COMPTEL CORPORATION'S FINANCIAL STATEMENTS BULLETIN FOR 2014
Comptel's growth accelerated towards the end of the year. Net profit more than doubled. Dividend proposal is 0.02 EUR (2013: 0.01 EUR) per share.
Key Figures for Fourth Quarter
-- Net sales EUR 26.8 million (Q4 2013: 22.2), growth +20.8% -- Operating profit EUR 3.9 million (3.7), growth +6.4% -- Operating profit 14.7% of net sales (16.7%) -- Earnings per share EUR 0.04 (0.02) -- Order backlog EUR 55.2 million (40.8), growth +35.5%
Key Figures for Full Year
-- Net sales EUR 85.7 million (2013: 82.7), growth +3.7% -- Operating profit EUR 8.3 million (7.3), growth +13.7% -- Operating profit 9.7% of net sales (8.8%) -- Earnings per share EUR 0.05 (0.02) -- Number of employees at the year-end 660 (690)
Board of Directors proposes to the Annual General Meeting that dividend of 0.02 EUR per share will be paid for 2014.
We expect the 2015 net sales to grow compared to previous year and we expect operating profit to be in the range of 8-12%, excluding one-time charges.
The full year financial information in this stock exchange release is based on the company's audited financial statements. The auditor's report was issued on 5th February 2015.
Juhani Hintikka, President and CEO:
"Our sales in Q4 grew by approximately 21% compared to last year and also our order backlog grew significantly compared to previous year. During second half of 2014 we won several new customers as well as we won several multi-year deals with our existing customers. In Q4 we won two new customers; both in South America. On a full year basis we doubled our new customer wins to eight compared to four in 2013.
Our new solutions grew almost 26% in Q4. However, our full year expectations did not materialize as we had expected. Our current business was strong and grew by 5% on a full year basis compared to previous year.
Regionally Asia-Pacific grew throughout the year, Europe made a very strong second half and Middle East performed as planned in 2014. As previously stated in 2014 our challenges were in the South America region.
Our net profit improved also significantly from previous years due some previously made tax changes in Asia and also due to some new decisions by the tax authorities. Going forward we expect this reducing our effective corporate tax rate.
We ended the year with a solid balance sheet and we continue to be net cash positive.
During 2014 we secured 26 significant orders, valued over EUR 0.5 million. In 2013 the comparable number of orders was 17."
Business Review
In Q4, Comptel's net sales increased by 20.8 per cent from the previous year and were EUR 26.8 million (22.2). Full-year net sales increased by 3.7 per cent compared to the previous year and were EUR 85.7 million (82.7). Sales increase was based on the current business that increased by 4.8 per cent compared to the previous year. New solutions sales increased in the fourth quarter by 25.7 per cent compared to the previous year.
In Q4, operating profit increased to EUR 3.9 million (3.7) representing 14.7 per cent (16.7) of net sales. The full year operating profit increased to 8.3 million representing 9.7 per cent (8.8) of net sales. The improved operating profit was based on the increased sales.
Result before taxes was EUR 7.4 million (5.6), which correspond to 8.7 per cent (6.7) of net sales. Net profit was EUR 5.5 million (2.6). Earnings per share for the financial year were EUR 0.05 (0.02).
In Q4 the tax expense was adjusted with 0.5 million regarding withholding tax related to 2013. This adjustment was based on the final decision from tax authorities for the tax year 2013. The 2014 tax expense was also adjusted in line with 2013 decision. The tax expense for the financial year was EUR 2.0 million (3.0). The tax expense includes EUR 1.0 million (1.3) withholding taxes due to double taxation. The consolidated effective tax rate was 26.6% (53.3%). The effective tax rate decrease was partially due to one time adjustment.
The Group's reported order backlog increased from the previous year and was EUR 55.2 million (40.8) at the end of the financial year. The company's total backlog including multi-year orders beyond 12 months is over EUR 70 million.
Business Areas
Net sales, 10-12 2014 10-12 2013 Change 1-12 2014 1-12 2013 Change EUR million % % -------------------------------------------------------------------------------- Europe 11.8 7.9 50.6 35.4 33.1 6.9 -------------------------------------------------------------------------------- Asia-Pacific 5.7 5.0 15.0 24.8 20.9 18.2 -------------------------------------------------------------------------------- Middle East and 6.4 5.6 14.9 16.8 16.3 3.1 Africa -------------------------------------------------------------------------------- Americas 2.8 3.7 -25.1 8.8 12.3 -28.7 -------------------------------------------------------------------------------- Total 26.8 22.2 20.8 85.7 82.7 3.7 -------------------------------------------------------------------------------- Operating profit by area, EUR million -------------------------------------------------------------------------------- Europe 7.7 3.7 106.7 19.5 15.6 25.0 -------------------------------------------------------------------------------- Asia-Pacific 2.4 2.5 -2.5 14.5 10.1 44.5 -------------------------------------------------------------------------------- Middle East and 3.3 3.0 11.3 7.3 6.7 9.3 Africa -------------------------------------------------------------------------------- Americas 1.4 2.4 -38.2 4.0 7.0 -41.8 -------------------------------------------------------------------------------- Unallocated costs -10.9 -7.9 -37.7 -37.0 -32.1 15.5 -------------------------------------------------------------------------------- Total 3.9 3.7 6.4 8.3 7.3 13.7 -------------------------------------------------------------------------------- Operating profit, % of net sales -------------------------------------------------------------------------------- Europe 64.9 47.3 55.3 47.3 -------------------------------------------------------------------------------- Asia-Pacific 42.6 50.2 58.7 48.0 -------------------------------------------------------------------------------- Middle East and 51.7 53.3 43.2 40.8 Africa -------------------------------------------------------------------------------- Americas 50.1 64.8 45.5 56.9 -------------------------------------------------------------------------------- Total 14.7 16.7 9.7 8.8 --------------------------------------------------------------------------------
Net Sales grew in all regions in 2014, with the exception of Americas. The proportional profitability improved in all areas except for Americas. Asia-Pacific grew by 18% and Europe grew strongly in second half of the year.
During the financial year, Comptel received 26 significant orders (17). Out of these 26 orders, 12 were Comptel Control & Charge, 6 Comptel Provisioning and Activation, 5 Comptel Fulfillment and 3 Managed Services. All sold projects and licenses with a minimum value of EUR 500,000 are considered significant orders and are reported by Comptel.
Net sales breakdown, 10-12 10-12 Change % 1-12 1-12 Change EUR million 2014 2013 2014 2013 % -------------------------------------------------------------------------- Project & License business 18.8 13.3 41.2 52.1 47.1 10.7 -------------------------------------------------------------------------- Recurring business 8.0 8.9 -10.0 33.6 35.6 -5.5 -------------------------------------------------------------------------- Total 26.8 22.2 20.8 85.7 82.7 3.7 --------------------------------------------------------------------------
Project & License business grew significantly compared to previous year, especially in the fourth quarter. Managed Services & Consulting business has been re-classed into Project & License business area starting Q3 2013. This change decreases the comparable recurring business area revenue and increases Project & Licence business area revenue in 2014.
Net sales 10-12 2014 10-12 2013 Change 1-12 2014 1-12 2013 Change breakdown, % % EUR million -------------------------------------------------------------------------------- New business 5.3 4.2 25.7 19.2 19.2 -0.1 -------------------------------------------------------------------------------- Current business 21.5 17.9 19.7 66.5 63.4 4.8 -------------------------------------------------------------------------------- Total 26.8 22.2 20.8 85.7 82.7 3.7 --------------------------------------------------------------------------------
Both new and current businesses grew significantly in the last quarter. New businesses net sales for the year was on same level as previous year due to slow beginning of the year.
Financial Position
EUR million 31 Dec 2014 31 Dec 2013 Change % ------------------------------------------------------------------------------- Statement of financial position total 77.6 67,9 14,3 ------------------------------------------------------------------------------- Liquid assets 9.4 6.5 42.9 ------------------------------------------------------------------------------- Trade receivables, gross 28.9 23.7 24,9 ------------------------------------------------------------------------------- Bad debt provision -1.2 -1.0 15.3 ------------------------------------------------------------------------------- Trade receivables, net 27.7 22.7 25.4 ------------------------------------------------------------------------------- Accrued income 10.9 9.4 16.0 ------------------------------------------------------------------------------- Deferred income related to partial debiting 4.4 1.9 131.4 ------------------------------------------------------------------------------- Interest-bearing debt 7.6 8.8 -13.4 ------------------------------------------------------------------------------- Equity ratio, per cent 52.4 50.5 3.8 -------------------------------------------------------------------------------
Statement of financial position total on 31 December 2014 was EUR 77.6 million (67.9), of which liquid assets amounted to EUR 9.4 million (6.5).
Operating cash flow was EUR 3.5 million (5.1) in the last quarter and EUR 10.0 million (8.8) during the financial year.
The trade receivables were EUR 28.9 million (23.7) at the end of the period. The accrued income was EUR 10.9 million (9.4). The deferred income related to partial debiting was EUR 4.4 million (1.9).
Comptel has a 16 million credit facility arrangement consisting of 3 million term-loan and a revolving credit facility of 13 million. Out of this arrangement Comptel had 3 million of the term-loan and 4 million of the revolving credit facility outstanding at year end. The credit facility is valid until January 2016.
The equity ratio was 52.4 per cent (50.5) and the gearing ratio was -5.4 per cent (7.7).
Research and Development (R&D)
EUR million 10-12 10-12 Change 1-12 1-12 Change 2014 2013 % 2014 2013 % -------------------------------------------------------------------------------- Direct R&D expenditure 5.1 4.9 5.6 16.8 17.8 -5.6 -------------------------------------------------------------------------------- Capitalisation of R&D expenditure -1.3 -1.5 -8.1 -4.7 -5.5 -14.3 according to IAS 38 -------------------------------------------------------------------------------- R&D depreciation and impairment 1.2 1.2 1.8 4.9 4.2 17.7 charges -------------------------------------------------------------------------------- R&D expenditure, net 5.0 4.6 9.1 17.0 16.5 3.2 -------------------------------------------------------------------------------- Direct R&D expenditure, % of net 19.2 21.9 19.6 21.5 sales --------------------------------------------------------------------------------
Direct R&D expenditure represented 19.6 per cent (21.5) of 2014 net sales.
Comptel's R&D expenditure was mainly targeted at automating the service fulfillment of telecom operators and at managing the real-time analysis of rapidly increasing data traffic. Comptel seeks global market leadership in these areas where the key business challenges of operators and service providers will be solved. In addition, the company is developing an integrated software platform which will enable a cost-efficient and solution-based R&D.
In 2014, the company focused on developing its offering within the Comptel Fulfillment, Comptel Policy & Charging Control and advanced analytics product areas. Ten major software releases were launched in these respective product areas during 2014.
Investments
EUR million 10-12 2014 10-12 2013 Change 1-12 2014 1-12 2013 Change % % -------------------------------------------------------------------------------- Gross investments 0.4 0.1 400.8 0.7 0.6 34.3 in property, plant and equipment and intangible assets --------------------------------------------------------------------------------
The investments comprised of devices, software and furnishings. The investments were funded through liquid assets and cash flow from operations.
Personnel
31 Dec 2014 31 Dec 2013 Change % ---------------------------------------------------------------------------- Number of employees at the end of period 660 690 -4.3 ----------------------------------------------------------------------------
1-12 2014 1-12 2013 Change % ----------------------------------------------------------------------------- Average number of personnel during the period 665 684 -2.7 -----------------------------------------------------------------------------
Number of employees at the end of the year was slightly lower compared to previous year.
In the last quarter, the personnel expenses were 47.4 per cent of net sales (45.5). In the financial year, the personnel expenses were 48.2 per cent of net sales (49.2).
At the end of the year, 30.2 per cent (29.6) of the personnel were located in Finland, 28.8 per cent (28.1) in Malaysia, 10.9 per cent (10.9) in Bulgaria, 7.1 per cent (7.6) in India, 3.2 per cent (7.5) in United Arab Emirates, and 19.8 per cent (17.8) in other countries where Comptel operates.
Comptel Share
The closing share price of the financial year was EUR 0.99 (0.48). Comptel's market capitalisation at the end of the year was EUR 105.8 million (51.5).
Comptel share 10-12 2014 10-12 2013 Change 1-12 2014 1-12 2013 Change % % -------------------------------------------------------------------------------- Shares traded, 7.1 6.2 14,8 27.8 18.4 51.3 million -------------------------------------------------------------------------------- Shares traded, EUR 5.0 3.2 57.0 16.5 8.7 91.1 million -------------------------------------------------------------------------------- Highest price, EUR 1.00 0.59 69.4 1.00 0.59 69.4 -------------------------------------------------------------------------------- Lowest price, EUR 0.55 0.46 19.6 0.48 0.37 29.7 --------------------------------------------------------------------------------
Of Comptel's outstanding shares, 5.1 per cent (6.4) were nominee registered or held by foreign shareholders at the end of the financial year.
During the period, Comptel Corporation allotted 121,480 shares to the members of the Board of Directors as part of their annual compensation and 75,000 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 464,739 of its own shares at the end of the financial year, which is 0.43 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 9,295.
2 140 000 share options were distributed during the review period based on Stock Option Incentive Plan 2014.
Corporate Governance
The Annual General Meeting (AGM) of Comptel Corporation was held on 12 of March 2014.
The resolutions of the Annual General Meeting as well as the minutes of the Annual General Meeting can be found at company's web page www.comptel.com. A separate stock exchange release about the resolutions of the Annual General Meeting including authorisations given to the Board of Directors was issued on 12 of March 2014.
The AGM authorised the Board of Directors to decide on share issues amounting to a maximum of 21,400,000 new shares and/or special rights entitling to shares and on repurchase or conveying of the company's own shares up to a maximum number of 10,700,000 shares. The authorisations are valid until 30 of June 2015. However, the authorisation to implement the company's share-based incentive programs is valid until five years from the AGM resolution.
Stock Option Incentive Plan 2014
Based on authorisation given to the Board of Directors by the Annual General Meeting held on 20 of March 2013, the Board of Directors resolved 5 of February 2014 on a new stock option incentive plan. A maximum total of 4,200,000 options will be granted and they entitle their holders to subscribe to a maximum of 4,200,000 new or existing Company's own shares. The new incentive plan replaced the existing incentive plan from the year 2012.
Of the stock options, 2,200,000 are to be marked with the symbol 2014A, 1,000,000 are to be marked with the symbol 2014B and 1,000,000 are to be marked with the symbol 2014C. The share subscription price stock option 2014A is EUR 0.54 per share, which corresponds to the trade volume weighted average quotation of the share on the NASDAQ OMX Helsinki Ltd during 15 of February - 15 of March 2014.The subscription price for options 2014B and 2014C is defined as the weighted average trade price of the Company's stock in NASDAQ OMX Helsinki as follows: for the options 2014B between 15 of February - 15 of March 2015 and for the options 2014C 15 of February - 15 of March 2016.
The subscription periods for the shares are as follows: for options 2014A 1 of February 2016 - 31 of January 2018; for options 2014B 1 of February 2017 - 31 of January 2019 and for options 2014C 1 of February 2018 - 31 of January 2020.
Pursuant to the stock option subscriptions, the number of shares can increase by a maximum of 4,200,000 new shares.
Full information on the stock option incentive plan can be found at company's web page www.comptel.com. A separate stock exchange release about the stock option plan has been issued on 5 of February 2014.
Events after the Reporting Period
There were no significant events after the reporting period.
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 of 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's business consists of deliveries of large productised IT system and the value of a single project may be several million euros. Therefore, the credit risk associated with a single project or an individual customer may be significant. Furthermore, some of Comptel's customers operate in countries where the political or financial climate can be unstable which in part may increase credit 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 Malaysian Ringgit 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. However, the process between the states is very slow and the timing of a change is hard to forecast. The interpretation of tax treaties may result in different views between the countries in question. This could mean that the double taxation will prevail. Comptel has also applications for return of withholding taxes in other countries but they are subject to local legal processes, which take time to get completed. Due to latest decisions by the Finnish tax authorities this risk impact on corporate effective tax rate is lower.
The risks and uncertainties of Comptel are described more in detail in the company's financial statements and the Board of Directors' report for 2014.
New Organisation and Strategy Update
Comptel renewed its organisation in the beginning of 2015. The new organisation reflects company's focus on the two core business areas. Going forward, the organization has business units: "Comptel Intelligent Data" and "Comptel Service Orchestration". The Comptel Intelligent Data business unit includes Comptel Convergent Mediation, Comptel Policy and Charging Control and Analytics. Service Orchestration includes Comptel Provisioning and Activation, Comptel Fulfillment and Comptel Inventory. Moreover, company continues to have common sales and services organisations and corporate functions. In addition, Comptel established a new business unit which will concentrate on new ideas and products in the early stage to develop them further.
Company will publish a stock exchange release on the strategy update on 17 March 2015.
Business outlook and markets
The business environment and industry of telecommunications operators is on a clear turning point, since new technologies and business competitors are entering the traditional telecoms field. We expect the trend to continue also during the year 2015. While the fundamental investments are targeted to the high bandwidth 4G and fibre networks, the operators have a strong need to develop new services and improve the quality of the customer experience to gain the full potential of the investments made in a heavily competitive market. Fierce competition inside the telecoms industry and against the newcomers in the same market requires that operators improve their business processes continuously and pay special attention to the cost structure.
The significance and role of software in managing the telecom networks and in enabling more business will further increase. We expect that the implementation of new network technologies and services will slightly increase the value of the software market and will create demand for larger software delivery projects. The customers in this market position require both services and new project deliveries that create a strong basis for business growth. Network technologies will also be moving to the software-based cloud environments at an increasing pace and will bring new and more extensive business opportunities for our service orchestration and intelligent data solutions.
Outlook
The company will change its reporting and will cease the reporting of net sales for new and current businesses. For the year 2015 the company will report net sales for the new business units; Intelligent Data and Service.
We expect the 2015 net sales to grow compared to previous year and we expect operating profit to be in the range of 8-12%, excluding one-time charges.
Characteristically a significant part of Comptel's operating profit and net sales is generated in the second half of the year.
Board of Directors' Proposal for the Disposal of Profits
The Group parent company's distributable equity on 31 December 2014 was EUR 6,740,529 (4,107,352).
Board of Directors proposes to the Annual General Meeting that dividend of 0.02 EUR per share will be paid for 2014.
TABLE PART
The full year financial information in this stock exchange release is based on the company's audited financial statements. The auditor's report was issued on 5 February 2015. The release has 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 2013.
All figures in the financial report have been rounded and consequently the sum of the individual figures can deviate from the sum figure.
Consolidated Statement of Comprehensive 1 Jan - 1 Jan - 1 Oct - 1 Oct - Income 31 Dec 31 Dec 31 Dec 31 Dec (EUR 1,000) 2014 2013 2014 2013 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net sales 85,714 82,668 26,792 22,172 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Other operating income 282 8 1 - --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Materials and services -3,905 -3,418 -1,050 -588 -------------------------------------------------------------------------------- Employee benefits -41,294 -40,678 -12,689 -10,089 -------------------------------------------------------------------------------- Depreciation, amortisation and impairment -6,263 -5,682 -1,501 -1,470 charges -------------------------------------------------------------------------------- Other operating expenses -26,225 -25,591 -7,614 -6,324 -------------------------------------------------------------------------------- -77,686 -75,369 -22,853 -18,470 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Operating profit/loss 8,311 7,308 3,940 3,702 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Financial income 1,478 367 599 156 -------------------------------------------------------------------------------- Financial expenses -2,396 -1,706 -364 -362 -------------------------------------------------------------------------------- Share of result of associated companies 45 -415 45 -415 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss before income taxes 7,436 5,554 4,220 3,081 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Income taxes -1,975 -2,962 31 -783 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss for the period 5,461 2,592 4,251 2,298 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Other comprehensive income --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Other comprehensive income to be reclassified to profit or loss in subsequent periods --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Translation differences 522 -582 -152 -107 -------------------------------------------------------------------------------- Cash flow hedges -227 - -227 - -------------------------------------------------------------------------------- Income tax relating to components of other 45 - 45 - comprehensive income -------------------------------------------------------------------------------- 341 -582 -333 -107 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total comprehensive income for the period 5,802 2,009 3,917 2,191 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 5,461 2,592 4,251 2,298 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total comprehensive income attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 5,802 2,009 3,917 2,191 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Shareholders of the parent company: --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Earnings per share, EUR 0.05 0.02 0.04 0.02 -------------------------------------------------------------------------------- Earnings per share, diluted, EUR 0.05 0.02 0.04 0.02 --------------------------------------------------------------------------------
Consolidated Statement of Financial Position (EUR 31 Dec 2014 31 Dec 2013 1,000) --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Assets --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Non-current assets -------------------------------------------------------------------------------- Goodwill 2,646 2,646 -------------------------------------------------------------------------------- Other intangible assets 13,435 14,174 -------------------------------------------------------------------------------- Tangible assets 1,596 1,629 -------------------------------------------------------------------------------- Investments in associates 673 661 -------------------------------------------------------------------------------- Available-for sale financial assets 87 87 -------------------------------------------------------------------------------- Deferred tax assets 5,880 4,358 -------------------------------------------------------------------------------- Other non-current receivables 613 500 -------------------------------------------------------------------------------- 24,929 24,055 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Current assets -------------------------------------------------------------------------------- Trade and other current receivables 43,358 37,144 -------------------------------------------------------------------------------- Current tax assets 315 202 -------------------------------------------------------------------------------- Cash and cash equivalents 9,352 6,542 -------------------------------------------------------------------------------- 52,710 43,889 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total assets 77,638 67,944 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Equity and liabilities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Equity attributable to equity holders of the parent company --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Share capital 2,141 2,141 -------------------------------------------------------------------------------- Fund of invested non-restricted equity 401 401 -------------------------------------------------------------------------------- Fair value reserve -182 - -------------------------------------------------------------------------------- Translation differences -699 -1,219 -------------------------------------------------------------------------------- Retained earnings 31,685 27,600 -------------------------------------------------------------------------------- Total equity 33,346 28,924 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Non-current liabilities -------------------------------------------------------------------------------- Deferred tax liabilities 2,669 2,983 -------------------------------------------------------------------------------- Provisions - - -------------------------------------------------------------------------------- Non-current financial liabilities 1,257 3,483 -------------------------------------------------------------------------------- 3,926 6,466 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Current liabilities -------------------------------------------------------------------------------- Provisions 1,325 1,939 -------------------------------------------------------------------------------- Current financial liabilities 6,305 5,287 -------------------------------------------------------------------------------- Trade and other current liabilities 32,713 25,078 -------------------------------------------------------------------------------- Current tax liabilities 24 250 -------------------------------------------------------------------------------- 40,367 32,554 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total liabilities 44,292 39,020 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total equity and liabilities 77,638 67,944 --------------------------------------------------------------------------------
Consolidated Statement of Cash Flows 1 Jan - 31 1 Jan - 31 (EUR 1,000) Dec 2014 Dec 2013 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from operating activities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss for the period 5,461 2,592 -------------------------------------------------------------------------------- Adjustments: -------------------------------------------------------------------------------- Non-cash transactions or items that are not part of 6,095 7,330 cash flows from operating activities -------------------------------------------------------------------------------- Interest and other financial expenses 620 434 -------------------------------------------------------------------------------- Interest income -16 -71 -------------------------------------------------------------------------------- Income taxes -1,996 2,962 -------------------------------------------------------------------------------- Change in working capital: -------------------------------------------------------------------------------- Change in trade and other current receivables -6,573 3,074 -------------------------------------------------------------------------------- Change in trade and other current liabilities 6,744 -2,997 -------------------------------------------------------------------------------- Change in provisions -262 -359 -------------------------------------------------------------------------------- Interest paid -295 -355 -------------------------------------------------------------------------------- Interest received 40 63 -------------------------------------------------------------------------------- Income taxes paid and tax returns received -3,789 -3,849 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash from operating activities 10,021 8,825 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from investing activities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Acquisition of subsidiaries, net of cash acquired 300 - -------------------------------------------------------------------------------- Investments in tangible assets -734 -466 -------------------------------------------------------------------------------- Investments in intangible assets - -85 -------------------------------------------------------------------------------- Investments in development projects -4,720 -5,510 -------------------------------------------------------------------------------- Proceeds from sale of intangible assets 39 5 -------------------------------------------------------------------------------- Change in other non-current receivables -82 -7 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash used in investing activities -5,199 -6,063 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from financing activities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Dividends paid -1,073 - -------------------------------------------------------------------------------- Acquisition of Company's own shares -312 -88 -------------------------------------------------------------------------------- Proceeds from borrowings 8,500 16,702 -------------------------------------------------------------------------------- Repayment of borrowings -9,544 -17,073 -------------------------------------------------------------------------------- Change in other liabilities -181 191 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash used in financing activities -2,609 -650 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net change in cash and cash equivalents 2,213 2,112 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the 6,542 4,817 period -------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period 9,352 6,542 -------------------------------------------------------------------------------- Change 2,809 1,726 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Effects of changes in foreign exchange rates 596 -386 --------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity -------------------------------------------------------------------------------- - attributable to equity holders of the parent company -------------------------------------------------------------------------------- - EUR 1,000 Share Other Translation Retained Total capital reserves differences earnings -------------------------------------------------------------------------------- Equity at 2,141 243 -682 25,208 26,956 31 Dec 2012 -------------------------------------------------------------------------------- Acquisition of -88 -88 Corporation's own shares -------------------------------------------------------------------------------- Transfer of treasury 158 66 223 shares -------------------------------------------------------------------------------- Share-based -50 -50 compensation -------------------------------------------------------------------------------- Other changes -127 -127 -------------------------------------------------------------------------------- Total comprehensive -582 2,592 2,009 income for the period -------------------------------------------------------------------------------- Equity at 2,141 401 -1,219 27,600 28,924 31 Dec 2013 --------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity -------------------------------------------------------------------------------- Equity attributable to equity holders of the parent company -------------------------------------------------------------------------------- EUR 1,000 Share Other Fair Transl Retained Total capital reserves value ation earnings reserve Differ ences -------------------------------------------------------------------------------- Equity at 2,141 401 0 -1,219 27,600 28,924 31 Dec 2013 -------------------------------------------------------------------------------- Dividends -1,073 -1,073 -------------------------------------------------------------------------------- Acquisition of -312 -312 Corporation's own shares -------------------------------------------------------------------------------- Transfer of treasury shares -------------------------------------------------------------------------------- Share-based 263 263 compensation -------------------------------------------------------------------------------- Other changes -2 -256 -258 -------------------------------------------------------------------------------- Total comprehensive -182 523 5,461 5,802 income for the period -------------------------------------------------------------------------------- Equity at 2,141 401 -182 -698 31,682 33,346 31 Dec 2014 --------------------------------------------------------------------------------
Notes
1. Application of new or amended standards and interpretations
Comptel has adopted the new or amended standards and interpretations, effective for the financial years beginning on or after 1 January 2014. However, those have not had an impact on the consolidated financial statements.
2. Segment information
Net sales by segment
EUR 1,000 1 Jan - 1 Jan - 1 Oct - 1 Oct - 31 Dec 2014 31 Dec 2013 31 Dec 2014 31 Dec 2013 --------------------------------------------------------------------------
-------------------------------------------------------------------------- Europe 35,358 33,074 11,847 7,869 -------------------------------------------------------------------------- Asia-Pacific 24,752 20,946 5,713 4,969 -------------------------------------------------------------------------- Middle East and Africa 16,814 16,312 6,447 5,613 -------------------------------------------------------------------------- Americas 8,790 12,337 2,786 3,721 -------------------------------------------------------------------------- Group total 85,714 82,668 26,792 22,172 --------------------------------------------------------------------------
Operating profit/loss by segment
EUR 1,000 1 Jan - 1 Jan - 1 Oct - 1 Oct - 31 Dec 31 Dec 31 Dec 31 Dec 2014 2013 2014 2013 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Europe 19,538 15,636 7,687 3,719 -------------------------------------------------------------------------------- Asia-Pacific 14,526 10,056 2,431 2,493 -------------------------------------------------------------------------------- Middle East and Africa 7,271 6,652 3,332 2,994 -------------------------------------------------------------------------------- Americas 3,998 7,023 1,397 2,410 -------------------------------------------------------------------------------- Group unallocated expenses -37,023 -32,059 -10,907 -7,913 -------------------------------------------------------------------------------- Group operating profit/loss total 8,311 7,308 3,940 3,702 -------------------------------------------------------------------------------- Financial income and expenses -918 -1,339 235 -206 -------------------------------------------------------------------------------- Share of result of associated 45 -415 45 - 415 companies -------------------------------------------------------------------------------- Group profit/loss before income 7,436 5,554 4,220 3,081 taxes --------------------------------------------------------------------------------
3. Business combinations
During the accounting year 2014 no new businesses were acquired.
4. Impairment loss on goodwill
No impairment loss were recorded during accounting year 2014.
5. Income tax
Income tax according to the statement of comprehensive income for the period was EUR 1,975 thousand positive (EUR 2,962 thousand positive in 2013).
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.
The application process to prevent Comptel's double taxation is still pending with the Ministry of Finance in Finland. However, the process between the states is very slow and the timing of a change is hard to forecast. The interpretation of tax treaties may result in different views between the countries in questions. This could mean that the double taxation will prevail.
According to the Board of Adjustment's decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to EUR 969 thousand in accounting year 2014 (EUR 1,300 thousand).
6. Tangible assets
EUR 1,000 1 Jan - 31 Dec 2014 1 Jan - 31 Dec 2013 ---------------------------------------------------
--------------------------------------------------- Additions 740 1,139 --------------------------------------------------- Disposals -1,456 -60 ---------------------------------------------------
7. Related party transactions
The Comptel Group have 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 Dec 2014 1 Jan - 31 Dec 2013 ----------------------------------------------------------------
---------------------------------------------------------------- Associate ---------------------------------------------------------------- Other operating income 1 4 ---------------------------------------------------------------- Interest income 8 8 ----------------------------------------------------------------
----------------------------------------------------------------
EUR 1,000 31 Dec 2014 31 Dec 2013 -------------------------------------------------
------------------------------------------------- Associate ------------------------------------------------- Non-current receivables 113 106 -------------------------------------------------
-------------------------------------------------
-------------------------------------------------
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 Dec 1 Jan - 31 Dec 2014 2013 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Salaries and other short-term employee 2,131 1,524 benefits -------------------------------------------------------------------------------- Share-based payments 131 125 -------------------------------------------------------------------------------- Total 2,262 1,649 --------------------------------------------------------------------------------
Guarantees and other commitments
EUR 1,000 31 Dec 2014 31 Dec 2013 ------------------------------------
------------------------------------ Guarantees 7 33 ------------------------------------
8. Commitments
Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows:
EUR 1,000 31 Dec 2014 31 Dec 2013 ----------------------------------------------------
---------------------------------------------------- Less than one year 2,439 2,312 ---------------------------------------------------- Between one and five years 2,962 4,596 ---------------------------------------------------- Total 5,401 6,908 ----------------------------------------------------
The group had no material capital commitments for the purchase of tangible assets at 31 December 2014 and 31 December 2013.
9. Contingent liabilities
EUR 1,000 31 Dec 2014 31 Dec 2013 ---------------------------------------------
--------------------------------------------- Bank guarantees 2,881 1,674 --------------------------------------------- Corporate mortgages 200 200 ---------------------------------------------
EUR 1,000 31 Dec 2014 31 Dec 2013 --------------------------------------------------------------------
-------------------------------------------------------------------- Contingent liabilities on behalf of others -------------------------------------------------------------------- Guarantees 27 72 --------------------------------------------------------------------
10. Fair values of financial assets and liabilities
1 000 euros Book Fair Book Fair value value value value 31.12.20 31.12.20 31.12.20 31.12.20 14 14 13 13 -------------------------------------------------------------------------------- Financial assets -------------------------------------------------------------------------------- Financial assets at fair value through profit or loss -------------------------------------------------------------------------------- Forward contracts (level 2) 25 25 712 712 -------------------------------------------------------------------------------- Available-for-sale financial assets 87 87 87 87 (level 3)) -------------------------------------------------------------------------------- Non-current trade receivables 1,466 1,466 1,027 1,027 -------------------------------------------------------------------------------- Current trade receivables 27,449 27,499 22,507 22,507 -------------------------------------------------------------------------------- Other current receivables 4,624 4,624 5,193 5,193 -------------------------------------------------------------------------------- Cash and cash equivalents 9,352 9,352 6,542 6,542 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Financial liabilities -------------------------------------------------------------------------------- Financial liabilities at fair value through profit or loss -------------------------------------------------------------------------------- Forward contracts (level 2) 847 847 4 4 -------------------------------------------------------------------------------- Trade payables and other liabilities 32,713 32,713 25,078 25,078 -------------------------------------------------------------------------------- Non-current loans from financial 1,078 1,081 3,122 3,134 institutions -------------------------------------------------------------------------------- Non-current finance lease liabilities 179 179 299 299 -------------------------------------------------------------------------------- Other non-current liabilities - - 63 63 -------------------------------------------------------------------------------- Current loans from financial 5,984 6,095 4,984 5,107 institutions -------------------------------------------------------------------------------- Current finance lease liabilities 259 259 203 203 -------------------------------------------------------------------------------- Other current liabilities 63 63 100 100 --------------------------------------------------------------------------------
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11. Key figures
Financial summary 1 Jan 31 Dec 1 Jan - 31 Dec 2014 2013 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net sales, EUR 1,000 85,714 82,668 -------------------------------------------------------------------------------- Net sales, change % 3.7 0.3 -------------------------------------------------------------------------------- Operating profit/loss, EUR 1,000 8,311 7,308 -------------------------------------------------------------------------------- Operating profit/loss, change % 13.7 154.1 -------------------------------------------------------------------------------- Operating profit/loss, as % of net sales 9.7 8.8 -------------------------------------------------------------------------------- Profit/loss before taxes, EUR 1,000 7,436 5,554 -------------------------------------------------------------------------------- Profit/loss before taxes, as % of net sales 8.7 6.7 -------------------------------------------------------------------------------- Return on equity, % 17.5 9.3 -------------------------------------------------------------------------------- Return on investment, % 19.5 16.1 -------------------------------------------------------------------------------- Equity ratio, % 52.4 50.5 -------------------------------------------------------------------------------- Gross investments in tangible and intangible 740 551 assets, EUR 1,0001) -------------------------------------------------------------------------------- Gross investments in tangible and intangible 0.9 0.7 assets, as % of net sales -------------------------------------------------------------------------------- Capitalisations according to IAS 38 to intangible 4,720 5,510 assets -------------------------------------------------------------------------------- Research and development expenditure, EUR 1,000 16,791 17,790 -------------------------------------------------------------------------------- Research and development expenditure, 19.6 21.5 as % of net sales -------------------------------------------------------------------------------- Order backlog, EUR 1,000 55,213 40,756 -------------------------------------------------------------------------------- Average number of employees during the period 665 684 -------------------------------------------------------------------------------- Interest-bearing net liabilities, EUR 1,000 -1,789 2,228 -------------------------------------------------------------------------------- Gearing ratio, % -5.4 7.7 --------------------------------------------------------------------------------
Per share data 1 Jan - 1 Jan - 31 Dec 2014 31 Dec 2013 -----------------------------------------------------------------------------
----------------------------------------------------------------------------- Earnings per share (EPS), EUR 0.05 0.02 ----------------------------------------------------------------------------- EPS diluted, EUR 0.05 0.02 ----------------------------------------------------------------------------- Equity per share, EUR 0.31 0.27 ----------------------------------------------------------------------------- Dividend per share, EUR2) 0.02 0.01 ----------------------------------------------------------------------------- Dividend per earnings, % 39.5 41.2 ----------------------------------------------------------------------------- Effective dividend yield, % 2.0 2.1 ----------------------------------------------------------------------------- P/E ratio 19.4 19.8 -----------------------------------------------------------------------------
----------------------------------------------------------------------------- Adjusted number of shares at the end of the period 107,421,270 107,421,270 ----------------------------------------------------------------------------- of which the number of treasury shares 464,739 161,219 ----------------------------------------------------------------------------- Outstanding shares 106,956,531 107,260,051 ----------------------------------------------------------------------------- Adjusted average number of shares during the period 107,284,900 106,893,591 ----------------------------------------------------------------------------- Average number of shares, dilution included 107,625,526 106,893,591 -----------------------------------------------------------------------------
1) The figure does not include investments in development projects.
2) The Board's proposal
11. 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) ------------------------------------ -----
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Comptel Corporation's Annual General Meeting will be held on 9 April 2015 at 12.30 pm in Helsinki.
The annual report for 2014 can be obtained from Comptel's website www.comptel.com in week 12.
Schedule for Comptel's interim reports in 2015:
January-March 24 April 2015
January-June 4 August 2015
January-September 20 October 2015
COMPTEL CORPORATION
Board of Directors
Additional information: Mr Juhani Hintikka, President and CEO, tel. +358 9 700 1131 Mr Tom Jansson, CFO, tel. +358 40 700 1849
Distribution: NASDAQ OMX Helsinki Major media www.comptel.com
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