QPR SOFTWARE OYJ STOCK EXCHANGE RELEASE, 29 April, 2003, 2.00 PM QPR SOFTWARE OYJ INTERIM REPORT JANUARY-MARCH 2003 Q1 NET SALES MATCH FORECASTS, RESULT POSITIVE 1-3/03 1-3/02 Net sales, MEUR 1.773 (2.888) Operating profit, MEUR 0.218 (1.092) Net result, MEUR 0.048 (0.573) Earnings per share (EPS), EUR 0.00 (0.06) Equity ratio -9.4% (60.2%) Equity per share, EUR -0.04 (0.55) Return on investment (ROI) 50.7% (72.3%) Development of operations, January-March 2003 Net sales of QPR Group declined by 38% to 1.773 MEUR in the first quarter of 2003 compared with the corresponding period in 2002. Operating profit for the first three months was 0.218 MEUR (1.092 MEUR), which accounts for 12.3% of net sales (37.8%). The Group?s net result was 0.048 MEUR, and earnings per share 0.00 EUR. Return of loan loss provisions of 0.1 MEUR improved the result. Key figures by business areas, MEUR: Software business Business games Total Net sales 1.346 (1.976) 0.427 (0.912) 1.773 (2.888) Operational expenses 1.324 (1.353) 0.177 (0.340) 1.502 (1.699) Depreciations 0.022 (0.102) 0.031 (0.000) 0.053 (0.102) Operating result -0.001 (0.520) 0.218 (0.572) 0.218 (1.092) Breakdown of software business figures, MEUR: Software licences 0.711 (1.247) -43.0% Partner payments 0.173 (0.298) ?41.9% Maintenance 0.390 (0.379) +3.2% Professional services 0.071 (0.052) +36.3% Total 1.346 (1.975) ?31.9% Net sales of the software business operations (including software licences, initial partner payments, and maintenance and professional services) declined by 32% to 1.346 MEUR during the reporting period compared with the same period in 2002. The share of software sales to end users (excluding partner payments) remained at the high level of 86% as outlined in the group strategy (85% in 2002). Net sales of Business Games declined by 53% to 0.427 MEUR. On January 31 QPR announced the sale of the unit in a buy-out agreement to a newly established company, Business game factory Oy. The purchase price, 1.2 MEUR, would be paid as 25% of the new company?s cash flow from sales. No payment was made during the reporting period. QPR estimates to receive about 0.5 MEUR in payment during 2003. QPR Group continued to develop software business operations and global distribution network during the period. Likewise the group continued to streamline operations to match demand. The impact of these measures will largely show in the second half of 2003. QPR is prepared to take further cost savings measures in order to retain profitability. On February 28 QPR announced the termination of negotiations within the employee participation statutes on the future of the Oulu office, and decided to terminate contract with 19 employees. Net sales accrued from the outside of Finland amounted to 56%. Product development In March QPR publicised a new version of the Balanced Scorecard and process management software. QPR 7 is new interactive software aimed at committing employees to common objectives and processes of organisation. QPR 7 seamlessly combines QPR Scorecard and QPR ProcessGuide. QPR 7 was well received in the markets as a new strategy tool, which changes conventional methods in communication of strategy and in process management. The Group?s R&D expenditure totalled 0.239 MEUR during the period (0.543 MEUR), which is 13.5% of net sales (18.8%). This expenditure was not capitalized in the balance sheet. Personnel and organisation The Group employed 52 persons at the end of the period (104). The decline during the first quarter was 46 people. Finance, investments and capital The Group?s shareholders? equity at the end of the period was 0.037 MEUR. Equity ratio at the end of March was ?9.4% (60.2%). Treating the convertible subordinated debenture of 0.486 MEUR as shareholders? equity ratio amounted to 0.8% (63.2%). The Group?s liquid assets at the end of the period totalled 0.245 MEUR (0.445 MEUR). Total investments in fixed assets during the first quarter amounted to 0.014 MEUR (0.089 MEUR), which equals 0.8% of net sales (3.1%). Shareholders? equity of the Group?s parent company, QPR Software Plc, was 1.230 MEUR, including share capital of 1.141 MEUR. The Group?s liquidity during the period remained tight. Liquid cash reserves at the end of the period amounted to 0.245 MEUR, current liabilities to 4.225 MEUR and received down payments to 0.937 MEUR. Consequently the Group?s quick ratio at the end of the period was 0.93. Sufficiency of the Group?s cash reserves for the next 12 months is expected to improve. A major risk to this development lies in a failure to reach sales targets. Liquidity may improve further if the Group can sell certain non-operational assets or make additional cost-savings measures. Trading in shares The company had 515 shareholders at the end of the period. Turnover of QPR share on the Helsinki Stock Exchange totalled 0.213 MEUR during the first quarter, which equals 3,437 euros a trading day. The total number of shares traded during the period was 0.613 million, equalling 9,881 shares a day. The trading volume equals 5.9% of the share capital. Average price was 0.32 euros per share. Total market capitalisation at the end of the period was 3.320 MEUR. The company does not have own shares. Extraordinary shareholders? meeting on 9 July 2002 authorized the Board of Directors to decide on the purchase of own shares on distributable funds until 7 July 2003 on the condition that the bookkeeping value or combined number of votes of the shares owned by the parent company or its subsidiaries does not exceed 5%. The Board has not exercised the authorisation. Other events during the period On 7 March, 2003 the Annual General Meeting of QPR Software Oyj approved the profit and loss account as well as the balance sheet for 2002 and discharged the members of the Board of Directors and Managing Director from liability for 2002. The AGM also elected Managing Director Antti Kosunen and Professor Teemu Malmi to continue as members of the Board. Professor Esa Saarinen and Director Pertti Korhonen resigned from the Board. Managing Director Asko Piekkola was elected as a new member to the Board. As of 17 February 2002 the Helsinki Stock Exchange placed QPR Software Oyj share on the Surveillance List. On January 7, 2003 the Extraordinary Annual Meeting of QPR Software Oyj elected Professor Teemu Malmi as new member of the Board of Directors, replacing Jouko Pelkonen. Professor Esa Saarinen, Director Pertti Korhonen of Nokia and Antti Kosunen of QPR remained as Board members. The EGM authorised the Board to divest shares in subsidiaries and minority holdings partly or in total on conditions approved by the Board. Outlook The general economic situation and postponed investment decision by larger companies have had a negative impact on the sales despite the products? high technical competitiveness. There is no sign of general improvement in business atmosphere, which makes longer-term estimates for the business development difficult. In addition to the down cycle, QPR is still in the middle of structural changes. However, QPR estimates that operating result for the first six months of 2003 will be positive and net sales is estimated to be 5.5-6.5 MEUR. GROUP INCOME STATEMENT(MEUR) 1-3/03 1-3/02 1-12/02 Change NET SALES 1.773 2.888 -39% 8.728 Other operating income 0.016 0.305 -95% 0.501 Minority ownerships -0.002 -0.012 -83% -0.178 Costs 1.516 1.987 -24% 11.699 Depreciation according to plan 0.053 0.102 -48% 0.740 EBIT 0.218 1.092 -80% -3.390 Net financial income -0.164 -0.252 -35% -2.385 PROFIT BEFORE EXTRAORDINARY ITEMS 0.053 0.840 -94% -5.775 Extraordinary items 0.000 0.000 0.000 PROFIT BEFORE TAXES 0.053 0.840 -94% -5.775 Taxes -0.005 -0.267 -98% -0.041 Minority interest 0.000 0.000 0.020 NET PROFIT 0.048 0.573 -92% -5.795 Earnings per share (EUR) 0.00 0.06 -100% -0.56 GROUP BALANCE SHEET (MEUR) 03/03 03/02 12/02 ASSETS FIXED ASSETS AND OTHER NON CURRENT ASSETS 1.734 3.143 -45% 1.773 Intangible assets 0.426 0.992 -57% 0.469 Property, plant & equipment 0.176 0.356 -51% 0.187 Investments in associated companies 1.127 0.000 1.112 Other investments 0.005 1.796 -100% 0.005 CURRENT ASSETS 3.952 7.032 -44% 3.659 Long-term receivables 0.888 2.750 -68% 0.262 Short-term receivables 2.820 3.837 -27% 3.127 Bank and cash 0.245 0.445 -45% 0.270 TOTAL ASSETS 5.686 10.175 -44% 5.433 SHAREHOLDERS? EQUITY AND LIABILITIES SHAREHOLDERS? EQUITY 0.037 5.947 -99% -0.043 Share capital 1.141 1.141 1.141 Other shareholders? equity -1.104 4.806 -123% -1.184 MINORITY INTERESTS 0.000 0.000 LIABILITIES 5.649 4.228 34% 5.475 Long-term liabilities 1.424 0.492 189% 0.565 Short-term liabilities 4.225 3.736 13% 4.911 TOTAL SHAREHOLDERS? EQUITY AND LIABILITIES 5.686 10.175 -44% 5.433 Shareholders? equity per share(EUR) -0.04 0.55 -0.05 Equity ratio -9.4% 60.2% -12.3% ROI 50.7% 72.3% -89.2% R&D costs(MEUR) 0.239 0.542 -55,9% 2.434 Gross investments in non-current assets (MEUR) 0.014 0.089 0.973 Average number of personnel 75 102 113 Adjusted average nr of shares 10.376.356 10.180.465 10.328.054 Adjusted nr of shares at the end of the period 10.376.356 10.376.356 10.376.356 1-3/03 1-3/02 1-12/02 CONSOLIDATED CASH FLOW STATEMENT (MEUR) CASH FLOW FROM OPERATING ACTIVITIES EBIT 0.218 1.092 -3.390 Depreciation according to plan 0.053 0.102 0.740 Other income and costs that include no payment -0.146 0.000 2.837 Net financial income -0.164 -0.252 -0.862 Taxes -0.005 -0.267 -0.041 Net change in short-term receivables 0.999 0.005 -1.060 Net change in short-term loans -0.820 -1.044 -0.291 Net change in long-term Receivables and debt 0.014 0.098 0.239 Net cash flow from operating activities 0.148 -0.266 -1.826 CASH FLOW FROM INVESTING ACTIVITIES Capital expenditure 0.001 -0.089 -0.130 Proceeds from sales of assets 0.000 0.000 0.095 Cash flow from investing Activities 0.001 -0.089 -0.036 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from long-term borrowings 0.000 0.000 1.200 Repayment of long term borrowings -0.206 -0.103 -0.370 Net change in minority shares 0.000 0.000 0.020 Proceeds from convertible subordinated debentures 0.000 0.070 0.274 Issue of new shares 0.000 1.276 1.276 Dividends paid 0.000 -0.699 -0.699 Foreign exchange adjustments 0.032 -0.011 0.163 Cash flow financing operations -0.175 0.533 1.865 Net change in cash And cash equivalents -0.026 0.178 0.003 Cash and cash equivalents at The beginning of the period 0.270 0.268 0.268 Cash and cash equivalents at The end of the period 0.245 0.445 0.270 CONTINGENT LIABILITIES Mortgages for loans 1.325 0.424 1.325 The group does not have liabilities from derivatives. The interim report is not audited. QPR SOFTWARE PLC Board of Directors Contact info Antti Kosunen, Chief Executive Officer (mobile +358400 850 200) antti.kosunen@qpr.com http://www.qpr.com DISTRIBUTION: HEX Key Media