TECNOMEN'S INTERIM REPORT 1 JANUARY - 31
Tecnomen Corporation STOCK EXCHANGE RELEASE
29 April 2003 at 8.30 a.m.
TECNOMEN'S INTERIM REPORT 1 JANUARY - 31 MARCH 2003
Tecnomens order book was better at the end of the review period than
at the corresponding time in 2002, even though the market remained in
a difficult state. During the review period Tecnomen supplied voice
mail, multimedia and prepaid systems to new customers, reinforcing its
market position. Net sales fell slightly from the previous year, but
the loss declined.
- Net sales EUR 7.6 (8.4) million
- Operating result EUR -3.8 (-5.4) million
- Order book EUR 8.3 (5.7) million
- Cash flow EUR -1.0 (-2.3) million
- Cash funds EUR 33.7 (38.8) million
- Equity ratio 89.9% (88.3%)
KEY FIGURES
1-3/03 1-3/02 2002
Net sales, MEUR 7.6 8.4 39.9
Net sales, change % -9.2 -44.3 -30.2
Operating result, MEUR -3.8 -5.4 -14.1
% of net sales -49.5 -64.0 -35.5
Result before -3.7 -5.3 -14.6
extraordinary items,
appropriations and taxes,
MEUR
% of net sales -49.0 -62.6 -36.7
Personnel at end of 436 558 457
period
Earnings per share, EUR -0.06 -0.09 -0.25
Equity per share, EUR 1.19 1.41 1.26
Net interest-bearing -32.8 -37.8 -33.8
liabilities, MEUR
Unless otherwise stated, all figures presented below are for the
review period 1-3/2003 and the figures for comparison are from the
corresponding period 1-3/2002.
MARKETS
No significant changes took place during the review period from
previous trends in the telecommunications market. Operators focused on
improving cost-efficiency, but at the same time were actively looking
for new service features to boost their net sales. The Iraq war slowed
down growth and increased caution during the review period in the
global economy. The prevailing caution of operators kept capital
expenditure at a low level and operators still required short pay-back
times for their investments. Competition intensified, increasing
pressure on system prices.
SALES AND NET SALES
Tecnomen supplied voice mail, multimedia and prepaid systems to
several new customers. Sales of system expansions were somewhat lower
during the review period, but the company was involved in several
negotiations and signed agreements of intent for expanding and
upgrading existing customer systems.
Tecnomens net sales in the first quarter totalled EUR 7.6 (8.4)
million, a decline of some 9 per cent from the first quarter in 2002.
The order book remained at a better level as in the previous year.
Net sales by business unit were as follows:
1-3/2003 1-3/2002
MEUR % MEUR %
Messaging Solutions 4.5 59 6.0 71
Intelligent Networks Systems 2.0 26 1.6 19
Paging Systems 1.1 14 0.8 10
Total net sales and their distribution among the different business
units vary greatly from one quarter of the year to another, as a
result of the timing of project deliveries.
In Europe, net sales mainly comprised deliveries of messaging and
paging systems. The voice mail system of a European operator was
replaced with a Tecnomen system. Multimedia messaging systems were
supplied in Europe and Asia.
Tecnomen supplied prepaid systems to two subsidiaries of América
Móvil, to PCS Digital in Guatemala and Nicaragua. Tecnomen also signed
a contract to upgrade a messaging system with the Kuwait-based Mobile
Telecommunications Company (MTC). During the review period, delivery
projects in Kuwait were postponed because of the Iraq war. Despite the
delays, there was no risk of the projects not being implemented.
Maintenance sales in total accounted for some 30 per cent (28%) of net
sales. In 2002, maintenance and support functions in total accounted
for 20 per cent of net sales.
Sales through global partners totalled some EUR 0.5 million or 6.7%
(6.8%) of net sales.
The order book showed a significant improvement on the end of the
corresponding period in the previous year. At the end of March the
order book stood at EUR 8.3 (5.7) million.
OPERATING RESULT
The company had an operating result during the review period of EUR
-3.8 (-5.4) million. The Groups operating loss declined from the
previous year because of the savings and restructuring action taken.
The result for the period before extraordinary items, appropriations
and taxes was EUR -3.7 (-5.3) million.
Earnings per share were EUR -0.06 (-0.09). Equity per share at the end
of the period was EUR 1.19.
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets were EUR 33.7
(38.8) million. The balance sheet total on 31 March 2003 stood at EUR
76.9 (93.8) million. The cash flow in the first quarter was EUR -1.0
(-2.3) million. Interest-bearing liabilities amounted to EUR 0.8 (1.0)
million. The debt to equity ratio (gearing) was -47.8 (-46.1) per
cent. The balance sheet structure remained strong and the equity ratio
on 31 March 2003 was 89.9 (88.3) per cent.
Financial income and expenses during the review period totalled
EUR 0.0 (0.1) million.
Tecnomens gross capital expenditure during the review period was
EUR 0.1 (0.5) million.
RESEARCH AND DEVELOPMENT
R&D on new versions of the companys main products progressed on
schedule. The latest voice service, unified messaging and multimedia
products based on the Tecnomen eZONER service platform were displayed
at the 3GSM World Congress in Cannes. Production of the prepaid system
versions presented at the end of 2002 proceeded as planned and
deliveries to customers were made on schedule.
R&D costs during the review period were EUR 2.5 (2.8) million,
corresponding to 32.5 (33.7) per cent of net sales. R&D related costs
have been recorded directly as costs.
PERSONNEL
At the end of the first quarter of 2003, Tecnomen employed 436 (558)
people worldwide. The average number of personnel during the period
was 438 (560).
TECNOMEN SHARES AND SHARE CAPITAL
At the end of March 2003 the shareholders' equity of Tecnomen
Corporation stood at EUR 68.7 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. The equity per share was EUR 1.19.
A total of 5,143,609 Tecnomen shares (EUR 2,394,278) were traded on
the Helsinki Exchanges during the period 2 January - 31 March 2003, or
8.85 per cent of the total number of shares. The highest share price
quoted in the period was EUR 0.58 and the lowest was EUR 0.42. The
average quoted price was EUR 0.47 and the closing price on 31 March
2003 was EUR 0.43. The share stock had a market value of EUR
24,979,809 at the closing price.
NOTIFICATION UNDER CHAPTER 2, SECTION 9 OF THE MARKET SECURITIES ACT
On 5 March, Tecnomen published notification of a change in share
ownership under section 9 of chapter 2 of the Finnish Securities
Market Act. In a transaction on 3 March 2003, Fennogens Investments
S.A acquired 1,535,000 Tecnomen Corporation shares (2.64%). When added
to the 1,952,092 Tecnomen shares (3.36%) already owned by Geveles Oy,
a fully-owned subsidiary of Fennogens Investments S.A, this raised the
total holding of Fennogens Group to 3,487,092 shares, or 6 per cent of
Tecnomen Corporations shares.
CURRENT AUTHORISATIONS
Tecnomens Annual General Meeting held on 25 March 2003 authorised the
companys Board of Directors as follows:
1. The Board was authorised to decide to purchase the companys own
shares such that, including the shares already in the possession
of the company, the shares purchased shall have a total nominal
value that represents at most 5 per cent of all the companys
current share capital and associated rights, using funds available
for the distribution of profit.
2. The Board was authorised to decide to dispose of the companys
own shares already in the possession of the company and any acquired
under the authorisation given to the Board.
3. The Board was authorised 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 the 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.
The authorisations given to the Board of Directors are effective for
one year from the decision of the Annual General Meeting of
Shareholders.
STOCK PROGRAMME
The company has a current 2002 stock option programme approved by the
Annual General Meeting of Shareholders on 11 April 2002. A total 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. According to the
option programme the share subscription price for stock option 2002C
is the Tecnomen trade volume weighted average share price on the
Helsinki Exchanges between 1 March and 31 March 2003, ie. 0.46 euros
INTRODUCTION OF THE INTERNATIONAL ACCOUNTING STANDARDS (IAS/IFRS)
The Tecnomen Group is preparing to start using the International
Accounting Standards (IAS/IFRS). The transfer will take place within
the time frame prescribed by law.
SUBSEQUENT EVENTS
On 23 April Tecnomen announced that it will supply several new voice
mail systems and previously delivered systems upgrades to
subsidiaries of the Telecom Americas group in Brazil. Tecnomen will
replace the existing voice mail systems, from other suppliers, of the
Groups operators Tess and Americel with new systems, and upgrade the
existing systems of ATL and Claro Digital.
On 23 April Tecnomen announced that it had acquired the entire share
stock of Helsinki-based Krocus Communications Oy, which develops
messaging system technology. The company acquisition will strengthen
Tecnomens position as a supplier of next generation value-added
service systems based on the Internet Protocol (IP) and will
considerably speed up the launch of these products on the market. In
particular Krocus J2EE expertise and Open Source technology solutions
will boost Tecnomens position as a pioneer in its field.
FUTURE OUTLOOK
No immediate signs of a recovery in growth are visible in the
telecommunications market. Despite the prolonged recession in the
telecommunications sector, operators are actively looking for ways to
offer more flexible and more cost-effective services. This creates
opportunities for Tecnomen to expand its customer base and increase
its market share. To increase its market share the company needs to
remain alert and have a long-term commitment to change in its
technology solutions and partnership with customers. Tecnomen is
currently developing the next generation of messaging systems, aiming
to reinforce the companys market position.
It is anticipated that the average price level of system deliveries in
2003 will fall but, in monetary terms, investments by teleoperators in
value-added systems are expected to remain approximately at the same
level as in the previous year.
The company is continuing its action to improve its cash flow from
operations and its result. As in previous years, the second half of
the year will make the bigger contribution to net sales.
SCHEDULE FOR PUBLISHING FINANCIAL INFORMATION
During the 2003 financial year Tecnomen will publish two more interim
reports:
- 1-6/2003 Wednesday 13 August 2003
- 1-9/2003 Wednesday 29 October 2003
TECNOMEN CORPORATION
Board of Directors
FURTHER INFORMATION
Vesa Helkkula, President and CEO, tel. +358 (0)9 804 781
Riitta Järnstedt, CFO, tel. +358 (0)9 804 781
DISTRIBUTION
Helsinki Exchanges
Main media
CONSOLIDATED INCOME STATEMENT
MEUR 1-3/03 1-3/02 2002
Net sales 7.6 8.4 39.9
Operating expenses 10.5 12.9 50.6
Depreciation 0.8 0.9 3.4
Operating result -3.8 -5.4 -14.1
% of net sales -49.5 -64.0 -35.5
Financial income and 0.0 0.1 -0.5
expenses
Result before -3.7 -5.3 -14.6
extraordinary items
Result before taxes and -3.7 -5.3 -14.6
minority interest
Taxes 0.0 -0.1 0.3
Result for the period -3.7 -5.3 -14.3
CONSOLIDATED BALANCE SHEET
MEUR 31.3.03 31.3.02 31.12.2002
Fixed assets 10.7 12.4 11.4
Current assets
Inventories 3.5 4.6 3.6
Financial assets 62.8 76.8 66.3
Assets 76.9 93.8 81.3
Shareholders equity 68.7 82.0 72.5
Liabilities
Interest-bearing 0.8 1.0 0.9
liabilities
Non-interest bearing 7.4 10.6 7.9
liabilities
Deferred tax 0.0 0.3 0.0
liabilities
Equity and liabilities 76.9 93.8 81.3
CONSOLIDATED CASH FLOW STATEMENT
MEUR 1-3/03 1-3/02 2002
Cash flow, business operations -0.9 -1.7 -3.8
Cash flow from investments -0.1 -0.5 -2.2
Cash flow from financing -0.1 -0.1 -0.4
Increase (+) and decrease (-) in -1.0 -2.3 -6.4
liquid funds
Liquid funds on 1 Jan. 34.7 41.1 41.1
Liquid funds on 31 March 33.7 38.8 34.7
Change -1.0 -2.3 -6.4
KEY FINANCIAL FIGURES
MEUR 1-3/03 1-3/02 2002
Return on investment, % -20.8 -24.4 -18.0
Return on equity, % -21.1 -25.1 -17.9
Equity ratio, % 89.9 88.3 90.1
Debt/equity ratio -47.8 -46.1 -46.6
(gearing), %
Investments 0.1 0.5 2.2
% of net sales 1.4 6.0 5.5
Research and development 2.5 2.8 11.2
% of net sales 32.5 33.7 28.0
Order book 8.3 5.7 10.4
Personnel, average 438 560 520
Personnel, at end of 436 558 457
period
KEY FIGURES PER SHARE
MEUR 1-3/03 1-3/02 2002
Earnings per share, EUR -0.06 -0.09 -0.25
Equity per share, EUR 1.19 1.41 1.26
Number of shares at end 58,093 58,093 58,093
of period, x 1,000
Number of shares on 58,093 58,093 58,093
average, x 1,000
Share price, EUR
Average price 0.47 1.8 0.97
Lowest price 0.42 1.52 0.49
Highest price 0.58 2.10 2.10
Share price at end of 0.43 1.70 0.51
period
Market value of issued 25.0 98.8 29.6
stock at end of period,
MEUR
Share turnover, million 5.1 4.8 24.3
shares
Share turnover, % of 8.85 8.3 41.8
total
Share turnover, MEUR 2.4 8.5 23.6
CONTINGENT LIABILITIES
MEUR 1-3/03 1-3/02 2002
For own debts
Mortgages 0.7 0.7 0.7
Pledges given to cover
other own commitments
Mortgages 1.3 0.6 1.3
Chattel mortgages 0.2 0.2 0.2
Other own liabilities 2.5 4.0 2.6
Derivative contracts
Current forward
contracts
Market value 11.4 14.6 11.0
Value of underlying 12.1 14.4 11.9
instrument
Currency options
Market value 0.0 1.1 0.0
KEY FIGURES PER QUARTER
1Q/02 2Q/02 3Q/02 4Q/02 1Q/03
Net sales, MEUR 8.4 8.2 12.7 10.6 7.6
Net sales, change % -44.3 -18.6 -2.3 -44.2 -9.2
Operating result, MEUR -5.4 -5.6 -0.3 -2.9 -3.8
% of net sales -64.0 -67.9 -2.2 -27.7 -49.5
Result before extraordinary -5.3 -5.5 -1.3 -2.6 -3.7
items, appropriations and
taxes, MEUR
Personnel at end of period 558 554 473 457 436
Earnings per share, EUR -0.09 -0.10 -0.02 -0.04 -0.06
Equity per share, EUR 1.41 1.31 1.30 1.26 1.19
Net interest-bearing -37.8 -33.7 -32.7 -33.8 -32.8
liabilities, 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 companys ten largest shareholders, excluding nominee
registrations, on 31 March 2003:
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
Oy Finvestock AB 2,003,600 3.45
Geveles AB 1,952,092 3.36
Fennogens Investments SA 1,535,000 2.64
Sumelius Johanna Marina 1,122,400 1.93
Oy Investsum AB 954,100 1.64
Estate of Suutarinen Helena 901,200 1.55
deceased
Gyllenberg Small Firm Fund 833,575 1.43
Total 16,571,967 28.52
Ownership of Tecnomen shares, 31 March 2003
Shares Holders % Shares and %
votes
1-500 3,543 53.77 781,003 1.34
501-1,000 1,068 16.21 815,043 1.40
1,001-5,000 1,324 20.09 3,095,356 5.33
5,001-10,000 263 3.99 1,994,693 3.43
10,001-50,000 242 3.67 5,530,443 9.52
50,001-100,000 45 0.68 3,165,210 5.45
100,001-500,000 85 1.29 18,498,918 31.84
500,001< 19 0.29 24,174,312 41.61
Joint account 37,600 0.06
Total 6,589 100.00 58,092,578 100.00
Ownership structure by sector, 31 March 2003
No. of %
shares
Companies 10,194,908 17.55
Finance houses and insurance 13,916,098 23.96
companies
Public sector 915,532 1.58
Non-profit making associations 867,764 1.49
Households and private persons 28,328,953 48.77
Foreign holders 3,831,723 6.60
TOTAL 58,054,978 99.94
Joint account 37,600 0.06
Share capital 58,092,578 100.00
Nominee registrations 3,198,651 5.51
