2017-03-06 14:00:00 CET
2017-03-06 14:00:00 CET
REGULATED INFORMATION
Ixonos - Financial Statement Release
IXONOS' AUDITOR'S REPORT 2016
Helsinki, Finland, 2017-03-06 14:00 CET (GLOBE NEWSWIRE) -- Ixonos Plc
Stock Exchange Release 06 March 2017 at 15:00
IXONOS' AUDITOR'S REPORT 2016
Ixonos' Auditor’s report 2016 as a whole is published in this release. In
addition to the standard format text the report includes additional information
related to emphasizing a matter. The Finnish auditor’s report was published 3
March 2017.
This document is an English translation of the Finnish auditor’s report. Only
the Finnish version of the report is legally binding.
Auditor’s Report
To the Annual General Meeting of Ixonos
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Ixonos Plc (business identity code
0997039-6) for the year ended 31 December 2016. The financial statements
comprise the consolidated balance sheet, statement of comprehensive income,
statement of changes in equity, statement of cash flows and notes, including a
summary of significant 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 performance, financial position 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.
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.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion..
Material uncertainty related to going concern basis
We would like to draw attention to the fact that the Group has been generating
losses in recent years and its financial position is challenging. The Group has
carried out several financing arrangements to strengthen its balance sheet and
secure liquidity. On 31 December 2016 the consolidated current liabilities
exceeded current assets. In accordance with note 33 the liabilities falling due
within next 12 months amounted to EUR 4.8 million at the financial year-end.
Consolidated cash flow from operating activities was negative in the financial
years 2015 and 2016.
As described in the report of the Board of Directors and in Accounting policies
for the consolidated financial statements, section Basis for preparation,
subsection Going Concern, on the balance sheet day, the company estimated that
its existing working capital may not be sufficient to cover the company’s
funding needs over the next 12 months. At the time financial statement were
prepared the negotiations for restructuring of short-term financing were
unfinished. The financial gap in the cash flow forecast in the beginning of the
year 2017 can be filled with bridge financing. The Directors believe that
financing negotiations will result in a positive solution for the company
securing future operations. After the balance sheet day the company has secured
a EUR 1 million loan agreement with its main owner and a EUR 1 million
commitment for additional loan with its main owner which company's Board of
Directors has approved.
As described in Accounting policies for the consolidated financial statements,
subsection Going concern, the financial statements have been prepared on a
going concern principle taking into account the realised financial arrangements
during the financial year 2016 and financial estimations made up for the year
2017. During the past year the company’s confirmed orders improved
significantly compared to the previous year. In addition to that the cost
structure was lightened. There is, however, material uncertainty related to
operational profitability, financial position improvements and the end result
of the financing negotiations, which may cast doubt upon the company‘s ability
to continue as a going concern.
Furthermore, we would like to draw attention to the fact that the goodwill
balance in the consolidated balance sheet amounts to EUR 11.5 million. As
described in the previous chapter there is uncertainty related to the Group’s
ability to continue as a going concern and thus the carrying value of goodwill
may not be supported.
Our opinion has not been qualified by this matter
Emphasis of a matter – valuation of subsidiary shares and intra-group
receivables in the parent company’s balance sheet
The carrying value of the subsidiary shares in the parent company Ixonos Plc’s
balance sheet totalled
EUR 26.1 million as at 31 December 2016. Furthermore, the parent company’s
intra-group receivables amounted to EUR 7.7 million. The Group has been
generating losses in recent years. As described in the notes to the parent
company’s financial statements the Group has prepared long-term forecasts to
assess the valuations of goodwill and subsidiary shares. The valuation of
subsidiary shares and intra-group receivables is highly dependent on the
subsidiaries’ future result development and the Group’s business model. Our
opinion has not been qualified by this matter.
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.
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.
In addition to the matters described in the sections Material uncertainty
related to goingconcern basis and Emphasis of a matter – valuation of
subsidiary shares and intra-group receivables in the parent company’sbalance
sheet we have found that the key audit matters described below are to be
included in our Auditor’s Report.
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
---------------------------------------------------------------
Valuation of Goodwill
(Refer to note 13 to the consolidated financial statements)
--------------------------------------------------------------------------------
-
—At the financial year-end, the goodwill —We evaluated the company’s
balance amounted to EUR 11.5 million estimation process and analyzed the
representing approximately 72 percent of assumptions used in the impairment
the consolidated total assets. tests for 2015 by comparing to
Consequently goodwill is the most performance in 2016 in respect of
significant individual item in the turnover and profitability.
consolidated balance sheet. As at 31 —Furthermore, we involved KPMG
December 2016 the Group’s equity was valuation specialists when analyzing
negative amounting to EUR 4.2 million. the reasonableness of the
—As described in the report of the Board assumptions underlying the goodwill
of Directors, the Group’s business impairment tests, and the technical
primarily consists of relatively accuracy of the impairment model.
short-term customer contracts. —As part of our audit procedures
Forecasting the starting dates and scope during the financial year and at
of new projects may be challenging from year-end, we assessed whether there
time to time. This may result in was any external or internal
unexpected fluctuation in turnover and indication that may warrant
Group’s profitability. preparation of impairment
—Preparation of impairment tests requires calculations at some other date than
management apply judgement and make the regular date of impairment
assumptions. Valuations prepared to testing, and result in an
support the carrying amount of goodwill impairment.
are highly dependent on the Group’s —At year-end audit we considered the
result development and business model. adequacy and appropriateness of the
Group’s notes in respect of goodwill
and impairment testing.
Valuation of Trade Receivables
(Refer to note 16 to the consolidated financial statements)
--------------------------------------------------------------------------------
-
—Trade receivables, amounting to EUR —We evaluated monitoring routines for
2.9 million as at 31 December 2016, trade receivables and tested the
make up a significant balance sheet effectiveness of the key internal
item. Regardless of the fact that controls. We also analyzed trade
there are no significant credit losses receivables and assessed the payments
incurred in the past, there is a received after the year-end to
valuation risk associated with the identify any trade receivables
trade receivables potentially impaired.
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 on 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. Misstatements can arise from fraud or
error and are considered material if, individually or in 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 scepticism 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
Other Information
The Board of Directors and the Managing Director are responsible for the other
information. The other information comprises information included in the report
of the Board of Directors and in the Annual Report, but does not include the
financial statements and our auditor’s report thereon. We obtained the report
of the Board of Directors prior to the date of this auditor’s report.
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 identified above 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 on the report of the Board of
Directors, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in
this regard.
Helsinki, 2 March 2017
KPMG OY AB
Esa Kailiala
Authorised Public Accountant, KHT
IXONOS PLC
Board of Directors
For more information, please contact:
IXONOS PLC
CEO Sami Paihonen, Tel. + 358 50 502 1111, sami.paihonen@ixonos.com
CFO Kristiina Simola, Tel. + 358 40 756 3132, kristiina.simola@ixonos.com
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