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TENDER OFFER DOCUMENT 23 February 2017
Public Tender Offer by Nokia Solutions and Networks Oy
for all issued and outstanding shares and option rights in Comptel Corporation
Nokia Solutions and Networks Oy (the “Offeror”) hereby offers to acquire, in accordance with Chapter 11 of the Finnish Securities Market
Act (746/2012, as amended) and the terms and conditions of this tender offer document, all of the issued and outstanding shares (the
“Shares” or, individually, a “Share”) in Comptel Corporation (the “Company” or “Comptel”) and all of the option rights granted under the
2014 option plan of the Company (the “2014 Option Rights”) and under the 2015 option plan of the Company (the “2015 Option Rights”,
and together with the 2014 Option Rights, the “Option Rights”) that are not held by Comptel or any of its subsidiaries (the “Tender
Offer”).
The Offeror is a wholly-owned indirect subsidiary of Nokia Corporation (“Nokia”) incorporated under the laws of Finland. Nokia's shares
are listed on the official list of Nasdaq Helsinki (“Nasdaq Helsinki”).
Comptel is a public limited company incorporated under the laws of Finland with its Shares and Option Rights 2014A and 2014B listed on
the official list of Nasdaq Helsinki.
Nokia and Comptel have on 8 February 2017 (the “Signing Date”) entered into a Transaction Agreement (“Transaction Agreement”) under
which Nokia makes the Tender Offer through the Offeror. For details please see “Summary of the Tender Offer”.
The price offered for each Share validly tendered in the Tender Offer is EUR 3.04 in cash (the “Share Offer Price”). The price offered for
Option Rights validly tendered in the Tender Offer is EUR 2.56 in cash for each 2014A Option Right, EUR 2.16 in cash for each 2014B
Option Right, EUR 1.53 in cash for each 2014C Option Right, EUR 2.15 in cash for each 2015A Option Right and EUR 2.15 in cash for
each 2015B Option Right (together, the “Option Right Offer Price”).
The Share Offer Price represents a premium of approximately 51.2 percent compared to the volume-weighted average trading price of the
Comptel Shares on Nasdaq Helsinki during the 12-month period preceding the date of announcement of the Tender Offer, a premium of
approximately 31,0 percent compared to the volume-weighted average trading price during the 3-month period preceding the announcement
of the Tender Offer, and a premium of approximately 28.8 percent compared to the closing price of the Shares on Nasdaq Helsinki on 8
February 2017, the last trading day before the announcement of the Tender Offer.
The acceptance period for the Tender Offer (the “Offer Period”) will commence on 27 February 2017 at 9:30 am (Finnish time) and expire
on 29 March 2017 at 4:00 pm (Finnish time) unless the Offer Period is extended. For details please see “Terms and Conditions of the Tender
Offer”.
The completion of the Tender Offer is subject to the satisfaction of the conditions described under section “Terms and Conditions of the
Tender Offer – Conditions to Completion of the Tender Offer” of this tender offer document (the “Tender Offer Document”). The Offeror
reserves the right to waive any conditions to completion of the Tender Offer.
Shareholders representing together approximately 48.3 percent of the Shares have subject to certain customary conditions irrevocably
undertaken to accept the Tender Offer. The Board of Directors of Comptel recommends that the shareholders and holders of Option Rights
accept the Tender Offer.
The information on this front page should be read in conjunction with, and is qualified in its entirety by, the more detailed information in this
Tender Offer Document, in particular in section “Terms and Conditions of the Tender Offer”.
THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW
AND THIS TENDER OFFER DOCUMENT AND RELATED ACCEPTANCE FORMS ARE NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR
TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW BY ANY MEANS WHATSOEVER INCLUDING,
WITHOUT LIMITATION, MAIL, FACSIMILE TRANSMISSION, E-MAIL OR TELEPHONE. IN PARTICULAR, THE TENDER OFFER IS NOT MADE
IN AND THIS TENDER OFFER DOCUMENT MUST UNDER NO CIRCUMSTANCES BE DISTRIBUTED INTO THE UNITED STATES, CANADA,
JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR ANY OTHER JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW.
Financial Advisor to Nokia and the Offeror and Arranger of the Tender Offer
Nordea Bank AB (publ), Finnish Branch
2
IMPORTANT INFORMATION
This Tender Offer Document has been prepared in accordance with Finnish law, including the Securities Market Act (746/2012, as amended
“SMA”), Decree 1022/2012 of the Ministry of Finance and regulations and guidelines 9/2013 (FSA 10/01.00/2013) issued by the Finnish
Financial Supervisory Authority (“FSA”). The Tender Offer Document and the Tender Offer are governed by Finnish law and any disputes
related thereto shall be exclusively settled by Finnish courts of competent jurisdiction.
The Offeror has undertaken to follow the Helsinki Takeover Code issued by the Securities Market Association referred to in Chapter 11
Section 28 of the SMA. According to the statement issued by the Board of Directors of Comptel on 21 February 2017 and attached as Annex
A to this Tender Offer Document, Comptel has also undertaken to follow said Helsinki Takeover Code.
This Tender Offer Document is available in Finnish and English. In the event of any discrepancy between the two language versions of the
Tender Offer Document, the Finnish language version shall prevail.
The FSA has approved the Finnish language version of the Tender Offer Document but is not responsible for the accuracy of the information
presented therein. The decision number of such approval is FSA 4/02.05.05/2017.
The Tender Offer Document will be available in Finnish from 27 February 2017 onwards at the branch offices of Nordea Bank (as defined
below), at Nasdaq Helsinki, Fabianinkatu 14, FI-00130 Helsinki, Finland, and at Offeror's headquarters at Karaportti 3, FI-02610 Espoo,
Finland. Electronic version of the Tender Offer Document will be available in Finnish from 24 February 2017 onwards online at
www.nordea.fi/osakkeet, www.comptel.com/nokia-tender-offer and www.nokia.com/fi_fi/sijoittajat/yritysostot-ja-myynnit, and in English
from 24 February 2017 onwards online at www.nordea.fi/equities, www.comptel.com/nokia-tender-offer and
www.nokia.com/en_int/investors/acquisitions-divestments.
As permitted under Finnish law, the Offeror may purchase Shares in the Company also on Nasdaq Helsinki or otherwise prior to the expiry
of the Offer Period or any extended Offer Period, as the case may be, at a price not exceeding the Share Offer Price of EUR 3.04 per Share.
The Offeror may also, as permitted under Finnish law, purchase Option Rights in Nasdaq Helsinki or otherwise prior to the expiry of the
Offer Period or the extended Offer Period at a price not exceeding the relevant Option Right Offer Price.
The Tender Offer is not being made directly or indirectly in any jurisdiction where prohibited by applicable law and this Tender Offer
Document and related acceptance forms are not and may not be distributed, forwarded or transmitted into or from any jurisdiction where
prohibited by applicable law by any means whatsoever including, without limitation, mail, facsimile transmission, e-mail or telephone. In
particular, the Tender Offer is not made in and this Tender Offer Document must under no circumstances be distributed into the United
States, Canada, Japan, Australia, South Africa or Hong Kong or any other jurisdiction where prohibited by applicable law.
All financial and other information presented in this Tender Offer Document concerning the Company are exclusively based on the
unaudited financial statements bulletin published by the Company for the financial year ended 31 December 2016, financial statements
published by the Company for the financial year ended 31 December 2015, stock exchange releases published by the Company, entries in the
Finnish Trade Register, the shareholders’ register of the Company dated 21 February 2017 and other information publicly available.
Consequently, the Offeror does not accept any responsibility for such information except for the accurate restatement of such information
herein.
Save to the extent required by mandatory law, this Tender Offer Document will not be supplemented or updated with any financial
information or other stock exchange releases published by the Company after the date of this Tender Offer Document nor will the Offeror
otherwise separately inform about the publishing of such financial information or other stock exchange releases, unless so required by
compulsory legislation.
Certain Key Dates
The following timetable sets forth certain key dates relating to the Tender Offer, provided that the Offer Period has not been extended or
discontinued in accordance with the terms and conditions of the Tender Offer:
9 February 2017 Announcement of the Offeror’s decision to launch the Tender Offer
27 February 2017 Offer Period commences
29 March 2017 (preliminary) Offer Period expires
30 March 2017 (preliminary) Announcement of the preliminary result of the Tender Offer
3 April 2017 (preliminary) Announcement of the final result of the Tender Offer
6 April 2017 (preliminary) Payment of the Share Offer Price and Option Right Offer Price
3
PERSONS RESPONSIBLE FOR THE TENDER OFFER DOCUMENT
Offeror
Nokia Solutions and Networks Oy
Address: Karaportti 3, FI-02610 Espoo, Finland
Domicile: Helsinki
The Board of Directors of the Offeror
Tommi Uitto (Chairman)
Esa Niinimäki
Peter Rönnberg
Parent Company of the Group of the Offeror
Nokia Corporation
Address: Karaportti 3, FI-02610 Espoo, Finland
Domicile: Helsinki
The Board of Directors of the Parent Company of the Group of the Offeror
Risto Siilasmaa (Chairman)
Bruce Brown
Louis R. Hughes
Jean C. Monty
Elizabeth Nelson
Carla Smits-Nusteling
Olivier Piou
Kari Stadigh
Statement by the Offeror and Nokia
This Tender Offer Document has been prepared by the Offeror pursuant to Chapter 11, Section 11 of the SMA for
purposes of the Tender Offer set out herein.
The Offeror and Nokia represent that to their best knowledge and understanding the information contained in this
Tender Offer Document is accurate and no information has been omitted that is likely to affect the assessment of the
merits of the Tender Offer.
All information concerning the Company presented in this Tender Offer Document has been extracted from, and has
been provided exclusively based upon, publicly available information. Consequently, neither the Offeror nor Nokia
accept any responsibility for such information, except for the accurate restatement of such information herein.
In Helsinki, 23 February 2017
Nokia Solutions and Networks Oy
In Helsinki, 23 February 2017
Nokia Corporation
4
ADVISORS TO THE OFFEROR
Financial advisor to Nokia and the Offeror in connection with the Tender Offer
Nordea Bank AB publ, Finnish Branch
Satamaradankatu 5
FI-00020 NORDEA
Finland
Legal advisor to Nokia and the Offeror in connection with the Tender Offer
Roschier, Attorneys Ltd
Keskuskatu 7 A
FI-00100 Helsinki
Finland
Arranger of the Tender Offer
Nordea Bank AB (publ), Finnish Branch
Satamaradankatu 5
FI-00020 NORDEA
Finland
ADVISORS TO THE COMPANY
Financial advisor to the Company in connection with the Tender Offer
Sisu Partners Oy
Mikonkatu 1 B
FI-00100 Helsinki
Finland
Legal advisor to the Company in connection with the Tender Offer
Castrén & Snellman, Attorneys Ltd.
Eteläesplanadi 14
FI-00130 Helsinki
Finland
5
TABLE OF CONTENTS
1. BACKGROUND AND OBJECTIVES ........................................................................................................ 7
1.1 Background to the Tender Offer ................................................................................................................ 7 1.2 Effect of the Tender Offer on Comptel’s Operations and Assets and Future Position of Management and
Employees ................................................................................................................................................. 7 1.3 Offeror’s and Nokia's Strategic Plans ........................................................................................................ 8 1.4 Financing of the Tender Offer ................................................................................................................... 8 1.5 Offeror’s Future Plans with respect to Comptel Shares ............................................................................. 8 1.6 Statement by the Comptel Board of Directors ........................................................................................... 8 1.7 Undertakings of Shareholders .................................................................................................................... 9 1.8 Fees to Advisors ........................................................................................................................................ 9 1.9 Applicable Law.......................................................................................................................................... 9
2. INFORMATION ON GROUNDS FOR PRICING OF THE TENDER OFFER .................................. 10
2.1 Grounds for determining the Offer Price ................................................................................................. 10 2.2 Trading Prices of Comptel’s Shares ........................................................................................................ 10 2.3 Grounds for Determining the Option Right Offer Price .......................................................................... 11 2.4 Trading prices of Comptel 2014A and 2014B Option Rights.................................................................. 11 2.5 Other Tender Offers ................................................................................................................................. 12
3. SUMMARY OF THE TRANSACTION AGREEMENT ........................................................................ 13
3.1 Background to the Transaction Agreement ............................................................................................. 13 3.2 Offer Period and Offer Price .................................................................................................................... 13 3.3 Conditions to Completion ........................................................................................................................ 13 3.4 Permission by the Board of Directors of Comptel to Transfer the 2015 Option Rights .......................... 13 3.5 Recommendation by the Board of Directors of Comptel ........................................................................ 13 3.6 Representations and Warranties ............................................................................................................... 14 3.7 Undertakings ............................................................................................................................................ 15 3.8 Termination ............................................................................................................................................. 16 3.9 Governing Law ........................................................................................................................................ 16
4. TERMS AND CONDITIONS OF THE TENDER OFFER..................................................................... 17
4.1 Object of the Tender Offer ...................................................................................................................... 17 4.2 Offer Price ............................................................................................................................................... 17 4.3 Offer Period ............................................................................................................................................. 17 4.4 Conditions to Completion of the Tender Offer ........................................................................................ 18 4.5 Obligation to increase the Tender Offer or to pay compensation ............................................................ 19 4.6 Acceptance Procedure of the Tender Offer ............................................................................................. 19 4.7 Withdrawal Rights ................................................................................................................................... 22 4.8 Announcement of the Result of the Tender Offer .................................................................................... 22 4.9 Terms of Payment and Settlement of Shares ........................................................................................... 23 4.10 Terms of Payment and Settlement of Option Rights ............................................................................... 23 4.11 Transfer of Ownership ............................................................................................................................. 24 4.12 Transfer Tax and Other Payments ........................................................................................................... 24 4.13 Other Issues ............................................................................................................................................. 24
5. PRESENTATION OF COMPTEL ............................................................................................................ 26
5.1 Overview ................................................................................................................................................. 26 5.2 Share Capital and Ownership Structure ................................................................................................... 26 5.3 Authorization to Issue Shares, Options and Other Special Rights entitling to Shares in Comptel .......... 26 5.4 Option Rights ........................................................................................................................................... 27 5.5 Treasury Shares ....................................................................................................................................... 28 5.6 Shareholders’ Agreements ....................................................................................................................... 28 5.7 Board of Directors, President and CEO, and Auditors ............................................................................ 28 5.8 Financial Information .............................................................................................................................. 29 5.9 Future Prospects Published by the Company........................................................................................... 29 5.10 Articles of Association ............................................................................................................................ 29
6
6. PRESENTATION OF THE OFFEROR ................................................................................................... 30
6.1 Offeror and Nokia in Brief ...................................................................................................................... 30 6.2 Persons related to the Offeror as stipulated in Chapter 11, Section 5 of the SMA .................................. 31 6.3 Company’s Ownership in the Offeror ..................................................................................................... 31
ANNEXES
ANNEX A: STATEMENT OF COMPTEL’S BOARD OF DIRECTORS A1
ANNEX B: FINANCIAL STATEMENTS OF COMPTEL B1
ANNEX C: FINANCIAL STATEMENTS BULLETIN PUBLISHED BY COMPTEL C1
ANNEX D: STOCK EXCHANGE RELEASE PUBLISHED BY COMPTEL ON 9 FEBRUARY 2017 D1
ANNEX E: ARTICLES OF ASSOCIATION OF COMPTEL E1
7
1. BACKGROUND AND OBJECTIVES
1.1 Background to the Tender Offer
The Offeror is a wholly-owned indirect subsidiary of Nokia. The Offeror's main business is part of Nokia's networks
business area, in which the company offers a wide selection of various products ranging from hardware components for
network operators to software solutions and, among others, services that support and optimize network operations and
participates in the research and development of these products.
Nokia is one of the global leaders in developing technologies for a connected world, offering communications services
providers, authorities, major corporations and consumers the most comprehensive selection of products, services and
licensing opportunities. Nokia is a global company with continuing operations in Europe, the Middle East, Africa, Asia-
Pacific, Greater China, North America and Latin America. Furthermore, Nokia has research and development facilities
in Europe, North America and Asia.
Comptel is a long term partner of Nokia. It is a public limited company incorporated under the laws of Finland, and its
shares are listed on the official list of Nasdaq Helsinki with the trading code CTL1V. Comptel was established in 1986
and it has approximately 837 employees in 32 countries. Comptel has completed over 1 400 customer projects in more
than 90 countries. It processes 20 percent of world´s mobile usage data every day, orchestrates communications and
digital services for more than two billion end-users daily and its largest customer has around 300 million subscribers. In
2016, Comptel’s net sales were EUR 100.0 million with an 11.0 percent operating margin. The company’s major sites
are located in Finland, Bulgaria, Malaysia, India, the United Kingdom and Norway.
Nokia and Comptel have on the Signing Date entered into a Transaction Agreement under which Nokia is committed to
make through its indirect wholly-owned subsidiary Nokia Solutions and Networks Oy a public tender offer for all the
Shares and Option Rights of Comptel that are not held by Comptel or any of its subsidiaries. The principal terms and
conditions of the Transaction Agreement have been described in the section “Summary of the Transaction Agreement”
below.
After reviewing the Tender Offer and its terms and conditions, as well other available information, the Board of
Directors of Comptel has unanimously decided to recommend that the shareholders and holders of Option Rights accept
the Tender Offer (see section 1.6 and Annex A below). To support its statement, the Board of Directors of Comptel has
received a fairness opinion dated 8 February 2017 from Comptel’s financial advisor Sisu Partners Oy. According to the
opinion, the consideration to be received by the holders of the Shares and the Option Rights pursuant to the Tender
Offer is believed to be fair from a financial point of view to such holders as of the date of opinion.
Major shareholders of Comptel, Mandatum Life Insurance Company, Elisa Corporation, Kaleva Mutual Insurance
Company, Varma Mutual Pension Insurance Company and Ilmarinen Mutual Pension Insurance Company (the “Major
Shareholders”), and the President and CEO of Comptel personally and through an entity in his control, the Chairman
of the Board of Directors of Comptel and the members of the Board of Directors of Comptel have subject to certain
customary conditions irrevocably undertaken to accept the Tender Offer (see section 1.7 below). Such shareholders
jointly represent approximately 48.3 percent of all the Shares and votes in Comptel.
1.2 Effect of the Tender Offer on Comptel’s Operations and Assets and Future Position of Management
and Employees
The Tender Offer is not expected to have a material effect on the operations, business locations or the number of jobs at
Comptel.
It is the intention of Nokia and the Offeror that Comptel will continue to operate as a separate unit, but its business
might be eventually harmonized with and/or integrated into the standalone software business operated by Applications
and Analytics business group of Nokia group based upon an integration plan to be developed by the management of
Nokia.
Certain employees and members of senior management of Comptel will play an important role in Nokia's organization
following the completion of the Tender Offer. In order to encourage these key employees of Comptel to remain in the
Company, the Offeror intends to offer them certain retention arrangements following the completion of the Tender
Offer. However, the Offeror intends to change the composition of the Board of Directors of Comptel after the
completion of the Tender Offer.
The Offeror has not entered into any agreements providing for any compensation or other remuneration granted to the
management or the members of the Board of Directors of Comptel payable in return for the execution of the
Transaction Agreement and/or for the completion of the Tender Offer.
8
1.3 Offeror’s and Nokia's Strategic Plans
The planned acquisition is part of Nokia's strategy to build a standalone software business at scale by expanding and
strengthening its software portfolio and go-to-market capabilities with additional sales capacity and a strategic partner
network. Comptel would bolster Nokia's software portfolio by adding critical solutions for catalogue-driven service
orchestration and fulfillment, intelligent data processing, customer engagement, and agile service monetization. The
combination of Nokia's Service Assurance portfolio and Comptel's Service Orchestration portfolio would enable a
dynamic closed loop between service assurance and fulfillment that simplifies management of complex heterogeneous
networks. When combined with Nokia's Cloudband(TM) and Nuage(TM) portfolios, Nokia would be able to provide
customers with complete, end-to-end orchestration of complex Network Function Virtualization (NFV) and Software
Defined Networking (SDN) deployments.
In November 2016, Nokia announced its long-term strategy, Rebalancing for Growth. As part of the strategy, Nokia is
strengthening its software capabilities in key areas: portfolio, services and go-to-market. The planned acquisition of
Comptel would bolster go-to-market efforts with a software-dedicated sales force and strong partner network. It would
also support Nokia's desire to build a portfolio that allows customers to automate as much of their network and business
operations as possible – including customer services, self-optimization, management and orchestration. Comptel would
help with this objective by bringing catalogue-driven fulfilment and digital service lifecycle management, complex
event processing, applications for customer engagement and service monetization; and emerging technologies for
context-aware on-device commerce and IoT pattern detection.
The Tender Offer is not expected to have a material effect on the operations and business locations of, or on the number
of jobs at Comptel.
1.4 Financing of the Tender Offer
The Tender Offer will be financed through Nokia Group’s internal financing arrangements and no third party financing
is required to complete the Tender Offer. The Tender Offer is thus not conditional upon obtaining financing for the
Tender Offer.
The financing arrangements for the Tender Offer do not have any impact on the operations or obligations of Comptel.
1.5 Offeror’s Future Plans with respect to Comptel Shares
The Offeror’s intention is to acquire all the Shares and Option Rights in the Company through the Tender Offer.
Obligation to Make a Mandatory Offer
According to Chapter 11, Section 19 of the SMA, a shareholder holding more than thirty (30) percent or fifty (50)
percent of the voting rights attached to shares in a company the shares of which are subject to public trading, is
obligated to make a public tender offer (mandatory offer) for all the remaining shares and securities entitling to shares
in the company. However, under the SMA, if the relevant threshold has been exceeded by means of a voluntary public
tender offer, the voluntary offer does not need to be followed by a mandatory offer provided that the initial voluntary
offer has been made for all shares and other securities entitling to shares in the target company. Pursuant to the above
exception, the Offeror will not have an obligation to launch a subsequent mandatory offer after the completion of the
Tender Offer.
Redemption under the Finnish Companies Act
Under Chapter 18 of the Finnish Companies Act (624/2006, as amended, “FCA”) a shareholder holding more than
ninety (90) percent of the total number of shares and voting rights in a company shall have the right and obligation to
redeem the remainder of the issued and outstanding shares in the company.
Should the Offeror obtain more than ninety (90) percent of the Shares of the Company and of the voting rights attached
to the Shares, the Offeror intends to initiate compulsory acquisition proceedings under the above provisions of the FCA
in order to acquire title to all the Shares in the Company. In such situation, the Offeror intends to acquire also title to all
Option Rights not tendered in the Tender Offer in accordance with the terms and conditions of the Option Rights.
Delisting from Nasdaq Helsinki
It is the Offeror’s intention that, as promptly as practicable following the initiation of the compulsory acquisition
proceedings under the FCA, the Company shall apply for the delisting of its Shares and Option Rights 2014A and
2015B from Nasdaq Helsinki.
1.6 Statement by the Comptel Board of Directors
The Board of Directors of Comptel has unanimously decided to recommend that the shareholders and holders of Option
Rights accept the Tender Offer.
9
In order to support its assessment of the Tender Offer, the Board of Directors of Comptel has requested from Comptel’s
financial advisor, Sisu Partners Oy, a fairness opinion regarding the Tender Offer. Sisu Partners Oy's fairness opinion
dated 8 February 2017 states that the consideration offered to the shareholders and holders of Option Rights under the
Tender Offer is fair from a financial point of view.
After having obtained the fairness opinion from Sisu Partners Oy and having carefully evaluated the terms and
conditions of the Tender Offer from the point of view of Comptel and its shareholders and the holders of the Option
Rights and other available information, the Board of Directors of Comptel has on 21 February 2017 issued a statement
to the effect that the consideration offered by the Offeror in the Tender Offer is fair to the holders of Shares and Option
Rights. Accordingly, the Board of Directors of Comptel has unanimously decided to recommend the shareholders and
holders of Option Rights to accept the Tender Offer. The statement by the Comptel Board in accordance with Chapter
11, Section 13 of the SMA is attached to this Tender Offer Document as Annex A.
1.7 Undertakings of Shareholders
Nokia has received undertakings by the Major Shareholders and the President and CEO of Comptel personally and
through an entity controlled by him, the Chairman of the Board of Directors of Comptel and the members of the Board
of Directors of Comptel according to which such shareholders subject to certain customary conditions irrevocably
undertake to accept the Tender Offer. Such shareholders represent jointly approximately 48.3 percent of all the Shares
and votes in Comptel.
1.8 Fees to Advisors
Nordea Bank (as defined below) serves as the financial advisor to Nokia and the Offeror in connection with the Tender
Offer and as the Arranger of the Tender Offer. Nokia is committed to pay to Nordea Bank total fees of approximately
EUR two (2) million based on the completion of the Tender Offer in connection with the Tender Offer.
1.9 Applicable Law
The Tender Offer and this Tender Offer Document shall be governed by Finnish law and all disputes relating thereto
shall be finally settled by a competent court in Finland.
10
2. INFORMATION ON GROUNDS FOR PRICING OF THE TENDER OFFER
2.1 Grounds for determining the Offer Price
Under the Tender Offer, the Offeror is offering a cash consideration of EUR 3.04 for each Share validly tendered.
The consideration offered for the Option Rights is EUR 2.56 in cash for each 2014A Option Right, EUR 2.16 in cash
for each 2014B Option Right, EUR 1.53 in cash for each 2014C Option Right, EUR 2.15 in cash for each 2015A Option
Right, and EUR 2.15 in cash for each 2015B Option Right.
Any distribution of dividend or other assets by Comptel after the Signing Date ("Distribution") shall reduce the Share
Offer Price by an amount equal to such Distribution per share as set out below in section 4.2. Such Distribution shall not
affect the Option Right Offer Price.
According to Chapter 11, Section 24 of the SMA, the starting point in determining the consideration to be offered in a
voluntary tender offer for all shares and other securities entitling to shares in the target company shall be the highest
price paid for the securities subject to the tender offer by the offeror or by a person related to the offeror as stipulated in
Chapter 11, Section 5 of the SMA, during a period of six (6) months preceding the announcement of the tender offer.
Neither the Offeror or Nokia nor any other party referred to in Chapter 11, Section 5 of the SMA has during the 6-
month period preceding the announcement of the Tender Offer (the “Announcement”) acquired any Shares or Option
Rights in the Company in public trading or otherwise at a price higher than the Share Offer Price or Option Right Offer
Price. At the date of this Tender Offer Document, neither the Offeror or Nokia nor any other party referred to in Chapter
11, Section 5 of the SMA holds any Shares or Option Rights in the Company.
2.2 Trading Prices of Comptel’s Shares
The chart below shows the price development of the Shares on Nasdaq Helsinki and the trading volumes of the Shares
during the last three (3) years preceding the Announcement, i.e. between 9 February 2014 and 8 February 2017.1
0
1,500
3,000
4,500
6,000
0
1
2
3
4
10/02/14 10/05/14 10/08/14 10/11/14 10/02/15 10/05/15 10/08/15 10/11/15 10/02/16 10/05/16 10/08/16 10/11/16
Tra
din
g v
olu
me (
tho
usan
d S
hare
s)
Clo
sin
g p
rice (
EU
R)
Trading volume Closing price
The closing price per Share on Nasdaq Helsinki on 8 February 2017, i.e. on the last trading day preceding the
Announcement, was EUR 2.36. The volume-weighted average trading price of the Shares on Nasdaq Helsinki over a 3-
month period preceding the Announcement, i.e. from 9 November 2016 to 8 February 2017, was EUR 2.32.
Correspondingly, the volume-weighted average trading price during the twelve (12) months preceding the
Announcement, i.e. from 9 February 2016 to 8 February 2017, was EUR 2.01.
The Share Offer Price of EUR 3.04 for each Share corresponds to a premium of approximately 28.8 percent to the
closing price of the Shares of the Company (EUR 2.36) on Nasdaq Helsinki on 8 February 2017, the last trading day
before the Announcement, and a premium of approximately 31.0 percent to the volume-weighted average trading price
of the Shares of the Company on Nasdaq Helsinki during the 3-month period preceding the Announcement as well as a
premium of approximately 51.2 percent compared to the volume-weighted average trading price during the last twelve
(12) months preceding the Announcement.
1 Source: Nasdaq Helsinki
11
The table below shows the quarterly trading prices and trading volumes of the Shares on Nasdaq Helsinki during the
last three (3) years preceding the Tender Offer.2
Share price during the period (EUR) Trading volume during the period
Time period Average High Low Shares Euros
10 Feb 2014 – 31 Mar 014 0.54 0.57 0.51 8,895,970 4,778,806
1 Apr 2014 – 30 Jun 2014 0.59 0.70 0.53 3,638,158 2,155,344
1 Jul 2014 – 30 Sep 2014 0.63 0.67 0.60 3,722,165 2,342,349
1 Oct 2014 – 31 Dec 2015 0.65 1.00 0.55 7,129,937 4,992,838
1 Jan 2015 – 31 Mar 2015 0.94 1.02 0.84 6,187,394 5,791,499
1 Apr 2015 – 30 Jun 2015 1.18 1.49 0.95 11,484,779 13,887,816
1 Jul 2015 – 30 Sep 2015 1.23 1.41 1.06 6,902,879 8,541,207
1 Oct 2015 – 31 Dec 2015 1.39 1.93 1.15 16,647,477 24,655,572
1 Jan 2016 – 31 Mar 2016 1.53 1.80 1.19 14,744,049 21,717,618
1 Apr 2016 – 3 Jun 2016 1.55 1.89 1.41 8,485,142 13,513,584
1 Jul 2016 – 30 Sep 2016 2.31 2.65 1.79 14,709,582 33,520,022
1 Oct 2016 – 31 Dec 2016 2.26 2.56 1.96 10,419,711 23,691,666
1 Jan 2017 – 8 Feb 2017 2.38 2.51 2.30 2,718,009 6,520,648
2.3 Grounds for Determining the Option Right Offer Price
The Option Right Offer Price is EUR 2.56 in cash for each 2014A Option Right, EUR 2.16 in cash for each 2014B
Option Right, EUR 1.53 in cash for each 2014C Option Right, EUR 2.15 in cash for each 2015A Option Right and EUR
2.15 in cash for each 2015B Option Right.
The Option Right Offer Price has been calculated by deducting the share subscription price of the respective Option
Rights from the Share Offer Price of EUR 3.04. The share subscription prices of the respective Option Rights pursuant
to the terms and conditions of the 2014 Option Rights and the 2015 Option Rights are as follows: EUR 0.48 for each
2014A Option Right, EUR 0.88 for each 2014B Option Right, EUR 1.51 for each 2014C Option Right, EUR 0.89 for
each 2015A Option Right and EUR 0.89 for each 2015B Option Right. Each Option Right entitles to subscribe for one
(1) share in the Company. For details of the Option Rights, please see section 5.4 below.
2.4 Trading prices of Comptel 2014A and 2014B Option Rights
2014A Option Rights and 2014B Option Rights are subject to public trading on the official list of Nasdaq Helsinki. The
chart below sets forth the price development and trading volume of the 2014A Option Rights on Nasdaq Helsinki for
the period preceding the Announcement during which these Option Rights were available for trading, i.e. between 1
February 2016 and 8 February 2017.3
0
60
120
180
0
1
2
3
01/02/2016 01/04/2016 01/06/2016 01/08/2016 01/10/2016 01/12/2016 01/02/2017
Tra
din
g v
olu
me (
tho
usan
d O
pti
on
R
igh
ts)
Clo
sin
g p
rice
(EU
R)
Trading volume Closing price
The closing price of the 2014A Option Rights on Nasdaq Helsinki on 8 February 2017, i.e. the last trading day
preceding the Announcement, was EUR 1.84. The volume-weighted average trading price of the 2014A Option Rights
2 Source: Nasdaq Helsinki
3 Source: Nasdaq Helsinki
12
on Nasdaq Helsinki during the three (3) months preceding the Announcement, i.e. from 9 November 2016 to 8 February
2017, was EUR 1.84.
The table below sets forth the quarterly trading prices and volumes of the 2014A Option Rights on Nasdaq Helsinki
during the one (1) year period preceding the Tender Offer.4
Price of 2014A Option Rights during the
period (EUR)
Trading volume of 2014A Option Rights
during the period
Time period Average High Low
2014A Option
Rights EUR
9 Feb 2016 – 31 Mar 2016 1.04 1.15 0.98 323,950 344,121
1 Apr 2016 – 30 Jun 2016 1.07 1.40 0.94 107,000 115,966
1 Jul 2016 – 30 Sep 2016 1.83 2.07 1.30 364,856 634,885
1 Oct 2016 – 31 Dec 2016 1.79 2.03 1.62 271,850 490,468
1 Jan 2017 – 8 Feb 2017 1.89 1.98 1.84 8,300 15,919
At the time of the Announcement, the 2014B Option Rights had been publicly traded for a total of six (6) trading days,
but no trading took place in them during such period. Due to this, the premium on the closing price cannot be
determined.
2.5 Other Tender Offers
To the Offeror’s knowledge, no public tender offer for the Shares or securities entitling holders to shares of Comptel
has been made by any third party during the twelve (12) months preceding the Announcement.
4 Source: Nasdaq Helsinki
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3. SUMMARY OF THE TRANSACTION AGREEMENT
This summary is not an exhaustive presentation of all terms and conditions of the Transaction Agreement. The summary
aims at describing the terms and conditions of the Transaction Agreement to the extent that such terms and conditions
may materially affect the assessment of a shareholder or a holder of Option Rights of the Company of the terms and
conditions of the Tender Offer.
3.1 Background to the Transaction Agreement
Nokia and Comptel entered on 8 February 2017 into the Transaction Agreement under which Nokia has undertaken to
make through its indirect wholly-owned subsidiary Nokia Solutions and Networks Oy, a public tender offer for all the
Shares and Option Rights of Comptel that are not held by Comptel or any of its subsidiaries. For such purpose, Nokia
has transferred its rights and obligations under the Transaction Agreement to the Offeror pursuant to the Transaction
Agreement, whereby Nokia is automatically deemed to have guaranteed the performance of the Offeror’s obligations
under the Transaction Agreement (the Offeror and Comptel hereafter each a “Party” and together “Parties”).
Should the Offeror obtain more than ninety (90) percent of the Shares of the Company and of the voting rights attached
to the Shares, the Offeror intends to initiate compulsory acquisition proceedings under the provisions of the FCA and/or
under the terms of the Option Rights of Comptel in order to acquire title to all the Shares and Option Rights in the
Company. The Offeror intends to apply for the delisting of the Company’s Shares from Nasdaq Helsinki.
Background to the Transaction Agreement is detailed further in the section “Background and Objectives — Background
to the Tender Offer".
3.2 Offer Period and Offer Price
Under the Transaction Agreement, the Offer Period under the Tender Offer shall initially run for four (4) weeks and it
may be extended by the Offeror in accordance with the terms and conditions of the Tender Offer.
The Transaction Agreement provides that the Offeror shall offer to acquire all the Shares for a consideration of
EUR 3.04 in cash for each Share subject to the terms and conditions of the Tender Offer. With respect to the Option
Rights that have been validly tendered in the Tender Offer, the consideration offered shall be EUR 2.56 in cash for each
2014A Option right, EUR 2.16 in cash for each 2014B Option Right, EUR 1.53 in cash for each 2014C Option Right,
EUR 2.15 in cash for each 2015A Option Right, and EUR 2.15 in cash for each 2015B Option Right. Any Distribution
by Comptel after the Signing Date shall reduce the Share Offer Price by an amount equal to such Distribution per share
as set out below in section 4.2. Such Distribution shall not affect the Option Right Offer Price.
3.3 Conditions to Completion
Under the Transaction Agreement, the obligation of the Offeror to accept for payment the tendered Shares and Option
Rights and to complete the Tender Offer shall be subject to the fulfilment or, to the extent permitted by applicable law,
waiver by the Offeror of the Conditions to Completion (as defined below) described in section “Terms and Conditions
of the Tender Offer – Conditions to Completion of the Tender Offer”.
3.4 Permission by the Board of Directors of Comptel to Transfer the 2015 Option Rights
The Board of Directors of Comptel has under the Transaction Agreement undertaken to grant a permission to the holder
of the 2015 Option Rights to transfer his Option Rights to the Offeror by accepting the Tender Offer and tendering the
Option Rights into the Tender Offer despite the transfer restrictions contained in the terms and conditions of the Option
Rights, as described in section “Terms and Conditions of the Tender Offer – Object of the Tender Offer”.
3.5 Recommendation by the Board of Directors of Comptel
The Transaction Agreement provides that having evaluated the terms and conditions of the Tender Offer from the point
of view of the Company, the shareholders and the holders of the Option Rights, the Board of Directors of the Company
unanimously recommends that the shareholders and holders of the Option Rights accept the Tender Offer.
Pursuant to the Transaction Agreement the Board of Directors of Comptel has, in the event of a possible competing
offer or proposal, undertaken not to withdraw or change its recommendation for the Tender Offer unless the Board of
Directors determines in good faith, after taking advice from external legal counsel and financial advisor, that the
competing offer or proposal are from a financial point of view more favorable to the shareholders and the holders of the
Option Rights than the Tender Offer when judged as a whole (taking into account, among other things, the identity of
the offeror, the consideration and other terms and conditions as well as the availability and reliability of financing), and
that therefore (i) it would no longer be in the best interest of the shareholders and holders of the Option Rights to accept
the Tender Offer, and (ii) such withdrawal or change of the recommendation is required for the Board of Directors of
the Company to comply with its fiduciary duties towards the shareholders and the holders of the Option Rights under
Finnish laws. The Board of Directors may withdraw or change its recommendation for the Tender Offer in accordance
with the above only if prior to such withdrawal or change, the Board of Directors has complied with certain agreed
14
procedures allowing the Offeror to assess the competing offer or proposal and to enhance its Tender Offer. For such
purpose, Comptel has undertaken to inform the Offeror with reasonably detailed information about the competing offer
or proposal (including identity of competing offeror, pricing and other main terms and conditions) and to provide the
Offeror with an opportunity to negotiate with the Board of Directors of Comptel about the matters arising from the
competing offer or proposal. Should the Offeror enhance its Tender Offer so as to be at least equally favorable to
Comptel’s shareholders and holders of the Option Rights as the competing offer or proposal, the Board of Directors has
undertaken to confirm and uphold the recommendation for the Tender Offer, as enhanced.
3.6 Representations and Warranties
In the Transaction Agreement, Comptel has given to Nokia and the Offeror certain representations and warranties
relating to, among other things:
Comptel and its affiliated entities being validly incorporated and Comptel having corporate power and
authority to execute the Transaction Agreement and to perform its obligations thereunder;
the latest consolidated financial statements and interim report of Comptel having been prepared in accordance
with relevant laws and accounting standards;
Comptel not discussing any competing offers or competing proposals and being unaware of any such offers or
proposals;
Comptel having disclosed all material information required to be disclosed under applicable Finnish
legislation, the regulation on market abuse (EU) No 596/2014 and the rules and requirements of Nasdaq
Helsinki, and compiled all information it has delivered for the purpose of Nokia ’s due diligence review in
good faith, and no such information being misleading or incorrect in any material respect;
the number of Shares and Option Rights issued by Comptel, and there being no further option rights or other
securities entitling to shares in Comptel;
Comptel and its affiliated entities being in compliance in all material respects with (i) applicable laws and
regulations, (ii) any material agreements and (iii) any applicable collective agreements and employee benefit
plans and policies, and no material agreements being terminated;
there being no material claims, litigation or other legal proceedings pending or threatened against Comptel or
its affiliated entities;
Comptel (or any of its affiliated entities) possessing exclusive ownership rights or valid licenses to all of the
intellectual property rights necessary for Comptel's and its affiliated entities' business, and that no intellectual
property rights have been breached and there are no pending or threatened litigation with regard to them, that
Comptel's source codes have not been disclosed to a third party at any time, and that Comptel and its affiliated
entities have undertaken the necessary measures within the framework of applicable legislation to protect their
corporate secrets and are in compliance with the applicable data security legislation;
Comptel and all of its affiliated entities having filed all tax returns and there being no tax related actions or
disputes pending or threatened with respect to them (excluding the announced tax dispute related to India);
Comptel and all of its affiliated entities having in place sufficient internal supervision mechanisms for
bookkeeping and them not (i) having used any of their funds for unlawful activities or unlawful gifts, (ii) made
any bribes or influence payments, or (iii) made or accepted any other unlawful payments; and
on the Signing Date, Comptel being unaware of any event, circumstance or change that constitutes or is likely
to result in a Material Adverse Change or would likely have constituted a Material Adverse Change (as defined
below under “Terms and Conditions of the Tender Offer – Conditions to Completion of the Tender Offer”) had
it occurred after the Signing Date.
In the Transaction Agreement, Nokia and the Offeror have given to Comptel certain representations and warranties
relating to, among other things:
Nokia and the Offeror being validly incorporated and having corporate power and authority to execute the
Transaction Agreement and to perform their obligations thereunder;
sufficient financing being available for the Offeror to finance the Tender Offer and there being no need for
third party financing to complete the Tender Offer;
the Tender Offer Document, when filed and distributed or disseminated, complying in all material respects
with all applicable laws and not containing any untrue or misleading statement of a material fact;
15
on the Signing Date, Nokia not being in a process of discussing or aware of any intention to enter into a
process of discussing any transaction that could hinder the completion of the Tender Offer; and
on the Signing Date, Nokia being unaware of any event, circumstance or change that constitutes or is likely to
result in a Material Adverse Change (as defined below) or would likely have constituted a Material Adverse
Change (as defined below) had it occurred after the Signing Date;
The representations and warranties shall automatically terminate upon the title to the Shares and Option Rights validly
tendered in the Tender Offer passing to the Offeror pursuant to the Tender Offer, thereby having no further effect after
such date. If a material breach of any of the representation or warranties occurs and such breach has not been cured by
the end of the Offer Period, the non-breaching Party may terminate the Transaction Agreement in accordance with
section 3.8 below.
3.7 Undertakings
Under the Transaction Agreement, the Parties have given each other certain undertakings, most of which shall
automatically terminate upon the passing of title to the Shares and Option Rights validly tendered in the Tender Offer to
the Offeror pursuant to the Tender Offer, thereby having no further effect after such date. The undertakings relate to the
procedures to be followed in connection with the Tender Offer, including, among other things, the following:
each Party has undertaken to use its reasonable efforts to assist and cooperate with the other Party in the
making of any necessary registrations and filings and in obtaining any necessary approvals, consents and
waivers from relevant regulatory authorities, governmental entities and third parties;
Comptel has undertaken not to (directly or indirectly) solicit or knowingly encourage any competing offer or
proposal for such offer or other transaction that could constitute or result in any competing transaction or
otherwise harm or hinder the completion of the Tender Offer, nor to facilitate or promote such proposals,
except if and to the extent such measures are required for the Board of Directors to comply with its fiduciary
duties towards Comptel’s shareholders and holders of Option Rights under Finnish laws. Comptel shall inform
the Offeror of any competing proposals (including the identity of the competing offeror, pricing and other main
terms and conditions of such proposal) and provide the Offeror an opportunity to negotiate with the Board of
Directors of Comptel of matters arising from such competing proposals;
Comptel has undertaken to, and to cause each of its affiliated entities to, conduct their respective businesses
only in the ordinary course of business consistent with past practice and not to make or implement any material
changes and certain actions without the prior consent of the Offeror;
Comptel has undertaken to use its reasonable efforts to provide the Offeror with access to information
regarding Comptel and its affiliated entities reasonably needed for purposes of necessary filings, completion of
the Tender offer or to assess any possible breach of representations and warranties or any Material Adverse
Change (as defined below) or for planning the integration to the extent permitted by applicable laws;
Nokia and the Offeror on behalf of themselves and of their subsidiaries have undertaken that they shall not
solicit for employment from the Company and its affiliated entities any of the latter's key employees during a
certain period of time;
each of the Parties has undertaken to comply with, and not deviate from the recommendations included in, the
Helsinki Takeover Code, or, in the event of a deviation, shall to the extent practically possible explain the
reasons for such deviation to the other Party in advance;
each Party has undertaken to notify the other Party of certain events and to consult with each other before
issuing any public announcements relating to the Tender Offer;
the Board of Directors of Comptel has undertaken to convene at the request of the Offeror an Extraordinary
General Meeting of Shareholders of Comptel after the completion of the Tender Offer for the purpose of
electing new members to the Board of Directors of Comptel; and
Nokia and the Offeror have undertaken to vote in favor of discharge of liability for the members of the Board
of Directors of Comptel at the next Annual General Meeting of the shareholders and to pay the remuneration
of the members of the Board of Directors and to maintain the members' of the Board of Directors and
Managing Director's current liability insurance policies for a certain time after the completion of the Tender
Offer.
If a material breach of any of the undertakings occurs and such breach relating to the commitments concerning the
conduct of Comptel’s business has not been cured by the end of the Offer Period, the non-breaching Party may
terminate the Transaction Agreement in accordance with section 3.8 below.
16
3.8 Termination
The Transaction Agreement and the transactions contemplated thereunder may be terminated with immediate effect
only as follows:
either Party may terminate the agreement upon a material breach of any representations and warranties or of
other undertakings by or obligations of the other Party set forth in the Transaction Agreement and such breach
of a representation or warranty or an undertaking relating to the conduct of business has not been remedied
before the Offer Period expires; or
either Party may terminate the agreement if the Board of Directors of Comptel has in compliance with the
provisions set forth in the Transaction Agreement withdrawn its recommendation to the shareholders and
holders of the Option Rights to accept the Tender Offer or changed its material contents; or
either Party may terminate the agreement if a final, non-appealable injunction or other order issued by any
court of competent jurisdiction or other final, non-appealable legal restraint or prohibition preventing the
consummation of the Tender Offer shall have taken effect after the Signing Date and shall still be in effect; or
either Party may terminate the agreement if the Tender Offer has not been completed by 31 May 2017 or, if the
non-completion of the Tender Offer is due to the regulatory approvals not having been obtained and either
Party has requested the extension of the Transaction Agreement by a maximum of three (3) months, by such
later date; or
Comptel may terminate the agreement if the Offeror has not commenced the Tender Offer on or prior to 6
March 2017 or a later date agreed by the Parties; or
the Offeror or Nokia may terminate the agreement, if after the Signing Date, there occurs a Material Adverse
Change (as defined below) or the Offeror or Nokia receives after the Signing Date information previously
undisclosed to it that constitutes a Material Adverse Change (as defined below).
In case the Transaction Agreement is terminated and this has a material effect on the planned acquisition from the
perspective of the Offeror, the Offeror shall be entitled to withdraw the Tender Offer.
3.9 Governing Law
The Transaction Agreement is governed by the laws of Finland.
17
4. TERMS AND CONDITIONS OF THE TENDER OFFER
The following sets forth the terms and conditions of the Tender Offer. Capitalized terms appearing in these terms and
conditions of the Tender Offer which are not defined in this Chapter 4 have the meanings ascribed to such terms in the
preceding sections of this Tender Offer Document.
4.1 Object of the Tender Offer
Through the Tender Offer, the Offeror offers to acquire all of the issued and outstanding Shares and Option Rights in
the Company that are not held by the Company or any of its subsidiaries on the terms and subject to the conditions set
forth below.
Nokia has guaranteed as for its own debt the performance of all of the Offeror’s obligations in relation to the Tender
Offer, including the payment of any offer consideration.
According to the terms and conditions of the Company's 2014 Option Rights, should anyone make a public tender offer
for all the Shares, Option Rights and other special rights entitling to Shares issued by the Company, a holder of the 2014
Option Rights may assign all the 2014 Option Rights held by him or her to the Offeror, although the transfer right
defined in the terms and conditions of the 2014 Option Rights had not yet begun. According to the terms and conditions
of the Company's 2015 Option Rights, the 2015 Option Rights are transferable when the relevant share subscription
period of the 2015 Option Rights has begun. On the date of this Tender Offer Document the share subscription period
with respect to the 2015 Option Rights has not yet begun. The Board of Directors of the Company may, however,
permit the transfer of the 2015 Option Rights also before the beginning of the share subscription period. Under the
Transaction Agreement, the Board of Directors of the Company has undertaken to grant a permission to the holder of
the 2015 Option Rights to transfer his 2015 Option Rights by accepting the Tender Offer and tendering the 2015 Option
Rights into the Tender Offer in accordance with the terms and conditions thereof.
4.2 Offer Price
The Share Offer Price for each Share validly tendered in accordance with the terms and conditions of the Tender Offer
is EUR 3.04 in cash. However, should the Company resolve on any Distribution after the signing date of the
Transaction Agreement, and should the record date of any such Distribution fall before any or all of the settlements of
the completion trades (whether after the expiry of the Offer Period or any Subsequent Offer Periods (as defined below))
under the Tender Offer, the Share Offer Price shall be reduced by an amount equal to any and each such Distribution
per Share, whereby the offer price so reduced shall constitute the Share Offer Price as defined under these terms and
conditions of the Tender Offer.
The Option Right Offer Price for each Option Right validly tendered in accordance with the terms and conditions of the
Tender Offer is: EUR 2.56 in cash for each 2014A Option Right, EUR 2.16 in cash for each 2014B Option Right, EUR
1.53 in cash for each 2014C Option Right, EUR 2.15 in cash for each 2015A Option Right and EUR 2.15 in cash for
each 2015B Option Right. Any Distribution by the Company shall not affect the Option Right Offer Price.
4.3 Offer Period
The Offer Period under the Tender Offer commences on 27 February 2017 at 9:30 a.m. (Finnish time) and expires on 29
March 2017 at 4:00 p.m. (Finnish time), unless the Offer Period is extended as set forth below.
The Offer Period may be extended by the Offeror (i) from time to time until the Closing Conditions (as defined below)
have been fulfilled or waived and (ii) with a Subsequent Offer Period (as defined below) in connection with the
announcement of the final result of the Tender Offer whereby the Offeror also declares the Tender Offer unconditional,
all as set forth below.
The Offeror will give notice of a possible extension of the Offer Period through a stock exchange release at the latest on
30 March 2017. The Offeror will give notice of a possible extension of an already extended Offer Period at the latest on
the first Finnish banking day following the expiry of the extended Offer Period.
If the Offeror extends the Offer Period, the Offer Period will expire on the date and at the time to which the Offeror
extends the Offer Period unless the extended Offer Period is discontinued as set forth below. The maximum duration of
the Offer Period (including any extended Offer Period) is ten (10) weeks. However, if the Closing Conditions (as
defined below) have not been fulfilled due to a particular obstacle such as, for example, pending approval by a
competition authority, the Offeror may extend the Offer Period beyond ten (10) weeks until such obstacle has been
removed and the Offeror has had a reasonable time to respond to the situation. The date of the expiry of the extended
Offer Period will in such case be published at least two (2) weeks before such expiry. Further, any Subsequent Offer
Period (as defined below) may extend beyond ten (10) weeks.
The Offeror may discontinue any extended Offer Period should all the Closing Conditions (as defined below) be
fulfilled or waived by the Offeror before the expiry of the extended Offer Period and execute the sale and purchase of
the Shares and Option Rights validly tendered in accordance with its terms and not properly withdrawn in accordance
18
with sections 4.9 and 4.10 below. Should the Offeror discontinue the extended Offer Period, the Offeror will announce
its decision thereon through a stock exchange release as soon as possible after such decision has been made and in any
case at least two (2) weeks before the expiry of the extended Offer Period to be discontinued. If the Offeror discontinues
the extended Offer Period, the extended Offer Period will expire on such earlier date and at the time indicated in such
announcement made by the Offeror.
The Offeror also reserves the right to extend the Offer Period in connection with the announcement of the final result of
the Tender Offer as set forth in section 4.8 (such extended Offer Period shall be referred to as the “Subsequent Offer
Period”). In the event of such Subsequent Offer Period, the Subsequent Offer Period will expire on the date and at the
time determined by the Offeror in the final result announcement. The expiration of a Subsequent Offer Period will be
announced at least two (2) weeks before the expiration of such Subsequent Offer Period.
4.4 Conditions to Completion of the Tender Offer
The obligation of the Offeror to accept for payment the tendered Shares and Option Rights and to complete the Tender
Offer shall be subject to the fulfillment or, to the extent permitted by applicable law, waiver by the Offeror of the
following conditions (jointly the "Closing Conditions") on or prior to the date of the Offeror’s announcement of the
final result of the Tender Offer:
1) the valid tender of Shares representing, together with any other Shares otherwise acquired by the Offeror or
Nokia prior to the final result announcement, more than ninety percent (90%) of the issued and outstanding
Shares and voting rights of the Company on a fully diluted basis (i.e. taking into consideration the effect of the
conversion of any and all Option Rights into shares in the Company) and calculated in accordance with
Chapter 18 Section 1 of the FCA;
2) the receipt of all necessary regulatory approvals, permits and consents, including without limitation
competition clearances (if any), and that any conditions set in such permits, consents or clearances, including,
but not limited to, any requirements for the disposal of any assets of the Offeror, Nokia or the Company or any
reorganization of the business of the Offeror, Nokia or the Company, are acceptable to the Offeror in that they
are not materially adverse to the Offeror, Nokia or the Company in view of the Tender Offer or the benefits of
the transaction contemplated thereby;
3) no Material Adverse Change (as defined below) having occurred after the Signing Date;
4) the Offeror or Nokia not, after the Signing Date, having received information previously undisclosed to them
that constitutes a Material Adverse Change (as defined below), that occurred prior to the Signing Date;
5) no information made public by the Company or disclosed by the Company to Nokia or the Offeror being
materially inaccurate, incomplete, or misleading, and the Company not having failed to make public any
information that should have been made public by it under applicable laws, including the rules of Nasdaq
Helsinki, provided that, in each case, the information made public, disclosed or not disclosed or the failure to
disclose information constitutes a Material Adverse Change (as defined below);
6) no court or regulatory authority of competent jurisdiction having given an order or issued any regulatory action
preventing, or materially challenging the completion of, the Tender Offer;
7) the Board of Directors of the Company having issued its recommendation for the Tender Offer and the
recommendation remaining in force and not being modified or changed in a manner detrimental to the Offeror
or Nokia;
8) the Transaction Agreement not having been terminated and remaining in force; and
9) the undertaking by each of the Major Shareholders to accept the Tender Offer remaining in force in accordance
with its terms.
“Material Adverse Change” means (a) any divestment or reorganization of all or any material part of the assets of the
Company and its affiliated entities, taken as whole, or (b) any event, condition, circumstance, development, occurrence,
change, effect or fact (each a “Effect”) that individually or in the aggregate, has, results in or would reasonably be
expected to have or result in a material adverse effect on the business, assets, financial condition or results of operations
of the Company and its affiliated entities, taken as a whole, excluding:
1) any Effect in political, financial, industry, economic or regulatory conditions generally, so long as such Effect
does not have a disproportionate effect on the Company relative to other industry participants;
2) any Effect resulting from or caused by natural disasters, outbreak of major hostilities or any act of war or
terrorism so long as such Effect does not have a disproportionate effect on the Company relative to other
industry participants;
19
3) any Effect resulting from any actions taken by the Company at the express request or direction of the Offeror
or Nokia; or
4) any Effect attributable to (i) an act or omission carried out or omitted by the Offeror or Nokia in connection
with the Tender Offer or (ii) the Tender Offer (for the sake of clarity, including but not limited to Effects
arising out of the announcement of, entry into, pendency of, anticipated completion of actions required or
contemplated by or performance of obligations under, the Transaction Agreement and the transactions
contemplated thereby or the identity of the parties to the Transaction Agreement).
Under no circumstances shall any Material Adverse Change be deemed to exist to the extent the Effect causing the
alleged Material Adverse Change has been publicly disclosed in any of the Company's stock exchange releases
(including any publicly disclosed annual or interim reports) published during the three (3) years preceding the date of
signing the Transaction Agreement or has been fairly disclosed in the due diligence information provided by the
Company to Nokia or the Offeror prior to the date of signing the Transaction Agreement.
The Offeror reserves the right to withdraw the Tender Offer in the event that any of the above Closing Conditions is not
fulfilled.
The Offeror can only invoke any of the Closing Conditions so as to cause the Tender Offer not to proceed, to lapse or to
be withdrawn if the circumstances which give rise to the right to invoke the relevant Closing Condition have a
significant meaning to the Offeror or Nokia in view of the Tender Offer, as referred to in the Regulations and
Guidelines 9/2013 (as may be amended or re-enacted from time to time) issued by the Finnish Financial Supervisory
Authority and the Helsinki Takeover Code.
The Closing Conditions set out herein are the exhaustive conditions for the completion of the Tender Offer.
The Offeror reserves the right to waive, to the extent permitted by applicable law, any of the Conditions to Completion
that have not been satisfied.
4.5 Obligation to increase the Tender Offer or to pay compensation
The Offeror reserves the right to acquire Shares and/or Option Rights also in public trading on Nasdaq Helsinki or
otherwise during and after the Offer Period (including any extension thereof) and any Subsequent Offer Period or
otherwise outside the Tender Offer.
If the Offeror or any party referred to in Chapter 11, Section 5 of the SMA acquires, before the expiry of the Offer
Period, Shares and/or Option Rights at a higher price than the Share Offer Price and/or the Option Right Offer Price or
otherwise on terms that are more favourable than those of the Tender Offer, the Offeror must according to Chapter 11,
Section 25 of the SMA amend the terms and conditions of the Tender Offer to correspond to this acquisition on more
favourable terms (obligation to increase the offer). The Offeror shall then, without delay, make public the triggering of
the obligation to increase the offer and pay, in connection with the completion of the Tender Offer, and in addition to
the Share Offer Price and/or the Option Right Offer Price, the difference between the more favourable acquisition terms
and the consideration offered in the Tender Offer to the holders of securities who have accepted the Tender Offer.
If the Offeror or any party referred to in Chapter 11, Section 5 of the SMA acquires, during the nine (9) months
following the expiry of the Offer Period, Shares and/or Option Rights at a higher price than the Share Offer Price and/or
the Option Right Offer Price or otherwise on terms that are more favorable than those of the Tender Offer, the Offeror
must according to Chapter 11, Section 25 of the SMA compensate those holders of securities who have accepted the
Tender Offer for the amount equal to the difference between the more favorable acquisition terms and the consideration
offered in the Tender Offer (obligation to compensate). The Offeror shall then, without delay, make public the
triggering of the obligation to compensate and pay the difference between the more favorable acquisition terms and the
consideration offered in the Tender Offer within one month after the triggering of the obligation to compensate to the
holders of securities who have accepted the Tender Offer.
According to Chapter 11, Section 25, Subsection 5 of the SMA, the obligation to compensate shall, however, not be
triggered in case the payment of a higher price than the Share Offer Price (or the Option Right Offer Price) is based on
an arbitral award pursuant to the FCA, provided that the Offeror or any party referred to in Chapter 11, Section 5 of the
SMA has not offered to acquire Shares (or Option Rights) on terms that are more favorable than those of the Tender
Offer before or during the arbitral proceedings.
4.6 Acceptance Procedure of the Tender Offer
Shares
The Tender Offer must be accepted separately for each book-entry account. A shareholder of the Company giving the
acceptance must have a cash account in a financial institution operating in Finland or abroad. A shareholder may only
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accept the Tender Offer unconditionally and for every Share on the book-entry account mentioned in the acceptance
form on the date and time of the execution of the sale and purchase of the Shares. Acceptance given during the Offer
Period is effective also until the end of any extended Offer Period.
Most of the Finnish book-entry account operators will send a notification of the Tender Offer, including instructions
and the relevant acceptance form to their customers who are registered as shareholders in the shareholders’ register of
the Company maintained by Euroclear Finland Ltd. (“Euroclear”). Shareholders who do not receive such notification
from their account operator or asset manager can contact any branch office of Nordea Bank AB (publ), Finnish Branch
(“Nordea Bank”) where such shareholders shall receive necessary information and can give their acceptance.
A shareholder in the Company whose shareholdings are registered in the name of a nominee and who wishes to accept
the Tender Offer shall effect such acceptance in accordance with the nominee’s instructions. The Offeror will not send
acceptance forms or other documents related to the Tender Offer to such shareholders in the Company.
Pledged Shares may only be tendered with the consent of the relevant pledgee. The obtaining of such consent shall be
the responsibility of the relevant shareholder in the Company. The consent by the pledgee shall be delivered in writing
to the account operator.
A shareholder in the Company who is registered as a shareholder in the shareholders’ register of the Company and who
wishes to accept the Tender Offer shall submit a properly completed and duly executed acceptance form to the account
operator managing the shareholder’s book-entry account in accordance with its instructions and within the time limit set
by the account operator or, in the case such account operator does not accept acceptance forms (e.g. Euroclear), such
shareholder shall contact any branch office of Nordea Bank to give his/her acceptance to tender the Shares. The
acceptance form shall be submitted so that it is received during the Offer Period or, if the Offer Period has been
extended, during such extended Offer Period, however, always in accordance with the instructions of the relevant
account operator. In the event of a Subsequent Offer Period, the acceptance form shall be submitted so that it is received
during the Subsequent Offer Period, however, always in accordance with the instructions of the relevant account
operator.
The method of delivery of acceptance forms is at the shareholder’s option and risk, and the delivery will be deemed
made only when actually received by the relevant account operator or Nordea Bank. The Offeror reserves the right to
reject any acceptance given in an incorrect or incomplete manner. The Offeror may also reject any partial tender of the
Shares per book-entry account.
By accepting the Tender Offer, the shareholder of the Company authorizes Nordea Bank or a party authorized by
Nordea Bank or the account operator managing the shareholder’s book-entry account to enter a transfer restriction or a
sales reservation on the shareholder’s book-entry account after the shareholder has delivered its acceptance of the
Tender Offer. In addition, the shareholder who has accepted the Tender Offer authorizes Nordea Bank or a party
authorized by Nordea Bank or the account operator managing the shareholder’s book-entry account to perform the
necessary entries and to take all other actions required to technically execute the Tender Offer and to sell all the Shares
held at such book-entry account at the time of the execution of trades under the Tender Offer to the Offeror in
accordance with the terms and conditions of the Tender Offer.
A shareholder that has validly accepted the Tender Offer and that has not properly withdrawn its acceptance in
accordance with the terms and conditions of the Tender Offer may not sell or otherwise dispose of its tendered Shares.
A transfer restriction in respect of the Shares will be registered in the relevant book-entry account after a shareholder
has submitted the acceptance for the Tender Offer. If the Tender Offer is not completed or if the tender is properly
withdrawn by the shareholder in accordance with the terms and conditions of the Tender Offer, the transfer restriction
registered on the tendered Shares in the relevant book-entry account will be removed as soon as possible and within
approximately three (3) Finnish banking days following the announcement that the Tender Offer will not be completed
or the receipt of a notice of withdrawal in accordance with the terms and conditions of the Tender Offer.
Option Rights
2014A Option Rights and 2014B Option Rights registered in the Finnish book-entry securities system
Pursuant to the terms and conditions of the 2014 Option Rights, the share subscription period has with respect to the
Option Rights belonging to the series 2014A begun on 1 February 2016, and to the series 2014B begun on 1 February
2017, and these Option Rights have been registered in the Finnish book-entry system. The acceptance procedure
described here only applies to the 2014A Option Rights and the 2014B Option Rights.
The Tender Offer must be accepted separately for each book-entry account. A holder of Option Rights of the Company
giving the acceptance must have a cash account in a financial institution operating in Finland or abroad. A holder of
Option Rights may only accept the Tender Offer unconditionally and for every Option Right on the book-entry account
mentioned in the acceptance form on the date and time of the execution of the sale and purchase of the Option Rights.
Acceptance given during the Offer Period is effective also until the end of any extended Offer Period.
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Most of the Finnish book-entry account operators will send a notification of the Tender Offer, including instructions
and the relevant acceptance form to their customers who are holders of Option Rights. Holders of Option Rights who do
not receive such notification from their account operator or asset manager can contact any branch office of Nordea
Bank where such holders of Option Rights shall receive necessary information and can give their acceptance.
A holder of Option Rights whose holdings are registered in the name of a nominee and who wishes to accept the Tender
Offer shall effect such acceptance in accordance with the nominee’s instructions. The Offeror will not send acceptance
forms or other documents related to the Tender Offer to such holders of Option Rights in the Company.
Pledged Option Rights may only be tendered with the consent of the relevant pledgee. The obtaining of such consent
shall be the responsibility of the relevant holder of Option Rights. The consent by the pledgee shall be delivered in
writing to the account operator.
A holder of Option Rights who wishes to accept the Tender Offer shall submit a properly completed and duly executed
acceptance form to the account operator managing the holder’s book-entry account in accordance with its instructions
and within the time limit set by the account operator or, in the case such account operator does not accept acceptance
forms (e.g. Euroclear), such holder of Option Rights can contact any branch office of Nordea Bank to give his/her
acceptance to tender the Option Rights. The acceptance form shall be submitted so that it is received during the Offer
Period or, if the Offer Period has been extended, during such extended Offer Period, however, always in accordance
with the instructions of the relevant account operator. In the event of a Subsequent Offer Period, the acceptance form
shall be submitted so that it is received during the Subsequent Offer Period, however, always in accordance with the
instructions of the relevant account operator.
The method of delivery of acceptance forms is at the option and risk of the holder of Option Rights, and the delivery
will be deemed made only when actually received by the relevant account operator or Nordea Bank. The Offeror
reserves the right to reject any acceptance given in an incorrect or incomplete manner. The Offeror may also reject any
partial tender of the Option Rights per book-entry account.
By accepting the Tender Offer, the holder of Option Rights authorizes Nordea Bank or a party authorized by Nordea
Bank or the account operator managing the holder’s book-entry account to enter a transfer restriction or a sales
reservation after the holder of Option Rights has delivered its acceptance of the Tender Offer. In addition, the holder of
Option Rights who has accepted the Tender Offer authorizes Nordea Bank or a party authorized by Nordea Bank or the
account operator managing the holder’s book-entry account to perform the necessary entries and to take all other actions
required to technically execute the Tender Offer and to sell all the Option Rights held at such book-entry account at the
time of the execution of trades under the Tender Offer to the Offeror in accordance with the terms and conditions of the
Tender Offer.
A holder of Option Rights that has validly accepted the Tender Offer and that has not properly withdrawn its acceptance
in accordance with the terms and conditions of the Tender Offer may not sell or otherwise dispose of its tendered
Option Rights. A transfer restriction in respect of the Option Rights will be registered in the relevant book-entry account
after a holder of Option Rights has submitted the acceptance for the Tender Offer. If the Tender Offer is not completed
or if the tender is properly withdrawn by the holder of Option Rights in accordance with the terms and conditions of the
Tender Offer, the transfer restriction registered on the tendered Option Rights in the relevant book-entry account will be
removed as soon as possible and within approximately three (3) Finnish banking days following the announcement that
the Tender Offer will not be completed or the receipt of a notice of withdrawal in accordance with the terms and
conditions of the Tender Offer.
2014C Option Rights, 2015A Option Rights and 2015B Option Rights not registered in the Finnish book-entry
securities system
Pursuant to the terms and conditions of the Option Rights, the share subscription period has not begun with respect to
the Option Rights belonging to the series 2014C, 2015A and 2015B and these Option Rights have not been registered in
the Finnish book-entry system. The acceptance procedures described herein apply only to the series 2014C, 2015A and
2015B Option Rights.
A holder of Option Rights of the Company not registered in the Finnish book-entry securities system may only accept
the Tender Offer for all Option Rights held by him/her on the date of the execution of the sale and purchase of the
Option Rights. A holder of Option Rights must have a cash account in a financial institution operating in Finland or
abroad.
Nordea Bank will send a notification of the Tender Offer, including instructions and the relevant acceptance form, to all
holders of Option Rights who are registered at the beginning of the Offer Period to the registry of holders of Option
Rights held by the Company. The notification and instructions are sent to the address stated in such registry. If the
holder of Option Rights does not receive such notification and acceptance form from Nordea Bank, or if the instructions
and acceptance form cannot be sent because the address of the holder of Option Rights is unknown, the holder of
Option Rights can contact the Company which shall instruct the holder of Option Rights on giving his/her acceptance.
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Pledged Option Rights may only be tendered with the consent of the relevant pledgee. The obtaining of such consent
shall be the responsibility of the relevant holder of Option Rights. The consent by the pledgee shall be delivered in
writing together with the acceptance form.
A holder of Option Rights who wishes to accept the Tender Offer shall submit a properly completed and duly executed
acceptance form in accordance with the instructions and within the time limit set by Nordea Bank.
The acceptance form shall be submitted so that it is received during the Offer Period or, if the Offer Period has been
extended, during such extended Offer Period, however, always in accordance with the instructions of Nordea Bank. In
the event of a Subsequent Offer Period, the acceptance form shall be submitted so that it is received during the
Subsequent Offer Period, however, always in accordance with the instructions of Nordea Bank. Nordea Bank may set a
separate time limit for delivering the acceptance form that ends already before the expiry of the Offer Period, the
extended Offer Period or the Subsequent Offer Period.
The method of delivery of acceptance forms is at the option and risk of the holder of Option Rights, and the delivery
will be deemed made only when actually received by Nordea Bank. The Offeror reserves the right to reject any
acceptance given in an incorrect or incomplete manner. The Offeror may also reject any partial tender of the Option
Rights held by a holder of Option Rights.
A holder of Option Rights that has validly accepted the Tender Offer may not sell or otherwise dispose of its tendered
Option Rights. By accepting the Tender Offer, the holder of Option Rights authorizes Nordea Bank to sell his/her
Option Rights to the Offeror in accordance with the terms and conditions of the Tender Offer.
4.7 Withdrawal Rights
In accordance with the Chapter 11, Section 16, Subsection 1 of the SMA, the acceptances for the Shares and the Option
Rights validly tendered in accordance with the terms and conditions of the Tender Offer may be withdrawn at any time
during the Offer Period or, if the Offer Period has been extended, during such extended Offer Period, until the Offeror
has announced that all the Conditions to Completion have been fulfilled by the Offeror or the Offeror has waived the
right to invoke them, thereby declaring the Tender Offer unconditional. After such announcement, the acceptances for
the Shares and the Option Rights already tendered may no longer be withdrawn except in the event that a third party
announces a competing public tender offer for the Shares and the Option Rights before the execution of the sale and
purchase of the Shares and the Option Rights in accordance with sections 4.9 and 4.10 below. The holders of the Shares
and/or the Option Rights validly tendered may also withdraw their acceptance during the Offer Period if the Offer
Period has lasted over ten (10) weeks and the Tender Offer has not been completed.
The proper withdrawal of the acceptance for the Shares and/or the Option Rights validly tendered requires that a written
notice of withdrawal is submitted to the same account operator to whom the acceptance form with respect to such
Shares and/or Option Rights was submitted. In case the acceptance form with respect to Shares and/or Option Rights
was submitted to Nordea Bank, the notice of withdrawal must be submitted to Nordea Bank. In case of holdings that are
registered in the name of a nominee, the holders of Shares or Option Rights shall instruct the nominee to submit the
notice of withdrawal.
If a holder of Shares or Option Rights registered in the Finnish book-entry securities system withdraws his/her
acceptance of the Tender Offer in accordance with the terms and conditions of the Tender Offer, the transfer restriction
registered on the tendered Shares and Option Rights in the relevant book-entry account will be removed as soon as
possible and within approximately three (3) Finnish banking days following the receipt of a notice of withdrawal in
accordance with the terms and conditions of the Tender Offer. As for the Option Rights not registered in the book-entry
securities system, Nordea Bank will send a proof of the withdrawal to the relevant holder of Option Rights to the
address registered to the registry of holders of Option Rights held by the Company in case of a possible withdrawal of
the acceptance of the Tender Offer in accordance with the terms and conditions of the Tender Offer.
Shares and/or Option Rights for which an acceptance is withdrawn may be re-tendered by following the acceptance
procedures described in section 4.6 above at any time prior to the expiry of the Offer Period or, if the Offer Period has
been extended, prior to the expiry of such extended Offer Period or during the Subsequent Offer Period, if any.
The account operator managing the relevant book-entry account or the nominee may charge a fee for withdrawals in
accordance with its price list.
In the event of a Subsequent Offer Period, the acceptance of the Tender Offer shall be binding and cannot be
withdrawn, unless otherwise provided under mandatory law.
4.8 Announcement of the Result of the Tender Offer
The Offeror will announce the preliminary result of the Tender Offer on or about the first (1st) Finnish banking day
following the expiry of the Offer Period or, if applicable, the extended or discontinued Offer Period, and will announce
the final result on or about the third (3rd) Finnish banking day following the expiry of the Offer Period or, if applicable,
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the extended or discontinued Offer Period. The announcement of the final result will confirm (i) the percentage of the
Shares and the Option Rights that have been validly tendered and not properly withdrawn and (ii) whether the Tender
Offer will be completed.
In the event of a Subsequent Offer Period, the Offeror will announce the initial percentage of the Shares and the Option
Rights validly tendered during the Subsequent Offer Period on or about the first (1st) Finnish banking day following the
expiry of the Subsequent Offer Period and the final percentage on or about the third (3rd) Finnish banking day following
the expiry of the Subsequent Offer Period.
4.9 Terms of Payment and Settlement of Shares
The sale and purchase of the Shares validly tendered and not properly withdrawn in accordance with the terms and
conditions of the Tender Offer will be executed on or about the fourth (4th) Finnish banking day following the expiry of
the Offer Period, or if the Offer Period has been extended or discontinued, the expiry of the extended or discontinued
Offer Period. The sale and purchase of the Shares will take place on Nasdaq Helsinki if permitted by the rules
applicable to securities trading on Nasdaq Helsinki. Otherwise, the sale and purchase of the Shares will take place
outside of Nasdaq Helsinki.
Settlement will be effected on or about the second (2nd) Finnish banking day following the above completion of trades
(the “Settlement Date”). The payment of the Share Offer Price will be made on the Settlement Date into the bank
account connected to the shareholder’s book-entry account or, in the case of shareholders whose holdings are registered
in the name of a nominee, into the bank account specified by the custodian or nominee. In any case, the Share Offer
Price will not be paid to a bank account situated in United States, Canada, Japan, Australia, South Africa or Hong Kong
or any other jurisdiction where the Tender Offer is not to be made (see section “Important information”), and all
guidance from custodians or nominees specifying bank accounts in such jurisdictions will be rejected. Actual time of
receipt for the payment by the shareholder will depend on the schedules of money transactions between financial
institutions and agreements between the holder and account operator, custodian or nominee in each case.
In the event of a Subsequent Offer Period, the Offeror shall in connection with the announcement thereof announce the
terms of payment and settlement for the Shares tendered during the Subsequent Offer Period. The completion trades of
the Shares validly tendered in accordance with the terms and conditions of the Tender Offer during the Subsequent
Offer Period shall, however, be executed at least within two (2) week intervals.
The Offeror reserves the right to postpone the payment of the Share Offer Price if payment is prevented or suspended
due to a force majeure event, but shall immediately effect such payment once the force majeure event preventing or
suspending payment is resolved.
4.10 Terms of Payment and Settlement of Option Rights
2014A Option Rights and 2014B Option Rights registered in the Finnish book-entry securities system
The sale and purchase of Option Rights registered in the Finnish book-entry securities system that are validly tendered
and not properly withdrawn in accordance with the terms and conditions of the Tender Offer will be executed on the
same date as the sale and purchase of the Shares, i.e. on or about the fourth (4th) Finnish banking day following the
expiry of the Offer Period, or, if applicable, the extended or discontinued Offer Period. The sale and purchase of the
2014A Option Rights and the 2014B Option Rights will take place on Nasdaq Helsinki if permitted by the rules
applicable to securities trading on Nasdaq Helsinki. Otherwise, the sale and purchase of the 2014A Option Rights and
the 2014B Option Rights will take place outside of Nasdaq Helsinki.
Settlement will be effected no later than on the Settlement Date, when the payment of the applicable Option Right Offer
Price will be made into the bank account attached to the book-entry account of the holder of the Option Rights or, in
case of nominee-registered Option Rights, into the bank account specified by the custodian or nominee. In any case, the
Option Right Offer Price will not be paid to a bank account situated in United States, Canada, Japan, Australia, South
Africa or Hong Kong or any other jurisdiction where the Tender Offer is not to be made (see section “Important
information”), and all guidance from custodians or nominees specifying bank accounts in such jurisdictions will be
rejected. Actual time of receipt for the payment by the holder of the Option Rights will depend on the schedules of
money transactions between financial institutions and agreements between the holder and account operator, custodian or
nominee in each case.
In the event of a Subsequent Offer Period, the Offeror shall in connection with the announcement thereof announce the
terms of payment and settlement for the Option Rights tendered during the Subsequent Offer Period. The sale and
purchase of the Option Rights validly tendered in accordance with the terms and conditions of the Tender Offer during
the Subsequent Offer Period shall, however, be executed at least within two (2) week intervals.
The Offeror reserves the right to postpone the payment of the applicable Option Right Offer Price if payment is
prevented or suspended due to a force majeure event, but shall immediately effect such payment once the force majeure
event preventing or suspending payment is resolved.
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2014C Option Rights, 2015A Option Rights and 2015B Option Rights not registered in the Finnish book-entry
securities system
The payment of the applicable Option Right Offer Price will be made no later than on the Settlement Date into the bank
account of the holder of the Option Rights specified in the acceptance form. In any case, the Option Right Offer Price
will not be paid to a bank account situated in United States, Canada, Japan, Australia, South Africa or Hong Kong or
any other jurisdiction where the Tender Offer is not to be made (see section “Important information”), and all guidance
from custodians or nominees specifying bank accounts in such jurisdictions will be rejected. Actual time of receipt for
the payment by the holder of the Option Rights will depend on the schedules of money transactions between financial
institutions.
In the event of a Subsequent Offer Period, the Offeror shall in connection with the announcement thereof announce the
terms of payment and settlement for the Option Rights tendered during the Subsequent Offer Period. The sale and
purchase of the Option Rights validly tendered in accordance with the terms and conditions of the Tender Offer during
the Subsequent Offer Period shall, however, be executed at least within two (2) week intervals.
The Offeror reserves the right to postpone the payment of the applicable Option Right Offer Price if payment is
prevented or suspended due to a force majeure event, but shall immediately effect such payment once the force majeure
event preventing or suspending payment is resolved.
4.11 Transfer of Ownership
Title to the Shares validly tendered in the Tender Offer will pass to the Offeror against the payment of the Share Offer
Price by the Offeror to the tendering shareholder.
Title to the Option Rights validly tendered in the Tender Offer will pass to the Offeror against the payment of the
applicable Option Right Offer Price by the Offeror to the tendering holder of Option Rights.
4.12 Transfer Tax and Other Payments
The Offeror will pay the transfer taxes, if any, relating to the sale and purchase of the Shares and Option Rights in
connection with the completion of the Tender Offer. The Offeror will not, however, be responsible for payment of such
transfer tax, where the tax liability is based on the Finnish Tax Administration’s position on taxation of employment
based options stated in its guidance (record no. A243/200/2016). According to the guidance, such transfer tax liability
with respect to employment based option arrangements arises at the moment when a subscription right is granted, but
the amount of payable transfer tax can only be determined upon exercising the right (e.g., in connection with the Tender
Offer when the Option Rights are disposed).
Fees charged by account operators, asset managers, nominees or any other person for registering the release of any
pledges or other possible restrictions preventing a sale of the relevant Shares or Option Rights, as well as fees relating to
a withdrawal of the tender by a shareholder or a holder of Option Rights in accordance with section 4.7 above, will be
borne by each shareholder and holder of Option Rights. The Offeror shall be responsible for other customary fees
relating to book-entry registrations required for the purposes of the Tender Offer, the sale and purchase of the Shares
and Option Rights tendered under the Tender Offer or the payment of the Share Offer Price and the Option Right Offer
Price, respectively.
4.13 Other Issues
The Offeror reserves the right to amend the terms and conditions of the Tender Offer in accordance with Chapter 11,
Section 15, Subsection 2 of the SMA, subject to the provisions of the Transaction Agreement.
Subject to the provisions of the Transaction Agreement, the Offeror reserves the right to extend the Offer Period and to
amend the terms and conditions of the Tender Offer (including a potential withdrawal of the Tender Offer) in
accordance with Chapter 11, Section 17 of the SMA if, during the Offer Period or any extended Offer Period, a third
party announces a competing public tender offer for the Shares and Option Rights.
The Offeror shall have sole discretion to determine all other issues relating to the Tender Offer, subject to the
requirements of applicable law as well as the provisions of the Transaction Agreement.
The Tender Offer is not being made directly or indirectly in any jurisdiction where either the making of or participating
in such tender offer would be prohibited by applicable law or would require registration or further documents or
measures in addition to those required under the Finnish law. As such, this Tender Offer Document and related
acceptance forms are not and may not be distributed, forwarded or transmitted in or into any jurisdiction where such
distribution, forwarding or transmission would be prohibited by applicable law or would require registration or further
documents or measures in addition to those required under the Finnish law by any means whatsoever including, without
limitation, mail, facsimile transmission, e-mail, telephone, Internet or other forms of communications. In particular, the
Tender Offer is not being made, directly or indirectly, in or into, and this Tender Offer Document must under no
circumstances be distributed into, or accepted by any such means within, or by persons located or resident in, or persons
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(including agents, fiduciaries or other intermediaries) acting for the account or benefit of persons located or resident in,
the United States, Canada, Japan, Australia, South Africa or Hong Kong. Any purported acceptance of the Tender Offer
resulting directly or indirectly from a violation of these restrictions will be invalid.
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5. PRESENTATION OF COMPTEL
All financial and other information presented in this Tender Offer Document concerning the Company are exclusively
based on the unaudited financial statements bulleting published by the Company for the financial year ended 31
December 2016, the audited financial statements published by the Company for the financial year ended 31 December
2015, stock exchange releases published by the Company, entries in the Finnish Trade Register, the shareholders’
register of the Company dated 21 February 2017 and other information publicly available. Consequently, the Offeror
does not accept any responsibility for such information, except for the accurate restatement of such information herein.
5.1 Overview
The Company is a public limited company incorporated under the laws of Finland, and its Shares are listed on the
official list of Nasdaq Helsinki with trading code CTL1V. In addition, the Company's Option Rights 2014A have been
listed on the official list of Nasdaq Helsinki with the trading code CTL1VEW114 and Option Rights 2014B with a
trading code CTL1VEW214.The business identity code of the Company is 0621455-2. The registered office of the
Company is in Helsinki, Finland and its registered address is Salmisaarenaukio 1, FI-00180 Helsinki, Finland. The
Company’s head office is located in Helsinki.
Comptel was established in 1986 and it has approximately 837 employees in 32 countries. Comptel has completed over
1,400 customer projects in more than 90 countries. It processes 20 percent of world´s mobile usage data every day,
orchestrates communications and digital services for more than two billion end-users daily and its largest customer has
around 300 million subscribers. Comptel Group’s net sales for the financial year ended 31 December 2016 were EUR
100.0 million. The Group’s operating profit for the same period was EUR 11.0 million, which corresponded to 11.0
percent of the net sales. The Company’s major sites are located in Finland, Bulgaria, Malaysia, India, the United
Kingdom and Norway.
According to the Articles of Association of the Company, the scope of the Company’s business activities is to offer
products and services related to information technology, develop information systems, buy, sell and maintain
information processing devices, provide training and consultancy in the field and engage in other comparable activities.
The Company may own and control shares, units and other securities and real estate.
5.2 Share Capital and Ownership Structure
As at the date of this Tender Offer Document, the registered share capital of the Company is EUR 2,141,096.20
consisting of 109,271,496 Shares.
The Company has a single share series and each Share entitles its holder to one (1) vote at the General Meetings of
Shareholders. The Shares carry equal rights to dividends.
The ten largest shareholders in the Company and their holdings on 21 February 2017 are presented in the table below.
Shareholder Shares in total
% of shares and
voting rights
Mandatum Life Insurance Company Limited 20,532,625 18.79
Elisa Corporation 14,304,000 13.09
Kaleva Mutual Insurance Company 8,724,980 7.98
Nordea Bank AB (publ), Finnish Branch 7,525,603 6.89
Skandinaviska Enskilda Banken AB (publ) Helsinki Branch 5,320,547 4.87
Varma Mutual Pension Insurance Company 5,144,825 4.71
The State Pension Fund 2,600,000 2.38
Ilmarinen Mutual Pension Insurance Company 2,236,368 2.05
Sijoitusrahasto Taaleritehdas Mikro Markka 2,192,890 2.01
Etola Erkki Olavi 1,500,000 1.37
Ten largest in total 70,081,838 64.14
The Articles of Association of the Company do not include any provisions or restrictions on voting rights that deviate
from the provisions of the FCA.
5.3 Authorization to Issue Shares, Options and Other Special Rights entitling to Shares in Comptel
The Annual General Meeting of Shareholders of the Company resolved on 6 April 2016 to authorize the Board of
Directors of Comptel to decide on the issuance of shares, options and other special rights entitling to shares, so that the
total number of new shares, including the shares issued pursuant to the special rights, may be 21,400,000 at the
maximum. The number of treasury shares held by the Company that can be assigned and/or obtained on the basis of
special rights may not exceed 10,700,000. Based on the authorization new shares may be issued and existing treasury
27
shares held by the Company may be transferred to shareholders pro rata to their holdings or in a directed share issue in
deviation from the shareholders’ pre-emptive subscription rights in case the deviation is justified by a weighty financial
reason for the Company, such as development of the capital structure of the Company, financing or implementing
acquisitions or other arrangements or implementing share-based incentive programs to the Company’s personnel. The
authorization also entitles to decide on a share issue free of charge to the Company itself. The number of shares to be
issued to the Company shall not exceed 10,700,000, including the number of own shares acquired by the Company by
virtue of the authorization to repurchase the Company's own shares. The Board of Directors shall decide on other terms
and conditions related to the authorizations. The authorizations shall be valid until 30 June 2017, apart from the
authorization concerning the implementation of the Company's share-based incentive programs, which shall be valid for
five years after the decision by the Annual General Meeting. The authorization revoked the corresponding authorization
decided in the Annual General Meeting of 9 April 2015.
The Board of Directors of the Company has proposed to the Annual General Meeting of Shareholders of the Company
to be held on 4 April 2017 that the Annual General Meeting would authorize the Board of Directors of the Company to
decide on the issuance of new shares and/or disposal of treasury shares either against or without consideration.
Furthermore, the Board of Directors of Comptel has proposed to the Annual General Meeting of Shareholders of the
Company that the Annual General Meeting would authorize the Board of Directors to issue options and other special
rights entitling to shares referred to in Chapter 10, Section 1 of the FCA, that would entitle to subscribe for new shares
or treasury shares in the Company against consideration, either by paying the subscription price in cash or by setting off
the subscriber's receivable against the subscription price. The total number of new shares, including the shares issued
pursuant to the special rights, would be 21,400,000 at the maximum. The number of treasury shares held by the
Company that can be assigned and/or obtained on the basis of special rights would not exceed 10,700,000. Based on the
proposed authorization new shares could be issued and existing treasury shares held by the Company could be
transferred to shareholders pro rata to their holdings or in a directed share issue in deviation from the shareholders’ pre-
emptive subscription rights in case the deviation is justified by a weighty financial reason for the Company, such as
development of the capital structure of the Company, financing or implementing acquisitions or other arrangements or
implementing share-based incentive programs to the Company’s personnel. The authorization would also entitle the
Board of Directors to decide on a share issue free of charge to the Company itself. The number of shares that could be
issued to the Company would not exceed 10,700,000, including the number of own shares acquired by the Company by
virtue of the authorization to repurchase the Company's own shares. The subscription price of the new shares and the
consideration paid for the Company’s own shares would be recorded in the invested non-restricted equity fund. The
Board of Directors has proposed that it would decide on other terms and conditions related to the authorizations. The
authorizations would be valid until 30 June 2018, apart from the authorization concerning the implementation of the
Company's share-based incentive programs, which would be valid for five years after the decision by the Annual
General Meeting. The authorization would revoke the corresponding authorization decided in the Annual General
Meeting of 6 April 2016.
5.4 Option Rights
Comptel currently has two share option plans, the 2014 share option plan and the 2015 share option plan. The 2014
share option plan is divided into tranches 2014A, 2014B and 2014C and the 2015 share option plan is divided into
tranches 2015A and 2015B. The 2014A and 2014B Option Rights are publicly traded on the Nasdaq Helsinki stock
exchange.
At its meeting held on 4 February 2014, the Board of Directors of Comptel decided, by virtue of the authorization
granted by the Company's Annual General Meeting held on 20 March 2013, to grant the 2014 Option Rights to persons
who have a contractual relationship including fixed work performance with the Company and its subsidiaries and
companies belonging to the Comptel Group. Under the terms and conditions of the 2014 Option Rights, a maximum of
4,200,000 2014 Option Rights were granted. Of the total granted Option Rights, 2,200,000 are marked with the symbol
2014A, 1,000,000 are marked with the symbol 2014B and 1,000,000 are marked with the symbol 2014C.
Each 2014 Option Right entitles its holder to subscribe for one (1) new Comptel share, thus entitling the holders of the
Option Rights to receive a maximum total of 4,200,000 new shares of the Company. The share subscription prices
related to each Option Right, in accordance with the terms and conditions of the 2014 Option Rights, are EUR 0.48 for
each 2014A Option Right, and EUR 0.88 for each 2014B Option Right and EUR 1.51 for each 2014C Option Right.
At its meeting held on 9 September 2015, the Board of Directors of Comptel decided, by virtue of the authorization
granted by the Company's Annual General Meeting held on 9 April 2015, to grant the 2015 Option Rights to the
Company's President & CEO. Under the terms and conditions of the 2015 Option Rights, a maximum of 3,478,260
2015 Option Rights were granted. Of the total granted Option Rights, 1,739,130 are marked with the symbol 2015A and
1,739,130 are marked with the symbol 2015B. The subscription price of the 2015 Option Rights was EUR 0.23 per
Option Right.
Each 2015 Option Right entitles its holder to subscribe for one (1) new Comptel share, thus entitling the President &
CEO of the Company to receive a maximum total of 3,478,260 new shares of the Company. The share subscription
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prices related to each Option Right, in accordance with the terms and conditions of the 2015 Option Rights, are EUR
0.89 for each 2015A Option Right and EUR 0.89 for each 2015B Option Right.
The granted 2014 Option Rights and 2015 Option Rights entitle their holders to subscribe for a maximum total of
7,678,260 new or existing shares of the Company. According to the stock exchange releases published by Comptel, of
the 2014 Option Rights in total 576,087 had been used for share subscriptions by the date of this Tender Offer
Document. As at the date of this Tender Offer Document, Comptel has not disclosed that any 2014B Option Rights
would have been used to subscribe for shares.
A summary of the Comptel Option Rights is presented in the following table:
2014 Option Rights
Number of allocated
Option Rights
Number of shares that may be
subscribed for per Option Right Share subscription period
2014A 2,200,000 1 1 Feb 2016 – 31 Jan 2018
2014B 1,000,000 1 1 Feb 2017 – 31 Jan 2019
2014C 1,000,000 1 1 Feb 2018 – 31 Jan 2020
2014 Option Rights
total 4,200,000
2015 Option Rights
Number of allocated
Option Rights
Number of shares that may be
subscribed for per Option Right Share subscription period
2015A 1,739,130 1 15 Aug 2018 – 15 Sep 2019
2015B 1,739,130 1 15 Aug 2019 – 15 Sep 2019
2015 Option Rights
total 3,478,260
In addition to the Option Rights described above, there are no other securities entitling their holders to receive shares in
the Company.
5.5 Treasury Shares
According to the Offeror's knowledge, the Company held a total of 117,129 Treasury Shares at the date of this Tender
Offer Document.
The Annual General Meeting of the Company held on 6 April 2016, authorized the Board of Directors to decide on
repurchase of the Company's own Shares up to a maximum number of 10,700,000 shares. The Company's own Shares
may be repurchased otherwise than in proportion to the holdings of the shareholders using the non-restricted equity at
the market price of the Shares in public trading through Nasdaq Helsinki at the time of the acquisition. The Shares shall
be repurchased for strengthening or developing the Company's capital structure, to be used in financing or
implementing acquisitions or other arrangements, to implement the Company's share-based incentive programs or to be
conveyed by other means or to be canceled. Under the authorization the Board of Directors shall decide on other terms
and conditions related to the repurchase of the Company's own Shares. The authorization to repurchase the Company's
own Shares shall be valid until 30 June 2017, and it revokes the corresponding authorization decided in the Annual
General Meeting of 9 April 2015.
The Board of Directors of the Company has proposed to the Annual General Meeting of Shareholders of the Company
to be held on 4 April 2017 that the Annual General Meeting would authorize the Board of Directors of the Company to
decide on repurchase of the Company's own Shares up to a maximum number of 10,700,000 shares. The Company's
own Shares could be repurchased otherwise than in proportion to the holdings of the shareholders using the non-
restricted equity at the market price of the Shares in public trading through Nasdaq Helsinki at the time of the
acquisition. The Shares could only be repurchased for strengthening or developing the Company's capital structure, to
be used in financing or implementing acquisitions or other arrangements, to implement the Company's share-based
incentive programs or to be conveyed by other means or to be canceled. Under the authorization the Board of Directors
would decide on other terms and conditions related to the repurchase of the Company's own Shares. The authorization
to repurchase the Company's own Shares would be valid until 30 June 2018, and it would revoke the corresponding
authorization decided in the Annual General Meeting of 6 April 2016.
5.6 Shareholders’ Agreements
The Offeror is not aware of any shareholders’ agreements or other agreements relating to the use of voting rights in the
Company.
5.7 Board of Directors, President and CEO, and Auditors
In accordance with the provisions of the FCA and the Articles of Association of the Company (see Annex E), the
supervision and administration of the Company are divided between the shareholders represented at the General
29
Meeting of Shareholders, the Board of Directors and the President and CEO.
Under the Articles of Association of the Company, the Board of Directors of the Company shall consist of at least three
(3) and not more than six (6) members. As at the date of this Tender Offer Document, the Board of Directors of the
Company consists of the following persons: Mr. Pertti Ervi (Chairman), Mr. Hannu Vaajoensuu (Vice Chairman), Ms.
Eriikka Söderström, Mr. Antti Vasara and Mr. Thomas Berlemann.
The President and CEO of the Company as at the date of this Tender Offer Document is Mr. Juhani Hintikka.
The auditor of the Company is the auditing firm Ernst & Young Oy (the responsible auditor being Mr. Mikko
Järventausta, APA).
Shareholders representing approximately 39.86 percent of the Shares and votes in the Company have notified the
Company that they will propose to the Annual General Meeting to be held on 4 April 2017 that the current Board
members Mr. Pertti Ervi, Mr. Hannu Vaajoensuu, Ms. Eriikka Söderström, Mr. Antti Vasara and Mr. Thomas
Berlemann be re-elected as members of the Board of Directors.
The Board of Directors of the Company has proposed, based on the recommendation of the Board’s Audit Committee,
to the Annual General Meeting to be held on 4 April 2017 that the Annual General Meeting would re-elect Ernst &
Young Oy, Authorized Public Accountants organization, as the Auditor of the Company.
5.8 Financial Information
The audited consolidated financial statements of the Company for the financial year ended 31 December 2015 are
included in this Tender Offer Document (see Annex B) in the form published by the Company. The aforementioned
financial statements have been presented to and adopted by the Annual General Meeting of the Company held on 6
April 2016.
This Tender Offer Document includes the Company's unaudited financial statements bulletin for the financial year
ended on 31 December 2016 (see Annex C) in the form published by the Company.
The Board of Directors of the Company has proposed to the Annual General Meeting of the Company to be held on 4
April 2017 that no dividend be paid from the financial year ended on 31 December 2016.
The Board of Directors of the Company has proposed to the Annual General Meeting of the Company to be held on 4
April 2017 that the Annual General Meeting would authorize the Board of Directors to decide on a dividend payment of
up to a maximum of EUR 0.04 per share in one tranche for the financial period ended on 31 December 2016 conditional
upon the Transaction Agreement having been terminated for any reason other than consummation of the Tender Offer,
meaning that the authorization can be used only provided that Tender Offer is not completed.
The authorization to decide on payment of dividend would be valid until 31 December 2017. Based on this
authorization, the Board of Directors would be entitled to decide on the dividend record date, dividend payment date
and other matters required by the matter. When deciding on the possible payment of dividend, the Board of Directors
shall assess the Company's liquidity and financial position as required by the FCA.
5.9 Future Prospects Published by the Company
The future prospects of the Company have been described in the audited financial statements of the Company for the
financial year ended 31 December 2015 and the unaudited financial statements bulletin published by the Company for
the financial year ended 31 December 2016 (see Annexes B and C). The stock exchange release published by the
Company on 9 February 2017 describes the guidance of the Board of Directors of Comptel for the year 2017 and the
Company's financial goals for the strategic period 2017-2019 (see Annex D).
5.10 Articles of Association
The Articles of Association of the Company are included in this Tender Offer Document (see Annex E).
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6. PRESENTATION OF THE OFFEROR
6.1 Offeror and Nokia in Brief
The Offeror is a limited liability company incorporated in accordance with the laws of Finland. Its business identity
code is 2058430-6. The registered domicile of the Offeror is Helsinki and its address is Karaportti 3, FI-02610 Espoo,
Finland. The Offeror is a wholly-owned indirect subsidiary of Nokia and a wholly-owned direct subsidiary of Nokia
Solutions and Networks B.V. Nokia Solutions and Networks B.V. is a wholly-owned direct subsidiary of Nokia Finance
International B.V., and Nokia Finance International B.V. is a wholly-owned direct subsidiary of Nokia.
The Offeror's main business is part of Nokia's networks business area, in which the company offers a wide selection of
various products ranging from hardware components for network operators to software solutions and, among others,
services that support and optimize network operations and participates in the research and development of these
products. The Offeror engages in the telecommunications industry and other sectors in the electronics industry,
including the production and marketing of computer systems and devices, as well as other industrial and business
activities. The company may own and control shares, units, other securities and real estate, and engage in related
activities. The company may also engage in securities trading and other investment activities. The company may
borrow money and pledge security.
Nokia is a public limited company incorporated in accordance with the laws of Finland. Its shares are listed on the
official lists of Nasdaq Helsinki and Euronext Paris (with the trading code NOKIA) and its American depositary shares
(ADS) are listed on the New York Stock Exchange (with the trading code NOK). The company's registered business
identity code is 0112038-9. The registered domicile of the company is Helsinki and its address is Karaportti 3, FI-02610
Espoo, Finland. The company is headquartered in Espoo.
The Nokia Group's turnover was EUR 23,614 million in the financial year ended on 31 December 2016. The Group's
operating loss for the same period was EUR 1,100 million, corresponding to 4.7 percent of turnover. The Nokia Group
employs around 101,000 people and has customers in more than 100 countries. In 2016, Nokia had sales in
approximately 130 countries. Nokia also has significant research and development activities, spending EUR 4.9 billion
on R&D in 2016.
Under its current Articles of Association, Nokia's corporate purpose is to research, develop, manufacture, market, sell
and deliver products, software and services in a wide range of consumer and business-to-business markets. These
products, software and services relate to, among others, network infrastructure for telecommunication operators and
other enterprises, the IoT, human health and well-being, multimedia, big data and analytics, mobile devices and
consumer wearables and other electronics. The company may also create, acquire and license intellectual property and
software as well as engage in other industrial and commercial operations, including securities trading and other
investment activities. The company may carry on its business operations directly, through subsidiary companies,
affiliate companies and joint ventures.
Nokia is one of the global leaders in technology and services for a connected world, offering providers of
telecommunications services, authorities, major corporations and consumers the most comprehensive selection of
products, services and licensing opportunities in the sector. Nokia is a global company with continuing operations in
Europe, the Middle East, Africa, Asia-Pacific, Greater China, North America and Latin America. Furthermore, Nokia
has research and development facilities in Europe, North America and Asia.
Nokia's largest business, the Networks business, is divided into four business groups: Mobile Networks, Fixed
Networks, IP/Optical Networks and Applications & Analytics. The Networks business is also supported by Nokia's
research organization, Nokia Bell Labs research and innovation arm. Nokia's Networks business is one of the leading
vendors in the mobile infrastructure markets. It offers a broad range of products and services for the software and
networking and IP infrastructure markets as well as related services markets. The core target group for products and
services are telecommunications operators, but the importance of the public sector and major corporations, among
others, is growing. In addition, Nokia has a fifth business group, Nokia Technologies, which focuses on developing and
licensing advanced technologies. Besides its bold product development activities, Nokia Technologies possesses a
comprehensive portfolio of over 26,000 patent families.
The Applications & Analytics business group is Nokia's dedicated software business. Nokia has long standing positions
in its primary markets: Nokia's BSS solutions support hundreds of millions of subscribers and manage over 1.5 billion
devices each day; Nokia is one of the leaders in LTE network management; Nokia has thousands of OSS deployments
with differentiated capabilities in service assurance, automation, analytics and Cloud; and Nokia's Session Border
Controller, a SDP that secures network borders and connects an exploding number of devices, stands out for its
virtualization capabilities. These markets are being reshaped by four trends: the transition to the Cloud, the growth of
the IoT, the increased need for security and privacy and the impact of augmented intelligence and machine learning.
These trends impact the way networks will operate, how new services and business models will be monetized, how
customer expectations will evolve and the speed at which CSPs and TXLEs will need to innovate.
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The Nokia's Applications & Analytics business group is driving an aggressive innovation agenda that includes an
Emerging Business unit that is developing software for IoT, security, Cloud, SON, and analytics. These advances are
helping Nokia's customers:
modernize BSS systems to rapidly launch and monetize new IoT and Cloud services;
improve customer experiences with rich analytics and machine learning;
operate larger networks and more services with fewer staff through virtualization and automation;
predict issues before they happen with augmented intelligence;
scale IoT services with a platform that handles data collection, event processing, device management, data
contextualization, data analytics, and end-to-end security;
increase the success of digital transformations with improved processes, collaboration and profitability; and
secure services and data with confidence.
Growing this business into a standalone software business at scale is a key tenent of Nokia's strategy.
The acquisition of Alcatel Lucent in January 2016 strengthened Nokia's already significant position in the field of next
generation technology. With the acquisition, Nokia became one of the market leaders in North America and the leading
supplier headquartered outside the country in China. In addition, Nokia is currently preparing a joint venture that will
combine its telecommunications infrastructure businesses in China with Alcatel Lucent Shanghai Bell, a joint venture of
Alcatel Lucent and the Chinese company China Huaxin Post & Telecommunication Economy Development Center.
The new joint venture is expected to generate added value to both Nokia and its Chinese partner in the joint venture.
Moreover, with the Alcatel Lucent acquisition, Nokia also strengthened its position in Europe, Latin America, the
Middle East and Africa. Nokia's target following the acquisition of Alcatel Lucent is to achieve approximately EUR 1.2
billion in total annual cost savings in full year 2018.
6.2 Persons related to the Offeror as stipulated in Chapter 11, Section 5 of the SMA
The Nokia Group of companies consists of Nokia Corporation and numerous direct or indirect subsidiaries, with the
Offeror being one of these subsidiaries. Neither the Offeror, Nokia, Nokia Solutions and Networks B.V., Nokia Finance
International B.V. nor any other company belonging to the Nokia group, and thus no party referred to in Chapter 11,
Section 5 of the SMA, holds as at the date of this Tender Offer Document any Shares or Option Rights in the Company
or has during the 6-month period preceding the Announcement acquired any Shares or Option Rights in the Company in
public trading or otherwise.
6.3 Company’s Ownership in the Offeror
To the best knowledge of the Offeror, the Company does not as at the date of this Tender Offer Document hold any
shares or securities entitling to shares in the Offeror, Nokia or in the entities referred to in Chapter 11, Section 5 of the
SMA.
32
TABLE OF CONTENTS FOR ANNEXES
Page
ANNEX A: STATEMENT OF COMPTEL’S BOARD OF DIRECTORS A1
The Statement by the Board of Directors of Comptel on the Tender Offer in the form published by the
Company on 21 February 2017. The Offeror does not accept any responsibility for such information except
for the accurate restatement of such information herein.
ANNEX B: FINANCIAL STATEMENTS OF THE COMPANY B1
The financial statements of the Company for the financial year ended 31 December 2015 have been
included in this Annex B in the form published by the Company. The Offeror does not accept any
responsibility for such information except for the accurate restatement of such information herein.
ANNEX C: FINANCIAL STATEMENTS BULLETING PUBLISHED BY THE COMPANY C1
The financial statements bulletin of the Company for the financial year ended 31 December 2016 has been
included in this Annex C in the form published by the Company. The Offeror does not accept any
responsibility for such information except for the accurate restatement of such information herein.
ANNEX D: STOCK EXCHANGE RELEASE PUBLISHED BY THE COMPANY ON 9 FEBRUARY 2017 D1
The stock exchange release published by the Company on 9 February 2017 has been included in this Annex
D in the form published by the Company. The Offeror does not accept any responsibility for such
information except for the accurate restatement of such information herein.
ANNEX E: ARTICLES OF ASSOCIATION OF THE COMPANY E1
The English language translation of the Articles of Association of the Company has been included in this
Annex E in the form registered in the Finnish Trade Register on the date of this Tender Offer Document.
The Offeror does not accept any responsibility for such information except for the accurate restatement of
such information herein.
Statement of the Board of Directors of Comptel Corporation regarding
the voluntary public tender offer by Nokia
Comptel Corporation, Stock Exchange Release, February 21, 2017 at 3 PM EET
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR
HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE
PROHIBITED BY APPLICABLE LAW.
Statement of the Board of Directors of Comptel Corporation regarding the voluntary public tender offer by
Nokia
Nokia Corporation (“Nokia”) and Comptel Corporation (“Comptel” of the “Company”) have announced on
February 9, 2017 that Nokia through its wholly owned indirect subsidiary Nokia Solutions and Networks Oy (the
“Offeror”), makes a voluntary public cash tender offer to purchase all of the issued and outstanding shares and
option rights in Comptel that are not owned by Comptel or any of its subsidiaries (the “Tender Offer”).
The Board of Directors of Comptel has on February 21, 2017 decided to issue the below statement regarding the
Tender Offer as required by the Finnish Securities Markets Act (746/2012, as amended).
TENDER OFFER IN BRIEF
Nokia and Comptel have on February 8, 2017 entered into a transaction agreement (the “Transaction
Agreement”) setting out, among others, the terms and conditions pursuant to which the Tender Offer shall be
made by Nokia through the Offeror.
The Tender Offer will be made in accordance with the terms and conditions of the tender offer document expected
to be published by the Offeror on or about February 24, 2017 (the “TenderOffer Document”).
The offer price is EUR 3.04 in cash for each share in Comptel. The share offer price represents a premium of:
28.8 percent compared to the closing price of the shares on Nasdaq Helsinki Ltd. (“Nasdaq Helsinki”) on
February 8, 2017, the last trading day before the announcement of the Tender Offer; and 51.2 percent compared to
the volume-weighted average trading price of the Comptel shares on Nasdaq Helsinki during the 12-month period
preceding the date of the announcement of the Tender Offer. The price offered for each option right granted under
Annex A
Comptel’s share option schemes 2014 and 2015 and validly tendered in the Tender Offer will be EUR 2.56 in cash
for each 2014A option right, EUR 2.16 in cash for each 2014B option right, EUR 1.53 in cash for each 2014C
option right, EUR 2.15 in cash for each 2015A option right and EUR 2.15 in cash for each 2015B option right.
Any distribution of dividend or other assets by Comptel after the date of the Transaction Agreement shall reduce
the Share Offer Price by an amount equal to such dividend or distribution per share. Such distribution shall not
affect the offer price for the Comptel option rights.
The offer period under the Tender Offer is expected to commence on or about February 27, 2017 and to run for
approximately four (4) weeks. The Offeror reserves the right to extend the offer period from time to time in
accordance with the terms and conditions of the Tender Offer.
Pursuant to the Transaction Agreement, the Offeror is to acquire all issued and outstanding shares and all issued
and outstanding option rights in Comptel.
The Tender Offer will be financed through Nokia group’s internal financing arrangements and no third party
financing is required by the Offeror to complete the Tender Offer. The Tender Offer is thus not conditional upon
obtaining any financing for the Tender Offer.
The following major shareholders of Comptel have irrevocably undertaken to accept the Tender Offer subject to
certain customary conditions: Mandatum Life Insurance Company Limited, Elisa Corporation, Kaleva Mutual
Insurance Company, Varma Mutual Pension Insurance Company and Ilmarinen Mutual Pension Insurance
Company as well as the members of the Comptel Board of Directors and the President and CEO of Comptel
(personally and through an entity in his control), representing jointly approximately 48.3 percent of the shares and
votes in Comptel.
The Tender Offer is subject to, among others, approvals by the relevant regulatory authorities, such as competition
authorities, and the Offeror gaining control of more than 90 percent of the outstanding Comptel shares on a fully
diluted basis.
STATEMENT OF THE BOARD OF DIRECTORS
1. Background for the statement
Pursuant to the Finnish Securities Market Act, the Board of Directors of Comptel shall prepare a public statement
regarding the Tender Offer.
The statement shall include a well-founded assessment of the Tender Offer from the perspective of Comptel and
its shareholders as well as of the strategic plans and their likely effects on the operations and employment of
Comptel presented by the Offeror in the Tender Offer Document.
For the purposes of issuing this statement, the Offeror has submitted to the Board of Directors of Comptel the draft
version of the Finnish language Tender Offer Document in the form in which the Offeror has filed it with the
Finnish Financial Supervisory Authority for approval on February 16, 2017.
In preparing its statement, the Board of Directors of Comptel has relied on information provided in the Offeror’s
announcement regarding the Tender Offer published on February 9, 2017 and the draft Tender Offer Document by
the Offeror and has not independently verified this information. Accordingly, the Board of Directors’ assessments
of the consequences of the Tender Offer on Comptel’s business and employees should be treated with caution.
2. Assessment regarding strategic plans presented by the Offeror and their likely effects on the operations
and employment of Comptel
Information given by the Offeror in the Tender Offer Document
The Board of Directors of Comptel has assessed the Offeror’s strategic plans based on the statements in Offeror’s
announcement regarding the Tender Offer published on February 9, 2017 and the draft Tender Offer Document.
Based on information provided by Nokia, it is the intention of Nokia and the Offeror that Comptel will continue to
operate as a separate unit, but its businesses might be eventually harmonized with and/or integrated into the
standalone software business operated by Applications & Analytics business group of Nokia group based upon an
integration plan to be developed by the management of Nokia. Further, Nokia has presented that certain employees
and members of senior management of Comptel will play an important role in Nokia’s organization following the
completion of the Tender Offer. Nokia has set forth that in order to encourage these key employees of Comptel to
remain in the Company, the Offeror intends to offer them certain retention arrangements following the completion
of the Tender Offer. The Offeror, however, intends, based on information provided by Nokia, to change the
composition of the Board of Directors of Comptel after the completion of the Tender Offer.
According to Nokia, the planned acquisition is part of Nokia’s strategy to build a standalone software business at
scale by expanding and strengthening its software portfolio and go-to-market capabilities with additional sales
capacity and a strategic partner network. Comptel would bolster Nokia’s software portfolio by adding critical
solutions for catalogue-driven service orchestration and fulfillment, intelligent data processing, customer
engagement, and agile service monetization. The combination of Nokia’s Service Assurance portfolio and
Comptel’s Service Orchestration portfolio would enable a dynamic closed loop between service assurance and
fulfillment that simplifies management of complex heterogeneous networks. When combined with Nokia’s
Cloudband(TM) and Nuage(TM) portfolios, Nokia would be able to provide customers with complete, end-to-end
orchestration of complex Network Function Virtualization (NFV) and Software Defined Networking (SDN)
deployments.
In November 2016, Nokia announced its long-term strategy, Rebalancing for Growth. As part of the strategy,
Nokia is strengthening its software capabilities in key areas: portfolio, services and go-to-market. The planned
acquisition of Comptel would bolster go-to-market efforts with a software-dedicated sales force and strong partner
network. It would also support Nokia’s desire to build a portfolio that allows customers to automate as much of
their network and business operations as possible – including customer services, self-optimization, management
and orchestration. Comptel would help with this objective by bringing catalogue-driven fulfilment and digital
service lifecycle management, complex event processing, applications for customer engagement and service
monetization; and emerging technologies for context-aware on-device commerce and IoT pattern detection.
The Tender Offer is not expected to have a material effect on the operations and business locations of, or on the
number of jobs at Comptel.
Board assessment
The Board of Directors of Comptel believes that Nokia’s global reach, strength of brand, and cross-selling
opportunities will benefit the activities of Comptel. Comptel will also gain entry to new markets in which Nokia
already has a strong presence, especially the United States. The greater size and financial strength of Nokia could
also enhance Comptel’s position with respect to its existing and potential customers. Combining Comptel’s
business with Nokia’s will offer the customers of both Comptel and Nokia a wider and more innovative software
portfolio which could improve the competitiveness of the combined business unit especially in the eyes of larger
customers. The Board of Directors of Comptel believes that the combination will also deepen the network know-
how of the combined entity.
The Board of Directors of Comptel believes that the combination creates an agile player in the OSS market and
forms a foundation for profitable growth and innovation. Combining Comptel’s business with a large and
recognized player such as Nokia, Comptel’s long-time partner, will also reduce risks related to Comptel’s current
business, which result from the consolidation between the market players in Comptel’s sector and potential
failures in the development or launch of new product areas, among others. In addition to these benefits to Comptel
and its customers, the combination of Comptel’s business with Nokia will also create opportunities for personal
and professional development for the employees of Comptel.
The Board of Directors of Comptel considers that the information on the Offeror’s strategic plans concerning
Comptel included in the announcement regarding the Tender Offer published on February 9, 2017 and in the draft
Tender Offer Document is of a general nature. However, based on information presented to Comptel and its Board
of Directors, the Board of Directors of Comptel evaluates that the completion of the Tender Offer is not expected
to have any material effect on Comptel’s operations and business locations or on the number of jobs at Comptel.
On the date of this statement the Board of Directors of Comptel has not received any formal statement as to the
effects of the Tender Offer to the employments at Comptel from Comptel's employees.
3. Assessment of the Board of Directors from the perspective of Comptel and its shareholders and holders of
option rights
Introduction
In evaluating the Tender Offer, analyzing alternative opportunities available to Comptel and concluding on its
statement, the Board of Directors has considered several factors, such as Comptel’s recent financial performance,
current position and future prospects, and the historical trading price of Comptel’s share.
The Board of Directors’ assessment of continuing the business operations of Comptel as an independent company
has been based on reasonable future-oriented estimates which include uncertainties, whereas the offer
consideration and the premium included therein is not subject to any uncertainty other than the fulfillment of the
conditions to completion of the Tender Offer.
In order to support its assessment of the Tender Offer, the Board of Directors of Comptel has received a fairness
opinion regarding the Tender Offer (the “Fairness Opinion”) from Comptel’s financial advisor, Sisu Partners.
The Fairness Opinion, subject to the assumptions and qualifications set out therein and dated February 8, 2017,
states that the offer consideration, from a financial point of view, is believed to be fair. The Fairness Opinion is
attached as Appendix 1 to this statement.
Board assessment
The Board of Directors of Comptel believes that the consideration offered by the Offeror to the shareholders and
holders of option rights is fair to such holders based on an assessment of the issues and factors, which the Board of
Directors has concluded to be material in evaluating the Tender Offer. These include, amongst other factors:
the premium being offered;
historical trading price of Comptel’s share taking into account the fact that, in the opinion of the Board of
Directors of Comptel, Comptel’s future value creation potential has been reflected in the current trading price to a
large extent;
the information and assumptions on the business operations and finances of Comptel at the date of this statement
and their expected future development including
o the consolidation trend between the market players in Comptel’s sector and the risks for smaller players to be left
out of delivery contracts;
o Comptel’s new product areas, analytics and automation of customer’s delivery processes, will require significant
investments in the future to remain competitive;
o development or launch of new product areas involves uncertainties;
the valuation multiples of Comptel shares compared to the industry multiples before the announcement of the
Tender Offer;
valuations and analysis made and commissioned by the Board of Directors as well as discussions with external
financial advisors;
the support by significant shareholders in Comptel for the Tender Offer; and
the Fairness Opinion issued by Sisu Partners.
The Board of Directors has concluded that the relevant business prospects of Comptel provide opportunities for
Comptel to develop its business as an independent company for the benefit of Comptel and its shareholders and
holders of option rights. However, taking into consideration the risks and uncertainties associated with such stand-
alone approach as well as the terms and conditions of the draft Tender Offer Document, the Board of Directors has
concluded that the Tender Offer is a more favorable alternative for the shareholders and holders of option rights.
Comptel has in the Transaction Agreement agreed to a standard non-solicitation clause whereby Comptel has
undertaken not to solicit competing proposals or, subject to the fiduciary duties of the Board of Directors of
Comptel, promote the progress of such proposals. Having carefully assessed the terms and conditions of the
Tender Offer, the Board of Directors of Comptel has concluded that entering into the Transaction Agreement,
including said non-solicitation clause, is in the interest of Comptel’s shareholders and holders of option rights.
4. Recommendation of the Board of Directors
The Board of Directors of Comptel has carefully assessed the Tender Offer and its terms and conditions based on
the draft Tender Offer Document, the Fairness Opinion, and other available information.
Based on the foregoing, the Board of Directors of Comptel deems that the Tender Offer and the amount of the
offer consideration offered for the shares and option rights are under the prevailing circumstances fair to Comptel
shareholders and holders of option rights.
Given the above-presented viewpoints, the Board of Directors of Comptel unanimously recommends that the
shareholders of Comptel and holders of option rights accept the Tender Offer.
This statement is based on an assessment of the issues and factors which the Board of Directors has concluded to
be material in evaluating the Tender Offer, including, but not limited to, the information and assumptions on the
business operations and finances of Comptel at the date of this statement and their expected future development.
All members of the Board of Directors have participated in the decision making concerning the statement. The
evaluation of independence of the members of the Board of Directors is available on the website of Comptel.
5. Other Issues
The Board of Directors of Comptel notes that combining the operations of Comptel with Nokia’s operations will,
in addition to synergy benefits, pose challenges to both parties, and the combination may, as is common in such
processes, involve unforeseeable risks.
The Board of Directors of Comptel notes that the shareholders and holders of option rights of Comptel should also
take into account the risks related to non-acceptance of the Tender Offer. If the Offeror waives the acceptance
condition of 90 per cent of the shares and votes, the completion of the Tender Offer would reduce the number of
Comptel shareholders and the number of shares, which would otherwise be publicly traded. Depending on the
number of shares validly tendered in the Tender Offer, this could have an adverse effect on the liquidity and value
of the shares.
Pursuant to Chapter 18 of the Finnish Companies Act (624/2006, as amended), a shareholder with more than 90
per cent of all shares and votes in a company shall have the right to acquire, and subject to a demand by the other
shareholders also be obligated to redeem, the shares owned by the other shareholders. The shares held by
Comptel’s shareholders who have not accepted the Tender Offer may be redeemed through compulsory
redemption proceedings under the Finnish Companies Act under the conditions set out therein.
Comptel has undertaken to comply with the Helsinki Takeover Code referred to in Chapter 11 Section 28 of the
Finnish Securities Markets Act.
This statement of the Board of Directors of Comptel does not constitute investment or tax advice, and the Board of
Directors of Comptel does not specifically evaluate herein the general price development or the risks relating to
the shares in general. Shareholders and holders of option rights must independently decide whether to accept the
Tender Offer, and they should take into account all relevant information available to them, including information
presented in the Tender Offer Document and this statement as well as any other factors affecting the value of the
shares.
Comptel is being advised by Sisu Partners as financial advisor and Castrén & Snellman Attorneys Ltd. as legal
advisor.
THE BOARD OF DIRECTORS OF COMPTEL
Further information:
Comptel
Tom Jansson
Chief Financial Officer
tel. +358 40 700 1849
APPENDIX: Sisu Partners’ Fairness Opinion
ABOUT COMPTEL
Life is digital moments. Comptel perfects these by transforming how you serve, meet and respond to the needs of
“Generation Cloud” customers.
Our solutions allow you to innovate rich communications services instantly, master the orchestration of service
and order flows, capture data-in-motion and refine your decision-making. We apply intelligence to reduce friction
in your business.
Comptel has enabled the delivery of digital and communications services to more than 2 billion people. Every day,
we care for more than 20% of all mobile usage data. Nearly 300 service providers across 90 countries have trusted
us to perfect customers’ digital moments.
For more information, visit www.comptel.com.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR
HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE
PROHIBITED BY APPLICABLE LAW.
Forward-Looking Statements
This stock exchange release contains statements that, to the extent they are not historical facts, constitute "forward
looking statements''. Forward looking statements include statements concerning our plans, expectations,
projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital
expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and
weaknesses, plans or goals relating to financial position, future operations and development, our business strategy
and the trends we anticipate in the industries and the political and legal environment in which we operate and other
information that is not historical information. In some instances, they can be identified by the use of forward-
looking terminology, including the terms "believes", "intends", "may", "will" or "should" or, in each case, their
negative or variations on comparable terminology. By their very nature, forward looking statements involve
inherent risks, uncertainties and assumptions, both general and specific, and risks exist that the predictions,
forecasts, projections and other forward looking statements will not be achieved. Given these risks, uncertainties
and assumptions, investors are cautioned not to place undue reliance on such forward looking statements. Any
forward looking statements contained herein speak only as at the date of this stock exchange release.
THIS RELEASE MAY NOT BE RELEASED OR OTHERWISE DISTRIBUTED, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA,
SOUTH AFRICA OR HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER
WOULD BE PROHIBITED BY APPLICABLE LAW.
THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN
OFFER OR INVITATION TO MAKE A SALES OFFER. IN PARTICULAR, THIS RELEASE IS NOT AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES DESCRIBED
HEREIN, AND IS NOT AN EXTENSION OF THE TENDER OFFER, IN THE UNITED STATES, CANADA,
JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG. INVESTORS SHALL ACCEPT THE TENDER
OFFER FOR THE SHARES AND OPTION RIGHTS ONLY ON THE BASIS OF THE INFORMATION
PROVIDED IN A TENDER OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR
INDIRECTLY IN ANY JURISDICTION WHERE EITHER AN OFFER OR PARTICIPATION THEREIN IS
PROHIBITED BY APPLICABLE LAW OR WHERE ANY TENDER OFFER DOCUMENT OR
REGISTRATION OR OTHER REQUIREMENTS WOULD APPLY IN ADDITION TO THOSE
UNDERTAKEN IN FINLAND.
THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION
WHERE PROHIBITED BY APPLICABLE LAW AND, WHEN PUBLISHED, THE TENDER OFFER
DOCUMENT AND RELATED ACCEPTANCE FORMS WILL NOT AND MAY NOT BE DISTRIBUTED,
FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY
APPLICABLE LAW. IN PARTICULAR, THE TENDER OFFER IS NOT BEING MADE, DIRECTLY OR
INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL SERVICE OF, OR BY ANY MEANS OR
INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, FACSIMILE TRANSMISSION, TELEX,
TELEPHONE OR THE INTERNET) OF INTERSTATE OR FOREIGN COMMERCE OF, OR ANY
FACILITIES OF A NATIONAL SECURITIES EXCHANGE OF, THE UNITED STATES, CANADA, JAPAN,
AUSTRALIA, SOUTH AFRICA OR HONG KONG. THE TENDER OFFER CANNOT BE ACCEPTED,
DIRECTLY OR INDIRECTLY, BY ANY SUCH USE, MEANS OR INSTRUMENTALITY OR FROM
WITHIN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG.
Attachments:
Sisu Partners' Fairness Opinion.pdf
Annex
8 | Comptel Annual Report 2015
BOARD OF DIRECTORS’ REPORT 2015
Board of Directors’ Report
BOAR
D OF
DIR
ECTO
RS’ R
EPOR
T
BUSINESS OUTLOOK AND MARKETS
It is more and more evident that both the business environment and technology in telecommunications business are entering a new disruption point. New competition fromglobaltechnologygiantslikeFacebook,GoogleandAppleischallengingoper-ators in their core business and forcing them to adapt to the new business models andlookforcost-efficiencyandflexibilityintheiroperations.Weexpectthistrendtocontinue also during the next few years and to bring Comptel considerable opportunity by connecting to this new demand.
Currentlykeyoperatorinvestmentsaredrivenbythevastlyincreasingdatademandandtargetedtoincreasethenetworkbandwidth.Roll-outsof4Gandfibrenetworksare going on worldwide and operators have a strong need to harvest this capacity also with new money-generating services. The importance of customer experience andfiercecompetitionbothinsidethetelecomsindustryandagainstthedisruptorsre-quires that operators improve their business processes continuously and pay special attention to the cost structure.
Traditionally the role of Comptel’s software has been in the management of ser-vicesandassigningnetworkcapacity toendusers.Theon-goingshiftofnetworkstowards new cloud-based software technologies and the resulting tighter integration ofnetworkandbusinesslayerswillmeanthatthesignificanceandvalueoftheman-agement software will increase. This is expected to bring new and more extensive business opportunities for Comptel service orchestration and intelligent data solutions.
Insearchofnewrevenuesourcesoperatorsneedmoreflexibilityinintegrationto-wards other business domains. To open up these new channels they need to introduce more sophisticated sales, order management and charging systems. The customers in thismarketpositionrequirebothmorehighvalueservicesandnewprojectdeliveriesthat will create opportunity for business growth.
NET SALES AND PROFITABILITYComptel group’s 2015 net sales increased by 14.0 per cent (3.7) and were EUR 97.7 million (2014: 85.7; 2013: 82.7). Growth was generated by both business units for the
year. Service Orchestration grew by 20.1 per cent and Intelligent Data grew by 7.1 per cent.
OperatingprofitwasEUR8.5million(2014:8.3;2013:7.3),whichamountsto8.7percent(9.7)ofnetsales.TherelativelowerprofitabilitywasduetoinvestmentsinthedevelopmentoftheFWDsolution(2.6M),investmentsindeliverycapacityaswellasin current product portfolio.
ProfitbeforetaxeswasEUR7.6million(7.4),whichamountsto7.8percent(8.7)ofnetsales.Thecompany’snetprofitwasEUR4.5million(5.5).EarningspershareforthefinancialyearwasEUR0.04(2014:0.05;2013:0.02).
The consolidated effective tax rate in 2015 was 40.5 per cent (26.6). In the latest tax decision, the tax authorities changed the interpretation on withholding taxes for certain countries. Due to this decision a onetime adjustment for 2014 taxes was made in 2015 which had a 4.2 per cent negative impact on the effective tax rate. The new decision also increased the 2015 effective tax rate by 3.3 per cent.
ThetaxexpenseforthefinancialyearwasEUR3.1million(2.0),includingEUR1.2million of withholding taxes (1.0).
TheGroup’sorderbackloggrewby20.2percentfromthepreviousyearandwasEUR 66.3 million (2014: 55.2; 2013 : 40.8).
BUSINESS AREASBusinessareasaredefinedbygeography.Comptelhasfourbusinessareas;Europe,Asia-Pacific,MiddleEast andAfrica, and theAmericas.Theoperatingprofit of thesegments includes cost of sales and customer service. The Group R&D and general and administration costs are not allocated to the segments.
In 2015,Comptel received 29 significant orders (26):ServiceOrchestration re-ceived16orders(11fortheFlowOneFulfillmentsolution,fiveforFlowOneProvisioningandActivation)and IntelligentDatareceivedsixorders(four forDataRefinery,oneforFastermindandonefortheMonetizersolution).Sevenordersweremulti-solutionordersacrossbusinessunits.AssignificantordersComptelreportssoldprojectsandlicenses with a minimum value of EUR 0.5 million.
EuropenetsaleswereEUR40.1million(35.4).Europenetsalesgrewsignificantly
Annex B
9 | Comptel Annual Report 2015
Board of Directors’ Report
across the region, especially with large Tier 1 global groups. The Group’s operating profitforthesegmentwasEUR27.5million(19.5),representing68.6percentofnetsales(55.3).Comptelwononenewcustomerinthisregion.Someofthemostsignifi-cant customers were operators belonging to the Telefonica and Vodafone group.
ThenetsalesofAsia-PacificwereEUR29.6million(24.8).TheGroup’soperatingprofitforthesegmentwasEUR15.5million(14.5),representing52.3percentofnetsales (58.7). Comptel won three new customers in this region. Some of the most significantcustomerswereNBNCo,IBMandPTIndosat.
ThenetsalesofMiddleEastandAfricawereEUR16.8million(16.8).TheGroup’soperatingprofitforthesegmentwasEUR5.6million(7.3),representing33.3percentof net sales (43.2). Some of themost significant customers were Saudi Telecom,Ooredoo and Etisalat group companies.
AmericasnetsaleswereEUR11.2million(8.8).TheGroup’soperatingprofitwasEUR 5.6 million (4.0), representing 50.1 per cent of net sales (45.5). Some of the mostsignificantcustomerswereoperatorsbelongingtotheTelefonicaandAmericanMovilesgroupandT-MobileinUS.
Comptel’s net sales are comprised of selling project & license business, and selling recurring business. Project & License business sales grew 21.4 per cent from previous year and were EUR 63.3 million (52.1). Recurring business sales grew 2.5 per cent from the previous year and were EUR 34.4 million (33.6)
Comptel’s net sales are comprised also of Service Orchestration and Intelligent Data. Service Orchestration grew 20.1 per cent from the previous year and was EUR 55.2 million (46.0). Intelligent Data grew 7.1 per cent from the previous year and was EUR 42.5 million (39.7).
INVESTMENTSDuring 2015 gross investments in intangible and tangible assets amounted to EUR 0.6 million (0.7) and comprised of investments in devices, software and furnishing. The investmentswerefundedthroughliquidassetsandcashflowfromoperations.
RESEARCH AND DEVELOPMENT
Comptel’s direct R&D expenditure and investments were EUR 20.3 million (2014: 16.8; 2013: 17.8). This corresponds to 20.8 per cent (2014: 19.6; 2013: 21.5) of net sales.
The focus of Comptel’s R&D expenditure was in the further development of solutions in the main product areas, Service Orchestration and Intelligent Data. Development is targeted both to secure the recurring revenue with competitive products and to win newmarkets by giving customers unique valuewith new innovations. ServiceOrchestration’sFlowOneFulfillmentsolutionisdevelopedasasuiteoforchestrationelementsthatmanagetheserviceandbusinessflowsfromgroundtocloud.IntelligentData’sDataRefinerycapturesdata-in-motionandusesembeddedintelligencetorefineitforautomated,in-the-momentdecisionsandactions.Monetizeristhebusinesspoli-cy and charging tool that allows the rapid innovation and design of rich communication anddataserviceoffers.DataFastermindembedsartificialintelligence,predictionandmachine learning capabilities into all solutions.
In theseareasComptelseeksglobal thought leadership insolvingthebusinesschallenges of operators and digital communications service providers. Additionally Comptel has started to invest in new products around the digital buying experience.
During 2015, Comptel continued to develop its current offering, and twelve major software releases were launched in these respective product areas.
Thecompanyfiled4newpatentapplicationsin2015(2).DuringtheyearComptelwas granted 4 new patents (8). At the end of the year, Comptel had 41 (37) granted patents and 40 (39) pending patent applications to protect its main products and solu-tions.
TheComptel®trademark is theregistered trademarkofComptelCorporation inseveral countries.
FINANCIAL POSITIONThe balance sheet total on 31 December 2015 was EUR 86.4 million (77.6), of which liquidassetsamountedtoEUR3.0million(9.4).Operatingcashflowforthefullyear
10 | Comptel Annual Report 2015
Board of Directors’ Report
wasEUR0.6million(10.0).ForthefourthquartertheoperatingcashflowwasEUR-0.2million(3.5).Cashflowwaslowerin2015duetotheinvestmentsduringtheyear.
Trade receivables were EUR 40.5 million (27.7) at the end of the period. The trade receivables increasedsignificantlyat theendof theyearduetostrongnetsales inlater part of the year. Accrued income was EUR 10.0 million (10.9). Deferred income related to partial debiting was EUR 3.3 million (4.4).
Comptel has a EUR 25 million credit facility arrangement consisting of EUR 20 millionrevolvingcredit facilityandEUR5millionoverdraftcapacityoncurrentbankaccount. Out of this arrangement Comptel had EUR 5 million of the revolving credit facility and EUR 2.0 million of the overdraft capacity outstanding at the end of the period. The credit facility is valid until the end of July 2018.
The equity ratio was 52.4 per cent (52.4) and the gearing ratio was 11.1 per cent (-5.4).
COMPANY STRUCTUREAt the end of 2015, the Comptel group comprised of the parent company Comptel Oyj and the wholly owned subsidiaries Comptel Communications Oy, Comptel Communications AS, Comptel Communications EOOD, Comptel Communications Sdn Bhd, Comptel Communications Brasil Ltda, Comptel Communications Inc., Comptel Communications India Private Limited, Comptel Communications S.r.l., Xtract Oy and Comptel Palvelut Philippines Inc.. In addition, the Group included the wholly owned subsidiary of Comptel Communications Holdings and its wholly owned subsidiary Comptel Communications Ltd. The group also included an Irish associated company Tango Telecom Ltd (share of ownership 20.0 percent)
Comptel Group has registered representative and branch offices in Australia,Egypt, India, Russia, United Arab Emirates, The Netherlands, Sweden, Germany, Singapore,HongKong,Indonesia,NewZeelandandTurkey.
PERSONNELAt the beginning of the year Comptel had 660 employees and at the end of the year
742. The Group employed an average of 723 persons in 2015 (2014: 665; 2013: 684).At the end of the period, 29.5 per cent (30.2) of the personnel were located in
Finland,25.5percent(28.8) inMalaysia,11.3percent(7.1) inIndia,10.2percent(10.9) in Bulgaria, and 23.5 per cent (23.0) in other countries where Comptel operates.
Ofthegrouppersonnel,47.1percent(44.1)worked incustomerservices,36.5per cent (38.3) in research, product development and product management, 10.0 per cent(11.8)insalesandmarketingand6.2percent(5.8)inadministrationandinternalsupportservicesattheendofthefinancialyear.
At the end of the year the Group had 722 (650) regular workers and 20 (10)non-permanent employees. Of the employees, 712 (639) were full-time and 30 (21) part-time.
Average personnel attrition in 2015 was 17.1 (19.7). The average years of service was 5.0 (4.9). The average age of employees at the end of the year was 37 (37). At the end of the year 73 per cent (71) of the employees were men and 27 per cent (29) women.
Wages and salaries totaled EUR 38.4 million (2014: 34.6; 2013: 34.2). Salaries and compensation paid to the management are described in the note to the consolidated financialstatements.
Of the personnel, 88 per cent had a university degree, 4 per cent had a polytechnic diploma, 4 per cent a vocational college diploma and 4 percent other education.
Inthefinancialyear,theamountofsickleavefromactiveworkinghourswas1.4percent (1.5).
CORPORATE GOVERNANCETheAnnualGeneralMeeting(AGM),heldon9April2015,electedthefollowingmem-bers to theBoardofDirectors:PerttiErvi,HannuVaajoensuu,EriikkaSöderström,Antti Vasara andHeikkiMäkijärvi. In itsmeeting held after theAGM, theBoard ofDirectors elected Pertti Ervi as chairman and Hannu Vaajoensuu as vice chairman. The board did not have any committees.
Intheendofthefinancialyearguaranteesgivenonbehalfoftherelatedpartiesamounted to EUR 29 thousand. Related party transactions are described in more
11 | Comptel Annual Report 2015
Board of Directors’ Report
detailinthenote31totheconsolidatedfinancialstatements.A separate Corporate Governance Statement has been given as part of the annual
report.
AUDITORSComptel’sauditorswasErnst&YoungMikkoJärventausta,APA,astheauditorwithprincipal responsibility.
COMPTEL’S SHARE AND SHAREHOLDERS’ EQUITYComptel has one share type. Each share constitutes one (1) vote. The company’s capitalstockon31December2015wasEUR2,141,096.20andthetotalnumberofvotes was 108,395,409.
The total exchange of Comptel’s shares in 2015 was 41.2 million shares (27.8) which is 38.0 per cent (25.9) of the total number of shares. The closing price was EUR 1.83 (0.99).Comptel’smarket valueat theendof theyearwasEUR198.1million(105.8).
During the year, Comptel Corporation allotted 64,950 shares to the members of the Board of Directors as part of their annual compensation and 133,333 shares to the President and CEO as per 2012 share-based incentive scheme.
The President and CEO of Comptel Corporation have a share-based incentive plan. The aim of the plan is to combine the objectives of the shareholders and the CEO of Comptel Corporation in order to increase the value of the company and to commit the CEO to the company. The prerequisite for the participation in the plan and receipt of reward from the performance period is that the CEO owns company’s shares or acquires them up to the number predetermined by the Board of Directors, which is 230,000 shares. The ownership requirement was valid until 31 December 2015. All the shares of the plan were transferred and rewards paid.
The Board of Directors decided on the 9.9.2015, based on the authorization received from theAnnual General Meeting held on 9April 2015, to grant in total
3,478,260 options for a new incentive program to the CEO. The options give the right to subscribe for, in total, 3,478,260 company shares.
Out of the subscription rights 1,739,130 are marked with symbol 2015A and1,739,130 aremarked with symbol 2015B.According to the rules of the incentiveplan, the share subscription price is EUR 0.92, which is the volume-weighted average priceof thecompany’share inNASDAQOMXHelsinkiduring12.August2015 -8.September 2015 deducted with 20 %.
MembersoftheBoardofDirectorsandtheCEOheldat31December2015a total of 1.306 per cent of company’s outstanding shares and share options.
Thecompanyheld118,507ofitsownsharesattheendofthefinancialyear,whichis0.11percentofthetotalnumberofitsshares.Thetotalcounter-bookvalueoftheshares held by the company was EUR 2,341.
TheAnnualGeneralMeeting,heldon9April2015,approvedtheproposaloftheBoard of Directors that dividend of 0.02 EUR per share was paid.
TheAGMauthorisedtheBoardofDirectorstodecideonshareissuesamountingto a maximum of 21,400,000 new shares and/or special rights entitling to shares and on repurchase or conveying of the company’s own shares up to a maximum number of 10,700,000 shares. The authorisations are valid until 30 of June 2016. However, the authorisation to implement the company’s share-based incentive programs is valid untilfiveyearsfromtheAGMresolution.
Aseparatestockexchangereleaseabouttheresolutionsof theAnnualGeneralMeetingincludingauthorisationsgiventotheBoardofDirectorswasissuedon9April2015.
BUSINESS RISKSComptel’sbusinessrisksareregularlyestimatedaspartoftheannualoperativeplan-ning and strategy process, of the process of preparing and deciding on commercial offers and agreements and investments and other resources allocations, and of other operativeactions.Strategicrisksareconsideredthemostsignificant.StrategicrisksarefurtherdividedintomarketrisksandrisksrelatedtotheComptel’sbusinessstrat-egy.
12 | Comptel Annual Report 2015
Board of Directors’ Report
Below is a description of the most important factors outside of the Group or generated by its operation, whichmay be of significance to Comptel’s business,operating result and share price in the future.
Thedemandintheoperationsupportsystemmayvarysignificantlybyregion.Comptel develops dynamic end-to-end solutions for leading operators globally
in the telecomfield.This requires thatComptelunderstandscorrectly thechangingtrends in its business environment and the needs of its customers and resellers in eachregion.Failuretoidentifymarketconditions,addresscustomers’needsandde-velopproductsinatimelyfashionmaysignificantlyunderminethegrowthofComptel’sbusinessandprofitability.
Comptelhasinvestedsignificantlyintonewproductareas,inanalyticsandauto-mation of customers’ delivery processes. Failure in the development or launch in these productareascanhaveasignificantimpactonthecompany’sgrowthandprofitability.
The timing of a single major deal and variations in the customer purchase behavior causesignificantquarterlyvariationsinsalesandprofit,andaretypicalofComptel’sfieldofindustry.
TheOSSmarket is highly competitive. The sector is undergoing consolidationbetweenthemarketplayers,whichisreflectedinthedurationandpricingagreements.IfCompteldoesnotmanagetoadaptitsoperationsandaddressthechangestakingplaceinitscompetitiveenvironment,themarketdevelopmentmaygreatlyimpairthecompany’s business and operating results.
Comptel has initiated the execution of customer and partner intimate business modelwhichrequiresgettingcompetentresourcesclosertokeycustomersandpart-nersincertaingrowthmarkets.
The Middle East, Africa and Asia are increasingly important market areas forComptel. The company is operating in several countries where the political situation is unstable. Deterioration of the situation in these areas may hinder Comptel’s business andundermineitsprofitability.
Comptel’s business consists of delivering large productised IT systems, and the valueofasingleprojectmaybeseveralmillioneuros.Therefore,thefinanciallossorcreditriskassociatedwithasingleprojectoranindividualcustomermaybesignificant.There are also risks, associated to the deliveries, that projects are not completed
timelyorinagreedtimeschedule,qualityandcostrisk.Toprojectsisalsoassociatedliquidatedamagerisk.Furthermore,someofComptel’scustomersoperate incoun-trieswherethepoliticalorfinancialclimatecanbeunstablewhichinpartmayincreasecreditrisk.
Compteloperatesgloballyandisexposedtorisksarisingfromcurrencyfluctua-tions. The exchange rate changes between the Euro, which is the company’s reporting currency,andtheUSDollar,UKPoundSterling,IndianRupeeandMalaysianRinggitaffectthecompany’snetsales,expensesandnetprofit.
The application process where Comptel seeks to avoid double taxation is stillpendingwiththeMinistryofFinanceinFinland.However,thelegalprocessbetweenthestatesisveryslowandtheresultsaredifficulttoforesee.Theinterpretationoftaxtreaties may result in different views between the countries in question. This could mean that the double taxation will persist. Comptel has also applications for return of withholding taxes in other countries but they are subject to local legal processes, whichtaketimetogetcompleted
Thecompany’sfinancialrisksaredescribedmore indetail in thenote27of theconsolidatedfinancialstatements.
EVENTS AFTER THE REPORTING PERIODTherewerenosignificanteventsafterthereportingperiod.
CHANGES IN REPORTINGThe company will be changing its segment reporting from 2016 onwards. The new seg-ments will be Business Units: Intelligent Data and Service Orchestration. Comparable numbersfor2015willbepublishedinMarch2016.
OUTLOOKComptelexpectsthe2016netsalestocontinuetogrowandoperatingprofittobeinthe range of 8-14% of revenue.
13 | Comptel Annual Report 2015
Board of Directors’ Report
CharacteristicallyasignificantpartofComptel’soperatingprofitandnetsalesisgenerated in the second half of the year.
BOARD OF DIRECTORS’ PROPOSAL FOR THE DISPOSAL OF PROFITSThe Group parent company’s distributable equity on 31 December 2015 was EUR 7,692,598 (6,740,529).TheBoardofDirectorsproposestotheAnnualGeneralMeetingthatdividendof0.03EUR per share will be paid for 2015.
Helsinki,17February2016
Comptel CorporationBoard of Directors
14 | Comptel Annual Report 2015FINA
NCIA
L ST
ATEM
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Financial statements
EUR 1,000
NOTES
1 JAN - 31 DEC 2015
1 JAN - 31 DEC 2014
Net sales 2 97,728 85,714
Other operating income 5 63 282
Materialsandservices 6 -5,546 -3,905
Employeebenefits 7 -46,764 -41,294
Depreciation, amortisation and impairment charges 8 -6,756 -6,263
Other operating expenses 9 -30,251 -26,225
-89,317 -77,686
Operating profit/loss 8,474 8,311
Financial income 11 1,392 1,478
Financial expenses 11 -2,541 -2,398
Share of result of associated companies 287 45
Profit/loss before income taxes 7,612 7,436
Income taxes 12 -3,085 -1,975
Profit/loss for the period 4,527 5,461
EUR 1,000
NOTES
1 JAN - 31 DEC 2015
1 JAN - 31 DEC 2014
Other comprehensive income
Othercomprehensiveincometobereclassifiedtoprofitorloss in subsequent periods
Cashflowhedges 14 -227
Translation differences 189 522
Income tax relating to components of other comprehensive income 12 -3 45
Total comprehensive income for the period 4,728 5,802
- -
Profit/lossattributableto:
Equity holders of the parent company 4,527 5,461
Non-controlling interest - -
Total comprehensive income attributable to:
Equity holders of the parent company 4,728 5,802
Non-controlling interest - -
Shareholders of the parent company 13
Earnings per share, EUR 0.04 0.05
Earnings per share, diluted, EUR 0.04 0.05
15 | Comptel Annual Report 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Financial statements
EUR 1,000
NOTES 31 DEC 2015 31 DEC 2014
ASSETS
Non-current assets
Goodwill 15 2,646 2,646
Other intangible assets 15 12,837 13,435
Tangible assets 14 1,152 1,595
Investments in associates 16 960 673
Available-for-salefinancialassets 87 87
Deferred tax assets 17 7,685 5,880
Other non-current receivables 646 613
26,013 24,929
Current assets
Trade and other receivables 18 56,930 43,043
Current tax assets18 403 315
Cash and cash equivalents 19 3,030 9,352
60,363 52,710
TOTAL ASSETS 86,376 77,639
EUR 1,000
NOTES 31 DEC 2015 31 DEC 2014
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 20 2,141 2,141
Fund of invested non-restricted equity 20 1,698 401
Fair value reserve 20 -170 -182
Translation difference 20 -510 -699
Retained earnings 34,165 31,685
37,324 33,346
Total equity 37,324 33,346
Non-current liabilities
Deferred tax liabilities 17 2,572 2,669
Non-currentliabilitiesfinancialliabilities 24 92 1,257
2,664 3,926
Current liabilities
Provisions
Currentfinancialliabilities 23 1,090 1,325
Trade and other current liabilities 24 7,075 6,305
Current tax liabilities 25 37,816 32,713
407 24
46,388 40,367
Total liabilities 49,052 44,293
TOTAL EQUITY AND LIABILITIES 86,376 77,639
16 | Comptel Annual Report 2015
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR 1,000
NOTES 31 DEC 2015 31 DEC 2014
Cash flows from operating activities
Profit/lossfortheperiod 4,527 5,461
Adjustments:
Non-cash transactions or items that are not partofcashflowsfromoperatingactivities 28 7,834 6,095
Interestandotherfinancialexpenses 273 620
Interest income -88 -16
Income taxes 3,069 1,996
Changeinworkingcapital:
Change in trade and other receivables -14,240 -6,573
Change in trade and other current liabilities 5,031 6,744
Change in provisions -277 -262
Interest paid -273 -295
Interest received 12 40
Income taxes paid and tax returns received -5,245 -3,789
Net cash from operating activities 623 10,021
Cash flows from investing activities
Sale of business operations - 300
Investments in tangible assets -456 -734
Investments in intangible assets -102 -
Investments in development projects -5,176 -4,720
Proceeds from sale of tangible and intangible assets 7 39
Change in other non-current receivables -3 -82
Net cash used in investing activities -5,730 -5,199
EUR 1,000
NOTES 31 DEC 2015 31 DEC 2014
Cash flows from financing activities
Dividends paid -2,139 -1,073
Acquisition of own shares - -312
Proceeds from new shares 497 -
Proceeds from share option 800 -
Proceeds from borrowings 27,935 8,500
Repayment of borrowings -28,063 -9,544
Lease payments -243 -180
Net cash used in financing activities -1,213 -2,609
Net change in cash and cash equivalents -6,319 2,213
Cash and cash equivalents at the beginning of the period 9,352 6,542
Cash and cash equivalents at the end of the period 3,030 9,352
Change -6,322 2,810
Effects of changes in foreign exchange rates -2 596
Financial statements
17 | Comptel Annual Report 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR 1,000 SHARE CAPITAL OTHER RESERVESTRANSLATION DIFFERENCES FAIR VALUE RESERVE RETAINED EARNINGS TOTAL
Equity at 31 Dec 2013 2,141 401 -1,219 0 27,600 28,924
Acquisition of Corporation’s own shares -311 -311
Dividends paid -1,073 -1,073
Share-based compensation 263 263
Prior year corrections *) -256 -256
Total comprehensive income for the period 521 -182 5,461 5,800
Equity at 31 Dec 2014 2,141 401 -698 -182 31,684 33,346
Shares issued 497 497
Dividends paid -2,139 -2,139
Share-based compensation 800 428 1,228
Dissolution of subsidiaries 7 7
Prior year corrections *) -342 -342
Total comprehensive income for the period 188 12 4,527 4,727
Equity at 31 Dec 2015 2,141 1,698 -510 -170 34,165 37,324
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY
*)Prioryearexpenseadjustmentswerepostedintoretainedearningsduringthefiscalyear.
Financial statements
18 | Comptel Annual Report 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED FINANCIAL STATEMENTS
COMPANY PROFILEComptel Corporation is a Finnish public limited liability company organised under the laws of Finland. Founded in 1986, Comptel Corporation is one of the leading providers of telecom software and services in convergent mediation and charging, predictive analytics and service fulfillment. Comptel Corporation is listed on NASDAQOMXHelsinki (CTL1V).Theparentcompanyof theComptelGroup,ComptelCorporation, is domiciled inHelsinki and its registered ad-dressisSalmisaarenaukio1,00180Helsinki.
Acopyof theconsolidatedfinancialstatementscanbeobtainedeither from Comptel’s website (www.comptel.com) or from the parent company’sheadoffice,theaddressofwhichismentionedabove.
On 17th February 2016, the Board of Directors of Comptel Corporationhasauthorisedthepublicationoftheconsolidatedfinan-cial statements of Comptel Corporation for the year 2014. According to theFinnishCompaniesAct,theAnnualGeneralMeetingcanconfirmor reject the consolidated financial statements after the publication.TheAnnualGeneralMeetingmaydecidetochangethefinancialstate-ments.
BASIS OF PREPARATIONComptel’s consolidated financial statements have been prepared inaccordance with the International Financial Reporting Standards (IFRS) in force as at 31 December 2014 including the IAS and IFRS standards as well as the SIC and IFRIC interpretations. IFRSs referred
to in the Finnish Accounting Act and in ordinances issued based on the provisions of this Act, refer to the standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No1606/2002oftheEU.Thenotestotheconsolidatedfinancialstate-ments also conform to the Finnish accounting and company legislation.
The consolidated financial statements are prepared under thehistorical cost convention except for available-for-sale assets, deriva-tivefinancialinstrumentsandhedgeditemsunderfairvaluehedging.Share-based payments are recognised at fair value at the grant date.
All financial information presented in euros has been roundedto the nearest thousand and consequently the sum of the individual figurescandeviatefromthesumfigure.
ComptelfirstadoptedtheIFRSin2005andappliedIFRS1First-time adoption of IFRS in the transition. The transition date was 1 January 2004.
On 1 January 2015, the Group adopted the following new and amended standards and interpretations endorsed by the EU and that are applicable to Comptel:
Amendment to IAS 19. Employee Benefits. The the standard outlines the accounting and disclosure requirements for the employee benefits.
Annual Improvements to IFSRs 2010-2012 and Annual Improvements to IFSRs 2011-2013.
The preparation of financial statements in conformity with IFRSrequiresmanagement tomakeestimatesaswell asuse judgementwhen applying accounting principles. Actual results may differ from these estimates. The chapter “Accounting policies requiring manage-ment’sjudgementandkeysourcesofestimationuncertainty”discuss-es judgements made by management when applying the accounting principlesadoptedbytheGroupandthosefinancialstatementitemsonwhichjudgementshavethemostsignificanteffect.
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PRINCIPLES OF CONSOLIDATION
Theconsolidatedfinancialstatementsincorporatethefinancialstate-ments of the parent company Comptel Corporation and all those sub-sidiaries in which it has, directly or indirectly, control (together referred to as “Group” or “Comptel”). Associates included in the consolidated financialstatementsare thoseentities inwhich theparentcompanyComptel Corporation has, directly or indirectly, significant influence,butnotcontrol,overthefinancialandoperatingpolicies.
SUBSIDIARIES
Subsidiaries are entities controlled by Comptel. Control means that theGrouphasthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Controlexistswhen Comptel is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Acquisitions of subsidiaries are accounted for using the purchase methodofaccounting.Theconsiderationtransferredandtheidentifia-ble assets acquired and the liabilities assumed have been recognised at fair value at the acquisition date. The acquisition costs, excluding the costs to issue debt or equity securities, have been recognised as a cost. The consideration transferred exclude business operations treated separately from the acquisition. The impact is recognised in profit or losswhen the acquisition takes place. Possible contingentconsideration has been recognised at fair value at the acquisition date andhasbeenclassifiedasliabilityorequity.Contingentconsiderationclassified as liability is recognised at fair value at the end of eachreportingperiodandtheresultinggainor loss isrecognised inprofitor loss or other comprehensive income. Contingent consideration
classifiedasequityshallnotberevalued.The subsidiaries acquired have been consolidated from the date
of acquisition, when control commenced. The subsidiaries disposed of areincludedintheconsolidatedfinancialstatementsuntilthecontrolceases. All inter-company income and expenses, receivables, liabili-tiesandunrealisedprofitsarisingfrominter-companytransactions,aswellasdistributionofprofitswithintheGroupareeliminatedaspartofthe consolidation process. Unrealised losses are eliminated only to the extent that there is no evidence of impairment.
The allocation of the profit or loss and the distribution of thecomprehensive income for the period attributable to equity holders of the parent company and non-controlling interest are presented in connection with the consolidated statement of comprehensive income. Possible non-controlling interest is recognised at fair value or amount corresponding to itsproportionalshareof thenet identifiableassetsacquired and liabilities assumed. Valuation method is defined sep-arately for each acquisition. Comprehensive income is attributed to equity holders of the parent company and non-controlling interest even if share of non-controlling interest was negative. The share of equity attributable to non-controlling interest is presented separately as part ofequityinthestatementoffinancialposition.Ifparentcompanyown-ership change in a subsidiary and does not result in loss of controlling interest it is recognised in equity.
If a business combination is achieved in stages the previously held equity interest is recognised at fair value and the resulting gain or loss is reflected inprofitor loss. If theGroupno longerhasacontrollingstakeinasubsidiary,theremainingassetisrecognisedatfairvalueatsuchdatewhenthetransactiontakesplaceandtheresultinggainorlossisrecognisedinprofitorloss.
Accounting treatment for acquisitions prior to 1 January 2010 has followed the prevailing standards at the end of the reporting period.
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20 | Comptel Annual Report 2015
Financial statements
ASSOCIATES
Associatesare thoseentities inwhichComptelhassignificant influ-ence.SignificantinfluencegenerallyariseswhenComptelholdsvotingrights less than 50 per cent but over 20 per cent or when the Group otherwise has significant influence over the financial and operatingpolicies, but not control. Holdings in associates are incorporated in thesefinancialstatementsusingtheequitymethodfromthedatethatsignificant influence commences until the date that significant influ-ence ceases. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate. When Comptel’s share in an associate’s losses exceeds its interest in the associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate or made payments on behalf of the associate. The Group’s proportionate share ofassociates’profitfortheperiodispresentedasaseparatelineitemin the consolidated statement of comprehensive income.
FOREIGN CURRENCY TRANSACTIONS
TheresultandfinancialpositionofaGroupentityaremeasuredusingthe currency of the primary economic environment in which the entity operates(functionalcurrency).Theconsolidatedfinancialstatementsare presented in euros, which is the functional and presentation cur-rency of the parent company.
Transactions in foreign currencies are translated at the exchange rates prevailing on the dates of the transactions. Foreign currency monetary balances are translated at the exchange rate at the end of reporting period. Non-monetary items measured at fair value in a foreign currency are translated at the exchange rate at the end of
reporting period. Gains and losses resulting from transactions in for-eign currencies and translation of monetary items are recognised in profitorloss.
FINANCIAL STATEMENTS OF FOREIGN SUBSIDIARIES
Statements of comprehensive income and cash flows of foreignsubsidiaries are translated into euros at the average exchange rate duringthefinancialperiod.Theirstatementsoffinancialpositionaretranslated using the exchange rate at the end of reporting period. The translationdifferencesarisingfromthetranslationoftheprofitfortheperiod by using the average and closing rates are recognised in other comprehensive income and presented as a separate item in equity. The translation differences arising from the use of the purchase meth-od and after the date of acquisition as well as the result of the hedge of a net investment in a foreign operation are recognised in other comprehensive income and presented within equity. If a subsidiary is disposed of, related cumulative translation differences deferred in equityare recognised inprofitor lossaspartof thegainor lossonsale. From the transition date onwards translation differences arising on the consolidation are presented as a separate component of equity.
Goodwill and fair value adjustments to assets and liabilities that arose on an acquisition of a foreign entity occurred prior to 1 January 2004 are translated into euros using the rate that prevailed on the date of the acquisition. Goodwill and fair value adjustments arisen on an acquisition after 1 January 2004 are treated as part of the assets and liabilities of the acquired entity and are translated at the closing rate.
TANGIBLE ASSETSTangible assets are measured at historical cost less cumulative
21 | Comptel Annual Report 2015
Financial statements
depreciation and any impairment losses. Where parts of an item of tangible assets have different economic useful lives, they are account-ed for as separate items of tangible assets. Depreciation is recognised inprofitorlossonastraight-linebasisovertheestimatedusefullivesof each part of an item of tangible assets. The depreciation period for machinery and equipment is four years.
Maintenance,repairsandrenewalsaregenerallyexpensedduringthe period in which they are incurred except for substantial renovation expenditure relating to leased premises that are capitalised under tangibleassets.Suchcostsaredepreciatedover theshorterof fiveyears and the lease term.
Residual values of tangible assets and expected useful lives are reassessed at each reporting date and where necessary are adjusted toreflectthechangesintheexpectedfutureeconomicbenefits.
TangibleassetsclassifiedasheldforsaleinaccordancewithIFRS5 Non-current Assets Held for Sale and Discontinued Operations are notdepreciatedaftertheclassificationasheldforsale.
Gains and losses on sales and disposals of tangible assets are included in operating income and in operating expenses, respectively.
According to IAS 23 borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are to be capitalised.
INTANGIBLE ASSETS GOODWILL
Goodwill resulting from business combinations subsequent to 1 January 2010 is recognised at the value at which the consideration transferred the amount of non-controlling interest and previously held assets together exceed the Group’s share of the amount of the net of
theacquisition-datefairvaluesoftheidentifiableassetsacquiredandliabilities assumed.
Acquisitionsthathavetakenplacebetween1January2004and31December 2009 have been recognised based on the previous IFRS standards. Goodwill arisen from the business combinations occurred prior to the IFRS transition date has been accounted for in accordance withFASandhasbeentakenasadeemedcost.
In accordance with IAS 36 Impairment of Assets goodwill is not amortised but tested for impairment annually. Goodwill is stated at cost less any cumulative impairment losses.
RESEARCH AND DEVELOPMENT COSTS
In accordance with IAS 38 Intangible Assets expenditure on research activities is recognised as an expense in the period in which it is in-curred. Development costs that arise from design of new or improved productsarecapitalisedasintangibleassetsinthestatementoffinan-cial position when the product is technically and commercially feasible anditwillgeneratefutureeconomicbenefits.Amortisationofsuchanassetiscommencedwhenitisavailableforuse.Unfinishedassetsaretested annually for impairment.
Comptel capitalises development costs and costs related to internal system projects meeting the requirements under IAS 38. Capitalised development costs are amortised on a straight-line basis over three years and the costs related to internal system projects over four years.
Government grants that compensate the Group for the develop-ment costs are either deducted from the carrying amount of the asset orfromtherelatedexpensesinprofitorloss.
22 | Comptel Annual Report 2015
OTHER INTANGIBLE ASSETS
Patents and licenses acquired as well as costs incurred from patent applicationswithafiniteuseful lifearecapitalisedandamortisedona straight-line basis over their useful lives. Amortisation is calculated based on the original cost and allocated over the useful life.
The capitalised patent costs are generally amortised over ten years and licenses over four years.
The expected amortisation periods are reviewed at each reporting date and if they differ from previous estimates, the amortisation period is changed accordingly.
Identifiableintangibleassetsacquiredonabusinesscombinationare measured at fair value. Such intangible assets relate for example to client relationships and technologies received in an asset acquisition andtheyareamortisedoverthreetofiveyears.
LEASES COMPTEL AS LESSEE
IAS 17 Leases divides leases into finance and operating leases.Leases are classified as finance leaseswhenever the terms of theleasetransfersubstantiallyallthetypicalrisksandrewardsofowner-ship to the lessee.
At the commencement of the lease term an asset acquired under afinanceleaseisrecognisedinthestatementoffinancialpositionatan amount equal to the lower of its fair value and the present value of theminimumleasepayments.Anassetacquiredunderafinanceleaseis depreciated over the shorter of the lease term and its useful life. Leasepaymentsareapportionedbetweenthefinancechargeandthereduction of the outstanding lease liability so as to achieve a constant
periodic rate of interest on the liability balance outstanding. Lease liabilitiesareincludedinfinancialliabilities.
Iftheleasedoesnotmeettherequirementsofafinancelease,itisalwaysclassifiedasanoperatinglease.Insuchacasethelesseehastherighttousetheassetforalimitedtimeandtherisksandrewardsincidental to ownership are not transferred to the lessee.
The leases of Comptel are mainly treated as operating leases. Paymentsmadethereunderarerecognisedinprofitorlossasrentalexpenses on a straight-line basis over the lease term.
IMPAIRMENT TANGIBLE AND INTANGIBLE ASSETS
Comptel assesses at each reporting date whether there is any indica-tion of impairment of assets. If there are such indications, the asset’s recoverable amount is estimated. In addition, the recoverable amount is estimated annually for the following assets regardless of there be-ingany indicationsof impairment:goodwillandunfinishedintangibleassets. The need for impairment is reviewed at the level of cash-gen-erating units which is the lowest level for which there are separately identifiable,mainlyindependentcashflows.
The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. The value in use represents the dis-countedfuturenetcashflowsexpectedtobederivedfromanassetora cash-generating unit. The discount rate used is the pre-tax rate that reflectsthemarket’sviewonthetimevalueofmoneyandthespecificrisksrelatedtotheasset.
An impairment loss is recognised if the carrying amount of an as-set or a cash-generating unit is higher than the recoverable amount. Impairmentlossesarerecognisedinprofitorloss.Ifanimpairmentloss
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23 | Comptel Annual Report 2015
isallocatedtoacash-generatingunit,itisfirstallocatedtodecreasethe goodwill allocated to this cash-generating unit and subsequently to decrease pro-rata other assets of the cash-generating unit. An impair-ment loss is reversed if there are any indications that the conditions and the recoverable amount have changed since the impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recog-nised. An impairment loss recognised for goodwill is never reversed.
PENSION OBLIGATIONSUnder IAS 19 Employee Benefits pensionplansareclassifiedaseitherdefinedcontributionplansordefinedbenefitplansbasedonthecom-pany’sobligations. Inadefinedcontributionplan thecompanypaysfixedcontributionstoaseparateentityandhasnofurtherobligations.The pension plans of Comptel are arranged in accordance with the locallegislation.Contributionsofthedefinedcontributionplansbasedon the regularly reviewed actuarial calculations prepared by the local pensioninsurancecompaniesarerecognisedasanexpenseinprofitorlossintheyeartowhichtheyrelate.Otherplansareclassifiedasdefinedbenefitplans.
Inadefinedbenefitplantheliabilitytoberecognisedinthestate-mentoffinancialposition is thenetamountof thenetpresentvalueof the pension obligation and the plan assets measured at fair value at the year-end. The calculation for pension obligations is carried out byqualifiedactuaries.Theamountof theobligation isbasedon theprojected unit credit method.
The revised standard includes several amendments to harmonize therecognitionofdefinedbenefitpensionplansandtoimprovecom-parability. In addition, the amendments to presentation will improve the
comparabilityoffinancialstatementsandprovideaclearerviewofthefinancialcommitmentsrelatedtodefinedbenefitplans.
SHARE-BASED PAYMENTSComptel has several option schemes and they are paid out as equity instruments. Equity-settled share-based schemes are measured at fair valueatthegrantdateandexpensedinprofitorlossonastraight-linebasis over the vesting period. The expense determined at the grant date is based on the Group’s estimate on the number of those options that eventually vest at the end of the vesting period. The fair value is determinedusingtheBlack-Scholesoptionpricingmodel.
Comptel has also share-based incentive programs. The share-based incentiveprogramsprovidethekeypersonnelof theComptelGroup with a possibility to receive shares of the company as compen-sation. The compensation paid based on the share-based incentive programs is paid as a combination of company shares and cash after the vesting period has expired. Costs incurred from the share-based incentive programs are recognised as employee benefit expensesover the commitment period.
PROVISIONSIAS 37 Provisions, Contingent Liabilities and Contingent Assets pre-scribes the recognition criteria for a provision. A provision is based on anexistingobligationanditisrecognisedinthestatementoffinancialposition when an entity has a present obligation (legal or constructive) asaresultofapastevent,itisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecan be made of the amount of the obligation.
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24 | Comptel Annual Report 2015
The amounts recognised as provisions shall be the best estimate at the end of the reporting period and if the best estimates change the provisions are adjusted. Changes in the provision are recognised similarlyinprofitorlossastheoriginalprovision.
A warranty provision is recognised when a product that embodies a warranty is sold or delivered. The amount of the warranty provision is based on experience-based information about the materialisation of warranty costs.
A restructuring provision is recognised when Comptel has prepared a detailed plan for restructuring, commenced the implementation of the plan and announced about the plan. A restructuring plan includes at least the following information: the business concerned, the principal locations affected, the location, function and approximate number of employees who will be compensated for terminating their services, the expenditures thatwill be undertaken andwhen the planwill beimplemented. No provision is recognised for the expenditure arising from the Group’s continuing operations.
Aprovisionisrecognisedwhentheexpectedeconomicbenefitstobe derived by the Group from a contract are lower than the unavoida-ble cost of meeting its obligations under the contract.
INCOME TAXESThe income taxes in the consolidated statement of comprehensive income consist of current tax and the change in the deferred tax assets and liabilities.Current tax is calculated on the taxable profit for theperiod determined in accordance with local tax rules and is adjusted with the tax for previous years. The deferred tax amount attributable to othercomprehensiveincomeorequityisreflectedinothercomprehen-sive income or equity, accordingly.
Deferred tax assets and liabilities are provided using the statement
offinancialpositionliabilitymethod,providingfortemporarydifferenc-esbetweenthecarryingamountsofassetsandliabilitiesforfinancialreporting purposes and the amounts used for taxation purposes. The enacted or substantially enacted tax rate at the reporting date is used as the tax rate. In Comptel the main temporary differences arise from the depreciation of tangible assets not deducted in taxation, the fair value measurement of derivatives, capitalisation of development costs, paid withholding taxes, which Comptel estimates to be able to deduct from the future income taxes and the reversal of goodwill amortisation on Group level.
Deferred tax liabilities are recognised at their full amounts in the statementoffinancialposition,anddeferredtaxassetsarerecognisedto the extent that it is probable that taxable profit will be availableagainst which the deductible temporary difference can be utilised.
REVENUE RECOGNITION AND NET SALESRevenuefromthesaleofgoodsisrecognisedwhensignificantrisksand rewards of ownership have been transferred to the buyer. Revenue from services is recognised when the service has been performed. License revenue that includes no work performance is recognisedwhen the license is delivered. The number of subscribers at a client is reviewed continuously. If their number exceeds the number agreed on in the terms of the license, the client can be charged for the increased number of subscribers. This license upgrade revenue is recognised upon invoicing.Maintenance revenue is recognisedas incomeonastraight-line basis over the maintenance term.
LONG-TERM PROJECTS
Revenue and expenses from long-term projects are recognised using
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25 | Comptel Annual Report 2015
the percentage-of-completion method, when the outcome of a long-term project can be estimated reliably. The revenue from a long-term projectcomprises license incomeandwork.Theoutcomeofa long-term project can be estimated reliably when the revenue and expenses expected as well as the progress made towards completing a particu-lar project can be measured reliably and when it is probable that the economicbenefitsassociatedwiththeprojectwillflowtotheGroup.InComptel the degree of completion of a long-term project is determined bytherelationofaccruedworkhourstoestimatedoverallworkhours.If it is probable that total project costs will exceed total project revenue, the expected loss is recognised as an expense immediately.
Net sales is adjusted for discounts granted, sales-related indirect taxes and effects of the translation differences arisen on the translation of the trade receivables denominated in foreign currencies.
A separate warranty provision is recognised to cover costs under warranty periods following the completion of the projects. The total estimated margin of onerous projects is recognised as an expense and a provision.
EARNINGS PER SHARE
Thecalculationofearningspershareisbasedontheprofitattributableto ordinary shareholders that is divided by the weighted average num-ber of ordinary shares outstanding during the year. Treasury shares owned by the Group are excluded when calculating the weighted average number of ordinary shares. For the purpose of calculating diluted earnings per share using the treasury stock method, theGroup assumes the following: the exercise of dilutive warrants and optionsoccurredatthebeginningofthefinancialperiod,theexerciseof dilutive warrants and options granted during the period followed at their grant date and the proceeds from their exercise was spent
byacquiring treasurysharesat theaveragemarketpriceduring theperiod. The denominator includes the weighted average number of ordinary shares and the shares to be issued following the exercise of warrants and options.
The assumptions of the exercise of options is excluded when cal-culating diluted earnings per share if the exercise price of the warrants andoptionsexceedstheaveragesharemarketpriceduringtheperiod.The options and warrants have a dilutive effect only if the average sharemarketpriceduring theperiod ishigher than thesubscriptionprice of an option and a warrant.
FINANCIAL ASSETS AND LIABILITIES FINANCIAL ASSETS
In accordance with IAS 39 Financial Instruments: Recognition and Measurement the financial assets of the Group are classified tofollowinggroups:financialassetsat fairvalue throughprofitor loss,held-to-maturity investments, loans and receivables and availa-ble-for-salefinancialassets.Classification isbasedon thenatureofthe item and it is made at initial recognition.
Anitemisclassifiedasfinancialassetatfairvaluethroughprofitorlosswhenitisheldfortradingorclassifiedatinitialrecognitionasfinancialassetatfairvaluethroughprofitorloss.Thelattergroupcom-prises such investments that are managed based on their fair value or an investment which contains one or more embedded derivative which changesthecashflowsofthecontractsignificantlyinwhichcasetheentire compound instrument is measured at fair value. Financial assets held for tradinghavebeenmainlyacquired togenerateprofits fromshort-term changes in market prices. Derivative instruments whichdonotmeetthecriteriaforhedgeaccountingdefinedinIAS39have
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26 | Comptel Annual Report 2015
beenclassifiedasheldfortrading.Derivativesheldfortradingaswellasfinancialassetsmaturingwithin12monthsareincludedincurrentassets. These assets have been measured at fair value. Unrealised and realised gains and losses arisen from fair value measurement are recognisedinprofitorlossintheperiodinwhichtheyoccur.
Held-to-maturity investments are non-derivative financial assetswithfixedordeterminablepaymentsandfixedmaturitythattheGrouphas the positive intention and ability to hold to maturity. Held-to-maturity investments are measured at amortised cost and they are included in non-currentassets.Comptelhadnosuchfinancialassetsduringthefinancialyearended31December2009.
Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.TheGroup does not hold them for trading purposes either. They are in-cluded in current assets, except for maturities greater than 12 months after the reporting date. Trade receivables are recognised based on the original amount charged from a client less any impairment losses.
Available-for-sale financial assets are non-derivative financialassetsthatareeitherdesignated inthiscategoryornotclassified inany of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date, in which case they are classified ascurrent.Available-for-salefinancialassetsmayincludeshares(equitysecurities) and interest-bearing investments. They are measured at fair value, or when the fair value can not be reliably determined, at cost.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other short-term, highly liquid investments with
originalmaturities of threemonths or less.Anybankoverdrafts areincluded within current liabilities.
FINANCIAL LIABILITIES
Financial liabilities are initially recognised at fair value, net of transac-tioncosts.Subsequentlyfinancialliabilitiesaremeasuredatamortisedcost using the effective interest rate method. Financial liabilities are bothnon-currentandcurrent.Afinancial liability isclassifiedascur-rent when the Group does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Borrowingcostsarerecognisedinprofitorlossasincurred.Feespaidon the establishment of loan facilities are recorded as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. When the draw-down occurs, the fees paid on the establishment of loan facilities are recognised as part of transaction costs. To the extent it is probable that some or all of the facility will not be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTINGDerivativesareinitiallyrecognisedinthestatementoffinancialpositionat cost, equivalent to their fair value and are subsequently measured to fair value.
From 1 October 2014 onwards Comptel has applied hedge ac-counting in accordance with IAS 39.
Comptel formally designates and documents the hedge relation-shipaswellastheGroup’sriskmanagementobjectiveandstrategy
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27 | Comptel Annual Report 2015
forundertakingthehedge.Compteldocumentsandassesses,attheinception of a hedge relationship and at least at each reporting date, the hedging instrument’s effectiveness in offsetting the exposure to changes inthehedgeditem’sfairvalueorcashflowsattributabletothehedgedrisk.Thechanges in the fairvaluesof thosederivativesmeeting thecriteriaofa fairvaluehedgeare recognised inprofitorloss together with the fair value changes of the hedged asset or lia-bilityattributabletothehedgedrisk.Thechangesinthefairvaluesofthe derivatives hedging trade receivables are booked against salesrevenues.
Ifaderivativemeetstheconditionsofacashflowhedge,thechangein the fair value of the effective portion of the hedging instrument is recognised in other comprehensive income and presented in equity in the hedging reserve. The accumulated gains or losses in equity arereclassifiedintoprofitorlossinthesameperiodduringwhichthehedgeditemaffectsprofit.Whenahedginginstrumentdesignatedasacashflowhedgeexpiresorissoldorthehedgenolongermeetsthecriteria for hedge accounting, the cumulative gain or loss on the hedg-ing instrument remains in equity until the forecast transaction occurs. However, if the forecast transaction is no longer expected to occur, any related cumulative gain or loss in equity is recognised immediately in profitorloss.
DIVIDENDSThe dividend proposed by the board of directors is not recognised until approved by a general meeting of shareholders.
Accounting policies requiring management’s judgment and keysources of estimation uncertaint
Thepreparationoffinancialstatementscallsforthemanagement
tomake future-related estimates and assumptionswhichmaydifferfrom the actual results. In addition, judgment is required when apply-ing accounting principles. The estimates are based on management’s best view at the reporting date. Possible changes in estimates and assumptions are recognised in that period when an assumption or estimate is corrected as well as in all subsequent periods.
InComptelthosekeyassumptionsconcerningthefutureandthosekeysourcesofestimationuncertaintyatreportingdatethathaveasig-nificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararethefollowing:
IMPAIRMENT TESTING
Goodwill, patenting costs and development costs capitalised under unfinishedintangibleassetsaretestedannuallyforimpairment.Assetsare reviewed for impairment in accordance with the principles set out above. Estimates are required in preparing these calculations.
Additional information about the sensitivity of the recoverable amount to changes in the assumptions used is presented in note 16. Intangible assets.
REVENUE RECOGNITION
As described above under the heading Revenue recognition principles revenue and expenses from long-term projects are recognised using the percentage of completion method when the outcome of a long-term project can be estimated reliably. The percentage of completion method is based on estimates of total expected project revenue and costs, as well as on reliable measurement of the progress made towards completing a particular project. The recognition of project revenueandprojectcostsinprofitorlossischangediftheestimate
Financial statements
28 | Comptel Annual Report 2015
of the outcome of a project deviates from the plan, in the period in whichthechangeisidentifiedforthefirsttimeanditcanbeestimatedreliably.Anexpectedlossonalong-termprojectisrecognisedinprofitorlossimmediatelywhenitisidentifiedandcanbeestimatedreliably.Additional information about the long-term contracts is presented in note 4. Revenue recognition using percentage of completion method.
TAXES
Managementneeds toassess the treatmentofwithholding taxesaswell as the possibility to utilise deferred tax assets. Deferred tax assets arerecognisedtotheextentthatit isprobablethattaxableprofitwillbe available against which the deductible temporary difference can be utilised.
APPLICATION OF NEW OR AMENDED STANDARDS AND INTERPRETATIONSThe below described standards, interpretations or their amendments have been published but are not yet effective and Comptel has not adopted them prior to the mandatory application date. Comptel will adopt the following amended or new standards and interpretations issued by the IASB as soon as they are effective if the effective dated is thesameas thebeginningof thefinancialyear,or if theeffectivedate is different, they will be adopted as from the beginning of the followingfinancialyear:
IFRS 9 Financial Instruments. Standard will be issued in three phases, it will replace the existing IAS 39 Financial instruments: RecognitionandMeasurement:
Theamendmentsresultingfromthefirstphaseaddresstheclassi-fication,measurementandrecognitionoffinancialassetsandfinancial
liabilities. Different ways of measurement for financial assets havebeen retained, but simplified. Based onmeasurement, financial as-setsareclassifiedintotwomaingroups:financialassetsatamortisedcost and financial assets at fair value. Classification depends on acompany’s business model and the characteristics of contractual cash flows.Forfinancialliabilities,thestandardretainsmostoftheIAS39requirements. Comptel Group is yet to assess the full impact of the amendments. The standard has not been endorsed for use in the EU yet.
IFRS 10, IFRS 12 and IAS 28 Investment entities. The new stand-ard is not expected to have an impact on Comptel’s consolidated financialstatements.
IFRS 11 Joint Arragements. The amendment to the standard requires that for the acquisition of an interest in a joint operation, in which the activity constitutes a business, the principles for business combinations accounting are applied. The amendment is estimated nottohavesignificanteffectsontheconsolidatedfinancialstatements.
IFRS 14 Regulatory Deferral Accounts. The standard allows rate-regulated entities to continue reporting regulatory deferral ac-countbalancesinconnectionwiththefirst-timeadoptionofIFRS.Thestandard isnotestimated tohaveaneffecton theGroup’sfinancialstatements.
IFRS 15 Revenue from Contracts with customers. The standard includes a five-stepmodel for revenue recognition. The recognitionmodel includes clearly more detailed instructions than the currently valid standards. Comptel is evaluating the impact of the standard and will implement it according to the schedule.
IFRS 16 Leases. The standard specifies how the lease agree-ments will be recognized, measured, presented and disclosed. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term
Financial statements
29 | Comptel Annual Report 2015
is 12 months or less or the underlying asset has a low value. The standard is estimated to have an impact on Comptel’s consolidated financialstatements.
IAS 16 and IAS 38 Clarification of acceptable methods of depre-ciation and amortization. The amendment rebuts the revenue-based method of depreciating tangible assets and allows, to a limited extend, the application of revenue-based method of depreciating for intangible assets. The amendments are not estimated to have an impact on Comptel’sconsolidatedfinancialstatements.
IAS 16 and IAS 41 Agriculture. IAS 16 to be applied to plants meet-ing the criteria instead of IAS 41 Agriculture. The amendments will not haveanimpactonComptel’sconsolidatedfinancialstatements.
IAS 1 Disclosure Initiative. The amendment encourages entitities to assessthenotesdisclosedandtheirclassification.Theamendmentisnot estimated to have an effect on Comptel’s consolidated statements.
Annual Improvements to IFSRs 2010-2012 and Annual Improvements to IFSRs 2011-2013 and Annual Improvements to IFSRs2012-2014.Minorand lessurgentamendments to thestand-ards are collected and implemented once a year. The effects of the amendments vary by standard, but the amendments are not estimated tohaveasignificanteffectonComptel’sconsolidatedstatements.
Financial statements
30 | Comptel Annual Report 2015
2015, EUR 1,000
EUROPE
ASIA-PACIFIC
MIDDLE EAST AND AFRICA
AMERICAS
SEGMENTS TOTAL
Net sales 40,096 29,607 16,794 11,231 97,728
Segment share of operating result 27,515 15,483 5,600 5,631 54,229
Depreciation and amortisation 13 40 9 31 93
Trade receivables 16,127 10,741 7,982 5,608 40,458
2014, EUR 1,000
EUROPE
ASIA-PACIFIC
MIDDLE EAST AND AFRICA
AMERICAS
SEGMENTS TOTAL
Net sales 35,358 24,752 16,814 8,790 85,714
Segment share of operating result 19,538 14,526 7,272 3,998 45,334
Depreciation and amortisation 18 119 2 43 182
Trade receivables 11,503 4,130 7,536 6,476 29,645
2. SEGMENT REPORTING
Comptel Group has five reportable segments which are based on geographicalareas.Comptel operates globally in all geographicalmarket areas.Market areasdiffer from each other in terms of price level, competitive position and Comptel’s own resource allocation. The segment division is based on the geographical location of customers.Geographical segments are Europe,Asia-Pacific,Middle East andAfrica and Americas. All segments generate revenue from sales of software licenses, services and support and maintenance associated with the software licenses.
Comptel Group’s operating segment reporting is conforming to IFRS standards.
The assessment of the operating results and resource allocation is based on the operating result of the segment in Comptel Group. The President and CEO of Comptel Group is ultimately responsible for these decisions.
Total net sales from the operating segments consolidate to Group external net sales. Segment expenses include sales and customer service expenses. Unallocated expenses relate to product management, research and development as well as admin-istration units. Segment assets include trade receivables.
Financial statements
31 | Comptel Annual Report 2015
EUR 1,000
2015
2014
Segment share of operating result 54,229 45,334
Unallocated expenses -45,755 -37,023
Financial income and expenses -1,149 -920
Share of result of associated companies 287 45
Group profit/loss before income taxes 7,612 7,436
EUR 1,000
2015
2014
Germany 12,433 7,907
India 9,280 7,696
Saudi Arabia 7,687 6,572
Australia 7,337 7,358
Argentina 5,187 4,010
Great Britain 3,305 1,691
Other countries 52,499 50,480
Total 97,728 85,714
EUR 1,000
2015
2014
Finland 13,401 13,950
Other countries 1,274 1,691
Investments in associates 960 673
Unallocated assets 2,693 2,735
Total 18,328 19,049
EUR 1,000
2015
2014
Project & License business 63,289 52,115
Recurring business 34,439 33,599
Total 97,728 85,714
EUR 1,000
2015
2014
Segment depreciation and amortisation 93 182
Unallocated depreciation, amortisation and impairment charges 6,663 6,081
Total depreciation, amortisation and impairment charges 6,756 6,263
EUR 1,000
2015
2014
Segment assets 40,458 29,645
Unallocated assets 44,272 47,993
Total assets 84,730 77,638
RECONCILIATIONS RESULT
GEOGRAPHICAL INFORMATION REVENUES FROM EXTERNAL CUSTOMERS
NON-CURRENT ASSETS
INFORMATION ABOUT MAJOR CUSTOMERS
The geographical split of net sales is based on the customer domicile.
The geographical split of non-current assets is based on the location of such assets. Non-current assets are presented without deferred tax assets and post-employment benefitassets.
In 2015 and 2014 revenues from a single customer did not exceed 10% of the total Comptel group net sales.
INFORMATION ABOUT PRODUCTS AND SERVICES REVENUES FROM EXTERNAL CUSTOMERS
DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES
ASSETS
Financial statements
32 | Comptel Annual Report 2015
3. BUSINESS COMBINATIONS
No new business combinations were acquired during the year 2015 or 2014.
4. REVENUE RECOGNITION USING PERCENTAGE OF COMPLETION METHOD
5. OTHER OPERATING INCOME
6. MATERIALS AND SERVICES
7. EMPLOYEE BENEFITS EUR 1,000
2015
2014
Net sales recognised as revenue according to percentage of completion 22,193 16,401
Amountrecognisedasrevenueduringthefinancialyearandprevious years for long-term projects in progress 13,336 12,042
Total costs of incomplete long-term projects 6,843 8,332
Backlogofordersoflong-termprojectsaccordingtopercentage of completion 19,696 14,053
Prepayments and accrued income recognised on the basis of percentage of completion 2,845 2,821
Deferred income and accruals recognised on the basis of percentage of completion 3,270 4,409
EUR 1,000
2015
2014
Gains on disposal of tangible assets 3 2
Sale of business operations - 300
Other income items 60 -20
Total 63 282
EUR 1,000
2015
2014
Purchases -87 82
External services 5,633 3,823
Total 5,546 3,905
EUR 1,000
2015
2014
Wages and salaries 38,373 34,623
Pensionexpenses-definedcontributionplans 4,364 3,690
Pensionexpenses-definedbenefitplans 328 188
Share options granted 322 122
Expenses related to share-based incentive program 647 410
Other social security costs 2,730 2,260
Total 46,764 41,293
THE AVERAGE NUMBER OF EMPLOYEES IN THE GROUP DURING THE FINANCIAL YEAR
2015
2014
Europe 361 348
Asia-Pacific 298 257
MiddleEastandAfrica 57 54
Americas 7 6
Total 723 665
Financial statements
33 | Comptel Annual Report 2015
8. DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES EUR 1,000
2015
2014
Depreciation and amortisation by asset type
Intangible assets
Patentsandtrademarks 77 77
Capitalised development costs 5,520 4,993
Other intangible assets 405 456
Total 6,002 5,526
Tangible assets
Machineryandequipment 754 737
Total 754 737
Total depreciation, amortisation and impairment charges 6,756 6,263
An additional contribution pension plan has been agreed on for the President and CEO of the parent company. The retirement age is based on the Finnish Statutory Employment Pension Sheme (TyEL). CEO’s pension costs were totally 209,310.00 euros in 2015 (123,574.00 euros in 2014), of which the additional pension plan’s por-tion was 85,595.00 euros (56,859.00 euros in 2014).
Information on the remuneration of the Group management is presented in note 31. Related party transactions.
Information on the options granted and on the management’s share in the share-based incentive plan is presented in note 21. Share-based payments.
10. RESEARCH AND DEVELOPMENT COSTSThe research and development costs recognised as expenses in the statement of comprehensive income amounted to EUR 12,752 thousand in 2015 (EUR 12,071 thousand in 2014).
The capitalised development expenditure totalled EUR 5,176 thousand (EUR 4,720 thousand in 2014). The amortisation of the capitalised development costs amounted to EUR 5,520 thousand (EUR 4,923 thousand in 2014).
Audit fees include the fees of the statutory auditors of each Group company.
9. OTHER OPERATING EXPENSES
THE AUDITORS’ FEES
EUR 1,000
2015
2014
Lease payments 3,035 3,435
Travel expenses 6,814 5,285
Marketingexpenses 2,151 1,163
Other operating expenses 18,251 16,342
Total 30,251 26,225
EUR 1,000
2015
2014
Ernst & Young
Audit 282 189
Tax consultation 81 55
Other services 21 12
Total 384 256
Financial statements
34 | Comptel Annual Report 2015
EUR 1,000
2015
2014
Interest income from cash and cash equivalents 8 4
Interest income from other receivables 80 36
Financial assets/liabilities measured at fair value through profitorloss:
Forward exchange contracts not in hedge accounting 1,305 -
Foreign exchange gains from other receivables and other liabilities 142 1,438
Interestexpensesfromfinancialliabilitiesmeasuredatamortised cost -189 -125
Interest expenses from other liabilities -84 -18
Forward exchange contracts - -356
Foreign exchange losses from other receivables and other liabilities -2,410 -1,763
Otherfinancialexpenses - -136
Total -1,148 -920
EUR 1,000
2015
2014
Net sales
Change in fair value of forward exchange contracts -584 46
Foreign exchange differences, net 179 126
Other operating expences
Change in fair value of forward exchange contracts - -17
Foreign exchange differences, net -106 -111
Financial income
Change in fair value of forward exchange contracts -25 -
Foreignexchangeprofits 1,330 1,463
Financial expenses
Change in fair value of forward exchange contracts -1,099 -1,150
Foreign exchange losses -1,311 -1,041
Total -1,616 -684
Comptel is applying hedge accounting in accordance with IAS 39 effect from 1.10.2014.
11. FINANCIAL INCOME AND EXPENSES STATEMENT OF COMPREHENSIVE INCOME ITEMS INCLUDE FOREIGN EXCHANGE DIFFERENCES AS FOLLOWS:
Financial statements
35 | Comptel Annual Report 2015
EUR 1,000
2015
2014
Current tax expense 1,199 775
Adjustments for previous years' taxes 161 84
Deferred taxes -1,829 -1,793
Withholding taxes 3,510 2,909
Other direct taxes 45 -
Total 3,086 1,975
In November 2006 Comptel Corporation received a refusal from the Board of AdjustmentoftheTaxOfficeforMajorCorporationsconcerningthecreditingoftaxeswithheld at source in taxation of 2004. The claim for adjustment concerns the crediting of taxes withheld at source the company has paid in 2004 to avoid double taxation.
Comptel Corporation recognised and paid these taxes withheld at source for 2004 in 2005. According to the Board of Adjustment’s decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to EUR 3,510 thousand in 2014. The total withholding taxes expensed between 2004 and 2015 amount to EUR 12,179 thousand.
Comptel Corporation has received license revenue from the countries with which Finland has a tax treaty. The purpose of the tax treaties is to avoid double taxation. Taxes have been withheld from the payments made to Comptel Corporation, in accordance with the royalty article of the related tax treaty, in the source country of the revenue. If the taxes withheld at source paid by Comptel Corporation will not be credited in Finland, the revenue from the customers located in the tax treaty countries will be subject to double taxation.
The application process to prevent Comptel’s double taxation is still pending with theMinistryofFinanceinFinland.However,theprocessbetweenthestatesisveryslow and the timing of a change is hard to forecast. The interpretation of tax treaties may result in different views between the countries in questions. This could mean that the double taxation will prevail.
There are confirmed losses in taxation for the group company Xtract Oy, totally13,851 thousand euros (11,404 thousand euros in 2014). Deferred taxes from the losses werenotbooked,becauseoftheuncertaintyofthepossibilitiestoutilizethelosses.
12. INCOME TAXES
Financial statements
Reconciliation between the income tax expense recognised in the statement of comprehensive income and the taxes calculated using the Group’s domestic corpo-rate tax rate 20 %:
INCOME TAX RECOGNISED IN OTHER COMPREHENSIVE INCOME
2015EUR 1,000
BEFORE TAX
TAX EXPENCE (-)/
BENEFIT (+) NET OF TAX
Cashflowhedges 14 -3 11
Translation differences 189 - 189
Total 203 -3 200
2014EUR 1,000
BEFORE TAX
TAX EXPENCE (-)/
BENEFIT (+) NET OF TAX
Cashflowhedges -227 45 -182
Translation differences 522 - 522
Total 295 45 340
EUR 1,000
2015
2014
Profitbeforetaxes 7,612 7,436
Income tax calculated using the domestic corporation tax rate 1,522 1,487
Effect of tax rates in foreign jurisdictions 370 -71
Non-deductible expenses - 30
R&D additional tax credit - -80
Non-deductible depreciations, amortisations and impairment charges 114 51
Withholding taxes, net 926 593
Current year losses for which no deferred tax assets was recognised - -34
Taxes for previous years 161 34
Other items -8 -35
Income taxes in the consolidated statement of comprehensive income 3,085 1,975
36 | Comptel Annual Report 2015
13. EARNINGS PER SHARE 14. TANGIBLE ASSETS
Thebasicearningspershareiscalculatedbydividingtheprofit/lossfortheyearat-tributable to equity holders of the parent by the weighted average number of ordinary sharesoutstandingduringthefinancialyear.
In calculating the diluted earnings per share, the weighted average number of shares is adjusted by the effect of the conversion into shares of all dilutive potential ordinary shares. Comptel has share options, which have a diluting effect, when the exercise price of the share options is lower than the fair value of the share. The fair valueof theshare isbasedon theaveragepriceof thesharesduring thefinancialperiod. In 2014 and 2014, the options did not have a material dilutive effect on earnings per share.
EUR 1,000
MACHINERY AND EQUIPMENT
Cost at 1 Jan 2015 9,218
Additions 456
Disposals -150
Exchange difference -250
Cost at 31 Dec 2015 9,274
Accumulated depreciation at 1 Jan 2015 -7,623
Depreciation -847
Disposals 146
Exchange difference 202
Accumulated depreciation at 31 Dec 2015 -8,122
Bookvalueat1Jan2015 1,595
Book value at 31 Dec 2015 1,152
EUR 1,000
MACHINERY AND EQUIPMENT
Cost at 1 Jan 2014 9,685
Additions 739
Disposals -1,456
Exchange difference 250
Cost at 31 Dec 2014 9,218
Accumulated depreciation at 1 Jan 2014 -8,056
Depreciation -834
Disposals 1,446
Exchange difference -179
Accumulated depreciation at 31 Dec 2014 -7,623
Bookvalueat1Jan2014 1,629
Book value at 31 Dec 2014 1,595
ThenetbookvalueofthetangibleassetsleasedfinanceleaseisEUR92thousands.
ThenetbookvalueofthetangibleassetsunderfinanceleaseisEUR179thousands.
Financial statements
2015
2014
Numberofoutstandingsharesduringthefinancialperiod,weighted average 107 370 551 107 284 900
Options - 1 400 000
Weighted average number of shares for calculation of diluted earnings per share 109 640 245 107 625 526
Profit/lossfortheyearattributabletoequityholdersoftheparent (EUR 1,000) 4,527 5,461
Numberofoutstandingsharesduringthefinancialperiod,weighted average 107 370 551 107 284 900
Basic earnings per share (euro) 0.04 0.05
Profit/lossfortheyearattributabletoequityholdersoftheparent (EUR 1,000) 4,527 5,461
Weighted average number of shares for calculation of diluted earnings per share 109 640 245 107 625 526
Diluted earnings per share (euro) 0.04 0.05
37 | Comptel Annual Report 2015
15. INTANGIBLE ASSETSEUR 1,000
GOODWILL
PATENTS AND TRADEMARKS
DEVELOPMENT COSTS
OTHER INTANGIBLE ASSETS
TOTAL
Cost at 1 Jan 2015 22,198 1,227 43,479 15,531 82,435
Additions 102 5,176 5,278
Disposals 0
Exchange difference 46 46
Cost at 31 Dec 2015 22,198 1,329 48,655 15,577 87,759
Accumulated amortisation at 1 Jan 2015 -19,552 -649 -31,092 -15,061 -66,354
Amortisation -78 -5,520 -311 -5 909
Exchange difference -13 -13
Accumulated amortisation at 31 Dec 2015 -19,552 -727 -36,612 -15,385 -72,276
Bookvalueat1Jan2015 2,646 577 12,387 470 16,080
Book value at 31 Dec 2015 2,646 602 12,043 192 15,483
Financial statements
EUR 1,000
GOODWILLPATENTS AND TRADEMARKS
DEVELOPMENT COSTS
OTHER INTANGIBLE ASSETS
TOTAL
Cost at 1 Jan 2014 21,559 1,227 38,758 15,514 77,058
Additions 4,721 4,721
Disposals -32 -32
Exchange difference 639 49 688
Cost at 31 Dec 2014 22,198 1,227 43,479 15,531 82,435
Accumulated amortisation at 1 Jan 2014 -18,913 -572 -26,099 -14,654 -60,239
Amortisation -77 -4,993 -359 -5,429
Exchange difference -639 -48 -687
Accumulated amortisation at 31 Dec 2014 -19,552 -649 -31,092 -15,061 -66,354
Bookvalueat1Jan2014 2,646 654 12,659 860 16,819
Book value at 31 Dec 2014 2,646 577 12,387 470 16,080
38 | Comptel Annual Report 2015
ALLOCATION OF GOODWILLGoodwill has been allocated to two different product business units which form separate cash generating units. These product business units do not relate directly togeographicsegments reportedbyComptel.Futurecashflowscanbegeneratedfromallgeographicalmarketareas.Consequently,goodwillcannotbeallocatedtoaspecificgeographicalsegment.Goodwillhasbeenallocatedtotwocashgeneratingunits which are Inventory unit and Fastermind unit. The latter was formed as a result of the Xtract acquisition in 2012. EUR 653 thousand (EUR 653 thousand in 2014) of goodwill has been allocated to Inventory unit and EUR 1,993 thousand (EUR 1,993 thousand in 2014) to Fastermind unit.
IMPAIRMENT TESTING
The recoverable amount of goodwill is determined based on value in use calculations. Thevalue inuse is computedbasedondiscounted forecast cashflows.ThecashflowforecastsrelyontheplansapprovedbytheBoardofDirectorsandmanagementconcerninginparticularprofitabilityandthegrowthrateofnetsales.Theplanscoverafive-yearperiodtakingintoaccounttherecentdevelopmentofthebusiness.Theusedpre-tax rate discount rate is 17.2 % (17.3 % in 2014).
Thecashflowsafterthefive-yearperiodfortheInventoryunithavebeenforecastedby estimating net sales to decrease with rate of -20% . Net sales is mainly generated from existing support and maintenance contracts as well as change requests to the existing systems. Based on these facts, management view is that there is a reason-ablejustificationtouselowergrowthprojectionthanthelong-termeconomicgrowthestimate.Anotherkeyfactorimpactingthecashflowsisoperatingexpenses.Basedon the impairment tests there is no need to recognise an impairment loss.
Thecashflowsafterthefive-yearperiodfortheFastermindunithavebeenfore-casted by estimating the future growth rate of net sales to be 1% . The global growth of communications services providers’ net sales and investments was approximately 2-3%in2015.Inspiteofsomewhatweakeconomicoutlookthegrowthratewashigh-erthantheGDPgrowthingeneral.Consequently,usinga1%growthrateisjustified.Analytics software is one of the fastest growing sectors in the telecommunications softwarespace.Netsalesgrowthisthekeyfactorimpactingthevaluationoftheunit
due to thesignificantgrowthexpectationset for theunit.Basedon the impairmenttests there is no need to recognise an impairment loss.
Theuseofthetestingmodelrequiresmakingestimatesandassumptionsconcern-inginvestments,marketgrowthandgeneralinterestratelevel.
SENSITIVITY ANALYSIS OF IMPAIRMENT TESTINGThe realisation of an impairment loss in the Inventory unit would require the long-term EBITDA level to be more than 134% lower than the management’s estimate at the end of reporting period or that the discount rate was over 105%.
The realisation of an impairment loss in the Intelligent Customer Interaction unit would require the long-term EBITDA level to be more than 22% lower than the man-agement’s estimate at the end of reporting period or that the discount rate was over 102%.
Financial statements
39 | Comptel Annual Report 2015
EUR 1,000
2015
2014
Carrying amount at 1 Jan 706 661
Share of results 254 45
Carrying amount at 31 Dec 960 706
GrouphasanassociatedcompanyinLimerick,Ireland.TangoTelecomLtdemployedan average of 69 employees in the year 2015 (65 in 2014).
The impairment in the investment value was realised during the year 2013, which brought up the value of the investment to correspond the corporate portion of the equity. The accounts of the associate do not include goodwill at 31.12.2015.
16. INVESTMENTS IN ASSOCIATES
SummaryfinancialinformationfortheGroup’sinvestmentsintheassociate-assets,liabilities,netsalesandprofit/loss(EUR1,000): 2015 ASSETS LIABILITIES NET SALES
PROFIT / LOSS
OWNERSHIP %
Tango Telecom Ltd. Group 6,810 2,068 9,189 1,428 20
2014 ASSETS LIABILITIES NET SALES
PROFIT / LOSS
OWNERSHIP %
Tango Telecom Ltd. Group 5,612 2,247 7,172 223 20
EUR 1,000 31 DEC 2014
RECOGNISED IN PROFIT OR LOSS 31 DEC 2015
Deferred tax liabilities
Capitalisation of intangible assets 2,491 -84 2,407
Capitalisation of and amortisation on technology in acquired business operations 19 -9 10
Impact of goodwill amortisation in taxation 131 - 131
Cumulative depreciation difference 20 - 20
Other taxable temporary differences 9 -4 5
Total 2,669 -97 2,572
17. DEFERRED TAX ASSETS AND LIABILITIES
EUR 1,000 31 DEC 2014
RECOGNISED IN PROFIT OR LOSS 31 DEC 2015
Deferred tax assets
Reversal of depreciation and amortisation in taxation 162 9 171
Loss for the period 301 -301 -
Withholding taxes 5,235 1,624 6,859
Share options 86 33 119
Bad Debt reserve - 267 267
Other tax deductible temporary differences 96 173 269
Total 5,880 1,805 7,685
CHANGES IN DEFERRED TAX ASSETS AND LIABILITIES DURING 2015:
Financial statements
40 | Comptel Annual Report 2015
EUR 1,000 GROSS 2015 IMPAIRED NET 2015
Not past due 29,508 29,508
1-30 days past due 3,540 3,540
31-90 days past due 3,124 3,124
91-180 days past due 2,822 2,822
181-360 days past due 1,238 1,238
Over 360 days past due 1,872 -1,646 226
Total 42,104 -1,646 40,458
EUR 1,000 GROSS 2014 IMPAIRED NET 2014
Not past due 20,773 20,773
1-30 days past due 1,926 1,926
31-90 days past due 1,011 1,011
91-180 days past due 3,158 3,158
181-360 days past due 581 581
Over 360 days past due 1,466 -1,184 282
Total 28,915 -1,184 27,731
AGEING ANALYSIS OF TRADE RECEIVABLES
EUR 1,000
2015
2014
Cashatbankandinhand 3,030 9,352
Total 3,030 9,352
19. CASH AND CASH EQUIVALENTS
Comptel recognised EUR 83 thousand credit losses on trade receivables in 2015 (2014: no recognision). The carrying amounts of the trade receivables and other receivables equal therelatedmaximumexposuretocreditrisk.Otherprepaymentsandaccruedincome mainly consist of accruals related to software services and user charges and rent accruals.
18. TRADE RECEIVABLES AND OTHER CURRENT RECEIVABLES EUR 1,000
2015
2014
Trade receivables 40,458 27,731
Prepayments 59 42
Accruals from long-term projects 6,968 8,554
Other prepayments and accrued income 3,121 2,407
Other receivables 6,726 4,624
Total 57,332 43,358
Financial statements
41 | Comptel Annual Report 2015
20. CAPITAL AND RESERVES
EUR 1,000 NUMBER OF SHARES SHARE CAPITALFUND OF INVESTED NON-
RESTRICTED EQUITY TREASURY SHARES TOTAL
At 1 Jan 2014 107,260,051 2,141 401 -383 2,159
Transfer of treasury shares 0 0
Return of treasury shares 196,480 66 66
Emission of new share 500,000 -312 -312
At 31 Dec 2014 106,956,531 2,141 401 -629 1,913
Emission of new share 346,232 494 494
Transfer of treasury shares 0 0
Return of treasury shares 974,139 497 428 925
At 31 Dec 2015 108,276,902 2,141 898 293 3,332
Comptel has one class of shares, articles of association do not limit the maximun number of shares. The shares do not carry a nominal value.All shares issued are fully paid.The impacts of movement in the number of shares are as follows:
The descriptions of the reserves under equity are as follows:
FUND OF INVESTED NON-RESTRICTED EQUITY
The fund of invested non-restricted equity includes other investments of equity nature andsubscriptionpricesofsharestotheextentthatitisspecificallynottobecreditedto share capital.
TRANSLATION RESERVE
The translation reserve comprises the translation differences arising from the transla-tionofthefinancialstatementsoftheforeignsubsidiaries.
FAIR VALUE RESERVE
The fair value reserve comprises the hedging reserve including the effective portion of thecumulativenetchangeinthefairvalueofcashflowhedginginstruments.Comptel
started to apply hedge accounting in accordance with IAS 39.
TREASURY SHARES
Treasury shares reserve includes the acquisition cost of treasury shares held by the Group. During thefinancial year2015 thecompanyallotted281,282shares to itsemployees based on the terms of the share-based incentive plan 2012 and 64,950 shares to members of the Board of Directors as part of their annual compensation (2014:121,480shares).Attheendofthefinancialyearthecompanyheld118,507treasury shares (464,739 treasury shares at 31 Dec 2014).
DIVIDENDS
TheBoardofDirectorsproposestotheAnnualGeneralMeetingthattheBoardwouldbe authorised to decide a dividend pay-out for 2015. The maximum dividend payment would be EUR 0.03 per share and the authorisation would be effective until the date of thenextAnnualGeneralMeeting.
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42 | Comptel Annual Report 2015
21. SHARE-BASED PAYMENTSSHARE OPTIONS
TTheGrouphashadfiveshareoptionschemesduringthefinancialyear.Theoptionsinquestionhavebeengrantedtothekeypersonnelaswellastoasubsidiaryfullyownedby Comptel Corporation.
2015 2009C 2014A 2014B 2015A 2015B
Grant date 14.04.2011 13.02.2014 16.03.2015 09.09.2015 09.09.2015
Subscription period 1.11.13 -30.11.15 1.2.16 -31.1.18 1.2.17 -31.1.19 15.8.18 -15.9.19 15.8.19 -15.9.19
Subscription value date 14.04.2011 13.02.2014 16.03.2015 08.09.2015 08.09.2015
Inputs to the value model:
Share price at grant date 0.54 0.55 0.97 1.15 1.15
Excercise price 0.51 0.51 0.91 0.92 0.92
Expected volatility - 33 % 35 % 25 % 25 %
Expected life of share options - 2.1 3.1 3.7 3.7
Riskfreeinterest 0.00% 0.00% 0.00% 0.00% 0.00%
Fair value of the share option at the grant date 0.06 0.54 0.28 0.11 0.11
Granted share options 0 2,100,000 950,000 1,739,130 1,739,130
2014 2009B 2009C 2014A
Grant date 26.05.2010 14.04.2011 13.02.2014
Subscription period 1.11.12 -30.11.14 1.11.13 -30.11.15 1.2.16 -31.1.18
Subscription value date 21.04.2010 14.04.2011 13.02.2014
Inputs to the value model:
Share price at grant date 0.78 0.58 0.55
Excercise price 0.69 0.54 0.53
Expected volatility 39 % 41 % 33 %
Expected life of share options - 0.9 3.1
Riskfreeinterest 0.09% 0.24% 0.60%
Fair value of the share option at the grant date 0.02 0.06 0.54
Granted share options 0 975.000 2,120,000
Financial statements
43 | Comptel Annual Report 2015
2015 2009C 2014A 2014B 2015A 2015B
Outstanding at the beginning of the year 974,000 2,120,000
Granted during the year 80,000 970,000 1,739,130 1,739,130
Exercised during the year 973,139
Forfeited during the year -100,000 -20,000
Expired during the year 861
Outstanding at the end of the year 2,100,000 950,000 1,739,130 1,739,130
Exercisable at the end of the year
Weighted average exercise price (euro) 0.51 0.51 0.91 0.92 0.92
For the option scheme approved in 2009, the total number of share options is-sued is 4,200,000. The share options may be exercised to subscribe a maximum of 4,200,000 Comptel Corporation shares in total. The share subscription period is for option 2009A, 1 November 2011-30 November 2013, for option 2009B, 1 November 2012-30 November 2014 and for option 2009C, 1 November 2013-30 November 2015. The members of the Executive Board were not included in 2009 option program.
TheAnnualGeneralMeetingofShareholdershason12March2014decidedonthe issue of the share options to theComptelGroup key personnel as part of theincentive and commitment program. The total number of share options issued is 4,200,000. The share subscription period for options 2014A (2,200,000 options) is
1.2.2016 - 31.1.2018, the share subscription period for the options 2014B (1,000,000 options) is 1.2.2017 - 31.1.2019 and the share subcription period for the options 2014C (1,000,000 options) is 1.2.2018 - 31.1.2020.
Basedon theauthorisationgivenby theAnnualGeneralMeeting, theBoardofDirectors has on 9 September 2015 decided on the issue of the share options to the CEO of the company as part of the remuneration, incentive and commitment program. The total number of share options issued is 3,478,260. The share subscription period for options 2015A (1,739,130 options) is 15.8.2018 - 15.9.2019, the share subscription period for the options 2015B (1,739,130 options) is 15.8.2019 - 15.9.2019.
Changes in the number of the outstanding share options and weighted average exercise prices during the period were as follows:
2014 2009B 2009C 2012A 2012B 2014A
Outstanding at the beginning of the year 1,125,000 975,000 1,523,824 1,523,824
Granted during the year 2,140,000
Exercised during the year
Forfeited during the year 275,000 1,523,824 1,523,824 20,000
Expired during the year 1,400,000
Outstanding at the end of the year 974,000 2,120,000
Exercisable at the end of the year 974,000
Weighted average exercise price (euro) 0.00 0.53 0.00 0.00 0.53
Financial statements
44 | Comptel Annual Report 2015
The number and average exercise prices of the share options outstanding at the end of the period:
YEAR OF EXPIRATION
AVERAGE EXERCISE PRICE,
EUR/SHARE
NUMBER OF
OPTIONS
AVERAGE EXERCISE PRICE,
EUR/SHARE
NUMBER OF
OPTIONS
2015 0.51 974,000
2018 0.51 2,120,000 0.53 974,000
2019 0.92 4,428,260 0.53 2,120,000
The expected volatility has been determined based on the historical volatility for a period equalling to the option vesting period.
In 2015 the expense recognised in respect of the option schemes amounted to EUR 304 thousand (2014: EUR 122 thousand).
SHARE-BASED INCENTIVE PLAN
TIn 2015, there is no expense for the share based incentive plan of the President and CEO (EUR 40 thousand in 2014, of which EUR 19 thousand was the portion paid in cash).
The Board of Directors of Comptel Corporation approved a new share-based incentiveplanfortheGroupkeypersonnelinFebruary2012.
The aim of the new plan is to combine the objectives of the shareholders and the target group of employees in order to increase the value of the company, commit the target group to the company and to offer them a competitive reward plan based on long-term shareholding in the company.
TheMatchingSharePlanincludestwoperformanceperiods,bothbeginningon2May2012.Theperformanceperiodswillendon2May2015andon2May2016.Thepre-requisite for participation to the plan and the receipt of reward from the perfor-mance periods requires that a target person owns the company’s shares or acquires them up to a number pre-determined by the Board of Directors. Furthermore, the potential reward from the plan is tied to the validity of the target person’s employment or service or contractual relation.
Rewards from the Plan will be paid partly in the form of company’s shares and partly in cash in 2015 and 2016.
Thecostoftheprogramisrecognisedunderemployeebenefitexpensesoverthevesting period. In 2015 EUR 223 thousand was expensed of which EUR 164 thousand is the portion to be paid in cash (in 2014, EUR 360 thousand of which 288 thousand in cash) .
The outstanding option schemes and share-based incentive programs are de-scribed in more detail in Section Shares and shareholders.
2015 2014
Financial statements
45 | Comptel Annual Report 2015
EUR 1,000PROVISION FOR
WARRANTYLEASE
PROVISION TOTAL
Balance at 1 Jan 2015 270 1,055 1,325
Provisions made during the year -161 -74 -235
Provisions used during the year - - -
Exchange difference - - -
Balance at 31 Dec 2015 109 981 1,090
22. PENSION OBLIGATIONS 24. FINANCIAL LIABILITIES
23. PROVISIONS
Comptel has pension plans in various countries that are based on the local legislation and well-established practices. In Finland the pension arrangement is mainly managed throughtheFinnishStatutoryEmploymentPensionScheme(TyEL)whichisadefinedcontribution plan.
Movementsinprovisionsduring2015:
PROVISION FOR WARRANTY
A provision for warranties is recognised when the underlying product including a war-ranty is sold. The provision is based on management estimates on warranty costs which will materialise.
This item includes the provisions made for unoccupied leased facilities.
Thefairvaluesofliabilitiesarepresentedinnote27.Financialriskmanagement.ComptelhadbankloansamountingtoEUR5,000thousandat31December2015
(EUR 7,000 thousand at 31 December 2014) and EUR 1,979 thousand of the overdraft limit (in 2014 there was no overdraft limit outstanding). Comptel has a credit facility consisting of EUR 20 million Revolving Credit Facility and EUR 5 million overdraft capacity. The facility is valid until 31 July 2018. Comptel’s subsidiary has a loan in the amountofEUR78thousandfromFinnverawithfixedamortisationschedule.Thelastinstalment will be paid on 15 August 2017.
The interest rate of the Facility is floating and determined based on prevailingIBOR. The weighted average interest rate is 0.7 % (2014: 1.3 %). The interest of the loan from Finnvera is determined based on 6 months euribor. At 31 December 2015 the interest rate was 3.7 %.
EUR 1,000 2015 2014
Non-current provisions - -
Current provisions 1,090 1,325
Total 1,090 1,325
EUR 1,000
2015
2014
Non-current financial liabilities measured at amortised cost
Loansfromfinancialinstitutions 33 1,078
Finance lease liabilities 58 179
Total 91 1,257
Current financial liabilities measured at amortised cost
Loansfromfinancialinstitutions 6,963 5,984
Finance lease liabilities 112 259
Other interest-bearing liabilities - 62
Total 7,075 6,305
Financial statements
46 | Comptel Annual Report 2015
EUR 1,000
2015
2014
Finance lease liabilities - minimum lease payments
Less than one year 126 270
Betweenoneandfiveyears 62 184
Total 188 454
Finance lease liabilities - present value of minimum lease payments
Less than one year 112 258
Betweenoneandfiveyears 57 179
Total 170 437
Futurefinancialcharges 7 16
EUR 1,000
2015
2014
Trade payables 2,116 1,094
Advances received from long-term contracts 3,270 4,409
Accrued expenses and deferred income 26,034 22,646
Other liabilities 6,802 4,564
Total 38,222 32,713
MATURITY ANALYSIS OF FINANCE LEASE LIABILITIES
25. TRADE AND OTHER CURRENT LIABILITIES
The accrued expenses and deferred income mainly comprise of accruals related to deferredrevenue,accruedemployeebenefitsandaccruedoperatingexpenses.
Comptel’sderivativecontractsatfairvaluethroughtheprofitorlossaccountsandcontractsunderthehedgeaccountingaredeterminedusingquotedmarketpriceandvaluation methods.
26. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Fairvaluehierarchyforfinancialinstrumentsmeasuredatfairvalue. EUR 1,000
FAIR VALUE AT 31.12.2015
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
Forward contracts measured at fair value through profit or loss
Liabilities 138 138
Forward contracts measured at fair value recognised in other comprehensive income
Liabilities 214 214
Financial assets available-for-sale
Other shares 87 87 EUR 1,000
FAIR VALUE AT 31.12.2014
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
Forward contracts measured at fair value through profit or loss
Assets 25 25
Liabilities 847 847
Forward contracts measured at fair value recognised in other comprehensive income
Liabilities 227 227
Financial assets available-for-sale
Other shares 87 87
Financial statements
47 | Comptel Annual Report 2015
27. FINANCIAL RISK MANAGEMENT
Comptelisexposedtofinancialrisksinitsordinarybusinessoperations.TheobjectiveofComptel’sriskmanagementistominimisetheadverseeffectsarisingfromfluctu-ationsof financialmarkets on theGroup’s cash flows, result andequity.Comptel’sgeneralriskmanagementprinciplesareapprovedbytheBoardofDirectorsandtheirimplementationistheresponsibilityoftheChiefFinancialOfficer(CFO)togetherwiththebusinessunits.Comptel’sfinancialpolicyisrisk-adverse.ThemainfinancialrisksfortheGrouparecurrencyriskandcreditrisk.Financialmanagementidentifiesandassessesrisksandacquirestheinstrumentsneededtohedgeagainstriskstogetherwith operating units. Hedging transactions are carried out in accordance with the writ-tenriskmanagement principlesapprovedby theBoardofDirectors.Comptelusesforeigncurrencyforwardsinitscurrencyriskmanagement.Othercurrencyinstrumentsmay be used based on a resolution of the Board of Directors.
CURRENCY RISK
Comptel operates globally and is therefore exposed to currency risks arising fromvarious currency positions. In Comptel’s business operations the major currencies are EuroandUSDollar(USD).AnothersignificantcurrencyisUKPoundSterling(GBP).
Comptel hedges open foreign currency positions. The currency position is mon-itored on a 12-month rolling period twice a month. Comptel started to apply hedge accounting in accordance with IAS 39 from 1.10.2014. The changes in the fair value of thehedginginstumentsforthefinancialassetsandliabilitiesarerecognisedthroughprofitandlossaccounts.
The hedging instruments are forward contracts entered into with banks. Thehedging forward contract is denominated in the same currency as the underlying item resulting the value of the hedging instrument to change in the opposite way compared to the underlying item.
The invoicing of sales orders follows the progress of projects, which causes timely uncertainty.Moreover,therealisedturnoveroftradereceivablesexceedsthetermsintheclientagreements.Thehedgingofthefuturecashflowsistimedtakingthesefactsinto account.
INTEREST RATE RISK
Interestrateriskistheriskthatcashflowsortheresultwillfluctuatebecauseofchang-esinmarketinterestrates.Comptel’sinterest-bearingliabilitiesat31December2015totalledEUR7,167thousand(2013:EUR7,562thousand).Comptelhadbankloansamounting to EUR 6,963 thousand at 31 December 2015 ( EUR 7,000 thousand at 31 December 2014). Comptel has a loan facility, which consists of EUR 20 million revolvingcreditfacilityandEUR5millionoverdraftcapacityoncurrentbankaccount.The ending date for the facility is 31 July 2018. At 31 December 2015 the amount available under the Revolving Credit Facility was EUR 15 million. Comptel’s subsidiary hasaloanintheamountofEUR78thousandfromFinnverawithfixedamortisationschedule. The last instalment will be paid on 15 August 2017.
Theinterestrateof the loanfacility isfloatinganddeterminedbasedonprevail-ing IBOR. The weighted average interest rate is 0.7%. The interest of the loan from Finnvera is determined based on 6 months euribor. At 31 December 2015 the interest rate was 3.7.
Corporate did not have interest rate swap contracts at the end of the Fiscal YearPossibleshort-terminvestmentsinfinancialsecuritiesgiverisetointerestraterisk
buttheimpactofsuchriskisnotsignificant.Comptel´srevenuesandoperatingcashflowsaremainlyindependentofthefluctuationsofmarketrates.
CREDIT RISKCreditriskistheriskthatonepartywillcauseafinanciallossfortheGroupbyfailingtodischargeanobligation.InComptelcreditriskmainlyarisesfromtradereceivablesrelated to customers, derivatives and cash and cash equivalents.
Credit riskmanagementprinciplesaredefined inComptel’sdocumentedproce-dures (RiskManagementPrinciples,Currencyhedging inComptelCorporationandGeneral principles of liquiditymanagement). Credit riskmanagement in respect ofderivatives and investments is centralised to the Group accounting department, in respect of clients and credit control to the business area organisation.
Comptel’s customers are mainly mid-size or large teleoperators. The Group’s clientele is large and geographically widely dispersed, which decreases the customer
Financial statements
48 | Comptel Annual Report 2015
riskoftheGroup.Comptel’s business consists of deliveries of large productised IT system and the
valueofasingleprojectmaybeseveralmillioneuro.Therefore theriskassociatedwithasingleprojectoran individualclientmaybesignificant.FurthermoresomeofComptel’s clients operate in countries that are or have been war zone areas, which in partincreasescreditrisk.
Comptelhasnosignificantcreditriskconcentrations,sincenoindividualcustomeror customer group represents a material risk. In delivery projects partial advanceinvoicingisgenerallyused.Furthermorecreditriskisreducedbyprogresspaymentsinvoiced based on percentage of completion. In some countries letter of credits are used.
Comptel has a policy for writing off trade receivables. According to the policy a baddebtprovisionof50%of thetotalvalue isgenerallybooked if thereceivable isoverdue more than 360 days and a provision of 100% is impacted when the receivable is overdue more than 540 days. Comptel recognised credit losses in the statement of comprehensiveincome83thousandeurosinthefinancialyear2015(therewerenocredit losses in 2014). The ageing analysis of trade receivables is presented in note 18. Trade receivables and other current receivables.
LIQUIDITY RISK
Liquidity riskmeans insufficientfinancingorhigher thannormalfinancingexpenseswhenbusinessenvironment deterioratesand financing is needed.Theobjectiveofliquidityriskmanagement istomaintainsufficient liquidityandensurethatfinancingofbusinessoperationsisavailablewhenneededquicklyenough.PartoftheGroup’sliquid funds are invested in mutual funds based on the principles approved by the BoardofDirectors.Comptel’smainsourceoffinancinghasbeentheoperatingcashflow.Cashlevelsaremonitoredonadailybasis.
At 31 December 2015 the Group’s cash and cash equivalents totalled EUR 3,030 thousand (EUR 9,352 thousand at 31 December 2014). At 31 December 2015 Comptel’s interest-bearing liabilities totalled EUR 7,166 thousand (EUR 7,562 thou-sand in 2014). Under the Revolving Credit Facility in place until 2018 there is still EUR
15 million available for draw-down. The Facility contains a covenant whereby Group equity ratio must be at least 35 %. At 31 December 2015 Comptel’s equity ratio was 52.4 % (2014: 52.4 %). In addition, the arrangement contains a covenant, according to which the net debt to the Group’s EBITDA must be equivalent or less than 2.75. At 31 December the the net debt to EBITDA was 0.27 (31 December 2014 -0.12). The covenants are reported every three months. Furthermore, Comptel has an option for TyEL (earnings-related pension) premium loan amounting to EUR 13,4 million.
Financial statements
49 | Comptel Annual Report 2015
2015, EUR 1,000 CARRYING AMOUNT
CONTRACTUAL CASH FLOW 1-6 MONTHS 7-12 MONTHS 1-2 YEARS 3-5 YEARS
Non-derivative financial liabilities
Loansfromfinancialinstitutions 6,996 7,007 6,950 23 34 -
Finance lease liabilities 170 177 67 46 64 -
Trade payables 2,116 2,116 2,116 - - -
Derivative financial liabilities
Forward exchange contracts under hedge accounting
Outflow 138 138 135 3 - -
2014, EUR 1,000 CARRYING AMOUNT
CONTRACTUAL CASH FLOW 1-6 MONTHS 7-12 MONTHS 1-2 YEARS 3-5 YEARS
Non-derivative financial liabilities
Loansfromfinancialliabilities 7,062 7,176 5,057 1,038 1,081 -
Hire purchase liabilities 63 63 32 31 - -
Finance lease liabilities 437 454 135 135 102 82
Trade payables 1,094 1,094 1,094 - - -
Derivative financial liabilities
Forward exchange contracts under hedge accounting
Inflow -25 -25 -25 - - -
Outflow 1,074 1,074 978 95 - -
Interest swap - not in hedge accounting
Net cash flow 19 19 - - 19 -
Thefollowingtablesetsforthmaturityanalysisbasedoncontractualcashflows.Cashflowincludesbothloanrepaymentsandinterestpayments.
Financial statements
50 | Comptel Annual Report 2015
EUR 1,000
BOOK VALUE31.12.15
FAIR VALUE31.12.15
BOOK VALUE31.12.14
FAIR VALUE31.12.14
Financial assets
Financial assets at fair value through profit or loss
Forward contracts (level 2) - - 25 25
Available-for-salefinancialassets (level 3) 87 87 87 87
Non-current trade receivables 1,872 1,872 1,466 1,466
Current trade receivables 40,232 40,232 27,449 27,449
Other current receivables 7,133 7,133 4,624 4,624
Cash and cash equivalents 3,030 3,030 9,352 9,352
Financial liabilities
Financial liabilities at fair value through profit or loss
Forward contracts (level 2) 138 138 847 847
Trade payables and other liabilities 38,020 38,020 32,713 32,713
Non-currentloansfromfinancialinstitutions 33 33 1,078 1,081
Non-currentfinanceleaseliabilities 58 58 179 179
Currentloansfromfinancialinstitutions 5,044 5,056 5,984 6,095
Currentbankoverdraftfacility 1,918 1,918 - -
Currentfinanceleaseliabilities 112 112 259 259
Other current liabilities - - 63 63
CAPITAL STRUCTURE MANAGEMENT
The purpose of Comptel capital structure management is to support the business operations by securing normal operational demands and grow shareholder value in the long-term.Comptel aims at continuing profitable business by investing inR&Dandenhancingitspresenceontheglobalmarketplace.Comptel’sprofitdistributionistypically30to60percentofthenetincomeforthepreviousfinancialyear.Theamountofdividendspaidmayvaryaccordingtothenear-termeconomicoutlookaswellasComptel’sfinancialposition.
Gearing in 2015 and 2014 was as follows: EUR 1,000
2015
2014
Interest-bearing liabilities 7,167 7,562
Cash and cash equivalents -3,030 -9,352
Interest-bearing net liabilities 4,137 -1,790
Total equity 37,324 33,346
Gearing 11,1 % -5.4 %
FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
Financial statements
51 | Comptel Annual Report 2015
EXPOSURE TO CURRENCY RISK
SENSITIVITY TO FOREIGN EXCHANGE RATESA 10 % weakening/strengthening of the euro against the currencies below at 31December would have affected equity and result after taxes as follows:
In calculating the sensitivity related to exchange rate changes the following assump-tions were used:- a +/- 10 % exchange rate change-thepositioncomprisesforeigncurrencyfinancialassetsandfinancialliabilities,i.e.
loans, trade receivables, cash and cash equivalents, trade payables and derivative instruments. This applies to companies operating in currency which is different from the currency subject to the sensitivity analysis.
FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIESThe carrying amount of the loans is EUR 7,166 thousand and the fair value is EUR 7,184thousand.Forotherfinancialassetsandliabilitiestheircarryingamountsequal their fair values as the discounting has no material effect considering the short maturity of these items.
Derivative instruments measured at fair value:
2015EUR 1,000 EQUITY RESULT
USD -1 390/1 390 -90/90
GBP -2 530/2 530 -300/300
2015 EUR 1,000
POSITIVE FAIR VALUE (CARRY-ING AMOUNT)
NEGATIVE FAIR VALUE (CARRY-ING AMOUNT)
NOMINAL VALUE OF UNDERLYING
INSTRUMENT
Forward contracts - all - 351 39,046
Forward contracts - under hedge accounting - 213 -
2014 EUR 1,000
POSITIVE FAIR VALUE (CARRY-ING AMOUNT)
NEGATIVE FAIR VALUE (CARRY-ING AMOUNT)
NOMINAL VALUE OF UNDERLYING
INSTRUMENT
Forward contracts - all 25 1,074 17,203
Forward contracts - under hedge accounting - 227 -
Interest swap - not under hedge accounting - 19 -
2014EUR 1,000 EQUITY RESULT
USD -31/31 -69/69
GBP -2 239/2 239 -6/6
EUR 1,000 USD GBP USD GBP
Loan receivables 404 - 362 -
Trade receivables 10,259 1,709 10,066 90
Cash and cash equivalents 6 4 1,179 221
Trade payables -430 -7,584 -208 -6,190
Net statement of financial position exposure 10,239 -5,871 11,399 -5,879
Orderbacklog (12 months) 20,887 4,680 21,938 1,460
Hedging
Forward contracts (12 months) -26,207 6,142 -12,527 5,398
Total net exposure 4,919 4,951 20,810 979
2015 2014
Financial statements
52 | Comptel Annual Report 2015
EUR 1,000
2015
2014
Other operating income -62 -300
Depreciation, amortisation and impairment charges 6,756 6,263
Exchange differences 994 325
Share of result of associates -287 -45
Share-based payments 428 263
Other adjustments 5 -411
Total 7,834 6,095
EUR 1,000
2015
2014
Bankguarantees,shortterm 2,286 2,595
Bankguarantees,longterm 441 285
Total 2,727 2,880
Corporate mortgages 200 200
Collaterals given on behalf of others
Guarantees 29 34
EUR 1,000
2015
2014
Less than one year 2,161 2,428
Betweenoneandfiveyears 1,218 2,962
Total 3,379 5,390
28. ADJUSTMENTS TO CASH FLOWS FROM OPERATING ACTIVITIES
30. COMMITMENTS AND CONTINGENCIES
29. OPERATING LEASES
Non-cashtransactionsoritemsthatarenotpartofcashflowsfromoperatingactivities:
Minimumleasepaymentsonnon-cancellableofficefacilitiesleasesandotheroperating leases are payable as follows:
Comptelhasleasedtheofficepremisesituses.Theseleasestypicallyrunforaperiodfrom one to ten years, and normally with an option to renew the lease after that date. The index, renewal and other terms of the agreements are diverse.
The statement of comprehensive income for the year 2015 includes lease ex-pensesfortheofficepremisesamountingtoEUR3,035thousand(2014:EUR2,978thousand).
Financial statements
53 | Comptel Annual Report 2015
31. RELATED PARTY TRANSACTIONS
The Comptel Group companies are as follows:
The Comptel Group has a related party relationship with its associates, the Board of Directors, President and CEO, the Executive Board and also with people and companies underComptelmanagement’sinfluence.Moreinformationabouttheinvestmentsinassociatesisgiveninthenotenumber16.
COMPANY DOMICILE GROUP HOLDING (%) GROUP VOTING (%) GROUP HOLDING (%) GROUP VOTING (%)
Comptel Corporation Finland
Comptel Communications Holdings Ltd. UK 100.00 100.00 100.00 100.00
Comptel Communications Ltd. UK 100.00 100.00 100.00 100.00
Business Tools Oy Finland 0.00 0.00 100.00 100.00
Comptel Communications AS Norway 100.00 100.00 100.00 100.00
Comptel Communications Brasil Ltda Brazil 100.00 100.00 100.00 100.00
Comptel Communications EOOD Bulgaria 100.00 100.00 100.00 100.00
Comptel Communications Inc. USA 100.00 100.00 100.00 100.00
Comptel Communications Oy Finland 100.00 100.00 100.00 100.00
Comptel Communications Sdn Bhd Malaysia 100.00 100.00 100.00 100.00
Comptel Passage Oy Finland 0.00 0.00 100.00 100.00
Comptel Ltd UK 0.00 0.00 100.00 100.00
ViewgateNetworksLtd. UK 0.00 0.00 100.00 100.00
Xtract Oy Finland 100.00 100.00 100.00 100.00
Comptel Communications India Private Ltd. India 100.00 100.00 100.00 100.00
Comptel Communications S.r.l. Italy 100.00 100.00 100.00 100.00
Comptel Palvelut Philippines, Inc. Philippines 100.00 100.00 0.00 0.00
2015 2014
Financial statements
54 | Comptel Annual Report 2015
EUR 1,000
2015
2014
Other operating income
Associates - 1
Interest revenue
Associates 8 8
Non-current receivables
Associates 121 113
EUR 1,000
2015
2014
President and CEO 868 585
Board of Directors at 31 Dec 2013
Ervi Pertti 59 61
MäkijärviHeikki 31 31
SöderströmEriikka 31 32
Vaajoensuu Hannu 39 40
Vasara Antti 31 33
Former Board members
Walldén Petteri - 2
Total 191 199
GUARANTEES AND OTHER CONTINGENT LIABILITIES
2015
2014
Guarantees 29 34
Transactions, which have been entered into with related parties, are as follows: TheemployeebenefitsofthePresidentandCEOandthemembersoftheBoardofDirectors of the parent company:
CONTINGENT LIABILITIES ASSUMED ON BEHALF OF GROUP COMPANIES
In 2008 Comptel Corporation gave a performance guarantee, still in force, on behalf of its subsidiary. The total value of this agreement is USD 4 million. Comptel gave a guarantee of GBP 700 thousand for its subsidiary in 2009.
KEY MANAGEMENT COMPENSATION
ThekeymanagementpersonnelcompensationincludestheemployeebenefitsofthePresident and CEO, the members of the Board of Directors and the members of the Executive Board.
AnadditionaldefinedcontributionpensionplanhasbeenagreedonforthePresidentand CEO of the parent company. Yearly pension expense is 15% of salary. The re-tirement age is based on the Finnish Statutory Employment Pension Scheme (TyEL).
New options were granted to the former and current members of the Executive Board in 2015, total number of the share options was 480,000 (In 2014 2.140.000). 3.618.260 share options were granted to the President and CEO in 2015 (In 2014 400.000). At 31 December 2014 the management had 5,448,260 share options, which were not exercis-able (2014: 3,094,000 share options, of which 975,000 were exercisable).
The compensation to the members of the Board of Directors has been paid by giving shares in Comptel Corporation with 40% of the annual gross compensation.
The management of the Group had no loans referred to in the Companies Act, chapter 8, article 6.
EUR 1,000
2015
2014
Salariesandothershort-termemployeebenefits 2,169 2,131
Share-based payments 725 131
Total 2,894 2,262
Financial statements
55 | Comptel Annual Report 2015
KEY FIGURES
1)Thefiguredoesnotincludeinvestmentsindevelopmentprojects.IncludestheacquisitionofXtractin2012.Thegrosscapitalinvestmentsexcludingtheacquisitionamounted EUR 1,678 thousand, which is 2.0% of net sales.
FINANCIAL SUMMARY 2011*) 2012 2013 2014 2015
Net sales, EUR 1,000 76,751 82,428 82,668 85,714 97,728
Net sales, change % -1.5 7.4 0.3 3.7 14.0
Operatingprofit/loss,EUR1,000 11,902 -13,517 7,308 8,311 8,474
Operatingprofit/loss,change% 31.3 213.6 154.1 13.7 2.0
Operatingprofit/loss,as%ofnetsales 15.5 -16.4 8.8 9.7 8.7
Profit/lossbeforetaxes,EUR1,000 10,963 -13,955 5,554 7,436 7,612
Profit/lossbeforetaxes,as%ofnetsales 14.3 -16.9 6.7 8.7 7.8
Return on equity, % 16.7 -37.2 9.3 17.5 12.8
Return on investment, % 23.6 -36.3 16.1 19.5 18.3
Equity ratio, % 66.5 46.8 50.5 52.4 52.4
Gross investments in tangible and intangible assets, EUR 1,000 1) 1,037 4,484 551 740 558
Gross investments in tangible and intangible assets, as % of net sales 1) 1.4 5.4 0.7 0.9 0.6
Research and development expenditure, EUR 1,000 15,419 18,581 17,790 16,791 20,299
Research and development expenditure, as % of net sales 20.1 22.5 21.5 19.6 20.8
Orderbacklog,EUR1,000 47,217 48,368 40,756 55,213 66,344
Averagenumberofemployeesduringthefinancialperiod 623 700 684 665 723
Interest-bearing net liabilities, EUR 1,000 -9,334 3,541 2,228 -1,789 4,137
Gearing ratio, % -22.3 13.1 7.7 -5.4 11.1
Debt-equity ratio% 0.2 31.0 30.3 22.7 19.2
Financial statements
56 | Comptel Annual Report 2015
2) The Board’s proposal*) Year 2011 error has been corrected.
PER SHARE DATA 2011*) 2012 2013 2014 2015
EPS, EUR 0.07 -0.12 0.02 0.05 0.04
Diluted EPS, EUR 0.07 -0.12 0.02 0.05 0.04
Equity per share, EUR 0.39 0.25 0.27 0.31 0.34
Dividend per share, EUR 2) 0.03 - 0.01 0.02 0.03
Dividend per earnings, % 2) 42.2 - 41.20 39.54 72.65
Effective dividend yield, % 2) 6.1 - 2.10 2.00 1.60
P/E ratio 6.9 -3.3 19.8 19.4 43.40
Highest share price 0.79 0.63 0.59 1.00 1.93
Lowest share price 0.42 0.37 0.38 0.48 0.84
Yearly average share price (VWAP) 0.63 0.47 0.46 0.60 1.20
Marketvalueatyear-end,millionEUR 52.3 42.8 51,5 105,8 198.1
Trading volume 32 836 546 26 734 489 18,358,693 27,778,321 41,222,529
Development of exchange of shares % 30.7 25.0 17.1 25.9 38.0
Adjusted number of shares at the end of period 107,054,810 107,054,810 107,421,270 107,421,270 108,395,409
of which the number of treasury shares 292,685 161,219 161,219 464,739 118,507
Outstanding shares at the end of period 106,762,125 106,893,591 107,260,051 106,956,531 108,276,902
Adjusted average number of shares during the period 106,775,223 106,863,518 106,893,591 107,284,900 107,370,551
Average number of shares, dilution included 106,775,223 107,650,327 106,893,591 107,625,526 109,640,245
Financial statements
57 | Comptel Annual Report 2015
Operating margin % =Operatingprofit/loss
Net salesx 100
Profitmargin (before income taxes) % =
Profit/lossbeforetaxes
Net salesx 100
Return on equity % (ROE) =Profit/loss
Total equity (average during year))x 100
Return on investment % (ROI) =Profit/lossbeforetaxes+financialexpenses
Total equity + interest bearing liabilities (average during year)x 100
Equity ratio % =Total equity
Statementoffinancialpositiontotal–advancesreceivedx 100
Gross investments in tangible and intangible assets, as %
of net sales =
Gross investments in tangible and intangible assets
Net salesx 100
Research and development expenditure, as % of net sales =
Research and development expenditure
Net salesx 100
Gearing ratio % =Interest-bearing liabilities - cash and cash equivalents
Total equityx 100
Debt-equity ratio % =Interest-bearing liabilities
Total equityx 100
DEFINITIONS OF KEY FIGURES
Earnings per share (EPS) =
Profit/lossforthefinancialyearattributabletoequity shareholders
Averagenumberofoutstandingsharesforthefinancialyear
Equity per share =
Equity attributable to the equity holders of the parent company
Adjusted number of shares at end of period
Dividend per share =Dividend
Adjusted number of shares at end of period
Dividend per earnings % =Dividend per share
Earnings per share (EPS)x 100
Effective dividend yield % =Dividend per share
Share closing price at end of periodx 100
P/E-ratio =Share closing price at end of period
Earnings per share (EPS)
Development of exchange of shares % =
Volume of exchange of shares
Adjusted number of shares at the end of period
Financial statements
58 | Comptel Annual Report 2015
PARENT COMPANY INCOME STATEMENT, FAS
PARENT COMPANY BALANCE SHEET, FAS
EUR 1,000
NOTES
1 JAN - 31 DEC 2015
1 JAN - 31 DEC 2014
Net sales 2 93,137 82,580
Other operating income 3 54 314
Materialsandservices 4 -3,896 -3,021
Personnel expenses 5 -18,083 -16,284
Depreciation and amortisation 6 -310 -345
Other operating expenses 7 -65,440 -57,599
-87,730 -77,249
Operating profit/loss 5,462 5,645
Financial income 8 703 2,319
Financial expenses 9 -1,490 -1,116
Profit/loss before appropriations and income taxes 4,675 6,848
Extraordinary income 550 -
Profit/loss before income taxes 5,225 6,848
Income taxes 10 -3,496 -2,896
Profit/loss for the period 1,729 3,952
EUR 1,000 NOTES 31 DEC 2015 31 DEC 2014
ASSETS
Non-current assets 11
Other intangible assets 246 379
Tangible assets 96 61
Investments 3,180 3,279
3,522 3,719
Current assets
Non-current receivables 12 4,140 3,583
Current receivables 13 52,547 43,525
Cash and cash equivalents 193 6,609
52,740 50,133
TOTAL ASSETS 60,402 57,435
EQUITY AND LIABILITIES
Capital and reserves 14
Share capital 2,141 2,141
Fund of invested non-restricted equity 1,698 401
Retained earnings 4,266 2,388
Profit/lossfortheperiod 1,729 3,952
9,834 8,882
Provisions 15 109 270
Liabilities
Non-current liabilities 16 - 1 272
Current liabilities 17 50,459 47,012
TOTAL EQUITY AND LIABILITIES 60,402 57,435
Financial statements
59 | Comptel Annual Report 2015
PARENT COMPANY STATEMENT OF CASH FLOWS, FAS
EUR 1,000
1 JAN - 31 DEC 2015
1 JAN - 31 DEC 2014
Cash flows from operating activities
Profit/lossbeforeappropriationsandincometaxes 4,675 6,848
Adjustments:
Depreciation, amortisation and impairment charges 310 345
Financial income and expenses 176 -1,475
Other adjustments 12 37
Changeinworkingcapital:
Change in trade and other current receivables -8,662 -6,175
Change in trade and other current liabilities 2,599 8,267
Change in provisions -161 -7
Interest paid -256 -187
Interest received 5 3
Taxes paid and tax returns received -3,496 -2,896
Net cash from operating activities -4,798 4,760
Cash flows from investing activities
Sale of business operations - 300
Investments in subsidiaries -180 -
Investments in tangible and intangible assets -212 -43
Proceeds from sale of tangible and intangible assetts - 1
Proceeds from repayments of loans 243 -
Loans granted -543 -423
Net cash used in investing activities -692 -165
EUR 1,000
1 JAN - 31 DEC 2015
1 JAN - 31 DEC 2014
Cash flows from financing activities
Dividends paid -2,139 -1,073
Acquisition of own shares - -312
Proceeds from new shares 497 -
Proceeds from share options 800 -
Proceeds from borrowings 27,979 8,500
Repayment of borrowings -28,063 -9,600
Net cash used in financing activities -926 -2 484
Change in cash and cash equivalents -6,416 2,111
Cash and cash equivalents at the beginning of period 6,609 4,498
Cash and cash equivalents at the end of period 193 6,609
Change -6,416 2,111
Financial statements
60 | Comptel Annual Report 2015
1. ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS
COMPANY PROFILE
ComptelCorporation is a Finnish public limited liability company organ-ised under the laws of Finland. Founded in 1986, Comptel Corporation is one of the leading providers of telecom software and services in convergent mediation and charging, predictive analytics and service fulfillment.ComptelCorporationislistedonNASDAQOMXHelsinki(CTL1V). The parent company of the Comptel Group, Comptel Corporation, is domiciled in Helsinki and its registered address isSalmisaarenaukio1,00180Helsinki.
ComptelCorporation’sseparatefinancialstatementsarepreparedin accordance with Finnish Accounting Standards (FAS).
PRESENTATION OF FINANCIAL INFORMATION All financial informationpresented ineurohasbeen rounded to thenearestthousandandconsequentlythesumoftheindividualfigurescandeviatefromthetotalfigure.
FOREIGN CURRENCY TRANSACTIONSTransactions denominated in foreign currencies are translated at the exchange rates prevailing on the dates of the transactions. Foreign currency monetary balances are translated at the closing rate at the balance sheet date. Non-monetary items measured at fair value in a
NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY, FAS
foreign currency are translated at the closing rate at the balance sheet date. Gains and losses resulting from transactions in foreign curren-cies and translation of monetary items are recognised on the income statement.
TANGIBLE ASSETS, INTANGIBLE ASSETS AND OTHER LONG-TERM EXPENDITURETangible assets, intangible assets and other long-term expenditure are stated at historical cost less cumulative depreciation and amortisation and any impairment losses. Where parts of an item of tangible assets, an intangible asset or parts of other long-term expenditure have different useful lives, they are accounted for as separate items of tangible assets, intangibleassetsorotherlong-termexpenditure.Maintenance,repairsandrenewalsaregenerallyexpensedduringthefinancialperiodinwhichthey are incurred except for large renovation expenditure relating to leased premises that are capitalised under other long-term expenditure.
Depreciation and amortisation is charged to the income statement on a straight-line basis over the estimated useful life of an asset. The depreciation/amortisation period for all assets is four years, with the exception of the basic refurbishment of leased premises and capital-ized patent expenses. Leased assets are amortised over the shorter oftheperiodoffiveyearsandtheleaseterm.Capitalizedpatentex-penses are depreciated within ten years. The amortisation period for goodwillisfiveyears.
Gains and losses on sales and disposals of the abovementioned assets are included in operating income and in operating expenses, respectively.
The difference between the annual depreciation according to
Financial statements
61 | Comptel Annual Report 2015
plan and the depreciation made in taxation is shown as a separate item under appropriations in the income statement. The accumulated depreciation difference is shown under appropriations between the shareholders’ equity and liabilities in the balance sheet.
RESEARCH AND DEVELOPMENT COSTSResearch and development costs are expensed during the period in which they occur. Government grants that compensate the company for the development costs are deducted from the related expenses in the income statement.
LEASESLease payments are expensed during the financial period in whichthey occur.
PENSION OBLIGATIONSThe pension plans of the parent company are arranged in accordance with the Finnish legislation. Contributions based on the regularly reviewed actuarial calculations prepared by the pension insurance company are recognised as an expense in the income statement in the year to which they relate.
PROVISIONSA provision is based on an existing obligation and it is recognised on the balance sheet when an entity has a present obligation (legal or
constructive)asaresultofapastevent,itisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligationandareliableestimate can be made of the amount of the obligation.
A provision for onerous contracts is recognised when the expected benefitstobederivedbythecompanyfromacontractarelowerthanthe unavoidable cost of meeting its obligations under the contract.
INCOME TAXESThe income taxes in the income statement consist of income tax based ontaxableprofitforthefinancialperiod,adjustmentstoprioryeartaxesand withholding taxes treated as non-deductible.
REVENUE RECOGNITION AND NET SALESRevenuefromthesaleofgoodsisrecognisedwhensignificantrisksand rewards of ownership have been transferred to the buyer. Revenue from services is recognised when the service has been performed. License revenue that includes no work performance is recognisedwhen the licence is delivered. The number of subscribers at a client is reviewed continuously. If their number exceeds the number agreed on in the terms of the licence, the client is charged for the increased number of subscribers. This licence upgrade revenue is recognised uponinvoicing.Maintenancerevenueisrecognisedonastraight-linebasis over the maintenance term.
LONG-TERM PROJECTSRevenue and expenses from a long-term project are recognised using
Financial statements
62 | Comptel Annual Report 2015
the percentage of completion method, when the outcome of a long-term project can be estimated reliably. The revenue from a long-term projectcomprises licence incomeandwork.Theoutcomeofa long-term project can be estimated reliably when the revenue and expenses expected as well as the progress made towards completing a particu-lar project can be measured reliably and when it is probable that the economicbenefitsassociatedwiththeprojectwillflowtothecompany.In Comptel the percentage of completion of a long-term project is determinedbytherelationofaccruedworkhourstoestimatedoverallwork hours.When it is probable that total project costswill exceedtotal project revenue, the expected loss is recognised as an expense immediately.
Net sales are adjusted for sales-related indirect taxes and other adjusting items.
A separate warranty provision is recognised to cover costs under warranty periods following the completion of the projects. The total estimated margin of onerous projects is recognised as an expense and a provision.
TRADE RECEIVABLESTrade receivables are recognised at the original invoice amount to customers and stated at their cost less impairment losses.
CASH AND CASH EQUIVALENTSCashandcashequivalentscomprisecash,bankbalancesandothershort-term highly liquid investments with original maturities of three monthsorlessfromthedateofacquisition.Bankoverdrafts,ifany,areincluded within current liabilities.
DERIVATIVE FINANCIAL INSTRUMENTS PRINCIPLES
Receivables,debtandcashflowinforeigncurrenciescanbehedged.Cashflowsarehedgedagainstcurrencyfluctuationsinrespectofthoseprojects for which revenue is recognised based on the percentage of completion method and invoices issued in a currency other than euro.
RECOGNITION AND MEASUREMENT
The company uses currency forward contracts. The changes in the values of the currency forward contracts entered into to hedge curren-cyrisksarerecognisedsothattheinterestratedifference,ifmaterial,is allocated over the term of the contract and the accrued portion is recognised in interest income or expenses. Exchange rate gains and losses are recognised as adjustments to sales or in exchange rate gainsandlossesunderfinancialitems,dependingonthenatureoftheunderlying item.
Any open currency forward contracts are measured at the average exchange rate at the balance sheet date and the resulting changes in value are recognised in the income statement. The exception applies to currency forward contracts relating to the company’s cash flowfrom sales, as their changes in value are recognised in the income statementasthecashflowisrealized.Thenominalvaluesandmarketvalues (closing cost) of all unexpired currency forward contracts are presentedinthenotestothefinancialstatementsundertheheadingCollaterals, commitments and other contingent liabilities, irrespective of whether their changes in value have been recognised in the income statement.
Financial statements
63 | Comptel Annual Report 2015
Net sales figures have been calculated based on the area, where the work wasdelivered to.
Information on the remuneration of the Group management is presented in more detailinnote31.Relatedpartytransactionstotheconsolidatedfinancialstatements.
2. NET SALES 4. MATERIALS AND SERVICES
5. PERSONNEL EXPENSES
3. OTHER OPERATING INCOME
1000 EUROA 2015 2014
By geographical area
Europe 39,831 34,821
Asia-Pacific 25,791 22,951
MiddleEastandAfrica 16,791 16,698
Americas 10,725 8,110
Total 93,137 82,580
EUR 1,000 2015 2014
Purchases -88 79
External services 3,984 2,942
Total 3,896 3,021
EUR 1,000 2015 2014
Wages and salaries 14,479 13,539
Pension expenses 2,814 2,120
Other social security costs 791 625
Total 18,083 16,284
EUR 1,000 2015 2014
Gain on sale of tangible and intangible assets 0 1
Other 54 313
Total 54 314
1000 EUROA 2015 2014
Net sales recognised as revenue according to percentage of completion 21,731 15,841
Amountrecognisedasrevenueduringthefinancialyear and previous years for long-term projects in progress 12,932 11,541
Total costs of incomplete long-term projects 5,775 7,541
Backlogofordersoflong-termprojectsaccordingtopercentage of completion 18,371 13,543
Prepayments and accrued income recognised on the basis of percentage of completion 2,845 2,768
Deferred income and accruals recognised on the basis of percentage of completion 2,477 4,409
MANAGEMENT SALARIES AND OTHER COMPENSATION 2015 2014
MembersoftheBoardofDirectors 191 200
2015 2014
Average number of personnel 208 188
PENSION COMMITMENTS IN RESPECT OF MEMBERS OF THE BOARD OF DIRECTORS AND THE PRESIDENT AND CEO
AnadditionaldefinedcontributionpensionplanhasbeenagreedonforthePresidentand CEO. The retirement age is based on the Finnish Statutory Employment Pension Scheme (TyEL)
Financial statements
REVENUE RECOGNITION USING PERCENTAGE OF COMPLETION METHOD
64 | Comptel Annual Report 2015
6. DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES
8. FINANCIAL INCOME
9. FINANCIAL EXPENSES
7. OTHER OPERATING EXPENSES
EUR 1,000 2015 2014
Depreciation and amortisation
Intangible rights 268 311
Machineryandequipment 42 34
Total 310 345
EUR 1,000 2015 2014
Interest income
From Group companies 13 120
From others 67 33
Income from dividends
From Group companies 204 1 524
Exchange gains
From others 418 642
Total 703 2,319
EUR 1,000 2015 2014
Interest expenses
To others 93 97
Other financial expenses
To others 162 105
Exchange losses
To others 1,234 914
Total 1,490 1,116
EUR 1,000 2015 2014
Lease payments 1,420 1,361
Travel expenses 1,593 1,415
Marketingexpenses 2,066 1,062
Software expenses 3,493 3,412
Consulting expenses 3,409 3,245
Group charges 49,137 43,990
Other operating expenses 4,323 3,114
Total 65,440 57,599
AUDITOR’S FEES 2015 2014
Ernst & Young
Audit 233 105
Tax consultation 79 55
Other services 5 12
Total 317 172
Financial statements
65 | Comptel Annual Report 2015
10. INCOME TAXES
11. NON-CURRENT ASSETS
EUR 1,000 2014 2013
Withholding taxes 3,420 2,819
Taxes from previous years 31 77
Taxes from previous years 45 0
Total 3,496 2,896
EUR 1,000
INTANGIBLERIGHTS
OTHER LONG-TERM
EXPENDITURE TOTAL
Cost at 1 Jan 2015 11,022 417 11,439
Additions 103 32 135
Cost at 31 Dec 2015 11,125 450 11,574
Accumulated amortisation at 1 Jan 2015 10,643 417 11,060
Amortisation 265 3 268
Accumulated amortisation at 31 Dec 2015 10,908 421 11,328
Book value at 31 Dec 2015 217 29 246
INTANGIBLE ASSETS EUR 1,000
INTANGIBLERIGHTS
OTHER LONG-TERM
EXPENDITURE TOTAL
Cost at 1 Jan 2014 11,022 417 11,439
Additions 0 0 0
Cost at 31 Dec 2014 11,022 417 11,439
Accumulated amortisation at 1 Jan 2014 10,332 417 10,749
Amortisation 311 0 311
Accumulated amortisation at 31 Dec 2014 10,643 417 11,060
Book value at 31 Dec 2014 379 0 379
INTANGIBLE ASSETS
Financial statements
66 | Comptel Annual Report 2015
EUR 1,000
MACHINERY AND EQUIPMENT
Cost at 1 Jan 2014 3,857
Additions 43
Cost at 31 Dec 2014 3,900
Accumulated depreciation at 1 Jan 2014 3,805
Depreciation 34
Accumulated depreciation at 31 Dec 2014 3,840
Book value at 31 Dec 2014 61
INVESTMENTS
SHARES INGROUP COMPANIES
SHARES IN ASSOCIATED COMPANIES
SHARES IN OTHER INVESTMENTS
TOTAL
Cost at 1 Jan 2015 2,792 400 87 3,279
Additions 180 - - 180
Decreases -280 - - -280
Cost at 31 Dec 2015 2,692 400 87 3,180
Book value at 31 Dec 2015 2,692 400 87 3,180
INVESTMENTS
SHARES INGROUP COMPANIES
SHARES IN ASSOCIATED COMPANIES
SHARES IN OTHER INVESTMENTS
TOTAL
Cost at 1 Jan 2014 2,792 400 87 3,279
Additions - - - -
Cost at 31 Dec 2014 2,792 400 87 3,279
Book value at 31 Dec 2014 2,792 400 87 3,279
EUR 1,000
MACHINERY AND EQUIPMENT
Cost at 1 Jan 2015 3,900
Additions 77
Cost at 31 Dec 2015 3,977
Accumulated depreciation at 1 Jan 2015 3,840
Depreciation 42
Accumulated depreciation at 31 Dec 2015 3,881
Book value at 31 Dec 2015 96
TANGIBLE ASSETS
Financial statements
TANGIBLE ASSETS
Additions in Group companies in 2012: Xtract Oy EUR 2,253 thousand (ownership 100%), Comptel Communications S.r.l. EUR 10 thousand (ownership 100 %), Comptel Communications India Private Ltd EUR 0 thousand (ownership 1 %), total EUR 2,263 thousand.
67 | Comptel Annual Report 2015
12. NON-CURRENT RECEIVABLES 13. CURRENT RECEIVABLESEUR 1,000 2015 2014
Receivables from Group companies
Loan receivables 3,470 3,470
Total 3,470 3,470
Receivables from associated companies
Loan receivables 75 75
Prepayments and accrued income 596 38
Total 671 113
Non-current receivables total 4,141 3,583
EUR 1,000 2015 2014
Receivables from Group companies
Trade receivables 2,671 2,342
Loan receivables 868 569
Other receivables 572 2,011
Total 4,111 4,921
Receivables from others
Prepayments 1 61
Trade receivables 33,457 25,115
Other receivables 6,326 4,263
Prepayments and accrued income 8,653 9,164
Total 48,437 38,604
Current receivables total 52,547 43,525
Specification of prepayments and accrued income
Accrued income capitalised according to degree of completion 2,845 2,768
Other prepayments 5,808 6,396
Total 8,653 9,164
Capital loans of EUR 3,470 thousand have been granted to the subsidiary Xtract Oy in accordance with the Companies Act chapter 12, constituting a non-current loan receivable.The interestof the loan is thebase ratesetby theMinistryofFinance+1.55%. The accrued interest balance is 117,462.60 euros.
Pitkäaikaisista siirtosaamisista 550 000,00 euroa on emoyhtiön tytäryhtiöltäänComptelCommunicationsOy:ltäsaamakonserniavustus.
Financial statements
68 | Comptel Annual Report 2015
14. EQUITY 15. PROVISIONS
16. NON-CURRENT LIABILITIES
RESTRICTED EQUITY EUR 1,000 2015 2014
Share capital at 1 Jan 2,141 2,141
Share capital at 31 Dec 2,141 2,141
EUR 1,000 2015 2014
Provisions at 1 Jan 270 277
Provisionsmadeduringthefinancialyear 109 270
Provisionsusedduringthefinancialyear -270 -277
Provisions at 31 Dec 109 270
EUR 1,000 2015 2014
Liabilities to Group companies
Other liabilities 0 272
Liabilities to others
Loans 0 1,000
Total non-current liabilities 0 1,272
NON-RESTRICTED EQUITYEUR 1,000 2015 2014
Fund of invested non-restricted equity at 1 Jan 401 401
New shares 497 0
Share based compensation 800 0
Fund of invested non-restricted equity at 31 Dec 1,698 401
Retained earnings at 1 Jan 6,340 3,706
Acquisition of Corporation’s own shares 0 -312
Transfer of treasury shares 66 66
Dividends paid -2,139 -1,073
Retained earnings at 31 Dec 4,266 2,388
Profit/loss for the financial year 1,729 3,952
Equity, total 9,834 8,882
BREAKDOWN OF DISTRIBUTABLE FUNDS EUR 1,000 2015 2014
Fund of invested non-restricted equity 1,698 401
Retained earnings 4,266 2,388
Profit/lossforthefinancialyear 1,729 3,952
Total 7,693 6,741
The provisions consist of a warranty provision. In 2012 the provisions include also aprovisionrecognisedforunoccupiedleasedofficefacilitiesandacostreserveforfulfillingobligationspertainingtocustomerprojects.
Financial statements
69 | Comptel Annual Report 2015
EUR 1,000 2015 2014
Liabilities to Group companies
Trade payables 24,427 19,724
Other liabilities 21 925
Total 24,448 20,649
Liabilities to others
Trade payables 1,745 944
Loans 6,979 6,000
Other liabilities 525 1,296
Accrued expenses and deferred income 16,762 18,123
Total 26,011 26,363
Current liabilities total 50,459 47,012
Specification of accrued expenses and deferred income
Personnel expenses 4,195 4,383
Items recognised on the basis of percentage of completion method 2,477 4,409
Other accrued expenses and deferred income items related to revenue recognition 9,074 8,446
Other accrued expenses and deferred income items 1,016 885
Total 16,762 18,123
EUR 1,000 2015 2014
Deferred tax assets, which have not been booked in the balance sheet:
Reversal of depreciation and amortisation in taxation 171 165
Loss for the period 0 301
Impairment loss on trade receivables 6,860 5,236
Total 7,032 5,702
17. CURRENT LIABILITIES 18. DEFERRED TAX ASSETS
Financial statements
70 | Comptel Annual Report 2015
19. COLLATERALS, COMMITMENTS AND OTHER CONTINGENT LIABILITIESLEASE COMMITMENTS EUR 1,000 2015 2014
Amountspayableduringthenextfinancialyear 152 198
Amounts payable later 102 191
Total 253 389
DERIVATIVE INSTRUMENTSEUR 1,000 2014 2013
Forward exchange contracts
Marketvalue -351 -1,049
Value of underlying instrument 39,046 17,203
RENTAL COMMITMENTS EUR 1,000 2015 2014
Amountspayableduringthenextfinancialyear 1,324 1,323
Amounts payable later 657 1,971
Total 1,981 3,295
GUARANTEESEUR 1,000 2015 2014
Bankguaranteesduewithinoneyear 2,286 2,600
Bankguaranteesduelater 441 0
Total 2,728 2,600
COLLATERALS GIVEN ON BEHALF OF OTHERSEUR 1,000 2015 2014
Guarantees 29 34
CONTINGENT LIABILITIES ASSUMED ON BEHALF OF GROUP COMPANIES
THE BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PARENT COMPANY PROFIT
The leases the company has entered into generally run for a period of three years and contain no redemption commitments.
In 2008 Comptel Corporation has given a performance guarantee on behalf of its subsidiary, still valid on 31.12.2012. The total value of this agreement is USD 4 million. Comptel gave a guarantee of GBP 700 thousand for its subsidiary in 2009.
According to the parent company balance sheet at 31 December 2015 the parent company’s distributable funds were EUR 7,692,598.27.
TheBoardofDirectorsproposestotheAnnualGeneralMeetingthatthedividendfor the year 2015 would be EUR 0.03 per share.
Forward exchange contracts are used for hedging purposes.
Financial statements
71 | Comptel Annual Report 2015
SHARES AND SHAREHOLDERSThe share of Comptel Corporation is listed in the NASDAQ OMXHelsinkiunderthecodeCTL1V.
Comptel has one series of shares. Each share equals to one (1) voteattheShareholders’GeneralMeeting.
The share capital of the company has not changed during the financialyearended.Thecompany’ssharecapitalon31December2015 amounted to 2,141,096.20 euros, and the total number of shares was 108,395,409.
AUTHORISATIONS TO THE BOARD OF DIRECTORSThe annual General meeting on 9 April 2015 granted to the Board of Directors an authorisation to decide on share issues and granting spe-cial rights entitling to shares. A maximum of 21,400,000 shares can be issued.Amaximumof10,700,000ofthecompany´streasurysharesheld by the company can be conveyed and/or received on basis on the special rights.
The authorisations are valid until 30 June 2016. However, the authorisation to implement the company’s share-based incentive pro-gramsisvaliduntilfiveyearsfromtheAGMresolution.
AseparatestockreleaseregardingtheauthorisationstotheBoardof Directors has been given on 9 April 2015.
SHARE OPTION SCHEMES
Comptel has currently two share option schemes.
SHARE OPTION SCHEME 2009TheAnnualGeneralMeetingdecidedon16March2009toissueshareoptions to thekeypersonnelof theComptelGroupasapartof the
incentive and commitment program.The remaining number of share options with the symbol C is
975,000. The share options may be exercised to subscribe to a maxi-mum of 975,000 new shares in the company or existing shares held by the company. The issued share options can be exchanged for shares constituting a maximum total of 0.09 per cent of the company’s shares and votes of the shares, after the potential share subscription, if new shares are issued in the share subscription.
ThesharesubscriptionpricewillbebasedontheprevailingmarketpriceoftheComptelshareontheNASDAQOMXHelsinkiLtdinApril2010 and April 2011. The current share subscription price for Comptel share option 2009C is EUR 0.51 per share, which corresponds to the trade volume weighted average quotation of the share on the NASDAQ OMXHelsinkiduring1April-30April2011deductedbythedividendsand capital repayment paid.
Comptel’s 2009C share options were listed on NASDAQ OMXHelsinki commencing from 1 November 2013. The trading code isCTL1VEW309 and ISIN code is FI4000048772. In 2015, 788,359 options were traded and the closing price was EUR 0.63.
SHARE OPTION SCHEME 2014BasedontheauthorizationgivenbytheAnnualGeneralMeeting,theBoard of Directors of Comptel Corporation has decided on 5.2.2014 to issuestockoptionstothekeypersonneloftheComptelGroup.
Themaximumtotalnumberofstockoptionsissuedis4.200.000,and they entitle their holders to subscribe each one share for maximum total of 4.200.000 new shares in the Company or existing shares held by the Company. The new option scheme replaces the share option scheme 2012.
Ofthestockoptions,2.200.000aremarkedwiththesymbol2014A,
Financial statements
72 | Comptel Annual Report 2015
1.000.000 are marked with the symbol 2014B and 1.000.000 aremarkedwiththesymbol2014C.
The subscription price for stock option 2014A is EUR 0.51 pershare, which is the trade volume weighted average quotation of the shareonNASDAQOMXHelsinkiLtdduring15.2.-15.3.2014deductedby the dividends and capital repayment paid. The subscription prices for stock options 2014B is EUR 0.91 per share, which is the tradevolumeweightedaveragequotationof theshareonNASDAQOMXHelsinkiLtdduring15.2.-15.3.2015.Thesubscriptionpricesforstockoptions 2014C shall be the trade volume weighted average quotation oftheshareonNASDAQOMXHelsinkiLtdduring15.2.-15.3.2016.
The share subscription periods for the options will be: 2014A 1.2.2016-31.1.2018, 2014B 1.2.2017-31.1.2019 and 2014C 1.2.2018-31.1.2020.
The share subscriptions may result in increase of the number of the company shares, maximum of 4,200,000 shares.
SHARE OPTION SCHEME 2015BasedontheauthorizationgivenbytheAnnualGeneralMeetingheldon 9 April 2015, the Board of Directors has decided on 9.9.2015 to issuestockoptionstothePresidentandCEOofComptelGroup.Themaximumtotalnumberofstockoptionsissuedis3,478,260,andtheyentitle the holder to subscribe each one share for maximum total of 3,478,260 new or existing shares held by the company.
Out of the subscription rights 1,739,130 options aremarked by2015A and 1,739,130 options by 2015B.
The subscription price is the trade volume weighted average quo-tationoftheshareinNASDAQOMXHelsinkiduring12August2015–8September2015deductedby20%.
The share subscription periods for the options will be: 2015A 15.8.2018-15.9.2019, 2015B 15.8.2019-15.9.2019.
The share subscriptions may result in increase of the number of the company shares, maximum of 3,478,260 shares.
SHARE-BASED INCENTIVE PLANS CEO PERFORMANCE SHARE PLAN 2011-2013The CEO has had a share-based incentive plan. The aim of the plan is to combine the objectives of the shareholders and the CEO of Comptel Corporation in order to increase the value of the company and to commit the CEO to the company. The prerequisite for participation in the plan and receipt of reward from the performance periods is that the CEO owns company’s shares or acquires them up to the number predetermined by the Board of Directors which is 230,000 shares. The ownership requirement is valid until 31 December 2015. Furthermore, the potential reward from the plan is tied to the validity of the CEO’s service contract.
At theendof thefinancialyear2014allsharesof theplanweretransferred and rewards paid.
MATCHING SHARE PLAN 2012The Board of Directors of Comptel Corporation has approved on 27 February2012ashare-based incentiveplan for theGroupkeyper-sonnel.
The aim of the plan is to combine the objectives of the share-holders and the target people in order to increase the value of the company, to commit the target people to the company, and to offer
Financial statements
73 | Comptel Annual Report 2015
them a competitive reward plan based on long-term shareholding in the company.
TheMatchingSharePlanincludestwoperformanceperiods,bothbeginningon2May2012.Theperformanceperiodswillendon2May2015andon2May2016.Theprerequisiteforparticipationintheplanand receipt of reward from the performance periods provides that a target person owns the company’s shares or acquires them up to the number predetermined by the Board of Directors. Furthermore, the po-tential reward from the plan is tied to the validity of the target person’s employment or service or contractual relation. No reward will generally be paid if a target person’s employment or service ends before the reward payment.
Rewards from the Plan will be paid partly in the company’s shares and partly in cash in 2015 and in 2016. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to a target person. The total outstanding amount of rewards to be paid on the basis of the Plan is an approximate maximum of 525,000 Comptel Corporation shares and a cash payment corresponding to the value of the shares, multiplied by 1.5, in the maximum. There were 22 persons in the plan at the end of the year 2015.
Financial statements
74 | Comptel Annual Report 2015
BOARD OF DIRECTORS’ PROPOSAL FOR THE DISPOSAL OF PROFITS
Financial statements
The Group parent company’s distributable equity on 31 December 2015 was EUR 7,692,598 (6,740,529). TheBoardofDirectorsproposestotheAnnualGeneralMeetingthatdividendof0.03EURpersharewillbepaidfor2015.
Helsinki,17February2016
Pertti Ervi
HannuVaajoensuu EriikkaSöderström
AnttiVasara HeikkiMäkijärvi
JuhaniHintikkaPresident and CEO
75 | Comptel Annual Report 2015
AUDITOR’S REPORT TO THE ANNUAL GENERAL MEETING OF COMPTEL CORPORATION
Wehave audited the accounting records, the financial statements, the report of theBoard of Directors, and the administration of Comptel Corporation for the year ended 31December,2015.Thefinancialstatementscomprisetheconsolidatedstatementoffinancialposition,statementofcomprehensiveincome,statementofchangesinequityandstatementofcashflows,andnotestotheconsolidatedfinancialstatements,aswellas theparentcompany’sbalancesheet, incomestatement,cashflowstatementandnotestothefinancialstatements.
RESPONSIBILITY OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTOR
TheBoardofDirectorsandtheManagingDirectorareresponsibleforthepreparationofconsolidatedfinancialstatementsthatgiveatrueandfairviewinaccordancewithInternational Financial Reporting Standards (IFRS) as adopted by the EU, as well as for thepreparationoffinancialstatementsandthereportoftheBoardofDirectorsthatgivea true and fair view in accordance with the laws and regulations governing the prepara-tionofthefinancialstatementsandthereportoftheBoardofDirectorsinFinland.TheBoard of Directors is responsible for the appropriate arrangement of the control of the company’saccountsandfinances,and theManagingDirectorshallsee to it that theaccountsofthecompanyareincompliancewiththelawandthatitsfinancialaffairshavebeen arranged in a reliable manner.
AUDITOR’S RESPONSIBILITY
Ourresponsibilityistoexpressanopiniononthefinancialstatements,ontheconsolidat-edfinancialstatementsandonthereportoftheBoardofDirectorsbasedonouraudit.The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assur-anceaboutwhetherthefinancialstatementsandthereportoftheBoardofDirectorsarefree from material misstatement, and whether the members of the Board of Directors of theparentcompanyortheManagingDirectorareguiltyofanactornegligencewhichmay result in liability in damages towards the company or have violated the Limited
Liability Companies Act or the articles of association of the company. An audit involves performing procedures to obtain audit evidence about the amounts
anddisclosuresinthefinancialstatementsandthereportoftheBoardofDirectors.Theprocedures selected depend on the auditor’s judgment, including the assessment of therisksofmaterialmisstatement,whetherduetofraudorerror.Inmakingthoseriskassessments, the auditor considers internal control relevant to the entity’s preparation offinancialstatementsandreportoftheBoardofDirectorsthatgiveatrueandfairviewin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well asevaluatingtheoverallpresentationofthefinancialstatementsandthereportoftheBoard of Directors.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovide a basis for our audit opinion.
OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS
Inouropinion, the consolidated financial statementsgivea trueand fair viewof thefinancialposition,financialperformance,andcashflowsofthegroupinaccordancewithInternational Financial Reporting Standards (IFRS) as adopted by the EU. Opiniononthecompany’sfinancialstatementsandthereportoftheBoardofDirectors
Inouropinion,thefinancialstatementsandthereportoftheBoardofDirectorsgiveatrueandfairviewofboththeconsolidatedandtheparentcompany’sfinancialper-formanceandfinancialpositioninaccordancewiththelawsandregulationsgoverningthepreparationofthefinancialstatementsandthereportoftheBoardofDirectorsinFinland. The information in the report of the Board of Directors is consistent with the informationinthefinancialstatements.
Helsinki,17February2016
Ernst & Young Oy, Authorized Public Accountant Firm
MikkoJärventausta,Authorized Public Accountant
Financial statements
COMPTEL CORPORATION FINANCIAL STATEMENTS
RELEASE FOR 2016
Stock exchange release 17 February 2017 at 8:00 am
Net sales and profit grew, earnings per share grew 154.4 %
Key figures for the Fourth Quarter of 2016:
Net sales EUR 29.9 million (Q4 2015: 32.6), change -8.2% Operating profit EUR 5.0 million (5.6), change -10.2% Operating profit 16.8% of net sales (17.2) Profit EUR 8.0 million (4.0), growth 100.9% Earnings per share EUR 0.07 (0.04), growth 96.3% Order backlog EUR 65.7 million (66.3), change -0.9%
Key figures for Full Year of 2016:
Net sales EUR 100.0 million (2015: 97.7), growth 2.3% Operating profit EUR 11.0 million (8.5), growth 29.8% Operating profit 11.0% of net sales (8.7) Comparable profit, excluding the India tax accounting, was EUR 7.1 million (4.5), growth 57.3% The reported profit EUR 11.7 million (4.5), growth 157.5%
Earnings per share EUR 0.11 (0.04), growth 154.4%
Dividend Proposal
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial period ended on December 31st, 2016.
The Board of Directors proposes to the Annual General Meeting that the Annual General Meeting authorizes the Board of Directors to decide on a dividend payment of up to a maximum of EUR 0.04 per share in one tranche for the financial period ended on December 31st, 2016 conditional upon the Transaction Agreement entered into on 8 February 2017 by and between Nokia Corporation and Comptel having been terminated for any reason other than consummation of said tender offer, meaning that the authorization can be used only provided that tender offer announced by Nokia Corporation on 9 February 2017 for all of the issued and outstanding shares and option rights in Comptel Corporation is not completed.
The authorization to decide on payment of dividend shall be valid until 31st, December 2017. Based on this authorization, the Board of Directors is entitled to decide on the dividend record date, dividend payment date and other matters required by the matter. When deciding on the possible payment of dividend, the Board of Directors shall assess the company's liquidity and financial position as required by the Companies Act.
Annex C
Outlook
We expect 2017 revenue to grow with double digit percentage and we expect comparable EBIT to be between 10-15% of net sales.
Characteristically a significant part of Comptel’s operating profit and net sales is generated in the second half of the year.
These statements for 2016 are based on the company's audited financial statements. The Auditor's Report was issued 16 February, 2017.
Juhani Hintikka, President and CEO:
Both Business Units’ net sales grew slightly in the year 2016. Also, both Business Unit’s profitability improved clearly in 2016.
We continued, as planned, to bring new solutions to the market and this can be seen in the distribution of the net sales. The important FulFillment solution net sales grew over 20 per cent compared to previous year. In Intelligent Data business unit both our Fastermind solution as well as the Monetizer solution grew significantly during 2016. Fastermind solution grew 50 per cent and Monetizer 70 per cent compared to previous year. The net sales of traditional products declined and therefore overall growth of the company was modest. We expect in the future our new products growth to continue and impact more significantly the overall company growth.
The FWD cloud solution got traction in 2016 and at the end of the year we had 4 signed contracts with customers. In addition, we have several ongoing negotiations with new customers and expect the net sales to start showing in 2017 numbers.
Regionally, EMEA continued to grow with strong performance in 2016. In Europe we received a significant reference, when one of the biggest operator chose Comptel as a partner for developing jointly their future virtual solutions. In APAC, we experienced some continued delays with our customers’ decision making as well as increasing competition among vendors.
In Latin America, the year 2016 was challenging and we implemented changes in the operational structure to better match the market conditions. Especially the traditional solutions net sales declined in Latin America. We expect this situation to improve during 2017. During 2016 we increased our investment in the North American market and built a good foundation for future growth.
The company profitability developed positively and our EBIT for the year improved from 8.7 per cent to 11.0, despite significant investments into R&D and sales coverage. I’m especially pleased with the company’s profitability development.
The full year profit increased significantly, being EUR 11.7 million and earnings per share 0.11. We managed to complete the process concerning a large part of our outstanding withholding taxes in India. This had a significant impact on our net profit for the year.
During 2016, we secured 21 orders valued over EUR 1.0 million. In 2015, the comparable number was 25. We also won 9 new customers during 2016.
In the beginning of 2017 our sales pipeline is significantly higher than a year ago and we are confident that we will achieve double digit growth in 2017.”
Business review of 2016
In the fourth quarter, Comptel’s net sales declined by 8.2 percent compared to previous year and were EUR 29.9 million (32.6). Both business unit net sales declined in the fourth quarter, compared to previous year. In the fourth quarter net sales continued to grow in the EMEA region while all other regions net sales declined.
Full year net sales grew by 2.3 per cent compared to previous year and were EUR 100.0 million (97.7). The new solutions sales continued to grow significantly while some of the traditional solutions sales declined compared to previous year.
Operating profit for the year improved by 29.8 per cent and was EUR 11.0 million (8.5). Significant investments into R&D and the product portfolio continued during the year 2016.
For the full year 2016 financial income/expenses were EUR 0.9 million (-1.1). This includes EUR 1.1 million interest income that relates to withholding tax refund from India. The other financial income/expenses were mainly due to fluctuation in exchange rates between EUR and other currencies. Shares in associated minority companies impacted results before taxes by EUR -0.2 million (0.3).
Profit before taxes, for the full year, was EUR 11.7 million (7.6) and profit for the reporting period was EUR 11.7 million (4.5). Earnings per share for the year was EUR 0.11 (0.04).
The tax expenses for 2016 were EUR 0.1 million (3.1), including EUR -2.7 million of withholding taxes (1.2). The 2016 tax expenses include the India tax refund that was received during the year. The EUR 4.5 million withholding tax refund included EUR 3.4 million tax and EUR 1.1 million interest. At the end of the year EUR 3.6 million has been paid in cash to the company.
In 2016, Comptel received 21 orders of which the value exceeded EUR one million (25), of which Intelligent Data unit received five (four Data Refinary solutions and one Monetizer) and Service Orchestration received 11 (11 FlowOne solutions). Five orders were multi-solution orders across the business units. Comptel reports orders for sold projects and licenses with a minimum value of EUR 1,000,000.
The Company’s 12-month order backlog was EUR 65.7 million (66.3). This was due to several significant orders
were delayed to 2017. The total order backlog was around EUR 90 million at the end of the year.
Business areas
Net sales, EUR million
10-12 2016
10-12 2015
Change, %
1-12 2016
1-12 2015
Change %
Intelligent Data 13.1 14.6 -10.0 43.8 42.5 3.0
Service Orchestration 16.8 18.0 -6.8 56.1 55.2 1.6
Other 0.0 0.0 0.0 0.1 0.0 0.0
Total 29.9 32.6 -8.2 100.0 97.7 2.3
Operating result, EUR million
Intelligent Data 2.6 3.5 -26.4 6.8 5.8 16.6
Service Orchestration 3.5 2.9 21.2 7.5 5.1 46.1
Other -0.1 -0.7 -36.0 -3.3 -2.5 -32.3
Total 5.0 5.6 -10.2 11.0 8.5 29.8
Operating result, % of net sales
Intelligent Data 19.5 23.8 15.5 13.7
Service Orchestration 20.8 16.0 13.4 9.3
Other - - - -
Total 16.8 17.2 11.0 8.7
In the fourth quarter both business unit net sales declined compared to previous year. The relative profitability of Intelligent Data unit decreased. For Service Orchestration, in the fourth quarter, the relative profitability improved compared to previous year.
For the full year 2016 both business unit’s net sales slightly grew. The operating result for Intelligent Data unit grew by 16.6 per cent and for Service Orchestration 46.1 per cent compared to the previous year. This growth in operating result was also reflected in the relative profitability in both business unit’s.
Net sales breakdown, EUR million
10-12 2016
10-12 2015
Change, %
1-12 2016
1-12 2015
Change %
Project & License business 21.0 24.0 -12.8 65.1 63.3 2.9
Recurring business 9.0 8.5 5.7 34.9 34.4 1.4
Total 29.9 32.6 -8.2 100.0 97.7 2.3
In the fourth quarter the net sales of project and license business declined by 12.8 per cent compared to previous year. The support and maintenance business grew by 5.7 per cent.
For the full year 2016 the net sales of project and license business grew 2.9 per cent and support and maintenance business grew 1.4 per cent compared to previous year.
Net sales Regional breakdown, EUR million
10-12 2016
10-12 2015
Change, %
1-12 2016
1-12 2015
Change, %
APAC 6.6 8.9 -26.1 30.1 29.6 1.6
EMEA 21.6 20.5 5.2 61.6 56.9 8.3
AMERICAS 1.8 3.2 -44.6 8.3 11.2 -26.0
Total 29.9 32.6 -8.2 100.0 97.7 2.3
In the fourth quarter, the EMEA region net sales continued to grow by 5.2 per cent compared to previous year and this was the 6th consecutive quarter that the region grew. Both the APAC and Americas regions net sales declined in the fourth quarter.
For the full year 2016 net sales grew in EMEA by 8.3 per cent compared to previous year. In APAC the net sales grew 1.6 per cent compared to the previous year. APAC net sales slowed down in the 2H of the year due to customer delays. For the full year 2016 Americas net sales declined by 26 per cent compared to the previous year.
Financial Position
EUR million 31 Dec 2016
31 Dec 2015
Change, %
Statement of financial position total 94.9 86.4 9.8
Liquid assets 9.2 3.0 205.0
Trade receivables, gross 40.4 42.1 -4.1
Bad debt provision -1.9 -1.6 13.7
Trade receivables, net 38.5 40.5 -4.8
Accrued income 15.8 10.0 59.0
Deferred income related to partial debiting 4.8 3.3 47.2
Interest-bearing debt 9.5 7.5 32.3
Equity ratio, per cent 58.6 52.4 11.8
The statement of the financial position on 31 Dec 2016 was EUR 94.9 million (86.4), of which liquid assets amounted to EUR 9.2 million (3.0). The operating cash flow was EUR 15.6 million (0.6) in 2016.
Trade receivables were EUR 38.5 million (40.5) at the end of the period. The accrued income was EUR 15.9 million (10.0). The deferred income related to partial debiting was EUR 5.0 million (3.3).
Comptel has a EUR 25 million credit facility arrangement consisting of a EUR 20 million revolving credit facility and a EUR 5 million overdraft capacity on current bank account. Out of this arrangement Comptel had EUR 8 million of the revolving credit facility outstanding at the end of the period and EUR 0.8 million of the overdraft facility. The credit facility is valid until July 2018.
The equity ratio was 58.7 per cent (52.4) and the gearing 0.5 per cent (11.1).
Research and Development (R&D)
EUR million 10-12 2016
10-12 2015
Change %
1-12 2016
1-12 2015
Change %
Direct R&D expenditure 5.8 7.5 -22.2 21.8 20.3 7.4
Capitalisation of R&D expenditure according to IAS 38 -1.7 -1.5 16.8 -6.2 -5.2 19.5
R&D depreciation and impairment charges 1.2 1.4 -17.6 4.9 5.5 -12.1
R&D expenditure, net 5.3 7.4 -28.9 20.5 20.6 -0.9
Direct R&D expenditure, % of net sales 19.5 22.9 21.8 20.8
Direct R&D expenditure represented 21.8 per cent (20.8) of net sales.
The key focus of Comptel’s R&D expenditure was in the further development of our existing solutions (Service Orchestration and Intelligent Data) and FWD time-based mobile data marketing solution.
Development work was focused on securing recurring revenue with competitive products, winning new markets by giving customers unique value, and by improving margins with better deployment and scalability of our products.
The FlowOne Fulfillment solution ensures unified order and service delivery flows for orchestrating services. FlowOne V is a design-led service orchestration for virtual networks. Data Refinery captures data-in-motion, turns raw data into immediate value and integrates into any data source. Monetizer is the business policy and charging solution that sets the speed to money and allows the innovation and designing of rich communication and data. Fastermind offers artificial intelligence apps, predictive analytics and machine learning capabilities for digital telcoes. In all of these areas, Comptel seeks global thought leadership in solving the business challenges of operators and digital communications service providers.
During 2016, the company continued to develop its current offering. In 2016 ten major software releases were launched in the product areas mentioned above.
Investments
EUR million 10-12
2016
10-12 2015
Change %
1-12 2016
1-12 2015
Change %
Gross investments in property, plant and equipment and intangible assets 0.2 0.2 46.3 1.5 0.6 177.6
The investments comprised of devices, software and furnishings. The investments were funded through cash flow from operations.
Personnel
31 Dec
2016 31 Dec
2015 Change,
%
Number of employees at the end of period 837 742 12.8
1-12 2016
1-12 2015
Change, %
Average number of personnel during the period 791 723 9.4
The number of employees increased in 2016, compared to the previous year, due to the increase in product investments and delivery capacity. In the fourth quarter, the personnel expenses were 43.3 per cent of net
sales (47.2). For the full year, personnel expenses were 46.8 per cent of net sales (47.9). At the end of the period, 28.1 per cent (29.5) of the personnel were located in Finland, 22.7 per cent (25.5) in Malaysia, 15.5 per cent (11.3) in India, 12.2 per cent (10.2) in Bulgaria, and 21.5 per cent (23.5) in other countries where Comptel operates.
Comptel share
The closing share price of the period was EUR 2.37 (1.83). Comptel’s market value at the end of the period was EUR 258.7 million (198.1).
Comptel share 10-12
2016
10-12
2015
Change %
1-12 2016
1-12 2015
Change %
Shares traded, million 10,4 16,6 -37,4 48,4 41,2 17,3
Shares traded, EUR million 23,7 24,7 -3,9 92,4 52,9 74,8
Highest price, EUR 2,56 1,93 32,6 2,65 1,93 37,3
Lowest price, EUR 1,96 1,15 70,4 1,19 0,84 41,7
Of Comptel’s outstanding shares, 5.1 per cent (6.0) were nominee registered or held by foreign shareholders at the end of the period. At the end of the period, the company held 117,129 of its own shares, which represents 0.11 per cent of the total number of shares. The total counter-book value of the shares held by the company was EUR 2,295.
Corporate Governance
Comptel Corporation’s Annual General Meeting (AGM) was held on 6 April 2016. The AGM resolved the number of Board members to be five. Mr. Pertti Ervi, Mr. Hannu Vaajoensuu, Ms. Eriikka Söderström, and Mr. Antti Vasara were re-elected as members of the Board of Directors. Mr. Thomas Berlemann was elected as a new member of the Board of Directors.
The AGM appointed Ernst & Young Oy as the company’s auditor. Mr. Mikko Järventausta is acting as the principal auditor.
The AGM resolved that a dividend of EUR 0.03 per share was paid for the year 2015.
In its meeting held after the Annual General Meeting, the Board of Directors elected Mr. Pertti Ervi as chairman and Mr. Hannu Vaajoensuu as vice chairman.
The Board of Directors decided to establish an audit committee to deal with the preparation of matters relating to the company’s financial reporting and control. The Board of Directors elected Ms. Eriikka Söderström as the chairperson of the audit committee, and Mr. Pertti Ervi and Mr. Antti Vasara as the members of the audit committee. All the members of the audit committee are independent from the company and its significant shareholders.
The AGM authorised the Board of Directors to decide on share issues amounting to a maximum of 21,400,000 new shares and on the repurchase or conveying of the company’s own shares up to a maximum number of 10,700,000 shares. The authorisations are valid until 30 June 2017. However, the authorisation to implement the company’s share-based incentive programs is valid five years from the AGM resolution.
A separate stock exchange release about the authorisations given and other decisions made by the Annual General Meeting was published on 6 April 2016.
Events after the Reporting Period
On the 9th of February Nokia announced its intention to acquire Comptel to advance its software strategy. Nokia made, recommended by the Comptel board, a cash tender offer for all the shares and option rights in Comptel.The offer price is EUR 3.04 in cash for each share in Comptel. A separate stock exchange release on this has been published on 9 February 2016.
Near-term Risks and Uncertainties
Comptel develops dynamic end-to-end solutions for leading operators globally in the telecom field. This requires Comptel to understand correctly the trends taking place in its business environment and the needs of its customers and resellers by each region. Failure to identify market conditions, address customers’ needs and develop its products in a timely way may significantly undermine the growth of Comptel’s business and its profitability.
Characteristics of Comptel’s field of industry are significant quarterly variations of net sales and profit, which are related to customers’ purchasing behaviour and the timing of major single deals.
Comptel’s business consists of deliveries of large productised IT systems, and the value of a single project may be several million euros. Therefore, the credit risk associated with a single project or an individual customer may be significant. Furthermore, some of Comptel’s customers operate in countries where the political or financial climate can be unstable which in part may increase credit risk.
Comptel operates globally, so it is exposed to risks arising from different currency positions. Exchange rate changes between the Euro, which is the company’s reporting currency, and the US Dollar, UK Pound Sterling and Malaysian Ringgit affect the company’s net sales, expenses and net profit.
The application process to prevent Comptel’s double taxation is still pending with the Ministry of Finance in Finland. However, the process between the states is very slow and the timing of change is hard to forecast. The interpretation of tax treaties may result in different views between the countries in question. This could mean that the double taxation will prevail. Comptel has also applications for return of withholding taxes in other countries but they are subject to local legal processes, which take time to get completed.
The risks and uncertainties of Comptel are described in more detail in the company’s financial statements and the Board of Directors’ report for 2016.
Business outlook and markets
Gartner forecasts operator investments will grow about 4 per cent during next few years. For Comptel the most important trend is that new investments go more to Cloud technology and software-based network solutions. This has been evidenced during the last year when we have seen that all leading operators have started building their next generation systems on software and cloud. First of these implementations have
been commissioned into trial use beside traditional systems and proved that they yield considerable savings and ease the promotion of new services for the digital society. However, the most important impact is that software networks are essential for launching new concepts like Internet of Things (IoT) and 5G.
We assume that this development is getting traction during the next years and will improve Comptel’s position when the number of managed services and volume of accumulated data will increase. We believe Comptel’s ability to successfully manage hybrid networks where old and new systems are used in parallel is a strong differentiator.
Another important trend is the huge growth in number of services and the aim to make them more personal. Operators will face a problem when they are combining the wide scope of services from large multinational giants (like Facebook, Google and Apple) and new innovate service developers. This will require improvements in network capacity, service management, scalability and management of the huge amount of data to meet the expected level of customer experience.
We see that Comptel’s role within the new network concept is to build user services from available resources and create balance between user experience and resource costs. This function is now strongly integrating with the cloud-based business systems (like sales, customer relationships, charging) and result is that we need to take a role as provider of real-time end-to-end data and control function.
Outlook:
We expect 2017 revenue to grow with double digit percentage and we expect EBIT to be between 10-15%.
Characteristically a significant part of Comptel’s operating profit and net sales is generated in the second half of the year.
Board of Directors proposal for the Disposal of Profits
The Group parent company’s distributable equity on 31 December 2016 was EUR 13,002,143 (7,692,598)
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial period ended on December 31st, 2016.
The Board of Directors proposes to the Annual General Meeting that the Annual General Meeting authorizes the Board of Directors to decide on a dividend payment of up to a maximum of EUR 0.04 per share in one tranche for the financial period ended on December 31st, 2016. The Board of Directors proposes that the authorization to decide on such dividend is conditional upon the Transaction Agreement entered into on 8 February 2017 by and between Nokia Corporation and Comptel Corporation (the “Transaction Agreement”) having been terminated for any reason other than consummation of said tender offer pursuant to the Transaction Agreement, meaning that the tender offer announced by Nokia Corporation on 9 February 2017 for all of the issued and outstanding shares and option rights in Comptel Corporation is unsuccessful.
The authorization to decide on payment of dividend shall be valid until the end of December 31st, 2017. Based on this authorization, the Board of Directors is entitled to decide on the dividend record date, dividend payment date and other matters required by the matter. When deciding on the possible payment of dividend, the Board of Directors shall assess the company's liquidity and financial position as required by the Companies Act.
COMPTEL CORPORATION
Board of Directors
Additional information: Mr Juhani Hintikka, President and CEO, tel. +358 9 700 1131 Mr Tom Jansson, CFO, tel. +358 40 700 1849
TABLE PART
The interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU. The accounting policies and methods of computation adopted in the financial statements are consistent with those of the annual financial statements for the year ended 2015.
All figures in the financial report have been rounded and consequently the sum of the individual figures can deviate from the sum figure. The interim report is unaudited.
Consolidated Statement of Comprehensive Income (EUR 1,000)
1 Jan – 31 Dec
2016
1 Jan – 31 Dec
2015
1 Oct – 31 Dec
2016
1 Oct – 31 Dec
2015
Net sales 100,011 97,728 29,930 32,611
Other operating income 27 63 6 40
Materials and services -4,141 -5,546 -897 -1,556
Employee benefits -46,763 -46,764 -12,964 -15,383
Depreciation, amortisation and impairment charges -5,817 -6,756 -1,451 -1,672
Other operating expenses -32,314 -30,251 -9,588 -8,432
-89,036 -89,317 -24,899 -27,043
Operating profit/loss 11,003 8,474 5,037 5,608
Financial income 3,269 1,392 1,503 91
Financial expenses -2,365 -2,541 -264 -65
Share of results of associated companies -172 287 -171 287
Profit/loss before income taxes 11,735 7,612 6,105 5,921
Income taxes -77 -3,085 1,857 -1,958
Profit/loss for the period 11,658 4,527 7,962 3,963
Other comprehensive income:
Other comprehensive income to be reclassified to profit or loss in subsequent periods
Translation differences -934 189 45 75
Cash flow hedges -296 14 -479 -505
Income tax relating to components of other comprehensive income 59 -3 95 101
Total other comprehensive income -1 170 200 -338 -329
Total comprehensive income for the period 10,487 4,728 7,624 3,634
Profit/loss attributable to:
Equity holders of the parent company 11,658 4,527 7,962 3,963
Total comprehensive income attributable to:
Equity holders of the parent company 10,487 4,728 7,624 3,634
Shareholders of the parent company:
Earnings per share, EUR 0.11 0.04 0.07 0,04
Earnings per share, diluted, EUR 0.10 0.04 0.07 0,04
Consolidated Statement of Financial Position (EUR 1,000)
31 Dec 2016
31 Dec 2015
Assets
Non-current assets
Goodwill 2,646 2,646
Other intangible assets 14,095 12,837
Tangible assets 1,707 1,152
Investments in associates 788 960
Available-for-sale financial assets 87 87
Deferred tax assets 8,242 7,685
Other non-current receivables 570 646
28,135 26,013
Current assets
Trade and other current receivables 56,977 56,930
Current tax asset 532 403
Cash and cash equivalents 9,242 3,030
66,751 60,363
Total assets 94,886 86,376
Equity and liabilities
Equity attributable to equity holders of the parent company
Share capital 2,141 2,141
Fund of invested non-restricted equity 1,975 1,698
Fair value reserve -407 -170
Translation differences -1,443 -510
Retained earnings 42,783 34,165
Total equity 45,049 37,324
Non-current liabilities
Deferred tax liabilities 2,805 2,572
Non-current financial liabilities 491 92
3,296 2,664
Current liabilities
Provisions 116 1,090
Current financial liabilities 8,993 7,075
Trade and other current liabilities 37,432 38,223
46,541 46,388
Total liabilities 49,837 49,052
Total equity and liabilities 94,886 86,376
Consolidated Statement of Cash Flows (EUR 1,000)
1 Jan – 31 Dec 2016
1 Jan – 31 Dec 2015
Cash flows from operating activities
Profit/loss for the period 11,658 4,527
Adjustments:
Non-cash transactions or items that are not part of cash flows from operating activities 6,497 7,834
Interest and other financial expenses 250 273
Interest income -1,197 -88
Income taxes 77 3,069
Change in working capital:
Change in trade and other current receivables -174 -14,240
Change in trade and other current liabilities -1,500 5,031
Change in provisions -664 -277
Interest and other financial expenses paid -250 -273
Interest received 1,197 12
Income taxes paid and tax returns received -291 -5,245
Net cash from operating activities 15,603 623
Cash flows from investing activities
Investments in tangible assets -1,417 -456
Investments in intangible assets -132 -102
Investments in development projects -6,185 -5,176
Proceeds from the sale of tangible assets 95 7
Change in other non-current receivables 29 -3
Net cash used in investing activities -7,610 -5,730
Cash flows from financing activities
Dividends paid -3,248 -2,139
Additional investment into equity 277 497
Proceeds from share options - 800
Proceeds from borrowings 33,715 27,935
Repayment of borrowings -31,924 -28,063
Change in lease liabilities 527 -243
Net cash used in financing activities -653 -1,213
Net change in cash and cash equivalents 7,339 -6,319
Cash and cash equivalents at the beginning of the period 3,030 9,352
Cash and cash equivalents at the end of the period 9,242 3,030
Change 6,212 -6,322
Effects of changes in foreign exchange rates -1,127 -2
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the parent company
EUR 1,000 Share capital
Other reserves
Translation differences
Fair value reserve
Retained earnings Total
Equity at 31 Dec 2014 2,141 401 -698 -182 31,684 33,346
Dividends -2,139 -2,139
Shares issued 497 497
Share-based compensation 800 428 1,228
Dissolution of a subsidiary 7 7
Prior year correction * -342 -342
Total comprehensive income for the period 188 12 4,527 4,727
Equity at 31 Dec 2015 2,141 1,698 -510 -170 -34,165 37,324
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the parent company
EUR 1,000 Share capital
Other reserves
Translation differences
Fair value reserve
Retained earnings Total
Equity at 31 Dec 2015 2,141 1,698 -510 -170 34,165 37,324
Dividends -3,248 -3,248
Shares issued 277 277
Share-based compensation 492 492
Prior year correction * -283 -283
Total comprehensive income for the period -934 -237 11,658 10,487
Equity at 3 Dec 2016 2,141 1,975 -1,444 -407 42,784 45,049
*Prior year expenses were corrected directly to Retained Earnings during the reporting periods.
Notes
1. Application of new or amended standards and interpretations
Comptel has adopted the new or amended standards and interpretations, effective for the financial years beginning on or after 1 January 2016. However, those have not had an impact on the consolidated financial statements.
2. Segment information
Net sales by segment
EUR 1,000 1 Jan – 31 Dec
2016
1 Jan – 31 Dec
2015
1 Oct – 31 Dec
2016
1 Oct – 31 Dec
2015
Intelligent Data 43,791 42,503 13,126 14,587
Service Orchestration 56,085 55,225 16,797 18,024
Other 135 - 7 -
Group total 100,011 97,728 29,930 32,611
Operating profit/loss by segment
EUR 1,000 1 Jan – 31 Dec 2016
1 Jan – 31 Dec 2015
1 Oct – 31 Dec
2016
1 Oct – 31 Dec
2015
Intelligent Data 6,769 5,808 2,554 3,469
Service Orchestration 7,492 5,128 3,496 2,884
Other -3,259 -2,462 -1,012 -745
Group operating profit/loss total 11,003 8,474 5,037 5,608
3. Income tax
Income tax expense according to the statement of comprehensive income for the period was EUR 77 thousand (EUR 3,085 thousand).
In 2006, the Board of Adjustment of the Tax Office for Major Corporations refused to accept the crediting of taxes withheld at source in taxation of 2004 and 2005. The application process to prevent Comptel’s double taxation is still pending with the Ministry of Finance in Finland. However, the process between the states is very slow and the timing of a change is hard to forecast. The interpretation of tax treaties may result in different views between the countries in question. This could mean that the double taxation will prevail.
According to the Board of Adjustment’s decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to EUR -2,714 thousand in January – December (EUR 1,167 thousand).
4. Tangible assets
EUR 1,000 1 Jan – 31 Dec 2016
1 Jan – 31 Dec 2015
Additions 1,417 456
Decreases -446 -150
5. Related party transactions
The Comptel Group have a related party relationship with its associate, the Board of Directors, the Executive Board and also with people and companies under Comptel management’s influence. Transactions which have been entered into with related parties are as follows:
EUR 1,000 1 Jan – 31 Dec 2016
1 Jan – 31 Dec 2015
Associate
Other operating income 2 -
Interest income 8 8
EUR 1,000 31 Dec 2016 31 Dec 2015
Associate
Non-current receivables 128 121
Remuneration to key management
Key management personnel compensation includes the employee benefits of the members of the Board of Directors and the Executive Board.
EUR 1,000 1 Jan – 31 Dec 2016
1 Jan - 31 Dec 2015
Salaries and other short-term employee benefits 1,798 2,169
Share-based payments 295 725
Total 2,093 2,894
Guarantees and other commitments
EUR 1,000 31 Dec 2016 31 Dec 2015
Guarantees - 29
6. Commitments
Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows:
EUR 1,000 31 Dec 2016 31 Dec 2015
Less than one year 2,395 2,161
Between one and five years 5,722 1,218
More than five years 548 -
Total 8,665 3,379
The group had no material capital commitments for the purchase of tangible assets at 31 December 2016 and 31 December 2015.
7. Contingent liabilities
EUR 1,000 31 Dec 2016 31 Dec 2015
Bank guarantees 4,136 2,727
Corporate mortgages 200 200
EUR 1,000 31 Dec 2016 31 Dec 2015
Contingent liabilities on behalf of others
Guarantees - 29
8. Fair values of financial assets and liabilities
EUR 1,000
Book value 31.12.2016
Fair value 31.12.2016
Book value 31.12.2015
Fair value 31.12.2015
Financial assets
Financial assets at fair value through profit or loss
Forward contracts (level 2) 160 160 - -
Available-for-sale financial assets (level 3)) 87 87 87 87
Non-current trade receivables 4,473 4,473 1,872 1,872
Current trade receivables 35,908 35,908 40,232 40,232
Other current receivables 3,115 3,115 7,133 7,133
Cash and cash equivalents 9,242 9,242 3,030 3,030
Financial liabilities
Financial liabilities at fair value through profit or loss
Forward contracts (level 2) 588 588 138 138
Trade payables and other liabilities 36,844 36,844 38,020 38,020
Non-current loans from financial institutions - - 33 33
Non-current finance lease liabilities 491 491 58 58
Current loans from financial institutions 7,973 7,973 5,044 5,056
Current bank overdraft facility 815 815 1,918 1,918
Current finance lease liabilities 205 205 112 112
9. Key figures
Financial summary 1 Jan – 31 Dec
2016
1 Jan- 31 Dec
2015
Net sales, EUR 1,000 100,011 97,728
Net sales, change % 2.3 14.0
Operating profit/loss, EUR 1,000 11,003 8,474
Operating profit/loss, change % 29.8 2.0
Operating profit/loss, as % of net sales 11.0 8.7
Profit/loss before taxes, EUR 1,000 11,735 7,612
Profit/loss before taxes, as % of net sales 11.7 7.8
Return on equity, % 28.3 12.8
Return on investment, % 23.9 18.3
Equity ratio, % 58.7 52.4
Gross investments in tangible and intangible assets, EUR 1,0001) 1,549 558
Gross investments in tangible and intangible assets, as % of net sales 1.5 0.6
Capitalizations according to IAS 38 to intangible assets, EUR 1,000 6,185 5,176
Research and development expenditure, EUR 1,000 21,794 20,299
Research and development expenditure, as % of net sales 21.8 20.8
Order backlog, EUR 1,000 65,717 66,344
Average number of employees during the period 791 723
Interest-bearing net liabilities, EUR 1,000 243 4,137
Gearing ratio, % 0.5 11.1
1) The figure does not include investments in development projects.
Per share data 1 Jan – 31 Dec
2016
1 Jan- 31 Dec
2015
Earnings per share (EPS), EUR 0.11 0.04
EPS diluted, EUR 0.10 0.04
Equity per share, EUR 0.41 0.34
Dividend per share, EUR 0.04 0.03
Dividend per earnings, % 38,36 72.7
Effective dividend yield, % 1.7 1.6
P/E ratio 22.1 43.4
Adjusted number of shares at the end of the period 109,271,496 108,395,409
of which the number of treasury shares 117,129 118,507
Outstanding shares 109,154,367 108,276,902
Adjusted average number of shares during the period 108,685,905 107,370,551
Average number of shares, dilution included 111,798,635 109,640,245
10. Definition of key figures
Operating margin % = Operating profit/loss x100
Net sales
Profit margin (before income taxes) % = Profit/loss before taxes x100
Net sales
Return on equity % (ROE) = Profit/loss x100
Total equity (average during year)
Return on investment % (ROI) = Profit/loss before taxes + financial expenses x100
Total equity + interest bearing liabilities (average during the year)
Equity ratio % = Total equity x100
Statement of financial position total – advances received
Gross investments in tangible and intangible assets, as % of net sales =
Gross investments in tangible and intangible assets
x100
Net sales
Research and development expenditure, as % of net sales = Research and development
expenditure x100
Net sales
Gearing ratio % = Interest-bearing liabilities – cash and cash equivalents
x100
Total equity
Earnings per share (EPS) = Profit/loss for the financial year attributable to equity shareholders
Average number of outstanding shares for the financial year
Equity per share = Equity attributable to the equity holders of the parent company
Adjusted number of shares at the end of period
Dividend per share = Dividend
Adjusted number of shares at the end of period
Dividend per earnings % = Dividend per share x100
Earnings per share (EPS)
Effective dividend yield % = Dividend per share x100
Share closing price at end of period
P/E ratio = Share closing price at end of period
Earnings per share (EPS)
COMPTEL ANNOUNCES PRELIMINARY INFORMATION
ABOUT 2016 FINANCIALS AND OUTLOOK FOR 2017 AND
FINANCIAL TARGETS FOR STRATEGY PERIOD
Comptel Corporation Stock Exchange Release February 9, 2017, 9.05 AM EET
Comptel’s preliminary net sales for 2016 were approximately EUR 100.0 million (2015: EUR 97.7 million) and
its preliminary EBIT was approximately EUR 11.0 million in 2016 (2015: EUR 8.5 million). Comparable profit,
excluding the India tax accounting, was EUR 7.1 million. The reported profit was approximately EUR 11.7
million in 2016 (2015: EUR 4.5 million EUR) and earnings per share were approximately EUR 0.11 (2015: EUR
0.04). Backlog for the next 12 months was at the end of the year EUR 65.7 million (2015: EUR 66.3 million).
The figures are based on preliminary results for 2016 which have not been audited.
BOARD OF DIRECTORS OUTLOOK STATEMENT FOR 2017
We expect 2017 revenue to grow with double digit percentage and we expect comparable EBIT to be between
10-15%.
COMPANY’S FINANCIAL TARGETS FOR STRATEGY PERIOD 2017-2019
Comptel’s financial goal over strategy period is to seek double digit annual growth and to increase operating
profit towards 20 % at the end of the period. Additionally Comptel will continue to evaluate non-organic growth
options.
Comptel Corporation will publish the financial statements for 2016 on Friday 17th of February 2017. The 2016
annual report, which includes the financial statements, will be published in week 11.
Near term risks and uncertainties
The same near-term risks and uncertainties that have been published and referred to in Comptel’s interim reports
during 2016 apply also with respect to the outlook and targets expressed above.
For further information, please contact:
Juhani Hintikka, President and CEO, tel. +358 9 7001131
Distribution:
NASDAQ Helsinki
Annex D
Major media
www.comptel.com
About Comptel Corporation
Life is digital moments. Comptel perfects these by transforming how you serve, meet and respond to the needs of
"Generation Cloud" customers.
Our solutions allow you to innovate rich communications services instantly, master the orchestration of service and order
flows, capture data-in-motion and refine your decision-making. We apply intelligence to reduce friction in your business.
Comptel has enabled the delivery of digital and communications services to more than 2 billion people. Every day, we care
for more than 20% of all mobile usage data. Nearly 300 service providers across 90 countries have trusted us to perfect
customers' digital moments.
For more information, visit www.comptel.com.
Articles of Association of Comptel Oyj
Article 1
The Company's trade name is Comptel Oyj, in English Comptel Corporation. The domicile of the Company is Helsinki.
Article 2
The Company's line of business is to offer information technology services and products, development of information systems, purchase, sell and service of information technology equipment, offer training and consulting related to the field and engage in other comparable activities. The company may own and control shares interests and other securities as well as real estate.
Article 3
The Company has a Board of Directors, which consists of no less than three (3) and no more than six (6) ordinary members.
The term of office for members of the Board of Directors expires at the end of the Annual General Meeting of Shareholders following their election.
Article 4
The Board of Directors shall elect a Chairman and a Deputy Chairman among its members. The meeting of the Board of Directors shall be convened by the Chairman as often as the interests of the Company require it. The Board of Directors shall constitute a quorum when more than half of its members are present.
Article 5
The Chairman of the Board of Directors and the Managing Director, each alone, and the members of the Board of Directors, two together, shall have the right to represent the Company.
The Board of Directors may authorise one or more persons to represent the Company by virtue of a procuration.
Article 6
The Company has one (1) regular auditor, which shall be an audit firm authorized by the Central Chamber of Commerce.
The term of office of the auditor shall be one calendar year. The duties of the auditor shall end at the close of the next Annual General Meeting following its election.
Article 7
The financial year of the Company ends on 31 December. Financial Statements including the pertinent documents and the report of the Board of Directors shall be delivered to the auditors at least one (1) month before the Annual General Meeting of Shareholders; the auditors shall
Annex E
give their report and a written auditor's report no later than two (2) weeks before the Annual General Meeting of Shareholders.
Article 8
The notice convening the General Meeting of Shareholders shall be delivered to the shareholders no later than 21 days prior the General Meeting of Shareholders, and in any event at least 9 days prior to the record date for the meeting, by publishing it in at least two newspapers, determined by the Board of Directors, or by publishing it in the internet pages of the Company, or by sending the notice by post to the shareholders to their addresses registered in the Company's register of shareholders.
To be entitled to attend the General Meeting of Shareholders, a shareholder must notify the Company of its attendance by the date specified in the notice convening the meeting, which date may not be earlier than ten days prior to the meeting.
Article 9
The Annual General Meeting of Shareholders shall be held each year before the end of June on a date decided by the Board of Directors.
At the Annual General Meeting of Shareholders the following shall be
Presented:
1) the financial statements which include consolidated financial statements, and the report of the Board of Directors; and
2) the Auditor's Report;
Decided:
3) the adoption of the financial statements, which also includes adoption of the consolidated financial statements;
4) the application of the profit shown in the balance sheet;
5) the discharge from liability of the members of the Board of Directors and the Managing Director;
6) the number of members of the Board of Directors; and
7) the remuneration to be paid to the members of the Board of Directors, and the auditors; as well as
Elected:
8) the members of the Board of Directors; and
9) the auditor.
Article 10
The Company's shares belong to the book-entry system after the registration date determined by the Board of Directors or the General Meeting of Shareholders of the Company.