TELESTE CORPORATION FINANCIAL STATEMENT 2.2.2011 AT 09:00
TELESTE CORPORATION FINANCIAL STATEMENT 2.2.2011 AT 09:00
FINANCIAL STATEMENT OF TELESTE CORPORATION 1 JANUARY TO 31 DECEMBER 2010
Q4/2010
– Net sales grew by 6.5% amounting to EUR 46.6 (43.8) million
– Operating profit grew by 72.7% equalling EUR 3.0 (1.7) million
– Undiluted result per share increased by 101.2% standing at EUR 0.12 (0.06)
– Orders received improved by 8.5% standing at EUR 50.8 (46.8) million
– Operating cash flow stood at EUR 0.9 (7.3) million
Outlook for 2011
We believe the net sales for the entire 2011 to increase slightly and the operating profit to improve somewhat over the 2010 level.
Comments on the Fourth Quarter of 2010 by CEO Jukka Rinnevaara
Video and Broadband Solutions’ net sales increased and exceeded the Q4 of 2009 (period of comparison) by 9.1 percent.The business area’s year-on-year orders received increased by 19.9% due to the order of EUR 6.9 million received from the French police organization.Deliveries related to the frame agreement of EUR 16.0 million from the Israeli HOT Telecom got underway as scheduled.The business area’s profitability was good.
Net sales of Network Services exceeded the period of comparison by 4.2%.However, profitability fell significantly over the period of comparison, among other things, because the German service operations involved items of lower price and margin bracket on the previous year.Moreover, the efficiency of our network maintenance operations was weakened by extremely difficult weather conditions in Central Europe.We signed a three-year contract with the German Kabel Deutschland for cable upgrade and maintenance services.In terms of net sales, the estimated annual value of this frame agreement equals approximately EUR 50 million.Extension of the contract and the ongoing efficiency measures provide a good basis for improving the profitability.
We believe our target market will pick-up gradually in 2011.Together with the efficiency measures, our competitive product and service offering allow for improvement in net sales and operating profit over the level of 2010.Yet, severe weather in Central Europe and the low order backlog of the early year may restrict our deliveries in the first quarter of 2011. In addition, we estimate that the efficiency measures, such as the development of the resource management and service processes, taken by the Network Services business area will improve profitability in the second half of 2011.
Financial Period 2010
– Net sales stood at EUR 167.8 (141.7), a year-on-year improvement of 18.5%
– Operating profit amounted to EUR 7.4 (2.5) million, an increase of 194.5% over the year of comparison
– Undiluted result per share equalled EUR 0.27 (0.02)
– Year-on-year orders received increased by 10.7% standing at EUR 167.2 (151.0) million
– Orders received by Video and Broadband Solutions amounted to EUR 86.5 (81.6) million
– Orders received by Network Services stood at EUR 80.7 (69.4) million
– Operating cash flow stood at EUR 5.4 (9.8) million
– The Board of Directors proposes that a dividend of EUR 0.12 (0.08) per outstanding share will be paid
The Group’s Business in the Fourth Quarter of 2010
Net sales in Q4 amounted to EUR 46.6 (43.8) million.Operating profit stood at EUR 3.0 (1.7) million making 6.4% (3.9%) of the net sales.Operating profit of the period of comparison included impairment loss of EUR 0.8 million.
Undiluted result per share was EUR 0.12 (0.06).
Operating cash flow stood at EUR 0.9 (7.3) million. The clear reduction in cash flow over the period of comparison was the result of changes in payment terms.
Year-on-year orders received improved by 8.5% standing at EUR 50.8 (46.8) million.The Group’s order backlog totalled EUR 17.0 (33.1) million.The order backlog of the comparative period included an order of EUR 12.0 million, which was written off from the backlog in Q2 of 2010.
Video and Broadband Solutions in Q4
Net sales amounted to EUR 22.9 (21.0) million i.e. an increase of 9.1% over the period of comparison.Operating profit stood at EUR 2.4 (-0.5) million making 10.3% (-2.2%) of the net sales.The improved operating profit was contributed by the management of material costs and the growth in net sales.Operating profit of the period of comparison included an impairment loss of EUR 0.8 million.
Orders received totaled EUR 27.1 (22.6) million.A significant order of EUR 6.9 million for the Paris urban area of video surveillance system was received from France.Order backlog totaled EUR 17.0 (28.6) million.The order backlog of the comparative period included an order of EUR 12.0 million, which was written off from the backlog in Q2 of 2010.
Network Services in Q4
In Q4, net sales for the business area totaled EUR 23.8 (22.8) million.Operating profit amounted to EUR 0.6 (2.2) million.The year-on-year decrease in the operating income was caused by items of lower price bracket and margin being included in the German services deliveries over the comparative period as well as difficult weather conditions.
Orders received totaled EUR 23.8 (24.3) million.Deliveries of the business area are mainly based on frame agreements and, therefore, there was no backlog.
REPORT OF THE BOARD OF DIRECTORS
Business Description and Overview
Founded in 1954, Teleste is a technology company consisting of two business areas: Video and Broadband Solutions and Network Services.In line with its strategy, Teleste continues to focus on the chosen product and technology segments as well as services business.
Video and Broadband Solutions’ net sales and profitability improved over the year of comparison.In 2010 the business area continued to exercise its cost adaptation (rotating lay-offs in Finland).
Network Services’ year-on-year net sales increased mainly due to changes in the Group structure on July 1, 2009 (we acquired a 100% holding of AVC’s shares, while at the same time raising our ownership in Cableway to 75%).In Germany, streamlining of service processes was running, but no impact on profitability was achieved in 2010.Profitability was additionally weakened by the severe weather conditions in the main market in Q1 and Q4.
Net Sales and Profitability
Teleste’s net sales totaled EUR 167.8 (141.7) million, an increase of 18.5% over the previous year.Owing to the general tight situation in the financial market, our main customers, i.e. the European cable operators, have been fairly cautious about their network investments.Concerning growth in net sales, EUR 20.4 million, or 12.2%, were due to changes in Group structure.
Operating profit stood at EUR 7.4 (2.5) million making 4.4% (1.8%) of the net sales.The year-on-year growth in operating profit was due to an increase in Video and Broadband Solutions’ net sales, efficient control over the material costs and cost adaptation.
Year-on-year orders received by the Group improved by 10.7% standing at EUR 167.2 (151.0) million.The impact of the change in the Group structure on the increased orders received was EUR 20.4 million.At the year-end, the order backlog stood at EUR 17.0 million.The order of EUR 12.0 million received in the summer of 2008 from India was written off from the order backlog.
Profit after financial items totaled EUR 6.7 (1.4) million while the net profit equalled EUR 4.7 (0.4) million.Undiluted result per share for the Group stood at EUR 0.27 (EUR 0.02).The return on capital employed was 10.2% (3.3%) and the return on equity was 9.9% (0.9%).
BUSINESS AREAS
Video and Broadband Solutions
This business area focuses on broadband subscriber networks, video services platforms and CCTV applications.Major clientele of the business area consists of cable operators but includes also resellers and public sector organizations.The main market of the business area is Europe.In 2010, we strengthened our expertise in IP video technology and presence in the Polish market through the Satlan acquisition.The business area has 23 offices of its own and a number of retail and integration partners.Outside Europe, Video and Broadband Solutions has offices of its own located in the United States, Australia, China and India.
The R&D effort of the business area focused on the video surveillance transfer system based on standard H.264.The continued R&D efforts included the Internet protocol-based video processing system (Luminato product range), amplification technology (Access product range), optical transmission system for the HFC network (HDO product range) and the video surveillance management system (VMX).
Orders received totaled EUR 86.5 (81.6) million, while the order backlog amounted to EUR 17.0 (28.6) million.The order of EUR 12.0 million received in the summer of 2008 from India was written off from the order backlog.
Net sales grew by 7.5% over the year of comparison amounting to EUR 82.0 (76.3) million.The impact of the Satlan acquisition on net sales for 2010 was EUR 3.6 million.
Operating profit stood at EUR 6.3 (-0.7) million making 7.7% (-0.9%) of the net sales. The improvement in the year-on-year operating profit was brought about by increased net sales, controlled material costs and cost adaption.In 2010, the business area’s Finnish personnel were on a rotating layoff.
Network Services
The clientele of Teleste’s Network Services business mainly consists of large European cable operators.The services provided by this business area include planning, new construction, upgrading and maintenance of cable networks.Implementation and scope of the relevant services vary by client ranging from standalone applications to integrated turnkey deliveries.Most deliveries are based on frame agreements.The services also include Teleste’s own product solutions.Our know-how in services covers all the sectors related to the cable network technology from installation and maintenance of headends to upgrading of house networks.Services are also provided through a network of subcontractors.
Orders received totaled EUR 80.7 (69.4) million.Net sales amounted to EUR 85.8 (65.4) million.As to the increased net sales and orders received, EUR 14.8 million was due to changes in Group structure dated on 1st July 2009 (AVC and Cableway).The impact of the acquisition of Freycom on net sales was EUR 2.0 million.Operating profit amounted to EUR 1.1 (3.2) million.The weakening in the operating profit was caused by the delivered services having included more basic items of a lower price and margin bracket.Additionally, our deliveries of services was aggravated by severe weather.
R&D and Investments
R&D expenditure for the period under review totaled EUR 10.3 (10.8) million making 6.1% (7.6%) of net sales.Teleste’s R&D expenditure focused on the business area of Video and Broadband Solutions, the R&D expenses of which amounted to 12.6% (14.2%) of the net sales.
Some 60% (60%) of the R&D expenses involved continued development of product platforms currently in production and their maintenance as well as customer-specific product applications.Activated R&D inputs totaled EUR 1.7 (1.6) million.Depreciation on activated R&D expenses amounted to EUR 2.4 (2.5) million.
At the end of the financial period, 9.7% (10%/2009, 25%/2008) of the Group personnel were working in R&D related duties.A number of Teleste’s projects involved co-operation with Finnish universities and research institutes.
Investments for the period under review totaled EUR 3.8 (25.2) million making 2.2% (17.8%) of net sales.The most significant investment involved the Polish Satlan Sp. z o.o. acquired for EUR 6.3 million (including the estimated additional purchase price).In Switzerland, Freycom SA was acquired for EUR 0.6 million.Direct costs resulting from acquisitions have been entered under expenses, and their impact on other operating expenses is insignificant.The estimated additional purchase price for the German acquisitions in the last quarter of 2009 was largely unrealized, so an item of EUR 5.8 million has been recorded in the fiscal year 2010 as a deduction under investments.Product development investments totaled EUR 1.7 (1.6) million.As to investments, EUR 0.1 (0.2) million was implemented by means of financial leasing.The last phase of the Littoinen extension project was launched at the end of the year involving product development facilities.The investment amounts to approximately EUR 1.0 million and is expected to be completed in June 2011.
Financing
Liquidity of the Group remained good throughout the year.Operating cash flow stood at EUR 5.4 (9.8) million.Accounts receivable caused no credit losses.At the end of the period, the amount of unused binding stand-by credits amounted to EUR 13.5 (18.5) million.The current binding stand-by credits of EUR 40.0 million run till November 2013.The Group’s equity ratio equaled 43.6% (43.6%) and net gearing 25.5% (22.0%).Interest bearing debt on 31 December 2010 stood at EUR 28.0 (22.8) million.
Personnel and Organization
In 2010, the Group employed an average of 1215 people (1103/2009, 702/2008).At the year-end, the figure totaled 1231 (1260/2009, 677/2008) of which 70% (68%/2009, 33%/2008) were stationed overseas.Employees stationed outside Europe accounted for less than 5% of the Group’s personnel.Expenditure on employee benefits amounted to EUR 50.8 (44.6/2009, 33.2/2008) million.The increase in employee benefits was mainly due to the change in the Group structure.
As part of the cost-structure adaptation measures required by the general market situation, the Finnish personnel have been on a rotating layoff.The co-determination procedure was concluded on January 22, 2010.In Finland, the measures agreed in the co-determination procedure continued until the end of 2010.The operational efficiency drive involving the sales organization abroad continued also.
Group Structure
The Polish Satlan was acquired on September 1, 2010 to strengthen Video and Broadband Solutions’ integration expertise.The price of EUR 2.8 million at the conclusion of the deal was paid in cash.The total purchase price is estimated at EUR 6.3 million, depending on the development in profitability of the acquired company within the next two years.In these financial statements the acquisition cost for Satlan is presented as preliminary since there are grounds for viewing the information concerning its profitability in a longer perspective given the moderately high conditional purchase price.An acquisition in Switzerland for Freycom SA was carried out on April 4, 2010 by the Network Services business area.The purchase price of EUR 0.6 million was paid in cash.The direct costs related to the acquisition of both companies have been entered under the Group’s other operating expenses.
With the ownership arrangements Teleste’s holding in the German Cableway AG rose to 100% when a Cableway minority interest was bought for EUR 0.4 million.The effect of Satlan on Teleste’s net sales for 2010 was EUR 3.6 million and on profit EUR 0.7 million, respectively.Freycom’s effect on net sales stood at EUR 2.0 million with no impact on profit.
The branch office in Spain was closed and the Slovak subsidiary dissolved.Teleste Kaurakatu Oy was merged into Ortikon Interactive Oy, which changed its name to Teleste Kaurakatu Oy.Teleste Video Networks AB and Teleste Försäljning AB were merged into Teleste Sweden AB.Young-Net GmbH was merged into Cableway Mitte GmbH and DINH Vlaanderen NV into DINH Telecom S.A.
Parent company Teleste has branch offices in Australia, the Netherlands, China and Denmark with subsidiaries in 12 countries outside Finland.
Essential Risks of Business Areas
Founded in 1954, Teleste is a technology and service provider consisting of two business areas: Video and Broadband Solutions and Network Services.With Europe as the main market area, our most significant clients include European cable operators and specified organizations in the public sector.
Concerning Video and Broadband Solutions, integrated deliveries of solutions create favourable conditions for growth, even if the involved resource allocation and technical implementation pose a challenge involving, therefore, also reasonable risks.The still ongoing difficult market situation may delay the implementation of investment plans among the clientele.Network investments carried out by the clients vary based on their need for upgrading and their capital structure.Much of Teleste’s competition comes from the USA so the exchange rate of euro up against the US dollar affects our competitiveness.Teleste hedges against short-term currency exposure by means of forward contracts.Correct technological choices and their timing are vital for our success.
Net sales for Network Services comes, for the most part, from a small number of large European customers, so a significant change in the demand for services by any one of them is reflected in the actual deliveries. To ensure quality of services and cost-efficiency, along with an efficient service process management, customer satisfaction requires innovative solutions in terms of processes, products and logistics.Smooth operation of the cable networks requires effective technical management and functional hardware solutions. This, in turn, means that the skill levels of our subcontractors and their personnel needs continuous and determined development.In addition, availability of capacity in our network of subcontractors may limit our ability to supply.
It is equally important for our business areas to take into account any market developments such as consolidations taking place among the clientele and competition.Weather conditions affect the supply conditions of products and services of our business areas.
The Board of Directors annually reviews any essential risks related to the company operation and the management thereof.Risk management constitutes an integral part of the strategic and operative practices of our business areas.Risks and their probability are reported to the Board by regular monthly reports.
The company has covered major risks of damage through insurance policies.These insurances do not include credit loss risks.In the period under review, no such risks materialized, and no legal proceedings or judicial procedures were pending that would have had any essential significance for the Group operation.
Decisions by the Annual General Meeting (AGM)
The Annual General Meeting of Teleste Corporation on April 9, 2010 confirmed the financial statements for 2009 and discharged the Board of Directors and the CEO from liability for the financial period.The AGM confirmed the dividend of EUR 0.08 per share proposed by the Board.The dividend was paid out on April 21, 2010.
Composition of the Board remained unchanged.Marjo Miettinen was appointed Chairman while the appointed Board Members include Pertti Ervi, Tero Laaksonen, Pertti Raatikainen, Kai Telanne and Petteri Walldén.
Authorised Public Accountants KPMG Oy Ab continue as the auditor until the next AGM.Accountant authorised by the Central Chamber of Commerce of Finland Esa Kailiala was chosen auditor-in-charge.
The AGM authorised the Board to acquire the maximum of 1,400,000 of the company’s own shares and to convey the maximum of 1,779,985 company’s own shares.The AGM also authorised the company Board to issue 10,000,000 new shares.Pursuant to the special rights provided by the company, the maximum number of significant shares is 5,000,000; these special rights are included in the authorisation to issue 10,000,000 new shares.
The authorizations are valid until the Annual General Meeting of Shareholders for year 2011.The Board has not exercised these rights.
Shares and Changes in Share Capital
On 31 December 2010, EM Group Oy was the largest single shareholder with a holding of 21.02%.
In the period under review, the lowest company share price was EUR 3.63 (2.25) and the highest was EUR 5.33 (4.30).Closing price on 31 December 2010 stood at EUR 4.41 (3.72).According to Euroclear Finland Ltd the number of shareholders at the end of the period under review was 5,184 (5,440).Foreign ownership accounted for 8.38% (9.69%).From 1 January to 31 December 2010, trading with Teleste share at NASDAQ OMX Helsinki amounted to EUR 14.2 (28.5) million.In the period under review, 3.2 (7.8) million Teleste shares were traded on the stock exchange.
In March 2010, Teleste Board of Directors decided on a directed share issue of 381,000 shares to Teleste Management Oy established by the Management Team of Teleste Corporation.This directed share issue was authorized by the AGM on 7 April 2009.
At the end of December 2010, the number of own shares in the Group possession stood at 760,985 (379,985) out of which parent company Teleste Corporation had none (0) while other Group or controlled companies had 760,985 shares, respectively.At the end of the period, the Group’s holding of the total amount of shares amounted to 4.18% (2.13%).
Based on the rights of options, the company amount of shares may increase by 840,000 shares equaling to 4.41% of all shares and votes.
On 31 December 2010, the registered share capital of Teleste stood at EUR 6,966,932.80 divided in 18,186,590 shares.
Ownership by Management and Members of the Governing Bodies on 31 December 2010
On the balance sheet date, CEO and the Members of the Board owned 98,482 Teleste Corporation shares equalling to 0.54% of all shares and votes.
Based on Teleste 2007 stock option rights, CEO was entitled to subscribe 120,000 shares.On the balance sheet date, the ownership including rights of options by the CEO and the Board amounted to 218,482 shares, which is equal to 1.15% of all shares and votes.On 31 December 2010, other members of the Management Team were not in the possession of Teleste Corporation shares.On 31 December 2010, Teleste Management Oy (a company incorporated for the management incentive scheme) was in the possession of 381,000 Teleste Corporation shares.CEO’s holding in the Teleste Management shares stands at 34.4% while the ownership by other members of Teleste Corporation’s Management Group equals 65.6%.On 31 December 2010, in addition to CEO’s stock options, members of Teleste Corporation’s Management Team owned a total of 255,000 Teleste 2007 options.
Teleste Corporation complies with the Finnish Corporate Governance Code, which was issued by the Securities Market Association on 15 June 2010, and entered into force on 1 October 2010.The Corporate Governance Statement will be issued separately from the Company’s Annual Report, and it will be available on Teleste’s website under Investors.Since 1 March 2000, Teleste complies with the insider guidelines issued by the NASDAQ OMX Helsinki Oy in their valid form at any given time.
Outlook for 2011
In 2011, deliveries of equipment and solutions by Video and Broadband Solutions to its customer base of operators in our target markets will at least achieve the level of 2010.European telecom operators are about to launch their TV distribution investments, and we believe that our video headend and optical network products are competitive in this new emerging market. Deliveries related to security and traffic control will grow from the 2010 level.
Demand for services provided by Network Services will remain relatively stable on the annual basis.We believe that in Germany, our main market, profitability will improve from the 2010 level thanks to the ongoing streamlining measures.This improvement in profitability will, in our estimation, mainly be seen in the second half of 2011.
Teleste expects to maintain its strong market position in its core markets.Severe weather conditions in Central Europe and the low order backlog of the early year may hold back our deliveries in the first quarter of 2011.
We believe the net sales for the entire 2011 to increase slightly and the operating profit to improve somewhat over the 2010 level.
Board of Directors’ Proposal for Dividends
The parent company’s distributable equity at the balance sheet date equals EUR 30.6 million.
Regarding the Annual General Meeting scheduled for 8 April 2011, the Board proposes that a dividend of EUR 0.12 (EUR 0.08) per share would be paid for the outstanding shares for the year 2010.
1 February 2011
TELESTE CORPORATION Jukka Rinnevaara
Board of Directors President and CEO
This interim report has been compiled in compliance with IAS 34, as it is accepted within EU, using the recognition and valuation principles with those used in the Annual Report. The Group has adopted revised IFRS 3Business Combinations from 1.1.2010. The data stated in this report is audited.
| STATEMENT OF COMPREHENSIVE INCOME, 1000 EUR | |||
| 10-12/2010 | 10-12/2009 | Change % | |
| Net sales | 46,643 | 43,784 | 6.5 % |
| Other operating income | 489 | 533 | -8.2 % |
| Raw material and consumables used | -22,074 | -21,038 | 4.9 % |
| Employee benefits expense | -14,140 | -13,407 | 5.5 % |
| Depreciations | -1,353 | -1,492 | -9.3 % |
| Amortisation expense | 0 | -800 | n/a |
| Other operating expenses | -6,598 | -5,862 | 12.6 % |
| Operating profit | 2,968 | 1,718 | 72.7 % |
| Financial income | 40 | 85 | -52.9 % |
| Financial expenses | -233 | -151 | 54.3 % |
| Profit before taxes | 2,775 | 1,652 | 67.9 % |
| Taxes | -671 | -657 | 2.1 % |
| Profit for the period | 2,104 | 995 | 111.4 % |
| Attributable to: | |||
| Equity holders of the parent | 2,104 | 995 | 111.4 % |
| Earnings per share for profit of the year attributable to the equity holders of the parent | |||
| Basic (expressed in euro per share) | 0.12 | 0.06 | 101.2 % |
| Diluted (expressed in euro per share) | 0.12 | 0.06 | 98.2 % |
| Total comprehensive income for the period, 1000 EUR | |||
| Net profit | 2,104 | 995 | 111.4 % |
| Translation differences | 402 | 170 | 136.5 % |
| Fair value reserve | 10 | -116 | n/a |
| Total comprehensive income for the period | 2,516 | 1,049 | 139.8 % |
| Attributable to: | |||
| Equity holders of the parent | 2,516 | 1,049 | 139.8 % |
| STATEMENT OF COMPREHENSIVE INCOME, 1000 EUR | 1-12/2010 | 1-12/2009 | Change % |
| Net sales | 167,836 | 141,651 | 18.5 % |
| Other operating income | 1,460 | 3,124 | -53.3 % |
| Raw material and consumables used | -82,054 | -69,962 | 17.3 % |
| Employee benefits expense | -50,824 | -44,584 | 14.0 % |
| Depreciation | -5,896 | -5,582 | 5.6 % |
| Amortisation expenses | 0 | -800 | n/a |
| Other operating expenses | -23,090 | -21,323 | 8.3 % |
| Operating profit | 7,432 | 2,524 | 194.5 % |
| Financial income | 84 | 105 | -20.0 % |
| Financial expenses | -773 | -710 | 8.9 % |
| Share of profit of associates | 0 | -544 | n/a |
| Profit before taxes | 6,743 | 1,375 | 390.4 % |
| Taxes | -1,959 | -959 | 104.3 % |
| Profit for the period | 4,784 | 416 | 1050.1 % |
| Attributable to: | |||
| Equity holders of the parent | 4,784 | 416 | 1050.1 % |
| Earnings per share for profit of the year attributable to the equity holders of the parent | |||
| Basic ( expressed in euro per share) | 0.27 | 0.02 | 1037.2 % |
| Diluted (expressed in euro per share) | 0.27 | 0.02 | 1019.9 % |
| Total comprehensive income for the period (tEUR) | |||
| Net profit | 4,784 | 416 | 1050.1 % |
| Translation differences | 277 | 189 | 46.6 % |
| Fair value reserve | -70 | -116 | -39.7 % |
| Total comprehensive income for the period | 4,991 | 489 | 920.7 % |
| Attributable to: | |||
| Equity holders of the parent | 4,991 | 489 | 920.7 % |
| STATEMENT OF FINANCIAL POSITION, 1000 EUR |
|||
| Assets 1000 EUR | |||
| 31.12.2010 | 31.12.2009 | Change % | |
| Non-current assets | |||
| Property, plant and equipment | 8,836 | 9,960 | -11.3 % |
| Goodwill | 30,959 | 31,657 | -2.2 % |
| Other intangible assets | 6,709 | 7,664 | -12.5 % |
| Available-for-sale investments | 713 | 713 | 0.0 % |
| Total | 47,217 | 49,994 | -5.6 % |
| Current assets | |||
| Inventories | 21,000 | 20,682 | 1.5 % |
| Trade and other receivables | 32,819 | 26,884 | 22.1 % |
| Cash | 15,203 | 12,518 | 21.4 % |
| Total | 69,022 | 60,084 | 14.9 % |
| Total assets | 116,239 | 110,078 | 5.6 % |
| Equity and liabilities | |||
| Equity attributable to equity holders of the parent | |||
| Share capital | 6,967 | 6,967 | 0.0 % |
| Share premium | 1,504 | 1,504 | 0.0 % |
| Translation differences | -95 | -372 | -74.5 % |
| Invested non restricted equity | 2,737 | 2,737 | 0.0 % |
| Other reserves | -186 | -116 | 60.3 % |
| Retained profits | 39,183 | 35,949 | 9.0 % |
| Non-controlling interest | 292 | 0 | n/a |
| Total | 50,402 | 46,669 | 8.0 % |
| Non-current liabilities | |||
| Interest-bearing liabilities | 11,847 | 12,237 | -3.2 % |
| Other liabilities | 3,865 | 6,461 | -40.2 % |
| Deferred tax liabilities | 511 | 265 | 92.8 % |
| Provisions | 657 | 513 | 28.0 % |
| Total | 16,880 | 19,476 | -13.3 % |
| Current liabilities | |||
| Trade and other liabilities | 30,161 | 32,372 | -6.8 % |
| Current tax payable | 1,240 | 0 | n/a |
| Provisions | 1,313 | 1,026 | 28.0 % |
| Interest-bearing liabilities | 16,243 | 10,535 | 54.2 % |
| Total | 48,957 | 43,933 | 11.4 % |
| Total liabilities | 65,837 | 63,409 | 3.8 % |
| Equity and liabilities total | 116,239 | 110,078 | 5.6 % |
| CONSOLIDATED CASH FLOW STATEMENT,1000 EUROS | |||
| 1.1.-31.12. 2010 |
1.1.-31.12. 2009 |
Change % | |
| Cash flows from operating activities | |||
| Profit for the period | 4,784 | 416 | 1050.1 % |
| Adjustments for: | |||
| Non-cash transactions | 6,143 | 6,666 | -7.8 % |
| Interest and other financial expenses | 773 | 710 | 8.9 % |
| Interest income and other financial income | -72 | -95 | -24.2 % |
| Dividends | -12 | -10 | 20.0 % |
| Taxes | 1,959 | 959 | 104.3 % |
| Change in working capital | |||
| Increase in trade and other receivables | -4,650 | 12,008 | n/a |
| Increase in inventories | 1,265 | -384 | n/a |
| Increase in trade and other payables | -3,942 | -7,702 | -48.8 % |
| Decrease in provisions | 431 | -92 | n/a |
| Paid interests and other financial expenses | -565 | -1,042 | -45.8 % |
| Received interests and dividends | 84 | 105 | -20.0 % |
| Paid taxes | -786 | -1,708 | -54.0 % |
| Cash flow from operating activities | 5,412 | 9,831 | -44.9 % |
| Cash flow from investing activities | |||
| Acquisition of subsidiary, net of cash acquired | -3,643 | -10,281 | -64.6 % |
| Purchases of property, plant and equipment (PPE) | -1,022 | -3,272 | -68.8 % |
| Proceeds from sales of PPE | 306 | 500 | -38.8 % |
| Purchases of intangible assets | -1,499 | -1,327 | 13.0 % |
| Proceeds from sales of shares | 0 | 0 | n/a |
| Investments in shares | 0 | -10 | n/a |
| Net cash used in investing activities | -5,858 | -14,390 | -59.3 % |
| Cash flow from financing activities | |||
| Proceeds from borrowings | 5,520 | 20,542 | -73.1 % |
| Payments of borrowings | -966 | -9,921 | -90.3 % |
| Payment of finance lease liabilities | -596 | -702 | -15.1 % |
| Dividends paid | -1,394 | -2,035 | -31.5 % |
| Own shares | 0 | -264 | n/a |
| Proceeds from issuance of ordinary shares | 289 | 0 | n/a |
| Net cash used in financing activities | 2,853 | 7,620 | -62.6 % |
| Change in cash | |||
| Cash and cash equivalents 1.1. | 12,518 | 9,268 | 35.1 % |
| Effect of currency changes | 277 | 189 | 46.6 % |
| Cash and cash equivalents 31.12. | 15,203 | 12,518 | 21.4 % |
| Consolidated statement of changes in equity, 1000 EUR | |||||||||
| Attributable to equity holders of the parent | Share capital |
Share premium |
Trans-lation differ-rences |
Reta-ined earn-ings |
Invested non– rest-ricted equity |
Other Rese-rves |
Total | Share of non Contr-olling interest |
Total equity |
| Equity 31.12.2009 | 6,967 | 1,504 | -372 | 35,949 | 2,737 | -116 | 46,669 | 0 | 46,669 |
| Total comprehensive income for the period | 0 | 0 | 277 | 4,784 | 0 | -70 | 4,991 | 0 | 4,991 |
| Share issue | 0 | 289 | 289 | ||||||
| Dividends | 0 | 0 | 0 | -1,424 | 0 | 0 | -1,424 | 30 | -1,394 |
| Changes in subsidiary interest | -373 | -373 | -27 | -400 | |||||
| Equity-settled share-based payments | 0 | 0 | 0 | 247 | 0 | 0 | 247 | 0 | 247 |
| Equity 31.12.2010 | 6,967 | 1,504 | -95 | 39,183 | 2,737 | -186 | 50,110 | 292 | 50,402 |
| BUSINESS SEGMENTS 2010, 1000 EUR |
|||
| Video and Broadband Solutions |
Network Services |
Group | |
| External sales | |||
| Services | 3,379 | 85,829 | 89,208 |
| Goods | 78,628 | 0 | 78,628 |
| External sales total | 82,007 | 85,829 | 167,836 |
| Operating profit of segments | 6,345 | 1,087 | 7,432 |
| Financial items | -689 | ||
| Shares of associates | 0 | ||
| Profit for the period | 6,743 | ||
| BUSINESS SEGMENTS 2009, 1000 EUR | Video and Broadband Solutions |
Network Services |
Group |
| External sales | |||
| Services | 3,449 | 65,371 | 68,820 |
| Goods | 72,831 | 0 | 72,831 |
| External sales total | 76,280 | 65,371 | 141,651 |
| Operating profits of the segments | -692 | 3,216 | 2,524 |
| Financial items | -605 | ||
| Share of associates | 0 | -544 | -544 |
| Profit before taxes | 0 | 0 | 1,375 |
| Amortisation expenses | 800 | 0 | 800 |
| Geographical division 2010, 1000 EUR | Nordic countries | Other Europe | Finland | Others | Group |
| Sales by origin | 17,932 | 129,512 | 11,272 | 9,120 | 167,836 |
| Assets | 7,922 | 77,272 | 29,877 | 1,168 | 116,239 |
| Capital expenditure for the period | 25 | 1,511 | 2,190 | 25 | 3,751 |
| Geographical division 2009, 1000 EUR | Nordic countries | Other Europe | Finland | Others | Group |
| Sales by origin | 17,964 | 107,011 | 11,630 | 5,046 | 141,651 |
| Assets | 11,843 | 64,547 | 32,611 | 1,077 | 110,078 |
| Capital expenditure for the period | 20 | 20,580 | 4,611 | 30 | 25,241 |
| Information per quarter, 1000 EUR | 10-12/10 | 7-9/10 | 4-6/10 | 1-3/10 | 10-12/09 | 1-12/2010 |
| Video and Broadband Solutions |
||||||
| Order intake | 27,080 | 21,170 | 19,702 | 18,578 | 22,567 | 86,530 |
| Net sales | 22,882 | 19,915 | 20,148 | 19,062 | 20,978 | 82,007 |
| EBIT | 2,365 | 1,955 | 1,463 | 562 | -457 | 6,345 |
| EBIT % | 10.3 % | 9.8 % | 7.3 % | 2.9 % | -2.2 % | 7.7 % |
| Network Services |
||||||
| Order intake | 23,761 | 18,710 | 19,278 | 18,926 | 24,257 | 80,675 |
| Net sales | 23,761 | 18,710 | 23,326 | 20,032 | 22,806 | 85,829 |
| EBIT | 603 | 28 | 192 | 264 | 2,175 | 1,087 |
| EBIT % | 2.5 % | 0.2 % | 0.8 % | 1.3 % | 9.5 % | 1.3 % |
| Total |
||||||
| Order intake | 50,841 | 39,880 | 38,980 | 37,504 | 46,824 | 167,205 |
| Net sales | 46,643 | 38,625 | 43,474 | 39,094 | 43,784 | 167,836 |
| EBIT | 2,968 | 1,984 | 1,655 | 826 | 1,718 | 7,432 |
| EBIT % | 6.4 % | 5.1 % | 3.8 % | 2.1 % | 3.9 % | 4.4 % |
| Commitments and contingencies, 1000 EUR |
2010 |
2009 |
Change % |
| Other securities | 640 | 120 | 433.3 % |
| Rental liabilities | 2,254 | 2,243 | 0.5 % |
| Lease liabilities | 4,227 | 3,733 | 13.2 % |
| Value of underlying forward contracts | 8,283 | 8,043 | 3.0 % |
| Market value of forward contracts | -293 | -228 | n/a |
| Interest rate swap | 11,500 | 11,500 | n/a |
| Market value of interest swap | -256 | -157 | n/a |
| The number of employees broken down by following categories 31.12. | 2010 | 2009 | Change % |
| Research and development | 119 | 135 | -11.9 % |
| Production and material management | 944 | 964 | -2.1 % |
| Sales and marketing | 123 | 115 | 7.0 % |
| Finance, quality and IT | 45 | 46 | -2.2 % |
| Total | 1,231 | 1,260 | -2.3 % |
| KEY FIGURES | IFRS 2010 |
IFRS 2009 |
IFRS 2008 |
IFRS 2007 |
IFRS 2006 |
|||
| Profit and loss account, balance sheet | ||||||||
| Net sales, Meur | 167.8 | 141.7 | 108.7 | 125.1 | 101.8 | |||
| Change % | 18.5 % | 30.3 % | -13.1 % | 22.9 % | 23.2 % | |||
| Sales outside Finland, % | 93.3 % | 91.8 % | 90.2 % | 91.2 % | 90.6 % | |||
| Operating profit, Meur | 7.4 | 2.5 | 5.6 | 13.2 | 9.8 | |||
| % of net sales | 4.4 % | 1.8 % | 5.2 % | 10.5 % | 9.6 % | |||
| Profit after financial items, Meur | 6.7 | 1.4 | 5.1 | 12.7 | 9.3 | |||
| % of net sales | 4.0 % | 1.0 % | 4.7 % | 10.1 % | 9.1 % | |||
| Profit before taxes, Meur | 6.7 | 1.4 | 5.1 | 12.7 | 9.3 | |||
| % of net sales | 4.0 % | 1.0 % | 4.7 % | 10.1 % | 9.1 % | |||
| Profit for the financial period, Meur | 4.8 | 0.4 | 5.5 | 9.4 | 6.9 | |||
| % of net sales | 2.9 % | 0.3 % | 5.1 % | 7.5 % | 6.8 % | |||
| R&D expenditure, Meur | 10.3 | 10.8 | 13.5 | 13.1 | 9.8 | |||
| % of net sales | 6.1 % | 7.6 % | 12.4 % | 10.5 % | 9.7 % | |||
| Gross investments, Meur | 3.8 | 25.2 | 3.9 | 12.3 | 6.2 | |||
| % of net sales | 2.2 % | 17.8 % | 3.6 % | 9.8 % | 6.1 % | |||
| Interest bearing liabilities, Meur | 28.1 | 22.8 | 11.0 | 9.5 | 8.0 | |||
| Shareholder’s equity, Meur | 50.4 | 46.7 | 46.6 | 46.7 | 37.7 | |||
| Total assets, Meur | 116.2 | 110.1 | 75.5 | 77.9 | 68.2 | |||
| Personnel and orders | ||||||||
| Average personnel | 1,215 | 1,103 | 702 | 681 | 608 | |||
| Order backlog at year end, Meur | 17.0 | 33.1 | 24.0 | 21.5 | 28.1 | |||
| Orders received, Meur | 167.2 | 151.0 | 118.6 | 118.5 | 107.2 | |||
| Key metrics |
||||||||
| Return on equity, % | 9.9 % | 0.9 % | 11.8 % | 22.2 % | 19.7 % | |||
| Return on capital employed, % | 10.2 % | 3.3 % | 10.4 % | 27.1 % | 24.3 % | |||
| Equity ratio, % | 43.6 % | 43.6 % | 61.7 % | 60.2 % | 55.3 % | |||
| Gearing, % | 25.5 % | 22.0 % | 3.6 % | 3.8 % | 3.2 % | |||
| Earnings per share, euro | 0.27 | 0.02 | 0.32 | 0.55 | 0.41 | |||
| Earnings per share fully diluted, euro | 0.27 | 0.02 | 0.32 | 0.52 | 0.38 | |||
| Shareholders’ equity per share, euro | 2.90 | 2.68 | 2.74 | 2.69 | 2.22 | |||
| Teleste share | ||||||||
| Highest price, euro | 5.33 | 4.30 | 7.49 | 12.34 | 12.75 | |||
| Lowest price, euro | 3.64 | 2.25 | 1.90 | 6.47 | 6.46 | |||
| Closing price, euro | 4.41 | 3.72 | 2.24 | 6.71 | 11.63 | |||
| Average price, euro | 4.49 | 3.62 | 4.52 | 10.10 | 9.83 | |||
| Price per earnings | 16.3 | 154.1 | 7.0 | 12.3 | 28.6 | |||
| Market capitalization, Meur | 80.2 | 66.2 | 39.9 | 118.6 | 202.2 | |||
| Stock turnover, Meur | 14.2 | 28.5 | 51.1 | 72.4 | 138.9 | |||
| Turnover, number in millions | 3.2 | 7.8 | 11.5 | 7.2 | 14.2 | |||
| Turnover, % of share capital | 17.4 % | 44.0 % | 64.6 % | 40.5 % | 81.4 % | |||
| Average number of shares | 18093689 | 17805590 | 17708782 | 17494435 | 17363102 | |||
| Number of shares at the year-end | 18186590 | 17805590 | 17805590 | 17671305 | 17389302 | |||
| Average number of shares, diluted w/o own shares | 17693605 | 17229154 | 17372555 | 17971752 | 18022505 | |||
| Number of shares at the year-end, diluted w/o own shares | 17693605 | 17425605 | 17039399 | 17972785 | 18034752 | |||
| Paid dividend, Meur | * 2,1 | 1.4 | 2.0 | 4.2 | 3.4 | |||
| Dividend per share, euro | *0,12 | 0.08 | 0.12 | 0.24 | 0.2 | |||
| Dividend per net result, % | 43.7 % | 331.3 % | 37.4 % | 43.9 % | 49.1 % | |||
| Effective dividend yield, % | 2.7 % | 2.2 % | 5.4 % | 3.6 % | 1.7 % | |||
| * The Board’s proposal to the AGM | ||||||||
| Treasury shares | Number of shares |
% of shares | % of votes | |||||
| Teleste companies own shares 31.12.2010 | 760,985 | 4.18 % | 4.18 % | |||||
CALCULATION OF KEY FIGURES
| Return on equity: | Profit/loss for the financial period ———————————————————— * 100 Shareholders’ equity (average) |
| Return on capital employed: | Profit/loss for the period after financial items + financing charges ———————————————————— * 100 Total assets – non-interest-bearing liabilities (average) |
| Equity ratio: | Shareholders’ equity ———————————————————- * 100 Total assets – advances received |
| Gearing: | Interest bearing liabilities – cash in hand and in bank – interest bearing assets ———————————————————- * 100 Shareholders’ equity |
| Earnings per share: | Profit for the period attributable to equity holder of the parent ——————————————————————————————– Weighted average number of ordinary shares outstanding during the period |
| Earnings per share, diluted: | Profit for the period attributable to equity holder of the parent (diluted) ———————————————————————————————- Average number of shares – own shares + number of options at the period-end |
| MAJOR SHAREHOLDERS 31.12.2010 | Shares | % |
| EM Group Oy | 3,822,813 | 21.02 |
| Mandatum Life | 1,679,200 | 9.23 |
| Ilmarinen Mutual Pension Insurance Company | 936,776 | 5.15 |
| Kaleva Mutual Pension Insurance Company | 824,641 | 4.53 |
| Op-Suomi Small Cap | 545,925 | 3.00 |
| Varma Mutual Pension Insurance Company | 521,150 | 2.87 |
| State Pension Fund | 500,000 | 2.75 |
| Aktia Capital Mutual Fund | 450,000 | 2.47 |
| Skagen Vekst Verdipapierfond | 437,000 | 2.40 |
| Teleste Management Oy | 381,000 | 2.09 |
| Teleste Incentive Oy | 379,985 | 2.09 |
| Fim Fenno Mutual Fund | 271,342 | 1.49 |
| Eläke-Fennia Mutual Insurance Company | 220,000 | 1.21 |
| Martnok Oy | 187,820 | 1.03 |
| Sumato Oy | 142,610 | 0.78 |
| Placeringsfonden Seb Gyllenberg Small Firm | 110,722 | 0.61 |
| Pharmacy Pension Fund | 110,000 | 0.60 |
| Stadigh Kari Henrik | 100,000 | 0.55 |
| Renkkeli Oy | 100,000 | 0.55 |
| SECTOR DISPERSION 31.12.2010 |
Shareholders | % | Shares | % |
| Corporations | 316 | 6.09 | 5,824,703 | 32.02 |
| Financial and insurance corporations | 12 | 0.23 | 3,760,250 | 20.67 |
| Public institutions | 9 | 0.17 | 2,325,976 | 12.78 |
| Non-profit institutions | 35 | 0.67 | 384,611 | 2.11 |
| Households | 4,775 | 92.11 | 4,366,549 | 24.00 |
| Foreign countries and nominee registered | 37 | 0.71 | 1,524,501 | 8.38 |
| Total | 5,184 | 100.00 | 18,186,590 | 100.00 |
| HOLDING DISPERSION 31.12.2010 |
Shareholders |
% |
Shares |
% |
| 0 – 100 | 1,151 | 22.20 | 79,858 | 0.43 |
| 101 – 1000 | 3,030 | 58.44 | 1,264,333 | 6.95 |
| 1001 – 10000 | 907 | 17.49 | 2,511,430 | 13.80 |
| 10001 – 100000 | 77 | 1.48 | 1,834,252 | 10.08 |
| 100001 – 1000000 | 17 | 0.32 | 6,994,704 | 38.46 |
| 1000001 — | 2 | 0.03 | 5,502,013 | 30.25 |
| Total | 5,184 | 100.00 | 18,186,590 | 100.00 |
ACQUISITIONS 1 JAN – 31 DECEMBER 2010
| At 14 April 2010 Networks Services segment was strengthened by acquiring 100% of shares of a Swiss company Freycom S.A. The company’s business area is in upgrading and maintenance of cable and house networks. At 1 September 2010 Video and Broadband solution segment was strengthened by acquiring 100% of shares of Polish company Satlan S.P.Z o.o, a system integrator focusing on IP video and broadband solutions for Polish operators and service providers. The acquisitions resulted in 1,228 thousand of intangible assets, which was allocated to trade marks, customer relationships. Teleste personnel increased with 52 persons. The goodwill, amounted 5,103 thousand EUR, is mainly due to future revenue expectation. The goodwill include estimated amount of the conditional supplementary contract price for Satlan. Total consideration is estimated to be 6,330 thousand euro depending on the profitability development during next two years. The fair value of Satlans trade receivables 1,305 thousand euro were 109 less than the total value based on agreements. The difference is expected to realize as credit losses. All costs related to the acquisitions, 94 thousand EUR, are expensed in other operating expenses.The goodwill is mainly due to expected return in the future. The impact of the acquisition of Freycom on Teleste’s net sales during the period 14.4.2010 – 31.12.2010 was 1,970 thousand EUR and on the profit 24 thousand EUR. If Freycom would have been consolidated since 1 January 2010, the Group revenue would have been 605 thousand EUR higher and the Group profit would have decreased 230 thousand EUR. The impact of the acquisition of Satlan on Teleste’s net sales during the period 1.9.2010 – 31.12.2010 was 3,631 thousand EUR and on the profit 656 thousand EUR. If Satlan would have been consolidated since 1 January 2010, the Group revenue would have been 3 707 thousand EUR higher and the Group profit would have increased 82 thousand EUR. |
|
| Calculation of recognised fair values on acquisition of Freycom | |
| 1 000 EUR | |
| Fair values used in consolidation | |
| Trade marks (inc. in intangible assets) | 43 |
| Customer relationship (inc. in intangible assets) | 188 |
| Book values used in consolidation | |
| Tangible assets | 107 |
| Inventories | 280 |
| Other receivables | 217 |
| Liquid funds | 340 |
| Total assets | 1,175 |
| Book values used in consolidation | |
| Deferred tax liabilities | 60 |
| Other liabilities | 914 |
| Total liabilities | 974 |
| Net identifiable assets and liabilities | 201 |
| Total consideration | 571 |
| Goodwill on acquisition | 370 |
| Consideration paid in cash | -571 |
| Cash and cash equivalents in acquired subsidiary | 197 |
| Total net cash outflow on the acquisition | -374 |
| Preliminary calculation of recognised fair values on acquisition of Satlan | |
| 1 000 EUR | |
| Fair values used in consolidation | |
| Trade marks (inc. in intangible assets) | 154 |
| Customer relationship (inc. in intangible assets) | 843 |
| Inventories | 1,314 |
| Trade receivables | 1,305 |
| Book values used in consolidation | |
| Tangible assets | 51 |
| Other receivables | 219 |
| Liquid funds | 333 |
| Total assets | 4,219 |
| Book values used in consolidation | |
| Deferred tax liabilities | 259 |
| Other liabilities | 2,363 |
| Total liabilities | 2,622 |
| Net identifiable assets and liabilities | 1,597 |
| Total consideration | 6,330 |
| Goodwill on acquisition | 4,733 |
| Consideration paid in cash | -2,780 |
| Cash and cash equivalents in acquired subsidiary | 333 |
| Total net cash outflow on the acquisition | -2,447 |
ADDITIONAL INFORMATION:
Mr Jukka Rinnevaara, CEO, Tel. +358 2 2605 866 or +358 400 747 488
DISTRIBUTION:
NASDAQ OMX Helsinki
Primary media
www.teleste.com