QPR Software Plc Annual Report 2010

"The Group has now a fully functional and automated system for measurement and performance management in accordance with Balanced Scorecard in its disposal. This Management Information System regularly helps us to monitor the key factors affecting to our success. Just now I see what we manage."

Ladislav Pásztor,

MUDr., MSc Slovak Diagnostics Group, Slovakia

"The solution provided by QPR Software adds value to activity planning and monitoring, which in turn helps deploy the personnel strategy of the City of Helsinki."

Matti Nuutinen

Special Planner City of Helsinki Finland

"Our Management Team can now make better informed decisions by accessing all information related to our construction sites when needed through QPR ScoreCard."

Jesús García Pons, Operations Director, ARB ARENDAL, Mexico

"QPR provided us with an excellent management system that was rolled out in a tight schedule. A good measure of success is the fact that Oriola-KD Healthcare complied with the tight medical devices –related ISO 13485 standard in three months without a single nonconformance."

Heikki Salusjärvi

Director, Quality & Risk Oriola-KD Healthcare, Finland

"Thanks to QPR Process Guide we can easily review our processes and easily have time to improve them. We believe, that the adoption and the contribution to our quality system by our employees is the result of using QPR ProcessGuide."

Sevilay Balci

Quality and HR Manager Pekdemir Construction Co, Turkey

"Thanks to clear processes our operational quality increases, customers become increasingly satisfied, and our staff becomes more motivated."

Timo Ryhänen Deputy Managing Director, Tecwill Ltd, Finland

Content Page

QPR in Brief 1
Message from the CEO 4
Board of Directors 5
Executive Management Team 7
Report of the Board of Directors January 1 – December 31, 2010 9
Consolidated Income Statement, IFRS 19
Consolidated Balance Sheet, IFRS 20
Consolidated Cash Flow Statement, IFRS 21
Consolidated Statement of Changes in Shareholders' Equity, IFRS 22
Accounting Principles of Consolidated Financial Statements, IFRS 23
Segment information 27
Notes to the Consolidated Financial Statements 29
Parent Company Income Statement, FAS 42
Parent Company Balance Sheet, FAS 43
Parent Company Cash Flow Statement, FAS 44
Accounting principles for parent company financial statements 45
Parent Company Notes Financial Statement, FAS 46
Date and signatures of Board of Directors' Report and Financial Statements 53
Auditor's Report 54
Information to Shareholders 55
Our customers 56

QPR in Brief

The business operations of the QPR Group comprises of software license sales, software subscription sales and sales of maintenance and professional services.

Mission, Vision, Values

Our Mission is to help people and organizations to take control of their processes and achieve their goals.

Our Vision is to have the highest customer satisfaction in the Process Excellence business by providing the best services and tools.

Our values are Long-term Success Together, Reliability, and Respect. Together they describe our operational culture and work community. They form the foundation for further success and growth of the Company.

Easy to use and implement software products

QPR Software offers out-of-the box software and services for process and performance management. The most tangible benefits of QPR's software and services based on it are related to process and performance improvement, strategy execution as well as risk and quality management.

Customer organizations systematically develop their processes and performance with QPR software and engage their personnel in the implementation. They may also use the software to comply with regulated requirements and standards.

QPR software is used by 1,500 customers around the world in both private and public sector. The software is localized into 26 languages.

QPR ProcessGuide is a comprehensive server-based software tool for process modeling and analysis. QPR ProcessGuide is especially designed for hierarchical process modeling. The built-in full support for the BPMN process modeling standard enables automatic transfer of process descriptions to the systems executing processes.

QPR ProcessGuide Xpress is the desktop version of QPR ProcessGuide.

QPR ScoreCard is comprehensive server-based software for strategic performance management. It helps to design, implement, communicate and assess an organization's strategy. The software facilitates the monitoring of the main financial and non-financial measures and effective management reporting.

QPR ProcessAnalyzer is a Microsoft Excel integrated and user-friendly Automated Business Process Discovery software. It provides fast results and is an ideal choice for pragmatic and cost-effective analysis and optimization of business processes.

QPR is also service!

QPR specialists and its international resellers have a wide experience in improving business processes as well as in planning risk management and performance management systems. Furthermore they have acquired a strong experience-based knowhow from best practices regarding the deployment and actual use of these systems.

QPR Process Management Framework is a service product that helps organizations to manage systematically organization's process architecture as well as to model and develop business processes.

QPR ScoreCard Rapid Implementation Service provides a ready-built measurement solutions utilizing both industry specific and generic best practices for performance measurement and monitoring. Organization specific metrics and reports are incorporated into the solution.

QPR Enterprise Architecture Framework provides customer with unified modeling procedures and practices to support enterprise architecture work.

QPR ProcessAnalysis provides customer with visual process analysis containing e.g. process charts, actual process variations, specific case descriptions and various advanced views (e.g. resource loads).

Global reach through partner network

QPR Software serves its customers as a comprehensive solution provider directly in Finland, Russian Federation and in CIS countries.

When needed, QPR can also support projects taking place in more than one country through its reseller partner network. You can find the nearest reseller to You from the Resellers section of the www.qpr.com site.

Net Sales 2006−2010 (EUR 1,000)

Breakdown of net sales 2006−2010, %

Recognitions to QPR Software in 2010

January: Gartner recognizes QPR Software in its Magic Quadrant for Corporate Performance Management as an innovative vendor interesting to watch (2010 Magic Quadrant for Corporate Performance Management Suites).

February: Gartner Inc. lists QPR Software among the most prominent vendors in the world with its QPR ProcessGuide business process analysis software (2010 Magic Quadrant for Business Process Analysis Tools).

February: Bloor Research Recognizes QPR Software as the innovator among all vendors of Operations Management Platforms for the Service Sector (Operations Management Platforms for the Service Sector report).

Operating Profit 2006−2010 (EUR 1,000)

Group net sales by geography, 2006−2010, %

November: QPR is the Ventana Research 2010 Overall Performance Management Leadership Award Winner with CNOOC SES's success on strategy implementation

QPR is certified Quality!

QPR Software Plc's Management System has received ISO9001:2008 quality certification covering the Company's all actions.

Scope of the certificate is design, marketing and delivery of software, services and solutions for Process Excellence.

Key Figures 2008−2010

(EUR 1,000 or %)	2010	2009	2008
Net sales	6,937	6,618	7,512
Net sales growth,%	4.8	–11.9	6.4
Operating profit	752	705	893
% of net sales	10.8	10.6	11.9
Profit or loss before tax	707	668	927
% of net sales	10.2	10.1	12.3
Profit for the period	527	517	928
% of net sales	7.6	7.8	12.4

Return on equity,%	20.0	19.5	37.1
Return on investment,%	21.0	21.4	33.6
Interest-bearing liabilities	793	1,098	182
Cash and cash equivalents	1,703	1,929	1,716
Net liabilities	–910	–831	–1,534
Equity	2,694	2,575	2,732
Gearing,%	–33.8	–32.3	–56.1
Equity ratio,%	42.6	42.5	52.9
Total balance sheet	7,250	6,874	6,047
Investments in non-current assets	350	1 ,026	837
% of net sales	5.0	15.5	11.1
Research and development expenses	1,278	1,325	1,540
% of net sales	18.4	20.0	20.5

Personnel average for period	63	57	53
Earnings per share,€	0.04	0.04	0.08
Earnings per share (diluted),€	0.04	0.04	0.07
Equity per share,€	0.22	0.21	0.22

Message from the CEO

In year 2010 we were able to benefit from the strategic choices we made a year earlier. Our net sales grew especially in domestic (Finland) service sales and in operations in Russia and CIS countries. Over half of our net sales now come from these markets.

In Finland, subscriptions sales and productized services helped us expand our customer base to include new companies, some of which are smaller than previously. Our interaction with customers increased as our service sales stepped up during the year. This has helped us understand our customers' needs better and more extensively.

Sales in Finland grew faster than net sales as the company moved mainly to subscription-based software sales. As a result of this, annually a significant amount of net sales will be realized based on subscription deals made in previous years. It forms a strong base for growing software sales in Finland.

Productized services, such as the healthcare solution developed from the QPR Process Management Framework, strengthened our position in the Finnish healthcare sector.

We started direct business in the Russian market in the beginning of 2010 having acquired the QPR business from our Russian reseller in the fall of 2009. Thanks to the takeover at the beginning of the year, we were able to get into good speed in the Russian growth market towards the end of the year. We expect net sales growth to continue in Russian market also in 2011. In addition to software products, Russia provides an attractive market for our new productized services. One in six QPR employees works for our Russian subsidiary.

The effects of the global economic downturn of the last two years could still be seen in other international markets. Individual national markets recovered at very differing rates. Due to this our channel net sales remained on previous year´s level in the review period.

In 2009 we started developing new software products aimed at the international market. The first of these, QPR ProcessAnalyzer, was piloted in Finland during the first half of 2010. The software product makes it possible to make a visual process analysis automati-

cally based on information stored in an organization's information systems. Right from the start, the product has raised interest in our customers and in Finland we struck four consultancy deals. Our international reseller network has also embraced the product with enthusiasm. The software product was launched commercially in February 2011.

Our internal strategy work was crystallized in the fall into what we call "3+1". According to this, our future growth is based upon software subscriptions sales, enterprise architecture services, Russian business operations, and the new QPR ProcessAnalyzer software product ("+1"). Based on the 3+1 strategy we set a goal to double our 2009 net sales by 2014.

I want to thank all QPR Software Plc customers, staff, and partners for 2010. I believe that we all have an interesting and inspiring year ahead of us.

Jari Jaakkola

Chief Executive Officer

Board of Directors

QPR Software Plc's Board of Directors, 31 December 2010: Antti Laine, Aino-Maija Gerdt, Vesa-Pekka Leskinen (chairman), Jyrki Kontio and Asko Piekkola.

QPR Board of Directors had 12 meetings in 2010 (14). The average participation percentage in meetings was 93 (90). The Board of Directors made a self-assessment of its operation. The Board has not established any committees. Chairman of the Board received an annual emolument of EUR 25,230 and a member an emolument of EUR 16,820. No separate meeting fees are paid.

Vesa-Pekka Leskinen

(b.1950)

Chairman of the Board since January 2006.
Member of the Board since July 2003.

Mr. Vesa-Pekka Leskinen is the Chairman of the Board of Kauppamainos Oy and was the CEO of Kauppamainos from 1979 to September 2010. He is the majority owner of Kauppamainos Oy. Main area of business of Kauppamainos Oy has been in the investor relations and communications, in relation to which nearly hundred annual reports of various companies have been designed and delivered, participated in the preparation of tens of share issues and similar financial transactions, and have been supporting the IPO process of more than ten companies. Mr. Leskinen has personally been involved in carrying out the investor relations and communication of public listed companies.

Vesa-Pekka Leskinen is the founder of Quartal Oy and was the majority owner of the Company until year 1999. Quartal Oy is focusing on developing and delivering computerized delivery solutions and communication services, especially for the stock market and the companies having business therein. Vesa-Pekka Leskinen is also Member of the Board of Mawell Ltd and Vianaturale Oy. By education Mr. Leskinen is an undergraduate and has a MAT degree.

Mr. Leskinen owns 851,400 shares of QPR Software Plc at 31 December, 2010. Kauppamainos Oy, a limited company, whose majority owner Leskinen is, owns 475,170 shares of QPR Software Plc at 31, December 2010.

Aino-Maija Gerdt (b. 1955)

Member of the Board since March 2010.

Independent member.

Mrs. Aino-Maija Gerdt (previously Fagerlund) has been the Chief Executive Officer of FRENDS Technology Oy since 2000. FRENDS is an international software company based in Finland. FRENDS specializes in business process integration and management. Mrs. Gerdt is also board member in Finnish Software Entrepreneur Association (also earlier in 2006-2008).

From 1999 to 2000 Aino-Maija Gerdt worked in EDS Finland/Nordic as Account Executive for named strategic accounts, first in Finland and later also in Sweden and Belgium. From 1996 to 1998 she worked as the Manager of the Industry business unit in Siemens–Nixdorf Oy. From 1994 to 1996 Gerdt worked as the Director for HR solutions in Tietonauha Oy.

Earlier Aino-Maija Gerdt has been a board member in Benefect Oy (1999–2001) and Executive Management Team member in the Vertical Software Solutions Fund of the Finnish Funding Agency for Technology and Innovation, Tekes (2006–2008). From 2006 to 2008 she was the Chairman for IAMCP Finland and Board Member for IAMCP EMEA from 2006 to 2007 (IAMCP, International Association of Microsoft Certified

Partners). Aino-Maija Gerdt holds M.Sc (BA) degree and has carried out MBA studies in Aalto University School of Science and Technology.

Aino-Maija Gerdt holds no shares in QPR Software Plc at 31 December, 2010.

Jyrki Kontio

(b.1961)

Member of the Board since March 2008.
Independent member.

Mr. Jyrki Kontio is an entrepreneur in his own consulting company R & D-Ware Oy. Previously, he was Professor of Software Product Business at the Helsinki University of Technology in 2002–2007. Prior to this assignment, Kontio worked for 15 years at Nokia Corporation, serving in various software and process management leadership and research positions. He has also worked as Senior Researcher at the University of Maryland in the USA: Mr. Kontio has a Ms.Sc. degree in Business Administration and a Doctor in Technology degree.

Mr. Kontio holds no shares of QPR Software Plc at 31 December, 2010.

Antti Laine

(b. 1961)

Member of the Board since March 2010.
Independent member.

Mr. Antti Laine has been the Managing Director of ASAN Securities Technology Ltd since 2006. ASAN is focused on developing and supplying high-standard networked video surveillance and recognition technology solutions. Mr. Laine is also member of the Board of Directors in ASAN Securities Technology Ltd, Milleferri Oy, Nuovoferri Oy and Oneiro Oy.

From 2001 to 2005 Antti Laine worked as the Managing Director of Conformiq Software Oy. From 2000 to 2002 he was partner in erVentures Oy, a company specialized in supporting and developing start-up companies. Between 1990 and 2000 Laine worked in various tasks in KONE Corporation's technology function and Asia regional organization. He was responsible for developing a new elevator platform for the Asian market and KONE's marketing in Asia.

Antti Laine has also been a board member in Conformiq Software Oy (2001−2005) and Endero Oy (2008−2009).

Antti Laine holds a Master and Licentiate degrees in Engineering.

Antti Laine holds no shares in QPR Software Plc at 31 December, 2010.

Asko Piekkola

(b.1952)

Member of the Board since March 2003.
Independent member.

Mr. Asko Piekkola is currently managing director and partner of AG-Partners Corporate Finance Ltd, operating in the area of business of mergers and acquisitions and assignments related to capital markets. He is also Member of the Board in Sievo Oy and Mawell Oy.

Previously he has worked, among others, in the following listed companies: as CFO on Labsystems and Spontel Oy, as member of the Board of Directors in Expaco Oy, Martela Oyj and Kylpyläkasino Oy and as a member and Chairman of the Board in Castrum Oyj.

Asko Piekkola has also held positions in Arctos Capital Oy (activities auxiliary to financial intermediation) as Member of the Board and Chairman of the Board, in Alexander Corporate Finance Oy (former Arctos Corporate Finance Oy) as Member of the Board, and in several other businesses and investment companies as Member of the Board and Chairman of the Board. He holds Ms.Sc. degree in Economics.

Asko Piekkola is also the Chairman of the Board in QPR's subsidiary QPR Services Oy.

Mr. Piekkola holds 316,438 shares of QPR Software Plc at 31 December, 2010.

Executive Management Team

QPR Software Plc's Management Team, 31 December 2010. From left: Päivi Martti (CFO), Antti Ainasoja (Software Sales International), Matti Erkheikki (Business Operations Finland), Jari Jaakkola (CEO), Teemu Lehto (Business Development ), Tony Virtanen (Products and Technology) and Jyrki Karasvirta (communications and marketing).

Jari Jaakkola

b. 1961

Chief Executive Officer as of January 2008.
Member of Executive Management Team since August 2006.
Been with the company since August 2006.

Mr. Jari Jaakkola worked from August 2006 to January 2008 as Senior Vice President, Business Operations at QPR Software Plc. Jari Jaakkola's previous experience covers leadership positions in Sonera Corporation and M-real Corporation. He also has extensive experience from positions in international advertising and PR agencies and the Finnish media. Mr. Jaakkola holds a B.A. degree in journalism from Tampere University and an MBA from Henley Management College.

Mr. Jaakkola holds 232,000 shares and 0 stock options of QPR Software Plc at 31 December, 2010. His 100%-owned company Value FM Ltd holds 18,000 shares of QPR Software Plc.

Antti Ainasoja

b. 1976

Vice President, Software Sales International since January 2009.
Member of Executive Management Team since January 2008.
Been with the company since May 2000.

Mr. Antti Ainasoja is responsible for the sales and delivery of QPR's software outside of Finland. Antti Ainasoja has been employed by QPR since May 2000. Initially he worked as a project manager and consultant implementing QPR solutions for Finnish customers. Since November 2001 he has worked as a Partner Manager establishing distribution channels in various Middle-East and Asian countries, and later as a Regional Manager in charge of channel sales in Asia. In 2008 he worked as the Vice President of Channel Sales Asia and Africa. Antti Ainasoja holds a Master's degree in Economics, with international marketing as his major subject.

Mr. Ainasoja holds 100 shares of QPR Software Plc at 31 December, 2010.

Matti Erkheikki

b. 1978

Vice President, Business Operations Finland since July 2010.
Member of Executive Management Team since July 2007.
Been with the company since February 2002.

Mr. Matti Erkheikki is responsible for selling QPR's software and service products to corporate and public sector customers in Finland. Matti Erkheikki has been employed by QPR Software since February 2002. Initially he worked as a consultant implementing QPR solutions globally. Since August 2005 he worked as a Business Development Manager and since July 2006 as the Regional Vice President of USA and Canada for QPR's California-based subsidiary QPR Software, Inc. As of July 2007 to July 2010 he was responsible for QPR's software sales in Finland. Matti Erkheikki holds a Master's degree in Industrial Engineering and Management.

Mr. Erkheikki holds 7,500 shares of QPR Software Plc at 31 December, 2010.

Jyrki Karasvirta

b. 1963

Vice President, Communications and Marketing since February 2010.
Member of Executive Management Team since February 2010.
Been with the company since June 2008.

Mr. Jyrki Karasvirta is responsible for the Group's marketing and communication. From June 2008 to February 2010 he worked as Communications Director in QPR Software. Karasvirta has earlier hold management level Corporate Communication positions in TeliaSonera Finland Oyj, Sonera Corporation and Asset Management Company Arsenal Ltd. Jyrki Karasvirta has a strong experience from international corporate communication tasks. From 2006 to 2008 he was the deputy chairman of ProCom – the Finnish Association of Communications Professionals. Jyrki Karasvirta holds Ms.Sc. degree in Corporate Communications and has a Marketing Management Diploma from the Institute of Marketing.

Jyrki Karasvirta holds 1,000 shares of QPR Software Plc at 31 December, 2010.

Teemu Lehto

b. 1970

Vice President of Business Development since January 2010.
Member of Executive Management Team since May 2002.
Been with the company since December 1999.

Mr. Teemu Lehto is responsible for the development of new businesses for QPR and innovation activities. He has been employed by QPR since September 1999. At first, he acted as a Product Manager, Senior Consultant and Sales Manager, and since April 2001 as a Global Partner Manager. He was the Vice President of Professional Services from 2002 to 2006. Teemu Lehto was also responsible for product development from December 2002 to March 2004. He was the Vice President of Strategic Accounts and Markets during 2006–2007. In 2008-2009 he worked as the Vice President of Marketing, Solutions and Business Development.

Before joining QPR he was the Managing Director at Planway Oy. Prior to this, he worked at ICL Data Oy as Development Manager at the Data Warehousing Center, at ViSolutions Oy as Product Development Manager, at Nokia Research Center as Application Developer in the department of knowledge management, and at Systeemikonsultit Oy as Application Developer. Teemu Lehto holds a Master's degree in Engineering, with Information Technology as his major subject.

Mr. Lehto holds 136,468 shares of QPR Software Plc at 31 December, 2010.

Päivi Martti

b. 1959

Chief Financial Officer since November 2009.
Member of Executive Management Team since November 2009.
Been with the company since November 2009.

Ms. Päivi Martti is responsible for the Group's finance, and administration. QPR's insider register is held by the CFO, who also administrates and monitors compliance with Insider Guidelines. Coordination of risk management and internal control and the related reporting is the responsibility of the Chief Financial Officer.

Päivi Martti worked as Acting Chief Financial Officer in QPR from May 2008 to August 2009. Before joining QPR, she has worked as the CFO in Holiday Club Resorts Oy. In addition, she has held several financial management leadership positions in Sonera Corporation, Sanitec Oyj and Oy Gustav Paulig Ab. Martti is a graduate from Commercial Institute and has a degree from the Institute of Marketing.

Ms. Martti holds 5,000 shares of QPR Software Plc at 31 December, 2010.

Tony Virtanen

Born 1971

Vice President Products and Technology March 2004–January 2011.
Member of Executive Management Team August 2006 –January 2011.
Employed by the company December 1999– February 2011.

Mr. Tony Virtanen was responsible for the Company's software product portfolio, product strategy, product management, product development and internal ICT in 2010. He moved to another company as of March 2011.

Tony Virtanen joined QPR in October 1999. Initially he worked as a consultant, then since January 2002 as a manager for channel support and customer solutions manager, and since December 2002 as a product manager and as of March 2004 as Vice President Products and Technology. By education Tony Virtanen is an undergraduate in Engineering, Information Technology as major subject.

Mr. Virtanen holds 172,112 shares of QPR Software Plc at 31 December, 2010.

Report of the Board of Directors January 1 – December 31, 2010

Highlights in 2010:

QPR Software Group's net sales in 2010 were EUR 6,937 thousand.
Operating profit was EUR 752 thousand.
Operating margin 10.8% of net sales.
Profit for the period was EUR 527 thousand.
Domestic (Finland) net sales were EUR 2,860 thousand (41.2% of total net sales).
Domestic net sales grew mainly due to good demand for QPR´s service products. Demand especially for process management framework was strong.
International net sales were EUR 4,077 thousand (58.8% of total net sales).
Russian business acquired in 2009 showed a favorable development especially in the latter half of the year.
The Company invested in developing Enterprise Architecture offering that was launched in the beginning of 2011.
QPR agreed on delivering process analysis service based on the new QPR ProcessAnalyzer software to four Finnish customers.

BUSINESS OPERATIONS

In the fiscal year 2010, the business operations of the QPR Group comprised entirely of software license sales and sales of maintenance and professional services.

In 2010 the QPR Software Group consisted of the parent Company QPR Software Plc and the following subsidiaries: QPR Software AB (100%, Sweden), QPR Software Inc. (100%, USA), QPR Services Oy (100%, Finland), QPR CIS Oy (80%, Finland) and Sopimuspankki Oy (60%, Finland, founded in August 2010).

QPR CIS Oy started its operations on 1 January, 2010. The QPR operations that QPR had acquired from its Russian resellers in November 2009 were transferred to QPR CIS at same moment. The subsidiary is domiciled in Finland and its minority shareholders are the sellers of the Russian business operations.

In 2010 QPR Software Plc had three business segments: Software Sales International (software license and maintenance sales outside of Finland), Software Sales Finland (software license and maintenance sales in Finland) and Service and Solutions (global professional service sales).

The geographical segments used by the Company are Domestic (Finland) and International markets. The software license sales in the Russian Federation and CIS countries related to the business operations QPR acquired from its Russian resellers are booked in 2010 as the sales made by QPR international resellers.

The Company does not monitor or report minor intersegment net sales.

In 2011, the Company started to report two business segments, which are Business Operations Finland (software license, maintenance and professional services sales in Finland) and International Business Operations (software license, maintenance and professional services sales outside of Finland).

Key figures of the Group from the review period and previous two periods are presented in Note 23, on page 39. Formulas for calculating key indicators of the Group are shown on page 41.

NET SALES

QPR Software Group´s 2010 net sales increased to EUR 6,937 thousand (2009: 6,618; 2008: 7,512). The increase is attributable to the good demand of professional services in Finland and to net sales growth in Russian business.

The share of international business of the total net sales remained almost same as in 2009 and was 59% (58). International net sales in 2010 grew to EUR 4,077 thousand (3,835), which was due to positive development in QPR´s Russian business operations. There were still large variances in demand after in various markets. In 2010, QPR sold software to 60 countries (70).

Business operations in Finland showed positive development. Net sales rose to EUR 2,860 thousand (2,783), which was mainly due to the growth in professional services sales.

Professional services net sales increased to EUR 1,214 thousand (886). Net sales were positively impacted by the initiation of direct sales in Russia and strong demand for service products in Finland. Professional services' share of the Group's net sales increased and was 17.5 percent (13.4).

Breakdown of net sales

(EUR 1,000)	1-12/2010	Share-%	1-12/2009	Share-%	Change-%
Software licenses	2,101	30.3	2,394	36.2	–12.2
Maintenance services	3,622	52.2	3,338	50.4	8.5
Professional services	1,214	17.5	886	13.4	37.0
Total	6,937	100.0	6,618	100.0	4.8

Group net sales by geography

(EUR 1,000)	1-12/2010	Share-%	1-12/2009	Share-%	Change-%
Domestic	2,860	41.2	2,783	42.1	2.8
International	4,077	58.8	3,835	57.9	6.3
Total	6,937	100.0	6,618	100.0	4.8

FINANCIAL PERFORMANCE

Operating profit in the financial year was EUR 752 thousand (2009: 705; 2008: 893), and its share of net sales were 10.8% (2009: 10.6; 2008: 11.9). Increase is attributable to the increased net sales. Operating profit includes a contribution of EUR 45 thousand from Finnish Funding Agency for Technology and Innovation for the development of the new QPR ProcessAnalyzer software. Costs were higher than in the previous year, which was attributable to outlays made in commencing direct sales in the Russian market and to development of professional service business in Finland.

Cash flow from operations in 2010 was EUR 860 thousand (953).

Net profit after tax for the financial year was EUR 527 thousand (517) which corresponded 7.6% (7.8%) of the net sales. In the consolidated balance sheet as of December 31, 2010 the remaining amount of deferred tax is EUR 233 thousand (413). An amount of EUR 229 thousand is in the books of the parent company and EUR 4 thousand in the books of QPR Services Oy.

Earnings per share were EUR 0.04 (0.04) and diluted earnings per share were EUR 0.04 (0.04).

BUSINESS SEGMENTS

Software Sales International

Software Sales International business segment´s 2010 net sales increased to EUR 4,039 thousand (3,728). The growth is due to net sales increase in Russia and CIS countries. For the same reason, segment´s operating profit increased to EUR 740 thousand (503).

The Company delivered software to 60 countries during the period (70). The largest geographic markets were Finland, Russian Federation, South Africa, United Arab Emirates and Belgium.

In the review period, QPR signed a corporate 3-year contract with Vattenfall AB. Vattenfall chose QPR ProcessGuide for their Group Business Process Modeling tool. The contract is estimated to have a positive impact on QPR´s license and maintenance service sales for the next three years.

Software Sales Finland

In the reporting period, the net sales of the Software Sales Finland business segment decreased to EUR 1,845 thousand (2,042). The decrease was due to the transition to software subscription sales, which had a negative impact on license net sales. However, subscription agreements made during the financial year started to increase recognized revenue towards the end of the year, which reversed net sales trend in the latter half of the year.

Operating profit declined due to decreased sales to EUR 369 thousand (668).

In Finland QPR delivered software, among others, to Alma Media Corporation, Aalto University, Cargotec Corporation, Enfo Oyj, Häme School of Applied Sciences, Kesko Corporation, Kymenlaakso healthcare and social services district Carea, Finnish Medicine Agency, Metso Automation, Oriola-KD Corporation, Outotec Oyj, Peab Oy, Solteq Plc, SRV Group, Vacon Plc and CouncilIT unit of Ministry of Finance.

Service and Solutions

Service and Solutions business segment´s net sales increased substantially (+24.2%) to EUR 1,053 thousand (848).

The growth was mainly due to good demand for QPR´s service products. Service products were sold mainly to new software customers, and the company was clearly more successful in acquiring new customers than in the previous years. Demand especially for process management framework was strong during the year. Net sales were positively impacted by the initiation of direct sales in Russia. Segment's net sales were mostly still obtained from Finland.

In its professional services offering, QPR focuses especially on supporting fast implementation of QPR software and customer's management methods.

FINANCE AND INVESTMENTS

At the end of 2010, the value of consolidated balance sheet was EUR 7,250 thousand (6,874). Increase is mostly attributable to the increase in trade receivables which was due to changes implemented in reseller billing practices and payment terms during the financial year.

Cash flow from operating activities was positive EUR 860 thousand (953). Cash flow from operations was negatively impacted by increase in operative working capital in the financial period. Cash and cash equivalents at the end of the review period were EUR 1,703 thousand (1,929).

A dividend of EUR 244 thousand (368) and a distribution of EUR 122 thousand (244) from the invested non-restricted equity fund were paid during the reporting period.

The Group´s investments in the review period totaled to EUR 350 thousand (1,026). In the previous year,

Consolidated net sales by business segment:

R&D expenditure of net sales, %

the higher investments were attributable to the acquisitions of healthcare business from Mawell Ltd and Russian QPR business from the Company's resellers in 2009.

The Group´s interest-bearing liabilities decreased and were EUR 793 thousand (1,098) at the end of the reporting period. Return on equity was 20.0% (19.5).

The gearing ratio was -33.8% (-32.3). Return on capital employed was 21.0% (21.4).

Short-term liabilities include deferred revenue in total of EUR 918 thousand (811). At the end of reporting period, quick ratio was 1.87 (2.05).

At the end of the reporting period, the consolidated shareholder's equity stood at EUR 2,694 thousand (2,575), and equity to assets ratio was 42.6% (2009: 42.5; 2008: 52.9). Return on equity was 20.0% (2009: 19.5; 2008: 37.1)

PRODUCT AND SERVICES DEVELOPMENT

The amount of R&D expenses in the review period totaled EUR 1,278 thousand (2009: 1,325; 2008: 1,540), representing 20% of all operating expenses (2009: 22; 2008: 23).

(EUR 1,000)	1-12/2010	Share-%	1-12/2009	Share-%	Change-%
Software Sales International	4,039	58.2	3,728	56.3	8.3
Software Sales Finland	1,845	26.6	2,042	30.9	–9.6
Service and Solutions	1,053	15.2	848	12.8	24.2
Total	6,937	100.0	6,618	100.0	4.8

Consolidated operating profit by business segment:

(EUR 1,000)	1-12/2010	Share-%	1-12/2009	Share-%	Change-%
Software Sales International	740	98.4	503	71.4	47.1
Software Sales Finland	369	49.1	668	94.9	–44.8
Service and Solutions	–12	–1.6	–67	–9.5	82.1
Not allocated	–345	–45.9	–400	–56.8	13.8
Total	752	100.0	705	100.0	6.7

During the review period, product development expenses have been activated as assets for a total amount of EUR 278 thousand (174). The amortization period of capitalized product development expenses is 4 years. The amortization of product development expense was EUR 190 thousand (165).

Product development employed 15 people at the end of the review period, corresponding to 23% of the total personnel.

During the review period, product development activities focused on the development of a new version of the QPR product family planned to be released in 2011.

Development of QPR ProcessAnalyzer, a software tool for Automated Business Process Discovery, continued. The software executes automatically visual process analysis from depository data. During the review period QPR agreed on delivering process analysis service, based on the software to four Finnish customers (National Land Survey Finland, Outokumpu Oyj, STX Finland Oy and Wärtsilä Oyj). First international re-selling agreement was signed to Germany with Marketing Resultant GmbH in January 2011. QPR ProcessAnalyzer product version 2.0 was launched in February 2011.

QPR software family is fully compatible with the newest, Windows 7 operating system. QPR has been Microsoft Gold Certified partner since 2007.

Professional Services offering to the domestic market was strengthened by developing vertical applications from the QPR ScoreCard Rapid Implementation service for public and health care sectors. The Company continued investments in Process Management Framework launched in Autumn 2009.

Development of QPR Enterprise Architecture offering was started in the first half of the year. QPR's Enterprise Architecture resources were strengthened by centralizing all internal expertise in one function at end of the year and by hiring new specialist resources outside of the company.

PERSONNEL

At the end of the June 2010, the Group employed a total of 65 persons (57). The average number of personnel during the reporting period was 63 (2009: 57; 2008: 53). Out of them 11 were employed by QPR's Russian subsidiary, OOO QPR Software, in Moscow (0), corresponding to 17% of the total personnel (0).

Personnel at the end of the period

Salaries and other emoluments from the period totaled EUR 4,093 thousand (2009: 3,524; 2008: 3,653).

SHARE CAPITAL, COMPANY SHARES AND STOCK OPTION PROGRAMS

The Company's share capital at the end of the reporting period was EUR 1,359,089.93 divided into 12,444,863 shares.

QPR Software Plc has one share class. Each share has one vote and equal right to dividend. The book counter value is EUR 0.11. The Company's shares are included in the Finnish book-entry securities system managed by Euroclear Finland Oy.

At the end of the review period, the Company had a total of 600 shareholders (608). In the reporting period, trading in Company shares amounted to EUR 806 thousand (628), i.e. an average of EUR 3,498 per trading day (2,500).

Trading in shares totaled 881,585 shares (716,800), giving an average of 3,485 shares per trading day (2,856). Turnover in shares corresponds to 7.1% of the total shares (5.8) and the average price was EUR 0.91 per share (0.88). The highest closing price during the review period was EUR 1.00 (1.08) and the lowest EUR 0.81 (0.73).

At the end of the reporting period, the total market value of the Company shares was EUR 11,032 thousand (11,578) at the review period´s closing price of EUR 0.91.

Own shares

The number of acquired own shares in the public trading of NASDAQ OMX Helsinki Ltd in the reporting period was 64,212. At the end of the reporting period the Company held 332,212 of its own shares with a total nominal value of EUR 37 thousand and a total purchase price of EUR 275 thousand. Own shares

			Shares and votes:
Number of shares	Number of shareholders	%	Number	%

1–500	260	43.3	49,264	0.4
501–1,000	111	18.5	95,771	0.8
1,001–5,000	134	22.3	347,931	2.8
5,001– 10,000	32	5.3	252,153	2.0
10,001– 50,000	37	6.2	852,006	6.8
50,001–100,000	4	0.7	243,187	2.0
100,001– 1,600,000	22	3.7	10,604,551	85.2
Total	600	100.0	12,444,863	100.0

Distribution of QPR shareholders' by holdings size, 31 December, 2010

Distribution of QPR shareholders' by sector, 31 December, 2010

			Shares and votes
	Number of shareholders	%	Number	%
Private Companies	36	6.0	5,564,555	44.7
Financial and insurance institutes	4	0.7	61,271	0.5
Households	542	90.3	5,448,680	43.8
Non-profit making organizations	1	0.2	1	0.0
Foreign	1	0.2	1,300,000	10.4
European Union	15	2.5	66,356	0.5
Other countries	1	0.2	4,000	0.0
Total	600	100.0	12,444,863	100.0
Out of which nominee-registrated	3		51,271	0.4

held by the Company represent 2.6% of the Company's capital stock.

The Board of Directors has been granted by the Annual Shareholders Meeting of March 18, 2010 a share repurchases authorization, valid until the next General Annual Meeting, to repurchase the Company shares in total of 250,000 shares at maximum. According to the authorization, the Company may acquire its own shares in order to strengthen the Company's capital structure, to be used as payment in corporate acquisitions or when the Company acquires assets related to its business or as part of the Company's incentive programs in a manner and to the extent decided by the Board of Directors, or to be transferred for other purposes or to be cancelled.

At the end of the reporting period, unused authorization was 185,788 shares.

OPTION SCHEMES

During the reporting period the Company had no option schemes effective.

ACQUISITIONS

QPR Software Plc agreed on 2 November, 2009 to acquire the business operations of its reseller Trodos Consulting and consulting partner United Project and Services Group (UPSG) in the Russian Federation and CIS countries. Acquired business operations comprise all QPR software related customer contracts, solutions, and intellectual property rights in Russia and CIS countries.

The operations were transferred to a joint venture QPR CIS, which started operations on 1 January, 2010. The subsidiary is responsible for all QPR software related business activities in the Russian Federation and CIS countries. QPR Software owns 80% and the sellers 20% of the shares of QPR CIS.

During 2010 no business acquisitions took place. Businesses acquired during the review period are described in Note 3, on page 29.

STRATEGY

The Board of Directors approved in its meeting on 22 October, 2010, a new strategy and business targets for years 2010 – 2014 for QPR Software. The Group targets profitable growth and pursues to double its 2009 net sales by year 2014.

QPR aims to accelerate its growth by expanding its offering to small and medium sized organizations. For these organizations, QPR and its resellers offer software subscriptions without any upfront investments, as well as service products that support software implementations and management methods chosen by the customers.

QPR expands its domestic service offering to large enterprises especially in enterprise architecture consulting services. The Company believes that the demand for these services will show strong increase in public and private sector.

The Company delivers its resellers, in addition to software, service products that support software sales. These service products have experienced strong demand in Finland in the past year. The Company also strengthens its reseller network for QPR ProcessGuide software.

QPR pursues strong growth in Russia, where it started its operations in 2010 after acquiring its Russian resellers´ business operations. Russian market is in a strong growth phase, and offers significant opportunities to QPR´s technology products and services.

The Company´s product development focuses on further development of existing products and building innovations aimed at process development. The company continues its close co-operation with Microsoft.

GOVERNANCE

QPR Software Plc complies with the NASDAQ OMX Helsinki Ltd Guidelines for Insiders issued on 9 October, 2009 and the Corporate Governance Code, effective as of 1 October, 2010.

The Company's Corporate Governance Statement is available in the Investor section of the Company's website, www.qpr.com. Also, available in the investor section is further information, such as administration of insiders register, public insiders register, list of major shareholders, articles of association, charter of the Board, description of how internal control and internal audit are organized, introductions of the members of the Board and Executive Management Team, and the information published by the Company in the financial year.

Decisions made by the General Annual Meeting

Following decisions were made in the General Annual Meeting on 18 March, 2010:

The General Annual Meeting confirmed the company's financial statements and the Group's financial statements for the financial period of January 1–December 31, 2009 and released the Board of Directors and the Managing Director from liability.

The General Annual Meeting approved the Board's proposals that a per-share dividend of EUR 0.02, a total of EUR 243,737.26 is paid and a distribution of EUR 0.01 per share, totaling in EUR 121,868.63 is made to the shareholders from the invested nonrestricted equity fund.

The payments were made to shareholders who were entered in the company's shareholder register, maintained by Euroclear Finland Oy, on the record date of 23 March, 2010. The date of both payments was 6 April, 2010.

The General Annual Meeting held on 18 March, 2010 resolved that the Board of Directors consists of five (5) ordinary members. The General Annual Meeting elected the following members to the Board of Directors: Aino-Maija Gerdt (prev. Fagerlund), Jyrki Kontio, Antti Laine, Vesa-Pekka Leskinen and Asko Piekkola.

In its first meeting immediately following the General Annual Shareholders' Meeting, the Board of Directors elected Vesa-Pekka Leskinen as Chairman of the Board. The Board of Directors noted that both new members, Aino-Maija Gerdt and Antti Laine, are independent from the Company and its main shareholders.

KPMG Oy Ab, Authorized Public Accountants, continued as QPR Software Plc's Auditors.

QPR Software Plc's General Annual General Meeting decided to keep Board's emoluments same as in 2009. The Chairman of the Board receives an annual emolument in total of EUR 25,230 in year 2010 and each Member of the Board receives an annual emolument in total of EUR 16,820.

The conditions of all authorizations of the Board and other decisions made by the General Annual Meeting are available in their entirety on the stock exchange release published by the Company on 18 March, 2010 and available on the investors section of the company's web site, www.qpr.com.

MANAGEMENT AND AUDITORS

The Executive Management Team (EMT) of QPR Software Plc consisted of the following persons in 1 January, 2010: Chief Executive Officer Jari Jaakkola (chairman); Vice President, Software Sales International Antti Ainasoja; Vice President, Software Sales Finland Matti Erkheikki; Vice President, Services and Solutions Maija Erkheikki; Vice President, Marketing and Business Development Teemu Lehto; Chief Financial Officer Päivi Martti; and Vice President, Products and Technology Tony Virtanen.

The distribution of EMT responsibilities were reorganized as of 18 February, 2010 when EMT's secretary Jyrki Karasvirta received responsibility for Company's marketing and communications as an EMT member and Teemu Lehto for business development.

Matti Erkheikki received as of 1st July responsibility also for Services and Solutions in addition to Software Sales Finland. He was appointed Vice President, Business Operations Finland.

KPMG Oy Ab, Authorized Public Accountants, acted as QPR Software Plc's Auditors, and Authorized Public Accountant Sixteen Nyman as the principal auditor.

AUTHORIZATIONS OF THE BOARD OF DIRECTORS

The General Annual Meeting on 18 March, 2010 decided to authorize the Board of Directors to decide on an issue of new shares and conveyance of own shares held by the Company (share issue) either on one or several occasions. The share issue can be carried out as a share issue against payment or without consideration on terms to be determined by the Board of Directors.

The authorization also includes the right to issue special rights, in the meaning of Chapter 10 Section 1 of the Companies Act, which entitle to the company's new shares or the company's own shares held by the company against consideration.

In the share issue and/or based on the special rights a maximum of 4,000,000 new shares can be issued and a maximum of 550,000 own shares held by the company can be conveyed. The authorization is in force until the next General Annual Meeting.

The General Annual Meeting decided to authorize the Board of Directors to decide on an acquisition of own shares. Based on the authorization, the aggregate maximum amount of 250,000 shares of the Company's own shares may be acquired, either on one or several occasions. The authorization shall be in force until the next General Annual Meeting.

INTERNAL CONTROL

Internal control and risk management in QPR Software Plc aims to ensure that the Company operates efficiently and effectively, distributes reliable information, complies with regulations and operational principles, reaches its strategic goals and ensures continuity of its business.

It is the duty of the Board of Directors to monitor the appropriateness, effectiveness and efficiency of risk management and internal control in QPR Software Group. Risk management report covering the risks presented in the Risk Management section is presented to the Board in connection with quarterly financial reporting.

The threat caused by the risks to shareholders is used as a criterion when the Board of Directors evaluates these risks. The Board of Directors also monitors that the Company has defined operational principles for internal control and that the Company monitors the effectiveness of internal control.

RISK MANAGEMENT

Coordination of risk management and internal control and the related reporting is the responsibility of the Chief Financial Officer. Risk management in QPR Software is guided by the requirements of legislation, shareholders' expectations regarding business objectives and expectations among important stakeholders, such as customers and personnel.

Risk management in QPR Software aims systematically and comprehensively to identify risks related to the Company's operations and ensures that risks are managed and taken into account in decision-making. The Company does not have a separate risk management organization, and risk management is part of routine responsibilities throughout the organization. Risk management is developed by constantly improving operative processes in the Company.

QPR Software identifies the risks by their essentiality: if actualized, the risks selected for monitoring would have a material impact on the Company's business operations. QPR has identified the following three groups of risks related to its operations: risks related to business operations, risks related to information and products and risks related to financing.

Property, operational and liability risks are covered by insurance.

Risks related to business operations

The following risks are related to QPR Software's business operations:

Country risk. The instrument used for measuring country risk is the potential loss of country-specific revenue. Risk is managed by constantly gathering market information by the Company's own actions and with the help of the international reseller network.

Customer risk. The instrument used for measuring customer risk is the potentially lost annual revenue from the customer. Risk is managed by taking good care of every customer.

Net sales forecasting process risk. The instrument used for measuring forecasting process risk is the difference between two succeeding net sales forecasts. The Company's forecast on future net sales is based on the Company's own estimate and on information gained from its international resellers. Risk is mitigated by managing effectively the internal forecasting process and international reseller network.

Personnel risk. The instrument used for measuring personnel risk is the adequacy of competencies needed for achieving strategic goals. Risk is managed by professional recruitment, good supervisory work and by securing possibilities for job rotation.

Legal risk. The instrument used for measuring legal risk is the estimated total combined financial value of all legal disputes on the Company in Euros. Also the probability of the risk to be actualized is estimated. The risk is managed by in-depth knowhow on contractual jurisprudence and by performing both ethically and according to the Company values.

Financial risk. The instrument used for measuring financial risk is the forecasted operative cash flow before investments. Risk is managed by following constantly the Company's financial position (cash flow calculation and forecasts).

QPR´s market and customer risks are mitigated as follows: the Company conducts business in more than 50 countries, both in public and private sectors as well as in several different business verticals. In addition, the customer benefits produced by QPR´s products and solutions are related to optimization and streamlining of operations, strategy implementation as well as risk management and compliance.

Reasonable credit risk concerning individual business partners is characteristic to any international business. QPR seeks to limit this credit risk by continuous monitoring of standard payment terms.

No significant changes have taken place in risks related to business operations during the financial period.

Risks related to information and products

QPR Software has identified the following three risks related to information and products:

Risk related to own products. The risk is managed by securing the competitiveness of the Company's offering at all times by constantly monitoring competitors. The security and good quality of products is guaranteed by automated virus prevention.

Intellectual Property Rights. The Company's Intellectual Property Rights (IPR) are secured by the confidentiality of the source code. Unauthorized use of software licenses is rejected by executing software deployment by product activation. In addition, the Company makes sure that external IPR is not utilized in its products without proper permission.

Data security. Data security risks are related to the good confidentiality of corporate, insider and customer information. Risk is managed by ongoing internal training, keeping instructions up-to-date at all times and good technical protection of the Company's data network.

No significant changes have taken place in QPR's information and products related risks during the financial period.

Risks related to financing

QPR Software has identified the following two financial risks:

Foreign currency risk. The instrument used for measuring foreign currency risk is the actualized exchange rate fluctuation and future outlook for it. The risk is managed by using the Euro as the primary invoicing currency and by currency hedging. The company constantly monitors how the open positions of the three biggest invoicing currencies develop. The Company introduced hedging for its foreign currency cash flows in June 2010. At the end of 2010, the Company had hedged 8.3% of its foreign (non-euro) currency cash flow.

Operative credit risk. The instrument used for measuring operative credit risk is the turnover rate of accounts receivables. Risk is managed by monitoring accounts receivables and by effective collection of bad debt.

Management of financial risks in 2010 is described in more detail in Note 22, on page 38.

No significant changes have taken place in QPR's financial risks during the financial period.

Risks related to Business Operations Russia

QPR started, as of January 2011, to monitor the following risks in the Russian subsidiary OOO QPR Software:

Country risk. The metric used for measuring country risk is the potential loss of country-specific revenue. Risk is managed by constantly gathering information from economical and financial development and by geographically and vertically spread customer base.

Customer risk. The metric used for measuring customer risk is the amount of lost customers. Risk is managed by good customer care and reseller support.

Personnel risk. The metric used for measuring personnel risk is adequacy of competencies needed for achieving strategic goals. Risk is managed by professional recruitment, good supervisory work and by securing possibilities for job rotation.

Financial risk. The metric used for measuring financial risk is forecasted operative cash flow. Risk is managed by following constantly Subsidiary's financial position (cash flow calculation and forecasts).

SHARES HELD BY THE BOARD AND CEO

The members of QPR Software Plc's Board of Directors, the Chief Executive Officer and their immediate inner circle held a total of 1,893,008 Company shares on December 31, 2010, representing 15.2% of the total number of the shares and votes (31 December, 2009: 18.4). These shares include own holdings, holdings of spouses, persons under guardianship, and controlled companies.

The members of QPR Software Plc's Board of Director or the CEO (including their immediate inner circles) did not possess any QPR stock options on 31 December, 2010.

LEGAL DISPUTES

During the period QPR had no material legal disputes.

EVENTS AFTER THE REPORTING PERIOD

Sami Tähtinen (34) was appointed as Vice President, Products and Technology and Member of the Executive Management Team at QPR Software Plc as of 24 January, 2011. He moves to QPR from CCC Corporation Ltd. Prior to this, Mr. Tähtinen worked as Chief Technology Officer in Frends Technology from 2002 to 2009. Sami Tähtinen holds a Master's degree in Engineering.

As of January 24, 2011 QPR Software´s Executive Management Teams consists of Chief Executive Officer Jari Jaakkola (chairman); Vice President, Software Sales International Antti Ainasoja; Vice President, Business Operations Finland Matti Erkheikki; Vice President, Communications and Marketing Jyrki Karasvirta; Vice President, Business Develop-

Major shareholders, 31 December 2010

	Number of shares	%
Ulkomarkkinat Oy	1,600,000	12.86
Pelkonen Jouko, total	1,352,500	10.87
- Pohjolan Rahoitus Oy	868,000	6.97
- Pelkonen Jouko	462,500	3.72
- Electrosale Oy	22,000	0.18
Leskinen Vesa-Pekka,
total	1,326,570	10.66
- Leskinen Vesa-Pekka	851,400	6.84
- Kauppamainos Oy	475,170	3.82
Alesco S.A.	1,300,000	10.45
Oy Autocarrera Ab	1,245,817	10.01
Junkkonen Kari	512,016	4.11
Fortel Invest Oy	422,321	3.39
Marttila Päivi, total	326,872	2.63
- Marttila Päivi	292,972	2.35
- Edina Oy	33,900	0.27
Sr Eq Technology	323,898	2.6
QPR Software Oyj	322,212	2.59
Piekkola Asko	316,438	2.54
Jaakkola Jari, total	250,000	2.01
- Jaakkola Jari	232,000	1.86
- Value FM Oy	18,000	0.14
Pääkkönen Esa	246,054	1.98
Leskinen Veli-Mikko	232,530	1.87
Kanninen Matti	195,826	1.57
Virtanen Tony	172,112	1.38
Laakso Janne	140,287	1.13
Becker Kai-Erik	140,000	1.12
Lehto Teemu	136,468	1.1
Ojanen Petri	116,600	0.94
20 biggest total	10,678,451	85.81

Other shareholders	1,766,412	14.19
Total	12,444,863	100.0

ment Teemu Lehto; Chief Financial Officer Päivi Martti; and Vice President, Products and Technology Sami Tähtinen.

QPR Software Plc's Management System received ISO9001:2008 quality certification covering Company's all actions on 27 January, 2011. Scope of the certificate is design, marketing and delivery of software, services and solutions for Process Excellence. (Operations of the Russian Subsidiary, OOO QPR Software, were not included in the audit.)

FUTURE OUTLOOK

Market forecasts published in the beginning of 2011 estimate that value of Global software sales will increase approximately 7.5% and global professional

services sales will increase 5–8% in 2011 compared to 2010.

QPR Software estimates the Group´s net sales in 2011 to grow faster than in the previous year and operating profit to remain approximately 10% of net sales. In Finland, growth is expected especially in software subscription net sales and enterprise architecture services sales. In international markets, growth is expected especially from Russia and CIS countries. Seasonality of large software deals can affect significantly net sales and profit of one individual quarter.

THE BOARD OF DIRECTORS' PROPOSAL ON DIVIDEND

The Board of Directors proposes to the General Annual Meeting on 18 March, 2011 that a dividend of EUR 0.03 per share be paid to shareholders for financial year 2010. The dividend shall be paid to a shareholder that has been entered into the company´s share-

Ownership of insiders, 31 December, 2010

holder register on the record date of the dividend payment on 23 March, 2011. The Board of Directors proposes to the General Annual Meeting that the dividend shall be paid on 1 April, 2011.

The Board of Directors has in its meeting on 18 February, 2011 decided to adopt a new dividend policy whereby the Board intends to propose to the General Annual Meeting dividends of approximately 30–50% of annual cash flow from operations. When preparing the dividend proposals, the Board takes into notice the Company´s financial position, profitability and business prospects. The distributable funds of QPR Software Plc Group were EUR 968 thousand at the end of the review period, out of which the profit of the period was EUR 433 thousand.

The Board of Directors' proposals to the General Annual Meeting are available in their entirety on the Investors section of the Company's web site and on the stock exchange release, published by the Company on February 18, 2011.

		By controlled	By close
Name and position	Own shares	companies	persons*)	Own options
Vesa-Pekka Leskinen,	851,400	475,170	0	0
Chairman of the Board
Aino-Maija Gerdt	0	0	0	0
Member of the Board
Jyrki Kontio	0	0	0	0
Member of the Board
Antti Laine,	0	0	0	0
Member of the Board
Asko Piekkola,	316,438	0	0	0
Member of the Board
Sixten Nyman	0	0	0	0
Auditor with primary responsibility
Jari Jaakkola	232,000	18,000	0	0
CEO

Insiders by definition
Antti Ainasoja,	100	0	0	0
VP, Executive Management Team
Maija Erkheikki,	2,000	0	7,500	0
VP, Executive Management Team
(on maternity leave)
Matti Erkheikki,	7,500	0	2,000	0
VP, Executive Management Team
Jyrki Karasvirta,	1,000	0	0	0
VP, Executive Management Team
Teemu Lehto,	136,468	0	200	0
VP, Executive Management Team
Päivi Martti,	5,000	0	0	0
CFO, Executive Management Team
Tony Virtanen,	172,112	0	0	0
VP, Executive Management Team

*) shares owned by spouses and other persons under guardianship.

Consolidated Income Statement, IFRS

(EUR 1,000)	Note	Jan 1 - Dec 31, 2010	Jan 1 - Dec 31, 2009
Net sales	1	6,937	6,618

Other operating income	2	94	35
Materials and services	4	227	451
Employee benefits expenses	5	4,094	3,524
Depreciation and amortization	6	532	466
Other operating expenses	7	1,426	1,508
		6,279	5,949
Operating profit		752	705
Financial income	8	103	20
Financial expenses	8	-148	-57
		-45	-37
Profit before tax		707	668
Income taxes	9	-180	-150
Profit for the period		527	517

Other comprehensive income statement items:
Exchange differences on translating foreign operations		23	11
Income tax relating to components of
other comprehensive income		0	0
Other comprehensive income, net of tax		23	11
Total comprehensive income		550	528

Profit for the period attributable to:
Equity holders of the parent company		527	517
Non-controlling interests		0	0
		527	517

Total comprehensive income attributable to:
Equity holders of the parent company		550	528
Non-controlling interests		0	0
		550	528
Number of outstanding shares weighted average,
1,000 pcs		12,166	12,384
Number of shares, 1,000 pcs		12,445	12,445
Earnings per share, EUR	10	0.04	0.04
Earnings per weighted average share, EUR	10	0.04	0.04

Consolidated Balance Sheet, IFRS

(EUR 1,000)	Note	December 31, 2010	December 31, 2009
ASSETS
Non-current assets
Intangible assets	11	1,400	1,720
Tangible assets	12	85	145
Other investments		5	5
Other long-term receivables	13	43	0
Deferred tax assets	14	233	413
Total non-current assets		1,766	2,283
Current assets
Trade and other receivables	15	3,781	2,662
Cash and cash equivalents	16	1,703	1,929
Total current assets		5,484	4,591

TOTAL ASSETS		7,250	6,874

(EUR 1,000)	Note	December 31, 2010	December 31, 2009
EQUITY AND LIABILITIES
Equity
Share capital	17	1,359	1,359
Share premium		21	21
Treasure shares		-275	-209
Translation difference		-70	-94
Invested non-restricted equity fund		5	127
Retained earnings		1,653	1,371
Equity attributable to shareholders of the parent company		2,693	2,575
Non-controlling interest		1	0
Total equity		2,694	2,575
Non-current liabilities
Interest-bearing liabilities	18	566	793
Non-Interest-bearing liabilities		0	460
Total non-current liabilities		566	1,253

Current liabilities
Trade and other payables	19	3,763	2,741
Interest-bearing liabilities	18	227	305
Total current liabilities		3,990	3,046
Total liabilities		4,556	4,299
TOTAL EQUITY AND LIABILITIES		7,250	6,874

Consolidated Cash Flow Statement, IFRS

(EUR 1,000)	Note	Jan 1–Dec 31, 2010	Jan 1–Dec 31, 2009
Cash flow from operating activities

Profit for the period		527	517
Adjustments for the profit
Depreciation and amortization		532	466
Non-cash transactions	20	24	11
Changes in working capital: Increase (-)/decrease (+) in
short-term non-interest bearing receivables		-908	-53
Increase (+)/decrease (-) in
short-term non-interest bearing liabilities		759	60
Interest expense and other financial expenses paid		-42	-31
Interest income and other financial income received		8	20
Income taxes paid		-40	-38
Net cash from operating activities		860	953
Cash flows from investing activities
Purchases of tangible assets		-39	-38
Purchases of intangible assets		-311	-932
Net cash used in investing activities		-350	-970
Cash flows from financial activities
Proceeds from issuance of share capital		0	11
Proceeds from long-term loans		0	1,132
Repayments of long-term borrowings	20	-305	-217
Purchase of own shares		-66	-84
Invested non-restricted equity fund distribution		-122	-244
Dividends paid		-244	-368
Net cash used in financing activities		-736	230
Net change in cash and cash equivalents		-226	213

Cash and cash equivalents at the beginning of the period		1,929	1,716
Effect of exchange rate difference		-4	0
Cash and cash equivalents at the end of period		1,703	1,929

Consolidated Statement of Changes in Shareholders' Equity, IFRS

(EUR 1,000)	Shareholders'		equity premium differences		Invested shares equity fund earnings		Equity attributable to shareholders Share Translation Treasure non-restr. Retained of the parent controlling company	Total
Shareholders' Equity
January 1, 2010	1 3 5 9	21	$-94$	$-209$	127	1 3 7 1	2 5 7 5	2 575
Dividends paid						$-244$	$-244$	$-244$
Purchase of own shares				-66			-66	-66
Invested non-restricted equity fund
paid					$-122$		$-122$	$-122$
Comprehensive income			24			526	550	551
Change in shareholders' equity 1-12	0	0	24	-66	$-122$	282	118	119
Shareholders' Equity
December 31, 2010	1 3 5 9	21	$-70$	$-275$		1653	2 6 9 3	2 6 9 4

							Equity
							attributable
(EUR 1,000)	Shareholders'		equity premium differences		Invested shares equity fund earnings		to shareholders Share Translation Treasure non-restr. Retained of the parent controlling company	Non- interest	Total
Shareholders' Equity
January 1, 2009	1 3 5 9	21	$-105$	$-125$	360	1 2 2 2	2 7 3 2	0	2 7 3 2
Employees options					11	$\Omega$	11	0	11
Dividends paid						$-368$	$-368$	0	$-368$
Purchase of own shares				-84			$-84$	$\Omega$	-84
Invested non-restricted equity fund
paid					$-244$		$-244$	0	$-244$
Comprehensive income			11			517	528		528
Change in shareholders' equity 1-12	0	0	11	$-84$	$-233$	149	$-157$	$\Omega$	$-157$
Shareholders' Equity
December 31, 2009	1 3 5 9	21	$-94$	$-209$	127	1 3 7 1	2 5 7 5	0	2 5 7 5

Accounting Principles of Consolidated Financial Statements, IFRS

Accounting principles

QPR Software Plc's Financial Statements have been prepared according to the International Financial reporting Standards (IRFS), in accordance with the IAS and IFRS standards and SIC and IFRIC interpretations valid on December 31, 2010.

As of 1 January, 2010, the Group has applied the following new and revised standards and interpretations:

IFRS 3 Business Combinations. The revision enables valuation of minority interest and goodwill at fair value. The method to be used is selected on a caseby-case basis. In case of successive acquisitions, the previously acquired share of ownership is revaluated at the fair value on the acquisition date, and this influences the recognized goodwill. Changes in contingent purchase price and costs related to the acquisition are recognized through profit or loss.

IAS 27 Consolidated and Separate Financial Statements. The manner in which increases and decreases in the shares of ownership of the Group's subsidiaries are handled will change. Losses of the subsidiaries are allocated as non-controlling interest, including the share exceeding the investment made by the subsidiary in question.

The following implemented revised or reformed standards and new interpretations have not influenced the Consolidated Financial Statements:

IFRS 2 Share-based Payment. The revisions refer to share based transactions settled in cash within the Group.

IAS 39 Financial Instruments: Recognition and Measurement. The revision refers to items approved as hedged items.

IFRIC 17 Distributions of Non-cash Assets to Owners. Non-cash dividends must be measured at fair value.

IFRIC 18 Transfers of Assets from Customers. An asset received from a customer must be capitalized in the balance sheet if the company exercises authority over the asset. A liability recognized as a counterpart must be recognized as income based on delivered products or services.

Principles of consolidation

QPR's Consolidated Financial Statements include the parent company QPR Software Plc and the subsidiaries controlled by it. With regard to subsidiaries, the parent company's control is based on full ownership of the shares capital or a majority holding. Company does not own shares in joint ventures or affiliates.

Subsidiaries acquired during the financial period are consolidated from the date which the Group has acquired control and are no longer consolidated from the date that control ceases. Intra-Group shareholdings are eliminated using of the acquisition cost method. Intra-Group business transactions, internal receivables and liabilities, unrealized profits, and the Group's internal profit distribution are eliminated in the Consolidated Financial statements.

The profit for the financial year to the shareholders of the parent company and non-controlling interests is presented separately in the income statement, and the share of the non-controlling interest in shareholders' equity is presented as its own component in the consolidated balance sheet.

Transactions in foreign currency

The Consolidated Financial Statements have been presented in Euro, which is the operating and presentation currency of the parent company. The operating currency of subsidiaries except Russian subsidiary is the local bookkeeping currency. The operating currency of Russian company has defined to be Euro.

Transactions denominated in a foreign currency have been translated into the operating currency using the exchange rate valid on the transactions date. Monetary items have been converted into the operating currency using the exchange rate at the closing date and non-monetary items using the exchange rate on the transactions date. The exchange profits and losses from business operations are included in the corresponding items above operating profit. The exchange profit and losses from financial assets or liabilities denominated in foreign currency are included in financial income and expenses.

The income statements of foreign subsidiaries are translated into Euros using the average exchange rates for the year and the balance sheets are translated using the exchange rates on the balance sheet date. Translation differences arising from the elimination of foreign subsidiaries and translation of equity items accumulated after the acquisition are entered in other comprehensive income. Foreign currency gains and losses from monetary items that are part of the net investment in a foreign unit are recognized in other comprehensive income.

Revenue recognition

Net sales includes normal sales income from business operations deducted by taxes related to sales and discounts granted. When net sales are calculated, it is adjusted for exchange rate differences of foreign currency.

Revenue recognition of product sales requires that there is a binding agreement of the sale, the product has been delivered, proceeds from the transaction can be reliably specified, the financial gain will benefit the company with sufficient probability, and significant benefits and risks related to ownership or rights of the use of the product have been transferred to the buyer. Income from services is recognized when it is probable that economic benefit will arise to the Group and when the income and costs associated with the transactions can be reliably determined.

The consolidated net sales consist mainly of software license sales, subscription sales, maintenance and consulting services sales.

Software license net sales are recognized in connection with the delivery, when significant benefits and risks related to ownership or rights of the use of the product have been transferred to the buyer.

Software subscription net sales, right to use software for the time being, are recognized on a payment basis during the agreement period.

Maintenance fee covering software updates and customer support is recognized on a payment basis during the agreement period.

Net sales of temporary rental licenses are recognized partly in license net sales and in maintenance fees.

Net sales of consulting services are recognized when the delivery has been made.

Other operating income

Public subsidies are presented in profit or loss for the period in other operating income, except when related to investments are deducted from the acquisition cost of the asset.

Employee Benefits

Pension plans

The Group has a pension scheme based on pay-based arrangements managed by a pension insurance company. The expenses are recognized in the comprehensive income statement in the financial period in which the contribution is payable.

Share-based payments

The Group has adopted the IFRS 2 standard on Share-based payments in association with all such options issued to key personnel after November 7, 2002 and which cannot be vested until January 1st 2005. Expenses associated with previous options schemes have not been presented in the comprehensive income statement.

Options are valued at fair price at the date of grant and recognized as an expense in the income statement during the term of the options. The expense determined at the date of grant is based on Group estimate on the amount of option rights expected to be vested at the end of the term. The fair value is determined on the basis of the Black-Scholes method.

Cash acquired on exercise of option rights based on share subscription, is recognized in share capital and share premium account. The company has no option schemes in effect.

Operating profit

The IAS 1 Presentation of Financial Statements standard does not define the concept of operating profit. The Group uses the following definition of operating profit; operating profit is the net sum income added to net sales, less the cost of material and services, employee benefits and other operating expenses as well as depreciation and amortization. Exchange rate differences derived from working capital items are included in operating profit, whereas exchange rate differences associated with financial assets and liabilities are recognized in financial income and expenses.

Impairment

On every closing date the Group reviews asset items for any indication of impairment losses. If there are such indications, the amount recoverable from the said asset item is assessed. The recoverable amount is the higher of the asset item's fair value less the cost arising from disposal and its value in use. The recoverable amount of financial assets is either the fair value or the present value of expected future cash flows discounted at the original effective interest rate.

An impairment loss is recognized in the comprehensive income statement when the carrying amount is greater than the recoverable amount. Goodwill or such intangible assets with an indefinite useful life are always assessed for impairment on the closing date.

No goodwill or intangible assets with an indefinite useful life were entered in the Group balance sheet in the financial year in question or the previous financial year.

Income tax

The tax expenses on the comprehensive profit and loss statement comprise tax based on the taxable income for the financial period and deferred tax. The tax based on the taxable income for the financial period is calculated on the basis of taxable income in accordance with the tax rate valid in each country. The tax is adjusted by any taxes associated with previous financial periods.

Deferred taxes are calculated at tax rates enacted by the balance sheet date.

A deferred tax asset has been recognized in the amount that it is likely that taxable income will be generated in the future against which the temporary difference can be utilized. Deferred tax liabilities are recognized in the balance sheet in full.

Intangible assets

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net assets of the acquired company after 1 January, 2004. Goodwill is tested annually for any impairment. For this purpose goodwill has been attributed to cash generating units. Goodwill is valued at the original acquisition cost less impairments. As goodwill was amortized in its entirety during the previous regulation governing financial statements, no goodwill has been entered for the Group in financial years 2009 and 2010.

Research and development expenditures have been recognized as expenses in the financial period so that development expenses inducing new products and significant revisions are activated and entered as amortized expenses during the useful life. Amortizations are recognized once the product version has been released. Maintenance and minor revisions are directly realized as expenses. R&D ventures started before 2006 have not been capitalized. Capitalized research and development expenditure's useful life time is 4 years.

Other intangible assets with a definite useful life are entered in the balance sheet and booked as straightline depreciation in the comprehensive income statement during their useful life. Useful life time of the other intangible assets is 2–5 years.

Tangible assets

The balance sheet values of tangible assets are based on original acquisition cost less accumulated depreciation, impairment loss and amortization. Depreciation is calculated using the straight-line method and is based on the estimated useful life of the asset. The useful life time is 2–7 years.

Borrowing costs for assets spanning over a long time period until completion are activated, other borrowing costs are recognized as an expense for the period during which they arise. Immediate transaction costs directly attributable to the acquisition of a particular loan are recognized in the original accrued acquisition costs using the effective interest method.

Lease agreements

Lease agreements of tangible assets where the Group has a substantial part of the risks and rewards of ownership are classified as finance leases. Finance leases are entered into the balance sheet's tangible fixed assets at the start of the lease term at the lower of the fair value of the leased property and the present value of the minimum lease payments. The asset acquired under a finance lease is depreciated over the shorter of the asset's useful life and the lease term. The corresponding rental obligations are included in interest-bearing liabilities.

Lease agreements where the lesser retains a significant portion of the risks and rewards of ownership are treated as other leases. Payments made under other leases are charged to the comprehensive income statement on a straight-line basis over the period of the lease.

Financial assets and liabilities

Financial assets and liabilities are recognized at inception at acquisition date which is the value of the purchased or sold asset on the trade date.

After initial valuation, financial assets are classified into four groups: financial assets at fair value through profit or loss, held-to-maturity investments, financial assets available for sale, and loans and other receivables. Transaction costs are included in the original carrying amount of the financial liabilities.

Financial liabilities are categorized at fair value through profit and loss or other financial liabilities. Financial assets at fair value through profit or loss are valued using the effective interest method at fair value. Other financial liabilities are valued at amortized cost.

On the closing date, the Group assesses whether the value of a financial instrument has been impaired and recognizes such an impairment loss through profit and loss in financial items. De-recognition of financial assets from the balance sheet takes place when the Group has lost a contractual right to receive the cash flows or when it has transferred substantially the risks and rewards outside the Group.

Derivative contracts

All derivatives contracts are categorized as financial assets available for sale. The Group does not apply hedge accounting under IAS 39. Unrealized and realized gains and losses arising from changes in fair value are recognized in the comprehensive income statement in financial income and expenses.

Cash and cash equivalents

Cash and cash equivalents comprise cash, bank deposits and other short-term very liquid investments which have a maturity of no more than three months calculated from the date of acquisition.

Treasury shares

Purchase of own shares as well as the associated immediate costs are recognized as deductions in shareholders' equity.

Provisions

Provisions are recognized according to IAS 37, when the Group has a present legal or constructive obligation as the result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.

Restructuring provisions are recognized when a detailed and appropriate plan relating to them has been prepared and the Company has begun to implement the plan or has announced it will do so. Restructuring provisions are based, e.g., on actual expenses incurring from employee termination payments.

A provision for a loss-making agreement is recognized when unavoidable expenditure required to fulfill obligations exceeds the benefits obtainable from the agreement.

A guarantee provision is recognized upon the sale of a product subject to a guarantee condition. The amount of guarantee provision is based on empirical data and estimation on actual guarantee costs.

Accounting principles necessitating management consideration and essential factors of uncertainty related to management estimates

Upon closing of consolidated financial statements, the Group is required to make estimates and assumptions regarding the future and to pay consideration to the adoption of closing principles, which means that actual results may differ from those reported. The most significant situations forcing the management to resort to consideration and estimates are associated, among others, with the following:

estimated useful lives of tangible and intangible fixed assets
from which point onwards development projects can be classified as recognized development expenses
probability of future taxable profit against which the loss or credit carry forwards can be utilized
fair value of trade receivables
amount of provisions
acquired operations.

Adoption of new or revised IFRS standards

The Group will adopt in 2011 the following standards and interpretations whose application is not yet compulsory in financial statements:

Revised IAS 24 Related Party Disclosures. The objective of the amendment is to clarify and simplify the definition of a related party especially with regards to significant influence or joint control.

Amended IAS 32 Financial Instruments: presentation – Classification of Rights Issues. The amendment particularly applies to the classification of rights issues offered for a fixed amount of foreign currency. The Group estimates that the amendments to the standard will not have a significant effect on the Group's financial statements.

The Group will adopt the following IFRS standard immediately after the standard has been accepted in European Union:

IFRS 9 Financial Instruments (effective from January 1, 2013 or thereafter financial year beginning). IFRS 9 is the first step in a larger project which aims to replace IAS 39. The different valuation methods have been retained, but they have been simplified. Financial assets are divided in two main categories based on valuation; at accrued acquisition costs and at fair value. The classification depends on the company's business model and cash flows based on agreements. Instruction for impairments and hedging in IAS 39 wild remain in force. Previous periods' financial statements need not be corrected if the standard will be adopted before the financial year starting on January 1, 2012. The standard has not yet been approved for adoption by the European Union.

Segment information

Business segments

As of January 1, 2009 QPR Software Plc has three business segments: Software Sales International (software license and maintenance sales outside of Finland), Software Sales Finland (software license and maintenance sales in Finland) and Service and Solutions (global professional service sales). The accounting and valuation principles are the same as they are in consolidated financial statement.

Group's management (CODM) monitors the operating profit of segments. The assets of segments are not monitored by management, and according to IFRS 8 standard assets are not allocated to segments.

Expenses are generated either directly from business or from allocated expenses. R&D, marketing, information technology and finance expenses are allocated in proportion to net sales, reviewing the validity of allocation. Non-allocated costs are totally administrative expenses.

(EUR 1,000)	January 1 - December 31, 2010	January 1–December 31, 2009

Net Sales
Software Sales International	4,039	3,728
Software Sales Finland	1,845	2,042
Service & Solutions	1,053	848
Not allocated	0	0
Total Net Sales	6,937	6,618
Operating profit
Software Sales International	740	503
Software Sales Finland	369	668
Service & Solutions	-12	-67
Not allocated	-345	-400
Total Operating profit	752	705
Finance income and expenses	-45	-37
Income tax expense	-180	-150
Profit for period	527	517
Other information
Depreciation and amortization
Software Sales International	267	239
Software Sales Finland	228	185
Service & Solutions	37	42
Not allocated	0	0
Total Depreciation and amortization	532	466

As of January 1, 2011 QPR Software Plc has two business segments: Software Sales International (software license, maintenance and professional services sales outside of Finland) and Business Operations Finland (software license, maintenance and professional services sales in Finland). The accounting and valuation principles are the same as they are in consolidated financial statements.

Group's management (CODM) monitors the operating profit of segments. The assets of segments are not monitored by management, and according to IFRS 8 standard assets are not allocated to segments.

	Jan 1– March 31,	April 1– June 30,	July 1– Sept 30,	Oct 1–Dec 31,	Jan 1–Dec 31,
(EUR 1,000)	2010	2010	2010	2010	2010
Net Sales
Software Sales International Business Operations	960	1,043	961	1,111	4,074
Finland	711	730	613	809	2,863
Not allocated	0	0	0	0	0
Total Net Sales	1,671	1,773	1,574	1,920	6,937
Operating profit Software Sales
International Business Operations	154	193	178	252	777
Finland	71	67	69	114	320
Not allocated	-80	-89	-83	-93	-345
Total Operating profit	145	171	164	273	752
Finance income and
expenses	-25	-45	-11	34	-45
Income tax expense	-25	-33	-55	-66	-180
Profit for period	95	93	98	241	527
Other information Depreciation and amortization Software Sales
International Business Operations	62	84	84	37	267
Finland Total Depreciation	67	67	67	64	265
and amortization	129	151	151	101	532

Notes to the Consolidated Financial Statements

1. Net sales

Group net sales are accrued solely from software business, with following break-down in financial year:

(EUR 1,000)	2010	2009
Software licenses	2,101	2,394
Maintenance services	3,622	3,338
Professional services	1,214	886
Total	6,937	6,618

The geographical break-down of the net sales was as follows:

(EUR 1,000)	2010	2009
Domestic	2,860	2,783
International	4,077	3,835
Total	6,937	6,618

2. Other operating income

(EUR 1,000)	2010	2009
Government grants	94	35
Other operating income	0	0
Total	94	35

3. Acquired businesses

There were no acquired businesses in 2010.

Year 2009

Company acquired on November 2, 2009 the business operations of its reseller Trodos and consulting partner United Project and Services Group (UPSG) in Russian Federation and CIS countries. Acquired business operations comprise all QPR Software related customer contracts, solutions, and intellectual property rights in Russia and CIS countries.

The operations were transferred to a subsidiary (QPR CIS Oy), which started operations in March 2010 and is responsible for all QPR software businesses in Russia and CIS-countries. QPR owns 80% and the sellers own 20% of the shares in the subsidiary. The price for acquired business operations is estimated to be approximately EUR 263 thousand. The final price will be based on QPR CIS's earnings before depreciations, interest and tax (ebitda) from 12 months period and is paid in spring 2011. Purchase price will be paid in cash (62.5%) and in QPR Software Plc's shares (37.5%). The estimate of the purchase price has been changed during 2010.

QPR and the sellers have also agreed call and put options for the sellers 20% share. Options can at the earliest be exercised in January 2014. QPR and the sellers have agreed that the purchase price will based on the highest of following figures:

20% from amount of 2013 QPR CIS Oy's ebitda multiplied by 5.5 less net debt, or
20% from the net assets value of QPR CIS at the end of 2013 financial year.

The purchase price of option is not recognized as part of acquisition value, because the option cannot presently be realized.

Purchase price (EUR 1,000)	263
Expenses (EUR 1,000)	8
Estimated purchase price	271

Cash flow impact of the purchase price will materialize in 2011.

The acquisition cost has been recognized in other intangible assets and it is amortized according to plan in five (5) years' time.

4. Materials and services

(EUR 1,000)	2010	2009
Materials and services	227	451
Total	227	451

Materials and services include mainly commissions and localization fees charged by the reseller network.

5. Employee benefits expenses

(EUR 1,000)	2010	2009
Salaries	3,342	2,933
Pension expenses - defined contribution plans	570	478
Other personnel expenses	182	113
Total	4,094	3,524

Group's personnel average for period	2010	2009
Total	63	57

The information about employee benefits can be found from the note number 21. Transactions of the inner circle.

6. Depreciations and amortization

(EUR 1,000)	2010	2009
Depreciation and amortization by group of assets
Intangible assets
Other intangible assets	434	347
Total	434	347
Tangible fixed assets
Machinery and equipment	98	119
Total	98	119
Total	532	466

7. Other operating expenses

(EUR 1,000)	2010	2009
Non-statutory indirect employee costs	227	202
Expenses of office premises	267	221
Travel expenses, marketing and other promotion	342	297
Bad debts and write downs	182	66
Other expenses	408	722
Total	1,426	1,508

Income statement included auditing and consultancy expenses

(EUR 1,000)	2010	2009
Auditing	41	43
Tax consultation	2	2
Other services	3	5
Total	46	50

Income statement included research and development expenses EUR 1,278 thousand in 2010 (EUR 1,325 thousand in 2009).

8. Financial income and expenses

(EUR 1,000)	2010	2009
Interest income	11	20
Interest expense	-26	-24
Other financial income and expenses	-19	-13
Exchange rate differences	-11	-20
Total	-45	-37

9. Income taxes

(EUR 1,000)	2010	2009
Taxes based on financial year	170	148
Taxes from previous years	-3	2
Deferred tax	13	0
Total	180	150

Reconsolidation of taxes between income statement and parent company's tax rate, 26 percent.

(EUR 1,000)	2010	2009
Profit before tax	707	668

Taxes calculated with the tax-% of parent company	184	173
Tax deviations based on the tax-% used by foreign companies	0	4
Other items	12	–38
Undetectable expenses	–16	11
Taxes in income statements	180	150

Other items include other item from subsidiaries totally EUR 12 thousand (-38).

10. Earnings per share

Undiluted earning per share in calculated by dividing the profit belonging to the owners of parent companies shareholders' during the period with weighted average of shares.

When calculating the earnings per share adjusted by dilution, the dilution effect of share options is taken into account in the weighted average number of shares.

	2010	2009
Profit of the period belonging to the parent company's shareholders (EUR 1,000)	527	517
Number of shares (1,000 pcs) Number of shares; weighted average of	12,445	12,445
outstanding shares during the period (1,000 pcs)	12,166	12,384
Earnings per share (EUR/share) Earnings per weighted average share (EUR/share)	0.04 0.04	0.04 0.04

11. Intangible assets

	Computer	Other intangible	Capitalized product
(EUR 1,000)	software	assets	development costs	Total
Acquisition costs Jan 1, 2010	616	2,095	783	3,494
Increase	33	0	278	311
Decrease	0	-197	0	–197
Acquisition costs Dec 31, 2010	649	1,898	1,061	3,608
Accumulated depreciations and
amortization Jan 1, 2010	395	1,065	314	1,774
Depreciations and amortization	84	160	190	434
Accumulated depreciations and
amortization Dec 31, 2010	479	1,225	504	2,208
Book value Jan 1, 2010	221	1,030	469	1,720
Book value Dec 31, 2010	170	673	557	1,400

	Computer	Other intangible	Capitalized product
(EUR 1,000)	software	assets	development costs	Total
Acquisition costs Jan 1, 2009	471	1,426	609	2,506
Increase	145	669	174	988
Acquisition costs Dec 31, 2009	616	2,095	783	3,494
Accumulated depreciations and
amortization Jan 1, 2009	315	963	149	1,427
Depreciations and amortization	80	102	165	347
Accumulated depreciations and amortization Dec 31, 2009	395	1,065	314	1,774
Book value Jan 1, 2009	156	463	460	1,079
Book value Dec 31, 2009	221	1,030	469	1,720

12. Tangible assets

	Other property,
	Machinery and	plant and
(EUR 1,000)	equipment	equipment	Total
Acquisition costs Jan 1, 2010	980	3	983
Increase	38	0	38
Acquisition costs Dec 31, 2010	1,018	3	1,021
Accumulated depreciations and
amortization Jan 1, 2010	835	3	838
Depreciations and amortization	98	0	98
Accumulated depreciations and amortization Dec 31, 2010	933	3	936
Book value Jan 1, 2010	146	0	145
Book value Dec 31, 2010	85	0	85

		Other property,
	Machinery and	plant and
(EUR 1,000)	equipment	equipment	Total
Acquisition costs Jan 1, 2009	942	3	945
Increase	38	0	38
Acquisition costs Dec 31, 2009	980	3	983
Accumulated depreciations and
amortization Jan 1, 2009	716	3	719
Depreciations and amortization	119	0	119
Accumulated depreciations and amortization Dec 31, 2009	835	3	838
Book value Jan 1, 2009	226	0	226
Book value Dec 31, 2009	145	0	145

13. Other long-term receivables

(EUR 1,000)	2010	2009
Withholding tax	21	0
Other long-term receivables	22	0
Total	43	0

14. Deferred tax assets and debts

Specification of deferred tax assets 2010:

		Recognized
		in income	Dec 31,
(EUR 1,000)	Jan 1, 2010	statement	2010
Retained losses in taxation	413	180	233
Total	413	180	233

Specification of deferred tax assets 2009:

		Recognized
		in income	Dec 31,
(EUR 1,000)	Jan 1, 2009	statement	2009
Retained losses in taxation	539	126	413
Total	539	126	413

Subsidiary in the United States, QPR Software Inc., has retained losses after official tax filling approximately EUR 494 thousands. No tax asset has realized from QPR Software Ink's retained losses.

Parent company's retained losses have to use before 2012 and 2013.

15. Trade and other receivables

(EUR 1,000)	2010	2009
Trade receivables	3,103	2,176
Accrued receivables	355	394
Other receivables	323	92
Total	3,781	2,662

15 a. Geographical break-down of the trade receivables

(EUR 1,000)	2010	2009
Domestic	1,124	440
European countries	637	735
Other countries	1,342	1,001
Total	3,103	2,176

15 b. Currency break-down of the trade receivables

(EUR 1,000)	2010	2009
CHF	3	9
EUR	2,269	1,294
GBP	61	146
JPY	21	34
NOK	2	0
USD	506	586
SEK	42	5
ZAR	199	102

receivables in Euro	3,103	2,176
%-share of euro receivable	73.1	59.5

The main part of trade receivables is in EUR and the most significant invoicing currencies after EUR were USD and ZAR during the financial year. If USD's and ZAR's value will change against EUR +/- 10% and share of different currencies remain in same level, the value of trade receivable will change +/- EUR 64 thousand, which correspond 2.1% from total value of trade receivable. Correspondent if the value of all other invoicing currencies drop down 10% will trade receivable's value weakened totally EUR 76 thousand.

15 c. Age Analysis of trade receivables

(EUR 1,000)	2010	2009
Over 180 days due	360	289
90–180 days due	123	254
0–90 days due	585	383
Non overdue	2,035	1,250
Total	3,103	2,176

16. Cash and cash equivalents

(EUR 1,000)	2010	2009
Bank accounts	1,703	1,929
Total	1,703	1,929

17. Shareholder's equity

	Number of shares	Share	Invested non-restr.
(EUR 1,000)	(1,000 pcs)	capital	equity fund	Total
January 1, 2010 Payment December 31, 2010	12,445	1,359	127 -122	1,486 -122
Total	12,445	1,359	5	1,364
January 1, 2009 Subscripted options Payment December 31, 2009	12,378 67	1,359	360 11 -244	1,719 11 -244
Total	12,445	1,359	127	1,486

Company has one series of shares and maximum value of share capital is EUR 1,359 thousand. All the subscripted shares have been fully paid.

17 a. Share-based payments

The company has no option schemes in effect.

18 a and b. Interest-bearing and non-interest-bearing liabilities

(EUR 1,000)	2010	2009
18 a. Non-current liabilities
Other non-interest-bearing loans	0	460
Pension loans	566	793
Total	566	1,253
Amortization of interest-bearing long term liabilities
2011	0	227
2012	227	227
2013	226	226
2014	113	113
Total	566	793

Non-current liabilities is in EUR. According to terms of loans, interest is fixed so a sensitivity analysis is not representative.

Amortization of non-interest bearing long-term liabilities:
2011	0	460
Total	0	460

The interest rates of interest bearing liabilities:

Year	2010	2009
Pension loan, %	2.80	2.80
Other loans, %	0	1-5.5

18 b. Current liabilities

(EUR 1,000)	2010	2009
Other interest-bearing loans	0	79
Pension loans	227	226
Total	227	305

19. Trade payable and other liabilities

(EUR 1,000)	2010	2009
Current

Trade payable Accrued expenses	315 1,920	386 1,342
Prepayments	918	811
Other liabilities	610	202
Total	3,763	2,741

The value of currency trade payables were low in 2010 and 2009.

20. Adjustments to the cash flow of operations

(EUR 1,000)	2010	2009
Non-cash business operations
Other adjustments (translation difference)	24	11
Total	24	11

20a. Amortization of current loans

(EUR 1,000)	2010	2009
Product development loan	79	103
Pension loans	226	113
Total	305	216

20b. Commitments and contingent liabilities

(EUR 1,000)	2010	2009
Business mortgage*	1,337	1,337
Current lease liabilities and rent commitments
Liabilities maturing during one year	235	222
Liabilities maturing 2-5 years	53	261
Total	289	483

Total commitments and contingent liabilities	1,626	1,820

*Business mortgage EUR 1,337 thousand are in Nordea as a security for pension loan from Ilmarinen. Rent commitments include rental agreement (October 5, 2009). First termination date is February 29, 2012 and termination time is 3 months. Rental guarantee EUR 60 thousand includes in balance sheet; Cash and cash equivalents.

Other liabilities

The operations were transferred to a subsidiary (QPR CIS Oy), which started operations in March 2010 and is responsible for all QPR software businesses in Russia and CIS-countries. QPR owns 80 % and the sellers own 20% of the shares in the subsidiary. The price for acquired business operations is estimated to be approximately EUR 263 thousand. The final price will be based on QPR CIS's earnings before depreciations, interest and tax (ebitda) from 12 months period and is paid in spring 2011. Purchase price will be paid in cash (62.5%) and in QPR Software Plc's shares (37.5%). The estimate of the purchase price has been changed during 2010.

20% from amount of 2013 QPR CIS Oy's ebitda multiplied by 5.5 less net debt, or
20% from the net assets value of QPR CIS at the end of 2013 financial year.

The purchase price of option is not recognized as part of acquisition value, because the option cannot presently be realized.

21. Transactions of the inner circle

I) Salaries, fees, emoluments, fringe benefits and accrued holiday pay and bonuses of the Executives

The Group (EUR 1,000)	2010	2009
CEO	171	179
Members of the Board	93	93
Total	264	272

The company does not have any differing pension arrangement for the CEO. The period of notice for the CEO is three (3) month. Compensation on termination is equivalent to six (6) month's salary. QPR Software Plc's General Annual Meeting held on 18 March, 2010 decided that the Chairman of the Board receives an annual emolument in total EUR 25 thousands and that the each Member if the Board receives an annual emolument in total of EUR 17 thousands in 2010. No separate meeting fees are paid.

The Group (EUR 1,000)	2010	2009
Salaries and other short-term fringe benefits
CEO	171	179
Members of the Board	93	93
Executive Management Team	564	448
Other operating expenses
Members of the Board	0	1
Executive Management Team	0	56
Total	828	777

Share-based payments of the Group Executives are described further in notes 17 a..

In 2010 Management Team's compensations were based on Group net sales and operating profit. The Group's management team does not enjoy benefits related to termination of contract.

No stock options were issued to company's executives in 2010 and 2009. The Executives held zero stock options in December 31, 2010.

II) The Group has given no loans to the inner circle.

22. Financial Risk Management

The International business operations of QPR Group are exposed to risks typical in normal international transactions. Financial risk management aims to secure sufficient financing cost-effectively and when necessary, to monitor and mitigate the materializing risks. Risk management is a centralized responsibility of the Group's financing function and the CEO. The general risk management policies are approved by the QPR Software Plc Board of Directors. The Board is also responsible for supervising the adequacy, appropriateness and effectiveness of Group risk management.

Group's interest-bearing loans don't include conditions of covenants.

Foreign exchange risk

The main sales currency for the Group is Euro and the majority of purchases are managed in Euros.

The main part of trade receivables is in Euro and the most significant invoicing currencies after Euro were USD and ZAR during the financial year. If USD's and ZAR's value will change against EUR +/- 10% and share of different currencies remain in same level, the value of trade receivable will change +/- EUR 64 thousand, which correspond 2.1% from total value of trade receivable. Correspondent if the value of all other invoicing currencies drop down 10% will trade receivable's value weakened totally EUR 76 thousand.

May 19, 2010 the Board of Directors approved the exchange rate risk policy. In June 2010 the company began foreign currency hedging. Target for currency hedging is to reduce the added uncertainty of exchange rates, minimize the exchange rate changes' effects on the Group's cash flow, profit and equity.

The purpose is not eliminated all risks, but to reduce the major risks to acceptable levels at an acceptable costs. The company's management reviews regularly the company's currency risks and takes into account the security expenses.

The company's hedging techniques have been futures and options. At the end of the reporting period the fair value we as follows (EUR 1,000):

Currency		Nominal value	Current value
JPY - future	1,300,000	12	0
USD - future	230,000	170	0
USD - option	100,000	78	-2
		260	-2

Interest rate risk

At closing the Company has interest-bearing liabilities totally EUR 793 thousand. These liabilities bear interest at a fixed rate. The effect of interest rate differences on the Group result is insignificant and the Group did not resort to hedging during the period being reported.

Liquidity risk

Liquidity risk is defined as financial distress or extraordinary high financing costs arising due to a shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing.

The objective of liquidity risk management is to maintain sufficient liquidity and to ensure that it is available for business purposes fast enough without endangering its value.

QPR maintain as sufficient liquidity by efficient cash management, cash deposits, and by investing in liquid interestbearing securities. Figures are non-discount and included costs of liabilities.

	Balance
(EUR 1,000)	value	0–6 months	6 months–1 year	1 years–2 years	2 years–5 years
Maturity of liabilities
Pension loans Trade payables and other	793	124	122	474	115
liabilities	924	924	0	0	0
Total	1,717	1,048	122	474	115

Operative credit risk

The Group's international business operations are naturally exposed to credit risk related to individual partners. However, the Group has a wide customer base and retailer network spread over several market areas. The Group's trade receivables thereby derive from a large number of retailers and customers in several market areas and according to management's estimation there are no concentrations of retailer, customer, or geographical risks. In addition, continuous and active monitoring of receivables and credit limits aims at mitigating Group credit risks. The Group's maximum credit risk corresponds to the book value of trade receivables at period end.

23. Key figures of the group 2008-2010

(EUR 1,000)	2010	2009	2008



























Equity per share, EUR	0.22	0.21	0.22

Company has redefined the booking principles of received advance payment in 2009.

24. Key figures per share 2008-2010

	2010	2009	2008
(EUR 1,000)	IFRS	IFRS	IFRS
Earnings per share (undiluted) EUR	0.04	0.04	0.08
Earnings per share (diluted), EUR	0.04	0.04	0.07
Equity per share, EUR	0.22	0.21	0.22
Dividend per share, EUR*	0.03	0.02	0.03
Dividend per profit, %	75.0	50.0	37.5
Effective dividend rate, %	3.30	2.11	4.0
Invested non-restricted equity fund paid	0.00	0.01	0.02
Price to earnings (P/E)	22.75	23.75	10.71
Development of share price
Average, EUR	0.91	0.88	0.79
Lowest, EUR	0.62	0.73	0.57
Highest, EUR	1.00	1.08	0.91
Price 31.12., EUR	0.91	0.95	0.75
Market price December 31.	11,032	11,578	9,283
Development of shares traded
Number of shares traded mill. Pcs	882	717	485
Trading-% from the total number of shares	7.1	5.8	3.9
Number of shares December 31., 1,000 pcs	12,445	12,445	12,378
Outstanding	12,123	12,186	12,217
Diluted / outstanding shares weighted average	12,166	12,384	12,378

*Year 2010: The Board of Directors' proposal to Annual General Meeting held by March 18th, 2011.

25. Events after review period

Sami Tähtinen (34) was appointed as Vice President, Products and Technology and Member of the Executive Management Team at QPR Software Plc as of 24 January, 2011. He moves to QPR from CCC Corporation Ltd. prior to this, Mr. Tähtinen worked as Chief Technology Officer in Frends Technology from 2002 to 2009. Sami Tähtinen holds a Master's degree in Engineering.

As of 24 January, 2011 QPR Software's Executive Management Teams consists of Chief Executive Offices Jari Jaakkola (chairman); Vice President, Software Sales International Antti Ainasoja; Vice President, Business Operations Finland Matti Erkheikki; Vice President, Communications and Marketing Jyrki Karasvirta; Vice President, Business Development Teemu Lehto; Chief Financial Officer Päivi Martti; and Vice President, Products and Technology Sami Tähtinen.

26. Capital management

(EUR 1,000)	2010	2009
Interest-bearing liability	793	1,098
Liquid assets	1,703	1,929
Gearing ratio	-910	-831
Shareholder's equity	2,694	2,575
Gearing, %	-33.8	-32.3
Equity ratio, %	42.6	42.5
Total balance sheet	7,250	6,874

The Development of Group capital structure is monitories, in particular, through gearing and equity ratio.

Calculation of Key Indicators

Return on equity (ROE), %:

Profit for the period x 100________________________ Shareholders' equity + non-controlling interest (average)

Return on investment (ROI), %:

Profit before taxes + interest and other financial expenses x 100 Balance sheet total - non-interest bearing liabilities (average)

Equity ratio, %:

Shareholders' equity x 100_________________ Balance sheet total – received advance payment

Gearing, %:

Interest bearing liabilities - cash and cash equivalents x 100 Shareholders' equity

Earnings per share, euro:

Profit for period____________________________________ Adjusted number of shares over the financial year (average)

Equity per share, euro:

Shareholders' equity_________________________________ Adjusted number of shares at the end of the financial period

Dividend per share, euro:

Total dividend paid_________________________________ Adjusted number of shares at the end of the financial period

Dividend / profit, %:

Dividend per share x 100 Earnings per share

Effective dividend yield, %:

Dividend per share (adjusted) x 100______________ Adjusted share price at the end of the financial period

Price-earnings ratio (P/E):

Adjusted share price at the end of the financial period Earnings per share (adjusted)

Market value of share capital:

(Number of shares - own shares) x share price at the end of the financial period

Turnover of shares, % of share capital:

Turnover (number of shares) x 100 Number of shares issued (average)

Quick ratio:

Current assets – inventories_______ Current liabilities - received advance payment

(EUR 1,000)	Note	Jan 1–Dec 31, 2010	Jan 1–Dec 31, 2009
Net sales	1	6,359	6,278
Other operating income	2	94	35

Material and services Employee benefits expenses	3 4	208 3,869	406 3,524
Depreciation	5	532	466
Other operating expenses	6	1,124	1,438
		5,733	5,834
Operating profit		720	479
Financial income and expense	7	-93	-36
Operating profit		627	443
Income tax	8	-184	-126
Profit for the period		443	317

Parent Company Income Statement, FAS

Parent Company Balance Sheet, FAS

(EUR 1,000)	Note	December 31, 2010	December 31, 2009
ASSETS
Non-current assets
Intangible assets	9	1,394	1,720
Tangible assets	10	78	145
Investments	11	193	188
Other investments	11	5	5
		1,670	2,058
Current assets
Long-term receivables	12	272	400
Short-term receivables	13	3,807	2,662
Cash and cash equivalents	14	1,550	1,685
		5,629	4,747
Total assets		7,299	6,805



(EUR 1,000)	Note	December 31, 2010	December 31, 200

EQUITY AND LIABILITIES
Equity belonging to owners of the parent
Share capital	15	1,359	1,359
Invested non-restricted equity fund		5	127
Retained earnings		795	721
Treasury shares		-275	-209
Profit for the period		443	317
Total equity		2,328	2,315

Liabilities
Non-current liability	16	566	1,253
Current liability	16	4,405	3,237
Total liabilities		4,971	4,490
Total equity and liabilities		7,299	6,805

Parent Company Cash Flow Statement, FAS

(EUR 1,000)	Jan 1–Dec 31, 2010	Jan 1–Dec 31, 2009
Cash flow from operating activities
Profit for the period	720	479
Adjustment for the period:
Depreciation	532	466
Financial items	-93	-30
Income taxes paid	0	0
Net cash before changes in working capital	1,159	915
Changes in working capital
Change in short term receivables, non-interest bearing	-1,180	-51
Change in short term liabilities, non-interest bearing	984	196
Change in long-term receivables, non-interest bearing	-21	0
Change in working capital	-217	145
Net cash from operating activities	942	1,060
Cash flows from investing activities
Purchases of intangible assets	-305	-932
Purchases of tangible assets	-30	-38
Net cash used in investing activities	-335	-970
Cash flows from financing activities
Proceeds from long-term loans	0	1,132
Repayments of long term borrowings	-305	-217
Proceed of issuance of share capital	0	11
Purchase of own shares	-66	-84
Increase of subsidiaries shares	-6	-3
Invested non-restricted equity fund distribution	-122	-244
Dividends paid	-244	-368
Net cash used in financing activities	-742	227
Net change in cash and cash equivalents	-135	317
Cash and cash equivalents at the beginning
of the period	1,685	1,368
Cash and cash equivalents at the end of period	1,550	1,685

Accounting principles for parent company financial statements

QPR Software Plc's financial statements from 2010 have been prepared according to the Finnish GAAP. The Group has started reporting according to the IFRS from 1 January, 2005.

Revenue recognition

The net sales of the parent company are generated through the following sales revenue: sale of software licenses, software updates, and sales of maintenance and consulting services.

Net sales of software licenses are recognized in connection with the delivery. Maintenance income covering software updates and customer support is recognized on a payment basis during the agreement period. Consulting services are recognized upon service delivery.

Net sales include sales of software licenses and services rendered less adjusted indirect taxes, exchange rate differences as well as discounts granted.

Transaction in foreign currency

Transactions in foreign currencies are recorded in operating currency using the exchange rate at the date of the transactions. Exchange rate differences have been entered in the respective items above operating profit.

Receivables and liabilities in foreign currencies are recorded in operating currency using the exchange rates quotes by the European Central Bank on 31 December, 2010.

Exchange rate differences derived from financial item are recognized in net amount in financial income and expenses.

Other operating income

Any public subsidy acquired is recognized in the profit or loss for the financial period under other operating income, expect when they arise from investments, in which case they reduce the acquisition cost.

Research and development expenditures

Research and development costs are capitalized in the balance sheet when the product is technically and commercially feasible and is expected to yield income.

Capitalized development expenses are depreciated in four (4) years. Research expenses are recognized as expenses during the financial year.

Pension expenses

The pension obligations of QPR Software Plc are recognized as an expense in the income statement of the financial statement in the period during which they arise.

Tangible assets

Tangible assets are valued at acquisition costs less deprecation according to plan. The assets are depreciated on the basis of their estimated economic lifetimes. The estimated economic lifetimes for machinery and equipment are 2–7 years.

Intangible assets

Other intangible assets with a limited economic life are recorded in the balance sheet less straight-line amortization in the income statement during the economic lifetime. The estimated economic life of other intangible assets is 2–5 years.

Leasing

In the Financial Statements for the parent company, leasing costs are recognized as annual expense in accordance with Finnish GAAP.

Cash and cash equivalents

Cash and cash equivalents include liquid cash, bank deposits and marketable securities.

Taxes

Income taxes are recognized in accordance with the Finnish tax regulation. A deferred tax asset is recognized to the extent it is considered probable that there will be future taxable profit against which the loss or credit carry forwards can be utilized.

Parent Company Notes Financial Statement, FAS

1. Net sales

Parent company's net sales are accrued solely from software business, with following break-down in financial year:

(EUR 1,000)	2010	2009
Software licenses	1,647	2,326
Maintenance services	3,648	3,066
Professional services	1,064	886
Total	6,359	6,278

The geographical break-down of the net sales was as follows:

(EUR 1,000)	2010	2009
Domestic	2,861	2,783
Sales to Group companies	393	72
International	3,105	3,423
Total	6,359	6,278

2. Other operating income

(EUR 1,000)	2010	2009
Government grants	94	35
Other operating income	0	0
Total	94	35

3. Materials and services

(EUR 1,000)	2010	2009
Materials and services	208	406
Total	208	406

Materials and services include mainly commissions and localization fees charged by the reseller network.

4. Employee benefits expenses

(EUR 1,000)	2010	2009
Salaries	3,155	2,933
Pension expenses	555	478
Other personnel expenses	159	113
Total	3,869	3,524
Salaries, fringe benefits, termination compensation and accruals of CEO
Jaakkola Jari	171	179
Total	171	179

Board fees by member:
Leskinen Vesa-Pekka, Chairman of the Board	25	25
Piekkola Asko	17	17
Gerdt Aino-Maija, from March 18, 2010	13	0
Laine Antti, from March 18, 2010	13	0
Niemi Jarmo, until March 18, 2010	4	17
Kontio Jyrki	17	17
Piela Topi, until March 18, 2010	4	17
Total	93	93

Average number of personnel	2010	2009
Total	57	57

5. Depreciation

(EUR 1,000)	2010	2009
Depreciation by group of assets
Intangible assets
Other intangible assets	434	347
Total	434	347
Tangible assets
Machinery and equipment	98	119
Total	98	119
Total	532	466

6. Other operating expenses

(EUR 1,000)	2010	2009
Non-statutory indirect employee costs	220	202
Travel expenses	159	146
Marketing and other promotion	165	148
Bad debts	132	66
Other operating expenses	448	876
Total	1,124	1,438

Income statement included auditing and consultancy expenses

(EUR 1,000)	2010	2009
Auditing	35	37
Tax consultation	2	2
Other services	3	5
Total	40	44

7. Financial income and expenses

(EUR 1,000)	2010	2009
Interest income	21	20
Interest expense	-30	-20
Other financial expenses	-19	-23
Exchange rate difference	-65	-13
Total	-93	-36

8. Income taxes

(EUR 1,000)	2010	2009
Deferred tax	-171	-126
Total	-171	-126

9. Intangible assets

(EUR 1,000)	Computer software	2010	2009
Acquisition costs January 1.		616	471
Increase		33	145
Acquisition costs December 31.		649	616

Accumulated depreciations and amortization January 1.		395	316
Depreciation		84	79
Accumulated depreciations and amortization December 31.		479	395

Book value January 1.		221	155
Book value December 31.		170	221

	Capitalized product
(EUR 1,000)	development costs	2010	2009
Acquisition costs January 1.		783	609
Increase		272	174
Acquisition costs December 31.		1,055	783

Accumulated depreciations and amortization January 1.		314	149
Depreciation		190	165
Accumulated depreciations and amortization December 31.		504	314

Book value January 1.		469	460
Book value December 31.		551	469

(EUR 1,000)	Other intangible assets	2010	2009
Acquisition costs January 1.		1,132	463
Increase		0	669
Decrease		-197
Acquisition costs December 31.		935	1,132

Accumulated depreciations and amortization January 1. 102 0 Depreciation 160 102 Accumulated depreciations and amortization December 31. 262 102

Book value January 1. 1,030 463 Book value December 31. 673 1,030

Total intangible assets December 31. 1,394 1,720

10. Tangible assets

(EUR 1,000)	2010	2009
Acquisition costs January 1.	980	942
Increase	31	38
Acquisition costs December 31.	1,011	980
Accumulated depreciations and amortization January 1.	835	716
Depreciation	98	119
Accumulated depreciations and amortization December 31.	933	835
Book value January 1.	145	226
Book value December 31.	78	145

Total tangible assets December 31.	78	145
11. Investments
Shares, Group company (EUR 1,000)	2010	2009
Acquisition costs January 1.	188	185
Increase	5	3
Acquisition costs December 31.	194	188
Book value December 31.	193	188
Shares, other
Acquisition costs January 1.	5	5
Acquisition costs December 31.	5	5
Book value December 31.	5	5
Total investments December 31.	198	193

Group companies	2010	2009
QPR Software Ab (Halmstad, Sweden)*	0%	0%
QPR Software Inc. (San Jose, CA, USA)	100%	100%
QPR CIS Oy (Helsinki, Finland)**	80%	100%
Sopimuspankki Oy (Helsinki, Finland)	60%
QPR Software OOO (Moscow, Russia)***
QPR Service Oy (Helsinki, Finland)	100%	100%
*QPR Services Oy owns 100% of QPR Software AB.

**QPR CIS Oy established October 29, 2009

***QPR OOO Oy established December 31, 2009, owned 100% by QPR CIS Oy

12. Long-term receivables

(EUR 1,000)	2010	2009
Deferred tax assets	229	400
Other long term deferred assets	22	0
Withholding tax receivables	21	0
Total	272	400

Parent company has retained losses, for which has been made the deferred tax asset.

13. Short-term receivables

(EUR 1,000)	2010	2009
Trade receivables	2,553	1,958
Other receivables - Group companies	739	270
Other short-term receivables	188	51
Accrued income	327	383
Total	3,807	2,662
Accrued income includes:
Pension insurance receivables	217	217
Other accrued income	3	66
Other accrued expenses	107	100
Total	327	383
Break-down Group receivables:
Other receivables
QPR CIS Oy	466	1
QPR Services Oy	273	269
Total	739	270
14. Cash and cash equivalents

(EUR 1,000)	2010	2009
Bank and cash	1,550	1,685
Total	1,550	1,685

15. Shareholders' equity

(EUR 1,000)	2010	2009
Shareholders' equity
Restricted equity
Share capital January 1.	1,359	1,359
Shares issued	0	0
Share capital December 31.	1,359	1,359
Total Restricted equity December 31.	1,359	1,359
Non-restricted equity
Invested non-restricted equity fund January 1.	127	360
Shares issued	0	11
Invested non-restricted equity fund paid	-122	-244
Invested non-restricted equity fund December 31.	5	127
Retained earnings January 1.	830	965
Profit for the period	443	317
Dividend distribution	-244	-368
Own shares	-66	-84
Retained earnings December 31.	963	830
Total Non-restricted equity	968	956
Total shareholders' equity December 31.	2,328	2,315
Own shares January 1.	-209	-125
Increase	-66	-84
Own shares December 31.	-275	-209
Distributable funds
Retained earnings	795	721
Profit for the period	443	317
Own shares	-275	-209
Invested non-restricted equity fund	5	127
Total	968	956

16. Liabilities

(EUR 1,000) 2010 Non-current liabilities	2009

Loans from financial institutions and other loans 566	1,253
Total 566	1,253
Current liabilities
Loans from financial institutions and other loans 226	305
Trade payable 313	386
Other short-term liabilities 587	178
Accrued expenses 1,743	1,261
Received advance payments 868	795
Other short-term liabilities - Group companies 668	312
Total 4,405	3,237

Accrued expenses
Holiday pay including social costs 462	445
Bonuses including social cots 149	165
Other accrued income 1,067	588
Accrued interest expenses 6	7
Other accrued expenses 59	56
Total 1,743	1,261
Other short-term liabilities - Group companies
QPR Software Inc. 331	57
QPR CIS Oy 32	0
QPR Software AB 305	255
Total 668	312
Rental liabilities
Current rental liabilities 211	198
Rental liabilities maturing later years 35	242
Leasing liabilities
Current lease liabilities 25	24
Lease liabilities maturing later years 18	19
Total commitments and contingent liabilities 289	483
	1,337

*Business mortgages EUR 1,337 thousand are in Nordea as a security for pension loan from Ilmarinen.

The parent company has no financial derivates.

Date and signatures of Board of Directors' Report and Financial Statements

Helsinki, Finland February 18th, 2011.

QPR Software Plc Board of Directors

Vesa-Pekka Leskinen Aino-Maija Gerdt Chairman of the Board Board member

Jyrki Kontio Antti Laine

Board member Board member

Asko Piekkola Jari Jaakkola

Board member Chief Executive Officer

Auditor's note

An auditor's report concerning the performed audit has been given to date.

In Helsinki, Finland, February 18th, 2011.

KPMG Oy Ab Autohorized Public Accountant Firm

Sixten Nyman Authorized Public Accountant

Auditor's Report

To the Annual General Meeting of QPR Software Plc

We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of QPR Software Plc for the year ended 31 December, 2010. The financial statements comprise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.

Responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion on the consolidated financial statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the company's financial statements and the report of the Board of Directors

In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.

Opinion on discharge from liability and distribution of profit

We support the adoption of the financial statements. The proposal by the Board of Directors regarding the treatment of distributable funds is in compliance with the Limited Liability Companies Act. We support that the Board of Directors of the parent company and the Managing Director be discharged from liability for the financial period audited by us.

Helsinki 18 February, 2011

KPMG OY AB

Sixten Nyman

Authorized Public Accountant

Information to Shareholders

The share of QPR Software Plc

The share of QPR Software Plc is quoted on the main list of the NASDAQ OMX Helsinki Ltd, in the Information technology sector, Small Cap segment. The trading started on March 8, 2003.

Trading code: QPR1V
ISIN code: FI0009008668

Annual Shareholder's Meeting

The Annual Shareholders' Meeting will be held on Friday 18 March, 2011 starting at 1:00 p.m. at the Company's headquarters Huopalahdentie 24, 00350 Helsinki, Finland.

A shareholder of the Company that has been entered into the Company's shareholders' register maintained by the Euroclear Finland Oy on 8 March, 2011 has the right to participate in the Shareholders' Meeting.

The shareholder willing to participate in the Shareholders' Meeting shall report the company of the participation on 10 March, 2011, at 4.00 p.m. at the latest, in writing to the address QPR Software Plc, Huopalahdentie 24, 00350 Helsinki, by phone to the number +358 50 436 1658, or by email to the address [email protected].

The letter or message of participation shall be at the destination prior to the expiry of the registration period. The possible proxies are asked to be delivered in connection with the registration to the address set forth above.

Shareholders, who hold their shares under a name of a nominee, can temporarily be registered to the

Register of Shareholders in order to attend the Meeting. The registration need to be entered into the Register of Shareholders of QPR Software on 8 March, 2011, the record date of the Meeting. A holder of nominee registered shares is advised to request necessary instructions regarding the registration in the shareholder's register of the Company, the issuing of proxy documents and registration for the General Meeting from his/her custodian bank.

Dividend

The Board of Directors proposes to the General Annual Meeting that a dividend of EUR 0.03 per share fund to be paid to shareholders for financial year 2010. The Board of Directors proposes to the General Annual Meeting that dividend shall be paid on 1 April, 2011.

Financial information in 2011

In 2011, QPR Software Plc will publish its financial information as follows:

Interim Report 1-3/2011: Wednesday, April 27
Interim Report 1-6/2011: Thursday, July 28
Interim Report 1-9/2011: Thursday, October 20

The interim reports and all stock exchange bulletins of QPR Software Plc are available on the Investor pages of Company's Internet pages, www.qpr.com.

Changes of addresses

If the address of a shareholder changes, we request to contact the custodian bank holding shareholders, book-entry account.

Our customers

QPR software is used by 1 500 customers around the world from the private as well as the public sector. Customer organizations systematically develop with them their processes and performance. Customers may also use software to comply with requirements set by regulation and standards (e.g. quality or environment) or to manage operational changes related to these. QPR Software is localized to 26 languages. During 2010 the Company sold software licenses to 60 countries.

Some of our international customers:

Abu Dhabi Distribution Company (ADDC)
Anheuser-Busch InBev
Advanced Electronics Company Ltd
African Bank
Areva
Armos Gazprom
AVL LIST GmbH
Banco General Rumiñahui S.A.
Barnsley Metropolitan Borough Council
Belgocontrol
BERCUT
BKKBN Badan Koordinasi Keluarga Berencana Nasional
Bosch
Robert Bosch GmbH
Botswana Water Utilities Corporation
Brasil Telecom
BSH Ev Aletleri Sanayi ve Ticaret A.S.
Cardiff Bus Company
Centers for Disease Control and Prevention, COTPER
Central Lancashire PCT
Českomoravská stavební spořitelna
City of Moscow
CNAV Caisse nationale

d'assurance vieillesse

Comision Federal de Electricidad,
Distribution
Golfo Norte CNOOC SES
Commercial Bank of Dubai
Commerzbank (Schweiz) AG
Danish Defence
DHL
Die Schweizerische Post
Dubai Aluminium Company Limited (DUBAL)
Eandis CVBA
East Trade EOOD
ECONICA
EDS
Emirates Post Group Holding
Ernst & Young Abu Dhabi
Fakultná
nemocnica Trnava GBES
Gesundheitsnetz Wallis (GNW)
Gold-Pak
Gulf Agency
Company (Qatar) Hatch Africa
Pty Ltd Hewlett Packard
Centre De Competences France
Hewlett-Packard
Höörs Kommun
Inkript Holding
Insel Spital Bern
IRKUT
Karachaganak Petroleum Operating
Kazzinc
Landstinget i Östergötland
Latvijas valsts meži
LEK
Lusitania, Companhia Seguros, SA
Maeda Road Construction CO., Ltd.
Mars Information Services
Merafong
Municipality
MetroNet Ministry of Finance Bulgaria
Ministry of Foreign Affairs (Slovakia)
Ministry of Justice of the Republic of Latvia
MTS OAO Mobilnye Telesystemy
Namakwa sands
Nampak
National Bank Of Abu Dhabi
NCCI
NEC Corporation, IT Platform Planning Division
NEC Software Ltd
NESTLE
Nextel
Telecomunicacoes Ltda
Nissha Printing
North Lanarkshire Council
ONEOK
Petroleo Brasileiro S.A.-Petrobras

56 2010 QPR – Quality. Processes. Results

Pfizer Health AB
Prezioso
Rentokil Initial A/S
San Diego County Regional Airport Authority
SIBUR
Sipahiler Turizm ve Organizasyon
Slavneft
Sonangol E.P South African
Airways State Patients
Fund at the Ministry of Health Lithuania
Swisscom AG
TACA International Airlines, S.A. Grupo TACA
Taifook Securities Group Limited
The Grass Roots Group UK Ltd
The Standard Bank of South Africa Limited
Trenciansky samospravny kraj

T-Systems on site Services GmbH Umeå Kommun United Finance Company, SAOG University of Pannonia Urzad

Marszalkowski w

VSMPO - AVISMA

Götalandsregionen

Lodzi Vattenfall AB Vetlanda kommun, Kommunledningsförvaltningen

WIND

Västra

TNK-BP TrendGlobe

Some of our customers in Finland:

Aalto University
Abloy
Alma Media
Altia
Amiedu School of Applied Sciences
Anttila
Arla Ingman
Atria
Barona
Carea
Cargotec
Enfo
Etelä-Karjala health and social services district
Etelä-Pohjanmaa health care district
Etelä-Savo health district
Evli Bank
Finnish Medicine Agency, FIMEA
Finnish Communications Regulatory Authority
Finnish Defence Forces
Finnish Defence University
Finnish National Board of Education
Finnish State Treasury
Finnritilä
Finnvera
Fira
Fortum
Gustav Paulig
Hansaprint
Heinola City
Helsinki and Uusimaa health care district
Helsinki School of Economics
Helsinki University
HKScan
Hyriä School of Applied Sciences
Häme School of
Applied Sciences Ilmarinen
Imatra City
Ingman
Isku
Jyväskylä
University
Järvenpää City
Kanta-Häme
health care district
Kastelli-Talot
Kemira
Kerava City
Keski-Pohjanmaa health care district
Kesko
Kirjavälitys
Kolster
Kuopio City
Kuopion University Lappi health care
district
Lappi University Laurea School of Applied Sciences
Lindorff
Lohja City
Lujatalo
Mediq Suomi
Metropolia
School of Applied Sciences
Metso
Metsä-Botnia
Ministry of Employment and Economy
National Audit Office of Finland
Neste Oil
Oilon
Onninen
Oriola-KD
Oulun City
Oulu Region Edcuational Group
Oulu University
Outokumpu
Outotec
Patria
Peab
Peikko Group
Pirkanmaa
health care district
Pohjois-Pohjanmaa health care district
Pohjois-Savo health care district
Pohjola Bank
Posiva
Pretax
Päijät-Häme
Educational Group
Päijät-Häme health care and social services district
QuattroGemini
Raisio
Ramboll
Rautaruukki
Regional State Administrative Agencies

57 2010 QPR – Quality. Processes. Results

Rovaniemi
Educational Group
Samlink
Satakunta School of Applied
Sciences Satakunta health care district

Tampere School of Applied Sciences

Turku School of Applied Sciences Turku City Vaasan & Vaasan Vaasa City Vaasa University

Savon Voima Sibelius Academy

Sato

Skanska Sodexo Solteq SRV StoraEnso Suomen Lähikauppa Suunto

Tecwill Tekes Teollisuuden Voima Transmeri Tulikivi

Vacon Valio Varkaus City Visma Software

We help people and organizations to take control of their processes and achieve their goals.

AI assistant

QPR Software Oyj — Annual Report 2010

3334_10-k_2011-02-25_e53a80d5-d115-4253-bb7a-f2c5d350673e.pdf

Ladislav Pásztor,

Matti Nuutinen

Heikki Salusjärvi

Sevilay Balci

Content Page

QPR in Brief

Mission, Vision, Values

Easy to use and implement software products

QPR is also service!

Global reach through partner network

Net Sales 2006−2010 (EUR 1,000)

Recognitions to QPR Software in 2010

QPR is certified Quality!

Key Figures 2008−2010

Message from the CEO

Board of Directors

Vesa-Pekka Leskinen

Aino-Maija Gerdt (b. 1955)

Jyrki Kontio

Antti Laine

Asko Piekkola

Executive Management Team

Jari Jaakkola

Antti Ainasoja

Matti Erkheikki

Jyrki Karasvirta

Teemu Lehto

Päivi Martti

Tony Virtanen

Report of the Board of Directors January 1 – December 31, 2010

BUSINESS OPERATIONS

NET SALES

Breakdown of net sales

Group net sales by geography

FINANCIAL PERFORMANCE

BUSINESS SEGMENTS

Software Sales International

Software Sales Finland

Service and Solutions

FINANCE AND INVESTMENTS

Consolidated net sales by business segment:

R&D expenditure of net sales, %

PRODUCT AND SERVICES DEVELOPMENT

Consolidated operating profit by business segment:

PERSONNEL

Personnel at the end of the period

SHARE CAPITAL, COMPANY SHARES AND STOCK OPTION PROGRAMS

Own shares

Distribution of QPR shareholders' by holdings size, 31 December, 2010

Distribution of QPR shareholders' by sector, 31 December, 2010

OPTION SCHEMES

ACQUISITIONS

STRATEGY

GOVERNANCE

Decisions made by the General Annual Meeting

MANAGEMENT AND AUDITORS

AUTHORIZATIONS OF THE BOARD OF DIRECTORS

INTERNAL CONTROL

RISK MANAGEMENT

Risks related to business operations

Risks related to information and products

Risks related to financing

Risks related to Business Operations Russia

SHARES HELD BY THE BOARD AND CEO

LEGAL DISPUTES

EVENTS AFTER THE REPORTING PERIOD

Major shareholders, 31 December 2010

FUTURE OUTLOOK

THE BOARD OF DIRECTORS' PROPOSAL ON DIVIDEND

Consolidated Income Statement, IFRS

Consolidated Balance Sheet, IFRS

Consolidated Cash Flow Statement, IFRS

Consolidated Statement of Changes in Shareholders' Equity, IFRS

Accounting Principles of Consolidated Financial Statements, IFRS

Company information

Accounting principles

Principles of consolidation

QPR Software Oyj Annual Report 2010