Services, and Financial Process Services. The previous name of the Financial Process Services segment was Information Logistics Services. The turnover of IT Services decreased by 3.3% to EUR 109.3 million (113.0), while operating profit fell by 20% to EUR 5.6 million (7.0). The negative development was the result of the general market situation, and also of adjustment measures in infrastructure consulting in Sweden.
BUSINESS OPERATIONS RENSPONSIBILITY
Enfo Oyj (Business ID: 2081212-9) is the parent company of the affiliated Enfo Group. Enfo Oyj’s parent company is Osuuskunta KPY.
The challenging economic situation forces business parties to focus on improving their competitiveness by boosting their operations. Thanks to Enfo’s services, companies are able to focus on the development of their key operations. In Finland, the IT service market decreased slightly or remained at the previous year’s level. In Sweden, the overall market grew slightly. In both countries, the decision-making processes of customers were characterised by caution and fiercer competition over prices. Furthermore, operating methods vary from one country to the other: supporting functions are outsourced more easily in Finland, while interest towards consulting services is higher in Sweden.
CORPORATE GOVERNANCE
Financial period 1 January – 31 December 2014
FINANCIAL STATEMENT
Report of Enfo Oyj’s Board of Directors
Enfo IN 2014
ENFO | Annual Report 2014
35
Investments and financing Enfo’s net investments over the financial period stood at EUR 8.9 million (5.1). Full-year investments were mainly directed at the acquisition of shares in Framsteg AB and data centre hardware. The hardware was financed through financial leasing agreements.
BUSINESS OPERATIONS
Enfo employed an average of 775 people (784) during the year, and a total of 802 people (767) at year-end. Of these, Financial Process Services employed 107 people, IT Services 673 people and Group services 23 people. Management made up 3% of Enfo’s entire staff. Of the personnel, 367 employees were working in Finland (349) and 408 in Sweden (435). In 2014, the Group’s personnel expenses amounted to EUR 67.2 million (69.6), accounting for 49% of all expenses in the income statement (49). During the financial period, Enfo paid its staff a total of EUR 52.1 million (54.1) in wages and fees. A total of EUR 0.3 million of result-based bonuses, including social security expenses, were paid during 2014. In proportion to the average number of personnel, the consolidated turnover was EUR 188,000 (193,000), operating profit was EUR 13,000 (14,000), and salary and pension expenses stood at EUR 81,000 (83,000). In 2014, Enfo Group recruited 95 permanent employees (89), whereas 74 (83) permanent employment relationships ended. At the end of 2014, the average duration of a permanent employment relationship with the Group was 7.7 years (7.4). The share of the Group’s personnel with more than 20 years of service was 6% (7), those employed 0–4 years comprised 42% (49), and those employed 5–10 made up 30% (26). A clear majority, i.e. 79% (79), of the Group’s personnel were male. The average age of personnel was 42 years (40). Apart from top management, Enfo Group’s employees in Finland are members of the
RENSPONSIBILITY
Personnel
personnel fund that was established in 2006. The incentive bonus scheme for the entire personnel consists of profit-sharing items and result-based bonuses paid to the personnel fund. Enfo Oyj’s Board of Directors decides upon the criteria for determining the profit-sharing items and resultbased bonuses annually, upon approval of the budget. The personnel fund invests 50–75% of the paid profit-sharing bonus items in Enfo Oyj’s shares. The personnel fund is Enfo Oyj’s third largest shareholder. During the 2014 financial period, a system similar to the Finnish personnel fund was established in Sweden (“vinstandelstiftelse”). Its key rules and profit-sharing principles are the same as in Finland. Enfo Group uses an annual bonus scheme directed at the Group’s management and key personnel. The bonus is either personal or groupspecific, and accounts for, at most, 20–50% of a person’s annual salary. The company’s Board of Directors makes the decisions about the bonus scheme for the management and key persons. In 2015, the annual bonus scheme involves about 40 persons. The central determining criteria for the bonus scheme include the operating profit for each segment and some other personal objectives. In addition to the annual bonus scheme, the Group uses a long-term incentive scheme directed at the management and key personnel. The share-based incentive scheme contains three one-year earning periods, i.e. calendar years 2014, 2015 and 2016. The company’s Board of Directors decides on the earning criteria for the earning period and their objectives upon approval of the budget. Any bonus for the 2015 earning period is based on the operating profit and increased turnover of each business area and unit. The scheme’s target group consists of 49 key persons.
CORPORATE GOVERNANCE
The company’s equity ratio was 42.9% (46.6) at the end of the period. Interest-bearing net liabilities at the end of December amounted to EUR 28.7 million (28.4) and net gearing was 55.1% (54.8).
FINANCIAL STATEMENT
Overall, Enfo succeeded moderately well in working with customers. Enfo signed new agreements with the following customers: Forex, Mölnlycke Health Care, the Central Administration of the Evangelical Church of Finland, Mainio Vire, Kemijoki, Pharmadata, Bisnoden, Mercedes Benz, Saab, Ambea and Cybercom. Additionally, the majority of ending fixed-term agreements were extended. In August 2014, Enfo acquired Framsteg AB in Sweden. The business transaction did not have any significant impact on turnover, while it strengthened Enfo’s position as a provider of consulting services and a Business Intelligence and Service and Asset Management expert. Through the acquisition, Enfo obtained 50 new professionals. The turnover of Financial Process Services decreased by 3.2% to EUR 37.6 million (38.9), while operating profit fell to EUR 4.1 million (4.3). The decrease in turnover was due to the ending of automatic meter management (AMM) projects. Outsourcing financial processes is a relatively new, but a clearly increasing, operating method in medium-sized and large companies. The most significant new customer agreement was signed with Pohjolan Voima on outsourcing its entire financial administration. Through the agreement, 13 people were transferred to Enfo. In addition, dozens of ZmartScan financial process surveys introduced as a new service the year before were conducted during the year.
Enfo IN 2014
ENFO | Annual Report 2014
36
BUSINESS OPERATIONS
Enfo aims towards environmental friendliness and responsibility in its operations, and by developing and offering more environmentally friendly solutions to its customers. Using the latest and more effective IT solutions, it is possible to save natural resources through energy efficiency and by reducing the need for printing. The company’s operations are guided by the principle of sustainable development, which is visible in its recycling and waste management functions. Any electronics scrap and other materials removed from use are recycled to enable their further use, where possible. Efficient data centres built by Enfo have significantly lower environmental load and electricity consumption than conventional data centres. Energy consumption is minimised through effective cooling solutions and by utilising lost heat. New data centres use energy-saving hot aisles, highly efficient UPS hardware and energy-efficient free cooling. The printing room contains a heat recovery system, through which the heat produced by hardware can be used to heat up the production facility. Any hardware not in immediate use has the current disconnected. Utilising the industry’s best practices, Enfo’s data centres have achieved excellent PUE values (Power Usage Effectiveness) that measure energy efficiency. The PUE average for 2014 was 1.25 (1.28) at Enfo’s data centres. Enfo has data centres in Kuopio and Karlskrona. Enfo has consistently tried to increase the popularity of e-invoicing by delivering information efficiently and using appropriate
Board of Directors, management and auditor Enfo Oyj’s Chairman of the Board of Directors is Tapio Hakakari, Managing Director of Webstor Oy. The other members of the Board of Directors are Hannu Isotalo, Chairman of the Board of Directors of Lujatalo Oy; Lauri Kerman, CEO of Osuuskunta KPY; Mammu Kaario, Investment Director at Korona Invest Oy; Timo Kärkkäinen, Senior Portfolio Manager, Capital Investments, of Ilmarinen Mutual Pension Insurance Company; and Soili Mäkinen, CIO at Cargotec Corporation. In 2014, Enfo Group’s Executive Management Team members were CEO Arto Herranen, CFO Tero Kosunen (finance, communications and IT), Senior Vice President Maria Lundell (HR), Managing Director Tero Saksman (Financial Process Services), Executive Vice President Osmo Wilska (IT Services and Outsourcing Services), Executive Vice President Lars Aabol (Consulting Services), and Marketing Director Adam Ritzén. Besides these managers, the Executive Management Team includes Nina Annila (Outsourcing Services), Fredrik Bergman (Consulting Services), Erik Brügge (Consulting
RENSPONSIBILITY
Environmental issues
In addition, Enfo has set strict emission restrictions for the company’s vehicles. In 2014, Enfo was able to further reduce the carbon dioxide emissions of its vehicles. The emissions totalled 139 g/km (144) in Finland, and 133 g/km (141) in Sweden. The efficiency and functionality of Enfo’s offices are governed by high standards. In summer 2014, Espoo functions moved to Alberga Business Park which has an environmental certificate at the BREEAM-very good level (BRE Environmental Assessment Method). The Kuopio office opened the year before has the LEED Gold environmental certificate (Leadership in Energy and Environmental Design).
CORPORATE GOVERNANCE
No significant research and product development projects were conducted during the financial period.
research methods. A transition to electronic invoicing is not only an eco-friendly action, but also a solution that boosts the company’s operations. Enfo published an animation that presents the benefits of e-invoices. Its aim was to communicate the importance and benefits of e-invoices to young people. Enfo uses PEFC- or FCS-approved and ISO 14000-certified recycled materials in the printing and enveloping of materials. These materials are acquired from local suppliers to minimise transport distances. All production-related waste paper and packaging materials will be collected and delivered for further use. All printer supplies, such as ink, cartridges and spare parts, are recyclable. During 2013, all Enfo’s offices in Finland fulfilled the Green Office requirements set by WWF (World Wildlife Fund) and received the right to use the GO symbol in its operations. The Green Office concept is an environmental system designed for offices, which makes it possible for workplaces to reduce their environmental load, obtain savings and decelerate the climate change. During the Green Office project, Enfo has performed a number of various actions, such as reduced unnecessary printing, adopted ecofriendly cleaning products, revised purchasing instructions taking environmental aspects into account, and rationalised waste sorting. Besides travel expenses, Enfo is now monitoring more closely the consumption of electricity and paper at its offices. In order to reduce the carbon footprint, Enfo has reduced its travel-related environmental impact by investing in videoconferencing and electronic communications solutions. In 2013, this investment amounted to nearly EUR 100,000. If travelling is necessary, the most purposeful and direct connections and transport methods will always be selected.
FINANCIAL STATEMENT
Research and product development
Enfo IN 2014
ENFO | Annual Report 2014
37
Decisions by the Annual General Meeting Enfo Oyj’s Annual General Meeting held on 19 March 2014 approved the financial statements over the financial period of 1 January – 31 December 2013, and discharged the members of the Board of Directors and the CEO from liability. According to the proposal of the Board of Directors, the AGM decided that a divided of EUR 5.40 per issued share be paid over the financial period. The dividend was paid on 30 May 2014. Tapio Hakakari, Hannu Isotalo, Mammu Kaario, Lauri Kerman, Timo Kärkkäinen and Soili Mäkinen were elected as members of the Board of Directors. Ossi Saksman was elected as the chairman
Events after the end of the financial period In February 2015, Enfo received the ISO 27001 certificate which covers Enfo Group’s information security management system, and data centre services under IT services and outsourcing in Kuopio and Karlskrona. The purpose of the information security management system is to keep data assets confidential, intact and available to those who need them, and to prevent the organisation’s data assets from being lost or misplaced. In February, Enfo appointed Cristian Homén, M.Sc. (Economics and Business Administration), Enfo’s Chief Financial Officer and member of the Executive Management Team. Tero Kosunen, the previous holder of the position, was transferred to be in charge of the development of Enfo’s businesses under the title of SVP, Business Development. The job description is new at Enfo, and its purpose is to support the Group’s growth and
During the first quarter of 2015, the company expects the Group’s operating profit to be slightly lower than the year before. Turnover is estimated to be at the previous year’s level. Full-year turnover and operating profit are expected to be higher than the year before.
Risks and uncertainties Short-term risks and uncertainties are associated with maintaining competitive prices in all of the Group’s business areas. In the long term, new operating methods, such as global cloud services, may significantly change the operating environment of IT outsourcing services.
Board of Directors’ proposal on the distribution of profit On 31 December 2014, the parent company’s distributable funds totalled EUR 32,613,087.61. The company’s Board of Directors proposes to the Annual General Meeting that a dividend of EUR 5.90 per share be paid for the 2014 financial period. The dividend will be paid to shareholders who are recorded in the company’s list of shareholders maintained by Euroclear Finland Oy by the record date for the dividend payment, 27 March 2015. The dividend will be paid on 29 May 2015.
BUSINESS OPERATIONS
Forecast for likely future development
RENSPONSIBILITY
On 31 December 2014, Enfo Oyj had a total of 590,833 shares. At the end of the period, the company had a total of 112 shareholders. The company has one series of shares. Enfo held 1,011 treasury shares at the end of December 2014. At the end of 2014, the ten largest shareholders in the company were Osuuskunta KPY, Ilmarinen Mutual Pension Insurance Company, Enfo Oyj’s Personnel Fund HR, Einari Vidgrén Oy, Keskisuomalainen Oyj, Pohjois-Savo Cooperative Bank, Hannu Isotalo Oy, Kallax Oy, Arto Herranen, and the Saastamoinen Foundation. Osuuskunta KPY’s share of ownership is 86.3%.
offer support in completing challenging Grouplevel development projects. At the beginning of the year, Osmo Wilska, director of IT outsourcing services, was transferred to Financial Process Services as the director of outsourcing services, and Matti Seppänen, VP, Sales, Finnish IT outsourcing services, was transferred to the Stockholm office where he is responsible for Swedish IT services and outsourcing.
CORPORATE GOVERNANCE
Shares, owners and changes in share capital
of the Nomination Committee, with Tapio Hakakari, Pekka Kantanen and Esko Torsti being elected as its members. In addition, the AGM decided on authorisations with the following principal terms and conditions: • The issuance of at most 113,500 new shares through a rights issue in one or more instalments. The authorisation remains valid until the next AGM. • The issuance or transfer of at most 10,000 new shares or treasury shares held by the company through a directed rights issue. The authorisation remains valid until the next AGM. • The acquisition of at most 10,000 treasury shares using the company’s unrestricted equity. The authorisation remains valid until the next AGM.
FINANCIAL STATEMENT
Services), Åsa Landén Ericsson (Consulting Services), and Matti Seppänen (Outsourcing Services). The company’s auditor during the financial period was the authorised public accounting firm PricewaterhouseCoopers Oy, with authorised public accountant Pekka Loikkanen as the appointed chief auditor.
Enfo IN 2014
ENFO | Annual Report 2014
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ENFO | Annual Report 2014
Enfo IN 2014
Key figures IFRS
2014
2013
2014
2012
2013
2012
145.2
Earnings per share, basic
8.50
10.69
5.16
4.0
1.3
Earnings per share, diluted
8.50
10.69
5.16
Operating profit (EUR million)
9.7
11.2
7.9
Share-specific equity
85.8
86.5
79.9
% of turnover
6.7
7.5
5.5
Share-specific dividend *
5.9
5.4
5.1
69.8
42.1
67.6
Profit before taxes (EUR million)
8.1
10.0
6.7
Dividend per result, % *
% of turnover
5.5
6.6
4.6
Number of shares, 31 Dec.
Profit for the period (EUR million)
6.4
7.6
4.4
% of turnover
4.4
5.0
3.0
1.6
1.3
1.2
1.1
0.9
0.8
Return on investment, %
11.3
14.3
10.6
Return on equity, % (ROE)
12.4
15.2
9.3
Financial costs, net (EUR million) % of turnover
Key figures on the balance sheet 42.9
46.6
42.7
Net gearing, %
55.1
54.8
64.6
Interest-bearing net liabilities (EUR million)
28.7
28.4
31.1
Balance sheet total (EUR million)
121.9
111.7
113.6
Equity ratio, %
590,833
590,833
589,120
- excluding own shares
589,822
590,024
584,170
Average number of shares adjusted by share issue
589,839
584,440
586,358
Other key figures Investments (net, EUR million)
8.9
5.1
3.8
% of turnover
6.1
3.4
2.6
775
784
778
Average number of employees
* Calculated according to the Board of Directors’ proposal on the distribution of dividends. A dividend of EUR 5.40 per share was paid for the 2013 financial period.
RENSPONSIBILITY
150.9
-3.7
Change in turnover, %
CORPORATE GOVERNANCE
145.3
Turnover (EUR million)
FINANCIAL STATEMENT
Key figures in the income statement
BUSINESS OPERATIONS
Share-specific key figures
39
CALCULATION OF THE KEYFIGURES
Enfo IN 2014
ENFO | Annual Report 2014
=
Equity ratio =
=
Net gearing =
=
Interest-bearing net financial liabilities =
=
Earnings per share (EPS) =
=
Profit for the period Equity (average of the beginning and end of the year) Equity Balance sheet total - received advance payments Interest-bearing net financial liabilities Equity Interest-bearing financial liabilities - cash, cash equivalents and other liquid financial assets Profit/loss attributable to the owners of the parent company's ordinary shares Weighted average of the number of issued ordinary shares
Share-specific equity =
=
Share-specific dividend =
=
Dividend per result (%) =
=
RENSPONSIBILITY
Return on equity =
Profit before taxes + financial costs Equity + interest-bearing financial liabilities (average of the beginning and end of the year)
Equity attributable to the shareholders of the parent company Number of undiluted shares, 31 Dec. Distribution of dividends for the period
CORPORATE GOVERNANCE
=
Number of undiluted shares , 31 Dec. Share-specific dividend Earnings per share
FINANCIAL STATEMENT
Return on investment =
BUSINESS OPERATIONS
The key figures have been calculated using the following formulas:
40
1 January – 31 December 2014
1 January – 31 December 2013
Turnover
4
145,333
150,939
Other operating income
5
124
21
Materials and services
6
-48,545
-52,684
Salaries and other employment benefits
7
-62,642
-64,977
Depreciation and amortisation
8
-4,640
-4,060
Other operating expenses
9
-19,928
-17,994
9,703
11,247
Operating profit
1 January – 31 December 2014
1 January – 31 December 2013
6,427
7,568
Change in the value of available-for-sale financial assets
-13
13
Exchange rate differences caused by net investments in foreign subsidiaries
-1,045
-560
Note
Profit for the period Items possibly recognised through profit or loss in the future:
Net investment hedging Other translation differences
Financial income
10
371
728
Financial costs
10
-2,020
-2,016
Financial costs (net)
10
-1,650
-1,288
Adjustments from previous periods recognised in equity
8,053
9,958
Taxes associated with other comprehensive income items
Profit before taxes
Cash flow hedging
-1,737
-767
4,690
6,801
3,275
5,479
1,415
1,322
7,568
Comprehensive income for the period, total
- equity-holders of the parent company
5,012
6,246
Attributable to
- non-controlling interests
1,415
1,322
Attributable to
Earnings per share calculated from the profit attributable to equity-holders of the parent company: - undiluted earnings per share (EUR)
12
8.50
10.69
- earnings per share adjusted by dilution (EUR)
12
8.50
10.69
214
-66
6,427
Profit for the period
31
-4
-2,390
11
33 -400
Other comprehensive income items for the period after taxes
-1,626
Income tax
-66 -641
- equity-holders of the parent company - non-controlling interests
BUSINESS OPERATIONS
Note
RENSPONSIBILITY
EUR THOUSAND
CORPORATE GOVERNANCE
EUR THOUSAND
FINANCIAL STATEMENT
Consolidated statement of comprehensive income
Consolidated income statement
Enfo IN 2014
ENFO | Annual Report 2014
41
ENFO | Annual Report 2014
Enfo IN 2014
Consolidated balance sheet IFRS, EUR THOUSAND
Non-current assets
Equity
Property, plant and equipment items
13
5,159
5,276
Goodwill
14
62,265
63,563
31 Dec 2014
31 Dec 2013
Equity attributable to equity-holders of the parent company
Other intangible assets
14
7,058
4,098
Share capital
21
265
265
Available-for-sale investments
15
136
149
Share premium account
21
13,316
13,316
Receivables
16
155
108
Treasury shares
21
-82
-65
Deferred tax assets
17
1,239
565
2,826
Non-current assets, total
76,012
73,761
Inventories
18
256
310
Trade receivables
19
25,811
28,100
Other receivables
19
3,031
2,595
3,423
2,720
1,192 1,787
1,773
34,152
32,338
50,630
50,452
Retained earnings
Non-controlling interests
1,375
1,296
52,005
51,748
17
719
404
Financial liabilities
23
26,813
18,780
Other liabilities
24
317
481
27,850
19,665
Total equity Non-current liabilities
Tax assets based on the period's taxable income Available-for-sale investments
21 21
Equity attributable to equity holders of the parent company, total
Current assets
Cash and cash equivalents
Translation differences Change in value and other reserves
15
2
2
20
13,343
4,215
Deferred tax liabilities
Non-current liabilities, total Current assets, total
45,866
37,942
Total assets
121,877
111,702
Current liabilities Accounts payable
24
9,390
7,947
Other liabilities
24
16,612
17,251
Tax liabilities based on the period's taxable income
24
815
1,286
Financial liabilities
23
15,206
13,806
42,023
40,290
Total liabilities
69,872
59,955
Total equity and liabilities
121,877
111,702
Current liabilities, total
BUSINESS OPERATIONS
Note
EQUITY AND LIABILITIES
RENSPONSIBILITY
31 Dec 2013
CORPORATE GOVERNANCE
31 Dec 2014
FINANCIAL STATEMENT
Note
ASSETS
42
Consolidated cash flow statement IFRS, EUR THOUSAND
1 January – 31 December 2014
1 January – 31 December 2013
Profit for the period
Financial items Profit/loss from disposal of fixed assets Taxes Operations not involving payment transactions
-4,447
-4,369
Cash flow from financial activities 6,427
7,568
Adjustments: Depreciation and amortisation
1 January – 31 December 2013
Dividends paid Share issues against payment
0
137
-16
322
4,640
4,060
1,650
1,288
Withdrawal of loans
17,989
3,000
48
105
Repayment of loans
-8,879
-5,543
1,626
2,391
Repayment of financial leasing liabilities
-3,097
-2,377
-164
-449
Net cash flow from financing
1,550
-8,831
2,091
1,861
Changes in cash and cash equivalents
9,033
725
Impact of exchange rate changes in cash and cash equivalents
95
-13
4,215
3,503
13,343
4,215
Transactions related to treasury shares
BUSINESS OPERATIONS
Cash flow from operations
1 January – 31 December 2014
Enfo IN 2014
ENFO | Annual Report 2014
206 -44
-1,094
-1,194
47
108
Taxes paid
-4,512
-4,971
Net cash flow from operations
11,455
10,929
Interest paid Interests and dividends received
Cash flow from investment activities Acquisition of subsidiaries less financial assets on the acquisition date Investments in tangible fixed assets Investments in intangible fixed assets Proceeds from tangible fixed assets Net cash flow from investments
-2,969 -468
-876
-561
-532
26
34
-3,972
-1,373
Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period
CORPORATE GOVERNANCE
53 643
Change in inventories Change in accounts payable and other payables
FINANCIAL STATEMENT
Change in sales and other receivables
RENSPONSIBILITY
Changes in working capital:
43
ENFO | Annual Report 2014
IFRS, EUR THOUSAND
Equity on 1 Jan 2013
Share premium
265
13,316
Currency Treasury translation shares differences -387
3,681
Revaluation and other reserves
Retained earnings
1,466
Profit/loss for the period
Total
Noncontrolling interest
Total equity
28,359
46,699
1,406
48,105
6,246
6,246
1,322
7,568
Comprehensive income Other comprehensive income items Available-for-sale investments
13
Exchange rate differences caused by net investments in foreign subsidiaries
-560
Net investment hedging
13
-560
-560
33
33
Other currency translations differences
13
-327
1
-326
33 -73
-400
Cash flow hedging
214
214
214
Taxes related with other comprehensive income items
-66
-66
-66
Other comprehensive income items for the period after taxes
-855
161
1
-693
-73
-767
Comprehensive income
-855
161
6,247
5,553
1 248
6,801
-2,977
-2,977
-1 358
-4,335
Emission
137
Acquisition of treasury shares
-50
Sale of treasury shares
371
8
Equity on 31 Dec. 2013
321 265
13,316
-65
2,826
137
-50
-50
380
380
709
709
146
-2,268
-1 801
-1,358
-3,159
1,772
32,338
50,452
1,296
51,748
Redemption obligation Transactions with owners, total
137
709
CORPORATE GOVERNANCE
21
Distributed dividends
FINANCIAL STATEMENT
Transaction with owners
RENSPONSIBILITY
Note
Share capital
BUSINESS OPERATIONS
Enfo IN 2014
Consolidated statement of changes in equity
44
265
13,316
Currency Treasury translation shares differences -65
2,826
Revaluation and other reserves
Retained earnings
1,772
Profit/loss for the period
Total
Noncontrolling interest
Total equity
32,338
50,452
1,296
51,748
5 012
5,012
1,415
6,427
Comprehensive income Other comprehensive income items Available-for-sale investments
-13
Exchange rate differences caused by net investments in foreign subsidiaries
-1,045
Net investment hedging Other currency translations differences
-13
-13
-1,045
-1,045
-66
-66
-523
-523
-66 -118
-641
Cash flow hedging
31
31
31
Taxes related with other comprehensive income items
-4
-4
-4
Other comprehensive income items for the period after taxes
-1,634
15
Comprehensive income
-1,634
15
-1,619
-118
-1,737
5,012
3,393
1,297
4,690
-3,185
-3,185
-1,219
-4,404
Emission Acquisition of treasury shares
-16
-16
-16
Sale of treasury shares Redemption obligation Transactions with owners, total Equity on 31 Dec. 2014
-16 265
13,316
-82
1,192
1,787
-13
-13
-3,198
-3,214
-1,219
-4,433
-13
34,152
50,630
1,375
52,005
CORPORATE GOVERNANCE
21
Distributed dividends
FINANCIAL STATEMENT
Transaction with owners
BUSINESS OPERATIONS
Equity on 1 Jan 2014
Share premium
RENSPONSIBILITY
Note
Share capital
Enfo IN 2014
ENFO | Annual Report 2014
45
ENFO | Annual Report 2014
Basis for preparation These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), applying the IAS and IFRS standards, and SIC and IFRIC interpretations valid on 31 December 2014. These consolidated financial statements have been prepared on the basis of the original acquisition cost (deemed cost), apart from the items recognised at fair value as required by the standards, such as available-for-sale financial assets. The preparation of financial statements following the IFRS standards requires the use of such calculation estimates and assumptions from the Group management that have an effect on the amount of assets and liabilities on the date of preparing the balance sheet, contingent asset and liability reporting, and the amount of profit and expenses over the reporting period. The accounting principles that require the management’s consideration and the uncertainties related to the estimates are discussed in a separate chapter. The financial statements are presented in thousands of euros. For presentation purposes, individual figures and final amounts have been rounded to the nearest thousand, causing rounding differences in the sums.
BUSINESS OPERATIONS RENSPONSIBILITY
2. Accounting principles for the consolidated financial statements
CORPORATE GOVERNANCE
Enfo Oyj is a Nordic IT service company which provides companies and organisations with IT services, regardless of their line of business. Enfo’s business operations are divided into two separately reported segments: IT Services, and Financial Process Services. More detailed information about its segment reporting is presented in Note 4. The company’s registered office is in Kuopio. Enfo Oyj is part of Osuuskunta KPY Group, the parent company of which is Osuuskunta KPY, and its registered office is in Kuopio. At its meeting on 25 February 2015, Enfo Oyj’s Board of Directors approved these financial statements for publication. According to the Finnish Companies Act, shareholders have the right to approve or reject the financial statements at the Annual General Meeting held after the release of the financial statements. The Annual General Meeting may also decide on revising the financial statements.
The consolidated financial statements have been prepared as per the same accounting principles as in 2013, apart from the following amendments to existing standards that have been valid from 1 January 2014. The amendments did not have any significant impact on the consolidated financial statements. IFRS 10 (amendment) Consolidated Financial Statements: IFRS 10 includes principles for the preparation and presentation of consolidated financial statements when an entity has control over one or more other entities. The standard outlines the principle of control and the control is stated to form the grounds for consolidating the object in the consolidated financial statements. The standard provides instructions for the application of the control concept when it is clarified whether the investors have the control and whether they must consolidate the investment object in the consolidated financial statements. The standard also contains the requirements related to the preparation procedure of consolidated financial statements. Amendment to IAS 32 “Financial Instruments: Presentation” concerning the offsetting of financial assets and financial liabilities The amendments relate to the application instructions of IAS 32. They clarify the requirements that relate to the deduction of financial assets and liabilities from each other on the balance sheet. Amendment to IAS 36 “Impairment of Assets” concerning recoverable amount disclosures for non-financial assets The amendment relates to the disclosure of the data concerning recoverable amounts to be presented for property items the value of which has impaired, if their value is based on fair value less the assignment cost. Amendment to IAS 39 “Financial Instruments: Recognition and Measurement” concerning the novation of derivatives The amendment is an alleviation that makes it possible to continue with hedge accounting, if certain criteria are met, when a central party becomes a new party to the derivative agreement.
Consolidation principles Subsidiaries The consolidated financial statements cover Enfo Oyj and its subsidiaries. Subsidiaries refer to companies where the Group holds the control. The Group has the control when it owns more than 50% of the voting rights, or it otherwise has the right to decide on the company’s financial and operational principles. The existence of potential voting rights is taken into account in the assessment of the conditions of control if the instruments justifying potential voting rights are implementable at the moment of assessment.
FINANCIAL STATEMENT
1. General information about the company
Enfo IN 2014
Notes to the consolidated financial statements
46
ENFO | Annual Report 2014
Intangible assets Goodwill The goodwill generated from combined business operations is recognised at the amount with which the assigned contribution, the non-controlling interests and the previously purchased share in total exceed the fair value of the acquired net assets. Business acquisitions from 1 January 2006 to 31 December 2009 have been recognised according to the previous IFRS 3 standard (2004). The previous goodwill generated from the combined business operations corresponds with the carrying amount pursuant to the previous accounting standard, which has been used as the deemed cost following the IFRS standards. No depreciation and amortisation is recognised on goodwill but it is tested annually or, if required, more frequently in the event of any impairment. For this
BUSINESS OPERATIONS
Property, plant and equipment items are recognised at the original acquisition cost less depreciation and amortisation. Subsequent expenses will only be included in the carrying amount of the tangible fixed asset if it is likely that the future financial benefit related to the asset will flow to the Group and the asset’s acquisition cost can be determined reliably. Other repair and maintenance costs are recognised through profit or loss on the date of occurrence. Property, plant and equipment items are depreciated using the straight-line method over their estimated useful lives. The Group applies the following estimated useful lives: • Machinery and equipment 3–5 years • Other tangible assets 10 years The residual value and useful life of assets are reviewed regularly in conjunction with each financial statement and interim report and, if required, adjusted to represent changes in expected financial benefit. Property, plant and equipment items will be depreciated when an item is ready for use and depreciation stops when the item is classified as being held for sale according to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
RENSPONSIBILITY
Figures related to the result and financial position of Group units are measured using the currency of the primary operational environment in which each unit operates (the ‘functional currency’). The consolidated financial statements are presented in euros, which is the functional and presentation currency of the Group’s parent company. Business transactions denominated in foreign currencies are recognised in euros following the rate valid on the transaction date. Monetary items denominated in foreign currencies have been converted into euros according to the rates on the closing date. Any profits and losses arising from business transactions denominated in foreign currencies and the conversion of monetary items are recognised in the income statement. Business gains and losses from exchange rates (sales and purchases) are included in corresponding items above operating profit. Exchange gains and losses related to financing are included in financial profits and losses. Income statements for foreign Group companies have been converted into the parent company’s currency at average exchange rates and balance sheets at the rates valid on the closing date. Any exchange differences arising from the conversion, as well as those arising from the conversion of equities of foreign subsidiaries, are recognised in equity. If a foreign subsidiary is sold or dissolved, the accumulated translation differences are recognised in the income statement as part of
Property, plant and equipment
CORPORATE GOVERNANCE
Foreign currency items
sales profits or losses. Translation differences arising from a monetary item which is part of an organisation’s net investment in a foreign unit are recognised in the consolidated financial statements in equity and will be transferred to the result when the investment is assigned.
FINANCIAL STATEMENT
Mutual shareholding has been eliminated using the acquisition cost method. Any conditional additional purchase price has been recognised at fair value on the acquisition date and classified as liability or equity. Acquired subsidiaries are consolidated in the consolidated financial statements from the date on which control and the subsidiaries were transferred to the Group until the end of that control. Intra-group transactions, receivables, liabilities, unrealised earnings and internal distribution of profit are eliminated when preparing the consolidated financial statements. Unrealised losses are not eliminated if the losses are caused by impairment. The distribution of profit or loss to equity-holders of the parent company and equity-holders without control is presented in a separate income statement. The distribution of comprehensive income to equity-holders of the parent company and equity-holders without control is presented in the statement of comprehensive income. Subsidiaries follow the same financial period as the parent company, as well as the consolidated accounting principles described here.
Enfo IN 2014
Notes to the consolidated financial statements
47
ENFO | Annual Report 2014
Research and development costs Research and development costs are recognised as costs in the income statement, apart from the development costs that meet the activation criteria required by IAS 38 Intangible Assets. Development costs are activated on the balance sheet as intangible assets when the product is technically viable, commercially usable and expected to produce future financial benefits. Activated development costs include the material, work and testing costs that are directly attributable to the preparation of the asset for its intended purpose. The development costs previously recognised as costs will not be activated in subsequent periods. Assets are depreciated from the date they are ready for use. The assets not ready for use are tested annually for any impairment. After the original recognition, activated development costs are recognised at acquisition cost less accrued depreciation and impairment. The useful life of activated development costs is 3–5 years, during which activated costs are recognised as costs through straight-line depreciation.
Other intangible assets Purchased patents, trademarks, licences and other intangible assets with a finite useful life are included on the balance sheet and recognised in the income statement as costs through the straight-line depreciation method over their useful lives. The Group estimates that the useful life for software and other intangible assets is 3–5 years. Intangible assets with an indefinite useful life are not depreciated but tested annually and, if required, more frequently for any impairment. Currently, the Group does not have any intangible assets with an indefinite useful life. The acquisition cost of intangible assets consists of the purchase price and all expenses that are directly attributable to the preparation of the asset for its
BUSINESS OPERATIONS
Lease agreements on tangible assets, where the Group holds a significant part of the risks and benefits of ownership, are classified as financial leasing agreements. They are recognised on the balance sheet at the lower fair value of the leased asset on the starting date of the lease period or the current value of minimum rents. Assets acquired through financial leasing agreements are depreciated over their useful lives, or over the lease period, should this be shorter. Leasing obligations are included in financial liabilities. Leasing rents paid are divided into financial costs and debt amortisation over the lease period so that an equal interest rate is generated on a financial period-specific basis for the remaining liability. Lease agreements where the lessor holds the risks and benefits of ownership are classified as other lease agreements. Rents paid on the basis of other lease agreements are recognised as costs in the income statement through fixed instalments over the lease period. Any incentives received are deducted from the paid rents on the basis of the distribution of benefits over the lease period.
RENSPONSIBILITY
The identifiable intangible assets acquired through combining business operations are recognised separate from goodwill. The combination of business operations has provided the Group with intangible rights that relate to customer relations and trademarks. Intangible rights are recognised at fair value on the acquisition date and depreciated over their estimated useful life. Fair value has been defined on the basis of assessed discounted cash flows.
Lease agreements The Group as the lessee
The Group as the lessor Assets leased out by the Group, where a significant part of the risks and benefits of ownership are transferred to the lessee, are classified as financial leasing agreements and recognised on the balance sheet as receivables at the current value. Financial income from financial leasing agreements is recognised during the lease period so that the remaining net investment produces an equal income rate for every financial period during the lease period. Currently, the Group does not have any significant financial leasing agreements as a lessor. Assets leased out through agreements other than financial leasing agreements are included in property, plant and equipment items on the balance sheet and depreciated over their useful lives. Rental income is recognised in the income statement as fixed instalments over the lease period.
Arrangements that include a lease agreement The Group analyses agreements signed with customers and suppliers according to the IFRIC 4 interpretation on the basis of the factual content of the arrangement. If an arrangement includes a lease agreement, the requirements of the IAS 17 Leases standard, standard are applied to the lease agreement component. The
CORPORATE GOVERNANCE
Intangible assets arising from combined business operations
intended purpose. Profit or loss arising from the assignment of intangible assets is presented in other operating profits or losses in the income statement.
FINANCIAL STATEMENT
purpose, goodwill is allocated to such units generating cash flow that correspond to the management’s method of monitoring operations and related goodwill. Goodwill is recognised at the original acquisition cost less impairment.
Enfo IN 2014
Notes to the consolidated financial statements
48
ENFO | Annual Report 2014
On each closing date, the Group assesses whether there are any indications of impairment for a property item. If there are such indications, the property item’s recoverable value is estimated. The recoverable amount is the property item’s fair value less the higher assignment cost or use value. Goodwill, intangible assets with an indefinite useful life, and unfinished intangible assets are tested for impairment annually, regardless of the existence of any indications of impairment. Impairment of goodwill is reviewed at the level of the units generating cash flow. An impairment loss is recognised when the carrying amount of a property item is greater than its recoverable amount. The impairment loss is recognised in the income statement. The impairment loss is reversed if there is a change in the circumstances and the asset’s recoverable amount has changed since the impairment loss was recognised. However, the impairment loss is only reversed to a maximum amount equal to the asset’s carrying amount, excluding the recognition of the impairment loss. An impairment loss recognised in goodwill will never be reversed.
Inventories are recognised at the lower of acquisition cost or net realisation value. The acquisition cost is determined using the weighted average price method. The net realisation value is the estimated selling price obtained in normal business operations less the estimated expenses required for finishing the product and sales expenses.
Perquisites Pension liabilities Pension schemes are classified as defined-benefit plans or defined-contribution plans. In defined-contribution plans, the Group pays fixed premiums to a separate unit. In this case, the Group does not have any legal or factual obligation to pay supplementary premiums, if the premium recipient is not capable of paying the pension benefits in question. Other schemes that do not meet the above conditions are defined-benefit plans. The Group’s pension security is handled by external pension insurance companies. Pension liabilities are classified as defined-contribution plans, which means the payments allocated to pension schemes are recognised in the income statement over the period in question.
BUSINESS OPERATIONS
Impairment of tangible and intangible assets
Inventories
RENSPONSIBILITY
relevant regulations of the IFRS standards are applied to other arrangements or arrangement components.
Enfo IN 2014
Notes to the consolidated financial statements
Government grants Government grants obtained for covering the acquisition of property, plant and equipment items are recognised as deductions of the carrying amounts of these items when it is relatively certain that they will be received and the Group meets the terms set out for the grant. The grants are recognised as income through smaller depreciation items over the asset’s operating life. Other government grants are recognised as other operating income.
Currently, the Group has an incentive scheme following the IFRS 2 Share-based Payments standard, providing key persons with the opportunity to receive the company’s shares as result-based bonuses based on the achievement of objectives. The conditions and fulfilment of the incentive scheme are determined on the basis of the financial objectives set for the Group. Costs arising from the incentive scheme are determined through the realisation estimate of the maximum bonus and objectives, and are presented as employee benefit expenses in the income statement. Bonuses are matched over the earning period. More information on the company’s share-based schemes can be found in Note 22, Share-based payments.
Provisions and contingencies Provisions are recognised when the Group has a legal or factual obligation as a result of a previous transaction, the fulfilment of the payment obligation is likely and the amount of the obligation can be estimated reliably. If it is possible to
FINANCIAL STATEMENT
Other borrowing costs are recognised as expenses in the period in which they were incurred. Borrowing costs arising from the acquisition or production of an item which meets the terms are activated as part of the item’s acquisition cost.
CORPORATE GOVERNANCE
Share-based payments Borrowing costs
49
ENFO | Annual Report 2014
Tax expenses in the income statement consist of tax based on taxable earnings and changes in deferred taxes. Taxes are recognised through profit or loss, unless they are associated with items recognised directly in equity or other comprehensive income items. In this case, taxes are recognised in the items in question. The taxes based on the period’s taxable income are calculated according to the tax rates valid in each country. Deferred taxes are calculated on all temporary differences between the carrying amount and tax value. Temporary differences are created from the fair value measurement of financial assets, differences between tax and accounting depreciation on fixed assets, the activation of development costs, financial leasing recognitions and the activation of intangible rights recognised in connection with
Recognition principles Produced services and sold goods Revenue from services is recognised as income in the financial period during which the service was performed. Revenue from services is recognised according to the stage of completion when the business result can be assessed reliably. The stage of completion is defined in each project as the share of the costs arising from the work performed by the review date, in relation to the project’s estimated total costs. For short-term services, revenue will be recognised when the service has been performed and it is likely that financial benefits can be received from the service. Once services are performed during a particular period of time, revenue will be recognised for the period using the straight-line method, unless some other method is a better indicator for the stage of completion. Revenue from the sale of goods is recognised when the significant risks and benefits and the factual control related to the ownership of the goods have been transferred to the buyer, the revenue and costs allocated to the transaction can be
BUSINESS OPERATIONS RENSPONSIBILITY CORPORATE GOVERNANCE
Taxes based on the period’s taxable income and deferred taxes
business combinations, for example. Deferred taxes are not recognised for nondeductible impairment of goodwill or retained subsidiary earnings to the extent that the difference is unlikely to be reversed in the foreseeable future. Deferred taxes have been calculated using the tax rates prescribed by the closing date or tax rates where the content has been approved and issued by the closing date. Deferred tax assets have been recognised up to the amount at which it is likely that taxable income will be generated in the future against which the temporary difference can be utilised. The amount of deferred tax claims and the probability of utilisation are assessed during the preparation of each set of financial statements. Deferred tax claims and liabilities are presented on the balance sheet as separate items included in non-current assets or liabilities. Deferred tax claims and liabilities are deducted from each other if the organisation has a legally executable right to set off the tax claims and liabilities based on the period’s taxable earnings, and the deferred tax claims and liabilities are related to income taxes collected by the same tax authority. Value Added Tax and similar indirect taxes are deducted from sales income. Any other taxes are included in other operating expenses. The Value Added Tax and other corresponding indirect taxes paid to the tax authorities are presented as current liabilities in the balance sheet item Other liabilities and the amount received from the tax authorities is presented as current receivables in the balance sheet item Other receivables.
FINANCIAL STATEMENT
receive compensation for part of the obligation from a third party, the compensation is recognised as a separate property item, when it is practically certain that the compensation will be received. Provisions are recognised at the current value of the expenses required to recover the obligation. A restructuring provision is recognised over the period in which the Group becomes legally or factually liable to pay. Compensation for the termination of employment will not be recognised until an agreement has been made with the representatives of the concerned employees, specifying the reasons for the termination and the number of discharged employees, or the employees have been notified of the specific terms. Provisions are not recognised for costs related to the Group’s continuous operations. Provisions will be recognised for agreements resulting in a loss when the necessary costs required for meeting the obligations exceed the benefits produced by the agreement. Contingent liabilities refer to conditional obligations arising from earlier events that become certain when an uncertain event outside the Group’s control is realised. In addition, an existing obligation which probably does not require that the payment obligation is met, or the amount of which cannot be estimated reliably, is considered to be a contingent liability. Contingent liabilities are presented in the Notes. Contingent assets are generated when it is possible, but not completely certain, that the company will gain an economic benefit. Contingent assets are presented in the Notes.
Enfo IN 2014
Notes to the consolidated financial statements
50
ENFO | Annual Report 2014
Non-current assets held for sale and discontinued operations The Group classifies a non-current property item, or a group of transferable items, and property items related to discontinued functions as held for sale, if the amount corresponding to the item’s carrying amount will mainly be accrued through the sale of the property item. In this case, the property item will immediately be held for sale in its current condition according to normal terms, the management will be committed to the plan related to the sale of the non-current property item, active sales efforts have been started and it is expected that the sale is very likely to occur within a year. Property items held for sale and property items associated with a terminated function that have been classified as available for sale are recognised at the lower of carrying amount or fair value less the expenses arising from the sale. Depreciation on these property items will be terminated on the classification date. Property items available for sale, groups of transferable items, the items associated with property items available for sale and recognised directly in equity, and liabilities included in the groups of transferable items are presented separately from other property items on the balance sheet. A discontinued function refers to a component of the corporation which has been transferred, or classified as available for sale, and which represents a significant segment or geographical operating area, is part of a single coordinated transfer plan of a significant segment or geographical region, or is a subsidiary which has been acquired with the single purpose of resale. The result of the dis-
Loans and other receivables Loans and other receivables include the Group’s sales and other receivables, and they are measured at amortised acquisition cost using the effective interest method. Current sales receivables are recognised according to the original invoiced amount less uncertain receivables. Non-current receivables are recognised by discounting estimated future payments to the present. Receivables are included on the balance sheet under current or non-current assets. Receivables are included under non-current assets, if they mature in more than 12 months.
Available-for-sale financial assets The Group’s other financial assets are classified as available-for-sale financial assets. They consist of shares and interest-bearing investments, and are recognised at fair value. Any changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income items and presented in the fair value reserve included in the “Other reserves” equity item, taking the tax impact into account. Changes in fair value are transferred from equity to the income statement when the investment is sold, or its value has decreased so that an impairment loss must be recognised on the investment. Available-for-sale financial assets are included in non-current assets, unless they are intended to be held for less than 12 months starting from the closing date, in which case they are included in current assets.
BUSINESS OPERATIONS
The Group’s financial assets are categorised into the following groups: loans and other receivables, financial assets recognised at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets. The classification is based on the purpose of the acquisition of the financial assets, and the assets are classified in connection with the original acquisition. The Group’s current financial assets are classified as loans and other receivables, or available-for-sale financial assets. The Group recognises the purchase and sale of financial assets at fair value on the basis of the transaction date. Transaction costs are included in the original carrying amount of the financial assets when the item in question is not recognised at fair value through profit or loss.
RENSPONSIBILITY
Interest, royalty and dividend income is recognised when it is likely that the financial benefit associated with the business activity will benefit the organisation and the income can be defined reliably. Interest income is recognised using the effective interest method. Royalty income is recognised on the basis of accrual pursuant to the factual content of the agreement, and dividends are recognised when the shareholder’s right to receive payment has been created.
Financial assets and liabilities
CORPORATE GOVERNANCE
Interest, royalties and dividends
continued function after taxes is presented as a separate item in the consolidated statement of comprehensive income.
FINANCIAL STATEMENT
defined clearly and it is likely that the financial benefit associated with the transaction will accrue to the company. Recognised proceeds are determined on the basis of the fair value of the received or receivable consideration. The amount of revenue to be recognised does not include any amounts collected on behalf of external parties, such as Value Added Tax.
Enfo IN 2014
Notes to the consolidated financial statements
51
ENFO | Annual Report 2014
Impairment On each closing date, the Group assesses whether there is any objective indication of impairment on an item included in financial assets. If such indications exist, the amount of loss is determined according to the difference between the property item’s carrying amount and its fair value or the current value of expected future cash flows discounted using the original effective interest rate. The impairment is recognised in financial items through profit or loss. The Group recognises an impairment loss on sales receivables when there is objective evidence (such as unsuccessful debt collection measures) that the receivable cannot be recovered in full. The amount of impairment loss recognised in the income statement is determined as the difference between the receivable’s carrying amount and the current value of the estimated future cash flows discounted with the effective interest rate. If the amount of the impairment loss decreases during a future financial period and the deduction can be objectively considered to be related to a transaction taking place after the impairment entry, the recognised loss will be reversed through profit or loss.
Financial liabilities Financial liabilities are recognised at fair value on the basis of the original consideration received. Transaction costs are included in the original carrying amount of financial liabilities.
Derivative instruments and hedging Derivatives are originally recognised at the fair value valid on the date of signing the derivative contract, after which they are recognised at fair value. Profits and losses resulting from the measurement at fair value are handled in accounting according to the purpose of the derivative agreement. Changes in the value of the derivative financial instruments to which hedge accounting is applied and which are efficient hedging instruments are presented in the income statement in compliance with the hedged item. Changes in fair value of other derivative financial instruments are recognised in financial items in the income statement. The Group has interest-rate derivatives in force. The derivatives are used to hedge the interest rate risk and part of the translation position denominated in SEK. When starting hedge accounting, the Group records the relation between the hedged item and hedging instruments, as well as the Group’s risk management objectives and hedging strategy. When starting hedging and at least on each closing date, the Group records and analyses the efficiency of hedging relations by reviewing the hedging instrument’s ability to cancel the hedged item’s fair value or changes in cash flow. The fair values of derivatives used for hedging are presented in Note 26.
BUSINESS OPERATIONS
Cash and cash equivalents comprise cash in hand, bank deposits withdrawable on demand and other highly liquid short-term investments. Items classified as cash and cash equivalents have a maximum maturity of three months starting from the acquisition date. Any loan limits used are included in current interest-bearing liabilities. A financial asset is only removed from the balance sheet when the contractual right to the cash flow from an item included in financial assets ceases to exist, or the Group transfers an item included in financial assets to another party so that the risks and benefits of ownership or control over the item are transferred to the other party.
RENSPONSIBILITY
Cash and cash equivalents
After the original measurement, all financial liabilities, apart from derivative liabilities, are valued at acquisition cost divided using the effective interest method. The difference between the acquisition cost and the balance sheet value produced by the effective interest method is recognised through profit or loss during the liability’s exercise period. Financial liabilities are presented as non-current and current liabilities based on their realisation period. Financial liabilities are removed from the balance sheet once the liability has ceased to exist.
CORPORATE GOVERNANCE
The fair value of financial assets is primarily defined using market values. If they are not available, fair value is defined using the market values for corresponding instruments, or by discounting cash flows.
Cash flow hedging The efficient proportion of changes in the fair value of derivatives that meet the terms and have been defined as cash flow hedging is recognised in comprehensive income items under Cash flow hedging. Profit or loss related to the inefficient proportion is recognised directly in the Financial income and expenses item in the income statement. Amounts accumulated in equity are transferred through profit or loss over the periods during which a hedging item has an impact on profit or loss. The profit or loss associated with the effective proportion of interest swap agreements that provide hedging against variable rate loans is presented in the income statement
FINANCIAL STATEMENT
Definition of fair value
Enfo IN 2014
Notes to the consolidated financial statements
52
ENFO | Annual Report 2014
Share capital and treasury shares The Group presents its issued ordinary shares as share capital. Treasury shares held by the Group are presented as reductions in equity. No profits or losses are recognised in the income statement for the purchase, sales, issuance or cancellation of treasury shares, but the consideration paid or received is recognised directly in equity.
Accounting principles that require the management’s consideration and central uncertainty factors related to estimates When preparing the financial statements, estimates and assumptions concerning the future must be made, and their results may differ from the estimates and assumptions made. In addition, consideration has to be exercised in applying the accounting principles.
The estimates made when preparing the financial statements are based on the management’s best knowledge on the closing date. The estimates are based on previous experience and assumptions concerning the future that, on the closing date, have been regarded as the most likely and are related to the expected development in the Group’s financial operating environment, considering sales and cost levels. The Group monitors the realisation of the estimates and assumptions and changes in background factors regularly together with its business units, using several internal and external data sources. Any changes in the estimates and assumptions are entered in accounting in the period during which the estimates and assumptions are adjusted, as well as in all following periods. Accounting estimates and management considerations have been applied to the determination of the realisability of specific property items, the useful life of tangible and intangible assets, deferred tax receivables (Note 17), the allocation of the acquisition cost related to business combinations and the price of share repurchase obligations, and to the performance of impairment testing where the recoverable amounts of cash-generating units have been determined using calculations based on the value in use (Note 14). The estimates are based on the management’s best knowledge at the moment, but it is possible that the realisations differ from the estimates used in the financial statements.
BUSINESS OPERATIONS
Uncertainty factors related to estimates
RENSPONSIBILITY
Net investment hedging in a foreign unit is recognised similarly in accounting as cash flow hedging. The profit or loss of a hedging instrument, which results from the efficient proportion of hedging, is recognised in other comprehensive income items. The profit or loss associated with inefficient proportion is recognised in the income statement. The profits and losses accumulated in equity are recognised in the income statement when a foreign unit is sold in part or in full.
The Group management exercises consideration when making decisions on the selection and application of accounting principles. This applies particularly to cases where the valid IFRS standards include alternative recognition, measurement or presentation methods. The management has exercised consideration, for instance, in the classification of leasing agreements and financial assets, and in the presentation method of the financial statements.
CORPORATE GOVERNANCE
Net investment hedging
Consideration related to the selection and application of accounting principles
FINANCIAL STATEMENT
as financial income or expenses. However, if an item not included in financial assets is recognised as a result of a hedged and anticipated business activity (e.g. inventories or fixed assets), profits and losses previously recognised in equity are transferred to the item’s original acquisition cost. In the event of inventories, profits and losses are ultimately included in expenses corresponding with products and services sold and, in the event of fixed assets, they are ultimately included in depreciation and amortisation. When a hedging instrument expires or is sold, or when hedging no longer meets the requirements set for the application of hedge accounting, profits or losses included in equity at the moment remain in equity, and they are only recognised through profit or loss when the anticipated business activity is entered in the income statement. If the anticipated business activity is not expected to be realised, the profit or loss presented in equity is transferred directly to the Financial income and expenses item in the income statement.
Enfo IN 2014
Notes to the consolidated financial statements
53
ENFO | Annual Report 2014
Currency risk The Group operates internationally and, as a result, is exposed to transaction risks caused by different currency positions and risks that are created when investments in different currencies are translated into the parent company’s operating currency. The biggest currency risks for the Group are caused by fluctuations in the exchange rate of the Swedish krona. The exchange rate risk is mainly caused by Enfo having a subsidiary in Sweden. The exchange rate risk is reduced by the fact that transactions in Sweden occur mainly in the national currency so that the translation changes in profit and costs are offset against each other. Because of the operating model, exchange rate differences with an impact on cash flow are realised to a fairly small extent and the hedging decisions on these items are made separately for each case. With regard to subsidiary investments and intra-group financing transactions, changes in exchange rates cause some fluctuation in the Group’s equity. In addition, currency risk in equity is created through earnings and the period’s result. At the end of 2014, the currency translation position in equity stood at EUR 9.5 million (2013: EUR 11.2 million). The position includes a net investment in subsidiaries outside the euro states. The position is completely the result of investments denominated in krona. Furthermore, the Group has an internal loan of SEK 203 million (about EUR 23 million) as a net investment in foreign operations. The translation position has been hedged through derivative agreements signed during the period and loans denominated in SEK.
51,679
Non-current liabilities
35,579
37,380
Current assets Current liabilities
26,157
21,965
33,856
25,057
The Group’s outside loans are denominated in EUR and SEK and, therefore, they are partially exposed to changes in exchange rates. In addition, the parent company has a small number of purchase agreements denominated in USD, GBP and SEK. Because of the nature of the business operations, the lead time is short and, as a result, the currency risk remains low. The Group’s realised exchange rate losses amounted to EUR -179,800 in 2014 (2013: EUR -56,700). Sensitivity analysis for changes in exchange rates Change rate = average volatility over the previous 12 months EUR THOUSAND Change rate
2014 SEK
2013 SEK
6.13
7.60
Effect On profit after taxes On equity
+10 / -9
+45 / -38
+620 / -549
+922 / -792
BUSINESS OPERATIONS
2013 SEK
52,776
RENSPONSIBILITY
Market risks
2014 SEK
Non-current assets
EUR THOUSAND
CORPORATE GOVERNANCE
The Group is exposed to financial risks in its normal business operations. The management of financing and financial risks within the Group is organised centrally in the parent company according to the financial policy approved by the Group’s Board of Directors. The objective of the Group’s financial risk management is to minimise the unfavourable impact of financial risks on the Group’s result, equity and capital adequacy. Derivative instruments are used in hedging against the risks.
Translated into euros in accordance with the rates of the closing date, the Group’s foreign-currency assets and liabilities are as follows:
Interest rate risk The Group’s interest-bearing liabilities and, to a small extent, its short-term financial market investments expose the Group to a cash flow interest rate risk. On 31 December 2014, the Group’s interest-bearing liabilities stood at EUR 42,020,000 (2013: EUR 32,586,000). On the closing date, the Group’s interestbearing net liabilities amounted to EUR 28,675,000 (2013: EUR 28,369,000). On 31 December 2014, the Group’s loan portfolio consisted of loans from financial institutions of SEK 96.4 million (EUR 10.4 million), a loan from a financial
FINANCIAL STATEMENT
3. Financial risk management
Enfo IN 2014
Notes to the consolidated financial statements
54
ENFO | Annual Report 2014
institution of EUR 14.8 million), and a bond loan of EUR 9.9 million. Of the agreed loans, EUR 11.9 million will fall due for payment in 2015. In 2016–2019, a total of EUR 23.5 million will fall due for payment. Of the loans from financial institutions, 43% are fixed-rate loans with interest swap agreements and the remainder of the loans are variable-rate loans. The bond loan has a fixed rate. The Group’s other interest-bearing liabilities of EUR 6,450,000 consist of the payment obligation of financial leasing agreements. The financial leasing agreements are mainly based on fixed instalments and changes in interest rates do not have a direct impact on the amount of the financial leasing payment. For primary loan financing, the Group analyses the impact of any interest changes on the result. The Group’s total interest rate in 2014 was 2.7% (3.1% in 2013). A 10% increase in the interest rate would have reduced the Group’s result, and, thus, its equity by EUR 118,000.
Maturity information about financial liabilities is presented in Note 23. The Group’s accounts payable of EUR 9,390,000 and other current non-interest-bearing liabilities of EUR 16,612,000 will fall due for payment during 2015.
Market risk in investment activities
Age distribution of sales receivables on 31 Decembe
The Group strives to regularly monitor the amount of financing required by the operations so that the Group has enough liquid assets for financing its operations and repaying maturing loans. In order to guarantee the availability and flexibility of Group financing, funding operations have used several financial institutions and financing forms, and paid attention to a balanced maturity distribution of loans and suitable loan periods. The company monitors compliance with loan covenant terms regularly and reports to financial institutions four times a year. The Group has met all loan covenant terms. The Group invests money in low-risk and high-liquidity instruments. On 31 December 2014, the Group’s cash and cash equivalents totalled EUR 13,343,000 (EUR 4,215,000 on 31 December 2013), and its liquid financial investments totalled EUR 13,000 (EUR 1,000 in 2013). The Group’s capital adequacy is at a good level on the reporting date.
EUR THOUSAND Unexpired
2014
2013
22,938
88.9%
23,269
2,217
8.6%
2,217
7.9%
15–30 days
180
0.7%
187
0.7%
31–60 days
389
1.5%
183
0.7%
61–90 days
63
0.2%
18
0.1%
91 days
24
0.1%
2,226
7.9%
25,811
100.0%
28,100
100.0%
1–14 days
82.7%
Capital management The objective of the Group’s capital management is to support business operations through an optimal capital structure by ensuring normal business conditions, and to increase shareholder value with the objective of achieving the best possible return. An optimal capital structure also guarantees smaller capital costs. The capital structure can be influenced through the distribution of dividends and by planning the financing of investments. The development of the Group’s capital structure is monitored continuously through net gearing. Net gearing and information illustrating the development of interest-bearing net liabilities are presented in the table of key ratios.
BUSINESS OPERATIONS RENSPONSIBILITY
In order to minimise credit risks in financing, the Group enters into agreements only with financial institutions and other parties with a solid financial standing. Customers’ credit ratings are inspected regularly. The Group does not have any significant accumulations of credit risks from receivables, because the Group has a broad customer base distributed across various sectors. The amount of credit losses recognised during the 2014 financial period was EUR 1.4 million (2013: EUR 4,000). The Group’s maximum credit risk corresponds to the carrying amount of financial assets at the end of the period.
CORPORATE GOVERNANCE
Capital adequacy
Credit risk
FINANCIAL STATEMENT
According to the Group’s investment policy, the Group invests only in low-risk market deposits, bank investment certificates and short interest funds, and thus the investment risk remains at a low level. Because of its investment policy, the Group is not exposed to price risk caused by fluctuations in the market prices for quoted shares.
Enfo IN 2014
Notes to the consolidated financial statements
55
ENFO | Annual Report 2014
Notes to the consolidated financial statements
107,890
37,443
Service sales
95,357
35,977
Hardware and software sales
12,533
1,466
Internal turnover
1,376
190
109,266
37,633
5,613
4,071
Investments
8,289
689
Depreciation and amortisation
4,065
387
Total turnover Result Operating profit
BUSINESS OPERATIONS
IT Services include IT outsourcing, data centre and workstation services, application services and solutions, consulting, industry-specific IT solutions, and the sale of hardware, software and related services. IT Services operate in Finland and Sweden. Financial Process Services provide solutions and services for the outsourcing of information logistics and invoicing processes which support the customers’ business operations. Financial Process Services operate mainly in Finland. Other functions present the Group services, holding companies and other minor units, considering the result and financial position. Pricing between the segments takes place at a fair market price. Within the Group, the assessment of segment profitability and the decisions on resources allocated to the segments are based on the segments’ result before financial items and taxes. Balance sheet assets and liabilities are not allocated to segments in internal reporting. The Managing Director, as the highest operative decision-maker, and the Group’s Management Team are responsible for the Group’s aforementioned assessments and resourcing decisions. In accordance with internal reporting, administrative costs have been allocated to the segments inasmuch as they are associated with business activities. Segment investments include investments in intangible (including goodwill) and tangible assets.
External turnover
Financial IT Services Process Services
Other information
1.1.2013–31.12.2013 Revenues External turnover
Financial IT Services Process Services 112,207
38,732
Service sales
96,213
36,017
Hardware and software sales
15,994
2,714
Internal turnover Total turnover
845
130
113,052
38,861
6 976
4 271
Result Operating profit
RENSPONSIBILITY
The Group’s reporting segments are:
Revenues
CORPORATE GOVERNANCE
Enfo Oyj has two reporting segments that are the Group’s strategic business units. These strategic business units produce different products and services, and they are managed as separate units, because their operations require the use of different marketing strategies and distribution channels.
1.1.2014–31.12.2014
Other information Investments
4 099
723
Depreciation and amortisation
3 528
363
FINANCIAL STATEMENT
4. Segment reporting
Enfo IN 2014
IFRS, EUR THOUSAND
56
ENFO | Annual Report 2014
Notes to the consolidated financial statements
146,899
151,913
Income of all other segments
0
0
Elimination of internal income
-1,566
-974
145,333
150,939
9,684
11,247
19
0
Financial items
-1,650
-1,288
Consolidated result before taxes, total
8,053
9,958
Total consolidated income Result Reporting segments' operating result Operating result of all other segments
Depreciation and amortisation Reporting segments' depreciation and amortisation Depreciation and amortisation of all other segments Total consolidated depreciation and amortisation
1 January – 31 December 2013
Finland
83,253
86,504
Other countries
62,079
64,435
145,333
150,939
21,372
22,082
Total consolidated income Non-current assets Finland Other countries
54,640
51,679
Consolidated non-current assets
76,012
73,761
5. Other operating income Sales profits from tangible fixed assets 4,453
3,891
188
170
4,640
4,060
0
7
Others
124
14
Total
124
21
12,972
16,157
53
206
6. Materials and services Purchases during the period
Investments Reporting segments' investments
8,689
4,822
Investments of all other segments
213
262
8 902
5 084
Total consolidated investments
1 January – 31 December 2014
Revenues (external)
BUSINESS OPERATIONS
Reporting segments' income
Geographically, the Group operates mainly in Finland and Sweden.
Change in inventory External services Total
35,519
36,320
48,545
52,683
CORPORATE GOVERNANCE
1 January – 31 December 2013
FINANCIAL STATEMENT
1 January – 31 December 2014
RENSPONSIBILITY
Information about geographical regions.
Reconciliation calculations
Revenues
Enfo IN 2014
IFRS, EUR THOUSAND
57
ENFO | Annual Report 2014
Notes to the consolidated financial statements
54,046
0
0
Profit-sharing bonus into the personnel fund
Total
1,772
3,983
4,380
7,970
Vehicle expenses
1,629
1,720
2,728
2,960
Hardware and software expenses
1,421
1,745
62,642
64,977
3,788
2,830
Other administrative expenses Telephone and data expenses Marketing, sales and representation expenses
Note 25 “Related-party information” contains information about the management’s perquisites. Note 22 contains more information about the Group’s share-based payments.
Other operating expenses Total
Average number of Group personnel during the period IT Services
647
677
Financial Process Services
104
84
Other functions Total
24
24
775
784
Auditing
Total 1.1.–31.12.2014
1.1.–31.12.2013
1,055
1,573
Depreciation and amortisation by asset category
737
1,845
1,503
2,057
550
19,928
17,994
Auditors’ fees
Other services
8. Depreciation and amortisation
677
The Group did not have any significant research and development expenses. Other operating expenses include rental expenses of EUR 5,502,000 (EUR 5,614,000 in 2013).
Tax guidance
Intangible assets
2,756
Costs of premises 7,813
Other indirect employee costs
2,686 1,841
Pension insurance premiums and pensions defined-contribution plans
Voluntary personnel expenses Travel expenses
1 January – 31 December 2013
196
206
7
3
82
28
285
237
1.1.–31.12.2014
1.1.–31.12.2013
10. Financial income and expenses
Property, plant and equipment
3,585
2,487
Total depreciation and amortisation
4,640
4,060
Dividend income
Total depreciation and amortisation
4,640
4,060
14
24
Interest income
124
201
Exchange rate gains
232
502
Total financial income
371
728
Interest expenses
1,031
1,122
Exchange rate losses
989
894
Other financial expenses
1
Total financial expenses
2,020
2,016
BUSINESS OPERATIONS
52,100
Salaries, wages and fees
1 January – 31 December 2014
RENSPONSIBILITY
1 January – 31 December 2013
CORPORATE GOVERNANCE
9. Other operating expenses
1 January – 31 December 2014
FINANCIAL STATEMENT
7. Salaries and other employment benefits
Enfo IN 2014
IFRS, EUR THOUSAND
58
ENFO | Annual Report 2014
Notes to the consolidated financial statements
2,773
6
22
Change in deferred tax liability and assets
-920
-404
Total
1,626
2,390
Comparison of taxes based on the current tax rate of 20.0% (24.0% in Finland in 2013) and taxes presented in the income statement: 1 January – 31 December 2014
1 January – 31 December 2013
8,053
9,958
1,626
2,391
Divergent tax bases of foreign subsidiaries Change in deferred taxes – change in Swedish tax rates Change in deferred taxes – change in Finnish tax rates
-15
24
Expenses non-deductible in taxation
128
Profit before taxes Taxes based on the current tax base
Tax-exempt income Non-recognised deferred tax receivables from losses Impact of appropriations Taxes recognised in previous periods Taxes in the income statement
-27 155
-48
-97
46
35
-106
-31
-6
-60
1,626
2,390
The weighted average of the applied tax rates was 20.2% in 2014.
Available-for-sale investments Exchange rate differences caused by net investments in foreign subsidiaries Net investment hedging Other currency translations differences Cash flow hedging Other comprehensive income items
2014 Available-for-sale investments Exchange rate differences caused by net investments in foreign subsidiaries Net investment hedging Other currency translations differences Cash flow hedging Other comprehensive income items
Before tax
Tax charge (-)/credit
After tax
-13
3
-10
-1 306
261
-1 045
-82
16
-66
-641
0
-641
31
-6
25
-2 011
274
-1 737
Before tax
Tax charge (-)/credit
After tax
13
-2
11
-742
182
-560
43
-11
33
-400
0
-400
214
-65
149
-872
105
-767
12. Earnings per share Earnings per share are calculated by dividing the profit for the period attributable to equity-holders of the parent company by the weighted average of outstanding shares for the period. Profit for the period attributable to equity-holders of the parent company (EUR thousand) Weighted average number of outstanding shares during the period (thousand shares)
1.1.–31.12.2014
1.1.–31.12.2013
5,012
6,246
590
584
Earnings per share, basic (EUR/share)
8.50
10.69
Earnings per share, diluted (EUR/share)
8.50
10.69
BUSINESS OPERATIONS
2,540
2013
RENSPONSIBILITY
Taxes from previous periods
1 January – 31 December 2013
CORPORATE GOVERNANCE
Tax based on the period's taxable income
1 January – 31 December 2014
FINANCIAL STATEMENT
Tax expenses (-)/income associated with other comprehensive income items are:
11. Income tax
Enfo IN 2014
IFRS, EUR THOUSAND
59
ENFO | Annual Report 2014
Notes to the consolidated financial statements
Increases from business combinations Decreases Transfers between items Exchange rate differences
2013 18,542
285
623
64 -289
-305
109
-2
-67
-25
Acquisition cost on 31 Dec.
18,936
18,834
Accumulated depreciation on 1 Jan.
18,019
17,802
Increases from business combinations
55
Accumulated depreciation on decreases
-103
-181
Depreciation for the period
287
418
Exchange rate differences
-44
-21
18,213
18,019
722
815
Other tangible assets
2014
2013
Acquisition cost on 1 Jan.
1,049
1,065
Accumulated depreciation on 31 Dec. Carrying amount on 31 Dec..
Increases
503
253
Decreases
-29
-244
-440
2
Transfers between items Exchange rate differences
-47
-27
1,036
1,049
Accumulated depreciation on 1 Jan.
431
269
Depreciation for the period
164
176
Acquisition cost on 31 Dec.
Increases from business combinations
11
Depreciation on decreases and transfers
-19
Exchange rate differences
-33
-14
Accumulated depreciation on 31 Dec.
555
431
Carrying amount on 31 Dec.
481
616
7,211
Increases
2,278
2,602
Decreases
-1,652
-1,898
Acquisition cost on 31 Dec.
8,542
7,916
Accumulated depreciation on 1 Jan.
4,074
3,868
-1,589
-1,868
2,101
1,892
4,586
4,074 3,343
Transfers between items Accumulated depreciation on decreases Depreciation for the period Accumulated depreciation on 31 Dec.
2013
182
Carrying amount on 1 Jan.
3,842
Carrying amount on 31 Dec.
3,956
3,842
Total tangible assets
5,159
5,276
14. Intangible assets The Group’s intangible assets consist mainly of goodwill and acquired software. The Group does not have a significant amount of internally manufactured products. The Group does not have any intangible assets with an indefinite useful life. Goodwill Acquisition cost on 1 Jan. Increases
2014
2013
63,563
65,156
1,512
3
-2,810
-1,596
62,265
63,563
Increases from business combinations
BUSINESS OPERATIONS
Increases
2014 18,834
7,916
RENSPONSIBILITY
Acquisition cost on 1 Jan.
2014
Acquisition cost on 1 Jan.
CORPORATE GOVERNANCE
Machinery and equipment
Financial leasing
Decreases Exchange rate differences Carrying amount on 31 Dec.
FINANCIAL STATEMENT
13. Tangible assets
Enfo IN 2014
IFRS, EUR THOUSAND
60
ENFO | Annual Report 2014
Notes to the consolidated financial statements
2,048
Exchange rate differences
11,613
-528
-1,450
11,683
10,163
8,961
9,898
437
469
-473
-1,406
Accumulated depreciation on 31 Dec.
8,925
8,961
Carrying amount on 31 Dec.
2,758
1,202
Decreases Acquisition cost on 31 Dec. Accumulated depreciation on 1 Jan. Depreciation and amortisation Exchange rate differences
Other intangible assets *
2014
2013
Acquisition cost on 1 Jan.
9,714
9,090
561
532
Increases Increases through corporate acquisitions Decreases
81 0
-107
Transfers between items
330
232
Exchange rate differences
-58
-33
10,627
9,714
8,141
7,693
Acquisition cost on 31 Dec. Accumulated depreciation on 1 Jan. Accumulated depreciation on business acquisitions
1,903
1,157
Increases
2,098
1,103
-122
-357
3,879
1,903
Decreases Acquisition cost on 31 Dec. Accumulated depreciation on 1 Jan.
Depreciation and amortisation
618
573
-57
-32
Accumulated depreciation on 31 Dec.
8,718
8,141
Carrying amount on 31 Dec.
1,910
1,573
580
588 -182
Accumulated depreciation on decreases
-121
-357
Depreciation for the period
1,032
531
Accumulated depreciation on 31 Dec.
1,491
580
Carrying amount on 1 Jan.
1,323
569
Carrying amount on 31 Dec.
2,388
1,323
Other intangible assets, total
7,058
4,098
69,321
67,661
Total intangible assets
Goodwill has been allocated to cash-generating units for impairment testing. The cash-generating units correspond to specific segments, which is the level at which the management monitors the operations and related goodwill. The recoverable amount has been defined on the basis of calculations related to the value in use. The calculations are based on forecasts approved by the management and cover three years. Estimated cash flows are discounted to the present. 2014
-93
Exchange rate differences
2013
Transfers between items
15
Accumulated depreciation on decreases
* Other intangible goods include mainly licences and software.
2014
Acquisition cost on 1 Jan.
2013
Discount rate IT Services Total
6.9%
7.4%
2014
2013
BUSINESS OPERATIONS
10,163
Increases
Intangible financial leasing assets
RENSPONSIBILITY
Acquisition cost on 1 Jan.
2013
CORPORATE GOVERNANCE
2014
Allocated goodwill 62,265
63,563
62,265
63,563
Cash flows after the forecast period have been estimated using a growth expectation of 2%. The growth expectation used does not exceed the average long-term growth in the industry.
FINANCIAL STATEMENT
Other intangible assets Customer relations and trademarks (business combination)
Enfo IN 2014
IFRS, EUR THOUSAND
61
ENFO | Annual Report 2014
Notes to the consolidated financial statements 15. Available-for-sale investments Non-current 1 Jan. Changes in fair value
2014
2013
149
138
-13
12
136
149
31 Dec. Current
2014
2013
1 Jan.
2
2
31 Dec.
2
2
BUSINESS OPERATIONS
Impairment
2014
2013
Security deposits
155
108
Total
155
108
CORPORATE GOVERNANCE
16. Non-current receivables
RENSPONSIBILITY
Available-for-sale investments consisted mainly of fund investments and minor investments in equities.
FINANCIAL STATEMENT
The following assumptions have an impact on the realisation of the calculations: Estimated turnover: The assumptions are based on a view of the general growth and price development in the market, and an estimate of the Group’s market share. The assumption values are based on the management’s previous experience in business development, the current market share, previous development of the market share, and estimates of future outlook issued by outside parties. Development of personnel and other expenses: The management’s assumptions are based on previous experience in the development of personnel costs, known salary increase agreements and the general view of the development of personnel costs. Discount rate: The rate used in calculations has been defined according to the weighted average cost of capital (WACC). The rate used represents the total cost of equity and liabilities, taking into account the special risks related to property items. The discount rate has been determined before taxes. As a result of the impairment tests performed, the company does not need to recognise impairment. The recoverable amount defined in impairment testing clearly exceeds the carrying amount of the tested units and, as a result, the management considers that any change in the central assumptions used in the calculations would not result in impairment.
Enfo IN 2014
IFRS, EUR THOUSAND
62
ENFO | Annual Report 2014
Notes to the consolidated financial statements Enfo IN 2014
IFRS, EUR THOUSAND
17. Deferred tax assets and liabilities Changes in deferred taxes during 2013:
Provisions
Confirmed losses Total
Recognised in equity
Recognised in comprehensive income items
Exchange rate differences
31 December 2013
296
-54
94
-40
54
215
215
Perquisites Hedge accounting
Recognised in the income statement
242
120 3 513
-65
55
-65
566
-3 122
-3
BUSINESS OPERATIONS
Deferred tax assets: Tangible and intangible assets: different depreciation period in taxation, activated financial leasing assets
31 December 2012
Deferred tax liabilities: -15 30
22
0 -3
120
-9
265
-2
Intangible assets recognised during business acquisitions
377
-103
Taxes recognised by the Group
193
-193
Total
701
-282
-2
31 December 2013
Recognised in the income statement
Recognised in equity
20 0 -12
404
Exchange rate differences
31 December 2014
Changes in deferred taxes in 2014: Deferred tax assets: Tangible and intangible assets: different depreciation period in taxation, activated financial leasing assets
Recognised in comprehensive income items
242
-95
147
Provisions
54
-33
22
Perquisites
215
-78
Hedge accounting
55
Confirmed losses Total
-10
128
-29
894
-6 923
49
566
719
-6
-39
1,239
120
85
-107
-4
94
Deferred tax liabilities: Different depreciation period in taxation for tangible assets Measurement of financial assets at fair value
20
-3
17
Intangible assets recognised during business acquisitions
265
450
-96
-12
607
Total
404
535
-203
-19
719
Of deferred tax receivables, EUR 990,000 are expected to be realised in the next 12 months. Approximately EUR 132,000 of deferred tax liabilities (2013: EUR 78,000) are expected to be realised within 12 months.
RENSPONSIBILITY
Measurement of financial assets at fair value
15 93
CORPORATE GOVERNANCE
Different depreciation period in taxation for tangible assets
FINANCIAL STATEMENT
Activated intangible assets
63
ENFO | Annual Report 2014
Notes to the consolidated financial statements
310
Total
256
310
19. Sales receivables and other receivables
31 December 2012 2014
2013
Sales receivables
25,811
28,100
Income tax receivables
3,423
2,720
Other accrued income
3,008
2,552
Other receivables Total sales and other receivables
Share capital Changes in the number of shares are presented in the table below:
23
43
32,265
33,415
The fair values of sales and other receivables correspond to their carrying amount.
2014
2013
Cash in hand and at bank
13,343
4,215
Total
13,343
4,215
Cash and cash equivalents on the balance sheet correspond to the cash and cash equivalents presented in the cash flow statement. The fair value of cash and cash equivalents does not differ from the carrying amount.
Treasury shares
Outstanding shares
589,120
4,950
584,170
Acquisition of treasury shares Share issue
606 1,713
Sale of treasury shares 31 December 2013
31 December 2013
-4,747 590,833
809
590,024
Issued shares
Treasury shares
Outstanding shares
590,833
809
590,024
Acquisition of treasury shares 31 December 2014
20. Cash and cash equivalents
Issued shares
202 590,833
1,011
589,822
Enfo Oyj has a single series of shares, with each share entitling to a single vote. The company’s shares are part of the book-entry system. Treasury shares Treasury shares are presented as reductions in equity on the balance sheet. In 2014, Enfo Oyj acquired 202 treasury shares. On the closing date, the company held 1,011 treasury shares. The treasury shares held by the company comprise 0.2% of all shares and votes. Descriptions of equity reserves are presented below.
BUSINESS OPERATIONS
2013
256
RENSPONSIBILITY
2014 Materials and supplies
CORPORATE GOVERNANCE
21. Equity
Share premium account The consolidated balance sheet presents restricted equity in a share premium account which is not included in the registered share capital. Translation differences The Group’s equity includes translation differences caused by the translation of equities in foreign subsidiaries and loan receivables corresponding to internal net investments into the rate on the closing date.
FINANCIAL STATEMENT
18. Inventories
Enfo IN 2014
IFRS, EUR THOUSAND
64
ENFO | Annual Report 2014
Notes to the consolidated financial statements
Deferred tax
2 214 -65
31 December 2013
1,773
1 January 2014 Change in the fair value of available-for-sale investments
1,773
Deferred tax Hedging instrument reserve Deferred tax 31 December 2014
-13 3 31 -6 1,787
Major shareholders
shares
Osuuskunta KPY
510,174
Ilmarinen Mutual Pension Insurance Company
11,202
Enfo Oyj's Personnel Fund HR
10,510
Einari Vidgren Oy
4,768
Keskisuomalainen Oyj
4,515
Pohjois-Savo Cooperative Bank
3,283
Hannu Isotalo Oy
2,979
Kallax Oy
2,848
Arto Herranen Saastamoinen Foundation Others Total
2,712 2,586 35,256 590,833
Terms of the result-based bonus system: The result-based bonus system is a long-term incentive scheme for the Group’s key persons. Each year before the beginning of a new financial period, the Board of Directors decides upon the target group employees and their goals, and sets objectives for the system’s criteria. The objectives of the incentive scheme and their achievement are defined on the basis of the financial results of the Group and its business units. The maximum bonus to be paid is specified in cash. The annual bonus based on the scheme is paid after the end of the financial period by the end of April in shares and/or cash. The number of shares to be assigned is determined according to the share-specific equity used as the share price. However, the Board of Directors may decide to pay bonuses fully in cash. At the end of the 2010 financial period, the Group adopted an incentive scheme for key persons, using a recognition practice that conforms to the IFRS 2 standard. The target group of the incentive scheme consists of key persons determined by the Board of Directors. Participation in the incentive scheme requires that the key person is in a permanent employment relationship with the company at the start of the earning period and that the key person holds the company’s shares as decided upon by the Board when the bonus is paid. The company’s Board of Directors decides on the earning criteria for the earning period and their objectives upon the approval of the budget. The share-based incentive scheme contains three one-year earning periods, i.e. calendar years 2011, 2012 and 2013. The 2014 bonus was based on turnover and profitability objectives set for Enfo Group and its units. Some of these objectives were reached in 2014, and these financial statements include EUR 55,000 in scheme-related bonus recognitions. At the end of 2013, the Group adopted an arrangement with similar conditions. The share-based incentive scheme contains three one-year earning periods, i.e. calendar years 2014, 2015 and 2016. The scheme awards a maximum of 27,870 shares in bonuses. The liability associated with the redemption obligation of the scheme is presented in other non-interest-bearing non-current liabilities.
BUSINESS OPERATIONS
Hedging instrument reserve
156
22. Share-based payments
RENSPONSIBILITY
Deferred tax
1,465
CORPORATE GOVERNANCE
1 January 2013 Change in the fair value of available-for-sale investments
Dividends In 2014, EUR 5.4 per share or a total of EUR 3,185,000 was paid in dividends. The company’s Board of Directors proposes to the Annual General Meeting that a dividend of EUR 5.90 per share be paid for the 2014 financial period.
FINANCIAL STATEMENT
Change in value and other reserves The fair value reserve includes unrealised changes in the fair value of available-forsale investments less the tax effect, and the reserve for invested non-restricted equity.
Enfo IN 2014
IFRS, EUR THOUSAND
65
ENFO | Annual Report 2014
Notes to the consolidated financial statements
2013 Fair value
15,733
15,140
13,487
13,109
Bond loan
9,902
9,202
Financial leasing liabilities
3,424
3,429
3,047
3,047
26,813
25,740
18,780
18,144
Total
Expiry of financial leasing liabilities The gross amount of financial leasing liabilities – minimum rents by expiry 2014
2013
Within 12 months
3,142
2,402
Within 1–5 years
3,435
2,927
In more than 5 years Total Future financial costs
167
278
6,744
5,607
305
359
6,440
5,248
Current Loans from financial institutions
11,919
12,123
11,302
11,311
Current value of financial leasing liabilities The current value of financial leasing liabilities expires as follows:
Financial leasing liabilities
3,015
3,021
2,201
2,201
Within 12 months
3,015
2,201
271
271
303
303
Within 1–5 years
3,282
2,773
15,205
15,415
13,806
13,858
143
274
6,440
5,248
8,833
8,549
3,171
2,727
Total
In more than 5 years Total
The Group’s financial liabilities as of 31 December 2014 consist of loans from financial institutions, a bond loan and a financial leasing liability. The fair value of long-term loans has been calculated by discounting future cash flows to the present using the interest rate that would be available to the Group’s similar loans on the closing date. Rated values and fair values of derivative financial instruments are presented in Note 27. Financial leasing agreements are generally made for 36–48 months with fixed instalments denominated in euro covering the agreement period.
The Group’s other interest-bearing liabilities will expire as follows: Bank loans: 1–6 months 6–12 months 1–5 years Total
13,402
15,759
25,504
27,035
Bond loans: 1–6 months 6–12 months 1–5 years
9,902
0
Total
9,902
0 FINANCIAL STATEMENT
Derivative liabilities
BUSINESS OPERATIONS
2014 Fair value
2013 Carrying amount
RENSPONSIBILITY
Non-current Loans from financial institutions
2014 Carrying amount
CORPORATE GOVERNANCE
23. Financial liabilities
Enfo IN 2014
IFRS, EUR THOUSAND
Derivative liabilities 1–6 months 6–12 months 1–5 years
271
303
Total
271
303
66
ENFO | Annual Report 2014
Notes to the consolidated financial statements
Bond loan
3.0
Financial leasing liabilities
3.7
3.7
Other non-current liabilities
2014
2013
Other non-current non-interest-bearing liabilities
1,036
885
Current Income tax liability
9,390
7,947
815
1,286
Accrued liabilities Personnel-related liabilities
9,619
8,664
Advances received
732
724
Other accrued liabilities
1,119
1,831
11,470
11,219
Total accrued liabilities Other liabilities Current non-interest-bearing liabilities, total Accounts payable and other non-interest-bearing payables, total
Registered office
Group share of share capital, %
Group share of votes, %
Kuopio
100%
100%
Enfo Holdings Oy
Kuopio
100%
100%
Enfo Zender Oy
Kuopio
100%
100%
Enfo Holdings AB
Stockholm
100%
100%
Enfo Sweden AB
Gothenburg
100%
100%
Enfo Forward AB
Gothenburg
100%
100%
Enfo Zystems AB
Gothenburg
100%
100%
Enfo Zipper AB
Gothenburg
100%
100%
Enfo Zingle AB
Gothenburg
100%
100%
Kuopio
100%
100%
Zuite Business Consulting AB
Gothenburg
30%
30%
Enfo Zuite AB
Gothenburg
100%
100%
Stockholm
100%
100%
Gothenburg
100%
100%
Stockholm
100%
100%
Bröndby
100%
100%
Company name
24. Accounts payable and other payables
Accounts payable
Group structure On 31 December 2014, the Group’s parent company and subsidiary relationships were as follows:
5,143
6,031
26,817
26,483
27,853
27,368
The carrying amount of trade and other payables corresponds to their fair value.
Parent company: Enfo Oyj Enfo Oyj’s subsidiaries:
Zuite by Enfo Oy
Enfo Pointer AB Enfo EnjoyIT Intergration AB Enfo Framsteg AB Framsteg Denmark ApS
At Zuite Business Consulting AB, control is determined on the basis of shareholder agreements. The non-controlling interests (70%) have been presented on a separate row in the consolidated income statement and the Group’s equity. Other Group insiders The Group’s other insiders include Enfo Oyj’s parent company Osuuskunta KPY and subsidiaries, and the Group’s management, including the Group’s Board of Directors, Managing Director and Management Team, and their spouses and relatives living in the same household.
BUSINESS OPERATIONS
2.9
RENSPONSIBILITY
2013
2.4
CORPORATE GOVERNANCE
2014 Bank loans
FINANCIAL STATEMENT
25. Information on related parties
On 31 December, the weighted averages of effective interest rates for interestbearing liabilities were as follows:
Enfo IN 2014
IFRS, EUR THOUSAND
67
ENFO | Annual Report 2014
Notes to the consolidated financial statements
The values of the acquired assets and liabilities were as follows on the acquisition date: Acquisition cost
Information about the parent company’s Managing Director and Board of Directors is presented in Note 5 in the parent company’s financial statements. Other transactions with related parties and outstanding balances
2014
2013
389
441
183
2,045
8
65
Sales of goods and services Parent and subsidiaries
Acquisition cost (paid in cash) Recognised conditional purchase price
2,945 654
654
Total acquisition cost
3,599
3 599
1,742
1 742
1,548
1 548
fair value
carrying amount
Acquired company’s assets and liabilities in current value Goodwill
2 945
Purchases of goods and services Parent and subsidiaries Sales and other receivables Parent and subsidiaries Accounts payable and other payables Parent and subsidiaries
0
86
Acquired company’s assets and liabilities
BUSINESS OPERATIONS
1,773
Intangible assets Customer relationships Trademarks
1,743
0
310
0
Technology
113
67
Tangible assets
40
40
The Group has signed an eight-year lease agreement with Osuuskunta KPY starting from 1 January 2012, concerning computer rooms located in Kiinteistö Oy Siilinjärven Lentokapteeni. The rent liability is included in the liability statement. The Group does not have any other significant transactions, receivables, liabilities or guarantees with related parties.
Sales and other receivables
26. Information about corporate acquisitions
Deferred tax liabilities
On 21 August 2014, Enfo Oyj’s Swedish subsidiary Enfo Sweden AB acquired all shares in Framsteg AB, a company specialised in Business Intelligence (BI) and Service and Asset Management solutions. The company has been consolidated in consolidated financial statements starting from 1 September 2014. The company’s four-month turnover was EUR 3.6 million and operating profit EUR 0.3 million. Framsteg operates under the IT Services segment.
Inventories Cash and cash equivalents
9
9
1,139
1,139
24
24
3,378
1,280
531
70
Other liabilities
826
826
Trade payables and other current liabilities
279
279
1,636
1,174
Total assets
Total liabilities
The Group’s turnover in 2014 would have been EUR 149.4 million and operating profit EUR 9.7 million if the acquisition of Framsteg AB had been consolidated in consolidated financial statements starting from the beginning of the 2014 financial period.
RENSPONSIBILITY
2013
1,749
CORPORATE GOVERNANCE
2014
Salaries and other current employment benefits
FINANCIAL STATEMENT
Management’s perquisites
Enfo IN 2014
IFRS, EUR THOUSAND
68
ENFO | Annual Report 2014
Notes to the consolidated financial statements
Liabilities with business mortgage as security Loans from financial institutions
25,407
27,035
Business mortgage
11,396
11,396
Subsidiary shares
16,395
16,395
Interest swaps Fair value
-243
-274
Rated value SEK (SEK 39,222,960)
4,176
7,379
6,750
7,650
Paid during the current financial period
3,436
3,700
To be paid later
3,535
3,536
Total
6,971
7,236
6,668
10,186
Leasing liabilities
Other rental liabilities Other contingent liabilities
2014
2013
13,638
17,422
Within 12 months
6,074
7,148
Within more than a year and less than five years
7,564
10,274
13,638
17,422
Within more than 5 years Total
The agreements do not include any significant sublease relationships or contingent leases.
Derivative contracts
Rated value EUR
Expiry of rental and leasing liabilities Other leasing agreements – total amount of minimum rents
118
108
Bank guarantees
330
272
Total
7,116
10,566
Total
14,086
17,802
The Group’s leasing agreement obligations relate to rented premises, cars and other rented assets.
BUSINESS OPERATIONS
2013
RENSPONSIBILITY
2014
CORPORATE GOVERNANCE
The Group has the following contingent liabilities:
FINANCIAL STATEMENT
27. Liabilities
Enfo IN 2014
IFRS, EUR THOUSAND
69
BALANCE SHEET
CASH FLOW STATEMENT
Motes to the financial statements date and signatures of the financial statements
AUDITOR’s note
BUSINESS OPERATIONS RENSPONSIBILITY
INCOME STATEMENT
AUDITOR’s report for enfo oyj’s annual general meeting FINANCIAL STATEMENT
71 72 73 74 82 82 83
CORPORATE GOVERNANCE
THE PARENT COMPANY’S FINANCIAL STATEMENTS (FAS)
Enfo IN 2014
ENFO | Annual Report 2014
70
2
49,254
Other operating income
3
3,674
3,318
Materials and services
4
-21,125
-21,169 -18,086
49,475
Personnel expenses
5
-18,261
Depreciation and amortisation
6
-676
-709
Other operating expenses
7
-9,236
-9,093
3,631
3,737
8
-871
387
2,761
4,124
9
3,850
4,100
6,611
8,224
-1,383
-2,026
5,228
6,198
Operating profit Financial income and expenses Profit/loss before extraordinary items Extraordinary items Profit/loss before appropriations and taxes Income tax Profit/loss for the period
10
BUSINESS OPERATIONS
Turnover
1 January 2013 – 31 December 2013
RENSPONSIBILITY
Note
1 January 2014 – 31 December 2014
CORPORATE GOVERNANCE
FAS, EUR THOUSAND
FINANCIAL STATEMENT
The parent company’s income statement (FAS)
Enfo IN 2014
ENFO | Annual Report 2014
71
ENFO | Annual Report 2014
Intangible assets
11
1,556
1,495
Tangible assets
12
136
561
Holdings in Group companies
13
19,606
19,606
Other shares and participations
13
Non-current assets
EQUITY AND LIABILITIES
Note
31 December 2014
31 December 2013
Equity
Investments
Total non-current assets
44
49
21,342
21,711
Share capital
19
265
265
Share premium account Reserve for invested non-restricted equity
19
13,316
13,316
19
1,912
1,912
Other reserves
19
11,562
11,536
Profit/loss from previous periods
13,912
10,915
Profit/loss for the period
5,228
6,198
46,194
44,143
105
158
Total equity
Current assets Inventories
14
183
165
Non-current receivables
15
35,111
37,292
Current receivables
16
32,666
25,955
Marketable securities
17
2
2
Cash in hand and at bank
18
12,709
2,160
Total current assets
80,670
65,573
TOTAL ASSETS
101,012
87,284
Obligatory provisions Liabilities Non-current Current Total liabilities TOTAL EQUITY AND LIABILITIES
20
23,487
15,733
21
32,225
27,250
55,712
42,983
101,012
87,284
RENSPONSIBILITY
31 December 2013
CORPORATE GOVERNANCE
31 December 2014
FINANCIAL STATEMENT
Note
ASSETS
BUSINESS OPERATIONS
FAS, EUR THOUSAND
Enfo IN 2014
The parent company’s balance sheet (FAS)
72
ENFO | Annual Report 2014
FAS, EUR THOUSAND
6,198
Adjustments to operating profit Depreciation and amortisation
676
709
48
84
Financial items
871
-387
Obligatory provisions
-53
-27
-3,850
-4,100
1,383
2,026
-18
225
1,663
-86
-351
-2,209
Loss from assignment for fixed assets
Extraordinary items Taxes Change in inventories, increase (-), decrease (+) Change in current and non-interest-bearing receivables, increase (-), decrease (+) Change in current and non-interest-bearing liabilities, increase (+), decrease (-) Interest paid and other financial costs Dividends received Interest received and other financial income
Cash flow from investment activities Purchases of property, plant and equipment
-23
-197
Purchases of intangible assets
-364
-627
Assignment of tangible assets
25
Increase in non-current receivables Decrease in non-current receivables Total cash flow from investments
-820
14
64
806
814
Group contributions received
4,100
Taxes paid
-2,156
-1,373
Total cash flow from operations
7,086
1,118
4,185 3,824
-1,537
-3,185
-2,980
-16
321
20,048
8,533
Cash flow from financing Payment of dividends
-1,276
18 -732
BUSINESS OPERATIONS
Profit for the period
1 January 2013 – 31 December 2013
Acquisition/sale of treasury shares Share issue Withdrawal of loans
137
Withdrawal of a bond loan
10,000
Repayment of current loans
-15,764
Increase in loan receivables
-11,443
Total cash flow from financing Changes in cash and cash equivalents Cash and cash equivalents on 1 Jan. Cash and cash equivalents transferred in business transfers Cash and cash equivalents on 31 Dec.
-5,543
-360
468
10,549
49
2,160
2,111
12,709
2,160
RENSPONSIBILITY
5,228
Cash flow from operating activities
1 January 2014 – 31 December 2014
CORPORATE GOVERNANCE
1 January 2013 – 31 December 2013
FINANCIAL STATEMENT
1 January 2014 – 31 December 2014
Enfo IN 2014
THE PARENT COMPANY’S CASH FLOW STATEMENT
73
ENFO | Annual Report 2014
Research and product development costs Research and product development costs are mainly recognised as annual expenses in the year in which they were generated.
Notes to the income statement
Inventories are presented at the lower of the weighted average acquisition price or the redemption price or probable sales price.
1. Accounting principles
Measurement of liquid assets
The parent company’s financial statements have been prepared in accordance with the Finnish Accounting Standards (FAS). The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and the accounting principles are described in Note 2 to the consolidated financial statements.
Securities are valued at the lower acquisition cost or the market price.
Recognition of income Revenue from services is recognised as income in the financial period during which the service was performed. Once services are performed during a particular period of time, revenue will be recognised for the period using the straight-line method, unless some other method is a better indicator for the stage of completion.
Measurement of non-current assets Tangible and intangible assets are recognised on the balance sheet at the direct acquisition cost less planned depreciation. Planned depreciation has been calculated using the straight-line method on the basis of the expected useful life of fixed assets. The depreciation periods are:
Pensions The company’s pension security is handled by external pension insurance companies. Pension expenses are recognised as costs in the year in which they are accumulated.
Deferred tax assets Intangible assets
3–5 years
Goodwill
4–5 years
Other machinery and equipment
3–5 years
Other tangible assets
10 years
Deferred tax assets caused by matching differences are included on the balance sheet. The deferred tax assets are included on the balance sheet on the basis of the management’s estimate of business development and resulting plan on the utilisation of deferred tax assets.
RENSPONSIBILITY
Measurement principles
BUSINESS OPERATIONS
Valuation of inventories
CORPORATE GOVERNANCE
Enfo Oyj is part of Osuuskunta KPY Group, the parent company of which is Osuuskunta KPY, and its registered office is in Kuopio. Osuuskunta KPY’s financial statements are available from address: Kauppakatu 18, 70100 Kuopio, Finland.
FINANCIAL STATEMENT
Notes to the financial statements
Enfo IN 2014
Notes to the financial statements
74
ENFO | Annual Report 2014
Notes to the financial statements 5. Personnel expenses 1 January 2013 – 31 December 2013
Other countries Total
14,840
14,561
2,693
2,632
Salaries, wages and fees 45,745
47,180
3,481
2,165
29
130
49,254
49,475
Indirect employee costs Pension costs Other indirect employee costs
727,549
893
18,261
18,086
263
265
372
369
1 January 2014 – 31 December 2014
1 January 2013 – 31 December 2013
512
464
Total Number of employees
3. Other operating income Capital gains from fixed assets
1 January 2014 – 31 December 2014
1 January 2013 – 31 December 2013
0
0
Others
3,674
3,318
Total
3,674
3,318
Purchases during the period
6. Depreciation and amortisation Depreciation according to plan
4. Materials and services
Change in inventory
Average Salaries, wages and fees for the management Managing Director, Deputy Managing Director and Board of Directors
Intangible assets 1 January 2014 – 31 December 2014
1 January 2013 – 31 December 2013
7,156
9,324
-18
225
External services
13,987
11,621
Total
21,125
21,169
Goodwill Other machinery and equipment Total
0
11
164
234
676
709
1 January 2014 – 31 December 2014
1 January 2013 – 31 December 2013
1,207
1,165
7.1. Other operating expenses Other personnel expenses Travel expenses Costs of premises Vehicle expenses
624
671
2,027
2,042
676
760
Hardware and software expenses
1,442
1,667
Other administrative expenses
1,329
1,285
298
293
1,025
775
Telephone and data expenses Marketing, sales and representation expenses Other operating expenses Total
608
434
9,236
9,093
BUSINESS OPERATIONS
Finland EU countries
1 January 2013 – 31 December 2013
RENSPONSIBILITY
Maantieteellisesti
1 January 2014 – 31 December 2014
CORPORATE GOVERNANCE
1 January 2014 – 31 December 2014
FINANCIAL STATEMENT
2. Geographic distribution of turnover
Enfo IN 2014
FAS, EUR THOUSAND
75
ENFO | Annual Report 2014
Notes to the financial statements
1 January 2013 – 31 December 2013
79
98
Auditing Tax guidance Other services Total
2
3
71
26
152
127
8. Financial income and expenses 1 January 2014 – 31 December 2014
1 January 2013 – 31 December 2013
From Group companies
14
63
From others
0
1
14
64
2,218
2,216
Dividend income
Total Interest income From Group companies From others Total
29
10
2,247
2,226
5
0
Total impairment
5
0
Interest expenses and other financial costs To Group companies
200
84
To others
804
727
Exchange rate losses
2,942
3,804
Total
3,946
4,614
Total financial expenses
3,951
4,614
-2,123
-1,093
-871
387
1 January 2014 – 31 December 2014
1 January 2013 – 31 December 2013
3,850
4,100
1 January 2014 – 31 December 2014
1 January 2013 – 31 December 2013
1,300
1,963
BUSINESS OPERATIONS
1 January 2014 – 31 December 2014
Impairment of commodities in permanent receivables
The financial income and expenses include Exchange rate losses/gains (net) Total financial income and expenses
9. Extraordinary items Group contribution
RENSPONSIBILITY
7.2 Auditors’ fee
Enfo IN 2014
FAS, EUR THOUSAND
819
2,712
Total
819
2,712
3,080
5,002
Total financial income
10. Income tax Income taxes on ordinary activities Taxes from previous periods
-2
12
Change in deferred tax assets
84
50
1,383
2,026
Total
Deferred tax receivables are caused by a negative depreciation difference of EUR 385,440.05, an interest swap agreement on cash flow hedging and an obligatory provision. The amount of deferred tax assets is presented in Note 15.
FINANCIAL STATEMENT
Exchange rate gains
CORPORATE GOVERNANCE
Other financial income
76
ENFO | Annual Report 2014
Notes to the financial statements
31 December 2014
31 December 2013
5,546
5,011
Increases
364
416
Transfers between items
210
211
Acquisition cost on 1 Jan.
Acquisition cost on 1 Jan.
31 December 2014
31 December 2013
797
797
797
797
Increases Decreases Acquisition cost on 31 Dec. Accumulated depreciation and impairment on 1 Jan.
-702
-649
-42
-53
-745
-702
Carrying amount on 1 Jan.
95
148
Carrying amount on 31 Dec.
53
95
31 December 2014
31 December 2013
9,788
9,788
9,788
9,788
Goodwill Acquisition cost on 1 Jan.
Depreciation for the period Accumulated depreciation and impairment on 31 Dec.
Depreciation for the period Accumulated depreciation and impairment on 31 Dec.
-9,788
-9,777
0
-11
-9,788
-9,788
Carrying amount on 1 Jan.
0
11
Carrying amount on 31 Dec.
0
0
-93 5,546
-4,145
-3,811
0
76
-470
-411
-4,615
-4 145
Carrying amount on 1 Jan.
1,400
1,200
Carrying amount on 31 Dec.
1,504
1,400
Total intangible assets
1,556
1,495
31 December 2014
31 December 2013
7,018
7,055
12. Tangible assets Acquisition cost on 1 Jan. Increases
Accumulated depreciation and impairment on 1 Jan.
0 6,119
-4,145
Machinery and equipment
Increases Acquisition cost on 31 Dec.
Accumulated depreciation and impairment on 1 Jan. Depreciation on decreases and transfers
Depreciation on decreases and transfers Depreciation for the period Accumulated depreciation and impairment on 31 Dec.
Decreases Acquisition cost on 31 Dec.
Decreases Acquisition cost on 31 Dec. Accumulated depreciation and impairment on 1 Jan. Depreciation on decreases and transfers
23
192
-146
-229
6,894
7,018
-6,679
-6,588
73
144
-164
-234
-6,770
-6,679
Carrying amount on 1 Jan.
339
466
Carrying amount on 31 Dec.
124
339
Depreciation for the period Accumulated depreciation and impairment on 31 Dec.
RENSPONSIBILITY
Intangible rights
CORPORATE GOVERNANCE
11. Intangible assets
BUSINESS OPERATIONS
Other long-term expenses
FINANCIAL STATEMENT
Notes to the balance sheet
Enfo IN 2014
FAS, EUR THOUSAND
77
ENFO | Annual Report 2014
Notes to the financial statements
Acquisition cost on 31 Dec.
5
5
14. Inventories 31 December 2014 Materials and supplies on 1 Jan. Change in inventory
Carrying amount on 1 Jan.
5
5
Carrying amount on 31 Dec.
5
5
31 December 2014
31 December 2013
216
211
Advance payments and purchases in progress Acquisition cost on 1 Jan. Increase Decrease/transfer Carrying amount on 31 Dec. Total tangible assets
0
216
-210
-211
6
216
136
561
13. Investments 31 December 2014
31 December 2013
Kirjanpitoarvo 1.1.
19 606
19 606
Kirjanpitoarvo 31.12.
19 606
19 606
Group companies have been presented in the notes to the IFRS financial statements. 31 December 2014
31 December 2013
Carrying amount on 1 Jan.
49
49
Decreases
-5
Other shares and participations
Refund of depreciation
Total investments
165
390
18
-225
183
165
31 December 2014
31 December 2013
15. Non-current receivables Receivables from Group companies Loan receivables
34,846
36,946
Total
34,846
36,946
Deferred tax assets
147
237
Other non-current receivables
118
108
35,111
37,292
Total
Osuudet saman konsernin yrityksissä
Carrying amount on 31 Dec.
Total
31 December 2013
BUSINESS OPERATIONS
5
RENSPONSIBILITY
31 December 2013
5
CORPORATE GOVERNANCE
31 December 2014
Acquisition cost on 1 Jan.
0 44
49
19,650
19,655
FINANCIAL STATEMENT
Other tangible assets
Enfo IN 2014
FAS, EUR THOUSAND
78
ENFO | Annual Report 2014
Notes to the financial statements
31 December 2014
31 December 2013
Receivables from Group companies Sales receivables
384
426
Loan receivables
3,696
8,227
Group account receivables
11,443
Other accrued income Total Trade receivables
31 December 2014
31 December 2013
2
2
2
2
Shares and participations
9,054
8,112
24,577
16,765
6,841
8,371
Carrying amount Total marketable securities (carrying amount)
18. Cash in hand and at bank 31 December 2014
31 December 2013
Cash in bank accounts
12,709
2,160
Total
12,709
2,160
BUSINESS OPERATIONS
17. Marketable securities
16. Current receivables
Enfo IN 2014
FAS, EUR THOUSAND
Prepayments and accrued income 304
Purchase invoice periods
780
Other accrued income Total Other receivables Total current receivables
628
90
71
1,227
778
21
42
32,666
25,955
RENSPONSIBILITY
Income tax receivables
79
CORPORATE GOVERNANCE
52
FINANCIAL STATEMENT
Pension insurance premiums
79
ENFO | Annual Report 2014
Notes to the financial statements
31 December 2014
31 December 2013
Share capital on 1 Jan.
265
265
Loans to financial institutions
Share capital on 31 Dec.
265
265
Bond loan 2014/2019, 1.85%
10,000
Non-current liabilities, total
23 487
15 733
Share premium account on 1 Jan.
13,316
13,316
Share premium account on 31 Dec.
13,316
13,316
Capital gain from treasury shares Share issue Reserve for invested non-restricted equity on 31 Dec.
8 137 1,912
1,912
11,536
11,387
25
149
11,562
11,536
31 December 2014
31 December 2013
21. Current liabilities 31 December 2014
31 December 2013
Loans to financial institutions
11,919
11,302
Total loans
11,919
11,302
Liabilities to Group companies Accounts payable Other liabilities Total
Other reserves on 1 Jan. Change in hedging reserves Other reserves on 31 Dec.
Trade payables Advances received
Retained earnings on 1 Jan.
17,113
13,571
-3,185
-2,977
-16
321
Retained earnings on 31 Dec.
13,912
10,915
Profit/loss for the period
5,228
6,198
46,194
44,143
Distributed dividends Change in treasury reserve
Personnel-related liabilities Expense provisions
13 912
10 915
Other reserves
11,562
11,536
Reserve for invested non-restricted equity Profit for the period Total
1,912
1,912
5,228
6,198
32,613
30,562
Treasury shares and major shareholders are presented in Note 21 to the consolidated financial statements.
6,987
2,678
2,343
559
724
2,971
2,704
221
779 553
3,192
4,035
Other liabilities Other liabilities
Retained earnings
12,194
Income tax
Valuation debt of derivatives Statement of distributable equity on 31 Dec.
23 6,965
Accrued liabilities
Total Total equity on 31 Dec.
105 12,089
RENSPONSIBILITY
1,767
15,733
Total Total current liabilities
271
303
1,411
1,556
1,683
1,859
32,225
27,250
CORPORATE GOVERNANCE
1,912
31 December 2013
13,487
FINANCIAL STATEMENT
Reserve for invested non-restricted equity on 1 Jan.
31 December 2014
BUSINESS OPERATIONS
20. Non-current liabilities
19. Equity
Enfo IN 2014
FAS, EUR THOUSAND
80
ENFO | Annual Report 2014
Notes to the financial statements 22. Commitments, contingent liabilities and other liabilities 31 December 2014
31 December 2013
Enfo IN 2014
FAS, EUR THOUSAND
Loans from financial institutions
25,407
27,035
Total loans
25,407
27,035
Commitments given Business mortgage Subsidiary shares
11,396
11,396
16,396
16,396
6,127
5,657
BUSINESS OPERATIONS
Liabilities with property as security
Paid during the current financial period To be paid later Total Other contingent liabilities Deposits as rental security on the balance sheet
7,165
7,047
13,291
12 705
118
108
Bank guarantees
330
272
Leasing liabilities
5,437
6,911
170
157
Share redemption commitments
CORPORATE GOVERNANCE
Amounts paid for leasing agreements
FINANCIAL STATEMENT
Leasing liabilities
RENSPONSIBILITY
Contingent liabilities and other liabilities
81
Mammu Kaario
Lauri Kerman
Timo Kärkkäinen
Soili Mäkinen
Arto Herranen CEO
AUDITOR’S NOTE A report has been issued today on the audit performed. Kuopio, 25 February 2015
PricewaterhouseCoopers Oy Authorised Public Accountants
Pekka Loikkanen Authorised Public Accountant
BUSINESS OPERATIONS
Hannu Isotalo
RENSPONSIBILITY
Tapio Hakakari
CORPORATE GOVERNANCE
Kuopio, 25 February 2015
FINANCIAL STATEMENT
SIGNATURES TO THE FINANCIAL STATEMENTS AND THE BOARD OF DIRECTORS’ REPORT
Enfo IN 2014
ENFO | Annual Report 2014
82
The Board of Directors and the CEO are responsible for preparing the financial statements and the Report of Board of Directors, and conveying a true and fair view in the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) as approved for use in the European Union, as well as for giving a true and fair view in the financial statements and the Report of the Board of Directors in accordance with the laws and regulations governing the preparation of the financial statements and the Report of Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and asset management, and the CEO shall see to it that the company’s accounts are in compliance with the law and that its asset management has been arranged in a reliable manner.
Auditor’s responsibility Our duty is to give an opinion on the financial statements, the consolidated financial statements and the Report of the Board of Directors on the basis of our audit. The Finnish Auditing Act requires us to comply with the principles of professional ethics. We have conducted our audit in accordance with the generally accepted auditing standards valid in Finland. The generally accepted auditing standards require us to plan and perform the audit in order to obtain reasonable assurance about whether the financial statements and the Report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the CEO are guilty of an act or negligence which may result in liability for damages towards the company, or have violated the Limited Liability Companies Act or the company’s Articles of Association. An audit includes procedures to obtain audit evidence about the figures and other disclosures in the financial statements and the Board of Directors’ report. The procedures selected depend on the auditor’s judgement, including the assess-
Statement on the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the Group’s financial position, financial performance, and its cash flows from operating activities in accordance with the IFRS as adopted by the European Union.
Statement on the financial statements and the Report of the Board of Directors In our opinion, the financial statements and the Report of the Board of Directors give a true and fair view of both the Group’s and the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the Report of the Board of Directors’ report valid in Finland. The information in the Report of the Board of Directors is consistent with the information in the financial statements. Kuopio, 25 February 2015 PricewaterhouseCoopers Oy Authorised Public Accounting Firm
Pekka Loikkanen Authorised Public Accountant
BUSINESS OPERATIONS RENSPONSIBILITY
Responsibility of the Board of Directors and the CEO
ment of the risks of material misstatement, whether due to malpractice or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial statements and the Report of the Board of Directors that give a true and fair view. The auditor assesses internal control to be able to design audit procedures that are appropriate in the circumstances, but not for the purpose of giving an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of the accounting principles applied to the financial statements and the reasonableness of the accounting estimates made by the company’s operational management, as well as evaluating the overall presentation of the financial statements and the Report of the Board of Directors. In our opinion, the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
CORPORATE GOVERNANCE
We have audited the accounting records, the financial statements, annual report and the administration of Enfo Oyj for the financial period of 1 January - 31 December 2014. The financial statements consist of the consolidated balance sheet, income statement, statement of comprehensive income, statement of changes in equity, cash flow statement and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.
FINANCIAL STATEMENT
AUDITOR’S REPORT TO ENFO OYJ´S ANNUAL GENERAL MEETING
Enfo IN 2014
ENFO | Annual Report 2014
83
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
RENSPONSIBILITY
simpler smoother smarter 84
BUSINESS OPERATIONS
Enfo IN 2014
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
RENSPONSIBILITY
BUSINESS OPERATIONS
Enfo IN 2014
FINLAND
Enfo IN 2014
ENFO oyj www.enfo.fi
ENFO sweden ab SWEDEN
RENSPONSIBILITY
70600 Kuopio
CORPORATE GOVERNANCE
Viestikatu 7
BUSINESS OPERATIONS
Head Office
40276 Göteborg
www.enfo.se
FINANCIAL STATEMENT
Lindholmspiren 3B
IV
