2016-10-20 07:00:02 CEST
2016-10-20 07:00:02 CEST
REGULATED INFORMATION
Comptel - Interim report (Q1 and Q3)
RESULT OF COMPTEL CORPORATION 1 JANUARY - 30 SEPTEMBER 2016
Stock exchange release
20 October 2016 at 8:00 am
-- Profitability continued to improve in the third quarter
-- Comptel specifies its future outlook
Key figures for the third quarter of 2016:
-- Net sales EUR 22.4 million (Q3 2015: 22.4), change -0.1%
-- Operating profit EUR 1.2 million (0.8), growth 52.8%
-- Operating profit 5.5% of net sales (3.6)
-- Net profit EUR 0.6 million (-0.1), growth 526.0%
-- Earnings per share EUR 0.01 (0.00)
-- Order backlog EUR 57.2 million (53.5), growth 6.8%
Key figures for January-September of 2016:
-- Net sales EUR 70.1 million (Jan-Sep 2015: 65.1), growth 7.6%
-- Operating profit EUR 6.0 million (2.9), growth 108.2%
-- Operating profit 8.5% of net sales (4.4)
-- Net profit EUR 3.7 million (0.6), growth 555.3%
-- Earnings per share EUR 0.03 (0.01)
Outlook (changed):
Specified guidance is:
“Comptel expects the 2016 net sales to continue to grow and operating profit to
be in the range of 9–13% of revenue.”
Previous guidance was:
“Comptel expects the 2016 net sales to continue to grow and operating profit to
be in the range of 9–14% of revenue.”
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:
“The decision making of our customers was slightly delayed in the third
quarter, especially related to big transformation projects. We see the that the
market has slowed down somewhat during the second half. Our sales pipeline has
continued to grow and due to strong sales outlook we feel confident about next
year.
In the third quarter, the Intelligent Data Business Unit net sales grew by 6.2
per cent compared to the previous year. Service Orchestration Business Unit net
sales declined by 5.4 per cent compared to the third quarter in 2015. On a year
to date basis both Business Units are growing compared to the previous year,
especially the growth of the Fulfillment business has continued to be strong.
Regionally, EMEA continued to grow while the rest of the regions declined in
the third quarter compared to the previous year. We see the decline in APAC as
temporary, while in South America the market conditions have been challenging
this year.
I’m very pleased that in terms of profitability we improved from last year in
the third quarter. Our operating profit improved by 52.8 per cent and net
profit by 526 per cent. Year-to-date, our profitability is also significantly
better than in the previous year.
The FWD application continued to move ahead with customers and several new
deals are currently under negotiation. We now have our first experiences with a
large scale implementation and are learning how to increase our customers’
prepaid revenue streams. We have increased the investment in FWD during the
year and this investment is lowering our profitability in 2016.
Gartner named Comptel as one of the leading vendors in catalog-centric
quote-to-order-to-install solutions that enable new digital multichannel
business, operational and technology transformation for operators. Gartner
noted that Comptel's particular strength is in support for the entire
inventory, provisioning/activation and order fulfillment value chain, with the
catalog at the center of its architecture.
During the third quarter, we secured 3 orders (Q3 2015:3), valued over EUR 1.0
million.
Business Review of the third quarter and January-September of 2016
Comptel’s net sales were on the same level in the third quarter compared to the
previous year. Net sales were EUR 22.4 million (22.4). Net sales grew in EMEA
but declined in other regions.
In January-September, net sales grew by 7.6 per cent and were EUR 70.1 million
(65.1). Net sales grew in APAC by 13.5 per cent, in EMEA by 10.0 per cent and
declined in Americas by 18.6 per cent. The Intelligent Data unit grew by 9.8
per cent and Service Orchestration by 5.6 per cent.
The operating result for the third quarter was EUR 1.2 million (0.8), which
corresponds to 5.5 per cent of net sales (3.6).
In January-September, the operating result was EUR 6.0 million (2.9), which
corresponds to 8.5 per cent of net sales (4.4). Strong net sales in the first
half of this year improved our profitability.
In the third quarter, result before taxes was EUR 0.9 million (0.5) and net
profit EUR 0.6 million (-0.1). Net profit improved by 526.0% compared to the
previous year. Earnings per share for the third quarter were EUR 0.01 (0.00).
Result before taxes for January-September was EUR 5.6 million (1.7) and net
profit EUR 3.7 million (0.6). Earnings per share for January-September were EUR
0.03 (0.01).
The tax expense for the third quarter was EUR 0.4 million of which EUR 0.3
million were withholding taxes related to double taxation. In
January-September, tax expenses were EUR 1.9 million, of which EUR 0.8 million
were withholding taxes related to double taxation.
In the second quarter of this year, Comptel received a favourable tax ruling
related to past years withholding taxes in India. The tax refund transfers are
still pending local authority’s decision and have therefore not been reflected
in the financials.
In January-September, Comptel received 9 orders over EUR 1 million (YTD 2015:
7), of which Intelligent Data unit received three (two Data Refinery solutions
and one Monetizer) and Service Orchestration received three (three FlowOne
solutions). Three orders were multi-solution orders across the business units.
Comptel reports orders for sold projects and licenses with a minimum value of
EUR 1,000,000.
The Group’s 12-month order backlog increased from the previous year and was EUR
57.2 million (53.5) at the end of the period. The Group’s total order backlog
exceeds EUR 80 million at the end of third quarter.
Business areas
--------
Net sales, 7-9 7-9 Change, 1-9 1-9 Change 1-12
EUR million 2016 2015 % 2016 2015 % 2015
---------------------- ----------------------------------------
Intelligent Data 9.7 9.2 6.2 30.7 27.9 9.8 42.5
----------------------------------------------------------------------
Service Orchestration 12.5 13.2 -5.4 39.3 37.2 5.6 55.2
----------------------------------------------------------------------
Other 0.1 0.0 0.0 0.1 0.0 0.0 0.0
----------------------------------------------------------------------
Total 22.4 22.4 -0.1 70.1 65.1 7.6 97.7
----------------------------------------------------------------------
Operating result,
EUR million
----------------------------------------------------------------------
Intelligent Data 1.1 0.9 33.9 4.2 2.3 80.2 5.8
----------------------------------------------------------------------
Service Orchestration 0.8 0.6 25.2 4.0 2.2 78.1 5.1
----------------------------------------------------------------------
Other -0.7 -0.7 -3.5 -2.2 -1.7 -30.8 -2.5
----------------------------------------------------------------------
Total 1.2 0.8 52.8 6.0 2.9 108.2 8.5
----------------------------------------------------------------------
Operating result,
% of net sales
----------------------------------------------------------------------
Intelligent Data 11.7 9.3 13.7 8.4 13.7
----------------------------------------------------------------------
Service Orchestration 6.4 4.8 10.2 6.0 9.3
----------------------------------------------------------------------
Other -616.4 0.0 0.0 0.0 0.0
----------------------------------------------------------------------
Total 5.5 3.6 8.5 4.4 8.7
----------------------------------------------------------------------
In the third quarter, Service Orchestration’s net sales declined by 5.4 per
cent compared to the previous year. The profitability of Service Orchestration
improved by 25.2 per cent compared to the previous year. Net sales for
Intelligent Data unit grew by 6.2 per cent in the third quarter compared to the
previous year. The profitability of Intelligent Data unit improved by 33.9 per
cent compared to the previous year.
In January-September, net sales of Service Orchestration grew by 5.6 per cent
compared to the previous year. Profitability of Service Orchestration improved
by 78.1 per cent compared to the previous year. The net sales for Intelligent
Data unit grew by 9.8 per cent compared to the previous year and profitability
improved by 80.2 per cent year-over-year.
Net sales breakdown, 7-9 7-9 Change, % 1-9 1-9 Change 1-12
EUR million 2016 2015 2016 2015 % 2015
-------------------------------------------------------------------------------
Project & License business 13.6 13.9 -2.4 44.1 39.3 12.4 63.3
-------------------------------------------------------------------------------
Recurring business 8.8 8.5 3.7 25.9 25.9 0.3 34.4
-------------------------------------------------------------------------------
Total 22.4 22.4 -0.1 70.1 65.1 7.6 97.7
-------------------------------------------------------------------------------
Project and license net sales declined by 2.4 per cent in the third quarter
compared to the previous year. This was due to delays with customers on
existing projects and new project decisions. Support and maintenance net sales
grew by 3.7 per cent compared to the previous year.
In January-September, project and licence business grew by 12.4 per cent.
Support and maintenance business grew by 0.3 per cent year-to-date compared to
the previous year.
Net sales Regional 7-9 7-9 Change, % 1-9 1-9 Change, % 1-12
breakdown, 2016 2015 2016 2015 2015
EUR million
--------------------------------------------------------------------------------
APAC 7.3 7.3 -0.3 23.5 20.7 13.5 29.6
--------------------------------------------------------------------------------
EMEA 13.3 12.7 4.7 40.0 36.4 10.0 56.9
--------------------------------------------------------------------------------
AMERICAS 1.9 2.5 -24.2 6.5 8.0 -18.6 11.2
--------------------------------------------------------------------------------
Total 22.4 22.4 -0.1 70.1 65.1 7.6 97.7
--------------------------------------------------------------------------------
In the third quarter, EMEA region continued to grow by 4.7 per cent while APAC
declined slightly by 0.3 per cent compared to the previous year. The Americas
region declined by 24.2 per cent compared to the previous year due to decline
in South America.
In January-September, both APAC and EMEA grew compared to the previous year.
The Americas region declined by 18.6 per cent due to decline in South America
region net sales.
Financial Position
EUR million 30 Sep 30 Sep Change 31 Dec Change
2016 2015 , 2015 ,
% %
--------------------------------------------------------------------------------
Statement of financial position 80.0 65.3 22.6 86.4 -7.3
total
--------------------------------------------------------------------------------
Liquid assets 3.5 2.7 30.1 3.0 15.2
--------------------------------------------------------------------------------
Trade receivables, gross 32.6 25.1 29.8 42.1 -22.5
--------------------------------------------------------------------------------
Bad debt provision -1.8 -1.5 13.3 -1.6 6.7
--------------------------------------------------------------------------------
Trade receivables, net 30.9 23.6 30.9 40.5 -23.7
--------------------------------------------------------------------------------
Accrued income 15.0 12.5 20.1 10.0 50.9
--------------------------------------------------------------------------------
Deferred income related to partial 4.5 3.0 51.3 3.3 37.1
debiting
--------------------------------------------------------------------------------
Interest-bearing debt 10.7 5.4 97.6 7.2 49.4
--------------------------------------------------------------------------------
Equity ratio, per cent 61.4 64.9 -5.4 52.4 17.1
--------------------------------------------------------------------------------
The statement of the financial position on 30 Sep 2016 was EUR 80.0 million
(65.3), of which liquid assets amounted to EUR 3.5 million (2.7). The operating
cash flow was EUR -4.7 million (-1.1) in the third quarter and EUR 7.1 million
(0.8) in January-September.
Trade receivables were EUR 30.9 million (23.6) at the end of the period. The
accrued income was EUR 15.0 million (12.5). The deferred income related to
partial debiting was EUR 4.5 million (3.0).
Comptel has a EUR 25 million credit facility arrangement consisting of a EUR 20
million revolving credit facility and a EUR 5 million overdraft capacity on
current bank account. Out of this arrangement, Comptel had EUR 9 million of the
revolving credit facility outstanding at the end of the period. The credit
facility is valid until July 2018.
The equity ratio was 57.8 per cent (64.1) and the gearing 38.1 per cent (8.2).
Research and Development (R&D)
EUR million 7-9 7-9 Change 1-9 1-9 Change 1-12
2016 2015 % 2016 2015 % 2015
--------------------------------------------------------------------------------
Direct R&D expenditure 5.7 4.2 37.4 16.0 12.8 24.6 20.3
--------------------------------------------------------------------------------
Capitalisation of R&D -1.5 -1.3 9.1 -4.5 -3.7 20.5 -5.2
expenditure according to IAS 38
--------------------------------------------------------------------------------
R&D depreciation and 1.1 1.5 -29.1 3.7 4.1 -10.2 5.5
impairment charges
--------------------------------------------------------------------------------
R&D expenditure, net 5.3 4.3 22.9 15.2 13.2 15.0 20.6
--------------------------------------------------------------------------------
Direct R&D expenditure, % of 25.5 18.6 - 22.8 19.7 20.8
net sales
--------------------------------------------------------------------------------
Direct R&D expenditure represented 22.8 per cent (19.7) of net sales.
The key focus of Comptel’s R&D expenditure was in the further development of
our existing solutions (Service Orchestration and Intelligent Data) and release
of the new FWD time-based mobile data marketing solution.
Development work was focused on securing recurring revenue with competitive
products, winning new markets by giving customers unique value, and by
improving margins with better deployment and scalability of our products.
The FlowOne Fulfillment solution has been developed as a suite of orchestration
elements that manage the life-cycle of digital services and business flows from
ground to cloud. Data Refinery captures data-in-motion and uses Softblade(TM)
technology with embedded intelligence to refine it for automated real-time
decision making. Monetizer is the business policy and charging solution that
sets the speed to money and allows the innovation and designing of rich
communication and data. Data Fastermind embeds artificial intelligence,
predictive analytics and machine learning capabilities into all solutions. In
all of these areas, Comptel seeks global thought leadership in solving the
business challenges of operators and digital communications service providers.
During 2016, the company will further continue to develop its current offering.
In January-September eight major software releases were launched in the
above-mentioned product areas.
Investments
EUR million 7-9 7-9 Change 1-9 1-9 Change 1-12
2016 2015 % 2016 2015 % 2015
--------------------------------------------------------------------------------
Gross investments in property, 0.9 0.1 671.8 1.3 0.4 231.6 0.6
plant and equipment and
intangible assets
--------------------------------------------------------------------------------
The investments comprised of devices, software and furnishings. The investments
were funded through cash flow from operations.
Personnel
30 Sep 30 Sep Change, 31 Dec Change,
2016 2015 % 2015 %
--------------------------------------------------------------------------------
Number of employees at the end 824 748 10.2 742 11.1
of period
--------------------------------------------------------------------------------
7-9 7-9 Change, % 1-12 Change, %
2016 2015 2015
--------------------------------------------------------------------------------
Average number of personnel during the 766 716 7.0 723 5.9
period
--------------------------------------------------------------------------------
The number of employees increased compared to the previous year due to the
increase in investments during 2016. In the third quarter, the personnel
expenses were 50.8 per cent of net sales (49.7).
At the end of the period, 27.9 per cent (29.2) of the personnel were located in
Finland, 23.1 per cent (26.6) in Malaysia, 15.2 per cent (11.8) in India, 12.0
per cent (9.9) in Bulgaria, and 21.8 per cent (22.5) in other countries where
Comptel operates.
Comptel share
The closing share price of the period was EUR 2.45 (1.19). Comptel’s market
value at the end of the period was EUR 266.9 million (127.9).
Comptel share 7-9 7-9 Change % 1-9 1-9 Change % 1-12
2016 2015 2016 2015 2015
----------------------------------------------------------------------------
Shares traded, million 14.7 6.9 113.0 37.9 24.6 54.1 41.2
----------------------------------------------------------------------------
Shares traded, EUR million 33.5 8.5 294.1 68.8 28.2 144.0 52.9
----------------------------------------------------------------------------
Highest price, EUR 2.65 1.41 87.9 2.65 1.49 77.9 1.93
----------------------------------------------------------------------------
Lowest price, EUR 1.79 1.06 68.9 1.19 0.84 41.7 0.84
----------------------------------------------------------------------------
Of Comptel’s outstanding shares, 5.7 per cent (6.0) were nominee registered or
held by foreign shareholders at the end of the period.
At the end of the period, the company held 117,129 of its own shares, which
represents 0.11 per cent of the total number of shares. The total counter-book
value of the shares held by the company was EUR 2,299.
Corporate Governance
Comptel Corporation’s Annual General Meeting (AGM) was held on 6 April 2016.
The AGM resolved the number of Board members to be five. Mr Pertti Ervi, Mr
Hannu Vaajoensuu, Ms Eriikka Söderström, and Mr Antti Vasara were re-elected as
members of the Board of Directors. Thomas Berlemann was elected as a new member
of the Board of Directors.
The AGM appointed Ernst & Young Oy as the company’s auditor. Mr. Mikko
Järventausta is acting as the principal auditor.
The AGM resolved that a dividend of EUR 0.03 per share was paid for the year
2015.
In its meeting held after the Annual General Meeting, the Board of Directors
elected Mr Pertti Ervi as chairman and Mr Hannu Vaajoensuu as vice chairman.
The Board of Directors decided to establish an audit committee to deal with the
preparation of matters relating to the company’s financial reporting and
control. The Board of Directors elected Ms Eriikka Söderström as the chairman
of the audit committee, and Mr Pertti Ervi and Mr Antti Vasara as the members
of the audit committee. All the members of the audit committee are independent
from the company and its significant shareholders.
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 or conveying of the
company’s own shares up to a maximum number of 10,700,000 shares. The
authorisations are valid until 30 June 2017. However, the authorisation to
implement the company’s share-based incentive programs is valid 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 6 April 2016.
Events after the Reporting Period
Comptel has won a new customer in North America and a separate stock exchange
release has been published on 13.10.2016.
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 of 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’s business consists of deliveries of large productised IT systems, and
the value of a single project may be several million euros. Therefore, the
credit risk associated with a single project or an individual customer may be
significant. Furthermore, some of Comptel’s customers operate in countries
where the political or financial climate can be unstable which in part may
increase credit risk.
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 and
Malaysian Ringgit 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. However, the process between the
states is very slow and the timing of a change is hard to forecast. The
interpretation of tax treaties may result in different views between the
countries in question. This could mean that the double taxation will prevail.
Comptel has also applications for return of withholding taxes in other
countries but they are subject to local legal processes, which take time to get
completed.
The risks and uncertainties of Comptel are described in more detail in the
company’s financial statements and the Board of Directors’ report for 2015.
Outlook (changed):
Specified guidance is:
“Comptel expects the 2016 net sales to continue to grow and operating profit to
be in the range of 9–13% of revenue.”
Previous guidance was:
“Comptel expects the 2016 net sales to continue to grow and operating profit to
be in the range of 9–14% of revenue.”
Characteristically a significant part of Comptel’s operating profit and net
sales is generated in the second half of the year.
COMPTEL CORPORATION
Board of Directors
Additional information:
Mr Juhani Hintikka, President and CEO, tel. +358 9 700 1131
Mr Tom Jansson, CFO, tel. +358 40 700 1849
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 2015.
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 1 Jan – 1 Jan – 1 Jul – 1 Jul –
Income (EUR 1,000) 30 Sep 30 Sep 30 Sep 30 Sep
2016 2015 2016 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net sales 70,080 65,117 22,393 22,422
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other operating income 21 23 8 7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Materials and services -3,244 -3,990 -1,032 -1,664
--------------------------------------------------------------------------------
Employee benefits -33,800 -31,381 -11,366 -11,040
--------------------------------------------------------------------------------
Depreciation, amortisation and impairment -4,366 -5,084 -1,304 -1,843
charges
--------------------------------------------------------------------------------
Other operating expenses -22,726 -21,820 -7,461 -7,071
--------------------------------------------------------------------------------
-64,136 -62,274 -21,164 -21,618
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating profit/loss 5,965 2,866 1,238 811
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 1,766 1,302 268 295
--------------------------------------------------------------------------------
Financial expenses -2,101 -2,476 -595 -572
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit/loss before income taxes 5,629 1,691 912 534
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income taxes -1,934 -1,127 -352 -600
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit/loss for the period 3,696 564 559 -67
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive income:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Translation differences -979 114 -167 -555
--------------------------------------------------------------------------------
Cash flow hedges 183 519 81 75
--------------------------------------------------------------------------------
Income tax relating to components of other -37 -104 -16 -14
comprehensive income
--------------------------------------------------------------------------------
Total other comprehensive income -832 529 -102 -495
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total comprehensive income for the period 2,863 1,093 458 -562
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit/loss attributable to:
--------------------------------------------------------------------------------
Equity holders of the parent company 3,696 564 559 -67
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total comprehensive income attributable to:
--------------------------------------------------------------------------------
Equity holders of the parent company 2,863 1,093 458 -562
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders of the parent company:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share, EUR 0,03 0,00 0,01 0,0
--------------------------------------------------------------------------------
Earnings per share, diluted, EUR 0,03 0,00 0,00 0,0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consolidated Statement of Financial Position 30 Sep 30 Sep 31 Dec
(EUR 1,000) 2016 2015 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Assets
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-current assets
--------------------------------------------------------------------------------
Goodwill 2,646 2,646 2,646
--------------------------------------------------------------------------------
Other intangible assets 13,520 12,727 12,837
--------------------------------------------------------------------------------
Tangible assets 1,884 1,254 1,152
--------------------------------------------------------------------------------
Investments in associates 960 673 960
--------------------------------------------------------------------------------
Available-for-sale financial assets 87 87 87
--------------------------------------------------------------------------------
Deferred tax assets 8,356 6,859 7,685
--------------------------------------------------------------------------------
Other non-current receivables 717 634 646
--------------------------------------------------------------------------------
28,170 24,880 26,013
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Current assets
--------------------------------------------------------------------------------
Trade and other current receivables 47,925 36,328 56,930
--------------------------------------------------------------------------------
Current tax asset 442 1,388 403
--------------------------------------------------------------------------------
Cash and cash equivalents 3,492 2,683 3,030
--------------------------------------------------------------------------------
51,859 40,398 60,363
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total assets 80,029 65,279 86,376
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity and liabilities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity attributable to equity holders of the
parent company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Share capital 2,141 2,141 2,141
--------------------------------------------------------------------------------
Fund of invested non-restricted equity 1,877 1,294 1,698
--------------------------------------------------------------------------------
Fair value reserve -24 234 -170
--------------------------------------------------------------------------------
Translation differences -1,489 -585 -510
--------------------------------------------------------------------------------
Retained earnings 34,710 30,431 34,165
--------------------------------------------------------------------------------
Total equity 37,215 33,515 37,324
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-current liabilities
--------------------------------------------------------------------------------
Deferred tax liabilities 2,728 2,630 2,572
--------------------------------------------------------------------------------
Non-current financial liabilities 557 124 92
--------------------------------------------------------------------------------
3,286 2,754 2,664
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Current liabilities
--------------------------------------------------------------------------------
Provisions 159 1,065 1,090
--------------------------------------------------------------------------------
Current financial liabilities 10,148 5,294 7,075
--------------------------------------------------------------------------------
Trade and other current liabilities 29,221 22,650 38,223
--------------------------------------------------------------------------------
39,529 29,009 46,388
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total liabilities 42,814 31,764 49,052
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total equity and liabilities 80,029 65,279 86,376
--------------------------------------------------------------------------------
Consolidated Statement of Cash Flows 1 Jan – 30 1 Jan – 30
(EUR 1,000) Sep Sep
2016 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from operating activities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit/loss for the period 3,696 564
--------------------------------------------------------------------------------
Adjustments:
--------------------------------------------------------------------------------
Non-cash transactions or items that are not part of cash 5,108 6,425
flows from operating activities
--------------------------------------------------------------------------------
Interest and other financial expenses 192 206
--------------------------------------------------------------------------------
Interest income -39 -55
--------------------------------------------------------------------------------
Income taxes 1,920 1,168
--------------------------------------------------------------------------------
Change in working capital:
--------------------------------------------------------------------------------
Change in trade and other current receivables 8,892 5,688
--------------------------------------------------------------------------------
Change in trade and other current liabilities -9,337 -10,604
--------------------------------------------------------------------------------
Change in provisions -603 -141
--------------------------------------------------------------------------------
Interest and other financial expenses paid -192 -219
--------------------------------------------------------------------------------
Interest received 3 63
--------------------------------------------------------------------------------
Income taxes paid and tax returns received -2,493 -2,292
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash from operating activities 7,146 803
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from investing activities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Investments in tangible assets -1,311 -395
--------------------------------------------------------------------------------
Investments in development projects -4,479 -3,716
--------------------------------------------------------------------------------
Proceeds from the sale of tangible assets 3 5
--------------------------------------------------------------------------------
Change in other non-current receivables -124 6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash used in investing activities -5,911 -4,100
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from financing activities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dividends paid -3,248 -2,139
--------------------------------------------------------------------------------
Shares issued - 93
--------------------------------------------------------------------------------
Proceeds from share options - 800
--------------------------------------------------------------------------------
Proceeds from borrowings 25,510 20,102
--------------------------------------------------------------------------------
Repayment of borrowings -21,979 -22,031
--------------------------------------------------------------------------------
Lease payments 7 -179
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash used in financing activities 289 -3,355
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net change in cash and cash equivalents 1,524 -6,652
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the period 3,030 9,352
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 3,492 2,683
--------------------------------------------------------------------------------
Change 461 -6,669
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Effects of changes in foreign exchange rates -1,062 -17
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
-------------------------------------------------------------------------
Equity attributable to equity holders of the parent company
--------------------------------------------------------------------------------
EUR 1,000 Share Other Translation Fair Retained Total
capital reserve differences value earnings
s reserve
--------------------------------------------------------------------------------
Equity at 2,141 401 -698 -182 31,684 33,346
31 Dec 2014
--------------------------------------------------------------------------------
Dividends -2,139 -2,139
--------------------------------------------------------------------------------
Shares issued 93 93
--------------------------------------------------------------------------------
Share-based 800 322 1,122
compensation
--------------------------------------------------------------------------------
Other changes 23 23
--------------------------------------------------------------------------------
Total comprehensive 113 415 564 1,092
income for the
period
--------------------------------------------------------------------------------
Equity at 2,141 1,295 -585 233 30,431 33,515
30 Sep 2015
--------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
-------------------------------------------------------------------------
Equity attributable to equity holders of the parent company
-------------------------------------------------------------------------
EUR 1,000 Share Other Translation Fair value Retain Total
capital reserves differences reserve ed
earnin
gs
--------------------------------------------------------------------------------
Equity at 2,141 1,698 -510 -170 34,165 37,324
31 Dec 2015
--------------------------------------------------------------------------------
Dividends -3,248 -3,248
--------------------------------------------------------------------------------
Shares issued 178 178
--------------------------------------------------------------------------------
Share-based 380 380
compensation
--------------------------------------------------------------------------------
Prior year -283 -283
correction *
--------------------------------------------------------------------------------
Total comprehensive -979 147 3,696 2,864
income for the
period
--------------------------------------------------------------------------------
Equity at 2,141 1,876 -1,489 -24 34,710 37,215
30 Sep 2016
--------------------------------------------------------------------------------
*Prior year expenses were corrected directly to Retained Earnings during the
quarter.
Notes
1. Application of new or amended standards and interpretations
Comptel has adopted the new or amended standards and interpretations, effective
for the financial years beginning on or after 1 January 2016. However, those
have not had an impact on the consolidated financial statements.
2. Segment information
Net sales by segment
EUR 1,000 1 Jan – 1 Jan – 1 Jul – 1 Jul –
30 Sep 2016 30 Sep 2015 30 Sep 2016 30 Sep 2015
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Intelligent Data 30,665 27,916 9,747 9,181
-------------------------------------------------------------------------
Service Orchestration 39,288 37,201 12,531 13,241
-------------------------------------------------------------------------
Other 128 - 115 -
-------------------------------------------------------------------------
Group total 70,080 65,117 22,393 22,422
-------------------------------------------------------------------------
Operating profit/loss by segment
EUR 1,000 1 Jan – 1 Jan – 1 Jul – 1 Jul –
30 Sep 2016 30 Sep 2015 30 Sep 30 Sep 2015
2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Intelligent Data 4,215 2,339 1,144 854
--------------------------------------------------------------------------------
Service Orchestration 3,996 2,244 802 641
--------------------------------------------------------------------------------
Other -2,246 -1,718 -708 -684
--------------------------------------------------------------------------------
Group operating profit/loss 5,965 2,866 1,238 811
total
--------------------------------------------------------------------------------
3. Income tax
Income tax expense according to the statement of comprehensive income for the
period was EUR 1,934 thousand (EUR 1,231 thousand).
In 2006, the Board of Adjustment of the Tax Office for Major Corporations
refused to accept the crediting of taxes withheld at source in taxation of 2004
and 2005.
The application process to prevent Comptel’s double taxation is still pending
with the Ministry of Finance in Finland. However, the process between the
states is very slow and the timing of a change is hard to forecast. The
interpretation of tax treaties may result in different views between the
countries in question. This could mean that the double taxation will prevail.
According to the Board of Adjustment’s decision currently in force, Comptel
Corporation has expensed taxes withheld at source amounting to EUR 798 thousand
in January - September (EUR 926 thousand).
4. Tangible assets
EUR 1,000 1 Jan – 1 Jan –
30 Sep 2016 30 Sep 2015
-----------------------------------
-----------------------------------
Additions 1,311 395
-----------------------------------
5. Related party transactions
The Comptel Group have 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 – 1 Jan –
30 Sep 2016 30 Sep 2015
-----------------------------------------
-----------------------------------------
Associate
-----------------------------------------
Interest income 6 6
-----------------------------------------
EUR 1,000 30 Sep 2016 31 Dec 2015
-------------------------------------------------
-------------------------------------------------
Associate
-------------------------------------------------
Non-current receivables 126 119
-------------------------------------------------
Remuneration to key management
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 – 30 Sep 1 Jan - 30 Sep
2016 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Salaries and other short-term employee 1,223 1,301
benefits
--------------------------------------------------------------------------------
Share-based payments 286 456
--------------------------------------------------------------------------------
Other compensation 35 -
--------------------------------------------------------------------------------
Total 1,545 1,757
--------------------------------------------------------------------------------
Guarantees and other commitments
EUR 1,000 30 Sep 2016 31 Dec 2015
------------------------------------
------------------------------------
Guarantees - 29
------------------------------------
6. Commitments
Minimum lease payments on non-cancellable office facilities and other operating
leases are payable as follows:
EUR 1,000 30 Sep 2016 31 Dec 2015
----------------------------------------------------
----------------------------------------------------
Less than one year 2,045 2,161
----------------------------------------------------
Between one and five years 5,077 1,218
----------------------------------------------------
More than five years 818 -
----------------------------------------------------
Total 7,941 3,379
----------------------------------------------------
The group had no material capital commitments for the purchase of tangible
assets at 30 September 2016 and 30 September 2015.
7. Contingent liabilities
EUR 1,000 30 Sep 2016 31 Dec 2015
---------------------------------------------
---------------------------------------------
Bank guarantees 2,323 2,727
---------------------------------------------
Corporate mortgages 200 200
---------------------------------------------
EUR 1,000 30 Sep 2016 31 Dec 2015
--------------------------------------------------------------------
--------------------------------------------------------------------
Contingent liabilities on behalf of others
--------------------------------------------------------------------
Guarantees - 29
--------------------------------------------------------------------
8. Fair values of financial assets and liabilities
EUR 1,000 Book Fair Book Fair Book Fair
value value value value value value
30.9.2 30.9.2 30.9.2 30.9.2 31.12. 31.12.
016 016 015 015 2015 2015
--------------------------------------------------------------------------------
Financial assets
--------------------------------------------------------------------------------
Financial assets at fair value
through profit or loss
--------------------------------------------------------------------------------
Forward contracts (level 2) 215 215 137 137 - -
--------------------------------------------------------------------------------
Available-for-sale financial 87 87 87 87 87 87
assets (level 3))
--------------------------------------------------------------------------------
Non-current trade receivables 2,866 2,866 1,722 1,722 1,872 1,872
--------------------------------------------------------------------------------
Current trade receivables 29,746 29,746 23,394 23,394 40,232 40,232
--------------------------------------------------------------------------------
Other current receivables 2,521 2,521 1,560 1,560 7,133 7,133
--------------------------------------------------------------------------------
Cash and cash equivalents 3,492 3,492 2,683 2,683 3,030 3,030
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial liabilities
--------------------------------------------------------------------------------
Financial liabilities at fair
value through profit or loss
--------------------------------------------------------------------------------
Forward contracts (level 2) 244 244 - - 138 138
--------------------------------------------------------------------------------
Trade payables and other 28,977 28,977 22,165 22,165 38,020 38,020
liabilities
--------------------------------------------------------------------------------
Non-current loans from financial - - 44 44 33 33
institutions
--------------------------------------------------------------------------------
Non-current finance lease 557 557 - - 58 58
liabilities
--------------------------------------------------------------------------------
Other non-current liabilities - - 110 110 - -
--------------------------------------------------------------------------------
Current loans from financial 8,985 8,994 5,044 5,048 5,044 5,056
institutions
--------------------------------------------------------------------------------
Current bank overdraft facility 900 900 135 135 1,918 1,918
--------------------------------------------------------------------------------
Current finance lease 95 95 77 77 112 112
liabilities
--------------------------------------------------------------------------------
Other current liabilities - - 31 31 - -
--------------------------------------------------------------------------------
9. Key figures
Financial summary 1 Jan – 1 Jan – 1 Jan-
30 Sep 30 Sep 31 Dec
2016 2015 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net sales, EUR 1,000 70,080 65,117 97,728
--------------------------------------------------------------------------------
Net sales, change % 7.6 10.5 14.0
--------------------------------------------------------------------------------
Operating profit/loss, EUR 1,000 5,965 2,866 8,474
--------------------------------------------------------------------------------
Operating profit/loss, change % 108.1 -34.4 2.0
--------------------------------------------------------------------------------
Operating profit/loss, as % of net sales 8.5 4.4 8.7
--------------------------------------------------------------------------------
Profit/loss before taxes, EUR 1,000 5,629 1,691 7,612
--------------------------------------------------------------------------------
Profit/loss before taxes, as % of net sales 8.0 2.6 7.8
--------------------------------------------------------------------------------
Return on equity, % - - 12.8
--------------------------------------------------------------------------------
Return on investment, % - - 18.3
--------------------------------------------------------------------------------
Equity ratio, % 57.8 64.1 52.4
--------------------------------------------------------------------------------
Gross investments in tangible and intangible 1,311 395 558
assets, EUR 1,0001)
--------------------------------------------------------------------------------
Gross investments in tangible and intangible 1.9 0.6 0.6
assets, as % of net sales
--------------------------------------------------------------------------------
Capitalizations according to IAS 38 to intangible 4,479 3,716 5,176
assets, EUR 1,000
--------------------------------------------------------------------------------
Research and development expenditure, EUR 1,000 15,969 12,815 20,299
--------------------------------------------------------------------------------
Research and development expenditure, 22.8 19.7 20.8
as % of net sales
--------------------------------------------------------------------------------
Order backlog, EUR 1,000 57,175 53,526 66,344
--------------------------------------------------------------------------------
Average number of employees during the period 776 716 723
--------------------------------------------------------------------------------
Interest-bearing net liabilities, EUR 1,000 14,198 2,735 4,137
--------------------------------------------------------------------------------
Gearing ratio, % 38.2 8.2 11.1
--------------------------------------------------------------------------------
1) The figure does not include investments in development projects.
Per share data 1 Jan – 1 Jan – 1 Jan-
30 Sep 2016 30 Sep 2015 31 Dec
2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share (EPS), EUR 0.03 0.01 0.04
--------------------------------------------------------------------------------
EPS diluted, EUR 0.03 0.00 0.04
--------------------------------------------------------------------------------
Equity per share, EUR 0.34 0.31 0.34
--------------------------------------------------------------------------------
Dividend per share, EUR - - 0.03
--------------------------------------------------------------------------------
Dividend per earnings, % - - 72.7
--------------------------------------------------------------------------------
Effective dividend yield, % - - 1.6
--------------------------------------------------------------------------------
P/E ratio - - 43.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Adjusted number of shares at the end of 109,067,440 107,603,775 108,395,409
the period
--------------------------------------------------------------------------------
of which the number of treasury shares 117,129 118,507 118,507
--------------------------------------------------------------------------------
Outstanding shares 108,950,311 107,485,268 108,276,902
--------------------------------------------------------------------------------
Adjusted average number of shares during 108,542,749 107,202,754 107,370,551
the period
--------------------------------------------------------------------------------
Average number of shares, dilution 116,452,742 108,769,930 109,640,245
included
--------------------------------------------------------------------------------
10. 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)
--------------------------------------------------------------------------------
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