2007-08-02 08:00:00 CEST
2007-08-02 08:00:00 CEST
REGULATED INFORMATION
Scanfil - Quarterly report
SCANFIL PLC'S INTERIM REPORT 1 JANUARY - 30 JUNE 2007
SCANFIL PLC STOCK EXCHANGE RELEASE 2 AUGUST 2007 9.00 a.m.
SCANFIL PLC'S INTERIM REPORT 1 JANUARY - 30 JUNE 2007
January - June
- Turnover for the first six months of 2007 totalled EUR 111.1 million
(122.5 in the corresponding period 2006)
- Operating profit was EUR 7.5 (1.7) million, which is 6.8 (1.4) % of
turnover.
- Profit for the review period was EUR 6.3 (- 0.9) million
- Earnings per share were EUR 0.11 (- 0.01)
April - June
- Turnover for the second quarter totalled EUR 58.9 million (62.4 in the
corresponding period in 2006)
- Operating profit was EUR 4.0 (5.1) million representing 6.7 (8.2)% of
turnover
- Earnings per share amounted EUR 0.05 (0.06)
DEVELOPMENT OF OPERATIONS
The major restructurings in the telecommunications sector that affected the
markets for telecommunications network products in late 2006 and early 2007 were
completed during the period under review. Markets are beginning to normalise,
and demand increased slightly towards the end of the period under review.
Increase in demand is the strongest in the growing markets of Asia and India.
Due to a tough price competition in these lower-cost countries and a less
expensive cost structure of new products, the average prices of
telecommunications network products have continued to decrease.
The demand for industrial electronics products has developed favourably in the
period under review, and the production volume was higher than in the
corresponding period in 2006.
Scanfil's operations in Asia continue to grow. The Chinese plants' sales,
including deliveries to the Group's other plants, represented 41% of the Group's
total sales in the period under review (32% in 2006 and 28% in the corresponding
period in 2006). The Chinese subsidiaries employ half of the Group's personnel,
and a total of 73% of the Group's personnel worked in the international
subsidiaries on 30 June 2007.
The transfer of the remaining manufacturing operations of the Oulu and Äänekoski
plants to the Group's other units advanced according to schedule. Production in
both locations will cease by the end of the third quarter.
Mr Harri Takanen, MSc(Eng), assumed his position as the President of Scanfil plc
on 15 May 2007, as announced earlier.
CPS Elektroniikka Oy, a subsidiary of the Scanfil Group, was dissolved on
15 June 2007 in accordance with the decision of the Annual General Meeting. The
company has not engaged in any production activities since 30 April 2005. The
dissolution does not affect the Group's financial performance.
FINANCIAL DEVELOPMENT
The Group's turnover in January - June was EUR 111.1 (122.5) million, showing a
decrease of 9% over the previous year. Distribution of turnover based on the
location of customers was as follows: Finland 42 (44)%, rest of Europe 26 (29)%,
Asia 30 (24)%, USA 1 (2)% and the others 1 (1)%.
Scanfil aims to continuously develop its manufacturing operations and improve
cost-efficiency at all levels. In the challenging and competitive operating
environment, the company has managed to retain its profitability at a
satisfactory level. Operating profit was EUR 7.5 (1.7) million, representing
6.8 (1.4)% of turnover. Earnings for the review period amounted to EUR 6.3
(-0.9) million. Earnings per share were EUR 0.11 (-0.01) and return on
investment was 11.9 (2.4)%. EUR 1.0 million of capital gains from sale of fixed
assets were recorded for 2007. The Group's result for 2006 is weakened by the
non-recurring expense item of EUR 7.6 million related to the discontinuation of
the Belgian subsidiary's production activities.
Turnover in April - June was EUR 58.9 (62.4) million. Operating profit in the
second quarter totalled EUR 4.0 (5.1) million, representing 6.7 (8.2)% of
turnover. Earnings per share were EUR 0.05 (0.06). For products being
discontinued, the Group recorded a write-down of EUR 1.0 million in the second
quarter, calculated on material and product inventories.
Owing to the structure of the company's operations, the effects of change in
exchange rates on the result were minimal. As growth shifts to the Asian
operations, the impact of fluctuations in the dollar exchange rate on company's
operations may increase.
FINANCING AND CAPITAL EXPENDITURE
The Group enjoys a strong financial position. Liabilities amounted to EUR 50.7
(72.9) million, EUR 43.2 (55.4) million of which were non-interest-bearing and
EUR 7.5 (17.5) million interest-bearing.
Liquid cash assets totalled EUR 36.0 (48.9) million. The equity ration was 71.6
(62.3)% and gearing -22.2 (-26.1)%.
Cash flow from operating activities in the review period was positive at EUR 6.3
(19.6) million, and the change in working capital was EUR -1.2 (11.3) million.
Gross investments in fixed assets totalled EUR 0.9 (2.8) million, which is 0.9
(2.3)% of turnover. Depreciations were EUR 3.8 (4.5) million.
BOARD OF DIRECTORS' AUTHORISATION
On 12 April 2007, the Annual General Meeting authorised the Board of Directors
to decide on the repurchase of a maximum of 4,000,000 company shares, using
non-restricted equity, and on the disposal of a maximum of 5,998,449 company
shares.
The Board of Directors has no existing share issue authorisations or
authorisations to issue convertible bonds with warrants.
OWN SHARES
On 30 June 2007, the company owned a total of 1,998,449 of its own shares, the
counter-book value of which totalled EUR 499,612 and which represented 3.3% of
the company's share capital and votes.
During the review period, the company disposed of 1,551 of its own shares in
conjunction with the share-based profit-sharing scheme of the Group's Management
Team.
SHARE TRADING AND SHARE PERFORMANCE
The highest trading price during the review period was EUR 2.49 and the lowest
EUR 2.13, the closing price for the period standing at EUR 2.31. A total of
4,835,850 shares were traded during the period, corresponding to 8.0% of the
total number of shares. The market value of the shares on 30 June 2007 was EUR
140,2 million.
PERSONNEL
Scanfil Group's personnel averaged 2,105 (2,187) employees during the review
period and the company employed 2,116 (2,173) employees at the end of the review
period, of whom 1,537 (1,402) were employed in the company's foreign plants.
FUTURE PROSPECTS
The markets for telecommunications networks are expected to grow only slightly
in 2007. Tough price competition, growth of demand shifting more and more to
developing markets, and the replacement of current high-volume products with
simpler and more inexpensive telecommunications network products will intensify
in late 2007, due to which the turnover in this product group is expected to
decrease in 2007.
The favourable development in the demand for industrial electronics products is
expected to continue in the second half of 2007.
Based on available forecasts, Scanfil plc's sales for 2007 are expected to fall
short of the 2006 level. Profitability for the full year is estimated to be at a
satisfactory level.
Scanfil plc's primary goals for 2007 are improving efficiency and maintaining
profitability as well as developing operations, taking into account changes in
the market and changing customer needs. In addition to actions directed at
profitability, the Company's good financial standing provides an opportunity to
actively seek various means and arrangements that will put Scanfil's operations
back on a growth track.
OPERATIONAL RISKS AND UNCERTAINTIES
Uncertainty in the market will continue and predictability is extremely poor.
Due to product changes and industry restructurings, the production of certain
high-volume products will end during the ongoing year, and there is, as yet, no
certainty of the production of substitute products. Key operational risks in
contract manufacturing include tough price competition, availability of
materials, and rapid and significant fluctuations in market demand.
APPENDICES:
Appendix 1: Consolidated profit and loss statements and balance sheet
Appendix 2: Consolidated cash flow statement
Appendix 3: Key indicators
Appendix 4: Calculation of changes in shareholders' equity
Appendix 5: Segment information
Appendix 6: Consolidated contingent liabilities
Appendix 7: Key indicators quarterly
This interim report has been prepared in accordance with the recognition and
measurement principles of the IFRS, but all of the requirements of the IAS 34
standard have not been followed.
The accounting policies and methods for calculating key indicators are the same
as those published in the financial statements for 2006.
Individual figures and grand totals have been rounded to the nearest million
euros, so they will not always add up. The figures are unaudited.
APPENDIX 1
CONSOLIDATED PROFIT AND LOSS STATEMENT
EUR million
2007 2006 2007 2006 2006
4 - 6 4 - 6 1 - 6 1 - 6 1 - 12
NET SALES 58.9 62.4 111.1 122.5 241.4
Increase or decrease of
Inventory of finished products - 1.0 0.7 - 1.6 - 2.3 - 0.4
Manufacturing for own use 0.0 0.0 0.0
Other operating income 0.6 0.3 1.6 0.3 2.1
Expenses - 52.7 - 56.1 - 99.7 -114.4 - 223.5
Depreciation - 1.8 - 2.2 - 3.8 - 4.5 - 8.3
OPERATING PROFIT 4.0 5.1 7.5 1.7 11.4
Financial income and expenses 0.0 - 0.2 0.3 - 0.3 0.7
PROFIT BEFORE TAXES 4.0 4.9 7.8 1.3 12.1
Direct tax - 0.8 - 1.3 - 1.5 - 2.2 - 3.8
NET PROFIT FOR THE PERIOD 3.2 3.7 6.3 - 0.9 8.2
Attributable to:
Equity holders of the Company 3.2 3.7 6.3 - 0.9 8.2
Earnings/share (EPS), EUR 0.05 0.06 0.11 - 0.01 0.14
CONSOLIDATED BALANCE SHEET
EUR million 30.6. 30.6. 31.12
2007 2006 2006
ASSETS
Long-term assets
Tangible current assets 40.3 48.9 43.1
Goodwill 2.6 2.3 2.5
Other intangible assets 1.2 1.0 1.0
Sellable investments 0.2 0.3 0.3
Receivables 0.2 0.3 0.2
Deferred tax receivables 0.2 0.2 0.2
Long-term assets total 44.6 52.9 47.4
Short-term assets
Inventories 35.3 36.2 41.4
Sales and other receivables 56.3 51.3 43.0
Prepayments 0.1 0.5 0.0
Financing assets with result
impact entered at current value 11.9 15.8 8.9
Cash and cash equivalents 24.1 33.1 22.9
Short-term assets total 127,7 136.9 116.2
Non-current assets held for sale 6.5 3.4 10.0
ASSETS TOTAL 178.8 193.3 173.6
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity that belongs to
the owners of the parent company
Share capital 15.2 15.2 15.2
Premium fund 16.1 16.1 16.1
Own shares - 6.9 - 4.1 - 6.9
Other funds 2.5 1.9 1.9
Translation differences - 0.4 - 1.4 - 0.7
Value change fund 0.1 0.1 0.1
Profits accrued 101.4 92.6 101.7
Shareholders' equity that belongs to
the owners of the parent company total 128.0 120.3 127.4
Long-term liabilities
Deferred tax liabilities 1.3 1.5 1.4
Reserves 7.3 11.6 8.5
Interest-bearing liabilities 7.5 17.5 7.5
Long-term liabilities total 16.1 30.6 17.4
Short-term liabilties
Procurement and other liabilities 34.3 41.7 28.2
Current income tax liabilities 0.3 0.6 0.6
Short-term liabilities total 34.6 42.4 28.8
Liabilities total 50.7 72.9 46.2
SHAREHOLDERS' EQUITY AND
LIABILITIES TOTAL 178.8 193.3 173.6
APPENDIX 2
CONSOLIDATED CASH FLOW STATEMENT 2007 2006 2006
EUR million 1 - 6 1 - 6 1 - 12
Cash flow from operations
Net profit 6.3 - 0.9 8.2
Adjustment for the net profit of the period 2.9 13.2 13.6
Change in net working capital - 1.2 11.3 2.9
Interests paid and other financial expenses - 0.2 - 0.3 - 0.7
Interests received 0.3 0.3 0.8
Taxes paid - 1.8 - 3.9 - 6.1
Net cash flow from operations 6.3 19.6 18.8
Cash flow from investments
Investments in tangible and
intangible assets - 0.8 - 2.3 - 7.8
Proceeds from sale of tangible
and intangible assets 4.3 1.0 2.8
Net cash flow from investments 3.5 - 1.3 - 5.0
Cash flow from funding
Acquiring of own shares - 2.8
Repayment of long-term loans - 0.4 - 10.4
Dividends paid - 5.9 - 6.0 - 6.0
Net cash flow from funding - 5.9 - 6.3 - 19.1
Change in assets 3.9 12.0 - 5.3
Liquid assets at the beginning
of the period 31.8 37.8 37.8
Effect of changes in currency exchange rates 0.1 - 1.1 - 0.9
Effect of changes in the fair value of investments 0.2 0.2 0.1
Liquid assets at the end of the period 36.0 48.9 31.8
APPENDIX 3
KEY INDICATORS 2007 2006 2006
1 - 6 1 - 6 1 - 12
Return on equity, % 9.8 - 1.4 6.4
Return on investment, % 11.9 2.4 9.0
Interest-bearing liabilities,
EUR million 7.5 17.5 7.5
Gearing, % - 22.2 - 26.1 - 19.1
Equity ratio, % 71.6 62.3 73.6
Gross investments in fixed
assets, EUR million 0.9 2.8 8.5
% of net turnover 0.9 2.3 3.5
Personnel, average 2 105 2 187 2 213
Earnings per share, EUR 0.11 - 0.01 0.14
Shareholders' equity per share, EUR 2.18 2.01 2.17
Number of shares at
the end of period, 000's 60 714 60 714 60 714
- not counting own shares 58 716 59 714 58 714
- weighted average 58 716 59 714 59 557
The company does not have any liabilities resulting from derivative instruments.
Owing to the nature of the sector, the company's order book covers only a short
period of time and does not give an accurate picture of future development.
APPENDIX 4
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million
A = Share capital
B = Premium fund
C = Own shares
D = Other reserves
E = Translation differences
F = Fair value reserve
G = Retained earnings
H = Total
I = Shareholder's equity total
SHAREHODER'S A B C D E F G H I
EQUITY
1.1.2006 15.2 16.1 -4.1 1.3 2.5 0.1 100.0 131.1 131.1
Translation difference - 3.9 - 3.9 - 3.9
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY - 3.9 - 3.9 - 3.9
Net profit for the period - 0.9 - 0.9 -0.9
TOTAL RECOGNIZED INCOME
AND EXPENCE - 3.9 - 0.9 - 4.8 - 4.8
Payment of dividend - 6.0 - 6.0 - 6.0
Transfer to funds 0.6 - 0.6
SHAREHOLDER'S EQUITY
30.6.2006 15.2 16.1 - 4.1 1.9 - 1.4 0.1 92.6 120.3 120.3
SHAREHOLDER'S EQUITY A B C D E F G H I
1.1.2007 15.2 16.1 - 6.9 1.9 - 0.7 0.1 101.7 127.4 127.4
Translation difference 0.3 0.3 0.3
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY 0.3 0.3 0.3
Net profit for the period 6.3 6.3 6.3
TOTAL RECOGNIZED INCOME
AND EXPENCE 0.3 6.3 6.5 6.5
Payment of dividend - 5.9 - 5.9 - 5.9
Transfers to funds 0.7 - 0.7
Transfer of own shares 0.0 0.0 0.0
SHAREHOLDER'S EQUITY
30.6.2007 15.2 16.1 - 6.9 2.5 - 0.4 0.1 101.4 128.0 128.0
APPENDIX 5
SEGMENT INFORMATION ACCORDING GEOGRAPHICAL AREA
EUR million 2007 2006 2006
1 - 6 1 - 6 1 - 12
TURNOVER
Europe 75.2 97.8 188.1
Asia 44.3 32.8 72.5
Turnover between segments - 8.5 - 8.1 - 19.1
Total 111.1 122.5 241.4
OPERATING PROFIT
Europe 3.7 - 1.5 4.9
Asia 3.9 3.2 6.5
Total 7.5 1.7 11.4
The Group operates in single sector.
APPENDIX 6
CONSOLIDATED CONTINGENT LIABILITIES
EUR million 2007 2006 2006
1 - 6 1 - 6 1 - 12
Real estate mortgages 2.5 6.2 6.2
Business mortgages 16.4 16.4 16.4
Guarantees pledged 0.7 0.7 0.7
Rental liabilities 0.9 0.3 0.5
The parent company has given a EUR 8.2 million bank guarantee to secure the
payment of contributions related to Scanfil NV's restructuring. Scanfil NV's
balance sheet includes a corresponding provision.
APPENDIX 7
KEY INDICATORS QUARTERLY
EUR million
Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06 Q4/05 Q3/05
Turnover, MEUR 58.9 52.2 51.5 67.5 62,4 60,1 76,8 83,4
Operating
profit, MEUR 4.0 3.6 2.7 7.0 5.1 - 3.4 6.2 7.8
Operating profit, % 6.7 6.8 5.2 10.4 8.2 - 5.7 8.1 9.3
Net income, MEUR 3.2 3.1 3.0 6.1 3.7 - 4.5 5.3 6.2
EPS, EUR 0.05 0.05 0.05 0.10 0.06 - 0.08 0.09 0.10
SCANFIL PLC
Harri Takanen
President
Additional information:
President Harri Takanen
Tel +358 8 4882 111
Distribution Helsinki Exchanges
Major Media
www.scanfil.com
Not for release over US newswire services. Forward looking statements: certain
statements in this stock exchange release may constitute "forward-looking"
statements which involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements of Scanfil
Oyj to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. When used
in this stock exchange release, such statements use such words as "may," "will,"
"expect," "anticipate," "project," "believe," "plan" and other similar
terminology. New risk factors may arise from time to time and it is not possible
for management to predict all of those risk factors or the extent to which any
factor or combination of factors may cause actual results, performance and
achievements of Scanfil Oyj to be materially different from those contained in
forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction of
actual results. The forward-looking information contained in this stock exchange
release is current only as of the date of this stock exchange release. There
should not be an expectation that such information will in all circumstances be
updated, supplemented or revised, except as provided by the law or obligatory
regulations, whether as a result of new information, changing circumstances,
future events or otherwise.
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