QPR SOFTWARE PLC STOCK EXCHANGE RELEASE 14 February 2007 AT 9.45 AM FINANCIAL STATEMENTS BULLETIN 1 JANUARY ? 31 DECEMBER 2006 QPR SOFTWARE PLC?S NET SALES REACHED MEUR 6.9 AND INCREASED BY 8.4%, OPERATING PROFIT 7.5% OF NET SALES, EARNINGS PER SHARE EUR 0.06, DIVIDEND PROPOSAL EUR 0.04 PER SHARE FOURTH QUARTER NET SALES WERE MEUR 1.8 QPR Software Group?s net sales for year 2006 reached MEUR 6.901 (6.364) and grew 8.4%. Operating profit was MEUR 0.517 (0.849). Net sales from international operations increased by 28.5% in the financial year compared to the previous year and were MEUR 4.613 (3.589). Operating profit was 7.5% (13.3%) of the net sales. Earnings per share were EUR 0.06 (0.06). Group net sales were MEUR 1.787 (1.805) during the fourth quarter of year 2006. Operating profit was 43 thousand euros (461). The Group delivered software licenses to 58 different countries in the year 2006. In total of 72 distributors delivered the Group?s software products worldwide. International operations represented 66.8% (56.4%) of the total net sales in the financial year. The Group?s largest export markets in the financial year were South Africa, Britain, Russia, Sweden and Japan. GROUP KEY FIGURES EUR 1000) 10-12/ 10-12/ Change 1-12/ 1-12/ Change 2006 2005 % 2005 2005 % Net Sales 1 787 1 805 -1.0 6 901 6 364 8.4 Operating profit 43 461 -90.6 517 849 -39.1 % of net sales 2.4 25.5 7.5 13.3 Profit before tax 58 494 -88.2 577 905 -36.2 Profit for the period 314 368 -14.7 702 690 1.8 % of net sales 17.6 20.4 10.2 10.8 Earnings per share,EUR 0.06 0.06 1.0 EPS (diluted), EUR 0.06 0.06 0.6 Equity per share, EUR 0.21 0.17 22.6 Cash flow from operating activities 976 1 800 -45.8 Cash and cash equivalents 1 884 1 582 19.1 Net liabilities -1 408 -771 82.6 Gearing, % -54.4 -36.9 Equity ratio, % 59.0 52.4 Return on equity, % 30.0 38.9 Return on investment, % 19.2 32.0 OUTLOOK FOR YEAR 2007 QPR Software Group aims to continue its sales growth especially in the international markets. The Group?s delivery and service capabilities are strengthened cost- efficiently in cooperation with key business partners in the most important export markets. In support of this, QPR has opened local offices in South Africa and the United States. QPR Software Group?s net sales and operating profit in year 2007 are estimated to increase from the previous year. The nature of the software license business of the QPR Group is seasonal. Seasonality of large software deals can affect significantly net sales and profit of one individual quarter. REPORTING This financial statements bulletin complies with accounting- and valuation principles of IFRS. This financial statements bulletin is not audited. FOURTH QUARTER HIGHLIGHTS QPR Software Group?s net sales were MEUR 1.787 (1.805). Domestic software license sales developed weaker than expected in the fourth quarter, whereas the Group?s international operations continued its growth in sales of both software licenses and maintenance services. In November, QPR Software published its cooperation with a Swedish software vendor, QlikTech AB, and released a new software product, QPR FactView, based on QlikTech?s technology. The technology has approximately 200 000 users worldwide. QPR FactView is a business analytics application, which is easy to deploy and adapts to customer?s existing information systems. During the fourth quarter, the international business accumulated net sales of MEUR 1.289 and represented 72.1% of Group net sales. The geographical break-down of the net sales was as follows, EUR 000: 10-12/ Share- 10-12/ Share Change 2006 % 2005 % % Domestic 498 27.9 707 39.2 -29.5 International 1 289 72.1 1 097 60.8 17.5 total 1 787 100.0 1 805 100.0 -1.0 Group net sales are accrued solely from software business, with the following break-down during the fourth quarter, EUR 000: 10-12/2006 10-12/2005 Change-% Software licenses 739 997 -25.9 Maintenance services 668 564 18.4 Professional services 381 244 56.2 Total 1 787 1 805 -1.0 The share of software license sales and maintenance services was to 79% (86%) of net sales. During the period October through December, QPR delivered software to a total of 40 countries. The largest software sales were recorded in South Africa, Finland, Belgium and Portugal. Operating profit was MEUR 0.043 (0.461), representing 2.4% (25.5%) of net sales. Net profit for the fourth quarter was MEUR 0.314 (0.368) and includes an effect of the increase of deferred tax assets in the parent company?s books of MEUR 0.260 (0). FINANCIAL STATEMENTS JANUARY 1 - DECEMBER 31, 2006 NET SALES AND FINANCIAL PERFORMANCE 1-12/2006 Group net sales for the financial year 2006 increased 8.4% totaling to MEUR 6.901 (6.364). In 2006, international operations represented 66.8% (56.4%) of the Group net sales and were MEUR 4.613 (3.589), and grew 28.5%. Correspondingly, international operations represented 82.1% (71.1%) of the total software license sales and were MEUR 2.672 (2.236), and grew 19.5%. In the financial year, 18 new reseller agreements were signed. Investments aimed at further growth of the international business were increased in the financial year, and in September, the Group opened a local office in San Francisco to support the growth in the United States. Group net sales are accrued solely from software business, with the following break-down in the financial year, EUR 000: 1-12/2006 1-12/2005 Change-% Software licenses 3 256 3 148 3.4 Maintenance services 2 509 2 126 18.0 Professional services 1 136 1 090 4.2 Total 6 901 6 364 8.4 The geographical break-down of the net sales was as follows, EUR 000: 1-12/2006 Share-% 1-12/2005 Share-% Change-% Domestic 2 288 33.2 2 775 43.6 -17.5 International 4 613 66.8 3 589 56.4 28.5 Total 6 901 100.0 6 364 100.0 8.4 Operating profit was MEUR 0.517 (0.849), corresponding to 7.5% (13.3%) of the net sales. Operating profit includes other operating income in total of MEUR 0.110 for the first quarter, due to a received resolution of waiving a product development loan, granted to the Company. In addition, this resolution reduced finance expenses. Net profit for the financial year increased by 1.8% compared to the previous year, and was MEUR 0.702 (0.690), representing 10.2% (10.8%) of net sales. Net profit for the financial year includes an effect of the increase of deferred tax assets in the parent company?s books of MEUR 0.260 (0). Earnings per share (diluted) were EUR 0.06 (0.06). Retained losses, for which no entry has been made in the parent company?s books as deferred tax assets, neither in the closure of financial year 2006 nor earlier, are approximately MEUR 2.0, corresponding to approximately MEUR 0.5 deferred tax assets. FINANCE AND INVESTMENTS The value of the total assets was MEUR 5.913 (5.430) at the end of the financial year. The Group?s investments in fixed assets during the financial year totaled to MEUR 0.361 (0.229). Cash flows from operating activities were positive during the financial year and were MEUR 0.976 (1.800). Cash and cash equivalents at the end of the financial year were MEUR 1.884 (1.582). The Group?s interest-bearing liabilities decreased by MEUR 0.334 during the financial year and were MEUR 0.476 (0.811). Gearing, a ratio of net liabilities and equity, was -54.4% (-36.9%). Return on investment was 19.2% (32.0%). Short-term liabilities contain deferred revenue in total of MEUR 1.532 (1.440). At the end of the financial year, quick ratio was 3.31 (3.42). At the end of the financial year, the Group?s equity was MEUR 2.586 (2.091), and the Group?s equity ratio reached 59.0% (52.4%). Return on equity was 30.0% (38.9%). PERSONNEL At the end of the financial year, the Group employed a total of 59 people (56). For incentive and commitment purposes, the Group has personnel bonus scheme covering the whole personnel and personnel stock option plan. PRODUCT DEVELOPMENT The amount of R&D expenses in the financial year totaled to MEUR 1.245 (1.324), representing 18.0% (20.8%) of net sales. During the financial year, R&D expenses have been activated as assets for a total amount of 147 thousand euros (0). The depreciation period of capitalized R&D expenses is 4 years. Product development employed 12 (12) people at the end of the financial year, and corresponded to 20% of the total personnel at the end of the financial year. The core know- how of product development remains centralized in the own organization. Long-term co-operation was continued with established subcontractors. In 2006, R&D was focused on the development work of QPR 7 product family and further on the completion of the new version QPR 7.5 released in October 2006. In the development of the new version, a particular attention was paid on ease of use and scalability in implementations for thousands of users. In addition, the new version QPR 7.5 delivers improvements in other areas, such as, risk management of business processes and reporting. In November 2006, QPR published its cooperation with a Swedish software vendor, QlikTech AB, and released a new software product, QPR FactView, based on QlikTech?s technology. QPR FactView is a fast-to-deploy application for the business analytics and reporting needs of an organization. QPR 7 suite is an interactive, easy-to-use, ready-to-run software solution that combines strategic performance management (QPR ScoreCard), business process management (QPR ProcessGuide) and business analytics (QPR FactView) into one complete collaborative management solution (QPR Collaborative Management Suite). With the help of QPR software solutions, organizations improve their business processes and bring clarity to organizations? objectives, support their people's commitment hereto and improve their ability to change. The software products developed by QPR are fast to implement and adapt to the changes in the customer?s business environment and the management methodologies deployed. QPR software applications are scalable from a single-user to an organization-wide management system, and integrate seamlessly to the customer?s other information systems. QPR 7 product family has been localized into 22 languages. BUSINESS AND FINANCIAL RISKS The general principles of risk management are approved by the Board of Directors. In addition, the Board of Directors monitors the adequacy, appropriateness and effectiveness of the Group?s risk management. Risk management relating to company's business operations is supported by continuous development of its operating processes and control points, in particular the sales process and sales control systems. Standard contract templates are used to further reduce business risks and also credit risks in case of default of its obligations by other parties. QPR Software operates in several dozens of countries and on a relatively narrow software product segment. A risk exposure of large international software vendors increasing their investments and focus on QPR?s software product segment exists, which might have an impact of further tightening the competitive landscape. The company operates in several market areas and sales are accumulated from many customers, which limit the market- specific risk. A part of the nature of international business is a reasonable credit risk concerning individual business partners, the risks of which the Company seeks to limit by continuous monitoring of receivables and credit limits. The majority of the Company's invoicing and purchasing is conducted in Euros. The current internal assessment and classification of currency risks is such that the Company does not have derivative contracts for protection against currency risks. The motivation and competences of the key people in the company, covering company?s core business processes and different levels of the organisation, are vitally crucial to the success of the company. Failure to recruit and retain key people could have a negative impact on the business and profitability of the company. The company has, in accordance with the company?s own judgments, insurances to reasonably cover personnel injuries and damages to fixed assets, as well as, legal protection, business liabilities and management?s liabilities for property damages. DECISIONS MADE BY THE ANNUAL SHAREHOLDERS? MEETING AND GOVERNANCE The Annual Shareholders? Meeting held on March 15, 2006 made the following resolutions: The Annual Shareholders? Meeting adopted QPR Software Plc?s financial statements and the consolidated statements and granted the members of the Board of Directors and the Managing Director discharge from liability for the financial year, ended December 31, 2005. The Annual Shareholders? Meeting resolved that a dividend of EUR 0.02 per share be paid for the fiscal year ended on 31 December 2005. The dividend was paid to shareholders who on the record date, 20 March 2006, were entered in the Company?s Shareholders? Register, which is kept by Finnish Central Securities Depository Ltd. The dividend was paid on 27 March 2006. The Annual Shareholders? Meeting resolved, by revoking the previous unused authorizations to increase the share capital, to approve the proposal of the Board of Directors on authorization of Board of Directors to decide on the increase of share capital. The maximum amount of authorization is EUR 266,944, equivalent of 2,426,764 shares, and is in effect until March 15, 2007. The Annual Shareholders? Meeting resolved that the Board of Directors consists of five ordinary members. The Annual Shareholders? Meeting elected the following members to the Board of Directors: Vesa-Pekka Leskinen, Asko Piekkola, Teemu Malmi, Jane Moilanen and Topi Piela as a new member. In its meeting following the Annual Shareholders? Meeting, the Board of Directors elected Vesa-Pekka Leskinen as Chairman of the Board. In the financial year 2006, QPR's Board of Directors had 22 board meetings. The average attendance at the meetings was 95 percent. The Annual Shareholders? Meeting elected KPMG Oy Ab, Authorized Public Accountants, as QPR Software Plc?s auditor and Authorized Public Accountant Sixten Nyman as the principle auditor. At the end of the financial year, the Executive Managment Team of QPR Software Plc comprises of Matti Kanninen, CEO (chairman); Jari Jaakkola, SVP Business Operations; Teemu Lehto, VP Strategic Accounts and Markets; Petri Leino, VP Business Operations Finland; Ritva Lindqvist, CFO; and Tony Virtanen, VP Products, Research and Care. CORPORATE GOVERNANCE QPR Software Plc complies with the Helsinki Exchanges' Guidelines for Insiders entered into force on 1 January 2006 and the Recommendation on Corporate Governance entered into force on 1 July 2004. The Company's Corporate Governance Statement is available in the Investor sector of the Company's website, http://www.qpr.com/investors. Also, available in the investor pages is further information, such as, administration of insiders register, public insiders register, list of major shareholders, articles of association, charter of the Board, description of how internal control and internal audit is organized, introductions of the members of the Board and Executive Management Team, and the information published by the company to the Helsinki Stock Exchanges in the financial year 2006. COMPANY SHARES AND TRADING IN COMPANY SHARES 1-12/2006 The Company?s share capital at the end of the financial year was EUR 1,345,934.04 divided into 12,235,764 shares, the book-counter value being EUR 0.11. The Company?s share capital was increased twice during the financial year as follows: Number of Share capital shares euro Share capital 1 January 2006 12 133 856 1 334 724.16 Share subscriptions based on stock options: on 11th May 2006 53 167 5 848.37 on 11th December 2006 48 741 5 361.51 Share capital 31 December 2006 12 235 764 1 345 934.04 In total of 101,908 new shares were subscribed based on QPR Software Plc?s stock option programs 2003/II and 2003/III. The corresponding increase in total of EUR 11,209.88 in the Company?s share capital was entered in the Finnish trade register on May 11, 2006 and on December 11, 2006. By the end of the financial year, 31 December 2006, the Company had also issued hitherto unconverted stock options that entitle to subscribe in total of 322,099 shares, which corresponds to 2.6% of the total number of shares in the Company. When counting all shares potentially to be subscribed based on the issued and hitherto unconverted stock options together with the current total number of shares, the total number of shares in the company would be 12,557,863. QPR Software Plc's shares are quoted in the Helsinki Stock Exchanges with the trading code QPR1V. The Company has one share class and each share is attached with one vote in the meetings of shareholders and with an equal right to a dividend. The book-counter value of the Company?s shares is EUR 0.11. Shares belong to the book- entry system managed by the Finnish Central Securities Depository Ltd. In the financial year, trading in company shares amounted to MEUR 2.584, i.e. an average of EUR 10,295 per trading day. Trading in shares totaled 2,965,205 shares, giving an average of 11,814 shares per trading day. Turnover in shares corresponds to 24.2% of the total shares and the average price was EUR 0.87 per share (EUR 0.57 in year 2005). The average share price in year 2006 was 52.6% higher compared to year 2005. At the end of the financial year, the total market value of the company shares was MEUR 11.746 (MEUR 7.159 in year 2005). The last transaction in the year 2006 with the QPR Software Plc?s shares in the Helsinki Stock Exchanges was closed at the price of EUR 0.96 per share (EUR 0.59 in the end of year 2005). STOCK OPTION PROGRAMS During the financial year, the Company had three prevailing stock option programs. Each stock option issued under these stock option programs entitle to subscribe one new share in the Company. At the end of the financial year, based on stock option program 2003/II, in total of 40,000 hitherto unconverted stock options have been issued, and there are no more stock options of the stock option program 2003/II in the possession of QPR Software Plc or any of its subsidiaries. At the end of the financial year, based on stock option program 2003/III, in total of 232,500 hitherto unconverted stock options have been issued, and in total of 121,290 stock options are in the possession of the Company?s subsidiary. At the end of the financial year, based on stock option program 2005/I, in total of 49,599 hitherto unconverted stock options have been issued, and in total of 150,401 stock options are in the possession of the Company?s subsidiary. At the end of the financial year, in total of 322,099 hitherto unconverted stock options have been issued, and in addition, in total of 271,691 stock options were in the possession of the Company?s subsidiary, to be given to present and future employees and management. BOARD AUTHORIZATIONS On the basis of the authorization given at the annual general meeting of 15 March 2006 the Board of Directors could further issue securities, which would increase the number of company shares in circulation at maximum by 2,426,764 shares. This authorization is in force until 15 March 2007. There are no Company?s own shares in the possession of the Company, and the Board of Directors do not have an authorization in force to purchase or transfer Company?s own shares. SHAREHOLDERS At the end of the financial year the Company had a total of 670 shareholders. The company has in total of four nominee- registered, holding in total of 72,444 company shares. At the end of the financial year, based on the various stock option programs, the inner circle (including holdings of more than 1.0%) and their immediate circles held issued stock option rights that entitle the holders to subscribe company shares as follows (each stock option issued under these stock option programs entitle to subscribe one new share): Shareholder Option rights Shares (% of all pcs Shares) Jari Jaakkola 10 000 307 000 2.51 Matti Kanninen 32 099 167 008 1.36 Teemu Lehto 30 000 153 654 1.26 627 662 5.13 SHARES HELD BY THE BOARD AND THE CEO The members of QPR Software Plc Board of Directors and the CEO together with their immediate circles held on 31 December 2006 in total of 2,253,090 QPR Software Plc?s shares, corresponding to 18.4 percent of the company?s shares and votes. The said amounts of shares include own holdings as well as the holdings of spouses, persons under guardianship, and controlled companies. The Board members and the CEO (together with their immediate circles) held on 31 December 2006 in total of 32,099 stock option rights issued in year 2005. These stock option rights entitle to subscribe 32,099 shares at maximum, which on 31 December 2006 would have corresponded to 0.3 percent of the Company?s share capital and votes after the subscriptions based on the said stock option rights. OTHER EVENTS DURING THE FINANCIAL YEAR QPR Software Plc renewed the areas of responsibilities of the company's management starting June 12th, 2006. The objective of the change is to clarify the areas of responsibilities of company's operational management, development, and administration. Domestic sales, international sales, and consulting business were combined, starting 1 October 2006, into the Business Operations group, which is responsible for marketing, sales, and delivery. QPR Software Plc's Executive Management Team comprises of Matti Kanninen, CEO (the chairman); Jari Jaakkola, SVP Business Operations; Teemu Lehto, VP Strategic Accounts and Markets; Petri Leino, VP Business Operations Finland; Ritva Lindqvist, CFO; and Tony Virtanen, VP Products, Research & Care. The company moved its headquarters to new office premises on 24 November 2006, address: Huopalahdentie 24, 00350 Helsinki, Finland. As an affect by the new three-year office lease, company?s lease liabilities increased to approximately 600 thousand euros. EVENTS AFTER THE FINANCIAL YEAR The company released a profit warning on January 10th, 2007, as the company had previously forecasted its group net sales for year 2006 to grow significantly faster than 10 per cent and group operating profit to increase from the previous year. In the stock exchange bulletin released January 10th, 2007, the company estimated that its group net sales showed approximately 7 per cent growth in year 2006, and that operating profit for year 2006 was approximately 7 per cent of group net sales, based on the company?s preliminary estimate. The estimated net sales and operating profit were lower than the company had previously forecasted, mainly due to weaker than expected license sales in Finland in the fourth quarter 2006. The company estimated that its international business developed according to the company?s previous forecast. FUTURE OUTLOOK QPR Software Group aims to continue its sales growth especially in the international markets. The Group?s delivery and service capabilities are strengthened cost- efficiently in cooperation with the key business partners in the most important export markets. In support of this, QPR has opened local offices in South Africa and the United States. QPR Software Group?s net sales and operating profit in year 2007 are estimated to increase from the previous year. The nature of the software license business of the QPR Group is seasonal. Seasonality of large software deals can affect significantly net sales and profit of one individual quarter. The Company aims at strengthening its product offering portfolio by establishment of business alliances with selected software product vendors, and by investments into its internal product development. The Company?s product development will continue to focus on developing ready-to- run software products for business performance management and business process management. Product versions will be released to offer added value through expansion to new solution areas, and by introducing further versatility of product functionality. In addition, the Company further intends to follow the developments in the re-structuring of software industry, and aims to actively participate in it. ANNUAL GENERAL MEETING, BOARD?S PROPOSALS The Board of Directors has decided to assemble the Annual General Meeting of Shareholders, to be held on Wednesday March 14th, 2007, starting at 9.00 a.m. at the company?s headquarters, address: Huopalahdentie 24, 00350 Helsinki, Finland. The Board of Directors decided in its meeting on 14 February 2007 to propose to the Shareholders? Meeting that from the financial year 2006, a dividend of EUR 0.04 per share be paid, a total of EUR 489,430.56 In the end of financial year 2006, the Group?s distributable funds are 1,023 thousand euros. The parent company?s distributable funds are 1,039,594 euros, of which the profit for the financial year is 585,390 euros. In addition, the Board proposes that the Shareholders? Meeting resolves to authorize the Board to decide on a share issue ? including the conveyance of the own shares held by the company ? and issue of special rights. In the share issue and/or based on the special rights, a maximum of 4,000,000 shares may be issued and a maximum of 250,000 own shares held by the company may be conveyed. Furthermore, the Board proposes that the Shareholders? Meeting resolves to authorize the Board to decide on an acquisition of a maximum of 250,000 own shares. The Board also proposes that the Shareholders? Meeting resolves to amend certain provisions of Articles of Association of the company due to new Companies Act which entered into force on 1 September 2006. The Board?s proposals in their entirety are available on the Notice for the Annual General Meeting of Shareholders, which shall be published as a stock exchange bulletin on 14 February 2007. In Helsinki, Finland, February 14th, 2007 Board of Directors of QPR Software Plc Vesa-Pekka Leskinen, Chairman of the Board Teemu Malmi Jane Moilanen Asko Piekkola Topi Piela Matti Kanninen, CEO This financial statements bulletin is not audited. FINANCIAL INFORMATION IN THE YEAR 2007 Financial Statements of the financial year 2006 shall be available on the Company?s internet pages on 16 February 2007. Interim reports shall be published as follows: - Interim Report 1-3/2007 Wednesday, April 25, 2007 - Interim Report 1-6/2007 Wednesday, July 25, 2007 - Interim Report 1-9/2007 Thursday, October 25, 2007 The Annual General Meeting of Shareholders shall be held on 14 March 2007. Notice for the Annual General Meeting of Shareholders shall be published as a stock exchange bulletin on 14 February 2007. For more information, please contact: QPR SOFTWARE PLC Matti Kanninen CEO tel. + 3... matti.kanninen@qpr.com http://www.qpr.com Enclosed: QPR GROUP?S FINANCIAL STATEMENTS INFORMATION GROUP?S INCOME STATEMENT 1.1.-31.12.2006 GROUP?S BALANCE SHEET 31.12.2006 GROUP?S CASH FLOW STATEMENT 1.1.-31.12.2006 GROUP?S STATEMENT OF CHANGES IN SHAREHOLDERS?EQUITY 1.1.- 31.12.2006 GROUP?S INCOME STATEMENT PER QUARTER GROUP?S COMMITMENTS AND CONTINGGENT LIABILITIES GROUP?S KEY FIGURES 2002-2006 SHAREHOLDERS 31.12.2006 MAJOR SHAREHOLDERS 31.12.2006 GROUP?S INCOME STATEMENT 1.1.-31.12.2006 (EUR 1000) 10-12 10-12 1-12 1-12 2006 2005 2006 2005 Net sales 1 787 1 805 6 901 6 364 Other operating income 107 148 268 181 Material and services 217 88 736 315 Employee benefits expenses 1 140 841 3 846 3 198 Depreciation 58 43 206 199 Other operating expenses 436 521 1 864 1 983 OPERATING PROFIT 43 461 517 849 Finance income and 15 33 60 56 expenses PROFIT BEFORE TAX 58 494 577 905 Income tax expense 256 -126 125 -216 PROFIT FOR THE PERIOD 314 368 702 690 Sharing of profit: To the parent company?s shareholders 314 368 702 690 Earnings per share (diluted), EUR 0.06 0.06 Earnings per share, EUR 0.06 0.06 Income taxes presented in the above income statement have been calculated based on the profit for the review period. GROUP?S BALANCE SHEET 31.12.2006 (EUR 1000) 31.12.2006 31.12.2005 NON-CURRENT ASSETS Tangible assets 307 244 Other intangible assets 213 120 Trade and other receivables 75 264 Deferred tax assets 330 190 NON-CURRENT ASSETS 925 818 CURRENT ASSETS Trade and other receivables 3 104 3 030 Cash and cash equivalents 1 884 1 582 CURRENT ASSETS 4 988 4 612 TOTAL ASSETS 5 913 5 430 EQUITY AND LIABILITIES (EUR 1000) EQUITY Share capital 1 346 1 335 Share premium 195 181 Reserve fund 21 21 Translation differences -49 -48 Retained earnings 1 072 602 TO THE PARENT COMPANY'S SHAREHOLDERS 2 586 2 091 TOTAL EQUITY 2 586 2 091 NON-CURRENT LIABILITIES Interest-bearing liabilities 285 550 NON-CURRENT LIABILITIES 285 550 CURRENT LIABILITIES Trade and other payables 2 850 2 528 Interest-bearing liabilities 191 260 CURRENT LIABILITIES 3 041 2 788 LIABILITIES 3 327 3 339 TOTAL EQUITY AND LIABILITIES 5 913 5 430 GROUP?S CASH FLOW STATEMENT 1.1.-31.12.2006 (EUR 1000) 1.1.-31.12. 1.1.-31.12. 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the period 702 690 Adjustment for the profit Deprecation 206 199 Non-cash transactions -354 373 Changes in working capital: Changes in trade and other receivables 55 -222 Changes in trade payables and 323 747 other liabilities Interest expense and other 5 -41 financial expenses Interest income and other 55 97 financial income Income taxes paid -16 -43 Net cash from operating activities 976 1 800 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of tangible assets -173 -195 Purchases of intangible assets -188 -34 Net cash used in investing -361 -229 activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of share capital 25 18 Repayments of financial leases 0 -33 Repayments of long term borrowings -95 -741 Dividends paid -243 0 Net cash used in financing activities -313 -756 Net change in cash and cash equivalents 302 815 Cash and cash equivalents at the 1 582 767 beginning of period Cash and cash equivalents at the 1 884 1 582 end of period GROUP STATEMENT OF CHANGES IN SHAREHOLDERS?EQUITY 1.1.- 31.12.2006 Share Share Share Trans- Retained holders issued premium lation earnings Total (EUR 1000) equity differ. EQUITY 1.1.2006 1 335 0 203 -48 602 2 091 Shares issued 11 11 Share premium 14 14 Employees options 10 10 Dividends paid -243 -243 Translation differences -1 -1 Profit for the period 702 702 CHANGE IN SHAREHOLDERS' 11 0 14 -1 470 494 EQUITY 1-12 EQUITY 31.12.2006 1 346 0 217 -49 1 072 2 586 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS?EQUITY 1.1.-31.12.2005 Share- Share Share Trans- Retained (EUR 1000) holders' issued premium lation earnings Total equity differ. EQUITY 1.1.2005 1 327 0 194 51 -112 1 459 Shares issued 8 8 Share premium 10 10 Employees options 24 24 Reserve fund -1 -1 Translation differences -99 -99 Profit for the period 690 690 CHANGE IN SHAREHOLDERS' 8 0 9 -99 714 633 EQUITY 1-12 EQUITY 31.12.2005 1 335 0 203 -48 602 2 091 GROUP?S COMMITMENTS AND CONTINGGENT LIABILITIES (EUR 1000) 31.12.2006 31.12.2005 Commitments and contingent liabilites Guarantees 0 0 Lease liabilities 636 37 Total 636 37 Current lease liabilities Lease liabilities maturing during one year 15 20 Lease liabilities maturing 2-5 years 18 24 Total 33 44 Total commitments and contingent 669 81 liabilities GROUP?S INCOME STATEMENT PER QUARTER 1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 7-9/ 10-12/ 10-12/ (EUR 1000) 2006 2005 2006 2005 2006 2005 2006 2005 Net sales 1 671 1 588 2 081 1 652 1 362 1 319 1 787 1 805 Other operating income 159 14 2 3 0 16 107 149 Material and services 120 69 273 64 126 94 217 88 Employee benefits expenses 948 745 960 855 799 758 1 140 841 Depreciation 48 53 49 52 50 50 58 43 Other operating exp. 482 545 572 486 374 431 436 521 Operating profit 232 189 228 198 13 2 43 461 Financial 25 16 8 -1 12 7 15 33 income/expenses Profit before tax 257 205 236 197 26 9 58 494 Income tax -71 -48 -53 -41 -7 -1 256 -126 Profit for the period 186 158 184 156 18 8 314 368 GROUP?S KEY FIGURES 2002-2006 Key figures illustrating the financial development of the Group EUR (000) 2006 2005 2004 2003 2002 Net sales 6 901 6 364 5 394 5 166 8 728 Growth of net sales % 8.4 18.0 4.4 -40.8 -29.7 Operating profit 517 849 805 800 -3 390 % of net sales 7.5 13.3 14.9 15.5 -38.8 Profit or loss before tax 577 905 694 727 -5 775 % of net sales 8.4 14.2 12.9 14.1 -66.2 Net Profit 702 690 470 709 -5 795 % of net sales 10.2 10.8 8.7 13.7 -66.4 Return on equity,% 30.0 38.9 44.3 138.3 -290.9 Return on investments,% 19.2 32.0 28.7 35.4 -89.2 Interest bearing liabilities 476 811 1 553 1 406 1 851 Cash and cash equivalents 1 884 1 582 767 410 270 Net liabilities -1 408 -771 786 993 1 586 Equity 2 586 2 091 1 459 1 259 -43 Gearing,% -54.4 -36.9 53.9 78.8 -3687.3 Equity ratio, % 59.0 52.4 36.7 20.7 -12.3 Total balance sheet 5 913 5 430 4 792 4 430 5 433 Investment in non-current 361 229 24 98 973 assets % of net sales 5.2 3.6 0.4 1.9 11.1 Research and development 1 245 1 324 1 095 1 085 2 434 expenses % of net sales 18.0 20.8 20.3 21.0 27.9 Personnel average for period 58 48 39 54 113 Personnel at the beginning of 56 40 41 98 100 period Personnel at the end of period 59 56 40 41 98 Earnings per share, e 0.06 0.06 0.04 0.02 -0.56 Earnings per share /diluted),e 0.06 0.06 Equity per share, e 0.21 0.17 0.12 0.07 -0.05 Number of shares 31.12.,1000 12236 12134 12063 11426 10376 Weighted average 12171 12080 11816 10414 10328 Diluted 12386 12243 12000 11556 SHAREHOLDERS 31.12.2006 Distribution of holdings by categories in size, December 31, 2006 Number of Number of Number of shares shareholders % Shares and % votes 1 - 500 238 35.5 % 50 946 0.4 % 501 - 1,000 126 18.8 % 110 392 0.9 % 1,001 - 5,000 173 25.8 % 461 909 3.8 % 5,001 - 10,000 46 6.9 % 364 100 3.0 % 10,001 - 50,000 57 8.5 % 1 332 099 10.9 % 50,001 - 100,000 7 1.0 % 455 094 3.7 % 100,001 -1,600,000 23 3.4 % 9 461 224 77.3 % Total 670 100.0 % 12 235 764 100.0 % Distribution of holdings by sector, December 31, 2006 Sectors Number of Number of shares shareholders % and votes % Private companies 46 6.9 % 1 395 664 11.4 % Financial and 2 0.3 % 200 0.0 % insurance institutions Household 581 86.7 % 8 645 397 70.7 % Foreigners 37 5.5 % 2 122 059 17.3 % 666 99.4 % 12 163 320 99.4 % Nominee-registered 4 72 444 0.6 % Total 670 12 235 764 100.0 % MAJOR SHAREHOLDERS 31.12.2006 %-share Number of Shares and shares votes Ulkomarkkinat Oy 1 600 000 13.08 % Vesa-Pekka Leskinen 851 400 6.96 % Kauppamainos Oy 707 700 5.78 % Total 1 559 100 12.74 % Alesco S.A 1 300 000 10.62 % Jouko Pelkonen 345 000 2.82 % Pohjolan Rahoitus Oy 402 000 3.29 % Electrosale Oy 284 000 2.32 % Total 1 031 000 8.43 % Kari Junkkonen 515 916 4.22 % Fortel Invest Oy 425 326 3.48 % Fides New Media, investment fund 376 000 3.07 % Procurator-Holding Oy 337 000 2.75 % P?ivi Marttila 293 072 2.40 % Edina Oy 33 900 0.28 % Total 326 972 2.67 % Asko Piekkola 316 438 2.59 % Jaakkola Jari 250 000 2.04 % Value FM Oy 57 000 0.47 % Total 307 000 2.51 % P??kk?nen Esa 246 054 2.01 % other shareholders 3 894 958 31.83 % Total 12 235 764 100.00 %