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INTERIM REPORT OF COMPTEL CORPORATION 1 JANUARY-30 SEPTEMBER 2014(OMX Via Acquire Media NewsEdge) Comptel Corporation Stock exchange release 21 October 2014 at 8.00 am INTERIM REPORT OF COMPTEL CORPORATION 1 JANUARY-30 SEPTEMBER 2014 Overall revenue growth of 8.7% compared to previous year Q3 and profitability improved significantly. Key figures for the third quarter: -- Net sales EUR 20.3 million (Q3 2013: 18.7), change 8.7% -- Operating result EUR 2.2 million (1.3), 11.0% of net sales and 74.8% growth to previous year quarter 3. -- Earnings per share EUR 0.00 (0.01) -- Order backlog EUR 45.0 million (35.5), change 26.9% Key figures for January-September: -- Net sales EUR 58.9 million (Q1-Q3, 2013: 60.5), change -2.6% -- Operating result EUR 4.4 million (3.6), 7.4% of net sales -- Earnings per share EUR 0.01 (-0.00) Comptel’s operating result for 2014 is expected to be EUR 5-10 million. The 2014 revenue is expected to remain at the 2013 level while the new solutions are expected to grow from Q2 onwards. Juhani Hintikka, President and CEO: ”We had a strong quarter both in terms of quarterly growth in net sales compared to last year, as well as in terms of profitability. In the third quarter Project and license revenue grew 20% compared to last year’s third quarter. Growth came both through winning new customers as well as new projects. Both our new and current business areas grew in the third quarter compared to last year. We signed a strategic partnership agreement with Hitachi who will be reselling our Policy Control solution. This will enable us to enter the Japanese market. During the third quarter we secured 6 significant orders, valued over EUR 500,000. Our backlog strengthened significantly overall. Comptel has won this year 6 new customers compared to 4 overall last year.” Business Review for the third Quarter and January-September 2014 In the third quarter, Comptel’s net sales increased by 8.7 per cent from the previous year and were EUR 20.3 million (18.7). The increase was due to improved project & license sales. In January-September, net sales decreased by 2.6 per cent from the previous year and were EUR 58.9 million (60.5). In the third quarter, the operating result was EUR 2.2 million (1.3), which corresponds to 11.0 per cent of net sales (6.8). The operating result improvement was mainly due to increase in net sales. The operating result for January-September was EUR 4.4 million (3.6), which correspond to 7.4 per cent of net sales (6.0). In the third quarter the net of financial income/expense were - 0.6 million (+0.05). This was due strengthening of USD during the quarter. In January – September the net financial income/expense were -1.2 (1.1). In January-September, profit before taxes was EUR 3.2 million (2.5) and net profit was EUR 1.2 million (0.3). Earnings per share for the period under review were EUR 0.01 (-0.00). Tax expense for January-September was EUR 2.0 million (2.2), including EUR 1.2 million of withholding taxes. The Group’s order backlog increased from the previous year and was EUR 45.0 million (35.5) at the end of the period. Business areas Net sales, 7-9 2014 7-9 Change % 1-9 2014 1-9 2013 Change 1-12 EUR million 2013 % 2013 -------------------------------------------------------------------------------- Europe 8.1 7.6 6.0 23.5 25.2 -6.7 33.1 -------------------------------------------------------------------------------- Asia Pacific 6.8 4.7 45.5 19.0 16.0 19.2 20.9 -------------------------------------------------------------------------------- Middle East and 3.5 3.5 -1.1 10.4 10.7 -3.1 16.3 Africa -------------------------------------------------------------------------------- Americas 2.0 2.9 -31.9 6.0 8.6 -30.3 12.3 -------------------------------------------------------------------------------- Total 20.3 18.7 8.7 58.9 60.5 -2.6 82.7 -------------------------------------------------------------------------------- Operating result, EUR million -------------------------------------------------------------------------------- Europe 4.5 3.6 24.7 11.9 11.9 -0.6 15.6 -------------------------------------------------------------------------------- Asia Pacific 4.5 2.3 94.2 12.1 7.6 59.9 10.1 -------------------------------------------------------------------------------- Middle East and 1.0 1.6 -36.5 3.9 3.7 7.7 6.7 Africa -------------------------------------------------------------------------------- Americas 0.8 1.7 -52.4 2.6 4.6 -43.6 7.0 -------------------------------------------------------------------------------- Unallocated costs -8.6 -8.0 -8.0 -26.1 -24.1 -8.2 -32.1 -------------------------------------------------------------------------------- Total 2.2 1.3 74.8 4.4 3.6 21.2 7.3 -------------------------------------------------------------------------------- Operating result, % of net sales -------------------------------------------------------------------------------- Europe 56.2 47.7 - 50.4 47.3 - 47.3 -------------------------------------------------------------------------------- Asia Pacific 66.0 49.4 - 63.5 47.3 - 48.0 -------------------------------------------------------------------------------- Middle East and 29.9 46.6 - 38.0 34.2 - 40.8 Africa -------------------------------------------------------------------------------- Americas 41.1 58.8 - 43.3 53.5 - 56.9 -------------------------------------------------------------------------------- Total 11.0 6.8 - 7.4 6.0 - 8.8 -------------------------------------------------------------------------------- In the third quarter, net sales grew in Asia Pacific and Europe. In January-September, net sales increased in Asia Pacific. The proportional profitability improved in Asia-Pacific and Middle East and Africa while Americas is below last year. In January-September, Comptel received 15 significant orders (Q1-Q3 2013: 15): 7 Comptel Control & Charge,3 Comptel Provisioning and Activation,3 Comptel Fulfillment and 2 Comptel Managed Services orders. As significant orders Comptel reports sold projects and licenses with a value of EUR 500,000 at the minimum. Net sales breakdown, 7-9 7-9 Change % 1-9 1-9 Change 1-12 EUR million 2014 2013 2014 2013 % 2013 ------------------------------------------------------------------------------ Project & License business 11.9 9.9 20.4 33.3 33.8 -1.4 47.1 ------------------------------------------------------------------------------ Recurring business 8.4 8.8 -4.4 25.6 26.7 -4.1 35.6 ------------------------------------------------------------------------------ Total 20.3 18.7 8.7 58.9 60.5 -2.6 82.7 ------------------------------------------------------------------------------ Project & License business sales increased significantly during Q3 compared to the previous year. The January-September project business sales is still slightly under last year due to slow start in the first quarter of the year 2014. Net sales 7-9 2014 7-9 2013 Change 1-9 1-9 Change % 1-12 2013 breakdown, % 2014 2013 EUR million -------------------------------------------------------------------------------- New business 5.1 5.0 2.8 13.9 15.0 -7.4 19.2 -------------------------------------------------------------------------------- Current business 15.2 13.7 10.9 45.0 45.5 -1.0 63.5 -------------------------------------------------------------------------------- Total 20.3 18.7 8.7 58.9 60.5 -2.6 82.7 -------------------------------------------------------------------------------- In the third quarter the current business grew significantly compared to the previous year. In January-September both sales categories are lower compared to the previous year due to a low Q1 sales level. Financial Position EUR million 30 Sep 31 Dec Change 30 Sep Change 2014 2013 % 2013 % -------------------------------------------------------------------------------- Statement of financial position 62.0 67.9 -8.7 63.4 -2.2 total -------------------------------------------------------------------------------- Liquid assets 5.7 6.5 -12.6 6.5 -11.4 -------------------------------------------------------------------------------- Trade receivables, gross 22.8 23.7 -3.8 22.4 2.1 -------------------------------------------------------------------------------- Bad debt provision -0.8 -1.0 -22.9 -0.8 1.0 -------------------------------------------------------------------------------- Trade receivables, net 22.0 22.7 -2.9 21.6 2.2 -------------------------------------------------------------------------------- Accrued income 10.3 9.4 9.2 10.0 2.9 -------------------------------------------------------------------------------- Deferred income related to partial 2.6 1.9 36.6 1.9 39.4 debiting -------------------------------------------------------------------------------- Interest-bearing debt 5.6 8.8 -36.7 11.9 -53.3 -------------------------------------------------------------------------------- Equity ratio, per cent 59.0 50.5 16.7 49.3 19.6 -------------------------------------------------------------------------------- The statement of financial position total was EUR 62.0 million. Operating cash flow was EUR 3.2 million (2.4) in the third quarter and EUR 6.5 million (3.7) during January-September. The trade receivables were EUR 22.0 million (21.6) at the end of the period. The accrued income was EUR 10.3 million (10.0). The deferred income related to partial debiting was EUR 2.6 million (1.9). Comptel has a 17 million credit facility arrangement, of which 5 million is in use. Out of the term loan facility there is 4 million in use and there is one million loan in use out of total 13 million revolving credit facility at the quarter end. The credit facility arrangement is valid until January 2016. The equity ratio was 59.0 per cent (49.3) and the gearing ratio was -0.6 per cent (20.1). The improved equity and gearing ratio during January-September is due to strengthening net cash flow. Research and Development (R&D) EUR million 7-9 7-9 Change 1-9 1-9 Change 1-12 2014 2013 % 2014 2013 % 2013 -------------------------------------------------------------------------------- Direct R&D expenditure 3.9 4.3 -8.4 11.7 12.9 -9.8 17.8 -------------------------------------------------------------------------------- Capitalisation of R&D -1.2 -1.2 -2.9 -3.4 -4.0 -16.6 -5.5 expenditure according to IAS 38 -------------------------------------------------------------------------------- R&D depreciation and 1.0 1.1 -12.0 3.7 3.0 23.8 4.2 impairment charges -------------------------------------------------------------------------------- R&D expenditure, net 3.7 4.2 -10.9 12.0 11.9 1.0 16.5 -------------------------------------------------------------------------------- Direct R&D expenditure and 19.4 23.1 - 19.8 21.4 - 21.5 investments, % of net sales -------------------------------------------------------------------------------- In January–September direct R&D expenditure represented 19.8 per cent (21.4) of net sales. Comptel’s R&D expenditure was mainly targeted at the service fulfillment automation of telecom operators and to the management and real-time analysis of rapidly increasing data traffic. Comptel seeks global market leadership in these areas where key business challenges of operators and service providers will be solved. In addition, the company is developing an integrated software platform which will enable a cost-efficient and solution-based R&D. In 2014, the company focuses on developing its offering within the Comptel Fulfillment, Comptel Policy & Charging Control and advanced analytics product areas. Five major software releases were launched in these respective product areas during January-September. Investments EUR million 7-9 7-9 Change 1-9 1-9 Change 1-12 2013 2014 2013 % 2014 2013 % -------------------------------------------------------------------------------- Gross investments in 0.1 0.1 -9.3 0.4 0.5 -20.9 0.6 property, plant and equipment and intangible assets -------------------------------------------------------------------------------- The investments comprised of devices, software and furnishings. The investments were funded through liquid assets and cash flow from operations. Personnel 30 Sep 30 Sep Change 31 Dec 2014 2013 % 2013 -------------------------------------------------------------------------------- Number of employees at the end of 653 683 -4.4 690 period -------------------------------------------------------------------------------- 1-9 1-9 Change 1-12 2014 2013 % 2013 ----------------------------------------------------------------------- Average number of personnel during the period 666 683 -2.5 684 ----------------------------------------------------------------------- The number of employees decreased slightly during third quarter. In July-September, personnel expenses were 48.2 per cent of net sales (49.2). In January-September, the personnel expenses were 48.5 per cent of net sales (50.6). At the end of the period, 29.7 per cent (30.2) of the personnel were located in Finland, 28.6 per cent (27.4) in Malaysia, 11.5 per cent (11.0) in Bulgaria, 7.2 per cent (4.8) in India, 3.1 per cent (6.3) in the United Arab Emirates, 2.8 per cent (2.8) in Norway, 2.1 per cent (6.3) in the United Kingdom, 15.0 per cent (11.2) in other countries where Comptel operates. Comptel share Closing share price of the period was EUR 0.64 (0.53). Comptel’s market value at the end of the period was EUR 68.2 million (56.7). Comptel share 7-9 2014 7-9 2013 Change 1-9 2014 1-9 2013 Change 1-12 % % 2013 -------------------------------------------------------------------------------- Shares traded, 3.7 4.4 -16.3 20.6 12.1 70.0 18.4 million -------------------------------------------------------------------------------- Shares traded, EUR 2.3 2.2 5.1 11.5 5.5 111.0 8.7 million -------------------------------------------------------------------------------- Highest price, EUR 0.67 0.55 21.8 0.70 0.55 27.3 0.59 -------------------------------------------------------------------------------- Lowest price, EUR 0.60 0.45 33.3 0.48 0.38 26.3 0.38 -------------------------------------------------------------------------------- Of Comptel’s outstanding shares, 3.4 per cent (7.5) were nominee registered or held by foreign shareholders at the end of the period. During the period, Comptel Corporation allotted gratuitously 121,480 shares to the members of the Board of Directors as part of their annual compensation and 75,000 shares to the President and CEO of the company according to the terms and conditions of the 2011 share-based incentive plan. The company held 193 412 of its own shares at the end of the period, which is 0.18 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 3 868. 2 140 000 share options were distributed during the review period based on Stock Option Incentive Plan 2014. Corporate Governance The Annual General Meeting of Comptel Corporation was held on 12 of March 2014. The resolutions of the Annual General Meeting as well as the minutes of the Annual General Meeting can be found at company’s web page www.comptel.com. A separate stock exchange release about the resolutions of the Annual General Meeting including authorisations given to the Board of Directors was issued on 12 of March 2014. The AGM authorised the Board of Directors to decide on share issues amounting to a maximum of 21,400,000 new shares and/or special rights entitling to shares and on repurchase or conveying of the company's own shares up to a maximum number of 10,700,000 shares. The authorisations are valid until 30 of June 2015. However, the authorisation to implement the company's share-based incentive programs is valid until five years from the AGM resolution. Stock Option Incentive Plan 2014 Based on authorisation given to the Board of Directors by the Annual General Meeting held on 20 of March 2013, the Board of Directors resolved 5 of February 2014 on a new stock option incentive plan. A maximum total of 4,200,000 options will be granted and they entitle their holders to subscribe to a maximum of 4,200,000 new or existing Company's own share. The new incentive plan is to replace the existing incentive plan from the year 2012. Of the stock options, 2,200,000 are to be marked with the symbol 2014A, 1,000,000 are to be marked with the symbol 2014B and 1,000,000 are to be marked with the symbol 2014C. The share subscription price stock option 2014A is EUR 0.54 per share, which corresponds to the trade volume weighted average quotation of the share on the NASDAQ OMX Helsinki Ltd during 15 of February - 15 of March 2014.The subscription price for options 2014B and 2014C is defined as the weighted average trade price of the Company’s stock in NASDAQ OMX Helsinki as follows: for the options 2014B between 15 of February – 15 of March 2015 and for the options 2014C 15 of February – 15 of March 2016. The subscription periods for the shares are as follows: for options 2014A 1 of February 2016 – 31 of January 2018; for options 2014B 1 of February 2017 - 31 of January, 2019 and for options 2014C 1 of February 2018 – 31 of January 2020. Pursuant to the stock option subscriptions, the number of shares can increase by a maximum of 4,200,000 new shares. Full information on the stock option incentive plan can be found at company’s web page www.comptel.com. A separate stock exchange release about the stock option plan has been issued on 5 of February 2014. Events after the Reporting Period There were no significant events after the reporting period. Near-term Risks and Uncertainties Comptel develops dynamic end-to-end solutions for leading operators globally in the telecom field. This requires Comptel to understand correctly the trends taking place in its business environment and the needs of its customers and resellers by each region. Failure to identify market conditions, address customers’ needs and develop its products in a timely way may significantly undermine the growth of Comptel’s business and its profitability. Characteristics of Comptel’s field of industry are significant quarterly variations of net sales and profit, which are related to customers’ purchasing behaviour and the timing of major single deals. Comptel’s business consists of deliveries of large productised IT system and the value of a single project may be several million euros. Therefore, the credit risk associated with a single project or an individual customer may be significant. Furthermore, some of Comptel’s customers operate in countries where the political or financial climate can be unstable which in part may increase credit risk. Comptel operates globally so it is exposed to risks arising from different currency positions. Exchange rate changes between the Euro, which is the company’s reporting currency, and the US Dollar, UK Pound Sterling and Malaysian Ringgit affect the company’s net sales, expenses and net profit. The application process to prevent Comptel’s double taxation is still pending with the Ministry of Finance in Finland. However, the process between the states is very slow and the timing of a change is hard to forecast. The interpretation of tax treaties may result in different views between the countries in question. This could mean that the double taxation will prevail. Comptel has also applications for return of withholding taxes in other countries but they are subject to local legal processes, which take time to get completed. The risks and uncertainties of Comptel are described more in detail in the company’s financial statements and the Board of Directors’ report for 2013. Outlook Comptel’s operating result for 2014 is expected to be EUR 5-10 million. The 2014 revenue is expected to remain at the 2013 level while the new solutions are expected to grow from Q2 onwards. Characteristically a significant part of Comptel’s operating profit and net sales is generated in the second half of the year. TABLE PART The interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU. The accounting policies and methods of computation adopted in the financial statements are consistent with those of the annual financial statements for the year ended 2013. All figures in the financial report have been rounded and consequently the sum of the individual figures can deviate from the sum figure. The interim report is unaudited. Consolidated Statement of Comprehensive 1 Jan – 1 Jan – 1 Jul – 1 Jul – Income (EUR 1,000) 30 Sep 30 Sep 30 Sep 30 Sep 2014 2013 2014 2013 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net sales 58,922 60,496 20,327 18,693 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Other operating income 281 8 -25 5 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Materials and services -2,855 -2,830 -756 -704 -------------------------------------------------------------------------------- Employee benefits -28,605 -30,589 -9,807 -9,191 -------------------------------------------------------------------------------- Depreciation, amortisation and -4,762 -4,212 -1,600 -1,497 impairment charges -------------------------------------------------------------------------------- Other operating expenses -18,611 -19,268 -5,903 -6,026 -------------------------------------------------------------------------------- -54,833 -56,898 -18,066 -17,418 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Operating profit/loss 4,370 3,606 2,236 1,279 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial income 879 210 336 11 -------------------------------------------------------------------------------- Financial expenses -2,034 -1,343 -892 41 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss before income taxes 3,216 2,473 1,679 1,331 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Income taxes -2,005 -2,179 -1,286 -600 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss for the period 1,211 294 394 731 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Other comprehensive income: -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Other comprehensive income to be reclassified to profit or loss in subsequent periods -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Translation differences 674 -476 361 -157 -------------------------------------------------------------------------------- Cash flow hedges - - - - -------------------------------------------------------------------------------- Income tax relating to components of - - - - other comprehensive income -------------------------------------------------------------------------------- Total other comprehensive income 674 -476 361 -157 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total comprehensive income for the 1,885 -181 755 574 period -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 1,211 294 394 731 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total comprehensive income attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 1,885 -181 755 574 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Shareholders of the parent company: -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Earnings per share, EUR 0.01 0.00 0.00 0.01 -------------------------------------------------------------------------------- Earnings per share, diluted, EUR 0.01 0.00 0.00 0.01 -------------------------------------------------------------------------------- Consolidated Statement of Financial Position (EUR 30 Sep 2014 31 Dec 2013 1,000) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Assets -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Non-current assets -------------------------------------------------------------------------------- Goodwill 2,646 2,646 -------------------------------------------------------------------------------- Other intangible assets 13,374 14,174 -------------------------------------------------------------------------------- Tangible assets 1,477 1,629 -------------------------------------------------------------------------------- Investments in associates 661 661 -------------------------------------------------------------------------------- Available-for-sale financial assets 87 87 -------------------------------------------------------------------------------- Deferred tax assets 4,587 4,358 -------------------------------------------------------------------------------- Other non-current receivables 537 500 -------------------------------------------------------------------------------- 23,371 24,055 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Current assets -------------------------------------------------------------------------------- Trade and other current receivables 32,955 37,346 -------------------------------------------------------------------------------- Cash and cash equivalents 5,720 6,542 -------------------------------------------------------------------------------- 38,676 43,889 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total assets 62,046 67,944 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Equity and liabilities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Equity attributable to equity holders of the parent company -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Share capital 2,141 2,141 -------------------------------------------------------------------------------- Fund of invested non-restricted equity 401 401 -------------------------------------------------------------------------------- Translation differences -545 -1,219 -------------------------------------------------------------------------------- Retained earnings 27,564 27,600 -------------------------------------------------------------------------------- Total equity 29,562 28,924 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Non-current liabilities -------------------------------------------------------------------------------- Deferred tax liabilities 2,588 2,983 -------------------------------------------------------------------------------- Non-current financial liabilities 2,262 3,483 -------------------------------------------------------------------------------- 4,849 6,466 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Current liabilities -------------------------------------------------------------------------------- Provisions 1,693 1,939 -------------------------------------------------------------------------------- Current financial liabilities 3,290 5,287 -------------------------------------------------------------------------------- Trade and other current liabilities 22,653 25,329 -------------------------------------------------------------------------------- 27,636 32,554 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total liabilities 32,485 39,020 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total equity and liabilities 62,046 67,944 -------------------------------------------------------------------------------- Consolidated Statement of Cash Flows 1 Jan – 30 1 Jan – 30 (EUR 1,000) Sep 2014 Sep 2013 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash flows from operating activities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit/loss for the period 1,211 294 -------------------------------------------------------------------------------- Adjustments: -------------------------------------------------------------------------------- Non-cash transactions or items that are not part of 4,641 5,370 cash flows from operating activities -------------------------------------------------------------------------------- Interest and other financial expenses 1,081 344 -------------------------------------------------------------------------------- Interest income -18 -12 -------------------------------------------------------------------------------- Income taxes 1,769 2,179 -------------------------------------------------------------------------------- Change in working capital: -------------------------------------------------------------------------------- Change in trade and other current receivables 3,375 8,190 -------------------------------------------------------------------------------- Change in trade and other current liabilities -2,975 -8,743 -------------------------------------------------------------------------------- Change in provisions 59 -724 -------------------------------------------------------------------------------- Interest and other financial expenses paid -194 -239 -------------------------------------------------------------------------------- Interest received 12 7 -------------------------------------------------------------------------------- Income taxes paid and tax returns received -2,399 -2,940 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash from operating activities 6,561 3,726 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash flows from investing activities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Proceeds from sale of business operations 200 - -------------------------------------------------------------------------------- Investments in tangible assets -379 -413 -------------------------------------------------------------------------------- Investments in intangible assets - -66 -------------------------------------------------------------------------------- Investments in development projects -3,371 -4,042 -------------------------------------------------------------------------------- Proceeds from sale of tangible assets 34 - -------------------------------------------------------------------------------- Change in other non-current receivables -8 -21 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash used in investing activities -3,553 -4,541 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash flows from financing activities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Dividends paid -1,073 - -------------------------------------------------------------------------------- Acquisition of Corporation’s own shares -146 -88 -------------------------------------------------------------------------------- Proceeds from borrowings - 14,015 -------------------------------------------------------------------------------- Repayment of borrowings -3,012 -11,043 -------------------------------------------------------------------------------- Lease payments -163 -87 -------------------------------------------------------------------------------- Change in other non-current liabilities -68 - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash used in financing activities -4,463 2,797 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net change in cash and cash equivalents -1,454 1,986 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the 6,542 4,817 period -------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period 5,720 6,459 -------------------------------------------------------------------------------- Change -822 1,642 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effects of changes in foreign exchange rates 632 -340 -------------------------------------------------------------------------------- Consolidated Statement of Changes in Equity -------------------------------------------------------------------------------- - Equity attributable to equity holders of the parent company -------------------------------------------------------------------------------- - EUR 1,000 Share Other Translation Retained Total capital reserves differences earnings -------------------------------------------------------------------------------- Equity at 2,141 243 -636 25,207 26,956 31 Dec 2012 -------------------------------------------------------------------------------- Acquisition of -88 -88 Corporation’s own shares -------------------------------------------------------------------------------- Transfer of treasury 66 66 shares -------------------------------------------------------------------------------- Share-based 199 199 compensation -------------------------------------------------------------------------------- Other changes 4 4 -------------------------------------------------------------------------------- Total comprehensive -476 294 -181 income for the period -------------------------------------------------------------------------------- Equity at 2,141 243 -1,112 25,684 26,957 30 Sep 2013 -------------------------------------------------------------------------------- Consolidated Statement of Changes in Equity -------------------------------------------------------------------------------- - Equity attributable to equity holders of the parent company -------------------------------------------------------------------------------- - EUR 1,000 Share Other Translation Retained Total capital reserves differences earnings -------------------------------------------------------------------------------- Equity at 2,141 401 -1,219 27,600 28,924 31 Dec 2013 -------------------------------------------------------------------------------- Dividends -1,073 -1,073 -------------------------------------------------------------------------------- Acquisition of -146 -146 Corporate’s own shares -------------------------------------------------------------------------------- Share-based 198 198 compensation -------------------------------------------------------------------------------- Prior year correction* -210 -210 -------------------------------------------------------------------------------- Other changes -14 -14 -------------------------------------------------------------------------------- Total comprehensive 674 1,211 1,885 income for the period -------------------------------------------------------------------------------- Equity at 2,141 401 -545 27,566 29,562 30 Sep 2014 -------------------------------------------------------------------------------- *Difference in prior year receivables was corrected directly to Retained Earnings during the reporting period Notes 1. Application of new or amended standards and interpretations Comptel has adopted the new or amended standards and interpretations, effective for the financial years beginning on or after 1 January 2014. However, those have not had an impact on the consolidated financial statements. 2. Segment information Net sales by segment EUR 1,000 1 Jan – 1 Jan – 1 Jul – 1 Jul – 30 Sep 2014 30 Sep 2013 30 Sep 2014 30 Sep 2013 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Europe 23,511 25,205 8,053 7,595 -------------------------------------------------------------------------- Asia-Pacific 19,039 15,976 6,843 4,702 -------------------------------------------------------------------------- Middle East and Africa 10,367 10,698 3,454 3,491 -------------------------------------------------------------------------- Americas 6,004 8,617 1,978 2,905 -------------------------------------------------------------------------- Group total 58,922 60,496 20,327 18,693 -------------------------------------------------------------------------- Operating profit/loss by segment EUR 1,000 1 Jan – 1 Jan – 1 Jul – 1 Jul – 30 Sep 30 Sep 30 Sep 30 Sep 2014 2013 2014 2013 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Europe 11,851 11,917 4,523 3,626 -------------------------------------------------------------------------------- Asia-Pacific 12,095 7,563 4,514 2,325 -------------------------------------------------------------------------------- Middle East and Africa 3,939 3,658 1,034 1,628 -------------------------------------------------------------------------------- Americas 2,601 4,613 812 1,707 -------------------------------------------------------------------------------- Group unallocated expenses -26,116 -24,146 -8,647 -8,006 -------------------------------------------------------------------------------- Group operating profit/loss 4,370 3,606 2,236 1,279 total -------------------------------------------------------------------------------- Financial income and expenses -1,155 -1,133 -556 52 -------------------------------------------------------------------------------- Group profit/loss before income 3,216 2,473 1,680 1,331 taxes -------------------------------------------------------------------------------- 3. Income tax Income tax expense according to the statement of comprehensive income for this year was EUR 2,005 thousand (EUR 2,179 thousand in 2013). In 2006, the Board of Adjustment of the Tax Office for Major Corporations refused to accept the crediting of taxes withheld at source in taxation of 2004 and 2005. The application process to prevent Comptel’s double taxation is still pending with the Ministry of Finance in Finland. However, the process between the states is very slow and the timing of a change is hard to forecast. The interpretation of tax treaties may result in different views between the countries in question. This could mean that the double taxation will prevail. According to the Board of Adjustment’s decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to EUR 1,207 thousand in January-September (EUR 915 thousand). 4. Tangible assets EUR 1,000 1 Jan – 30 Sep 2014 1 Jan – 30 Sep 2013 --------------------------------------------------- --------------------------------------------------- Additions 379 1,091 --------------------------------------------------- Disposals -17 -128 --------------------------------------------------- 5. Related party transactions The Comptel Group have a related party relationship with its associate, the Board of Directors, the Executive Board and also with people and companies under Comptel management’s influence. Transactions which have been entered into with related parties are as follows: EUR 1,000 1 Jan – 30 Sep 2014 1 Jan – 30 Sep 2013 ---------------------------------------------------------------- ---------------------------------------------------------------- Associate ---------------------------------------------------------------- Other operating income - 4 ---------------------------------------------------------------- Interest income 6 6 ---------------------------------------------------------------- EUR 1,000 30 Sep 2014 31 Dec 2013 ------------------------------------------------- ------------------------------------------------- Associate ------------------------------------------------- Non-current receivables 111 106 ------------------------------------------------- Trade receivables - - ------------------------------------------------- Remuneration to key management Key management personnel compensation includes the employee benefits of the members of the Board of Directors and the Executive Board. EUR 1,000 1 Jan – 30 Sep 1 Jan – 30 Sep 2014 2013 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Salaries and other short-term employee 1,336 1,065 benefits -------------------------------------------------------------------------------- Share-based payments 429 236 -------------------------------------------------------------------------------- Total 1,765 1,301 -------------------------------------------------------------------------------- Guarantees and other commitments EUR 1,000 30 Sep 2014 31 Dec 2013 ------------------------------------ ------------------------------------ Guarantees 30 44 ------------------------------------ 6. Commitments Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows: EUR 1,000 30 Sep 2014 31 Dec 2013 ---------------------------------------------------- ---------------------------------------------------- Less than one year 2,745 2,312 ---------------------------------------------------- Between one and five years 3,240 4,596 ---------------------------------------------------- Total 5,984 6,908 ---------------------------------------------------- The group had no material capital commitments for the purchase of tangible assets at 30 September 2014 and 30 September 2013. 7. Contingent liabilities EUR 1,000 30 Sep 2014 31 Dec 2013 --------------------------------------------- --------------------------------------------- Bank guarantees 2,260 1,674 --------------------------------------------- Corporate mortgages 200 200 --------------------------------------------- EUR 1,000 30 Sep 2014 31 Dec 2013 -------------------------------------------------------------------- -------------------------------------------------------------------- Contingent liabilities on behalf of others -------------------------------------------------------------------- Guarantees 56 72 -------------------------------------------------------------------- 8. Key figures Financial summary 1 Jan–30 1 1 Sep Jan–30Se Jan–31De 2014 p c 2013 2013 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net sales, EUR 1,000 58,922 60,496 82,668 -------------------------------------------------------------------------------- Net sales, change % -2.6 -0.1 0.3 -------------------------------------------------------------------------------- Operating profit/loss, EUR 1,000 4,370 3,606 7,308 -------------------------------------------------------------------------------- Operating profit/loss, change % 21.2 123.6 154.1 -------------------------------------------------------------------------------- Operating profit/loss, as % of net sales 7.4 6.0 8.8 -------------------------------------------------------------------------------- Profit/loss before taxes, EUR 1,000 3,216 2,473 5,554 -------------------------------------------------------------------------------- Profit/loss before taxes, as % of net sales 5.5 4.1 6.7 -------------------------------------------------------------------------------- Return on equity, % - - 9.3 -------------------------------------------------------------------------------- Return on investment, % - - 16.1 -------------------------------------------------------------------------------- Equity ratio, % 59.0 49.3 50.5 -------------------------------------------------------------------------------- Gross investments in tangible and intangible 379 479 551 assets, EUR 1,0001) -------------------------------------------------------------------------------- Gross investments in tangible and intangible 0.6 0.8 0.7 assets, as % of net sales -------------------------------------------------------------------------------- Capitalisations according to IAS 38 to intangible 3,371 4,042 5,510 assets, EUR 1,000 -------------------------------------------------------------------------------- Research and development expenditure, EUR 1,000 11,652 12,925 17,790 -------------------------------------------------------------------------------- Research and development expenditure, 19.8 21.4 21.5 as % of net sales -------------------------------------------------------------------------------- Order backlog, EUR 1,000 45,019 35,489 40,756 -------------------------------------------------------------------------------- Average number of employees during the period 666 683 684 -------------------------------------------------------------------------------- Interest-bearing net liabilities, EUR 1,000 -169 5,432 2,228 -------------------------------------------------------------------------------- Gearing ratio, % -0.6 20.1 7.7 -------------------------------------------------------------------------------- 1) The figure does not include investments in development projects. Per share data 1 Jan – 1 Jan – 1 Jan – 30 Sep 2014 30 Sep 2013 31 Dec 2013 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Earnings per share (EPS), EUR 0.01 0.00 0.02 -------------------------------------------------------------------------------- EPS diluted, EUR 0.01 0.00 0.02 -------------------------------------------------------------------------------- Equity per share, EUR 0.28 0.25 0.27 -------------------------------------------------------------------------------- Dividend per share, EUR - - 0.01 -------------------------------------------------------------------------------- Dividend per earnings, % - - 41.2 -------------------------------------------------------------------------------- Effective dividend yield, % - - 2.1 -------------------------------------------------------------------------------- P/E ratio - - 19.8 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Adjusted number of shares at the end of 107,421,270 107,054,810 107,421,270 the period -------------------------------------------------------------------------------- of which the number of treasury shares 193,412 161,219 161,219 -------------------------------------------------------------------------------- Outstanding shares 107,227,858 106,893,591 107,260,051 -------------------------------------------------------------------------------- Adjusted average number of shares during 107,421,270 106,893,591 106,863,518 the period -------------------------------------------------------------------------------- Average number of shares, dilution 108,597,357 106,893,591 106,893,591 included -------------------------------------------------------------------------------- 9. Definition of key figures -------------------------------------------------------------------------------- Operating margin % = Operating profit/loss x100 ------------------------------------ ----------------------------------------- ------------------------------------ Net sales ------------------------------------ ----- ------------------------------------ ----- Profit margin (before income taxes) = Profit/loss before taxes x100 % ------------------------------------ ----------------------------------------- ------------------------------------ Net sales ------------------------------------ ----- ------------------------------------ ----- Return on equity % (ROE) = Profit/loss x100 ------------------------------------ ----------------------------------------- ------------------------------------ Total equity (average during year) ------------------------------------ ----- ------------------------------------ ----- Return on investment % (ROI) = Profit/loss before taxes + x100 financial expenses ------------------------------------ ----------------------------------------- ------------------------------------ Total equity + interest bearing liabilities (average during the year) ------------------------------------ ----- ------------------------------------ ----- Equity ratio % = Total equity x100 ------------------------------------ ----------------------------------------- ------------------------------------ Statement of financial position total – advances received ------------------------------------ ----- ------------------------------------ ----- Gross investments in tangible and = Gross investments in tangible and x100 intangible assets, as % of net intangible assets sales ------------------------------------ ----------------------------------------- ------------------------------------ Net sales ------------------------------------ ----- ------------------------------------ ----- Research and development = Research and development x100 expenditure, as % of net sales expenditure ------------------------------------ ----------------------------------------- ------------------------------------ Net sales ------------------------------------ ----- ------------------------------------ ----- Gearing ratio % = Interest-bearing liabilities – x100 cash and cash equivalents ------------------------------------ ----------------------------------------- ------------------------------------ Total equity ------------------------------------ ----- ------------------------------------ ----- Earnings per share (EPS) = Profit/loss for the financial year attributable to equity shareholders ------------------------------------ ----------------------------------------- ------------------------------------ Average number of outstanding shares for the financial year ------------------------------------ ----- ------------------------------------ ----- Equity per share = Equity attributable to the equity holders of the parent company ------------------------------------ ----------------------------------------- ------------------------------------ Adjusted number of shares at the end of period ------------------------------------ ----- ------------------------------------ ----- Dividend per share = Dividend ------------------------------------ ----------------------------------------- ------------------------------------ Adjusted number of shares at the end of period ------------------------------------ ----- ------------------------------------ ----- Dividend per earnings % = Dividend per share x100 ------------------------------------ ----------------------------------------- ------------------------------------ Earnings per share (EPS) ------------------------------------ ----- ------------------------------------ ----- Effective dividend yield % = Dividend per share x100 ------------------------------------ ----------------------------------------- ------------------------------------ Share closing price at end of period ------------------------------------ ----- ------------------------------------ ----- P/E ratio = Share closing price at end of period ------------------------------------ ----------------------------------------- ------------------------------------ Earnings per share (EPS) ------------------------------------ ----- -------------------------------------------------------------------------------- COMPTEL CORPORATION Board of Directors Additional information: Mr Juhani Hintikka, President and CEO, tel. +358 9 700 1131 Mr Tom Jansson, CFO, tel. +358 40 700 1849 Distribution: NASDAQ OMX Helsinki Major media www.comptel.com Copyright © 2014 OMX AB (publ). 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