TECNOMEN INTERIM REPORT 1 JANUARY - 30 J
Tecnomen Corporation STOCK EXCHANGE RELEASE
13 August 2003 at 8.30 a.m.
TECNOMEN INTERIM REPORT 1 JANUARY - 30 June 2003
Tecnomen increased its net sales 15.7 per cent on the corresponding
period in the previous year and reduced its loss. During the period
Tecnomen supplied voice mail, multimedia and prepaid systems to
several existing and new customers, reinforcing its market standing.
The cash flow in the second quarter was positive.
SUMMARY, APRIL-JUNE
- Operating result EUR -0.8 (-5.6) million
- Net sales EUR 11.6 (8.2) million, increase 41.5%
- Order book EUR 6.9 (9.1) million
- Cash flow positive, EUR 0.6 (-4.2) million
- Cash funds EUR 34.3 (34.6) million
- Equity ratio 89.3% (89.0%)
KEY FIGURES
4-6/03 4-6/02 1-6/03 1-6/02 2002
Net sales, MEUR 11.6 8.2 19.2 16.6 39.9
Net sales, change % 41.5 -18.6 15.7 -34.0 -30.2
Operating result, MEUR -0.8 -5.6 -4.6 -10.9 -14.1
% of net sales -7.6 -67.9 -24.2 -65.9 -35.5
Result before -0.6 -5.5 -4.3 -10.8 -14.6
extraordinary items,
appropriations and taxes,
MEUR
% of net sales -5.2 -67.0 -22.6 -64.9 -36.7
Personnel at end of 444 554 444 554 457
period
Earnings per share, EUR -0.01 -0.10 -0.08 -0.19 -0.25
Equity per share, EUR 1.18 1.31 1.18 1.31 1.26
Net interest-bearing -32.8 -33.7 -32.8 -33.7 -33.8
liabilities, MEUR
Unless otherwise stated, all figures presented below are for the
review period 1-6/2003 and the figures for comparison are from the
corresponding period 1-6/2002.
MARKETS
During the period no clear changes took place in the
telecommunications market from the situation at the start of the
period. Intensifying competition increased the pressure on system
prices, especially with new customers. Consolidation among companies
in the sector has continued as the business environment changes.
SALES AND NET SALES
Despite the continuing uncertainty in the market, Tecnomen increased
its net sales both from the corresponding period in the previous year
and compared to the previous quarter. Tecnomens net sales in the
review period rose 15.7 per cent to EUR 19.2 (16.6) million. The
companys net sales in the second quarter totalled EUR 11.6 (8.2)
million, or 41.5 per cent higher than the year before. At the end of
June the companys order book stood at EUR 6.9 (9.1) million.
The result during the review period was weakened by the rise of some
20 per cent from last year in the average exchange rate for the euro
against the US dollar. More than a third of Tecnomens invoicing is in
dollars or in currencies that are tied to the dollar. Tecnomen hedges
against exchange rate risks for the coming 12 months using currency
derivatives.
Net sales by business unit were as follows:
1-6/2003 1-6/2002
MEUR % MEUR %
Messaging Solutions 12.2 64 10.9 66
Intelligent Networks Systems 4.9 25 3.0 18
Paging Systems 2.1 11 2.7 16
Total net sales and their distribution among the different business
units vary greatly from one quarter of the year to another, as a
result of the timing of project deliveries.
During the review period, Tecnomen signed several contracts to supply
voice mail, unified messaging and multimedia systems to existing and
new customers.
Regionally Tecnomens sales rose most in East and South-East Asia,
where interest in multimedia services and new messaging systems
increased. Net sales in Europe comprised mainly deliveries of
messaging and paging systems. In Latin America the company supplied
several voice mail systems and updates for them to the subsidiaries of
the Telecom Américas group in Brazil.
Maintenance and service sales in total accounted for some 20.7 per
cent (24.4%) of net sales. In 2002, maintenance and service in total
accounted for 20 per cent of net sales.
Sales through global partners totalled some EUR 2.1 million or 10.9%
(11.2%) of net sales.
OPERATING RESULT
Thanks to the rise in net sales and the cuts in costs carried out, the
companys loss declined. The operating result for the review period
was EUR -4.6 (-10.9) million. The operating result in the second
quarter was EUR -0.8 (-5.6) million. Costs include a provision of EUR
0.3 million against credit losses.
The result for the period before extraordinary items, appropriations
and taxes was EUR -4.3 (-10.8) million.
Earnings per share were EUR -0.08 (-0.19). Equity per share at the end
of the period was EUR 1.18 (1.31).
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets were EUR 34.3
(34.6) million. The balance sheet total on 30 June 2003 stood at EUR
77.2 (86.1) million. The cash flow in the period under review was EUR
-0.4 (-6.5) million. The cash flow in the second quarter was EUR 0.6
(-4.2) million. Interest-bearing liabilities amounted to EUR 1.5 (1.0)
million. The debt to equity ratio (gearing) was -48.2 per cent
(-44.1%). The balance sheet structure remained strong and the equity
ratio on 30 June 2003 was 89.3 per cent (89.0%).
Financial income and expenses during the review period totalled EUR
0.3 (0.2) million. Interest and investment income was EUR 0.4 (0.6)
million.
Tecnomens gross capital expenditure during the review period was EUR
1.2 (1.2) million. The most significant investment was the acquisition
of the entire share stock of Helsinki-based Krocus Communications Oy,
which develops messaging system technology. The steps for merging
Krocus Communications Oy with Tecnomen Corporation have been started
in accordance with the plan for the project and on 24 June 2003 the
companies Boards of Directors signed the merger plan. The planned
date for registering the completion of the merger is 30 November 2003.
Krocus Communications Oy has been consolidated into the group from the
date of acquisition. Consolidation did not have a significant impact
on the groups consolidated result.
RESEARCH AND DEVELOPMENT
R&D costs during the review period were EUR 4.7 (5.7) million,
corresponding to 24.4 per cent (34.6%) of net sales. R&D related costs
have been recorded directly as costs.
Tecnomen is focusing its efforts on its next generation messaging
system platform and seeks to reinforce its position as a supplier of
next generation IP (Internet Protocol)-based value-added service
systems. The company aims to be a strong partner enabling operators to
provide the packaged messaging services of the future.
Development work continued on prepaid systems. New standards supported
by the Tecnomen system included CAMEL phase 2. The functions of CAMEL
2 make it possible to create value-added services for individual
operators and to use them when outside the home network.
PERSONNEL
At the end of the second quarter of 2003, Tecnomen employed 444 (554)
people worldwide. The average number of personnel during the period
under review was 440 (556).
TECNOMEN SHARES AND SHARE CAPITAL
At the end of June 2003 the shareholders' equity of Tecnomen
Corporation stood at EUR 68.1 million and the share capital was EUR
4,647,406.24, divided into 58,092,578 shares. The company held 400,000
of these shares. The equity per share was EUR 1.18.
A total of 9,687,500 Tecnomen shares (EUR 4,413,372) were traded on
the Helsinki Exchanges during the period 2 January - 30 June 2003, or
16.7 per cent of the total number of shares. The highest share price
quoted in the period was EUR 0.58 and the lowest was EUR 0.39. The
average quoted price was EUR 0.46 and the closing price on 30 June
2003 was EUR 0.52. The share stock had a market value of EUR
30,208,141 at the closing price.
CURRENT AUTHORISATIONS
At the end of the review period Tecnomens Board of Directors held the
following current authorisations granted by the Annual General Meeting
on 25 March 2003:
1. Authorisation to decide to purchase the companys own shares such
that, including the shares already in the possession of the company,
the shares purchased shall have a total nominal value that
represents at most 5 per cent of all the companys current share
capital and associated rights, using funds available for the
distribution of profit.
2. Authorisation to decide to dispose of the companys own shares
already in the possession of the company and any acquired under
the authorisation given to the Board.
3. Authorisation to decide to increase the share capital by issuing
new shares, convertible bonds and/or stock options in one or more
issues. The number of new shares through share issuance or
subscription of shares in exchange for convertible bonds or
pursuant to the stock options may be at most 7,518,515 shares,
and the company's share capital may rise by at most a total of
EUR 601,481.20.
The authorisations given to the Board of Directors are effective for
one year from the decision of the Annual General Meeting of
Shareholders.
STOCK PROGRAMME
The company has a current 2002 stock option programme approved by the
Annual General Meeting of Shareholders on 11 April 2002, which is
divided into four stock option series, the 2002A, 2002B, 2002C and
2002D stock options. A total of 4,100,000 stock options may be issued
that entitle holders to subscribe to a total of 4,100,000 Tecnomen
Corporation shares. As a result of subscriptions with the 2002 stock
options, the company's share capital can rise by a maximum of EUR
328,000. According to the option programme, the share subscription
price for stock option 2002C is the Tecnomen trade volume weighted
average share price on the Helsinki Exchanges between 1 March and
31 March 2003, ie. 0.46 euros. The subscription period for the 2002A
stock options started on 1 April 2003. During the review period no
share subscriptions have been made with the 2002A stock options.
SUBSEQUENT EVENTS
Tecnomens chief executive officer, Mr. Vesa Helkkula, resigned from
this position as of 1 August 2003. Mr. Helkkula continues to act on
special commissions for Tecnomens Board. Mr. Ilpo Uotila, the
managing director of Covar Oy, a company providing management and
consulting services, was appointed interim CEO of the company as of
today. He will perform the duties of Tecnomens CEO until the new CEO
has been appointed.
FUTURE OUTLOOK
Developments in the telecommunications market are still not showing
any signs of improvement. Investments by operators have remained low.
The company estimates that the fluctuation in sales from quarter to
quarter will continue. Negotiations are underway concerning several
deliveries that would take place towards the end of 2003.
Tecnomen is continuing its action to improve its operating result and
cash flow. At the start of the summer the company initiated a project
to examine its strategy, with the goal of ensuring that operations are
profitable even in weak market conditions.
SCHEDULE FOR PUBLISHING FINANCIAL INFORMATION
The figures for the third quarter of 2003 will be published on
Wednesday, 29 October 2003.
TECNOMEN CORPORATION
Board of Directors
FURTHER INFORMATION
Lauri Ratia, Chairman of the Board, tel. +358 50 2922
Ilpo Uotila, CEO, tel. +358 400 301 327
Riitta Järnstedt, CFO, tel. +358 (0)9 804 781
DISTRIBUTION
Helsinki Exchanges
Main media
CONSOLIDATED INCOME STATEMENT
MEUR 1-6/03 1-6/02 2002
Net sales 19.2 16.6 39.9
Operating expenses 22.2 25.8 50.6
Depreciation 1.6 1.7 3.4
Operating result -4.6 -10.9 -14.1
% of net sales -24.2 -65.9 -35.5
Financial income and 0.3 0.2 -0.5
expenses
Result before -4.3 -10.8 -14.6
extraordinary items
Result before taxes and -4.3 -10.8 -14.6
minority interest
Taxes 0.0 0.0 0.3
Result for the period -4.4 -10.8 -14.3
CONSOLIDATED BALANCE SHEET
MEUR 30.6.03 30.6.02 31.12.2002
Fixed assets 11.1 12.1 11.4
Current assets
Inventories 2.6 4.8 3.6
Financial assets 63.6 69.2 66.3
Assets 77.2 86.1 81.3
Shareholders equity 68.1 76.3 72.5
Liabilities
Interest-bearing 1.5 1.0 0.9
liabilities
Non-interest bearing 7.7 8.6 7.9
liabilities
Deferred tax 0.0 0.2 0.0
liabilities
Equity and liabilities 77.2 86.1 81.3
CONSOLIDATED CASH FLOW STATEMENT
MEUR 1-6/03 1-6/02 2002
Cash flow, business operations 0.4 -4.9 -3.8
Cash flow from investments -0.7 -1.1 -2.2
Cash flow from financing -0.1 -0.5 -0.4
Increase (+) and decrease (-) in -0.4 -6.5 -6.4
liquid funds
Liquid funds on 1 Jan. 34.7 41.1 41.1
Liquid funds on 30 June 34.3 34.6 34.7
Change -0.4 -6.5 -6.4
KEY FINANCIAL FIGURES
MEUR 1-6/03 1-6/02 2002
Return on investment, % -12.0 -25.9 -18.0
Return on equity, % -12.4 -26.3 -17.9
Equity ratio, % 89.3 89.0 90.1
Debt/equity ratio -48.2 -44.1 -46.6
(gearing), %
Investments 1.2 1.2 2.2
% of net sales 6.1 7.2 5.5
Research and development 4.7 5.7 11.2
% of net sales 24.4 34.6 28.0
Order book 6.9 9.1 10.4
Personnel, average 440 556 520
Personnel, at end of 444 554 457
period
KEY FIGURES PER SHARE
MEUR 1-6/03 1-6/02 2002
Earnings per share, EUR -0.08 -0.19 -0.25
Equity per share, EUR 1.18 1.31 1.26
Number of shares at end 58,093 58,093 58,093
of period, x 1,000
Number of shares on 58,093 58,093 58,093
average, x 1,000
Share price, EUR
Average price 0.46 1.47 0.97
Lowest price 0.39 0.87 0.49
Highest price 0.58 2.10 2.10
Share price at end of 0.52 0.88 0.51
period
Market value of issued 30.2 51.1 29.6
stock at end of period,
MEUR
Share turnover, million 9.7 9.9 24.3
shares
Share turnover, % of 16.7 17.1 41.8
total
Share turnover, MEUR 4.4 14.6 23.6
CONTINGENT LIABILITIES
MEUR 1-6/03 1-6/02 2002
For own debts
Mortgages 0.7 0.7 0.7
Pledges given to cover
other own commitments
Mortgages 1.3 0.6 1.3
Chattel mortgages 0.2 0.2 0.2
Other own liabilities 2.2 4.5 2.6
Derivative contracts
Current forward
contracts
Market value 13.1 14.6 11.0
Value of underlying 13.7 14.5 11.9
instrument
Currency options
Market value 0.9 1.1 0.0
KEY FIGURES PER QUARTER
1Q/02 2Q/02 3Q/02 4Q/02 1Q/03 2Q/03
Net sales, MEUR 8.4 8.2 12.7 10.6 7.6 11.6
Net sales, change % -44.3 -18.6 -2.3 -44.2 -9.2 41.5
Operating result, MEUR -5.4 -5.6 -0.3 -2.9 -3.8 -0.8
% of net sales -64.0 -67.9 -2.2 -27.7 -49.5 -7.6
Result before -5.3 -5.5 -1.3 -2.6 -3.7 -0.6
extraordinary items,
appropriations and taxes,
MEUR
Personnel at end of period 558 554 473 457 436 444
Earnings per share, EUR -0.09 -0.10 -0.02 -0.04 -0.06 -0.01
Equity per share, EUR 1.41 1.31 1.30 1.26 1.19 1.18
Net interest-bearing -37.8 -33.7 -32.7 -33.8 -32.8 -32.8
liabilities, MEUR
The financial figures in the balance sheet, income statement and key
indicators have been rounded up or down to the nearest million euro.
Calculations based on these rounded figures may not give exactly the
same results as those presented in this release, since the figures
shown here have been calculated using exact values.
The figures are not audited.
SHAREHOLDERS
The companys ten largest shareholders, excluding nominee
registrations, on 30 June 2003:
No. of %
shares
Henki-Sampo Insurance Fund 3,083,400 5.31
Hammaren Lars-Olof 2,164,300 3.73
Sumelius Henning 2,022,300 3.48
Oy Finvestock AB 2,003,600 3.45
Geveles AB 1,952,092 3.36
Fennogens Investments SA 1,535,000 2.64
Sumelius Johanna Marina 1,122,400 1.93
Oy Investsum AB 954,100 1.64
Estate of Suutarinen Helena 901,200 1.55
deceased
Gyllenberg Small Firm Fund 833,575 1.43
TOTAL 16,571,967 28.52
Ownership of Tecnomen shares, 30 June 2003
Shares Holders % Shares and %
votes
1-500 3,489 52.47 767,297 1.32
501-1,000 1,079 16.23 830,272 1.43
1,001-5,000 1,370 20.60 3,236,219 5.57
5,001-10,000 300 4.51 2,279,243 3.92
10,001-50,000 261 3.92 5,911,875 10.18
50,001-100,000 47 0.71 3,283,869 5.65
100,001-500,000 87 1.31 18,722,320 32.23
500,001< 17 0.26 23,023,883 39.63
Joint account 37,600 0.06
Total 6,650 100.00 58,092,578 100.00
Ownership structure by sector, 30 June 2003
No. of %
shares
Companies 10,393,684 17.89
Finance houses and insurance 13,354,096 22.99
companies
Public sector 913,965 1.57
Non-profit making associations 732,309 1.26
Households and private persons 29,393,801 50.60
Foreign holders 3,267,123 5.62
TOTAL 58,054,978 99.94
Joint account 37,600 0.06
Share capital 58,092,578 100.00
Nominee registrations 3,207,462 5.52
