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TJ Group Plc
Stock Exchange Release
February 9, 2005 at 08:30 Finnish time
TJ Group Annual Report 1 January–31 December 2004
· Net sales decreased by 28%; EUR 17.32 million (EUR 24.09 million)
· Operating result improved by 54%; Operating profit/loss EUR -2.65 million (EUR -5.81 million)
· Result before taxes improved by 44%; EUR -4.83 million (EUR -8.56 million)
· Equity ratio 17% (37%), shareholders' equity/share EUR 0.02 (EUR 0.06)
· Earnings per share EUR -0.03 (EUR -0.05)
· Total costs decreased by 31% to EUR 23.04 million (EUR 33.56 million)
· The operating result for the last quarter improved by 117%; EUR 0.12 million (EUR -0.71 million in Q4/2003)
The operating result of the group turned to positive for the last quarter of the year.
The operating result for the entire year improved compared to the corresponding period of the previous year (1 January–31 December 2003).
CHANGES IN THE GROUP STRUCTURE AND THEIR EFFECTS
On 15 July 2004, TJ Group Plc and GEDYS IntraWare signed an agreement on combining their software business operations based on IBM technology.
The TJ Group Plc's entire CRM business outside of Finland and one Finnish subsidiary that was focused on the CRM business, TJ Group Software House, were transferred to the joint venture that was founded based on the agreement.
THE NET SALES AND RESULT DEVELOPMENT
TJ Group's net sales for the financial period 1 January–31 December 2004 decreased by 28% and were EUR 17.32 million (EUR 24.09 million). The net sales of the group's companies in Finland decreased by 3% and were EUR 13.85 million (EUR 14.33 million) and the net sales of companies outside of Finland decreased by 64% to EUR 3.47 million (EUR 9.76 million).
TJ Group's operating result improved by 54% compared to the previous financial period. The company has achieved this primarily by following its strategy of cutting costs and developing the profitable units.
TJ Group's operating result in the financial period still showed a loss of EUR 2.65 million, but the loss is smaller than in the corresponding financial period of the previous year, when the operating result showed a loss of EUR 5.81 million.
The result before extraordinary expenses and taxes improved by 44% to EUR -3.37 million (EUR -6.04 million). The result before taxes improved by 44% to EUR -4.83 million (EUR -8.56 million).
The salary and personnel costs for the financial period decreased by 30% or EUR 4.60 million and were EUR 10.72 million, which is 62% of the net sales (64%). The net sales per person in the financial period were EUR 97 thousand (EUR 90 thousand).
Other operating costs for the financial period decreased by 3% and were EUR 5.37 million (EUR 5.55 million). The total costs for the period were EUR 23.04 million (EUR 33.56 million).
THE LAST QUARTER OF 2004
The operating result of the last quarter of 2004 was positive, EUR 0.12 million. The net sales for the last quarter of the financial period (1 October–31 December 2004) were EUR 4.19 million. In the corresponding quarter of the previous financial period (1 October–31 December 2003), the net sales were EUR 7.58 million. The net sales of the group's companies in Finland were EUR 3.82 million (EUR 4.27 million) and companies outside of Finland EUR 0.37 million (EUR 3.31 million).
The last quarter's result before extraordinary items and taxes was EUR -0.25 million. In the corresponding quarter of the previous financial period (1 October–31 December 2003), the result before extraordinary items and taxes was EUR -0.71 million. The result before taxes was EUR -1.72 million (EUR -1.51 million).
The result before extraordinary items and taxes has improved by 64% compared to the corresponding quarter of the previous financial period and 64% compared to the previous quarter of the closed financial period.
BUSINESS OPERATIONS
The first two quarters of the financial period (1 January–31 December 2004)
During the first two quarters of the financial period (1 January–31 December 2004), TJ Group's business took place under the TJ Group name in Finland, Germany, Norway, Sweden, and Switzerland.
During the first two quarters of the financial period, TJ Group had 100% ownership in Finnish subsidiaries Documenta Oy, Key Partners Oy, PlanMill Ltd, and TJ Group Software House Holding Oy, which has companies with business operations in Finland (TJ Group Software House Oy) and Norway (TJ Group Software House AS). Additionally, TJ Group had a 50% ownership in Morning Digital Design Oy. Each of these companies focused on their own area of expertise.
During the first two quarters of the financial period, TJ Group had 100% ownership outside of Finland also in subsidiaries TJ Group AB in Sweden, TJ Group AS in Norway, TJ Group GmbH in Germany (Dresden), and TJ Group e-Solutions in Germany (Stuttgart). These companies had their business focus in distribution and sales of solutions based on TJ Group Software House Holding Oy´s product portfolio.
The company sold its products and services also through partner companies. During the first two quarters of the financial period, TJ Group had 7 partners in the Nordic Countries, 17 in other parts of Europe, 2 in the United States, and 1 in Australia.
The last two quarters of the financial period (1 January–31 December 2004)
Part of TJ Group Plc's product-based CRM business was transferred, in accordance with the mutual arrangement of TJ Group Plc and GEDYS IntraWare GmbH announced on 16 July 2004, to the partial ownership company founded by these companies.
Due to this corporate arrangement, TJ Group Plc's business operations on the last two quarters of the financial period differ partly from the first two quarters of the financial period.
During the last two quarters of the financial period, TJ Group has had business operations under the TJ Group name in Germany in addition to Finland.
At the end of the financial period, TJ Group had 100% ownership in Finnish subsidiaries Documenta Oy, Key Partners Oy, and PlanMill Ltd, and the German subsidiary TJ Group GmbH.
At the end of the financial period, TJ Group also had 50% ownership in the Finnish participating interest companies Morning Digital Design Oy and GEDYS Software Holding Oy (previously TJ Group Software House Holding Oy). Additionally, at the end of the financial period, TJ Group had 25.91% ownership in German GAP AG. Each of these companies focus on their own area of expertise.
The company sells its products and services also through partner companies. During the last two quarters of the financial period, TJ Group had 5 partners in the Nordic Countries and 15 in other parts of Europe.
Documenta Oy
Documenta Oy's net sales for the financial period (1 January–31 December 2004) were EUR 6.43 million (EUR 3.23 million). The operating result was EUR 0.75 million (EUR 0.19 million), which is 12% of the net sales (6%). The result before taxes was EUR 3 thousand.
The net sales for the last quarter of the financial period (1 October–31 December 2004) were EUR 2.01 million (EUR 1.25 million). The operating result was EUR 0.82 million (EUR 0.35 million), which is 40% of the net sales (28%).
The company employed an average of 59 (37) persons during the financial period.
On 1 January 2004, Documenta Oy took over the sales of the TJ Group CRM Suite product family in Finland and some maintenance and support services from the TJ Group Plc subsidiary TJ Group Services Oy, which was closed down. 23 employees were transferred from TJ Group Services to Documenta.
Documenta Oy is a company specializing in digital document handling and work process intensification. It offers information technology based software, maintenance, operation service and integration solutions for companies and public administration. Documenta is responsible for selling the TJ Group CRM Suite product family in Finland directly and through its business partners.
Key Partners Oy
Key Partners Oy's net sales for the financial period (1 January–31 December 2004) were EUR 6.29 million (EUR 8.46 million). The operating result was EUR 1.56 million (EUR 1.90 million), which is 25% of the net sales (22%). The result before taxes was EUR 3 thousand.
The net sales for the last quarter of the financial period (1 October–31 December 2004) were EUR 1.65 million (EUR 2.12 million). The operating result was EUR 0.43 million (EUR 0.53 million), which is 26% of the net sales (25%).
The company employed an average of 59 (94) persons during the financial period.
Key Partners Oy is an independent IT service company and its core expertise includes system and service integration, system architecture, project management, and customer-specific deliveries of entire systems. The company's goal is to support its customers' business by producing high quality deliveries of information systems and integrations.
PlanMill Ltd
PlanMill Ltd's net sales for the financial period (1 January–31 December 2004) were EUR 0.98 million (EUR 0.87 million). The operating result was EUR 31 thousand (EUR -67 thousand), which is 3% of the net sales (-8%). The result before taxes was EUR 29 thousand.
The net sales for the last quarter of the financial period (1 October–31 December 2004) were EUR 0.37 million (EUR 0.28 million). The operating result was EUR 95 thousand (EUR 58 thousand), which is 26% of the net sales (21%).
The company employed an average of 11 (11) persons during the financial period.
PlanMill Ltd is a developer and provider of PSA (Professional Services Automation) solutions. Browser-based PSA solutions by PlanMill help project-oriented organizations to improve the control of personnel, projects and business processes, which in turn improves their productivity and profitability. The company has offices in Helsinki (Finland) and St. Gallen (Switzerland). The company has a network of authorized resellers in Austria, Germany and Switzerland.
GEDYS Software Holding Oy
GEDYS Software Holding Oy's (TJ Group Software House Holding Oy until 27 July 2004) net sales for the financial period (1 January–31 December 2004) were EUR 1.44 million. The operating result before charging of the group management costs was EUR -87 thousand, which is -6% of the net sales.
The company started its operation on 1 January 2004, so there are no comparison figures from the previous financial period.
In connection with the mutual arrangement of TJ Group Plc and GEDYS IntraWare GmbH announced on 16 July 2004, the business operations of GEDYS Software Holding Oy were transferred to the partial ownership company founded by these companies.
TJ Group Limited / United Kingdom
TJ Group Limited's net sales for the financial period (1 January–31 December 2004) were EUR 7 thousand (EUR 56 thousand). The operating result was EUR -56 thousand (EUR -0.23 million), which is -800% of the net sales (-414%).
The company's business operations were closed down on 31 March 2004.
TJ Group AS / Norway
TJ Group AS's net sales for the financial period (1 January–31 December 2004) were EUR 0.67 million (EUR 3.22 million). The operating result before charging of the management costs was EUR -0.32 million (EUR -0.54 million), which is -48% of the net sales (-17%). The result before taxes, including the group management costs, was EUR -0.32 million.
In connection with the mutual arrangement of TJ Group Plc and GEDYS IntraWare GmbH announced on 16 July 2004, TJ Group AS was transferred to GEDYS Internet Products NV as capital contributed in kind.
TJ Group AB / Sweden
TJ Group AB's net sales for the financial period (1 January–31 December 2004) were EUR 0.50 million (EUR 1.02 million). The operating result before charging of the group management costs was EUR -0.11 million (EUR -0.46 million), which is -23% of the net sales (-46%).
In connection with the mutual arrangement of TJ Group Plc and GEDYS IntraWare GmbH announced on 16 July 2004, TJ Group AB was transferred to GEDYS Internet Products NV as capital contributed in kind.
TJ Group GmbH / Germany
TJ Group GmbH's net sales for the financial period (1 January–31 December 2004) were EUR 1.36 million (EUR 5.53 million). The operating result before charging of the group management costs was EUR -0.30 million (EUR -0.75 million), which is -22% of the net sales (-14%). The result before taxes, including the group management costs, was EUR 57 thousand.
The net sales for the last quarter of the financial period (1 October–31 December 2004) were EUR 0.37 million (EUR 1.94 million). The operating result before charging of the group management costs was EUR
-0.20 million (EUR -0.45 million), which is -54% of the net sales (-23%).
The company employed an average of 14 (37) persons during the financial period.
As of 23 January 2004, TJ Group Plc divided its German operations into two companies by founding a new subsidiary, TJ Group e-Solutions GmbH, and transferring its CRM business operations to this company. The transfer of part of the business operations into the new company affects the figures for TJ Group GmbH.
TJ Group GmbH is responsible for developing and selling the TJ Group CAI Suite products for international market and ebVokus products to local German market. The company has an office in Dresden.
TJ Group e-Solutions GmbH / Germany
TJ Group e-Solutions GmbH's net sales for the financial period (1 January–31 December 2004) were EUR 1.01 million. The operating result before charging of the group management costs was EUR -0.19 million, which is -19% of the net sales. The result before taxes, including the group management costs, was EUR -0.26 million.
The company started operation on 23 January 2004, so there are no comparison figures from the financial period of the previous year (1 January–31 December 2003).
In connection with the mutual arrangement of TJ Group Plc and GEDYS IntraWare GmbH announced on 16 July 2004, the business operations of TJ Group e-Solutions GmbH were transferred to the partial ownership company founded by these companies.
TJ Group GmbH / Switzerland and Austria
TJ Group GmbH's net sales for the financial period (1 January–31 December 2004) were EUR 0 (EUR 0.12 million). The operating result was EUR -20 thousand (EUR -0.26 million). The result before taxes, including the group management costs, was EUR -20 thousand.
The company's operation was discontinued on 31 March 2004. During the period of 1 April–31 December 2004,,the company's software solutions were sold in Switzerland and Austria by the company's partners.
SIGNIFICANT EVENTS IN THE FINANCIAL PERIOD
Part of TJ Group, TJ Group Software House Holding Oy started its operation on 1 January 2004. Its business included TJ Group's customer relationship management products TJ Group CRM Suite and TJ Group CMS Suite and Ementor's CRM product line. In connection with the mutual arrangement of TJ Group Plc and GEDYS IntraWare GmbH announced on 16 July 2004, the business operations of the company were transferred to the partial ownership company founded by these companies. The company's name was changed to GEDYS Software Holding Oy on 27 July 2004.
On 23 January 2004, TJ Group founded a new subsidiary in Germany, TJ Group e-Solutions GmbH, and transferred part of its product-based CRM business into it. In connection with the mutual arrangement of TJ Group Plc and GEDYS IntraWare GmbH announced on 16 July 2004, the business operations of the company were transferred to the partial ownership company founded by these companies.
On 27 April 2004, TJ Group and GEDYS IntraWare signed a letter of intent on combining their software business operations based on IBM technology.
On 24 June 2004, TJ Group Plc announced that the company and its two major owners had agreed on a credit limit of two million euros on market terms. With the credit limit, the company ensures the realization of the corporate arrangement with GAP AG, announced on 27 April 2004, and the development of the company's operations after that.
Anneli Koivunen, the Managing Director of the group's subsidiary Key Partners Oy, was appointed as the new CEO of TJ Group as of 1 July 2004. The previous CEO of the group, Mikko Setälä, continues as a deputy member of the TJ Group Plc's Board of Directors.
On 15 July 2004, TJ Group Plc and GEDYS IntraWare signed an agreement on combining their software business operations based on IBM technology. The TJ Group Plc's entire CRM business outside of Finland and one Finnish subsidiary that was focused on the CRM business, TJ Group Software House, were transferred to the joint venture that was founded based on the agreement.
On 12 August 2004, the Extraordinary Shareholders' Meeting decided unanimously to approve the Joint Venture Agreement entered into and announced on 16 July 2004, by and among TJ Group Plc, GlobalWare AG, vbv vitamin-b venture GmbH, and GAP AG für Applikationen und Produkte.
On 12 August 2004, the Extraordinary Shareholders' Meeting decided unanimously to approve the Agreements regarding Credit Limit and Pledge of Shares entered into and announced on 24 June 2004, by and among TJ Group Plc and its main owners Messrs Tuomo Tilman and Jyrki Salminen.
On 6 October 2004, the company announced that some members of the current management, who were in the company's management in the spring of 2000, had been arrested for interrogation. The basis for the action was a suspected information offense related to the securities market. The matter was related to the preliminary investigation concerning a possible information offense related to the share issue and sale of the year 2000.
On 7 October 2004, the company announced that the persons arrested for interrogation had been released.
FINANCING AND INVESTMENTS
The value of TJ Group's cash and liquid current assets totalled EUR 2.10 million (EUR 2.94 million) at the end of the financial period. The equity ratio of the group was 17% (37%).
TJ Group's sales receivables at the end of the financial period were EUR 2.54 million (EUR 5.10 million).
In the financial period, the group's gross investments totalled EUR -0.88 million (EUR 2.04 million), which equals to -5% (8%) of the net sales. The product development costs have not been activated in the balance sheet, but have been registered as costs in the profit and loss statement at the time they incurred.
Of the credit limit agreed on 24 June 2004, EUR 1 million has been used by 31 December 2004 and EUR 1 million remains unused.
INTRODUCING FINANCIAL STATEMENT COMPLYING WITH THE IFRS REGULATIONS
TJ Group Plc will implement the closing of accounts in compliance with the IFRS regulations at the beginning of 2005. Also the interim reports for 2005 will be written in compliance with the IFRS regulations.
PERSONNEL AND MANAGEMENT TEAM
At the end of the financial period, the group had 133 (231) employees. 118 (171) of these worked in Finland and 15 (59) outside of Finland. The group employed an average of 178 (267) persons during the financial period.
The Management Team of TJ Group consists of CEO Anneli Koivunen and Group Controller Kimmo Hietala.
BOARD OF DIRECTORS AND AUDITORS
At the end of the financial period on 31 December 2004, TJ Group Plc's Board of Directors included four members and two deputy members: Chairman Tuomo Tilman, Bo Eklund, Jyrki Salminen, Kari Salo, and deputy members Markku Montonen and Mikko Setälä.
Auditing has been done by Ernst Young Oy Authorised Public Accounting Firm, with Stig-Erik Haga as the principal accountant.
More detailed descriptions of the members of the group's Board of Directors and Management Team and the CEO's of the subsidiaries can be found on the company's web sites at www.tjgroup.fi and www.tjgroup.com.
CORPORATE GOVERNANCE
TJ Group Plc has Corporate Governance description drawn up according to the instructions of the Helsinki Exchanges. It explains, for example, the rights of TJ Group owners, arrangements for Shareholders' Meeting and matters discussed in the meeting, selection and operating methods of the Board of Directors, appointment and responsibilities of the CEO, and management of the TJ Group subsidiaries.
The Corporate Governance of the group can be found on the company's web site at www.tjgroup.fi and www.tjgroup.com.
JUDICIAL DECISIONS AND ACTIONS
On 16 September 2004, the Helsinki Court of Appeal gave a judgement by which it confirmed Espoo district court's judgement of 9 October 2001 to dismiss the claim against TJ Group Plc. The Court of Appeal lowered the amount adjudged by the district court to be paid by the claimants to TJ Group as compensation for legal costs from EUR 127,297 to EUR 98,415. The claim was related to the certain clerical errors in the offering circular for the share issue in February 2000 and the alleged effect on the investment decision of three Finnish companies.
The preliminary investigation by the police department of Helsinki concerning the possible information offense related to the share issue and sale of the year 2000 had not been finished by the end of the financial period.
SHARES AND SHARE CAPITAL
TJ Group Plc's share capital at the end of 2004 was EUR 2,569,853.92, and the total number of shares was 128,492,696. The nominal value of a share was EUR 0.02.
The highest TJ Group share price in the financial period was EUR 0.41 and the lowest EUR 0.16. The average share price was EUR 0.26 and the closing price EUR 0.16. The absolute trade of the share in the Helsinki Exchanges was EUR 9.3 million and 31.2 million shares.
At the end of 2004, the foreign holding of TJ Group shares was 4.9 percent.
THE SHARE HOLDING AND WARRANTS OF THE BOARD OF DIRECTORS AND THE MANAGEMENT
On 31 December 2004, the members and deputy members of the TJ Group's Board of Directors and the CEO owned a total of 63,282,775 TJ Group shares, that is, 49.3 percent of the company's share capital and votes, and 1,836,480 TJ Group warrants, that is, 1.4 percent of the company's share capital and votes.
The company complies to and adapts the Guidelines for Insiders drawn up by the Helsinki Exchanges.
THE CURRENT AUTHORIZATIONS OF THE BOARD OF DIRECTORS
On 26 March 2004, the Annual Shareholders' Meeting authorized the Board of Directors to decide, within one year, on the increase of share capital by issuing of new shares, to grant option rights, or to take convertible loans in one or several installments. In the issuing of new shares or granting of option rights or taking of convertible loans, a right can be given to subscribe for a total of not more than 25,698,539 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 513,970.78.
At the end of the financial period, the Board of Directors does not have the authorization for share repurchase or transfer.
WARRANT PROGRAMS
The purpose of the TJ Group warrant programs is to encourage the company's employees to do their job in such a way that the company's business will operate and develop according to the strategies.
On 24 September 2004, the company announced that the Warrants 2003 A (1,112,000 units) and Warrants 2003 B (887,000 units) are to be quoted on the main list of the Helsinki Exchanges on 28 September 2004 and are to be listed as TJ Group Warrant 2003 A (FI0009609804) and as TJ Group Warrant 2003 B (FI0009609812).
For more information on TJ Group's warrant programs, see the company's web site at www.tjgroup.fi and www.tjgroup.com.
EVENTS AFTER THE FINANCIAL PERIOD
On 27 January 2005, the company announced that it had been informed that State Prosecutor Ritva Sahavirta, after consideration, has decided to raise charges against the the company's Board of Directors at that time, CFO and some others in relation to suspected security markets information offence concerning the company's share issue in the year 2000 and subsequent communications. In the release, the company also stated that a claim for a fine imposed on a corporation, amounting to 200,000 euros, and a claim for ordering the alleged criminal benefit of 39,396,600 euros to be paid to the state have been made against the company. The company also stated that the accused Board members Tuomo Tilman, Jyrki Salminen and Bo Eklund had announced that they will withdraw from their duties in the current Board of Directors of TJ Group.
On 3 February 2005, the company announced that a member of the TJ Group Plc's Board of Directors, Bo Eklund had announced that he will resign from the Board of Directors and the resignation will take effect immediately. The rest of the Board of Directors will continue their duties until the next Shareholders' Meeting.
NEAR-TERM OUTLOOK
The markets are showing improvement in demand, although IT investments will remain moderate. The customers are interested in solutions for self-service and electronic client transactions. Multinational providers are strengthening their position in the Finnish IT outsourcing markets as large and mid-sized companies continue to outsource their IT services.
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 8,48 million be booked against retained earnings.
PRESS CONFERENCE
TJ Group will hold a press conference for the press and analysts today, Wednesday, 9 February 2005, at 10:00. The press conference will be held in the TJ Group main office in Ruoholahti. The address is Itämerenkatu 5, 00180 Helsinki. TJ Group's CEO Anneli Koivunen will be present.
Helsinki, 9 February 2005
The Board of Directors of TJ Group Plc
Tuomo Tilman, Chairman of the Board
Jyrki Salminen
Kari Salo
CONTACT:
CEO Anneli Koivunen, TJ Group Plc
Tel. +358 205 5151
This is a translation of the original Finnish release. In case the translation differs in meaning from the Finnish version, the Finnish version takes precedence.
DISTRIBUTION:
Helsinki Exchanges
Main media
APPENDICES:
Consolidated profit and loss statement
Consolidated profit and loss statement by quarter
Consolidated balance sheet
Consolidated cash flow statement
Consolidated cash flow statement by quarter
Figures by company
Figures by company by quarter
Key figures
The figures in the annual report are not audited.
In addition to the accounts of the parent company, the financial report of TJ Group Plc consolidates the accounts of Documenta Oy, Planmill Ltd, Key Partners Oy, and Key Partners Projektit Oy for the period of 1 January–31 December 2004. The accounts for GEDYS Software Holding Oy, GEDYS Software AS, GEDYS Software Oy, TJ Group AB, TJ Group Holding AB, TJ Solutions AB, Kompetensbolaget PMV AB (merged in 2003), Leylock Data AB (merged in 2003), TJ Group AS, TJ Group GmbH, TJ Group e-Solutions GmbH, TJ Group Switzerland GmbH, TJ Group A/S, TJ Group Americas Inc, and TJ Group Limited have been consolidated for the period of 1 Jan–30 June 2004.
The figures for Morning Digital Design Oy and GEDYS Software Holding Oy (ownership 50% in each) have been consolidated in the annual report by using the equity method. The figures for GAP AG (ownership 25.91%) have not been consolidated as they would not have a significant effect on the operating result and financial position of the group.
Annual Report 2004
TJ Group PLC