Published: 2017-08-03 08:00:00 CEST
QPR Software
Half Year financial report

QPR SOFTWARE'S HALF YEAR FINANCIAL REPORT JANUARY – JUNE 2017

SUMMARY

Software net sales increased in the first half of the year

April - June 2017

  • Net sales EUR 2,062 thousand (2016: 2,173). Software license net sales increased (+17%), but total net sales decreased by 5% due to the decline in consulting net sales (-15%).
  • Operating profit EUR 4 thousand (230).
  • Operating margin 0.2% (10.6).
  • Cash flow from operating activities EUR -66 thousand (192).
  • Profit before taxes EUR -9 thousand (217).
  • Profit for the quarter EUR 18 thousand (175).
  • Earnings per share EUR 0.001 (0.015).

 January – June 2017

  • Net sales EUR 4,369 thousand (2016: 4,215). Net sales increased 4% due to the strong growth of software license net sales (+81%). Growth was slowed down by decline in consulting net sales (-10%).
  • Operating profit EUR 280 thousand (125).
  • Operating margin 6.4% (3).
  • Cash flow from operating activities EUR 1,649 thousand (1,422).
  • Profit before tax EUR 256 thousand (95).
  • Profit for the period EUR 171 thousand (70).
  • Earnings per share EUR 0.014 (0.006).
  • Outlook for 2017 remains unchanged.

Business operations

QPR Software´s mission is to make customers agile and efficient in their operations. We innovate, develop, and sell software aimed at analyzing, monitoring, and modeling operations in organizations. Furthermore, we offer customers a variety of consulting services.

 

OUTLOOK


Operating environment and market outlook

We estimate the growth of process mining software and related services to accelerate compared to previous year. This software product category is still relatively new, but competition and investments are increasing strongly in this market.

In developed markets, competition is expected to increase for process and enterprise architecture modeling software and performance management software. Whereas in emerging markets, growth potential for these software products is still expected.
 

Outlook for 2017

Outlook for 2017 remains unchanged.

QPR will continue to invest in sales activities for its in-house developed process mining software and the related services. QPR estimates that this business will grow significantly this year.

Tightened competition in the software business for process and enterprise architecture modeling and performance management is expected to have a negative impact on sales in parts of QPR’s reseller channel, especially in developed markets. To offset this negative impact, QPR seeks growth in emerging markets by renewing its reseller partner channel related to these products.

In its home market in Finland, QPR will especially focus to develop and deliver process modeling and performance management products. In operational development consulting we will invest in developing and expanding our key accounts.

QPR estimates that its net sales will grow in 2017, but operating profit will remain slightly lower than previous year due to growth investments. The planned increase in costs is mainly related to accelerating software development and growth investments in international business.

Net sales in individual quarters are expected to fluctuate to some extent, due to timing of software license deals in each quarter.

  

KEY FIGURES              
               
EUR in thousands, unless otherwise indicated Apr-Jun, 2017 Apr-Jun, 2016 Change, % Jan-Jun, 2017 Jan-Jun, 2016 Change, % Jan-Dec, 2016
               
Net sales 2,062 2,173 -5 4,369 4,215 4 8,634
EBITDA 227 456 -50 709 542 31 1,628
 % of net sales 11.0 21.0   16.2 12.9   18.9
Operating profit 4 230 -98 280 125 125 761
 % of net sales 0.2 10.6   6.4 3.0   8.8
Profit before tax -9 217 -104 256 95 170 710
Profit for the period 18 175 -90 171 70 143 568
 % of net sales 0.9 8.1   3.9 1.7   6.6
               
Earnings per share, EUR 0.001 0.015 -90 0.014 0.006 143 0.047
Equity per share, EUR 0.245 0.221 11 0.245 0.221 11 0.261
               
Cash flow from operating
activities
-66 192 -134 1,649 1,422 16 1,419
Cash and cash equivalents 1,336 900 48 1,336 900 48 565
Net borrowings -1,336 -900 48 -1,336 -900 48 -565
Gearing, % -43.7 -32.8 33 -43.7 -32.8 33 -17.4
Equity ratio, % 68.5 65.2 5 68.5 65.2 5 46.3
Return on equity, % 2.2 25.2   10.8 5.0   18.4
Return on investment, % -3.6 29.9   18.6 8.8   24.6

 

REPORTING

QPR Software innovates, develops, sells and delivers software and services in international markets 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, Software rentals, and Consulting. Software rentals and Software maintenance 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.

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 head quarter location.

 

REVIEW BY THE CEO

In line with our strategy, we seek to grow especially our international software sales in the coming years. To reach this target, we started to increase our product development, marketing and delivery resources in late 2016. In software development, we have placed renewed focus on great user experience. Our focus areas are process mining, process analytics, and operational performance monitoring. We believe that the relevant market for these focus areas will grow significantly, as companies collect more and more transaction and other event data from their operations.

In January-June, our international net sales grew by 13% compared to last year, and our software net sales grew by 12 %. In the first quarter growth was stronger than in the second, which was due to higher software license net sales. We did not close large software license deals in the second quarter, which led to lower average deal size than in the first quarter. Net sales in individual quarters are expected to be influenced also in the future by the timing of software license deals.

Consulting net sales decreased in January-June, which was due to a decline in operational development consulting to Finnish customers. However, in the second quarter we managed to strengthen operational development consulting order backlog for the latter half of the year.

Jari Jaakkola

CEO

 

NET SALES DEVELOPMENT

April – June 2017

Second quarter net sales were EUR 2,062 thousand (2,173) and decreased by 5% compared to the corresponding period last year. This was due mainly to a decrease in consulting net sales.

Software license net sales grew by 17% in April-June. Although license net sales grew compared to equivalent period last year, it remained lower than in the first quarter this year. This was due to lower average deal size – in the second quarter we did not close large software license deals.

Software maintenance net sales remained at the prior year level, and churn remained low. Software rental net sales decreased by 6% as new software sales focused mainly on license sales. The recurring revenue (software maintenance and software rentals) share of total net sales was 51% (50).

Consulting net sales decreased by 15%, which was due to lower operational development consulting sales to Finnish customers. In addition, we increased significantly the use of consulting resources to support software sales. This reduced consulting invoicing.

Consolidated net sales in international markets increased by 6%, but decreased by 10% in Finland. Of the Group net sales, 68% (71) derived from Finland, 18% (18) from the rest of Europe (including Russia and Turkey) and 14% (11) from the rest of the world.

January – June 2017

Net sales in the January – June reporting period were EUR 4,369 thousand (4,215) and grew by 4%.

Software license net sales grew strongly (81%) compared to previous year. Especially increase in direct process mining and modeling software sales contributed to this positive development. Furthermore, international channel sales in performance management software increased. Software maintenance and software rental net sales decreased by 1% and 6%, respectively. The share of recurring revenue was 49% (52) of total net sales.

Total software net sales (software license, maintenance and rental) grew by 12%.

Consulting net sales decreased by 10%, which was due to lower operational development consulting sales to Finnish customers.

Consolidated net sales in international markets increased 13% and remained on the last year´s level in Finland. Of the Group net sales, 68% (70) derived from Finland, 20% (19) from the rest of Europe (including Russia and Turkey) and 12% (11) from the rest of the world.

 

NET SALES BY PRODUCT GROUP          
               
EUR in thousands Apr-Jun, 2017 Apr-Jun, 2016 Change,
%
Jan-Jun, 2017 Jan-Jun, 2016 Change,
%
Jan-Dec, 2016
               
Software licenses 291 249 17 820 453 81 1,316
Software maintenance 670 672 0 1,347 1,355 -1 2,776
Software rentals 391 414 -6 777 828 -6 1,670
Consulting 710 839 -15 1,425 1,579 -10 2,872
Total 2,062 2,173 -5 4,369 4,215 4 8,634
               
NET SALES BY GEOGRAPHIC AREA          
               
EUR in thousands Apr-Jun, 2017 Apr-Jun, 2016 Change,
%
Jan-Jun, 2017 Jan-Jun, 2016 Change,
%
Jan-Dec, 2016
               
Finland 1,399 1,549 -10 2,961 2,967 0 5,634
Europe incl. Russia and Turkey 379 389 -3 886 796 11 1,748
Rest of the world 284 235 21 523 452 16 1,252
Total 2,062 2,173 -5 4,369 4,215 4 8,634


 

FINANCIAL PERFORMANCE

April – June 2017

The April – June Group operating profit was EUR 4 thousand (230), or 0.2% of net sales (10.6). Operating profit decreased mainly due to lower net sales and higher personnel costs.

The Group´s April-June fixed costs were EUR 2,007 thousand (1,844), and increased by 9% compared to the prior year corresponding period. Personnel expenses represented 73.4% (73.8) of the fixed costs and amounted to EUR 1,473 thousand (1,361).

The Group´s April-June profit before tax was EUR -9 thousand (217) and profit for the period was EUR 18 thousand (175). Taxes recorded for the period were EUR 27 thousand positive (42 negative). Net positive taxes resulted from the decreased profit as well as from withholding taxes and tax accruals related to prior year. Earnings per share (fully diluted) were EUR 0.001 (0.015).

January – June 2017

In the January – June reporting period, the Group operating profit was EUR 280 thousand (125), or 6.4% (3.0) of net sales. Operating profit increased from the previous year due to higher net sales.

The Group´s January – June fixed costs were EUR 3,963 (3,856), and increased by 3.0% compared to prior year. Personnel costs represented 72.5% (75.7) of fixed costs and were EUR 2,872 thousand (2,918). Credit losses, inclusive in fixed costs, totaled EUR 9 thousand (8).

Profit before taxes in the January – June reporting period was EUR 256 thousand (95) and profit for the period was EUR 171 thousand (70). Tax costs recorded for the period were EUR 85 thousand (24). Earnings per share (fully diluted) were EUR 0.014 (0.006).

 

FINANCE AND INVESTMENTS

January – June cash flow from operating activities was EUR 1,649 thousand (1,422). The strong cash flow resulted from the increased profit as well as from decreased working capital. Cash and cash equivalents at the end of the reporting period were EUR 1,336 thousand (900).

January – June investments totaled EUR 516 thousand (366), and were mainly product development expenditure.

Net financial items in the reporting period January - June were EUR 24 thousand (30). Net financial expenses included net foreign exchange losses of EUR 29 thousand (22).

At the end of the reporting period, the Company had no interest-bearing liabilities. The gearing ratio was -44% (-33). Current liabilities included deferred revenue in total of EUR 2,008 thousand (2,427). Annualized return on investment in the reporting period January – June was 19% (9) and in April – June -4% (30).

At the end of the reporting period, the equity ratio was 69% (65) and the consolidated shareholders’ equity was EUR 3,055 thousand (2,745). Annualized return on equity in the reporting period January – June was 11% (5) and in April – June 2% (25).

 

PRODUCT DEVELOPMENT

QPR innovates and develops software products that analyze, measure and model operations in organizations. Furthermore, we offer customers a variety of related solutions.

At the end of 2016, we started to accelerate our product development by adding resources in a controlled manner. Subsequently, we expect product development expenses to grow this year. Product development expenses do not include amortization of capitalized product development expenses. The capitalized product development expenses are amortized in four years.

Second quarter product development expenses added up to EUR 657 thousand (418), equal to 32% (19) of net sales. During April – June product development expenses were capitalized for EUR 218 thousand (161). April – June amortization of capitalized product development expenses was EUR 167 thousand (147).

In the January – June reporting period, product development expenses were EUR 1,222 thousand (906), equal to 28% of net sales (22). During January – June product development expenses were capitalized for EUR 449 thousand (340). The January – June amortization of capitalized product development expenses was EUR 318 thousand (256).

The Company develops the following software products: QPR EnterpriseArchitect, QPR Metrics, QPR ProcessDesigner, and QPR ProcessAnalyzer. In addition, QPR develops services and solutions that are complementary to its software.

 

PERSONNEL

At the end of the reporting period, the Group employed a total of 80 persons (69). We have increased personnel resources especially in product development. The average number of personnel during the second quarter was 78 (70) and during the January-June reporting period 75 (75)

At the end of the reporting period the average age of employees was 38.9 (39.1) years. Women accounted for 27 % (30) of the employees, and men for 73% (70). Sales and marketing employs 15% (20) of the personnel, consulting and customer service 41% (39), product development 34% (29) and administration 10% (12).

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 mainly on net sales performance.

 

SHARES AND SHAREHOLDERS        
         
Trading of shares Jan-Jun, 2017 Jan-Jun, 2016 Change, % Jan-Dec, 2016
         
Shares traded, pcs 887,151 366,396 142 901,526
Volume, EUR 1,300,786 387,159 236 970,905
% of shares 7.4 3.1   7.5
Average trading price, EUR 1.47 1.06 39 1.08
         
Shares and market capitalization Jun 30, 2017 Jun 30, 2016 Change, % Dec 31, 2016
         
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 1,185 1,198 -1 1,171
Closing price, EUR 1.79 1.00 79 1.20
Market capitalization, EUR 21,458,259 11,987,854 - 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 28, 2017 approved the Board's proposal to pay a per-share dividend of EUR 0.03 (0.02), a total of EUR 360 thousand (240) for the financial year 2016. Dividends were paid to all shareholders registered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of March 30, 2017. Dividends were paid on April 7, 2017.

 

OTHER EVENTS DURING THE REPORTING PERIOD

In the beginning of 2017 the Company´s international channel sales, customer care and marketing were merged into process mining business. Matti Erkheikki was appointed to lead the new Process Mining and Strategy Management business unit.

Tero Aspinen, responsible for Middle East business and offering development in Strategy Management, joined the Executive Management Team as of 1st January 2017. 

 

EVENTS AFTER THE REPORTING PERIOD

There were no significant events after the reporting period.

 

GOVERNANCE

The Annual General Meeting on March 28, 2017 resolved that the number of Board Members is five (5).

The Annual General Meeting re-elected Kirsi Eräkangas, Vesa-Pekka Leskinen and Topi Piela as members of the Company´s Board of Directors. In addition, the Annual General Meeting elected Juha Häkämies and Taina Sipilä as new members of the Board of Directors.

Juha Häkämies is Vice President, Strategy, and a member of the management team of Gasum. Prior to this, he has worked as Head of M&A and Business Development at Basware and, among other things, in managerial and business development positions at Digia and Sonera. Taina Sipilä is the CEO and Founder of the software company Dear Lucy. She is also a member of the board in the software company Sympa. Prior to this, she worked as the chairman of the board in Sympa and earlier as the CEO.

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 28, 2017 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 10% (14) of total trade receivables at the end of the reporting period.

At the end of the reporting period, approximately 67% (69) of Group’s trade receivables were in euro. At the end of the reporting period, the Company had not hedged its non-euro trade receivables.

QPR has earlier reported that it initiated an arbitration process in summer 2016, due to a customer's decision to dissolve a contract, which decision QPR regarded unjustified. This arbitration process was completed in May 2017. The arbitration court resolved to sentence the defendant to compensate the entire value of the violated contract to QPR. The arbitration court dismissed the customer's counterclaim.

During the first quarter, the Company identified an increased credit risk with regards to receivables from one customer. About EUR 100 thousand revenue has been recognized from these receivables. A payment plan has been made together with the customer, and its implementation continues to be closely monitored.

Risks and risk management related to the Company’s business are further described in the Annual Report 2016, pages 13-15 (https://www.qpr.com/investors/financial-information/annual-reports)

 

FINANCIAL INFORMATION

In 2017, QPR Software will publish interim reports in English and Finnish on the following dates:

  • Interim Report Q3/2017: Thursday, October 26, 2017

 

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, 2017 Apr-Jun, 2016 Change, % Jan-Jun, 2017 Jan-Jun, 2016 Change, % Jan-Dec, 2016
               
Net sales 2,062 2,173 -5 4,369 4,215 4 8,634
Other operating income 7 12 -45 7 18 -62 18
               
Materials and services 57 112 -49 133 253 -47 419
Employee benefit expenses 1,473 1,361 8 2,872 2,918 -2 5,362
Other operating expenses 311 257 21 662 521 27 1,243
EBITDA 227 456 -50 709 542 31 1,628
               
Depreciation and amortization 223 226 -2 429 417 3 866
Operating profit 4 230 -98 280 125 125 761
               
Financial income and expenses -14 -12 11 -24 -30 -18 -51
Profit before tax -9 217 -104 256 95 170 710
               
Income taxes 27 -42 -163 -85 -24 248 -142
Profit for the period 18 175 -90 171 70 143 568
               
               
Earnings per share, EUR
(basic and diluted)
0.001 0.015 -90 0.014 0.006 143 0.047
               
Consolidated statement of
comprehensive income:
             
 Profit for the period 18 175   171 70   568
Other items in comprehensive income that may be reclassified subsequently to profit or loss:              
 Exchange differences on
 translating foreign operations
-8 3   -8 1   9
Total comprehensive income 10 178   163 71   577

 

   

CONSOLIDATED BALANCE SHEET        
         
EUR in thousands Jun 30,
2017
Jun 30,
2016
Change,
%
Dec 31,
2016
         
Assets        
         
Non-current assets:        
 Intangible assets 2,032 2,030 0 1,955
 Goodwill 513 513 0 513
 Tangible assets 203 234 -13 193
 Other non-current assets 5 27 -83 27
Total non-current assets 2,752 2,804 -2 2,687
         
Current assets:        
 Trade and other receivables 2,383 2,934 -19 4,619
 Cash and cash equivalents 1,336 900 48 565
Total current assets 3,718 3,834 -3 5,184
         
Total assets 6,470 6,638 -3 7,871
         
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 -241 0 -233
 Invested non-restricted equity fund 5 5 0 5
 Retained earnings 2,349 2,040 15 2,538
Equity attributable to shareholders of the parent company 3,055 2,745 11 3,252
         
Non-current liabilities:        
 Non-interest-bearing liabilities - 1 -100 -
Total non-current liabilities - 1 -100 -
         
Current liabilities:        
 Advances received 2,008 2,427 -17 852
 Accrued expenses and prepaid income 1,109 1,136 -2 3,033
 Trade and other payables 297 328 -9 735
Total current liabilities 3,415 3,891 -12 4,619
         
Total liabilities 3,415 3,892 -12 4,619
         
Total equity and liabilities 6,470 6,638 -3 7,871

 

   

CONSOLIDATED CASH FLOW STATEMENT          
               
EUR in thousands Apr-Jun, 2017 Apr-Jun, 2016 Change, % Jan-Jun, 2017 Jan-Jun, 2016 Change, % Jan-Dec, 2016
               
Cash flow from operating activities:              
 Profit for the period 18 175 -90 171 70 143 568
 Adjustments to the profit 204 285 -28 533 474 13 1,070
 Working capital changes -190 -230 -18 1,084 948 14 -110
 Interest and other financial
 expenses paid
-8 -10 -21 -26 -30 -15 -47
 Interest and other financial
 income received
7 1 525 12 3 293 5
 Income taxes paid -98 -29 237 -125 -43 191 -66
Net cash from operating activities -66 192 -134 1,649 1,422 16 1,419
               
Cash flow from investing activities:              
 Purchases of tangible and
 intangible assets
-251 -167 50 -516 -366 41 -698
Net cash used in investing activities -251 -167 50 -516 -366 41 -698
               
Cash flow from financing activities:              
 Repayments of short term
 borrowings
- -   - -500   -500
 Dividends paid -360 -240 50 -360 -240 50 -240
Net cash used in financing activities -360 -240 50 -360 -740 -51 -740
               
Net change in cash and cash
equivalents
-677 -215 215 774 316 144 -19
Cash and cash equivalents at the beginning of the period 565 1,116 -49 565 585 -3 585
Effects of exchange rate changes on cash and cash equivalents -2 -2   -3 -2 56 -1
Cash and cash equivalents at the end of the period 1,336 900 48 1,336 900 48 565

 

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, 2016 1,359 21 -242 -439 5 2,210 2,914
Dividends paid           -240 -240
Comprehensive income     1     70 71
Equity Jun, 2016 1,359 21 -241 -439 5 2,040 2,745
Comprehensive income     8     498 506
Equity Dec 31, 2016 1,359 21 -233 -439 5 2,538 3,252
Dividends paid           -360 -360
Comprehensive income     -8     171 163
Equity Jun 30, 2017 1,359 21 -241 -439 5 2,349 3,055

 

NOTES TO INTERIM FINANCIAL STATEMENTS

ACCOUNTING PRINCIPLES

This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2017, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2016. 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 2016 financial statements.

The Group has made a preliminary assessment of the impacts of IFRS 15 during the year 2016. The Group continues to review the revenue streams and customer contracts during 2017 to clarify the impact of the needed changes. Further analysis have identified the following major changes:

  • The Group interprets that the IFRS 15 principal versus agent consideration requires, that the Group in the future includes the resales commission in the reported revenue derived from resellers, and includes the resales commission, respectively, in reported costs. Currently the resales revenue and costs have been reported without the resales commission. This change increases net sales revenue and lowers relative profitability, but does not affect absolute profitability.
  • License part deriving from long-term software rental agreements, which are included in the recurring revenue, will in the future be recognized at one point instead of the current recognition over time. This will lead to an earlier recognition of revenue within the year.
  • Numerical estimates of the effects will be given during the year 2017, as soon as the reliability of the estimates has been assured.

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, 2017 Jan-Jun, 2016 Jan-Dec, 2016
       
Increase in intangible assets:      
 Acquisition cost Jan 1 8,521 7,862 7,862
 Increase 449 343 659
       
Increase in tangible assets:      
 Acquisition cost Jan 1 1,746 1,707 1,707
 Increase 67 23 39
       
       
CHANGE IN INTEREST-BEARING LIABILITIES    
       
EUR in thousands Jan-Jun, 2017 Jan-Jun, 2016 Jan-Dec, 2016
       
Interest-bearing liabilities Jan 1 - 500 500
Proceeds from short term borrowings - - -
Repayments - 500 500
Interest-bearing liabilities Jun 30 - - -

 

PLEDGES AND COMMITMENTS        
         
EUR in thousands Jun 30,  2017 Jun 30,  2016 Dec 31,  2016 Change, %
         
Business mortgages (held by the Company) 1,389 1,390 1,390 0
         
Minimum lease payments based on lease agreements:        
 Maturing in less than one year 276 257 289 -5
 Maturing in 1-5 years 233 407 345 -33
Total 509 664 635 -20
         
Total pledges and commitments 1,898 2,054 2,024 -6

 

CONSOLIDATED INCOME STATEMENT BY QUARTER  
             
EUR in thousands Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016
             
Net sales 2,062 2,307 2,315 2,104 2,173 2,042
Other operating income 7 0 - - 12 6
             
Materials and services 57 76 98 68 112 141
Employee benefit expenses 1,473 1,399 1,337 1,108 1,361 1,557
Other operating expenses 311 351 401 321 257 264
EBITDA 227 482 479 607 456 86
             
Depreciation and amortization 223 206 227 222 226 191
Operating profit 4 276 252 385 230 -105
             
Financial income and expenses -14 -11 -10 -11 -12 -18
Profit before tax -9 265 242 374 217 -123
             
Income taxes 27 -112 -25 -93 -42 18
Profit for the period 18 153 217 281 175 -105

 

GROUP KEY FIGURES      
       
EUR in thousands, unless otherwise indicated Jan-Jun or Jun 30, 2017 Jan-Jun or Jun 30, 2016 Jan-Dec or Dec 31, 2016
       
Net sales 4,369 4,215 8,634
Net sales growth, % 3.7 -14.4 -8.5
EBITDA 709 542 1,628
 % of net sales 16.2 12.9 18.9
Operating profit 280 125 761
 % of net sales 6.4 3.0 8.8
Profit before tax 256 95 710
 % of net sales 5.9 2.2 8.2
Profit for the period 171 70 568
 % of net sales 3.9 1.7 6.6
       
Return on equity (per annum), % 10.8 5.0 18.4
Return on investment (per annum), % 18.6 8.8 24.6
Cash and cash equivalents 1,336 900 565
Net borrowings -1,336 -900 -565
Equity 3,055 2,745 3,252
Gearing, % -43.7 -32.8 -17.4
Equity ratio, % 68.5 65.2 46.3
Total balance sheet 6,470 6,638 7,871
       
Investments in non-current assets 516 366 698
 % of net sales 11.8 8.7 8.1
Product development expenses 1,222 906 1,818
 % of net sales 28.0 21.5 21.1
       
Average number of personnel 75 75 71
Personnel at the beginning of period 63 83 83
Personnel at the end of period 80 69 63
       
Earnings per share, EUR 0.014 0.006 0.047
Equity per share, EUR 0.245 0.221 0.261