TECNOMEN'S FINANCIAL STATEMENTS 1 JANUARY - 31 DECEMBER 2004
Tecnomen Corporation STOCK EXCHANGE RELEASE
16 February 2005 at 8.30 am
TECNOMEN´S FINANCIAL STATEMENTS 1 JANUARY 31 DECEMBER 2004
Tecnomen achieved its goal set for 2004, to improve net sales and
result. The net sales in 2004 increased 13.7 per cent from previous
year to EUR 51.5 million. The result before extraordinary items,
appropriations and taxes improved clearly and was EUR 2.6 million.
Tecnomen´s net sales in the fourth quarter of 2004 was EUR 13.7
million and the result before extraordinary items, appropriations and
taxes EUR 0.1 million.
SUMMARY FOR 2004
- Net sales EUR 51.5 (45.3) million
- Operating result EUR 1.6 (-7.0) million
- Order book EUR 9.8 (10.0) million
- Cash flow EUR 4.3 (0.1) million
- Cash funds at end of period EUR 30.6 (34.8) million
- Equity ratio 88.1 % (85.2 %)
- Personnel at end of period 350(398)
- Tecnomen outsourced part of its software development and
maintenance for voice messaging systems to Accenture Services Oy and
59 persons transferred to the employment of Accenture.
- Tecnomen´s Board of Directors confirmed new organisation
structure consisting of three functions: sales and customer
operations, product lines and manufacturing, finance and
administration.
KEY FIGURES
10-12/04 10-12/03 2004 2003
Net sales, MEUR 13.7 17.0 51.5 45.3
Net sales, change % -19.2 59.9 13.7 13.6
Operating result, MEUR -0.5 -0.5 1.6 -7.0
% of net sales -3.4 -2.7 3.1 -15.6
Result before 0.1 -0.4 2.6 -6.4
extraordinary items,
appropriations and
taxes, MEUR
% of net sales 1.0 -2.3 5.1 -14.2
Personnel at end of 350 398 350 398
period
Earnings per share, EUR 0.00 -0.02 0.04 -0.13
Earnings per share, 0.00 0.04
diluted, EUR
Equity per share, EUR 1.17 1.13 1.17 1.13
Net interest-bearing -30.0 -34.1 -30.0 -34.1
liabilities, MEUR
Unless otherwise stated, all figures presented below are for the
review period 1-12/2004 and the figures for comparison are from the
corresponding period 1-12/2003.
MARKETS
Positive development was seen in the market during 2004. Operators
invested in new services and next generation systems. In Tecnomen´s
Messaging product line, net sales of PMR products decreased, while net
sales of other Messaging products increased slightly. 83 per cent of
Messaging sales consisted of Voice Mail deliveries. Net sales of the
Charging product line increased 53 per cent. 90 per cent of Charging
sales consisted of Prepaid deliveries. During the year Tecnomen signed
new customers in growing markets.
Messaging
Regional fragmentation of the messaging market continues. In Western
Europe the traditional messaging market has ceased growing and
investments remain relatively modest. The number of mobile phone users
is still growing in Eastern Europe, Latin America, Middle East, Africa
and Asia Pacific.
The largest order in 2004 was to supply a messaging solution and
prepaid system to Brasil Telecom in Brazil. The order was worth USD
4.7 million. Tecnomen made a major territorial breakthrough in the
growing mobile markets in Russia and neighbouring countries and
delivered a Multimedia Messaging Service Centre, Short Message Service
Centres and a Voice Mail system to these areas. New, important
customers were signed up also in the Middle East.
Tecnomen delivered the first Next Generation Messaging (NGM) systems
in 2004. The first Video Mail deliveries were made towards the end of
the year to the West European market.
During the year under review Tecnomen enhanced its product offering
through the conclusion of cooperation agreements with third parties to
sell Short Message Service Centres (SMSC). Teleoperators can now
obtain their entire communications infrastructure from Tecnomen.
Charging
Tecnomen´s main market for Charging solutions is Latin America, which
during 2004 was also Tecnomen´s strongest geographical growth area.
Many operators in the area have expanded or are expanding their
systems and the growth of 2.5G networks bring demand for new types of
services, in particular for data charging.
During 2004 Tecnomen delivered the first Prepaid Data Charging
solutions to Brazil. Tecnomen signed new customers in Brazil,
El Salvador, Honduras, Nicaragua and Uruguay.
In product development Tecnomen focuses on Charging solutions, and
uses third party solutions for other IN solutions, to complement
Tecnomen´s product offering.
SALES AND NET SALES
Tecnomen´s net sales in the review period increased 13.7 per cent to
EUR 51.5 (45.3) million. The company´s net sales in the fourth quarter
totalled EUR 13.7 (17.0) million, or 19.2 per cent lower than the year
before.
Total net sales and their distribution among the different product
lines vary greatly from one quarter of the year to another, as a
result of the timing of project deliveries.
Net sales by product line
2004 2003
MEUR % MEUR %
Messaging 31.5 61 32.2 71
Charging 20.0 39 13.1 29
TOTAL 51.5 100 45.3 100
Net sales by market area
2004 2003
MEUR % MEUR %
Americas(excl. North America) 24.2 47 12.6 28
EMEA 23.7 46 22.6 50
APAC 3.6 7 10.1 22
TOTAL 51.5 100 45.3 100
The performance in different geographical areas varied considerably.
The biggest change during the review period took place in Latin
America, where sales grew 92.1 per cent. In EMEA (Europe, Middle East
and Africa) sales grew 4.9 per cent. Sales declined 64.4 per cent in
APAC (Asia Pacific) due to a big delivery to a Taiwanese customer
towards the end of the previous year.
A substantial part of net sales came from América Móvil group.
Sales through global partners totalled EUR 8.2 million being 16.0 per
cent (13.8 %) of net sales.
Maintenance and service sales accounted altogether for 15.2 per cent
(18.5 %) of net sales.
The order book stood at EUR 9.8 (10.0) at the end of the review
period. The Messaging product line accounted for EUR 7.3 million or
75.0 per cent (70.4%) of the order book and Charging for EUR 2.4
million or 25.0 per cent (29.6%).
OPERATING RESULT
Operative costs during the financial year decreased by EUR 1.7 million
compared to the previous year, resulting from a decline in sales
related costs, such as project reservations, agent commissions and
subcontracting.
The net result for the period improved due to reversing a provision in
financial income and expenses of appr. EUR 0.5 million, relating to
equity financing given to the subsidiary in Brazil.
The result for the period before extraordinary items, appropriations
and taxes was EUR 2.6 (-6.4) million.
Earnings per share were EUR 0.04 (-0.13). Equity per share at the end
of period was EUR 1.17 (1.13).
FINANCING AND INVESTMENTS
Tecnomen´s financial position is strong. Liquid assets were EUR 30.6
(34.8) million at the end of the review period. The balance sheet
total on 31 December 2004 stood at EUR 77.5 (77.5) million. The cash
flow in the period under review was EUR 4.3 (0.1) million. Interest
bearing liabilities amounted to EUR 0.6 (0.7) million. The debt to
equity ratio (gearing) was 44.4 per cent (-52.3 %). The balance sheet
structure remained strong and the equity ratio on 31 December 2004 was
88.1 per cent (85.2 %).
Financial income and expenses during the review period totalled
EUR 1.0 (0.6) million. Interest and investment income totalled EUR 0.6
(0.9) million. At the end of the year, 79 per cent of cash funds were
in money market funds, 2 per cent in commercial papers, and the
remainder either in deposits or bank certificates of deposit.
Tecnomen´s gross capital expenditure during the review period was
EUR 1.6 (1.9) million.
Change in working capital
2004 2003
Trade receivables and advances, incr. (-) -5.1 0.7
/ decr. (+)
Other short-term receivables, non- 0.0 0.5
interest bearing, incr. (-)/decr. (+)
Inventories, incr. (-)/ decr. (+) 0.0 1.4
Accounts payable and advances, incr.(+)/ -0.2 0.2
decr. (-)
Other current liabilities, non-interest -1.4 2.4
bearing, incr. (+)/ decr. (-)
CHANGE IN WORKING CAPITAL, TOTAL -6.7 5.2
RESEARCH AND DEVELOPMENT
R&D costs during the review period were EUR 11.5 (9.4) million,
corresponding to 22.4 per cent (20.8%) of net sales. R&D related costs
have been recorded as costs.
R&D efforts during 2004 focused on developing Next Generation
Messaging (NGM) system based on open standards. In Charging R&D
efforts focused on real-time Prepaid Data Charging.
PERSONNEL
The number of Tecnomen personnel fell by 48 during 2004 and stood at
350 (398) at the end of the review period. The major cause of the
decrease in personnel was that 59 persons transferred to the
employment of Accenture Service Oy as a result of outsourcing. The
company employed on average 355 (440) people during the review period.
Personnel by market area
31.12.2004 % 31.12.2003 %
Americas (excl. North-America) 52 15 38 10
EMEA 272 78 334 83
APAC 26 7 26 7
TOTAL 350 100 398 100
Of the personnel, 129 were located in Finland, corresponding to 37 per
cent of the total personnel. Sales and customer operations employed 99
persons, product lines and manufacturing 202 persons, and finance and
administration 49 persons.
TECNOMEN GROUP STRUCTURE
Tecnomen´s Board of Directors confirmed new organisation structure
consisting of three functions: sales and customer operations, product
lines and manufacturing, finance and administration. Organisation
structure was simplified and the use of resources made more efficient.
The change in the organisation came into force on 1 June 2004.
TECNOMEN SHARES AND SHARE CAPITAL
At the end of December 2004 the shareholders´ equity of Tecnomen
Corporation stood at EUR 67.5 million and the share capital was
EUR 4,647,406.24, divided into 58,092,578 shares. Tecnomen disposed of
132,000 of its own shares on 29 October 2004 as consideration in a
transaction in which Tecnomen purchased the entire share stock of
Krocus Communications Oy on 23 April 2003. The consideration of the
shares disposed was 1 euro per share and the disposal was made outside
the stock exchange. The total nominal value of the disposed shares was
EUR 10,560 accounting for 0.23 per cent of the entire share stock and
votes of Tecnomen Corporation. After this disposal of shares the
company held 268,000 of own shares, representing 0.46 per cent of the
company´s share capital and votes. The nominal value of the shares
held by the company totalled EUR 21,440. Equity per share was
EUR 1.17.
A total of 33,148,241 Tecnomen shares (EUR 45,535,975) were traded on
the Helsinki Exchanges during the period 2 January 31 December 2004,
or 57.06 per cent of the total number of shares.
The highest share price quoted in the period was EUR 1.82 and the
lowest was EUR 1.11. The average quoted price was EUR 1.37 and the
closing price on 31 December 2004 was EUR 1.33. The share stock had
market value of EUR 77,263,129 at the end of the period.
CURRENT AUTHORISATIONS
At the end of the review period Tecnomen´s Board of Directors held the
following current authorisations by the Annual General Meeting on 24
March 2004:
1. Authorisation to decide to dispose of the company´s own shares
already in the possession of the company and any acquired under the
authorisation given to the Board.
During the review period Tecnomen disposed of 132,000 of the company´s
own shares. Otherwise this authorisation remained unexercised.
2. 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.
During the review period the Board did not use the authorisation to
raise the company´s share capital by issuing new shares, convertible
bonds or stock options.
The authorisations given to the Board of Directors are effective for
one year from the decision of the Annual General Meeting of
Shareholders.
STOCK OPTION PROGRAMME
The company has a valid 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 maximum 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. The share subscription price for stock options 2002A
and 2002B is EUR 1.68, for stock option 2002C EUR 0.46 and for stock
option 2002D EUR 1.33. The subscription period for the 2002A stock
option is 1 April 2003 30 April 2006. The subscription periods with
the 2002C and 2002D stock options have not started yet. During the
review period no share subscriptions were made with the 2002A or 2002B
stock options.
ADOPTION OF IFRS STANDARDS (IAS) IN FINANCIAL ACCOUNTING
Tecnomen Corporation will adopt IFRS standards in 2005. The company
has planned to publish the comparison figures and financial statements
for 2004 in March 2005.
The main accounting principles for the financial statements that will
change when Tecnomen starts using IFRS standards are:
- Principles for revenue recognition (IAS 11, 18)
- Treatment of intangible assets(IAS 38)
- Treatment of financial instruments (IAS 32, 39)
- Treatment of employee benefits (IAS 19)
- Disclosure requirements
The effect of these changes on shareholders´ equity in the opening
balance sheet of 2004 is estimated to be small.
TECNOMEN´S MANAGEMENT AND AUDITORS
During the review period, Tecnomen´s Board of Directors consisted of
six members: Lauri Ratia, Carl-Johan Numelin, Lars Hammarén, Keijo
Olkkola, Christer Sumelius and Timo Toivila. Lauri Ratia was the
Chairman of the Board and Carl-Johan Numelin was Vice Chairman.
Eero Mertano was appointed Vice President of Global Sales and
Marketing at Tecnomen Corporation on 7 January 2004.
Tecnomen´s Management Board consists of four members: Jarmo Niemi,
President and CEO, Riitta Järnstedt, Chief Financial Officer, Vesa
Kemppainen, Chief Operating Officer and Eero Mertano, Vice President,
Sales and Marketing.
Tecnomen Corporation´s auditors were KPMG Oy Ab and the responsible
auditor was Sixten Nyman, APA.
PROSPECTS FOR 2005
Markets have picked up from the previous year. Demand is expected to
increase slightly in other areas except Western Europe. Price
competition will remain intense.
During 2005 Tecnomen´s goal is to further improve net sales and
maintain the positive trend in the result.
PAYMENT OF DIVIDENDS
According to the balance sheet on 31 December 2004, the company has no
distributable funds for paying a dividend.
SCHEDULE FOR PUBLISHING FINANCIAL INFORMATION
During the 2005 financial year Tecnomen will publish three interim
reports:
- 1-3/2005 Wednesday 4 May
- 1-6/2005 Wednesday 17 August
- 1-9/2005 Wednesday 2 November
TECNOMEN Corporation
Board of Directors
FURTHER INFORMATION
Jarmo Niemi, President and CEO, tel. +358 (0)9 8047 8799
Riitta Järnstedt, CFO, tel. +358 (0)9 8047 8650
DISTRIBUTION
Helsinki Exchanges
Main media
CONSOLIDATED INCOME STATEMENT
MEUR 2004 2003
Net sales 51.5 45.3
Operating expenses 47.6 49.3
Depreciation 2.3 3.0
Operating result 1.6 -7.0
% of net sales 3.1 -15.6
Financial income and 1.0 0.6
expenses
Result before extraordinary 2.6 -6.4
items
Result before taxes and 2.6 -6.4
minority interest
Taxes -0.5 -0.8
Result for the period 2.1 -7.3
CONSOLIDATED BALANCE SHEET
MEUR 31.12.2004 31.12.2003
Fixed assets 9.4 10.1
Current assets
Inventories 2.2 2.2
Trade receivables 32.1 27.0
Cash and bank balances 30.6 34.8
Other financial assets 3.2 3.4
Assets 77.5 77.5
Shareholders´ equity 67.5 65.2
Provisions 0.1 0.6
Liabilities
Interest-bearing 0.6 0.7
liabilities
Non-interest bearing 9.1 10.9
liabilities
Deferred tax 0.2 0.1
liabilities
Equity and liabilities 77.5 77.5
CONSOLIDATED CASH FLOW STATEMENT
MEUR 2004 2003
Cash flow, business operations -2.5 1.9
Cash flow from investments -1.6 -1.6
Cash flow from financing -0.2 -0.2
Increase (+) and decrease (-) in -4.3 0.1
liquid funds
Liquid funds on 1 January 34.8 34.7
Liquid funds on 31 December 30.6 34.8
Change -4.3 0.1
KEY FINANCIAL FIGURES
MEUR 2004 2003
Return on investment, % 4.1 -9.1
Return on equity, % 3.2 -10.5
Equity ratio, % 88.1 85.2
Debt/equity ratio -44.4 -52.3
(gearing), %
Investments 1.6 1.9
% of net sales 3.1 4.2
Research and development 11.5 9.4
% of net sales 22.4 20.8
Order book 9.8 10.0
Personnel, average 355 440
Personnel, at end of period 350 398
KEY FIGURES PER SHARE
2004 2003
Earnings per share, EUR 0.04 -0.13
Earnings per share, 0.04
diluted, EUR
Equity per share, EUR 1.17 1.13
Number of shares at end of 58,093 58,093
period, x 1,000
Number of shares on 58,093 58,093
average, x 1,000
Share price, EUR
Average price 1.37 0.86
Lowest price 1.11 0.39
Highest price 1.82 1.59
Share price at the end of 1.33 1.37
period
Market value of issued 77.3 79.6
stock at end of period,
MEUR
Share turnover, million 33.1 32.4
shares
Share turnover, % of total 57.1 55.8
Share turnover, MEUR 45.5 27.9
Own shares at beginning of 400 400
period, x 1,000
Disposal of own shares, 132
x 1,000
Own shares at end of 268 400
period, x 1,000
CONTINGENT LIABILITIES
MEUR 2004 2003
Pledges 0.8 1.0
For own debts
Mortgages 0.7 0.7
Pledges given to cover
other own commitments
Mortgages 1.3 1.3
Chattel mortgages 0.2 0.2
Other own liabilities 1.9 2.7
Derivative contracts
Current forward contracts
Market value 18.4 15.7
Value of underlying 19.8 16.7
instrument
Currency options
Market value 0.0 0.0
KEY FIGURES PER QUARTER
1Q/03 2Q/03 3Q/03 4Q/03 1Q/04 2Q/04 3Q/04 4Q/04
Net sales, MEUR 7.6 11.6 9.1 17.0 11.7 13.6 12.5 13.7
Net sales, -9.2 41.5 -28.0 59,9 53.8 17.4 36.9 -19.2
change %
Operating -3.8 -0.8 -1.9 -0.5 -0.8 2.0 0.9 -0.5
result, MEUR
% of net -49.5 -7.6 -21.3 -2.7 -7.2 14.9 7.2 -3.4
sales
Result before -3.7 -0.6 -1.7 -0.4 -0.7 1.8 1.3 0.1
extraordinary
items,
appropriations
and taxes, MEUR
Personnel at 436 444 437 398 343 347 350 350
end of period
Earnings per -0.06 -0.01 -0.03 -0.02 -0.01 0.02 0.04 0.00
share, EUR
Equity per 1.19 1.18 1.15 1.13 1.12 1.16 1.18 1.17
share, EUR
Net interest- -32.8 -32.8 -31.9 -34.1 -29.5 -30.8 -31.0 -30.0
bearing
liabilities,
MEUR
Order book, 8.3 6.9 7.2 10.0 16.7 11.1 8.9 9.8
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 company´s ten largest shareholders, excluding nominee
registrations, on 31 December 2004:
No. of shares %
Sampo Life Insurance Co. Ltd 3,083,400 5.31
Hammaren Lars-Olof 2,164,300 3.73
Sumelius Henning 2,022,300 3.48
FIM Fenno Fund 1,285,000 2.21
Sumelius Johanna Marina 1,122,400 1.93
OP-Finland Small Firm Fund 1,020,162 1.76
Oy Investsum AB 954,100 1.64
Estate of Suutarinen Helena 901,200 1.55
Kaleva Mutual Insurance Company 900,000 1.55
Pohjola Finland Value Investment 800,000 1.38
Fund
TOTAL 14,252,862 24.54
Ownership of Tecnomen shares, 31 December 2004
Shares Holders % Shares and %
votes
1-500 3,206 46.84 716,536 1.23
501-1 000 1,154 16.86 919,218 1.58
1 001-5 000 1,666 24.34 4,233,837 7.29
5 001-10 000 380 5.55 2,931,572 5.05
10 001-50 000 286 4.18 6,459,175 11.12
50 001-100 000 56 0.82 4,072,724 7.01
100 001-500 000 77 1.13 17,593,222 30.28
500 001< 19 0.28 21,128,694 36.37
Joint account 37,600 0.06
Total 6,844 100.00 58,092,578 100.00
Ownership structure by sector, 31 December 2004
No. of shares %
Companies 5,882,547 10.13
Finance houses and insurance 14,328,868 24.67
companies
Public sector 1,525,725 2.63
Non-profit making associations 3,175,636 5.47
Households and private persons 31,714,849 54.59
Foreign holders 1,427,353 2.46
TOTAL 58,054,978 99.94
Joint account 37,600 0.06
Share capital 58,092,578 100.00
Nominee registrations 2,223,231 3.83
