QPR SOFTWARE PLC STOCK EXCHANGE RELEASE 15 February 2006 AT 3.00 PM FINANCIAL STATEMENTS BULLETIN 1 JANUARY ? 31 DECEMBER 2005 QPR SOFTWARE PLC?S NET SALES MEUR 6.4, OPERATING PROFIT 13.3% OF NET SALES, EARNINGS PER SHARE EUR 0.06, DIVIDEND PROPOSAL EUR 0.02 PER SHARE FOURTH QUARTER NET SALES REACHED MEUR 1.8, OPERATING PROFIT 25.5% OF NET SALES QPR Software Group?s net sales increased by 15.3% in the fourth quarter of 2005 and reached MEUR 1.805. Net sales for the financial year 2005 were MEUR 6.364 and increased by 18.0%. Earnings per share increased by 43.9% and was EUR 0.06. The share of international operations of the Group's net sales for the financial year was 56.4%. The Board of Directors will propose to the Shareholders? Meeting a payment of dividend of EUR 0.02 from the financial year 2005 GROUP KEY FIGURES EUR thousand 10-12/ 10-12/ Change 1-12/ 1-12/ Change 2005 2004 % 2005 2004 % Net sales 1 805 1 565 15.3 6 364 5 394 18.0 Operating profit 461 371 24.0 849 805 5.5 % of net sales 25.5 23.7 13.3 14.9 Profit before tax 494 371 33.2 905 694 30.4 Profit for the period 368 231 59.2 690 470 46.8 % of net sales 20.4 14.8 10.8 8.7 Earnings per share, EUR 0.06 0.04 43.6 Earnings per share,(diluted) EUR 0.06 0.04 43.9 Equity per share, EUR 0.17 0.12 42.5 Cash flows from operating activities 1 800 811 121.9 Cash and cash equivalents 1 582 767 106.4 at the end of the period Net liabilities -771 786 Gearing, % -36.9 53.8 Equity ratio, % 52.4 36.7 Return on equity,% 38.9 44.3 Return on investment, % 32.0 28.7 QPR Software Plc adopted the International Financial Reporting Standards (IFRS) as of January 1, 2005. The compararive figures for 2004 are also in line with IFRS. FUTURE OUTLOOK FOR YEAR 2006 According to industry research institutes? public forecasts, the global annual sales growth for enterprise applications, and especially for business performance management and business process management applications, shall in average reach approximately 10% annually in years 2006-2009. The growth of QPR Software Group?s net sales in year 2006 is estimated to be significantly faster than the global growth of enterprise applications and especially business performance management and business process management applications. The Group?s operating profit is estimated to increase from the previous year. FOURTH QUARTER KEY FIGURES The fourth quarter in the Group?s sales has almost without exception been, as is characteristic in the software industry, the peak of the year. The Group?s net sales increased 15.3% and was MEUR 1.805 (1.565). Operating profit was MEUR 0.461 (0.371) and was 25.5% of the net sales (23.7%). The operating profit of the fourth quarter includes other operating income in total of MEUR 0.126 due to a received resolution of waiving a product development loan, granted to the Company, in addition to which, the finance expences for the period decrease in total of MEUR 0.014 due to the same reason. Profit for the fourth quarter increased 59.2% compared to the corresponding quarter of the previous year, and totaled MEUR 0.368 (0.231), and was 20.4% of net sales (14.8%). In the global markets, the Company?s international operations developed especially positively in South Africa. In addition, a significant opening was made in the Russian market. Out of the fourth quarter net sales, a total of MEUR 1.097 was accrued from the international operations. The share of international operations of the Group's net sales for the fourth quarter was 60.8%. Favourable business operations in Finland were supported by the continuing demand for deliveries of larger complete management solutions and the supporting projects and professional services. The Group?s net sales were derived in its entirety from the software business, divided as follows during the fourth quarter, MEUR: 10-12/ 2005 10-12/ 2004 Change-% Software licenses 997 796 25.3 Maintenance services 564 537 5.1 Professional services 244 232 5.1 Total 1 805 1 565 15.3 FINANCIAL STATEMENTS JANUARY 1 - DECEMBER 31, 2005 NET SALES AND FINANCIAL PERFORMANCE 1-12/2005 The net sales of the Group for the financial year 2005 increased 18.0% totaling to MEUR 6.364 (the comparable net sales for the financial year 2004 were MEUR 5.394). The Group?s net sales were accrued in its entirety from the software business, divided as follows during the financial year, MEUR: 1-12/ 2005 1-12/ 2004 Change-% Software licenses 3 148 2 882 9.2 Maintenance services 2 126 1 803 17.9 Professional services 1 090 710 53.7 Total 6 364 5 394 18.0 The positive development of the software business in the financial year 2005 was based on the increase of sales of both domestic direct sales and domestic professional services sales. During the financial year, 70% (78%) of the license sales, in total of MEUR 2.207, accumulated via the global distribution channel. 1-12/ 1-12/ 2005 Share-% 2004 Share-% Change-% Domestic 2 775 43.6 1 894 35.1 46.5 International 3 589 56.4 3 500 64.9 2.5 Net sales total 6 364 100.0 5 394 100.0 18.0 The operating profit for the financial year was MEUR 0.849 (0.805) and was 13.3% of the net sales (14.9%). The Group?s profit for the financial year increased by 46.8% compared to the previous year and was MEUR 0.690 (0.470). Profit for the financial year was 10.8% of the net sales (8.7%). Earnings per share was EUR 0.06. INVESTMENTS The Group's investments in fixed assets during the financial year were MEUR 0.229 (0.024). FINANCING AND BALANCE SHEET Total assets of the balance sheet were MEUR 5.430 (4.792). Cash flows from operating activities were positive during the financial year and totaled MEUR 1.800 (0.811). The Group?s cash and cash equivalents at the end of the period were MEUR 1.582 (0.767). The Group?s interest-bearing liabilities decreased by MEUR 0.742 during the financial year and were MEUR 0.811 at the end of the period. Short-term liabilities include deferred revenue in total of MEUR 1.440 (0.817). Quick ratio key figure at the end of the financial year was 3.42 (3.01). At the end of the financial year, the Group?s equity was MEUR 2.091 (1.459), and the Group?s equity ratio reached 52.4% (36.7%) correspondingly. PERSONNEL At the end of the financial year, the Group employed a total of 56 people (40). For incentive and commitment purposes, the Group has personnel bonus scheme covering the whole personnel and personnel stock option plan. BUSINESS OPERATIONS International Operations and Distribution Channel During the financial year, in total of 62 (58) international resellers delivered QPR?s software in 48 (46) countries. QPR?s software has been translated into more than 20 different languages. During the financial year, in total of 22 new reseller agreements were signed. The international operations developed positively especially in the Continental Europe and South African markets. The industry segment of banking, finance and insurance showed the most significant growth, with such distinguished customers as F?reningsSparbanken in Sweden, Commerzbank in Switzerland, Banco Ita? in Brazil, Dubai Islamic Bank and Commercial Bank of Dubai in the United Arab Emirates, The National Company of Co-operative Insurance (NCCI) in Saudi Arabia, the Central Bank of Indonesia, Vero Insurance in New Zealand, and Stanbic Africa in South Africa. In the year 2005 the group invested in international sales and international distribution channel. The personnel in the international sales increased by 5 totaling to 13 at the end of the year. The international distribution network was expanded targeting to sales increase. The main part of these investments were made towards the end of the financial year. Domestic Operations Business operations in Finland developed remarkably positively supported by the strong growth in projects and professional services. An increasing share of the deliveries were focused on delivering larger comprehensive solutions, supported by service and project agreements. Deliveries were largely based on the QPR?s ndustry specific solutions.Telecommunications, Local Government, Manufacturing, Construction, Wholesale and Logistics as well as Food continued to be the strong industry segments with such distinguished customers as Nokia, Rautaruukki, Finnet Association, City of Kerava, City of Vaasa, City of Lohja, Metso, Skanska, Tradeka and Valio. PRODUCT DEVELOPMENT The Group's R&D costs for the financial year totaled MEUR 1.324 (1.095), that is, 20.8% (20.3%) of net sales, and increased 20.9% compared to the previous year. No overhead costs have been included in the R&D costs. In the financial year 2005 and also in the comparison year 2004, the whole of Group?s R&D costs have been entered in the income statement as annual expenses, because the R&D costs have not been, at the time of the origin, adequately reliably proved to fulfill the criteria for capitalization of R&D costs. Product development operations were strengthened during the financial year by both recruiting new employees and by expanding the subcontracted operations. Product development employed 12 (9) people at the end of the financial year, and corresponded to 21.4% of the personnel at the end of the financial year. Whilst adding product development resources, the core know-how of product development remains centralized in the own organization, while long-term co-operation with subcontractors. The new product version of the QPR 7 suite, QPR 7.4, was released in June 2005. The localized 21 language versions of QPR 7.4 were released in September 2005. The development of version QPR 7.4 focused especially on the versatility and completeness of the analysis and visualization of business performance and business process information continues. QPR 7.4 suite is an interactive management software solution that combines strategic performance management (QPR ScoreCard) and business process management (QPR ProcessGuide) into one complete collaborative management solution (QPR Collaborative Management). With the help of QPR?s software solutions, organizations support their people's commitment to organization?s objectives and processes. The software products developed by QPR are largely adaptable to the particular management methods of the customer, are adaptable also by the customers themselves, and integrate seamlessly to the customer?s other information systems. 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. The management of the risks 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 limits 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. Notwithstanding, the Company has reasonably significant US dollar receivables from both its subsidiary and a long-term business partner. The current internal assessment and classification of currency risks is such that the Company does not have derivative contracts for protection against currency risks. RESOLUTIONS MADE BY THE ANNUAL SHAREHOLDERS? MEETING, AND BOARD AUTHORIZATIONS The Annual Shareholders? Meeting held on March 15, 2005 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, 2004. The Annual Shareholders? Meeting resolved that no dividend shall be distributed for the fiscal year 2004. The Annual Shareholders? Meeting resolved that the Board of Directors consists of five ordinary members. The Annual Meeting re- elected Vesa-Pekka Leskinen, Teemu Malmi, Jane Moilanen, Asko Piekkola and Timo Tirkkonen to the Board of Directors. Ernst & Young Oy, Authorized Public Accountants, continued as QPR Software Plc?s auditors. The Annual Shareholders? Meeting resolved on approving the proposals of the Board of Directors on issuing stock options and authorization of Board of Directors to decide on the increase of share capital. The proposals of the Board of Directors are available in the QPR Software Plc?s stock exchange bulletin released on 23 February 2005. THE BOARD OF DIRECTORS, MANAGEMENT, AND AUDITORS OF THE MOTHER COMPANY According to the Company?s articles of association, the Annual Shareholders? Meeting appoints members to the Board of Directors. The Board elects a Chairman from among its members, and appoints the Company?s managing director. The Board of Directors in its meeting after the Annual Shareholders? Meeting on 15 March 2005 elected Timo Tirkkonen to continue as Chairman of the Board. Timo Tirkkonen requested to resign on 22 December 2005, and the Board resolved to elect from among its members Vesa-Pekka Leskinen Chairman of the Board of Directors from 1 January 2006. In the financial year 2005, the management responsibility of the Company?s business operations was held by the Executive Management Team, the chairman of which was the Company?s CEO Matti Kanninen, and consisted of the following members: Juha Jolkkonen, Vice President international sales, Petri Leino, Vice President Nordic sales, Teemu Lehto, Vice President professional services, and the CFO Martti Kurppa. Ernst & Young Oy, Authorized Public Accountants, has continued as the Company?s auditors, with Rauno Sipil?, Authorized Public Accountant, as the auditor with primary responsibility. OTHER EVENTS DURING THE FINANCIAL YEAR The Board of Directors of QPR Software Plc resolved on 26 April 2005 that the hitherto undistributed stock options issued on 1 October 2003 be partly distributed to the personnel of the QPR Software Group. The total number of stock options issued to the personnel of the QPR Software Group was 7,500 stock options 2003/IIIA and 22,500 stock options 2003/IIIB. Furthermore, the Board of Directors resolved that of the hitherto undistributed stock options 2003/II, issued by the Extraordinary General Meeting of Shareholders on 22 July 2003, be distributed a total of 11,917 stock options to the CEO of the Company. SHARE AND SHARE CAPITAL In the financial year 2005, the Company?s share capital was increased in total by EUR 7,837.50 due to two share subscriptions with the stock options 2003/III. The Company?s share capital at the end of the financial year was EUR 1,334,724.16 and the number of shares was 12,133,856. Share Number of Share capital premium shares euro euro Share capital 1 January 2005 12,062,606 1,326,886 171,390 Share subscriptions based on stock options: on 9th June 2005 30,000 3,300.00 4,200.00 on 28th November 2005 41,250 4,537.50 5,775.00 Share capital 31 December,2005 12,133,856 1,334,724 181,365 By the end of the financial year, the Company had also issued hitherto unconverted stock options that entitle to subscribe in total of 363,167 shares, which corresponds to 2.99% of the total number of shares in the Company. QPR Software Plc's shares are quoted on the NM-list of 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. The stock exchange trading lot size is 200 shares. Shares belong to the book-entry system managed by the Finnish Central Securities Depository Ltd. 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 51,917 hitherto unconverted stock options have been issued, and in total of 7,491 stock options are in the possession of the Company?s subsidiary. Based on stock option program 2003/III, in total of 311,250 hitherto unconverted stock options have been issued, and in total of 125,040 stock options are in the possession of the Company?s subsidiary. No stock options have been issued based on stock option program 2005/I, and all of the in total of 200,000 stock options remain in the possession of the Company?s subsidiary. At the end of the financial year, in total of 363,167 hitherto unconverted stock options have been issued, and in addition, in total of 332,531 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 2005 the Board of Directors could further issue securities, which would increase the number of company shares in circulation at maximum by 2,412,518 shares. This authorization is in force until 15 March 2006. 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 650 shareholders. During the financial year, in total of three notices of holding changes were made on 12 May 2005 in accordance with Chapter 2, Section 10 of the Securities Market Act. The holding of Antti Kosunen (Helsinki) decreased from 21.12% to 0.00% of QPR Software Plc's share capital and votes. The holding of Ulkomarkkinat Oy (Company ID 0115507-1) increased above one-tenth (1/10) to 13.08% of QPR Software Plc's share capital and votes. The holding of Alesco SA (RCS Luxemburg B64824) increased above one-tenth (1/10) to 10.78% of QPR Software Plc's share capital and votes. The company has in total of 1 nominee registered, holding in total of 27,000 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: Shareholder Option rights Shares (% of all pcs shares) Kari Junkkonen 3,750 515,766 4.25 Tony Virtanen 7,500 164,612 1.36 Teemu Lehto 30,000 153,654 1.27 Matti Kanninen 11,917 147,600 1.22 Timo Tirkkonen 40,000 138,060 1.14 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 2005 in total of 2,326,742 QPR Software Plc?s shares, corresponding to 19.2 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 2005 in total of 51,917 stock option rights issued in year 2003. These stock option rights entitle to subscribe 51,917 shares at maximum, which on 31 December 2005 would have corresponded to 0.4 percent of the Company?s share capital and votes after the subscriptions based on the said stock option rights. TRADING IN COMPANY SHARES 1-12/2005 In the financial year, trading in company shares amounted to MEUR 3.291, i.e. an average of EUR 13,219 per trading day. Trading in shares totaled 5,749,684 shares, giving an average of 23,091 shares per trading day. Turnover in shares corresponds to 47.4% of the total shares and the average price was EUR 0.57 per share. The last transaction in the year 2005 with the QPR Software Plc?s shares in the Helsinki Stock Exchanges was closed at the price of EUR 0.59 per share, which corresponded to an increase of 13.5% compared to the end of year 2004. At the end of the financial year, the total market value of the company shares was MEUR 7.159. 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. ADOPTION OF IFRS The date of transition to IFRS for QPR Software Plc was January 1, 2004. The major effects of the adoption of IFRS on QPR Software Plc?s financial information is available in the QPR Software Plc?s stock exchange bulletin released on 25 February 2005. The first IFRS financial statements of QPR Software Plc are prepared for the financial year ending December 31, 2005. The deferred tax assets, based on the mother company's losses prior to January 1, 2004, were entered in the mother company's and the Groups annual books in 2003. The amount of the deferred tax of EUR 540,000 was not affected by the transition to IFRS. The deferred tax has been deminished during January through December 2005 reflecting the accumulated taxable income during that period. In the Group's balance sheet as of 31 December 2005, the remaining amount of deferred tax is 189,700 euro. EVENTS AFTER THE FINANCIAL YEAR The Chairman of the Board of Directors of QPR Software Plc in the financial year 2005, Timo Tirkkonen, resigned effective 1 January 2006. The Board resolved to elect from among its members Vesa- Pekka Leskinen Chairman of the Board of Directors from 1 January 2006. The Company has on February 13, 2006 received a confirmation of a resolution of waiving of a product development loan in total of 236,000 euros, granted to the Company. This resolution has, in addition to the increase in profits in the financial year 2005, a positive impact on company profits in total of 120,915 euros in the first quarter of year 2006. FUTURE OUTLOOK According to industry research institutes? public forecasts, the global annual sales growth for enterprise applications and especially for business performance management and business process management applications shall in average reach approximately 10% annually in years 2006-2009. The growth of QPR Software Group?s net sales in year 2006 is estimated to be significantly faster than the global growth of enterprise applications and especially business performance management and business process management applications. The Group?s operating profit is estimated to increase from the previous year. In the year 2006, the QPR Software Group aims to continue its sales growth in both domestic and international markets. The most significant investments during year 2006 shall be focused on the following markets: Finland, Sweden, Britain, United States, South Africa, and Japan. In the year 2005, the mentioned markets accumulated in total of 67% of the net sales of QPR Software, and a further remarkable growth potential is expected in these markets. QPR Software is determined to strengthen its distribution channel, service level and delivery capabilities in these markets. 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 shall on-goingly focus on developing ready-to-run software products for business performance management and business process management. Further new versions of the software products shall be released to continuously offer added value to the customers through an expansion to new solution areas for which the products are deployable, 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 DIVIDEND PROPOSAL The Board of Directors has decided to assemble the Annual General Meeting of Shareholders, to be held on 15 March 2006. Notice for the Annual General Meeting of Shareholders shall be published as a stock exchange bulletin on 15 February 2006. The Board of Directors decided in its meeting on 15 February 2006 to propose to the Shareholders? Meeting that from the financial year 2005, a dividend of EUR 0.02 per share be paid, a total of EUR 242,677.12. In addition, the Board proposes to the Shareholders? Meeting that an authorization be given to the Board to decide on the increase of share capital, on the basis of which, the number of company shares in circulation could increase at maximum by 2,426,763 shares. In the end of 2005, the Group?s distributable funds according to the balance sheet are MEUR 0.554 and the parent company?s distributable funds are MEUR 0.697. In Helsinki, Finland, February 15th, 2006 Board of Directors of QPR Software Plc Vesa-Pekka Leskinen, Chairman of the Board Teemu Malmi Jane Moilanen Asko Piekkola Matti Kanninen, CEO Information in this stock exchange release is based on the audited information of the QPR Software?s Financial Statements. No auditors? report has been issued concerning the Financial Statements. Financial information in the year 2006 Financial Statements of the financial year 2005 shall be available on the Company?s internet pages on 17 February 2006. Interim reports shall be published as follows: - Interim Report 1-3/2006 Wednesday, April 26, 2006 - Interim Report 1-6/2006 Wednesday, July 26, 2006 - Interim Report 1-9/2006 Wednesday, October 25, 2006 The Annual General Meeting of Shareholders shall be held on 15 March 2006. Notice for the Annual General Meeting of Shareholders shall be published as a stock exchange bulletin on 15 February 2006. For more information, please contact: QPR SOFTWARE PLC Matti Kanninen CEO tel. + 3... matti.kanninen@qpr.com http://www.qpr.com Enclosed: `Financial statements of QPR Software Oyj INCOME STATEMENT 1.1.-31.12.2005 BALANCE SHEET 31.12.2005 STATEMENT OF CHANGES IN SHAREHOLDERS?EQUITY 1.1.-31.12.2005 CASH FLOW STATEMENT 1.1.-31.12.2005 PROFIT STATEMENT PER QUARTER COMMITMENTS AND CONTINGGENT LIABILITIES KEY FIGURES 2001-2005 SHAREHOLDERS MAJOR SHAREHOLDERS COMPARATIVE IFRS-DATA FOR THE PERIOD 1.1.-31.12.2004 GROUP INCOME STATEMENT January 1-DECEMBER 31,2005 (EUR 1000) 10-12 10-12 1-12 1-12 2005 2004 2005 2004 Net sales 1 805 1 565 6 364 5 394 Other operating income 149 27 181 85 Material and services 88 66 315 337 Employee benefits Expenses 841 749 3 198 2 637 Deprecation 43 51 199 251 Other operating expenses 521 355 1 983 1 449 OPERATING PROFIT 461 371 849 805 Finance income and 33 1 55 -65 expenses Share of the results in associated -1 -46 companies PROFIT BEFORE TAX 494 371 905 694 Income tax expense -126 -140 -214 -224 PROFIT FOR THE PERIOD 368 231 691 470 Sharing of profit: To the parent company?s shareholders 368 231 691 470 Earnings per share (diluted),EUR 0.06 0.04 Earnings per share, EUR 0.06 0.04 GROUP BALANCE SHEET DECEMBER 31, 2005 (EUR 1000) 31.12.2005 31.12.2004 NON-CURRENT ASSETS Tangible assets 244 127 Other intangible assets 120 207 Trade and other receivables 264 513 Deferred tax assets 190 362 NON-CURRENT ASSETS 818 1 210 CURRENT ASSETS Trade and other receivables 3 030 2 816 Cash and cash equivalents 1 582 767 CURRENT ASSETS 4 612 3 582 TOTAL ASSETS 5 430 4 792 EQUITY AND LIABILITIES (EUR 1000) SHAREHOLDER`S EQUITY Share capital 1 335 1 327 Share premium 181 171 Reserve fund 21 22 Translation differences -48 51 Retained earnings 602 -112 SAHREHOLDERS?EQUITY 2 091 1 460 Minority interest TO THE PARENT COMPANY?S SHAREHOLDERS 2 091 1 460 NON-CURRENT LIABILITIES Interest-bearing liabilities 550 1 303 NON-CURRENT LIABILITIES 550 1 303 CURRENT LIABILITIES Trade and other payables 2 528 1 779 Interest-bearing liabilities 260 250 CURRENT LIABILITIES 2 788 2 029 LIABILITIES 3 339 3 332 TOTAL EQUITY AND LIABILITIES 5 430 4 792 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS?EQUITY JANUARY 1-DECEMBER 31,2004 Trans Share lation Retai Subor holders Share differ ined nidated (EUR 1.000) equity premium ences ernings loan Total EQUITY 31.12.2003 1 257 3 280 146 -3 910 486 1 259 Impact of implementation of IFRS 0 -125 -146 163 -486 -595 Restated equity January ,2004 1 257 3 155 0 -3 746 0 664 Shares issued 70 70 Share premium 171 171 Losses from previous period covered by 0 share premium fund -3 132 3 132 0 Employees options 32 32 Reserve fund Translation differences 51 51 Profit for the period 470 470 CHANGE IN SHAREHOLDER?S EQUITY 1-12 70 -2961 51 3 635 0 795 EQUITY 31.12.2004 1 327 194 51 -112 0 1 459 CHANGES IN SHAREHOLDERS?EQUITY JANUARY 1-DECEMBER 31,2005 Share Trans Retai Subor holders Share lation ined ninated (EUR 1.000) equity premi differ earnin loan Total um ence gs EQUITY 1 327 194 51 -112 0 1 459 1.1.2005 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 SHAREHOLDER?S EQUITY 1-12 8 9 -99 714 0 633 EQUITY 1 335 202 -47 602 0 2091 31.12.2005 GROUP CASH FLOW STATEMENT JANUARY 1-DECEMBER 31,2005 (EUR 1000) 1.1.- 1.1.- 31.12.2005 31.12.2004 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the period 849 805 Adjustment for the profit Deprecation 199 251 Other income and expenses 288 509 IFRS-adjustments -74 37 Changes in working capital: Changes in trade and other receivables -222 -658 Changes in trade payables and other 747 -37 liabilities Interest expense and other financial -41 -125 expenses Interest income and other financial 97 60 expenses Income taxes paid -43 -31 Net cash from operating activities 1 800 811 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of tangible assets -195 -24 Purchases of intangible assets -34 0 Net cash used in investing activities -229 -24 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from insurance of share capital 18 241 Repayments of financial leases -33 -107 Repayments of long-term borrowings -741 -563 Net cash used in financing activities -756 -429 Net change in cash and cash equivalents 815 357 Cash and cash equivalents at the 767 410 beginning of period Cash and cash equivalents at the end of 1 582 767 period GROUP INCOME STATEMENT PER QUARTER 1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 7-9/ 10-12/10-12/ (EUR 1000) 2005 2004 2005 2004 2005 2004 2005 2004 Net sales 1588 1397 1652 1446 1319 986 1805 1565 Other operating income 14 19 3 0 16 39 149 27 Material and services 69 176 64 78 94 17 88 66 Employee benefits expenses 745 667 855 627 758 594 841 749 Deprecation 53 79 52 73 50 48 43 51 Other operating expenses 545 342 486 441 431 31 521 355 Operating profit 189 152 198 228 2 53 461 371 Financial income 16 1 -1 -45 7 -22 33 1 and expenses Share of the results in -17 -9 -19 -1 associated companies Profit before tax 205 136 197 174 9 13 494 371 Income tax -48 -23 -41 -51 -1 -10 -126 -140 Profit for the period 158 112 156 124 8 3 368 231 Following items have formerly been reported below operating profit,among financial income and expenses: Included in net sales: Exchange rate 37 5 45 24 -1 -9 8 -71 differences Included in operating profit: Exchange rate 16 12 24 2 2 -7 8 -31 differences COMMITMENTS AND CONTINGENT LIABILITIES (EUR 000) 31.12.2005 31.12.2004 Commitments and contingent liabilities Guarantees 0 1 325 Lease liabilities 37 32 Total 37 1 357 Current lease liabilities lease liabilities maturing during one year 20 32 Lease liabilities maturing 2-5 years 24 4 Total 44 36 Total commitments and contingent liabilities 81 1 393 KEY FIGURES 2001-2005 EUR (000) 2005 2004 2003 2002 2001 IFRS IFRS FAS FAS FAS Net sales 6 364 5 394 5 166 8 728 12417 Growth of net sales % 18.0 4.4 -40.8 -29.7 54.8 Operating profit 849 805 800 -3 390 2 909 % of net sales 13.3 14.9 15.5 -38.8 23.4 Profit or loss before tax 905 694 727 -5 775 2 530 % of net sales 14.2 12.9 14.1 -66.2 20.4 Net Profit 690 470 709 -5 795 1 965 % of net sales 10.8 8.7 13.7 -66.4 15.8 Return of equity,% 38.9 44.3 138.3 -290.9 62.6 Return of investments,% 32.0 28.7 35.4 -89.2 67.1 Interest-bearing liabilities 811 1 553 1 406 1 851 1 243 Cash and cash equivalents 1 582 767 410 270 268 Gearing,% -36.9 53.8 192.4 -391.8 21.4 Equity ratio, % 52.4 36.7 20.7 -12.3 49.7 Total balance sheet 5430 4792 4430 5433 10114 Investment in non-current 229 24 98 973 2631 assets % of net sales 3.6 0.4 1.9 11.1 21.2 Research and development 1 324 1 095 1085 2434 2040 expenses % of net sales 20.8 20.3 21.0 27.9 16.4 Personnel average for period 48 39 54 113 100 Personnel at the beginning of 40 41 98 100 100 period Personnel at the end of period 56 40 41 98 100 Earnings per share, EUR 0.06 0.04 0.02 -0.56 0.22 Earnings per share /diluted,EUR 0.06 Equity per share, EUR 0.17 0.12 0.07 -0.05 0.45 Number of shares 31.12.,1000 12134 12063 11426 10376 9990 Weighted average 12080 11816 10414 10328 9990 Diluted 12243 12000 11556 SHAREHOLDERS Number of Number of shares share Shares and votes holders % % 1 - 500 219 33.7 45 561 0.4 501 - 1 000 106 16.3 94 291 0.8 1 001 - 5 000 169 26.0 465 170 3.8 5 001 - 10 000 62 9.5 493 392 4.1 10 001 - 50 000 66 10.2 1501 612 12.4 50 001 - 100 000 6 0.9 369 004 3.0 100 001 - 2 726 914 22 3.4 9164 826 75.5 Total 650 100% 12133 856 100% Distribution of holdings by sector December 31, 2005 Number of Shares and votes share % % holders Private companies 46 7.1 4126 926 34.0 Financial and insurance institutions 5 0.8 632 563 5.2 Households 577 88.8 5969 035 49.2 Foreigners 22 3.4 1405 332 11.6 Total 650 100% 12133 856 100% In total of 27 000 shares in the sector Financial and insurance institutions is nominee-registered, which corresponds to 0,2% of shares and votes. SHAREHOLDERS ? MAJOR SHAREHOLDERS %-share Number of Shares and shares votes Ulkomarkkinat Oy 1 600 000 13.19 % Alesco S.A 1 300 000 10.71 % Vesa-Pekka Leskinen 851 400 7.02 % + Kauppamainos Oy 707 700 5.83 % Total 1 559 100 12.85 % Kari Junkkonen 515 766 4.25 % Fortel Invest Oy 457 526 3.77 % Jouko Pelkonen 345 000 2.84 % Pohjolan Rahoitus Oy 402 000 3.31 % Electrosale Oy 284 000 2.34 % Total 1 031 000 8.50 % Fides New Media, sij.rahasto 376 000 3.10 % Asko Piekkola 316 438 2.61 % P?ivi Marttila 294 872 2.43 % Edina Oy 33 900 0.28 % Total 328 772 2.71 % Jaakkola Jari 250 000 2.06 % Value FM Oy 50 000 0.41 % Total 300 000 2.47 % P??kk?nen Esa 246 054 2.03 % Promotion Bridge I KY 225 000 1.85 % other shareholders 3 878 200 31.96 % Total 12 133 856 100 % COMPARATIVE IFRA DATA FOR THE PERIOD 1.1.-31.12.2004 RECONSOLIDATED PROFIT STATEMENT 1.1.-31.12.2004 (FAS-IFRS) FAS IFRS- IFRS EUR (1.000) 31.12. adjustments 31.12. 2004 2004 Net sales 5 555 -160 5 394 Other operating income 39 46 85 Share of the results in associated -108 108 0 companies Material and services 337 0 337 Employee benefits expenses 2 605 32 2 637 Depreciation 146 105 251 Other operating expenses 1 534 -84 1 449 OPERATING PROFIT 864 -59 805 Financial income and expenses -179 115 -65 Financial income 18 42 60 Financial expenses -198 73 -125 Share of the results in associated 0 -46 -46 companies PROFIT BEFORE TAX 684 55 694 Income tax expenses -224 0 -224 PROFIT FOR THE PERIOD 460 10 470 The column IFRS-adjustments contain also changes in accounting principles, associated with presentation of exchange rate differences. These items were formerly presented among financial items, below operating profit. They are currently presented in corresponding items above operating profit.Net sales contain ?52 thousand euros in 2004 and other operating expenses contain -25 thousand exchange rate differences. RECONCILIATION OF SHAREHOLDERS EQUITY 1.1.2004 AND 1.1.2005 IFRS- EUR (000) FAS adjustments IFRS Equity capital 1 257 0 1 257 Share premium 3 258 -125 3 133 Reserve fund 22 0 22 Employees options 0 8 8 Retained earnings -3 764 9 -3 755 Subordinated loan 486 -486 0 SHAREHOLDERS EQUITY IFRS 1.1.2004 1 259 -595 664 IFRS- EUR (000) FAS adjustments IFRS Equity capital 1 327 1 327 Share premium 297 -125 171 Reserve fund 22 22 Employees options 0 40 40 Retained earnings -580 9 -571 Profit for the period 460 10 470 Subordinated loan 486 -486 0 EQUITY IFRS 31.1.2004 2 012 -553 1 459 RECONSOLIDATED BALANCE SHEET 31.12.2004 (FAS-IFRS) Group balance sheet December 31,2005 ASSETS FAS IFRS- IFRS (EUR 1000) 31.12. adjust 31.12. 2004 ments 2004 NON-CURRENT ASSETS Tangible assets 100 27 127 Other intangible assets 207 0 207 Trade and other receivables 669 -156 513 Deferred tax assets 362 0 362 NON-CURRENT ASSETS 1 338 -129 1 210 CURRENT ASSETS Trade and other receivables 2 773 43 2 816 Cash and cash equivalents 767 0 767 CURRENT ASSETS 3 540 43 3 582 TOTAL ASSETS 4 878 -86 4 792 EQUITY AND LIABILITIES (EUR 1000) EQUITY Equity capital 1 327 0 1 327 Share premium 297 -126 171 Reserve fund 22 0 22 Employees options 0 40 40 Translation difference 0 51 51 Retained earnings -580 428 -152 Net income 460 -460 0 Subordinated loan 486 -486 0 EQUITY TOTAL 2 012 -553 1 459 Minority interest 0 0 0 NON CURRENT LIABILITIES Interest-bearing liabilities 820 484 1 303 NON CURRENT LIABILITIES 820 484 1 303 CURRENT LIABILITIES Trade payables and other liabilities 1 796 -17 1 779 Interest-bearing liabilities 250 0 250 CURRENT LIABILITIES 2 046 -17 2 029 LIABILITIES TOTAL 2 866 467 3 333 EQUITY AND LIABILITIES TOTAl 4 878 -86 4 792