Proha Plc Stock Exchange Bulletin February 15, 2007 at 9.05 a.m.
PROHA PLC FINANCIAL STATEMENTS (IFRS) JANUARY 1, - DECEMBER 31,2006
Period October - December 2006:
- Net sales for the continuing operations of Proha Group grew by
72% and were EUR 12.2 (7.1 in October - December 2005) million.
- Operating result for the continuing operations improved and was
EUR 0.2 (-0.6) million.
- The Proha Group net sales including the discontinued operations
decreased by 32% and were EUR 12.2 million (EUR 17.9 million),
because Artemis sub-group was divested in June 2006 and no longer
was consolidated to the Group figures.
- The Groups operating result improved and was EUR 0.2 (-0.8)
million.
- The strong performance by Dovre and Fabcon increased the net
sales and improved profitability for the continuing operations.
Dovres operating profit was negatively impacted by recognition
of EUR 0.2 million pension expense, which was caused by sharper
than anticipated increase in interest rates and other principal
actuarial assumptions in Norway.
New Strategy for Proha:
- On October 26, 2006 Proha published its new strategy that
focuses on project management emphasizes international growth and
group synergies.
Financial year 2006:
- Net sales for the continuing operations grew by 55% and were EUR
41.0 million (26.4 million in 2005).
- The Proha Group net sales including the discontinued operations
decreased by 9.8% and were EUR 58.2 million (EUR 64.5 million).
- The Group's operating result including the discontinued operations
was EUR 11.6 (-3.6) million.
- The operating result for the Group continuing operations before
non-recurring items was EUR 0.1 million and after the non-recurring
items EUR -0.3 million.
- The Groups total operating result of EUR 11.6 million is
composed of EUR 0.1 (-1.4) million operating result for the
continuing operations, EUR 14.5 million gain on disposal from the
divestment of Artemis on the second quarter of 2006 and of
EUR -3.0 (-1.9) million operating loss of Artemis for the period
January 1, - June 30, 2006.
- The divestment of sub-group Artemis was closed on June 30, 2006.
The divestment has material positive impact on Prohas result and
financial position.
- The Fabcon acquisition was closed with the effective date May 1,
2006. Prohas subsidiary Dovre International AS acquired the
business operations and international subsidiaries of Norwegian
Fabcon Management AS. The acquisition enhances growth of both
Proha and its subsidiary Dovre and strengthens their position in
the fast growing oil and gas industry markets.
PROHA CEO PEKKA PERE:
Year 2006 has been a year of major restructuring for the Proha
Group. Divesting Artemis sub-group in summer of 2006 decreased the
Group net sales but improved the financial position of Proha.
Acquiring the business operations and international subsidiaries
of Norwegian Fabcon increases the size and strengthens the
international presence of Prohas oil and gas market related
project management services business.
The new structure created by these transactions and the strong
balance sheet of the company enable growth and improved
profitability for the continuing operations. In the fall of 2006
formulated new strategy that focuses on project management
emphasizes international growth and group synergies streamlines
the group structure and management.
The reorganized Proha Group consists of two divisions:
- Dovre Consulting and Services division and
- Safran Systems division.
Dovre Consulting and Services division provides project and supply
chain management consulting and services. The software business of
Proha was combined into new Safran Systems division that develops,
sells and supports project management software and helps the
customers fully benefit from them in their business operations.
As part of the new strategy the new SafranOne software platform
and new Safran Portal solutions integrate Microsoft Project and
Portfolio products, Prohas Safran software products and
Microsofts latest Internet technologies. SafranOne provides
advanced software architecture for sustainable solution delivery
to customers.
KEY RATIOS FOR THE CONTINUING OPERATIONS
10-12 10-12 1-12 1-12
(EUR 2006 2005 Change 2006 2005 Change
million) % %
Net sales 12,2 7,1 71,9 % 41,0 26,4 55,3 %
Operating
result 0,2 -0,6 137,4 % -0,3 -1,4 76,5 %
% of
net sales 1,8 % -8,3 % -0,8 % -5,3 %
Result before
taxes 0,0 -0,8 103,1 % -0,6 -1,7 61,5 %
Result for
the period 0,0 -0,9 100,3 % -1,1 -1,9 43,2 %
Return on
equity % 0,1 % -44,3 % -7,1 % -24,4 %
Return on
investment % 6,8 % -16,6 % -0,7 % -7,9 %
Cash and cash
equivalents 12,0 7,3 64,8 % 12,0 7,3 64,8 %
Debt-equity
ratio % -38,7 % 6,8 % -38,7 % 6,8 %
Equity-
ratio % 47,0 % 59,3 % 47,0 % 59,3 %
Basic
earnings
per
share, EUR 0,000 -0,015 -0,018 -0,032
Diluted
earnings
per
share, EUR 0,000 -0,015 -0,018 -0,032
Equity per
share, EUR 0,25 0,26 0,25 0,26
KEY RATIOS OF THE PROHA GROUP
10-12 10-12 1-12 1-12
(EUR million) 2006 2005 Change 2006 2005 Change
% %
Net sales 12,2 17,9 -32,0 % 58,2 64,5 -9,8 %
Operating
result 0,2 -0,8 126,2 % 11,6 -3,6 426,8 %
% of net sales 1,8 % -4,7 % 20,0 % -5,5 %
Result
before taxes 0,0 -1,2 102,2 % 12,0 -5,0 338,9 %
Result for
the period 0,0 -1,6 100,2 % 11,0 -6,0 282,7 %
Return on
equity % 0,1 % -92,7 % 0,0 % 111,2 % -86,0 % 0,0 %
Return on
investment % 6,7 % -14,6 % 0,0 % 72,8 % -14,7 % 0,0 %
Cash and cash
equivalents 12,0 7,3 64,8 % 12,0 7,3 64,8 %
Debt-equity
ratio % -38,2 % 47,0 % 0,0 % -38,2 % 47,0 % 0,0 %
Equity-
ratio % 47,3 % 11,0 % 0,0 % 47,3 % 11,0 % 0,0 %
Basic
earnings
per share,EUR 0,000 -0,027 0,179 -0,098
Diluted
earnings
per share,EUR 0,000 -0,027 0,179 -0,098
Equity per
share, EUR 0,25 0,10 0,25 0,07
NEW STRATEGY FOR PROHA
On October 25, 2006 the Proha Board of Directors approved the new
strategy for Proha. Proha is one of the leading software and
service companies specializing in project management. Proha
supports customers executing projects and managing project
business by providing a comprehensive set of tools and services
with the best project management practices.
Proha Group consists of two divisions: Dovre Consulting and
Services division and Safran Systems division.
Dovre Consulting and Services division provides project and supply
chain management consulting and services. Dovre Consulting and
Services division consists of Dovre International AS and its
recently acquired Fabcon companies. The division focuses on
project management and supply chain management services mainly
within oil and gas sector. Dovre has subsidiaries in the USA and
Great Britain and Fabcon in Canada, United States, France,
Singapore, Nigeria and Great Britain. In addition, Fabcon has
branch offices in Russia and South Korea.
The software business of Proha is reorganized by establishing the
internationally operating Safran Systems division. Safran Systems
division develops,sells and supports project management software.
The operations and products of Prohas Norwegian subsidiary Safran
Software Solutions AS, Finnish subsidiary Datamar Oy as well as
the Proha Mobile Business Unit are organized as Safran Systems
division.
Safran Software Solutions AS is a Norwegian company specializing
in project management software for the oil and gas sector. Finnish
Datamar Oy offers tailored software solutions in client/server and
Internet environments.
Proha is a Microsoft Gold Certified partner and Safran is one of
the few official international launch partners for Microsoft
Project 2007.
In addition to organic growth, Proha Group will seek growth by
expanding its international sales and services network through
acquisitions. The growth through a series of structured
acquisitions is intended to be gained at a low risk level by
maintaining a moderate level of capital employed and not
committing the groups cash funds extensively.
As part of thenew strategy and group structure Proha redefined
management responsibilities and selected a new management team.
The members of the new management team are Pekka Pere as the
chairman, Arve Jensen, Birger Flaa, Steinar Dalva, Sirpa Haavisto
and Pekka Halonen. Janne Rainvuori as the corporate counsel
will be the secretary of the management team.
IFRS REPORTING
These financial statements of Proha have been prepared according
to the International Financial Reporting Standards (IFRS). In
preparing the financial statements, the IAS and IFRS standards and
SIC and IFRIC interpretations valid on December 31, 2006 have been
followed.
On October 26, 2006 Proha published the new strategy that includes
the establishment of two business divisions. The Group reporting
structure has been changed to follow the new divisional
organization with Dovre Consulting and Services, Safran Systems,
and other operations forming separate reporting business segments.
The Groups segment reporting is based primarily on business
segments and secondarily on geographical segments.
In the new reporting structure Dovre Consulting and Services
division includes the Norwegian companies Dovre International AS
and Dovre Fabcon AS with their international subsidiaries. Safran
Systems business is operated by the Group parent company, Datamar
Oy and Norwegian Safran Software Solutions AS. Other operations
consist mainly of Group administration.
The geographical segments are: EMEA (Europe, Middle East, and
Africa), Americas and APAC (Asia Pacific including Australia and
New Zealand). The net sales per geographical segment are presented
by customers location and assets by their locations.
PROHA DIVESTED ITS OWNERSHIP AT ARTEMIS
The divestment of Artemis International Solutions Corporation
(Artemis) was closed on June 30, 2006. Proha has issued stock
exchange bulletins on the transaction on March 13, 2006, April 3,
2006, June 9, 2006 and July 3, 2006.
The agreement of Artemis divestment does not include non-
competition clauses. The future development of Artemis does not
cause any obligations for Proha.
The divestment of Artemis has material impact on both the extent
of the Group operations and the Group structure. The Groups
result for the period includes approx. EUR 14.5 million gain on
disposal for the sale of Artemis shares. Due to the fixed sale
price, Artemis result of EUR -3.1 million for the period January
1, - June 30, 2006 increased the gain on disposal by approximately
EUR 3.1 million, because the items of Artemis income statement
were consolidated in the Proha Groups income statement until the
closing date June 30, 2006.
Artemis sub-group that has been a separate reporting segment and a
group of cash flow generating units has been classified as
discontinued operation according to IFRS 5 standard.
Proha got approximately EUR 10.0 million for its 53.3% ownership
in Artemis and the amount was paid in cash in July 2006.
PROHA ACQUIRED BUSINESS OPERATIONS OF FABCON
Dovre Fabcon AS, founded by Prohas Norwegian subsidiary Dovre
International AS, purchased the business operations and overseas
subsidiaries of Fabcon Management AS in 2006. Fabcon is
consolidated in Prohas group financial statements beginning May
1, 2006. The purchase enhances growth of both Proha and its
subsidiary Dovre and strengthens their position in the fast
growing markets. Proha has issued stock exchange bulletins on the
acquisition on April 4, 2006 and May 12, 2006.
The cost of Fabcon acquisition is approximately NOK 24.8 million
(approx. EUR 3.2 million) according to the estimate at the end of
the period under review. In addition to the acquisition price of
NOK 24.4 million (approx. EUR 3.1 million) the cost of acquisition
includes costs directly attributable to the acquisition for
approx. NOK 0.4 million (approx. EUR 0.1 million).
The purchase price will be paid in two installments. The first
installment of approximately NOK 16.3 million (approx. EUR 2.1
million) was paid in June 2006. The final purchase price is
dependent on Fabcon's result for 2006 and some other customary
terms and conditions. The rest of the purchase price will be at
the most NOK 8.0 million (approx. EUR 1.0 million) and will be
paid on December 31, 2007 at the latest. The estimated second
installment of EUR 1.0 million of the purchase price is included
in the accrued liabilities of the current liabilities in the Group
balance sheet on December 31, 2006.
Of the cost of acquisition of approximately EUR 0.5 million was
allocated to customer agreements and customer relations.
Consequently approximately EUR 0.2 million was recognized as
deferred tax liability. The fair value of the acquired net assets
was approximately EUR 1.8 million. The goodwill of approximately
EUR 1.5 million was recognized for the acquisition, based on the
Proha estimate that Fabcon acquisition will increase Dovres
growth and strengthen Dovres position in the global gas industry
markets with the help of Fabcons international network. Following
the acquisition Proha is better able to serve its international
oil and gas sector customers. For the period May 1, - December 31,
2006 Fabcons share of the Group result was EUR 0.4 million. The
assets and liabilities recognized of the acquiree are presented in
the tables of this bulletin.
BUSINESS PERFORMANCE
Prohas net sales mainly consist of oil and gas sector project
management business. Dovre Consulting and Services Division
accounted for approximately 93% (93%) and Safran Systems Division
7% (7%) of the net sales of the Group continuing operations.
For Dovre Consulting and Services Division both the net sales and
profitability developed positively in 2006 as well as in the
fourth quarter. In 2006 Dovre acquired several new customers of
whom many are oil and gas industry companies investing in new
technology in the field such as, Sea Metric International, Aker
Floating Production, MPF Corp. and Sevan Marine.
For Fabcon the growth has been most significant in Canada and
Russia with the Exxon Sakhalin project there. Through ExxonMobile
agreement Fabcon operated in eight countries in 2006.
In 2006 approximately 90% of the business of the Norwegian
subsidiaries came from oil and gas sector and approximately 10%
from other project management sales. The business of Fabcon
companies acquired in 2006 is fully focused on oil and gas sector.
In 2006 and in the fourth quarter the demand in the oil and gas
sector has continued strong. The level of investments in the oil
and gas industry remains high. The positive mood of the markets is
anticipated to continue.
In developing its business operations Dovre focuses on maintaining
the leading position in the Norwegian markets, improving
profitability, taking advantage of the synergies created by the
Fabcon acquisition and in continuing the growth in the
international markets. Dovre is planning to add personnel to meet
the increasing demand in the oil and gas industry. In the
Norwegian markets in particular the challenge is to recruit
professionals to meet the demand. The purchase of Fabcons
business operations increases Dovres international presence
considerably. Significant customers of both Dovre and Fabcon have
positively received the acquisition of Fabcon.
NET SALES
Proha Group
In 2006 the Proha Group net sales including the discontinued
operations declining by 10% and were EUR 58.2 million (EUR 64.5
million in 2005) because Artemis no longer was consolidated to the
Group figures in the latter half of 2006. However, the increased
net sales of Dovre and Fabcon partly offset the decline.
In the fourth quarter of 2006 the Proha Group net sales decreased
by 32% and were EUR 12.2 million (EUR 17.9 million for the fourth
quarter of 2005), because Artemis no longer was consolidated to
the Group figures.
Continuing operations
In 2006 the net sales for the continuing operations grew by 55%
and were EUR 41.0 (26.4) million.
The net sales of Dovre Consulting and Services Division grew by
56% and totaled EUR 38.1 (24.5 in 2005) million. Safran Systems
Division net sales grew by 49% and totaled EUR 2.9 (1.9) million.
In the fourth quarter of 2006 the net sales of Dovre Consulting
and Services Division grew by 70% and were EUR 11.0 (6.5 in fourth
quarter of 2005) million. The net sales of Safran Systems Division
grew by 90% on the fourth quarter of 2006 and were EUR 1.1 (0.6)
million.
Discontinued operations
In 2006 the net sales of the discontinued operations totaled EUR
17.2 (38.1) million and accounted for 30% (59%) of the Group net
sales.
Due to the divestment of Artemis sub-group closed on June 30,
2006, the fourth quarter net sales of the discontinuing operations
were EUR 0.0 (10.8) million and accounted for 0% (60%) of the
Group's net sales.
Distribution of net sales by revenue type (EUR million and % of
net sales):
10-12 % 10-12 % 1-12 % 1-12 %
2006 2005 2006 2005
Services 0,1 0,9 3,1 17,4 2,9 5,0 9,7 15,0
One time
license
revenue 0,3 2,1 3,6 20,1 7,5 12,8 14,3 22,2
Recurring
license
revenue 11,8 96,9 11,2 62,5 47,9 82,2 40,5 62,8
Total 12,2 100,0 17,9 100,0 58,2 100,0 64,5 100,0
In 2006 the service revenue was EUR 47.9 (40.5) million or 82%
(63%) of the net sales.
In 2006 the license sales amounted to EUR 10.4 (24.0) million,
accounting for 18% (37%) of the net sales. The share of one-time
licenses was EUR 2.9 (9.7) million and that of recurring licenses
EUR 7.5 (14.3) million.
The service revenue for the fourth quarter of 2006 was EUR 11.8
(11.2) million accounting for 97% (63%) of the net sales.
In the fourth quarter of 2006 the license sales amounted to EUR
0.4 (6.7) million, accounting for 3% (38%) of the net sales. The
share of one-time licenses was EUR 0.1 (3.1) million and that of
recurring licenses EUR 0.3 (3.6) million in the fourth quarter.
In the fourth quarter of 2006, the increase of service revenue and
decrease of license revenue were due to items of Artemis income
statement no longer being consolidated with the Proha Group. Also
the acquisition of Fabcon on May 1, 2006 increased the proportion
of service revenue in the Group net sales.
Distribution of net sales by segment:
10-12 10-12 Change 1-12 1-12 Change
(EUR million) 2006 2005 % 2006 2005 %
Dovre 11,1 6,5 70,0 38,1 24,5 55,6
Safran 1,1 0,9 24,0 3,0 2,5 19,4
Others 0,2 0,0 619,4 0,5 0,1 377,1
Discontinued
operations 0,0 10,8 -100,0 17,2 38,1 -54,9
Inter-segment
net sales -0,1 -0,3 -0,6 -0,7
Group total 12,2 17,9 -31,8 58,2 64,5 -9,8
Distribution of net sales by geographical segments
10-12 10-12 1-12 1-12
(EUR million) 2006 2005 2006 2005
EMEA 7,2 14,1 43,1 51,2
AMERICAS 5,8 2,3 12,9 7,4
APAC 0,9 1,5 5,4 5,9
Net sales
between
countries -1,7 0,0 -3,2 0,0
Group total 12,2 17,9 58,2 64,5
Distribution of net sales by country (% of net sales):
10-12 10-12 1-12 1-12
(% of net sales) 2006 2005 2006 2005
EMEA 58,9 % 78,9 % 74,0 % 79,4 %
AMERICAS 47,9 % 12,8 % 22,2 % 11,5 %
APAC 7,0 % 8,4 % 9,3 % 9,1 %
Net sales
between segments -13,8 % 0,0 % -5,5 % 0,0 %
Group total 100,0 % 100,0 % 100,0 % 100,0 %
PROFITABILITY
In 2006 Proha Group's operating result was EUR 11.6 (-3.6)
million. The operating result is composed of EUR 0.1 million in
operating result of the continuing operations, EUR 14.5 million in
gain on disposal of Artemis in the second quarter of 2006 and of
EUR -3.0 million in Artemis operating result for the period
January 1, - June 30, 2006.
The Groups operating result for the fourth quarter was EUR 0.3
(-1.4) million.
Distribution of operating result by segment:
10-12 10-12 1-12 1-12
(EUR million) 2006 2005 Change 2006 2005 Change
% %
Dovre 0,6 0,1 728,7 2,2 0,9 134,0
Safran -0,1 -0,1 -23,0 -0,6 -0,4 50,7
Others -0,3 -0,6 -49,9 -2,0 -2,0 0,4
Discontinued
operations 0,0 -0,3 -100,0 12,0 -2,2 -650,6
Group total 0,2 -0,8 -126,2 11,6 -3,6 -426,8
Continuing operations
In 2006 the operating result for the continuing operations was EUR
-0.3 (-1.4 in 2005) million. In 2006, the operating result for the
continuing operations without non-recurring items was EUR 0.1
(-0.8) million. In 2006 the operating result for the continuing
operations includes approx. EUR -0.5 million of loss on disposal
recognized by the parent company for its divestment of Artemis
shares on the second quarter. The operating result of the Dovre
Consulting and Services Division was EUR 2.2 (0.9) million. The
operating result for Safran Systems Division was EUR -0.6 (-0.4)
million.
In the fourth quarter of 2006 the operating result for the
continuing operations was EUR 0.2 (-0.6) million. The operating
result of Dovre Consulting and Services Division was EUR 0.6 (0.1
in the fourth quarter of 2005) million. Dovre's operating profit was
negatively impacted by recognition of EUR 0.2 million pension
expense of defined benefit plan. The increase was caused by sharper than
anticipated increase in interest rates and other principal
actuarial assumptions in Norway. In the fourth quarter of 2006 the
operating result of Safran Systems Division was EUR -0.1 (-0.1).
Discontinued operations
In 2006 the operating result for the discontinued operations was
approx. EUR 12.0 (-2.2) million. The operating result for the
discontinued operations is composed of the gain on disposal of EUR
15.0 million for the divestment of Artemis in the second quarter
of 2006 and of EUR -3.0 million operating loss of Artemis during
January-June 2006.
Due to the divestment of Artemis sub-group on June 30, 2006, the
fourth quarter operating result of the discontinued operations
were EUR 0.0 (-0.3) million.
Proha Group
In 2006 the result before tax for Proha Group was EUR 11.9 (-5.0)
million and result after tax was EUR 10.9 (-6.0) million. The
Groups EUR 10.9 million result after tax is composed of EUR 14.5
million in gain on disposal of Artemis, EUR -3.1 million in
Artemis result and EUR -0.6 million in the result of the
continuing operations.
In 2006 the result for the continuing operations was EUR -1.1
(-1.9) million. In 2006 the result without non-recurring items for
the continuing operations was EUR -0.7 (-1.9) million.
Group earnings per share amounted to EUR 0.179 (-0.098). For the
continuing operations the earnings per share were EUR -0.018
(-0.032). For the discontinued operations the earnings per share
were EUR 0.197 (-0.067).
Group return on investment (ROI) was 72.8% (-13.4%).
Goodwill
The Group's goodwill is not amortized but tested for impairment
under IAS 36. No indications of impairment of assets exist.
CASH FLOW, FINANCING AND INVESTMENTS
The Group balance sheet total on December 31, 2006 was EUR 32.7
(42.8) million.
On December 31, 2006, the Group cash and cash equivalents totaled
EUR 12.0 (7.3) million. The cash and cash equivalents for the
continuing operations were EUR 12.0 (3.8) million on December 31,
2006. The payment from disposal of Artemis was made in July, which
increased the Groups cash and cash equivalents by approx. EUR
10.0 million at the time.
In 2006, cash flow from operating activities was EUR -0.6 (0.2)
million.
In 2006 the gross investments totaled EUR 2.2 (0.3) million. The
gross investments of the continuing operations were EUR 2.1 (0.1)
million and gross investments of the discontinued operations were
EUR 0.1 (0.2) million. The gross investments of the continuing
operations consist mainly of acquisition of Fabcon. Approximately
EUR 0.5 million of the acquisition cost of Fabcon was allocated to
customer agreements and customer relations. Approximately EUR 1.4
million was recognized as goodwill.
The total cash flow of investments was EUR 4.5 (1.2) million. EUR
1.9 million was invested in Fabcon acquisition. The cash flow of
investments was increased by EUR 6.6 million for the proceeds from
the disposal of Artemis net of cash disposed of.
Total of EUR 2.2 million new loans were drawn mainly for the
financing of Fabcon acquisition. A total of EUR 1.2 million loans
were repaid resulting in total EUR 1.0 (0,7) million in cash flow
of financing activities.
Group equity to assets ratio was 47.3% (11.0%) and gearing was
-38.2% (47.0%). On December 31, 2006 the interest-bearing
liabilities amounted to EUR 6.2 (9.4) million, accounting for
18.9% (22.0%) of the Group's shareholders' equity and liabilities
total. Of the interest-bearing liabilities, EUR 2.0 (4.7) million
were non-current liabilities and EUR 4.2 (4.7) million current
liabilities. The Group's Quick Ratio was 1.7 (1.0).
STATEMENT ON THE ADEQUACY OF THE COMPANY'S ASSETS
On December 31, 2006 the Group's cash and cash equivalents
amounted to EUR 12.0 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
In 2006 the Group research and development costs for the strategic
products were EUR 4.0 (7.3) million accounting for 7% (11%) of the
net sales. The research and development costs for the continuing
operations were EUR 1.0 (1.0) million accounting for 2% (4%) of
the net sales of continuing operations. The research and
development costs for the discontinued operations were EUR 3.0
(7.3) million accounting for 17% (17%) of the net sales of the
discontinued operations. No research and development costs were
capitalized in 2006.
In 2006 SafranOne product concept was developed towards function
specific solutions. SafranOne is a technical platform used for
various portal solutions developed separately. In the fourth
quarter of 2006 the development of Safran Portal for Knowledge
Projects was initiated aimed at project management of knowledge
work. In 2006 Proha became Microsoft Gold Certified Partner. Proha
products utilize the latest technology available on the markets.
In 2006 also new version of Prohas previously developed software
solutions Safran Project and Safran for Microsoft Project were
introduced to the markets. The close cooperation with Microsoft is
continuing with the latest version of Safran for Microsoft Project
being introduced to the markets simultaneously with Microsoft
Project 2007 software.
Prohas mobile solutions were developed further with e.g. new
solution for upgrading alert level for rescue personnel,
Outlook/ExchangeTM integration for communication of meeting
reservations, application for allocation of urgent maintenance
work and polling applications for customer service operations.
Prohas Datamar released a new version 3.2 of its Rescue Planner
software developed for rescue departments. Rescue Planner is now
used by e.g. Helsinki Rescue Department, Tampere Regional Rescue
Department and Oulu - Koillismaa Regional Rescue Department.
PERSONNEL
The Group staff costs amounted to EUR 50.1 (52.1) million,
constituting 86% (81%) of net sales. The staff costs for the
continuing operations were EUR 37.9 (25.0) million accounting for
92% (95%) of the net sales of the continuing operations. The staff
costs for the discontinued operations were EUR 12.2 (27.1) million
accounting for 71% (71%) of the net sales of the discontinued
operations.
On December 31, 2006 the Proha Group employed 325 (516) people
worldwide and the average number of Group personnel was 469 (525).
At the end of the period, the continuing operations employed 325
(213) people.
Distribution of personnel by segment (average):
10-12 10-12 1-12 1-12
Personnel 2006 2005 Change % 2006 2005 Change %
Dovre 266 179 48,9 238 173 37,2
Safran 53 32 64,9 46 32 44,8
Other 7 11 -36,4 18 11 54,4
Discontinued
operations 302 -100,0 168 308 -45,7
Total 326 524 -37,8 469 525 -10,7
In 2006 total of EUR 0.2 (0.4) million of options were expensed.
Of the expensed options the continuing operations accounted for
EUR 0.1 (0.1) million and the discontinued operations for EUR 0.1
(0.4) million.
ENVIRONMENT
The business of Proha Group is not considered to have any
significant environmental consequences.
REVIEW ON RISKS AND UNCERTAINTIES OF BUSINESS
Proha manages its risks by being aware of the central risk factors
in business and financing as well as of linking risk management as
part of business processes. In risk management the principle of
risk diversification is applied. Proha Board of Directors
supervises the company risk management.
The recognized risks are finance risks, price risks, technology
risks, risks of demand, and dependence on development of customer
business area.
The primary financial risks are currency risk, interest rate risk
and liquidity risk. Proha operates globally. Due to the
diversified currency risk no forward foreign currency contracts or
other corresponding hedging are used. The Group liquidity is
managed through cash and liquidity management. The aim is to
maintain the balance between fixed and flexible rate loans.
Compared to the Groups business volume the amount of loans with
fixed interest rates is not such that the fair value interest risk
would require hedging. It is the principle of Proha to not
guarantee loans for the subsidiaries.
Typical Proha customers are large and financially solid companies,
which for its part reduces the Groups credit risk. The Group does
not provide actual customer financing
Rapid changes in generally accepted IT utilities and architectures
might pose a risk to software business. The occurrence of
exceptionally rapid changes is, however, unlikely.
The business of Dovre and Fabcon is based on long term customer
relationships and agreements, and consequently the changes in
demand are reflected with delay in the business. The challenge is
to recruit professionals to meet the demand in the Norwegian
markets. In Prohas business, no single customer generates over 5%
of the Proha Groups net sales. The dependence of the Norwegian
business on the oil, gas and off-shore industry is significant,
and therefore substantial and long-term changes in the energy
prices may pose a risk to the Norwegian operations. Because the
customer agreements in Norwegian business are generally long term
and a considerable portion of employment agreements are tied to
customer projects, the risks are rather in the business volume
than in profitability. Prohas subsidiary Dovre manages the price
risk by making long term frame agreements with the customers.
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
(chairman) 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 to be
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
ended on May 25, 2006. The subscription price EUR 0.48 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 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 makes one exception
from the recommendation: 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 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 in 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 and the authorization remains fully unused as of
now.
In its meeting on May 30, 2006, Proha Board of Directors approved
the subscriptions of the option issue that is part of Proha
Group's incentive and commitment program and that was decided by
the Annual General Meeting on April 25, 2006. In the issue, a
total of 1.341.000 Proha Plc stock options were subscribed,
entitling to the subscription of 1.341.000 shares. The stock
options were granted without compensation to the management of the
Group companies and company board. The terms and conditions of the
option issue were published in the Stock Exchange Bulletin on
April 4, 2006.
No shares were subscribed for with Proha Plc stock options during
the period under review.
TRADING ON THE HELSINKI STOCK EXCHANGE
Liquidity Providing for Proha Plc's Share
Proha Plc and Swedish Remium AB signed a market making agreement
that follows the guidelines set by the Helsinki Stock Exchange on
April 5, 2004. Market making in accordance with the LP agreement
commenced on June 12, 2006. The agreement will be in force
initially for a fixed term of six (6) months and thereafter until
further notice, and the agreement's period of notice is one (1)
month.
According to the agreement Remium AB will quote bids and offers
for Proha Plc's share so that the spread of the bid and offer
prices is EUR 0.02. The bids and offers quoted by the liquidity
provider must be for at least 10,000 shares.
The number of registered shareholders of Proha Plc totaled 3,471
on December 31, 2006. In 2006, the share price was EUR 0.34 at its
lowest and EUR 0.50 at its highest. The closing price on December
29, 2006 was EUR 0.40. Market capitalization was approximately EUR
24.5 million at the end of the period. The trading volume of the
Proha share on the OMX Nordic Exchange was approximately EUR 17.0
million during the period.
PROSPECTS FOR 2007
In 2006 the group structure of Proha was changed and strategy
renewed. The changes created improved preconditions for business
growth and improved profitability in 2007 and onwards. According
to the new strategy Proha seeks international growth and
profitability by concentrating on project management services and
software and by emphasizing the synergies between the group
businesses.
Though the focus of Proha business will continue to be in
demanding oil and gas industry companies and projects, the company
will also expand its business operations in other industries.
The favorable market outlook seems to continue in 2007. Especially
the developments in the oil and gas market sector impact the
future development. The high energy prices and growing demand will
keep the number of international investments in the field high.
The development of Prohas present software business is impacted
by the general development of IT markets and, following the new
partnership strategy, by the advancement of Microsofts new
products in the markets.
The general outlook is good for business development of Dovre
Consulting and Services division. In northeastern Canada projects
will be completed and that will temporarily cause decline in the
service business in Canada. Initiation of new projects in Alberta
Canada are targeted to replace the completed projects, but the
impact of new projects will not yet be seen in the net sales in
the first half of 2007. In other locations around the world the
consulting and services business is anticipated to develop
favorably.
In 2007 the focus areas of Safran Systems division are software
products development as well as building and strengthening of
international delivery and partnership networks. To strengthen the
network Prohas Growth Ventures operations aim to make strategic
acquisition at a low risk level that will create basis for rapid
growth in the future around the world.
On an annual level, the net sales of Prohas continuing operations
are anticipated to increase and the profitability to improve
compared to 2006.
BOARD OF DIRECTORS' PROPOSAL FOR DISTRIBUTION OF PROFIT
The Proha Board of Directors proposes that result for the financial
year be entred in capital and reserves, and no dividend be paid.
PRESS CONFERENCE
Proha Plc will hold a press conference for the media and financial
analysts on February 15, 2007 at 12.00 a.m., in Marskin Sali 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 audited.
GROUP INCOME STATEMENT AND BALANCE SHEET
JANUARY 1, - DECEMBER 31, 2006
GROUP INCOME STATEMENT
Continuing operations
10-12 10-12 Change 1-12 1-12 Change
(EUR 2006 2005 % 2006 2005 %
thousand)
NET SALES 12 183 7 085 71,9 41 021 26 421 55,3
Other
operating
income 169 35 387,4 392 160 145,5
Gain on
disposal of
discontinued
operations -472
Material and
services -35 -34 4,0 -85 -97 -12,8
Employee
benefits
expense -11 204 -6 968 60,8 -37 887 -24 997 51,6
Depreciation
and
amortisation -94 -91 3,4 -374 -346 8,1
Other
operating
expenses -797 -618 29,0 -2 920 -2 529 15,5
OPERATING
RESULT 222 -592 137,4 -326 -1 388 76,5
Financing
income 151 156 -2,9 222 253 -12,1
Financing
expenses -345 -405 -14,7 -539 -539 0,1
Share of
result in
associates -2 0 -2 0 -620,7
RESULT BEFORE
TAX 26 -840 103,1 -645 -1 674 61,5
Tax on income
from
operations -23 -39 -40,3 -455 -263 73,1
RESULT FOR
THE PERIOD 2 -879 100,3 -1 100 -1 937 43,2
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable
to equity
holders of
the parent -8 -889 99,2 -1 108 -1 942 42,9
Result
attributable
to minority
interest 10 10 -0,9 8 4 90,8
2 -879 100,3 -1 100 -1 937 43,2
Earnings/
share
(undiluted),
eur 0,000 -0,015 -0,018 -0,032
Earnings/
share
(diluted),
eur 0,000 -0,015 -0,018 -0,032
DISCONTINUED OPERATIONS
(EUR 10-12 10-12 Change 1-12 1-12 Change
thousand) 2006 2005 % 2006 2005 %
NET SALES 0 10 829 -100,0 17 195 38 106 -54,9
Other
operating
income 0 184 -100,0 116 1 396 -91,7
Gain on
disposal of
discontinued
operations 0 15 006
Material and
services 0 -985 -100,0 -1 744 -3 349 -47,9
Employee benefits
expense 0 -7 112 -100,0 -12 210 -27 117 -55,0
Depreciation
and
amortisation 0 -76 -100,0 0 -325 -100,0
Other
operating
expenses 0 -3 094 -100,0 -6 402 -10 883 -41,2
OPERATING
RESULT 0 -254 -100,0 11 961 -2 172 650,6
Financing
income 0 151 -100,0 1 004 1 146 -12,4
Financing
expenses 0 -251 -100,0 -369 -2 303 -84,0
Share of
result
in associates
RESULT BEFORE
TAX 0 -354 100,0 12 596 -3 329 478,4
Tax on income
from
operations 0 -390 -100,0 -489 -759 -35,6
RESULT FOR
THE PERIOD 0 -744 100,0 12 106 -4 088 396,2
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable
to equity
holders of
the parent 0 -744 100,0 12 070 -4 088 395,3
Result
attributable
to minority
interest 0 0 100,0 36 0
Earnings/
share
(undiluted),
eur 0,000 -0,012 0,197 -0,067
Earnings/
share
(diluted),
eur 0,000 -0,012 0,197 -0,067
GROUP TOTAL
(EUR 10-12 10-12 Change 1-12 1-12 Change
thousand) 2006 2005 % 2006 2005 %
NET SALES 12 183 17 915 -32,0 58 215 64 527 -9,8
Other
operating
income 169 219 -22,6 508 1 555 -67,3
Gain on
disposal of
discontinued
operations 0 14 534
Material and
services -35 -1 019 -96,6 -1 829 -3 447 -46,9
Employee benefits
expense -11 204 -14 080 -20,4 -50 097 -52 113 -3,9
Depreciation
and
amortisation -94 -167 -43,5 -374 -670 -44,3
Other
operating
expenses -797 -3 713 -78,5 -9 322 -13 412 -30,5
OPERATING
RESULT 222 -846 126,2 11 635 -3 560 426,8
Financing
income 151 307 -50,6 1 227 1 399 -12,3
Financing
expenses -345 -655 -47,3 -908 -2 841 -68,0
Share of
result in
associates -2 0 -2 0 -620,7
RESULT BEFORE
TAX 26 -1 194 102,2 11 951 -5 003 338,9
Tax on income
from
operations -23 -429 -94,6 -944 -1 022 -7,6
RESULT FOR
THE PERIOD 2 -1 623 100,2 11 007 -6 025 282,7
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable
to equity
holders
of the parent -8 -1 633 99,5 10 962 -6 029 281,8
Result
attributable
to minority
interest 10 10 0,7 45 4 937,4
Earnings/
share
(undiluted),
eur 0,000 -0,027 0,179 -0,098
Earnings/
share
(diluted),
eur 0,000 -0,027 0,179 -0,098
GROUP BALANCE SHEET
CONTINUING OPERATIONS
31.12. 31.12.
(EUR thousand) 2006 2005 Change %
ASSETS
Non-current assets
Intangible assets 1 999 1 708 17,0
Goodwill 4 758 3 474 37,0
Tangible assets 216 278 -22,4
Investments in associates 982 962 2,1
Available-for-sale
investments 36 27 33,6
Long-term trade receivables
and other receivables 130 0
Deferred tax asset 208 97 114,8
Non-current assets 8 328 6 545 27,2
Current assets
Trade receivables
and other receivables 12 339 6 172 99,9
Cash and cash equivalents 12 022 3 829 214,0
Current assets 24 361 10 001 143,6
TOTAL 32 689 16 546 97,6
Minority interest 112 59 89,7
Non current liabilities
Deferred tax liability 491 418 17,4
Non-current interest
bearing liabilities 1 958 3 428 -42,9
Liabilities from defined
benefit plan 379 147 158,3
Non current liabilities 2 828 3 992 -29,2
Current liabilities
Current interest
bearing liabilities 4 205 1 477 184,8
Trade payables and
other liabilities 9 783 5 400 81,2
Tax liability, income tax 556 285 95,1
Current provisions 0 21 -100,0
Current liabilities 14 545 7 183 102,5
TOTAL 17 484 11 234 55,6
DISCONTINUED OPERATIONS *)
31.12. 31.12.
(EUR thousand) 2006 2005 Change %
ASSETS
Non-current assets
Intangible assets 0 76 -100,0
Goodwill 0 7 751 -100,0
Tangible assets 0 352 -100,0
Investments in associates 0 5 -100,0
Available-for-sale
investments 0 54 -100,0
Long-term trade receivables
and other receivables 0 205 -100,0
Non-current assets 0 8 442 -100,0
Current assets
Trade receivables
and other receivables 0 14 183 -100,0
Tax receivable, income tax 0 117 -100,0
Cash and cash equivalents 0 3 464 -100,0
Current assets 0 17 764 -100,0
TOTAL 0 26 206 -100,0
Minority interest 0 14 -100,0
Non current liabilities
Non-current interest
bearing liabilities 0 1 228 -100,0
Liabilities from defined
benefit plan 0 3 258 -100,0
Non-current provisions 0 77 -100,0
Non current liabilities 0 4 564 -100,0
Current liabilities
Current interest
bearing liabilities 0 3 261 -100,0
Trade payables and
other liabilities 0 18 049 -100,0
Tax liability, income tax 0 1 230 -100,0
Current liabilities 0 22 540 -100,0
TOTAL 0 27 104 -100,0
*) Assets and liabilities related to discontinued
operations are classified as held for sale.
GROUP TOTAL
31.12. 31.12.
(EUR thousand) 2006 2005 Change %
ASSETS
Non-current assets
Intangible assets 1 999 1 784 12,1
Goodwill 4 758 11 225 -57,6
Tangible assets 216 629 -65,7
Investments in associates 982 966 1,7
Available-for-sale
investments 36 81 -55,7
Long-term trade receivables
and other receivables 130 205 -36,9
Deferred tax receivable 208 97 114,8
Non-current assets 8 328 14 987 -44,4
Current assets
Trade receivables
and other receivables 12 339 20 355 -39,4
Tax receivable, income tax 0 117 -100,0
Cash and cash equivalents 12 022 7 293 64,8
Current assets 24 361 27 765 -12,3
ASSETS TOTAL 32 689 42 752 -23,5
SHAREHOLDERS' EQUITY AND
LIABILITIES
Shareholders' equity
Share capital 15 917 15 917 0,0
Share premium account 4 379 4 808 -8,9
Fair value reserve
and other reserves 368 430 -14,6
Translation differences 38 463 -91,7
Retained earnings -5 497 -17 219 68,1
Equity attributable to equity
holders of the parent 15 205 4 400 245,6
Minority interest 112 73 52,8
Shareholders' equity 15 316 4 473 242,4
Non current liabilities
Deferred tax liability 491 418 17,4
Non-current interest
bearing liabilities 1 958 4 656 -57,9
Liabilities from defined
benefit plan 379 3 405 -88,9
Non-current provisions 0 77 -100,0
Non current liabilities 2 828 8 556 -67,0
Current liabilities
Current interest
bearing liabilities 4 205 4 738 -11,2
Trade payables and
other liabilities 9 783 23 449 -58,3
Tax liability, income tax 556 1 515 -63,3
Current provisions 0 21 -100,0
Current liabilities 14 545 29 723 -51,1
TOTAL EQUITY AND 32 689 42 752 -23,5
LIABILITIES
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 1-12/2006
Share Re- Re-
Sha- pre- valu- tai Min-
(EUR re mium ation Trans ned- ority
thoudsand) capi- ac- re- lation earn- inte-
tal count serve diff ings Total rest Total
SHAREHOLDERS'
EQUITY
1.1.2006 15 917 4 808 430 463 -17 219 4 400 73 4 473
Change in
translation
differences -13 -181 -41 -235 2 -233
Share
based
payments 77 77 77
Transfers between
items -50 50
Disposal of
Artemis -429 -244 673 -50 -50
Acquisition
of Fabcon 57 57
NET
PROFITS
/LOSSES
RECOGNIZED
DIRECTLY TO
SHAREHOLDERS'
EQUITY 0 -429 -63 -425 759 -158 9 -149
Result
for the
period 10 962 10 962 45 11 007
TOTAL
PROFITS AND
LOSSES 10 962 10 962 45 11 007
Dividend
distribution 0 0 -15 -15
SHAREHOLDERS'
EQUITY
31.12.2006 15 917 4 379 368 38 -5 497 15 205 112 15 316
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
1-12/2005
Share Re- Re-
Sha- pre- valu- tai Min-
(EUR re mium ation Trans ned- ority
thoudsand) capi- ac- re- lation earn- inte-
tal count serve diff ings Total rest Total
SHAREHOLDERS'
EQUITY
1.1.2005 15 917 4 807 467 -545 -11 171 9 475 70 9 545
Change in
translation
differences 15 1 009 -575 448 -1 447
Share based
payments 498 498 498
Transfers between
items -52 52
Other change 7 7 7
NET
PROFITS
/LOSSES
RECOGNIZED
DIRECTLY TO
SHAREHOLDERS'
EQUITY -37 1 009 -19 953 -1 952
Result for the
period -6 029 -6 029 4 -6 025
TOTAL PROFITS
AND LOSSES -6 029 -6 029 4 -6 025
Share issue 0 1 1 1
SHAREHOLDERS'
EQUITY
31.12.2005 15 917 4 808 430 463 -17 219 4 400 73 4 473
GROUP CASH FLOW STATEMENT
1-12 1-12
(EUR thousand) 2006 2005
Cash flow from operating activities
Operating result 11 635 -3 560
Adjustments
Disposal of Artemis -11 292
Other operating income -71 -1 369
Depreciation and amortisation 374 670
Employee benefits expense 319 995
Other operating expenses 253
Other adjustments -99 3
Adjustments, total -10 769 553
Change in net working capital
Increase (-) / decrease (+)
in current receivables -3 883 16
Increase (+) / decrease (-)
in current liabilities 3 040 3 626
Other adjustments 21
Change in net working capital, total -815 3 663
Interest paid -555 -171
Interest received 267 434
Other financial expenses paid -355 -2 501
Other financial income received 373 2 188
Income taxes paid -353 -442
Cash flow from operating activities -572 163
Cash flow from investing activities
Investments in tangible and
intangible assets -36 -279
Acquisition of subsidiaries net
cash acquired -1 949
Investments in associates -23
Proceeds from disposal of
subsidiaries
net cash disposed of 6 579
Partial disposals of subsidiaries 629
Disposal of associates 619
Proceeds (-) and repayments (+) of
loan receivables -118 186
Dividends received 2 20
Cash flow from investing activities 4 455 1 173
Cash flow from financing activities
Proceeds from issuance
of share capital 1
Proceeds from short-term loans 579 3 563
Repayments of short-term loans -742 -3 740
Proceeds from long-term loans 1 619 1 705
Repayments of long-term loans -463 -782
Dividends paid -15 -9
Cash flow from financing activities 978 738
Change in cash and cash equivalents 4 861 2 075
Cash and cash equivalents at
beginning of the period 7 293 5 069
Foreign exchange rate adjustment -132 150
Cash and cash equivalents of
subsidiaries acquired 213
Cash and cash equivalents of
subsidiaries divested -3 464
Change in cash and cash equivalents
for the continuing operations 8 112
Change in cash and cash equivalents 2 075
Cash and cash equivalents at
end of the period 12 022 7 293
The following assets and liabilities were
recognized of Fabcon acquisition:
Fair Carrying
values amount
upon before
business business
combination combination
Acquisition date May 1, May 1,
2006 2006
(EUR thousand)
Non-current assets
Intangible assets 544 0
Tangible assets 22 22
Trade and other
receivables 138 138
Available-for-sale
investments 13 13
Current assets
Trade and other
receivables 2 095 2 095
Cash and cash 213 213
equivalents
Assets total 3 025 2 481
Minority interest 57 57
Non-current liabilities
Deferred tax 152 0
liability
Long term interest
bearing liabilities 322 322
Current liabilities
Trade payables and
other liabilities 766 766
Liabilities total 1 240 1 088
Net assets 1 727 1 335
Goodwill on acquisition 1 473
Cost of acquisition total 3 200
Amount of acquisition cost paid
in cash and cash assets 2 162
Amount of deferred income 1 038
Cost of acquisition total 3 200
Amount of acquisition cost paid
in cash and cash assets 2 162
- cash and cash assets on
acquisition date -213
Impact to cash flow in
cash flow of investments
Jan.1, - December 31, 2006 1 949
The figures of the table are based on exchange
rate of the acquisition date.
COMMITMENTS AND CONTINGENT LIABILITIES
GROUP
31.12. 31.12.
(EUR thousand) 2006 2005
COLLATERAL FOR OWN
COMMITMENTS
Debts secured by corporate
mortgages
Pension loans 86
Corporate mortgages given
as security of the loans 168
Debts secured by the assets
of the company
Loans from financial
institutions 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 corporate
mortgages
Loans from financing
institutions 3 028
The debt is secured by
current assets of Dovre
International As and Dovre
Fabcon AS and 100% of Dovre
Fabcon AS shares 5 672
Debts secured by assets
Loans and checking
account credit lines 1 927
Book value of trade
receivables and fixed assets
given as security 1 106 6 807
Debts secured by shares
Loans and checking
account credit lines 24 48
Book value of pledged
shares 511 511
Future minimum lease
payments under non-cancellable
operating leases:
Not later than one year 328 2 558
Later than one year and not
later than five years 1 204 4 867
Total 1 533 7 425
GROUP QUARTERLY INCOME STATEMENT 2006
CONTINUING OPERATIONS
1-3 4-6 7-9 10-12
(EUR thousand) 2006 2006 2006 2006
NET SALES 7 464 10 316 11 058 12 183
Other operating
income 143 34 46 169
Gain on disposal
of discontinued
operations -472
Material and 0
services -3 -123 76 -35
Employee
benefits expense -6 699 -9 825 -10 159 -11 204
Depreciation
and amortisation -86 -92 -101 -94
Other operating
expenses -748 -753 -621 -797
OPERATING RESULT 70 -915 299 222
% 0,9 % -8,9 % 2,7 % 1,8 %
Financing income 7 7 56 151
Financing
expenses -63 -62 -69 -345
Share of result
in associates -2
RESULT BEFORE
TAX 15 -970 286 26
% 0,2 % -9,4 % 2,6 % 0,2 %
Tax on income
from operations -156 -103 -173 -23
RESULT FOR THE
PERIOD -141 -1 073 113 2
% -1,9 % -10,4 % 1,0 % 0,0 %
DISCONTINUED OPERATIONS
1-3 4-6 7-9 10-12
(EUR thousand) 2006 2006 2006 2006
NET SALES 8 837 8 357 0 0
Other operating
income 37 79 0 0
Gain on disposal
of discontinued
operations 0 15 006
Material and
services -961 -784 0 0
Employee
benefits expense -6 330 -5 880 0 0
Depreciation
and amortisation 0 0 0 0
Other operating
expenses -3 263 -3 139 0 0
OPERATING RESULT -1 679 13 640 0 0
% -19,0 % 163,2 %
Financing income 295 709 0 0
Financing
expenses -309 -60 0 0
RESULT BEFORE
TAX AND MINORITY
INTEREST -1 694 14 289 0 0
% -19,2 % 171,0 %
Tax on income
from operations -252 -237 0 0
RESULT FOR THE
PERIOD -1 946 14 052 0 0
% -22,0 % 168,1 %
GROUP TOTAL
1-3 4-6 7-9 10-12
(EUR thousand) 2006 2006 2006 2006
NET SALES 16 301 18 673 11 058 12 183
Other operating
income 180 113 46 169
Gain on disposal
of discontinued
operations 0 14 534 0 0
Material and
services -964 -907 76 -35
Employee
benefits expense -13 029 -15 705 -10 159 -11 204
Depreciation and
amortisation -86 -92 -101 -94
Other operating
expenses -4 011 -3 892 -621 -797
OPERATING RESULT -1 610 12 725 299 222
% -9,9 % 68,1 % 2,7 % 1,8 %
Financing income 302 716 56 151
Financing
expenses -372 -122 -69 -345
Share of result
in associates
RESULT BEFORE -2
TAX AND MINORITY
INTEREST -1 679 13 319 286 26
% -10,3 % 71,3 % 2,6 % 0,2 %
Tax on income
from operations -408 -340 -173 -23
RESULT FOR THE
PERIOD -2 087 12 979 113 2
% -12,8 % 69,5 % 1,0 % 0,0 %
GROUP QUARTERLY INCOME STATEMENT 2005
CONTINUING OPERATIONS
1-3 4-6 7-9 10-12
(EUR thousand) 2005 2005 2005 2005
NET SALES 6 330 6 727 6 279 7 085
Other operating
income 8 201 -83 35
Gain on disposal
of discontinued
operations
Material and
services -5 -8 -50 -34
Employee
benefits expense -6 180 -6 348 -5 500 -6 968
Depreciation
and amortisation -87 -82 -85 -91
Other operating
expenses -379 -694 -838 -618
OPERATING RESULT -315 -204 -278 -592
% -5,0 % -3,0 % -4,4 % -8,3 %
Financing income 67 26 4 156
Financing
expenses -56 -31 -48 -405
Share of result
in associates
RESULT BEFORE
TAX -303 -209 -322 -840
% -4,8 % -3,1 % -5,1 % -11,9 %
Tax on income
from operations -60 -95 -68 -39
RESULT FOR THE
PERIOD -363 -305 -390 -879
% -5,7 % -4,5 % -6,2 % -12,4 %
DISCONTINUED OPERATIONS
1-3 4-6 7-9 10-12
(EUR thousand) 2005 2005 2005 2005
NET SALES 9 113 9 844 8 319 10 829
Other operating
income 730 423 59 184
Gain on disposal
of discontinued
operations
Material and
services -856 -972 -536 -985
Employee
benefits expense -6 791 -6 764 -6 450 -7 112
Depreciation
and amortisation -47 -46 -156 -76
Other operating
expenses -2 495 -2 891 -2 403 -3 094
OPERATING RESULT -345 -407 -1 167 -254
% -3,8 % -4,1 % -14,0 % -2,3 %
Financing income 432 420 143 151
Financing
expenses -832 -748 -473 -251
RESULT BEFORE
TAX AND MINORITY
INTEREST -744 -735 -1 496 -354
% -8,2 % -7,5 % -18,0 % -3,3 %
Tax on income
from operations -165 -164 -40 -390
RESULT FOR THE
PERIOD -909 -899 -1 536 -744
% -10,0 -9,1 % -18,5 % -6,9 %
GROUP TOTAL
1-3 4-6 7-9 10-12
(EUR thousand) 2005 2005 2005 2005
NET SALES 15 443 16 571 14 598 17 915
Other operating
income 737 624 -24 219
Gain on disposal
of discontinued
operations
Material and
services -861 -980 -586 -1 019
Employee benefits
expense -12 971 -13 112 -11 950 -14 080
Depreciation and
amortisation -134 -128 -241 -167
Other operating
expenses -2 874 -3 585 -3 240 -3 713
OPERATING RESULT -660 -611 -1 444 -846
% -4,3 % -3,7 % -9,9 % -4,7 %
Financing income 500 446 147 307
Financing
expenses -887 -779 -520 -655
Share of result
in associates
RESULT BEFORE
TAX AND MINORITY
INTEREST -1 047 -944 -1 817 -1 194
% -6,8 % -5,7 % -12,4 % -6,7 %
Tax on income
from operations -225 -260 -108 -429
RESULT FOR THE
PERIOD -1 273 -1 204 -1 925 -1 623
% -8,2 % -7,3 % -13,2 % -9,1 %
Distribution of quarterly net sales by segment:
10-12 6-9 4-6 1-3
(EUR million) 2006 2006 2006 2006
Dovre 11,1 10,5 9,7 6,8
Safran 1,1 0,6 0,6 0,7
Others 0,2 0,2 0,1 0,0
Discontinued
operations 0,0 0,0 8,4 8,8
Inter-segment
net sales -0,1 -0,2 -0,1 -0,1
Group total 12,2 11,1 18,7 16,3
10-12 6-9 4-6 1-3
2005 2005 2005 2005
Dovre 6,5 5,8 6,3 6,0
Safran 0,9 0,7 0,5 0,5
Others 0,0 0,0 0,0 0,0
Discontinued
operations 10,8 8,3 9,8 9,1
Inter-segment
net sales -0,3 -0,2 -0,1 -0,1
Group total 17,9 14,6 16,6 15,4
Distribution of quarterly operating result by segment:
10-12 6-9 4-6 1-3
(EUR million) 2006 2006 2006 2006
Dovre 0,6 0,7 0,4 0,6
Safran -0,1 -0,2 -0,3 0,0
Others -0,3 -0,2 -1,0 -0,5
Discontinued
operations 0,0 0,0 13,6 -1,7
Group total 0,2 0,3 12,7 -1,6
10-12 6-9 4-6 1-3
2005 2005 2005 2005
Dovre 0,1 0,2 0,4 0,3
Safran -0,1 0,1 -0,2 -0,2
Others -0,6 -0,6 -0,4 -0,4
Discontinued
operations -0,3 -1,2 -0,4 -0,3
Group total -0,8 -1,4 -0,6 -0,7
GROUP KEY FIGURES
(EUR million) 1-12 1-12
2006 2005
Net sales 58,2 64,5
Net sales
continued operations 41,0 26,4
Net sales
discontinued operations 17,2 38,1
Operating result 11,6 -3,6
% of net sales 20,0 % -5,5 %
Operating result
continued operations -0,3 -1,4
Operating result
discontinued operations 12,0 -2,2
Result before taxes 12,0 -5,0
% of net sales 20,5 % -7,8 %
Result for the period 11,0 -6,0
% of net sales 18,9 % -9,3 %
Return on equity, % 111,2 % -86,0 %
Return on investment,% 72,8 % -13,4 %
Interest-bearing 6,2 9,4
liabilities
Cash and cash equivalents 12,0 7,3
Gearing, % -38,2 % 47,0 %
Equity to assets ratio, % 47,3 % 11,0 %
Balance sheet total 32,7 42,8
Gross investments 2,2 0,3
% of net sales 3,8 % 0,4 %
Research and development 4,0 7,3
costs
% of net sales 6,8 % 11,3 %
Personnel average for
the period 469 525
Personnel at the end of
the period 325 531
Basic earnings
per share, EUR 0,179 -0,098
Equity per share, EUR 0,179 0,098
Diluted earnings
per share, EUR 0,25 -0,07
Average number of shares:
Undiluted 61 218 670 61 217 970
Diluted 61 236 944 61 217 970
Number of shares at end of
period: 61 218 670 61 218 670
Largest Shareholders as per December 29, 2006
Name Number of Percentage of
shares all shares and
voting rights
Dovregruppen A.S. * 6 560 646 10.7
Etra-Invest Oy 6 211 500 10.1
Alec E. Gores Trust 3 787 766 6.2
Pekka Mäkelä 2 882 375 4.7
Pekka Pere** 2 541 105 4.1
Etola Erkki 2 000 000 3.3
Eficor Oyj** 1 700 000 2.8
Lars Nyqvist 1 465 355 2.4
Thominvest Oy 1 043 500 1.7
Eero Ruokostenpohja 703 950 1.1
Lapuan Osuuspankki 640 000 1.0
FIM Pankkiiriliike 585 000 0.9
Risto Saikko 546 390 0.9
Reino Jokinen 530 000 0.9
Patrick Ternier 515 000 0.8
Astea AS 471 257 0.8
Kefura AB 450 000 0.7
Vesa Olsson 400 000 0.7
Kari Paasi 382 000 0.6
Markku Mäkinen 340 000 0.6
*) Birger Flaa holds control over Dovregruppen A.S.
**) Pekka Pere holds control over Eficor Oyj
Notifications concerning changes in ownership in 2006
January 3, 2007, Ownership of Revocable Living Trust of Alec E.
Gores fell below 5%.
November 2, 2006, Etola and Etra-Invest Oy combined share
ownership exceeded 10%.
October 26, 2006, Ownership of Revocable Living Trust of Alec E.
Gores fell below 10%.