COMPTEL CORPORATION STOCK EXCHANGE RELEASE, 14th February 2007, at
8.00 am
COMPTEL CORPORATIONS FINANCIAL STATEMENT FOR 2006
Profitability and order backlog grew significantly during the last
quarter.
Key Figures for the Fourth Quarter
. Turnover EUR 22.8 million (OctoberDecember 2005: 23.2)
· Operating profit excluding non-recurring items EUR 4.8 million
(4.0)
· Operating profit EUR 4.8 million (2.6)
· Earnings per share EUR 0.01 (0.01)
· Order backlog EUR 29.5 million (24.5)
Based on the earnings of 2006, the Board of Directors proposes that a
dividend of EUR 0.05 per share be paid.
The financial information in this stock exchange release is based on
the company's audited financial statements. The auditor's report was
issued on February 13, 2007.
Sami Erviö, President and CEO:
"During the fourth quarter, Comptel's business progressed according to
set targets. Turnover nearly remained at a level for the last quarter
of the previous year, and operating profit rose to 21 per cent of the
turnover. This is a remarkable achievement as we booked exceptional
high costs of EUR 0.7 million related to our strategic projects for
OctoberDecember.
Earnings per share for the forth quarter remained at a level of the
previous year due to double taxation of withholding taxes, which we
have earlier announced. Its effect was approximately 0.02 euros. We
will rigorously try to obtain a correction to the resolution of the Tax
Office for Major Corporation.
In OctoberDecember, Comptel sold a record-breaking 13 new core
licenses, many of which were directed at Eastern Europe. Our business
perspectives remained positive also in the developing markets of the
Middle East, Africa and Asia. Order backlog grew by 20 per cent from
last year which is a solid base for the deliveries of the New Year.
In accordance with our strategy, we strengthened our local presence by
establishing a representative office in South Africa in October.
We reached the financial targets we had set for 2006. Our turnover grew
by over 20 per cent through the acquisition of business operations and
the growth of earlier business. Also the operating profit improved and
the operating profit excluding non-recurring items grew by 18 per cent
from the previous year."
JanuaryDecember 2006 Summary
· Turnover EUR 80.4 million (2005: 66.1)
· Operating profit excluding non-recurring items EUR 14.0 million
(11.9)
· Operating profit EUR 11.2 million (10.5)
· Earnings per share EUR 0.05 (0.07)
· Number of employees at the end of the period 547 (576)
The turnover of Comptel was EUR 80.4 million in 2006 (66.1). Turnover
grew by 21.8 per cent compared to the previous year (10.7), mainly due
to the acquisition of EDB Telecom.
The Group's operating profit was EUR 11.2 million (10.5), being 14.0
per cent (15.9) of the turnover. Excluding one-off items related to the
integration, the Group's operating profit was EUR 14.0 million, which
corresponds to 17.4 per cent of the turnover. The fourth quarter
includes exceptional high costs of EUR 0.7 million related to strategic
projects.
Financial items totalled EUR 0.03 million (0.2). The Group's profit
before taxes was EUR 11.2 million (10.8), which is 13.9 per cent (16.4)
of the turnover. Group net profit was EUR 5.8 million (7.0).
Earnings per share for the financial period were EUR 0.05 (0.07).
In November, Comptel Corporation received a resolution of dismissal
from the Tax Office for Major Corporations assessment adjustment board
concerning the companys tax credit treatment for withholding taxes in
2004. Comptel Corporation had requested for the withholding taxes that
the company has paid in Thailand, Indonesia, Greece, Romania,
Singapore, Brazil and Argentina in 2004 to be credited in Finland, thus
removing the double taxation on the companys respective income from
these countries. As an impact of withholding taxes on its taxes from
2005 and 2006, Comptel Corporation booked EUR 2.1 million in the fourth
quarter of this year. This book item had an effect of approximately
EUR 0.02 on the companys earnings per share. Comptel Corporation aims
to have its taxation changed.
The order backlog witnessed strong growth and at the end of the review
period amounted to EUR 29.5 (24.5). The order backlog grew strongly
from the level of the third quarter (24.3).
Business Areas
Turnover, EUR 10- 10- Chang 1-12 1-12 Chang
million 12 12 e % 2006 2005 e %
2006 2005
Europe 13.2 14.5 -9.0 47.6 34.5 38.0
Middle East and 2.9 1.9 52.6 12.0 9.1 32.1
Africa
America 2.5 2.5 0.0 8.2 8.8 -7.3
Asia-Pacific 4.2 4.3 -2.3 12.6 13.6 -7.5
Total 22.8 23.2 -1.7 80.4 66.1 21.8
Operating
margin breakdown
by market, EUR
million
Europe 5.7 6.6 -13.6 23.0 16.1 42.0
Middle East 1.6 0.8 100.0 7.2 4.4 63.6
and Africa
America 1.4 1.4 0.0 4.5 4.6 -2.2
Asia-Pacific 2.9 1.4 107.1 6.4 4.9 30.6
Unallocated -6.8 -7.6 -10.5 - - 52.8
expenses 29.8 19.5
Total 4.8 2.6 84.6 11.2 10.5 6.7
Operating
margin as a
percentage of
turnover
Europe 43.2 45.4 - 48.3 46.4 -
Middle East 55.2 40.4 - 59.9 48.2 -
and Africa
America 56.0 56.0 - 56.1 52.0 -
Asia-Pacific 69.0 33.1 - 50.8 35.7 -
Total 21.0 11.4 - 14.0 15.9 -
The development of turnover was excellent in Europe, and in the Middle
East and Africa. In Asia Pacific turnover decreased from the previous
year, but order intake increased. In America turnover did not developed
according to expectations. Except of America, operating profit of the
business units improved from the previous year. The proportional
profitability increased especially in Asia Pacific due to slighter
amount of low-margin products than earlier.
In the fourth quarter of 2006, Comptel sold 13 core licenses: seven for
mediation and six for provisioning solutions. Of these, seven were sold
in Europe, three in the Middle East and Africa, and three in Asia
Pacific.
In 2006, Comptel sold a total of 29 (16) new core licenses, of
which 14 were mediation, 13 provisioning, one network inventory system
and one TETRA solution.
Comptels core licenses for mediation are Comptel EventLink®,
Comptel OnlineLink® and the former EDB Telecom mediation product.
Comptels core license for provisioning is Comptel InstantLink®, for
network inventory NIMS as well as the TETRA solution.
Turnover Breakdown 10- 10- Chang 1-12 1-12 Chang
by Type, EUR 12 12 e % 2006 2005 e %
million 2006 2005
Licenses 7.4 7.9 -6.3 25.8 24.3 6.2
Services and 15.4 15.3 0.6 54.6 41.7 30.9
Maintenance
Hardware 0.0 0.0 0.0 0.0 0.1 0.0
Total 22.8 23.2 -1.7 80.4 66.1 21.8
Growth in services and maintenance is partly due to the acquired EDB
Telecom business operations and partly due to increased maintenance
business operation.
Turnover Breakdown 10- 10- Chang 1-12 1-12 Chang
by Sales Channel, 12 12 e % 2006 2005 e %
EUR million 2006 2005
Direct Sales 16.9 18.1 -6.6 62.8 49.9 25.9
Partner Sales 5.9 5.1 15.7 17.6 16.2 8.6
Total 22.8 23.2 -1.7 80.4 66.1 21.8
Financial Position
EUR million 31.12. 31.12. Change
2006 2005 %
Balance Sheet Total 68.8 66.7 3.1
Liquid Assets 12.9 9.6 34.4
Sales Receivables 28.2 24.9 13.3
Accruals 5.0 6.5 -23.1
Deferred income related 1.5 1.8 -16.7
to partial debiting
Equity Ratio, per cent 67.7 67.6 0.1
The balance sheet total on December 31, 2006 was EUR 68.8 million
(66.7), of which liquid assets amounted to EUR 12.9 million (9.6). The
change in liquid assets between JanuaryDecember was EUR 3.3 million
(18.8 negative). Operating cash flow was EUR 8.3 million (11.2), paid
dividends were the EUR 4.3 million (8.7) and net investments were EUR
0.7 million (21.2) in January December.
Sales receivables at the end of the period were EUR 28.2 million
(24.9). The growth of sales receivables was mainly due to concentration
of invoicing to the end of the period. Accrued income was EUR 5.0
million (6.5). Deferred income related to partial debiting was EUR 1.5
million (1.8).
Equity ratio was 67.7 per cent (67.6) and gearing was 27.7 negative
(21.5 negative). The Group had no interest-bearing debt at the date of
the financial statements.
The Group had no interest-bearing debt at the end of the reporting period.
Investments, Research and Development (R&D)
EUR million 10- 10- Chang 1-12 1-12 Chang
12 12 e % 2006 2005 e %
2006 2005
Gross Investments 0.3 18.6 -98.4 1.5 20.0 -92.5
in Fixed Assets
Direct R&D Costs 3.0 2.6 15.4 11.1 8.2 35.4
and Investments
Capitalised R&D 1.0 0.4 150.0 1.7 1.8 -5.6
expenditure
according to IAS
38
Gross investments comprised of investment in devices, software and
office furnishing. The EDB Telecom acquisition is included in the gross
investments in the fixed assets of 2005. Excluding this, gross
investments in 2005 were EUR 1.9 million. The investments in fixed
assets in 2006 were funded through cash flow from operations.
In addition to R&D costs, internal system development projects
worth of EUR 0.3 million were capitalized in JanuaryDecember. At the
moment, Comptel continues to focus on the development of its current
main products. The company estimates its level of investment to grow at
a moderate rate.
Personnel
31.12.2 31.12.2 Change %
006 005
Number of Employees at 547 576 -5.0
the end of the period
1-12 1-12 Change %
2006 2005
Number of Employees on 561 462 21.4
Average
The decrease in the number of employees compared to the end of 2005 was
mainly due to the integration of business operations bought from EDB Telecom
during the first half of 2006.
Personnel expenses in OctoberDecember were 37.0 per cent of turnover (45.4)
and in JanuaryDecember 45.2 per cent (34.1). The decrease in personnel
expenses during the fourth quarter is mainly due to the decrease of number
of personnel and improved operational efficiency.
At the end of the review period, 58.7 per cent (56.4) of the personnel
worked in Finland and 21.9 per cent (26.4) in Norway.
Comptel's Share
The closing price of the review period on December 29, 2006 was EUR 1.80
(1.64). Comptel's market value on December 31, 2006 was EUR 192.7 million
(175.5).
Shares traded 10- 10- Chang 1-12 1-12 Chang
12 12 e % 2006 2005 e %
2006 2005
Shares traded, 11.9 14.5 -17.9 49.8 160.7 -69.0
million
Exchange, EUR 20.6 23.4 -12.0 85.0 277.8 -69.4
million
Highest price, EUR 1.88 1.78 5.6 2.01 2.32 -13.4
Lowest price, EUR 1.49 1.51 -1.3 1.44 1.47 -2.0
7.0 per cent of Comptel's shares were nominee registered on December 31,
2006.
In July, The National Board of Patents and Registration in Finland granted
permission for the implementation of a decrease in the company's share
premium fund. In accordance with the decision of the Annual General Meeting,
the amount of EUR 7,367,898.92 was transferred from the share premium fund
to the company's unrestricted shareholder's equity governed by the General
Meeting.
The share subscription with Comptel Corporation 2000 warrants expired on 31
January 2006. During the subscription period, no shares were subscribed to.
The Board of Directors of Comptel Corporation cancelled 1,236,600
warrants 2001A and D that were held by Comptel Corporation's fully
owned subsidiary Comptel Communications Oy. The share subscription
price for both warrants is EUR 10.11. Following the cancellation of
warrants, the share capital of Comptel Corporation may increase by a
maximum of EUR 55.268 due to the 2001 options. The cancellation of the
warrants was registered in the Trade Register on May 18, 2006.
Of the stock options 2006A distributed during the review period, a
total of 1,240,000 are held by key personnel from Comptel Corporation.
The rest of the 2006 stock options have been granted to Comptel
Communications Oy to be further distributed to the present and future
key personnel of the Group. The share subscription price for stock
options 2006A is EUR 1.84 per share, which corresponds to the trade
volume weighted average quotation of the Comptel Corporation share on
the Helsinki Stock Exchange during April 1April 30, 2006.
During the review period, a total of 90,000 stock options 2001B/C
have been distributed. The share subscription price for stock options
2001B/C is EUR 2.51 per share, which corresponds to the trade volume
weighted average quotation of the Comptel Corporation share on the
Helsinki Stock Exchange during May 1May 31, 2002, inflated by 15 per
cent.
Corporate Governance
Due to his sick leave, Mr. Olli Riikkala, Chairman of the Board of
Directors, was not able to participate in the work of the Board of
Directors during October 1, 2006January 31, 2007. Mr. Hannu
Vaajoensuu, Vice Chairman, assumed the responsibilities of the chair.
Long-term Financial Targets
Comptels goal is to create shareholder value by long-term earnings
growth. Comptel is aiming to continue its profitable growth by
investing in product development and strengthening its market presence
close to its customers. In addition Comptel actively seeks for focused
acquisition opportunities.
Comptels long term financial targets are:
· Double-digit turnover growth per annum on average
· Operating profit 20 percent of revenue on average
· Solid balance sheet that enables strategic acquisitions
Events after the Review Period
January 23, 2007 Comptel Corporation announced the signing of a lease
on office premises with AC Salmisaari Oy. Comptel will move to the
Ruoholahti area of Helsinki once the new building is completed during
the summer of 2007. The common premises are expected to significantly
improve operational efficiency. The agreement as a whole was signed for
ten years, and it includes options to expand and partial termination.
The increase in the Group's rental commitments is, in total,
approximately EUR 13.5 million. In the upcoming years, the Group's
annual rent in Helsinki will remain at the same level or decrease
slightly.
Outlook for 2007
The Operations Support Systems market is expected to continue to grow
globally. Comptel's business prospects have developed favourably,
particularly in Eastern Europe. The Group's strong order backlog gives
a good basis for growth. A significant part of Comptel's business will
continue to comprise of customer specific solutions for Elisa and
Telenor. Their share of the Group's turnover is not predicted to grow.
The organic turnover growth of Comptel is expected to be from 5 to 10
percent in 2007. Comptel's operating profit is expected to grow from
the previous year and to be close to companys long-term target which
is 20 per cent of turnover.
An increasing portion of Comptel's business will come from services for
existing customers, which in its part lessens the fluctuation from one
quarter to another. However, single contracts or delivery projects may
continue to have a significant impact on the result of a quarter.
Helsinki, February 13, 2007
Olli Riikkala
Timo Kotilainen, Juhani Lassila, Matti Mustaniemi, Ilkka Toivola, Hannu
Vaajoensuu
Sami Erviö
President and CEO
Profit and Loss Account for the
Group
EUR 1,000 1.1.- 1.1.-
31.12.2006 31.12.200
5
Turnover 80,439 66,065
Other operating income 109 564
Materials and services -7,929 -8,716
Expenses incurred by employee -36,391 -27,113
benefits
Depreciation and value -4,549 -3,650
adjustments
Other operating charges -20,448 -16,633
-69,316 -56,113
Operating profit 11,232 10,516
Financial income 786 426
Financial charges -758 -182
Share of the results from -54 54
associated companies
Profit before taxes 11,206 10,814
Taxes -5,408 -3,634
Profit for the period 5,798 7,180
Distribution to
shareholders:
Shareholders of the parent 5,766 6,966
company:
Minority 33 215
Earnings per share
Earnings per share, EUR 0.05 0.07
Earnings per share, diluted, EUR 0.05 0.07
Balance Sheet for the Group
EUR 1,000 31.12.2006 31.12.2005
ASSETS
Non-current assets
Other intangible assets 7,875 9,105
Goodwill 10,832 12,543
Tangible assets 2,292 2,422
Investments in associated 400 454
companies
Saleable investments 87 87
Deferred tax assets 714 809
22,201 25,420
Current Assets
Floating assets 18 0
Sales receivables and other 33,692 31,604
receivables
Financial assets 12,934 9,633
46,643 41,236
TOTAL ASSETS 68,844 66,656
SHAREHOLDERS' EQUITY AND DEBTS
Parent companys distributable equity
Share capital 2,141 2,141
Share premium account 0 7,368
Unrestricted invested equity 7,368 0
Translation differences -674 -621
Retained earnings 37,782 35,818
46,617 44,706
Minority interest 145 163
Total Shareholders Equity 46,761 44,869
Long-term liabilities
Deferred tax liabilities 1,604 933
Provisions 188 1,953
Other liabilities 169 0
1,961 2,886
Short-term liabilities
Bills payable and other 18,831 18,815
liabilities
Tax liabilities based on the 1,291 86
taxable income of the period
Total liabilities 22,083 21,787
TOTAL SHAREHOLDERS' EQUITY AND 68,844 66,656
DEBTS
Rental commitments (EUR 31.12.2006 31.12.2005
1,000)
Premises
Payable during the next 12 3,137 3,033
months
Amounts payable later 8,500 12,221
Total 11,637 15,254
Leasing commitments
Payable during the next 12 381 351
months
Amounts payable later 313 293
Total 694 644
Leasing agreements are
mostly valid for three years
and contain no redemption
clauses.
Guarantees 775 773
Forward exchange contracts
Derivative instruments
Market value 218 -683
Value of underlying 17,390 15,752
instrument
CONSOLIDATED STATEMENT OF Group Group
CASH FLOW in EUR 1,000 1.1.- 1.1.-
31.12.2006 31.12.2005
Cash flow from operating
activities
Profit for the period 5,798 7,180
Adjustments:
Transactions without a cash 5,414 3,572
flow effect
Interest and other financial 582 36
expenses
Interest income -590 -393
Taxes 5,408 3,634
Change in working capital:
Change in trade and other -4,090 -1,504
receivables
Change in Floating assets -18
Change in accounts payable -507 2,602
and other short-term
liabilities
Change in provisions -1,383 962
Interest paid -582 -36
Interest received 583 393
Income taxes paid -2,280 -5,291
Net cash flow from operating 8,335 11,155
activities
Cash flow from investing
activities
Acquisition of business 2,294 -18,116
activities, net sum of cash
acquired
Acquisition of tangible -1,041 -1,304
assets
Acquisition of intangible -464 -464
assets
Capitalised development -1,727 -1,808
expenditure
Proceeds from the disposal of 237 481
tangible assets
Net cash flow from investing -700 -21,211
activities
Cash flow from financing
activities
Granted loan receivables
Dividends paid -4,333 -8,732
Net cash flow from financing -4,333 -8,732
activities
Net decrease/increase in cash 3,302 -18,788
and cash equivalents
Cash and cash equivalents at 9,632 28,420
the beginning of financial
year
Cash and cash equivalents at 12,934 9,632
the end of financial year
Change 3,302 -18,788
Minority Total
interest
Parent company's distributable equity
Share Share Other Transla Fair Retai Total
capi premium funds tion value ned
EUR 1000 tal account diffe reserve ear
rences nings
Shareholders' 2,141 7,368 0 -946 0 37,450 46,013 115 46,128
equity
Dec 31,2004
Cash flow
hedges:
Gain/loss -162 -162 -162
entered
in
equity
Translation 325 325 325
differences
Tax on entries 42 42 42
in equity
Profit for 6,966 6,966 215 7,181
the period
Total 325 -120 6,966 7,171 215 7,386
proceeds and
expenses for the
period
Dividend -8,566 -8,566 -166 -8,732
Share-based 87 87 87
compensation
Shareholders' 2,141 7,368 0 -621 -120 35,937 44,705 164 44,869
equity,
Dec 31, 2005
Cash flow
hedges:
Gain/loss 83 83 83
entered in
equity
Translation -53 -53 -53
differences
Tax 0 0
on entries
in equity
Net income
directly
entered in
equity 0 0
From share -7,368 7,368
equity to
unrestricted
invested
equity
Profit 5,766 5,766 33 5,798
for the period
Total 0 -7,368 7,368 -53 83 5,766 5,766 33 5,829
proceeds
and
expenses
for the
period
Dividend -4,282 -4,282 -52 -4,334
Sahare-based 397 397 397
compensation
Shareholders' 2 141 0 7,368 -674 -37 37,818 46,616 145 46,761
equity, Dec
31, 2006
FINANCIAL INDICATORS
Financial summary 1.1. -31.12.2006 1.1.-31.12. 2005
Turnover, EUR 1,000 80,439 66,065
Turnover, change % 21.8 10.7
Operating profit, 11,232 10,516
EUR 1,000
Operating profit, 6.8 -29.0
change %
Operating profit as 14.0 15.9
% of turnover
Profit after 11,206 10,815
financial items,
EUR 1,000
Profit after 13.9 16.4
financial items, %
of turnover
Return on equity, % 12.7 15.8
Return on 25.3 24.0
investment, %
Equity ratio, % 67.7 67.6
Gross investment in 1,477 19,968
fixed assets, EUR
1,000 2)
Gross investments 1.8 30.2
in fixed assets, %
of the turnover 2)
Capitalisation, 1,727 1,808
according to IAS
38, on intangible
assets
Research and 11,079 8,154
development
expenditure, EUR
1,000
Research and 13.8 12.3
development costs,
% of turnover
Back orders, EUR 29,483 24,482
1,000 1)
Average number of 561 462
employees during
the period
Gearing ratio, % -27.7 -21.5
1) The order book may vary significantly during the financial
period.
2) Includes the acquisition of the EDB Telecom business in
2005. Gross investments excluding the acquisition were EUR
1,852 thousand which amounts to 2.8 per cent of turnover.
Per share data 1.1.-31.12.2006 1.1.-31.12.2005
Earnings per share 0.05 0.07
(EPS), EUR
Diluted EPS, EUR 0.05 0.07
Equity per share, 0.44 0.42
EUR
Dividend per share, 0.05 0.04
EUR
Dividend per 92.8 61.5
earnings, %
Effective dividend 2.8 2.4
yield, %
P/E-ratio 33.4 25.2
Adjusted number of 107,054,810 107,054,810
shares at the end
of the period
Adjusted average 107,054,810 107,054,807
number of shares
during the period
Number of diluted 107,054,810 107,054,807
shares
Comptels Twenty Largest Shareholders and Nominee Registered on
December 31, 2006
1. Elisa Corporation 19.9%
2. Sampo Life Insurance Company Limited 18.3%
3. Kaleva Mutual Insurance Company 6.5%
4. Varma Mutual Pension Insurance 4.6%
Company
5. OP-Suomi Pienyhtiöt Investment Fund 3.1%
6. State Pension Fund 1.4%
7. Mandatum Finnish Small Cap 0.9%
8. EQ Small Titans / EQ Fund Management 0.9%
Ltd
9. OP-Pohjola Pienyhtiöt Investment 0.9%
Fund
10. Aktia Capital Investment Fund 0.8%
11. Tapiola Mutual Pension Insurance 0.8%
Company
12. Finanssi-Sampo Ltd 0.8%
13. Etera Mutual Pension Insurance 0.8%
Company
14. Evli Select 0.7%
15. SEB Gyllenberg Small Firm 0.7%
16. Veikko Laine Oy 0.7%
17. Ilmarinen Mutual Pension Insurance 0.6%
Company
18. Placeringsfonden Aktia Secura 0.6%
19. Stiftelsen för Åbo Akademi 0.6%
20. Forssan Seudun Puhelin Oy 0.5%
Nominee registered and foreign ownership 7.0%
COMPTEL CORPORATION
Additional information:
Sami Erviö, President and CEO, tel. +358 9 700 1131
Mr. Veli Matti Salmenkylä, CFO, tel. +358 50 2813
Mr. Samppa Seppälä, Director, IR and Corporate Communication, tel. +358
50 5680533
Distribution:
Helsinki Stock Exchange
Major media