SIMPLER, SMOOTHER, SMARTER BUSINESS IN THE DIGITAL DIMENSION
ANNUAL REPORT 2015
RESPONSIBILITY
20
CORPORATE GOVERNANCE
26
FINANCIAL STATEMENTS
34
8 IT Services and
14 Case Nordic
10 Consulting
16 Case Loiste
Outsourcing
Services
12 Financial Process Services
20 Responsibility towards customers
22 Responsibility
Choice Hotels
18 Case Blueprint Genetics
24 Responsibility
towards society and partners
towards personnel
26 Corporate
Governance
30 Board of
Directors
BUSINESS OPERATIONS
08
06 Competence areas
32 Management
RESPONSIBILITY
BUSINESS OPERATIONS
04 CEO’s review
CORPORATE GOVERNANCE
Enfo is a Nordic IT service company offering business solutions, financial processes and managed IT services. Our passion is helping customers transform their business in the digital dimension. We are constantly thinking beyond tomorrow while taking responsibility for today. Enfo’s turnover is EUR 141 million euros, and the company employs approximately 900 niched experts.
01
02 Enfo in 2015
FINANCIAL STATEMENT
ENFO
ENFO 2015
ENFO 2015
ENFO | Annual Report 2015
II
40%
BUSINESS OPERATIONS
ENFO 2015
ENFO | Annual Report 2015
During the partnership with Enfo, the IT
1 to 4.
CORPORATE GOVERNANCE
increased from 2.7 to 3.7 on a scale from
FINANCIAL STATEMENT
by 40%, while user satisfaction has
RESPONSIBILITY
costs incurred by Ambea have decreased
1
According to the Net Promoter Score (NPS), 91% of our customers would choose Enfo as their partner again.
ENFON VUOSI 2015
01
03
JANUARY FOREX Bank selects Enfo as one of its IT service providers. The value of the five-year agreement is EUR 5 million, including workstation, network, Service Desk, local support and server services.
MARCH Enfo increases the ESAB digitisation rate by integrating hardware and data systems into a single system, which produces better information for analysis purposes.
02
APRIL Enfo discontinued its remote reading and measurement data management service by selling the business area to Voimatel Oy, a provider of power and data network services.
FEBRUARY Enfo Zender Oy signs an outsourcing agreement with Strålfors Oy on 18 February 2015. According to the agreement, the functions and personnel of Enfo's printing service production are transferred to Strålfors.
04
06
MAY SAP and Enfo expand their Nordic service partnership, dating back to 2006, to also cover the retail of the next generation's SAP business systems.
07
JUNE Nordic construction company NCC starts using Windows 10, Microsoft's newest operating system, assisted by Enfo. data network services.
08
JULY Savon Voima decides to transfer its financial administration application services to Enfo and start using Enfo's standardised financial administration applications as a cloud service.
09
AUGUST Enfo releases a survey, according to which financial administration and IT functions will increasingly be purchased as a service.
10
SEPTEMBER Enfo's reputation as an attractive employer is significantly boosted in the annual survey conducted by Universum, identifying the opinions of young professionals on their dream employers. Enfo finishes in 74th place, while it came in 95th the year before.
11
NOVEMBER Construction group SRV outsources its functions associated with purchase invoice handling and purchase ledger to Enfo. Through the transaction, four SRV employees transfer as established employees to Enfo's service centre in Espoo.
12
DECEMBER Enfo decides to change its business structure by dividing its functions into five business areas. The new structure is entered into use from the beginning of 2016.
BUSINESS OPERATIONS RESPONSIBILITY
91
%
CORPORATE GOVERNANCE
Significant changes are taking place in the IT service market, which can be seen as polarised demand. While demand for traditional IT services is decreasing, new IT services that support digitisation are increasing. As a result, customers are more often looking for solutions and services to support completely new business operations, whereas greater focus was previously placed on improving the efficiency of existing functions. Enfo revised its strategy and reshaped its organisation to better respond to the needs of its customers.
FINANCIAL STATEMENT
CHANGES IN MARKETS
ENFO 2015
ENFO | Annual Report 2015
2
OPERATING PROFIT
7,5 miljoonaa euroa
IN THE DIGITAL DIMENSION
(9,7)
PERSONNEL
883
883
47% 53%
THE BEST IT COMPANY IN FINLAND Enfo was selected as one of the best workplaces in
henkilöä vuoden lopussa
Finland in the survey organized by Great Place to Work Finland. Enfo takes part in
KEY FIGURES
the large-sized businesses category (500+ employ-
IFRS 2015
IFRS 2014
140,6
145,3
Operating profit (MEUR)
7,5
9,7
Profit for the period (MEUR)
5,4
6,4
Financial expenses, net, (MEUR)
0,8
1,6
Turnover (MEUR)
Return on investment %
8,8
11,3
Return on equity %, (ROE)
10,1
12,4
Equity ratio, %
44,4
42,9
Net gearing, %
50,7
55,1
Interest-bearing net liabilities
27,8
28,7
Balance sheet total (MEUR)
124,1
121,9
140,6 milj. euroa
TURNOVER by segments
77% 23%
IT-services and outsourcing
Financial pro- cess services
ees), and came in 4th. The company is the best among Finnish IT companies in this category.
Finland
Sweden
RONGO STRENGTHENED ENFO’S OFFERING At the end of year 2015 Enfo acquired Rongo Oy, which specialises in business intelligence and analytics solutions. The merger strengthened Enfo’s position as a supplier of analytics solution in the Nordic countries.
1
st
BUSINESS OPERATIONS
(145,3)
RESPONSIBILITY
miljoonaa euroa
PERSONNEL at the year end
Through the transaction, 75 experts in information man-
CORPORATE GOVERNANCE
140,6
SIMPLER, SMOOTHER, SMARTER BUSINESS
agement will transfer to Enfo. Rongo will offer its high-quality information management services to the customers under its own name.
FINANCIAL STATEMENT
TURNOVER
ENFO 2015
ENFO | Annual Report 2015
3
CORPORATE GOVERNANCE FINANCIAL STATEMENT
Arto Herranen
CEO
Change in the IT services market gained new momentum during 2015. The demand for traditional services faded, whereas interest in new digitalisation-related services strengthened. There was also change in the direction of demand, where customers increasingly sought solutions to support their business operations. Enfo revised its strategy in order to respond to the future needs of its customers. CEO Arto Herranen provides us with insight into the past and the future.
RESPONSIBILITY
BUSINESS OPERATIONS
ENFO 2015
ENFO | Annual Report 2015
4
We made progress in many areas. The growth and profitability of consultancy business significantly improved in Sweden where the market was also clearly more favourable than in Finland. The November acquisition of a majority shareholding in Rongo, a company specialising in analytical and BI solutions, increased the depth of our offering in a growing area of services. We also concluded new agreements for outsourcing financial processes with different companies, including Loiste and SRV. I also consider our strategy revision and the extensive internal change process it sparked off to be very significant. WHAT WAS THE BASIS FOR INITIATING THE STRATEGY WORK?
Customer orientation has always been the most important cornerstone of our operations. We achieved better scores than before in the latest
THE BASIS OF YOUR STRATEGY IS CRYSTALLIZED INTO THE TERM DIGITAL DIMENSION. WHAT DOES IT MEAN?
Digitalisation and the rapid development of its associated technologies provide our customers with new business opportunities. Our aim is to enable digitalisation by providing integrated and holistic business solutions together with continuous IT services. In addition, we are creating a model for joint innovation and agile development in order to test new ideas and to support our customers’ business objectives. By combining the diverse talents of Enfo, we can provide our customer with more added value. WHAT DOES THE INTERNAL CHANGE PROCESS ENTAIL?
The change will be significant. We established two new units, one for concentrating on the development of new businesses and the other for serving our major customers. In addition, we performed an extensive rotation of duties in the management team.
HOW WILL THE CHANGES BE VISIBLE TO THE CLIENTELE?
The responsibilities for customer accounts were previously decentralised to different units in a way that caused boundaries between units and countries that hampered our customer work. Now the customer can obtain all of our services from a single location. The account manager has better control of the customer’s overall situation and can therefore more actively seek solutions. HOW WILL THE CHANGES AFFECT ENFO EMPLOYEES?
Putting the strategy into practice will be one of our key projects for this coming year. Our goal is to ensure future success, as well as engendering a uniform corporate culture and even closer internal cooperation. I believe that competence sharing, our internal efficiency and the quality of our services will all improve because we now observe best practices in everything we do. These changes provide Enfo employees with new opportunities for self-development. WHAT ARE YOUR THOUGHTS FOR THIS YEAR?
We have strong expectations of growth. Rongo will significantly add to our net sales, but there are also excellent possibilities for organic growth. We shall continue investing resources into new businesses even if it keeps taxing our profitability. Putting the strategy into practice will be our major internal joint effort. However, I am confident that the reforms will succeed, as I am surrounded by a team of competent Enfo employees. I wish to extend my thanks to all Enfo employees for their good work during 2015. I also thank our customers, our shareholders and partners who have all supported our operations. We are moving ahead with confidence.
RESPONSIBILITY
WHAT WERE THE HIGHLIGHTS OF THE YEAR?
customer satisfaction survey, but were also able to pick out areas for development to serve as the basis of our strategy. There was a clear change in the need for IT services. The reasons for this are many, but the change means that conventional IT services will decrease and new digitalisation-based services will grow. Consequently, investing in growing services was our primary focus in the new strategy. Another need for change, brought up by feedback from our customers, concerned the fact that sales and customer service were earlier organised by business sector, and this did not always serve the customers in an optimal manner.
CORPORATE GOVERNANCE
Our net sales decreased by 3% from the previous year to EUR 141 million. When the effect of divested businesses is taken into account, net sales remained at the previous year’s level. Instead, our profit was smaller than expected. Operating profit decreased by 22 per cent to EUR 7.5 million. The change was partly due to intense competition. However, most of the decrease in operating profit is explained by investments in new businesses, such as the IT outsourcing services in Sweden and the outsourcing services for financial processes which produced a total loss of over four million euros. On the other hand, both these functions enjoyed rapid growth and are now producing over 10 per cent of Enfo’s net sales.
FINANCIAL STATEMENT
HOW DOES LAST YEAR LOOK IN FIGURES?
BUSINESS OPERATIONS
A NEW DIRECTION FORWARDS
ENFO 2015
ENFO | Annual Report 2015
5
ENFO | Annual Report 2015
Kuopio
Stockholm
BUSINESS OPERATIONS
Skövde Göteborg
Karlskrona
RESPONSIBILITY
Malmö
CONSULTING SERVICES
FINANCIAL PROCESS SERVICES
CORPORATE GOVERNANCE
IT SERVICES AND OUTSOURCING
Espoo
Västerås
FINANCIAL STATEMENT
ENFO HAS APPROXIMATELY 900 NICHED EXPERTS IN 15 COMPETENCE AREAS.
ENFO 2015
Kajaani
COMPETENCE AREAS
6
ENFO 2015
ENFO | Annual Report 2015
CORPORATE GOVERNANCE
RESPONSIBILITY
BUSINESS OPERATIONS
THINKING BEYOND TOMORROW WHILE TAKING RESPONSIBILITY FOR TODAY
CLOUD
OUTSOURCING
BUSINESS INTELLIGENCE & ANALYTICS
WORKLIFE
PROCESS AUTOMATION & SELF-SERVICE
SERVICE & ASSET MANAGEMENT
INFORMATION LOGISTICS
MOBILITY
APPLICATIONS
PROCESS INNOVATION
SAP BUSINESS SUITE
INTEGRATION
INTERNET OF THINGS
FINANCIAL PROCESSES & APPLICATIONS
FINANCIAL STATEMENT
SECURITY
7
BUSINESS OPERATIONS RESPONSIBILITY
MOBILITY
APPLICATIONS
CORPORATE GOVERNANCE
OUTSOURCING
FINANCIAL STATEMENT
CLOUD
IT SERVICES AND OUTSOURCING
ENFO 2015
ENFO | Annual Report 2015
8
ENFO | Annual Report 2015
Better customer service Enfo developed its organisation and methods of operation in order to better respond to the changing market situation. Account responsibilities were centralised so that customers have a single contact person. The sales process
New agreements Enfo’s main market area for outsourced IT services is in Finland and Sweden. In Finland, outsourcing has been the dominant model of IT procurement for quite some time now, but in Sweden, procurement has been more predominantly based on purchasing consultancy services, whereas the service outsourcing market is only taking its shape. In 2015, the intense market situation was evidenced by price pressures in outsourcing IT services and by challenges in new account sales. In contrast, cooperation with existing customers continued at a good level. Net sales and profitability of operations decreased slightly from 2014 levels. Enfo maintained its position as the market leader in Finland as the main outsourcing partner for large and medium-sized companies with 300–6,000 employees. The most significant customer agreements were concluded with HSY, VVO, the Otava Group and Oriola. In September, the Helsinki Region Environmental Services Authority HSY ordered IT infrastructure services and work from Enfo. Finland´s largest private-sector landlord, VVO Group plc, concluded a fouryear continuation agreement covering, among
Slow growth The IT services market forecasts predict very moderate growth in Finland for 2016, with stronger demand in Sweden. The advancing digitalisation will speak in favour of IT investments, but the unit costs of IT usage will at the same time decrease. As a whole, the market is expected to continue to be challenging, while certain areas, such as solutions dominating public cloud services, are enjoying strong growth. Enfo has an excellent competitive position in both countries, because as a Nordic company with extensive references and the right size, it is an attractive partner for potential customers. The new organisation is also expected to bring growth with more active sales and better management of accounts.
BUSINESS OPERATIONS
other things, customer environment development services, workstation and device management services, as well as user support, server and data network services. The Otava Group expanded cooperation with Enfo by starting to use Enfo’s Private Cloud services. In addition, an agreement was announced in early 2016 whereby Oriola acquired the workstation, network, local support and server services for its service business from Enfo. This transaction is proof of Enfo’s ability to implement outsourcing services for companies operating both in Finland and Sweden.
RESPONSIBILITY
was also developed. In addition to customerrelated work, the change supports the development of supply and competence and creates a uniform method of working with customers. It also ensures the efficiency of production and high service quality.
CORPORATE GOVERNANCE
T
he IT services market is now dominated by the joint effects of several change trends. In many of Enfo’s customer sectors, the need arises from the change in value creation models and processes. Consequently, the clientele is partly changing from IT management to business management. At the same time, the IT environment is becoming increasingly complex. The customers want to utilise different solutions, both those they have procured and those that are produced as public cloud services. Combining these into a functional package requires a more extensive range of expertise. Total solutions can be quickly implemented, mainly by integrating existing solutions, while the demand for tailored solutions is decreasing. For Enfo, the market changes provide an opportunity to offer its customers more comprehensive and demanding packages. In 2015, the wave of changes already clearly impacted the market, which experienced hardly any growth. The customers’ decision-making was also slow in many places, and agreements were concluded for shorter terms than before.
FINANCIAL STATEMENT
MARKET OF MANY CHANGES
ENFO 2015
IT SERVICES AND OUTSOURCING
As of 1 January, 2016, the name of the business unit is Managed Services.
9
ENFO 2015
ENFO | Annual Report 2015
BUSINESS OPERATIONS
CONSULTING SERVICES PROCESS INNOVATION
BUSINESS INTELLIGENCE
SERVICE & ASSET MANAGEMENT WORKLIFE
RESPONSIBILITY
& ANALYTICS
MOBILITY
CORPORATE GOVERNANCE
INTEGRATION
PROCESS AUTOMATION &
INTERNET OF THINGS
FINANCIAL STATEMENT
SELF-SERVICE
10
ENFO | Annual Report 2015
ENFO 2015
CONSULTING SERVICES
Enfo’s consultancy services increased its net sales, and there was also a clear improvement in profitability. The targets were achieved, and the year was successful as a whole. Framsteg, acquired in 2014, strengthened Enfo’s market position as a provider of BI management solutions. Framsteg was integrated into Enfo in line with the plans. In addition to the 50 professionals moving from Framsteg, the organisation was strengthened by recruiting new talent.
Towards digital dimensions The market for consultancy services is still forecasting a growing demand In Sweden. Consequently, there are high expectations for the development of net sales and profits. Enfo wants to provide its customers with solutions and services that take them ever deeper into digital dimensions.
RESPONSIBILITY
Enfo seeks to improve the efficiency of solutions produced for its customers by offering more service agreements as continuation of the projects. The cross-selling of service throughout Enfo will be promoted by offering consultancy services more actively across country and unit boundaries. As of 1 January, 2016, the name of the business unit is Business Solutions.
Enfo’s consultancy services provide customers with strong expertise and specialised solutions for the Swedish market. Its competitiveness is based on concentration on selected areas of competence and on the solid expertise of its personnel.
CORPORATE GOVERNANCE
The targets were achieved
The marketing and sales efforts bore fruit, and agreements were signed with both existing and new customers. Important orders were placed by many companies, including mining and industrial group Sandvik, steel company Outokumpu, hotel chain Nordic Choice Hotels and Södra Skogsägarna, Sweden’s largest forest owners’ association. The development of business towards continuous service agreements also advanced, and new agreements were signed with Volkswagen Finans, Coop and Ambea. The traditional Enfo Evolution Day was organised in December, providing over 400 participants with an extensive information package of the trends in the sector and of the solutions produced by Enfo for its customers.
FINANCIAL STATEMENT
I
n Sweden, the good general situation in the economy increased the volume of the consultancy services market in 2015. Solutions promoting digitalisation particularly attracted much interest, as did total solutions rather than individual software suites. Changes in the customers’ needs were also reflected in the clientele, where the buyers were heads of business operations more often than before. The price level was maintained or even improved slightly, thanks to the healthy demand.
BUSINESS OPERATIONS
SOLUTIONS FOR PROMOTING DIGITALISATION
11
FINANCIAL
FINANCIAL PROCESS SERVICES
ENFO 2015
ENFO | Annual Report 2015
PROCESSES &
BUSINESS OPERATIONS
APPLICATIONS
INFORMATION
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
RESPONSIBILITY
LOGISTICS
12
ENFO | Annual Report 2015
Investments for the future The net sales of financial process services decreased slightly, which was also reflected in operating profit. Profitability was also taxed by the costs related to organisational restructuring and the development of new services. In invoice operations, development investments were made into digitalisation of the service platform and in financial process outsourcing, into concept development and the cloudbased service platform. Demand for the earlier launched ZmartScan financial process mapping continued to intensify, and the mapping process was also developed.
More power through digitalisation The enhancement of Finland’s competitiveness still requires clearly more efficient operations in the public and private sectors alike. Enfo responds to this need by providing its customers with the services it has developed for utilising the possibilities offered by digitalisation. Enfo is also an attractive outsourcing partner due to its suitable size, flexibility and good reputation as an employer. The strengthening demand for outsourcing services provides positive indications for the current year, while the intense competition for customers is expected to continue. As of 1 January, 2016, the name of the business unit is Financial Process Services.
BUSINESS OPERATIONS
Enfo had good success in selling outsourced financial processes during 2015. Active negotiations on outsourcing were conducted with several parties, and new agreements with Savon Voima, energy company Loiste and SRV were announced. Savon Voima outsourced its financial management application services to Enfo with an agreement that was signed in August and entered into force at the beginning of 2016. Loiste, one of the biggest sellers of electricity in Finland, outsourced its financial and invoicing functions to Enfo with a five-year agreement in November. With the agreement, ten Loiste employees moved to the service centre established in Kajaani. SRV, a listed construction company, transferred its functions related to the processing of purchase invoices and accounts payable to Enfo in November. With the transaction, four SRV employees transferred as established employees to Enfo’s service centre in Espoo. The cooperation for handling the financial management of Pohjolan Voima, initiated in 2014, progressed as planned.
introduced, allowing many previously-manual operations to be automated. That way, employees can be allocated to more demanding duties and their competencies can be actively developed.
RESPONSIBILITY
The outsourcing of financial processes started with major companies and is still a rather new idea for the medium-sized companies in Enfo’s target group. Consequently, the market is still at its initial phase, but interest in outsourced financial processes is increasing all the time. Outsourcing provides many companies with a more cost-efficient and high-quality way to handle their financial processes. The volumes of e-invoicing kept increasing during 2015, and now approximately half of all companies and one in four consumers use e-invoices. In spite of the growing volumes, the intense price competition in invoice operations continued.
New significant agreements
Reform of service processes The benefits of outsourcing provided by Enfo for its customers are based on reforming and enhancing the service process by utilising digitalisation, automation and other process changes. In the most extensive solution, Enfo assumes responsibility for the process, the underlying IT and even the personnel. Once taken over, the service process is reformed and more effective standardized data systems are
Enfo offers comprehensive services for improving the efficiency of its customers’ financial and information logistics processes, their outsourcing and electronic invoicing in Finland.
FINANCIAL STATEMENT
Outsourced financial processes constitute a growing market
CORPORATE GOVERNANCE
INVESTMENTS FOR THE FUTURE
ENFO 2015
FINANCIAL PROCESS SERVICES
13
RESPONSIBILITY
INTEGRATIONS FOR FASTER TIME-TO-MARKET AND BETTER SERVICE TO HOTEL GUESTS
BUSINESS OPERATIONS
CASE
ENFO 2015
ENFO | Annual Report 2015
NORDIC CHOICE HOTELS AS is one of the leading hotel chains of the Nordic countries with three distinctive hotel chains and a number of independent hotels represented in over a hundred destinations in the Nordic and Baltic countries. The vision is to “with energy, courage and enthusiasm, create a better world.”
CORPORATE GOVERNANCE
NORDIC CHOICE HOTELS
www.nordicchoicehotels.com
FINANCIAL STATEMENT
TURNOVER: Over NOK 6.2 billion annually PERSONNEL: 13,000
14
“In order to attain our goals, we needed a new integration platform and we needed to set a new standard for integrations. It should be possible to integrate all future solutions in the platform and its standard,” says Folkesson. In the evaluation Nordic Choice Hotels compared both suppliers and products. Enfo’s overall offer with implementation, development, administration and responsibility for the entire integration solution was the most attractive. The integration platform is based on MuleSoft’s integration platform Mule ESB and Anypoint API manager, combined with an integration strategy and processes for development, operation and administration. “The implementation started in April 2015 and was completed at the start of 2016. Now we will start benefiting from the solution,” says John Folkesson.
He is very satisfied with how the implementation has functioned: “Enfo has taken great responsibility and I have encountered many people with vast integration expertise who have also influenced us to improve our internal processes.”
App for better service In order to create a better world with energy, courage and enthusiasm, Nordic Choice wants to use new technology effectively and innovatively. “We are developing, for example, an app with very high ambitions to improve the service and customer experience and which will assist hotels to deliver to customers in a better manner,” says John Folkesson and summarises: “Now everything consists of integrated services and the development will only continue. The competition is tough and success depends on how quickly we can deliver to end customers and how quickly we can test new ideas with minor risk – in order to create
simpler, smoother and smarter services for our customers.” “Another issue is how we should handle APIs and open APIs, that is, identifying which data may be interesting for others to develop further. In this context we must ask ourselves what we can make available, how, why and for who?”
Dignity and expertise He only sees opportunities and has high expectations for both MuleSoft and Enfo: “Enfo is our primary partner and we purchase both operation and development, such as, for example, the group project with the app. We also have some remaining ad hoc integrations to deal with in order to connect on the bus.” “For us, having a partner who has both dignity and vast knowledge and expertise within the integration area feels secure. Of course, the fact that they have a large organisation behind them is also an important element of security,” concludes John Folkesson.
BUSINESS OPERATIONS
RESPONSIBILITY
Future-proof solution
John Folkesson Integration Architect
CORPORATE GOVERNANCE
“We experienced high costs and long delivery chains so we realised that we must take a stronger hold,” says John Folkesson, Integration Architect at Nordic Choice Hotels. The preference was a standardised and service-based platform in order to strengthen relations with customers and collaboration partners, lower costs of development and operation, reduce time-to-market and make it easier to replace or upgrade solutions.
”For us, having a partner who has both dignity and vast knowledge and expertise within the integration area feels secure.”
FINANCIAL STATEMENT
A fragmented integration landscape with point-to-point integrations and many different technical solutions and formats resulted in that the development within Nordic Choice Hotels could not maintain the desired pace. The integration was seen as a brake pad for a hotel group which wants to deliver first-class and modern service to its guests.
ENFO 2015
ENFO | Annual Report 2015
15
RESPONSIBILITY
OUTSOURCING RELEASES ENERGY FOR CORE PROCESSES
BUSINESS OPERATIONS
CASE
ENFO 2015
ENFO | Annual Report 2015
LOISTE is a Finnish energy company whose core operations include the production, distribution and sales of energy (electricity and district heating). Loiste is renowned for its good service, and it has almost 200,000 satisfied customers around Finland. Loiste has offices in Helsinki and Kajaani.
CORPORATE GOVERNANCE
LOISTE
NET SALES: EUR 149 MILLION PERSONNEL: 62
FINANCIAL STATEMENT
www.loiste.fi
16
Concentration on core processes increases productivity
Financial administration services become increasingly digital
Loiste’s strategy is based on the aim to concentrate on the company’s core activities, i.e. the production, distribution and sales of energy. The company is prepared give up certain support functions when it finds a suitable partner. In 2015, the service processes of Loiste’s financial and invoicing functions were transferred to Enfo with their associated applications. At the same time, Enfo establishes a new service branch in Kajaani where 10 Loiste employees moved as existing employees. “I am glad that our employees can now have more varied and challenging duties at Enfo where these services related to financial administration constitute part of the core business. We are keeping the CFO and the controller function, which can now fully concentrate on monitoring the finances and related decisions. In other words, we set our sights forward, not back,” Ryymin says.
The company estimated that outsourcing will bring savings of EUR 1.5 million in five years, a significant enhancement of operations for Loiste. The savings are achieved because Loiste and Enfo’s other financial services customers share a common service centre and common advanced data systems which means that the service can be produced for all customers more efficiently and at a lower cost. Enfo is also assuming the responsibility for more efficient production of services for Loiste. With the service, Enfo will enhance the customer’s invoicing, flow of information and debt collection and will produce better reports in support of the management. The aim is to reform Loiste’s financial management into an efficient service utilising digital possibilities e.g. for e-invoicing, automatic connection services and analytics in support of management. In the future, productivity of the service centre will also be enhanced with means of software robotics.
BUSINESS OPERATIONS
RESPONSIBILITY
Markku Ryym in CEO
CORPORATE GOVERNANCE
From Loiste’s perspective, two issues have become the biggest problems in the energy sector. The first of them is global climate change: for example in Kainuu where Loiste is based, the temperature has now been 12% higher than normal for three years in a row. In turn, the changes in temperature affect the demand for energy. Another significant change has taken place in the production of energy. “The price has been really low at the Electricity Exchange. It does not cover the production costs, which is why a few condensing power plants have been shut down. This has resulted in a lot of debate regarding security of supply in Finland, because we have to rely on imported electricity when the temperature drops well below the freezing point,” says CEO Markku Ryymin of Loiste. “When the price of electricity decreases, price competition naturally intensifies. All energy companies must exercise strict cost control in the distribution of electricity. Together, these factors resulted in our starting to actively seek a change in our methods of operation in order to improve our competitiveness and cost efficiency.”
”I am glad that our employees can now have more varied and challenging duties at Enfo where these services related to financial administration constitute part of the core business.”
FINANCIAL STATEMENT
As the entire sector is undergoing a profound change, with pressures for change coming from both within and outside the sector, the company has to re-think its strategy. Finnish energy company Loiste Oy has decided to seek cost efficiency and improved competitiveness by a bold reform of its methods of operation. One of the biggest changes was implemented when Loiste outsourced its financial and invoicing functions and transferred the associated applications and employees to Enfo.
ENFO 2015
ENFO | Annual Report 2015
17
RESPONSIBILITY
GENETIC INFORMATION FOR ALL WITH THE HELP OF BIG DATA
BUSINESS OPERATIONS
CASE
ENFO 2015
ENFO | Annual Report 2015
BLUEPRINT GENETICS is a Finnish genetic diagnostics company established in 2012. The company aims to reduce the costs of healthcare and bring high quality genetic testing into mainstream healthcare. The company’s DNA sequencing technology helps perform high-quality genetic analyses in an efficient and inexpensive manner.
CORPORATE GOVERNANCE
BLUEPRINT GENETICS
NET SALES IN 2015: 1,8 MILLION PERSONNEL: 33 FINANCIAL STATEMENT
www.blueprintgenetics.com
18
to cover 17 new categories, and the number of different tests increases from 20 to 300 so that the product range will cover hereditary diseases in all areas of medical science. In order to be able to do this in a cost efficient manner, a scalable system utilising automation is required.
All relevant data easily available Blueprint Genetics uses IBM Watson Explorer which allows efficient processing and analysis of genetic data. This solution was chosen because of the good experience other fields of medicine have had of Watson Explorer and because its ability to process a high volume of medical literature. The project was implemented by Enfo Rongo. In addition to Watson Explorer, Blueprint Genetics uses Enfo Rongo’s 360⁰ product which provides flexible and quick access to relevant data. Genetic data is extremely complex and fragmented which makes processing it a challenge. The 360⁰ view provides a possibility
to develop the system to the exact needs of Blueprint Genetics.
More time for analysing the results Thanks to IBM Watson Explorer, manual work has been reduced by 80%, which shortens the time for completing the tests and improves cost efficiency and systematisation. When a part of the data analysis steps are automated, geneticists will have more time to analyse the results and produce their reports. The high quality reports rapidly produced by the system and the error-free tests allow the geneticists to produce comprehensive reports leading to further actions. It is an enormous quantum leap to increase the range of tests over ten-fold to cover hereditary diseases in all fields of medicine. The system, implemented in cooperation with IBM and Enfo Rongo, has a pivotal role in the product management of Blueprint Genetics when the company expands its operations.
BUSINESS OPERATIONS
RESPONSIBILITY
Tommi Lehtonen CEO
CORPORATE GOVERNANCE
Blueprint Genetics aims to decrease the healthcare costs by bringing clearly less expensive genetic tests to the market without compromising on their quality. The company’s DNA sequencing technology helps perform efficient genetic analyses of high quality. The company also produces diagnoses that previously were impossible. The future looks promising. “Genetic testing will become much more popular. There will be an explosion in testing within five years when healthy people are also included in its scope and can see their own genotypes,” says CEO Tommi Lehtonen. More than 120 hospitals around the world are using the test method of Blueprint Genetic for diagnostics of cardiovascular diseases. In addition to diagnoses, the results can be analysed further. “We take testing to the end, i.e. provide patient-specific genetic knowledge in addition to other information and data in a clinical statements produced by geneticists and clinicians,” Lehtonen explains. Until now, the company has only operated in one category, cardiovascular disorders. During 2016, the product portfolio will expand
”There will be an explosion in testing within five years when healthy people are also included in its scope and can see their own genotypes.”
FINANCIAL STATEMENT
Blueprint Genetics is a genetic diagnostics company that intends to revolutionize genetic testing by making it available to an increasing share of the population as part of mainstream healthcare. In order to facilitate this, genetic testing must be of the highest quality and low in cost, and the analysis of results must be available quickly. The company uses Big Data technology for processing genetic data in diverse forms. It allows the genetic data to be efficiently processed and analysed and also makes possible the partial automation of the process.
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Comprehensive management systems Enfo operates management systems covering the environment, quality, information security and IT service production. The management
More customer-oriented organisation Enfo revised its business organisation in early 2016 in order to strengthen the prerequisites for implementing the new strategy and in order to make its operations more customer-oriented. Following the change, the Strategic Accounts business unit was established. Its purpose is to provide customers with a service covering the entire range of Enfo more fluently than before. The other units are Business Solutions which produces consultancy services, Managed Services which is responsible for IT outsourcing services, Financial Process Services which produces outsourcing services for financial administration, and Emerging Businesses which is responsible for the Group’s new business functions. The business structure also includes the new Transformation Office function, which is responsible for developing the Group’s operations and implementing the growth strategy.
BUSINESS OPERATIONS
systems are based on international standards, such as the ISO 9001 quality standard, the ISO 14001 environmental standard, the ISO 27001 information security standard and the ISO 20000 IT service production standard. Enfo’s quality management and information security management systems are certified, and certification will be applied for the environmental management system during this year. The certified management systems guide Enfo and its employees in their activities and choices towards the right direction, but they also provide customers with a certainty that operations are of a high standard. Therefore, the demands for certification are increasingly originating from customers. Enfo obtained certification for its quality management system in 2009. Early in 2005, the information security management system and Data Center services in Kuopio and Karlskrona were granted an ISO 27001 information security certificate. The certificate shows that Enfo takes information security risks seriously and requires the company to continuously develop its information security to be ready for evolving threats. In 2015, the environmental policy was also updated and an environmental organisation was established. It is composed of the environmental manager and the persons appointed responsible for environmental matters in each office. Enfo has always had ample capabilities for observing the environmental standard, but the work for unifying methods of
Customer satisfaction is at the core of Enfo’s operations. That is why Enfo monitors customer satisfaction in annual surveys, both separately for each business and at Group level. More than 200 customers in Finland and Sweden responded to the survey carried out in November 2015. The results were significantly better than the year before. Enfo was particularly commended for high levels of competence, reliability and customer-oriented operations. The areas for development brought up in the survey included internal cooperation at Enfo. Work is already progressing for developing this aspect with the new strategy and organisation.
RESPONSIBILITY
The customers and their needs facilitate the long-term maintenance of Enfo’s goodwill and profitable business. Therefore Enfo is constantly developing its offering in order to better meet the customers’ needs both now and in the future. The progress of digitalisation creates great opportunities for doing so, while also requiring diverse competencies and an open-minded attitude. Enfo aims to provide solutions and services to make its customers’ businesses simpler, smarter and more fluent with the help of digitalisation. The digital revolution is rapidly changing business and earning models. The chance is continuous, which means that in order to succeed, companies have to be able to foresee the future and change their methods of operation. On the other hand, digitalisation offers considerable advantages: it allows many commodities to be produced and distributed more economically, quickly, safely and in a more environmentally friendly manner than when using conventional 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.
Customer satisfaction at a high level
CORPORATE GOVERNANCE
CUSTOMER-ORIENTED SOLUTIONS
operation in all offices is now also in progress. The goal is to apply for Group-level environmental certification during 2016.
FINANCIAL STATEMENT
RESPONSIBILITY - CUSTOMERS
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CUSTOMER SATISFACTION
ENFO 2015
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RESPONSIBILITY
CORPORATE GOVERNANCE FINANCIAL STATEMENT
OPERATIONS.
BUSINESS OPERATIONS
OF ENFO’S
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ENFO | Annual Report 2015
Development on the agenda Expanding the range of services and changing the methods of operation will also enhance
Increased visibility The number of Enfo’s employees had some organic growth, in addition to which 75 experts moved to Enfo from the BI and analytical solutions company Rongo acquired in the autumn. Enfo's continuously increasing visibility was evidenced by the interest shown in the company by potential employees. In Sweden, competition for skilled professionals in the industry is more intense than in Finland, but it was possible to recruit new employees without any difficulties.
Well-being at work is of high standard Enfo encourages dialogue with their employees and is an encouraging employer. The wellbeing at work surveys and employee turnover indicate that people at Enfo enjoy their work and appreciate their colleagues. Team spirit is high, and the aim is to recognize and respect people as individuals. The challenge we sometimes face is that of striking the right work balance at times when the workload is exceptionally high. Enfo’s managers and employees participated in a Nordic programme for sustainable worklife during 2015. The programme consisted of workshops concerning well-being at work and in personal life and it was called lifestyle@enfo.
BUSINESS OPERATIONS
Many surveys also found that Enfo's image as an employer had improved. In an international survey carried out by Universum, Enfo climbed significantly and was ranked number 70 in Finland and number 74 in Sweden on the list of ideal employers for IT professionals. Compared to 2014 Finland moved up 10 places and Sweden 21. At the Nordic level, Enfo was ranked number 25 by IT students. Enfo also participated in the Great Place to Work survey both in Finland and in Sweden. In Finland Enfo came in 4th position and was the best among Finnish IT companies in the large-sized businesses category. In Sweden the survey results will be published on March 16th.
RESPONSIBILITY
Enfo has grown through many corporate acquisitions in Finland and Sweden. At the same time, its service range and customer base have expanded. Both countries have served their customers largely using their own resources and offerings. An extensive project was carried out in 2015 to enable the customer to reach the entire scope of Enfo’s expertise via a single point of contact. The formation of Group-level teams and operations improve efficiency and ensure that the strictest quality requirements are met. Closer cooperation also supports Enfo’s ability to quickly respond to a changing operating environment and improve its customer orientation.
competence sharing and strengthen Enfo’s company culture. 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 and to plan their career paths. Various training channels and methods are being actively used. In 2015, the Enfo High Potential Ambassadors programme was introduced as a new form of training, and 16 participants were selected for it. The training started in the autumn and will last for just under one year. It includes a broad array of topics, from analysing the economy and international marketing, to presentation skills and understanding the customer.
CORPORATE GOVERNANCE
E
nfo is a Nordic IT service company that employs about 900 professionals. Enfo has the vision of making its customers’ business processes simpler, smoother and smarter in the Digital Dimension. To fulfil this vision, Enfo requires strong and large-scale expertise, continuous service development and passionate employees. At the same time, it allows Enfo employees to develop their own skills working with the best specialists and experts in the business.
FINANCIAL STATEMENT
ENCOURAGING WORK ENVIRONMENT
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RESPONSIBILITY – PERSONNEL
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FINANCIAL STATEMENT
ENFO ENCOURAGES DIALOGUE WITH THEIR EMPLOYEES AND IS AN ENCOURAGING EMPLOYER.
CORPORATE GOVERNANCE
RESPONSIBILITY
BUSINESS OPERATIONS
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Centralised procurement Our extensive and expert partnership network significantly strengthens Enfo’s ability to develop and produce services. Enfo’s network includes technology suppliers, providers of services and products, as well as companies letting out business premises. Because Enfo aims to be a reliable and fair partner, it also carefully selects its own cooperation partners and suppliers. In 2015, development work was carried out for supplier management and operating models with the aim of ensuring the responsible and equal treatment of all operators and reliable deliveries to Enfo. The updated guidelines and criteria will be introduced during 2016, and procurement will be controlled at Group level.
Environmental values are also part of Enfo’s day-to-day business, from responsible recycling to re-use of equipment. Demonstrating preference for recycled materials and efficient waste treatment reduce the environmental loads. In outsourcing services, Enfo assumes responsibility for the entire lifespan of its customers’ equipment. Through the service, all devices and accessories, such as ink cartridges, are recycled or reused in compliance with requirements and in cooperation with reliable operators.
Energy consumption is the most important factor in terms of environmental impact. In addition to developing energy efficiency, Enfo also prefers to use renewable energy sources. Offices and data centres are the biggest consumers of energy. In addition to functionality, energy efficiency is always taken into account when selecting office premises. The premises in Alberga Business Park in Espoo, for example, have Breeam environmental classification.
Energy-efficient data centres The energy efficiency of data centres is significant because their service lives are counted in tens of years. The measures for reducing their energy consumption include minimising the share of cooled premises, using efficient cooling solutions and utilising waste heat. The average PUE value (Power Usage Effectiveness) which measures the energy efficiency of data centres in Kuopio and Karlskrona was 1.29 in 2015 (1.25 in 2013).
Commuting on a bicycle Enfo strives to minimise the environmental impacts of travelling, for example by preferring teleconferences, travelling using methods with the least environmental impact, and telecommuting. Strict emission limits are imposed on the selection of company cars, and Enfo employees are encouraged to commute using public transport, bicycles, or on foot. In 2015, Enfo held an internal campaign and competition that resulted in an increased number of employees commuting by bicycle.
BUSINESS OPERATIONS
Efficient recycling
As a responsible corporate citizen, Enfo seeks to minimise the environmental loads exerted by its operations. During 2015, considerable investments were made regarding environmental aspects when the environmental policy and environmental management system were developed with the aim of applying for the ISO14001 environmental certificate in 2016.
RESPONSIBILITY
Environmental values held high
Donation to charity The unstable political situation in Middle East and the war in Syria brought an unprecedented flow of refugees to Europe in 2015. Enfo supported the work for refugees by donating approximately EUR 30,000 to the Finnish Red Cross and UNCHR.
FINANCIAL STATEMENT
E
nfo is a responsible corporate citizen, the operations of which touch not only its customers and personnel, but also partners, shareholders, financiers and the entire of 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. During 2015, various investments were made in corporate responsibility, including development work for procurement and environmental policies.
CORPORATE GOVERNANCE
RESPONSIBLE COOPERATION
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FINANCIAL STATEMENT
ENFO STRIVES TO MINIMISE THE ENVIRONMENTAL IMPACTS OF TRAVELLING.
CORPORATE GOVERNANCE
RESPONSIBILITY
BUSINESS OPERATIONS
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RESPONSIBILITY
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.
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
BUSINESS OPERATIONS
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Notice of Annual General Meeting The Annual General Meeting is the most senior decision-making body of Enfo Oyj and a forum through which shareholders can take part in
Managing Director and other management 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 2015, Enfo Group paid a total of EUR 279.124 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 2014 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
The Boards of Directors 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. In 2015 Enfo Oyj the Board of Directors consisted of five members until November 25th, after which the Board of Directors continued with four members. In 2015, the Board of Directors convened 10 times, and the overall attendance rate of the Board members was 100%.
BUSINESS OPERATIONS
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. 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.
be appointed as, a member or the chairman of the Board of Directors.
RESPONSIBILITY
Annual General Meeting
steering and supervising the company. The company must hold one Annual General Meeting per financial year. Extraordinary General Meetings can be held if necessary. The shareholders can exercise their right to speak and vote at the General Meetings.
CORPORATE GOVERNANCE
The application guidelines for good corporate governance were revised and approved by the Board of Directors of Enfo Oyj on 26 September 2014.
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
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• • • • •
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. 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. 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
Committees 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. 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
Incentive scheme 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 2016, the annual bonus scheme involves about 40 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
BUSINESS OPERATIONS
Remuneration of the Board of Directors 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 bonus 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 expenses policy.
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
RESPONSIBILITY
• • • •
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 Meeting. Otherwise, the Nomination Committee is convened by its chairman as required. At Enfo Oyj’s Annual General Meeting on 25 March 2015, Tapio Hakakari, Pekka Kantanen Esko Torsti and Ossi Saksman (Chairman) were elected to the Nomination Committee. In 2015, the Nomination Committee convened once, and the overall attendance rate was 100%.
CORPORATE GOVERNANCE
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
The Boards of Directors’ agenda Every six months, the Board of Directors produces a written agenda that covers a schedule for meetings and a plan of issues to be addressed in the meetings, including the following:
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Internal supervision and audit 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.
Insider administration Insider regulations do not apply to the company because the company’s shares are not traded on the Helsinki Stock Exchange.
Communications 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.
BUSINESS OPERATIONS
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 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.
RESPONSIBILITY
Risk management
accounting firm, as the company’s auditor until further notice, and Pekka Loikkanen, Authorised Public Accountant, as the main auditor. In the period of 1 January–31 December 2015, Enfo Group paid the auditor a total of EUR 207.487,39 in auditing fees and EUR 101.958,31 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.
CORPORATE GOVERNANCE
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 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.
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.
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
FINANCIAL STATEMENT
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 segment and unit. The scheme’s target group consists of 49 key persons.
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BOARD OF DIRECTORS TIMO KÄRKKÄINEN
LAURI KERMAN
SOILI MÄKINEN
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
RESPONSIBILITY
BUSINESS OPERATIONS
TAPIO HAKAKARI
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Member of the Board M.Sc. (Economics) (b. 1963)
Member of the Board M.Sc. (Economics) (b. 1967) • 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 March 19, 2014. Holds no shares in Enfo Oyj. Dependent of a significant shareholder and of the company.
SOILI MÄKINEN Member of the Board M.Sc. (Economics) (b. 1960) • CIO at Cargotec Oyj. Main work experience: CIO at MacGREGOR Oy (20042006). 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 March 21, 2013. Holds no shares in Enfo Oyj. Independent of the company and significant shareholders.
CORPORATE GOVERNANCE
LAURI KERMAN
• Senior Portfolio Manager at Ilmarinen Mutual Pension Insurance Company. Member of the Board of Directors of 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 March 24, 2011. Holds no shares in Enfo Oyj. Independent of the company and significant shareholders.
FINANCIAL STATEMENT
• Managing Director of Webstor Oy. Deputy Chairman of the Board of Directors of Cargotec Oyj, Chairman of the Board of Directors of Consti yhtiöt Oyj and Opteam Oy. Member of the Board of Directors of Handelsbanken AB Suomi. 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 June 26, 2007. Holds 1,636 shares in Enfo Oyj. Independent of the company and significant shareholders.
Board of Directors since January 1, 2016. In 2015, Mammu Kaario was also part of the Board of Directors. She resigned her membership on 25 November when she was appointed CEO of Partnera Oy.
BUSINESS OPERATIONS
TIMO KÄRKKÄINEN
Chairman of the Board Master of Law (b. 1953)
RESPONSIBILITY
TAPIO HAKAKARI
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ENFO GROUP’S MANAGEMENT CHRISTIAN HOMÉN
TERO KOSUNEN
TERO SAKSMAN
SAMULI SAVO
MALIN UNG
LARS AABOL
ADAM RITZÉN
MATS ELIASSON
FINANCIAL STATEMENT
CORPORATE GOVERNANCE
RESPONSIBILITY
BUSINESS OPERATIONS
ARTO HERRANEN
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CHRISTIAN HOMÉN
TERO KOSUNEN
Chairman of the Executive Management Team, CEO M.Sc. (Technology) (b. 1963)
CFO M.Sc. (Economics) (b. 1973)
EVP, Financial Process Services M.Sc. (Technology) (b. 1978)
MALIN UNG
• Tero Saksman has previously served as a controller at Kuopion Puhelin Oyj and Enfo Oyj. In Enfo Oyj’s Information Logistics Services, he has served as a sales director, sales manager and service manager. • Member of the Board at Kasve Oy. • Member of the Executive Management Team of Enfo Oyj since January 1, 2011. Holds 1316 shares in Enfo Oyj.
EVP, Emerging Businesses and Transformation Office M.Sc. (Engineering) (b. 1975) • Samuli Savo has previously worked at Gartner as Digital Lead EMEA HighTech and Telecoms as well as Consulting Director. Savo has also worked in several managerial positions at Fujitsu, including Head of Offerings, Head of SAP Practice and Director of Services. • Member of the Executive Management Team of Enfo Oyj since August 1, 2015. Holds 407 shares in Enfo Oyj.
LARS AABOL EVP, Strategic Account and country manager of Sweden (b. 1965) • Lars Aabol has previously served as the Managing Director of Hogia Infra AB, and as a Sales Manager for Framfab. • Member of the Executive Management Team of Enfo Oyj since July 1, 2012. Holds 946 shares in Enfo Oyj.
ADAM RITZÉN SVP, Marketing, Enfo Group Engineer (b. 1964) • Adam Ritzén has previously served as Marketing Manager at Enfo Sweden, Sales and Marketing Manager at Enfo Zystems. He has served as Sales and Marketing Director at Aircall AB, and marketing director at STC AB, and as CEO at GBL AB. • Member of the Executive Management Team of Enfo Oyj since July 1, 2012. Holds 404 shares in Enfo Oyj.
• Malin Ung has previously acted as the HR Manager of Enfo Sweden, HR Manager at Framsteg AB, Senior HR Consultant at HR Skills Stockholm AB and as a HR Manager at Wise Group. • Member of the Executive Management Team of Enfo Oyj since 1st January 2016. Holds 202 shares in Enfo Oyj.
RESPONSIBILITY
EVP, Business Solutions (b. 1959)
Senior Vice President, HR (b. 1967)
MATS ELIASSON EVP, Business Solutions (b. 1959) • Mats Eliasson has previously acted as SVP, Service and Asset Management of Enfo Sweden, CEO of Framsteg AB, Managing Director of MRO Software AB and as CEO of EBM Business Development AB. • Member of the Executive Management Team of Enfo Oyj since 1st January 2016. Holds 404 shares in Enfo Oyj.
CORPORATE GOVERNANCE
SAMULI SAVO TERO SAKSMAN
• 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 October 1, 2011. Holds 808 shares in Enfo Oyj.
FINANCIAL STATEMENT
• Arto Herranen has previously served as the Managing Director of Kupion Puhelin Oyj and 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. • Chairman of the Executive Management Team of Enfo Oyj since 2007. Holds 2,712 shares in Enfo Oyj.
• 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. • Member of the Executive Management Team of Enfo Oyj since 1st February, 2015. Holds 808 shares in Enfo Oyj.
Executive management team since January 1, 2016. In 2015, Maria Lundell was also part of the Executive management team until 25.11..
BUSINESS OPERATIONS
ARTO HERRANEN
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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 46 46 54 56 57 57 58 58 58 58 59 59 60 60 62 62 63 64 64 64 64 65 66 67 67 68 69
NOTES 1. General information about the company 2. Accounting principles for the consolidated financial statements 3. Financial risk management 4. Segment reporting 5. Other operating income 6. Materials and services 7. Salaries and other employment benefits 8. Depreciation and amortisation 9. Other operating expenses 10. Financial income and expenses 11. Income tax 12. Earnings per share 13. Tangible assets 14. Intangible assets 15. Available-for-sale investments 16. Non-current receivables 17. Deferred tax assets and liabilities 18. Inventories 19. Sales receivables and other receivables 20. Cash and cash equivalents 21. Equity 22. Share-based payments 23. Financial liabilities 24. Accounts payable and other payables 25. Information on related parties 26. Information about corporate acquisitions 27. Liabilities
BUSINESS OPERATIONS RESPONSIBILITY
BOARD OF DIRECTORS’ REPORT
CORPORATE GOVERNANCE
35 39 41 41 41 42 43 44
FINANCIAL STATEMENT
CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
ENFO 2015
ENFO | Annual Report 2015
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 over 50 years of experience developing proven IT solutions and concepts, along with the deep expertise of 900 top IT professionals.
Market development Development in Enfo’s main market areas in Finland and Sweden continued in different directions. In Finland, economic growth was close to zero, whereas general growth accelerated in Sweden. This development was also reflected in demand for IT services. In Finland, the depression continued, the decision-making processes of customers often took time and price competition was fierce, while investment activity was higher in Sweden. Significant changes are taking place in the IT service market. In addition, the business operations of our customers require more varied services. As a result, customers are looking for solutions and ser-
Turnover and result Turnover of the Enfo Group decreased by 3.2% to EUR 140.6 million (145.3), but when the divested businesses are taken into account, the turnover
Development by reporting segment Enfo’s business operations are divided into two separately reported lines of business – IT Services, and Financial Process Services. The turnover of IT Services grew by 1.1% to EUR 110.5 million (109.3), while operating profit
BUSINESS OPERATIONS
remained at the previous year’s level. The turnover was affected by the decreasing demand for IT outsourcing and the intense competition in invoice operator services in Finland. On the other hand, the demand for consulting services in Sweden had a positive effect on turnover. Operating profit stood at EUR 7.5 million, showing a decline of 22.3%. The ratio between the operating profit and turnover was 5.4%. Most of the decrease in operating profit is explained by investments in new businesses, such as IT outsourcing services in Sweden and outsourcing services for financial processes which produced a total loss of more than EUR 4 million. On the other hand, both of these businesses enjoyed rapid growth and are now producing over 10% of Enfo’s turnover. Profit before taxes was EUR 6.8 million (8.1), representing 4.8% (5.5%) of turnover. The Group’s net financing costs were EUR 0.8 million (1.6). Profit for the period was EUR 5.4 million (6.4) and 3.8% (4.4%) of turnover. Earnings per share were EUR 7.39 (8.50).
RESPONSIBILITY
Enfo Oyj (Business ID: 2081212-9) is the parent company of the affiliated Enfo Group. Enfo Oyj’s parent company is Osuuskunta KPY.
vices to support completely new business operations, whereas greater focus was previously placed on improving the efficiency of existing functions using IT. This is why decisions on IT procurement are increasingly being made by persons responsible for business operations. At the same time, the IT environment is becoming more complex. Combining different parts, such as the company’s own system, third-part systems and public cloud services, into an efficient package requires increasingly diverse competencies. The weak economic situation in Finland and the forecasts of continuing uncertainty are evidenced by the generally modest development of IT and invoicing operator services and by the intensifying price competition. In contrast, there is significant market potential in outsourced financial processes. In Sweden, the economic indicators are clearly better and the outlook is positive. This increased the demand for consulting services. The focus of demand for services also varied by country: Supporting functions were outsourced more in Finland, while more consulting services were procured in Sweden.
CORPORATE GOVERNANCE
Financial period 1 January–31 December 2015
FINANCIAL STATEMENT
REPORT OF ENFO OYJ’S BOARD OF DIRECTORS
ENFO 2015
ENFO | Annual Report 2015
35
Personnel Enfo employed an average of 818 people (775) during the year, and a total of 883 people (802) at year-end. Of these, Financial Process Services employed 97 people, IT Services 744 people and Group services 42 people. Management made up 5% of Enfo’s entire staff. Of the personnel, 356 employees were working in Finland (367) and 462 in Sweden (408). In 2015, the Group’s personnel expenses amounted to EUR 65.1 million (67.2), accounting for 52% of all expenses in the income statement (49). During the financial period, Enfo paid its staff a total of EUR 54.1 million (52.1) in wages and fees. A total of EUR 0.8 million of result-based bonuses, including social security expenses, were paid during 2015. In proportion to the average number of personnel, the consolidated turnover was EUR 172,000 (188,000), operating profit was EUR 9,200 (13,000), and salary and pension expenses stood at EUR 79,600 (81,000). In 2015, Enfo Group recruited 115 permanent employees (95), whereas 87 (74) permanent
BUSINESS OPERATIONS
Enfo’s net investments during the financial period totalled EUR 14.3 million (8,9). The investments made during the year mainly concerned the acquisition of Rongo Oy’s shares and the data centre equipment acquired through financial leasing agreements. In addition, investments were made to enhance the supply of financial process services. The company’s equity ratio was 44.4% (42.9) at the end of the period. Interest-bearing net liabilities at the end of December amounted to EUR 27.8 million (28.7) and net gearing was 50.7% (55.1).
RESPONSIBILITY
Investments and financing
employment relationships ended. At the end of 2015, the average duration of permanent employments with the Group was 7.6 years (7.7). The share of the Group’s personnel with more than 20 years of service was 6% (6), those employed for 0–4 years comprised 43% (42), and those employed for 5–10 years made up 32% (30). A clear majority, i.e. 74% (79), of the Group’s personnel were male. The average age of personnel was 42 years (42). Apart from top management and the personnel of Enfo Rongo Oy, Enfo Group’s employees in Finland are members of the personnel fund that was established in 2006. The incentive bonus scheme for the entire personnel consists of profitsharing 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 result-based 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. In Sweden, there is a foundation (”vinstandelstiftelse”) that is equivalent to the Finnish personnel fund, established in 2014. Its main rules and profit-sharing bonus grounds are the same as in Finland. Enfo Group uses an annual bonus scheme directed at the Group management and key persons. 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-
CORPORATE GOVERNANCE
remained good. The operating profit was reduced by investments in the development of financial process services and the price competition in invoice operator services.
FINANCIAL STATEMENT
fell by 13.7% to EUR 6.4 million (5.6). As the IT service market faced clear changes, the development of the turnover was affected by a number of factors. In Finland, demand for traditional IT services decreased. Instead, demand for consulting services strengthened in Sweden, and business operations increased heavily. Framsteg, a company acquired in autumn 2014, also strengthened Enfo’s position as a provider of consulting services. Customer agreements were signed for example with Forex Bank, Otava Group, VVO, HSY and Savox Communications. The increase in the turnover was particularly supported by the success of consulting operations in Sweden. In IT Services, significant changes in the organisation and operating methods were carried out, with the intention of strengthening Enfo’s ability to respond to changing customer needs. In November 2015, Enfo acquired a majority shareholding in Rongo Oy, a company specialising in Business Intelligence and analytics solutions. The business transaction did not have any significant impact on turnover (less than 1%), while it strengthened Enfo’s position as a provider of consulting services and a Business Intelligence expert. Through the acquisition, Enfo obtained 75 new professionals. The turnover of Financial Process Services decreased by 13.8% to EUR 32.4 million (37.6), while operating profit fell to EUR 1.2 million (4.1). Turnover was reduced by the divestment of businesses and intense competition in invoice operator services. The outsourcing of financial processes has clear growth potential among medium-sized and large companies, and negotiations over outsourcing were entered into at an accelerating pace. Enfo signed new significant agreements with energy company Loiste and construction company SRV. The impact of these agreements can be seen as positive development starting from 2016. The demand for ZmartScan financial process surveys
ENFO 2015
ENFO | Annual Report 2015
36
Environmental issues Enfo aims towards environmental friendliness and responsibility in its own operations and in the development and production of solutions offered to its customers. Enfo’s operations are guided by the principles of sustainable development which is evidenced by its travelling guidelines, material choices, recycling and waste management. The aim is to save natural resources with the IT solutions and services provided, for example through energy efficiency and by reducing the need for printing. Energy efficiency is the most important environmental factor in Enfo’s service production. 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. 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 2015 was 1.29 (1.25) at Enfo’s
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 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
BUSINESS OPERATIONS RESPONSIBILITY
No significant research and product development projects were conducted during the financial period.
Company, and Soili Mäkinen, CIO at Cargotec Corporation. Mammu Kaario resigned her Board membership on 25 November when she was appointed CEO of Partnera Oy. In 2015, Enfo Group’s Executive Management Team members were Arto Herranen, Tero Kosunen, Christian Homén (from 1 February), Maria Lundell, Samuli Savo (from 1 August) Tero Saksman, Lars Aabol and Adam Ritzén. Besides these managers, the extended Executive Management Team included Nina Annila (Outsourcing Services), Fredrik Bergman (Consulting Services), Erik Brügge (Consulting Services), Åsa Landén Ericsson (Consulting Services), Matti Seppänen (Outsourcing Services) and from 1 December also Malin Ung and Mats Eliasson. 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.
Shares, owners and changes in share capital On 31 December 2015, Enfo Oyj had a total of 600,833 shares. At the end of the period, the company had a total of 117 shareholders. The company has one series of shares. Enfo held 1,011 treasury shares at the end of December 2015. At the end of 2015, the ten largest shareholders in the company were: Osuuskunta KPY, Ilmarinen Mutual Pension Insurance Company, Enfo Oyj’s Personnel Fund HR, Rongo Cap Oy, Einari Vidgrén Oy, Keskisuomalainen Oyj, Pohjois-Savon Osuuspankki, Hannu Isotalo Oy, Kallax Oy and Arto Herranen. Osuuskunta KPY’s share of ownership is 84.91%. Aas part of the acquisition of Rongo Oy, a directed share issue was carried out for the owners of Rongo Oy on the basis of the authorisation
CORPORATE GOVERNANCE
Research and product development
data centres. Enfo has data centres in Kuopio and Karlskrona. The efficiency and functionality of Enfo’s offices are governed by high standards. All Enfo’s offices in Finland fulfil the Green Office requirements set by WWF (World Wildlife Fund). 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. In addition, the Espoo office is located in Alberga Business Park which has a BREEM environmental certificate BRE Environmental Assessment Method) of very good level, while the Kuopio office has the LEED Gold environmental certificate (Leadership in Energy and Environmental Design). In addition to energy efficiency, waste recycling is an important element of environmental responsibility: At Enfo, electronics scrap and other obsolete materials are recycled to enable their further use, where possible. All production-related waste paper and packaging materials are collected and delivered for further use. All printer supplies, such as ink, cartridges and spare parts, are recycled. In 2015, the environmental policy was updated and an environmental organisation was established. It is composed of the environmental manager and the persons appointed responsible for environmental matters in each office. The goal is to apply for Group-level environmental certification to Enfo during 2016.
FINANCIAL STATEMENT
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 segment and unit. The scheme’s target group consists of 49 key persons. At the end of the 2014 financial period, the Group adopted an incentive scheme for key persons based on the financial results of their respective business units.
ENFO 2015
ENFO | Annual Report 2015
37
The Group’s turnover is expected to increase in 2016. Operating profit is expected to decrease from the year before due to investments in new business operations. In addition, non-recurring costs arising from measures to improve the efficiency of specific business units will reduce this year’s operating profit.
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 2015, the parent company’s distributable funds totalled EUR 35,916,704.45. The company’s Board of Directors will propose to the Annual General Meeting that a dividend of EUR 5.90 per share be paid for the 2015 financial period. The dividend will be paid to shareholders who are recorded in the company’s list of shareholders maintained by Euroclear Finland Oy on the record date for dividend payment, 1 April 2016. The dividend will be paid on 27 May 2016.
BUSINESS OPERATIONS
Forecast for likely future development
RESPONSIBILITY
Enfo Oyj’s Annual General Meeting held on 25 March 2015 decided, in accordance with the Board of Directors’ proposal, that a dividend of EUR 5.90 per each issued share be paid on the basis of the confirmed balance sheet for the financial period ending on 31 December 2014, i.e., a total of EUR 3,478,162.10. The dividends were paid on 27 May 2015. Tapio Hakakari, Mammu Kaario, Lauri Kerman, Timo Kärkkäinen and Soili Mäkinen were re-elected as members of the Board of Directors. No new member was elected as replacement for Hannu Isotalo who resigned the Board membership at his own request. At the organisation meeting held after the Annual General Meeting, the Board of Directors elected Tapio Hakakari as the Chairman and Mammu Kaario as the Deputy Chairman. In addition, the AGM decided on authorisations with the following principal terms and conditions: • The issuance of at most 175,000 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.
Enfo revised its business organisation in early 2016 in order to strengthen the prerequisites for implementing the new strategy and in order to make its operations more customer-oriented. As a result of the change, the Group will be divided into five business areas: Strategic Accounts, which will focus on key customer accounts; Business Solutions, which will produce consulting services; Managed Services, which will offer IT outsourcing services; Financial Process Services, which will provide outsourcing services for financial administration; and Emerging Businesses, which will be responsible for the Group’s new business functions. The business structure will also include the new Transformation Office function, which will be responsible for developing the Group’s operations and implementing the growth strategy. At the same time, the areas of responsibility and membership of the Executive Management Team were amended as follows. The members of the Groups’ new Executive Management Team are: Arto Herranen, CEO, Lars Aabol, EVP, Strategic Accounts and Country Director for Sweden (previous position EVP, Consulting Services), Mats Eliasson, EVP, Business Solutions (previous position SVP, Service and Asset Management, Christian Homén, CFO, Tero Kosunen, EVP, Financial Process Services (previous position SVP, Business Development), Adam Ritzén, SVP, Marketing, Tero Saksman, EVP, Managed Services (previous position EVP, Financial Process Services), Samuli Savo, EVP, Emerging Businesses and Transformation Office, (previous position EVP, IT Outsourcing Services) and Malin Ung, SVP, HR (previous position HR Manager Enfo Sweden) In January, Enfo acquired the Swedish company Next Improvement as part of the Group’s objective to achieve the position of a leading operator in the Nordic market of the Service & Asset
Management sector. Next Improvement provides total solutions for companies wishing to enhance their business, reduce costs or ensure the quality of business operations. Its clientele primarily includes Nordic industrial companies, both small and large. The product portfolio of Next Improvement, including the Rejus maintenance system, will together with other jointly implemented production solutions strengthen and supplement Enfo’s current product range.
CORPORATE GOVERNANCE
Decisions by the Annual General Meeting
Events after the end of the financial period
FINANCIAL STATEMENT
given to the Board by the AGM. A total of 8,048 shares were subscribed in the directed issue. In addition, the company issued a total of 1,952 new shares a part of the key persons’ incentive scheme.
ENFO 2015
ENFO | Annual Report 2015
38
ENFO | Annual Report 2015
ENFO 2015
KEY FIGURES IFRS
2015
2014
2013
2015
2014
2013
150.9
Earnings per share, basic
7.39
8.50
10.69
-3.7
4.0
Earnings per share, diluted
7.39
8.50
10.69
Operating profit (EUR million)
7.5
9.7
11.2
Share-specific equity
89.0
85.8
86.5
% of turnover
5.4
6.7
7.5
Share-specific dividend *
5.9
5.9
5.4
79.9
69.8
50.5
Dividend per result, % *
Profit before taxes (EUR million)
6.8
8.1
10.0
% of turnover
4.8
5.5
6.6
Number of shares, 31 Dec
600,833
590,833
590,833
Profit for the period (EUR million)
5.4
6.4
7.6
- excluding own shares
599,822
589,822
590,024
% of turnover
3.8
4.4
5.0
Financial costs, net (EUR million)
0.8
1.6
1.3
% of turnover
0.5
1.1
0.9
Average number of shares adjusted by share issue
592,096
589,839
584,440
Investments (net, EUR million)
14.6
8.9
5.1
% of turnover
10.4
6.1
3.4
818
775
784
Return on investment, %
8.8
11.3
14.3
Return on equity, % (ROE)
10.1
12.4
15.2
Key figures on the balance sheet Equity ratio, %
44.4
42.9
46.6
Net gearing, %
50.7
55.1
54.8
Interest-bearing net liabilities (EUR million)
27.8
28.7
28.4
Balance sheet total (EUR million)
124.1
121.9
111.7
Other key figures
Average number of employees
* Calculated according to the Board of Directors’ proposal on the distribution of dividends. A dividend of EUR 5.9 per share was paid for the 2014 financial period.
RESPONSIBILITY
145.3
-3.2
Change in turnover, %
CORPORATE GOVERNANCE
140.6
Turnover (EUR million)
FINANCIAL STATEMENT
Key figures in the income statement
BUSINESS OPERATIONS
Share-specific key figures
39
CALCULATION OF THE KEYFIGURES
ENFO 2015
ENFO | Annual Report 2015
=
Return on equity
=
Equity ratio
=
Net gearing
=
Interest-bearing net financial liabilities
=
Earnings per share (EPS)
=
Profit before taxes + financial costs Equity + interest-bearing financial liabilities (average of the beginning and end of the year) 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
RESPONSIBILITY
Return on investment
BUSINESS OPERATIONS
The key figures have been calculated using the following formulas:
Profit/loss attributable to the owners of the parent company’s ordinary shares
=
Share-specific dividend
=
Dividend per result (%)
=
Equity attributable to the shareholders of the parent company Number of undiluted shares, 31 Dec. Distribution of dividends for the period Number of undiluted shares , 31 Dec. Share-specific dividend Earnings per share
FINANCIAL STATEMENT
Share-specific equity
CORPORATE GOVERNANCE
Weighted average of the number of issued ordinary shares
40
Turnover
IFRS, EUR 1,000
NOTE
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
4
140,647
145,333
Other operating income
5
953
124
Materials and services
6
-46,117
-48,545
Salaries and other employment benefits
7
-65,085
-62,642
Depreciation and amortisation
8
-5,020
-4,640
Other operating expenses
9
-17,840
-19,928
Operating profit
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
5,393
6,427
Change in the value of available-for-sale financial assets
5
-13
Exchange rate differences caused by net investments in foreign subsidiaries
387
-1,045
Profit for the period Items possibly recognised through profit or loss in the future:
Net investment hedging
115
-66
Other translation differences
213
-641
Cash flow hedging
127
31
Taxes associated with other comprehensive income items
-26
-4
Other comprehensive income items for the period after taxes
821
-1,737
6,214
4,690
7,537
9,703
10
515
371
Financial costs
10
-1,276
-2,020
Financial costs (net)
10
-761
-1,650
Adjustments from previous periods recognised in equity
6,777
8,053
-1,384
-1,626
5,393
6,427
Financial income
Profit before taxes Income tax
11
Profit for the period
Comprehensive income for the period, total Attributable to Attributable to
- equity-holders of the parent company - to non-controlling equity holders
4,375
5,012
equity-holders of the parent company
1,415
5,170
3,275
1,018
to non-controlling equity holders
1,043
1,415
BUSINESS OPERATIONS
IFRS, EUR 1,000
RESPONSIBILITY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CORPORATE GOVERNANCE
CONSOLIDATED INCOME STATEMENT
ENFO 2015
ENFO | Annual Report 2015
undiluted earnings per share (EUR)
12
7.39
8.50
earnings per share adjusted by dilution (EUR)
12
7.39
8.50
FINANCIAL STATEMENT
Earnings per share calculated from the profit attributable to equity-holders of the parent company:
41
ENFO | Annual Report 2015
ENFO 2015
CONSOLIDATED BALANCE SHEET IFRS, EUR 1,000
1 Jan–31 Dec 2014
NOTE
ASSETS
EQUITY AND LIABILITIES
Non-current assets
Equity
Property, plant and equipment
13
4,360
5,159
Goodwill
14
71,499
62,265
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
Equity attributable to equity-holders of the parent company
Other intangible assets
14
9,203
7,058
Share capital
21
265
265
Available-for-sale investments
15
142
136
Share premium account
21
13,316
13,316
Receivables
16
92
155
Treasury shares
21
-87
-82
Deferred tax assets
17
1,361
1,239
Translation differences
21
2,052
1,192
Change in value and other reserves
21
2,875
1,787
Retained earnings
35,064
34,152
Equity attributable to equity holders of the parent company, total
53,486
50,630
Non-current assets, total
86,656
76,012
Current assets Inventories
18
177
256
Trade receivables
19
26,365
25,811
Other receivables
19
3,242
3,031
1,971
3,423
1,375 52,005
17
1,094
719
2
2
5,662
13,343
Financial liabilities
23
23,232
26,813
Other liabilities
24
5,005
317
29,331
27,850
Non-current liabilities, total Current assets, total
37,419
45,866
124,075
121,877
Current liabilities Total assets
Trade payables
24
9,691
9,390
Other liabilities
24
19,297
16,612
Tax liabilities based on the period's taxable income
24
676
815
Financial liabilities
23
10,224
15,206
39,888
42,023
Current liabilities, total Total liabilities Total equity and liabilities
69,219
69,872
124,075
121,877
CORPORATE GOVERNANCE
15 20
Deferred tax liabilities
FINANCIAL STATEMENT
Available-for-sale investments
1,370 54,856
Non-current liabilities
Tax assets based on the period's taxable income Cash and cash equivalents
Non-controlling interests Total equity
BUSINESS OPERATIONS
1 Jan–31 Dec 2015
RESPONSIBILITY
NOTE
42
ENFO | Annual Report 2015
Cash flow from operations Profit for the period
5,393
6,427 4,640
Financial items
761
1,650
Profit/loss from disposal of fixed assets
-37
48
1,384
1,626
-567
-164
2,798
2,091
80
53
-367
643
-1,101
-1,094
26
47
Operations not involving payment transactions Changes in working capital: Change in sales and other receivables Change in inventories Change in accounts payable and other payables Interest paid Interests and dividends received Taxes paid Net cash flow from operations
-1,317
-4,512
12,072
11,455
-3,751
-2,969
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 Sales gains from business transactions Net cash flow from investments
Dividends paid
-4,857
-4,447
-1
-16
Withdrawal of loans
11,501
17,989
Transactions related to treasury shares 5,020
Taxes
1 Jan–31 Dec 2014
Cash flow from financial activities
Adjustments: Depreciation and amortisation
1 Jan–31 Dec 2015
-51
-468
-1,515
-561
80
26
797 -4,440
-,3,972
Repayment of loans
-18,531
-8,879
Repayment of financial leasing liabilities
-3,330
-3,097
Net cash flow from financing
-15,217
1,550
Changes in cash and cash equivalents
-7,585
9,033
-95
95
13,343
4,215
5,662
13,343
Impact of exchange rate changes in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period
RESPONSIBILITY
1 Jan–31 Dec 2014
CORPORATE GOVERNANCE
1 Jan–31 Dec 2015
FINANCIAL STATEMENT
IFRS, EUR 1,000
BUSINESS OPERATIONS
ENFO 2015
CONSOLIDATED CASH FLOW STATEMENT
43
ENFO | Annual Report 2015
IFRS, EUR 1,000
NOTE
Equity on 1 Jan 2014
Share capital
Share premium
Treasury shares
Currency translation differences
265
13,316
-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
BUSINESS OPERATIONS
ENFO 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
-13
-13
-1,045
-1,045
-1,045
-66
-66
-523
-523
Available-for-sale investments
-13
Exchange rate differences caused by net investments in foreign subsidiaries Net investment hedging Other currency translations differences
-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
-118
-1,737
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
-1,619 5,012
RESPONSIBILITY
Other comprehensive income items
44
NOTE
Equity on 1 Jan 2015
Share capital
Share premium
Treasury shares
Currency translation differences
265
13,316
-82
1,192
Revaluation and other reserves
Retained earnings
1,787
Profit/loss for the period
Total
Noncontrolling interest
Total equity
34,152
50,630
1,375
52,005
4,375
6,246
1,018
5,393
Comprehensive income
BUSINESS OPERATIONS
ENFO 2015
ENFO | Annual Report 2015
5
387
387
387
115
115
Net investment hedging Other currency translations differences
357
Cash flow hedging
-170 127
Adjustments for the previous periods recognized in equity Taxes related with other comprehensive income items
-26
187
115 26
213
127
127
0
0
-26
-26
Other comprehensive income items for the period after taxes
860
106
4,205
5,170
1,044
6,214
Comprehensive income
-855
161
6,247
5,553
1,248
6,801
-3,478
-3,478
-1,379
-4,857
Transaction with owners
21
Distributed dividends Emission
978
Acquisition of treasury shares
-71
Sale of treasury shares
66
3
The amount of non-controlling interest in the acquired subsidiary
978
-71
-71
69
69
0
Management incentive scheme
167
Transactions with owners, total
-5 265
13,316
-86
2,052
331
167
331 167
19
19
982
-3,292
-2,315
-1,048
-3,363
2,874
35,065
53,486
1,371
54,856
Redemption obligation
Equity on 31 Dec 2015
978
19
FINANCIAL STATEMENT
5
Exchange rate differences caused by net investments in foreign subsidiaries
CORPORATE GOVERNANCE
5
Available-for-sale investments
RESPONSIBILITY
Other comprehensive income items
45
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 2015. 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.
Amendments effective next year The IFR standards entering into force in 2016 are not expected to have any material impact on the Group’s financial result for the financial period, on its financial position or on the way the financial statements are presented.
Amendments effective later The Group will start using the below standards and interpretations published by the IASB later than on the financial period starting on 1 January 2016 provided that they are approved by the EU. IFRS 15: Revenue from contracts with customers (expected to enter into force on 1 January 2018). The standard includes a five-step model for recording the sales revenues derived from contracts with customers. The basic principle of the new model is that sales revenues are recorded when the control of the goods or services is passed to the customer – in other words, control is now the deciding factor instead of the earlier used risks and benefits. In addition, IFRS 15 has extensive requirements regarding enclosed information. IFRS 9: Financial instruments (expected to enter into force on 1 January 2018). The standard includes revised instructions for the classification and measurement of financial assets as well as a new model, based on expected credit losses, for assessing the impairment of financial assets and new requirements for general hedge accounting. IFRS 16: Leases (expected to enter into force on 1 January 2019). According to the draft for the standard, the lessees must record in their balance sheets a tenancy agreement liability reflecting the rent payable in the future and an asset item reflecting the right of occupancy for almost all tenancy agreements. Enfo Oyj is currently evaluating the possible impacts if the standards.
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
RESPONSIBILITY
2. Accounting principles for the consolidated financial statements
Enfo Oyj has applied the standard amendments and interpretations which entered into force during the financial period and are applicable to Enfo Oyj. The amendments have not had any material impact on the Group’s financial result for the financial period, on its financial position or on the way the financial statements are presented.
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 1 March 2016, 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.
FINANCIAL STATEMENT
1. General information about the company
BUSINESS OPERATIONS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ENFO 2015
ENFO | Annual Report 2015
46
ENFO | Annual Report 2015
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
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 straightline 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.
BUSINESS OPERATIONS RESPONSIBILITY
PROPERTY, PLANT AND EQUIPMENT
CORPORATE GOVERNANCE
FOREIGN CURRENCY ITEMS
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 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.
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 to the carrying amount pursuant to the previous
FINANCIAL STATEMENT
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. 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 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
47
ENFO | Annual Report 2015
Intangible assets arising from combined business operations
Research and development costs are recognised as costs in the income statement, apart from the development costs that meet the valuation 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
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 periodspecific 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.
RESPONSIBILITY
Research and development costs
LEASE AGREEMENTS The Group as the lessee
CORPORATE GOVERNANCE
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.
BUSINESS OPERATIONS
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 intended purpose. Profit or loss arising from the assignment of intangible assets is presented in other operating profits or losses in the income statement.
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.
FINANCIAL STATEMENT
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 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 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
48
ENFO | Annual Report 2015
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS 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.
BORROWING COSTS 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.
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 definedcontribution 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
INVENTORIES
RESPONSIBILITY
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 relevant regulations of the IFRS standards are applied to other arrangements or arrangement components.
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.
CORPORATE GOVERNANCE
Arrangements that include a lease agreement
GOVERNMENT GRANTS
Share-based payments Currently, the Group has an incentive scheme following the IFRS 2 Sharebased 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.
FINANCIAL STATEMENT
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.
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
49
ENFO | Annual Report 2015
TAXES BASED ON THE PERIOD’S TAXABLE INCOME AND DEFERRED TAXES 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.
BUSINESS OPERATIONS RESPONSIBILITY
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 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.
CORPORATE GOVERNANCE
PROVISIONS AND CONTINGENCIES
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 business combinations, for example. Deferred taxes are not recognised for non-deductible 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.
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
FINANCIAL STATEMENT
More information on the company’s share-based schemes can be found in Note 22, Share-based payments.
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
50
ENFO | Annual Report 2015
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.
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.
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
BUSINESS OPERATIONS RESPONSIBILITY
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
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 discontinued function after taxes is presented as a separate item in the consolidated statement of comprehensive income.
FINANCIAL STATEMENT
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 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 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
51
ENFO | Annual Report 2015
Cash and cash equivalents 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.
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
BUSINESS OPERATIONS
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. 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.
RESPONSIBILITY
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.
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.
CORPORATE GOVERNANCE
Definition of fair value
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 STATEMENT
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. The 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.
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
52
ENFO | Annual Report 2015
Net investment hedging 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.
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, issu-
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.
Consideration related to the selection and application of accounting principles 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.
BUSINESS OPERATIONS
ACCOUNTING PRINCIPLES THAT REQUIRE THE MANAGEMENT’S CONSIDERATION AND CENTRAL UNCERTAINTY FACTORS RELATED TO ESTIMATES
RESPONSIBILITY
ance or cancellation of treasury shares, but the consideration paid or received is recognised directly in equity.
Uncertainty factors related to estimates 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
CORPORATE GOVERNANCE
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 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.
FINANCIAL STATEMENT
Cash flow hedging
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
53
ENFO | Annual Report 2015
MARKET RISKS 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 2015, the currency translation position in equity stood at EUR 9.0 million (EUR 9.5 million in 2014). The position includes a net investment in subsidiaries outside the euro states. The position is mainly the result of SEK-denominated investments. The position includes minor investments denominated in DKK or NOK. Furthermore, the Group has an internal loan of SEK 203 million (about EUR 22 million) as a net investment in foreign operations.
2014 SEK
Non-current assets
53,189
52,776
Non-current liabilities
36,103
35,579
Current assets
27,494
26,157
Current liabilities
35,724
33,856
The Group’s external 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 -235,000 in 2015 (EUR 179,800 in 2014). Sensitivity analysis for changes in exchange rates Change rate = average volatility over the previous 12 months EUR 1,000 Change rate
2015 SEK
2014 SEK
6.93
6.13
+35 / -31
+10 / -9
+655 / -600
+620 / -549
Effect On profit after taxes On equity
BUSINESS OPERATIONS
2015 SEK
RESPONSIBILITY
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 for against the risks.
EUR 1,000
CORPORATE GOVERNANCE
3. Financial risk management
The translation position has been hedged through derivative agreements signed during the period and loans denominated in SEK. 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 2015, the Group’s interest-bearing liabilities stood at EUR 33,456,000 (EUR 42,020,000 in 2014) On the balance sheet date, the Group’s interest-bearing net liabilities amounted to EUR 27,794,000 (EUR 28,675,000 on 31 December 2014).
FINANCIAL STATEMENT
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.
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
54
ENFO | Annual Report 2015
Age distribution of sales receivables on 31 December
Market risk in investment activities According to the Group’s investment policy, the Group invests only in lowrisk 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.
Capital adequacy 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 2015, the Group’s cash and cash equivalents totalled EUR 5,662,000 (EUR 13,343,000 on 31 December 2014), and its liquid financial investments totalled EUR 2,000 (EUR 13,000 in 2014). The Group’s capital adequacy is at a good level on the reporting date.
EUR 1,000
2015
Unexpired
23 429
88,9%
22 938
88,9%
2 259
8,6%
2 217
8,6% 0,7%
1–14 days
2014
15–30 days
173
0,7%
180
31–60 days
243
0,9%
389
1,5%
61–90 days
110
0,4%
63
0,2%
91 days
129
0,5%
24
0,1%
26 343
100,0%
25 811
100,0%
BUSINESS OPERATIONS
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 2015 financial period was EUR 1,000 (EUR 1.4 million in 2014). The Group’s maximum credit risk corresponds to the carrying amount of financial assets at the end of the period.
RESPONSIBILITY
Credit risk
CORPORATE GOVERNANCE
Maturity information about financial liabilities is presented in Note 23. The Group’s accounts payable of EUR 9,691,000 and other current noninterest-bearing liabilities of EUR 19,973,000 will fall due for payment during 2016.
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.
FINANCIAL STATEMENT
On 31 December 2015, the Group’s loan portfolio consisted of loans from financial institutions of SEK 123.8 million (EUR 13.4 million), a loan from a financial institution of EUR 5 million), and a bond loan of EUR 9.9 million. Of the agreed loans, EUR 7.4 million will fall due for payment in 2016. In 2017-2020, a total of EUR 21 million will fall due for payment. Of the loans from financial institutions, 8% 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 4,915,000 consist of the payment obligations 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. In 2015, the Group’s total interest rate was 2.6% (2.7% in 2014). A 10% increase in the interest rate would have reduced the Group’s result, and thus its equity. by EUR 57,000.
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
55
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 January 2015–31 December 2015
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.
Revenues
108,408
32,238
Service sales
97,884
32,134
Hardware and software sales
10,524
105
2,104
144
110,512
32,382
6,385
1,152
Investments
12,710
1,577
Depreciation and amortisation
3,939
437
IT Services
Financial Process Services
Internal turnover Total turnover
Operating profit Other information
1 January–31 December 2014 Revenues External turnover
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
RESPONSIBILITY
Result
CORPORATE GOVERNANCE
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.
IT Services
Other information FINANCIAL STATEMENT
THE GROUP’S REPORTING SEGMENTS ARE:
External turnover
Financial Process Services
BUSINESS OPERATIONS
4. Segment reporting
ENFO 2015
IFRS, EUR 1,000
56
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INFORMATION ABOUT GEOGRAPHICAL REGIONS
142,895
146,899
Income of all other segments
0
0
Elimination of internal income
-2,248
-1,566
140,647
145,333
7,537
9,684
0
19
-761
-1,650
6,777
8,053
Total consolidated income Result Reporting segments' operating result Operating result of all other segments Financial items Consolidated result before taxes, total Depreciation and amortisation Reporting segments' depreciation and amortisation Depreciation and amortisation of all other segments Total consolidated depreciation and amortisation
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
Finland
73,140
83,253
Other countries
67,507
62,079
140,657
145,333
Total consolidated income Non-current assets Finland
33,284
21,372
Other countries
53,372
54,640
86,656
76,012
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
Consolidated non-current assets
5. Other operating income 4,376
4,453
644
188
5,020
4,640
Reporting segments' investments
14,287
8,689
Investments of all other segments
290
213
14,577
8,902
Investments
Total consolidated investments
Revenues (external)
Sales profits from tangible fixed assets
118
0
Others
835
124
Total
953
124
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
8,633
12,972
6. Materials and services Purchases during the period Change in inventory External services Total
79
53
37,404
35,519
46,117
48,545
BUSINESS OPERATIONS
Reporting segments' income
Geographically, the Group operates mainly in Finland and Sweden.
RESPONSIBILITY
1 Jan–31 Dec 2014
CORPORATE GOVERNANCE
1 Jan–31 Dec 2015
FINANCIAL STATEMENT
Reconciliation calculations
Revenues
ENFO 2015
IFRS, EUR 1,000
57
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
52,100
0
0
Profit-sharing bonus into the personnel fund Pension insurance premiums and pensions defined-contribution plans
7,895
Other indirect employee costs Total
7,813
3,139
2,728
65,085
62,642
1 Jan–31 Dec 2014
Voluntary personnel expenses
2,570
2,686
Travel expenses
2,012
1,841
Costs of premises
3,641
3,983
Vehicle expenses
1,593
1,629
Hardware and software expenses
2,083
1,421
Other administrative expenses
2,573
3,788
Telephone and data 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. Average number of Group personnel during the period 689
647
Financial Process Services
IT Services
91
104
Other functions
38
24
818
775
Total
Marketing, sales and representation expenses Other operating expenses Total
Auditing
Total 1 Jan–31 Dec 2014
Intangible assets
2,773
1,055
Property, plant and equipment
2,465
3,585
Total depreciation and amortisation
5,239
4,640
Depreciation and amortisation by asset category
Decrease of Group reserve Total depreciation and amortisation
-219 5,020
4,640
1,086
2,057
17,840
19,928
Auditors’ fees
Other services
1 Jan–31 Dec 2015
677 1,845
The Group did not have any significant research and development expenses. Other operating expenses include rental expenses of EUR 5,574,000 (EUR 5,502,000 in 2014).
Tax guidance
8. Depreciation and amortisation
698 1,584
207
196
18
7
84
82
309
285
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
10. Financial income and expenses Dividend income
BUSINESS OPERATIONS
54,051
Salaries, wages and fees
1 Jan–31 Dec 2015
10
14
Interest income
-37
124
Exchange rate gains
542
232
Total financial income
515
371
Interest expenses
843
1,031
Exchange rate losses
229
989
Other financial expenses
204
1
Total financial expenses
1,276
2,020
CORPORATE GOVERNANCE
1 Jan–31 Dec 2014
RESPONSIBILITY
9. Other operating expenses
1 Jan–31 Dec 2015
FINANCIAL STATEMENT
7. Salaries and other employment benefits
ENFO 2015
IFRS, EUR 1,000
58
ENFO | Annual Report 2015
1,719
2,540
-5
6
Change in deferred tax liability and assets
-330
-920
Total
1,384
1,626
Comparison of taxes based on the current tax base of 20.0% (20.0% in Finland in 2014) and taxes presented in the income statement: 1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
Profit before taxes
6,777
8,053
Taxes based on the current tax base
1,384
1,626
Divergent tax bases of foreign subsidiaries Change in deferred taxes – change in Swedish tax rates Change in deferred taxes – change in Finnish tax rates
-36
-15
Expenses non-deductible in taxation
107
Tax-exempt income Non-recognised deferred tax receivables from losses
-29
Impact of appropriations
-47
Taxes recognised in previous periods Taxes in the income statement
128 -48 46
Available-for-sale investments Exchange rate differences caused by net investments in foreign subsidiaries
Before tax
Tax charge (-)/credit
After tax
5
-1
4
484
-97
387
Net investment hedging Other currency translations differences
144
-29
115
213
0
213
Cash flow hedging Other comprehensive income items
127
-25
101
973
-152
821
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
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
-106
5
-6
1,384
1,626
The weighted average of the applied tax rates was 20.4% in 2014.
2015
12. Earnings per share
BUSINESS OPERATIONS
Taxes from previous periods
1 Jan–31 Dec 2014
RESPONSIBILITY
Tax based on the period's taxable income
Tax expenses (-)/income associated with other comprehensive income items are: 1 Jan–31 Dec 2015
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. 1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
4,375
5,012
592
590
Earnings per share, basic (EUR/share)
7.39
8.50
Earnings per share, diluted (EUR/share)
7.39
8.50
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)
FINANCIAL STATEMENT
11. Income tax
CORPORATE GOVERNANCE
IFRS, EUR 1,000
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
59
ENFO | Annual Report 2015
Machinery and equipment Acquisition cost on 1 Jan. Increases Increases from business combinations Decreases Transfers between items Exchange rate differences Acquisition cost on 31 Dec. Accumulated depreciation on 1 Jan. Increases from business combinations Accumulated depreciation on decreases Depreciation for the period Exchange rate differences Accumulated depreciation on 31 Dec. Carrying amount on 31 Dec.
2015
2014
18,936
18,834
72
285
321
64
-3,374
-289
-45
109
28
-67
15,938
18,936
18,213
18,019
0
55
-3,365
-103
274
287
19
-44
15,141
18,213
797
722
Other tangible assets
2015
2014
Acquisition cost on 1 Jan.
1,036
1,049
Increases
1,515
503
Decreases
-442
-29
-1,464
-440
Transfers between items Exchange rate differences
27
-47
Acquisition cost on 31 Dec.
671
1,036
Accumulated depreciation on 1 Jan.
555
431
Depreciation for the period
142
164
0
11
Increases from business combinations Depreciation on decreases and transfers
-362
-19
9
-33
Accumulated depreciation on 31 Dec.
344
555
Carrying amount on 31 Dec.
325
481
Exchange rate differences
2015
2014
8,542
7,916
Increases
1,404
2,278
Decreases
-1,232
-1,652
Acquisition cost on 31 Dec.
8,714
8,542
4,586
4,074
Accumulated depreciation on 1 Jan. Transfers between items Accumulated depreciation on decreases
-1,159
-1,589
Depreciation for the period
2,050
2,101
Accumulated depreciation on 31 Dec.
5,477
4,586
Carrying amount on 1 Jan.
3,956
3,842
Carrying amount on 31 Dec.
3,238
3,956
Total tangible assets
4,360
5,159
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.
2015
2014
62,265
63,563
Increases
8,159
1,512
Exchange rate differences
1,075
-2,810
71,499
62,265
Carrying amount on 31 Dec.
BUSINESS OPERATIONS
Acquisition cost on 1 Jan.
RESPONSIBILITY
Financial leasing
CORPORATE GOVERNANCE
13. Tangible assets
FINANCIAL STATEMENT
IFRS, EUR 1,000
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
60
ENFO | Annual Report 2015
11,683
10,163
Increases
2,855
2,048
289
-528
14,827
11,683
8,925
8,961
Decreases Acquisition cost on 31 Dec. Accumulated depreciation on 1 Jan. Depreciation and amortisation
748
437
Exchange rate differences
238
-473
Accumulated depreciation on 31 Dec.
9,911
8,925
Carrying amount on 31 Dec.
4,917
2,758
Other intangible assets *
2015
2014
Acquisition cost on 1 Jan.
10,627
9,714
150
561
1
81
Increases Increases through corporate acquisitions Decreases Transfers between items Exchange rate differences Acquisition cost on 31 Dec. Accumulated depreciation on 1 Jan. Accumulated depreciation on business acquisitions Accumulated depreciation on decreases Depreciation and amortisation
-87
0
1,464
330
-7
-58
12,149
10,627
8,718
8,141
0
15 618
-7
-57
Accumulated depreciation on 31 Dec.
9,443
8,718
Carrying amount on 31 Dec.
2,706
1,910
* Other intangible goods include mainly licences and software.
2014 1,903
Increases
420
2,098
Decreases
-616
-122
3,682
3,879
1,491
580
Acquisition cost on 31 Dec. Accumulated depreciation on 1 Jan. Transfers between items
-616
-121
Depreciation for the period
Accumulated depreciation on decreases
1,228
1,032
Accumulated depreciation on 31 Dec.
2,101
1,491
Carrying amount on 1 Jan.
2,388
1,323
1,581
2,388
9,203
7,058
80,702
69,321
Carrying amount on 31 Dec. Other intangible assets, total 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. 2015
-18 750
Exchange rate differences
2015 3,879
Acquisition cost on 1 Jan.
Acquisition cost on 1 Jan. Exchange rate differences
Intangible financial leasing assets
2014
Discount rate IT Services Total
7.2%
6.9%
2015
2014
BUSINESS OPERATIONS
2014
RESPONSIBILITY
2015
Allocated goodwill 71 499
62 265
71 499
62 265
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. A goodwill of 8,2 million euros was recognized when combining Rongo Oy’s business. The amount of goodwill was calculated as part of the acquisition, which realized in November 2015. There were no signs justifying an impairment recognition by the closing of accounts.
FINANCIAL STATEMENT
Other intangible assets Customer relations and trademarks (business combination)
CORPORATE GOVERNANCE
IFRS, EUR 1,000
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
61
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Jan. Changes in fair value
2015
2014
136
149
5
-13
142
136
Impairment 31 Dec. Current
2015
2014
1 Jan.
2
2
31 Dec.
2
2
RESPONSIBILITY
Available-for-sale investments consisted mainly of fund investments and minor investments in equities.
16. Non-current receivables 2015
2014
Security deposits
92
155
Total
92
155 CORPORATE GOVERNANCE
Non-current
BUSINESS OPERATIONS
15. Available-for-sale investments
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 expenses 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 2015
IFRS, EUR 1,000
62
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ENFO 2015
IFRS, EUR 1,000
17. Deferred tax assets and liabilities Changes in deferred taxes during 2014: 31 Dec 2013 242
-95
Provisions
54
-33
Perquisites
215
-78
Hedge accounting
55
Confirmed losses Total
Recognised in equity
Recognised in comprehensive income items
Exchange rate differences
31 Dec 2014 147 22
-10
128
-29
894
-6
49
923 566
719
-6
-39
1 239
120
85
-107
-4
94
BUSINESS OPERATIONS
Deferred tax assets: Tangible and intangible assets: different depreciation period in taxation, activated financial leasing assets
Recognised in the income statement
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
31 Dec 2014
Recognised in the income statement
Recognised in equity
Exchange rate differences
31 Dec 2015
147
-49
Provisions
22
20
Perquisites
128
21
Changes in deferred taxes in 2015 Deferred tax assets: Tangible and intangible assets: different depreciation period in taxation, activated financial leasing assets
Hedge accounting Confirmed losses Total
Recognised in comprehensive income items
98 42 3
152
22
1,046
-25
25
1,361
94
-47
0
48
17
1
49
-25
894
130
1,239
122
23
CORPORATE GOVERNANCE
Different depreciation period in taxation for tangible assets
RESPONSIBILITY
Deferred tax liabilities:
Deferred tax liabilities: Measurement of financial assets at fair value
18
Intangible assets recognised during business acquisitions
607
571
-162
11
1,028
Total
719
571
-208
12
1,094
Of deferred tax receivables, EUR 426,000 is expected to materialise in the next 12 months. About EUR 291,000 of deferred tax liabilities (EUR 132,000 in 2014) is expected to materialise in the next 12 months.
FINANCIAL STATEMENT
Different depreciation period in taxation for tangible assets
63
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21. Equity 177
256
Total
177
256 31 December 2013
Issued shares
Treasury shares
Outstanding shares
590,833
809
590,024
Acquisition of treasury shares
19. Sales receivables and other receivables Trade receivables
31 December 2014 2015
2014
26,365
25,811
Income tax receivables
1,971
3,423
31 December 2014
Other accrued income
3,150
3,008
Acquisition of treasury shares
92
23
31,578
32,265
Other receivables Total sales and other receivables
The fair values of sales and other receivables correspond to their carrying amount.
Share issue
202 590,833
1,011
589,822
Issued shares
Treasury shares
Outstanding shares
1,011
589,822
590,833
808 10,000
Sale of treasury shares 31 December 2015
-808 600,833
1,011
599,822
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.
20. Cash and cash equivalents 2015
2014
Cash in hand and at bank
5,662
13,343
Total
5,662
13,343
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.
BUSINESS OPERATIONS
Materials and supplies
Share capital Changes in the number of shares are presented in the table below:
Treasury shares Treasury shares are presented as reductions in equity on the balance sheet. In 2015, Enfo Oyj acquired and sold 808 treasury shares. On the balance sheet date, the company held 1,011 treasury shares. The treasury shares held by the company comprise 0.2% of all shares and voting rights. Descriptions of equity reserves are presented below.
RESPONSIBILITY
2014
CORPORATE GOVERNANCE
2015
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 2015
IFRS, EUR 1,000
64
ENFO | Annual Report 2015
Deferred tax
-13 3
Hedging instrument reserve
31
Deferred tax
-6
31 December 2014
1,787
1 January 2015
1,787
Change in the fair value of available-for-sale investments
5
Deferred tax
-1
Share issue regarding invested non-restricted equity Sale of treasury shares regarding invested non-restricted equity
978 3
Hedging instrument reserve
127
Deferred tax
-25
31 December 2015
2,875
Major shareholders, 31 December 2015
shares
Osuuskunta KPY
510,174
Ilmarinen Mutual Pension Insurance Company
11,202
Enfo Oyj's Personnel Fund HR
10,510
Rongo Cap Oy
6,086
Einari Vidgren Oy
4,768
Keskisuomalainen Oyj
4,515
Pohjois-Savon Osuuspankki
3,283
Hannu Isotalo Oy
2,979
Kallax Oy
2,848
Arto Herranen Others Total
2,712 41,756 600,833
22. Share-based rewards 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 as well as other indicators (including customer satisfaction). 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 2013 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 2014, 2015 and 2016. The scheme awards a maximum of 27,870 shares in bonuses. The bonus for the earning period of 2014 was based on the turnover and profitability targets set for Enfo Group and its units. Part of the targets were met, and 1,952 shares were issued from the system in 2015. The liability associated with the redemption obligation associated with the key persons’ incentive schemes expired in 2013 and earlier is presented in other non-interest-bearing non-current liabilities.
BUSINESS OPERATIONS
Change in the fair value of available-for-sale investments
1,773
RESPONSIBILITY
1 January 2014
Dividends In 2014, EUR 5.9 per share, or a total of EUR 3,478,000, 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 2015 financial period.
CORPORATE GOVERNANCE
Change in value and other reserves The fair value reserve includes unrealised changes in the fair value of available-for-sale investments less the tax effect, and the reserve for invested nonrestricted equity.
FINANCIAL STATEMENT
IFRS, EUR 1,000
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
65
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Total
2015
2014
Within 12 months
2,813
3,142
2,246
3,435
11,121
11,037
13,487
13,109
Within 1–5 years
9,924
9,373
9,902
9,202
In more than 5 years
2,186
2,185
3,424
3,429
Total
23,231
22,625
26,813
25,740 Future financial costs
6,744
181
305
4,914
6,440
12,123 3,021
Within 12 months
2,729
3,015
Within 1–5 years
2,151
3,282
34
143
4,914
6,440
6,889
8,833
466
3,171
7,356
6,961
11,919
Financial leasing liabilities
2,729
2,729
3,015
139
139
271
271
10,224
9,829
15,205
15,415
Total
167
5,095
Current value of financial leasing liabilities The current value of financial leasing liabilities expires as follows:
Current Loans from financial institutions Derivative liabilities
37
In more than 5 years Total
The Group’s financial liabilities as of 31 December 2015 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:
BUSINESS OPERATIONS
Financial leasing liabilities
2014 Fair value
Expiry of financial leasing liabilities The gross amount of financial leasing liabilities – minimum rents by expiry
RESPONSIBILITY
Bond loan
2015 Fair value
2014 Carrying amount
Bank loans 1-6 months 6-12 months 1–5 years Total
11,121
13,402
18,477
25,504
Bond loans 1-6 months
CORPORATE GOVERNANCE
Non-current Loans from financial institutions
2015 Carrying amount
6-12 months 1–5 years
9,924
9,902
Total
9,924
9,902
Derivative liabilities 1-6 months 6-12 months 1–5 years
139
271
Total
139
271
FINANCIAL STATEMENT
23. Financial liabilities
ENFO 2015
IFRS, EUR 1,000
66
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Bond loan
3,2
3,0
Financial leasing liabilities
3,5
3,7
Other non-current non-interest-bearing liabilities
2015
2014
5,005
1,036
9,390
Income tax liability
676
1,286
Advances received
510
815
Accrued liabilities 10,289
9,619
Other accrued liabilities
1,437
1,119
Total accrued liabilities
11,726
10,738
Other liabilities Current non-interest-bearing liabilities, total Accounts payable and other non-interest-bearing payables, total
Group share of votes, %
Kuopio
100%
100%
Enfo Holdings Oy
Kuopio
100%
100%
Enfo Zender Oy
Kuopio
100%
100%
Espoo
51%
51%
Espoo
51%
51%
Tukholma
100%
100%
Enfo Sweden AB
Göteborg
100%
100%
Enfo Forward AB
Göteborg
100%
100%
Enfo Zystems AB
Göteborg
100%
100%
Enfo Zipper AB
Göteborg
100%
100%
Enfo Zingle AB
Göteborg
100%
100%
Kuopio
100%
100%
Enfo Oyj’s subsidiaries:
Rongo Oy 9,691
Personnel-related liabilities
Group share of share capital, %
Parent company: Enfo Oyj
Current Trade payables
Registered office
Company name
24. Accounts payable and other payables Other non-current liabilities
Group structure On 31 December 2015, the Group’s parent company and subsidiary relationships were as follows:
7,061
5,143
29,664
26,817
34,669
27,853
The carrying amount of trade and other payables corresponds to their fair value.
Rongo Ohjelmistot Oy Enfo Holdings AB
Zuite by Enfo Oy Zuite Business Consulting AB
Göteborg
30%
30%
Enfo Zuite AB
Göteborg
100%
100%
Enfo Pointer AB
Tukholma
100%
100%
Enfo EnjoyIT Intergration AB
Göteborg
100%
100%
Enfo Framsteg AB
Tukholma
100%
100%
Bröndby
100%
100%
Lillestöm
100%
100%
Framsteg Denmark ApS Enfo Norway Holdings AS
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
2,4
RESPONSIBILITY
2014
2,6
CORPORATE GOVERNANCE
2015
FINANCIAL STATEMENT
25. Information on related parties
On 31 December, the weighted averages of effective interest rates for interestbearing liabilities were as follows: Bank loans
ENFO 2015
IFRS, EUR 1,000
67
ENFO | Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Management’s perquisites
2015
2014
26. Information about corporate acquisitions
Salaries and other current employment benefits
1,906
1,749
On 2 November 2015, Enfo Oyj acquired 51% of the capital stock of Rongo Oy. Rongo Oy is a Finnish expert company specialising in information management. Rongo Oy is the parent company of the Rongo Group and owns 100% of Rongo Ohjelmistot Oy, a Group company. The Rongo sub-group was included in the consolidated financial statements from 2 November 2015. The company’s two-month turnover was EUR 1.3 million and operating profit EUR -0.2 million. The business of the Rongo sub-group is included in the IT Services segment.
2015
2014
641
389
550
183
27
183
22
8
0
0
Sales of goods and services Parent and subsidiaries Other operating income Parent and subsidiaries Purchases of goods and services Parent and subsidiaries Sales and other receivables Parent and subsidiaries Accounts payable and other payables Parent and subsidiaries
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.
Consideration paid for the acquisition Paid in cash and by a directed share issue Additional purchase price
5,268
Contingent consideration
4,782
Total consideration
10,900
The values of the acquired assets and liabilities were as follows on the acquisition date: Acquired company’s assets and liabilities Customer relationships
Fair value 1,957
Product brands
438
Technology
460
Other intangible assets Tangible assets
On 1 April 2015, Enfo sold its unit concentrating on metering services to Voimatel, a Finnish producer of electrical and data network services. Voimatel Oy is a wholly-owned subsidiary of Osuuskunta KPY, the biggest shareholder of Enfo Oyj. In the transfer of business, nine Enfo employees were transferred to Voimatel Oy as established employees. The divested metering services included remote reading and control services for meters, life cycle management services for meters, balance reports and reporting of energy data. The Enfo Group started the remote reading service for energy meters, or the metering service business, in 2007.
850
Sales and other receivables
1 321 2,255
Cash and cash equivalents
539
Deferred tax liabilities
-571
Other liabilities Trade payables and other current liabilities Acquired identifiable net assets
-456 -1,765 3,179
Less non-controlling interests
-439
Plus goodwill
8,159
Acquired net assets
RESPONSIBILITY
Other transactions with related parties and outstanding balances
CORPORATE GOVERNANCE
5 in the parent company’s financial statements.
10,900
FINANCIAL STATEMENT
Information about the parent company’s CEO and Board of Directors is presented in Note
BUSINESS OPERATIONS
ENFO 2015
IFRS, EUR 1,000
68
ENFO | Annual Report 2015
Loans from financial institutions
2015
2014
18,477
25,407
Business mortgage Subsidiary shares
0
11,396
0
16,395
During the financial period, the Group signed a new Creditors Agreement with financial institutions. The agreement replaced mortgage and share pledges. Derivative contracts
Rated value SEK (SEK 13,074,320) Rated value EUR
Payable later
2,500
3,535
Total
6,137
6,971
Other rental liabilities
7,315
6,668
Other contingent liabilities
45
118
208
330
Total
7,568
7,116
Total
13,705
14,086
Bank guarantees
2015
Expiry of rental and leasing liabilities Other leasing agreements – total amount of minimum rents
2014
-115
-243
1,423
4,176
5,850
6,750
2015
2014
13,452
13,638
Within 12 months
6,393
6,074
Within more than a year and less than five years
7,058
7,564
13,451
13,638
BUSINESS OPERATIONS
3,436
Within more than 5 years Total
Interest swaps Fair value
2014
3,637
The Group’s leasing agreement obligations relate to rented premises, cars and other rented assets.
The Group has the following contingent liabilities: Debts and their securities
2015
Payable during the current financial period
The agreements do not include any significant sublease relationships or contingent leases.
CORPORATE GOVERNANCE
27. Liabilities
Leasing liabilities
FINANCIAL STATEMENT
The goodwill is created by the expected synergies between the Enfo Group and Rongo Oy as well as by the personnel of the acquired company. The acquisition-related costs of EUR 143,000 are included in other expenses in the income statement and in cash flows from business operations in the cash flow statement. The Group’s turnover in 2015 would have been EUR 147.5 million and operating profit EUR 8.3 million if the above acquisition of Rongo Oy had been consolidated in the consolidated financial statements starting from the beginning of the 2015 financial period.
RESPONSIBILITY
IFRS, EUR 1,000
ENFO 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
69
INCOME STATEMENT
BALANCE SHEET
NOTES TO THE FINANCIAL STATEMENTS DATE AND SIGNATURES OF THE FINANCIAL STATEMENTS
AUDITOR’S NOTE
BUSINESS OPERATIONS CORPORATE GOVERNANCE
CASH FLOW STATEMENT
AUDITOR’S REPORT FOR ENFO OYJ’S ANNUAL GENERAL MEETING
FINANCIAL STATEMENT
71 72 73 74 82 82 84
RESPONSIBILITY
THE PARENT COMPANY’S FINANCIAL STATEMENTS, 31 DECEMBER 2015 (FAS)
ENFO 2015
ENFO | Annual Report 2015
70
1 Jan–31 Dec 2014
Turnover
2
45,912
49,254
Other operating income
3
4,917
3,674
Materials and services
4
-20,394
-21,125
Personnel expenses
5
-16,730
-18,261
Depreciation and amortisation
6
-647
-676
Other operating expenses
7
-8,715
-9,236
4,342
3,631
8
1,787
-871
6,129
2,761
9
1,000
3,850
7,129
6,611
-1,426
-1,383
5,703
5,228
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
1 Jan–31 Dec 2015
RESPONSIBILITY
NOTE
CORPORATE GOVERNANCE
FAS, EUR 1,000
FINANCIAL STATEMENT
THE PARENT COMPANY’S INCOME STATEMENT (FAS)
ENFO 2015
ENFO | Annual Report 2015
71
THE PARENT COMPANY’S BALANCE SHEET (FAS) FAS, EUR 1,000
NOTE
31 Dec 2015
31 Dec 2014 1,556
160
136
13
30,541
19,606
13
45
44
31,779
21,342
Investments
Total non-current assets Current assets Inventories
14
165
183
Non-current receivables
15
35,768
35,111
Current receivables
16
30,018
32,666
Marketable securities
17
2
2
Cash in hand and at bank
18
4,860
12,709
70,813
80,670
102,592
102,012
Share capital
19
265
265
Share premium account Reserve for invested non-restricted equity
19
13,316
13,316
19
2,893
1,912
Other reserves
19
11,576
11,562
Profit/loss from previous periods
15,743
13,912
Profit/loss for the period
5,703
5,228
49,498
46,194
95
105
20
25,769
23,487
21
27,230
32,225
52,999
55,712
102,592
102,012
Total equity Obligatory provisions Liabilities Non-current Current Total liabilities TOTAL EQUITY AND LIABILITIES
BUSINESS OPERATIONS
1,033
TOTAL ASSETS
31 Dec 2014
RESPONSIBILITY
11 12
Total current assets
31 Dec 2015
CORPORATE GOVERNANCE
Intangible assets
Other shares and participations
NOTE
Equity
Tangible assets Holdings in Group companies
EQUITY AND LIABILITIES
FINANCIAL STATEMENT
ASSETS Non-current assets
ENFO 2015
ENFO | Annual Report 2015
72
THE PARENT COMPANY’S CASH FLOW STATEMENT FAS, EUR 1,000
1 Jan–31 Dec 2014
5,703
5,228
647
Loss from assignment for fixed assets Obligatory provisions Extraordinary items Taxes Change in working capital Change in inventories, increase (-), decrease (+) Change in current and non-interest-bearing receivables, increase (-), decrease (+) Change in current and non-interestbearing liabilities, increase (+), decrease (-)
48 -1,787
871
-11
-53
-1,000
-3,850
1,426
1,383
Dividends received Interest received and other financial income Taxes paid Change in Group receivables/liabilities Total cash flow from operations
-364
-23
Assignment of tangible assets Acquisition of subsidiaries
25 -4,458
Decrease in non-current receivables Changes in other investments Total cash flow from investments
4,185 0 -4,607
3,824
-3,478
-,3,185
-1
-16
11,501
20,048
Cash flow from financing Payment of dividends 18 550
-18 1,663
-73
-351
-1,056
-,1,276
10
14
Acquisition/sale of treasury shares Share issue Withdrawal of loans Withdrawal of a bond loan Repayment of current loans
Interest paid and other financial costs
-149
332
806
-1,290
-2,156
-51
-3,471
3,417
-486
10,000 -18,531
Increase in loan receivables Group contribution
-12,292 -11,443
3,850
4,100
Total cash flow from financing
-6,659
7,211
Change in cash and cash equivalents
-7,849
10,549
Cash and cash equivalents on 1 Jan.
12,709
2,160
Cash and cash equivalents on 31 Dec.
4,860
12,709
RESPONSIBILITY
Financial items
676
Purchases of intangible assets
CORPORATE GOVERNANCE
Depreciation and amortisation
1 Jan–31 Dec 2014
FINANCIAL STATEMENT
Profit for the period Adjustments to operating profit
1 Jan–31 Dec 2015 Cash flow from investment activities Purchases of property, plant and equipment
BUSINESS OPERATIONS
1 Jan–31 Dec 2015 Cash flow from operating activities
ENFO 2015
ENFO | Annual Report 2015
73
NOTES TO THE FINANCIAL STATEMENTS Research and product development costs
Valuation of inventories
Notes to the income statement
Inventories are presented at the lower 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.
Measurement principles MEASUREMENT OF NON-CURRENT ASSETS
Pensions
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 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
Other machinery and equipment
3–5 years 10 years
FINANCIAL STATEMENT
Other tangible assets
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.
RESPONSIBILITY
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.
The depreciation periods are:
BUSINESS OPERATIONS
Research and product development costs are mainly recognised as annual expenses in the year in which they were generated.
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.
ENFO 2015
ENFO | Annual Report 2015
74
ENFO | Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS 2. Geographic distribution of turnover
6. Depreciation and amortisation
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
Geographically 45,745
4,116
3,481
11
29
45,912
49,254
3. Other operating income
Goodwill
1 Jan–31 Dec 2014
0
0
Others
4,914
Total
4,917
Other machinery and equipment Total
External services Total
Other indirect employee costs Total
1,207
3,674
Travel expenses
636
624
3,674
Costs of premises
1,897
2,027
620
676
1,866
1,442
Other administrative expenses
1,116
1,329
Telephone and data expenses Marketing, sales and representation expenses
256
298
781
1,025
Other operating expenses
606
608
8,715
9,236
1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
94
79
Hardware and software expenses 1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
4,877
7,156
18
-18
15,500
13,987
20,394
21,125
Total
7.2 Auditors’ fee 1 Jan–31 Dec 2015
1 Jan–31 Dec 2014
13,520
14,840
Auditing Tax guidance
2,490
2,693
719
728
16,730
18,261
253
263
365
372
Number of employees Average Salaries, wages and fees for the management Managing Director, Deputy Managing Director and Board of Directors
164 676
1 Jan–31 Dec 2014
Indirect employee costs Pension costs
94 647
937
5. Personnel expenses Salaries, wages and fees
0
1 Jan–31 Dec 2015
4. Materials and services Change in inventories
512
0
Other personnel expenses
Vehicle expenses
Purchases during the period
553
7.1 Other operating expenses 1 Jan–31 Dec 2015
Capital gains from fixed assets
Intangible assets
Other services Total
11
2
33
71
138
152
BUSINESS OPERATIONS
41,785
RESPONSIBILITY
Total
1 Jan–31 Dec 2014
CORPORATE GOVERNANCE
Other countries
1 Jan–31 Dec 2015 Depreciation according to plan
FINANCIAL STATEMENT
Finland EU countries
ENFO 2015
FAS, EUR 1,000
75
ENFO | Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
1 Jan–31 Dec 2014
From Group companies From others Total
9
14
1
0
10
14
From others Total
1,799
2,218
39
29
1,838
2,247
Total Total financial income
1,270
819
1,270
819
3,117
3,080
5
Reversal of impairment
-1
Total impairment
-1
5
1 Jan–31 Dec 2014
1,412
1,300
Taxes from previous periods
-10
-2
Change in deferred tax assets
24
84
1,426
1,383
Total
and by a statutory provision. The deferred tax asset regarding the interest rate swap associated with cash flow hedging is recorded in equity. The amount of deferred tax assets is presented in Note 15.
11. Intangible assets Intangible rights
31 Dec 2015
31 Dec 2014
797
797
797
797
-745
-702
-40
-42
-785
-745
Carrying amount on 1 Jan.
53
95
Carrying amount on 31 Dec.
12
53
Acquisition cost on 1 Jan. Increases
Interest expenses and other financial costs To Group companies
134
200
To others
869
804
Exchange rate losses
1 Jan–31 Dec 2015
10. Income tax
NOTES TO THE BALANCE SHEET
Impairment of commodities in permanent receivables
Total
3,850
Deferred tax assets are caused by a negative depreciation difference of EUR 277,514.59
Other financial income Exchange rate gains
1 Jan–31 Dec 2014
1,000
Income taxes on ordinary activities
Interest income From Group companies
1 Jan–31 Dec 2015 Group contribution
329
2,942
1,331
3,946
BUSINESS OPERATIONS
1 Jan–31 Dec 2015 Dividend income
RESPONSIBILITY
9. Extraordinary items
Decreases Acquisition cost on 31 Dec. Accumulated depreciation and impairment on 1 Jan.
CORPORATE GOVERNANCE
8. Financial income and expenses
ENFO 2015
FAS, EUR 1,000
Total financial expenses
1,330
3,951
The financial income and expenses include Exchange rate losses/gains (net) Total financial income and expenses
941
-2,123
1,787
-871
Depreciation for the period Accumulated depreciation and impairment on 31 Dec.
FINANCIAL STATEMENT
Depreciation on decreases and transfers
76
ENFO | Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
9,788
9,788
Machinery and equipment
Accumulated depreciation and impairment on 1 Jan. Depreciation for the period Accumulated depreciation and impairment on 31 Dec.
-9,788
-9,788
0
0
-9,788
-9,788
Carrying amount on 1 Jan.
0
0
Carrying amount on 31 Dec.
0
0
31 Dec 2015
31 Dec 2014
6,119
5,546
24
364
6
210
Other long-term expenses Acquisition cost on 1 Jan. Increases Transfers between items Decreases Acquisition cost on 31 Dec. Accumulated depreciation and impairment on 1 Jan. Depreciation on decreases and transfers Depreciation for the period Accumulated depreciation and impairment on 31 Dec. Carrying amount on 1 Jan. Carrying amount on 31 Dec. Total intangible assets
0
0
6,149
6,119
Acquisition cost on 1 Jan.
31 Dec 2015
31 Dec 2014
6,894
7,018
Increases
0
23
Decreases
0
-146
6,894
6,894
-6,770
-6,679
Acquisition cost on 31 Dec. Accumulated depreciation and impairment on 1 Jan. Depreciation on decreases and transfers
0
73
-94
-164
-6,864
-6,770
Carrying amount on 1 Jan.
124
339
Carrying amount on 31 Dec.
30
124
Depreciation for the period Accumulated depreciation and impairment on 31 Dec.
Other tangible assets
31 Dec 2015
31 Dec 2014
Acquisition cost on 1 Jan.
5
5
Acquisition cost on 31 Dec.
5
5
Carrying amount on 1 Jan.
5
5
Carrying amount on 31 Dec.
5
5
31 Dec 2015
31 Dec 2014
6
216
-4,615
-4,145
0
0
-513
-470
-5,128
-4,615
Advance payments and purchases in progress
1,504
1,400
Acquisition cost on 1 Jan.
1,021
1,504
Increase
1,033
1,556
Carrying amount on 31 Dec.
125
6
Total tangible assets
160
136
Decrease/transfer
125
0
-6
-210
BUSINESS OPERATIONS
Acquisition cost on 31 Dec.
RESPONSIBILITY
12. Tangible assets
9,788
CORPORATE GOVERNANCE
31 Dec 2014
9,788
FINANCIAL STATEMENT
31 Dec 2015
Acquisition cost on 1 Jan.
Goodwill
ENFO 2015
FAS, EUR 1,000
77
ENFO | Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS 13. Investments
15. Non-current receivables 31 Dec 2015
31 Dec 2015
31 Dec 2014
Carrying amount on 31 Dec.
30,541
19,606
Loan receivables
35,624
34,846
Total
35,624
34,846
98
147
19,606 Deferred tax assets Other non-current receivables
Group companies have been presented in the notes to the IFRS financial statements. 31 Dec 2015
Total
31 Dec 2014
Other shares and participations 44
Decreases Carrying amount on 31 Dec. Total investments
49 -5
1 45 30,586
44 19,650
31 Dec 2015
31 Dec 2014
Materials and supplies on 1 Jan.
183
165
Change in inventory
-18
18
165
183
Total
118 35,111
31 Dec 2015
31 Dec 2014
16. Current receivables Receivables from Group companies Trade receivables Loan receivables Group account receivables Other accrued income Total Trade receivables
14. Inventories
45 35,768
BUSINESS OPERATIONS
10,934
310
384
3,779
3,696
10,469
11,443
8,111
9,054
22,670
24,577
5,900
6,841
Prepayments and accrued income Pension insurance premiums
276
52
Income tax receivables
192
304
Purchase invoice periods
858
780
Other accrued income
104
90
1,430
1,227
18
21
30,018
32,666
Total Other receivables Total current receivables
RESPONSIBILITY
19,606
CORPORATE GOVERNANCE
Carrying amount on 1 Jan. Increase
Refund of depreciation
31 Dec 2014
Receivables from Group companies
FINANCIAL STATEMENT
Holdings in Group companies
Carrying amount on 1 Jan.
ENFO 2015
FAS, EUR 1,000
78
ENFO | Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS ENFO 2015
FAS, EUR 1,000
17. Marketable securities 31 Dec 2014
Shares and participations
Retained earnings on 1 Jan.
19,140
17,113
Carrying amount on 1 Jan.
2
Distributed dividends
-3,478
-3,185
Revision
0
-5
-16
Financial securities (carrying amount) on 31 Dec.
2
15,657
13,912
Change in treasury reserve
Profit/loss for the period
18. Cash in hand and at bank 31 Dec 2015
31 Dec 2014
Cash in bank accounts
4,860
12,709
Total
4,860
12,709
19. Equity 31 Dec 2015
31 Dec 2014
Share capital on 1 Jan.
265
265
Share capital on 31 Dec.
265
265
Share premium account on 1 Jan.
13,316
13,316
Share premium account on 31 Dec.
13,316
13,316
1,912
1,912
Reserve for invested non-restricted equity on 1 Jan. Capital gain from treasury shares
3
Share issue Reserve for invested non-restricted equity on 31 Dec.
2,893
1,912
Other reserves on 1 Jan.
11,562
11,536
Change in hedging reserves Other reserves on 31 Dec.
Retained earnings on 31 Dec.
978
101
25
11,663
11,562
5,703
5,228
49,498
46,194
Retained earnings
15,657
13,912
Other reserves
11,663
11,562
Reserve for invested non-restricted equity
2,893
1,912
Profit for the period
5,703
5,228
35,917
32,613
Total equity on 31 Dec. Statement of distributable equity on 31 Dec.
Total
RESPONSIBILITY
2
Treasury shares and major shareholders are presented in Note 21 to the consolidated financial statements.
CORPORATE GOVERNANCE
2
BUSINESS OPERATIONS
31 Dec 2015
31 Dec 2014
FINANCIAL STATEMENT
31 Dec 2015
79
ENFO | Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS 21. Current liabilities
13,487
Bond loan 2014/2019, 1.85%
10,000
10,000
Other non-current liabilities
4,648
Non-current liabilities, total
25,769
23,487
7,356
11,919
Total loans
7,356
11,919
Liabilities to Group companies Trade payables
80
105
Other liabilities
11,191
12,089
Total
11,272
12,194
Trade payables
2,842
2,678
510
559
2,652
2,971
Advances received Accrued liabilities Personnel-related liabilities Expense provisions Total
153
221
2,805
3,192
BUSINESS OPERATIONS
11,121
31 Dec 2014
Loans to financial institutions
RESPONSIBILITY
Loans to financial institutions
31 Dec 2015
31 Dec 2014
Other liabilities Valuation debt of derivatives Other liabilities Total Total current liabilities
139
271
2,307
1,411
2,446
1,683
27,230
32,225
CORPORATE GOVERNANCE
31 Dec 2015 Liabilities expiring in less than 5 years
FINANCIAL STATEMENT
20. Non-current liabilities
ENFO 2015
FAS, EUR 1,000
80
22. Commitments, contingent liabilities and other liabilities 31 Dec 2015
31 Dec 2014
Loans from financial institutions
18,477
25,407
Total loans
18,477
25,407
ENFO 2015
ENFO | Annual Report 2015
Commitments given Business mortgage
0
11,396
Subsidiary shares
0
16,396
BUSINESS OPERATIONS
Debts and their securities
institutions. The agreement replaced mortgage and share pledges.
Contingent liabilities and other liabilities
31 Dec 2015
31 Dec 2014
6,019
6,127
Leasing liabilities
RESPONSIBILITY
During the financial period, the company signed a new Creditors Agreement with financial
Total Other contingent liabilities Deposits as rental security on the balance sheet
5,311
7,165
11,330
13,291
45
118
Bank guarantees
208
330
Leasing liabilities
6,532
5,437
152
170
Share redemption commitments
FINANCIAL STATEMENT
Paid during the current financial period Payable later
CORPORATE GOVERNANCE
Amounts paid for leasing agreements
81
SIGNATURES TO THE FINANCIAL STATEMENTS AND THE BOARD OF DIRECTORS’ REPORT
ENFO 2015
ENFO | Annual Report 2015
Timo Kärkkäinen
Soili Mäkinen
Arto Herranen CEO
AUDITOR’S NOTE A report has been issued today on the audit performed.
RESPONSIBILITY
Lauri Kerman
CORPORATE GOVERNANCE
Tapio Hakakari
BUSINESS OPERATIONS
Kuopio, 1 March 2016
PricewaterhouseCoopers Oy Authorised Public Accountants
FINANCIAL STATEMENT
Kuopio, 1 March 2016
Pekka Loikkanen Authorised Public Accountant
82
Responsibility of the Board of Directors and the CEO 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, 1 March 2016 PricewaterhouseCoopers Oy Authorised Public Accounting Firm
Pekka Loikkanen Authorised Public Accountant
BUSINESS OPERATIONS
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.
RESPONSIBILITY
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 2015. 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.
CORPORATE GOVERNANCE
(translated from the Finnish original)
FINANCIAL STATEMENT
AUDITOR’S REPORT TO ENFO OYJ´S ANNUAL GENERAL MEETING
ENFO 2015
ENFO | Annual Report 2015
83
CORPORATE GOVERNANCE
IN THE DIGITAL DIMENSION
FINANCIAL STATEMENT
SIMPLER, SMOOTHER, SMARTER BUSINESS
RESPONSIBILITY
BUSINESS OPERATIONS
ENFO 2015
ENFO | Annual Report 2015
84
ENFO OYJ FINLAND Head Office Viestikatu 7 70600 Kuopio, Finland www.enfo.fi
ENFO SWEDEN AB SWEDEN Lindholmspiren 3B 40276 Göteborg, Sweden www.enfo.se
