Gofore Plc · OMXHEX:GOFORE
Gofore — Investor Day (January 2021)
76 slides from Gofore's investor day presentation, Jan 14, 2021
Slide 1: Gofore — Pure-play digital transformation consultancy
GOFORE Gofore — Pure-play digital transformation consultancy Capital markets day presentation
Slide 2: Disclaimer
GOFORE Disclaimer This presentation includes forward looking statements which involve risks and uncertainty factors. These statements are not based on historical facts but relate to the company’s future activities and performance. They include statements about future strategies and anticipated benef
Slide 3: Today's agenda
Today’s agenda GOFORE 12:00 — 12:45 Opening remarks and Gofore in Brief Mikael Nylund 12:45 — 13:15 Gofore Growth Strategy Mikael Nylund & Juha Virtanen Q&A 13:15 — 14:00 Gofore’s Differentiated Offering Elja Kirjavainen, Aki Koikkalainen & Miika Nurminen Q&A 14:00 — 14:15 Break 14:15 — 14:45 Sustai
Slide 4: Presenting today
GOFORE Presenting today & Ss 2 Mikael Nylund Teppo Talvinko Kristiina Hark6nen CEO CFO Chief Sustainability Officer ld + Juha Virtanen Elja Kirjavainen Aki Koikkalainen Miika Nurminen Sales Director Director, Advisory Services Director, Digital Services Managing Director, Qentinel Finland yy.
Slide 5: Contents
GOFORE GOFORE 5-20 Gofore in brief 21-31 Gofore growth strategy 52-4) Gofore’s differentiated offering 45-50 Sustainability driving our business 51-60 People, culture and ecosystem 61-69 Financial highlights 70-71 Closing remarks 72-76 Appendix
Slide 6: Gofore is a growing and profitable digital transformation consultancy
Gofore is a growing and profitable digital transformation consultancy GOFORE
Slide 7: The world is turning digital at an increasing pace
GOFORE The world is turning digital at an increasing pace 1T-market predictions By 2023, digitally By 2024, over 50% of By 2023, over 500 million By 2022, 30% of Nordic transformed enterprises global IT spend will be for digital solutions will be enterprises will adopt tools will account for more th
Slide 8: We deliver digital solutions with positive societal impact
GOFORE We deliver digital solutions with positive societal impact Selected examples Digitalizing national Building a smarter Protecting the service architecture education sector rchipelago Sea Revolutionizing services Accelerating the switch to for the labor market electric cars Creating a single po
Slide 9: Net sales development 2012-2020
78.0 64.1 50.6 34.0 18.6 9.2 12.4 3.7 6.0 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 10: Our aim is always to be
GOFORE Our aim is always to be a= we Growing and Constantly renewing Impactful and International Offering exceptional profitable responsible customer and employee experience
Slide 11: Gofore key investment highlights
GOFORE Gofore key investment highlights G 11
Slide 12: Gofore ideally positioned as a digi-native in the accelerating digital transformation
GOFORE Gofore ideally positioned as a digi-native in the accelerating digital e transformation Traditional IT services Business support 2-4% Market growth!) | Long implementation cycles IT to support operations Cost savings Offshoring IT system maintenance 12
Slide 13: Pure-play next-gen offering for agile digital transformation
2 Pure-play next-gen offering for agile digital transformation Lead Q@ Se. ADVISORY Digitally native advisory ; 100% legacy-free consulting and development services KS SERVICE AGILE CLOUD, DESIGN DEVELOPMENT DATA& ANALYTICS Create Design and technology development services for digital transformation
Slide 14: Long-term relationships with a diverse and growing client base
Long-term relationships with a diverse and growing client base Public (70% of sales") Private (30% of sales") ZEEE Outotec ANDRIZ aimo park a @on 3sreP 11 @ ) oe eis FJ ass O D virasto Lantmanner Sales CAGR Sales CAGR 2017-19: 2017-19: G 1) 2019 figure; 2) 2017 public vs. private sales split percent
Slide 15: Tech-native platform underpinning scalability and efficiency
GOFORE e Tech-native platform underpinning scalability and efficiency Daily data collection Real-time forward-looking analytics Human- Data-driven Al-aided decision making centric management Conversational management bots culture model Shared real-time situational awareness Shared responsibility for
Slide 16: Headcount growth and employer rankings
# 2019 2020 1 Supercell 6 Reaktor 2 Futurice 7 Microsoft 3 Google 8 Fazer 4 KONE 9 Vincit 5 10 Konecranes 724 582 495 374 196 132 95 45 62 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 17: Customer and sales mix
70.9 64.1 70% 93% 2019 Q3'20 LTM Public Private Time-and-material Fixed price/Other Returning customers New customers
Slide 18: Growth and profitability
35% 30% 25% 20% 15% 10% 5% 0% -5% 0% 5% 10% 15% 20% 25% 30%
Slide 19: Target to continue rapid and profitable growth
Target to continue rapid and profitable growth Gofore financial targets and dividend policy Growth >20% annual net sales growth, of which organic growth accounts for approximately half Profitability 15% EBITAmargin GOFORE Dividend At least 40% of annual net profit
Slide 20: Gofore update
GOFORE Gofore update Updated strategy and long-term financial targets released in December 2020 New Group Executive Team in place since 1st January 2021 Preparations for transferring to Nasdaq Helsinki Main Market progressing well. Transfer scheduled during the 1st quarter of 2021. Danske Bank advis
Slide 21: Gofore growth strategy
GOFORE Gofore in brief Gofore growth strategy Gofore’s differentiated offering Sustainability driving our business People, culture and ecosystem Financial highlights Closing remarks Appendix GOFORE 21
Slide 22: Avenues to reach the growth targets
Avenues to reach the growth targets Growth in Finland International growth Disciplined M&A 1. Become #1 in digital 1. Grow with international 1. Keep up M&A growth at transformation business clients served from Finland least at the historical pace for the p wits Sette 2. Expand physical presence 2.
Slide 23: Need for higher efficiency and improved service provision
Need for higher efficiency and improved service provision Digitalisation at the top of the strategic agenda Large partnerships and comprehensive services scopes Procurement of expertise and individual tasks The most modern public organisations very advanced digitally IT development still partly in-h
Slide 24: Company sales index and competitors
350 300 # Company Sales index 44.8 250 1 IT generalist 100 32.9 200 2 IT generalist 44 150 21.4 3 IT product supplier 34 100 4 28 50 2017 2018 2019 2020YTD 5 IT generalist 19 Gofore Comp. 1 Comp. 2 2017 2018 2019 Comp. 3 Comp. 4
Slide 25: Net sales growth and profitability
19.2 17.7 12.6 2017 2018 2019 2018 2019 Q3 2020 LTM
Slide 26: Digital public services index
Connectivity Human Capital Use of Internet Integration of Digital Technology Digital Public Services
Slide 27: Grow with international clients
Grow with international clients Gofore existing platform enables growth with international clients without setting up new physical locations Actively look for and rapidly react to international opportunities — build and develop needed capabilities Deliver promises and show capabilities to grow and e
Slide 28: Public and private sector market dynamics
• • • • Creation of new business and sales Improvement of internal efficiency • Agile development Strong in-house development culture More centralized competition Very fragmented competition Fewer significant players Mid size competitor dominated
Slide 29: Gofore has followed a disciplined M&A strategy over the past years
Gofore has followed a disciplined M&A strategy over the past years 2017-2020 total Leadin 4/2017 Qentinel Finland . . state-of-the-art Silver Planet 8/2020 added i] | 5 acquired companies design capability, 2/2019 boosted digital quality international digital change assurance to business advisory se
Slide 30: Strategy to continue acquisitive growth
Strategy to continue acquisitive growth and look for targets fitting Gofore’s strategy Digital transformation offering becomes available for add-on companies » Synergies available » Customer base / portfolio 7) Digital transformation services Gofore Group business platform * Integration process for
Slide 31: Q&A
GOFORE Q&A
Slide 32: Gofore's differentiated offering
GOFORE Gofore in brief Gofore growth strategy Gofore’s differentiated offering Sustainability driving our business People, culture and ecosystem Financial highlights Closing remarks Appendix GOFORE 32
Slide 33: Digitalisation is a key company priority within customer organisations
GOFORE Digitalisation is a key company priority within customer organisations Corporate strategy and digital development should not be disassociated anymore 87% of senior . ' . . business leaders We combine technological expertise with say digitalisation top talent in management consulting is a comp
Slide 34: We are more than just another IT consultant
GOFORE We are more than just another IT consultant ; ; © Inour customers’ operational environment pace of change is increasing and predictability is decreasing Developing customers * Traditional “3-year plan” thinking does not work — constant changeis needed capabilities © Together we build right ca
Slide 35: Gofore Spark — our end-to-end framework
GOFORE Gofore Spark — our end-to-end framework / what customers need for successful digitalisation Execute change, Produce, maintain, transform improve Create vision, Identify capabilities, define strategy create foundation w Where we want to be Vision, mission, strategy Where we are now Evaluation
Slide 36: Supporting customers in their digital transformation
GOFORE Supporting customers in their digital transformation / what we actually deliver Create vision, Identify capabilities, Execute change, Produce, maintain, define strategy create foundation transform improve Cee PIZA T T wi Gece ee ee eeeaeaeaeaeneneeeeeeetenenaeaeaeaes wee All connected/nosilos
Slide 37: Cloud deep dive
Cloud deep dive — Gofore was an early cloud adopter and has strong expertise IT spending shifting to Strong cloud expertise public cloud computing “By 2024, more than 45% of IT spending on system 2) infrastructure, infrastructure software, application aWS patner q software and business process outso
Slide 38: Case Study: Transformation of the job market in Finland
Case Study: Transformation of the job market in Finland Ow: 8 Login Recoding society Unparalleled ecosystem to match jobs and job seekers Developing tomorrow Pioneering way to vision job applications and employment services Massive scale One of the biggest digitalisation projects in the society Meet
Slide 39: Qentinel Finland is the newest addition to the Gofore crew
GOFORE Qentinel Finland is the newest addition to the Gofore crew Qentinel Finland Oy net sales (EURm, FAS, audited) Miika Nurminen 9 Managing Director +16.1% a 12.0 Q Qe n ti n al woworte Quality assurance testing 10.4 tstns Test automation Founded Lines of code - People 2002 tested daily impacted
Slide 40: Digital quality assurance is a significant growth market
GOFORE Digital quality assurance is a significant growth market CAGR 2020-26: >6% CAGR 2017-19: >15% ~$40bn B Faster time to market for new solutions ttt ago Cost savings with early identification of errors ~€150m ue | — Global” Finland? Bragg Key market drivers") Gaui Gen sursillen cima labaecalgpa
Slide 41: Q&A
GOFORE Q&A
Slide 42: Break
Break 15 minutes GOFORE
Slide 43: Sustainability driving our business
GOFORE Gofore in brief Gofore growth strategy Gofore’s differentiated offering Sustainability driving our business People, culture and ecosystem Financial highlights Closing remarks Appendix GOFORE 43
Slide 44: Digitalisation is here to solve the world's challenges
GOFORE Digitalisation is here to solve the world’s challenges Digitalisation offers tools for success in sustainable development, reduction of emissions and fighting climate change * Big data analysis * New ways of thinking, through e.g. VR and Al * New operating models + Efficient information shari
Slide 45: Gofore layers of ethical work life
GOFORE 4 INDIVIDUAL My own work and daily actions ACTION o Guidance, organizational structure, practices con! a = Gofore layers of a thical k lif a Code of Conduct MORAL etnical work lite « COMPASS 1S} = ° VALUE 1 VALUE 2 oO Gofore is a good We thrive on COMPANY workplace for everyone customer succe
Slide 46: Our most important sustainability themes
GOFORE Our most important sustainability themes Ethical and environmentally sound work does baat Responsibility as an employer through our Good corporate customers citizenship
Slide 47: We combat climate change by helping our customers build new technologies
We combat climate change by helping our customers to build new technologies Next generation charging services with 200+ energy & hardware customers in 21 countries Gofore has been a key partner in Virta’s journey from ecosystem understanding to end customer solutions * Helping Virta in ecosystem map
Slide 48: Gofore Good Growth
GOFORE Our unique — Gofore Good Growth — ensures clients’ businesses embed sustainability in everything they do In practice it includes: Modeling and measurement of impact + Identifying key Sustainable Development Goals (SDG) of the UN in the customer's organization . . * Creating tangible performan
Slide 49: We are revitalizing the Baltic Sea with the help of digitalization
GOFORE We are revitalizing the Baltic Sea with the help of digitalization Regenerative agriculture boosted by digitali n Y Gofore has teamed up with Baltic Sea Action Group (BSAG) and expediting the work done via the Carbon Action platform Gofore’s brings in expertise in designing and developing soi
Slide 50: We make sure our work is ethically and environmentally sound
GOFORE We make sure our work is ethically and environmentally sound All our employees are committed to decreasing Gofore’s environmental footprint an 2 Ny Identifying negative Business travel, Environmentally sound Green office Cyber security impacts in project work office energy use software infras
Slide 51: People, culture and ecosystem
GOFORE Gofore in brief Gofore growth strategy Gofore’s differentiated offering Sustainability driving our business People, culture and ecosystem Financial highlights Closing remarks Appendix GOFORE 51
Slide 52: Unique culture delivers sustainable success
GOFORE Unique culture delivers sustainable success - Culture happens between people Culture is actions Culture is always evolving When aligned with strategy, culture drives business success
Slide 53: Employer rankings
# 2019 2020 1 Supercell 6 Reaktor 2 Futurice 7 Microsoft 3 Google 8 Fazer 4 KONE 9 Vincit 5 10 Konecranes
Slide 54: Headcount development 2012-2020
724 582 495 374 196 132 95 62 45 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 55: We nurture learning through an interplay with clients and the market
GOFORE We nurture learning through an interplay with clients and the market Market changes constantly Trends Innovations * The market evolves constantly — trends, innovations, technologies * Our experts are in the best position to understand which are the key new technologies to learn and adopt G We
Slide 56: The multi-experienced pool of skilled employees is our most important asset
GOFORE The multi-experienced pool of skilled employees is our most important asset and competitive advantage By age group By gender 20-29 years 030-39 years BWomen 40-49 years OMen 50-59 years 060-69 years PhDs Engineering education vs. other PhDs OOther GEngineering |. dOther 56
Slide 57: Employee turnover and satisfaction
42 14% 10% 8% 2019 2018 2019 2020E
Slide 58: Monthly employee metrics
• • • • • Jan-18 42 Feb-18 45 Mar-18 Apr-18 41 May-18 Jun-18 49 4750 Jul-18 24 Aug-18 46 Sep-18 52 Oct-18 Nov-18 5555 Dec-18 50 Jan-19 52 Feb-19 61 Mar-19 66 Apr-19 May-19 60 Jun-19 57 59 Jul-19 18 Aug-19 Sep-19 Oct-19 Nov-19 56555457 Dec-19 53 Jan-20 60 Feb-20 68 Mar-20 Apr-20 80 May-20 Jun-20 73 7
Slide 59: Recoding employee interactions
GOFORE Recoding employee interactions — measuring, improving, engaging, understanding, scaling + Makes Gofore data visible to all employees * Provides various reports from personal to Gofore level * Sends reminders on all things that matter Company wide view on all the projects Match right talents w
Slide 60: Q&A
GOFORE Q&A
Slide 61: Financial highlights
GOFORE Gofore in brief Gofore growth strategy Gofore’s differentiated offering Sustainability driving our business People, culture and ecosystem Financial highlights Closing remarks Appendix GOFORE 61
Slide 62: Net sales and CAGR 2017-2019
Sales CAGR 2017-2019 Total 37% 78.0 Finland 41% 64.1 53.7 50.6 International 10% 46.8 34.0 Public sector 45% Private sector 24% 2017 2018 2019 2020 1-9/2019 1-9/2020 Audited FAS figures Unaudited FAS figures Unaudited FAS figures
Slide 63: Solid performance through the COVID-19 pandemic
GOFORE Solid performance through the COVID-19 pandemic * The COVID-19 pandemic has caused uncertainties in the operating environment * In the longer term, the pandemic is expected to accelerate digitalization bearing in mind that public and private sector customers’ ability to invest in digital tran
Slide 64: Monthly net sales
8.7 8.5 8.3 7.1 6.8 6.6 6.1 6.1 6.4 6.2 6.0 6.1 5.9 5.9 6.0 5.2 5.3 5.5 5.1 5.3 5.6 4.6 2.2 2.4 January February March April May June July August September October November December
Slide 65: Significant share of sales to public sector
GOFORE Significant share of sales to public sector, which has been a focus area for us Net sales distribution 1-9/2020 __Bylocation _ Byclientele Subcontracting 11% 17% @ = Finland wm Outside Finland mPrivate Public mTop5 Others m Subcontractors m Personnel G Note: Unaudited FAS figures 65
Slide 66: Adjusted EBITA development
• 8.0 7.7 7.6 7.5 • 6.8 6.2 6.0 5.7 • 2017 2018 2019 1-9/2019 1-9/2020 Audited FAS figures Unaudited IFRS figures Unaudited FAS figures Unaudited IFRS figures
Slide 67: FAS to IFRS adjusted EBITA bridge
1.1 -0.2 -1.1 5.8 -0.7 0.7 5.6 5.1 4.9 FAS adj. EBITA FAS one-off FAS reported Other OPEX Share-based Depreciation IFRS reported Restructuring IFRS adj. EBITA costs EBITA (leases) payments (leases) EBITA costs • • • •
Slide 68: Balance sheet and acquisitions
10.6 Target EV (EURm) Funding EV/EBITDA 7.8 Undisclosed Cash, stock Undisclosed 2.7 2.9 0.6 4.7 Cash, stock 9.1x3) 2017 2018 2019 H1 2019 H1 2020 14.3 Cash, stock 7.8x Q3 2019 Q4 2019 Q3 2020 Cash position 16.0 21.4 16.1 Undisclosed Cash Undisclosed Net debt -6.6 -10.8 -1.7 Equity ratio 59.2% 58.1%
Slide 69: Q&A
GOFORE Q&A
Slide 70: Closing remarks
GOFORE Gofore in brief Gofore growth strategy Gofore’s differentiated offering Sustainability driving our business People, culture and ecosystem Financial highlights Closing remarks Appendix GOFORE 70
Slide 71: Gofore key investment highlights
GOFORE Gofore key investment highlights G 71
Slide 72: Appendix
GOFORE Gofore in brief Gofore growth strategy Gofore’s differentiated offering Sustainability driving our business People, culture and ecosystem Financial highlights Closing remarks Appendix GOFORE 72
Slide 73: Cost structure
• Net sales 100% • • Personnel costs 58% • • Material and services 14% • Other opex 17% • Adjusted EBITA 12.0% •
Slide 74: Quarterly key figures (IFRS)
GOFORE Quarterly key figures (IFRS) shale laa nike Q12019) —Q22019 Q42019 Q12020 @22020 320203) Net Sales 16,682 16,771 13,347 17,266 18,823 18,553 16,292 EBITDA 2,909 2,496 1,574 2,244 3,035 3,068 2,172 EBITDA margin -% 174% 14.9% 11.8% 13.0% 16.1% 16.5% 13.3% EBITA, Adjusted 2,824 2,011 1,129 1,74
Slide 75: Key figures (IFRS)
GOFORE Key figures (IFRS) otherwise stated Net Sales 53,668 46,800 37,376 33,453 64,066 EBITDA 8,275 6979 6,102 5,405 9,223 EBITDA margin -% 15,4.% 14,9.% 163% 16,2 % 14,4.% EBITA, Adjusted 7,517 5,964 5,629 4,835 7,710 EBITA, Adjusted, margin -% 14,0 % 12,7% 151% 14,5 % 12,0% EBITA 6,495 5,550 4911
Slide 76: FAS vs. IFRS key figures
GOFORE FAS vs. IFRS key figures In thousands of EUR, unless FANS Wass FANS Wass FANS Waits oinanizasicieg 11.- 11.- 11- 11.- 11.- 11.- 30.9.2020 30.9.2020” 30.6.2020 30.6.2020} 31.12.2019? 31.12.2019?) Net Sales 53,668 53,668 37,376 37,376 64,066 64,066 EBITDA 7,087 8,275 5,203 6,102 8,214 9,223 EBI