TECNOMEN?S INTERIM REPORT 1 JANUARY ? 31 MARCH 2005 (IFRS)
Tecnomen Corporation STOCK EXCHANGE RELEASE
4 May 2005 at 8.30 am
TECNOMENS INTERIM REPORT 1 JANUARY 31 MARCH 2005 (IFRS)
Tecnomens operating result remained unchanged in the first quarter of
2005, net sales decreased 4.2 per cent from the corresponding period
in the previous year to EUR 12.6 (13.1) million. The largest sale
transactions in the review period, with a combined value of USD 12
million, were for América Móvils subsidiaries in Ecuador and
Argentina.
- Net sales EUR 12.6 (13.1) million
- Operating result EUR -0.3 (-0.4)million
- Order book EUR 19.4 (20.3) million
- Cash flow EUR -1.7 (-4.6) million
- Cash funds at end of period EUR 29.1 (30.3) million
KEY FIGURES 1-3/2005 1-3/2004 2004
Net sales, MEUR 12.6 13.1 51.6
Net sales, change % -4.2
Operating result, MEUR -0.3 -0.4 3.9
% of net sales -2.1 -2.8 7.5
Result before taxes, MEUR -0.2 -0.2 4.9
% of net sales -1.7 -1.5 9.5
Result for the period, MEUR -0.4 -0.4 4.0
Personnel at end of period 350 343 350
Earnings per share, EUR -0.01 -0.01 0.07
Earnings per share, diluted, -0.01 -0.01 0.07
EUR
Equity per share, EUR 1.17 1.09 1.16
Return on equity, % -2.1 -2.8 6.0
Return on investment, % -1.0 -1.1 7.4
Equity ratio, % 87.3 85.4 88.8
Balance sheet, MEUR 78.5 74.4 76.9
Tecnomen adopted IFRS in its financial reporting at the beginning of
2005 and the interim report has been prepared in accordance with these
standards. Unless otherwise stated, all figures presented below are
for the review period 1-3/2005 and the figures for comparison are for
the corresponding period 1-3/2004. 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 the whole 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, the Middle
East and Africa) and APAC (Asia Pacific).
SALES AND NET SALES
Tecnomens net sales in the review period decreased 4.2 per cent from
the corresponding period in 2004 to EUR 12.6 (13.1) million.
Tecnomens deliveries are divided into project deliveries and product
and service deliveries. Project deliveries are recognised in
accordance with IAS 11 (Construction contracts) by stage of completion
on the balance sheet date. Product and service deliveries are
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. Examples of these
are system deliveries of short duration and supplementary products and
services often sold separately, 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 8.9 million of the net sales in the review period has been
recognised in accordance with IAS 11 and EUR 3.7 million in accordance
with IAS 18.
Net sales by geographical area were: Americas 34 per cent (48%), EMEA
49 per cent (44%) and APAC 17 per cent (8%).
Sales through global partners totalled EUR 2.9 (0.8) million or
22.8 per cent (5.9%) of net sales.
Maintenance and service sales totalled EUR 2.0 million or
15.6 per cent (12.2%) of net sales.
The order book stood at EUR 19.4 (20.3) million at the end of the
review period. Americas accounted for 55 per cent of the order book,
EMEA 41 per cent and APAC 4 per cent.
OPERATING RESULT
The result for the period was weakened by one-time personnel costs of
EUR 0.3 million incurred during the period and by calculated and
actual exchange rate losses of EUR 0.4 (0.4) million due to the
dollar.
The operating result for the review period was EUR -0.3 (-0.4) million.
Development costs for new products are capitalised and amortised over
the expected useful life of the asset, provided they fulfil the
criteria defined in IAS 38. Tecnomen starts to capitalise development
costs, in cases that meet the IFRS criteria, once the operational
requirements and the production, testing and project plan are ready
and have been approved. Amortisation of capitalised development costs
starts with the first deliveries to the customer. The expected useful
life of capitalised development costs varies from three to five years.
The result for the period before taxes was EUR -0.2 (-0.2) million.
Earnings per share were EUR -0.01 (-0.01). Equity per share at the end
of the period was EUR 1.17 (1.09).
FINANCING AND INVESTMENTS
Tecnomens financial position is strong. Liquid assets totalled EUR
29.1 (30.3) million. The balance sheet total on 31 March 2005 stood at
EUR 78.5 (74.4) million. Interest bearing liabilities amounted to EUR
0.5 (0.7) million. The debt to equity ratio (gearing) was 42.4 per
cent (-47.2%). The balance sheet structure remained strong and the
equity ratio on 31 March 2005 was 87.3 per cent (85.4%).
Tecnomens gross capital expenditure during the review period was EUR
0.3 (0.4) million or 2.3 per cent (3.1%) of net sales.
Financial income and expenses during the review period totalled EUR
0.1 (0.2) million. Most of the liquid assets are invested in funds,
and the calculated increase in value in these (EUR 0.1 million) is
entered in shareholders equity.
CHANGE IN WORKING CAPITAL, MEUR 1-3/05 1-3/04
Trade receivables and advances, incr. (-) -0.9 -4.5
/decr. (+)
Other short-term receivables, non- -0.7 -1.0
interest bearing, incr. (-)/decr. (+)
Inventories, incr. (-)/decr. (+) -1.2 -0.5
Accounts payable and advances, incr. (+) 1.0 0.4
/decr. (-)
Other current liabilities, non-interest 0.4 1.0
bearing, incr. (+)/decr. (-)
CHANGE IN WORKING CAPITAL, TOTAL -1.4 -4.6
RESEARCH AND DEVELOPMENT
R&D costs during the review period were EUR 3.0 (2.9) million,
corresponding to 23.9 per cent (21.9%) of net sales. EUR 0.5 (0.3)
million of development costs have been activated and will be amortised
in 3-5 years. Amortisation of R&D costs in the review period totalled
EUR 0.1 million (0.0).
PERSONNEL
At the end of March 2005 Tecnomen employed 350 (343) persons, of whom
129 (138) worked in Finland and 221 (205) elsewhere. The company
employed on average 350 (378) people during the review period.
Personnel by geographical area were as follows: Americas 51 (38)
persons, EMEA 274 (279) and APAC 25 (26).
MARKETS
Regional fragmentation continues in the market for the Messaging
product line. In Western Europe, demand among operators has shifted
from conventional messaging systems to open, IP-based Next Generation
Messaging systems. The number of mobile phone users is still growing
in Eastern Europe, Latin America, Middle East, Africa and Asia
Pacific.
Tecnomen´s main market for the Charging product line is Latin America,
and this was again the Tecnomen region with strongest growth during
the review period. Many operators in the area have expanded or are
expanding their systems, the increasing availability of 2.5G networks
is one factor creating demand for new types of services, in particular
for data charging.
The largest orders obtained during the review period were a USD 4.4
million prepaid expansion for Porta in Ecuador and a USD 7.6 million
prepaid expansion for CTI in Argentina. Both operators are
subsidiaries of América Móvil.
Tecnomen continued successfully to supply the Next Generation
Messaging (NGM) systems that it started to deliver last year. Demand
for NGM systems was boosted by the Cannes exhibition, where Tecnomen
demonstrated Next Generation Video Mail live in a 3G network. Video
Mail is a vital component of every 3G network since it bridges 2G and
3G technology and so speeds up the adoption rate for video telephony
services.
During the review period Tecnomen won a EUR 2 million Next Generation
Messaging System upgrade contract from Celcom in Malaysia. The
delivery includes Next Generation Video Mail, Unified Messaging and
Missed Call Notice services.
TECNOMEN SHARES AND SHARE CAPITAL
At the end of March 2005 the shareholders equity of Tecnomen
Corporation stood at EUR 67.5 (62.7) million and the share capital was
EUR 4,647,406.24, divided into 58,092,578 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 1.17
(1.09).
A total of 10,475,131 Tecnomen shares (EUR 14,441,463) were traded on
the Helsinki Exchanges during the period 3 January 31 March 2005, or
18.03 per cent of the total number of shares.
The highest share price quoted in the period was EUR 1.52 and the
lowest EUR 1.28. The average quoted price was EUR 1.38 and the closing
price on 31 March 2005 was EUR 1.38. The share stock had a market
value of EUR 80,167,758 at the end of the period.
TECNOMENS BOARD OF DIRECTORS AND AUDITORS
The Annual General Meeting held on 16 March 2005 did not bring any
changes to the period of office or members of Tecnomens Board of
Directors. The period of office for Tecnomens current Board of
Directors will end in 2007. The Board members are Lauri Ratia, Lars
Hammarén, Carl-Johan Numelin, Keijo Olkkola, Christer Sumelius and
Timo Toivila. According to the decision by the preliminary meeting of
the Board, Lauri Ratia continues as Chairman and Carl-Johan Numelin as
Vice Chairman of the Board.
KPMG Oy Ab, Authorised Public Accountants, will continue as the
companys auditors, with Sixten Nyman, APA, as responsible auditor,
until the end of the following Annual General Meeting of Shareholders.
CURRENT AUTHORISATIONS
Tecnomens Annual General Meeting on 16 March 2005 gave the Board of
Directors the following authorisations:
1. Authorisation 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.
2. Authorisation 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 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 OPTION PROGRAMME
The company has a valid 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 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 no share subscriptions were made
with the 2002A and 2002B stock options.
PROSPECTS FOR 2005
The current order book will enable a positive result in the first half
of the year.
During 2005 Tecnomens goal is to further improve net sales and
maintain the positive trend in its result.
SCHEDULE FOR PUBLISHING FINANCIAL INFORMATION
During 2005 Tecnomen will publish interim reports as follows:
- 1-6/2005 Wednesday, 17 August
- 1-9/2005 Wednesday, 2 November
TECNOMEN CORPORATION
Board of Directors
FURTHER INFORMATION
Jarmo Niemi, President and CEO, tel. +358 (0)9 8047 8799
Riitta Järnstedt, CFO, tel. +358 (0)9 8047 8650
PRESS CONFERENCE
Tecnomen is holding a conference to announce its first quarter results
at 10 am on 4 May 2005 in the Pavilion room at the Scandic Hotel
Simonkenttä. The material presented will be available after the press
conference on Tecnomens website at www.tecnomen.com/investor.
DISTRIBUTION
Helsinki Exchanges
Main media
The figures are unaudited.
CONSOLIDATED INCOME 1-3/2005 1-3/2004 2004
STATEMENT, MEUR
NET SALES 12.6 13.1 51.6
Other operating income 0.0 0.0 1.4
Materials and services -2.0 -3.4 -11.3
Employee benefit expenses -5.8 -5.4 -19.9
Depreciation -0.6 -0.6 -2.3
Other operating expenses -4.5 -4.0 -15.8
OPERATING RESULT -0.3 -0.4 3.9
Financial income and 0.1 0.2 1.0
expenses
RESULT BEFORE TAXES -0.2 -0.2 4.9
Income taxes -0.1 -0.2 -1.0
RESULT FOR THE PERIOD -0.4 -0.4 4.0
Earnings per share, EUR -0.01 -0.01 0.07
Earnings per share, -0.01 -0.01 0.07
diluted, EUR
Equity per share, EUR 1.17 1.09 1.16
CONSOLIDATED BALANCE SHEET, 31.3.2005 31.3.2004 2004
MEUR
Long-term assets
Fixed assets 11.3 10.3 11.1
Other long-term assets 0.6 1.6 0.5
Current assets
Inventories 3.4 2.7 2.2
Trade receivables 13.8 11.7 12.7
Other financial assets *) 20.3 17.9 19.6
Cash and bank balances 29.1 30.3 30.8
ASSETS 78.5 74.4 76.9
Shareholders equity 67.5 62.7 67.5
Long-term liabilities
Provisions 0.1 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 0.7 0.2 0.6
Current liabilities
Interest-bearing liabilities 0.1 0.1 0.1
Non-interest bearing 9.7 9.6 8.1
liabilities
EQUITY AND LIABILITIES 78.5 74.4 76.9
*) A change in balance sheet classification has been made between
trade receivables and other financial assets in the transition to
revenue recognition by stage of completion.
CHANGE IN SHAREHOLDERS EQUITY, MEUR
MEUR Share Own Other Translatio Retained Total
capital shares reserves n earnings
difference
Shareholders 4.6 -0.3 66.3 0.0 -3.2 67.5
equity
1 Jan. 2005
Change in 0.0 0.0
translation
difference
Recognised 0.3 0.3
directly in
retained
earnings
Loss for the -0.4 -0.4
period
Shareholders 4.6 -0.3 66.3 0.0 -3.2 67.5
equity
31 March
2005
MEUR Share Own Other Translatio Retained Total
capital shares reserves n earnings
difference
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 0.0 0.0
directly in
retained
earnings
Loss for the -0.4 -0.4
period
Shareholders 4.6 -0.4 66.3 0.0 -7.9 62.7
equity
31 March 2004
CONSOLIDATED CASH FLOW 1-3/2005 1-3/2004 2004
STATEMENT, MEUR
Cash flow from operating -0.9 -4.3 -1.0
activities
Cash flow from investments -0.8 -0.3 -3.3
Cash flow from financing -0.0 -0.0 -0.0
activities
Change in liquid funds -1.7 -4.6 -4.3
Liquid funds 1 Jan. 30.8 34.8 34.8
Change in fair value of 0.1 0.1 0.2
investments
Liquid funds 31 March/ 31 Dec. 29.1 30.3 30.8
Change -1.7 -4.6 -4.3
NET SALES BY SECONDARY 1-3/2005 1-3/2004 2004
SEGMENTS, MEUR
Americas 4.3 6.3 24.1
EMEA 6.1 5.8 22.5
APAC 2.1 1.0 5.1
TOTAL 12.6 13.1 51.6
CONSOLIDATED KEY FINANCIAL 1-3/2005 1-3/2004 2004
FIGURES, MEUR
Return on investment, % -1.0 -1.1 7.4
Return on equity, % -2.1 -2.8 6.0
Equity ratio, % 87.3 85.4 88.8
Debt/Equity(gearing) ratio, % -42.4 -47.2 -44.7
Investments 0.3 0.4 1.6
% of net sales 2.3 3.1 3.1
Research and development 3.0 2.9 11.5
% of net sales 23.9 21.9 22.4
Order book 19.4 20.3 12.2
Personnel, average 350 378 355
Personnel, at end of period 350 343 350
CONSOLIDATED KEY FIGURES PER SHARE 1-3/2005 1-3/2004 2004
Earnings per share, EUR -0.01 -0.01 0.07
Earnings per share, diluted, EUR -0.01 -0.01 0.07
Equity per share, EUR 1.17 1.09 1.16
Number of shares at end of period, 58,093 58,093 58,093
1,000 shares
Number of shares on average, 58,093 58,093 58,093
1,000 shares
Share performance, EUR
Average price 1.38 1.45 1.37
Lowest price 1.28 1.21 1.11
Highest price 1.52 1.82 1.82
Share price at end of period, EUR 1.38 1.27 1.33
Market value of share capital at 80.2 73.8 77.3
end of period, MEUR
Share turnover, million shares 10.5 14.9 33.1
Share turnover, % of total number 18.0 25.6 57.1
Share turnover, EUR million 14.4 21.6 45.5
CONSOLIDATED CONTINGENT 1-3/2005 1-3/2004 2004
LIABILITIES, 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 2.4 2.4 2.8
Derivate financial
instruments
Currency forward contracts
Fair value 22.5 23.8 18.4
Value of underlying 22.5 23.5 19.8
instruments
Currency options
Fair value 0.0 0.0 0.0
KEY FIGURES PER QUARTER, MEUR 1Q/05 1Q/04 2Q/04 3Q/04 4Q/04
Net sales 12.6 13.1 14.4 11.7 12.4
Net sales, change % -4.2
Operating result -0.3 -0.4 3.1 0.9 0.1
% of net sales -2.1 -2.8 21.7 8.0 1.2
Result before taxes -0.2 -0.2 3.0 1.4 0.8
Personnel at the end of period 350 343 347 350 350
Earnings per share, EUR -0.01 -0.01 0.05 0.02 0.01
Earnings per share, diluted, EUR -0.01 -0.01 0.05 0.02 0.01
Equity per share, EUR 1.17 1.09 1.15 1.16 1.16
Net interest-bearing liabilities -28.6 -29.6 -30.9 -31.1 -30.2
Order book 19.4 20.3 13.7 11.3 12.2
Q1 2004 COMPARATIVE FIGURES
CONSOLIDATED INCOME STATEMENT, IFRS FAS IFRS
MEUR Q1 2004 Q1 2004 adjustments
NET SALES 13.1 11.7 1.4
Other operating income 0.0 0.0 0.0
Materials and services -3.4 -3.4 0.0
Employee benefit expenses -5.4 -5.7 0.3
Depreciation -0.6 -0.6 0.0
Other operating expenses -4.0 -2.8 -1.2
OPERATING RESULT -0.4 -0.8 0.4
Financial income and expenses 0.2 0.2 0.0
RESULT BEFORE TAXES -0.2 -0.7 0.5
Income taxes -0.2 -0.2 0.1
RESULT FOR THE PERIOD -0.4 -0.8 0.4
Earnings per share, EUR -0.01 -0.01
Earnings per share, diluted, -0.01 -0.01
EUR
CONSOLIDATED BALANCE SHEET, IFRS FAS IFRS
MEUR 31.3.2004 31.3.2004 adjustments
Long-term assets
Fixed assets 10.3 9.9 0.3
Other long-term assets 1.6 2.5 -0.9
Current assets
Inventories 2.7 2.7 0.0
Trade receivables 11.7 30.5 -18.8
Other financial assets 17.9 1.6 16.3
Cash and bank balances 30.3 30.2 0.1
ASSETS 74.4 77.4 -3.0
Shareholders´ equity 62.7 64.5 -1.8
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 0.2 0.1 0.1
Current liabilities
Interest-bearing liabilities 0.1 0.1 0.0
Non-interest bearing 9.6 11.2 -1.6
liabilities
EQUITY AND LIABILITIES 74.4 77.4 -3.0
RECONCILIATION OF EQUITY, MEUR 1.1. 31.3.
2004 2004
Shareholders equity according to 65.2 64.5
FAS
IFRS transition:
IAS 11 Construction contracts -2.0 -1.8
IAS 12 Income taxes 0.0 -0.1
IAS 19 Employee benefits -0.2 -0.3
IAS 38 Intangible assets 0.0 0.3
IAS 39 Financial instruments 0.1 0.1
IFRS 3 Business combinations 0.0 0.0
Total -2.2 -1.8
Shareholders equity according to 63.1 62.7
IFRS
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.
SHAREHOLDERS
The companys ten largest shareholders, excluding nominee
registrations, on 31 March 2005:
No. of %
shares
Sampo Life Insurance Co. Ltd 3,083,400 5.31
Hammaren Lars-Olof 2,164,300 3.73
Sumelius Henning 2,022,300 3.48
OP-Finland Small Firm Fund 1,811,962 3.12
Pohjola Finland Value Investment 1,591,600 2.74
FIM Fenno Fund 1,285,000 2.21
Sumelius Johanna Marina 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 15,929,662 27.42
Ownership of Tecnomen shares, 31 March 2005:
Shares Holders % Shares and %
votes
1-500 3,101 48.27 684,285 1.18
501-1 000 1,053 16.39 836,280 1.44
1 001-5 000 1,508 23.47 3,799,049 6.54
5 001-10 000 345 5.37 2,662,639 4.58
10 001-50 000 265 4.13 6,035,903 10.39
50 001-100 000 57 0.89 4,025,410 6.93
100 001-500 000 76 1.18 16,817,591 28.95
500 001< 19 0.30 23,193,821 39.93
Joint account 37,600 0.06
TOTAL 6,424 100.00 58,092,578 100.00
Ownership structure by sector, 31 March 2005:
No. of shares %
Companies 5,925,756 10.20
Finance houses and insurance 15,920,534 27.41
companies
Public sector 1,037,225 1.79
Non-profit making associations 3,408,042 5.87
Households and private persons 30,362,205 52.26
Foreign holders 1,401,216 2.41
TOTAL 58,054,978 99.94
Joint account 37,600 0.06
Share capital 58,092,578 100.00
Nominee registrations 2,352,558 4.05
