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2012-04-20 07:30:10 CEST 2012-04-20 07:31:14 CEST REGULATED INFORMATION Comptel - Interim report (Q1 and Q3)Interim Report of Comptel Corporation for January - March 2012Comptel Corporation Stock exchange release, 20 April 2012 at 8.30 am Net sales grew significantly from the previous year; results were impacted by an impairment loss and investments for growth. -- Net sales EUR 19.9 million (January - March 2011: 16.8), growth 18.4% -- Operating result EUR -12.0 million (-0.2), of which impairment loss EUR 10.2 million -- Operating result excluding impairment loss EUR -1.9 million (-0.2) -- Earnings per share EUR -0.10 (-0.02) -- Order backlog EUR 41.1 million (34.6) As stated earlier, in 2012 Comptel net sales are estimated to grow over 10 per cent from the previous year. Following the impairment loss, operating result is estimated to remain negative. Operating profit excluding one-off items is estimated to represent 5 - 10 per cent of net sales. Characteristically a significant part of Comptel's operating profit and net sales is generated in the second half of the year. Juhani Hintikka, President and CEO: ”In the first quarter Comptel's business proceeded favourably as net sales grew significantly from the previous year, according to our expectations. We also managed to turn the Europe East region back on a growth track. In line with our stated strategy, we continued to invest for growth and this decreased our operative profitability. The one-off costs relating to rebranding and marketing, the arbitration of the Cisco dispute and the Xtract acquisition increased our costs during the period under review. Subcontracting related to delivery projects and low license sales in the first quarter also declined the profitability. We will continue our efforts to bring new products into the market in order to increase the share of license sales. However, our total costs were exceptionally high during the quarter and we have taken measures to decrease our cost level. We took a major step in executing our strategy by acquiring a leading customer analytics company, Xtract. The transaction completes our ‘event-analysis-action' vision to help operators analyse events from the network and transform them into relevant and timely actions. The acquisition has been very favourably received by our customers and business integration has progressed as planned. By driving real-time business decisions telecom operators can provide value to their customers and operations. Our operating result was impacted by an impairment loss, which we recorded following a change in our allocation method of goodwill. After the reporting period, Comptel and Cisco have settled their dispute concerning the Axioss software which was under arbitration. In accordance with the settlement, the parties have agreed to withdraw all their claims against each other and the arbitration process has been terminated. It has been agreed that no financial compensation will be made between the parties.” Business Review of the First Quarter 2012 Comptel's net sales grew in the first quarter by 18.4 per cent from the previous year, to EUR 19.9 million (16.8). Project deliveries increased the Group's net sales. License sales remained low in the period under review. Comptel changed the allocation method of goodwill during the first quarter of the year. Due to the change, an impairment testing was carried out on a new cash generating unit level. Previously, it had not been possible to allocate goodwill specifically to any segment or cash generating unit. As a result of impairment testing Comptel recorded an impairment loss of EUR 10.2 million in the first quarter result. Following the impairment loss, the operating result for the period was EUR -12.0 million (-0.2), which corresponds -60.4 per cent of net sales (-0.9). Operating result excluding impairment loss was EUR -1.9 million (-0.2). Compared to the previous year, the share of service sales increased significantly and affected subcontracting costs. Also, the one-off costs relating to rebranding and marketing, the arbitration of the Cisco dispute and the acquisition decreased the operative profitability of the period. The company continued to invest in sales and service organisation and R&D. Comptel's total costs were exceptionally high during the quarter and the company has taken measures to decrease the cost level. Loss before taxes was EUR 12.5 million (0.3) and net loss was EUR 10.4 million (1.6). Earnings per share for the period under review were EUR -0.10 (-0.02). Tax expense for the period was EUR -2.1 million (1.3), of which EUR 0.5 million were withholding taxes. In connection with the impairment of goodwill a change of EUR 2.5 million was booked in deferred tax liabilities. The cumulative amount of outstanding, non-credited withholding taxes payment since 2004 is EUR 8.2 million. The Group's order backlog grew from the previous year and was EUR 41.1 million (34.6) at the end of the period. Maintenance agreements represent EUR 24.3 million (20.8) and other order backlog EUR 16.8 million (13.8) of the total. During the period under review, Comptel Corporation acquired Xtract Oy, a Finnish software company specialising in analytics, for a total consideration of EUR 3.1 million (enterprise value). By combining the leading analytics capabilities with its existing software, Comptel will this year create an offering which will enable operators to react quickly to events from the network and transform them automatically into relevant and timely actions that improve customer experience. Xtract has approximately 20 customers including telecom operators AVEA in Turkey, DNA in Finland, Megafon in Russia and TeliaSonera in Finland as well as insurance company If, retail and media companies. Xtract's net sales were EUR 2.4 million in 2011. Xtract has 27 highly skilled employees. Xtract Group was consolidated into Comptel Group financials as of 10 February 2012. The acquisition was financed through Comptel Corporation's liquid assets. The 20 Xtract employees working in Finland have moved to Comptel office in Helsinki and globally as part of Comptel organisation. Business areas Net sales, 1-3 2012 1-3 2011 Change, 2011 EUR million % ---------------------------------------------------------- Europe East 3.9 2.8 36.4 12.9 ---------------------------------------------------------- Europe West 5.0 3.8 31.4 19.1 ---------------------------------------------------------- Asia Pacific 4.5 6.2 -27.8 21.1 ---------------------------------------------------------- Middle East and Africa 3.8 2.6 50.1 13.7 ---------------------------------------------------------- Americas 2.7 1.4 95.8 9.9 ---------------------------------------------------------- Total 19.9 16.8 18.4 76.8 ---------------------------------------------------------- Operating result, EUR million ---------------------------------------------------------- Europe East 1.3 0.4 209.0 2.2 ---------------------------------------------------------- Europe West 2.2 2.0 10.2 11.4 ---------------------------------------------------------- Asia Pacific 2.0 4.4 -54.8 11.9 ---------------------------------------------------------- Middle East and Africa 1.1 0.8 30.3 5.5 ---------------------------------------------------------- Americas 1.5 0.6 160.9 5.7 ---------------------------------------------------------- Unallocated costs -20.1 -8.3 141.0 -25.0 ---------------------------------------------------------- Total -12.0 -0.2 7,765.7 11.6 ---------------------------------------------------------- Operating result, % of net sales ---------------------------------------------------------- Europe East 34.8 15.4 - 16.9 ---------------------------------------------------------- Europe West 44.0 52.4 - 60.0 ---------------------------------------------------------- Asia Pacific 43.6 69.8 - 56.5 ---------------------------------------------------------- Middle East and Africa 28.2 32.5 - 39.8 ---------------------------------------------------------- Americas 54.8 41.1 - 56.9 ---------------------------------------------------------- Total -60.4 -0.9 - 15.1 ---------------------------------------------------------- Net sales grew significantly in all regions except Asia Pacific where a major license deal was booked in the previous year. Following the growth of net sales, the proportional profitability improved in Europe East and in the Americas. In January - March, Comptel received 3 significant orders (3), 2 policy control& charging and 1 managed services. As significant orders Comptel reports sold projects and licenses with a value of EUR 500,000 at the minimum. Net sales breakdown, 1-3 2012 1-3 2011 Change, % 2011 EUR million ----------------------------------------------------------- Licenses 3.0 5.7 -47.4 21.1 ----------------------------------------------------------- Services 8.8 3.2 172.8 22.9 ----------------------------------------------------------- Maintenance agreements 8.1 7.9 2.8 32.7 ----------------------------------------------------------- Total 19.9 16.8 18.4 76.8 ----------------------------------------------------------- License sales remained low which impaired the profitability. A major part of net sales consisted of project deliveries, which considerably increased the share of services. Maintenance revenue consists of maintenance and support of the delivered systems. Net sales by sales channel, 1-3 2012 1-3 2011 Change, % 2011 EUR million ---------------------------------------------------------------- Direct sales 15.8 13.9 13.5 57.1 ---------------------------------------------------------------- Partner sales 4.1 2.9 41.9 19,6 ---------------------------------------------------------------- Total 19.9 16.8 18.4 76,8 ---------------------------------------------------------------- The share of partner sales increased from the previous year. Financial Position EUR million 31 March 31 Dec Change, 31 March Change, 2012 2011 % 2011 % -------------------------------------------------------------------------------- Statement of financial 62.8 71.8 -12.5 74.9 -16.1 position total -------------------------------------------------------------------------------- Liquid assets 6.8 9.4 -27.5 9.2 -25.7 -------------------------------------------------------------------------------- Trade receivables, gross 25.8 26.7 -3.4 22.1 16.5 -------------------------------------------------------------------------------- Bad debt provision -0.8 -0.7 21.5 -0.6 41.4 -------------------------------------------------------------------------------- Trade receivables, net 24.9 26.0 -4.1 21.5 15.8 -------------------------------------------------------------------------------- Accrued income 12.7 10.2 24.0 8.0 58.4 -------------------------------------------------------------------------------- Deferred income related to 1.5 2.1 -28.9 1.7 -15.1 partial debiting -------------------------------------------------------------------------------- Interest-bearing debt 3.0 0.1 4,378.1 0.1 3,041.4 -------------------------------------------------------------------------------- Equity ratio, per cent 56.9 66.6 -14.5 67.1 -15.2 -------------------------------------------------------------------------------- The impairment loss was reflected in statement of financial position total which was EUR 62.8 million. The acquisition of Xtract Oy decreased the liquid assets which were EUR 6.8 million at the end of the period. Operating cash flow was EUR -0.7 million (3.1) in the first quarter. The trade receivables were EUR 24.9 million (21.5) at the end of the period. The accrued income was EUR 12.7 million (8.0). The deferred income related to partial debiting was EUR 1.5 million (1.7). Comptel Corporation withdrew a loan of EUR 2.0 million during the review period. The company has available a revolving credit facility of EUR 15.0 million maturing in the year 2013. The equity ratio was 56.9 per cent (67.1) and the gearing ratio was -13.1 per cent (-20.8). Research and Development (R&D) EUR million 1-3 2012 1-3 2011 Change, 2011 % -------------------------------------------------------------------------------- Direct R&D expenditure 5.2 3.9 34.4 15.4 -------------------------------------------------------------------------------- Capitalisation of R&D expenditure -1.5 -1.0 51.3 -4.0 according to IAS 38 -------------------------------------------------------------------------------- R&D depreciation and impairment charges 0.6 0.9 -29.9 3.4 -------------------------------------------------------------------------------- R&D expenditure, net 4.3 3.8 14.5 14.8 -------------------------------------------------------------------------------- Direct R&D expenditure, % of net sales 26.0 22.9 - 20.1 -------------------------------------------------------------------------------- R&D expenditure increased from the previous year as Comptel actively developed new products for the market. Investments in R&D will increase the expenditure this year. Direct R&D expenditure represented 26.0 per cent (22.9) of net sales. Comptel's R&D expenditure was mainly targeted at the service fulfillment automation of telecom operators and to the management and analysis in real-time of rapidly increasing data traffic. Comptel seeks market leadership in these areas where key business challenges of operators will be solved. In addition, the company is developing an integrated software platform, which will enable a cost-efficient and solution-based R&D. This year, the company focuses on developing its offering within the Fulfillment, Policy Control & Charging and Intelligent Customer Interaction product areas. In Intelligent Customer Interaction, integrating the acquired Xtract customer analytics into the Comptel software platform is a priority. With a combined offering, Comptel can help operators to improve customer loyalty as well as enable individually targeted marketing. During the review period three software releases were launched in these respective product areas. Investments EUR million 1-3 2012 1-3 2011 Change, 2011 % -------------------------------------------------------------------------------- Gross investments in property, plant and 3.2 0.2 1,560.9 1.0 equipment and intangible assets -------------------------------------------------------------------------------- The acquisition of Xtract Oy increased the gross investments from the previous year. The other investments comprised of devices, software and furnishings. The investments were funded through cash flow from operations. Personnel 31 March 31 March Change, 31 Dec 2012 2011 % 2011 -------------------------------------------------------------------------------- Number of employees at the end of 697 595 17.1 639 period -------------------------------------------------------------------------------- 1-3 2012 1-3 2011 Change, 1-12 2011 % -------------------------------------------------------------------------------- Average number of personnel during the 678 595 13.9 623 period -------------------------------------------------------------------------------- The number of employees increased significantly from the previous year as Comptel continued to invest in its sales, service and R&D organisation. 27 employees joined Comptel as Xtract was consolidated into Comptel Group during the period. In the first quarter, the personnel expenses were 53.6 per cent of net sales (52.6). At the end of the period, 33.0 per cent (36.6) of the personnel were located in Finland, 23.7 per cent (25.2) in Malaysia, 9.6 per cent (5.7) in Bulgaria, 7.3 per cent (9.2) in the United Kingdom, 6.7 per cent (4.9) in the United Arab Emirates, 5.2 per cent (6.7) in Norway, and 14.5 per cent (11.7) in other countries where Comptel operates. Comptel share The closing share price of the period was EUR 0.57 (0.68). Comptel's market value at the end of the period was EUR 60.9 million (72.7). Comptel share 1-3 2012 1-3 2011 Change, % 2011 --------------------------------------------------------------- Shares traded, million 10.9 11.2 -2.9 32.8 --------------------------------------------------------------- Shares traded, EUR million 6.5 8.2 -20.1 21.0 --------------------------------------------------------------- Highest price, EUR 0.63 0.79 -20.3 0.79 --------------------------------------------------------------- Lowest price, EUR 0.49 0.67 -26.9 0.48 --------------------------------------------------------------- Of Comptel's outstanding shares, 5.6 per cent (6.5) were nominee registered or held by foreign shareholders at the end of the period. Elisa Corporation notified on 17 January 2012 that its direct ownership in Comptel Corporation had increased to over the 10% threshold following the merger of Saunalahti Group Oyj into Elisa Corporation. Elisa Group's ownership remained unchanged. During the period, Comptel Corporation allotted gratuitously 111,186 shares to the members of the Board of Directors as part of their annual compensation and 25,000 shares to the President and CEO of the company according to the terms and conditions of the 2011 share-based incentive plan. The company held 156,499 of its own shares at the end of the period, which is 0.15 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 3,130. No share options were distributed during the review period. Corporate Governance The Annual General Meeting (AGM), held on 26 March 2012, re-elected Mr Hannu Vaajoensuu and Mr Petteri Walldén as members of the Board of Directors and elected Mr Pertti Ervi, Ms Eriikka Söderström and Mr Antti Vasara elected as new members of the Board of Directors. In its meeting held after the AGM, the Board of Directors elected Mr Pertti Ervi as chairman and Mr Hannu Vaajoensuu as vice chairman. The Board decided not to set up committees. The AGM resolved to elect Ernst & Young Oy as authorised public accountant, Mr Heikki Ilkka being the principal auditor. The AGM approved the proposal of Board of Directors that a dividend of EUR 0.03 per share be paid for 2011. The dividend was paid on 12 April 2012. The AGM decided to issue stock options to the key personnel of the Comptel Group as a part of the incentive and commitment program for the key personnel. The AGM authorised the Board of Directors to decide on share issues amounting to a maximum of 21,400,000 new shares and on repurchase of the company's own shares up to a maximum number of 10,700,000 shares. The authorisations are valid until 30 June 2013. However, the authorisation to implement the company's share-based incentive programs is valid until five years from the AGM resolution. A separate stock exchange release about the authorisations given and other decisions made by the Annual General Meeting was published on 26 March 2012. Ms Ulla Koivukoski joined Comptel as Senior Vice President, Marketing and Communications, and member of the Group Executive Board as of 1 February 2012. During the period under review, the Board of Directors resolved on a new share-based incentive plan for the Group key personnel. The aim of the new plan is to combine the objectives of the shareholders and the target people in order to increase the value of the company, to commit the target people to the company, and to offer them a competitive reward plan based on long-term shareholding in the company. Events after the Reporting Period Comptel Corporation and Cisco Systems Inc. have settled the dispute under arbitration concerning Comptel's use of a certain sub-set of Axioss software that was sold to Cisco and simultaneously licensed back to Comptel for use in the current release of Comptel Fulfillment. Cisco brought the matter to the London Court of International Arbitration in December 2011. In accordance with the settlement, the parties have agreed to withdraw all their claims against each other and the arbitration process has thereby been terminated. It has been agreed that no financial compensation will be made between the parties. Comptel will continue in the fulfillment business and will, consistent with the terms of Cisco's license back to Comptel, support its existing Axioss and Comptel Fulfillment customers. Near-term Risks and Uncertainties Comptel develops dynamic end-to-end solutions for leading operators globally in the telecom field. This requires Comptel to understand correctly the trends taking place in its business environment and the needs of its customers and resellers by each region. Failure to identify market conditions, address customers' needs and develop its products in a timely way may significantly undermine the growth of Comptel's business and its profitability. Characteristics for Comptel's field of industry are significant quarterly variations of net sales and profit, which are related to customers' purchasing behaviour and the timing of major single deals. Comptel operates globally so it is exposed to risks arising from different currency positions. Exchange rate changes between the Euro, which is the company's reporting currency, and the US Dollar, UK Pound Sterling, Malaysian ringgit and Norwegian Krone affect the company's net sales, expenses and net profit. The application process to prevent Comptel's double taxation is still pending with the Ministry of Finance in Finland. The company believes the treatment of its withholding taxation will be changed. However, the process between the states is very slow and the timing of a change is hard to forecast. The risks and uncertainties of Comptel are described more in detail in the company's financial statements and the Board of Directors' report for 2011. Outlook As earlier stated, in 2012 Comptel net sales are estimated to grow over 10 per cent from the previous year. Following the impairment loss, operating result is estimated to remain negative. Operating profit excluding one-off items is estimated to represent 5 - 10 per cent of net sales. Earlier Comptel had estimated the operating profit to represent 5 - 10 per cent of net sales. Characteristically a significant part of Comptel's operating profit and net sales is generated in the second half of the year. 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 and methods of computation adopted in the financial statements are consistent with those of the annual financial statements for the year ended 2011 except for the application of new or amended standards and interpretations as set forth in note 1. 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 Statement of Comprehensive Income 1 Jan - 31 Mar 1 Jan - 31 Mar (EUR 1,000) 2012 2011 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net sales 19,926 16,825 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Other operating income 1 4 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Materials and services -1,622 -773 -------------------------------------------------------------------------------- Employee benefits -10,672 -8,843 -------------------------------------------------------------------------------- Depreciation, amortisation and impairment -11,128 -1,359 charges -------------------------------------------------------------------------------- Other operating expenses -8,538 -6,006 -------------------------------------------------------------------------------- -31,959 -16,982 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Operating profit/loss -12,032 -153 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial income 437 249 -------------------------------------------------------------------------------- Financial expenses -914 -415 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss before income taxes -12,509 -319 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Income taxes 2,094 -1,329 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss for the period -10,416 -1,648 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Other comprehensive income -------------------------------------------------------------------------------- Cash flow hedges 742 453 -------------------------------------------------------------------------------- Translation differences 3 -63 -------------------------------------------------------------------------------- Income tax relating to components of other -182 -118 comprehensive income -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total comprehensive income for the period -9,852 -1,375 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company -10,416 -1,648 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total comprehensive income attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company -9,852 -1,375 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Shareholders of the parent company: -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Earnings per share, EUR -0.10 -0.02 -------------------------------------------------------------------------------- Earnings per share, diluted, EUR -0.10 -0.02 -------------------------------------------------------------------------------- Consolidated Statement of Financial Position (EUR 31 Mar 2012 31 Dec 2011 1,000) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Assets -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Non-current assets -------------------------------------------------------------------------------- Goodwill 2,646 10,832 -------------------------------------------------------------------------------- Other intangible assets 10,936 9,255 -------------------------------------------------------------------------------- Tangible assets 1,388 1,381 -------------------------------------------------------------------------------- Investments in associates 817 817 -------------------------------------------------------------------------------- Available-for sale financial assets 87 87 -------------------------------------------------------------------------------- Deferred tax assets 1,093 636 -------------------------------------------------------------------------------- Other non-current receivables 480 409 -------------------------------------------------------------------------------- 17,447 23,418 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Current assets -------------------------------------------------------------------------------- Trade and other current receivables 38,532 38,941 -------------------------------------------------------------------------------- Cash and cash equivalents 6,818 9,401 -------------------------------------------------------------------------------- 45,350 48,343 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total assets 62,797 71,761 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Equity and liabilities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Equity attributable to equity holders of the parent company -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Share capital 2,141 2,141 -------------------------------------------------------------------------------- Fund of invested non-restricted equity 243 178 -------------------------------------------------------------------------------- Translation differences -679 -682 -------------------------------------------------------------------------------- Retained earnings 27,322 40,169 -------------------------------------------------------------------------------- Total equity 29,027 41,805 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Non-current liabilities -------------------------------------------------------------------------------- Deferred tax liabilities 2,565 4,798 -------------------------------------------------------------------------------- Provisions 2,561 2,750 -------------------------------------------------------------------------------- Non-current financial liabilities 38 29 -------------------------------------------------------------------------------- 5,164 7,577 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Current liabilities -------------------------------------------------------------------------------- Trade and other current liabilities 25,651 22,341 -------------------------------------------------------------------------------- Current financial liabilities 2,955 38 -------------------------------------------------------------------------------- 28,606 22,379 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total liabilities 33,770 29,956 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total equity and liabilities 62,797 71,761 -------------------------------------------------------------------------------- Consolidated Statement of Cash Flows 1 Jan - 31 1 Jan - 31 (EUR 1,000) Mar 2012 Mar 2011 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash flows from operating activities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss for the period -10,416 -1,648 -------------------------------------------------------------------------------- Adjustments: -------------------------------------------------------------------------------- Non-cash transactions or items that are not part of 11,794 1,633 cash flows from operating activities -------------------------------------------------------------------------------- Interest and other financial expenses 88 13 -------------------------------------------------------------------------------- Interest income -9 -8 -------------------------------------------------------------------------------- Income taxes -2,094 1,329 -------------------------------------------------------------------------------- Change in working capital: -------------------------------------------------------------------------------- Change in trade and other current receivables 1,888 3,282 -------------------------------------------------------------------------------- Change in trade and other current liabilities -83 -243 -------------------------------------------------------------------------------- Change in provisions -189 -203 -------------------------------------------------------------------------------- Interest paid -88 -13 -------------------------------------------------------------------------------- Interest received 7 6 -------------------------------------------------------------------------------- Income taxes paid and tax returns received -1,560 -1,091 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash from operating activities -660 3,058 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash flows from investing activities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Acquisition of subsidiaries, net of cash acquired -1,812 - -------------------------------------------------------------------------------- Investments in tangible assets -202 -141 -------------------------------------------------------------------------------- Investments in intangible assets -62 -50 -------------------------------------------------------------------------------- Investments in development projects -1,488 -983 -------------------------------------------------------------------------------- Change in other non-current receivables -32 - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash used in investing activities -3,595 -1,174 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash flows from financing activities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Proceeds from borrowings 2,021 - -------------------------------------------------------------------------------- Repayment of borrowings -305 - -------------------------------------------------------------------------------- Lease payments -10 -9 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash used in financing activities 1,706 -9 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net change in cash and cash equivalents -2,549 1,874 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the 9,401 7,028 period -------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period 6,818 9,181 -------------------------------------------------------------------------------- Change -2,583 2,153 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effects of changes in foreign exchange rates 34 -279 -------------------------------------------------------------------------------- Consolidated Statement of Changes in Equity -------------------------------------------------------------------------------- - Equity attributable to equity holders of the parent company -------------------------------------------------------------------------------- - EUR 1,000 Share Other Translati Fair Treasur Retained Total capita reserv on value y earnings l es differenc reserve shares es -------------------------------------------------------------------------------- Equity at 2,141 7,575 -858 -40 -600 40,927 49,146 31 Dec 2010 -------------------------------------------------------------------------------- Dividends -4,270 -4,270 -------------------------------------------------------------------------------- Transfer of 76 225 -225 76 treasury shares -------------------------------------------------------------------------------- Share-based 134 134 compensation -------------------------------------------------------------------------------- Total -63 335 -1,648 -1,375 comprehensive income for the period -------------------------------------------------------------------------------- Equity at 2,141 7,651 -921 296 -375 34,918 43,710 31 Mar 2011 -------------------------------------------------------------------------------- Consolidated Statement of Changes in Equity -------------------------------------------------------------------------------- - Equity attributable to equity holders of the parent company -------------------------------------------------------------------------------- - EUR 1,000 Share Other Translati Fair Treasur Retained Total capita reserv on value y earnings l es differenc reserve shares es -------------------------------------------------------------------------------- Equity at 2,141 178 -682 -589 -375 41,133 41,805 31 Dec 2011 -------------------------------------------------------------------------------- Dividends -3,207 -3,207 -------------------------------------------------------------------------------- Transfer of 66 14 -14 66 treasury shares -------------------------------------------------------------------------------- Share-based 215 215 compensation -------------------------------------------------------------------------------- Total 3 560 -10,416 -9,852 comprehensive income for the period -------------------------------------------------------------------------------- Equity at 2,141 243 -679 -29 -361 27,712 29,027 31 Mar 2012 -------------------------------------------------------------------------------- Notes 1. Application of new or amended standards and interpretations On 1 January 2012 the Group adopted the following new and amended standards and interpretations endorsed by the EU and that are applicable to Comptel: Amendments to IFRS 7 Financial Instruments: Disclosures (effective for financial years beginning on or after 1 July 2011): The amendments will promote transparency in the reporting of transfer transactions and improve users' understanding of the risk exposures relating to transfers of financial instruments and the effect of those risks on an entity's financial position, particularly those involving securitisation of financial assets. 2. Segment information Net sales by segment EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011 ---------------------------------------------------------------- ---------------------------------------------------------------- Europe East 3,866 2,834 ---------------------------------------------------------------- Europe West 5,001 3,804 ---------------------------------------------------------------- Asia-Pacific 4,511 6,245 ---------------------------------------------------------------- Middle East and Africa 3,841 2,559 ---------------------------------------------------------------- Americas 2,708 1,383 ---------------------------------------------------------------- Group total 19,926 16,825 ---------------------------------------------------------------- Operating profit/loss by segment EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Europe East 1,345 435 ------------------------------------------------------------------------------- Europe West 2,199 1,995 ------------------------------------------------------------------------------- Asia-Pacific 1,969 4,360 ------------------------------------------------------------------------------- Middle East and Africa 1,084 832 ------------------------------------------------------------------------------- Americas 1,483 568 ------------------------------------------------------------------------------- Group unallocated expenses -20,112 -8,344 ------------------------------------------------------------------------------- Group operating profit/loss total -12,032 -153 ------------------------------------------------------------------------------- Financial income and expenses -477 -166 ------------------------------------------------------------------------------- Group profit/loss before income taxes -12,509 -319 ------------------------------------------------------------------------------- 3. Business combinations On 9 February 2012, Comptel Corporation acquired all shares of Xtract Oy, a Finnish software company specialising in analytics. By acquiring Xtract the company creates a unique offering by combining world class analytics capabilities with its existing assets. This offering enables operators to react quickly to events from the network and transform them automatically into relevant and timely actions that improve the customer experience. The total consideration (enterprise value) was EUR 3,100 thousand. The actual purchase price EUR 2,075 thousand was paid in cash. The goodwill according to IFRS 3 is EUR 1,993 thousand after the fair value allocations reflected in net assets. EUR 215 thousand was recognised in intangible assets which are amortised over five years. The goodwill is attributable to the skilled workforce of Xtract and the utilisation potential of Comptel's existing sales channel to promote Xtract products. The values of the assets and liabilites arising from the acquisition were as follows: EUR 1,000 Recognised fair values on acquisition -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Technology (incl. in other intangible 840 assets) -------------------------------------------------------------------------------- Other intangible assets 1 -------------------------------------------------------------------------------- Machinery and equipment 6 -------------------------------------------------------------------------------- Trade receivables and other receivables 842 -------------------------------------------------------------------------------- Cash and cash equivalents 263 -------------------------------------------------------------------------------- Total assets 1,952 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Deferred tax liabilities 53 -------------------------------------------------------------------------------- Other non-interest bearing liabilities 597 -------------------------------------------------------------------------------- Interest bearing liabilities 1,220 -------------------------------------------------------------------------------- Total liabilities 1,870 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net assets 82 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Acquisition cost 2,075 -------------------------------------------------------------------------------- Goodwill 1,993 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Purchase price paid in cash 2,075 -------------------------------------------------------------------------------- Cash and cash equivalents in acquired -263 subsidiary -------------------------------------------------------------------------------- Total net cash outflow on the acquisition 1,812 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Comptel has expensed acquisition-related consultation fees of EUR 145 thousand. The fees are included in other operating expenses. Xtract's net sales EUR 199 thousand and result EUR -382 thousand for the period 10 February to 31 March 2012 is included in the comprehensive statement of income. Comptel Group net sales for 1 January - 31 March 2012 would have been EUR 20,292 thousand and loss EUR 10,166 thousand if Xtract had been consolidated from the beginning of the year 2012. 4. Impairment loss on goodwill Comptel changed the allocation method of goodwill during the first quarter of the year. Due to the change, an impairment testing was carried out on a new cash generating unit level. Previously, it had not been possible to allocate goodwill specifically to any segment or cash generating unit. As a result of impairment testing Comptel recorded an impairment loss of EUR 10,179 thousand in the first quarter result. In the test, the recoverable amount of goodwill is determined based on value in use calculation. The value in use is computed based on discounted forecast cash flows. The cash flow forecasts rely on the plans approved by the Board of Directors and management concerning in particular profitability and the growth rate of net sales. The plans cover a five-year period taking into account the recent development of business. The used pre-tax discount rate is 16.4%. The cash flows after the five-year period have been forecast by estimating the future growth rate of net sales to be 0%. The use of the testing model requires making estimates and assumptions concerning investments, market growth and general interest rate level. 5. Income tax Income tax according to the statement of comprehensive income for the period was EUR 2,094 thousand positive (EUR 1,329 thousand negative in 2011) as a change of EUR 2,494 thousand in deferred tax liabilities was booked in connection with the impairment of goodwill. In 2006, Adjustment of the Tax Office for Major Corporations refused to accept the crediting of taxes withheld at source in taxation of 2004 and 2005. Comptel is pursuing negotiations with the Ministry of Finance and the other countries that have withheld tax at source to avoid double taxation. The company believes the treatment of its withholding taxation will be changed. The negotiation process between countries is, however, very slow and the time for the change to take place is very difficult to predict. According to the Board of Adjustment's decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to EUR 543 thousand in January - March (EUR 690 thousand). 6. Tangible assets EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011 --------------------------------------------------- --------------------------------------------------- Additions 209 141 --------------------------------------------------- 7. Related party transactions The Comptel Group has a related party relationship with its associate, the Board of Directors, the Executive Board and also with people and companies under Comptel management's influence. Transactions, which have been entered into with related parties are as follows: EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Associate ------------------------------------------------------------------------- Other operating income 1 - ------------------------------------------------------------------------- Purchases of goods and services - - ------------------------------------------------------------------------- Interest income 2 2 ------------------------------------------------------------------------- ------------------------------------------------------------------------- EUR 1,000 31 Mar 2012 31 Dec 2011 ------------------------------------------------- ------------------------------------------------- Associate ------------------------------------------------- Non-current receivables 93 91 ------------------------------------------------- Trade receivables 1 - ------------------------------------------------- ------------------------------------------------- Remuneration to key management The key management personnel compensation includes the employee benefits of the members of the Board of Directors and the Executive Board. EUR 1,000 1 Jan - 31 Mar 1 Jan - 31 Mar 2012 2011 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Salaries and other short-term employee 557 813 benefits -------------------------------------------------------------------------------- Share-based payments 45 45 -------------------------------------------------------------------------------- Total 602 858 -------------------------------------------------------------------------------- 8. Commitments Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows: EUR 1,000 31 Mar 2012 31 Dec 2011 ---------------------------------------------------- ---------------------------------------------------- Less than one year 3,564 3,377 ---------------------------------------------------- Between one and five years 7,082 7,909 ---------------------------------------------------- Total 10,646 11,286 ---------------------------------------------------- The group had no material capital commitments for the purchase of tangible assets at 31 March 2012 and 31 March 2011. 9. Contingent liabilities EUR 1,000 31 Mar 2012 31 Dec 2011 ----------------------------------------- ----------------------------------------- Bank guarantees 1,864 1,847 ----------------------------------------- 10. Events after the Reporting Period Comptel Corporation and Cisco Systems Inc. have settled the dispute under arbitration concerning Comptel's use of a certain sub-set of Axioss software that was sold to Cisco and simultaneously licensed back to Comptel for use in the current release of Comptel Fulfillment. Cisco brought the matter to the London Court of International Arbitration in December 2011. In accordance with the settlement, the parties have agreed to withdraw all their claims against each other and the arbitration process has thereby been terminated. It has been agreed that no financial compensation will be made between the parties. Comptel will continue in the fulfillment business and will, consistent with the terms of Cisco's license back to Comptel, support its existing Axioss and Comptel Fulfillment customers. 11. Key figures Financial summary 1 Jan - 31 1 Jan - 31 1 Jan - 31 Mar 2012 Mar 2011 Dec 2011 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net sales, EUR 1,000 19,926 16,825 76,751 -------------------------------------------------------------------------------- Net sales, change % 18.4 -6.9 -1.5 -------------------------------------------------------------------------------- Operating profit/loss, EUR 1,000 -12,032 -153 11,609 -------------------------------------------------------------------------------- Operating profit/loss, change % -7,765.7 -180.2 30.3 -------------------------------------------------------------------------------- Operating profit/loss, as % of net -60.4 -0.9 15.1 sales -------------------------------------------------------------------------------- Profit/loss before taxes, EUR 1,000 -12,509 -319 10,699 -------------------------------------------------------------------------------- Profit/loss before taxes, as % of net -62,8 -1,9 13,9 sales -------------------------------------------------------------------------------- Return on equity, % - - 16.0 -------------------------------------------------------------------------------- Return on investment, % - - 22.9 -------------------------------------------------------------------------------- Equity ratio, % 56.9 67.1 66.6 -------------------------------------------------------------------------------- Gross investments in tangible and 3 171 191 1,037 intangible assets, EUR 1,0001) -------------------------------------------------------------------------------- Gross investments in tangible and 15,9 1.1 1.4 intangible assets, as % of net sales -------------------------------------------------------------------------------- Capitalisations according to IAS 38 to 1,488 983 3,965 intangible assets -------------------------------------------------------------------------------- Research and development expenditure, 5,184 3,856 15,419 EUR 1,000 -------------------------------------------------------------------------------- Research and development expenditure, 26.0 22.9 20.1 as % of net sales -------------------------------------------------------------------------------- Order backlog, EUR 1,000 2) 41,110 34,554 47,217 -------------------------------------------------------------------------------- Average number of employees during the 678 595 623 period -------------------------------------------------------------------------------- Interest-bearing net liabilities, EUR -3,825 -9,086 -9,334 1,000 -------------------------------------------------------------------------------- Gearing ratio, % -13.1 -20.8 -22.3 -------------------------------------------------------------------------------- 1) Includes the acquisition of Xtract in 2012. The gross capital investments excluding the acquisition amounted to EUR 264 thousand, which is 1.3 percent of net sales. The figure does not include investments in development projects. 2) The order book may vary significantly during the financial period. -------------------------------------------------------------------------------- - Per share data 1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 2012 2011 Dec 2011 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Earnings per share (EPS), EUR -0.10 -0.02 0.07 -------------------------------------------------------------------------------- EPS diluted, EUR -0.10 -0.02 0.07 -------------------------------------------------------------------------------- Equity per share, EUR 0.27 0.41 0.39 -------------------------------------------------------------------------------- Dividend per share, EUR - - 0.03 -------------------------------------------------------------------------------- Dividend per earnings, % - - 43.9 -------------------------------------------------------------------------------- Effective dividend yield, % - - 6.1 -------------------------------------------------------------------------------- P/E ratio - - 7.2 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Adjusted number of shares at the 107,054,810 107,054,810 107,054,810 end of the period -------------------------------------------------------------------------------- of which the number of treasury 156,499 183,900 292,685 shares -------------------------------------------------------------------------------- Outstanding shares 106,898,311 106,870,910 106,762,125 -------------------------------------------------------------------------------- Adjusted average number of shares 106,765,118 106,555,907 106,775,223 during the period -------------------------------------------------------------------------------- Average number of shares, 106,765,118 106,695,907 106,775,223 dilution included -------------------------------------------------------------------------------- 12. Definition of key figures -------------------------------------------------------------------------------- Operating margin % = Operating profit/loss x100 ------------------------------------ ------------------------------------ Net sales Profit margin (before income taxes) = Profit/loss before taxes x100 % ------------------------------------ ------------------------------------ Net sales Return on equity % (ROE) = Profit/loss x100 ------------------------------------ ------------------------------------ Total equity (average during year) Return on investment % (ROI) = Profit/loss before taxes + x100 financial expenses ------------------------------------ ------------------------------------ Total equity + interest bearing liabilities (average during the year) Equity ratio % = Total equity x100 ------------------------------------ ------------------------------------ Statement of financial position total - advances received Gross investments in tangible and = Gross investments in tangible and x100 intangible assets, as % of net intangible assets sales ------------------------------------ ------------------------------------ Net sales Research and development = Research and development x100 expenditure, as % of net sales expenditure ------------------------------------ ------------------------------------ Net sales Gearing ratio % = Interest-bearing liabilities - x100 cash and cash equivalents ------------------------------------ ------------------------------------ Total equity Earnings per share (EPS) = Profit/loss for the financial year attributable to equity shareholders ------------------------------------ ------------------------------------ Average number of outstanding shares for the financial year Equity per share = Equity attributable to the equity holders of the parent company ------------------------------------ ------------------------------------ Adjusted number of shares at the end of period Dividend per share = Dividend ------------------------------------ ------------------------------------ Adjusted number of shares at the end of period Dividend per earnings % = Dividend per share x100 ------------------------------------ ------------------------------------ Earnings per share (EPS) Effective dividend yield % = Dividend per share x100 ------------------------------------ ------------------------------------ Share closing price at end of period P/E ratio = Share closing price at end of period ------------------------------------ ------------------------------------ Earnings per share (EPS) -------------------------------------------------------------------------------- Schedule for Comptel's interim reports in 2012: January - June: 18 July 2012 January - September: 18 October 2012 COMPTEL CORPORATION Board of Directors Additional information: Mr Juhani Hintikka, President and CEO, tel. +358 9 700 1131 Mr Mikko Hytönen, CFO, tel. +358 40 758 5801 Mr Samppa Seppälä, Director, IR and Corporate Communications, tel. +358 50 568 0533 Distribution: NASDAQ OMX Helsinki Major media www.comptel.com |
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