TECNOMEN?S INTERIM REPORT 1 JANUARY ? 30 JUNE 2005 (IFRS)
Tecnomen Corporation STOCK EXCHANGE RELEASE
17 August 2005 at 8.30 am
TECNOMENS INTERIM REPORT 1 JANUARY 30 JUNE 2005 (IFRS)
Net sales in the first half of year increased 14.8 per cent to EUR 31.6 (27.6)
million. The result for the period was EUR 2.2 (2.3) million and cash flow EUR
0.3 (-3.4) million.
- Net sales EUR 31.6 (27.6) million
- Operating result EUR 2.2 (2.8) million
- Order book EUR 15.1 (13.7) million
- Cash flow EUR 0.3 (-3.4) million
- Cash funds at end of period EUR 31.2 (31.6) million
KEY FIGURES 4-6/05 4-6/04 1-6/05 1-6/04 2004
Net sales, MEUR 19.1 14.4 31.6 27.6 51.6
Net sales, change % 32.0 14.8
Operating result, MEUR 2.4 3.1 2.2 2.8 3.9
% of net sales 12.8 21.7 6.9 10.1 7.5
Profit before taxes, MEUR 3.1 3.0 2.9 2.8 4.9
% of net sales 16.2 20.6 9.1 10.1 9.5
Result for the period 2.6 2.8 2.2 2.3 4.0
Personnel at end of period 357 347 357 347 350
Earnings per share, EUR 0.04 0.05 0.04 0.04 0.07
Earnings per share, diluted, 0.04 0.05 0.04 0.04 0.07
EUR
The interim report has been prepared in accordance with the principles and
measurements of IFRS standards. Unless otherwise stated, all figures presented
below are for the review period 1-6/2005 and the figures for comparison are for
the corresponding period 1-6/2004. More information on Tecnomens transition to
IFRS standards was given in the stock exchange release dated 31 March 2005 and
available at www.tecnomen.com/investor.
From the beginning of 2005 the primary segment in Tecnomens financial
reporting is Tecnomen Group, divided into the Messaging and Charging product
lines, and the secondary segment is formed by the geographical areas, based on
customer location. The geographical segments are the Americas (North, Central
and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia
Pacific).
*)Hedging of receivables is done for 12 months and derivatives are accounted by
using fair value at the balance sheet date. Tecnomen does not apply hedging
accounting in accordance with IAS 39, changes in the fair value of derivatives
are recorded directly in the income statement. The comparable result that does
not include calculatory changes in these financial instruments used for hedging
future cash flow was EUR 5.0 million (3,7). The comparable result for 2004 was
EUR 3.1 million.
SALES AND NET SALES
Tecnomens net sales in the review period increased 14.8 per cent from the
corresponding period in 2004 to EUR 31.6 (27.6) million.
Tecnomens deliveries are divided into project or product and service
deliveries. Project deliveries are recognised in accordance with IAS 11
(Construction contracts) by stage of completion on the balance sheet date.
Revenue from product and service deliveries is recognised in accordance with
IAS 18 when the amount of revenue can be measured reliably and it is probable
that the company will receive the economic benefits associated with the
transaction. Some examples of these are system deliveries of short duration and
supplementary deliveries, such as maintenance, licences, training,
documentation and spare parts. Revenue from fixed term maintenance contracts is
normally recognised on a straight-line basis over the contract period.
EUR 23.9 million of the net sales in the review period has been recognised in
accordance with IAS 11 and EUR 7.7 million in accordance with IAS 18.
Net sales by geographical area were: Americas 51.4 per cent (46.5%), EMEA 40.2
per cent (45.5%) and APAC 8.4 per cent (8.0%).
Net sales by product lines were: Messaging 48.0 per cent (64 %), Charging 52.0
per cent (36.0 %).
Sales through global partners totalled EUR 6.7 (2.4) million or 21.2 per cent
(8.7%) of net sales.
Maintenance and service sales totalled EUR 3.8 million or 12.1 per cent (13.9%)
of net sales.
The order book stood at EUR 15.1 (13.7) million at the end of the review
period. Americas accounted for 45.0 per cent of the order book, EMEA 42.3 per
cent and APAC 12.7 per cent.
OPERATING RESULT
The result for the period was weakened by calculatory exchange rate losses of
EUR 2.8 (1.4) million relating to the dollar and by one-time personnel costs of
EUR 0.3 million.
The operating result for the review period was EUR 2.2 (2.8) million.
The profit for the period before taxes was EUR 2.9 (2.8) million.
Earnings per share were EUR 0.04 (0.04). Equity per share at the end of the
period was EUR 1.21 (1.15).
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets totalled EUR 31.2 (31.6)
million. Most of the liquid assets are invested in funds, and the calculated
increase in value in these (EUR 0.3 million) is entered in shareholders
equity. The balance sheet total on 30 June 2005 stood at EUR 84.8 (76.0)
million. Interest bearing liabilities amounted to EUR 0.5 (0.7) million. The
debt to equity ratio (gearing) was 43.6 per cent (-47.2%). The balance sheet
structure remained strong and the equity ratio on 30 June 2005 was 84.8 per
cent (87.3%).
Tecnomens gross capital expenditure excluding the capitalisation of
development cots during the review period was EUR 0.5 (0.8) million or 1.7 per
cent (2.8%) of net sales.
Financial income and expenses during the review period totalled EUR 0.7 (0.0)
million consisting mainly of valuating of balance sheet items.
CHANGE IN WORKING CAPITAL, MEUR 1-6/05 1-6/04
Trade receivables and advances, incr. (-) 0.4 -5.1
/decr. (+)
Other short-term receivables, non-interest -5.0 0.8
bearing, incr. (-)/decr. (+)
Inventories, incr. (-)/decr. (+) -1.0 -0.5
Accounts payable and advances, incr. (+) 0.4 0.4
/decr. (-)
Other current liabilities, non-interest bearing, 3.9 -0.8
incr. (+)/decr. (-)
CHANGE IN WORKING CAPITAL, TOTAL -1.2 -5.2
MARKETS
During the first half of the year investment among operators remained stable,
especially in markets experiencing strong subscriber growth. These include
Eastern Europe, Latin America, the Middle East, Africa and Asia Pacific.
Demand for next generation messaging solutions (NGM) rose during the review
period. To be able to offer new services and achieve greater cost-efficiency,
operators invested more in next generation voice messaging. In addition, the
more widespread introduction of 3G networks increased the need for video
messaging services.
Demand for prepaid solutions increased slightly during the first half of the
year. The reasons for this growth were growth in subscriber numbers and the
growing need to charge prepaid subscribers for the use of data services.
The largest prepaid solution contracts signed during the review period were the
USD 4.4 million expansion for Porta in Equador and the USD 7.6 million
expansion for CTI in Argentina. The biggest messaging solution expansion, worth
USD 2.9 million, was supplied to CLARO in Brazil. Next Generation Messaging
solution were supplied to Celcom and Maxis in Malaysia, to Voxmobile in
Luxembourg and AMC in Albania.
Messaging product line
During the first half of the year Tecnomen launched the iCalled and iMessaged
service packages, which are part of the Next Generation Messaging solution.
Tecnomen extended its partnership with Jinny Software Ltd to include Multimedia
Messaging Service Centre (MMSC) products and services. Jinny Software Ltd will
now provide Tecnomen with product development and maintenance services for both
MMSC and short message centre (SMSC) products.
Public authorities showed greater interest in Tecnomens PMR (Professional
Mobile Radio) Messaging products. To meet this need, Tecnomen tailored
Messaging products in line with public authority requirements.
Charging product line
The Charging product line continued to supply and support prepaid charging
solutions for mobile operators. The focus in R&D was on further developing
components connected with prepayment for data traffic. All operators who offer
real-time charging services for voice messaging and support SMS, MMS or GPRS
data services in their networks need a prepaid data service.
RESEARCH AND DEVELOPMENT
Research and development costs during the review period were EUR 6.5 (5.9)
million, corresponding to 20.5 per cent (21.3%) of net sales. EUR 1.3 (0.9)
million of development costs have been capitalised and will be amortised over
3-5 years. R&D costs of EUR 0.2 million (0.0) were amortised during the review
period.
The growing interest shown by operators in new service packages and NGM
solutions increased the companys investments in product development during the
review period.
PERSONNEL
At the end of June 2005 Tecnomen employed 357 (347) persons, of whom 129 (136)
worked in Finland and 228 (211) elsewhere. The company employed on average 352
(360) people during the review period. Personnel by geographical area were as
follows: Americas 55 (44) persons, EMEA 276 (277) and APAC 26 (26).
TECNOMEN SHARES AND SHARE CAPITAL
At the end of June 2005 the shareholders equity of Tecnomen Corporation stood
at EUR 70.3 (65.5) million and the share capital was EUR 4,648,286.24, divided
into 58,103,578 shares. The company held 268,000 of these shares, which
represents 0.46 per cent of the companys share capital and votes. The shares
held by the company have a nominal value of EUR 21,440. The equity per share
was EUR 1.21 (1.15).
A total of 16,775,641 Tecnomen shares (EUR 23,751,214) were traded on the
Helsinki Exchanges during the period 3 January 30 June 2005, representing
28.87 per cent of the total number of shares.
The highest share price quoted in the period was EUR 1.62 and the lowest EUR
1.28. The average quoted price was EUR 1.42 and the closing price on 30 June
2005 was EUR 1.56. The share stock had a market value of EUR 90,641,582 at the
end of the period.
CURRENT AUTHORISATIONS
The Annual General Meeting held on 16 March 2005 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 valid 2002 stock option programme approved by the Annual
General Meeting of Shareholders on 11 April 2002. The stock option programme 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 companys share
capital can rise by a maximum of EUR 328,000. The subscription period for the
2002A stock option is 1 April 2003 30 April 2006, for the 2002B stock option
1 April 2004 30 April 2007, for the 2002C stock option 1 April 2005 30
April 2007 and for the 2002D stock option 1 April 2006 30 April 2008. 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. During the
review period a total of 11,000 Tecnomen shares were subscribed with the 2002C
stock options, and these raised the share capital by EUR 880. No share
subscriptions were made with the other stock options.
EVENTS AFTER END OF PERIOD
Tecnomen receives USD 5.4 million expansion order from Brasil Telecom, which is
not included into order book at the end of review period. Tecnomen will provide
Brasil Telecom with prepaid and messaging expansions and upgrades for its
mobile and fixed networks. Delivery is scheduled mainly for the third quarter
of 2005.
PROSPECTS FOR 2005
Demand for the Next Generation Messaging Solutions (NGM) was increasing during
the period. During the second half of the year Tecnomen will also deliver NGM
solutions that replace competitors outdated systems. Expansion deliveries to
the Charging product lines prepaid systems continue as subscriber numbers
rise. Both product lines continue their heavy investment on R&D.
During 2005 Tecnomens net sales will improve clearly and positive trend in
result continues.
FINANCIAL INFORMATION
Tecnomen is holding a conference to announce its half-year results at 10.00 am
on 17 August 2005 in the Tapiola conference room at the Scandic Hotel
Simonkenttä. The material presented at the press conference will be available
at www.tecnomen.com/investor.
Tecnomen will publish its third quarter financial results on Wednesday,
2 November 2005.
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
Helsinki Exchanges
Main media
The figures are unaudited.
CONSOLIDATED INCOME STATEMENT, 1-6/05 1-6/04 2004
MEUR
NET SALES 31.6 27.6 51.6
Other operating income 0.3 0.0 1.4
Materials and services -6.3 -5.5 -11.3
Employee benefit expenses -11.1 -10.1 -19.9
Depreciation -1.1 -1.1 -2.3
Other operating expenses -11.2 -8.1 -15.8
OPERATING RESULT 2.2 2.8 3.9
Financial income and expenses 0.7 0.0 1.0
RESULT BEFORE TAXES 2.9 2.8 4.9
Income taxes -0.7 -0.5 -1.0
RESULT FOR THE PERIOD 2.2 2.3 4.0
Earnings per share, EUR 0.04 0.04 0.07
Earnings per share, diluted, EUR 0.04 0.04 0.07
Equity per share, EUR 1.21 1.15 1.16
CONSOLIDATED BALANCE SHEET, 30.6.2005 30.6.2004 31.12.2004
MEUR
Long-term assets
Fixed assets 11.9 10.7 11.1
Other long-term assets 0.6 0.5 0.5
Current assets
Inventories 3.2 2.7 2.2
Trade receivables 13.2 13.3 12.7
Other financial assets 24.6 17.2 19.6
Cash and bank balances 31.2 31.6 30.8
ASSETS 84.8 76.0 76.9
Shareholders equity 70.3 65.5 67.5
Long-term liabilities
Provisions 0.0 0.9 0.1
Interest-bearing liabilities 0.5 0.6 0.5
Non-interest bearing 0.0 0.3 0.0
liabilities
Deferred tax liabilities 1.0 0.4 0.6
Current liabilities
Interest-bearing liabilities 0.0 0.1 0.1
Non-interest bearing 13.0 8.3 8.1
liabilities
EQUITY AND LIABILITIES 84.8 76.0 76.9
CHANGE IN SHAREHOLDERS EQUITY, MEUR
MEUR Share Own Other Translation Retained Total
capital shares reserves difference earnings
Shareholders 4.6 -0.3 66.3 0.0 -3.2 67.5
equity
1 Jan. 2005
Change in 0.3 0.3
translation
difference
Recognised 0.4 0.4
directly in
retained
earnings
Result for the 2.2 2.2
period
Shareholders 4.6 -0.3 66.3 0.3 -0.6 70.3
equity
30 June 2005
MEUR Share Own Other Translation Retained Total
capital shares reserves difference earnings
Shareholders 4.6 -0.4 66.3 0.0 -7.5 63.1
equity
1 Jan. 2004
Change in 0.0 0.0
translation
difference
Recognised 0.1 0.1
directly in
retained
earnings
Result for the 2.3 2.3
period
Shareholders 4.6 -0.4 66.3 0.0 -5.1 65.5
equity
30 June 2004
CONSOLIDATED CASH FLOW STATEMENT, MEUR 1-6/05 1-6/04 2004
Cash flow, business operations 2.2 -1.5 -1.0
Cash flow from investments -1.9 -1.8 -3.3
Cash flow from financing -0.0 -0.0 -0.0
Increase (+) and decrease (-) in liquid 0.3 -3.4 -4.3
funds
Liquid funds on 1 Jan. 30.8 34.8 34.8
Change in fair value of investments 0.1 0.1 0.2
Liquid funds on 30 June / 31 December 31.2 31.6 30.8
Change 0.3 -3.4 -4.3
NET SALES BY SECONDARY SEGMENTS, 1-6/2005 1-6/2004 2004
MEUR
Americas 16.0 12.8 24.1
EMEA 12.7 12.5 22.5
APAC 2.7 2.2 5.1
TOTAL 31.6 27.5 51.6
CONSOLIDATED KEY FINANCIAL FIGURES, 1-6/05 1-6/04 2004
MEUR
Return on investment, % 8.4 8.4 7.4
Return on equity, % 6.5 7.1 6.0
Equity ratio, % 84.7 87.3 88.8
Debt/equity ratio (gearing), % -43.6 -47.2 -44.7
Investments 0.5 0.8 1.6
% of net sales 1.7 2.8 3.1
Research and development 6.5 5.9 11.5
% of net sales 20.5 21.3 22.4
Order book 15.1 13.7 12.2
Personnel, average 352 360 355
Personnel, at end of period 357 347 350
CONSOLIDATED KEY FIGURES PER SHARE, 1-6/05 1-6/04 2004
MEUR
Earnings per share, EUR 0.04 0.04 0.07
Earnings per share, diluted, EUR 0.04 0.04 0.07
Equity per share, EUR 1.21 1.15 1.16
Number of shares at end of period, x 58,104 58,093 58,093
1,000
Number of shares on average, x 1,000 58,095 58,093 58,093
Share price, EUR
Average price 1.42 1.39 1.37
Lowest price 1.28 1.11 1.11
Highest price 1.62 1.82 1.82
Share price at end of period 1.56 1.35 1.33
Market value of issued stock at end of 90.6 78.4 77.3
period, MEUR
Share turnover, million shares 16.8 21.9 33.1
Share turnover, % of total 28.9 37.7 57.1
Share turnover, MEUR 23.8 30.4 45.5
CONSOLIDATED CONTINGENT LIABILITIES, 1-6/05 1-6/04 2004
MEUR
Pledges given 0.8 1.0 0.8
For own debts
Mortgages 0.7 0.7 0.7
For other own commitments
Mortgages 1.3 1.3 1.3
Chattel mortgages 0.2 0.2 0.2
Other own liabilities 3.0 2.6 2.8
Derivative financial instruments
Currency forward contracts
Fair value 25.6 18.6 18.4
Value of underlying instruments 24.1 18.2 19.8
Currency options
Fair value 0.0 0.0 0.0
KEY FIGURES PER QUARTER, MEUR 2Q/05 1Q/05 1Q/04 2Q/04 3Q/04 4Q/04
Net sales, MEUR 19.1 12.6 13.1 14.4 11.7 12.4
Net sales, change % 32.0 -4.2
Operating result, MEUR 2.4 -0.3 -0.4 3.1 0.9 0.1
% of net sales 12.8 -2.1 -2.8 21.7 8.0 1.2
Result before taxes, MEUR 3.1 -0.2 -0.2 3.0 1.4 0.8
Personnel at end of period 357 350 343 347 350 350
Earnings per share, EUR 0.04 -0.01 -0.01 0.05 0.02 0.01
Earnings per share, diluted, 0.04 -0.01 -0.01 0.05 0.02 0.01
EUR
Equity per share, EUR 1.21 1.17 1.09 1.15 1.16 1.16
Net interest-bearing -30.7 -28.6 -29.6 -30.9 -31.1 -30.2
liabilities, MEUR
Order book, MEUR 15.1 19.4 20.3 13.7 11.3 12.2
IFRS Q2 2004 COMPARATIVE FIGURES
CONSOLIDATED INCOME STATEMENT, MEUR IFRS FAS IFRS
Q2 2004 Q2 2004 adjustments
NET SALES 27.6 25.3 2.3
Other operating income 0.0 0.0 0.0
Materials and services -5.5 -5.5 0.0
Employee benefit expenses -10.1 -10.8 0.8
Depreciation -1.1 -1.2 0.1
Other operating expenses -8.1 -6.6 -1.5
OPERATING RESULT 2.8 1.2 1.6
Financial income and expenses 0.0 0.0 0.0
RESULT BEFORE TAXES 2.8 1.2 1.6
Income taxes -0.5 -0.2 -0.3
RESULT FOR THE PERIOD 2.3 1.0 1.3
Earnings per share, EUR 0.04 0.02
Earnings per share, diluted, EUR 0.04 0.02
CONSOLIDATED BALANCE SHEET, MEUR IFRS FAS IFRS
30.6.2004 30.6.2004 adjustments
Long-term assets
Fixed assets 10.7 9.7 1.0
Other long-term assets 0.5 1.0 -0.5
Current assets
Inventories 2.7 2.7 0.0
Trade receivables 13.3 30.9 -17.6
Other financial assets 17.2 1.8 15.5
Cash and bank balances 31.6 31.5 0.1
ASSETS 76.0 77.5 -1.5
Shareholders´ equity 65.5 66.2 -0.8
Long-term liabilities
Provisions 0.9 0.6 0.3
Interest-bearing liabilities 0.6 0.6 0.0
Non-interest bearing 0.3 0.3 0.0
liabilities
Deferred tax liabilities 0.4 0.1 0.3
Current liabilities
Interest-bearing liabilities 0.1 0.1 0.0
Non-interest bearing 8.3 9.6 -1.3
liabilities
EQUITY AND LIABILITIES 76.0 77.5 -1.5
RECONCILIATION OF EQUITY, MEUR 1.1. 31.3. 30.6.
2004 2004 2004
Shareholders equity according to FAS 65.2 64.5 66.2
IFRS transition:
IAS 11 Construction contracts -2.0 -1.8 -1.3
IAS 12 Income taxes 0.0 -0.1 -0.3
IAS 19 Employee benefits -0.2 -0.3 -0.3
IAS 38 Intangible assets 0.0 0.3 0.9
IAS 39 Financial instruments 0.1 0.1 0.1
IFRS 3 Business combinations 0.0 0.0 0.1
Total -2.2 -1.8 -0.8
Shareholders equity according to IFRS 63.1 62.7 65.5
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.
SHAREHOLDERS
The companys ten largest shareholders, excluding nominee registrations, on 30
June 2005:
No. of shares %
Sampo Life Insurance Co. Ltd 3,083,400 5.31
Hammaren Lars-Olof 2,164,300 3.73
OP-Finland Small Firm Fund 2,111,962 3.64
Sumelius Henning 2,022,300 3.48
Pohjola Finland Value Investment 1,686,800
Fund 2.90
FIM Fenno Fund 1,466,600 2.52
Sumelius Johanna Maria 1,122,400 1.93
Kaleva Mutual Insurance Company 1,000,000 1.72
Oy Investsum Ab 947,500 1.63
Estate of Suutarinen Helena 901,200 1.55
TOTAL 16,506,462 28.41
Ownership of Tecnomen shares, 30 June 2005
Shares Holders % Shares and votes %
1-500 3,025 49.84 663,078 1.14
501-1,000 979 16.13 775,598 1.33
1,001-5,000 1,363 22.45 3,403,255 5.86
5,001-10,000 303 4.99 2,300,956 3.96
10,001-50,000 249 4.10 5,895,413 10.15
50,001-100,000 57 0.94 4,066,375 7.00
100,001-500,000 75 1.24 17,346,741 29,85
500,001< 19 0.31 23,614,562 40.64
Joint account 37,600 0.06
Total 6,070 100.00 58,103,578 100.00
Ownership structure by sector, 30 June 2005
No. of shares %
Companies 5,939,734 10.22
Finance houses and insurance companies 16,642,488 28.64
Public sector 1,032,725 1.78
Non-profit making associations 3,647,442 6.28
Households and private persons 29,427,911 50.65
Foreign holders 1,375,678 2.37
TOTAL 58,065,978 99.94
Joint account 37,600 0.06
Share capital 58,103,578 100.00
Nominee registrations 2,544,50 4.38
