TJ Group Plc Stock Exchange Release February 15, 2007, at 08:30 Finnish time
TJ GROUP FINANCIAL REPORT 1 JANUARY-31 DECEMBER 2006 (IFRS)
- Net sales EUR 4.32 million (EUR 9.88 million)
- Operating result EUR -1.56 million (EUR -1.13 million)
- Result before taxes EUR -1.74 million (EUR -1.27 million)
- Equity ratio -40.5% (-8.4%), shareholders' equity/share EUR -0.02
(EUR -0.01)
- Earnings per share EUR -0.014 (EUR -0.025)
STRUCTURE OF THE GROUP
During the review period, TJ Group consisted of the Finnish subsidiaries
Documenta Oy and PlanMill Ltd (until 29 September 2006), in which it had 100%
ownership, and the parent company TJ Group Plc. The company had business
operations in Finland only, so there are no geographically segmented reports of
the net sales, business results and personnel to be presented.
During the review period, TJ Group Plc owned 50% of Morning Digital Design Oy
(until 7 April 2006) and 23% of the German company GAP AG (until 31 March 2006)
in addition to the subsidiaries. On 7 April 2006, the company announced that it
had sold its 50% share of Morning Digital Design Oy to Edita Oyj. On 31 March
2006, the company announced that GAP AG and the German company GROUP Technologies
AG will merge into GlobalWare AG and that, after the merger, TJ Group Plc will
own about 9.4% of the shares of this company. GlobalWare AG has changed its name
to GROUP Technologies AG on 6 June 2006.
On 31 December 2006, TJ Group Plc owned 8.79% of the GROUP Technologies AG shares
and these shares have been entered in the balance sheet as other financial assets
under long-term assets. The GROUP Technologies AG shares have been valued at the
stock exchange rate of the closing date, 31 December 2006.
On 29 September 2006, the company announced that it had sold the business
operations of its subsidiary PlanMill Ltd to its operating management and Sentica
Partners.
In its business operations, TJ Group Oyj will focus on developing its customers'
business processes especially by means of document and workflow management
systems and development of quality and customer relationship management, with the
emphasis on the Finnish markets. The company will continue to use the operating
model in which the operative functions have been centralized into the
subsidiary/subsidiaries.
NET SALES
TJ Group's net sales for the review period were EUR 4.32 million (EUR 9.88
million). The net sales of the continuing operations on the review period were
EUR 3.93 million and the comparable net sales of the continuing operations on 1
January-31 December 2005 were EUR 4.68 million.
RESULT DEVELOPMENT
TJ Group's operating result for the review period was EUR -1.56 million (EUR
-1.13 million). The operating result of the continuing operations on the review
period was EUR -1.88 million and the comparable operating result of the
continuing operations on 1 January-31 December 2005 was EUR -5.53 million.
The operating result of the review period includes as other profits of the
business the following one-off profits: EUR 0.78 million for selling the Morning
Digital Design Oy shares to Edita Oyj, EUR 0.57 million for selling the business
operations of PlanMill Ltd to its operating management and Sentica Partners, a
cancellation of a reservation of EUR 0.38 million for unprofitable leases and a
related additional write-off of EUR 0.27 million from the reconstruction costs of
the office premises included in the balance sheet. The lease for office space,
signed in 2001, ended on 30 June 2006 and the reservation connected to it has
been cancelled. TJ Group Plc and its subsidiaries Documenta Oy and Planmill Ltd
have moved to new premises at Westendintie 1, 02160 Espoo.
The business result of the review period includes a one-off reservation of EUR
0.33 million concerning a tax claim for the year 2000. The company has presented
a counterclaim related to this on the basis of the right of recourse.
Additionally, the operating result is burdened by the EUR 1.4 million
depreciation of the value of the GROUP Technologies AG shares. The shares have
been valued at the stock exchange rate of the closing date, 31 December 2006, and
they have been entered in the balance sheet as other financial assets under long-
term assets. The shares will be valued at the stock exchange rate of the review
period's closing date also in the future interim reports and financial reports.
The exchange rate on December 31, 2006
was EUR 0.47 and the latest exchange rate on February 14, 2007 was EUR 0.60.
Company is owning 1 999 357 pcs GROUP Technologies shares. Additionally, the
operating result of the review period is still encumbered by the expenses
relating to the legal proceedings concerning the alleged security markets
information offense.
The result before taxes for the review period was EUR -1.74 million (EUR -1.27
million). The result before taxes of the continuing operations on the review
period was EUR -2.07 million and the comparable result before taxes of the
continuing operations on 1 January-31 December 2005 was EUR -5.67 million.
The costs for employment benefits on the review period were EUR 2.52 million (EUR
6.06 million), which equals to 58% of the net sales (61%). The costs for
employment benefits for the continuing operations on the review period were EUR
2.24 million and the comparable costs for employment benefits on the period of 1
January-31 December 2005 were EUR 2.84 million. Net sales per person for the
continuing operations on the review period were EUR 94 thousand.
At the end of the review period, the group's equity is negative. The loss on
company's share capital has been registered in the trade register on 20 September
2006.
THE NET SALES AND RESULT DEVELOPMENT OF THE SUBSIDIARY (IFRS)
Documenta Oy
Documenta Oy's net sales for the review period 1 January-31 December 2006 were
EUR 3.90 million (EUR 4.86 million on 1 January-31 December 2005). The operating
result was EUR 0.42 million (EUR 1.32 million on 1 January-31 December 2005),
which is 11% of the net sales.
During the review period, a large project started on 2003 for the Finnish Defence
Forces was completed. However, the project will continue on 2007 as deliveries of
additional parts and options. The customer base of Documenta started to grow on
the review period. Additionally, Documenta worked in closer cooperation with
Microsoft Oy and IBM Oy during the year. During the review period, Documenta has
especially invested in developing a new generation product family. The results of
the product development project will be published in stages during 2007.
Documenta Oy is a company specializing in software products for digital workflow
and document management, quality management, customer relationship management and
intensification of operative processes. Documenta offers information technology
based software, maintenance, operation service and integration solutions for
companies and public administration. Documenta is also responsible for reselling
the GROUP Technologies AG's iQ-Suite and CRM Suite (Gedys Software) product
families in Finland directly and through its partners. The CEO of the company is
Asko Ojanen.
SIGNIFICANT EVENTS IN THE REVIEW PERIOD
On 26 January 2006, the company announced that the Helsinki District Court had
given, on 26 January 2006, the following decision on the trial concerning the
share issue and sales of TJ Group Plc in the year 2000:
- The charges for aggravated misuse of inside information have been rejected.
- The then-CEO of TJ Group Plc Jyrki Salminen and the Chairman of the Board Tuomo
Tilman have been sentenced to 40 day-fines for a security market information
offense concerning the unnecessary delay of the profit warning given by TJ Group
Plc on 26 April 2000.
- The other charges concerning security market information offenses have been
rejected.
Additionally, the District Court rejected the claim for a fine imposed on a
corporation, amounting to EUR 200,000, and the claim for ordering the alleged
criminal benefit of EUR 39,369,600 to be paid to the state that the State
Prosecutor had made against TJ Group Plc.
In accordance with the District Court's decision, the state is obligated to pay
the legal expenses of TJ Group Plc.
On 1 February 2006, the company announced that on 1 February 2006 the State
Prosecutor had stated discontent with the District Court's decision given on 26
January 2006 and had decided to appeal to the Court of Appeal.
On 13 March 2006, the company announced that TJ Group Plc had delivered to the
Helsinki Court of Appeal a counterappeal regarding its legal expenses.
On 31 March 2006, the company announced that TJ Group's associated company GAP AG
and the German company GROUP Technologies AG will merge into GlobalWare AG and
that, after the merger, TJ Group Plc will own about 9.4% of the shares of this
company.
On 7 April 2006, the company announced that TJ Group Plc had signed an agreement
on selling its shares of Morning Digital Design Oy to Edita Oyj.
On 7 April 2006, the company announced that the Annual Shareholders' Meeting,
held on 7 April 2006, authorized the Board of Directors to decide, within one
year from the Annual Shareholders' Meeting, on the issuing of new shares or to
take convertible loans in one or several portions. In the issuing of new shares
or taking of convertible loans, a right can be given to subscribe for a total of
not more than 250,000,000 new shares, the book value equivalent of which is EUR
0.02 per share. On the basis of the authorization, the share capital may be
increased by a maximum of EUR 5,000,000.
On 29 September 2006, the company announced that TJ Group Plc has sold the
business operations of PlanMill Ltd to its operating management and Sentica
Partners.
THE CURRENT AUTHORIZATIONS OF THE BOARD OF DIRECTORS
The Annual Shareholders' Meeting, held on 7 April 2006, authorized the Board of
Directors to decide, within one year from the Annual Shareholders' Meeting, on
the issuing of new shares or to take convertible loans in one or several
portions. In the issuing of new shares or taking of convertible loans, a right
can be given to subscribe for a total of not more than 250,000,000 new shares,
the book value equivalent of which is EUR 0.02 per share. On the basis of the
authorization, the share capital may be increased by a maximum of EUR 5,000,000.
The authorization includes a right to deviate from the pre-emptive rights of the
existing shareholders to subscribe for new shares or convertible loans as set out
in Chapter 4, Section 2 of the Companies Act. If the Board of Directors, on the
basis of this authorization, decides on the issuing of new shares or taking of
convertible loans deviating from the pre-emptive rights of the existing
shareholders, it is possible on the basis of the authorization to issue new
shares deviating from the pre-emptive rights of the existing shareholders for a
maximum amount of 20% of the registered share capital and of the total number of
votes for the shares at the time when the Annual Shareholders' Meeting decides on
the authorization and at the time when the Board of Directors decides to issue
new shares or take convertible loans. However, when deciding on the issuing of
new shares or taking of convertible loans on the basis of the pre-emptive rights
of the existing shareholders, this 20% maximum limit does not in any way limit
the number of shares to be subscribed.
A deviation from the shareholders' pre-emptive subscription rights requires that
there is an important financial reason for this, such as an arrangement connected
with the development of the Company's business or capital structure. The Board
of Directors decides who will have subscription rights.
The authorization also includes the right to decide the basis of defining the
subscription price for new shares and convertible loans and the terms of the
issuing of new shares or taking of a convertible loan. Except with respect to a
share capital increase on the basis of a convertible loan, the Board of Directors
is authorized to decide that the shares may be subscribed against a contribution
in kind, by means of set-off or otherwise on special terms.
At the end of the review period, the Board of Directors does not have the
authorization for share repurchase or transfer.
FINANCING AND INVESTMENTS
The value of TJ Group's cash and liquid current assets totalled EUR 3.08 million
(EUR 2.27 million) at the end of the review period. The equity ratio of the group
was -40.5% (-8.4%).
TJ Group's sales receivables at the end of the review period were EUR 1.60
million (EUR 1.53 million).
During the review period, the group's gross investments totalled EUR -1.6 million
(EUR -2.7 million), which equals to -36% (-27%) of the net sales. The cash flow
of the investments in the statement of source and application of funds was EUR
157 thousand.
RESEARCH AND DEVELOPMENT COSTS
The research expenses have been entered directly as costs. The product
development expenses have been entered in accordance with the IAS 38 standard in
such a way that the development expenses for entirely new products and new
product versions including significant improvements have been activated, if their
future accumulativeness can be reliably verified. Other product development
expenses have been entered as costs in the profit and loss statement at the time
they incurred. The product development costs activated in the balance sheet
during the review period were EUR 157 thousand in total.
PERSONNEL
At the end of the review period, the group had 42 (52) employees. The group
employed an average of 49 (97) persons during the review period.
MANAGEMENT, BOARD OF DIRECTORS, AND AUDITORS OF THE COMPANY
The management of the company consists of CEO Hannu Jokela and CFO Anneli
Saarikoski.
TJ Group Plc's Board of Directors includes four members and two deputy members:
Chairman of the Board Tuomo Tilman, Hannu Jokela, Jörg Ott, Jyrki Salminen, and
deputy members Markku Montonen and Anneli Saarikoski.
The auditor selected by the Shareholders' Meeting is Ernst Young Oy Authorised
Public Accounting Firm with Arto Tenhula as the principal accountant.
SHARES, SHARE CAPITAL, AND SHAREHOLDERS
TJ Group Plc's share capital on 31 December 2006 was EUR 2,569,853.92, and the
total number of shares was 128,492,696. The equivalent book value of a share is
EUR 0.02. Shareholders' equity/share was EUR -0.02. At the end of the review
period, the equities of the group and the parent company were negative.
At the end of the review period, the company had 15,920 shareholders.
THE SHARE HOLDING AND WARRANTS OF THE BOARD OF DIRECTORS AND THE MANAGEMENT
On 31 December 2006, the members and deputy members of the TJ Group's Board of
Directors and the CEO owned a total of 63,236,641 TJ Group shares, that is, 49.2
percent of the company's share capital and votes, and 230,000 TJ Group warrants,
that is, 0.2 percent of the company's share capital and votes.
For more information on TJ Group's warrant programs, see the company's web site
at www.tjgroup.fi and www.tjgroup.com.
The company complies to and adapts the Guidelines for Insiders drawn up by the
Helsinki Exchanges.
DISTRIBUTION OF DIVIDEND
The company's Board of Directors will propose to the Annual Shareholders' Meeting
that no dividend be paid for the financial period and that the company's loss of
EUR 2.04 million be booked against retained earnings.
NEAR-TERM OUTLOOK
TJ Group Plc's goal for 2007 is to increase the group's net sales and improve the
result compared to 2006. This will be pursued by means of organic growth and
possibly business arrangements.
A prerequisite for any business arrangements is that the ongoing legal process
will have a positive outcome for the company. As the legal process continues, it
also harms the operative functions of the group's subsidiaries, especially sales
to new customers.
The interim report of TJ Group for 1 January-31 March 2007 will be published on
26 April 2006.
Espoo, 15 February 2007
The Board of Directors of TJ Group Plc
Tuomo Tilman, Chairman of the Board
Hannu Jokela
Jörg Ott
Jyrki Salminen
CONTACT:
TJ Group Plc
CEO Hannu Jokela
Tel. 0207 91 6700
DISTRIBUTION:
Helsinki Exchanges
Main media
www.tjgroup.com
The figures in the financial report have not been audited.
In addition to the accounts of the parent company, the financial report of TJ
Group Plc consolidates the accounts of Documenta Oy and PlanMill Ltd (for 1
January-31 August 2006). The figures for Morning Digital Design Oy (ownership
50%) for 1 January-31 March 2006 have been consolidated in the financial report
by using the equity method.
Figures for the participating interest company GAP AG (ownership 23%) for the
period of 1 January-31 March 2006 have not been consolidated, because due to the
merger of GAP AG, Globalware AG and GROUP Technologies AG, there is not enough up-
to-date information on GAP AG results, and because the consolidation is not
necessary in order to give a correct and sufficient picture of the result of the
group's operation and its financial position. On 31 March 2006, TJ Group Plc
announced that due to the merger of GAP AG, Globalware AG and Group Technologies
AG, the company's ownership was to decrease to 9.4%. After this, the company's
shareholding in GROUP Technologies AG (name changed on 6 June 2006) was no longer
considered partial ownership, but has been entered in other shares and holdings.
At the end of the financial period, TJ Group Plc owns 8.79% of the shares of
GROUP Technologies AG.
The comparison figures for 2005 include the following companies in addition to
the above mentioned companies: figures for TJ-KiPa Oy (former Key Partners Oy)
and TJ Group GmbH.
CONSOLIDATED PROFIT AND LOSS STATEMENT
(EUR thousand)
1 Jan-31 Dec 1 Jan-31 Dec
2006 2005
12 months 12 months
Net sales 4 323 9 882
Change in work in progress,inc(+),dec(-) 0 -5
Other operating income 306 677
Income from selling of business 1 351 3 971
operations
Materials and services 631 705
Employee benefits expenses 2 519 6 060
Depreciations
Depreciations according to plan 700 705
Rents 757 1 896
Marketing expenses 80 132
Other operating expenses 3 239 2 614
Write-off of shares in associated 0 3 163
companies
Unprofitable agreements -382 382
Operating profit/loss -1 564 -1 132
Financial income and expeses
Interest income and other financial 79 5
income
Interest expenses and other financial -256 -256
expenses
Share of profit/loss in associated 0 112
companies
Profit/loss before income taxes -1 741 -1 271
Income taxes
Write-off of imputed tax receivable -1 -1 890
Profit/loss for the period -1 742 -3 161
To eguity holders of the parent -1 742 -3 161
Earnings per share calculated on
profit/loss
attributable to equity holders of the
parent:
Earnings per share continued operations -0,016 -0,059
(undiluted), EUR
Earnings per share continued operations -0,016 -0,059
(diluted), EUR
Earnings per share discontinued 0,003 0,034
operations (undiluted), EUR
Earnings per share discontinued 0,003 0,034
operations (diluted), EUR
CONSOLIDATED PROFIT AND LOSS STATEMENT CONTINUED
OPERATIONS
Continu Continu
ed ed
and and
dis- dis-
continu continu
ed ed
(EUR thousand) operati Continu Continu operati
ons ed ed ons
in operati operati in
total ons ons total
1 Jan- 1 Jan- 1 Jan- 1 Jan-
31 Dec 31 Dec 31 Dec 31 Dec
2006 2006 2005 2005
12 12 12 12
months months months months
Net sales 4 323 3 932 4 676 9 882
Change in work in 0 0 -5 -5
progress,inc(+),dec(-)
Other operating income 306 306 677 677
Income from selling of business 1 351 1 158 0 3 971
operations
Materials and services 631 611 193 705
Employee benefits expenses 2 519 2 241 2 842 6 060
Depreciations
Depreciations according to 700 627 472 705
plan
Rents 757 729 1 572 1 896
Marketing expenses 80 76 63 132
Other operating expenses 3 239 3 376 5 733 2 614
Write-off of shares in 0 0 0 3 163
associated companies
Unprofitable agreements -382 -382 0 382
Operating profit/loss -1 564 -1 882 -5 527 -1 132
Financial income and expeses
Interest income and other 79 69 3 5
financial income
Interest expenses and other -256 -255 -253 -256
financial expenses
Share of profit/loss in 0 0 112 112
associated companies
Profit/loss before income taxes -1 741 -2 068 -5 665 -1 271
Income taxes
Write-off of imputed tax -1 -1 -1 889 -1 890
receivable
Profit/loss for the period -1 742 -2 069 -7 554 -3 161
To eguity holders of the parent -1 742 -2 069 -7 554 -3 161
Earnings per share calculated on
profit/loss
attributable to equity holders
of the parent:
Earnings per share (undiluted), -0,014 -0,016 -0,059 -0,025
EUR
Earnings per share (diluted), -0,014 -0,016 -0,059 -0,025
EUR
CONSOLIDATED PROFIT AND LOSS STATEMENT BY
QUARTER
(EUR thousand) Total
1 Jan- 1 Apr- 1 Jul- 1 Oct- 1 Jan-
31 Mar 30 Jun 30 Sep 31 Dec 31 Dec
2006 2006 2006 2006 2006
3 months 3 months 3 months 3 months 12
months
Net sales 1 124 995 786 1 418 4 323
Other operating income 164 142 0 0 306
Income from selling of 0 776 575 0 1 351
business operations
Materials and services 87 83 109 352 631
Employee benefits expenses 676 783 459 601 2 519
Depreciations
Depreciations according to 102 344 213 41 700
plan
Rents 300 309 76 72 757
Marketing expenses 44 24 10 2 80
Other operating expenses 392 573 304 1 970 3 239
Unprofitable agreements 0 -382 0 0 -382
Operating profit/loss -313 179 190 -1 620 -1 564
Financial income and expeses
Interest income and other 1 0 26 52 79
financial income
Interest expenses and other -70 -61 -60 -65 -256
financial expenses
Share of profit/loss in 20 0 0 -20 0
associated companies
Profit/loss before income -362 118 156 -1 653 -1 741
taxes
Income taxes 0 0 0 -1 -1
Profit/loss for the period -362 118 156 -1 654 -1 742
CONSOLIDATED BALANCE SHEET
(EUR thousand)
ASSETS 31 Dec 2006 31 Dec 2005
NON-CURRENT ASSETS
Intangible assets
Intangible rights 316 602
Goodwill 0 73
Tangible assets 171 130
Shares in associated companies 0 2 899
Other financial assets 972 11
Non-current assets total 1 459 3 715
CURRENT ASSETS
Trade receivables 1 595 1 527
Other current assets 125 1 775
Cash and cash equivalents 3 084 2 271
Current assets total 4 804 5 573
TOTAL ASSETS 6 263 9 288
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2006 31 Dec 2005
Equity attributable to equity holders
of the parent
Share capital 2 570 2 570
Premium reserve 65 142 65 142
Retained earnings -68 491 -65 330
Profit/loss for the period -1 742 -3 161
TOTAL SHAREHOLDERS' EQUITY -2 521 -779
Long-term liabilities
Convertible loans 4 500 4 500
Interest-bearing liabilities 2 033 2 155
Long-term liabilities total 6 533 6 655
Current liabilities
Interest-bearing liabilities 128 94
Trade payables 787 866
Other current liabilities 351 351
Accrued liabilities 985 2 101
Current liabilities total 2 251 3 412
TOTAL SHAREHOLDERS' EQUITY AND 6 263 9 288
LIABILITIES
CONSOLIDATED CASH FLOW
STATEMENT
(EUR thousand) 1 Jan- 1 Jan-
31 Dec 2006 31 Dec 2005
Cash flow from operating
activities
Operating profit/loss -1 564 -1 132
Amendments:
Booking of shares at current
price, no
payment transaction 1 399 3 163
Depreciations 700 705
Change in working capital:
Change in trade and other 1 582 1 545
receivables
Change in trade and other -1 195 -1 288
payables
Change of work in progress 0 5
Interests received 79 5
Interests paid -256 -256
Other financial items 0 112
Income taxes, paid -1 -1 890
Cash flow from operating 744 969
activities total
Cash flow/investments
Investments in intangible and 157 -499
tangible assets
Cash flow/investments total 157 -499
Cash flow/financing
Repayment of loans -122 -94
Increase of loans 34 -210
Cash flow/financing total -88 -304
Change in liquid funds 813 166
according to the cash flow
statement
Change in liquid funds 813 166
Liquid funds opening balance 2 271 2 105
Liquid funds closing balance 3 084 2 271
KEY FIGURES 1 Jan- 1 Jan-
31 Dec 31 Dec
2006 2005
Net sales, EUR million 4,32 9,88
Operating profit/loss, EUR million -1,56 -1,13
% of net sales -36,2% -11,5%
Cash flow from operations, EUR 0,74 -2,19
million
Return on equity, % 1) 105,6 % -394,4 %
Return on investment, % -29,4 % -13,2 %
Interest bearing net debt, EUR 3,6 4,5
million
Net debt to equity (Net Gearing), % -141,9 % -574,8 %
Equity ratio, % -40,5 % -8,4 %
Gross investments -1,6 -2,7
% of net sales -36 % -27 %
Personnel at the end of the period 42 52
Personnel average 49 97
Employee benefits expenses/person, 51 62
EUR thousand
KEY FIGURES PER SHARE
Earnings/share, euro -0,014 -0,025
Shareholders' equity per share, euro -0,02 -0,01
1) Both indicator and devider are
negative
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Retained
(EUR thousand) Share Share earnings Total
capital premium
SHAREHOLDERS' EQUITY 1 Jan 2 570 65 142 -65 330 2 382
2005
Profit/loss for the period -3 161 -3 161
SHAREHOLDERS' EQUITY 31 Dec 2 570 65 142 -68 491 -779
2005
Retained
(EUR thousand) Share Share earnings Total
capital premium
SHAREHOLDERS' EQUITY 1 Jan 2 570 65 142 -68 491 -779
2006
Profit/loss for the period -1 742 -1 742
SHAREHOLDERS' EQUITY 31 Dec 2 570 65 142 -70 233 -2 521
2006