2014-10-29 08:30:00 CET
2014-10-29 08:30:03 CET
REGULATED INFORMATION
QPR Software - Interim report (Q1 and Q3)
NET SALES INCREASED, PROFITABILITY IMPROVED SIGNIFICANTLY FROM PREVIOUS YEAR
QPR SOFTWARE PLC STOCK EXCHANGE RELEASE OCTOBER 29, 2014 AT 9.30 AM
INTERIM REPORT JANUARY-SEPTEMBER 2014
NET SALES INCREASED, PROFITABILITY IMPROVED SIGNIFICANTLY FROM PREVIOUS YEAR
Summary third quarter 2014
-- Net sales EUR 2,167 thousand (third quarter 2013: 1,961).
-- Net sales increased 11% mainly due to an increase in software net sales.
Software net sales grew 14%.
-- Recurring revenues (software rentals and maintenance services) increased 6%
and were 58% of total net sales (60). Net sales from software rentals
increased 13%.
-- Operating profit EUR 227 thousand (171), growth 33%.
-- Operating margin 10.5% of net sales (8.7).
-- Cash flow from operating activities EUR 345 thousand (53).
-- Profit before taxes EUR 222 thousand (167), growth 33%.
-- Profit for the quarter EUR 167 thousand (142), growth 18%.
-- Earnings per share EUR 0.014 (0.012), growth 16%.
Summary January-September 2014
-- Net sales EUR 6,856 thousand (January-September 2013: 6,377).
-- Net sales increased 8% due to an increase in software net sales. Software
net sales grew 11%.
-- Recurring revenues (software rentals and maintenance services) increased 6%
and were 54% of total net sales (55). Net sales from software rentals
increased 15%.
-- Operating profit EUR 678 thousand (361), growth 88%.
-- Operating margin 9.9% of net sales (5.7).
-- Cash flow from operating activities EUR 1,172 thousand (1,251).
-- Profit before taxes EUR 657 thousand (347), growth 89%.
-- Profit for January-September EUR 549 thousand (295), growth 86%.
-- Earnings per share EUR 0.046 (0.024), growth 91%.
OUTLOOK
Operating environment and market outlook
QPR Software estimates that demand for enterprise architecture based business
development services and software will increase in its home market Finland, as
well as elsewhere in Europe. Development of operations in an enterprise
architecture context, and not just in business process or in system development
context, is a necessity in current competitive environment for more and more
organizations. QPR Software provides its customers, through its software and
services, an insight and control to various dimensions of their organizations,
such as business processes, information, applications and technology.
QPR Software aims to grow in its home market Finland especially in the
enterprise architecture based business development services and in the process
analysis business. In the international markets, the Company's goal is to
significantly increase the sales of its innovative software products. In the
international markets, the Company operates mainly through its reseller channel
and puts effort in recruiting new resellers.
Outlook for 2014
The Company estimates its net sales and operating profit in euros to increase
in 2014, compared to 2013.
KEY FIGURES
--------------------------------------------------------------------------------
EUR in thousands, Jul-Sep Jul-Sep Change Jan-Sep Jan-Se Change Jan-Dec
unless otherwise , 2014 , 2013 , % , 2014 p, , % , 2013
indicated 2013
--------------------------------------------------------------------------------
Net sales 2,167 1,961 10.5 6,856 6,377 7.5 8,688
EBITDA 416 353 17.8 1,242 891 39.4 1,285
% of net sales 19.2 18.0 18.1 14.0 14.8
Operating profit 227 171 32.7 678 361 87.8 578
% of net sales 10.5 8.7 9.9 5.7 6.7
Profit before tax 222 167 32.9 657 347 89.3 554
Profit for the 167 142 17.6 549 295 86.1 521
period
% of net sales 7.7 7.2 8.0 4.6 6.0
Earnings per share, 0.014 0.012 16.1 0.046 0.024 90.8 0.043
EUR
Equity per share, 0.232 0.217 6.9 0.232 0.217 6.9 0.231
EUR
Cash flow from 345 53 576.5 1,172 1,251 -6.2 1,661
operating
activities
Cash and cash 1,303 1,248 4.4 1,303 1,248 4.4 1,365
equivalents
Free cash flow 183 -134 573 643 -10.9 815
Net borrowings -1,303 -1,135 14.8 -1,303 -1,135 14.8 -1,252
Gearing, % -45.1 -42.0 -45.1 -42.0 -43.6
Equity ratio, % 55.5 52.8 55.5 52.8 42.5
Return on equity, % 23.8 21.5 25.4 13.9 17.8
Return on 32.3 24.2 30.8 16.1 18.3 investment, %
--------------------------------------------------------------------------------
REPORTING
This report complies with requirements of IAS 34 ”Interim Financial Reporting.”
Starting from the beginning of 2014, the Group has applied certain new or
revised IFRS standards and IFRIC interpretations as described in the
Consolidated Financial Statements 2013. The implementation of these new and
revised requirements have not impacted the reported figures. For all other
parts, the accounting principles and methods are the same as they were in the
2013 financial statements. This report is unaudited.
QPR Software's business operations consist of software and consulting services
sales. The Company reports income for products and services as follows:
software license sales, software maintenance services, software rentals, and
consulting services.
Starting from the beginning of 2014, the Company also reports fixed-price
extended software maintenance services as part of software maintenance.
Earlier, these services were reported as part of consulting revenues.
Comparative figures for 2013 have not been restated. In January-September 2014,
the change increased net sales from software maintenance by EUR 94 thousand
and, accordingly, decreased net sales from consulting services with the same
amount.
The Company reports the following operating segments: Direct and OEM business
(software license and rental sales, maintenance and consulting services sales
to direct customers and OEM customers) and Resellers (software license and
rental sales, maintenance and consulting services sales through resellers and
the Russian subsidiary).
REVIEW BY THE CEO
In the third quarter of 2014, the Company's software net sales growth
accelerated, despite the continued challenging market situation.
Net sales from both software licenses (+71%) and software rentals (+13%) grew
significantly from the previous year and net sales from maintenance services
remained on last year's level. The strong growth in software license net sales
was attributable to excellent new sales in international business. The
development in software sales shows that QPR's software for operational
development is in great demand even at economically challenging times. In
tightening competitive environment, there is an increasing demand for tools to
drive profitability and operational improvement initiatives.
Also the consulting business market situation remained challenging in Finland,
which is the Company's main market. Consulting net sales in the third quarter
grew slightly, but were negatively affected by the relatively slow start in
customer projects after the summer holidays. Based on the current order
backlog, we expect consulting net sales to grow in the second half of 2014
compared to previous year.
The most important target for us is to further speed up net sales growth from
present level. Thanks to our new software products and strengthening service
offering, we are in excellent position to reach this target. The biggest
opportunities for software sales growth lie outside the borders of our home
market Finland, and thus we are strengthening our outlays for growth in
international sales channel. Our specific focus is to strengthen the
distribution network for our process analysis, enterprise architecture and
process modeling software.
Jari Jaakkola
CEO
NET SALES
Net sales in the third quarter were EUR 2,167 thousand (1,961) and increased
11% from the corresponding period of the previous year. In January-September,
net sales were EUR 6,856 thousand (6,377) and increased 8% from the
corresponding period of the previous year. Both for the third quarter and for
January-September, the increase was especially due to growth in net sales from
software licenses and software rentals, as compared to the corresponding
periods in the previous year.
Net sales by product group
--------------------------------------------------------------------------------
EUR in Jul-Sep Jul-Sep Change Jan-Sep Jan-Se Change Jan-Dec
thousands , , , , p, , ,
2014 2013 % 2014 2013 % 2013
--------------------------------------------------------------------------------
Software licenses 278 163 71 958 702 36 1,034
Software maintenance 764 748 2 2,318 2,280 2 3,021
services
Software rentals 488 431 13 1,408 1,226 15 1,656
Consulting 637 619 3 2,172 2,170 0 2,977
--------------------------------------------------------------------------------
Total 2,167 1,961 11 6,856 6,377 8 8,688
--------------------------------------------------------------------------------
Demand for software licenses in the developing markets was on a higher level
than in the previous year, both in the third quarter and in January-September.
In the developed markets, however, more and more customers favor software
rentals instead of purchasing software licenses, which has a negative impact on
software license net sales and, on the other hand, a positive impact on
software rental net sales.
Software maintenance services relate to contract-based customer support and
software updates for earlier sold software licenses. Approximately 60% of
maintenance service net sales come from international and 40% from Finnish
customers.
Rental net sales of the Company's software have grown strongly already for
several years. This development continued in the current year. Of all new
software sales, the share of rental sales is large especially in the Company's
home market Finland. The vast majority of software rentals is based on
continuing agreements signed with the customers. Net sales from software
rentals grew 13% in the third quarter and 15% in January-September.
Total recurring revenues (net sales from software maintenance services and
software rentals) grew 6% in the third quarter and 6% in January-September. The
share of recurring revenues in the third quarter was 58% (60) of total net
sales.
Consulting net sales grew slightly in the third quarter and were at the
previous year's level in January-September. Especially the consulting for
enterprise architecture based operational development grew strongly in
January-September, while net sales from technical consulting declined due to
continued difficult market situation. In the third quarter, growth in
consulting net sales was slowed down by the relatively slow start in customer
projects after the summer holidays.
Net sales by segment
--------------------------------------------------------------------------------
EUR in Jul-Sep Jul-Sep Change Jan-Sep Jan-Sep Change Jan-Dec
thousands , , , , , , ,
2014 2013 % 2014 2013 % 2013
--------------------------------------------------------------------------------
Direct and OEM 1,370 1,249 10 4,377 4,066 8 5,574
business
Resellers 797 712 12 2,479 2,311 7 3,114
--------------------------------------------------------------------------------
Total 2,167 1,961 11 6,856 6,377 8 8,688
--------------------------------------------------------------------------------
Net sales in the Direct and OEM business grew 10% in the third quarter and 8%
in January-September. The growth in January-September was especially strong in
net sales from software and consulting for enterprise architecture based
operational development. In the third quarter, growth was driven by strong net
sales from software, while growth from consulting net sales was slowed down by
the relatively slow start in customer projects after the summer holidays.
Net sales in the Resellers business increased 12% from the previous year in the
third quarter and 7% in January-September, mainly due to growth in software
license net sales. The growth was slowed down by negative exchange rate changes
in maintenance service revenues, and by unfavorable business development in
Russia.
FINANCIAL PERFORMANCE
Operating profit
In the third quarter, the Group's operating profit increased 33% and was EUR
227 thousand (171), or 10.5% of net sales (8.7). In January-September,
operating profit increased 88% and was EUR 678 thousand (361), or 9.9% of net
sales (5.7). The Group's operating expenses increased at a lower rate than net
sales both in the third quarter and in January-September.
Operating profit by segment
--------------------------------------------------------------------------------
EUR in Jul-Sep Jul-Sep Change Jan-Sep Jan-Sep Change Jan-Dec
thousands , , , , , , ,
2014 2013 % 2014 2013 % 2013
--------------------------------------------------------------------------------
Direct and OEM 141 133 6 491 321 53 536
business
Resellers 164 115 43 455 298 53 385
Unallocated -78 -77 1 -268 -257 4 -343
--------------------------------------------------------------------------------
Total 227 171 33 678 361 88 578
--------------------------------------------------------------------------------
Operating profit in the Direct and OEM business increased from the previous
year, due to growth in net sales, both in the third quarter and in
January-September. In the third quarter, growth in net sales was, however,
slowed down by increased personnel expenses and the relatively slow in
consulting customer projects after the summer holidays.
Operating profit in the Resellers business increased from the previous year,
mainly due to higher net sales from software licenses, both in the third
quarter and in January-September. Operating profit for the Resellers business
includes credit losses of EUR 51 thousand (15) in the third quarter and EUR 70
thousand (36) in January-September.
Other items in the comprehensive income statement
Net financial expenses were EUR 5 thousand (3) in the third quarter and EUR 21
thousand (14) in January-September. In the third quarter, net financial
expenses included foreign exchange losses of EUR 6 thousand (1). In
January-September, net financial expenses included foreign exchange losses of
EUR 22 thousand (5).
Profit before taxes was EUR 222 thousand (167) in the third quarter and EUR 657
thousand (347) in January-September.
QPR Software puts significant efforts in developing its software and service
products, and expects to be able to utilize an additional tax deduction on
research and development activities, valid for years 2013 - 2014 in Finland.
Therefore, similar to 2013, the effective tax rate of 16% (15) for
January-September was significantly lower than the Finnish corporate tax rate
of 20% (24.5). Tax rate in the third quarter was higher than in the previous
quarters due to source taxes from previous years booked in the Swedish
subsidiary.
Profit for the third quarter increased 18% and was EUR 167 thousand (142).
Earnings per share for the third quarter were EUR 0.014 (0.012). Profit for
January-September increased 86% and was EUR 549 thousand (295). Earnings per
share for January-September were EUR 0.046 (0.024).
FINANCE AND INVESTMENTS
Cash flow from operating activities in the third quarter improved from the
previous year and was EUR 345 thousand (53). In January-September, cash flow
from operating activities was EUR 1,172 thousand (1,251) and declined from the
previous year mainly due to an exceptional timing of invoicing in 2013.
Investments totaled EUR 162 thousand (185) in the third quarter and EUR 599
thousand (606) in January-September. More than half of the investments were
made in the development of software and consulting service products.
Net change in cash and cash equivalents was EUR 174 thousand (-284) in the
third quarter and EUR -64 thousand (-153) in January-September. Cash and cash
equivalents at the end of the quarter were EUR 1,303 thousand (1,248).
At the end of the quarter, the Company had no interest-bearing liabilities. At
the end of comparative third quarter of 2013, interest-bearing liabilities were
EUR 113 thousand. The gearing ratio was -45% (-42). Current liabilities include
received advance payments in total of EUR 1,433 thousand (1,428). Return on
investment (per annum) was 32% (24) in the third quarter and 31% (16) in
January-September.
At the end of the quarter, equity ratio was 56% (53) and the consolidated
shareholders' equity was EUR 2,886 thousand (2,700). Return on equity (per
annum) was 24% (22) in the third quarter and 25% (14) in January-September.
PRODUCT DEVELOPMENT
Product development expenses in the third quarter were EUR 445 thousand (343),
equal to 21% (18) of net sales, and in January-September EUR 1,381 thousand
(1,261), equal to 20% (20) of net sales. Product development expenses do not
include amortization of capitalized product development expenses.
Product development expenses were capitalized for a total amount of EUR 107
thousand (93) in the third quarter and EUR 368 thousand (343) in
January-September. The amortization period for capitalized product development
expenses is four years. The amortization of capitalized product development
expenses was EUR 106 thousand (74) in the third quarter and EUR 283 thousand
(211) in January-September.
Product development employed 28 persons (26) at the end of the quarter, equal
to 34% (32) of the total personnel.
The Company develops QPR Suite product family that consists of the following
software products: QPR EnterpriseArchitect, QPR Metrics, QPR ProcessDesigner.
Furthermore, the Company develops QPR ProcessAnalyzer software product that is
focused on process analysis and monitoring.
In January, QPR Software released QPR Suite 2014, which includes the software
tools for architecture based business development, as well as the related
supporting methodology. QPR Suite 2014 is available in over 20 languages.
In January, QPR Software also released a new version of the QPR ProcessAnalyzer
software. Release 2014.1 brings added efficiency to the process analysis with
an integrated data extraction. In addition to the most common IT systems, data
can now also be extracted directly from databases used by the companies.
Automated notifications and process flow animation raise the control and
visualization of the process performance to a totally new level.
By developing its consulting service products, the Company aims to grow its
local business in Finland, and to accelerate its international software sales
by offering complementary service concepts and solutions to its reseller
partners.
PERSONNEL
At the end of the quarter, the Group employed a total of 83 persons (80).
Average number of personnel in January-September was 81 (83) and personnel
expenses totaled EUR 4,452 thousand (4,221), equal to 65% (66) of net sales.
For incentive purposes, the Company has a bonus program that covers all
employees. Remuneration of the top management consists of salary, fringe
benefits and a possible annual bonus based on net sales and operating profit
performance. In 2014, the maximum annual bonus of executive management team,
including the CEO, is 60% of the annual base salary. More information on
incentive plans can be found in the Annual Report 2013
(www.qpr.com/investors/key-figures-and-reports.htm).
SHARES AND SHAREHOLDERS
--------------------------------------------------------------------------------
Trading of shares Jan-Sep, Jan-Sep, Change Jan-Dec,
2014 2013 , 2013
%
--------------------------------------------------------------------------------
Shares traded, pcs 2,267,058 415,159 446 624,427
Volume, EUR 2,189,000 393,213 457 586,842
% of shares 18.2 3.3 5.0
Average trading price, EUR 0.97 0.95 2 0.94
Treasury shares acquired during the 37,400 87,022 -57 133,722
year, pcs
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shares and market capitalization Sep 30, Sep 30, Change Dec 31,
2014 2013 , 2013
%
--------------------------------------------------------------------------------
Total number of shares, pcs 12,444,863 12,444,863 - 12,444,863
Treasury shares, pcs 457,009 372,909 23 419,609
Book counter value, EUR 0.11 0.11 - 0.11
Outstanding shares, pcs 11,987,854 12,071,954 -1 12,025,254
Number of shareholders 756 617 23 627
Closing price, EUR 1.01 0.93 9 0.93
Market capitalization, EUR 12,107,733 11,226,917 8 11,183,486
Book counter value of all treasury 50,271 41,020 23 46,157
shares, EUR
Total purchase value of all treasury 439,307 343,684 28 395,134
shares, EUR
Treasury shares, % of all shares 3.7 3.0 3.4
--------------------------------------------------------------------------------
Trading of the QPR Software share grew more than five-fold in
January-September, as compared to the corresponding period of the previous
year. The number of shareholders increased 23% and was 756 (617) at the end of
the third quarter.
The Annual General Meeting held on March 13, 2014 approved the Board's proposal
that a per-share dividend of EUR 0.04 (0.04), a total of EUR 480 thousand
(486), be paid for the financial year 2013. The dividend was paid to
shareholders entered in the Company's shareholder register, maintained by
Euroclear Finland Oy, on the record date of March 18, 2014. The dividend
payment date was April 3, 2014.
The Annual General Meeting on March 13, 2014 authorized the Board of Directors
to decide on issuing a maximum of 4,000,000 new shares, to decide on conveyance
of a maximum of 700,000 own shares held by the Company, and to decide on
acquiring a maximum of 250,000 own shares. The authorizations are in force
until the next Annual General Meeting. For the time being, the Company has not
used these authorizations.
OTHER EVENTS DURING THE REVIEW PERIOD
In February, QPR Software announced that Gartner Inc., an international ICT
research and consulting company, has ranked QPR Software in the best tier used
in its report “MarketScope for Enterprise Business Process Analysis”, with the
rating “Positive”. According to Gartner, the potential customers should
consider vendors in this category as a viable choice for their strategic or
tactical investments. Gartner evaluated the vendors on the following criteria:
product/service, overall viability, market understanding, offering (product)
strategy, business model, innovation, and customer experience, with the latter
two having a highest weighting.
In March, QPR Software and Tieto, the largest Nordic IT services company,
signed a cooperation agreement with the aim to offer customers business driven
enterprise architecture services for gaining substantial business benefits. QPR
Software provides Tieto with QPR EnterpriseArchitect software together with the
methodology for business driven enterprise architecture. The agreement enables
QPR Software, together with Tieto, to offer customers more comprehensive
services, increasing the business benefits that can be gained from enterprise
architecture work.
In March, QPR Software and Affecto Finland Oy signed a cooperation agreement,
through which Affecto can offer its customers data driven approach for analysis
and improvement of processes. QPR Software provides Affecto with the automated
business process discovery (ABPD) software, QPR ProcessAnalyzer. The agreement
enables QPR Software, together with Affecto, to offer customers a way to bring
transparency to processes and see the process changes, and thereby be able to
have a direct impact on their business performance.
In April, QPR Software's corporate performance management tool QPR Metrics was
rated as “Facilitators” in Nucleus Research Corporate Performance Management
Technology Value Matrix. Nucleus Research defines Facilitators as companies
offering an application that is intuitive and easy to use, driving rapid
adoption with limited training requirements.
In June, QPR Software announced at the IRMUK Business Process Management
Conference in London the release of its new enhanced 2014.1 template supporting
QPR Software's enterprise architecture based operational development
methodology. The template contains a very pragmatic and business oriented
framework linking strategy to business capabilities and their practical
realization by organization, processes, and ICT.
In August, QPR Software announced that it will deliver a process intelligence
solution to a leading European manufacturing group with operations in
approximately 30 countries and production in almost ten countries. QPR ProAct
solution, to be delivered as a cloud service, will enable the customer to
analyze, improve and monitor their global order-to-cash process by using the
data that exist in their enterprise resource planning system (SAP). The
solution helps this customer to obtain economies of scale in production units -
while facing a market that requires ever-increasing flexibility in deliveries.
QPR Software estimates the value of the software and service deliveries to
exceed EUR 200 thousand over the next three years.
In August, QPR Software announced that Erdemir Group, one of the largest steel
producers in the world and one of the largest industrial enterprises in Turkey,
has selected QPR Software and Ironman Consulting, QPR's reseller in Turkey, as
solution providers for its strategic and individual performance management.
Ironman is one of the leading strategic management consulting firms in Turkey.
The solution will be powered by QPR Metrics performance management software
that enables fast implementation and offers a flexible web based environment
for performance management.
In September, QPR Software announced plans to transfer its Russian customer and
reseller support functions from Moscow to Helsinki, from where the reseller
support to all other countries is already centrally delivered. Russia
represents approximately 2% of QPR Software's net sales. The transfer, planned
to take place in the beginning of 2015, is expected to reduce costs slightly,
but its impact on financial results is not significant.
In September, QPR Software announced the release of its enhanced template
2014.2 for enterprise architecture based operational development methodology.
The new version has been enhanced with support for enterprise risk management,
application portfolio management and human resource management functions, as
well as reports helping the users to distill the relevant knowledge to business
or function specific needs and situations. QPR Software's operational
development methodology (QPR ODM) already serves a broad range of customers
with different needs and situations, such as mergers and acquisitions, business
continuity, risk analysis, or technology renewal.
EVENTS AFTER THE REVIEW PERIOD
In October, Gartner Inc., the world's leading IT research and consulting
company, published its report “Magic Quadrant for Enterprise Architecture
Tools”, featuring QPR Software as a new vendor. The decision to add QPR
Software to the Magic Quadrant was based on Gartner's evaluation of the QPR
EnterpriseArchitect flagship product. In total the report evaluates 13
different providers.
GOVERNANCE
The Annual General Meeting on March 13, 2014 resolved that the Board of
Directors consists of four (4) ordinary members. The AGM re-elected the
following members to the Board of Directors: Kirsi Eräkangas, Jyrki Kontio,
Vesa-Pekka Leskinen and Topi Piela. In its meeting following the Annual General
Meeting, the Board of Directors elected Vesa-Pekka Leskinen as Chairman of the
Board.
The AGM elected KPMG Oy Ab, Authorized Public Accountants, to continue as QPR
Software Plc's auditors, with Kirsi Jantunen, Authorized Public Accountant,
acting as principal auditor.
The AGM authorized the Board to decide on issuing new shares, conveying own
shares held by the Company, and repurchasing the Company's own shares.
All authorizations of the Board and other decisions made by the Annual General
Meeting are available in their entirety on the stock exchange release published
by the Company on March 13, 2014 and available on the investors section of the
Company's web site, http://www.qpr.com/investors/stock-exchange-releases.htm.
STRATEGY
As part of its annual planning process, QPR Software has updated its strategy
and the financial targets for years 2015 - 2017. The Company continues to aim
for an approximately 15% annual profitable growth by investing in the
international distribution of its new software products (QPR
EnterpriseArchitect ja QPR ProcessAnalyzer) and in the expansion of its
consulting business focused on operational development of the customer
organizations in its home market in Finland.
SHORT-TERM RISKS AND UNCERTAINTIES
Internal control and risk management in QPR Software aims to ensure that the
Company operates efficiently and effectively, distributes reliable information,
complies with regulations and operational principles, reaches its strategic
goals, reacts to changes in the market and operational environment, and ensures
the continuity of its business.
QPR Software has identified the following four groups of risks related to its
operations: risks related to business operations (country, customer, service
delivery, personnel, legal and financial risks as well as risks related to the
Company's resellers), risks related to information and products (QPR products,
IPR, data security), risks related to financing (foreign currency, bad debt),
and risks related to new businesses (growth of new business, product
development investments in new business). The Company has an insurance policy
for property, operational and liability risks. The Company monitors country,
customer, personnel and finance risks also in the Russian subsidiary OOO QPR
Software.
Financial risks include reasonable credit risk concerning individual business
partners, which is characteristic to any international business. QPR Software
seeks to limit this credit risk by continuous monitoring of standard payment
terms, receivables and credit limits. In January-September, EUR 70 thousand
(36) of credit losses were recorded. The amount of trade receivables over 60
days past due was 10% (9) of total trade receivables at the end of the quarter.
Approximately 62% of Group's trade receivables were in euro at the end of the
quarter. At the end of the quarter, the Company had not hedged its non-euro
trade receivables.
No significant changes have taken place in the Company's short-term risks and
uncertainties during the quarter. Risks and risk management related to the
Company's business are further described in the Annual Report 2013, pages 13-15
(http://www.qpr.com/investors/key-figures-and-reports.htm).
QPR SOFTWARE PLC
BOARD OF DIRECTORS
Further information:
Jari Jaakkola, CEO
Tel. +358 (0) 40 5026 397
DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Main Media
Neither this press release nor any copy of it may be taken, transmitted or
distributed, directly or indirectly, in or into the United States of America or
its territories or possessions.
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
--------------------------------------------------------------------------------
EUR in thousands, Jul-Se Jul-Se Change Jan-Se Jan-Se Change Jan-De
unless otherwise p 2014 p 2013 , p 2014 p 2013 , c 2013
indicated % %
--------------------------------------------------------------------------------
Net sales 2,167 1,961 11 6,856 6,377 8 8,688
Other operating income 1 - 26 32 -19 32
Materials and services 66 72 -8 243 206 18 292
Employee benefit 1,370 1,209 13 4,452 4,221 5 5,703
expenses
Other operating expenses 316 327 -3 945 1,091 -13 1,439
--------------------------------------------------------------------------------
EBITDA 416 353 18 1,242 891 39 1,285
Depreciation and 189 183 3 564 530 6 707
amortization
--------------------------------------------------------------------------------
Operating profit 227 171 33 678 361 88 578
Financial income and -5 -3 -21 -14 50 -25
expenses
--------------------------------------------------------------------------------
Profit before tax 222 167 33 657 347 89 554
Income taxes -54 -25 116 -108 -52 108 -33
--------------------------------------------------------------------------------
Profit for the period 167 142 18 549 295 86 521
Earnings per share, 0.014 0.012 16 0.046 0.024 91 0.043
EUR (basic and diluted)
Consolidated statement
of comprehensive
income:
Profit for the period 167 142 549 295 521
Other items in
comprehensive income
that may be
reclassified
subsequently to profit
or loss:
Exchange differences on
translating foreign -10 -5 -11 -8 -12
operations
Income tax relating to
components of other
comprehensive income
- - - - -
-------------------------------------------------------------------------
Total comprehensive 157 137 538 287 509
income
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
EUR in thousands Sep 30, Sep 30, Dec 31, Change,
2014 2013 2013 %
--------------------------------------------------------------------------------
Assets
Non-current assets:
Intangible assets 1,681 1,592 1,628 3
Goodwill 513 513 513 0
Tangible assets 190 181 207 -8
Other non-current assets 37 144 82 -55
--------------------------------------------------------------------------------
Total non-current assets 2,421 2,430 2,431 0
Current assets:
Trade and other receivables 2,906 2,865 4,365 -33
Cash and cash equivalents 1,303 1,248 1,365 -5
--------------------------------------------------------------------------------
Total current assets 4,209 4,113 5,730 -27
Total assets 6,630 6,543 8,161 -19
================================================================================
Equity and liabilities
Equity:
Share capital 1,359 1,359 1,359 0
Other funds 21 21 21 0
Treasury shares -439 -344 -395 11
Translation differences -192 -177 -181 6
Invested non-restricted equity fund 5 5 5 0
Retained earnings 2,132 1,835 2,061 3
--------------------------------------------------------------------------------
Equity attributable to shareholders of 2,886 2,700 2,871 1
the parent company
Non-current liabilities:
Non-interest-bearing liabilities 29 59 42 -31
--------------------------------------------------------------------------------
Total non-current liabilities 29 59 42 -31
Current liabilities:
Borrowings - 113 113 -100
Advances received 1,433 1,428 1,406 2
Accrued expenses and prepaid income 1,909 1,873 2,976 -36
Trade and other payables 373 370 753 -50
--------------------------------------------------------------------------------
Total current liabilities 3,714 3,784 5,248 -29
Total liabilities 3,744 3,843 5,290 -29
Total equity and liabilities 6,630 6,543 8,161 -19
================================================================================
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
EUR in thousands Jul-Se Jul-Se Change Jan-Se Jan-Se Change Jan-De
p 2014 p 2013 , p 2014 p 2013 , c 2013
% %
--------------------------------------------------------------------------------
Cash flow from operating
activities:
Profit for the period 167 142 18 549 295 86 521
Adjustments to the 178 211 -16 552 540 2 700
profit
Working capital changes -80 -229 -65 82 595 -86 573
Interest and other -4 -13 -69 -11 -26 -58 -30
financial expenses paid
Interest and other 1 3 -67 2 7 -71 8
financial income
received
Income taxes paid 82 -62 -232 -2 -161 -99 -111
--------------------------------------------------------------------------------
Net cash from operating 345 53 551 1,172 1,251 -6 1,661
activities
Cash flow from investing
activities:
Acquired subsidiaries - - - -3 -3
Purchases of tangible -162 -185 -12 -599 -606 -1 -846
and intangible assets
--------------------------------------------------------------------------------
Net cash used in -162 -185 -12 -599 -609 -2 -849
investing activities
Cash flow from financing
activities:
Repayments of long-term - -113 -100 -113 -226 -50 -226
borrowings
Repurchase of shares -9 -39 -100 -44 -83 -47 -134
Dividends paid - - -480 -486 -1 -486
--------------------------------------------------------------------------------
Net cash used in -9 -152 -94 -637 -795 -20 -847
financing activities
Net change in cash and 174 -284 -161 -64 -153 -58 -35
cash equivalents
Cash and cash 1,127 1,534 -27 1,365 1,404 -3 1,404
equivalents at the
beginning of the period
Effects of exchange rate 2 -2 2 -3 -167 -4
changes on cash and
cash equivalents
--------------------------------------------------------------------------------
Cash and cash 1,303 1,248 4 1,303 1,248 4 1,365
equivalents at the end
of the period
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
--------------------------------------------------------------------------------
EUR in Share Other Translatio Treasur Invested Retained Total
thousand capita funds n y non-restricted earnings
s l difference shares equity fund
s
--------------------------------------------------------------------------------
Equity 1,359 21 -169 -261 5 2,026 2,981
Jan 1,
2013
Dividends -486 -486
paid
Repurchas -83 -83
e of
shares
Comprehen -8 295 287
sive
income
--------------------------------------------------------------------------------
Equity 1,359 21 -177 -344 5 1,835 2,700
Sep 30,
2013
Repurchas -51 -51
e of
shares
Comprehen -4 226 222
sive
income
--------------------------------------------------------------------------------
Equity 1,359 21 -181 -395 5 2,061 2,871
Dec 31,
2013
Dividends -480 -480
paid
Repurchas -44 -44
e of
shares
Comprehen -11 551 540
sive
income
--------------------------------------------------------------------------------
Equity 1,359 21 -192 -439 5 2,132 2,886
Sep 30,
2014
--------------------------------------------------------------------------------
NOTES TO INTERIM FINANCIAL STATEMENTS
ACCOUNTING PRICIPLES
This report complies with requirements of IAS 34 ”Interim Financial Reporting.”
Starting from the beginning of 2014, the Group has applied certain new or
revised IFRS standards and IFRIC interpretations as described in the
Consolidated Financial Statements 2013. The implementation of these new and
revised requirements have not impacted the reported figures. For all other
parts, the accounting principles and methods are the same as they were in the
2013 financial statements.
When preparing the consolidated financial statements, management is required to
make estimates and assumptions regarding the future and to consider the
appropriate application of accounting principles, which means that actual
results may differ from those estimated.
All amounts presented in this report are consolidated figures, unless otherwise
noted. The amounts presented in the report are rounded, so the sum of
individual figures may differ from the sum reported. This report is unaudited.
During the review period, the Group did not have any financial instruments
measured at fair value.
INTANGIBLE AND TANGIBLE ASSETS
--------------------------------------------------------------------------------
EUR in thousands Jan-Sep, 2014 Jan-Sep, 2013 Jan-Dec,
2013
--------------------------------------------------------------------------------
Increase in intangible assets:
Acquisition cost Jan 1 6,112 5,428 5,428
Increase 538 498 687
Increase in tangible assets:
Acquisition cost Jan 1 1,351 1,234 1,234
Increase 61 108 159
--------------------------------------------------------------------------------
CHANGE IN INTEREST-BEARING LIABILITIES
--------------------------------------------------------------------------------
EUR in thousands Jan-Sep, 2014 Jan-Sep, 2013 Jan-Dec,
2013
--------------------------------------------------------------------------------
Interest-bearing liabilities Jan 1 113 339 339
Repayments -113 -226 -226
--------------------------------------------------------------------------------
Interest-bearing liabilities Sep 30/Dec - 113 113
31
--------------------------------------------------------------------------------
PLEDGES AND COMMITMENTS
--------------------------------------------------------------------------------
EUR in thousands Sep 30, Sep 30, Dec 31, Change
2014 2013 2013 ,
%
--------------------------------------------------------------------------------
Business mortgages (held by the 1,392 1,395 1,394 0
Company)
Minimum lease payments based on
lease
agreements
Maturing in less than one year 154 251 163 -6
Maturing in 1-5 years 37 72 38 -3
--------------------------------------------------------------------------------
Total 191 323 201 -5
Total pledges and commitments 1,583 1,718 1,595 -1
--------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT BY QUARTER
--------------------------------------------------------------------------------
EUR in thousands Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2014 2014 2014 2013 2013 2013 2013
--------------------------------------------------------------------------------
Net sales 2,167 2,465 2,225 2,310 1,961 2,335 2,082
Other operating 1 10 15 - - - 32
income
Materials and 66 92 85 86 72 73 61
services
Employee benefit 1,370 1,557 1,525 1,482 1,209 1,484 1,528
expenses
Other operating 316 304 325 348 327 382 383
expenses
--------------------------------------------------------------------------------
EBITDA 416 522 305 395 353 396 142
Depreciation and 189 178 197 178 183 174 173
amortization
--------------------------------------------------------------------------------
Operating profit 227 344 107 217 171 222 -31
Financial income
and
expenses -5 -12 -4 -11 -3 0 -11
--------------------------------------------------------------------------------
Profit before tax 222 332 103 206 167 222 -42
Income taxes -54 -43 -10 19 -25 -33 6
--------------------------------------------------------------------------------
Profit for the 167 288 93 225 142 189 -36
period
--------------------------------------------------------------------------------
SEGMENT INFORMATION
--------------------------------------------------------------------------------
EUR in thousands Jul-Sep, Jul-Sep, Change Jan-Sep, Jan-Sep Change Jan-Dec
2014 2013 , % 2014 , 2013 , % , 2013
--------------------------------------------------------------------------------
Net sales
Direct and 1,370 1,249 10 4,377 4,066 8 5,574
OEM business
Resellers 797 712 12 2,479 2,311 7 3,114
--------------------------------------------------------------------------------
Total 2,167 1,961 11 6,856 6,377 8 8,688
EBITDA
Direct and 238 232 3 796 607 31 921
OEM business
Resellers 256 198 29 714 541 32 708
Unallocated -78 -77 1 -268 -257 4 -343
------------------------------------------------------------------------------
Total 416 353 18 1,242 891 39 1,285
Operating profit
Direct and 141 133 6 491 321 53 536
OEM business
Resellers 164 115 43 455 298 53 385
Unallocated -78 -77 1 -268 -257 4 -343
------------------------------------------------------------------------------
Total 227 171 33 678 361 88 578
Financial income -5 -3 67 -21 -14 50 -25
and expenses
Income taxes -54 -25 116 -108 -52 108 -33
--------------------------------------------------------------------------------
Profit for the 167 142 18 549 295 86 521
period
Other
information:
Depreciation and
amortization
Direct and 97 99 -2 305 286 18 384
OEM business
Resellers 92 83 11 259 243 7 323
--------------------------------------------------------------------------------
Total 189 183 3 564 530 12 707
--------------------------------------------------------------------------------
GROUP KEY FIGURES
--------------------------------------------------------------------------------
EUR in thousands, unless otherwise Jan-Sep or Jan-Sep or Jan-Dec or
indicated Sep 30, 2014 Sep 30, 2013 Dec 31, 2013
--------------------------------------------------------------------------------
Net sales 6,856 6,377 8,688
Net sales growth, % 7.5 -3.8 -6.8
EBITDA 1,242 891 1,285
% of net sales 18.1 14.0 14.8
Operating profit 678 361 578
% of net sales 9.9 5.7 6.7
Profit before tax 657 347 554
% of net sales 9.6 5.4 6.4
Profit for the period 549 295 521
% of net sales 8.0 4.6 6.0
Return on equity (per annum), % 25.4 13.9 17.8
Return on investment (per annum), % 30.8 16.1 18.3
Borrowings - 113 113
Cash and cash equivalents 1,303 1,248 1,365
Free cash flow 573 643 815
Net borrowings -1,303 -1,135 -1,252
Equity 2,886 2,700 2,871
Gearing, % -45.1 -42.0 -43.6
Equity ratio, % 55.5 52.8 42.5
Total balance sheet 6,630 6,543 8,161
Investments in non-current assets 599 607 846
% of net sales 8.7 9.5 9.7
Product development expenses 1,381 1,261 1,683
% of net sales 20.1 19.8 19.4
Average number of personnel 81 83 82
Personnel at the beginning of period 79 81 81
Personnel at the end of period 83 80 79
Earnings per share, EUR 0.046 0.024 0.043
Equity per share, EUR 0.232 0.217 0.231
--------------------------------------------------------------------------------
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