TECNOTREE CORPORATION INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2010 (unaudited)
Tecnotree Corporation INTERIM REPORT
27 October 2010 at 8.30 am
TECNOTREE CORPORATION INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2010 (unaudited)
Sales and profitability improve but results fall below target
Net sales in the third quarter of the year, EUR 13.3 million, were similar to
those in the corresponding period in the previous year (EUR 13.2 million). The
cash flow after investments was EUR -7.1 (-1.7**) million. Net sales for the
full nine month period totalled EUR 46.7 (39.7) million and the adjusted
operating result*** was EUR 0.7 (-6.8) million. The cash flow after investments
was EUR -11.1 (-0.8**) million and the order book at the close of the period
stood at EUR 20.1 (31 Dec.2009: 11.7) million.
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| KEY FIGURES | 7-9/201 | 7-9/200 | 1-9/201 | 1-9/2009 | 1-12/2009 |
| | 0 | 9 | 0 | | |
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| Net sales, MEUR | 13.3 | 13.2 | 46.7 | 39.7 | 53.3 |
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| Adjusted operating | -0.7 | -2.1* | 0.7 | -6.8* | -8.8* |
| result, MEUR*** | | | | | |
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| Operating result, MEUR | -2.0 | -3.2* | -3.2 | -6.5* | -15.0* |
--------------------------------------------------------------------------------
| Result before taxes, | -1.8 | -3.6* | -4.3 | -6.9* | -15.4* |
| MEUR | | | | | |
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| Result for the period | -2.1 | -4.4* | -5.7 | -9.0* | -16.2* |
--------------------------------------------------------------------------------
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| Earnings per share, | -0.03 | -0.06 | -0.08 | -0.14 | -0.24 |
| basic, EUR | | | | | |
--------------------------------------------------------------------------------
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| Order book, MEUR | | | 20.1 | 15.2 | 11.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow after | -7.1 | -1.7** | -11.1 | -0.8** | -4.8** |
| investments, MEUR | | | | | |
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| Change in cash and cash | -7.1 | -2.1 | -12.2 | -20.7 | -26.0 |
| equivalents, MEUR | | | | | |
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| Cash and cash | | | 14.1 | 30.5 | 25.7 |
| equivalents, MEUR | | | | | |
--------------------------------------------------------------------------------
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| Equity ratio % | | | 68.8 | 68.7* | 65.6* |
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| Net gearing % | | | 3.1 | -13.8** | -10.8 |
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| Personnel at end of | | | 830 | 842 | 779 |
| period | | | | | |
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* The figures for the comparative periods have changed due to adjustments to the
purchase price calculation of Tecnotree India
** Before the EUR 14.7 million net payment for the acquisition of Tecnotree
India
*** Adjusted operating result = operating result before R & D capitalisation,
amortization of this and one-time costs. Details of these are given in the
section “Result analysis”.
Unless otherwise stated, all figures presented below are for the review period
1-9/2010 and the figures for comparison are for the corresponding period
1-9/2009. The figures for the period 1-12/2009 include the figures for Tecnotree
India (formerly Lifetree) for the period 6 May - 31 December 2009.
President and CEO Eero Mertano:
“Even though we have not achieved our profitability targets set at the beginning
of the year, our sales have increased clearly from the previous year and our
profitability has improved considerably. This has been made possible by the
gradually increasing willingness of mobile phone operators to make investments,
and by our broader product portfolio, greater R & D resources and improving cost
structure.
During the nine month review period our net sales increased significantly from
the corresponding period in the previous year to EUR 46.7 million (EUR 39.7
million in Jan. - Sep. 2009). New orders totalled EUR 55.1 million and as a
result the order book rose from EUR 11.7 million at the end of 2009 to EUR 20.1
million. Maintenance sales also increased encouragingly to EUR 19.4 (16.9)
million.
Our company has a strong financial position, a competitive solutions portfolio
and skilled international personnel. These strong points enable us to work
closely with our customers with a long-term approach.”
SALES AND NET SALES
Tecnotree's net sales in the review period increased 17.6 per cent to EUR 46.7
(39.7) million.
EUR 20.5 million of sales in the review period have been recognised by stage of
completion (IAS 11 Construction Contracts) and EUR 26.2 million on delivery (IAS
18 Revenues).
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| NET SALES BY MARKET AREA | 1-9/2010 | 1-9/2009 | 1-9/2010 | 1-9/2009 |
| | MEUR | MEUR | % | % |
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| Americas (North, Central and | 19.4 | 17.3 | 41.5 | 43.4 |
| South America) | | | | |
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| Europe | 4.9 | 5.6 | 10.5 | 14.1 |
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| MEA (Middle East and Africa) | 17.8 | 14.9 | 38.1 | 37.5 |
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| APAC (Asia and Pacific) | 4.6 | 2.0 | 9.9 | 6.0 |
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| TOTAL | 46.7 | 39.7 | 100.0 | 100.0 |
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| CONSOLIDATED ORDER BOOK | 30.9.201 | 31.12.200 | 30.9.2010 | 31.12.200 |
| | 0 | 9 | % | 9 |
| | MEUR | MEUR | | % |
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| Americas (North, Central and | 4.5 | 1.9 | 22.4 | 15.9 |
| South America) | | | | |
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| Europe | 1.8 | 1.2 | 9.0 | 10.0 |
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| MEA (Middle East and Africa) | 12.6 | 6.9 | 62.7 | 59.2 |
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| APAC (Asia and Pacific alue) | 1.2 | 1.7 | 6.0 | 14.9 |
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| TOTAL | 20.1 | 11.7 | 100.0 | 100.0 |
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Maintenance and service sales totalled EUR 19.4 (16.9) million or 41.5 per cent
(42.6 %) of net sales.
RESULT ANALYSIS
Tecnotree's business operations are based on project sales. The income and costs
recorded for these 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.
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| INCOME STATEMENT, KEY FIGURES, MEUR | 1-9/2010 | 1-9/2009 | 1-12/2009 |
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| Net sales | 46.7 | 39.7 | 53,3 |
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| Adjusted operating result, MEUR | 0.7 | -6.8 | -8.8 |
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| Product development capitalisation | 0.5 | -4.5 | 5.1 |
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| Product development amortisation | -4.4 | -3.2 | -4.2 |
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| One-time costs | 0.0 | -1.0 | -7.0 |
--------------------------------------------------------------------------------
| Operating result | -3.2 | -6.5 | -15.0 |
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| Result before taxes | -4.3 | -6.9 | -15.4 |
--------------------------------------------------------------------------------
The adjusted result before R & D capitalisation showed an improvement of EUR 7.5
million from the previous year. This was due in particular to the increase in
net sales of EUR 7.0 million. Capitalisation of research and development costs
and amortisation of these had the net impact of weakening the result by EUR 5.2
million compared to the corresponding period in the previous year.
Capitalisation was EUR 4.0 million less and amortization EUR 1.2 million more
than in the previous year.
Tecnotree Convergence Limited has been consolidated as from 6 May 2009, so the
figures for the first half of 2009 do not include the figures for India for the
period 1 January - 6 May 2009. These were: net sales EUR 5.0 million and
operating profit EUR 0.1 million. Net sales in the review period were EUR 2.1
million more than the corresponding 2009 figure when these omitted net sales of
EUR 5.0 million are included. Costs adjusted by the net impact of R & D
capitalisation and by one-time items totalled EUR 46.0 million in the period,
compared with a total of EUR 51.7 million in the previous year including
Tecnotree Convergence Limited's costs in the first part of the year. Therefore,
there have been savings of EUR 5.7 million.
Taxes for the period totalled EUR 1.4 (2.1) million, including the following
items:
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| TAXES IN INCOME STATEMENT, MEUR | 1-9/2010 | 1-9/2009 | 1-12/2009 |
--------------------------------------------------------------------------------
| Withholding tax expenses in parent | -1.3 | -1.0 | -1.5 |
| company | | | |
--------------------------------------------------------------------------------
| Income taxes on the results of Group | -1.3 | -0.5 | -1.4 |
| companies | | | |
--------------------------------------------------------------------------------
| Deferred tax asset based on tax | 0.5 | 0.1 | 0.6 |
| allowances in India | | | |
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| Change in deferred tax liability based | | | |
| on: | | | |
--------------------------------------------------------------------------------
| - R&D capitalisation | 0.7 | -0.8 | 2.2 |
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| - dividend tax in India | -0.5 | | -0.6 |
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| Other items | 0.5 | 0.1 | -0.0 |
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| TAXES IN INCOME STATEMENT, TOTAL | -1.4 | -2.1 | -0.8 |
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Earnings per share were EUR -0.08 (-0.14). Equity per share at the end of the
period was EUR 1.03 (31.12.2009: EUR 1.05).
FINANCING AND INVESTMENTS
Tecnotree's liquid funds totalled EUR 14.1 (31.12.2009: 25.7) million. The
change in cash and cash equivalents for the review period was EUR -12.2 million.
The balance sheet total on 30 September 2010 stood at EUR 111.3 (31.12.2009:
118.4) million. Interest-bearing liabilities were EUR 17.8 (31.12.2009: 18.9)
million. The net debt to equity ratio (net gearing) was 3.1 per cent 31.12.2009:
-10.8 %). The balance sheet structure remained strong and the equity ratio on 30
September 2010 was 68.8 per cent (31.12.2009: 65.6 %).
Tecnotree's gross capital expenditure during the review period, excluding the
capitalisation of development costs, was EUR 0.6 (1.3) million or 1.2 per cent
(3.2 %) of net sales.
Financial income and expenses (net) during the review period totalled EUR -1.1
(-0.4) million. The change from the comparative period is due mainly to the
reduction in exchange rate gains and increase in exchange rate losses due to
unfavourable developments in the exchange rates for the Group's main currencies
during the first half of the year.
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| FINANCIAL INCOME AND EXPENSES, MEUR | 1-9/2010 | 1-9/2009 | 1-12/2009 |
--------------------------------------------------------------------------------
| Interest income | 0.2 | 0.3 | 0.3 |
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| Exchange rate gains | 0.2 | 0.4 | 0.4 |
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| Other financial income | 0.3 | 0.4 | 0.6 |
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| FINANCIAL INCOME, TOTAL | 0.7 | 1.1 | 1.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest expenses | -0.3 | -0.3 | -0.4 |
--------------------------------------------------------------------------------
| Exchange rate losses | -1.1 | -0.8 | -0.8 |
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| Other financial expenses | -0.4 | -0.4 | -0.6 |
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| FINANCIAL EXPENSES, TOTAL | -1.8 | -1.5 | -1.8 |
--------------------------------------------------------------------------------
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| CHANGE IN WORKING CAPITAL, MEUR | 1-9/2010 | 1-9/2009 | 1-12/2009 |
| (increase - / decrease +) | | | |
--------------------------------------------------------------------------------
| Change in trade receivables | 0.5 | 2.5 | 1.5 |
--------------------------------------------------------------------------------
| Change in other short-term receivables | -6.1 | 9.0 | 10.9 |
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| Change in inventories | -0.4 | -0.3 | -0.1 |
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| Change in trade payables | 4.1 | -1.9 | -1.5 |
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| Change in other current liabilities | -8.6 | -1.5 | -1.4 |
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| CHANGE IN WORKING CAPITAL, TOTAL | -10.4 | 7.7 | 14.1 |
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The change in current liabilities had a negative impact of EUR 8.6 million on
the cash of the review period. This item includes payments made in 2010 on the
provision for the one-time costs made in the 2009 closing.
SEGMENT INFORMATION
As from the beginning of 2010, the operating segments under IFRS 8 reported by
Tecnotree are the geographical areas, which are Americas (North, Central and
South America), Europe, MEA (Middle East and Africa), and APAC (Asia Pacific).
This is because their results are monitored separately in the company's internal
financial reporting. Tecnotree's chief operating decision maker, as referred to
in IFRS 8, is the Group's management board.
Net sales and the result for the operating segments are presented based on the
location of customers. The result of the operating segments includes the costs
that can be allocated to the segments on a reasonable basis. Common costs for
the whole Group as well as taxes and financial items are not allocated.
GEOGRAPHICAL AREAS
Tecnotree Group operates in the following geographical areas: Americas (North,
Central and South America), Europe, MEA (Middle East and Africa) and APAC (Asia
Pacific).
Americas (North, Central and South America)
Sales and the order book grew encouragingly in Latin America and Tecnotree
obtained major new customers and expansion projects in the region. Income
recognition made encouraging progress for the expansion projects and the new
products developed in India. Mobile phone operators in the region have
significantly increased their level of investment from the previous year.
Europe
In Europe, sales stopped growing due to the slower investment behaviour of
operators. The degree of completion of delivery projects in progress rose as
planned. European operators seem to be making slightly bigger investments than
in the previous year, especially in eastern Europe.
MEA (Middle East and Africa)
In the Middle East and Africa, sales and the order book grew considerably. Sales
of billing, customer management and managed services solutions increased in
particular. Operators in the region continue to have heavy investment needs,
which are boosted by the growth in subscriber numbers.
APAC (Asia Pacific)
Sales in the APAC region grew significantly from the corresponding period in the
previous year. The willingness of operators to make investments varies greatly
from one country to another, but overall seems to be better than in 2009.
RESEARCH AND DEVELOPMENT
Research and development costs during the review period totalled EUR 9.8 (10.7)
million, corresponding to 21.0 per cent (26.9 %) of net sales. EUR 0.5 (4.5)
million of development costs were capitalised. Once projects are completed,
their capitalised costs are amortised over 3-5 years from the start of
commercial use. R&D costs of EUR 4.4 (3.2) million were amortised during the
review period.
PERSONNEL
At the end of September 2010 Tecnotree employed 830 (31.12.2009: 779) persons,
of whom 66 (31.12.2009: 83) worked in Finland and 764 (31.12.2009: 696)
elsewhere. The company employed on average 779 (503) people during the review
period. Personnel by country were as follows:
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| | 1-9/2010 | 1-9/2009 | 1-12/2009 |
--------------------------------------------------------------------------------
| Personnel, at end of period | 830 | 842 | 779 |
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| Finland | 66 | 90 | 83 |
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| Ireland | 64 | 140 | 87 |
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| Brazil | 47 | 50 | 49 |
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| India | 601 | 510 | 507 |
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| Other countries | 52 | 52 | 53 |
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| Personnel, average | 779 | 613 | 665 |
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| Personnel expenses before R&D | 21.4 | 21.9 | 32.3 |
| capitalisation (MEUR) | | | |
--------------------------------------------------------------------------------
TECNOTREE'S SHARES AND SHARE CAPITAL
At the end of September 2010 the shareholders' equity of Tecnotree Corporation
stood at EUR 75.9 (31.12.2009: 77.1) million and the share capital was EUR 4.7
million. The total number of shares was 73,630,977. The company held 134,800 of
these shares, which represents 0.18 per cent of the company's total number of
shares and votes. Equity per share was EUR 1.03 (31.12.2009: 1.05).
A total of 10,413,941 Tecnotree shares (EUR 9,167,972) were traded on the
Helsinki Exchanges during the period 2 January - 30 September 2010, representing
14.2 per cent of the total number of shares.
The highest share price quoted in the period was EUR 1.00 and the lowest EUR
0.70. The average quoted price was EUR 0.88 and the closing price on 30
September 2010 was EUR 0.77. The market capitalisation of the share stock at the
end of the period was EUR 56,695,852.
CURRENT AUTHORISATIONS
The Annual General Meeting held on 25 March 2010 authorised the Board of
Directors to decide on the acquisition of a maximum of 7,360,000 of the
Company's own shares. Own shares may be acquired with unrestricted shareholders'
equity otherwise than in proportion to the holdings of the shareholders through
public trading of the securities on NASDAQ OMX Helsinki Oy at the market price
of the shares in public trading at the time of the acquisition. Own shares may
be acquired for the purpose of developing the capital structure of the Company,
carrying out corporate acquisitions or other business arrangements to develop
the business of the Company, financing capital expenditure, to be used as part
of the Company's incentive schemes, or to be otherwise retained in the
possession of the Company, disposed of or nullified in the extent and manner
decided by the Board of Directors. The authorisation is valid for one year from
the decision of the Annual General Meeting. The Board of Directors has not
exercised this authorisation during the review period.
Furthermore, the Annual General Meeting authorised the Board of Directors to
decide to issue and/or to convey a maximum of 17,800,000 new shares and/or the
Company's own shares either against payment or for free. New shares may be
issued and the Company's own shares may be conveyed to the Company's
shareholders in proportion to their current shareholdings in the Company or
waiving the shareholder's pre-emption right, through a directed share issue if
the Company has a weighty financial reason to do so. The Board of Directors may
also decide on a free share issue to the Company itself. The Board of Directors
is, within the authorization, authorized to grant the special rights referred to
in Chapter 10, Section 1 of the Companies Act. The authorisation is valid for
one year from the decision of the Annual General Meeting. The Board of Directors
has not exercised this authorisation during the review period.
STOCK OPTION PROGRAMMES
During the review period the company had in force the 2006 and 2009 stock option
programmes. The exercise period for the 2006A options ended on 30 April 2010.
The state of the options on 30 September 2010 was as follows:
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| Option | Maximum | Number of | Exercise period | Exercise |
| series | number of | granted | | price |
| | options | options | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2006B | 173,000 | 173,000 | 1.4.2008-30.4.2011 | 1.32 |
--------------------------------------------------------------------------------
| 2006C | 667,000 | | 1.4.2009-30.4.2012 | 0.98 |
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| Total | 840,000 | 173,000 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2009A | 1,026,005 | 686,171 | 1.4.2009-31.3.2011 | 0.86 |
--------------------------------------------------------------------------------
| 2009B | 2,394,013 | 1 096,207 | 1.4.2010-31.3.2012 | 0.86 |
--------------------------------------------------------------------------------
| 2009C | 3,420,018 | 1 566,011 | 1.4.2011-31.3.2013 | 0.86 |
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| Total | 6,840,036 | 3 348,389 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2006 and | 7,680,036 | 3,521,389 | | |
| 2009 | | | | |
| total | | | | |
--------------------------------------------------------------------------------
Some of the 2009B and 2009C stock options become available to key personnel
based on a performance appraisal. The stock options are part of the incentive
and commitment scheme for key personnel.
Altogether 7,680,036 stock options remained on 30 September 2010 of all the
company's stock options in circulation. The shares that could be subscribed on
the basis of these stock options accounted for a maximum of 9.45 % of the
Company's shares and the votes carried by the shares after any increase in share
capital. On 30 September 2010 the Company still held 4,158,647 of all the
current stock options. The issued stock options had a maximum diluting effect on
30 September 2010 of 4.56 %.
The company's Board of Directors may issue stock options such that their maximum
dilution shall not exceed 8.50 %.
PRESIDENT AND CEO
Tecnotree's Board of Directors has appointed Kaj Hagros as president and CEO as
from 1 November 2010. Tecnotree's acting president and CEO Eero Mertano
continues in this position until 31 October 2010.
Before joining Tecnotree, Kaj Hagros has held positions as managing director and
chief operating officer within Fox Mobile Group, a subsidiary of News
Corporation (NASDAQ: NWS).
RISKS AND UNCERTAINTY FACTORS
The risks and uncertainty factors for Tecnotree are explained in the report of
the Board of Directors presented in the 2009 Annual Report. The risks and
uncertainties to which the company is exposed in the near future relate to major
projects that are under negotiation and to their timing, to receivables, and to
changes in currency exchange rates. No significant changes have taken place in
the company's risks and uncertainty factors compared to the 2009 closing.
EVENTS AFTER THE END OF PERIOD
No significant events have occurred after the end of period.
PROSPECTS
Consistent with the improving market sentiment and demand, Tecnotree estimates
that sales will be higher in 2010 than in 2009. The higher sales and reduced
costs are expected to improve profitability.
Despite the improvement in profitability, the operating result is expected to
remain negative.
Variations between quarterly figures are expected to continue to be
considerable.
FINANCIAL INFORMATION
Tecnotree is holding a conference for analysts and the media to announce its
results for the third quarter of 2010 at 10.00 am on 27 October 2010 in the
Pavilion conference room at the Scandic Hotel Simonkenttä, Simonkatu 9,
Helsinki. The interim review will be presented by President and CEO Eero Mertano
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
Mr Eero Mertano, President and CEO, tel. +358 (0)50 535 4970
Mr Tuomas Wegelius, CFO, tel. +358 (0)400 433 228
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Main media
www.tecnotree.com
TABLE SECTION
The financial figures in the income statement, balance sheet and key indicators
are presented in million euros. The figures shown here have been calculated
using exact values.
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| CONSOLIDATED INCOME | Not | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ |
| STATEMENT, MEUR | e | 2010 | 2009 | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| NET SALES | 2 | 13.3 | 13.2 | 46.7 | 39.7 | 53.3 |
--------------------------------------------------------------------------------
| Other operating income | | 0.0 | 0.2 | 0.0 | 0.3 | 0.3 |
--------------------------------------------------------------------------------
| Materials and services | | -1.9 | -2.3 | -7.7 | -7.7 | -10.7 |
--------------------------------------------------------------------------------
| Employee benefit expenses | | -6.8 | -7.3 | -21.3 | -19.0 | -29.2 |
--------------------------------------------------------------------------------
| Depreciation, | | -2.1 | -1.9* | -6.3 | -5.1* | -6.9* |
| amortisation and | | | | | | |
| impairment charges | | | | | | |
--------------------------------------------------------------------------------
| Other operating expenses | | -4.5 | -5.1 | -14.6 | -14.6 | -21.8 |
--------------------------------------------------------------------------------
| OPERATING RESULT | 2 | -2.0 | -3.2* | -3.2 | -6.5* | -15.0* |
--------------------------------------------------------------------------------
| Financial income | | 0.2 | 0.2 | 0.7 | 1.1 | 1.3 |
--------------------------------------------------------------------------------
| Financial expenses | | -0.0 | -0.7 | -1.8 | -1.5 | -1.8 |
--------------------------------------------------------------------------------
| RESULT BEFORE TAXES | 2 | -1.8 | -3.6* | -4.3 | -6.9* | -15.4* |
--------------------------------------------------------------------------------
| Income taxes | | -0.3 | -0.7* | -1.4 | -2.1* | -0.8 |
--------------------------------------------------------------------------------
| RESULT FOR THE PERIOD | | -2.1 | -4.4* | -5.7 | -9.0* | -16.2* |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Allocated to: | | | | | | |
--------------------------------------------------------------------------------
| Equity holders of parent | | -2.1 | -4.4* | -5.6 | -9.1* | -16.2* |
| company | | | | | | |
--------------------------------------------------------------------------------
| Non-controlling | | 0.0 | 0.1 | 0.0 | 0.1 | 0.0 |
| interest | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share | | | | | | |
| calculated from the | | | | | | |
| profit attributable to | | | | | | |
| equity holders of parent | | | | | | |
| company: | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | | -0.03 | -0.06 | -0.08 | -0.14 | -0.24 |
| basic, EUR | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | | -0.03 | -0.06 | -0.08 | -0.13 | -0.24 |
| diluted, EUR | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED STATEMENT OF | | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ |
| COMPREHENSIVE INCOME, | | 2010 | 2009 | 2010 | 2009 | 2009 |
| MEUR | | | | | | |
--------------------------------------------------------------------------------
| RESULT FOR THE PERIOD | | -2.1 | -4.4* | -5.7 | -9.0* | -16.2* |
--------------------------------------------------------------------------------
| Other comprehensive | | | | | | |
| income: | | | | | | |
--------------------------------------------------------------------------------
| Translation differences | | -3.5 | -1.0 | 4.4 | -1.4 | 0.4 |
| from | | | | | | |
| foreign operations | | | | | | |
--------------------------------------------------------------------------------
| Tax relating to | | 0.1 | | -0.0 | | |
| components of | | | | | | |
| other comprehensive | | | | | | |
| income | | | | | | |
--------------------------------------------------------------------------------
| Other comprehensive | | -3.4 | -1.0 | -4.4 | -1.4 | 0.4 |
| income, net of tax | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL COMPREHENSIVE | | -5.6 | -5.5* | -1.2 | -10.4* | -15.8* |
| INCOME FOR THE PERIOD | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Allocated to: | | | | | | |
--------------------------------------------------------------------------------
| Equity holders of parent | | -5.6 | -5.5* | -1.2 | -10.5* | -15.8* |
| company | | | | | | |
--------------------------------------------------------------------------------
| Non-controlling | | 0.0 | 0.1 | -0.0 | 0.1 | 0.0 |
| interest | | | | | | |
--------------------------------------------------------------------------------
* The figures for the comparative periods have changed due to adjustments to the
purchase price calculation of Tecnotree India
--------------------------------------------------------------------------------
| CONSOLIDATED CONDENSED BALANCE | Note | 30.9.2010 | 30.9.2009 | 31.12.2009 |
| SHEET, | | | | |
| MEUR | | | | |
--------------------------------------------------------------------------------
| Assets | | | | |
--------------------------------------------------------------------------------
| Goodwill | | 21.2 | 18.4* | 19.6* |
--------------------------------------------------------------------------------
| Other intangible assets | | 19.7 | 24.6* | 24.0* |
--------------------------------------------------------------------------------
| Tangible assets | | 6.8 | 7.5 | 7.3 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 2.2 | 1.3 | 1.5 |
--------------------------------------------------------------------------------
| Other non-current trade and | | 0.9 | 0.8 | 0.9 |
| other | | | | |
| receivables | | | | |
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | | 1.7 | 1.5 | 1.3 |
--------------------------------------------------------------------------------
| Trade receivables | | 19.8 | 18.0 | 19.3 |
--------------------------------------------------------------------------------
| Other receivables | | 23.2 | 18.2 | 17.2 |
--------------------------------------------------------------------------------
| Investments | | 1.4 | 0.8 | 1.6 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 14.1 | 30.5 | 25.7 |
--------------------------------------------------------------------------------
| TOTAL ASSETS | | 111.3 | 121.6 | 118.4* |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' equity | | 75.9 | 82.1* | 77.1* |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | 3.5 | 6.4* | 4.0* |
--------------------------------------------------------------------------------
| Non-current interest-bearing | | 15.6 | 17.8 | 16.7 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Other non-current liabilities | | 0.9 | 0.3 | 0.3 |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Current interest-bearing | | 2.2 | 2.2 | 2.3 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Trade payables and other | | 13.2 | 12.8 | 18.1 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES, TOTAL | | 111.3 | 121.6 | 118.4* |
--------------------------------------------------------------------------------
* The figures for the comparative periods have changed due to adjustments to the
purchase price calculation of Tecnotree India
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY, MEUR
A = Share capital
B = Share premium fund
C = Own shares
D = Translation differences
E = Invested non-restricted equity reserve
F = Other reserves
G = Retained earnings
H = Total equity attributable to equity holders of parent company
I = Non-controlling interest
J = Total shareholders' equity
--------------------------------------------------------------------------------
| MEUR | A | B | C | D | E | F | G | H | I | J |
--------------------------------------------------------------------------------
| Sharehold | 4. | 0.8 | -0. | 0.4 | 12.6 | 52.1 | 6.4 | 77.0 | 0.1 | 77.1 |
| ers' | 7 | | 1 | | | | | | | |
| equi | | | | | | | | | | |
| ty | | | | | | | | | | |
| 1 Jan. | | | | | | | | | | |
| 2010 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Covering | | | | | | -22. | 22.7 | | | 0.0 |
| of loss | | | | | | 7 | | | | |
--------------------------------------------------------------------------------
| Share-bas | | | | | | | 0.2 | 0.2 | | 0.2 |
| ed | | | | | | | | | | |
| payments | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | | | | | | | -0.1 | -0.1 | | -0.1 |
| adjustmen | | | | | | | | | | |
| ts | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | 4.4 | | | -5.7 | -1.3 | -0.0 | -1.3 |
| comprehen | | | | | | | | | | |
| sive | | | | | | | | | | |
| income | | | | | | | | | | |
| for the | | | | | | | | | | |
| period | | | | | | | | | | |
--------------------------------------------------------------------------------
| Sharehold | 4. | 0.8 | -0. | 4.7 | 12.6 | 29.4 | 23.6 | 75.8 | 0.1 | 75.9 |
| ers' | 7 | | 1 | | | | | | | |
| equity | | | | | | | | | | |
| 30 Sep. | | | | | | | | | | |
| 2010 | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | A | B | C | D | E | F | G | H | I | J |
--------------------------------------------------------------------------------
| Sharehold | 4. | 0.8 | -0. | -0. | 0.3 | 50.6 | 27.3 | 83.5 | | 83.5 |
| ers' | 7 | | 1 | 1 | | | | | | |
| equi | | | | | | | | | | |
| ty | | | | | | | | | | |
| 1 Jan. | | | | | | | | | | |
| 2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Share | | | | | 11.8 | 2.0 | | 13.7 | | 13.7 |
| issue | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | | -0.5 | -4.6 | -5.1 | | -5.1 |
| paid | | | | | | | | | | |
--------------------------------------------------------------------------------
| Share-bas | | | | | | | 0.1 | 0.1 | | 0.1 |
| ed | | | | | | | | | | |
| payments | | | | | | | | | | |
--------------------------------------------------------------------------------
| Acquisiti | | | | | | | | | 0.3 | 0.3 |
| ons | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | -1. | | | -9.0 | 10.5 | 0.1 | -10.4 |
| comprehen | | | | 4 | | | | | | |
| sive | | | | | | | | | | |
| income | | | | | | | | | | |
| for the | | | | | | | | | | |
| period | | | | | | | | | | |
--------------------------------------------------------------------------------
| Sharehold | 4. | 0.8 | -0. | -1. | 12.1 | 52.0 | 13.8 | 81.9 | 0.4 | 82.1 |
| ers' | 7 | | 1 | 5 | | | | | | |
| equity | | | | | | | | | | |
| 30 Sep. | | | | | | | | | | |
| 2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
In June 2009 a total dividend of EUR 5,097,325.52 was paid, or EUR 0.07 per
share on 72,818,936 shares.
--------------------------------------------------------------------------------
| CONSOLIDATED CONDENSED CASH FLOW | 1-9/2010 | 1-9/2009 | 1-12/2009 |
| STATEMENT, MEUR | | | |
--------------------------------------------------------------------------------
| Cash flow from operating activities | | | |
--------------------------------------------------------------------------------
| Result for the period | -5.7 | -9.0 | -16.2 |
--------------------------------------------------------------------------------
| Adjustments of the result | 7.8 | 5.1 | 8.1 |
--------------------------------------------------------------------------------
| Changes in working capital | -10.4 | 7.7 | 14.1 |
--------------------------------------------------------------------------------
| Interest paid | -0.3 | -1.0 | -1.2 |
--------------------------------------------------------------------------------
| Interest received | 0.5 | 0.4 | 0.4 |
--------------------------------------------------------------------------------
| Income taxes paid | -2.1 | -1.3 | -3.2 |
--------------------------------------------------------------------------------
| Net cash flow from operating | -10.4 | 4.6 | 2.0 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing activities | | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries less | | -14.5 | -14.0 |
| cash and cash equivalents at acq. date | | | |
--------------------------------------------------------------------------------
| Transactions with minority | | | -0.7 |
--------------------------------------------------------------------------------
| Investments in intangible assets | -0.6 | -4.7 | -5.3 |
--------------------------------------------------------------------------------
| Investments in tangible assets | -0.5 | -1.1 | -1.2 |
--------------------------------------------------------------------------------
| Investments in other securities | -0.7 | -0.5 | -0.8 |
--------------------------------------------------------------------------------
| Proceeds from disposal of other | 0.9 | 0.8 | 0.3 |
| securities | | | |
--------------------------------------------------------------------------------
| Interest received from investments | 0.0 | | 0.1 |
--------------------------------------------------------------------------------
| Dividends received from investments | 0.2 | 0.1 | 0.1 |
--------------------------------------------------------------------------------
| Net cash flow from investing | -0.8 | -19.9 | -21.5 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing activities | | | |
--------------------------------------------------------------------------------
| Repayments of borrowings | -1.1 | -0.3 | -1.4 |
--------------------------------------------------------------------------------
| Dividend paid | 0.0 | -5.1 | -5.1 |
--------------------------------------------------------------------------------
| Net cash flow from financing | -1.1 | -5.4 | -6.5 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Increase (+) and decrease (-) in cash | -12.2 | -20.7 | -26.0 |
| and cash equivalents | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents at beg. of | 25.7 | 51.0 | 51.0 |
| period | | | |
--------------------------------------------------------------------------------
| Impact of changes in exchange rates | 0.8 | 0.0 | 0.4 |
--------------------------------------------------------------------------------
| Change in fair value of investments | -0.2 | 0.1 | 0.2 |
--------------------------------------------------------------------------------
| Cash and cash equivalents at end of | 14.1 | 30.5 | 25.7 |
| period | | | |
--------------------------------------------------------------------------------
1. ACCOUNTING PRINCIPLES FOR THE INTERIM REPORT
This interim report has been prepared in accordance with the international
financial reporting standard IAS 34 Interim Financial Reporting. The formulas
for calculating the key figures presented and the accounting principles for the
interim report are the same as the principles published in the 2009 Annual
Report. The new and revised IFRS regulations that came into force on 1 January
2010 have not had a significant impact on the accounting principles and basis
for preparing the interim report.
As from the beginning of 2010, Tecnotree has changed the operating segments
under IFRS 8, so that these are now the geographical areas: Americas (North,
Central and South America), Europe, MEA (Middle East and Africa), and APAC (Asia
Pacific).
The purchase price calculation of Tecnotree India presented in the financial
statements 2009 was preliminary. In the final purchase price calculation, the
fair value of customer contracts and the related customer relationships was
assessed at EUR 0.5 million and the fair value of the order book at EUR 0.2
million. These values were included in goodwill in the preliminary calculation.
The amortization period for customer relationships is 5 years and for the order
book 5 months, beginning on the date of acquisition 6 May 2009. The figures for
the comparative period have been adjusted accordingly. The adjustments affecting
the result in the comparative period are in amortizations of other intangible
assets and deferred taxes relating to these.
2. SEGMENT INFORMATION
As from the beginning of 2010, the operating segments under IFRS 8 reported by
Tecnotree are the geographical areas, which are Americas (North, Central and
South America), Europe, MEA (Middle East and Africa), and APAC (Asia Pacific).
This is because their results are monitored separately in the company's internal
financial reporting. Tecnotree's chief operating decision maker, as referred to
in IFRS 8, is the Group's management board.
Net sales and the result for the operating segments are presented based on the
location of customers. The result of the operating segments includes costs that
can be allocated to the segments on a reasonable basis, such as sales, customer
service and delivery costs. Product management, product development and
administrative costs, depreciation, taxes and financial items are not allocated.
As from 1 January 2010, reporting for the new operating segments is such that
the 2009 segment results are not presented in accordance with the new segment
structure, since the information is not available and the cost to develop it
would be excessive.
--------------------------------------------------------------------------------
| OPERATING SEGMENTS: | 1-9/2010 | 1-9/2009 | 1-12/2009 |
| NET SALES, MEUR | | | |
--------------------------------------------------------------------------------
| Americas (North, Central and South | 19.4 | 17.3 | 23.1 |
| America) | | | |
--------------------------------------------------------------------------------
| Europe | 4.9 | 5.6 | 5.2 |
--------------------------------------------------------------------------------
| MEA (Middle East and Africa) | 17.8 | 14.9 | 21.3 |
--------------------------------------------------------------------------------
| APAC (Asia Pacific) | 4.6 | 2.0 | 3.6 |
--------------------------------------------------------------------------------
| TOTAL | 46.7 | 39.7 | 53.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 3. CONSOLIDATED CONTINGENT | 30.9.2010 | 30.9.2009 | 31.12.2009 |
| LIABILITIES, MEUR | | | |
--------------------------------------------------------------------------------
| Pledges given | 0.1 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Guarantees | | | |
--------------------------------------------------------------------------------
| On own behalf | 0.3 | 0.2 | 0.6 |
--------------------------------------------------------------------------------
| Other liabilities | | | |
--------------------------------------------------------------------------------
| Restriction related to real estate in | 0.4 | 0.4 | 0.4 |
| Ireland | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OTHER OPERATING LEASES, MEUR | 30.9.2010 | 30.9.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| Minimum rents payable based on other | | | |
| leases that cannot be cancelled: | | | |
--------------------------------------------------------------------------------
| Other operating leases | | | |
--------------------------------------------------------------------------------
| Less than one year | 0.6 | 0.6 | 0.7 |
--------------------------------------------------------------------------------
| Between one and five years | 0.3 | 0.8 | 0.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 4. CONSOLIDATED KEY FINANCIAL FIGURES | 1-9/2010 | 1-9/2009 | 1-12/2009 |
--------------------------------------------------------------------------------
| Return on investment, % | -3,4 | -7.0* | -13.7* |
--------------------------------------------------------------------------------
| Return on equity, % | -9.9 | -14.5* | -20.2* |
--------------------------------------------------------------------------------
| Equity ratio, % | 68.8 | 68.7* | 65.6* |
--------------------------------------------------------------------------------
| Net gearing, % | 3.1 | -13.8* | -10.8 |
--------------------------------------------------------------------------------
| Investments, MEUR | 1.1 | 1.3 | 1.4 |
--------------------------------------------------------------------------------
| % of net sales | 2.4 | 3.2 | 2.7 |
--------------------------------------------------------------------------------
| Research and development, MEUR | 9.8 | 10.7 | 14.5 |
--------------------------------------------------------------------------------
| % of net sales | 21.0 | 26.9 | 27.2 |
--------------------------------------------------------------------------------
| Order book, MEUR | 20.1 | 15.2 | 11.7 |
--------------------------------------------------------------------------------
| Personnel, average | 779 | 613 | 665 |
--------------------------------------------------------------------------------
| Personnel, at end of period | 830 | 842 | 779 |
--------------------------------------------------------------------------------
* The figures for the comparative periods have changed due to adjustments to the
purchase price calculation of Tecnotree India
--------------------------------------------------------------------------------
| CONSOLIDATED KEY FIGURES PER SHARE | 1-9/2010 | 1-9/2009 | 1-12/2009 |
--------------------------------------------------------------------------------
| Earnings per share, basic, EUR | -0.08 | -0.14 | -0.24 |
--------------------------------------------------------------------------------
| Earnings per share, diluted, EUR | -0.08 | -0.13 | -0.24 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 1.03 | 1.12 | 1.05 |
--------------------------------------------------------------------------------
| Number of shares at end of period, x | 73,496 | 78,819 | 73,496 |
| 1,000 | | | |
--------------------------------------------------------------------------------
| Number of shares on average, x 1,000 | 73,496 | 66,306 | 68,039 |
--------------------------------------------------------------------------------
| Share price, EUR | | | |
--------------------------------------------------------------------------------
| Average | 0.88 | 1.01 | 1.00 |
--------------------------------------------------------------------------------
| Lowest | 0.70 | 0.78 | 0.78 |
--------------------------------------------------------------------------------
| Highest | 1.00 | 1.21 | 1.21 |
--------------------------------------------------------------------------------
| Share price at end of period, EUR | 0.77 | 1.00 | 0.94 |
--------------------------------------------------------------------------------
| Market capitalisation of issued stock | 56.7 | 73.0 | 69.2 |
| at end of period, MEUR | | | |
--------------------------------------------------------------------------------
| Share turnover, million shares | 10.4 | 18.4 | 22.6 |
--------------------------------------------------------------------------------
| Share turnover, % of total | 14.2 | 25.2 | 30.7 |
--------------------------------------------------------------------------------
| Share turnover, MEUR | 9.2 | 19.1 | 23.2 |
--------------------------------------------------------------------------------
| Price/earnings ratio (P/E) | | | -3.97 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY KEY FIGURES | 3Q/10 | 2Q/10 | 1Q/10 | 4Q/09 | 3Q/09 | 2Q/09 |
--------------------------------------------------------------------------------
| Net sales, MEUR | 13.3 | 19.3 | 14.1 | 13.5 | 13.2 | 15.0 |
--------------------------------------------------------------------------------
| Net sales, change % | 0.5 | 28.7 | 22.8 | -37.7 | -27.4 | -32.6 |
--------------------------------------------------------------------------------
| Adjusted operating | -0,7 | 2,0 | -0,6 | -2.0 | -2.1 | -2.7 |
| result*** | | | | | | |
--------------------------------------------------------------------------------
| % of net sales | -5.1 | 10.2 | -4.2 | -14.7 | -15.6 | -18.0 |
--------------------------------------------------------------------------------
| Operating result, MEUR | -2.0 | 0.7 | -1.9 | -8.5 | -3.2 | -1.6 |
--------------------------------------------------------------------------------
| % of net sales | -14.7 | 3.8 | -13.7 | -63.0 | -23.9 | -10.5 |
--------------------------------------------------------------------------------
| Result before taxes, | -1.8 | 0.0 | -2.5 | -8.6 | -3.6 | -1.8 |
| MEUR | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Personnel at end of | 830 | 794 | 759 | 779 | 842 | 820 |
| period | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, | -0.03 | -0.01 | -0.04 | -0.10 | -0.06 | -0.04 |
| basic, EUR | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | -0.03 | -0.01 | -0.04 | -0.10 | -0.06 | -0.04 |
| diluted, EUR | | | | | | |
--------------------------------------------------------------------------------
| Equity per share, EUR | 1.03 | 1.11 | 1.08 | 1.05 | 1.12 | 1.20 |
--------------------------------------------------------------------------------
| Net interest-bearing | -10.3 | -5.0 | -9.1 | -8.3 | -11.3 | -14.3 |
| liabilities, MEUR | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Order book, MEUR | 20.1 | 21.0 | 21.9 | 11.7 | 15.2 | 21.5 |
--------------------------------------------------------------------------------
*** Adjusted result = operating result before R & D capitalisation, amortization
of this and one-time costs. Details of these are given in the section “Result
analysis”.
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