Published: 2014-10-29 08:30:00 CET
QPR Software
Interim report (Q1 and Q3)

NET SALES INCREASED, PROFITABILITY IMPROVED SIGNIFICANTLY FROM PREVIOUS YEAR

QPR SOFTWARE PLC   STOCK EXCHANGE RELEASE   OCTOBER 29, 2014 AT 9.30 AM
 

INTERIM REPORT JANUARY-SEPTEMBER 2014

NET SALES INCREASED, PROFITABILITY IMPROVED SIGNIFICANTLY FROM PREVIOUS YEAR

Summary third quarter 2014

  • Net sales EUR 2,167 thousand (third quarter 2013: 1,961).
  • Net sales increased 11% mainly due to an increase in software net sales. Software net sales grew 14%.
  • Recurring revenues (software rentals and maintenance services) increased 6% and were 58% of total net sales (60). Net sales from software rentals increased 13%.
  • Operating profit EUR 227 thousand (171), growth 33%.
  • Operating margin 10.5% of net sales (8.7).
  • Cash flow from operating activities EUR 345 thousand (53).
  • Profit before taxes EUR 222 thousand (167), growth 33%.
  • Profit for the quarter EUR 167 thousand (142), growth 18%.
  • Earnings per share EUR 0.014 (0.012), growth 16%.

Summary January-September 2014

  • Net sales EUR 6,856 thousand (January-September 2013: 6,377).
  • Net sales increased 8% due to an increase in software net sales. Software net sales grew 11%.
  • Recurring revenues (software rentals and maintenance services) increased 6% and were 54% of total net sales (55). Net sales from software rentals increased 15%.
  • Operating profit EUR 678 thousand (361), growth 88%.
  • Operating margin 9.9% of net sales (5.7).
  • Cash flow from operating activities EUR 1,172 thousand (1,251).
  • Profit before taxes EUR 657 thousand (347), growth 89%.
  • Profit for January-September EUR 549 thousand (295), growth 86%.
  • Earnings per share EUR 0.046 (0.024), growth 91%.

OUTLOOK

Operating environment and market outlook

QPR Software estimates that demand for enterprise architecture based business development services and software will increase in its home market Finland, as well as elsewhere in Europe. Development of operations in an enterprise architecture context, and not just in business process or in system development context, is a necessity in current competitive environment for more and more organizations. QPR Software provides its customers, through its software and services, an insight and control to various dimensions of their organizations, such as business processes, information, applications and technology.

QPR Software aims to grow in its home market Finland especially in the enterprise architecture based business development services and in the process analysis business. In the international markets, the Company’s goal is to significantly increase the sales of its innovative software products. In the international markets, the Company operates mainly through its reseller channel and puts effort in recruiting new resellers.

Outlook for 2014

The Company estimates its net sales and operating profit in euros to increase in 2014, compared to 2013.

KEY FIGURES

               
EUR in thousands, unless otherwise indicated Jul-Sep, 2014 Jul-Sep, 2013 Change, % Jan-Sep, 2014 Jan-Sep, 2013 Change, % Jan-Dec, 2013
               
Net sales 2,167 1,961 10.5 6,856 6,377 7.5 8,688
EBITDA 416 353 17.8 1,242 891 39.4 1,285
 % of net sales 19.2 18.0   18.1 14.0   14.8
Operating profit 227 171 32.7 678 361 87.8 578
 % of net sales 10.5 8.7   9.9 5.7   6.7
Profit before tax 222 167 32.9 657 347 89.3 554
Profit for the period 167 142 17.6 549 295 86.1 521
 % of net sales 7.7 7.2   8.0 4.6   6.0
               
Earnings per share, EUR 0.014 0.012 16.1 0.046 0.024 90.8 0.043
Equity per share, EUR 0.232 0.217 6.9 0.232 0.217 6.9 0.231
               
Cash flow from operating activities 345 53 576.5 1,172 1,251 -6.2 1,661
Cash and cash equivalents 1,303 1,248 4.4 1,303 1,248 4.4 1,365
Free cash flow 183 -134   573 643 -10.9 815
Net borrowings -1,303 -1,135 14.8 -1,303 -1,135 14.8 -1,252
Gearing, % -45.1 -42.0   -45.1 -42.0   -43.6
Equity ratio, % 55.5 52.8   55.5 52.8   42.5
Return on equity, % 23.8 21.5   25.4 13.9   17.8
Return on investment, % 32.3 24.2   30.8 16.1   18.3

REPORTING

This report complies with requirements of IAS 34 ”Interim Financial Reporting.” Starting from the beginning of 2014, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2013. 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 2013 financial statements. This report is unaudited.

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

Starting from the beginning of 2014, the Company also reports fixed-price extended software maintenance services as part of software maintenance. Earlier, these services were reported as part of consulting revenues. Comparative figures for 2013 have not been restated. In January-September 2014, the change increased net sales from software maintenance by EUR 94 thousand and, accordingly, decreased net sales from consulting services with the same amount.

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

REVIEW BY THE CEO

In the third quarter of 2014, the Company’s software net sales growth accelerated, despite the continued challenging market situation.

Net sales from both software licenses (+71%) and software rentals (+13%) grew significantly from the previous year and net sales from maintenance services remained on last year’s level. The strong growth in software license net sales was attributable to excellent new sales in international business. The development in software sales shows that QPR’s software for operational development is in great demand even at economically challenging times. In tightening competitive environment, there is an increasing demand for tools to drive profitability and operational improvement initiatives.

Also the consulting business market situation remained challenging in Finland, which is the Company’s main market. Consulting net sales in the third quarter grew slightly, but were negatively affected by the relatively slow start in customer projects after the summer holidays. Based on the current order backlog, we expect consulting net sales to grow in the second half of 2014 compared to previous year.

The most important target for us is to further speed up net sales growth from present level. Thanks to our new software products and strengthening service offering, we are in excellent position to reach this target. The biggest opportunities for software sales growth lie outside the borders of our home market Finland, and thus we are strengthening our outlays for growth in international sales channel. Our specific focus is to strengthen the distribution network for our process analysis, enterprise architecture and process modeling software.

Jari Jaakkola
CEO

NET SALES

Net sales in the third quarter were EUR 2,167 thousand (1,961) and increased 11% from the corresponding period of the previous year. In January-September, net sales were EUR 6,856 thousand (6,377) and increased 8% from the corresponding period of the previous year. Both for the third quarter and for January-September, the increase was especially due to growth in net sales from software licenses and software rentals, as compared to the corresponding periods in the previous year.

Net sales by product group

               
EUR in
thousands
Jul-Sep,
2014
Jul-Sep,
2013
Change,
%
Jan-Sep,
2014
Jan-Sep,
2013
Change,
%
Jan-Dec,
2013
               
Software licenses 278 163 71 958 702 36 1,034
Software maintenance services 764 748 2 2,318 2,280 2 3,021
Software rentals 488 431 13 1,408 1,226 15 1,656
Consulting 637 619 3 2,172 2,170 0 2,977
Total 2,167 1,961 11 6,856 6,377 8 8,688

Demand for software licenses in the developing markets was on a higher level than in the previous year, both in the third quarter and in January-September. In the developed markets, however, more and more customers favor software rentals instead of purchasing software licenses, which has a negative impact on software license net sales and, on the other hand, a positive impact on software rental net sales.

Software maintenance services relate to contract-based customer support and software updates for earlier sold software licenses. Approximately 60% of maintenance service net sales come from international and 40% from Finnish customers.

Rental net sales of the Company’s software have grown strongly already for several years. This development continued in the current year. Of all new software sales, the share of rental sales is large especially in the Company’s home market Finland. The vast majority of software rentals is based on continuing agreements signed with the customers. Net sales from software rentals grew 13% in the third quarter and 15% in January-September.

Total recurring revenues (net sales from software maintenance services and software rentals) grew 6% in the third quarter and 6% in January-September. The share of recurring revenues in the third quarter was 58% (60) of total net sales.

Consulting net sales grew slightly in the third quarter and were at the previous year’s level in January-September. Especially the consulting for enterprise architecture based operational development grew strongly in January-September, while net sales from technical consulting declined due to continued difficult market situation. In the third quarter, growth in consulting net sales was slowed down by the relatively slow start in customer projects after the summer holidays.

Net sales by segment

               
EUR in
thousands
Jul-Sep,
2014
Jul-Sep,
2013
Change,
%
Jan-Sep,
2014
Jan-Sep,
2013
Change,
%
Jan-Dec,
2013
               
Direct and OEM business 1,370 1,249 10 4,377 4,066 8 5,574
Resellers 797 712 12 2,479 2,311 7 3,114
Total 2,167 1,961 11 6,856 6,377 8 8,688

Net sales in the Direct and OEM business grew 10% in the third quarter and 8% in January-September. The growth in January-September was especially strong in net sales from software and consulting for enterprise architecture based operational development. In the third quarter, growth was driven by strong net sales from software, while growth from consulting net sales was slowed down by the relatively slow start in customer projects after the summer holidays.

Net sales in the Resellers business increased 12% from the previous year in the third quarter and 7% in January-September, mainly due to growth in software license net sales. The growth was slowed down by negative exchange rate changes in maintenance service revenues, and by unfavorable business development in Russia.

FINANCIAL PERFORMANCE

Operating profit

In the third quarter, the Group’s operating profit increased 33% and was EUR 227 thousand (171), or 10.5% of net sales (8.7). In January-September, operating profit increased 88% and was EUR 678 thousand (361), or 9.9% of net sales (5.7). The Group’s operating expenses increased at a lower rate than net sales both in the third quarter and in January-September.

Operating profit by segment

               
EUR in
thousands
Jul-Sep,
2014
Jul-Sep,
2013
Change,
%
Jan-Sep,
2014
Jan-Sep,
2013
Change,
%
Jan-Dec,
2013
               
Direct and OEM business 141 133 6 491 321 53 536
Resellers 164 115 43 455 298 53 385
Unallocated -78 -77 1 -268 -257 4 -343
Total 227 171 33 678 361 88 578

Operating profit in the Direct and OEM business increased from the previous year, due to growth in net sales, both in the third quarter and in January-September. In the third quarter, growth in net sales was, however, slowed down by increased personnel expenses and the relatively slow in consulting customer projects after the summer holidays.

Operating profit in the Resellers business increased from the previous year, mainly due to higher net sales from software licenses, both in the third quarter and in January-September. Operating profit for the Resellers business includes credit losses of EUR 51 thousand (15) in the third quarter and EUR 70 thousand (36) in January-September.

Other items in the comprehensive income statement

Net financial expenses were EUR 5 thousand (3) in the third quarter and EUR 21 thousand (14) in January-September. In the third quarter, net financial expenses included foreign exchange losses of EUR 6 thousand (1). In January-September, net financial expenses included foreign exchange losses of EUR 22 thousand (5).

Profit before taxes was EUR 222 thousand (167) in the third quarter and EUR 657 thousand (347) in January-September.

QPR Software puts significant efforts in developing its software and service products, and expects to be able to utilize an additional tax deduction on research and development activities, valid for years 2013 – 2014 in Finland. Therefore, similar to 2013, the effective tax rate of 16% (15) for January-September was significantly lower than the Finnish corporate tax rate of 20% (24.5). Tax rate in the third quarter was higher than in the previous quarters due to source taxes from previous years booked in the Swedish subsidiary.

Profit for the third quarter increased 18% and was EUR 167 thousand (142). Earnings per share for the third quarter were EUR 0.014 (0.012). Profit for January-September increased 86% and was EUR 549 thousand (295). Earnings per share for January-September were EUR 0.046 (0.024).

FINANCE AND INVESTMENTS

Cash flow from operating activities in the third quarter improved from the previous year and was EUR 345 thousand (53). In January-September, cash flow from operating activities was EUR 1,172 thousand (1,251) and declined from the previous year mainly due to an exceptional timing of invoicing in 2013.

Investments totaled EUR 162 thousand (185) in the third quarter and EUR 599 thousand (606) in January-September. More than half of the investments were made in the development of software and consulting service products.

Net change in cash and cash equivalents was EUR 174 thousand (-284) in the third quarter and EUR -64 thousand (-153) in January-September. Cash and cash equivalents at the end of the quarter were EUR 1,303 thousand (1,248).

At the end of the quarter, the Company had no interest-bearing liabilities. At the end of comparative third quarter of 2013, interest-bearing liabilities were EUR 113 thousand. The gearing ratio was -45% (-42). Current liabilities include received advance payments in total of EUR 1,433 thousand (1,428). Return on investment (per annum) was 32% (24) in the third quarter and 31% (16) in January-September.

At the end of the quarter, equity ratio was 56% (53) and the consolidated shareholders’ equity was EUR 2,886 thousand (2,700). Return on equity (per annum) was 24% (22) in the third quarter and 25% (14) in January-September.

PRODUCT DEVELOPMENT

Product development expenses in the third quarter were EUR 445 thousand (343), equal to 21% (18) of net sales, and in January-September EUR 1,381 thousand (1,261), equal to 20% (20) of net sales. Product development expenses do not include amortization of capitalized product development expenses.

Product development expenses were capitalized for a total amount of EUR 107 thousand (93) in the third quarter and EUR 368 thousand (343) in January-September. The amortization period for capitalized product development expenses is four years. The amortization of capitalized product development expenses was EUR 106 thousand (74) in the third quarter and EUR 283 thousand (211) in January-September.

Product development employed 28 persons (26) at the end of the quarter, equal to 34% (32) of the total personnel.

The Company develops QPR Suite product family that consists of the following software products: QPR EnterpriseArchitect, QPR Metrics, QPR ProcessDesigner. Furthermore, the Company develops QPR ProcessAnalyzer software product that is focused on process analysis and monitoring.

In January, QPR Software released QPR Suite 2014, which includes the software tools for architecture based business development, as well as the related supporting methodology. QPR Suite 2014 is available in over 20 languages.

In January, QPR Software also released a new version of the QPR ProcessAnalyzer software. Release 2014.1 brings added efficiency to the process analysis with an integrated data extraction. In addition to the most common IT systems, data can now also be extracted directly from databases used by the companies. Automated notifications and process flow animation raise the control and visualization of the process performance to a totally new level.

By developing its consulting 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 83 persons (80). Average number of personnel in January-September was 81 (83) and personnel expenses totaled EUR 4,452 thousand (4,221), equal to 65% (66) of net sales.

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 and operating profit performance. In 2014, the maximum annual bonus of executive management team, including the CEO, is 60% of the annual base salary. More information on incentive plans can be found in the Annual Report 2013 (www.qpr.com/investors/key-figures-and-reports.htm).

SHARES AND SHAREHOLDERS

         
Trading of shares Jan-Sep,
2014
Jan-Sep,
2013
Change,
%
Jan-Dec,
2013
         
Shares traded, pcs 2,267,058 415,159 446 624,427
Volume, EUR 2,189,000 393,213 457 586,842
% of shares 18.2 3.3   5.0
Average trading price, EUR 0.97 0.95 2 0.94
Treasury shares acquired during the year, pcs 37,400 87,022 -57 133,722
         
Shares and market capitalization Sep 30,
2014
Sep 30,
2013
Change,
%
Dec 31,
2013
         
Total number of shares, pcs 12,444,863 12,444,863 - 12,444,863
Treasury shares, pcs 457,009 372,909 23 419,609
Book counter value, EUR 0.11 0.11 - 0.11
Outstanding shares, pcs 11,987,854 12,071,954 -1 12,025,254
Number of shareholders 756 617 23 627
Closing price, EUR 1.01 0.93 9 0.93
Market capitalization, EUR 12,107,733 11,226,917 8 11,183,486
Book counter value of all treasury shares, EUR 50,271 41,020 23 46,157
Total purchase value of all treasury shares, EUR 439,307 343,684 28 395,134
Treasury shares, % of all shares 3.7 3.0   3.4

Trading of the QPR Software share grew more than five-fold in January-September, as compared to the corresponding period of the previous year. The number of shareholders increased 23% and was 756 (617) at the end of the third quarter.

The Annual General Meeting held on March 13, 2014 approved the Board's proposal that a per-share dividend of EUR 0.04 (0.04), a total of EUR 480 thousand (486), be paid for the financial year 2013. The dividend was paid to shareholders entered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of March 18, 2014. The dividend payment date was April 3, 2014.

The Annual General Meeting on March 13, 2014 authorized the Board of Directors to decide on issuing a maximum of 4,000,000 new shares, to decide on conveyance of a maximum of 700,000 own shares held by the Company, and to decide on acquiring a maximum of 250,000 own shares. The authorizations are in force until the next Annual General Meeting. For the time being, the Company has not used these authorizations.

OTHER EVENTS DURING THE REVIEW PERIOD

In February, QPR Software announced that Gartner Inc., an international ICT research and consulting company, has ranked QPR Software in the best tier used in its report “MarketScope for Enterprise Business Process Analysis”, with the rating “Positive”. According to Gartner, the potential customers should consider vendors in this category as a viable choice for their strategic or tactical investments. Gartner evaluated the vendors on the following criteria: product/service, overall viability, market understanding, offering (product) strategy, business model, innovation, and customer experience, with the latter two having a highest weighting.

In March, QPR Software and Tieto, the largest Nordic IT services company, signed a cooperation agreement with the aim to offer customers business driven enterprise architecture services for gaining substantial business benefits. QPR Software provides Tieto with QPR EnterpriseArchitect software together with the methodology for business driven enterprise architecture. The agreement enables QPR Software, together with Tieto, to offer customers more comprehensive services, increasing the business benefits that can be gained from enterprise architecture work.

In March, QPR Software and Affecto Finland Oy signed a cooperation agreement, through which Affecto can offer its customers data driven approach for analysis and improvement of processes. QPR Software provides Affecto with the automated business process discovery (ABPD) software, QPR ProcessAnalyzer. The agreement enables QPR Software, together with Affecto, to offer customers a way to bring transparency to processes and see the process changes, and thereby be able to have a direct impact on their business performance.

In April, QPR Software’s corporate performance management tool QPR Metrics was rated as “Facilitators” in Nucleus Research Corporate Performance Management Technology Value Matrix. Nucleus Research defines Facilitators as companies offering an application that is intuitive and easy to use, driving rapid adoption with limited training requirements.

In June, QPR Software announced at the IRMUK Business Process Management Conference in London the release of its new enhanced 2014.1 template supporting QPR Software’s enterprise architecture based operational development methodology. The template contains a very pragmatic and business oriented framework linking strategy to business capabilities and their practical realization by organization, processes, and ICT.

In August, QPR Software announced that it will deliver a process intelligence solution to a leading European manufacturing group with operations in approximately 30 countries and production in almost ten countries. QPR ProAct solution, to be delivered as a cloud service, will enable the customer to analyze, improve and monitor their global order-to-cash process by using the data that exist in their enterprise resource planning system (SAP). The solution helps this customer to obtain economies of scale in production units - while facing a market that requires ever-increasing flexibility in deliveries. QPR Software estimates the value of the software and service deliveries to exceed EUR 200 thousand over the next three years.

In August, QPR Software announced that Erdemir Group, one of the largest steel producers in the world and one of the largest industrial enterprises in Turkey, has selected QPR Software and Ironman Consulting, QPR’s reseller in Turkey, as solution providers for its strategic and individual performance management. Ironman is one of the leading strategic management consulting firms in Turkey. The solution will be powered by QPR Metrics performance management software that enables fast implementation and offers a flexible web based environment for performance management.

In September, QPR Software announced plans to transfer its Russian customer and reseller support functions from Moscow to Helsinki, from where the reseller support to all other countries is already centrally delivered. Russia represents approximately 2% of QPR Software’s net sales. The transfer, planned to take place in the beginning of 2015, is expected to reduce costs slightly, but its impact on financial results is not significant.

In September, QPR Software announced the release of its enhanced template 2014.2 for enterprise architecture based operational development methodology. The new version has been enhanced with support for enterprise risk management, application portfolio management and human resource management functions, as well as reports helping the users to distill the relevant knowledge to business or function specific needs and situations. QPR Software’s operational development methodology (QPR ODM) already serves a broad range of customers with different needs and situations, such as mergers and acquisitions, business continuity, risk analysis, or technology renewal.

EVENTS AFTER THE REVIEW PERIOD

In October, Gartner Inc., the world’s leading IT research and consulting company, published its report “Magic Quadrant for Enterprise Architecture Tools”, featuring QPR Software as a new vendor. The decision to add QPR Software to the Magic Quadrant was based on Gartner’s evaluation of the QPR EnterpriseArchitect flagship product. In total the report evaluates 13 different providers.

GOVERNANCE

The Annual General Meeting on March 13, 2014 resolved that the Board of Directors consists of four (4) ordinary members. The AGM re-elected the following members to the Board of Directors: Kirsi Eräkangas, Jyrki Kontio, Vesa-Pekka Leskinen and Topi Piela. In its 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, to continue 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, conveying own shares held by the Company, and repurchasing the Company’s own shares.

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 13, 2014 and available on the investors section of the Company's web site, http://www.qpr.com/investors/stock-exchange-releases.htm.

STRATEGY

As part of its annual planning process, QPR Software has updated its strategy and the financial targets for years 2015 – 2017. The Company continues to aim for an approximately 15% annual profitable growth by investing in the international distribution of its new software products (QPR EnterpriseArchitect ja QPR ProcessAnalyzer) and in the expansion of its consulting business focused on operational development of the customer organizations in its home market in Finland.

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 Software 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 Software seeks to limit this credit risk by continuous monitoring of standard payment terms, receivables and credit limits. In January-September, EUR 70 thousand (36) of credit losses were recorded. The amount of trade receivables over 60 days past due was 10% (9) of total trade receivables at the end of the quarter.

Approximately 62% 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 non-euro trade receivables.

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 2013, pages 13-15 (http://www.qpr.com/investors/key-figures-and-reports.htm).

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 2014 Jul-Sep 2013 Change,
%
Jan-Sep 2014 Jan-Sep 2013 Change,
%
Jan-Dec 2013
               
Net sales 2,167 1,961 11 6,856 6,377 8 8,688
Other operating income 1 -   26 32 -19 32
               
Materials and services 66 72 -8 243 206 18 292
Employee benefit expenses 1,370 1,209 13 4,452 4,221 5 5,703
Other operating expenses 316 327 -3 945 1,091 -13 1,439
EBITDA 416 353 18 1,242 891 39 1,285
               
Depreciation and amortization 189 183 3 564 530 6 707
Operating profit 227 171 33 678 361 88 578
               
Financial income and expenses -5 -3   -21 -14 50 -25
Profit before tax 222 167 33 657 347 89 554
               
Income taxes -54 -25 116 -108 -52 108 -33
Profit for the period 167 142 18 549 295 86 521
               
               
Earnings per share,
EUR (basic and diluted)
0.014 0.012 16 0.046 0.024 91 0.043
               
Consolidated statement of comprehensive income:              
Profit for the period 167 142   549 295   521
Other items in comprehensive income that may be reclassified subsequently to profit or loss:              
             
             
  Exchange differences on              
  translating foreign operations -10 -5   -11 -8   -12
  Income tax relating to
  components of
other
  comprehensive income
             
- -   - -   -
  Total comprehensive income 157 137   538 287   509

 

CONSOLIDATED BALANCE SHEET        
         
EUR in thousands Sep 30,  2014 Sep 30,  2013 Dec 31, 2013 Change, %
         
Assets        
         
Non-current assets:        
Intangible assets 1,681 1,592 1,628 3
Goodwill 513 513 513 0
Tangible assets 190 181 207 -8
Other non-current assets 37 144 82 -55
Total non-current assets 2,421 2,430 2,431 0
         
Current assets:        
Trade and other receivables 2,906 2,865 4,365 -33
Cash and cash equivalents 1,303 1,248 1,365 -5
Total current assets 4,209 4,113 5,730 -27
         
Total assets 6,630 6,543 8,161 -19
         
Equity and liabilities        
         
Equity:        
Share capital 1,359 1,359 1,359 0
Other funds 21 21 21 0
Treasury shares -439 -344 -395 11
Translation differences -192 -177 -181 6
Invested non-restricted equity fund 5 5 5 0
Retained earnings 2,132 1,835 2,061 3
Equity attributable to shareholders of the parent company 2,886 2,700 2,871 1
         
Non-current liabilities:        
Non-interest-bearing liabilities 29 59 42 -31
Total non-current liabilities 29 59 42 -31
         
Current liabilities:        
Borrowings - 113 113 -100
Advances received 1,433 1,428 1,406 2
Accrued expenses and prepaid income 1,909 1,873 2,976 -36
Trade and other payables 373 370 753 -50
Total current liabilities 3,714 3,784 5,248 -29
         
Total liabilities 3,744 3,843 5,290 -29
         
Total equity and liabilities 6,630 6,543 8,161 -19

 

CONSOLIDATED CASH FLOW STATEMENT
               
EUR in thousands Jul-Sep 2014 Jul-Sep 2013 Change,
%
Jan-Sep 2014 Jan-Sep 2013 Change,
%
Jan-Dec 2013
               
Cash flow from operating activities:              
Profit for the period 167 142 18 549 295 86 521
Adjustments to the profit 178 211 -16 552 540 2 700
Working capital changes -80 -229 -65 82 595 -86 573
Interest and other financial expenses paid -4 -13 -69 -11 -26 -58 -30
Interest and other financial income received 1 3 -67 2 7 -71 8
Income taxes paid 82 -62 -232 -2 -161 -99 -111
Net cash from operating activities 345 53 551 1,172 1,251 -6 1,661
               
Cash flow from investing activities:              
Acquired subsidiaries - -   - -3   -3
Purchases of tangible and intangible assets -162 -185 -12 -599 -606 -1 -846
Net cash used in investing activities -162 -185 -12 -599 -609 -2 -849
               
Cash flow from financing activities:              
Repayments of long-term borrowings - -113 -100 -113 -226 -50 -226
Repurchase of shares -9 -39 -100 -44 -83 -47 -134
Dividends paid - -   -480 -486 -1 -486
Net cash used in financing activities -9 -152 -94 -637 -795 -20 -847
               
Net change in cash and cash equivalents 174 -284 -161 -64 -153 -58 -35
Cash and cash equivalents at the beginning of the period 1,127 1,534 -27 1,365 1,404 -3 1,404
Effects of exchange rate changes on cash and cash equivalents 2 -2   2 -3 -167 -4
Cash and cash equivalents at the end of the period 1,303 1,248 4 1,303 1,248 4 1,365

 

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, 2013 1,359 21 -169 -261 5 2,026 2,981
Dividends paid           -486 -486
Repurchase of shares       -83     -83
Comprehensive income     -8     295 287
Equity Sep 30, 2013 1,359 21 -177 -344 5 1,835 2,700
Repurchase of shares       -51     -51
Comprehensive income     -4     226 222
Equity Dec 31, 2013 1,359 21 -181 -395 5 2,061 2,871
Dividends paid           -480 -480
Repurchase of shares       -44     -44
Comprehensive income     -11     551 540
Equity Sep 30, 2014 1,359 21 -192 -439 5 2,132 2,886

NOTES TO INTERIM FINANCIAL STATEMENTS

ACCOUNTING PRICIPLES

This report complies with requirements of IAS 34 ”Interim Financial Reporting.” Starting from the beginning of 2014, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2013. 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 2013 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 review period, the Group did not have any financial instruments measured at fair value.
 

INTANGIBLE AND TANGIBLE ASSETS    
       
EUR in thousands Jan-Sep, 2014 Jan-Sep, 2013 Jan-Dec,
2013
       
Increase in intangible assets:      
Acquisition cost Jan 1 6,112 5,428 5,428
Increase 538 498 687
       
Increase in tangible assets:      
Acquisition cost Jan 1 1,351 1,234 1,234
Increase 61 108 159
       
       
CHANGE IN INTEREST-BEARING LIABILITIES    
       
EUR in thousands Jan-Sep, 2014 Jan-Sep, 2013 Jan-Dec,
2013
       
Interest-bearing liabilities Jan 1 113 339 339
Repayments -113 -226 -226
Interest-bearing liabilities Sep 30/Dec 31 - 113 113

 

PLEDGES AND COMMITMENTS        
         
EUR in thousands Sep 30,  2014 Sep 30, 2013 Dec 31, 2013 Change,
%
         
Business mortgages (held by the Company) 1,392 1,395 1,394 0
         
Minimum lease payments based on lease        
agreements        
  Maturing in less than one year 154 251 163 -6
  Maturing in 1-5 years 37 72 38 -3
  Total 191 323 201 -5
         
Total pledges and commitments 1,583 1,718 1,595 -1

 

CONSOLIDATED INCOME STATEMENT BY QUARTER
               
EUR in thousands Q3/ 2014 Q2/ 2014 Q1/ 2014 Q4/ 2013 Q3/ 2013 Q2/ 2013 Q1/ 2013
               
Net sales 2,167 2,465 2,225 2,310 1,961 2,335 2,082
Other operating income 1 10 15 - - - 32
               
Materials and services 66 92 85 86 72 73 61
Employee benefit expenses 1,370 1,557 1,525 1,482 1,209 1,484 1,528
Other operating expenses 316 304 325 348 327 382 383
EBITDA 416 522 305 395 353 396 142
               
Depreciation and amortization 189 178 197 178 183 174 173
Operating profit 227 344 107 217 171 222 -31
               
Financial income and              
expenses -5 -12 -4 -11 -3 0 -11
Profit before tax 222 332 103 206 167 222 -42
               
Income taxes -54 -43 -10 19 -25 -33 6
Profit for the period 167 288 93 225 142 189 -36

 

SEGMENT INFORMATION          
                 
EUR in thousands Jul-Sep, 2014 Jul-Sep, 2013 Change, % Jan-Sep, 2014 Jan-Sep, 2013 Change, % Jan-Dec, 2013
                 
Net sales              
  Direct and OEM business 1,370 1,249 10 4,377 4,066 8 5,574
  Resellers 797 712 12 2,479 2,311 7 3,114
  Total 2,167 1,961 11 6,856 6,377 8 8,688
                 
EBITDA              
  Direct and OEM business 238 232 3 796 607 31 921
  Resellers 256 198 29 714 541 32 708
  Unallocated -78 -77 1 -268 -257 4 -343
  Total 416 353 18 1,242 891 39 1,285
                 
Operating profit              
  Direct and OEM business 141 133 6 491 321 53 536
  Resellers 164 115 43 455 298 53 385
  Unallocated -78 -77 1 -268 -257 4 -343
  Total 227 171 33 678 361 88 578
                 
Financial income and expenses -5 -3 67 -21 -14 50 -25
Income taxes -54 -25 116 -108 -52 108 -33
Profit for the period 167 142 18 549 295 86 521
                 
Other information:              
                 
Depreciation and amortization              
  Direct and OEM business 97 99 -2 305 286 18 384
  Resellers 92 83 11 259 243 7 323
  Total 189 183 3 564 530 12 707

 

GROUP KEY FIGURES      
       
EUR in thousands, unless otherwise indicated Jan-Sep or
Sep 30, 2014
Jan-Sep or
Sep 30, 2013
Jan-Dec or
Dec 31, 2013
       
Net sales 6,856 6,377 8,688
Net sales growth, % 7.5 -3.8 -6.8
EBITDA 1,242 891 1,285
 % of net sales 18.1 14.0 14.8
Operating profit 678 361 578
 % of net sales 9.9 5.7 6.7
Profit before tax 657 347 554
 % of net sales 9.6 5.4 6.4
Profit for the period 549 295 521
 % of net sales 8.0 4.6 6.0
       
Return on equity (per annum), % 25.4 13.9 17.8
Return on investment (per annum), % 30.8 16.1 18.3
Borrowings - 113 113
Cash and cash equivalents 1,303 1,248 1,365
Free cash flow 573 643 815
Net borrowings -1,303 -1,135 -1,252
Equity 2,886 2,700 2,871
Gearing, % -45.1 -42.0 -43.6
Equity ratio, % 55.5 52.8 42.5
Total balance sheet 6,630 6,543 8,161
       
Investments in non-current assets 599 607 846
 % of net sales 8.7 9.5 9.7
Product development expenses 1,381 1,261 1,683
 % of net sales 20.1 19.8 19.4
       
Average number of personnel 81 83 82
Personnel at the beginning of period 79 81 81
Personnel at the end of period 83 80 79
       
Earnings per share, EUR 0.046 0.024 0.043
Equity per share, EUR 0.232 0.217 0.231

QPR – Quality. Processes. Results.

QPR Software is specialized in operational development of private and public sector organizations. Our mission is to help our customers to become agile and efficient in their operations. We offer software and consulting services in areas of enterprise architecture development, process modeling and analysis as well as performance management. Our shares are listed on the NASDAQ OMX Helsinki Ltd.  www.qpr.com