Published: 2013-07-30 08:30:00 CEST
QPR Software
Interim report (Q1 and Q3)

SECOND QUARTER NET SALES EUR 2.3 MILLION, EARNINGS PER SHARE INCREASED 60%

QPR SOFTWARE PLC       STOCK EXCHANGE RELEASE JULY 30, 2013 AT 9.30 AM

INTERIM REPORT JANUARY-JUNE 2013

SECOND QUARTER NET SALES EUR 2.3 MILLION, EARNINGS PER SHARE INCREASED 60%

Summary second quarter 2013

  • Net sales EUR 2,335 thousand (2012: 2,404).
  • Net sales decreased 3% due to a significant decrease in software license net sales. Net sales from software rentals increased 44%.
  • Recurring revenues (software rentals and maintenance services) increased 5% and were 50% of total net sales (46). The growth in recurring revenues was slowed down by exchange rate changes in maintenance service revenues.
  • Operating profit EUR 222 thousand (230). Operating result returned positive after the first quarter operating loss.
  • Profit before taxes EUR 222 thousand (196), growth 13%.
  • Profit for the quarter EUR 189 thousand (124), growth 52%.
  • Earnings per share EUR 0.016 (0.010), growth 60%.

Summary January-June 2013

  • Net sales EUR 4,416 thousand (2012: 4,616).
  • Net sales decreased 4% due to a significant decrease in software license net sales. Net sales from software rentals increased 44%.
  • Recurring revenues (software rentals and maintenance services) increased 8% and were 53% of total net sales (47). The growth in recurring revenues was slowed down by exchange rate changes in maintenance service revenues.
  • Operating profit EUR 191 thousand (429).
  • Cash flow from operating activities EUR 1,198 thousand (1,632).
  • Profit before taxes EUR 180 thousand (393).
  • Profit for the period EUR 153 thousand (273).
  • Earnings per share EUR 0.013 (0.022).

Outlook 2013

QPR estimates its net sales in 2013 to remain on the same level or to grow slightly compared to previous year (2012: EUR 9.3 million). Especially net sales from software rentals and enterprise architecture services are expected to grow, but software license net sales to decrease. Operating profit is estimated to be lower than in previous year (2012: EUR 0.9 million), but to improve significantly from the level in January-June 2013.

In 2013, the Company aims to continue investments in the development of its new software products. In recent years, QPR has launched two new software products that have excellent growth prospects. The strong growth of QPR EnterpriseArchitect business in Finland is estimated to continue, and in 2013 the Company is building a new international reseller network for the product. QPR EnterpriseArchitect is software for agile management of all dimensions in the enterprise architecture. The Company also continues investing into the growth of its new QPR ProcessAnalyzer software product that offers a fast way to automatically discover processes by using data stored in the IT systems of an organization.

The Company is also developing its professional service offering, with the aim to grow its local business in Finland and to accelerate its international software sales. Internationally, this happens by offering complementary service concepts and solutions to the Company’s reseller partners.

KEY FIGURES

EUR in thousands, unless otherwise indicated Apr-Jun 2013 Apr-Jun 2012 Change, % Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
               
Net sales 2,335 2,404 -2.9 4,416 4,616 -4.3 9,321
EBITDA 396 398 -0.5 538 764 -29.6 1,555
 % of net sales 17.0 16.6   12.2 16.6   16.7
Operating profit 222 230 -3.5 191 429 -55.5 874
 % of net sales 9.5 9.6   4.3 9.3   9.4
Profit before tax 222 196 13.3 180 393 -54.2 833
Profit for the period 189 124 52.4 153 273 -44.0 662
 % of net sales 8.1 5.2   3.5 5.9   7.1
               
Earnings per share, EUR 0.016 0.010 60.0 0.013 0.022 -40.9 0.054
Equity per share, EUR 0.209 0.221 -5.4 0.209 0.221 -5.4 0.240
               
Cash flow from operating activities -71 52 -236.5 1,198 1,632 -26.6 1,777
Cash and cash equivalents 1,534 1,817 -15.6 1,534 1,817 -15.6 1,404
Free cash flow -277 -83 233.7 777 1,322 -41.2 1,165
Net liabilities -1,308 -1,365 -4.2 -1,308 -1,365 -4.2 -1,065
Gearing, % -50.3 -49.8   -50.3 -49.8   -35.7
Equity ratio, % 47.6 47.1   47.6 47.1   51.3
Return on equity, % 27.3 17.2   11.0 19.1   22.2
Return on investment, % 29.9 27.4   13.0 25.4   25.5

REPORTING

This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2013, the Company has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2012. The implementation of these new and revised requirements have not materially impacted the reported figures. For all other parts, the accounting and valuation principles are the same as they were in the 2012 financial statements. This report is unaudited.

QPR Software’s business operations consist of software and professional services sales. The Company reports income for products and services as follows: software license sales, software maintenance services, software rentals, and professional services.

QPR reports the following business segments: Direct and OEM business (software license and rental sales, maintenance and professional services sales to direct customers and OEM customers) and Resellers (software license and rental sales, maintenance and professional services sales through resellers and the Russian subsidiary).

NET SALES

Net sales in the second quarter were EUR 2,335 thousand (2,404) and decreased 3% from the corresponding period of the previous year. Net sales decreased due to a clear decline in software license sales, which was not fully compensated by the continued strong growth in software rental net sales.

Net sales in January-June were EUR 4,416 thousand (4,616) and decreased 4% from the corresponding period of the previous year.

Net sales by product group

  

EUR in thousands Apr-Jun 2013 Apr-Jun 2012 Change, % Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
               
Software licenses 341 541 -37 539 993 -46 1,797
Software maintenance services 760 826 -8 1,531 1,603 -4 3,223
Software rentals 405 282 44 795 551 44 1,221
Professional services 829 755 10 1,551 1,469 6 3,080
Total 2,335 2,404 -3 4,416 4,616 -4 9,321

New software sales by QPR are increasingly made through software rentals rather than perpetual license sales, which is reflected as decline in software license net sales and increase in software rental net sales. In Finland, clear majority of new sales are made on a rental basis. Internationally, the transition is still ongoing.

In the second quarter, software license net sales decreased 37%, which the growth of 44% in software rental net sales was not able to fully compensate. Net sales from software maintenance services declined 8%, mainly due to exchange rate changes. Net sales from professional services increased 10%, as especially net sales from enterprise architecture services grew strongly.

Total recurring revenue (net sales from software maintenance services and software rentals) grew 5% in the second quarter. The growth in recurring revenues was slowed down by exchange rate changes in maintenance service revenues. The share of recurring revenue of total net sales increased to 50% (46).

Net sales by product group in January-June also developed similarly as in the second quarter. QPR expects net sales from professional services to grow during the rest of the year, compared to the level in the first half of the year, especially in the enterprise architecture services.

Net sales by business segment 

EUR in thousands Apr-Jun 2013 Apr-Jun 2012 Change, % Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
               
Direct and OEM business 1,468 1,380 6 2,818 2,643 7 5,491
Resellers 866 1,024 -15 1,599 1,973 -19 3,830
Total 2,335 2,404 -3 4,416 4,616 -4 9,321

In the second quarter, net sales in the Direct and OEM business grew 6% from the corresponding period last year. The growth was especially strong in net sales from software and services aiming at developing enterprise architecture.

Net sales in the Resellers unit decreased 15% in the second quarter, mainly due to decline in software license net sales.

Net sales in January-June also developed similarly as in the second quarter.

FINANCIAL PERFORMANCE

Operating profit by business segment:

EUR in thousands Apr-Jun 2013 Apr-Jun 2012 Change, % Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
               
Direct and OEM business 170 186 -9 188 409 -54 848
Resellers 143 141 1 183 222 -18 402
Unallocated -91 -97 -6 -180 -202 -11 -376
Total 222 230 -3 191 429 -55 874

The Group’s operating loss for the first quarter turned into profit for the second quarter, even though net sales continued to be slightly lower than in the previous year. In the second quarter, operating profit in the Direct and OEM business declined slightly due to continued outlays in the growth businesses. Operating profit in the Resellers unit was on the level of previous year, since the result for the corresponding quarter of the previous year was reduced by credit losses of EUR 119 thousand.

The Group’s expenses in the second quarter declined 4%, mainly due to lower credit losses. Personnel expenses grew 9% and were 70% of total expenses (62).

Net financial expenses in the second quarter were EUR 0 thousand (34). Net financial expenses included foreign exchange gains of EUR 3 thousand (losses of EUR 32 thousand). Income taxes in the second quarter were EUR 33 thousand (72). For new development projects started in 2013, the Company expects to be able to utilize an additional tax deduction on research and development activities, valid for years 2013 – 2014 in Finland, which lowered the Group’s effective tax rate to 15%. Profit before taxes in the second quarter was EUR 222 thousand (196) and profit for the period was EUR 189 thousand (124). Earnings per share for the second quarter increased 60% to EUR 0.016 (positive 0.010).

In January-June, operating profit in the Direct and OEM business declined due to continued outlays in the growth businesses especially in the first quarter. Operating profit in the Resellers unit declined due to lower net sales. Operating profit for the Resellers unit in January-June includes credit losses of EUR 21 thousand (149). Profit before taxes in January-June was EUR 180 thousand (393) earnings per share were EUR 0.013 (0.022).

FINANCE AND INVESTMENTS

Cash flow from operating activities was EUR 1,198 thousand (1,632) in January-June and EUR ‑71 thousand (52) in the second quarter. Cash and cash equivalents at the end of the second quarter were EUR 1,534 thousand (1,817).

Investments in January-June totaled EUR 424 thousand (310). Slightly more than half of the investments were made in product development.

Interest-bearing liabilities decreased and were EUR 226 thousand (452) at the end of the reporting period. The gearing ratio was -50% (-50). Current liabilities include deferred revenue in total of EUR 1,688 thousand (1,600). Return on investment was 13% (25) in January-June and 30% (27) in the second quarter.

At the end of the reporting period, equity ratio was 48% (47) and the consolidated shareholders’ equity was EUR 2,601 thousand (2,748). Return on equity was 11% (19) in January-June and 27% (17) in the second quarter.

The Annual General Meeting on March 14, 2013 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 550,000 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. On March 20, 2013, the Company issued a stock exchange release on a decision to start acquiring own shares through public trading in NASDAQ OMX Helsinki Ltd.

PRODUCT AND SERVICE DEVELOPMENT

Product development expenses in January-June were EUR 918 thousand (846), representing 21% (18) of net sales. Product development expenses do not include amortization of capitalized product development expenses.

In January-June, product development expenses were capitalized for a total amount of EUR 250 thousand (211). The amortization period for capitalized product development expenses is four years. The amortization of capitalized product development expenses in January-June was EUR 137 thousand (111).

Product development employed 27 persons at the end of the quarter, which corresponds to 32% of the total personnel.

In January-June, software product development activities were especially focused on the QPR EnterpriseArchitect and QPR ProcessAnalyzer products.

By developing its service products, the Company aims to grow its local business in Finland, and to accelerate its international software sales by offering complementary service concepts and solutions to its reseller partners.

PERSONNEL

At the end of the quarter, the Group employed a total of 84 persons (79). Average number of personnel in January-June was 84 (76) and personnel expenses totaled EUR 3,013 thousand (2,654).

For incentive purposes, the Company has a bonus program that covers all employees. Short-term remuneration of the top management consists of salary, fringe benefits and a possible annual bonus based on net sales and operating profit performance. The maximum annual bonus of executive management team, including the CEO, is 40% of the annual base salary. Long-term remuneration of the executive management team consists of a share-based incentive plan. Information on incentive plans in the Annual Report 2012: www.qpr.com --> “Investors” section.

SHARES AND SHAREHOLDERS

Trading of shares Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
         
Shares traded, pcs 282,186 218,495 29 501,186
Volume, EUR 267,802 189,266 41 437,890
% of shares 2.3 1.8   4.0
Average trading price, EUR 0.95 0.87 10 0.87
Treasury shares acquired during the period, pcs 47,052 41,630 13 106,482
         
Shares and market capitalization Jun 30, 2013 Jun 30, 2012 Change, % Dec 31, 2012
         
Total number of shares, pcs 12,444,863 12,444,863 0 12,444,863
Treasury shares, pcs 332,939 221,035 51 285,887
Book counter value, EUR 0.11 0.11   0.11
Outstanding shares, pcs 12,111,924 12,223,828 -1 12,158,976
Number of shareholders 609 586 4 597
Closing price, EUR 0.92 0.92 0 0.95
Market capitalization, EUR 11,142,970 11,245,922 -1 11,551,027
Book counter value of all treasury shares, EUR 36,623 24,314 51 31,448
Total purchase value of all treasury shares, EUR 304,990 203,797 50 260,906
Treasury shares, % of all shares 2.7 1.8   2.3

The Annual General Meeting held on March 14, 2013 approved the Board's proposal that a per-share dividend of EUR 0.04 (0.03), a total of EUR 486 thousand (367), is paid for the financial year 2012. The dividend was paid to shareholders entered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of March 19, 2013. The dividend payment date was April 3, 2013.

OTHER EVENTS IN JANUARY-JUNE

In March, QPR Software and the German software company JobRouter AG announced a new process analysis service based on QPR ProcessAnalyzer software. The companies have agreed on cooperation, where JobRouter will use QPR ProcessAnalyzer software in fact-based visualizing and analysis of their customers’ processes in the JobRouter workflow solution.

In April, QPR Software published an agreement with CGI, the leading IT and business process services company, for a new process analysis service based on QPR ProcessAnalyzer software product. With the service, CGI will be able to show their customers the real state of their processes and help support them in reaching operational efficiency. For QPR, the partnership gives the opportunity to bring QPR ProcessAnalyzer to a larger audience.

In April, after a tender competition, Hansel Oy, the central procurement unit of the Finnish Government, elected QPR Software as one of the frame agreement providers of management consulting services for years 2013–2017. The frame agreement enables QPR to offer its professional services in simplified tender competitions by government entities in their operational development and enterprise architecture projects.

GOVERNANCE

The Annual General Meeting on March 14, 2013 resolved that the Board of Directors consists of four (4) ordinary members. The AGM elected the following members to the Board of Directors: Kirsi Eräkangas, Jyrki Kontio, Vesa-Pekka Leskinen and Topi Piela. In its first meeting following the Annual General Meeting, the Board of Directors elected Vesa-Pekka Leskinen as Chairman of the Board.

The AGM elected KPMG Oy Ab, Authorized Public Accountants, as QPR Software Plc's auditors, with Kirsi Jantunen, Authorized Public Accountant, acting as principal auditor.

The AGM authorized the Board to decide on issuing new shares and repurchasing the Company’s own shares.

The conditions of 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 14, 2013 and available on the investors section of the Company's web site, www.qpr.com.

SHORT-TERM RISKS AND UNCERTAINTIES

Internal control and risk management in QPR Software aims to ensure that the Company operates efficiently and effectively, distributes reliable information, complies with regulations and operational principles, reaches its strategic goals, reacts to changes in the market and operational environment, and ensures the continuity of its business.

QPR has identified the following four groups of risks related to its operations: risks related to business operations (country, customer, service delivery, personnel, legal and financial risks as well as risks related to the Company’s resellers), risks related to information and products (QPR products, IPR, data security), risks related to financing (foreign currency, bad debt), and risks related to new businesses (growth of new business, product development investments in new business). The Company has an insurance policy for property, operational and liability risks. The Company monitors country, customer, personnel and finance risks also in the Russian subsidiary OOO QPR Software.

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 escalated economic crisis in the euro area has, according to management’s estimate, to some extent increased the credit risk that has earlier remained on a moderate level, and has resulted in increased credit losses. During the current year, however, the amount of credit losses and overdue receivables has been clearly lower than in the previous year. In January-June, EUR 21 thousand (149) of credit losses were recorded. The amount of trade receivables over 60 days past due was 7% (10) of total trade receivables at the end of the quarter.

Approximately 65% of Group’s trade receivables were in euro at the end of the quarter. At the end of the quarter, the Company had not hedged its foreign currency (non-euro) trade receivables.

No significant changes have taken place in the Company’s short-term risks and uncertainties during January-June. Risks and risk management related to the Company’s business are further described in the Annual Report 2012, pages 14-15 (www.qpr.com/investors/key-figures-and-reports.htm).

OUTLOOK 2013

QPR estimates its net sales in 2013 to remain on the same level or to grow slightly compared to previous year (2012: EUR 9.3 million). Especially net sales from software rentals and enterprise architecture services are expected to grow, but software license net sales to decrease. Operating profit is estimated to be lower than in previous year (2012: EUR 0.9 million), but to improve significantly from the level in January-June 2013.

In 2013, the Company aims to continue investments in the development of its new software products. In recent years, QPR has launched two new software products that have excellent growth prospects. The strong growth of QPR EnterpriseArchitect business in Finland is estimated to continue, and in 2013 the Company is building a new international reseller network for the product. QPR EnterpriseArchitect is software for agile management of all dimensions in the enterprise architecture. The Company also continues investing into the growth of its new QPR ProcessAnalyzer software product that offers a fast way to automatically discover processes by using data stored in the IT systems of an organization.

The Company is also developing its professional service offering, with the aim to grow its local business in Finland and to accelerate its international software sales. Internationally, this happens by offering complementary service concepts and solutions to the Company’s reseller partners.

FINANCIAL INFORMATION

Interim Report Q3/2013 will be published on Tuesday, October 29, 2013.

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 INCOME STATEMENT          
               
EUR in thousands, unless otherwise indicated Apr-Jun 2013 Apr-Jun 2012 Change, % Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
               
Net sales 2,335 2,404 -3 4,416 4,616 -4 9,321
Other operating income - 21 n/a 32 36 -11 158
               
Materials and services 73 115 -37 134 202 -34 402
Employee benefit expenses 1,484 1,360 9 3,013 2,654 14 5,491
Other operating expenses 382 552 -31 763 1,032 -26 2,031
EBITDA 396 398 -1 538 764 -30 1,555
               
Depreciation and amortization 174 168 4 347 335 4 681
Operating profit 222 230 -3 191 429 -55 874
               
Financial income and expenses 0 -34 -100 -11 -36 -69 -41
Profit before tax 222 196 13 180 393 -54 833
               
Income taxes -33 -72 -54 -27 -120 -78 -171
Profit for the period 189 124 52 153 273 -44 662
               
Profit for the period attributable to:              
 Shareholders of the parent company 189 146   153 319   662
 Non-controlling interests - -22   - -46   -
 Total 189 124   153 273   662
               
Earnings per share, EUR (basic and diluted) 0.016 0.010 60 0.013 0.022 -41 0.054
               
Consolidated statement of comprehensive income:              
Profit for the period 189 124   153 273   662
Other items that may be reclassified              
subsequently to profit or loss:              
 Exchange rate differences from              
 translating foreign operations -5 -37   -3 -85   -103
 Income tax related to other items - -   - -   -
 Total comprehensive income 184 87   150 188   559
               
Total comprehensive income attributable to:              
 Shareholders of the parent company 184 109   150 234   559
 Non-controlling interests - -22   - -46   -
 Total 184 87   150 188   559

 

CONSOLIDATED BALANCE SHEET        
         
EUR in thousands Jun 30, 2013 Jun 30, 2012 Dec 31, 2012 Change, %
         
Assets        
         
Non-current assets:        
Intangible assets 1,571 1,706 1,557 1
Goodwill 513 513 513 0
Tangible assets 198 141 140 41
Other non-current assets 133 95 120 11
Total non-current assets 2,415 2,455 2,330 4
               
Current assets:        
Trade and other receivables 3,207 3,141 3,111 3
Cash and cash equivalents 1,534 1,817 1,404 9
Total current assets 4,741 4,958 4,515 5
         
Total assets 7,156 7,413 6,845 5
         
Equity and liabilities        
         
Equity:        
Share capital 1,359 1,359 1,359 0
Other funds 21 21 21 0
Treasury shares -305 -204 -261 17
Translation differences -172 -152 -169 2
Invested non-restricted equity fund 5 5 5 0
Retained earnings 1,693 1,773 2,026 -16
Equity attributable to shareholders of the parent company 2,601 2,802 2,981 -13
Non-controlling interests - -54 - n/a
Total equity 2,601 2,748 2,981 -13
         
Non-current liabilities:        
Interest-bearing liabilities - 226 113 n/a
Non-interest-bearing liabilities - - 71 n/a
Total non-current liabilities - 226 184 n/a
         
Current liabilities:        
Trade and other payables 4,329 4,213 3,452 25
Interest-bearing liabilities 226 226 226 0
Total current liabilities 4,555 4,439 3,678 24
         
Total liabilities 4,555 4,665 3,862 18
         
Total equity and liabilities 7,156 7,413 6,845 5

 

CONSOLIDATED CASH FLOW STATEMENT      
               
EUR in thousands Apr-Jun 2013 Apr-Jun 2012 Change, % Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
               
Cash flow from operating activities:              
Profit for the period 189 124 52 153 273 -44 662
Adjustments to the profit 162 164 -1 329 306 8 548
Working capital changes -364 -191 91 824 1,106 -25 744
Interest and other financial expenses paid -8 -7 14 -13 -18 -28 -39
Interest and other financial income received 2 1 100 4 4 0 21
Income taxes paid -52 -39 33 -99 -39 154 -159
Net cash from operating activities -71 52 -237 1,198 1,632 -27 1,777
               
Cash flow from investing activities:              
Acquired subsidiaries - -   -3 -   -81
Purchases of tangible and intangible assets -206 -135 53 -421 -310 36 -612
Net cash used in investing activities -206 -135 53 -424 -310 37 -693
               
Cash flow from financing activities:              
Repayments of long-term borrowings -113 -   -113 -113 0 -226
Repurchase of shares -32 -17 88 -44 -45 -2 -103
Dividends paid -486 -367 32 -486 -367 32 -367
Net cash used in financing activities -631 -384 64 -643 -525 22 -696
               
Net change in cash and cash equivalents -909 -467 95 131 797 -84 388
Cash and cash equivalents at the beginning of the period 2,443 2,283 7 1,404 1,020 38 1,020
Effects of exchange rate changes on cash and cash equivalents 0 1   -1 0   -4
Cash and cash equivalents at the end of the period 1,534 1,817 -16 1,534 1,817 -16 1,404

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY      
                 
EUR in thousands Share capital Other funds Translation differences Treasury shares Invested non-restricted equity fund Retained earnings Non-controlling interests Total
                 
Equity Jan 1, 2012 1,359 21 -66 -158 5 1,820 -8 2,973
Dividends paid           -367   -367
Repurchase of shares       -45       -45
Comprehensive income     -85     320 -46 188
Equity Jun 30, 2012 1,359 21 -151 -204 5 1,773 -54 2,748
Acquisition of the remaining 20% share in QPR CIS Oy           -89 8 -81
Repurchase of shares       -58       -58
Comprehensive income     -18     342 46 371
Equity Dec 31, 2012 1,359 21 -169 -261 5 2,026 - 2,981
Dividends paid           -486   -486
Repurchase of shares       -44       -44
Comprehensive income     -3     153   150
Equity Jun 30, 2013 1,359 21 -172 -305 5 1,693 - 2,601

NOTES TO INTERIM FINANCIAL STATEMENTS

ACCOUNTING PRICIPLES

This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2013, the Company has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2012. The implementation of these new and revised requirements have not materially impacted the reported figures. For all other parts, the accounting and valuation principles are the same as they were in the 2012 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.

GROUP INTANGIBLE AND TANGIBLE ASSETS
       
EUR in thousands Jan-Jun 2013 Jan-Jun 2012 Jan-Dec 2012
       
Increase in intangible assets:      
Acquisition cost Jan 1 5,428 5,004 5,004
Increase 318 249 427
       
Increase in tangible assets:      
Acquisition cost Jan 1 1,234 1,159 1,159
Increase 101 61 117

 

CHANGE IN GROUP INTEREST-BEARING LIABILITIES
       
EUR in thousands Jan-Jun 2013 Jan-Jun 2012 Jan-Dec 2012
       
Interest-bearing liabilities Jan 1 339 566 566
Repayments -113 -113 -226
Interest-bearing liabilities Jun 30 226 452 339

 

GROUP COMMITMENTS AND CONTINGENT LIABILITIES    
         
EUR in thousands Jun 30, 2013 Jun 30, 2012 Dec 31, 2012 Change,
%
         
Business mortgage 1,337 1,337 1,337 0
         
Lease liabilities        
 Liabilities maturing in one year 353 176 397 -11
 Liabilities maturing in 2-5 years 26 64 91 -71
 Lease liabilities total 379 240 488 -22
         
Total commitments and contingent liabilities 1,716 1,577 1,825 -6

 

CONSOLIDATED INCOME STATEMENT BY QUARTER    
             
EUR in thousands Q2 2013 Q1 2013 Q4
2012
Q3 2012 Q2 2012 Q1 2012
             
Net sales 2,335 2,082 2,693 2,011 2,404 2,212
Other operating income - 32 104 18 21 15
             
Materials and services 73 61 100 100 115 87
Employee benefit expenses 1,484 1,528 1,626 1,211 1,360 1,294
Other operating expenses 382 383 620 379 552 480
EBITDA 396 142 451 339 398 366
             
Depreciation and amortization 174 173 171 174 168 167
Operating profit 222 -31 281 165 230 199
             
Financial income and            
expenses 0 -11 -9 4 -34 -2
Profit before tax 222 -42 271 169 196 197
             
Income taxes -33 6 -34 -17 -72 -48
Profit for the period 189 -36 237 152 124 149

 

 

SEGMENT INFORMATION            
                 
EUR in thousands Apr-Jun 2013 Apr-Jun 2012 Change, % Jan-Jun 2013 Jan-Jun 2012 Change, % Jan-Dec 2012
                 
Net sales              
  Direct and OEM business 1,468 1,380 6 2,818 2,643 7 5,491
  Resellers 866 1,024 -15 1,599 1,973 -19 3,830
  Total 2,335 2,404 -3 4,416 4,616 -4 9,321
                 
EBITDA              
  Direct and OEM business 257 284 -10 375 608 -38 1,251
  Resellers 230 211 9 343 358 -4 680
  Unallocated -91 -97 -6 -180 -202 -11 -376
  Total 396 398 -1 538 764 -30 1,555
                 
Operating profit              
  Direct and OEM business 170 186 -9 188 409 -54 848
  Resellers 143 141 1 183 222 -18 402
  Unallocated -91 -97 -6 -180 -202 -11 -376
  Total 222 230 -3 191 429 -55 874
                 
Financial income and expenses 0 -34 -100 -11 -36 -69 -41
Income taxes -33 -72 -54 -27 -120 -78 -171
Profit for the period 189 124 52 153 273 -44 662
                 
Other information:              
                 
Depreciation and amortization              
  Direct and OEM business 87 98 -11 187 199 -6 403
  Resellers 87 70 24 160 136 18 278
  Total 174 168 4 347 335 4 681

Names of the segments have been changed in 2013. Earlier, these segments were called Finland operations and International operations.

GROUP KEY FIGURES      
       
EUR in thousands, unless otherwise indicated Jan-Jun or
Jun 30, 2013
Jan-Jun or
Jun 30, 2012
Jan-Dec or
Dec 31, 2012
       
Net sales 4,416 4,616 9,321
Net sales growth, % -4.3 30.0 23.6
EBITDA 538 764 1,555
 % of net sales 12.2 16.6 16.7
Operating profit 191 429 874
 % of net sales 4.3 9.3 9.4
Profit before tax 180 393 833
 % of net sales 4.1 8.5 8.9
Profit for the period 153 273 662
 % of net sales 3.5 5.9 7.1
       
Return on equity, % 11.0 19.1 22.2
Return on investment ,% 13.0 25.4 25.5
Interest-bearing liabilities 226 452 339
Cash and cash equivalents 1,534 1,817 1,404
Free cash flow 777 1,322 1,165
Net liabilities -1,308 -1,365 -1,065
Equity 2,601 2,748 2,981
Gearing, % -50.3 -49.8 -35.7
Equity ratio, % 47.6 46.6 51.3
Total balance sheet 7,156 7,413 6,845
       
Investments in non-current assets 420 304 518
 % of net sales 9.5 6.6 5.6
Product development expenses 918 846 1,619
 % of net sales 20.8 18.3 17.4
       
Average number of personnel 84 76 78
Personnel at the beginning of period 81 73 73
Personnel at the end of period 84 79 81
       
Earnings per share, EUR 0.013 0.022 0.054
Equity per share, EUR 0.209 0.221 0.240