INTERIM REPORT OF COMPTEL CORPORATION 1 JANUARY

Stock exchange release 18 October 2012 at 8.00 am

In July-September, net sales grew significantly from the previous year. Operating result was positive.

Key figures for the third quarter:

Net sales EUR 20.4 million (Q3 2011: 16.6)
Operating result EUR 0.4 million (8.0)
Operating result excluding one-off costs EUR 1.6 million (-0.8)
Earnings per share EUR 0.00 (0.08)
Order backlog EUR 44.5 million (32.1)

Key figures for January - September:

Net sales EUR 60.5 million (Q1 - Q3 2011: 53.5)
Operating result EUR -15.3 million (9.2), of which impairment loss EUR 10.2 million
Operating result excluding one-off costs EUR -2.6 million (0.4)
Earnings per share EUR -0.14 (0.07)

As stated earlier, in 2012 Comptel net sales are estimated to grow approximately 10 per cent from the previous year. Operating profit excluding one-off items is estimated to represent 0 - 5 per cent of net sales. Due to the impairment loss recorded in the first quarter and one-off items, operating result is estimated to remain negative. Characteristically a significant part of Comptel’s operating profit and net sales is generated in the second half of the year.

Juhani Hintikka, President and CEO:

”We saw positive development in our net sales and operating result during the third quarter. We won two significant projects from South America. One of these orders was received outside of our traditional domain, from a Brazilian utility company. We have won ten new customers since January this year. We closed a deal with a prominent operator group in the Middle East for Comptel Social Links software, which strengthens our position as an analytics vendor to be reckoned with in our customer space.

Operating result for the third quarter was positive as per our expectations. The result was impacted by one-off items relating to personnel restructuring. We met the cost savings targets set in June and the cost level for the third quarter was significantly lower compared to the first half of the year. We completed personnel related efficiency measures during the third quarter.

We have updated our strategy during the third quarter. Through the integration of our analytics capabilities our strategic goals and customer promise have become more precise. We are aiming at becoming the leader in the field of customer interaction automation both in the telecommunications market and outside our domain. We will continue investing in research and development as defined in our strategy. On top of this, we have clarified our sales and marketing strategy. The role of our partners will be of more importance both in the telecommunications markets and in the quest for new industries and decision makers. We will communicate strategy updates to the public during the last quarter of the year.”

Business Review for the Third Quarter and January - September 2012

In the third quarter, Comptel’s net sales increased by 22.3 per cent from the previous year and were EUR 20.4 million (16.6). In January - September, net sales grew by 13.2 per cent from the previous year and were EUR 60.5 million (53.5). Increase in net sales was mainly attributable to higher license sales.

In the third quarter, the operating result was EUR 0.4 million (8.0), which corresponds to 2.0 per cent of net sales (48.3). The operating result was burdened by restructuring costs relating to personnel reduction. Excluding these one-off items, operating profit was EUR 1.6 million (-0.8). The increase in the comparable operating result was mainly a result of growth in license sales.

Following the impairment loss recorded in the first quarter, the operating result for January - September was EUR -15.3 million (9.2), which corresponds to -25.3 per cent of net sales (17.2). Operating result excluding impairment loss and one-off items was EUR -2.6 million (0.4). During the second quarter Comptel initiated measures to lower the run-rate cost levels. These actions had positive impact to the third quarter operating result. All in all, Comptel is aiming at achieving savings of approximately EUR 10 million at an annual level. These savings are estimated to materialise during 2013. The cost savings are aimed at items outside Comptel’s core business.

In January-September, profit before taxes was EUR -15.9 million (9.0) and net loss was EUR -15.0 million (7.2). Earnings per share for the period under review were EUR -0.14 (0.07).

Tax expense for the review period was EUR -0.9 million (1.8), including EUR 1.4 million of withholding taxes. In connection with the impairment of goodwill, a change of EUR 2.5 million was booked in deferred tax liabilities. The cumulative amount of outstanding, non-credited withholding taxes payment since 2004 is EUR 9.0 million.

The Group’s order backlog grew significantly from the previous year and was EUR 44.5 million (32.1) at the end of the period. Maintenance agreements represent EUR 22.4 million (15.1) and other order backlog EUR 22.0 million (17.0) of the total. Order intake increased from the previous year during the third quarter but was lower compared to the other quarters due to normal seasonality.

During the period under review, Comptel Corporation acquired Xtract Oy, a software company specialising in analytics, for a total consideration of EUR 3.1 million (enterprise value). By combining the leading analytics capabilities with its existing software, Comptel will this year create an offering which will enable operators to react quickly to events from the network and transform them automatically into relevant and timely actions that improve customer experience. Xtract Group was consolidated into Comptel Group financials as of 10 February 2012. The acquisition was financed through Comptel Corporation's liquid assets. The 20 Xtract employees working in Finland have moved to the Comptel office in Helsinki and globally as part of the Comptel organisation.

Business areas

Net sales, EUR million	7-9 2012	7-9 2011	Change %	1-9 2012	1-9 2011	Change %	1-12 2011
Europe East	3.5	2.6	36.2	12.1	9.3	29.3	12.9
Europe West	5.5	4.8	16.0	15.3	12.9	17.8	19.1
Asia Pacific	5.9	4.2	40.2	16.7	15.9	4.8	21.1
Middle East and Africa	3.4	3.3	2.3	10.2	9.8	3.7	13.7
Americas	2.1	1.8	14.2	6.4	5.5	16.2	9.9
Total	20.4	16.6	22.3	60.5	53.5	13.2	76.8
Operating result, EUR million
Europe East	1.2	0.3	301.3	4.5	2.2	103.1	2.2
Europe West	2.7	2.4	11.6	6.9	6.6	3.8	11.4
Asia Pacific	2.5	1.8	37.3	7.6	9.3	-17.7	11.9
Middle East and Africa	0.8	1.2	-36.4	1.6	4.0	-60.4	5.5
Americas	0.7	0.8	-5.5	2.6	2.6	-2.0	5.7
Unallocated costs	-7.4	1.5	-587.4	-38.5	-15.5	148.4	-24.8
Total	0.4	8.0	-94.9	-15.3	9.2	-266.0	11.9
Operating result, % of net sales
Europe East	33.4	11.4	-	37.3	23.7	-	16.9
Europe West	48.3	50.2	-	45.1	51.2	-	60.0
Asia Pacific	42.6	43.5	-	45.7	58.2	-	56.5
Middle East and Africa	23.2	37.4	-	15.4	40.4	-	39.8
Americas	35.0	42.3	-	40.6	48.2	-	56.9
Total	2.0	48.3	-	-25.3	17.2	-	15.5

In the third quarter and January - September, net sales grew in all the geographic regions. Strongest growth was experienced in Europe West and Europe East. Operating result decreased in Middle East and Asia Pacific.

In January - September, Comptel received 13 significant orders (Q1 - Q3 2011: 13), nine policy control & charging, 2 fulfillment and 2 managed services orders. As significant orders, Comptel reports sold projects and licenses with a value of EUR 500,000 at the minimum.

Net sales breakdown, EUR million	7-9 2012	7-9 2011	Change %	1-9 2012	1-9 2011	Change %	1-12 2011
Licenses	6.0	2.7	118.6	13.4	13.9	-3.5	21.1
Services	6.0	5.9	1.1	22.6	16.0	41.5	22.9
Maintenance	8.4	8.0	4.9	24.5	23.6	3.9	32.7
Total	20.4	16.6	22.3	60.5	53.5	13.2	76.8

License sales were high during the third quarter which had positive impact on the profitability. Services sales remained at previous year’s level. Maintenance revenue consists of maintenance and support of the delivered systems.

Net sales by sales channel, EUR million	7-9 2012	7-9 2011	Change %	1-9 2012	1-9 2011	Change %	1-12 2011
Direct sales	14.3	12.8	11.7	44.9	41.3	8.8	57.1
Partner sales	6.1	3.9	57.2	15.7	12.2	28.2	19.6
Total	20.4	16.6	22.3	60.5	53.5	13.2	76.8

Both direct and partner sales increased during the third quarter.

Financial Position

EUR million	30 Sep 2012	31 Dec 2011	Change %	30 Sep 2011	Change %
Statement of financial position total	60.2	71.8	-16.1	78.2	-23.0
Liquid assets	6.5	9.4	-30.4	24.3	-73.1
Trade receivables, gross	20.4	26.7	-23.7	20.6	-1.2
Bad debt provision	-1.1	-0.7	52.5	-0.9	13.0
Trade receivables, net	19.3	26.0	-25.7	19.7	-1.9
Accrued income	12.9	10.2	26.2	9.6	33.9
Deferred income related to partial debiting	3.1	2.1	49.1	2.0	51.5
Interest-bearing debt	7.5	0.1	11,109.0	0.1	9,714.9
Equity ratio, per cent	50.2	66.6	-24.6	75.3	-33.4

The impairment loss was reflected in ‘statement of financial position total’ which was EUR 60.2 million. The acquisition of Xtract Oy decreased the liquid assets which were EUR 6.5 million at the end of the period. The dividends of EUR 3.2 million (4.3) were paid in the second quarter.

Operating cash flow was EUR 2.0 million (-3.2) in the third quarter and EUR 1.7 million (3.4) during January - September.

The trade receivables were EUR 19.3 million (19.7) at the end of the period. The accrued income was EUR 12.9 million (9.6). The deferred income related to partial debiting was EUR 3.1 million (2.0).

Comptel Corporation withdrew a loan of EUR 7.0 million during the review period. The company has available a revolving credit facility of EUR 15.0 million maturing in 2013. The equity ratio was 50.2 per cent (75.3) and the gearing ratio was 3.8 per cent (-46.7).

Research and Development (R&D)

EUR million	7-9 2012	7-9 2011	Change %	1-9 2012	1-9 2011	Change %	1-12 2011
Direct R&D expenditure	4.1	3.1	31.5	14.1	10.9	29.6	15.4
Capitalisation of R&D expenditure according to IAS 38	-1.5	-1.0	46.8	-4.8	-3.1	58.4	-4.0
R&D depreciation and impairment charges	0.6	0.9	-31.3	2.0	2.7	-23.7	3.4
R&D expenditure, net	3.3	3.1	7.4	11.3	10.5	7.6	14.8
Direct R&D expenditure, % of net sales	20.3	18.9	-	23.3	20.3	-	20.1

R&D expenditure increased from the previous year as Comptel actively developed new products for the market. Investments in R&D will increase the expenditure this year. Direct R&D expenditure represented 23.3 per cent (20.3) of net sales in the period under review.

Comptel’s R&D expenditure was mainly targeted at the service fulfillment automation of telecom operators and to the management and real-time analysis of rapidly increasing data traffic. Comptel seeks market leadership in these areas where key business challenges of operators will be solved. In addition, the company is developing an integrated software platform, which will enable a cost-efficient and solution-based R&D.

This year, the company focuses on developing its offering within the Fulfillment, Policy Control & Charging and Intelligent Customer Interaction product areas. In Intelligent Customer Interaction, integrating the acquired Xtract customer analytics into the Comptel software platform is a priority. With a combined offering, Comptel can help operators to improve customer loyalty as well as enable individually targeted marketing. Comptel introduced a Next Generation Comptel Fulfillment software platform into the market in May and in addition five software releases were launched in these respective product areas during the first half of the year.

Investments

EUR million	7-9 2012	7-9 2011	Change %	1-9 2012	1-9 2011	Change %	2011
Gross investments in property, plant and equipment and intangible assets	0.3	0.2	54.3	3.9	0.6	509.1	1.0

The acquisition of Xtract Oy increased the gross investments from the previous year. The other investments comprised of devices, software and furnishings. The investments were funded through cash flow from operations

Personnel

	30 Sep 2012	30 Sep 2011	Change %	31 Dec 2011
Number of employees at the end of period	701	630	11.3	639

	1-9 2012	1-9 2011	Change %	1-12 2011
Average number of personnel during the period	706	618	14.2	623

The number of employees increased significantly from the previous year as Comptel continued to invest in its sales, service and R&D organisation. 27 employees joined Comptel as Xtract was consolidated into the Comptel Group during the period under review. The number of employees is expected to decrease during the fourth quarter as a result of the efficiency measures.

In July - September, personnel expenses were 55.3 per cent of net sales (55.3). In January - September, the personnel expenses were 55.9 per cent of net sales (50.4).

At the end of the period, 32.0 per cent (32.5) of the personnel were located in Finland, 24.3 per cent (24.6) in Malaysia, 9.3 per cent (8.9) in Bulgaria, 7.8 per cent (7.0) in the United Kingdom, 7.4 per cent (5.7) in the United Arab Emirates, 4.9 per cent (6.2) in Norway, and 14.3 per cent (15.1) in other countries where Comptel operates.

Comptel share

Closing share price of the period was EUR 0.40 (0.62). Comptel’s market value at the end of the period was EUR 42.8 million (66.3).

Comptel share	7-9 2012	7-9 2011	Change %	1-9 2012	1-9 2011	Change %	1-12 2011
Shares traded, million	3.4	8.4	-60.2	19.2	25.6	-25.3	32.8
Shares traded, EUR million	1.3	4.7	-71.9	10.4	16.6	-37.1	21.0
Highest price, EUR	0.43	0.62	-30.6	0.63	0.79	-20.3	0.79
Lowest price, EUR	0.37	0.42	-11.9	0.37	0.42	-11.9	0.42

Of Comptel’s outstanding shares, 5.1 per cent (7.8) were nominee registered or held by foreign shareholders at the end of the period.

Elisa Corporation notified on 17 January 2012 that its direct ownership in Comptel Corporation had increased to over the 10% threshold following the merger of Saunalahti Group Oyj into Elisa Corporation. Elisa Group's ownership remained unchanged.

During the period, Comptel Corporation allotted gratuitously 111,186 shares to the members of the Board of Directors as part of their annual compensation and 25,000 shares to the President and CEO of the company according to the terms and conditions of the 2011 share-based incentive plan.

The company held 161,219 of its own shares at the end of the period, which is 0.15 per cent of the total number of its shares. The total counter-book value of the shares held by the company was EUR 3,224.

Corporate Governance

The Annual General Meeting (AGM), held on 26 March 2012, re-elected Mr Hannu Vaajoensuu and Mr Petteri Walldén as members of the Board of Directors and elected Mr Pertti Ervi, Ms Eriikka Söderström and Mr Antti Vasara elected as new members of the Board of Directors. In its meeting held after the AGM, the Board of Directors elected Mr Pertti Ervi as chairman and Mr Hannu Vaajoensuu as vice chairman. The Board decided not to set up committees.

The AGM resolved to elect Ernst & Young Oy as authorised public accountant, Mr Heikki Ilkka being the principal auditor.

The AGM approved the proposal of Board of Directors that a dividend of EUR 0.03 per share be paid for 2011. The dividend was paid on 12 April 2012.

The AGM decided to issue stock options to key personnel of the Comptel Group as a part of the incentive and commitment program for the key personnel.

The AGM authorised the Board of Directors to decide on share issues amounting to a maximum of 21,400,000 new shares and on repurchase of the company's own shares up to a maximum number of 10,700,000 shares. The authorisations are valid until 30 June 2013. However, the authorisation to implement the company's share-based incentive programs is valid until 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 26 March 2012.

During the period under review, the Board of Directors resolved on a new share-based incentive plan for the Group key personnel. The aim of the new plan is to combine the objectives of the shareholders and the target people in order to increase the value of the company, to commit the target people to the company, and to offer them a competitive reward plan based on long-term shareholding in the company.

In April, Comptel Corporation and Cisco Systems Inc. settled the dispute under arbitration concerning Comptel’s use of a certain sub-set of Axioss software that was sold to Cisco and simultaneously licensed back to Comptel for use in the current release of Comptel Fulfillment. Cisco brought the matter to the London Court of International Arbitration in December 2011. In accordance with the settlement, the parties have agreed to withdraw all their claims against each other and the arbitration process has thereby been terminated. It has been agreed that no financial compensation will be made between the parties. Comptel will continue in the fulfillment business and will, consistent with the terms of Cisco’s license back to Comptel, support its existing Axioss and Comptel Fulfillment customers.

Events after the Reporting Period

As part of the communication on productivity improvement activities that was made earlier in Q2, Comptel will renew its sales strategy and operating model. The new sales strategy will focus on winning new customers, entering new markets, closing larger deals, strengthening partnerships and improving profitability of existing customers. This requires the right competences and timely investments for each customer segment. In order to execute the renewed sales strategy, Comptel will establish a Chief Market Operations Officer (CMO) role, under whom the current business-area heads will be transferred.

With the change in sales leadership the structure of the Executive Board and reporting practices will be simplified. The Legal and Financial departments will be consolidated into one organization. After these changes the members of the Executive Board are, Mr. Juhani Hintikka (CEO). Mr. Mauro Carobene (CMO), Mr. Mikko Hytönen (CFO), Mr. Antti Koskela (CTO), Mr. Kari Onniselkä (Services), Ms. Niina Pesonen (HR) and Ms. Ulla Koivukoski (Marketing and Communications). The number of Executive Team members will be reduced from the current twelve to seven persons. New organization will be gradually effective as per November 1, 2012. A separate stock exchange release has been published on October 17, 2012.

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.

If the company fails to execute the efficiency measures and costs savings as planned it will have an impact on the company’s financial results and financial position.

Characteristics for 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 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, Malaysian ringgit and Norwegian Krone 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. The company believes the treatment of its withholding taxation will be changed. However, the process between the states is very slow and the timing of a change is hard to forecast.

The risks and uncertainties of Comptel are described more in detail in the company’s financial statements and the Board of Directors’ report for 2011.

Outlook

As stated in 15 June 2012, in 2012 Comptel net sales are estimated to grow approximately 10 per cent from the previous year.

Operating profit excluding one-off items is estimated to represent 0 - 5 per cent of net sales. Due to the impairment loss recorded in the first quarter and one-off items, operating result is estimated to remain negative.

Characteristically a significant part of Comptel’s operating profit and net sales is generated in the second half of the year.

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 2011 except for the application of new or amended standards and interpretations as set forth in note 1.

Comptel has adopted IAS 8 to correct errors discovered in the figures for the reporting periods 2010, 2011 and Q1/2012. The nature of the error is described in note 13.

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 – 30 Sep 2012	1 Jan – 30 Sep 2011^*	1 Jul – 30 Sep 2012	1 Jul – 30 Sep 2011^*

Net sales	60,539	53,481	20,353	16,640

Other operating income	2	19,715	1	19,700

Materials and services	-4,356	-3,288	-1,097	-1,271
Employee benefits	-33,864	-26,979	-11,256	-9,210
Depreciation, amortisation and impairment charges	-13,299	-12,630	-1,020	-10,027
Other operating expenses	-24,326	-21,082	-6,571	-7,796
	-75,846	-63,979	-19,945	-28,305

Operating profit/loss	-15,305	9,218	409	8,035

Financial income	977	1,018	263	617
Financial expenses	-1,602	-1,228	66	-560

Profit/loss before income taxes	-15,930	9,008	738	8,092

Income taxes	923	-1,789	-915	486

Profit/loss for the period	-15,006	7,219	-177	8,577

Other comprehensive income
Cash flow hedges	899	-412	396	-764
Translation differences	151	-113	32	-96
Income tax relating to components of other comprehensive income	-222	107	-99	199

Total comprehensive income for the period	-14,179	6,801	152	7,916

Profit/loss attributable to:
Equity holders of the parent company	-15,006	7,219	-177	8,577

Total comprehensive income attributable to:
Equity holders of the parent company	-14,179	6,801	152	7,916

Shareholders of the parent company:

Earnings per share, EUR	-0.14	0.07	-0.00	0.08
Earnings per share, diluted, EUR	-0.14	0.07	-0.00	0.08

^*Year 2011 error has been corrected.

Consolidated Statement of Financial Position (EUR 1,000)	30 Sep 2012	31 Dec 2011

Assets

Non-current assets
Goodwill	2,646	10,832
Other intangible assets	13,015	9,255
Tangible assets	1,175	1,381
Investments in associates	817	817
Available-for sale financial assets	87	87
Deferred tax assets	2,543	636
Other non-current receivables	503	409
	20,786	23,418

Current assets
Trade and other current receivables	32,874	38,941
Cash and cash equivalents	6,546	9,401
	39,420	48,343

Total assets	60,206	71,761

Equity and liabilities

Equity attributable to equity holders of the parent company

Share capital	2,141	2,141
Fund of invested non-restricted equity	243	178
Translation differences	-532	-682
Retained earnings	22,968	40,169
Total equity	24,820	41,805

Non-current liabilities
Deferred tax liabilities	3,092	4,798
Provisions	3,070	2,750
Non-current financial liabilities	174	29
	6,336	7,577

Current liabilities
Trade and other current liabilities	21,731	22,341
Current financial liabilities	7,319	38
	29,049	22,379

Total liabilities	35,385	29,956

Total equity and liabilities	60,206	71,761

Consolidated Statement of Cash Flows (EUR 1,000)	1 Jan – 30 Sep 2012	1 Jan – 30 Sep 2011^*

Cash flows from operating activities

Profit/loss for the period	-15,006	7,219
Adjustments:
Non-cash transactions or items that are not part of cash flows from operating activities	14,199	-6,702
Interest and other financial expenses	173	43
Interest income	-18	-28
Income taxes	-923	1,789
Change in working capital:
Change in trade and other current receivables	7,056	4,304
Change in trade and other current liabilities	-1,035	-1,570
Change in provisions	320	785
Interest paid	-172	-43
Interest received	12	23
Income taxes paid and tax returns received	-2,922	-2,398

Net cash from operating activities	1,685	3,421

Cash flows from investing activities

Acquisition of subsidiaries, net of cash acquired	-1,812	-
Investments in tangible assets	-341	-355
Investments in intangible assets	-369	-281
Investments in development projects	-4,847	-3,061
Proceeds from sale of intangible assets	-	21,903
Change in other non-current receivables	-37	-53

Net cash used in investing activities	-7,406	18,153

Cash flows from financing activities

Dividends paid	-3,207	-4,270
Proceeds from borrowings	19,000	-
Repayment of borrowings	-13,020	-
Lease payments	-29	-29

Net cash used in financing activities	2,744	-4,299

Net change in cash and cash equivalents	-2,977	17,275

Cash and cash equivalents at the beginning of the period	9,401	7,028
Cash and cash equivalents at the end of the period	6,546	24,347
Change	-2,855	17,319

Effects of changes in foreign exchange rates	121	43

^*Year 2011 error has been corrected.

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	Treasury shares	Retained earnings	Total
Equity at 31 Dec 2010	2,141	7,575	-858	-40	-600	40,927	49,146
Dividends						-4,270	-4,270
Transfer of treasury shares		76			225	-225	76
Share-based compensation^*						202	202
Total comprehensive income for the period^*			-113	-305		7,219	6,801
Equity at 30 Sep 2011	2,141	7,651	-971	-345	-375	43,853	51,955

^*Year 2011 error has been corrected.

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	Treasury shares	Retained earnings	Total
Equity at 31 Dec 2011	2,141	178	-682	-589	-375	41,133	41,805
Dividends						-3,207	-3,207
Transfer of treasury shares		66			14	-14	66
Share-based compensation						336	336
Total comprehensive income for the period			151	677		-15,006	-14,179
Equity at 30 Sep 2012	2,141	243	-532	87	-361	23,241	24,820

Notes

1. Application of new or amended standards and interpretations

On 1 January 2012 the Group adopted the following new and amended standards and interpretations endorsed by the EU and that are applicable to Comptel:

Amendments to IFRS 7 Financial Instruments: Disclosures (effective for financial years beginning on or after 1 July 2011). The amendments will promote transparency in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of financial instruments and the effect of those risks on an entity’s financial position, particularly those involving securitisation of financial assets.

2. Segment information

Net sales by segment

EUR 1,000	1 Jan – 30 Sep 2012	1 Jan – 30 Sep 2011	1 Jul – 30 Sep 2012	1 Jul – 30 Sep 2011

Europe East	12,054	9,325	3,505	2,573
Europe West	15,261	12,949	5,520	4,758
Asia-Pacific	16,653	15,890	5,893	4,204
Middle East and Africa	10,179	9,816	3,385	3,310
Americas	6,392	5,501	2,050	1,795
Group total	60,539	53,481	20,353	16,640

Operating profit/loss by segment

EUR 1,000	1 Jan – 30 Sep 2012	1 Jan – 30 Sep 2011^*	1 Jul – 30 Sep 2012	1 Jul – 30 Sep 2011^*

Europe East	4,499	2,214	1,172	292
Europe West	6,884	6,629	2,665	2,389
Asia-Pacific	7,618	9,251	2,512	1,830
Middle East and Africa	1,569	3,962	787	1,238
Americas	2,596	2,650	717	759
Group unallocated expenses	-38,470	-15,489	-7,444	1,527
Group operating profit/loss total	-15,305	9,218	409	8,035
Financial income and expenses	-625	-210	329	57
Group profit/loss before income taxes	-15,930	9,008	738	8,092

^*Year 2011 error has been corrected.

3. Business combinations

On 9 February 2012, Comptel Corporation acquired all shares of Xtract Oy, a Finnish software company specialising in analytics.

By acquiring Xtract the company creates a unique offering by combining world class analytics capabilities with its existing assets. This offering enables operators to react quickly to events from the network and transform them automatically into relevant and timely actions that improve the customer experience.

The total consideration (enterprise value) was EUR 3,100 thousand. The actual purchase price EUR 2,075 thousand was paid in cash.

The goodwill according to IFRS 3 is EUR 1,993 thousand after the fair value allocations reflected in net assets. EUR 215 thousand was recognised in intangible assets which are amortised over five years.

The goodwill is attributable to the skilled workforce of Xtract and the utilisation potential of Comptel’s existing sales channel to promote Xtract products.

The values of the assets and liabilites arising from the acquisition were as follows:

EUR 1,000	Recognised fair values on acquisition

Technology (incl. in other intangible assets)	840
Other intangible assets	1
Machinery and equipment	6
Trade receivables and other receivables	842
Cash and cash equivalents	263
Total assets	1,952

Deferred tax liabilities	53
Other non-interest bearing liabilities	597
Interest bearing liabilities	1,220
Total liabilities	1,870

Net assets	82

Acquisition cost	2,075
Goodwill	1,993

Purchase price paid in cash	2,075
Cash and cash equivalents in acquired subsidiary	-263
Total net cash outflow on the acquisition	1,812

Comptel has expensed acquisition-related consultation fees of EUR 145 thousand. The fees are included in other operating expenses.

Xtract’s net sales EUR 725 thousand and result EUR -1,380 thousand for the period 10 February to 30 September 2012 are included in the comprehensive statement of income. Comptel Group net sales for 1 January – 30 September 2012 would have been EUR 60,904 thousand and loss EUR 14,917 thousand if Xtract had been consolidated from the beginning of the year 2012.

4. Impairment loss on goodwill

Comptel changed the allocation method of goodwill during the first quarter of the year. Due to the change, an impairment testing was carried out on a new cash generating unit level. Previously, it had not been possible to allocate goodwill specifically to any segment or cash generating unit. As a result of impairment testing Comptel recorded an impairment loss of EUR 10,179 thousand in the first quarter result.

In the test, the recoverable amount of goodwill is determined based on value in use calculation. The value in use is computed based on discounted forecast cash flows. The cash flow forecasts rely on the plans approved by the Board of Directors and management concerning in particular profitability and the growth rate of net sales. The plans cover a five-year period taking into account the recent development of business. The used pre-tax discount rate is 16.4%.

The cash flows after the five-year period have been forecast by estimating the future growth rate of net sales to be 0%.

The use of the testing model requires making estimates and assumptions concerning investments, market growth and general interest rate level.

5. Income tax

Income tax according to the statement of comprehensive income for the period was EUR 923 thousand positive (EUR 1,789 thousand negative in 2011) as a change of EUR 2,494 thousand in deferred tax liabilities was booked in connection with the impairment of goodwill.

In 2006, Adjustment of the Tax Office for Major Corporations refused to accept the crediting of taxes withheld at source in taxation of 2004 and 2005.

Comptel is pursuing negotiations with the Ministry of Finance and the other countries that have withheld tax at source to avoid double taxation. The company believes the treatment of its withholding taxation will be changed. The negotiation process between countries is, however, very slow and the time for the change to take place is very difficult to predict.

According to the Board of Adjustment’s decision currently in force, Comptel Corporation has expensed taxes withheld at source amounting to EUR 1,422 thousand in January – September (EUR 1,020 thousand).

6. Tangible assets

EUR 1,000	1 Jan – 30 Sep 2012	1 Jan – 30 Sep 2011

Additions	341	355

7. 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 – 30 Sep 2012	1 Jan – 30 Sep 2011

Associate
Other operating income	1	-
Purchases of goods and services	-	130
Interest income	6	6

EUR 1,000	30 Sep 2012	31 Dec 2011

Associate
Non-current receivables	96	91
Trade receivables	0	-

Remuneration to key management

The 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 – 30 Sep 2012	1 Jan – 30 Sep 2011

Salaries and other short-term employee benefits	1,680	2,325
Share-based payments	234	179
Total	1,914	2,504

Guarantees and other commitments

EUR 1,000	30 Sep 2012	31 Dec 2011

Guarantees	90	-

8. Commitments

Minimum lease payments on non-cancellable office facilities and other operating leases are payable as follows:

EUR 1,000	30 Sep 2012	31 Dec 2011

Less than one year	3,204	3,377
Between one and five years	6,419	7,909
Total	9,623	11,286

The group had no material capital commitments for the purchase of tangible assets at 30 September 2012 and 30 September 2011.

9. Contingent liabilities

EUR 1,000	30 Sep 2012	31 Dec 2011

Bank guarantees	3,358	1,847

EUR 1,000	30 Sep 2012	31 Dec 2011

Contingent liabilities on behalf of others
Guarantees	129	-

10. Events after the Reporting Period

As part of the communication on productivity improvement activities that was made earlier in Q2, Comptel will renew its sales strategy and operating model. The new sales strategy will focus on winning new customers, entering new markets, closing larger deals, strengthening partnerships and improving profitability of existing customers. This requires the right competences and timely investments for each customer segment. In order to execute the renewed sales strategy, Comptel will establish a Chief Market Operations Officer (CMO) role, under whom the current business-area heads will be transferred.

11. Key figures

Financial summary	1 Jan – 30 Sep 2012	1 Jan – 30 Sep 2011^*	1 Jan – 31 Dec 2011^*

Net sales, EUR 1,000	60,539	53,481	76,751
Net sales, change %	13.2	-1.6	-1.5
Operating profit/loss, EUR 1,000	-15,305	9,218	11,902
Operating profit/loss, change %	-266.0	130.0	33.6
Operating profit/loss, as % of net sales	-25.3	17.2	15.5
Profit/loss before taxes, EUR 1,000	-15,930	9,008	10,963
Profit/loss before taxes, as % of net sales	-26.3	16.8	14.3
Return on equity, %	-	-	16.0
Return on investment, %	-	-	22.9
Equity ratio, %	50.2	75.3	66.6
Gross investments in tangible and intangible assets, EUR 1,000¹⁾	3,871	636	1,037
Gross investments in tangible and intangible assets, as % of net sales	6.4	1.2	1.4
Capitalisations according to IAS 38 to intangible assets	4,847	3,061	3,965
Research and development expenditure, EUR 1,000	14,082	10,867	15,419
Research and development expenditure, as % of net sales	23.3	20.3	20.1
Order backlog, EUR 1,000 ²⁾	44,469	32,098	47,217
Average number of employees during the period	706	618	623
Interest-bearing net liabilities, EUR 1,000	947	-24,270	-9,334
Gearing ratio, %	3.8	-46.7	-22.3
¹⁾Includes the acquisition of Xtract in 2012. The gross capital investments excluding the acquisition amounted to EUR 965 thousand, which is 1.6 percent of net sales. The figure does not include investments in development projects. ²⁾ The order book may vary significantly during the financial period.

^*Year 2011 error has been corrected.

Per share data	1 Jan – 30 Sep 2012	1 Jan – 30 Sep 2011^*	1 Jan – 31 Dec 2011^*

Earnings per share (EPS), EUR	-0.14	0.07	0.07
EPS diluted, EUR	-0.14	0.07	0.07
Equity per share, EUR	0.23	0.49	0.39
Dividend per share, EUR	-	-	0.03
Dividend per earnings, %	-	-	42.2
Effective dividend yield, %	-	-	6.1
P/E ratio	-	-	6.9

Adjusted number of shares at the end of the period	107,054,810	107,054,810	107,054,810
of which the number of treasury shares	161,219	183,900	292,685
Outstanding shares	106,893,591	106,870,910	106,762,125
Adjusted average number of shares during the period	106,853,421	106,768,209	106,775,223
Average number of shares, dilution included	106,853,421	106,768,209	106,775,223

^*Year 2011 error has been corrected.

12. 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)

13. Corrections to figures reported in 2010, 2011 and Q1/2012

An error was discovered in the line item Employee benefits for the periods 2010, 2011 and Q1/2012. The errors have been corrected retrospectively according to IAS 8. The errors were related to the calculation of option costs. The correction of the error in 2010 did not have an impact on the amount of equity and no restated opening balances are presented. The key figures for the financial year 2010 will be restated and presented in the financial statements for 2012. The statement of comprehensive income for 2011 was changed as follows:

	Reported	Corrected
Consolidated Statement of Comprehensive Income (EUR 1,000)	1 Jan – 31 Dec 2011	1 Jan – 31 Dec 2011

Net sales	76,751	76,751

Other operating income	19,802	19,802

Materials and services	-5,285	-5,285
Employee benefits	-36,747	-36,454
Depreciation, amortisation and impairment charges	-13,635	-13,635
Other operating expenses	-29,277	-29,277
	-84,944	-84,651

Operating profit/loss	11,609	11,902

Financial income	536	536
Financial expenses	-1,289	-1,289
Share of result of associated companies	-187	-187

Profit/loss before income taxes	10,669	10,963

Income taxes	-3,373	-3,373

Profit/loss for the period	7,297	7,590

Other comprehensive income
Cash flow hedges	-727	-727
Translation differences	175	175
Income tax relating to components of other comprehensive income	177	177

Total comprehensive income for the period	6,922	7,216

Profit/loss attributable to:
Equity holders of the parent company	7,297	7,590

Total comprehensive income attributable to:
Equity holders of the parent company	6,922	7,216

Shareholders of the parent company:

Earnings per share, EUR	0.07	0.07
Earnings per share, diluted, EUR	0.07	0.07

The earnings per share figure has also been restated. Due to the rounding it did not have impact on the key figure. The correction did not impact the amount of equity.

The restated quarterly figures for 2011 and Q1/2012 are as follows:

Consolidated Statement of Comprehensive Income (EUR 1,000)	1-3/2011	4-6/2011	7-9/2011	10-12/2011	2011	1-3/2012

Net sales	16,825	20,016	16,640	23,269	76,751	19,926

Other operating income	4	12	19,700	87	19,802	1

Materials and services	-773	-1,244	-1,271	-1,997	-5,285	-1,622
Employee benefits	-8,783	-8,986	-9,210	-9,475	-36,454	-10,541
Depreciation, amortisation and impairment charges	-1,359	-1,243	-10,027	-1,005	-13,635	-11,128
Other operating expenses	-6,006	-7,279	-7,796	-8,194	-29,277	-8,538
	-16,921	-18,753	-28,305	-20,672	-84,651	-31,829

Operating profit/loss	-92	1,275	8,035	2,684	11,902	-11,901

Financial income	249	153	617	-482	536	437
Financial expenses	-415	-253	-560	-61	-1,289	-914
Share of result of associated companies	-	-	-	-187	-187	-

Profit/loss before income taxes	-258	1,175	8,092	1,955	10,963	-12,379

Income taxes	-1,329	-946	486	-1,584	-3,373	2,094

Profit/loss for the period	-1,587	229	8,577	371	7,590	-10,285

Other comprehensive income
Cash flow hedges	453	-101	-764	-314	-727	742
Translation differences	-63	46	-96	288	175	3
Income tax relating to components of other comprehensive income	-118	26	199	70	177	-182

Total comprehensive income for the period	-1,315	200	7,916	415	7,216	-9,721

Profit/loss attributable to:
Equity holders of the parent company	-1,587	229	8,577	371	7,590	-10,285

Total comprehensive income attributable to:
Equity holders of the parent company	-1,315	200	7,916	415	7,216	-9,721

Shareholders of the parent company:

Earnings per share, EUR	-0.01	0.00	0.08	0.00	0.07	-0.10
Earnings per share, diluted, EUR	-0.01	0.00	0.08	0.00	0.07	-0.10

Comptel Corporation will announce its financial statements bulletin for 2012 on 13 February 2013.

COMPTEL CORPORATION

Board of Directors

Additional information:
Mr Juhani Hintikka, President and CEO, tel. +358 9 700 1131
Mr Mikko Hytönen, CFO, tel. +358 40 758 5801
Ms Ulla Koivukoski, SVP Marketing and Communications, tel. +358 400 481 870

Distribution:
NASDAQ OMX Helsinki
Major media
www.comptel.com

INTERIM REPORT OF COMPTEL CORPORATION 1 JANUARY - 30 SEPTEMBER 2012