GEOSENTRIC OYJ Q1 2010 INTERIM REPORT 31.05.2010 at 11:45
INTERIM REPORT 1-3/2010
Contents
1. Summary of key figures and results
2. Operational overview
3. Material events in the period
4. Material events after the end of the period
5. Review of the financial position and the financial results
6. Sufficient liquidity
7. Outlook
8. Assessment of significant operational risks
9. Review of R&D activities
10. Investments
11. Personnel and organization
12. Environmental issues
13. Financing and structural arrangements
14. Board authorization
15. Company's shares and shareholders
16. About the Company
17. Financial Statements, Q1 2010 (not audited)
1. Summary of key figures and results
The key figures summarizing the Group's financial position and financial results
were as follows (teuros unless indicated otherwise):
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| In period | Q1/2010 | Q1/2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 607 | 939 | 2491 |
--------------------------------------------------------------------------------
| Operating Result | -3549 | -3827 | -15538 |
--------------------------------------------------------------------------------
| Basic earnings per share (eur) | -0.00 | -0.00 | -0.02 |
--------------------------------------------------------------------------------
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| At the end of the period | | | |
--------------------------------------------------------------------------------
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| Total assets | 4512 | 13303 | 8893 |
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| Shareholders' equity | -5882 | 6430 | -2236 |
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| Total liabilities | 10394 | 6873 | 11129 |
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2. Operational overview
GeoSentric is a developer and provider of solutions, products and technologies
for location based services and LBS-enabled social networks. It develops a
leading geo-integration platform for mobile devices, personal navigation
devices, web browsers, and other internet-connected devices. It provides
applications and bundled ODM/OEM solutions for consumer and B2B markets, built
on the convergence of location based services, social networking, search, mobile
& Web 2.0 technologies. Its intellectual property is delivered as software and
services in products which include the GyPSii product platform (“GyPSii”)
together with ready-to-use integrated GPS/GSM devices for navigation and object
tracking and customisable software solutions for industry specific uses
(“TWIG”). In addition, GeoSentric offers Internet-based locating services with
which the user may locate other GeoSentric devices. The GyPSii platform and TWIG
product line complement each other and enable GeoSentric to utilize its overall
intellectual property rights to software and services in an efficient manner
with delivery of products and services to two different markets, GyPSii
offerings to the geo social networking/LBS sector and TWIG offerings to the
LBS/B2B sector.
The business model for the GyPSii platform services and applications is via
embedded licensing of IPR in terms of software technology and branded
trademarks, and downstream advertising revenue generation from the platform in
partnerships with mobile operators and carriers. Thus during the reporting
period Q1/2010 the Group focused on securing contracts with the major
distribution partners to integrate product on to their new devices and services
and to broaden the range of GyPSii supported devices. Major marketing and launch
plans during 2010 by the distribution partners have driven significant volumes
of GyPSii users on a global basis, which is expected to have a positive impact
on revenues from GyPSii during 2010. The global financial crisis has delayed the
launches of certain new products by some of the Company's distribution partners.
This has caused some lag to the Company's business plans but has not had any
significant effect on the future outlook for GyPSii business.
The total net sales of the Group in Q1/2010 were 607 teuros, down (-35.4%) on
total net sales in Q1/2009 of 939 teuros, while the total cost of sales in
Q1/2010 were also down from that of the prior period of Q1/2009, going to 492
teuros from 600 teuros, an 18.0% reduction. Revenue in the period was
substantially all from the TWIG product and TWIG IP. The revenue reduction was
caused by a decline in sales of the older Discovery Pro product which was not
offset by the newly launched Protector product. The gross margin for the
reporting period was 115 teuros (18.9%), compared to a gross margin of 339
teuros (36.1%) for the prior period Q1/2009. This gross margin decline reflects
further price erosion in the Twig product line up as the TWIG Discovery products
reach the end of their market lives.
Total operating expenses decreased in the reporting period compared to the prior
year period, going to 3664 teuros in Q1/2010, from 4166 teuros in Q1/2009, a
12.0% decrease. This was mainly driven by reductions R&D expense compared to the
prior period and also unusually high legal costs in the prior period related
mainly to litigation ongoing at that time which has subsequently been resolved.
The total earnings before taxes were -3867 teuros in Q1/2010, versus -3920
teuros in Q1/2009. Earnings per share for the reporting period were -0.00 Euros
per share.
3. Material events in the period
In February 2010, at Mobile World Congress (MWC) in Barcelona Spain the Company
announced the following new applications and partnerships:
Tweetsii - GyPSii announced Tweetsii, a new application to connect people with
places and networks by integrating the Twitter experience for a real time web
social media experience. The application stems from GyPSii's core mission
“Connect, Create, Share” and seeks to energize a people-powered index of the
world, supported by real time user created content, that is shared and accessed
when it's most useful. Tweetsii is a ready-to-use app for current Twitter users.
OpenDeveloper - GyPSii announced a plan to open their API to the developer
community with OpenDeveloper, a premier source of next generation technologies
to connect people; create, share and search content; and monetize applications
with contextual advertising. OpenDeveloper seeks to accelerate innovation in the
mobile and social media ecosystem by arming developers with powerful
technologies to create sticky apps. As consumers are increasingly eager to
connect with mobile technologies the API will enable developers to get creative
in the pursuit of compelling new solutions.
China Telecom - GyPSii has been selected to be the branded China Telecom
solution “le tu”, (Happy Trails in English) powered by GyPSii to be launched on
and around 2010 Shanghai Expo with China Telecom Shanghai Telecom. GyPSii will
deliver “le tu”, powered by GyPSii OEx API and distribution through China
Telecom. The initial deployment will be to Shanghai during 2010 Shanghai Expo,
in and around May 1, 2010. Subsequent deployment geographies include 14 other
provinces including Jiangsu, Zhejiang, Fujian, Shandong, Hainan, Shanxi, Anhui,
Jiangxi, Henan, Hubei, Hunan, Guangxi, Guizhuo and Yuan. This partnership will
supply GyPSii with subscription and advertising revenue into the China Telecom
subscriber base that is estimated to be a 65M subscriber market size.
Genasys/Telefonica - GyPSii has been selected by Genasys to be the exclusive LBS
social media partner in Telefonica's location based application portfolio in
Latin America. The agreement between GyPSii and Genasys provides subscription
revenue to GyPSii for a 5 year term. GyPSii will deliver a co-branded Telefonica
/ “Powered by GyPSii” WebTop, WAP site and handheld apps into Telefonica's
approximately 130 million subscriber base in Latin America.
Intrinsyc - GyPSii and Intrinsyc will be going to market with a social network
and navigation application. The application will provide a compelling integrated
mapping, navigation and social content solution to their current customer base,
operators and into new navigation markets, incremental to GyPSii's core mobile
lifestyle markets. The agreement provides 2 revenue streams for GyPSii, the
first includes a support services fee per user. The second calls out an
advertising split for all advertisements served within the social mapping and
navigation application.
China Ad Partners - GyPSii announced several important on-line and mobile
advertising and coupon distribution partners in China.
Working with Shanghai coupon provider Kubang, GyPSii connects users with coupons
for nearby restaurants that the user views alongside user-created content on the
GyPSii network. If the user searches “food” for example they might receive a
coupon for a nearby restaurant. This not only adds value to the user experience
but also drives transaction and referrals for the restaurant on GyPSii.
GyPSii has also partnered with leading Chinese mobile advertising network
MADhouse to help deliver inventory for major global and regional brands. GyPSii
has other deals in place with Admob, search engine company Baidu, and CHANet,
the leading mobile marketing affiliate network in China.
In addition, GyPSii continues to expand its extensive index of Points of
Interest for GyPSii users to search and explore. Content relationships with
5757577 and Gudumani connect GyPSii users with new restaurant and dining POIs:
Avantouch for theatre information: and City8 for travel POI. This additional
content enhances the GyPSii user experience, providing more information and
greater choice for members to access and use on their mobile device.
In the Magi.Tel case the Finnish Enforcement Authority approved the Company's
appeal against enforcement of the decision of the Court of First Instance of
Rome and ruled that the respective payment has lapsed in its entirety due to the
Company's earlier reorganization program.
GyPSii launched Tweetsii on the iPhone to the public at South SouthWest (SXSW),
a major internet and social media event, annually held in Austin, Texas.
Tweetsii is a real time app that supports a mobile lifestyle, with user created
tweets, images, reviews, comments, checkins, tips, and more. It builds an
aggregated real world index of places, not a corporate created index, with
updates from Twitter users and location-based services, including GyPSii,
Gowalla and FourSquare, among others. All content contributes to a place-based
index that delivers real time, mobile, location-specific content creation and
search to connect users with the people, places, activities and ideas they're
interested in.
On March 29, 2010 the Company announced to extend its current financing round
until the end of the year 2010.
4. Material events after the end of the period
The top industry group for Mobility and the Internet awarded GyPSii as the 2010
Most Innovative Location Based Service at the 7th annual 2010 Wireless
Communication Conference in Beijing. The organizers of the conference include
the major mobile carriers in China (China Mobile, China Telecom, and China
Unicom) and a host of other Internet companies such as Sina, Baidu, QQ/Tencent,
Kaixin.
Tweetsii launched on Android and added major new enhancements on iPhone. The
application now has additional features to connect users with what's happening
and where, while design enhancements make viewing and creating content easy for
the mobile user.
Garmin and GyPSii elected to renew their existing contract into a 3rd year. The
extension of the contract allows Garmin to continue to leverage GyPSii's API
into Garmin's mobile phone and connected PND product lines.
China Telecom and GyPSii launched a new application for the Shanghai World Expo,
started in May 2010. As an official sponsor, China Telecom and its ‘Happy Trail'
application (powered by GyPSii) is the mobile SNS and destination guide for the
Shanghai World Expo.
Lenovo has choosen GyPSii as a top 10 application to be distributed on phones
and via download from the Lenovo Mobile Market.
Robin Halliday, CFO and member of the management team has resigned from the
Group during the Q2. He will continue to work for the Company as a consultant.
The Company's Annual General Meeting originally planned to be held on May 14,
2010 was cancelled and postponed later due to reasons attributable to the
current financing round and as informed to the markets in the stock exchange
release published on May 12, 2010. Also, as informed in the stock exchange
release published on May 31, 2010 the Company has now agreed to the preliminary
terms for the financing of 6M€.
5. Review of the financial position and the financial results
The Company has during the period retained solidity and liquidity.
The key figures summarizing the Group's financial position and financial results
were as follows (teuros unless indicated otherwise):
--------------------------------------------------------------------------------
| In period | Q1/2010 | Q1/2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 607 | 939 | 2491 |
--------------------------------------------------------------------------------
| Operating Result | -3549 | -3827 | -15538 |
--------------------------------------------------------------------------------
| Basic earnings per share (eur) | -0.00 | -0.00 | -0.02 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| At the end of the period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 4512 | 13303 | 8893 |
--------------------------------------------------------------------------------
| Shareholders'' equity | -5882 | 6430 | -2236 |
--------------------------------------------------------------------------------
| Total liabilities | 10394 | 6873 | 11129 |
--------------------------------------------------------------------------------
| Cash | 2141 | 7167 | 5939 |
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6. Sufficient liquidity
The Company has, during the reporting period, retained sufficient liquidity.
However, as Company announced in its Financial Statements 2009 release on March
31, 2010, the working capital would not be sufficient for the next twelve (12)
months without raising additional external financing. To secure sufficient
liquidity in all circumstances, the Company decided upon extending the financing
round until the end of the year 2010 as announced to the markets on March 29,
2010. The Company also announced in its Financial Statements 2009 release that
it will need to raise at minimum 6M€ of external financing during the Q2 2010 to
secure sufficient liquidity.
As announced in the stock exchange release published on May 31, 2010 and
described in the section “Material events after the end of the reporting period”
the Company has now agreed to the preliminary terms for the financing of 6M€
with its lead investor, providing the Company with the required additional
financing of 6M€ to secure sufficient liquidity. With this new financing, the
Company will retain sufficient liquidity through the next twelve (12) months
period.
7. Future Outlook
Market Outlook
There are over 4 billion mobile phone units in the market and over 1 billion new
phones shipped every year. Internet Access, camera, location capabilities, and
3rd party application support has become standard on most devices.
GyPSii's applications are supported on the 7 major mobile platforms and allow
the company to address not only the fast growing smartphone market (lead by
iPhone and Android) but also the feature phone market, which by industry polls
in 2009 represents nearly 80% of the mobile phones in the world today.
With the widespread adoption of mobile internet and the ability to provide
location/GPS information in real-time, the market has created new revenue
opportunities around delivering location aware mobile advertising, promotional
offers and couponing to consumers. GyPSii's expertise, technologies, and
partnerships have positioned them to exploit this market opportunity on a very
broad scale.
Business Development Outlook
Over the past year the Group has progressed significantly in its strategy and
targeting of emerging markets. Leveraging the prior year's foundational work
with the handset manufacturers, GyPSii has moved forward to secure partnerships
with all three carriers in China (China Mobile, China Telecom, and China Unicom)
re-iterating the maturing value that location based mobile applications hold to
the operators. In 2010, the Group will continue to work with each carrier
closely to refine rollout schedules, aligning rollout of Operator 3G services,
OEM Strategic Devices, and next generation GyPSii applications in target
markets.
Additionally, GyPSii has further advanced on its emerging market strategy by
expanding into Latin America. GyPSii's exclusive contract with Genasys to
provide Location-centric Mobile Social networking to Telefonica enables reach
into tweleve (12) new geographies. Telefonica, Genasys and GyPSii are developing
a go to market strategy to deliver an integrated “Powered by GyPSii” solution in
the second half of 2010. As in China, GyPSii is partnering with a major operator
to facilitate the execution of a go to market strategy that is targeted at over
130 million existing subscribers. This approach allows GyPSii to reduce costs by
leveraging the breadth of Telefonica resources in the region and joint marketing
funds.
Building on the cornerstone accounts above, in 2010 GyPSii is expanding its
business development efforts in Latin America to gain mind share with the other
regional carriers to provide similar offering.
With the development of its Open APIs the Group has also furthered business
development opportunities with strategic service providers to deliver GyPSii
into other non-emerging markets. This approach allows GyPSii to reduce the risk
and overhead associated with business development efforts in non-target markets
while assessing geographies that may prove to be long-term opportunistic for the
company. In 2010, GyPSii is exploring several indirect opportunities in China
and Korea with highly reputable potential business partners.
In summary, the Group has seen increased interest from Mobile Operators to
provide location based applications on their networks. GyPSii and its
application/platform are being seen as a means for emerging market operators to
up-sell data packages and improve ROI on significant network upgrades while
forging diversified mobile advertising strategies. The Group sees a continuation
of this activity in the second half of 2010, and increased demand for GyPSii.
As announced previously, the Company expected to see positive development in
GyPSii generated revenues starting from the last quarter of 2009. Ongoing
financing negotiations and the global financing crisis have shifted the revenue
expectations of GyPSii further to the future, yet revenues have started to be
generated and the Company expects to see accelerated positive development in
GyPSii generated revenues during 2010.
TWIG product demand has declined as the TWIG Discovery reaches the end of its
product life and the newer TWIG Protector has so far been disappointing in terms
of new sales achievement. The TWIG Discovery Pro GSM/GPRS/GPS handset is
targeted at the safety and security market and the TWIG Locator tracking unit
for the asset and vehicle tracking market. Due to above-mentioned reasons the
company is now exploring alternatives to divest its mobile handset business.
8. Assessment of significant operational risks
The global financial crisis and current global recession may have a negative
impact also on the business of the Group. The Group's business model is partner
driven and possible delays in partners' launching their new products to the
market may have an adverse effect on the development of the Group's business by
decelerating the distribution and user-adoption rate of the Group's services.
There is no certainty of the success regarding the implementation and
realisation of the business plan. According to the business strategy, the Group
is pursuing entrance also to new business segments with competitive situations
new to it, or which may be only in the early market phase. Unless the Group is
able to successfully respond to these developments it may significantly impair
the Group´s operating results.
A key driver of the business model is sufficient and sufficiently rapid growth
of users of the services, and the speed of adoption of mobile, UGC and location
based advertising of which the Group has no certainty. Advertising budgets are
being reduced by major brands and advertisers and this could have an adverse
affect on the adoption of mobile and location based advertising in 2010 and
beyond.
In addition, the Company carries a limited risk connected with the TWIG product
inventory. Should the Company not be able to sufficiently protect its industrial
rights and other intangible assets, its competitive position may suffer. It is
also possible that other parties may bring action against the Company on grounds
of alleged infringement of industrial or intellectual property rights and,
should they be successful, the Company may be obligated to pay significant
compensation.
Since 1997, the Company has not paid dividends. In the future, the re-payments
of capital loans will restrict the possibility to distribute dividends. The
total amount of loans as at 31 March 2010 was 10113 teuros at nominal value.
Regarding future dividend payments, there is also uncertainty about the ability
of the Company to accrue distributable capital. According to the financial
statements of the Company, there was no distributable capital in the latest
balance sheet of the Company.
The Group´s business plan has been prepared by assuming that the Group´s result
and cashflow will improve significantly. Should the result and cashflow
essentially fail to meet the planned figures, the Group´s financing plan may
turn out to be insufficient causing a need to secure additional financing. The
Company has already decided upon new financing round through its subsidiary.
Should the new financing be delayed this might enforce the Company to introduce
significant cost cutting plan, which would also have material effect on
execution on Company's current business plan in the short term, and also cause
an insolvency risk.
There are significant financial risks related to the Company's business,
competition and industry and it is possible that investors may lose all or a
part of their invested capital.
GeoHolding B.V., and investor groups led by Horizon Group and Schroders & Co
Limited have influence on GeoSentric, each of them separately. The Company
trusts that the regulation and information obligation binding public companies,
supported by the compliance with the corporate governance recommendations,
together with the continuous external auditing activity maintained by a skilled
and reputable auditing firm suffice to pre-empt a misuse of control power.
9. Review of R&D-activities
The volume of the Group´s R&D activities continued to be significant due to the
on-going R&D-programs by means of which the Group intends to significantly
expand its business over the next few years. No capitalisations were made.
The Group has R&D units in Salo (Finland), Amsterdam (the Netherlands), Windsor
(UK), Warwick, RI (USA) and Shanghai (China).
Additionally, GyPSii server facilities are maintained in the US, China and the
Netherlands at present, with continued upgrades and new locations planned in the
future.
10. Investments
Gross investments in period 1-3/2010 were 19 teuros. In the full year 2009 gross
investments were 208 teuros. There were no new investments made into the Company
and no new sources of finance established in the period 1-3/2010.
11. Personnel and organization
The number of employed personnel at GeoSentric in period 1-3/2010 averaged 130,
of which 32, at most, were affected by alternate forced leaves. The alternate
forced leave program, agreed in autumn 2007 to apply for the time being,
continues also in 2010.
12. Environmental issues
The Company pays for its products a statutory recycling fee and has organised
the recycling of disposed materials contractually through Jalopinta Ky.
Altogether, the Group´s operations cause no significant environmental impact.
13. Financing and structural arrangements
The Board has decided to approve the proposed preliminary terms for additional
financing of 6M€ to be adopted by issuing preferably convertible notes of
Company's fully owned Dutch subsidiary GeoSolutions Holdings N.V.
14. Board authorization
The Annual General Meeting convened on May 15, 2009 authorized the Board to
increase the share capital by maximum of 3,000,000 euros and share amount by
maximum of 300,000,000 new shares. The authorization is valid for two (2) years
from the date of the Annual General Meeting. At the same all the other
authorizations were terminated.
At the end of the reporting period the remaining amount of Board's authorization
was 2,705,000.00 euros and 270,500,000 shares corresponding to 30.12 % of the
currently registered share amount and 18.88 % shares after all shares and
instruments entitled to shares, effecting a corresponding immediate dilution to
existing shareholdings.
15. Company's shares and shareholders
The shares of GeoSentric Oyj are listed on the NASDAQ OMX Helsinki (NASDAQ OMX:
GEO1V) and issued in the book entry system held by Euroclear Finland, address PL
1110, FIN-00101 Helsinki, Finland. The ISIN-code of the share is FI 0009004204.
The Company's shares have been on the surveillance list since February 11, 2003.
The Company and its subsidiaries do not have any Company´s shares owned by or
administered on behalf of the Company.
At the end of the reporting period the Company's registered share capital was
8,950,961.85 Euros, consisting of 897,926,354 shares.
16. About the Company
GeoSentric is a developer of location-based technologies, delivering products
and services with a market-leading mobile digital lifestyle application and
geo-mobility social networking platform: connecting people, places and
communities across networks and devices. GyPSii provides a geo-location social
networking platform and services for mobile and web Internet-connected devices,
and provides applications and bundled ODM/OEM solutions for consumer and B2B
markets, built on the convergence of location based services, social networking,
search, mobile & Web 2.0 technologies. For more information, visit
www.geosentric.com or www.gypsii.com or www.gypsii.com.cn.
© 2010 GeoSentric Oyj. All rights reserved.
Based in Salo, Finland and Amsterdam, The Netherlands, GeoSentric operates
offices in North America, Europe and Asia Pacific.
GeoSentric (NASDAQ OMX Helsinki-GEO1V) is listed on the Nasdaq OMX Exchange in
Helsinki. The Company has been on the surveillance list since February 2003.
GEOSENTRIC OYJ
For more information, please contact: investors@gypsii.com
Distribution:
NASDAQ OMX Helsinki
Principal news media
GEOSENTRIC OYJ INTERIM REPORT 1Q/2010 (Unaudited)
GROUP STATEMENT OF COMPREHENSIVE INCOME
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| 1000 EUR | Note | 1Q/2010 | 1Q/2009 | 2009 |
--------------------------------------------------------------------------------
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| Net sales | | 607 | 939 | 2491 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cost of goods sold | 4 | 492 | 600 | 2141 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross margin | | 115 | 339 | 350 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other operating income | | 0 | 0 | 2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| General & Administrative | 4 | 699 | 835 | 3111 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Research & Development | 4 | 1999 | 2120 | 8211 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Sales & Marketing | 4 | 966 | 1211 | 4568 |
| expenses | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating result | | -3549 | -3827 | -15538 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income | | 2 | 77 | 74 |
--------------------------------------------------------------------------------
| Financial expenses | | -320 | -170 | -723 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result before taxes | | -3867 | -3920 | -16187 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes | | 99 | 126 | 409 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result for the period | | -3768 | -3794 | -15778 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Translation difference | | -22 | 4 | 11 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comprehensive income | | -3790 | -3790 | -15767 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, eur | | | | |
--------------------------------------------------------------------------------
| Basic earnings per | | -0,00 | -0,00 | -0,02 |
| share, eur | | | | |
--------------------------------------------------------------------------------
Diluted earnings per share have not been computed because dilution effect would
improve the key figure.
GROUP STATEMENT OF FINANCIAL POSITION
--------------------------------------------------------------------------------
| 1000 EUR | Note | 31.3.2010 | 31.3.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
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| ASSETS | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Property, plant and | | 217 | 179 | 240 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Goodwill | | 216 | 216 | 216 |
--------------------------------------------------------------------------------
| Other intangible assets | | 7 | 2018 | 510 |
--------------------------------------------------------------------------------
| Other financial assets | | 66 | 66 | 66 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| | | 506 | 2479 | 1032 |
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | | 914 | 1865 | 1216 |
--------------------------------------------------------------------------------
| Trade receivables and | | 947 | 1784 | 696 |
| other receivables | | | | |
--------------------------------------------------------------------------------
| Prepaid expenses | | 4 | 8 | 10 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 2141 | 7167 | 5939 |
--------------------------------------------------------------------------------
| | | 4006 | 10824 | 7861 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | | 4512 | 13303 | 8893 |
--------------------------------------------------------------------------------
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| EQUITY AND LIABILITIES | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders´equity | | | | |
--------------------------------------------------------------------------------
| Share capital | 5 | 8951 | 8951 | 8951 |
--------------------------------------------------------------------------------
| Share premium account | 5 | 13631 | 13631 | 13631 |
--------------------------------------------------------------------------------
| Translation difference | | 113 | 128 | 135 |
--------------------------------------------------------------------------------
| Invested distributable | 5 | 30603 | 28012 | 30603 |
| equity account | | | | |
--------------------------------------------------------------------------------
| Retained earnings | | -59180 | -44292 | -55556 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´ equity | | -5882 | 6430 | -2236 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | 0 | 511 | 128 |
--------------------------------------------------------------------------------
| Interest-bearing debt | 7 | 7152 | 3394 | 7061 |
--------------------------------------------------------------------------------
| | | 7152 | 3905 | 7189 |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Trade payables and other | | 2303 | 2225 | 2634 |
| payables | | | | |
--------------------------------------------------------------------------------
| Provisions | | 37 | 62 | 37 |
--------------------------------------------------------------------------------
| Interest bearing debt | 7 | 902 | 681 | 1269 |
--------------------------------------------------------------------------------
| | | 3242 | 2968 | 3940 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | | 10394 | 6873 | 11129 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´ equity | | 4512 | 13303 | 8893 |
| and liabilities | | | | |
--------------------------------------------------------------------------------
GROUP CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| 1000 EUR | 1Q/2010 | 1Q/2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operations | | | |
--------------------------------------------------------------------------------
| Result for the period | -3768 | -3794 | -15778 |
--------------------------------------------------------------------------------
| Adjustments | 892 | 529 | 3991 |
--------------------------------------------------------------------------------
| Changes in working capital: | | | |
--------------------------------------------------------------------------------
| Change of trade and other | -245 | 860 | 1946 |
| receivables | | | |
--------------------------------------------------------------------------------
| Change of inventories | 302 | -460 | -295 |
--------------------------------------------------------------------------------
| Change of trade and other | -331 | 248 | 632 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Paid interests | -630 | 0 | -930 |
--------------------------------------------------------------------------------
| Received interest payments | 1 | 71 | 145 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operations, net | -3779 | -2546 | -10289 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investments, net | -19 | -14 | -208 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
--------------------------------------------------------------------------------
| Proceeds from issue of share | 0 | 0 | 0 |
| capital | | | |
--------------------------------------------------------------------------------
| Transaction expenses of share | 0 | -27 | -68 |
| issues | | | |
--------------------------------------------------------------------------------
| Transaction expenses of loans | 0 | 0 | -750 |
--------------------------------------------------------------------------------
| Proceeds from long term | 0 | 0 | 2591 |
| borrowings, equity | | | |
--------------------------------------------------------------------------------
| Proceeds from long term | 0 | 0 | 4909 |
| borrowings, liability | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow from financing | 0 | -27 | 6682 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash | -3798 | -2587 | -3815 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash on January 1 | 5939 | 9754 | 9754 |
--------------------------------------------------------------------------------
| Cash on December 31 | 2141 | 7167 | 5939 |
--------------------------------------------------------------------------------
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY
--------------------------------------------------------------------------------
| | Share | Translat | Share | Inv. | Accrued | Total |
| | capital | ion | premium | distrib. | result | (1000eur |
| | (1000eu | differen | account | equity | (1000eur | ) |
| | r) | ce | (1000eur | account | ) | |
| | | (1000eur | ) | (1000eur | | |
| | | ) | | ) | | |
--------------------------------------------------------------------------------
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| Shareholder | 8951 | 124 | 13631 | 28039 | -40692 | 10053 |
| s´ equity | | | | | | |
| 31.12.2008 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Items | 0 | 4 | 0 | 0 | 0 | 4 |
| booked | | | | | | |
| directly | | | | | | |
| into | | | | | | |
| shareholder | | | | | | |
| s´ equity | | | | | | |
--------------------------------------------------------------------------------
| Result for | 0 | 0 | 0 | 0 | -3794 | -3794 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| Comprehensi | 0 | 4 | 0 | 0 | -3794 | -3790 |
| ve income | | | | | | |
--------------------------------------------------------------------------------
| Share issue | 0 | 0 | 0 | -27 | 0 | -27 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Booked | 0 | 0 | 0 | 0 | 194 | 194 |
| expense of | | | | | | |
| stock | | | | | | |
| options to | | | | | | |
| key | | | | | | |
| personnel | | | | | | |
| and | | | | | | |
| partners | | | | | | |
--------------------------------------------------------------------------------
| Equity | 0 | 0 | 0 | 0 | 0 | 0 |
| portions of | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| Shareholder | 8951 | 128 | 13631 | 28012 | -44292 | 6430 |
| s´ equity | | | | | | |
| 31.3.2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholder | 8951 | 135 | 13631 | 30603 | -55556 | -2236 |
| s´ equity | | | | | | |
| 31.12.2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Items | 0 | -22 | 0 | 0 | 0 | -22 |
| booked | | | | | | |
| directly | | | | | | |
| into | | | | | | |
| shareholder | | | | | | |
| s´ equity | | | | | | |
--------------------------------------------------------------------------------
| Result for | 0 | 0 | 0 | 0 | -3768 | -3768 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| Comprehensi | 0 | -22 | 0 | 0 | -3768 | -3790 |
| ve income | | | | | | |
--------------------------------------------------------------------------------
| Share issue | 0 | 0 | 0 | 0 | 0 | 0 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Booked | 0 | 0 | 0 | 0 | 144 | 144 |
| expense of | | | | | | |
| stock | | | | | | |
| options to | | | | | | |
| key | | | | | | |
| personnel | | | | | | |
| and | | | | | | |
| partners | | | | | | |
--------------------------------------------------------------------------------
| Equity | 0 | 0 | 0 | 0 | 0 | 0 |
| portions of | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| Shareholder | 8951 | 113 | 13631 | 30603 | -59180 | -5882 |
| s´ equity | | | | | | |
| 31.3.2010 | | | | | | |
--------------------------------------------------------------------------------
KEY FIGURES
--------------------------------------------------------------------------------
| | 1Q/2010 | 1Q/2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, 1000 EUR | 607 | 939 | 2491 |
--------------------------------------------------------------------------------
| Operating result, 1000 EUR | -3549 | -3827 | -15538 |
--------------------------------------------------------------------------------
| Result before taxes, 1000 EUR | -3867 | -3920 | -16187 |
--------------------------------------------------------------------------------
| Gross investments, 1000 EUR | 19 | 14 | 208 |
--------------------------------------------------------------------------------
| Average personnel | 130 | 108 | 120 |
--------------------------------------------------------------------------------
| Earnings per share, EUR | -0,00 | -0,00 | -0,02 |
--------------------------------------------------------------------------------
| Equity per share, EUR | -0,01 | 0,02 | -0,00 |
--------------------------------------------------------------------------------
| Weighted average number of | | | |
--------------------------------------------------------------------------------
| shares in period, 1000 pcs | 897926 | 896826 | 897651 |
--------------------------------------------------------------------------------
| Number of shares at the end of the | 897926 | 897926 | 897926 |
| period, 1000 pcs | | | |
--------------------------------------------------------------------------------
1. BASE INFORMATION OF THE COMPANY
GeoSentric is a developer and provider of solutions, products and technologies
for location based services and LBS-enabled social networks. It develops a
leading geo-integration platform for mobile devices, personal navigation
devices, web browsers, and other internet-connected devices, which provides
applications and bundled ODM/OEM solutions for consumer and B2B markets, built
on the convergence of location based services, social networking, search, mobile
& Web 2.0 technologies. Its intellectual property is delivered as software and
services in products which include the GyPSii product platform ("GyPSii")
together with ready-to-use integrated GPS/GSM devices for navigation and object
tracking and customisable software solutions for industry specific uses
(“TWIG”). The company has deep expertise and technology IP in User Generated
Content Management, Location Based Services, Open Social Networking,
Ad-Targeting and Integration, for Social Media markets and users on mobile
phones, the web, personal navigation and internet connected devices.
Based in Salo, Finland, and Amsterdam, The Netherlands, GeoSentric operates
offices in North America, Europe and Asia Pacific. GeoSentric is listed in
NASDAQ OMX Helsinki Ltd (NASDAQ OMX: GEO1V). The parent company of the group is
GeoSentric Oyj (formerly Benefon Oyj).
The registered domicile is Salo, Finland, with street address Meriniitynkatu 11,
24100 Salo, Finland, and mail address PL 84, FIN-24101 Salo, Finland. A copy of
the group financial statements is available at the internet address
www.geosentric.com or at the company head office at address Meriniitynkatu 11,
FIN-24100 Salo, Finland.
2. ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS
Foundation:
The group interim report has been prepared in accordance with International
Financial Reporting Standards ("IFRS") and has been prepared to the accounting
standard IAS 34, Interim Reports. An interim report shall be read together with
the financial statements for year 2009.
Accounting principles:
The utilised principles of preparation are identical with those utilised by the
Group in financial statements for year 2009.
IASB has published new standards and interpretations and changes in existing
standards, application of which is mandatory on 1.1.2010 or thereafter, and
which the group has not adopted earlier voluntarily. The group will adopt the
following standards (and their amendments) and interpretations from 1.1.2010
onwards:
Reformed IFRS 3, Business combinations. Changes affect the goodwill amount of
recognised acquisition and profit effect items. According to the rules of
change-over to IFRS, business combinations which are already carried out will be
not corrected.
Changed IAS 27, Consolidated financial statements and separate financial
statements. May have impact on the recognition of possible changes in
subsidiaries ownership´s.
Change to IAS 39, Financial instruments: recognition and measurement to hedged
items acceptable items. The group has no hedged items as defined.
IFRIC 17, Non cash dispensation to ownerships. Concerning dispensation of
dividends. No effect on the group.
IFRIC 18, Asset transfers from customers. No effect on the group.
Changes for "Improvements to IFRS". Small changes relate to 12 different
standards but they have no significant effects on the financial statements.
Changes to IFRS 2, Share-based payments - Share-based businesses paid in cash in
group. Concerning non cash paid share-based payments. May have impact to
financial statement in future.
Change to IAS 32, Financial instruments: presentation method - Classification of
Rights Issues. Concerns booking of shares, options or subscription rights made
in other currency than issuer´s functional currency. No effect on the group.
3. SEGMENT INFORMATION
The group has only one distinct segment, location based services and devices
utilising them. Its share of net sales has been 100% in the period and in the
reference period.
4. COSTS BY CATEGORY
--------------------------------------------------------------------------------
| 1000 EUR | 1Q/2010 | 1Q/2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Increase/decrease in inventories | 178 | 184 | -164 |
| of finished products | | | |
--------------------------------------------------------------------------------
| Impairment loss in inventories | 0 | 0 | 484 |
--------------------------------------------------------------------------------
| Use of raw materials and | 191 | 281 | 1288 |
| consumables | | | |
--------------------------------------------------------------------------------
| Total expense of direct employees | 123 | 135 | 533 |
--------------------------------------------------------------------------------
| Cost of goods sold total | 492 | 600 | 2141 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total expense of indirect | 2103 | 2195 | 8710 |
| employees | | | |
--------------------------------------------------------------------------------
| Depreciations | 545 | 529 | 2172 |
--------------------------------------------------------------------------------
| Other operating expenses | 1016 | 1442 | 5008 |
--------------------------------------------------------------------------------
| Expenses by cost category, total | 3664 | 4166 | 15890 |
--------------------------------------------------------------------------------
5. SHAREHOLDERS´ EQUITY
--------------------------------------------------------------------------------
| | Number of | Share | Share | Invested | Total |
| | shares | capital | premium | distribute | (1000eur) |
| | (1000) | (1000eur) | account | d equity | |
| | | | (1000eur) | account | |
| | | | | (1000eur) | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31.12.2009 | 897926 | 8951 | 13631 | 30603 | 53185 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31.3.2010 | 897926 | 8951 | 13631 | 30603 | 53185 |
--------------------------------------------------------------------------------
According to the Company´s articles of association registered there is no
maximum for the shares and there is only one category of shares at the Company.
Also the clause about maximum amount of share capital has been removed. The
shares carry no nominal value. All outstanding shares are fully paid.
6. OPTION RIGHTS
Shares without charge:
Based to the loan of 7.500.000 eur raised by the subsidiary GeoSolutions
Holdings N.V. during the year 2009, the Board has agreed as preconditions for
the investment to pay and industry standard placement fee which shall be paid
partially in cash and partially in company´s shares. The amount of fee shall
depend on the final terms of financing round to be confirmed.
Cost of options booked in the period according to IFRS 2. Consideration is given
as options. The counter-item of costs bookings is income statement is
shareholders´equity.
--------------------------------------------------------------------------------
| 1000 EUR | 1Q/2010 | 1Q/2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Key persons | 35 | 91 | 276 |
--------------------------------------------------------------------------------
| Board | 57 | 76 | 557 |
--------------------------------------------------------------------------------
| Other interest groups | 52 | 27 | 81 |
--------------------------------------------------------------------------------
| Total | 144 | 194 | 914 |
--------------------------------------------------------------------------------
7. FINANCIAL LIABILITIES
--------------------------------------------------------------------------------
| 1000 EUR | Nominal | | 1Q/2010 | 1Q/2009 | 2009 |
| | loan | | | | |
| | value | | | | |
| | 1Q/2010 | | | | |
--------------------------------------------------------------------------------
| Non-current: | | | | | |
--------------------------------------------------------------------------------
| Loan 2008 | 10000 | | 2604 | 3394 | 2605 |
--------------------------------------------------------------------------------
| Loan 2009 | 7500 | | 4548 | 0 | 4456 |
--------------------------------------------------------------------------------
| Non-current | | | 7152 | 3394 | 7061 |
| total | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current: | | | | | |
--------------------------------------------------------------------------------
| Cbl 2004A | 113 | | 113 | 113 | 113 |
--------------------------------------------------------------------------------
| Loan 2008 | | | 789 | 568 | 1156 |
--------------------------------------------------------------------------------
| Current | | | 902 | 681 | 1269 |
| total | | | | | |
--------------------------------------------------------------------------------
Convertible bond loan 2004A:
This loan with a nominal principal of 1130 teuros was raised on year 2004 and
was converted during the conversion period before 31.12.2008 in all 1017 teuros.
The remaining amount of loan is 113 teuros. The interest is 4%. No interest was
paid. The loan capital, interest and other benefit may be paid in case of
dismantling or bankruptcy of company only with priority after the other
creditors. The principal may be returned otherwise only providing that a full
coverage for the bound equity and other non-distributable items in the confirmed
financial statements for the latest expired financial year is retained. Interest
or other benefits may be paid only in case the paid amount may be used for
profit distribution in the confirmed balance sheet for latest expired financial
period.
Financing round 2008:
The subscription period of the loan note for raising a maximum amount of 16,000
teuros ended on May 15, 2009 and the total amount of subscription was 10,000
teuros. The maximum amount of new shares to be subscribed by virtue of the
subscribed note is 94,339,622 representing approximately 10.51 % of the
registered share amount and 8.11 % of all outstanding securities. As a result of
the note the Company´s share capital may increase by a maximum of 943 teuros.
The annual interest of the loan is 12.5 %, paid twice a year, however interest
of period 1.7.-31.12.2009 was paid until January 2010. The loan will end on
August 25, 2013.
Financing round 2009:
The subscription period of the loan note for raising a maximum amount of 25,000
teuros, originally decided to end on March 31, 2010, has been extended until the
end of the year 2010. The group has received and withdrawn the investment
commitment of 7,500 teuros during the year 2009. The loan note was raised by the
subsidiary GeoSolutions Holdings N.V.. The loan note entitles to subscribe
shares of GeoSolutions. The amount of shares will in all events be less than
half of GeoSolution´s outstanding shares and share capital. Alternatively the
investors may be offered option to convert their notes into GeoSentric´s shares
corresponding the same proportional amount of fully diluted shares as the
investor otherwise would have received of GeoSolution´s shares. The note will
expire in five years. The final terms shall be confirmed after closing the
offering. As precondition for the investment the Company has agreed to pay an
industry standard placement fee. The amount of fee depends on the final terms of
the offering.
8. COLLATERAL COMMITMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------
| 1000 EUR | 1Q/2010 | 1Q/2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Collateral for own liabilities: | | | |
--------------------------------------------------------------------------------
| Pledged non-current financial | 5 | 46 | 5 |
| assets | | | |
--------------------------------------------------------------------------------
| Pledged current financial | 58 | 57 | 57 |
| assets | | | |
--------------------------------------------------------------------------------
9. RELATED PARTY TRANSACTIONS
The parent and subsidiary company relations in the group were as follows: Parent
company GeoSentric Oyj. Subsidiaries with parent company ownership and voting
rights of 100 % are GeoSolutions Holdings N.V., and its through (100%)
subsidiaries GeoSolutions B.V., GeoSentric (UK) Ltd., GyPSii (Shanghai) Co Ltd.
and GyPSii Inc..
Close circle events have been presented in the Financial Statements from year
2009. No essential changes have taken place in the reporting period.
10. EVENTS AFTER THE END OF THE PERIOD
The Company's Annual General Meeting planned to be held on May 14, 2010 was
cancelled and postponed to be held at a later date by the end of June 2010 as
announced on May 12, 2010.
The Company has agreed to preliminary terms for raising additional financing of
6M€ through its Dutch subsidiary GeoSolutions Holdings N.V. as announced on May
31, 2010.
