TECNOMEN'S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2005 (IFRS)
Tecnomen Corporation STOCK EXCHANGE RELEASE
2 November 2005 at 08.30 am
TECNOMENS INTERIM REPORT 1 JANUARY 30 SEPTEMBER 2005 (IFRS)
Net sales in the review period increased 30.3 per cent to EUR 51.1 (39.2)
million. The result for the period was EUR 6.0 (3.3) million and cash flow EUR
-0.3 (-3.2) million. Net sales for the third quarter increased 66.9 per cent
and the result 266.0 per cent.
- Net sales EUR 51.1 (39.2) million
- Operating result EUR 6.4 (3.7) million
- Order book EUR 19.1 (11.3) million
- Cash flow EUR -0.3 (-3.2) million
- Cash funds at end of period EUR 30.6 (31.8) million
KEY FIGURES 7-9/05 7-9/04 1-9/05 1-9/04 2004
Net sales, MEUR 19.5 11.7 51.1 39.2 51.6
Net sales, change % 66.9 30.3
Operating result, MEUR 4.2 0.9 6.4 3.7 3.9
% of net sales 21.4 8.0 12.4 9.4 7.5
Profit before taxes, MEUR 4.2 1.4 7.1 4.1 4.9
% of net sales 21.6 11.6 13.9 10.6 9.5
Result for the period *) 3.8 1.0 6.0 3.3 4.0
Personnel at end of period 356 350 356 350 350
Earnings per share, EUR 0.06 0.02 0.10 0.06 0.07
Earnings per share, diluted, 0.06 0.02 0.10 0.06 0.07
EUR
The interim report has been prepared in accordance with IFRS recognition and
measurement principles. Unless otherwise stated, all figures presented below
are for the review period 1-9/2005 and the figures for comparison are for the
corresponding period 1-9/2004. 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, so changes in the fair value of
derivatives are recorded directly in the income statement. The comparable
result, which does not include these imputed changes in the financial
instruments used for hedging the future cash flow, was EUR 8.2 (4.4) million.
The comparable result for 2004 was EUR 3.1 million.
SALES AND NET SALES
Tecnomens net sales in the review period increased 30.3 per cent from the
corresponding period in 2004 to EUR 51.1 (39.2) 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 39.8 million of the net sales in the review period has been recognised in
accordance with IAS 11 and EUR 11.3 million in accordance with IAS 18.
Net sales by geographical area were: Americas 56.3 per cent (44.8%), EMEA 36.7
per cent (45.7%) and APAC 7.0 per cent (9.5%).
Net sales by product lines were: Messaging 46% (63%), Charging 54% (37%).
Sales through global partners totalled EUR 9.5 (5.1) million or 18.6 per cent
(13.1%) of net sales.
Maintenance and service sales totalled EUR 5.9 million or 11.5 per cent (14.3%)
of net sales.
The order book stood at EUR 19.1 (11.3) 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 imputed exchange rate losses of EUR
2.2 (1.0) million relating to the dollar.
The operating result for the review period was EUR 6.4 (3.7) million.
The profit for the period before taxes was EUR 7.1 (4.1) million.
Earnings per share were EUR 0.10 (0.06). Equity per share at the end of the
period was EUR 1.28 (1.16).
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets totalled EUR 30.6 (31.8)
million. Most of the liquid assets are invested in funds, and the imputed
increase in value in these (EUR 0.4 million) is entered in shareholders
equity. The balance sheet total on 30 September 2005 stood at EUR 91.2 (77.3)
million. Interest bearing liabilities amounted to EUR 0.5 (0.6) million. The
debt to equity ratio (gearing) was 40.5 per cent (-46.7%). The balance sheet
structure remained strong and the equity ratio on 30 September 2005 was 83.3
per cent (88.1%).
Tecnomens gross capital expenditure excluding the capitalisation of
development costs during the review period was EUR 1.3 (1.2) million or 2.5 per
cent (3.0%) of net sales.
Financial income and expenses during the review period totalled EUR 0.7 (0.4).
Interest income from redeemed fund units was EUR 0.4 million and the remaining
EUR 0.3 million comes from assessing currency based balance sheet items.
CHANGE IN WORKING CAPITAL, MEUR 1-9/05 1-9/04
Trade receivables and advances, incr. (-) -6.4 -5.7
/decr. (+)
Other short-term receivables, non-interest bearing, -3.6 1.2
incr. (-)/decr. (+)
Inventories, incr. (-)/decr. (+) -1.1 -0.5
Accounts payable and advances, incr. (+) 2.0 0.2
/decr. (-)
Other current liabilities, non-interest bearing, 4.8 -1.2
incr. (+)/decr. (-)
CHANGE IN WORKING CAPITAL, TOTAL -4.2 -6.0
MARKETS
During the third quarter of the year investments by operators remained stable
in emerging markets such as Latin America, Africa, Eastern Europe and the
densely populated countries of Asia.
Demand for Next Generation Messaging (NGM) solutions grew in Europe and Asia
during the review period. Operators were looking to invest in next generation
voice and video solutions in order to increase revenues and profitability.
Operators showed growing interest in next generation multipurpose platforms,
and Tecnomen signed Telco Server contracts for example with Onetel in the
United Kingdom. Telco Server has also boosted channel sales of Tecnomen Next
Generation solutions.
Strong demand continued for new Prepaid solutions and for expansions and
upgrades. This was due to the growth seen by operators in subscriber numbers
and to the increasing need for convergent charging solutions.
The largest contracts signed during the review period were the USD 5.8 million
Prepaid expansion for Porta in Ecuador, the USD 2.6 million Prepaid expansion
for PCS Digital in Guatemala, and the USD 5.4 million Prepaid and Messaging
expansion and upgrade contract for Brasil Telecom.
Tecnomen also signed new Messaging system contracts with Mobile TeleSystems
(MTS) in Russia and Eltel Networks in Sweden. During this review period,
expansions and upgrades were delivered to CTE Telecom Personal in El Salvador,
Alõ-Megatel in Honduras, Mattel in Mauritania and CTI in Argentina.
Messaging product line
During the review period Tecnomen expanded the NGM service offering with new
voice and video messaging services and iCalled services.
Tecnomen also launched its Next Generation Telco Server product. The Tecnomen
Telco Server is an open, standards compliant, scalable multipurpose access
platform used in building voice and video applications for both circuit
switched and IMS networks.
In the Professional Mobile Radio (PMR) market, Tecnomen's Voice Mail services
combined with the Tecnomen Short Data Service Centre (SDSC) comprise a complete
suite of services for TETRA operators. TETRA operators are now able to offer a
wide range of value added services to their demanding public authority
customers, such as the police and fire services.
Charging product line
Tecnomen's Convergent Charging (Prepaid) solution continued its success during
the review period. Tecnomen added advanced services to the Prepaid Data
Charging solution, in line with the growing demand from operators for
convergent, real-time charging products for voice messaging and SMS, MMS and
GPRS data services.
For the Prepaid Voice Charging solution, Tecnomen introduced a wide range of
new features to boost the competitive standing of operators. Development
efforts were focused on more sophisticated bonus and discount options, and on
improving the competitiveness of the Convergent Charging solution.
RESEARCH AND DEVELOPMENT
Research and development costs during the review period were EUR 9.4 (8.3)
million, corresponding to 18.5 per cent (21.2%) of net sales. EUR 2.6 (1.5)
million of development costs have been capitalised and will be amortised over 3-
5 years starting from commercial use. R&D costs of EUR 0.3 million (0.0) were
amortised during the review period.
PERSONNEL
At the end of September 2005 Tecnomen employed 356 (350) persons, of whom 118
(134) worked in Finland and 238 (216) abroad. The company employed on average
352 (355) people during the review period. Personnel by geographical area were
as follows: Americas 61 (46) persons, EMEA 270 (278) and APAC 25 (26).
TECNOMEN SHARES AND SHARE CAPITAL
At the end of September 2005 the shareholders equity of Tecnomen Corporation
stood at EUR 74.2 (66.6) million and the share capital was EUR 4,654,926.24,
divided into 58,186,578 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 1.28 (1.16).
A total of 32,812,716 Tecnomen shares (EUR 55,709,272) were traded on the
Helsinki Exchanges during the period 3 January 30 September 2005,
representing 56.39 per cent of the total number of shares.
The highest share price quoted in the period was EUR 2.57 and the lowest EUR
1.28. The average quoted price was EUR 1.70 and the closing price on 30
September 2005 was EUR 2.34. The share stock had a market value of EUR
136,156,593 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 94,000 Tecnomen shares were subscribed with the 2002C
stock options, and these raised the share capital by EUR 7,520. No share
subscriptions were made with the other stock options.
PROSPECTS FOR 2005
Demand for the Next Generation Messaging Solutions (NGM) is further increasing.
During the second half of the year deliveries of prepaid system expansions from
the Charging product line will continue as subscriber numbers rise. Both
product lines continue their heavy investment in R&D.
Net sales for 2005 are expected to increase by almost one third and the result
for the Q4 to be positive.
FINANCIAL INFORMATION
Tecnomen is holding a conference to announce its third quarter results at 10.00
am on 2 November 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 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, 1-9/05 1-9/04 2004
MEUR
NET SALES 51.1 39.2 51.6
Other operating income 0.0 0.0 1.4
Materials and services -11.0 -8.1 -11.3
Employee benefit expenses -17.0 -14.7 -19.9
Depreciation -1.6 -1.7 -2.3
Other operating expenses -15.2 -11.2 -15.8
OPERATING RESULT 6.4 3.7 3.9
Financial income and expenses 0.7 0.4 1.0
RESULT BEFORE TAXES 7.1 4.1 4.9
Income taxes -1.1 -0.8 -1.0
RESULT FOR THE PERIOD 6.0 3.3 4.0
Earnings per share, EUR 0.10 0.06 0.07
Earnings per share, diluted, EUR 0.10 0.06 0.07
Equity per share, EUR 1.28 1.16 1.16
CONSOLIDATED BALANCE SHEET, 30.9.2005 30.9.2004 31.12.2004
MEUR
Long-term assets
Fixed assets 13.4 11.3 11.1
Other long-term assets 0.5 0.9 0.5
Current assets
Inventories 3.3 2.7 2.2
Trade receivables 20.2 14.3 12.7
Other financial assets 23.2 16.4 19.6
Cash and bank balances 30.6 31.8 30.8
ASSETS 91.2 77.3 76.9
Shareholders equity 74.2 66.6 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 1.2 0.6 0.6
Current liabilities
Interest-bearing liabilities 0.0 0.1 0.1
Non-interest bearing 15.3 8.3 8.1
liabilities
EQUITY AND LIABILITIES 91.2 77.3 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 0.5 0.5
translation
difference
Recognised 0.4 0.4
directly in
retained
earnings
Deferred taxes -0.1 -0.1
share
Result for the 6.0 6.0
period
Shareholders 4.6 -0.3 66.3 0.5 3.1 74.2
equity
30 Sep 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 0.2 0.2
directly in
retained
earnings
Result for the 3.3 3.3
period
Shareholders 4.6 -0.4 66.3 0.0 -4.0 66.6
equity
30 Sep 2004
CONSOLIDATED CASH FLOW STATEMENT, MEUR 1-9/05 1-9/04 2004
Cash flow, business operations 3.5 -0.3 -1.0
Cash flow from investments -3.8 -2.8 -3.3
Cash flow from financing -0.1 -0.1 -0.0
Increase (+) and decrease (-) in liquid -0.3 -3.2 -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 Sep / 31 Dec 30.6 31.8 30.8
Change -0.3 -3.2 -4.3
NET SALES BY SECONDARY SEGMENTS, MEUR 1-9/05 1-9/04 2004
Americas 28.8 17.6 24.1
EMEA 18.7 18.0 22.5
APAC 3.6 3.7 5.1
TOTAL 51.1 39.2 51.6
CONSOLIDATED KEY FINANCIAL FIGURES, 1-9/05 1-9/04 2004
MEUR
Return on investment, % 13.9 8.8 7.4
Return on equity, % 11.3 6.9 6.0
Equity ratio, % 83.3 88.1 88.8
Debt/equity ratio (gearing), % -40.5 -46.7 -44.7
Investments 1.3 1.2 1.6
% of net sales 2.5 3.0 3.1
Research and development 9.4 8.3 11.5
% of net sales 18.5 21.2 22.4
Order book 19.1 11.3 12.2
Personnel, average 352 355 355
Personnel, at end of period 356 350 350
CONSOLIDATED KEY FIGURES PER SHARE, 1-9/05 1-9/04 2004
MEUR
Earnings per share, EUR 0.10 0.06 0.07
Earnings per share, diluted, EUR 0.10 0.06 0.07
Equity per share, EUR 1.28 1.16 1.16
Number of shares at end of period, x 58,187 58,093 58,093
1,000
Number of shares on average, x 1,000 58,108 58,093 58,093
Share price, EUR
Average price 1.70 1.37 1.37
Lowest price 1.28 1.11 1.11
Highest price 2.57 1.82 1.82
Share price at end of period 2.34 1.32 1.33
Market value of issued stock at end of 136.2 76.7 77.3
period, MEUR
Share turnover, million shares 32.8 26.6 33.1
Share turnover, % of total 56.4 45.8 57.1
Share turnover, MEUR 55.7 36.6 45.5
CONSOLIDATED CONTINGENT LIABILITIES, 1-9/05 1-9/04 2004
MEUR
Pledges given 0,8 0.9 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 2.3 2.8
Derivative financial instruments
Currency forward contracts
Fair value 14.8 18.7 18.4
Value of underlying instruments 13.9 18.8 19.8
Currency options
Fair value 0.0 0.0 0.0
KEY FIGURES PER QUARTER, MEUR 3Q/05 2Q/05 1Q/05 4Q/04 3Q/04 2Q/04
Net sales, MEUR 19.5 19.1 12.6 12.4 11.7 14.4
Net sales, change % 66.9 32.0 -4,2
Operating result, MEUR 4.2 2.4 -0.3 0.1 0.9 3.1
% of net sales 21.4 12.8 -2.1 1.2 8.0 21.7
Result before taxes, MEUR 4.2 3.1 -0.2 0.8 1.4 3.0
Personnel at end of period 356 357 350 350 350 347
Earnings per share, EUR 0.06 0.04 -0.01 0.01 0.02 0.05
Earnings per share, diluted, 0.06 0.04 -0.01 0.01 0.02 0.05
EUR
Equity per share, EUR 1.28 1.21 1.17 1.16 1.16 1.15
Net interest-bearing -30.1 -30.7 -28.6 -30.2 -31.1 -30.9
liabilities, MEUR
Order book, MEUR 19.1 15.1 19.4 12.2 11.3 13.7
IFRS Q3 2004 COMPARATIVE FIGURES
CONSOLIDATED INCOME STATEMENT, MEUR IFRS FAS IFRS
1-9/04 1-9/04 adjustments
NET SALES 39.2 37.8 1.5
Other operating income 0.0 0.0 0.0
Materials and services -8.1 -8.1 0.0
Employee benefit expenses -14.7 -15.8 1.1
Depreciation -1.7 -1.8 0.1
Other operating expenses -11.2 -10.1 -1.0
OPERATING RESULT 3.7 2.1 1.6
Financial income and expenses 0.4 0.4 0.0
RESULT BEFORE TAXES 4.1 2.5 1.6
Income taxes -0.8 -0.4 -0.4
RESULT FOR THE PERIOD 3.3 2.1 1.2
Earnings per share, EUR 0.06 0.04
Earnings per share, diluted, EUR 0.06 0.04
CONSOLIDATED BALANCE SHEET, MEUR IFRS FAS IFRS
30.9.2004 30.9.2004 adjustments
Long-term assets
Fixed assets 11.3 9.6 1.6
Other long-term assets 0.9 0.9 0.0
Current assets
Inventories 2.7 2.7 0.0
Trade receivables 14.3 31.5 -17.2
Other financial assets 16.4 2.3 14.1
Cash and bank balances 31.8 31.6 0.1
ASSETS 77.3 78.6 -1.3
Shareholders´ equity 66.6 67.4 -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 0.6 0.2 0.4
Current liabilities
Interest-bearing liabilities 0.1 0.1 0.0
Non-interest bearing 8.3 9.5 -1.2
liabilities
EQUITY AND LIABILITIES 77.3 78.6 -1.3
RECONCILIATION OF EQUITY, MEUR 1.1. 31.3. 30.6. 30.9.
2004 2004 2004 2004
Shareholders equity according to FAS 65.2 64.5 66.2 67.4
IFRS transition:
IAS 11 Construction contracts -2.0 -1.8 -1.3 -1.8
IAS 12 Income taxes 0.0 -0.1 -0.3 -0.5
IAS 19 Employee benefits -0.2 -0.3 -0.3 -0.3
IAS 38 Intangible assets 0.0 0.3 0.9 1.5
IAS 39 Financial instruments 0.1 0.1 0.1 0.1
IFRS 3 Business combinations 0.0 0.0 0.1 0.1
Total -2.2 -1.8 -0.8 -0.8
Shareholders equity according to IFRS 63.1 62.7 65.5 66.6
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
September 2005:
No. of shares %
Sampo Life Insurance Co. Ltd/Mandatum 3,083,400 5.30
Hammaren Lars-Olof 2,164,300 3.72
Sumelius Henning 2,022,300 3.48
OP-Finland Small Firm Fund 2,000,562 3.44
Pohjola Finland Value Investment Fund 1,479,800 2.54
FIM Fenno Fund 1,466,600 2.52
Suupohjan Cooperative Bank 1,234,900 2.12
Sumelius Johanna Marina 1,122,400 1.93
Kaleva Mutual Insurance Company 950,000 1.63
Oy Investsum Ab 947,500 1.63
TOTAL 16,471,762 28.31
Ownership of Tecnomen shares, 30 September 2005
Shares Holders % Shares and votes %
1-500 3,031 49.45 669,514 1.15
501-1,000 1,032 16.84 828,591 1.42
1,001-5,000 1,370 22.35 3,419,721 5.88
5,001-10,000 312 5.09 2,381,851 4.09
10,001-50,000 240 3.92 5,639,625 9.69
50,001-100,000 54 0.88 3,933,044 6.76
100,001-500,000 71 1.16 15,895,504 27.32
500,001< 19 0.31 25,381,128 43.62
Joint account 37,600 0.06
Total 6,129 100.00 58,186,578 100.00
Ownership structure by sector, 30 September 2005
No. of shares %
Companies 5,166,624 8.88
Finance houses and insurance companies 17,571,920 30.20
Public sector 994,825 1.71
Non-profit making associations 3,541,971 6.09
Households and private persons 29,456,917 50.62
Foreign holders 1,416,721 2.43
TOTAL 58,148,978 99.94
Joint account 37,600 0.06
Share capital 58,186,578 100.00
Nominee registrations 4,887,484 8.40
