2016-03-31 07:30:01 CEST
2016-03-31 07:30:01 CEST
REGULATED INFORMATION
Tecnotree Oyj - Financial Statement Release
Tecnotree Corporation Financial Report 1 January – 31 December 2015 (unaudited)
Tecnotree Corporation
Financial Report
31 March, 2016 at 08.30 am EEST
Tecnotree is a global supplier of telecom IT solutions, providing products and
services for charging, billing, customer care, and messaging and content
services. The company’s product portfolio comprises virtually the full range of
business management systems for telecom operators, with standard solutions for
fixed networks, mobile services and broad band and for managing subscriptions,
services and cash flows for prepaid and post-paid customers. Tecnotree has a
strong footing especially in developing markets.
SIGNIFICANT IMPROVEMENT IN RESULT
Fourth quarter
-- Fourth quarter net sales were EUR 24.6 (24.2) million.
-- The operating result for the quarter was EUR 6.4 (4.7) million.
-- The adjusted result for the quarter was EUR 3.9 (0.5) million and result
EUR 3.3 (0.5) million.
-- The order book at the end of the period stood at EUR 26.8 (31 December
2014: 38.9) million.
-- Fourth quarter cash flow after investments was EUR 4.4 (2.7) million.
-- Earnings per share were EUR 0.03 (0.00).
Jan-Dec 2015
-- Net sales for the review period were EUR 76.5 (74.0) million.
-- The operating result was EUR 11.7 (3.3) million.
-- The adjusted result for the period was EUR 0.6 (-6.4) million and the
result EUR 0.2 (‑9.3) million.
-- Cash flow after investments for the review period was EUR 6.3 (-1.8)
million and the company’s cash and cash equivalents were EUR 6.4 (31
December 2014: 2.5) million.
-- Earnings per share were EUR 0.00 (-0.08).
KEY FIGURES 10-12/ 10-12/ 1-12/ 1-12/
2015 2014 2015 2014
Net sales, MEUR 24.6 24.2 76.5 74.0
Adjusted operating result, MEUR 1 6.4 5.1 12.0 3.7
Operating result, MEUR 6.4 4.7 11.7 3.3
Result before taxes, MEUR 5.4 4.0 7.8 -2.4
Adjusted result for the period, MEUR 2 3.9 0.5 0.6 -6.4
Result for the period 3.3 0.5 0.2 -9.3
Earnings per share, basic, EUR 0.03 0.00 0.00 -0.08
Order book, MEUR 26.8 38.9
Cash flow after investments, MEUR 4.4 2.7 6.3 -1.8
Change in cash and cash equivalents, MEUR 3.5 0.5 4.2 -4.2
Cash and cash equivalents, MEUR 6.4 2.5
Equity ratio % 23.9 22.5
Net gearing % 145.2 172.7
Personnel at end of period 934 993
1 Adjusted operating result = operating result before one-time costs. Details
of these are given in the section “Result analysis”.
2 Adjusted result for the period = result for the period without exchange rate
gains and losses that are included in financial items and mainly arise on
receivables due to subsidiaries from the parent company.
Unless otherwise stated, all figures presented below are for the review period
1-12/2015 and the figures for comparison are for the corresponding period
1-12/2014.
CEO Ilkka Raiskinen
For Tecnotree, 2015 was a year of major events. In March 2015 the company filed
an application for debt restructuring proceedings. Particular factors leading
to this situation were the capital tied up in two major projects that
originally had a combined value of USD 54.6 million and the large trade
payables incurred at the end of 2014 for hardware for the projects. In
addition, a lack of foreign currency at the central banks in certain countries
in the developing markets where clients are located significantly delayed
customer payments at the start of the year. In January 2015 one of the two
major projects was terminated under an agreement made with the client and
payment was received for the outstanding receivables for the project during the
second quarter. The debt restructuring proceedings stabilized the company’s
situation and the 2015 cash flow after investments was EUR 6.3 million
positive.
Net sales in 2015 were EUR 2.5 million higher than in the previous year, even
though no income was recognized during the year for the two major projects
mentioned above. In the previous year the combined net sales for the projects
had been EUR 6.3 million. Net sales in the MEA and APAC area increased EUR 9.4
million. In this area Tecnotree has expanded sales of its products in several
countries thanks to its well established customer relationships and has
succeeded in selling new products. Average annual growth in net sales in the
MEA area has been more than 20% in the period 2012 – 2015. New products that
deserve a mention are the Unified Product Catalogue and Customer Lifecycle
Management products. Net sales in the Europe & Americas area declined EUR 6.9
million due to the weak state of the markets.
The operating result increased EUR 8.4 million from the previous year. One
factor contributing to this, in addition to the growth in net sales, was that
the volume of hardware purchased for projects declined considerably. The
company spent EUR 4.0 million less on services and materials than in 2014.
Net sales and the operating result in the final quarter of 2015 were at record
levels. Projects were completed on schedule, which also contributed to the
strong cash flow in the quarter.”
RESTRUCTURING PROCEEDINGS
On 5 March 2015 Tecnotree Corporation filed an application with the district
court of Espoo for debt restructuring proceedings. The court decided on 9 March
2015 to commence the corporate restructuring proceedings. The extraordinary
meeting of shareholders of Tecnotree Corporation held on 27 March 2015 decided
to approve the application made by the Board of Directors and to continue with
the restructuring proceedings.
Tecnotree Corporation’s business operations have been loss-making for several
years, the cash situation remained tight during 2014, and on 31 December 2014
the shareholders’ equity of the parent company fell below half of the share
capital. The Company actively searched for a solution to improve its financial
standing and carefully studied different options for solving the situation. As
the result, the Company came to the conclusion that it was in the best interest
of the Company and its shareholders for the Company to apply for restructuring
proceedings in accordance with the Act on Restructuring of Enterprises. The
Company considered that its difficulties were temporary in nature, and that the
restructuring proceedings would in the Company’s assessment make it possible to
remedy the Company’s financing and equity structure and thus secure the
long-term continuation of the Company’s business operations. As it is
implemented, the restructuring eases the debt liability of the Company and
consequently also improves the shareholders’ equity.
On 9 March 2015 the district court appointed Mr. Jari Salminen,
Attorney-at-Law, from Eversheds Attorneys Ltd as the administrator in respect
of the restructuring process. The administrator delivered his proposed
restructuring programme to the district court of Espoo on 30 March 2016.
Tecnotree Corporation has to comply with the restructuring programme to be
confirmed through court proceedings. This requires a sufficient cash inflow, in
other words payments by customers.
Filing the application for restructuring has had no direct impact on
Tecnotree’s business operations, and the Company has continued to carry out
agreed customer projects and to serve its customers as usual.
Content of the draft restructuring programme of Tecnotree Corporation
The Administrator of the corporate restructuring of Tecnotree Corporation filed
the draft restructuring programme to the District Court of Espoo on 30 March
2016. The Administrator considers that the draft restructuring programme will
result in a more favorable outcome for the creditors compared to bankruptcy.
The Administrator's view is that if implemented, the draft restructuring
programme would lead to the Company's operations being rehabilitated.
The essential content of the draft restructuring programme is as follows:
-- At the moment, the total amount of the restructuring debts to be taken into
ac-count in the restructuring proceedings is approximately 73.9 million
euros. The Company has intragroup restructuring debts approximately 36.7
million euros. According to the Administrator’s draft programme the
intragroup restructuring debts will be fully cut. In addition, the Company
has 11.1 million euros unsecured debt. The total amount of the
restructuring debts includes also approximately 26.1 million euros secured
debts out of which approximately 8.9 million euros is secured by business
mortgage. The Administrator is proposing that the unsecured restructuring
debts be cut by 50% which would leave 50% of the amount of such debt to be
repaid.
-- The draft restructuring programme does include a provision on a duty to
make supplementary payments on restructuring debts with no priority if the
Company's actual cash flow exceeds the projected cash flow during the
payment programme.
-- Payments under the restructuring programme will end on 31 December 2020.
-- The draft restructuring programme contains obligations concerning the sale
of the Company’s property. The sales proceeds will be used to fund some of
the payments to secured creditors and to creditors holding a business
mortgage as security for their claims.
If the draft restructuring programme is approved, the group will record a
one-off positive income effect of approximately 5.6 million euros as a result
of debt rearrangement.
The approval and entry into force of the draft programme are conditional upon
Tecnotree Corporation's General Meeting approving the draft programme.
Risks and uncertainties in the near future
Tecnotree’s risks and uncertainties in the near future relate to financing,
projects, to their timing, to trade receivables and receivables from
construction contracts and to changes in foreign exchange rates. Having
sufficient cash funds is the biggest single risk. The financing agreement
contains covenants that create risk.
The company has sales in several countries where the country’s central bank has
a shortage of foreign currency. This causes additional delays in payments,
costs and even the risk of not receiving payment at all.
Tecnotree Corporation’s restructuring proceedings are still in progress. The
administrator delivered his proposed restructuring program to the district
court of Espoo on 30 March 2016. The draft restructuring programme contains
obligations concerning the sale of the Company’s property. The court will take
the decision on this matter later. In case an acceptable restructuring plan
does not come into force, the company will have to pay its creditors in full
for its debts in the restructuring process. The Company is also obliged to
fulfil the terms of the restructuring programme, which includes risk.
At the end of the year the Group’s shareholders’ equity of stood at EUR 17.8
million. However, the shareholders’ equity of the parent company was EUR 3.0
million negative.
EVENTS AFTER THE END OF THE PERIOD
The administrator of Tecnotree’s restructuring proceedings delivered his
proposed restructuring program to the district court of Espoo on 30 March 2016.
The content of this proposal is disclosed above under “Restructuring
proceedings”.
PROSPECTS IN 2015
The operative performance of the company has improved. Tecnotree believes that
the filing of its draft debt restructuring plan in early 2016, along with its
continued focus on cost, product renewal and better serving its customers will
give the company a solid base to continue to improve both its operating
efficiency and addressable revenue opportunities. However, Tecnotree does not
provide an annual outlook for 2016 due to several uncertainty factors having
impact on customer investments. These uncertainty factors relate to a
strengthening dollar as well as the softening macroeconomic environment and
political instability in some of its key markets in Latin America, the Middle
East and Africa.
Variations in the quarterly figures will be considerable.
FINANCIAL INFORMATION
Tecnotree is holding a conference for analysts, investors and the media to
present its financial report on Thursday, 31 March 2016 at 10.00 am in the
Tapiola conference room at the Scandic Simonkenttä Hotel , Simonkatu 9,
Helsinki. The interim report will be presented by CEO Ilkka Raiskinen and the
conference will be held in Finnish. The material to be presented at the press
conference will be available at www.tecnotree.com.
TECNOTREE CORPORATION
Board of Directors
FURTHER INFORMATION
Ilkka Raiskinen, CEO, tel. +358 (0)45 311 3113
Tuomas Wegelius, CFO, tel. +358 400 433 228
DISTRIBUTION
Nasdaq Helsinki
Main media
www.tecnotree.com
About Tecnotree
Tecnotree is a global provider of telecom IT solutions for the management of
products, customers and revenue. Tecnotree helps communications service
providers to transform their business towards a marketplace of digital
services. Tecnotree empowers service providers to monetise on service bundles,
provide personalised user experiences and augment value throughout the customer
lifecycle. With around 1000 telecom experts, Tecnotree serves around 90 service
providers in around 70 countries. Tecnotree is listed on the main list of
NASDAQ Helsinki with the trading code TEM1V. For more information on Tecnotree,
please visit www.tecnotree.com
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