TECNOMEN?S INTERIM REPORT 1 JANUARY - 30
Tecnomen Corporation STOCK EXCHANGE RELEASE
11 August 2004 at 8.30 am
TECNOMENS INTERIM REPORT 1 JANUARY - 30 JUNE 2004
Second quarter result a clear profit and positive result for the first
half of year. Tecnomen expects net sales in 2004 to exceed EUR 50
million and the result for the second half of the year to be positive.
SUMMARY, APRIL-JUNE
- Net sales EUR 13.6 (11.6) million, +17.4%
- Operating result EUR 2.0 (-0.8) million
- Order book EUR 11.1 (6.9) million, +60.5%
- Cash flow EUR 1.3 (0.6) million
- Cash funds EUR 31.5 (34.3) million
- Return on investment 3.6% (-12.0%)
- Equity ratio 86.6% (89.3%)
- Debt/equity ratio -46.5% (-48.2%)
KEY FIGURES
4-6/04 4-6/03 1-6/04 1-6/03 2003
Net sales, MEUR 13.6 11.6 25.3 19.2 45.3
Net sales, change % 17.4 41.5 31.9 15.7 13.6
Operating result, MEUR 2.0 -0.8 1.2 -4.6 -7.0
% of net sales 14.9 -7.6 4.6 -24.2 -15.6
Result before 1.8 -0.6 1.2 -4.3 -6.4
extraordinary items,
appropriations and
taxes, MEUR
% of net sales 13.4 -5.2 4.7 -22.6 -14.2
Result for the period 1.8 -0.6 1.0 -4.4 -7.3
Personnel at end of 347 444 347 444 398
period
Earnings per share, EUR 0.02 -0.01 0.02 -0.08 -0.13
Equity per share, EUR 1.16 1.18 1.16 1.18 1.13
Net interest-bearing -30.8 -32.8 -30.8 -32.8 -34.1
liabilities, MEUR
Unless otherwise stated, all figures presented below are for the
review period 1-6/2004 and the figures for comparison are for the
corresponding period 1-6/2003.
MARKETS
During the second quarter of 2004, the situation in the market
improved from the first quarter but competition on price remained
intense. The markets showed greater interest in the products of both
the Messaging and the Charging businesses. Tecnomen continued to see
strongest growth in Latin America, and in addition demand picked up
especially in the markets in the Middle East, Africa and Eastern
Europe.
Messaging
Net sales of the Messaging product line during the review period rose
almost ten per cent to EUR 15.6 (14.3) million. The company supplied
new systems and several expansions to existing systems around the
world during the period. One breakthrough worth mentioning is the
supply of a multimedia messaging centre (MMSC) to the rapidly growing
mobile market in Russia. The performance of the PMR Messaging
business, which was merged with the Messaging product line during the
review period, has continued as expected.
Tecnomen signed a marketing agreement with Nokia concerning the NGM
Video Mail product. Tecnomen added a short message service centre
(SMSC) to its product portfolio by signing a sales cooperation
agreement with Acotel. Operator customers can now obtain their entire
messaging infrastructure (voice mail, MMSC, SMSC, Download Centre, WAP
gateway) from Tecnomen. The cooperation with Accenture Services Oy
started up as expected, increasing operating efficiency.
Charging
Net sales for the Charging product line during the review period
almost doubled, to EUR 9.7 (4.9) million. Several operators in Latin
America have expanded or are expanding their systems, so activity in
the region will remain at a high level. Tecnomens sales efforts in
the markets in Asia and Africa have increased the interest of
potential customers in the companys products. Interest has increased
in data solutions such as real-time MMS billing.
SALES AND NET SALES
Tecnomens net sales in the review period increased 31.9 per cent to
EUR 25.3 (19.2) million. The companys net sales in the second quarter
totalled EUR 13.6 (11.6) million, or 17.4 per cent higher than the
year before. Some 80 per cent of net sales came from 12 customers.
Sales to new customers accounted for 25.3 per cent (14.5%) of net
sales.
Total net sales and their distribution among the different product
lines and geographical regions vary greatly from one quarter of the
year to another, due to the seasonal nature of the business and the
timing of project deliveries.
Net sales by product line
1-6/2004 1-6/2003
MEUR % MEUR %
Messaging 15.6 62 14.3 75
Charging 9.7 38 4.9 25
TOTAL 25.3 100 19.2 100
Net sales by region
1-6/2004 1-6/2003
MEUR % MEUR %
Americas 12.4 49 5.0 26
EMEA 12.3 49 11.4 59
APAC 0.6 2 2.8 15
TOTAL 25.3 100 19.2 100
The performance in different geographical regions varied considerably.
The biggest change during the review period took place in South
America, where sales grew 47 per cent. In EMEA (Europe, Middle East
and Africa) sales grew 9 per cent. Sales declined in APAC (Asia
Pacific).
Sales through global partners totalled EUR 2.4 (2.1) million or
9.5 per cent (10.9%) of net sales.
Maintenance and service sales together accounted for 15.2 per cent
(20.7%) of net sales.
The order book increased 61 per cent and stood at EUR 11.1 (6.9)
million at the end of the review period. The Messaging product line
accounted for 58.1 per cent (80.7%) of the order book and Charging for
41.9 per cent (19.3%). The order book grew encouragingly especially in
South America, which accounted for 46.5 per cent (19.2%) of the order
book.
OPERATING RESULT
The operating result for the review period was EUR 1.2 (-4.6) million,
or 4.6 per cent (-24.2%) of the net sales. The companys operating
result in the second quarter totalled EUR 2.0 (-0.8) million.
When comparing the costs for the periods, notice should be taken of
the impact of the lay-offs in the first half of 2003 (some EUR 0.6
million).
The result for the period before extraordinary items, appropriations
and taxes was EUR 1.2 (-4.3) million.
Earnings per share were EUR 0.02 (-0.08). Equity per share at the end
of period was EUR 1.16 (1.18).
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets were EUR 31.5
(34.3) million. The balance sheet total on 30 June 2004 stood at EUR
77.5 (77.2) million. Interest bearing liabilities amounted to EUR 0.7
(1.5) million. The debt to equity ratio (gearing) was -46.5 per cent
(-48.2%). The balance sheet structure remained strong and the equity
ratio on 30 June 2004 was 86.6 per cent (89.3%).
Tecnomens gross capital expenditure during the review period was EUR
0.8 (1.2) million, or 3.1 per cent (6.3%) of net sales. Investments
mainly focused on the next generation messaging product and raising
efficiency in operations.
Financial income and expenses during the review period totalled EUR
0.0 (0.3) million and included EUR 0.2 million in exchange rate losses
arising from the valuation of foreign currency balance sheet items and
EUR 0.1 million other financial expenses. Interest income was EUR 0.3
million.
Change in working capital
1-6/04 1-6/03
Trade receivables and advances, incr. (-) -3.9 2.5
/ decr. (+)
Other short-term receivables, non- 0.9 0.0
interest bearing, incr. (-)/ decr. (+)
Inventories, incr. (-)/ decr. (+) -0.5 1.0
Accounts payable and advances, incr. (+)/ 0.4 0.0
decr. (-)
Other current liabilities, non-interest -1.4 0.2
bearing, inc. (+)/ decr. (-)
CHANGE IN WORKING CAPITAL, TOTAL -4.5 3.8
RESEARCH AND DEVELOPMENT
R&D costs during the review period were EUR 5.9 (4.7) million,
corresponding to 23.3 per cent (24.4%) of net sales. R&D related costs
have been recorded directly as costs.
PERSONNEL
At the end of June 2004, Tecnomen employed 347 (444) people worldwide,
136 (239) in Finland and 211 (205) abroad. The company employed on
average 360 (440) people during the review period. During the review
period 59 people transferred to the employment of Accenture Services
Oy in consequence of an outsourcing agreement.
TECNOMEN SHARES AND SHARE CAPITAL
At the end of June 2004 the shareholders equity of Tecnomen
Corporation stood at EUR 66.2 (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, representing 0.69 per cent of the companys
share capital and votes. The nominal value of the shares held by the
company totalled EUR 32,000. Equity per share was EUR 1.16 (1.18).
A total of 21,876,143 Tecnomen shares (EUR 30,443,311) were traded on
the Helsinki Exchanges during the period 2 January - 30 June 2004, or
37.66 per cent of the total number of shares.
The highest share price quoted in the period was EUR 1.82 and the
lowest was 1.11. The average quoted price was EUR 1.39 and the closing
price on 30 June 2004 was 1.35. The share stock had a market value of
EUR 78,424,980 at the closing price.
CURRENT AUTHORISATIONS
The Annual General Meeting held on 24 March 2004 authorised the Board
of Directors to dispose of the companys own shares and increase the
share capital. The Board had not exercised these authorisations by the
date of publication of this Interim Report.
STOCK OPTION 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 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 option 2002D
was set at 1.33 euros, the Tecnomen trade volume weighted average
share price on the Helsinki Exchanges between 1 March and 31 March
2004. The subscription period for the 2002A stock options started on 1
April 2003 and for the 2002B options on 1 April 2004. During the
review period no share subscriptions were made with the 2002A or 2002B
stock options. The subscription periods for the 2002C and 2002D stock
options had not started in the review period.
NEW ORGANISATION STRUCTURE AND MANAGEMENT BOARD
During the second quarter Tecnomens Board of Directors confirmed the
new organisation structure, which consists of three functions: sales
and customer operations, product lines and manufacturing, and finance
and administration.
The change simplified the existing organisation and made more
effective use of resources. The new organisation took effect as from
1 June 2004.
Tecnomens new management board comprises the President & CEO Mr Jarmo
Niemi and three other members:
- Ms Riitta Järnstedt, Chief Financial Officer (CFO), responsible
for finance and administration.
- Mr Vesa Kemppainen, Chief Operating Officer (COO), responsible
for product lines and manufacturing
- Mr Eero Mertano, Vice President, Sales, (VP Sales), responsible
for sales, customer operations and support
CORPORATE GOVERNANCE
Tecnomen complies with the insider guidelines of the Helsinki
Exchanges, effective as of 1 March 2000, and the recommendation on the
corporate governance of listed companies, effective as of 1 July 2004.
The updated version of the companys corporate governance policy can
be seen on the companys website, www.tecnomen.com/investor.
ADOPTION OF IFRS STANDARDS
Tecnomen will adopt IFRS standards in its financial reporting in 2005.
The planned date for publishing figures for comparison and the 2004
financial statements is March 2005. During 2004 the company is
carrying out parallel IFRS accounting and preparing figures for
comparison for 2005.
EVENTS AFTER END OF REVIEW PERIOD
On 12 July Tecnomen announced that the Russian operator Multiregional
TransitTelecom (MTT) and its system integrator partner Compulink had
selected Tecnomen to provide its Multimedia Messaging Service Centre
(MMSC) and WAP gateway.
On 5 August Tecnomen announced that Vodafone Ireland had chosen
Tecnomen to expand and upgrade the Vodafone Voice Mail.
PROSPECTS FOR 2004
Tecnomen expects net sales in 2004 to exceed EUR 50 million and the
result for the second half of the year to be positive. Competition in
the market remains intense.
FINANCIAL INFORMATION
Tecnomen is holding a conference to announce its half-year results at
10.00 am on 11 August 2004 in the Pavilion room at the Scandic Hotel
Simonkenttä. The material presented at the press conference is
available at www.tecnomen.com/investor.
Tecnomen will publish its third quarter financial results on
Wednesday, 27 October 2004.
TECNOMEN CORPORATION
Board of Directors
FURTHER INFORMATION
Mr Jarmo Niemi, President and CEO, tel. +358 (0)9 8047 8799
Ms Riitta Järnstedt, CFO, tel. +358 (0)9 8047 8650
DISTRIBUTION
HEX Helsinki Exchanges
Main media
CONSOLIDATED INCOME STATEMENT
MEUR 1-6/04 1-6/03 2003
Net sales 25.3 19.2 45.3
Operating expenses 22.9 22.2 49.3
Depreciation 1.2 1.6 3.0
Operating result 1.2 -4.6 -7.0
% of net sales 4.6 -24.2 -15.6
Financial income and 0.0 0.3 0.6
expenses
Result before extraordinary 1.2 -4.3 -6.4
items
Result before taxes and 1.2 -4.3 -6.4
minority interest
Taxes -0.2 0.0 -0.8
Result for the period 1.0 -4.4 -7.3
CONSOLIDATED BALANCE SHEET
MEUR 30.6.2004 30.6.2003 31.12.2003
Fixed assets 9.7 11.1 10.1
Current assets
Inventories 2.7 2.6 2.2
Trade receivables 31.4 25.3 27.0
Cash and bank balances 31.5 34.3 34.8
Other financial assets 2.2 3.9 3.4
Assets 77.5 77.2 77.5
Shareholders equity 66.2 68.1 65.2
Provisions 0.6 0.0 0.6
Liabilities
Interest-bearing 0.7 1.5 0.7
liabilities
Non-interest bearing 9.9 7.7 10.9
liabilities
Deferred tax 0.1 0.0 0.1
liabilities
Equity and liabilities 77.5 77.2 77.5
CONSOLIDATED CASH FLOW STATEMENT
MEUR 1-6/04 1-6/03 2003
Cash flow, business operations -2.4 0.4 1.9
Cash flow from investments -0.9 -0.7 -1.6
Cash flow from financing 0.0 -0.1 -0.2
Increase (+) and decrease (-) in -3.3 -0.4 0.1
liquid funds
Liquid funds on 1 Jan. 34.8 34.7 34.7
Liquid funds on 30 June / 31 31.5 34.3 34.8
December
Change -3.3 -0.4 0.1
KEY FINANCIAL FIGURES
MEUR 1-6/04 1-6/03 2003
Return on investment, % 3.6 -12.0 -9.1
Return on equity, % 3.0 -12.4 -10.5
Equity ratio, % 86.6 89.3 85.2
Debt/equity ratio (gearing), -46.5 -48.2 -52.3
%
Investments 0.8 1.2 1.9
% of net sales 3.2 6.1 4.2
Research and development 5.9 4.7 9.4
% of net sales 23.3 24.4 20.8
Order book 11.1 6.9 10.0
Personnel, average 360 440 440
Personnel, at end of period 347 444 398
KEY FIGURES PER SHARE
MEUR 1-6/04 1-6/03 2003
Earnings per share, EUR 0.02 -0.08 -0.13
Equity per share, EUR 1.16 1.18 1.13
Number of shares at end of 58,093 58,093 58,093
period, x 1,000
Number of shares on average, x 58,093 58,093 58,093
1,000
Share price, EUR
Average price 1.39 0.46 0.86
Lowest price 1.11 0.39 0.39
Highest price 1.82 0.58 1.59
Share price at end of period 1.35 0.52 1.37
Market value of issued stock at 78.4 30.2 79.6
end of period, MEUR
Share turnover, million shares 21.9 9.7 32.4
Share turnover, % of total 37.7 16.7 55.8
Share turnover, MEUR 30.4 4.4 27.9
CONTINGENT LIABILITIES
MEUR 1-6/04 1-6/03 2003
Pledges given 1.0 0.5 1.0
For own debts
Real estate mortgages 0.7 0.7 0.7
Pledges given to cover other
company commitments
Mortgages 1.3 1.3 1.3
Real estate mortgages 0.2 0.2 0.2
Other company liabilities 2.6 2.2 2.6
Derivative contracts
Currency forward contracts
Market value 18.6 13.1 15.7
Value of underlying 18.2 13.7 16.7
instrument
Currency options
Market value 0.0 0.9 0.0
KEY FIGURES PER QUARTER
1Q/03 2Q/03 3Q/03 4Q/03 1Q/04 2Q/04
Net sales, MEUR 7.6 11.6 9.1 17.0 11.7 13.6
Net sales, change % -9.2 41.5 -28.0 59.9 53.8 17.4
Operating result, MEUR -3.8 -0.8 -1.9 -0.5 -0.8 2.0
% of net sales -49.5 -7.6 -21.3 -2.7 -7.2 14.9
Result before -3.7 -0.6 -1.7 -0.4 -0.7 1.8
extraordinary items,
appropriations and taxes,
MEUR
Personnel at end of 436 444 437 398 343 347
period
Earnings per share, EUR -0.06 -0.01 -0.03 -0.02 -0.01 0.02
Equity per share, EUR 1.19 1.18 1.15 1.13 1.12 1.16
Net interest-bearing -32.8 -32.8 -31.9 -34.1 -29.5 -30.8
liabilities, MEUR
Order book, MEUR 8.3 6.9 7.2 10.0 16.7 11.1
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
The companys ten largest shareholders, excluding nominee
registrations, on 30 June 2004:
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
FIM Fenno Fund 1,285,000 2.21
Sumelius Johanna Marina 1,122,400 1.93
Oy Investsum AB 954,100 1.64
Estate of Suutarinen Helena 901,200 1.55
Sumelius Maria 790,600 1.36
Kyro Corporation 715,362 1.23
Mandatum Suomi Kasvuosake 711,348 1.22
Fund
TOTAL 13,750,010 23.66
Ownership of Tecnomen shares, 30 June 2004
Shares Holders % Shares and %
votes
1-500 3,323 46.61 746,887 1.29
501-1,000 1,224 17.17 976,225 1.68
1,001-5,000 1,733 24.31 4,379,407 7.54
5,001-10,000 394 5.53 3,027,977 5.21
10,001-50,000 305 4.28 6,582,512 11.33
50,001-100,000 54 0.76 3,912,073 6.73
100,001-500,000 81 1.14 19,136,082 32.94
500,001< 16 0.22 19,293,815 33.21
Joint account 37,600 0.06
Total 7,130 100.00 58,092,578 100.00
Ownership structure by sector, 30 June 2004
No. of shares %
Companies 6,877,848 11.84
Finance houses and insurance 13,294,918 22.89
companies
Public sector 1,476,335 2.54
Non-profit making associations 3,191,922 5.49
Households and private persons 31,700,949 54.57
Foreign holders 1,513,006 2.60
TOTAL 58,054,978 99.94
Joint account 37,600 0.06
Share capital 58,092,578 100.00
Nominee registrations 3,100,571 5.34
