QPR SOFTWARE PLC UNOFFICIAL TRANSLATION OF THE STOCK EXCHANGE BULLETIN FROM JANUARY 28, 2004 AT 5.30 PM QPR SOFTWARE PLC?S FINANCIAL STATEMENTS BULLETIN 1-12/2003 The net sales of the QPR Group for the fiscal period 2003 were MEUR 5.166 (MEUR 8.728 in 2002). The operating profit for the fiscal period was MEUR 0.800 (MEUR -3.390) including a total of MEUR 1.200 being the accrual for the selling price of the divested Business Games operations. The net result for the fiscal period was MEUR 0.709 (MEUR -5.795), which includes a total of MEUR 0.540 being an entry for deferred tax gain. The earning per share was EUR 0.02 (EUR -0.56). In the fiscal period 2003 the net sales of the software business (including software licenses, initial partner payments, maintenance and professional services sales) decreased by 21.1% compared to the previous year and was MEUR 4.707. End user sales (software business less partner payments) increased 0.4% compared to the previous year and were MEUR 4.439. The net sales of Business Games operations were MEUR 0.460 (MEUR 2.759). Business Games operation was divested on 30 January 2003. The net sales of the Group for the fourth quarter, MEUR 1.572, increased 66.1% compared to the previous quarter and decreased 25.7% compared to the corresponding quarter of the previous year. The net sales of the software business were MEUR 1.522 in which there was an increase of 69.4% compared to the previous quarter and a decrease of 10.8% compared to the corresponding quarter of the previous year. End user sales (software business less initial partner payments) were MEUR 1.539, in which there was an increase of 72.8% compared to the previous quarter and an increase of 8.7% compared to the corresponding quarter of the previous year. Software license sales were MEUR 1.058, in which there was an increase of 128.6% compared to the previous quarter and an increase of 17.3% compared to the corresponding quarter of the previous year. The share of end customer sales of the company?s turnover in the fourth quarter was 97.9%, whereas in the corresponding quarter of the previous year it was 66.9%. Given the present market situation the Board of Directors anticipates that the net sales of the software business for the first quarter of 2004 will reach MEUR 1.3 to 1.5, while for the corresponding period in 2003 it was MEUR 1.346. The Group?s operating result for the first quarter is estimated to be positive. The following table presents the key figures for the fiscal period compared to the corresponding period of the previous year. 1-12/03 1-12/02 - Net Sales, MEUR 5.166 (8.728) - Other Oper. Income, MEUR 1.327 (0.501) - Operating Result, MEUR 0.800 (-3.390) - Net Result, MEUR 0.709 (-5.795) - Earning per Share, EUR 0.02 (-0.56) - Equity Ratio 20.7% (-12.3%) - Equity per Share, EUR 0.07 (-0.05) - Return on Investment 35.4% (-89.2%) The share of software business of the Group?s turnover for the fiscal period was 91.1% (68.4%). The share of international operations of the Group?s turnover for the fiscal period was 67% (55%). The turnover of the Group for ongoing business was divided as follows for the fiscal period 2003 (previous year): Software licenses 2.553 (2.974) -14.2% Partner payments 0.268 (1.545) -82.7% Maintenance services 1.474 (1.231) +19.7% Professional services 0.412 (0.218) +89.1% Software business in total 4.707 (5.968) -21.1% Business Games business 0.460 (2.760) -83.3% Development of operations In the year 2003 the net sales of the QPR Group decreased 40.8% compared to 2002, and were MEUR 5.166. The operating profit for the fiscal period was MEUR 0.800, which was 15.5% of turnover. The net result for the fiscal period was MEUR 0.709 and the earning per share was EUR 0.02 while the earning per share after the dilution effect was EUR 0.01. The operating result for the fiscal period contains a sum of MEUR 1.200, being the accrual for the selling price of the divested Business Games operations, and the net result for the fiscal period contains an entry of MEUR 0.540 for deferred tax gain. The result for the fiscal period further includes costs, which can be described as one-off, being in respect of the reorganisation of the company?s operations and financial arrangements and amounting to some MEUR 0.250, which were mainly materialised in the latter half of the year. In addition to this, the company experienced costs of some MEUR 0.100 for extraordinary interest and financing costs during the fiscal period. The effect of the Business Games operation on the net result of the Group, excluding accrual of the selling price of the Business Games operation at MEUR 1.200 entered as other operating income, was only KEUR 7. The concentration of the QPR Group on software business activities and the investments in global distribution channels continued during the fiscal period, and co-operation with the key distributors was expanded and intensified. During the fiscal period 77% (39%) of the license sales, MEUR 1.974, accumulated via the global distribution channel, where growth amounted to 68% compared to the previous year. Herewith the QPR net sales and operating profit for the fiscal period 2003 by business area and quarter (ongoing software business = SB and Business Games operation sold = BG) likewise the accrual of the selling price of the Business Games operation (SP) at MEUR 1.200 and its effect on the Group?s operating result (KEUR): 1-3/03 4-6/03 SB BG SP Total SB BG SP Total Net Sales 1,346 427 1,773 939 -65 875 Other Operating Income 16 0 0 16 48 0 80 128 Operating Result -1 218 0 218 -413 -135 80 -469 Operating Result from beginning of year -1 218 0 218 -414 83 80 -251 7-9/03 10-12/03 SB BG SP Total SB BG SP Total Net Sales 900 48 947 1,522 50 1,572 Other Operating Income 9 0 452 462 53 0 668 721 Operating Result -181 -49 452 223 157 3 668 828 Operating Result from beginning of year -595 35 532 -28 -438 38 1,200 800 Development of operations 10-12/2003 The net sales for the Group?s fourth quarter, MEUR 1.572 (MEUR 2.116) increased 66.1% compared to the previous quarter and decreased 25.7% compared to the corresponding quarter of the previous year. The development of the Group?s net sales was favourable compared to the previous quarter, especially for end user demand. The net sales for software business were MEUR 1.522, showing an increase of 69.4% compared to the previous quarter and a decrease of 10.8% compared to the corresponding quarter of the previous year. End user sales (net sales from software business less initial partner payments) were MEUR 1.539, showing an increase of 72.8% compared to the previous quarter and an increase of 8.7% compared to the corresponding quarter of the previous year. Sales of software licenses totalled MEUR 1.058, showing an increase of 128.6% compared to the previous quarter and an increase of 17.3% compared to the corresponding quarter of the previous year. The share of end user sales of the company?s turnover in the fourth quarter was 97.9%, whereas in the corresponding quarter of the previous year it was 66.9%. The operating result for the Group?s fourth quarter was MEUR 0.828. The operating result for the fourth quarter was affected by the accrual of the selling price for the divested Business Games operation at MEUR 0.668. The net result of the Group for the fourth quarter was MEUR 1.204. The net result of the Group for the fourth quarter was affected by the entering of MEUR 0.540 as deferred tax gain. Product Development In March 2003 QPR launched a new release of the Balanced Scorecard and Process Management software. QPR 7 is the new collaborative management software aimed at committing people to the organisation?s objectives and processes. QPR 7 seamlessly combines the QPR ScoreCard and the QPR ProcessGuide. QPR 7 has been well received on the markets as a strategic tool representing new thinking and for its part will change the conventional methods for communication of strategy and process management. By the end of the fiscal period QPR 7 has been translated into 20 different languages. The Company?s R&D costs for the fiscal period totalled MEUR 1.085 (MEUR 2.434), that is, 21.0% (27.9%) of turnover. R&D costs have not been capitalized in the balance sheet. No overhead costs have been included in the R&D costs. Personnel and Organisation At the end of the fiscal period the Group employed a total of 41 people (98), all of whom are working in the software business. Financing, investment and changes in equity At the end of the fiscal period the Group?s equity was MEUR 1.259, and its share capital was MEUR 1.257. The Group?s equity ratio was 20.7% (-12.3%) at the end of December 2003. At the end of the fiscal period the Group?s liquid cash funds were MEUR 0.410. The Group?s investments in fixed assets were MEUR 0.098 (MEUR 0.973), i.e. 1.9% (11.2%) of turnover. The most significant investment was the subscription of QPR CostControl BV shares in the December 2003 issue to the amount of MEUR 0.090. The equity of the parent company QPR Software Plc totalled MEUR 2.014, of which MEUR 1.257 share capital. By the end of the fiscal period the Group?s liquidity had returned to normal, having been tight for most of the year. At the time of closing the books liquid cash funds amounted to MEUR 0.410, current assets less MEUR 0.766 long-term receivables amounted to MEUR 2.812, short-term liabilities amounted to MEUR 3.069 and deferred revenue amounted to MEUR 0.694. Thus the Quick Ratio key figure at the end of the fiscal period was 1.18. The liquidity prognosis indicates that the Group?s cash funds will be sufficient for the next 12 months, and the liquidity situation is estimated to improve further during that time. Factors contributing to the improvement in liquidity are improvement in the profitability of the Group?s business operations, probable additional subscription of shares by shareholders (approx. MEUR 0.2) and instalments from the sale of Business Games operation during the fiscal period (estimated MEUR 0.5). During the fiscal period new shares were subscribed with stock options in November 2003 and a targeted share issue was accomplished in December 2003. Together these served to raise share capital by MEUR 0.116 and MEUR 0.332 was entered in the share premium reserve. During the fiscal period no new subordinated loans were drawn. Other events during the fiscal period The extraordinary general meeting of 7 January 2003 of QPR Software Plc elected Professor Teemu Malmi, Helsinki School of Economics, an ordinary member of the Board of Directors in place of Mr Jouko Pelkonen who had resigned, and re-elected the former members Professor Esa Saarinen, Helsinki University of Technology, Director Pertti Korhonen, Nokia, and CEO Antti Kosunen, QPR. The meeting authorised the Board of Directors to dispose of the shares in subsidiaries or associated companies held by the Company, either in part or in whole on the conditions approved by the Board of Directors. The Helsinki Stock Exchange placed the QPR Software Plc share on the Surveillance list as of 17 February 2003. On 28 February 2003, QPR announced the termination of the negotiations within the employee participation statutes (co- operation procedure) concerning the future of the whole of Oulu office and cancelled the employment relationship of 19 employees. On 7 March 2003, the Annual General Meeting of QPR Software Plc approved the income statements and the balance sheet of the Company and the Group for the year 2002, and released the Board of Directors and the Managing Director from liability for the financial year 2002. In addition, the meeting re-elected CEO Antti Kosunen and Professor Teemu Malmi as members of the Board of Directors. Professor Esa Saarinen and Director Pertti Korhonen resigned from the Board of Directors. Managing Director Asko Piekkola was elected a new member of the Board of Directors. CEO Antti Kosunen resigned from his duties as CEO of QPR Software Plc commencing on 1 July 2003. The Board of Directors of the Company appointed Matti Kanninen as acting CEO from 1 July 2003. On 1 July 2003, the Board of Directors of QPR Software Plc decided on a financing arrangement aimed at improving the Company?s financial situation and liquidity. Accordingly, the Company decided to sell 5,000 of its shares in Mawell Ltd and to offer the buyer an option to purchase a further 6,000 shares in Mawell Ltd. The Company received EUR 165,000 as the purchase price of the shares. The purchase price value of the option was EUR 198,000. In connection with the financing arrangement, the Company was granted a loan of EUR 450,000 by its major shareholders and sources close to the Company, which loan the Company decided to draw. The loan arrangement and the sale of 5,000 shares in Mawell Ltd did not influence the result since the shares were sold to their book value. These measures had also only a minor effect on the equity ratio and balance sheet. In the stock exchange bulletin of 11 July 2003, the Board of Directors of QPR provided further information of issues affecting the position of the Company. The most material and recent change was the drop in the Company?s headcount from 98 at the beginning of the year to 52 at the end of March 2003, and further to 42 at the end of June, as the result of the restructuring and reorganisation measures the Company initiated in 2002, and partly of the divestment of the Business Games operations. On 22 July 2003, the Extraordinary General meeting of QPR Software Plc authorized the Board of Directors to increase the share capital of the Company by issuing new shares, stock options or convertible bonds, in accordance with the Board's proposal. The authorization may amount to a maximum of EUR 228,270. However, through issuing stock options, the share capital of the Company may be increased by a maximum of EUR 57,067. Based on the authorization, a maximum of 2,075,182 shares or securities entitling to their subscription may be issued. On 22 July 2003, in conjunction with the financing arrangement aimed at improving the Company?s financial situation and liquidity, the general meeting approved a new stock option plan (Stock Option Plan 2003/I), based on which a total of 1,125,000 stock options was offered to the lenders. The stock options entitle their holders to subscribe a corresponding number of the shares of the Company. Further the general meeting approved a second stock option plan (Stock Option Plan 2003/II) according to which a total of 259,408 stock options will be distributed to the CEO, members of the Board of Directors and the management team, key personnel and personnel in the inner circle of the Group, and to the fully owned subsidiaries. The stock options entitle their holders to subscribe a corresponding number of the shares of the Company. The general meeting resolved to cancel the 270,000 stock options held by the Company, thereby annulling in full the stock option program approved by the general meeting of 31 August 2000, QPR Software Plc?s Stock Option Plan, and the stock option program approved by the general meeting of 9 July 2002, QPR Software Plc?s Stock Option Plan 2002. Following the annul, the share capital of the Company can no longer be increased on the basis of the stock option plans referred to above. The general meeting resolved to elect new members to the Board of Directors, and elected Teemu Malmi, Asko Piekkola, Vesa-Pekka Leskinen and Timo Tirkkonen members of the Board of Directors. The Board of Directors of QPR Software Plc elected among themselves Timo Tirkkonen the Chairman of the Board of Directors. At the same time the Board of Directors appointed as the managing director Matti Kanninen who had been the acting managing director from 1 July 2003. On 26 August 2003, the Board of Directors of QPR Software Plc resolved to sell 6,000 shares in Mawell Oy to a purchase price of EUR 198,000 in order to further improve the financial situation and liquidity of the Company. At the same time, the Company agreed to grant the buyer an option to buy a further 4,000 shares in Mawell Oy. The transaction had no influence on the result since the shares were sold at book-counter value of the shares. On 26 August 2003, the Board of Directors further resolved to sell a part of the credit balance for the selling price from Business Game Factory Ltd. The sale of the credit balance had a direct positive effect of approx. MEUR 0.365 on the book result. The remaining credit balance for the selling price was not entered into books earlier for reasons of caution. On 1 October 2003, the Board of Directors of QPR Software Plc resolved in accordance with the authorization granted by the general meeting on 22 July 2003 to issue and distribute stock options to QPR Software Group personnel and to QPR Services Oy, a fully owned subsidiary of QPR Software Plc. The number of stock options totals 518,790 and they entitle subscription of 518,790 shares of QPR Software Plc. Of the stock options 259,395 will be marked 2003/IIIA and 259,395 will be marked 2003/IIIB. The subscription price of a share with the stock options marked 2003/IIIA and 2003/IIIB is EUR 0.25 per share. The subscription price will be lowered after 1 October 2003 and on each fix date for payment of dividend, by the amount of the dividends, payment of which was resolved prior to the subscription. The minimum subscription price of a share shall be the book value equivalent of the share. The subscription period for the stock options marked 2003/IIIA is from 30 September 2004 to 31 December 2008 and for the stock options marked 2003/IIIB from 30 September 2005 to 31 December 2008. The stock options are meant to prompt the personnel toward a long- term commitment of increasing the value of the Company for the shareholders. Further, the stock options are aimed at binding the personnel to the employer through the condition that should the employment of a stock option holder be terminated prior to 30 September 2005, such person shall offer his or her stock options to the Company with no indemnification payable for the value eventually accrued on such stock options. A total of 210,000 of stock options marked 2003/IIIA, and 210,000 of stock options marked 2003/IIIB were distributed to the personnel of QPR Software Group. The remaining 98,790 of the stock options marked 2003/III were distributed to QPR Services Oy for later distribution to the current or future personnel of QPR Software Group. On 1 October 2003, the Board of Directors of QPR Software Plc resolved to distribute to the managing director of the Company a total of 50,000 and to each member of the Board of Directors a total of 30,000 stock options, of the stock options marked 2003/II issued by the Extraordinary General meeting on 22 July 2003. The distributed stock options marked 2003/II total 170,000. The remaining 89,408 of the stock options marked 2003/II were distributed to QPR Service Oy, a subsidiary of QPR Software Plc. The stock options marked 2003/II entitle the subscription of max. 259,408 shares in QPR Software Plc. The subscription price of a share with such stock option is EUR 0.30 per share and the subscription period is from 30 September 2004 to 31 December 2008. The Company decided on 28 November 2003 to sell in total of 4,000 shares in Mawell Ltd against the consideration of EUR 198,000. On 11 December the Company further sold 6,000 shares in Mawell Ltd at a total price of EUR 132,000. The Company no longer has any holding in Mawell Ltd. The share transaction had no effect on the result as it was accomplished at book-counter value of the shares. The general meeting of the Company had previously authorized the Board of Directors of the Company to sell shares under the conditions it deemed most fit. The total number of shares subscribed by 30 November 2003 under the QPR Software Plc?s Stock Option Plan 2003/I amounted to 650,000 shares in the said company, at a price of EUR 0.38 per share, the price at issue being in total EUR 247,000. The new shares entitle holders to dividends already for the fiscal period 2003 and yield other shareholder entitlements once the increase in share capital is registered in the Trade Register. Stock Option Plan 2003/I comprises a total of 1,125,000 stock option rights. Each option entitles the holder to convert one QPR Software Plc share. As a result of the conversion of hitherto unconverted options the number of shares may further rise by a maximum of 475,000 shares and the share capital by EUR 52,250. The issue price of shares with regard to the unconverted options is EUR 0.42 per share and the period for conversion of shares through option rights expires on 10 March 2004. If the full number of the remaining options is converted the total issue price of these shares will be EUR 199,500. On 11 December 2003 the Board of Directors of QPR Software Plc released the following Stock Exchange Bulletin: 1. QPR Software Plc and its subsidiary on 30 January 2003 sold its business games operation to the recently established Business Games Factory Oy (BGF) at a price of 1,200,000 Euro. In keeping with the contract BGF has paid the selling price, paying the seller a percentage share of its customer payment inflow, which has been noted as per cash basis in the QPR result. The payment of the instalments of the selling price began in May 2003 and by the end of August 2003 instalments totalling approximately 165,000 Euro had been paid. In addition to the foregoing, the sale of the receivable accomplished in August yielded a result of some 368,000 Euro. 2. It is the intention of QPR Software Plc and its subsidiary that once the business operations and financial situation of BGF are on a firm footing, in connection with the closing of the books for 2003, to shift with respect to the price of the transaction to normal book-keeping practice. As a result of this the remainder of the yield amounts to some 667,000 Euro and the remaining 896,000 Euro balance will be entered in the closing of the books. The aforementioned share transaction will enhance the group?s liquidity for 2003 by some 90,000 Euro. 3. The result of QPR for 2002 was markedly negative, and the confirmed losses of the mother company for the 2002 fiscal period amount to 4,203,792 Euro. As the profitability of the core business operation of the company improves and assuming that the development of the result goes as currently estimated, it will be possible for the company to use the aforementioned confirmed loss in future years. Thus with the closing of the books for 2003 the company will consider the possibility of entering a portion of a calculatory tax gain and output. Decisions on this will be taken when the closing of the books is ongoing and in the light of the situation prevailing at that time. Information regarding the company?s closing of the books for the fiscal period 2003 will be made available on 28 January 2004. 4. As a result of the improved business result, the measures described above, the previously accomplished sale of Mawell Oy shares and as an upshot of a share issue the equity of the closing of the books will grow significantly and solidity at the closing of the books is anticipated to exceed 20 per cent. The result of the company for the fiscal period 2003 will correspondingly be clearly positive. The Company subscribed on 16 December 2003 a total of 200 shares of QPR CostControl BV in a share issue targeted at the existing shareholders of QPR CostControl BV. The issue price of the shares was 450 Euro each, in total 90,000 Euro. The holding of QPR Software Plc in QPR CostControl BV after the subscription of shares is 32.3% where as it was formerly 32.7%. The book value of QPR Software Plc?s investment in the partly owned company after the subscription is approximately EUR 419,000. The aim of the accomplished targeted share issue is to ensure a rapid launch and efficient distribution of the new QPR CostControl product to be released in 2004, and thereby to achieve a favourable turnover and result development in the partly owned company in 2004. The Board of Directors of QPR Software Plc, under the authorization given at the extra-ordinary company meeting on 22 July 2003, decided on 19 December 2003 on a targeted share issue, in which an investment fund entitled Fides New Media, administrated by Fides Rahastoyhti? Oy, and Ulkomarkkinat Oy subscribed 200,000 new shares each, i.e. in total 400,000 new shares. The subscription price of the shares in the targeted share issue was 0.50 Euro each, and the total subscription price of the shares was 200,000 Euro. As a result of the subscription of the shares the share capital of QPR Software Plc increased by EUR 44,000. The new shares issued amounted after targeted share issue approximately 3.5 per cent of company?s total share capital. The new shares entitle holders to dividend for the present fiscal period and yield other shareholder rights once increase has been entered on the Trade Register. The targeted share issue improved the company?s liquidity by EUR 200,000, and improved the company?s solidity. The total increase in share capital of EUR 71,500 due to the share subscriptions of 650,000 company shares related to the QPR Software Plc Stock Option Plan 2003/I, and the total increase in share capital of EUR 44,000 due to the share subscriptions of 400,000 company shares resulting from the targeted share issue decided on by the Board with reference to the authorization given by the extraordinary general meeting were entered in the Trade Register during the fiscal period 2003. The company announced that it would apply for the listing of the new shares on Helsinki Stock Exchange New Market List for public trading together with the old shares. Company ownership and trading in company shares At the end of the fiscal period the Company had a total of 599 shareholders. Ownership was distributed as follows: Number of shares Owners % Number of shares % 1 ? 500 228 38.06% 48,576 0.43% 501 ? 1,000 100 16.69% 86,031 0.75% 1,001 ? 5,000 150 25.04% 421,856 3.69% 5,001 ? 10,000 44 7.35% 352,962 3.09% 10,001 ? 50,000 49 8.18% 1,116,308 9.77% 50,001 ? 100,000 11 1.84% 726,466 6.36% 100,001 ? 2,795,714 17 2.84% 8,674,157 75.91% Total 599 11,426,356 Of the shareholders 23 (3.84%) were foreigners, owning 128,396 shares (1.12%). In the fiscal period trading in company shares amounted to MEUR 1.204, i.e. an average of EUR 4,817 per trading day. Trading in shares totalled 3,562,375 shares, giving an average of 14,250 shares per trading day. Turnover in shares corresponds to 31.2% of the total shares and the average price was EUR 0.34 per share. The market value of the shares at the end of the fiscal period was EUR 0.50 per share, totalling MEUR 5.713. The number of shares issued by QPR Software Plc at the end of the fiscal period and at the time of review was 11,426,356. In addition to this the company has issued stock option rights to Board members, management and key personnel, which entitle the holders to subscribe 590,000 new shares. 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 188,198 shares. Furthermore, in keeping with the decision of the general meeting of 22 July 2003 and with a view to improving the company?s financial situation and liquidity, the company has issued stock option rights for subscription by those providing loans in the financial arrangements. These options would entitle holders to subscribe a further 475,000 new shares. On the basis of the authorization given at the extraordinary general meeting of 22 July 2003 the Board of Directors could further issue securities, which would increase the number of company shares in circulation at maximum by 1,156,392 shares. This authorization is in force until 22 July 2004. Events after the fiscal period The 650,000 shares subscribed on stock option rights as part of the QPR Software Plc?s Stock Option Plan 2003/I and the 400,000 shares subscribed in the targeted share issue entered public trading on the Helsinki Stock Exchange New Market list together with old shares as of 14 January 2004. The number of shares available for trading thus rose to 11,426,356. Financial Supervision had on 10 December 2003 granted the Company permission (No. 124/271/2003) to deviate from its obligation to issue a prospectus when applying for inclusion on the Stock Exchange List of the shares subscribed under Stock Option Plan 2003/I and the permission of 2 January 2004 to deviate from the obligation to publish a prospectus (No. 132/271/2003) when applying for inclusion on the Stock Exchange list of shares to be subscribed under the targeted share issue. Future prospects Given the present market situation the Board of Directors estimates that software business net sales will reach MEUR 1.3 to 1.5 in the first quarter of 2004, whereas in the corresponding quarter of 2003 it was MEUR 1.346. It is anticipated that the Group?s operating result for the first quarter will be positive. For the whole of 2004, the growth of the current business operations is estimated to continue steadily. However, for more significant financial growth than what has been recently achieved would require more extensive contracts to be obtained with QPR?s potential co-operation partners. It is the conception of the Board of Directors that as it stands at present the growth in the net sales of the QPR?s software business will for 2004 be on an annual level around 20-40%. The result of the Group is thus anticipated to be distinctly positive. GROUP INCOME STATEMENT (MEUR) 1-12/03 1-12/02 change NET SALES 5.166 8.728 -41% Other operating income 1.327 0.501 165% Share of results in associated companies -0.144 -0.178 -19% Expenses 5.338 11.699 -54% Depreciation according to plan 0.212 0.740 -71% OPERATING PROFIT/LOSS 0.800 -3.390 124% Net financial income and expenses -0.613 -2.385 -74% PROFIT BEFORE EXTRAORDINARY ITEMS 0.188 -5.775 103% Extraordinary earnings 0.540 0.000 100% Extraordinary expenses 0.000 0.000 PROFIT BEFORE TAXES 0.727 -5.775 113% Taxes -0.018 -0.041 -56% Minority interest 0.000 0.020 -100% NET PROFIT/LOSS 0.709 -5.795 112% Earnings per share (EUR) 0.02 -0.56 103% Taxes include taxes for fiscal period and calculated tax total noted in income statement GROUP BALANCE SHEET (MEUR) 12/03 12/02 ASSETS FIXED ASSETS AND OTHER NON-CURRENT ASSETS 0.852 1.773 -52% Intangible assets 0.301 0.469 -36% Tangible assets 0.123 0.187 -34% Investments in Associated companies 0.424 1.112 -62% Other investments 0.005 0.005 CURRENT ASSETS 3.578 3.659 -2% Long-term receivables 1.221 0.262 366% Short-term receivables 1.947 3.127 -38% Cash and cash equivalents 0.410 0.270 52% TOTAL ASSETS 4.430 5.433 -18% SHAREHOLDERS? EQUITY AND LIABILITIES SHAREHOLDERS? EQUITY 1.259 -0.043 3028% Share capital 1.257 1.141 10% Other shareholders? equity 0.002 -1.184 100% MINORITY INTERESTS 0.000 0.000 LIABILITIES 3.171 5.475 -42% Long- term liabilities 0.102 0.565 -82% Short-term liabilities 3.069 4.911 -37% TOTAL SHAREHOLDERS? EQUITY AND LIABILITIES 4.430 5.433 -18% Shareholders? equity per share (Euro) 0.07 -0.05 240% Equity Ratio 20.7% -12.3% ROI 35.4% -89.2% R&D expenditure (MEUR) 1.085 2.434 -55% Gross investments in non-current assets (MEUR) 0.098 0.973 -90% Average number of personnel 54 113 Adjusted average number of shares in fiscal period 10,413,753 10,328,054 Number of shares at the end of fiscal period 11,426,356 10,376,356 Consolidated cash flow for the review period and for the corresponding period in the previous year (MEUR): 1-12/02 1-12/02 CASH-FLOW FROM OPERATING ACTIVITIES EBIT 0.800 -3.390 Depreciation according to plan 0.212 0.740 Other income and expenses that include no payment 0.099 2.837 Net financial income -0.613 -0.862 Incidental revenue and expenses 0.540 0.000 Taxes -0.018 -0.041 Net change in interest-free receivables 1.176 -1.060 Net change in interest-free loans -1.859 -0.291 Net change in long-term receivables and debts-0.959 0.239 Net cash-flow from operating activities -0.623 -1.826 CASH-FLOW FROM INVESTING ACTIVITIES Capital expenditure 0.020 -0.130 Investment in associated companies -0.109 0.000 Purchase of investments 0.693 0.000 Proceeds from sale of tangible and intangible assets 0.000 0.095 Proceeds from repayments of loans 0.000 0.000 Cash-flow from investing activities 0.604 -0.036 CASH-FLOW FROM FINANCING ACTIVITIES Proceeds from long-term borrowings 0.000 1.200 Repayment of long-term borrowings -0.445 -0.370 Net change in minority shares 0.000 0.020 Proceeds from convertible subordinated debentures 0.000 0.274 Proceeds from issuance of new shares 0.447 1.276 Dividends paid 0.000 -0.699 Foreign exchange adjustments 0.156 0.163 Cash flow from financing activities 0.158 1.865 Net change in cash and cash equivalents (+) / (-) 0.139 0.003 Cash and cash equivalents at beginning of period 0.270 0.268 Cash and cash equivalents at end of period 0.410 0.270 CONTINGENT LIABILITIES Securities for own commitments (MEUR) Mortgages for loans 1.325 1.325 The Group has no liabilities from derivatives. The financial statement 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.