COMPTEL CORPORATION STOCK EXCHANGE RELEASE, 14th February 2007, at 8.00 am COMPTEL CORPORATIONS FINANCIAL STATEMENT FOR 2006 Profitability and order backlog grew significantly during the last quarter. Key Figures for the Fourth Quarter . Turnover EUR 22.8 million (OctoberDecember 2005: 23.2) · Operating profit excluding non-recurring items EUR 4.8 million (4.0) · Operating profit EUR 4.8 million (2.6) · Earnings per share EUR 0.01 (0.01) · Order backlog EUR 29.5 million (24.5) Based on the earnings of 2006, the Board of Directors proposes that a dividend of EUR 0.05 per share be paid. The financial information in this stock exchange release is based on the company's audited financial statements. The auditor's report was issued on February 13, 2007. Sami Erviö, President and CEO: "During the fourth quarter, Comptel's business progressed according to set targets. Turnover nearly remained at a level for the last quarter of the previous year, and operating profit rose to 21 per cent of the turnover. This is a remarkable achievement as we booked exceptional high costs of EUR 0.7 million related to our strategic projects for OctoberDecember. Earnings per share for the forth quarter remained at a level of the previous year due to double taxation of withholding taxes, which we have earlier announced. Its effect was approximately 0.02 euros. We will rigorously try to obtain a correction to the resolution of the Tax Office for Major Corporation. In OctoberDecember, Comptel sold a record-breaking 13 new core licenses, many of which were directed at Eastern Europe. Our business perspectives remained positive also in the developing markets of the Middle East, Africa and Asia. Order backlog grew by 20 per cent from last year which is a solid base for the deliveries of the New Year. In accordance with our strategy, we strengthened our local presence by establishing a representative office in South Africa in October. We reached the financial targets we had set for 2006. Our turnover grew by over 20 per cent through the acquisition of business operations and the growth of earlier business. Also the operating profit improved and the operating profit excluding non-recurring items grew by 18 per cent from the previous year." JanuaryDecember 2006 Summary · Turnover EUR 80.4 million (2005: 66.1) · Operating profit excluding non-recurring items EUR 14.0 million (11.9) · Operating profit EUR 11.2 million (10.5) · Earnings per share EUR 0.05 (0.07) · Number of employees at the end of the period 547 (576) The turnover of Comptel was EUR 80.4 million in 2006 (66.1). Turnover grew by 21.8 per cent compared to the previous year (10.7), mainly due to the acquisition of EDB Telecom. The Group's operating profit was EUR 11.2 million (10.5), being 14.0 per cent (15.9) of the turnover. Excluding one-off items related to the integration, the Group's operating profit was EUR 14.0 million, which corresponds to 17.4 per cent of the turnover. The fourth quarter includes exceptional high costs of EUR 0.7 million related to strategic projects. Financial items totalled EUR 0.03 million (0.2). The Group's profit before taxes was EUR 11.2 million (10.8), which is 13.9 per cent (16.4) of the turnover. Group net profit was EUR 5.8 million (7.0). Earnings per share for the financial period were EUR 0.05 (0.07). In November, Comptel Corporation received a resolution of dismissal from the Tax Office for Major Corporations assessment adjustment board concerning the companys tax credit treatment for withholding taxes in 2004. Comptel Corporation had requested for the withholding taxes that the company has paid in Thailand, Indonesia, Greece, Romania, Singapore, Brazil and Argentina in 2004 to be credited in Finland, thus removing the double taxation on the companys respective income from these countries. As an impact of withholding taxes on its taxes from 2005 and 2006, Comptel Corporation booked EUR 2.1 million in the fourth quarter of this year. This book item had an effect of approximately EUR 0.02 on the companys earnings per share. Comptel Corporation aims to have its taxation changed. The order backlog witnessed strong growth and at the end of the review period amounted to EUR 29.5 (24.5). The order backlog grew strongly from the level of the third quarter (24.3). Business Areas Turnover, EUR 10- 10- Chang 1-12 1-12 Chang million 12 12 e % 2006 2005 e % 2006 2005 Europe 13.2 14.5 -9.0 47.6 34.5 38.0 Middle East and 2.9 1.9 52.6 12.0 9.1 32.1 Africa America 2.5 2.5 0.0 8.2 8.8 -7.3 Asia-Pacific 4.2 4.3 -2.3 12.6 13.6 -7.5 Total 22.8 23.2 -1.7 80.4 66.1 21.8 Operating margin breakdown by market, EUR million Europe 5.7 6.6 -13.6 23.0 16.1 42.0 Middle East 1.6 0.8 100.0 7.2 4.4 63.6 and Africa America 1.4 1.4 0.0 4.5 4.6 -2.2 Asia-Pacific 2.9 1.4 107.1 6.4 4.9 30.6 Unallocated -6.8 -7.6 -10.5 - - 52.8 expenses 29.8 19.5 Total 4.8 2.6 84.6 11.2 10.5 6.7 Operating margin as a percentage of turnover Europe 43.2 45.4 - 48.3 46.4 - Middle East 55.2 40.4 - 59.9 48.2 - and Africa America 56.0 56.0 - 56.1 52.0 - Asia-Pacific 69.0 33.1 - 50.8 35.7 - Total 21.0 11.4 - 14.0 15.9 - The development of turnover was excellent in Europe, and in the Middle East and Africa. In Asia Pacific turnover decreased from the previous year, but order intake increased. In America turnover did not developed according to expectations. Except of America, operating profit of the business units improved from the previous year. The proportional profitability increased especially in Asia Pacific due to slighter amount of low-margin products than earlier. In the fourth quarter of 2006, Comptel sold 13 core licenses: seven for mediation and six for provisioning solutions. Of these, seven were sold in Europe, three in the Middle East and Africa, and three in Asia Pacific. In 2006, Comptel sold a total of 29 (16) new core licenses, of which 14 were mediation, 13 provisioning, one network inventory system and one TETRA solution. Comptels core licenses for mediation are Comptel EventLink®, Comptel OnlineLink® and the former EDB Telecom mediation product. Comptels core license for provisioning is Comptel InstantLink®, for network inventory NIMS as well as the TETRA solution. Turnover Breakdown 10- 10- Chang 1-12 1-12 Chang by Type, EUR 12 12 e % 2006 2005 e % million 2006 2005 Licenses 7.4 7.9 -6.3 25.8 24.3 6.2 Services and 15.4 15.3 0.6 54.6 41.7 30.9 Maintenance Hardware 0.0 0.0 0.0 0.0 0.1 0.0 Total 22.8 23.2 -1.7 80.4 66.1 21.8 Growth in services and maintenance is partly due to the acquired EDB Telecom business operations and partly due to increased maintenance business operation. Turnover Breakdown 10- 10- Chang 1-12 1-12 Chang by Sales Channel, 12 12 e % 2006 2005 e % EUR million 2006 2005 Direct Sales 16.9 18.1 -6.6 62.8 49.9 25.9 Partner Sales 5.9 5.1 15.7 17.6 16.2 8.6 Total 22.8 23.2 -1.7 80.4 66.1 21.8 Financial Position EUR million 31.12. 31.12. Change 2006 2005 % Balance Sheet Total 68.8 66.7 3.1 Liquid Assets 12.9 9.6 34.4 Sales Receivables 28.2 24.9 13.3 Accruals 5.0 6.5 -23.1 Deferred income related 1.5 1.8 -16.7 to partial debiting Equity Ratio, per cent 67.7 67.6 0.1 The balance sheet total on December 31, 2006 was EUR 68.8 million (66.7), of which liquid assets amounted to EUR 12.9 million (9.6). The change in liquid assets between JanuaryDecember was EUR 3.3 million (18.8 negative). Operating cash flow was EUR 8.3 million (11.2), paid dividends were the EUR 4.3 million (8.7) and net investments were EUR 0.7 million (21.2) in January December. Sales receivables at the end of the period were EUR 28.2 million (24.9). The growth of sales receivables was mainly due to concentration of invoicing to the end of the period. Accrued income was EUR 5.0 million (6.5). Deferred income related to partial debiting was EUR 1.5 million (1.8). Equity ratio was 67.7 per cent (67.6) and gearing was 27.7 negative (21.5 negative). The Group had no interest-bearing debt at the date of the financial statements. The Group had no interest-bearing debt at the end of the reporting period. Investments, Research and Development (R&D) EUR million 10- 10- Chang 1-12 1-12 Chang 12 12 e % 2006 2005 e % 2006 2005 Gross Investments 0.3 18.6 -98.4 1.5 20.0 -92.5 in Fixed Assets Direct R&D Costs 3.0 2.6 15.4 11.1 8.2 35.4 and Investments Capitalised R&D 1.0 0.4 150.0 1.7 1.8 -5.6 expenditure according to IAS 38 Gross investments comprised of investment in devices, software and office furnishing. The EDB Telecom acquisition is included in the gross investments in the fixed assets of 2005. Excluding this, gross investments in 2005 were EUR 1.9 million. The investments in fixed assets in 2006 were funded through cash flow from operations. In addition to R&D costs, internal system development projects worth of EUR 0.3 million were capitalized in JanuaryDecember. At the moment, Comptel continues to focus on the development of its current main products. The company estimates its level of investment to grow at a moderate rate. Personnel 31.12.2 31.12.2 Change % 006 005 Number of Employees at 547 576 -5.0 the end of the period 1-12 1-12 Change % 2006 2005 Number of Employees on 561 462 21.4 Average The decrease in the number of employees compared to the end of 2005 was mainly due to the integration of business operations bought from EDB Telecom during the first half of 2006. Personnel expenses in OctoberDecember were 37.0 per cent of turnover (45.4) and in JanuaryDecember 45.2 per cent (34.1). The decrease in personnel expenses during the fourth quarter is mainly due to the decrease of number of personnel and improved operational efficiency. At the end of the review period, 58.7 per cent (56.4) of the personnel worked in Finland and 21.9 per cent (26.4) in Norway. Comptel's Share The closing price of the review period on December 29, 2006 was EUR 1.80 (1.64). Comptel's market value on December 31, 2006 was EUR 192.7 million (175.5). Shares traded 10- 10- Chang 1-12 1-12 Chang 12 12 e % 2006 2005 e % 2006 2005 Shares traded, 11.9 14.5 -17.9 49.8 160.7 -69.0 million Exchange, EUR 20.6 23.4 -12.0 85.0 277.8 -69.4 million Highest price, EUR 1.88 1.78 5.6 2.01 2.32 -13.4 Lowest price, EUR 1.49 1.51 -1.3 1.44 1.47 -2.0 7.0 per cent of Comptel's shares were nominee registered on December 31, 2006. In July, The National Board of Patents and Registration in Finland granted permission for the implementation of a decrease in the company's share premium fund. In accordance with the decision of the Annual General Meeting, the amount of EUR 7,367,898.92 was transferred from the share premium fund to the company's unrestricted shareholder's equity governed by the General Meeting. The share subscription with Comptel Corporation 2000 warrants expired on 31 January 2006. During the subscription period, no shares were subscribed to. The Board of Directors of Comptel Corporation cancelled 1,236,600 warrants 2001A and D that were held by Comptel Corporation's fully owned subsidiary Comptel Communications Oy. The share subscription price for both warrants is EUR 10.11. Following the cancellation of warrants, the share capital of Comptel Corporation may increase by a maximum of EUR 55.268 due to the 2001 options. The cancellation of the warrants was registered in the Trade Register on May 18, 2006. Of the stock options 2006A distributed during the review period, a total of 1,240,000 are held by key personnel from Comptel Corporation. The rest of the 2006 stock options have been granted to Comptel Communications Oy to be further distributed to the present and future key personnel of the Group. The share subscription price for stock options 2006A is EUR 1.84 per share, which corresponds to the trade volume weighted average quotation of the Comptel Corporation share on the Helsinki Stock Exchange during April 1April 30, 2006. During the review period, a total of 90,000 stock options 2001B/C have been distributed. The share subscription price for stock options 2001B/C is EUR 2.51 per share, which corresponds to the trade volume weighted average quotation of the Comptel Corporation share on the Helsinki Stock Exchange during May 1May 31, 2002, inflated by 15 per cent. Corporate Governance Due to his sick leave, Mr. Olli Riikkala, Chairman of the Board of Directors, was not able to participate in the work of the Board of Directors during October 1, 2006January 31, 2007. Mr. Hannu Vaajoensuu, Vice Chairman, assumed the responsibilities of the chair. Long-term Financial Targets Comptels goal is to create shareholder value by long-term earnings growth. Comptel is aiming to continue its profitable growth by investing in product development and strengthening its market presence close to its customers. In addition Comptel actively seeks for focused acquisition opportunities. Comptels long term financial targets are: · Double-digit turnover growth per annum on average · Operating profit 20 percent of revenue on average · Solid balance sheet that enables strategic acquisitions Events after the Review Period January 23, 2007 Comptel Corporation announced the signing of a lease on office premises with AC Salmisaari Oy. Comptel will move to the Ruoholahti area of Helsinki once the new building is completed during the summer of 2007. The common premises are expected to significantly improve operational efficiency. The agreement as a whole was signed for ten years, and it includes options to expand and partial termination. The increase in the Group's rental commitments is, in total, approximately EUR 13.5 million. In the upcoming years, the Group's annual rent in Helsinki will remain at the same level or decrease slightly. Outlook for 2007 The Operations Support Systems market is expected to continue to grow globally. Comptel's business prospects have developed favourably, particularly in Eastern Europe. The Group's strong order backlog gives a good basis for growth. A significant part of Comptel's business will continue to comprise of customer specific solutions for Elisa and Telenor. Their share of the Group's turnover is not predicted to grow. The organic turnover growth of Comptel is expected to be from 5 to 10 percent in 2007. Comptel's operating profit is expected to grow from the previous year and to be close to companys long-term target which is 20 per cent of turnover. An increasing portion of Comptel's business will come from services for existing customers, which in its part lessens the fluctuation from one quarter to another. However, single contracts or delivery projects may continue to have a significant impact on the result of a quarter. Helsinki, February 13, 2007 Olli Riikkala Timo Kotilainen, Juhani Lassila, Matti Mustaniemi, Ilkka Toivola, Hannu Vaajoensuu Sami Erviö President and CEO Profit and Loss Account for the Group EUR 1,000 1.1.- 1.1.- 31.12.2006 31.12.200 5 Turnover 80,439 66,065 Other operating income 109 564 Materials and services -7,929 -8,716 Expenses incurred by employee -36,391 -27,113 benefits Depreciation and value -4,549 -3,650 adjustments Other operating charges -20,448 -16,633 -69,316 -56,113 Operating profit 11,232 10,516 Financial income 786 426 Financial charges -758 -182 Share of the results from -54 54 associated companies Profit before taxes 11,206 10,814 Taxes -5,408 -3,634 Profit for the period 5,798 7,180 Distribution to shareholders: Shareholders of the parent 5,766 6,966 company: Minority 33 215 Earnings per share Earnings per share, EUR 0.05 0.07 Earnings per share, diluted, EUR 0.05 0.07 Balance Sheet for the Group EUR 1,000 31.12.2006 31.12.2005 ASSETS Non-current assets Other intangible assets 7,875 9,105 Goodwill 10,832 12,543 Tangible assets 2,292 2,422 Investments in associated 400 454 companies Saleable investments 87 87 Deferred tax assets 714 809 22,201 25,420 Current Assets Floating assets 18 0 Sales receivables and other 33,692 31,604 receivables Financial assets 12,934 9,633 46,643 41,236 TOTAL ASSETS 68,844 66,656 SHAREHOLDERS' EQUITY AND DEBTS Parent companys distributable equity Share capital 2,141 2,141 Share premium account 0 7,368 Unrestricted invested equity 7,368 0 Translation differences -674 -621 Retained earnings 37,782 35,818 46,617 44,706 Minority interest 145 163 Total Shareholders Equity 46,761 44,869 Long-term liabilities Deferred tax liabilities 1,604 933 Provisions 188 1,953 Other liabilities 169 0 1,961 2,886 Short-term liabilities Bills payable and other 18,831 18,815 liabilities Tax liabilities based on the 1,291 86 taxable income of the period Total liabilities 22,083 21,787 TOTAL SHAREHOLDERS' EQUITY AND 68,844 66,656 DEBTS Rental commitments (EUR 31.12.2006 31.12.2005 1,000) Premises Payable during the next 12 3,137 3,033 months Amounts payable later 8,500 12,221 Total 11,637 15,254 Leasing commitments Payable during the next 12 381 351 months Amounts payable later 313 293 Total 694 644 Leasing agreements are mostly valid for three years and contain no redemption clauses. Guarantees 775 773 Forward exchange contracts Derivative instruments Market value 218 -683 Value of underlying 17,390 15,752 instrument CONSOLIDATED STATEMENT OF Group Group CASH FLOW in EUR 1,000 1.1.- 1.1.- 31.12.2006 31.12.2005 Cash flow from operating activities Profit for the period 5,798 7,180 Adjustments: Transactions without a cash 5,414 3,572 flow effect Interest and other financial 582 36 expenses Interest income -590 -393 Taxes 5,408 3,634 Change in working capital: Change in trade and other -4,090 -1,504 receivables Change in Floating assets -18 Change in accounts payable -507 2,602 and other short-term liabilities Change in provisions -1,383 962 Interest paid -582 -36 Interest received 583 393 Income taxes paid -2,280 -5,291 Net cash flow from operating 8,335 11,155 activities Cash flow from investing activities Acquisition of business 2,294 -18,116 activities, net sum of cash acquired Acquisition of tangible -1,041 -1,304 assets Acquisition of intangible -464 -464 assets Capitalised development -1,727 -1,808 expenditure Proceeds from the disposal of 237 481 tangible assets Net cash flow from investing -700 -21,211 activities Cash flow from financing activities Granted loan receivables Dividends paid -4,333 -8,732 Net cash flow from financing -4,333 -8,732 activities Net decrease/increase in cash 3,302 -18,788 and cash equivalents Cash and cash equivalents at 9,632 28,420 the beginning of financial year Cash and cash equivalents at 12,934 9,632 the end of financial year Change 3,302 -18,788 Minority Total interest Parent company's distributable equity Share Share Other Transla Fair Retai Total capi premium funds tion value ned EUR 1000 tal account diffe reserve ear rences nings Shareholders' 2,141 7,368 0 -946 0 37,450 46,013 115 46,128 equity Dec 31,2004 Cash flow hedges: Gain/loss -162 -162 -162 entered in equity Translation 325 325 325 differences Tax on entries 42 42 42 in equity Profit for 6,966 6,966 215 7,181 the period Total 325 -120 6,966 7,171 215 7,386 proceeds and expenses for the period Dividend -8,566 -8,566 -166 -8,732 Share-based 87 87 87 compensation Shareholders' 2,141 7,368 0 -621 -120 35,937 44,705 164 44,869 equity, Dec 31, 2005 Cash flow hedges: Gain/loss 83 83 83 entered in equity Translation -53 -53 -53 differences Tax 0 0 on entries in equity Net income directly entered in equity 0 0 From share -7,368 7,368 equity to unrestricted invested equity Profit 5,766 5,766 33 5,798 for the period Total 0 -7,368 7,368 -53 83 5,766 5,766 33 5,829 proceeds and expenses for the period Dividend -4,282 -4,282 -52 -4,334 Sahare-based 397 397 397 compensation Shareholders' 2 141 0 7,368 -674 -37 37,818 46,616 145 46,761 equity, Dec 31, 2006 FINANCIAL INDICATORS Financial summary 1.1. -31.12.2006 1.1.-31.12. 2005 Turnover, EUR 1,000 80,439 66,065 Turnover, change % 21.8 10.7 Operating profit, 11,232 10,516 EUR 1,000 Operating profit, 6.8 -29.0 change % Operating profit as 14.0 15.9 % of turnover Profit after 11,206 10,815 financial items, EUR 1,000 Profit after 13.9 16.4 financial items, % of turnover Return on equity, % 12.7 15.8 Return on 25.3 24.0 investment, % Equity ratio, % 67.7 67.6 Gross investment in 1,477 19,968 fixed assets, EUR 1,000 2) Gross investments 1.8 30.2 in fixed assets, % of the turnover 2) Capitalisation, 1,727 1,808 according to IAS 38, on intangible assets Research and 11,079 8,154 development expenditure, EUR 1,000 Research and 13.8 12.3 development costs, % of turnover Back orders, EUR 29,483 24,482 1,000 1) Average number of 561 462 employees during the period Gearing ratio, % -27.7 -21.5 1) The order book may vary significantly during the financial period. 2) Includes the acquisition of the EDB Telecom business in 2005. Gross investments excluding the acquisition were EUR 1,852 thousand which amounts to 2.8 per cent of turnover. Per share data 1.1.-31.12.2006 1.1.-31.12.2005 Earnings per share 0.05 0.07 (EPS), EUR Diluted EPS, EUR 0.05 0.07 Equity per share, 0.44 0.42 EUR Dividend per share, 0.05 0.04 EUR Dividend per 92.8 61.5 earnings, % Effective dividend 2.8 2.4 yield, % P/E-ratio 33.4 25.2 Adjusted number of 107,054,810 107,054,810 shares at the end of the period Adjusted average 107,054,810 107,054,807 number of shares during the period Number of diluted 107,054,810 107,054,807 shares Comptels Twenty Largest Shareholders and Nominee Registered on December 31, 2006 1. Elisa Corporation 19.9% 2. Sampo Life Insurance Company Limited 18.3% 3. Kaleva Mutual Insurance Company 6.5% 4. Varma Mutual Pension Insurance 4.6% Company 5. OP-Suomi Pienyhtiöt Investment Fund 3.1% 6. State Pension Fund 1.4% 7. Mandatum Finnish Small Cap 0.9% 8. EQ Small Titans / EQ Fund Management 0.9% Ltd 9. OP-Pohjola Pienyhtiöt Investment 0.9% Fund 10. Aktia Capital Investment Fund 0.8% 11. Tapiola Mutual Pension Insurance 0.8% Company 12. Finanssi-Sampo Ltd 0.8% 13. Etera Mutual Pension Insurance 0.8% Company 14. Evli Select 0.7% 15. SEB Gyllenberg Small Firm 0.7% 16. Veikko Laine Oy 0.7% 17. Ilmarinen Mutual Pension Insurance 0.6% Company 18. Placeringsfonden Aktia Secura 0.6% 19. Stiftelsen för Åbo Akademi 0.6% 20. Forssan Seudun Puhelin Oy 0.5% Nominee registered and foreign ownership 7.0% COMPTEL CORPORATION Additional information: Sami Erviö, President and CEO, tel. +358 9 700 1131 Mr. Veli Matti Salmenkylä, CFO, tel. +358 50 2813 Mr. Samppa Seppälä, Director, IR and Corporate Communication, tel. +358 50 5680533 Distribution: Helsinki Stock Exchange Major media