2015-10-30 08:00:03 CET
2015-10-30 08:00:09 CET
REGULATED INFORMATION
Ixonos - Interim report (Q1 and Q3)
Interim report for the period January 1 - September 30, 2015
Helsinki, Finland, 2015-10-30 08:00 CET (GLOBE NEWSWIRE) -- Ixonos Plc
Stock Exchange Release 30 October 2015 at 09:00
Interim report for the period January 1 - September 30, 2015
CHALLENGING THIRD QUARTER - PERIOD OF CHANGES, CRESENSE TO STRENGHTEN THE
SERVICE PORTFOLIO
Third quarter 2015 in brief:
-- Turnover in the third quarter was EUR 3.5 million (2014: 6.4 million), a
change of -44.3 per cent.
-- Earnings before interest, taxes, depreciation and amortization (EBITDA)
were EUR -2.3 million, -64.6 per cent of turnover (2014: EUR -0.1
million, -1.1per cent of turnover).
-- Operating result was EUR -2.5 million (2014: EUR -0.6 million), -71.0 per
cent of turnover.
-- Net result was EUR -3.0 million (2014: EUR -0.6 million).
-- Earnings per share were EUR -0.02 (2014: EUR -0.01).
Review period in brief (last year's reference figures inside brackets):
-- Turnover for the review period was EUR 12.7million (2014: EUR 18.1
million), a change of -29.8 per cent.
-- Earnings before interest, taxes, depreciation and amortization (EBITDA)
were EUR -5.5 million, -43.7 per cent of turnover, (2014: EUR -3.8 million,
-21.2 percent of turnover).
-- Operating result was EUR -6.4 million, -50.6 per cent of turnover (2014:
EUR -5.6 million, -31.0 per cent of turnover).
-- Net result was EUR -12.1 million (2014: EUR -5.5 million),
including write-off of deferred tax assets EUR -4.9 million.
-- Earnings per share were EUR -0.06 (2014: EUR -0.06).
-- Net cash flow from operating activities was EUR -3.5 million (2014: EUR
-6.1million).
-- The financing position and balance sheet were strengthened in February
through EUR 5.8 million directed share issue. Financial loans were
rearranged at the same time.
-- On July 13, 2015 the company signed a credit facility agreement of EUR 3.0
million with its main owner and on June 10, 2015 it agreed upon a EUR 1.0
million loan with a related party.
-- On September 2, 2015 the company made a share based acquisition of Cresense
Oy, a company which specializes in user oriented design.
Future prospects
The turnover of the company in 2015 is estimated to EUR 16 - 18 million. The
operating profit of the company is expected to decrease compared to 2014 and
the cash flow to be negative.
Changes in the management of the group
The company has reduced the size of the Management Team to three members. Chief
Executive
Officer Sami Paihonen is a member of the Management Team together with
Executive Vice
President Teppo Kuisma and Chief Financial Officer Kristiina Simola, who joined
Ixonos on October 1,
2015.
Sami Paihonen, President and CEO:
“The turnover of the third quarter remained, as in the second quarter, on a
lower level than in the comparison period. Significant reasons to this were
that the company started implementing its strategic change process where the
service offering will be modified and at the same time the launch of some
customer projects were delayed during the review period. The international
sales remained on the same level as in the comparison period which was a
positive element during the third quarter.
We continued our controlled efforts to adjust the cost structure to a more
sustainable level. Our trading loss posed however challenges to the cash flow
and therefore the company has continued to secure the requisites together with
the financiers. We believe that the chosen strategy leads to improved chances
to succeed in the constantly changing and challenging markets as an operator
who combines user and usability research with high quality design and excellent
realisation.
The company's new management is carrying through a strategy process, which main
directions were
supported by observations and operative improvement ideas from the personnel.
The realisation of these strategic changes has been initiated in order to make
the company into a faster, more agile and cost-effective operator. The vision
of the company has been clarified further and the increased customer interest
during the past quarter has already proven that we are on a right track.”
OPERATIONS
Ixonos is a design-led technology company that provides creative digital
solutions and services for customers in selected target industries. We help our
customers embrace digitalisation, Internet and mobility for productivity, new
business models and unique user experiences for competitive advantage.
Our primary geographical markets are Finland, USA and Great Britain, where our
design studios are located. The software development is primarily located in
Finland, but we have technical knowhow in all target markets to support our
customers.
Our core strength and key differentiator is our ability to combine our
world-class design capability with strong technical implementation skills,
hence offering total end-to-end solutions that deliver strategic value to our
customers. We call this Dream - Design - Deliver -approach.
Ixonos Design services cover digital, mobile, web design as well as service and
industrial design. These holistic design services consist of design strategy,
design and user research, design innovation and workshops, visual and
interaction design, and prototyping for various connected devices and services
and ranging to complete cross-platform design.
As a technology company we excel in creative software development, both in
embedded SW as well as in online SW. We utilise open standard technologies
(e.g. Linux, Android, iOS, Windows). We combine our software development
capabilities with our world-leading technology knowhow and our deep
understanding of user interface design and usability, as well as professional
project management capabilities. This enables us to provide solutions for our
customers with quality and agility. Our technology competences cover wireless
connectivity, RF, audio, imaging and video technologies among others.
Our primary business areas are:
- Industrial Internet: Providing embedded and creative digital solutions for
the industrial companies. We help industrial companies to transform from
proprietary technologies into standard open source technologies enabling
increased productivity and value for their customers. We provide also digital
innovations that help our customers in their business model transformation
towards service business. Our clientele in this segment consists of companies
such as Kone, Outotec, Cargotec, Kemppi and Metso.
- Media: Helping TV broadcasters, studios, production companies and operators
to offer increasingly interactive and personalised viewing experiences, as well
as new business models, through innovations such as Ixonos TV Compass™ 2nd
screen solution. Our clientele in this segment consists of companies such as
Al-Jazeera, Discovery and MBC Group.
- Online consumer brands: Helping consumer-facing retail and service brands to
embrace Internet-based digital and mobile solutions for differentiation,
customer experience, productivity and service innovation. Our clientele in this
segment consists of companies such as Stockmann, Viking Line and ST1.
- Cloud Solutions: Providing secure and robust cloud and managed hosting
services with Ixonos Cloud™ solution. Ixonos virtual private cloud has been
designed for demanding enterprise use. It combines the security of a private
cloud with the scalability of the public clouds. Information is secured and
stored in our machine rooms in Finland. Ixonos Cloud™ is also used as a
back-end platform for several end-to-end solutions. Our clientele in this
segment consists of companies such as Microsoft, Fonecta and Veikkaus.
- Smart Devices & Platforms, where our customers include HP and Samsung.
We continue to serve our customers also in several other market segments,
including:
- Automotive and Transportation, where our customers include Honda, VW and
MarcoPolo.
- Finnish Public Sector, where our customers include several ministries and
municipalities, as well as
Tiera.
- Defence & Security, where our customers include Airbus and Savox
Communications.
Organisation
Our organisation consists of the following functions:
-- Sales & Marketing function, which is in charge of customer
relationships, sales pipeline, order intake and profitable revenue
generation.
-- Design
function, which is in charge of the design capabilities that are a unique
differentiator in our Dream Design Deliver approach.
-- Solution Creation
function, which is in charge of technical solution implementation,
software development, and cost-effective customer project management.
-- The whole organisation's operations are supported by support functions such
as Finance & Control and Human Resources.
Locations
Our offices are situated in our main markets Finland, USA, Great Britain and
Singapore.
-- Our Solution Creation development sites are mainly located in Finland.
Additionally we have customer-facing technical personnel in USA and Great
Britain.
-- Our Design Studios are located in Finland, USA, Great Britain and
Singapore.
-- Our Sales offices are located in Finland, USA and Great Britain.
SEGMENT REPORTING
Ixonos reports its operations as a single segment.
TURNOVER
The turnover in the third quarter was EUR 3.5 million (2014: EUR 6.4 million),
which is 44.3 per cent lower compared to the corresponding period.
The company's turnover during the review period was EUR 12.7 million (2014: EUR
18.1 million), which is 29.8 percent lower than in the comparison period.
The lower turnover was mainly caused by challenges in the domestic market.
Furthermore, there have been delays in the expected projects in Great Britain.
During the review period, no single customer generated a dominating share of
the turnover or exceeded one fourth of the total turnover.
RESULT
The operating result for the third quarter was EUR -2.5 million (2014: EUR -0.6
million) and the result before taxes was EUR -3.0million (2014: EUR -0.8
million). The third quarter earnings per share were EUR -0.02 (2014: EUR
-0.01). Cash flow from operating activities per share in the second quarter was
EUR -0.04 (2014: EUR -0.01). The operating result for the review period was EUR -6.4 million (2014: EUR -5.6
million) and result before tax was EUR -7.2 million (2014: EUR -6.3 million).
Earnings per share were EUR -0.06 (2014: EUR -0.06). Cash flow per share from
operating activities in the review period was EUR -0.03 (2014: EUR 0.03).
The result of the review period decreased due to capitalisation of deferred tax
assets by -4.9 MEUR made Q2/2015 and lower than estimated turnover.
RETURN ON CAPITAL
The group's total shareholders' equity reported negative by EUR -7.1 million.
Due to negative value of total shareholders' equity the return-on-equity ratio
has not been provided for the accounting period.
Return on investment (ROI) was -51.0 per cent (2014: -46.3per cent).
INVESTMENTS
Investments during the review period totalled to EUR 0.3 million (2014: EUR 0.8
million). Investments consisted of capitalisation of R&D expenditure in media
and industrial internet businesses and investments in fixed assets.
BALANCE SHEET AND FINANCING
The balance sheet totalled to EUR 17.7 million (2014: EUR 25.3 million).
Shareholders' equity was EUR -7.1 million (2014: EUR 1.6 million). The equity
to total assets -ratio was -40.1per cent (2014: 6.2 per cent). The group's
liquid assets at the end of the review period amounted to EUR 0.6 million
(2014: EUR 0.2 million). Non-controlling interest of the equity was EUR 0.2
million (2014: EUR 0.2 million).
The change in shareholders' equity was mainly caused by write-off of company's
deferred tax assets.
At the end of the review period, the balance sheet included EUR 14.9 million
(2014: EUR 10.7 million) in bank loans. This amount covers the bank overdraft
in use.
The company has agreed with its main financiers regarding a period partly free
of instalments for its loans until December 31, 2015. For this period the loan
covenants that are based on EBITDA performance in Euros have been agreed. The
amount of bank loans under covenants amounted on September 30, 2015 to EUR 5.8
million (2014: EUR 6.1 million). The company has obtained from its creditors a
waiver of right to apply their option to claim repayment based on agreed
covenants as of September30, 2015.
The company repaid its loans amounting to EUR 2.3 million to Turret Oy Ab, a
related party, on February 10, 2015. At the same time the EUR 3.5 million
long-term convertible bond and its interests were used to pay part of the
directed share issue.
On February 10, 2015 the company also raised a EUR 4.0 million loan guaranteed
by its main owner Tremoko Oy Ab from financial institutions.The company made an
announcement regarding the financing arrangements on February10, 2015.
On June 10, 2015 the company agreed upon EUR 1.0 million short term bridge loan
with Turret Oy Ab, a related party, for working capital purposes.
On July 13, 2015 the company signed a credit facility agreement of EUR 3.0
million with its main owner Tremoko Oy. The company made an announcement
regarding the financing arrangements on June 23, 2015 and July 14, 2015.
The company has stated that the company's working capital will not be
sufficient to fund the company's operations over the next 12 months. The
company estimates that it will have sufficient working capital for the next 2
months provided that the cash flow estimates for 2015 materialize.
The company has ongoing negotiations with its main owners and financiers
concerning the company's financing.
CASH FLOW
Consolidated cash flow from operating activities during the review period was
EUR -7.4 million (2014: EUR -6.1 million). As of September 30, 2015, the
company had sold EUR 0.8 million (2014: EUR 1.5 million) in accounts receivable
to reduce the turnaround time.
DEFERRED TAX ASSETS
The management has assessed the prerequisities for capitalizing the deferred
tax assets. Due to continuing uncertainties in the markets, and despite the
expected improvement of the result before onetime items in comparison to the
previous year, the management has concluded that the conditions and certifying
future views that need to be fulfilled to enable the company to continue
capitalizing its deferred tax assets may not be assuredly verified. Based on
this change of management assessment the company has decided not to capitalize
the deferred tax assets and has decided to write off the existing capitalised
values from its balance sheet, total of EUR -4.9 million.
GOODWILL
On September 30, 2015, the consolidated balance sheet included EUR 12.2 million
in goodwill (2014: EUR 10.8 million). The before mentioned goodwill includes an
addition of EUR 1.3 million as a result of the acquisition of Cresense Oy's
shares.
The following parameters were used in the goodwill impairment testing:
-- The review period of 4 years
-- WACC discount rate 10 per cent
-- 1 per cent growth estimate used for terminal value calculation
The company made an impairment test on September 30, 2015 confirming that there
is no need for an impairment. The present value of future cash flows exceeded
the carrying value of assets by EUR 7.4 million.
The present value of the cash flow calculation EUR 19.7 million is lower than
the sum of the company's financial liabilities EUR 16.6 million and the market
price of the shares EUR 21.0 millions of September 30, 2015.
ACQUSITION OF CRESENSE OY
The company has acquired the Finnish privately owned company Cresense Oy in
order to strengthen Ixonos' position as an innovative digitalization and
transformation partner by enforcing the company's user research and design
know-how. The corporate transaction was completed on September 2, 2015. As part
of the company's reorganization, a total of 27 employees joined Ixonos.
In the transaction, all Cresense shares apart from shares owned by the company
itself were transferred to the ownership of Ixonos. Cresense Oy owns 300 own
shares, which represents 14 per cent of the company's total shares. As
compensation, Ixonos issued a total of 7,142,860 new Ixonos shares in a
directed share issue to be subscribed by the existing owners of Cresense Oy.
The sellers have subscribed all the shares that were offered in the share issue
and Ixonos Board of Directors has approved the subscriptions. The shares will
represent 3.4 per cent of Ixonos shares and votes after the share issue. The
shares will entitle to full dividends possibly distributed by Ixonos and to
other distribution of assets as well as carry other shareholder rights in the
company starting from when the shares have been entered in the Trade Register
and the shareholders' register of the company. The shares of the sellers
continuing to work for the group are subject to a lock-up period from six (6)
months to two (2) years starting from the issue date. If certain prerequisites
are met, the sellers will be entitled to an additional purchase price of EUR
380,000 at most. Ixonos may pay the possible additional purchase price in cash
or as Ixonos shares at its option.
The share issue was carried out in derogation from the pre-emptive subscription
right of the shareholders by the decision of Ixonos' Board of Directors on the
authorisation of the Annual General Meeting held on April 29, 2015. The share
issue was carried out in order to develop the group's business and to finance a
corporate transaction therefore there was a weighty financial reason for the
share issue and the deviation from the pre-emptive right of the shareholders
within the meaning of the Finnish Limited Liability Companies Act. The
subscription price of the shares was EUR 0.07 per share. The subscription price
has been defined as the mean price weighted with the trading amounts of the
Ixonos share of the period June 26, 2015 - August 25, 2015. The subscription
took place and Cresense Oy's shares were transferred to Ixonos in connection
with the execution of the acquisition.
In connection to the acquisition of Cresense Oy's shares EUR 1.3 million was
written down in goodwill.
The acquisition of Cresense Oy responds to the customer demand to combine user
research knowledge with digitalization. Through the acquisition Ixonos'
Dream-Design-Deliver concept can be better utilized by the customer with the
Discover-Design-Deliver business concept. The increased offer book is believed
to increase the united company's turnover. In addition synergy advantage will
be obtained by combining office facilities and utilizing the companies' best
practice and equipment.
PERSONNEL
The average number of employees during the review period was222 (2014: 337) and
in the end of the period 209 (2014: 276) employees. Staff decreased in Finland
as well as abroad. In the end of the review period, the Group had 170 employees
(2014: 248) stationed in Finnish companies, while Group companies in other
countries employed 39 (2014: 28). During review period the number of employees
decreased by 55.
SHARES AND SHARE CAPITAL
Share turnover and price
During the financial period, the highest price of the company's share was EUR
0.12 (2014: EUR 0.16) and the lowest price was EUR 0.05 (2014: EUR 0.08). The
closing price on September30, 2015 was EUR 0.10 (2014: EUR 0.10). The weighted
average price was EUR 0.07 (2014: EUR 0.11). The number of shares traded during
the review period was 40,240,359(2014: 35,204,000), which corresponds to
19.2per cent (2014: 33.1 percent) of the total number of shares at the end of
the review period. The market value of the share capital was EUR
20,382,260(2014: EUR 10,950,294) at closing on September 30, 2015.
Ixonos Plc issued a total of 7,142,860 new Ixonos shares in a directed share
issue in connection with the acquisition of Cresense Oy's on September 2, 2015.
The shares were entered into the Trade Register on September 10, 2015 and were
released for subscription in Nasdaq Helsinki on September 30, 2015 equal to the
existing Ixonos shares. Some shares are subject to a lock-up period from six
(6) months to two (2) years counting from the issuing date. After this share
issue Ixonos Plc's total amount of shares and votes increased to 210,126,396.
The company realized a directed share issue on February 10, 2015. Tremoko Oy
Ab, a related party, subscribed 96,670,000 shares at a price of EUR 0.06 per
share corresponding to approximately EUR 5.8 million.
In connection with Tremoko's mandatory public takeover bid in March 2015 a
total of 20,454,656 shares and 1,540,000 options were transferred to Tremoko Oy
Ab, whereby its ownership rose to 79.1 percent. With the options right the
ownership percentage may be raised to 79.2 percent.
Share capital
At the beginning of the review period, the company's registered share capital
was EUR 585,394.16 and the number of shares was 106,313,536. At the end of the
review period, the registered share capital was EUR 585,394.16 and the number
of shares was 210,126,396
Option plans 2011 and 2014
2011 plan
The Board of Directors of Ixonos Plc decided on November 30, 2011 to grant new
options. This decision was based on the authorisation given by the Annual
General Meeting on March 29, 2011.
The options were issued by December 31, 2011, free of charge, to a subsidiary
wholly owned by Ixonos Plc. This subsidiary will distribute the options, as the
Board decides, to employees of Ixonos Plc and other companies in the Ixonos
Group, to increase their commitment and motivation. Options will not be issued
to members of the Board of Directors of Ixonos Plc or to the Ixonos Group's
senior management.
The options will be marked IV/A, IV/B and IV/C. A total of 600,000 options will
be issued. According to the terms of the options, the Board of Directors
decides how the options will be divided between option series and, if needed,
how undistributed options will be converted from one series to another.
Each option entitles its holder to subscribe for one new or treasury share in
Ixonos Plc.
The exercise period for the IV/A options began on October 1, 2014, for the IV/B
options it will begin on October 1, 2015 and for the IV/C options on October 1,
2016. The exercise periods for all options will end on December 31, 2018. The
exercise price for each option series is a trade volume weighted average price
at NASDAQ OMX Helsinki. The exercise prices will be reduced by the amount of
dividends, and they can also be adjusted under other circumstances specified in
the option terms.
In order to ensure the equal treatment of shareholders and the 2011 stock
option holders and taking into account the adjustment made on October 30, 2013
following the consolidation of the company's shares, the Board of Directors of
Ixonos has due to the Rights Offering adjusted the subscription ratio and the
subscription price of the 2011 stock options in accordance with the terms and
conditions of the 2011 stock options.
The subscription ratio of stock options IV/A shall be amended to 5.022 and the
subscription price shall be amended to EUR 0.291 per share. As regards stock
options IV/C, the subscription ratio shall be amended to 5.022 and the
subscription price shall be amended to EUR 0.208 per share. The option plans
for IV/B options have been cancelled.
The total amount of shares is rounded down to full shares in connection with
subscription of the shares and the total subscription price is calculated using
the rounded amount of shares and rounded to the closest cent. Due to the above
mentioned adjustments concerning stock options IV/A, the adjusted maximum total
number of shares to be subscribed for based on the 2011 stock options shall be
1,104,840.
2014 plan
The Board of Directors of Ixonos Plc decided to issue stock options on February
18, 2014, on the basis of the authorization granted by the Extraordinary
General Meeting held on October 30, 2013.
The stock options will be offered to the global management team and certain key
personnel of Ixonos Plc and its subsidiaries for the purpose of improving
commitment and motivation. The stock options will be marked as series 2014A,
2014B and 2014C. The aggregate number of stock options is 5,000,000. The Board
of Directors will, in accordance with the terms and conditions of the stock
options, decide on the allocation of the stock options between different series
and, if necessary, on the conversion of stock options that has not been
allocated into another series of stock options.
Each option entitles its holder to subscribe for one new or treasury share in
Ixonos Plc. The share subscription period with 2014A stock options starts on
March 1, 2016, with 2014B stock options on March 1, 2017 and with 2014C stock
options on March 1, 2018. The share subscription period ends with all stock
options on December 31, 2018. The share subscription price for each series is
the volume weighted average price of the company's share on the Helsinki
Exchange during the period March 1 to May 31, 2014 for 2014A, January 1 to
March 31, 2015 for 2014B and January 1 to March 31, 2016 for 2014C. The
subscription price may be decreased with the amount of dividends paid and may
also otherwise be subject to change in accordance with the terms and conditions
of the stock options among others. The subscription price for 2014A is EUR 0.11
and for 2014B it is EUR 0.06.
Shareholders
On September 30, 2015, the company had 2,992 shareholders (2014: 4,163).
Private persons owned 17.0 per cent (2014: 40.3 per cent) and institutions 80.2
per cent (2014: 52.8 per cent) and foreigners 0.6per cent (2014: 1.9 per cent)
and nominee registered ownership was 2.2 per cent (2014: 5.0 per cent) of all
shares.
Tremoko Oy Ab, a related party, owns 79.1 percent of the company's shares. With
the options held by Tremoko the ownership can be increased to 79.2 percent.
Related-party transactions
In connection with the financing arrangement made on February 10, 2015 the
loans to Turret Oy Ab, a related party, amounting to EUR 2.3 million and the
interests were repaid. In the same arrangement Tremoko Oy Ab, a related party,
used the EUR 3.5 million long term convertible loan, which had been transferred
to it by Turret Oy Ab, and related interests as a partial payment for the
shares subscribed.
On February 10, 2015 the company also withdraw loans of EUR 4.0 million in
total from financial institutes that where secured by the company's main owner
Tremoko Oy Ab. The company made an announcement concerning its financial
arrangements on February 10, 2015.
On June 10, 2015 Ixonos secured an agreement for short term loan arrangement
with Turret Oy Ab. The loan agreement enables, if necessary, additional
financing for a maximum of 1.0 million Euros until December 31, 2016.
During the reporting period Ixonos Finland Oy sold receivables to Finance Link,
a related party, for a total of EUR 0.9 million.
On July 13, 2015 the company signed a credit facility agreement of EUR 3.0
million with its main owner Tremoko Oy. The company made an announcement
regarding the financing arrangements on June 23, 2015 and July 14, 2015.
On October 29, 2015 the company has signed a short term loan agreement of EUR
500,000 with a related party.
OTHER EVENTS DURING THE REPORTING PERIOD
Market events in the review period
The new business opportunities in digitalisation expanded the sales
opportunities on all markets but especially in Europe the decision-making of
our customers concerning the new businesses was more moderate than what we
expected. We increased our added value and competitiveness by even more clearly
partnering with the leading operators in the market and by publicise some
concrete customer cases. In Finland Viking Line's digitalised cruise experience
was welcomed positively and taking the service design into a new business
oriented way was experienced as proper.
We enforced the Media Solutions business with Brightcove solutions since the
growth of video distribution is expanding worldwide. Our consumer service
solutions got a strong partner through Gigya's social media identity and
customer relation management cloud. We also published the Sherri Hill mobile
solution as a result of this co-operation.
On requests from our customers we presented the new business concepts in
different industry seminars and organized in Finland the popular Innovation,
Experience, Design event to invited guests and in New York and London our
events connected business operators together.
Ixonos adapted its costs in order to improve efficiency
On January 22, 2015 Ixonos started co-operational negotiations in order to
secure its production efficiency. The negotiations concerned the personnel in
Jyväskylä, excluding those who performed their work at customer's premises. On
March 9, 2015 Ixonos informed that the negotiations had been concluded and that
a maximum of 20 people will be made redundant. Ixonos continues its operations
in Jyväskylä.
On March24, 2015 Ixonos started co-operational negotiations with the aim of
adjusting the personnel costs. The negotiations concerned the whole personnel
in Finland, excluding the office in Jyväskylä. On April 8, 2015 Ixonos informed
that the negotiations had been concluded. As a result, a maximum of 20
temporary lay-offs (with maximum duration of 90 working days) will be
implemented. Some of these temporary lay-offs will be part-time in nature. In
addition, a maximum of 4 permanent lay-offs will be implemented in roles where
there are permanently diminished grounds for work continuation.
Extraordinary general meeting
On January 16, 2015 the Board of Directors issued an invitation to Ixonos Plc
extraordinary meeting to be held on February 10, 2015. The proposal of the
Board of Directors was that the Extraordinary General Meeting would authorize
the Board to decide on a paid share issue and on granting option rights and
other special rights entitling to shares that are set out in Chapter 10 Section
1 of the Finnish Limited Liability Companies Act (LLCA) or on the combination
of some of the aforementioned instruments in one or more tranches.
On the same day Ixonos informed about a plan aiming at strengthening its
financial position and the balance sheet. The proposed arrangement included a
directed share issue and a loan facility. The planned measures aimed at
significantly enhancing Ixonos's equity ratio and liquid assets position.
The general meeting authorized the Board to decide on a paid share issue as per
their proposal.
Directed share issue and financial arrangements on February 10, 2015
On February 10, 2015 the Board of Directors of Ixonos Plc decided to issue in a
directed share issue 96,670,000 new shares to be subscribed for by Tremoko Oy
Ab in derogation from the pre-emptive subscription right of the shareholders on
the authorization of the Extraordinary General Meeting on February 10, 2015.
The subscription price of the shares in the share issue was EUR 0.06 per share.
The subscription price was defined as the mean price weighted with the trading
amounts of the period December 16, 2014 - January 15, 2015 rounded up to the
nearest cent. The funds derived from the share issue, EUR 5.8 million, were
used to maintain and strengthen the financial standing of the Group so there
was weighty financial reasons for the share issue and for deviating from the
pre-emptive right of the shareholders as described in the Finnish Limited
Liability Companies Act. The shares issued and subscribed for in the share
issue were equivalent to approximately 90.9 per cent of all of the company's
shares and votes before the share issue and approximately 47.6 per cent of all
of the company's shares and votes after the share issue.
Tremoko Oy Ab subscribed for the share issue in full on February 10, 2015. The
Board of Directors of the company accepted Tremoko's share subscription. The
shares were registered in the trade register on February 11, 2015.
Furthermore the Board announced that:
- Tremoko had paid the subscription price of the Shares it subscribed for in
connection with the Directed Share Issue by setting off the receivables based
on convertible capital loan that it has from Ixonos approximately for an amount
of EUR 3.86 million.
- Ixonos had been granted a total amount of EUR 4.0 million loans by financial
institutions. Tremoko gave a collateral of EUR 4.0 million for the loans.
Ixonos shall pay a remuneration of 3.5 per cent of the amount of the collateral
per year to Tremoko for giving the collateral.
- Ixonos has repaid its debts worth approximately EUR 2.43 million (incl.
interest) to Turret Oy Ab.
- concerning the arrangement, Ixonos agreed with its creditors on the
restructuring of its funding based on liabilities. The creditors granted the
loans of the Ixonos group taken out before the Arrangement (here in after
collectively the “Loan”) an exemption from amortisations for the period of
March 15, to December 31, 2015 so that only 25 per cent of the capital of the
Loan falling due during the exemption from amortisations will be paid, in
deviation from what has been agreed previously. In addition, the original term
of the Loan is changed so that the total term of the Loan will be extended
until December 31, 2018. The original terms of payment and the instalments have
been altered so that the instalments falling due January 1, 2016 to December
31, 2018 will be equal in size and they will be determined on the basis of the
capital of the Loan that does not fall due as on December 31, 2015. The
provisions concerning the interest and margin will remain as they are despite
the exemption from amortisations, the extension of the term of the loan and
changing the terms of payment and the instalments.
New securities note
The Finnish Financial Supervisory Authority approved on March 3, 2015, the
Ixonos Plc's securities note related to the Company's directed share issue
announced on February 10, 2015.
Public takeover bid of Ixonos Plc's shares
On February 10, 2015 the new majority owner of Ixonos, Tremoko Oy Ab announced
a public takeover bid. Tremoko Oy Ab, a limited liability company in private
Finnish ownership, acquired on February 10, 2015 altogether 49,008,088 shares
of Ixonos Plc from Turret Oy Ab and Holdix Oy Ab. In addition, Tremoko
subscribed for altogether 96,670,000 new shares of Ixonos in a directed share
issue decided upon by Ixonos's Board of Directors.
Thereby Tremoko owned altogether 145,678,088 of Ixonos's shares and, thus,
Tremoko's share of ownership and votes rose to altogether 71.8 per cent of all
of Ixonos's shares and votes.
As a result of the share acquisition and the share subscription, an obligation
to launch a public takeover bid for all other shares of Ixonos and for
securities entitling thereto were formed to Tremoko Oy Ab, as referred to in
Chapter 11 Section 19 of the Finnish Securities Markets Act.
The offer of Tremoko was published on March 2, 2015 and was valid until March
24, 2015. The payment offered for the shares was EUR 0.06 in cash per each
share. The payment offered for the options was EUR 0.008 for options marked
with IV/A in the option Scheme 2011 and EUR 0.017 for options marked with IV/C.
The payment offered for options marked with 2014A in the Option Scheme 2014 was
EUR 0.010.
The Board of Directors of the company published their opinion on the mandatory
takeover bid made by Tremoko Oy Ab on March 9, 2015. The opinion was based on
the overall assessment made by the qualified and independent members. Paul
Ehrnrooth, member of the board of the company, did not participate in the
assessment since Turret Oy Ab, which can be described as a company in which
Paul Ehrnrooth exercises control, owns 65 per cent of the bidder's shares and
votes. In order to assess the takeover bid, the Board of Directors acquired
from an independent expert a Fairness Opinion on the reasonableness in
economic terms of the payment offered for the shares from the perspective of
all shareowners.
The Board of Directors published the following recommendation:
Taking into consideration the bidder's statements, the views of the company's
management team, and the contents of the Fairness Opinion, the Board of
Directors assesses that the takeover bid is reasonable and that the company and
its shareholders and option holders would benefit from the realisation of the
takeover bid in the way intended by the bidder. On the basis of the
aforementioned assessments and facts, the members of the Board of Directors who
took part in the decision-making unanimously recommend that the shareholders
and option holders accept the takeover bid.
Tremoko Oy Ab announced on March 26, 2015 that the 20,454,656 shares tendered
during the offer period represented approximately 10.1 per cent of all of
Ixonos shares and resulting votes. Tremoko's share of ownership of the shares
and votes of Ixonos Plc was therefore altogether 166,132,744 shares, i.e.
approximately 81.8 per cent.
Moreover, a total of 1,540,000 options were offered to Tremoko. Tremoko has the
opportunity to raise its ownership to approximately 82.0 per cent of all Ixonos
Shares and votes by using the said options to subscribe for Ixonos Shares.
Annual General Meeting
The Annual General Meeting of Ixonos Plc was held on April 29, 2015. Minutes of
the Annual General Meeting and decisions taken are available on the company's
website, www.ixonos.com.
Changes in the management of the group
During the review period the following changes have taken place:
-- Sami Paihonen was appointed Chief Executive Officer (CEO) on July 1, 2015.
He succeeded Esa Harju who resigned on August 31, 2015.
-- Teppo Kuisma was appointed Executive Vice President on July 1, 2015.
-- Chief Financial Officer (CFO) Mikael Nyberg resigned on May 23, 2015 and
the interim CFO Pekka Pylkäs acted as CFO during June 1 - September 30.
Pekka Pylkäs will continue as a Member of the Board.
-- Kristiina Simola was appointed as CFO on October 1, 2015.
-- Marko Tiesmäki (SVP, Sales) left the company on July 3, 2015
-- Bo Lönnqvist (SVP, Technology) resigned on August 14, 2015.
EVENTS AFTER THE FINANCIAL PERIOD
Credit line agreement
-- The company has renewed its loan of EUR 1.0 million with a related party.
The new repayment date is December 31, 2016.
-- The company has signed a short term loan agreement of EUR 500,000 with a
related party.
RISK MANAGEMENT AND NEAR-FUTURE UNCERTAINTY FACTORS
Ixonos Plc's risk management aims to ensure undisturbed continuity and
development of the company's operations, support attainment of the commercial
targets set by the company and promote increasing company value. Details on the
risk management organisation and process as well as on recognised risks are
presented on the company's website at www.ixonos.com.
Changes in key customer accounts may have adverse effects on Ixonos'
operations, earning power and financial position. Should a major customer
switch its purchases from Ixonos to its competitors or make forceful changes to
its own operating model, Ixonos would have limited ability to acquire, in the
short term, new customer volume to compensate for such changes.
The group's turnover consists primarily of relatively short term customer
contracts. Forecasting the starting dates and scope is from time to time
challenging at the same time the cost structure is fairly rigid. Also the
group's balance sheet may impede current and new customer relations. This may
result in unexpected fluctuation in turnover and profitability.
Part of the company's business operations is based on fixed-price project
deliveries. Fixed-price projects may include risks related to their duration
and content. These risks are being managed by means of contract management as
well as project management.
A significant part of the group's turnover is invoiced in foreign currency.
Risks related to currency fluctuation are managed through different means.
The company's balance sheet includes a significant amount of goodwill, which
may still be impaired should internal or external factors reduce the profit
expectations of the company's cash flow. Goodwill is tested each quarter and,
if necessary, at other times.
The company's financial agreements have covenants attached to them. A covenant
breach may increase the company's financial expenses or lead to a call for
swift partial or full repayment of non-equity loans. The main risks related to
covenant breaches are associated with EBITDA fluctuation due to the market
situation and with a potential need to increase the company's working capital
through non-equity funding. The company manages these risks by negotiating with
financiers and by maintaining readiness for various financing methods.
The company estimated that its working capital is not sufficient to fund the
company's operations over the next 12 months. The company's working capital is
expected to be sufficient to fund the company's operations over the next 12
months if the sales development is better than the current forecast or the
company is able to make larger cost savings than forecasted. A possible
financial shortage remaining can be filled e.g. with bridge financing or
through other measures such as equity financing.
LONG-TERM GOALS AND STRATEGY
In the long term, Ixonos aims to achieve an operating result of at least 10 per
cent. To reach its long-term goals, Ixonos focuses its strategy on deepening
the company's product, solution and service offering as well as on new accounts
in selected industries.
NEXT REPORTS
The financial statement for the period January 1 -December30, 2015 will be
published on Friday, February26, 2015.
IXONOS PLC
Board of Directors
For more information, please contact:
Ixonos Plc
- Sami Paihonen, President and CEO, tel. +358 50 502 1111,
sami.paihonen@ixonos.com
- Kristiina Simola, CFO, tel. +358 40 756 3132, kristiina.simola@ixonos.com
Distribution:
NASDAQ OMX Helsinki
Main media
THE IXONOS GROUP
SUMMARY OF FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTSJanuary 1
- September30, 2015
CONSOLIDATED INCOME STATEMENT, EUR 1,000
1.7.-30. 1.7.-30. Change 1.1.-30. 1.1.-30 Change 1.1.-31.
9.15 9.14 % 9.15 .9.14 % 12.14
--------------------------------------------------------------------------------
Turnover 3 545 6 362 -44,3 12 686 18 063 -29,8 23 939
% %
--------------------------------------------------------------------------------
Operating -6 061 -6 971 -13,1 -19 106 -23 666 -19,3 -31 363
expenses % %
--------------------------------------------------------------------------------
OPERATING -2 516 -609 313,1 -6 419 -5 603 14,6 % -7 424
RESULT %
--------------------------------------------------------------------------------
Financial -476 -227 109,7 -732 -740 -1,1 % -1 054
income and %
expenses
--------------------------------------------------------------------------------
Result before -2 992 -836 257,9 -7 151 -6 343 12,7 % -8 478
tax %
--------------------------------------------------------------------------------
Income tax -30 250 -4 968 866 210
--------------------------------------------------------------------------------
RESULT FOR THE -3 023 -586 415,9 -12 119 -5 476 121,3 -8 267
PERIOD % %
--------------------------------------------------------------------------------
Attributable
to:
--------------------------------------------------------------------------------
Equity holders -3 020 -585 416,2 -12 109 -5 466 121,5 -8 249
of the parent % %
--------------------------------------------------------------------------------
Non-controlling -3 -1 132,7 -10 -10 5,0 % -18
interests %
--------------------------------------------------------------------------------
Earnings per
share
--------------------------------------------------------------------------------
Undiluted, EUR -0.02 -0.01 100 % -0,06 -0.06 0 % -0.09
--------------------------------------------------------------------------------
Diluted, EUR -0.02 -0.01 100 % -0,06 -0.06 0 % -0.09
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME, EUR 1,000
1.7.-30. 1.7.-30. Change 1.1.-30. 1.1.-30 Change 1.1.-31
9.15 9.14 % 9.15 .9.14 % .12.14
--------------------------------------------------------------------------------
Result for the -3 023 -586 415.9 -12 119 -5 476 121.3 -8 267
period % %
--------------------------------------------------------------------------------
Other
comprehensive
income
--------------------------------------------------------------------------------
Change in 198 -205 -196.6 -157 -148 6.1 % -138
translation %
difference
--------------------------------------------------------------------------------
COMPREHENSIVE -2 825 -791 257.1 -12 276 -5 624 118.3 -8 405
RESULT FOR THE % %
PERIOD
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, EUR 1,000
ASSETS 30.9.2015 30.9.2014 31.12.2014
--------------------------------------------------------------------------------
NON-CURRENT ASSETS
--------------------------------------------------------------------------------
Goodwill 12 182 10 847 10 847
--------------------------------------------------------------------------------
Other intangible assets 894 1 548 1 254
--------------------------------------------------------------------------------
Property, plant and equipment 444 1 194 697
--------------------------------------------------------------------------------
Deferred tax assets 0 5574 4 947
--------------------------------------------------------------------------------
Available-for-sale investments 23 3 3
--------------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 13 543 19 165 17 748
--------------------------------------------------------------------------------
CURRENT ASSETS
--------------------------------------------------------------------------------
Trade and other receivables 3 608 5 952 3 894
--------------------------------------------------------------------------------
Cash and cash equivalents 559 182 255
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 4 168 6 135 4 149
--------------------------------------------------------------------------------
TOTAL ASSETS 17 710 25 300 21 897
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES 30.9.2015 30.9.2014 31.12.2014
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
Share capital 585 585 585
--------------------------------------------------------------------------------
Share premium reserve 219 219 219
--------------------------------------------------------------------------------
Invested non-restricted equity fund 38 659 32 358 32 345
--------------------------------------------------------------------------------
Retained earnings -34 683 -26 367 -26 346
--------------------------------------------------------------------------------
Result for the period -12 109 -5 466 -8 249
--------------------------------------------------------------------------------
Equity attributable to equity holders of the -7 329 1 329 -1 446
parent
--------------------------------------------------------------------------------
Non-controlling interests 224 237 229
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY -7 105 1 566 -1 217
--------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------
Non-current liabilities 4 227 4 086 3 909
--------------------------------------------------------------------------------
Current liabilities 20 588 19 647 19 204
--------------------------------------------------------------------------------
TOTAL LIABILITIES 24 815 23 734 23 113
--------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 17 710 25 300 21 897
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY, EUR 1,000
A: Share capital
B: Share premium reserve
C: Share Issue
D: Invested non-restricted equity fund
E: Translation difference
F: Retained earnings
G: Total equity attributable to equity holders of the parent
H: Non-controlling interests
I: Total equity
A B C D E F G H I
--------------------------------------------------------------------------------
Shareholders' equity 585 219 0 28 794 70 -26 246 3 423 247 3 670
at January 1, 2014
--------------------------------------------------------------------------------
Result for the period -5 466 -5 466 -10 -5 476
--------------------------------------------------------------------------------
Other comprehensive
income:
--------------------------------------------------------------------------------
Change in translation -62 -86 -148 -148
difference
--------------------------------------------------------------------------------
Transactions with
shareholders:
--------------------------------------------------------------------------------
Share issue 3 655 3 655 3 655
--------------------------------------------------------------------------------
Expenses for equity -91 -91 -91
procurement
--------------------------------------------------------------------------------
Share-based -44 -44 -44
remuneration
--------------------------------------------------------------------------------
Shareholders' equity 585 219 0 32 363 8 -31 842 1 329 237 1 566
at September 30,
2015
--------------------------------------------------------------------------------
Shareholders' equity 585 219 0 32 363 -71 -34 524 -1 446 229 -1 217
at January 1, 2015
--------------------------------------------------------------------------------
Other changes -5 12
--------------------------------------------------------------------------------
Result for the period -12 109 -12 109 -12 109
--------------------------------------------------------------------------------
Other comprehensive
income
--------------------------------------------------------------------------------
Change in translation -157 -157 -157
difference
--------------------------------------------------------------------------------
Transactions with
shareholders:
--------------------------------------------------------------------------------
Share issue 6 300 6 300 6 300
--------------------------------------------------------------------------------
Expenses for equity 14 20 34 34
procurement
--------------------------------------------------------------------------------
Share-based 49 49 49
remuneration
--------------------------------------------------------------------------------
Shareholders' equity 585 219 0 38 659 -288 -46 565 -7 330 224 -7 105
at September 30,
2015
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT, EUR 1,000
1.1.- 30.9.2015 1.1.-30.9.2014 1.1.-31.12.2014
--------------------------------------------------------------------------------
Cash flow from operating
activities
--------------------------------------------------------------------------------
Result for the period -12 119 -5 476 -8 267
--------------------------------------------------------------------------------
Adjustments to cash flow from
operating activities
--------------------------------------------------------------------------------
Income tax 4 938 -866 -210
--------------------------------------------------------------------------------
Depreciation and impairment 873 1 778 2 788
--------------------------------------------------------------------------------
Financial income and expenses 732 740 731
--------------------------------------------------------------------------------
Other adjustments -129 200 130
--------------------------------------------------------------------------------
Change in provisions 0 -67 -67
--------------------------------------------------------------------------------
Cash flow from operating -5 675 -3 692 -4 895
activities before change in
working capital
--------------------------------------------------------------------------------
Change in working capital -561 -1 803 -113
--------------------------------------------------------------------------------
Interest received 64 45 181
--------------------------------------------------------------------------------
Interest paid -1 247 -697 -799
--------------------------------------------------------------------------------
Tax paid -17 0 -141
--------------------------------------------------------------------------------
Net cash flow from operating -7 436 -6 146 -5 767
activities
--------------------------------------------------------------------------------
Cash flow from investing
activities
--------------------------------------------------------------------------------
Acquisition of subsidiaries, -139 0 0
net of cash acquired
--------------------------------------------------------------------------------
Investments in tangible and -357 -807 -1 025
intangible assets
--------------------------------------------------------------------------------
Net cash flow from investing -496 -807 -1 025
activities
--------------------------------------------------------------------------------
Net cash flow before financing -7 932 -6 953 -6 793
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow from financing
activities
--------------------------------------------------------------------------------
Increase in long-term 3 866 4 500 4 500
borrowings
--------------------------------------------------------------------------------
Repayment of long-term -3 500 -964 -1 133
borrowings
--------------------------------------------------------------------------------
Increase in short-term 5 884 3 506 3 526
borrowings
--------------------------------------------------------------------------------
Repayment of short-term -3 601 -3 875 -3 891
borrowings
--------------------------------------------------------------------------------
Proceeds from share issue 5 800 3 655 3 655
--------------------------------------------------------------------------------
Expenses for equity 75 -181 -104
procurement
--------------------------------------------------------------------------------
Financial leasing payments -289 -123 -159
--------------------------------------------------------------------------------
Net cash flow from financing 8 236 6 640 6 552
activities
--------------------------------------------------------------------------------
Change in cash and cash 304 -314 -240
equivalents
--------------------------------------------------------------------------------
Liquid assets at the beginning 255 496 496
of the period
--------------------------------------------------------------------------------
Liquid assets at the end of 559 182 255
the period
--------------------------------------------------------------------------------
Accounting principles
This interim report has been prepared in accordance with IAS 34 (Interim
Financial Reporting) and the accounting policies for the annual financial
statement of December 31, 2014. The IFRS amendments and interpretations that
entered into force on January 1, 2015 have not affected the consolidated
financial statements.
Preparing interim reports in accordance with IFRS requires Ixonos' management
to make estimates and assumptions that affect the amounts of assets and
liabilities on the balance sheet date as well as the amounts of income and
expenses for the financial period. In addition, judgement must be used in
applying the accounting policies. As the estimates and assumptions are based on
views prevailing at the time of releasing the interim report, they involve
risks and uncertainty factors. Actual results may differ from estimates and
assumptions.
The figures in the income statement and balance sheet are consolidated. The
consolidated balance sheet includes all group companies as well as Ixonos
Management Invest Oy, a company owned by members of Ixonos management. The
original interim report is in Finnish. The interim report in English is a
translation of the original report.
As the figures in the report have been rounded, sums of individual figures may
differ from the sums presented. The interim report is unaudited.
Going Concern
This interim report has been prepared according to the going concern principle
taking into account the realized financial arrangements in the beginning of the
financial year and financial estimations made up to the end of year 2015. The
estimations take into consideration probable or foreseeable changes in future
expectations in revenues as well as in costs.
The company's existing working capital will not be sufficient to cover the
company's funding needs over the next 12 months. The company estimates that it
had sufficient working capital for the next 2 months provided that the cash
flow projections for 2015 materialize.
The company assesses its need for additional working capital to be EUR 0- 3
million. The company's working capital is expected to be sufficient to fund the
company's operations over the next 12 months provided that the sales
development is better than the current forecast foresees or the company is able
to realize more extensive cost savings than forecasted. According to the
management's estimate the possible financial shortage remaining can be
compensated with e.g. bridge financing or through other measures such as equity
financing.
The company has taken and has planned to take several measures to secure its
financial position:
- The share issue on February 10, 2015 with a refinancing arrangement linked to
it.
- The company agreed on February 10, 2015 with its creditors on the
restructuring of its debt based funding. The creditors granted the loans of EUR
6.1 million the Ixonos group had taken out before the Arrangement (hereinafter
collectively the “Loan”) an exemption from amortizations for the period of
March 15, to December 31, 2015 so that only 25 per cent from amortizations of
the Loan that is falling due during the exemption period are to be paid, in
deviation from what has been agreed previously. In addition, the term of the
Loan is changed so that the total term of the Loan will be extended until
December 31, 2018. The original terms of payment and the instalments have been
altered so that the instalments falling due January 1, 2016 to December 31,
2018 will be equal in size and they will be determined on the basis of the
capital of the Loan that has not fallen due as on December 31, 2015. The
provisions concerning the interest and margin will remain unchanged despite the
exemption from amortizations, the extension of the term of the loan and
changing the terms of payment and the instalments.
- The company has agreed with its creditors upon covenants for the year 2015
that are based on achieved EBITDA, defined in Euro amounts and reviewed on
quarterly basis. The company has obtained from its creditors a waiver of right
to apply their option to claim repayment based on agreed covenants as of
September30, 2015.
- On June 10, 2015 the company agreed upon a EUR 1.0 million short term bridge
loan with Turret Oy Ab, a related party, for working capital purposes.
- On July 14, 2015 Ixonos secured a credit line agreement with Tremoko Oy Ab.
The credit line agreement enables, if necessary, additional financing for a
maximum of EUR 3.0 million until June 30, 2017.
- The company has renewed its loan agreement with its related party of EUR 1.0
million. The new repayment date is December 31, 2016.
- The company has signed a short term loan agreement of EUR 500,000 with a
related party.
- The company's loan agreements include covenants of which the company's
creditors have confirmed a waiver until September 30, 2015 concerning premature
repayment of loans.
- The company has continued adapting its costs and the efficiency of its
operations will be further developed. The efforts have already been taken and
will further be adapted also in the field of fixed costs, related to office
space costs, among other things.
- The company resolutely puts emphasis on developing its sales and its sales
offering in the chosen target markets. The resources of sales have been renewed
and enforced in the target markets.
If the above measures do not occur as planned, this may result in a shortage of
working capital, premature payback of loans with covenants and difficulties to
continue company's operations. If the cash flow forecast for 2015 do not
materialize as planned the company is likely to lose its liquidity if no
further measures are taken and it would not under those circumstances be able
to finance its planned operations or pay back its loans as per original
amortization plans.The loss of liquidity described above could in the worst
case lead to liquidation, company restructuring or being declared insolvent.
Deferred tax assets
The management has assessed the prerequisites for capitalizing the deferred tax
assets. Due to continuing uncertainties in the markets, and despite the
expected improvement of the result before onetime items in comparison to the
previous year, the management has concluded that the conditions and certifying
future views that need to be fulfilled to enable the group to continue
capitalizing its deferred tax assets may not be assuringly verified. Based on
this change of management assessment the group has decided not to capitalize
the deferred tax assets and has decided to write off the existing capitalized
values from its balance sheet.
The write-off of earlier capitalized deferred tax assets from group's balance
sheet total to EUR -4.9 million. Said write-off will impact the result of
running period and thus will impact the reported group's shareholders' equity.
Goodwill impairment
Ixonos made an impairment testing for the goodwill value on the balance sheet
on September 30, 2015. The goodwill is attributed to the one cash generating
unit (CGU) starting from November 1, 2013.
The impairment test showed a surplus of EUR 7.4 million based on discounted
cash flow valuation compared to tested amount and no impairment was recognized.
The carrying amount of goodwill is EUR 12.2 million. The present value of the
cash flows calculated, EUR 19.7 million is lower than the sum of the company's
financial liabilities (EUR 16.6 million) and the market price of the shares
(EUR 21.0 million) on September 30, 2015.
The impairment test of the company is based on operative company value. The
forecasting period used in impairment testing at September30, 2015was Q4 2015
to Q32019.
In the forecast the year 2015 is a year of consolidation and stabilization with
relatively small growth. For the years 2016-2018 the company expects to reach
stronger growth, on average of 12.0 per cent, as digitalization will impact an
ever growing part of the business community. The forecasted EBIT level is
assumed to increase to on average of 6.0 per cent. Even though the company's
long term target level for EBIT is 10 per cent the uncertainty of forecasts has
been taken into consideration and therefore the average, normalized EBIT level
has been used in the calculation.
The impairment test is done by comparing the carrying value of assets to
present value of future cash flow taking into consideration forecasted cash
flows during the forecast period, discount factor and growth rate used in
calculating terminal value. The discount factor used is 10 per cent p.a. and
growth rate used in calculating terminal value is 1 per cent p.a. When
calculating the terminal value the weighted average EBIT percentage level for
the period was used.
The impairment test is most sensitive besides to the cash flow forecast itself
and the assumptions behind it, to the growth rate used when calculating the
terminal value and to the discount factor. If the growth rate -8.2 per cent had
been used instead of 1 per cent, the tested value would have been equal to the
discounted cash flow. If the discount factor had been 16.4 per cent instead of
10per cent, the tested value would have been equal to the discounted cash flow.
If the EBIT percentage used had been 1.5 per cent instead of 2.5 per cent, the
tested value would have been equal to the discounted cash flow.
Loan covenants
The Company has agreed with its main financiers a partially instalment free
period for the loans until December31, 2015. During this period the company
pays 25 per cent of the original instalments. During the partially instalment
free period there are covenants based on quarterly EBITDA levels in Euros which
replace the covenants described below. The company has obtained from its
creditors a waiver of right to apply their option to claim repayment based on
agreed covenants as of September 30, 2015.
Loans granted in 2012 by the company's financiers have covenants attached.
Should the company not be within the limits of a covenant, the creditors are
entitled to call in the loans to which that covenant applies. The covenant
levels are reviewed semi-annually on a rolling twelve-month basis. Depending on
the point in time, the equity ratio must be at least 35 per cent. The ratio of
interest-bearing liabilities (i.e. interest-bearing liabilities in the balance
sheet, including leasing liabilities) to EBITDA may not exceed 2.5on June 30,
2013 onward. The ratios of interest-bearing liabilities to EBITDA as well as
the ratio of interest-bearing net liabilities to EBITDA are calculated based on
IFRS principles.
The amount of those financing loans that included covenants had a capital of
EUR 5.8 million on September 30, 2015 (2014: EUR 6.1 million). On September 30,
2015 the company's equity ratio was -40.1 per cent (2014: 6.2 percent) and the
ratio of interest-bearing liabilities and the EBITDA was negative (2014:
negative).
Instalment scheme for borrowings under covenants
Period Amount of instalment EUR1.000
01.10. - 31.12.2015 101
01.01. - 31.12.2016 1 892
01.01. - 31.12.2017 1 892
01.01. - 31.12.2018 1 892
Instalment scheme for all loans
Period Amount of instalment EUR 1.00001.10. - 31.12.2015 135
01.01. - 31.12.2016 2 232
01.01. - 31.12.2017 2 371
01.01. - 31.12.2018 2 371
2019 and later 2 806
CONSOLIDATED INCOME STATEMENT, QUARTERLY, EUR 1,000
Q3/2015 Q2/2015 Q1/2015 Q4/2014 Q3/2014
--------------------------------------------------------------------------------
1.7.-30.9.15 1.4.-30.6.15 1.1.-31.3.15 1.10.-31.12.14 1.7.-30.9.14
--------------------------------------------------------------------------------
Turnover 3 545 4 557 4 584 5 876 6 362
--------------------------------------------------------------------------------
Operatin -6 061 -6 486 -6 558 -7 697 -6 975
g
expense
s
--------------------------------------------------------------------------------
OPERATIN -2 516 -1 929 -1 974 -1 821 -613
G PROFIT
BEFORE
GOODWIL
L
IMPAIRM
ENT
--------------------------------------------------------------------------------
Goodwill 0 0 0 0 0
impairm
ent
--------------------------------------------------------------------------------
OPERATIN -2 516 -1 929 -1 974 -1 821 -613
G PROFIT
--------------------------------------------------------------------------------
Financia -476 -135 -121 -314 -223
l income
and
expense
s
--------------------------------------------------------------------------------
Profit -2 992 -2 064 -2 095 -2 135 -836
before
tax
--------------------------------------------------------------------------------
Income -30 -4 938 0 -656 250
tax
--------------------------------------------------------------------------------
PROFIT -3 023 -7 002 -2 095 -2 791 -586
FOR THE
PERIOD
--------------------------------------------------------------------------------
CHANGES IN FIXED ASSETS, EUR 1,000
Goodwi Intangible Property, plant Availab Total
ll assets and equipment le-
for-sal
e
investm
ents
--------------------------------------------------------------------------------
Carrying amount at 10 847 1 585 2 106 14 14 552
January 1, 2014
--------------------------------------------------------------------------------
Additions 0 802 72 1 875
--------------------------------------------------------------------------------
Changes in exchange 0 0 7 0 7
rates
--------------------------------------------------------------------------------
Disposals and 0 -3 -49 0 -52
transfers
--------------------------------------------------------------------------------
Impairment 0 0 0 -12 -12
--------------------------------------------------------------------------------
Depreciation for the 0 -836 -942 0 -1 778
period
--------------------------------------------------------------------------------
Carrying amount at 10 847 1 548 1 194 3 13 591
September 30, 2014
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Carrying amount at 10 847 1 254 697 3 12 801
January 1, 2015
--------------------------------------------------------------------------------
Additions 1 335 126 131 20 1 612
--------------------------------------------------------------------------------
Changes in exchange 0 0 6 0 6
rates
--------------------------------------------------------------------------------
Disposals and 0 0 0 0 0
transfers
--------------------------------------------------------------------------------
Impairment 0 0 -2 0 -2
--------------------------------------------------------------------------------
Depreciation for the 0 -486 -388 0 -874
period
--------------------------------------------------------------------------------
Carrying amount at 12 182 894 444 23 13 543
September 30, 2015
--------------------------------------------------------------------------------
FINANCIAL RATIOS
1.1.-30.9.2015 1.1.-30.9.2014 1.1.-31.12.2014
--------------------------------------------------------------------------------
Earnings per share, diluted, -0.06 -0.06 -0.09
EUR
--------------------------------------------------------------------------------
Earnings per share, EUR -0.06 -0.06 -0.09
--------------------------------------------------------------------------------
Equity per share, EUR -0.03 0.01 -0.01
--------------------------------------------------------------------------------
Operating cash flow per share, -0.04 -0.07 -0.06
diluted, EUR
--------------------------------------------------------------------------------
Operating cash flow per share, -0.04 -0.06 -0.06
EUR
--------------------------------------------------------------------------------
Return on investment, per cent -51.0 -46.3 -46.4
--------------------------------------------------------------------------------
Return on equity, per cent N/A -465.3 -672.5
--------------------------------------------------------------------------------
Operating result ∕ turnover, -50.6 -31.0 -31.0
per cent
--------------------------------------------------------------------------------
Net gearing from total equity, -267.4 1 075.2 -1 397.7
per cent
--------------------------------------------------------------------------------
Equity ratio, per cent -40.1 6.2 -5.6
--------------------------------------------------------------------------------
Equity ratio, per cent, -41.1 5.3 -6.6
excluding non-controlling
interest
--------------------------------------------------------------------------------
EBITDA, 1,000 EUR -5 544 -3 829 -4 636
--------------------------------------------------------------------------------
OTHER INFORMATION
1.1.-30.9.2015 1.1.-30.9.2014 1.1.- 31.12.2014
--------------------------------------------------------------------------------
PERSONNEL
--------------------------------------------------------------------------------
Employees, average 222 337 320
--------------------------------------------------------------------------------
Employees, at the end of the 209 276 264
period
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMMITMENTS, EUR 1,000
--------------------------------------------------------------------------------
Collateral for own commitments
--------------------------------------------------------------------------------
Corporate mortgages 23 500 23 300 23 300
--------------------------------------------------------------------------------
Financial bonds 71 427 66
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Leasing and other rental
commitments
--------------------------------------------------------------------------------
Falling due within 1 year 1 785 2 097 2 189
--------------------------------------------------------------------------------
Falling due within 1-5 years 2 176 3 426 3 305
--------------------------------------------------------------------------------
Falling due after 5 years 0 0 0
--------------------------------------------------------------------------------
Total 3 961 5 523 5 495
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Nominal value of interest rate
swap agreement
--------------------------------------------------------------------------------
Falling due within 1 year 0 0 0
--------------------------------------------------------------------------------
Falling due within 1-5 years 3 953 4 941 4 941
--------------------------------------------------------------------------------
Falling due after 5 years 3 000 0 0
--------------------------------------------------------------------------------
Total 6 953 4 941 4 941
--------------------------------------------------------------------------------
Fair value -59 -68 -60
--------------------------------------------------------------------------------
CALCULATION OF KEY FIGURES
EBITDA = Earnings before Interest, Taxes, Depreciation and Amortization
Diluted earnings per share = result for the period ∕ number of shares, adjusted
for issues and dilution, average
Earnings per share = result for the period ∕ number of shares, adjusted for
issues, average
Shareholders' equity per share = shareholders' equity ∕ number of shares,
undiluted, on the closing date
Cash flow from operating activities, per share, diluted = net cash flow from
operating activities ∕ number of shares, adjusted for issues and dilution,
average
Return on investment = (result before taxes + interest expenses + other
financial expenses) ∕ (balance sheet total - non-interest-bearing liabilities,
average) × 100
Return on equity = net result ∕ shareholders' equity, average × 100
Net gearing from total equity= (interest-bearing liabilities - liquid assets) /
shareholders' equity × 100
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