Proha Plc Stock Exchange Bulletin May 17, 2001 at 9.15 am
INTERIM REPORT OF PROHA PLC FOR THE PERIOD JANUARY 1 - MARCH 31, 2001
- Net sales EUR 20.8 million (FIM 123.8 million), growth compared
to the corresponding period in 2000 was 767%. Growth compared to
the last quarter in 2000 was 17%.
- Operating loss EUR -1.0 million (FIM -5.9 million), against
operating profit of EUR 0.5 million in 2000.
- Earnings before financial expenses, taxes, and depreciation
(EBITDA) was EUR 0.002 million, compared to EUR 0.53 million for
the same period in 2000.
- Net sales and result forecast for the financial year 2001 is
affected by the uncertainty of economic growth in the United
States and other countries at the end of 2001.
- Company's 10% profit forecast (EBITDA) requires that the economy
recovers towards the end of the year. If the economic development
in general remains unchanged the Company's target is a positive
result.
- Net sales for the financial year 2001 is expected to grow by 5-
20%, depending on the economic growth in the United States and the
rest of the world. Earlier evaluations forecasted a growth of 20%.
- The net sales and result forecasts exclude the effects of the
Opus360 Corporation acquisition. The already known and forecasted
losses of Opus will have an effect on Proha's financial result for
2001, depending on the closing date of the acquisition. Losses
have been taken into account in the purchase price of Opus360.
NET SALES AND RESULT
Proha Group's net sales for January 1 - March 31, 2001 increased
to EUR 20.8 million, compared to EUR 2.4 million for the same
period in 2000. Earnings before financial expenses, taxes, and
depreciation (EBITDA) was EUR 0.002 million (EUR 0.5 million).
Operating profit decreased to EUR -1.0 million, compared to EUR
0.5 million for the corresponding period in 2000. Loss before
appropriations and taxes was EUR -1.1 million (-5.2% of net
sales), compared to EUR 0.5 million in 2000. Earnings per share
for three months amounted to EUR -0.02 (EUR 0.08).
NET SALES AND EBITDA BY BUSINESS AREA, 1000 EUR
Business Area Net sales EBITDA %
Artemis companies
(Project Management) 18 900 78 0
Accountor companies
(Financial Management) 1 168 7 1
Intellisoft companies
(Internet Technologies) 532 -57 -11
Other areas 178 -25 -14
Total 20 779 2 0
FINANCING AND INVESTMENTS
At the end of the period, the balance sheet total was EUR 57.1
million, compared to EUR 10.6 million for the same period in 2000.
Current assets totaled EUR 5.5 million, against EUR 5.8 million in
2000. As the business volume increased, Quick Ratio declined from
2.8 to 1.1.
In addition to extensive product development and executed
acquisitions, the most significant investments were made on
machinery and equipment, a total of EUR 0.4 million.
Interest bearing liabilities were 13.9% of the Group's
total capital at the end of the period.
PRODUCT DEVELOPMENT
Artemis' product family for the new generation, which complements
the prevailing product offering, will be introduced in the fall of
2001. Soon after this, products which complement Artemis Business
Management Architecture (BMA) will be launched.
In the Financial Management business area, Proha subsidiary
Accountor Oy focused on the integration of financial management
system based on new technology and on the development of methods.
The operative activities of the virtual management service,
ProCountor.Com, were strengthened. The service has been available
since May.
In the Internet Technologies business area, Intellisoft Oy has
developed ASP service and outsourcing services as well as built
the infrastructure supporting these operations. In the future,
Intellisoft will focus more on the ASP services business.
ACQUISITIONS AND CHANGES IN ASSOCIATED COMPANIES
During the period, Proha Plc closed a deal in which the Company
acquired the entire share capital of JST Investments (Asia) Pte
Ltd (JST) through an exchange of shares. In the arrangement, a
total of 278,275 new Proha Plc shares were offered to the owners
of JST. In addition, 36,130 shares were offered for subscription
to the minority shareholders of PMSoft Korea.
Proha Plc also closed a deal in which the Company acquired a 25%
holding of the share capital of PMSoft Korea Ltd at a purchase
price of EUR 221,350. The remaining 75% of the shares in PMSoft
Korea are owned by PMSoft Asia.
In January, Proha Plc and Swiss-based STS Sauter Training &
Simulation SA (STS), a software company specializing in the
development of interactive project and resource management
learning tools, signed an agreement under which Proha will obtain
a 33% holding in the STS share capital towards its CHF 750,000
investment in STS. Providing that the prerequisites for the
execution of the agreement still exist, the investment is expected
to realize by the end of September 2001. With the execution of the
agreement, Proha has an option to purchase the remaining 67% of
STS' shares during 2002 and 2003. If Proha uses the option, the
shares can be paid either in cash or as Proha shares. The purchase
price is based on the net sales and the result of STS. Under the
terms of the agreement, Proha is entitled to distribute STS's
Internet-based project and resource management learning tools
worldwide under the Artemis brand. Artemis added STS's e-learning
tools SyberGuide, SyberTrain, and SimulTrain to its product
family.
In February, Proha Plc's Norwegian-based subsidiary Safran
Software Solutions AS (Safran) and Norwegian holding company
Dovregruppen AS signed an agreement according to which Safran
acquired 40% of the share capital of Dovegruppen AS's subsidiary
Dovre International AS (Dovre). Net sales of this Norway's leading
consulting company specializing in project management was NOK 94
million in 2000, and at the turn of the year it had 115 employees.
The purchase price was NOK 10 million. The acquisition was
concluded on May 8, 2001 in accordance with the original terms and
conditions.
Safran also has an option to purchase the remaining 60% of Dovre's
shares during 2003 and 2006. The purchase price of the deal which
is anticipated to close on the basis of options is based on the
net sales and result of Dovre during the option period. The
purchase price can be paid either in cash or as Proha shares.
Safran also has a right to transfer its options to Proha.
In March, Proha subsidiary Accountor Oy, acquired the entire share
capital of the Finnish-based accounting firm Taloushallinta Oy
Tilikolmio.
COOPERATION AGREEMENTS
In January, Proha Plc and Basware Plc signed an agreement on
worldwide cooperation. Proha offers Basware e-Flow PIP purchase
invoice processing software and Target products as an ASP service
in the Financial Management business area. In addition, both
Proha's ASP service and electronic invoice handling service BREVe
will be combined with Basware's myeflow.com electronic invoicing
service. Proha also has a right to sell BasWare e-Flow PIP and
Target products in countries, where they are offered as an ASP
service.
Proha Plc and Elma Oy Electronic Trading (Elma) agreed on
strategic cooperation under which Proha will offer its customers
electronic invoicing services using Elma's electronic invoicing
infrastructure. Proha will add Elma's electronic invoicing service
to its own ProCountor.Com and IAP (Internet Accounting Partner)
services in the Financial Management business area. In addition to
Finland, electronic invoicing cooperation will, at an early stage,
cover the Nordic countries. The agreement also includes Elma's
TYVI services in Finland (Automatic electronic statement
transferring service to the Finnish authorities).
In February, Proha Plc and SAP Finland signed a strategic
partnership agreement. Pursuant to the agreement, Proha subsidiary
Accountor Oy is the first in Finland to offer mySAP.com solution
as an ASP service. The agreement covers the entire European
Economic Area and Switzerland.
GROUP STRUCTURE AND ITS CHANGES
Proha announced that it will simplify its corporate structure in
Finland during the spring of 2001. Operations will be incorporated
into companies operating within the three different business areas
(Project Management, Financial Management, and Internet
Technologies).
Following the arrangements, the strategic business units in the
Group are the Artemis Group, Accountor and Intellisoft.
PERSONNEL
The number of personnel continued to grow. At the end of the
period, the number of employees in the Proha Group totaled 684.
The number of personnel for the corresponding period in 2000 was
190. Staff expenses were EUR 12.7 million, 60.9% of net sales. Of
these, 557 people worked in the area of Project Management, 86 in
Financial Management, and 41 in Internet Technologies. The number
of employees in Finland was 220 and 457 abroad.
SHARE CAPITAL
On January 1, 2001, the number of Company shares was EUR
52,700,125 and the share capital was EUR 13,702,032.50.
Changes in share capital
Trade Increase in Increase in Directed
Register the Number Share Issue
of Shares Capital
(date) (EUR)
05.01.01 278,275 72,351.50 PMSoft Asia
13.01.01 36,130 9,393.80 PMSoft Korea
Number of Shares
and Share Capital
on March 31, 2001 53,014,530 13,783,777.80
AUTHORIZATION TO ISSUE SHARES
The Board of Directors was authorized by the Extraordinary General
Meeting on December 13, 2000 to decide on increasing the share
capital through one or more new subscriptions having a total
combined value of at maximum 7,000,000 new shares, each share
having a book parity of EUR 0.26. On the basis of this
authorization, the Company's share capital can be increased by a
maximum of EUR 1,820,000. The number of unused shares is
6,685,595, corresponding to EUR 6,685,596. The authorization is
valid until December 12, 2001.
INCENTIVE SYSTEM FOR PERSONNEL
On the basis of the authorization by the Extraordinary General
Meeting on December 13, 2000, the Board of Directors of Proha Plc
resolved on February 4, 2001, to issue a maximum of 2,000,000
stock options entitling to Proha shares. The subscription period
for all stock options will end on February 4, 2006.
The stock options were offered without consideration to the
employees of the Proha Group in Finland and abroad as well as to
certain members of boards of directors of the Proha Group
companies as a part of the Group's employee incentive system.
In its meeting on March 9, 2001, Proha Plc's Board of Directors
approved the subscriptions made during the first subscription
period (February 15 - May 8, 2001) of the option issue which is a
part of employee incentive system.
In the issue, a total of 1,784,828 Proha Plc stock options were
subscribed. Proha Board of Directors confirmed the subscription
price for the shares subscribed on the basis of the stock options
as EUR 1.35 per share.
TRADING ON THE HELSINKI STOCK EXCHANGE
The number of Proha Plc's registered shareholders totaled 2,742 at
the end of the period. During the period, the share price was EUR
0.87 at its lowest and EUR 3.15 as its highest. Company's market
capitalization was approximately EUR 55.7 million as of the end of
the period.
DECISIONS OF THE GENERAL MEETINGS
The Annual General Meeting of Proha Plc held on April 4, 2001,
confirmed the 2000 Financial Statements and discharged the members
of the Board of Directors and the CEO from liability for 2000.
The General Meeting approved the Board of Directors' proposal that
no dividend is paid from distributable earnings.
The Board of Directors of Proha Plc continues in its present
composition. The members of the Board of Directors are Olof Ödman
(Chairman), Pekka Pere, Klaus Cawén, Alec E. Gores, Pekka Mäkelä,
and Steven Yager.
KPMG Wideri Oy Ab was elected as the Company's ordinary auditor,
with Reino Tikkanen, APA, as the auditor in charge.
The meeting decided, in accordance with the proposal of the Board
of Directors, to amend the articles 12 and 13 of the Articles of
Association.
ACCOUNTING PRINCIPLES
In the interim report, the consolidation follows the accounting
principles of the financial statements on March 31, 2001. New
subsidiaries, JST Investments Ltd and its subsidiaries PMSoft Asia
Pte Ltd, PMSoft Pte Lted, PMSoft International Ltd, and PMSoft
Korea Ltd, have been consolidated as of January 1, 2001. These
above mentioned companies have been consolidated using the
acquisition cost method in accordance with the statement of the
Finnish Accounting Standards Board, October 1999.
Depreciation of goodwill
Goodwill of Artemis companies, a total of EUR 16.6 million, will
be depreciated according to a 10-year depreciation plan. During
the first quarter the depreciation of goodwill of the Proha Group
was accrued EUR 0.465 million. Goodwill resulting from the
consolidation of other Group companies, EUR 0.4 million, will be
depreciated according to a 3-year depreciation plan. The change in
the handling of depreciation of goodwill from that reported in the
financial statement bulletin on February 22, 2001, was announced
in the stock exchange bulletin on March 22, 2001.
Fixed assets' assessment
The depreciation plan of machinery and equipment has been altered
from the previous year. According to plan, the depreciation period
is 3-10 years. Straight-line depreciation has been used as a
depreciation method.
Research and development expenses
Research and development expenses were EUR 2.5 million of which
EUR 0.2 million has been activated into the balance sheet and EUR
2.3 million has been entered as expenses.
Deferred tax liabilities and assets
Deferred tax assets totaled EUR 2.7 million on March 31, 2001. The
amount of deferred tax liabilities was EUR 7000 .
Company shares
Proha Plc shares which were in the Group's holding already at the
end of the financial year 2000 are not presented in the
consolidated balance sheet on March 31, 2001. The shares equal
3.7% of the total number of shares.
EVENTS AFTER THE FINANCIAL YEAR
Framework agreement with Norsk Hydro
Proha Group's Norwegian-based associated company, Dovre
International As, signed an extensive framework agreement with
Norsk Hydro Produksjon Aa. Dovre was selected as Norsk Hydro's
most important supplier of consultants and competence within
Project Management and Supply Chain Management. The validity of
the agreement is 3 years. It includes an option to extend the
agreement to 9 years.
Acquisition of the majority of Opus360 Corporation
Proha Plc and Opus360 Corporation, US-based Nasdaq-listed software
company, have signed an agreement pursuant to which Proha will
receive 80% of the entire share capital of Opus360 Corporation. As
Proha subsidiary, Opus 360 Corporation will become the parent
company of Proha's Artemis Group, and it is planned to be renamed
Artemis International Corporation. The closing of the deal
requires the approval of the general meetings of each Opus360 and
Proha.
In the acquisition, Proha will be offered approximately
188,660,000 new Opus360 shares through a directed issue, which
accounts for 80% of the entire share capital of Opus360. In
return, Proha subsidiaries in the Project Management business area
(Artemis companies and Projektihallinto Oy Proha) will be combined
with Opus360 as well as 19.9% of each Intellisoft Oy in the IT
business area and Accountor Oy in the Financial Management
business area. The acquisition has no effect on the number of
Proha Plc shares.
The new Proha subgroup focusing on project and resource management
and its parent company Opus360 Corporation will continue as
independent units of Proha Plc. The Chairman of the Board of
Directors of the new company will be Proha's President and CEO
Pekka Pere. As the CEO of the new company will be appointed an
American Steven Yager, the CEO of Artemis and a member of the
Proha Board of Directors. The transaction is expected to close
during the second half of 2001.
Due to the Opus360 agreement and the possible Nasdaq-listing of
Proha's Artemis subgroup related to the agreement, Proha's
application for the main list of the Helsinki Stock Exchange will
be delayed for the present.
Option issue of employee incentive system
In its meeting on April 11, 2001, Proha Board of Directors decided
in line with the option program 2001 that the second subscription
period is April 18 - April 20, 2001. In the issue, a total of
1,592,720 Proha Plc stock options were subscribed entitling to the
subscription of 159,272 shares in accordance with the terms and
conditions of the option issue. The options were offered without
consideration mainly to the new employees of the Proha Group.
Proha Board of Directors confirmed the subscription price for the
shares subscribed on the basis of the stock options as EUR 1.35
per share.
The stock options are based on the decision made by Proha Board of
Directors, on the basis of the authorization by the Extraordinary
General Meeting on December 13, 2000, to increase the Company
share capital by a maximum of EUR 520,000 by issuing a maximum of
20,000,000 stock options that entitle to a subscription of
2,000,000 shares in accordance with the terms and conditions of
the option issue.
Name change of Proha subsidiary Projektihallinto Oy Proha
On May 1, 2001, Proha subsidiary Projektihallinto Oy Proha was
renamed Artemis Finland Oy. The name change is part of the
reorganization of the Proha Group structure. All operations of
Project Management business area in Finland will be combined as
one company, which is the subsidiary of Proha subgroup Artemis
International.
PROSPECTS FOR THE NEAR FUTURE
Contradictory opinions on the future prospects of the world
economy cause uncertainty in the evaluation of year-end net sales
and profit. The business operations for the rest of the year are
planned assuming that there will be no recovery in the general
economic situation. At the same time, the Company is prepared to
react quickly to the market growth which is bound to happen sooner
or later. Cautious measures are taken in order to secure a
positive annual result under all circumstances.
The Company forecast for 10% earnings before financial expenses,
taxes, and depreciation (EBITDA) requires that the economic
development will recover at the end of the year. If the general
economic development remains unchanged the Company's target is a
positive result. Net sales for the financial year 2001 is expected
to grow by 5-20%, depending on the economic growth in the United
States and the rest of the world. Earlier evaluations forecasted a
growth of 20%. The net sales and result forecasts exclude the
effects of the Opus360 Corporation acquisition. The already known
and predicted losses of Opus will have an effect on Proha's
financial result for 2001, depending on the closing date of the
acquisition. Losses have been taken into account in the purchase
price of Opus360.
Espoo, May 17, 2001
The Board of Directors of Proha Plc
For more information please contact:
PROHA PLC
President and CEO Pekka Pere, tel. +358 (0)20 4362 000
pekka.pere@proha.com
http://www.proha.fi
DISTRIBUTION:
Helsinki Stock Exchange
Major Media
PRESS CONFERENCE
Proha Plc will hold a press conference for both the financial
analysts and the media on May 17, 2001 at 2.00 pm on the second
floor of the Nordia hall in the Marina Congress Center, at
Katajanokan laituri 6, Helsinki.
Welcome
PROHA GROUP CONSOLIDATED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET
JANUARY 1 - MARCH 31, 2001
The figures are unaudited.
CONSOLIDATED PROFIT AND LOSS ACCOUNT, JANUARY 1 - MARCH 31, 2001
1/01-3/01 1/00-3/00 1/00-12/00
(EUR 1 000) (EUR 1 000) (EUR 1 000)
Net sales 20 779 2 413 36 149
Variation in stock 24 - -
Share of results
of associated companies 73 30 -56
Other operating income 28 338 2 227
Raw materials and services -2 324 -246 -5 777
Staff expenses -12 660 -1 206 -17 324
Depreciation and reduction in value
Depreciation according to plan -520 -67 -1 163
Depreciation of goodwill -465 - -711
Depreciation and reduction in value
total -986 -67 -1 874
Other operating charges -5 918 -799 -11 402
Operating profit (loss) -984 463 1 943
Financial income and expenses -97 24 -406
Profit (loss) before
extraordinary items -1 080 487 1 537
Extraordinary items 0 0 0
Profit before appropriations
and taxes -1 080 487 1 537
Appropriations 0 0 0
Income taxes -119 -107 -486
Change in deferred tax liabilities -1 -11 0
Profit (loss) before
minority interest -1 199 369 1 051
Minority interest of profit 93 -7 -126
Profit (loss)
for the financial year -1 106 362 925
BALANCE SHEET 31.3.2001 31.3.2000 31.12.2000
Assets
Non-current assets
Intangible assets 17 666 476 17 519
Tangible assets 2 910 360 2 885
Investments 2 808 1 190 2 706
Non-current assets total 23 384 2 026 23 110
Current assets
Stocks 152 8 145
Non-current debtors 313 210 361
Current debtors 27 739 2 550 26 002
Short-term investments 323 269 270
Cash in hand and at bank 5 181 5 565 5 787
Current assets total 33 709 8 602 32 565
ASSETS TOTAL 57 093 10 628 55 675
LIABILITIES
Capital and reserves
Share capital 13 784 6 096 13 703
Share premium account 3 266 0 3 107
Conversion difference 83 0 0
Retained earnings 3 833 646 2 907
Profit (loss)
for the financial year -1 106 361 925
Capital loan 187 382 187
Capital and reserves
total 20 047 7 485 20 829
Minority interest 315 81 325
Provisions 445 0 468
Appropriations 0 2 0
Creditors
Non-current creditors 4 498 659 5 162
Current creditors 31 789 2 401 28 891
Creditors total 36 287 3 060 34 053
LIABILITIES TOTAL 57 093 10 628 55 675
KEY RATIOS OF THE PROHA GROUP
1/01-3/01 1/00-3/00 1/00-12/00
Net sales (EUR 1000) 20 779 2 413 36 149
EBITDA* 2 530 3 817
% of net sales 0.0 22.0 10.6
Operating profit (loss)
(EUR 1000) -984 463 1 943
% of net sales -4.7 19.2 5.4
EBIT** -984 463 1 943
% of net sales -4.7 19.2 5.4
Profit before appropriations
and taxes -1 080 487 1 537
% of net sales -5.2 20.2 4.3
Profit for the period -1 106 362 925
% of net sales -5.3 15.0 2.6
Earnings per share, EUR -0.02 0.08 0.03
Equity per share, EUR 0.37 1.61 0.39
Average personnel 679 140 249
*Earnings before financial expenses, taxes, and depreciation
**Earnings before financial expenses and taxes
NET SALES BY COUNTRY
Finland 17.6%
Germany 2.8%
France 10.6%
Italy 9.4%
Japan 8.1%
Singapore 2.0%
Great Britain 13.3%
United States 34.5%
Other 1.7%
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