Proha Plc Stock Exchange Bulletin May 11, 2006 at 9.05 a.m.
PROHA PLC FINANCIAL STATEMENTS (IFRS) JANUARY 1, - MARCH 31, 2006
- The Proha Group net sales for the period January 1, - March 31, 2006 grew by
5.6% compared to the corresponding period in 2005 and were EUR 16.3 million
(EUR 15.4 million in corresponding period 2005).
- The Group's operating result was EUR -1.6 (-0.7) million.
- The Group's cash flow from operations was EUR 1.1 (0.8) million.
- In March Proha accepted Trilogy’s offer to buy its subsidiary Artemis. The
completion of the sale will reduce the amount of Proha Group’s net sales
considerably but it will have a material positive impact on Proha Group's
year 2006 result and financial position. The closing is estimated to be
delayed by about one month due to the SEC review.
- After the period under review Proha’s subsidiary Dovre made an agreement on
purchasing the business operations and international subsidiaries of Fabcon
for approximately EUR 3 million. The purchase will increase Proha’s business
operations specializing in oil and gas sector and make them more
international.
KEY RATIOS OF THE PROHA GROUP
EUR million 1-3 1-3 1-12
2006 2005 Change % 2005
Net Sales 16.3 15.4 5.6 % 64.5
Operating Result -1.6 -0.7 -144.1 % -3.6
Profit/loss
before taxes -1.7 -1.0 -60.3 % -5.0
Profit/loss
for the period -2.1 -1.3 -66.6 % -6.0
Return on
Equity % -235.4 % -56.4 % -86.0 %
Return on
Investment % -40.9 % -3.6 % -13.4 %
Cash and cash
equivalents 6.9 8.8 -22.1 % 7.3
Debt-equity
ratio % 76.6 % -1.3 % 47.0 %
Equity-ratio % 6.9 % 21.1 % 11.0 %
Gross Investments 0.1 0.1 -35.7 % 0.3
% of Net Sales 0.4 % 1.0 % 0.4 %
Research and
development costs 1.8 1.6 11.3 % 7.3
% of Net Sales 11.1 % 10.6 % 11.3 %
Personnel average
for the period 528 531 -0.6 % 525
Personnel at the
end of the period 529 530 -0.2 % 531
Basic earnings
per share, EUR -0.034 -0.021 -40.0 % -0.098
Equity per
share, EUR 0.04 0.14 -233.2 % 0.07
Diluted earnings
per share, EUR -0.034 -0.021 -40.1 % -0.098
Cash flows from
operating
activities 1.1 0.8 26.4 % 0.2
IFRS REPORTING
The Proha Plc’s interim report follows the same accounting policies and methods
of computation as in the financial statement for 2005.
According to IFRS 5 standard the non-current assets held for sale and assets
related to discontinued operations are classified as held for sale and they are
measured at the lower of their carrying amount and fair value less costs to
sell, if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use.
Artemis sub-group that is a separate reporting segment and a group of cash flow
generating units is classified as discontinued operation according to IFRS 5
standard. The assets and liabilities related to Artemis sub-group are
classified as held for sale. According to IFRS 5 standard no depreciations
have been recorded on the fixed assets of Artemis sub-group beginning
January 1, 2006.
CHANGES IN GROUP STRUCTURE
The key business areas of Proha Group are the Artemis sub-group and the
Norwegian subsidiaries, Dovre International AS and Safran Software Solutions AS,
fully owned by Proha. Proha's ownership at Artemis is 53.3%. The group
structure of Proha will be changed considerably after the sale of Artemis
published on March 13, 2006 and the purchase of the business operations and
international subsidiaries of Norwegian Fabcon Management AS published on April
4, 2006.
PROHA ACCEPTED TRILOGY’S OFFER TO BUY ARTEMIS SHARES
In March 2006 the Boards of Directors of Proha Plc and its sub-group Artemis
International Solutions Corporation (Artemis) accepted the offer to buy Artemis'
entire share capital made by the subsidiary of US based software company
Trilogy, Inc. Trilogy became Artemis shareholder through the financing
arrangement in 2004.
The transaction is made as a merger where Trilogy will pay Artemis shareholders
USD 1.60 per share of common stock and USD 2.20 per preferred share resulting in
total price of approximately USD 27 million. Proha's ownership at Artemis is
7,977,062 shares corresponding to approximately 53.3% of the total share capital
of Artemis. In closing the sale Proha will get approximately USD 12.7 million
for its share in Artemis.
The closing of the sale requires approval by Artemis shareholders. The majority
of Artemis shareholders required for the approval has agreed to vote for the
decision unless a superior offer is made for the shares before the shareholders
meeting. Non solicited competing offers may be received until the Annual Meeting
of Artemis stockholders. The agreement includes also terms and conditions of
that are customary for closing of acquisitions. The closing is delayed by about
one month due to the SEC review. According to Artemis management's estimate the
annual meeting will be held in June - July 2006.
The following estimates on the impacts of the sale are based on the assumption
that the sale is closed on the terms agreed with Trilogy.
On closing the sale will increase the parent company cash assets by USD 12.7
million i.e. approximately EUR 10.7 million calculated at the exchange rate of
the date of acceptance of the purchase offer. The sale is estimated to have no
material impact on the year 2006 result and shareholders' equity of Proha Plc.
The sale is estimated to have a material positive impact on the year 2006 result
and shareholders' equity of Proha Group.
The result of the disposal of Artemis will be defined by the difference between
the sale price of approximately USD 12.7 and the amount of net assets at the
closing of the sale. In the 2005 year end financial statements of Proha Group
the assets of Artemis sub-group were approximately EUR 26.3 in total including
goodwill of approximately EUR 7.8 million and the liabilities were approximately
EUR 27.2 million resulting in negative net assets of approximately EUR 0.9
million. The impact on result will be determined by the net assets at the
closing of the sale. The items of Artemis sub-group income statement will be
consolidated in the Proha financial statements until the closing of the sale.
When the sale is closed the result of Artemis for 2006 will not have an impact
on the net result of Proha group.
Proha will continue the growth and international expansion of the project
management business in the oil and gas sector as well as on development and
sales of Proha's other project management software. Proha's business is composed
of project management services and software that are offered and sold to
customers worldwide.
PROHA'S SUBSIDIARY DOVRE INTERNATIONAL TO PURCHASE BUSINESS OPERATIONS AND
SUBSIDIARIES OF FABCON
After the period on April 4, 2006 Proha Plc's Norwegian subsidiary Dovre
International AS has signed the purchase agreement on the business
operations and overseas subsidiaries of Fabcon Management AS. Fabcon
is an internationally operating oil and gas industry project management
consultant established in 1977.
The purchase price of NOK 24.4 million (approx. EUR 3.0 million) will be paid
fully in cash in two instalments. Two thirds of the purchase price will be paid
in 45 days after the closing date that Dovre estimates to be latest in May 2006,
and the rest will be paid latest on December 31, 2007. The latter part of the
purchase price is conditional and dependent on Fabcon's result for 2006 and some
other customary terms and conditions. In the acquisition the acquirer of
Fabcon's business operations and subsidiaries is a subsidiary founded by Dovre.
The business operations to be purchased include fully owned subsidiaries in
Canada, United States, France, Singapore and Nigeria as well as the subsidiary
in Great Britain where Fabcon has control with 48% ownership. In addition,
Fabcon has branch offices in Russia and South Korea. With 70 employees Fabcon
group's net sales were approximately NOK 106 million (approx. EUR 13.3 million)
in 2005 and the operating profit was approximately NOK 4.3 million (approx. EUR
0.5 million). Preliminarily the net sales are anticipated to be approximately
NOK 90 million (approx. EUR 11.3 million) in 2006, which is slightly less than
in 2005 due to ending of certain one-time projects. Over 90% of the net sales
are generated from international customers outside Norway. On December 31, 2005
the net assets of the business operations to be transferred in the purchase were
approximately NOK 11.0 million (approx. EUR 1.4 million) including long term
liabilities of approximately NOK 3.1 million (approx. EUR 0.4 million).
The purchase will enhance Proha's growth and strengthen its position in the
global oil and gas markets.
BUSINESS PERFORMANCE
The Norwegian subsidiaries Dovre International AS and Safran Software Solutions
AS are reported as a business segment. The business of the Norwegian
subsidiaries is composed of project management services and software that are
offered and sold to customers worldwide. The investments resulting from the
higher oil prices have increased the importance of oil and gas sector for
Dovre. During the first quarter of 2006 approximately 85% of the business of
the Norwegian subsidiaries came from oil and gas sector and approximately 15%
from other project management sales. Dovre accounted for approximately 94.5%
(95.0%) and Safran 5.5% (5.0%) of the net sales of the Norwegian subsidiaries.
During the first quarter of 2006 the demand in the oil and gas sector has
continued strong with high investing activity. The level of investments in the
oil and gas industry is higher than ever before and the high oil prices pushing
investments worldwide.
On the first quarter of 2006 the net sales of Dovre grew by 16.2% compared to
the corresponding period in 2005. Long term frame agreements secure stability
for Dovre's business but slow down the increased demand to be shown in prices.
The profit margins in business have been improved. The costs caused by the
preparations of Fabcon acquisition increased the cost level of Dovre in the
first quarter of 2006.
In developing its business operations Dovre focuses in maintaining the leading
position in the Norwegian markets, improving profitability and in continuing the
growth in the international markets. Dovre is planning to increase personnel to
meet the increasing demand in the oil and gas industry. The purchase of Fabcon’s
business operations will increase Dovre’s international presence considerably. A
major task following the closing of Fabcon purchase will be the development and
integration of its business with Proha’s international operations.
Safran focuses on sales of software for oil and gas sector and on software
support services. The company’s consulting capacity was fully engaged during the
first quarter of 2006. The net sales of Safran grew by 25% compared to the
corresponding period in 2005 and also the operative result improved.
Safran’s software license sales constitute mainly of Safran Project software
that was predominantly sold to existing clients within the oil and gas sector as
the activity within the industry increased. In Norway Safran Project is a
market leader within its customer sector. Safran for Microsoft Project
software was mainly sold outside the oil and gas sector.
The Mobile Business Unit of Proha that started in the second half of 2005
develops and sells automatic workflow management software and provides the
integration services for the software. The products and pilots based on the
Mobile Workflow Manager technology have been started and the applications
include automation of processes in upgrading alert levels for rescue operations,
in resource management and tasks management of field operations. The first
published project is the delivery for the Helsinki Rescue Department.
The new business does not have a material impact on Proha Group's net sales or
result of 2006 and unit's operations are not currently reported separately.
Mobile Business Unit is expected add significantly the functionalities of the
Group's existing products and thus to create new business opportunities.
NET SALES
In the period January 1 - March 31, 2006 the Proha Group's net sales grew by
5.6% and were EUR 16.3 million (15.4).
Distribution of net sales by revenue type:
(EUR million, % of net sales)
1-3 1-3 1-12
2006 % 2005 % 2005 %
One time
license
revenue 1.3 7.7 2.1 13.7 9.7 15.0
Recurring
license
revenue 3.5 21.5 3.5 22.7 14.3 22.2
Services 11.5 70.7 9.8 63.6 40.5 62.8
Total 16.3 100.0 15.4 100.0 64.5 100.0
In the first quarter of 2006 the net sales continued to constitute mainly of
services with EUR 11.5 (9.8) million or 70.7% (63.6%).
The license sales amounted to EUR 4.8 (5.6) million, accounting for 29.3%
(36.4%) of the net sales. The share of one-time licenses was EUR 1.3 (2.1)
million and that of recurring licenses EUR 3.5 (3.5) million.
Distribution of net sales by segment:
(EUR million)
1-3 1-3 Change 1-12
2006 2005 % 2005
Discontinued
operations 8.8 9.1 -3.0 38.1
Norwegian
subsidiaries 7.2 6.2 16.2 25.8
Unallocated items 0.3 0.2 63.9 0.9
Inter-segment
net sales 0.0 0.0 29.8 -0.2
Group total 16.3 15.4 5.6 64.5
Distribution of net sales by country:
(EUR million)
1-3 1-3 1-12
2006 2005 2005
Great Britain 1.4 1.4 5.9
Italy 1.2 1.5 5.8
Japan 1.5 1.0 4.9
Norway *) 7.2 6.2 25.8
France 1.4 1.8 6.7
Germany 0.5 0.4 1.8
Finland 1.3 1.3 5.2
United States 1.7 1.6 7.4
Others 0.1 0.3 0.9
Net sales
between countries 0.0 0.0 -0.1
Total 16.3 15.4 64.5
Distribution of net sales by country:
(% of net sales)
1-3 1-3 1-12
2006 2005 2005
Great Britain 8.5 % 9.1 % 9.1 %
Italy 7.5 % 9.7 % 9.0 %
Japan 9.1 % 6.4 % 7.6 %
Norway *) 44.2 % 40.1 % 39.9 %
France 8.5 % 11.6 % 10.5 %
Germany 2.9 % 2.5 % 2.9 %
Finland 8.2 % 8.3 % 8.1 %
United States 10.3 % 10.5 % 11.5 %
Others 0.9 % 2.0 % 1.5 %
Net sales between
countries -0.1 % -0.1 % -0.1 %
Total 100.0 % 100.0 % 100.0 %
*) The net sales of Dovre's international operations outside Norway have been
listed under Norway.
Continuing operations
The net sales of the continuing operations were EUR 7.5 (6.3) million in the
first quarter of 2006. The net sales of the Norwegian subsidiaries totalled EUR
7.2 (6.2) million and accounted for 44.1% (40.1%) of the Group's net sales and
96.4% (97.8%) of the net sales of continuing operations. The net sales of
Norwegian subsidiaries grew by 16.2% compared to the corresponding period in
2005.
Discontinued operations
The net sales of the discontinued operations totalled EUR 8.8 (9.1) million and
accounted for 54.2% (59.0%). The net sales of the discontinued operations
declined by 3.0% compared to the first quarter of 2005.
PROFITABILITY
In the first quarter of 2006 the Proha Group's operating result was EUR -1.6
(-0.7) million.
Distribution of operating result by segment:
(EUR million)
1-3 1-3 Change 1-12
2006 2005 % 2005
Discontinued
operations -1.8 -0.4 -296.0 -2.6
Norwegian
subsidiaries 0.6 0.2 127.8 1.0
Unallocated
items -0.4 -0.4 14.2 -1.8
Inter-segment
operating result -0.1 0.0 -23.9 -0.2
Group total -1.6 -0.7 -144.1 -3.6
Continuing operations
The operating result for the continuing operations was EUR 0.1 (-0.3) million
for the first quarter of 2006. In the first quarter of 2006 the operating profit
of the Norwegian subsidiaries was EUR 0.6 (0.2) million.
Discontinued operations
The operating result for the discontinued operations was EUR -1.8 (-0.4) million.
Other operating expenses of the discontinued operations include EUR 0.6 million
of non-recurring items. In the first quarter of 2005 the operating result
included EUR 0.6 million in non-recurring income and EUR 0.2 million in non-
recurring expenses. According to IFRS 5 standard no depreciations have been
recognized on the fixed assets of the discontinued operations beginning January
1, 2006. During the first quarter of 2005 the depreciations on fixed assets of
discontinued were approximately EUR 0.05 million.
The Group's goodwill is not amortized but tested for impairment under IAS 36. No
indications of impairment of assets exist.
In the first period of 2006 the Group's research and development costs were EUR
1.8 (1.6) million. In the first period of 2006 no research and development costs
were capitalized (EUR 0.02 million in the corresponding period 2005).
In the first quarter of 2006 the Group's result before taxes was EUR -1.7 (-1.0)
million. The net result for the period was EUR -2.1 (-1.3) million.
Earnings per share amounted to EUR -0.034 (-0.021). Return on investment (ROI)
was -40.9% (-3.6%) and return on equity (ROE) was -235.4% (-56.4%).
CASH FLOW, FINANCING AND INVESTMENTS
The balance sheet total on March 31, 2006 was EUR 39.6 (43.5) million. At the
end of the period, cash and cash equivalents totalled EUR 6.9 (8.8) million,
decreasing by EUR 0.4 million compared to the situation on December 31, 2005.
During the first quarter of 2006, cash flow from operating activities was EUR
1.1 million (0.8).
During the first quarter of 2006 the gross investments were EUR 0.1 (0.1)
million. The total cash flow of investments was EUR -0.2 (3.2) million.
Total of EUR 0.5 million new loans were drawn and total of EUR 1.7 million loans
repaid, resulting in total EUR -1.2 (-0.2) million in cash flow of financing
activities.
Equity to assets ratio was 6.9% (21.1%) and gearing was 76.6% (-1.3%). On March
31, 2006 the interest-bearing liabilities amounted to EUR 8.9 (8.7) million,
accounting for 22.5% (20.0%) of the Group's shareholders' equity and liabilities
total. Of the interest-bearing liabilities, EUR 5.0 (4.6) million were non-
current liabilities and EUR 3.9 (4.2) million current liabilities. The Group's
Quick Ratio was 0.9 (1.2).
STATEMENT ON THE ADEQUACY OF THE COMPANY'S ASSETS
On March 31, 2006 the Group's cash and cash equivalents amounted to EUR 6.9
(8.8) million.
According to Proha's management, the liquid assets of the company are sufficient
for Proha to continue as a going concern during the following 12 months.
RESEARCH AND DEVELOPMENT
The research and development costs for the strategic products were EUR 1.8 (1.6)
million accounting for 11.1% (10.6%) of the net sales in the first quarter of
2006. No research and development costs were capitalized during the first
quarter of 2006.
On February 16, 2006 Proha Board of Directors decided to adjust their previous
interpretation of the accounting treatment of software development costs at
Artemis sub-group. The software development of Proha group is mainly done in the
Artemis sub-group. The control systems at Artemis are not built to follow the
specific point in time at which the technical feasibility of the software is
established, which is required by IAS 38 standard. Also for this reason, Artemis
does not have a mechanism that would appropriately track the costs incurred from
the time at which technical feasibility is established and the point in time
each software product is available for release. Therefore the software
development costs at Artemis have been recognized as expense.
PERSONNEL
On March 31, 2006 the Proha Group employed 529 (530) people worldwide.
In the first quarter of 2006, the average number of Group personnel was
528 (531). At the end of the period, the continuing operations employed 237
(215) people and the discontinued operations employed 292 (316) people.
In the first quarter of 2006, the Group staff costs amounted to EUR 13.0 (13.0)
million, constituting 79.9% (84.0%) of net sales.
Distribution of personnel by segment (average):
1-3 1-3 1-12
Personnel 2006 2005 Change % 2005
Discontinued
operations 294 316 -6.9 % 308
Norwegian
subsidiaries 202 185 8.8 % 188
Others 32 30 8.6 % 29
Total 528 531 -0.6 % 525
In the first quarter of 2006 EUR 0.1 (0.1) million of options were expensed.
DECISIONS OF PROHA ANNUAL GENERAL MEETING OF SHAREHOLDERS
On April 25, 2006 the Annual General Meeting of Proha Plc made the following
decisions:
The Annual General Meeting confirmed the 2005 Financial Statements and
discharged the Board of Directors and CEO from liability. The Annual General
Meeting approved the Board of Directors' proposal that the net loss for the
financial period be transferred to profit/loss brought forward account and no
dividend is paid.
The following five members were elected to the Board of Directors of Proha Plc:
Birger Flaa, Pekka Mäkelä, Pekka Pere, Olof Ödman and Ernst Jilderda as a new
member.
The Annual General Meeting decided that the Chairman of the Board be paid EUR
18,000 and each Board member, at the moment of election not employed by the
Proha Group or by such company which owns more than five percents of Proha's
share capital and who does not exercise dominant influence over such company, to
be paid EUR 10,000 per year as remuneration for board work.
Ernst & Young Oy was elected to continue as the Company's auditor, with Ulla
Nykky, APA, as the auditor in charge.
Issue of option rights
The Annual General Meeting approved the Board of Directors' proposal to issue a
maximum of 1,395,000 option rights that are offered deviating from the
shareholders' pre-emptive subscription right to the Board of Directors and to
the management of the Group companies.
The subscription of the option rights began on April 25, 2006 and will end on
May 25, 2006. The subscription price is the weighted average price of the
Company share from April 4, 2006 through April 25, 2006. The share subscription
period will commence in steps between years 2007 and 2009 and will end on May
25, 2010. If the options are exercised the share capital of Proha Plc may
increase by a maximum of 1,395,000 shares and EUR 362,700.00. The options now
issued constitute a maximum of 2.23% of the Company's shares and voting rights
after the potential share capital increase. The complete terms and conditions
were given in a stock exchange bulletin on April 4, 2006.
Authorization of the Board of Directors to increase the company's share capital
The Annual General Meeting authorized the Board of Directors to increase the
Company's share capital through an issue of new shares, stock options, option
warrants and/or convertible bonds deviating from the shareholders' pre-emptive
subscription rights. Pursuant to this authorization, the aggregate maximum
number of new shares to be issued or offered for subscription pursuant to stock
options, option warrants and/or convertible bonds shall not exceed 12,243,734
shares with an account equivalent value of EUR 0.26 each, and the share capital
of the Company may be increased by no more than EUR 3,183,370.84, which
represents 20% of the currently registered share capital and of the votes that
can be cast in the General Meeting of Shareholders. The authorization was
granted for a period of one year from the date of the Annual General Meeting.
CORPORATE GOVERNANCE
Proha Plc follows the recommendations of the Helsinki Stock Exchange, the
Central Chamber of Commerce and the Confederation of Finnish Industries and
Employers regarding the corporate governance of publicly held companies. Proha
deviates from the recommendation in two respects. 1) Of the five members of the
Proha Board of Directors only two are currently independent of the company and
any of its significant owners. 2) A share-based bonus system may also be applied
to those members of the Board, who do not have an employment relationship with
the company. Proha's corporate governance principles can be found on the
company's website at www.proha.com.
SHARE CAPITAL AND AUTHORIZATIONS TO ISSUE SHARES
Proha Plc has one class of shares. The book value of the shares is EUR 0.26 per
share. Each share entitles the shareholder to one vote. Proha Plc shares are
traded on the NM list of the Helsinki Stock Exchange.
On January 1, 2006, the subscribed capital of Proha Plc was EUR 15,916,854.20
and the number of shares is 61,218,670. No changes were made on the share
capital during the first quarter of 2006.
The Board of Directors has the authorization by the Annual General Meeting on
April 25, 2006 to increase the company's share capital. Pursuant to this
authorization, the aggregate maximum number of new shares to be issued shall not
exceed 12,243,734 shares with an account equivalent value of EUR 0.26 each, and
the share capital of the Company may be increased by no more than EUR
3,183,370.84. The authorization is valid for one year following the Annual
General Meeting.
The Annual General Meeting approved the Board of Directors' proposal to issue a
maximum of 1,395,000 option rights that are offered deviating from the
shareholders' pre-emptive subscription right to the Board of Directors and to
the management of the Group companies. The subscription of the option rights
began on April 25, 2006 and will end on May 25, 2006. The Board confirmed the
subscription price for the shares subscribed on the basis of these option rights
as EUR 0.48. The subscription price is the weighted average price of the Company
share from April 4, 2006 through April 25, 2006 and thus corresponds to the fair
market price.
The terms and conditions of the option issue were published in the Stock
Exchange Bulletin on April 4, 2006.
TRADING ON THE HELSINKI STOCK EXCHANGE
The number of registered shareholders of Proha Plc totalled 3,468 on March 31,
2006. During the period January 1 - March 31, 2006, the share price was EUR 0.37
at its lowest and EUR 0.50 at its highest. The closing price on March 31, 2006
was EUR 0.47. Market capitalization was approximately EUR 28.8 million at the
end of the period. The trading volume of the Proha share on the NM list of the
Helsinki Stock Exchange was approximately EUR 6.3 million during the first
quarter of 2006.
PROSPECTS FOR 2006
The completion of sale of Artemis will have a significant impact on Proha
Group's operations in 2006. If the sale is completed on terms now negotiated
with Trilogy, Inc., the sale will have a significant positive impact on Proha
Group's result and financial position.
The added investments in the oil and gas sector caused by the increased oil
prices have a significant impact on the development of Norwegian subsidiaries.
The investments are anticipated to keep the demand strong also for 2006. The
challenge for Proha's Norwegian subsidiaries is to respond to the demand, which
calls for successful recruiting. Improved profitability and increased share of
international business are additional goals. After the period, Proha’s
subsidiary Dovre agreed on purchasing Fabcon business operations as part of its
strategy of international expansion. The purchase will increase Dovre’s business
considerably and make it more international. The net sales of Fabcon are
estimated to exceed EUR 11 million in 2006.
Upon conclusion the sale of Artemis and the purchase of Fabcon’s business
operations will have a material impact on Proha’s business and strategy. The
focus will shift towards the rapidly developing international oil and gas
sector. Proha will publish its new strategy and business division after the
final conclusion of the transactions.
PUBLICATION OF ARTEMIS' RESULT FOR THE FIRST QUARTER OF 2006
The date for the disclosure of the Artemis International Solutions Corporation’s
first quarter US-GAAP result of 2006 will be disclosed later.
PRESS CONFERENCE
Proha Plc will hold a press conference for the media and financial
analysts on May 11, 2006 at 12.00 a.m., at Marskin Sali cabinet at
World Trade Center, address Aleksanterinkatu 17, Helsinki.
More information
PROHA PLC
CEO Pekka Pere, tel +358 (0)20 4362 000
pekka.pere@proha.com
www.proha.com
DISTRIBUTION:
Helsinki Stock Exchange
Major Media
The figures are unaudited.
GROUP INCOME STATEMENT
Continuing operations
1-3 1-3 1-12
EUR 1000 2006 2005 2005
NET SALES 7 464 6 330 26 421
Other operating
income 143 8 160
Material and
services -3 -5 -97
Employee
benefits expense -6 699 -6 180 -24 997
Depreciation
and amortisation -86 -87 -346
Other operating
expenses -748 -379 -2 529
OPERATING RESULT 70 -315 -1 388
Financing income 7 67 253
Financing -63 -56 -539
expenses
RESULT BEFORE
TAX 15 -303 -1 674
Tax on income
from operations -156 -60 -263
RESULT FOR
THE PERIOD -141 -363 -1 937
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable to
equity holders
of the parent -145 -354 -1 942
Result
attributable
to minority
interest 3 -9 4
-141 -363 -1 937
Earnings/share
(undiluted), eur -0.002 -0.006 -0.032
Earnings/share
(diluted), eur -0.002 -0.006 -0.032
Discontinued Operations
1-3 1-3 1-12
EUR 1000 2006 2005 2005
NET SALES 8 837 9 113 38 106
Other operating
income 37 730 1 396
Material and
services -961 -856 -3 349
Employee
benefits expense -6 330 -6 791 -27 117
Depreciation
and amortisation -47 -325
Other operating
expenses -3 263 -2 495 -10 883
OPERATING RESULT -1 679 -345 -2 172
Financing income 295 432 1 146
Financing
expenses -309 -832 -2 303
RESULT BEFORE
TAX -1 694 -744 -3 329
Tax on income
from operations -252 -165 -759
RESULT FOR
THE PERIOD -1 946 -909 -4 088
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable to
equity holders
of the parent -1 961 -909 -4 088
Result
attributable
to minority
interest 15 0 0
-1 946 -909 -4 088
Earnings/share
(undiluted), eur -0.032 -0.015 -0.067
Earnings/share
(diluted), eur -0.032 -0.015 -0.067
Group total
1-3 1-3 1-12
EUR 1000 2006 2005 2005
NET SALES 16 301 15 443 64 527
Other operating
income 180 737 1 555
Material and
services -964 -861 -3 447
Employee
benefits expense -13 029 -12 -52 113
971
Depreciation
and amortisation -86 -134 -670
Other operating
expenses -4 011 -2 874 -13 412
OPERATING RESULT -1 610 -660 -3 560
Financing income 302 500 1 399
Financing
expenses -372 -887 -2 841
RESULT BEFORE
TAX -1 679 -1 047 -5 003
Tax on income
from operations -408 -225 -1 022
RESULT FOR
THE PERIOD -2 087 -1 273 -6 025
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable to
equity holders
of the parent -2 105 -1 263 -6 029
Result
attributable
to minority
interest 18 -9 4
-2 087 -1 273 -6 025
Earnings/share
(undiluted), eur -0.034 -0.021 -0.098
Earnings/share
(diluted), eur -0.034 -0.021 -0.098
GROUP BALANCE SHEET
Continuing operations
EUR 1000 31.3. 31.3. 31.12.
2006 2005 Change % 2005
Non-current assets
Intangible assets 1 656 1 833 -9.7 1 708
Goodwill 3 482 3 585 -2.9 3 474
Tangible assets 247 292 -15.5 278
Investments in associates 962 962 0.0 962
Long term
receivables 0 45 -100.0 0
Long term trade receivables
and other receivables 9 77 -88.0 0
Available-for-sale
investments 27 24 13.3 27
Deferred tax asset 97 70 38.8 97
Non-current assets total 6 479 6 886 -5.9 6 545
Current assets
Trade receivables
and other receivables 6 635 6 418 3.4 6 172
Tax receivable, income tax 0 360 -100.0 0
Cash and cash equivalents 2 955 2 954 0.0 3 829
Current assets total 9 590 9 732 -1.5 10 001
TOTAL 16 069 16 618 -3.3 16 546
Minority interest 47 54 -12.4 59
Non-current liabilities
Deferred tax liability 407 443 -8.2 418
Non-current interest
bearing liabilities 3 424 3 291 4.0 3 428
Non-current non-interest
bearing liabilities 0 80 -100.0 0
Liabilities from defined
benefit plan 147 175 -16.0 147
Non-current provisions 0 0 -100.0 0
Non-current liabilities total 3 978 3 990 -0.3 3 992
Current liabilities
Current interest
bearing liabilities 1 254 1 289 -2.7 1 477
Trade Payables and
Other Liabilities 4 980 4 773 4.3 5 400
Tax liability, income tax 385 -15 285
Current provisions 0 0 0.0 21
Current liabilities total 6 619 6 047 9.5 7 183
TOTAL 10 644 10 091 5.5 11 234
Discontinued operations *)
EUR 1000 31.3. 31.3. 31.12.
2006 2005 Change % 2005
Non-current assets
Intangible assets 92 85 8.7 76
Goodwill 7 751 7 894 -1.8 7 751
Tangible assets 390 472 -17.5 352
Investments in associates 5 5 0.0 5
Long term trade receivables
and other receivables 168 238 -29.2 205
Available-for-sale
investments 53 54 -0.9 54
Non-current assets total 8 459 8 747 -3.3 8 442
Current assets
Trade receivables
and other receivables 10 810 12 294 -12.1 14 268
Tax receivable, income tax 299 0 0.0 117
Cash and cash equivalents 3 934 5 889 -33.2 3 464
Current assets total 15 043 18 183 -17.3 17 849
TOTAL 23 502 26 931 -12.7 26 291
Minority interest 32 0 14
Non-current liabilities
Non-current interest
bearing liabilities 1 571 1 277 23.0 1 228
Non-current non-interest
bearing liabilities 0 91 -100.0 0
Liabilities from defined
benefit plan 3 206 2 830 13.3 3 258
Non-current provisions 4 117 -96.6 77
Non-current liabilities total 4 781 4 315 10.8 4 564
Current liabilities
Current interest
bearing liabilities 2 648 2 871 -7.8 3 261
Trade Payables and
Other Liabilities 18 096 17 024 6.3 18 134
Tax liability, income tax 829 781 6.2 1 230
Current liabilities total 21 573 20 676 4.3 22 625
TOTAL 26 386 24 991 5.6 27 203
*) Assets and liabilities related to discontinued operations are
classified as held for sale.
Group total
EUR 1000 31.3. 31.3. 31.12.
2006 2005 Change % 2005
ASSETS
Non-current assets
Intangible assets 1 748 1 918 -8.8 1 784
Goodwill 11 232 11 479 -2.1 11 225
Tangible assets 636 764 -16.7 629
Investments in associates 966 966 0.0 966
Long term
receivables 0 45 -100.0 0
Long term trade receivables
and other receivables 178 315 -43.6 205
Available-for-sale
investments 80 77 3.4 81
Deferred tax asset 97 70 38.8 97
Non-current assets total 14 938 15 634 -4.5 14 987
Current assets
Trade receivables
and other receivables 17 445 18 712 -6.8 20 439
Tax receivable, income tax 299 360 -16.9 117
Cash and cash equivalents 6 889 8 843 -22.1 7 293
Current assets total 24 633 27 915 -11.8 27 850
ASSETS TOTAL 39 571 43 549 -9.1 42 837
SHAREHOLDERS' EQUITY AND
LIABILITIES
Shareholders' equity
Subscribed capital 15 917 15 917 0.0 15 917
Share premium account 4 808 4 807 0.0 4 808
Fair value reserve
and other reserves 418 460 -9.0 430
Translation differences 377 -57 766.3 463
Retained earnings -18 979 -12 661 -49.9 -17 219
Equity attributable to equity
holders of the parent 2 541 8 466 -70.0 4 400
Minority interest 79 54 46.1 73
Shareholders' equity total 2 620 8 520 -69.3 4 473
Non-current liabilities
Deferred tax liability 407 443 -8.2 418
Non-current interest
bearing liabilities 4 995 4 568 9.3 4 656
Non-current non-interest
bearing liabilities 0 172 -100.0 0
Liabilities from defined
benefit plan 3 353 3 005 11.6 3 405
Non-current provisions 4 117 -96.6 77
Non-current liabilities total 8 759 8 305 5.5 8 556
Current liabilities
Current interest
bearing liabilities 3 902 4 160 -6.2 4 738
Trade Payables and
Other Liabilities 23 076 21 797 5.9 23 534
Tax liability, income tax 1 214 766 58.6 1 515
Current provisions 0 0 0.0 21
Current liabilities total 28 193 26 723 5.5 29 808
TOTAL EQUITY AND LIABILITIES 39 571 43 549 -9.1 42 837
RECONCILIATION OF SHAREHOLDERS' EQUITY 1-3/2006
Sub- Share Re-
scr- pre- valu- Profit/ Min-
ibed mium ation Trans- loss ority
(1000 EUR) capi- ac- re- lation brought inte-
tal count serve diff. forward Total rest Total
SHAREHOLDERS'
EQUITY 1.1.2006 15 917 4 808 430 463 -17 219 4 400 73 4 473
Change in
translation
difference 1 -86 221 135 3 138
Share based
payments 111 111 111
Transfers
between items -13 13
NET PROFIT/LOSS
RECOGNIZED
DIRECTLY TO
SHAREHOLDERS'
EQUITY -12 -86 344 246 3 249
Profit/loss for
the period -2 105 -2 105 18 -2 087
Dividends -15 -15
TOTAL PROFITS
AND LOSSES -12 -86 -1 761 -1 859 6 -1 853
Share issue
SHAREHOLDERS'
EQUITY
31.3.2006 15 917 4 808 418 377 -18 979 2 541 79 2 620
RECONCILIATION OF SHAREHOLDERS' EQUITY 1-3/2005
Sub- Share Re-
scr- pre- valu- Profit/ Min-
ibed mium ation Trans- loss ority
(1000 EUR) capi- ac- re- lation brought inte-
tal count serve diff. forward Total rest Total
SHAREHOLDERS'
EQUITY 1.1.2005 15 917 4 807 467 -545 -11 171 9 475 70 9 545
Change in
translation
difference 5 489 -351 143 -7 136
Share based
payments 103 103 103
Transfers
between items -12 12
Other change 8 8 8
NET PROFIT/LOSS
RECOGNIZED
DIRECTLY TO
SHAREHOLDERS'
EQUITY -7 489 -227 255 -7 249
Profit/loss for
the period -1 263 -1 263 -9 -1 273
TOTAL PROFITS
AND LOSSES -7 489 -1 490 -1 008 -16 -1 024
Share issue
SHAREHOLDERS'
EQUITY
31.3.2005 15 917 4 807 460 -57 -12 661 8 466 54 8 520
GROUP CASH FLOW STATEMENT
1-3 1-3 1-12
2006 2005 2005
Cash flow from operating activities
Operating result -1 610 -660 -3 560
Adjustments
Other operating income 0 -573 -1 369
Depreciation and amortization 86 134 670
Employee benefits expense 112 103 995
Other operating expenses 0 159 253
Other adjustments -60 155 3
Adjustments, total 138 -22 553
Change in net working capital
Increase (-) / decrease (+)
in short term receivables 2 985 156 16
Increase (+) / decrease (-)
in short term liabilities 115 2 203 3 626
Change in provisions -21 0 21
Change in net working capital, total 3 079 2 359 3 663
Interest paid -164 -436 -171
Interest received 24 199 434
Other financial expenses paid -186 -727 -2 501
Other financial income received 328 585 2 188
Income taxes paid -508 -487 -442
Cash flow from operating activities 1 101 811 163
Cash flow from investing activities
Investments in tangible and intangible assets -64 -159 -279
Disposals of associated companies 0 573 619
Partial disposals of subsidiary companies 0 197 629
Proceeds and repayments of loan receivables -146 2 608 186
Dividends received 0 0 20
Cash flow from investing activities -210 3 219 1 173
Cash flow from financing activities
Share issue 0 0 1
Proceeds from short-term loans 17 2 119 3 563
Repayments of short-term loans -1 586 -2 262 -3 740
Proceeds from long-term loans 456 0 1 705
Repayments of long-term loans -118 -13 -782
Dividends paid -15 0 -9
Cash flow from financing activities -1 246 -156 738
Change in cash and cash equivalents -355 3 874 2 074
Cash and cash equivalents Jan. 1 -7 293 -5 069 -5 069
Foreign exchange rate adjustment 49 99 -150
Cash and cash equivalents March 31 6 889 8 843 7 293
CONTINGENT LIABILITIES (EUR 1000) 31.3.2006 31.12.2005
COLLARETAL FOR OWN COMMITENTS
Debts secured by corporate mortgages
Pension loans 86 86
Corporate mortgages given
as security of the loans 168 168
Debts secured by the assets of the company
Loans from financial institutions 3 168 3 276
Debts secured by the assets of Artemis
International Solutions Corporation
in USA and in Great Britain except for
intellectual property rights.
Debts secured by assets
Loans and checking
account credit lines used 1 701 1 927
Book value of trade receivables and
fixed assets given as security 6 323 6 880
Debts secured by shares
Loans from financial institutions 48 48
Book value of pledged shares 152 152
Future costs for non-cancellable
leasing contracts
Within a year 2 937 2 558
Within 1 - 5 years 3 169 4 867
Total 6 105 7 425
INCOME STATEMENT BY QUARTER
Continuing Operations
1-3 1-3 4-6 7-9 10-12
(EUR 1000) 2006 2005 2005 2005 2005
NET SALES 7 464 6 330 6 727 6 279 7 085
Other operating income 143 8 201 -83 35
Material and services -3 -5 -8 -50 -34
Employee
benefits expense -6 699 -6 180 -6 348 -5 500 -6 968
Depreciation
and amortisation -86 -87 -82 -85 -91
Other operating expenses -748 -379 -694 -838 -618
Operating Result 70 -315 -204 -278 -592
% 0,9 % -5,0 % -3,0 % -4,4 % -8,3 %
Financing income
and expenses -55 12 -5 -44 -249
Share of profit/loss 0 0 0 0 0
in associates
PROFIT/LOSS BEFORE TAX AND
MINORITY INTEREST 15 -303 -209 -322 -840
% 0,2 % -4,8 % -3,1 % -5,1 % -11,9 %
Tax on income from -156 -60 -95 -68 -39
operations
PROFIT/LOSS FOR THE PERIOD -141 -363 -305 -390 -879
% -1,9 % -5,7 % -4,5 % -6,2 % -12,4 %
Discontinued Operations
1-3 1-3 4-6 7-9 10-12
(EUR 1000) 2006 2005 2005 2005 2005
NET SALES 8 837 9 113 9 844 8 319 10 829
Other operating income 37 730 423 59 184
Material and services -961 -856 -972 -536 -985
Employee
benefits expense -6 330 -6 791 -6 764 -6 450 -7 112
Depreciation
and amortisation -47 -46 -156 -76
Other operating expenses -3 263 -2 495 -2 891 -2 403 -3 094
Operating Result -1 679 -345 -407 -1 167 -254
% -19,0 % -3,8 % -4,1 % -14,0 % -2,3 %
Financing income
and expenses -14 -399 -328 -329 -100
PROFIT/LOSS BEFORE TAX AND
MINORITY INTEREST -1 694 -744 -735 -1 496 -354
% -19,2 % -8,2 % -7,5 % -18,0 % -3,3 %
Tax on income from -252 -165 -164 -40 -390
operations
PROFIT/LOSS FOR THE PERIOD -1 946 -909 -899 -1 536 -744
% -22,0 % -10,0 % -9,1 % -18,5 % -6,9 %
Group total
(EUR 1000) 1-3 1-3 4-6 7-9 10-12
2006 2005 2005 2005 2005
NET SALES 16 301 15 443 16 571 14 598 17 915
Other operating income 180 737 624 -24 219
Material and services -964 -861 -980 -586 -1 019
Employee
benefits expense -13 029 -12 971 -13 112 -11 950 -14 080
Depreciation and
amortisation -86 -134 -128 -241 -167
Other operating expenses -4 011 -2 874 -3 585 -3 240 -3 713
Operating Result -1 610 -660 -611 -1 444 -846
% -9,9 % -4,3 % -3,7 % -9,9 % -4,7 %
Financing income and
expenses -69 -387 -333 -373 -349
PROFIT/LOSS BEFORE TAX AND
MINORITY INTEREST -1 679 -1 047 -944 -1 817 -1 194
% -10,3 % -6,8 % -5,7 % -12,4 % -6,7 %
Tax on income from
operations -408 -225 -260 -108 -429
PROFIT/LOSS FOR THE PERIOD -2 087 -1 273 -1 204 -1 925 -1 623
% -12,8 % -8,2 % -7,3 % -13,2 % -9,1 %
GROUP KEY FIGURES
EUR million 1-3 1-3 1-12
2006 2005 2005
Net sales 16.3 15.4 64.5
Net sales
continuing operations 7.5 6.3 26.4
Net sales
discontinued operations 8.8 9.1 38.1
Operating result -1.6 -0.7 -3.6
% of net sales -9.9 % -4.3 % -5.5 %
Operating result
continuing operations 0.1 -0.3 -1.4
Operating result
discontinued operations -1.7 -0.3 -2.2
Result before taxes -1.7 -1.0 -5.0
% of net sales -10.3 % -6.8 % -7.8 %
Result for the period -2.1 -1.3 -6.0
% of net sales -12.9 % -8.2 % -9.3 %
Return on equity, % -235.4 % -56.4 % -86.0 %
Return on
Investment, % -40.9 % -3.6 % -13.4 %
Interest-bearing liabilities 8.9 8.7 9.4
Cash and cash equivalent 6.9 8.8 7.3
Gearing, % 76.6 % -1.3 % 47.0 %
Equity to assets ratio, % 6.9 % 21.1 % 11.0 %
Balance sheet total 39.6 43.5 42.8
Gross investments 0.1 0.1 0.3
% of net sales 0.4 % 1.0 % 0.4 %
Research and development
costs 1.8 1.6 7.3
% of net sales 11.1 % 10.6 % 11.3 %
Personnel average for
the period 528 531 525
Personnel at the end of
the period 529 530 531
Basic earnings
per share, EUR -0.034 -0.021 -0.098
Equity per share, EUR 0.04 0.14 0.07
Diluted earnings
per share, EUR -0.034 -0.021 -0.098
Share issue adjusted weighted
average number of shares
during period 61 218 670 61 217 770 61 217 970
Weighted average number of
shares, options and convertible
bonds during period 61 218 670 61 377 131 61 217 970
Share issue adjusted number of
shares at the end of period 61 218 670 61 217 770 61 218 670
LARGEST SHAREHOLDERS ON MARCH 31, 2006
Shareholder Percentage
of all
shares and
Number of voting
shares rights
Dovregruppen A.S. 6 560 646 10.7
Alec E. Gores Trust 6 357 655 10.4
Pekka Pere 4 241 105 6.9
Etra-Invest Oy 3 600 000 5.9
Pekka Mäkelä 2 923 775 4.8
Etola Erkki 2 000 000 3.3
Lars Nyqvist 1 900 455 3.1
Suupohjan Osuuspankki 1 279 700 2.1
Thominvest Oy 1 043 500 1.7
Eero Ruokostenpohja 700 950 1.1
Risto Saikko 566 390 0.9
FIM Pankkiiriliike Oy 562 900 0.9
Patrick Ternier 550 087 0.9
Lapuan Osuuspankki 500 000 0.8
Alexa Marie Gores 474 720 0.8
Eric B. Gores 474 720 0.8
Lauren C. Gores 474 720 0.8
Rochelle Francis Gores 474 720 0.8
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