QPR SOFTWARE PLC STOCK EXCHANGE RELEASE, JULY 30, 2015 AT 9.00 AM
INTERIM REPORT JANUARY – JUNE 2015
JANUARY–JUNE NET SALES INCREASED 5%, INVESTMENTS IN GROWTH CONTINUED
Summary January - June 2015
- Net sales EUR 4,926 thousand (2014: 4,689).
- Net sales rose 5% due to increase in consulting and software license net sales.
- Operating profit decreased to EUR 291 thousand (451), due to increased outlays in growth.
- Operating margin was 5.9% (9.6)
- Cash flow from operating activities EUR 1,066 thousand (828).
- Profit before taxes EUR 289 thousand (435).
- Profit for the period EUR 260 thousand (382).
- Earnings per share EUR 0.022 (0.032).
Summary April – June 2015
- Net sales EUR 2,402 thousand (2014: 2,465).
- Net sales decreased slightly due to decrease in software maintenance and rental net sales. In the reporting period there were no large license sales closures.
- Operating profit decreased to EUR 32 thousand (344). The decrease was mainly due to increases in outlays in new software products and international distribution.
- Operating margin was 1.3% (14.0)
- Cash flow from operating activities was negative EUR 380 thousand (311). The negative development was due to timing changes in invoicing compared to last year, growth in operative working capital and smaller profit than in previous year.
- Profit before taxes EUR 16 thousand (332).
- Profit for the quarter EUR 35 thousand (288).
- Earnings per share EUR 0.003 (0.024).
Business operations
QPR Software focuses on providing organizations software and professional services for operational development. Our software and services are used in over 50 countries. The Company offers its customers insight to their business operations through modeling, analysis and performance monitoring. This insight enables customers to streamline and improve business operations and to execute their strategies swiftly and effectively. The Company´s product portfolio has been strongly renewed in recent years. The new software products offer customers innovative and efficient tools for organizations to model their various operations, to model processes based on actual event data and to analyze causes for potential performance problems.
OUTLOOK
Operating environment, market outlook and outlook for 2015
The leading market research companies estimate that global IT services market demand grows in 2015 by 2-3 %, compared to 2014. The Company estimates that in its relevant markets demand for enterprise architecture modeling, measurement and process analysis software as well as related services will develop faster than the global IT services market.
In 2015, the Company increases its growth investments in international distribution of innovative software products developed by the Company. In international markets, the Company operates mainly through its resellers and continues to put effort in recruiting new resellers. In its home market Finland, the Company seeks growth especially from enterprise architecture and process modeling software sales, process analysis software sales and its consulting business.
The Company updated is outlook for 2015 on June 8th, and estimated that the weakened market on second quarter would remain weak over summer, but would improve gradually towards the end of the year. Despite the market situation, QPR estimates its net sales to grow this year compared to 2014 (EUR 9,541 million), but its profitability to remain lower than in the previous year due to higher expenses. The Company estimates its operating profit in 2015 to be 6 – 11 % of net sales (2014: 11.5%), depending on software license sales. Seasonality of large software deals can affect significantly net sales and profit of one individual quarter.
| KEY FIGURES | |||||||
| EUR in thousands, unless otherwise indicated | Apr-Jun 2015 | Apr-Jun 2014 | Change, % | Jan-Jun 2015 | Jan-Jun 2014 | Change, % | Jan-Dec 2014 |
| Net sales | 2,402 | 2,465 | -2.5 | 4,926 | 4,689 | 5.1 | 9,541 |
| EBITDA | 243 | 522 | -53.4 | 702 | 826 | -15.0 | 1,857 |
| % of net sales | 10.1 | 21.2 | 14.2 | 17.6 | 19.5 | ||
| Operating profit | 32 | 344 | -90.7 | 291 | 451 | -35.5 | 1,095 |
| % of net sales | 1.3 | 14.0 | 5.9 | 9.6 | 11.5 | ||
| Profit before tax | 16 | 332 | -95.1 | 289 | 435 | -33.6 | 1,065 |
| Profit for the period | 35 | 288 | -88.0 | 260 | 382 | -32.0 | 890 |
| % of net sales | 1.4 | 11.7 | 5.3 | 8.1 | 9.3 | ||
| Earnings per share, EUR | 0.003 | 0.024 | -87.9 | 0.022 | 0.032 | -32.2 | 0.074 |
| Equity per share, EUR | 0.229 | 0.220 | 4.2 | 0.229 | 0.220 | 4.2 | 0.257 |
|
Cash flow from operating activities |
-380 | 311 | -222.2 | 1,066 | 828 | 28.7 | 1,617 |
| Cash and cash equivalents | 1,134 | 1,127 | 0.6 | 1,134 | 1,127 | 0.6 | 1,426 |
| Free cash flow | -694 | 110 | 312 | 391 | 702 | ||
| Net borrowings | -1,134 | -1,127 | 0.6 | -1,134 | -1,127 | 0.6 | -1,426 |
| Gearing, % | -39.7 | -41.2 | -39.7 | -41.2 | -44.6 | ||
| Equity ratio, % | 57.6 | 54.8 | 57.6 | 54.8 | 44.0 | ||
| Return on equity, % | 4.4 | 40.8 | 17.2 | 27.2 | 29.3 | ||
| Return on investment, % | 1.0 | 56.6 | 19.2 | 31.6 | 35.4 |
REPORTING
This report complies with requirements of IAS 34 Interim Financial Reporting. Starting from the beginning of 2015, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2014. 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 2014 financial statements. This report is unaudited.
QPR Software innovates, develops, sells and delivers to international markets software and services aimed at operational development in organizations. QPR Software reports one operating segment: Operational development of organizations. In addition to this, the Company reports revenue from products and services as follows: Software license sales, Software maintenance services, Software rentals, and Consulting. Software rentals and Software maintenance services together form the recurring revenue reported by the Company. Recurring revenue is based on long-term contracts continuing for the time being or for a fixed period of several years. Typically rental and maintenance charges are invoiced annually in advance.
As geographic information QPR Software reports geographical areas Finland, rest of Europe including Russia and Turkey, and rest of the world. Net sales are reported by the customer´s location.
REVIEW BY THE CEO
After a good first quarter, the market for the Company´s products and services weakened in April – July, which led into a slight decrease in net sales compared to previous year. The operating environment was impacted by weak economic growth in several markets, in some cases negative growth. The economic growth was weak especially in the Company’s largest market area Europe (including Finland). According to the Company´s update in outlook, published by QPR on June 8, 2015, we estimate the weakened market outlook to remain weak throughout the summer, but to improve gradually towards the end of the year.
In the reporting period there were no large license sales closures. The amount of offers made and their average size has increased this year, and thus based on activities in the market the Company expects improving performance towards the end of the year. New resellers have favourably contributed to the amount of offers. This year the company has signed 13 new reseller agreements.
In the second quarter 2015, the Company´s software license net sales reached 8% growth, mainly due to growth in sales of the Company´s new software products. Consulting net sales grew slightly (+2%) as well. However, software maintenance net sales (-10%) and software rental net sales (-7%) decreased, which was due to expiration of a few significant contracts last year or in the beginning of this year.
Fixed costs increased 9% in the second quarter, due to outlays in software development and international distribution and sales. With these outlays, we seek good organic growth especially through our new software products, launched in the 2010s. These products are QPR ProcessAnalyzer (analyzes event data in IT systems) and modeling software QPR EnterpriseArchitect. In international business, the Company’s growth strategy is based on software sales through continued expansion of international reseller channel. The main target for the Company in its home market Finland is strengthening its software products´ leading position and to further expand its local consulting business.
Jari Jaakkola
CEO
NET SALES DEVELOPMENT
Net sales in the second quarter were EUR 2,402 thousand (2,465) and decreased 3% from the corresponding period of the previous year.
| NET SALES BY PRODUCT GROUP | |||||||
| EUR in thousands | Apr-Jun 2015 | Apr-Jun 2014 | Change, % | Jan-Jun 2015 | Jan-Jun 2014 | Change, % | Jan-Dec 2014 |
| Software licenses | 409 | 379 | 8 | 764 | 680 | 12 | 1,470 |
| Software maintenance services | 715 | 791 | -10 | 1,451 | 1,554 | -7 | 3,093 |
| Software rentals | 445 | 477 | -7 | 884 | 920 | -4 | 1,901 |
| Consulting | 833 | 818 | 2 | 1,828 | 1,535 | 19 | 3,077 |
| Total | 2,402 | 2,465 | -3 | 4,926 | 4,689 | 5 | 9,541 |
| NET SALES BY GEOGRAPHIC AREA | |||||||
| EUR in thousands | Apr-Jun 2015 | Apr-Jun 2014 | Change, % | Jan-Jun 2015 | Jan-Jun 2014 | Change, % | Jan-Dec 2014 |
| Finland | 1,575 | 1,614 | -2 | 3,321 | 3,058 | 9 | 6,193 |
| Europe incl. Russia and Turkey | 446 | 523 | -15 | 905 | 987 | -8 | 2,035 |
| Rest of the world | 382 | 327 | 17 | 701 | 644 | 9 | 1,313 |
| Total | 2,402 | 2,465 | -3 | 4,926 | 4,689 | 5 | 9,541 |
April – June 2015
Software license net sales grew 8% compared to previous year, and vast majority of license sales was derived from international markets. However, software maintenance services net sales and software rental net sales decreased (-10% and -7%). This was due to expiration of a few significant contracts, which was not fully compensated by maintenance services and rental new sales. Customer churn remained low measured by the number of expired contracts, but among them there were several economically significant ones. The share of recurring revenue (software maintenance services and software rentals) was 48% (51) of total net sales.
Consulting net sales in the first quarter grew slightly (+2%). The development compared to previous year was relatively evenly spread in various consulting business areas.
Out of the Group net sales 65% (65) were derived from Finland, 19% (21) from the rest of Europe (including Russia and Turkey) and 16% (13) from the rest of the world.
January – June 2015
Software license net sales grew 12% compared to previous year, and vast majority of license sales was derived from international markets. Software maintenance services net sales and software rental net sales decreased (-7% and -4%). This was due to expiration of a few significant contracts, which was not fully compensated by maintenance services and rental new sales. Customer churn remained low measured by the number of expired contracts, but among them there were several economically significant ones. The share of recurring revenue was 47% (53) of total net sales.
Consulting net sales in the first quarter grew strongly, which led to 19% increase in consulting net sales in January – June.
Out of the Group net sales 67% (65) were derived from Finland, 18% (21) from rest of the Europe (including Russia and Turkey) and 14% (14) from the rest of the world.
FINANCIAL PERFORMANCE
April – June 2015
In the second quarter, the Group’s operating profit was EUR 32 thousand (344), or 1.3% of net sales (14.0). Operating profit decreased from the previous year mainly due to increased expenses arising on outlays made into new software products and international sales channel. The majority of these outlays are new recruitments and thus increased personnel costs.
The Group´s fixed costs were EUR 2,221 thousand (2,039), and grew 8.9% compared to the corresponding period in the previous year. Personnel expenses represented 77,6% (76,4) of the fixed costs and were EUR 1,723 thousand (1,557).
Profit before taxes in the quarter was EUR 16 thousand (332) and profit for the period was EUR 35 thousand (288). Taxes recorded for the period were EUR -18 thousand (43). Earnings per share (fully diluted) were EUR 0.003 (0.024).
January – June 2015
In January – June, the Group operating profit was EUR 291 thousand (451), or 5.9% of net sales (9.6). Operating profit decreased from the previous year mainly due to increased costs in the second quarter. The costs were increased mainly by growth in international sales channel personnel and other operating costs, as well as product development personnel costs.
The Group´s fixed costs were EUR 4,381 in the reporting period (4,086), and grew 7.2% compared to previous year. Personnel costs represented 76.4% (75.4) of fixed costs and were EUR 3,345 thousand (3,082). Credit losses, inclusive in fixed costs, totaled EUR 19 thousand (19).
Profit before taxes in the quarter was EUR 289 thousand (435) and profit for the period was EUR 260 thousand (382). Taxes recorded for the period were EUR 29 thousand (53). Earnings per share (fully diluted) were EUR 0.022 (0.032).
FINANCE AND INVESTMENTS
Cash flow from operating activities was EUR 1,066 thousand (828) in January - June. Cash and cash equivalents at the end of the quarter were EUR 1,134 thousand (1,127).
Investments in the first half of the year totaled EUR 754 thousand (437). Investments consisted mainly of product development and extension of the office facilities.
Net financial items in the review period were EUR -2 thousand (-16). Net financial expenses included net foreign exchange losses of EUR 2 thousand (16). In April – June net financial items were EUR -16 thousand (-12), and included net foreign exchange currency losses of EUR 16 thousand (13).
At the end of the quarter, the Company had no interest-bearing liabilities. The gearing ratio was -40% (-41). Current liabilities include deferred revenue in total of EUR 1,910 thousand (1,886). Annualized return on investment was 19% (32) in the reporting period January – June and 1% (57) in April - June.
At the end of the quarter, equity ratio was 58% (55) and the consolidated shareholders’ equity was EUR 2,854 thousand (2,736). Annualized return on equity was 17% (27) in the reporting period January – June and 4% (41) in April – June.
The Annual General Meeting on March 12, 2015 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.
PRODUCT DEVELOPMENT
The Company develops software and consulting service products to be used by its customers. Software product development costs in the reporting period January – June were 90% of the total product development costs. 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.
In April - June, product development expenses were EUR 468 thousand (470), and represented 19% of net sales (19). Product development expenses do not include amortization of capitalized product development expenses. Product development expenses were capitalized for a total amount of EUR 193 thousand (173). The amortization of capitalized product development expenses in the quarter was EUR 114 thousand (92).
In the reporting period January – June, product development expenses were EUR 948 thousand (936), and represented 19% of net sales (20). Product development expenses do not include amortization of capitalized product development expenses. Product development expenses were capitalized for a total amount of EUR 360 thousand (320). The amortization of capitalized product development expenses in the reporting period was EUR 229 thousand (176).
PERSONNEL
At the end of the quarter, the Group employed a total of 86 persons (79). Average number of personnel during the quarter was 85 (81).
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 performance. In 2015, the maximum annual bonus of executive management team, including the CEO, is 30% of the annual base salary. More information on incentive plans can be found in the Annual Report 2014 (http://www.qpr.com/sites/default/files/QPRSoftwareAnnualReport2014.pdf).
SHARES AND SHAREHOLDERS
| Trading of shares | Jan-Jun, 2015 | Jan-Jun, 2014 | Change, % | Jan-Dec, 2014 |
| Shares traded, pcs | 3,358,905 | 1,213,420 | 177 | 2,828,001 |
| Volume, EUR | 4,811,303 | 1,140,398 | 322 | 2,751,903 |
| % of shares | 28.0 | 9.8 | 23.6 | |
| Average trading price, EUR | 1.43 | 0.94 | 52 | 0.97 |
| Treasury shares acquired during the year, pcs | 0 | 37,400 | -100 | 37,400 |
| Shares and market capitalization | Jun 30, 2015 | Jun 30, 2014 | Change, % | Dec 31, 2014 |
| Total number of shares, pcs | 12,444,863 | 12,444,863 | - | 12,444,863 |
| Treasury shares, pcs | 457,009 | 457,009 | - | 457,009 |
| Book counter value, EUR | 0.11 | 0.11 | - | 0.11 |
| Outstanding shares, pcs | 11,987,854 | 11,987,854 | - | 11,987,854 |
| Number of shareholders | 1,219 | 708 | 72 | 820 |
| Closing price, EUR | 1.46 | 0.94 | 55 | 1.01 |
| Market capitalization, EUR | 17,502,267 | 11,268,583 | 55 | 12,107,733 |
| Book counter value of all treasury shares, EUR | 50,271 | 50,271 | 0 | 50,271 |
| Total purchase value of all treasury shares, EUR | 439,307 | 430,307 | 2 | 439,307 |
| Treasury shares, % of all shares | 3.7 | 3.7 | - | 3.7 |
The Annual General Meeting held on March 12, 2015 approved the Board's proposal that a per-share dividend of EUR 0.05 (0.04), a total of EUR 599 thousand (480), be paid for the financial year 2014. The dividend was paid to shareholders entered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of March 16, 2015. The dividend payment date was April 8, 2015.
OTHER EVENTS DURING THE REPORTING PERIOD
QPR Software´s sales and deliveries were organized from the beginning of 2015 into four units: Operational Development Software, Operational Development Consulting, Process Intelligence and Channel Business.
Miika Nurminen was appointed Senior Vice President, Operational Development Consulting, and member of the Executive Management Team as of January 1, 2015. Nurminen has previously held several leadership positions in QPR Software.
Sari Törmälä was appointed Senior Vice President, Operational Development Software, and member of the Executive Management Team as of February 23, 2015. Before QPR Törmälä worked in Kunnan Taitoa Oy, a service provider for the local government sector in Finland providing financial and personnel management services, where she as a member of the Executive Management Team was responsible for sales and customers. Sari Törmälä´s employment at QPR ended in June 2015. The business units Operational Development Consulting and Operational Development Software were combined as of July 1, and Miika Nurminen was appointed to lead the unit.
In February, QPR announced that it expands co-operation with a European public sector health care organization and delivers a project for the organization’s operational development purposes. The total value of the software and consulting services, delivered by QPR and thus recognizable during the first half of 2015, is around EUR 140 thousand. Target of the agreed project is to improve the customer’s operations, development and performance as well as project management. In addition, the project aims for better alignment between business and IT by linking the business area service layer with IT services.
In March, QPR announced that QPR Software is recognized in international research company Gartner Inc.´s Market Guide for Enterprise Business Process Analysis (EBPA) report. The Gartner EBPA Market Guide evaluated the Enterprise business process analysis marketplace and depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace. Gartner evaluated the EBPA vendors on the focus and importance of different use cases, as well as about the focus and importance of the different EBPA capabilities.
In April, QPR announced that The U.S. Patent and Trademark Office has granted a patent to a technology for analyzing and improving business processes with event instance date, developed by QPR Software. The patented technology utilizes event instance data obtained from information management systems, and helps organizations to analyze and develop their business processes. The patent supports the sale of QPR ProcessAnalyzer software and QPR process intelligence consulting as well as opens up new opportunities for OEM business.
In April, the Company also announced that the City of Helsinki, the capital of Finland, has decided to approve QPR Software’s offer for delivering process and enterprise architecture tool as a service. The value of the entire four year agreement period is EUR 1.5 million, out of which the share of revenue booked as software rentals is over 75%. QPR´s competitor appealed to the technical board of the City of Helsinki and to the Market Court and delivered a claim for correction against this purchase decision. The City decided to return the case for further preparation into its sourcing unit and made a new decision to approve QPR´s offer in July 2015. The terms and conditions of the new decision are the same to QPR as in the first decision in April. QPR´s competitor has appealed both to the technical board of the City of Helsinki and to the Market Court with a claim for correction against also this new purchase decision.
QPR Software´s Chief Financial Officer Päivi Martti´s employment ended at QPR in June 2015. Jaana Mattila, who has worked in the Company as Business Controller since March 2015, was selected as new Chief Financial Officer. Mattila has previously worked, among others, as Finance Director in Fazer Amica and as CFO in Biohit Oyj.
OTHER EVENTS AFTER THE REPORTING PERIOD
After the reporting period, except for the city of Helsinki decision that was described above, there were no other significant events.
GOVERNANCE
The Annual General Meeting on March 12, 2015 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, Vesa-Pekka Leskinen and Topi Piela. The AGM selected Juho Malmberg, as a new member, to join the Board of Directors. Juho Malmberg has previously held leadership positions, among others, in Accenture, KONE and Zenrobotics. 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 12, 2015 and available on the investors section of the Company's web site, http://www.qpr.com/annual-general-meeting/annual-general-meeting-2015
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 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.
Financial risks include reasonable credit risk concerning individual business partners, which is characteristic to any international business. QPR seeks to limit this credit risk by continuous monitoring of standard payment terms, receivables and credit limits. The amount of trade receivables over 60 days past due was 11% (10) of total trade receivables at the end of the quarter.
Approximately 66% of Group’s trade receivables were in euro at the end of the quarter (70). 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 2014, pages 12-14. (http://www.qpr.com/sites/default/files/QPRSoftwareAnnualReport2014.pdf).
FINANCIAL INFORMATION
In 2015, QPR Software will publish interim reports in English and Finnish on the following dates:
- Interim Report Q3/2015: Wednesday, October 22, 2015
QPR SOFTWARE PLC
BOARD OF DIRECTORS
Further information:
Jari Jaakkola, CEO
Tel. +358 (0) 40 5026 397
DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Main Media
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, 2015 | Apr-Jun, 2014 | Change, % | Jan-Jun, 2015 | Jan-Jun, 2014 | Change, % | Jan-Dec, 2014 |
| Net sales | 2,402 | 2,465 | -3 | 4,926 | 4,689 | 5 | 9,541 |
| Other operating income | 1 | 10 | 1 | 25 | 26 | ||
| Materials and services | 149 | 92 | 62 | 254 | 177 | 44 | 337 |
| Employee benefit expenses | 1,723 | 1,557 | 11 | 3,345 | 3,082 | 9 | 6,092 |
| Other operating expenses | 287 | 304 | -6 | 625 | 629 | -1 | 1,281 |
| EBITDA | 243 | 522 | -53 | 702 | 826 | -15 | 1,857 |
| Depreciation and amortization | 211 | 178 | 19 | 411 | 375 | 10 | 761 |
| Operating profit | 32 | 344 | -91 | 291 | 451 | -35 | 1,095 |
| Financial income and expenses | -16 | -12 | -2 | -16 | -30 | ||
| Profit before tax | 16 | 332 | -95 | 289 | 435 | -34 | 1,065 |
| Income taxes | 18 | -43 | -142 | -29 | -53 | -45 | -175 |
| Profit for the period | 35 | 288 | -88 | 260 | 382 | -32 | 890 |
| Earnings per share, EUR | |||||||
| (basic and diluted) | 0.003 | 0.024 | -88 | 0.022 | 0.032 | -32 | 0.074 |
|
Consolidated statement of comprehensive income: |
|||||||
| Profit for the period | 35 | 288 | 260 | 382 | 890 | ||
|
Other items in comprehensive income that may be reclassified subsequently to profit or loss: |
|||||||
|
Exchange differences on translating foreign operations |
7 | 7 | -3 | -1 | -40 | ||
|
Income tax relating to components of other comprehensive income |
- | - | - | - | - | ||
| Total comprehensive income | 42 | 295 | 257 | 381 | 850 | ||
| CONSOLIDATED BALANCE SHEET | ||||
| EUR in thousands |
June 30, 2015 |
June 30, 2014 |
Change, % |
Dec 31, 2014 |
| Assets | ||||
| Non-current assets: | ||||
| Intangible assets | 1,996 | 1,704 | 17 | 1,815 |
| Goodwill | 513 | 513 | 0 | 513 |
| Tangible assets | 337 | 193 | 75 | 175 |
| Other non-current assets | 27 | 89 | -69 | 27 |
| Total non-current assets | 2,873 | 2,499 | 15 | 2,529 |
| Current assets: | ||||
| Trade and other receivables | 2,856 | 3,256 | -12 | 4,572 |
| Cash and cash equivalents | 1,134 | 1,127 | 1 | 1,426 |
| Total current assets | 3,990 | 4,383 | -9 | 5,998 |
| 0 | ||||
| Total assets | 6,863 | 6,882 | 0 | 8,527 |
| Equity and liabilities | ||||
| Equity: | ||||
| Share capital | 1,359 | 1,359 | 0 | 1,359 |
| Other funds | 21 | 21 | 1 | 21 |
| Treasury shares | -439 | -430 | 2 | -439 |
| Translation differences | -224 | -182 | 23 | -221 |
| Invested non-restricted equity fund | 5 | 5 | 7 | 5 |
| Retained earnings | 2,131 | 1,963 | 9 | 2,471 |
| Equity attributable to shareholders of the parent company | 2,854 | 2,736 | 4 | 3,196 |
| Non-current liabilities: | ||||
| Non-interest-bearing liabilities | 17 | 33 | -47 | 25 |
| Total non-current liabilities | 17 | 33 | -47 | 25 |
| Current liabilities: | ||||
| Advances received | 1,910 | 1,886 | 1 | 1,261 |
| Accrued expenses and prepaid income | 1,633 | 1,828 | -11 | 3,223 |
| Trade and other payables | 449 | 399 | 13 | 822 |
| Total current liabilities | 3,992 | 4,112 | -3 | 5,305 |
| Total liabilities | 4,009 | 4,146 | -3 | 5,331 |
| Total equity and liabilities | 6,863 | 6,882 | 0 | 8,527 |
| CONSOLIDATED CASH FLOW STATEMENT | |||||||
| EUR in thousands | Apr-Jun 2015 | Apr-Jun 2014 | Change, % | Jan-Jun 2015 | Jan-Jun 2014 | Change, % | Jan-Dec 2014 |
| Cash flow from operating activities: | |||||||
| Profit for the period | 35 | 288 | -88 | 260 | 382 | -32 | 887 |
| Adjustments to the profit | 259 | 184 | 41 | 448 | 374 | 20 | 725 |
| Working capital changes | -557 | -117 | 376 | 499 | 162 | 208 | 25 |
| Interest and other financial expenses paid | -17 | -3 | 467 | -18 | -7 | 157 | -13 |
| Interest and other financial income received | 7 | 0 | 7 | 1 | 600 | 3 | |
| Income taxes paid | -106 | -42 | 152 | -129 | -84 | 54 | -10 |
| Net cash from operating activities | -380 | 311 | -222 | 1,066 | 828 | 29 | 1,617 |
| Cash flow from investing activities: | |||||||
| Purchases of tangible and intangible assets | -314 | -201 | 56 | -754 | -437 | 73 | -915 |
| Net cash used in investing activities | -314 | -201 | 56 | -754 | -437 | 73 | -915 |
| Cash flow from financing activities: | |||||||
|
Repayments of long-term borrowings |
- | - | -100 | - | -113 | -100 | -113 |
| Repurchase of shares | - | - | -100 | - | -35 | -100 | -44 |
| Dividends paid | -599 | -480 | -599 | -480 | -480 | ||
| Net cash used in financing activities | -599 | -480 | 25 | -599 | -628 | -5 | -637 |
|
Net change in cash and cash equivalents |
-1,294 | -370 | 250 | -287 | -237 | 21 | 65 |
| Cash and cash equivalents at the beginning of the period | 2,427 | 1,496 | 62 | 1,426 | 1,365 | 4 | 1,365 |
| Effects of exchange rate changes on cash and cash equivalents | 0 | 1 | -5 | 0 | -4 | ||
| Cash and cash equivalents at the end of the period | 1,134 | 1,127 | 1 | 1,134 | 1,127 | 1 | 1,426 |
| 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, 2014 | 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 |
| Dividends paid | |||||||
| Repurchase of shares | -9 | -9 | |||||
| Comprehensive income | -39 | 508 | 469 | ||||
| Equity Dec 31, 2014 | 1,359 | 21 | -221 | -439 | 5 | 2,471 | 3,196 |
| Dividends paid | -599 | -599 | |||||
| Repurchase of shares | |||||||
| Comprehensive income | -3 | 260 | 257 | ||||
| Equity Jun 30, 2015 | 1,359 | 21 | -224 | -439 | 5 | 2,131 | 2,854 |
NOTES TO INTERIM FINANCIAL STATEMENTS
ACCOUNTING PRICIPLES
This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2015, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2014. 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 2014 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 reporting period, the Group did not have any financial instruments measured at fair value.
| INTANGIBLE AND TANGIBLE ASSETS | |||
| EUR in thousands | Jan-Jun 2015 | Jan-Jun 2014 | Jan-Dec 2014 |
| Increase in intangible assets: | |||
| Acquisition cost Jan 1 | 6,650 | 6,112 | 6,112 |
| Increase | 526 | 400 | 538 |
| Increase in tangible assets: | |||
| Acquisition cost Jan 1 | 1,425 | 1,351 | 1,351 |
| Increase | 228 | 37 | 74 |
| CHANGE IN INTEREST-BEARING LIABILITIES | |||
| EUR in thousands | Jan-Jun 2015 | Jan-Jun 2014 | Jan-Dec 2014 |
| Interest-bearing liabilities Jan 1 | - | 113 | 113 |
| Repayments | - | -113 | -113 |
|
Interest-bearing liabilities Mar 31/ Dec 31 |
- | - | - |
| PLEDGES AND COMMITMENTS | ||||
| EUR in thousands | Jun 30, 2015 | Jun 30, 2014 | Dec 31, 2014 | Change, % |
| Business mortgages (held by the Company) | 1,392 | 1,392 | 1,391 | 0 |
| Minimum lease payments based on lease | ||||
| agreements | ||||
| Maturing in less than one year | 353 | 159 | 304 | 16 |
| Maturing in 1-5 years | 259 | 46 | 436 | -41 |
| Total | 611 | 205 | 740 | -17 |
| Total pledges and commitments | 2,003 | 1,596 | 2,131 | -6 |
| CONSOLIDATED INCOME STATEMENT BY QUARTER | ||||||||
| EUR in thousands | Q2 2015 | Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 | ||
| Net sales | 2 402 | 2 524 | 2 685 | 2 167 | 2 465 | 2 225 | ||
| Other operating income | 1 | - | - | 1 | 10 | 15 | ||
| Materials and services | 149 | 105 | 94 | 66 | 92 | 85 | ||
| Employee benefit expenses | 1 723 | 1 622 | 1 640 | 1 370 | 1 557 | 1 525 | ||
| Other operating expenses | 287 | 338 | 336 | 316 | 304 | 325 | ||
| EBITDA | 243 | 459 | 615 | 416 | 522 | 305 | ||
| Depreciation and amortization | 211 | 200 | 198 | 189 | 178 | 197 | ||
| Operating profit | 32 | 259 | 417 | 227 | 344 | 107 | ||
| Financial income and expenses | -16 | 14 | -8 | -5 | -12 | -4 | ||
| Profit before tax | 16 | 272 | 409 | 222 | 332 | 103 | ||
| Income taxes | 18 | -47 | -68 | -54 | -43 | -10 | ||
| Profit for the period | 35 | 225 | 341 | 167 | 288 | 93 | ||
| GROUP KEY FIGURES | |||
| EUR in thousands, unless otherwise indicated |
Jan-Jun or Jun 30, 2015 |
Jan-Jun or Jun 30, 2014 |
Jan-Dec or Dec 31, 2014 |
| Net sales | 4,926 | 4,689 | 9,541 |
| Net sales growth, % | 5.1 | 6.2 | 9.8 |
| EBITDA | 702 | 826 | 1,857 |
| % of net sales | 14.3 | 17.6 | 19.5 |
| Operating profit | 291 | 451 | 1,095 |
| % of net sales | 5.9 | 9.6 | 11.5 |
| Profit before tax | 289 | 435 | 1,065 |
| % of net sales | 5.9 | 9.3 | 11.2 |
| Profit for the period | 260 | 382 | 890 |
| % of net sales | 5.3 | 8.1 | 9.3 |
| Return on equity (per annum), % | 17.2 | 27.2 | 29.3 |
| Return on investment (per annum), % | 19.2 | 31.6 | 35.4 |
| Cash and cash equivalents | 1,134 | 1,127 | 1,426 |
| Free cash flow | 312 | 391 | 702 |
| Net borrowings | -1,134 | -1,127 | -1,426 |
| Equity | 2,854 | 2,736 | 3,196 |
| Gearing, % | -39.7 | -41.2 | -44.6 |
| Equity ratio, % | 57.6 | 54.8 | 44.0 |
| Total balance sheet | 6,863 | 6,882 | 8,527 |
| Investments in non-current assets | 754 | 437 | 915 |
| % of net sales | 15.3 | 9.3 | 9.6 |
| Product development expenses | 948 | 936 | 1,847 |
| % of net sales | 19.2 | 20.0 | 19.4 |
| Average number of personnel | 85 | 81 | 81 |
| Personnel at the beginning of period | 78 | 79 | 79 |
| Personnel at the end of period | 86 | 79 | 78 |
| Earnings per share, EUR | 0.022 | 0.032 | 0.074 |
| Equity per share, EUR | 0.229 | 0.220 | 0.257 |