QPR SOFTWARE PLC STOCK EXCHANGE BULLETIN 27 April 2005, AT 6.30 PM QPR SOFTWARE PLC INTERIM REPORT JANUARY 1 ? MARCH 31, 2005 1-3/2005 1-3/2004 Net Sales, MEUR 1.551 1.409 +10.0% Operating Result, MEUR 0.136 0.119 +14.5% -percent of Net Sales 8.8% 8.4% Net Result, MEUR 0.157 0.113 +39.8% -percent of Net Sales 10.1% 8.0% Liquid Assets, MEUR 1.534 0.629 +143.8% -Gearing -24.2% 259.3% Earning per Share, EUR 0.01 0.01 +33.1% Earning per Share, diluted, EUR 0.01 0.01 +37.3% Equity per Share, EUR 0.13 0.08 +66.6% Equity Ratio 40.6% 25.0% Return on Investment 31.2% 23.8% The understanding of the Board of Directors is that the preconditions exist for the Group to reach the previously stated estimates of the volume and profitability of the business in the whole of year 2005. QPR Software Plc transferred to reporting according to International Financial Reporting Standards (IFRS) as of January 1, 2005. This interim report, including the comparison figures, is according to IFRS standards. The interim report in unaudited. NET SALES AND FINANCIAL PERFORMANCE 1-3/2005 The Group?s net sales and operating result developed positively. The net sales of the Group for the first quarter increased 10.0% compared to the corresponding period of the previous year and was MEUR 1.551 (MEUR 1.409). The operating profit for the Group?s first quarter was MEUR 0.136 (MEUR 0.119), which was 8.8% (8.4%) of turnover. The net result of the Group increased 39.8% compared to the corresponding period of the previous year and was MEUR 0.157 (MEUR 0.113), which was 10.1% (8.0%) of turnover. The earning per share was EUR 0.01. The share of international operations of the Group?s turnover for the review period was 52% (71%). During the review period 75% (84%) of the license sales, MEUR 0.572 accumulated via the global distribution channel, and decreased 19.5% compared to the corresponding period of the previous year. The Group?s net sales is accrued in its entirety from the software business, divided as follows during the review period, MEUR: 1-3/2005 1-3/2004 Software licenses 0.759 0.847 -10.5% Initial partner payments 0.004 0.017 -76.5% Maintenance services 0.485 0.391 +24.0% Professional services 0.303 0.154 +96.7% Net sales in total 1.551 1.409 +10.0% BUSINESS OPERATIONS 1-3/2005 The positive development of the software business during the review period was based on the increase of sales by domestic direct sales and further by the domestic professional services. International Operations and Distribution Network The share of international operations of the Group's net sales for the review period was 52% (71%), and 75% (84%) of the license sales accumulated via the global distribution channel. During the review period, in total of 37 international resellers delivered QPR software in 29 countries. Co-operation with the key resellers was intensified and sales activities were focused on the most significant key customers. Geographically strongest regions were South Africa, the United States, Sweden, the United Kingdom and Switzerland. Banking, finance and insurance was the strongest industry segment with such distinguished customers as F?reningsSparbanken in Sweden, Banco Ita? in Brazil, Dubai Islamic Bank in the United Arab Emirates, Vero Insurance in New Zealand, and Metropolitan Health Group in South Africa. Domestic Operations Business in Finland developed positively supported by the strong growth in professional services. An increasing share of the deliveries were focused on delivering larger complete management solutions, and the supporting professional services and project agreements. Deliveries were largely based on the QPR?s industry specific solutions. Telecommunications, Local Government, Manufacturing, Construction, Wholesale and Logistics as well as Food were the strongest industry segments with such distinguished customers as Nokia, City of Kerava, Metso, Skanska, SRV Westerlund, Tradeka and Valio. PRODUCT DEVELOPMENT The Group's R&D costs for the review period totalled MEUR 0.294 (MEUR 0.277), that is, 19.0% (19.7%) of turnover, and increased 6.2% compared to the previous year. No overhead costs have been included in the R&D costs, neither have any R&D costs been capitalized in the balance sheet, as the R&D costs for the review period are regarded not to fulfill the particular criteria for R&D costs stated in the IAS 38. Product creation is consistently focused on development of software products for Performance Management, Process Management and Operational Risk Management. The core know-how of product development is on-goingly centralised in the own organisation, and long-term co-operation is continued with subcontractors. All software products developed by QPR are best-of-breed, ready-to- run applications, which are largely adaptable to the particular management methods of the customer, are adaptable also by the customers themselves, are delivered in multiple language versions, and integrate seamlessly to the customer?s other information systems. It is the goal of QPR to expand the current product offering by developing new management software applications that fit into the QPR product portfolio. QPR 7.3 is a 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 7.3, organisations support their people's commitment to organisation's objectives and processes. QPR's software have been translated into 20 different languages. PERSONNEL At the end of the review period the Group employed a total of 44 people (41). The number of employees increased by four during the review period. For incentive and commitment purposes, the Group has personnel bonus scheme and stock option plan covering the whole personnel. The subscription period for stock options 2003/IIIA began in 30 September 2004 and is scaled to begin for stock options 2003/IIIB in 30 September 2005. FINANCING, INVESTMENT AND CHANGES IN EQUITY At the end of the review period, the Group?s equity was MEUR 1.591 (MEUR 0.937), and the Group?s equity ratio was 40.6% (25.0%) correspondingly. The Group?s investments in fixed assets during the review period were MEUR 0.025 (MEUR 0.003), i.e. 1.6% (0.2%) of turnover. During the review period, the Group?s liquidity has further improved. At the end of the review period, liquid cash funds amounted to MEUR 1.534 (MEUR 0.629). Current assets less MEUR 0.820 long-term receivables amounted to MEUR 3.953, short-term liabilities amounted to MEUR 2.447 and deferred revenue amounted to MEUR 1.163. Thus the Quick Ratio key figure at the end of the review period was 3.08. The liquidity situation is estimated to remain good during the next 12 months. The liquidity situation is further supported during the next 12 months by the instalments from the sale of Business Games operation (estimated MEUR 0.4) and instalments from the sale of holding in partly owned company (estimated MEUR 0.1). During the review period, no new shares were subscribed, nor were any new subordinated loans drawn. DECISIONS MADE BY THE ANNUAL SHAREHOLDERS? MEETING 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 (5) ordinary members. The Annual Meeting re-elected Vesa-Pekka Leskinen, Teemu Malmi, Jane Moilanen, Asko Piekkola and Timo Tirkkonen to the Board of Directors. The Board of Directors elected Timo Tirkkonen to continue as Chairman of the Board. Ernst & Young Oy, Authorised Public Accountants, continues 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 authorisation 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. QPR Software Plc?s Stock Option Plan 2005/I and authorisation to increase share capital were registered on trade register on 1 April 2005. EVENTS AFTER THE REVIEW PERIOD 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. The Board of Directors resolved as well 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. COMPANY OWNERSHIP AND TRADING IN COMPANY SHARES At the end of the review period the Company had a total of 719 shareholders. In the review period trading in company shares amounted to MEUR 0.631, i.e. an average of EUR 11,260 per trading day. Trading in shares totaled 1,211,120 shares, giving an average of 21,627 shares per trading day. Turnover in shares corresponds to 10.0% of the total shares and the average price was EUR 0.52 per share. The market value of the shares at the end of the review period was EUR 0.53 per share, totaling MEUR 6.393. The number of shares issued by QPR Software Plc at the end of the fiscal period and at the time of review was 12,062,606. In addition to this the Company has issued stock option rights, including the stock option distributed on 26 April 2005, to Board members, management and other personnel, which entitle the holders to further subscribe 449,417 new shares with the hitherto unconverted options. Thereof, the subscription period for a total of 239,417 options began in 30 September 2004, and will begin for a total of 210,000 options in 30 September 2005. In addition, stock option rights are also in the possession of the subsidiary to be given to present and future employees and management, which would entitle holders to subscribe a maximum of 317,531 shares. 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. CORPORATE GOVERNANCE QPR Software Plc complies with the Helsinki Exchanges' Guidelines for Insiders entered into force on 1 March 2000 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, CALCULATORY TAX GAIN The date of transition to IFRS for QPR Software Plc is 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. QPR Software Plc will prepare its first IFRS financial statements for the fiscal year ending December 31, 2005. This interim report released on April 27, 2005, for the first quarter ending March 31, 2005, including the comparison figures, is according to IFRS. The calculatory tax gain and output based on the mother company's losses prior to January 1, 2004, for which, in accordance with generally accepted accounting principles considering precaution, a calculatory tax gain and output of 540,000 euro, was entered in the mother company's and the Groups annual books in 2003. The amount entered for calculatory tax gain was not affected by the transition to IFRS. The calculatory tax gain has decreased during January through March 2005 reflecting the accumulated taxable income during that period. In the Group's balance sheet as of 31 March 2005, the remaining calculatory tax gain is 328,550 euro. FUTURE PROSPECTS It is the conception of the Board of Directors that the estimates of Company?s turnover and profit given for the whole of 2005 needs not to be changed. The Board of Directors estimated on 28 January 2005 that the organic growth in the net sales of the QPR Group will for 2005 be on an annual level around 20-30%, and based on that the operating profit percentage will remain on the same level as in year 2004, which was approximately 15 percent. In addition, the Company further intends to follow the developments in the re-structuring of software industry, and aims to actively participate in it. COMPANY?S FINANCIAL INFORMATION IN 2005 The subsequent Interim Reports of QPR Software Plc will be published: Interim Report 1-6/05 Wednesday, July 27, 2005 Interim Report 1-9/05 Wednesday, October 26, 2005 GROUP INCOME STATEMENT 1-3/05 1-3/04 1-12/04 (MEUR) change NET SALES 1.551 1.409 10% 5.555 Other operating income 0.013 0.019 -30% 0.039 Share of the results in associated companies 0.000 -0.034 100% -0.109 Expenses 1.375 1.197 15% 4.398 Depreciation 0.053 0.079 -33% 0.251 OPERATING PROFIT/LOSS 0.136 0.119 14% 0.836 Net financial income and expenses 0.069 0.017 305% -0.142 PROFIT BEFORE TAXES 0.205 0.136 51% 0.694 Taxes -0.048 -0.023 105% -0.224 NET PROFIT/LOSS 0.157 0.113 40% 0.470 Earnings per share (EUR) 0.013 0.010 30% 0.040 Earnings per share, diluted (EUR) 0.013 0.009 37% 0.039 3/05 3/04 12/04 GROUP BALANCE SHEET (MEUR) ASSETS FIXED ASSETS AND OTHER NON-CURRENT ASSETS 0.310 0.897 -65% 0.339 Intangible assets 0.182 0.279 -35% 0.207 Tangible assets 0.124 0.206 -40% 0.127 Investments in associated companies 0.000 0.407 -100% 0.000 Other investments 0.005 0.005 0% 0.005 CURRENT ASSETS 4.773 3.721 28% 4.453 Deferred tax gain 0.329 0.517 -36% 0.362 Long-term receivables 0.342 0.570 -40% 0.509 Short-term receivables 2.569 2.005 28% 2.815 Cash and cash equivalents 1.534 0.629 144% 0.767 TOTAL ASSETS 5.083 4.618 10% 4.792 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY 1.591 0.937 70% 1.459 Share capital 1.327 1.304 2% 1.327 Other shareholders' equity 0.264 -0.367 172% 0.132 LIABILITIES 3.492 3.681 -5% 3.333 Subordinated loans 0.486 0.486 0% 0.486 Other long-term liabilities 0.559 0.489 14% 0.821 Short-term liabilities 2.447 2.706 -10% 2.026 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 5.083 4.618 10% 4.792 Shareholders' equity per share (Euro) 0.13 0.08 0.12 Equity ratio 40.6% 25.0% 36.7% ROI 31.2% 23.8% 31.4% R&D expenditure (MEUR) 0.294 0.277 6% 1.095 Gross investments in non-current assets (MEUR) 0.025 0.003 692% 0.024 Average number of personnel 43 40 39 Adjusted average 12,267,774 12,048,586 11,999,804 number of shares in review period Number of shares at 12,062,606 11,851,356 12,062,606 the end of review period GROUP STATEMENT OF CHANGES IN SHAREHOLDERS? EQUITY Share Other Translation Retained (kEUR) capital funds Differences Earnings Total SHAREHOLDERS? EQUITY 1 JANUARY 2004 1,257 3,163 146 -3,901 664 Issuance of new shares 47 47 Share premium 132 132 Covering retained losses with share premium fund -3,132 3,132 0 Share-related compensation 8 8 Reserve fund 0 0 Translation differences -26 -26 Profit for the period 113 113 CHANGE IN SHAREHOLDERS? EQUITY 47 -2,993 -26 3,245 272 SHAREHOLDERS? EQUITY 31 MARCH 2004 1,304 170 119 -656 937 Issuance of new shares 23 23 Share premium 40 40 Share-related compensation 24 24 Reserve fund 1 1 Translation differences 78 78 Profit for the period 357 357 CHANGE IN SHAREHOLDERS? EQUITY 23 64 78 357 523 SHAREHOLDERS? EQUITY 31 DECEMBER 2004 1,327 234 197 -298 1,459 Share-related compensation 8 8 Reserve fund 0 0 Translation differnces -33 -33 Profit for the period 157 157 CHANGE IN SHAREHOLDERS? EQUITY 0 8 -33 157 132 SHAREHOLDERS? EQUITY 31 MARCH 2005 1,327 242 164 -141 1,591 Consolidated cash-flow for the review period, for 2004 and for the corresponding period in the previous year (MEUR) 1-3/05 1-3/04 1-12/04 CASH-FLOW FROM OPERATING ACTIVITIES EBIT 0.136 0.125 0.864 Depreciation 0.053 0.047 0.146 Other income and expenses that include no payment 0.182 -0.044 0.509 IFRS-adjustments that include no payment 0.008 -0.046 -0.151 Net financial income 0.037 0.008 -0.175 Taxes -0.014 0.000 -0.031 Net change in interest- free receivables 0.076 0.426 -0.685 Net change in interest- free loans 0.446 -0.275 0.103 Net change in long-term receivables and debts 0.166 0.035 0.070 Net cash-flow from Operating activities 1.091 0.275 0.649 CASH-FLOW FROM INVESTING ACTIVITIES Capital expenditure -0.025 -0.003 -0.024 Cash-flow from investing activities -0.025 -0.003 -0.024 CASH-FLOW FROM FINANCING ACTIVITIES Repayment of long-term borrowings -0.286 -0.204 -0.563 Proceeds from issuance Of new shares 0.000 0.178 0.241 Translation differences -0.013 -0.027 0.051 Cash-flow from financing activities -0.298 -0.052 -0.271 Net change in cash and cash equivalents (+) / (-) 0.767 0.219 0.357 Cash and cash equivalents at beginning of period 0.767 0.410 0.410 Cash and cash equivalents 1.534 0.629 0.767 at end of period , CONTINGENT LIABILITIES Securities for own commitments (MEUR) Mortgages for loans 1.325 1.325 1.325 The Group has no liabilities for derivatives. RECONCILIATION OF PROFIT IN THE COMPARATIVE PERIOD Group Income Statement January 1?March 31, 2004 FAS IFRS- IFRS (kEUR) 1-3/04 adjustmens 1-3/04 NET SALES 1,409 1,409 Other operating income 19 19 Share of the results in associated companies -34 -34 Material and services 176 176 Personnel expenses 659 8 667 Depreciation and amortization 47 79 Tangible assets 22 33 54 Intangible assets 25 25 Other operating expenses 388 -34 353 Operating profit 125 119 Financing income and expenses 7 17 Financial income 31 12 43 Financial expenses -24 -2 -26 Profit before tax 132 136 Taxes -23 -23 Profit for the period 109 113 RECONCILIATION OF PROFIT IN 2004 Group Income Statement January 1?December 31, 2004 FAS IFRS- IFRS (kEUR) 1-12/04 adjustmens 1-12/04 NET SALES 5,555 5,555 Other operating income 39 39 Share of the results in associated companies -108 -108 Material and services 337 337 Personnel expenses 2,605 32 2,637 Depreciation and amortization 146 251 Tangible assets 44 105 150 Intangible assets 102 102 Other operating expenses 1,534 -110 1,424 Operating profit 864 836 Financing income and expenses -179 -142 Financial income 18 42 60 Financial expenses -198 -5 -203 Profit before tax 684 694 Taxes -224 -224 Profit for the period 460 470 RECONCILIATION OF SHAREHOLDERS? EQUITY, 31 MARCH 2004 Group balance sheet 31 March 2004 FAS IFRS- IFRS (kEUR) 3/04 adjustmens 3/04 Share capital 1,304 1,304 Share premium account 257 -125 132 Share-related compensation 0 16 16 Reserve fund 22 22 Retained earnings -658 9 -649 Profit for the period 109 4 113 Subordinated loans 486 -486 0 SHAREHOLDERS? EQUITY 1,520 937 RECONCILIATION OF SHAREHOLDERS? EQUITY, 31 DECEMBER 2004 Group balance sheet 31 December 2004 FAS IFRS- IFRS (kEUR) 12/04 adjustmens 12/04 Share capital 1,327 1,327 Share premium account 297 -125 171 Share-related compensation 0 40 40 Reserve fund 22 22 Retained earnings -580 9 -571 Profit for the period 460 10 470 Subordinated loans 486 -486 0 SHAREHOLDERS? EQUITY 2,012 1,459 Reconciliation of shareholders' equity on January 1, 2004 has been published as a stock exchange release on February 25, 2005. The interim report is unaudited. QPR SOFTWARE PLC Board of Directors Further information: QPR SOFTWARE PLC Mr. Matti Kanninen, Managing Director tel. +358-40-545 5877 matti.kanninen@qpr.com http://www.qpr.com DISTRIBUTION: Helsinki Stock Exchange Main media Neither this press release nor any copy of it may be taken, transmitted into or distributed in the United States of America or its territories or possessions.