COMPTEL CORPORATION Stock Exchange Release, 10 February 2012 at 8.00
am
Net sales were at the previous year's level, operating profit increased thanks to the Axioss transaction. Investments for growth and a lower than expected license sales decreased the operative profitability. Order backlog was at a record high.
Key Figures for Fourth Quarter
-- Net sales EUR 23.3 million (Q4 2010: 23.5) -- Operating profit EUR 2.6 million (4.9) -- Earnings per share EUR 0.00 (0.03) -- Order backlog EUR 47.2 million (34.0)
Key Figures for Full Year
-- Net sales EUR 76.8 million (2010: 77.9) -- Operating profit EUR 11.6 million (8.9) -- Operating profit excluding one-off items EUR 2.8 million (8.9) -- Earnings per share EUR 0.07 (0.04) -- Number of employees at the year-end 639 (589)
Board of Directors proposes a dividend of EUR 0.03 (0.07) per share be paid for 2011.
Comptel's order backlog at the end of 2011 was strong, creating conditions for growth during 2012. Comptel net sales are estimated to grow over 10 per cent from the previous year. Operating profit 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.
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 9 February 2012.
Juhani Hintikka, President and CEO:
-The last quarter was again the best of the year for Comptel. Our business proceeded strongly in the Latin America, Middle East and Europe West. We won 10 new customers and received 10 significant orders, which increased our order backlog to a record high level. In line with our strategy, we continued investments in sales and service organisation which was reflected in our operative profitability.
The year 2011 was a time of transformation in Comptel. We renewed the organisation and executive board, established new teams and offices, launched new values and formulated a new strategy. We also hired a significant amount of new experts close to our customers and prospects. Further, we increased our investments in R&D to bring new products to the market. With the new products we aim to increase the share of license sales which will improve the company's profitability.
Towards the year-end we started to see the first results of the transformation process when both the employee and the customer satisfaction improved. During the year as a whole, we won 15 new customers of which 5 are located in new countries for us. Our order backlog strengthened significantly when we booked 23 orders with a value over 500,000 euros.
The sale of Axioss software increased our operating profit and in December we made a capital repayment and paid an extraordinary dividend to our shareholders. Comptel's financial position remained strong."
Business Review
In the fourth quarter, Comptel's net sales remained at the previous year's level and were EUR 23.3 million (23.5). Full year net sales decreased by 1.5 per cent compared to the previous year and were EUR 76.8 million (77.9). Net sales decreased as a result of the license sales, which was lower than in the previous year.
In the fourth quarter, operating profit decreased to EUR 2.6 million (4.9), representing 11.1 per cent (20.8) of net sales. The continued investments in sales and service organisation as well as a lower than targeted license sales weakened the profitability. Full year operating profit was EUR 11.6 million (8.9), which corresponds 15.1 per cent (11.4) of net sales. The sale of Axioss fulfillment software to Cisco Systems for EUR 22.1 million increased the operating profit. Full year operating profit excluding one-off items was EUR 2.8 million (8.9), corresponding 3.7 per cent (11.4) of net sales.
In 2011, net financial items were EUR -0.8 million (-0.7). Profit before taxes was EUR 10.7 million (8.5), which corresponds 13.9 per cent (10.9) of net sales. Net profit was EUR 7.3 million (4.7). Earnings per share for the financial year were EUR 0.07 (0.04).
Tax expense for the financial year was EUR 3.4 million (3.8). The expense included EUR 1.3 million (1.0) of withholding taxes due to double taxation. The cumulative amount of outstanding, non-credited and as an expense recognized double withholding taxes payment since 2004 is EUR 7.6 million.
The Group's order backlog strengthened significantly as a result of the orders received towards year-end and was EUR 47.2 million (34.0) at the end of the financial year. Maintenance agreements represented EUR 24.9 million (20.5) and other order backlog EUR 22.3 million (13.6) of the total.
Business Areas
Net sales, 10-12 10-12 Change 1-12 1-12 Change EUR million 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Europe East 3.6 5.6 -36.2 12.9 19.5 -33.9 -------------------------------------------------------------------------------- Europe West 6.1 5.2 18.8 19.1 17.6 8.3 -------------------------------------------------------------------------------- Asia-Pacific 5.2 7.1 -27.0 21.1 23.1 -8.7 -------------------------------------------------------------------------------- Middle East and Africa 3.9 3.1 26.5 13.7 9.8 39.8 -------------------------------------------------------------------------------- Americas 4.4 2.5 75.1 9.9 7.8 26.9 -------------------------------------------------------------------------------- Total 23.3 23.5 -1.2 76.8 77.9 -1.5 -------------------------------------------------------------------------------- Operating profit by area, EUR million -------------------------------------------------------------------------------- Europe East 0.0 2.8 -101.3 2.2 8.8 -75.2 -------------------------------------------------------------------------------- Europe West 4.8 3.4 41.0 11.4 11.0 3.7 -------------------------------------------------------------------------------- Asia-Pacific 2.7 4.8 -45.0 11.9 13.1 -8.8 -------------------------------------------------------------------------------- Middle East and Africa 1.5 1.6 -6.4 5.5 2.5 119.9 -------------------------------------------------------------------------------- Americas 3.0 1.8 66.5 5.7 4.2 35.0 -------------------------------------------------------------------------------- Unallocated costs -9.4 -9.5 -1.9 -25.0 -30.6 -18.3 -------------------------------------------------------------------------------- Total 2.6 4.9 -47.2 11.6 8.9 30.3 -------------------------------------------------------------------------------- Operating profit, % of net sales -------------------------------------------------------------------------------- Europe East -1.0 49.5 - 16.9 45.0 - -------------------------------------------------------------------------------- Europe West 78.6 66.2 - 60.0 62.6 - -------------------------------------------------------------------------------- Asia-Pacific 51.1 67.8 - 56.5 56.6 - -------------------------------------------------------------------------------- Middle East and Africa 38.4 51.8 - 39.8 25.3 - -------------------------------------------------------------------------------- Americas 67.7 71.2 - 56.9 53.5 - -------------------------------------------------------------------------------- Total 11.1 20.8 - 15.1 11.4 - --------------------------------------------------------------------------------
Net sales remained low in Europe East. In the previous year, net sales of the region included the license upgrades agreed at the time when the maintenance of Telenor's old IT systems was removed from Comptel. In Europe West, net sales turned to growth. In Asia-Pacific, net sales decreased from the previous year when Comptel recognised a major license upgrade in the region. In the Middle East and Americas, net sales grew significantly as a result of new deliveries and sales.
Low net sales impaired the profitability in Europe East. During the financial year, profitability remained good in Europe West, Asia-Pacific and in the Americas. In the Middle East, profitability improved from the previous year.
In October - December, Comptel received 10 significant orders. During the financial year, Comptel received 23 significant orders (13), 10 fulfillment, 9 control & charge and 4 covering both of these main solution areas. As significant orders Comptel reports sold projects and licenses with a value of EUR 500,000 at the minimum.
Net sales 10-12 10-12 Change % 1-12 1-12 Change % breakdown, 2011 2010 2011 2010 EUR million -------------------------------------------------------------------------------- Licenses 7.3 10.8 -32.6 21.1 26.2 -19.4 -------------------------------------------------------------------------------- Services 6.9 4.3 62.5 22.9 18.3 25.3 -------------------------------------------------------------------------------- Maintenance 9.1 8.5 6.8 32.7 33.4 -2.0 agreements -------------------------------------------------------------------------------- Total 23.3 23.5 -1.2 76.8 77.9 -1.5 --------------------------------------------------------------------------------
License sales decreased from the previous year. The increased amount of larger system deliveries raised the share of services, in line with Comptel's strategy. Maintenance revenue consists of maintenance and support of the delivered systems.
Net sales by sales channel, 10-12 10-12 Change 1-12 1-12 Change EUR million 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Direct sales 15.8 12.2 30.1 57.1 48.7 17.2 -------------------------------------------------------------------------------- Partner sales 7.4 11.4 -34.6 19.6 29.2 -32.6 -------------------------------------------------------------------------------- Total 23.3 23.5 -1.2 76.8 77.9 -1.5 --------------------------------------------------------------------------------
The share of direct sales increased in the last quarter and during the financial year. The share of partner sales decreased from the previous year, however, the role of partners was significant in several deals booked in as direct sales.
Financial Position
EUR million 31 Dec 2011 31 Dec 2010 Change % ------------------------------------------------------------------------------- Statement of financial position total 71.8 76.4 -6.0 ------------------------------------------------------------------------------- Liquid assets 9.4 7.0 33.8 ------------------------------------------------------------------------------- Trade receivables, gross 26.7 25.1 6.3 ------------------------------------------------------------------------------- Bad debt provision -0.7 -0.8 -16.9 ------------------------------------------------------------------------------- Trade receivables, net 26.0 24.3 7.1 ------------------------------------------------------------------------------- Accrued income 10.2 7.6 34.7 ------------------------------------------------------------------------------- Deferred income related to partial debiting 2.1 1.9 9.3 ------------------------------------------------------------------------------- Interest-bearing debt 0.1 0.1 -36.2 ------------------------------------------------------------------------------- Equity ratio, per cent 66.6 71.6 -7.1 -------------------------------------------------------------------------------
Statement of financial position total on 31 December 2011 was EUR 71.8 million (76.4), of which liquid assets amounted to EUR 9.4 million (7.0). The dividends of EUR 7.2 million (3.2) and a capital repayment of EUR 7.5 million were paid during the financial year.
Operating cash flow was EUR -3.5 million (1.7) in the last quarter, and EUR -0.0 million (16.6) during the financial year.
The trade receivables were EUR 26.0 million (24.3) at the end of the period. The accrued income was EUR 10.2 million (7.6). The deferred income related to partial debiting was EUR 2.1 million (1.9).
Comptel Corporation has available in full a revolving credit facility of EUR 15.0 million maturing in the year 2013. The equity ratio was 66.6 per cent (71.6) and the gearing ratio was 22.3 per cent negative (-14.1).
Research and Development (R&D)
EUR million 10-12 10-12 Change 1-12 1-12 Change 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Direct R&D expenditure 4.6 3.7 23.3 15.4 13.4 14.9 -------------------------------------------------------------------------------- Capitalisation of R&D expenditure -0.9 -1.0 -6.0 -4.0 -3.9 0.8 according to IAS 38 -------------------------------------------------------------------------------- R&D depreciation and impairment 0.7 1.1 -33.2 3.4 3.7 -8.9 charges -------------------------------------------------------------------------------- R&D expenditure, net 4.4 3.8 14.9 14.8 13.2 12.4 -------------------------------------------------------------------------------- Direct R&D expenditure, % of net 19.6 15.7 - 20.1 17.2 - sales --------------------------------------------------------------------------------
Comptel's R&D expenditure was mainly targeted at the service fulfillment automation of telecom operators and to the management in real-time of rapidly increasing data traffic. In addition, the company is developing an integrated software platform, which will enable a cost-efficient and solution-based R&D.
Investments
EUR million 10-12 10-12 Change 1-12 1-12 Change 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Gross investments in property, 0.4 0.2 63.2 1.0 1.1 -7.7 plant and equipment and intangible assets --------------------------------------------------------------------------------
Gross investments in the financial year comprised of investments in devices, software and furnishings. The investments were funded through cash flow from operations.
Personnel
31 Dec 2011 31 Dec 2010 Change % ---------------------------------------------------------------------------- Number of employees at the end of period 639 589 8.5 ----------------------------------------------------------------------------
1-12 2011 1-12 2010 Change % ----------------------------------------------------------------------------- Average number of personnel during the period 623 586 6.3 -----------------------------------------------------------------------------
The number of employees increased as Comptel invested in its sales and service organisation.
In the last quarter, the personnel expenses were 41.1 per cent of net sales (38.6). In the financial year, the personnel expenses were 47.9 per cent of net sales (45.6).
At the end of the year, 32.2 per cent (38.0) of the personnel were located in Finland, 24.1 per cent (23.6) in Malaysia, 8.9 per cent (5.8) in Bulgaria, 7.8 per cent (8.8) in the United Kingdom, 6.4 per cent (5.1) in the United Arab Emirates, 5.8 per cent (7.0) in Norway, and 14.8 per cent (11.7) in other countries where Comptel operates.
Comptel Share
The closing share price of the financial year was EUR 0.49 (0.69). Comptel's market value at the end of the year was EUR 52.3 million (73.5).
Comptel share 10-12 10-12 Change 1-12 1-12 Change 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Shares traded, million 7.2 26.1 -72.4 32.8 38.3 -14.3 -------------------------------------------------------------------------------- Shares traded, EUR 4.4 18.9 -76.7 21.0 29.0 -27.8 million -------------------------------------------------------------------------------- Highest price, EUR 0.72 0.90 -20.0 0.79 0.95 -16.8 -------------------------------------------------------------------------------- Lowest price, EUR 0.48 0.68 -29.4 0.48 0.68 -29.4 --------------------------------------------------------------------------------
Of Comptel's outstanding shares, 8.4 per cent (6.6) were nominee registered or held by foreign shareholders at the end of the financial year.
During the year, Comptel Corporation allotted 312,920 shares as part of share-based incentives to persons involved in the program and 110,148 shares to the members of the Board of Directors as part of their annual compensation.
During the review period, a total of 165,000 share options 2009B and 1 475 000 share options 2009C have been distributed to the key personnel of Comptel Group. A number of 250,000 share options 2009B and 180,000 share options 2009C were returned to the company.
The current share subscription price for option 2009B is EUR 0.73, which corresponds to the trade volume weighted average quotation of the Comptel share on the NASDAQ OMX during 1 April - 30 April 2010 deducted by the dividends and capital repayment paid. The current share subscription price for option 2009C is EUR 0.57, which corresponds to the trade volume weighted average quotation of the Comptel share on the NASDAQ OMX Helsinki during 1 April - 30 April 2011 deducted by the dividend and capital repayment paid.
Share options 2009A were listed on NASDAQ OMX Helsinki commencing from 1 November 2011. The trading code is CTL1VEW109 and ISIN code is FI4000031489. The current share subscription price with the share option 2009A is EUR 0.46, which corresponds to the trade volume weighted average quotation of the Comptel share on the Helsinki stock exchange during 1 April - 30 April 2009 deducted by the dividends and capital repayment paid.
The share subscription period of 2006B share options expired on 30 November 2011. During the subscription period no shares were subscribed.
The company held 292,685 of its own shares at the end of the financial year, which is 0.27 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 5,854.
The Annual General Meeting (AGM), held on 23 March 2011, approved the proposal of Board of Directors that a dividend of EUR 0.04 per share be paid for 2010. 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 2012.
The Extraordinary General Meeting, held on 29 November 2011, approved the proposal of Board of Directors that a capital repayment of EUR 0.07 per share and a dividend of EUR 0.03 per share be paid.
Corporate Governance
The Annual General Meeting, held on 23 March 2011, re-elected the following members for the Board of Directors: Mr Olli Riikkala, Mr Hannu Vaajoensuu, Mr Timo Kotilainen, Mr Juhani Lassila, Mr Petteri Walldén and Mr Henri Österlund. In its meeting held after the AGM, the Board of Directors re-elected Mr Olli Riikkala as chairman and Mr Hannu Vaajoensuu as vice chairman. Mr Juhani Lassila continues as chairman of the audit committee in which the other members are Mr Petteri Walldén and Mr Henri Österlund. Mr Olli Riikkala continues as chairman of the compensation committee in which the other members are Mr Timo Kotilainen and Mr Hannu Vaajoensuu.
Mr Juhani Hintikka acted as the President and CEO of Comptel as of 3 January 2011.
Following the organisational changes implemented in 2011, the members of Comptel Executive Board, in addition to CEO, are the business area leaders Mr Timo Koistinen (Europe East), Mr Mauro Carobene (Europe West), Mr Mika Korpinen (Asia-Pacific), Mr Veqar Islam (Middle East and Africa) and Mr Diego Becker (Americas), Mr Antti Koskela responsible for Products and Solutions, Mr Kari Onniselkä responsible for Global Services, Mr Mikko Hytönen (CFO), Ms Niina Pesonen (HR) and Mr Sami Ahonen responsible for Legal and M&A.
Events after the Reporting Period
Comptel Corporation announced on 26 January 2012 that it will acquire Xtract Oy, a Finnish software company specialising in analytics, for a total consideration of EUR 3.1 million (enterprise value). 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 which are mainly based in Espoo, Finland. The transaction was completed on 9 February 2012 after which time onwards Xtract Group will be consolidated into Comptel Group financials. The acquisition was financed through Comptel Corporation's liquid assets.
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.
In December 2011, Cisco Systems Inc. filed a request for arbitration against Comptel Corporation and its wholly owned subsidiary Comptel Communications Ltd in the London Court of International 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. Comptel regards Cisco's claims entirely against the recent agreements concluded by Comptel and Cisco for the sale of Axioss software to Cisco. This dispute has no impact on the next-generation Comptel Fulfillment 8, which will be released in summer 2012.
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
Comptel's order backlog at the end of 2011 was strong, creating conditions for growth during 2012.
In 2012, Comptel net sales are estimated to grow over 10 per cent from the previous year. Operating profit 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.
Board of Directors' Proposal for the Disposal of Profits
The Group parent company's distributable equity on 31 December 2011 was EUR 15,026, 574.95 (24,980,408.87).
The Board of Directors proposes to the General Meeting that a dividend of EUR 0.03 (0.04 and an extraordinary dividend 0.03) per share be paid, totalling EUR 3,202,863.75 (7,473,348.75).
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 9 February 2012. 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 2010 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.
Consolidated Statement of Comprehensive 1 Jan - 1 Jan - 1 Oct - 1 Oct - Income 31 Dec 31 Dec 31 Dec 31 Dec (EUR 1,000) 2011 2010 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net sales 76,751 77,888 23,269 23,544 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Other operating income 19,802 426 87 6 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Materials and services -5,285 -2,607 -1,997 -831 -------------------------------------------------------------------------------- Employee benefits -36,747 -35,522 -9,573 -9,088 -------------------------------------------------------------------------------- Depreciation, amortisation and -13,635 -5,941 -1,005 -1,443 impairment charges -------------------------------------------------------------------------------- Other operating expenses -29,277 -25,337 -8,194 -7,288 -------------------------------------------------------------------------------- -84,944 -69,407 -20,770 -18,649 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Operating profit/loss 11,609 8,908 2,586 4,900 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Financial income 536 864 -482 139 -------------------------------------------------------------------------------- Financial expenses -1,289 -1,574 -61 -248 -------------------------------------------------------------------------------- Share of result of associated companies -187 314 -187 314 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss before income taxes 10,669 8,512 1,857 5,105 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Income taxes -3,373 -3,811 -1,584 -1,984 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss for the period 7,297 4,702 273 3,121 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Other comprehensive income -------------------------------------------------------------------------------- Cash flow hedges -727 8 -314 -242 -------------------------------------------------------------------------------- Translation differences 175 900 288 180 -------------------------------------------------------------------------------- Income tax relating to components of 177 -2 70 63 other comprehensive income --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total comprehensive income for the 6,922 5,607 317 3,121 period --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 7,297 4,702 273 3,121 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total comprehensive income attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 6,922 5,607 317 3,121 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Shareholders of the parent company: --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Earnings per share, EUR 0.07 0.04 0.00 0.03 -------------------------------------------------------------------------------- Earnings per share, diluted, EUR 0.07 0.04 0.00 0.03 --------------------------------------------------------------------------------
Consolidated Statement of Financial Position (EUR 31 Dec 2011 31 Dec 2010 1,000) --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Assets --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Non-current assets -------------------------------------------------------------------------------- Goodwill 10,832 19,626 -------------------------------------------------------------------------------- Other intangible assets 9,255 10,948 -------------------------------------------------------------------------------- Tangible assets 1,381 1,842 -------------------------------------------------------------------------------- Investments in associates 817 1,003 -------------------------------------------------------------------------------- Available-for sale financial assets 87 87 -------------------------------------------------------------------------------- Deferred tax assets 636 783 -------------------------------------------------------------------------------- Other non-current receivables 409 432 -------------------------------------------------------------------------------- 23,418 34,721 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Current assets -------------------------------------------------------------------------------- Trade and other current receivables 38,919 34,580 -------------------------------------------------------------------------------- Current tax assets 22 36 -------------------------------------------------------------------------------- Cash and cash equivalents 9,401 7,028 -------------------------------------------------------------------------------- 48,343 41,644 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total assets 71,761 76,365 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Equity and liabilities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Equity attributable to equity holders of the parent company --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Share capital 2,141 2,141 -------------------------------------------------------------------------------- Fund of invested non-restricted equity 178 7,575 -------------------------------------------------------------------------------- Translation differences -682 -858 -------------------------------------------------------------------------------- Retained earnings 40,169 40,287 -------------------------------------------------------------------------------- Total equity 41,805 49,146 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Non-current liabilities -------------------------------------------------------------------------------- Deferred tax liabilities 4,798 5,762 -------------------------------------------------------------------------------- Provisions 2,750 1,954 -------------------------------------------------------------------------------- Non-current financial liabilities 29 68 -------------------------------------------------------------------------------- Other non-current liabilities - 1 -------------------------------------------------------------------------------- 7,577 7,784 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Current liabilities -------------------------------------------------------------------------------- Trade and other current liabilities 21,615 18,819 -------------------------------------------------------------------------------- Current tax liabilities 726 579 -------------------------------------------------------------------------------- Current financial liabilities 38 36 -------------------------------------------------------------------------------- 22,379 19,435 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total liabilities 29,956 27,219 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total equity and liabilities 71,761 76,365 --------------------------------------------------------------------------------
Consolidated Statement of Cash Flows 1 Jan - 31 1 Jan - 31 (EUR 1,000) Dec 2011 Dec 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from operating activities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss for the period 7,297 4,702 -------------------------------------------------------------------------------- Adjustments: -------------------------------------------------------------------------------- Non-cash transactions or items that are not part of -4,463 7,111 cash flows from operating activities -------------------------------------------------------------------------------- Interest and other financial expenses 63 139 -------------------------------------------------------------------------------- Interest income -56 -37 -------------------------------------------------------------------------------- Income taxes 3,373 3,811 -------------------------------------------------------------------------------- Change in working capital: -------------------------------------------------------------------------------- Change in trade and other current receivables -4,903 4,082 -------------------------------------------------------------------------------- Change in trade and other current liabilities 1,211 -1,711 -------------------------------------------------------------------------------- Change in provisions 796 -587 -------------------------------------------------------------------------------- Interest paid -63 -163 -------------------------------------------------------------------------------- Interest received 48 29 -------------------------------------------------------------------------------- Income taxes paid and tax returns received -3,350 -820 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash from operating activities -47 16,556 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from investing activities -------------------------------------------------------------------------------- Investments in tangible assets -434 -1,085 -------------------------------------------------------------------------------- Investments in intangible assets -558 -39 -------------------------------------------------------------------------------- Investments in development projects -3,965 -3,932 -------------------------------------------------------------------------------- Proceeds from sale of intangible assets 21,903 - -------------------------------------------------------------------------------- Change in other non-current receivables -58 -3 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash used in investing activities 16,888 -5,059 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from financing activities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Dividends paid -7,242 -3,191 -------------------------------------------------------------------------------- Capital repayment -7,473 - -------------------------------------------------------------------------------- Acquisition of Corporation's own shares - -468 -------------------------------------------------------------------------------- Lease payments -38 - -------------------------------------------------------------------------------- Proceeds from borrowings - 6,000 -------------------------------------------------------------------------------- Repayment of borrowings - -14,000 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash used in financing activities -14,753 -11,659 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net change in cash and cash equivalents 2,088 -163 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the 7,028 6,730 period -------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period 9,401 7,028 -------------------------------------------------------------------------------- Change 2,373 298 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Effects of changes in foreign exchange rates 286 461 --------------------------------------------------------------------------------
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 31 Dec 2,141 7,499 -1,757 -45 -287 38,748 46,299 2009 -------------------------------------------------------------------------------- Dividends -3,191 -3,191 -------------------------------------------------------------------------------- Acquisition of -468 -468 Corporation's own shares -------------------------------------------------------------------------------- Transfer of 76 155 -155 76 treasury shares -------------------------------------------------------------------------------- Share-based 824 824 compensation -------------------------------------------------------------------------------- Total 900 6 4,702 5,607 comprehensive income for the period -------------------------------------------------------------------------------- Equity at 2,141 7,575 -858 -40 -600 40,927 49,146 31 Dec 2010 --------------------------------------------------------------------------------
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 -7,473 -7,473 -------------------------------------------------------------------------------- Capital -7,473 -7,473 repayment -------------------------------------------------------------------------------- Transfer of 76 225 -225 76 treasury shares -------------------------------------------------------------------------------- Share-based 608 608 compensation -------------------------------------------------------------------------------- Total 175 -550 7,297 6,922 comprehensive income for the period -------------------------------------------------------------------------------- Equity at 2,141 178 -682 -589 -375 41,133 41,805 31 Dec 2011 --------------------------------------------------------------------------------
Notes
1. Application of new or amended standards and interpretations
On 1 January 2011 the Group adopted the following new and amended standards and interpretations endorsed by the EU and that are applicable to Comptel:
Revised IAS 24 Related Party Disclosures. The amendment simplifies and clarifies the definition of a related party and relaxes the disclosure requirements of business operations between public enterprises.
Improvements to IFRSs (May 2010) (mainly effective for financial periods beginning on or after 1 July 2010). Under this procedure minor and non-urgent amendments are grouped together and carried out through a single document annually.
2. Segment information
Net sales by segment
EUR 1,000 1 Jan - 1 Jan - 1 Oct - 1 Oct - 31 Dec 2011 31 Dec 2010 31 Dec 2011 31 Dec 2010 --------------------------------------------------------------------------
-------------------------------------------------------------------------- Europe East 12,910 19,517 3,585 5,622 -------------------------------------------------------------------------- Europe West 19,074 17,611 6,125 5,154 -------------------------------------------------------------------------- Asia-Pacific 21,109 23,118 5,219 7,147 -------------------------------------------------------------------------- Middle East and Africa 13,716 9,810 3,900 3,084 -------------------------------------------------------------------------- Americas 9,942 7,832 4,441 2,536 -------------------------------------------------------------------------- Group total 76,751 77,888 23,269 23,544 --------------------------------------------------------------------------
Operating profit/loss by segment
EUR 1,000 1 Jan - 1 Jan - 1 Oct - 1 Oct - 31 Dec 31 Dec 31 Dec 31 Dec 2011 2010 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Europe East 2,180 8,780 -35 2,780 -------------------------------------------------------------------------------- Europe West 11,442 11,030 4,813 3,412 -------------------------------------------------------------------------------- Asia-Pacific 11,919 13,076 2,667 4,847 -------------------------------------------------------------------------------- Middle East and Africa 5,458 2,482 1,496 1,598 -------------------------------------------------------------------------------- Americas 5,657 4,189 3,007 1,806 -------------------------------------------------------------------------------- Group unallocated expenses -25,047 -30,649 -9,362 -9,543 -------------------------------------------------------------------------------- Group operating profit/loss total 11,609 8,908 2,586 4,900 -------------------------------------------------------------------------------- Financial income and expenses -753 -710 -543 -109 -------------------------------------------------------------------------------- Share of result of associated -187 314 -187 314 companies -------------------------------------------------------------------------------- Group profit/loss before income 10,669 8,512 1,857 5,105 taxes --------------------------------------------------------------------------------
3. Income tax expense
Tax expense according to the statement of comprehensive income for the period was EUR 3,373 thousand (EUR 3,811 thousand 2010).
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.
At the end of year 2010 Comptel had a tax receivable of EUR 595 thousand from Greece and Romania. The Ministry of Finance had earlier announced that it had reached an agreement with these two countries. However, during the refund process factors indicating that Greece will not adhere to the agreement have come up. Comptel recognised the tax receivables during 2011.
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 1,189 thousand in January - December (EUR 1,006 thousand).
4. Tangible assets
EUR 1,000 1 Jan - 31 Dec 2011 1 Jan - 31 Dec 2010 ---------------------------------------------------
--------------------------------------------------- Additions 479 1,190 --------------------------------------------------- Disposals -2 -38 ---------------------------------------------------
5. 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 Dec 2011 1 Jan - 31 Dec 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Associate -------------------------------------------------------------------------------- Purchases of goods and services 156 100 -------------------------------------------------------------------------------- Interest income 8 7 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Companies under management's influence -------------------------------------------------------------------------------- Purchases of goods and services 14 43 --------------------------------------------------------------------------------
EUR 1,000 31 Dec 2011 31 Dec 2010 ----------------------------------------------------------------
---------------------------------------------------------------- Associate ---------------------------------------------------------------- Non-current receivables 91 83 ----------------------------------------------------------------
---------------------------------------------------------------- Companies under management's influence ---------------------------------------------------------------- Trade and other current liabilities - 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 Dec 1 Jan - 31 Dec 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Salaries and other short-term employee 2,942 2,560 benefits -------------------------------------------------------------------------------- Share-based payments 207 519 -------------------------------------------------------------------------------- Total 3,148 3,078 --------------------------------------------------------------------------------
6. Commitments
Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows:
EUR 1,000 31 Dec 2011 31 Dec 2010 ----------------------------------------------------
---------------------------------------------------- Less than one year 3,377 3,597 ---------------------------------------------------- Between one and five years 7,909 11,226 ---------------------------------------------------- More than five years - 751 ---------------------------------------------------- Total 11,286 15,574 ----------------------------------------------------
The group had no material capital commitments for the purchase of tangible assets at 31 December 2011 and 31 December 2010.
7. Contingent liabilities
EUR 1,000 31 Dec 2011 31 Dec 2010 -----------------------------------------
----------------------------------------- Bank guarantees 1,847 2,061 -----------------------------------------
8. Events after the reporting period
Comptel Corporation announced on 26 January 2012 that it will acquire Xtract Oy, a Finnish software company specialising in analytics, for a total consideration of EUR 3.1 million (enterprise value). The transaction was completed on 9 February 2012 after which time onwards Xtract Group will be consolidated into Comptel Group financials. The transaction was completed on 9 February 2012 after which time onwards Xtract Group will be consolidated into Comptel Group financials.
9. The impact of the Axioss software sale on the operating result
During the third quarter Comptel sold the Axioss software to Cisco.
The impact on the net operating result is as follows:
EUR 1,000 ----------------------------------------------------------------------
---------------------------------------------------------------------- Sales price 22,122 ---------------------------------------------------------------------- Impairment of intangible assets related to the operations sold -2,198 ---------------------------------------------------------------------- Expenses related to the asset sale -219 ---------------------------------------------------------------------- Other operating income, net 19,705 ----------------------------------------------------------------------
---------------------------------------------------------------------- Goodwill impairment -8,742 ----------------------------------------------------------------------
---------------------------------------------------------------------- Impact on operating result 10,963 ----------------------------------------------------------------------
The asset sale resulted in one-off expenses of 2,165 thousand euros which impacted the operating result.
10. Key figures
Financial summary 1 Jan - 31 Dec 1 Jan - 31 Dec 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net sales, EUR 1,000 76,751 77,888 -------------------------------------------------------------------------------- Net sales, change % -1.5 4.0 -------------------------------------------------------------------------------- Operating profit/loss, EUR 1,000 11,609 8,908 -------------------------------------------------------------------------------- Operating profit/loss, change % 30.3 775.2 -------------------------------------------------------------------------------- Operating profit/loss, as % of net sales 15.1 11.4 -------------------------------------------------------------------------------- Profit/loss before taxes, EUR 1,000 10,669 8,512 -------------------------------------------------------------------------------- Profit/loss before taxes, as % of net sales 13.9 10.9 -------------------------------------------------------------------------------- Return on equity, % 16.0 9.9 -------------------------------------------------------------------------------- Return on investment, % 22.9 16.3 -------------------------------------------------------------------------------- Equity ratio, % 66.6 71.6 -------------------------------------------------------------------------------- Gross investments in tangible and intangible 1,037 1,124 assets, EUR 1,000 -------------------------------------------------------------------------------- Gross investments in tangible and intangible 1.4 1.4 assets, as % of net sales -------------------------------------------------------------------------------- Capitalisations according to IAS 38 to 3,965 3,932 intangible assets -------------------------------------------------------------------------------- Research and development expenditure, EUR 1,000 15,419 13,414 -------------------------------------------------------------------------------- Research and development expenditure, 20.1 17.2 as % of net sales -------------------------------------------------------------------------------- Order backlog, EUR 1,000 1) 47,217 34,049 -------------------------------------------------------------------------------- Average number of employees during the period 623 586 -------------------------------------------------------------------------------- Interest-bearing net liabilities, EUR 1,000 -9,334 -6,923 -------------------------------------------------------------------------------- Gearing ratio, % -22.3 -14.1 --------------------------------------------------------------------------------
Per share data 1 Jan - 31 Dec 1 Jan - 31 Dec 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Earnings per share (EPS), EUR 0.07 0.04 -------------------------------------------------------------------------------- EPS diluted, EUR 0.07 0.04 -------------------------------------------------------------------------------- Equity per share, EUR 0.39 0.46 -------------------------------------------------------------------------------- Dividend per share, EUR 0.03 0.04 -------------------------------------------------------------------------------- Dividend per earnings, % 43.9 90.6 -------------------------------------------------------------------------------- Effective dividend yield, % 6.1 5.8 -------------------------------------------------------------------------------- P/E ratio 7.2 15.6 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Adjusted number of shares at the end of 107,054,810 107,054,810 the period -------------------------------------------------------------------------------- of which the number of treasury shares 292,685 599,905 -------------------------------------------------------------------------------- Outstanding shares 106,762,125 106,454,905 -------------------------------------------------------------------------------- Adjusted average number of shares during 106,775,223 106,477,113 the period -------------------------------------------------------------------------------- Average number of shares, dilution 106,775,223 107,398,488 included --------------------------------------------------------------------------------
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)
--------------------------------------------------------------------------------
Comptel Corporation's Annual General Meeting will be held on 26 March 2012 at 11 am in Helsinki.
The annual report for 2011 can be obtained from Comptel's website www.comptel.com in week 9.
Schedule for Comptel's interim reports in 2012: January-March 20 April January-June 18 July January-September 18 October
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
Net sales were at the previous year's level, operating profit increased thanks to the Axioss transaction. Investments for growth and a lower than expected license sales decreased the operative profitability. Order backlog was at a record high.
Key Figures for Fourth Quarter
-- Net sales EUR 23.3 million (Q4 2010: 23.5) -- Operating profit EUR 2.6 million (4.9) -- Earnings per share EUR 0.00 (0.03) -- Order backlog EUR 47.2 million (34.0)
Key Figures for Full Year
-- Net sales EUR 76.8 million (2010: 77.9) -- Operating profit EUR 11.6 million (8.9) -- Operating profit excluding one-off items EUR 2.8 million (8.9) -- Earnings per share EUR 0.07 (0.04) -- Number of employees at the year-end 639 (589)
Board of Directors proposes a dividend of EUR 0.03 (0.07) per share be paid for 2011.
Comptel's order backlog at the end of 2011 was strong, creating conditions for growth during 2012. Comptel net sales are estimated to grow over 10 per cent from the previous year. Operating profit 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.
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 9 February 2012.
Juhani Hintikka, President and CEO:
-The last quarter was again the best of the year for Comptel. Our business proceeded strongly in the Latin America, Middle East and Europe West. We won 10 new customers and received 10 significant orders, which increased our order backlog to a record high level. In line with our strategy, we continued investments in sales and service organisation which was reflected in our operative profitability.
The year 2011 was a time of transformation in Comptel. We renewed the organisation and executive board, established new teams and offices, launched new values and formulated a new strategy. We also hired a significant amount of new experts close to our customers and prospects. Further, we increased our investments in R&D to bring new products to the market. With the new products we aim to increase the share of license sales which will improve the company's profitability.
Towards the year-end we started to see the first results of the transformation process when both the employee and the customer satisfaction improved. During the year as a whole, we won 15 new customers of which 5 are located in new countries for us. Our order backlog strengthened significantly when we booked 23 orders with a value over 500,000 euros.
The sale of Axioss software increased our operating profit and in December we made a capital repayment and paid an extraordinary dividend to our shareholders. Comptel's financial position remained strong."
Business Review
In the fourth quarter, Comptel's net sales remained at the previous year's level and were EUR 23.3 million (23.5). Full year net sales decreased by 1.5 per cent compared to the previous year and were EUR 76.8 million (77.9). Net sales decreased as a result of the license sales, which was lower than in the previous year.
In the fourth quarter, operating profit decreased to EUR 2.6 million (4.9), representing 11.1 per cent (20.8) of net sales. The continued investments in sales and service organisation as well as a lower than targeted license sales weakened the profitability. Full year operating profit was EUR 11.6 million (8.9), which corresponds 15.1 per cent (11.4) of net sales. The sale of Axioss fulfillment software to Cisco Systems for EUR 22.1 million increased the operating profit. Full year operating profit excluding one-off items was EUR 2.8 million (8.9), corresponding 3.7 per cent (11.4) of net sales.
In 2011, net financial items were EUR -0.8 million (-0.7). Profit before taxes was EUR 10.7 million (8.5), which corresponds 13.9 per cent (10.9) of net sales. Net profit was EUR 7.3 million (4.7). Earnings per share for the financial year were EUR 0.07 (0.04).
Tax expense for the financial year was EUR 3.4 million (3.8). The expense included EUR 1.3 million (1.0) of withholding taxes due to double taxation. The cumulative amount of outstanding, non-credited and as an expense recognized double withholding taxes payment since 2004 is EUR 7.6 million.
The Group's order backlog strengthened significantly as a result of the orders received towards year-end and was EUR 47.2 million (34.0) at the end of the financial year. Maintenance agreements represented EUR 24.9 million (20.5) and other order backlog EUR 22.3 million (13.6) of the total.
Business Areas
Net sales, 10-12 10-12 Change 1-12 1-12 Change EUR million 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Europe East 3.6 5.6 -36.2 12.9 19.5 -33.9 -------------------------------------------------------------------------------- Europe West 6.1 5.2 18.8 19.1 17.6 8.3 -------------------------------------------------------------------------------- Asia-Pacific 5.2 7.1 -27.0 21.1 23.1 -8.7 -------------------------------------------------------------------------------- Middle East and Africa 3.9 3.1 26.5 13.7 9.8 39.8 -------------------------------------------------------------------------------- Americas 4.4 2.5 75.1 9.9 7.8 26.9 -------------------------------------------------------------------------------- Total 23.3 23.5 -1.2 76.8 77.9 -1.5 -------------------------------------------------------------------------------- Operating profit by area, EUR million -------------------------------------------------------------------------------- Europe East 0.0 2.8 -101.3 2.2 8.8 -75.2 -------------------------------------------------------------------------------- Europe West 4.8 3.4 41.0 11.4 11.0 3.7 -------------------------------------------------------------------------------- Asia-Pacific 2.7 4.8 -45.0 11.9 13.1 -8.8 -------------------------------------------------------------------------------- Middle East and Africa 1.5 1.6 -6.4 5.5 2.5 119.9 -------------------------------------------------------------------------------- Americas 3.0 1.8 66.5 5.7 4.2 35.0 -------------------------------------------------------------------------------- Unallocated costs -9.4 -9.5 -1.9 -25.0 -30.6 -18.3 -------------------------------------------------------------------------------- Total 2.6 4.9 -47.2 11.6 8.9 30.3 -------------------------------------------------------------------------------- Operating profit, % of net sales -------------------------------------------------------------------------------- Europe East -1.0 49.5 - 16.9 45.0 - -------------------------------------------------------------------------------- Europe West 78.6 66.2 - 60.0 62.6 - -------------------------------------------------------------------------------- Asia-Pacific 51.1 67.8 - 56.5 56.6 - -------------------------------------------------------------------------------- Middle East and Africa 38.4 51.8 - 39.8 25.3 - -------------------------------------------------------------------------------- Americas 67.7 71.2 - 56.9 53.5 - -------------------------------------------------------------------------------- Total 11.1 20.8 - 15.1 11.4 - --------------------------------------------------------------------------------
Net sales remained low in Europe East. In the previous year, net sales of the region included the license upgrades agreed at the time when the maintenance of Telenor's old IT systems was removed from Comptel. In Europe West, net sales turned to growth. In Asia-Pacific, net sales decreased from the previous year when Comptel recognised a major license upgrade in the region. In the Middle East and Americas, net sales grew significantly as a result of new deliveries and sales.
Low net sales impaired the profitability in Europe East. During the financial year, profitability remained good in Europe West, Asia-Pacific and in the Americas. In the Middle East, profitability improved from the previous year.
In October - December, Comptel received 10 significant orders. During the financial year, Comptel received 23 significant orders (13), 10 fulfillment, 9 control & charge and 4 covering both of these main solution areas. As significant orders Comptel reports sold projects and licenses with a value of EUR 500,000 at the minimum.
Net sales 10-12 10-12 Change % 1-12 1-12 Change % breakdown, 2011 2010 2011 2010 EUR million -------------------------------------------------------------------------------- Licenses 7.3 10.8 -32.6 21.1 26.2 -19.4 -------------------------------------------------------------------------------- Services 6.9 4.3 62.5 22.9 18.3 25.3 -------------------------------------------------------------------------------- Maintenance 9.1 8.5 6.8 32.7 33.4 -2.0 agreements -------------------------------------------------------------------------------- Total 23.3 23.5 -1.2 76.8 77.9 -1.5 --------------------------------------------------------------------------------
License sales decreased from the previous year. The increased amount of larger system deliveries raised the share of services, in line with Comptel's strategy. Maintenance revenue consists of maintenance and support of the delivered systems.
Net sales by sales channel, 10-12 10-12 Change 1-12 1-12 Change EUR million 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Direct sales 15.8 12.2 30.1 57.1 48.7 17.2 -------------------------------------------------------------------------------- Partner sales 7.4 11.4 -34.6 19.6 29.2 -32.6 -------------------------------------------------------------------------------- Total 23.3 23.5 -1.2 76.8 77.9 -1.5 --------------------------------------------------------------------------------
The share of direct sales increased in the last quarter and during the financial year. The share of partner sales decreased from the previous year, however, the role of partners was significant in several deals booked in as direct sales.
Financial Position
EUR million 31 Dec 2011 31 Dec 2010 Change % ------------------------------------------------------------------------------- Statement of financial position total 71.8 76.4 -6.0 ------------------------------------------------------------------------------- Liquid assets 9.4 7.0 33.8 ------------------------------------------------------------------------------- Trade receivables, gross 26.7 25.1 6.3 ------------------------------------------------------------------------------- Bad debt provision -0.7 -0.8 -16.9 ------------------------------------------------------------------------------- Trade receivables, net 26.0 24.3 7.1 ------------------------------------------------------------------------------- Accrued income 10.2 7.6 34.7 ------------------------------------------------------------------------------- Deferred income related to partial debiting 2.1 1.9 9.3 ------------------------------------------------------------------------------- Interest-bearing debt 0.1 0.1 -36.2 ------------------------------------------------------------------------------- Equity ratio, per cent 66.6 71.6 -7.1 -------------------------------------------------------------------------------
Statement of financial position total on 31 December 2011 was EUR 71.8 million (76.4), of which liquid assets amounted to EUR 9.4 million (7.0). The dividends of EUR 7.2 million (3.2) and a capital repayment of EUR 7.5 million were paid during the financial year.
Operating cash flow was EUR -3.5 million (1.7) in the last quarter, and EUR -0.0 million (16.6) during the financial year.
The trade receivables were EUR 26.0 million (24.3) at the end of the period. The accrued income was EUR 10.2 million (7.6). The deferred income related to partial debiting was EUR 2.1 million (1.9).
Comptel Corporation has available in full a revolving credit facility of EUR 15.0 million maturing in the year 2013. The equity ratio was 66.6 per cent (71.6) and the gearing ratio was 22.3 per cent negative (-14.1).
Research and Development (R&D)
EUR million 10-12 10-12 Change 1-12 1-12 Change 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Direct R&D expenditure 4.6 3.7 23.3 15.4 13.4 14.9 -------------------------------------------------------------------------------- Capitalisation of R&D expenditure -0.9 -1.0 -6.0 -4.0 -3.9 0.8 according to IAS 38 -------------------------------------------------------------------------------- R&D depreciation and impairment 0.7 1.1 -33.2 3.4 3.7 -8.9 charges -------------------------------------------------------------------------------- R&D expenditure, net 4.4 3.8 14.9 14.8 13.2 12.4 -------------------------------------------------------------------------------- Direct R&D expenditure, % of net 19.6 15.7 - 20.1 17.2 - sales --------------------------------------------------------------------------------
Comptel's R&D expenditure was mainly targeted at the service fulfillment automation of telecom operators and to the management in real-time of rapidly increasing data traffic. In addition, the company is developing an integrated software platform, which will enable a cost-efficient and solution-based R&D.
Investments
EUR million 10-12 10-12 Change 1-12 1-12 Change 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Gross investments in property, 0.4 0.2 63.2 1.0 1.1 -7.7 plant and equipment and intangible assets --------------------------------------------------------------------------------
Gross investments in the financial year comprised of investments in devices, software and furnishings. The investments were funded through cash flow from operations.
Personnel
31 Dec 2011 31 Dec 2010 Change % ---------------------------------------------------------------------------- Number of employees at the end of period 639 589 8.5 ----------------------------------------------------------------------------
1-12 2011 1-12 2010 Change % ----------------------------------------------------------------------------- Average number of personnel during the period 623 586 6.3 -----------------------------------------------------------------------------
The number of employees increased as Comptel invested in its sales and service organisation.
In the last quarter, the personnel expenses were 41.1 per cent of net sales (38.6). In the financial year, the personnel expenses were 47.9 per cent of net sales (45.6).
At the end of the year, 32.2 per cent (38.0) of the personnel were located in Finland, 24.1 per cent (23.6) in Malaysia, 8.9 per cent (5.8) in Bulgaria, 7.8 per cent (8.8) in the United Kingdom, 6.4 per cent (5.1) in the United Arab Emirates, 5.8 per cent (7.0) in Norway, and 14.8 per cent (11.7) in other countries where Comptel operates.
Comptel Share
The closing share price of the financial year was EUR 0.49 (0.69). Comptel's market value at the end of the year was EUR 52.3 million (73.5).
Comptel share 10-12 10-12 Change 1-12 1-12 Change 2011 2010 % 2011 2010 % -------------------------------------------------------------------------------- Shares traded, million 7.2 26.1 -72.4 32.8 38.3 -14.3 -------------------------------------------------------------------------------- Shares traded, EUR 4.4 18.9 -76.7 21.0 29.0 -27.8 million -------------------------------------------------------------------------------- Highest price, EUR 0.72 0.90 -20.0 0.79 0.95 -16.8 -------------------------------------------------------------------------------- Lowest price, EUR 0.48 0.68 -29.4 0.48 0.68 -29.4 --------------------------------------------------------------------------------
Of Comptel's outstanding shares, 8.4 per cent (6.6) were nominee registered or held by foreign shareholders at the end of the financial year.
During the year, Comptel Corporation allotted 312,920 shares as part of share-based incentives to persons involved in the program and 110,148 shares to the members of the Board of Directors as part of their annual compensation.
During the review period, a total of 165,000 share options 2009B and 1 475 000 share options 2009C have been distributed to the key personnel of Comptel Group. A number of 250,000 share options 2009B and 180,000 share options 2009C were returned to the company.
The current share subscription price for option 2009B is EUR 0.73, which corresponds to the trade volume weighted average quotation of the Comptel share on the NASDAQ OMX during 1 April - 30 April 2010 deducted by the dividends and capital repayment paid. The current share subscription price for option 2009C is EUR 0.57, which corresponds to the trade volume weighted average quotation of the Comptel share on the NASDAQ OMX Helsinki during 1 April - 30 April 2011 deducted by the dividend and capital repayment paid.
Share options 2009A were listed on NASDAQ OMX Helsinki commencing from 1 November 2011. The trading code is CTL1VEW109 and ISIN code is FI4000031489. The current share subscription price with the share option 2009A is EUR 0.46, which corresponds to the trade volume weighted average quotation of the Comptel share on the Helsinki stock exchange during 1 April - 30 April 2009 deducted by the dividends and capital repayment paid.
The share subscription period of 2006B share options expired on 30 November 2011. During the subscription period no shares were subscribed.
The company held 292,685 of its own shares at the end of the financial year, which is 0.27 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 5,854.
The Annual General Meeting (AGM), held on 23 March 2011, approved the proposal of Board of Directors that a dividend of EUR 0.04 per share be paid for 2010. 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 2012.
The Extraordinary General Meeting, held on 29 November 2011, approved the proposal of Board of Directors that a capital repayment of EUR 0.07 per share and a dividend of EUR 0.03 per share be paid.
Corporate Governance
The Annual General Meeting, held on 23 March 2011, re-elected the following members for the Board of Directors: Mr Olli Riikkala, Mr Hannu Vaajoensuu, Mr Timo Kotilainen, Mr Juhani Lassila, Mr Petteri Walldén and Mr Henri Österlund. In its meeting held after the AGM, the Board of Directors re-elected Mr Olli Riikkala as chairman and Mr Hannu Vaajoensuu as vice chairman. Mr Juhani Lassila continues as chairman of the audit committee in which the other members are Mr Petteri Walldén and Mr Henri Österlund. Mr Olli Riikkala continues as chairman of the compensation committee in which the other members are Mr Timo Kotilainen and Mr Hannu Vaajoensuu.
Mr Juhani Hintikka acted as the President and CEO of Comptel as of 3 January 2011.
Following the organisational changes implemented in 2011, the members of Comptel Executive Board, in addition to CEO, are the business area leaders Mr Timo Koistinen (Europe East), Mr Mauro Carobene (Europe West), Mr Mika Korpinen (Asia-Pacific), Mr Veqar Islam (Middle East and Africa) and Mr Diego Becker (Americas), Mr Antti Koskela responsible for Products and Solutions, Mr Kari Onniselkä responsible for Global Services, Mr Mikko Hytönen (CFO), Ms Niina Pesonen (HR) and Mr Sami Ahonen responsible for Legal and M&A.
Events after the Reporting Period
Comptel Corporation announced on 26 January 2012 that it will acquire Xtract Oy, a Finnish software company specialising in analytics, for a total consideration of EUR 3.1 million (enterprise value). 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 which are mainly based in Espoo, Finland. The transaction was completed on 9 February 2012 after which time onwards Xtract Group will be consolidated into Comptel Group financials. The acquisition was financed through Comptel Corporation's liquid assets.
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.
In December 2011, Cisco Systems Inc. filed a request for arbitration against Comptel Corporation and its wholly owned subsidiary Comptel Communications Ltd in the London Court of International 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. Comptel regards Cisco's claims entirely against the recent agreements concluded by Comptel and Cisco for the sale of Axioss software to Cisco. This dispute has no impact on the next-generation Comptel Fulfillment 8, which will be released in summer 2012.
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
Comptel's order backlog at the end of 2011 was strong, creating conditions for growth during 2012.
In 2012, Comptel net sales are estimated to grow over 10 per cent from the previous year. Operating profit 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.
Board of Directors' Proposal for the Disposal of Profits
The Group parent company's distributable equity on 31 December 2011 was EUR 15,026, 574.95 (24,980,408.87).
The Board of Directors proposes to the General Meeting that a dividend of EUR 0.03 (0.04 and an extraordinary dividend 0.03) per share be paid, totalling EUR 3,202,863.75 (7,473,348.75).
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 9 February 2012. 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 2010 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.
Consolidated Statement of Comprehensive 1 Jan - 1 Jan - 1 Oct - 1 Oct - Income 31 Dec 31 Dec 31 Dec 31 Dec (EUR 1,000) 2011 2010 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net sales 76,751 77,888 23,269 23,544 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Other operating income 19,802 426 87 6 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Materials and services -5,285 -2,607 -1,997 -831 -------------------------------------------------------------------------------- Employee benefits -36,747 -35,522 -9,573 -9,088 -------------------------------------------------------------------------------- Depreciation, amortisation and -13,635 -5,941 -1,005 -1,443 impairment charges -------------------------------------------------------------------------------- Other operating expenses -29,277 -25,337 -8,194 -7,288 -------------------------------------------------------------------------------- -84,944 -69,407 -20,770 -18,649 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Operating profit/loss 11,609 8,908 2,586 4,900 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Financial income 536 864 -482 139 -------------------------------------------------------------------------------- Financial expenses -1,289 -1,574 -61 -248 -------------------------------------------------------------------------------- Share of result of associated companies -187 314 -187 314 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss before income taxes 10,669 8,512 1,857 5,105 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Income taxes -3,373 -3,811 -1,584 -1,984 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss for the period 7,297 4,702 273 3,121 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Other comprehensive income -------------------------------------------------------------------------------- Cash flow hedges -727 8 -314 -242 -------------------------------------------------------------------------------- Translation differences 175 900 288 180 -------------------------------------------------------------------------------- Income tax relating to components of 177 -2 70 63 other comprehensive income --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total comprehensive income for the 6,922 5,607 317 3,121 period --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 7,297 4,702 273 3,121 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total comprehensive income attributable to: -------------------------------------------------------------------------------- Equity holders of the parent company 6,922 5,607 317 3,121 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Shareholders of the parent company: --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Earnings per share, EUR 0.07 0.04 0.00 0.03 -------------------------------------------------------------------------------- Earnings per share, diluted, EUR 0.07 0.04 0.00 0.03 --------------------------------------------------------------------------------
Consolidated Statement of Financial Position (EUR 31 Dec 2011 31 Dec 2010 1,000) --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Assets --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Non-current assets -------------------------------------------------------------------------------- Goodwill 10,832 19,626 -------------------------------------------------------------------------------- Other intangible assets 9,255 10,948 -------------------------------------------------------------------------------- Tangible assets 1,381 1,842 -------------------------------------------------------------------------------- Investments in associates 817 1,003 -------------------------------------------------------------------------------- Available-for sale financial assets 87 87 -------------------------------------------------------------------------------- Deferred tax assets 636 783 -------------------------------------------------------------------------------- Other non-current receivables 409 432 -------------------------------------------------------------------------------- 23,418 34,721 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Current assets -------------------------------------------------------------------------------- Trade and other current receivables 38,919 34,580 -------------------------------------------------------------------------------- Current tax assets 22 36 -------------------------------------------------------------------------------- Cash and cash equivalents 9,401 7,028 -------------------------------------------------------------------------------- 48,343 41,644 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total assets 71,761 76,365 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Equity and liabilities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Equity attributable to equity holders of the parent company --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Share capital 2,141 2,141 -------------------------------------------------------------------------------- Fund of invested non-restricted equity 178 7,575 -------------------------------------------------------------------------------- Translation differences -682 -858 -------------------------------------------------------------------------------- Retained earnings 40,169 40,287 -------------------------------------------------------------------------------- Total equity 41,805 49,146 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Non-current liabilities -------------------------------------------------------------------------------- Deferred tax liabilities 4,798 5,762 -------------------------------------------------------------------------------- Provisions 2,750 1,954 -------------------------------------------------------------------------------- Non-current financial liabilities 29 68 -------------------------------------------------------------------------------- Other non-current liabilities - 1 -------------------------------------------------------------------------------- 7,577 7,784 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Current liabilities -------------------------------------------------------------------------------- Trade and other current liabilities 21,615 18,819 -------------------------------------------------------------------------------- Current tax liabilities 726 579 -------------------------------------------------------------------------------- Current financial liabilities 38 36 -------------------------------------------------------------------------------- 22,379 19,435 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total liabilities 29,956 27,219 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Total equity and liabilities 71,761 76,365 --------------------------------------------------------------------------------
Consolidated Statement of Cash Flows 1 Jan - 31 1 Jan - 31 (EUR 1,000) Dec 2011 Dec 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from operating activities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Profit/loss for the period 7,297 4,702 -------------------------------------------------------------------------------- Adjustments: -------------------------------------------------------------------------------- Non-cash transactions or items that are not part of -4,463 7,111 cash flows from operating activities -------------------------------------------------------------------------------- Interest and other financial expenses 63 139 -------------------------------------------------------------------------------- Interest income -56 -37 -------------------------------------------------------------------------------- Income taxes 3,373 3,811 -------------------------------------------------------------------------------- Change in working capital: -------------------------------------------------------------------------------- Change in trade and other current receivables -4,903 4,082 -------------------------------------------------------------------------------- Change in trade and other current liabilities 1,211 -1,711 -------------------------------------------------------------------------------- Change in provisions 796 -587 -------------------------------------------------------------------------------- Interest paid -63 -163 -------------------------------------------------------------------------------- Interest received 48 29 -------------------------------------------------------------------------------- Income taxes paid and tax returns received -3,350 -820 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash from operating activities -47 16,556 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from investing activities -------------------------------------------------------------------------------- Investments in tangible assets -434 -1,085 -------------------------------------------------------------------------------- Investments in intangible assets -558 -39 -------------------------------------------------------------------------------- Investments in development projects -3,965 -3,932 -------------------------------------------------------------------------------- Proceeds from sale of intangible assets 21,903 - -------------------------------------------------------------------------------- Change in other non-current receivables -58 -3 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash used in investing activities 16,888 -5,059 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash flows from financing activities --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Dividends paid -7,242 -3,191 -------------------------------------------------------------------------------- Capital repayment -7,473 - -------------------------------------------------------------------------------- Acquisition of Corporation's own shares - -468 -------------------------------------------------------------------------------- Lease payments -38 - -------------------------------------------------------------------------------- Proceeds from borrowings - 6,000 -------------------------------------------------------------------------------- Repayment of borrowings - -14,000 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net cash used in financing activities -14,753 -11,659 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net change in cash and cash equivalents 2,088 -163 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the 7,028 6,730 period -------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period 9,401 7,028 -------------------------------------------------------------------------------- Change 2,373 298 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Effects of changes in foreign exchange rates 286 461 --------------------------------------------------------------------------------
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 31 Dec 2,141 7,499 -1,757 -45 -287 38,748 46,299 2009 -------------------------------------------------------------------------------- Dividends -3,191 -3,191 -------------------------------------------------------------------------------- Acquisition of -468 -468 Corporation's own shares -------------------------------------------------------------------------------- Transfer of 76 155 -155 76 treasury shares -------------------------------------------------------------------------------- Share-based 824 824 compensation -------------------------------------------------------------------------------- Total 900 6 4,702 5,607 comprehensive income for the period -------------------------------------------------------------------------------- Equity at 2,141 7,575 -858 -40 -600 40,927 49,146 31 Dec 2010 --------------------------------------------------------------------------------
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 -7,473 -7,473 -------------------------------------------------------------------------------- Capital -7,473 -7,473 repayment -------------------------------------------------------------------------------- Transfer of 76 225 -225 76 treasury shares -------------------------------------------------------------------------------- Share-based 608 608 compensation -------------------------------------------------------------------------------- Total 175 -550 7,297 6,922 comprehensive income for the period -------------------------------------------------------------------------------- Equity at 2,141 178 -682 -589 -375 41,133 41,805 31 Dec 2011 --------------------------------------------------------------------------------
Notes
1. Application of new or amended standards and interpretations
On 1 January 2011 the Group adopted the following new and amended standards and interpretations endorsed by the EU and that are applicable to Comptel:
Revised IAS 24 Related Party Disclosures. The amendment simplifies and clarifies the definition of a related party and relaxes the disclosure requirements of business operations between public enterprises.
Improvements to IFRSs (May 2010) (mainly effective for financial periods beginning on or after 1 July 2010). Under this procedure minor and non-urgent amendments are grouped together and carried out through a single document annually.
2. Segment information
Net sales by segment
EUR 1,000 1 Jan - 1 Jan - 1 Oct - 1 Oct - 31 Dec 2011 31 Dec 2010 31 Dec 2011 31 Dec 2010 --------------------------------------------------------------------------
-------------------------------------------------------------------------- Europe East 12,910 19,517 3,585 5,622 -------------------------------------------------------------------------- Europe West 19,074 17,611 6,125 5,154 -------------------------------------------------------------------------- Asia-Pacific 21,109 23,118 5,219 7,147 -------------------------------------------------------------------------- Middle East and Africa 13,716 9,810 3,900 3,084 -------------------------------------------------------------------------- Americas 9,942 7,832 4,441 2,536 -------------------------------------------------------------------------- Group total 76,751 77,888 23,269 23,544 --------------------------------------------------------------------------
Operating profit/loss by segment
EUR 1,000 1 Jan - 1 Jan - 1 Oct - 1 Oct - 31 Dec 31 Dec 31 Dec 31 Dec 2011 2010 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Europe East 2,180 8,780 -35 2,780 -------------------------------------------------------------------------------- Europe West 11,442 11,030 4,813 3,412 -------------------------------------------------------------------------------- Asia-Pacific 11,919 13,076 2,667 4,847 -------------------------------------------------------------------------------- Middle East and Africa 5,458 2,482 1,496 1,598 -------------------------------------------------------------------------------- Americas 5,657 4,189 3,007 1,806 -------------------------------------------------------------------------------- Group unallocated expenses -25,047 -30,649 -9,362 -9,543 -------------------------------------------------------------------------------- Group operating profit/loss total 11,609 8,908 2,586 4,900 -------------------------------------------------------------------------------- Financial income and expenses -753 -710 -543 -109 -------------------------------------------------------------------------------- Share of result of associated -187 314 -187 314 companies -------------------------------------------------------------------------------- Group profit/loss before income 10,669 8,512 1,857 5,105 taxes --------------------------------------------------------------------------------
3. Income tax expense
Tax expense according to the statement of comprehensive income for the period was EUR 3,373 thousand (EUR 3,811 thousand 2010).
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.
At the end of year 2010 Comptel had a tax receivable of EUR 595 thousand from Greece and Romania. The Ministry of Finance had earlier announced that it had reached an agreement with these two countries. However, during the refund process factors indicating that Greece will not adhere to the agreement have come up. Comptel recognised the tax receivables during 2011.
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 1,189 thousand in January - December (EUR 1,006 thousand).
4. Tangible assets
EUR 1,000 1 Jan - 31 Dec 2011 1 Jan - 31 Dec 2010 ---------------------------------------------------
--------------------------------------------------- Additions 479 1,190 --------------------------------------------------- Disposals -2 -38 ---------------------------------------------------
5. 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 Dec 2011 1 Jan - 31 Dec 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Associate -------------------------------------------------------------------------------- Purchases of goods and services 156 100 -------------------------------------------------------------------------------- Interest income 8 7 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Companies under management's influence -------------------------------------------------------------------------------- Purchases of goods and services 14 43 --------------------------------------------------------------------------------
EUR 1,000 31 Dec 2011 31 Dec 2010 ----------------------------------------------------------------
---------------------------------------------------------------- Associate ---------------------------------------------------------------- Non-current receivables 91 83 ----------------------------------------------------------------
---------------------------------------------------------------- Companies under management's influence ---------------------------------------------------------------- Trade and other current liabilities - 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 Dec 1 Jan - 31 Dec 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Salaries and other short-term employee 2,942 2,560 benefits -------------------------------------------------------------------------------- Share-based payments 207 519 -------------------------------------------------------------------------------- Total 3,148 3,078 --------------------------------------------------------------------------------
6. Commitments
Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows:
EUR 1,000 31 Dec 2011 31 Dec 2010 ----------------------------------------------------
---------------------------------------------------- Less than one year 3,377 3,597 ---------------------------------------------------- Between one and five years 7,909 11,226 ---------------------------------------------------- More than five years - 751 ---------------------------------------------------- Total 11,286 15,574 ----------------------------------------------------
The group had no material capital commitments for the purchase of tangible assets at 31 December 2011 and 31 December 2010.
7. Contingent liabilities
EUR 1,000 31 Dec 2011 31 Dec 2010 -----------------------------------------
----------------------------------------- Bank guarantees 1,847 2,061 -----------------------------------------
8. Events after the reporting period
Comptel Corporation announced on 26 January 2012 that it will acquire Xtract Oy, a Finnish software company specialising in analytics, for a total consideration of EUR 3.1 million (enterprise value). The transaction was completed on 9 February 2012 after which time onwards Xtract Group will be consolidated into Comptel Group financials. The transaction was completed on 9 February 2012 after which time onwards Xtract Group will be consolidated into Comptel Group financials.
9. The impact of the Axioss software sale on the operating result
During the third quarter Comptel sold the Axioss software to Cisco.
The impact on the net operating result is as follows:
EUR 1,000 ----------------------------------------------------------------------
---------------------------------------------------------------------- Sales price 22,122 ---------------------------------------------------------------------- Impairment of intangible assets related to the operations sold -2,198 ---------------------------------------------------------------------- Expenses related to the asset sale -219 ---------------------------------------------------------------------- Other operating income, net 19,705 ----------------------------------------------------------------------
---------------------------------------------------------------------- Goodwill impairment -8,742 ----------------------------------------------------------------------
---------------------------------------------------------------------- Impact on operating result 10,963 ----------------------------------------------------------------------
The asset sale resulted in one-off expenses of 2,165 thousand euros which impacted the operating result.
10. Key figures
Financial summary 1 Jan - 31 Dec 1 Jan - 31 Dec 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net sales, EUR 1,000 76,751 77,888 -------------------------------------------------------------------------------- Net sales, change % -1.5 4.0 -------------------------------------------------------------------------------- Operating profit/loss, EUR 1,000 11,609 8,908 -------------------------------------------------------------------------------- Operating profit/loss, change % 30.3 775.2 -------------------------------------------------------------------------------- Operating profit/loss, as % of net sales 15.1 11.4 -------------------------------------------------------------------------------- Profit/loss before taxes, EUR 1,000 10,669 8,512 -------------------------------------------------------------------------------- Profit/loss before taxes, as % of net sales 13.9 10.9 -------------------------------------------------------------------------------- Return on equity, % 16.0 9.9 -------------------------------------------------------------------------------- Return on investment, % 22.9 16.3 -------------------------------------------------------------------------------- Equity ratio, % 66.6 71.6 -------------------------------------------------------------------------------- Gross investments in tangible and intangible 1,037 1,124 assets, EUR 1,000 -------------------------------------------------------------------------------- Gross investments in tangible and intangible 1.4 1.4 assets, as % of net sales -------------------------------------------------------------------------------- Capitalisations according to IAS 38 to 3,965 3,932 intangible assets -------------------------------------------------------------------------------- Research and development expenditure, EUR 1,000 15,419 13,414 -------------------------------------------------------------------------------- Research and development expenditure, 20.1 17.2 as % of net sales -------------------------------------------------------------------------------- Order backlog, EUR 1,000 1) 47,217 34,049 -------------------------------------------------------------------------------- Average number of employees during the period 623 586 -------------------------------------------------------------------------------- Interest-bearing net liabilities, EUR 1,000 -9,334 -6,923 -------------------------------------------------------------------------------- Gearing ratio, % -22.3 -14.1 --------------------------------------------------------------------------------
Per share data 1 Jan - 31 Dec 1 Jan - 31 Dec 2011 2010 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Earnings per share (EPS), EUR 0.07 0.04 -------------------------------------------------------------------------------- EPS diluted, EUR 0.07 0.04 -------------------------------------------------------------------------------- Equity per share, EUR 0.39 0.46 -------------------------------------------------------------------------------- Dividend per share, EUR 0.03 0.04 -------------------------------------------------------------------------------- Dividend per earnings, % 43.9 90.6 -------------------------------------------------------------------------------- Effective dividend yield, % 6.1 5.8 -------------------------------------------------------------------------------- P/E ratio 7.2 15.6 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Adjusted number of shares at the end of 107,054,810 107,054,810 the period -------------------------------------------------------------------------------- of which the number of treasury shares 292,685 599,905 -------------------------------------------------------------------------------- Outstanding shares 106,762,125 106,454,905 -------------------------------------------------------------------------------- Adjusted average number of shares during 106,775,223 106,477,113 the period -------------------------------------------------------------------------------- Average number of shares, dilution 106,775,223 107,398,488 included --------------------------------------------------------------------------------
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)
--------------------------------------------------------------------------------
Comptel Corporation's Annual General Meeting will be held on 26 March 2012 at 11 am in Helsinki.
The annual report for 2011 can be obtained from Comptel's website www.comptel.com in week 9.
Schedule for Comptel's interim reports in 2012: January-March 20 April January-June 18 July January-September 18 October
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
