2011-02-02 08:00:00 CET
2011-02-02 08:00:10 CET
REGULATED INFORMATION
Teleste - Financial Statement Release
TELESTE CORPORATION FINANCIAL STATEMENT 2.2.2011 AT 09:00
Turku, Finland, 2011-02-02 08:00 CET (GLOBE NEWSWIRE) -- TELESTE CORPORATION
FINANCIAL STATEMENT 2.2.2011 AT 09:00
FINANCIAL STATEMENT OF TELESTE CORPORATION 1 JANUARY TO 31 DECEMBER 2010
Q4/2010
- Net sales grew by 6.5% amounting to EUR 46.6 (43.8) million
- Operating profit grew by 72.7% equalling EUR 3.0 (1.7) million
- Undiluted result per share increased by 101.2% standing at EUR 0.12 (0.06)
- Orders received improved by 8.5% standing at EUR 50.8 (46.8) million
- Operating cash flow stood at EUR 0.9 (7.3) million
Outlook for 2011
We believe the net sales for the entire 2011 to increase slightly and the
operating profit to improve somewhat over the 2010 level.
Comments on the Fourth Quarter of 2010 by CEO Jukka Rinnevaara
Video and Broadband Solutions' net sales increased and exceeded the Q4 of 2009
(period of comparison) by 9.1 percent.The business area's year-on-year orders
received increased by 19.9% due to the order of EUR 6.9 million received from
the French police organization.Deliveries related to the frame agreement of EUR
16.0 million from the Israeli HOT Telecom got underway as scheduled.The
business area's profitability was good.
Net sales of Network Services exceeded the period of comparison by
4.2%.However, profitability fell significantly over the period of comparison,
among other things, because the German service operations involved items of
lower price and margin bracket on the previous year.Moreover, the efficiency of
our network maintenance operations was weakened by extremely difficult weather
conditions in Central Europe.We signed a three-year contract with the German
Kabel Deutschland for cable upgrade and maintenance services.In terms of net
sales, the estimated annual value of this frame agreement equals approximately
EUR 50 million.Extension of the contract and the ongoing efficiency measures
provide a good basis for improving the profitability.
We believe our target market will pick-up gradually in 2011.Together with the
efficiency measures, our competitive product and service offering allow for
improvement in net sales and operating profit over the level of 2010.Yet,
severe weather in Central Europe and the low order backlog of the early year
may restrict our deliveries in the first quarter of 2011. In addition, we
estimate that the efficiency measures, such as the development of the resource
management and service processes, taken by the Network Services business area
will improve profitability in the second half of 2011.
Financial Period 2010
- Net sales stood at EUR 167.8 (141.7), a year-on-year improvement of 18.5%
- Operating profit amounted to EUR 7.4 (2.5) million, an increase of 194.5%
over the year of comparison
- Undiluted result per share equalled EUR 0.27 (0.02)
- Year-on-year orders received increased by 10.7% standing at EUR 167.2 (151.0)
million
- Orders received by Video and Broadband Solutions amounted to EUR 86.5 (81.6)
million
- Orders received by Network Services stood at EUR 80.7 (69.4) million
- Operating cash flow stood at EUR 5.4 (9.8) million
- The Board of Directors proposes that a dividend of EUR 0.12 (0.08) per
outstanding share will be paid
The Group's Business in the Fourth Quarter of 2010
Net sales in Q4 amounted to EUR 46.6 (43.8) million.Operating profit stood at
EUR 3.0 (1.7) million making 6.4% (3.9%) of the net sales.Operating profit of
the period of comparison included impairment loss of EUR 0.8 million.
Undiluted result per share was EUR 0.12 (0.06).
Operating cash flow stood at EUR 0.9 (7.3) million. The clear reduction in cash
flow over the period of comparison was the result of changes in payment terms.
Year-on-year orders received improved by 8.5% standing at EUR 50.8 (46.8)
million.The Group's order backlog totalled EUR 17.0 (33.1) million.The order
backlog of the comparative period included an order of EUR 12.0 million, which
was written off from the backlog in Q2 of 2010.
Video and Broadband Solutions in Q4
Net sales amounted to EUR 22.9 (21.0) million i.e. an increase of 9.1% over the
period of comparison.Operating profit stood at EUR 2.4 (-0.5) million making
10.3% (-2.2%) of the net sales.The improved operating profit was contributed by
the management of material costs and the growth in net sales.Operating profit
of the period of comparison included an impairment loss of EUR 0.8 million.
Orders received totaled EUR 27.1 (22.6) million.A significant order of EUR 6.9
million for the Paris urban area of video surveillance system was received from
France.Order backlog totaled EUR 17.0 (28.6) million.The order backlog of the
comparative period included an order of EUR 12.0 million, which was written off
from the backlog in Q2 of 2010.
Network Services in Q4
In Q4, net sales for the business area totaled EUR 23.8 (22.8)
million.Operating profit amounted to EUR 0.6 (2.2) million.The year-on-year
decrease in the operating income was caused by items of lower price bracket and
margin being included in the German services deliveries over the comparative
period as well as difficult weather conditions.
Orders received totaled EUR 23.8 (24.3) million.Deliveries of the business area
are mainly based on frame agreements and, therefore, there was no backlog.
REPORT OF THE BOARD OF DIRECTORS
Business Description and Overview
Founded in 1954, Teleste is a technology company consisting of two business
areas: Video and Broadband Solutions and Network Services.In line with its
strategy, Teleste continues to focus on the chosen product and technology
segments as well as services business.
Video and Broadband Solutions' net sales and profitability improved over the
year of comparison.In 2010 the business area continued to exercise its cost
adaptation (rotating lay-offs in Finland).
Network Services' year-on-year net sales increased mainly due to changes in the
Group structure on July 1, 2009 (we acquired a 100% holding of AVC's shares,
while at the same time raising our ownership in Cableway to 75%).In Germany,
streamlining of service processes was running, but no impact on profitability
was achieved in 2010.Profitability was additionally weakened by the severe
weather conditions in the main market in Q1 and Q4.
Net Sales and Profitability
Teleste's net sales totaled EUR 167.8 (141.7) million, an increase of 18.5%
over the previous year.Owing to the general tight situation in the financial
market, our main customers, i.e. the European cable operators, have been fairly
cautious about their network investments.Concerning growth in net sales, EUR
20.4 million, or 12.2%, were due to changes in Group structure.
Operating profit stood at EUR 7.4 (2.5) million making 4.4% (1.8%) of the net
sales.The year-on-year growth in operating profit was due to an increase in
Video and Broadband Solutions' net sales, efficient control over the material
costs and cost adaptation.
Year-on-year orders received by the Group improved by 10.7% standing at EUR
167.2 (151.0) million.The impact of the change in the Group structure on the
increased orders received was EUR 20.4 million.At the year-end, the order
backlog stood at EUR 17.0 million.The order of EUR 12.0 million received in the
summer of 2008 from India was written off from the order backlog.
Profit after financial items totaled EUR 6.7 (1.4) million while the net profit
equalled EUR 4.7 (0.4) million.Undiluted result per share for the Group stood
at EUR 0.27 (EUR 0.02).The return on capital employed was 10.2% (3.3%) and the
return on equity was 9.9% (0.9%).
BUSINESS AREAS
Video and Broadband Solutions
This business area focuses on broadband subscriber networks, video services
platforms and CCTV applications.Major clientele of the business area consists
of cable operators but includes also resellers and public sector
organizations.The main market of the business area is Europe.In 2010, we
strengthened our expertise in IP video technology and presence in the Polish
market through the Satlan acquisition.The business area has 23 offices of its
own and a number of retail and integration partners.Outside Europe, Video and
Broadband Solutions has offices of its own located in the United States,
Australia, China and India.
The R&D effort of the business area focused on the video surveillance transfer
system based on standard H.264.The continued R&D efforts included the Internet
protocol-based video processing system (Luminato product range), amplification
technology (Access product range), optical transmission system for the HFC
network (HDO product range) and the video surveillance management system (VMX).
Orders received totaled EUR 86.5 (81.6) million, while the order backlog
amounted to EUR 17.0 (28.6) million.The order of EUR 12.0 million received in
the summer of 2008 from India was written off from the order backlog.
Net sales grew by 7.5% over the year of comparison amounting to EUR 82.0 (76.3)
million.The impact of the Satlan acquisition on net sales for 2010 was EUR 3.6
million.
Operating profit stood at EUR 6.3 (-0.7) million making 7.7% (-0.9%) of the net
sales. The improvement in the year-on-year operating profit was brought about
by increased net sales, controlled material costs and cost adaption.In 2010,
the business area's Finnish personnel were on a rotating layoff.
Network Services
The clientele of Teleste's Network Services business mainly consists of large
European cable operators.The services provided by this business area include
planning, new construction, upgrading and maintenance of cable
networks.Implementation and scope of the relevant services vary by client
ranging from standalone applications to integrated turnkey deliveries.Most
deliveries are based on frame agreements.The services also include Teleste's
own product solutions.Our know-how in services covers all the sectors related
to the cable network technology from installation and maintenance of headends
to upgrading of house networks.Services are also provided through a network of
subcontractors.
Orders received totaled EUR 80.7 (69.4) million.Net sales amounted to EUR 85.8
(65.4) million.As to the increased net sales and orders received, EUR 14.8
million was due to changes in Group structure dated on 1st July 2009 (AVC and
Cableway).The impact of the acquisition of Freycom on net sales was EUR 2.0
million.Operating profit amounted to EUR 1.1 (3.2) million.The weakening in the
operating profit was caused by the delivered services having included more
basic items of a lower price and margin bracket.Additionally, our deliveries of
services was aggravated by severe weather.
R&D and Investments
R&D expenditure for the period under review totaled EUR 10.3 (10.8) million
making 6.1% (7.6%) of net sales.Teleste's R&D expenditure focused on the
business area of Video and Broadband Solutions, the R&D expenses of which
amounted to 12.6% (14.2%) of the net sales.
Some 60% (60%) of the R&D expenses involved continued development of product
platforms currently in production and their maintenance as well as
customer-specific product applications.Activated R&D inputs totaled EUR 1.7
(1.6) million.Depreciation on activated R&D expenses amounted to EUR 2.4 (2.5)
million.
At the end of the financial period, 9.7% (10%/2009, 25%/2008) of the Group
personnel were working in R&D related duties.A number of Teleste's projects
involved co-operation with Finnish universities and research institutes.
Investments for the period under review totaled EUR 3.8 (25.2) million making
2.2% (17.8%) of net sales.The most significant investment involved the Polish
Satlan Sp. z o.o. acquired for EUR 6.3 million (including the estimated
additional purchase price).In Switzerland, Freycom SA was acquired for EUR 0.6
million.Direct costs resulting from acquisitions have been entered under
expenses, and their impact on other operating expenses is insignificant.The
estimated additional purchase price for the German acquisitions in the last
quarter of 2009 was largely unrealized, so an item of EUR 5.8 million has been
recorded in the fiscal year 2010 as a deduction under investments.Product
development investments totaled EUR 1.7 (1.6) million.As to investments, EUR
0.1 (0.2) million was implemented by means of financial leasing.The last phase
of the Littoinen extension project was launched at the end of the year
involving product development facilities.The investment amounts to
approximately EUR 1.0 million and is expected to be completed in June 2011.
Financing
Liquidity of the Group remained good throughout the year.Operating cash flow
stood at EUR 5.4 (9.8) million.Accounts receivable caused no credit losses.At
the end of the period, the amount of unused binding stand-by credits amounted
to EUR 13.5 (18.5) million.The current binding stand-by credits of EUR 40.0
million run till November 2013.The Group's equity ratio equaled 43.6% (43.6%)
and net gearing 25.5% (22.0%).Interest bearing debt on 31 December 2010 stood
at EUR 28.0 (22.8) million.
Personnel and Organization
In 2010, the Group employed an average of 1215 people (1103/2009, 702/2008).At
the year-end, the figure totaled 1231 (1260/2009, 677/2008) of which 70%
(68%/2009, 33%/2008) were stationed overseas.Employees stationed outside Europe
accounted for less than 5% of the Group's personnel.Expenditure on employee
benefits amounted to EUR 50.8 (44.6/2009, 33.2/2008) million.The increase in
employee benefits was mainly due to the change in the Group structure.
As part of the cost-structure adaptation measures required by the general
market situation, the Finnish personnel have been on a rotating layoff.The
co-determination procedure was concluded on January 22, 2010.In Finland, the
measures agreed in the co-determination procedure continued until the end of
2010.The operational efficiency drive involving the sales organization abroad
continued also.
Group Structure
The Polish Satlan was acquired on September 1, 2010 to strengthen Video and
Broadband Solutions' integration expertise.The price of EUR 2.8 million at the
conclusion of the deal was paid in cash.The total purchase price is estimated
at EUR 6.3 million, depending on the development in profitability of the
acquired company within the next two years.In these financial statements the
acquisition cost for Satlan is presented as preliminary since there are grounds
for viewing the information concerning its profitability in a longer
perspective given the moderately high conditional purchase price.An acquisition
in Switzerland for Freycom SA was carried out on April 4, 2010 by the Network
Services business area.The purchase price of EUR 0.6 million was paid in
cash.The direct costs related to the acquisition of both companies have been
entered under the Group's other operating expenses.
With the ownership arrangements Teleste's holding in the German Cableway AG
rose to 100% when a Cableway minority interest was bought for EUR 0.4
million.The effect of Satlan on Teleste's net sales for 2010 was EUR 3.6
million and on profit EUR 0.7 million, respectively.Freycom's effect on net
sales stood at EUR 2.0 million with no impact on profit.
The branch office in Spain was closed and the Slovak subsidiary
dissolved.Teleste Kaurakatu Oy was merged into Ortikon Interactive Oy, which
changed its name to Teleste Kaurakatu Oy.Teleste Video Networks AB and Teleste
Försäljning AB were merged into Teleste Sweden AB.Young-Net GmbH was merged
into Cableway Mitte GmbH and DINH Vlaanderen NV into DINH Telecom S.A.
Parent company Teleste has branch offices in Australia, the Netherlands, China
and Denmark with subsidiaries in 12 countries outside Finland.
Essential Risks of Business Areas
Founded in 1954, Teleste is a technology and service provider consisting of two
business areas: Video and Broadband Solutions and Network Services.With Europe
as the main market area, our most significant clients include European cable
operators and specified organizations in the public sector.
Concerning Video and Broadband Solutions, integrated deliveries of solutions
create favourable conditions for growth, even if the involved resource
allocation and technical implementation pose a challenge involving, therefore,
also reasonable risks.The still ongoing difficult market situation may delay
the implementation of investment plans among the clientele.Network investments
carried out by the clients vary based on their need for upgrading and their
capital structure.Much of Teleste's competition comes from the USA so the
exchange rate of euro up against the US dollar affects our
competitiveness.Teleste hedges against short-term currency exposure by means of
forward contracts.Correct technological choices and their timing are vital for
our success.
Net sales for Network Services comes, for the most part, from a small number of
large European customers, so a significant change in the demand for services by
any one of them is reflected in the actual deliveries. To ensure quality of
services and cost-efficiency, along with an efficient service process
management, customer satisfaction requires innovative solutions in terms of
processes, products and logistics.Smooth operation of the cable networks
requires effective technical management and functional hardware solutions.
This, in turn, means that the skill levels of our subcontractors and their
personnel needs continuous and determined development.In addition, availability
of capacity in our network of subcontractors may limit our ability to supply.
It is equally important for our business areas to take into account any market
developments such as consolidations taking place among the clientele and
competition.Weather conditions affect the supply conditions of products and
services of our business areas.
The Board of Directors annually reviews any essential risks related to the
company operation and the management thereof.Risk management constitutes an
integral part of the strategic and operative practices of our business
areas.Risks and their probability are reported to the Board by regular monthly
reports.
The company has covered major risks of damage through insurance policies.These
insurances do not include credit loss risks.In the period under review, no such
risks materialized, and no legal proceedings or judicial procedures were
pending that would have had any essential significance for the Group operation.
Decisions by the Annual General Meeting (AGM)
The Annual General Meeting of Teleste Corporation on April 9, 2010 confirmed
the financial statements for 2009 and discharged the Board of Directors and the
CEO from liability for the financial period.The AGM confirmed the dividend of
EUR 0.08 per share proposed by the Board.The dividend was paid out on April 21,
2010.
Composition of the Board remained unchanged.Marjo Miettinen was appointed
Chairman while the appointed Board Members include Pertti Ervi, Tero Laaksonen,
Pertti Raatikainen, Kai Telanne and Petteri Walldén.
Authorised Public Accountants KPMG Oy Ab continue as the auditor until the next
AGM.Accountant authorised by the Central Chamber of Commerce of Finland Esa
Kailiala was chosen auditor-in-charge.
The AGM authorised the Board to acquire the maximum of 1,400,000 of the
company's own shares and to convey the maximum of 1,779,985 company's own
shares.The AGM also authorised the company Board to issue 10,000,000 new
shares.Pursuant to the special rights provided by the company, the maximum
number of significant shares is 5,000,000; these special rights are included in
the authorisation to issue 10,000,000 new shares.
The authorizations are valid until the Annual General Meeting of Shareholders
for year 2011.The Board has not exercised these rights.
Shares and Changes in Share Capital
On 31 December 2010, EM Group Oy was the largest single shareholder with a
holding of 21.02%.
In the period under review, the lowest company share price was EUR 3.63 (2.25)
and the highest was EUR 5.33 (4.30).Closing price on 31 December 2010 stood at
EUR 4.41 (3.72).According to Euroclear Finland Ltd the number of shareholders
at the end of the period under review was 5,184 (5,440).Foreign ownership
accounted for 8.38% (9.69%).From 1 January to 31 December 2010, trading with
Teleste share at NASDAQ OMX Helsinki amounted to EUR 14.2 (28.5) million.In the
period under review, 3.2 (7.8) million Teleste shares were traded on the stock
exchange.
In March 2010, Teleste Board of Directors decided on a directed share issue of
381,000 shares to Teleste Management Oy established by the Management Team of
Teleste Corporation.This directed share issue was authorized by the AGM on 7
April 2009.
At the end of December 2010, the number of own shares in the Group possession
stood at 760,985 (379,985) out of which parent company Teleste Corporation had
none (0) while other Group or controlled companies had 760,985 shares,
respectively.At the end of the period, the Group's holding of the total amount
of shares amounted to 4.18% (2.13%).
Based on the rights of options, the company amount of shares may increase by
840,000 shares equaling to 4.41% of all shares and votes.
On 31 December 2010, the registered share capital of Teleste stood at EUR
6,966,932.80 divided in 18,186,590 shares.
Ownership by Management and Members of the Governing Bodies on 31 December 2010
On the balance sheet date, CEO and the Members of the Board owned 98,482
Teleste Corporation shares equalling to 0.54% of all shares and votes.
Based on Teleste 2007 stock option rights, CEO was entitled to subscribe
120,000 shares.On the balance sheet date, the ownership including rights of
options by the CEO and the Board amounted to 218,482 shares, which is equal to
1.15% of all shares and votes.On 31 December 2010, other members of the
Management Team were not in the possession of Teleste Corporation shares.On 31
December 2010, Teleste Management Oy (a company incorporated for the management
incentive scheme) was in the possession of 381,000 Teleste Corporation
shares.CEO's holding in the Teleste Management shares stands at 34.4% while the
ownership by other members of Teleste Corporation's Management Group equals
65.6%.On 31 December 2010, in addition to CEO's stock options, members of
Teleste Corporation's Management Team owned a total of 255,000 Teleste 2007
options.
Teleste Corporation complies with the Finnish Corporate Governance Code, which
was issued by the Securities Market Association on 15 June 2010, and entered
into force on 1 October 2010.The Corporate Governance Statement will be issued
separately from the Company's Annual Report, and it will be available on
Teleste's website under Investors.Since 1 March 2000, Teleste complies with the
insider guidelines issued by the NASDAQ OMX Helsinki Oy in their valid form at
any given time.
Outlook for 2011
In 2011, deliveries of equipment and solutions by Video and Broadband Solutions
to its customer base of operators in our target markets will at least achieve
the level of 2010.European telecom operators are about to launch their TV
distribution investments, and we believe that our video headend and optical
network products are competitive in this new emerging market. Deliveries
related to security and traffic control will grow from the 2010 level.
Demand for services provided by Network Services will remain relatively stable
on the annual basis.We believe that in Germany, our main market, profitability
will improve from the 2010 level thanks to the ongoing streamlining
measures.This improvement in profitability will, in our estimation, mainly be
seen in the second half of 2011.
Teleste expects to maintain its strong market position in its core
markets.Severe weather conditions in Central Europe and the low order backlog
of the early year may hold back our deliveries in the first quarter of 2011.
We believe the net sales for the entire 2011 to increase slightly and the
operating profit to improve somewhat over the 2010 level.
Board of Directors' Proposal for Dividends
The parent company's distributable equity at the balance sheet date equals EUR
30.6 million.
Regarding the Annual General Meeting scheduled for 8 April 2011, the Board
proposes that a dividend of EUR 0.12 (EUR 0.08) per share would be paid for the
outstanding shares for the year 2010.
1 February 2011
TELESTE CORPORATION Jukka Rinnevaara
Board of Directors President and CEO
This interim report has been compiled in compliance with IAS 34, as it is
accepted within EU, using the recognition and valuation principles with those
used in the Annual Report. The Group has adopted revised IFRS 3Business
Combinations from 1.1.2010. The data stated in this report is audited.
STATEMENT OF COMPREHENSIVE INCOME, 1000 EUR
10-12/2010 10-12/2009 Change %
Net sales 46,643 43,784 6.5 %
Other operating income 489 533 -8.2 %
Raw material and consumables used -22,074 -21,038 4.9 %
Employee benefits expense -14,140 -13,407 5.5 %
Depreciations -1,353 -1,492 -9.3 %
Amortisation expense 0 -800 n/a
Other operating expenses -6,598 -5,862 12.6 %
Operating profit 2,968 1,718 72.7 %
Financial income 40 85 -52.9 %
Financial expenses -233 -151 54.3 %
Profit before taxes 2,775 1,652 67.9 %
Taxes -671 -657 2.1 %
Profit for the period 2,104 995 111.4 %
Attributable to:
Equity holders of the parent 2,104 995 111.4 %
Earnings per share for profit of the year attributable to the equity holders of
the parent
Basic (expressed in euro per share) 0.12 0.06 101.2 %
Diluted (expressed in euro per share) 0.12 0.06 98.2 %
Total comprehensive income for the period,
1000 EUR
Net profit 2,104 995 111.4 %
Translation differences 402 170 136.5 %
Fair value reserve 10 -116 n/a
Total comprehensive income for the period 2,516 1,049 139.8 %
Attributable to:
Equity holders of the parent 2,516 1,049 139.8 %
STATEMENT OF COMPREHENSIVE INCOME, 1000 EUR 1-12/2010 1-12/2009 Change %
Net sales 167,836 141,651 18.5 %
Other operating income 1,460 3,124 -53.3 %
Raw material and consumables used -82,054 -69,962 17.3 %
Employee benefits expense -50,824 -44,584 14.0 %
Depreciation -5,896 -5,582 5.6 %
Amortisation expenses 0 -800 n/a
Other operating expenses -23,090 -21,323 8.3 %
Operating profit 7,432 2,524 194.5 %
Financial income 84 105 -20.0 %
Financial expenses -773 -710 8.9 %
Share of profit of associates 0 -544 n/a
Profit before taxes 6,743 1,375 390.4 %
Taxes -1,959 -959 104.3 %
Profit for the period 4,784 416 1050.1 %
Attributable to:
Equity holders of the parent 4,784 416 1050.1 %
Earnings per share for profit of the year attributable to the equity holders of
the parent
Basic ( expressed in euro per share) 0.27 0.02 1037.2 %
Diluted (expressed in euro per share) 0.27 0.02 1019.9 %
Total comprehensive income for the period
(tEUR)
Net profit 4,784 416 1050.1 %
Translation differences 277 189 46.6 %
Fair value reserve -70 -116 -39.7 %
Total comprehensive income for the period 4,991 489 920.7 %
Attributable to:
Equity holders of the parent 4,991 489 920.7 %
STATEMENT OF FINANCIAL POSITION, 1000 EUR
Assets 1000 EUR
31.12.2010 31.12.2009 Change %
Non-current assets
Property, plant and equipment 8,836 9,960 -11.3 %
Goodwill 30,959 31,657 -2.2 %
Other intangible assets 6,709 7,664 -12.5 %
Available-for-sale investments 713 713 0.0 %
Total 47,217 49,994 -5.6 %
Current assets
Inventories 21,000 20,682 1.5 %
Trade and other receivables 32,819 26,884 22.1 %
Cash 15,203 12,518 21.4 %
Total 69,022 60,084 14.9 %
Total assets 116,239 110,078 5.6 %
Equity and liabilities
Equity attributable to equity holders of the
parent
Share capital 6,967 6,967 0.0 %
Share premium 1,504 1,504 0.0 %
Translation differences -95 -372 -74.5 %
Invested non restricted equity 2,737 2,737 0.0 %
Other reserves -186 -116 60.3 %
Retained profits 39,183 35,949 9.0 %
Non-controlling interest 292 0 n/a
Total 50,402 46,669 8.0 %
Non-current liabilities
Interest-bearing liabilities 11,847 12,237 -3.2 %
Other liabilities 3,865 6,461 -40.2 %
Deferred tax liabilities 511 265 92.8 %
Provisions 657 513 28.0 %
Total 16,880 19,476 -13.3 %
Current liabilities
Trade and other liabilities 30,161 32,372 -6.8 %
Current tax payable 1,240 0 n/a
Provisions 1,313 1,026 28.0 %
Interest-bearing liabilities 16,243 10,535 54.2 %
Total 48,957 43,933 11.4 %
Total liabilities 65,837 63,409 3.8 %
Equity and liabilities total 116,239 110,078 5.6 %
CONSOLIDATED CASH FLOW STATEMENT,1000 EUROS
1.1.-31.12. 1.1.-31.12. Change %
2010 2009
Cash flows from operating activities
Profit for the period 4,784 416 1050.1 %
Adjustments for:
Non-cash transactions 6,143 6,666 -7.8 %
Interest and other financial expenses 773 710 8.9 %
Interest income and other financial income -72 -95 -24.2 %
Dividends -12 -10 20.0 %
Taxes 1,959 959 104.3 %
Change in working capital
Increase in trade and other receivables -4,650 12,008 n/a
Increase in inventories 1,265 -384 n/a
Increase in trade and other payables -3,942 -7,702 -48.8 %
Decrease in provisions 431 -92 n/a
Paid interests and other financial expenses -565 -1,042 -45.8 %
Received interests and dividends 84 105 -20.0 %
Paid taxes -786 -1,708 -54.0 %
Cash flow from operating activities 5,412 9,831 -44.9 %
Cash flow from investing activities
Acquisition of subsidiary, net of cash -3,643 -10,281 -64.6 %
acquired
Purchases of property, plant and equipment -1,022 -3,272 -68.8 %
(PPE)
Proceeds from sales of PPE 306 500 -38.8 %
Purchases of intangible assets -1,499 -1,327 13.0 %
Proceeds from sales of shares 0 0 n/a
Investments in shares 0 -10 n/a
Net cash used in investing activities -5,858 -14,390 -59.3 %
Cash flow from financing activities
Proceeds from borrowings 5,520 20,542 -73.1 %
Payments of borrowings -966 -9,921 -90.3 %
Payment of finance lease liabilities -596 -702 -15.1 %
Dividends paid -1,394 -2,035 -31.5 %
Own shares 0 -264 n/a
Proceeds from issuance of ordinary shares 289 0 n/a
Net cash used in financing activities 2,853 7,620 -62.6 %
Change in cash
Cash and cash equivalents 1.1. 12,518 9,268 35.1 %
Effect of currency changes 277 189 46.6 %
Cash and cash equivalents 31.12. 15,203 12,518 21.4 %
Consolidated statement of changes in equity, 1000 EUR
Attribut Share Share Trans- Reta-i Invest Other Total Share Total
able to capita premiu lation ned ed Rese-r of non equity
equity l m differ earn-i non-- ves Contr-
holders -rence ngs rest-r olling
of the s icted intere
parent equity st
Equity 6,967 1,504 -372 35,949 2,737 -116 46,669 0 46,669
31.12.20
09
Total 0 0 277 4,784 0 -70 4,991 0 4,991
comprehe
nsive
income
for the
period
Share 0 289 289
issue
Dividend 0 0 0 -1,424 0 0 -1,424 30 -1,394
s
Changes -373 -373 -27 -400
in
subsidia
ry
interest
Equity-s 0 0 0 247 0 0 247 0 247
ettled
share-ba
sed
payments
Equity 6,967 1,504 -95 39,183 2,737 -186 50,110 292 50,402
31.12.20
10
BUSINESS SEGMENTS 2010, 1000 EUR
Video and Network Group
Broadband Services
Solutions
External sales
Services 3,379 85,829 89,208
Goods 78,628 0 78,628
External sales total 82,007 85,829 167,836
Operating profit of segments 6,345 1,087 7,432
Financial items -689
Shares of associates 0
Profit for the period 6,743
BUSINESS SEGMENTS 2009, 1000 EUR Video and Network Group
Broadband Services
Solutions
External sales
Services 3,449 65,371 68,820
Goods 72,831 0 72,831
External sales total 76,280 65,371 141,651
Operating profits of the segments -692 3,216 2,524
Financial items -605
Share of associates 0 -544 -544
Profit before taxes 0 0 1,375
Amortisation expenses 800 0 800
Geographical division 2010, Nordic Other Finlan Others Group
1000 EUR countries Europe d
Sales by origin 17,932 129,512 11,272 9,120 167,83
6
Assets 7,922 77,272 29,877 1,168 116,23
9
Capital expenditure for the 25 1,511 2,190 25 3,751
period
Geographical division 2009, Nordic Other Finlan Others Group
1000 EUR countries Europe d
Sales by origin 17,964 107,011 11,630 5,046 141,65
1
Assets 11,843 64,547 32,611 1,077 110,07
8
Capital expenditure for the 20 20,580 4,611 30 25,241
period
Information per quarter, 10-12/1 7-9/10 4-6/10 1-3/10 10-12/0 1-12/201
1000 EUR 0 9 0
Video and Broadband Solutions
Order intake 27,080 21,170 19,702 18,578 22,567 86,530
Net sales 22,882 19,915 20,148 19,062 20,978 82,007
EBIT 2,365 1,955 1,463 562 -457 6,345
EBIT % 10.3 % 9.8 % 7.3 % 2.9 % -2.2 % 7.7 %
Network Services
Order intake 23,761 18,710 19,278 18,926 24,257 80,675
Net sales 23,761 18,710 23,326 20,032 22,806 85,829
EBIT 603 28 192 264 2,175 1,087
EBIT % 2.5 % 0.2 % 0.8 % 1.3 % 9.5 % 1.3 %
Total
Order intake 50,841 39,880 38,980 37,504 46,824 167,205
Net sales 46,643 38,625 43,474 39,094 43,784 167,836
EBIT 2,968 1,984 1,655 826 1,718 7,432
EBIT % 6.4 % 5.1 % 3.8 % 2.1 % 3.9 % 4.4 %
Commitments and contingencies, 1000 EUR 2010 2009 Change
%
Other securities 640 120 433.3 %
Rental liabilities 2,254 2,243 0.5 %
Lease liabilities 4,227 3,733 13.2 %
Value of underlying forward contracts 8,283 8,043 3.0 %
Market value of forward contracts -293 -228 n/a
Interest rate swap 11,500 11,500 n/a
Market value of interest swap -256 -157 n/a
The number of employees broken down by following 2010 2009 Change
categories 31.12. %
Research and development 119 135 -11.9 %
Production and material management 944 964 -2.1 %
Sales and marketing 123 115 7.0 %
Finance, quality and IT 45 46 -2.2 %
Total 1,231 1,260 -2.3 %
KEY FIGURES IFRS IFRS IFRS IFRS IFRS
2010 2009 2008 2007 2006
Profit and loss account,
balance sheet
Net sales, Meur 167.8 141.7 108.7 125.1 101.8
Change % 18.5 % 30.3 % -13.1 % 22.9 % 23.2 %
Sales outside Finland, % 93.3 % 91.8 % 90.2 % 91.2 % 90.6 %
Operating profit, Meur 7.4 2.5 5.6 13.2 9.8
% of net sales 4.4 % 1.8 % 5.2 % 10.5 % 9.6 %
Profit after financial items, 6.7 1.4 5.1 12.7 9.3
Meur
% of net sales 4.0 % 1.0 % 4.7 % 10.1 % 9.1 %
Profit before taxes, Meur 6.7 1.4 5.1 12.7 9.3
% of net sales 4.0 % 1.0 % 4.7 % 10.1 % 9.1 %
Profit for the financial 4.8 0.4 5.5 9.4 6.9
period, Meur
% of net sales 2.9 % 0.3 % 5.1 % 7.5 % 6.8 %
R&D expenditure, Meur 10.3 10.8 13.5 13.1 9.8
% of net sales 6.1 % 7.6 % 12.4 % 10.5 % 9.7 %
Gross investments, Meur 3.8 25.2 3.9 12.3 6.2
% of net sales 2.2 % 17.8 % 3.6 % 9.8 % 6.1 %
Interest bearing liabilities, 28.1 22.8 11.0 9.5 8.0
Meur
Shareholder's equity, Meur 50.4 46.7 46.6 46.7 37.7
Total assets, Meur 116.2 110.1 75.5 77.9 68.2
Personnel and orders
Average personnel 1,215 1,103 702 681 608
Order backlog at year end, 17.0 33.1 24.0 21.5 28.1
Meur
Orders received, Meur 167.2 151.0 118.6 118.5 107.2
Key metrics
Return on equity, % 9.9 % 0.9 % 11.8 % 22.2 % 19.7 %
Return on capital employed, % 10.2 % 3.3 % 10.4 % 27.1 % 24.3 %
Equity ratio, % 43.6 % 43.6 % 61.7 % 60.2 % 55.3 %
Gearing, % 25.5 % 22.0 % 3.6 % 3.8 % 3.2 %
Earnings per share, euro 0.27 0.02 0.32 0.55 0.41
Earnings per share fully 0.27 0.02 0.32 0.52 0.38
diluted, euro
Shareholders' equity per 2.90 2.68 2.74 2.69 2.22
share, euro
Teleste share
Highest price, euro 5.33 4.30 7.49 12.34 12.75
Lowest price, euro 3.64 2.25 1.90 6.47 6.46
Closing price, euro 4.41 3.72 2.24 6.71 11.63
Average price, euro 4.49 3.62 4.52 10.10 9.83
Price per earnings 16.3 154.1 7.0 12.3 28.6
Market capitalization, Meur 80.2 66.2 39.9 118.6 202.2
Stock turnover, Meur 14.2 28.5 51.1 72.4 138.9
Turnover, number in millions 3.2 7.8 11.5 7.2 14.2
Turnover, % of share capital 17.4 % 44.0 % 64.6 % 40.5 % 81.4 %
Average number of shares 18093689 17805590 17708782 1749443 17363102
5
Number of shares at the 18186590 17805590 17805590 1767130 17389302
year-end 5
Average number of shares, 17693605 17229154 17372555 1797175 18022505
diluted w/o own shares 2
Number of shares at the 17693605 17425605 17039399 1797278 18034752
year-end, diluted w/o own 5
shares
Paid dividend, Meur * 2,1 1.4 2.0 4.2 3.4
Dividend per share, euro *0,12 0.08 0.12 0.24 0.2
Dividend per net result, % 43.7 % 331.3 % 37.4 % 43.9 % 49.1 %
Effective dividend yield, % 2.7 % 2.2 % 5.4 % 3.6 % 1.7 %
* The Board's proposal to the AGM
Treasury shares Number of % of shares % of votes
shares
Teleste companies own shares 760,985 4.18 % 4.18 %
31.12.2010
CALCULATION OF KEY FIGURES
Return on equity: Profit/loss for the financial period
------------------------------------------------------------
* 100
Shareholders' equity (average)
Return on capital Profit/loss for the period after financial items + financing
employed: charges
------------------------------------------------------------
* 100
Total assets - non-interest-bearing
liabilities (average)
Equity ratio: Shareholders' equity
---------------------------------------------------------- *
100
Total assets - advances received
Gearing: Interest bearing liabilities - cash in hand and in bank -
interest bearing assets
---------------------------------------------------------- *
100
Shareholders' equity
Earnings per Profit for the period attributable to equity holder of the
share: parent
------------------------------------------------------------
--------------------------------
Weighted average number of ordinary shares outstanding
during the period
Earnings per Profit for the period attributable to equity holder of the
share, diluted: parent (diluted)
------------------------------------------------------------
----------------------------------
Average number of shares - own shares + number of options at
the period-end
MAJOR SHAREHOLDERS 31.12.2010 Shares %
EM Group Oy 3,822,813 21.02
Mandatum Life 1,679,200 9.23
Ilmarinen Mutual Pension Insurance Company 936,776 5.15
Kaleva Mutual Pension Insurance Company 824,641 4.53
Op-Suomi Small Cap 545,925 3.00
Varma Mutual Pension Insurance Company 521,150 2.87
State Pension Fund 500,000 2.75
Aktia Capital Mutual Fund 450,000 2.47
Skagen Vekst Verdipapierfond 437,000 2.40
Teleste Management Oy 381,000 2.09
Teleste Incentive Oy 379,985 2.09
Fim Fenno Mutual Fund 271,342 1.49
Eläke-Fennia Mutual Insurance Company 220,000 1.21
Martnok Oy 187,820 1.03
Sumato Oy 142,610 0.78
Placeringsfonden Seb Gyllenberg Small Firm 110,722 0.61
Pharmacy Pension Fund 110,000 0.60
Stadigh Kari Henrik 100,000 0.55
Renkkeli Oy 100,000 0.55
SECTOR DISPERSION 31.12.2010 Shareholders % Shares %
Corporations 316 6.09 5,824,703 32.02
Financial and insurance corporations 12 0.23 3,760,250 20.67
Public institutions 9 0.17 2,325,976 12.78
Non-profit institutions 35 0.67 384,611 2.11
Households 4,775 92.11 4,366,549 24.00
Foreign countries and nominee 37 0.71 1,524,501 8.38
registered
Total 5,184 100.00 18,186,590 100.00
HOLDING DISPERSION 31.12.2010 Shareholders % Shares %
0 - 100 1,151 22.20 79,858 0.43
101 - 1000 3,030 58.44 1,264,333 6.95
1001 - 10000 907 17.49 2,511,430 13.80
10001 - 100000 77 1.48 1,834,252 10.08
100001 - 1000000 17 0.32 6,994,704 38.46
1000001 -- 2 0.03 5,502,013 30.25
Total 5,184 100.00 18,186,590 100.00
ACQUISITIONS 1 JAN - 31 DECEMBER 2010
At 14 April 2010 Networks Services segment was strengthened by acquiring 100% of
shares of a Swiss company Freycom S.A. The company's business area is in
upgrading and maintenance of cable and house networks.
At 1 September 2010 Video and Broadband solution segment was strengthened by
acquiring 100% of shares of Polish company Satlan S.P.Z o.o, a system integrator
focusing on IP video and broadband solutions for Polish operators and service
providers.
The acquisitions resulted in 1,228 thousand of intangible assets, which was
allocated to trade marks, customer relationships. Teleste personnel increased
with 52 persons. The goodwill, amounted 5,103 thousand EUR, is mainly due to
future revenue expectation. The goodwill include estimated amount of the
conditional supplementary contract price for Satlan. Total consideration is
estimated to be 6,330 thousand euro depending on the profitability development
during next two years. The fair value of Satlans trade receivables 1,305
thousand euro were 109 less than the total value based on agreements. The
difference is expected to realize as credit losses. All costs related to the
acquisitions, 94 thousand EUR, are expensed in other operating expenses.The
goodwill is mainly due to expected return in the future.
The impact of the acquisition of Freycom on Teleste's net sales during the
period 14.4.2010 - 31.12.2010 was 1,970 thousand EUR and on the profit 24
thousand EUR. If Freycom would have been consolidated since 1 January 2010, the
Group revenue would have been 605 thousand EUR higher and the Group profit would
have decreased 230 thousand EUR.
The impact of the acquisition of Satlan on Teleste's net sales during the period
1.9.2010 - 31.12.2010 was 3,631 thousand EUR and on the profit 656 thousand EUR.
If Satlan would have been consolidated since 1 January 2010, the Group revenue
would have been 3 707 thousand EUR higher and the Group profit would have
increased 82 thousand EUR.
Calculation of recognised fair values on acquisition of Freycom
1 000 EUR
Fair values used in consolidation
Trade marks (inc. in intangible assets) 43
Customer relationship (inc. in intangible assets) 188
Book values used in consolidation
Tangible assets 107
Inventories 280
Other receivables 217
Liquid funds 340
Total assets 1,175
Book values used in consolidation
Deferred tax liabilities 60
Other liabilities 914
Total liabilities 974
Net identifiable assets and liabilities 201
Total consideration 571
Goodwill on acquisition 370
Consideration paid in cash -571
Cash and cash equivalents in acquired subsidiary 197
Total net cash outflow on the acquisition -374
Preliminary calculation of recognised fair values on acquisition of Satlan
1 000 EUR
Fair values used in consolidation
Trade marks (inc. in intangible assets) 154
Customer relationship (inc. in intangible assets) 843
Inventories 1,314
Trade receivables 1,305
Book values used in consolidation
Tangible assets 51
Other receivables 219
Liquid funds 333
Total assets 4,219
Book values used in consolidation
Deferred tax liabilities 259
Other liabilities 2,363
Total liabilities 2,622
Net identifiable assets and liabilities 1,597
Total consideration 6,330
Goodwill on acquisition 4,733
Consideration paid in cash -2,780
Cash and cash equivalents in acquired subsidiary 333
Total net cash outflow on the acquisition -2,447
ADDITIONAL INFORMATION:
Mr Jukka Rinnevaara, CEO, Tel. +358 2 2605 866 or +358 400 747 488
DISTRIBUTION:
NASDAQ OMX Helsinki
Primary media
www.teleste.com
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