QPR SOFTWARE PLC STOCK EXCHANGE RELEASE 26 April 2006 at 9.30 AM INTERIM REPORT JANUARY 1-MARCH 31, 2006 QPR SOFTWARE PLC?S NET SALES AROSE TO 1.671 MILLION EURO, OPERATING PROFIT WAS 13.9% OF NET SALES, EARNINGS PER SHARE GREW TO 0.02 EURO QPR Software Group?s net sales arose to 1.671 (1.588) million euros during the first quarter in 2006. The Group delivered software licenses to 29 different countries during the first quarter and the international business represented 55% (56%) of the total net sales. Operating profit expanded to 0.232 million EUR (0.189). Earnings per share increased 17.2% and reached 0.02 EUR (0.01). Return on equity was 35.9% (41.3%) and return on investment 36.2% (42.4%). GROUP KEY FIGURES (EUR 1000) 1-3/ 1-3/ Change 1-12/ 2006 2005 % 2005 Net Sales 1 671 1 588 5.3 6 364 Operating profit 232 189 22.5 849 % of net sales 13.9 11.9 13.3 Profit before tax 257 205 25.4 905 Profit for the period 186 158 18.1 690 % of net sales 11.1 9.9 10.8 Earnings per share, EUR 0.02 0.01 17.6 0.06 EPS (diluted), EUR 0.02 0.01 17.2 0.06 Equity per share, EUR 0.17 0.13 28.6 0.17 Cash flow from operating activities 656 1 086 1 800 Cash and cash equivalents 1 932 1 534 1 582 Net liabilities -1 369 -267 -771 Gearing, % -66.6 -16.8 -36.9 Equity ratio, % 53.9 40.6 52.4 Return on equity, % 35.9 41.3 38.9 Return on Investment, % 36.2 42.4 32.0 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. 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 QPR Software Plc adopted the International Financial Reporting Standards (IFRS) as of January 1, 2005. This interim report complies with accounting- and valuation principles of IFRS and is not audited. THE MAIN POINTS OF THE FIRST QUARTER QPR Software Group?s net sales reached EUR 1.671 (1.588). A purchase decision, made by a customer in the public sector, was taken into Market Court, thus diminishing net sales by nearly MEUR 0.1. The impact of exchange rate difference on the net sales was negative by 1.4%. The share of software license sales and maintenance services of net sales remained at a high level and was 81% (81%). During the period January through March QPR delivered software in total of 29 countries. Geographically, the sales were particularly strong in Finland, South Africa, United Kingdom, Latvia and Japan. From customer perspective, significant sales were reached with such distinguished customers as Skanska, Ingman Foods, The University of Jyv?skyl?, South African Airways, TKC Corporation, Dorset County Council Consortium, Reading Borough Council and Latvian Ministry of Justice. Cash flows from operating activities were positive during the review period and totaled MEUR 0.656 (1.086). Operating profit increased by 22.5% and totaled MEUR 0.232 (0.189), representing 13.9% (11.9%) of net sales. The operating profit of the first quarter includes other operating income in total of MEUR 0.110 due to a received resolution of waiving a product development loan, granted to the Company, in addition to which the finance expenses have diminished. Profit for the review period increased by 18.1% compared to the corresponding period previous year, and was MEUR 0.186 (0.158), representing 11.1% (9.9%) of net sales. Earnings per share (diluted) increased by 17.2% and were EUR 0.02 (0.01). NET SALES AND FINANCIAL PERFORMANCE 1-3/2006 During the review period, the net sales of the Group increased 5.3% totaling MEUR 1.671 (1.588). The Groups net sales are accrued in its entirety from software business, with the following break-down during the review period, MEUR: 1-3/ 2006 1-3/ 2005 Change-% 1-12/ 2005 Software licenses 765 796 -3.8 3 148 Maintenance 580 485 19.7 2 126 services Professional 325 307 6.0 1 090 services Total 1 671 1 588 5.3 6 364 The corresponding geographical break-down of the net sales was as follows, MEUR: 1-3/2006 Share-% 1-3/2005 Share-% Change-% 1-12/2005 Domestic 746 44.6 694 43.7 7.5 2 775 International 925 55.4 894 56.3 3.5 3 589 Net sales, 1 671 100.0 1 588 100.0 5.3 6 364 total The efforts made by the QPR Group's product development and sales force on larger implementations had a positive impact on net sales. The average size of deliveries has increased and the implementations made at the customers? sites have expanded. The tendency shown by enterprises and the public sector to improve their processes had a positive impact on the demand of QPR?s products. The focus of deliveries was increasingly on larger complete management solutions and the supporting projects and professional services. During the first quarter 65% (77%) of the software license sales were accumulated via the global distribution channel, and was MEUR 0.498. During the first quarter, in total of five new reseller agreements were signed. Operating profit increased by 22.5% and totaled MEUR 0.232 (0.189), representing 13.9% (11.9%) of net sales. Profit for the first quarter increased by 18.1% compared to the corresponding period previous year, and was MEUR 0.186 (0.158), representing 11.1% (9.9%) of net sales. Retained losses, for which no entry has been made in the mother company's books as deferred tax assets, are approximately MEUR 2.5. During January through March 2006, the deferred tax assets have been diminished by kEUR 69, based upon the taxable income during that period. In the Group's balance sheet as of 31 March 2006, the remaining amount of deferred tax is kEUR 120. Earnings per share (diluted) increased to EUR 0.02 (0.01). FINANCE AND INVESTMENTS The Group?s total assets on the balance sheet at the end of March 2006 were MEUR 5.533 (5.083). The Group?s investments in fixed assets during the review period were MEUR 0.073 (0.025). Cash flows from operating activities were positive during the review period and totaled MEUR 0.656 (1.086). The Group?s cash and cash equivalents at the end of the review period were MEUR 1.932 (1.534). The Group?s interest-bearing liabilities decreased by MEUR 0.248 during the review period and were MEUR 0.563. Gearing (net liabilities as a ratio of equity) was -66.6% (-16.8%). Return on investment was 36.2% (42.4%). Short-term liabilities contain deferred revenue in total of MEUR 1.715 (1.163). Quick ratio key figure at the end of review period was 3.7 (3.2). At the end of review period, the Group?s equity was MEUR 2.059 (1.591), and the Group?s equity ratio reached 53.9% (40.6%). Return on equity was 35.9% (41.3%). PERSONNEL At the end of review of the period, the Group employed a total of 54 people (44). During the last 12 months period, the increase in headcount by 10 persons refers mainly to international sales. At the end of 2005, corresponding headcount was 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 review period totaled to MEUR 0.398 (0.294), that was 23.8% (19.0 %) of net sales, and an increase of 35.4% compared to the corresponding period of the previous year. No overhead costs have been included in the R&D costs. All the R&D expenses in the review period and in the comparative period have been recorded as expenses in the profit and loss statement. Product development employed 12 (9) people at the end of the review period, and corresponded to 21.8% of the total personnel at the end of the review period. The core know-how of product development remains centralized in the own organization. Long-term co-operation was continued with established subcontractors. During the review period the R&D focused on the development work of QPR 7 product family and new version of QPR 7.5, that will be released in the second half of 2006. In the development of the new version, a particular attention has been paid on ease-of-use and scalability in implementations of thousands of users. QPR 7 suite is an interactive easy-to-use, ready-to-run 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 bring clarity to their business processes and organizations? objectives, support their people's commitment hereto and improve their ability to change. The software products developed by QPR 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 21 languages. 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 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. The Annual Shareholders? Meeting elected KPMG Oy Ab, Authorised Public Accountants, as QPR Software Plc?s auditor and Authorised Public Accountant Sixten Nyman as the principle auditor. The Annual Shareholders? Meeting resolved on approving the proposal of the Board of Directors on authorisation of Board of Directors to decide on the increase of share capital. The Shareholders? Meeting resolved, by revoking the previous unused authorisations to increase the share capital, authorise the Board of Directors to decide, until March 15, 2007 on the increase of share capital through one or more new issues and/or on one or more convertible bonds and/or granting option rights in one or more installments. The maximum amount of authorisation is EUR 266,944, equivalent of 2,426,764 shares. Regarding a new issue the Board of Directors would be granted authorisation to decide that shares may be subscribed against property given as a subscription in kind, by using the right to set-off or otherwise according to certain terms. The increase in share capital by means of a new issue is to be carried out according to the Board?s decision, at the price set by the Board and on the Board?s other terms. The Board would was authorised to deviate from the pre-emptive subscription rights of shareholders when increasing share capital by means of a new issue, convertible bonds and/or granting option rights provided that there exists an important financial reason from the company?s point of view. COMPANY SHARES AND TRADING IN COMPANY SHARES 1-3/2006 The Company?s share capital at the end of the review period was EUR 1,334,724.16, divided into 12,133,856 shares, the book-counter value being EUR 0.11. At the end of the review period the Company had a total of 660 shareholders. During the review period, trading in Company shares totaled MEUR 0.954, giving an average of EUR 14,910 per trading day. Trading in shares totaled 1,278,858 shares, corresponding to 10.5% the total shares and the average price was EUR 0.75 per share. At the end of the review period, the market value of company shares was MEUR 10.678 at the review period?s closing price of EUR 0.88. At the end of previous financial year, the market value of the QPR Group was MEUR 7.159, the closing price being EUR 0.59. STOCK-OPTION PROGRAMS During the review period, 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 review period, based on stock option program 2003/II, in total of 40,000 hitherto unconverted stock options have been issued, and in total of 7,491 stock options are in the possession of the Company?s subsidiary. At the end of the review period, based on stock option program 2003/III, in total of 288,750 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 review period, in total of 328,750 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. The Board of Directors of the Company approved 25 April 2006 a subscription of 53,167 shares under the QPR Software Plc Stock Option Plan 2003/II and 2003/III, out of which 34,417 shares were subscribed during the review period. The share capital increase has not yet been entered in the Finnish Trade Register. 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. 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. In Helsinki, Finland, April 26th, 2006 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 QPR Software Plc?s interim reports shall be published as follows: - Interim report 1-6/2006 Wednesday, July 26, 2006 - Interim report 1-9/2006 Wednesday, October 25, 2006 For more information, please contact: QPR SOFTWARE PLC Matti Kanninen, CEO Tel. 040... matti.kanninen@qpr.com http://www.qpr.com Enclosed: Financial statements of QPR- Software Plc Income satements 1.1.-31.3.2006 Balance sheet 31.3.2006 Statement of changes in shareholders equity 1.1.-31.3.2006 Cash flow statement 1.1.-31.3.2006 Profit statements per quarter Commitments and contingent liabilities Key figures 1-3/2006, 1-3/2005 and 2005 Major sahreholders GROUP INCOME STATEMENT 1.1.-31.3.2006 (EUR 1000) 1-3.2006 1-3.2005 1-12.2005 Net sales 1 671 1 588 6 364 Other operating income 159 14 181 Material and services 120 69 315 Employee benefits Expenses 948 745 3 198 Depreciation 48 53 199 Other operating expenses 482 545 1 983 OPERATING PROFIT 232 189 849 Finance income and expenses 25 16 55 Share of the results in associated companies PROFIT BEFORE TAX 257 205 905 Income tax expense -71 -48 -214 PROFIT FOR THE PERIOD 186 158 690 Sharing of profit: To the parent company?s shareholders 186 158 690 Earnings per share (diluted), EUR 0.02 0.01 0.06 Earnings per share, EUR 0.02 0.01 0.06 GROUP BALANCE SHEET 31.3.2006 (EUR 1000) 31.3.2006 31.3.2005 31.12.2005 NON-CURRENT ASSETS Tangible assets 278 124 244 Other intangible assets 111 182 120 Trade and other receivables 273 346 264 Deferred tax assets 121 329 190 NON-CURRENT ASSETS 783 981 818 CURRENT ASSETS Trade and other receivables 2 818 2 569 3 030 Cash and cash equivalents 1 932 1 534 1 582 CURRENT ASSETS 4 750 4 103 4 612 TOTAL ASSETS 5 533 5 083 5 430 EQUITY AND LIABILITIES (EUR 1000) SHAREHOLDERS' EQUITY Share capital 1 335 1 327 1 335 Share premium 181 171 181 Issue of shares 9 0 0 Reserve fund 21 22 21 Translation differences -31 17 -48 Retained earnings 545 53 602 SHAREHOLDERS' EQUITY 2 059 1 591 2 091 PARENT COMPANY'S SHAREHOLDERS' 2 059 1 591 2 091 INTEREST NON-CURRENT LIABILITIES Interest-bearing liabilities 476 1 045 550 NON-CURRENT LIABILITIES 476 1 045 550 CURRENT LIABILITIES Trade and other payables 2 913 2 225 2 528 Interest-bearing liabilities 86 222 260 CURRENT LIABILITIES 2 999 2 447 2 788 LIABILITIES 3 475 3 492 3 339 TOTAL EQUITY AND LIABILITIES 5 533 5 082 5 430 GROUP CASH FLOW STATEMENT 1.1.- 1.1.- 1.1.- (EUR 1000) 31.3.2006 31.3.2005 31.12.2005 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the period 186 158 690 Adjustment for the profit Deprecation 48 53 199 Other income and expenses -122 167 373 Changes in working capital: Changes in trade and other 167 280 -222 receivables Changes in trade payables and 353 446 747 other liabilities Interest expense and other 7 -17 -41 financial expenses Interest income and other 17 13 97 financial income Income taxes paid -2 -14 -43 Net cash from operating 656 1 086 1 800 activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of tangible assets -42 -12 -195 Purchases of intangible assets -17 -13 -34 Net cash used in investing -58 -25 -229 activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of share 9 0 18 capital Repayments of financial leases -1 -8 -33 Repayments of long term -12 -286 -741 borrowings Dividends paid -243 0 Net cash used in financing -247 -294 -756 activities Net change in cash and cash 350 767 815 equivalents Cash and cash equivalents at the 1 582 767 767 beginning of period Cash and cash equivalents at the 1 932 1 534 1 582 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS? EQUITY 1.1.-31.3.2006 Share- Trans- holders' Share Share lation Retained (EUR 1.000) equity issue premium differ. earnings Total SHAREHOLDERS' EQUITY 1.1.2006 1 335 0 203 -48 602 2 091 Subscription, options 9 9 Dividends -243 -243 paid Translation 16 16 differences Profit for the period 185 185 CHANGE IN SHAREHOLDERS' EQUITY 1-3 0 9 0 16 -58 -33 SHAREHOLDERS' EQUITY 31.3.2006 1 335 9 203 -31 545 2 059 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS? EQUITY 1.1.-31.3.2005 Share- Trans- holders' Share Share lation Retained (EUR 1.000) equity issue premium differ. earnings Total SHAREHOLDERS' EQUITY 1.1.2005 1 327 0 194 51 -112 1 459 Employees options 8 8 Translation -34 -34 differences Profit for the period 157 157 CHANGE IN SHAREHOLDERS' EQUITY 1-3 0 0 0 -34 165 131 SHAREHOLDERS' EQUITY 31.3.2005 1 327 0 194 17 53 1 591 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS? EQUITY 1.1.-31.12.2005 Share- Trans- holders' Share Share lation Retained (EUR 1.000) equity issue premium differ. earnings Total SHAREHOLDERS' EQUITY 1.1.2005 1 327 194 51 -112 0 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' EQUITY 1-12 8 9 -99 714 0 633 EQUITY 31.12.2005 1 335 203 -48 602 0 2 091 COMMITMENTS AND CONTINGENT LIABILITIES (EUR 000) 31.3.2006 31.12.2005 Commitments and contingent liabilites Guarantees 0 0 Lease leabilities 36 37 Total 36 37 Current lease liabilities Lease liabilities maturing during one year 20 20 Lease liabilities maturing 2-5 years 20 24 Total 40 44 Total commitments and contingent liabilites 76 81 INCOME SATEMENT PER QUARTER 1-3/ 1-3/ 4-6/ 7-9/ 10-12/ (EUR 1000) 2006 2005 2005 2005 2005 Net sales 1 671 1 588 1 652 1 319 1 805 Other operating income 159 14 3 16 149 Material and services 120 69 64 94 88 Employee benefits expenses 948 745 855 758 841 Depreciation 48 53 52 50 43 Other operating expenses 482 545 486 431 521 Operating profit 232 189 198 2 461 Financial income/expenses 25 16 -1 7 33 Profit before tax 256 205 197 9 494 Income tax -71 -48 -41 -1 -126 Profit for the period 186 158 156 8 368 KEY FIGURES EUR (000) 1-3/2006 1-3/2005 1-12/2005 IFRS IFRS IFRS Net sales 1 671 1 588 6 364 Growth of net sales % 5.3 13.6 18.0 Operating profit 232 189 849 % of net sales 13.9 11.9 13.3 Profit or loss before tax 257 205 905 % of net sales 15.4 12.9 14.2 Net Profit 186 158 690 % of net sales 11.1 9.9 10.8 Return of equity,% 35.9 41.3 38.9 Return on investments,% 36.2 42.4 32.0 Interest bearing liabilities 563 1 267 811 Cash and cash equivalents 1 932 1 534 1 582 Net liabilities -1 369 -267 -771 Equity 2 059 1 591 2 091 Gearing,% -66.6 -16.8 -36.9 Equity ratio, % 53.9 40.6 52.4 Total balance sheet 5 533 5 083 5430 Investment in non-current assets 73 25 229 % of net sales 4.4 1.6 3.6 Research and development expenses 411 294 1 324 % of net sales 24.6 18.5 20.8 Personnel average for period 55 42 48 Personnel at the beginning of period 56 40 40 Personnel at the end of period 54 44 56 EUR (000) 1-3/2006 1-3/2005 1-12/2005 IFRS IFRS IFRS Earnings per share ,e 0.02 0.01 0.06 Earnings per share /diluted), e 0.02 0.01 0.06 Equity per share, e 0.17 0.13 0.17 MAJOR SHAREHOLDERS 31.3.2006 %-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 401 400 3.31% Electrosale Oy 284 000 2.34% Total 1 030 400 8.49% 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 3 878 800 31.97% Total 12 133 856 100%