M-Brain Oy Financial Statement 31.12.201431.03.2015 13:00:00 CET
M-Brain Oy, Financial Statement 31.3.2015 02:00 pm
M-Brain Oy Financial Statements from Year 2014
January - December 2014:
July - December 2014:
EXECUTIVE CHAIRMAN KIM NYBERG'S COMMENTS
M-Brain is a global information, technology and consulting services company. We help our clients to navigate the turbulent and ever expanding business environment. We offer crucial external business information, and advise in its efficient management and utilisation. We turn information into actionable insights for daily decision-making and strategic planning. We call it Informed Leadership.
M-Brain's industry is undergoing a drastic renewal phase driven by the rapid increase in especially social media related information and the overall globalization. As the globalization of companies continues its growth, the provider of information solutions has to be able to respond to the challenges brought about by these two developments. In future, success oriented companies operating in M-Brain's field of business will have to be able to act fast and provide their clients with such relevant information for their business operations that can be converted into knowledge and thereby growth.
The revenue of the group increased from last year due to the acquisition of GIA. However, the increase of the revenue was smaller than the company had targeted. The pressures on M-Brain's revenue have mainly been due to the challenging economic situation in Finland and the impact of the media revolution on the traditional media monitoring services. Approximately 60% of the decline in revenue in Finland is due to the gradual decrease in the traditional clipping business. Approximately 40 % percent of the decline is due to a decrease in the average purchases within certain client groups in the transfer from the purchase of services to the use of tools.
The 15 million bond issued by the company was listed to the First North Bond Market Finland market place. As a part of the company's financial arrangements the company successfully executed a share issue in which 2,622 new shares were subscribed. The company stated that it would use the funds from the bond for new acquisitions. With the received funds the company acquired the whole share capital of Global Intelligence Alliance Group Oy (GIA) by a share purchase in September 4, 2014. The latter part of the year was marked by the tight actions aiming to merge the companies and the reorganization of the entity.
REVENUE AND RESULT DEVELOPMENT
The revenue of M-Brain Group in 2014 was EUR 23,518 thousand. The operating profit of the company was EUR -26 thousand.
The integration of made acquisitions and the improvement of operational efficiency were continued during the financial period. These operations helped to achieve significant cost savings by removing overlapping actions and improving the production. The improving impact of these operations will though not appear until the year 2015 while their non-recurring cost effects decreased the operating profit of 2014 compared to the previous year. The profitability in 2014 was negatively impacted by decreased revenue development in the Finnish markets. The main reason for the decrease in revenue was the decline in the traditional business caused by the media revolution in Finland as well as the decrease in the average purchase price paid by the client due to the general economic situation in the domestic market. The sales of the new technology products that the company had launched did not fully cover the lost revenue caused by the decline in the traditional clipping business in the review period. The total revenue was increased due to the acquisition of GIA Group. GIA Group figures are consolidated into M-Brain Group starting from September.
M-Brain's EBITDA was EUR 922.5 thousand (January 1 - December 31, 2013: 2,669.3) i.e. 3.9% of the net sales (13.5%). The decline in EBITDA is mainly due to the challenging situation on the home market, the decrease in the demand of the print media based business operations as well as non-recurring items in connection to the acquisition, efficiency enhancement measures and obtaining financing. The depreciations for the financial period were EUR 948.8 thousand and operating profit EUR -26.3 thousand (January 1 - December 31, 2013: depreciations 732.2 and operating profit 1,937.1).
FINANCING AND INVESTMENTS
On June 25, 2014, M-Brain listed a bond on First North Bond Market Finland market place. The 15 million unsecured bond is subject to a fixed interest rate of 8 percent and its due date is June 17, 2017. The company stated that it would use the funds for new acquisitions.
M-Brain has, with a purchase agreement signed 4 September 2014, acquired the whole share capital of Global Intelligence Alliance Group Oy (GIA). The sellers are funds managed by CapMan, as well as GIA's management and other individual shareholders.
M-Brain's investments, EUR 1,137 thousand, are mainly related to the internal product development. The intangible assets resulting from the internal development activities will be recognized in the balance sheet once the expenses of the development phase can be calculated reliably, once the completion of the product can be implemented technically, once the Group can use or sell the product, once the Group can prove how the product will generate likely future financial benefit, and once the Group has both the intention and the resources to complete the development work and to sell the product. After initial recognition, capitalized development costs are measured at cost less accumulated depreciation/amortization and impairment losses. Depreciation/amortization is recognized from the date the asset is ready for use.
PERSONNEL, MANAGEMENT AND ADMINISTRATION
The average number of personnel in the Group during the review period was 345 full-time employees (in year 2013 the Group had 302 employees, and in year 2012 306 employees).
Kim Nyberg (Chairman of the Board), Marjukka Nyberg, Petri Laine, Pirjo Ståhle, Robert Ingman and Tage Lindberg were members of the Board of Directors of the mother company during the whole financial year. In addition, Matti Rusanen has been a member of the Board starting from June 30, 2014. Tuomo Räsänen was Managing Director of the parent company until June 30, 2014 and since that Kimmo Valtonen.
M-Brain Oy's auditor is Deloitte & Touche Oy, principal auditor Authorized Public Accountant Hannu Mattila. The Group's Finnish subsidiaries have the same auditor.
GENERAL MEETINGS
The Annual General Meeting of the Company was held on June 17, 2014. The Annual General Meeting decided on the adoption of the financial statements and the discharge of liability to the members of the Board of Directors and the CEO. The Annual General Meeting decided that the result for the fiscal year January 1 - December 31, 2013 be recorded in the profit and loss account and that no dividends be distributed. The Annual General Meeting decided that no change be made to the fees of the members of the Board of Directors. The fee of the Board members is EUR 1,200 per month.
DIVIDEND PROPOSAL BY THE BOARD OF DIRECTORS
Profit for the period of the mother company of the Group, M-Brain Oy was 1,406,992.42 euros and distributable funds 13,371,562.28 euros. The Board of Directors proposes to the Annual General Meeting that the distributable funds are uses as follows: dividends are not distributed and the profit for the period is booked to the retained earnings.
SHARES
On December 31, 2013, the company had 20,971 registered shares. On June 3, 2014, the shareholders of M-Brain Oy unanimously decided to authorize the Board of Directors to make a decision on a directed share issue of a maximum of 2,622 new shares. The new shares were registered by the end of the review period. On December 31, 2014, the Company had a total of nine shareholders. On July 1, 2014, the Company acquired 100 of its own shares.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
The process to merge Global Intelligence Alliance Group Oy into its sister company M-Brain Insight Oy has been started.
Sirpa Ojala was elected as a Managing Director of M-Brain Oy on March 16, 2015.
MAJOR RISKS AND UNCERTAINTIES
Technological development in the Company's field of business is extremely fast. In accordance with its strategy, the Company has made significant investments in its own product development to improve its competitiveness compared to its competitors.
The core operations of the Group are insured against accidental damages and interruptions.
Accounts receivables is significant balance sheet item. Credit risk related to accounts receivables is managed by consistent credit policy and efficient credit management. Credit risk is also reduced by the large number of clients and by the fact that the receivables are allocated to several businesses.
The Group's loan financing involves special terms agreed with the lender to which the Company is committed.
OUTLOOK FOR THE YEAR 2015
The revenue for year 2015 is estimated to be approximately EUR 33 - 37 million and EBITDA approximately EUR 4 - 7 million.
The Company's business involves various risks and uncertainties, and the statements in this release, other than statements of historical facts, are forward looking statements. These statements are based on the management's best judgment and belief in light of the information currently available to it. As such statements involve risks and uncertainties, the actual results may differ materially from those we expect at the moment.
FINANCIAL INFORMATION FOR YEAR 2015
Financial statements for the period January 1, 2015 - June 30, 2015 will be published on August 17, 2015.
FINANCIAL INFORMATION
The financial statements of M-Brain Group have been prepared in accordance with IFRS recognition and measurement principles. More information about the principles of the preparation of the Group financial statements can be found in the attachment to the financial statements. The financial statements and the figures for the financial period have been audited. Other information presented in this report is unaudited.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
| 000 euros | 1.7.-31.12.2014 | 1.7.-31.12.2013 | 1.1.-31.12.2014 | 1.1.-31.12.2013 | |
| Revenue | 14 015,9 | 9 856,1 | 23 518,1 | 19 784,6 | |
| Other operating income | 28,1 | 35,5 | 76,1 | 80,6 | |
| Materials and external services | -1 703,6 | -868,2 | -2 614,7 | -1 640,5 | |
| Personnel expenses | -8 774,2 | -5 647,3 | -14 710,0 | -11 715,6 | |
| Depreciation | -569,1 | -353,9 | -948,8 | -732,2 | |
| Other operating expenses | -3 539,2 | -1 984,6 | -5 347,0 | -3 839,7 | |
| Operating profit | -542,0 | 1 037,6 | -26,3 | 1 937,1 | |
| Finance income | 284,7 | -20,4 | 302,1 | 74,7 | |
| Finance costs | -898,6 | -193,6 | -1 055,3 | -339,5 | |
| Finance costs (net) | -613,9 | -214,0 | -753,2 | -264,8 | |
| Profit (loss) before income tax | -1 155,9 | 823,6 | -779,5 | 1 672,3 | |
| Income tax expense | 86,7 | -248,5 | 10,8 | -458,9 | |
| PROFIT (LOSS) FOR THE PERIOD | -1 069,2 | 575,1 | -768,7 | 1 213,4 | |
| Other comprehensive income, net of income tax | |||||
| Items that may be reclassified subsequently to profit or loss: | |||||
| Currency translation differences | 23,6 | 15,1 | 69,4 | -3,3 | |
| Other comprehensive income for the period, net of tax | 23,6 | 15,1 | 69,4 | -3,3 | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | -1 045,6 | 590,2 | -699,3 | 1 210,1 | |
| Profit attributable to: | |||||
| Owners of the company | -1 069,2 | 575,1 | -768,7 | 1 213,4 | |
| Total comprehensive income attributable to: | |||||
| Owners of the company | -1 045,6 | 590,2 | -699,3 | 1 210,1 |
| 000 euros | 31.12.2014 | 31.12.2013 | |
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 21 976,5 | 9 845,3 | |
| Development costs | 1 339,1 | 975,3 | |
| Other intangible assets | 3 530,0 | 852,6 | |
| Tangible assets | 719,9 | 547,6 | |
| Available-for-sale financial assets | 26,9 | 24,5 | |
| Deferred tax asset | 181,5 | 29,2 | |
| Total non-current assets | 27 773,9 | 12 274,6 | |
| Current assets | |||
| Trade and other receivables | 5 948,6 | 2 658,5 | |
| Other shares | 6,5 | 2,4 | |
| Cash and cash equivalents | 1 601,0 | 1 573,1 | |
| Total current assets | 7 556,0 | 4 234,1 | |
| TOTAL ASSETS | 35 329,8 | 16 508,7 | |
| EQUITY AND LIABILITIES | |||
| Equity attributable to owners of the company | |||
| Share capital | 215,5 | 215,5 | |
| Share premium | 247,2 | 247,2 | |
| Reserve for invested non-restricted equity | 12 292,2 | 7 495,4 | |
| Retained earnings | -895,4 | -290,6 | |
| Total equity | 11 859,5 | 7 667,5 | |
| Non-current liabilities | |||
| Borrowings | 15 072,1 | 2 145,4 | |
| Deferred tax liability | 684,1 | 144,4 | |
| Other liabilities | 189,2 | 127,3 | |
| Total non-current liabilities | 15 945,4 | 2 417,1 | |
| Current liabilities | |||
| Borrowings | 211,8 | 1 570,7 | |
| Advance payments | 1 572,2 | 1 741,9 | |
| Trade payables | 913,5 | 444,2 | |
| Other current liabilities | 1 128,8 | 907,3 | |
| Accrued liabilities | 3 698,6 | 1 760,1 | |
| Total current liabilities | 7 524,9 | 6 424,1 | |
| Total liabilities | 23 470,3 | 8 841,2 | |
| TOTAL EQUITY AND LIABILITIES | 35 329,8 | 16 508,7 |
| 1.7.- 31.12.2014 | 1.7.- 31.12.2013 | 1.1.- 31.12.2014 | 1.1.- 31.12.2013 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Profit (loss) for the period | -1 069,2 | 575,1 | -768,7 | 1 213,4 | |||||||
| Adjustments for: | |||||||||||
| Depreciation according to plan (+) | 569,1 | 353,9 | 948,8 | 732,2 | |||||||
| Other adjustments (income - / expenses +) | 344,6 | 249,9 | 237,1 | 448,8 | |||||||
| Financial income and expenses | 613,9 | 214,0 | 753,2 | 264,8 | |||||||
| 458,4 | 1 392,9 | 1 170,4 | 2 659,2 | ||||||||
| Changes in working capital: | |||||||||||
| Non-current operative receivables | 0,0 | 70,4 | 0,0 | 45,9 | |||||||
| Current operative receivables | -136,4 | -192,6 | 208,8 | -65,2 | |||||||
| Current operative payables | 618,5 | -778,5 | 344,1 | -413,4 | |||||||
| 482,1 | -900,7 | 552,9 | -432,7 | ||||||||
| Interests paid (-) | -934,8 | -192,8 | -1 087,6 | -334,8 | |||||||
| Interests received (+) | 284,7 | -24,0 | 289,8 | 52,9 | |||||||
| Income taxes paid | -391,4 | -92,0 | -452,2 | -263,1 | |||||||
| -1 041,5 | -308,8 | -1 250,0 | -545,1 | ||||||||
| NET CASH GENERATED BY OPERATING ACTIVITIES | -101,0 | 183,5 | 473,3 | 1 681,4 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Investments on tangible and intangible assets | -789,3 | -228,9 | -1 137,0 | -531,2 | |||||||
| Net cash outflow on acquisition of subsidiaries (-) | -15 691,0 | -4,5 | -15 691,0 | -4,5 | |||||||
| NET CASH GENERATED BY INVESTING ACTIVITIES | -16 480,3 | -233,4 | -16 828,0 | -535,7 | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from share issue (+) | 0,0 | 0,0 | 4 913,7 | 0,0 | |||||||
| Purchase of own shares (-) | -116,9 | 0,0 | -116,9 | 0,0 | |||||||
| Repayments of short-term debt (-) | 0,0 | 0,0 | -1 346,4 | 0,0 | |||||||
| Repayments of long-term debt (-) | 0,0 | -1 029,5 | -1 805,5 | -1 628,8 | |||||||
| Withdrawals of long-term debt (+) | 0,0 | 0,0 | 14 737,5 | 0,0 | |||||||
| NET CASH USED IN CASH AND CASH EQUIVALENTS | -116,9 | -1 029,5 | 16 382,4 | -1 628,8 | |||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | -16 698,2 | -1 079,5 | 27,8 | -483,1 | |||||||
| Cash and cash equivalents at the beginning of the period | 18 299,1 | 2 652,6 | 1 573,1 | 2 056,2 | |||||||
| Cash and cash equivalents at the end of the period | 1 601,0 | 1 573,1 | 1 601,0 | 1 573,1 | |||||||
| STATEMENT OF CHANGES IN EQUITY | ||||||
| Note | Share capital | Share premium | Reserve for invested non- restricted equity | Retained earnings | Total | |
| Balance at July 1, 2013 | 215,5 | 247,2 | 7 495,4 | -888,7 | 7 069,4 | |
| Comprehensive income | ||||||
| Profit for the period | 575,1 | 575,1 | ||||
| Other comprehensive income, net of income tax | ||||||
| Currency translation differences | 15,1 | 15,1 | ||||
| Total comprehensive income for the year | 590,2 | 590,2 | ||||
| Share-based payments | 7,9 | 7,9 | ||||
| Total transactions with owners, recognised directly in equity | 7,9 | 7,9 | ||||
| Balance at December 31, 2013 | 215,5 | 247,2 | 7 495,4 | -290,6 | 7 667,5 | |
| Balance at July 1, 2014 | 215,5 | 247,2 | 12 409,1 | 125,1 | 12 996,9 | |
| Comprehensive income | ||||||
| Profit for the period | -1 069,2 | -1 069,2 | ||||
| Other comprehensive income, net of income tax | ||||||
| Currency translation differences | 23,6 | 23,6 | ||||
| Total comprehensive income for the year | -1 045,6 | -1 045,6 | ||||
| Share-based payments | 25,0 | 25,0 | ||||
| Share issue | 0,0 | 0,0 | ||||
| Acquisition by the company of its own shares | -118,7 | -118,7 | ||||
| Financial costs related to the share issue | 1,8 | 1,8 | ||||
| Total transactions with owners, recognised directly in equity | -116,9 | 25,0 | -91,9 | |||
| Balance at December 31, 2014 | 215,5 | 247,2 | 12 292,2 | -895,4 | 11 859,5 | |
| STATEMENT OF CHANGES IN EQUITY | ||||||
| Share capital | Share premium | Reserve for invested non-restricted equity | Retained earnings | Total | ||
| Balance at January 1, 2013 (IFRS) | 215,5 | 247,2 | 7 495,4 | -1 534,6 | 6 423,5 | |
| Comprehensive income | ||||||
| Profit for the period | 1 213,4 | 1 213,4 | ||||
| Other comprehensive income, net of income tax | ||||||
| Currency translation differences | -3,3 | -3,3 | ||||
| Total comprehensive income for the year | 1 210,1 | 1 210,1 | ||||
| Share-based payments | 33,9 | 33,9 | ||||
| Total transactions with owners, recognised directly in equity | 33,9 | 33,9 | ||||
| Balance at December 31, 2013 | 215,5 | 247,2 | 7 495,4 | -290,6 | 7 667,5 | |
| Balance at January 1, 2014 (IFRS) | 215,5 | 247,2 | 7 495,4 | -290,6 | 7 667,5 | |
| Comprehensive income | ||||||
| Profit for the period | -768,7 | -768,7 | ||||
| Other comprehensive income, net of income tax | ||||||
| Currency translation differences | 69,4 | 69,4 | ||||
| Total comprehensive income for the year | -699,3 | -699,3 | ||||
| Share-based payments | 94,5 | 94,5 | ||||
| Share issue | 5 001,2 | 5 001,2 | ||||
| Acquisition by the company of its own shares | -118,7 | -118,7 | ||||
| Financial costs related to the share issue | -85,7 | -85,7 | ||||
| Total transactions with owners, recognised directly in equity | 4 796,8 | 94,5 | 4 891,3 | |||
| Balance at December 31, 2014 | 215,5 | 247,2 | 12 292,2 | -895,4 | 11 859,5 | |
FINANCIAL STATEMENT AND AUDITOR'S REPORT
The complete financial statement of the Group and the mother company are attached to this announcement.
Helsinki 31 March 2015
M-BRAIN OY
Further Information
Kim Nyberg, Executive Chairman - Email: kim.nyberg@m-brain.com, Telephone number: +358-400-430538
Sirpa Ojala, CEO - Email: sirpa.ojala@m-brain.com, Telephone number: +358-40-5663466
Janne Kärkkäinen, CFO - Email: janne.karkkainen@m-brain.com, Telephone number: +358-40-5294603
Certified Adviser Evli Bank Plc / Petteri Nurminen: Telephone number +358-40-5095665