2015-01-30 07:30:00 CET
2015-01-30 07:30:03 CET
REGULATED INFORMATION
Tecnotree Oyj - Financial Statement Release
Tecnotree Corporation Financial Report 1 January – 31 December 2014 (unaudited)
Tecnotree Corporation
Financial Report
30th January, 2015 at 08.30 am EET
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.
Fourth quarter in line with expectations
Fourth quarter
-- Fourth quarter net sales were EUR 24.2 (20.0) million.
-- The adjusted operating result for the quarter was EUR 5.1 (3.6) million and
the operating result EUR 4.7 (3.6) million.
-- The adjusted result for the quarter was EUR 0.5 (-0.2) million and result
EUR 0.5 (0.5) million.
-- The order book at the end of the period stood at EUR 38.9 (31 December
2013: 45.0) million.
-- Fourth quarter cash flow after investments was EUR 2.7 (0.1) million.
-- Earnings per share were EUR 0.00 (0.00).
Full year 2014
-- Net sales for the review period were EUR 74.0 (73.9) million.
-- The adjusted operating result was EUR 3.7 (3.3) million and the operating
result was EUR 3.3 (1.6) million.
-- The adjusted result for the period was EUR -6.4 (-7.0) million and the result EUR -9.3 (-2.5) million.
-- Cash flow after investments for the review period was EUR -1.8 (-4.6)
million and the company's cash and cash equivalents were EUR 2.5 (31
December 2013: 6.6) million. The company's cash situations continued to be
tight.
-- Earnings per share were EUR -0.08 (-0.02).
KEY FIGURES 10-12/ 10-12/ 1-12/ 1-12/
2014 2013 2014 2013
Net sales, MEUR 24.2 20.0 74.0 73.9
Adjusted operating result, MEUR 1 5.1 3.6 3.7 3.3
Operating result, MEUR 4.7 3.6 3.3 1.6
Result before taxes, MEUR 4.0 3.7 -2.4 4.1
Adjusted result for the period, MEUR 2 0.5 -0.2 -6.4 -7.0
Result for the period 0.5 0.5 -9.3 -2.5
Earnings per share, basic, EUR 0.00 0.00 -0.08 -0.02
Order book, MEUR 38.9 45.0
Cash flow after investments, MEUR 2.7 0.1 -1.8 -4.6
Change in cash and cash equivalents, MEUR 0.5 -0.3 -4.2 -3.8
Cash and cash equivalents, MEUR 2.5 6.6
Equity ratio % 22.5 30.3
Net gearing % 172.7 113.4
Personnel at end of period 993 1,059
1 Adjusted operating result = operating result before R & D capitalisation,
amortisation of this and 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, included in financial items, on intra-group balances being
typically receivables due to subsidiaries from the parent company.
Unless otherwise stated, all figures presented below are for the review period
1-12/2014 and the figures for comparison are for the corresponding period
1-12/2013.
CEO Ilkka Raiskinen:
“The company's fourth quarter net sales and adjusted operating result set new
records. The cash flow from operations was also positive, so 2014 ended well.
The order book for Africa and the Middle East increased considerably during
2014 and the business outlook in the region is encouraging. Progress has been
made in the large projects in Latin America; it has been agreed to carry out
one of the projects in several projects in separate phases, which in future
will reduce the amount of working capital tied up and improve cash flow.
Despite the encouraging final part of the year, the result for the whole year
remained a loss, so the company's situation is still challenging. In 2015
efforts to raise efficiency will focus particularly on raising the degree of
productisation, which will reduce the company's costs and speed up project
deliveries.
Tecnotree operates in markets that are growing strongly. Teleoperators in these
markets provide consumers not only with conventional telecoms services but also
with Internet and content services, and the billing and charging services for
these require new solutions. Tecnotree has a strong position in its key
markets, and for this reason the company believes that the growth in the market
will also be reflected in Tecnotree's business. Tecnotree's operating result is
expected to continue to increase during 2015.”
Result analysis
The income and costs recorded for Tecnotree's business operations vary
considerably from one quarter to another. For this reason it is important to
base an examination of the profitability of the company on the result for more
than one quarter.
Tecnotree reports its operating result as follows:
INCOME STATEMENT, KEY FIGURES, MEUR 10-12/ 10-12/ 1-12/ 1-12/
2014 2013 2014 2013
Net sales 24.2 20.0 74.0 73.9
Other operating income 0.0 0.0 0.1 0.1
Operating costs excluding product development -19.1 -16.5 -70.4 -70.6
capitalisation and one-time costs
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Adjusted operating result 5.1 3.6 3.7 3.3
Product development capitalisation 0.0 0.0 0.0 0.0
Product development amortisation -0.0 -1.7
One-time costs -0.4 -0.4
--------------------------------------------------------------------------------
OPERATING RESULT 4.7 3.6 3.3 1.6
Financial items without foreign currency -0.7 -0.5 -2.8 -2.0
differences
Income taxes -3.5 -3.2 -6.9 -6.6
--------------------------------------------------------------------------------
Adjusted result for the period 0.5 -0.2 -6.4 -7.0
Foreign currency differences included in financial 0.0 0.6 -2.9 4.5
items
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD 0.5 0.5 -9.3 -2.5
The foreign currency differences included in financial items are mainly due to
the impact of intra-group balance sheet items, when for example a subsidiary
records an exchange rate gain or loss on a euro denominated receivable from the
parent company. These intra-group items are large, so the exchange rates have a
significant impact. It is important to examine Tecnotree's operative result
without the impact of exchange rates, which is why they are shown separately.
The 2014 costs include one-time costs of EUR 0.4 million arising from
redundancies.
Net sales in 2014 were EUR 0.1 million more than in the previous year.
Quarterly net sales varied considerably and were as follows (million euros):
14.4 (Q1), 11.7 (Q2), 23.7 (Q3) and 24.2 (Q4). Second quarter net sales were
significantly lower than normal as most of the customer orders and net sales
accrued in the second half of the year. The strengthening of the US dollar had
a positive impact on net sales in the second half of the year.
The operating result for the year improved by EUR 1.3 million on the previous
year. Amortisation was EUR 2.4 million less. Of this, EUR 1.7 million was
because Tecnotree no longer had any amortisation of R&D capitalisation.
Amortisation declined by a further EUR 0.5 million from the previous year with
the ending of the amortisation of assets recognized at the purchase of the
company in India, since five years had passed since the acquisition. The costs
for materials and services increased EUR 1.3 million in particular because of
larger equipment deliveries included in projects.
Financial income and expenses (net) during the review period totalled a net
loss of EUR 5.7 million (net gain of EUR 2.5 million). As stated above, the
exchange rate gains and losses included in financial items mainly comprise
exchange rate differences on intra-group balance sheet items. These balance
sheet items are typically receivables due to subsidiaries from the parent
company. Exchange rate differences have no direct impact on the Group's cash
flow.
Parent company's equity less than half of share capital
The shareholders' equity of the parent company on 31 December 2014 was EUR
2,193,142.25, or 46.5 % of the share capital. So the parent company
shareholders' equity has fallen below half of the share capital. According to
section 23 of chapter 20 of the Limited Liability Companies Act, if a public
company's shareholders' equity according to the balance sheet is less than half
of its share capital, the Board of Directors shall without delay call a general
meeting of shareholders to decide on any measures to restore the company to a
sounder financial position. The general meeting of shareholders shall be held
no later than three months after the financial statements have been completed.
The Annual General Meeting of Tecnotree Corporation will be held at 5.00 pm on
25 March 2015 at the Marina Congress Center in Helsinki, where measures to put
the company back on a healthy financial standing will also be discussed. The
Board will publish a separate invitation to the AGM at a later date, but no
later than 4 March 2015.
Events after the end of period
Tecnotree reached agreement with an operator group in Latin America to split
delivery of the USD 30.5 million contract announced on 20 December 2011 into
two delivery projects. The first phase is valued at USD 13.2 million and this
includes delivery of a charging system for prepaid customers and a subscription
management system. This first phase is being completed and will come to an end
during the first half of 2015.
Phasing the project as agreed has reduced Tecnotree's order book at the end of
year 2014 by USD 17.3 million, since the USD 30.5 million contract signed on 20
December 2011 has been split into two projects and commercial negotiations on
the second part are still in progress. Phasing the project clarifies the
overall project and releases USD 5.6 million in working capital, since under
the terms of the original agreement Tecnotree's right to invoice depended on
progress in delivery of the entire system. Under the phasing agreed now,
Tecnotree has the right to invoice after completion of partial deliveries.
As part of the phasing, the parties have agreed on the delivery of the
Tecnotree Agility TM Converging Charging Solution as the mobile data charging
platform in three countries. Tecnotree will also provide expert services to
ensure the smooth integration of the solution with existing network operations
and business support systems. The precise commercial value of the second phase
will be determined during negotiations, and deliveries will be spread over 2015
and 2016.
Prospects in 2015
Tecnotree estimates that its operating result will improve from 2014.
Variations in the quarterly figures will be considerable.
Proposal concerning the result
The Board of Directors proposes to the Annual General Meeting, that no dividend
be paid for the financial year ended 31 December 2014, and that the parent
company's loss for the financial year, EUR 5,519,009.82, be covered by
non-restricted equity reserves of EUR 2,131,259.02 and the rest EUR
3,387,750.80 by reducing share capital.
Financial information
Tecnotree is holding a conference for analysts, investors and the media to
present its financial report on Friday, 30 January 2015 at 10.00 am in the
Tapiola conference room at the Scandic Simonkenttä Hotel, Simonkatu 9,
Helsinki. The financial 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 OMX Helsinki Ltd.
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 over 1000 telecom experts, Tecnotree serves more than 100
service providers in over 70 countries. Tecnotree is listed on the main list of
NASDAQ OMX Helsinki with the trading code TEM1V. For more information on
Tecnotree, please visit www.tecnotree.com
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