FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Report of the Board of Directors, financial period nebula January oy:n 1 December Tilinpäätös 31, Ownership structure changes, board of directors and auditor With the authorisation given by the shareholders meeting on May 26,, the Board of Directors took decisions on August 25, and December 8, on targeted share issues to key members of personnel. The targeted share issues involved the total of 129.450 shares with a subscription price of 2.066 euros per share. The aim of the targeted share issues was to increase commitment to the Company. Therefore, the Company had a weighty financial reason for derogation to the pre-emptive right. The share capital was not increased with the share issues, the subscription price of 267.443,70 euro was credited in full to the reserve for invested unrestricted equity. In order to simplify and streamline the group structure, the parent company of Nebula Oy, Rite Internet Ventures AB, sold on December 15, all 9.607.360 shares in Nebula it owned to its own parent company, Rite Internet Ventures Holding AB. After the execution of the above arrangements Rite Internet Ventures Holding AB owns 77.48% of the shares of Nebula Oy. The general meeting of shareholders held on May 26, appointed Juha Koivisto as a new member of the Board of Directors. Christoffer Häggblom (chairman), Peter Lindell and Jukka Norokorpi remain as members of the Board of Directors based on the decision of the general meeting. PricewaterhouseCoopers was appointed to continue as auditor, with APA Markku Katajisto as auditor with principal responsibility. Business review and important information related to the development of operations The demand for Nebula s services remained strong for the whole financial period. Especially the enterprise customers showed increased interest in Nebula. The Company launched several projects to respond to the challenges and to clarify the offered services to especially the medium sized companies. Also the webpages of Nebula were renewed during the financial period in order to support the diversed offering of services. The streamlining of service production was continued by additional development of ITIL operating patterns. A practical example of this was, for instance, that every supervisor in service production possess an ITIL certification. In addition, a major upgrading program of the main ERP application was started. It will be finalized during the first quarter of 2012. Sales organisation was strengthened by increasing personnel. Supervision and control was improved with renewal of the CRM application. Measures enabling to serve even larger enterprise customers were continued according to plans. The Cloud Services showed a strong growth. The customers are particularly interested in cost savings that can be achieved by centralizing infrastructure to an external service provider. The development activities of this sector in contained standardization of service offering and services. Interest among larger enterprises on Nebula s Managed Services continued strong. Nebula Oy has successfully predicted the transition of information society into 24/7 pace, which many customers consider as essential. The genuine ability of the Company to offer its services on 24/7 basis has turned out to be a significant competitive edge. Expectations of the increase in demand for Office Services have not been unjustified. Customers are more and more willing to acquire crucial activities like email and essential office applications - as services via internet. Investments in office services will be continued in 2012. The Networks Services continued to show strong growth. The customers were particularly interested in fast symmetric connections and enterprise network solutions. Several major product development projects in the sectors of connection and data security services were launched after mid. The development projects have proceeded according to plans and they will strengthen Nebula s market position after the first quarter of 2012. Investments in on machinery and equipment amounted to approximately 2,2 million euro. With the investments Nebula has aimed at ensuring the sufficiency of both the resources and competitiveness as the service needs of the customers continue to increase. In the summer Nebula acquired additional 1.404,5 m2 office space in Heikkiläntie 2, Lauttasaari for mainly its production, sales, customer service and administrative personnel. There are three modern datacenters in server and customer support centers in Lauttasaari and Pitäjänmäki. The company has decided to expand datacenters further in 2012. Personnel resources have been increased in in line with the increase in the number of customers and service offering. At the end of the number of employees was 89 in the parent company and 95 in the group (78 and 83 in, respectively). 2
FINANCIAL STATEMENTS Nebula Oy has two 100 per cent owned Finnish subsidiaries, Hi-Tech Store Oy and Nordic Web Hotel Oy. During the financial period the operations of Hi-Tech Store Oy were transferred to Nebula Oy. Net sales of the group was 21.5 million euro (13.3 million euro for nine months in ) and operating profit 4.4 million euro (1.7 million euro for nine months in ). Operating profit is affected by amortization of intangible assets recognized according to IFRS 3 at acquisition of Nebula shares. The amortization amounted to 1300 thousand euro (975 thousand euro in ). In addition, operating profit is affected by contingent consideration type remuneration expenses of appr 1328 thousand euro related to share purchase consideration (1040 thousand euro in ). Financing and investment Total assets amount to 47.8 million euro. Equity ratio was 28%. Gearing was 147% and interest-bearing net debt amounted to 18.8 million euro. Liquid funds were 3.9 million euro. The loans from financial institutions contain covenants related to equity ratio and the ratio of net debt against EBITDA. Nebula Oy acquired the enterprise customers network business operations of 24 Online Oy with an agreement signed on January 20,. The business commenced at Nebula on March 1,. Nebula Oy acquired all shares of Site Hosting JEP Oy with a purchase agreement signed on the 27th April. The company was registered in the Trade Register on the 1st July,. The acquired company was merged into Nebula The following key figures, in thousand euros except for percentages, present the financial position and result of the group and the parent company: group group (9 mo) parent co parent co (4 mo) Net sales 21,511 13,257 20,842 6,277 Operating profit 4,400 1,712 3,413 1,000 Operating profit as a percentage of net sales 20.5 12.9 16.4 15.9 Net gearing, % 147.4 228.9 166.8 233.7 Return on equity, % 20.0 4.6 9.2 17.0 Equity ratio, % 28.0 23.6 28.0 26.2 Key ratios on the personnel of the group and the parent company: group group (9 mo) parent co parent co (4 mo) Average number of employees 90 81 84 74 Salaries and rewards (1000 ) 5,466 3,544 3,939 1,282 Calculation of key figures: Net gearing, %: Return on equity, %: Equity ratio, %: (Interest bearing liabilities less cash and cash equivalents)/total equity (Profit before income tax less income tax expense)/total equity Total equity/(total equity and liabilities less advances received) 3
FINANCIAL STATEMENTS Oy. The merger was registered at the trade register on the 30th November,. The final consideration to be given is dependant on the net sales 2012 of the business. Nebula Oy acquired the network connection business related to ADSL enterprise customers of Maxisat Oy on May 20,. The subsidiary of Nebu Oy, Nordic Web Hotel Oy, acquired the hosting business and trade mark operated under the name Ammuu.com from Greenhost GH Oy on February 11,. All the business combinations accomplished during the financial year have been presented in the note 23 to the financial statements. Key figures The financial statements December 31, cover the second financial period for the current Nebula group. In the financial period the net sales of the group represented operations of a period of approximately nine months and for the parent company, a period of four months. Because of this, the group figures are not comparable with the group figures of the 12 month financial period. In the return on equity, the numerator has been adjusted to reflect a volume of 12 months. Events after the reporting period The Company has commenced in January an expansion of one datacenter, approved by the Board of Directors on December 8,. The investment amounts to approximately 1.1 million euro. The expansion is scheduled to be ready during the first half of 2012. Estimate on the projected future development Operations are estimated to continue developing favourably also in the future. The growth in net sales is expected to continue. The Group continues to develop its service offering and production capacity and reinforces its personnel resources. Assessment of risks and uncertainties The Company has reviewed its business and operational risks in accordance with the Companies Act. A disaster recovery plan has been prepared for the service environment. Technical risks have been mitigated by investing substantially in technical security and back up systems related to among other things automatic extinguisher and UPS equipment and 24/7 access control and alarm systems. To mitigate for connection interruptions, the Company has secured network connections with parallel connections and POPs abroad. In addition, operations are secured with extensive risk insurances. Customer risks, on the other hand, are reduced by the very large number of customer, when a proportion of a single customer does not pose a significant risk to the whole operation. Previous experience also shows that the operations of the Company are not particularly cyclical. This obviously is due to the fact that the services offered by the Company are essential to the customers own operations. The financial position of the group is affected by the loans raised in at business combination. Interest expenses and depreciation on intangible assets recognised at business combination reduce profit. Also the comparable depreciation on business combinations reduce profit. However, repayment and other terms of loans have been set in such a way that servicing the debts does not cause liquidity problems. A significant part of total assets comprises of the goodwill that arose in business combination. There is an impairment risk involved in the goodwill. The management of Nebula Ltd estimates that the risks related to goodwill and liquidity are under control and that there are no other risks endangering the operations. Dividend proposal The Board proposes to the Annual General Meeting that a dividend of 0,04 euro per share is to be paid. The total amount of dividends would be approximately 496.000 euro. The parent company s distributable equity is 10.303,632,36 euro and profit for financial period is 984.890,43 euro. The profit of the group amounts to 2.290.455,26 euro. 4
FINANCIAL STATEMENTS Consolidated Statement of Comprehensive Income In euros Year ended December 31, Year ended December 31, *) Net sales 21,510,867.50 13,256,827.13 Other operating income 30,509.28 25,116.43 Raw materials and consumables 1,149,580.34 1,081,359.43 Personnel expenses 6,429,257.03 4,108,677.60 Amortization and depreciation 3,255,167.46 1,901,151.94 Other expenses 6,306,946.18 4,478,561.66 Operating profit 4,400,425.77 1,712,192.93 Finance income 44,149.25 19,345.92 Finance costs -1,161,341.03-913,320.90 Finance costs - net -1,117,191.78-893,974.98 Profit before income tax 3,283,233.99 818,217.95 Income tax expense -992,778.73-642,668.36 Profit for the year 2,290,455.26 175,549.59 Total comprehensive income for the year 2,290,455.26 175,549.59 *) 9 month Profit and Loss statement according to IFRS 5
FINANCIAL STATEMENTS Consolidated Statement of Financial Position In euros As at December 31, As at December 31, Assets Non-current assets Goodwill 23,391,010.66 23,344,054.08 Other intangible assets 13,527,679.20 13,548,164.78 Property, plant and equipment 5,153,936.47 4,775,998.05 Deferred income tax assets 11,576.53 16,327.48 Other non-current assets 173,247.45 140,362.35 42,257,450.32 41,824,906.74 Current assets Inventories 91,879.81 36,710.82 Trade and other receivables 1,597,282.06 963,653.11 Cash and cash equivalents 3,862,579.30 2,283,359.75 5,551,741.17 3,283,723.68 Total assets 47,809,191.49 45,108,630.42 Equity and liabilities Own capital Share capital 1,002,500.00 1,002,500.00 Share issue 15,495.00 0.00 Other reserves 9,251,948.70 9,000,000.00 Retained earnings 2,466,004.85 175,549.59 Total equity 12,735,948.55 10,178,049.59 Liabilities Non-current liabilities Loans from financial institutions 7,029,544.97 9,975,904.67 Capital loans 12,600,000.00 12,600,000.00 Deferred income tax liabilities 3,506,431.80 3,652,375.39 Other non-current liabilities 2,802,303.39 1,333,214.31 25,938,280.16 27,561,494.37 Current liabilities Loans from financial institutions 3,000,000.00 3,000,000.00 Current income tax liabilities 1.150,939.08 401,125.17 Trade and other payables 4,984,023.70 3,967,961.29 9,134,962.78 7,369,086.46 Total liabilities 35,073,242.94 34,930,580.83 Total equity and liabilities 47,809,191.49 45,108,630.42 6
FINANCIAL STATEMENTS Consolidated statement of changes in equity In euros Share capital Share issue Other reserves Retained earnings Total equity Opening net book amount, January 26, 0.00 0.00 0.00 0.00 0.00 Comprehensive income Profit 0.00 0.00 175,549.59 175,549.59 Total comprehensive income 0.00 0.00 0.00 175,549.59 175,549.59 Transactions with owners Proceeds from equity investment without new shares issued 1,000,000.00 0.00 7,150,000.00 8,150,000.00 Proceeds from shares issued 2,500.00 0.00 1,850,000.00 1,852,500.00 Transactions with owners 1,002,500.00 0.00 9,000,000.00 10,002,500.00 Balance at December 31, 1,002,500.00 0.00 9,000,000.00 175,549.59 10,178,049.59 In euros Share capital Share issue Other reserves Retained earnings Total equity Opening net book amount, January 1, 1,002,500.00 0.00 9,000,000.00 175,549.59 10,178,049.59 Comprehensive income Profit 0.00 0.00 0.00 2,290,455.26 2,290,455.26 Total comprehensive income 0.00 0.00 0.00 2,290,455.26 2,290,455.26 Transactions with owners Proceeds from shares issued 0.00 15,495.00 251,948.70 0.00 267,443.70 Transactions with owners 0.00 15,495.00 251,948.70 0.00 267,443.70 Balance at December 31, 1,002,500.00 15,495.00 9,251,948.70 2,466,004.85 12,735,948.55 7
FINANCIAL STATEMENTS Consolidated statement of cash flows in euros Year ended December 31, Year ended December 31, Cash flows from operating activities Cash generated from operations 9,009,921.12 4,316,349.60 Interest paid -1,073,534.26-774,076.97 Income tax paid -803,523.09-337,750.22 Net cash generated from operating activities 7,132,863.77 3,204,522.41 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired -309,949.98-35,007,810.63 Acquisition of businesses, net of cash acquired -773,013.04 0.00 Purchases of property, plant and equipment (PPE) -1,731,503.57-1,640,733.16 Proceeds from sale of PPE 30,000.00 33,500.00 Purchases if intangible assets -48,976.84 0.00 Proceeds from sale of available-for-sale financial assets 0.00 22,035.21 Proceeds from return of guarantee deposit 10,522.50 0.00 Increase in rent guarantee deposit -3,555.57 0.00 Interest received 44,149.25 19,345.92 Net cash used in investing activities -2,782,327.25-36,573,662.66 Cash flows from financing activities Proceeds from issuance of ordinary shares 0.00 1,002,500.00 Proceeds from fund for non-restricted equity 267,443.70 9,000,000.00 Proceeds from borrowings 0.00 27,600,000.00 Repayments of borrowings -3,000,000.00-1,950,000.00 Repayments of finance lease liabilities -38,760.67 0.00 Net cash generated from financing activities -2,771,316.97 35,652,500.00 Net increase in cash and cash equivalents 1,579,219.55 2,283,359.75 Cash and cash equivalents at beginning of year 2,283,359.75 0.00 Change in cash and cash equivalents 1,579,219.55 2,283,359.75 Cash and cash equivalents at end of year 3,862,579.30 2,283,359.75 8