AI assistant
ComTel SpA — Interim / Quarterly Report 2012
Apr 20, 2012
9984_rns_2012-04-20_1571951d-daaf-4c5b-ba7b-7139257d15af.html
Interim / Quarterly Report
Open in viewerOpens in your device viewer
Interim Report of Comptel Corporation for January - March 2012
Interim Report of Comptel Corporation for January - March 2012
Comptel Corporation Stock exchange release, 20 April 2012 at 8.30 am
Net sales grew significantly from the previous year; results were impacted by
an impairment loss and investments for growth.
-- Net sales EUR 19.9 million (January - March 2011: 16.8), growth 18.4%
-- Operating result EUR -12.0 million (-0.2), of which impairment loss EUR
10.2 million
-- Operating result excluding impairment loss EUR -1.9 million (-0.2)
-- Earnings per share EUR -0.10 (-0.02)
-- Order backlog EUR 41.1 million (34.6)
As stated earlier, in 2012 Comptel net sales are estimated to grow over 10 per
cent from the previous year. Following the impairment loss, operating result is
estimated to remain negative. Operating profit excluding one-off items is
estimated to represent 5 - 10 per cent of net sales. Characteristically a
significant part of Comptel's operating profit and net sales is generated in
the second half of the year.
Juhani Hintikka, President and CEO:
”In the first quarter Comptel's business proceeded favourably as net sales grew
significantly from the previous year, according to our expectations. We also
managed to turn the Europe East region back on a growth track.
In line with our stated strategy, we continued to invest for growth and this
decreased our operative profitability. The one-off costs relating to rebranding
and marketing, the arbitration of the Cisco dispute and the Xtract acquisition
increased our costs during the period under review. Subcontracting related to
delivery projects and low license sales in the first quarter also declined the
profitability. We will continue our efforts to bring new products into the
market in order to increase the share of license sales. However, our total
costs were exceptionally high during the quarter and we have taken measures to
decrease our cost level.
We took a major step in executing our strategy by acquiring a leading customer
analytics company, Xtract. The transaction completes our
‘event-analysis-action' vision to help operators analyse events from the
network and transform them into relevant and timely actions. The acquisition
has been very favourably received by our customers and business integration has
progressed as planned. By driving real-time business decisions telecom
operators can provide value to their customers and operations.
Our operating result was impacted by an impairment loss, which we recorded
following a change in our allocation method of goodwill.
After the reporting period, Comptel and Cisco have settled their dispute
concerning the Axioss software which was under arbitration. In accordance with
the settlement, the parties have agreed to withdraw all their claims against
each other and the arbitration process has been terminated. It has been agreed
that no financial compensation will be made between the parties.”
Business Review of the First Quarter 2012
Comptel's net sales grew in the first quarter by 18.4 per cent from the
previous year, to EUR 19.9 million (16.8). Project deliveries increased the
Group's net sales. License sales remained low in the period under review.
Comptel changed the allocation method of goodwill during the first quarter of
the year. Due to the change, an impairment testing was carried out on a new
cash generating unit level. Previously, it had not been possible to allocate
goodwill specifically to any segment or cash generating unit. As a result of
impairment testing Comptel recorded an impairment loss of EUR 10.2 million in
the first quarter result.
Following the impairment loss, the operating result for the period was EUR
-12.0 million (-0.2), which corresponds -60.4 per cent of net sales (-0.9).
Operating result excluding impairment loss was EUR -1.9 million (-0.2).
Compared to the previous year, the share of service sales increased
significantly and affected subcontracting costs. Also, the one-off costs
relating to rebranding and marketing, the arbitration of the Cisco dispute and
the acquisition decreased the operative profitability of the period. The
company continued to invest in sales and service organisation and R&D.
Comptel's total costs were exceptionally high during the quarter and the
company has taken measures to decrease the cost level.
Loss before taxes was EUR 12.5 million (0.3) and net loss was EUR 10.4 million
(1.6). Earnings per share for the period under review were EUR -0.10 (-0.02).
Tax expense for the period was EUR -2.1 million (1.3), of which EUR 0.5 million
were withholding taxes. In connection with the impairment of goodwill a change
of EUR 2.5 million was booked in deferred tax liabilities. The cumulative
amount of outstanding, non-credited withholding taxes payment since 2004 is EUR
8.2 million.
The Group's order backlog grew from the previous year and was EUR 41.1 million
(34.6) at the end of the period. Maintenance agreements represent EUR 24.3
million (20.8) and other order backlog EUR 16.8 million (13.8) of the total.
During the period under review, Comptel Corporation acquired Xtract Oy, a
Finnish software company specialising in analytics, for a total consideration
of EUR 3.1 million (enterprise value). By combining the leading analytics
capabilities with its existing software, Comptel will this year create an
offering which will enable operators to react quickly to events from the
network and transform them automatically into relevant and timely actions that
improve customer experience.
Xtract has approximately 20 customers including telecom operators AVEA in
Turkey, DNA in Finland, Megafon in Russia and TeliaSonera in Finland as well as
insurance company If, retail and media companies. Xtract's net sales were EUR
2.4 million in 2011. Xtract has 27 highly skilled employees. Xtract Group was
consolidated into Comptel Group financials as of 10 February 2012. The
acquisition was financed through Comptel Corporation's liquid assets. The 20
Xtract employees working in Finland have moved to Comptel office in Helsinki
and globally as part of Comptel organisation.
Business areas
Net sales, 1-3 2012 1-3 2011 Change, 2011
EUR million %
Europe East 3.9 2.8 36.4 12.9
Europe West 5.0 3.8 31.4 19.1
Asia Pacific 4.5 6.2 -27.8 21.1
Middle East and Africa 3.8 2.6 50.1 13.7
Americas 2.7 1.4 95.8 9.9
Total 19.9 16.8 18.4 76.8
Operating result,
EUR million
Europe East 1.3 0.4 209.0 2.2
Europe West 2.2 2.0 10.2 11.4
Asia Pacific 2.0 4.4 -54.8 11.9
Middle East and Africa 1.1 0.8 30.3 5.5
Americas 1.5 0.6 160.9 5.7
Unallocated costs -20.1 -8.3 141.0 -25.0
Total -12.0 -0.2 7,765.7 11.6
Operating result,
% of net sales
Europe East 34.8 15.4 - 16.9
Europe West 44.0 52.4 - 60.0
Asia Pacific 43.6 69.8 - 56.5
Middle East and Africa 28.2 32.5 - 39.8
Americas 54.8 41.1 - 56.9
Total -60.4 -0.9 - 15.1
Net sales grew significantly in all regions except Asia Pacific where a major
license deal was booked in the previous year. Following the growth of net
sales, the proportional profitability improved in Europe East and in the
Americas.
In January - March, Comptel received 3 significant orders (3), 2 policy control& charging and 1 managed services. As significant orders Comptel reports sold
projects and licenses with a value of EUR 500,000 at the minimum.
Net sales breakdown, 1-3 2012 1-3 2011 Change, % 2011
EUR million
Licenses 3.0 5.7 -47.4 21.1
Services 8.8 3.2 172.8 22.9
Maintenance agreements 8.1 7.9 2.8 32.7
Total 19.9 16.8 18.4 76.8
License sales remained low which impaired the profitability. A major part of
net sales consisted of project deliveries, which considerably increased the
share of services. Maintenance revenue consists of maintenance and support of
the delivered systems.
Net sales by sales channel, 1-3 2012 1-3 2011 Change, % 2011
EUR million
Direct sales 15.8 13.9 13.5 57.1
Partner sales 4.1 2.9 41.9 19,6
Total 19.9 16.8 18.4 76,8
The share of partner sales increased from the previous year.
Financial Position
EUR million 31 March 31 Dec Change, 31 March Change,
2012 2011 % 2011 %
Statement of financial 62.8 71.8 -12.5 74.9 -16.1
position total
Liquid assets 6.8 9.4 -27.5 9.2 -25.7
Trade receivables, gross 25.8 26.7 -3.4 22.1 16.5
Bad debt provision -0.8 -0.7 21.5 -0.6 41.4
Trade receivables, net 24.9 26.0 -4.1 21.5 15.8
Accrued income 12.7 10.2 24.0 8.0 58.4
Deferred income related to 1.5 2.1 -28.9 1.7 -15.1
partial debiting
Interest-bearing debt 3.0 0.1 4,378.1 0.1 3,041.4
Equity ratio, per cent 56.9 66.6 -14.5 67.1 -15.2
The impairment loss was reflected in statement of financial position total
which was EUR 62.8 million. The acquisition of Xtract Oy decreased the liquid
assets which were EUR 6.8 million at the end of the period. Operating cash flow
was EUR -0.7 million (3.1) in the first quarter.
The trade receivables were EUR 24.9 million (21.5) at the end of the period.
The accrued income was EUR 12.7 million (8.0). The deferred income related to
partial debiting was EUR 1.5 million (1.7).
Comptel Corporation withdrew a loan of EUR 2.0 million during the review
period. The company has available a revolving credit facility of EUR 15.0
million maturing in the year 2013. The equity ratio was 56.9 per cent (67.1)
and the gearing ratio was -13.1 per cent (-20.8).
Research and Development (R&D)
EUR million 1-3 2012 1-3 2011 Change, 2011
%
Direct R&D expenditure 5.2 3.9 34.4 15.4
Capitalisation of R&D expenditure -1.5 -1.0 51.3 -4.0
according to IAS 38
R&D depreciation and impairment charges 0.6 0.9 -29.9 3.4
R&D expenditure, net 4.3 3.8 14.5 14.8
Direct R&D expenditure, % of net sales 26.0 22.9 - 20.1
R&D expenditure increased from the previous year as Comptel actively developed
new products for the market. Investments in R&D will increase the expenditure
this year. Direct R&D expenditure represented 26.0 per cent (22.9) of net
sales.
Comptel's R&D expenditure was mainly targeted at the service fulfillment
automation of telecom operators and to the management and analysis in real-time
of rapidly increasing data traffic. Comptel seeks market leadership in these
areas where key business challenges of operators will be solved. In addition,
the company is developing an integrated software platform, which will enable a
cost-efficient and solution-based R&D.
This year, the company focuses on developing its offering within the
Fulfillment, Policy Control & Charging and Intelligent Customer Interaction
product areas. In Intelligent Customer Interaction, integrating the acquired
Xtract customer analytics into the Comptel software platform is a priority.
With a combined offering, Comptel can help operators to improve customer
loyalty as well as enable individually targeted marketing. During the review
period three software releases were launched in these respective product areas.
Investments
EUR million 1-3 2012 1-3 2011 Change, 2011 %
Gross investments in property, plant and 3.2 0.2 1,560.9 1.0
equipment and intangible assets
The acquisition of Xtract Oy increased the gross investments from the previous
year. The other investments comprised of devices, software and furnishings. The
investments were funded through cash flow from operations.
Personnel
31 March 31 March Change, 31 Dec
2012 2011 % 2011
Number of employees at the end of 697 595 17.1 639
period
1-3 2012 1-3 2011 Change, 1-12 2011
%
Average number of personnel during the 678 595 13.9 623
period
The number of employees increased significantly from the previous year as
Comptel continued to invest in its sales, service and R&D organisation. 27
employees joined Comptel as Xtract was consolidated into Comptel Group during
the period. In the first quarter, the personnel expenses were 53.6 per cent of
net sales (52.6).
At the end of the period, 33.0 per cent (36.6) of the personnel were located in
Finland, 23.7 per cent (25.2) in Malaysia, 9.6 per cent (5.7) in Bulgaria, 7.3
per cent (9.2) in the United Kingdom, 6.7 per cent (4.9) in the United Arab
Emirates, 5.2 per cent (6.7) in Norway, and 14.5 per cent (11.7) in other
countries where Comptel operates.
Comptel share
The closing share price of the period was EUR 0.57 (0.68). Comptel's market
value at the end of the period was EUR 60.9 million (72.7).
Comptel share 1-3 2012 1-3 2011 Change, % 2011
Shares traded, million 10.9 11.2 -2.9 32.8
Shares traded, EUR million 6.5 8.2 -20.1 21.0
Highest price, EUR 0.63 0.79 -20.3 0.79
Lowest price, EUR 0.49 0.67 -26.9 0.48
Of Comptel's outstanding shares, 5.6 per cent (6.5) were nominee registered or
held by foreign shareholders at the end of the period.
Elisa Corporation notified on 17 January 2012 that its direct ownership in
Comptel Corporation had increased to over the 10% threshold following the
merger of Saunalahti Group Oyj into Elisa Corporation. Elisa Group's ownership
remained unchanged.
During the period, Comptel Corporation allotted gratuitously 111,186 shares to
the members of the Board of Directors as part of their annual compensation and
25,000 shares to the President and CEO of the company according to the terms
and conditions of the 2011 share-based incentive plan.
The company held 156,499 of its own shares at the end of the period, which is
0.15 per cent of the total number of its shares. The total counter-book value
of the shares held by the company was EUR 3,130.
No share options were distributed during the review period.
Corporate Governance
The Annual General Meeting (AGM), held on 26 March 2012, re-elected Mr Hannu
Vaajoensuu and Mr Petteri Walldén as members of the Board of Directors and
elected Mr Pertti Ervi, Ms Eriikka Söderström and Mr Antti Vasara elected as
new members of the Board of Directors. In its meeting held after the AGM, the
Board of Directors elected Mr Pertti Ervi as chairman and Mr Hannu Vaajoensuu
as vice chairman. The Board decided not to set up committees.
The AGM resolved to elect Ernst & Young Oy as authorised public accountant, Mr
Heikki Ilkka being the principal auditor.
The AGM approved the proposal of Board of Directors that a dividend of EUR 0.03
per share be paid for 2011. The dividend was paid on 12 April 2012.
The AGM decided to issue stock options to the key personnel of the Comptel
Group as a part of the incentive and commitment program for the key personnel.
The AGM authorised the Board of Directors to decide on share issues amounting
to a maximum of 21,400,000 new shares and on repurchase of the company's own
shares up to a maximum number of 10,700,000 shares. The authorisations are
valid until 30 June 2013. However, the authorisation to implement the company's
share-based incentive programs is valid until five years from the AGM
resolution.
A separate stock exchange release about the authorisations given and other
decisions made by the Annual General Meeting was published on 26 March 2012.
Ms Ulla Koivukoski joined Comptel as Senior Vice President, Marketing and
Communications, and member of the Group Executive Board as of 1 February 2012.
During the period under review, the Board of Directors resolved on a new
share-based incentive plan for the Group key personnel. The aim of the new plan
is to combine the objectives of the shareholders and the target people in order
to increase the value of the company, to commit the target people to the
company, and to offer them a competitive reward plan based on long-term
shareholding in the company.
Events after the Reporting Period
Comptel Corporation and Cisco Systems Inc. have settled the dispute under
arbitration concerning Comptel's use of a certain sub-set of Axioss software
that was sold to Cisco and simultaneously licensed back to Comptel for use in
the current release of Comptel Fulfillment. Cisco brought the matter to the
London Court of International Arbitration in December 2011.
In accordance with the settlement, the parties have agreed to withdraw all
their claims against each other and the arbitration process has thereby been
terminated. It has been agreed that no financial compensation will be made
between the parties. Comptel will continue in the fulfillment business and
will, consistent with the terms of Cisco's license back to Comptel, support its
existing Axioss and Comptel Fulfillment customers.
Near-term Risks and Uncertainties
Comptel develops dynamic end-to-end solutions for leading operators globally in
the telecom field. This requires Comptel to understand correctly the trends
taking place in its business environment and the needs of its customers and
resellers by each region. Failure to identify market conditions, address
customers' needs and develop its products in a timely way may significantly
undermine the growth of Comptel's business and its profitability.
Characteristics for Comptel's field of industry are significant quarterly
variations of net sales and profit, which are related to customers' purchasing
behaviour and the timing of major single deals.
Comptel 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, Malaysian
ringgit and Norwegian Krone affect the company's net sales, expenses and net
profit.
The application process to prevent Comptel's double taxation is still pending
with the Ministry of Finance in Finland. The company believes the treatment of
its withholding taxation will be changed. However, the process between the
states is very slow and the timing of a change is hard to forecast.
The risks and uncertainties of Comptel are described more in detail in the
company's financial statements and the Board of Directors' report for 2011.
Outlook
As earlier stated, in 2012 Comptel net sales are estimated to grow over 10 per
cent from the previous year.
Following the impairment loss, operating result is estimated to remain
negative. Operating profit excluding one-off items is estimated to represent 5
- 10 per cent of net sales.
Earlier Comptel had estimated the operating profit to represent 5 - 10 per cent
of net sales.
Characteristically a significant part of Comptel's operating profit and net
sales is generated in the second half of the year.
TABLE PART
The interim financial statements have been prepared in accordance with IAS 34,
Interim Financial Reporting, as adopted by the EU. The accounting policies and
methods of computation adopted in the financial statements are consistent with
those of the annual financial statements for the year ended 2011 except for the
application of new or amended standards and interpretations as set forth in
note 1.
All figures in the financial report have been rounded and consequently the sum
of the individual figures can deviate from the sum figure. The interim report
is unaudited.
Consolidated Statement of Comprehensive Income 1 Jan - 31 Mar 1 Jan - 31 Mar
(EUR 1,000) 2012 2011
Net sales 19,926 16,825
Other operating income 1 4
Materials and services -1,622 -773
Employee benefits -10,672 -8,843
Depreciation, amortisation and impairment -11,128 -1,359
charges
Other operating expenses -8,538 -6,006
-31,959 -16,982
--------------------------------------------------------------------------------
Operating profit/loss -12,032 -153
Financial income 437 249
Financial expenses -914 -415
Profit/loss before income taxes -12,509 -319
Income taxes 2,094 -1,329
Profit/loss for the period -10,416 -1,648
Other comprehensive income
Cash flow hedges 742 453
Translation differences 3 -63
Income tax relating to components of other -182 -118
comprehensive income
Total comprehensive income for the period -9,852 -1,375
Profit/loss attributable to:
Equity holders of the parent company -10,416 -1,648
Total comprehensive income attributable to:
Equity holders of the parent company -9,852 -1,375
Shareholders of the parent company:
Earnings per share, EUR -0.10 -0.02
Earnings per share, diluted, EUR -0.10 -0.02
Consolidated Statement of Financial Position (EUR 31 Mar 2012 31 Dec 2011
1,000)
Assets
Non-current assets
Goodwill 2,646 10,832
Other intangible assets 10,936 9,255
Tangible assets 1,388 1,381
Investments in associates 817 817
Available-for sale financial assets 87 87
Deferred tax assets 1,093 636
Other non-current receivables 480 409
17,447 23,418
--------------------------------------------------------------------------------
Current assets
Trade and other current receivables 38,532 38,941
Cash and cash equivalents 6,818 9,401
45,350 48,343
--------------------------------------------------------------------------------
Total assets 62,797 71,761
Equity and liabilities
Equity attributable to equity holders of the parent
company
Share capital 2,141 2,141
Fund of invested non-restricted equity 243 178
Translation differences -679 -682
Retained earnings 27,322 40,169
Total equity 29,027 41,805
Non-current liabilities
Deferred tax liabilities 2,565 4,798
Provisions 2,561 2,750
Non-current financial liabilities 38 29
5,164 7,577
--------------------------------------------------------------------------------
Current liabilities
Trade and other current liabilities 25,651 22,341
Current financial liabilities 2,955 38
28,606 22,379
--------------------------------------------------------------------------------
Total liabilities 33,770 29,956
Total equity and liabilities 62,797 71,761
Consolidated Statement of Cash Flows 1 Jan - 31 1 Jan - 31
(EUR 1,000) Mar 2012 Mar 2011
Cash flows from operating activities
Profit/loss for the period -10,416 -1,648
Adjustments:
Non-cash transactions or items that are not part of 11,794 1,633
cash flows from operating activities
Interest and other financial expenses 88 13
Interest income -9 -8
Income taxes -2,094 1,329
Change in working capital:
Change in trade and other current receivables 1,888 3,282
Change in trade and other current liabilities -83 -243
Change in provisions -189 -203
Interest paid -88 -13
Interest received 7 6
Income taxes paid and tax returns received -1,560 -1,091
Net cash from operating activities -660 3,058
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired -1,812 -
Investments in tangible assets -202 -141
Investments in intangible assets -62 -50
Investments in development projects -1,488 -983
Change in other non-current receivables -32 -
Net cash used in investing activities -3,595 -1,174
Cash flows from financing activities
Proceeds from borrowings 2,021 -
Repayment of borrowings -305 -
Lease payments -10 -9
Net cash used in financing activities 1,706 -9
Net change in cash and cash equivalents -2,549 1,874
Cash and cash equivalents at the beginning of the 9,401 7,028
period
Cash and cash equivalents at the end of the period 6,818 9,181
Change -2,583 2,153
Effects of changes in foreign exchange rates 34 -279
Consolidated Statement of Changes in Equity
- Equity attributable to equity holders of the parent company
- EUR 1,000 Share Other Translati Fair Treasur Retained Total
capita reserv on value y earnings
l es differenc reserve shares
es
Equity at 2,141 7,575 -858 -40 -600 40,927 49,146
31 Dec 2010
Dividends -4,270 -4,270
Transfer of 76 225 -225 76
treasury shares
Share-based 134 134
compensation
Total -63 335 -1,648 -1,375
comprehensive
income for the
period
Equity at 2,141 7,651 -921 296 -375 34,918 43,710
31 Mar 2011
Consolidated Statement of Changes in Equity
- Equity attributable to equity holders of the parent company
- EUR 1,000 Share Other Translati Fair Treasur Retained Total
capita reserv on value y earnings
l es differenc reserve shares
es
Equity at 2,141 178 -682 -589 -375 41,133 41,805
31 Dec 2011
Dividends -3,207 -3,207
Transfer of 66 14 -14 66
treasury shares
Share-based 215 215
compensation
Total 3 560 -10,416 -9,852
comprehensive
income for the
period
Equity at 2,141 243 -679 -29 -361 27,712 29,027
31 Mar 2012
Notes
- Application of new or amended standards and interpretations
On 1 January 2012 the Group adopted the following new and amended standards and
interpretations endorsed by the EU and that are applicable to Comptel:
Amendments to IFRS 7 Financial Instruments: Disclosures (effective for
financial years beginning on or after 1 July 2011): The amendments will promote
transparency in the reporting of transfer transactions and improve users'
understanding of the risk exposures relating to transfers of financial
instruments and the effect of those risks on an entity's financial position,
particularly those involving securitisation of financial assets.
- Segment information
Net sales by segment
EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011
Europe East 3,866 2,834
Europe West 5,001 3,804
Asia-Pacific 4,511 6,245
Middle East and Africa 3,841 2,559
Americas 2,708 1,383
Group total 19,926 16,825
Operating profit/loss by segment
EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011
Europe East 1,345 435
Europe West 2,199 1,995
Asia-Pacific 1,969 4,360
Middle East and Africa 1,084 832
Americas 1,483 568
Group unallocated expenses -20,112 -8,344
Group operating profit/loss total -12,032 -153
Financial income and expenses -477 -166
Group profit/loss before income taxes -12,509 -319
- Business combinations
On 9 February 2012, Comptel Corporation acquired all shares of Xtract Oy, a
Finnish software company specialising in analytics.
By acquiring Xtract the company creates a unique offering by combining world
class analytics capabilities with its existing assets. This offering enables
operators to react quickly to events from the network and transform them
automatically into relevant and timely actions that improve the customer
experience.
The total consideration (enterprise value) was EUR 3,100 thousand. The actual
purchase price EUR 2,075 thousand was paid in cash.
The goodwill according to IFRS 3 is EUR 1,993 thousand after the fair value
allocations reflected in net assets. EUR 215 thousand was recognised in
intangible assets which are amortised over five years.
The goodwill is attributable to the skilled workforce of Xtract and the
utilisation potential of Comptel's existing sales channel to promote Xtract
products.
The values of the assets and liabilites arising from the acquisition were as
follows:
EUR 1,000 Recognised fair values on
acquisition
Technology (incl. in other intangible 840
assets)
Other intangible assets 1
Machinery and equipment 6
Trade receivables and other receivables 842
Cash and cash equivalents 263
Total assets 1,952
Deferred tax liabilities 53
Other non-interest bearing liabilities 597
Interest bearing liabilities 1,220
Total liabilities 1,870
Net assets 82
Acquisition cost 2,075
Goodwill 1,993
Purchase price paid in cash 2,075
Cash and cash equivalents in acquired -263
subsidiary
Total net cash outflow on the acquisition 1,812
Comptel has expensed acquisition-related consultation fees of EUR 145 thousand.
The fees are included in other operating expenses.
Xtract's net sales EUR 199 thousand and result EUR -382 thousand for the period
10 February to 31 March 2012 is included in the comprehensive statement of
income. Comptel Group net sales for 1 January - 31 March 2012 would have been
EUR 20,292 thousand and loss EUR 10,166 thousand if Xtract had been
consolidated from the beginning of the year 2012.
- Impairment loss on goodwill
Comptel changed the allocation method of goodwill during the first quarter of
the year. Due to the change, an impairment testing was carried out on a new
cash generating unit level. Previously, it had not been possible to allocate
goodwill specifically to any segment or cash generating unit. As a result of
impairment testing Comptel recorded an impairment loss of EUR 10,179 thousand
in the first quarter result.
In the test, the recoverable amount of goodwill is determined based on value in
use calculation. 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 business. The used pre-tax discount rate is 16.4%.
The cash flows after the five-year period have been forecast by estimating the
future growth rate of net sales to be 0%.
The use of the testing model requires making estimates and assumptions
concerning investments, market growth and general interest rate level.
- Income tax
Income tax according to the statement of comprehensive income for the period
was EUR 2,094 thousand positive (EUR 1,329 thousand negative in 2011) as a
change of EUR 2,494 thousand in deferred tax liabilities was booked in
connection with the impairment of goodwill.
In 2006, Adjustment of the Tax Office for Major Corporations refused to accept
the crediting of taxes withheld at source in taxation of 2004 and 2005.
Comptel is pursuing negotiations with the Ministry of Finance and the other
countries that have withheld tax at source to avoid double taxation. The
company believes the treatment of its withholding taxation will be changed. The
negotiation process between countries is, however, very slow and the time for
the change to take place is very difficult to predict.
According to the Board of Adjustment's decision currently in force, Comptel
Corporation has expensed taxes withheld at source amounting to EUR 543 thousand
in January - March (EUR 690 thousand).
- Tangible assets
EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011
Additions 209 141
- Related party transactions
The Comptel Group has a related party relationship with its associate, the
Board of Directors, the Executive Board and also with people and companies
under Comptel management's influence.
Transactions, which have been entered into with related parties are as follows:
EUR 1,000 1 Jan - 31 Mar 2012 1 Jan - 31 Mar 2011
Associate
Other operating income 1 -
Purchases of goods and services - -
Interest income 2 2
EUR 1,000 31 Mar 2012 31 Dec 2011
Associate
Non-current receivables 93 91
Trade receivables 1 -
Remuneration to key management
The key management personnel compensation includes the employee benefits of the
members of the Board of Directors and the Executive Board.
EUR 1,000 1 Jan - 31 Mar 1 Jan - 31 Mar
2012 2011
Salaries and other short-term employee 557 813
benefits
Share-based payments 45 45
Total 602 858
- Commitments
Minimum lease payments on non-cancellable office facilities and other operating
leases are payable as follows:
EUR 1,000 31 Mar 2012 31 Dec 2011
Less than one year 3,564 3,377
Between one and five years 7,082 7,909
Total 10,646 11,286
The group had no material capital commitments for the purchase of tangible
assets at 31 March 2012 and 31 March 2011.
- Contingent liabilities
EUR 1,000 31 Mar 2012 31 Dec 2011
Bank guarantees 1,864 1,847
- Events after the Reporting Period
Comptel Corporation and Cisco Systems Inc. have settled the dispute under
arbitration concerning Comptel's use of a certain sub-set of Axioss software
that was sold to Cisco and simultaneously licensed back to Comptel for use in
the current release of Comptel Fulfillment. Cisco brought the matter to the
London Court of International Arbitration in December 2011.
In accordance with the settlement, the parties have agreed to withdraw all
their claims against each other and the arbitration process has thereby been
terminated. It has been agreed that no financial compensation will be made
between the parties. Comptel will continue in the fulfillment business and
will, consistent with the terms of Cisco's license back to Comptel, support its
existing Axioss and Comptel Fulfillment customers.
- Key figures
Financial summary 1 Jan - 31 1 Jan - 31 1 Jan - 31
Mar 2012 Mar 2011 Dec 2011
Net sales, EUR 1,000 19,926 16,825 76,751
Net sales, change % 18.4 -6.9 -1.5
Operating profit/loss, EUR 1,000 -12,032 -153 11,609
Operating profit/loss, change % -7,765.7 -180.2 30.3
Operating profit/loss, as % of net -60.4 -0.9 15.1
sales
Profit/loss before taxes, EUR 1,000 -12,509 -319 10,699
Profit/loss before taxes, as % of net -62,8 -1,9 13,9
sales
Return on equity, % - - 16.0
Return on investment, % - - 22.9
Equity ratio, % 56.9 67.1 66.6
Gross investments in tangible and 3 171 191 1,037
intangible assets, EUR 1,0001)
Gross investments in tangible and 15,9 1.1 1.4
intangible assets, as % of net sales
Capitalisations according to IAS 38 to 1,488 983 3,965
intangible assets
Research and development expenditure, 5,184 3,856 15,419
EUR 1,000
Research and development expenditure, 26.0 22.9 20.1
as % of net sales
Order backlog, EUR 1,000 2) 41,110 34,554 47,217
Average number of employees during the 678 595 623
period
Interest-bearing net liabilities, EUR -3,825 -9,086 -9,334
1,000
Gearing ratio, % -13.1 -20.8 -22.3
1) Includes the acquisition of Xtract in 2012. The gross capital investments
excluding the acquisition amounted to EUR 264 thousand, which is 1.3 percent of
net sales. The figure does not include investments in development projects.
2) The order book may vary significantly during the financial period.
Per share data 1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31
2012 2011 Dec 2011
Earnings per share (EPS), EUR -0.10 -0.02 0.07
EPS diluted, EUR -0.10 -0.02 0.07
Equity per share, EUR 0.27 0.41 0.39
Dividend per share, EUR - - 0.03
Dividend per earnings, % - - 43.9
Effective dividend yield, % - - 6.1
P/E ratio - - 7.2
Adjusted number of shares at the 107,054,810 107,054,810 107,054,810
end of the period
of which the number of treasury 156,499 183,900 292,685
shares
Outstanding shares 106,898,311 106,870,910 106,762,125
Adjusted average number of shares 106,765,118 106,555,907 106,775,223
during the period
Average number of shares, 106,765,118 106,695,907 106,775,223
dilution included
- Definition of key figures
Operating margin % = Operating profit/loss x100
------------------------------------
------------------------------------
Net sales
Profit margin (before income taxes) = Profit/loss before taxes x100
%
------------------------------------
------------------------------------
Net sales
Return on equity % (ROE) = Profit/loss x100
------------------------------------
------------------------------------
Total equity (average during year)
Return on investment % (ROI) = Profit/loss before taxes + x100
financial expenses
------------------------------------
------------------------------------
Total equity + interest bearing
liabilities (average during the
year)
Equity ratio % = Total equity x100
------------------------------------
------------------------------------
Statement of financial position
total - advances received
Gross investments in tangible and = Gross investments in tangible and x100
intangible assets, as % of net intangible assets
sales
------------------------------------
------------------------------------
Net sales
Research and development = Research and development x100
expenditure, as % of net sales expenditure
------------------------------------
------------------------------------
Net sales
Gearing ratio % = Interest-bearing liabilities - x100
cash and cash equivalents
------------------------------------
------------------------------------
Total equity
Earnings per share (EPS) = Profit/loss for the financial year
attributable to equity
shareholders
------------------------------------
------------------------------------
Average number of outstanding
shares for the financial year
Equity per share = Equity attributable to the equity
holders of the parent company
------------------------------------
------------------------------------
Adjusted number of shares at the
end of period
Dividend per share = Dividend
------------------------------------
------------------------------------
Adjusted number of shares at the end of period
Dividend per earnings % = Dividend per share x100
------------------------------------
------------------------------------
Earnings per share (EPS)
Effective dividend yield % = Dividend per share x100
------------------------------------
------------------------------------
Share closing price at end of
period
P/E ratio = Share closing price at end of
period
------------------------------------
------------------------------------
Earnings per share (EPS)
Schedule for Comptel's interim reports in 2012:
January - June: 18 July 2012
January - September: 18 October 2012
COMPTEL CORPORATION
Board of Directors
Additional information:
Mr Juhani Hintikka, President and CEO, tel. +358 9 700 1131
Mr Mikko Hytönen, CFO, tel. +358 40 758 5801
Mr Samppa Seppälä, Director, IR and Corporate Communications, tel. +358 50 568
0533
Distribution:
NASDAQ OMX Helsinki
Major media
www.comptel.com