QPR Software Oyj — Interim / Quarterly Report 2015

Oct 22, 2015

Disclosure 327662

QPR Software - Interim report (Q1 and Q3)

INTERIM REPORT JANUARY – SEPTEMBER 2015

INVESTMENTS IN GROWTH CONTINUED QPR SOFTWARE PLC STOCK EXCHANGE RELEASE, 22 OCTOBER 2015 AT 8.30 AM INTERIM REPORT JANUARY - SEPTEMBER 2015 INVESTMENTS IN GROWTH CONTINUED Summary January - September 2015 -- Net sales EUR 6,916 thousand (2014: 6,856). License net sales and consulting net sales increased, maintenance services and software rental net sales decreased. -- Operating profit decreased to EUR 290 thousand (678), due to increased outlays in software development and distribution. -- Operating margin was 4.2% (9.9). -- Cash flow from operating activities EUR 785 thousand (1,172). -- Profit before taxes EUR 299 thousand (657). -- Profit for the quarter EUR 283 thousand (549). -- Earnings per share EUR 0.024 (0.046). Summary July - September 2015 -- Net sales EUR 1,989 thousand (2014: 2,167). -- Net sales decreased mainly due to lower net sales in technical consulting and in QPR´s traditional software reseller channel, which was not fully compensated by net sales growth of new products and new resellers. Currency exchange rates had a negative impact in maintenance services net sales. -- Operating profit decreased to EUR -1 thousand (227). -- Profit before taxes EUR 10 thousand (222). -- Profit for the quarter EUR 23 thousand (167). -- Earnings per share EUR 0.002 (0.014). Business operations QPR Software focuses on providing organizations software and professional services for operational development. Our software and services are used in over 50 countries. The Company offers customer organizations insight to their business operations though modeling, analysis and performance monitoring. This insight enables customers to streamline and improve business operations and to execute their strategies swiftly and effectively. The Company´s product portfolio has been strongly renewed in recent years. The new software products offer customers innovative and efficient tools to model their business operations, to automatically discover any processes based on actual event data and to analyze causes for potential performance problems. FUTURE OUTLOOK Customer demand in analytics, monitoring and modeling software, as well as consulting, weakened in QPR´s home market Finland after a strong first quarter of the year. QPR estimated in June (stock exchange release 8th June, 2015) that the weakened market would remain weak over summer, but would improve gradually towards the end of the year. After the summer, the demand and net sales started to pick up, but slower than we estimated in June. Approximately one third of the Company´s net sales is derived from international software sales. This year we have strongly renewed our sales channel by recruiting new international resellers. The amount and value of made offers have continued to grow since the spring, but sales cycles from offers to closed deals have been longer than previously. The Company estimates that the longer sales cycles are due to risen average deal size and growing weight of new products and new resellers in our offer base. Based on updated market outlook, QPR now estimates that its net sales will remain on the same level as last year (+/-4%). Earlier, the Company estimated net sales to grow compared to previous year (2014: EUR 9.541 million). The Company estimates this year´s operating profit to amount approximately 2 - 8 % of net sales (earlier estimate: 6 - 11% of net sales), depending mainly on software license sales in the fourth quarter. The forecasted decline in operating margin (2014: 11.5%) is mainly due to outlays in software product development and in international reseller recruitment. QPR estimates that the outlays made in software reseller channel and renewed product portfolio will next year lead to growth in software sales. Based on this, the Company estimates its net sales and operating profit to return to growth path in 2016. KEY FIGURES -------------------------------------------------------------------------------- EUR in thousands, Jul- Jul- Change Jan- Jan- Change Jan-Dec, unless otherwise Sep, Sep, , % Sep, Sep, , % 2014 indicated 2015 2014 2015 2014 -------------------------------------------------------------------------------- Net sales 1,989 2,167 -8.2 6,916 6,856 0.9 9,541 EBITDA 204 416 -50.8 906 1,242 -27.0 1,857 % of net sales 10.3 19.2 13.1 18.1 19.5 Operating profit -1 227 -100.6 290 678 -57.3 1,095 % of net sales -0.1 10.5 4.2 9.9 11.5 Profit before tax 10 222 -95.5 299 657 -54.5 1,065 Profit for the period 23 167 -86.3 283 549 -48.5 890 % of net sales 1.2 7.7 4.1 8.0 9.3 Earnings per share, 0.002 0.014 -86.4 0.024 0.046 -48.5 0.074 EUR Equity per share, EUR 0.229 0.232 -1.2 0.229 0.232 -1.2 0.257 Cash flow from -282 345 -181.6 785 1,172 -33.0 1,617 operating activities Cash and cash 683 1,303 -47.6 683 1,303 -47.6 1,426 equivalents Free cash flow -455 183 -142 573 702 Net borrowings -683 -1,303 -47.6 -683 -1,303 -47.6 -1,426 Gearing, % -23.9 -45.1 -23.9 -45.1 -44.6 Equity ratio, % 59.0 55.5 59.0 55.5 44.0 Return on equity, % 3.2 23.8 12.5 25.4 29.3 Return on investment, -0.2 32.3 12.8 30.8 35.4 % -------------------------------------------------------------------------------- REPORTING This report complies with requirements of IAS 34 Interim Financial Reporting. Starting from the beginning of 2015, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2014. The implementation of these new and revised requirements have not impacted the reported figures. For all other parts, the accounting principles and methods are the same as they were in the 2014 financial statements. This report is unaudited. QPR Software innovates, develops, sells and delivers to international markets software and services aimed at operational development in organizations. QPR Software reports one operating segment: Operational development of organizations. In addition to this, the Company reports revenue from products and services as follows: Software license sales, Software maintenance services, Software rentals, and Consulting. Software rentals and Software maintenance services together form the recurring revenue reported by the Company. Recurring revenue is based on long-term contracts continuing for the time being or for a fixed period of several years. Typically rental and maintenance charges are invoiced annually in advance. As geographic information QPR Software reports geographical areas Finland, rest of Europe including Russia and Turkey, and rest of the world. Net sales are reported by the customer´s location. REVIEW BY THE CEO In the next three years, QPR seeks to grow especially its analytics and monitoring software sales in the international markets. In line with these targets and strategy, we continued the renewal of our international sales in the third quarter. This year we have increased growth investments in international distribution of our innovative software products. Reseller recruitment has been successful, and during this year the Company has recruited 16 new resellers in 13 countries. QPR has invested also in opening up the new markets and training the new resellers. The amount and value of made offers have continued to grow since the spring, but at the same time sales cycles from offers to closed deals have been longer than previously. Net sales growth from new resellers in the third quarter thus did not fully compensate the decline in traditional software sales channel and technical consulting. However, we estimate that in 2016 the new software products and distribution renewals will return the group net sales and operating profit back to growth path. This growth is supported by our consulting business in Finland. Jari Jaakkola CEO NET SALES DEVELOPMENT Net sales in the third quarter were EUR 1,989 thousand (2,167) and decreased 8% from the corresponding period of the previous year. NET SALES BY PRODUCT GROUP -------------------------------------------------------------------------------- EUR in thousands Jul- Jul- Change, Jan- Jan- Change Jan- Sep, Sep, % Sep, Sep, , % Dec, 2015 2014 2015 2014 2014 -------------------------------------------------------------------------------- Software licenses 223 278 -20 987 958 3 1,470 Software 687 764 -10 2,194 2,318 -5 3,093 maintenance services Software rentals 443 488 -9 1,328 1,408 -6 1,901 Consulting 636 637 0 2,407 2,172 11 3,077 -------------------------------------------------------------------------------- Total 1,989 2,167 -8 6,916 6,856 1 9,541 -------------------------------------------------------------------------------- NET SALES BY GEOGRAPHIC AREA -------------------------------------------------------------------------------- EUR in thousands Jul- Jul- Change, Jan- Jan- Change Jan- Sep. Sep. % Sep. Sep. , % Dec, 2015 2014 2015 2014 2014 -------------------------------------------------------------------------------- Finland 1,365 1,402 -3 4,686 4,459 5 6,193 Europe incl. Russia 371 426 -13 1,276 1,413 -10 2,035 and Turkey Rest of the world 253 339 -25 953 983 -3 1,313 -------------------------------------------------------------------------------- Total 1,989 2,167 -8 6,916 6,856 1 9,541 -------------------------------------------------------------------------------- July - September 2015 Software license net sales decreased 20% compared to previous year, which was due a decrease in reseller channel license sales. Majority of license sales was derived from international markets. In July - September there were no large software deals. The timing of large software deals can have a significant impact on net sales of an individual quarter. Software maintenance services net sales and software rental net sales decreased (-10% and -9%). This was due to expiration of a few significant contracts, which was not fully compensated by new maintenance services and rental sales. Customer churn remained low measured by the number of expired contracts, but among them there were more economically significant ones than usually. Furthermore, currency exchange rates had a negative impact on maintenance services net sales. The share of recurring revenues (software maintenance services and software rentals) was 57% (58) of total net sales. Consulting net sales in the third quarter was at the same level compared to previous year. Net sales in operational development and process analysis consulting increased, but net sales in technical SAP consulting decreased. Out of the Group net sales 69% (65) were derived from Finland, 19% (20) from rest of the Europe (including Russia and Turkey) and 13% (16) from the rest of the world. January - September 2015 Software license net sales grew 3 % compared to previous year, and vast majority of license net sales was derived from international markets. Software maintenance services net sales and software rental net sales decreased (-5% and -6%). This was due to expiration of a few significant contracts, which was not fully compensated by new maintenance services and rental sales. Customer churn remained low, measured by the number of expired contracts, but among them there were more economically significant ones than usually. The share of recurring revenue was 51% (54) of total net sales. Consulting net sales in January - September consulting to strong grew 11%, mainly due to strong first quarter of the year. Out of the Group net sales 68% (65) were derived from Finland, 18% (21) from rest of the Europe (including Russia and Turkey) and 14% (14) from the rest of the world. FINANCIAL PERFORMANCE July - September 2015 In the third quarter, the Group's operating profit was EUR -1 thousand (227), or -0.1% of net sales (10.5). Operating profit decreased from the previous year mainly due to increased costs arising on outlays made into new software products and international sales channel. Profit before taxes in the quarter was EUR 10 thousand (222) and profit for the period was EUR 23 thousand (167). Taxes recorded for the period were EUR 13 thousand positive (54 negative). Earnings per share (fully diluted) were EUR 0.002 (0.024). January - September 2015 In January - September, the Group operating profit was EUR 290 thousand (678), or 4.2% of net sales (9.9). Operating profit decreased from the previous year due to increased costs. Higher costs are mainly due to increases in international sales channel and product development costs. The majority of these outlays are increased personnel and marketing costs. The Group´s fixed costs were EUR 6,225 thousand (5,961) in the reporting period, and grew 4.4% compared to previous year. Personnel costs represented 76.2% (74.7) of fixed costs and were EUR 4,743 thousand (4,452). Credit losses, inclusive in fixed costs, totaled EUR 21 thousand (70). Profit before taxes in the quarter was EUR 299 thousand (657) and profit for the period was EUR 283 thousand (549). Taxes recorded for the period were EUR 16 thousand (108). Earnings per share (fully diluted) were EUR 0.024 (0.046). FINANCE AND INVESTMENTS Cash flow from operating activities was EUR 785 thousand (1,172) in January - September. Cash and cash equivalents at the end of the quarter were EUR 683 thousand (1,303). Investments in January - September year totaled EUR 927 thousand (599). Investments consisted mainly of product development and extension of the office facilities. Net financial items in January - September were EUR 9 thousand positive (-21). Financial items included foreign exchange currency gains of EUR 10 thousand (22). In July - September net financial items were EUR 11 thousand positive (-5), and included EUR 12 thousand (-5) foreign exchange currency gains (net). At the end of the quarter, the Company had no interest-bearing liabilities. The gearing ratio was -24% (-45). Current liabilities include deferred revenue in total of EUR 1,549 thousand (1,433). Annualized return on investment was 13% (31) in the reporting period January - September and 0% (32) in July - September. At the end of the quarter, equity ratio was 59% (56) and the consolidated shareholders' equity was EUR 2,854 thousand (2,886). Annualized return on equity was 13% (25) in the reporting period January - September and 3% (24) in July - September. The Annual General Meeting on March 12, 2015 authorized the Board of Directors to decide on issuing a maximum of 4,000,000 new shares, to decide on conveyance of a maximum of 700,000 own shares held by the Company, and to decide on acquiring a maximum of 250,000 own shares. The authorizations are in force until the next Annual General Meeting. PRODUCT DEVELOPMENT The Company develops software and consulting service products to be used by its customers. Software product development costs in the reporting period January - September were approximately 90% of all product development costs. By developing its consulting service products, the Company aims to grow its local business in Finland, and to accelerate its international software sales by offering complementary service concepts and solutions to its software reseller partners. In July - September, product development expenses were EUR 407 thousand (445), and represented 20% of net sales (21). Product development expenses do not include amortization of capitalized product development expenses. Product development expenses were capitalized for a total amount of EUR 168 thousand (107). The amortization of capitalized product development expenses in the quarter was EUR 117 thousand (106). In the reporting period January - September, product development expenses were EUR 1,355 thousand (1,381), and represented 20% of net sales (20). Product development expenses do not include amortization of capitalized product development expenses. Product development expenses were capitalized for a total amount of EUR 609 thousand (368). The amortization of capitalized product development expenses in the reporting period was EUR 346 thousand (283). PERSONNEL At the end of the reporting period, the Group employed a total of 87 persons (83). Average number of personnel during the reporting period January-September was 87 (81). For incentive purposes, the Company has a bonus program that covers all employees. Remuneration of the top management consists of salary, fringe benefits and a possible annual bonus based on net sales and operating profit performance. In 2015, the maximum annual bonus of executive management team, including the CEO, is 30% of the annual base salary. More information on incentive plans can be found in the Annual Report 2014 (http://www.qpr.com/sites/default/files/QPRSoftwareAnnualReport2014.pdf). QPR SOFTWARE´S STRATEGY 2016 - 2018 The Board of Directors has approved an updated strategy for QPR Software. QPR Software innovates, develops and sells in international markets software aimed at analyzing, monitoring and modeling operations in organizations. Furthermore, the Company strengthens its consulting practice in its home market Finland and offers customers a variety of services for operational development planning and execution. The Company´s strategy is to differentiate from its competitors by developing its software products to meet with the increasing challenges organizations face in leading and developing their operations in digitalizing world. Special focus areas for development are process analytics and operational performance monitoring. The Company believes that the relevant market for these focus areas grows significantly in the future, as companies collect more and more transaction and other event data from their operations. In software development, special focus is placed on processing and analyzing large amounts of data, as well as good user experience. In the next three years, QPR seeks to grow especially its analytics and monitoring software sales in the international markets. In order to reach this target, the Company has this year increased its investments in expanding and renewing its international software reseller channel. The Company maintains its middle term target at 15% annual net sales growth. In 2016, the Company estimates its net sales and operating profit to return to growth path, led mainly by software sales. SHARES AND SHAREHOLDERS -------------------------------------------------------------------------------- Trading of shares Jan-Sep, Jan-Sep, Change Jan-Dec, 2015 2014 , 2014 % -------------------------------------------------------------------------------- Shares traded, pcs 4,186,256 2,267,058 85 2,828,001 Volume, EUR 5,900,822 2,189,000 170 2,751,903 % of shares 34.9 18.2 0.2 Average trading price, EUR 1.41 0.97 45.98 0.97 Treasury shares acquired during the 0 37,400 -100 37,400 year, pcs -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Shares and market capitalization Sep 30, Sep 30, Change Dec 31, 2015 2014 , 2014 % -------------------------------------------------------------------------------- Total number of shares, pcs 12,444,863 12,444,863 - 12,444,863 Treasury shares, pcs 457,009 457,009 - 457,009 Book counter value, EUR 0.11 0.11 - 0.11 Outstanding shares, pcs 11,987,854 11,987,854 - 11,987,854 Number of shareholders 1,221 756 62 820 Closing price, EUR 1.30 1.01 29 1.01 Market capitalization, EUR 15,584,210 12,107,733 29 12,107,733 Book counter value of all treasury 50,271 50,271 0 50,271 shares, EUR Total purchase value of all treasury 439,307 439,307 0 439,307 shares, EUR Treasury shares, % of all shares 3.7 3.7 - 3.7 -------------------------------------------------------------------------------- The Annual General Meeting held on March 12, 2015 approved the Board's proposal that a per-share dividend of EUR 0.05 (0.04), a total of EUR 599 thousand (480), be paid for the financial year 2014. The dividend was paid to shareholders entered in the Company's shareholder register, maintained by Euroclear Finland Oy, on the record date of March 16, 2015. The dividend payment date was April 8, 2015. OTHER EVENTS DURING THE REPORTING PERIOD In the beginning of 2015, QPR Software´s sales and deliveries were organized into four units: Operational Development Software, Operational Development Consulting, Process Intelligence and Channel Business. Miika Nurminen was appointed Senior Vice President, Operational Development Consulting, and member of the Executive Management Team as of 1 January, 2015. Nurminen has previously held several leadership positions in QPR Software. Sari Törmälä was appointed Senior Vice President, Operational Development Software, and member of the Executive Management Team as of February 23, 2015. Before QPR Törmälä worked in Kunnan Taitoa Oy, a service provider for the local government sector in Finland providing financial and personnel management services, where she as a member of the Executive Management Team was responsible for sales and customers. Sari Törmälä´s employment at QPR ended in June 2015. The business units Operational Development Consulting and Operational Development Software were combined as of July 1, and Miika Nurminen was appointed to lead the unit. In February, QPR announced that it expands co-operation with a European public sector health care organization and delivers a project for the organization's operational development purposes. The total value of the software and consulting services, delivered by QPR and thus recognizable during the first half of 2015, is around EUR 140 thousand. Target of the agreed project is to improve the customer's operations, development and performance as well as project management. In addition, the project aims for better alignment between business and IT by linking the business area service layer with IT services. In March, QPR announced that QPR Software is recognized in international research company Gartner Inc.´s Market Guide for Enterprise Business Process Analysis (EBPA) report. The Gartner EBPA Market Guide evaluated the Enterprise business process analysis marketplace and depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace. Gartner evaluated the EBPA vendors on the focus and importance of different use cases, as well as about the focus and importance of the different EBPA capabilities. In April, QPR announced that The U.S. Patent and Trademark Office has granted a patent to a technology for analyzing and improving business processes with event instance date, developed by QPR Software. The patented technology utilizes event instance data obtained from information management systems, and helps organizations to analyze and develop their business processes. The patent supports the sale of QPR ProcessAnalyzer software and QPR process intelligence consulting as well as opens up new opportunities for OEM business. In April, the Company also announced that the City of Helsinki, the capital of Finland, had decided to approve QPR Software´s offer for delivering process and enterprise architecture tool as a service. The value of the entire four year agreement period is EUR 1.5 million, out of which the share of revenue booked as software rentals is over 75%. QPR´s competitor appealed to the technical board of the City of Helsinki and to the Market Court and delivered a claim for correction against this purchase decision. The City decided to return the case for further preparation into its sourcing unit and made a new decision to approve QPR´s offer in July 2015. The terms and conditions of the new decision are the same to QPR as in the first decision in April. QPR´s competitor again appealed both to the technical board of the City of Helsinki and to the Market Court, and provided a claim for correction also against this new purchase decision. The technical board of the City of Helsinki rejected the claim in September, but decision regarding the claim in the Market Court is still pending. QPR Software´s Chief Financial Officer Päivi Martti´s employment ended at QPR in June 2015. Jaana Mattila, who worked in the Company as Business Controller since March 2015, was selected as the new Chief Financial Officer. Mattila has previously worked, among others, as Finance Director in Fazer Amica and as CFO in Biohit Oyj. OTHER EVENTS AFTER THE REPORTING PERIOD There were no other significant events after the reporting period. GOVERNANCE The Annual General Meeting on March 12, 2015 resolved that the Board of Directors consists of four (4) ordinary members. The AGM re-elected the following members to the Board of Directors: Kirsi Eräkangas, Vesa-Pekka Leskinen and Topi Piela. The AGM selected Juho Malmberg, as a new member, to join the Board of Directors. Juho Malmberg has previously held leadership positions, among others, in Accenture, KONE and Zenrobotics. In its meeting following the Annual General Meeting, the Board of Directors elected Vesa-Pekka Leskinen as Chairman of the Board. The AGM elected KPMG Oy Ab, Authorized Public Accountants, to continue as QPR Software Plc's auditors, with Kirsi Jantunen, Authorized Public Accountant, acting as principal auditor. The AGM authorized the Board to decide on issuing new shares, conveying own shares held by the Company, and repurchasing the Company's own shares. All authorizations of the Board and other decisions made by the Annual General Meeting are available in their entirety on the stock exchange release published by the Company on March 12, 2015 and available on the investors section of the Company's web site (http://www.qpr.com/investors/annual-general-meeting/annual-general-meeting-2015 ) . SHORT-TERM RISKS AND UNCERTAINTIES Internal control and risk management in QPR Software aims to ensure that the Company operates efficiently and effectively, distributes reliable information, complies with regulations and operational principles, reaches its strategic goals, reacts to changes in the market and operational environment, and ensures the continuity of its business. QPR has identified the following four groups of risks related to its operations: risks related to business operations (country, customer, service delivery, personnel, legal and financial risks as well as risks related to the Company's resellers), risks related to information and products (QPR products, IPR, data security), risks related to financing (foreign currency, bad debt), and risks related to new businesses (growth of new business, product development investments in new business). The Company has an insurance policy for property, operational and liability risks. Financial risks include reasonable credit risk concerning individual business partners, which is characteristic to any international business. QPR seeks to limit this credit risk by continuous monitoring of standard payment terms, receivables and credit limits. In the review period January - September, EUR 21 thousand (70) of credit losses were recorded. The amount of trade receivables over 60 days past due was 5% (10) of total trade receivables at the end of the quarter. Approximately 67 % of Group's trade receivables were in euro at the end of the quarter (62). At the end of the quarter, the Company had not hedged its non-euro trade receivables. No significant changes have taken place in the Company's short-term risks and uncertainties during the quarter. Risks and risk management related to the Company's business are further described in the Annual Report 2014, pages 12-14. (http://www.qpr.com/sites/default/files/QPRSoftwareAnnualReport2014.pdf). QPR SOFTWARE PLC BOARD OF DIRECTORS Further information: Jari Jaakkola, CEO Tel. +358 (0) 40 5026 397 DISTRIBUTION: NASDAQ OMX Helsinki Ltd Main Media Neither this press release nor any copy of it may be taken, transmitted or distributed, directly or indirectly, in or into the United States of America or its territories or possessions. CONSOLIDATED COMPREHENSIVE INCOME STATEMENT -------------------------------------------------------------------------------- EUR in thousands, unless Jul-Se Jul-Se Change Jan-Se Jan-Se Change Jan-De otherwise indicated p, p, , % p, p, , % c, 2015 2014 2015 2014 2014 -------------------------------------------------------------------------------- Net sales 1 989 2 167 -8 6 916 6 856 1 9 541 Other operating income 0 1 1 26 26 Materials and services 148 66 124 402 243 65 337 Employee benefit 1 398 1 370 2 4 743 4 452 7 6 092 expenses Other operating expenses 239 316 -24 865 945 -8 1 281 -------------------------------------------------------------------------------- EBITDA 204 416 -51 906 1 242 -27 1 857 Depreciation and 206 189 9 617 564 9 761 amortization -------------------------------------------------------------------------------- Operating profit -1 227 -100 290 678 -57 1 095 Financial income and 11 -5 9 -21 -30 expenses -------------------------------------------------------------------------------- Profit before tax 10 222 -95 299 657 -55 1 065 Income taxes 13 -54 -124 -16 -108 -85 -175 -------------------------------------------------------------------------------- Profit for the period 23 167 -86 283 549 -49 890 Earnings per share, EUR (basic and diluted) 0,002 0,014 -86 0,024 0,046 -48 0,074 Consolidated statement of comprehensive income: Profit for the period 23 167 283 549 890 Other items in comprehensive income that may be reclassified subsequently to profit or loss: Exchange differences on -23 -10 -26 -11 -40 translating foreign operations Income tax relating to - - - - - components of other comprehensive income -------------------------------------------------------------------------------- Total comprehensive 0 157 257 538 850 income CONSOLIDATED BALANCE SHEET -------------------------------------------------------------------------------- EUR in thousands September September Change Dec 31, 30, 30, , 2014 2015 2014 % -------------------------------------------------------------------------------- Assets Non-current assets: Intangible assets 2,002 1,681 19 1,815 Goodwill 513 513 0 513 Tangible assets 298 190 57 175 Other non-current assets 67 37 81 27 -------------------------------------------------------------------------------- Total non-current assets 2,880 2,421 19 2,529 Current assets: Trade and other receivables 2,825 2,906 -3 4,572 Cash and cash equivalents 683 1,303 -48 1,426 -------------------------------------------------------------------------------- Total current assets 3,508 4,209 -17 5,998 Total assets 6,388 6,630 -4 8,527 ================================================================================ Equity and liabilities Equity: Share capital 1,359 1,359 0 1,359 Other funds 21 21 0 21 Treasury shares -439 -439 0 -439 Translation differences -247 -192 29 -221 Invested non-restricted equity fund 5 5 0 5 Retained earnings 2,155 2,132 1 2,471 -------------------------------------------------------------------------------- Equity attributable to shareholders 2,854 2,886 -1 3,196 of the parent company Non-current liabilities: Non-interest-bearing liabilities 13 29 -55 25 -------------------------------------------------------------------------------- Total non-current liabilities 13 29 -55 25 Current liabilities: Advances received 1,549 1,433 8 1,261 Accrued expenses and prepaid income 1,560 1,909 -18 3,223 Trade and other payables 412 373 10 822 -------------------------------------------------------------------------------- Total current liabilities 3,521 3,714 -5 5,305 Total liabilities 3,534 3,744 -6 5,331 Total equity and liabilities 6,388 6,630 -4 8,527 ================================================================================ CONSOLIDATED CASH FLOW STATEMENT -------------------------------------------------------------------------------- EUR in thousands Jul-Se Jul-Se Change Jan-Se Jan-Se Change Jan-De p, p, , % p, p, , % c, 2015 2014 2015 2014 2014 -------------------------------------------------------------------------------- Cash flow from operating activities: Profit for the period 23 167 -86 283 549 -48 887 Adjustments to the 204 178 15 652 552 18 725 profit Working capital changes -466 -80 482 33 82 -59 25 Interest and other -12 -4 203 -30 -11 175 -13 financial expenses paid Interest and other 3 1 9 2 358 3 financial income received Income taxes paid -33 82 -140 -162 -2 8,000 -10 -------------------------------------------------------------------------------- Net cash from operating -282 345 -182 785 1,172 -33 1,617 activities Cash flow from investing activities: Purchases of tangible -173 -162 7 -927 -599 55 -915 and intangible assets -------------------------------------------------------------------------------- Net cash used in -173 -162 7 -927 -599 55 -915 investing activities Cash flow from financing activities: Repayments of long-term - - - -113 -113 borrowings Repurchase of shares - -9 - -44 -44 Dividends paid 0 - -599 -480 -480 -------------------------------------------------------------------------------- Net cash used in 0 -9 -101 -599 -637 -6 -637 financing activities Net change in cash and -454 174 -361 -742 -64 1,060 65 cash equivalents Cash and cash 1,134 1,127 1 1,426 1,365 4 1,365 equivalents at the beginning of the period Effects of exchange rate 4 2 -1 2 -4 changes on cash and cash equivalents -------------------------------------------------------------------------------- Cash and cash 683 1,303 -48 683 1,303 -48 1,426 equivalents at the end of the period -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN EQUITY -------------------------------------------------------------------------------- EUR in Share Other Translatio Treasur Invested Retained Total thousand capita funds n y non-restricted earnings s l difference shares equity fund s -------------------------------------------------------------------------------- Equity 1,359 21 -181 -395 5 2,061 2,871 Jan 1, 2014 Dividends -480 -480 paid Repurchas -44 -44 e of shares Comprehen -11 551 540 sive income Equity 1,359 21 -192 -439 5 2,132 2,886 Sept 30, 2014 -------------------------------------------------------------------------------- Dividends paid Repurchas 0 0 e of shares Comprehen -29 339 310 sive income -------------------------------------------------------------------------------- Equity 1,359 21 -221 -439 5 2,471 3,196 Dec 31, 2014 Dividends -599 -599 paid Repurchas e of shares Comprehen -26 283 257 sive income -------------------------------------------------------------------------------- Equity 1,359 21 -247 -439 5 2,155 2,854 Sept 30, 2015 -------------------------------------------------------------------------------- NOTES TO INTERIM FINANCIAL STATEMENTS ACCOUNTING PRICIPLES This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2015, the Group has applied certain new or revised IFRS standards and IFRIC interpretations as described in the Consolidated Financial Statements 2014. The implementation of these new and revised requirements have not impacted the reported figures. For all other parts, the accounting principles and methods are the same as they were in the 2014 financial statements. When preparing the consolidated financial statements, management is required to make estimates and assumptions regarding the future and to consider the appropriate application of accounting principles, which means that actual results may differ from those estimated. All amounts presented in this report are consolidated figures, unless otherwise noted. The amounts presented in the report are rounded, so the sum of individual figures may differ from the sum reported. This report is unaudited. During the reporting period, the Group did not have any financial instruments measured at fair value. INTANGIBLE AND TANGIBLE ASSETS -------------------------------------------------------------------------------- EUR in thousands Jan-Sep, Jan-Sep, Jan-Dec, 2015 2014 2014 -------------------------------------------------------------------------------- Increase in intangible assets: Acquisition cost Jan 1 6,953 6,112 6,112 Increase 700 538 841 Increase in tangible assets: Acquisition cost Jan 1 1,425 1,351 1,351 Increase 228 61 74 -------------------------------------------------------------------------------- CHANGE IN INTEREST-BEARING LIABILITIES -------------------------------------------------------------------------------- EUR in thousands Jan-Sep, Jan-Sep, Jan-Dec, 2015 2014 2014 -------------------------------------------------------------------------------- Interest-bearing liabilities Jan 1 - 113 113 Repayments - -113 -113 -------------------------------------------------------------------------------- Interest-bearing liabilities Sept - - - 30/Dec 31 -------------------------------------------------------------------------------- PLEDGES AND COMMITMENTS -------------------------------------------------------------------------------- EUR in thousands Sep 30, Sep 30, Dec 31, Change, % 2015 2014 2014 -------------------------------------------------------------------------------- Business mortgages (held by the 1,390 1,392 1,391 0 Company) Minimum lease payments based on lease agreements Maturing in less than one year 365 154 304 20 Maturing in 1-5 years 172 37 436 -61 -------------------------------------------------------------------------------- Total 537 191 740 -27 Total pledges and commitments 1,927 1,583 2,131 -10 -------------------------------------------------------------------------------- CONSOLIDATED INCOME STATEMENT BY QUARTER -------------------------------------------------------------------------------- EUR in thousands Q3 Q2 Q1 Q4 Q3 Q2 Q1 2015 2015 2015 2014 2014 2014 2014 -------------------------------------------------------------------------------- Net sales 1,989 2,402 2,524 2,685 2,167 2,465 2,225 Other operating income - 1 - - 1 10 15 Materials and services 148 149 105 94 66 92 85 Employee benefit 1,398 1,723 1,622 1,640 1,370 1,557 1,525 expenses Other operating expenses 239 287 338 336 316 304 325 -------------------------------------------------------------------------------- EBITDA 204 243 459 615 416 522 305 Depreciation and 206 211 200 198 189 178 197 amortization -------------------------------------------------------------------------------- Operating profit -1 32 259 417 227 344 107 Financial income and 11 -16 14 -8 -5 -12 -4 expenses -------------------------------------------------------------------------------- Profit before tax 10 16 272 409 222 332 103 Income taxes 13 18 -47 -68 -54 -43 -10 -------------------------------------------------------------------------------- Profit for the period 23 35 225 341 167 288 93 -------------------------------------------------------------------------------- GROUP KEY FIGURES -------------------------------------------------------------------------------- EUR in thousands, unless Jan-Sep or Sep Jan-Sep or Sep Jan-Dec or Dec otherwise indicated 30, 2015 30, 2014 31, 2014 -------------------------------------------------------------------------------- Net sales 6,916 6,856 9,541 Net sales growth, % 0.9 7.5 9.8 EBITDA 906 1,242 1,857 % of net sales 13.1 18.1 19.5 Operating profit 290 678 1,095 % of net sales 4.2 9.9 11.5 Profit before tax 299 657 1,065 % of net sales 4.3 9.6 11.2 Profit for the period 283 549 890 % of net sales 4.1 8.0 9.3 Return on equity (per 12.5 25.4 29.3 annum), % Return on investment (per 12.8 30.8 35.4 annum), % Cash and cash equivalents 683 1,303 1,426 Free cash flow -142 573 702 Net borrowings -683 -1,303 -1,426 Equity 2,854 2,886 3,196 Gearing, % -23.9 -45.1 -44.6 Equity ratio, % 59.0 55.5 44.0 Total balance sheet 6,388 6,630 8,527 Investments in non-current 927 599 915 assets % of net sales 13.4 8.7 9.6 Product development 1,355 1,381 1,847 expenses % of net sales 19.6 20.1 19.4 Average number of personnel 87 81 81 Personnel at the beginning 78 79 79 of period Personnel at the end of 87 83 78 period Earnings per share, EUR 0.024 0.046 0.074 Equity per share, EUR 0.229 0.232 0.257 --------------------------------------------------------------------------------