QPR Software Half-year Financial Report January – June 2018 QPR SOFTWARE STOCK EXCHANGE RELEASE, AUGUST 2, 2018 AT 9.00 AM
QPR SOFTWARE HALF-YEAR FINANCIAL REPORT JANUARY – JUNE 2018
Net sales and cash flow from operating activities increased
April - June 2018
- Net sales increased 3% to EUR 2,272 thousand (2017: 2,198).
- Recurring revenue 54% of net sales (51).
- Operating result EUR -118 thousand (-99).
- Operating margin -5.2% (-4.5).
- Cash flow from operating activities EUR 142 thousand (-66).
- Result before taxes EUR -117 thousand (-113).
- Result for the quarter EUR -85 thousand (-86).
- Earnings per share EUR -0.007 (-0.007).
January – June 2018 - Net sales increased 3% to EUR 5,154 thousand (2017: 5,011).
- Recurring revenue 56% of net sales (54).
- Operating result EUR 282 thousand (388).
- Operating margin 5.5% (7.8).
- Cash flow from operating activities EUR 1,739 thousand (1,649).
- Result before tax EUR 94 thousand (364).
- Result for the period EUR 40 thousand (279).
- Earnings per share EUR 0.003 (0.023).
- Outlook for 2018 remains unchanged, but QPR further defines its expectations for net sales growth in the remainder of 2018. Net sales growth is expected to accelerate from growth level achieved in January – June. The estimate is based on orders received and contracts made after the reporting period in July, as well as current amount of offers made to prospects.
Business operations
QPR Software´s mission is to make customers agile and efficient in their operations. We innovate, develop, and sell software aimed at analyzing, monitoring, and modeling operations in organizations. Furthermore, we offer customers a variety of consulting services.
OUTLOOK
Operating environment and market outlook In recent years, QPR Software has invested heavily in developing the company´s new process mining software, as well as renewing all user interfaces of its software products. The company estimates that the demand for process mining software and related services will continue to grow in 2018. Growth focus is on Europe, even though the demand for process mining software, especially in large organizations, is also growing strong outside Europe. Due to the current early market stage, country specific differences in demand will continue to be significant. In developed markets, competition in software business for process and enterprise architecture modeling and performance management is expected to remain tight. The company still sees growth potential for these products in emerging markets. Outlook for 2018 Outlook for 2018 remains unchanged, but QPR further defines its expectations for net sales growth in the remainder of 2018. Net sales growth is expected to accelerate from growth level achieved in January – June. This estimate is based on orders received and contracts made after the reporting period in July, as well as current amount of offers made to prospects. The value of orders received in July is significantly higher than in the previous year. Previously published outlook for 2018 The Company estimates that its net sales will grow in 2018 (2017: EUR 9,084 million). The growth in net sales will be driven by software business, in particular the process mining software QPR ProcessAnalyzer. Consulting net sales are also expected to grow from previous year. In 2018, QPR will invest more in its growing business segments and is planning to increase its resources, especially in international sales and marketing. Despite the increase in costs, the company estimates that its operating result will improve from previous year and will exceed 5% of net sales (2017: 0.4% of net sales).
KEY FIGURES
| | | | | | | | | EUR in thousands,
unless otherwise indicated | Apr-Jun,
2018 | Apr-Jun,
2017 | Change,
% | Jan-Jun,
2018 | Jan-Jun,
2017 | Change,
% | Jan-Dec,
2017 | | | | | | | | | | | Net sales | 2,272 | 2,198 | 3 | 5,154 | 5,011 | 3 | 9,084 | | EBITDA | 120 | 123 | -3 | 760 | 817 | -7 | 946 | | % of net sales | 5.3 | 5.6 | | 14.8 | 16.3 | | 10.4 | | Operating result | -118 | -99 | -19 | 282 | 388 | -27 | 32 | | % of net sales | -5.2 | -4.5 | | 5.5 | 7.8 | | 0.4 | | Result before tax | -117 | -113 | -3 | 94 | 364 | -74 | -6 | | Result for the period | -85 | -86 | 2 | 40 | 279 | -86 | -152 | | % of net sales | -3.7 | -3.9 | | 0.8 | 5.6 | | -1.7 | | | | | | | | | | | Earnings per share, EUR | -0.007 | -0.007 | 2 | 0.003 | 0.023 | -86 | -0.013 | | Equity per share, EUR | 0.220 | 0.266 | -17 | 0.220 | 0.266 | -17 | 0.231 | | | | | | | | | | Cash flow from operating
activities | 142 | -66 | 314 | 1,739 | 1,649 | 5 | 984 | | Cash and cash equivalents | 1,238 | 1,336 | -7 | 1,238 | 1,336 | -7 | 318 | | Net borrowings | -1,238 | -1,336 | -7 | -1,238 | -1,336 | -7 | -318 | | Gearing, % | -45.3 | -40.4 | 12 | -45.3 | -40.4 | 12 | -11.0 | | Equity ratio, % | 57.9 | 69.4 | -17 | 57.9 | 69.4 | -17 | 49.5 | | Return on equity, % | -11.5 | -9.8 | | 2.8 | 16.6 | | -4.8 | | Return on investment, % | -15.1 | -10.6 | | 20.8 | 23.9 | | 1.4 |
REPORTING The figures in this half year report are reported according to IFRS 15 accounting principles, effective from 1 January 2018. The IFRS 15 restated comparable Group key figures have been published as a stock exchange release on 25 April 2018. QPR Software innovates, develops, sells and delivers software and services in international markets aimed at operational development in organizations. QPR Software reports one operating segment: Operational development of organizations. In addition to this, the Company reports revenue from products and services as follows: Software licenses, Software maintenance services, Cloud services and Consulting. New accounting principles do not have an impact on Consulting sales revenue recognition, but there are changes in software sales revenue recognition. QPR has not earlier reported the share of Cloud services in its software sales. Recurring revenue reported by the Company consists of Software maintenance services and Cloud services. In addition, recurring revenue includes that part of software license sales, where user rights have been sold to customers with a long-term contract, continuing for the time being, and invoiced in the beginning of the invoicing period. The license part of revenue is recognized at one point in time, in the beginning of the invoicing period. These contracts continuing for the time being are automatically renewed after the end of the agreed period (usually 1 year), unless the agreement is terminated within notice period. 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.
REVIEW BY THE CEO Despite the relatively low net sales growth (+3%) in January – June, QPR´s business is developing favorably. The increased investments in product development last year have significantly increased competitiveness of our software products. The new software versions have had an excellent reception in the markets. International net sales increased 17% in January – June due to increased software sales. Especially grew process mining and analytics software QPR ProcessAnalyzer sales to European customers and performance management software sales to Middle East. In the reporting period we delivered process mining and analytics software, among others, to Fennovoima (a company constructing and operating a new nuclear power plant in Finland), Piraeus Bank in Greece, a major financial services company operating in over 30 countries and to a global medical device company´s European Business unit. New performance management software customers were, among others, Saudi Railway Company, Board of Grievances in Saudi Arabia and large central government organizations in Abu Dhabi. Outlook for the second half of 2018 is good and we estimate net sales growth to accelerate compared to achieved growth level in January – June. Jari Jaakkola
CEO
NET SALES DEVELOPMENT April – June 2018 Second quarter net sales were EUR 2,272 thousand (2,198) and increased by 3% compared to the corresponding period last year. Share of recurring revenue was 54% of net sales (51). Net sales were negatively impacted by the decision to discontinue subcontracted consulting that is not related to QPR software products. Software license net sales decreased by 13% in April – June. The decrease was due to postponement of several software deals to the third quarter. The value of orders received after the reporting period in July is significantly higher than in the previous year. Software maintenance net sales decreased 8% from the previous year. Currency exchange rate changes had a negative impact on maintenance net sales. Cloud service net sales grew by 60% from the previous year. In line with general industry development, customers are increasingly electing to use QPR software through cloud service. Especially our process mining and analytics customers using QPR ProcessAnalyzer, opt for this choice. Consulting net sales increased by 11%, which was due to increase in operational development consulting as well change management and digitalization consulting sales to Finnish customers. In addition, new deliveries of performance management software QPR Metrics to customers in Middle East had a positive impact on consulting net sales. Net sales in international markets increased by 5% and 2% in Finland. Of the Group net sales, 57% (58) derived from Finland, 23% (24) from the rest of Europe (including Russia and Turkey) and 19% (18) from the rest of the world. January – June 2018 Net sales in the January – June reporting period were EUR 5,154 thousand (5,011) and grew by 3%. Share of recurring revenue was 56% of net sales (54). International software sales and operational development consulting in Finland developed favorably. International net sales grew by 17% due to increase in software sales. QPR ProcessAnalyzer deliveries to European customers and QPR Metrics deliveries to Middle Eastern customers increased. Net sales in Finland decreased 6% from previous year, which was mainly due to the decision to discontinue subcontracted consulting that is not related to QPR software products. Of the Group net sales, 56% (61) derived from Finland, 27% (25) from the rest of Europe (including Russia and Turkey) and 17% (14) from the rest of the world.
NET SALES BY PRODUCT GROUP
| | | | | | | | | | EUR in thousands | Apr-Jun,
2018 | Apr-Jun,
2017 | Change,
% | Jan-Jun,
2018 | Jan-Jun,
2017 | Change,
% | Jan-Dec,
2017 | | | | | | | | | | | Software licenses | 389 | 447 | -13 | 1,526 | 1,494 | 2 | 2,326 | | Software maintenance services | 771 | 838 | -8 | 1,482 | 1,690 | -12 | 3,260 | | Cloud services | 324 | 203 | 60 | 630 | 401 | 57 | 819 | | Consulting | 787 | 710 | 11 | 1,515 | 1,425 | 6 | 2,680 | | Total | 2,272 | 2,198 | 3 | 5,154 | 5,011 | 3 | 9,084 |
NET SALES BY GEOGRAPHIC AREA | | | | | | | | | | EUR in thousands | Apr-Jun,
2018 | Apr-Jun,
2017 | Change,
% | Jan-Jun,
2018 | Jan-Jun,
2017 | Change,
% | Jan-Dec,
2017 | | | | | | | | | | | Finland | 1,305 | 1,277 | 2 | 2,897 | 3,079 | -6 | 5,459 | | Europe incl. Russia and Turkey | 529 | 530 | 0 | 1,384 | 1,242 | 11 | 2,288 | | Rest of the world | 437 | 390 | 12 | 873 | 690 | 27 | 1,337 | | Total | 2,272 | 2,198 | 3 | 5,154 | 5,011 | 3 | 9,084 |
FINANCIAL PERFORMANCE April – June 2018 The April – June Group operating result was EUR -118 thousand (-99). Operating result weakened due to strategic investments in growth businesses. Increased costs are mainly personnel costs. The Group´s April - June fixed costs were EUR 2,129 thousand (2,007) and increased by 6% compared to the prior year´s corresponding period. Personnel expenses represented 75.3% (73.4) of the fixed costs and amounted to EUR 1,603 thousand (1,473). The Group´s April - June result before tax was EUR -117 thousand (-113) and result for the period was EUR -85 thousand (-86). Earnings per share were EUR -0.007 (-0.007). January – June 2018 In the January – June reporting period, the Group operating result was EUR 282 thousand (388), or 5.5% (7.8) of net sales. Operating result weakened due to strategic investments in growth businesses. Increased costs are mainly personnel costs. The Group´s January – June fixed costs were EUR 4,218 (3,963), and increased by 6% compared to prior year. Personnel costs represented 74.8% (72.5) of fixed costs and were EUR 3,154 thousand (2,872). Credit losses, inclusive in fixed costs, totaled EUR 18 thousand (9). Result before taxes in the reporting period was EUR 94 thousand (364) and result for the period was EUR 40 thousand (279). Earnings per share were EUR 0.003 (0.023).
FINANCE AND INVESTMENTS
January – June cash flow from operating activities was EUR 1,739 thousand (1,649). Cash and cash equivalents at the end of the reporting period were EUR 1,238 thousand (1,336). Net financial items in the reporting period January - June were EUR 188 thousand (24). Net financial expenses included net foreign exchange losses of EUR 190 thousand (29). Exceptionally large currency exchange losses are due to liquidation of the Group´s subsidiary in Russia. The currency exchange losses arise from the subsidiary´s working capital and were initiated when Russian rouble weakened significantly in years 2009 – 2018. Currency differences have been reported in previous years in other comprehensive income, and after liquidation of the subsidiary as financial expenses in the Group´s profit and loss statement. Thus, these currency losses do not have any impact on retained earnings or cash flow from operating activities. January – June investments totaled EUR 454 thousand (516) and were mainly product development expenditure. The Group´s financial position is strong, and it had no interest-bearing liabilities at the end of the reporting period. The gearing ratio was -45% (-40). Current Equity ratio at the end of the reporting period was 58% (69).
PRODUCT DEVELOPMENT
QPR innovates and develops software products that analyze, measure and model operations in organizations. The Company develops the following software products: QPR EnterpriseArchitect, QPR Metrics, QPR ProcessDesigner, and QPR ProcessAnalyzer In the January – June reporting period, product development expenses were EUR 1,039 thousand (1,222), equal to 20% of net sales (24). In January - June product development expenses were capitalized for EUR 421 thousand (449). The amortization period for capitalized product development expenses is four years. The amortization of capitalized product development expenses in January - June was EUR 377 thousand (318).
PERSONNEL
At the end of the reporting period, the Group employed a total of 82 persons (80). The average number of personnel during the second quarter was 81 (78). At the end of the reporting period the average age of employees was 40.2 (38.9) years. Women accounted for 20 % (30) of the employees, and men for 80% (70). Sales and marketing employs 18% (15) of the personnel, consulting and customer service 41% (41), product development 32% (34) and administration 9% (10). For incentive purposes, the Company has a bonus program that covers all employees. Remuneration of the top management consists of salary, fringe benefits, and a possible annual bonus based mainly on Group and business unit net sales performance.
QPR SOFTWARE’S STRATEGY FOR 2018–2020
QPR Software innovates, develops and sells software for the international marketplace aimed at analyzing, measuring and modeling operations in organizations. Furthermore, we offer customers a variety of services for operational development planning and execution. We focus our product development to meet the challenges organizations face, especially in leading and developing their operations in a digitalizing world. Our focus areas for development are process mining and modeling, as well as performance measurement. We believe that the relevant market for these focus areas will grow significantly in the future, as companies collect more and more data on transactions and other events from their operations. Our target is to gain a significant share in the rapidly growing process mining and analytics market. We accelerate product development by increasing our resources in a controlled manner and allocating them especially to process mining and analytics. In software development, special focus is placed on excellent user experience. In the next few years, QPR seeks to grow, especially its international software sales. To reach this target, the Company will continue to increase its resources and investments in international marketing and sales in 2018. QPR’s reseller channel will continue to play a strategic role in international sales and distribution of QPR’s modeling and performance management products. QPR’s own international direct sales will focus on the process mining and analytics product.
SHARES AND SHAREHOLDERS
| | | | | | | Trading of shares | Jan-Jun,
2018 | Jan-Jun,
2017 | Change,
% | Jan-Dec,
2017 | | | | | | | | Shares traded, pcs | 407,435 | 887,151 | -54 | 1,552,104 | | Volume, EUR | 669,979 | 1,300,786 | -48 | 2,463,215 | | % of shares | 3.4 | 7.4 | | 12.9 | | Average trading price, EUR | 1.64 | 1.47 | 12 | 1.59 | | | | | | | | Shares and market capitalization | Jun 30,
2018 | Jun 30,
2017 | Change,
% | Dec 31,
2017 | | | | | | | | 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 | 1,177 | 1,185 | -1 | 1,246 | | Closing price, EUR | 1.62 | 1.79 | -9 | 1.71 | | Market capitalization, EUR | 19,420,323 | 21,458,259 | -9 | 20,499,230 | 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 |
GOVERNANCE
The Annual General Meeting held on April 12, 2018 approved the Board's proposal to pay a per-share dividend of EUR 0.03 (0.03), a total of EUR 360 thousand (360) for the financial year 2017. Dividends were paid to all shareholders registered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of April 16, 2017. Dividends were paid on April 23, 2018. The Annual General Meeting resolved that the number of Board Members is four (4) and re-elected Juha Häkämies, Vesa-Pekka Leskinen, Topi Piela and Taina Sipilä 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 April 12, 2018 and available on the investors section of the Company's web site, http://www.qpr.com/investors/stock-exchange-releases.htm.
EVENTS AFTER THE REPORTING PERIOD
There were no significant events after the reporting period.
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 11% (15) of total trade receivables at the end of the quarter. Approximately 55% of Group’s trade receivables were in euro at the end of the quarter (71). At the end of the quarter, the Company had not hedged its non-euro trade receivables. Risks and risk management related to the Company’s business are further described in the Annual Report 2017, pages 21-23 (https://www.qpr.com/investors/financial-information/annual-reports)
FINANCIAL INFORMATION
In 2018, QPR Software will publish interim reports in English and Finnish on the following dates: - Interim Report Q3/2018: Thursday, October 25, 2018.
QPR SOFTWARE PLC
BOARD OF DIRECTORS
Further information:
Jari Jaakkola, CEO
Tel. +358 (0) 40 5026 397 DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Main Media Neither this press release nor any copy of it may be taken, transmitted or distributed, directly or indirectly, in or into the United States of America or its territories or possessions.
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
| | | | | | | | | EUR in thousands, unless
otherwise indicated | Apr-Jun,
2018 | Apr-Jun,
2017 | Change,
% | Jan-Jun,
2018 | Jan-Jun,
2017 | Change,
% | Jan-Dec, 2017 | | | | | | | | | | | Net sales | 2,272 | 2,198 | 3 | 5,154 | 5,011 | 3 | 9,084 | | Other operating income | -5 | 7 | | -10 | 7 | -240 | 18 | | | | | | | | | | | Materials and services | 255 | 297 | -14 | 643 | 666 | -3 | 1,154 | | Employee benefit expenses | 1,603 | 1,473 | 9 | 3,154 | 2,872 | 10 | 5,682 | | Other operating expenses | 288 | 311 | -7 | 586 | 662 | -12 | 1,320 | | EBITDA | 120 | 123 | -3 | 760 | 817 | -7 | 946 | | | | | | | | | | | Depreciation and amortization | 238 | 223 | 7 | 478 | 429 | 11 | 913 | | Operating result | -118 | -99 | -19 | 282 | 388 | -27 | 32 | | | | | | | | | | | Financial income and expenses | 1 | -14 | 107 | -188 | -24 | -674 | -38 | | Result before tax | -117 | -113 | -3 | 94 | 364 | -74 | -6 | | | | | | | | | | | Income taxes | 32 | 27 | 20 | -54 | -85 | 36 | -146 | | Result for the period | -85 | -86 | 2 | 40 | 279 | -86 | -152 | | | | | | | | | | | | | | | | | | | Earnings per share, EUR
(basic and diluted) | -0.007 | -0.007 | 2 | 0.003 | 0.023 | -86 | -0.013 | | | | | | | | | | Consolidated statement of
comprehensive income: | | | | | | | | | Result for the period | -85 | -86 | 2 | 40 | 279 | -86 | -152 | Other items in comprehensive
income that may be reclassified
subsequently to profit or loss: | | | | | | | | Exchange differences on
translating foreign operations | 1 | -8 | | 180 | -8 | | -7 | | Total comprehensive income | -84 | -94 | -10 | 219 | 271 | -19 | -159 |
CONSOLIDATED BALANCE SHEET
| | | | | | | EUR in thousands | Jun 30,
2018 | Jun 30,
2017 | Change,
% | Dec 31,
2017 | | | | | | | | Assets | | | | | | | | | | | | Non-current assets: | | | | | | Intangible assets | 1,945 | 2,032 | -4 | 1,952 | | Goodwill | 513 | 513 | 0 | 513 | | Tangible assets | 136 | 203 | -33 | 153 | | Other non-current assets | 62 | 127 | -51 | 127 | | Total non-current assets | 2,656 | 2,874 | -8 | 2,745 | | | | | | | | Current assets: | | | | | | Trade and other receivables | 2,020 | 2,260 | -11 | 3,744 | | Cash and cash equivalents | 1,238 | 1,336 | -7 | 318 | | Total current assets | 3,258 | 3,596 | -9 | 4,061 | | | | | | | | Total assets | 5,914 | 6,470 | -9 | 6,807 | | | | | | | | Equity and liabilities | | | | | | | | | | | | Equity: | | | | | | Share capital | 1,359 | 1,359 | 0 | 1,359 | | Other funds | 21 | 21 | 0 | 21 | | Treasury shares | -439 | -439 | 0 | -439 | | Translation differences | -61 | -241 | -75 | -240 | | Invested non-restricted equity fund | 5 | 5 | 0 | 5 | | Retained earnings | 1,849 | 2,600 | -29 | 2,169 | Equity attributable to shareholders of
the parent company | 2,735 | 3,305 | -17 | 2,875 | | | | | | | | Current liabilities: | | | | | | Advances received | 1,194 | 1,709 | -30 | 997 | | Accrued expenses and prepaid income | 1,643 | 1,159 | 42 | 2,314 | | Trade and other payables | 342 | 297 | 15 | 620 | | Total current liabilities | 3,179 | 3,165 | 0 | 3,932 | | | | | | | | Total liabilities | 3,179 | 3,165 | 0 | 3,932 | | | | | | | | Total equity and liabilities | 5,914 | 6,470 | -9 | 6,807 |
CONSOLIDATED CASH FLOW STATEMENT
| | | | | | | | | | EUR in thousands | Apr-Jun,
2018 | Apr-Jun,
2017 | Change,
% | Jan-Jun,
2018 | Jan-Jun,
2017 | Change,
% | Jan-Dec, 2017 | | | | | | | | | | | Cash flow from operating activities: | | | | | | | | | Result for the period | -85 | -86 | 2 | 40 | 279 | -86 | -152 | | Adjustments to the result | 209 | 204 | 3 | 906 | 533 | 70 | 1,091 | | Working capital changes | 24 | -86 | 128 | 813 | 976 | -17 | 200 | Interest and other financial
expenses paid | -5 | -8 | -36 | -14 | -26 | -46 | -37 | Interest and other financial
income received | 5 | 7 | -35 | 8 | 12 | -30 | 10 | | Income taxes paid | -6 | -98 | -94 | -14 | -125 | -89 | -128 | | Net cash from operating activities | 142 | -66 | 314 | 1,739 | 1,649 | 5 | 984 | | | | | | | | | | | Cash flow from investing activities: | | | | | | | | Purchases of tangible and
intangible assets | -244 | -251 | -3 | -454 | -516 | -12 | -872 | | Net cash used in investing activities | -244 | -251 | -3 | -454 | -516 | -12 | -872 | | | | | | | | | | | Cash flow from financing activities: | | | | | | | | Repayments of short term
borrowings | - | - | | - | - | | - | | Dividends paid | -360 | -360 | 0 | -360 | -360 | 0 | -360 | | Net cash used in financing activities | -360 | -360 | 0 | -360 | -360 | 0 | -360 | | | | | | | | | | Net change in cash and cash
equivalents | -462 | -677 | -32 | 926 | 774 | 20 | -247 | Cash and cash equivalents
at the beginning of the period | 1,704 | 2,015 | -15 | 318 | 565 | -44 | 565 | Effects of exchange rate changes
on cash and cash equivalents | -4 | -2 | -66 | -5 | -3 | -88 | 0 | Cash and cash equivalents
at the end of the period | 1,238 | 1,336 | -7 | 1,238 | 1,336 | -7 | 318 |
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 Dec 31, 2016 | 1,359 | 21 | -233 | -439 | 5 | 2,538 | 3,252 | | Equity IFRS changes | | | | | | 142 | 142 | | Equity Jan 1, 2017 | 1,359 | 21 | -233 | -439 | 5 | 2,681 | 3,394 | | Dividends paid | | | | | | -360 | -360 | | Comprehensive income | | | -8 | | | 279 | 271 | | Equity Jun 30, 2017 | 1,359 | 21 | -241 | -439 | 5 | 2,600 | 3,305 | | Comprehensive income | | | 0 | | | -431 | -430 | | Equity Dec 31, 2017 | 1,359 | 21 | -240 | -439 | 5 | 2,169 | 2,875 | | Dividends paid | | | | | | -360 | -360 | | Comprehensive income | | | 180 | | | 40 | 219 | | Equity Jun 30, 2018 | 1,359 | 21 | -61 | -439 | 5 | 1,849 | 2,735 |
NOTES TO HALF-YEAR FINANCIAL STATEMENTS ACCOUNTING PRINCIPLES This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2018, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2017. Implementation of IFRS 15 Revenue from Contracts with Customers –standard has changed revenue recognition, generation of operating profit and key figures as described in the Reporting section of this report. The implementation of other new and revised requirements has not impacted the reported figures. For all other parts, the accounting principles and methods are the same as they were in the 2017 financial statements. When preparing the consolidated financial statements, management is required to make estimates and assumptions regarding the future and to consider the appropriate application of accounting principles, which means that actual results may differ from those estimated. All amounts presented in this report are consolidated figures, unless otherwise noted. The amounts presented in the report are rounded, so the sum of individual figures may differ from the sum reported. This report is unaudited. During the reporting period, the Group did not have any financial instruments measured at fair value.
INTANGIBLE AND TANGIBLE ASSETS
| | | | | | EUR in thousands | Jan-Jun,
2018 | Jan-Jun,
2017 | Jan-Dec,
2017 | | | | | | | Increase in intangible assets: | | | | | Acquisition cost Jan 1 | 9,318 | 8,521 | 8,521 | | Increase | 422 | 449 | 797 | | | | | | | Increase in tangible assets: | | | | | Acquisition cost Jan 1 | 1,821 | 1,746 | 1,746 | | Increase | 32 | 67 | 75 |
PLEDGES AND COMMITMENTS
| | | | | | | EUR in thousands | Jun 30,
2018 | Jun 30,
2017 | Dec 31,
2017 | Change,
% | | | | | | | | Business mortgages (held by the Company) | 1,385 | 1,389 | 1,388 | 0 | | | | | | | | Minimum lease payments based on lease agreements: | | | | | | Maturing in less than one year | 238 | 276 | 278 | -14 | | Maturing in 1-5 years | 1 | 233 | 88 | -99 | | Total | 239 | 509 | 365 | -35 | | | | | | | | Total pledges and commitments | 1,624 | 1,898 | 1,754 | -7 |
CONSOLIDATED INCOME STATEMENT BY QUARTER
| | | | | | | | | EUR in thousands | Q2
2018 | Q1
2018 | Q4
2017 | Q3
2017 | Q2
2017 | Q1
2017 | | | | | | | | | | Net sales | 2,272 | 2,882 | 2,107 | 1,966 | 2,198 | 2,813 | | Other operating income | -5 | -5 | 5 | 6 | 7 | 0 | | | | | | | | | | Materials and services | 255 | 388 | 246 | 241 | 297 | 370 | | Employee benefit expenses | 1,603 | 1,551 | 1,506 | 1,304 | 1,473 | 1,399 | | Other operating expenses | 288 | 297 | 432 | 226 | 311 | 351 | | EBITDA | 120 | 640 | -72 | 201 | 123 | 694 | | | | | | | | | | Depreciation and amortization | 238 | 240 | 250 | 235 | 223 | 206 | | Operating result | -118 | 400 | -322 | -34 | -99 | 488 | | | | | | | | | | Financial income and expenses | 1 | -189 | -7 | -7 | -14 | -11 | | Result before tax | -117 | 211 | -329 | -41 | -113 | 477 | | | | | | | | | | Income taxes | 32 | -86 | -70 | 9 | 27 | -112 | | Result for the period | -85 | 124 | -398 | -32 | -86 | 365 |
GROUP KEY FIGURES
| | | | | EUR in thousands, unless
otherwise indicated | Jan-Jun or
Jun 30, 2018 | Jan-Jun or
Jun 30, 2017 | Jan-Dec or
Dec 31, 2017 | | | | | | | Net sales | 5,154 | 5,011 | 9,084 | | Net sales growth, % | 2.9 | | | | EBITDA | 760 | 817 | 946 | | % of net sales | 14.8 | 16.3 | 10.4 | | Operating result | 282 | 388 | 32 | | % of net sales | 5.5 | 7.8 | 0.4 | | Result before tax | 94 | 364 | -6 | | % of net sales | 1.8 | 7.3 | -0.1 | | Result for the period | 40 | 279 | -152 | | % of net sales | 0.8 | 5.6 | -1.7 | | | | | | | Return on equity (per annum), % | 2.8 | 16.6 | -4.8 | | Return on investment (per annum), % | 20.8 | 23.9 | 1.4 | | Cash and cash equivalents | 1,238 | 1,336 | 318 | | Net borrowings | -1,238 | -1,336 | -318 | | Equity | 2,735 | 3,305 | 2,875 | | Gearing, % | -45.3 | -40.4 | -11.0 | | Equity ratio, % | 57.9 | 69.4 | 49.5 | | Total balance sheet | 5,914 | 6,470 | 6,807 | | | | | | | Investments in non-current assets | 454 | 516 | 872 | | % of net sales | 8.8 | 10.3 | 9.6 | | Product development expenses | 1,039 | 1,222 | 2,274 | | % of net sales | 20.2 | 24.4 | 25.0 | | | | | | | Average number of personnel | 80 | 75 | 76 | | Personnel at the beginning of period | 79 | 63 | 63 | | Personnel at the end of period | 82 | 80 | 76 | | | | | | | Earnings per share, EUR | 0.003 | 0.023 | -0.013 | | Equity per share, EUR | 0.220 | 0.266 | 0.231 |
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