COMPTEL PLC STOCK EXCHANGE BULLETIN 21 JULY, 2000 AT 08.15

Transcription

1 COMPTEL PLC STOCK EXCHANGE BULLETIN 21 JULY, 2000 AT COMPTEL S INTERIM REPORT Summary Turnover FIM 172,5 million, +56,6% Operating profit FIM 68,6 million, +93,1% Pre-tax profit FIM 71,4 million, +86,3% - GPRS deliveries were started to BT Cellnet, Radiolinja and Sonera - GPRS Charging Gateway deliveries began in connection with Nokia s GPRS network deliveries - Decision to establish a subsidiary in the United States and sales offices in Hong Kong and Sydney, Australia - Comptel and Logica announced marketing co-operation of new mobile services in Japan. - MSC status was awarded to Kuala Lumpur office which became a subsidiary - Company acquired majority of Probatus Oy - Marketing cooperation begun with Yomi Media KEY INDICATORS x) x) x) Q2/00 Q2/99 H1/00 H1/ Financial summary Turnover, FIM million Turnover, increase % % 53.2% % % % Operating profit, FIM million Operating profit, increase % 79.1 % % 93.1 % 249.7% % Operating profit as % of % % 34.3 % turnover % % Profit before extraordinary items, provisions and taxes, FIM million Profit before extraordinary % 36.2 % items, provisions and taxes as % of turnover % % % Average number of personnel during the financial period Per share data EPS, FIM Equity per share, FIM Adjusted average number of shares for the financial year

2 x) Comparison Comptel Plc CHANGES IN COMPANY STRUCTURE This is the first time that the interim report data are presented at the Group level, as Comptel acquired a majority in Probatus Oy (51.0%), Arcus Software Oy became an affiliate of Comptel (23.4%), and the representative office in Kuala Lumpur was changed to a fully owned subsidiary (Comptel Communications Sdn Bhd). The subsidiaries and affiliates have not, however, had any substantial impact on the financial result of the Comptel Group. The data contained in the present interim report concern the entire Group unless otherwise stated. FINANCIAL RESULT FOR THE SECOND QUARTER OF 2000 (APRIL-JUNE) Comptel s turnover during the second quarter of 2000 was FIM 90.5 million (FIM 60.3 million), up by 50.0% from the corresponding period in the previous year. Exports rose by 91,4% to FIM 67,6 million (FIM 35.3 million), accounting for 74,7% of turnover. As anticipated, the highest growth figures were recorded on the American and Asia-Pacific markets. Exports through partners continued to increase, making up 80.4% of total exports. Operating profit rose by 79.1% to FIM 39.3 million (FIM 22.0 million), which is equivalent to 43.5% (36.4 %) of turnover. Comptel s operating profit rose at a higher rate than its turnover, which was attributable to the fact that the MDS product family and exports made up a greater proportion of its turnover, and to the fact that its subscriber based license revenues grew. Operating profit also includes the FIM 1.8 million capital gains from sales of Radiolinja s L-shares, which is presented under other operating income. A social security contribution of FIM 3.0 million, scheduled for the second quarter in the personnel warrant scheme, is included in personnel costs as an obligatory provision. Financial items amounted to FIM million (FIM +1.5 million), mainly composed of interest income. Comptel s share of the losses recorded for its affiliate Arcus Software is presented under financial income and charges. The result after financial items was up by 71.2 %, being FIM 40.1 million (FIM 23.4 million). The result corresponded to 44.3% (38.8%) of turnover. The order back log increased by 59.4 %, amounting to FIM 164 million (FIM 103 million). Earnings per share increased by 62.5 %, being FIM 0.26 (0.16) /share. FINANCIAL RESULT FOR THE FIRST HALF OF 2000 Comptel s turnover amounted to FIM million (FIM million) during the period January-June 2000, showing a 56.6% growth from the corresponding period in the previous year. Exports increased by 78.9 % and totalled FIM million (FIM 63.5 million). Exports made up 65.8 % of turnover in the first half of the year, the figures being 51% for

3 Europe, the Middle East and Africa, 30% for the Asia-Pacific, and 19% for North and South America. Operating profit, which rose by 93.1%, was FIM 68.6 million (FIM 35.5 million), equivalent to 39.8% (32.7%) of turnover. A social security contribution of FIM 4.8 million, scheduled for the first half of the year in the personnel warrant scheme, is included in personnel costs as an obligatory provision. Financial items amounted to FIM million (FIM +2.8 million), mainly composed of interest revenues. Comptel s share of the losses recorded for its affiliate Arcus Software is presented under financial income and charges. The result after financial items was up by 86.3%, being FIM 71.4 million (FIM 38.3 million). The result corresponded to 41.4% (34.8%) of turnover. Earnings per share increased by 67.8 %, being FIM 0.47 (0.28) per share. MAIN DEVELOPMENTS IN THE SECOND QUARTER OF 2000 COMPTEL AND TRENDS IN THE INDUSTRY The traditional mediation software market is about to change. Comptel is responding to this change by introducing an m-services platform. Mobile business has expanded more rapidly than anticipated. The company believes that new services will continue to accelerate this growth and change the mediation software market. Trends have shown that Comptel has been able to select its key focus areas successfully. The GPRS product development investments started in 1998 have helped the company to maintain its position as a pioneer in mediation solutions for new mobile services (m-services platform). Products and services based on these will occupy an increasingly prominent position in the future. Comptel had already announced its first GPRS customer deliveries in 1999 while the competing enterprises published their own GPRS mediation products during the second quarter of this year. Mediation solutions will play an increasingly important role in the operators business in the future, as the number of transactions is increasing and there is a need to bill the services, to share revenues and to disseminate information between the various parties of the value chain, all this in real time. This will be a crucial factor for operators competitiveness in packet-switched mobile networks (GPRS and 3G). The services concerned will also create a new market for supplementary mediation products, as already indicated by Comptel s Transaction Database (MDS/AMD-DB) and MDS Credit Guard applications. New mobile services force telecommunications operators to invest in next generation billing systems. According to the company management the dynamics and speed of the market will create challenges for the IT departments of large operators and this creates an opportunity for new billing and mediation system vendors. A good example of this is the agreement between BT Cellnet and Comptel according to which Comptel will

4 deliver GPRS and IP mediation software and Geneva Technology Ltd a GPRS and IP billing system to BT Cellnet. Auctions for 3G mobile licenses have already begun, and this will open up new markets for the mediation business. Comptel s investments in its GPRS business will directly benefit the 3G mediation business. Major structural changes have continued in the sector. Good examples of this are the public purchase offers announced on two of Comptel s competitors in April (Architel by Nortel Networks and MSI by Marconi.) The company management believes that Comptel s position as an independent mediation system supplier will become even more prominent once the aforementioned structural reorganisation has been completed. PARTNERSHIPS The importance of partners continued to increase in the second quarter. Sales through partners represented 80.4% (47.3%) of the total exports, which is in line with Comptel s long-term target. The respective amount for the first half of the year was 76,3 % (54,5 %). Today, partner network covers all continents. MDS BUSINESS BY GEOGRAPHIC AREA Comptel has delivered its systems to more than 150 customers in 46 countries. In geographical terms, it gained 51% of its turnover from Europe, the Middle East and Africa, 30% from the Asia-Pacific area and 19% from North and South America. Several new projects have not been announced in public, due to competition issues pertaining to Comptel s customers. Keen growth is expected to continue on the Asian and American market in the future. There is currently extremely fierce competition in the European market so the growth rate is expected to be moderate and largely involve GPRS solutions. One strategic priority is to expand the company s own local sales network and develop more intensive local co-operation with partners. Europe GPRS delivery agreements were announced with BT Cellnet, Radiolinja and Sonera. MDS for Satellite and MDS Credit Guard agreements were concluded with Radiolinja - (Radiolinja s subsidiary Globalstar Northern Europe Ltd). An MDS/AMD-DB (Transaction Database) delivery agreement was concluded with Sonera. Marketing cooperation was launched with Yomi Media. Under the agreement Comptel will start to market, to mobile operators worldwide, advanced mobile services on a Smartal service platform, smart service portal, developed by Yomi Media.

5 Jorma Turunen was assigned to be responsible for EMEA business functions and appointed a member of the executive board at the beginning of May. Asia and Australia Comptel s representative office in Kuala Lumpur was changed to a subsidiary (Comptel Communications Sdn Bhd) in April. At the same time, the Malaysian authorities granted the subsidiary MSC Status (Multimedia Super Corridor, the local hi-tech enterprise status). The subsidiary had 19 employees at the end of June and is expected to increase to 40 or so by the end of the year. Most of the new employees will be stationed in the newly established product development unit. The setting up sales offices in Hong Kong and Sydney is proceeding as planned. Americas Establishing a subsidiary in the US market continues as planned. The new company will become operational by the end of the year. Systems development Comptel is responsible for pursuing systems development work for Elisa Communications. The most important new projects were concerned with the adoption of the Euro. RESEARCH AND PRODUCT DEVELOPMENT R&D work was largely centred on mediation software. R&D costs were derived from direct R&D projects and from indirect R&D projects relating to customer deliveries. Almost 25% of Comptel employees were involved in R&D projects. Direct R&D costs during the second quarter of the year amounted to FIM 7.6 million and during the first half of the year to FIM 13.7 million. In the first half of the year, the focus in R&D work was on further developing the MDS for the GPRS/IP product, a research on evolution of the mobile communications network from voice telephone network to mobile services network (m-commerce / m-services / WAP), further developing the GPRS Charging Gateway product, the new generation of core MDS (Mediation Device Solutions) software products, further developing the MDS Credit Guard product (credit reminder/credit limit application) and the MDS/AMD- DB application (Transaction Database). The company charges all R&D costs incurred against the profit for the period. The product development unit in Malaysia began operation and recruitment of new personnel will continue. FINANCIAL POSITION Comptel s financial position remained solid. The balance sheet total on 30 June 2000 was FIM million of which cash in hand and at bank

6 totalled FIM million. The company had no interest-bearing liabilities at the end of the period under review and its equity ratio was 77.6 %. INVESTMENTS Fixed asset investments amounted to FIM 14.8 million (FIM 4.7 million) during the second quarter of the year, and to FIM 20.1 million (FIM 7.6 million) during the first half of the year). Investments mainly concerned the acquisition of Probatus shares, subscription of Arcus Software s shares, basic improvements to leased premises and investments in hardware and other equipment. Fixed asset investments were funded through the cash flow gained from operating activities, apart from the acquisition of Probatus shares. Acquiring a majority of Probatus Oy Comptel acquired 51% of Probatus Oy, which is located in Tampere, on 8 th May The transaction was implemented in the form of an exchange of shares in which Comptel Plc offered, through a share issue directed at the sellers, a total of 53,805 new Comptel Plc shares for subscription. The additional sum, a maximum of FIM 7 million based on the growth of Probatus business and the result for the year 2001, will be paid in the spring of The acquisition enables Comptel to expand its business to areas that lie outside the Helsinki region and where it is easier to obtain skilled personnel. Probatus new office will be opened in Forssa in August, and measures are currently being taken to explore opportunities for also expanding Probatus business to other cities in Finland. Probatus had 30 employees at the end of June. EMPLOYEES The company had 425 employees at the end of the review period, an increase of 101 people, or 31%, as compared with the corresponding period in the previous year. COMPTEL S SHARE Comptel s largest 10 shareholders, excluding nominee registered owners, as on : Elisa Communications Corporation 58.1% Varma-Sampo 0.5% SITRA National Fund for Research and Development 0.5% Ilmarinen Mutual Insurance Company 0.4% Sijoitusrahasto Leonia Osake 0.4% Mutual Insurance Company Pension-Fennia 0.4% OP-Tuotto Sijoitusrahasto 0.3% Local Government Pensions Institution 0.3% Tapiola Mutual Pension Insurance Company 0.3% FIM Forte Sijoitusrahasto 0.3% Nominee registered 20.0%

7 By resolution of the Annual General Meeting, the number of Comptel s shares was raised, without increasing the share capital, by splitting each share into five (5) The book value of each share was decreased from EUR 0.1 to EUR 0.02 accordingly. The record date was 7 April In the Extraordinary General Meeting on November 1999 the Board of Directors was authorised to issue 400,000 warrants to Comptel employees for the subscription of a maximum of 2,000,000 Comptel Plc shares. At the end of the period under review, 341,850 of these warrants had been distributed to the personnel. The maximum number of Comptel shares that can be subscribed for with the warrant certificates is 1,709,250. In the Annual General Meeting of the Board of Directors was authorised to issue 1,000,000 warrants to Comptel employees for the subscription of a maximum of 1,000,000 Comptel Plc shares. At the end of the period under review the authorisation had not been exercised. The warrant programme comprises three warrant rights of which the issue price for holders of warrants endorsed with the letter A is EUR 19.63, in accordance with the weighted average price of the company s shares traded on the stock exchange in April The issue prices for warrant rights B and C will be determined in April 2001 and in April In connection with the majority acquisition of Probatus Oy, Comptel Plc offered a total of 53,805 new Comptel Plc shares for subscription by the sellers through a subscription issue. The number of shares totalled 107,053,805 at the end of the review period. RESOLUTIONS PASSED BY COMPTEL S ANNUAL GENERAL MEETING Meeting on 3 April 2000, Comptel Plc s Annual General Meeting passed the following resolutions: The Annual General Meeting adopted the accounts and discharged members of the Board of Directors and the Managing Director from liability for the financial year ending 31 December The Annual General Meeting approved the Board of Directors proposal for the distribution of profit, thereby declaring a total dividend of EUR 2,140,000 or EUR 0.1 per share for The record date for payment of dividend was 6 April 2000 and dividend was paid from 13 April The Annual General Meeting appointed Erik Anderson, Ann-Maj Majuri-Ahonen, Matti Mattheiszen, Gunnulf Mårtenson and Vesa Silaskivi to Comptel Plc s Board of Directors. The Annual General Meeting re-appointed authorised public accountants SVH Pricewaterhouse Coopers Oy as the company s auditors, with Henrik Sormunen APA as the principal auditor. In accordance with the Board of Directors proposal, the Annual General Meeting passed a resolution to amend Article 4 of the company s Articles of Association. Subsequent to this amendment, Article 4 now reads as follows: Article 4 The company shall have a minimum of 21,000,000 and a maximum of 500,000,000 shares. The shares have no nominal value.

8 The Annual General Meeting also resolved to increase the number of shares in the company without increasing the share capital by splitting each Comptel Plc share into five (5). The splitting of shares shall take place such that shareholders registered on 7 April 2000 as shareholders in the company s share register kept by the Finnish Central Securities Depository shall receive shares as per the ratio above. The book value of each share shall decrease from EUR 0.1 to EUR 0.02 accordingly. The Annual General Meeting also decided to issue warrants to key personnel in the Comptel Group and to Comptel Plc s wholly-owned subsidiary. The preemption rights of existing shareholders are to be disapplied because the warrants are intended as part of an incentive scheme for key personnel. Some of the persons entitled to warrants belong to the company s inner circle. Persons belonging to this group and entitled to subscribe for shares presently own per cent of the company s shares and votes. Shares available for subscription under the warrants now being issued account for 0.91 per cent of the company s shares and votes conveyed by them. Of the 1,000,000 warrants issued, 200,000 are to be endorsed with the letter A, 400,000 with the letter B and 400,000 with the letter C. The warrants may be exercised to subscribe to a maximum of 1,000,000 Comptel Plc shares in total. The issue price for holders of warrants endorsed with the letter A is the weighted average price of the company s shares traded on the Helsinki Exchanges in April 2000, for holders of warrants endorsed with the letter B, the weighted average price of the company s shares traded on the Helsinki Exchanges in April 2001, and for warrants endorsed with the letter C, the weighted average price of the company s shares traded on the Helsinki Exchanges in April The issue price will, on the record date for each payment of dividend, be reduced by the amount of any cash dividends paid subsequent to the determination period and before any subscription. Subscriptions by virtue of the warrants shall commence in stages as follows: 1 December 2001 (warrant A), 1 December 2002 (warrant B) and 1 December 2003 (warrant C) and shall end on 31 January 2006 in respect of all warrants. Comptel Plc s subscribed capital may be raised by a maximum of 1,000,000 new shares or EUR 20,000. The Annual General Meeting resolved to authorise the Board of Directors to decide within one year of the Meeting whether to increase the subscribed capital by one or more new issues, to decide whether to issue one or more convertible bond loans and/or issue warrants provided that such issuance of a convertible bond loan, warrants or new shares may not result in the issuance of more than 21,400,000 new shares and the company s share capital may be increased by a maximum total of EUR 428,000. The Annual General Meeting simultaneously resolved that the authorisation granted by the Annual General Meeting allow the Board of Directors to disapply the pre-emption rights of existing shareholders to subscribe for new shares, convertible bond loans and/or options and to decide the determination principles for the issue prices, issue prices, the terms and conditions of subscribing for new shares and the terms of the convertible bond loan and/or warrants. The pre-emption rights of existing shareholders may be disapplied if there exists an important financial reason to do so such as financing, implementing or enabling corporate acquisitions, strengthening or developing the company s financial or capital structure or carrying out other arrangements related to developing the company s operations. The Board of Directors has the right to decide on the distribution of the entitlement of pre-emption

9 rights but may not make such a decision so that benefits any member of the company s inner circle. The Board of Directors has the right to decide whether the shares issued in a rights issue, convertible bond or option can be subscribed for in kind or otherwise subject to certain conditions or by using the right of set-off. FUTURE OUTLOOK The company has continued in its strategic key areas in accordance with the targets set. Product development investments have involved mobile business and, in particular, the packaging of software and services. The company has also strengthened its own sales and marketing network as planned to establish and maintain customer contacts and to support the partner network. According to the company management growth prospects on the mediation software market still remain good. The role of mediation software will further strengthen in mobile and IP networks and new value-added services are being developed around the existing products (Comptel s m-services platform). The mediation software will play an essential role in improving and maintaining customers competitiveness in the future. Additionally, it is expected that the number of subscribers in mobile networks will continue to increase. Any significant delay in GPRS terminal equipment deliveries could slow down the company s growth. There are also some factors of uncertainty linked to the scheduling of 3G mobile networks, their technical properties, services and high license prices. Comptel s organic growth may slow down due to the lack of a skilled workforce in Finland. Project-based business is characterised by quarterly fluctuations. The company management believes that the turnover of the second half of the year will further increase and the estimated turnover growth rate for the whole year is %. Despite the additional costs arising from expanding overseas functions, the management believes that profitability will remain good and is increasing the EBITDA target for the year from 30% to 35-40%, which represents the very top in the industry. Such high profitability figures show that the company is operating effectively by utilising its international partner network in distribution, mastering software packaging and focusing on its key field of expertise, while at the same time keeping its costs structure under strict control. As for the year 2001, the company management expects the rate of Comptel s turnover growth to exceed the market growth in general. Next interim report Comptel Plc s next interim report will be published on Tuesday 17 October, 2000 (third quarter). PROFIT AND LOSS ACCOUNT OF THE GROUP *) *)

10 FIM 1000 *) comparison Comptel Plc *)comparison Comptel Plc Turnover Other operating income Materials and services Staff costs Depreciation and value adjustments Other operating charges Operating profit Share of affiliate companies results Financial income and charges Profit before exceptional items Exceptional items 0,00 0,00 0,00 Profit before appropriations and taxes Difference between actual and planned depreciations Taxes Minority interest Profit for the period BALANCE SHEET OF THE GROUP FIM 1000 ASSETS *) *)comparison of Comptel Plc *) *)comparison of Comptel Plc Fixed tangibles

11 Intangible assets Goodwill Tangible assets Financial assets Current assets Short-term debtors Cash in hand and at banks SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity Subscribed capital Share premium account , , Contingency fund Retained earnings Profit for the period Minority interest Accumulated appropriations Provisions for liabilities and charges Creditors Short-term creditors FINANCIAL INDICATORS Financial summary Turnover, FIM *) 06/1999 *) 06/2000 *)comparison of Comptel Plc *)comparison of Comptel Plc

12 Turnover, increase % Operating profit, FIM 1000 Operating profit, increase % Operating profit as % of turnover Profit before exceptional items, provisions and taxes, FIM 1000 Profit before exceptional items, provisions and taxes as % of turnover Profit before appropriations and taxes, FIM 1000 Profit before appropriations and taxes as % of turnover 53,2 71,2 56, ,6 249,7 93,1 34,3 32,3 39, ,2 34,8 41, ,2 34,8 41,4 Equity ratio, % 78,0 61,4 77,6 Gross fixed asset investments, FIM 1000 Gross fixed 7,3 6,9 11,6 asset investments as % of turnover Research and development costs, FIM 1000 Research and 7,0 5,7 8,0 development costs as % of turnover Back orders, FIM ) Average number of employees during the period

13 Interestbearing net liabilities, FIM 1000 Gearing ratio,% -93,7-119,0-89,8 1) The cyclicality in the back orders is remarkable within a fiscal year. Majority of annual maintenance agreements are booked. Per share data EPS, FIM 0,60 0,27 0,47 Diluted EPS, 0,60 0,27 0,46 FIM Equity per 1,22 0,58 1,64 share, FIM Adjusted number of shares at balance sheet date 1) Adjusted average number of shares for the financial year Number of diluting shares 1) Until 22 October 1999 there were 105 shares. On 22 October 1999 the number of shares was raised to 21,000,000. The financial indicators use 105,000,000 because on 3 April 2000 the Annual General Meeting decided to split Comptel share one into five.

14 COMPTEL PLC Managing Director Heikki Tetri For further information, please contact Comptel Plc Managing Director Heikki Tetri, tel Distribution: Helsinki Exchanges Major Media