QPR SOFTWARE PLC STOCK EXCHANGE RELEASE AUGUST 2, 2016 AT 9.30 AM
SECOND QUARTER PROFITS IMPROVED YEAR-ON-YEAR
Summary April – June 2016
- Net sales EUR 2,173 thousand (2015: 2,402).
- Operating profit EUR 230 thousand (32).
- Operating margin 10.6% (1.3).
- Comparable operating profit EUR 230 thousand (32).
- Cash flow from operating activities EUR 192 thousand (- 380).
- Profit before taxes EUR 217 thousand (16).
- Profit for the quarter EUR 175 thousand (35).
- Earnings per share EUR 0.015 (0.003).
Summary January – June 2016
- Net sales EUR 4,215 thousand (2015: 4,926).
- Operating profit EUR 125 thousand (291).
- Operating margin 3.0% (5.9).
- Comparable operating profit EUR 165 thousand (291).
- Cash flow from operating activities EUR 1,422 thousand (1,066).
- Profit before taxes EUR 95 thousand (289).
- Profit for the period EUR 70 thousand (260).
- Earnings per share EUR 0.006 (0.022).
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.
OUTLOOK
Operating environment and market outlook
QPR expects the demand for process mining software to grow in its home market in Finland, as well as in the broader European market. The software market for process mining is relatively new and, for the time being, its market size is still small. Market maturity varies greatly from one country to another, but already last year we experienced strong market growth in several European countries. This growth is expected to continue this year, and the Company believes that its QPR ProcessAnalyzer product has a strong position in the market.
In developed markets, competition in process and enterprise architecture modeling and performance management software is expected to continue to increase. In developing markets, especially in the Middle East and Africa, there is still strong growth potential for these software products.
Outlook for 2016
The Company´s outlook is unchanged.
In process mining software and process analysis services, QPR continues to invest in direct sales in Finland and in international channel sales. The Company estimates that this business will continue to grow this year.
In process and enterprise architecture modeling and performance management software, the tightened competition is expected to continue to have a negative impact on sales in part of QPR´s reseller channel, especially in developed markets. To offset this impact, QPR seeks growth from new reseller partnerships, especially from Middle East and Africa.
The Company believes that in its home market, Finland, it will maintain the leading position as a process modeling and analysis software vendor targeting operational development functions in organizations; as well as to preserve QPR’s position in operational development consulting. This position has strengthened over the past few years.
The Company estimates that its comparable operating profit will grow in 2016 compared to 2015.
| KEY FIGURES | |||||||
| EUR in thousands, unless otherwise indicated | Apr-Jun, 2016 | Apr-Jun, 2015 | Change, % | Jan-Jun, 2016 | Jan-Jun, 2015 | Change, % | Jan-Dec, 2015 |
| Net sales | 2,173 | 2,402 | -9.5 | 4,215 | 4,926 | -14.4 | 9,436 |
| EBITDA | 456 | 243 | 87.2 | 542 | 702 | -22.8 | 1,190 |
| % of net sales | 21.0 | 10.1 | 12.9 | 14.2 | 12.6 | ||
| Operating profit | 230 | 32 | 615.6 | 125 | 291 | -57.2 | 368 |
| % of net sales | 10.6 | 1.3 | 3.0 | 5.9 | 3.9 | ||
| Profit before tax | 217 | 16 | 1,238.2 | 95 | 289 | -67.2 | 347 |
| Profit for the period | 175 | 35 | 406.5 | 70 | 260 | -72.9 | 338 |
| % of net sales | 8.1 | 1.4 | 1.7 | 5.3 | 3.6 | ||
| Earnings per share, EUR | 0.015 | 0.003 | 403.5 | 0.006 | 0.022 | -73.0 | 0.028 |
| Equity per share, EUR | 0.221 | 0.229 | -3.8 | 0.221 | 0.229 | -3.8 | 0.234 |
|
Cash flow from operating activities |
192 | -380 | 150.6 | 1,422 | 1,066 | 33.4 | 406 |
| Cash and cash equivalents | 900 | 1,134 | -20.7 | 900 | 1,134 | -20.7 | 585 |
| Net borrowings | -900 | -1,134 | -20.7 | -900 | -1,134 | -20.7 | -85 |
| Gearing, % | -32.8 | -39.7 | -32.8 | -39.7 | -2.9 | ||
| Equity ratio, % | 65.2 | 57.6 | 65.2 | 57.6 | 42.7 | ||
| Return on equity, % | 25.2 | 4.4 | 5.0 | 17.2 | 11.1 | ||
| Return on investment, % | 29.9 | 1.0 | 8.8 | 19.2 | 12.0 |
REPORTING
QPR Software innovates, develops, sells and delivers software and services in international markets aimed at operational development. 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 licenses, 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.
The geographical areas reported are Finland, the rest of Europe (including Russia and Turkey), and the rest of the world. Net sales are reported according to the customer´s location.
In the January – June 2016 interim report the Company has renamed a term used in financial reporting to comply with the European Securities and Markets Authority´s (ESMA) recommendations for alternative key figures. The new term used for previously used “operating profit excluding non-recurring items” is “comparable operating profit”. Items having an impact on comparable operating profit are, for example, non-recurring items related to business streamlining or restructuring. Comparable operating profit is calculated by eliminating these items from operating profit. Interest-bearing net debt is calculated by deducting cash and cash equivalents out of interest-bearing liabilities.
REVIEW BY THE CEO
After a challenging first quarter, our profit development made a clear upturn in the second quarter from April to June. As a result of streamlining our operations, EBITDA doubled year-on-year and operating profit exceeded 10% of net sales.
The business environment remained challenging and economic growth was weak in most markets. This was the case especially in the Company’s largest market area, Europe (including Finland). Channel license net sales were negatively affected by the tightened competition in process modeling software, as well as performance management software.
However, in the second quarter we received many positive signals that indicate accelerating growth in the process mining market. Our net sales in this product area grew over 50 % and we acquired many significant customers among large international corporations. Due to our patented technology, early go-to-market strategy and innovative functionalities, our process mining software QPR ProcessAnalyzer is in excellent position to continue its strong revenue growth. Our patented technology in question received additional intellectual property protection in May, when the United States Patent and Trademark Office awarded already the second patent for this technology.
In 2015, we invested in recruiting and training new reseller partners; as well as in marketing and product launches in new markets. In process mining software, we expanded distribution especially into developed European markets, such as Germany, Sweden, Belgium and the Netherlands. For performance management and process modeling software, we recruited many new resellers from Middle East, Africa and South America.
We believe these investments will have a positive impact on net sales this year, but at the same time, we estimate that the tightened competition will continue to have a negative impact on sales in part of QPR´s reseller channel. We estimate that comparable operating profit will grow in 2016, as compared to 2015.
Jari Jaakkola
CEO
NET SALES DEVELOPMENT JANUARY 1 – JUNE 30, 2016
April – June 2016
Net sales in the second quarter were EUR 2,173 thousand (2,402) and decreased 10% from the corresponding period of the previous year. This was mainly due to a decrease in process modeling and performance management software net sales in the international sales channel. Process mining software and related consulting net sales grew significantly, over 50% compared to prior year.
Software license net sales decreased 39% compared to previous year. Net sales were negatively affected by the tightened competition in process and enterprise architecture modeling software, as well as performance management software.
Net sales from software maintenance services and software rentals decreased (-6% and -7%, respectively). Currency exchange rates had a slightly negative impact on software maintenance service net sales. The share of recurring revenues was 50% (48) of total net sales.
Consulting net sales were on the same level as in the previous year (+1%). Technical SAP consulting net sales decreased, but process mining consulting net sales increased significantly.
Of the Group net sales, 71% (65) derived from Finland, 18% (19) from the rest of Europe (including Russia and Turkey) and 11% (16) from the rest of the world.
| NET SALES BY PRODUCT GROUP | |||||||
| EUR in thousands | Apr-Jun, 2016 | Apr-Jun, 2015 |
Change, % |
Jan-Jun, 2016 | Jan-Jun, 2015 |
Change, % |
Jan-Dec, 2015 |
| Software licenses | 249 | 409 | -39 | 453 | 764 | -41 | 1,427 |
| Software maintenance services | 672 | 715 | -6 | 1,355 | 1,451 | -7 | 2,873 |
| Software rentals | 414 | 445 | -7 | 828 | 884 | -6 | 1,774 |
| Consulting | 839 | 833 | 1 | 1,579 | 1,828 | -14 | 3,362 |
| Total | 2,173 | 2,402 | -10 | 4,215 | 4,926 | -14 | 9,436 |
| NET SALES BY GEOGRAPHIC AREA | |||||||
| EUR in thousands | Apr-Jun, 2016 | Apr-Jun, 2015 |
Change, % |
Jan-Jun, 2016 | Jan-Jun, 2015 |
Change, % |
Jan-Dec, 2015 |
| Finland | 1,549 | 1,575 | -2 | 2,967 | 3,321 | -11 | 6,499 |
| Europe incl. Russia and Turkey | 389 | 446 | -13 | 796 | 905 | -12 | 1,740 |
| Rest of the world | 235 | 382 | -38 | 452 | 701 | -36 | 1,197 |
| Total | 2,173 | 2,402 | -10 | 4,215 | 4,926 | -14 | 9,436 |
January – June 2016
Net sales in the January – June reporting period were EUR 4,215 thousand (4,926). The decrease in net sales was due to weaker sales in software licenses and consulting services.
Software license net sales decreased 41% compared to previous year. Net sales were negatively affected by tightened competition in process modeling and performance management software.
Software maintenance services net sales and software rental net sales decreased (-7% and -6%, respectively). Currency exchange rates had a negative impact to software maintenance service net sales. The share of recurring revenues was 52% (47) of total net sales.
Consulting net sales (-14%) were negatively affected by the decrease in technical SAP consulting net sales and a slow start in operational development consulting projects at the beginning of the year.
Of the Group net sales, 70% (67) derived from Finland, 19% (18) from the rest of Europe (including Russia and Turkey) and 11% (14) from the rest of the world.
FINANCIAL PERFORMANCE
April – June 2016
In the second quarter, the Group’s operating profit improved due to expense reductions and was EUR 230 thousand (32), or 10.6% of net sales (1.3). Especially personnel expenses were lower than in the previous year. Investments into new software products and international sales channel were continued.
The Group´s fixed costs in the quarter were EUR 1,844 thousand (2,221), and decreased 19.0% compared to the corresponding period in the previous year. Personnel expenses represented 73.8% (77.6) of the fixed costs and were EUR 1,361 thousand (1,723).
Profit before taxes in the quarter was EUR 217 thousand (16) and profit for the period was EUR 175 thousand (35). Taxes recorded for the period were EUR 42 thousand (-18). Earnings per share (fully diluted) were EUR 0.015 (0.003).
January – June 2016
In the January – June reporting period, the Group operating profit was EUR 125 thousand (291), or 3.0% of net sales (5.9). Operating profit decreased from the previous year due to lower net sales.
Comparable operating profit was EUR 165 thousand (291). The items that have an impact on comparable operating profit are related to the streamlining of operations implemented in early 2016, and mainly include personnel expenses.
The Group´s fixed costs were EUR 3,856 in the reporting period (4,381), and decreased 12.0% compared to previous year. Personnel costs represented 75.7% (76.4) of fixed costs and were EUR 2,918 thousand (3,345). Credit losses, inclusive in fixed costs, totaled EUR 8 thousand (19).
Profit before taxes in the reporting period was EUR 95 thousand (289) and profit for the period was EUR 70 thousand (260). Taxes recorded for the period were EUR 24 thousand (29). Earnings per share (fully diluted) were EUR 0.006 (0.022).
FINANCE AND INVESTMENTS
Cash flow from operating activities was EUR 1,422 thousand (1,066) in January - June. The growth in cash flow was due to more efficient working capital management and lower investments. Cash and cash equivalents at the end of the second quarter were EUR 900 thousand (1,134).
Investments in the first half of the year totaled EUR 366 thousand (754). Investments were mainly related to product development expenditure.
Net financial items in the review period January - June were EUR -30 thousand (-2). Net financial expenses included net foreign exchange losses of EUR 22 thousand (2). In April – June net financial items were EUR -12 thousand (-16), and included net foreign exchange currency losses of EUR 12 thousand (16).
At the end of the second quarter, the Company had no interest-bearing liabilities. The gearing ratio was -33% (-40). Current liabilities include deferred revenue in total of EUR 2,427 thousand (1,910). Annualized return on investment was 9% (19) in the reporting period January – June and 30% (1) in April – June.
At the end of the second quarter, equity ratio was 65% (58) and the consolidated shareholders’ equity was EUR 2,745 thousand (2,854). Annualized return on equity was 5% (17) in the reporting period January – June and 25% (4) in April – June.
The Annual General Meeting held on March 22, 2016 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
In the April – June reporting period, product development expenses were EUR 418 thousand (468), 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 161 thousand (193). The amortization of capitalized product development expenses in the quarter was EUR 147 thousand (114).
In the reporting period January – June, product development expenses were EUR 906 thousand (948), and represented 22% 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 340 thousand (360). The amortization of capitalized product development expenses in the quarter was EUR 256 thousand (229).
PERSONNEL
At the end of the reporting period, the Group employed a total of 69 persons (86). The average number of personnel during the second quarter was 70 (88) and 75 (85) in the review period January – June.
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 2016, the maximum annual bonus of the executive management team, including the CEO, is 30% of the annual base salary. More information on the bonus program can be found in the Annual Report 2015 (http://cdn.qpr.com/sites/default/files/QPR_Software_Annual_Report_2015_1.pdf).
SHARES AND SHAREHOLDERS
| Trading of shares | Jan-Jun, 2016 | Jan-Jun, 2015 | Change, % | Jan-Dec, 2015 |
| Shares traded, pcs | 366,396 | 3,358,905 | -89 | 4,558,065 |
| Volume, EUR | 387,159 | 4,811,303 | -92 | 6,350,859 |
| % of shares | 3.1 | 28.0 | 38.0 | |
| Average trading price, EUR | 1.06 | 1.43 | -26 | 1.39 |
| Shares and market capitalization | Jun 30, 2016 | Jun 30, 2015 | Change, % | Dec 31, 2015 |
| 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 | 1,198 | 1,219 | -2 | 1,212 |
| Closing price, EUR | 1.00 | 1.46 | -32 | 1.20 |
| Market capitalization, EUR | 11,987,854 | 17,502,267 | -32 | 14,385,425 |
| Book counter value of all treasury shares, EUR | 50,271 | 50,271 | - | 50,271 |
| Total purchase value of all treasury shares, EUR | 439,307 | 439,307 | - | 439,307 |
| Treasury shares, % of all shares | 3.7 | 3.7 | - | 3.7 |
The Annual General Meeting held on March 22, 2016 approved the Board's proposal to pay a per-share dividend of EUR 0.02 (0.05), a total of EUR 240 thousand (599) for the financial year 2015. Dividends were paid to all shareholders registered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of March 24, 2016. Dividends were paid on April 5, 2016.
The Annual General Meeting approved the Board´s proposal to authorize the Board of Directors, subject to its discretion, on payment of an extra dividend of EUR 0.01 during 2016. The authorization is valid until 31 December, 2016.
OTHER EVENTS DURING THE QUARTER
In January, QPR and the Swedish business and IT services company iStone announced that they have signed a reseller agreement for QPR ProcessAnalyzer - the software that enables automated process analysis based on existing data from Enterprise Resource Planning (ERP) systems. The partnership creates new opportunities in automated process mapping and process flow optimization, especially for those organizations using the ERP system Infor M3.
QPR Software and PricewaterhouseCoopers (PwC) Portugal announced in February that they have signed a consulting agreement on using QPR ProcessAnalyzer in PwC’s process and operational improvement consulting in Portugal. QPR ProcessAnalyzer enables automated process analysis based on existing data from enterprise IT systems, utilizing technology patented in the United States by QPR.
In March, QPR completed co-determination negotiations with its personnel. As a result of the negotiations, the Company reduces its annual expenses by approximately EUR 0.7 million. Of the total, EUR 0.1 million will be realized by reducing external purchases and EUR 0.6 million through personnel reductions.
QPR signed an agreement in March on delivering software for business process management purposes in one of the world’s largest lighting manufacturing companies. The signed agreement is valid for three years, and the value of the entire three year agreement is approximately EUR 0.2 million before reseller commissions.
In March, QPR announced the launch of QPR MobileDashboard, an application that makes it even easier to access and browse actionable performance information on the go.
QPR Software was listed in April as a representative vendor in the Gartner Market Guide for Enterprise Business Process Analysis (EBPA). Globally the Gartner Market Guide lists 22 representative vendors offering solutions in this market.
In May, QPR received additional intellectual property protection for its process mining technology. This was already the second patent that the United States Patent and Trademark Office has awarded for the technology in question. The patented technology is utilized in QPR ProcessAnalyzer, an application developed by QPR. QPR’s previous patent from 2015 related to the utilization of event instance data obtained from information management systems to help organizations analyze and improve their business processes. The latest patent now safeguards the technology behind predicting the probability of future events based on process analysis.
In June, the Company announced the release of the new QPR Suite 2016, the complete portfolio of business management tools for planning, executing and monitoring strategy-driven operations. The newest developments in QPR technology bring enhancements to user experience and enable easy integration between QPR products and third party software. New features of the Suite further strengthen QPR’s offering as a value-adding solution provider for strategy execution, business-IT alignment, performance and process management and process mining.
In June, QPR made a deal to deliver QPR ProcessDesigner and QPR Metrics, as well as professional consulting services to a leading European engineering group. The duration of the contract made is three years, and it is worth well over 0,2 million euros.
EVENTS AFTER THE REPORTING PERIOD
There were no significant events after the reporting period.
GOVERNANCE
The Annual General Meeting on March 22, 2016 resolved that the number of Board Members is four (4).
The Annual General Meeting re-elected Kirsi Eräkangas, Vesa-Pekka Leskinen, Juho Malmberg and Topi Piela as members of the Company´s Board of Directors. The term of office of the members of the Board of Directors expires at the end of the next Annual General Meeting. At its organizing meeting, the Board of Directors elected Vesa-Pekka Leskinen as its Chairman.
The Annual General Meeting re-elected Authorized Public Accountants KPMG Oy Ab as QPR Software´s auditor with Kirsi Jantunen, Authorized Public Accountant, acting as principal auditor. The term of office of the auditor expires at the end of the next Annual General Meeting.
The Annual General Meeting decided to authorize the Board of Directors to decide on an issue of new shares and conveyance of the own shares held by the Company (share issue) either in one or in several occasions. The share issue can be carried out as a share issue against payment or without consideration on terms to be determined by the Board of Directors.
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 22, 2016 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 at 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 three groups of risks related to its operations: risks related to business operations (country, customer, personnel, legal), risks related to information and products (QPR products, IPR, data security) and risks related to financing (foreign currency, short-term cash flow). 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 14% (11) of total trade receivables at the end of the reporting period.
Approximately 69% of Group’s trade receivables were in Euro at the end of the reporting period (66). At the end of the reporting period, the Company had not hedged its non-euro trade receivables.
QPR has initiated an arbitration process due to a customer´s decision to dissolve a contract, as QPR regards this dissolution unjustified. The value of the contract is less than EUR 100 thousand and less than EUR 50 thousand has been recognized as revenue.
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 2015, pages 14-15 (http://cdn.qpr.com/sites/default/files/QPR_Software_Annual_Report_2015_1.pdf).
FINANCIAL INFORMATION
QPR Software will publish the interim report in English and Finnish on the following date:
- Interim Report Q3/2016: Thursday, October 27, 2016
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, 2016 | Apr-Jun, 2015 | Change, % | Jan-Jun, 2016 | Jan-Jun, 2015 | Change, % | Jan-Dec, 2015 |
| Net sales | 2,173 | 2,402 | -10 | 4,215 | 4,926 | -14 | 9,436 |
| Other operating income | 12 | 1 | 1,099 | 18 | 1 | 1,705 | 1 |
| Materials and services | 112 | 149 | -25 | 253 | 254 | -1 | 558 |
| Employee benefit expenses | 1,361 | 1,723 | -21 | 2,918 | 3,345 | -13 | 6,477 |
| Other operating expenses | 257 | 287 | -11 | 521 | 625 | -17 | 1,211 |
| EBITDA | 456 | 243 | 88 | 542 | 702 | -23 | 1,190 |
| Depreciation and amortization | 226 | 211 | 7 | 417 | 411 | 2 | 822 |
| Operating profit | 230 | 32 | 618 | 125 | 291 | -57 | 368 |
| Financial income and expenses | -12 | -16 | -23 | -30 | -2 | 1,391 | -21 |
| Profit before tax | 217 | 16 | 1,258 | 95 | 289 | -67 | 347 |
| Income taxes | -42 | 18 | -335 | -24 | -29 | -16 | -9 |
| Profit for the period | 175 | 35 | 407 | 70 | 260 | -73 | 338 |
|
Earnings per share, EUR (basic and diluted) |
0.015 | 0.003 | 407 | 0.006 | 0.022 | -73 | 0.028 |
|
Consolidated statement of comprehensive income: |
|||||||
| Profit for the period | 175 | 35 | 70 | 260 | 338 | ||
| Other items in comprehensive income that may be reclassified subsequently to profit or loss: | |||||||
|
Exchange differences on translating foreign operations |
3 | 7 | 1 | -3 | -21 | ||
|
Income tax relating to components of other comprehensive income |
- | - | - | - | - | ||
| Total comprehensive income | 178 | 42 | 71 | 257 | 317 | ||
| CONSOLIDATED BALANCE SHEET | ||||
| EUR in thousands |
Jun 30, 2016 |
Jun 30, 2015 |
Change, % |
Dec 31, 2015 |
| Assets | ||||
| Non-current assets: | ||||
| Intangible assets | 2,030 | 1,996 | 2 | 2,041 |
| Goodwill | 513 | 513 | 0 | 513 |
| Tangible assets | 234 | 337 | -31 | 274 |
| Other non-current assets | 27 | 27 | 0 | 27 |
| Total non-current assets | 2,804 | 2,873 | -2 | 2,855 |
| Current assets: | ||||
| Trade and other receivables | 2,934 | 2,856 | 3 | 4,592 |
| Cash and cash equivalents | 900 | 1,134 | -21 | 585 |
| Total current assets | 3,834 | 3,990 | -4 | 5,177 |
| Total assets | 6,638 | 6,863 | -3 | 8,033 |
| Equity and liabilities | ||||
| Equity: | ||||
| Share capital | 1,359 | 1,359 | 0 | 1,359 |
| Other funds | 21 | 21 | 0 | 21 |
| Treasury shares | -439 | -439 | 0 | -439 |
| Translation differences | -241 | -224 | 8 | -242 |
| Invested non-restricted equity fund | 5 | 5 | 0 | 5 |
| Retained earnings | 2,040 | 2,131 | -4 | 2,210 |
| Equity attributable to shareholders of the parent company | 2,745 | 2,854 | -4 | 2,914 |
| Non-current liabilities: | ||||
| Non-interest-bearing liabilities | 1 | 17 | -92 | 9 |
| Total non-current liabilities | 1 | 17 | -92 | 9 |
| Current liabilities: | ||||
| Interest-bearing liabilities | - | - | 500 | |
| Advances received | 2,427 | 1,910 | 27 | 1,209 |
| Accrued expenses and prepaid income | 1,136 | 1,633 | -30 | 2,932 |
| Trade and other payables | 328 | 449 | -27 | 468 |
| Total current liabilities | 3,891 | 3,992 | -3 | 5,109 |
| Total liabilities | 3,892 | 4,009 | -3 | 5,119 |
| Total equity and liabilities | 6,638 | 6,863 | -3 | 8,033 |
| CONSOLIDATED CASH FLOW STATEMENT | |||||||
| EUR in thousands | Apr-Jun, 2016 | Apr-Jun, 2015 | Change, % | Jan-Jun, 2016 | Jan-Jun, 2015 | Change, % | Jan-Dec, 2015 |
| Cash flow from operating activities: | |||||||
| Profit for the period | 175 | 35 | 400 | 70 | 260 | -73 | 338 |
| Adjustments to the profit | 285 | 259 | 10 | 474 | 448 | 6 | 850 |
| Working capital changes | -230 | -557 | -59 | 948 | 499 | 90 | -645 |
|
Interest and other financial expenses paid |
-10 | -17 | -39 | -30 | -18 | 67 | -38 |
|
Interest and other financial income received |
1 | 7 | 3 | 7 | -57 | 12 | |
| Income taxes paid | -29 | -106 | -73 | -43 | -129 | -67 | -111 |
| Net cash from operating activities | 192 | -380 | 151 | 1,422 | 1,066 | 33 | 406 |
| Cash flow from investing activities: | |||||||
|
Purchases of tangible and intangible assets |
-167 | -314 | -47 | -366 | -754 | -51 | -1,148 |
| Net cash used in investing activities | -167 | -314 | -47 | -366 | -754 | -51 | -1,148 |
| Cash flow from financing activities: | |||||||
|
Proceeds from short term borrowings |
- | - | - | - | 500 | ||
|
Repayments of short-term borrowings |
- | - | -500 | - | - | ||
| Dividends paid | -240 | -599 | -60 | -240 | -599 | -60 | -599 |
| Net cash used in financing activities | -240 | -599 | -60 | -739.687 | -599 | 23 | -99 |
|
Net change in cash and cash equivalents |
-215 | -1,294 | -83 | 316 | -287 | -210 | -841 |
| Cash and cash equivalents at the beginning of the period | 1,116 | 2,427 | -54 | 585 | 1,426 | -59 | 1,426 |
| Effects of exchange rate changes on cash and cash equivalents | -2 | 0 | -2 | -5 | -64 | 1 | |
| Cash and cash equivalents at the end of the period | 900 | 1,134 | -21 | 900 | 1,134 | -21 | 585 |
| 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, 2015 | 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 |
| Dividends paid | |||||||
| Repurchase of shares | |||||||
| Comprehensive income | -18 | 78 | 60 | ||||
| Equity Dec 31, 2015 | 1,359 | 21 | -242 | -439 | 5 | 2,210 | 2,914 |
| Dividends paid | -240 | -240 | |||||
| Repurchase of shares | |||||||
| Comprehensive income | 1 | 70 | 71 | ||||
| Equity Jun 30, 2016 | 1,359 | 21 | -241 | -439 | 5 | 2,040 | 2,745 |
NOTES TO HALF YEAR FINANCIAL REPORT
ACCOUNTING PRINCIPLES
This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2016, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2015. 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 2015 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, 2016 | Jan-Jun, 2015 | Jan-Dec, 2015 |
| Increase in intangible assets: | |||
| Acquisition cost Jan 1 | 7,862 | 6,956 | 6,956 |
| Increase | 343 | 526 | 906 |
| Increase in tangible assets: | |||
| Acquisition cost Jan 1 | 1,707 | 1,465 | 1,465 |
| Increase | 23 | 228 | 242 |
| CHANGE IN INTEREST-BEARING LIABILITIES | |||
| EUR in thousands | Jan-Jun, 2016 | Jan-Jun, 2015 | Jan-Dec, 2015 |
| Interest-bearing liabilities Jan 1 | 500 | - | - |
| Proceeds from short term borrowings | - | - | 500 |
| Repayments | 500 | - | - |
| Interest-bearing liabilities Jun 30/Dec 31 | - | - | 500 |
| PLEDGES AND COMMITMENTS | ||||
| EUR in thousands | Jun 30, 2016 | Jun 30, 2015 | Dec 31, 2015 | Change, % |
| Business mortgages (held by the Company) | 1,390 | 1,392 | 1,392 | 0 |
| Minimum lease payments based on lease agreements: | ||||
| Maturing in less than one year | 257 | 353 | 357 | -28 |
| Maturing in 1-5 years | 407 | 259 | 89 | 357 |
| Total | 664 | 611 | 446 | 49 |
| Total pledges and commitments | 2,054 | 2,003 | 1,838 | 12 |
| CONSOLIDATED INCOME STATEMENT BY QUARTER | ||||||
| EUR in thousands | Q2 2016 | Q1 2016 | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 |
| Net sales | 2,173 | 2,042 | 2,520 | 1,989 | 2,402 | 2,524 |
| Other operating income | 12 | 6 | - | - | 1 | - |
| Materials and services | 112 | 141 | 156 | 148 | 149 | 105 |
| Employee benefit expenses | 1,361 | 1,557 | 1,734 | 1,398 | 1,723 | 1,622 |
| Other operating expenses | 257 | 264 | 346 | 239 | 287 | 338 |
| EBITDA | 456 | 86 | 284 | 204 | 243 | 459 |
| Depreciation and amortization | 226 | 191 | 206 | 206 | 211 | 200 |
| Operating profit | 230 | -105 | 78 | -1 | 32 | 259 |
| Financial income and expenses | -12 | -18 | -30 | 11 | -16 | 14 |
| Profit before tax | 217 | -123 | 48 | 10 | 16 | 272 |
| Income taxes | -42 | 18 | 7 | 13 | 18 | -47 |
| Profit for the period | 175 | -105 | 55 | 23 | 35 | 225 |
| GROUP KEY FIGURES | |||
| EUR in thousands, unless otherwise indicated | Jan-Jun or Jun 30, 2016 | Jan-Jun or Jun 30, 2015 | Jan-Dec or Dec 31, 2015 |
| Net sales | 4,215 | 4,926 | 9,436 |
| Net sales growth, % | -14.4 | 5.1 | -1.1 |
| EBITDA | 542 | 702 | 1,190 |
| % of net sales | 12.9 | 14.3 | 12.6 |
| Operating profit | 125 | 291 | 368 |
| % of net sales | 3.0 | 5.9 | 3.9 |
| Profit before tax | 95 | 289 | 347 |
| % of net sales | 2.2 | 5.9 | 3.7 |
| Profit for the period | 70 | 260 | 338 |
| % of net sales | 1.7 | 5.3 | 3.6 |
| Return on equity (per annum), % | 5.0 | 17.2 | 11.1 |
| Return on investment (per annum), % | 8.8 | 19.2 | 12.0 |
| Borrowings | - | - | 500 |
| Cash and cash equivalents | 900 | 1,134 | 585 |
| Net borrowings | -900 | -1,134 | -85 |
| Equity | 2,745 | 2,854 | 2,914 |
| Gearing, % | -32.8 | -39.7 | -2.9 |
| Equity ratio, % | 65.2 | 57.6 | 42.7 |
| Total balance sheet | 6,638 | 6,863 | 8,033 |
| Investments in non-current assets | 366 | 754 | 1,148 |
| % of net sales | 8.7 | 15.3 | 12.2 |
| Product development expenses | 906 | 948 | 1,821 |
| % of net sales | 21.5 | 19.2 | 19.3 |
| Average number of personnel | 75 | 85 | 86 |
| Personnel at the beginning of period | 83 | 78 | 78 |
| Personnel at the end of period | 69 | 86 | 83 |
| Earnings per share, EUR | 0.006 | 0.022 | 0.028 |
| Equity per share, EUR | 0.221 | 0.229 | 0.234 |