TECNOTREE CORPORATION half year REport 1 JAN – 30 june 2018 (UNAUDITED) Tecnotree is a global provider of IT solutions for the management of services, products, customers and revenue for Communications Service Providers. Tecnotree helps customers to monetise and transform their business towards a marketplace of digital services. Together with its customers, Tecnotree empowers people to self-serve, engage and take control of their own digital life.


Second quarter

  • Second quarter net sales were EUR 9.8 (15.1) million.
  • Financial situation and liquidity remain critical.
  • The adjusted operating result for the quarter was EUR 1.0 (3.6) million and operating result EUR 1.0 (3.1) million.
  • The adjusted result for the quarter was EUR 0.0 (1.2) million and result EUR 0.0 (0.7) million.
  • The order book at the end of the period stood at EUR 25.6 (31 December 2017: 26.2) million.
  • Second quarter cash flow after investments was negative EUR 2.2 (0.6) million.
  • Earnings per share were EUR 0.0 (0.01).

January-June 2018

  • Net sales for the review period were EUR 17.4 (27.3) million.
  • The adjusted operating result was EUR -1.4 (3.7) and the operating result EUR -1.4 (2.9) million.
  • The adjusted result for the period was negative EUR 2.8 (-0.7) million and the result negative EUR 2.8 (‑1.5) million.
  • Cash flow after investments for the review period was EUR 2.2 (3.2) million and the company’s cash and cash equivalents were EUR 2.8 (31 December 2017: 2.3) million.
  • Earnings per share were EUR -0.02 (-0.01).

1 Adjusted operating result = operating result before one-time costs. Details are given in the section “Result analysis”.

2 Adjusted result for the period = result for the period before one-time costs.

With reference to the new guidelines on alternative performance measures issued by the European Securities and Markets Authority (ESMA), Tecnotree uses the alternative performance measures “adjusted operating result” and “adjusted result for the period”. These measures are defined in the footnote to the above table.

CEO Padma Ravichander:

Broader Outlook

At the outset, the Q2 results once again reiterates the tenacity of the company in bouncing back from difficult periods. Q1 2018 was one of the toughest period encountered, by the company. The voluntary public tender offer from an investor had a severe impact on the performance of the company. This had resulted in substantial lower revenues and negative financial result during Q1 2018.

However, Q2 2018, again demonstrates that the company is slowly but surely coming back on track.


Revenue for Q2 2018 was nearly 10 Me, which is 30% higher than the previous quarter, albeit, lower than Q2 2017. The revenue in Q2 2018, witnessed growth over previous quarter in all regions, with bigger increase in MEA region.

Order intake continues to pose challenges and the major customers are concerned about the liquidity position of the company. Frequent public announcements from large shareholder are not helping in allaying customers apprehensions. The wait and watch policy adopted by customers are affecting the new orders coming in company’s way

Inspite of above situation, the customers still have unflinched confidence on the company, as evidenced by the recent two major orders placed by Nepal Telecom and a leading operator at Iran


The cost optimization plan initiated last year continued this year also. The costs are coming down and are kept under tight control. Productivity optimization is given top priority and consequently, the head count of the company is brought down to 616 at the end of Q2 2018 against 641 at the end of previous quarter

This has resulted in keeping the personnel costs under a reasonable level. The company believes in optimizing costs, not just at personnel costs, but also the other operational costs. As a result, the other operating costs were down by 18% in this quarter compared to previous quarter


As a result of increase in Revenue coupled with reduction in costs, resulted in a positive EBITDA of 1.2 Me in this quarter, against a negative 2.4 Me in the previous quarter. The quick turnaround indicates the inherent strength of the company to endure tough times and bounce back at the earliest opportunity.

Our operating environment continues to be challenging one. We operate in countries facing currency exchange and withholding tax issues, and we also continue to be dependent on a few major customers. However, our Maintenance & Support revenue continues to be stable and has significant committed ongoing orders.

As the cash positions remain tight and the order backlog needs to improve, the company plans to announce further cost reductions in Opex to improve cash positions in the coming quarters without affecting delivery of licenses and services to its customers.

The company still continues to aggressively pursue long term solution to its current financial position.


The risks and uncertainty factors for Tecnotree are explained in the 2017 Board of Directors’ Report and in the notes to the Financial Statements.

Risks and uncertainties in the near future

Tecnotree’s risks and uncertainties in the near future relate to financial risk, availability of funding and sufficiency, projects, to their timing, to trade receivables and receivables from construction contracts and to changes in foreign exchange rates. Having sufficient cash funds and the development of net sales are the most significant single risks.

The liquidity of the company continues to remain tight and hence the financial situation of the company remains critical. The company continues to be engaged aggressively to collect its receivables from the key customers to secure liquidity. The company’s ability as going concern is dependent on the successful completion of getting new financing. The company is currently negotiating with financiers and the negotiations are on-going and will be continued.

The following payment according to the restructuring payment schedule fall due on 31st of December. The stringent financial situation and uncertainty of sufficient funding create uncertainty about obtaining new customers.

The company has sales in several countries where the country’s central bank has a shortage of foreign currency. This causes additional delays in payments, costs and even the risk of not receiving payment at all.

At the end of June 2018, the Group’s shareholders’ equity of stood at EUR 10.7 million negative.


Tecnotree announced on 3 July 2018 that the company has received from Viking Acquisition Corp. (“Viking”) on Friday 29 June 2018 an offer and a request to convene an extraordinary General Meeting in respect of the offer. The offer relates to a divestment of assets of the company to Viking and does not include a cash offer for the shares of the company. The offer is preliminary and non-binding.

Tecnotree announced on 4 July that Nepal Telecom selects it as the provider of its roaming system and on 9 July on rapid service creation initiative with a key operator in Iran.


The liquidity of the company is extremely tight and the financial situation and liquidity are critical. Balancing the company’s financial situation and optimizing costs continues. The company continues seeking long-term financing, which could be implemented through company or restructuring arrangements. The company’s ability as going concern is dependent on the successful completion of getting new financing. Negotiations are on-going and will be continued.

Tecnotree does not provide an estimate for full year 2018 due to several uncertainty factors having impact on customer investments.


Board of Directors


Tecnotree is a global provider of telecom IT solutions for the management of products, customers and revenue. Tecnotree helps Communications Service Providers to transform their business towards a marketplace of digital services. Tecnotree empowers service providers to monetize service bundles, provide personalized user experiences and augment value throughout the customer lifecycle. With around 600 telecom experts, Tecnotree serves around 90 service providers in around 70 countries. Tecnotree is listed on the main list of NASDAQ Helsinki with the trading code TEM1V.