Gofore Plc: Transition to IFRS Reporting

Gofore Oyj
·29-min read

GOFORE PLC COMPANY ANNOUNCEMENT 16 DECEMBER 2020 AT 16.47

Gofore Plc: Transition to IFRS Reporting

Gofore Plc announced on 15.11.2019 that the company is targeting to transfer to Nasdaq OMX Helsinki Main list in 2021. As part of the process, the Company will prepare its annual financial statements in accordance with the International Financial Reporting Standards (IFRS) for the period ending 31.12.2020.

Gofore Plc has prepared the following unaudited IFRS financial information to provide investors with comparative information for the consolidated statement of comprehensive income, balance sheet and for the company’s key figures as at and for the six months ended 30.6.2020 with comparatives for 2019. Additionally the corresponding information for the financial year ended 31.12.2019 as well as the opening balance for the IFRS transition date 1.1.2019 has been included in this transition release.

In addition, Gofore has prepared the IFRS key figures in the table below, as at and for the nine months ended 30.9.2020 with comparatives for 2019. Consolidated statement of financial position and consolidated statement of profit and loss are not presented for the nine months ended 30.9.2020 with comparatives for 2019. Key figures for the 1.1.-30.9.2020 include the acquisition of Qentinel Finland Oy made on 1.9.2020.

The financial information disclosed in this release is prepared based on IFRS Standards effective as at 31.12.2020. IFRS 1 First-time Adaption of International Financial Reporting Standards has been applied in the preparation of comparable key figures and transition calculations presented in this release. The financial information presented in the release is unaudited, except the income statement and statement of the financial position prepared in accordance with Finnish Accounting Standards (FAS) for the period ended 31.12.2019.

Gofore Plc will publish during Q1 2021 its annual report, which includes financial statements prepared in accordance with international financial reporting standards (IFRS) for the period ending 31.12.2020 with comparatives for the period ending 31.12.2019 as well as the opening balance for 1.1.2019.

The key differences between IFRS and FAS resulting from the transition to IFRS are described in accompanying notes to the release (Description of IFRS transition effects and exemptions applied) and contain periods 1.1.2019, 30.6.2019, 31.12.2019 and 30.6.2020.

Additional information on the historical financial information prepared in accordance with FAS is available on Gofore's website at www.gofore.com.

IFRS Key Figures

EUR thousand, unless otherwise specified

1.1.-30.9.2020

1.1.-30.9.2019

1.1.-30.6.2020

1.1.-30.6.2019

1.1.-31.12.2019

Net Sales

53 668

46 800

37 376

33 453

64 066

EBITDA

8 275

6 979

6 102

5 405

9 223

EBITDA margin -%

15,4 %

14,9 %

16,3 %

16,2 %

14,4 %

EBITA, Adjusted

7 517

5 964

5 629

4 835

7 710

EBITA, Adjusted, margin -%

14,0 %

12,7 %

15,1 %

14,5 %

12,0 %

EBITA

6 495

5 550

4 911

4 466

7 296

EBITA margin -%

12,1 %

11,9 %

13,1 %

13,3 %

11,4 %

Operating Profit (EBIT)

5 789

5 082

4 495

4 205

6 620

Operating Profit (EBIT) margin -%

10,8 %

10,9 %

12,0 %

12,6 %

10,3 %

Profit for the period

4 203

3 868

3 236

3 217

5 096

Earnings per share, EPS (diluted) *

0,30

0,28

0,23

0,24

0,37

Equity ratio -%

47,1 %

59,2 %

56,9 %

54,8 %

58,1 %

Net gearing -%

-4,6 %

-21,3 %

-29,5 %

-13,3 %

-33,4 %

* EPS diluted equals to EPS undiluted



Consolidated Statement of Financial Position as at 30.6.2020, 30.6.2019, 31.12.2019 and 1.1.2019

Consolidated Statement of Financial Position as at 30.6.2020

EUR Thousand

Notes

FAS as at 30.6.2020

Re-classification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS as at 30.6.2020

Assets

Non-current assets

Goodwill

2, 3

17 149

-3 929

2 960

-969

16 180

Other intangible assets

2, 10

632

-155

3 246

3 091

3 723

Property, plant and equipment

10

357

155

155

512

Right-of-use assets

1

0

5 342

5 342

5 342

Investments

51

0

51

Deferred tax assets

1, 4, 5

0

6

0

9

16

16

Total non-current assets

18 188

0

5 349

-683

2 960

0

9

7 636

25 824

Current assets

Trade receivables

5, 10

10 455

-199

-47

-246

10 209

Contract assets

10

0

214

214

214

Other current assets

2, 6, 10

2 129

-15

88

13

87

2 216

Cash and cash equivalents

19 496

0

0

19 496

Total current assets

32 080

0

0

88

0

0

-33

55

32 135

Total assets

50 268

0

5 349

-595

2 960

0

-24

7 691

57 958

Equity and liabilities

Equity

Share capital

80

0

80

Treasury shares

9

0

-409

-409

-409

Share-based payments

4

0

534

0

534

534

Translation differences

8

1

-11

-11

-10

Fund for unrestricted equity

20 323

0

20 323

Retained earnings

1, 2, 3, 4, 5, 6, 7, 8

10 600

-23

-1 283

2 960

-534

394

1 515

12 115

Equity attributable to equity holders of the parent

31 005

0

-23

-1 283

2 960

0

-27

1 628

32 633

Non-controlling interests

13

0

0

13

Total equity

31 018

0

-23

-1 283

2 960

0

-27

1 628

32 646

Non-current liabilities

Interest-bearing loans and borrowings

3 784

0

3 784

Other non-current financial liabilities

148

0

148

Provisions

307

0

307

Lease liabilities

1

0

3 217

3 217

3 217

Accrued expenses

0

0

0

Deferred tax liabilities

2, 6

0

688

3

691

691

Total non-current liabilities

4 239

0

3 217

688

0

0

3

3 908

8 147

Current liabilities

Trade and other payables

5 123

0

5 123

Contract liabilities

628

0

628

Interest-bearing loans and borrowings

1 376

0

1 376

Lease liabilities

1

0

2 155

2 155

2 155

Accrued expenses

7 885

0

7 885

Income tax payable

0

0

0

Total current liabilities

15 011

0

2 155

0

0

0

0

2 155

17 165

Total liabilities

19 250

0

5 372

688

0

0

3

6 063

25 313

Total equity and liabilities

50 268

0

5 349

-595

2 960

0

-24

7 691

57 958



Consolidated Statement of Financial Position as at 30.6.2019

EUR Thousand

Notes

FAS as at 30.6.2019

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS as at 30.6.2019

Assets

Non-current assets

Goodwill

2, 3, 10

19 129

-432

-3 699

846

-3 285

15 844

Other intangible assets

2, 10

153

-120

3 814

3 694

3 846

Property, plant and equipment

10

506

120

120

627

Right-of-use assets

1

0

4 208

4 208

4 208

Investments

63

0

63

Deferred tax assets

1, 4, 5

0

3

8

7

19

19

Total non-current assets

19 852

-432

4 211

115

846

8

7

4 756

24 608

Current assets

Trade receivables

5, 10

14 253

-131

-37

-168

14 085

Contract assets

10

0

131

131

131

Other current assets

2, 6, 10

1 805

432

88

13

534

2 338

Cash and cash equivalents

14 125

0

14 125

Total current assets

30 182

432

0

88

0

0

-24

496

30 678

Total assets

50 034

0

4 211

203

846

8

-16

5 252

55 286

Equity and liabilities

Equity

Share capital

80

0

80

Treasury shares

0

0

Share-based payments

4

0

153

153

153

Translation differences

8

-9

-11

-11

-20

Fund for unrestricted equity

20 163

0

20 163

Retained earnings

1, 2, 3, 4, 5, 6, 7, 8

9 662

0

-10

-577

846

-144

-8

107

9 769

Equity attributable to equity holders of the parent

29 896

0

-10

-577

846

8

-19

248

30 144

Non-controlling interests

0

0

Total equity

29 896

0

-10

-577

846

8

-19

248

30 144

Non-current liabilities

Interest-bearing loans and borrowings

5 160

0

5 160

Other non-current financial liabilities

0

0

Provisions

0

0

Lease liabilities

1

2 472

2 472

2 472

Accrued expenses

6

0

6

Deferred tax liabilities

2, 6

780

3

783

783

Total non-current liabilities

5 166

0

2 472

780

0

0

3

3 255

8 420

Current liabilities

Trade and other payables

5 690

0

5 690

Contract liabilities

293

0

293

Interest-bearing loans and borrowings

1 405

0

1 405

Lease liabilities

1

0

1 749

1 749

1 749

Accrued expenses

7 582

0

7 582

Income tax payable

2

0

2

Total current liabilities

14 972

0

1 749

0

0

0

0

1 749

16 722

Total liabilities

20 138

0

4 221

780

0

0

3

5 004

25 142

Total equity and liabilities

50 034

0

4 211

203

846

8

-16

5 252

55 286



Consolidated Statement of Financial Position as at 31.12.2019

EUR Thousand

Notes

FAS as at 31.12.2019

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS as at 31.12.2019

Assets

Non-current assets

Goodwill

2, 3

18 206

-3 929

1 903

-2 026

16 180

Other intangible assets

2, 3, 10

277

-128

3 662

3 535

3 812

Property, plant and equipment

10

457

128

128

585

Right-of-use assets

1

0

5 309

5 309

5 309

Investments

51

0

51

Deferred tax assets

1, 4, 5

0

4

27

3

35

35

Total non-current assets

18 991

0

5 314

-267

1 903

27

3

6 981

25 971

Current assets

Trade receivables

5, 10

8 213

-184

-17

-202

8 011

Contract assets

10

0

190

190

190

Other current assets

2, 6, 10

1 870

-5

88

41

124

1 994

Cash and cash equivalents

21 358

0

21 358

Total current assets

31 441

0

0

88

0

0

23

112

31 553

Total assets

50 432

0

5 314

-178

1 903

27

27

7 093

57 524

Equity and liabilities

Equity

Share capital

80

0

80

Treasury shares

0

0

0

Share-based payments

4

0

360

360

360

Translation differences

8

32

-11

-11

21

Fund for unrestricted equity

20 323

0

20 323

Retained earnings

1, 2, 3, 4, 5, 6, 7, 8

11 016

-16

-953

1 903

-333

30

632

11 648

Equity attributable to equity holders of the parent

31 451

0

-16

-953

1 903

27

19

981

32 432

Non-controlling interests

0

0

Total equity

31 451

0

-16

-953

1 903

27

19

981

32 432

Non-current liabilities

Interest-bearing loans and borrowings

4 472

0

4 472

Other non-current financial liabilities

148

0

148

Provisions

0

0

0

Lease liabilities

1

0

3 305

3 305

3 305

Accrued expenses

6

0

6

Deferred tax liabilities

2, 6

0

774

8

782

782

Total non-current liabilities

4 626

0

3 305

774

0

0

8

4 087

8 712

Current liabilities

Trade and other payables

5 143

0

5 143

Contract liabilities

1 734

0

1 734

Interest-bearing loans and borrowings

1 390

0

1 390

Lease liabilities

1

0

2 025

2 025

2 025

Accrued expenses

6 088

0

6 088

Income tax payable

0

0

0

Total current liabilities

14 355

0

2 025

0

0

0

0

2 025

16 380

Total liabilities

18 980

0

5 330

774

0

0

8

6 112

25 092

Total equity and liabilities

50 432

0

5 314

-178

1 903

27

27

7 093

57 524



Consolidated Statement of Financial Position as at 1.1.2019 (Opening IFRS Statement of Financial Position at the date of transition to IFRS)

EUR Thousand

Notes

FAS 1.1.2019

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS as at 1.1.2019

Assets

Non-current assets

Goodwill

8 626

0

8 626

Other intangible assets

10

107

-89

-89

17

Property, plant and equipment

10

452

89

89

541

Right-of-use assets

0

4 560

4 560

4 560

Investments

51

0

51

Deferred tax assets

5

0

7

7

7

Total non-current assets

9 235

0

4 560

0

0

0

7

4 567

13 802

Current assets

Trade receivables

5, 10

8 761

-179

-37

-216

8 544

Contract assets

10

0

179

179

179

Other current assets

10

3 111

-2 007

-2 007

1 104

Cash and cash equivalents

10

13 417

2 007

2 007

15 424

Total current assets

25 289

0

0

0

0

0

-37

-37

25 252

Total assets

34 524

0

4 560

0

0

0

-30

4 530

39 054

Equity and liabilities

Equity

Share capital

80

0

80

Treasury shares

0

0

0

Share-based payments

0

0

0

Translation differences

8

11

-11

-11

0

Fund for unrestricted equity

8

12 859

0

12 859

Retained earnings

5, 8

9 055

-19

-19

9 037

Equity attributable to equity holders of the parent

22 006

0

0

0

0

0

-30

-30

21 976

Non-controlling interests

0

0

0

Total equity

22 006

0

0

0

0

0

-30

-30

21 976

Non-current liabilities

Interest-bearing loans and borrowings

2 614

0

2 614

Other non-current financial liabilities

516

0

516

Provisions

0

0

0

Lease liabilities

1

0

2 952

2 952

2 952

Accrued expenses

0

0

0

Deferred tax liabilities

0

0

0

Total non-current liabilities

3 130

0

2 952

0

0

0

0

2 952

6 082

Current liabilities

Trade and other payables

4 297

0

4 297

Contract liabilities

0

0

0

Interest-bearing loans and borrowings

1 069

0

1 069

Lease liabilities

1

0

1 608

1 608

1 608

Accrued expenses

4 020

0

4 020

Income tax payable

2

0

2

Total current liabilities

9 388

0

1 608

0

0

0

0

1 608

10 996

Total liabilities

12 518

0

4 560

0

0

0

0

4 560

17 078

Total equity and liabilities

34 524

0

4 560

0

0

0

-30

4 530

39 054



Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income for the period 1.1.-30.6.2020, 1.1.-30.6.2019 and 1.1.-31.12.2019

Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income 1.1.-30.6.2020

EUR Thousand

Notes

FAS
1.1.-30.6.2020

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS
1.1.-30.6.2020

Revenue from contracts with customers (net sales)

37 376

0

37 376

Work performed by the entity and capitalised

331

0

331

Other operating income

1

245

1

1

246

Materials and Services

Purchases

-55

0

-55

External Services

-5 278

0

-5 278

-5 333

0

0

0

0

0

0

0

-5 333

Employee benefits expense

Salaries and compensations

-18 026

0

-18 026

Pensions

-2 673

0

-2 673

Other personnel expenses

4

-754

-174

-174

-928

Depreciation and amortisation

1, 2, 3

-1 168

-1 081

-416

1 057

-440

-1 608

Other operating expenses

1, 5

-5 964

1 102

-29

1 073

-4 891

Operating profit (EBIT)

4 034

0

22

-416

1 057

-174

-29

460

4 495

Finance costs

1, 6

-33

-31

-61

-93

-126

Finance income

6

0

34

34

34

Profit before tax

4 001

0

-9

-416

1 057

-174

-57

402

4 403

Income tax

1, 2, 4, 5, 6

-1 241

2

86

-27

11

72

-1 169

Non-controlling interests

2

0

0

2

Profit for the financial period

2 763

0

-7

-330

1 057

-201

-45

473

3 236

Other Comprehensive Income

Net other comprehensive loss to be reclassified to profit or loss in subsequent periods

Exchange differences on translation of foreign operations

8

0

-30

-30

-30

Other comprehensive income, net of tax

0

-30

-30

-30

Total comprehensive income for the financial period

2 763

0

-7

-330

1 057

-201

-76

443

3 206



Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income 1.1.-30.6.2019

EUR Thousand

Notes

FAS
1.1.-30.6.2019

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS
1.1.-30.6.2019

Revenue from contracts with customers (net sales)

33 453

0

33 453

Work performed by the entity and capitalised

19

0

19

Other operating income

36

0

36

Materials and Services

Purchases

-55

0

-55

External Services

-4 610

0

-4 610

-4 665

0

0

0

0

0

0

0

-4 665

Employee benefits expense

Salaries and compensations

-15 386

0

-15 386

Pensions

-2 575

0

-2 575

Other personnel expenses

4

-597

-153

-153

-750

Depreciation and amortisation

1, 2, 3

-937

-849

-261

846

-263

-1 200

Other operating expenses

1, 2

-5 222

864

-369

495

-4 727

Operating profit (EBIT)

4 126

0

15

-629

846

-153

0

79

4 205

Finance costs

1, 6

-45

-28

-1

-29

-74

Finance income

6

0

15

15

15

Profit before tax

4 082

0

-13

-629

846

-153

13

65

4 146

Income tax

1, 2, 4, 6

-990

3

52

8

-3

61

-929

Non-controlling interests

0

0

Profit for the financial period

3 092

0

-10

-577

846

-144

11

125

3 217

Other Comprehensive Income

Net other comprehensive loss to be reclassified to profit or loss in subsequent periods

Exchange differences on translation of foreign operations

8

0

-20

-20

-20

Other comprehensive income, net of tax

0

-20

-20

-20

Total comprehensive income for the financial period

3 092

0

-10

-577

846

-144

-10

105

3 196



Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income for the year 1.1.-31.12.2019

EUR Thousand

Notes

FAS
1.1.-31.12.2019

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS
1.1.-31.12.2019

Revenue from contracts with customers (net sales)

64 066

0

64 066

Work performed by the entity and capitalised

139

0

139

Other operating income

175

0

175

Materials and Services

Purchases

-178

0

-178

External Services

-8 493

0

-8 493

-8 671

0

0

0

0

0

0

0

-8 671

Employee benefits expense

Salaries and compensations

-30 452

0

-30 452

Pensions

-5 034

0

-5 034

Other personnel expenses

4

-1 210

-360

-360

-1 570

Depreciation and amortisation

1, 2, 3

-2 098

-1 732

-677

1 903

-505

-2 603

Other operating expenses

1, 2, 5

-10 799

1 762

-414

20

1 368

-9 430

Operating profit (EBIT)

6 116

0

30

-1 090

1 903

-360

20

503

6 620

Finance costs

1, 6

-84

-51

-1

-52

-135

Finance income

6

0

42

42

42

Profit before tax

6 033

0

-20

-1 090

1 903

-360

61

493

6 526

Income tax

1, 4, 5, 6

-1 588

4

138

27

-12

157

-1 430

Non-controlling interests

0

0

Profit for the financial period

4 445

0

-16

-953

1 903

-333

48

651

5 096

Other Comprehensive Income

Net other comprehensive loss to be reclassified to profit or loss in subsequent periods

Exchange differences on translation of foreign operations

8

0

21

21

21

Other comprehensive income, net of tax

0

21

21

21

Total comprehensive income for the financial period

4 445

0

-16

-953

1 903

-333

69

671

5 116


Description of IFRS transition effects and exemptions applied


The accounting policies that have had the most significant impact on the income statement and the statement of financial position of Gofore Group as a result of the transition to IFRS have been summarized below.

Gofore Group has applied the exemptions of IFRS 1 First-time Adaption of International Financial Reporting Standards relating to Business Combinations, Foreign Currency Translations and Share-based Payments. These are described more in detail below.

The alphabets in topics (A-F) refer to the columns in the calculation tables.

1.

Leases, Gofore as a lessee (B)

Gofore Group has mainly leased offices, parking spaces, cars and office machinery. Under FAS, lease expenses have been recognized as other operating expenses in the P&L on a straight-line basis over the lease period. The Group has not capitalized the leases in FAS and has thus not followed the option to apply IFRS 16 in FAS. The commitments relating to the lease agreements have been disclosed in the notes to the financial statements as off-balance sheet items as part of contingent liabilities.

The Group has adopted IFRS 16 standard by using the modified retrospective approach by recognising the cumulative effect of initially applying the standard in the opening balance sheet as at 1 January 2019. The right-of-use asset and the lease liability are calculated by discounting the future lease payments. The lease liabilities have been measured at the present value of the remaining lease payments as of 1 January 2019 and right-of-use assets have been recognized at an amount equal to the lease liability on 1 January 2019.

In applying IFRS 16, the lease expenses presented in FAS are replaced with the depreciation of the right-of-use asset. In addition, the interest costs of the lease liabilities are recognised as finance costs in the Statement of Profit and Loss.

The standard contains practical expedients, under which low-value leases and short-term leases (lease-term under 12 months) can be exempted from recognition. Gofore Group applies both expedients.

The effect of leases has been presented in column B, "Leases" in the Statement of Profit and Loss and Statement of Financial Position.

2.

Business combinations (C)

Gofore has elected to apply the exemption of IFRS 1 and it is not applying IFRS 3 Business Combinations retrospectively to past business combinations that occured before the date of transition to IFRS. Use of this exemption means that the FAS carrying amounts of assets and liabilities, that are required to be recognised under IFRS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with IFRS. Gofore did not recognise or exclude any previously recognised amounts as a result of IFRS recognition requirements.

Gofore has restated the business combinations from the transition date 1.1.2019 onwards, to comply with the requirements of IFRS. There are two acquisitions, Silver Planet Oy and Mangodesign (officially named mangodesign Finke-Anlauff & Anlauff GbR), that have been made by Gofore during the reporting period of this release. These acquisitions have been recorded in accordance with IFRS 3.

Gofore has measured the cost of the acquisitions at the fair value of the considerations paid, allocated that cost to the acquired identifiable assets and liabilities on the basis of their fair values and the rest of the cost has been recorded as goodwill. For the acquisitions of Silverplanet and Mangodesign, Gofore has identified customer relationships and non-compete agreements as key intangible assets and allocated the cost accordingly to these identified intangible assets. These identified intangible assets are amortized within their underlying useful life between 5-6 years.

Under FAS, transaction costs are included in the acquisition cost of the acquired company, while these items are expensed when incurred under IFRS. Accordingly, when preparing the PPAs for the business combinations in the conversion period, the transaction costs have been expensed for IFRS purposes.

The adjustments for business combinations recalculated in accordance with IFRS 3, have been presented in the column C, "Business combinations" in the Statement of Profit and Loss and in the Statement of Financial Position.

3.

Reversal of goodwill amortizations (D)

Following the transition exemption of IFRS 1, the businesses acquired prior to the IFRS trasition 1.1.2019 are recognised in Gofore's IFRS financial statements by using the carrying amount of goodwill as of 1.1.2019 as presented in the FAS Financial Statements. Gofore has reversed the FAS amortization in the conversion period by adjusting the goodwill amortizations in the Statement of Profit and Loss against the goodwill recognised in the Statement of Financial Position. In accordance with IFRS, goodwill shall no longer be amortized over its useful life but it will be tested for impairment in accordance with IAS 36 annually or whenever there are indications of impairment in the assets. The goodwill has been tested for impairment as of 1.1.2019 and 31.12.2019 and has not resulted any impairment recognition.

The adjustment for reversal of goodwill amotizations has been presented in adjustment column D, "Reversal of Goodwill amortizations".

4.

Share-based payments (E)

Under local GAAP, the Group has recognised only the cost for the long-term incentive plan as an expense when incurred. IFRS requires the fair value of the share options to be determined using an appropriate pricing model and the expenses for the share-based payments are recognised over the vesting period.

Gofore has only equity settled share-based payment programs in the reporting period and the expenses for these share based payment programs, have been recognised over the vesting period in IFRS. The adjustment has been recoded in other personell expenses and within share-based payments and retained earnings in equity.

The effect of share-based payments has been presented in column E, "Share-based Payments" in the Statement of Profit and Loss and Statement of Financial Position.

5.

Impairment of financial assets (F)

The adoption of IFRS has changed the Group’s accounting for impairment losses for financial assets by replacing incurred loss approach under FAS with a forward-looking expected credit loss (ECL) approach in accordance with IFRS 9. As a result Gofore has measured and recognised a loss allowance for expected credit losses for financial assets measured at amortized cost. The related change in the loss allowance during the conversion period has been recorded through profit and loss in other operating expenses.

The effect of ECL has been presented in column F, "Other Adjustments" in Statement of Profit and Loss and Statement of Financial Position.

6.

Financial assets (F)

In accordance with IFRS the financial assets shall be classified based on the business model.

In the transition to IFRS Gofore Group made an irrevocably decicion to classify its financial securities, which include shares in funds, at fair value through profit and loss. The effect of change in fair value of financial securities has been presented in column F, Other Adjustments in Statement of Profit and Loss and Statement of Financial Position.

Investments in other shares are measured at fair value through Statement of Other Comprehensive Income (OCI).

In FAS these have been presented at acquisition cost.

7.

Deferred tax (B, C, E, F)

Gofore Group has recognised deferrred taxes in FAS mainly relating to depreciation differences. In IFRS deferred tax assets and liabilities are recognised on all adjustments leading to temporary differences.

The most significant impacts on deferred taxes are resulting from the business combinations presented in accordance with IFRS 3, from which deferred tax liabilities have been recorded in the conversion period.

The deferred tax impacts of all IFRS adjustments have been presented in connection with each separate IFRS adjustment in the Statement of Profit and Loss and the Statement of Financial Position.

8.

Foreign currency translation (F)

Under FAS, the Group has recognised translation differences on foreign operations in a separate component of equity. In the IFRS transition the cumulative currency translation differences for all foreign operations have been deemed to be zero as at 1 January 2019 applying the exepmtion of IFRS 1. Any gain or loss on a subsequent disposal of any foreign operation after the adoption of IFRS will exclude translation differences that arose before the date of transition but will include later translation differences.
The resulting adjustment has been recognised against retained earnings.

Starting from the transition date 1.1.2019, the currency translation difference is presented through Statement of Other Comprehensive Income (OCI) in accordance with IFRS.

The effect of the adjustment has been presented in column F, "Other Adjustments" in the Statement of Other Comprehensive Income and Statement of Financial Position.

9.

Treasury shares (F)

The own shares acquired are classified as treasury shares. At the end of June 2020, company held 33 859 shares which are valued at the purchase price on the acquisition date. Treasury shares are presented as a separate line item within equity under IFRS, while in FAS financial statements these have been presented within retained earnings.

The effect of the adjustment has been presented in column F, "Other Adjustments" in the Statement of Financial Position.

10.

Reclassifications (A)

On 1 July 2019, Gofore Group acquired 100% of the shares in Mangodesign (officially named mangodesign Finke-Anlauff & Anlauff GbR). Gofore made a prepayment for the acquisition on 30 June 2019 amounting to EUR 432 thousands that was recognised in FAS as goodwill. For IFRS purposes the pre-payment has been reclassified from goodwill into other current assets at 30 June 2019.

The leasehold improvements have been reclassified from intangible assets in FAS to property, plant and equipment in accordance with IFRS.

The timing of invoicing may differ from the timing of revenue recognition. When revenue is recognised prior to invoicing from a client, Gofore recognises a contract asset. In accordance with IFRS 15, contract assets are presented as a separate item in the Statement of Financial Position. In FAS these items have been presented as trade receivables and other current assets. Thus, the sales, which is recognised as revenue but not yet invoiced from the client, is reclassified from trade receivables and other current assets to contract assets.

Based on the nature of a savings account in Hypo Bank, presented within Other current assets in FAS, the Group has reclassified it to cash and cash equivalents as at 1 January 2019.

The effect of the reclassifications have been presented in column A, "Reclassifications" in the Statement of Financial Position.


Formulas of Key Figures

EBITDA

=

Operating profit + depreciations and amortisation

EBITDA margin, %

=

Operating profit + depreciations and amortisation

x 100

Net sales

Operating profit before amortisation of intangible assets identified in PPA and impairment of goodwill (EBITA)

=

Operating profit + amortisation of intangible assets identified in PPA + impairment of goodwill

Operating profit before amortisation of intangible assets identified in PPA and impairment of goodwill (EBITA) margin -%

=

Operating profit + amortisation of intangible assets identified in PPA + impairment of goodwill

x 100

Net sales

Operating Profit (EBIT) margin -%

=

Operating profit

x 100

Net sales

Earnings per share (EPS), diluted, euros

=

Profit for the period attributable for shareholders of the company

x 100

Weighted average number of shares outstanding during the period adjusted for share issues

Equity ratio, %

=

Shareholders equity

x 100

Balance sheet total – advances received

Net gearing, %

=

Long term loans from credit institutions + Non-current lease liabilities + Short term loans from credit institutions + Current lease liabilities – Cash in hand and at banks – Other rights of ownership under Current and Non-current investments

x 100

Shareholder equity



Alternative Performance Measures

New ESMA (European Securities and Markets Authority) guidelines on alternative performance measures have been effective from 2016 fiscal year. Gofore uses and presents operating profit before amortization of PPA (EBITA), EBITDA, ROI, ROE, equity ratio and net gearing alternative performance measures to better illustrate the operative development of its business. PPA amortizations arise from assets recognised in fair value in acquired business combinations.

Adjusted EBITA

The Company determines term “Adjusted EBITA” as follows:

Reported EBITA + (+ goodwill impairment +/- costs/gains directly related to acquiring business combinations + restructuring costs of business structure - gains of sales of fixed assets + losses of sales of fixed assets).



Adjusted EBITA (IFRS):

1.1.-30.9.2020

1.1.-30.9.2019

1.1.-30.6.2020

1.1.-30.6.2019

1.1.-31.12.2019

EBITA

6 495

5 550

4 911

4 466

7 296

Direct costs related to acquiring business combinations

304

414

0

369

414

Restructuring costs of business structure

718

0

718

0

0

Gains of sales of fixed assets

0

0

0

0

0

Losses of sale of fixed assets

0

0

0

0

0

Adjusted EBITA

7 517

5 964

5 629

4 835

7 710

EBITA, Adjusted, margin -%:

Adjusted EBITA

7 517

5 964

5 629

4 835

7 710

Net sales

53 668

46 800

37 376

33 453

64 066

EBITA, Adjusted, margin -%

14,0 %

12,7 %

15,1 %

14,5 %

12,0 %


Further information:
Teppo Talvinko, CFO, Gofore Plc
tel. +358 40 715 3660
teppo.talvinko@gofore.com

Certified Adviser: Evli Bank Plc, tel. +358 40 579 6210

Gofore Plc is a Finland-based digitalisation specialist with international growth plans. Together with our customers, we are pioneering an ethical digital world. We're made up of over 700 impact-driven people across Finland, Germany, Spain and Estonia – top experts in our industry who are our company's heart, brain, and hands. We use consulting, coding and design as tools to incite positive change. We care for our people, our customers, and the surrounding world. Our values guide our business: Gofore is a great workplace that thrives on customer success. In 2019, our net sales amounted to EUR 64.1 million. Gofore Plc's shares are quoted in the Nasdaq First North Growth Market Finland. Learn more: www.gofore.com.

Attachment


4 5604 560Investments 51 051Deferred tax assets50 777Total non-current assets 9 23504 56000074 56713 802 Current assets Trade receivables5, 108 761-179 -37-2168 544Contract assets100179 179179Other current assets103 111-2 007 -2 0071 104Cash and cash equivalents1013 4172 007 2 00715 424Total current assets 25 28900000-37-3725 252Total assets 34 52404 560000-304 53039 054 Equity and liabilities Equity Share capital 80 080Treasury shares 0 00Share-based payments 0 00Translation differences811 -11-110Fund for unrestricted equity812 859 012 859Retained earnings5, 89 055 -19-199 037Equity attributable to equity holders of the parent 22 00600000-30-3021 976Non-controlling interests 0 00Total equity 22 00600000-30-3021 976 Non-current liabilities Interest-bearing loans and borrowings 2 614 02 614Other non-current financial liabilities 516 0516Provisions 0 00Lease liabilities10 2 952 2 9522 952Accrued expenses 0 00Deferred tax liabilities 0 00Total non-current liabilities 3 13002 95200002 9526 082 Current liabilities Trade and other payables 4 297 04 297Contract liabilities 0 00Interest-bearing loans and borrowings 1 069 01 069Lease liabilities10 1 608 1 6081 608Accrued expenses 4 020 04 020Income tax payable 2 02Total current liabilities 9 38801 60800001 60810 996Total liabilities 12 51804 56000004 56017 078Total equity and liabilities 34 52404 560000-304 53039 054



Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income for the period 1.1.-30.6.2020, 1.1.-30.6.2019 and 1.1.-31.12.2019

Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income 1.1.-30.6.2020

EUR Thousand

Notes

FAS
1.1.-30.6.2020

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS
1.1.-30.6.2020

Revenue from contracts with customers (net sales)

37 376

0

37 376

Work performed by the entity and capitalised

331

0

331

Other operating income

1

245

1

1

246

Materials and Services

Purchases

-55

0

-55

External Services

-5 278

0

-5 278

-5 333

0

0

0

0

0

0

0

-5 333

Employee benefits expense

Salaries and compensations

-18 026

0

-18 026

Pensions

-2 673

0

-2 673

Other personnel expenses

4

-754

-174

-174

-928

Depreciation and amortisation

1, 2, 3

-1 168

-1 081

-416

1 057

-440

-1 608

Other operating expenses

1, 5

-5 964

1 102

-29

1 073

-4 891

Operating profit (EBIT)

4 034

0

22

-416

1 057

-174

-29

460

4 495

Finance costs

1, 6

-33

-31

-61

-93

-126

Finance income

6

0

34

34

34

Profit before tax

4 001

0

-9

-416

1 057

-174

-57

402

4 403

Income tax

1, 2, 4, 5, 6

-1 241

2

86

-27

11

72

-1 169

Non-controlling interests

2

0

0

2

Profit for the financial period

2 763

0

-7

-330

1 057

-201

-45

473

3 236

Other Comprehensive Income

Net other comprehensive loss to be reclassified to profit or loss in subsequent periods

Exchange differences on translation of foreign operations

8

0

-30

-30

-30

Other comprehensive income, net of tax

0

-30

-30

-30

Total comprehensive income for the financial period

2 763

0

-7

-330

1 057

-201

-76

443

3 206



Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income 1.1.-30.6.2019

EUR Thousand

Notes

FAS
1.1.-30.6.2019

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS
1.1.-30.6.2019

Revenue from contracts with customers (net sales)

33 453

0

33 453

Work performed by the entity and capitalised

19

0

19

Other operating income

36

0

36

Materials and Services

Purchases

-55

0

-55

External Services

-4 610

0

-4 610

-4 665

0

0

0

0

0

0

0

-4 665

Employee benefits expense

Salaries and compensations

-15 386

0

-15 386

Pensions

-2 575

0

-2 575

Other personnel expenses

4

-597

-153

-153

-750

Depreciation and amortisation

1, 2, 3

-937

-849

-261

846

-263

-1 200

Other operating expenses

1, 2

-5 222

864

-369

495

-4 727

Operating profit (EBIT)

4 126

0

15

-629

846

-153

0

79

4 205

Finance costs

1, 6

-45

-28

-1

-29

-74

Finance income

6

0

15

15

15

Profit before tax

4 082

0

-13

-629

846

-153

13

65

4 146

Income tax

1, 2, 4, 6

-990

3

52

8

-3

61

-929

Non-controlling interests

0

0

Profit for the financial period

3 092

0

-10

-577

846

-144

11

125

3 217

Other Comprehensive Income

Net other comprehensive loss to be reclassified to profit or loss in subsequent periods

Exchange differences on translation of foreign operations

8

0

-20

-20

-20

Other comprehensive income, net of tax

0

-20

-20

-20

Total comprehensive income for the financial period

3 092

0

-10

-577

846

-144

-10

105

3 196



Consolidated Statement of Profit & Loss and Consolidated Statement of Other Comprehensive Income for the year 1.1.-31.12.2019

EUR Thousand

Notes

FAS
1.1.-31.12.2019

Reclassification (A)

Leases (B)

Business
combinations (C)

Reversal of Goodwill amortizations (D)

Share-based Payments (E)

Other
adjustments (F)

Effects of
IFRS adjustments, Total

IFRS
1.1.-31.12.2019

Revenue from contracts with customers (net sales)

64 066

0

64 066

Work performed by the entity and capitalised

139

0

139

Other operating income

175

0

175

Materials and Services

Purchases

-178

0

-178

External Services

-8 493

0

-8 493

-8 671

0

0

0

0

0

0

0

-8 671

Employee benefits expense

Salaries and compensations

-30 452

0

-30 452

Pensions

-5 034

0

-5 034

Other personnel expenses

4

-1 210

-360

-360

-1 570

Depreciation and amortisation

1, 2, 3

-2 098

-1 732

-677

1 903

-505

-2 603

Other operating expenses

1, 2, 5

-10 799

1 762

-414

20

1 368

-9 430

Operating profit (EBIT)

6 116

0

30

-1 090

1 903

-360

20

503

6 620

Finance costs

1, 6

-84

-51

-1

-52

-135

Finance income

6

0

42

42

42

Profit before tax

6 033

0

-20

-1 090

1 903

-360

61

493

6 526

Income tax

1, 4, 5, 6

-1 588

4

138

27

-12

157

-1 430

Non-controlling interests

0

0

Profit for the financial period

4 445

0

-16

-953

1 903

-333

48

651

5 096

Other Comprehensive Income

Net other comprehensive loss to be reclassified to profit or loss in subsequent periods

Exchange differences on translation of foreign operations

8

0

21

21

21

Other comprehensive income, net of tax

0

21

21

21

Total comprehensive income for the financial period

4 445

0

-16

-953

1 903

-333

69

671

5 116


Description of IFRS transition effects and exemptions applied


The accounting policies that have had the most significant impact on the income statement and the statement of financial position of Gofore Group as a result of the transition to IFRS have been summarized below.

Gofore Group has applied the exemptions of IFRS 1 First-time Adaption of International Financial Reporting Standards relating to Business Combinations, Foreign Currency Translations and Share-based Payments. These are described more in detail below.

The alphabets in topics (A-F) refer to the columns in the calculation tables.

1.

Leases, Gofore as a lessee (B)

Gofore Group has mainly leased offices, parking spaces, cars and office machinery. Under FAS, lease expenses have been recognized as other operating expenses in the P&L on a straight-line basis over the lease period. The Group has not capitalized the leases in FAS and has thus not followed the option to apply IFRS 16 in FAS. The commitments relating to the lease agreements have been disclosed in the notes to the financial statements as off-balance sheet items as part of contingent liabilities.

The Group has adopted IFRS 16 standard by using the modified retrospective approach by recognising the cumulative effect of initially applying the standard in the opening balance sheet as at 1 January 2019. The right-of-use asset and the lease liability are calculated by discounting the future lease payments. The lease liabilities have been measured at the present value of the remaining lease payments as of 1 January 2019 and right-of-use assets have been recognized at an amount equal to the lease liability on 1 January 2019.

In applying IFRS 16, the lease expenses presented in FAS are replaced with the depreciation of the right-of-use asset. In addition, the interest costs of the lease liabilities are recognised as finance costs in the Statement of Profit and Loss.

The standard contains practical expedients, under which low-value leases and short-term leases (lease-term under 12 months) can be exempted from recognition. Gofore Group applies both expedients.

The effect of leases has been presented in column B, "Leases" in the Statement of Profit and Loss and Statement of Financial Position.

2.

Business combinations (C)

Gofore has elected to apply the exemption of IFRS 1 and it is not applying IFRS 3 Business Combinations retrospectively to past business combinations that occured before the date of transition to IFRS. Use of this exemption means that the FAS carrying amounts of assets and liabilities, that are required to be recognised under IFRS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with IFRS. Gofore did not recognise or exclude any previously recognised amounts as a result of IFRS recognition requirements.

Gofore has restated the business combinations from the transition date 1.1.2019 onwards, to comply with the requirements of IFRS. There are two acquisitions, Silver Planet Oy and Mangodesign (officially named mangodesign Finke-Anlauff & Anlauff GbR), that have been made by Gofore during the reporting period of this release. These acquisitions have been recorded in accordance with IFRS 3.

Gofore has measured the cost of the acquisitions at the fair value of the considerations paid, allocated that cost to the acquired identifiable assets and liabilities on the basis of their fair values and the rest of the cost has been recorded as goodwill. For the acquisitions of Silverplanet and Mangodesign, Gofore has identified customer relationships and non-compete agreements as key intangible assets and allocated the cost accordingly to these identified intangible assets. These identified intangible assets are amortized within their underlying useful life between 5-6 years.

Under FAS, transaction costs are included in the acquisition cost of the acquired company, while these items are expensed when incurred under IFRS. Accordingly, when preparing the PPAs for the business combinations in the conversion period, the transaction costs have been expensed for IFRS purposes.

The adjustments for business combinations recalculated in accordance with IFRS 3, have been presented in the column C, "Business combinations" in the Statement of Profit and Loss and in the Statement of Financial Position.

3.

Reversal of goodwill amortizations (D)

Following the transition exemption of IFRS 1, the businesses acquired prior to the IFRS trasition 1.1.2019 are recognised in Gofore's IFRS financial statements by using the carrying amount of goodwill as of 1.1.2019 as presented in the FAS Financial Statements. Gofore has reversed the FAS amortization in the conversion period by adjusting the goodwill amortizations in the Statement of Profit and Loss against the goodwill recognised in the Statement of Financial Position. In accordance with IFRS, goodwill shall no longer be amortized over its useful life but it will be tested for impairment in accordance with IAS 36 annually or whenever there are indications of impairment in the assets. The goodwill has been tested for impairment as of 1.1.2019 and 31.12.2019 and has not resulted any impairment recognition.

The adjustment for reversal of goodwill amotizations has been presented in adjustment column D, "Reversal of Goodwill amortizations".

4.

Share-based payments (E)

Under local GAAP, the Group has recognised only the cost for the long-term incentive plan as an expense when incurred. IFRS requires the fair value of the share options to be determined using an appropriate pricing model and the expenses for the share-based payments are recognised over the vesting period.

Gofore has only equity settled share-based payment programs in the reporting period and the expenses for these share based payment programs, have been recognised over the vesting period in IFRS. The adjustment has been recoded in other personell expenses and within share-based payments and retained earnings in equity.

The effect of share-based payments has been presented in column E, "Share-based Payments" in the Statement of Profit and Loss and Statement of Financial Position.

5.

Impairment of financial assets (F)

The adoption of IFRS has changed the Group’s accounting for impairment losses for financial assets by replacing incurred loss approach under FAS with a forward-looking expected credit loss (ECL) approach in accordance with IFRS 9. As a result Gofore has measured and recognised a loss allowance for expected credit losses for financial assets measured at amortized cost. The related change in the loss allowance during the conversion period has been recorded through profit and loss in other operating expenses.

The effect of ECL has been presented in column F, "Other Adjustments" in Statement of Profit and Loss and Statement of Financial Position.

6.

Financial assets (F)

In accordance with IFRS the financial assets shall be classified based on the business model.

In the transition to IFRS Gofore Group made an irrevocably decicion to classify its financial securities, which include shares in funds, at fair value through profit and loss. The effect of change in fair value of financial securities has been presented in column F, Other Adjustments in Statement of Profit and Loss and Statement of Financial Position.

Investments in other shares are measured at fair value through Statement of Other Comprehensive Income (OCI).

In FAS these have been presented at acquisition cost.

7.

Deferred tax (B, C, E, F)

Gofore Group has recognised deferrred taxes in FAS mainly relating to depreciation differences. In IFRS deferred tax assets and liabilities are recognised on all adjustments leading to temporary differences.

The most significant impacts on deferred taxes are resulting from the business combinations presented in accordance with IFRS 3, from which deferred tax liabilities have been recorded in the conversion period.

The deferred tax impacts of all IFRS adjustments have been presented in connection with each separate IFRS adjustment in the Statement of Profit and Loss and the Statement of Financial Position.

8.

Foreign currency translation (F)

Under FAS, the Group has recognised translation differences on foreign operations in a separate