Tecnotree Oyj - Interim report (Q1 and Q3)

Tecnotree Corporation Interim Report 1 January – 30 September 2015 (unaudited)

Tecnotree Corporation
Interim Report
29 October, 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. 

PROFITABILITY IMPROVED IN THE REVIEW PERIOD

Third quarter

  -- Third quarter net sales were EUR 17.7 (23.7) million. 
  -- The operating result for the quarter was EUR 2.7 (4.7) million.
  -- The adjusted result for the quarter was EUR -0.0 (2.4) million and result
     EUR 1.9 (1.2) million.
  -- The order book at the end of the period stood at EUR 33.7 (31 December
     2014: 38.9) million.
  -- Second quarter cash flow after investments was EUR -1.7 (-0.7) million.
  -- Earnings per share were EUR 0.02 (0.01).

January - September 2015

  -- Net sales for the review period were EUR 51.9 (49.8) million. 
  -- The operating result was EUR 5.3 (-1.4) million.
  -- The adjusted result for the period was EUR -3.4 (-6.9) million and the
     result EUR ‑3.1 (‑9.8) million.
  -- Cash flow after investments for the review period was EUR 1.9 (-4.5)
     million and the company's cash and cash equivalents were EUR 3.2 (31
     December 2014: 2.5) million.
  -- Earnings per share were EUR -0.03 (-0.08).





KEY FIGURES                                7-9/  7-9/   1-9/   1-9/  1-12/
                                           2015  2014   2015   2014   2014
Net sales, MEUR                            17.7  23.7   51.9   49.8   74.0
Adjusted operating result, MEUR 1           2.7   4.7    5.6   -1.4    3.7
Operating result, MEUR                      2.7   4.7    5.3   -1.4    3.3
Result before taxes, MEUR                   3.8   2.8    2.4   -6.4   -2.4
Adjusted result for the period, MEUR 2      0.0   2.4   -3.4   -6.9   -6.4
Result for the period, MEUR                 1.9   1.2   -3.1   -9.8   -9.3
Earnings per share, basic, EUR             0.02  0.01  -0.03  -0.08  -0.08
Order book, MEUR                                        33.7   52.7   38.9
Cash flow after investments, MEUR          -1.7  -0.7    1.9   -4.5   -1.8
Change in cash and cash equivalents, MEUR  -2.3  -1.3    0.7   -4.7   -4.2
Cash and cash equivalents, MEUR                          3.2    2.0    2.5
Equity ratio %                                          18.8   20.8   22.5
Net gearing %                                          204.7  196.0  172.7
Personnel at end of period                               932  1,059    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 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
1-9/2015 and the figures for comparison are for the corresponding period
1-9/2014. 

CEO Ilkka Raiskinen

“The year is going according to plan
Developments in profitability have been encouraging. Compared to the previous
year sales have clearly focused more on Tecnotree's own products - one
particular aspect worth mentioning is that hardware deliveries were
significantly down on the previous year. Net sales no longer include income
recognised from two projects in Latin America begun in 2012 that originally had
a total value of USD 54.7 million. As a result, profitability has improved. 

Cash flow from operations in the nine month period was positive but in the
third quarter was negative, mainly due to seasonal fluctuation, and cash flow
remains one of the biggest challenges facing the company. Development of
operations continues, and this will also improve the cash flow. 

We expect to complete the corporate restructuring proceedings during the fourth
quarter, which will clarify the company's situation.” 

POSTPONING OF THE DRAFT RESTRUCTURING PROGRAM OF TECNOTREE CORPORATION

The district court of Espoo decided on 9 March 2015 to commence the corporate
restructuring proceedings concerning Tecnotree Corporation in accordance with
the Act on Restructuring of Enterprises. The district court appointed Mr. Jari
Salminen, Attorney-at-Law, from Eversheds Attorneys Ltd. as the administrator
in respect of the restructuring process. 

The district court of Espoo has decided on 28 September 2015, at the request of
the administrator, to postpone the deadline so that the draft restructuring
program shall be submitted latest on 31 December 2015. According to the former
order of the court, the draft restructuring program was to be submitted latest
on 30 September 2015. The contents of the request were as follows: 

“Due to the wide international business conducted by the company, the
evaluations needed and the compiling of the draft restructuring program are
pending, and the administrator does not consider it to be possible to submit a
draft restructuring program by 30 September 2015. 

Compiling the most meaningful restructuring program for the benefit of the
creditors requires that the consequences of a possible debt arrangement, e.g.
to the status of the foreign subsidiaries in their home countries, will be
carefully evaluated. 

In the evaluations made during the restructuring proceedings so far, no
obstacles for creating an implementable restructuring program and
reorganization of the business have come up.“ 

RISKS AND UNCERTAINTY FACTORS

The risks and uncertainty factors for Tecnotree are explained in the 2014 Board
of Directors' Report and in the notes to the Financial Statements. 

Risks and uncertainties in the near future

Tecnotree's risks and uncertainties in the near future relate to projects, to
their timing, to receivables from the recognition of partial deliveries and for
sales, to changes in foreign exchange rates and to financing. Having sufficient
cash funds is the biggest single risk. The financing agreement contains
covenants that create risk. More details are given in the section “Financing,
cash flow and balance sheet” in the interim report. 

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. 

On 30 September 2015 the Group's shareholders' equity of stood at EUR 14.0
million. However, the shareholders' equity of the parent company was EUR 1.0
million negative. 

Restructuring proceedings

Tecnotree Corporation filed an application for debt restructuring proceedings
with the district court of Espoo on 5 March 2015. 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
must prepare and deliver his proposed restructuring programme to the district
court of Espoo by 31 December 2015. Tecnotree Corporation has to comply with
the programme approved by the court. This involves risk. Tecnotree is
responsible for all its liabilities in full after the date of application for
restructuring proceedings. This requires that cash inflow, in other words
payments by customers, is sufficient for paying of expenses. 

After filing its application for restructuring proceedings, Tecnotree has had
problems in individual cases, in particular with companies from which Tecnotree
has made purchases. Customers may also be afraid of the risks relating to
Tecnotree, which may have some impact on future orders. 

EVENTS AFTER THE END OF THE PERIOD

No significant events have occurred after the end of the period.

PROSPECTS IN 2015

Tecnotree estimates that its operating result will improve from 2014.
Variations in the quarterly figures will be considerable. 

FINANCIAL INFORMATION

Tecnotree is holding a conference for analysts, investors and the media to
present its interim report on Thursday, 29 October 2015 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 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 around 1000 telecom experts, Tecnotree serves around 90 service
providers in around 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

Attachments:

Tecnotree Interim Report Q3 2015.pdf

Tecnotree Interim Report Q3 2015 Presentation.pdf