2009-03-31 15:20:00 CEST
2009-03-31 15:20:05 CEST
REGULATED INFORMATION
GeoSentric Oyj - Financial Statement Release
FINANCIAL STATEMENTS RELEASE FOR FINANCIAL YEAR 2008
GEOSENTRIC OYJ BULLETIN March 31, 2009 at 16:20
FINANCIAL STATEMENTS RELEASE FOR FINANCIAL YEAR 2008
The Annual Report 2008 of GeoSentric Oyj has been published company's web site.
The Annual Report are available at www.geosentric.com.
Summary of key figures
Review of October - December 2008
Operational overview
Material events in the year 2008
Material events after the end of the financial year
Review of the financial position and the financial results Sufficient Liquidity
Outlook
Assessment of significant operational risks
Review of R&D-activities
Change in Accounting Practices
Investments and financing
Personnel and organization
Environmental issues
Board of Directors and auditors
Group Structure
Board authorization
Structural arrangements and changes in amounts of shares
Company shares and shareholders
Board proposal for distribution of profit
SUMMARY OF KEY FIGURES
Key figures summarizing the Group's financial position and financial results
(teuros if not indicated otherwise):
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| In period 4Q/2008 2008 4Q/2007 2007 |
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| Net sales 1164 4374 892 4435 |
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| Operating result -3255 -11919 -3550 -18726 |
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| Basic earnings |
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| per share (eur) -0.00 -0.01 -0.01 -0.06 |
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| At the end of period |
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| Total assets 16805 17360 |
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| Shareholders´ equity 10053 12737 |
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| Total liabilities 6752 4623 |
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REVIEW OF OCTOBER - DECEMBER 2008
The development of GyPSii platform and services continued strong also through
the fourth quarter. The results were seen as an added support to a broad range
of new mobile devices as well as receiving highly appreciated awards of the
industry. The TWIG sales continued at steady state through the period. The
Company also succeeded to close 10M€ financing to support its business plan.
At the Intel Developer Forum in Taipei in October, Senior Intel Executive
Wen-Hang Wang showcased GyPSii in his keynote as the social networking solution
will be promoted for the MID class of device, and with ‘platinum-level' status
in the Intel developer community. Intel will recommend GyPSii as a key platform
that will add significant ‘out of the box' value to Intel's OEM partners, by
allowing users to bring together location and the social networking experience
to turn a MID into their personal digital life recorder.
In October GyPSii received the Symbian Star Developer 2008 Innovation Award of
the Year in London on stage during the keynote at the event on October 22nd. The
Star Developer Awards recognizes the most unique and innovative application
developed for mobile phones based on Symbian OS™, as chosen by leading developer
programs represented at the show.
In November the company announced that it is the first location based social
networking application with touch screen experience to be able to support the
Nokia 5800 XpressMusic, with its launch on the Nokia 5800 XpressMusic. GyPSii is
available for all the current Nokia S60 devices - including the N95, the N73,
the N78, the N82, N6210, N6220, E66, E71 and the 6110 Navigator phone.
In December, GyPSii won the Best Location Based Service (LBS) Application of the
Year award in the first Telecom Asia Readers' Choice Awards held December 8th,
Hong Kong, SAR, PRC. The Telecom Asia Awards recognize the most innovative
technology within the Asia Pacific telecommunications industry. Nominations were
made by 78 analysts who evaluated competitors against market data combined with
specific input from an independent panel of telecommunication executives. For
the first time in 11 years, they chose to recognise outstanding achievements of
companies that provide advanced technologies and applications to regional
network operators.
Sales of the TWIG product line continued to exceed 1,000,000 euro per quarter.
The GyPSii growth strategy is building distribution through partnerships, like
device manufacturers, aligning GyPSii products with distribution partnership
phone products, leveraging distribution launches, promotion of devices and in
sequence build out monetization from revenue sharing such as advertising and
fees from OEM/ODM relationships.
GyPSii is currently executing on the distribution deal and product alignment
phases, and has moved into distribution launch and promotion phase, which will
lead to market penetration and monetization later in 2009 and into 2010.
In October, GeoSentric announced that, related to the financing arrangement
announced in August-September, the Board had decided to draw down the second
installment of EUR 7,200,000 of the commitment on top of the 2,800,000 euros
drawn down in September. Later in October, the Company announced that it had
drawn down, on October 12, 2008, the second installment of EUR 7,200,000 of the
committed loan with Schroders & Co., Limited.
OPERATIONAL OVERVIEW
GeoSentric is a developer and provider of solutions, products and technologies
for location based services and LBS-enabled social networks. It develops a
leading geo-integration platform for mobile devices, personal navigation
devices, web browsers, and other internet-connected devices, which provides
applications and bundled ODM/OEM solutions for consumer and B2B markets, built
on the convergence of location based services, social networking, search, mobile& Web 2.0 technologies. Its intellectual property is delivered as software and
services in products which include the GyPSii product platform (“GyPSii”)
together with ready-to-use integrated GPS/GSM devices for navigation and object
tracking and customisable software solutions for industry specific uses
(“TWIG”). In addition, GeoSentric offers Internet-based locating services with
which the user may locate other GeoSentric devices. The GyPSii platform and TWIG
product line complete each other and enable GeoSentric to utilize its overall
intellectual property rights to software and services in efficient manner and
delivery of products and services to two different markets, GyPSii offerings to
geo social networking/LBS sector and TWIG offerings to LBS/B2B sector.
The business model for the GyPSii platform services and applications is via
embedded licensing of IPR in terms of software technology and branded
trademarks, and downstream advertising revenue generation from the platform in
partnerships with mobile operators and carriers. Thus during the year 2008 the
Company focused on securing contracts with the major distribution partners;
Garmin, Samsung, China Unicom, China Mobile and others, to integrate product on
to their new devices and services that began initially launching in late 2008.
Major marketing and launch plans for 2009 by all the distribution partners will
drive significant volumes of GyPSii users on a global basis.
The Group's financial results continued to improve over the course of the year
2008. The total net sales of the Group in 2008 were 4374 teuros, very similar
to the total net sales in 2007 of 4435 teuros, while the total cost of sales in
2008 were substantially reduced from that of the prior year 2007, going to 3006
teuros from 6021 teuros, a 50.1% reduction. Revenue in the calendar year 2008
was mainly from the Twig product and Twig IP, whereas the distribution and
integration plans with major partners provided the fertile seeding for GyPSii
revenues in 2009. The gross margin for the reporting period was strong, at 1368
teuros, compared to a gross margin loss of 1586 teuros for the prior year 2007.
This represents a material improvement over the previous year with the Group now
generating a strong, positive gross margin.
Additionally, total operating expenses were substantially reduced in the
reporting year compared to the prior year, going to 13322 teuros, from 17201
teuros in 2007, a 22.6% improvement.
As a result, total result before taxes were -11865 teuros in 2008, versus -19010
teuros in the prior year, a 37.6% improvement. Earnings per share for the
reporting period were -0.01 euros per share.
MATERIAL EVENTS IN THE YEAR 2008
As the key element of the business model and the revenue generation of GyPSii
platform is sufficient and sufficiently rapid growth of users of the
GyPSii-services, the Company plan is to penetrate location solutions markets via
Network Operators, Social Networks and OEM's worldwide. The Group's GyPSii
business progressed strongly in the year as demonstrated by numerous agreements
relating to GyPSii technology, service platform and the end user service, which
was first launched at the Mobile World Congress in Barcelona in February 2008.
The highlights of the year were the GyPSii launch at Mobile World Congress in
February 2008 and the penetration of GyPSii into the device manufacturer
eco-system, China operators and working with organizations with a global mass
distribution footprint. The signing of distribution deals with Samsung, Garmin,
Intel and the 2 largest operators in China, China Mobile and China Unicom, to be
on the current and new range of devices.
After the launch of the GyPSii platform, the Group entered into agreements with
global leaders in mobile technology and GPS navigation such as Samsung, provider
of mobile handsets, and Garmin, provider of GPS products. Further, the
agreements with MyNet and China Mobile are indicative of the global market's
selection and adoption of the GyPSii overall platform. The Intel relationship as
part of the reference platform for Atom-based processor MID devices is also a
strategic and significant milestone for the Company. These material agreements
continue to establish GyPSii as a leading platform, applications and services
provider for the geo-social networking, mobility, and Internet advertising
markets. The revenue generation with GyPSii represented a minority of the
recognized revenue for the year 2008, as the main focus in 2008 was on
developing the GyPSii platform and partnerships with the global market leaders.
GyPSii also received several distinguished international awards. As recognition
of the GyPSii-platform and its market leadership, the Company was a winner in
NAVTEQ LBS Challenge, a global contest in which over 300 companies competed, and
won also the prestigious Symbian Star Developer Award, for the Most Innovative
Symbian Application of 2008. In addition GyPSii won the Best LBS Application of
the Year award in the first Telecom Asia Readers' Choice Awards held on December
2008. Telecom Asia organizes the awards to recognize the top technology
innovations and contributions to the telecoms industry in Asia Pacific.
The Group is also looking further to expand its reach beyond mobile phones &
smart phones, into adjacent markets such as navigation and other mobile based
internet-connected form factors. However the success will be dependent on
manufacturers' ability to break new markets and garner market adoption. The
company is seeing a growing trend for device manufacturers to build embedded
applications on-deck within their devices, and GyPSii is well positioned to take
advantage of this emerging opportunity, with the recent release of the API
Services product, OEx (OpenExperience) which supports the needs of manufacturers
to develop their own on-deck user interfaces.
Detailed Information on GyPSii services and related agreements-
The company entered in several important agreements for the deployment of
GyPSii-platform based services:
A relationship with China's leading Windows mobile distribution company, Dopod
Club, was announced in February 2008, whereby Dopod Club partnered with GyPSii
to provide the GyPSii service for use on mobile phones or via the Internet to
the rapidly growing Chinese market.
The Company announced in February 2008 it had signed a comprehensive agreement
to partner with Shanghai Rannuo and China Unicom to launch its GyPSii service
during the 2008 Olympic Games in Beijing. Rannuo is a Shanghai based high-tech
IT Company that has a full China Value Added Service (VAS) certificate (No.
B2-20040257) issued by the Ministry of Information and Industry (MII), this
certificate allows Rannuo to provide Internet and VAS services to mobile users
in China. China Unicom is one of the 2 mobile operators in China with more than
100M subscribers.
The Company announced in May 2008 it had entered into a map licensing agreement
with NAV2, a Shanghai-based provider of world class digital map data. The deal
means GyPSii users will have complete access to NAV2's comprehensive China map
database. This database will play a crucial part in the roll-out of the GyPSii
service across China. The licensed map database contains coverage of more than
980 cities and more than five million local points of interest (POIs) and local
content relevant to the Chinese market.
The Company announced in June 2008 a multi-year worldwide agreement with Garmin.
Under the terms of the agreement, the Company will provide technology, products,
worldwide data center infrastructure, development licenses and GyPSii branding
rights to Garmin on a worldwide non-exclusive basis for a range of Garmin
products. The agreement provides development licenses to Garmin, to leverage the
GyPSii location-based geo-social networking services infrastructure for internal
development and integration with its products. The agreement also has provisions
for revenue sharing between GyPSii and Garmin.
In July 2008 the Company announced a multi-year worldwide agreement with
Samsung, a leader, 2nd in global market share for mobile phones. Under the terms
of the agreement, GeoSentric will provide technology, products, worldwide data
center infrastructure, and GyPSii branding rights to Samsung, on a worldwide
non-exclusive basis for a range of Samsung products. GyPSii, will be initially
bundled on Samsung's Omnia (SGH-i900) and SGH-i780 as an embedded application.
The agreement has provisions for revenue sharing between GyPSii and Samsung,
utilizing the business models enabled by GyPSii.
In August 2008, the Company announced it had signed an agreement with Nanjing
MyNet Ltd. to make the GyPSii mobile social networking platform available to
customers of China Mobile, the world's biggest mobile phone operator by
subscriber numbers, representing over six hundred million subscribers. The
agreement with GyPSii means that MyNet will offer the full suite of GyPSii
location and mobile social networking features and services to China Mobile
customers. And has provisions for GyPSii to share revenues based on current
business models for mobile social networking that provide a range of revenue
streams, including both subscriptions and advertising revenues.
In August 2008 the Company announced a pre-bundled Distribution Agreement with
Ramar, an electronics and manufacturing organization based in China supplying
OEM or ODMs with GPS navigation and mobile phones. The agreement has provisions
for revenue sharing between GeoSentric and Ramar. GyPSii will be available on
“amsam” devices in both Traditional and Simplified Chinese. Ramar will promote
and distribute the GyPSii-enabled phones directly from its own stores, and also
via retail partners across China. The deal includes provisions for GyPSii
revenue streams from both IPR (intellectual property rights) licenses and mobile
Geo-advertising business models.
The Company announced in August 2008 it has been chosen by Intel as a preferred
mobile social networking application for its family of forthcoming Mobile
Internet Devices (MIDs) based on the Intel® Atom™ processor Z5XX series. GyPSii
is planned to be embedded into the reference Moblin architecture that Intel will
provide to over 70 OEM & ODM's who build or will be building MID solutions on
the Intel Moblin platform for the global marketplace. GyPSii for Intel-based MID
devices also runs on Microsoft Windows XP and Microsoft Windows Vista
environments. As part of the MID Moblin rollout Intel showcased GyPSii in the
Keynote Session - at the Intel Developers Forum Conference in San Francisco from
August 18-21, 2008.
In September 2008, the Company announced it had signed an agreement with one of
China's leading web-based travel companies, eLong Inc., to provide
GyPSii-powered hotel information and reservation services to visitors to China,
including such popular cities as Beijing and Shanghai. Under the agreement,
eLong will pay GyPSii a referral fee for hotel customers using the GyPSii
platform. This deal will cover hotels in almost 400 cities across China, and is
part of GyPSii “whole product strategy” to include 3rd party premium content for
GyPSii members and additional revenue streams for GyPSii.
Other events in 2008 included:
The company announced in May 2008 the opening and live availability of its new
China-based data center in Shanghai, boosting its infrastructure and support for
the rapidly growing user base in China, with the site being found at
www.gypsii.com.cn.
As a result of the Group's intention to significantly expand its recently
refocused business over the next few years, the volume of the Company´s research
and development activities continued to be significant due to the on-going
R&D-programs.
To support Company's business plan, growth of the operations and future
investments, the Company decided to raise maximum amount of 16 MEUR additional
financing by issuing a loan note which includes a specific option right to use
the note to set off subscription price of shares. During the year 2008 the
Company raised a total amount of 10M euros of the financing.
TWIG business
The business of the Company's TWIG unit was stable and steady over the year,
focusing on the TWIG Discovery Pro GSM/GPRS/GPS handset for the safety and
security market and on the TWIG Locator tracking device for the asset and
vehicle tracking market. The Company introduced a gateway-server product that
enables 3rd party track and trace systems interconnected to TWIG Web Finder.
Legal Proceedings
The Company does not have any pending or threatening legal proceedings which the
Company would consider to have material impact on the Company's financial
position or profitability.
However, the Company has informed the markets about the following claims brought
against it and which the Company has evaluated to have no material impact on the
business or financial position of the Company.
The Court of First Instance in Rome has given a decision relating to the dispute
between the Company and an Italian company Magi.tel regarding an alleged patent
infringement. If the judgment is not reversed on appeal, the Company will be,
according to the court decision, obliged to pay EUR 167,070.00 in damages and
legal fees to Magi.tel. The Company has a strong position that the claims made
by Magi.tel were groundless and maintains the option to appeal on the judgment.
A third party software licensor has brought a claim against the Company in the
US regarding claimed unpaid license fees for certain software used in company's
TWIG Discovery mobile phones. The parties settled the matter and as a part of
the settlement the parties have entered into licensing agreement, entitling the
Company to license certain software.
The Company has been informed of a claim brought against it in the US by a
distributor for its TWIG Discovery mobile phones seeking to terminate the issued
purchase order, return already delivered accepted devices and refund of returned
devices added with stocking and delivery costs. The Company's view is that it
has received a binding purchase order for the devices and it will pursue
fulfillment of the purchase order in all suitable manners. The Company has also
filed a claim in Finland to enforce the purchase order against the said
distributor.
MATERIAL EVENTS AFTER THE END OF THE FINANCIAL YEAR
During the year 2009, the Company has continued its efforts to broaden the range
of GyPSii supported devices, which is an essential element in Company's business
plan. In February the Company announced that its GyPSii mobile social networking
application was now available on over 25 more Nokia devices, including the
flagship N96 and N95 products, as well as on the BlackBerry Bold, Curve and
Pearl devices. This extends the reach of the service to many more devices and
markets. Supported devices include: Nokia phones include: N96, N95-8GB, N95,
N93/N931, N92, N85, N82, N81, N80, N79, N78, N77, N76, N75, N73, N72, N71, E90,
E71, E70, E66, E65, E62, E61/E61i, E60, E51, E50, Touch Xpress 5800, 6220
Classic, 6210 Navigator, 6120 Classic, 6110 Navigator, 5700, 5500, 5320XM.
Blackberry Smartphones include: Bold; Pearl series 8110, 8120, 8130; Curve
series 8310, 8320, 8330 and 8800, 8820, 8830.
At Mobile World Congress in Barcelona, February 2009, GyPSii announced a
strategic partnership with LG Electronics of Korea, to embed GyPSii's
location-enabled mobile digital lifestyle application on a range of mobile
devices. LG Electronics and GyPSii will share advertising and sponsorship
revenues generated by users of GyPSii on the new LG devices. The range will
first launch across the Windows Mobile devices, closely followed by Android and
java-enabled devices.
Also at Mobile World Congress, GyPSii announced the launch of OpenExperience API
(OEx), the premier all-inclusive platform for incorporating location-based
social networking functionality into embedded mobile clients and applications.
The company demonstrated select services of OEx on the soon to be released
GyPSii native application support for the iPhone at Mobile World Congress, in
Barcelona. OEx supports a whole new “user experience” on mobile devices, as seen
on the iPhone and other embedded mobile and internet connected device platforms.
OEx allows GyPSii partners to enhance their own products and services with the
rich location-specific features, content and community of the GyPSii mobile
social network. In using the API, partners can leverage GyPSii's vast
international infrastructure and immediately offer new services to their
customer base. OEx powers GyPSii's own mobile social network and is currently in
use by industry leaders Samsung, Navteq and Garmin to offer enhanced services to
their customers.
The Company also launched a next generation, GPS/GSM personal protection device,
TWIG Protector.
After the reporting period the Company's registered share amount increased by
2,830,189 new share issued by the Board of Directors on November 20, 2008.
The Board of Directors decided to extend the subscription period for the loan
note issue accepted by the Board earlier on September 3, 2008 in order to raise
a maximum amount of EUR 16,000,000. The Board decided to extend the subscription
period of the Issue further until May 15, 2009.
Board member David Francis has resigned from the Board of Directors effective as
of March 13, 2009 due to personal reasons not attributable to the company.
GeoSentric Oyj's Board of Directors decided on March to establish committees to
enhance the preparation of matters falling within the competence of the Board.
The established committees are 1) Audit and Finance Committee; 2) Corporate
Governance and Nominations Committee; 3) Compensation Committee; and 4)
Strategic Options Committee.
REVIEW OF THE FINANCIAL POSITION AND THE FINANCIAL RESULTS
The Company has during the period retained solidity and liquidity.
Key figures summarizing the Group's financial position and financial results
(teuros if not indicated otherwise):
In period 2008 2007 2006
Net sales 4374 4435 6959
Operating result -11919 -18726 -11543
Operating result (%) -272 -422 -166
At the end of period
Total assets 16805 17360 17397
Shareholders´ equity 10053 12737 10421
Total liabilities 6752 4623 6976
SUFFICIENT LIQUIDITY
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| Cash Flow Statement 01/2009-03/2010 million euros |
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| Cash flow from operations 12.6 |
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| Share subscription payments 0.0 |
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| Investments -9.2
|
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| Change in cash |
| 3.4 |
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| Cash in the beginning of the period 9.8 |
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| Cash at the end of the period 13.2 |
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This cash flow statement assumes that sales targets set in financial projections
for financial years 2009 and 2010 are met. These projections are highly
dependent on timely deliveries and sales success of the Company's products and
services.
OUTLOOK
The reporting year 2008 witnessed the Company signing agreements with global
leaders in mobile technology and GPS navigation; Samsung as the #2 provider of
mobile handsets, and Garmin as the #1 provider of GPS products. Further, the
agreement with MyNet and China Mobile is indicative of the global market's
selection and adoption of the GyPSii overall platform. The Intel relationship as
part of the reference platform for Atom-based processor MID devices is also a
strategic and significant milestone for the Company. The Company also has deeper
device support for Nokia supported platforms built on Symbian operating systems,
like the recent introduced, 5th Edition Touch based device, Nokia 5800 and
future devices expected in 2009. These material agreements continue to establish
GyPSii as a leading platform, applications and services provider for the
geo-social networking, mobility, and Internet advertising markets.
GyPSii is further establishing distribution with major global players in the
phone and MID (mid internet devices) markets. The market is blurring between
smart phones, MID devices and new entrants that are pushing the price down for
entry point for what was seen as mid to high level mobile devices making them
available to purchase by the mass market in the US, Europe and Asia. This trend
continues with the recent entries by Android and RIM devices. GyPSii will be
supporting Android as it emerges as a serious alternative for device
manufacturers to the development of home grown proprietary platforms, lightly
supported Linux variants and established competitive platforms. GyPSii will be
updating the iPhone application for full native support in early Q2, which will
expand reach into the most advanced mobile web user base.
The TWIG product demand has remained in a steady and stable state focused on the
TWIG Discovery Pro GSM/GPRS/GPS handset which is targeted at the safety and
security market and the TWIG Locator tracking unit for the asset and vehicle
tracking market. Customers continue to place orders for these unique devices and
the Company continues to provide reliable quality product shipments and
delivery.
ASSESSMENT OF SIGNIFICANT OPERATIONAL RISKS
The global financial crisis and current global recession may have a negative
impact on the business of the Company. The Company's business model is partner
driven and possible delays in partners' launching their new products to the
markets may have an adverse effect on the development of Company's business by
decelerating the distribution and user-adoption rate of Company's products and
services.
There is no certainty of the success regarding the implementation and
realization of the business plan. According to the business plan and strategy,
the Company is currently pursuing entrance also to new business segments with
competitive situations new to it, or which may be only in the early market
phase. Unless the Company is able to successfully respond to this development it
may significantly impair the Company's operating result.
A key driver of the business model is sufficient and sufficiently rapid growth
of users of the services, and the speed of adoption of mobile, UGC and location
based advertising of which the Company has no certainty. Advertising budgets are
being reduced by all major brands and advertisers and this could have an adverse
affect on the adoption of mobile and location based advertising in 2009.
In addition, the Company carries a limited risk connected with the TWIG product
inventory. Should the Company not be able to sufficiently protect its industrial
rights and other intangible assets, its competitive position may suffer. It is
also possible that other parties may bring action against the Company on grounds
of alleged infringement of industrial or intellectual property rights and,
should they be successful, the Company may be obligated to pay significant
compensation.
Since 1997, the Company has not paid dividends. In the future, the re-payments
of capital loans will restrict the possibility to distribute dividends. The
total amount of loans as per December 31, 2008 was about 113 teuros at nominal
value, consisting solely of the convertible bond loans issued by the Company.
Regarding future dividend payments, there is also uncertainty about the ability
of the Company to accrue distributable capital. According to the financial
statements 2008 of the Company, there was no distributable capital in the
balance sheet of the Company.
REVIEW OF R&D-ACTIVITIES
The volume of the group's R&D activities were significant due to the on-going
R&D-programs by means of which the group intends to significantly expand its
business over the next few years. No capitalizations were made.
The group has R&D units in Salo (Finland), Amsterdam (the Netherlands), Windsor
(UK), Warwick, RI (USA) and Shanghai (China).
Additionally, GyPSii server facilities are maintained in the US and China at
present, with continued upgrades and new locations planned in the future.
The development of R&D costs in years 2006-2008 was the following:
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| Year | R&D costs | % of sales | of which | % of sales |
| | teuros | | capitalized | |
| | | | teuros | |
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| 2006 | 5496 | 79.0 | 4163 | 59.8 |
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| 2007 | 5797 | 130.7 | 0 | 0 |
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| 2008 | 6088 | 139.2 | 0 | 0 |
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CHANGE IN ACCOUNTING PRACTICES
In the published P&L-statements, the Company has adopted in 1-9/2008 report a
functional format replacing the prior presentation format by cost categories.
All reference numbers have been adjusted to be congruent with those for the
on-going period, presented in the new functional format. Amortisation of
GeoSolutions IPR, received in the acquisition, has been included in R&D function
in the new functional presentation, whereas in the previously issued financial
statements 2007 it was not included in R&D costs.
INVESTMENTS AND FINANCING
Gross investments in financial period were 119 teuros. In year 2007 gross
investments were 6283 teuros, which amount almost entirely came from the
GeoSolutions acquisition, and in year 2006 they were 4393 teuros.
PERSONNEL AND ORGANIZATION
The number of employed personnel at GeoSentric in 2008 averaged 94, of which 42,
at most, were affected by alternate forced leaves. The alternate forced leave
program, agreed to in autumn 2007 to apply for the time being, continued in 2008
and will continue also in 2009. The average number of personnel in year 2007 was
83 and in year 2006 it was 82.
In November 2008 the Company announced its organization re-defining and
clarifying the management structure of the Company. The members of the
management team of the Company are: Dan Harple (Executive Chairman), Tomi Raita
(Senior Vice President & Managing Director, EMEA) Michael Po (Senior Vice
President, Engineering), Rich Pizzarro (Senior Vice President & Chief Technology
Officer), Bill Conners (Senior Vice President, Sales and Business Development),
Bruce Hathaway (Senior Vice President, Finance, Controller and Corporate
Secretary), Robin Halliday (Chief Financial Officer), Thor Johnson (Senior Vice
President, Media Markets), Shane Lennon (Senior Vice President, Marketing), Jack
Early (Senior Vice President, Global Matrix Operations), Jeff Lin (Managing
Director, Asia Pacific), Sam Critchley (Vice President, Products), Adrian
Anderson (Vice President, Strategic Partnerships), Gavin Nicol (Architect) and
Jukka Nieminen (Vice President, Services & Solutions).
ENVIRONMENTAL ISSUES
The Company changed into a no-lead manufacturing process according to so called
ROHS-directive during summer 2006. The Company pays for its products a statutory
recycling fee and has organized the recycling of disposed materials
contractually through Jalopinta Ky. Altogether, the Company's operations cause
no significant environmental impact.
BOARD OF DIRECTORS AND AUDITORS
According to the Company's articles of association the Board of Directors
consists of not less than three (3) but no more than nine (9) ordinary members.
The term of the members of the Board of Directors begins at the end of the
Annual General Meeting of shareholders and expires at the end of the next Annual
General Meeting of the shareholders following the election.
In the annual general meeting convened on May 16, 2008, the number of Board
members was increased from six to seven. Daniel Harple, Gary Bellot, David
Francis and Michael Vucekovich were re-elected to the Board. Andy van Dam,
Winston Guillory and Hans van der Velde were elected to the Board as new
members. The Board elected Mr. Harple as the Chairman of the Board of Directors.
In financial year 2008, the audit firm Ernst & Young Oy continued to serve as
the ordinary auditor of the Company, with Mr. Erkka Talvinko, CPA, as the
responsible auditor. Audit firm PricewaterhouseCoopers was elected as the deputy
auditor of the Company.
GROUP STRUCTURE
In addition to the parent company, GeoSentric Oyj, the group comprises of 100 %
owned subsidiaries, GyPSii (Shanghai) Co. Ltd, GeoSolutions B.V., GyPSii Inc.,
Benefon Solutions B.V. and GeoSentric (UK) Ltd. (formerly Benefon (UK) Ltd).
GeoSentric (UK) Ltd., GyPSii (Shanghai) Co., Ltd., GeoSolutions B.V. and GyPSii
Inc. are primarily engaged with the GyPSii. GyPSii (Shanghai) Co., Ltd. has a
primary focus for market development in Asia. Further, product quality
assurance, testing, and multi-lingual review are assisted by the Shanghai team.
GeoSentric Oyj is the group parent company and is engaged in the TWIG-products
and provides R&D services to the GyPSii-products and services. Benefon Solutions
B.V. is presently dormant.
BOARD AUTHORIZATION
The Annual General Meeting convened on April 16, 2007 authorized the Board to
increase the share capital by maximum of 1,902,500 euros and issuance of new
shares by maximum of 190,250,000 shares. The authorization is valid for two
years from the date of the Annual General Meeting.
The Extraordinary General Meeting convened on September 10, 2007, authorized the
Board to increase share capital by a maximum of 8,000,000 euros and share amount
by 800,000,000 new shares. The new authorization is valid for two years from the
date of the Extraordinary General Meeting. The authorization granted by the
Extraordinary General Meeting of April 16, 2007 remains to be valid.
At the end of the reporting period the remaining amount of Board's authorization
was 2,244,748.80 euros and 224,474,880 shares corresponding to 25 % of the
currently registered share amount and 15.91 % shares after all shares and
instruments entitled to shares, effecting a corresponding immediate dilution to
existing shareholdings.
STRUCTURAL ARRANGEMENTS AND CHANGES IN AMOUNTS OF SHARES
The Company has fifteen valid option programs directed to key resources of which
six has been adopted during the year 2008; 2008I, 2008II, 2008III, 2008IV, 2008V
and 2008VI. Each option right entitle its holder to subscribe one new share and
of each new share 0.01 euros is to be booked to Company's share capital. The
other main terms and conditions of the option programs adopted during year 2008
are as follows:
The Board decided to adopt Option Plan 2008I and issue a total amount of
4,451,632 option rights in its meeting on February 15, 2008. The options are
divided into two series an option rights have been subscribed by the key
personnel of the Group. The Board extended the end of share subscription period
from the initial December 31, 2010 until December 31, 2012. Share subscription
price is 0.06 euros per share. Option rights have been subscribed.
The Board decided to adopt Option Plan 2008II and issue a total amount of
577,000 option rights in its meeting on April 18, 2008 to its key employees. The
option may be subscribed into new shares during the share subscription period
ending on December 31, 2012 with a share subscription price of 0.06 euros per
share. Option rights have been subscribed.
The Board decided in its meeting on May 16, 2008 to adopt Option Plan 2008III
and issue a total amount of 24,500,000 option rights to the members of the Board
of Directors. The option may be subscribed into new shares during the share
subscription period ending on December 31, 2012 with a share subscription price
of 0.045 euros per share. Option rights have been subscribed.
The Board decided in its meeting on 15, 2008 to adopt Option Plan 2008IV and
issue a total amount of 2,877,000 option rights to the key employees. The option
may be subscribed into new shares during the share subscription period ending on
December 15, 2013 with a share subscription price of 0.06 euros per share.
Option rights have been subscribed.
The Board decided in its meeting on November 20, 2008 to adopt Option Plan 2008V
and issue a total amount of 9,505,000 option rights to the key resources of
GeoSentric Group. The Board may grant options during the option subscription
period, which ends on December 31, 2009. The options will be divided into
separate series as decided by the Board. The options shall vest on quarterly
basis. The share subscription price for each series will be determined to equal
the trade volume weighted average share price of the company share (GEO1V) in
NASDAQ OMX during the thirty (30) days period immediately preceding the vesting
quarter of the respective options, i.e. March, June, September and December. The
share subscription period with the options shall begin no earlier than January
1, 2009 but no later than January 1, 2010 and end no later than January 1, 2016.
However, the share subscription period for each option series ends after six (6)
years have passed from the first vesting date for that option series. Of the
reserved amount, a total of 5,578,500 options had been allotted by December 31,
2008. The Option Plan was registered on February 5, 2009.
The Board decided in its meeting on November 20, 2008 to adopt Option Plan
2008VI. According to the Option Plan 2008-VI the company issues a maximum of
495,000 option rights to the personnel of the company as a part of the general
share-based incentive plan of GeoSentric. The Board may grant options during the
option subscription period, which ends on December 31, 2009. The options will be
divided into separate series as decided by the Board. The share subscription
price for each series will be determined to equal the trade volume weighted
average share price of the Company share (GEO1V) in NASDAQ OMX during the thirty
(30) days period immediately preceding the vesting quarter of the respective
options. The share subscription period with the options shall begin no earlier
than January 1, 2009 but no later than January 1, 2010 and end no later than
January 1, 2016. However, the share subscription period for each option series
ends after six (6) years have passed from the first vesting date for that option
series. All reserved options have been allotted. The Option Plan was registered
on February 5, 2009
More information upon the option programs is available in Note 23 “Option
Rights” of the Financial Statements
During the financial year the Company increased its share capital five times as
new shares were subscribed by virtue of security conversions and share issues.
Shares were subscribed by virtue of the conversion as follows:
--------------------------------------------------------------------------------
| Security | Amount of shares | Share capital increase |
--------------------------------------------------------------------------------
| CBL 2004A | 84,217,547 | 842,175.47 |
--------------------------------------------------------------------------------
| CBL 2007F | 5,400,000 | 54,000.00 |
--------------------------------------------------------------------------------
| CBL 2007G | 88,000,000 | 880,000.00 |
--------------------------------------------------------------------------------
| CBL 2007H | 82,222,221 | 822,222.21 |
--------------------------------------------------------------------------------
| CBL 2007I | 4,711,111 | 47,111.11 |
--------------------------------------------------------------------------------
| CBL 2007J | 880,000 | 8,800.00 |
--------------------------------------------------------------------------------
| CBL 2008A | 2,328,889 | 23,288.89 |
--------------------------------------------------------------------------------
| Special Rights 2007 | 102,171,068 | 1.021,710.68 |
--------------------------------------------------------------------------------
| Total | 369,930,836 | 3,699,308.36 |
--------------------------------------------------------------------------------
In addition the Board decided in March to raise additional financing of EUR
131,000 by issuing a maximum of 582,222 new shares at a subscription price of
0.18 euros per share and a convertible bond loan 2008A entitling to subscribe a
maximum of 2,328,889 new shares. Of the subscribed shares 0.01 euros was booked
to the share capital.
The Board decided to raise a maximum amount of EUR 16,000,000 by issuing a loan
note which includes a specific option right to use the note to set off
subscription price of shares (“Note”). The Note shall be directed to at maximum
one hundred institutional and qualified investors accepted by the Board. The
note provides a minimum conversion ratio of EUR 0.106, exceeding the current
share price on the issue date, and is exercisable only at predefined conversion
events. The maximum amount of new shares to be subscribed by virtue of the Note
is 150,302,466, assuming that the maximum amount of financing is raised. Of the
share subscription price EUR 0.01 shall booked to share capital. As a result of
the Note Company's share capital may increase by a maximum of EUR 1,503,024.66.
The interest rate of the Note is 12.5 % payable semi-annually with the first
payment due on 30 June, 2009. The Note period is five years ending on August 25,
2013. The Board extended initial subscription period of the Note from November
18, 2008 until April 1, 2009. As of December 31, 2008 a commitment of EUR
10,000,000 was accepted by the Board entitling its holder to subscribe
94,339,622 new shares at maximum.
COMPANY SHARES AND SHAREHOLDERS
The shares of GeoSentric Oyj are listed on the NASDAQ OMX Helsinki (NASDAQ OMX:
GEO1V) and issued in the book entry system held by Euroclear Finland, address PL
1110, FIN-00101 Helsinki, Finland. The ISIN-code of the share is FI 0009004204.
The Company's shares have been on the surveillance list since February 11, 2003.
The Company and its subsidiaries do not have any Company´s shares owned by or
administered on behalf of the Company.
The company's share capital on December 31, 2008, was 8,950,961,65 euros,
consisting of 895,096,165 shares. The number of outstanding shares in the
beginning of the financial year 2008 was 524,583,107.
BOARD PROPOSAL REGARDING THE HANDLING OF THE RESULT
The Board proposes to the general meeting that no dividend is distributed and
that the loss for the period is booked to the prior years´ result account.
NOTICE
The GeoSentric's financial statements release has been prepared according to the
accounting standard IAS 34, Interim Reports. The accounting principles for the
financial statements have been presented in the Financial Statements 2008
published on March 31, 2009. The information presented in this report has been
audited.
In the Notes to the Financial Statements there is more detailed and additional
information about the Company's operations in the financial year 2008.
It should be noted that certain statements herein which are not historical facts
are based on management's best assumptions and beliefs in light of the
information currently available to it.
According to Finnish Securities Market Act, Chapter 2, Section 10 c, GeoSentric
Oyj has published the annual summary of the stock exchange releases and
announcements published during the year 2008. The summary is available at:
www.geosentric.com.
In Salo March 30, 2009
GeoSentric Oyj
The Board of Directors
GEOSENTRIC OYJ FINANCIAL STATEMENTS FY 2008
GROUP INCOME STATEMENT
--------------------------------------------------------------------------------
| 1000 EUR | Note | 4Q/2008 | 2008 | 4Q/2007 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | | 1164 | 4374 | 892 | 4435 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cost of goods sold | 4 | 664 | 3006 | 907 | 6021 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross margin | | 500 | 1368 | -15 | -1586 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other operating | | 0 | 35 | 29 | 61 |
| income | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| General & | 4 | 1128 | 3874 | 1455 | 4947 |
| Administrative | | | | | |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Research & | 4 | 1593 | 6088 | 1199 | 5797 |
| Development expenses | | | | | |
--------------------------------------------------------------------------------
| Sales & Marketing | 4 | 1034 | 3360 | 910 | 6457 |
| expenses | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating result | | -3255 | -11919 | -3550 | -18726 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income | | 190 | 330 | 43 | 69 |
--------------------------------------------------------------------------------
| Financial expenses | | -195 | -276 | -19 | -353 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result before taxes | | -3260 | -11865 | -3526 | -19010 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes | | 110 | 492 | 127 | 382 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result for the | | -3150 | -11373 | -3399 | -18628 |
| period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, | | | | | |
| eur | | | | | |
--------------------------------------------------------------------------------
| Basic earnings per | | -0,00 | -0,01 | -0,01 | -0,06 |
| share, eur | | | | | |
--------------------------------------------------------------------------------
Diluted earnings per share have not been computed because dilution effect would
improve the key figure.
GROUP STATEMENT OF FINANCIAL POSITION
--------------------------------------------------------------------------------
| 1000 EUR | Note | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | | 194 | 199 |
--------------------------------------------------------------------------------
| Goodwill | | 216 | 216 |
--------------------------------------------------------------------------------
| Other intangible assets | | 2520 | 4531 |
--------------------------------------------------------------------------------
| Other financial assets | | 64 | 62 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 0 | 0 |
--------------------------------------------------------------------------------
| | | 2994 | 5008 |
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | | 1405 | 2818 |
--------------------------------------------------------------------------------
| Trade receivables and other | | 1816 | 2049 |
| receivables | | | |
--------------------------------------------------------------------------------
| Prepaid expenses | | 836 | 965 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 9754 | 6520 |
--------------------------------------------------------------------------------
| | | 13811 | 12352 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | | 16805 | 17360 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders´equity | | | |
--------------------------------------------------------------------------------
| Share capital | 5 | 8951 | 5246 |
--------------------------------------------------------------------------------
| Share premium account | 5 | 13631 | 14652 |
--------------------------------------------------------------------------------
| Translation difference | | 124 | 0 |
--------------------------------------------------------------------------------
| Invested distributable equity | 5 | 28039 | 23695 |
| account | | | |
--------------------------------------------------------------------------------
| Retained earnings | | -40692 | -30856 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´ equity | | 10053 | 12737 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | 638 | 1148 |
--------------------------------------------------------------------------------
| Interest-bearing debt | 7 | 3394 | 0 |
--------------------------------------------------------------------------------
| | | 4032 | 1148 |
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Trade payables and other | | 1977 | 2431 |
| payables | | | |
--------------------------------------------------------------------------------
| Provisions | | 62 | 104 |
--------------------------------------------------------------------------------
| Interest bearing debt | 7 | 681 | 940 |
--------------------------------------------------------------------------------
| | | 2720 | 3475 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | | 6752 | 4623 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´ equity and | | 16805 | 17360 |
| liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| GROUP CASH FLOW STATEMENT | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1000 EUR | | 2008 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operations | | | |
--------------------------------------------------------------------------------
| Result for the period | | -11373 | -18628 |
--------------------------------------------------------------------------------
| Adjustments | | 3384 | 5934 |
--------------------------------------------------------------------------------
| Changes in working capital: | | | |
--------------------------------------------------------------------------------
| Change of trade and other | | 362 | 2469 |
| receivables | | | |
--------------------------------------------------------------------------------
| Change of inventories | | 1416 | 3376 |
--------------------------------------------------------------------------------
| Change of trade and other | | -454 | -2069 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Paid interests | | -2 | -47 |
--------------------------------------------------------------------------------
| Received interest payments | | 118 | 50 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operations, net | | -6549 | -8915 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investments, | | -119 | -131 |
| net | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
--------------------------------------------------------------------------------
| Proceeds from issue of share | | 1 | 10693 |
| capital | | | |
--------------------------------------------------------------------------------
| Transaction expenses of share | | -99 | -202 |
| issues | | | |--------------------------------------------------------------------------------
| Proceeds from long term | | 6038 | 2113 |
| borrowings, equity | | | |
--------------------------------------------------------------------------------
| Proceeds from long term | | 3962 | 420 |
| borrowings, liability | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow from financing | | 9902 | 13024 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash | | 3234 | 3978 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash on January 1 | | 6520 | 2542 |
--------------------------------------------------------------------------------
| Cash on December 31 | | 9754 | 6520 |
--------------------------------------------------------------------------------
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
| | Share | Share | Share | Inv. | Accrued | Total |
| | capital | issue | prem | distrib. | result | (1000 |
| | (1000 | (1000 | account | equity | (1000 | eur) |
| | eur) | eur) | (1000 | account | eur) | |
| | | | eur) | (1000 | | |
| | | | | eur) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders´ | 2634 | 400 | 15936 | 4866 | -13415 | 10421 |
| equity | | | | | | |
| 31.12.2006 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Items booked | 0 | 0 | 0 | 0 | 0 | 0 |
| directly into | | | | | | |
| shareholders´ | | | | | | |
| equity | | | | | | |
--------------------------------------------------------------------------------
| Result for | 0 | 0 | 0 | 0 | -18628 | -18628 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| Total income | 0 | 0 | 0 | 0 | -18628 | -18628 |
| and costs | | | | | | |
| booked in the | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Share issues, | 617 | -400 | 0 | 10425 | 0 | 10642 |
| cash | | | | | | |
--------------------------------------------------------------------------------
| Share issues, | 92 | 0 | 0 | 1255 | 0 | 1347 |
| offset with | | | | | | |
| trade | | | | | | |
| receivables | | | | | | |
--------------------------------------------------------------------------------
| Share issues | 1284 | 0 | -1284 | 0 | 0 | 0 |
| paid from | | | | | | |
| funds | | | | | | |
--------------------------------------------------------------------------------
| Conversion of | 319 | 0 | 0 | 2019 | 0 | 2338 |
| convertible | | | | | | |
| bonds into | | | | | | |
| shares | | | | | | |
--------------------------------------------------------------------------------
| GeoSolutions | 300 | 0 | 0 | 3900 | 0 | 4200 |
| acquisition | | | | | | |
--------------------------------------------------------------------------------
| Share issue | 0 | 0 | 0 | -883 | 0 | -883 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Booked | 0 | 0 | 0 | 0 | 1187 | 1187 |
| expense of | | | | | | |
| stock options | | | | | | |
| to key | | | | | | |
| personnel and | | | | | | |
| partners | | | | | | |
--------------------------------------------------------------------------------
| Equity | 0 | 0 | 0 | 2113 | 0 | 2113 |
| portions of | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| Shareholders´ | 5246 | 0 | 14652 | 23695 | -30856 | 12737 |
| equity | | | | | | |
| 31.12.2007 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Transl. | | | | |
| | | diff. | | | | |
| | | (1000 | | | | |
| | | eur) | | | | |
--------------------------------------------------------------------------------
| Items booked | 0 | 124 | 0 | 0 | 0 | 124 |
| directly into | | | | | | |
| shareholders´ | | | | | | |
| equity | | | | | | |
--------------------------------------------------------------------------------
| Result for | 0 | 0 | 0 | 0 | -11373 | -11373 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| Total income | 0 | 124 | 0 | 0 | -11373 | -11249 |
| and costs | | | | | | |
| booked in the | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Share issue, | 6 | 0 | 0 | 99 | 0 | 105 |
| cash | | | | | | |
--------------------------------------------------------------------------------
| Share issue, | 1022 | 0 | -1021 | 0 | 0 | 1 |
| special | | | | | | |
| rights | | | | | | |
--------------------------------------------------------------------------------
| Conversion of | 2677 | 0 | 0 | -1694 | 0 | 983 |
| convertible | | | | | | |
| bonds into | | | | | | |
| shares | | | | | | |
--------------------------------------------------------------------------------
| Share issue | 0 | 0 | 0 | -99 | 0 | -99 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Booked | 0 | 0 | 0 | 0 | 1537 | 1537 |
| expense of | | | | | | |
| stock options | | | | | | |
| to key | | | | | | |
| personnel and | | | | | | |
| partners | | | | | | |
--------------------------------------------------------------------------------
| Equity | 0 | 0 | 0 | 6038 | 0 | 6038 |
| portions of | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| Shareholders´ | 8951 | 124 | 13631 | 28039 | -40692 | 10053 |
| equity | | | | | | |
| 31.12.2008 | | | | | | |
--------------------------------------------------------------------------------
KEY FIGURES
--------------------------------------------------------------------------------
| | 4Q/2008 | 2008 | 4Q/2007 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, 1000 | 1164 | 4374 | 892 | 4435 |
| EUR | | | | |
--------------------------------------------------------------------------------
| Operating result, | -3255 | -11919 | -3550 | -18726 |
| 1000 EUR | | | | |
--------------------------------------------------------------------------------
| Result before | -3260 | -11865 | -3526 | -19010 |
| taxes, 1000 EUR | | | | |
--------------------------------------------------------------------------------
| Gross | 14 | 119 | 4 | 6283 |
| investments, 1000 | | | | |
| EUR | | | | |
--------------------------------------------------------------------------------
| Average personnel | 101 | 94 | 87 | 83 |
--------------------------------------------------------------------------------
| Earnings per | -0,00 | -0,01 | -0,01 | -0,06 |
| share, EUR | | | | |
--------------------------------------------------------------------------------
| Equity per share, | 0,01 | 0,01 | 0,02 | 0,02 |
| EUR | | | | |
--------------------------------------------------------------------------------
| Weighted average | 895096 | 779047 | 370604 | 327772 |
| number of shares | | | | |
| in period, 1000 | | | | |
| pcs | | | | |
--------------------------------------------------------------------------------
| Number of shares | 895096 | 895096 | 524583 | 524583 |
| at the end of the | | | | |
| period, 1000 pcs | | | | |
--------------------------------------------------------------------------------
1. BASE INFORMATION OF THE COMPANY
GeoSentric is a developer and provider of solutions, products and technologies
for location based services and LBS-enabled social networks. It develops a
leading geo-integration platform for mobile devices, personal navigation
devices, web browsers, and other internet-connected devices, which provides
applications and bundled OEM/ODM solutions for consumer and B2B markets, built
on the convergence of location based services, social networking, search, mobile& Web 2.0 technologies. Its intellectual property is delivered as software and
services in products which include the GyPSii product platform (“GyPSii”)
together with ready-to-use integrated GPS/GSM devices for navigation and object
tracking and customisable software solutions for industry specific uses
(“TWIG”).
The company has deep expertise and technology IP in User Generated Content
Management, Location Based Services, Open Social Networking, Ad-Targeting and
Integration, for Social Media markets and users on mobile phones, the web,
personal navigation and internet connected devices. Based in Salo, Finland, and
Amsterdam, The Netherlands, GeoSentric operates offices in North America, Europe
and Asia Pacific. GeoSentric is listed in NASDAQ OMX Helsinki Ltd (NASDAQ OMX:
GEO1V).
The parent company of the group is GeoSentric Oyj (former Benefon Oyj). The
registered domicile is Salo, Finland, with street address Meriniitynkatu 11,
24100 Salo, Finland, and mail address PL 84, FIN-24101 Salo, Finland. A copy of
the group financial statements is available at the internet address
www.geosentric.com or at the company head office at address Meriniitynkatu 11,
FIN-24100 Salo, Finland.
2. ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS
Foundation:
The group financial statement bulletin has been prepared in accordance with the
International Financial Reporting Standards ("IFRS") and has been prepared
according to the accounting standard IAS 34, Interim Reports. Information is
based to confirmed financial statement for year 2008.
Accounting principles:
The used preparation principles have been presented in the Financial Statements
from year 2008. In the P&L-statement, the Company has adopted a functional
format replacing the prior presentation format by cost categories. All reference
numbers have been adjusted to be congruent with those for the on-going period,
presented in the new functional format. Amortisation of GeoSolutions IPR,
received in the acquisition, has been included in R&D function in the new
functional presentation, whereas in the financial statements 2007 it was not
included in R&D costs.
Since 1.1.2008 the group has applied the following new standards and
interpretations:
IFRIC 11, IFRS2, regarding business transactions with group company shares and
own shares. This interpretation has no effect on the group financial statements.
IFRIC 12, Service Concession Arrangements. This interpretation is not applicable
to the group´s industry.
IFRIC 14, IAS 19, The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction. The Company has no benefit-based retirement
plans in the meaning of the interpretation.
Changes in standards IAS 39, Financing Instruments: booking and valuation, and
IFRS7, Financing Instruments: information to be presented in the financial
statements. The changes were given due to the international financing crisis and
concern the re-classification of certain financial assets. The group holds no
such financial assets that ought to be re-classified.
3. SEGMENT INFORMATION
The primary reported segments of the group comprise business segments. At the
moment, there is only one distinct segment, location based services and devices
utilising them. Its share of net sales has been 100% in the period and in the
reference period.
4. COSTS BY CATEGORY
--------------------------------------------------------------------------------
| 1000 EUR | 4Q/2008 | 2008 | 4Q/2007 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Increase/decrease in | 196 | 1290 | 386 | 691 |
| inventories of | | | | |
| finished products | | | | |
--------------------------------------------------------------------------------
| Use of raw materials | 261 | 808 | 377 | 4246 |
| and consumables | | | | |
--------------------------------------------------------------------------------
| Total expense of | 207 | 908 | 144 | 1084 |
| direct employees | | | | |
--------------------------------------------------------------------------------
| Cost of goods sold | 664 | 3006 | 907 | 6021 |
| total | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total expense of | 2199 | 7263 | 1423 | 5345 |
| indirect employees | | | | |
--------------------------------------------------------------------------------
| Depreciations | 538 | 2133 | 775 | 4013 |
--------------------------------------------------------------------------------
| Impairment loss | 0 | 0 | 0 | 440 |
--------------------------------------------------------------------------------
| Other operating | 1018 | 3926 | 1366 | 7403 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Expenses by cost | 3755 | 13322 | 3564 | 17201 |
| category, total | | | | |
--------------------------------------------------------------------------------
5. SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
| | Number of | Share | Share | Invested | Total |
| | shares | capital | prem | distribut | (1000 |
| | (1000) | (1000 | account | . equity | eur) |
| | | eur) | (1000 | account | |
| | | | eur) | (1000 | |
| | | | | eur) | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31.12.2007 | 524583 | 5246 | 14652 | 23695 | 43593 |
--------------------------------------------------------------------------------
| Share conversion | 47803 | 478 | | -478 | 0 |
| of CBL2007G | | | | | |
| 31.1.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 44659 | 447 | | -447 | 0 |
| of CBL2007H | | | | | |
| 31.1.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 311 | 3 | | -3 | 0 |
| of CBL2007I | | | | | |
| 31.1.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 880 | 9 | | -9 | 0 |
| of CBL2007J | | | | | |
| 31.1.2008 | | | | | |
--------------------------------------------------------------------------------
| Share issue | 582 | 6 | | 99 | 105 |
| 20.3.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 7998 | 79 | | | 79 |
| of CBL2004A | | | | | |
| 20.3.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 37900 | 379 | | -379 | 0 |
| of CBL2007G | | | | | |
| 20.3.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 35416 | 354 | | -354 | 0 |
| of CBL2007H | | | | | |
| 20.3.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 4400 | 44 | | -44 | 0 |
| of CBL20071 | | | | | |
| 20.3.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 4239 | 42 | | | 42 |
| of CBL2004A | | | | | |
| 12.5.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 5400 | 54 | | -54 | 0 |
| of CBL2007F | | | | | |
| 12.5.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 2298 | 23 | | -23 | 0 |
| of CBL2007G | | | | | |
| 12.5.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 2147 | 22 | | -22 | 0 |
| of CBL2007H | | | | | |
| 12.5.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 2329 | 23 | | 3 | 26 |
| of CBL2008A | | | | | |
| 12.5.2008 | | | | | |
--------------------------------------------------------------------------------
| Share issue, | 102171 | 1022 | -1021 | | 1 |
| special rights | | | | | |
| 12.5.2008 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 71980 | 720 | | 116 | 836 |
| of CBL2004A | | | | | |
| 18.8.2008 | | | | | |
--------------------------------------------------------------------------------
| Costs of share | | | | -99 | -99 |
| issues | | | | | |
--------------------------------------------------------------------------------
| Equity | | | | 6038 | 6038 |
| components | | | | | |
| separated from | | | | | |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| 31.12.2008 | 895096 | 8951 | 13631 | 28039 | 50621 |
--------------------------------------------------------------------------------
According to the Company´s new articles of association registered on 10.12.2007,
there is no maximum for the shares and there is only one category of shares at
the Company. Also the clause about maximum amount of share capital has been
removed. The shares carry no nominal value but the book parity value at the
moment is 0.01 euros per share. All outstanding shares are fully paid.
6. OPTION RIGHTS
The company carries fifteen on-going stock option programs, in which six has
been approved during the period.
In all of these, one option right entitles to subscribe for one new S-share of
the company.
Option program 2007-6:
The Board decided on 19.10.2007 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue 35,305,555 option rights and 102,171,068
special rights to GeoHolding in relation to financing arrangements in the
autumn. Option rights were subscribed for with accepted financing agreement.
Share subscription price with option rights is 0.045 euros per share and with
special rights 1 euro per 100.000 shares. Share subscription period have begun
and will end on 2.1.2013. Special rights were converted into shares on
12.5.2008.
Option program 2007-7:
The Board decided on 19.11.2007 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue a maximum of 3,367,500 option rights to
certain key persons of the Company. Subscription period of the option rights
began on 19.11.2007 and will end on 19.11.2009. The Board decided on 20.11.2008
to extend the share subscription period until 19.11.2011. Share subscription
price is 0.07 euros.
Option program 2008-1:
The Board decided on 15.2.2008 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue a maximum of 4,451,632 option rights to
certain key persons of the Company. Subscription period of the option rights
began on 19.2.2008 and will end on 31.12.2009. The Board decided on 20.11.2008
to extend the share subscription period until 19.2.2012. Share subscription
price is 0.06 euros.
Option program 2008-2:
The Board decided on 18.4.2008 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue a maximum of 577,000 option rights to
certain key persons of the Company. Subscription period of the option rights
began on 18.4.2008 and will end on 31.12.2012. Share subscription period with
A-class options begins on 18.4.2010 and with B-class options on 18.4.2011. With
both, share subscription period ends on 31.12.2012. The board decided on
20.11.2008 to advance the share subscription period to begin on 18.7.2008. Share
subscription price is 0.06 euros.
Option program 2008-3:
The Board decided on 16.5.2008 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue a maximum of 24,500,000 option rights to
the members of the Board of the Company. Every Board member is entitled to
subscribe for a maximum of 3.500.000 option rights. Option rights were granted
as part of the incentive program approved by the annual general meeting of
16.5.2008. Option rights have been subscribed for. Share subscription period
with Class C1 options begins on 1.7.2008, with class C2 options on 1.10.2008,
with class C3 options on 1.1.2009 and with class C4 options on 1.4.2009. With
all options, share subscription period ends on 31.12.2012. Share subscription
price is 0.045 euros.
Option program 2008-4:
The Board decided on 15.8.2008 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue a maximum of 2,877,000 option rights to
certain key persons of the Company. Option rights have been divided into D and E
classes and further into 16 sub-categories. Share subscription period has been
staged by sub-category such that the subscription period for the first
sub-category begins on 15.1.2009 and that of the last sub-category on 15.9.2012.
Share subscription period with all options ends on 15.12.2013. Share
subscription price is 0.06 euros.
Option program 2008-5:
The Board decided on 20.11.2008 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue a maximum of 9,505,000 option rights and
at the same time allotted 5,208,500 option rights under the option plan to
certain key persons of the Company. Subscription period of the option rights
began on 20.11.2008 and will end on 31.12.2009. Option rights are divided into
16 sub-categories. Share subscription period has been staged by sub-category
such that subscription period of the first sub-category begins on 1.4.2009 and
that of the last one on 1.1.2013. Share subscription period for all options ends
on 1.4.2015. Share subscription price is determined on basis of the volume
weighted mean closing price of the share in March 2009.
Option program 2008-6:
The Board decided on 20.11.2008 by virtue of authorisation by extraordinary
general meeting on 10.9.2007 to issue a maximum of 495,000 option rights to
certain key persons of the Company. Subscription period of the option rights
began on 20.11.2008 and will end on 31.12.2009. Option rights are divided in 16
sub-categories. Share subscription period is staged by sub-category such that
the subscription period for the first category begins on 1.4.2009 and that of
the last one on 1.1.2013. Share subscription period for all options ends on
1.4.2015. Share subscription price is determined on basis of the volume weighted
mean closing price of the share in March 2009.
Special right:
The Board decided to issue 2.830.189 shares without price to Raymond Kalley as
part of the agreed advisor fee. The shares have been registered in trade
register after the end of the financial period.
Cost of options booked in the period according to IFRS 2. Consideration is given
as options. The counter-item of costs bookings is income statement is
shareholders´equity.
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| 1000 EUR 2008 2007 |
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| Key persons | 385 | 958 |
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| Board | 989 | 0 |
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| Other interest groups | 163 | 229 |
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| Total | 1537 | 1187 |
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7. FINANCIAL LIABILITIES
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| 1000 EUR | | 2008 | 2007 |
--------------------------------------------------------------------------------
| | Nominal loan | | |
| | value 2008 | | |
--------------------------------------------------------------------------------
| Non-current: | | | |
--------------------------------------------------------------------------------
| Loan 2008 | 10000 | 3394 | 0 |
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| Current: | | | |
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| Cbl 2004A | 113 | 113 | 940 |
| Loan 2008 | | 568 | 0 |
| Current total | | 681 | 940 |
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Convertible bond loan 2004A:
This loan with a nominal principal of 1130 teuros was decided on 26.2.2004. The
pay-back was due in four even annual allotments starting in 2005. The interest
is 4%. The loan may be converted between 1.6.2004-31.12.2008 into a maximum of
113.044.073 S-shares of the company with book parity value of 0.01 euros. The
loan capital, interest and other benefit may be paid in case of dismantling or
bankruptcy of the company only with priority after the other creditors. The
principal may be returned otherwise only providing that a full coverage for the
bound equity and other non-distributable items in the confirmed financial
statements for the latest expired financial year is retained. Interest or other
benefits may be paid only in case the paid amount may be used for profit
distribution in the confirmed balance sheet for latest expired financial period.
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| Share swaps: | 1000 EUR | 1000 PCS |
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| Loan amount when raised | 1130 | 113044 |
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| Share conversions | -176 | -17551 |
| 2004-2006 | | |
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| Share conversion | -79 | -7998 |
| 20.3.2008 | | |
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| Share conversion | -42 | -4239 |
| 12.5.2008 | | |
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| Share conversion | -720 | -71980 |
| 18.8.2008 | | |
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| Loan amount on 31.12.2008 | 113 | 11276 |
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Convertible bond loan 2007F:
This loan with nominal value of 135 teuros was raised in June 2007 and converted
into shares in May 2008. Share subscription price was 0.025 euros. No interest
was paid.
Convertible bond loan 2007G:
This loan with nominal value of 990 teuros was raised in September 2007 and
converted into shares in January, Mars and May 2008. Share subscription price
was 0.01125 euros. No interest was paid.
Convertible bond loan 2007H:
This loan with nominal value of 925 teuros was raised in October 2007 and
converted into shares in January, Mars and May 2008. Share subscription price
was 0.01125 euros. No interest was paid.
Convertible bond loan 2007I:
This loan with nominal value of 53 teuros was formed from trade payables in
October 2007 and converted into shares in January and Mars 2008. Share
subscription price was 0.01125 euros. No interest was paid
Convertible bond loan 2007J:
This loan with nominal value of 10 teuros was raised in December 2007 and
converted into shares in January 2008. Share subscription price was 0.01125
euros. No interest was paid.
Convertible bond loan 2008A:
This loan with nominal value of 26 teuros was raised in Mars 2008 and converted
into shares in May 2008. Share subscription price was 0.01125 euros. No interest
was paid.
Financing round 2008:
The Board has decided to raise a maximum of 16,000 teuros by issuing a loan with
an attached special right to use the loan receivable for payment of share
subscriptions in set-off. The minimum rate of conversion is 0.106 euros and the
maximum number of shares subscribed by virtue of the loan is 150,302,466. The
annual interest of the loan is 12.5 %, paid twice a year. The loan period will
end on 25.8.2013. The Board has received and accepted an investment commitment
of 10,000 teuros, of which 2,800 teuros was raised on 3.9.2008 and 7,200 teuros
on 13.10.2009.
The above convertible loan 2008 of 10,000 teuros has been divided in the
financial statements into equity and debt as required by IAS 32. The devision is
based on careful evaluation of the actual and contractual terms of the
convertible loan as well as judgements made by the management of the company.
The part of the convertible loan presented as debt consists of the discounted
present value of the future interest payments not avoidable to the company
regardless of the conversion. The remaining interest and main part of the
convertible loan is presented as equity, as the management of the company
considers using the conversion right as highly probable. The part of the loan
presented as debt will be amortized during the contractual maturity of the loan.
The discount interest rate used in valuation of the debt part of the convertible
loan is based on the interest rate the company could expect to negotiate for a
corresponding loan from third parties. The interest rate used consists of risk
free interest rate and of a company specific risk premium. Risk premium
estimated by management is 1.5%. Effective loan interests range from 16,2 to
16,4%.
-
8. COLLATERAL COMMITMENTS AND CONTINGENCIES
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| 1000 EUR 2008 2007 |
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| Contingent liability: |
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| Debt to banks with interest until 31.12. 0 1734 |
--------------------------------------------------------------------------------
Contingent debts, amounting to 1768 teuros with interest, have been rendered
null and void on 30.9.2008. Related chattel mortgages and pledged cash have been
relieved.
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| Collateral for own liabilities: |
--------------------------------------------------------------------------------
| Chattel mortgage as collateral for own liability 0 12068 |
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| Pledged non-current financial assets 44 42 |
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| Pledged current financial assets 57 373 |
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9. RELATED PARTY TRANSACTIONS
The parent and subsidiary company relations in the group were as follows:
Parent company GeoSentric Oyj. Subsidiaries with parent company ownership and
voting rights of 100 % are GeoSolutions B.V., GeoSentric UK Ltd., GyPSii
(Shanghai) Co. Ltd., GyPSii Inc. and Benefon Solutions B.V.
The management on 31.12.2008 comprised seven Board members and fourteen other
managers. The Board members were Daniel Harple, Gary Bellot, David Francis,
Winston Guillory, Andries Van Dam, Johannes van der Velde and Michael
Vucekovich. The top team comprised Daniel Harple, Tomi Raita, Michael Po, Rich
Pizzarro, Bill Conners, Bruce Hathaway, Robin Halliday, Thor Johnson, Shane
Lennon, Jack Early, Jeff Lin, Sam Critchley, Gavin Nicol, Jukka Nieminen and
Adrian Anderson. The Managing Director has been Tomi Raita.
Close circle events have been presented in the Financial Statements from year
2008.
10. IMPAIRMENT TESTING AND GOING CONCERN ASSESSMENT
The Group has tested its tangible fixed assets, goodwill and the IPR acquired as
part of the acquisition of GeoSolutions BV. The method used in the testing is
value in use and the whole group has been considered to represent the cash
generating unit subject to testing. The carrying value tested comprised of
tangible fixed assets 194 t€, goodwill 216 t€ and the IPR 2,500 t€, totalling
2,910 t€.
The test showed no impairment of the tested assets.
The following assumptions were used in the testing.
The cash flow estimate is based on the management forecast for the years
2009-2011.
Aggregate operating cash flow in 2009-2011: 16.7 m€
Discount rate used: 20 %
Sensitivity analysis:
The following changes in each of the assumptions individually applied would
decrease the value in use to the carrying value of the tested assets.
Decrease in annual operating cash flows: 3.5 m€
Increase in discount rate used: 82 %points
The management forecast used is based on the business plan prepared, the planned
revenue models and identified revenue sources.The business model and main
sources of revenue are expected to come via embedded licensing of the Company's
IPR and downstream advertising sales from the platform in partnerships with
mobile operators and carriers. The key element for the business model and
revenue generation is sufficient and sufficiently rapid growth of GyPSii users
which shall be achieved efficiently by penetration location solution markets via
Network Operators, Social Networks and OEMs/ODMs worldwide. During the year 2008
the Company focused on securing contracts with the major distribution partners:
Garmin, Samsung, China Unicom, China Mobile, MyNet, Intel and others, to
integrate GyPSii on to their new devices and services, and to increase volumes
of GyPSii users. These partnerships are indicative of the global market
selection and adoption of the GyPSii overall platform for the geo-social
networking, mobility, and Internet advertising markets. Although revenue
generation of GyPSii represented a minority of the net for the year 2008, the
user base of GyPSii is growing and major marketing launch plans for 2009 by all
of the distribution partners are planned to drive significant volumes of GyPSii
users on a global basis.
The most significant risk relating to the business plan is the sufficient growth
of distribution and users. As the Company's business model is partner driven,
possible delays in partners' launching their new products to the markets may
have an adverse effect on the development of the Company's business by
decelerating the distribution and user adoption rate of the Company's products
and services.
The Company's management reporting system is highly developed enabling the
management to monitor the progress of the business and financials performance
against the business model and budget on a continuous basis. The management
evaluates on a regular basis the distribution channels, performance, scope and
focus of the business plan in order to secure continuity. Based on the
assessment of current and planned activities and the interest expressed by the
market supporting the business plan and the management forecast by virtue of the
up-to-date reports, the Board assesses the company to be a going concern.
11. EVENTS AFTER THE END OF THE PERIOD
After the reporting period the Company's registered share amount increased by
2,830,189 new share issued by the Board of Directors on November 20, 2008.
The Board of Directors decided to extend the subscription period for the loan
note issue accepted by the Board earlier on September 3, 2008 in order to raise
a maximum amount of EUR 16,000,000 decided to extend the subscription period of
the Issue further until May 15, 2009.
Board member David Francis has resigned from the Board of Directors effective as
of March 13, 2009 due to personal reasons not attributable to the company.
GeoSentric Oyj's Board of Directors decided on March to establish committees to
enhance the preparation of matters falling within the competence of the Board.
The established committees are 1) Audit and Finance Committee; 2) Corporate
Governance and Nominations Committee; 3) Compensation Committee; and 4)
Strategic Options Committee.
BOARD PROPOSAL TO THE GENERAL MEETING FOR MEASURES REGARDING THE LOSS OF THE
PERIOD
The company has no distributable assets.
The result of the period of the parent company is 782.807,06 euros (FAS).
The Board proposes to the General Meeting that no dividend is distributed and
that loss for the period is booked on the account of Retained earnings.
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