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QPR Software Oyj — Annual Report 2023
Mar 22, 2024
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Download source fileQPR SOFTWARE ANNUAL REPORT 2023
TABLE OF CONTENTS
3 Our purpose, strategy and markets
6 Review by the CEO
8 Board of Directors
11 Executive Management Team
15 Report of the Board of Directors
33 Financial statements
43 Notes to Financial Statements
90 Signatures of Board of Directors and Financial Statements
92 Auditor’s Report
99 Information for Shareholders
100 Contact Information
Our purpose, strategy and markets
OUR PURPOSE IS TO HELP ORGANIZATIONS REACH THEIR FULL OPERATIONAL POTENTIAL
QPR Software’s mission is to innovate, develop and deliver software for analyzing, monitoring, and modeling the organizations’ operations. The company also offers consulting services to ensure that customers get full value from the software and related methods. We help our customers drive process and business transparency, ensure that their operations are run as required and designed, and create actionable intelligence where modern AI meets thought leadership. By providing organizations with the technologies and methods to transform the invisible into visible and the unknown into manageable, they are empowered to reach long-lasting, continuous results.
OUR STRATEGY AND STRATEGIC TARGETS
QPR Software Plc refined its current strategy in December 2023 to reflect market changes and the Company's priority areas and announced renewed financial goals for the strategy period 2024-2027. In accordance with the refined strategy, the Company profiles itself even more strongly as a software and SaaS player and as a consultant for its core business areas as well as a leading player in Digital Twin of an Organization (DTO) technology. The aim of the refined strategy is to further increase the value the Company produces for its customers and to support the Company's growth through concentration. The Company's mission is to innovate, develop and deliver software for analyzing, monitoring, and modeling the organizations’ operations. The Company also offers consulting services to ensure that customers get full value from the software and related methods. In accordance with the adjusted strategy (2024–2027), the Company focuses its business on the international growth of SaaS solutions offered by Digital Twin of an Organization (DTO) and the process mining at its core. The Company's DTO offering also includes software developed for modeling and managing and measuring the organization's strategy and performance. The Company's revised financial goals for the strategic period 2024–2027 are average twenty (20) percent annual SaaS growth, and sustainable operating profit. The Company also continues to build new strategic partner networks in accordance with the strategy announced on March 10, 2022, to achieve a scalable Go-to-Market model, expand its own offering and improve the value it provides to its customers together with technology and implementation partners. The Company concentrates its growth investments in Europe and the Middle East and, through a partner network, on new market areas such as North America.
THE CURRENT STATE OF OUR MARKETS
The Company reports the following geographical areas: Finland, the rest of Europe (including Turkey), and the rest of the world. The Company has closed its business and partnerships in Russia for the time being. QPR has its own sales staff in Finland, and the United Arab Emirates. The Company concentrates its growth investments in Europe and the Middle East and, through a partner network, on new market areas such as North America. The Company’s management estimates that the size of the process mining market in 2022 was approximately $1.1 billion. The management estimates that the market continues to grow at an average annual rate of around 49% and reach $28 billion by 2030. The demand for Digital Twin of an Organization technology is expected to grow with the development of the process mining market. The management estimates also that the modeling and organizational strategy and performance management software market is also around $1.0 billion. The market is quite mature but continues to grow at an average annual percentage rate of single digits.
REVIEW BY THE CEO
"The year 2023 was a turning point for QPR in many ways, and despite the challenging operating environment, we achieved improvement in results as a whole. The changes we made produced significant results with the company's profitability, cost and organizational structure, refined strategy and focus on core business. SaaS net sales, which is at the core of our strategy, continued to grow by 36% in January-December. The group's total net sales decreased by 3% due to discontinuation of consulting services outside the core business in Finland. Our software business grew by 8%. EBITDA improved significantly and was 182 thousand euros, an improvement of approximately two million euros compared to the comparison period. In addition, the operating cash flow grew to 849 thousand euros, while in 2022 it was about two million euros negative. The group's total free cash flow was 108 thousand euros and it improved approximately by 3.5 million euros. In supporting the transformation efforts, the company organized a directed share issue in the third quarter. This infusion strengthened its capital and financial position, resulting in gross assets of approximately 800 thousand euros. This shows confidence in the company's turnaround trajectory and supports the execution of its strategic initiatives. QPR Software's mission is to innovate, develop and deliver software for analyzing, monitoring, and modeling the operations of organizations. QPR was named a visionary in the 2023 Magic Quadrant™ for Process Mining Tools study published by Gartner in March. In July 2023, Business Finland granted QPR a research grant for the further development of the artificial intelligence and machine learning features of our process mining technology. In September, we announced the company's new positioning as a leading player in Digital Twin of an Organization (DTO) technology. QPR is the only player in the market whose product portfolio includes all the different areas of the DTO solution for process mining, modeling and managing strategy and digital transformation. With this, the company streamlined its product portfolio to focus exclusively on its core business as a software and SaaS provider, also offering customized consulting services. The new positioning improves the customer experience, increases the value we already produce for our customers and effectively responds to the environment's rapidly changing needs. The change in strategic focus also gives QPR the opportunity to utilize our strengths more effectively, adapt to market dynamics and achieve sustainable success in our chosen market segments. The market is typically dominated by large companies with extensive resources and an established reputation. The compact structure is our hidden strength and QPR has established strong, sustainable customer and partner relationships with industry giants. This indicates the quality and reliability of our products and services. Our agility allows us to quickly adapt to changing market demands, and to offer individual attention to our customers. We managed to win new customers and expand cooperation with our existing customers. In addition, we also won back customers who had switched to our competitors in the meantime.
Board of Directors
Executive Management Team
Report of the Board of Directors
Financial statements
Notes to Financial Statements
Signatures of Board of Directors and Financial Statements
Auditor’s Report
Information for Shareholders
Contact InformationOur agile delivery, personalized service, and excellent return on investment (ROI) and lower total cost of ownership (TCO) attracted users of competing products. The outlook for our presence in the Middle East market developed positively. The negative effects of fixed-price software delivery projects, which were sold in prior years, on the company's business and profitability in 2022 and early 2023 were fully completed during the second quarter of 2023. QPR is known in the market as a visible and reputable vendor with a strong partner network. In October, we concluded the first process mining SaaS contract in this market with a local investment and finance company. Demand for our products has been strong at the start of 2024. One key goal during 2023 was to strengthen our global partner network, in addition to increasing software sales and improving profitability. An important step in this endeavor was to find potential partners for the US market. Our process mining software, QPR ProcessAnalyzer, stands out globally as the sole software capable of running directly on the Snowflake Data Cloud. A substantial part of Snowflake's clientele is in the US market. We expect to be able to report on progress in early 2024. We are entering the year 2024 with a positive and confident mind. The market for process mining and the adoption of digital solutions in company business development continue to experience robust growth. I see many unique and exciting opportunities in our industry. The slowly budding recovery of economic growth, falling interest rates and normalizing inflation will improve the financial position of customers, and investment decisions can be expected to accelerate towards the end of 2024. We expect the operating results to improve in the 2024 financial year. I would like to warmly thank our customers, partners, QPR investors and shareholders for their trust in QPR during 2023. I would also like to thank all our employees for their dedication and hard work for the company's future and success."
Heikki Veijola
Chief Executive Officer
Board of Directors and Executive Management Team
8
BOARD OF DIRECTORS
The Board of Directors oversees the company’s management and organizes the operations as appropriate. The Board validates the principles concerning the company’s strategy, organization, accounting, and financial control and appoints the company’s CEO. The Board's work is determined by the Board's rules of procedure, which e.g. determine the matters requiring consideration by the Board. The CEO is responsible for executing the company’s strategy and managing current matters in accordance with the instructions and regulations issued by the Board.
QPR Software Plc’s general meeting elected the members of the board of directors at the annual general meeting on May 3, 2023. At the meeting, it was decided that the Board of Directors will consist of four members. Pertti Ervi, Matti Heikkonen, Antti Koskela and Jukka Tapaninen. The Annual General Meeting elected Pertti Ervi as Chairman of the Board. The Board did not form committees due to the small scope of the business and the size of the Board. QPR's Board members have broad, deep, and strategic expertise and strong experience in the technology sector as well as software business development, growth, and internationalization.
MEMBERS OF THE BOARD OF DIRECTORS
Pertti Ervi
Chairman of the Board
b. 1957, engineer
About
* Chairman of the Board since March 2021.
Key experience
* Independent management consultant and professional board member
* Computer 2000 AG, Co-CEO 1995 – 2000.
* Computer 2000 Finland Oy, Founding Member and Managing Director 1983 – 1995.
Key positions of trust
* Member and Chairman of the Board, Chairman of the Audit Committee, F-Secure Oyj, 2003 – present
* Member of the Board, WithSecure Oyj, 2003 – 2023
* Member and Chairman of the Board, Efecte Oy, 2008 – present
* Chairman of the Board, Mintly Oy, 2017 – present
* Member of the Board, Pointsharp Holding AB, 2021 – present
* Member and Chairman of the Board, Teleste Oyj, 2009 – 2020
* Chairman of the Board, Comptel Oyj, 2011 – 2017
Antti Koskela
Member of the Board
b. 1971 Master of Science in Technology
About
* Member of the Board since March 2021.
Key experience
* WithSecure Oyj, Executive Vice President and Chief Product Officer, 2021 – present
* Elisa Oyj, Vice President, Business Development, 2020 – 2021
* Nokia Software, CDO and Vice President, 2018 – 2020
* Comptel, CTO and Executive Vice President, 2011 – 2017
* Nokia Siemens Networks, various managerial positions, 2007 – 2011
* Nokia Networks, various managerial positions, 1999 – 2007
Matti Heikkonen
Member of the Board
b. 1976 Master of Science in Technology
About
* Member of the Board since March 2021.
Key experience
* Enreach Group, Chief Commercial Officer 2023- present
* Enreach for Enterprises, CEO, 2021 – present
* Benemen Oy, CEO, 2018 – 2021
* Questback AS, EVP Global Operations, 2010 – 2018
* Digium Oy, CEO, 2007 – 2010
* Nokia, various managerial positions, 2004 – 2007
* Various CEO and managerial positions in the software industry, 1998 – 2004
Key positions of trust
* Member of the Board, QT-Group 2023-
* Chairman of the Board, Identia Oy 2023-
* Chairman of the Board, Benemen Oy, 2017 – 2018
* Member of the Board and Audit Committee, F-Secure Oyj, 2013 – 2019
* Member and Chairman of the Board, Mobile Wellness Solutions MWS Oy, 2015 – 2019
* Member and Chairman of the Board, The Finnish Software and E-business Association, 2004 – 2017
* Member of the Board, Ixonos Oyj, 2011 – 2015
Jukka Tapaninen
Member of the Board
b. 1963 Master of Science in Economics
About
* Member of the Board since March 2021.
Key experience
* Aiforia Technologies, CEO, 2020 – present
* Pegasystems, VP and Managing Director EMEA, APAC and Japan, 2016 – 2020
* SAP, Vice President Global/EMEA, 2005 – 2016
* Basware, SVP and General Manager, 2002 – 2005
* Stonesoft Inc, CEO Americas, 2000 – 2002
* HP, Regional and Global managerial roles, Sales and Business Development, 1995 – 2000
Key positions of trust
* Vice Chairman of the Board, Aiforia Oy, 2015 – 2020
* Member of the Board, WeVision Oy, 2014 – present
* Member of the Board, Meshworks Wireless Oy, 2011 – present
* Chairman of the Board, Addoro Ab, 2014 – 2017 (acquisition)
* Member of the Board, Findity Ab, 2013 – 2016
* Member of the Board, VeliQ B.V., 2015
10
EXECUTIVE MANAGEMENT TEAM
Matti Erkheikki
Chief Product Officer
b. 1978 Master’s Degree in Industrial Engineering and Management
Heikki Veijola
CEO
b. 1970 Master of Science in Economics
About
* The Company’s CEO since March 2023
* Member of the Executive Management Team since March 2023
Area of Responsibility
Heikki Veijola started as the CEO of QPR Software Oyj on March 1, 2023. As the CEO of QPR Software, Heikki Veijola is responsible for managing the running administration of the Company in accordance with the instructions and regulations issued by the Board of Directors. Veijola is also responsible for representing the Company, its operational management, sales and partner operations, human resources, and preparation of decisions and implementation thereof that belong to the Board of Directors.
Experience
Veijola has most recently served as Enreach Oy’s Director of Strategic Partnerships and a member of the executive management team, being responsible for business operations in the Microsoft and Salesforce ecosystems as well as for cooperation with system integrators, consultants, and other strategic partnerships, especially in Northern Europe. Before this, Veijola was the Sales Director of Enreach Oy. Veijola has strong experience in building and renewing sales, international growth, partner ecosystems, and cloud- and SaaS (Software as a Service) businesses. During his career, Veijola has also worked for 11 years in Finland's largest marketing group Salomaa Group as a CEO of KASKI Agency, and advertising agency Adsek Oy, leading the companies through two industry transformations.
Education
Veijola has a master's degree in Economics (M.Sc., Turku School of Economics and Business Administration) majoring in International Marketing.
About
* Member of the Executive Management Team since August 2022
Area of responsibility
Kerkelä-Hiltunen is responsible for QPR Software's finance and administration, including external and internal reporting, monitoring and managing the financial performance of the business, capital allocation and procurement. She also oversees investor relations, compliance with the Insider Trading Manual, coordination of risk management and treasury functions.
Experience
Kerkelä-Hiltunen has more than 20 years of solid expertise in finance and management, as well as a wealth of knowledge in the fields of telecom, technology and manufacturing industries in business-to-business, and consulting. Before joining QPR, she was in charge of the Deloitte Finance and Performance Energy, Resources and Industrial clients portfolio, business finance offering as well as regional CFO program coordination. Prior to joining Deloitte, Mervi had a lengthy career at Nokia where she held a variety of global financial management positions, including Head of Finance Transformation and Group Functions, Finance Process Owner, Head of Business Reporting, and ss the CFO and Chair of the Board of the Indian mobile phone factory and company.
Education:
Mervi holds a Master's degree in Economics from the University of Oulu and has also completed the Finance Executive program at Aalto Executive Education and the Good Board Member (HHJ) training.
About
* Member of the Executive Management Team since July 2007
Area of Responsibility
Matti Erkheikki is the head of QPR's product management unit and is responsible for QPR's products and the vision and strategy of the product portfolio.## EXECUTIVE MANAGEMENT TEAM
Erkheikki Keinänen
Chief Product Officer
b. 1971
Master of Science in Technology
About
• Member of the Executive Management Team since January 2015
Area of Responsibility
It is on Erkheikki's responsibility that the Company's products and their characteristics are in line with the organization's goals and that the product portfolio is constantly developed and improved in accordance with the needs of customers and target groups.
Experience
Erkheikki has been employed by QPR since 2002, first as a consultant, participating in QPR's delivery projects both domestically and internationally. In 2005, Erkheikki worked as the company's development manager, and in 2006 as the regional manager responsible for the USA and Canada operations in California at QPR's American subsidiary. In the years 2007–2014, he was responsible for QPR's Finnish business and in the years 2012–2014 also for the global OEM business. Prior to his current position, since January 2015, he has held the role of Business Director, responsible for QPR's process mining and strategy management operations internationally.
Education
Erkheikki holds a master's degree in industrial engineering and management.
Mervi Kerkelä-Hiltunen
CFO
b. 1975
Master of Science in Economics
Sanna Salo
CMO
b. 1977
Master of Science in Economics
EXECUTIVE MANAGEMENT TEAM
Tero Aspinen
VP, Middle-East Business
b. 1985
Master’s Degree in Industrial Engineering and Management
About
• Member of the Executive Management Team since January 2017
Area of Responsibility
Tero Aspinen is responsible for QPR’s business in the Middle East market and for sales and development of Performance Management software solutions globally.
Experience
Tero Aspinen has served QPR Software in various roles since 2008. He has been involved in more than a hundred customer cases where organizations have implemented QPR’s solutions. Prior to his current role, Mr. Aspinen worked as Vice President for Middle East Business and Performance Management Solutions (2017–2022).
Education
Aspinen holds a Master’s degree in Industrial Engineering and Management.
About
• Member of the Executive Management Team since February 2022
Area of Responsibility
Sanna Salo is responsible for the strategy, planning, development, and implementation of QPR Software's brand, marketing, communication, and stock exchange communication.
Experience
Salo has more than 20 years of experience of B2B business in the IT industry through various positions in sales, marketing, and communication. Before starting at QPR, Salo worked as the Marketing and Communications Director of B2B digital marketing solutions provider Fonecta Oy. Before Fonecta, Salo worked for ten years at International Business Machines Corporation (IBM), holding various management positions in marketing both in Finland and in the Nordic countries. Before this, Salo worked for nine years at Atea Finland Oy in a range of marketing, communication, and sales positions.
Education
Salo has a Master's degree in Economics (M.Sc., Turku School of Economics and Business Administration) majoring in marketing. Salo also has a Bachelor of Business Administration (B.Sc.) degree in international business from Häme University of Applied Sciences.
Teemu Lehto
Chief Professional Services
b. 1970
Doctor of Science (Technology)
About
• Member of the Executive Management Team since March 2023
Area of Responsibility
Teemu Lehto is responsible for QPR’s professional services business.
Experience
Teemu Lehto has worked in management and expert positions at QPR Software for over 20 years. During his long career at QPR, Lehto has been responsible for the consulting business, marketing and communication, product development, as well as sales and partnerships. Before joining QPR, Lehto worked as CEO of Planway Oy, as the development manager of ICL Data Oy, and as the product development manager of ViSolutions Oy. He has also previously worked as a software engineer at Nokia Research Center and Systeemikonsultit Oy.
Education
Lehto holds a Doctoral degree in Technology.
Mika Maliniemi
Chief Operating Officer
b. 1980
Datanome
About
• Member of the Executive Management Team since January 2024
Area of Responsibility
Maliniemi's area of responsibility includes QPR's software product development, cloud service development and production, and customer support services.
Experience
Mika Maliniemi has worked in management and expert positions for over 20 years. Maliniemi has a long career at QPR, where he has been responsible for partnerships and technical consulting. He has also led QPR’s Customer Care, Cloud Services, and the Technical Services units. Outside QPR, Maliniemi worked at Mawell Plc, where he established and launched their customer support operations. He has also worked at TietoEvry as a manager, leading the customer support and deployments.
Education
Mika holds a degree in business information technology from Business School of Oulu.
QPR Software Board Review and Financial Statement 2023
TABLE OF CONTENTS
- Report of the Board of Directors
- Financial statements
- Notes to Financial Statements
Signatures of Board of Directors and Financial Statements
Report of the Board of Directors
SUMMARY OF THE FULL YEAR 2023
- SaaS software business grew +36 % (January-December 2022: +35 %)
- Net sales was 7,550 thousand euros and a decrease of 3 % (7,823) as the company focused on its core business
- EBITDA was 182 thousand euros (- 1,753), change from the comparison period 1,935 thousand
- The operating result was – 813 thousand euros (- 2,770), the change compared to the comparison period was 1,957 thousand
- The result before taxes was -924 thousand euros (-2,864), a change from the comparison period of 1,940 thousand
- The result was -924 thousand euros (-2,686), a change from the comparison period of 1,943 thousand
- Earnings/share was -0.055 euros (-0.202)
- Cash flow from operations 849 thousand euros (-1,765)
BUSINESS OPERATIONS
QPR Software Plc is a pioneer in business process optimization solutions and has positioned itself as a leading player in Digital Twin of an Organization (DTO) technology. QPR innovates, develops, and delivers software for analyzing, monitoring and modeling the operations of organizations. The company also offers consulting services to ensure that customers get full value from the software and associated methods.
QPR Software reports one business segment, Organizational Development of organizations. In addition to this, the Company reports revenue from products and services as follows: Software licenses, Renewable software licenses, Software maintenance services, Cloud services, and Consulting.
Recurring revenue reported by the Company consists of SaaS revenue, as well as revenue from renewable licenses and maintenance services.
Software licenses are sold to customers without time restrictions or for a limited-term. Renewable software licenses are sold to customers as a user right with an indefinite-term contract. These contracts are automatically renewed at the end of the agreed period, usually one year, unless the agreement is terminated within the notice. Renewable license revenue is recognized at one point in time, in the beginning of the invoicing period, yet at the earliest on the delivery. SaaS and maintenance service revenues are recognized monthly as recurring revenue throughout the contract period.
The geographical areas reported are Finland, the rest of Europe (including Russia and Turkey), and the rest of the world. Net sales are reported according to the location of the customer’s headquarters. The company has closed its business and partnerships in Russia for the time being.
Until 2023, the company provided consulting services, predominantly to public administration, which were unrelated to its core business. In the end of 2023, the company discontinued these activities. In the future, the company will prioritize offering consulting services tailored to the software it develops, aiming to deliver maximum added value to its customers.
NET SALES
The net sales in January-December was 7,550 thousand euros (7,823). The share of continuous net sales was 61% (53). Net sales decreased by 273 thousand euros (3%) because of the company's decision to discontinue providing consulting services beyond its core business to domestic public sector clients. The net sales of the group's other business areas increased (8.5%).
The group's net sales increased in the rest of Europe by 383 thousand euros (14%), decreased in Finland by 665 thousand euros (15%) and increased by 30 thousand euros (3%) in the rest of the world. The growth in Europe was related to the expansion of the software business and related consulting business in line with the company's internationalization strategy.
In Finland, the decline in net sales occurred because consulting outside the previously mentioned core business was discontinued. The decrease in net sales in the rest of the world was primarily due to the end of fixed-price software delivery projects sold to public administration customers in the Middle East in the previous year’s 2020–2021. The projects in question were implementations of software solutions in the application area of strategy and performance management. The discussion about the possible continuation of the completed projects with a new contract structure has been ongoing, and project deliveries will most likely start during the first half of 2024. The decrease in net sales was balanced out by obtaining a substantial long-term maintenance contract from the same customer, one year ahead of schedule; and by securing new contracts with customers in the Middle East market.
Of the net sales, 46% (50) derived from Finland, 42% (35) from the rest of Europe (including Turkey), and 12% (12) from the rest of the world. SaaS net sales grew by 36%, to 2,371 thousand euros (1,738).The increase in net sales from SaaS services was a result not only of the expansion of the use of QPR ProcessAnalyzer's SaaS solution with a global pharmaceutical company, announced by the company in December 2022, but also because of other successful customer expansions. The growth was also partly due to customers switching from licenses to the SaaS service model, and partly due to the company's price increases caused by inflationary pressure. SaaS growth was also boosted by successes in new customer acquisition. Transitioning to SaaS invoicing, ongoing contract net sales accounted for 61% of total net sales. Aligning with company’s strategy, recurring net sales increased by 8% from the comparison period. However, license revenues declined compared to last year due to the transition to SaaS and delays in customer decision- making prompted by challenging market conditions. Consulting net sales was 2,469 thousand euros (3,139), and its decrease was due to the discontinuation of outside the core business consulting in Finland. The decrease in net sales related to the end of fixed-price projects in the Middle East was compensated by the increase in consulting related to the implementation of products delivered to Europe.
NET SALES BY PRODUCT GROUP
The Group’s net sales derive from software and consulting businesses are broken down as follows:
| Group, IFRS (EUR 1 000) | 2023 | 2022 | Change, % |
|---|---|---|---|
| Software licenses | 485 | 560 | -13 |
| Renewable software licenses | 504 | 583 | -13 |
| Software maintenance services | 1,720 | 1,803 | -5 |
| Cloud services | 2,371 | 1,738 | 36 |
| Consulting services | 2,469 | 3,139 | -21 |
| Total net sales | 7,550 | 7,823 | -3 |
NET SALES BY GEOGRAPHIC AREA
The geographical areas reported are Finland, the rest of Europe (including Russia and Turkey), and the rest of the world. Net sales are reported according to the customer’s location. The company has closed its business and partnerships in Russia for the time being.
| 2023 | 2022 | Change, % | |
|---|---|---|---|
| Finland | 3,499 | 4,126 | -15 |
| Europe incl. Russia and Turkey | 3,128 | 2,745 | 14 |
| Rest of the world | 923 | 953 | -3 |
| Total net sales | 7,550 | 7,823 | -3 |
Group, IFRS (EUR 1 000)
| 2023 | 2022 | Muutos % | |
|---|---|---|---|
FINANCIAL PERFORMANCE
The group's EBITDA was a positive 182 thousand euros (-1,753) and the operating result was -813 thousand euros (-2,770). EBITDA was significantly improved compared to the comparison period by the company's strong cost-saving measures and the 8.5% growth of the software business. EBITDA, on the other hand, was reduced by discontinued public sector consulting projects in Finland, as well as a fixed-price project in the Middle East that ended in the first half of the year. In addition, the business result was improved by 55% lower company premises costs reported in depreciation in accordance with IFRS. The group's variable expenses were 896 thousand euros (1,552), and they decreased by 42% compared to the comparison period. Expenses decreased mainly after the completion of challenging fixed- price software delivery projects in the Middle East during the second quarter. With this, the need for the use of external services decreased significantly. The impact of fixed-price projects in the Middle East on the company's EBITDA for the first half of the year was negative. The group's fixed expenses were 6,473 thousand euros (8,028), i.e. 19% lower than in the comparison period, due to personnel reductions and layoffs implemented in the last quarter of 2022 and the second quarter of 2023, as well as external cost savings. Investments in long-term product development substantially decreased of 702 thousand euros, settling at 619 thousand euros (1,321). Consequently, this reduction mitigates the impact of cost reductions during the comparison period. The change in the provision for bad debts included in the fixed costs of the reporting period was four thousand euros (January-December 2022: 3). Overall, the group’s expenses decreased by 17% compared to the comparison period due to the company’s significant cost savings, as well as lower subcontracting costs for projects in the Middle East. In 2023, the company's SaaS net sales grew by 36% and software net sales as a whole by 8%. Net sales decreased in Finland, due to the discontinuation of consulting outside the core business in Finland, as well as the delay of follow-up projects in the Middle East. The company responded to the changing challenges of the business environment by implementing strong cost-saving measures throughout the financial year. In addition to this, on October 19, 2023, the company carried out change negotiations focused on the public administration consulting unit, which resulted in the termination of a total of nine positions. The savings from these measures will positively affect the company's profitability in the second quarter of 2024. Additionally, as a result of the change negotiations announced on December 14, 2023, and concluded on January 5, 2024, the company aims for cost savings from the termination of a total of 10 positions. The company also strives to organize its operations more efficiently, respond to changes in the operating environment, and renew the organizational structure to achieve the company's long-term growth and profitability goals. The employment contracts, ended as a result of change negotiations, will carry work obligation until the end of employment. Thus, the company did not record provisions related to change negotiations at the end of 2023. The result for the review period was -924 thousand euros (-2,868) and the earnings per share -0.055 euros (-0, 202).
FINANCE AND INVESTMENTS
Cash flow from operations during the review period was a positive 849 thousand euros (–1,798). The change in operating cash flow compared to 2022 was due to significant improvements in operating profit and working capital. During the final quarter of the year, the company garnered more of the annual revenue from its expanding software business through advance payments, compared to the previous year's corresponding period. Annual invoicing focuses on the turn of the year and is therefore seasonal. In addition to this, the company was able to collect its receivables from completed projects in the Middle East and was able to advance the start of a significant maintenance contract by a year. The cash flow of projects in the Middle East improved by approximately 300 thousand euros compared to 2022. Due to the robust cost-saving measures implemented by the company, there was a notable decrease in outgoing cash flow. Net financing costs were 111 thousand euros (62), and they included exchange losses of 14 thousand euros (20). The investments were 620 thousand euros (1,353), and they were mainly product development investments. The net cash flow from financing was 639 thousand euros (2,726), primarily driven by a directed share issue amounting to 760 thousand euros (2,937), alongside premises rents paid totaling 121 thousand euros (266). The group's financial situation is fair. At the end 20 of the review period, the group's cash and cash equivalents were 884 thousand euros (17) and short-term receivables were 1,706 thousand (3,452). 79% (82%) of receivables are denominated in euros and 53% of invoices are not yet due. Of the total amount of short-term receivables, the share of 1-30 days overdue receivables was 35%, 30-60 days 9% and more than 60 days 3%. The company was able to improve its invoicing cycle and enhance its collection. In addition, the group has available a credit limit of 500,000 euros. At the end of the review period, the group had a bank loan of EUR 1,500 thousand, of which EUR 1,000 thousand was long-term. In accordance with the original financing agreement, the first installment of EUR 0.5 million is due on January 31, 2024. After this, installments of EUR 0.5 million will mature annually in January 2025 and 2026. The covenants related to the loan are based on the company's EBITDA and equity ratio. The EBITDA of the covenants is tested every six months, and the equity ratio is tested annually according to the situation on the last day of the year. In the testing carried out on 31 December 2023, EBITDA fell below the agreed covenant limit. In December 2023, the bank pledged not to exercise its receivables maturity right under the financing agreement in the event of a potential breach of the group's EBITDA covenant as per the 2023 financial statements. The company's free cash flow, operating and investment cash flows, and premises rents totaled 108 thousand euros (-3,385). The significant change was due to the improvement of operating cash flow, lower cash flows from investments, and lower paid premises rents. The equity ratio was 8.1% (7.4%), largely driven by the directed share issue executed in the third quarter, which resulted in the acquisition of 760 thousand euros in new equity capital. Furthermore, the company's bolstered cash reserves, coupled with the reduction of the head office lease term from 5.5 years to 3.5 years in June, have enhanced the equity ratio. The equity ratio was reduced by the negative operating result of 924 thousand euros for the financial year.
PRODUCT DEVELOPMENT
QPR has positioned itself as a leading player in Digital Twin of an Organization (DTO) technology. The company innovates and develops software products that analyze, measure, and model the operations of organizations. QPR innovates and develops software products that analyze, measure, and model operations in organizations. The Company develops the following software products: QPR ProcessAnalyzer, QPR EnterpriseArchitect, QPR ProcessDesigner, and QPR Metrics. Product development expenses for the full year were 1,427 thousand euros (2,674) and product development expenses were capitalized in the balance sheet of 637 thousand euros (1,336). Product development depreciation was recorded at 782 thousand euros (660). The amortization period for capitalized product development expenses is four years.
PERSONNEL
At the end of the review period, the group employed 49 people (85).# PERSONNEL
The average number of personnel in 2023 was 57 (81). The average age of the personnel is 46 (44) years. Women account for 22% (26) of employees, and men for 78% (74). Of all personnel, 13% (17) work in sales and marketing, 44% (44) in consulting and customer care, 33% (30) in product development, and 10% (9) in administration. Personnel expenses were 5,287 thousand euros (7,214), of which the share of salaries and bonuses was 4,363 thousand euros (5,995). For incentive purposes, the company has a bonus program covering the entire personnel. The top management's short-term remuneration consists of monetary salary, fringe benefits and a possible annual bonus, mainly determined by the net sales development of the group and profit units. In addition, the company has a stock option program for key personnel.
STRUCTURAL CHANGE IN THE GROUP
There were no changes in the group structure in 2023. In 2022, the company has established a French branch under QPR Software Plc.
STOCK OPTION PLAN
The Board of Directors of QPR Software Plc decided in a meeting held on September 6, 2023, to launch a new key employee stock option plan, based on the authorization granted at the Annual General Meeting. QPR Software is operating with 2019B, 2022 and 2023 stock option plans intending to use these as part of the Group's incentive and commitment program for the key employees. The purpose of the stock options is to encourage the key employees to work on a long-term basis to increase the shareholder value and retain the key employees at the company. The stock options are issued gratuitously.
Option plan 2019B provides for the issuance of up to 473,000 options and option plan 2022 maximum 489,542 options, and option plan 2023 maximum 1,000,000 calculation. Each option entitles its holder to subscribe for one share. Out of the 2019 stock option plan, 437,000 options are marked with the symbol 2019B. The subscription period for stock options marked 2019B is January 1,2023-January 31,2024. The subscription period for the company's previous option program 2019A was January 1, 2022-January 31, 2023, and no shares were subscribed with the options of that program. The allocated number of shares, subscribed by exercising 2019B stock options issued corresponds to a maximum total of 0.8 per cent of all shares and votes of the shares in the company after the potential share subscriptions, if new shares are issued in the share subscription. After the share subscriptions with allocated stock options, the number of the company’s shares may be increased by a maximum total of 138,000 shares, if new shares are issued in the share subscription. The share subscription price for stock options 2019B is EUR 2.55 per share, which corresponded to the market price of the company’s share with an addition of 50 per cent at the time of issuance. The theoretical market value of stock options 2019 is approximately EUR 83 thousand in total. On December 31, 2023, out of stock option plan 2019B, no subscription has been made.
The stock option plan 2022 is marked with the symbol 2022. The Share subscription period with the Stock Options shall be 15 June 2025 - 31 May 2027. The number of shares for the stock option plan 2022, subscribed by exercising stock options corresponds to a maximum of 1.9% of the Company’s shares and votes after possible share subscriptions, if new shares are issued in the share subscription. As a result of the share subscriptions with stock options, the number of the Company’s shares may increase by a maximum of 489,542 shares, if new shares are issued in the share subscription. The share subscription price for stock options 2022 is EUR 0.85 per share, which corresponds to the market price of the company’s share at the time of issuance. The theoretical market value of stock option 2022 is approximately EUR 88 thousand in total.
The stock option plan 2023 is marked with the symbol 2023. The Share subscription period with the Stock Options shall be 6 September 2026 – 6 September 2028. The number of shares for the stock option plan 2023, subscribed by exercising stock options corresponds to a maximum of 5.2% of the Company’s shares and votes after possible share subscriptions, if new shares are issued in the share subscription. As a result of the share subscriptions with stock options, the number of the Company’s shares may increase by a maximum of 1,000,000 shares, if new shares are issued in the share subscription. The share subscription price for stock options 2023 is EUR 0.42 per share, which corresponds to the market price of the company’s share at the time of issuance. The assumed cost effect of the option program is around 150 thousand euros in total. The terms and conditions of the stock option plans for 2019, 2022 and 2023 are available on the company’s webpage www.qpr.com/investors.
STRATEGY
QPR Software's mission is to innovate, develop and deliver software for analyzing, monitoring and modeling the operations of organizations. The company also offers consulting services to ensure that customers get full value from the software and associated methods. On December 14, 2023, QPR Software Plc refined its current strategy to reflect market changes and the company's priority areas and announced renewed financial goals for the strategy period. In accordance with the adjusted strategy, the company profiles itself even more strongly as a software and SaaS player, a consultant for its core business areas, and as one of the leading players in Digital Twin of an Organization (DTO) technology. The aim of the adjusted strategy is to further increase the value the company produces for its customers and to support the company's growth through concentration. The company's mission is to innovate, develop and deliver software for analyzing, monitoring, and modeling the organizations’ operations. The company also offers consulting services to ensure that customers get full value from the software and related methods. In accordance with the adjusted strategy (2024–2027), the company focuses its business on the international growth of SaaS solutions offered by Digital Twin of an Organization (DTO) and the process mining at its core. The Company's DTO offering also includes software developed for modeling and managing and measuring the organization's strategy and performance. The Company's revised financial goals for the strategic period 2024–2027 are:
* Average twenty (20) percent annual SaaS growth, and
* Sustainable operating profit.
The Company also continues to build new strategic partner networks in accordance with the strategy announced on March 10, 2022, to achieve a scalable Go- to-Market model, expand its own offering and improve the value it provides to its customers together with technology and implementation partners. The Company concentrates its growth investments in Europe and the Middle East and, through a partner network, on new market areas such as North America.
THE PARENT COMPANY’S FINANCIAL PERFORMANCE AND POSITION
Parent company Net Sales was EUR 6,957,506 and it declined 3,8% from the comparable period (2022: 7,234,554). The decline in Net Sales was due to lower license and consulting revenue partly netted of by higher SaaS revenue. The Parent company’s operative loss was -13% of net sales and it was EUR -934,116 (2022: -33%, -2,375,022). Operating result increased due to cost saving measures and software revenue growth, while revenue from public sector consulting in Finland decreased as well as other income. In addition to previously explained impacts, the parent company result EUR -1,402,736 (-3,007,840) improved due to lower financing costs compared to comparable year and was deteriorated due to impairment of the shares and capital loan of its subsidiary that previously operated business in Russia. Financing costs were EUR 160,190 (600,190), the value of impaired subsidiary shares EUR 80,608 and value of impaired subsidiary capital loan EUR 225,000. The parent company transferred on August 23,2023 EUR 1,279,090 from share capital to invested unrestricted equity fund with the authorization granted by the Annual General Meeting. The share capital at the end of the fiscal year 2023 was €80,000, divided into 18,175,192 shares. The company has one class of shares. Each share carries one vote and equal rights to dividends. The book value of the shares is €0.11. The shares are registered in the book-entry system maintained by Euroclear Finland Ltd. The parent company's equity at the end of the fiscal year was EUR 1,112,072 (EUR 1,670,507). The equity was strengthened by the proceeds of a directed share issue, totaling EUR 760,000, and was, in turn, weakened by the loss-making financial year. During the fiscal year, the company reduced the value of the shares of its subsidiary that had previously conducted business in Russia by EUR 83,608 and wrote down the capital loan granted to that company by EUR 225,000. In January 2023, the parent company converted a short-term bank loan of EUR 1,000,000 into a long-term loan. Partially due to this, along with significant cost savings made by the company, the parent company's short-term debt decreased to EUR 1,653,151, totaling EUR 5,887,781. The short-term liabilities of the parent company included loans from subsidiaries amounting to EUR 2.1 million, while the parent company had borrowed EUR 2.3 million from its subsidiaries. Additionally, the parent company's short-term liabilities include advance payments for the year 2024 totaling EUR 2.1 million. Return for own equity was negative -126%, but it improved compared to comparison period (2022: -180%). The own equity ratio was 14% (2022: 18%).
SHARE CAPITAL, SHAREHOLDERS, AND SHARES
The company's share capital at the end of the fiscal year 2023 was 80,000 euros, divided into 18,175,192 shares. The company has one series of shares. Each share has one vote and an equal right to dividends. The share's book value is EUR 0.11 euros.The Company’s shares are included in the Finnish book-entry securities system managed by Euroclear Finland Oy. At the end of the financial year, the company had 1,943 shareholders (1,747). The company's shares were traded for EUR 1,586,000 (2,315) during the financial year, or an average of 6,318 euros per trading day (9,187). Trading in shares was on total 3,538,455 shares (2,263,135). Turnover in shares corresponds to 19.8% of the outstanding shares (14.1) and the average trading price of the shares was EUR 0.45 (1.02). The highest closing price of the financial year was EUR 0.75 (1.86) and the lowest closing price was EUR 0.32 (0.53). At the end of the year, the total market value of the company’s outstanding shares was EUR 5,957 thousand at the closing price of EUR 0.33/share. Additional information is presented in Note 34.
On 23 August 2023, QPR Software Plc received a notification from AC Invest Oy pursuant to Chapter 9, Section 5 of the Securities Markets Act (AML), according to which its direct share ownership of QPR Software Oyj's total number of shares and votes has decreased under (5) percent. On 23 August 2023, QPR Software Oyj received a notification from Vesa-Pekka Leskinen pursuant to Chapter 9, Section 5 of the Securities Markets Act (AML), according to which his direct share ownership of QPR Software Oyj's total number of shares and votes has decreased under ten (10) percent. On 23 August 2023, QPR Software Oyj received a notification from Oy Fincorp Ab pursuant to Chapter 9, Section 5 of the Securities Markets Act (AML), according to which its direct share ownership of QPR Software Oyj's total number of shares and votes has increased to more than twenty (20) percent.
Major shareholders of QPR Software Plc, December 31, 2023
| Registered shareholders | No. | Shares | % of shares and votes |
|---|---|---|---|
| KEMPE ROGER KENNETH: | 4,696,335 | 26 % | |
| OY FINCORP AB | 4,653,535 | 26 % | |
| KEMPE ROGER KENNETH | 42,800 | 0 % | |
| LESKINEN VESA-PEKKA ILMARI: | 1,768,759 | 10 % | |
| LESKINEN VESA-PEKKA ILMARI | 1,135,200 | 6 % | |
| KAUPPAMAINOS OY | 633,559 | 3 % | |
| UMO CAPITAL OY | 971,900 | 5 % | |
| SIILASMAA RISTO KALEVI | 805,333 | 4 % | |
| OY TALCOM AB | 562,000 | 3 % | |
| LAMY OY | 553,249 | 3 % | |
| JUNKKONEN KARI JUHANI | 520,824 | 3 % | |
| LAAKSO JANNE JUHANI | 444,444 | 2 % | |
| PIEKKOLA ASKO | 413,917 | 2 % | |
| PELKONEN JOUKO ANTERO: | 385,400 | 2 % | |
| POHJOLAN RAHOITUS OY | 385,000 | 2 % | |
| PELKONEN JOUKO ANTERO | 400 | 0 % | |
| QPR SOFTWARE OYJ | 339,471 | 2 % | |
| AC INVEST OY | 319,253 | 2 % | |
| LESKINEN VELI-MIKKO ILMARI | 310,040 | 2 % | |
| TRADEIRA OY | 204,842 | 1 % | |
| KEMPE PIA PAULINA | 168,333 | 1 % | |
| KEIKKO AARON SAMUEL | 111,164 | 1 % | |
| OY CATA-HOLDING AB | 100,000 | 1 % | |
| LEINO RIKU PETTERI | 90,358 | 0 % | |
| NORDCENTERIN NUORISOVALMENNUKSEN EDISTÄMISSÄÄTIÖ S | 86,666 | 0 % | |
| PALOHEIMO ASSET MANAGEMENT OY | 79,306 | 0 % | |
| 20 largest shareholders, total | 12,931,594 | 71 % | |
| Other shareholders, total | 5,243,598 | 29 % | |
| TOTAL | 18,175,192 | 100 % |
*exclude nominee registered shareholders
Distribution of shareholding by size, December 31, 2023
| Number of Shares | Shareholders | Shares and votes | |
|---|---|---|---|
| Number | % | Number | |
| 1 – 500 | 1,277 | 65.7 | 168,005 |
| 501 - 1 000 | 219 | 11.3 | 169,291 |
| 1 001 - 5 000 | 299 | 15.4 | 701,847 |
| 5 001 - 10 000 | 53 | 2.7 | 387,183 |
| 10 001 - 50 000 | 66 | 3.4 | 1,616,560 |
| 50 001 - 100 000 | 11 | 0.6 | 788,840 |
| 100 001 -1 700 000 | 18 | 0.9 | 14,343,466 |
| TOTAL | 1,943 | 100 | 18,175,192 |
| of which nominee registered | 7 | 1,879,292 |
Distribution of shareholding by sector, December 31, 2023
| Sector | Shareholders: Number | Shares and votes: Number | % | % |
|---|---|---|---|---|
| Private companies | 52 | 3.943.626 | 21.7 | |
| Financial and insurance institutions | 7 | 7.085.685 | 39.0 | |
| Households | 1,873 | 6.914.023 | 38.0 | |
| Non-profit organizations | 2 | 86,667 | 0.5 | |
| European union | 5 | 136,191 | 0.7 | |
| Other countries | 4 | 7,000 | 0.04 | |
| TOTAL | 1,943 | 18,173,192 | 100 | 100 |
| of which nominee registered | 7 | 1,879,202 | 10.3 |
QPR Software shareholding by insiders and closely related persons, December 31, 2023
| Options | Name and position | Number of shares | By controlled entities | By closely related persons *) | 2019 | B | 2022 | 2023 |
|---|---|---|---|---|---|---|---|---|
| Pertti Ervi, Chairman of the board | 73,112 | |||||||
| Matti Heikkonen, Board member | 24,487 | 40,922 | ||||||
| Antti Koskela, Board member | 42,945 | |||||||
| Jukka Tapaninen, Board member | 32,976 | |||||||
| Petri Kettunen, Principal auditor | ||||||||
| Heikki Veijola, CEO | 135,000 | 97,908 | 200,000 | |||||
| Insiders by definition: | Tero Aspinen, VP, Management team | 0 | 33,000 | 36,716 | 80,000 | |||
| Matti Erkheikki, Director/Management team | 2,000 | 65,000 | 48,954 | 100,000 | ||||
| Mervi Kerkelä-Hiltunen, Director/Management team | 5,121 | 0 | 0 | 36,716 | 150,000 | |||
| Pekka Keskiivari, Director/Management team | 2,565 | 0 | 45,000 | 36,716 | 80,000 | |||
| Teemu Lehto, Director/Management team | 34,000 | 0 | 10,000 | 7,434 | 80,000 | |||
| Sanna Salo, Director/Management team | 5,121 | 7,350 | 0 | 36,716 | 80,000 | |||
| * Shares held by spouses and persons under guardianship | ||||||||
| Insider ownership, TOTAL | 220,327 | 40,922 | 9,350 | 288,000 | 301,160 | 770,000 |
OWN SHARES
QPR Software Plc’s 1,719,871 new shares issued in the direct share issue on August 22, 2023 have been registered in the trade register kept by the Finnish Patent and Registration Board on August 23, 2023. After the registration of the new shares, the total number of the company's shares is 18,175,192, of which the company had 339,471 own shares with a total nominal value of EUR 37,342 euros and a total purchase price of EUR 347,552 euros. The shares held by the company (treasury shares) represent 1.9% of the company's share capital and votes.
GOVERNANCE
QPR Software Plc’s (QPR) management practices reflect sound corporate governance and high ethical principles. They comply with the regulatory rules related to the management of public companies, such as the Finnish Companies Act, the Market Abuse Regulation, and the Securities Markets Act. Also, QPR’s Articles of Association, as well as the Finnish Corporate Governance Code (effective as of January 1, 2020) and the Guidelines for Insiders. A separate report has been issued on QPR Software's corporate governance system for 2023, which was published along with the annual report on 22 March 2024. The company's management principles and an explanation of the corporate governance system can be read in the investor section of the company's website. The investor pages also contain a report on insider governance, information on the largest owners, the articles of association, the board's rules of procedure, a report on internal control and audit, introductions of the board of directors and the management team, a summary of the company's disclosure policy, and the company's press releases published during the financial year.
ANNUAL GENERAL MEETING
The Annual General Meeting of QPR Software Plc was held May 3, 2023, in Helsinki. The Annual General Meeting adopted the Company's financial statements for the financial year 2022 and discharged the members of the Board of Directors and the CEO from liability. The Annual General Meeting resolved that no dividend be paid based on the balance sheet adopted for the financial year ended on December 31, 2022, further adopted the Company’s Remuneration Report, and resolved to amend the Company’s Articles of Association. Further, the Annual General Meeting resolved to reduce the share capital of the Company, to authorize the Board of Directors to decide on share issues and on the issue of other special rights entitling to shares as well as on the acquisition of own shares.
Annual accounts and the use of the profit shown on the balance sheet
The Annual General Meeting adopted the Company’s financial statements and discharged the members of the Board of Directors and the CEO from liability for the financial period January 1 – December 31, 2022. The Annual General Meeting resolved that no dividend be paid based on the balance sheet adopted for the financial year ended on December 31, 2022.
Board of Directors and Auditor
The Annual General Meeting confirmed that the number of Board members is four. Pertti Ervi was re-elected as the Chairman of the Board of Directors and Matti Heikkonen, Antti Koskela, and Jukka Tapaninen were re-elected as members of the Board of Directors. The Authorised Public Accountants KPMG Oy Ab was re-elected as the Company’s auditor. KPMG Oy Ab has announced that Petri Kettunen, Authorized Public Accountant, will act as the principal auditor.
Remuneration of the members of the Board of Directors and the Auditor
The Annual General Meeting resolved that the Chairman of the Board of Directors be paid EUR 45,000 per year and the other members of the Board of Directors EUR 25,000 per year. Approximately 40 percent of the remuneration will be paid in shares and 60 percent in cash. The shares will be granted as soon as possible after the Annual General Meeting and if the insider regulations allow it. The members of the Board of Directors will also be reimbursed for travel and other expenses incurred while they are managing the Company's affairs. The remuneration to the Auditor shall be paid according to the reasonable invoice.
Amendment of the Articles of Association
The Annual General Meeting resolved to amend 27 Articles 6 and 9 of the Company’s Articles of Association. Article 6 was amended to correspond to the responsibility for the auditor oversight stipulated in the amended Finnish Auditing Act (1141/2015) and further so that the term of the auditor shall end at the closing of the first Annual General Meeting following the election. Article 9 was amended to enable holding a general meeting entirely without a meeting venue as a so-called remote meeting in addition to the Helsinki, Espoo and Vantaa. Further, said article was amended due to certain legislation changes stipulating the matters to be resolved upon in an Annual General Meeting.
Reduction of the share capital
The Annual General Meeting resolved to reduce the Company’s registered share capital from EUR 1,359,090 to EUR 80,000, i.e. by an aggregate amount of EUR 1,279,090, with the reduced amount of EUR 1,279,090 being transferred to the reserve for invested unrestricted shareholders’ equity. The reduction of the share capital requires a public notice in accordance with the Finnish Companies Act.# Authorization of the Board of Directors to decide on share issues and on the issue of other special rights entitling to shares
The Annual General Meeting resolved to authorize the Board of Directors to decide on issuances of new shares and conveyances of the own shares held by the Company (share issue) either in one or more instalments. The share issues can be carried out against payment or without consideration on terms to be determined by the Board of Directors. The authorization also includes the right to issue special rights referred to in Chapter 10, Section 1 of the Finnish Companies Act, which entitle to the Company's new shares or own shares held by the Company against consideration.
Based on the authorization, the maximum number of new shares that may be issued and own shares held by the Company that may be conveyed in share issues or on the basis of special rights referred to in Chapter 10, Section 1 of the Finnish Companies Act is 3,200,000 shares. The authorization includes the right to deviate from the shareholders' pre-emptive subscription right. The authorization is in force until the next Annual General Meeting.
Authorization of the Board of Directors to decide the acquisition of own shares
The Annual General Meeting resolved to authorize the Board of Directors to decide on the acquisition of the Company’s own shares. Based on the authorization, an aggregate maximum amount of 500,000 own shares may be acquired, either in one or more instalments. The authorization includes the right to acquire own shares otherwise than in proportion to the existing shareholdings of the Company’s shareholders, using the Company’s non-restricted shareholders’ equity. The authorization is in force until the next Annual General Meeting.
The terms of all authorizations given to the board of QPR Software Plc by the Annual General Meeting can be read in full in the stock exchange release published by the company on May 3, 2023. The release can be read in the investor section of the company's website.
MANAGEMENT AND AUDITORS
The other members of the management team were:
- Director responsible for QPR's products and the vision and strategy of the product portfolio Matti Erkheikki
- The company's director responsible for sales and customers Eric Allart (until June 27, 2023)
- Director responsible for technology Pekka Keskiivari
- Tero Aspinen, director responsible for Middle East business
- The director responsible for the consulting business was Samuel Rinnetmäki until February 28, 2023, and Teemu Lehto from March 1, 2023.
- Director responsible for marketing, communication, and brand Sanna Salo
- The company's CFO Mervi Kerkelä-Hiltunen
- Johanna Lähde served as the company's HR director until 1 September 2023
During the accounting period, the auditing firm KPMG Oy Ab acted as the actual auditor of QPR Software Plc, and the principal auditor was Petri Kettunen, KHT.
SHARES HELD BY THE BOARD AND CEO
QPR Software Plc's board members and CEO and their close associates owned 485,041 QPR Software Plc shares on 31 December 2023, which corresponds to 2.7% of the company's shares and voting power. (31/12/2022: 1.9). The number of shares includes own, spouse's, guardians' and controlling entities' holdings.
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INTERNAL CONTROL
The Group’s internal control and risk management aim to ensure that the Group 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 continuity of its business. The Board of Directors' duty is to monitor the appropriateness, effectiveness and efficiency of risk management and internal control within the Group. The Board assesses the risks based on the threat they pose to shareholders. The Board also oversees that the Company has defined operating principles for internal control and that the Company monitors the effectiveness of controls.
RISK MANAGEMENT
The Group’s CFO is responsible for coordinating and reporting on the Group’s internal controls and risk management. The Group’s risk management is driven by the requirements arising from legislation, shareholder expectations regarding business objectives, as well as the expectations from customers, personnel, and other important stakeholders. QPR’s risk management aims to systematically and comprehensively identify the risks related to its operations and to ensure that risks are managed and considered in decision making. Risk management responsibilities are integrated throughout the organization. Risk management is developed by continuously improving the Company’s operational processes. The principle of materiality is used as the basis for identifying risks: the realization of monitored risks must have a material effect on the Company’s business operations.
QPR Software has identified the following three groups of risks related to its operations: risks related to business operations, risks related to information and products, and risks related to financing. Property, operational, and liability risks are covered by way of insurance.
QPR Software Plc’s Management System was awarded the ISO 9001:2015 quality certificate covering all of the Company’s activities, which are audited annually by an external evaluator.
RISKS RELATED TO BUSINESS OPERATIONS
The following risks are related to QPR Software’s business operations:
Country risk
Risk is measured by assessing the potential loss of country-specific revenue. Risk is managed by continuously gathering market information and diversifying business across geographical markets and industries as well as considering movements in geopolitical environment.
Customer risk
Risk is measured in terms of software maintenance customer churn and the share of overdue accounts receivable in total receivables (%). Risk is managed by taking good care of every customer and reseller, as well as by actively following up on accounts receivable.
Personnel risk
Risk is measured in terms of personnel churn. Risk is managed through skilled recruitment, professional management practices, and by providing job rotation and learning and growth opportunities.
Legal and other risks
Risk is measured by comparing the cumulative euro-value of all open legal disputes with annual net sales (%). Risk is managed with good knowledge of contract law and standard terms, and by conducting business activities that are both ethical and in line with Company values.
QPR’s country and customer risks are mitigated by conducting business in more than 50 countries, in both public and private sectors, as well as in several different industries. Reasonable credit risk concerning individual business partners is characteristic to any international business. QPR seeks to limit this risk by continuously monitoring standard payment terms, receivables, and credit limits. The value of trade receivables over 60 days past due was 3% (3) of total trade receivables at the end of the period.
RISKS RELATED TO INFORMATION AND PRODUCTS
QPR Software has identified the following three risks related to information and products:
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Risk related to products
Risk is managed by ensuring that the Company’s offering remains competitive by differentiating from competitors through the strengths of its content and products. The Company seeks to ensure the security of its products by using automatic malware prevention.
Intellectual Property Rights
The Company’s Intellectual Property Rights (IPR) are protected by the confidentiality of the source code, its secure storage, and selected patent applications. In the process mining business, the Company has adopted a more active IPR strategy. As a result, QPR filed patent applications for five separate inventions in Finland and the USA in 2012. The inventions relate to automated business process discovery based on processing event data. In April 2015, QPR announced that the U.S. Patent and Trademark Office has granted a patent as a result of the applications. In May 2016, QPR informed that the U.S. Patent and Trademark Office granted an additional patent to its process mining technology. In addition, the Company uses contract management and internal training to ensure that third-party IPRs are not used in QPR products without permission. The Company has legal expense insurance.
Information and security risks
QPR Software regularly monitors and mitigates information security risks in its operations and reports to the Board of Directors. The Company uses governance practices and technology to improve the security of their systems. To mitigate information security risks, the Company has adopted data and vendor governance models, conducted annual audits of our partners, and organized relevant in-house training to improve security awareness. QPR has had no significant information security events or problems related to product management, and no significant changes in the risks of these have been observed during 2023. In June 2023, there was extensive sewage water damage at the company's headquarters in Helsinki, which did not, however, cause any information security risks. In September 2023, Bureau Veritas performed the re-certification of QPR Software's information security management system according to the latest ISO 27001:2022 standard. The international ISO 27001 standard contains requirements for establishing, implementing, maintaining, and continually improving an information security management system. The information security management system preserves the confidentiality, integrity, and availability of information by applying a risk management process and gives confidence to interested parties that risks are adequately managed.# RISKS RELATED TO FINANCING
QPR Software has identified the following two financing risks:
Currencies
Foreign currency risk is measured by calculating the share of all non-euro receivables in total receivables, or the share of an individual non-euro currency in total receivables (%). The risk is managed by using the euro as the primary invoicing currency and by currency hedging in accordance with the Company’s hedging policy. The company constantly monitors how the open positions of the biggest invoicing currencies develop. At the end of the financial year, the Company had not hedged its foreign currency (non-euro) trade receivables. Approximately 79% of the Group’s trade receivables were in euros at the end of the financial year (82).
Liquidity risk
Liquidity risk means insufficient financing or higher than usual financing costs due to a lack of liquid assets when business conditions suddenly deteriorate, and financing is needed. The goal of liquidity risk management is to maintain sufficient liquidity and to ensure that funds are constantly available to finance the business quickly enough. QPR maintains sufficient liquidity through efficient cash management, deposits, and by reacting to rapidly changing situations. The business cash flow forecast is used as a measure. The risk is managed by active monitoring of the forecast and efficient collection. Risks related to the company's financial position are mitigated by the relatively high share of continuous income in turnover. In addition to this, the company invoices most of the continuous income receivables with pre-invoicing. The company's financial position on December 31, 2023, was moderate due to the previous loss-making performance, the impact of which the company will reduce with the cost savings brought about by the concluded change negotiations during 2024. In addition, on January 24, 2023, the company converted a short-term financing limit of 1.5 million euros into a long-term one, the conditions of which are covenants tied to EBITDA and equity ratio. The EBITDA of the covenants is tested every six months, and the equity ratio is tested annually according to the 30 situation on the last day of the year. In the testing carried out on 31 December 2023, EBITDA fell below the agreed covenant limit. In December 2023, the bank pledged not to exercise its receivables maturity right under the financing agreement in the event of a potential breach of the group's EBITDA covenant as per the 2023 financial statements. The financing limit will be repaid in installments of 500 thousand euros on 31 January 2024, 31 January 2025, and 31 January 2026. To manage the liquidity risk, the company also has an agreement for a credit limit of 500 thousand euros, which was not in use on December 31, 2023. Financial risk management is described in more detail for the financial year 2023 in note 30 to the financial statements.
LEGAL DISPUTES
In 2022 and 2023, the Company did not have any legal disputes.
OUTLOOK FOR 2024
The company monitors the development of the world's economic situation and geopolitical tensions. The slowly budding recovery of economic growth, falling interest rates and normalizing inflation will improve the financial position of customers, and investment decisions can be expected to accelerate towards the end of 2024. Supported by the current contract base and the projected growth of SaaS (Software as a Service) net sales, QPR expects the growth of SaaS net sales to be double-digit and estimates that the entire software net sales will grow in 2024 (2023: 5,122 thousand euros). The company expects the operating result to improve significantly in the financial year 2024. The operating result in 2023 was -813 thousand euros.
THE BOARD OF DIRECTORS’ PROPOSAL ON DIVIDEND
At the end of the 2023 fiscal year, the parent company's distributable funds were EUR 1,340,682. The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for the financial year 2023. There have been no significant changes in the company's financial position since the end of the financial year.
EVENTS AFTER THE REPORTING PERIOD
Change negotiations related to the adjustment of QPR Software Plc´s strategy
On December 14, 2023, QPR Software Plc announced its adjusted strategy and the change in its organizational structure planned to support it and submitted a negotiation proposal in accordance with the related Cooperation Act to start the change negotiations. The change negotiations were completed on Thursday, January 4, 2024. In the change negotiations, the Company planned to change its organizational structure to support its adjusted strategy. The goal of the planned changes is to support the more efficient organization of QPR Software's operations, to try to respond to changes in the operating environment, and to renew the organizational structure in order to achieve the Company's long-term growth and profitability goals. Change negotiations were held separately in both QPR Software Plc and QPR Services Oy. As a result of the negotiations, the Company will terminate a maximum of four positions at QPR Software Plc and a maximum of six positions at QPR Services Oy.
QPR Software Plc signed the first partner agreement in North America and received an affirmative decision on Business Finland's support for market mapping
QPR Software's unique process mining software, QPR ProcessAnalyzer, is globally the only software running natively in the Snowflake Data Cloud. This means solving performance, scalability, and security issues for customers. The majority of Snowflake's customers are in the US market. In accordance with its strategy, QPR aims to expand to the North American market, utilizing the partner network that is being built there. An important step in this endeavor is the signing of a significant partnership agreement with Solution BI on January 16, 2024. The agreement includes resale rights for QPR ProcessAnalyzer in the United States, Canada and Mexico. QPR Software also cooperates with Solution BI in the Middle East region. In addition, on January 30, 2024, Business Finland approved QPR Software Oyj's Market Explorer funding, which is used to investigate business opportunities and map markets in North America. Granted support covers 50% of incurred costs, upper limit 39,995 euros. This financial support is intended to facilitate the mapping of the company's new markets and to promote the conditions for the internationalization of the business.
Key figures of the group 2021-2023
| Group, IFRS (EUR 1 000) | 2023 | 2022 | 2021 | |
|---|---|---|---|---|
| Net sales | 7,550 | 7,823 | 9,140 | |
| Growth of net sales, % | -3.5 | -14.4 | 1.9 | |
| Operating result | -813 | -2,770 | -1,248 | |
| % of net sales | -10.8 | -35.4 | -13.7 | |
| Result or loss before tax | -924 | -2,864 | -1,356 | |
| % of net sales | -12.2 | -36.6 | -14.8 | |
| Result for the period | -924 | -2,868 | -1,356 | |
| % of net sales | -12.2 | -36.7 | -14.8 | |
| Return on equity, % | -221.5 | -625.7 | -111.4 | |
| Return of investments, % | -42.0 | -120.3 | -49.3 | |
| Cash and cash equivalents | 884 | 17 | 441 | |
| Net liabilities | 934 | 2,262 | 1,241 | |
| Equity | 348 | 487 | 430 | |
| Gearing, % | 268.3 | 464.9 | 288.5 | |
| Equity ratio, % | 8.1 | 7.4 | 8.3 | |
| Total balance sheet | 5,869 | 7,442 | 5,800 | |
| Investment in intangible and tangible assets | 637 | 2,324 | 924 | |
| % of net sales | 8.4 | 29.7 | 10.1 | |
| Research and development expenses | 1,427 | 2,674 | 2,115 | |
| % of net sales | 18.9 | 34.2 | 23.1 | |
| Personnel average for period | 57 | 81 | 80 | |
| Personnel at the beginning of period | 85 | 80 | 88 | |
| Personnel at the end of period | 49 | 85 | 80 |
Per-share key figures 2021-2023
| Group, IFRS (EUR 1,000) | 2023 | 2022 | 2021 | |
|---|---|---|---|---|
| Diluted/Undiluted Earnings per share, EUR | -0.055 | -0.202 | -0.113 | |
| Equity per share, EUR | 0.020 | 0.030 | 0.035 | |
| Dividend per share *, EUR | 0.000 | 0.000 | 0.000 | |
| Dividend as % of result | 0.0 | 0.0 | 0.0 | |
| Effective dividend yield, % | 0.0 | 0.0 | 0.0 | |
| Price/earnings ratio (P/E) | -6.0 | -2.8 | -16.4 | |
| Development of share price | 0.0 | 0.0 | 0.0 | |
| Average price, EUR | 0.45 | 1.02 | 1.97 | |
| Lowest closing price, EUR | 0.32 | 0.50 | 1.48 | |
| Highest closing price, EUR | 0.75 | 1.89 | 2.38 | |
| Closing price on Dec 31, EUR | 0.33 | 0.56 | 1.85 | |
| Market capitalization on Dec 31, EUR 1,000 | 5,957 | 8,983 | 22,178 | |
| Development of trading volume | ||||
| Number of shares traded, 1,000 pcs | 3,538 | 2,263 | 3,324 | |
| % of all shares | 19.8 | 14.1 | 27.7 | |
| Number of shares on Dec 31, 1,000 pcs | 18,175 | 16,455 | 12,445 | |
| Average number of shares outstanding | 17,836 | 16,042 | 11,988 |
*) Year 2023: The Board of Director's proposal to the Annual General Meeting.
Financial Statements
QPR Software Plc Annual Report 2023 and related Annual Financial Report (AFR) ESEF tagging is officially published in Finnish. QPR Software Plc has decided to provide voluntarily non-official version translated in English in this ESEF tagged document.
| Note | 2023 | 2022 | |
|---|---|---|---|
| Net sales | 3 | 7,550 | 7,823 |
| Other operating income | 4 | 1 | 4 |
| Materials and services | 6 | 896 | 1,552 |
| Employee benefit expenses | 7 | 5,287 | 7,214 |
| Depreciation and amortization | 9 | 995 | 1,017 |
| Other operating expenses | 10 | 1,186 | 814 |
| Total expenses | 8,363 | 10,597 | |
| Operating Result | -813 | -2,770 | |
| Financial income | 11 | 1 | 4 |
| Financial expenses | 11 | -112 | -66 |
| Financial items, net | -111 | -62 | |
| Provisions | 25 | 0 | -33 |
| Result before tax | -924 | -2,864 | |
| Income taxes | 12 | 0 | -3 |
| Result for the financial year | -924 | -2,868 | |
| Other items in comprehensive income that may be reclassified subsequently to profit or loss: | |||
| Exchange differences on translating foreign operations | -1 | 2 | |
| Other items in comprehensive income, net of tax | -1 | 2 | |
| Total comprehensive income for the financial year | -925 | -2,866 | |
| Earnings per share, EUR | |||
| Undiluted, EUR | 13 | -0.055 | -0.202 |
| Diluted, EUR | 13 | -0.055 | -0.202 |
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT, IFRS
CONSOLIDATED BALANCE SHEET, IFRS (1/2)
| (EUR 1 000) | Note | 2023 | 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized product development expenses | 14 | 2,217 | 2,380 |
| Other intangible assets | 14 | 28 | 31 |
| Goodwill | 15 | 358 | 358 |
| Tangible assets | 16 | 81 | 171 |
| Other investments | 17 | 5 | 5 |
| Right-of-use assets | 16 | 318 | 756 |
| Deferred | |||
| --- | --- | --- | --- |
| Total non-current assets | 3,279 | 3,973 | |
| Current assets | |||
| Trade and other receivables | 20 | 1,706 | 3,452 |
| Cash and cash equivalents | 21 | 884 | 17 |
| Total current assets | 2,590 | 3,469 | |
| Total assets | 5,869 | 7,442 |
36 CONSOLIDATED BALANCE SHEET, IFRS (2/2)
EQUITY AND LIABILITIES
Equity
| 23 | 80 | 1,359 | |
|---|---|---|---|
| Other funds | 21 | 21 | 21 |
| Treasury shares | -348 | -406 | |
| Translation difference | -67 | -66 | |
| Invested non-restricted equity fund | 23 | 4,925 | 2,943 |
| Retained earnings | -4,263 | -3,364 | |
| Equity attributable to shareholders of the parent company | 348 | 487 |
Non-current liabilities
| Interest-bearing lease liabilities | 192 | 609 | |
| Interest-bearing liabilities | 1,000 | 0 | |
| Deferred tax liabilities | 19 | 0 | 0 |
| Total non-current liabilities | 1,192 | 609 | |
Current liabilities
| Interest-bearing lease liabilities | 126 | 149 | |
| Provisions | 25 | 0 | 33 |
| Trade and other payables | 25 | 3,703 | 4,644 |
| Interest-bearing liabilities | 24 | 500 | 1,521 |
| Total current liabilities | 4,329 | 6,346 | |
| Total liabilities | 5,521 | 6,955 | |
| Total equity and liabilities | 5,869 | 7,442 | |
(EUR 1,000)
37 CONSOLIDATED CASH FLOW STATEMENT, IFRS
(EUR 1 000)
| Note | 2023 | 2022 | |
|---|---|---|---|
| Cash flow from operating activities | |||
| Result for the period | -924 | -2,868 | |
| Adjustments for the result | |||
| Depreciation | 995 | 1,017 | |
| Other adjustments | 27 | 83 | -143 |
| Changes in working capital: | |||
| Increase (-)/decrease (+) in short-term non-interest bearing | 1,872 | -680 | |
| Increase (+)/decrease (-) in short-term non-interest bearing | -1,051 | 988 | |
| Interest expense and other financial expenses paid | -107 | -58 | |
| Interest income and other financial income received | 0 | 0 | |
| Taxes paid | -19 | -21 | |
| Net cash flow from operating activities | 849 | -1,765 | |
| Cash flow from investing activities | |||
| Acquisition of tangible assets | 0 | -111 | |
| Capitalized development expenses | -619 | -1209 | |
| Acquisition of other intangible assets | -2 | -35 | |
| Net cash flow from in investing activities | -620 | -1,355 | |
| Cash flow from financing activities | |||
| Proceeds from borrowings | 24 | 1,500 | 1,521 |
| Repayments of borrowings | 24 | -1,500 | -1,500 |
| Payment of lease liabilities | -121 | -266 | |
| Share issue, net | 23 | 760 | 2,937 |
| Net cash used in financing activities | 639 | 2,693 | |
| Change in cash and cash equivalents | 868 | -427 | |
| Cash and cash equivalents at the beginning of year | 17 | 441 | |
| Effect of exchange rate differences | 0 | 3 | |
| Cash and cash equivalents at the end of year | 21 | 884 | 17 |
*2022: Includes non-interest bearing liabilities related to Investments EUR 127 thousand
38 PARENT COMPANY INCOME STATEMENT, FAS
(EUR)
| Note | 2023 | 2022 | |
|---|---|---|---|
| Net sales | 3 | 6,957,506 | 7,234,554 |
| Other operating income | 4 | 388,696 | 693,716 |
| Material and services | 6 | 2,301,230 | 2,511,492 |
| Personnel expenses | 7 | 3,992,126 | 5,306,728 |
| Depreciation and amortization | 9 | 158,066 | 185,842 |
| Other operating expenses | 10 | 1,828,896 | 2,299,231 |
| Total expenses | 8,280,317 | 10,303,292 | |
| Operating result | -934,116 | -2,375,022 | |
| Financial income and expenses | 11 | -468,620 | -600,190 |
| Result before appropriations and taxes | -1,402,736 | -2,975,212 | |
| Appropriations | 25 | 0 | -32,628 |
| Result before taxes | -1,402,736 | -3,007,840 | |
| Income taxes | 12 | 0 | 0 |
| Result for the financial year | -1,402,736 | -3,007,840 |
39 PARENT COMPANY BALANCE SHEET, FAS
(EUR)
| Note | 2023 | 2022 | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 14 | 84,107 | 150,426 |
| Tangible assets | 16 | 80,775 | 170,866 |
| Investments in group companies | 17 | 3,497,653 | 3,581,261 |
| Other investments | 17 | 4,562 | 4,562 |
| Total non-current assets | 3,667,098 | 3,907,115 | |
| Current assets | |||
| Non-current receivables | 18.19 | 0 | 225,000 |
| Current receivables | 20 | 3,472,941 | 5,111,014 |
| Cash and cash equivalents | 21 | 859,814 | 938 |
| Total current assets | 4,332,755 | 5,336,952 | |
| Total assets | 7,999,852 | 9,244,067 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 23 | 80,000 | 1,359,090 |
| Invested unrestricted equity fund | 23 | 5,529,731 | 3,454,341 |
| Retained earnings | -2,747,372 | 270,643 | |
| Treasury shares | -347,552 | -405,726 | |
| Provisions | - | 32,628 | |
| Total equity | 1,112,072 | 1,670,507 | |
| Appropriations | |||
| Result for the financial year | -1,402,736 | -3,007,840 | |
| Total appropriations | 0 | 32,628 | |
| Liabilities | 1,000,000 | - | |
| Current liabilities | 24.25 | 5,887,781 | 7,540,932 |
| Total liabilities | 6,887,781 | 7,540,932 | |
| Total equity and liabilities | 7,999,852 | 9,244,067 |
40 PARENT COMPANY CASH FLOW STATEMENT, FAS
(EUR)
| 2023 | 2022 | |
|---|---|---|
| Cash flow from operations | ||
| Operating result | -1,402,736 | -2,375,022 |
| Adjustment for the period: | ||
| Depreciation and amortization | 158,066 | 185,842 |
| Non-cash transactions | 356,610 | 35,199 |
| Financial items, net | -69,746 | -42,031 |
| Cash flows before change in working capital | -957,806 | -2,196,012 |
| Change in working capital | ||
| Increase (-) / decrease (+) in current receivables | 1,807,431 | -875,913 |
| Increase (-) / decrease (+) in current liabilities* | -952,531 | 1,061,813 |
| Change in net working capital | 854,900 | 185,900 |
| Net cash from operating activities | -102,905 | -2,010,112 |
| Cash flows from investing activities | ||
| Investments in intangible assets | -1,657 | -34,534 |
| Purchases of tangible assets | 0 | -111,043 |
| Investments in subsidiary loans granted | 203,694 | -1,185,942 |
| Net cash used in investing activities | 202,037 | -1,331,519 |
| Cash flows from financing activities | ||
| Proceeds from current loans and borrowings | 1,500,000 | 1,520,756 |
| Repayments of short-term borrowings | -1,500,000 | -1,500,000 |
| Proceeds from share issuance | 759,744 | 2,937,392 |
| Cash flows from financing activities | 759,744 | 2,958,148 |
| Change in cash and cash equivalents | 858,876 | -383,483 |
| Cash and cash equivalents at the beginning of the year | 938 | 384,421 |
| Cash and cash equivalents at the end of the year | 859,814 | 938 |
41 STATEMENTS OF CHANGES IN EQUITY
Consolidated statement of changes in equity, IFRS
(EUR 1,000)
| Share capital | Other funds | Translation differences | Treasury shares | Invested unrestricted equity fund | Retained earnings | Equity attributable to shareholders of the parent company | |
|---|---|---|---|---|---|---|---|
| Equity Dec 31, 2021 | 1,359 | 21 | -68 | -439 | 5 | -448 | 430 |
| Disposal of own shares | 0 | 0 | 0 | 34 | 0 | 0 | 34 |
| Stock option scheme | 0 | 0 | 0 | 0 | 0 | -47 | -47 |
| Share issue, net | 0 | 0 | 0 | 0 | 2,937 | 0 | 2,937 |
| Comprehensive income | 0 | 0 | 2 | 0 | 0 | -2,868 | -2,866 |
| Equity Dec 31, 2022 | 1,359 | 21 | -66 | -406 | 2,943 | -3,364 | 487 |
| Disposal of own shares | 0 | 0 | 0 | 58 | 0 | -10 | 48 |
| Reduction of share capital | -1,279 | 0 | 0 | 0 | 1,279 | 0 | 0 |
| Stock option scheme | 0 | 0 | 0 | 0 | 0 | 36 | 36 |
| Share issue, net | 0 | 0 | 0 | 0 | 703 | 0 | 703 |
| Comprehensive income | 0 | 0 | -1 | 0 | 0 | -924 | -925 |
| Equity Dec 31, 2023 | 80 | 21 | -67 | -348 | 4,925 | -4,263 | 348 |
Parent company statement of changes in shareholders’ equity, FAS
| Number of shares | Share capital | Treasury shares | Invested unrestricted equity fund | Retained earnings | Vapaa oma pääoma (EUR) | Total unrestricted equity | Total equity | |
|---|---|---|---|---|---|---|---|---|
| Equity Jan 1, 2022 | 12,444,863 | 1,359,090 | -439,307 | 5,347 | 256,223 | -177,736 | 1,181,354 | |
| Right issue | 0 | 0 | 0 | 3,448,994 | 0 | 3,448,994 | 3,448,994 | |
| Treasury share price difference | 0 | 0 | 0 | 0 | 14,418 | 14,418 | 14,418 | |
| Disposal of own shares | 0 | 0 | 33,581 | 0 | 0 | 33,581 | 33,581 | |
| Result for the year | 0 | 0 | 0 | 0 | -3,007,840 | -3,007,840 | -3,007,840 | |
| Equity Dec 31, 2022 | 16,455,321 | 1,359,090 | -405,726 | 3,454,341 | -2,737,199 | 311,417 | 1,670,507 | |
| Right issue | 0 | 0 | 0 | 796,300 | 0 | 796,300 | 796,300 | |
| Reduction of share capital | 0 | -1,279,090 | 0 | 1,279,090 | 0 | 1,279,090 | 0 | |
| Treasury share price difference | 0 | 0 | 0 | 0 | -10,175 | -10,175 | -10,175 | |
| Disposal of own shares | 0 | 0 | 58,175 | 0 | 0 | 58,175 | 58,175 | |
| Result for the year | 0 | 0 | 0 | 0 | -1,402,736 | -1,402,736 | -1,402,736 | |
| Equity Dec 31, 2023 | 18,175,192 | 80,000 | -347,551 | 5,529,731 | -4,150,108 | 1,032,072 | 1,112,072 |
Notes to Financial Statements
44 COMPANY INFORMATION
QPR offers services and software tools for developing business processes and enterprise architecture. The Group’s parent company, QPR Software Plc (company ID 0832693-7), is a public limited liability company incorporated in Finland. The parent company is domiciled in Helsinki and its registered office is located at Huopalahdentie 24, 00350 Helsinki, Finland. The shares of the parent company, QPR Software Plc, have been listed on the Helsinki Stock Exchange since 2002. A copy of the Consolidated Financial Statements is available on the Internet at www.qpr.com or at QPR Software Plc, Huopalahdentie 24, Helsinki, Finland. QPR Software Plc’s Board of Directors have approved the financial statements for publication on February 16, 2024. Shareholders have the right to approve or reject financial statements in the Annual General Meeting or decide to revise them.
1. ACCOUNTING PRINCIPLES FOR CONSOLIDATED FINANCIAL STATEMENT
Basis of preparation
QPR Software Plc’s Consolidated Financial Statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and take into account the IAS and IFRS standards, as well as SIC and IFRIC interpretations, in force on December 31, 2023. In the Finnish accounting legislation, International Financial Reporting Standards refer to standards and interpretations accepted to be followed in the European Union in accordance with Regulation (EC) No 1606/2002. The financial statements have been prepared using the historical cost convention, unless otherwise disclosed in the accounting principles below. The Consolidated Financial Statements are presented in Euro, which is the functional currency of the parent company. Financial statements are presented in thousands of Euros. All presented figures are rounded, which means that the sum of individual amounts may differ from the total presented. Key figures have been calculated using exact amounts.
New and amended standards and interpretations adopted in 2023
From the beginning of 2023, the Group has applied the following new and revised standards and interpretations.
- Disclosure of Accounting Policies – Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements (effective for financial years beginning on or after January 1, 2023, early adoption is permitted)
The amendments clarify the application of materiality in deciding which accounting policies to disclose. -
Classification of Liabilities as Current or Non-current – Amendments to IAS 1 Presentation of Financial Statements (effective for financial years beginning on or after January 1, 2023, early adoption is permitted)
Amendments aim to harmonize the way IAS 1 is applied in practice and to clarify the classification of liabilities as current or non-current.# Definition of Accounting Estimates – Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors -
(effective for financial years beginning on or after January 1, 2023, early adoption is permitted) Amendments clarify how entities should distinguish changes between accounting principles and accounting estimates and focus on developing and clarifying accounting estimates.
Consolidation principles
The Consolidated Financial Statements include the parent company, QPR Software Plc, and the subsidiaries it controls. The parent company's control is based on the ownership of the entire share capital or a majority of shares in the case of subsidiaries, as well as 100% voting rights. The Company did not own shares in joint ventures or associated companies in 2023 and 2022. Subsidiaries acquired during the financial period are consolidated from the date on which control is obtained, and divestments are included until the date on which control ceases. Intragroup shareholdings are eliminated using the acquisition cost method. Intercompany business transactions, receivables, liabilities, unrealized profits, as well as intragroup profit distribution, are eliminated in the Consolidated Financial Statements. The profit for the financial year applicable to non-controlling interests is presented separately in the consolidated comprehensive income statement, and the share of the non-controlling interest in shareholders’ equity is presented separately in the consolidated balance sheet. The Group’s subsidiaries did not have any non-controlling interests in 2023 and 2022.
Continuity of operations
The Consolidated Financial Statements have been prepared in accordance with the principle of continuity. The company concluded a long-term refinancing agreement at the beginning of 2023. Additional information in the note 30.
Foreign currency translation
The functional currency of foreign subsidiaries is the local bookkeeping currency. Transactions denominated in foreign currency have been translated into the group reporting currency using the exchange rate valid on the transaction date. Monetary items have been converted into the group reporting currency using the exchange rate on the closing date, and non-monetary items using the exchange rate on the transaction date. The exchange gains and losses from business operations are included in operating profit, and the exchange gains and losses from financial assets or liabilities are included in financial income and expenses. The income statements of foreign subsidiaries are translated into Euro using the average exchange rates for the year, and the balance sheets are translated using the exchange rates on the balance sheet date. Translation differences arising from the elimination of foreign subsidiaries and the translation of equity items accumulated after the acquisition are entered in other comprehensive income. Foreign currency gains and losses from monetary items that are part of the net investment in a foreign unit are recognized in other comprehensive income.
Revenue recognition
Net sales include the normal sales income from the Group’s business operations, deducted by sales-related taxes and granted discounts. When calculating net sales, they are adjusted to account for exchange rate differences. Revenue is recognized when (or as) the control of goods or services are transferred to a customer either over time or at a point in time. The consolidated net sales consist of software license sales, software maintenance services, cloud (SaaS) services and consulting. In relation to its resellers, the Company acts as a principal and records in its net sales the revenue from the software sales of the resellers to the end customers, and records in its costs the reseller commission. Software license revenue is recognized at a point in time, when (or as) a company transfers control of license or user rights to a customer. Limited term license performance obligations are license and maintenance, and revenue is recognized as the performance obligation if fulfilled, either at a point in time or over time, during the agreement period. Long-term software license contracts agreed for indefinite duration have the performance obligation for licenses and maintenance. The license part of the revenue is recognized at a point in time, in the beginning of each invoicing period, however not earlier than delivery is performed. The maintenance part as well as cloud services in total are recognized over time, evenly during the contract period. Software maintenance services covering software updates and customer support are recognized over time, evenly during the agreement period. Cloud services (SaaS) in totality are recognized over time, as the performance obligation is the service rendered over time. Revenues from consulting services are recognized as services are rendered, when (or as) control of the services has been transferred to the customer. The Group uses payment terms typical for each market, including domestic terms, which are typically shorter than international terms.
Advance payments
Licenses and maintenance fees for long-term, indefinite-term software licenses (Renewable Licenses), software maintenance revenues, as well as revenues from cloud services (SaaS services) are generally invoiced before the commencement of the performance obligation. The portion of the performance obligation is recorded in the balance sheet as deferred income liabilities, and, correspondingly, either as accounts receivable or, upon the fulfillment of the performance, into the bank account.
Other operating income
Other operating income includes income that is not related to the parent company’s core business. Public subsidies are recorded in other operating income, except when they are related to investments, in which case they are deducted from the acquisition cost of the asset.
Research and development expenditure
Research costs are expensed as incurred. Expenses related to the introduction of new technology, or the development of a new product are capitalized and amortized over the useful life of 4 years. When determining the duration of useful economic life, the technology’s eventual obsolescence and the product’s typical life cycle are considered. Amortization begins when the product becomes commercially viable. Maintenance costs and minor improvements to existing products are expensed. Grants received for product development are recognized in the income statement for the periods in which the corresponding expenses are incurred.
Pension plans
The Group’s pension scheme is a defined contribution plan managed by a pension insurance company. The expenses are recognized in the comprehensive income statement in the financial period that the contribution relates to. The Group does not have a legal or constructive liability to pay additional contributions in case of non-performance by the pension insurance company.
Share-based payments
The Group has adopted an option plan for key persons as of beginning of the year 2019 and expanded it with a new plans in 2022 and 2023. In the Group incentive plan payments are made in the form of equity instruments. The benefits granted under the plans are recognized at fair value on the date on which they were granted and entered as costs evenly throughout the period during which they were earned. The effect of the plans on profit or loss is presented under the costs of employee benefits. The cost determined on the date on which the options were granted is based on the Group estimate of the number of options for which rights are presumed to arise at the end of the incentive earning period. The Group updates the presumption of the final number of options on the final day of every reporting period. Changes in estimates are treated through profit or loss. The fair value of the option plan is defined based on the Black-Scholes pricing model. Terms that are not market based, such as profitability and specific growth targets, are not taken into consideration when determining the fair value of options. Instead, they affect the estimate of the final number of options. When option rights are exercised, the assets obtained from share subscriptions are entered into the invested unrestricted equity fund in accordance with the terms of the plan.
Operating profit
IAS 1 “Presentation of Financial Statements” does not define the concept of operating profit. The Group uses the following definition of operating profit: operating profit is the sum of net sales and other operating income, less the cost of materials and services, expenses for employee benefits, other operating expenses, as well as depreciation, amortization and impairment losses of tangible and intangible assets. Exchange rate differences arising from working capital items are included in operating profit, whereas exchange rate differences arising from financial assets and liabilities are included in financial income and expenses.
Impairment
At each annual closing, the Group reviews asset items for any indication of impairment losses. If there are such indications, the amount recoverable from the said asset item is assessed. The recoverable amount of tangible and intangible assets is the higher of the asset item’s fair value less the cost arising from disposal and its value in use. The recoverable amount of financial assets is either the fair value or the present value of expected future cash flows discounted at the original effective interest rate. An impairment loss is recognized in the comprehensive income statement when the carrying amount is greater than the recoverable amount. Goodwill is not amortized but its recoverable amount is estimated annually or more frequently if circumstances indicate that the value may be impaired. Such an estimate is prepared at least at each annual closing. For such purposes, goodwill is allocated to cash-generating units.# Accounting Policies
An impairment loss is recognized in the consolidated comprehensive income statement, if the impairment test shows that the carrying amount of goodwill exceeds its recoverable amount. In this case the goodwill is recorded at its recoverable amount. After the initial recognition, goodwill is valued at original acquisition cost, less impairment losses recognized. Impairment losses on goodwill cannot be reversed.
Income taxes
The tax expense in the comprehensive income statement consists of tax based on taxable income for the financial year and deferred tax. Tax based on taxable income for the financial year is calculated on the basis of taxable income and the tax rate valid in each country. Income taxes are charged to income, except when they are related to items recorded in equity or other items in comprehensive income, in which case the tax expense is adjusted to such items.
Deferred taxes are calculated based on temporary differences between the book value and tax value of an asset or liability item. Deferred taxes are calculated at tax rates enacted by the balance sheet date. A deferred tax asset is recognized in the amount that it is probable, in accordance with IAS 12, that future taxable income will be generated against which the temporary difference can be utilized. Deferred tax liabilities are recognized in the balance sheet in full.
Intangible assets
Goodwill arising from business acquisitions represents the excess of the cost of an acquisition, amount of non-controlling interests, and previously owned equity interests, over the fair value of the net assets of the acquired company. Goodwill is valued at the original acquisition cost minus impairment losses. 47
Other intangible assets include, for example, patents and IT systems. They are amortized on a straight-line basis over their useful life, which is 2 – 5 years.
Tangible assets
The balance sheet values of tangible assets are based on original acquisition cost minus accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method and is based on the estimated useful life of the asset. The Group didn’t capitalize any borrowing costs in 2022 and 2021.
Useful lifetimes of tangible assets:
- Machinery and equipment: 3 – 7 years
- IT machinery and equipment: 2 – 5 years
Lease agreements
The Group has adopted the IFRS 16 standard on leases. According to the standard, a contract is or contains a lease if the Group has a right to control the use of an identified asset for a certain period of time in exchange for consideration. When determining the non- cancellable period, the Group assesses the probability of exercising extension and termination options by considering all relevant facts and circumstances.
Lease payments are divided into liabilities and financial expenses. Financial expenses are recognized in the income statement for the lease period. The right-of- use asset is depreciated using the straight-line method over the asset’s useful life or lease term, if shorter than useful life. Lease liabilities are discounted at the average loan interest rate of the year.
When future lease payments are revised due to changes in an index rate or the terms of the lease, the right-of-use asset and the corresponding lease liability is revalued to reflect these changes.
The group applies a practical expedient, under which the company does not recognize lease agreements with a lease term of up to 12 months at the commencement date (short-term lease) on the balance sheet. Instead, the company recognizes the lease payments related to short-term leases as expenses on a straight-line basis over the lease term.
The Group primarily leases offices for business use. Lease agreements are typically made either as fixed-term contracts or indefinite-term contracts.
Financial assets and liabilities
The Group’s financial assets are classified into the following measurement categories: financial assets at fair value through profit or loss and financial assets at amortized cost. The classification of financial assets is based on the purpose of the acquisition (business model for managing the asset) that is determined upon initial recognition. Transaction costs are included in the original carrying amount of a financial asset when the item is not measured at fair value through profit or loss. Purchases and sales of financial assets are recorded on the trade date. Items recognized at amortized cost comprise trade receivables.
Financial liabilities are initially recognized at fair value minus the transaction costs that are directly attributable to the acquisition or issue of financial liability. Subsequently financial liabilities, except for derivative liabilities, are measured at amortized cost using the effective interest rate (EIR) method. Financial liabilities may include both non-current and current liabilities and they can be interest-bearing or non- interest-bearing.
Financial assets and liabilities measured at fair value are presented in accordance with the hierarchy levels based on fair value measurement. Levels 1, 2 and 3 are based on the source of information used in the measurement. On level 1, fair values are based on public quotes. On level 2, fair values are based on quoted market rates and prices, discounted cash flows, and valuation models (options). For assets and liabilities classified on level 3, there is no reliable market information source, and therefore, the fair values of these instruments are not based on market information.
To measure expected credit losses of trade receivables from customers, the Group uses a simplified approach, where the loss allowance is measured based on an allowance matrix and recognized at an amount equal to lifetime expected credit losses. Expected credit losses are measured based on historical information on previous credit losses, and also the available information on future economic conditions is included in the model.
Derivative contracts
Derivative contracts are initially recognized at fair value on the date on which the Group becomes party to the contract and are subsequently measured at fair value. The Group has no derivative contracts in 2023 and 2022.
Cash and cash equivalents
Cash and cash equivalents include cash and cash equivalents which are highly liquid and have a maturity of no more than three months from the date of acquisition.
Treasury shares
The repurchase of our own shares as well as the related direct costs are recorded as deductions in equity. 48
Provisions
A provision is recognized when the Group has a legal or constructive obligation as a result of an action, the outflow of resources required to settle the obligation is probable, and a reliable estimate of the amount can be made. A restructuring provision is recognized when a detailed and appropriate plan has been prepared and the company has begun to implement the plan or has announced that it will do so. Restructuring provisions are based on the management’s best estimate of the expenses to be incurred, e.g., from employee termination payments. A provision for a loss-making agreement is recognized when unavoidable expenditure required to fulfill the obligations exceeds the benefits obtainable from the agreement.
Accounting principles that require management consideration, and essential factors of uncertainty related to management estimates
The preparation of the financial statements in accordance with IFRS standards requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the balance sheet, as well as the amounts of income and expenses for the reporting period and future periods. In addition, professional judgment is required in applying the accounting principles used in the preparation of the financial statements. Since the estimates and assumptions related to the determination of the carrying amounts of assets and liabilities are based on management's views at the date of the financial statements, expected outcomes, and other assumptions that were available when preparing these consolidated financial statements and are considered appropriate in the circumstances.
Estimates involve risks and uncertainties, and actual outcomes may differ from the estimates and assumptions made. In estimates requiring management judgment, the management has taken into account general uncertainties such as geopolitical tensions, inflation, and uncertainties affecting the overall economic development in the valuation. Uncertainties may affect revenue development, the discount rate used, and the evolution of the company's cost structure. Additionally, uncertainties may impact the company's customers' payment behavior, as well as potential misjudgments in the capitalization of research and development expenses resulting from technology choices.
Estimates are reviewed if there are changes in circumstances or if new information or experience is obtained. Since estimates inherently involve various degrees of uncertainty, the actual outcome may differ from the estimated, leading to adjustments in the carrying amounts of assets and liabilities.
Learn more about the key areas that required management consideration:
- Share-based payments and option schemes (Note 8)
- Product development expenditure (Note 14)
- Goodwill (Note 15)
- Deferred tax (Note 19)
- Trade receivables (Note 20)
- Leases (Note 29)
- Financial risk management (Note 31)
Adoption of new or revised IFRS standards
The Group has not yet adopted the following already published new or amended standards and interpretations. The Group will adopt them immediately after the standard or interpretation is effective or, when applicable, at the beginning of the next financial year. (*= On December 31, 2022, the standard in question was not yet approved for adoption in EU)
Management is currently assessing the impact of the following new or revised standards and interpretations on the Consolidated Financial Statements.Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures * (voluntary adoption is allowed, entry into force postponed for the time being) Amendments eliminate the conflict between current guidance on consolidation and equity method accounting and require that a full gain should be recognized when transferred assets constitute a business as defined in IFRS 3 Business Combinations. Other new and revised standards and interpretations are not expected to influence the Consolidated Financial Statements when they become effective.
ACCOUNTING PRINCIPLES OF PARENT COMPANY FINANCIAL STATEMENTS
Financial statements of the parent company, QPR Software Plc, have been prepared in accordance with 49 Finnish Accounting Standards (FAS), which differ in certain respects from the international standards (IFRS) used in the Consolidated Financial Statements. Financial statements have been prepared using historical cost convention, unless otherwise disclosed in the accounting principles below. The parent company financial statements are presented in Euro. All figures are rounded, which means that the sum of individual amounts may differ from the total presented. Key figures have been calculated using exact amounts.
Foreign currency translation
Transactions denominated in foreign currency are translated using the exchange rate on the transaction date. At the end of the reporting period, financial assets and liabilities denominated in foreign currency are valued at balance sheet date. Exchange rate differences arising from foreign currency business transactions are recorded in their corresponding income statement accounts above operating profit; and the net exchange rate differences arising from financial items are recorded in financial income or expenses.
Revenue recognition and Advance payments
The parent company applies the same principles of revenue recognition and advance payment booking principles as the Group. The Group’s principles of revenue recognition and advance payments are introduced in Note 1, page 45.
Other operating income
Other operating income includes income that is not related to the parent company’s core business. Public subsidies are included in other operating income, except when they are related to investments, in which case they are deducted from the acquisition cost of the asset.
Pension plans
The employees’ statutory pension plan is managed by a pension insurance company. Statutory pension contributions are stated in the income statement as an expense in the year of their accrual.
Research and development expenditure
Research costs are expensed as incurred. Expenses related to the introduction of new technology, or the development of a new product are capitalized and amortized over the useful life of 4 years. When determining the duration of useful economic life, the technology’s eventual obsolescence and the product’s typical life cycle are considered. Amortization begins when the product becomes commercially viable. Maintenance costs and minor improvements to existing products are expensed. Grants received for product development are recognized in the income statement for the periods in which the corresponding expenses are incurred.
Intangible assets
Intangible assets are reported at original acquisition cost minus accumulated amortization and impartment losses, if any. Public subsidies used to acquire an intangible asset are deducted from the asset’s acquisition cost and reduce asset amortization in the income statement. The expected useful lifetime of an intangible asset ranges from 2 – 5 years.
Tangible assets
Tangible assets are stated in the balance sheet at original acquisition cost minus accumulated depreciation and impartment losses. The economic life of a tangible asset ranges from 2 – 7 years.
Investments
The shares the parent company holds in subsidiaries and other entities are valued at original acquisition cost or at fair value, if lower.
Provisions
A provision is recognized when the parent company has a legal or constructive obligation as a result of an action, an outflow of resources required to settle the obligation is probable, and a reliable estimate of the amount can be made.
Leasing
Lease payments are treated as expenses during the rental period.
2. SEGMENT INFORMATION
QPR Software reports on one operating segment: Operational development of organizations. In addition to this, the Company reports net sales from products and services as follows: Software license sales, Renewable software license sales, Software maintenance services, Cloud services, and Consulting. Recurring revenue reported by the Group consists of software maintenance services and cloud services as well as of renewable software licenses. They are based on long-term, indefinite, or multiyear contracts, and are generally invoiced annually in advance. The accounting and valuation principles for the segments are the same as in the Consolidated Financial Statements.
| Group (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Net sales by operating segment | ||
| Operational development of org. | 7,550 | 7,823 |
| Total net sales | 7,550 | 7,823 |
3. NET SALES
Net Sales by Product Group
The Group’s net sales derive from software and consulting businesses are broken down as follows:
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Software licenses | 485 | 560 |
| Renewable software licenses | 504 | 583 |
| Software maintenance services | 1,720 | 1,803 |
| Cloud services | 2,371 | 1,738 |
| Consulting services | 2,469 | 3,139 |
| Total net sales | 7,550 | 7,823 |
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Software licenses | 446,561 | 511,639 |
| Renewable software licenses | 239,533 | 342,862 |
| Software maintenance services | 1,480,323 | 1,562,072 |
| Cloud services | 2,322,405 | 1,678,508 |
| Consulting services | 2,468,683 | 3,139,472 |
| Total net sales | 6,957,506 | 7,234,554 |
Net sales geographically
The geographical areas reported are Finland, the rest of Europe (including Russia and Turkey), and the rest of the world. Net sales are reported according to the customer’s location. The company has closed its business and partnerships in Russia for the time being.
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Finland | 3,499 | 4,126 |
| Europe incl. Russia and Turkey | 3,128 | 2,745 |
| Rest of the world | 923 | 953 |
| Total net sales | 7,550 | 7,823 |
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Finland | 3,499,399 | 4,125,501 |
| Europe incl. Russia and Turkey | 2,627,272 | 2,240,723 |
| Rest of the world | 830,835 | 868,330 |
| Total net sales | 6,957,506 | 7,234,554 |
Balance sheet items based on customer agreements are presented in Note 22.
4. OTHER OPERATING INCOME
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Other items | 1 | 4 |
| Total | 1 | 4 |
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Other items | 388,696 | 693,716 |
| Total | 388,696 | 693,716 |
The other items include intra-group service charges from the parent company.
5. ACQUIRED BUSINESS OPERATIONS, PARENT COMPANY
The branch to France was established under QPR Software Plc in 2022.
6. MATERIALS AND SERVICES
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Materials and services | 896 | 1,552 |
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Materials and services | 2,301,230 | 2,511,492 |
Materials and services include mainly commissions and localization fees charged by the reseller network, as well as consultancy subcontracting. Materials and services of the parent company include intra-group license fees in addition to the above-mentioned expenses.
7. EMPLOYEES AND RELATED PARTIES
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Wages and salaries | 4,425 | 5,995 |
| Pension expenses - defined contribution plans | 741 | 1,008 |
| Other personnel expenses | 121 | 211 |
| Total | 5,287 | 7,214 |
| Average number of employees during the year | 57 | 81 |
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Wages and salaries | 3,339,953 | 4,413,833 |
| Pension expenses - defined contribution plans | 551,973 | 728,847 |
| Other personnel expenses | 100,200 | 164,048 |
| Total | 3,992,126 | 5,306,728 |
| Average number of employees during the year | 40 | 56 |
Related parties
The Group and the parent company’s related parties include members of the parent company’s Board of Directors and the Executive Management Team, including the Chief Executive Officer, their spouses, domestic partners, children and dependents, spouses’ or domestic partners’ children and dependents, as well as entities controlled by any such related party. The Group does not have any loans, commitments or guarantees granted to or received from related parties. The Group has not had business transactions with related parties in 2023 and 2022. Related parties to the parent company also include subsidiaries in the Group. The list of Group companies is presented in Note 17. Shares in subsidiaries and other entities. Transactions between the parent company and other Group companies, as well as intra-Group receivables, liabilities, commitments, and guarantees are included as total amounts in the notes for the parent company financial statements. Salaries, bonuses, fringe benefits and change in vacation bonus and bonus accruals for management The Group has determined management to include members of the Board of Directors and the Executive Management Team, including the Chief Executive Officer.# Group, IFRS (EUR 1 000)
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Salaries and other short-term benefits: | | |
| Members of the Board of Directors | 120 | 113 |
| Chief Executive Officer Jussi Vasama | 56 | 219 |
| Chief Executive Officer Heikki Veijola | 163 | 0 |
| Executive Management Team | 1,041 | 969 |
| Total | 1,380 | 1,301 |
Parent company, FAS (EUR)
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Salaries and other short-term benefits: | ||
| Members of the Board of Directors | 120,000 | 113,175 |
| Chief Executive Officer Jussi Vasama | 55,937 | 219,058 |
| Chief Executive Officer Heikki Veijola | 162,593 | 0 |
| Executive Management Team | 1,041,134 | 969,066 |
| Total | 1,379,664 | 1,301,299 |
55 The Group and the parent company’s related parties include members of the parent company’s Board of Directors and the Executive Management Team, including the Chief Executive Officer, their spouses, domestic partners, children and dependents, spouses’ or domestic partners’ children and dependents, as well as entities controlled by any such related party. The Group does not have any loans, commitments or guarantees granted to or received from related parties. The Group has not had business transactions with related parties in 2023 and 2022. Related parties to the parent company also include subsidiaries in the Group. The list of Group companies is presented in Note 17. Shares in subsidiaries and other entities. Transactions between the parent company and other Group companies, as well as intra-Group receivables, liabilities, commitments, and guarantees are included as total amounts in the notes for the parent company financial statements. In 2023, the maximum annual bonus of Executive Management Team, including the CEO, was 50% of the annual base salary. The bonus scheme for members of the Executive Management Team was based on a set of KPI's including development of the Group net sales, new sales and other non financial KPI's. For financial year 2023 about 44 thousand euros (2022: EUR 12 thousand) will be paid to the executive management team, including the CEO.
Parent company, FAS (EUR)
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Board fees by member: | ||
| Ervi Pertti, Chairman of the Board | 45,000 | 43,020 |
| Heikkonen Matti | 25,000 | 23,385 |
| Koskela Antti | 25,000 | 23,385 |
| Tapaninen Jukka | 25,000 | 23,385 |
| Total | 120,000 | 113,175 |
56 8. SHARE BASED PAYMENTS Option scheme QPR Software is operating with 2019B, 2022 and 2023 stock option plans intending to use these as part of the Group's incentive and commitment program for the key employees. The purpose of the stock options is to encourage the key employees to work on a long-term basis to increase the shareholder value and retain the key employees at the company. The stock options are issued gratuitously. The option plan 2019 B provides for the issuance of up to 473,000 options, option plan 2022 maximum 489,542 options and option plan 2023 maximum 1,000,000 options. Each option entitles its holder to subscribe for one share. The option plan participants can execute their reward during a one or two-year subscription period following each vesting period through either subscribing for shares or selling options. The option plan participants generally lose the right to their reward if their employment terminates during the vesting period. Stock option plan 2019 B with 437,000 options is marked with the symbol 2019B. The subscription period for stock options marked 2019 B is January 1,2023-January 31, 2024. The allocated number of shares, subscribed by exercising 2019 B stock options issued corresponds to a maximum total of 0.8 per cent of all shares and votes of the shares in the company after the potential share subscriptions, if new shares are issued in the share subscription. After the share subscriptions with allocated stock options, the number of the company’s shares may be increased by a maximum total of 138,000 shares, if new shares are issued in the share subscription. The share subscription price for stock options 2019B is EUR 2.55 per share, which corresponded to the market price of the company’s share with an addition of 50 per cent at the time of issuance. The share subscription price will be credited to the reserve for the company’s invested unrestricted equity. The share subscription price will be deducted by the amount of dividends and distribution of assets paid. The initial theoretical market value for Stock Option plan 2019B, is approximately EUR 0.11 per stock option. The theoretical market value of stock options 2019B is approximately EUR 50,400 in total. The theoretical market value of one stock option has been calculated using the Black & Scholes stock option pricing model by taking into account the share subscription price of a stock option and with the following input factors: share price EUR 1.70, risk free interest rate 0 per cent, times to maturities of stock options approximately 5 years and volatility approximately 22 per cent. On December 31, 2023, out of stock option plan 2019 B, no subscription has been made. A member of the Executive Management Team participating in the stock option plan must increase his or her share ownership in the company with the net profit received through the stock options. He or she must invest half of the net profit received through the stock options in the company’s shares until his or her share ownership in the company corresponds to the value of his or her annual gross salary. The share ownership must be maintained at such level as long as his or her employment or service is in force. The Board of Directors resolved on the 2019 B stock option plans by virtue of an authorization granted by the company’s Annual General Meeting of Shareholders held on 12 April 2018. The target group of the stock option plan includes in total less than 15 key employees and persons belonging to the management. The terms and conditions of the stock options 2019 available on the company’s webpage: www.qpr.com/investors. The stock option plan 2022 are marked with the symbol 2022. The Share subscription period with the Stock Options shall be 15 June 2025 - 31 May 2027. The number of shares for the stock option plan 2022, subscribed by exercising stock options corresponds to a maximum of 1.9% of the Company’s shares and votes after possible share subscriptions, if new shares are issued in the share subscription. As a result of the share subscriptions with stock options, the number of the Company’s shares may increase by a maximum of 489,542 shares, if new shares are issued in the share subscription. The share subscription price for stock options 2022 is EUR 0.85 per share, which was corresponding to the market price of the company’s share at the time of issuance. The share subscription price will be credited to the reserve for the company’s invested unrestricted equity. The share subscription price will be deducted by the amount of dividends and distribution of assets paid. The theoretical market value of one stock option 2022 is approximately EUR 0.22 per stock option and is approximately EUR 107,700 in total. The theoretical market value of one stock option has been calculated using the Black & Scholes stock option pricing model by taking into account the share subscription price of a stock option and with the following input factors: share price EUR 0.85, risk free interest rate 0.88 per cent, times to maturities of stock options approximately 4.8 years volatility approximately 27 per cent.
57 The Board of Directors resolved on the 2022 stock option plans by virtue of an authorization granted by the company’s Annual General Meeting of Shareholders held on 6 April 2022. The target group of the stock option plan includes in total less than 10 key employees and persons belonging to the management. The terms and conditions of the stock options 2022 available on the company’s webpage: www.qpr.com/investors. The stock option plan 2023 are marked with the symbol 2023. The Share subscription period with the Stock Options shall be 6 September 2026 - 6 September 2028. The number of shares for the stock option plan 2023, subscribed by exercising stock options corresponds to a maximum of 5.2% of the Company’s shares and votes after possible share subscriptions, if new shares are issued in the share subscription. As a result of the share subscriptions with stock options, the number of the Company’s shares may increase by a maximum of 1,000,000 shares, if new shares are issued in the share subscription. The share subscription price for stock options 2023 is EUR 0.42 per share, which was corresponding to the market price of the company’s share at the time of issuance. The share subscription price will be credited to the reserve for the company’s invested unrestricted equity. The share subscription price will be deducted by the amount of dividends and distribution of assets paid. The theoretical market value of one stock option 2023 is approximately EUR 0.16 per stock option and is approximately EUR 158,000 in total. The theoretical market value of one stock option has been calculated using the Black & Scholes stock option pricing model by taking into account the share subscription price of a stock option and with the following input factors: share price EUR 0.42, risk free interest rate 0.88 per cent, times to maturities of stock options approximately 5 years volatility approximately 42 per cent. The Board of Directors resolved on the 2023 stock option plans by virtue of an authorization granted by the company’s Annual General Meeting of Shareholders held on 3 May 2023. The target group of the stock option plan includes key employees and persons belonging to the management. The terms and conditions of the stock options 2023 available on the company’s webpage: .www.qpr.com/investors.
Stock option schemes and subscription period
| Stock options granted / outstanding at end of the year | Returned/ exercised/ expired | Un-distributed | Share subscription price |
|---|---|---|---|
| 2019B 1.1.2023–31.1.2024 | 288,000 | 288,000 | 2,55 |
| 2022 15.6.2025–31.5.2027 | 352,470 | 0 | 0,85 |
| 2023 6.9.2026–6.9.2028 | 950,000 | 0 | 0,42 |
| Total | 1,590,470 | 0 | 288,000 |
58 9.## DEPRECIATION AND AMORTIZATION
Group, IFRS (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Intangible assets | 787 | 671 |
| Tangible assets | ||
| Machinery and equipment | 90 | 111 |
| Right-of-use assets, buildings | 118 | 235 |
| Total | 995 | 1,017 |
Parent company, FAS (EUR)
| 2023 | 2022 | |
|---|---|---|
| Intangible assets | 67,975 | 74,634 |
| Tangible assets | ||
| Machinery and equipment | 90,091 | 111,208 |
| Total | 158,066 | 185,842 |
No write-downs on assets were booked in 2023 and 2022.
10. OTHER OPERATING EXPENSES
Group, IFRS (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Non-statutory indirect employee costs | 93 | 191 |
| Premises | 52 | 25 |
| Travel expenses | 14 | 44 |
| Marketing and other sales promotion | 223 | 279 |
| Computers and software | 615 | 528 |
| External services | 604 | 807 |
| Doubtful receivables and bad debts | 2 | 58 |
| Capitalized product development expenses | -619 | -1,321 |
| Other expenses | 201 | 202 |
| Total | 1,186 | 814 |
Other expenses include fees paid to the Company’s auditor as follows:
| 2023 | 2022 | |
|---|---|---|
| Auditing | 73 | 66 |
| Other services | 2 | 5 |
| Total | 75 | 71 |
Product development expenses incurred during the year:
| 2023 | 2022 | |
|---|---|---|
| Expenses recognized in profit or loss | 809 | 1,353 |
| Capitalized expenses | 619 | 1,321 |
| Total | 1,428 | 2,674 |
Product development expenses mainly consist of external services and personnel expenses. Recognized expenses do not include amortization. The amortization of capitalized product development expenses is presented in Note 14.
Parent company, FAS (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Non-statutory indirect employee costs | 66,015 | 147,982 |
| Premises | 169,780 | 290,750 |
| Travel expenses | 14,428 | 39,386 |
| Marketing and other sales promotion | 222,965 | 279,009 |
| Computers and software | 601,099 | 509,695 |
| External services | 573,746 | 777,597 |
| Doubtful receivables and bad debts | -4,948 | 46,401 |
| Other expenses | 185,810 | 208,411 |
| Total | 1,828,896 | 2,299,230 |
Other expenses include fees paid to the Company’s auditor as follows:
| 2023 | 2022 | |
|---|---|---|
| Auditing | 67,572 | 59,237 |
| Tax consulting | - | - |
| Other services | 2,000 | 5,419 |
| Total | 69,572 | 64,656 |
Product development expenses incurred during the year:
| 2023 | 2022 | |
|---|---|---|
| Expenses recognized in profit or loss | 13,913 | 118,606 |
| Capitalized expenses | - | - |
| Total | 13,913 | 118,606 |
11. Financial income and expenses
Recognized in profit or loss
Group, IFRS (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Interest income from loans and other receivables | 1 | 0 |
| Interest expenses from loans | -89 | -21 |
| Other financial income and expenses | -9 | -25 |
| Exchange rate differences | -14 | -16 |
| Total | -111 | -62 |
Exchange rate differences in profit and loss:
| 2023 | 2022 | |
|---|---|---|
| Exchange rate differences included in net sales | -40 | -10 |
| Exchange rate gains in financial income | 0 | 4 |
| Exchange rate losses in financial expenses | -14 | -20 |
| Total | -54 | -26 |
Recognized in profit or loss
Parent company, FAS (EUR)
| 2023 | 2022 | |
|---|---|---|
| Interest income from loans and other receivables | 655 | 0 |
| Impairment losses of holdings in Group companies | -83,610 | - |
| Interest expenses from loans | -88,322 | -21,032 |
| Other financial income and expenses | -317,272 | -525,714 |
| Exchange rate differences | 19,929 | -53,524 |
| Total | -468,620 | -600,270 |
Recognized in profit or loss:
| 2023 | 2022 | |
|---|---|---|
| Exchange rate differences included in net sales | -36,867 | -12,833 |
| Exchange rate gains in financial income | 0 | 1,508 |
| Exchange rate losses in financial expenses | 19,929 | -55,032 |
| Total | -16,938 | -66,357 |
Other Financial income and expenses in parent company include right issue costs worth of EUR 93,409 (2022: EUR 511,602) according to FAS. According to IAS32 group is presented right issuance as net value.
The parent company (FAS) wrote down the value of its subsidiary, QPR CIS OY, which had previously engaged in business in Russia, by 83,610 EUR. The parent company assesses that the ongoing war initiated by Russia and the sanctions imposed by the European Union will significantly impact the business opportunities of QPR CIS OY. Consequently, the discounted cash flow of future earnings is lower than the value of the shares in the parent company's balance sheet.
Additionally, the parent company (FAS) wrote down the capital loan, 225,000 EUR, it had previously granted to its subsidiary engaged in business in Russia, QPR CIS OY. The parent company assesses the repayment prospects of the loan as weak due to the war initiated by Russia and the related sanctions imposed by entities like the European Union.
12. INCOME TAXES
Group, IFRS (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Current tax expense | 0 | 0 |
| Tax expense from previous years | 0 | 3 |
The recognition of deferred tax assets is recorded to the extent it is probable that taxable income will be generated in the future against which unused tax losses, unused tax credits, and deductible temporary differences can be utilized in the respective countries. QPR continuously assesses the probability of realizing deferred tax assets and considers both favorable and unfavorable evidence in this evaluation. QPR has recognized 273 thousand euros of deferred tax assets on its balance sheet between the years 2016 and 2020. The company estimates that it will have taxable income to an extent that it can utilize these deferred tax assets during the period from 2026 to 2030. Based on the assessment made as of December 31, 2023, QPR did not consider it probable that it could utilize the unused tax losses from the year 2023, unused tax credits, and deductible temporary differences in Finnish taxation in the foreseeable future. The evaluation was mainly based on previous results. If the company has incurred losses in the recent past in the country to which the deferred tax asset relates, special consideration must be given to the recognition of deferred tax assets in the balance sheet. The company recognizes deferred tax assets from unused tax losses and tax credits only to the extent that it has sufficient taxable temporary differences or other convincing evidence that there will be sufficient taxable income against which it can utilize the unused tax losses or tax credits in the future. When assessing the recognition of deferred tax assets favorably in the future, less weight may be given if there is other unfavorable evidence, such as accumulated losses, which can be considered a strong indication that there may not be taxable income available in the future. In 2023, QPR incurred an accounting loss, so the company believes it lacks sufficient evidence of generating long-term taxable income to consider it probable that it can utilize the deferred tax assets in Finland. This conclusion is based on emphasizing objective unfavorable evidence compared to more subjective favorable evidence. The primary factors in this assessment used more objectively include realized long-term financial performance compared to inherently more subjective expectations of future financial performance in Finland.
Parent company, FAS (EUR)
| 2023 | 2022 | |
|---|---|---|
| Current tax expense | 0 | 0 |
| Tax expense from previous years | 0 | 0 |
QPR continues to assess the utilization of deferred tax assets, especially monitoring realized profits, and may reclassify the deferred tax asset related to Finland back to the balance sheet when sufficient tax profitability is achieved. The utilization of these deferred tax assets is uncertain in the foreseeable future due to previous years' tax losses and a lack of sufficiently convincing evidence that taxable income will be generated sufficiently in the coming years in Finland. In Finland, deferred tax assets can be offset against profits for the next ten tax years. The first possible expiring deferred tax asset, 34 thousand euros, would expire in the tax year 2026 if the company does not achieve a profitable result by the end of that fiscal year. The income statement tax expense is calculated at the Finnish tax rate (20.0% in 2023 and 2022). The company did not recognize deferred tax assets in the years 2023 and 2022. Deferred tax assets are 217 thousand euros in 2023 and 722 thousand euros in 2022. The recognized and unrecognized deferred tax assets amount to a total of 1,424 thousand euros. In Note 19, the assessment criteria for deferred tax assets are described in more detail.
Reconciliation of Deferred Taxes:
Group, IFRS (EUR 1,000)
| 2023 | 2022 | |
|---|---|---|
| Result before tax | -924 | -2,864 |
| Income tax calculated at the Finnish corporate tax rate | 185 | 573 |
| Effect of different tax rates in foreign subsidiaries | -1 | -1 |
| Effect of IFRS 15 and IFRS 16 | 6 | 40 |
| Other items | -11 | -7 |
| Withholding tax | 19 | 12 |
| Deferred tax of right issue costs | 19 | 102 |
| Unrecognized deferred tax | -217 | -722 |
| Tax expense in the comprehensive income statement | 0 | -3 |
13. EARNINGS PER SHARE
Undiluted earnings per share are calculated by dividing total comprehensive income attributable to shareholders of the parent company by the weighted average number of shares outstanding during the financial year.
Group, IFRS (EUR 1,000)
| 2023 | 2022 | |
|---|---|---|
| Total comprehensive income attributable to shareholders of the parent company (EUR thousand) | -925 | -2,870 |
| Number of shares outstanding (1,000 pcs) | 16,678 | 14,187 |
| Earnings per share (EUR/share) | ||
| Undiluted and diluted | -0,055 | -0,202 |
The Group is operating share option schemes, Stock option plan 2019B, 2022 and 2023. In 2023 and 2022, the stock option scheme did not have a dilutive effect. The group arranges successfull right issuance in 2023 with 1,719,871 new shares. Total outstading shareson December 31, 2023 was 17,835,721.
14. INTANGIBLE ASSETS
Group (EUR 1 000), IFRS
| Computer software | Other intangible assets | Capitalized product development | Total | |
|---|---|---|---|---|
| Book value Jan 1, 2022 | 7 | 1 | 1,704 | 1,711 |
| Increases and decreases | 0 | 35 | 1,336 | 1,371 |
| Amortization for the period | -4 | -7 | -660 | -671 |
| Acquisition cost Dec 31, 2022 | ||||
| Accum. amortization and write-downs Dec 31, 2022 | ||||
| Book value Jan 1, 2023 | 3 | 28 | 2,380 | 2,411 |
| Increases and decreases | 0 | 2 | 619 | 620 |
| Amortization for the period | -2 | -3 | -782 | -787 |
| Acquisition cost Dec 31, 2023 | 1,064 | 2,632 | 10,318 | 14,014 |
| Accum. |
Group (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Acquisition cost Jan 1 | 358 | 358 |
| Write-downs | 0 | 0 |
| Acquisition cost Dec 31 | 358 | 358 |
| Book value Dec 31 | 358 | 358 |
Parent company (EUR 1 000), FAS
| Computer software | Other intangible assets | Capitalized product development | Total | |
|---|---|---|---|---|
| Book value Jan 1, 2022 | 184,299 | 1,007 | 5,219 | 190,526 |
| Increases | 0 | 34,534 | 0 | 34,507 |
| Amortization for the period | -63,799 | -7,356 | -3,479 | -74,634 |
| Acquisition cost Dec 31, 2022 | 1,331,427 | 1,587,126 | 365,292 | 3,283,819 |
| Accum. amortization and write-downs Dec 31, 2022 | -1,210,927 | -1,558,941 | -363,552 | -3,134,420 |
| Book value Jan 1, 2023 | 120,500 | 28,185 | 1,740 | 150,399 |
| Increases | 0 | 1,657 | 0 | 1,657 |
| Amortization for the period | -63,664 | -2,571 | -1,740 | -67,975 |
| Acquisition cost Dec 31, 2023 | 1,331,427 | 1,588,783 | 365,292 | 3,285,502 |
| Accum. amortization and write-downs Dec 31, 2023 | -1,274,591 | -1,561,512 | -365,292 | -3,201,395 |
| Book value Dec 31, 2023 | 56,836 | 27,271 | 0 | 84,107 |
QPR does not have intangible asset with an unlimited economic useful life. QPR's goodwill arises from the acquisition of Nobultec Ltd in 2011 and it has been allocated to the group software business, previously to the Process Mining business unit. QPR has made goodwill impairment test for the reporting period at 31.12.2023. The recoverable amount from the cash generating unit is determined based on value in-use calculations. The calculations are prepared following the discounted cash flow method using the management approved estimates driven from budget for the following year and subsequent development derived from the strategic plans. Terminal year value has been defined based on the long-term strategic plans. Cash flows beyond the 5-year period are calculated using the terminal value method. The terminal growth rate of 1.0% percent (1.0%) used in projections is based on management’s assessment on conservative long-term growth. Key driver for the valuation is the revenue growth based on the software business performance and future strategic growth plans, market position as well as the potential in key markets. The applied discount rate is the weighted average pre-tax cost of capital (WACC). The components of the WACC are risk-free rate, market risk premium, company specific factor, and industry specific beta, cost of debt and debt/equity ratio. The WACC of 11.36% percent (11.28 %) has been used in the calculations. As a result of the impairment test, no impairment loss for the CGU was recognized for the financial period ended 31.12.2023. When assessing the recoverable amounts of cash generating unit, management believes that no reasonably possible change in any of the key variables used would lead to a situation where the recoverable amount of the unit would fall below their carrying amount. Considering that, QPR does not present any sensitivity analyses regarding impairment test.
Accounting estimates and management's judgements
The management uses significant estimates and judgement when determining whether there are indications of impairment of goodwill. Management judgement has also been used when defining the amount of cash generating units and considered Process Mining software business area and related consulting recoverable cash flows, as well as recoverable cash flows from common functions. The cash flow projections are based on budgets and financial estimates approved by management covering a 5-year period. Cash flow forecasts are based on QPR’s existing business structure, actual results and the management’s best estimates on future Net Sales, cost development, general market conditions and growth potential on the market as well as economic uncertainties. Management has considered structural changes impacting to all business areas for improving performance as well as realized last quarter growth drivers. Management tests the impacts of changes in significant estimates used in forecasts by sensitivity analyses.
16. TANGIBLE AND RIGHT-OF-USE ASSETS
Group (EUR 1 000), IFRS
| Machinery and equipment | Right-of-use assets: buildings | |
|---|---|---|
| Book value Jan 1, 2022 | 171 | 148 |
| Increases | 111 | 842 |
| Depreciation for the period | -111 | -235 |
| Acquisition cost Dec 31, 2022 | 2,277 | 1,854 |
| Accum. depreciation and write-downs Dec 31, 2022 | -2,105 | -1099 |
| Book value Dec 31, 2022 | 171 | 756 |
| Increases | 0 | 0 |
| Decreases | 0 | -319 |
| Depreciation for the period | -90 | -118 |
| Acquisition cost Dec 31, 2023 | 2,277 | 1,535 |
| Accum. depreciation and write-downs Dec 31, 2023 | -2,195 | -1,217 |
| Book value Dec 31, 2023 | 81 | 318 |
*) Right-of-use assets Note 28 Leases
The Company renegotiated office lease agreements shortening it's maturity from 5.5 years to 3.5 years and partly agreed of discounted leases for 2023 and 2024. Lease contract's maturity is 2 years and 4 months. According to agreement, the Company has a possibility to move to the landloard’s other facilities with mutual agreement. Along with the change of lease contract, company's Right of Use assets decreased from the comparable period.
Parent company (EUR), FAS
| Machinery and equipment | |
|---|---|
| Book value Jan 1, 2022 | 171,030 |
| Increases | 111,043 |
| Depreciation for the period | -111,207 |
| Acquisition cost Dec 31, 2022 | 2,237,106 |
| Accum. depreciation and write-downs Dec 31, 2022 | -2,066,240 |
| Book value Jan 1, 2023 | 170,866 |
| Increases | 0 |
| Depreciation for the period | -90,091 |
| Acquisition cost Dec 31, 2023 | 2,237,106 |
| Accum. depreciation and write-downs Dec 31, 2023 | -2,156,331 |
| Book value Dec 31, 2023 | 80,775 |
17. SHARES IN SUBSIDIARIES AND OTHER ENTITIES
The parent company of the Group is QPR Software Plc.
Parent company
| Subsidiaries | Domicile | 2023 | 2022 |
|---|---|---|---|
| Owned directly by the parent company: | |||
| QPR CIS Oy | Helsinki, Finland | 100 % | 100 % |
| QPR Software AB | Stockholm, Sweden | 100 % | 100 % |
| QPR Services Oy | Helsinki, Finland | 100 % | 100 % |
| QPR Software Inc. | San Jose, CA, USA | 100 % | 100 % |
| QPR Software Limited | London, UK | 100 % | 100 % |
Parent company (EUR)
| Shares in subsidiaries | Other shares | |
|---|---|---|
| 2023 | 2022 | |
| Acquisition cost Jan 1 | 3,581,263 | 3,581,263 |
| Increases | 0 | 0 |
| Decreases | -83,610 | 0 |
| Acquisition cost Dec 31 | 3,497,653 | 3,581,263 |
| Book value Dec 31 | 3,497,653 | 3,581,263 |
| Total book value of shares Dec 31 | 3,502,215 | 3,585,825 |
18. LONG-TERM RECEIVABLES
Parent company, FAS (EUR)
| 2023 | 2022 | |
|---|---|---|
| Receivables from the Group companies | 0 | 225,000 |
| Breakdown of the Parent company's receivables from Group companies: | ||
| QPR CIS Oy | 0 | 225,000 |
| Total | 0 | 225,000 |
The parent company (FAS) wrote down the value of its subsidiary, QPR CIS OY, which had previously engaged in business in Russia.The parent company assesses that the ongoing war initiated by Russia and the sanctions imposed by the European Union will significantly impact the business opportunities of QPR CIS OY. Consequently, the discounted cash flow of future earnings is lower than the value of the shares in the parent company's balance sheet.
19. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets, based on tax-loss carryforwards, have changed as follows:
| Group, IFRS (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Jan 1 | 273 | 273 |
| Dec 31 | 273 | 273 |
A deferred tax asset of EUR 273 thousand has been recognized in the balance sheet for confirmed and probable unused losses of the Group’s Finnish Companies. These tax assets company will most likely be able to utilize before the end of the utilization period by 2030. The company has not recognized deferred tax assets in 2021 -2023 according to the principle of precaution. Unbooked deferred tax assets for the loss in 2023 amount to EUR 217 thousand, for 2022 amounted to EUR 722 thousand and for year 2021 amounted to EUR 212 thousand. Total of unbooked deferred tax assets is EUR 1,151 thousand. Recognized and unrecognized deferred tax assets are EUR 1,424 thousand. At 31 December 2023, QPR concluded based on its assessment that it is not probable for result year 2022 that it will be able to utilize the unused tax losses, unused tax credits and deductible temporary differences in Finland in the foreseeable future. This assessment was done primarily based on the historical performance. In 2023, QPR generated accounting and taxable loss. This conclusion is based on the weighting of objective negative evidence against more subjective positive evidence. The primary factors in this weighting were the more objective record of a pattern of financial performance compared to the more inherently subjective expectations regarding future financial performance in Finland. QPR continues to assess the realizability of deferred tax assets including in particular its actual profitability and may re-recognize deferred tax assets related to Finland where a clear pattern of tax profitability can be established. Finnish unrecognized and recognized deferred tax assets expires in ten years from the time those arose, starting from year 2026 until 2033 and are available against future Finnish tax liabilities.
The parent company (FAS) wrote down the capital loan it had previously granted to its subsidiary engaged in business in Russia, QPR CIS Oy. The parent company assesses the repayment prospects of the loan as weak due to the war initiated by Russia and the related sanctions imposed by entities like the European Union.
20. TRADE AND OTHER RECEIVABLES
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Trade receivables | 1,290 | 2,831 |
| Credit loss provision | -7 | -3 |
| Accrued income and prepaid expenses | 218 | 380 |
| Other receivables | 205 | 242 |
| Total | 1,706 | 3,449 |
Geographical breakdown of trade receivables:
| Finland | Other European countries | Countries outside Europe | Total | |
|---|---|---|---|---|
| 2023 | 547 | 452 | 291 | 1,290 |
| 2022 | 1,172 | 1,162 | 497 | 2,831 |
| Eoyhtiö, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Trade receivables | 1,179,236 | 2,775,016 |
| Credit loss provision | - | -3,100 |
| Accrued income and prepaid expenses | 203,191 | 369,006 |
| Income tax receivables | - | - |
| Other receivables | 83,565 | 62,756 |
| Current receivables from Group companies | 2,231,949 | 1,907,336 |
| Total | 3,697,941 | 5,111,014 |
Geographical breakdown of trade receivables:
| Finland | Other European countries | Countries outside Europe | Total | |
|---|---|---|---|---|
| 2023 | 546,539 | 371,457 | 261,240 | 1,179,236 |
| 2022 | 1,171,644 | 1,146,350 | 457,022 | 2,775,016 |
| Currency breakdown of trade receivables: | 2023 (%) | 2022 (%) |
|---|---|---|
| EUR (Euro) | 1,014 (78.6) | 2,316 (81.8) |
| USD (U.S. Dollar) | 248 (19.2) | 240 (8.5) |
| SEK (Swedish Krona) | 3 (0.2) | 33 (1.2) |
| ZAR (South African Rand) | 9 (0.7) | 6 (0.2) |
| JPY (Japanese Yen) | 13 (1.0) | 16 (0.6) |
| GBP (Pound Sterling) | 4 (0.3) | 23 (0.8) |
| AED (United Arab Emirates dirham) | - (-) | 196 (6.9) |
| Total | 1,290 (100) | 2,831 (100) |
Age analysis of trade receivables:
| 2023 | (%) | 2022 | (%) | |
|---|---|---|---|---|
| Not due | 681 | 52.8 | 1,940 | 68.5 |
| 0 - 90 days overdue | 543 | 42.1 | 825 | 29.1 |
| 90 - 180 days overdue | 33 | 2.5 | 47 | 1.7 |
| More than 180 days overdue | 33 | 2.6 | 20 | 0.7 |
| Total | 1,290 | 100 | 2,831 | 100 |
Fair value of trade receivables: The initial book value of trade receivables equals fair value because the effect of discounting is not material considering maturity.
Credit losses and provision of credit losses: The Group recognizes expected credit loss provision based on the age of the trade receivable.
| Group, IFRS | Trade receivables | Credit loss expectation based on trade receivables | Credit loss expectance based on age trade receivables, % |
|---|---|---|---|
| 2023, EUR 1,000 | |||
| Not due | 681 | 0 | 0.02 |
| 0 - 60 days overdue | 452 | 2 | 0.5 |
| 60 - 120 days overdue | 119 | 1 | 1.0 |
| 120 - 180 days overdue | 4 | 0 | 2.0 |
| >180 days overdue | 33 | 3 | 10.0 |
| Total | 1,290 | 7 | 0 |
In addition to the maturity-based matrix for trade receivables, in 2023, the Company has not recognized additional provisions for credit losses (2022: EUR 0). Credit losses of EUR 2 thousand (2022: EUR 36) on trade receivables have been recognized in the Group’s result.
Breakdown of the parent company's accrued income and prepaid expenses:
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Accrued income | 33,522 | 32,456 |
| Prepaid expenses | 168,077 | 330,350 |
| Total | 201,599 | 362,806 |
Breakdown of the parent company's receivables from Group companies:
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| QPR Services Oy | 2,006,949 | 1,907,336 |
| Total | 2,006,949 | 1,907,336 |
21. CASH AND CASH EQUIVALENTS
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Bank accounts | 884 | 17 |
| Total | 884 | 17 |
The parent company has a revolving credit facility of EUR 1.5 million with Nordea for financing need. The funds were used at the end of 2023: EUR 1.0 million (at the end of 2022: EUR 0) in the long term liabilities and EUR 0.5 million (at the end of 2022: EUR 1.5 million) in the short term liabilities. The agreement for the revolving credit facility was renewed 24th January 2023 and transferred as long term loan maturing 31st January 2026. The Group has a credit limit of EUR 0.5 million, which was not in use at the end of 2023 (2022: EUR 22 thousand). The amount of the credit limit decreased from EUR 1 million to EUR 0.5 million in February 2023.
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Bank accounts | 859,814 | 938 |
| Total | 859,814 | 938 |
22. BALANCE SHEET ITEMS RELATED TO CUSTOMER CONTRACTS
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Trade receivables | 1,290 | 2,831 |
| Contract assets | 34 | 33 |
| Contract liabilities* | -2,186 | -2,258 |
*The contractual liability for the comparison year has been restated according to 2023 reporting principles.
Contract assets are items for which performance obligations have already been fulfilled, but the customers have not yet been invoiced. In QPR Software, contract assets are usually related to consulting services, which are invoiced after the performance obligations have been fulfilled. Contract liabilities, on the contrary, are items which have already been invoiced, but for which performance obligations have not yet been entirely fulfilled. In QPR Software, contract liabilities are usually related to maintenance or SaaS fees, which are invoiced in advance and are recognized as revenue over the duration of the contract period.
| Parent company, FAS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Trade receivables | 1,179,236 | 2,775,016 |
| Contract assets | 33,522 | 32,778 |
| Contract liabilities* | -2,061,924 | -2,200,622 |
23. SHAREHOLDERS' EQUITY
The Company has one series of shares and the maximum value of share capital is EUR 80 thousand. All issued shares have been paid in full. The Company arranged right issuance in 2023 increasing number of shares to 18,175,192 (2022: 16,455,321).
Other funds: Includes the reserve fund in subsidiary QPR Software AB.
Treasury shares: Includes the purchase price of shares repurchased by the Group.
Invested unrestricted equity fund: Invested unrestricted equity fund includes proceedings from right issuance arranged in third quarter 2023. Along the right issuance 1,719,871 new shares were registered. According to Finnish accounting standards, invested unrestricted equity fund is reported into gross value.
Calculation of the distributable funds:
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Retained earnings | -2,747,372 | 270,643 |
| Result for the period | -1,402,736 | -3,007,840 |
| Dividends paid | - | - |
| Treasury shares | -347,552 | -405,727 |
| Invested unrestricted equity fund | 5,529,731 | 3,454,341 |
| Distributable funds | 1,032,072 | 311,418 |
24. OTHER NON-CURRENT LIABILITIES AND INTEREST-BEARING LOANS
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Non-current liabilities | ||
| Non-current Lease liabilities | 192 | 609 |
| Loans from banks | 1,000 | - |
| Total | 1,192 | 609 |
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Non-current liabilities | ||
| Loans from banks | 1,000,000 | 0 |
| Total | 1,000,000 | 0 |
| Group, IFRS (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Current interest-bearing loans | ||
| Loans from banks, next year repayment | 500 | 1,521 |
| Lease libilities | 126 | 149 |
| Total | 626 | 1670 |
| Parent company, FAS (EUR) | 2023 | 2022 |
|---|---|---|
| Current interest-bearing loans | ||
| Lease libilities | 500,000 | 1,520,756 |
| Total | 500,000 | 1,520,756 |
The company has EUR 1 million of long term and 0.5 million of short term loan from banks. Interest-bearing loans consist of euribor 12 months and 1.05 % interest margin. The Group has a credit limit of EUR 0.5 million, which was not in use at the end of 2023 (2022: EUR 22 thousand). The amount of the credit limit decreased from EUR 1 million to EUR 0.5 million in February 2023,. The parent company has a revolving credit facility of EUR 1.5 million with Nordea for financing need. The funds were used at the end of 2023: EUR 1.0 million (at the end of 2022: EUR 0) in the long term loans and EUR 0.5 million (at the end of 2022: EUR 1.5 million) in the short term loans. The agreement for the revolving credit facility was renewed 24th January 2023 and transferred as long term loan maturing 31st January 2026. Covenants attached to the loan, are based on the company's EBITDA and equity ratio. The EBITDA is tested every six months, and the equity ratio is tested annually according to the situation on the last day of the year. At the covenant test on 31st December 2023, EBITDA was below the agreed covenant limit.In December 2023, the bank committed to not exercising the right to demand immediately it's receivables based on the financing agreement if the group breaches a possible EBITDA covenant as of the financial statements in December 2023. Considering the discounted present value of the debt, taking into account its maturity and interest rate, it is 1.435 million euros, which is 65 thousand euros lower than the original book value of the debt, which was 1.5 million euros.
Repayment schedule of right-of-use liabilities
Group, IFRS (EUR 1,000)
| 2023 | 2022 | |
|---|---|---|
| Nominal interest rate | 4.6% | |
| Maturity | 2022-2026 | |
| Book value | 318 | 758 |
| Lease liabilities | 318 | 758 |
| Interest-bearing right-of-use liabilities | 318 | 758 |
The Company renegotiated office lease agreements shortening it's maturity from 5.5 years to 3.5 years and partly agreed of discounted leases for 2023 and 2024. Lease contract's maturity is 2 years and 4 months. According to agreement, the Company has a possibility to move to the landloard’s other facilities with mutual agreement. Along with the change of lease contract, company's lease expenses decreased from the comparation period.
25. TRADE PAYABLES AND OTHER LIABILITIES
Group, IFRS (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Provisions | - | 33 |
| Trade payables | 212 | 499 |
| Accrued expenses and prepaid income | 1,539 | 2,598 |
| Advances received | 1,558 | 885 |
| Other liabilities | 395 | 661 |
| Total | 3,703 | 4,676 |
The initial carrying amount of trade paybles and other liabilities corresponds to the fair value because the effect of discounting is not material considering the maturity of the item. The amount of trade payables in foreign currencies was 23 %, (2022: 1 %). The Group didn't book provisions at the end of 2023. At the end of 2022 QPR recognised a provision for the estimated restructuring cost following management's approval of the publication of the detailed restructuring plan. The provision applied to expenses related to the reorganisation of personnel published 20th September 2022 and as a result to costs related to termination of the lease of the premises. On 31st December 2022 the provision was EUR 33 thousands. Cash flows related to the restructuring materialized in the beginning of 2023. This provision was reported in QPR Plc in provisions, in group bookings.
Parent company, FAS (EUR)
| 2023 | 2022 | |
|---|---|---|
| Provisions for liabilities and charges | - | 32,628 |
| Trade payables | 189,566 | 457,733 |
| Accrued expenses and prepaid income | 1,262,222 | 2,338,513 |
| Advances received | 1,530,141 | 860,024 |
| Other liabilities | 309,345 | 570,708 |
| Current liabilities to Group companies | 2,096,506 | 1,793,198 |
| Total | 5,387,781 | 6,052,804 |
Breakdown of the parent company's accrued expenses and prepaid income:
Parent company, FAS (EUR)
| 2023 | 2022 | |
|---|---|---|
| Holiday pay, including social costs | 415,751 | 574,955 |
| Bonuses, including social costs | 102,645 | 136,189 |
| Prepaid income | 612,515 | 1,508,242 |
| Other accrued expenses | 131,311 | 119,127 |
| Total | 1,262,222 | 2,338,513 |
Breakdown of the parent company's liabilities to Group companies:
Parent company, FAS (EUR)
| 2023 | 2022 | |
|---|---|---|
| QPR CIS Oy | 23,414 | 24,488 |
| QPR Software AB | 1,347,642 | 1,016,631 |
| QPR Software Inc | 724,532 | 750,080 |
| QPR Software Limited | 919 | 1,999 |
| Total | 2,096,506 | 1,793,198 |
26. CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
The table discloses carrying amounts of financial assets and financial liabilities. The fair value hierarchy level for equity investments measured at fair value is 3. The carrying amount of other financial assets and financial liabilities is a reasonable estimate of their fair value. The financial assets and liabilities are classified in accordance with IFRS 9.
| December 31, 2023 | |||
|---|---|---|---|
| Book value | At fair value through profit or loss | Recognised at amortised cost | |
| Financial assets | Note | ||
| Financial assets measured at fair value | |||
| Equity investments | 17 | 5 | 5 |
| Total | 5 | 5 | |
| Financial assets not measured at fair value | |||
| Trade and other receivables | 20 | 1,706 | 1,706 |
| Cash and cash equivalents | 21 | 884 | 884 |
| Total | 2,590 | 2,590 | |
| Financial liabilities | |||
| Financial liabilities not measured at fair value | |||
| Bank borrowings | 24 | 1,500 | 1,500 |
| Right-of-use liabilities | 24 | 318 | 318 |
| Trade payables and other liabilities | 25 | 3,703 | 3,703 |
| Total | 5,521 | 5,521 |
27. ADJUSTMENTS TO THE CASH FLOW FROM OPERATING ACTIVITIES
Group, IFRS (EUR 1,000)
| 2023 | 2022 | |
|---|---|---|
| Other items | -173 | - |
| Total | -173 | - |
Other items includes Stock option program IFRS2 adjustments and accounts payable related to investments.
28. COMMITMENTS AND CONTINGENT LIABILITIES
Group (EUR 1 000)
| 2023 | 2022 | |
|---|---|---|
| Business mortgage | 2,382 | 2,382 |
| Lease liabilities and rental commitments | ||
| Maturing within one year | 30 | 47 |
| Maturing during in 1-5 years | 27 | 80 |
| Total | 2,439 | 2,509 |
Parent company (EUR)
| 2023 | 2022 | |
|---|---|---|
| Business mortgage | 2,337,288 | 2,337,288 |
| Lease liabilities and rental commitments | ||
| Maturing within one year | 166,310 | 226,178 |
| Maturing during in 1-5 years | 225,616 | 749,419 |
| Total | 2,729,214 | 3,312,885 |
Rental commitments include following agreements:
Group (IFRS):
Business mortages are given as guarantee for Nordea towards RCF loan value EUR 1,500 thousand. Rental guarantees totaling EUR 3 thousand are included in other current receivables in the balance sheet. Rental agreements related office and IT equipments as well as car lease agreements
PARENT (FAS)
Business mortages are given as guarantee for Nordea towards RCF loan value EUR 1,500 thousand. Rental guarantees totaling EUR 2 thousand are included in other current receivables in the balance sheet. Rental agreements related office and IT equipments as well as car lease agreements
The Company renegotiated office lease agreements shortening it's maturity from 5.5 years to 3.5 years and partly agreed of discounted leases for 2023 and 2024. Lease contract's maturity is 2 years and 4 months. According to agreement, the Company has a possibility to move to the landloard’s other facilities with mutual agreement. Along with the change of lease contract, company's lease expenses decreased from the comparation period.
29. LEASE AGREEMENTS
Leases in the Balance Sheet
Group, IFRS (EUR 1,000)
| Dec 31, 2023 | Dec 31, 2022 | |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Right-of use assets, buildings | 318 | 756 |
| Total | 318 | 756 |
| Lease liabilities | ||
| Lease liabilities, non-current | 192 | 609 |
| Lease liabilitiess, current | 126 | 149 |
| Total | 318 | 758 |
The Company renegotiated office lease agreements shortening it's maturity from 5.5 years to 3.5 years and partly agreed of discounted leases for 2023 and 2024. Lease contract's maturity is 2 years and 4 months. According to agreement, the Company has a possibility to move to the landloard’s other facilities with mutual agreement. Along with the change of lease contract, company's lease expenses decreased from the comparation period.
Leases in the Income Statement
| 01-12/2023 | 01-12/2022 | |
|---|---|---|
| Depreciation of right-of-use assets | -118 | -235 |
| Interest expenses | -6 | -8 |
| Total | -124 | -243 |
The total cash outflow for leases in 2023 was EUR 121 thousand (2022: 266).
30. FINANCIAL RISK MANAGEMENT
The International business operations of QPR Group are exposed to risks typical in normal international transactions. Financial risk management aims to secure sufficient financing cost-effectively and to monitor, and when necessary, to mitigate the materializing risks. Risk management is a centralized responsibility of the Group’s financing function and the CEO. The general risk management policies are approved by the QPR Software Plc Board of Directors. The Board is also responsible for supervising the adequacy, appropriateness, and effectiveness of the Group’s risk management
Foreign exchange risk
The main sales currency for the Group is Euro and most purchases are made in Euros. The majority of trade receivables is in Euros (EUR), 79%. During the financial year, the most significant invoicing currencies after EUR were the U.S. Dollar (USD) and the Japanese yen (JPY). If the value of USD and JPY against EUR were to decrease by 10%, and the share of currencies were to remain on the same level, the value of trade receivables would decrease by EUR 26 thousand, equaling 2.0 % of the total value of all trade receivables. Correspondingly, if the value of all non-EUR invoicing currencies were to decrease by 10%, the value of trade receivables would decrease by EUR 28 thousand. A breakdown of trade receivables by currency is presented in Note 20
In accordance with the foreign exchange risk policy approved by the Board of Directors, the Company may engage in foreign currency hedging. The purpose of currency hedging is to reduce the uncertainty brought by exchange rates and to minimize the adverse impact of exchange rate changes to the Group’s cash flow, financial results, and equity. Management regularly reviews the Company’s foreign exchange risks, taking into account the hedging costs. At the end of 2023 and 2022, the Company did not have any hedging instruments
Interest rate risk
The impact of interest rate changes on the Group result is insignificant and the Group did not take any hedging measures during the financial year. According to the financing agreement made on 24th, January 2024, the interest rate for the 1.0 million EUR long term and 0.5 million EUR short term loans is tied to 12 months euribor and 1,05% margin.
Liquidity risk
Liquidity risk is defined as financial distress or extraordinarily high financing costs due to the shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing. The purpose of liquidity risk management is to maintain sufficient liquidity and to ensure that funds are continuously available to finance business operations quickly enough. QPR maintains sufficient liquidity through efficient cash management and deposits. The group converted it's loans in January 2023 to the long term and bind under covenants, measured against EBITDA and own equity ratio. EBITDA based performance measure is tested bi-annually and own equity ratio annually in the end of year. At the covenant test on 31st December 2023, EBITDA was below the agreed covenant limit.In December 2023, the bank committed to not exercising the right to demand immediately its receivables based on the financing agreement if the group breaches a possible EBITDA covenant as of the financial statements in December 2023. The credit limit will be repaid in instalments of 500 thousand on 31.1.2024, 31.1.2025, and 31.1.2026.
Dec, 31 2023
Group, IFRS (EUR 1,000) | Tasearvo | 0–6 kk | 7-12 kk | yli 12 kk
---|---|---|---|---
Trade and other payables | 212 | 212 | 0 | 0
Bank borrowings, revolving credit facility | 1500 | 500 | 0 | 1000
Lease liabilities (IFRS16) | 318 | 57 | 69 | 192
Total | 2,031 | 769 | 69 | 1,192
Dec, 31 2022
Group, IFRS (EUR 1 000) | Tasearvo | 0–6 kk | 7-12 kk | yli 12 kk
---|---|---|---|---
Trade and other payables | 499 | 499 | 0 | 0
Bank borrowings, revolving credit facility | 1521 | 1521 | 0 | 0
Lease liabilities (IFRS16) | 758 | 85 | 63 | 609
Total | 2,778 | 2,105 | 63 | 609
The interest of the bank loan consists of euribor 12 months and 1.05 % interest margin, trade liabilities are free of interest and lease liability has imputed interest of 4.563 %.
Operative credit risk
The Group’s international business operations are by their nature exposed to reasonable credit risk related to individual partners. However, the Group’s customer base and reseller network is broad and spread over several market areas. Thus, the Group’s trade receivables are collected from a large number of resellers and customers in several market areas, and according to management’s estimate there are no concentrations of reseller, customer, or geographical risks. In addition, the continuous and active monitoring of receivables and credit limits aim to mitigate the Group’s credit risks. The Group’s maximum credit risk corresponds to the book value of trade receivables. Additional information on the Group’s trade receivables is presented in Note 20.
31. CAPITAL MANAGEMENT
| Group, IFRS (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Cash and cash equivalents | 884 | 17 |
| Net liabilities | 934 | 2,262 |
| Shareholders' equity | 348 | 487 |
| Gearing, % | 268,3 | 464,9 |
| Equity ratio, % | 8,1 | 7,4 |
| Total balance sheet | 5,869 | 7,442 |
The development of Group's capital structure is monitored, in particular, through gearing and equity ratio.
32. EVENTS AFTER THE REPORTING PERIOD
Change negotiations related to the adjustment of QPR Software Plc´s strategy
On December 14, 2023, QPR Software Plc announced its adjusted strategy and the change in its organizational structure planned to support it and submitted a negotiation proposal in accordance with the related Cooperation Act to start the change negotiations. The change negotiations were completed on Thursday, January 4, 2024.
In the change negotiations, the Company planned to change its organizational structure to support its adjusted strategy. The goal of the planned changes is to support the more efficient organization of QPR Software's operations, to try to respond to changes in the operating environment, and to renew the organizational structure in order to achieve the Company's long-term growth and profitability goals. Change negotiations were held separately in both QPR Software Plc and QPR Services Oy. As a result of the negotiations, the Company will terminate a maximum of four positions at QPR Software Plc and a maximum of six positions at QPR Services Oy.
QPR Software Plc signed the first partner agreement in North America and received an affirmative decision on Business Finland's support for market mapping
QPR Software's unique process mining software, QPR ProcessAnalyzer, is globally the only software running natively in the Snowflake Data Cloud. This means solving performance, scalability, and security issues for customers. The majority of Snowflake's customers are in the US market. In accordance with its strategy, QPR aims to expand to the North American market, utilizing the partner network that is being built there. An important step in this endeavor is the signing of a significant partnership agreement with Solution BI on January 16, 2024. The agreement includes resale rights for QPR ProcessAnalyzer in the United States, Canada and Mexico. The company also cooperates with Solution BI in the Middle East region. In addition, on January 30, 2024, Business Finland approved QPR Software Plc's Market Explorer funding, which is used to investigate business opportunities and map markets in North America. Granted support covers 50% of incurred costs, upper limit 39,995 euros. This financial support is intended to facilitate the mapping of the company's new markets and to promote the conditions for the internationalization of the business.
33. RECONCILIATION OF ALTERNATIVE KEY FIGURES
| 2023 | 2022 | |
|---|---|---|
| Equity ratio, % | ||
| Total Equity | 348 | 487 |
| balance sheet total | 5,869 | 7,442 |
| Advances received | 1,558 | 885 |
| Advances received | ||
| Total equity x 100 (Balance sheet total - advances received) | 8.1 % | 7.4 % |
SIGNATURES OF BOARD OF DIRECTORS’ AND FINANCIAL STATEMENTS
Helsinki, Finland, February 16, 2024
QPR Software Plc
Board of Directors
Pertti Ervi
Chairman of the Board
Matti Heikkonen
Board member
Antti Koskela
Board member
Jukka Tapaninen
Board member
Heikki Veijola
Chief Executive Officer
AUDITOR’S NOTE
An auditor’s report concerning the performed audit has been given today.
Helsinki, Finland, February 16, 2024
KPMG Oy Ab
Authorized Public Accountants
Petri Kettunen
Authorized Public Accountant
DEFINITION OF KEY INDICATORS
- Return on equity (ROE), %: Result for the period x 100 / Shareholders' equity (average)
- Return on investment (ROI), %: (Result before taxes + interest and other financial expenses) x 100 / Balance sheet total - non-interest bearing liabilities (average)
- Equity ratio, %: Total equity x 100 / Balance sheet total - advances received
- Gearing: Interest-bearing liabilities - cash and cash equivalents
- Gearing, %: (Interest-bearing liabilities - cash and cash equivalents) x 100 / Total equity
- Earnings per share, euro: Result for period / Weighted average number of shares outstanding during the year
- Equity per share, euro: Equity attributable to shareholders of the parent company / Number of shares outstanding at the end of the year
- Dividend per share, euro: Total dividend paid / Number of shares outstanding at the end of the year
- Dividend per Result, %: Dividend per share x 100 / Earnings per share
- Effective dividend yield, %: Dividend per share x 100 / Share price at the end of the year
- Price/earnings ratio (P/E): Share price at the end of the year / Earnings per share
- Market capitalization: Total number of shares outstanding x share price at the end of the year
- Turnover of shares, % of all shares: Number of shares traded x 100 / Average number of shares outstanding during the year
Alternative key figures
The Group reports certain performance measures that are not based on IFRS (i.e. alternative performance measures). Alternative performance measures are used to provide relevant information to interested parties and improve comparability of reporting periods. Alternative performance measures may not be considered as a substitute for measures of performance in accordance with IFRS. Definitions for alternative measures can be found under the title ”Definition for key indicators”.
Auditor's Report
TO THE ANNUAL GENERAL MEETING OF QPR SOFTWARE PLC
Report of the Audit of the Financial Statements
Opinion
We have audited the financial statements of QPR Software Plc (business identity code 0832693-7) for the year ended 31 December 2023. The financial statements comprise the consolidated balance sheet, comprehensive income statement, statement of changes in equity, cash flow statement and notes, including a summary of material accounting policies, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes.
In our opinion
- the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU
- the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Board of Directors.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. In our best knowledge and understanding, the non- audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 10 to the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Materiality
The scope of our audit was influenced by our application of materiality. The materiality is determined based on our professional judgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate the effect of identified misstatements on the financial statements as a whole. The level of materiality we set is based on our assessment of the magnitude of misstatements that, individually or in aggregate, could reasonably be expected to have influence on the economic decisions of the users of the financial statements.We have also taken into account misstatements and/or possible misstatements that in our opinion are material for qualitative reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The significant risks of material misstatement referred to in the EU Regulation No 537/2014 point (c) of Article 10(2) are included in the description of key audit matters below. We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud.
94 THE KEY AUDIT MATTER
- The financial statements have been prepared on a going concern basis considering the efficiency improvement measures taken, the operating forecast as well as the financing agreement renewed by the company during the financial year. The financing agreement includes financial covenants based on the company's EBITDA margin and equity ratio.
- In recent years, the Group has generated losses, cash flow from operating activities has been negative and liquidity tight. The Group has taken efficiency improvement measures to strengthen its financial position, create a more sustainable cost structure, and secure liquidity. The Group's result for the financial year 2023 is EUR 0.9 million negative, against a positive cash flow from operating activities of EUR 0.8 million. The company's financial position has been strengthened by a directed share issue of EUR 0.76 million in the financial year.
Sufficiency of Group’s liquidity and financing arrangements - Refer to consolidated cash flow statement, accounting policies for the consolidated financial statements and notes 25, 26 and 30 to the consolidated financial statements
HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Our audit procedures included, among others:
- In our audit, we inspected the financing arrangements for the directed share issue and the renewed financing agreement carried out during the financial year. We assessed compliance with the covenants in the financing agreement and the impact of a breach of the EBITDA covenant on the company's financial position and liability classification.
- To assess the sufficiency of financing, we analyzed the business plans and cash flow estimates prepared by the company.
- As a part of our year-end audit procedures, we assessed the accuracy of classification of financial liabilities, and considered the adequacy and appropriateness of the disclosures provided on the financial status in the consolidated financial statements.
95 Valuation of capitalised product development costs and valuation of goodwill
- Refer to accounting principles for the consolidated financial statements and notes 9, 10, 14 and 15
- The Group companies develop software and consulting service products to be used by their customers. The development expenditures are capitalized to the extent that they meet the capitalization criteria set out in the relevant accounting standard (IAS 38) and are assessed to contribute future economic benefits. The assessment may change even in a rather short term, e.g. as a result of technical development.
- The total product development costs capitalized in the financial year ended amounted to EUR 0.6 million. The capitalized product development costs are amortized over four years on a straight-line basis. At the year-end 2023, the capitalized product development costs amounted to EUR 2.2 million. The capitalized product development costs represent 637 percent of the consolidated equity.
- Goodwill amounted to EUR 0.4 million at the financial year-end 2023 and represents 103 percent of the consolidated equity.
- Goodwill and capitalized product development costs are tested at least annually for impairment.
- The preparation of the cash flow projections underlying the impairment tests requires management judgement in regard to e.g. sales growth, profitability, terminal growth and discount rates.
- Due to the significant carrying amounts and management judgment involved in determining recoverable amounts and useful life, the valuation of capitalized product development costs and goodwill is one of the key areas that our audit is focused on.
Our audit procedures included, among others:
- We assessed the appropriateness of the capitalization process and the amortization periods of development expenditures and considered whether the development costs capitalized during the year had met the capitalization criteria under the relevant accounting standard.
- We assessed the appropriateness of the impairment test carried out for the goodwill in the consolidated financial statements.
- Our audit procedures on the impairment testing included, among others, the following: We evaluated the cash flow estimates for future financial periods prepared by management and the key assumptions used in the impairment tests, such as sales growth, profitability and terminal growth.
- Furthermore, we considered the adequacy and appropriateness of the Group's notes in respect of goodwill, testing calculations and intangible assets.
96 Revenue recognition and valuation of trade receivables
- Refer to accounting principles for the consolidated financial statements and notes 2, 3 and 20
- The consolidated net sales consist of software license sales, software maintenance services, cloud (SaaS) services and consulting services. Revenue is recognized when (or as) the control of the service is transferred to the customer, which may be over time or at a point in time.
- Application of revenue recognition principles requires management judgement especially in identifying separate performance obligations, determining stand-alone selling price as well as in analyzing terms and conditions of the contract to determine the appropriate timing to recognize revenue.
- The revenue recognition principles and their consistent application have a significant impact on the net sales and profitability as reported by QPR Software Plc. Therefore, the revenue recognition is one of the key areas that our audit is focused on.
- Trade receivables were in total EUR 1.3 million at 31 December 2023, representing a significant part of the balance sheet. Regardless the fact that there are no significant credit losses incurred in the past, there may be valuation risk associated with trade receivables. Due to the significance of the carrying amount of the trade receivables, the valuation and monitoring of trade receivables is one of the key areas that our audit is focused on.
Our audit procedures included, among others:
- We evaluated the revenue recognition principles by reference to applicable financial reporting standards and contract terms.
- Our audit procedures included testing of key controls designed to ensure the completeness and accuracy of net sales.
- We completed detailed audit procedures over revenue contracts that we selected based on size, timing and complexity. In respect of the selected contracts, we assessed the identification of performance obligations, tested the accuracy of invoicing and compared revenue transactions recorded with contractual terms and traced them to supporting evidence of delivery.
- We evaluated the monitoring routines for trade receivables and the effectiveness of the key internal controls. We also analyzed the trade receivables followed up the payments received after year-end 2023 in respect of selected trade receivables.
- In addition, we assessed the adequacy and accuracy of disclosures related to revenue recognition and trade receivables in the consolidated financial statements.
97 Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists.## AUDITOR'S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
Opinion
We have audited the consolidated financial statements of QPR Software Plc (the "Group") for the year ended 31 December 2023, which comprise the consolidated statement of financial position as at 31 December 2023, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2023, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Finland, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS as adopted by the European Union, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors and the Managing Director are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors and the Managing Director either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
— Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
— Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern.
— Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
— Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
OTHER REPORTING REQUIREMENTS
Information on our audit engagement
We have been the auditors appointed by the Annual General Meeting since 2006, and our appointment represents a total period of uninterrupted engagement of 18 years.
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard.
Helsinki, 16 February 2024
KPMG OY AB
PETRI KETTUNEN
Authorized Public Accountant, KHT
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INFORMATION FOR SHAREHOLDERS
THE SHARE OF QPR SOFTWARE PLC
QPR SOFTWARE PLC SHARES
The share of QPR Software Plc is quoted on the main list of the Nasdaq Helsinki, in the Information technology sector, Small Cap segment. Trading started on March 8, 2002.
- Trading code: QPR1V
- ISIN code: FI0009008668
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on May 15th, 2024. The Board of Directors convenes the Annual General Meeting, with a separate announcement of the General Meeting.
CHANGES OF ADDRESSES
If the address of a shareholder changes, we request you to contact the custodian bank holding the shareholder’s book-entry account.
FINANCIAL INFORMATION IN 2024
QPR will publish three Interim Reports in 2024:
- Interim Report January–March 2024 on Friday 19 April 2024
- Half-year Financial Report January-June 2024 on Friday 2 August 2024
- Interim Report January-September 2024 on Friday 25 October 2024
The interim reports and all stock exchange bulletins of QPR Software Plc are available on the Investor pages of the Company's web pages (www.qpr.com/Investors).
100
CONTACT INFORMATION
QPR Software Plc
- Domicile: Helsinki (Finland)
- Business ID: 0832693-7
- Official address: Huopalahdentie 24, 00350 HELSINKI, Finland
- Head Office: Huopalahdentie 24, 00350 HELSINKI
- Tel: 0290 001 150
- Customer Care Tel: 0290 001 156
- Email: [email protected]
- Company website: www.qpr.com
101
INDEPENDENT ASSURANCE REPORT ON THE MARK-UP OF CONSOLIDATED FINANCIAL STATEMENTS
To the Board of Directors of QPR Software Plc
We have undertaken a reasonable assurance engagement in respect of whether the consolidated financial statements for the year ended 31 December, 2023 included in the digital financial statements 7437003V4S76KM56UW70-2023-12-31-en.zip of QPR Software Plc (Business ID 0832693-7) have been marked up with iXBRL markups in accordance with the requirements of Article 4 of EU Delegated Regulation 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for preparing the report of the Board of Directors and financial statements (ESEF financial statements) that comply with the requirements of ESEF RTS. This responsibility includes:
- preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF RTS
- marking up the primary statements and the notes to the consolidated financial statements, and the company identification data included in the ESEF financial statements with iXBRL tags in accordance with Article 4 of the ESEF RTS; and
- ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal control as they deem necessary to prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Management
We are independent of the company in accordance with the ethical requirements applicable in Finland, which apply to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The auditor applies International Standard on Quality Management ISQM 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulations requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion on whether the marking up of the consolidated financial statements included in the ESEF financial statements comply in all material respects with the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000.# Independent Auditor’s Reasonable Assurance Report on QPR Software Plc’s ESEF Financial Statements
To the Shareholders of QPR Software Plc
Conclusion
We have performed a reasonable assurance engagement to obtain evidence about whether, in all material respects, the primary statements of the consolidated financial statements included in the ESEF financial statements are marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, whether the notes to the consolidated financial statements and the company identification data included in the ESEF financial statements data have been marked up, in all material respects, with iXBRL tags in accordance with Article 4 of the ESEF RTS, and whether the ESEF financial statements and the audited financial statements are consistent with each other.
The engagement involves procedures to obtain evidence whether; — the primary statements of the consolidated financial statements included in the ESEF financial statements are, in all material respects, marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, and; — whether the notes to the consolidated financial statements and the company identification data included in the ESEF financial statements data, have been marked up, in all material respects, with iXBRL tags in accordance with Article 4 of the ESEF RTS; and — whether the ESEF financial statements and the audited financial statements are consistent with each other. The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes the assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether due to fraud or error. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the primary statements of the consolidated financial statements, the notes to the consolidated financial statements and the company identification data included in the ESEF financial statements of QPR Software Plc identified as 7437003V4S76KM56UW70-2023-12-31-en.zip for the year ended 31 December, 2023 are, in all material respects, marked up in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion on the audit of the consolidated financial statements of QPR Software Plc for the year ended 31 December, 2023 is set out in our Auditor’s Report dated 16 February, 2024. In this report, we do not express any audit opinion or other assurance conclusion on the consolidated financial statements.
Helsinki 18 March, 2024
KPMG OY AB
Petri Kettunen
Authorised Public Accountant, KHT
Independent Auditor