TECNOMEN?S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2004
Tecnomen Corporation STOCK EXCHANGE RELEASE
27 October 2004 at 8.30 am
TECNOMENS INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2004
Tecnomens net sales in the review period increased 33.5 per cent to
EUR 37.8 (28.3) million. The operating result for the review period
was EUR 2.1 (-6.6) million.
SUMMARY, JULY-SEPTEMBER
- Net sales EUR 12.5 (9.1) million
- Operating result EUR 0.9 (-1.9) million
- Order book EUR 8.9 (7.2) million
- Cash flow EUR 0.2 (-1.2) million
- Cash funds EUR 31.6 (33.1) million
KEY FIGURES
7-9/04 7-9/03 1-9/04 1-9/03 2003
Net sales, MEUR 12.5 9.1 37.8 28.3 45.3
Net sales, change % 36.9 -28.0 33.5 -3.3 13.6
Operating result, MEUR 0.9 -1.9 2.1 -6.6 -7.0
% of net sales 7.2 -21.3 5.5 -23.3 -15.6
Result before 1.3 -1.7 2.5 -6.0 -6.4
extraordinary items,
appropriations and
taxes, MEUR
% of net sales 10.6 -18.6 6.6 -21.3 -14.2
Result for the period 1.1 -2.0 2.1 -6.3 -7.3
Personnel at end of 350 437 350 437 398
period
Earnings per share, EUR 0.04 -0.03 0.04 -0.11 -0.13
Equity per share, EUR 1.18 1.15 1.18 1.15 1.13
Net interest-bearing -31.0 -31.9 -31.0 -31.9 -34.1
liabilities, MEUR
Unless otherwise stated, all figures presented below are for the
review period 1-9/2004 and the figures for comparison are for the
corresponding period 1-9/2003.
MARKETS
Demand for all of Tecnomens products, in particular for the next
generation messaging and data charging solutions, increased during the
third quarter of 2004 from the previous quarters. Market growth in
Latin America was sustained throughout the period, and increasing
demand was witnessed in the Middle East, Africa and Eastern Europe,
and also in the Asia-Pacific region, where demand has been relatively
low for several years. Competition and the caution shown by operators
in making investment decisions maintained pressure on prices and
margins.
Messaging
Net sales of the Messaging product line during the review period rose
19 per cent to EUR 23.4 (19.6) million.
Some of the major system deliveries were: an expansion for the voice
mail system to Indosat (Indonesia) and an expansion and a system
update to Vodafone Ireland, including further enhancements to their
"Vodafone Mail" product. One encouraging regional breakthrough was
made in the growing mobile market in Pakistan: Telenor Pakistan
purchased Voice Mail and MMSC systems from Tecnomen. The PMR Messaging
business has remained stable.
Tecnomen has sales cooperation agreements with third party SMSC
providers to include an SMSC in its sales offering. Several contracts
with customers have already been signed, and the current offer
situation is very promising. As well as sales of individual SMSCs,
this cooperation has opened up access for Tecnomen to mobile operators
who wish to purchase complete messaging systems (Voice Mail, MMSC,
SMSC, Download Centre, WAP gateway) from a single system vendor.
The transfer of the outsourced functions to Accenture Service Oy was
completed in August. Cooperation in outsourcing with Accenture
continues as planned.
Charging
Net sales of the Charging product line during the review period rose
66.4 per cent to EUR 14.4 (8.7) million.
The main market area for Tecnomen Charging solutions continues to be
in Latin America. Several operators in the area have expanded or are
expanding their systems. Some of the largest system deliveries made
during the third quarter were expansions of prepaid systems to PCS
Digital in Guatemala and Nicaragua and to Porta in Ecuador.
Tecnomens ongoing sales efforts in the Asian and African markets have
increased the interest of potential customers in the company's
products. Data solutions such as real-time MMS billing are proving to
be particularly popular.
SALES AND NET SALES
Tecnomens net sales in the review period increased 33.5 per cent to
EUR 37.8 (28.3) million. The companys net sales in the third quarter
totalled EUR 12.5 (9.1) million, or 36.9 per cent higher than the year
before. Some 70 per cent of net sales came from 10 customers. Sales to
new customers accounted for 27.1 per cent (13.1%) 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
1-9/2004 1-9/2003
MEUR % MEUR %
Messaging 23.4 61.8 19.6 69.3
Charging 14.4 38.2 8.7 30.7
TOTAL 37.8 100.0 28.3 100.0
Net sales by region
1-9/2004 1-9/2003
MEUR % MEUR %
Americas 17.3 45.7 7.4 26.3
EMEA 18.4 48.6 17.4 61.5
APAC 2.1 5.7 3.5 12.2
TOTAL 37.8 100.0 28.3 100.0
The performance in different geographical regions varied considerably.
The biggest change during the review period took place in South
America, where sales grew 132.2 per cent. In EMEA (Europe, Middle East
and Africa) sales grew 5.6 per cent. Sales declined 38.2 per cent in
APAC (Asia Pacific).
Sales through global partners totalled EUR 5.6 (4.9) million or
14.9 per cent (17.2%) of net sales.
Maintenance and service sales together accounted for EUR 5.6 million
or 14.9 per cent (21.4%) of net sales.
The order book increased 24.9 per cent and stood at EUR 8.9 (7.2)
million at the end of the review period. The Messaging product line
accounted for EUR 6.1 million or 68.4 per cent (74.6%) of the order
book and Charging for EUR 2.8 million or 31.6 per cent (25.4%). The
order book grew encouragingly especially in South America, which
accounted for 53.9 per cent (34.7%) of the order book.
OPERATING RESULT
The operating result for the review period was EUR 2.1 (-6.6) million.
The companys operating result in the third quarter totalled EUR 0.9
(-1.9) million.
The result for the period before extraordinary items, appropriations
and taxes was EUR 2.5 (-6.0) million.
Earnings per share were EUR 0.04 (-0.11). Equity per share at the end
of period was EUR 1.18 (1.15).
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets were EUR 31.6
(33.1) million. The balance sheet total on 30 September 2004 stood at
EUR 78.6 (75.1) million. Interest bearing liabilities amounted to
EUR 0.6 (1.2) million. The debt to equity ratio (gearing) was -46.0
per cent (-48.8%). The balance sheet structure remained strong and
the equity ratio on 30 September 2004 was 87.7 per cent (88.8%).
Tecnomens gross capital expenditure during the review period was
EUR 1.2 (1.6) million, or 3.2 per cent (5.6%) of net sales.
Financial income and expenses during the review period totalled
EUR 0.4 (0.6) million and that consists mainly of interest income.
Change in working capital
1-9/04 1-9/03
Trade receivables and advances, incr. -3.6 2.9
(-)/ decr. (+)
Other short-term receivables, non- 0.0 0.2
interest bearing, incr. (-)/ decr. (+)
Inventories, incr. (-)/ decr. (+) -0.5 0.2
Accounts payable and advances, incr. (+)/ 0.2 0.1
decr. (-)
Other current liabilities, non-interest -2.0 -0.3
bearing, inc. (+)/ decr. (-)
CHANGE IN WORKING CAPITAL, TOTAL -6.0 3.1
RESEARCH AND DEVELOPMENT
R&D costs during the review period were EUR 8.3 (7.0) million,
corresponding to 22.1 per cent (24.9%) of net sales. R&D related costs
have been recorded directly as costs.
PERSONNEL
At the end of September 2004, Tecnomen employed 350 (437) people
worldwide, 134 (234) in Finland and 216 (203) abroad. The company
employed on average 355 (440) people during the review period. During
the first quarter 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 September 2004 the shareholders equity of Tecnomen
Corporation stood at EUR 67.4 (66.1) 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 1.18 (1.15).
A total of 26,632,490 Tecnomen shares (EUR 36,570,989) were traded on
the Helsinki Exchanges during the period 2 January - 30 September
2004, or 45.8 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 1.37 and the closing
price on 30 September 2004 was 1.32. The share stock had a market
value of EUR 76,682,203 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.
ADOPTION OF IFRS STANDARDS
Tecnomen will adopt IFRS standards in its financial reporting on 1
January 2005. The opening balance and comparison figures for 2004 will
be published during the first quarter of 2005.
According to preliminary estimates, the standards that have the
biggest impact on the 2004 opening balance are IAS 11, 18 Principles
for Revenue Recognition, IAS 19 Provisions for Disability Pension
under the Employees Pension Act, and changes in the classification of
provisions based on IAS 37.
PROSPECTS FOR 2004
Tecnomen expects net sales in 2004 to exceed EUR 50 million and the
result for the fourth quarter to be positive.
FINANCIAL INFORMATION
Tecnomen is holding a conference to announce its third quarter results
at 10.00 am on 27 October 2004 in the Pavilion room at the Scandic
Hotel Simonkenttä. The material presented at the press conference will
be available at 10.00 am on Tecnomens website at
www.tecnomen.com/investor.
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
CONSOLIDATED INCOME STATEMENT
MEUR 1-9/2004 1-9/2003 2003
Net sales 37.8 28.3 45.3
Operating expenses 34.0 32.5 49.3
Depreciation 1.8 2.3 3.0
Operating result 2.1 -6.6 -7.0
% of net sales 5.5 -23.3 -15.6
Financial income and expenses 0.4 0.6 0.6
Result before extraordinary 2.5 -6.0 -6.4
items
Result before taxes and 2.5 -6.0 -6.4
minority interest
Taxes -0.4 -0.3 -0.8
Result for the period 2.1 -6.3 -7.3
CONSOLIDATED BALANCE SHEET
MEUR 30.9.2004 30.9.2003 31.12.2003
Fixed assets 9.6 10.6 10.1
Current assets
Inventories 2.6 3.4 2.2
Trade receivables 31.5 24.6 27.0
Cash and bank balances 31.6 33.1 34.8
Other financial assets 3.3 3.4 3.4
Assets 78.6 75.1 77.5
Shareholders equity 67.4 66.1 65.2
Provisions 0.6 0.0 0.6
Liabilities
Interest-bearing 0.6 0.8 0.7
liabilities
Non-interest bearing 9.8 8.2 10.9
liabilities
Deferred tax 0.2 0.0 0.1
liabilities
Equity and liabilities 78.6 75.1 77.5
CONSOLIDATED CASH FLOW STATEMENT
MEUR 1-9/2004 1-9/2003 2003
Cash flow, business operations -1.8 -0.5 1.9
Cash flow from investments -1.3 -1.0 -1.6
Cash flow from financing -0.1 -0.1 -0.2
Increase (+) and decrease (-) -3.2 -1.6 0.1
in liquid funds
Liquid funds on 1 Jan. 34.8 34.7 34.7
Liquid funds on 30 September/ 31.6 33.1 34.8
31 December
Change -3.2 -1.6 0.1
KEY FINANCIAL FIGURES
MEUR 1-9/2004 1-9/2003 2003
Return on investment, % 5.0 -11.3 -9.1
Return on equity, % 4.2 -12.2 -10.5
Equity ratio, % 87.7 88.8 85.2
Debt/equity ratio (gearing), % -46.0 -48.8 -52.3
Investments 1.2 1.6 1.9
% of net sales 3.2 5.6 4.2
Research and development 8.3 7.0 9.4
% of net sales 22.1 24.9 20.8
Order book 8.9 7.2 10.0
Personnel, average 355 440 440
Personnel, at end of period 350 437 398
KEY FIGURES PER SHARE
MEUR 1-9/2004 1-9/2003 2003
Earnings per share, EUR 0.04 -0.11 -0.13
Equity per share, EUR 1.18 1.15 1.13
Number of shares at end of 58,093 58,093 58,093
period, x 1,000
Number of shares on average, 58,093 58,093 58,093
x 1,000
Share price, EUR
Average price 1.37 0.59 0.86
Lowest price 1.11 0.39 0.39
Highest price 1.82 0.92 1.59
Share price at end of period 1.32 0.83 1.37
Market value of issued stock at 76.7 48.2 79.6
end of period, MEUR
Share turnover, million shares 26.6 17.9 32.4
Share turnover, % of total 45.8 30.9 55.8
Share turnover, MEUR 36.6 10.5 27.9
CONTINGENT LIABILITIES
MEUR 1-9/2004 1-9/2003 2003
Pledges given 0.9 0.5
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 2.3 2.3 2.7
Derivative contracts
Currency forward contracts
Market value 18.7 12.7 15.7
Value of underlying 18.8 13.3 16.7
instrument
Currency options
Market value 0.0 2.6 0.0
KEY FIGURES PER QUARTER
3Q/03 4Q/03 1Q/04 2Q/04 3Q/04
Net sales, MEUR 9.1 17.0 11.7 13.6 12.5
Net sales, change % -28.0 59.9 53.8 17.4 36.9
Operating result, MEUR -1.9 -0.5 -0.8 2.0 0.9
% of net sales -21.3 -2.7 -7.2 14.9 7.2
Result before extraordinary -1.7 -0.4 -0.7 1.8 1.3
items, appropriations and
taxes, MEUR
Personnel at end of period 437 398 343 347 350
Earnings per share, EUR -0.03 -0.02 -0.01 0.02 0.04
Equity per share, EUR 1.15 1.13 1.12 1.16 1.18
Net interest-bearing -31.9 -34.1 -29.5 -30.8 -31.0
liabilities, MEUR
Order book, MEUR 7.2 10.0 16.7 11.1 8.9
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 September 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
Kaleva Mutual Insurance Company 900,000 1.55
Sumelius Maria 790,600 1.36
Mandatum Suomi Kasvuosake Fund 736,348 1.27
TOTAL 13,959,648 24.03
Ownership of Tecnomen shares, 30 September 2004
Shares Holders % Shares and %
votes
1-500 3,316 46.95 746,173 1.28
501-1,000 1,180 16.71 938,237 1.62
1,001-5,000 1,723 24.39 4,390,654 7.56
5,001-10,000 399 5.65 3,053,497 5.26
10,001-50,000 293 4.15 6,270,058 10.79
50,001-100,000 56 0.79 4,070,974 7.01
100,001-500,000 77 1.09 17,973,746 30.94
500,001< 19 0.27 20,611,639 35.48
Joint account 37,600 0.06
Total 7,063 100.00 58,092,578 100.00
Ownership structure by sector, 30 September 2004
No. of shares %
Companies 6,844,445 11.78
Finance houses and insurance 12,946,701 22.29
companies
Public sector 1,554,112 2.68
Non-profit making associations 3,260,422 5.61
Households and private persons 31,999,242 55.08
Foreign holders 1,450,056 2.50
TOTAL 58,054,978 99.94
Joint account 37,600 0.06
Share capital 58,092,578 100.00
Nominee registrations 2,204,509 3.80
