TECNOMEN?S FINANCIAL STATEMENTS 1 JANUAR
Tecnomen Corporation STOCK EXCHANGE RELEASE
14 February 2003 at 8.30 a.m.
TECNOMENS FINANCIAL STATEMENTS 1 JANUARY - 31 DECEMBER 2002
The order intake at the end of the year was better than one year
earlier. At the end of the financial period the order book stood at
EUR 10.4 (4.4) million. Net sales and the operating result for the
whole year declined clearly from the previous year. However, net sales
fell less than general market in the sector.
The cash flow in the fourth quarter was positive. The financial
position remained extremely strong. The customer base expanded in all
main product sectors.
The company cut its organisational costs and the number of personnel
declined by about 100. Tecnomen continued its major investments in
R&D, but targeted them more precisely.
SUMMARY
- Net sales EUR 39.9 (57.1) million
- Operating result EUR -14,1 (-1.5) million
- Non-recurring items reducing operating result EUR 1.7 million
- Order book EUR 10.4 (4.4) million
- Cash flow 10-12/2002 EUR 1.1 million, 1-12/2002 EUR -6.2 million
- Cash funds EUR 34.7 (41.1) million
- Equity ratio 90.1% (89.2%)
KEY FIGURES
10-12/02 10-12/01 2002 2001
pf
Net sales, MEUR 10.6 19.0 39.9 57.1
Net sales, change % -44.2 -18.3 -30.2 -13.9
Operating result, MEUR -2.9 4.4 -14.1 -1.5
% of net sales -27.7 23.3 -35.5 -2.7
Result before -2.6 6.4 -14.6 0.6
extraordinary items,
appropriations and
taxes, MEUR
% of net sales -24.3 34.0 -36.7 1.1
Personnel at end of 457 556 457 556
period
Earnings per share, EUR -0.04 0.11 -0.25 0.01
Equity per share, EUR 1.26 1.50 1.26 1.50
Net interest-bearing -33.8 -40.0 -33.8 -40.0
liabilities, MEUR
pf= Pro forma figures
Unless otherwise stated, all figures presented below are for the
review period 1-12/2002 and the figures for comparison are pro forma
figures from the corresponding period 1-12/2001.
TECNOMEN GROUP'S PRO FORMA FIGURES
Because of the restructuring of the Group in 2001, to make comparison
easier the figures for 2001 in this release are Pro forma figures.
These are formed by adding together the figures of the official
Tecnomen Group (the former Tecnomen Holding Group) for the period 31
March - 31 December 2001 and those of Tecnomen Corporation, which
merged with Tecnomen Group, for the period 1 January - 31 March 2001.
The calculations for the Group's Pro forma figures are given in an
appendix to this release.
MARKETS
The volume of investment by telecommunications operators declined even
more than in the previous year. Investments in value-added services
were cut. Earlier miscalculations, such as the investments in 3G
licences, and the overheating of the share market towards the end of
the 1990s, contributed to the unexpectedly sharp fall in the overall
market. Consolidation continued among companies in the sector, but at
a more moderate rate than in previous years.
Typical features of the market were efforts to raise efficiency and
increasing pressure on prices. Voice-based services remained the most
popular form of messaging in the telecommunications market in 2002.
Demand for data-based messaging applications and unified messaging
systems failed to pick up as anticipated. The slowdown in the growth
in the number of mobile phone users and the decline in demand for
systems intensified competition and created pressure on market prices.
Operators tried to segment their user groups and to target services
more precisely.
The market started up for multimedia systems, along with the first
commercial services for them. The anticipated rapid growth in user
numbers and applications failed to materialize, however, during 2002.
Prepaid systems continued to grow in popularity in 2002, especially in
areas where the number of users continued to rise rapidly. This was
the case especially in Latin America and Africa.
SALES AND NET SALES
During the review period Tecnomen had net sales of EUR 39.9 (57.1)
million, a fall of some 30 per cent from the previous year. The order
intake declined less during the period than net sales.
Tecnomens market share grew despite the decrease in net sales. The
company has estimated that average investment demand in Tecnomens
product areas fell some 35-45 per cent worldwide. Tecnomens sales
grew in its Middle East and Africa area and fell in Eastern and South-
East Asia, where operators and service providers postponed their
orders until 2003.
In 2002, 41 (48) per cent of Tecnomens net sales came from Europe,
29 (25) per cent from Latin America, 21 (10) per cent from the Middle
East and Africa, and 9 (17) per cent from Eastern and South-East Asia.
Tecnomens messaging systems accounted for about 61 (66) per cent of
net sales during the review period, prepaid systems and other
intelligent network products for about 29 (22) per cent and paging
systems for about 10 (11) per cent.
Tecnomen has worldwide partnership agreements for marketing and
selling its products with Siemens, Nokia, Nortel Networks and Fujitsu
Invia. Cooperation continued at an encouraging level with these
strategic partners and these sales accounted for 18.0 (19.9) per cent
of total net sales. Tecnomens collaboration with Siemens expanded
into the area of multimedia services, in both sales partnership and
the development of Siemens multimedia terminal devices. The first
prepaid system was supplied with Nortel.
During the review period Tecnomen signed delivery agreements with
existing and new customers. The customer base expanded, but the
systems supplied were smaller in size than in previous years. System
maintenance sales increased.
The company supplied messaging systems and capacity expansions in
Norway, Denmark, Switzerland, Ireland, Lithuania, South Africa and
Brazil. It supplied multimedia messaging centres in Finland and
Austria.
Tecnomen supplied new prepaid systems in Africa and several Latin
American countries and a paging system expansion in Kuwait.
The order intake towards the end of the year improved compared to the
fourth quarter in the previous year and the year-end order book stood
at EUR 10.4 (4.4) million.
OPERATING RESULT
The company had an operating result during the review period of EUR
-14.1 (-1.5) million. The decline in net sales was the biggest factor
affecting the result. Because of this, the company initiated major
steps to achieve savings and streamline operations. These actions will
mainly start to have a visible impact on the result during 2003. Most
of the losses occurred early in the year.
Non-recurring costs of EUR 0.7 million arising from the reductions in
personnel were allocated to the review period.
Commercial commitments from previous financial periods and other
realized project obligations increased non-recurring costs for the
period by about EUR 1 million.
The net result is reduced by a provision of about EUR 0.6 million,
allocated to financial income and expenses, for exchange rate losses
relating to equity financing given to the subsidiary in Brazil.
The result for the period before extraordinary items, appropriations
and taxes was EUR -14.6 (0.6) million.
Earnings per share were EUR -0.25 (0.01). Equity per share at the end
of the period was EUR 1.26 (1.50).
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets were EUR 34.7
(41.1) million. The balance sheet total on 31 December 2002 stood at
EUR 81.3 (98.7) million. The cash flow in the fourth quarter was EUR
1.1 million positive. Interest-bearing liabilities amounted to EUR 0.9
(1.1) million. The debt to equity ratio (gearing) was -46.6 (-45.8)
per cent. The balance sheet structure remained strong and the equity
ratio on 31 December 2002 was 90.1 (89.2) per cent.
Tecnomens gross capital expenditure during the review period was EUR
2.2 (3.3) million.
RESEARCH AND DEVELOPMENT
Tecnomen continued its investments in R&D in 2002. Because of the
state of the market, the company targeted its efforts more precisely
on ensuring the competitiveness of key product areas.
During the year Tecnomen continued its R&D on messaging systems (voice
mail, unified messaging and multimedia services) and developed new
features for the Tecnomen eZONER service platform. The company
developed the architecture of the service platform to bring it more in
line with new requirements in terms of range of functions and power.
Increasing the capacity of various systems and developing new product
features were part of the R&D projects for all products. A new system
architecture with improved scalability, enabling systems that can
manage tens of millions of subscribers, was launched for prepaid
systems.
R&D costs were EUR 11.2 (12.3) million, corresponding to 28.0 (21.5)
per cent of net sales. R&D related costs have been recorded directly
as costs.
PERSONNEL AND ORGANISATION
The organisation and operations of the whole group were enhanced
during the review period. The steps taken aimed at not only cutting
costs but also increasing customer satisfaction and improving the
companys response capabilities. The reductions in personnel costs
were implemented in such a way that Tecnomen retains its ability to
react to customer needs.
Part of the streamlining action involved changes at all the business
units and in sales and marketing, lowering the organisational
structure and combining functions.
In Eastern and South-East Asia Tecnomen concentrated operations at its
Malaysia and Taiwan offices. Its offices in Thailand, mainland China
and Hong Kong were either closed down or Tecnomens partners took over
responsibility for them. The company cut back its operations in Spain.
As a result of the personnel rationalisation carried out at the
companys business units, during 2002 the number of personnel in the
group declined some 18 per cent from the previous year. At the end of
2002, Tecnomen employed 457 (556) people worldwide. The average number
of personnel during the period was 520 (559).
TECNOMEN SHARES AND SHARE CAPITAL
At the end of 2002 the shareholders' equity of Tecnomen Corporation
stood at EUR 72.5 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 1.26.
A total of 24,256,896 Tecnomen shares (EUR 23,560,482) were traded on
the Helsinki Exchanges during the period 2 January - 30 December 2002,
or 41,8 per cent of the total number of shares. The highest share
price quoted in this period was EUR 2.10 and the lowest was EUR 0.49.
The average quoted price was EUR 0.97 and the closing price on 30
December 2002 was EUR 0.51. The share stock had a market value of
EUR 29,627,215 at the closing price.
CURRENT AUTHORISATIONS
Tecnomens Annual General Meeting of Shareholders, held on 11 April
2002, authorised the Board of Directors for a period of one year from
the AGM to decide on purchasing and disposing of the companys own
shares. The company may purchase at most 2,904,628 shares, or five (5)
per cent of the company's total share capital, using distributable
funds. The shares may be used as consideration in company
acquisitions, in purchasing assets relating to the company's business
operations or in making other arrangements for developing the
company's business, in consolidating the company's capital structure,
to cover the social security costs arising from stock options, or as
part of the company's remuneration or incentive schemes, or otherwise
for resale issuance or for invalidation in a manner and to an extent
to be decided by the Board.
During the review period, on the basis of the authorisation given by
the AGM the company purchased 400,000 of the companys own shares on
the Helsinki Exchanges in the period 22 May - 5 June 2002, with a
total purchasing price of EUR 398,692. The shares represent 0.69 per
cent of the companys total share capital and of its voting rights.
The shares purchased have a combined nominal value of EUR 32,000.
Tecnomens Annual General Meeting of Shareholders authorised the Board
of Directors for a period of one year from the AGM to decide on
raising the company's share capital by a maximum of EUR 601,481.20,
corresponding to 7,518,515 new shares, in one or more issues by
issuing new shares and/or convertible bonds and/or stock options,
disapplying the pre-emptive subscription rights of shareholders. The
authorisation can be used to carry out company acquisitions or other
arrangements to develop the company's business operations, to finance
investments, to reinforce the company's capital structure, to cover
the social security costs arising from share options, or to set up a
remuneration or incentive scheme for the company.
During the review period the Board has not used the authorisation to
raise the companys share capital by issuing new shares, convertible
bonds or stock options and has not disposed of the companys own
shares.
STOCK OPTIONS
Tecnomens AGM on 11 April 2002 decided on a new stock option
programme. A total of 4,100,000 stock options can 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. The stock options are divided into 2002A (400,000), 2002B
(1,200,000), 2002C (1,200,000) and 2002D (1,300,000) stock options. A
total of 396,000 2002A stock options and 377,000 2002B stock options
were distributed to Tecnomen key personnel. In accordance with the
decision of the AGM, a total of 100,000 2002B stock options were
distributed to members of the Board of Directors.
BOARD OF DIRECTORS, MANAGEMENT AND AUDITORS
During the review year, Tecnomens Board of Directors contained seven
members: Lauri Ratia, Keijo Olkkola, Lars Hammarén, Carl-Johan
Numelin, Christer Sumelius, Timo Toivila and Hannu Turunen. Lauri
Ratia was Chairman of the Board and Keijo Olkkola was Vice Chairman.
Tecnomen Oyjs President and CEO was Vesa Helkkula, MSc (Eng.), MBA.
Tecnomen Corporation's auditors were KPMG Wideri Oy Ab and the
responsible auditor was Sixten Nyman, APA.
SUBSEQUENT EVENTS
The following statements have been issued since the close of the
period:
Tecnomen signed an agreement worth EUR 2.9 million to supply prepaid
systems to two subsidiaries of América Móvil - PCS Digital in
Guatemala and in Nicaragua. An agreement was also signed to replace
the prepaid system of the Guatemala company Telgua.
In January Tecnomen announced that it had developed three new value-
added services for its voice mail, that will help operators increase
customer loyalty and boost their net sales. These new, easy to use
features are Missed Call Notice, the Greet and Route Service, and an
improved version of the E-Mail Reader service.
PROSPECTS FOR 2003
Economic uncertainty is a key element affecting prospects for 2003,
coupled with the threat of war in Iraq and the unrest in Venezuela.
The telecommunications market is showing no clear signs of a return to
growth. Even though the use of end user messaging services continues
to grow, intensifying competition between service and system suppliers
is bringing prices down. The new services and user features give
confidence in future market growth, since they will increase the
volume of messaging by end users.
The impact of the steps taken in 2002 to raise efficiency and cut
costs will be fully visible in 2003. Precise focusing on selected
customer segments and geographical areas has given a boost to
marketing and sales. The efforts put into Latin America and certain
Southeast Asian customers are expected to increase sales during 2003.
Investments by teleoperators in 2002 are expected to remain at roughly
the same level as in the previous year in terms of euros, but average
prices are expected to fall. Tecnomen will continue its efforts to
strengthen its market position and improve its cash flow from
operating activities and result.
PROPOSAL OF BOARD FOR DISTRIBUTION OF DIVIDENDS
The Board of Directors proposes to the Annual General Meeting to be
held on 25 March 2003 that no dividend be paid for the financial
period that ended on 31 December 2002 and that the loss for the year
be transferred to the retained earnings account.
SCHEDULE FOR PUBLISHING FINANCIAL INFORMATION
During the 2003 financial year Tecnomen will publish three interim
reports:
- 1-3/2003 Tuesday 29 April
- 1-6/2003 Wednesday 13 August
- 1-9/2003 Wednesday 29 October
TECNOMEN CORPORATION
Board of Directors
FURTHER INFORMATION
Vesa Helkkula, President and CEO, tel. +358 (0)9 804 781
Riitta Järnstedt, CFO, tel. +358 (0)9 804 781
DISTRIBUTION
Helsinki Exchanges
Main media
CONSOLIDATED INCOME STATEMENT
MEUR 2002 2001
pf
Net sales 39.9 57.1
Operating expenses 50.6 54.8
Depreciation 3.4 3.8
Operating result -14.1 -1.5
% of net sales -35.5 -2.7
Financial income and -0.5 2.2
expenses
Result before extraordinary -14.6 0.6
items
Result before taxes and -14.6 0.6
minority interest
Minority interest
Taxes 0.3 -0.2
Result for the period -14.3 0.4
pf= pro forma figures
CONSOLIDATED BALANCE SHEET
MEUR 31.12.2002 31.12.2001
Fixed assets 11.4 12.8
Current assets
Inventories 3.6 3.3
Financial assets 66.3 82.5
Assets 81.3 98.7
Shareholders equity 72.5 87.3
Minority interest
Liabilities
Interest-bearing 0.9 1.1
liabilities
Non-interest bearing 7.9 9.9
liabilities
Deferred tax liabilities 0.0 0.4
Equity and liabilities 81.3 98.7
pf= pro forma figures
CASH FLOW STATEMENT
MEUR 2002 2001
pf
Cash flow business operations -3.6 -1.8
Cash flow from investments -2.2 -3.3
Cash flow from financing -0.4 0.9
Increase (+) and decrease (-) in -6.2 -4.2
liquid funds
Liquid funds in 1.Jan. 41.1 45.3
Translation difference -0.2
Liquid funds incl. exchange 40.9
differences 1 Jan.
Liquid funds in 31 Dec. 34.7 41.1
Change -6.2 -4.2
pf= pro forma figures
KEY FINANCIAL FIGURES
MEUR 2002 2001
pf
Return on investment, % -18.0 0.9
Return on equity, % -17.9 0.6
Equity ratio, % 90.1 89.2
Debt/equity ratio -46.6 -45.8
(gearing), %
Investments 2.2 3.3
% of net sales 5.5 5.9
Research and development 11.2 *)12.3
% of net sales 28.0 *)21.5
Order book 10.4 4.4
Personnel, average 520 559
Personnel, at end of period 457 556
pf= pro forma figures
*) According to the new accounting principles
KEY FIGURES PER SHARE
MEUR 2002 2001
official
Earnings per share, EUR -0.25 0.00
Equity per share, EUR 1.26 1.50
Number of shares at end of 58,093 58,093
period, 1,000
Number of shares on average, 58,093 39,742
1,000
Share price trend, EUR
Average price 0.97 1.89
Lowest price 0.49 0.98
Highest price 2.10 3.93
Share price at end of period 0.51 *)1.81
Market value of issued stock 29.6 *)105.1
at end of period, MEUR
Share turnover, million 24.3 5.1
shares
Share turnover, % of total 41.8 12.8
Share turnover, MEUR 23.6 9.6
pf= Pro forma figures calculated for new number of shares
*)= closing price for new Tecnomen shares on first quoting day,
2 January 2002
CONTINGENT LIABILITIES
MEUR 2002 2001
official
For own debts
Mortgages 0.7 0.7
Pledges given to cover
other own commitments
Mortgages 1.3 0.6
Chattel mortgages 0.2 0.2
Other own liabilities 2.6 3.8
Derivative contracts
Current forward
contracts
Market value 11.0 12.1
Value of underlying 11.9 11.9
instrument
Currency options
Market value 0.0 1.1
KEY FIGURES PER QUARTER
1/02 2/02 3/02 4/02
Net sales, MEUR 8.4 8.2 12.7 10.6
Net sales, change % -44.3 -18.6 -2.3 -44.2
Operating result, MEUR -5.4 -5.6 -0.3 -2.9
% of net sales -64.0 -67.9 -2.2 -27.7
Result before extraordinary items, -5.3 -5.5 -1.3 -2.6
appropriations and taxes, MEUR
Personnel at end of period 558 554 473 457
Earnings per share, EUR -0.09 -0.10 -0.02 -0.04
Equity per share, EUR 1.41 1.31 1.30 1.26
Net interest-bearing liabilities, -37.8 -33.7 -32.7 -33.8
MEUR
pf= pro forma figures
The financial figures in the balance sheet, income statement and key
indicators have been rounded up or down to the nearest million euro.
The figures shown here have been calculated using exact values.
The figures are not audited.
SHAREHOLDERS
Companys ten largest shareholders, excluding nominee registrations,
30 December 2002
No. of %
shares
Henki-Sampo Insurance Fund 3,083,400 5.31
Hammaren Lars-Olof 2,264,300 3.90
Sumelius Henning 2,022,300 3.48
Geveles AB 1,952,092 3.36
Sumelius Johanna Marina 1,122,400 1.93
Svenska Handelsbanken 1,056,200 1.82
Filialkontoret
Oy Investsum AB 954,100 1.64
Estate of Suutarinen Helena 901,200 1.55
deceased
Gyllenberg Small Firm Fund 833,575 1.43
Sumelius Maria 803,600 1.38
Total 14,993,167 25.81
The division of Tecnomen shares, 30 December 2002
Shares Holders % Shares and %
votes
1-500 3,601 54.44 795,254 1.37
501-1,000 1,075 16.25 819,985 1.41
1,001-5,000 1,315 19.88 3,062,886 5.27
5,001-10,000 250 3.78 1,866,230 3.21
10,001-50,000 228 3.45 5,211,938 8.97
50,001-100,000 47 0.71 3,333,089 5.74
100,001-500,000 81 1.22 17,729,192 30.52
500,001< 18 0.27 25,236,404 43.44
Joint account 37,600 0.06
Total 6,615 100.00 58,092,578 100.00
Ownership structure by sector, 30 December 2002
No. of shares %
Companies 7,248,482 12.48
Finance houses and 18,353,488 31.59
insurance companies
Public sector 949,595 1.63
Non-profit making 984,708 1.70
associations
Household and private 28,065,012 48.31
persons
Foreign holders 2,453,693 4.22
TOTAL 58,054,978 99.94
Joint account 37,600 0.06
Share capital 58,092,578 100.00
Nominee registrations 6,566,047 11.30
APPENDIX
GROUPS PRO FORMA INCOME STATEMENT
MEUR *)Official **)Adjustments Pro forma
2001 2001 2001
Net sales 42.2 14.9 57.1
Operating expanses 41.3 13.5 54.8
Depreciation 2.9 0.9 3.8
Operating result -2.0 0.5 -1.5
% of net sales -4.6 1.9 -2.7
Financial income and 1.9 0.3 2.2
expenses
Result before -0.1 0.7 0.6
extraordinary items
Result before taxes -0.1 0.7 0.6
Taxes 0.1 -0.3 -0.2
Minority interest
Result for the period 0.0 0.4 0.4
*) Income statement of official Tecnomen Group (former Tecnomen
Holding Group) for the financial period 31 March - 31 December 2001.
**) The adjustments include not only the figures from the Income
Statement of the old Tecnomen Group for the period 1 January - 31
March 2001 but also the changes in the minority interest caused by the
merger.
