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IMPROVED PROFITABILITY RESULTS THROUGH STRONG COST MANAGEMENT
Fourth quarter 2018
Fourth quarter net sales were EUR 12.1 (15.6) million.
Net sales for the financial period were EUR 41.9 (55.1) million.
1 Adjusted operating result = operating result before one-time items.
2 Adjusted result for the period = result before one-time items.
Unless otherwise stated, all figures presented below are for the financial period 1-12/2018 and the figures for comparison are for the corresponding period in 2017.
CEO PADMA RAVICHANDER:
2018 – Prudent cost management yields strong profitability improvement
For Tecnotree, 2018 was a year, where we clearly demonstrated our resilience and ability to make massive turn-around of our results, especially in the second half of the year. While we showed stable performance on the revenue growth in Q4 we also improved our operating result significantly in the fourth quarter. This certainly confirms that we are on the right path to recovery and growth.
The company’s long term viability, was further endorsed by the capital infusion that we received from Fitzroy Investments Limited during H2. This further strengthened our overall financial situation and the new investors believe in the company’s overall turn-around and growth strategy.
The investment by Fitzroy also enhanced the confidence of our major customers and that has reflected in order volumes in Q3 and Q4 of 2018.
Tecnotree was able to garner new orders and some of the major ones were
By focusing on our key customers in terms of high quality delivery and SLA compliance during 2018, we also won many accolades from our customers and they clearly stand as a testimony to our product features as well as to our stability and delivery competence.
We are now confident that our customers are convinced about the stability and our ability to deliver state-of-the-art products and excellent services, which will result in good new business opportunities.
Tecnotree has been increasing the efficiency of operations over the last few years, at the same time reducing the costs prudently. In 2018, the company continued to optimize costs. During the Q4-2018, Tecnotree completed the negotiations in Finland, which will result in further reduction of costs by EUR 2 million, the full impact of which will be realized in 2019.
Costs were optimized in other areas also, resulting in overall reduction in opex by 21% over the previous year.
Given that the company operates in emerging markets with multiple tax regimes, the withholding taxes continue to be a major concern. The company is trying to optimize the tax burdens and to ensure lesser tax impacts in the coming years.
To ensure the stable cash position the company continues to enforce restraint in all areas of expenditure and is focused on the aggressive and timely collection of the outstanding receivables.
2019 – The road ahead
In 2019, Tecnotree will strive to recover in terms of order intake and focus on profitable business growth by efficient cost management.
While expanding its market reach to new geographies, the company also will focus on delivering cutting-edge technology based Digital BSS 5.0 stack to new and existing customers and providing state-of-the-art digital transformation capabilities. Tecnotree’s products will help the customers to grow revenue while reducing operational costs and will deliver superior speed of service.
RISKS AND SHORT-TERM UNCERTAINTY FACTORS
Tecnotree’s risks and uncertainties in the near future relate to development of net sales, projects, to their timing, to trade receivables and to changes in foreign exchange rates. Risks related to having sufficient cash funds and financing have reduced after new capital investments done to the company. Fitzroy subscribed for 52,555,040 new shares in the company with the total subscription price of 2.09 million euros at a price per share of about 0.04 euros. In addition, Fitzroy has subscribed for 72,444,960 freely transferable warrants entitling, but not obligating, their holder to subscribe for 72,444,960 new shares in the company with the total subscription price of 2.91 million euros.
According to company’s cash flow forecast its cash flow will be positive during the next 12 months period. This along with ensuring the going concern principle assumes net sales of the company to remain at the same level as in 2018 and cost management according to the plan.
EVENTS AFTER THE END OF THE PERIOD
Tecnotree announced on 25 January 2019 that Fitzroy Investments Limited had transferred a number of 50.000.000 million warrants to Luminos Sun Holding Limited. According to the information provided to Tecnotree by Luminos, Luminos is a company incorporated under the laws of the British Virgin Islands and its ultimate beneficial owner is Mr. Prakash K Aildasani. Luminos has further informed Tecnotree that it will exercise the warrrants transferred to it within 15 days.
OUTLOOK FOR 2019
The company strengthened and stabilised its operations in 2018 and in 2019 the company continues with the efforts to improve its net sales while focusing on profitable growth.
PROPOSAL CONCERNING THE RESULT
Considering the parent company’s accumulated losses of EUR 6,839,442.02 in retained earnings, the Board of Directors proposes to the annual to the Annual General Meeting that no dividends will be paid for the financial period ended 31 December 2018.
Board of Directors
FURTHER INFORMATION Padma Ravichander,CEO,Tel. +97 156 414 1420 Kirsti Parvi, CFO, tel. +358 (0)505 174 569 www.tecnotree.com