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ComTel SpA Annual Report 2009
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Annual Report
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COMPTEL
Annual Report
Comptel is a leading telecom software vendor helping communications service providers to deliver innovative services flexibly and charge them effectively. We have sold solutions to 280 customers with 800 million subscribers in 85 countries.
| Key figures | 2005 | 2006 | 2007 | 2008 | 2009 |
|---|---|---|---|---|---|
| Net sales, EUR million | 66.1 | 80.4 | 82.4 | 84.8 | 74.9 |
| change, % | 10.7 | 21.8 | 2.4 | 3.0 | -11.7 |
| Operating profit, EUR million | 10.5 | 11.2 | 16.5 | 11.4 | 1.0 |
| % of net sales | 15.9 | 14.0 | 20.0 | 13.4 | 1.4 |
| Equity ratio, % | 75.2 | 74.6 | 77.6 | 67.4 | 62.6 |
| Average number of personnel | 462 | 561 | 555 | 606 | 613 |
Net sales by geography 2009
Personnel by function 2009
Net sales and operating profit
R&D investments
Order backlog
Dividend per share
Content
2 Comptel for Investors
4 Message from the CEO
6 Report of the Board of Directors
12 Financial Statements
51 Corporate Governance Statement
54 Board of Directors and Corporate Executives
56 Shareholder Information and Annual Summary
57 Contact Information
Financial statements presented in the Annual Report are condensed from the audited financial statements of Comptel Corporation. The entire audited financial statements are available on the company's website at www.comptel.com.
Comptel, August 1, 2009
Comptel for Investors
Comptel is one of the leading players in global Operations Support System (OSS) markets. Our solutions meet service providers' growing needs to improve their efficiency and reduce time to market for new services.
Comptel has wide expertise in service fulfillment, mediation and charging. Our offering expands from point solutions to an integrated end-to-end software platform. We sell software licenses as well as services and maintenance related to our products.
Comptel employs about 600 highly-skilled experts worldwide. We also cooperate in sales and delivery with partners, for example system integrators IBM, Logica and Tech Mahindra, and network device manufacturers Alcatel-Lucent, Cisco and Juniper.
Our customers include leading global operators, such as América Móvil, Bharti Airtel, China Mobile, O2, Orascom, QTel, Saudi Telecom, T-Mobile, Telefónica, Vodafone ja Zain.
In addition to software products, we deliver customer specific solutions to Elisa in Finland and Telenor in Norway.
Comptel aims to create shareholder value by increasing net sales in the long term and by sustaining profitability on a good level. We intend to continue profitable growth by investing in product development and strengthening our local presence close to customers worldwide. We are also actively seeking focused acquisitions.
Comptel was founded in Finland in 1986 and was listed on the Helsinki stock exchange in 1999. Comptel is a Mid Cap company and part of the Information Technology sector of NASDAQ OMX.
Comptel's software connects service providers' customer care and billing systems with the network. The move towards next generation IP-based services will increase the role of OSS in the telecoms business, and operators will need to invest in OSS to bring innovative services to market faster and more efficiently. Comptel is the world's leading provider of dynamic OSS, offering an extensive portfolio of solutions to increase revenues, improve the customer experience and reduce costs.
Strategy
- Become the strategic partner of choice for system integrators and network vendors
- Get closer to customers and offer unparalleled OSS expertise with new business models, e.g. software as a service
- Offer faster time to market for communications services
- Develop offerings with increased value and competitive advantage – an end-to-end Comptel Dynamic OSS™ Solution
COMPTEL Annual Report | Comptel for Investors
COMPTEE Annual Report | Comptel for Investors
Solution Offering
| ORDER | CHARGING |
|---|---|
| Customer Care and Billing | |
| Order Processing and Inventory | Comptel Dynamic OSS™ |
| Fulfillment and Resource Management | Catalog |
| Mediation and Charging | |
| Access Networks | Core Networks |
| Service Platforms |
Fulfillment and Resource Management
- Order management coordinates the order-to-cash process.
- Inventory holds information for the management of network resources and associated services.
- Provisioning and activation activates the network elements to provide services.
Catalog solutions manage complex service packages and their life-spans.
Mediation and Charging
- Mediation collects usage information in real-time.
- Rating attaches the price to services in real-time.
- Charging solutions charge the subscriber account in real-time.
- Policy control manages subscriber- and service-specific policies in real-time.
Client Value Proposition
Time to Market
Comptel helps service providers reduce time to market for new services, driving real differentiated innovation. Comptel's solutions can be deployed fast, so that the benefits can be realised fast.
Reliable Delivery
Comptel's reliability enables service providers to predictably deliver quality services to their customers. Comptel's solutions are reliable and scalable, so they can work in even the most challenging environments.
Value for Money
Comptel helps service providers reduce overall operating costs, so they can offer value for money to their customers. Comptel's solutions are designed to bring efficiencies to operations.
Partners for the Future
Comptel's flexible solutions adapt to existing environments and thanks to Comptel's expertise, evolve to meet the demands of future services. Comptel believes in building long-term relationships with service providers.
We continued to invest in the future
The year 2009 was a challenging one for Comptel. We adjusted our operations in line with reduced demand, whilst continuing to invest in the development of end-to-end solutions in accordance with our strategy.
"Versatile broadband offerings require more flexible systems to support the growth."
The global economic recession slowed down telecom operators' investments and weakened the demand for Operations Support Systems (OSS) in Europe and in the Americas. At the start of 2009 we began a cost cutting exercise that was carried out according to the plan, and now we are able to operate with a significantly reduced cost structure.
Despite the recession, there is a growing need for telecom operators to develop their services and networks. Operators need dynamic support systems to be able to launch versatile services fast and manage their life-cycle. At the same time, operators are trying to reduce costs by consolidating the network and business management systems that they have built-up over many years. In addition, next generation technologies and the building of 4G mobile networks are increasing the need for operators to invest in systems that support their new business models.
Breakthrough in mobile broadband
Mobile broadband services are a key growth area in telecoms. The rapidly increasing use of mobile to access email, music and video services as well as Internet-based social networks creates congestion in data network. In order to meet the growing demand, operators have been investing to increase their network capacity, but revenues have not grown at the same pace as costs. Therefore new methods are required for managing and optimising their broadband offering.
In 2009 we extended our mediation and charging solutions suite, adding Comptel Policy Control which helps operators to manage bandwidth in real-time and allocate their network capacity efficiently according to demand. In addition, the solution can help subscribers control their roaming costs. The solution has received several telecoms awards for innovation, and by the end of the year this product had been sold and was being deployed in a number of countries.
IP solutions are becoming more common
Internet-based networks and services, such as IPTV and VoIP, are becoming more popular and they require more advanced service management systems. Comptel has great expertise in IP-based fulfillment solutions, and we invested substantially in this growing market during 2009.
COMPTEL Annual Report | Message from the CEO
We are building an integrated platform for fulfillment based on the technology of Axiom Systems which was acquired the previous year. We also combined our three product units into one larger entity. Our main R&D focus was in developing of end-to-end solutions for service fulfillment automation used in fixed broadband networks.
Unique offering for customers and partners
We provide our customers and partners with one of the most comprehensive solution portfolio available in the OSS market. Our integrated software platform automates the service fulfillment process, manages services and network resources and enables real-time mediation and charging. Our solutions provide some one thousand off-the-shelf interfaces for different network elements and IT systems in fixed, mobile, IP, cable and satellite and convergent environments.
As part of our active partner strategy, we have been providing network equipment vendors and system integrators both solutions and expertise in fulfillment and charging. In 2009, we developed a closer cooperation with
our partners, including Alcatel-Lucent, Cisco and IBM.
A global expert
Comptel is an international company. Our highly-skilled personnel are of 40 different nationalities and we are present in 20 countries. In 2009, the proportion of our personnel working in Asia increased to over one quarter of the total, and we also significantly expanded the resources and operating area of our Bulgarian service centre. We are serving our customers and partners better than ever in their own markets.
I wish to thank our personnel for their valuable contribution and our customers, partners and shareholders for their trust and good cooperation during these challenging times. I believe that our adjustment measures as well as the continuing investment in product development will ensure Comptel's long-term profitability and competitiveness.
Helsinki, March 2010
"Our integrated platform consolidates separate systems and brings competitive edge."
COMPTEL Annual Report | Message from the CEO
Report of the Board of Directors for 2009
Net sales and operating profit
Earnings per share
Return on equity
Market development
Comptel operates globally in the telecom OSS (Operations Support System) markets.
The global recession had an impact on telecom operators' investments and it decreased the demand for OSS in Europe and in the Americas. However, the operators' need to expand services and networks remains. With the deployment of 4G networks and the growth of data services in particular, investment is required in systems which promote new business. At the same time, in the developed markets especially, operators are looking to consolidate the network and business management systems as a part of their drive to reduce costs. Also these changes call for software which supports modern business models.
During the first and last quarter of 2009, Comptel adjusted its headcount in line with the reduced demand with statutory personnel negotiations in Finland and in Norway. The company continued actively to focus R&D and to position the offering away from point solutions towards dynamic end-to-end solutions. The customer service centre operations and resources set-up in Bulgaria were significantly expanded during the year.
Net sales and profitability
The net sales of Comptel Group were EUR 74.9 million in 2009 (2008: 84.8; 2007: 82.4). Net sales decreased by 11.7 per cent (increased 3.0) compared to the previous year. Low license sales especially in the European and American markets decreased net sales.
The Group's operating profit was EUR 1.0 million (2008: 11.4; 2007: 16.5), which corresponds 1.4 per cent (13.4) of net sales. The operating profit, excluding one-off items of EUR 2.5 million (1.1) related to personnel reductions, was EUR 3.5 million (12.5), which corresponds 4.7 per cent (14.7) of net sales.
Net financial items were EUR 0.7 million negative (0.9 negative). The Group's profit before taxes was EUR 0.4 million (10.6), representing 0.5 per cent (12.5) of net sales. Group net loss was EUR 2.1 million (net profit 6.6). Earnings per share for the financial period were EUR -0.02 (2008: 0.06; 2007: 0.10).
Tax expense for the year 2009 was EUR 2.5 million (4.0), of which EUR 1.2 million (1.5) were withholding taxes due to double taxation. The cumulative amount of double paid withholding taxes is EUR 6.6 million. The respective countries and the Ministry of Finance in Finland are still negotiating on the recovery of the withholding taxes. The company believes the treatment of its withholding taxation will be changed.
Return on equity was -4.4 per cent (2008: 12.8; 2007: 21.9).
The Group's order backlog remained at the previous year's level and was EUR 37.6 million at the end of the period (2008: 38.8; 2007: 35.1).
Key figures, per share data and the definition of key figures are presented in more detail in notes to the financial statements.
Business areas
Comptel's principal business segments are the four geographical market areas: Europe, Asia-Pacific, Middle East and Africa, and the Americas. The operating profit of the segments includes the cost of sales and customer services. Group R&D and general costs are not allocated to the segments.
In 2009, Comptel sold a total of 19 (21) new core licenses of which five were Comptel Mediation and Charging, five Comptel Control and Charge, four Comptel Provisioning and Activation, two Comptel Fulfillment, one Comptel Order Management, one Comptel Inventory and one Comptel Service Repository.
Europe was clearly the most significant market area. Net sales in the area totalled EUR 33.3 million (40.8). Net sales decreased as a result of a decelerating market from the previous year and due to slowness in investment decisions. The Group's operating profit
COMPTEL Annual Report | Report of the Board of Directors
for European business was EUR 15.4 million (20.9), which was 46.1 per cent of the European net sales (51.3). The profitability was weakened by decreased net sales and also due to one-off items related to personnel reductions. In 2009 Comptel sold ten core licenses to its European customers. Some of the most significant European customers were Elisa and Telenor, operators belonging to the Telefónica O2, T-Mobile, Vodafone and Wind groups, and Base, Cosmote, KPN and TDC.
The net sales of Asia-Pacific area remained at the previous year's level and were EUR 20.5 million (20.9). The Group's operating profit from the Asia-Pacific business increased to EUR 11.5 million (9.3), which was 56.3 per cent of the segment's net sales (44.8). Comptel sold three core licenses to Asia-Pacific customers in 2009. The most significant customers in the region were Bharti Airtel and Idea in India, Vodafone and IBM in India and Australia, Indosat in Indonesia, DiGi in Malaysia, FET in Taiwan and DTAC in Thailand.
The net sales of the Middle East and Africa increased to EUR 16.1 million (15.3). The Group's operating profit from the region totalled EUR 8.3 million (8.9), which is 51.6 per cent of the segment's net sales (58.6). In 2009, Comptel sold five core licenses to its customers in the region. Many of the biggest operators in the Middle East are Comptel's customers. Among the most significant customers in the Middle East and Africa were operators belonging to the Orascom, Q-Tel and Zain groups, Saudi Telecom and Telenor Pakistan.
The net sales from the Americas decreased to EUR 5.1 million (7.9). A low demand for OSS licenses resulted in the decrease of net sales. The Group's operating profit from the American business was EUR 0.3 million (4.2), which is 5.4 per cent of the segment's net sales (53.1). Comptel sold one core license to its American customers in 2009. The most significant customers in the Americas were operators belonging to the América Móvil
and Telefónica groups, and Axtel, Oi and T-Mobile US.
Comptel's net sales are comprised of selling software licenses and license upgrades, and secondly of the services and maintenance supporting its solutions. In 2009, license sales were EUR 19.7 million (27.4) and service and maintenance sales were EUR 55.2 million (57.5).
Comptel sells and delivers its products and solutions both directly through its own sales organisation and through its partners. The most significant partners are system integrators such as IBM, Tech Mahindra, Logica and Accenture and network equipment vendors like Alcatel-Lucent, Cisco and Juniper. In addition to its global partners, Comptel cooperates with a number of local partners that are significant in their own region, such as T-Systems in Germany. In 2009, the net sales through partners and resellers were EUR 23.1 million (24.5) and from direct sales EUR 51.7 million (60.4).
Investments
Gross investments in tangible and intangible assets were EUR 0.7 million in 2009 (2008: EUR 1.5 million excluding the acquisition of Axiom Systems) and comprised of investments in devices, software and furnishings. The investments were funded through cash flow from operations.
Research and development
Comptel's direct R&D expenditures and investments were EUR 13.1 million (14.0). This corresponds to 17.5 per cent (16.5) of the Group's net sales. Direct R&D expenditure of 2009 is not fully comparable to previous year since Axiom Systems Ltd was consolidated as of 20 April 2008 and since company's expenses have been allocated more widely in the regional organisation in 2009.
Comptel's R&D expenditure and investments were mainly targeted at developing new dynamic end-to-end solutions, which enable
Geographical net sales breakdown
Net sales by category
Net sales breakdown by sales channel
COMPTEL Annual Report | Report of the Board of Directors
8
COMPTEL Annual Report | Report of the Board of Directors
Statement of financial position
Operating cash flow
Equity ratio
service providers to shorten time to market for new services and to charge for them. Comptel continued the development of all of its main products to further improve competitiveness and to offer new features and functionalities.
A new product, Comptel Policy Control, was launched for mediation and charging solutions. It allows roaming cost control, bandwidth management and the optimising of resource usage. Comptel Policy Control is built on the top of the earlier launched technology platform, which enables online and real-time management as well as mediation and charging for both prepaid and postpaid services.
In fulfillment, the development of an integrated platform was continued. The focus was in developing of end-to-end solutions for service fulfillment automation of broadband networks. Another important development area was catalog solutions allowing the commercial and technical management of services as an integrated part of the platform.
Comptel filed two (eight) new patent applications in 2009, as well as extended 12 previously filed patent applications. During the year Comptel was granted two patents, which were connected with real-time mediation of usage data and charging of subscribers in an online mediation environment. At the end of 2009, Comptel had 12 (ten) granted patents and 82 (70) pending patent applications to protect all of its main products and solutions.
The Comptel® trademark is a registered trademark of Comptel Corporation in several countries.
Financial position
Statement of financial position total on 31 December 2009 was EUR 82.6 million (83.0), of which liquid assets amounted to EUR 6.7 million (6.1). In January–December, net operating cash flow was EUR 6.3 million (7.9), paid dividends were EUR 4.3 million (6.4) and net investments were EUR 4.1 million (15.3).
The trade receivables at the end of the period were EUR 23.6 million (27.6). Accrued income was EUR 13.5 million (9.2). The deferred income related to partial debiting was EUR 1.6 million (1.8).
The Group had EUR 8.0 million of interest-bearing debt at the date of the financial statements (5.1). Comptel Corporation has in force a revolving credit facility of EUR 15.0 million maturing in the year 2013, of which EUR 7.0 million is still to be withdrawn. Equity ratio was 62.6 per cent (67.4) and the gearing ratio was 2.8 (2.1 negative).
Company structure
At the end of 2009, Comptel Group comprised of the parent company Comptel Corporation and the fully owned subsidiaries Comptel Communications Oy, Comptel Communications AS, Comptel Communications Inc., Comptel Communications Sdn Bhd, Comptel Communications Brasil Ltda, Comptel Ltd., Comptel Passage Oy and Business Tools Oy. In addition the Group included the fully owned subsidiary Axiom Systems Holdings Ltd. and its fully owned subsidiaries Axiom Systems Ltd., Viewgate Networks Limited and Axiom Systems OSS (Asia Pacific) Pte. The Group also included an Irish associated company Tango Telecom Ltd. (share of ownership 20.0 per cent).
Comptel Group has registered representative and branch offices in Australia, China, India, Italy, Russia, and in the United Arab Emirates.
Personnel
At the beginning of the year Comptel had 650 employees, and at the end of the year 587. The number of employees was reduced by 9.7 per cent following of statutory personnel negotiations in 2009. The Group employed an average of 613 persons in 2009 (2008: 606; 2007: 555).
At the end of the year, 29 persons were working in the customer service centre established in Bulgaria in 2008. These persons are
working for a partner company and will be transferred to the Comptel Group during the second quarter of 2010.
Of the Group personnel, 65.2 per cent (73.0) were located in Europe, 26.6 per cent (20.5) in the Asia-Pacific area, 3.9 per cent (2.9) in the Middle East and Africa and 4.3 per cent (3.5) in the Americas and at the end of 2009.
Of the Group personnel, 40.4 per cent (39.1) worked in customer services, 31.3 per cent (32.0) in research, product development and product management, 19.1 per cent (20.7) in sales and marketing and 9.2 per cent (8.3) in administration and internal support services at the end of 2009.
At the end of the year the Group had 580 (641) regular workers and 7 (12) non-permanent employees. Of the employees, 559 (619) were full-time and 28 (34) part-time.
Average personnel turnover in 2009 was 16.9 per cent (15.9). The average years of service was 6.2 (6). The average age of the employees at the end of the year was 37 years (38). At the end of the year 72 per cent (73) of the employees were men and 28 per cent (27) women.
Salaries and commissions totalled EUR 32.0 million in 2009 (2008: 32.0; 2007: 27.6).
Salaries and compensations paid to the management are described in attachment 30 Related party transactions of the financial statements.
Of the personnel, 66 per cent had a university degree, 19 per cent had a polytechnic diploma, 8 per cent a vocational college diploma and 7 per cent other education.
The Group launched Comptel University programme for personnel competence development. In 2009, a special focus was in developing the sales competencies further in all business areas. An average of EUR 1,047 per person was spent on training (1,035). The number of training days per person was 4.9 (6.6).
In 2009 the amount of sick leave from active working hours was 1.6 per cent (2.3).
Corporate governance
The Annual General Meeting, held on 16 March 2009, elected the following members for the Board of Directors: Mr Olli Riikkala, Mr Hannu Vaajoensuu, Mr Timo Kotilainen, Mr Juhani Lassila and Mr Petteri Walldén.
In 2009, the Group Executives were Mr Sami Erviö, President and CEO, the business area leaders Mr Harri Palviainen (Europe) until 26 August, Mr Mika Korpinen (Asia-Pacific), Mr Youssef Kermoury (Middle East and Africa) and Mr Ricardo Carreon (Americas), Mr Minesh Patel responsible for Global Alliances and Sales Development, Ms Arnhild Schia responsible for Strategic Marketing, Mr Simo Sääskilahti responsible for Products and Solutions, Mr Gareth Senior (CTO), Mr Markku Pirskanen (CFO as of 20 April, Mr Veli Matti Salmenkylä until 15 March), Ms Niina Pesonen, responsible for Human Resources, and Mr Markku Järvenpää responsible for Global Operations Support. Mr Ricardo Carreon left the company on 14 January 2010.
Mr Simo Sääskilahti, Senior Vice President of Products and Solutions, was appointed to Deputy CEO of Comptel Corporation as of 1 December 2009. Mr Timo Koistinen, M.Sc (Engineering), was nominated as Senior Vice President Europe region, effective as of 1 January 2010.
A separate Corporate Governance Statement has been given as a part of the annual report.
Auditors
Comptel's authorised public accountant was KPMG Oy Ab.
Number of employees at year end
Personnel by market area
Personnel breakdown by function
COMPTEL Annual Report | Report of the Board of Directors
Comptel's share and shareholders' equity
Comptel has one share type. Each share constitutes one (1) vote at the Annual General Meeting. The company's capital stock on 31 December 2009 was EUR 2,141,096.20 and the total number of votes was 107,054,810.
The total exchange of Comptel's shares in 2009 was 35.8 million shares (30.5), which is 33.5 per cent (28.5) of the total number of shares. The closing price was EUR 0.78 (0.69). Comptel's market value at the end of the year was EUR 83.3 million (73.8).
Comptel's shareholders by sector and size, the largest holders and the figures on shares traded and share quotations are presented in the section Shares and shareholders in the financial statements.
During the year, a total of 1,250,000 share options 2009A have been distributed to the key personnel of Comptel Group. The rest of the 2009 share options have been granted to Comptel Communications Oy, to be further distributed to the present and future key personnel of the Group. The current share subscription price for option 2009A is EUR 0.63, which corresponds to the trade volume weighted average quotation of the Comptel share on NASDAQ OMX Helsinki during 1 April - 30 April 2009.
During the year, 100,000 share options 2006A have also been distributed. The current share subscription price for option 2006A is EUR 1.69, which corresponds to the trade volume weighted average quotation of the Comptel share on the Helsinki stock exchange during 1 April - 30 April 2006 deducted by the dividends paid.
Comptel Corporation's 2006B share options were listed on NASDAQ OMX Helsinki commencing from 2 November 2009. The trading code is CTL1VEW206 and ISIN code is FI4000005335. The current share subscription price is EUR 1.89 which corresponds to the trade volume weighted average quotation of the Comptel share on the Helsinki stock exchange during 1 April - 30 April 2007 deducted by the dividends paid.
During the year, Comptel Corporation allotted 168,426 shares as part of share-based incentives to persons involved in the program and 100,922 shares to the members of the Board of Directors as their annual compensation according to a resolution of the Annual General Meeting.
Members of the Board of Directors, the President and CEO, and the Deputy CEO owned a total of 0.5 per cent of the company's shares and votes and 2.9 per cent of the company's share options at the end of the period under review. A total of 240,000 shares can be subscribed with the above options.
A total of 8,400,000 Comptel Corporation shares can be subscribed with the company's outstanding share options.
The company held 304,004 of its own shares at the end of the period under review, which is 0.28 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 6,080. The company has initiated a share buy-back programme, according to which a maximum amount of 800,000 own shares will be purchased through public trading on NASDAQ OMX Helsinki.
The Annual General Meeting, held on 16 March 2009, approved the Board of Directors' proposal for a dividend, according to which a dividend of EUR 0.04 per share was paid for 2008. The Annual General Meeting decided to issue share options to the key personnel of the Comptel Group and granted the Board of Directors authorisations to decide on share issues amounting to a maximum of 21,400,000 new shares and on repurchase to a maximum of 10,700,000 own shares. Based on this authorisation, a number of 211,350 own shares were repurchased in 2009. The authorisations to share issues and repurchase the own shares are valid until 30 June 2010.
Business risks
Comptel's business risks are regularly estimated as part of the annual operative planning and strategy process, of the process of preparing and deciding on commercial offers and agreements and investments and other resource allocations, and of other operative actions. Strategic risks are considered the most significant. Strategic risks are further divided into market risks and risks related to Comptel's business strategy.
Below is a description of the most important factors outside the Group or generated by its operation, which may be of significance to Comptel's business, operating result and share price in the future.
The recovery of operations support system markets may be delayed in Europe and in the North America, and the demand can weaken also in other regions.
Comptel develops dynamic end-to-end solutions for leading operators in the telecom field. This requires Comptel to understand correctly the trends taking place in its business environment and the needs of its customers and resellers by each region. Failure to identify market conditions, address customers' needs and develop its products in a timely way may significantly undermine Comptel's business and profitability.
Competition in the OSS market is keen. The sector is undergoing consolidation between actors, which is reflected in the duration and pricing of agreements. If Comptel does not manage to adapt its operations and
COMPTEL Annual Report | Report of the Board of Directors
address the changes taking place in its competition environment, the market development may greatly impair the company's business and operating result.
The Middle East, Africa and Asia are increasingly important market areas for Comptel. The company is operating in several countries where the political and social situation is unstable. Deterioration of the situation in these areas may hinder Comptel's business and undermine its profitability. The value of a single delivery project can well be several million euros. Thus a single delivery project or customer may involve a significant risk.
Comptel operates globally so it is exposed to risks arising from different currency positions. Exchange rate changes between the Euro, which is the company's reporting currency, and the US Dollar, UK Pound Sterling and Norwegian Krone affect the company's net sales, expenses and net profit.
The application submitted by Comptel to prevent double taxation is still pending with the Ministry of Finance in Finland. The company believes the treatment of its withholding taxation will be changed also concerning the countries where the issue is still unsolved.
The risks and uncertainties of Comptel is described more in detail in attachment 26 of the financial statements.
Outlook for 2010
The weakening of operations support system markets has halted according to our view, and the situation is stable. There are no clear signs yet of sustained market recovery, but we anticipate a cautious growth to begin during the second half of the year.
Comptel's net sales and operating profit are estimated to grow in 2010. The full year operating profit margin is forecast to be 8 - 12 per cent. However, in the first quarter net sales are estimated to remain at the previous year's level or to decrease slightly, which may lead to a negative operating result.
Board of Directors' proposal for the disposal of profits
The Group parent company's distributable equity on 31 December 2009 was EUR 29,167,506.81 (35,326,977.62).
The Board of Directors proposes to the General Meeting that a dividend of EUR 0.03 (0.04) per share be paid, totalling EUR 3,197,119.68 (4,278,486.24).
Helsinki, 8 February 2010
Olli Riikkala
Timo Kotilainen
Juhani Lassila
Hannu Vaajoensuu
Petteri Walldén
Sami Erviö
President and CEO
COMPTEL Annual Report | Report of the Board of Directors
Consolidated Statement of Comprehensive Income
| EUR 1,000 | Notes | 1 Jan - 31 Dec 2009 | 1 Jan - 31 Dec 2008 |
|---|---|---|---|
| Net sales | 2 | 74,896 | 84,849 |
| Other operating income | 5 | 102 | 81 |
| Materials and services | 6 | -5,828 | -6,906 |
| Employee benefits | 7 | -38,231 | -38,930 |
| Depreciation, amortisation and impairment charges | 8 | -5,654 | -4,881 |
| Other operating expenses | 9 | -24,268 | -22,830 |
| -73,980 | -73,547 | ||
| Operating profit/loss | 1,018 | 11,383 | |
| Financial income | 11 | 1,156 | 1,992 |
| Financial expenses | 11 | -1,825 | -2,913 |
| Share of result of associated companies | 40 | 136 | |
| Profit/loss before income taxes | 388 | 10,597 | |
| Income taxes | 12 | -2,526 | -3,972 |
| Profit/loss for the period | -2,138 | 6,625 | |
| Other comprehensive income | |||
| Cash flow hedges | -176 | 9 | |
| Translation differences | 743 | -1,683 | |
| Income tax relating to components of other comprehensive income | 12 | 46 | -2 |
| Total comprehensive income for the period | -1,525 | 4,948 | |
| Profit/loss attributable to: | |||
| Equity holders of the parent company | -2,138 | 6,625 | |
| Minority interests | - | - | |
| Total comprehensive income attributable to: | |||
| Equity holders of the parent company | -1,525 | 4,948 | |
| Minority interests | - | - | |
| Shareholders of the parent company: | 13 | ||
| Earnings per share, EUR | -0.02 | 0.06 | |
| Earnings per share, diluted, EUR | -0.02 | 0.06 |
COMPTEL Financial Statements | Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
| EUR 1,000 | Notes | 31 Dec 2009 | 31 Dec 2008 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 15 | 19,355 | 19,027 |
| Other intangible assets | 15 | 11,806 | 11,978 |
| Tangible assets | 14 | 1,589 | 2,595 |
| Investments in associates | 16 | 689 | 649 |
| Available-for-sale financial assets | 87 | 87 | |
| Deferred tax assets | 17 | 1,243 | 1,153 |
| Other non-current receivables | 346 | 244 | |
| 35,116 | 35,734 | ||
| Current assets | |||
| Trade and other receivables | 18 | 38,668 | 39,101 |
| Current tax assets | 2,093 | 2,005 | |
| Cash and cash equivalents | 19 | 6,730 | 6,135 |
| 47,491 | 47,241 | ||
| TOTAL ASSETS | 82,607 | 82,975 | |
| EQUITY AND LIABILITIES | |||
| Equity attributable to equity holders of the parent company | |||
| Share capital | 20 | 2,141 | 2,141 |
| Fund of invested non-restricted equity | 20 | 7,499 | 7,433 |
| Translation difference | 20 | -1,757 | -2,500 |
| Retained earnings | 38,416 | 44,502 | |
| 46,299 | 51,576 | ||
| Total equity | 46,299 | 51,576 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 17 | 5,458 | 4,902 |
| Provisions | 23 | 2,541 | 2,937 |
| Non-current financial liabilities | 24 | 1 | 12 |
| 8,000 | 7,851 | ||
| Current liabilities | |||
| Trade and other current liabilities | 25 | 20,117 | 18,331 |
| Current tax liabilities | 179 | 176 | |
| Current financial liabilities | 24 | 8,012 | 5,040 |
| 28,308 | 23,548 | ||
| Total liabilities | 36,308 | 31,399 | |
| TOTAL EQUITY AND LIABILITIES | 82,607 | 82,975 |
COMPTEL Financial Statements | Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
| EUR 1,000 | Notes | 1 Jan - 31 Dec 2009 | 1 Jan - 31 Dec 2008 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit/loss for the period | -2,138 | 6,625 | |
| Adjustments: | |||
| Non-cash transactions or items that are not part of cash flows from operating activities | 27 | 6,840 | 6,596 |
| Interest and other financial expenses | 336 | 159 | |
| Interest income | -64 | -274 | |
| Income taxes | 2,526 | 3,972 | |
| Change in working capital: | |||
| Change in trade and other receivables | 273 | 1,277 | |
| Change in trade and other current liabilities | 1,648 | -4,713 | |
| Change in provisions | -396 | -511 | |
| Interest paid | -315 | -157 | |
| Interest received | 108 | 262 | |
| Income taxes paid | -2,517 | -5,345 | |
| Net cash from operating activities | 6,301 | 7,893 | |
| Cash flows from investing activities | |||
| Acquisition of subsidiaries, net of cash acquired | - | -9,333 | |
| Purchase price adjustments | 268 | - | |
| Investments in tangible assets | -458 | -1,273 | |
| Investments in intangible assets | -228 | -93 | |
| Investments in development projects | -3,906 | -4,566 | |
| Proceeds from sale of tangible and intangible assets | 341 | - | |
| Loans granted | -75 | - | |
| Change in receivables | 5 | - | |
| Net cash used in investing activities | -4,053 | -15,265 | |
| Cash flows from financing activities | |||
| Dividends paid | -4,278 | -6,415 | |
| Acquisition of Corporation's own shares | -295 | - | |
| Proceeds from borrowings | 8,000 | 8,000 | |
| Repayment of borrowings | -5,000 | -3,000 | |
| Change in other non-current liabilities | -11 | -35 | |
| Net cash used in financing activities | -1,585 | -1,450 | |
| Net change in cash and cash equivalents | 663 | -8,822 | |
| Cash and cash equivalents at the beginning of the period | 19 | 6,135 | 14,708 |
| Effects of changes in foreign exchange rates | 68 | -249 | |
| Cash and cash equivalents at the end of the period | 19 | 6,730 | 6,135 |
| 663 | -8,822 |
COMPTEL Financial Statements | Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
| Equity attributable to equity holders of the parent company | Minority interest | Equity Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| EUR 1,000 | Share capital | Other reserves | Translation differences | Fair value reserve | Treasury shares | Retained earnings | Total | |||
| Equity at 31 Dec 2007 | 2,141 | 7,368 | -817 | 78 | -427 | 43,686 | 52,031 | 116 | 52,147 | |
| Dividends | -6,415 | -6,415 | -6,415 | |||||||
| Transfer of treasury shares | 65 | 302 | -302 | 65 | 65 | |||||
| Share-based compensation | 947 | 947 | 947 | |||||||
| Change in group structure¹⁾ | -116 | -116 | ||||||||
| Total comprehensive income for the period | -1,683 | 6 | 6,625 | 4,948 | 4,948 | |||||
| Equity at 31 Dec 2008 | 2,141 | 7,433 | -2,500 | 85 | -125 | 44,541 | 51,576 | - | 51,576 | |
| Dividends | -4,278 | -4,278 | -4,278 | |||||||
| Acquisition of Corporation's own shares | -336 | -336 | -336 | |||||||
| Transfer of treasury shares | 67 | 174 | -174 | 67 | 67 | |||||
| Share-based compensation | 797 | 797 | 797 | |||||||
| Total comprehensive income for the period | 743 | -130 | -2,138 | -1,525 | 1,525 | |||||
| Equity at 31 Dec 2009 | 2,141 | 7,499 | -1,757 | -45 | -287 | 38,748 | 46,299 | - | 46,299 |
¹⁾ The shares of Business Tools Oy transferred under Comptel Corporation's direct holding and liquidation of Probatus Oy
COMPTEL Financial Statements | Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
1. Accounting principles for the consolidated financial statements
Company profile
Comptel Corporation is a Finnish public limited liability company organised under the laws of Finland. Founded in 1986, Comptel Corporation is one of the leading providers of productised telecom software in convergent fulfillment, mediation and charging.
Comptel Corporation is listed on NASDAQ OMX Helsinki (CTL1V). The parent company of the Comptel Group, Comptel Corporation, is domiciled in Helsinki and its registered address is Salmisaarenaukio 1, 00180 Helsinki.
A copy of the consolidated financial statements can be obtained either from Comptel's website (www.comptel.com) or from the parent company's head office, the address of which is mentioned above.
Basis of preparation
Comptel's consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) in force as at 31 December 2009 including the IAS and IFRS standards as well as the SIC and IFRIC interpretations. IFRSs referred to in the Finnish Accounting Act and in ordinances issued based on the provisions of this Act, refer to the standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the EU. The notes to the consolidated financial statements also conform to the Finnish accounting and company legislation.
The consolidated financial statements are prepared under the historical cost convention except for available-for-sale assets, derivative financial instruments and hedged items under fair value hedging. Share-based payments are recognised at fair value at the grant date.
All financial information presented in euro has been rounded to the nearest thousand and consequently the sum of the individual figures can deviate from the sum figure.
Comptel first adopted the IFRS in 2005 and applied IFRS 1 First-time adoption of IFRS in the transition. The transition date was 1 January 2004.
On 1 January 2009 the Group adopted the following new and amended standards and interpretations endorsed by the EU and that are applicable to Comptel:
IAS 1 Presentation of Financial Statements (revised 2007). The amendments have mainly changed the presentation format of the income statement and the statement of changes in equity. Furthermore, the revised standard has extensively changed the terminology used also in other standards, and the names of some of the financial statements have changed, too. The calculation principle of earnings per share ratio has not changed.
IFRS 8 Operating Segments. The standard defines that operating segments information must be based on the reporting available to executive management and accounting principles applied therein. IFRS 8 has not changed the reportable segments of Comptel Group.
Amendments to IFRS 2 Sharebased Payment - Vesting Conditions and Cancellations. The amended standard requires all non-vesting conditions to be taken into account when determining the fair value of the equity instruments granted. The amended standard also clarifies the accounting treatment of cancellations. The amendment has not had any impact on the financial statements of Comptel.
Amendments to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments. The changes were implemented as a result of the international financial crisis in March 2009. A three level hierarchy was introduced to disclose the fair values of financial instruments. The amended standard also requires that additional information is presented to facilitate the estimation of the reliability of the fair values of financial instruments. The amendments also clarify and expand earlier requirements in presenting information on liquidity risk. These changes have increased the scope of disclosures required to be presented in the financial statements.
Improvements to IFRSs (Annual Improvements, May 2008). Under this procedure minor and non-urgent amendments are grouped together and carried out through a single document annually. The related amendments deal with 34 standards. The amendments have not had a significant impact on the consolidated financial statements.
Amended IAS 23 Borrowing Costs. The renewed standard stipulates that borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, like production plant, form part of the cost of that asset and should be capitalised. The amendment did not have impact on Comptel's financial statements.
Amendments to IAS 1 Presentation of Financial Statements and IAS 32 Financial Instruments: Recognition and Measurement - Puttable Financial Instruments and Obligations Arising on Liquidation. The fundamental principle of the standard is that certain types of puttable equity instruments should be classified as equity instead of financial liability as previously. The amendments did not have impact on Comptel's financial statements.
Amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and Measurement - Embedded derivatives. The changes in the standard aim at clarifying the impact of a financial asset being transferred away from financial assets recognised at a fair value. In case of an embedded derivative being reclassified then all embedded derivatives must be reassessed and may be treated as separate items in the financial statements. This interpretation did not have impact on Comptel's financial statements.
IFRIC 16 Hedges of a Net Investment in a Foreign Operation. The interpretation clarifies the treatment of hedged net investment in a foreign operation. IFRIC 16 did not have impact on Comptel's financial statements.
The preparation of financial statements in conformity with IFRS requires management to make estimates as well as use judgement when applying accounting principles. Actual results may differ from these estimates. The chapter "Accounting policies requiring management's judgement and key sources of estimation uncertainty" discusses
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
judgements made by management when applying the accounting principles adopted by the Group and those financial statement items on which judgements have the most significant effect.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the parent company Comptel Corporation and all those subsidiaries in which it has, directly or indirectly, control (together referred to as “Group” or “Comptel”). Associates included in the consolidated financial statements are those entities in which the parent company Comptel Corporation has, directly or indirectly, significant influence, but not control, over the financial and operating policies.
Subsidiaries
Subsidiaries are entities controlled by Comptel. Control means that the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Control exists, among other, when the voting rights attached to the shares owned by Comptel amount to 50 per cent or more of the total voting rights. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.
Acquisitions of subsidiaries are accounted for using the purchase method of accounting. The subsidiaries acquired have been consolidated from the date of acquisition, when control commenced. The subsidiaries disposed of are included in the consolidated financial statements until the control ceases.
All inter-company income and expenses, receivables, liabilities and unrealised profits arising from inter-company transactions, as well as distribution of profits within the Group are eliminated as part of the consolidation process. Unrealised losses are eliminated only to the extent that there is no evidence of impairment.
The allocation of the profit for the period attributable to equity holders of the parent company and minority interest is presented on the face of the statement of comprehensive income. The minority interests are identified separately from the Group's equity therein.
Associates
Associates are those entities in which Comptel has significant influence. Significant influence generally arises when Comptel holds voting rights less than 50 per cent but over 20 per cent or when the Group otherwise has significant influence over the financial and operating policies, but not control. Holdings in associates are incorporated in these financial statements using the equity method from the date that significant influence commences until the date that significant influence ceases. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate. When Comptel's share in an associate's losses exceeds its interest in the associate, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate or made payments on behalf of the associate. The Group's proportionate share of associates' profit for the period is presented as a separate line item in the consolidated statement of comprehensive income.
Foreign currency transactions
The result and financial position of a Group entity are measured using the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in euro, which is the functional and presentation currency of the parent company.
Transactions in foreign currencies are translated at the exchange rates prevailing on the dates of the transactions. Foreign currency monetary balances are translated at the exchange rate at the end of reporting period. Non-monetary items measured at fair value in a foreign currency are translated at the exchange rate at the end of reporting period. Gains and losses resulting from transactions in foreign currencies and translation of monetary items are recognised in profit or loss.
Financial statements of foreign subsidiaries
Statements of comprehensive income and cash flows of foreign subsidiaries are translated into euro at the average exchange rate during the financial period. Their statements of financial position are translated using the exchange rate at the end of reporting period. The translation differences arising from the translation of the profit for the period by using the average and closing rates are recognised in other comprehensive income and presented as a separate item in equity. The translation differences arising from the use of the purchase method and after the date of acquisition as well as the result of the hedge of a net investment in a foreign operation are recognised in other comprehensive income and presented within equity. If a subsidiary is disposed of, related cumulative translation differences deferred in equity are recognised in profit or loss as part of the gain or loss on sale. From the transition date onwards translation differences arising on the consolidation are presented as a separate component of equity.
Goodwill and fair value adjustments to assets and liabilities that arose on an acquisition of a foreign entity occurred prior to 1 January 2004 are translated into euro using the rate that prevailed on the date of the acquisition. Goodwill and fair value adjustments arisen on an acquisition after 1 January 2004 are treated as part of the assets and liabilities of the acquired entity and are translated at the closing rate.
Tangible assets
Tangible assets are measured at historical cost less cumulative depreciation and any impairment losses. Where parts of an item of tangible assets have different economic useful lives, they are accounted for as separate items of tangible assets. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of tangible assets. The depreciation period for machinery and equipment is four years.
Maintenance, repairs and renewals are generally expensed during
the period in which they are incurred except for substantial renovation expenditure relating to leased premises that are capitalised under tangible assets. Such costs are depreciated over the shorter of five years and the lease term.
Residual values of tangible assets and expected useful lives are reassessed at each reporting date and where necessary are adjusted to reflect the changes in the expected future economic benefits.
Tangible assets classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are not depreciated after the classification as held for sale.
Gains and losses on sales and disposals of tangible assets are included in operating income and in operating expenses, respectively.
According to IAS 23 borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are to be capitalised.
Intangible assets
Goodwill
After 1 January 2004 goodwill represents the Group's share of difference between the cost of the acquisition and the fair value of the net identifiable assets, liabilities and contingent liabilities acquired measured at the acquisition date. Goodwill arisen from the business combinations occurred prior to the IFRS transition date has been accounted for in accordance with FAS and has been taken as a deemed cost.
In accordance with IAS 36 Impairment of Assets goodwill is not amortised but tested for impairment annually. Goodwill is stated at cost less any cumulative impairment losses.
Research and development costs
In accordance with IAS 38 Intangible Assets expenditure on research activities is recognised as an expense in the period in which it is incurred. Development costs that arise from design of new or improved products are capitalised as intangible assets in the statement of financial position when the product is technically and commercially feasible and it will generate future economic benefits. Amortisation of such an asset is commenced when it is available for use. Unfinished assets are tested annually for impairment.
Comptel capitalises development costs and costs related to internal system projects meeting the requirements under IAS 38. As from 1 January 2008 cost also includes an appropriate share of separately determined overheads relating to the project in question. Capitalised development costs are amortised on a straight-line basis over three years and the costs related to internal system projects over four years.
Government grants that compensate the Group for the development costs are either deducted from the carrying amount of the asset or from the related expenses in profit or loss.
Other intangible assets
Patents and licenses acquired as well as costs incurred from patent applications with a finite useful life are capitalised and amortised on a straight-line basis over their useful lives. Amortisation is calculated based on the original cost and allocated over the useful life.
The capitalised patent costs are generally amortised over ten years and licenses over four years.
The expected amortisation periods are reviewed at each reporting date and if they differ from previous estimates, the amortisation period is changed accordingly.
Identifiable intangible assets acquired on a business combination are measured at fair value. Such intangible assets relate for example to client relationships and technologies received in an asset acquisition and they are amortised over three to five years.
Leases
Comptel as lessee
IAS 17 Leases divides leases into finance and operating leases. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the typical risks and rewards of ownership to the lessee. At the commencement of the lease term an asset acquired under a finance lease is recognised in the statement of financial position at an amount equal to the lower of its fair value and the present value of the minimum lease payments. An asset acquired under a finance lease is depreciated over the shorter of the lease term and its useful life. Lease payments are apportioned between the finance charge and the reduction of the outstanding lease liability so as to achieve a constant periodic rate of interest on the liability balance outstanding. Lease liabilities are included in financial liabilities. If the lease does not meet the requirements of a finance lease, it is always classified as an operating lease. In such a case the lessee has the right to use the asset for a limited time and the risks and rewards incidental to ownership are not transferred to the lessee.
The leases of Comptel are mainly treated as operating leases. Payments made thereunder are recognised in profit or loss as rental expenses on a straight-line basis over the lease term.
Impairment
Tangible and intangible assets
Comptel assesses at each reporting date whether there is any indication of impairment of assets. If there are such indications, the asset's recoverable amount is estimated. In addition, the recoverable amount is estimated annually for the following assets regardless of there being any indications of impairment: goodwill and unfinished intangible assets. The need for impairment is reviewed at the level of cash-generating units which is the lowest level for which there are separately identifiable, mainly independent cash flows.
The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. The value in use represents the discounted future net cash flows expected to be derived from an asset or a cash-generating unit. The discount rate used is the pre-tax rate that reflects the market's view on the time value of money and the specific risks related to the asset.
An impairment loss is recognised if the carrying amount of an asset or a cash-generating unit is higher than the recoverable amount. Impairment losses are recognised in profit or loss. If an impairment loss is allocated to a cash-generating unit, it is first allocated to decrease the goodwill allocated to this cash-generating unit and subsequently to decrease pro-rata other assets of the cash-generating unit. An impairment loss is reversed if there are any indications that the conditions and the recoverable amount have changed since the impairment loss was recognised. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised. An impairment loss recognised for goodwill is never reversed.
Pension obligations
Under IAS 19 Employee Benefits pension plans are classified as either defined contribution plans or defined benefit plans based on the company's obligations. In a defined contribution plan the company pays fixed contributions to a separate entity and has no further obligations. The pension plans of Comptel are arranged in accordance with the local legislation. Contributions of the defined contribution plans based on the regularly reviewed actuarial calculations prepared by the local pension insurance companies are recognised as an expense in profit or loss in the year to which they relate. Other plans are classified as defined benefit plans.
In a defined benefit plan the liability to be recognised in the statement of financial position is the net amount of the net present value of the pension obligation and the plan assets measured at fair value at the year-end, adjusted with both unrecognised actuarial gains and losses as well as with unrecognised past service cost. The calculation for pension obligations is carried out by qualified actuaries. The amount of the obligation is based on the projected unit credit method. Pension expenses are recognised in profit or loss over the expected working lives of the employees participating in the plan.
Share-based payments
Comptel has several option schemes and they are paid out as equity instruments. Equity-settled share-based schemes are measured at fair value at the grant date and expensed in profit or loss on a straight-line basis over the vesting period. The expense determined at the grant date is based on the Group's estimate on the number of those options that eventually vest at the end of the vesting period. The fair value is determined using the Black-Scholes option pricing model.
Comptel has also share-based incentive programs. The share-based incentive programs provide the key personnel of the Comptel Group with a possibility to receive shares of the company as compensation. The compensation paid based on the share-based incentive programs is paid as a combination of company shares and cash after the vesting period has expired. Costs incurred from the share-based incentive programs are recognised as employee benefit expenses over the vesting period.
Provisions
IAS 37 Provisions, Contingent Liabilities and Contingent Assets prescribes the recognition criteria for a provision. A provision is based on an existing obligation and it is recognised in the statement of financial position when an entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
A warranty provision is recognised when a product that embodies a warranty is sold or delivered. The amount of the warranty provision is based on experience-based information about the materialisation of warranty costs.
A restructuring provision is recognised when Comptel has prepared a detailed plan for restructuring, commenced the implementation of the plan and announced about the plan. A restructuring plan includes at least the following information: the business concerned, the principal locations affected, the location, function and approximate number of employees who will be compensated for terminating their services, the expenditures that will be undertaken and when the plan will be implemented. No provision is recognised for the expenditure arising from the Group's continuing operations.
A provision is recognised when the expected economic benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract.
Income taxes
The income taxes in the consolidated statement of comprehensive income consist of current tax and the change in the deferred tax assets and liabilities. Current tax is calculated on the taxable profit for the period determined in accordance with local tax rules and is adjusted with the tax for previous years. The deferred tax amount attributable to other comprehensive income or equity is reflected in other comprehensive income or equity, accordingly.
Deferred tax assets and liabilities are provided using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The enacted or substantially enacted tax rate at the reporting date is used as the tax rate. In Comptel the main temporary differences arise from the depreciation of tangible assets not deducted in taxation, the fair value measurement of derivatives, capitalisation of development costs and the reversal of goodwill amortisation on Group level.
Deferred tax liabilities are recognised at their full amounts in the statement of financial position, and deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised.
Revenue recognition and net sales
Revenue from the sale of goods is recognised when significant risks and rewards of ownership have been transferred to the buyer. Revenue from services is recognised when the service has been performed. License revenue that includes no work performance is recognised when the license is delivered. The number of subscribers at a client is reviewed continuously. If their number exceeds the number agreed on in the terms of the license, the client can be charged for the increased number of subscribers. This license upgrade revenue is recognised upon invoicing. Maintenance revenue is recognised as income on a straight-line basis over the maintenance term.
Long-term projects
Revenue and expenses from long-term projects are recognised using the percentage-of-completion method, when the outcome of a long-term project can be estimated reliably. The revenue from a long-term project comprises license income and work. The outcome of a long-term project can be estimated reliably when the revenue and expenses expected as well as the progress made towards completing a particular project can be measured reliably and when it is probable that the economic benefits associated with the project will flow to the Group. In Comptel the degree of completion of a long-term project is determined by the relation of accrued work hours to estimated overall work hours. If it is probable that total project costs will exceed total project revenue, the expected loss is recognised as an expense immediately.
Net sales is adjusted for discounts granted, sales-related indirect taxes and effects of the translation differences arisen on the translation of the trade receivables denominated in foreign currencies.
A separate warranty provision is recognised to cover costs under warranty periods following the completion of the projects. The total estimated margin of onerous projects is recognised as an expense and a provision.
Earnings per share
The calculation of earnings per share is based on the profit attributable to ordinary shareholders that is divided by the weighted average number of ordinary shares outstanding during the year. Treasury shares owned by the Group are excluded when calculating the weighted average number of ordinary shares. For the purpose of calculating diluted earnings per share using the treasury stock method, the Group assumes the following: the exercise of dilutive warrants and options occurred at the beginning of the financial period, the exercise of dilutive warrants and options granted during the period followed at their grant date and the proceeds from their exercise was spent by acquiring treasury shares at the average market price during the period. The denominator includes the weighted average number of ordinary shares and the shares to be issued following the exercise of warrants and options.
The assumptions of the exercise of options is excluded when calculating diluted earnings per share if the exercise price of the warrants and options exceeds the average share market price during the period. The options and warrants have a dilutive effect only if the average share market price during the period is higher than the subscription price of an option and a warrant.
Financial assets and liabilities
Financial assets
In accordance with IAS 39 Financial Instruments: Recognition and Measurement the financial assets of the Group are classified to following groups: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. Classification is based on the nature of the item and it is made at initial recognition.
An item is classified as financial asset at fair value through profit or loss when it is held for trading or classified at initial recognition as financial asset at fair value through profit or loss. The latter group comprises such investments that are managed based on their fair value or an investment which contains one or more embedded derivative which changes the cash flows of the contract significantly in which case the entire compound instrument is measured at fair value. Financial assets held for trading have been mainly acquired to generate profits from short-term changes in market prices. Derivative instruments which do not meet the criteria for hedge accounting defined in IAS 39 have been classified as held for trading. Derivatives held for trading as well as financial assets maturing within 12 months are included in current assets. These assets have been measured at fair value. Unrealised and realised gains and losses arisen from fair value measurement are recognised in profit or loss in the period in which they occur.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity. Held-to-maturity investments are measured at amortised cost and they are included in non-current assets. Comptel had no such financial assets during the financial year ended 31 December 2009.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Group does not hold them for trading purposes either. They are included in current assets, except for maturities greater than 12 months after the reporting date. Trade receivables are recognised based on the original amount charged from a client less any impairment losses.
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date, in which case they are classified as current. Available-for-sale financial assets may include shares (equity securities) and interest-bearing investments. They are measured at fair value, or when the fair value can not be reliably determined, at cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other short-term, highly liquid investments with
original maturities of three months or less. Any bank overdrafts are included within current liabilities.
Financial liabilities
Financial liabilities are initially recognised at fair value, net of transaction costs. Subsequently financial liabilities are measured at amortised cost using the effective interest rate method. Financial liabilities are both non-current and current. A financial liability is classified as current when the Group does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Borrowing costs are recognised in profit or loss as incurred. Fees paid on the establishment of loan facilities are recorded as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. When the draw-down occurs, the fees paid on the establishment of loan facilities are recognised as part of transaction costs. To the extent it is probable that some or all of the facility will not be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
Derivative financial instruments and hedge accounting
Derivatives are initially recognised in the statement of financial position at cost, equivalent to their fair value and are subsequently measured to fair value. Gains and losses arising from the fair value measurement are accounted for in accordance with the purpose of the derivative in the financial statements. Those derivatives that are used for hedging purposes and are effective hedges are presented consistently with the hedged item in profit or loss. When Comptel enters into a derivative contract, it is accounted for either as a fair value hedge of assets, liabilities or a firm commitment or, in respect of currency risk as a cash flow hedge, a hedge of a highly probable forecast transaction or as a derivative that does not meet the conditions of hedge accounting under IAS 39.
At the inception of a hedge relationship, Comptel formally designates and documents the hedge relationship as well as the Group's risk management objective and strategy for undertaking the hedge. Comptel documents and assesses, at the inception of a hedge relationship and at least at each reporting date, the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedged risk. The changes in the fair values of those derivatives meeting the criteria of a fair value hedge are recognised in profit or loss together with the fair value changes of the hedged asset or liability attributable to the hedged risk.
If a derivative meets the conditions of a cash flow hedge, the change in the fair value of the effective portion of the hedging instrument is recognised in other comprehensive income and presented in equity in the hedging reserve. The accumulated gains or losses in equity are reclassified into profit or loss in the same period during which the hedged item affects profit or loss. Those gains and losses resulting from the instruments hedging the expected sales denominated in foreign currency are adjusted against sales revenues. If the hedged forecast transaction subsequently results in the recognition of a non-financial asset, the associated gains and losses are removed from equity and are included in the cost of the asset. When a hedging instrument designated as a cash flow hedge expires or is sold or the hedge no longer meets the criteria for hedge accounting, the cumulative gain or loss on the hedging instrument remains in equity until the forecast transaction occurs. However, if the forecast transaction is no longer expected to occur, any related cumulative gain or loss in equity is recognised immediately in profit or loss.
Dividends
The dividend proposed by the board of directors is not recognised until approved by a general meeting of shareholders.
Accounting policies requiring management's judgment and key sources of estimation uncertainty
The preparation of financial statements calls for the management to make future-related estimates and assumptions which may differ from the actual results. In addition, judgment is required when applying accounting principles. The estimates are based on management's best view at the reporting date. Possible changes in estimates and assumptions are recognised in that period when an assumption or estimate is corrected as well as in all subsequent periods.
In Comptel those key assumptions concerning the future and those key sources of estimation uncertainty at reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are the following:
Impairment testing
Goodwill, patenting costs and development costs capitalised under unfinished intangible assets are tested annually for impairment. Assets are reviewed for impairment in accordance with the principles set out above. Estimates are required in preparing these calculations.
Additional information about the sensitivity of the recoverable amount to changes in the assumptions used is presented in note 15. Intangible assets.
Revenue recognition
As described above under the heading Revenue recognition principles revenue and expenses from long-term projects are recognised using the percentage of completion method when the outcome of a long-term project can be estimated reliably. The percentage of completion method is based on estimates of total expected project revenue and costs, as well as on reliable measurement of the progress made towards completing a particular project. The recognition of project revenue and project costs in profit or loss is changed if the estimate of the outcome of a project deviates from the plan, in the period in which the change is identified for the first time and it can be estimated reliably. An expected loss on a long-term project is recognised in profit or loss
immediately when it is identified and can be estimated reliably. Additional information about the long-term contracts is presented in note 4. Revenue recognition using percentage of completion method.
Application of new or amended standards and interpretations
The below described standards, interpretations or their amendments have been published but are not yet effective and Comptel has not adopted them prior to the mandatory application date. Comptel will adopt the following amended or new standards and interpretations issued by the IASB as soon as they are effective:
IFRS 3 Business Combinations (revised 2008; effective for financial periods beginning on or after 1 July 2009). The scope of the revised IFRS 3 is broader than before. In respect of Comptel several significant amendments have been made to the standard. The amendments impact the amount of goodwill to be recognised on business combinations and sales results of businesses. The amendments also have an effect on the amounts to be recognised in profit or loss both on the financial year when the business combination is effected and in those financial years when contingent consideration is paid or further acquisitions are made. Under the transitional provisions of the standard those business combinations where control is transferred prior to the effective date of the revised standard are not adjusted to comply with the new rules.
IAS 27 Consolidated and Separate Financial Statements (amended 2008; effective for financial periods beginning on or after 1 July 2009). If the parent company retains control, the amended standard requires impacts from changes in ownership in a subsidiary be recognised directly in Group's equity. When control is lost, the remaining interest is measured at fair value through profit or loss. A similar accounting treatment will be extended to investments in associated companies (IAS 28) and interests in joint ventures (IAS 31) in the future. Resulting from the amendments losses of a subsidiary may be allocated to non-controlling interest (minority) also when they exceed the value of the minority shareholders' investment.
Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items (effective for financial periods beginning on or after 1 July 2009). The amendment deals with hedge accounting and relate to designation of a one-sided risk in a hedged item and designation of inflation in a financial hedged item. The Group does not expect the amendment to have any significant impact on the consolidated financial statements in the future.
IFRIC 17 Distributions of Non-Cash Assets to Owners (effective for financial periods beginning on or after 1 July 2009). The interpretation gives guidelines to a situation when owners receive dividends in other forms than cash or the owners have the possibility to select whether they will receive non-cash assets or cash. The Group does not expect the amendment to have any impact on the consolidated financial statements.
Improvements to IFRSs (April 2009; mainly effective for financial periods beginning on or after 1 January 2010). Under this procedure minor and non-urgent amendments are grouped together and carried out through a single document annually. The related amendments deal with 12 standards. Impacts vary by standard but the Group does not expect the future amendments to have a significant impact on the consolidated financial statements. The amended standards have not been endorsed for use in the EU.
IFRS 9 Financial Instruments (effective for financial periods beginning on or after 1 January 2013). IFRS 9 is the first step in replacing IAS 39. The standard deals with classification and valuation of financial assets. The standard has not been endorsed for use in the EU yet.
Revised IAS 24 Related Party Disclosures (effective for financial periods beginning on or after 1 January 2011). The amendment relaxes the disclosure requirements of business operations between public enterprises and simplifies and clarifies the definition of a related party. The revised standard has not been endorsed for use in the EU yet.
2. Segment reporting
Comptel Group has four reportable segments which are based on geographical areas. Comptel operates globally in all these market areas. Geographical market areas differ from each other in terms of price level, competitive position and Comptel's own resource allocation. The segment division is based on the geographical location of customers. Geographical segments are Europe, Asia-Pacific, Middle East and Africa and Americas. All segments generate revenue from sales of software licenses, services and support and maintenance associated with the software licenses.
Adoption of IFRS 8 did not change the reported operating segments or items allocated or not allocated to the segments of Comptel Group. Comptel Group's operating segment reporting is conforming to IFRS standards.
The assessment of the operating results and resource allocation is based on the operating result of the segment in Comptel Group. The President and CEO of Comptel Group is ultimately responsible for these decisions.
Total net sales from the operating segments consolidate to Group external net sales. Segment expenses include sales and customer service expenses. Unallocated expenses relate to product management, research and development as well as administration units. Segment assets include trade receivables.
| 2009
EUR 1,000 | Europe | Asia-Pacific | Middle East and Africa | Americas | Segments total |
| --- | --- | --- | --- | --- | --- |
| Net sales | 33,296 | 20,455 | 16,078 | 5,067 | 74,896 |
| Segment share of operating result | 15,359 | 11,517 | 8,301 | 275 | 35,453 |
| Depreciation and amortisation | 671 | 49 | 17 | 15 | 752 |
| Trade receivables | 7,228 | 3,023 | 9,188 | 2,733 | 22,172 |
| 2008
EUR 1,000 | Europe | Asia-Pacific | Middle East and Africa | Americas | Segments total |
| --- | --- | --- | --- | --- | --- |
| Net sales | 40,768 | 20,861 | 15,279 | 7,941 | 84,849 |
| Segment share of operating result | 20,898 | 9,348 | 8,946 | 4,219 | 43,411 |
| Depreciation and amortisation | 543 | 331 | 151 | 93 | 1,119 |
| Trade receivables | 10,096 | 4,037 | 8,655 | 3,403 | 26,191 |
Reconciliations
Result
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Segment share of operating result | 35,453 | 43,411 |
| Unallocated expenses | -34,436 | -32,028 |
| Financial income and expenses | -670 | -922 |
| Share of result of associated companies | 40 | 136 |
| Group profit/loss before income taxes | 388 | 10,597 |
Depreciation, amortisation and impairment charges
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Segment depreciation and amortisation | 752 | 1,119 |
| Unallocated depreciation, amortisation and impairment charges | 4,901 | 3,762 |
| Total depreciation, amortisation and impairment charges | 5,654 | 4,881 |
Assets
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Segment assets | 22,172 | 26,191 |
| Unallocated assets | 60,435 | 56,784 |
| Total assets | 82,607 | 82,975 |
Information about products and services
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Licenses | 19,663 | 27,376 |
| Service and maintenance | 55,233 | 57,473 |
| Total | 74,896 | 84,849 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
Geographical information
Revenues from external customers
The geographical split of net sales is based on the customer domicile.
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| India | 9,007 | 9,336 |
| Finland | 6,435 | 7,953 |
| Norway | 5,699 | 7,847 |
| Saudi Arabia | 3,523 | 3,406 |
| Other countries | 50,233 | 56,307 |
| Total | 74,896 | 84,849 |
Non-current assets
The geographical split of non-current assets is based on the location of such assets. Non-current assets are presented without deferred tax assets and post-employment benefit assets.
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Finland | 10,813 | 11,462 |
| Other countries | 1,160 | 1,246 |
| Investments in associates | 689 | 649 |
| Unallocated assets | 21,184 | 21,214 |
| Total | 33,847 | 34,571 |
3. Business combinations
Acquisition in 2008
On 21 April 2008, Comptel Corporation acquired all the shares of Axiom Systems Holdings Limited. UK-based Axiom Systems is specialised in the broadband fulfillment market.
The initial purchase price of 7.0 million UK Pound Sterling (8.9 million euro) was paid in cash. The actual purchase price of 8.9 million euro, costs directly attributable to the acquisition were 0.7 million euro and the fair value of allocations to the identifiable net assets was 3.0 million euro, therefore the goodwill according to IFRS 3 was 9.7 million euro. 3.0 million euro was allocated to intangible assets, which are amortised over 5 years.
The goodwill is attributable to the synergies expected to arise subsequent to the acquisition. The acquisition was in line with Comptel's long-term growth strategy to become world's leading supplier of telecom software. According to the Comptel management, the goodwill is mainly based on the fact that Axiom's solutions for IP services complement Comptel's product portfolio, the common sales network enables cross-selling to Axiom's and Comptel's customers, and the combined R&D strengthens the operations. The professionally skilled workforce is also part of the goodwill.
Axiom Group's loss for the period 21 April to 31 December 2008, 1.3 million euro, is included in the Comptel Group result for 2008. Comptel Group net sales for January - December 2008 would have been 87.5 million euro and profit 5.7 million euro if Axiom had been consolidated from the beginning of the year 2008.
The values of the assets and liabilities arising from the acquisition were as follows:
| EUR 1,000 | Recognised fair values on acquisition | Pre-acquisition carrying amounts |
|---|---|---|
| Technology (incl. in other intangible assets) | 3,001 | - |
| Machinery and equipment | 289 | 289 |
| Deferred tax assets | 233 | 233 |
| Trade receivables and other receivables | 4,246 | 4,246 |
| Cash and cash equivalents | 124 | 124 |
| Total assets | 7,894 | 4,892 |
| Deferred tax liabilities | 901 | - |
| Other non-interest bearing liabilities | 7,195 | 7,195 |
| Interest bearing liabilities | 89 | 89 |
| Total liabilities | 8,184 | 7,284 |
| Net assets | -291 | -2,392 |
| Acquisition cost | 9,457 | |
| Goodwill | 9,748 | |
| Purchase price paid in cash | 9,457 | |
| Cash and cash equivalents in acquired subsidiary | -124 | |
| Total net cash outflow on the acquisition | 9,333 |
During the first quarter 2009 the purchase price was adjusted to 6.8 million UK Pound Sterling (8.6 million euro).
The purchase price calculation has been prepared in UK Pound Sterling and therefore the amount of goodwill fluctuates according to the exchange rate. As at 31 December 2009 the goodwill totalled 8.5 million euro (8.2 million euro on 31 December 2008).
4. Revenue recognition using percentage of completion method
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Net sales recognised as revenue according to percentage of completion | 13,953 | 20,561 |
| Amount recognised as revenue during the financial year and previous years for long-term projects in progress | 20,382 | 19,348 |
| Backlog of orders of long-term projects according to percentage of completion | 6,905 | 8,219 |
| Prepayments and accrued income recognised on the basis of percentage of completion | 7,772 | 4,796 |
| Deferred income and accruals recognised on the basis of percentage of completion | 1,582 | 1,876 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
5. Other operating income
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Gains on disposal of tangible assets | 2 | 16 |
| Indemnity | 70 | - |
| Negative goodwill on consolidation recognised as income | - | 52 |
| Other income items | 29 | 12 |
| Total | 102 | 81 |
6. Materials and services
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Purchases during the period | 1,395 | 1,750 |
| External services | 4,433 | 5,156 |
| Total | 5,828 | 6,906 |
7. Employee benefits
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Wages and salaries | 31,176 | 30,713 |
| Pension expenses - defined contribution plans | 2,925 | 3,677 |
| Pension expenses - defined benefit plans | 46 | 19 |
| Share options granted | 572 | 722 |
| Expenses related to share-based incentive program | 208 | 554 |
| Other social security costs | 3,303 | 3,245 |
| Total | 38,231 | 38,930 |
The average number of employees in the Group during the financial year
| 2009 | 2008 | |
|---|---|---|
| Europe | 422 | 467 |
| Asia-Pacific | 142 | 101 |
| Middle East and Africa | 23 | 17 |
| Americas | 26 | 21 |
| Total | 613 | 606 |
Information on the remuneration of the Group management is presented in note 30. Related party transactions.
Information on the options granted and on the management's share in the share-based incentive plan is presented in note 21. Share-based payments.
8. Depreciation, amortisation and impairment charges
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Depreciation and amortisation by asset type | ||
| Intangible assets | ||
| Patents and trademarks | 50 | 39 |
| Capitalised development costs | 2,629 | 1,521 |
| Other intangible assets | 1,480 | 1,951 |
| Total | 4,160 | 3,511 |
| Tangible assets | ||
| Machinery and equipment | 1,153 | 1,366 |
| Total | 1,153 | 1,366 |
| Impairment charges by asset type | ||
| Patents and trademarks | - | 4 |
| Capitalised development costs | 340 | - |
| Total | 340 | 4 |
| Total depreciation, amortisation and impairment charges | 5,654 | 4,881 |
9. Other operating expenses
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Lease payments | 5,233 | 5,143 |
| Travel expenses | 4,968 | 5,619 |
| Marketing expenses | 1,890 | 1,160 |
| Expenses relating to restructuring of the acquired subsidiary | - | 550 |
| Other operating expenses | 12,177 | 10,358 |
| Total | 24,268 | 22,830 |
| The auditors' fees | ||
| --- | --- | --- |
| EUR 1,000 | 2009 | 2008 |
| KPMG | ||
| Audit | 108 | 64 |
| Statements | - | 2 |
| Tax consultation | 60 | 65 |
| Other services | 57 | 205 |
| Total | 226 | 336 |
| Pricewaterhouse Coopers | ||
| Audit | -16 | 28 |
| Tax consultation | 7 | 32 |
| Other services | 0 | - |
| Total | -9 | 60 |
| Other | ||
| Audit | 6 | 5 |
| Tax consultation | - | 1 |
| Total | 6 | 7 |
| Total auditors' fees | 223 | 402 |
25
Audit fees include the fees of the statutory auditors of each Group company. For the year 2008 Other services included acquisition-related services, amounting to 116 thousand euro, which has been capitalised.
10. Research and development costs
The research and development costs recognised as expenses in the statement of comprehensive income amounted to 9,186 thousand euro in 2009 (9,441 thousand euro in 2008).
The capitalised development expenditure totalled 3,906 thousand euro (4,566 thousand euro in 2008). The amortisation of the capitalised development costs amounted to 2,680 thousand euro (1,559 thousand euro in 2008). A write-down of 340 thousand euro was made on the capitalised development costs in 2009.
11. Financial income and expenses
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Interest income from cash and cash equivalents | 31 | 239 |
| Interest income from other receivables | 33 | 35 |
| Foreign exchange gains from other receivables and other liabilities | 1,092 | 1,718 |
| Interest expenses from financial liabilities measured at amortised cost | -251 | -82 |
| Interest expenses from other liabilities | -68 | -41 |
| Foreign exchange losses from other receivables and other liabilities | -1,490 | -2,754 |
| Other financial expenses | -17 | -36 |
| Total | -670 | -922 |
Other statement of comprehensive income items include foreign exchange differences as follows:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Net sales | -291 | -334 |
| Materials and services | 2 | 22 |
12. Income taxes
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Current tax expense | 449 | 1,656 |
| Adjustments for previous years’ taxes | 252 | 178 |
| Deferred taxes | 545 | 1,328 |
| Withholding taxes | 1,280 | 810 |
| Total | 2,526 | 3,972 |
In November 2006 Comptel Corporation received a refusal from the Board of Adjustment of the Tax Office for Major Corporations concerning the crediting of taxes withheld at source in taxation of 2004. The claim for adjustment concerns the crediting of taxes withheld at source the company has paid in 2004 to avoid double taxation.
Comptel Corporation recognised and paid these taxes withheld at source for 2004 in 2005. According to the Board of Adjustment’s decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to 3,186 thousand euro for the years 2005-2007. Withholding taxes expensed amounted to 1,499 thousand euro in 2008 and 1,234 thousand euro in 2009. Consequently, the total withholding taxes expensed amounted to 6,561 thousand euro as of 31 December 2009.
Comptel Corporation has received license revenue from the countries with which Finland has a tax treaty. The purpose of the tax treaties is to avoid double taxation. Taxes have been withheld from the payments made to Comptel Corporation, in accordance with the royalty article of the related tax treaty, in the source country of the revenue. If the taxes withheld at source paid by Comptel Corporation will not be credited in Finland, the revenue from the customers located in the tax treaty countries will be subject to double taxation.
The Ministry has announced that it has reached an agreement with Greece, Malaysia and Romania. In respect of these countries a tax receivable amounting to 635 thousand euro has been recognised based on the double tax treatment for the years 2004-2008. The refund process pertaining to these countries is still pending with the relevant tax authorities. Comptel is pursuing the negotiations with the Ministry of Finance and other countries that have withheld tax at source to avoid double taxation. The company believes the treatment of its withholding taxation will be changed.
In 2008 the current tax includes a tax credit, 573 thousand euro, for Axiom Systems’ research and development activities. Similar tax credit was not obtained in 2009.
Income tax recognised in other comprehensive income
| 2009 EUR 1,000 | Before tax | Tax expense (-)/ benefit (+) | Net of tax |
|---|---|---|---|
| Cash flow hedges | -176 | 46 | -130 |
| Translation differences | 743 | - | 743 |
| Total | 567 | 46 | 613 |
| 2008 EUR 1,000 | Before tax | Tax expense (-)/ benefit (+) | Net of tax |
| Cash flow hedges | 9 | -2 | 6 |
| Translation differences | -1,683 | - | -1,683 |
| Total | -1,675 | -2 | -1,677 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
Reconciliation between the income tax expense recognised in the statement of comprehensive income and the taxes calculated using the Group's domestic corporate tax rate 26%:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Profit before taxes | 388 | 10,597 |
| Income tax calculated using the domestic corporation tax rate | 101 | 2,755 |
| Effect of tax rates in foreign jurisdictions | -41 | -38 |
| Non-deductible expenses | 143 | 113 |
| Options and share-based payments | 188 | 228 |
| Share of profit / loss of associates | -10 | -35 |
| Withholding taxes | 1,280 | 810 |
| Current year losses for which no deferred tax assets was recognised | 795 | - |
| Taxes for previous years | 252 | 156 |
| Change in unrecognised deferred tax assets/liabilities | -103 | 69 |
| Other items | -79 | -86 |
| Income taxes in the consolidated statement of comprehensive income | 2,526 | 3,972 |
13. Earnings per share
The basic earnings per share is calculated by dividing the profit/loss for the year attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year.
| 2009 | 2008 | |
|---|---|---|
| Profit/loss for the year attributable to equity holders of the parent (EUR 1,000) | -2,138 | 6,625 |
| Number of outstanding shares during the financial period, weighted average | 106,953,918 | 106,938,539 |
| Basic earnings per share (euro) | -0.02 | 0.06 |
In calculating the diluted earnings per share, the weighted average number of shares is adjusted by the effect of the conversion into shares of all dilutive potential ordinary shares. Comptel has share options, which have a diluting effect, when the exercise price of the share options is lower than the fair value of the share. The fair value of the share is based on the average price of the shares during the financial period. In 2009, the options did not have a material dilutive effect (no dilutive effect in 2008).
| 2009 | 2008 | |
|---|---|---|
| Profit/loss for the year attributable to equity holders of the parent (EUR 1,000) | -2,138 | 6,625 |
| Weighted average number of shares for calculation of diluted earnings per share | 107,078,252 | 106,938,539 |
| Diluted earnings per share (euro) | -0.02 | 0.06 |
14. Tangible assets
| EUR 1,000 | Machinery and equipment |
|---|---|
| Cost at 1 Jan 2009 | 8,794 |
| Additions | 458 |
| Disposals | -877 |
| Exchange difference | 214 |
| Cost at 31 Dec 2009 | 8,589 |
| Accumulated depreciation at 1 Jan 2009 | -6,199 |
| Depreciation | -1,153 |
| Disposals | 534 |
| Exchange difference | -181 |
| Accumulated depreciation at 31 Dec 2009 | -6,999 |
| Book value at 1 Jan 2009 | 2,595 |
| Book value at 31 Dec 2009 | 1,589 |
| Cost at 1 Jan 2008 | 7,482 |
| Additions | 1,351 |
| Business combination | 289 |
| Disposals | -9 |
| Exchange difference | -318 |
| Cost at 31 Dec 2008 | 8,794 |
| Accumulated depreciation at 1 Jan 2008 | -5,082 |
| Depreciation | -1,366 |
| Disposals | 8 |
| Exchange difference | 241 |
| Accumulated depreciation at 31 Dec 2008 | -6,199 |
| Book value at 1 Jan 2008 | 2,400 |
| Book value at 31 Dec 2008 | 2,595 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
28
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
15. Intangible assets
| EUR 1,000 | Goodwill | Patents and trademarks | Development costs | Other intangible assets | Total |
|---|---|---|---|---|---|
| Cost at 1 Jan 2009 | 19,027 | 851 | 15,650 | 11,028 | 46,556 |
| Additions | 98 | 3,808 | 228 | 4,134 | |
| Decreases | -268 | -268 | |||
| Exchange difference | 597 | 243 | 840 | ||
| Cost at 31 Dec 2009 | 19,355 | 949 | 19,459 | 11,499 | 51,263 |
| Accumulated amortisation at 1 Jan 2009 | 0 | -228 | -8,100 | -7,223 | -15,551 |
| Amortisation | -50 | -2,629 | -1,480 | -4,160 | |
| Impairment loss | -340 | -340 | |||
| Exchange difference | -50 | -50 | |||
| Accumulated amortisation at 31 Dec 2009 | 0 | -278 | -11,070 | -8,753 | -20,102 |
| Book value at 1 Jan 2009 | 19,027 | 624 | 7,550 | 3,805 | 31,005 |
| Book value at 31 Dec 2009 | 19,355 | 671 | 8,389 | 2,746 | 31,161 |
| Cost at 1 Jan 2008 | 10,832 | 711 | 11,225 | 8,473 | 31,242 |
| Additions | 140 | 4,426 | 111 | 4,677 | |
| Business combination | 9,748 | 3,001 | 12,749 | ||
| Exchange difference | -1,554 | -557 | -2,111 | ||
| Cost at 31 Dec 2008 | 19,027 | 851 | 15,650 | 11,028 | 46,556 |
| Accumulated amortisation at 1 Jan 2008 | 0 | -185 | -6,580 | -5,333 | -12,097 |
| Amortisation | -39 | -1,521 | -1,951 | -3,511 | |
| Impairment loss | -4 | -4 | |||
| Exchange difference | 61 | 61 | |||
| Accumulated amortisation at 31 Dec 2008 | 0 | -228 | -8,100 | -7,223 | -15,551 |
| Book value at 1 Jan 2008 | 10,832 | 526 | 4,645 | 3,140 | 19,144 |
| Book value at 31 Dec 2008 | 19,027 | 624 | 7,550 | 3,805 | 31,005 |
Allocation of goodwill
Of the goodwill 10,832 thousand euro (10,832 thousand euro in 2008) relates to know-how and market knowledge of the personnel and to the development potential of technology transferred from EDP Partners in connection of the business acquisition. 8,523 thousand euro (8,195 thousand euro in 2008) is attributable to the acquisition of Axiom Systems. According to Comptel management, the goodwill is mainly based on the fact that solutions for IP services complement Comptel's product portfolio, the combined sales network enables cross-selling to Axiom's and Comptel's customers, and the combined R&D strengthens the operations. The professionally skilled workforce is also part of the goodwill. The expected future cash flows may be generated from all market areas, therefore goodwill can not be specifically allocated to any of the geographical segments alone.
The agreement also included a provision regarding a contingent consideration. As the net sales of Axiom Systems for the year 2008 were less than 13.5 million euro, no contingent consideration was paid. The potential contingent consideration was not included in the goodwill determined at the acquisition date since the amount could not be estimated reliably.
Impairment testing
The recoverable amount of goodwill is determined based on value in use calculations. The value in use is computed based on discounted forecast cash flows. The cash flow forecasts rely on the plans approved by the Board of Directors and management concerning in particular profitability and the growth rate of net sales. The plans cover a five-year period taking into account the recent development of the business. The used pre-tax rate discount rate is 16.9% (14.9% in 2008).
The cash flows after the five-year period have been forecast by estimating the future growth rate of net sales to be 3% (3% in 2008). Based on the impairment tests there is no need to recognise an impairment loss.
The use of the testing model requires making estimates and assumptions concerning investments, market growth and general interest rate level.
Sensitivity analysis of impairment testing
The realisation of an impairment loss would require the actual operating profit (EBIT) level to be 77% lower than the management's estimate at the end of reporting period (42% in 2008), or that the discount rate was over 29% (21% in 2008).
16. Investments in associates
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Carrying amount at 1 Jan | 649 | 513 |
| Share of results | 40 | 136 |
| Carrying amount at 31 Dec | 689 | 649 |
The carrying amount of goodwill included in the carrying amount of the investment in the associate amounted to 400 thousand euro at 31 December 2009 (31 December 2008: 400 thousand euro).
Summary financial information for the Group's investments in the associate - assets, liabilities, net sales and profit / loss (EUR 1,000):
| 2009 | Assets | Liabilities | Net sales | Profit / loss | Ownership % |
|---|---|---|---|---|---|
| Tango Telecom Ltd. | 3,523 | 868 | 5,250 | 200 | 20 |
| 2008 | |||||
| Tango Telecom Ltd. | 3,119 | 442 | 5,247 | 681 | 20 |
17. Deferred tax assets and liabilities
Changes in deferred tax assets and liabilities during 2009:
| EUR 1,000 | 31 Dec 2008 | Recognised in profit or loss | Recognised in other comprehensive income | Exchange differences | 31 Dec 2009 |
|---|---|---|---|---|---|
| Deferred tax assets | |||||
| Provisions | 127 | -43 | 84 | ||
| Reversal of depreciation and amortisation in taxation | 475 | 3 | 478 | ||
| Impairment loss on trade receivables | 273 | -33 | 241 | ||
| Loss for the period | - | 152 | 152 | ||
| Business combinations | 196 | -35 | 86 | 248 | |
| Amortisation on technology in acquired business operations | 101 | -101 | 0 | ||
| Forward contracts hedging backlog of orders | - | 16 | 16 | ||
| Other tax deductible temporary differences | -20 | 45 | 25 | ||
| Total | 1,153 | -12 | 16 | 86 | 1,243 |
| Deferred tax liabilities | |||||
| Capitalisation of intangible assets | 2,127 | 230 | 2,357 | ||
| Capitalisation of and amortisation on technology in acquired business operations | 757 | -263 | 55 | 549 | |
| Impact of goodwill amortisation in taxation | 1,831 | 563 | 2,394 | ||
| Cumulative depreciation difference | 71 | 35 | -2 | 104 | |
| Forward contracts hedging backlog of orders | 30 | -30 | 0 | ||
| Other taxable temporary differences | 88 | -33 | 55 | ||
| Total | 4,902 | 532 | -30 | 53 | 5,458 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
Changes in deferred tax assets and liabilities during 2008:
| EUR 1,000 | 31 Dec 2007 | Recognised in profit or loss | Business combinations | 31 Dec 2008 |
|---|---|---|---|---|
| Deferred tax assets | ||||
| Provisions | 78 | 49 | 127 | |
| Reversal of depreciation and amortisation in taxation | 486 | -11 | 475 | |
| Impairment loss on trade receivables | 301 | -28 | 273 | |
| Business combinations | 0 | 196 | 196 | |
| Amortisation on technology in acquired business operations | 0 | 101 | 101 | |
| Other tax deductible temporary differences | -82 | 63 | -20 | |
| Total | 783 | 174 | 196 | 1,153 |
| EUR 1,000 | 31 Dec 2007 | Recognised in profit or loss | Recognised in other comprehensive income | Business combinations |
| --- | --- | --- | --- | --- |
| Deferred tax liabilities | ||||
| Capitalisation of intangible assets | 1,346 | 781 | ||
| Capitalisation of technology in acquired business operations | 0 | 757 | ||
| Impact of goodwill amortisation in taxation | 1,267 | 563 | ||
| Cumulative depreciation difference | 15 | 56 | ||
| Forward contracts hedging backlog of orders | 27 | 2 | ||
| Other taxable temporary differences | 5 | 83 | ||
| Total | 2,660 | 1,483 | 2 | 757 |
18. Trade receivables and other current receivables
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Trade receivables | 23,578 | 27,621 |
| Receivables from associates | 1 | 191 |
| Prepayments | 84 | 106 |
| Accruals from long-term projects | 7,772 | 4,796 |
| Other prepayments and accrued income | 3,592 | 2,311 |
| Other receivables | 3,641 | 4,076 |
| Total | 38,668 | 39,101 |
Comptel has recognised credit losses on trade receivables totalling 429 thousand euro in 2009 (2008: 187 thousand euro). Credit losses recognised arose from several small receivables past due over a year. The carrying amounts of the trade receivables and other receivables equal the related maximum exposure to credit risk. Other prepayments and accrued income mainly consist of accruals related to software service and user charges and rent accruals.
| Ageing analysis of trade receivables | |||
|---|---|---|---|
| EUR 1,000 | Gross 2009 | Impaired | Net 2009 |
| Not past due | 12,563 | 12,563 | |
| 1-30 days past due | 3,001 | 3,001 | |
| 31-90 days past due | 3,189 | 3,189 | |
| 91-180 days past due | 736 | 736 | |
| 181-360 days past due | 3,430 | -13 | 3,418 |
| Over 360 days past due | 2,087 | -1,415 | 672 |
| Total | 25,007 | -1,428 | 23,578 |
| EUR 1,000 | Gross 2008 | Impaired | Net 2008 |
| Not past due | 15,549 | 15,549 | |
| 1-30 days past due | 3,981 | 3,981 | |
| 31-90 days past due | 3,807 | 3,807 | |
| 91-180 days past due | 2,360 | 2,360 | |
| 181-360 days past due | 1,101 | 1,101 | |
| Over 360 days past due | 1,882 | -1,060 | 822 |
| Total | 28,681 | -1,060 | 27,621 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
19. Cash and cash equivalents
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Cash at bank and in hand | 6,730 | 6,135 |
| Total | 6,730 | 6,135 |
20. Capital and reserves
The impacts of movement in the number of shares are as follows:
| EUR 1,000 | Number of shares | Fund of invested non-restricted | |||
|---|---|---|---|---|---|
| Share capital | equity | Treasury shares | Total | ||
| At 1 Jan 2008 | 106,814,469 | 2,141 | 7,368 | -427 | 9,082 |
| Transfer of treasury shares | 156,334 | 65 | 302 | 367 | |
| Return of treasury shares | -8,647 | 0 | |||
| At 31 Dec 2008 | 106,962,156 | 2,141 | 7,433 | -125 | 9,449 |
| Acquisition of Corporation's own shares | -480,698 | -336 | -336 | ||
| Transfer of treasury shares | 269,348 | 67 | 174 | 241 | |
| At 31 Dec 2009 | 106,750,806 | 2,141 | 7,499 | -287 | 9,353 |
The maximum number of Comptel Corporation shares is 500 million at 31 December 2009 (31 December 2008: 500 million). The counterbook value of a share is 0.02 euro per share and the maximum share capital amounts to 8,400,000.00 euro (31 December 2008: 8,400,000.00 euro). All shares issued have been fully paid.
The descriptions of the reserves under equity are as follows:
Fund of invested non-restricted equity
The fund of invested non-restricted equity includes other investments of equity nature and subscription prices of shares to the extent that it is specifically not to be credited to share capital.
Translation reserve
The translation reserve comprises the translation differences arising from the translation of the financial statements of the foreign subsidiaries.
Fair value reserve
The fair value reserve comprises the hedging reserve including the effective portion of the cumulative net change in the fair value of cash flow hedging instruments.
Treasury shares
Treasury shares reserve includes the cost of treasury shares held by the Group. Comptel transferred 110,463 shares purchased in 2007 to persons under the share-based incentive plan for 2007 in 2008 and 45,871 shares to the members of the Board of Directors as part of their annual compensation. Comptel bought 269,348 shares in 2009 out of which 168,426 shares were transferred to persons under the share-based incentive plan and 100,922 shares to the members of the Board of Directors as part of their annual compensation. Comptel acquired 211,350 own shares in the end of 2009. At the end of the financial year the company had 304,004 treasury shares (92,654 treasury shares at 31 Dec 2008).
Dividends
After 31 December 2009 the Board of Directors has proposed a dividend to be paid 0.03 euro per share.
31
21. Share-based payments
Share options
The Group has had two share option schemes during the financial year. The options in question have been granted to the key personnel as well as to the subsidiaries fully owned by Comptel Corporation. For the option scheme approved in 2006, the total number of share options issued is 4,200,000. The share options may be exercised to subscribe a maximum of 4,200,000 Comptel Corporation shares in total. The share subscription period is for option 2006A, 1 November 2008 - 30 November 2010, for option 2006B, 1 November 2009 - 30 November 2011 and for option 2006C, 1 November 2010 - 30 November 2012. For the option scheme approved in 2009, the total number of share options issued is 4,200,000. The share options may be exercised to subscribe a maximum of 4,200,000 Comptel Corporation shares in total. The share subscription period is for option 2009A, 1 November 2011-30 November 2013, for option 2009B, 1 November 2012 - 30 November 2014 and for option 2009C, 1 November 2013 - 30 November 2015. The corporate executives are not included in 2009 option program. The subscription period of the 2001 option scheme expired on 31 December 2008. During the subscription period no shares were subscribed.
Changes in the number of the outstanding share options and weighted average exercise prices during the period were as follows:
| 2009 | Weighted average exercise price, EUR/share | Number of options |
|---|---|---|
| Outstanding at the beginning of the year | 1.71 | 3,530,000 |
| Granted during the year | 0.71 | 1,350,000 |
| Forfeited during the year | 1.68 | -240,000 |
| Expired during the year | - | - |
| Outstanding at the end of the year | 1.39 | 4,640,000 |
| Exercisable at the end of the year | 1.79 | 2,210,000 |
| 2008 | Weighted average exercise price, EUR/share | Number of options |
| --- | --- | --- |
| Outstanding at the beginning of the year | 3.50 | 4,446,500 |
| Granted during the year | 1.54 | 1,590,000 |
| Forfeited during the year | 1.77 | -400,000 |
| Expired during the year | 5.26 | -2,106,500 |
| Outstanding at the end of the year | 1.71 | 3,530,000 |
| Exercisable at the end of the year | 1.73 | 990,000 |
The number and average exercise prices of the share options outstanding at the end of the period:
| 2009 | Average exercise price, EUR/share | Number of options |
|---|---|---|
| 2010 | 1.69 | 1,090,000 |
| 2011 | 1.89 | 1,120,000 |
| 2012 | 1.44 | 1,180,000 |
| 2013 | 0.63 | 1,250,000 |
| 2008 | Average exercise price, EUR/share | Number of options |
| --- | --- | --- |
| 2010 | 1.73 | 990,000 |
| 2011 | 1.93 | 1,248,000 |
| 2012 | 1.48 | 1,292,000 |
The fair value of the share options 2009A and 2006A granted during the financial year was 0.37 euro and 0.33 euro (2006C 0.56 and 2006B 0.32 euro in 2008), determined using the Black-Scholes option pricing model.
The inputs used in the Black-Scholes formula were as follows:
| 2009 | 2008 | |||
|---|---|---|---|---|
| 2009A | 2006A | 2006C | 2006B | |
| Weighted average share price (euro) | 0.82 | 1.53 | 1.46 | 1.44 |
| Exercise price (euro) | 0.63 | 1.73 | 1.48 | 1.93 |
| Expected volatility | 38% | 35% | 36% | 36% |
| Expected option life (years) | 4.5 | 2.6 | 4.6 | 3.5 |
| Risk-free interest rate | 2.71% | 4.20% | 5.23% | 5.34% |
The expected volatility has been determined based on the historical volatility for a period equalling to the option vesting period in 2009 calculations. In 2008 a volatility for 12 months immediately preceding the grant date was used in the calculations.
In 2009 the expense recognised in respect of the option schemes amounted to 572 thousand euro (2008: 722 thousand euro).
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
Share-based incentive plan
The key personnel of the Group has had a share-based incentive program since 2006. The last vesting period of Comptel Corporation Share Ownership Plan 2006 - 2008 ended on 31 December 2008. The compensation based on the share based incentive program has been paid as a combination of company shares and cash after the vesting period has expired. A participant has to possess the shares paid as compensation at least for two years after the end of the vesting period.
In the beginning of 2009 the Board of Directors of Comptel Corporation approved a new share-based incentive plan for the Comptel Group key personnel. The aim of the plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the company, to commit the key personnel to the company, and to offer them a competitive reward plan based on holding the company shares.
The new plan includes three vesting periods, calendar years 2009, 2010 and 2011. The Board of Directors will decide on the earnings criteria for each vesting period at the beginning of each vesting period. A two-year restriction period will follow each vesting period, during which shares cannot be transferred. Should a key person's employment or service end during the restriction period, must he/she gratuitously return the shares paid as reward to the company. The reward from the plan for vesting period 2009 is based on the continuance of employment or service of a key person and on the Comptel Group's operating profit margin. The reward from the vesting period 2009 will be paid partly as the Company's shares and partly in cash in 2010. The proportion of cash will cover taxes and tax-related costs arising from the reward.
The President and CEO of the company belongs to the incentive plan provided that he holds at least 150,000 Comptel Corporation shares until 31 December 2012. The restriction periods of the rewards to be paid to the President and CEO, on the basis of continuance of his service, will end in 2012 and 2013. A maximum amount in denomination in euro has been determined for the rewards of the President and CEO.
The cost of the program is recognised under employee benefit expenses over the vesting period. In 2009, 327 thousand euro was expensed (2008: 515 thousand euro), of which 166 thousand euro is the portion to be paid in cash (2008: 279 thousand euro).
The outstanding option schemes and share-based incentive programs are described in more detail in section Shares and shareholders.
22. Pension obligations
Comptel has pension plans in various countries that are based on the local legislation and well-established practices. In Finland the pension arrangement is mainly managed through the Finnish Statutory Employment Pension Scheme (TyEL) which is a defined contribution plan. In addition, Comptel has a voluntary additional pension plan to certain employees in Finland and this arrangement has been accounted for as a defined benefit plan.
The difference between the net liability and unrecognised actuarial gains and losses is included in other non-current receivables.
Liability/receivable for defined benefit obligations in statement of financial position:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Present value of obligations | 209 | 139 |
| Fair value of plan assets | -198 | -135 |
| Net liability | 11 | 4 |
| Unrecognised actuarial gains (+) and losses (-) | -37 | -14 |
| Liability (+)/receivable (-) in statement of financial position | -26 | -11 |
Defined benefit expense recognised in the statement of comprehensive income:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Current service cost | 41 | 42 |
| Interest expense | 10 | 7 |
| Expected return on plan assets | -5 | -4 |
| Actuarial gains (-) and losses (+) | 0 | 1 |
| Total | 46 | 47 |
Movements in the present value of the obligation:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Obligation at the beginning of the period | 139 | 102 |
| Current service cost | 41 | 42 |
| Interest expense | 10 | 7 |
| Actuarial gains (-) and losses (+) | 19 | -13 |
| Obligation at the end of the period | 209 | 139 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
Movements in the fair value of plan assets:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Fair value of plan assets at the beginning of the period | 135 | 93 |
| Expected return on plan assets | 5 | 4 |
| Actuarial gains (+) and losses (-) | -4 | -3 |
| Contributions into the plan paid by the employer | 61 | 41 |
| Fair value of plan assets at the end of the period | 198 | 135 |
Principal actuarial assumptions at 31 December:
| 2009 | 2008 | |
|---|---|---|
| Discount rate | 5.00% | 5.75% |
| Expected return on plan assets | 3.40% | 3.40% |
| Future salary increases | 2.50% | 4.00% |
| EUR 1,000 | 2009 | 2008 |
| --- | --- | --- |
| Actual return on plan assets | 1 | 1 |
| EUR 1,000 | 2009 | 2008 |
| --- | --- | --- |
| Present value of the obligation | 209 | 139 |
| Fair value of plan assets | -198 | -135 |
| Surplus (-) / deficit (+) | 11 | 4 |
| Experience adjustments arising on plan assets | -4 | -3 |
| Experience adjustments arising on plan liabilities | -26 | -4 |
The expected contributions to the defined benefit pension plans for the year 2010 are 32 thousand euro.
23. Provisions
Movements in provisions during 2009:
| EUR 1,000 | Provision for warranty | Lease provision | Other provisions | Total |
|---|---|---|---|---|
| Balance at 1 Jan 2009 | 428 | 2,386 | 124 | 2,937 |
| Provisions made during the year | 302 | 302 | ||
| Provisions used during the year | -37 | -687 | -124 | -847 |
| Exchange difference | 149 | 149 | ||
| Balance at 31 Dec 2009 | 391 | 2,150 | 0 | 2,541 |
Movements in provisions during 2008:
| EUR 1,000 | Provision for warranty | Lease provision | Other provisions | Total |
|---|---|---|---|---|
| Balance at 1 Jan 2008 | 464 | 300 | 12 | 776 |
| Provisions made during the year | 332 | 124 | 456 | |
| Business combinations | 2,683 | 2,683 | ||
| Provisions used during the year | -540 | -540 | ||
| Unused provisions reversed | -36 | -12 | -48 | |
| Exchange difference | -389 | -389 | ||
| Balance at 31 Dec 2008 | 428 | 2,386 | 124 | 2,937 |
Provision for warranty
A provision for warranties is recognised when the underlying product including a warranty is sold. The provision is based on historical warranty data.
Lease provision
This item includes the provisions made for unoccupied leased facilities.
Other provisions
Other provisions include a provision recognised for employment benefit expenses.
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
24. Financial liabilities
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Non-current financial liabilities measured at amortised cost | ||
| Finance lease liabilities | - | 11 |
| Other liabilities | 1 | 1 |
| Total | 1 | 12 |
| Current financial liabilities measured at amortised cost | ||
| Loans from financial institutions | 8,000 | 5,000 |
| Finance lease liabilities | 12 | 40 |
| Total | 8,012 | 5,040 |
The fair values of liabilities are presented in note 26. Financial risk management.
Comptel had a bank loan amounting to 8,000 thousand euro at 31 December 2009 (5,000 thousand at 31 December 2008). The weighted average interest rate is 1.5% (3.6% in 2008). The loan together with the interest become payable during the second quarter in 2010. Comptel has a 15 million euro Revolving Credit Facility arrangement in place until 2013. At 31 December 2009 the amount available under the said facility was 7 million euro.
Maturity analysis of finance lease liabilities
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Finance lease liabilities - minimum lease payments | ||
| Less than one year | 12 | 46 |
| Between one and five years | - | 12 |
| Total | 12 | 58 |
| Finance lease liabilities - present value of minimum lease payments | ||
| Less than one year | 12 | 40 |
| Between one and five years | - | 11 |
| Total | 12 | 52 |
| Future financial charges | 0 | 6 |
25. Trade and other current liabilities
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Trade payables | 1,412 | 872 |
| Trade payables and other current liabilities to associates | - | 197 |
| Advances received from long-term contracts | 1,582 | 1,876 |
| Accrued expenses and deferred income | 13,868 | 11,986 |
| Other liabilities | 3,255 | 3,401 |
| Total | 20,117 | 18,331 |
The accrued expenses and deferred income mainly comprise accruals related to employee benefits.
26. Financial risk management
Comptel is exposed to financial risks in its ordinary business operations. The objective of Comptel's risk management is to minimise the adverse effects arising from fluctuations of financial markets on the Group's cash flows, result and equity. Comptel's general risk management principles are approved by the Board of Directors and their implementation is the responsibility of the Chief Financial Officer (CFO) together with the business units. Comptel's financial policy is risk-adverse. The main financial risks for the Group are currency risk and credit risk. Financial management identifies and assesses risks and acquires the instruments needed to hedge against risks together with operating units. Hedging transactions are carried out in accordance with the written risk management principles approved by the Board of Directors. Comptel uses foreign currency forwards in its currency risk management.
Currency risk
Comptel operates globally and is therefore exposed to currency risks arising from various currency positions. In Comptel's business operations the major currencies are Euro and US Dollar (USD). Other significant currencies are UK Pound Sterling (GBP) and Norwegian Krona (NOK).
Comptel hedges open positions in foreign currency and applies hedge accounting for the definition of these positions. The currency position is monitored on a 12-month rolling period.
The hedging instruments are forward contracts entered into with banks. The hedging forward contract is always denominated in the same currency as the underlying item resulting the value of the hedging instrument to change in the opposite way compared to the underlying item and consequently the hedge is effective. The potential ineffectiveness may result from a possible overhedging or underhedging.
The invoicing of sales orders follows the progress of projects, which causes timely uncertainty. Moreover, the realised turnover of trade receivables exceeds the terms in the client agreements. The hedging of the future cash flows is timed taking these facts into account. The ineffective portion of a hedge is recognised in the statement of comprehensive income.
Interest rate risk is the risk that cash flows or the result will fluctuate because of changes in market interest rates. Comptel's interest-bearing liabilities as at 31 December 2009 totalled 8,012 thousand euro, of which 8,000 thousand euro is a bank loan (5,052 thousand euro, of which 5,000 thousand euro was a bank loan in 2008). The bank loan becomes repayable in 2010 but can be renewed under Comptel's Revolving Credit Facility. Comptel has a Revolving Credit Facility of 15 million euro valid until 2013 and the undrawn funds amounted to 7 million euro. The interest payment for amounts falling due in 2010 is fixed. The interest rate is determined based on prevailing IBOR. Possible short-term investments in financial securities gives rise to interest rate risk but the impact of such risk is not significant. Comptel's revenues and operating cash flows are mainly independent of the fluctuations of market rates.
Credit risk
Credit risk is the risk that one party will cause a financial loss for the Group by failing to discharge an obligation. In Comptel credit risk mainly arises from trade receivables related to customers, derivatives, cash and cash equivalents and money market investments.
Credit risk management principles are defined in Comptel's documented procedures (Risk Management Principles, Currency hedging in Comptel Corporation and General principles of investment activities). Credit risk management in respect of derivatives and investments is centralised to the Group accounting department, in respect of clients and credit control to the business area organisation.
Comptel's customers are mainly mid-size or large teleoperators. The Group's clientele is large and geographically widely dispersed, which decreases the customer risk of the Group.
Comptel's business consists of deliveries of large productised IT system and the value of a single project may be several million euro. Therefore the risk associated with a single project or an individual client may be significant. Furthermore some of Comptel's clients operate in countries that are or have been war zone areas, which in part increases credit risk.
Comptel has no significant credit risk concentrations, since no individual customer or customer group represents a material risk. In delivery projects partial advance invoicing is generally used. Furthermore credit risk is reduced by progress payments invoiced based on percentage of completion. In some countries letter of credits are used.
Comptel introduced a new policy for writing off trade receivables. According to the policy a bad debt provision of 50% of the total value is generally booked if the receivable is overdue more than 360 days and a provision of 100% is impacted when the receivable is overdue more than 540 days. The amount of credit losses recognised in the statement of comprehensive income in the financial year 2009 was 429 thousand euro (187 thousand euro in 2008). Credit losses recognised arose from several small receivables past due over a year. The maximum amount of Comptel's credit risk equals the carrying amount of financial assets at the end of the financial year. The ageing analysis of trade receivables is presented in note 18. Trade receivables and other current receivables.
Liquidity risk
Liquidity risk means insufficient financing or higher than normal financing expenses when business environment deteriorates and financing is needed. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that financing of business operations is available when needed quickly enough. Part of the Group's liquid funds are invested in mutual funds based on the principles approved by the Board of Directors. Comptel's main source of financing has been the operating cash flow. Cash levels are monitored on a weekly basis.
As at 31 December 2009 the Group's cash and cash equivalents totalled 6,730 thousand euro (6,135 thousand euro at 31 December 2008). As at 31 December 2009 Comptel's interest-bearing liabilities totalled 8,012 thousand euro (5,052 thousand in 2008). Under the Revolving Credit Facility in place until 2013 there is still 7 million euro available for down-draw. The Facility contains a covenant whereby Group equity ratio must be at least 35%. As of 31 December 2009 Comptel's equity ratio was 62.6% (2008: 67.4%). Furthermore, Comptel has an option for TyEL (earnings-related pension) premium loan amounting to 9.8 million euro.
The following table sets forth maturity analysis based on contractual cash flows. Cash flow includes both loan repayments and interest payments.
| 2009
EUR 1,000 | Carrying amount | Contractual cash flow | 1-6 months | 7-12 months | |
| --- | --- | --- | --- | --- | --- |
| Non-derivative financial liabilities | | | | | |
| Loans from financial institutions | 8,000 | 8,070 | 8,070 | | |
| Finance lease liabilities | 12 | 12 | 12 | | |
| Trade payables | 1,412 | 1,412 | 1,412 | | |
| Derivative financial liabilities | | | | | |
| Forward exchange contracts used for hedging | | | | | |
| Inflow | 220 | -220 | -219 | -1 | |
| 2008
EUR 1,000 | Carrying amount | Contractual cash flow | 1-6 months | 7-12 months | 1-2 years |
| Non-derivative financial liabilities | | | | | |
| Loans from financial institutions | 5,000 | 5,138 | | 5,138 | |
| Finance lease liabilities | 52 | 58 | 23 | 23 | 12 |
| Trade payables | 885 | 885 | 885 | | |
| Derivative financial liabilities | | | | | |
| Forward exchange contracts used for hedging | | | | | |
| Inflow | 177 | -177 | -177 | | |
| Outflow | -114 | 114 | | 114 | |
Capital structure management
The purpose of Comptel capital structure management is to support the business operations by securing normal operational demands and grow shareholder value in the long term. Comptel aims at continuing profitable business by investing in R&D and enhancing its presence on the global market place. The amount of dividends paid to the shareholders may vary in order for the Group to reduce debt or increase cash in hand which would result in increased opportunities to focused acquisitions also in the future.
Exposure to currency risk
| EUR 1,000 | 2009 | 2008 | ||
|---|---|---|---|---|
| USD | NOK | GBP | USD | |
| Trade receivables | 8,088 | 1,666 | 768 | 12,469 |
| Cash and cash equivalents | 3,101 | 85 | 446 | 788 |
| Trade payables | -125 | -47 | -38 | |
| Net statement of financial position exposure | 11,063 | 1,751 | 1,167 | 13,219 |
| Order backlog (12 months) | 11,101 | 2,833 | 32 | 9,809 |
| Hedging | ||||
| Forward contracts (12 months) | -8,677 | -14,730 | ||
| Total net exposure | 13,487 | 4,583 | 1,199 | 8,298 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
Sensitivity to foreign exchange rates
A 10% weakening/strengthening of the euro against the currencies below at 31 December would have affected equity and result after taxes as follows:
| 2009 | ||
|---|---|---|
| EUR 1,000 | Equity | Result |
| USD | 177/-177 | 485/-485 |
| NOK | 130/-130 | 130/-130 |
| GBP | 86/-86 | 86/-86 |
| 2008 | ||
| --- | --- | --- |
| EUR 1,000 | Equity | Result |
| USD | -112/112 | 74/-74 |
| NOK | 163/-163 | 163/-163 |
| GBP | 68/-68 | 68/-68 |
In calculating the sensitivity related to exchange rate changes the following assumptions were used:
- a +/-10% exchange rate change
- the position comprises foreign currency financial assets and financial liabilities, i.e. trade receivables, cash and cash equivalents, trade payables and derivatives
- the position excludes future foreign currency cash flows
Fair values of financial assets and liabilities
For financial assets and liabilities their carrying amounts equal their fair values as the discounting has no material effect considering the short maturity of these items..
Derivative instruments measured at fair value:
| 2009 | Positive fair value (carrying amount) | Negative fair value (carrying amount) | Nominal value of underlying instrument |
|---|---|---|---|
| EUR 1,000 | |||
| Cash flow hedges | |||
| Recognised in other comprehensive income | 62 | 4,165 | |
| Fair value hedges | |||
| Recognised in profit or loss | 158 | 11,831 |
Currency forward contracts presented in equity will be recognised in profit or loss during 2010.
| 2008 | Positive fair value (carrying amount) | Negative fair value (carrying amount) | Nominal value of underlying instrument |
|---|---|---|---|
| EUR 1,000 | |||
| Cash flow hedges | |||
| Recognised in other comprehensive income | 114 | 2,515 | |
| Fair value hedges | |||
| Recognised in profit or loss | 177 | 12,215 |
Fair value hierarchy for financial instruments measured at fair value
| EUR 1,000 | 31 Dec 2009 | Level 2 |
|---|---|---|
| Liabilities measured at fair value | ||
| Financial liabilities measured at fair value through profit and loss | ||
| Forward contracts | 220 | 220 |
| of which cash flow hedges | 62 | 62 |
| Total | 220 | 220 |
According to IFRS 7 financial instruments carried at fair value must be classified according to a three level hierarchy.
Level 1: fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: fair values are based on inputs other than quoted prices included within level 1. However, the fair values are based on information that is observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: fair values are based on significantly different information than the input data and is not based on observable market data (unobservable inputs). The fair values are based on management estimates and application of those in generally accepted valuation models.
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
27. Adjustments to cash flows from operating activities
Non-cash transactions or items that are not part of cash flows from operating activities:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Depreciation, amortisation and impairment charges | 5,654 | 4,881 |
| Exchange differences | 398 | 1,036 |
| Share of result of associates | -40 | -136 |
| Share-based payments | 779 | 888 |
| Other adjustments | 50 | -73 |
| Total | 6,840 | 6,596 |
28. Operating leases
Minimum lease payments on non-cancellable office facilities leases and other operating leases are payable as follows:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Less than one year | 3,904 | 4,234 |
| Between one and five years | 12,783 | 12,136 |
| More than five years | 2,248 | 3,282 |
| Total | 18,935 | 19,652 |
Comptel has leased the office premises it uses. These leases typically run for a period from one to ten years, and normally with an option to renew the lease after that date. The index, renewal and other terms of the agreements are diverse.
The statement of comprehensive income for the year 2009 includes lease expenses for the office premises amounting to 4,554 thousand euro (2008: 4,498 thousand euro).
29. Commitments and contingencies
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Bank guarantees | 1,616 | 1,047 |
30. Related party transactions
The Comptel Group companies are as follows:
| 2009 Company | Domicile | Group holding (%) | Group voting (%) |
|---|---|---|---|
| Comptel Corporation | Finland | ||
| Axiom Systems Holdings Ltd. | UK | 100.00 | 100.00 |
| Axiom Systems Ltd. | UK | 100.00 | 100.00 |
| Axiom Systems OSS (Asia-Pacific) Pte | Singapore | 100.00 | 100.00 |
| Business Tools Oy | Finland | 100.00 | 100.00 |
| Comptel Communications AS | Norway | 100.00 | 100.00 |
| Comptel Communications | |||
| Brasil Ltda | Brazil | 100.00 | 100.00 |
| Comptel Communications Inc. | USA | 100.00 | 100.00 |
| Comptel Communications Oy | Finland | 100.00 | 100.00 |
| Comptel Communications | |||
| Sdn Bhd | Malaysia | 100.00 | 100.00 |
| Comptel Passage Oy | Finland | 100.00 | 100.00 |
| Comptel Ltd | UK | 100.00 | 100.00 |
| Network People Ltd. | UK | 100.00 | 100.00 |
| Viewgate Networks Inc. | USA | 100.00 | 100.00 |
| Viewgate Networks Ltd. | UK | 100.00 | 100.00 |
| 2008 Company | Domicile | Group holding (%) | Group voting (%) |
| --- | --- | --- | --- |
| Comptel Corporation | Finland | ||
| Axiom Systems Holdings Ltd. | UK | 100.00 | 100.00 |
| Axiom Systems Ltd. | UK | 100.00 | 100.00 |
| Axiom Systems OSS (Asia-Pacific) Pte | Singapore | 100.00 | 100.00 |
| Business Tools Oy | Finland | 100.00 | 100.00 |
| Comptel Communications AS | Norway | 100.00 | 100.00 |
| Comptel Communications | |||
| Brasil Ltda | Brazil | 100.00 | 100.00 |
| Comptel Communications Inc. | USA | 100.00 | 100.00 |
| Comptel Communications Oy | Finland | 100.00 | 100.00 |
| Comptel Communications | |||
| Sdn Bhd | Malaysia | 100.00 | 100.00 |
| Comptel Passage Oy | Finland | 100.00 | 100.00 |
| Comptel Ltd | UK | 100.00 | 100.00 |
| Network People Ltd. | UK | 100.00 | 100.00 |
| Viewgate Networks Inc. | USA | 100.00 | 100.00 |
| Viewgate Networks Ltd. | UK | 100.00 | 100.00 |
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
The Comptel Group has a related party relationship with its associates, the Board of Directors, CEO, deputy CEO, the Corporate Executives and also with people and companies under Comptel management's influence.
Transactions, which have been entered into with related parties, are as follows:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Purchases of goods and services | ||
| Associates | 635 | 1,318 |
| Companies under management's influence | 35 | 28 |
| Interest revenue | ||
| Associates | 4 | 12 |
| Receivables | ||
| Associates | 76 | 191 |
| Liabilities | ||
| Associates | - | 197 |
| Companies under management's influence | 1 | 1 |
Contingent liabilities assumed on behalf of Group companies
In 2008 Comptel Corporation gave a performance guarantee, still in force, on behalf of its subsidiary. The total value of this agreement is 4 million US Dollars. Comptel gave a guarantee of 700 thousand UK Pound Sterling for its subsidiary in 2009.
Key management compensation
The key management personnel compensation includes the employee benefits of the CEO, deputy CEO, the members and deputy members of the Board of Directors and the Corporate Executives.
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Salaries and other short-term employee benefits | 2,249 | 1,790 |
| Share-based payments | 409 | 412 |
| Total | 2,657 | 2,201 |
The employee benefits of the CEO and the members of the Board of Directors of the parent company:
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| CEO | 486 | 556 |
| Board of Directors at 31 Dec 2009 | ||
| Kotilainen Timo | 34 | 35 |
| Lassila Juhani | 34 | 35 |
| Riikkala Olli | 60 | 66 |
| Vaajoensuu Hannu | 41 | 46 |
| Walldén Petteri | 25 | - |
| Former members of the Board of Directors | ||
| Mustaniemi Matti | 8 | 35 |
| Hintikka Juhani | - | 7 |
| Total | 688 | 780 |
The retirement age of the CEO of the parent company is 62 years.
Management of the company was granted 100,000 share options in 2009 (2008: 140,000). At 31 December 2009 management had 510,000 share options, of which 362,000 were exercisable (2008: 370,000 share options, of which 110,000 exercisable).
The compensation to the members of the Board of Directors has been paid by giving shares in Comptel Corporation with 40% of the annual gross compensation.
The related parties of the Group had no loans referred to in the Companies Act, chapter 8, article 6.
COMPTEL Financial Statements | Notes to the Consolidated Financial Statements
Key Figures
| Financial summary | 2005 | 2006 | 2007 | 2008 | 2009 |
|---|---|---|---|---|---|
| Net sales, EUR 1,000 | 66,065 | 80,439 | 82,399 | 84,849 | 74,896 |
| Net sales, change % | 10.7 | 21.8 | 2.4 | 3.0 | -11.7 |
| Operating profit/loss, EUR 1,000 | 10,516 | 11,232 | 16,518 | 11,383 | 1,018 |
| Operating profit/loss, change % | -29.0 | 6.8 | 47.1 | -31.1 | -91.1 |
| Operating profit/loss, as % of net sales | 15.9 | 14.0 | 20.0 | 13.4 | 1.4 |
| Profit/loss before taxes, EUR 1,000 | 10,815 | 11,206 | 16,396 | 10,597 | 388 |
| Profit/loss before taxes, as % of net sales | 16.4 | 13.9 | 19.9 | 12.5 | 0.5 |
| Return on equity, % | 15.8 | 12.7 | 21.9 | 12.8 | -4.4 |
| Return on investment, % | 24.0 | 25.3 | 32.9 | 19.1 | 1.5 |
| Equity ratio, % 1) | 75.2 | 74.6 | 77.6 | 67.4 | 62.6 |
| Gross investments in tangible and intangible assets, EUR 1,000 2) | 19,968 | 1,477 | 1,908 | 10,919 | 686 |
| Gross investments in tangible and intangible assets, as % of net sales 2) | 30.2 | 1.8 | 2.3 | 12.9 | 0.9 |
| Research and development expenditure, EUR 1,000 | 8,154 | 11,079 | 10,333 | 14,007 | 13,092 |
| Research and development expenditure, as % of net sales | 12.3 | 13.8 | 12.5 | 16.5 | 17.5 |
| Order backlog, EUR 1,000 | 24,482 | 29,483 | 35,051 | 38,846 | 37,554 |
| Average number of employees during the financial period | 462 | 561 | 555 | 606 | 613 |
| Interest-bearing net liabilities, EUR 1,000 | -9,632 | -12,934 | -14,708 | -1,083 | 1,282 |
| Gearing ratio, % | -21.5 | -27.7 | -28.2 | -2.1 | 2.8 |
1) When calculating the equity ratio for 2007, those deferred income items recognised on the basis of the percentage of completion method as well as deferred income arising from sales accruals have been accounted for as advances received. The comparative information has been restated.
2) Includes the acquisition of the EDB Telecom business in 2005. The aggregate gross capital expenditure excluding this acquisition amounted to 1,852 thousand euro, which was 2.8% of the net sales..
Includes the acquisition of Axiom Systems in 2008. The aggregate gross capital expenditure excluding this acquisition amounted to 1,461 thousand euro, which was 1.7% of the net sales.
| Per share data | 2005 | 2006 | 2007 | 2008 | 2009 |
|---|---|---|---|---|---|
| EPS, EUR | 0.07 | 0.05 | 0.10 | 0.06 | -0.02 |
| Diluted EPS, EUR | 0.07 | 0.05 | 0.10 | 0.06 | -0.02 |
| Equity per share, EUR | 0.42 | 0.44 | 0.49 | 0.48 | 0.43 |
| Dividend per share, EUR 3) | 0.04 | 0.05 | 0.06 | 0.04 | 0.03 |
| Dividend per earnings, % 3) | 61.5 | 92.8 | 59.1 | 64.6 | -150.1 |
| Effective dividend yield, % 3) | 2.4 | 2.8 | 4.2 | 5.8 | 3.8 |
| P/E ratio | 25.2 | 33.4 | 14.0 | 11.1 | -39.0 |
| Highest share price | 2.29 | 1.58 | 0.96 | ||
| Lowest share price | 1.36 | 0.60 | 0.57 | ||
| Market value at year-end, million EUR | 151.7 | 73.8 | 83.3 | ||
| Adjusted number of shares at the end of period | 107,054,810 | 107,054,810 | 107,054,810 | 107,054,810 | 107,054,810 |
| of which the number of treasury shares | 240,341 | 92,654 | 304,004 | ||
| Outstanding shares at the end of period | 107,054,810 | 107,054,810 | 106,814,469 | 106,962,156 | 106,750,806 |
| Adjusted average number of shares during the period | 107,054,810 | 107,054,810 | 106,848,199 | 106,938,539 | 106,953,918 |
| Average number of shares, dilution included | 107,054,810 | 107,054,810 | 106,848,199 | 106,938,539 | 107,078,252 |
3) The Board's proposal
COMPTEL Financial Statements | Key Figures
Definitions of Key Figures
Operating margin % = $\frac{\text{Operating profit/loss}}{\text{Net sales}} \times 100$
Profit margin (before income taxes) % = $\frac{\text{Profit/loss before taxes}}{\text{Net sales}} \times 100$
Return on equity % (ROE) = $\frac{\text{Profit/loss}}{\text{Total equity (average during year)}} \times 100$
Return on investment % (ROI) = $\frac{\text{Profit/loss before taxes} + \text{financial expenses}}{\text{Total equity} + \text{interest bearing liabilities (average during year)}} \times 100$
Equity ratio % = $\frac{\text{Total equity}}{\text{Statement of financial position total – advances received}} \times 100$
Gross investments in tangible and intangible assets, as % of net sales = $\frac{\text{Gross investments in tangible and intangible assets}}{\text{Net sales}} \times 100$
Reasearch and development expenditure, as % of net sales = $\frac{\text{Research and development expenditure}}{\text{Net sales}} \times 100$
Gearing ratio % = $\frac{\text{Interest-bearing liabilities} - \text{cash and cash equivalents}}{\text{Total equity}} \times 100$
Earnings per share (EPS) = $\frac{\text{Profit/loss for the financial year attributable to equity shareholders}}{\text{Average number of outstanding shares for the financial year}}$
Equity per share = $\frac{\text{Equity attributable to the equity holders of the parent company}}{\text{Adjusted number of shares at end of period}}$
Dividend per share = $\frac{\text{Dividend}}{\text{Adjusted number of shares at end of period}}$
Dividend per earnings % = $\frac{\text{Dividend per share}}{\text{Earnings per share (EPS)}} \times 100$
Effective dividend yield % = $\frac{\text{Dividend per share}}{\text{Share closing price at end of period}} \times 100$
P/E-ratio = $\frac{\text{Share closing price at end of period}}{\text{Earnings per share (EPS)}}$
COMPTEL Financial Statements | Definition of Key Figures
Parent Company Income Statement, FAS
| EUR 1,000 | 1 Jan - 31 Dec 2009 | 1 Jan - 31 Dec 2008 |
|---|---|---|
| Net sales | 67,881 | 76,884 |
| Other operating income | 94 | 14 |
| Materials and services | -5,445 | -5,773 |
| Personnel expenses | -18,627 | -21,875 |
| Depreciation and amortisation | -3,696 | -4,651 |
| Other operating expenses | -40,178 | -36,694 |
| -67,945 | -68,993 | |
| Operating profit/loss | 30 | 7,905 |
| Financial income | 789 | 969 |
| Financial expenses | -1,064 | -1,737 |
| Profit/loss before appropriations and income taxes | -245 | 7,137 |
| Change in accumulated depreciation | 59 | 0 |
| Profit/loss before income taxes | -186 | 7,137 |
| Income taxes | -1,424 | -2,934 |
| Profit/loss for the period | -1,610 | 4,203 |
COMPTEL Financial Statements | Parent Company Income Statement, FAS
Parent Company Balance Sheet, FAS
| EUR 1,000 | Notes | 31 Dec 2009 | 31 Dec 2008 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 1,628 | 3,794 | |
| Other intangible assets | 922 | 1,591 | |
| Tangible assets | 603 | 1,539 | |
| Investments | 10,317 | 10,586 | |
| 13,471 | 17,510 | ||
| Current assets | |||
| Non-current receivables | 8,963 | 5,513 | |
| Current receivables | 35,951 | 36,010 | |
| Cash and cash equivalents | 4,580 | 4,882 | |
| 40,531 | 40,892 | ||
| Total assets | 62,964 | 63,915 | |
| EQUITY AND LIABILITIES | |||
| Capital and reserves | 1 | ||
| Share capital | 2,141 | 2,141 | |
| Fund of invested non-restricted equity | 7,499 | 7,433 | |
| Retained earnings | 23,279 | 23,691 | |
| Profit/loss for the period | -1,610 | 4,203 | |
| 31,309 | 37,468 | ||
| Accumulated appropriations | 0 | 59 | |
| Provisions | 694 | 884 | |
| Liabilities | |||
| Non-current liabilities | 273 | 273 | |
| Current liabilities | 30,689 | 25,231 | |
| Total equity and liabilities | 62,964 | 63,915 |
COMPTEL Financial Statements | Parent Company Balance Sheet, FAS
Parent Company Statement of Cash Flows, FAS
| EUR 1,000 | 1 Jan - 31 Dec 2009 | 1 Jan - 31 Dec 2008 |
|---|---|---|
| Cash flows from operating activities | ||
| Profit/loss before appropriations and income taxes | -245 | 7,137 |
| Adjustments: | ||
| Depreciation and amortisation | 3,696 | 4,651 |
| Financial income and expenses | -181 | -169 |
| Other adjustments | 66 | 297 |
| Change in working capital: | ||
| Change in trade and other receivables | 112 | -1,928 |
| Change in trade and other current liabilities | 2,397 | -1,003 |
| Change in provisions | -190 | 119 |
| Interest paid | -246 | -133 |
| Interest received | 99 | 291 |
| Taxes paid | -1,510 | -5,543 |
| Net cash from operating activities | 3,998 | 3,718 |
| Cash flows from investing activities | ||
| Acquisition of subsidiaries | - | -9,690 |
| Purchase price adjustments | 268 | - |
| Investments in tangible and intangible assets | -267 | -871 |
| Proceeds from sale of tangible and intangible assets | 341 | - |
| Proceeds received from liquidation of a subsidiary | - | 103 |
| Loans granted | -3,069 | - |
| Net cash used in investing activities | -2,726 | -10,459 |
| Cash flows from financing activities | ||
| Dividends paid | -4,278 | -6,415 |
| Acquisition of Corporation's own shares | -295 | - |
| Proceeds from borrowings | 8,000 | 8,000 |
| Repayment of borrowings | -5,000 | -3,000 |
| Change in other non-current liabilities | - | 1 |
| Net cash used in financing activities | -1,574 | -1,415 |
| Change in cash and cash equivalents | -302 | -8,156 |
| Cash and cash equivalents at the beginning of period | 4,882 | 13,037 |
| Cash and cash equivalents at the end of period | 4,580 | 4,882 |
| Change | -302 | -8,156 |
COMPTEL Financial Statements | Parent Company Statement of Cash Flows, FAS
Notes to the Financial Statements of the Parent Company, FAS
The annual report contains the parent company's notes in summary. Full audited financial statements are available on the website www.comptel.com.
1. Equity
Restricted equity
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Share capital at 1 Jan | 2,141 | 2,141 |
| Share capital at 31 Dec | 2,141 | 2,141 |
Non-restricted equity
| EUR 1,000 | 2009 | 2008 |
|---|---|---|
| Fund of invested non-restricted equity at 1 Jan | 7,433 | 7,368 |
| Treasury shares given to the members of the Board of Directors | 66 | 66 |
| Fund of invested non-restricted equity at 31 Dec | 7,499 | 7,433 |
| Retained earnings at 1 Jan | 27,893 | 30,106 |
| Dividends paid | -4,278 | -6,415 |
| Acquisition of Corporation's own shares | -336 | 0 |
| Retained earnings at 31 Dec | 23,279 | 23,691 |
| Profit/loss for the financial year | -1,610 | 4,203 |
| Equity, total | 31,309 | 37,468 |
Breakdown of distributable funds
| EUR 1,000 | 31 Dec 2009 | 31 Dec 2008 |
|---|---|---|
| Fund of invested non-restricted equity | 7,499 | 7,433 |
| Retained earnings | 23,279 | 23,691 |
| Profit/loss for the financial year | -1,610 | 4,203 |
| Total | 29,168 | 35,327 |
2. Collaterals, commitments and other contingent liabilities
Lease commitments
| EUR 1,000 | 31 Dec 2009 | 31 Dec 2008 |
|---|---|---|
| Amounts payable during the next financial year | 261 | 352 |
| Amounts payable later | 129 | 314 |
| Total | 390 | 666 |
The leases the company has entered into generally run for a period of three years and contain no redemption commitments.
Rental commitments
| EUR 1,000 | 31 Dec 2009 | 31 Dec 2008 |
|---|---|---|
| Amounts payable during the next financial year | 2,248 | 2,097 |
| Amounts payable later | 11,952 | 12,577 |
| Total | 14,200 | 14,674 |
Guarantees
| EUR 1,000 | 31 Dec 2009 | 31 Dec 2008 |
|---|---|---|
| Bank guarantees due within one year | 607 | 281 |
| Bank guarantees due later | 157 | 206 |
| Total | 764 | 487 |
Contingent liabilities assumed on behalf of Group companies
In 2008 Comptel Corporation gave a performance guarantee, still in force, on behalf of its subsidiary. The total value of this agreement is 4 million US Dollars. Comptel gave a guarantee of 700 thousand UK Pound Sterling for its subsidiary in 2009.
Derivative instruments
| EUR 1,000 | 31 Dec 2009 | 31 Dec 2008 |
|---|---|---|
| Forward exchange contracts | ||
| Market value | -220 | -63 |
| Value of underlying instrument | 15,996 | 14,730 |
Forward exchange contracts are used for hedging purposes.
COMPTEL Financial Statements | Notes to the Financial Statements of the Parent Company, FAS
The share of Comptel Corporation is listed in the NASDAQ OMX Helsinki under the code CTL1V.
Comptel has one series of shares. Each share equals to one (1) vote at the Shareholders' General Meeting.
The share capital of the company has not changed during the year ended. The company's share capital on 31 December 2009 amounted to 2,141,096.20 euros, and the total number of shares was 107,054,810.
Authorisations to the Board of Directors
Authorisation to decide on share issues
The Annual General Meeting on 16 March 2009 granted to the Board of Directors an authorisation to decide on share issues and granting special rights entitling to shares. A maximum of 21,400,000 shares can be issued. A maximum of 10,700,000 of the company's treasury shares held by the company can be conveyed and/or received on basis of the special rights.
New shares may be issued and the company's treasury shares held by the company may be conveyed to the company's shareholders in proportion to their present shareholdings in the company; or waiving the pre-emptive rights of the shareholders, through a directed share issue if the company has a weighty financial reason to do so, such as using the shares to develop the company's capital structure, as financing or in implementing acquisitions or other arrangements or in implementing the company's share-based incentive program.
The Board of Directors was authorised to grant option rights and other special rights referred to in Chapter 10, Section 1 of the Companies Act, which carry the right to receive, against payment, new shares of the company or the company's treasury shares held by the company in such a manner that the subscription price of the shares is paid in cash or by using the subscriber's receivable to set off the subscription price.
The subscription price of the new shares and the consideration payable for the company's own shares shall be recognised under the invested non-restricted equity fund.
The authorisation to share issues is valid until 30 June 2010.
Authorisation to repurchase company's own shares
The Annual General Meeting granted the Board of Directors an authorisation to repurchase a maximum of 10,700,000 of the company's own shares for developing the company's capital structure, to be used in financing or implementing acquisitions or other arrangements, for implementing the company's share-based incentive programs or to be conveyed by other means or to be cancelled.
Based on this authorisation, a number of 211,350 own shares were purchased in 2009.
The authorisation to repurchase the own shares is valid until 30 June 2010.
Share option schemes
Comptel has currently two share option schemes.
Share option scheme 2006
The Annual General Meeting decided on 13 March 2006 to issue share options to the key personnel of Comptel Group, as well as to a wholly owned subsidiary of Comptel Corporation. It was decided to disapply the pre-emptive rights of existing shareholders, since the share options are intended as part of an incentive and commitment program for the key personnel.
The total number of share options issued is 4,200,000. Of the share options, 1,400,000 are marked with the symbol A, 1,400,000 are marked with the symbol B and 1,400,000 are marked with the symbol C. The share options may be exercised to subscribe to a maximum of 4,200,000 Comptel shares in total.
The current share subscription price for option 2006A is EUR 1.69 which corresponds to the trade volume weighted average quotation of the Comptel share on the Helsinki stock exchange during 1 April - 30 April 2006 deducted by the dividend paid, for option 2006B EUR 1.89 which corresponds to the trade volume weighted average quotation of the Comptel share on the Helsinki stock exchange during 1 April - 30 April 2007 and for option 2006C EUR 1.44 which corresponds to the trade volume weighted average quotation of the Comptel share on the Helsinki stock exchange during 1 April - 30 April 2008.
The share subscription period is for option 2006A, 1 November 2008 - 30 November 2010, for option 2006B, 1 November 2009 - 30 November 2011 and for option 2006C, 1 November 2010 - 30 November 2012.
As a result of the subscriptions, the share capital of Comptel Corporation may be increased by a maximum of 4,200,000 new shares or by a total of 84,000 euros. At the end of the financial year, 4,200,000 share options were distributed and these can be exercised to subscribe 4,200,000 shares of Comptel. A number of 810,000 of these share options were granted to Comptel's subsidiary Comptel Communications.
Comptel's 2006A share options were listed on Helsinki stock exchange commencing from 3 November 2008. The trading code for the share options 2006A is CTL1VEW106 and ISIN code is FI0009652390. In 2009, a number of 30,000 options were traded and the closing price was EUR 0.05.
Comptel's 2006B share options were listed on NASDAQ OMX Helsinki commencing from 2 November 2009. The trading code is CTL1VEW206 and ISIN code is FI4000005335. No options were traded in 2009.
Share option scheme 2009
The Annual General Meeting decided on 16 March 2009 to issue share options to the key personnel of the Comptel Group as a part of the incentive and commitment program.
The total number of share options issued is 4,200,000. Of the share options, 1,400,000 are marked with the symbol A, 1,400,000 are marked with the symbol B and 1,400,000 are marked with the symbol C. The share options may be exercised to subscribe to a maximum of 4,200,000 new shares in the company or existing shares held by the company. The share options now issued can be exchanged for shares constituting a maximum total of 3.8 per cent of the company's shares and votes of the shares, after the potential share subscription, if new shares are issued in the share subscription.
The share subscription price will be based on the prevailing market price of the Comptel share on the NASDAQ OMX Helsinki Ltd in April 2009, April 2010 and April 2011. The current share subscription price for Comptel share option 2009 A is EUR 0.63 per share, which corresponds to the trade volume weighted average quotation of the share on the NASDAQ OMX Helsinki during 1 April - 30 April 2009.
The share subscription period for stock options 2009A will be 1 November 2011 - 30 November 2013, for stock options 2009B 1 November 2012 - 30 November 2014 and for stock options 2009C 1 November 2013 - 30 November 2015.
The Board of Directors decides on the distribution of share options during the second quarters of 2009, 2010 and 2011. During 2009, a total of 1,250,000 share options 2009A have been distributed to the key personnel of Comptel Group. The rest of the 2009 share options have been granted to Comptel Communications Oy to be further distributed.
The Corporate Executives and other key persons belonging to the target group of the share based incentive plan 2009 - 2011 are not included in the share option scheme 2009.
Share-based incentive plans
The last earning period of share-based incentive plan 2006 - 2008 for the key personnel ended on 31 December 2008. The reward was based on the growth of net sales and on the development of operating profit. The reward for 2008 was paid in 2009 by transferring gratuitously 93,426 company shares and in cash, amounting to EUR 89,716. Beneficiaries are prohibited from transferring the shares within two years from the end of the earning period. There were 16 key persons in the plan at the end of 2008.
The Board of Directors approved a new share-based incentive plan in January 2009. The aim of the plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the company and to commit the key personnel to the company. The plan includes three earning periods, years 2009, 2010 and 2011. The Board of Directors decides on the earnings criteria at the beginning of each period. A two-year restriction period will follow each earning period, during which shares cannot be transferred. Should a key person's employment or service end during the restriction period, he/she must gratuitously return the shares paid as reward to the company.
The potential reward from the plan for the earning period 2009 will be based on the continuance of employment or service of a key person and on the Comptel Group's operating profit margin. There were 13 key persons in the plan at the end of 2009. The President and CEO of the Company belongs to the incentive plan provided that he holds at least 150,000 Comptel shares until 31 December 2012. The restriction periods of the rewards to be potentially paid to the President and CEO, on the basis of continuance of his service, will end in 2012 and 2013. A maximum amount in denomination of euro has been determined for the rewards of the President and CEO. The rewards to be paid on the basis of the plan will correspond to the value of a maximum total of five million Comptel shares.
Management interests
Members of the Board of Directors and the President and CEO hold:
- A total of 0.571 per cent of the company's outstanding shares and share options
- 0.420 per cent of the votes and share capital
- The share options can provide them with 0.182 per cent of the votes and share capital
Share trading data
| I Jan - 31 Dec 2007 | I Jan - 31 Dec 2008 | I Jan - 31 Dec 2009 | |
|---|---|---|---|
| Closing price, EUR | 1.42 | 0.69 | 0.78 |
| Highest price, EUR | 2.29 | 1.58 | 0.96 |
| Lowest price, EUR | 1.36 | 0.60 | 0.57 |
| Weighted average trading price, EUR | 1.85 | 1.28 | 0.69 |
| Shares traded, 1,000 shares | 57,547 | 30,480 | 35,838 |
| Shares traded, EUR million | 106.0 | 39.7 | 24.3 |
| Market capitalisation at the year end, EUR million | 151.7 | 73.8 | 83.3 |
COMPTEL Financial Statements | Shares and Shareholders
Shareholding by owner group on 31 Dec 2009
| Shares | % of total shares | |
|---|---|---|
| Companies | 21,749,752 | 20.3 |
| Financial and insurance companies | 43,561,021 | 40.7 |
| Public sector | 11,436,308 | 10.7 |
| Non-profit making entities | 365,882 | 0.3 |
| Private households | 23,054,704 | 21.5 |
| Foreign holding and nominee registered | 6,887,143 | 6.4 |
| Total number of shares | 107,054,810 | 100 |
Shareholding by number of shares on 31 Dec 2009
| Number of shares | Number of shareholders | % of shareholders | Number of shares | % of total shares |
|---|---|---|---|---|
| 1 – 100 | 2,152 | 11.0 | 136,033 | 0.1 |
| 101 – 500 | 11,803 | 60.6 | 2,184,488 | 2.0 |
| 501 – 1000 | 1,884 | 9.7 | 1,569,920 | 1.5 |
| 1001 – 5000 | 2,715 | 13.9 | 6,627,447 | 6.2 |
| 5001 – 10000 | 491 | 2.5 | 3,741,391 | 3.5 |
| 10001 – 50000 | 347 | 1.8 | 7,230,081 | 6.8 |
| 50001 – 100000 | 38 | 0.2 | 2,884,677 | 2.7 |
| 100001 – 500000 | 28 | 0.1 | 6,517,427 | 6.1 |
| 500001 – | 23 | 0.1 | 76,163,346 | 71.1 |
| Total | 19,481 | 100.0 | 107,054,810 | 100.0 |
Largest shareholders on 31 Dec 2009
| Shares | % of shares and votes | |
|---|---|---|
| I. Mandatum Life Insurance Company Limited | 19,569,925 | 18.28 |
| 2. Elisa Corporation | 14,304,000 | 13.36 |
| 3. OP-funds | 8,047,625 | 7.52 |
| OP-Finland Small Firms Fund | 4,661,802 | 4.35 |
| OP-Delta Fund | 2,085,823 | 1.95 |
| OP-Nordic Small Firm Fund | 1,300,000 | 1.21 |
| 4. Kaleva Mutual Insurance Company Group | 7,816,875 | 7.30 |
| Kaleva Mutual Insurance Company | 7,816,875 | 7.30 |
| 5. Varma Mutual Pension Insurance Company | 5,144,825 | 4.81 |
| 6. ABN AMRO funds | 4,953,173 | 4.63 |
| Alfred Berg mutual funds | 2,714,353 | 2.54 |
| ABN AMRO Small Cap Finland Fund | 1,416,223 | 1.32 |
| ABN AMRO Optimal Fund | 822,597 | 0.77 |
| 7. The State Pension Fund | 2,600,000 | 2.43 |
| 8. Aktia funds | 1,867,437 | 1.74 |
| Investment Fund Aktia Capital | 1,100,000 | 1.03 |
| Aktia Secura Fund | 517,437 | 0.48 |
| Fund Aktia Solida | 250,000 | 0.23 |
| 9. Etera Mutual Pension Insurance Company | 1,143,938 | 1.07 |
| 10. Forssan Seudun Puhelin Oy | 989,998 | 0.92 |
| 11. Erikoissijoitusrahasto Fourton Fokus Suomi | 895,961 | 0.84 |
| 12. Evli funds | 762,700 | 0.71 |
| 13. Ilmarinen Mutual Pension Insurance Company | 683,591 | 0.64 |
| 14. Veikko Laine Oy | 576,275 | 0.54 |
| 15. Etola Erkki | 555,000 | 0.52 |
COMPTEL Financial Statements | Shares and Shareholders
The Board of Directors' Proposal for the Distribution of Parent Company Profit
According to the parent company statement of financial position at 31 December 2009 the parent company's distributable funds were 29,167,506.81 euro.
The Board of Directors proposes to the Annual General Meeting the distributable funds be used as follows:
- dividend of 0.03 euro per share on the 106,570,656 shares outstanding which makes in total 3,197,119.68 euro
- to be left in equity 25,970,387.13 euro
Helsinki, 8 February 2010
Timo Kotilainen
Hannu Vaajoensuu
Olli Riikkala
Juhani Lassila
Petteri Walldén
Sami Erviö
President and CEO
Auditors' Report
To the Annual General Meeting of Comptel Corporation
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Comptel Corporation for the year ended on December 31, 2009. The financial statements comprise the consolidated statement of financial position, consolidated statement of comprehensive income, statement of changes in equity, statement of cash flows and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, statement of cash flows and notes to the financial statements.
The responsibility of the Board of Directors and the President and CEO
The Board of Directors and the President and CEO are responsible for the preparation of the financial statements and the report of the Board of Directors and for the fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the fair presentation of the parent company's financial statements and the report of the Board of Directors in accordance with laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the President and CEO shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Auditors' responsibility
Our responsibility is to perform an audit in accordance with good auditing practice in Finland, and to express an opinion on the parent company's financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. Good auditing practice requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements and the report of the Board of Directors are free from material misstatement and whether the members of the Board of Directors of the parent company and the President and CEO have complied with the Limited Liability Companies Act.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the
financial statements or of the report of the Board of Directors, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements and the report of the Board of Directors in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
The audit was performed in accordance with good auditing practice in Finland. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Opinion on the company's financial statements and the report of the Board of Directors
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
Opinion on the discharge from liability and disposal of distributable funds
The consolidated financial statements and the parent company's financial statements can be adopted and the members of the Board of Directors and the President and CEO of the parent company can be discharged from liability for the period audited by us. The proposal by the Board of Directors regarding the disposal of distributable funds is in compliance with the Limited Liability Companies Act.
Helsinki, February 8, 2010
KPMG OY AB
Pekka Pajamo, Authorized Public Accountant
This document is an English translation of the Finnish auditor's report. Only the Finnish version of the report is legally binding.
COMPTEL Financial Statements | The Board of Directors' Proposal for the Distribution of Parent Company Profit and Auditors' Report
Corporate Governance Statement 2009
Comptel Corporation complies with the Finnish Limited Liability Companies Act, other regulations concerning publicly traded companies, Comptel Corporation's own Articles of Association and the rules of NASDAQ OMX Helsinki Ltd. In addition, Comptel complies with the Finnish Corporate Governance Code issued by the Securities Market Association in 2008. The Corporate Governance Code is publicly available at www.cgfinland.fi.
Duties and responsibilities of executive bodies
The highest decision-making bodies in Comptel Corporation are shareholders at the General Meeting, the Board of Directors, and the President and CEO of the Group.
General Meeting
The highest decision-making power in Comptel Corporation is vested in the General Meeting. In the General Meeting, shareholders decide on the adoption of the financial statements, the use of the profit shown in the balance sheet, the discharge from liability of the Board members as well as the President and CEO, the number of Board members and the remuneration paid to the Board members and auditors. The General Meeting elects the Board members and, whenever necessary, the auditor and deputy auditors or the public accounting firm. In addition, any other business mentioned in the notice of the meeting is dealt with during the General Meeting.
The General Meeting of Comptel Corporation is summoned by the company's Board of Directors. According to the company's Articles of Association, the Annual General Meeting must be held each year before the end of June, on a date set by the Board.
Comptel Corporation's Annual General Meeting for 2009 was held on the 16th of March 2009. The documents concerning the Annual Meeting are available on the company's website at www.comptel.com.
Board of Directors
The duties and responsibilities of the Board of Directors are primarily defined by the Finnish Limited Liability Companies Act and the Articles of Association of Comptel Corporation. The Board of Directors controls and supervises the operational management of the company. The Board of Directors is responsible for ensuring that the company's accounting and financial management are properly organised.
The Board of Directors has confirmed the written charter that specifies the Board's duties, business to be handled, meeting practices and the decision-making processes. According to the written charter, the Board of Directors handles and decides on all matters that are financially, commercially or fundamentally significant to the Group's operations. The Board of Directors confirms the Group's strategy, budget, corporate structure, major corporate arrangements and investments. Furthermore, the Board of Directors approves and confirms the principles of risk management, appoints and discharges the President and CEO, and decides on the terms and conditions of employment for the President and CEO.
The Board of Directors regularly evaluates its own operations and working practices. The Board also carries out a self-assessment in relation to its operations and working practices once a year.
As specified in the Articles of Association, the General Meeting
elects a minimum of three and a maximum of six Board members. The Board members are elected for one year at a time so that the term of office for all Board members ends at the close of the following years Annual General Meeting. The Board of Directors elects a chairman and a vice chairman from among its members.
The Annual General Meeting for 2009 elected the following five Board members: Mr Timo Kotilainen, Mr Juhani Lassila, Mr Olli Riikkala (chairman), Mr Hannu Vaajoensuu (vice chairman) and Mr Petteri Walldén.
As a general rule, the Board of Directors convenes once a month and additionally, whenever necessary. In 2009 the Board of Directors convened 11 times (2008: 16). The average attendance of the members was 96 per cent (99).
All members of the Board are independent of the company and the company's significant shareholders.
Board Committees
There are two permanent committees within the Board of Directors: the Audit Committee and the Compensation Committee, both of which consist of three Board members. The Board of Directors elects the chairmen and the members of the committees from among its members for one year at a time. The Board of Directors has confirmed a written charter for the committees that lay down their key duties and operating policies.
The Audit Committee is the Board's preparatory body which focuses on matters relating to the company's financial reporting and control. The Committee makes sure that the company's financial reporting, accounting and financial management as well as external and internal audit and risk management systems are properly organised. The Committee is also responsible for keeping in contact with the auditor and assessing the auditors' performance.
In 2009 the Audit Committee convened 4 times (2008: 4). The average attendance of the members was 92 per cent (92). In its meeting held after the Annual General Meeting for 2009, the Board of Directors elected Mr Juhani Lassila as the Chairman and Mr Timo Kotilainen and Mr Petteri Walldén as members of the Audit Committee.
The Compensation Committee is the Board's preparatory body which assists the Board of Directors in matters relating to the terms and conditions of employment and remuneration for the senior management and prepares and develops the company's compensation systems.
In 2009 the Compensation Committee convened 1 time (2008: 4). The average attendance of the members was 100 per cent (100). In its meeting held after the Annual General Meeting for 2009, the Board of Directors elected Mr Olli Riikkala as the Chairman and Mr Timo Kotilainen and Mr Hannu Vaajoensuu as members of the Compensation Committee.
In addition, whenever needed, the Board may also set temporary working committees to prepare subjects for the Board. In 2009, there did not convene any working committee of the Board.
President and CEO
The President and CEO is responsible for ensuring that the company's accounting is legally arranged and that the company's financial management is reliably organised.
COMPTEL Annual Report | Corporate Governance Statement
The President and CEO is responsible for ensuring that the objectives, strategies, future plans, outlines and goals set by the Board of Directors are implemented and achieved by the Comptel Group. The President and CEO prepares the issues to be decided by the Board of Directors and executes the decisions made.
The President and CEO is appointed by the Board of Directors. The Board of Directors decides on the terms and conditions of President and CEO´s employment, including the salary, other compensations and fringe benefits that are defined in the CEO's contract of employment.
Comptel Corporation's President and CEO is Mr Sami Erviö.
Corporate Executives
The duty of the Corporate Executives is to assist the President and CEO. Corporate Executives include the directors of the business units and the units supporting business operations.
Comptel's management of business operations is based on the operations of the profit and cost units. Comptel Corporation's subsidiaries and affiliated companies operate within the respective business areas. The Corporate Executives are responsible for integrating the activities of the Group and its parts into an operating plan associated with the annual budget to implement the Group's strategies. During the year, the results of the operations relative to the budget and operating plan are reported monthly, and the causes of any deviations as well as the measures taken to correct them are properly documented.
In 2009, the Group Executives were, in addition to the President and CEO, the business area leaders Mr Harri Palviainen (Europe) until 26 August, Mr Mika Korpinen (Asia-Pacific), Mr Youssef Kermoury (Middle East and Africa) and Mr Ricardo Carreon (Americas), Mr Minesh Patel responsible for Global Alliances and Sales Development, Ms Arnhild Schia responsible for Strategic Marketing, Mr Simo Sääskilahti responsible for Products and Solutions, Mr Gareth Senior (CTO), Mr Markku Pirskanen (CFO as of 20 April, Mr Veli Matti Salmenkylä until 15 March), Ms Niina Pesonen, responsible for Human Resources, and Mr Markku Järvenpää responsible for Global Operations Support.
In 2009 the Corporate Executives convened 6 times (11).
Insider administration
Comptel complies with the insider guidelines of NASDAQ OMX Helsinki Ltd. In accordance with the Securities Market Act, Comptel maintains a register containing information on the so-called insiders with the duty to declare, in the SIRE system of Euroclear Finland Ltd. Insiders comprise permanent insiders and project-specific insiders.
At the end of 2009, there were 17 insiders with the duty to declare (14) and 83 company-specific permanent insiders (84). The insiders with the duty to declare include the members of the Board of Directors, the CEO, Corporate Executives and the principal auditor.
Comptel's insiders are obliged to comply with the so-called closed window rule which starts three weeks prior to the announcement of an interim report and financial statements and ends 24 hours after the announcement of such. Comptel does not apply the 'open window' rule.
An updated list of the insiders with the duty to declare, their connections and their holdings is available on the company's website.
Auditing
According to the Finnish Auditing Act, statutory audits comprise the auditing of the accounts, financial statements, Board's report and administration. The General Meeting must be provided with an auditor's report including an opinion on whether the financial statements give correct and sufficient information about the Group's result and financial position at the close of the financial year. The auditors report to the Board of Directors on their work and observations.
KPMG Oy Ab acts as the auditors of Comptel, Mr Pekka Pajamo (APA) being the principal auditor.
Communications
All essential information concerning Comptel's corporate governance as well as the stock exchange and press releases are published on the company's website.
The main features of the internal control and risk management systems pertaining to the financial reporting process
Objectives of internal control
Internal control comprises all processes that are designed to provide reasonable assurance regarding the achievement of the company's objectives in the following matters: the efficiency of operations, cost-effective use of resources, reliability of financial reporting and compliance with the laws and regulations as well as the internal principles policies.
Internal control is an essential part of Comptel's corporate governance. Comptel's Board of Directors, management and other personnel take part in internal control processes.
The objective of Comptel's internal control is to ensure that:
- the company's operations are efficient and profitable
- financial and operational information is reliable
- the entire Group complies with the regulations and policies.
Internal control is not a separate process, but it is integrated into the company's day-to-day operations. Internal control covers all of Comptel processes, policies and organisational structures that help to ensure that the company is achieving its objectives, that the business conduct is ethical, that the assets are managed responsibly and that financial reporting is organised properly. It includes for example reporting, approval practices and information on the compliance with the policies.
Control environment
The foundation of Comptel's internal control is its values: Reliability, Professional Excellence, Responsibility and Fairness. The company has also approved the code of conduct that guides the Group's operations. The values and the code of conduct are reflected in the day-to-day operations as well as in the internal guidelines, processes and practices, thus developing the corporate culture.
Comptel's management system is based on performance management. The strategy process controls the establishment of objectives. The annual Group-level financial and other targets are translated into targets for business and other units. Target setting is an integral part of each employee's performance management in Comptel. Duties and responsibilities are given in accordance with the strategy to promote the company's objectives.
The achievement of the Group's and individual business units' annual objectives is followed up through monthly management reporting. The Corporate Executives also regularly follow up on the reliability of the company's financial reporting. Comptel's financial reporting uses an ERP system. The Group's Financial Administration monitors the realisation of internal and external accounting and reconciles the possible differences between the two.
Comptel applies the International Financial Reporting Standards (IRFS). Ensuring the reliability of financial reporting requires good organisation of the financial administration and accounting systems. The financial reporting process is monitored by the Board of Directors' Audit Committee. In connection with the statutory audit, the auditor reviews the control environment of the financial reporting as part of auditing the administration.
Risk assessment
Risk management is an important part of Comptel's internal control. The two are integrated on the process level. Risk management refers to a systematic process to identify, evaluate and control risks due to external factors as well as risks arising from the Group's own activity.
Comptel's risk management system aims at minimising the detrimental impacts of risks on the Group's profit. The Board of Directors has ratified the principles of risk management defining the risk management objectives and general practices, and also the tasks and responsibilities connected with risk management.
The Chief Financial Officer is in charge of coordinating risk management within the Group. As a general rule, the business units are responsible for identification and management of any and all risks that have an impact on their operations. Risk evaluation and management are an important part of the Group's annual business planning and strategy process, budgeting, as well as the preparatory and decision-making processes connected with commercial offers, agreements and investments and other operative activities.
In addition, the risk management system is based on monthly reports that are used to track the development of the financial position, net sales, profitability, orders, deliveries, trade receivables, order backlog and order flow, which in turn enable monitoring the development of the entire Group's results. The internal reporting is carried out by business units during the meetings of the Corporate Executives and in the audits of the Group's support functions.
Control activities
Comptel's internal control system includes human resources management policies, such as compensation and benefits, personnel development, recruitment and resourcing management. Individual objective and appraisal processes enable the evaluation of employees' performances on an individual level. The Human Resources function is responsible for maintaining and developing the company's HR processes.
Comptel has confirmed the corporate approval rights. The Delegation of Authority defines the situations requiring prior approval, authorisation to sign agreements, procurement rights and approval practices concerning payments. The Accounting Manual contains the charts of account and guidelines on the use of expense accounts for those approving invoices.
Comptel's Quality System defines the company's key processes and duties as well as the related roles, responsibilities, guidelines, documentation, best practice policies and quality indicators. Comptel's customer deliveries, software development and development of internal processes comply with the project management process which is described in the company's quality management guidelines.
Revenue recognition for long-term customer projects is essential in defining Comptel's net sales and profit. The percentage of completion method, and control points have been internally defined and approved. Managing, controlling and monitoring the key process of project related revenue recognition is essential for the business.
Information and communication
The internal control system needs sufficient and reliable communication within the organisation. The Corporate Executives follow up on the achievement of the company's financial and other objectives in regular meetings. The Financial Administration is responsible for preparing monthly reports and regularly updating the financial forecast. The Group uses a common reporting system.
The company's guidelines and manuals are available to all employees on the Group's intranet. The Corporate Communications is responsible for the internal communication channels and for Comptel's external communications.
Monitoring
Monitoring refers to processes that are used to assess Comptel's system of internal control and its performance. Monitoring is performed both on an ongoing basis and through separate evaluations including quality audits, internal and external audits.
The quality audits are carried out by the company's internal quality organisation in accordance with the annual plan.
An internal audit is carried out according to the annual plan in which the auditing targets are defined. The actual audit is executed in chosen locations based on a prepared auditing plan. The audit focuses on the assessment of business operations, the implementation and realisation of financial and administrative processes in practice, and the compliance of good corporate governance. The audit also ensures the compliance of all permissions, reports and obligations.
Within Comptel Corporation, internal audits belong to the Financial Administration's responsibilities, and it is primarily carried out by the company's own personnel. Whenever necessary, external experts are used to complement the audit activities. The internal audit is reported to the Board of Directors' Audit Committee.
The external auditor verifies that the company's annual accounts are correct and monitors the company's quarterly reporting. In addition, the auditors report to the Board of Directors in an ongoing fashion regarding the administration and operations.
Board of Directors
OLLI RIIKKALA,
born 1951, M.Sc. (Engineering), MBA
Chairman of the Board since 2005
Professional experience
GE Healthcare
Senior Advisor, 2004 - 2006
Senior Executive, 2003 - 2006
CEO GEMS/IT Europe, Middle East and Africa, 2003 - 2004
Instrumentarium Corporation
Member of the Board of Directors, 1987 - 2003
President and CEO, 1997 - 2003
Executive VP, 1995 - 1997
Executive Director, Health Care Group, 1990 - 1997
Several managerial positions in 1979 - 1990
Board memberships
Nexstim Oy, Deputy Chairman of the Board, 2009 -
Tieto Corporation, Vice Chairman of the Board, 2008 -, Member, 2004 -
Fastems Oy Ab, Chairman of the Board, 2007 -
Helvar Oy Ab, Chairman of the Board, 2007 -
Oriola-KD Corporation, Chairman of the Board, 2006 -
Instrumentarium Scientific Foundation, Member, 2004 -
Helvar Merco Oy Ab, Chairman of the Board, 2004 -, Member, 1999 -
Biomedicum Foundation, Member, 2000 -
HYKS-Instituutti Oy, Member, 2000 -
Appointed into the Finnish Academy of Technology, 2002
Comptel shares: 111,183
HANNU VAAJOENSUU
born 1961, M.Sc. (Economics)
Vice Chairman of the Board since 2005
Professional experience
Basware Corporation
Chairman of the Board, 2010 -
Full-time Chairman of the Board, 2005 - 2010
CEO, 1999 - 2004
Partner, Executive Director, 1991 - 1999
Consulting Director, 1990 - 1991
Consultant, 1987 - 1990
Execuplan Oy, Software Specialist, 1985 - 1987
Board memberships
Basware Corporation, Member of the Board, 1990 -, Chairman 2005 -
Inventure Oy, Member of the Board, 2009 -
Nervogrid Oy, Member of the Board, 2009 -
Praha Plc, Member of the Board, 2009 -
Efecte Corp., Chairman of the Board, 2008 -, Member, 2005 -
Profit Software Oy, Chairman of the Board, 2008 -
Biocomputing Platforms Ltd Oy, Member of the Board, 2008 -
Sede Oy, Chairman of the Board, 2007 -
Comptel shares: 50,501
The holdings of board members and corporate executives are as per 31 December 2009. Up-to-date information on ownership is available at www.comptel.com/investors.
TIMO KOTILAINEN
born 1959, M.Sc. (Engineering)
Member of the Board since 2005
Professional experience
Nixu Oy, Managing Director, 2006 -
Nokia Networks
Vice President, Head of the EMEA Customer Business Team, 2002 - 2003
Director, Head of the Nordic Customer Business Team, 2001 - 2002
Director, Mobile Internet Applications, Head of the Marketing and Sales, 2000 - 2001
Sales Director and General Manager, South Europe, 1998 - 2000
Sales Director and General Manager, North Europe, 1996 - 1998
Account Manager, Finland, 1993 - 1996
Hewlett-Packard Oy, Account Manager, 1991 - 1993
Solid Information Technology, Sales Manager, 1990 - 1991
Praha Oyj, Consultant, 1987 - 1990
Comptel shares: 38,143
JUHANI LASSILA
born 1962, M.Sc. (Economics)
Member of the Board since 2006
Professional experience
Agros Oy, Managing Director, 2005 -
GE Healthcare, Finance integration leader for Instrumentarium Corporation and GEMS/IT, 2003 - 2004
Instrumentarium Corporation
Director of Group Finance and Group Treasury, 1999 - 2004
Group Treasurer, 1996 - 1999
Postipankki Oy, Financial analyst, 1988 - 1996
Instrumentarium Corporation, Investment Analyst, 1987 - 1988
Board memberships
Lassila & Tikanoja plc, Vice Chairman of the Board, 2007 -, Member, 2001 -
Suominen Yhtymä Oy, Member of the Board, 2005 -
Evald and Hilda Nissi Foundation, Chairman of the Board, 2003 -
Comptel shares: 33,986
PETTERI WALLDÉN
born 1948, M.Sc. (Engineering)
Member of the Board since 2009
Professional experience
Alteams Oy, President and CEO, 2007 -
Onninen Oy, President and CEO, 2001 - 2005
Ensto Oy, President and CEO, 1996 - 2001
Nokia Cables Ltd, President and CEO, 1990 - 1996
Sako Ltd, President, 1987 - 1990
Nokia Cables Ltd, General Manager, 1983 - 1986
Board memberships
Teleste Corporation, Member of the Board, 2009 -
Tikkurila Oy, Member of the Board, 2008 -
Kuusakoski Group Oy, Member of the Board, 2007 -
Empower Oy, Member of the Board, 2007 -
Nokian Tyres Oyj, Chairman of the Board 2006 -, Member, 2005 -
eQ Oyj, Member of the Board, 2005 -
S.E. Mäkinen Logistics Oy, Member of the Board, 1995 -
Comptel shares: 16,000
COMPTEL Annual Report | Board of Directors
Corporate Executives
As of January 2010
SAMI ERVIÖ
born 1962, M.Sc. (Engineering), MBA
President and CEO of Comptel since 2005.
Held several specialist and senior management positions in Instrumentarium in 1987 - 2005, such as sales, marketing and R&D in Datex-Ohmeda division and as Business Development Director of Instrumentarium Corporation. His latest positions were Managing Director of subsidiary Deio, which provides IT systems for healthcare, and General Electric's European Integration Director for Instrumentarium.
Comptel shares: 200,000; share options 2006: 210,000
SIMO SÄÄSKILAHTI
born 1971, M.Sc. (Engineering Physics; Economics)
Senior Vice President, Products and Solutions, Deputy CEO
Joined Comptel in 2001, Corporate Executive since 2003. Has previously worked as Head of Convergent Charging Business, as CFO and as Corporate Planning Manager. Before joining Comptel worked as Management Consultant at McKinsey & Company.
Comptel shares: 39,127; share options 2006: 30,000
MARKKU JÄRVENPÄÄ
born 1958, M.Sc. (Engineering)
Senior Vice President, Global Operations Support
Joined Comptel in 2000, Corporate Executive since 2005. Has previously worked as Head of Customer Services and Technology, as Head of EDB Telecom integration, as head of Provisioning Business and as IT Manager. Before joining Comptel worked as IT Manager in Oy Suomen Michelin Ab and as IT Project Manager in Michelin SA, Switzerland.
Comptel shares: 27,549; share options 2006: 30,000
YOUSSEF KERMOURY
born 1970, B.Sc. (Computer Science)
Senior Vice President, Middle East and Africa
Joined Comptel in 1996, Corporate Executive since 2009. Has previously worked as Head of Global Services and Regions, as Head of Technical Consultation and Training Services, as Head of Consultation Services and as Head of Customer Services APAC.
Comptel shares: 3,500; share options 2006: 50,000
TIMO KOISTINEN
born 1957, M.Sc. (Engineering)
Senior Vice President, Europe
Joined Comptel in 2010, Corporate Executive since 2010. Has previously held various senior sales management and business development positions in Nokia Siemens Networks since 1997. Before that worked in Hewlett-Packard in sales and sales management positions.
No holding in Comptel
MIKA KORPINEN
born 1961, Engineer of Telecommunications
Senior Vice President, Asia-Pacific
Joined Comptel in 2001, Corporate Executive since 2009. Has previously worked as Head of Asia-Pacific region, as Head of Hong Kong office and as Sales Director of North Asia. Before joining Comptel has worked as Senior Manager at Elcoteq Asia Ltd. in Hong Kong and as General Manager of Tecnomen in Hong Kong.
Comptel shares: 2,659; share options 2006: 30,000
MINESH PATEL
born 1964, Honours degree in Chemistry & Biochemistry
Senior Vice President, Global Alliances & Sales Development
Joined Comptel in 2008, Corporate Executive since 2009. Has previously worked in Axiom Systems as Executive Vice President of world wide operations 2001 - 2008. Has also worked at Micromuse (IBM) and at Application and Telecoms Division of Oracle.
Comptel share options 2006: 10,000
NIINA PESONEN
born 1965, M.Sc. (Social and Behavioural)
Senior Vice President, Human Resources
Joined Comptel in 2007, Corporate Executive since 2007. Has previously held several HR management and development positions in Nokia 1992 - 2007. Her latest positions were Business HR Director for the Delivery Operations of Nokia Networks and HR Head for North East Region in Nokia Siemens Networks.
Comptel shares: 4,432; share options 2006: 10,000
MARKKU PIRSKANEN
born 1964, M.Sc. (Economics)
Chief Financial Officer
Joined Comptel in 2009, Corporate Executive since 2009. Has previously worked as the CFO and Director of Project Sales unit in Finlayson Oy, as CFO of F-Secure Corporation and as Financial Director of Santasalo-Jot Oy.
Comptel shares: 7,000
ARNHILD SCHIA
born 1963, Master degree in Computer Science, diploma of Business Management
Senior Vice President, Strategic Marketing
Joined Comptel in 2005, Corporate Executive since 2005. Has previously worked as Head of South and West Europe, Asia-Pacific and Americas and as Head of Market Development. Before joining Comptel worked as President and CEO of EDB Telecom AS and Incatel AS, and as EVP of Telesciences Inc.
Comptel shares: 36,075; share options 2006: 30,000
GARETH SENIOR
born 1970
Chief Technology Officer
Joined Comptel in 2008, Corporate Executive since 2008. Has previously worked at Axiom Systems as CEO in 2004 - 2008 and as CTO in 2000 - 2004. Has 20 years experience of IT development, of which 15 years working directly for National Carriers with a focus on Service Fulfillment.
Comptel shares: 4,432; share options 2006: 110,000
COMPTEL Annual Report | Corporate Executives
Shareholder Information
Annual General Meeting
The Annual General Meeting of Comptel shareholders will be held at the Finlandia Hall, terrace hall, Mannerheimintie 13 e, 00100 Helsinki starting at 2 pm on Monday, 22 March 2010.
Shareholders intending to attend the Meeting shall notify the company thereof by 10 am Finnish time on 17 March 2010, either writing to Comptel Corporation, P.O.Box 1000, FI-00181 Helsinki, Finland or by telephone at +358 9 700 11793, or by telefax at +358 9 700 11224 or by email to [email protected].
Shareholders registered on Wednesday 10 March 2010 in the Company's Shareholder Register maintained by Euroclear Finland Ltd shall have the right to attend the Annual General Meeting. Any proxies shall be sent to the above address together with the notification.
Dividend and financial statements
The Board of Directors has decided to propose to the Annual General Meeting that a dividend of 0.03 euros per share be paid for year 2009. The dividend decided by the Annual General Meeting will be paid to shareholders registered on 25 March 2010 in the Company's Shareholder Register maintained by the Euroclear Finland Ltd. The Board of Directors proposes to the Annual General Meeting that the dividend be paid on 14 April 2010.
The financial statements and the proposals of the Board of Directors are available on Comptel Corporation's website at www.comptel.com from 1 March 2010. Copies of the documents will be sent to shareholders upon request, tel. +358 9 700 11793.
Changes of name and address
Shareholders should notify the book-entry securities register where their book-entries are registered of any changes in name and/or address.
Publication of interim reports 2010
- January - March, Thursday, 22 April
- January - June, Thursday, 22 July
- January - September, Tuesday, 26 October
Comptel publishes its interim reports, financial statements and annual reports in English and Finnish. The financial reports are available on Comptel's website at www.comptel.com under Investors. They may also be ordered by email ([email protected]) or by phone (+358 9 700 11793).
Investor contacts
Samppa Seppälä, Director,
Investor Relations and Corporate Communications
Tel. +358 9 700 1131, fax +358 9 700 11375
Email: [email protected]
Annual Summary
Stock Exchange Releases of Comptel Corporation in 2009
| Expiry of Comptel Corporation's 2001 Share Options | 2 January |
|---|---|
| Comptel to Start Personnel Negotiations for Reducing Costs | 8 January |
| The Board of Directors of Comptel Corporation Resolved on an Incentive Plan for Key Personnel | 20 January |
| Comptel Concludes Personnel Negotiations | 9 February |
| Notice of Annual General Meeting | 12 February |
| Comptel Corporation's Financial Statements for 2008 | 12 February |
| Comptel Share Incentives | 19 February |
| Markku Pirskanen Has Been Nominated as the New CFO | 23 February |
| Comptel's Annual Report 2008 Published | 6 March |
| Resolutions Passed by Comptel Corporation's Annual General Meeting | 16 March |
| Interim Report of Comptel Corporation 1 January - 31 March 2009 | 29 April |
| Share Subscription Price with Comptel Share Options 2009A and Market Value of the Option Serie 2009A | 8 May |
| Comptel Has Received a Major Order in India | 22 July |
| Interim Report of Comptel Corporation 1 January - 30 June, 2009 | 29 July |
| Changes in Comptel Corporation Executive Management | 26 August |
| Interim Report of Comptel Corporation 1 January - 30 September 2009 | 28 October |
| Comptel Corporation's Share Options 2006B Will Be Listed | 30 October |
| Comptel's Financial Reporting and Annual General Meeting in 2010 | 4 November |
| Changes in the Management of Comptel Corporation | 27 November |
| Repurchase of Comptel Corporation's Own Shares | 2 December |
| The Date of Comptel's Annual General Meeting | 21 December |
Comptel Corporation's stock exchange releases are available on Comptel's website at www.comptel.com.
COMPTEL Annual Report | Shareholder Information and Annual Summary
Contact Information
Helsinki, Finland
Headquarters
Comptel Corporation
P.O.Box 1000, FI-00181 Helsinki
Visiting address:
Salmisaarenaukio 1
Tel. +358 9 700 1131
Fax +358 9 700 11375
Oslo, Norway
P.O.Box 519, N-1327 Lysaker
Visiting address:
Amstein Arnebergsvei 28
Tel: +47 815 55 880
Bergen, Norway
Bredalsmarken 15
N-5006 Bergen
Tel. +47 815 55 880
Fax +47 55 36 96 02
Bodø, Norway
Jernbaneveien 69
N-8002 Bodø
Tel. +47 815 55 880
Fax +47 75 53 32 77
Lillehammer, Norway
Vormstuguveden 40
N-2624 Lillehammer
Tel. +47 815 55 880
Fax +47 61 26 26 27
Reading, UK
69 Suttons Business Park
Sutton Park Avenue
Earley, Reading, RG6 1AZ, UK
Tel. +44 (0) 118 929 4000
Milan, Italy
Via Vincenzo Monti, 8
20123 Milano, Italy
Tel. +39 02 46712296
Moscow, Russia
Ul. Staraya Basmannaya, 38/2
105066 Moscow, Russia
Tel. +7 903 660 6537
Dubai, United Arab Emirates
Dubai Internet City
Building # 16, Office 133
Dubai, United Arab Emirates
Tel. +971 4 361 6810
Fax +971 4 368 6850
Cape Town, South Africa
19 Highgrove, Tokai Road, Tokai
7945, Cape Town, South Africa
Tel. (mobile) +27 796 736 247
Kuala Lumpur, Malaysia
L5-E-6, Enterprise 4
Technology Park Malaysia
Bukit Jalil, 57000 Kuala Lumpur
Malaysia
Tel. +603 8995 6222
Fax +603 8996 1888
Beijing, China
Air China Plaza Room 809
Xiaoyun Road No 36
Chaoyang District (100027)
Beijing, China
Tel. +86 10 8447 5050
Fax +86 10 8447 5060
Hong Kong, China
Room 1005, 10th Floor
Jubilee Center, 18 Fenwick Street
Wanchai, Hong Kong
Tel. +852 2530 0879
Fax +852 2530 0325
New Delhi, India
CS3, 5th Floor, Lobe No. 1
The Corenthum
A-41 Sector 62
Noida 201307, UP India
Tel. +91 120 3005500
Fax +91 120 4280560
Sydney, Australia
Level 12, Suite 16
100 Walker Street
North Sydney, NSW 2060
Australia
Tel. +61 2 9956 7855
Fax +61 2 9956 7955
São Paulo, Brazil
World Trade Center São Paulo
Av. das Nações Unidas
12.551 - 9° andar
Cep: 04578-903 - São Paulo - Brasil
Tel. +55 11 3443-7459
Fax +55 11 3443-7607
Buenos Aires, Argentina
Victoria Ocampo 360 - piso 3
C1107BGA Buenos Aires
Argentina
Tel. +54 11 4515 6300
Fax +54 11 4515 6301
México City, Mexico
Blvd. Manuel Ávila Camacho 36
Piso 10 y 12
Col. Lomas de Chapultepec
11560 México, D.F.
Tel. +52 55 9171 1652
Arlington, Virginia, USA
1655 North Fort Myer Drive
Suite 700, Arlington, Virginia
22209 USA
Tel. +1 703 351 1141
Fax +1 703 351 1143
641
374
Printed in USA
COMPTEL
Comptel Corporation
Salmisaarenaukio 1
P.O.Box 1000, FI-00181 Helsinki
Tel. +358 9 700 1131
Fax +358 9 700 11375
www.comptel.com
Time to Market | Reliable Delivery | Value for Money | Partners for the Future