TELESTE CORPORATION INTERIM REPORT 1 JAN TO 30 SEPT 2008
TELESTE CORPORATION INTERIM REPORT 21 OCTOBER 2008 AT 14:00 TELESTE CORPORATION INTERIM REPORT 1 JAN TO 30 SEPT 2008 - Net sales stood at EUR 80.6 million being 14.3% below the period of comparison - Operating profit amounted to EUR 4.1 million, a fall of 60.0% over the previous year; undiluted result per share equalled EUR 0.21 (0.41) per share - Orders received improved by 5.2% over the year of comparison standing at EUR 93.4 million - Orders received by Broadband Cable Networks amounted to EUR 81.8 million, up by 7.3% over the previous year - Orders received by Video Networks equalled EUR 11.6 million, down by 7.6% over the previous year - Growth and profitability outlook for the current year have been adjusted downwards. Net Sales and Profitability Net sales fell 14.3% short of the corresponding period last year amounting to EUR 80.6 (94.0) million. Net sales for the period of comparison include a fairly large delivery to South Korea. Due to the uncertainty in the finance market some customers have postponed their ordering decisions. In Europe network upgrading was limited in Q3 during major sporting events. Compared to the same time period in the previous year operating profit fell by 60.0% standing at EUR 4.1 (10.1) million, which is 5.0% (10.8%) of net sales. Weakening in the operating profit was mainly caused by diminished net sales. Year over year, employee benefits increased by 8.2% standing at EUR 24.5 (22.6) million. Other operating expenses decreased by 4.7% amounting to EUR 13.1 (13.8) million. Year over year, depreciation grew by 38.7% standing at EUR 3.5 (2.5) million. Undiluted result per share equalled EUR 0.21 (EUR 0.41). Earnings per share include a tax rebate of EUR 1.1 million involving a changed interpretation regarding deductibility of certain items for years 2001 to 2004. Year over year, orders received improved by 5.2% standing at EUR 93.4 (88.8) million. Order backlog grew amounting to EUR 27.8 (23.3) million. Net sales for Q3 totalled EUR 24.1 (32.3) million, a decrease of 25.3% over the period of comparison. Compared to the same time period in the previous year, owing to the reduction in net sales, operating profit fell by 68.6% standing at EUR 1.5 (4.7) million, which is 6.1% (14.4%) of net sales. Orders received in Q3 stood at EUR 26.6 (29.4) million, which is 9.7% below the figure for the period of comparison. Changes in Group Structure In the beginning of February Teleste improved its standing as a supplier of headend video centre solutions (IPTV) by acquiring the Finnish Ortikon Interactive Oy. The acquisition will not have an essential effect on Teleste's financial figures for 2008. Business Areas Broadband Cable Networks Net sales of Broadband Cable Networks fell by 16.7% from the year of comparison standing at EUR 68.8 (82.7) million. This reduction was mainly caused by the insecurity in the financial markets affecting the investment decisions. Private equity companies, in particular, have slowed down their investment activities. A number of major sporting events in Q3 also set a limit to network upgrading operations. Operating profit stood at EUR 4.4 (10.5) million making 6.4% (12.7%) of the net sales. The weakened operating profit was caused by diminished net sales. Orders received by Broadband Cable Networks amounted to EUR 81.8 (76.2) million. Order backlog totalled EUR 26.1 (20.5) million. The order backlog includes an order on headend video centre of EUR 12 million received from India in June. The related deliveries will begin in Q1 of 2009. Orders for EUR 4.4 million received in 2007 have been removed from the order backlog in September this year because their deliveries are not likely to be realised in the near future. Ortikon Interactive Oy acquired in February 2008 strengthens the provision of headend video centre solutions for the business area. The Q3 net sales for the business was EUR 20.9 (28.4) million, which is 26.5% below the figure for the period of comparison. Operating profit stood at EUR 1.7 (4.6) million making 7.9% (16.1%) of the net sales. Weakening in the operating profit was mainly caused by diminished net sales. Orders received in Q3 stood at EUR 22.8 (23.8) million, that is 4.0% less than in the period of comparison. In August Broadband Cable Networks secured a frame agreement worth millions of euros with the leading Belgian cable operator Telenet for deliveries involving an optical system. We estimate this frame agreement to run for 4 to 5 years and the related deliveries will start in Q1 of 2009. In August we entered into a new significant customer relationship with the Dutch cable operator Ziggo. Teleste will supply Ziggo with optical equipment for about one million euros and the related deliveries are scheduled to start in Q4 of 2008. The business area expanded its service offering for the cable operators. New services include hosting of video headends and operating encryption systems. These services were first commercially launched in Spain. Video Networks Net sales of Video Networks amounted to EUR 11.7 (11.4) million, which is 3.3% more over the period of comparison. Operating profit was EUR -0.3 (-0.3) million in the red. Orders received by Video Networks decreased by 7.6 % over the period of comparison to EUR 11.6 (12.6) million. Order backlog totalled EUR 1.7 (2.8) million. The Q3 net sales for the business was EUR 3.2 (3.9) million, which is 16.4% below the figure for the period of comparison. Operating loss was EUR -0.2 million (profit of EUR 0.1 million). Weakening in the operating profit was mainly caused by diminished net sales. Year-on-year orders received in Q3 declined by 33.6% standing at EUR 3.8 (5.7) million. As to the orders received by the business area, this falling short of the period of comparison was due to the high volume of orders in that period and the temporary weakening of the market. Significant Short-Term Risks and Uncertainty Factors for the Business Areas The increased insecurity in the world economy and the financial markets may slow down the investment activity of our customers even more than we have estimated. Regardless of the slight weakening in the value of euro, strong euro against the American dollar continues to some degree to erode our competitive edge. Ownership and operative rearrangements among our clientele may slow down the folding out of some investments in both of our business areas. Strengthening of order backlog for Video Networks is dependent on timing of public sector decisions. Introduction to the market of new competing technologies is a characteristic risk factor for both of our business areas. Personnel At the end of September the number of Teleste staff was 694 (677, 607), out of which 471 (446, 430) were stationed in Finland. At the end of September the number of temporary labour was 20 (69, 50). The stated number of personnel does not include temporary employees. R&D and Investments The R&D expenditure for the review period totalled EUR 10.1 (9.6) million making 12.5% (10.2%) of net sales. Almost 60% of the relevant expenditure involved customising product platforms and the maintenance thereof. The increase in R&D expenses over the previous year was mainly caused by the development effort involving the IPTV system as a whole and the software development for the video surveillance systems. Depreciation on previous R&D investments amounted to EUR 1.3 (1.0) million. At the end of September, the number of our R&D personnel was 160 (142, 128). The growth in the R&D personnel is mainly related to the acquisition of Ortikon. In June 2008 Tekes - the National Technology Agency of Finland - decided to continue its contribution to the development of broadband integrated services digital networks. In total terms, the development support stands at EUR 2.8 million and the decision covers the period 1 July 2008 to 31 December 2009. Investments totalled EUR 2.8 (10.5) million. Investments made in the period under review mainly involve product development, EUR 1.8 (1.7) million, and performance of the additional contract price included in the acquisition of EUR 0.3 million. Investments in machinery and equipment for the production in the period under review stood at EUR 0.3 million. Acquisition of Ortikon Interactive Oy is included in the investments. Investments made in the given period included EUR 6.1 million related to the acquisition of DINH Telecom and EUR 1.4 million for the SMT line. The company has prepared plans for the transfer of operations carried out in the Nousiainen plant over to Littoinen. The move is estimated to take place before end of 2009. Finance Operating cash flow in the period under review increased by 35.0% standing at EUR 7.1 (5.3) million. In the period under review, short-term receivables decreased by EUR 2.5 million and short-term non-interest bearing debt by EUR 2.1 million. The financing cash flow includes EUR 0.8 million involving purchasing of Teleste's own shares. At the end of the review period the funds stood at EUR 8.9 (13.5) million. At the end of September, interest-bearing debt stood at EUR 11.3 (20.8) million. In the review period, interest-bearing debt increased by EUR 1.8 (12.8) million. At the end of September, in addition to liquid funds the company's unused stand-by credits amounted to EUR 21.0 (12.0) million. The current stand-by credits will be due in November 2008. The company has negotiated total credit facilities of EUR 40 million with two financiers. These new facilities will stay effective for five years. Gearing was 5.2% (16.6%) and the equity ratio was 59.6% (49.8%). The company hedges main exchange rate risks of forecasted currency flows for six months ahead. Shares and Shareholders In the past year the trading price of the share fluctuated between EUR 3.71 (8.50) and EUR 7.49 (12.34). The closing price at the end of September was EUR 3.92 (8.70). According to the Finnish Central Security Depository, the number of shareholders at the end of the period was 5,326 (5,313) while foreign ownership accounted for 15.3% (21.7%). Trading in NASDAQ OMX Helsinki Oy amounted to EUR 38.5 (56.1) with the number of shares totalling 6.6 (5.2) million. At the end of September the number of own shares in the company's possession was 525,871 (352,482) equalling 3.0% (2.0%) of the entire capital stock at the end of the period under review. In the period under review 7,761 own shares were conveyed to the Management Team share bonus scheme. This equals 0.04% of the total number of shares. In May 2008 the Board of the company decided to launch a repurchase program of own shares based on authorisation granted by the Annual General Meeting. Based on this decision by the Board the maximum number of own shares repurchased will be 500,000. In the period under review the number of repurchased own shares amounted to 181,150 with the relevant price averaging EUR 4.47 per share. The 2004B options received by Teleste key personnel were listed in NASDAQ OMX Helsinki Oy on 1 April 2008. On behalf of their customers Schroder Investment Management Limited reported their holding in Teleste to have decreased below five per cent. Considering the made share purchases, the holding in Teleste equals 4.96% of the company share capital and 4.42% of the company votes (the previous holding amounted 5.01% of the company share capital and votes). Decisions by the Annual General Meeting The Annual General Meeting (AGM) on 1 April 2008 confirmed the financial statements for 2007 and discharged the Board and the CEO from liability for the financial period. The AGM confirmed the Board's proposed dividend of EUR 0.24 per share. The dividend was paid out on 15 April 2008. The AGM decided that the Board of Directors shall consist of six members. Mr. Tapio Hintikka was re-elected as Chairman of the Board whilst Mr. Tero Laaksonen, Mr. Pertti Raatikainen, Mr. Timo Toivila and Mr. Pekka Vennamo continue as members on the Board of Directors. Mr. Kai Telanne was elected new member of the Board. Authorised Public Accountants KPMG Oy Ab continue as the auditor until the next AGM. 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 1,744,721 company's own shares. The AGM also authorised the company to issue 5,000,000 new shares. The maximum number of shares that may be subscribed with the special rights granted by the Company is 2,000,000 shares. These authorisations will be valid until the AGM due to be held in 2009. Outlook As the offering of services for the clientele of Broadband Cable Networks increases and becomes more versatile and with the increasing competition the operators will need to invest in increased network capacity and improved quality. We believe that there will be growing demand for the products and services of the business area in the medium term. To make use of the future development potential we will continue to focus on the next generation network and broadband technologies as well as the service business. Our new product solutions will strengthen our position in the rapidly growing and developing markets such as India. Investments by the operators may be delayed with the increased uncertainty in the world economy. Price competition will continue to be strong. The prospect list for the system deliveries and the related services by Video Networks is on a good level. Growth and profitability prospects for the current year have been specified. In our interim report published on 15 July 2008 we stated that our net sales will remain slightly below the level of 2007 and that the operating profit will fall short of the 2007 level. In our current estimation, net sales for the current year will remain below last year's level due to postponement of orders by the customers and, owing to this decrease in net sales, operating profit will fall clearly short of last year's. Operating profit for Q4 is estimated to end up at level with the previous quarters. As to orders received, the view for the entire year has also been specified. In our interim report of 15 July 2008 we estimated the orders received to increase over 2007. According to our current estimate, orders received for the entire year are at the same level with 2007 and, therefore, order backlog at the year-end will be higher than at the end of last year. Regardless of the insecurity in the world economy and the crisis in the financial markets, our positive view of the market situation is based on growth prospects of the developing markets, the frame agreements and the potential growth in the provided services. Teleste's final accounts for the financial year 2008 will be released on 4 February 2009. 21.10.2008 Teleste Corporation Jukka Rinnevaara Board of Directors CEO This interim report has been compiled in compliance with IFRS 34, as it is accepted within EU, using the recognition and valuation principles with those used in the Annual Report. The data stated in this report is unaudited. -------------------------------------------------------------------------------- | CONSOLIDATED STATEMENT OF | 1-9/2008 | 1-9/2007 | Change % | 1-12/2007 | | INCOME (TEUR) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Turnover | 80 570 | 94 024 | -14.3 % | 125 100 | -------------------------------------------------------------------------------- | | Change in inventories of | -963 | 3 395 | n/a | -673 | | | finished goods | | | | | -------------------------------------------------------------------------------- | | Other operating income | 1 351 | 1 154 | 17.1 % | 1 772 | -------------------------------------------------------------------------------- | | Materials and services | -35 792 | -49 513 | -27.7 % | -59 692 | -------------------------------------------------------------------------------- | | Personnel expenses | -24 471 | -22 619 | 8.2 % | -31 455 | -------------------------------------------------------------------------------- | | Other operating expenses | -13 125 | -13 766 | -4.7 % | -18 324 | -------------------------------------------------------------------------------- | | Depreciation | -3 514 | -2 534 | 38.7 % | -3 552 | -------------------------------------------------------------------------------- | Operating profit | 4 057 | 10 141 | -60.0 % | 13 176 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Financial income and | -432 | -696 | -38.0 % | -504 | | | expenses | | | | | -------------------------------------------------------------------------------- | Profit after financial items | 3 625 | 9 445 | -61.6 % | 12 672 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit before taxes | 3 625 | 9 445 | -61.6 % | 12 672 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Taxes | 40 | -2 447 | n/a | -3 309 | -------------------------------------------------------------------------------- | Net profit | 3 665 | 6 998 | -47.6 % | 9 363 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to: | | | | | -------------------------------------------------------------------------------- | | Equity holders of the | 3 665 | 6 998 | -47.6 % | 9 363 | | | parent | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share for profit of the year attributable to the equity holders | | of the parent | -------------------------------------------------------------------------------- | (expressed in euro per share) | | | | | -------------------------------------------------------------------------------- | | Basic | 0.21 | 0.41 | -48.4 % | 0.55 | -------------------------------------------------------------------------------- | | Diluted | 0.21 | 0.39 | -46.1 % | 0.52 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated Statement of | 7-9/2008 | 7-9/2007 | Change % | | | Income (tEUR) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Turnover | 24 118 | 32 267 | -25.3 % | | -------------------------------------------------------------------------------- | | Change in inventories of | 901 | 1 546 | -41.7 % | | | | finished goods | | | | | -------------------------------------------------------------------------------- | | Other operating income | 466 | 288 | 61.8 % | | -------------------------------------------------------------------------------- | | Materials and services | -10 794 | -16 859 | -36.0 % | | -------------------------------------------------------------------------------- | | Personnel expenses | -7 904 | -7 257 | 8.9 % | | -------------------------------------------------------------------------------- | | Other operating expenses | -4 214 | -4 285 | -1.7 % | | -------------------------------------------------------------------------------- | | Depreciation | -1 114 | -1 048 | 6.3 % | | -------------------------------------------------------------------------------- | Operating profit | 1 460 | 4 651 | -68.6 % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Financial income and | -284 | -361 | -21.3 % | | | | expenses | | | | | -------------------------------------------------------------------------------- | Profit after financial items | 1 176 | 4 291 | -72.6 % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit before taxes | 1 176 | 4 291 | -72.6 % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Taxes | 698 | -1 118 | n/a | | -------------------------------------------------------------------------------- | Net profit | 1 874 | 3 173 | -40.9 % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to: | | | | | -------------------------------------------------------------------------------- | Equity holders of the parent | 1 874 | 3 173 | -40.9 % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share for profit of the year attributable to the equity holders | | of the parent | -------------------------------------------------------------------------------- | Basic ( expressed in euro per | 0.11 | 0.19 | -41.6 % | | | share) | | | | | -------------------------------------------------------------------------------- | Diluted (expressed in euro | 0.11 | 0.18 | -39.0 % | | | per share) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | BALANCE SHEET (tEUR) | 30.9.2008 | 30.9.200 | Change % | 31.12.2007 | | | | 7 | | | -------------------------------------------------------------------------------- | Non-current assets | -------------------------------------------------------------------------------- | | Property,plant,equipment | 6 815 | 7 536 | -9.6 % | 7 757 | -------------------------------------------------------------------------------- | | Goodwill | 13 584 | 12 871 | 5.5 % | 12 686 | -------------------------------------------------------------------------------- | | Intangible assets | 6 408 | 6 095 | 5.1 % | 6 629 | -------------------------------------------------------------------------------- | | Investments | 783 | 1 116 | -29.8 % | 723 | -------------------------------------------------------------------------------- | | | 27 590 | 27 618 | -0.1 % | 27 795 | -------------------------------------------------------------------------------- | Current assets | -------------------------------------------------------------------------------- | | Inventories | 16 131 | 19 351 | -16.6 % | 15 936 | -------------------------------------------------------------------------------- | | Other current assets | 23 962 | 28 786 | -16.8 % | 26 455 | -------------------------------------------------------------------------------- | | Short-term investments | 3 500 | 2 006 | 74.5 % | 0 | -------------------------------------------------------------------------------- | | Liquid funds | 5 434 | 11 480 | -52.7 % | 7 702 | -------------------------------------------------------------------------------- | | | 49 027 | 61 623 | -20.4 % | 50 093 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 76 617 | 89 241 | -14.1 % | 77 888 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholder's equity and liabilities | -------------------------------------------------------------------------------- | Share capital | 6 967 | 6 967 | 0.0 % | 6 967 | -------------------------------------------------------------------------------- | Other equity | 38 698 | 37 163 | 4.1 % | 39 702 | -------------------------------------------------------------------------------- | | | 45 665 | 44 130 | 3.5 % | 46 669 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | -------------------------------------------------------------------------------- | Provisions | 425 | 425 | 0.0 % | 425 | -------------------------------------------------------------------------------- | Non interest bearing | 1 288 | 939 | 37.2 % | 1 197 | | liabilities | | | | | -------------------------------------------------------------------------------- | Interest bearing liabilities | 1 311 | 2 110 | -37.9 % | 1 700 | -------------------------------------------------------------------------------- | | | 3 024 | 3 474 | -13.0 % | 3 322 | -------------------------------------------------------------------------------- | Short-term liabilities | -------------------------------------------------------------------------------- | Trade payables and other s-t | 17 468 | 22 258 | -21.5 % | 19 596 | | liabilities | | | | | -------------------------------------------------------------------------------- | Provisions | 440 | 658 | -33.1 % | 518 | -------------------------------------------------------------------------------- | S-t interest bearing | 10 019 | 18 721 | -46.5 % | 7 783 | | liabilities | | | | | -------------------------------------------------------------------------------- | | | 27 927 | 41 637 | -32.9 % | 27 897 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total shareholder's equity | 76 617 | 89 241 | -14.1 % | 77 888 | | and liabilities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH-FLOW (TEUR) | 1-9/2008 | 1-9/2007 | Change % | 1-12/2007 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Cash-flow from operation | 7 132 | 5 284 | 35.0 % | 11 988 | -------------------------------------------------------------------------------- | | Cash in | 84 456 | 91 204 | -7.4 % | 125 663 | -------------------------------------------------------------------------------- | | Cash out | -77 324 | -85 920 | -10.0 % | -113 675 | -------------------------------------------------------------------------------- | Cash-flow from investments | -1 829 | -6 282 | -70.9 % | -8 468 | -------------------------------------------------------------------------------- | | Cash in | 220 | 377 | -41.6 % | 814 | -------------------------------------------------------------------------------- | | Cash out | -2 049 | -6 659 | -69.2 % | -9 282 | -------------------------------------------------------------------------------- | Cash-flow from finance | -4 048 | 7 704 | n/a | -2 490 | -------------------------------------------------------------------------------- | | Cash in | 6 249 | 12 222 | -48.9 % | 12 630 | -------------------------------------------------------------------------------- | | Cash out | -6 139 | -1 106 | 455.1 % | -11 707 | -------------------------------------------------------------------------------- | | Paid dividend | -4 158 | -3 412 | 21.9 % | -3 413 | -------------------------------------------------------------------------------- | Other items | -23 | -9 | 155.6 % | -118 | -------------------------------------------------------------------------------- | | Effect of currency rates | -23 | -9 | 155.6 % | -118 | -------------------------------------------------------------------------------- | Change in liquid funds | 1 232 | 6 697 | -81.6 % | 912 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY FIGURES | 1-9/2008 | 1-9/2007 | Change % | 1-12/2007 | -------------------------------------------------------------------------------- | | Earnings per share, EUR | 0.21 | 0.41 | -48.4 % | 0.55 | -------------------------------------------------------------------------------- | | Earnings per share fully | 0.21 | 0.39 | -46.1 % | 0.52 | | | diluted, EUR | | | | | -------------------------------------------------------------------------------- | | Shareholders' equity per | 2.66 | 2.55 | 4.2 % | 2.69 | | | share, EUR | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Return on equity | 10.6 % | 22.8 % | -53.6 % | 22.2 % | -------------------------------------------------------------------------------- | | Return on capital | 9.9 % | 24.7 % | -59.9 % | 27.1 % | | | employed | | | | | -------------------------------------------------------------------------------- | | Equity ratio | 59.6 % | 49.8 % | 19.6 % | 60.2 % | -------------------------------------------------------------------------------- | | Gearing | 5.2 % | 16.6 % | -68.5 % | 3.8 % | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Investments, tEUR | 2 755 | 10 475 | -73.7 % | 12 284 | -------------------------------------------------------------------------------- | | Investments % of net | 3.4 % | 11.1 % | -69.3 % | 9.8 % | | | sales | | | | | -------------------------------------------------------------------------------- | | Order backlog, tEUR | 27 800 | 23 305 | 19.3 % | 21 523 | -------------------------------------------------------------------------------- | | Personnel, average | 708 | 683 | 3.7 % | 681 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Number of shares | 17 682 | 17 437 | 1.4 % | 17 494 | | | (thousands) | | | | | -------------------------------------------------------------------------------- | | including own shares | | | | | -------------------------------------------------------------------------------- | | Highest share price, EUR | 7.49 | 12.34 | -39.3 % | 12.34 | -------------------------------------------------------------------------------- | | Lowest share price, EUR | 3.71 | 8.50 | -56.4 % | 6.47 | -------------------------------------------------------------------------------- | | Average share price, EUR | 5.86 | 10.85 | -46.0 % | 10.10 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Turnover, in million | 6.6 | 5.2 | 26.4 % | 7.2 | | | shares | | | | | -------------------------------------------------------------------------------- | | Turnover, in MEUR | 38.5 | 56.1 | -31.3 % | 72.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Treasury shares | | | | | -------------------------------------------------------------------------------- | | | Number | | % of | % of | -------------------------------------------------------------------------------- | | | of shares | | shares | votes | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Parent company owns own | 525 871 | | 2.97 % | 2.97 % | | | shares 30.9.2008 | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Contingent liabilities and pledged assets (tEUR) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | For own debt | | | | | -------------------------------------------------------------------------------- | | Guarantees | 306 | 404 | -24.3 % | 184 | -------------------------------------------------------------------------------- | | Other securities | 240 | 568 | -57.7 % | 365 | -------------------------------------------------------------------------------- | Leasing and rent liabilities | 2 440 | 2 167 | 12.6 % | 2 635 | -------------------------------------------------------------------------------- | | | 2 986 | 3 139 | -4.9 % | 3 184 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Derivative instruments (tEUR) | | | | | -------------------------------------------------------------------------------- | | Value of underlying | 10 320 | 11 717 | -11.9 % | 7 746 | | | forward contracts | | | | | -------------------------------------------------------------------------------- | | Market value of forward | -148 | -302 | -51.0 % | -152 | | | contracts | | | | | -------------------------------------------------------------------------------- | Taxes are computed on the basis of the tax on the profit for the period. | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | Primary segments information | 1-9/2008 | 1-9/2007 | Change % | 1-12/2007 | | (tEUR) | | | | | -------------------------------------------------------------------------------- | Broadband Cable Networks | -------------------------------------------------------------------------------- | | Order intake | 81 750 | 76 200 | 7.3 % | 101 450 | -------------------------------------------------------------------------------- | | Net sales | 68 840 | 82 674 | -16.7 % | 108 204 | -------------------------------------------------------------------------------- | | EBIT | 4 387 | 10 466 | -58.1 % | 12 837 | -------------------------------------------------------------------------------- | | EBIT% | 6.4 % | 12.7 % | -49.7 % | 11.9 % | -------------------------------------------------------------------------------- | Video Networks | -------------------------------------------------------------------------------- | | Order intake | 11 620 | 12 570 | -7.6 % | 17 080 | -------------------------------------------------------------------------------- | | Net sales | 11 730 | 11 350 | 3.3 % | 16 896 | -------------------------------------------------------------------------------- | | EBIT | -330 | -325 | n/a | 339 | -------------------------------------------------------------------------------- | | EBIT% | -2.8 % | -2.9 % | n/a | 2.0 % | -------------------------------------------------------------------------------- | Total | -------------------------------------------------------------------------------- | | Order intake | 93 370 | 88 770 | 5.2 % | 118 530 | -------------------------------------------------------------------------------- | | Net sales | 80 570 | 94 024 | -14.3 % | 125 100 | -------------------------------------------------------------------------------- | | EBIT | 4 057 | 10 141 | -60.0 % | 13 176 | -------------------------------------------------------------------------------- | | EBIT% | 5.0 % | 10.8 % | -53.3 % | 10.5 % | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Information per | 7-9/08 | 4-6/08 | 1-3/08 | 10-12/0 | 7-9/07 | 10/2007 | | quarter (tEUR) | | | | 7 | | - | | | | | | | | 9/2008 | -------------------------------------------------------------------------------- | Broadband Cable Networks | -------------------------------------------------------------------------------- | | Order intake | 22 838 | 32 872 | 26 040 | 25 250 | 23 798 | 107 000 | -------------------------------------------------------------------------------- | | Net sales | 20 873 | 24 995 | 22 972 | 25 530 | 28 387 | 94 370 | -------------------------------------------------------------------------------- | | EBIT | 1 657 | 1 829 | 901 | 2 371 | 4 576 | 6 757 | -------------------------------------------------------------------------------- | | EBIT % | 7.9 % | 7.3 % | 3.9 % | 9.3 % | 16.1 % | 7.2 % | -------------------------------------------------------------------------------- | Video Networks | -------------------------------------------------------------------------------- | | Order intake | 3 753 | 4 535 | 3 332 | 4 510 | 5 650 | 16 130 | -------------------------------------------------------------------------------- | | Net sales | 3 245 | 4 265 | 4 220 | 5 546 | 3 880 | 17 276 | -------------------------------------------------------------------------------- | | EBIT | -197 | -113 | -20 | 664 | 75 | 334 | -------------------------------------------------------------------------------- | | EBIT % | -6.1 % | -2.6 % | -0.5 % | 12.0 % | 1.9 % | 1.9 % | -------------------------------------------------------------------------------- | Total | -------------------------------------------------------------------------------- | | Order intake | 26 591 | 37 407 | 29 372 | 29 760 | 29 448 | 123 130 | -------------------------------------------------------------------------------- | | Net sales | 24 118 | 29 260 | 27 192 | 31 076 | 32 267 | 111 646 | -------------------------------------------------------------------------------- | | EBIT | 1 460 | 1 716 | 881 | 3 035 | 4 651 | 7 091 | -------------------------------------------------------------------------------- | | EBIT % | 6.1 % | 5.9 % | 3.2 % | 9.8 % | 14.4 % | 6.4 % | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to | Share | Share | Trans-la | Retaine | Investe | Total | | equity holders of | capita | premiu | tion | d | d | | | the parent (tEUR) | l | m | differ-r | earning | free | | | | | | ences | s | capital | | -------------------------------------------------------------------------------- | Shareholder's | 6 967 | 1 504 | -53 | 35 720 | 2 531 | 46 669 | | equity 1.1.2008 | | | | | | | -------------------------------------------------------------------------------- | | Translation | | | -23 | | | -23 | | | differences | | | | | | | -------------------------------------------------------------------------------- | | Profit of the | | | | 3 665 | | 3 665 | | | period | | | | | | | -------------------------------------------------------------------------------- | | Equity-settle | | | | -3 954 | -754 | -4 708 | | | d share-based | | | | | | | | | payments | | | | | | | -------------------------------------------------------------------------------- | | Used options | | | | | 62 | 62 | -------------------------------------------------------------------------------- | Shareholder's | 6 967 | 1 504 | -76 | 35 431 | 1 839 | 45 665 | | equity 30.9.2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholder's | 6 955 | 1 417 | 65 | 29 224 | 0 | 37 661 | | equity 1.1.2007 | | | | | | | -------------------------------------------------------------------------------- | | Translation | | | -9 | | | -9 | | | differences | | | | | | | -------------------------------------------------------------------------------- | | Profit of the | | | | 6 998 | | 6 998 | | | period | | | | | | | -------------------------------------------------------------------------------- | | Equity-settle | | | | -3 021 | 2 101 | -920 | | | d share-based | | | | | | | | | payments | | | | | | | -------------------------------------------------------------------------------- | | Used options | 12 | 87 | | | 301 | 400 | -------------------------------------------------------------------------------- | Shareholder's | 6 967 | 1 504 | 56 | 33 201 | 2 101 | 44 130 | | equity 30.9.2007 | | | | | | | -------------------------------------------------------------------------------- CALCULATION OF KEY FIGURES -------------------------------------------------------------------------------- | Return on equity: | Profit/loss for the financial period | | | ------------------------------ * 100 | | | Shareholders' equity (average) | -------------------------------------------------------------------------------- | Return on capital | Profit/loss for the period after financial | | employed: | 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, | Profit for the period attributable to equity | | diluted: | holder of the parent (diluted) | | | ----------------------------------------------- | | | Average number of shares - own shares + number | | | of options at the period-end | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SECTOR DISPERSION | | | | | -------------------------------------------------------------------------------- | Owners | Number of | % of | Number of | % of total | | | shareholde | owners | shares | shares | | | rs | | | | -------------------------------------------------------------------------------- | Corporations | 304 | 5.71 | 1 693 138 | 9.56 | -------------------------------------------------------------------------------- | Financial and insurance | 29 | 0.54 | 5 487 751 | 31.00 | | corporations | | | | | -------------------------------------------------------------------------------- | Public institutions | 13 | 0.24 | 2 945 591 | 16.64 | -------------------------------------------------------------------------------- | Non-profit organizations | 50 | 0.94 | 1 135 491 | 6.41 | -------------------------------------------------------------------------------- | Households | 4 883 | 91.68 | 3 737 004 | 21.11 | -------------------------------------------------------------------------------- | Foreign and nominee | 47 | 0.88 | 2 705 669 | 15.28 | | -registered | | | | | -------------------------------------------------------------------------------- | Total | 5 326 | 100 | 17 704 | 100.00 | | | | | 644 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MAJOR SHAREHOLDERS 30.9.2008 | Shares | % | -------------------------------------------------------------------------------- | 1. | Mandatum Henkivakuutusosakeyhtiö | 1 679 200 | 9.48% | -------------------------------------------------------------------------------- | 2. | Ilmarinen Mutual Pension Insurance Company | 894 776 | 5.05% | -------------------------------------------------------------------------------- | 3. | Kaleva Mutual Insurance Company | 798 541 | 4.51% | -------------------------------------------------------------------------------- | 4. | Teleste Corporation | 585 871 | 2.97% | -------------------------------------------------------------------------------- | 5. | Varma Mutual Pension Insurance Company | 521 150 | 2.94% | -------------------------------------------------------------------------------- | 6. | State Pension Fund | 500 000 | 2.82% | -------------------------------------------------------------------------------- | 7. | Alfred Berg Finland Sijoitusrahasto | 495 828 | 2.80% | -------------------------------------------------------------------------------- | 8. | Aktia Capital Mutual Fund | 487 200 | 2.75% | -------------------------------------------------------------------------------- | 9. | Skagen Vekst Verdipapierfond | 437 000 | 2.47% | -------------------------------------------------------------------------------- | 10. | Op-Suomi Pienyhtiöt | 411 016 | 2.32% | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The range of products and services of Broadband Cable Networks was | | strengthened by acquisition of 100% of shares of Finish Ortikon Interactive | | Oy at 6 February 2008. The purchase price was 100 thousands EUR and it was | | paid in cash. The acquisition resulted in 202 thousands EUR of intangible | | assets, which was allocated to trade marks, customer relationships and | | technology. The goodwill, amounted 605 thousands EUR, is mainly due to | | synergy effects in the future. The impact of the acquisition on Teleste's | | net sales during the period was 388 teur and on the EBIT -115 teur | -------------------------------------------------------------------------------- | Recognised fair values on acquisition | | 1 000 € | -------------------------------------------------------------------------------- | Fair values used in consolidation | -------------------------------------------------------------------------------- | Trade marks (inc. in intangible assets) | 46 | -------------------------------------------------------------------------------- | Customer relationship (inc. in intangible assets) | 108 | -------------------------------------------------------------------------------- | Technology (inc. in intangible assets) | 48 | -------------------------------------------------------------------------------- | Book values used in consolidation | | -------------------------------------------------------------------------------- | Tangible assets | 13 | -------------------------------------------------------------------------------- | Trade receivables | 19 | -------------------------------------------------------------------------------- | Other receivables | 126 | -------------------------------------------------------------------------------- | Total assets | 360 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Book values used in consolidation | | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 556 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 53 | -------------------------------------------------------------------------------- | Other liabilities | 256 | -------------------------------------------------------------------------------- | Total liabilities | 865 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net identifiable assets and liabilities | -505 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total consideration | 100 | -------------------------------------------------------------------------------- | Goodwill on acquisition | 605 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consideration paid in cash | -100 | -------------------------------------------------------------------------------- | Cash and cash equivalents in acquired subsidiary | 0 | -------------------------------------------------------------------------------- | Total net cash outflow on the acquisition | -100 | -------------------------------------------------------------------------------- ADDITIONAL INFORMATION: CEO Jukka Rinnevaara, tel +358 2 2605 866 or +358 400 747 488 DISTRIBUTION: NASDAQ OMX Helsinki Media www.teleste.com