2016-10-28 07:30:02 CEST
2016-10-28 07:30:02 CEST
REGLERAD INFORMATION
Tecnotree Oyj - Interim report (Q1 and Q3)
Tecnotree Corporation Short Report 1 January – 30 September 2016 (unaudited)
Tecnotree Corporation
Short Report
28 October, 2016 at 08.30 a.m. EEST
According to the Finnish Securities Market Act, chapter 7, sections 10 and 11,
listed companies are obliged to publish a half-year report of the first six
months of the fiscal year. However, as from 2016 it is no longer obligatory to
publish interim reports after three months and nine months. Tecnotree announced
on 26 November 2015 that it would publish summary versions of the 1-3/2016 and
1-9/2016 reports, which would contain the figures for the period with a short
commentary on them and a summary of the events in the period. This is therefore
not an interim report as defined in IAS 34.
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.
Challenging quarter and cost savings continue
KEY FIGURES 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2016 2015 2016 2015 2015
Net sales, MEUR 16.2 17.7 45.4 51.9 76.5
Adjusted operating result, MEUR 1 1.8 2.7 0.5 5.6 12.0
Operating result, MEUR 0.8 2.7 -0.5 5.3 11.7
Result before taxes, MEUR -0.3 3.8 -5.4 2.4 7.8
Adjusted result for the period, MEUR 2 -0.8 -0.0 -7.0 -3.4 0.6
Result for the period -1.1 1.9 -8.2 -3.1 0.2
Earnings per share, basic, EUR -0.01 0.02 -0.07 -0.03 0.00
Order book, MEUR 23.9 33.7 26.8
Cash flow after investments, MEUR -2.4 -1.7 -4.7 1.9 6.3
Change in cash and cash equivalents, MEUR -2.1 -2.3 -5.3 0.7 4.2
Cash and cash equivalents, MEUR 1.0 3.2 6.4
Equity ratio % 11.4 18.8 23.9
Net gearing % 399.8 204.7 145.2
Personnel at end of period 892 932 934
1 Adjusted operating result = operating result before one-time costs. Details
of these are given in the Short Report section “Result analysis”.
2 Adjusted result for the period = result for the period without exchange rate
gains and lossesthat 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
1-9/2016 and the figures for comparison are for the corresponding period
1-9/2015.
CEO Padma Ravichander
The company’s focus during this review period were – holding on to revenue
levels and cost optimization. The company was able to achieve both these
objectives. The revenue for Q3 2016 was almost identical to that of Q2 2016.
One of the highlights of the quarter was winning a new customer, a South East
African operator to deliver a full BSS transformation project. The order is
worth USD 8 million and deliveries are expected to be completed in 2017.
The multi-year strategic project will see Tecnotree deploying a complete BSS
platform transformation based on Tecnotree AgilityTM Enterprise Suite of
products, comprising of Unified Product Catalog, Customer Lifecycle Management,
Convergent Billing System, Loyalty & Campaign Management System and Tecnotree
Application Platforms. The operator has initiated this project to offer
unmatched omni-channel customer experience to drive customer value across their
quad play offerings on GSM, FXL, ISP and IPTV.
The total net sales of the third quarter was down by EUR 1.5 million compared
to previous year and for the January–September review period EUR 6.5 million,
mainly due to weak South America market. Last year at this time, currency
exchange gains totalling EUR 1.8 million were recorded in net sales and in the
result, mainly due to strengthening of USD. This year the corresponding figure
was a currency exchange loss of EUR 0.7 million, so these figures had a
negative impact EUR 2.5 million when comparing the results.
The other objective of the quarter was cost optimization including reduction of
personnel by 100 man years, yielding a savings of EUR 5 million per year. The
company has begun the implementation of the cost saving measures and the full
impact of all these actions will be visible in the coming year 2017.
The most important single event in the third quarter for Tecnotree was the
revised restructuring programme filed by the Administrator with the court on 30
September 2016. This reduces the uncertainty surrounding the issue and
clarifies the company’s situation. If the program is approved, the Group’s debt
will be cut by EUR 6.7 million, and EUR 2.4 million of recognized interest
costs will be cancelled.
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 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, and an amended proposed restructuring programme on 30
September 2016.
The Administrator considers that the draft restructuring programme filed on 30
September 2016 will result in a more favourable 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.
Compared to the restructuring programme proposal filed to the District Court of
Espoo on 30 March 2016, the programme is no longer based so strongly on the
realization of the Company’s assets but rather on the operative cash-flow of
the Company.
The essential content of the drat restructuring programme ia as follows:
-- At the moment, the total amount of the restructuring debts to be taken into
account in the restructuring proceedings is approximately EUR 73.9 million.
The Company has intragroup restructuring debts approximately EUR 36.7
million. According to the Administrator’s draft programme the intragroup
restructuring debts will be fully cut. In addition, the Company has EUR
13.2 million unsecured debt. The total amount of the restructuring debts
includes also approximately EUR 23.8 million secured debts out of which
approximately EUR 7.9 million 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 30 June 2025. The
payments are broken down in appendix 15 of the draft restructuring
programme. The company pays EUR 0.1 million in 2016, correspondingly EUR
1.5 million in 2017 and EUR 2.0 million in 2018.
If the draft restructuring programme is approved, the group will record a
one-off positive income effect of approximately EUR 6.7 million as a result of
debt rearrangement. In addition, the company will cancel provisions for
interest expenses. A total of EUR 2.4 million of these had been accrued by 30
September 2016.
The approval and entry into force of the draft programme are conditional upon
Tecnotree Corporation's General Meeting approving the draft programme.
RISK AND UNCERTAINTY FACTORS
The risks and uncertainty factors for Tecnotree are explained in the 2015 Board
of Directors’ Report and in the notes to the Financial Statements.
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 and during the third quarter,
the financial situation was very tight.
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 revised restructuring program to the district court
of Espoo on 30 September 2016. The proposed 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 September 2016, the Group’s shareholders’ equity of stood at EUR
8.1 million. However, the shareholders’ equity of the parent company remains
negative.
PROSPECTS IN 2016
The company estimates that its net sales and operating result will be clearly
lower than in the previous year. The weak state of the market in Latin America
is a particular factor in this decline. The company continues to be financially
very constrained and the liquidity will remain very tight.
Tecnotree started a cost savings plan with the target to reduce personnel costs
by EUR 5.0 million, representing 100 man years. A part of the savings will
happen in 2016 when one-time costs for these action will also happen. The
savings will have a full impact in 2017.
As in previous years, variations in the quarterly figures are estimated to be
considerable.
FINANCIAL INFORMATION
Tecnotree is holding a conference for analysts, investors and the media to
present its short financial report on 28 October 2016 at 10.00 am in the
Tapiola conference room at the Scandic Hotel Simonkenttä, Simonkatu 9,
Helsinki. The result will be presented by CEO Padma Ravichander and the
conference will be held in English. The material to be presented at the press
conference will be available at www.tecnotree.com
TECNOTREE CORPORATION
Board of Directors
FURTHER INFORMATION
Mrs. Padma Ravichander, Interim CEO, tel. +97 156 414 1420
Ms Kirsti Parvi, CFO, tel. +358 (0)50 517 4569
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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