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%.