Q1 2017 - hugin.infohugin.info/131926/R/2099167/795991.pdf · the strong position within IoT,...

Connectivity

Security

Software & APPs

IoT / Digitalisation

R&D ServicesEmbedded Solutions

Q1 2017

Digitalisation of the industries

of tomorrow

2 data respons asa – quarterly report 1. quarter 2017

Revenue in the first quarter was NOK 293 million (244), a growth of 20 %. EBITDA was NOK 24.2 million (13,2). Net profit was NOK 36.3 million (8.6) and the earnings per share for the quarter was NOK 0.69 (0.15). The order intake during the quarter totalled NOK 363 million (312). The order backlog was NOK 851 million (759) at the end of the quarter. Data Respons had a cash flow from operating activities of NOK -16.6 million (4.5) in the first quarter. The total number of employees at March 31, 2017 was 522 (429).

Data Respons achieved record high revenues in the first quarter, driven by solid per-formance in the R&D Services segment with a growth of 50 %. The company continued the positive development internationally with bolt-on acquisitions and healthy organic growth. The Solutions segment declined in the same period mainly due to lower deliv-eries in Maritime, Oil & Gas industry and associated sectors.

Profitability increased significantly in the first quarter for the R&D Services segment due to high overall utilisation, recruitment ability and good inflow of specialist assign-ments and large turnkey R&D projects. In the Solutions segment, the decline in rev-enue has been compensated with lower costs due to continued initiatives and good discipline into 2017, resulting in an unchanged EBITDA margin in first quarter.

Revenue growth in the international operations has improved profitability. Sweden strengthened its position as the largest geographical region in the company with 50 % of total revenue, while 18 % of the total revenue came from Germany. Norway ac-counted for 25 % of the revenue in Data Respons. The positive momentum is due to the strong position within IoT, industrial digitalisation and embedded technologies. Major contract signings came from key customers within Medical, Smart grid / Smart home, Transport & Automotive, Telecom, Defence and Industry & Automation.

The company’s order backlog ended at NOK 851 million, which is the highest level in the company’s history. During the first quarter, Data Respons acquired the remain-ing 50 % of the shares in Techpeople A/S, a SW specialist company in Denmark with headquarters in Copenhagen. The company will strengthen Data Respons position as a leading player within R&D Services in Denmark. TechPeople’s profit and loss statement

Q1: QUARTERLY REPORT 2017

KEY FIGURES

NOK million Q1 17 Q1 16

Operating revenue 293.4 243.6

EBITDA 24.2 13.2EBIT 21.5 12.1Profit before tax 40.5 10.5

REVENUE BY REPORTING SEGMENT

NOK million Q1 17 Q1 16

R&D Services 174.7 116.4

Solutions 119.7 128.0Eliminations -1.0 -0.7Group 293.4 243.6

Summary of Q1 2017 � Revenue of NOK 293 million � EBITDA of NOK 24.2 million � Order intake of NOK 363 million � Net profit of NOK 36.3 million � Earnings per share NOK 0.69

In the report, we compare the income state-ment with figures from the same period in 2016 and with financial position at year end 2016 (in brackets).


55%

5%

30%

10%

SOLUTIONS R&D SERVICES

Order backlog

and balance sheet has been fully consolidated in the accounts of Data Respons from March 1, 2017.

Data Respons has remeasured its previously held equity interest in TechPeople at its acquisition date fair value and have recognised the resulting gain of NOK 26 million as a financial income under net finan-cial items in the income statement.

Financial position and liquidityThe company’s book value of total assets at the end of the first quarter was NOK 858 million (786). The company’s equity was NOK 335 million (283), resulting in an equity ratio of 39 % (36 %).

Current assets amounted to NOK 355 million (339) and current liabilities were NOK 288 million (296). At March 31, 2017, the non-current assets amounted to NOK 503 million (447), of which deferred tax assets of NOK 11 million (11) and other intangible assets including goodwill was NOK 483 million (425).

The company’s cash flow from operations in the first quarter was NOK -16.6 million (4.5). The negative cash flow from operations was due to seasonality and fluctuations between forth quarter 2016 and first quarter this year. In the fourth quarter 2016 the operating cash flow was NOK 46.5 million. On a 12 months rolling basis the cash flow from operations was strong with NOK 58.3 million.

The cash balance on March 31, 2017 was NOK 47 million (of which NOK 3 million is restricted). The company had interest bearing debt of NOK 92 million, whereof NOK 11 million is current interest bearing debt.

The Board of Directors propose to distribute a dividend of NOK 1.00 per share for 2016. Following the resolution by the annual general meeting on Thursday April 27, 2017 the DAT share will be traded ex-dividend on April 28, 2017.

Operating segments

R&D servicesRevenue in the first quarter was NOK 175 million (116), a growth of 50 %. EBITDA before corporate cost was NOK 21.1 million (8.7), resulting in an EBITDA margin of 12.1%. The order intake totalled NOK 237 million (169) during the quarter.

The company experienced record high revenue and profitability in R&D Services in the first quarter due to high utilisation, increasing re-cruitment ability and good inflow of new assignments and turnkey R&D projects. The unique competence base in the embedded, digitalisation and IoT technologies provides increasing opportunities going forward.

Data Respons continues to leverage on its leading position in offering customers access to highly skilled specialists and project teams with a broad range of expertise from future oriented technologies areas like automation, IoT, digitalisation and different embedded solution disciplines. A strong competence platform is strategically important in order to develop new recurring solution customers and to stand out as a complete solutions provider in the market.

In March 2017, Data Respons acquired the remaining 50 % of the shares in TechPeople A/S, a SW specialist company in Denmark with headquarters in Copenhagen. The company has more than 50 em-ployees and associated consultants that are experts in software and application development, architecture and system design as well as communication for embedded and IoT solutions. The acquisition strengthens Data Respons’ position as a leading player within R&D Ser-vices in Denmark. SolutionsRevenue in the first quarter was NOK 120 million (128), a decline of 6 %. EBITDA before corporate cost was NOK 6.5 million (7.0), resulting in an EBITDA margin of 5.5%. The order intake totalled NOK 126 million (142) during the quarter.

Q1 15 Q1 16 Q1 17

Revenue293

Q1 15 Q1 16 Q1 17

Order intake363

Q1 15 Q1 16 Q1 17

EBITDA24.2

Q1 2013 - Q1 2017

851

The company continued the positive development internationally with bolt-on acquisitions and healthy organic growth. “


55%

5%

30%

10%

The decline in revenues in Solutions was mainly due to the weak market conditions in the Maritime, Oil & Gas industry and associated sectors, following the trend from the last quarters. Several cost-reducing initiatives have been implemented in Solutions going into 2017, which has compensated the impact on profitability from declined revenues. Although the market situation is not expected to change in the near term, there are some early signs that the market is bottoming out during 2017.

During the quarter, the growth internationally and the strong decline in Norway has led to a change in the customer mix towards new customers in other sectors than the Mari-time, Oil & Gas industry and to other geographical markets. The order intake follows the same pattern as the revenue, with positive development internationally while the Nor-wegian region still is weak. Major orders came from key customers in Medical, Telecom, Transportation, Defence and Industry & Automation. The pipeline of larger solution con-tracts in the industrial IoT area has increased during the quarter.

Data Respons is positioned as the leading provider of smart devices, embedded and in-dustrial IoT solutions in the Nordic region. The company has a strong and increasing base of recurring solution customers and has a solid order backlog. Solution deliveries secure long-term and strategically important customer relationships and provide a significant potential for future growth.

In order to meet the continued demand for increased SW content, connectivity, higher performance and more functionality, many of our customers focus on strategic partner-ships. Our customers can get access to specialist competence, shorter time-to-market and achieve lower costs of ownership by using Data Respons. The long-term profitability is expected to improve based on a competence oriented and focused business model. This includes strategic relationships with customers in main markets, higher SW content, more value add services and global partners.

Market developmentData Respons has a solid and well balanced customer base within several industry sectors, based upon our strong competence within IoT, digitalisation and embedded technologies. Our geographical footprint and more than 30 years of experience have given the company relevant vertical competence within these markets.

The customer list includes world-leading companies such as ABB, Analogic, Assa Abloy, Bombardier, Cisco, Ericsson, Hexagon, Hydro, Klarna, Kongsberg Group, Maquet, National Oilwell Varco, Raytheon, Rolls Royce, Saab, Scania, Schlumberger, Siemens, Statoil, TDC, Tomra, Thales, Thermo Fisher Scientific and Volvo. The number of blue-chip customers is increasing and the company expects this trend to continue going forward.

There is a large business potential in industrial IoT and the digital transformation of our key markets such as Automotive, Smart grid/Smart home, Banking/Insurance, Telecom, De-fence, Maritime, Medical and Industry/Automation. The trend with increased automation, digitalisation and everything connected (IoT) fit well with both of the company’s business units and competence map. We can develop anything from sensor level to the mobile app, making us a good partner for our customers with their digital transition. Areas in which Data Respons is involved:

� Automotive projects like connected car, digital transition of car infotainment systems and telematics solutions

� Smart grid / Smart home solutions � Digital ship and maritime IoT applications � Digital transition of Banking/Insurance infrastructure and systems � Advanced security and communication systems for defence applications

� Projects of transforming telecommunication, mobile structure and connectivity platform towards full IoT accessibility

� Data acquisition sensor systems to improve efficiency of oil exploration

� Future Medtech applications with IoT solution capabilities and a complete digital SW platform

� Software-heavy cloud infrastructure systems � Software components and solutions for IoT applications � SW end-to-end systems and digital transition of existing industrial products and installations

Based on feedback from our customers and partners, the company expects a growing market for IoT devices, automation and robotics, advanced communication solutions,

REVENUE BY COUNTRY

Norway25 %

Sweden50 %

Denmark7 %

Germany18 %

REVENUE BY SEGMENT

R&D Services

59 %

Solutions41 %

REVENUE BY INDUSTRY

Other 4 %

Industry / Automation

19 %

Finance & Media 9 %

Public 2 %

Transport / Automotive

18 %Telecom 14 %

Defence & Security

11 %

Mar

itim

e 6

%

Oil Services

8 %

Medical9 %

EARNINGS PER SHARE (NOK 0.69)

2013 2014 2015 2016 Q1 17


55%

5%

30%

10%

connected and integrated systems and the use of consumer-based technologies (mobility, digitalisation). In addition, there is a growing demand for cost-effective and robust solutions for demanding environmental conditions, areas in which Data Respons has strong compe-tence and experience.

Geographic regionsData Respons is located in the Nordic region, Germany and Taiwan. Our business model is based on close cooperation with our customers and understanding their business needs. To facilitate close cooperation, Data Respons believes in having regional offices with skilled engineering staff (specialist level) in important industrial clusters to build strategic and long-term relationships with our key customers.

Data Respons Sweden accounted for 50 % of the total revenue and was the largest mar-ket area in the first quarter. The positive development in revenue growth and profitability improvement continued in Sweden. The Swedish part of the company has built a strong position in several vertical markets such as Transportation, Telecom, Defence, Industry and Automation, gaining the ability to win new IoT, digitalisation and embedded solution con-tracts with large customers. The company’s R&D Services segment has frame agreements with more than 30 large industrial companies.

Data Respons Norway accounted for 25 % of the group’s revenue in the first quarter. De-spite the demanding conditions in major industries like the Maritime, Oil & Gas industry, the market showed a small revenue growth again (2 %). Export-oriented customers within other sectors have had a positive development and are increasingly important going forward. The company’s focus is to improve the customer base in sectors such as IoT, Industry and Auto-mation, Telecom, Medical, Public and Defence.

Data Respons Germany continued the positive development in the first quarter and repre-sents 18 % of the company’s revenue in the first quarter. Germany is the largest market in the embedded and IoT industry in Europe, estimated to 1/3 of the total European market.

Data Respons Denmark represents 7 % of the company revenue and will strengthen its po-sition based on the recent acquisition of Techpeople. Data Respons also has a Quality and Technology Centre in Taiwan where projects are carried out in cooperation with our Asian partners.

The digitalisation trend is an attractive growth opportunity for our company since it involves most of our current market areas.

FINANCIAL CALENDAR 201727.04.17 Presentation of Q1 17 27.04.17 Annual General Meeting28.04.17 Ex Dividend Date14.07.17 Presentation of Q2 1720.10.17 Presentation of Q3 1731.01.18 Presentation of Q4 17

SHAREHOLDER HOLDING SHARE

CUSTOM HOLDING AS 16 087 279 32.39 %MP PENSJON PK 4 315 055 8.69 %

STOREBRAND VEKST 2 938 047 5.92 %

NORDEA NORDIC SC FUND 2 669 746 5.38 %

ACTIA NORDIC 2 362 266 4.76 %

HANDELSBANKEN SWED FUNDS 2 090 282 4.21 %VARNER INVEST AS 1 500 000 3.02 %HERALD INVESTMENT TRUST 1 024 387 2.06 %STOREBRAND NORGE I VPF 900 092 1.81 %CARNEGIE INV. BANK AB 891 833 1.80 %VPF STOREBRAND OPTIMA 668 417 1.35 %

NHO - P665AK 662 684 1.33 %

HSBC TTEE MARLB EUR TRUST 628 709 1.27 %

VPF DNB SMB 497 431 1.00 %

NORDNET BANK AB 443 741 0.89 %

DANSKE BANK A/S 440 900 0.89 %

ALTEA PROPERTY DEV. 431 717 0.87 %

VENTOR AS 384 257 0.77 %

AVANZA BANK AB 383 167 0.77 %

EUROVEST AS 350 000 0.70 %

Total 20 largest 39 670 010 79.88 %

Total others 9 992 784 20.12 %Total no. of shares 49 662 794 100 %

LARGEST SHAREHOLDERS (MARCH 31, 2017)

Share information The share price started at NOK 18.60 at the beginning of the year and ended at NOK 23.50 at March 31, 2017. The Data Respons share is listed at OB Match, and 2.4 million shares were traded and 2 372 transactions were registered at the Oslo Stock Exchange during the quarter. Data Respons had 1 195 shareholders at March 31, 2017. Data Respons ASA owned no treasury shares at March 31, 2017. The total number of out-standing shares at March 31, 2017 was 49 662 794.

SHARE PRICE PERFORMANCE

171819202122232425

MARCH 2017JANUARY 2017

“


INTERIM FINANCIAL STATEMENTSCONDENSED CONSOLIDATED

The contents of the condensed consolidated inte-rim financial statements are in compliance with the standard (IFRS) for interim reporting (IAS 34).

OutlookThe company believes that the long-term outlook for specialist R&D ser-vices, embedded solutions and IoT market is positive. The need for more intelligent and cost effective products, more mobility, increased automa-tion/robotising and the digitalisation of the society are driving forces in all our markets.

Data Respons is well-positioned as a full-service, independent technol-ogy company and a leading player in the Nordic region and Germany. The company has customers in a wide range of vertical industries and a balanced portfolio of blue-chip customers.

Although the market conditions are mixed, we continue to see opportu-nities in most of our key markets. Organic growth is the primary objec-tive for Data Respons, however selective acquisitions are continuously considered in the Nordics and Germany.

Profitable growth, positive operational cash flow and a strengthened position in key markets are Data Respons’ main focus areas. Based on the current demand from our customers, a focused organisation and a strong order backlog, the company expects growth, increased profitabil-ity and positive cash flow from operations going forward.

The Board of Directors of Data Respons ASAHøvik, April 26, 2017


INCOME STATEMENT

N0K MILLION Q1 17 Q1 16 2016

Sales revenue 293.0 243.4 1 038.0

Other income 0.4 0.2 1.7

Total revenue and other income 293.4 243.6 1 039.6

Cost of goods sold 137.9 125.9 516.7

Employee expenses 113.1 89.8 379.3

Other operating expenses 18.3 14.8 69.2

EBITDA 24.2 13.2 74.4

Depreciation 1.0 0.9 3.7

Amortisation of intangible assets 1.7 0.1 2.2

Operating profit (EBIT) 21.5 12.1 68.4

Net financial items 19.0 -1.6 0.4

Profit before income tax 40.5 10.5 68.8

Income tax expense 4.2 1.9 15.8

Profit for the period 36.3 8.6 53.0

PROFIT ATTRIBUTABLE TO:

- Owners of the company 34.5 7.1 46.8

- Non-controlling interests 1.8 1.5 6.2

Earnings per share (NOK) 0.69 0.15 0.95

Diluted earnings per share (NOK) 0.70 0.14 0.95

NOK MILLION Q1 17 Q1 16 2016

Profit for the period 36.3 8.6 53.0

OTHER COMPREHENSIVE INCOME

Items that may subsequently be reclassified to profit or loss

Currency translation differences 5.3 -4.4 -19.5

Currency translation differences on non-controlling interests 0.3 -0.7 -2.7

Other comprehensive income 5.6 -5.1 -22.2

Total comprehensive income 42.0 3.5 30.8

ATTRIBUTABLE TO:

- Owners of the parent 39.8 2.7 27.4

- Non-controlling interests 2.1 0.8 3.5

STATEMENT OF COMPREHENSIVE INCOME


NOK MILLION 31.03.2017 31.12.2016

Intangible assets 483.3 425.1

Deferred tax assets 10.7 10.6

Machinery and equipment 7.9 7.9

Other non-current assets 1.1 3.7

Total non-current assets 503.0 447.3

Inventories 29.1 34.7

Trade receivables 258.1 225.6

Other current receivables 21.0 15.5

Cash and cash equivalents 46.6 62.9

Total current assets 354.8 338.7

Total assets 857.8 786.1

Paid in capital 210.6 200.8

Other equity 93.6 53.7

Non-controlling interests 30.4 28.3

Total equity 334.6 282.8

Deferred tax liabilities 20.5 19.4

Interest-bearing loans and borrowings 81.4 80.6

Other non-current liabilities 133.0 107.4

Total non-current liabilities 234.9 207.4

Current interest-bearing loans and borrowings 10.6 14.7

Trade payables 104.3 111.0

Public duties payable / taxes payable 53.5 53.0

Other current liabilities 119.9 117.2

Total current liabilities 288.2 295.9

Total liabilities and equity 857.8 786.1

STATEMENT OF FINANCIAL POSITION


NOK MILLION Q1 17 Q1 16 2016

EBITDA 24.2 13.2 74.4

Income tax paid -2.9 -5.0 -10.8

Change in inventories 5.5 10.9 18.4

Change in trade receivables -17.0 20.8 -6.9

Change in trade payables -17.5 -23.2 -2.0

Other - operating activities -9.0 -12.1 6.4

Net cash flow from operational activities -16.6 4.5 79.4

Acquisition of subsidiaries, net of cash acquired -5.6 -0.5 -92.1

Purchase of machinery & equipment -0.9 -0.8 -2.2

Other - investing activities 2.6 0.7 1.1

Net cash flow from investing activities -3.9 -0.6 -93.2

Net change in overdraft/borrowings -3.6 - 96.9

Purchase/sale of treasury shares - - -4.7

Proceeds from issue of shares 9.9 - 2.4

Dividends paid to equity holders of the company - - -48.9

Dividends paid to non-controlling interests - - -2.9

Other - financing activities -3.2 -0.2 -2.6

Net cash flow from financing activities 3.0 -0.2 40.2

Net cash flow from the period -17.4 3.8 26.4

Cash at the beginning of the period 62.9 39.0 39.0

Exchange gain/losses on cash 1.1 -1.0 -2.6

Cash at the end of the period 46.6 41.8 62.9

HEREOF PRESENTED AS:

Free cash 43.3 38.5 58.2

Restricted cash 3.2 3.3 4.7

CASH FLOW STATEMENT


Attributable to equity holders of the companyNon-

controlling interests

TotalEquity

NOK MILLIONShare

capital Share premium

Translation differences

Other equity Total

EQUITY AT JANUARY 1, 2017 24.6 176.2 6.2 47.5 254.5 28.3 282.8

Profit/ loss for the period 34.5 34.5 1.8 36.3

Other comprehensive income for the period 5.3 5.3 0.3 5.6

Total comprehensive income - - 5.3 34.5 39.8 2.1 42.0

Issue of share capital 0.2 9.6 9.9 9.9

Equity at March 31, 2017 24.8 185.8 11.5 82.0 304.2 30.4 334.6

STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of the companyNon-

controlling interests

TotalEquity

NOK MILLIONShare

capital Share premium

Translation differences

Other equity Total

EQUITY AT JANUARY 1, 2016 24.5 174.0 25.7 54.2 278.4 27.5 305.9


Other comprehensive income for the period -4.4 -4.4 -0.7 -5.1

Total comprehensive income - - -4.4 7.1 2.7 0.8 3.5

Dividends paid - -0.2 -0.2

Employee share option scheme 0.1 0.1 0.1

Equity at March 31, 2016 24.5 174.0 21.3 61.5 281.2 28.1 309.3


Other comprehensive income for the period -15.1 -15.1 -2.0 -17.1

Total comprehensive income - - -15.1 39.7 24.6 2.7 27.3

Changes in non-controlling interests - 0.2 0.2

Dividends paid -48.9 -48.9 -2.8 -51.7

Employee share option scheme -4.7 -4.7 -4.7

Issue of share capital 0.1 2.2 2.3 2.3

Equity at December 31, 2016 24.6 176.2 6.2 47.5 254.5 28.3 282.8


NOTES TO THE CONDENSED CONSOLIDATEDINTERIM FINANCIAL STATEMENTS

Note 1: General information Data Respons is a full-service, independent technology company and a leading player in the embedded solutions market. The company is a public limited company, which is listed on the Oslo Stock Exchange and is incorporated in Norway. The address of the company is Sandviksveien 26, 1363 Høvik. These condensed consolidated interim financial statements have not been audited.

Note 2: Basis of preparation / accounting policies These condensed consolidated interim financial statements for the first quarter have been prepared in accordance with IAS 34, ‘Interim financial reporting’. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2016, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) and the interpretations set out by the Interna-tional Accounting Standards Board, as approved by the European Union.

The accounting policies adopted are consistent with those of the previous financial year.


Note 3: Operating segments The group is divided into two operating segments: R&D Services and Solutions.

R&D Services Data Respons delivers consultancy services, R&D development projects and experienced specialists with extensive industry knowledge.

SolutionsThe Solutions segment comprises development and delivery of custom solutions by combining engineering services with standard embedded com-puter products from leading partners or deliveries of standard embedded computer services.

Corporate Corporate comprises the activities of corporate services, management and group finance

EBITDA PER QUARTERQ1 Q2 Q3 Q4

NOK MILLION 2017 2016 2017 2016 2017 2016 2017 2016 2016

R&D Services 21.1 8.7 12.8 17.4 20.1 59.1

Solutions 6.5 7.0 7.5 7.5 9.3 31.3

Corporate -3.5 -2.5 -2.9 -6.6 -3.9 -16.0

EBITDA 24.2 13.2 17.4 18.3 25.5 74.4

EBIT 21.5 12.1 16.5 17.3 22.6 68.4

Profit before tax 40.5 10.5 15.8 18.3 24.2 68.8

Q1 Q2 Q3 Q4

NOK MILLION 2017 2016 2017 2016 2017 2016 2017 2016 2016R&D Services 174.7 116.4 142.5 123.1 176.2 558.3

Solutions 119.7 128.0 121.8 108.5 126.0 484.2

Eliminations -1.0 -0.7 -1.1 -0.5 -0.6 -2.9

Operating revenue 293.4 243.6 263.2 231.2 301.6 1 039.6

OPERATING REVENUE PER QUARTER

Note 4: Significant estimates and judgementsIn connection with the preparation of the these condensed consolidated interim financial statements, the management has made assumptions and estimates about future events and applied judgements that affects the reported values of assets, liabilities, revenues, expenses and related disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The assumptions, estimates and judgements are based on historical experience, current trends and other factors that the group management believes to be relevant at the time these condensed consolidated interim financial statements are prepared.

Key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date - that have a significant risk of causing a mate-rial adjustment to the carrying amounts of assets and liabilities within the next financial year - are described below. The group based its assumptions and estimates on parameters available when these condensed consolidated interim financial statements were prepared. Accounting estimates may change be-cause of future events. Estimates and their underlying assumptions are assessed continuously. Changes to accounting estimates are included in the financial statements for the period in which the change occurs. If the changes apply to future periods, the impact is spread over the current and future periods. In the process of applying the group’s accounting policies, management has made the following estimates and judgements, which have the most significant effect on the amounts recognised in the condensed consolidated interim financial statements:

Business combinationsAll business combinations are accounted for using the acquisition method, according to the requirements in IFRS 3. The acquisition date is the date on which the acquirer obtains control of the acquiree. All pertinent facts and circumstances surrounding a business combination has been considered in assessing when the group has obtained control. To evaluate whether control has been obtained the group has used the guidance in IFRS 10. The group has used acqui-sition dates at the beginning or end of a month, the date on which it closes its books, rather than the actual acquisition date during the month. This compiles with the requirements in IFRS 3, cause the events between the convenience date and the actual acquisition date does not result in material changes in the amounts recognised.

If the business combinations include arrangements for contingent payments to employees or selling shareholders, the group has assessed whether the ar-rangements are contingent considerations in the business combinations or separate transactions. Important factors in assessing the nature of the arrange-


ment is understanding the reasons why the acquisition agreement includes a provision for contingent payments, who initiated the arrangement and when the parties entered into the arrangement. If it is not clear whether an arrangement for payments to employees or selling shareholders is part of the exchange for the acquiree or is a transaction separate from the business combination, the group has used the guidance is IFRS 3.

The group has, according to IFRS 3, recognised identifiable intangible assets of the acquiree separately from goodwill. An intangible asset has been concluded identifiable if it has met either the contractual-legal criterion or the separable criterion in IAS 38. The group has in their business combinations assessed if there are any identifiable intangible assets separable from goodwill. The group has used the identification criteria in IFRS 3 and assessed if the criteria are met based on the nature of the business of the acquiree.

The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. The valuation of intangible assets have been based on value-in-use calculations. Cash forecasts are based on projected cash flows based with the following key estimates and judgements; revenue growth, EBIT margin and discount rate. Future revenue growth and EBIT margin is based on the management’s best estimate and judgement. The assumptions used in the valuation of the intangible assets are the same assumptions used in the valuation of the company. Amortisation of intangible assets are based on manage-ment’s estimates of residual value, amortisation method and the useful life of intangible assets. The useful life of an intangible asset is based on a estimated length of time the intangible asset can reasonably be used to generate income and be of benefit to the group. The useful lives of intangible assets are reviewed at least annually taking into consideration the factors mentioned above and all other important relevant factors. A change in estimated useful life is a change in accounting estimate, and amortisation plans are adjusted prospectively.

Earn-out liabilitiesThe earn-out obligations have been recognized as a contingent consideration, at fair value at the time of the acquisition, based on the facts and circum-stances available at that time. Earn-out liabilities are usually contingent on the future financial performance of subsidiaries, which needs to be estimated when calculating the expected earn-out liabilities. The earn-out liabilities are initially recognised and measured at fair value at the date of acquisition, with any subsequent remeasurements recognised in profit or loss. The determination of the fair value is based on discounted cash flows, and the key assumption is the estimate of the future financial performance of subsidiaries, normally calculated as a multiple of the company’s financial performance measured by EBIT.

At each reporting period, the original estimated fair value of the earn-out obligation needs to be adjusted for two reasons. The net present value of cash payments increases as cash settlements move closer in time, requiring an interest cost to be recognised, and updated estimates of the company’s financial performance may give rise to changes in the expected cash payments needed to settle the earn-out liability.

The interest component of the change in earn-out liability is a financial cost as it relates in its entirety to the financial structure of the acquisition. If the acqui-sition had been financed by external debt, an equivalent interest cost would be charged by the source of external funding. The second component of the change in the earn-out liability arises due to changes in estimates. The expected financial performance of the company either surpasses or falls short of the expected performance at the time of the acquisition. This leads to a new estimate of the fair value of the obligation. In accordance with IAS 8, the effect of a change in estimates is recognised as an operating item in the income statement.

Impairment assessmentImpairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value, less costs of disposal calculation, is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flow forecasts is based on budgets approved by the Board of Directors, with a five-year projection period and do not include restructuring activities that the group is not yet committed to, or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the group.

TaxesDeferred tax assets are recognised to the extent that it is probable that the tax assets will be realised. Significant judgement is required to determinethe amount that can be recognised and depends foremost on the expected timing, level of taxable profits as well as tax planning strategies and the exist-ence of taxable temporary differences. The judgements relate primarily to tax losses carried forward in some of the group’s foreign operations. When an en-tity has a history of recent losses, the deferred tax asset arising from unused tax losses is recognised only to the extent that there is convincing evidence that sufficient future taxable profit will be generated. Estimated future taxable profit is not considered as convincing evidence unless the entity has demonstrated the ability of generating significant taxable profit for the current year, or there are certain other events providing sufficient evidence of future taxable profit. Uncertainty related to new transactions and events and the interpretation of new tax rules may affect these judgements.

Note 5: Significant events and transactionsOn March 1, 2017, Data Respons entered into an agreement to acquire TechPeople A/S. TechPeople was established in 2010 and is specialises inSoftware and application development, architecture and system design as well as communication for embedded and IoT solutions. The acquisition strengthens Data Respons’ position as a leading player within R&D Services in Denmark.

TechPeople had a turnover of DKK 52 million for 2016, resulting in a growth of 49 % and a profit before tax of DKK 3.6 million. By the end of 2016, the company had approximately 50 consultants in R&D assignments at its customers. As of December 31, 2016, total assets in TechPeople was DKK 15.3 million. Before the acquisition, Data Respons owned 50 % of the shares in TechPeople A/S and the investment is, in the financial statements, classified as a joint venture according to IFRS 11 and is accounted for by using the equity method. From March 1, 2017, TechPeople’s income state-ment and balance sheet has been fully consolidated in the consolidated accounts of Data Respons.

It was agreed an up front consideration at closing of the agreement where the seller received 434 000 newly issued shares in Data Respons ASA through a private placement. In addition, the seller will receive annual earn-out payments depending on the company’s actual EBIT for 2017, 2018 and 2019. Annual earn-out payments will be due for payment in Q2 the year following the respective earn-out year.


NOK MILLION 31.03.2017 31.12.2016

Credit facility 55.5 59.0

Revolving credit facility 36.5 36.3

Interest bearing loan 92.0 95.3

Of which:

Current liability portion 10.6 14.7

Non-current liability 81.4 80.6

The acquisition of TechPeople is considered as a business combination achieved in stages under IFRS 3, and Data Respons has remeasured itspreviously held equity interest in TechPeople at its acquisition-date fair value. See note 11 for details. It is assessed that the carrying amount of assets and liabilities in TechPeople represents its fair value at the acquisition date March 1 2017. Based on the preliminary purchase price alloca-tion, the gross purchase price for 100 % of the shares is estimated to be NOK 54.8 million. Book value of the equity is NOK 1.5 million, which gives an excess value of NOK 53.3 million. The excess value have been allocated to customer relationship intangible asset, deferred tax on excess value and goodwill. The goodwill of NOK 48.9 million comprises the value of expected synergies arising from the acquisition, assembled workforce and deferred tax on excess values. The fair values of the identifiable assets and liabilities of the business as at the date of acquisition were:

Note 6: Interest bearing liabilitiesData Respons has interest-bearing loans and borrowings of EUR 10.5 million related to the acquisition of MicroDoc in 2016. The interest-bearing loans and borrowings consists of a credit facility of EUR 6.5 million and a revolving credit facility of EUR 4.0 million, and is measured at amortised cost. The credit facility has a biannual repayment profile over 7 years. The credit facility has a floating interest rate; EURIBOR with a fixed margin of 2.6 % in 2017. The revolving credit facility has a biannual interest repayment profile over 5 years with a lump-sum down payment after 5 years in 2021. The revolving credit facility has a floating interest rate; EURIBOR with a fixed margin of 2.2 % in 2017.

Data Respons is subject to certain covenants as part of its credit facility and revolving credit facility. The equity-to-asset ratio should be minimum 30 % for the group, and as of March 31, 2017, the ratio was 39 % (36 %). Furthermore, there is a covenant requirement that the net interest bearing debt divided by a 12 months rolling consolidated EBITDA should not exceed 3.0. As of March 31, 2017, the ratio was 1.1 (1.3).

NOK MILLION TechPeople A/S

Trade receivables 15.5

Cash and cash equivalents 6.9

Other assets 0.2

Total assets 22.5

Trade payables 10.7

Other current liabilities 10.3

Total liabilities 21.0

Net identifiable net assets 1.5

Total identified excess value 53.3

Intangible assets 5.7

Deferred tax on excess value -1.3

Goodwill 48.9


NOK MILLION Fair value level Category 31.03.2017 31.12.2016

Current earn-out liabilities 3 FVPLT* 39.6 39.7

Non-current earn-out liabilities 3 FVPLT* 126.2 106.8

Total 165.8 146.5

Note 7: Fair value measurementData Respons has earn-out liabilities that are initially recognised and measured at fair value at the date of acquisition, with any subsequent re-measurements recognised in profit or loss. The fair value of the earn-out liabilities are calculated by estimating the future financial performance of subsidiaries, normally calculated as a multiple of the company’s financial performance measured by EBIT.

The earn-out liabilities are classified in the statement of financial position as disclosed in the table below. There are no significant differences bet-ween total carrying value and fair value.

*FVPLT: Fair value through profit and loss

All other significant financial assets are classified as receivables and all other significant financial liabilities are measured at amortised cost.

Note 8: Cash and cash equivalentsAs of March 31, 2017, Data Respons had cash reserves of NOK 46.6 million (62.9), whereof restricted cash consisting of employee’s tax deductions was NOK 3.2 million (4.7). In addition, the company has an overdraft facility of NOK 40 million (40) and a long term revolving credit facility of NOK 70 million (70) as of March 31, 2017; of which NOK 36.3 million (36.3) was utilised in the acquisition of MicroDoc in 2016. Unutilised long term revolving credit facility as of March 31, 2017 is NOK 33.7 million (33.7).

The total unutilised cash reserve and credit facilities for the group at March 31, 2017, is NOK 117.1 million (131.9). There are financial covenants, which may restrict the use of the credit facilities, see note 6.

Note 9: Income taxIncome tax expense amounted to NOK 4.2 million (1.9) for the first quarter, corresponding to an effective tax rate of 10.1 % (18.1 %) The effective income tax rate was primarily influenced by the fair value adjustment related to the TechPeople acquisition (see note 11) and different tax rates in Sweden, Denmark and Germany.

Note 10: Share capitalIn March 2017, 434 000 new shares were issued at a price of NOK 22.70 per share in connection with the acquisition of the TechPeople. The total number of outstanding shares at March 31, 2017 was 49 662 794.

The Board of Directors propose to distribute a dividend of NOK 1.00 per share for 2016. Following the resolution by the annual general meeting on April 27, 2017 and the DAT share will be traded ex-dividend on April 28, 2017.

Note 11: Financial itemsThe acquisition of TechPeople is considered as a business combination achieved in stages under IFRS 3. In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in the income statement. Data Respons has remeasured its previously held equity interest in TechPeople at its acquisition-date fair value and have recognised the resulting gain of NOK 26.5 million as a financial item in the income statement.

Note 12: Related party transactionsOther than ordinary business transactions between group companies, there have been no related party transactions in the first quarter of 2017. All transactions within the group are based on ordinary commercial terms using the arm’s length principle.

Note 13: Events occurring after the reporting periodThere have been no material events subsequent to the reporting period that might have a significant effect on the condensed consolidated interim financial statements for the first quarter of 2017.


DEFINITIONSORDER INTAKE: Order intake means that Data Respons has received a purchase order from a customer or has entered into a delivery contract with a customer in the relevant accounting period where Data Respons will deliver a specific solution or consultancy services at a predefined cost. The timeframe for the orders vary.

For the R&D Services segment the order will typically be executed immediately and produce revenue over the next 3 to 12 months. The customer has the right to cancel the contract on short notice, but Data Respons rarely experience cancellations.

For the Solutions segment, delivery (and revenue) will typically start 6-18 months after the order date. Once deliveries have started, the relevant order will include serial deliveries over a period of 12 to 36 months.

Some Solutions orders are firm contracts, especially for deliveries within the next 12 months. Other orders, especially long-term contracts, have estimated delivery volumes, are non-binding for the customer and could either be cancelled, adjusted or prolonged in time. The risk of cancellations exists; however, the risk for adjustments of the delivery volume or extensions of the delivery period is a larger risk.

ORDER BACKLOG: Order backlog is the total NOK value of unfulfilled and undelivered orders as of the balance sheet date in the relevant accounting period. The order backlog is adjusted for currency fluctuations, revisions of the order quantity and cancellations on a quarterly basis.

DEFINITION OF NON-IFRS FINANCIAL MEASURES: EBIT: is defined as earnings before interest and tax. Equivalent to operating profit.

EBITDA: Is defined as operating profit adjusted for depreciation, amortisation and impairments.

EBITDA margin before corporate costs: Is defined as operating profit adjusted for depreciation, amortisation and impairments, before allocation of corporate costs divided by revenues

EQUITY RATIO: Is defined as total equity divided by total assets.

CEO, Data Respons ASAKenneth RagnvaldsenTel: +47 913 90 918 Email: [email protected]

Data Respons ASA, Sandviksveien 26, 1363 HøvikTel: +47 67 11 20 [email protected]

CFO, Data Respons ASARune Wahl Tel: +47 950 36 046 Email: [email protected]


NorwayOslo, Høvik, Kongsberg, Stavanger, Bergen.

SwedenStockholm, Gothenburg, Linköping

DenmarkCopenhagen

GermanyBerlin, Munich, Stuttgart, Erlangen, Karlsruhe

TaiwanTaipei

Our values Being Generous

Responsibility To Perform Having fun


datarespons.com

Group HQData Respons ASASandviksveien 26NO-1363 Høvik, NorwayTel.: +47 67 11 20 [email protected]

DenmarkData Respons A/SSmedeholm 10DK-2730 HerlevTel.: +45 88 32 75 [email protected]

NorwayData Respons Norge ASSandviksveien 26NO-1363 HøvikTel.: +47 67 11 20 [email protected]

GermanyData Respons GmbHAmalienbadstr. 41, Bau 53DE-76227 KarlsruheTel.: +49 721 480 887 [email protected]

TaiwanData Respons ASIA AS18F-6 NO. 738, Chung-Cheng Road, Chung-Ho, New TaipeiTel.: +886 2 8226 2150

SwedenData Respons ABJan Stenbecks Torg 17, IIISE-164 40 KistaTel.: +46 8 501 688 [email protected]

Main offices

Sylog ABJan Stenbecks Torg 17, IIISE-164 40 KistaTel.: +46 (0)8 750 49 00

TechPeople A/SSmedeholm 10DK-2730 HerlevTel.: +45 88 32 75 00

MicroDoc Computersysteme GmbHElektrastrasse 6AD-81925 Munich, GermanyTel: +49-89-551969-0

Q1 2017 - hugin.infohugin.info/131926/R/2099167/795991.pdf · the strong position within IoT,...

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