Tecnotree Q2 sales improve over Q1 but financing uncertainty remains

Friday 10 August 2018 | 12:51 CET | News

Finnish communications software provider Tecnotree said that second quarter net sales fell to EUR 9.8 million from EUR 15.1 million a year earlier and that its financial situation and liquidity remain critical. Sales were better than in the first quarter of this year and CEO Padma Ravichander said Q2 shows that the company is "slowly but surely coming back on track". Even so, Tecnotree would not provide any FY outlook.

The adjusted operating profit for the second quarter was EUR 1.0 million compared with an operating loss of EUR 3.6 million a year earlier. It broke even at net profit level, after a net loss of EUR 0.7 million a year earlier and an adjusted net loss last year of EUR 1.2 million. Earnings per share were zero, compared with negative EPS of EUR 0.01 a year earlier.

Ravichander said the Q2 results reiterate Tecnotree's tenacity in bouncing back from difficult periods, as Q1 was one of the toughest ever encountered. The voluntary public tender offer from an investor had a severe impact on the performance of the company and had resulted in substantial lower revenues and negative financial result during Q1 2018.

Order intake continues to pose challenges and major customers are concerned about Tecnotree’s liquidity position of the company. Frequent public announcements from large shareholder are not helping in allaying customers apprehensions, she said.

In March, Viking Acquisitions made a EUR 0.10 per share public offer for the outstanding shares in Tecnotree, but the bid missed its 90 percent take-up target. Tecnotree shareholders then voted against a motion to elect Viking nominees to its board of directors. Viking subsequently sought Tecnotree's bankruptcy but this was narrowly averted. In July, Viking made an offer for Tecnotree's assets, but not a cash offer for shares in the company

Tecnotree's cost optimisation plan initiated last year has continued, said Ravichander, and the head count had fallen to 616 on 30 June from 641 on 31 March. This has kept personnel costs to a reasonable level. Other operating costs were down by 18 percent compared with the first quarter of 2018.

As the cash positions remain tight and the order backlog needs to improve, Tecnotree plans to announce more operating cost reductions to improve cash positions in the coming quarters, without affecting delivery of licences and services to its customers.

The company is still aggressively pursuing a long-term solution to its current financial position. It aims to collect its receivables from the major customers to secure liquidity. Its ability as a going concern is dependent on it successfully obtaining new financing, and is negotiating with financiers.

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Categories: IT
Companies: Tecnotree
Countries: Finland / World
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-/- 7.8%
blended ARPU y-o-y
Netherlands  |  2018 Q1