TIDMQPR1V
QPR SOFTWARE PLC STOCK EXCHANGE RELEASE 20 October 2023, AT 9.00 AM EET
Q3 SaaS revenue increased by 33 %. Significant EBITDA
improvement, operating result near zero. The Company is
repositioning itself as a leading player in Digital Twin of an
Organization (DTO).
FINANCIAL DEVELOPMENT BRIEFLY
JULY-SEPTEMBER 2023
-- SaaS software business grew +33%
-- Net sales amounted to EUR 1,806 thousand, increase of 23% (July-September
2022: 1,468)
-- EBITDA was EUR 242 thousand (-853)
-- Operating result (EBIT) amounted to EUR -12 thousand (-1,102)
-- Result before taxes was EUR -37 thousand (-1,111)
-- Result was EUR -37 thousand (-1,111)
-- Earnings per share was EUR -0,002 (-0,069)
JANUARY-SEPTEMBER 2023
-- SaaS software business grew +43% (January- September 2022: +29%)
-- Net sales amounted to EUR 5,951 thousand, increase of 5%
(January-September 2022: 5,650)
-- EBITDA was EUR 275 thousand (-1,324)
-- Operating result (EBIT) amounted to EUR -468 thousand (-2,090)
-- Result before taxes was EUR --555 thousand (-2,119)
-- Result was EUR -555 thousand (-2,119)
-- Earnings per share was EUR -0,031 (-0,147)
NEW OUTLOOK FOR 2023 (Updated 16 October 2023)
Supported by the current contract base and the projected growth
of SaaS (Software as a Service) net sales, QPR expects the growth
of SaaS net sales to be more than 35% and estimates that the entire
net sales will remain at the same level as in 2022 (2022: 7,823
thousand euros).
The company expects EBITDA to improve considerably and end up
clearly positive in the 2023 financial year. EBITDA in 2022 was
--1,753 thousand euros.
PREVIOUS OUTLOOK FOR 2023
The exceptional circumstances caused by increased interest rate,
inflation, and a market downturn in Europe continue to affect new
customer acquisition, companies' investments, and prolong
decision-making in early 2023.
Supported by the current contract base and the projected growth
of SaaS (Software as a Service) net sales, QPR expects the growth
of SaaS net sales to be more than 35% and estimates that the entire
net sales increase in 2023 (2022: 7,823 thousand euros).
The company expects the EBITDA to improve considerably and reach
the break-even point in the financial year 2023. The EBITDA in 2022
was - 1,753 thousand euros.
CEO HEIKKI VEIJOLA:
"The third quarter of the year was successful for QPR in many
ways. This can be seen in the company's Q3's clear net sales
increase of 23 %. SaaS (Software as a service) revenue continued to
increase by +33 %. Also, EBITDA was clearly positive: EUR 242
thousand and improved significantly from last year and the previous
quarter above our expectations. Because of this, we gave on 16
October a new outlook for the whole year.
The growth of the third quarter is the result of successes,
especially in the Middle East market. The most significant of these
was the first process mining SaaS contract in the Middle East. The
customer is an advanced investment and financial company that is
committed to supporting its customers' financial objectives and
promoting the economic growth and development of the area. The
company succeeded in closing the previous year's sold Middle East
fixed-price software delivery projects, which had prolonged
negative impact on the company's business and profitability. We
believe that the Middle East will provide us with significant
opportunities to continue our growth and add value to our
customers.
The general uncertainty of the global economy has continued, and
the acquisition of new customers has been slower than expected,
while simultaneously the companies' investment decision-making time
has increased. Supported by the current contract base and growth of
SaaS (Software as a Service) net sales, QPR expects the growth of
SaaS net sales to be more than 35% and estimates that the entire
net sales is at the same level as in the comparison period. The
company's measures to improve its operations, cost structure and
business profitability have produced significant results, and we
expect the EBITDA to improve considerably to be clearly positive in
the financial year 2023.
In July-August, we implemented a directed share issue, which
main purpose was to strengthen the company's capital and financial
position. As a result of the share issue, we raised net proceedings
of around EUR 700,000. I am pleased with the result of the directed
share issue and would warmly want to thank the investors for their
support and confidence in QPR's vision, strategy, leadership and
future. A successful share issue brought expected improvement to
the company's capital and financial position and gives us the
opportunity to focus on implementing our strategic plans.
At the beginning of September, we announced that the company is
repositioning itself as a leading player in Digital Twin of An
Organization (DTO). The QPR DTO solution enables the creation of a
digital copy of the company's entire business, storing its various
areas, processes and data. This provides organizations with a
completely new opportunity to design, analyze, and lead their
complex business initiatives and make intelligent, data-based
decisions.
Repositioning is an integral part of the company's journey of
change. We develop our product range, improve our service offering,
and strengthen our partnerships to ensure that our customers have
access to the most advanced software products on the market. QPR is
the only player in the market that has all the different aspects of
the Digital Twin of An Organization; process mining, modelling, and
strategy and digital transformation management. QPR supplies
different modules individually or together. We also provide
consulting for all these areas.
One of the key objectives of the company in the second half of
the year has been, in addition to the growth in software sales and
profitability, to strengthen the ecosystem to better serve the
overall needs of our customers. I think we have done well here. I
believe that our ability to find like-minded partners who share our
commitment to excellence, innovation and customer-oriented
solutions, not only expands our foothold in the market, but also
rises an ecosystem that is the basis for long-term growth and
sustainability.
Our medium-term goals are to find partners also for the US
market. QPR ProcessAnalyzer is globally the only software that
operates natively at Snowflake Data Cloud. This means solving
problems related to performance, scaling and security. The majority
of Snowflake's customers are in the US market. QPR has initiated
activities regarding the market perception of the partner network
during the third quarter of the year.
Yesterday, we published inside information, where we informed
about the company's plan to start change negotiations. The
background of the change negotiations is the repositioning of the
company as a leading player in Digital Twin of an Organization
(DTO) technology and the optimization of the company's organization
in line with this goal. In addition, some of the consulting
projects in the domestic public sector outside the core business
have ended prematurely or they are realized smaller than their
original scope. This will reduce the net sales at the end of the
year, and the company's net sales for the whole fiscal year will
remain at the level of the previous year. Change negotiations are a
necessary step to ensure that the company's structure and
operations correspond to the change in business focus and the
company's long-term vision and goals.
I would like to warmly thank our customers, partners and
shareholders for their confidence in QPR during the third quarter
of the year. I also want to thank all our employees for their
dedication and hard work for the company's future and success."
Heikki Veijola
Chief Executive Officer
KEY FIGURES
EUR in thousands,
unless otherwise July-Sept, July-Sept, Change, Jan-Sept, Jan-Sept, Change, Jan-Dec,
indicated 2023 2022 % 2023 2022 % 2022
Net sales 1,806 1,468 23 5,951 5,680 5 7,823
EBITDA 242 -853 128 275 -1,324 121 -1,753
% of net sales 13.4 -58.1 4.6 -23.3 -22
Operating result -12 -1,102 99 -468 -2,090 78 -2,770
% of net sales -0.7 -75.1 -7.9 -36.8 -35
Result before tax -37 -1,111 97 -555 -2,119 74 -2,864
Result for the period -37 -1,111 97 -555 -2,119 74 -2,868
% of net sales -2.0 -75.7 -9.3 -37.3 -37
Earnings per share,
EUR
(basic and diluted) -0.002 -0.069 97 -0.031 -0.147 79 -0.202
Equity per share,
EUR 0.035 0.079 -56 0.036 0.144 -75 0.030
Cash flow from operating
activities -640 -1,419 55 20 -2,042 101 -1,798
Cash and cash equivalents 181 36 406 181 36 406 17
Net borrowings 1,639 1,504 9 1,639 1,504 9 2,262
Gearing, % 257.2 115.8 122 257.2 115.8 122 465
Equity ratio, % 13.7 27.7 -51 13.7 27.7 -51 7
Return on equity,
% -49.7 -326.9 85 -394.8 -326.9 -21 -626
Return on investment,
% -11.6 -115.8 90 -98.3 -115.8 15 -120
REPORTING
QPR Software innovates, develops, sells, and delivers software
and services in international markets aimed at facilitating
operational development in organizations. QPR Software reports one
operating segment: Operational development of organizations.
In addition to this, the Company reports revenue from products
and services as follows: Software licenses, Renewable software
licenses, Software maintenance services, SaaS
(Software-as-a-service,) and Consulting.
Recurring revenue reported by the Company consists of SaaS
revenue, Renewable software licenses, and Software maintenance
services. Software licenses are sold to customers for perpetual use
or for an agreed, limited period. Renewable software licenses are
sold to customers as a user right for an indefinite duration. These
contracts are automatically renewed at the end of the agreed
period, usually one year unless the agreement is terminated within
the notice period. Renewable license revenue is recognized at one
point in time, at the beginning of the invoicing period.
Geographical areas reported are Finland, the rest of Europe
(including Russia and Turkey), and the rest of the world. Net sales
are reported according to the customer s headquarters location. The
company has closed its business and partnerships in Russia for the
time being. Russian numbers are reported as part of comparison
year.
BUSINESS OPERATIONS
QPR's purpose is to help customers achieve more with less. We
help our customers drive process and business transparency, ensure
that their operations are run as required and designed, and create
actionable intelligence where modern AI meets thought
leadership.
We do so by innovating, developing, and delivering software for
analyzing, monitoring, and modelling organizations' operations. To
ensure maximum customer value, we also offer a wide range of
complementary consulting services. By providing organizations with
the technologies and methods to transform the invisible into
visible and the unknown into manageable, they are empowered to
reach long-lasting, continuous results.
NET SALES DEVELOPMENT
NET SALES BY PRODUCT GROUP
July-Sept, July-Sept, Change, Jan-Sept, Jan-Sept, Change, Jan-Dec,
EUR in thousands 2023 2022 % 2023 2022 % 2022
--------------------- ---------- ---------- ------- --------- --------- ------- --------
Software licenses 174 56 208 383 357 7 560
Renewable software
licenses* 78 80 -3 453 509 -11 583
Software maintenance
services* 428 452 -5 1,272 1,386 -8 1,803
SaaS 585 441 33 1,754 1,227 43 1,738
Consulting 541 438 24 2,089 2,200 -5 3,139
Total 1,806 1,468 23 5,951 5,680 5 7,823
*Jan-Sept, 2022 categorization between renewable license and
software maintenance revenue has been adjusted with 2023 reporting
policy (reported in Jan-Sept, 2022: renewable software licenses:
631, software maintenance services:1265)
NET SALES BY GEOGRAPHIC AREA
EUR in July-Sept, July-Sept, Change, Jan-Sept, Jan-Sept, Change, Jan-Dec,
thousands 2023 2022 % 2023 2022 % 2022
---------- ---------- ---------- ------- --------- --------- ------- --------
Finland 793 920 -14 2,799 3,037 -8 4,126
Europe
incl.
Turkey 702 530 32 2,398 1,868 28 2,745
Rest of
the
world 310 18 1618 754 775 -3 953
Total 1,806 1,468 23 5,951 5,680 5 7,823
JULY-SEPTEMBER 2023
The net sales July-September was EUR 1,806 thousand (EUR 1,468)
and increased by 23 % compared to the comparison period. Recurring
revenue accounted for 60 % of the total net sales (66).
The net sales of software licenses was 174 thousand euros (56),
and it grew by 208%, mainly due to the license agreement in the
Middle East.
The net sales of renewable software licenses was 78 thousand
euros (80), decreasing -3% from the combined effect of the
termination of individual customer contracts, the transition to the
SaaS-service model, and new contracts and price increases.
The net sales of software maintenance services was 428 thousand
euros (452), and it decreased by 5%, partly due to customer churn,
negative exchange rate changes and the current customers transition
to the SaaS-service model, which in turn were compensated by the
expansion of collaboration with existing customers, new customers,
and price increases against inflation pressure.
SaaS net sales grew by 33%, to 585 thousand euros (441). The
increase in revenue from SaaS-services was a result not only of the
company's announcement in December 2022 of expanding the use of QPR
ProcessAnalyzer's SaaS solution with a global pharmaceutical
company, but also of the company's other successes in expanding
collaboration with existing customers. The growth was also partly
due to customers transitioning from licenses to the SaaS-service
model, and partly due to the company's price increases caused by
inflation pressure.
The net sales of consulting was 541 thousand euros (438), and it
increased by 24% mainly due to the reversal of the revenue
recognition recorded during the third quarter of the reference year
2022 related to the net sales of the fixed-price project in the
Middle East. The fixed-price projects in the Middle East have been
completed during the second quarter.
The Group's net sales was 49% (48) from Finland, 40% (33) from
the rest of Europe (including Turkey) and 11% (20) from the rest of
the world.
JANUARY-SEPTEMBER 2023
The net sales for January-September was 5,951 thousand euros
(5,680), and it increased by 5% from the comparison period. The
share of recurring revenue in net sales was 58% (55).
The net sales of software licenses was 383 thousand euros, and
it grew by 7%. This was mainly the result of higher license sales
in Europe and the Middle East, which in turn was reduced by the
expiration of fixed-term license agreements and the transition to a
SaaS-service agreement model.
The net sales of renewable software licenses was 453 thousand
euros, and it decreased by 11%. This is the result of the end of
the business of an individual customer due to the war of aggression
in Ukraine started by Russia, individual other customer exits, and
the transition of existing customers to the SaaS service model.
Price increases against inflation pressure partially eliminate the
effects of the decline in net sales.
The net sales of software maintenance services was 1,272
thousand euros, and it decreased by 8% compared to the comparison
period. Net sales decreased due to customers transitioning to the
SaaS-service model, the negative impact of the exchange rate, and
the termination of service contracts for individual customers. The
increase in net sales was influenced by the expansion of existing
customer contracts and the acquisition of new customers.
The net sales of SaaS-services was 1,754 thousand euros, and it
was 43% higher compared to the comparison period. The increase in
revenue from SaaS services was a result not only of the expansion
of the use of QPR ProcessAnalyzer's SaaS solution with a global
pharmaceutical company announced by the company in December 2022,
but also because of the company's other successes in expanding
collaboration with existing customers, as well as new customer
acquisition. The growth was also partly due to customers switching
from licenses to the SaaS-service model, and partly due to the
company's price increases against inflation pressure.
The net sales of consulting was 2,089 thousand euros (2,200),
and it decreased by 5% mainly due to the higher revenue recognition
of fixed-price projects in the Middle East recorded during the
comparison period and the higher consulting revenue of the public
sector, which in turn were compensated by the increased
product-related consulting revenue of the private sector during the
reporting period. The fixed-price projects in the Middle East have
been completed during the second quarter of 2023.
The Group's net sales was 49% (48) from Finland, 40% (33) from
the rest of Europe (including Turkey) and 11% (20) from the rest of
the world.
FINANCIAL DEVELOPMENT
JULY-SEPTEMBER 2023
The group's EBITDA increased in July-September and was 242
thousand euros (-853) and the operating profit was -12 thousand
euros (-1,102). The result for the period was -37 thousand euros
(-1,111). Although the company's result was still loss-making,
compared to the comparison period, it has developed significantly
thanks to the measures that the company actively took to improve
the efficiency of operations, improve the cost structure and
business profitability.
The group's variable costs were 147 thousand euros (406).
Expenses decreased mainly due to the fact the challenging software
delivery projects in the Middle East were completed during the
second quarter of the year. The need for the use of external
services also decreased accordingly.
The company's fixed costs were 1,671 thousand euros (2,164), and
they decreased by 23% compared to the comparison period. This was
the result of the savings programs implemented in the last quarter
of 2022 and the second quarter of 2023, as well as the personnel
reductions made as a result of change negotiations. The effect of
these was partially reduced by lower R&D activations.
The liquidation of the credit loss provision, which is included
in the fixed costs of the third quarter, was 1 thousand euros
(Q3'22: liquidation 2).
The result before taxes was -37 thousand euros (-1,111), and the
result for the review period was -37 thousand euros (-1,111).
Earnings per share were EUR -0.02 (-0.069) per share.
JANUARY-SEPTEMBER 2023
The group's EBITDA was positive in January-September and was 275
thousand euros (-1,324). The company's operating profit was still
negative at -468 thousand euros, but it improved significantly
compared to the comparison period (-2,090) thanks to the measures
that the company actively took to improve the efficiency of
operations, improve the cost structure and business
profitability.
The group's variable costs were 762 thousand euros (1,141), and
they decreased by 33% compared to the comparison period. Costs
decreased mainly due to the fact the challenging software delivery
projects in the Middle East were completed during the second
quarter of the year. The need for the use of external services also
decreased accordingly.
The group's fixed costs were 5,658 thousand euros (6,629), i.e.,
15% lower than the comparison period due to the personnel
reductions and savings implemented in the last quarter of 2022 and
the second quarter of 2023. Lower R&D activations partially
reduced the effects.
The reversal of the credit loss provision, which is included in
the fixed costs of the half-year period, was one (1) thousand euros
(January-September 2022: 0).
The result before taxes was -555 thousand euros (-2,119) and the
result for the review period was --555 euros (-2,119). Earnings per
share were EUR -0.031 (-0.147) per share.
FINANCE AND INVESTMENTS
Cash flow from operations in the review period January-September
was 20 thousand euros (-2,042). The change in operating cash flow
compared to the comparison period 2022 was the result of a
significant improvement in the result of the review period of 1,565
thousand euros and 608 thousand euros in working capital
changes.
Trade and other receivables were EUR 429 thousand lower compared
to the comparison period due to enhanced collection of trade
receivables and invoicing of completed projects in the Middle
East.
Net financing costs were 87 thousand euros (30), and they
included exchange rate losses of 12 thousand euros (7).
The investments were 511 thousand euros (1,164), and they were
product development investments.
The net cash flow of the financing was 656 thousand euros,
consisting mainly of 703 thousand euros from the company's directed
share issue, as well as rent payments for the company's premises.
In the comparison period 2022, the net cash flow of the company's
financing was 2,880 thousand euros, which was mainly the result of
the company's implemented rights issue.
The financial situation of the group is fair. At the end of the
review period, the group's cash and cash equivalents were 181
thousand euros (36) and short-term receivables were 2,077 thousand
euros (2,361). In addition, the group has available other
short-term cash resources of 500 thousand euros. At the end of the
review period, the group had a bank loan, of which EUR 1.0 million
was long-term and EUR 500 thousand was short-term. Covenants are
attached to the loan, which is based on the company's EBITDA and
equity ratio. Regarding the covenants, the EBITDA is tested every
six months, and the equity ratio is tested annually according to
the situation on the last day of the year. EBITDA for the first
half of the year exceeded the limit defined by the covenants.
The company renewed the financing agreement with its main
financing bank on January 24, 2023, according to which the previous
short-term loan of EUR 1.5 million was converted into a long-term
loan. According to the financing agreement, the first installment
of 0.5 million euros is due on January 31, 2024. After this,
installments of 0.5 million euros are due annually in January. The
last loan repayment date is January 24, 2026. The company withdrew
the loan during the first quarter of the year.
Net debt in relation to equity (gearing) was 257,2% (115,8%) and
the equity ratio at the end of the review period was 13,7% (27.7%).
The net debt ratio and the equity ratio were affected by the
decrease in equity and cash resources, as well as the 5.5-year
lease agreement for the company's head office premises concluded in
the last quarter of 2022, where the monthly rental costs were
significantly lower. The company entered into a new lease at the
end of June 2023 due to the extensive water damage that occurred in
the premises of its Helsinki head office. The lease term of the
premises under renovation was shortened by about two years, and as
the rent for the temporary bypass space was lower, the total rental
debt and right-of-use assets decreased significantly.
With the new lease agreement, the total lease term of the
company's head office will be shortened, and it will reduce the
company's lease debt. The new, smaller, and more affordable
temporary offices will also reduce the right-of-use assets.
PRODUCT DEVELOPMENT
QPR innovates and develops software products that analyze,
measure, and model operations in organizations. The Company
develops the following software products: QPR ProcessAnalyzer, QPR
EnterpriseArchitect, QPR ProcessDesigner, and QPR Metrics.
In the third quarter of the year, product development expenses
were EUR 248 thousand (710). R&D expenses worth EUR 80 thousand
(364) were capitalized. The amortization of capitalized R&D
expenses was EUR 220 thousand (249).
The amortization period for capitalized R&D expenses is four
years.
PERSONNEL
At the end of the review period, the Group employed a total of
52 people (88). The average number of personnel during
January-September was 60 (78). The number of personnel has
decreased as a result of change negotiations that ended in the last
quarter of 2022 and the second quarter of 2023.
The average age of employees was 47 (44) years. Women account
for 23% (25) of employees, and men for 76% (75). Of all the
personnel, 16% (17) work in sales and marketing, 40% (45) in
consulting and customer service, 33% (30) in product development
and 11% (8) in administration.
For incentive purposes, the company has a bonus program covering
the entire personnel. The top management's short-term remuneration
consists of monetary salary, fringe benefits and a possible annual
bonus, mainly determined by the net sales development of the group
and profit units. In addition, the company has an option program
for key personnel.
SHARES AND SHAREHOLDER
Jan-Sept, Jan-Sept, Change, Jan-Dec,
Trading of shares 2023 2022 % 2022
Shares traded, pcs 1,729,586 1,671,546 3 2,263,135
Volume, EUR 898,702 1,980,554 -55 2,315,155
% of shares 9.7 10.4 -7 14.1
Average trading price,
EUR 0.52 1.18 -56 1.02
Average trading value per
day, EUR 3,566 7,859 -55 9,187
Treasury shares acquired
during the year, pcs 0 0 0 0
Sept 30, Sept 30, Change, Dec 31,
Shares and market capitalization 2023 2022 % 2022
Total number of shares,
pcs 18,175,192 16,455,321 10 16,455,321
Treasury shares, pcs 339,471 413,487 -18 413,487
Book counter value, EUR 0.11 0.11 - 0.11
Outstanding shares, pcs 17,835,721 16,041,834 11 16,041,834
Number of shareholders 1,863 1,705 9 1,747
Closing price, EUR 0.39 0.55 -29 0.56
Market capitalization,
EUR 6,938,095 8,823,009 -21 8,983,427
Book counter value of all
treasury
shares, EUR 37,342 45,484 -18 45,484
Total purchase value of
all treasury
shares, EUR 347,552 405,726 -14 405,726
Treasury shares, % of all
shares 1.9 2.5 -26 2.5
GOVERNANCE
The Annual General Meeting of QPR Software Plc was held May 3,
2023 in Helsinki. The Annual General Meeting adopted the Company's
financial statements for the financial year 2022 and discharged the
members of the Board of Directors and the CEO from liability. The
Annual General Meeting resolved that no dividend be paid based on
the balance sheet adopted for the financial year ended on December
31, 2022, further adopted the Company's Remuneration Report, and
resolved to amend the Company's Articles of Association. Further,
the Annual General Meeting resolved to reduce the share capital of
the Company, to authorize the Board of Directors to decide on share
issues and on the issue of other special rights entitling to shares
as well as on the acquisition of own shares.
Annual accounts and the use of the profit shown on the balance
sheet
The Annual General Meeting adopted the Company's financial
statements and discharged the members of the Board of Directors and
the CEO from liability for the financial period January 1 --
December 31, 2022. The Annual General Meeting resolved that no
dividend be paid based on the balance sheet adopted for the
financial year ended on December 31, 2022.
Remuneration of the members of the Board of Directors and the
Auditor
The Annual General Meeting resolved that the Chairman of the
Board of Directors be paid EUR 45,000 per year and the other
members of the Board of Directors EUR 25,000 per year.
Approximately 40 percent of the remuneration will be paid in shares
and 60 percent in cash. The shares will be granted as soon as
possible after the Annual General Meeting and if the insider
regulations allow it. The members of the Board of Directors will
also be reimbursed for travel and other expenses incurred while
they are managing the Company's affairs.
The remuneration to the Auditor shall be paid according to the
reasonable invoice.
Board of Directors and Auditor
The Annual General Meeting confirmed that the number of Board
members is four. Pertti Ervi was re-elected as the Chairman of the
Board of Directors and Matti Heikkonen, Antti Koskela, and Jukka
Tapaninen were re-elected as members of the Board of Directors.
The Authorised Public Accountants KPMG Oy Ab was re-elected as
the Company's auditor. KPMG Oy Ab has announced that Petri
Kettunen, Authorized Public Accountant, will act as the principal
auditor.
Amendment of the Articles of Association
The Annual General Meeting resolved to amend Articles 6 and 9 of
the Company's Articles of Association. Article 6 was amended to
correspond to the responsibility for the auditor oversight
stipulated in the amended Finnish Auditing Act (1141/2015) and
further so that the term of the auditor shall end at the closing of
the first Annual General Meeting following the election. Article 9
was amended to enable holding a general meeting entirely without a
meeting venue as a so-called remote meeting in addition to the
Helsinki, Espoo and Vantaa. Further, said article was amended due
to certain legislation changes stipulating the matters to be
resolved upon in an Annual General Meeting.
Reduction of the share capital
The Annual General Meeting resolved to reduce the Company's
registered share capital from EUR 1,359,090 to EUR 80,000, i.e. by
an aggregate amount of EUR 1,279,090, with the reduced amount of
EUR 1,279,090 being transferred to the reserve for invested
unrestricted shareholders' equity. The reduction of the share
capital requires a public notice in accordance with the Finnish
Companies Act.
Authorization of the Board of Directors to decide on share
issues and on the issue of other special rights entitling to
shares
The Annual General Meeting resolved to authorize the Board of
Directors to decide on issuances of new shares and conveyances of
the own shares held by the Company (share issue) either in one or
more instalments. The share issues can be carried out against
payment or without consideration on terms to be determined by the
Board of Directors. The authorization also includes the right to
issue special rights referred to in Chapter 10, Section 1 of the
Finnish Companies Act, which entitle to the Company's new shares or
own shares held by the Company against consideration. Based on the
authorization, the maximum number of new shares that may be issued
and own shares held by the Company that may be conveyed in share
issues or on the basis of special rights referred to in Chapter 10,
Section 1 of the Finnish Companies Act is 3,200,000 shares. The
authorization includes the right to deviate from the shareholders'
pre-emptive subscription right. The authorization is in force until
the next Annual General Meeting.
Authorization of the Board of Directors to decide the
acquisition of own shares
The Annual General Meeting resolved to authorize the Board of
Directors to decide on the acquisition of the Company's own shares.
Based on the authorization, an aggregate maximum amount of 500,000
own shares may be acquired, either in one or more instalments. The
authorization includes the right to acquire own shares otherwise
than in proportion to the existing shareholdings of the Company's
shareholders, using the Company's non-restricted shareholders'
equity. The authorization is in force until the next Annual General
Meeting.
All related materials can be found in the Investors section on
the company's website.
SHORT-TERM RISKS AND UNCERTAINTIES
Internal control and risk management at QPR Software aim 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 that
business continuity is secured considering the financial
position.
The Company has identified the following three groups of risks
related to its operations: risks related to business operations
(country, customer, personnel, legal), risks related to information
and products (QPR products, IPR, data privacy, and security), and
risks related to financing and liquidity (foreign currency,
short-term cash flow).
The Company has an insurance policy covering property,
operational, and liability risks. Financial risks include
reasonable credit risk concerning individual business partners,
which is characteristic of any international business. QPR seeks to
limit this credit risk by continuously monitoring standard payment
terms, receivables, and credit limits.
Approximately 79% of the Group's trade receivables were in euros
at the end of the quarter (70%). At the end of the quarter, the
Company had not hedged its non-euro trade receivables.
SIGNIFICANT EVENTS DURING THE FINANCIAL PERIOD
Renewal of the financing agreement
During the first quarter of the fiscal year 2023, the company
renewed its 1.5-million-euro financing agreement with Nordea from
short-term to long-term.
Amendment of the articles of association
The decisions of the general meeting and changes to the articles
of association have been registered in the trade register on May
25, 2023.
Reduction of share capital
In the third quarter of the fiscal year, the company reduced its
parent company's share capital to 80,000 euros. The share capital
reduction has been registered in the trade register on 14 September
2023.
Directed share issue
The company organized a directed share issue in July-August
2023, aiming to raise funding to cover business losses and
strengthen the financial position, as well as to develop a
profitable business and implement the strategy. In the directed
offering, 1,719,871 shares were subscribed at a price of EUR 0.463
and the company collected EUR 786 thousand of new capital from the
current shareholders. A successful share issue was important in
strengthening the company's financial position.
Flaggings
On 23 August 2023, QPR Software Plc received a notification from
AC Invest Oy pursuant to Chapter 9, Section 5 of the Securities
Markets Act (AML), according to which its direct share ownership of
QPR Software Oyj's total number of shares and votes has decreased
under (5) percent.
On 23 August 2023, QPR Software Oyj received a notification from
Vesa-Pekka Leskinen pursuant to Chapter 9, Section 5 of the
Securities Markets Act (AML), according to which his direct share
ownership of QPR Software Oyj's total number of shares and votes
has decreased under ten (10) percent.
On 23 August 2023, QPR Software Oyj received a notification from
Oy Fincorp Ab pursuant to Chapter 9, Section 5 of the Securities
Markets Act (AML), according to which its direct share ownership of
QPR Software Oyj's total number of shares and votes has increased
to more than twenty (20) percent.
The Bord of Directors published a new option program
On September 6, 2023, the company announced that the company's
board of directors has decided on a new stock option program on
September 6, 2023, based on the authorization given by the
company's annual general meeting on May 3, 2023, where the key
personnel of the company and its subsidiaries can receive stock
options entitling them to subscribe to the company's shares.
A maximum of 1,000,000 stock options were issued, and they
entitle their holders to subscribe for a maximum of 1,000,000 new
or existing Company Shares. The Board of Directors decides whether
the subscriber will be given new or the Company's own Shares.
Option rights are granted free of charge. All 1,000,000 Warrants
are marked with the code 2023. The terms of the stock options are
available on the company's website in the Investors section.
The stock exchange releases related to the option program can be
read on the company's website in the Investors/Stock market and
press releases section.
Changes in the company's management
The company's CEO Jussi Vasama left his position and Heikki
Veijola started as CEO on March 1, 2023. The director of the
consulting business, Samuel Rinnetmäki, moved outside the company
and Teemu Lehto became a member of the management team as the new
director responsible for the consulting business on March 1,
2023.
The company announced on June 27, 2023, that QPR Software Oyj
and Chief Revenue Officer Eric Allart have agreed that Allart will
leave his position in the company. Allart's work obligation in the
company ended immediately. CEO Heikki Veijola is currently serving
as the company's interim Chief Revenue Officer.
Also, Director, People & Culture Johanna Lähde has also left
the company during the second quarter of the year.
Change negotiations
In the second quarter of the fiscal year 2023, the company
started change negotiations in order to improve the profitability
of the business and to enhance the implementation of the company's
strategy. As a result of the change negotiations, 7 people were
dismissed from the company and about 39 people were laid off
part-time or full-time.
EVENTS AFTER THE REVIEW PERIOD
Profit warning 16 October 2023
On 16 October 19, 2023, the company gave a profit warning saying
that it expects its EBITDA to become clearly positive in 2023.
According to previous guidance, the company expected its EBITDA to
improve significantly and reach the break-even point in the
financial year 2023. The improvement in profitability beyond
expectations has been influenced by the significant cost-saving
measures taken and the focus of sales on the more profitable SaaS
and software business as well as on consulting in these priority
areas.
As part of the profit warning the company stated that some of
the consulting projects in the domestic public sector outside the
core business have ended prematurely or they are occurring on a
smaller scope than originally expected. This will reduce the net
sales at the end of the year, and the company's net sales for the
whole fiscal year will remain at the level of the previous year,
while the growing software business compensates for the decrease.
The company's SaaS net sales is expected to continue to grow by
more than 35% from last year, and business activities outside of
consulting will grow as a whole.
Change negotiations notice 19 October 2023
On 19 October 2023, QPR Software Plc announced that it will
submit a negotiation proposal per the Act on Cooperation to start
the change negotiations. The company has previously announced that
as part of its strategy, it is re-positioning itself even more
strongly as a software and SaaS player and as a consultant for its
core business areas as well as a leading player in Digital Twin of
an Organization (DTO) technology.
In change negotiations, the company deals with measures aimed at
adapting the company's operation, structure, and related personnel
costs to reflect the change in business focus and the company's
long-term vision and goals.
The scope of the negotiations includes the personnel of the
company's consulting business unit, in all offices, a total of 14
people.
According to preliminary estimates, the measures that may be
implemented after the change negotiations could lead to temporary
layoffs of the personnel of the consulting business unit for a
maximum of 90 days and, in addition, to the termination of a
maximum of nine (9) positions.
The negotiations will start on 26 October 2023 and last two (2)
weeks following the Act on Cooperation.
QPR SOFTWARE PLC
BOARD OF DIRECTORS
For further information:
Heikki Veijola
Chief Executive Officer
QPR Software Plc
Tel. +358 40 922 6029
About QPR Software
QPR Software Plc (Nasdaq Helsinki) provides process mining,
performance management, and enterprise architecture solutions for
digital transformation, strategy execution, and business process
improvement in over 50 countries. QPR software allows customers to
gain valuable insights for informed decisions that make a
difference.
www.qpr.com
DISTRIBUTION
Nasdaq Helsinki
Key medias
www.qpr.com
FINANCIAL STATEMENT INFORMATION
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
EUR in thousands,
unless July-Sept, July-Sept, Change, Jan-Sept, Jan-Sept, Change, Jan-Dec,
otherwise indicated 2023 2022 % 2023 2022 % 2022
Net sales 1,806 1,468 23 5,951 5,680 5 7,823
Other operating income 1 0 - 1 0 - 4
Materials and services 147 406 -64 762 1,141 -33 1,552
Employee benefit
expenses 1,056 1,711 -38 4,023 5,262 -24 7,214
Other operating
expenses 361 204 77 892 601 48 814
EBITDA 242 -853 128 275 -1,324 121 -1,753
Depreciation and
amortization 254 249 2 743 766 -3 1,017
Operating result -12 -1,102 99 -468 -2,090 78 -2,770
Financial income and
expenses -25 -9 185 -87 -30 191 -62
Provisions - - - - - - -33
Result before tax -37 -1,111 97 -555 -2,119 74 -2,864
Income taxes - 0 - - 0 - -3
Result for the period -37 -1,111 97 -555 -2,119 74 -2,868
Earnings per share,
EUR
(basic and diluted) -0.002 -0.069 97 -0.031 -0.147 79 -0.202
Consolidated statement
of
comprehensive income:
Result for the period -37 -1,111 97 -555 -2,119 74 -2,868
Exchange differences
on
translating foreign
operations 0 0 - 1 1 -25 -2
Total comprehensive
income -37 -1,110 97 -554 -2,118 74 -2,870
CONDENSED CONSOLIDATED BALANCE SHEET
Sept 30, Sept 30, Change, Dec 31,
EUR in thousands 2023 2022 % 2022
Assets
Non-current assets:
Intangible assets 2,357 2,268 4 2,411
Goodwill 358 358 0 358
Tangible assets 95 198 -52 171
Right-of-use assets 320 5 5917 756
Other non-current assets 277 280 -1 277
Total non-current assets 3,407 3,110 10 3,973
Current assets:
Trade and other receivables 1,896 2,325 -18 3,452
Cash and cash equivalents 181 36 406 17
Total current assets 2,077 2,361 -12 3,469
Total assets 5,484 5,470 0 7,442
Equity and liabilities
Equity:
Share capital 80 1,359 -94 1,359
Other funds 21 21 0 21
Treasury shares -348 -406 -14 -406
Translation differences -67 -66 -2 -66
Invested non-restricted
equity fund 4,925 2,943 67 2,943
Retained earnings -3,974 -2,552 -56 -3,364
Equity attributable to
shareholders of
the parent company 637 1,299 -51 487
Non-current liabilities:
Interest-bearing liabilities 1,000 - - -
Interest-bearing lease
liabilities 209 - - 609
Total non-current liabilities 1,209 - - 609
Current liabilities:
Provisions - - - 33
Interest-bearing liabilities 500 1,500 -67 1,521
Interest-bearing lease
liabilities 110 40 178 149
Advances received 841 786 7 885
Accrued expenses and prepaid
income 1,496 1,490 0 2,598
Trade and other payables 690 355 94 1,161
Total current liabilities 3,638 4,171 -13 6,346
Total liabilities 4,847 4,171 16 6,955
Total equity and liabilities 5,484 5,470 0 7,442
CONSOLIDATED CONDENCED CASH FLOW STATEMENT
July-Sept, July-Sept, Change, Jan-Sept, Jan-Sept, Change, Jan-Dec,
EUR in thousands 2023 2022 % 2023 2022 % 2022
Cash flow from operating
activities:
Result for the period -37 -1,111 97 -555 -2,119 74 -2,868
Adjustments to the result 264 252 5 745 768 -3 874
Working capital changes -791 -553 -43 -54 -662 92 307
Interest and other financial
expenses paid -74 -8 881 -104 -29 264 -58
Interest and other financial
income received 0 0 - 0 0 - 0
Income taxes paid -2 0 - -11 0 - -21
Net cash from operating
activities -640 -1,419 55 20 -2,042 101 -1,765
Cash flow from investing
activities:
Purchases of tangible
and
intangible assets -80 -429 -81 -512 -1,164 -56 -1,355
Net cash used in investing
activities -80 -429 -81 -512 -1,164 -56 -1,355
Cash flow from financing
activities:
Proceeds from short term
borrowings - 800 - 1,500 1,600 - 1,521
Repayments of short term
borrowings - -800 - -1,500 -1,600 - -1,500
Payment of lease liabilities -15 -49 -70 -103 -183 -44 -266
Sales of own shares - - - - 34 - -
Share issue net 760 16 - 760 2,948 - 2,937
Net cash used in financing
activities 745 -33 -2,347 656 2,798 -77 2,692
Net change in cash and
cash
equivalents 26 -1,882 -101 164 -408 -140 -427
Cash and cash equivalents
at the beginning of the
period 156 1,918 -92 17 441 -96 441
Effects of exchange rate
changes
on cash and cash equivalents 0 0 -18 0 2 -94 3
Cash and cash equivalents
at the end of the period 181 36 406 181 36 406 17
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Invested
non-
restricted
Share Other Translation Treasury equity Retained
EUR in thousands capital funds differences shares fund earnings Total
Equity Jan 1, 2022 1,359 21 -68 -439 5 -448 430
-------- ------ ------------ -------- ----------- --------- ------
Stock option scheme 5 5
Disposal of own shares 34 34
Share issue ,net 2,937 2,937
Exchange rate differences
in equity of foreign
operations 12 12
Comprehensive income 1 -2,120 -2,119
Equity Sept 30, 2022 1,359 21 -67 -406 2,943 -2,551 1,299
-------- ------ ------------ -------- ----------- --------- ------
Stock option scheme -52 -52
Exchange rate differences
in equity of foreign
operations -12 -12
Comprehensive income 1 -749 -748
Equity Dec 31, 2022 1,359 21 -66 -406 2,943 -3,364 487
-------- ------ ------------ -------- ----------- --------- ------
Stock option scheme -45 -45
Reduction of share
capital -1,279 1,279 0
Disposal of own shares 58 -10 48
Share issue ,net 703 703
Comprehensive income -1 -554 -555
Equity Sept 30, 2023 80 21 -67 -348 4,925 -3,974 637
-------- ------ ------------ -------- ----------- --------- ------
NOTES TO INTERIM FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
This report complies with the requirements of IAS 34" Interim
Financial Reporting".
In preparation of the consolidated interim report, company's
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.
INTANGIBLE AND TANGIBLE ASSETS
Jan-Sept, Jan-Sept, Jan-Dec,
EUR in thousands 2023 2022 2022
Increase in intangible
assets:
Acquisition cost Jan 1 14,217 12,846 12,846
Increase 512 1,055 1,371
Increase in tangible assets:
Acquisition cost Jan 1 2,816 2,705 2,705
Increase 0 108 111
CHANGE IN INTEREST-BEARING LIABILITIES
Jan-Sept, Jan-Sept, Jan-Dec,
EUR in thousands 2023 2022 2022
Interest-bearing liabilities
Jan 1 2,279 1,682 1,682
Proceeds from borrowings 1,500 1,600 597
IFRS 16 -335 - -
Repayments 1,623 1,741 -
Interest-bearing liabilities
Dec 31 1,820 1,540 2,279
PLEDGES AND COMMITMENTS
Jan-Sept, Jan-Sept, Dec 31, Change,
EUR in thousands 2023 2022 2022 %
Business mortgages (held by
the Company) 2,381 2,383 2,382 0
Minimum lease payments based
on lease agreements:
Maturing in less than one year 30 18 47 -36
Maturing in 1-5 years 34 11 80 -57
Total 65 29 127 -49
Total pledges and commitments 2,445 2,412 2,509 -3
CONSOLIDATED INCOME STATEMENT BY QUARTER
July-Sept, April-June, Jan-Mar, Oct-Dec, Jul-Sep,
EUR in thousands 2023 2023 2023 2022 2022
Net sales 1,806 1,908 2,237 2,142 1,468
Other operating income 1 1 - 4 -
Materials and services 147 221 394 411 406
Employee benefit
expenses 1,056 1,368 1,599 1,951 1,711
Other operating
expenses 361 313 218 214 204
EBITDA 242 7 26 -430 -853
Depreciation and
amortization 254 238 251 251 249
Operating result -12 -231 -225 -681 -1,102
Financial income and
expenses -25 -23 -39 -32 -9
Provisions - - - -33 -
Result before tax -37 -254 -264 -745 -1,111
Income taxes - 5 -5 -3 -
Result for the period -37 -249 -269 -748 -1,111
GROUP KEY FIGURES
EUR in thousands, unless Jan-Sept or Jan-Sept or Jan-Dec or
otherwise indicated Sept 30, 2023 Sept 30, 2022 Dec 31, 2022
------------------------------- -------------- -------------- -------------
Net sales 5,951 5,680 7,823
Net sales growth, % 4.8 -19.8 -14.4
EBITDA 275 -1,324 -1,753
% of net sales 4.6 -23.3 -22.4
Operating result -468 -2,090 -2,770
% of net sales -7.9 -36.8 -35.4
Result before tax -555 -2,119 -2,864
% of net sales -9.3 -37.3 -36.6
Result for the period -555 -2,119 -2,868
% of net sales -9.3 -37.3 -36.7
Return on equity (per annum),
% -394.8 -326.9 -625.7
Return on investment (per
annum), % -98.3 -115.8 -120.3
Cash and cash equivalents 181 36 17
Net borrowings 1,639 1,504 2,262
Equity 487 1,299 487
Gearing, % 257 115.8 464.9
Equity ratio, % 13.7 27.7 7.4
Total balance sheet 5,484 5,470 7,442
Investments in non-current
assets * 511 1207 2,324
% of net sales 8.6 21 29.7
Product development expenses 1,113 2,141 2,674
% of net sales 18.7 38 34.2
Average number of personnel 60 78 81
Personnel at the beginning
of period 85 80 80
Personnel at the end of period 52 88 85
Earnings per share, EUR
(basic and diluted) -0.034 -0.147 -0.202
Equity per share, EUR 0.036 0.081 0.030
*adjustment for the previous reporting
periods
(END) Dow Jones Newswires
October 20, 2023 02:00 ET (06:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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