QPR SOFTWARE PLC STOCK EXCHANGE RELEASE JULY 31, 2014 AT 9.30 AM
INTERIM REPORT JANUARY – JUNE 2014
NET SALES INCREASED, PROFITABILITY IMPROVED SIGNIFICANTLY FROM PREVIOUS YEAR
Summary second quarter 2014
- Net sales EUR 2,465 thousand (second quarter 2013: 2,335).
- Net sales increased 6% mainly due to an increase in software net sales. Software net sales grew 9%.
- Recurring revenues (software rentals and maintenance services) increased 9% and were 51% of total net sales (50). Net sales from software rentals increased 18%. The growth in recurring revenues was slowed down by exchange rate changes in maintenance service revenues.
- Operating profit EUR 344 thousand (222), growth 55%.
- Cash flow from operating activities EUR 311 thousand (-71).
- Profit before taxes EUR 332 thousand (222), growth 50%.
- Profit for the quarter EUR 288 thousand (189), growth 52%.
- Earnings per share EUR 0.024 (0.016), growth 50%.
Summary January-June 2014
- Net sales EUR 4,689 thousand (January-June 2013: 4,416).
- Net sales increased 6% mainly due to an increase in software net sales. Software net sales grew 10%.
- Recurring revenues (software rentals and maintenance services) increased 6% and were 53% of total net sales (53). Net sales from software rentals increased 16%. The growth in recurring revenues was slowed down by exchange rate changes in maintenance service revenues.
- Operating profit EUR 451 thousand (191), growth 136%.
- Cash flow from operating activities EUR 828 thousand (1,198).
- Profit before taxes EUR 435 thousand (180), growth 142%.
- Profit for January-June EUR 382 thousand (153), growth 150%.
- Earnings per share EUR 0.032 (0.013), growth 146%.
OUTLOOK
Operating environment and market outlook
QPR Software estimates that demand for enterprise architecture based business development services and software will increase in its home market Finland, as well as elsewhere in Europe. Development of operations in an enterprise architecture context, and not just in business process or in system development context, is a necessity in current competitive environment for more and more organizations. QPR Software provides its customers, through its software and services, an insight and control to various dimensions of their organizations, such as business processes, information, applications and technology.
QPR Software aims to grow in its home market Finland especially in the enterprise architecture based business development services and in the process analysis business. In the international markets, the Company’s goal is to significantly increase the sales of its innovative software products. In the international markets, the Company operates mainly through its reseller channel and puts effort in recruiting new resellers.
Outlook for 2014
The Company estimates its net sales and operating profit in euros to increase in 2014, compared to 2013.
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KEY FIGURES |
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| EUR in thousands, unless otherwise indicated | Apr-Jun 2014 | Apr-Jun 2013 | Change, % | Jan-Jun 2014 | Jan-Jun 2013 | Change, % | Jan-Dec 2013 |
| Net sales | 2 465 | 2 335 | 5.6 | 4 689 | 4 416 | 6.2 | 8 688 |
| EBITDA | 522 | 396 | 31.8 | 826 | 538 | 53.5 | 1 285 |
| % of net sales | 21.2 | 17.0 | 17.6 | 12.2 | 14.8 | ||
| Operating profit | 344 | 222 | 55.0 | 451 | 191 | 136.1 | 578 |
| % of net sales | 14.0 | 9.5 | 9.6 | 4.3 | 6.7 | ||
| Profit before tax | 332 | 222 | 49.5 | 435 | 180 | 141.7 | 554 |
| Profit for the period | 288 | 189 | 52.4 | 382 | 153 | 149.7 | 521 |
| % of net sales | 11.7 | 8.1 | 8.1 | 3.5 | 6.0 | ||
| Earnings per share, EUR | 0.024 | 0.016 | 50.0 | 0.032 | 0.013 | 146.2 | 0.043 |
| Equity per share, EUR | 0.220 | 0.209 | 5.3 | 0.220 | 0.209 | 5.3 | 0.231 |
| Cash flow from operating activities | 311 | -71 | 828 | 1 198 | -30.9 | 1 661 | |
| Cash and cash equivalents | 1 127 | 1 534 | -26.5 | 1 127 | 1 534 | -26.5 | 1 365 |
| Free cash flow | 110 | -277 | 391 | 777 | -49.7 | 815 | |
| Net borrowings | -1 127 | -1 308 | -13.8 | -1 127 | -1 308 | -13.8 | -1 252 |
| Gearing, % | -41.2 | -50.3 | -41.2 | -50.3 | -43.6 | ||
| Equity ratio, % | 54.8 | 47.6 | 54.8 | 47.6 | 42.5 | ||
| Return on equity, % | 40.8 | 27.3 | 27.2 | 11.0 | 17.8 | ||
| Return on investment, % | 56.6 | 29.9 | 31.6 | 13.0 | 18.3 |
REPORTING
This report complies with requirements of IAS 34 ”Interim Financial Reporting.” Starting from the beginning of 2014, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2013. The implementation of these new and revised requirements have not impacted the reported figures. For all other parts, the accounting principles and methods are the same as they were in the 2013 financial statements. This report is unaudited.
QPR Software’s business operations consist of software and consulting services sales. The Company reports income for products and services as follows: software license sales, software maintenance services, software rentals, and consulting services.
Starting from the beginning of 2014, the Company also reports fixed-price extended software maintenance services as part of software maintenance. Earlier, these services were reported as part of consulting revenues. Comparative figures for 2013 have not been restated. In January-June 2014, the change increased net sales from software maintenance by EUR 63 thousand and, accordingly, decreased net sales from consulting services with the same amount.
The Company reports the following operating segments: Direct and OEM business (software license and rental sales, maintenance and consulting services sales to direct customers and OEM customers) and Resellers (software license and rental sales, maintenance and consulting services sales through resellers and the Russian subsidiary).
REVIEW BY THE CEO
In the first half of 2014, the Company’s software net sales grew approximately 10 percent, despite the continued challenging market situation and the negative impact from exchange rate changes to net sales. Net sales from both software licenses (+26%) and software rentals (+16%) grew significantly from the previous year. This shows that the Company’s software for operational development is in great demand even at economically challenging times. In tightening competitive environment, there is an increasing demand for tools to drive profitability and operational improvement initiatives.
The Company’s consulting net sales were at the previous year’s level, and a twofold development trend was visible. Operational development consulting based on enterprise architecture continued to grow rapidly, while net sales from technical consulting declined in a tight market situation. In consulting business, the order backlog strengthened significantly in the second quarter. Due to this development, we expect consulting net sales to grow in the second half of 2014 compared to previous year.
Our most important target is to further speed up net sales growth. Thanks to our new software products, we are in excellent position to reach this target. The biggest opportunities for software sales growth lie outside the borders of our home market Finland, and thus we are strengthening our outlays for growth in international sales channel. Our specific focus is to expand the distribution for our process analysis, enterprise architecture and process modeling software.
Profitability was strong in the second quarter; operating margin rose to 14% of net sales (Q2 2013: 9.5%). Due to fairly fixed cost structure, net sales growth has a strong impact on the Company´s profitability.
Jari Jaakkola
CEO
NET SALES
Net sales in the second quarter were EUR 2,465 thousand (2,335) and increased 6% from the corresponding period of the previous year. In January-June, net sales were EUR 4,689 thousand (4,416) and increased 6% from the corresponding period of the previous year. Both for the second quarter and for January-June, the increase was especially due to growth in net sales from software licenses and software rentals, as compared to the corresponding periods in the previous year.
Net sales by product group
| EUR in thousands | Apr-Jun 2014 | Apr-Jun 2013 | Change, % | Jan-Jun 2014 | Jan-Jun 2013 | Change, % | Jan-Dec 2013 |
| Software licenses | 379 | 341 | 11 | 680 | 539 | 26 | 1 034 |
| Software maintenance services | 791 | 760 | 4 | 1 554 | 1 531 | 2 | 3 021 |
| Software rentals | 477 | 405 | 18 | 920 | 795 | 16 | 1 656 |
| Consulting | 818 | 829 | -1 | 1 535 | 1 551 | -1 | 2 977 |
| Total | 2 466 | 2 335 | 6 | 4 689 | 4 416 | 6 | 8 688 |
Demand for software licenses in the developing markets was on a higher level than in the previous year, both in the second quarter and in January-June. In the developed markets, however, more and more customers favor software rentals instead of purchasing software licenses, which has a negative impact on software license net sales and, on the other hand, a positive impact on software rental net sales.
Software maintenance services relate to contract-based customer support and software updates for earlier sold software licenses. Strengthening of the euro against main export currencies had a negative impact on maintenance service net sales in the second quarter and in January-June. Approximately 60% of maintenance service net sales come from international and 40% from Finnish customers.
Rental net sales of the Company’s software have grown strongly already for several years. This development continued in the current year. Of all new software sales, the share of rental sales is especially large in the Company’s home market Finland. The vast majority of software rentals is based on continuing agreements signed with the customers. Net sales from software rentals grew 18% in the second quarter and 16% in January-June.
Total recurring revenues (net sales from software maintenance services and software rentals) grew 9% in the second quarter and 6% in January-June. The growth in recurring revenues was slowed down by exchange rate changes in maintenance service revenues. The share of recurring revenues in the second quarter was 51% (50) of total net sales.
Consulting net sales were at the previous year’s level both in the second quarter and in January-June. Especially the consulting for enterprise architecture based operational development grew strongly, while net sales from technical consulting declined due to continued difficult market situation.
Net sales by segment
| EUR in thousands | Apr-Jun 2014 | Apr-Jun 2013 | Change, % | Jan-Jun 2014 | Jan-Jun 2013 | Change, % | Jan-Dec 2013 |
| Direct and OEM business | 1 554 | 1 468 | 6 | 3 006 | 2 818 | 7 | 5 574 |
| Resellers | 911 | 866 | 5 | 1 683 | 1 599 | 5 | 3 114 |
| Total | 2 465 | 2 335 | 6 | 4 689 | 4 416 | 6 | 8 688 |
Net sales in the Direct and OEM business grew 6% in the second quarter and 7% in January-June. The growth was especially strong in net sales from software and consulting for enterprise architecture based operational development. Net sales from technical consulting decreased.
Net sales in the Resellers business increased 5% from the previous year both in the second quarter and in January-June, mainly due to growth in software license net sales. The growth was slowed down by negative exchange rate changes in maintenance service revenues, and by unfavorable business development in Russia.
FINANCIAL PERFORMANCE
Operating profit
In the second quarter, the Group’s operating profit increased 55% and was EUR 344 thousand (222), or 14.0% of net sales (9.5). In January-June, operating profit increased 136% and was EUR 451 thousand (191), or 9.6% of net sales (4.3). The Group’s operating expenses were at the previous year’s level both in the second quarter and in January-June.
Operating profit by segment
| EUR in thousands | Apr-Jun 2014 | Apr-Jun 2013 | Change, % | Jan-Jun 2014 | Jan-Jun 2013 | Change, % | Jan-Dec 2013 |
| Direct and OEM business | 258 | 170 | 52 | 350 | 188 | 86 | 536 |
| Resellers | 186 | 143 | 30 | 291 | 183 | 59 | 385 |
| Unallocated | -100 | -91 | 10 | -190 | -180 | 6 | -343 |
| Total | 344 | 222 | 55 | 451 | 191 | 136 | 578 |
Operating profit in the Direct and OEM business increased from the previous year, due to growth in net sales, both in the second quarter and in January-June.
Operating profit in the Resellers business increased from the previous year, mainly due to higher net sales from software licenses, both in the second quarter and in January-June. Operating profit for the Resellers business includes credit losses of EUR 16 thousand (0) in the second quarter and EUR 19 thousand (21) in January-June.
Other items in the comprehensive income statement
Net financial expenses were EUR 12 thousand (0) in the second quarter and EUR 16 thousand (11) in January-June. In the second quarter, net financial expenses included foreign exchange losses of EUR 12 thousand (net gains of 3). In January-June, net financial expenses included foreign exchange losses of EUR 16 thousand (5).
Profit before taxes was EUR 332 thousand (222) in the second quarter and EUR 435 thousand (180) in January-June.
QPR Software puts significant efforts in developing its software and service products, and expects to be able to utilize an additional tax deduction on research and development activities, valid for years 2013-2014 in Finland. Therefore, similar to 2013, the effective tax rate for the review period was significantly lower than the Finnish corporate tax rate of 20% (24.5). The effective tax rate was 13% (15) in the second quarter and 12% (15) in January-June.
Profit for the second quarter increased 52% and was EUR 288 thousand (189). Earnings per share for the second quarter were EUR 0.024 (0.016). Profit for January-June increased 150% and was EUR 382 thousand (153). Earnings per share for January-June were EUR 0.032 (0.013).
FINANCE AND INVESTMENTS
Cash flow from operating activities in the second quarter improved from the previous year and was EUR 311 thousand (-71). In January-June, cash flow from operating activities was EUR 828 thousand (1,198) and declined from the previous year mainly due to an exceptional timing of invoicing in 2013.
Investments totaled EUR 201 thousand (206) in the second quarter and EUR 437 thousand (424) in January-June. More than half of the investments were made in the development of software and consulting service products.
At the beginning of the second quarter, dividends of EUR 480 thousand (486) were paid. Net change in cash and cash equivalents was EUR -370 thousand (-909) in the second quarter and EUR -237 thousand (131) in January-June. Cash and cash equivalents at the end of the quarter were EUR 1,127 thousand (1,534).
At the end of the quarter, the Company had no interest-bearing liabilities. At the end of comparative second quarter of 2013, interest-bearing liabilities were EUR 226 thousand. The gearing ratio was -41% (-50). Current liabilities include received advance payments in total of EUR 1,886 thousand (1,688). Return on investment (per annum) was 57% (30) in the second quarter and 32% (13) in January-June.
At the end of the quarter, equity ratio was 55% (48) and the consolidated shareholders’ equity was EUR 2,736 thousand (2,601). Return on equity (per annum) was 41% (27) in the second quarter and 27% (11) in January-June.
PRODUCT DEVELOPMENT
Product development expenses in the second quarter were EUR 470 thousand (457), equal to 19% (20) of net sales, and in January-June EUR 936 thousand (918), equal to 20% (21) of net sales. Product development expenses do not include amortization of capitalized product development expenses.
Product development expenses were capitalized for a total amount of EUR 173 thousand (140) in the second quarter and EUR 320 thousand (250) in January-June. The amortization period for capitalized product development expenses is four years. The amortization of capitalized product development expenses was EUR 92 thousand (68) in the second quarter and EUR 176 thousand (137) in January-June.
Product development employed 29 persons (27) at the end of the quarter, equal to 37% (32) of the total personnel.
The Company develops the following software products: QPR EnterpriseArchitect, QPR Metrics, QPR ProcessDesigner, and QPR ProcessAnalyzer.
In January, QPR Software released QPR Suite 2014, which includes the software tools for architecture based business development, as well as the related supporting methodology. QPR Suite 2014 is available in over 20 languages.
In January, QPR Software also released a new version of the QPR ProcessAnalyzer software. Release 2014.1 brings added efficiency to the process analysis with an integrated data extraction. In addition to the most common IT systems, data can now also be extracted directly from databases used by the companies. Automated notifications and process flow animation raise the control and visualization of the process performance to a totally new level.
By developing its consulting service products, the Company aims to grow its local business in Finland, and to accelerate its international software sales by offering complementary service concepts and solutions to its reseller partners.
PERSONNEL
At the end of the quarter, the Group employed a total of 79 persons (84). Average number of personnel in January-June was 81 (84) and personnel expenses totaled EUR 3,082 thousand (3,013), equal to 66% (68) of net sales.
For incentive purposes, the Company has a bonus program that covers all employees. Remuneration of the top management consists of salary, fringe benefits and a possible annual bonus based on net sales and operating profit performance. In 2014, the maximum annual bonus of executive management team, including the CEO, is 60% of the annual base salary. More information on incentive plans can be found in the Annual Report 2013 (www.qpr.com/investors/key-figures-and-reports.htm).
SHARES AND SHAREHOLDERS
| Trading of shares | Jan-Jun 2014 | Jan-Jun 2013 | Change, % | Jan-Dec 2013 |
| Shares traded, pcs | 1 213 420 | 282 186 | 330 | 624 427 |
| Volume, EUR | 1 140 398 | 267 802 | 326 | 586 842 |
| % of shares | 9.8 | 2.3 | 5.0 | |
| Average trading price, EUR | 0.94 | 0.95 | -1 | 0.94 |
| Treasury shares acquired during the year, pcs | 37 400 | 47 052 | -21 | 133 722 |
| Shares and market capitalization | Jun 30, 2014 | Jun 30, 2013 | Change, % | Dec 31, 2013 |
| Total number of shares, pcs | 12 444 863 | 12 444 863 | - | 12 444 863 |
| Treasury shares, pcs | 457 009 | 332 939 | 37 | 419 609 |
| Book counter value, EUR | 0.11 | 0.11 | - | 0.11 |
| Outstanding shares, pcs | 11 987 854 | 12 111 924 | -1 | 12 025 254 |
| Number of shareholders | 708 | 609 | 16 | 627 |
| Closing price, EUR | 0.94 | 0.92 | 2 | 0.93 |
| Market capitalization, EUR | 11 268 583 | 11 142 970 | 1 | 11 183 486 |
| Book counter value of all treasury shares, EUR | 50 271 | 36 623 | 37 | 46 157 |
| Total purchase value of all treasury shares, EUR | 430 307 | 304 990 | 41 | 395 134 |
| Treasury shares, % of all shares | 3.7 | 2.7 | 3.4 |
Trading of the QPR Software share more than quadrupled in January-June, as compared to the corresponding period of the previous year. The number of shareholders increased 16% and was 708 (609) at the end of the second quarter.
The Annual General Meeting held on March 13, 2014 approved the Board's proposal that a per-share dividend of EUR 0.04 (0.04), a total of EUR 480 thousand (486), be paid for the financial year 2013. The dividend was paid to shareholders entered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of March 18, 2014. The dividend payment date was April 3, 2014.
The Annual General Meeting on March 13, 2014 authorized the Board of Directors to decide on issuing a maximum of 4,000,000 new shares, to decide on conveyance of a maximum of 700,000 own shares held by the Company, and to decide on acquiring a maximum of 250,000 own shares. The authorizations are in force until the next Annual General Meeting. For the time being, the Company has not used these authorizations.
OTHER EVENTS DURING THE REVIEW PERIOD
In February, QPR Software announced that Gartner Inc., an international ICT research and consulting company, has ranked QPR Software in the best tier used in its report “MarketScope for Enterprise Business Process Analysis”, with the rating “Positive”. According to Gartner, the potential customers should consider vendors in this category as a viable choice for their strategic or tactical investments. Gartner evaluated the vendors on the following criteria: product/service, overall viability, market understanding, offering (product) strategy, business model, innovation, and customer experience, with the latter two having a higher weighting.
In March, QPR Software and Tieto, the largest Nordic IT services company, signed a cooperation agreement with the aim to offer customers business driven enterprise architecture services for gaining substantial business benefits. QPR Software provides Tieto with QPR EnterpriseArchitect software together with the methodology for business driven enterprise architecture. The agreement enables QPR Software, together with Tieto, to offer customers more comprehensive services, increasing the business benefits that can be gained from enterprise architecture work.
In March, QPR Software and Affecto Finland Oy signed a cooperation agreement, through which Affecto can offer its customers data driven approach for analysis and improvement of processes. QPR Software provides Affecto with the automated business process discovery (ABPD) software, QPR ProcessAnalyzer. The agreement enables QPR Software, together with Affecto, to offer customers a way to bring transparency to processes and see the process changes, and thereby be able to have a direct impact on their business performance.
In April, QPR Software’s corporate performance management tool QPR Metrics was rated as “Facilitators” in Nucleus Research Corporate Performance Management Technology Value Matrix. Nucleus Research defines Facilitators as companies offering an application which is intuitive and easy to use, driving rapid adoption with limited training requirements.
In June, QPR Software announced at the IRMUK Business Process Management Conference in London the release of its new enhanced 2014.1 template supporting QPR Software’s enterprise architecture based operational development methodology. The template contains a very pragmatic and business oriented framework linking strategy to business capabilities and their practical realization by organization, processes, and ICT.
GOVERNANCE
The Annual General Meeting on March 13, 2014 resolved that the Board of Directors consists of four (4) ordinary members. The AGM re-elected the following members to the Board of Directors: Kirsi Eräkangas, Jyrki Kontio, Vesa-Pekka Leskinen and Topi Piela. In its meeting following the Annual General Meeting, the Board of Directors elected Vesa-Pekka Leskinen as Chairman of the Board.
The AGM elected KPMG Oy Ab, Authorized Public Accountants, to continue as QPR Software Plc's auditors, with Kirsi Jantunen, Authorized Public Accountant, acting as principal auditor.
The AGM authorized the Board to decide on issuing new shares, conveying own shares held by the Company, and repurchasing the Company’s own shares.
All authorizations of the Board and other decisions made by the Annual General Meeting are available in their entirety on the stock exchange release published by the Company on March 13, 2014 and available on the investors section of the Company's web site, http://www.qpr.com/investors/stock-exchange-releases.htm.
SHORT-TERM RISKS AND UNCERTAINTIES
Internal control and risk management in QPR Software aims to ensure that the Company operates efficiently and effectively, distributes reliable information, complies with regulations and operational principles, reaches its strategic goals, reacts to changes in the market and operational environment, and ensures the continuity of its business.
QPR Software has identified the following four groups of risks related to its operations: risks related to business operations (country, customer, service delivery, personnel, legal and financial risks as well as risks related to the Company’s resellers), risks related to information and products (QPR products, IPR, data security), risks related to financing (foreign currency, bad debt), and risks related to new businesses (growth of new business, product development investments in new business). The Company has an insurance policy for property, operational and liability risks. The Company monitors country, customer, personnel and finance risks also in the Russian subsidiary OOO QPR Software.
Financial risks include reasonable credit risk concerning individual business partners, which is characteristic to any international business. QPR Software seeks to limit this credit risk by continuous monitoring of standard payment terms, receivables and credit limits. In January-June, EUR 19 thousand (21) of credit losses were recorded. The amount of trade receivables over 60 days past due was 14% (7) of total trade receivables at the end of the quarter.
Approximately 70% of Group’s trade receivables were in euro at the end of the quarter. At the end of the quarter, the Company had not hedged its non-euro trade receivables.
No significant changes have taken place in the Company’s short-term risks and uncertainties during the quarter. Risks and risk management related to the Company’s business are further described in the Annual Report 2013, pages 13-15 (http://www.qpr.com/investors/key-figures-and-reports.htm).
FINANCIAL INFORMATION
Interim Report for January-September 2014 will be published on Wednesday, October 29, 2014.
QPR SOFTWARE PLC
BOARD OF DIRECTORS
Further information:
Jari Jaakkola, CEO
Tel. +358 (0) 40 5026 397
DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Main Media
www.qpr.com
Neither this press release nor any copy of it may be taken, transmitted or distributed, directly or indirectly, in or into the United States of America or its territories or possessions.
| CONSOLIDATED COMPREHENSIVE INCOME STATEMENT | |||||||
| EUR in thousands, unless otherwise indicated | Apr-Jun 2014 | Apr-Jun 2013 | Change, % | Jan-Jun 2014 | Jan-Jun 2013 | Change, % | Jan-Dec 2013 |
| Net sales | 2 465 | 2 335 | 6 | 4 689 | 4 416 | 6 | 8 688 |
| Other operating income | 10 | - | 25 | 32 | -22 | 32 | |
| Materials and services | 92 | 73 | 26 | 177 | 134 | 32 | 292 |
| Employee benefit expenses | 1 557 | 1 484 | 5 | 3 082 | 3 013 | 2 | 5 703 |
| Other operating expenses | 304 | 382 | -20 | 629 | 763 | -18 | 1 439 |
| EBITDA | 522 | 396 | 32 | 826 | 538 | 54 | 1 285 |
| Depreciation and amortization | 178 | 174 | 2 | 375 | 347 | 8 | 707 |
| Operating profit | 344 | 222 | 55 | 451 | 191 | 136 | 578 |
| Financial income and expenses | -12 | 0 | -16 | -11 | 45 | -25 | |
| Profit before tax | 332 | 222 | 50 | 435 | 180 | 142 | 554 |
| Income taxes | -43 | -33 | 30 | -53 | -27 | 96 | -33 |
| Profit for the period | 288 | 189 | 52 | 382 | 153 | 150 | 521 |
| Earnings per share, EUR (basic and diluted) | 0.024 | 0.016 | 50 | 0.032 | 0.013 | 146 | 0.043 |
| Consolidated statement of comprehensive income: | |||||||
| Profit for the period | 288 | 189 | 382 | 153 | 521 | ||
| Other items in comprehensive income that | |||||||
| may be reclassified subsequently to | |||||||
| profit or loss: | |||||||
|
Exchange differences on translating foreign operations |
|||||||
| 7 | -5 | -1 | -3 | -12 | |||
| Income tax relating to components | |||||||
| of other comprehensive income | - | - | - | - | - | ||
| Total comprehensive income | 295 | 184 | 381 | 150 | 509 | ||
| CONSOLIDATED BALANCE SHEET | ||||||||||||
| EUR in thousands | Jun 30, 2014 |
Jun 30, 2013 |
Dec 31, 2013 |
Change, % |
||||||||
| Assets | ||||||||||||
| Non-current assets: | ||||||||||||
| Intangible assets | 1 704 | 1 571 | 1 628 | 5 | ||||||||
| Goodwill | 513 | 513 | 513 | 0 | ||||||||
| Tangible assets | 193 | 198 | 207 | -7 | ||||||||
| Other non-current assets | 89 | 133 | 82 | 9 | ||||||||
| Total non-current assets | 2 499 | 2 415 | 2 431 | 3 | ||||||||
| Current assets: | ||||||||||||
| Trade and other receivables | 3 256 | 3 207 | 4 365 | -25 | ||||||||
| Cash and cash equivalents | 1 127 | 1 534 | 1 365 | -17 | ||||||||
| Total current assets | 4 383 | 4 741 | 5 730 | -24 | ||||||||
| Total assets | 6 882 | 7 156 | 8 161 | -16 | ||||||||
| Equity and liabilities | ||||||||||||
| Equity: | ||||||||||||
| Share capital | 1 359 | 1 359 | 1 359 | 0 | ||||||||
| Other funds | 21 | 21 | 21 | 0 | ||||||||
| Treasury shares | -430 | -305 | -395 | 9 | ||||||||
| Translation differences | -182 | -172 | -181 | 1 | ||||||||
| Invested non-restricted equity fund | 5 | 5 | 5 | 0 | ||||||||
| Retained earnings | 1 963 | 1 693 | 2 061 | -5 | ||||||||
| Equity attributable to shareholders of the parent company | 2 736 | 2 601 | 2 871 | -5 | ||||||||
| Non-current liabilities: | ||||||||||||
| Non-interest-bearing liabilities | 33 | 64 | 42 | -21 | ||||||||
| Total non-current liabilities | 33 | 64 | 42 | -21 | ||||||||
| Current liabilities: | ||||||||||||
| Borrowings | - | 226 | 113 | -100 | ||||||||
| Advances received | 1 886 | 1 688 | 1 406 | 34 | ||||||||
| Accrued expenses and prepaid income | 1 828 | 2 073 | 2 976 | -39 | ||||||||
| Trade and other payables | 399 | 504 | 753 | -47 | ||||||||
| Total current liabilities | 4 112 | 4 491 | 5 248 | -22 | ||||||||
| Total liabilities | 4 146 | 4 555 | 5 290 | -22 | ||||||||
| Total equity and liabilities | 6 882 | 7 156 | 8 161 | -16 | ||||||||
|
CONSOLIDATED CASH FLOW STATEMENT |
||||||||||||
| EUR in thousands | Apr-Jun 2014 | Apr-Jun 2013 |
Change, % |
Jan-Jun 2014 |
Jan-Jun 2013 |
Change, % |
Jan-Dec 2013 | |||||
| Cash flow from operating activities: | ||||||||||||
| Profit for the period | 288 | 189 | 52 | 382 | 153 | 150 | 521 | |||||
| Adjustments to the profit | 184 | 162 | 14 | 374 | 329 | 14 | 700 | |||||
| Working capital changes | -117 | -364 | -68 | 162 | 824 | -80 | 573 | |||||
| Interest and other financial expenses paid | -3 | -8 | -63 | -7 | -13 | -46 | -30 | |||||
| Interest and other financial income received | 0 | 2 | -100 | 1 | 4 | -75 | 8 | |||||
| Income taxes paid | -42 | -52 | -19 | -84 | -99 | -15 | -111 | |||||
| Net cash from operating activities | 311 | -71 | 828 | 1 198 | -31 | 1 661 | ||||||
| Cash flow from investing activities: | ||||||||||||
| Acquired subsidiaries | - | - | - | -3 | -3 | |||||||
| Purchases of tangible and intangible assets | -201 | -206 | -2 | -437 | -421 | 4 | -846 | |||||
| Net cash used in investing activities | -201 | -206 | -2 | -437 | -424 | 3 | -849 | |||||
| Cash flow from financing activities: | ||||||||||||
| Repayments of long-term borrowings | - | -113 | -100 | -113 | -113 | 0 | -226 | |||||
| Repurchase of shares | - | -32 | -100 | -35 | -44 | -20 | -134 | |||||
| Dividends paid | -480 | -486 | -1 | -480 | -486 | -1 | -486 | |||||
| Net cash used in financing activities | -480 | -631 | -24 | -628 | -643 | -2 | -847 | |||||
| Net change in cash and cash equivalents | -370 | -909 | -59 | -237 | 131 | -281 | -35 | |||||
| Cash and cash equivalents at the beginning of the period | 1 496 | 2 443 | -39 | 1 365 | 1 404 | -3 | 1 404 | |||||
| Effects of exchange rate changes on cash and cash equivalents | 1 | 0 | 0 | -1 | -100 | -4 | ||||||
| Cash and cash equivalents at the end of the period | 1 127 | 1 534 | -27 | 1 127 | 1 534 | -27 | 1 365 | |||||
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||||
| EUR in thousands | Share capital | Other funds | Translation differences | Treasury shares | Invested non-restricted equity fund | Retained earnings | Total |
| Equity Jan 1, 2013 | 1 359 | 21 | -169 | -261 | 5 | 2 026 | 2 981 |
| Dividends paid | -486 | -486 | |||||
| Repurchase of shares | -44 | -44 | |||||
| Comprehensive income | -3 | 153 | 150 | ||||
| Equity Jun 30, 2013 | 1 359 | 21 | -172 | -305 | 5 | 1 693 | 2 601 |
| Repurchase of shares | -90 | -90 | |||||
| Comprehensive income | -9 | 368 | 359 | ||||
| Equity Dec 31, 2013 | 1 359 | 21 | -181 | -395 | 5 | 2 061 | 2 871 |
| Dividends paid | -480 | -480 | |||||
| Repurchase of shares | -35 | -35 | |||||
| Comprehensive income | -1 | 382 | 381 | ||||
| Equity Jun 30, 2014 | 1 359 | 21 | -182 | -430 | 5 | 1 963 | 2 736 |
NOTES TO INTERIM FINANCIAL STATEMENTS
ACCOUNTING PRICIPLES
This report complies with requirements of IAS 34 ”Interim Financial Reporting.” Starting from the beginning of 2014, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2013. The implementation of these new and revised requirements have not impacted the reported figures. For all other parts, the accounting principles and methods are the same as they were in the 2013 financial statements.
When preparing the consolidated financial statements, management is required to make estimates and assumptions regarding the future and to consider the appropriate application of accounting principles, which means that actual results may differ from those estimated.
All amounts presented in this report are consolidated figures, unless otherwise noted. The amounts presented in the report are rounded, so the sum of individual figures may differ from the sum reported. This report is unaudited.
During the review period, the Group did not have any financial instruments measured at fair value.
| INTANGIBLE AND TANGIBLE ASSETS | |||
| EUR in thousands | Jan-Jun 2014 | Jan-Jun 2013 | Jan-Dec 2013 |
| Increase in intangible assets: | |||
| Acquisition cost Jan 1 | 6 112 | 5 428 | 5 428 |
| Increase | 400 | 318 | 687 |
| Increase in tangible assets: | |||
| Acquisition cost Jan 1 | 1 351 | 1 234 | 1 234 |
| Increase | 37 | 101 | 159 |
| CHANGE IN INTEREST-BEARING LIABILITIES | |||
| EUR in thousands | Jan-Jun 2014 | Jan-Jun 2013 | Jan-Dec 2013 |
| Interest-bearing liabilities Jan 1 | 113 | 339 | 339 |
| Repayments | -113 | -113 | -226 |
|
Interest-bearing liabilities Jun 30/Dec 31 |
- | 226 | 113 |
| PLEDGES AND COMMITMENTS | ||||
| EUR in thousands | Jun 30, 2014 | Jun 30, 2013 | Dec 31, 2013 | Change, % |
| Business mortgages (held by the Company) | 1 392 | 1 394 | 1 394 | 0 |
| Minimum lease payments based on lease | ||||
| agreements | ||||
| Maturing in less than one year | 159 | 353 | 163 | -2 |
| Maturing in 1-5 years | 46 | 26 | 38 | 20 |
| Total | 205 | 379 | 201 | 2 |
| Total pledges and commitments | 1 596 | 1 773 | 1 595 | 0 |
| CONSOLIDATED INCOME STATEMENT BY QUARTER | ||||||
| EUR in thousands | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 |
Q2 2013 |
Q1 2013 |
| Net sales | 2 465 | 2 225 | 2 310 | 1 961 | 2 335 | 2 082 |
| Other operating income | 10 | 15 | - | - | - | 32 |
| Materials and services | 92 | 85 | 86 | 72 | 73 | 61 |
| Employee benefit expenses | 1 557 | 1 525 | 1 482 | 1 209 | 1 484 | 1 528 |
| Other operating expenses | 304 | 325 | 348 | 327 | 382 | 383 |
| EBITDA | 522 | 305 | 395 | 353 | 396 | 142 |
| Depreciation and amortization | 178 | 197 | 178 | 183 | 174 | 173 |
| Operating profit | 344 | 107 | 217 | 171 | 222 | -31 |
| Financial income and | ||||||
| expenses | -12 | -4 | -11 | -3 | 0 | -11 |
| Profit before tax | 332 | 103 | 206 | 167 | 222 | -42 |
| Income taxes | -43 | -10 | 19 | -25 | -33 | 6 |
| Profit for the period | 288 | 93 | 225 | 142 | 189 | -36 |
| SEGMENT INFORMATION | ||||||||
| EUR in thousands | Apr-Jun 2014 | Apr-Jun 2013 | Change, % |
Jan-Jun 2014 |
Jan-Jun 2013 | Change, % | Jan-Dec 2013 | |
| Net sales | ||||||||
| Direct and OEM business | 1 554 | 1 468 | 6 | 3 006 | 2 818 | 7 | 5 574 | |
| Resellers | 911 | 866 | 5 | 1 683 | 1 599 | 5 | 3 114 | |
| Total | 2 465 | 2 335 | 6 | 4 689 | 4 416 | 6 | 8 688 | |
| EBITDA | ||||||||
| Direct and OEM business | 350 | 257 | 36 | 558 | 375 | 49 | 921 | |
| Resellers | 272 | 230 | 18 | 458 | 343 | 34 | 708 | |
| Unallocated | -100 | -91 | 10 | -190 | -180 | 6 | -343 | |
| Total | 522 | 396 | 32 | 826 | 538 | 54 | 1 285 | |
| Operating profit | ||||||||
| Direct and OEM business | 258 | 170 | 52 | 350 | 188 | 86 | 536 | |
| Resellers | 186 | 143 | 30 | 291 | 183 | 59 | 385 | |
| Unallocated | -100 | -91 | 10 | -190 | -180 | 6 | -343 | |
| Total | 344 | 222 | 55 | 451 | 191 | 136 | 578 | |
| Financial income and expenses | -12 | 0 | -16 | -11 | 45 | -25 | ||
| Income taxes | -43 | -33 | 30 | -53 | -27 | 96 | -33 | |
| Profit for the period | 288 | 189 | 52 | 382 | 153 | 150 | 521 | |
| Other information: | ||||||||
| Depreciation and amortization | ||||||||
| Direct and OEM business | 92 | 87 | 6 | 208 | 187 | 11 | 384 | |
| Resellers | 86 | 87 | -1 | 167 | 160 | 4 | 323 | |
| Total | 178 | 174 | 2 | 375 | 347 | 8 | 707 | |
| GROUP KEY FIGURES | |||
| EUR in thousands, unless otherwise indicated |
Jan-Jun or Jun 30, 2014 |
Jan-Jun or Jun 30, 2013 |
Jan-Dec or Dec 31, 2013 |
| Net sales | 4 689 | 4 416 | 8 688 |
| Net sales growth, % | 6.2 | -4.3 | -6.8 |
| EBITDA | 826 | 538 | 1 285 |
| % of net sales | 17.6 | 12.2 | 14.8 |
| Operating profit | 451 | 191 | 578 |
| % of net sales | 9.6 | 4.3 | 6.7 |
| Profit before tax | 435 | 180 | 554 |
| % of net sales | 9.3 | 4.1 | 6.4 |
| Profit for the period | 382 | 153 | 521 |
| % of net sales | 8.1 | 3.5 | 6.0 |
| Return on equity (per annum), % | 27.2 | 11.0 | 17.8 |
| Return on investment (per annum), % | 31.6 | 13.0 | 18.3 |
| Borrowings | - | 226 | 113 |
| Cash and cash equivalents | 1 127 | 1 534 | 1 365 |
| Free cash flow | 391 | 777 | 815 |
| Net borrowings | -1 127 | -1 308 | -1 252 |
| Equity | 2 736 | 2 601 | 2 871 |
| Gearing, % | -41.2 | -50.3 | -43.6 |
| Equity ratio, % | 54.8 | 47.6 | 42.5 |
| Total balance sheet | 6 882 | 7 156 | 8 161 |
| Investments in non-current assets | 437 | 420 | 846 |
| % of net sales | 9.3 | 9.5 | 9.7 |
| Product development expenses | 936 | 918 | 1 683 |
| % of net sales | 20,0 | 20.8 | 19.4 |
| Average number of personnel | 81 | 84 | 82 |
| Personnel at the beginning of period | 79 | 81 | 81 |
| Personnel at the end of period | 79 | 84 | 79 |
| Earnings per share, EUR | 0.032 | 0.013 | 0.043 |
| Equity per share, EUR | 0.220 | 0.209 | 0.231 |
QPR – Quality. Processes. Results.
QPR Software is specialized in operational development of private and public sector organizations. Our mission is to help our customers to become agile and efficient in their operations. We offer software and consulting services in areas of enterprise architecture development, process modeling and analysis as well as performance management. Our shares are listed on the NASDAQ OMX Helsinki Ltd. www.qpr.com