COMPTEL Stock exchange release 22 April 2010 at 8.00 am INTERIM REPORT OF COMPTEL CORPORATION 1 JANUARY - 31 MARCH 2010 Net sales grew from the previous year and operating result rose to profit. Net sales EUR 18.1 million, growth 6% (January - March 2009: 17.1) Operating profit EUR 0.2 million (-3.2) Operating profit excluding one-off items EUR 0.2 million (-1.3) Earnings per share EUR -0.01 (-0.03) Order backlog EUR 35.6 million (37.6) Outlook: The weakening of operations support system markets has halted according to our view, and the situation is stable. We have begun to see the first signs of increasing operator investments and we anticipate a cautious growth to begin during the second half of the year. Comptel's net sales and operating profit are estimated to grow in 2010. The full year operating profit margin is forecast to be 8 - 12 per cent. Sami Erviö, President and CEO: ”In the first quarter, Comptel's performance was slightly better than anticipated. Our net sales turned to growth and our operating result to profit. However, the result is still burdened by double taxation which, combined with the financial items, made our net result negative. The customers are beginning to consider new projects, but the number of new license orders was low during the quarter. Our partner sales increased in line with our stated strategy, and our order backlog remained decent. From now on, we report separately the backlog of maintenance agreements. Our financial position remained strong and the cash flow was good. Following the review period, the customer service centre in Bulgaria was transferred to Comptel Group. The Sofia unit is involved in our software delivery projects and maintains the customer systems globally, along with the other Comptel customer service centres. The new service centre brings Comptel closer to customers and strengthens the profitability of our service business.” Business Review of the First Quarter 2010 Comptel's net sales grew by 5.7 per cent compared to the previous year and were EUR 18.1 million (17.1). The growth consisted of an increased license and maintenance revenues compared to previous year. There were fewer change requests of a smaller size, but more license upgrades were invoiced. The Group's operating profit was EUR 0.2 million (operating loss of EUR 3.2 million including one-off items). The operating profit represented 1.1 per cent of net sales (-18.7). Tax expense for the period was EUR 0.7 million (+0.2), of which EUR 0.4 million (0.2) were withholding taxes due to double taxation. The cumulative amount of double withholding taxes payment is EUR 7.0 million. Group's tax rate is expected to decrease during the rest of this year. Net result for the period was EUR 0.8 million negative (-3.1) and the earnings per share were EUR 0.01 negative (-0.03). The Group's order backlog at the end of the period was EUR 35.6 million (37.6), which is 5.4 per cent lower than in the previous year due to a low order flow especially in the Middle East and Africa. Maintenance agreements represent EUR 22.2 million (21.6) and other order backlog EUR 13.4 million (16.0) of the total. Business Areas -------------------------------------------------------------------------------- | Net sales, EUR million | 1-3 2010 | 1-3 2009 | Change % | 2009 | -------------------------------------------------------------------------------- | Europe | 8.1 | 7.6 | 7.0 | 33.3 | -------------------------------------------------------------------------------- | Asia-Pacific | 5.2 | 4.8 | 8.4 | 20.5 | -------------------------------------------------------------------------------- | Middle East and Africa | 2.6 | 3.4 | -24.3 | 16.1 | -------------------------------------------------------------------------------- | Americas | 2.2 | 1.3 | 64.3 | 5.1 | -------------------------------------------------------------------------------- | Total | 18.1 | 17.1 | 5.7 | 74.9 | -------------------------------------------------------------------------------- | Operating profit by area, EUR | | | | | | million | | | | | -------------------------------------------------------------------------------- | Europe | 3.6 | 2.5 | 48.4 | 15.4 | -------------------------------------------------------------------------------- | Asia-Pacific | 2.5 | 3.0 | -16.7 | 11.5 | -------------------------------------------------------------------------------- | Middle East and Africa | 0.4 | 2.0 | -80.7 | 8.3 | -------------------------------------------------------------------------------- | Americas | 0.9 | 0.1 | 1,174.1 | 0.3 | -------------------------------------------------------------------------------- | Unallocated costs | -7.2 | -10.7 | -32.4 | -34.4 | -------------------------------------------------------------------------------- | Total | 0.2 | -3.2 | 106.0 | 1.0 | -------------------------------------------------------------------------------- | Operating profit, % of net | | | | | | sales | | | | | -------------------------------------------------------------------------------- | Europe | 44.9 | 32.4 | - | 46.1 | -------------------------------------------------------------------------------- | Asia-Pacific | 47.8 | 62.2 | - | 56.3 | -------------------------------------------------------------------------------- | Middle East and Africa | 15.0 | 58.9 | - | 51.6 | -------------------------------------------------------------------------------- | Americas | 41.6 | 5.4 | - | 5.4 | -------------------------------------------------------------------------------- | Total | 1.1 | -18.7 | - | 1.4 | -------------------------------------------------------------------------------- In the regions net sales increased from the previous year, except of the Middle East and Africa where order intake was lower than anticipated. The recovery of net sales improved the profitability in Europe and in the Americas. In January - March, Comptel closed one (six) new core license - to deliver Comptel Interconnect Billing Solution in Europe. Comptel reports as new core licenses the software license deliveries which value exceeds EUR 100,000. -------------------------------------------------------------------------------- | Net sales breakdown by type | 1-3 2010 | 1-3 2009 | Change % | 2009 | | EUR million | | | | | -------------------------------------------------------------------------------- | Licenses | 4.5 | 3.4 | 34.0 | 19.7 | -------------------------------------------------------------------------------- | Services | 4.8 | 5.5 | -12.7 | 22.8 | -------------------------------------------------------------------------------- | Maintenance agreements | 8.7 | 8.2 | 6.1 | 32.4 | -------------------------------------------------------------------------------- | Total | 18.1 | 17.1 | 5.7 | 74.9 | -------------------------------------------------------------------------------- Service revenue consists of the delivery projects of larger systems, and maintenance revenue consists of maintenance and support of the delivered systems. The share of license revenue increased from the previous year and was at the level of the full year 2009. -------------------------------------------------------------------------------- | Net sales by sales channel, | 1-3 | 1-3 2009 | Change % | 2009 | | EUR million | 2010 | | | | -------------------------------------------------------------------------------- | Direct sales | 12.1 | 12.4 | -2.5 | 51.7 | -------------------------------------------------------------------------------- | Partner sales | 6.0 | 4.7 | 27.1 | 23.1 | -------------------------------------------------------------------------------- | Total | 18.1 | 17.1 | 5.7 | 74.9 | -------------------------------------------------------------------------------- The share of partner sales increased in line with Comptel's strategy. Financial Position -------------------------------------------------------------------------------- | EUR million | 31 March | 31 Dec | Change | 31 March | Change % | | | 2010 | 2009 | % | 2009 | | -------------------------------------------------------------------------------- | Statement of financial | 82.7 | 82.6 | 0.1 | 84.2 | -1.8 | | position total | | | | | | -------------------------------------------------------------------------------- | Liquid assets | 10.5 | 6.7 | 55.6 | 6.5 | 61.2 | -------------------------------------------------------------------------------- | Trade receivables, | 26.0 | 25.0 | 3.9 | 28.8 | -9.7 | | gross | | | | | | -------------------------------------------------------------------------------- | Bad debt provision | -2.2 | -1.4 | 54.0 | -0.7 | 197.0 | -------------------------------------------------------------------------------- | Trade receivables, net | 23.8 | 23.6 | 0.8 | 28.0 | -15.2 | -------------------------------------------------------------------------------- | Accrued income | 12.5 | 13.5 | -7.2 | 11.7 | 197.0 | -------------------------------------------------------------------------------- | Deferred income related | 1.8 | 1.6 | 15.3 | 1.5 | -15.2 | | to partial debiting | | | | | | -------------------------------------------------------------------------------- | Interest-bearing debt | 8.0 | 8.0 | -0.2 | 10.0 | -20.3 | -------------------------------------------------------------------------------- | Equity ratio, per cent | 59.4 | 62.6 | -5.2 | 59.8 | -0.7 | -------------------------------------------------------------------------------- Statement of financial position total on 31 March 2010 was EUR 82.7 million, of which liquid assets amounted to EUR 10.5 million (31 March 2009: 6.5). This year the dividends are paid in the second quarter, while in the previous year they were paid in the first quarter (4.1). During the first quarter, operating cash flow was EUR 5.3 million (0.4), primarily due to a release of working capital. The trade receivables at the end of the period were EUR 23.8 million (28.0). Accrued income was EUR 12.5 million (11.7). The deferred income related to partial debiting was EUR 1.8 million (1.5). The Group had EUR 8.0 million of interest-bearing debt at the end of the period (10.0). Comptel Corporation has in force a revolving credit facility of EUR 15.0 million maturing in the year 2013, of which EUR 7.0 million is still to be withdrawn. Equity ratio was 59.4 per cent (59.8) and the gearing ratio was 5.8 per cent negative (8.0). Research and Development (R&D) -------------------------------------------------------------------------------- | EUR million | 1-3 | 1-3 2009 | Change % | 2009 | | | 2010 | | | | -------------------------------------------------------------------------------- | Direct R&D expenditure | 3.3 | 4.1 | -19.6 | 14.0 | -------------------------------------------------------------------------------- | Capitalisation of R&D | -0.9 | -1.0 | -10.5 | -3.9 | | expenditure according to IAS 38 | | | | | -------------------------------------------------------------------------------- | R&D depreciation and impairment | 0.9 | 0.6 | 62.1 | 3.0 | | charges | | | | | -------------------------------------------------------------------------------- | R&D expenditure, net | 3.3 | 3.7 | -9.3 | 13.2 | -------------------------------------------------------------------------------- The R&D expenditure remained at the level of year-end 2009 and they are expected to remain at the current level. Comptel's R&D expenditure was mainly targeted at developing new dynamic end-to-end solutions, which enable service providers to shorten time-to-market for new services and to charge for them. The company is especially focusing on development of fulfillment solutions in IP-based environment, in which area the demand is expected to grow significantly in the future. Investments -------------------------------------------------------------------------------- | EUR million | 1-3 | 1-3 2009 | Change % | 2009 | | | 2010 | | | | -------------------------------------------------------------------------------- | Gross investments in property, | 0.6 | 0.1 | 565.8 | 0.7 | | plant and equipment and | | | | | | intangible assets | | | | | -------------------------------------------------------------------------------- Gross investments in the period under review comprised of investments in devices, software and furnishings. The investments were funded through cash flow from operations. Personnel -------------------------------------------------------------------------------- | | 31 March | 31 March | Change % | 31 Dec | | | 2010 | 2009 | | 2009 | -------------------------------------------------------------------------------- | Number of employees at | 577 | 635 | -9.1 | 587 | | the end of period | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 1-3 2010 | 1-3 2009 | Change % | 2009 | -------------------------------------------------------------------------------- | Average number of | 583 | 645 | -9.6 | 613 | | personnel during the | | | | | | period | | | | | -------------------------------------------------------------------------------- The number of employees did not change significantly during the period. In the previous year the adjustment of operations in line with declined demand reduced the number of employees. At the end of the period, 26 persons were working in the customer service centre established in Bulgaria in 2008. These persons were employed by a partner company and they were transferred to the Comptel Group as of 1 April 2010. In January - March, the personnel expenses were 50.1 per cent of net sales (69.0% including one-off items). The share of personnel expenses is expected to decline as net sales is growing during the rest of the year. At the end of the period 40.0 per cent (45.8) of the personnel were located in Finland, 21.7 per cent (15.4) in Malaysia, 12.1 per cent (13.5) in Norway, and 9.4 per cent (9.8) in the United Kingdom. Comptel Share The closing share price of the period was EUR 0.87 (0.61). Comptel's market value at the end of the period was EUR 92.6 million (65.2). -------------------------------------------------------------------------------- | Comptel share | 1-3 2010 | 1-3 2009 | Change % | 2009 | -------------------------------------------------------------------------------- | Shares traded, million | 4.0 | 14.3 | -72.0 | 35.8 | -------------------------------------------------------------------------------- | Shares traded, EUR | 3.3 | 9.0 | -63.8 | 24.3 | | million | | | | | -------------------------------------------------------------------------------- | Highest price, EUR | 0.95 | 0.72 | 31.9 | 0.96 | -------------------------------------------------------------------------------- | Lowest price, EUR | 0.76 | 0.57 | 33.3 | 0.57 | -------------------------------------------------------------------------------- Of Comptel's outstanding shares, 6.6 per cent (7.5) were nominee registered or held by foreign shareholders at the end of the review period. During the period, Comptel Corporation allotted 168,000 shares as part of share-based incentives to persons involved in the program and 84,447 shares to the members of the Board of Directors as part of their annual compensation. During the period, the company continued its share buy-back programme, according to which a maximum amount of 800,000 own shares will be purchased through public trading on NASDAQ OMX Helsinki. The company held 599,588 of its own shares at the end of the period under review, which is 0.56 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 11,992. No share options were distributed during the review period. Corporate Governance The Annual General Meeting (AGM), held on 22 March 2010, elected the following members for the Board of Directors: Mr Olli Riikkala (M.Sc. Eng., MBA), Mr Hannu Vaajoensuu (Chairman of the Board, Basware), Mr Timo Kotilainen (Managing Director, Nixu Oy), Mr Juhani Lassila (Managing Director, Agros Oy), Mr Petteri Walldén (M.Sc. Eng.) and Mr Henri Österlund (CEO, Accendo Capital Partners Oy). 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. KPMG Oy Ab continues as the auditors of Comptel, Mr Pekka Pajamo (APA) being the principal auditor. The AGM approved the proposal of Board of Directors that a dividend of EUR 0.03 per share be paid for 2009. The dividend was paid on 14 April 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 2011. A separate stock exchange release about the authorisations given and other decisions made by the Annual General Meeting was published on 22 March 2010. Mr Ricardo Carreon, SVP of Americas, left the company on 14 January 2010. Since then, the Group Executives have been Mr Sami Erviö, President and CEO, the business area leaders Mr Timo Koistinen (Europe), Mr Mika Korpinen (Asia-Pacific), Mr Youssef Kermoury (Middle East and Africa), Mr Minesh Patel responsible for Global Alliances and Sales Development, Ms Arnhild Schia responsible for Strategic Marketing, Mr Simo Sääskilahti responsible for Products and Solutions, Mr Gareth Senior (CTO), Mr Markku Pirskanen (CFO), Ms Niina Pesonen, responsible for Human Resources, and Mr Markku Järvenpää responsible for Global Operations Support. Near-term Risks and Uncertainties The recovery of operations support system markets may be delayed in Europe and in the North America, and the demand can weaken also in other regions. Comptel develops dynamic end-to-end solutions for leading operators 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. Comptel operates globally so it is exposed to risks arising from different currency positions. Exchange rate changes between the Euro, which is the company's reporting currency, and the US Dollar, UK Pound Sterling and Norwegian Krone affect the company's net sales, expenses and net profit. The application submitted by Comptel to prevent double taxation is still pending with the Ministry of Finance in Finland. The company believes the treatment of its withholding taxation will be changed also concerning the countries where the issue is still unsolved. The risks and uncertainties of Comptel are described more in detail in the company's Annual Report 2009. Outlook The weakening of operations support system markets has halted according to our view, and the situation is stable. We have begun to see the first signs of increasing operator investments and we anticipate a cautious growth to begin during the second half of the year. Comptel's net sales and operating profit are estimated to grow in 2010. The full year operating profit margin is forecast to be 8 - 12 per cent. TABLE PART The interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU. The accounting policies and methods of computation adopted in the financial statements are consistent with those of the annual financial statements for the year ended 2009 except for the application of new or amended standards and interpretations as set forth in note 1. All figures in the financial report have been rounded and consequently the sum of the individual figures can deviate from the sum figure. The interim report is unaudited. -------------------------------------------------------------------------------- | Consolidated Statement of | 1 Jan - | 1 Jan - | | Comprehensive Income (EUR 1,000) | 31 Mar 2010 | 31 Mar 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales | 18,067 | 17,101 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other operating income | 3 | 10 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Materials and services | -741 | -1,556 | -------------------------------------------------------------------------------- | Employee benefits | -9,060 | -11,877 | -------------------------------------------------------------------------------- | Depreciation, amortisation and | -1,559 | -1,286 | | impairment charges | | | -------------------------------------------------------------------------------- | Other operating expenses | -6,520 | -5,589 | -------------------------------------------------------------------------------- | | -17,879 | -20,308 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit/loss | 191 | -3,197 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income | 218 | 311 | -------------------------------------------------------------------------------- | Financial expenses | -452 | -392 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit/Loss before income taxes | -44 | -3,279 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income taxes | -728 | 219 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit/Loss for the period | -771 | -3,060 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other comprehensive income | | | -------------------------------------------------------------------------------- | Cash flow hedges | -111 | -118 | -------------------------------------------------------------------------------- | Translation differences | 383 | 342 | -------------------------------------------------------------------------------- | Income tax relating to components of | 29 | 31 | | other comprehensive income | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total comprehensive income for the | -471 | -2,805 | | period | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit/Loss attributable to: | | | -------------------------------------------------------------------------------- | Equity holders of the parent company | -771 | -3,060 | -------------------------------------------------------------------------------- | Minority interests | - | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total comprehensive income | | | | attributable to: | | | -------------------------------------------------------------------------------- | Equity holders of the parent company | -471 | -2,805 | -------------------------------------------------------------------------------- | Minority interests | - | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholders of the parent company: | | | -------------------------------------------------------------------------------- | Earnings per share, EUR | -0.01 | -0.03 | -------------------------------------------------------------------------------- | Earnings per share, diluted, EUR | -0.01 | -0.03 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated Statement of Financial | 31 Mar 2010 | 31 Dec 2009 | | Position (EUR 1,000) | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current assets | | | -------------------------------------------------------------------------------- | Goodwill | 19,339 | 19,355 | -------------------------------------------------------------------------------- | Other intangible assets | 11,402 | 11,806 | -------------------------------------------------------------------------------- | Tangible assets | 1,947 | 1,589 | -------------------------------------------------------------------------------- | Investments in associates | 689 | 689 | -------------------------------------------------------------------------------- | Available-for sale financial assets | 87 | 87 | -------------------------------------------------------------------------------- | Deferred tax assets | 1,273 | 1,243 | -------------------------------------------------------------------------------- | Other non-current receivables | 348 | 346 | -------------------------------------------------------------------------------- | | 35,086 | 35,116 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | -------------------------------------------------------------------------------- | Trade and other receivables | 37,148 | 40,761 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 10,473 | 6,730 | -------------------------------------------------------------------------------- | | 47,621 | 47,491 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 82,707 | 82,607 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity and liabilities | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity attributable to equity holders | | | | of the parent company | | | -------------------------------------------------------------------------------- | Share capital | 2,141 | 2,141 | -------------------------------------------------------------------------------- | Fund of invested non-restricted | 7,575 | 7,499 | | equity | | | -------------------------------------------------------------------------------- | Translation difference | -1,375 | -1,757 | -------------------------------------------------------------------------------- | Retained earnings | 34,073 | 38,416 | -------------------------------------------------------------------------------- | | 42,415 | 46,299 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity | 42,415 | 46,299 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 5,513 | 5,458 | -------------------------------------------------------------------------------- | Provisions | 2,495 | 2,541 | -------------------------------------------------------------------------------- | Non-current financial liabilities | 1 | 1 | -------------------------------------------------------------------------------- | | 8,009 | 8,000 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current liabilities | | | -------------------------------------------------------------------------------- | Trade and other current liabilities | 24,284 | 20,296 | -------------------------------------------------------------------------------- | Current financial liabilities | 8,000 | 8,012 | -------------------------------------------------------------------------------- | | 32,284 | 28,308 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 40,292 | 36,308 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity and liabilities | 82,707 | 82,607 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated Statement of Cash Flows | 1 Jan - | 1 Jan - | | (EUR 1,000) | 31 Mar 2010 | 31 Mar 2009 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Cash flows from operating activities | | | -------------------------------------------------------------------------------- | Profit/Loss for the period | -771 | -3,060 | -------------------------------------------------------------------------------- | Adjustments: | | | -------------------------------------------------------------------------------- | Non-cash transactions or items that | 1,950 | 1,541 | | are not part of cash flows from | | | | operating activities | | | -------------------------------------------------------------------------------- | Interest and other financial expenses | 47 | 71 | -------------------------------------------------------------------------------- | Interest income | -8 | -15 | -------------------------------------------------------------------------------- | Income taxes | 728 | -219 | -------------------------------------------------------------------------------- | Change in working capital: | | | -------------------------------------------------------------------------------- | Change in trade and other receivables | 2,468 | 1,126 | -------------------------------------------------------------------------------- | Change in trade and other current | 294 | 1,126 | | liabilities | | | -------------------------------------------------------------------------------- | Change in provisions | -46 | 1,105 | -------------------------------------------------------------------------------- | Interest paid | -20 | -10 | -------------------------------------------------------------------------------- | Interest received | 6 | 16 | -------------------------------------------------------------------------------- | Income taxes paid and tax returns | 644 | -1,252 | | received | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash from operating activities | 5,291 | 429 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Cash flows from investing activities | | | -------------------------------------------------------------------------------- | Purchase price adjustments | - | 268 | -------------------------------------------------------------------------------- | Investments in tangible assets | -582 | -72 | -------------------------------------------------------------------------------- | Investments in intangible assets | - | -16 | -------------------------------------------------------------------------------- | Investments in development projects | -898 | -1,004 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash used in investing activities | -1,481 | -823 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from financing activities | | | -------------------------------------------------------------------------------- | Dividends paid | - | -4,101 | -------------------------------------------------------------------------------- | Acquisition of Corporation's own | -441 | -174 | | shares | | | -------------------------------------------------------------------------------- | Proceeds from borrowings | - | 5,000 | -------------------------------------------------------------------------------- | Change in other non-current | - | -11 | | liabilities | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash used in financing activities | -441 | 713 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net change in cash and cash | 3,369 | 319 | | equivalents | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents at the | 6,730 | 6,135 | | beginning of the period | | | -------------------------------------------------------------------------------- | Effects of changes in foreign | -374 | -43 | | exchange rates | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at the end | 10,473 | 6,497 | | of the period | | | -------------------------------------------------------------------------------- | Change | 3,369 | 319 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated Statement of Changes in Equity | | | -------------------------------------------------------------------------------- | Equity attributable to equity holders | | | | | of the parent company | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1,000 | Share | Other | Translati | Fair value | | | | capital | reserves | on | reserve | | | | | | differenc | | | | | | | es | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,433 | -2,500 | 85 | | | Dec 2008 | | | | | | -------------------------------------------------------------------------------- | Dividends | | | | | | -------------------------------------------------------------------------------- | Acquisition of | | | | | | | Corporation's | | | | | | | own shares | | | | | | -------------------------------------------------------------------------------- | Transfer of | | 67 | | | | | treasury shares | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | | | | compensation | | | | | | -------------------------------------------------------------------------------- | Change in group | | | | | | | structure | | | | | | -------------------------------------------------------------------------------- | Total | | | 342 | -87 | | | comprehensive | | | | | | | income for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,499 | -2,158 | -2 | | | Mar 2009 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | | Minority | Equity | | | | | | interest | total | -------------------------------------------------------------------------------- | EUR 1,000 | Treasur | Retained | Total | | | | | y | earnings | | | | | | shares | | | | | -------------------------------------------------------------------------------- | Equity at 31 | -125 | 44,541 | 51,576 | - | 51,576 | | Dec 2008 | | | | | | -------------------------------------------------------------------------------- | Dividends | | -4,278 | -4,278 | - | -4,278 | -------------------------------------------------------------------------------- | Acquisition of | -174 | | -174 | | -174 | | Corporation's | | | | | | | own shares | | | | | | -------------------------------------------------------------------------------- | Transfer of | 174 | -174 | 67 | | 67 | | treasury shares | | | | | | -------------------------------------------------------------------------------- | Share-based | | 197 | 197 | | 197 | | compensation | | | | | | -------------------------------------------------------------------------------- | Total | | -3,060 | -2,085 | | -2,085 | | comprehensive | | | | | | | income for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | -125 | 37,226 | 44,581 | - | 44,581 | | Mar 2009 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated Statement of Changes in Equity | | | -------------------------------------------------------------------------------- | Equity attributable to equity holders | | | | | of the parent company | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1,000 | Share | Other | Translati | Fair value | | | | capital | reserves | on | reserve | | | | | | differenc | | | | | | | es | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,499 | -1,757 | -45 | | | Dec 2009 | | | | | | -------------------------------------------------------------------------------- | Dividends | | | | | | -------------------------------------------------------------------------------- | Acquisition of | | | | | | | Corporation's | | | | | | | own shares | | | | | | -------------------------------------------------------------------------------- | Transfer of | | 76 | | | | | treasury shares | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | | | | compensation | | | | | | -------------------------------------------------------------------------------- | Total | | | 383 | -82 | | | comprehensive | | | | | | | income for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | 2,141 | 7,575 | -1,375 | -128 | | | Mar 2010 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | | Minority | Equity | | | | | | interest | total | -------------------------------------------------------------------------------- | EUR 1,000 | Treasur | Retained | Total | | | | | y | earnings | | | | | | shares | | | | | -------------------------------------------------------------------------------- | Equity at 31 | -287 | 38,748 | 46,299 | - | 46,299 | | Dec 2009 | | | | | | -------------------------------------------------------------------------------- | Dividends | | -3,191 | -3,191 | - | -3,191 | -------------------------------------------------------------------------------- | Acquisition of | -441 | | -441 | | -441 | | Corporation's | | | | | | | own shares | | | | | | -------------------------------------------------------------------------------- | Transfer of | 129 | -129 | 76 | | 76 | | treasury shares | | | | | | -------------------------------------------------------------------------------- | Share-based | | 143 | 143 | | 143 | | compensation | | | | | | -------------------------------------------------------------------------------- | Total | | -771 | -471 | | -471 | | comprehensive | | | | | | | income for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | -599 | 34,799 | 42,415 | - | 42,415 | | Mar 2010 | | | | | | -------------------------------------------------------------------------------- Notes 1. Application of new or amended standards and interpretations On 1 January 2010 the Group adopted the following new and amended standards and interpretations endorsed by the EU and that are applicable to Comptel: Revised IFRS 3 Business Combinations. The scope of the revised IFRS 3 is broader than before. In respect of Comptel several significant amendments have been made to the standard. The amendments impact the amount of goodwill to be recognised on business combinations and sales results of businesses. The amendments also have an effect on the amounts to be recognised in profit or loss both on the financial year when the business combination is effected and in those financial years when contingent consideration is paid or further acquisitions are made. Under the transitional provisions of the standard those business combinations where control is transferred prior to the effective date of the revised standard are not adjusted to comply with the new rules. Amended IAS 27 Consolidated and Separate Financial Statements. If the parent company retains control, the amended standard requires impacts from changes in ownership in a subsidiary be recognised directly in Group's equity. When control is lost, the remaining interest is measured at fair value through profit or loss. A similar accounting treatment will be extended to investments in associated companies (IAS 28) and interests in joint ventures (IAS 31) in the future. Resulting from the amendments losses of a subsidiary may be allocated to non-controlling interest (minority) also when they exceed the value of the minority shareholders' investment. Amendment to IAS 39 Financial Instruments: Recognition and Measurement (Eligible Hedged Items). The amendment deals with hedge accounting and relate to designation of a one-sided risk in a hedged item and designation of inflation in a financial hedged item. IFRIC 17 Distributions of Non-Cash Assets to Owners. The interpretation gives guidelines to a situation when owners receive dividends in other forms than cash or the owners have the possibility to select whether they will receive non-cash assets or cash. Improvements to IFRSs (April 2009) (mainly effective for financial periods beginning on or after 1 January 2010). Under this procedure minor and non-urgent amendments are grouped together and carried out through a single document annually. The related amendments deal with 12 standards. Impacts vary by standard but the amendments are not significant for the Group. 2. Segment information Net sales by segment -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2010 | 31 Mar 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Europe | 8,098 | 7,571 | -------------------------------------------------------------------------------- | Asia-Pacific | 5,228 | 4,823 | -------------------------------------------------------------------------------- | Middle East and Africa | 2,556 | 3,377 | -------------------------------------------------------------------------------- | Americas | 2,186 | 1,330 | -------------------------------------------------------------------------------- | Group total | 18,067 | 17,101 | -------------------------------------------------------------------------------- Operating profit/loss by segment -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2010 | 31 Mar 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Europe | 3,637 | 2,450 | -------------------------------------------------------------------------------- | Asia-Pacific | 2,498 | 3,001 | -------------------------------------------------------------------------------- | Middle East and Africa | 384 | 1,990 | -------------------------------------------------------------------------------- | Americas | 909 | 71 | -------------------------------------------------------------------------------- | Group unallocated expenses | -7,237 | -10,710 | -------------------------------------------------------------------------------- | Group operating profit/loss | 191 | -3,197 | | total | | | -------------------------------------------------------------------------------- | Financial income and expenses | -234 | -81 | -------------------------------------------------------------------------------- | Group profit/loss before income | -44 | -3,279 | | taxes | | | -------------------------------------------------------------------------------- 3. Income tax expense Tax expense according to the statement of comprehensive income for the period was EUR 728 thousand (income EUR 219 thousand 2009). In 2006, Adjustment of the Tax Office for Major Corporations refused to accept the crediting of taxes withheld at source in taxation of 2004 and 2005. The Ministry of Finance has come to an agreement with Greece and Romania. Relating to these countries, Comptel has booked EUR 595 thousand tax receivables for taxes withheld in 2004 -2008. The refund process pertaining to these countries is still pending with the relevant tax authorities. Comptel is pursuing the negotiations with the Ministry of Finance and other countries that have withheld tax at source to avoid double taxation. Comptel believes the treatment of its withholding taxation will be changed. According to the Board of Adjustment's decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to EUR 403 thousand in January - March (EUR 193 thousand). 4. Tangible assets -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2010 | 31 Mar 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Additions | 582 | 71 | -------------------------------------------------------------------------------- | Disposals | -36 | - | -------------------------------------------------------------------------------- 5. Related party transactions The Comptel Group has a related party relationship with its associates, the Board of Directors, the Corporate Executives and also with people and companies under Comptel management's influence. Transactions, which have been entered into with related parties are as follows: -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2010 | 31 Mar 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Associates | | | -------------------------------------------------------------------------------- | Purchases of goods and services | 100 | 109 | -------------------------------------------------------------------------------- | Interest income | 2 | 3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Companies under management's | | | | influence | | | -------------------------------------------------------------------------------- | Purchases of goods and services | 11 | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1,000 | 31 Mar 2010 | 31 Dec 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Associates | | | -------------------------------------------------------------------------------- | Trade and other current | 78 | 76 | | receivables | | | -------------------------------------------------------------------------------- | Trade and other current | 100 | - | | liabilities | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Companies under management's | | | | influence | | | -------------------------------------------------------------------------------- | Trade and other current | 1 | 1 | | liabilities | | | -------------------------------------------------------------------------------- Remuneration to key management The key management personnel compensation includes the employee benefits of the members of the Board of Directors and the Corporate Executives. -------------------------------------------------------------------------------- | EUR 1,000 | 1 Jan - | 1 Jan - | | | 31 Mar 2010 | 31 Mar 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Salaries and other short-term | 597 | 642 | | employee benefits | | | -------------------------------------------------------------------------------- | Share-based payments | 75 | 91 | -------------------------------------------------------------------------------- | Total | 673 | 733 | -------------------------------------------------------------------------------- 6. Commitments Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows: -------------------------------------------------------------------------------- | EUR 1,000 | 31 Mar 2010 | 31 Dec 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Less than one year | 4,236 | 3,904 | -------------------------------------------------------------------------------- | Between one and five years | 12,442 | 12,783 | -------------------------------------------------------------------------------- | More than five years | 1,873 | 2,248 | -------------------------------------------------------------------------------- | Total | 18,551 | 18,935 | -------------------------------------------------------------------------------- The group had no material capital commitments for the purchase of tangible assets as at 31 March 2010 and 31 March 2009. 7. Contingent liabilities -------------------------------------------------------------------------------- | EUR 1,000 | 31 Mar 2010 | 31 Dec 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bank guarantees | 1,758 | 1,616 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 8. Key figures -------------------------------------------------------------------------------- | Financial summary | 1 Jan - | 1 Jan - | 1 Jan - | | | 31 Mar 2010 | 31 Mar 2009 | 31 Dec 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales, EUR 1,000 | 18,067 | 17,101 | 74,896 | -------------------------------------------------------------------------------- | Net sales, change % | 5.7 | -12.2 | -11.7 | -------------------------------------------------------------------------------- | Operating profit/loss, EUR | 191 | -3,197 | 1,018 | | 1,000 | | | | -------------------------------------------------------------------------------- | Operating profit/loss, change % | 106.0 | -182.8 | -91.1 | -------------------------------------------------------------------------------- | Operating profit/loss, as % of | 1.1 | -18.7 | 1.4 | | net sales | | | | -------------------------------------------------------------------------------- | Profit/loss before taxes, EUR | -44 | -3,279 | 388 | | 1,000 | | | | -------------------------------------------------------------------------------- | Profit/loss before taxes, as % | -0.2 | -19.2 | 0.5 | | of net sales | | | | -------------------------------------------------------------------------------- | Return on equity, % | - | - | -4.4 | -------------------------------------------------------------------------------- | Return on investment, % | - | - | 1.5 | -------------------------------------------------------------------------------- | Equity ratio, % | 59.4 | 59.8 | 62.6 | -------------------------------------------------------------------------------- | Gross investments in tangible | 582 | 87 | 686 | | and intangible assets, EUR | | | | | 1,000 | | | | -------------------------------------------------------------------------------- | Gross investments in tangible | 3.2 | 0.5 | 0.9 | | and intangible assets, as % of | | | | | net sales | | | | -------------------------------------------------------------------------------- | Capitalisations according to | 898 | 1,004 | 3,906 | | IAS 38 to intangible assets | | | | -------------------------------------------------------------------------------- | Research and development | 3,304 | 4,109 | 14,046 | | expenditure, EUR 1,000 | | | | -------------------------------------------------------------------------------- | Research and development | 18.3 | 24.0 | 18.8 | | expenditure, as % of net sales | | | | -------------------------------------------------------------------------------- | Order backlog, EUR 1,000 1) | 35,598 | 37,613 | 37,554 | -------------------------------------------------------------------------------- | Average number of employees | 583 | 645 | 613 | | during the period | | | | -------------------------------------------------------------------------------- | Interest-bearing net | -2,473 | 3,546 | 1,282 | | liabilities, EUR 1,000 | | | | -------------------------------------------------------------------------------- | Gearing ratio, % | -5.8 | 8.0 | 2.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) The order book may vary significantly | | | during the financial period. | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Per share data | 1 Jan - | 1 Jan - | 1 Jan - | | | 31 Mar 2010 | 31 Mar 2009 | 31 Dec 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share (EPS), EUR | -0.01 | -0.03 | -0.02 | -------------------------------------------------------------------------------- | EPS diluted, EUR | -0.01 | -0.03 | -0.02 | -------------------------------------------------------------------------------- | Equity per share, EUR | 0.40 | 0.42 | 0.43 | -------------------------------------------------------------------------------- | Dividend per share, EUR | - | - | 0.03 | -------------------------------------------------------------------------------- | Dividend per earnings, % | - | - | -150.1 | -------------------------------------------------------------------------------- | Effective dividend yield, % | - | - | 3.8 | -------------------------------------------------------------------------------- | P/E ratio | - | - | -39.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Adjusted number of shares at | 107,054,810 | 107,054,810 | 107,054,810 | | the end of the period | | | | -------------------------------------------------------------------------------- | - of which the number of | 599,588 | 92,654 | 304,004 | | treasury shares | | | | -------------------------------------------------------------------------------- | Outstanding shares | 106,455,222 | 106,962,156 | 106,750,806 | -------------------------------------------------------------------------------- | Adjusted average number of | 106,569,711 | 106,962,156 | 106,953,918 | | shares during the period | | | | -------------------------------------------------------------------------------- | Average number of shares, | 106,914,539 | 106,962,156 | 107,078,252 | | dilution included | | | | -------------------------------------------------------------------------------- 9. Definition of key figures -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating margin % | = | Operating profit/loss | x 100 | -------------------------------------------------------------------------------- | | | Net sales | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit margin (before | = | Profit/loss before taxes | x 100 | | income taxes) % | | | | -------------------------------------------------------------------------------- | | | Net sales | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity % (ROE) | = | Profit/loss | x 100 | -------------------------------------------------------------------------------- | | | Total equity (average during | | | | | year) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on investment % | = | Profit/loss before taxes + | x 100 | | (ROI) | | financial expenses | | -------------------------------------------------------------------------------- | | | Total equity + interest bearing | | | | | liabilities | | | | | (average during the year) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity ratio % | = | Total equity | x 100 | -------------------------------------------------------------------------------- | | | Statement of financial position | | | | | total - advances received | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross investments in | = | Gross investments in tangible and | x 100 | | tangible and intangible | | intangible assets | | | assets, as % of net | | | | | sales | | | | -------------------------------------------------------------------------------- | | | Net sales | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Research and development | = | Research and development | x 100 | | expenditure, as % of net | | expenditure | | | sales | | | | -------------------------------------------------------------------------------- | | | Net sales | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gearing ratio % | = | Interest-bearing liabilities - | x 100 | | | | 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 end | | | | | of period | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Dividend per share | = | Dividend | | -------------------------------------------------------------------------------- | | | Adjusted number of shares at end | | | | | of period | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Dividend per earnings % | = | Dividend per share | x 100 | -------------------------------------------------------------------------------- | | | Earnings per share (EPS) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Effective dividend yield | = | Dividend per share | x 100 | | % | | | | -------------------------------------------------------------------------------- | | | Share closing price at end of | | | | | period | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | P/E ratio | = | Share closing price at end of | | | | | period | | -------------------------------------------------------------------------------- | | | Earnings per share (EPS) | | -------------------------------------------------------------------------------- Schedule for Comptel's interim reports in 2010: January - June 22 July January - September 26 October COMPTEL CORPORATION Board of Directors Additional information: Mr Sami Erviö, President and CEO, tel. +358 9 700 1131 Mr Markku Pirskanen, CFO, tel. +358 40 517 4606 Mr Samppa Seppälä, Director, IR and Corporate Communications, tel. +358 50 568 0533 Distribution: NASDAQ OMX Helsinki Major media