2008-04-23 07:00:10 CEST
2008-04-23 07:01:10 CEST
REGULATED INFORMATION
Comptel - Interim report (Q1 and Q3)
Interim Report of Comptel Corporation 1 January - 31 March, 2008
Comptel Corporation Stock exchange release 23 April 2008 at 8.00 am INTERIM REPORT OF COMPTEL CORPORATION 1 JANUARY - 31 MARCH, 2008 Operating profit and order backlog strengthened from the previous year. Net sales EUR 19.5 million (January-March 2007: 19.5) Operating profit EUR 3.9 million (3.4) Earnings per share EUR 0.02 (0.02) Order backlog EUR 33.1 million (29.7) Sami Erviö, President and CEO: ”Comptel's financial performance was twofold in the first quarter of 2008. The operating profit improved and was close to 20 per cent of net sales. On the other hand, the order intake did not meet our expectations. The development of net sales was hampered by the delaying of certain European projects and a further weakening of US dollar rate. However, with the order backlog remaining at the high level of the year-end and with favourable order prospects, the basis for the deliveries of this year is good. During the first quarter Comptel closed significant deals in Europe and Asia-Pacific. In March we signed a long-term agreement with IBM India for license upgrades, and to deliver and maintain Comptel Convergent Charging Solution for a leading telecom operator in India. In all we sold five new core licenses. In the beginning of the year we restructured our organisation to meet the customer needs even better. The renewal has progressed well, although the initial phase required time away from daily duties for some personnel. On 21 April, we completed the acquisition of Axiom Systems. This strengthens our position to provide Dynamic OSS (Operations Support System) for the next generation IP networks. With this acquisition we can capitalize the growing investments of service providers to new IP-based services, like VoIP and IPTV.” Business Review of the First Quarter 2008 The net sales of Comptel Group in the first quarter of 2008 remained at the previous year level and were EUR 19.5 million (19.5). The Group's operating profit increased to EUR 3.9 million (3.4). The operating profit margin grew and was 19.8 per cent of the net sales (17.2). The order backlog was EUR 33.1 million. The growth of 11.5 per cent from the same period last year was affected by the increase of maintenance contracts. Business Areas -------------------------------------------------------------------------------- | Net sales, EUR million | 1-3 2008 | 1-3 2007 | Change % | 2007 | -------------------------------------------------------------------------------- | Europe | 9.2 | 12.3 | -25.3 | 48.5 | -------------------------------------------------------------------------------- | Middle East and Africa | 2.5 | 2.1 | 15.1 | 9.8 | -------------------------------------------------------------------------------- | Americas | 2.1 | 1.8 | 15.6 | 7.2 | -------------------------------------------------------------------------------- | Asia-Pacific | 5.8 | 3.3 | 76.9 | 16.9 | -------------------------------------------------------------------------------- | Total | 19.5 | 19.5 | -0.1 | 82.4 | -------------------------------------------------------------------------------- | Operating profit by market | | | | | | area, EUR million | | | | | -------------------------------------------------------------------------------- | Europe | 5.2 | 7.3 | -28.5 | 28.3 | -------------------------------------------------------------------------------- | Middle East and Africa | 0.9 | 1.0 | -7.2 | 5.7 | -------------------------------------------------------------------------------- | Americas | 1.0 | 1.1 | -13.1 | 3.9 | -------------------------------------------------------------------------------- | Asia-Pacific | 4.2 | 2.0 | 109.0 | 9.5 | -------------------------------------------------------------------------------- | Unallocated costs | -7.4 | -8.0 | -7.6 | -30.9 | -------------------------------------------------------------------------------- | Total | 3.9 | 3.4 | 15.0 | 16.5 | -------------------------------------------------------------------------------- | Operating profit, as per | | | | | | cent of net sales | | | | | -------------------------------------------------------------------------------- | Europe | 56.7 | 59.2 | - | 58.3 | -------------------------------------------------------------------------------- | Middle East and Africa | 37.0 | 45.9 | - | 58.4 | -------------------------------------------------------------------------------- | Americas | 47.1 | 62.7 | - | 54.1 | -------------------------------------------------------------------------------- | Asia-Pacific | 73.0 | 61.8 | - | 56.5 | -------------------------------------------------------------------------------- | Total | 19.8 | 17.2 | - | 20.0 | -------------------------------------------------------------------------------- In Europe, net sales were impaired by a few delays in license sales and other orders. In Asia-Pacific, significant license upgrades increased the operating profit. During the first quarter 2008, Comptel closed five new core license agreements: four Comptel Mediation and Charging Solutions, and one Comptel Provisioning and Activation Solution. -------------------------------------------------------------------------------- | Net sales breakdown by type, | 1-3 2008 | 1-3 2007 | Change % | 2007 | | EUR million | | | | | -------------------------------------------------------------------------------- | Licenses | 6.8 | 6.8 | 0.4 | 27.8 | -------------------------------------------------------------------------------- | Services and Maintenance | 12.7 | 12.7 | -0.4 | 54.6 | -------------------------------------------------------------------------------- | Total | 19.5 | 19.5 | -0.1 | 82.4 | -------------------------------------------------------------------------------- There were no significant changes in the breakdown of net sales. -------------------------------------------------------------------------------- | Net sales by sales channel, | 1-3 2008 | 1-3 2007 | Change % | 2007 | | EUR million | | | | | -------------------------------------------------------------------------------- | Direct Sales | 13.3 | 15.3 | -13.0 | 60.6 | -------------------------------------------------------------------------------- | Partner Sales | 6.1 | 4.2 | 47.4 | 21.8 | -------------------------------------------------------------------------------- | Total | 19.5 | 19.5 | -0.1 | 82.4 | -------------------------------------------------------------------------------- Partner sales increased significantly as a result of the long-term agreement signed with IBM India in March. Financial Position -------------------------------------------------------------------------------- | EUR million | 31 Dec | 31 Dec 2007 | Change % | | | 2008 | | | -------------------------------------------------------------------------------- | Balance sheet total | 76.6 | 73.6 | 4.0 | -------------------------------------------------------------------------------- | Liquid assets | 19.4 | 14.7 | 31.9 | -------------------------------------------------------------------------------- | Trade receivables | 23.6 | 27.1 | -12.7 | -------------------------------------------------------------------------------- | Accrued income | 8.0 | 8.6 | -6.3 | -------------------------------------------------------------------------------- | Deferred income related to partial | 2.4 | 2.7 | -11.1 | | debiting | | | | -------------------------------------------------------------------------------- | Equity ratio, % | 70.9 | 77.6 | - | -------------------------------------------------------------------------------- The Group had no interest-bearing debt at the end of the period. Liquid assets grew and were on a significantly higher level than in the previous year since dividends were paid after the review period. Equity ratio decreased compared to the year-end due to the resolution of dividend payment passed by the Annual General Meeting on 19 March. The Group's operating cash flow was EUR 6.3 million (5.2) in the first quarter. Trade receivables at the end of the period were EUR 23.6 million (24.2). Trade receivables decreased during the period and were on a lower level than at the end of first quarter 2007. Investments, Research and Development (R&D) -------------------------------------------------------------------------------- | EUR million | 1-3 2008 | 1-3 2007 | Change % | 2007 | -------------------------------------------------------------------------------- | Gross investments in | 0.4 | 0.2 | 141.4 | 1.9 | | intangible and tangible | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Direct R&D expenditure and | 2.7 | 2.5 | 11.1 | 10.3 | | investments | | | | | -------------------------------------------------------------------------------- | Capitalisation of R&D | 1.2 | 0.7 | 74.2 | 2.9 | | expenditure according to IAS | | | | | | 38 | | | | | -------------------------------------------------------------------------------- Gross investments in tangible and intangible assets mainly comprised of investments in devices, software and furnishing. The investments were financed by funds from operations. To meet the requirements of IAS 38, Comptel has modified its accounting principles for the capitalisation of development costs and of costs related to internal projects. A share of the fixed costs defined separately, is included in the cost of development and internal projects to which they are related. In the first quarter, these costs amounted to 231 thousand euro. The change has a positive impact on the operating profit. R&D expenditure and investments were mainly targeted to develop new dynamic end-to-end solutions, which shorten time-to-market for new services and enable service providers to charge for them. Personnel -------------------------------------------------------------------------------- | | 31 Mar | 31 Mar | Change % | 31 Dec 2007 | | | 2008 | 2007 | | | -------------------------------------------------------------------------------- | Number of employees at | 541 | 537 | 0.7 | 554 | | the end of period | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 1-3 2008 | 1-3 2007 | Change % | 2007 | -------------------------------------------------------------------------------- | Average number of | 546 | 541 | 0.9 | 555 | | personnel during the | | | | | | period | | | | | -------------------------------------------------------------------------------- There were no significant changes in number or average number of personnel compared to previous year. Personnel turnover increased to some extent during the review period. The personnel expenses in January-March were 43.7 per cent of net sales (42.6). At the end of the period 59.0 per cent (59.2) of the personnel were located in Finland and 17.2 per cent (21.6) in Norway. Comptel's share The closing price of Comptel's share on 31 March 2008 was EUR 1.45 (1.86). Comptel's market value at the end of the period was EUR 155.1 million (198.4). -------------------------------------------------------------------------------- | Comptel share | 1-3 2008 | 1-3 2007 | Change % | 2007 | -------------------------------------------------------------------------------- | Shares traded, million | 8.9 | 13.2 | -32.3 | 57.5 | -------------------------------------------------------------------------------- | Shares traded, EUR | 12.4 | 25.8 | -51.8 | 106.0 | | million | | | | | -------------------------------------------------------------------------------- | Highest price, EUR | 1.55 | 2.11 | -26.5 | 2.29 | -------------------------------------------------------------------------------- | Lowest price, EUR | 1.25 | 1.76 | -29.0 | 1.36 | -------------------------------------------------------------------------------- Of Comptel's outstanding shares, 7.1 per cent were nominee registered or held by foreign shareholders at the end of the review period. During the review period, Comptel Corporation disposed gratuitously 110,463 shares to persons involved in the 2007 share-based incentive program and 45,871 shares to the members of the Board of Directors as a part of their annual compensation. The company held 84,007 of its own shares at the end of the period under review, which is 0.08 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 1,680. No share options were distributed during the review period. Corporate Governance The Annual General Meeting, held on 19 March 2008, elected the following members for the Board of Directors: Mr Olli Riikkala (M.Sc. Eng., MBA), Mr Hannu Vaajoensuu (Full-time Chairman, BasWare Corporation), Mr Timo Kotilainen (Managing Director, Nixu Oy), Mr Matti Mustaniemi (Partner, Tempo CSF Oy), and Mr Juhani Lassila (Managing Director, Agros Oy). In its meeting held after the Annual General Meeting, the Board of Directors elected Mr Olli Riikkala as chairman and Mr Hannu Vaajoensuu as vice chairman. Mr Matti Mustaniemi continues as chairman of the audit committee in which the other members are Mr Juhani Lassila and Mr Hannu Vaajoensuu. Mr Olli Riikkala continues as chairman of the compensation committee in which the other members are Mr Timo Kotilainen and Mr Hannu Vaajoensuu. KPMG Oy Ab continues as the auditors of Comptel, Mr Pekka Pajamo (APA) being the principal auditor. The Annual General Meeting granted the Board of Directors authorisations to repurchase Comptel's own shares and to decide on share issues. A separate stock exchange release about the authorisations given and other decisions made by the Annual General Meeting was published on 19 March 2008. Comptel reorganised its operation in January 2008 by combining its sales and customer services units into regional businesses and by uniting its four separate product units. The business is supported by the Group's global operations, administration and the human resources unit. The target of the new organisation is to increase decision-making close to customers and enhance the sales of end-to-end solutions. Comptel Group's Executive Board comprises the following persons as of 8 January 2008: Mr Sami Erviö, President and CEO, Mr Harri Palviainen, Executive Vice President, and Ms Arnhild Schia, Senior Vice President, to whom the four geographical areas report, Mr Simo Sääskilahti, Senior Vice President, Products and Solutions, Mr Markku Järvenpää, Senior Vice President, Global Operations Support, Mr Veli Matti Salmenkylä, CFO, Administration, and Ms Niina Pesonen, Senior Vice President, Human Resources. Subsequent Events On 21 April 2008, Comptel Corporation acquired Axiom Systems Holdings Limited for a cash consideration of GBP 7.0 million (EUR 8.9 million). Comptel Corporation will pay an additional purchase price if Axiom Group's audited net sales in 2008 are more than EUR 13.5 million. The additional price may vary between GBP 4 and 16 million. The maximum amount will be paid if Axiom Group's audited net sales in 2008 reach EUR 21.6 million. The additional purchase price comprises of both cash and Comptel shares. Following the transaction Axiom Group's balance sheet is free of interest bearing debt and has a positive net working capital balance. The acquisition was financed through Comptel Corporation's liquid assets and by raising approximately EUR 5.0 million of debt. In case additional purchase price is paid, a maximum of 4.8 million new Comptel shares will be issued. UK-based Axiom Systems is specialised in the broadband fulfillment market. The acquisition gives Comptel a strong position to capitalize the growing investments of service providers to new IP-based services, like VoIP and IPTV. Net sales of Axiom were GBP 7.8 million (EUR 11.5 million) and the company was EBITDA negative in 2007. Axiom has currently 87 employees. The net sales in 2008 are estimated to grow about 15%. Near-term Risks and Uncertainties Comptel has described risks related to its operations as a part of the financial statements for 2007. The risks are divided into strategic, financial, operative and losses. There have not been any significant changes in Comptel's risks and factors of uncertainty during the review period. Comptel's main business currencies are the Euro and the US dollar. Changes in exchange rates may affect the price level of the markets. Comptel hedges the cash flows from orders. A further weakening of the dollar rate may impact net sales and profitability. Comptel reorganised its operations in January 2008. Comptel's global success is based on skilled personnel and a responsive customer-oriented organisation. This requires intensifying the operations in the new organisation, constant recruitment of skilled employees, keeping them in service and developing their skills. If the company does not succeed in this and if the turnover of personnel increases, it may significantly impair Comptel's operating results. The application submitted by Comptel to prevent double withholding taxation is still pending in the Ministry of Finance. The company believes that it can change the treatment of its withholding taxes. However, double withholding taxation has an impact on company's earnings per share in near term. If Comptel encounters problems in turnover of personnel or its relationship with customers or partners while integrating Axiom Systems, it may have a significant impact on company's operating result in near term. Outlook The global OSS market and Comptel's business prospects are expected to develop favourably. However, the USD rate remaining below the level recorded in the previous year or its weakening from the current level will slow down the growth of net sales in Euro terms. A significant part of Comptel's business will continue to comprise customer specific solutions for Elisa and Telenor. Its share of the Group's net sales is not predicted to grow. The order backlog is on the good level, mainly as a result of a strong stock of maintenance agreements. During the current year Comptel will further invest in developing end-to-end solutions and strengthening its sales organisation. Comptel is consolidating Axiom Systems starting from 21 April 2008. It is estimated that Comptel's net sales will increase over 10 per cent in 2008. Comptel's operating profit, before the estimated EUR 1 million one-off costs related to integration of Axiom Systems, is expected to be 15-20 per cent of net sales. An increasing portion of Comptel's business will come from services for existing customers, which, to some extent, lessens the fluctuation from one quarter to another. Single business contracts or delivery projects may continue to have a significant influence on a quarter's result. TABLE PART The interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU. The accounting policies adopted are mainly consistent with those of the annual statement for the year ended 2007. Information about the changes in the accounting policies is given in the notes. All figures in the financial report have been rounded and consequently the sum of the individual figures can deviate from the sum figure. The interim report is unaudited. -------------------------------------------------------------------------------- | Consolidated Income Statement | 1Jan - | 1Jan - | | (EUR 1,000) | 31 Mar | 31 Mar 2007 | | | 2008 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales | 19,478 | 19,503 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Materials and services | -1,251 | -2,092 | -------------------------------------------------------------------------------- | Employee benefits | -8,506 | -8,313 | -------------------------------------------------------------------------------- | Depreciation, amortisation and impairment | -1,066 | -965 | | charges | | | -------------------------------------------------------------------------------- | Other operating expenses | -4,794 | -4,774 | -------------------------------------------------------------------------------- | | -15,616 | -16,144 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | 3,862 | 3,359 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income | 238 | 138 | -------------------------------------------------------------------------------- | Financial expenses | -643 | -186 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit before income taxes | 3,457 | 3,311 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income taxes | -1,460 | -1,231 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit for the period | 1,997 | 2,080 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to: | | | -------------------------------------------------------------------------------- | Equity holders of the parent company | 1,997 | 2,080 | -------------------------------------------------------------------------------- | Minority interests | - | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholders of the parent company: | | | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.02 | 0.02 | -------------------------------------------------------------------------------- | Earnings per share, diluted, EUR | 0.02 | 0.02 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated Balance Sheet (EUR 1,000) | 31 Mar 2008 | 31 Dec 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | | | -------------------------------------------------------------------------------- | Non-current assets | | | -------------------------------------------------------------------------------- | Goodwill | 10,832 | 10,832 | -------------------------------------------------------------------------------- | Other intangible assets | 8,798 | 8,312 | -------------------------------------------------------------------------------- | Tangible assets | 2,455 | 2,400 | -------------------------------------------------------------------------------- | Investments in associates | 513 | 513 | -------------------------------------------------------------------------------- | Available-for sale financial assets | 87 | 87 | -------------------------------------------------------------------------------- | Deferred tax assets | 770 | 782 | | Other non-current assets | 29 | - | | | 23,485 | 22,926 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | -------------------------------------------------------------------------------- | Trade and other receivables | 33,722 | 35,997 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 19,404 | 14,708 | -------------------------------------------------------------------------------- | | 53,126 | 50,705 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 76,611 | 73,631 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity and liabilities | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity attributable to equity holders | | | | of the parent company | | | -------------------------------------------------------------------------------- | Share capital | 2,141 | 2,141 | -------------------------------------------------------------------------------- | Fund of invested non-restricted equity | 7,368 | 7,368 | -------------------------------------------------------------------------------- | Translation difference | -939 | -817 | -------------------------------------------------------------------------------- | Retained earnings | 39,239 | 43,338 | -------------------------------------------------------------------------------- | | 47,810 | 52,030 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Minority interest | 116 | 116 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity | 47,926 | 52,147 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 3,086 | 2,660 | -------------------------------------------------------------------------------- | Provisions | 870 | 776 | -------------------------------------------------------------------------------- | | 3,956 | 3,437 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current liabilities | | | -------------------------------------------------------------------------------- | Trade and other current liabilities | 24,729 | 18,048 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 28,686 | 21,485 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity and liabilities | 76,611 | 73,631 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated statement of cash flows | 1 Jan -31 Mar | 1 Jan -31 Mar 2007 | | (EUR 1,000) | 2008 | | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Cash flows from operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 1,997 | 2,080 | -------------------------------------------------------------------------------- | Adjustments: | | | -------------------------------------------------------------------------------- | Transactions without cash flow effect | 1,560 | 1,287 | -------------------------------------------------------------------------------- | Interest and other financial expenses | 17 | 27 | -------------------------------------------------------------------------------- | Interest income | -91 | -120 | -------------------------------------------------------------------------------- | Income taxes | 1,460 | 1,231 | -------------------------------------------------------------------------------- | Change in working capital: | | | -------------------------------------------------------------------------------- | Change in trade and other receivables | 2,499 | 2,963 | -------------------------------------------------------------------------------- | Change in inventories | 0 | 18 | -------------------------------------------------------------------------------- | Change in trade and other current | 44 | -1,000 | | liabilities | | | -------------------------------------------------------------------------------- | Change in provisions | 93 | -166 | -------------------------------------------------------------------------------- | Interest paid | -17 | -27 | -------------------------------------------------------------------------------- | Interest received | 91 | 120 | -------------------------------------------------------------------------------- | Income taxes paid | -1,350 | -1,178 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash from operating activities | 6,303 | 5,234 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Cash flows from investing activities | | | -------------------------------------------------------------------------------- | Investments in tangible assets | -365 | -351 | -------------------------------------------------------------------------------- | Investments in intangible assets | -1 | - | -------------------------------------------------------------------------------- | Investments in development projects | -1,242 | -713 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash used in investing activities | -1,607 | -1,064 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from financing activities | | | -------------------------------------------------------------------------------- | Dividends paid | - | -5,365 | -------------------------------------------------------------------------------- | Acquisition of Corporation's own | - | -792 | | shares | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash used in financing activities | - | -6,157 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net change in cash and cash | 4,696 | -1,986 | | equivalents | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at the | 14,708 | 12,934 | | beginning of the period | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at the end | 19,404 | 10,948 | | of the period | | | -------------------------------------------------------------------------------- | Change | 4,696 | -1,986 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated statement of changes in equity | | | -------------------------------------------------------------------------------- | Equity attributable to equity holders | | | | | of the parent company | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1,000 | Share | Other | Translati | Fair value | | | | capital | reserves | on | reserve | | | | | | differenc | | | | | | | es | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,368 | -674 | -37 | | | Dec 2006 | | | | | | -------------------------------------------------------------------------------- | Cash flow | | | | | | | hedges: | | | | | | -------------------------------------------------------------------------------- | gains and | | | | 47 | | | losses | | | | | | | taken to equity | | | | | | -------------------------------------------------------------------------------- | Translation | | | 15 | | | | difference | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Total | - | - | 15 | 47 | | | recognized | | | | | | | income and | | | | | | | expense for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Dividends | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | | | | compensation | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,368 | -659 | 11 | | | Mar 2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | | Minority | Equity | | | | | | interest | total | -------------------------------------------------------------------------------- | EUR 1,000 | Treasur | Retained | Total | | | | | y | earnings | | | | | | shares | | | | | -------------------------------------------------------------------------------- | Equity at 31 | - | 37,818 | 46,616 | 145 | 46,761 | | Dec 2006 | | | | | | -------------------------------------------------------------------------------- | Cash flow | | | | | | | hedges: | | | | | | -------------------------------------------------------------------------------- | gains and | | | 47 | | 47 | | losses taken | | | | | | | to equity | | | | | | -------------------------------------------------------------------------------- | Translation | | | 15 | | 15 | | difference | | | | | | -------------------------------------------------------------------------------- | Profit for the | | 2,080 | 2,080 | - | 2,080 | | period | | | | | | -------------------------------------------------------------------------------- | Total | - | 2,080 | 2,143 | - | 2,143 | | recognized | | | | | | | income and | | | | | | | expense for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Dividends | | -5,332 | -5,332 | -33 | -5,366 | -------------------------------------------------------------------------------- | Acquisition of | -792 | | -792 | | -792 | | Corporation's | | | | | | | own shares | | | | | | -------------------------------------------------------------------------------- | Share-based | | 115 | 115 | | 115 | | compensation | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | -792 | 34,681 | 42,750 | 111 | 42,861 || Mar 2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated statement of changes in equity | | | -------------------------------------------------------------------------------- | Equity attributable to equity holders | | | | | of the parent company | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1,000 | Share | Other | Translati | Fair value | | | | capital | reserves | on | reserve | | | | | | differenc | | | | | | | es | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,368 | -871 | 78 | | | Dec 2007 | | | | | | -------------------------------------------------------------------------------- | Cash flow | | | | | | | hedges: | | | | | | -------------------------------------------------------------------------------- | gains and | | | | 104 | | | losses | | | | | | | taken to equity | | | | | | -------------------------------------------------------------------------------- | Translation | | | -122 | | | | difference | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Total | - | - | -122 | 104 | | | recognized | | | | | | | income and | | | | | | | expense for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Dividends | | | | | | -------------------------------------------------------------------------------- | Transfer of | | | | | | | treasury shares | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | | | | compensation | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,368 | -939 | 182 | | | Mar 2008 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | | Minority | Equity | | | | | | interest | total | -------------------------------------------------------------------------------- | EUR 1,000 | Treasur | Retained | Total | | | | | y | earnings | | | | | | shares | | | | | -------------------------------------------------------------------------------- | Equity at 31 | -427 | 43,686 | 52,031 | 116 | 52,147 | | Dec 2007 | | | | | | -------------------------------------------------------------------------------- | Cash flow | | | | | | | hedges: | | | | | | -------------------------------------------------------------------------------- | gains and | | | 104 | | 104 | | losses taken | | | | | | | to equity | | | | | | -------------------------------------------------------------------------------- | Translation | | | -122 | | -122 | | difference | | | | | | -------------------------------------------------------------------------------- | Profit for the | | 1,997 | 1,997 | - | 1,997 | | period | | | | | | -------------------------------------------------------------------------------- | Total | - | 1,997 | 1,979 | - | 1,979 | | recognized | | | | | | | income and | | | | | | | expense for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Dividends | | -6,415 | -6,415 | | -6,415 | -------------------------------------------------------------------------------- | Transfer of | 302 | -302 | - | | - | | treasury shares | | | | | | -------------------------------------------------------------------------------- | Share-based | | 216 | 216 | | 216 | | compensation | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | -125 | 39,182 | 47,810 | 116 | 47,926 | | Mar 2008 | | | | | | -------------------------------------------------------------------------------- Notes 1. Changes in accounting principles Comptel has specified the accounting principles regarding capitalisation of development costs and costs related to internal projects meeting the requirements under IAS 38. A share of separately defined fixed costs relating to development costs and internal projects is included in the acquisition cost of the projects. The management estimates the impact to be approximately 900 thousand euro this year. The estimate may differ from the actual result, as the costs of the projects to be capitalised according to IAS 38 may vary during the financial period. 2. Net sales and operating profit by segment Net sales by segment -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2008 | 31 Mar 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Europe | 9,213 | 12,340 | -------------------------------------------------------------------------------- | Middle East and Africa | 2,453 | 2,130 | -------------------------------------------------------------------------------- | Americas | 2,054 | 1,777 | | Asia-Pacific | 5,758 | 3,256 | -------------------------------------------------------------------------------- | Total | 19,478 | 19,503 | -------------------------------------------------------------------------------- Operating profit by segment -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2008 | 31 Mar 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Europe | 5,219 | 7,301 | -------------------------------------------------------------------------------- | Middle East and Africa | 909 | 979 | -------------------------------------------------------------------------------- | Americas | 968 | 1,114 | -------------------------------------------------------------------------------- | Asia-Pacific | 4,204 | 2,012 | -------------------------------------------------------------------------------- | Group unallocated expenses | -7,438 | -8,046 | -------------------------------------------------------------------------------- | Total | 3,862 | 3,359 | -------------------------------------------------------------------------------- 3. Income tax expense Tax rate according to the income statement for the period was 42.2% (37.2%). The tax rate is very high due to double taxation. In 2006 Adjustment of the Tax Office for Major Corporations refused crediting of taxes withheld at source in taxation of 2004 and 2005. Comptel continues its activities to attain an adjustment to the decision to avoid double taxation. The issue has been transferred to the Ministry of Finance. Comptel believes to have the treatment of its withholding taxation changed. According to the Board of Adjustment's decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to 528 thousand euro in the first quarter (387 thousand euro). 4. Tangible assets -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2008 | 31 Mar 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Additions | 379 | 152 | -------------------------------------------------------------------------------- | Disposals | - | -8 | -------------------------------------------------------------------------------- 5. Related party transactions The Comptel Group has a related party relationship with its associates, the Board of Directors, CEO and deputy CEO and the members of the Executive Board. Transactions, which have been entered into with related parties (associates), are as follows: -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2008 | 31 Mar 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Purchases of goods and services | 169 | 110 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1,000 | 31 Mar 2008 | 31 Dec | | | | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Trade and other current receivables | 182 | 179 | -------------------------------------------------------------------------------- | Trade and other current liabilities | 26 | 416 | -------------------------------------------------------------------------------- Remuneration to key management The key management personnel compensation includes the employee benefits of the CEO, deputy CEO, the members and deputy members of the Board of Directors and the members of the Executive Board. -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2008 | 31 Mar 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term employee | 562 | 401 | | benefits | | | -------------------------------------------------------------------------------- | Share-based payments | 168 | 138 | -------------------------------------------------------------------------------- 6. Commitments Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows: -------------------------------------------------------------------------------- | EUR 1,000 | 31 Mar 2008 | 31 Dec 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Less than one year | 3,192 | 3,411 | -------------------------------------------------------------------------------- | Between one and five years | 11,258 | 11,560 | -------------------------------------------------------------------------------- | More than five years | 4,267 | 4,595 | -------------------------------------------------------------------------------- | Total | 18,718 | 19,567 | -------------------------------------------------------------------------------- The group has no material capital commitments for the purchase of tangible assets as at 31 March 2008. 7. Contingent liabilities -------------------------------------------------------------------------------- | EUR 1,000 | 31 Mar 2008 | 31 Dec 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bank guarantees | 1,034 | 1,132 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 8. Subsequent events On 21 April 2008, Comptel Corporation acquired Axiom Systems Holdings Limited for a cash consideration of GBP 7.0 million (EUR 8.9 million). Comptel Corporation pays additional purchase price if Axiom Group's audited net sales in 2008 are more than EUR 13.5 million. The additional price may vary between GBP 4 and 16 million. The maximum amount will be paid if Axiom Group's audited net sales in 2008 reach EUR 21.6 million. The additional purchase price comprises of both cash and Comptel shares. Following the transaction Axiom Group's balance sheet is free of interest bearing debt and has a positive net working capital balance. The acquisition was financed through Comptel Corporation's liquid assets and by raising approximately EUR 5.0 million of debt. In case additional purchase price is paid, a maximum of 4.8 million new Comptel shares will be issued. UK-based Axiom Systems is specialised in the broadband fulfillment market. The acquisition gives Comptel a strong position to capitalize the growing investments of service providers to new IP-based services, like VoIP and IPTV. Net sales of Axiom were GBP 7.8 million (EUR 11.5 million) and the company was EBITDA negative in 2007. Axiom has currently 87 employees. The net sales in 2008 are estimated to grow about 15%. 9. Key figures -------------------------------------------------------------------------------- | Financial summary | 1 Jan - | 1 Jan - | 1 Jan - | | | 31 Mar 2008 | 31 Mar | 31 Dec | | | | 2007 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales, EUR 1,000 | 19,478 | 19,503 | 82,399 | -------------------------------------------------------------------------------- | Net sales, change % | -0.1 | 0.4 | 2.4 | -------------------------------------------------------------------------------- | Operating profit, EUR 1,000 | 3,862 | 3,359 | 16,518 | -------------------------------------------------------------------------------- | Operating profit, change % | 15.0 | 466.6 | 47.1 | -------------------------------------------------------------------------------- | Operating profit, as % of | 19.8 | 17.2 | 20.0 | | net sales | | | | -------------------------------------------------------------------------------- | Profit before taxes, EUR | 3,457 | 3,311 | 16,396 | | 1,000 | | | | -------------------------------------------------------------------------------- | Profit before taxes, as % of | 17.7 | 17.0 | 19.9 | | net sales | | | | -------------------------------------------------------------------------------- | Return on equity, % | - | - | 21.9 | -------------------------------------------------------------------------------- | Return on investment, % | - | - | 32.9 | -------------------------------------------------------------------------------- | Equity ratio, % 1) | 70.9 | 75.4 | 77.6 | -------------------------------------------------------------------------------- | Gross investments in | 381 | 158 | 1,908 | | tangible and intangible | | | | | assets, EUR 1,000 | | | | -------------------------------------------------------------------------------- | Gross investments in | 2.0 | 0.8 | 2.3 | | tangible and intangible | | | | | assets, as % of net sales | | | | -------------------------------------------------------------------------------- | Capitalisations according to | 1,242 | 713 | 2,921 | | IAS 38 to intangible assets | | | | -------------------------------------------------------------------------------- | Research and development | 2,739 | 2,465 | 10,333 | | expenditure, EUR 1,000 | | | | -------------------------------------------------------------------------------- | Research and development | 14.1 | 12.6 | 12.5 | | expenditure, as % of net | | | | | sales | | | | -------------------------------------------------------------------------------- | Order backlog, EUR 1,000 2) | 33,131 | 29,708 | 35,051 | -------------------------------------------------------------------------------- | Average number of employees | 546 | 541 | 555 | | during the period | | | | -------------------------------------------------------------------------------- | Interest-bearing net | -19,404 | -10,947 | -14,708 | | liabilities, EUR 1,000 | | | | -------------------------------------------------------------------------------- | Gearing ratio, % | -40.5 | -25.5 | -28.2 | -------------------------------------------------------------------------------- | 1) When calculating the equity ratio for 2007, those | | | deferred income items recognised on the basis of the | | | percentage of completion method as well as deferred income | | | arising from sales accruals were accounted for as advances | | | received. The figure for the first quarter 2007 has been | | | restated. | | -------------------------------------------------------------------------------- | 2) The order book may vary significantly during the | | | financial period. | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Per share data | 1 Jan - 31 | 1 Jan - 31 | 1 Jan - 31 | | | Mar 2008 | Mar 2007 | Dec 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share (EPS), EUR | 0.02 | 0.02 | 0.10 | -------------------------------------------------------------------------------- | EPS diluted, EUR | 0.02 | 0.02 | 0.10 | -------------------------------------------------------------------------------- | Equity per share, EUR | 0.45 | 0.40 | 0.49 | -------------------------------------------------------------------------------- | Dividend per share, EUR | - | - | 0.06 | -------------------------------------------------------------------------------- | Dividend per earnings, % | - | - | 59.1 | -------------------------------------------------------------------------------- | Effective dividend yield, % | - | - | 4.2 | -------------------------------------------------------------------------------- | P/E ratio | - | - | 14.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjusted number of shares at the | 107,054,810 | 107,054,810 | 107,054,810 | | end of the period | | | | -------------------------------------------------------------------------------- | - of which the number of | 84,007 | 410,000 | 240,341 | | treasury shares | | | | -------------------------------------------------------------------------------- | Outstanding shares | 106,970,803 | 106,644,810 | 106,814,469 | | Adjusted average number of | 106,867,170 | 106,917,280 | 106,848,199 | | shares during the period | | | | -------------------------------------------------------------------------------- | Average number of shares, | 106,867,170 | 106,917,280 | 106,848,199 | | dilution included | | | | -------------------------------------------------------------------------------- 10. Definition of key figures -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity % (ROE) | = | Profit for the year | x 100 | -------------------------------------------------------------------------------- | | | Shareholders' equity (average | | | | | during year) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on investment % | = | Profit before taxes + financial | x 100 | | (ROI) | | expenses | | -------------------------------------------------------------------------------- | | | Balance sheet total - | | | | | non-interest-bearing liabilities | | | | | (average during the year) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity ratio % | = | Shareholders' equity | x 100 | -------------------------------------------------------------------------------- | | | Balance sheet total - advances | | | | | received | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share (EPS) | = | Net profit for the financial year | | | | | attributable to equity | | | | | shareholders | | -------------------------------------------------------------------------------- | | | Adjusted average number of shares | | | | | for the financial year | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Dividend per share | = | Dividend | | -------------------------------------------------------------------------------- | | | Adjusted average number of shares | | | | | for the financial year | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Dividend per earnings % | = | Dividend per share | x 100 | -------------------------------------------------------------------------------- | | | Earnings per share (EPS) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Effective dividend yield | = | Dividend per share | x 100 | | % | | | | -------------------------------------------------------------------------------- | | | Share closing price at balance | | | | | sheet date | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | P/E ratio | = | Share closing price at balance | | | | | sheet date | | -------------------------------------------------------------------------------- | | | Earnings per share (EPS) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity per share | = | Equity attributable to the equity | | | | | holders of the parent company | | -------------------------------------------------------------------------------- | | | Adjusted number of shares at | | | | | balance sheet date | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gearing ratio % | = | Interest-bearing liabilities - | x 100 | | | | cash and cash equivalents | | -------------------------------------------------------------------------------- | | | Shareholders' equity | | -------------------------------------------------------------------------------- Schedule for Comptel's interim reports: January-June 2008 30 July January-September 2008 22 October COMPTEL CORPORATION Board of Directors Additional information: Mr Sami Erviö, President and CEO, tel. +358 9 700 1131 Mr Veli Matti Salmenkylä, CFO, tel. +358 50 2813 Mr Samppa Seppälä, Director, IR and Corporate Communications, tel. +358 50 568 0533 Distribution: OMX Nordic Exchange in Helsinki Major media
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