2015-02-06 08:00:00 CET
2015-02-06 08:00:04 CET
REGULATED INFORMATION
QPR Software - Financial Statement Release
NET SALES GROWTH ACCELERATED TOWARDS THE END OF THE YEAR, PROFITABILITY ALMOST DOUBLED FROM THE PREVIOUS YEAR
QPR SOFTWARE PLC STOCK EXCHANGE RELEASE FEBRUARY 6, 2015 AT 9:00
AM
FINANCIAL STATEMENTS BULLETIN 2014
NET SALES GROWTH ACCELERATED TOWARDS THE END OF THE YEAR, PROFITABILITY ALMOST
DOUBLED FROM THE PREVIOUS YEAR
Summary full year2014
-- Net sales EUR 9,541 thousand (2013: 8,688).
-- Net sales increased 10% mainly due to an increase in software net sales.
Software net sales grew 13%.
-- Recurring revenues (software rentals and maintenance services) increased 7%
and were 52% of total net sales (54). Net sales from software rentals
increased 15%.
-- Operating profit EUR 1,095 thousand (578), operating margin 11.5% of net
sales (6.7).
-- Cash flow from operating activities EUR 1,617 thousand (1,661).
-- Profit before taxes EUR 1,065 thousand (554).
-- Profit for the year EUR 890 thousand (521).
-- Earnings per share EUR 0.074 (0.043).
-- The Board of Directors proposes to the Annual General Meeting that a
dividend of EUR 0.05 per share be paid to shareholders for the financial
year 2014 (2013: 0.04)
Summary fourth quarter2014
-- Net sales EUR 2,685 thousand (2,310).
-- Net sales increased 16% due to a significant increase in software license
and consulting services net sales. Software net sales grew 18%.
-- Recurring revenues (software rentals and maintenance services) increased 8%
and were 47% of total net sales (51). Net sales from software rentals
increased 15%.
-- Operating profit EUR 417 thousand (217), operating margin 15.5% of net
sales (9.4).
-- Cash flow from operating activities EUR 445 thousand (410).
-- Profit before taxes EUR 409 thousand (206).
-- Profit for October-December EUR 341 thousand (225).
-- Earnings per share EUR 0.028 (0.019).
Business operations
QPR Software focuses on providing organizations software and professional
services for operational development. Our software and services are used in
over 50 countries. The Company offers its customers insight to their business
operations though modeling, analysis and performance monitoring. This insight
enables customers to streamline and improve business operations and to execute
their strategies swiftly and effectively. The Company´s product portfolio has
been strongly renewed in recent years. The new software products offer
customers innovative and efficient tools to model enterprise architecture, to
automatically discover any processes based on actual event data and to analyze
causes for potential performance problems.
OUTLOOK
Operating environment and market outlook
The leading market research companies estimate that global IT services market
demand grows in 2015 by 2-3 %, compared to 2014. The Company estimates that in
its relevant markets demand for enterprise architecture modeling, measurement
and process analysis software as well as related services will develop faster
than the global IT services market.
Outlook for 2015
The Company estimates its net sales and operating profit in euros to increase
in 2015, compared to 2014.
The further strengthened position of the Company in its home market provides a
good starting point to continue organic and profitable growth. In international
markets, the Company's goal is to significantly increase sales of its
innovative software products.
In 2015, investments will be mainly made in international distribution of
innovative enterprise architecture modeling and process analysis software
products developed by the Company. In international markets, the Company
operates mainly through its resellers and puts effort in recruiting new
resellers.
KEY FIGURES
--------------------------------------------------------------------------------
EUR in thousands, Oct-Dec Oct-Dec Change Jan-Dec Jan-Dec Change,
unless otherwise 2014 2013 , 2014 2013 %
indicated %
--------------------------------------------------------------------------------
Net sales 2,685 2,310 16.2 9,541 8,688 9.8
EBITDA 615 395 55.7 1,857 1,285 44.5
% of net sales 22.9 17.1 19.5 14.8
Operating profit 417 217 92.2 1,095 578 89.4
% of net sales 15.5 9.4 11.5 6.7
Profit before tax 409 206 98.5 1,065 554 92.2
Profit for the 341 225 51.6 890 521 70.8
period
% of net sales 12.7 9.7 9.3 6.0
Earnings per share, 0.028 0.019 49.7 0.074 0.043 72.1
EUR
Equity per share, 0.257 0.231 11.1 0.257 0.231 11.1
EUR
Cash flow from 445 410 8.5 1,617 1,661 -2.6
operating
activities
Cash and cash 1,426 1,365 4.5 1,426 1,365 4.5
equivalents
Free cash flow 129 170 -24.1 702 815 -13.9
Net borrowings -1,426 -1,252 13.9 -1,426 -1,252 13.9
Gearing, % -44.6 -43.6 -44.6 -43.6
Equity ratio, % 44.0 42.5 44.0 42.5
Return on equity, % 44.8 32.4 29.3 17.8
Return on 54.8 28.7 35.4 18.3
investment, %
--------------------------------------------------------------------------------
REPORTING
The notes of this Stock Exchange Release comply with the 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 Stock Exchange Release 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.
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 2014, the Company's software net sales growth accelerated towards the end of
the year and reached 13% for the full year, despite the continued challenging
market situation.
In the fourth quarter, net sales from both software licenses (+54%) and
software rentals (+15%) grew significantly from the previous year, while net
sales from maintenance services grew slightly (+4%). 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 the tightening competitive environment, there is an
increasing demand for tools to drive profitability and operational improvement
initiatives.
Also the Company's consulting business developed positively in the latter part
of the year, and net sales grew by 12% in the last quarter. Our order backlog
continued to increase and our market position strengthened during late 2014,
especially in the public sector.
Our target is organic and profitable growth. Thanks to our new software
products and strengthening service offering, we are in an 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 the international sales channel. Our specific focus
is to strengthen the distribution network for our process analysis, enterprise
architecture and process modeling software.
In 2014, our operating profit nearly doubled compared to the previous year. In
2015, we estimate our net sales and operating profit to increase further. Also
in the longer term, we aim for profitable growth. Our target is an
approximately 15% annual organic and profitable growth, on the average, in 2015
- 2017.
The development of our software and service offering continued as planned in
2014. During the year, we released new versions of all our software products.
Furthermore, we continued to invest in developing and productizing our
operational development services based on enterprise architecture. The results
were visible in the strong net sales growth of these services.
Jari Jaakkola
CEO
NET SALES
Net sales in 2014 were EUR 9,541 thousand (8,688) and increased 10% from the
previous year. The main driver for this increase was software business, which
showed strong growth especially in license sales. Growth also in consulting net
sales accelerated towards the end of the year.
In the fourth quarter, net sales were EUR 2,685 thousand (2,310) and increased
16% from the corresponding period of the previous year. The fourth quarter net
sales increased mainly due to the strong increase both in the software licenses
and consulting net sales.
Net sales by product group
--------------------------------------------------------------------------------
EUR in thousands Oct-Dec Oct-Dec Change, Jan-Dec Jan-Dec Change,
2014 2013 % 2014 2013 %
--------------------------------------------------------------------------------
Software licenses 512 332 54 1,470 1,034 42
Software maintenance 772 742 4 3,093 3,021 2
services
Software rentals 494 430 15 1,901 1,656 15
Consulting 907 807 12 3,077 2,977 3
--------------------------------------------------------------------------------
Total 2,685 2,310 16 9,541 8,688 10
--------------------------------------------------------------------------------
Net sales by segment
--------------------------------------------------------------------------------
EUR in thousands Oct-Dec Oct-Dec Change, Jan-Dec Jan-Dec Change,
2014 2013 % 2014 2013 %
--------------------------------------------------------------------------------
Direct and OEM 1,817 1,508 20 6,193 5,574 11
business
Resellers 868 803 8 3,348 3,114 8
--------------------------------------------------------------------------------
Total 2,685 2,310 16 9,541 8,687 10
--------------------------------------------------------------------------------
The economic growth was weak in most markets. On the other hand, the downturn
in economy initiated operational development projects in several organizations,
increasing demand for modeling, analysis and measurement software as well as
related services.
QPR's market position was strengthened thanks to its broadened offering in the
international software market and also in the domestic market for operational
development services. Software license sales developed positively throughout
the year (+42%) and in the fourth quarter (+54%). The development was positive
especially in Sweden, Turkey, Indonesia and in the United Arab Emirates.
The software maintenance services relate to contract-based customer support and
software updates. The international customers represent approximately 60% and
the Finnish customers approximately 40% of software maintenance service net
sales. The software maintenance service net sales increased slightly in the
fourth quarter and in the entire year. The software maintenance service net
sales were negatively impacted by the termination of a long-term agreement by
the Company's largest maintenance customer at the end of June 2014.
Rental net sales of the Company's software have grown strongly already for
several years. The growth continued also in 2014, although the company has
moved the focus in the new sales from software rentals to software. The share
of software rentals continues to be large 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 15%, both in the
fourth quarter and in 2014. In 2015, software rental net sales growth will be
negatively impacted by a slightly over EUR 0.1 million decrease on the annual
rental of a significant customer from the beginning of 2015, and due to
focusing new sales - more than previously - on software license sales.
Total recurring revenues (net sales from software maintenance services and
software rentals) grew 8% in the fourth quarter and 7% in 2014. The share of
recurring revenues was 52% (54) of total net sales in 2014.
Consulting net sales developed positively in the latter part of the year after
stagnant net sales in the first half. Consulting net sales growth accelerated
to 12% in the fourth quarter, especially due to the good development in process
analysis and enterprise architecture based operational development services
sales.
Net sales of the Direct and OEM segment grew 20% in the fourth quarter and 11%
in 2014, compared to the previous year. The growth was driven by the positive
development of enterprise architecture modeling and process analysis software,
as well as related consulting services sales both in the fourth quarter and in
2014.
Net sales of the Resellers segment grew 8% both in the fourth quarter and in
2014. This was mainly due to an increase in software license sales. The growth
was slowed down by the unfavorable business development in Russia.
FINANCIAL PERFORMANCE
Operating profit
The Group's operating profit increased 92% in the fourth quarter, and was EUR
417 thousand (217), or 15.5% of net sales (9.4). In 2014, operating profit
increased 89% and was EUR 1,095 thousand (578), or 11.5% of net sales (6.7).
The Group's operating expenses increased at a lower rate than net sales both in
the fourth quarter and in 2014.
Operating profit by segment
--------------------------------------------------------------------------------
EUR in thousands Oct-Dec Oct-Dec Change Jan-Dec Jan-Dec Change
2014 2013 , 2014 2013 ,
% %
--------------------------------------------------------------------------------
Direct and OEM 350 216 62 842 536 57
business
Resellers 166 87 91 621 385 61
Unallocated -99 -86 15 -368 -343 7
--------------------------------------------------------------------------------
Total 417 217 92 1,095 578 89
--------------------------------------------------------------------------------
Operating profit in the Direct and OEM segment increased from the previous
year, due to growth in net sales, both in the fourth quarter and in 2014.
Operating profit in the Resellers segment increased from the previous year,
mainly due to higher net sales from software licenses, both in the fourth
quarter and in 2014. Operating profit for the Resellers segment includes credit
losses of EUR 26 thousand (17) in the fourth quarter and EUR 96 thousand (53)
in 2014.
Other items in the comprehensive income statement
Net financial expenses were EUR 30 thousand (25) in 2014. The net financial
expenses included foreign exchange losses of EUR 29 thousand (15) in 2014.
Profit before taxes was EUR 1,065 thousand (554) in 2014. Income taxes were EUR
175 thousand (33) in 2014. They were partly reduced by an additional tax
deduction on research and development activities, valid for years 2013 - 2014
in Finland, which the Company estimates to be able to utilize in the 2014
taxation, in line with the previous year. The growth of EUR 142 thousand in
income taxes was mainly due to higher taxable income than in the previous year
and due to withholding taxes from previous years charged to expense in the
Swedish subsidiary.
Profit for 2014 increased 71% and was EUR 890 thousand (521). Earnings per
share for 2014 were EUR 0.074 (0.043).
FINANCE AND INVESTMENTS
In 2014, cash flow from operating activities declined slightly to EUR 1,617
thousand (1,661). The decline from the previous year was mainly due to an
exceptional timing of invoicing in 2013. The cash flow from operating
activities for the fourth quarter increased from the previous year and was EUR
445 thousand (410). Investments totaled EUR 915 thousand (849) in 2014. 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 65 thousand (-35) in 2014 and
EUR 129 thousand in the fourth quarter (118). Cash and cash equivalents at the
end of the year were EUR 1,426 thousand (1,365).
At the end of 2014, the Company had no interest-bearing liabilities. At the end
of 2013, interest-bearing liabilities were EUR 113 thousand. The gearing ratio
was -45% (-44). Current liabilities include received advance payments in total
of EUR 1,261 thousand (1,406). Return on investment was 35% (18) in 2014 and
(per annum) 55% in the fourth quarter (29).
At the end of 2014, equity ratio was 44% (43) and the consolidated
shareholders' equity was EUR 3,196 thousand (2,871). Return on equity was 29%
(18) in 2014 and (per annum) 45% in the fourth quarter (32).
PRODUCT DEVELOPMENT
Product development expenses in 2014 were EUR 1,847 thousand (1,683), equal to
19% of net sales (19). Product development expenses do not include amortization
of capitalized product development expenses.
Product development expenses were capitalized for a total amount of EUR 683
thousand (507) in 2014. The amortization period for capitalized product
development expenses is four years. The amortization of capitalized product
development expenses was EUR 396 thousand (277).
Product development employed 27 persons (27) at the end of the year, equal to
34% of the total personnel (34).
The Company develops QPR Suite product family that consists of the following
software products: QPR EnterpriseArchitect, QPR Metrics, and QPR
ProcessDesigner. Furthermore, the Company develops QPR ProcessAnalyzer software
product that is focused on process analysis and monitoring.
In January 2014, QPR Software released QPR Suite 2014, which includes the
software tools for architecture based operational development, as well as the
related supporting methodology. QPR Suite 2014 is available in over 20
languages.
In January 2014, 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 2014, the Group employed a total of 78 persons (79). Average
number of personnel in 2014 was 81 (82) and personnel expenses totaled EUR
6,092 thousand (5,703), equal to 64% of net sales (66).
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. 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-Dec Jan-Dec Change, %
2014 2013
--------------------------------------------------------------------------------
Shares traded, pcs 2,828,001 624,427 353
Volume, EUR 2,751,903 586,842 369
% of shares 22.7 5.0
Average trading price, EUR 0.97 0.94 4
Treasury shares acquired during the year, 37,400 133,722 -72
pcs
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shares and market capitalization Dec 31, Dec 31, Change, %
2014 2013
--------------------------------------------------------------------------------
Total number of shares, pcs 12,444,863 12,444,863 -
Treasury shares, pcs 457,009 419,609 9
Book counter value, EUR 0.11 0.11 -
Outstanding shares, pcs 11,987,854 12,025,254 0
Number of shareholders 820 627 31
Closing price, EUR 1.01 0.93 9
Market capitalization, EUR 12,107,733 11,183,486 8
Book counter value of all treasury shares, 50,271 46,157 9
EUR
Total purchase value of all treasury 439,307 395,134 11
shares, EUR
Treasury shares, % of all shares 3.7 3.4
--------------------------------------------------------------------------------
Trading of the QPR Software share grew more than five-fold in 2014, as compared
to 2013. The number of shareholders increased 31% and was 820 (627) at the end
of 2014.
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 2014, 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. The
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 0.2 million 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 December, QPR announced that Erdemir Group
expands the use of the solution to all its office employees.
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 became
effective as of January 2015 and 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.
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.
In November, the Company announced that it has won the tender for the
enterprise architecture training service for the Finnish public sector. Thetender was organized by the Government ICT Center Valtori. QPR Software will
train the public sector operational development specialists and enterprise
architects until 2018.
In December, QPR Software announced that it has won the tender for the
enterprise architecture consulting provider of the Finnish Transport Agency.
The agreement period started on December 4, 2014 and runs until December 3,
2016. The estimated total value of this consultancy is approximately EUR 0.3
million.
In December, Finnish Senate Properties selected QPR as the provider for
enterprise architecture consulting. The agreement period is six months,
starting as of December 2014. After the first agreement period, the agreement
can be renewed in six-month periods during 2015 - 2017. The estimated total
value of this consultancy in 2014 - 2017 (initial agreement period+ possible
renewals) is slightly over EUR 0.3 million.
A summary of the Company's disclosure policy has been published on the
Company's web site, at www.qpr.com/investors/key-figures-and-reports.htm .
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, www.qpr.com/investors/stock-exchange-releases.htm .
FINANCIAL TARGETS
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 and 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 2014, EUR 96 thousand of credit losses
were recorded (53). The amount of trade receivables over 60 days past due was
6% (5) of total trade receivables at the end of 2104.
Approximately 81% of Group's trade receivables were in euro at the end of the
year. At the end of 2014, 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 year. Risks and risk management related to the
Company's business are further described in the Annual Report 2013, pages 13-15
(www.qpr.com/investors/key-figures-and-reports.htm ).
THE BOARD OF DIRECTORS' PROPOSAL ON DIVIDEND
The Board of Directors proposes to the Annual General Meeting on March 12, 2015
that a dividend of EUR 0.05 per share be paid to shareholders for the financial
year 2014, totaling EUR 599 thousand. The dividend shall be paid to a
shareholder that has been entered into the Company's shareholder register on
the record date of the dividend payment on March 16, 2015. The Board of
Directors proposes to the AGM that the dividend be paid on April 8, 2015.
The dividend proposed by the Board for the financial year 2014 represents 37%
of the consolidated cash flow from operations in 2014.
The distributable funds of the parent company were EUR 1,282 thousand at
December 31, 2014. No material changes have taken place in the Company's
financial position after the end of the financial year.
FINANCIAL INFORMATION
In 2015, QPR Software Plc will publish its financial information in Finnish and
English as follows:
-- Annual Report 2014: Thursday, February 19, 2015.
-- Interim Report 1 - 3/2015: Thursday, April 23, 2015.
-- Interim Report 1 - 6/2015: Thursday, July 30, 2015.
-- Interim Report 1 - 9/2015: Thursday, October 22, 2015.
The Annual General Meeting will be held on Thursday, March 12, 2015.
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, Oct-Dec Oct-Dec Change Jan-Dec Jan-Sep Change
unless otherwise 2014 2013 , % 2014 2013 , %
indicated
--------------------------------------------------------------------------------
Net sales 2,685 2,310 16 9,541 8,688 10
Other operating income 0 - 26 32 -19
Materials and services 94 86 9 337 292 15
Employee benefit expenses 1,640 1,482 11 6,092 5,703 7
Other operating expenses 336 348 -3 1,281 1,439 -11
--------------------------------------------------------------------------------
EBITDA 615 395 56 1,857 1,285 44
Depreciation and 198 178 11 761 707 8
amortization
--------------------------------------------------------------------------------
Operating profit 417 217 92 1,095 578 89
Financial income and -8 -11 -30 -25 20
expenses
--------------------------------------------------------------------------------
Profit before tax 409 206 99 1,065 554 92
Income taxes -68 19 -175 -33 430
--------------------------------------------------------------------------------
Profit for the period 341 225 52 890 521 71
Earnings per share, EUR 0.028 0.019 50 0.074 0.043 72
(basic and diluted)
Consolidated statement of
comprehensive income:
Profit for the period 341 225 890 521
Other items in
comprehensive income
that
may be reclassified
subsequently to
profit or loss:
Exchange differences on
translating foreign -29 -4 -40 -12
operations
Income tax relating to
components of
other comprehensive - - - -
income
--------------------------------------------------------------------------------
Total comprehensive 312 221 850 509
income
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
EUR in thousands Dec Dec 31, Change,
31,2014 2013 %
--------------------------------------------------------------------------------
Assets
Non-current assets:
Intangible assets 1,815 1,628 11
Goodwill 513 513 0
Tangible assets 175 207 -16
Other non-current assets 27 82 -67
--------------------------------------------------------------------------------
Total non-current assets 2,529 2,431 4
Current assets:
Trade and other receivables 4,572 4,365 5
Cash and cash equivalents 1,426 1,365 4
--------------------------------------------------------------------------------
Total current assets 5,998 5,730 5
Total assets 8,527 8,161 4
================================================================================
Equity and liabilities
Equity:
Share capital 1,359 1,359 0
Other funds 21 21 0
Treasury shares -439 -395 11
Translation differences -221 -181 22
Invested non-restricted equity fund 5 5 0
Retained earnings 2,471 2,061 20
--------------------------------------------------------------------------------
Equity attributable to shareholders of the 3,196 2,871 11
parent company
Non-current liabilities:
Non-interest-bearing liabilities 25 42 -40
--------------------------------------------------------------------------------
Total non-current liabilities 25 42 -40
Current liabilities:
Borrowings - 113 -100
Advances received 1,261 1,406 -10
Accrued expenses and prepaid income 3,223 2,976 8
Trade and other payables 822 753 9
--------------------------------------------------------------------------------
Total current liabilities 5,305 5,248 1
Total liabilities 5,331 5,290 1
Total equity and liabilities 8,527 8,161 4
================================================================================
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
EUR in thousands Oct-Dec Oct-Dec Change Jan-Dec Jan-Dec Change
2014 2013 , % 2014 2013 , %
--------------------------------------------------------------------------------
Cash flow from operating
activities:
Profit for the period 338 225 50 887 521 70
Adjustments to the profit 173 161 7 725 700 4
Working capital changes -57 -23 148 25 573 -96
Interest and other financial -2 -4 -50 -13 -30 -57
expenses paid
Interest and other financial 1 1 0 3 8 -63
income received
Income taxes paid -8 50 -10 -111 -91
--------------------------------------------------------------------------------
Net cash from operating 445 410 9 1,617 1,661 -3
activities
Cash flow from investing
activities:
Acquired subsidiaries - - - -3 -100
Purchases of tangible and -316 -240 32 -915 -846 8
intangible assets
--------------------------------------------------------------------------------
Net cash used in investing -316 -240 32 -915 -849 8
activities
Cash flow from financing
activities:
Repayments of long-term - - -113 -226 -50
borrowings
Repurchase of shares - -52 -100 -44 -134 -67
Dividends paid - - -480 -486 -1
--------------------------------------------------------------------------------
Net cash used in financing 0 -52 -100 -637 -847 -25
activities
Net change in cash and cash 129 118 9 65 -35
equivalents
Cash and cash equivalents at 1,303 1,248 4 1,365 1,404 -3
the beginning of the period
Effects of exchange rate -6 -1 -4 -4
changes on cash and cash
equivalents
--------------------------------------------------------------------------------
Cash and cash equivalents 1,426 1,365 4 1,426 1,365 4
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 -134 -134
e of
shares
Comprehen -12 521 509
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 -40 890 850
sive
income
--------------------------------------------------------------------------------
Equity 1,359 21 -221 -439 5 2,471 3,196
Dec 31,
2014
--------------------------------------------------------------------------------
NOTES TO INTERIM FINANCIAL STATEMENTS
ACCOUNTING PRICIPLES
The notes of this Stock Exchange Release comply 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 Stock Exchange Release are consolidated figures,
unless otherwise noted. The amounts that are presented are rounded, so the sum
of individual figures may differ from the sum reported. This Stock Exchange
Release 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-Dec ,2014 Jan-Dec, 2013
------------------------------------------------------------------
Increase in intangible assets:
Acquisition cost Jan 1 6,112 5,428
Increase 538 687
Increase in tangible assets:
Acquisition cost Jan 1 1,351 1,234
Increase 74 159
------------------------------------------------------------------
CHANGE IN INTEREST-BEARING LIABILITIES
------------------------------------------------------------------
EUR in thousands Jan-Dec, 2014 Jan-Dec,2013
------------------------------------------------------------------
Interest-bearing liabilities Jan 1 113 339
Repayments -113 -226
------------------------------------------------------------------
Interest-bearing liabilities Sep 30/ - 113
Dec 31
------------------------------------------------------------------
PLEDGES AND COMMITMENTS
-------------------------------------------------------------------------------
EUR in thousands Dec 31, 2014 Dec 31, 2013 Change, %
-------------------------------------------------------------------------------
Business mortgages (held by the Company) 1,391 1,394 0
Minimum lease payments based on lease
agreements
Maturing in less than one year 304 163 87
Maturing in 1-5 years 436 38 1047
-------------------------------------------------------------------------------
Total 740 201 268
Total pledges and commitments 2,131 1,595 34
-------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT BY QUARTER
--------------------------------------------------------------------------------
EUR in thousands Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2014 2014 2014 2014 2013 2013 2013 2013
--------------------------------------------------------------------------------
Net sales 2,685 2,167 2,465 2,225 2,310 1,961 2,335 2,082
Other operating - 1 10 15 - - - 32
income
Materials and 94 66 92 85 86 72 73 61
services
Employee benefit 1,640 1,370 1,557 1,525 1,482 1,209 1,484 1,528
expenses
Other operating 336 316 304 325 348 327 382 383
expenses
--------------------------------------------------------------------------------
EBITDA 615 416 522 305 395 353 396 142
Depreciation and 198 189 178 197 178 183 174 173
amortization
--------------------------------------------------------------------------------
Operating profit 417 227 344 107 217 171 222 -31
Financial income
and
expenses -8 -5 -12 -4 -11 -3 0 -11
--------------------------------------------------------------------------------
Profit before 409 222 332 103 206 167 222 -42
tax
Income taxes -68 -54 -43 -10 19 -25 -33 6
--------------------------------------------------------------------------------
Profit for the 341 167 288 93 225 142 189 -36
period
--------------------------------------------------------------------------------
SEGMENT INFORMATION
--------------------------------------------------------------------------------
EUR in thousands Oct-Dec Oct-Dec Change, Jan-Dec Jan-Dec Change,
2014 2013 % 2014 2013 %
--------------------------------------------------------------------------------
Net sales
Direct and OEM 1,817 1,508 20 6,193 5,574 11
business
Resellers 868 803 8 3,348 3,114 8
--------------------------------------------------------------------------------
Total 2,685 2,310 16 9,541 8,688 10
EBITDA
Direct and OEM 452 314 44 1,249 921 36
business
Resellers 262 166 58 975 708 38
Unallocated -99 -86 15 -368 -343 7
------------------------------------------------------------------------------
Total 615 395 56 1,857 1,285 44
Operating profit
Direct and OEM 350 216 62 842 536 57
business
Resellers 166 87 91 621 385 61
Unallocated -99 -86 15 -368 -343 7
------------------------------------------------------------------------------
Total 417 217 92 1,095 578 89
Financial income -8 -11 -27 -30 -25 20
and expenses
Income taxes -68 19 -175 -33 430
--------------------------------------------------------------------------------
Profit for the 341 225 52 890 521 71
period
Other information:
Depreciation and
amortization
Direct and OEM 102 98 4 407 384 6
business
Resellers 96 80 20 354 323 10
--------------------------------------------------------------------------------
Total 198 178 11 761 707 8
--------------------------------------------------------------------------------
GROUP KEY FIGURES
----------------------------------------------------------------------------
EUR in thousands, Jan-Dec or Dec 31, Jan-Dec or Dec 31,
unless otherwise indicated 2014 2013
----------------------------------------------------------------------------
Net sales 9,541 8,688
Net sales growth, % 9.8 -6.8
EBITDA 1,857 1,285
% of net sales 19.5 14.8
Operating profit 1,095 578
% of net sales 11.5 6.7
Profit before tax 1,065 554
% of net sales 11.2 6.4
Profit for the period 890 521
% of net sales 9.3 6.0
Return on equity (per annum), % 29.3 17.8
Return on investment (per annum), % 35.4 18.3
Borrowings - 113
Cash and cash equivalents 1,426 1,365
Free cash flow 702 815
Net borrowings -1,426 -1,252
Equity 3,196 2,871
Gearing, % -44.6 -43.6
Equity ratio, % 44.0 42.5
Total balance sheet 8,527 8,161
Investments in non-current assets 915 846
% of net sales 9.6 9.7
Product development expenses 1,847 1,683
% of net sales 19.4 19.4
Average number of personnel 81 82
Personnel at the beginning of period 79 81
Personnel at the end of period 78 79
Earnings per share, EUR 0.074 0.043
Equity per share, EUR 0.257 0.231
----------------------------------------------------------------------------
QPR - Quality. Processes. Results.
QPR Software provides insight to business operations for successful strategy
execution and operations improvement. QPR offers a comprehensive software suite
and consulting services for modeling, analyzing, designing and measuring
operations, supporting agile business transformation. We are a global thought
leader in business driven enterprise architecture and in process intelligence.
QPR Software Plc was founded in 1991 and has its headquarters in Helsinki,
Finland. As a publicly listed company, our shares are quoted on the NASDAQ OMX
Helsinki Ltd. www.qpr.com
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