QPR Software Half Year Financial Report 2022: SaaS revenue increased by 24%, total revenue decreased, and the company completed a successful financing round

QPR Software Oyj

QPR SOFTWARE PLC                                  STOCK EXCHANGE RELEASE                                  August 3, 2022, AT 9.00 AM

QPR Software Plc's January-June report 2022: SaaS revenue grew clearly, unique process mining technology was launched on the market, and QPR is investing in future growth supported by a successful financing round. New sales of software licenses fell clearly compared to the exceptional comparison period. Investments in growth continued.

FINANCIAL DEVELOPMENT

April-June 2022 highlights

• SaaS software business grew +38%

• Net sales amounted to EUR 2,012 thousand and decreased 6% (April-June 2021: 2,138)

• EBITDA amounted to EUR -270 thousand (3)

• Operating result (EBIT) amounted to EUR -515 thousand (-275)

• Result before taxes EUR -526 thousand (-283)

• Quarter’s result EUR -629 thousand (-231)

January-June 2022 highlights

• SaaS software business grew +24%

• Net sales amounted to EUR 4,213 thousand, a decrease of 16% (April-June 2021: 5,042)

• EBITDA to EUR -471 thousand (569)

• Operating result (EBIT) amounted to EUR -988 thousand (11)

• Result before taxes EUR -1,009 thousand (-78)

• Result EUR -1,009 thousand (-231)

OUTLOOK FOR 2022 (unchanged)

On a general level, the increased uncertainty of the operating environment in Europe due to the war in Ukraine and inflation in the aftermath of the coronavirus pandemic continue to create uncertainty in acquiring new customers. However, QPR's solutions that enable operational efficiency and cost savings are an opportunity for our customers to renew themselves and react to market changes faster than the competition.

Based on the increased sales offer base, continuous customer revenues, and the booking rate of consulting, QPR estimates that its turnover will increase in 2022 (2021: EUR 9,140 thousand) supported by the growth of SaaS turnover.

CEO JUSSI VASAMA COMMENTS ON JANUARY–JUNE 2022:

The implementation of QPR's new strategy has progressed well, which can be seen in the clear increase in SaaS revenue compared to the comparison period. SaaS revenue growth accelerated to 38% in the secong quarter exceeding the long-term strategic target level. The recurring revenue items of the software business, SaaS and maintenance revenues, grew by 14% in the second quarter and by 9% in January–June compared to the comparison period. The share of recurring profits in turnover increased to 45% in the second quarter, as compared to 37% a year earlier.

Net sales in the second quarter decreased from the comparison period, but the decrease clearly slowed down as compared to the first quarter. In the entire comparison period, the figures were affected by the exceptionally large one-time license sales in the first quarter of 2021. In the second quarter, the sale of new software licenses was at the level of the comparison period.

Revenue from the consulting business was 15% lower in the first half of the year compared to the previous year. This is primarily due to demand fluctuations in the consulting services of the Finnish public sector, and partly also a reflection of the challenge of quickly hiring consulting expertise that meets the market’s demand.

During the monitoring period, we focused on renewing the company's strategic focus, structure, and operating models. We have strengthened our foundation to enable growth and strengthened our offering as a leading process intelligence SaaS service provider.

In the second quarter, the company launched a unique solution developed for the process mining market. The solution enables a customer-oriented SaaS software business based on scalable process intelligence. It is the first and only flexibly scalable and quickly deployable solution on the market, that organizations can use without compromising on the amount of data, data integrity, and process data integrity.

With the launched solution, QPR enables customers to make their operations more efficient and save on costs. We do this by combining a deep understanding of the customer’s business processes with real-time process transparency, ready-made dashboards, and market-leading Data Cloud technology. Snowflake was selected as the modern technology provider. QPR’s solution, built on top of the Snowflake data cloud, is thus the only process mining software on the market to run natively and securely in the Snowflake data cloud. Additionally, QPR signed a partnership agreement with Snowflake, making us the only Process Mining Powered by Snowflake partner globally. In addition to increasing product development investments, the company increased investment in marketing, sales, and strengthening its partnership network.

In line with the company strategy, the focus lies on strong and continuous SaaS revenue growth. In the medium term, this affects the overall growth of the company, especially regarding to the gradual decrease in new sales of software licenses. For the rest of the year, the company will continue to invest heavily in marketing, sales, and product development in accordance with its strategy. This will consequently weaken profitability in the near future.

As the company previously announced, QPR's rights issue from May 27 to June 10, 2022, was oversubscribed. The goal of the share issue was to strengthen the company's financial conditions to implement the company's growth strategy. The rights issue would enable investments in the growth of the international SaaS business by focusing on QPR's scalable process mining offering and our capabilities. I am very satisfied with the result of the rights issue, where the company raised approximately EUR 2.9 million in net assets. This is a strong indication of investors' trust and faith in the new strategy and in QPR itself as the leading software and service company in our industry.

I am happy that the renewal of the company's structure and operations has progressed quickly. After the company's reorganization, two new people started in the executive management team. In the second quarter, we announced the strengthening of the company's executive management team with the appointment of a new CRO, CFO, and Head of People and Culture. The appointments support the implementation of QPR's new growth strategy. We have also increased investments in personnel well-being and strengthened our recruitment process. I am very satisfied with QPR's ability to function as an international and multicultural organization, and I believe this will be a significant competitive advantage for the company as an employer in the future.

On a general level, increased uncertainty of the operating environment and the increase in cost levels may affect investments of some customer industries. However, QPR's solutions, which enable operational efficiency and cost savings, are an opportunity for our customers to renew themselves and to react to market changes.

Jussi Vasama

Chief Executive Officer

KEY FIGURES

EUR in thousands, unless otherwise indicated	April-June, 2022	April-June, 2021	Change, %	Jan-June, 2022	Jan-June, 2021	Change, %	Jan-Dec, 2021
Net sales	2,012	2,138	-6	4,213	5,042	-16	9,140
EBITDA	-270	3	-10,164	-471	569	-183	241
% of net sales	-13.4	0.1		-11.2	11.3		2.6
Operating result	-515	-275	-87	-988	11	-9,494	-1,248
% of net sales	-25.6	-12.9		-23.4	0.2		-13.7
Result before tax	-526	-283	-86	-1,009	-78	-1,201	-1,356
Result for the period	-629	-231	-172	-1,009	-61	-1,556	-1,356
% of net sales	-31.3	-10.8		-23.9	-1.2		-14.8
Earnings per share, EUR (basic and diluted)	-0.039	-0.019	-103	-0.082	-0.005	-1,138	-0.113
Equity per share, EUR	0.149	0.159	-6	0.149	0.159	-6	0.035
Cash flow from operating activities	-664	305	-318	-623	1,211	-151	692
Cash and cash equivalents	1,918	878	119	1,918	878	118	441
Net borrowings	-322	-23	-1,033	-322	-23	-1,300	1,682
Gearing, %	-10.9	-1.2	-832	-13.5	-1.2	-1,054	288.5
Equity ratio, %	40.5	39.9	1	40.5	39.9	14	8.3
Return on equity, %	-178.4	-44.4	-302	-286.2	-6.1	-4,592	-111.4
Return on investment, %	-49.3	-18.7	-164	-89.8	0.7	12,929	-49.3

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 net sales, 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 with 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 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.

NET SALES DEVELOPMENT

NET SALES BY PRODUCT GROUP
EUR in thousands	April-June, 2022	April-June, 2021	Change, %	Jan-June, 2022	Jan-June, 2021	Change, %	Jan-Dec, 2021
Software licenses	169	133	27	301	866	-65	1,317
Renewable software licenses	41	81	-49	429	524	-18	797
Software maintenance services	471	481	-2	933	939	-1	2,034
SaaS	436	317	38	786	635	24	1,283
Consulting	895	1,126	-21	1,763	2,078	-15	3,709
Total	2,012	2,138	-6	4,213	5,042	-16	9,140
NET SALES BY GEOGRAPHIC AREA
EUR in thousands	April-June, 2022	April-June, 2021	Change, %	Jan-June, 2022	Jan-June, 2021	Change, %	Jan-Dec, 2021
Finland	957	1,145	-16	2,118	2,593	-18	4,614
Europe incl. Turkey	661	545	21	1,338	1,232	9	2,689
Rest of the world	394	448	-12	757	1,217	-38	1,837
Total	2,012	2,138	-6	4,213	5,042	-16	9,140

April-June 2022

Net sales in the second quarter amounted to EUR 2,012 thousand (2,138). Recurring revenue accounted for 45% (37) of net sales.

New software license net sales amounted to EUR 169 thousand (133), increased 27%. Renewable software license net sales decreased to EUR 41 thousand (81) due to the decrease in sales in Finland and the international retail channel.

Software maintenance net sales were EUR 471 thousand (481), which decreased 2% mainly due to lower international channel maintenance net sales.

SaaS revenue increased EUR 436 thousand (317). At the end of the quarter, the entire offer backlog was more than EUR 8 million (Q1; over EUR 7 million) and the annual estimate of the SaaS offer backlog for the next 12 months over EUR 1,5 million (Q1; over EUR 1.6 million).

Consulting and software deliveries revenue was EUR 895 thousand (1,126) and decreased by 21%. This is primarily due to demand fluctuations in the consulting services of the Finnish public sector, and partly also as a challenge to quickly hire consulting expertise that meets the demand from the market.

Net sales in Finland decreased by 16% but international net sales increased by 6%. Of the Group net sales, 47% (54) derived from Finland, 33% (25) from the rest of Europe (including Turkey) and 20% (21) from the rest of the world.

January - June 2022

Net sales in January – June amounted to EUR 4,213 thousand (5,042) and decreased by 16%. The share of recurring revenue was 41% of net sales (31).

Of the Group net sales, 50% (51) derived from Finland, 32% (24) from the rest of Europe (including Turkey) and 18% (24) from the rest of the world.

FINANCIAL PERFORMANCE

April - June 2022

The Group´s EBITDA amounted to -270 thousand (3) and operating result (EBIT) to EUR -515 thousand (-275).  Net Sales that decreased operating result. Operating expenses were almost on the same level as in the previous year.

The result for the period was EUR -629 thousand (-231). Earnings per share were EUR -0.039 (-0.019).

January - June 2022

The Group´s EBITDA amounted to EUR -471 thousand (569) and an operating result (EBIT) amounted to EUR -988 thousand (11). Net Sales that decreased operating result. Operating expenses were almost on the same level as the in previous year (+5%).

The Group´s fixed costs were EUR 4,465 thousand (4,397) in the reporting period. Credit losses, included in fixed costs, were EUR 37 thousand (24).

The result before taxes was EUR -1,009 thousand (-78) and result for the period was EUR -1,009 thousand (-61). Earnings per share were EUR -0.082 (-0.005).

FINANCE AND INVESTMENTS

Cash flow from operating activities in January-June decreased to EUR 623 thousand (1,211). mainly due to decreased financial results. Cash and cash equivalents at the end of the reporting period were EUR 1,918 thousand (878). The net effect of the share issue organized in the second quarter on cash and cash equivalents was 2.9 million euros.

Net financial expenses were EUR 21 thousand (88). The expenses of the comparison period include a one-time guarantee payment related to the finished project, which the company paid in January 2021.

Investments in January - June totaled EUR 783 thousand (379). Investments were mainly related to product development expenditure.

The Company’s financial position is good. Cash and cash equivalents at the end of the reporting period were EUR 1,918 thousand (878), and in addition, the Group has access to EUR 1.0 million in other short-term financial instruments. At the end of the period, the Group had a short-term bank loan of EUR 1,500 thousand and no long-term interest-bearing bank loans. The gearing ratio was -13.5% (-1). At the end of the reporting period, the equity ratio was 40.5 (40).

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 first half of the year, product development expenses were EUR 1,431 thousand (956). Product development expenses worth EUR 674 thousand (358) were capitalized. The amortization of capitalized product development expenses was EUR 326 thousand (346). The amortization period for capitalized product development expenses is four years.

PERSONNEL

At the end of the reporting period, the Group employed a total of 81 persons (79). The average number of personnel during the period was 78 (75).

The average age of employees was 44 (43.7) years. Women account for 24% (25) of employees, and men for 76% (75). Of all personnel, 18% (18) work in sales and marketing, 44% (42) in consulting and customer care, 31% (31) in product development, and 7% (9) in administration.

The company announced three new executive management team appointments during Q2. Eric Allart was appointed QPR’s CRO to be responsible for global direct sales from June 1, 2022. Johanna Lähde was appointed as the company's Head of People and Culture on August 1, 2022, and her responsibility is the development of the company's operating culture and personnel. Mervi Kerkelä-Hiltunen has been appointed as the new Chief Financial Officer (CFO) of QPR Software and a member of the executive management team as of August 4, 2022. Strengthening the executive management team with new positions, to which strong professionals in their own areas of expertise have been appointed, supports the implementation of QPR's new growth strategy.

For incentive purposes, the Company has a bonus program that covers all employees. Short-term remuneration of the top management consists of salary, fringe benefits, and a possible annual bonus, mainly based on the net sales performance of the Group and business units. Furthermore, the Company has a key employee stock option plan in use.

SHARES AND SHAREHOLDER

Trading of shares	Jan-June, 2022	Jan-June, 2021	Change, %	Jan-Dec, 2021
Shares traded, pcs	1,287,534	1,298,011	-1	3,323,915
Volume, EUR	1,677,990	2,776,234	-40	6,255,379
% of shares	8.0	10.8		27.7
Average trading price, EUR	1.30	2.14	-39	1.88
Shares and market capitalization	June 30, 2022	June 30, 2021	Change, %	Dec 31, 2021
Total number of shares, pcs	16,455,321	12,444,863	-	12,444,863
Treasury shares, pcs	413,487	457,009	-	457,009
Book counter value, EUR	0.11	0.11	-	0.11
Outstanding shares, pcs	16,041,834	11,987,854	-	11,987,854
Number of shareholders	1,653	1,408	17	1,509
Closing price, EUR	0.86	2.06	-58	1.85
Market capitalization, EUR	13,795,977	24,694,979	-44	22,177,530
Book counter value of all treasury shares, EUR	45,484	50,271	-	50,271
Total purchase value of all treasury shares, EUR	405,726	439,307	-	439,307
Treasury shares, % of all shares	2.5	3.7	-	3.7

On April 6, 2022, the Annual General Meeting authorized the company's Board of Directors to decide on the share issue. On April 22, 2022, the company announced in a separate release that it had begun preparations for the rights issue during the second quarter to enable the necessary growth investments to be made.

On May 19, 2022, with the authorization granted by the Annual General Meeting on 6 April 2022, the Board of Directors of the Company decided on a rights offering and published the terms and conditions of the offering where the Company issued up to 4,010,458 new shares in the Company.

On June 13, 2022, the Company announced the preliminary result of its oversubscribed rights offering, and on June 15, 2022, The final result of its oversubscribed rights offering and amendments to the terms and conditions of the stock options 2019 as a result of the offering.

On June 17, 2022, the Company announced, that new shares issued in the rights offering have been registered with the trade register.

All the related stock exchange releases can be found in the Investors section of the Company's website: https://www.qpr.com/investors/stock-exchange-and-press-releases

GOVERNANCE

In March 2022, the Board of Directors gave notice to the shareholders of QPR Software Plc that the Annual General Meeting will be held on Wednesday, April 6, 2022. The Board of Directors of the Company resolved on extraordinary measures pursuant to the temporary legislation approved by the Finnish Parliament. In order to prevent the spread of the Covid-19 pandemic, the Annual General Meeting was held without shareholders’ presence at the Meeting venue. Participation and exercise of shareholder rights in the Meeting was possible only by way of proxy representation, by submitting counterproposals, and by asking questions in advance.

The Annual General Meeting approved the Board's proposal that no dividend be paid for the financial year 2021. The Annual General Meeting made an advisory decision on the Remuneration Report and decided to approve the presented Remuneration Report. The Annual General Meeting resolved that the number of Board Members is four (4) and elected Pertti Ervi, Matti Heikkonen, Antti Koskela, and Jukka Tapaninen members of the Company ́s Board of Directors. The term of office of the members of the Board of Directors expires at the end of the next Annual General Meeting. At its organizing meeting, the Board of Directors elected Pertti Ervi as its Chairman.

The Annual General Meeting elected Authorized Public Accountants KPMG Oy Ab as QPR Software ́s auditor with Miika Karkulahti, Authorized Public Accountant, acting as principal auditor. The term of office of the auditor expires at the end of the next Annual General Meeting. The Annual General Meeting decided to authorize the Board of Directors to decide on the conveyance of the own shares held by the Company (share issue) either on one or on several occasions. The share issue can be carried out as a share issue against payment or without consideration on terms to be determined by the Board of Directors.

All authorizations of the Board and other decisions made by the previous Annual General Meeting are available in their entirety in the stock exchange release published by the Company on April 6, 2022.

The release can be found in the Investors section of the Company's website.

EVENTS AFTER THE REVIEW PERIOD

No significant events after the review period.

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 ensures the continuity of its business. QPR 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 security), and risks related to financing (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 58% of the Group’s trade receivables were in euro at the end of the quarter (58%). At the end of the quarter, the Company had not hedged its non-euro trade receivables.

Risks and risk management practices related to the Company’s business are further described in the Annual Report 2021, pages 23-24.

FINANCIAL INFORMATION

In 2022 QPR Software Plc will publish its financial information, in Finnish and English, as follows:

Interim Report January – September: Friday, October 21, 2022

QPR SOFTWARE PLC

BOARD OF DIRECTORS

For further information:

Jussi Vasama
Chief Executive Officer
QPR Software Plc
Tel. +358 50 380 9893

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.

Dare to improve.

www.qpr.com

DISTRIBUTION

Nasdaq Helsinki

Key medias

www.qpr.com

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
EUR in thousands, unless otherwise indicated	April-June, 2022	April-June, 2021	Change, %	Jan-June, 2022	Jan-June, 2021	Change, %	Jan-Dec, 2021
Net sales	2,012	2,138	-6	4,213	5,042	-16	9,140
Other operating income
Materials and services	407	297	37	735	634	16	1,106
Employee benefit expenses	1,740	1,692	3	3,551	3,464	3	6,824
Other operating expenses	135	146	-8	397	375	6	968
EBITDA	-270	3	10,164	-471	569	-183	241
Depreciation and amortization	245	278	-12	517	558	-7	1,489
Operating result	-515	-275	-87	-988	11	9,494	-1,248
Financial income and expenses	-11	-8	-38	-21	-88	-76	-108
Result before tax	-526	-283	-86	-1,009	-78	-1,201	-1,356
Income taxes	-103	52	-298	0	17	-100	0
Result for the period	-629	-231	-172	-1,009	-61	-1,556	-1,356
Earnings per share, EUR (basic and diluted)	-0.039	-0.019	103	-0.082	-0.005	-1,138	-0.113
Consolidated statement of comprehensive income:
Result for the period	-629	-231	172	-1009	-61	-1,556	-1,356
Other items in comprehensive income that may be reclassified subsequently to profit or loss:
Exchange differences on  translating foreign operations	0	0		1	1		-3
Total comprehensive income	-629	-231	172	-1,008	-60	-1582	-1,359

CONDENSED CONSOLIDATED BALANCE SHEET
EUR in thousands	June 30, 2022	June 30, 2021	Change, %	Dec 31, 2021
Assets
Non-current assets:
Intangible assets	2,067	2,033	2	1 ,711
Goodwill	358	513	-30	358
Tangible assets	168	153	10	172
Right-of-use assets	62	122	-49	148
Other non-current assets	281	306	-8	277
Total non-current assets	2,936	3,126	-6	2,666
Current assets:
Trade and other receivables	2,205	1,950	13	2,694
Cash and cash equivalents	1,918	878	118	441
Total current assets	4,123	2,828	50	3,135
Total assets	7,059	5,954	19	5,800
Equity and liabilities
Equity:
Share capital	1,359	1,359	0	1,359
Other funds	21	21	0	21
Treasury shares	-406	-439	-8	-439
Translation differences	-66	-68	-2	-68
Invested non-restricted equity fund	2,938	5	54840	5
Retained earnings	-1,456	1,099	-233	-448
Equity attributable to shareholders of the parent company	2,390	1,977	21	430
Current liabilities:
Interest-bearing liabilities	1,500	700		1,600
Interest-bearing lease liabilities	96	155	-38	82
Advances received	1,163	1,003	16	627
Accrued expenses and prepaid income	1,298	1,648	-21	2,293
Trade and other payables	613	472	30	768
Total current liabilities	4,669	3,977	17	5,370
Total liabilities	4,669	3,977	17	5,370
Total equity and liabilities	7,059	5,954	19	5,800

CONSOLIDATED CONDENSED CASH FLOW STATEMENT Thousand euros	4-6/2022	4-6/2021	Change %	1-6/2022	1-6/2021	Change %	1-12/2021
Cash flow from operating activities:
Result for the period	-629	-231	172	-1,009	-61	-1,554	-1,356
Adjustments to the result	246	391	-37	517	593	-13	1,518
Working capital changes	-269	217	-224	-109	896	-112	713
Interest and other financial  expenses paid	-12	-88	86	-21	-230	91	-164
Interest and other financial  income received	0	0	0	0	2	100	3
Income taxes paid	0	17	-100	0	11	100	-22
Net cash from operating activities	-664	305	-318	-623	1,211	-151	692
Cash flow from investing activities:
Purchases of tangible and  intangible assets	-391	-222	76	-734	-379	94	-942
Net cash used in investing activities	-391	-222	76	-734	-379	94	-942
Cash flow from financing activities:
Proceeds from short term  borrowings	0	0		0	700	-100	1500
Repayments of short term  borrowings	0	0	0	0	-700	-100	-991
Payment of lease liabilities	57	-49	16	-135	-138		0
Sales of own shares	34		0	34	0		0
Share issue net	2,933	0	0	2,933	0		0
Net cash used in financing activities	2,909	-49	-6026	2,831	-138	-2145	509
Net change in cash and cash equivalents	1,854	34	-5,354	1,474	694	113	258
Cash and cash equivalents at the beginning of the period	61	857	-93	441	185	138	185
Effects of exchange rate changes on cash and cash equivalents	2	-13	-118	3	-1		-2
Cash and cash equivalents at the end of the period	1,918	878	118	1,918	878	118	441

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR in thousands	Share capital	Other funds	Translation differences	Treasury shares	Invested non- restricted equity fund	Retained earnings	Total
Equity Jan 1, 2021	1 359	21	-69	-439	5	1,126	2,004
Stock option scheme						33	33
Comprehensive income			1			-61	-59
Equity June 30, 2021	1 359	21	-68	-439	5	1,098	1,978
Stock option scheme						26	26
Comprehensive income						-1,572	-1,572
Equity Dec 31, 2021	1 359	21	-68	-439	5	-448	430
Stock option scheme						2	2
Disposal of own shares				34			34
Share issue ,net					2,933		2,933
Comprehensive income			1			-1,009	-1,008
Equity June 30, 2022	1 359	21	-67	-406	2,938	-1,455	2,390

NOTES TO INTERIM FINANCIAL STATEMENTS

ACCOUNTING PRINCIPLES

This report complies with requirements of IAS 34 ”Interim Financial Reporting”. Starting from the beginning of 2022, the Group has applied certain new or revised IFRS standards and IFRIC interpretations, as described in the Consolidated Financial Statements 2021. The implementation of these new and revised requirements has not impacted the reported figures. For all other parts, the accounting principles and methods are the same as they were in the 2021 financial statements.

When preparing the consolidated financial statements, management is required to make estimates and assumptions regarding the future and to consider the appropriate application of accounting principles, which means that actual results may differ from those estimated.

All amounts presented in this report are consolidated figures, unless otherwise noted. The amounts presented in the report are rounded, so the sum of individual figures may differ from the sum reported. This report is unaudited.

INTANGIBLE AND TANGIBLE ASSETS
EUR in thousands	Jan-June, 2022	Jan-June, 2021	Jan-Dec, 2021
Increase in intangible assets:
Acquisition cost Jan 1	12,846	11,987	11,987
Increase	685	358	859
Increase in tangible assets:
Acquisition cost Jan 1	2,705	2,869	2,622
Increase	49	21	83
CHANGE IN INTEREST-BEARING LIABILITIES
EUR in thousands	Jan-June, 2022	Jan-June, 2021	Jan-Dec, 2021
Interest-bearing liabilities Jan 1	1,682	947	947
Proceeds from short term borrowings	0	700	1,500
Repayments	86	792	765
Interest-bearing liabilities June 30/Dec 31	1,596	855	1,682

PLEDGES AND COMMITMENTS
EUR in thousands	Jan-June, 2022	Jan-Juner, 2021	Dec 31, 2021	Change, %
Business mortgages (held by the Company)	2,384	2,387	2,386	0
Minimum lease payments based on lease agreements:
Maturing in less than one year	20	7	23	-13
Maturing in 1-5 years	15	3	23	-35
Total	35	12	46	-24
Total pledges and commitments	2,419	2,398	2,432	-1

CONSOLIDATED INCOME STATEMENT BY QUARTER
EUR in thousands	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Net sales	2,012	2,201	2,054	2,043	2,138	2,904
Other operating income	0	0	0	0	0	0
Materials and services	407	328	224	248	297	337
Employee benefit expenses	1,740	1,811	1,925	1,434	1,692	1,772
Other operating expenses	135	263	335	259	146	228
EBITDA	-270	-201	-430	103	3	566
Depreciation and amortization	245	271	620	311	278	280
Operating result	-515	-472	-1,050	-208	-275	286
Financial income and expenses	-11	-10	-15	-5	-8	-80
Result before tax	-526	-483	-1,065	-213	-283	206
Income taxes	-103	103	-66	49	52	-35
Result for the period	-629	-380	-1,131	-165	-231	170

GROUP KEY FIGURES
EUR in thousands, unless otherwise indicated	Jan-June or June 30, 2022	Jan-June or June30, 2021	Jan-Dec or Dec 31, 2021
Net sales	4,213	5,042	9,140
Net sales growth, %	-16.4	4.4	1.9
EBITDA	-471	569	241
% of net sales	-11.2	11.3	2.6
Operating result	-988	11	-1,248
% of net sales	-23.4	0.2	-13.7
Result before tax	-1,009	-78	-1,356
% of net sales	-23.9	-1.5	-14.8
Result for the period	-1,009	-61	-1,356
% of net sales	-23.9	-1.2	-14.8
Return on equity (per annum), %	-286.2	-6.1	-111.4
Return on investment (per annum), %	-89.88	0.7	-49.3
Cash and cash equivalents	1,918	878	441
Net borrowings	-322	-23	1,682
Equity	2,390	1,977	430
Gearing, %	-13.5	-1.2	288.5
Equity ratio, %	40.5	39.9	8.3
Total balance sheet	7,059	5,954	5,800
Investments in non-current assets	783	425	942
% of net sales	18.6	8.4	10.3
Product development expenses	1,431	956	2,115
% of net sales	34.0	19.0	23.1
Average number of personnel	78	82	80
Personnel at the beginning of period	80	88	88
Personnel at the end of period	81	82	80
Earnings per share, EUR (basic and diluted)	-0.082	-0.019	-0.113
Equity per share, EUR	0.149	0.159	0.035