M-Brain Oy Semi-Annual Report 17.8.2015 01:00 pm
M-BRAIN OY SEMI-ANNUAL REPORT January 1 - June 30, 2015 (unaudited)
January - June 2015:
- Revenue EUR 15,478 (January 1 - June 30, 2014: 9,502) thousand - increase 62.9% from the corresponding period last year.
- EBITDA was EUR 1,437 (January 1 - June 30, 2014: 895) thousand - increase 60.5% from the corresponding period last year.
- Balance sheet total as of June 30, 2015 EUR 34,711 (as of June 30, 2014: 32,901) thousand.
The main figures (unaudited)
| M-Brain Group (IFRS) | |||
| 1000 EUR | 1-6.2015 | 1-6.2014 | 1-12.2014 |
| Revenue | 15 478 | 9 502 | 23 518 |
| EBITDA | 1 437 | 895 | 922 |
| EBITDA % of revenue | 9.3 % | 9.4 % | 3.9 % |
| Operating profit | 778 | 516 | -26 |
| Operating profit % of revenue | 5.0 % | 5.4 % | -0.1 % |
| Profit (loss) for the period | 189 | 301 | -769 |
| Profit (loss) for the period % of revenue | 1.2 % | 3.2 % | -3.3 % |
| Balance sheet total | 34 711 | 32 901 | 35 330 |
| Revenue of own equity, % | 1.6 % | 2.9 % | -7.9 % |
| Equity ratio, % | 36.4 % | 41.6 % | 35.1 % |
| Number of personnel (FTE) | 398 | 298 | 345 |
MANAGING DIRECTOR SIRPA OJALA'S COMMENTS
M-Brain is a global information, technology and consulting services company with offices in 12 countries. We help our clients to navigate the turbulent and ever expanding business environment. We offer crucial external business information, and advice in its efficient management and utilization. We turn information into actionable insights for daily decision-making and strategic planning. We call it Informed Leadership.
The first half-year period of 2015 has been a time of strong integration for M-Brain. Combining M-Brain's and Global Intelligence Alliance Group's, which was acquired in the fall of 2014, operations and their further development have helped M-Brain to achieve a positive and market position strengthening growth with a significant expansion of the product portfolio and market area. Packaging services into Monitoring, Intelligence and Advisory segments has further developed the positive customer experience and M-Brain's position as our customers' business and market intelligence partner.
REVENUE AND RESULT DEVELOPMENT
In the first half-year period of 2015, the revenue of M-Brain Group was EUR 15,478 thousand. The operating profit was EUR 778 thousand.
The cuts regarding overlapping functions and production streamlining measures carried out during the previous financial year significantly lowered the cost level during the review period. The Finnish market remained challenging due to the general economic situation and the decline in the traditional business caused by the media revolution in Finland.
M-Brain's EBITDA was EUR 1,437 thousand (January 1 - June 30, 2014: 895) i.e. 9.3% of the net sales (9.4%). EBITDA of the review period includes approximately EUR 525 thousand of non-recurring costs. The GIA Group acquisition significantly improved the overall growth of the revenue and the result. The figures of GIA Group are consolidated into M-Brain Group as of September 2014.
The depreciations for the review period were EUR 659 thousand and operating profit EUR 778 thousand (January 1 - June 30, 2014: depreciations 380 and operating profit 516).
The Company's Finnish subsidiary Global Intelligence Alliance Group Oy merged with its sister company M-Brain Insight Oy on June 30, 2015.
FINANCING AND INVESTMENTS
On June 25, 2014, M-Brain listed a bond on First North Bond Market Finland market place. The EUR 15 million unsecured bond is subject to a fixed interest rate of 8 percent and its due date is June 17, 2017. M-Brain has, with a purchase agreement signed 4 September, 2014, acquired the whole share capital of Global Intelligence Alliance Group Oy (GIA) mainly using the funds received from the bond.
M-Brain's investments, EUR 387 thousand, are mainly related to the internal product development. The intangible assets resulting from the internal development activities will be recognized in the balance sheet once the expenses of the development phase can be calculated reliably, once the completion of the product can be implemented technically, once the Group can use or sell the product, once the Group can prove how the product will generate likely future financial benefit, and once the Group has both the intention and the resources to complete the development work and to sell the product. After initial recognition, capitalized development costs are measured at cost less accumulated depreciation/amortization and impairment losses. Depreciation/amortization is recognized from the date the asset is ready for use.
PERSONNEL, MANAGEMENT AND ADMINISTRATION
The average number of personnel in the Group during the review period was 398 full-time employees (January 1 - June 30, 2014: 298).
Kim Nyberg (Chairman of the Board), Marjukka Nyberg, Petri Laine, Robert Ingman, Pirjo Ståhle, Tage Lindberg and Matti Rusanen were members of the Board of Directors of the Company from the beginning of the review period. On June 30, 2014 the Annual General Meeting of the Company re-elected Kim Nyberg, Marjukka Nyberg, Petri Laine, Robert Ingman, Tage Lindberg and Matti Rusanen as members of the Board of Directors.
Kimmo Valtonen was Managing Director of the parent company until March 16, 2015 and from that date onwards Sirpa Ojala.
M-Brain Oy's auditor is Deloitte & Touche Oy, principal auditor Authorized Public Accountant Hannu Mattila. The Group's Finnish subsidiaries have the same auditor.
GENERAL MEETINGS
The Annual General Meeting of the Company was held on June 30, 2015. The Annual General Meeting decided on the adoption of the financial statements and the discharge of liability to the members of the Board of Directors and the CEO. The Annual General Meeting decided that the result for the fiscal year January 1 - December 31, 2014 be recorded in the profit and loss account and that no dividends be distributed. The Annual General Meeting decided that no change be made to the fees of the members of the Board of Directors. The fee of the Board members is EUR 1,200 per month.
SHARES
On June 30, 2015, the Company had 23,593 registered shares. On June 30, 2015, the Company had a total of nine shareholders. The Company owns 100 of its own shares.
Significant events after the reVIEW period
The Company has not had any significant events after the review period.
Major risks and uncertainties
Technological development in the Company's field of business is extremely fast. In accordance with its strategy, the Company has made significant investments in its own product development to improve its competitiveness compared to its competitors.
The core operations of the Group are insured against accidental damages and interruptions.
Accounts receivables is significant balance sheet item. Credit risk related to accounts receivables is managed by consistent credit policy and efficient credit management. Credit risk is also reduced by the large number of clients and by the fact that the receivables are allocated to a number of different industries.
The Group's loan financing involves covenants agreed with the lenders to which the Company is committed. Fulfillment of the covenants with regard to the key figures will be reviewed for the first time on December 31, 2015.
OUTLOOK FOR THE YEAR 2015
The revenue for year 2015 is estimated to be approximately EUR 32-36 million and EBITDA approximately EUR 3.3-5.3 million, including non-recurring expenses of approximately EUR 0.7 million relating mainly to the integration of Global Intelligence Alliance Group. These non-recurring items as well as weaker than previously expected revenue development explain the reduced outlook.
Previously in the financial statements published on March 31, 2015, the Company estimated that revenue for year 2015 would be approximately EUR 33-37 million and EBITDA approximately EUR 4-7 million.
The Company's business involves various risks and uncertainties, and the statements in this release, other than statements of historical facts, are forward looking statements. These statements are based on the management's best judgment and belief in light of the information currently available to it. As such statements involve risks and uncertainties, the actual results may differ materially from those we expect at the moment.
FINANCIAL INFORMATION
Financial statements for 2015 will be published on March 4, 2016.
DETAILED FINANCIAL INFORMATOIN
This unaudited Semi-Annual Report has been prepared in accordance with IFRS recognition and measurement principles. The Report has been prepared applying the same principles as in the IFRS consolidated financial statements for the year 2014 except the amendments regarding the new IFRS standards entered into force and put into operation on January 1, 2015. These amendments have not had a material effect on the Semi-Annual Report.
The preparation of the consolidated financial statements in accordance with the IFRS requires the use of estimations and assumptions of management which effects the reported assets and liabilities as well as the income and expenses in the balance sheet. Although these estimations are based on management's best current knowledge, it is possible that the actual results may differ from these estimates and assumptions.
All figures are presented in thousands of euros and have been rounded to the nearest 0.1 thousand euros, as a consequence of which the sum of individual figures may deviate from the presented sum.
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (IFRS) | |||
| (unaudited) | |||
| 000 EUR | 1.1.-30.6.2015 | 1.1.-30.6.2014 | 1.1.-31.12.2014 |
| Revenue | 15 478.5 | 9 502.2 | 23 518.1 |
| Other operating income | 77.6 | 48.0 | 76.1 |
| Materials and external services | -1 990.4 | -911.1 | -2 614.7 |
| Personnel expenses | -8 570.9 | -5 935.8 | -14 710.0 |
| Depreciation | -659.4 | -379.6 | -948.8 |
| Other operating expenses | -3 557.8 | -1 807.8 | -5 347.0 |
| Operating profit | 777.5 | 515.7 | -26.3 |
| Finance income | 356.6 | 17.4 | 302.1 |
| Finance costs | -968.7 | -156.7 | -1 055.3 |
| Financial costs (net) | -612.2 | -139.3 | -753.2 |
| Profit (loss) before income tax | 165.4 | 376.4 | -779.5 |
| Income tax expense | 23.1 | -75.9 | 10.8 |
| Profit (loss) for period | 188.5 | 300.5 | -768.7 |
| Other comprehensive income, net of income tax | |||
| Items that may be reclassified subsequently to profit or loss: | |||
| Currency translation differences | -29.9 | 45.8 | 69.4 |
| Other comprehensive income for the period, net of tax | -29.9 | 45.8 | 69.4 |
| Total comprehensive income for the period | 158.6 | 346.3 | -699.3 |
| Profit attributable to owners of the company: | 188.5 | 300.5 | -768.7 |
| Total comprehensive income attributable to the owners of the company: | 158.6 | 346.3 | -699.3 |
| 000 EUR | 30.6.2015 | 30.6.2014 | 31.12.2014 |
| Assets | |||
| Non-current assets | |||
| Goodwill | 21 976.5 | 9 845.3 | 21 976.5 |
| Development costs | 1 406.0 | 1 094.3 | 1 339.1 |
| Other intangible assets | 3 366.8 | 763.4 | 3 530.0 |
| Tangible assets | 624.2 | 509.9 | 719.9 |
| Available-for-sale financial assets | 27.0 | 24.5 | 26.9 |
| Deferred tax asset | 377.9 | 2.6 | 181.5 |
| Total non-current assets | 27 778.3 | 12 240.0 | 27 773.9 |
| Current assets | |||
| Trade and other receivables | 5 497.1 | 2 359.1 | 5 948.6 |
| Other shares | 2.4 | 2.4 | 6.5 |
| Cash and cash equivalents | 1 433.3 | 18 299.1 | 1 601.0 |
| Total current assets | 6 932.9 | 20 660.6 | 7 556.0 |
| TOTAL ASSETS | 34 711.2 | 32 900.6 | 35 329.8 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to owners of the company | |||
| Share capital | 215.5 | 215.5 | 215.5 |
| Share premium | 247.2 | 247.2 | 247.2 |
| Reserve for invested non-restricted equity | 12 292.2 | 12 409.1 | 12 292.2 |
| Retained earnings | -698.3 | 125.2 | -895.4 |
| Total equity | 12 056.6 | 12 997.0 | 11 859.5 |
| Non-current liabilities | |||
| Borrowings | 15 105.0 | 15 077.3 | 15 072.1 |
| Deferred tax liability | 641.3 | 132.6 | 684.1 |
| Other liabilities | 184.0 | 122.3 | 189.2 |
| Total non-current liabilities | 15 930.3 | 15 332.3 | 15 945.4 |
| Current liabilities | |||
| Borrowings | 115.5 | 0.0 | 211.8 |
| Advance payments | 1 599.0 | 1 628.0 | 1 572.2 |
| Trade payables | 1 369.0 | 751.7 | 913.5 |
| Other current liabilities | 896.6 | 563.7 | 1 128.8 |
| Accrued liabilities | 2 744.2 | 1 627.9 | 3 698.6 |
| Total current liabilities | 6 724.4 | 4 571.3 | 7 524.9 |
| Total liabilities | 22 654.6 | 19 903.6 | 23 470.3 |
| TOTAL EQUITY AND LIABILITIES | 34 711.2 | 32 900.6 | 35 329.8 |
| CONSOLIDATED CASH FLOWS (IFRS) | |||
| (Unaudited) | |||
| 000 EUR | 1.1.-30.6.2015 | 1.1.-30.6.2014 | 1.1.-31.12.2014 |
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Profit (loss) for the period | 188.5 | 300.5 | -768.7 |
| Adjustments for the profit (loss) for the period | 1 330.7 | 635.8 | 1 939.1 |
| Changes in working capital | -269.6 | 70.8 | 552.9 |
| Interests paid (-) | -905.8 | -152.8 | -1 087.6 |
| Interests received (+) | 1.9 | 5.2 | 289.8 |
| Income taxes paid | -25.6 | -60.8 | -452.2 |
| CASH FLOW FROM OPERATING ACTIVITIES | 320.1 | 798.6 | 473.3 |
| CASH FLOW FROM INVESTING ACTIVITIES | |||
| Investments on tangible and intangible assets | -383.2 | -347.6 | -1 137.0 |
| Net cash outflow on acquisition of subsidiaries (-) | 0.0 | 0.0 | -15 691.0 |
| CASH FLOW FROM INVESTING ACTIVITIES | -383.2 | -347.6 | -16 828.0 |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Proceeds from share issue (+) | 0.0 | 4 913.7 | 4 913.7 |
| Purchase of own shares (-) | 0.0 | 0.0 | -116.9 |
| Repayments of debt (-) | -104.6 | -3 376.2 | -3 151.9 |
| Withdrawals of long-term debt (+) | 0.0 | 14 737.5 | 14 737.5 |
| CASH FLOW FROM FINANCING ACTIVITIES | -104.6 | 16 275.0 | 16 382.4 |
| INCREASE IN CASH AND CASH EQUIVALENTS | -167.6 | 16 726.0 | 27.8 |
| CASH AND CASH EQUIVALENTS AT JANUARY 1 | 1 601.0 | 1 573.1 | 1 573.1 |
| CASH AND CASH EQUIVALENTS AT JUNE 30 | 1 433.3 | 18 299.1 | 1 601.0 |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS) | ||||||
| (Unaudited) | ||||||
| Liite | Share capital | Share premium | Reserve for invested non-restricted equity | Retained earnings | Total | |
| Balance at January 1, 2014 | 215.5 | 247.2 | 7 495.4 | -290.6 | 7 667.5 | |
| Comprehensive income | ||||||
| Profit for the period | 300.5 | 300.5 | ||||
| Other comprehensive income, net of income tax | ||||||
| Currency translation differences | 45.8 | 45.8 | ||||
| Total comprehensive income for the year | 346.3 | 346.3 | ||||
| Share-based payments | 21 | 69.5 | 69.5 | |||
| Share issue | 14 | 5 001.2 | 5 001.2 | |||
| Acquisition by the company of its own shares | -87.5 | -87.5 | ||||
| Total transactions with owners, recognised directly in equity | 4 913.7 | 69.5 | 4 983.2 | |||
| Balance at June 30, 2014 | 215.5 | 247.2 | 12 409.1 | 125.2 | 12 997.0 | |
| Liite | Share capital | Share premium | Reserve for invested non-restricted equity | Retained earnings | Total | |
| Balance at January 1, 2015 | 215.5 | 247.2 | 12 292.2 | -895.4 | 11 859.5 | |
| Comprehensive income | ||||||
| Profit for the period | 188.5 | 188.5 | ||||
| Other comprehensive income, net of income tax | ||||||
| Currency translation differences | -29.9 | -29.9 | ||||
| Total comprehensive income for the year | 158.6 | 158.6 | ||||
| Share-based payments | 21 | 38.4 | 38.4 | |||
| Total transactions with owners, recognised directly in equity | 38.4 | 38.4 | ||||
| Balance at June 30, 2015 | 215.5 | 247.2 | 12 292.2 | -698.3 | 12 056.6 | |
Helsinki August 17, 2015
M-BRAIN OY
Further Information:
Sirpa Ojala, CEO - Email: sirpa.ojala@m-brain.com, Telephone number: +358-40-5663466
Janne Kärkkäinen, CFO - Email: janne.karkkainen@m-brain.com, Telephone number: +358-40-5294603
Certified Adviser Evli Bank Plc / Petteri Nurminen: Telephone number +358-40-5095665
HUG#1945918