Tecnotree proposes no FY dividend as financial situation remains 'tight'

Monday 5 March 2018 | 12:25 CET | News

Tecnotree posted a one-off goodwill write-down of EUR 16.7 million for both the fourth quarter and full year 2017, according to its unaudited results. Tecnotree warned that the financial situation remains tight due to a delay in financing arrangements, and it is proposing no dividend for the year. Fourth quarter cash flow after investments was zero, although it said the one-off write-down had not had any effect on its cash flow.

The goodwill was mainly related to the business transaction implemented in 2009, after a write-down of EUR 1.2 million was already made in 2012. This writedown was done in 2017 because the business development in Middle East, Africa and Americas has not met with expectations.

Fourth quarter net sales rose to EUR 15.6 million from EUR 14.7 million, and the operating loss widened to EUR 12.2 million from EUR 9.6 million.

The company said that the adjusted operating result for the quarter was positive at  EUR 4.4 million, after a EUR 0.8 million adjusted operating profit for Q4 2016. The adjusted net profit for the quarter was EUR 2.6 million compared with EUR 3.0  million a year earlier, but unadjusted, it posted a net loss of EUR 14.1 million after a net profit of EUR 2.0 million the year before. It ended the period with a loss per share of EUR 0.11 after positive EPS of EUR 0.02 a year earlier.

On 31 December 2017, the order book stood at EUR 26.2 million, up from EUR 24.9 million. Fourth quarter cash flow after investments was zero, compared with EUR 3.8 million a year earlier. It said the one-off write-down had not had any effect on its cash flow.

For the full year, Tecnotree noted EUR 1.1 million in write-downs related to redundancies, as well as the EUR 16.7 million impairment related to the 2009 transaction. Full year net sales fell to EUR 55.1 million from EUR 60.1 million.  Revenue in Latin America region was stable year on year at about EUR 22 million. European turnover increased to EUR 2.6 million from EUR 1.9 million in 2016. In MEA, revenue dropped from EUR 32 million in 2016 to EUR 30 million in 2017. APAC revenue fell from EUR 3 million to EUR 1 million.

There was a full-year operating loss of EUR 8.0 million (loss of EUR 10.1 million) and an adjusted operating profit of EUR 9.8 million (positive EUR 1.2 million).

The adjusted result for the period was positive at EUR 2.3 million after a loss of EUR 4.2 million the year before, but it posted a net loss of EUR 15.5 million, lower than the net loss of EUR 6.3 million for full year 2016. EPS was negative at EUR 0.13, after a loss per share of EUR 0.05 in 2016.

Tecnotree warned that the financial situation remains tight due to a delay in financial arrangements. It said full year cash flow after investments was positive at EUR 4.8 million (negative EUR 900,000) and the company’s cash and cash equivalents were positive at EUR 2.3 million (EUR 3.5 million)

The company said that it successfully achieved the cost reductions of EUR 5 million promised in March 2017. However, its liquidity and cash position remained extremely challenging. The amount of overdue trade payables is "significant" at EUR 2.9 million. It did not succeed in realising a needed financing arrangement, and this financing is one of the things that it will focus on in 2018. Negotiations in this regard are continuing.

Tecnotree said it will continue with cost optimisation and other measures for increased efficiency. It will minimise currency exchange risks and withholding taxes. It will concentrate more on ensuring timely collections of receivables by improving timeliness of its deliveries.

The company has sales in several countries where the country's central bank has a shortage of foreign currencies. This may cause extra delays in payments, costs and even risks of not receiving payment at all. In January 2018, Tecnotree repatriated net EUR 9.3 million of receivables from its customer in Latin America, out of which EUR 4.2 million was related to maintenance and support services for second and third quarters of 2018.

The company estimates that its revenue in 2018 will be at the same level as in 2017 and that the operating result will be better than the adjusted operating result in 2017.

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