Published: 2016-10-27 07:30:00 CEST
QPR Software
Interim report (Q1 and Q3)

QPR SOFTWARE INTERIM REPORT JANUARY – SEPTEMBER 2016

QPR SOFTWARE PLC   STOCK EXCHANGE RELEASE OCTOBER 27, 2016 AT 8.30 AM
 

THIRD QUARTER NET SALES AND PROFIT INCREASED YEAR-ON-YEAR

Summary July – September 2016

  • Net sales EUR 2,104 thousand (2015: 1,989).
  • Operating profit EUR 385 thousand (-1).
  • Operating margin 18.3% (-0.1).
  • Comparable operating profit EUR 385 thousand (-1).
  • Cash flow from operating activities EUR -201 thousand (-282).
  • Profit before taxes EUR 374 thousand (10).
  • Profit for the quarter EUR 281 thousand (23).
  • Earnings per share EUR 0.023 (0.002).

Summary January – September 2016

  • Net sales EUR 6,319 thousand (2015: 6,916).
  • Operating profit EUR 509 thousand (290).
  • Operating margin 8.1% (4.2).
  • Comparable operating profit EUR 549 thousand (290).
  • Cash flow from operating activities EUR 1,221 thousand (785).
  • Profit before taxes EUR 469 thousand (299).
  • Profit for the period EUR 352 thousand (283).
  • Earnings per share EUR 0.029 (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 operations and to execute their strategies swiftly and effectively.

 

OUTLOOK

Operating environment and market outlook (updated)

QPR expects the demand for process mining software to grow in its home market in Finland, as well as in the broader international 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 emerging markets there is still strong growth potential for these software products.

 

Outlook for 2016 (updated)

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

The tightened competition in the software business for process and enterprise architecture modeling and performance management is expected to continue having a negative impact on sales in parts of QPR’s reseller channel, especially in developed markets. To offset this negative impact, QPR seeks growth from new reseller partnerships in emerging countries.

In its home market in Finland, QPR believes it will maintain its position as a leading software provider for process modeling and operational development; as well as to preserve its position in operational development consulting. This position has strengthened over the past few years.

QPR has updated its future outlook and estimates its operating profit to grow in 2016 as compared to 2015 (EUR 368 thousand). Earlier this year QPR estimated its comparable operating profit to grow in 2016 as compared to 2015.

 

KEY FIGURES              
               
EUR in thousands, unless otherwise indicated Jul-Sep, 2016 Jul-Sep 2015 Change,
%
Jan-Sep, 2016 Jan-Sep, 2015 Change,
%
Jan-Dec, 2015
               
Net sales 2,104 1,989 6 6,319 6,916 -9 9,436
EBITDA 607 204 197 1,149 906 27 1,190
 % of net sales 28.8 10.3   18.2 13.1   12.6
Operating profit 385 -1   509 290 76 368
 % of net sales 18.3 -0.1   8.1 4.2   3.9
Profit before tax 374 10 3,622 469 299 57 347
Profit for the period 281 23 1,126 352 283 24 338
 % of net sales 13.4 1.2   5.6 4.1   3.6
               
Earnings per share, EUR 0.023 0.002 1,135 0.029 0.024 24 0.028
Equity per share, EUR 0.243 0.229 6 0.243 0.229 6 0.234
               
Cash flow from operating
activities
-201 -282 28 1,221 785 56 406
Cash and cash equivalents 567 683 -17 567 683 -17 585
Net borrowings -567 -683 -17 -567 -683 -17 -85
Gearing, % -18.8 -23.9   -18.8 -23.9   -2.9
Equity ratio, % 71.5 59.0   71.5 59.0   42.7
Return on equity, % 39.0 3.2   15.8 12.5   11.1
Return on investment, % 50.3 -0.2   22.9 12.8   12.0

  

REPORTING                                                                   

QPR Software innovates, develops, sells and delivers software and services aimed at operational development in international markets. 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. Rental and maintenance charges are typically 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 half year financial report the Company renamed a term in order to comply with the European Securities and Markets Authority´s (ESMA) recommendations for alternative key figures, which stepped into force on July 3, 2016. The previously used term “operating profit excluding non-recurring items” is now known as “comparable operating profit”. Items having an impact on comparable operating profit are, for example, non-recurring items related to streamlining or restructuring business. Comparable operating profit is calculated by eliminating these items from operating profit. Interest-bearing net debt is calculated by deducting cash and cash equivalents from interest-bearing liabilities.

 

REVIEW BY THE CEO

The positive development in the growth of our third quarter profit was very satisfactory. As a result of increased net sales and our streamlined operations, operating profit increased to over 18% of net sales.

The business environment remained challenging and economic growth was weak in most markets, especially in the Company’s largest market area, Europe (including Finland). On the other hand, the demand for process mining, being at the beginning of its life-cycle, kept on growing. We acquired and extended several significant client engagements with big international corporations. Consequently, our third quarter net sales for this product area more than doubled year-on-year. Net sales for this product area grew by over 60% year-to-date.

Thanks to our patented technology, early market entry, and innovative functionalities, our process mining software QPR ProcessAnalyzer is in excellent position to continue its strong market growth.

We also achieved a significant market opening in Saudi Arabia by striking a deal with a leading furniture retailer for our comprehensive, easy-to-use software solution for strategy execution and quality management. The delivery will be done in cooperation with QPR’s local reseller partner Leaders Solutions.

We believe that the investments made in 2015 to grow our reseller partner network will have a positive impact on net sales this year; but at the same time, we estimate that tightened competition will continue to have a negative impact on sales in parts of QPR´s reseller channel. We estimate that our operating profit will grow in 2016, as compared to 2015.

Jari Jaakkola
CEO

 

NET SALES DEVELOPMENT

July – September 2016

Net sales in the third quarter were EUR 2,104 thousand (1,989) and grew 6% from the corresponding period of the previous year. Software net sales grew significantly (+19%) and net sales from process mining software and related process analysis services more than doubled year-on-year. Net sales from process modeling and performance management software in the international sales channel also increased. Growth in net sales was slowed down by a clear downturn in the net sales from consulting services (-23%).

Software license net sales grew by 121% compared to last year. Net sales were positively affected by a sizeable deal made with a leading, international IT and business process outsourcing service provider. Also the net sales of our performance management software QPR Metrics showed positive development.

Net sales from software rentals decreased by 6%, because new software sales were driven by license sales. Software maintenance services grew 3% and customer churn remained on the same low level as in the past years. Recurring revenues (software maintenance services and rentals) represented 53% (57) of total net sales.

Net sales from consulting services decreased clearly (-23%), which was caused by unfavorable conditions in the operational development and technical SAP consulting businesses. On the contrary, net sales from process analysis services grew.

Of the Group net sales, 56% (69) derived from Finland, 22% (19) from the rest of Europe (including Russia and Turkey), and 22% (13) from the rest of the world.

 

NET SALES BY PRODUCT GROUP          
               
EUR in thousands Jul-Sep, 2016 Jul-Sep 2015 Change,
%
Jan-Sep, 2016 Jan-Sep, 2015 Change,
%
Jan-Dec, 2015
               
Software licenses 494 223 121 946 987 -4 1,427
Software maintenance services 708 687 3 2,064 2,194 -6 2,873
Software rentals 415 443 -6 1,244 1,328 -6 1,774
Consulting 487 636 -23 2,065 2,407 -14 3,362
Total 2,104 1,989 6 6,319 6,916 -9 9,436

 

NET SALES BY GEOGRAPHIC AREA          
               
EUR in thousands Jul-Sep, 2016 Jul-Sep 2015 Change,
%
Jan-Sep, 2016 Jan-Sep, 2015 Change,
%
Jan-Dec, 2015
               
Finland 1,185 1,365 -13 4,152 4,686 -11 6,499
Europe incl. Russia and Turkey 461 371 24 1,257 1,276 -2 1,740
Rest of the world 459 253 81 910 953 -5 1,197
Total 2,104 1,989 6 6,319 6,916 -9 9,436

 

January – September 2016

Net sales for the January – September reporting period were EUR 6,319 thousand (6,916). The decrease in net sales was mainly caused by the dip in consulting service net sales when compared to last year. Software net sales in the beginning of the year were lower than last year, but sales took a clear upturn in the third quarter with significant software license deals made.

Net sales deriving from software maintenance services and software rentals decreased (-6% both). Recurring revenues (software maintenance services and rentals) represented 52% (51) of total net sales.

Net sales from consulting services decreased -14%, which was caused by unfavorable conditions in the operational development and technical SAP consulting businesses. On the contrary, net sales from process analysis services grew.

Of the Group net sales, 66% (68) derived from Finland, 20% (18) from the rest of Europe (including Russia and Turkey), and 14% (14) from the rest of the world.

 

FINANCIAL PERFORMANCE

July – September 2016

In the third quarter, the Group’s operating profit improved significantly being EUR 385 thousand (-1), representing 18.3% of net sales (-0.1). Net sales increased and costs dropped significantly. Especially personnel costs were lower than the year before. Further investments were made in the Company’s new software products.

The Group’s fixed costs in the quarter amounted to EUR 1,651 thousand (1,843) and they decreased 10.4% year-on-year. Personnel costs represented 67.1% (75.9) of fixed costs, equaling to EUR 1,108 thousand (1,398).

Profit before taxes was EUR 374 thousand (10) and profit for the period was EUR 281 thousand (23). Earnings per share (fully diluted) were EUR 0.023 (0.002).

 

January – September 2016

The Group’s operating profit for the January – September reporting period was EUR 509 thousand (290), representing 8.1% of net sales (4.2). Operating profit improved significantly due to cost reductions.

Comparable operating profit was EUR 549 thousand (290). The items having 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 for the reporting period were EUR 5,507 thousand (6,225) and they diminished year-on-year by 11.5%. Personnel costs represent 73.1% of fixed costs and they amounted to EUR 4,025 thousand (4,743). Credit losses, included in fixed costs, totaled EUR 49 thousand (21).

Profit before taxes was EUR 469 thousand (299) and the operating profit was EUR 352 thousand (283). Earnings per share (fully diluted) were EUR 0.029 (0.024).

 

FINANCE AND INVESTMENTS

Cash flow from operating activities in the January – September reporting period amounted to EUR 1,221 thousand (785). The growth in cash flow resulted from more efficient management of working capital and lower investment expenditure. The Group’s cash and cash equivalents at the end of the third quarter were EUR 567 thousand (683).

Investments year-to-date amounted to EUR 496 thousand (927). Investments consisted mainly of product development.

Net financial items for the January – September reporting period were EUR -41 thousand (+9). Net financial items include net foreign exchange losses of EUR -31 thousand (+10). In the July – September reporting period, net financial items were EUR -11 thousand (+11) including net foreign exchange losses of EUR -9 thousand (+12).

The Company did not have interest-bearing liabilities at the end of the third quarter. The gearing ratio was -19% (-24). Current liabilities include a total of EUR 1,758 thousand (1,549) in deferred revenue. The annualized return on investment was 23% (13) year-to-date, and 50% (0) for the third quarter alone.

At the end of the reporting period, the equity ratio was 71% (59) and the consolidated shareholders’ equity was EUR 3,025 thousand (2,854). The annualized return on equity was 16% (13) year-to-date, and 39% (3) for the third quarter alone.

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 the 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 July – September reporting period, product development expenses amounted to EUR 344 thousand (407), representing 16% of net sales (20). Product development expenses worth EUR 121 thousand were capitalized (168). Capitalized product development expenses worth EUR 157 thousand were amortized (117).

In the reporting period January – September, product development expenses amounted to EUR 1,250 thousand (1,355), representing 20% of net sales (20). Product development expenses do not include the amortization of capitalized product development expenses. Product development expenses worth EUR 461 thousand were capitalized (609). Capitalized product development expenses worth EUR 412 thousand were amortized (346).

 

PERSONNEL

At the end of the reporting period, the Group had a total of 68 employees (87). The average number of employees in the third quarter was 68 (88), and 73 in the January – September reporting period (87).

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-Sep, 2016 Jan-Sep, 2015 Change, % Jan-Dec, 2015
         
Shares traded, pcs 640,416 4,186,256 -85 4,558,065
Volume, EUR 671,386 5,900,822 -89 6,350,859
% of shares 5.3 34.9   38.0
Average trading price, EUR 1.05 1.41 -26 1.39
         
Shares and market capitalization Sep 30, 2016 Sep 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 1,197 1,221 -2 1,212
Closing price, EUR 1.04 1.30 -20 1.20
Market capitalization, EUR 12,467,368 15,584,210 -20 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 development 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 reduced 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 to 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 EUR 0.2 million.

In August, QPR struck a deal with a leading furniture retailer in Saudi Arabia to deliver a comprehensive, easy-to-use software solution for strategy execution and quality management. The deal is a significant market opening in Saudi Arabia, where the demand for software solutions on strategy execution and quality management is experiencing strong growth in both private and public sectors.

In September, QPR delivered process mining and process performance management software to a leading IT and business process outsourcing service provider. The customer is a member of Fortune 500, offering services to customers globally from over 50 locations worldwide. The customer uses QPR ProcessAnalyzer for continuously analyzing and monitoring the business process services provided to its customers. This helps the customer to improve the efficiency and quality of their services, and to proactively ensure that service-level agreements are met. QPR ProcessAnalyzer automatically generates a variety of visual analyses for discovering process flow charts, variations, bottlenecks and KPIs based on the customer’s operational data. The three-year contract is worth approximately EUR 250 thousand.

 

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 10% (5) of total trade receivables at the end of the reporting period.

Approximately 71% of the Group’s trade receivables were in Euro at the end of the reporting period (67). 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. The customer has made a counterclaim with demands worth under EUR 100 thousand. QPR believes that the counterclaim made by the customer is unfounded.

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).

 

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 Jul-Sep, 2016 Jul-Sep 2015 Change, % Jan-Sep, 2016 Jan-Sep, 2015 Change, % Jan-Dec, 2015
               
Net sales 2,104 1,989 6 6,319 6,916 -9 9,436
Other operating income  - -   18 1 1,705 1
               
Materials and services 68 148 -54 321 402 -20 558
Employee benefit expenses 1,108 1,398 -21 4,025 4,743 -15 6,477
Other operating expenses 321 239 34 842 865 -3 1,211
EBITDA 607 204 197 1,149 906 27 1,190
               
Depreciation and amortization 222 206 8 639 617 4 822
Operating profit 385 -1   509 290 76 368
               
Financial income and expenses -11 11 -197 -41 9 -554 -21
Profit before tax 374 10 3,622 469 299 57 347
               
Income taxes -93 13 -812 -117 -16 631 -9
Profit for the period 281 23 1,126 352 283 24 338
               
               
Earnings per share, EUR
(basic and diluted)
0.023 0.002 1,135 0.029 0.024 24 0.028
               
Consolidated statement of
comprehensive income:
             
 Profit for the period 281 23   352 283   338
Other items in comprehensive income that may be reclassified subsequently to profit or loss:              
 Exchange differences on
 translating foreign operations
-2 -23   -1 -26   -21
Total comprehensive income 280 0   350 257   317

 

CONSOLIDATED BALANCE SHEET        
         
EUR in thousands Sep 30,
2016
Sep 30,
2015
Change,
%
Dec 31,
2015
         
Assets        
         
Non-current assets:        
 Intangible assets 1,966 2,002 -2 2,041
 Goodwill 513 513 0 513
 Tangible assets 206 298 -31 274
 Other non-current assets 27 67 -59 27
Total non-current assets 2,712 2,880 -6 2,855
         
Current assets:        
 Trade and other receivables 2,710 2,825 -4 4,592
 Cash and cash equivalents 567 683 -17 585
Total current assets 3,277 3,508 -7 5,177
         
Total assets 5,990 6,388 -6 8,033
         
Equity and liabilities        
         
Equity:        
 Share capital 1,359 1,359 0 1,359
 Other funds 21 21 1 21
 Treasury shares -439 -439 0 -439
 Translation differences -243 -247 -2 -242
 Invested non-restricted equity fund 5 5 7 5
 Retained earnings 2,322 2,155 8 2,210
Equity attributable to shareholders of the parent company 3,025 2,854 6 2,914
         
Non-current liabilities:        
 Non-interest-bearing liabilities - 13 -100 9
Total non-current liabilities - 13 -100 9
         
Current liabilities:        
 Interest-bearing liabilities - -   500
 Advances received 1,758 1,549 13 1,209
 Accrued expenses and prepaid income 938 1,560 -40 2,932
 Trade and other payables 269 412 -35 468
Total current liabilities 2,965 3,521 -16 5,109
         
Total liabilities 2,965 3,534 -16 5,119
         
Total equity and liabilities 5,990 6,388 -6 8,033

 

CONSOLIDATED CASH FLOW STATEMENT          
               
EUR in thousands Jul-Sep, 2016 Jul-Sep 2015 Change,
%
Jan-Sep, 2016 Jan-Sep, 2015 Change,
%
Jan-Dec, 2015
               
Cash flow from operating activities:              
 Profit for the period 281 23 1,126 352 283 24 338
 Adjustments to the profit 324 204 59 798 652 22 850
 Working capital changes -774 -466 -66 174 33 421 -645
 Interest and other financial
 expenses paid
-11 -12 11 -41 -30 35 -38
 Interest and other financial
 income received
0 3 -92 3 9 -65 12
 Income taxes paid -22 -33 33 -65 -162 -60 -111
Net cash from operating activities -201 -282 28 1,221 785 56 406
               
Cash flow from investing activities:              
 Purchases of tangible and
 intangible assets
-130 -173 25 -496 -927 -46 -1,148
Net cash used in investing activities -130 -173 25 -496 -927 -46 -1,148
               
Cash flow from financing activities:              
 Proceeds from short term
 borrowings
- -   - -   500
 Repayments of short term
 borrowings
- -   -500 -   -
 Dividends paid - -   -240 -599 -60 -599
Net cash used in financing activities - -   -740 -599 23 -99
               
Net change in cash and cash
equivalents
-332 -454 27 -15 -742 -98 -841
Cash and cash equivalents at the beginning of the period 900 1,134 -21 585 1,426 -59 1,426
Effects of exchange rate changes on cash and cash equivalents -1 4   -2 -1 253 1
Cash and cash equivalents at the end of the period 567 683 -17 567 683 -17 585

 

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     -26     283 257
Equity Sep 30, 2015 1,359 21 -247 -439 5 2,155 2,854
Dividends paid              
Repurchase of shares              
Comprehensive income     5     55 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     352 350
Equity Sep 30, 2016 1,359 21 -243 -439 5 2,322 3,025

 

NOTES TO INTERIM FINANCIAL STATEMENTS

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-Sep, 2016 Jan-Sep, 2015 Jan-Dec, 2015
       
Increase in intangible assets:      
 Acquisition cost Jan 1 7,862 6,956 6,956
 Increase 471 700 906
       
Increase in tangible assets:      
 Acquisition cost Jan 1 1,707 1,465 1,465
 Increase 25 228 242
       
       
CHANGE IN INTEREST-BEARING LIABILITIES    
       
EUR in thousands Jan-Sep, 2016 Jan-Sep, 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 Sep 30,  2016 Sep 30, 2015 Dec 31,  2015 Change, %
         
Business mortgages (held by the Company) 1,389 1,390 1,392 0
         
Minimum lease payments based on lease agreements:        
 Maturing in less than one year 236 365 357 -34
 Maturing in 1-5 years 344 172 89 287
Total 581 537 446 30
         
Total pledges and commitments 1,970 1,928 1,838 7

 

CONSOLIDATED INCOME STATEMENT BY QUARTER  
             
EUR in thousands Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
             
Net sales 2,104 2,173 2,042 2,520 1,989 2,402
Other operating income - 12 6 - - 1
             
Materials and services 68 112 141 156 148 149
Employee benefit expenses 1,108 1,361 1,557 1,734 1,398 1,723
Other operating expenses 321 257 264 346 239 287
EBITDA 607 456 86 284 204 243
             
Depreciation and amortization 222 226 191 206 206 211
Operating profit 385 230 -105 78 -1 32
             
Financial income and expenses -11 -12 -18 -30 11 -16
Profit before tax 374 217 -123 48 10 16
             
Income taxes -93 -42 18 7 13 18
Profit for the period 281 175 -105 55 23 35

 

GROUP KEY FIGURES      
       
EUR in thousands, unless otherwise indicated Jan-Sep or Sep 30, 2016 Jan-Sep or Sep 30, 2015 Jan-Dec or Dec 31, 2015
       
Net sales 6,319 6,916 9,436
Net sales growth, % -8.6 0.9 -1.1
EBITDA 1,149 906 1,190
 % of net sales 18.2 13.1 12.6
Operating profit 509 290 368
 % of net sales 8.1 4.2 3.9
Profit before tax 469 299 347
 % of net sales 7.4 4.3 3.7
Profit for the period 352 283 338
 % of net sales 5.6 4.1 3.6
       
Return on equity (per annum), % 15.8 12.5 11.1
Return on investment (per annum), % 22.9 12.8 12.0
Borrowings - - 500
Cash and cash equivalents 567 683 585
Net borrowings -567 -683 -85
Equity 3,025 2,854 2,914
Gearing, % -18.8 -23.9 -2.9
Equity ratio, % 71.5 59.0 42.7
Total balance sheet 5,990 6,388 8,033
       
Investments in non-current assets 496 927 1,148
 % of net sales 7.9 13.4 12.2
Product development expenses 1,250 1,355 1,821
 % of net sales 19.8 19.6 19.3
       
Average number of personnel 73 87 86
Personnel at the beginning of period 83 78 78
Personnel at the end of period 68 87 83
       
Earnings per share, EUR 0.029 0.024 0.028
Equity per share, EUR 0.243 0.229 0.234