2011-05-20 10:00:00 CEST
2011-05-20 10:00:03 CEST
REGULATED INFORMATION
Salcomp Oyj - Interim report (Q1 and Q3)
Salcomp Plc Interim Report 1 January - 31 March 2011: NET SALES INCREASED STRONGLY - RESULT IN THE RED
Salo, Finland, 2011-05-20 10:00 CEST (GLOBE NEWSWIRE) -- Salcomp Plc Interim
Report 20 May 2011 at 11:00 a.m. Finnish time
January-March 2011:
-Net sales increased by 21% to EUR 71.9 million (EUR 59.6 million in
January-March 2010).
-Number of chargers delivered increased by 7% to 70.8 million chargers (65.9
million chargers).
-Market share in mobile phone chargers was some 19% (20%), when the so-called
grey market phones, i.e. mobile phones produced without a license, were also
included.
-Operating profit weakened to EUR -1.5 million (EUR 1.5 million).
-Operating profit includes a cost of EUR 0.5 million related to the termination
of long-term incentive schemes, due to ongoing redemption and delisting
process.
-Operating profit, excluding the exchange rate gains/losses, was EUR -1.1
million (EUR 1.1 million).
-Earnings per share weakened to EUR -0.05 (EUR 0.04).
-Cash flow from operating activities was EUR 1.4 million negative (EUR 1.8
million positive).
-Group's net interest-bearing debt totaled to EUR 4.7 million (EUR -1.3
million).
-Cash and cash equivalents at the end of the period were EUR 12.3 million (EUR
19.4 million).
-The holding of Salcomp's biggest shareholder, Nordstjernan AB, in Salcomp
exceeded 90%, and Nordstjernan started a procedure in order to redeem the rest
of the shares and delist the company shares.
Outlook for 2011 unchanged:
-Salcomp's net sales in 2011 are expected to be EUR 280-320 million.
-The operating margin in 2011 is expected to be 2-4% of the net sales.
-Due to the strategy revision of a major customer, as well as the earthquake
and tsunami in Japan, Salcomp's outlook for 2011 continues to be more uncertain
than usual.
Markku Hangasjärvi, President and CEO:
”According to estimates made by market research companies and our biggest
customers, some 374 million mobile phones were sold during the first quarter of
the year, up by some 16% compared with the January-March period in 2010.
In the market share review, we have changed over to use the same figures as our
biggest customers. When determining the market volume, we also include the
so-called grey market phones, i.e. mobile phones produced without a license.
Salcomp does not deliver chargers to the grey market phones. Calculated with
these figures, our market share was approximately 19% in the first quarter of
the year and approximately 20% in the corresponding period in 2010. The
decrease in our market share was mainly due to the faster-than-average growth
in the grey market phones.
Salcomp's net sales grew by over one-fifth, compared with the first quarter in
2010. Despite the increase in net sales, the operating profit ended up in the
red. Operating profit was weakened by higher material prices and a rise in
labor costs and fixed costs.
The earthquake in Japan and the tsunami after that have so far only had minor
influence on Salcomp's material purchases. However, the total picture has not
yet completely cleared up, and material deliveries, both to us and at least to
some of our customers, are expected to encounter disruptions during the year.”
Financial development in January-March 2011
In the first quarter of the year, Salcomp's net sales increased by 21% to EUR
71.9 million (EUR 59.6 million in January-March 2010) and the number of
chargers delivered increased by 7% to 70.8 million (65.9 million) chargers. In
addition to the growth in the number of chargers delivered, net sales were
increased due to the higher average sales prices of chargers, which resulted
mainly from exchange rate changes, but also from a product mix consisting of
more expensive products, especially smart phone chargers.
Salcomp's operating profit weakened to EUR -1.5 million (EUR 1.5 million). This
was due to an increase in material prices and higher labor costs. In addition,
accelerated efforts in broadening the product range and customer base increased
fixed costs. Operating profit was weakened by a cost of EUR 0.5 million related
to the termination of long-term incentive schemes, due to the ongoing
redemption and delisting process. Operating profit was also burdened by
realized and unrealized exchange rate losses of EUR 0.4 million (EUR 0.4
million of gains). The operating margin in January-March 2011 was
-2.1% (2.5%).
The profit for the period amounted to EUR -1.9 million (EUR 1.6 million).
Earnings per share were EUR -0.05 (EUR 0.04), and diluted earnings per share
were EUR -0.05 (EUR 0.04).
R&D and capital expenditure
The Group's R&D expenditure in January-March was EUR 1.6 million (EUR 1.5
million), or 2.2% (2.5%) of net sales. R&D focused on developing new products
for current and new customers, and constant improvement in the cost structure
of existing products.
Capital expenditure in the period amounted to EUR 1.7 million (EUR 0.9
million). The capital expenditure mainly involved increasing the production
capacity in the low and medium power range chargers, as well as increasing the
automation level.
Financing
Cash flow from operating activities in January-March was EUR 1.4 million
negative (EUR 1.8 million positive). The cash flow from operating activities
decreased mainly due to an increase in net working capital. Cash and cash
equivalents at the end of period were EUR 12.3 million (EUR 19.4 million).
The Group's equity ratio at the end of the period was 42.2% (43.1%) and gearing
was 6.0% (-1.8%). Net interest-bearing debt totaled EUR 4.7 million (EUR -1.3
million) at the end of March.
Decisions at the Annual General Meeting
Salcomp Plc's Annual General Meeting was held on 24 March 2011 in Helsinki. The
AGM approved the 2010 financial statements and discharged the members of the
Board and the President and CEO from liability for the financial year.
The AGM decided that no dividend for 2010 will be paid.
The AGM decided that the number of the members of the Board of Directors
remains at five and the Board composition unchanged. The AGM elected Carl
Engström, Mats Heiman, Petri Kähkönen, Jukka Rinnevaara and Kari Vuorialho as
members of the Board of Directors until the conclusion of the 2012 Annual
General Meeting. The AGM appointed Carl Engström as the Chairman and Kari
Vuorialho as the Vice Chairman. The AGM decided to leave the remuneration for
the Board of Directors unchanged: the remuneration for a full term will be EUR
40,000 for the Chairman, EUR 32,000 for the Vice Chairman and EUR 25,000 for
the members.
At its organizing meeting following the AGM, Salcomp's Board of Directors
concluded, due to the company's size and composition of the Board of Directors,
that it is not necessary to establish any separate Board committees. The Board
of Directors further stated that all Board members are independent of the
company, and Petri Kähkönen, Jukka Rinnevaara and Kari Vuorialho are also
independent of the company's significant shareholders.
KPMG Oy Ab, Authorized Public Accounting Firm, continues as the company auditor
and Pauli Salminen, APA, as the responsible auditor.
The AGM authorized the Board of Directors to decide on issuance of no more than
11.8 million new shares or own shares held by the company. Furthermore, the AGM
decided to authorize the Board of Directors to repurchase no more than 3.8
million of the company's own shares.
A total of 16 shareholders were present at the AGM, either in person or
represented by proxy, representing 35,675,973 shares, or 91.4 per cent of the
total number of shares in the company.
Personnel and management
The number of Group personnel at the end of March totaled 9,269 (9,295): 5,140
were employed in China, 2,591 in India, 1,468 in Brazil and 70 in Finland and
other countries.
Changes in ownership
Salcomp's biggest shareholder, Nordstjernan AB, informed on 9 March 2011 that
it has acquired an additional 4,982,473 shares in Salcomp Plc. After the
transaction, Nordstjernan's total holding in Salcomp amounted to 35,147,189
shares, corresponding to 90.1 per cent of all the shares and votes excluding
the 337,000 shares that are in the possession of Salcomp.
After the title to the acquired shares had passed, Nordstjernan informed that
it intends to use the right and obligation to redeem the minority shareholders'
shares as stipulated in Chapter 18, Paragraph 1 of the Companies Act.
Nordstjernan will further apply for a delisting of the company from the NASDAQ
OMX Helsinki exchange in due course.
In accordance with Chapter 2, Section 9 of the Securities Markets Act, Salcomp
received a flagging notification from Sampo plc regarding the changes in the
holdings in Salcomp on 9 March 2011. The portion held by Mandatum Life
Insurance Company Limited, belonging to Sampo Group, of the share capital and
votes in Salcomp Plc decreased to below 5% as a result of the sale of shares on
8 March 2011. After the transaction, Mandatum Life Insurance Company does not
hold any Salcomp shares.
On 5 April 2011, Nordstjernan informed that the Redemption Committee of the
Central Chamber of Commerce has, on the basis of Nordstjernan's application,
requested the District Court of Varsinais-Suomi to appoint a trustee for the
arbitral proceedings to supervise the interests of the minority shareholders of
Salcomp during the redemption proceedings. The District Court of
Varsinais-Suomi appointed, on 31 March 2011, attorney-at-law Kim Kyntölä as the
trustee.
Shares and shareholders
Salcomp's registered share capital amounts to EUR 9,832,735.12, divided into
39,023,840 fully paid outstanding shares and 337,000 shares in the possession
of the company. The shares in the possession of the company were acquired
through share issues carried out in 2010 related to the share-based incentive
programs. The company has one series of shares, and all the shares entitle the
shareholder to equal rights in the company.
Salcomp's share price fluctuated between EUR 1.83 and EUR 2.15 in
January-March. The average share price during the period was EUR 2.00 and the
closing price at the end of March EUR 2.00. Share trading amounted to EUR 12.4
million and 6.2 million shares. According to the book-entry system, Salcomp had
937 shareholders at the end of the period. Foreign ownership at the end of
March was 92.9% and the market value for outstanding shares EUR 78.7 million.
Risks and uncertainties in the near future
Salcomp's business involves uncertainty factors that may affect the company's
financial development in the near future. These include the general development
of the mobile phone markets, substantial changes in the purchase prices and
availability of materials and charger components, significant changes in labor
costs, especially in China, as well as changes in the competition in the mobile
phone charger markets. Furthermore, changes in the market shares of customers
and deterioration in the financial position of major customers may have a
negative effect on Salcomp's business.
Major changes in exchange rates can be considered one of the other short- term
uncertainty factors, especially the exchange rate of the US dollar in relation
to the euro and to currencies in those countries in which Salcomp has
production. In addition, the impact of the global economy on the stability of
the financial market, as well as accessibility of financing, has an influence
on Salcomp's business.
In the medium term, Salcomp's business may be affected by standardization
projects concerning mobile phone chargers in the different market areas. Due to
standardization, it is possible that, in the future, in some market areas, some
mobile phone kits will not include a separate mobile phone charger.
Risks are managed to the extent that the company has influence over them.
Further details on risks and risk management are available on the company web
site.
Events after the reporting period
There are no events after the reporting date which would have a significant
influence on the figures presented in the Financial Statements.
Outlook for 2011
According to the estimates published by some of Salcomp's key customers and by
various market research companies, the mobile phone market, including also the
so-called grey market phones, is expected to grow, measured by the number of
units, by some 9% during 2011, compared with 2010. This would mean
approximately 1.6 billion mobile phones and, therefore, mobile phone chargers,
to be sold in 2011. The volume growth in chargers used in other consumer
electronic applications is also estimated to continue in 2011.
Salcomp's net sales in 2011 are expected to be EUR 280-320 million. The
operating margin in 2011 is expected to be 2-4% of the net sales. Due to the
strategy revision of a major customer, as well as the earthquake and tsunami in
Japan, Salcomp's outlook for 2011 continues to be more uncertain than usual.
Helsinki 20 May 2011
Salcomp Plc
Board of Directors
Further information:
Markku Hangasjärvi, President and CEO, tel. +358 40 7310 114
Jari Saarinen, CFO, tel. +358 40 5004 206
Salcomp Plc's Interim Report has been prepared in accordance with the
international financial accounting standard IAS 34, Interim Reports. This
Interim Report is unaudited.
CONDENSED FINANCIAL STATEMENTS AND NOTES
STATEMENT OF COMPREHENSIVE INCOME
(EUR 1 000)
1-3/ 1-3/ Change 1-12/
2011 2010 % 2010
Net sales 71 937 59 635 20.6% 299 008
Cost of sales -68 456 -53 760 27.3% -270 524
Gross margin 3 481 5 875 -40.7% 28 484
Other operating income 2 0 - 110
Sales and marketing -705 -589 19.7% -3 047
expenses
Administrative expenses -2 678 -2 292 16.8% -8 875
Research and development -1 577 -1 512 4.3% -6 884
expenses
Other operating expenses -3 -2 50.0% -76
Operating result -1 480 1 480 - 9 712
Finance income 13 662 -98.0% 971
Finance expenses -286 -445 -35.7% -1 660
Result before tax -1 753 1 697 - 9 023
Income tax expenses -140 -66 112.1% -1 057
Result for the period -1 893 1 631 - 7 966
Other comprehensive income for the period
Exchange differences on translating foreign -405 1 064 - 2 449
operations
Other comprehensive income for the period, -405 1 064 - 2 449
net of tax
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -2 298 2 695 - 10 415
Basic earnings per share, EUR -0.05 0.04 - 0.20
Diluted earnings per share, EUR -0.05 0.04 - 0.20
STATEMENT OF FINANCIAL POSITION
(EUR 1 000)
31.3.2011 31.3.2010 Change % 31.12.2010
Non-current assets
Property, plant and equipment 24 376 20 883 16.7% 25 281
Goodwill 66 412 66 412 0.0% 66 412
Other intangible assets 815 521 56.4% 830
Deferred tax assets 4 024 3 240 24.2% 4 023
95 627 91 056 5.0% 96 546
Current assets
Inventories 30 580 22 072 38.5% 37 246
Trade and other receivables 48 088 36 289 32.5% 46 233
Cash and cash equivalents 12 255 19 411 -36.9% 18 553
90 923 77 772 16.9% 102 032
Total assets 186 550 168 828 10.5% 198 578
Equity and liabilities
Share capital 9 833 9 833 0.0% 9 833
Invested unrestricted equity 5 820 19 305 -69.9% 5 820
Retained earnings 63 125 43 516 45.1% 64 881
78 778 72 654 8.4% 80 534
Non-current liabilities
Deferred tax liabilities 17 289 17 288 0.0% 17 317
Capital loans 0 10 000 - 0
Interest-bearing liabilities 8 996 4 881 84.3% 11 187
26 285 32 169 -18.3% 28 504
Current liabilities
Trade and other payables 73 514 60 773 21.0% 81 321
Interest-bearing current liabilities 7 973 3 232 146.7% 8 219
81 487 64 005 27.3% 89 540
Total equity and liabilities 186 550 168 828 10.5% 198 578
STATEMENT OF CHANGES IN EQUITY
(EUR 1 000)
Attributable to equity holders of the parent
Share Invested Translation Retained Total
capital unrestricted differences earnings equity
equity
Equity on 1 Jan 2010 9 833 22 035 2 285 38 456 72 609
Total comprehensive 0 0 1 064 1 631 2 695
income for the
period
Option costs 0 0 0 80 80
Repayment of 0 -2 730 0 0 -2 730
capital*
Equity on 31 March 2010 9 833 19 305 3 349 40 167 72 654
Equity on 1 Jan 2011 9 833 5 820 4 734 60 147 80 534
Total comprehensive 0 0 -405 -1 893 -2 298
income for the
period
Incentive plans** 0 0 0 542 542
Equity on 31 March 2011 9 833 5 820 4 329 58 796 78 778
*Decision by the AGM on 24 March and payment on 7 April
**Delisting cost effect included
STATEMENT OF CASH FLOWS
(EUR 1 000) 1-3/2011 1-3/2010 Change % 1-12/2010
Cash flow before change in working 419 2 781 -84.9% 15 113
capital
Change in working capital -1 777 -758 134.4% -2 878
Financial items and taxes -56 -216 -74.1% -2 562
Net cash flow from operating activities -1 414 1 807 - 9 673
Purchases -1 720 -863 99.3% -8 950
Sales 0 0 - 19
Cash flows from investing activities -1 720 -863 99.3% -8 931
Cash flow before financing -3 134 944 - 742
Withdrawal of borrowings 0 0 - 20 794
Repayment of borrowings -2 437 -1 000 143.7% -20 583
Share issue 0 0 - 96
Dividends* 0 0 - -2 730
Net cash flow from financing activities -2 437 -1 000 143.7% -2 423
Change in cash and cash equivalents -5 571 -56 9 848.2% -1 681
Cash and cash equivalents 18 553 18 872 -1.7% 18 872
at the beginning of the period
Translation difference -727 595 - 1 362
Cash and cash equivalents 12 255 19 411 -36.9% 18 553
at the end of the period
*Repayment of capital
KEY FIGURES
1-3/ 1-3/ Change 1-12/
2011 2010 % 2010
Sold chargers, Mpcs 70.8 65.9 7.3% 296.6
Average sales price, EUR 1.02 0.90 12.9% 1.01
Net sales, MEUR 71.9 59.6 20.7% 299.0
EBITDA, MEUR -0.1 2.7 - 15.0
EBITDA%, % -0.1% 4.5% 5.0%
Operating result, MEUR -1.5 1.5 - 9.7
Operating margin, % -2.1% 2.5% 3.2%
Basic earnings per share, EUR -0.05 0.04 - 0.20
Diluted earnings per share, EUR -0.05 0.04 - 0.20
Earnings per share excluding -0.05 0.04 - 0.20
deferred tax, EUR
Equity per share, EUR 2.02 1.86 8.6% 2.06
Return on equity, % 5.6% 12.2% 10.4%
Return on capital employed, % 7.2% 14.9% 11.1%
Return on net assets, % 23.0% 59.8% 39.8%
Equity ratio, % 42.2% 43.1% 40.6%
Gearing, % 6.0% -1.8% 1.1%
Capital expenditure, MEUR 1.7 0.9 99.3% 9.0
Capital expenditure, % of net sales 2.4% 1.4% 3.0%
Personnel on average 8 977 8 060 11.4% 9 825
Personnel at the end of period 9 269 9 295 -0.3% 10 350
Average number of shares outstanding 39 016 543 38 975 190 39 000 461
Number of shares outstanding at the 39 023 840 38 975 190 39 023 840
end of period
Diluted number of shares outstanding 39 018 358 38 975 190 39 001 219
on average
Highest share price, EUR 2.15 2.19 2.19
Lowest share price, EUR 1.83 1.90 1.73
Average share price, EUR 2.00 2.00 1.99
Traded shares, Mpcs 6.2 0.6 2.1
Traded shares, MEUR 12.4 1.3 4.2
NOTES TO THE INTERIM REPORT
This Interim Report has been prepared in accordance with the international
financial accounting standard IAS 34 Interim Reports. The same accounting
principles are applied in this Interim Report as in the Financial Statements.
Compared with the Financial Statements, amended standards or interpretations
have not affected this Interim Report. Salcomp has one business segment,
chargers. Internal management reporting complies with the IFRS reporting and
due to this, separate adjustments are not presented.
LIABILITIES
(EUR 1 000)
31.3.2011 31.3.2010 Change % 31.12.2010
For own debt
Company and real estate 82 000 82 000 0.0% 82 000
mortgages
Others 5 872 5 117 340.0% 5 872
Leasing and rental liabilities 5 695 7 323 -22.2% 5 382
93 567 89 328 4.7% 93 254
QUARTERLY INFORMATION
1-3/11 10-12/10 7-9/10 4-6/10 1-3/10 4/10-3/11
Sold chargers, 70 771 81 933 80 098 68 586 65 941 301 388
kpcs
Net sales, kEUR 71 937 80 733 86 470 72 170 59 635 311 310
Operating result, kEUR -1 480 2 540 3 365 2 327 1 480 6 752
Operating margin, % -2.1% 3.1% 3.9% 3.2% 2.5% 2.2%
Average sales price, EUR 1.02 0.99 1.08 1.05 0.90 1.03
OPTION RIGHTS
During the financial year 2007, the General Meeting of Shareholders established
an option program with a total of 2,047,500 option rights that entitle to
subscribe the same amount of new shares of the company. The option program is
divided to symbols 2007A, 2007B and 2007C. The Board of Directors has not
granted option rights to Group key personnel during the financial year. The
share based incentives are conditional. The vesting conditions are based on
that the total shareholder return is at least 8 % per annum. Options are lost
when a person is leaving the company before the settlement period begins. The
Board of Directors can decide in these cases that the stock option owner is
entitled to keep the options or a part of them. The fair value has been
determined using the Cox-Ross-Rubinstein binomial model.
Program symbol 2007A 2007B 2007C Total
options
Number of options 657 500 682 500 707 500 2 047 500
Vesting period 1.4.2007 1.4.2008 1.4.2009
- - -
31.3.201 31.3.201 31.3.201
0 1 2
Options granted before the current 465 000 507 500 627 500 1 600 000
financial year
Options granted during the current 0 0 0 0
financial year
Options forfeited during the current 0 0 0 0
financial year
Settlement (shares / option) 1 1 1
Settlement period 1.4.2010 1.4.2011 1.4.2012
- - -
31.3.201 31.3.201 31.3.201
2 3 4
Grant date 02.05.07 07.05.08 11.08.09
Exercise price 2.81 3.33 1.40
Share price at grant date 3.51 3.79 1.51
The fair value of option at grant 1.44 1.44 0.61
date
SHARE BASED INCENTIVE PROGRAMS
The Board of Directors of Salcomp Plc has approved two new share-based
incentive programs for the Group key personnel. The new programs are a Matching
Share Program targeted at the members of the Extended Global Management Team,
as well as a Performance Share Program targeted at 53 key employees including
also the members of the Extended Global Management Team. Both Programs include
one earning period, from calendar year 2010 to 2012. The potential rewards from
both the Matching and Performance Share programs will be paid partly in Company
shares and partly in cash during 2013. The cash payment is intended to cover
the personal taxes and tax-related costs arising from the reward. No reward
will be paid to a key person, if his or her employment or service in a Group
Company ends before the reward payment. The rewards to be paid on the basis of
the earning period will correspond to the value of maximum 532,000 Salcomp Plc
shares. Global Management Team can earn a total of 281,000 pcs of Salcomp Plc
shares during the total earning period.
Releases relating to the new incentive program have been issued on 19 May and
21 June 2010.
Cost effect of delisting is presented in the Statement of Changes in Equity.
RELATED PARTY INFORMATION
(EUR 1 000)
Related 31.3.2011 31.3.2010 Change % 31.12.2010
party
transaction
s with
Nordstjerna
n AB
Capital 0 10 000 - 0
loans
Interest 0 1 087 - 0
payable of
capital
loans
Sales of 0 0 - 0
receivables
Interest 0 0 - 553
expense of
the period
Salcomp has renewed the financing arrangements in May 2010. In this connection,
the capital loans have been repaid to Nordstjernan AB. Release on the issue has
been published on 25 May 2010.
OWN SHARES
31.3.2011 31.3.2010 31.12.2010
Parent company own shares (pcs) 337 000 0 337 000
CALCULATION OF FINANCIAL RATIOS
Average personnel: Average number of personnel at end of each month
Return on equity (%) = Result for the period x 100 : Equity on average
Return on capital employed (%) = (Result before tax + interest charges and
other financial expenses) x 100 : (Total liabilities less interest-free debt
(on average))
Return on net assets (%) = Operating result x 100 : (Fixed assets less goodwill
and deferred tax assets + inventory + short-term receivables less short-term
interest-free debt on average)
Equity ratio (%) = Equity x 100 : Total liabilities less received advance
payments
Gearing (%) = (Interest-bearing debt less cash and cash equivalents) x 100 :
Equity
Earnings per share = Result for the period : Weighted average number of shares
outstanding during the period
Equity per share = Equity : number of shares outstanding at the end of period
Earnings per share, diluted = Result for the period : Weighted average number
of shares outstanding during the period, adjusted for the share issue
Markku Hangasjärvi, President and CEO, tel. +358 40 7310 114
Jari Saarinen, CFO, tel. +358 40 5004 206
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