2009-07-22 08:01:00 CEST
2009-07-22 08:16:32 CEST
REGULATED INFORMATION
Elcoteq - Interim report (Q1 and Q3)
Elcoteq SE's Interim Report January - June 2009 (Unaudited)
Elcoteq SE
Interim Report
July 22, 2009, at 9.00 am (EET)
Elcoteq SE's net sales between April and June totaled 436.0 million
euros (904.8 in April - June 2008 and 470.0 in January - March 2009).
Operating income improved significantly compared to the first
quarter, and was -11.5 million euros (0.6 in April - June 2008 and
-38.3 in January - March 2009). Cash flow turned clearly positive as
a result of the major cost reduction and working capital improvement
actions carried out during the first half of 2009, and amounted to
72.2 million euros in the second quarter (-78.5 in April - June 2008
and -50.7 in January - March 2009). The equity project proceeded as
expected and the company announced the signing of a conditional
Letter of Intent for equity increase of 50 million euros with
Shenzhen Kaifa Technology Co., Ltd., a Chinese industrial company
belonging to China Electronics Corporation (CEC) group. CEC has been
Elcoteq's joint venture partner in China since 2002.
April - June
- Net sales 436.0 million euros (904.8 in April - June 2008)
- Operating income -11.5 million euros (0.6) and -11.0 million euros
excluding restructuring costs
- Income before taxes -23.4 million euros (-5.5)
- Earnings per share (EPS) -0.67 euros (-0.42)
- Cash flow after investing activities 72.2 million euros (-78.5)
- Rolling 12-month return on capital employed (ROCE) -14.4% (-6.2%)
- Gearing 2.9 (1.2)
- Total one-time costs 6.6 million euros, of which 6.2 million euros
are financial expenses and 0.4 million euros restructuring costs
above operating income
January - June
- Net sales 906.0 million euros (1,813.6 in January - June 2008)
- Operating income -49.8 million euros (-8.9) and -35.7 million euros
excluding restructuring costs
- Income before taxes -73.3 million euros (-21.0)
- Earnings per share (EPS) -2.07 euros (-0.78)
- Cash flow after investing activities 21.5 million euros (-79.6)
- Interest-bearing net debt 215.9 million euros (220.2)
This interim report has been prepared using IFRS recognition and
measuring principles. Tables have been prepared in compliance with
the IAS 34 requirements approved by the EU. The comparative figures
given in the body text of this report are figures for the
corresponding period in the previous year, unless stated otherwise.
April - June
Elcoteq recorded net sales of 436.0 million euros (904.8) between
April and June. Operating income totaled
-11.5 million euros (0.6). Net sales have decreased significantly
from last year, mainly due to the extraordinarily low market demand.
The company has adjusted its operations to lower volumes but has
still maintained its global platform to serve customers close to
their end markets and its ability to respond to future growth
opportunities. In the light of the current volatile market situation,
the company will continue to seek further potential for cost base
improvements.
The Group's net financial expenses were 11.9 million euros (6.1).
Financial expenses include one-time costs of 6.2 million euros
arising from a loan receivable revaluation. Income before taxes was
-23.4 million euros (-5.5) and net income totaled -21.8 million euros
(-13.7). Earnings per share (EPS) were -0.67 euros (-0.42).
The Group's gross capital expenditures on fixed assets between April
and June were 1.5 million euros (16.6), or 0.4% of net sales.
Depreciation amounted to 16.0 million euros (18.2). Investments have
been reduced to a minimum to increase existing asset capacity
utilization ratios.
Cash flow after investing activities improved significantly and was
72.2 million euros (-78.5). Cash flow received by the Group from sold
accounts receivable was 18.7 million euros at the end of June
(113.8). The company has been successful in its vigorous measures to
improve its working capital levels, especially inventory turns.
At the end of June 2009, Elcoteq had cash and unused but immediately
available credit lines totaling 184.8 million euros (288.0). These
credit limits included a 230 million euro syndicated, committed
credit facility, of which 30 million euros were unused. Cash and
unused but immediately available credit lines increased by 65.9
million euros from the first quarter.
In order to refinance its 230 million euro credit facility, the
company has intended to agree on a new syndicated, committed credit
facility agreement with the same bank group. However, such an
agreement has not been concluded as the received equity increase
proposals have contained as an integral part a certain level of
debt-to-equity conversion, and the new credit facility agreement
could have endangered the equity investment. A new re-financing
solution will be developed as the equity project progresses.
At the end of June, the Group's interest-bearing net debt amounted
to 215.9 million euros (220.2). The net debt decreased 25% from the
first quarter. The solvency ratio was 10.0% (18.0% at the end of June
2008) and gearing was 2.9 (1.2). Rolling 12-month return on capital
employed (ROCE) was -14.4% (-6.2%).
January - June
Net sales in January - June decreased significantly compared to the
same period last year, standing at 906.0 million euros (1,813.6 in
January - June 2008). Operating income was -49.8 million euros (-8.9)
and -35.7 million euros excluding restructuring costs. Income before
taxes was -73.3 million euros (-21.0). Earnings per share (EPS) were
-2.07 euros (-0.78). Cash flow after investing activities was
positive at 21.5 million euros (-79.6), which is a significant
improvement from last year.
Gross capital expenditures on fixed assets in January - June amounted
to 3.5 million euros (44.3), 0.4% of net sales. Depreciation totaled
34.9 million euros (35.3).
Business Areas
As of the beginning of 2008, Elcoteq's segment reporting covers three
Business Areas: Personal Communications, Home Communications and
Communications Networks. In the second quarter of 2009, Personal
Communications contributed 59% (70%), Home Communications 16% (10%)
and Communications Networks 25% (20%) of the Group's net sales.
Elcoteq's largest customers (in alphabetical order) are EADS,
Ericsson, Funai, Huawei, Nokia Devices, Nokia Siemens Networks,
Philips, Research in Motion (RIM), Sony Ericsson and Thomson. There
is also a very promising sales pipeline for winning new customers.
Net sales of the Personal Communications Business Area in the second
quarter were 259.1 million euros (631.0). Net sales increased from
the first quarter. Personal Communications' net sales have decreased
from last year mainly due to the manufacturing re-allocation
decisions made by Nokia Devices. The segment's operating income was
2.1 million euros (5.6). The cost level has been further reduced and
together with higher sales contributed to clearly better
profitability than in the first quarter.
Net sales of the Home Communications Business Area were lower in the
second quarter than a year earlier, standing at 69.0 million euros
(90.5). The segment's operating income was -6.7 million euros (0.9).
The decrease in net sales compared to last year was due to lower
market demand. Net sales decreased also compared to the first quarter
of 2009, which was due to the display panel supply shortages and the
change in the business model in Juarez, where the display panels were
consigned to Elcoteq instead of Elcoteq buying the panels. The
display panel supply situation is expected to improve during the
third quarter. The Second-quarter profitability was significantly
affected by the lower volumes.
Net sales of the Communications Networks business area were lower in
the second quarter than a year earlier, standing at 107.9 million
euros (183.3). The segment's operating income was 1.5 million euros
(3.3). The segment has been able to keep its profitability at a
fairly good level despite of the drop in net sales.
Elcoteq's second-quarter net sales were derived from the geographical
areas as follows: Europe 44% (46%), Asia-Pacific 15% (26%) and
Americas 40% (28%).
Personnel
At the end of June 2009, the Group employed 12,996 (21,522) people.
The geographical distribution of the workforce was as follows: Europe
5,928 (9,708), Asia-Pacific 3,187 (6,212) and Americas 3,881 (5,602).
The average number of employees on Elcoteq's direct payroll between
January and June was 13,088 (17,543).
Progress in the Restructuring Plan
Elcoteq has reduced its manufacturing capacity through the
Restructuring Plan launched in January to adapt to the radical
changes in the market situation. The restructuring actions have
proceeded according to the Plan. A further step in this process was
taken on June 17, when Elcoteq and Ericsson concluded an agreement
whereby Elcoteq will sell the majority of the machinery, equipment
and materials of its Tallinn manufacturing operations to Ericsson.
The agreement also includes the transfer of the lease agreement
concerning manufacturing premises and employment agreements related
to these operations. The transaction value is approximately 30
million euros. The company expects a minor profit from the
transaction, which is expected to close during the third quarter. The
transaction will not have an impact on profitability at the annual
level. The revenue generated by the transferred business is less than
200 million euros annually.
Approximately 1,200 of Elcoteq's 1,600 employees in Tallinn will be
transferred to Ericsson and continue their employment under the
existing terms and conditions. Elcoteq will continue operations in
Tallinn on a smaller scale in a specialized plant. Deliveries to
Ericsson will continue from other Elcoteq plants. European
high-volume manufacturing will be concentrated in Elcoteq's plant in
Pécs, Hungary.
The total restructuring costs were 27.6 million euros, of which 13.5
million euros were booked in December 2008, 13.6 million euros in the
first quarter and 0.4 million euros in the second quarter of 2009.
Equity Project
In January, the company commenced a project to strengthen its balance
sheet. The company has now signed a Letter of Intent with Shenzhen
Kaifa Technologies Co., Ltd. ("Kaifa"), a separately listed Chinese
industrial company belonging to China Electronics Corporation group.
CEC has been Elcoteq's successful joint venture partner in China
since 2002. The CEC Group consists of more than 200 different
technology companies ranging from semiconductor, computer and
mechanics companies to software development.
As an equity investment Kaifa would subscribe new shares to be issued
by Elcoteq with the amount of 50 million euros. Elcoteq and Kaifa are
also negotiating about further financing, which is subject to certain
financial performance criteria.
Kaifa's investment is depending on Elcoteq's creditors agreeing on
restructuring of current debt, which will include partial
debt-to-equity swap and it needs shareholders' approvals. The actual
number of shares to be issued to Kaifa will be determined after the
negotiations with the creditors have been completed, aiming at Kaifa
becoming the single biggest shareholder of Elcoteq with a minimum
ownership of 30%. The definitive agreement is planned to be signed
during the third quarter of 2009.
Pohjola Corporate Finance has been engaged to advice the company in
these debt negotiations.
Shares and Shareholders
At the end of June 2009, the company had 127,795,919 shares divided
into 22,025,919 series A shares and 105,770,000 series K Founders'
shares. All the series K Founders' shares are held by the company's
three principal owners.
Elcoteq had 10,163 shareholders on June 30, 2009. There were a total
of 5,582,957 foreign and nominee registered shares, representing
4.37% of the votes.
Short-Term Risks and Uncertainty Factors
The company's key short-term challenges are to conclude the planned
equity increase, improve operational profitability and free up cash.
In the changing market circumstances, the company must also continue
to maintain the right service offering, optimized cost level and
ability to react rapidly to demand changes.
Prospects
Under the current market conditions it is still extremely difficult
to make exact forecasts. Third-quarter net sales are expected to
decrease slightly compared with the second-quarter of 2009 due to the
partial Tallinn business transfer to Ericsson. Operating income is
expected to improve from the second quarter. Cash flow is expected to
remain positive.
Successful completion of the equity increase project is expected to
speed up the closing of several new programs, which are under
negotiations with both existing and new customers.
The company's priority areas for 2009 are to strengthen the equity
base, further balance the customer base, clear improvement in
bottom-line profitability through the ongoing restructuring actions
and strong cash generation through improved profitability, limited
capital expenditure and further working capital reduction.
Elcoteq plans its material purchases and capacity based on the
forecasts received from customers and market analysis. Such forecasts
may fluctuate during the forecast period, causing uncertainty in the
company's own forecasts.
July 21, 2009
Board of Directors
Further information:
Jouni Hartikainen, President and CEO, +358 10 413 11
Mikko Puolakka, CFO, tel. +358 10 413 1287
Minna Aila, Director, Investor Relations and Corporate
Responsibility, tel. +358 10 413 1908
Press Conference and Webcast
Elcoteq will arrange a combined press conference, conference call and
audio webcast for media and analysts on Wednesday, July 22, at 2.30
pm (EET). The event will be held in English and it will be hosted at
the Scandic Hotel Simonkenttä, Mansku room (Simonkatu 9, Helsinki,
Finland).
To participate by phone, please dial in 5 - 10 minutes before the
beginning of the event:
+44 (0)20 7162 0025 (Europe) or +1 334 323 6201 (USA). The password
is Elcoteq. The press conference can also be followed later as a
recording via Elcoteq's website at www.elcoteq.com.
Elcoteq will publish its third-quarter interim report at 9.00 am
(EET) on Wednesday, October 28, 2009.
Enclosures:
1 Income statement
2 Balance sheet
3 Cash flow statement
4 Statement of changes in shareholders' equity
5 Formulas for the calculation of key figures
6 Key figures
7 Business areas
8 Restructuring expenses
9 Assets and liabilities classified as held for sale
10 Assets pledged and contingent liabilities
11 Quarterly figures
The Group adopted the following standards on January 1, 2009:
- IFRS 8 Operating Segments. The adoption of the standard does not
have an impact on the Interim Report.
- Revised IFRS 23 Borrowing Costs. The adaptation of the standard
causes a change in the accounting principles used in the consolidated
financial statements. The adoption of the standard does not have a
material impact on the Group currently.
- Revised IAS 1 Presentation of Financial Statements. The change of
the standard has impact on the presentation of Income Statement and
Statement of Changes in Shareholders' Equity.
The following changes in the accounting principles do not have an
impact on the consolidated financial statements:
- IFRS 2 Share-based Payments
- IFRS 1 First-Time adoption and IAS 27 Consolidated and Separate
Financial Statements
- IFRIC 15 Agreements for the Construction of Real
Estate
APPENDIX 1
INCOME
STATEMENT, Q2/ Q2/ Change 1-6/ 1-6/ Change, 1-12/
MEUR 2009 2008 % 2009 2008 % 2008
NET SALES 436.0 904.8 -51.8 906.0 1,813.6 -50.0 3,443.2
Change in
work in
progress
and
finished
goods -4.4 -10.1 -26.3 -7.3 261.9 -35.5
Other
operating
income 1.4 3.1 -55.2 3.6 4.6 -21.8 11.2
Operating
expenses -428.0 -878.9 -51.3 -884.1 -1,784.5 -50.5 -3,346.8
Restructuring
expenses -0.4 - -14.1 - -13.5
Depreciation
and
impairment -16.0 -18.2 -12.2 -34.9 -35.3 -1.1 -78.9
OPERATING
LOSS -11.5 0.6 -49.8 -8.9 460.7 -20.4
% of net
sales -2.6 0.1 -5.5 -0.5 1,022.4 -0.6
Financial
income and
expenses -11.9 -6.1 95.3 -23.5 -12.1 94.3 -32.4
Share of
profits and
losses of
associates 0.0 - 0.0 - -0.1
LOSS BEFORE
TAXES -23.4 -5.5 322.9 -73.3 -21.0 249.6 -52.9
Income
taxes 1.5 -7.3 5.3 -3.1 -268.0 -11.1
NET LOSS -21.8 -12.8 70.1 -68.0 -24.1 182.1 -64.0
Other
comprehensive
income
Cash flow
hedges 4.4 1.5 3.3 -0.9 -2.5
Net gain/loss on
hedges of net
investments in
foreign
operations 1.7 -2.9 3.2 -0.7 -6.4
Foreign currency
translation
differences for
foreign
operations 0.3 4.8 0.4 5.5 11.2
Income tax
relating to
components of
other
comprehensive
income -1.5 0.2 -1.2 0.2 0.4
Other
comprehensive
income for the
period, net of
tax 4.9 3.6 5.7 4.1 2.7
TOTAL
COMPREHENSIVE
LOSS FOR THE
PERIOD -16.9 -9.2 -62.3 -20.0 -61.3
LOSS FOR THE
PERIOD
ATTRIBUTABLE TO:
Equity holders
of the parent
company * -21.8 -13.7 -67.4 -25.3 -65.9
Minority
interests 0.0 0.9 -0.6 1.2 1.9
-21.8 -12.8 -68.0 -24.1 -64.0
TOTAL COMPREHENSIVE LOSS
ATTRIBUTABLE TO:
Equity holders
of the parent
company * -16.1 -10.3 -61.5 -21.1 -64.8
Minority
interests -0.8 1.1 -0.8 1.1 3.5
-16.9 -9.2 -62.3 -20.0 -61.3
Earnings per
share (EPS), A
shares EUR -0.67 -0.42 -2.07 -0.78 -2.02
Earnings per
share (EPS), K
founders'
shares EUR -0.07 -0.04 -0.21 -0.08 -0.20
Income tax is the amount corresponding to the actual effective rate
based on year-to-date actual tax
calculation.
* The Group's reported net income for the
period.
APPENDIX 2
June 30, Dec. 31,
BALANCE SHEET, MEUR 2009 2008 Change, %
ASSETS
Non-current assets
Intangible assets 26.6 27.6 -3.9
Tangible assets 129.8 167.8 -22.6
Investments 2.2 2.2 -1.3
Long-term receivables 45.8 46.4 -1.2
Non-current assets, total 204.3 244.0 -16.3
Current assets
Inventories 113.7 256.2 -55.6
Current receivables 221.4 336.3 -34.2
Cash and equivalents 154.8 95.1 62.7
Current assets, total 489.8 687.5 -28.8
Assets classified as held for sale 41.0 23.9 71.5
ASSETS, TOTAL 735.1 955.4 -23.1
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of
the parent company
Share capital* 13.0 13.0 0.0
Other shareholders'
equity 48.7 109.4 -55.5
Equity attributable to equity holders of
the parent company, total 61.8 122.5 -49.6
Minority interests 12.0 12.7 -5.9
Total equity 73.7 135.2 -45.5
Long-term liabilities
Long-term loans 159.6 159.3 0.2
Other long-term debt 5.7 5.6 0.4
Long-term liabilities, total 165.2 165.0 0.2
Current liabilities
Current loans 210.7 173.9 21.2
Other current
liabilities 279.0 473.9 -41.1
Provisions 5.7 7.5 -23.7
Current liabilities, total 495.4 655.3 -24.4
Liabilities classified as held for sale 0.8 - -
SHAREHOLDERS' EQUITY AND LIABILITIES,
TOTAL 735.1 955.4 -23.1
* Share capital includes both A-shares listed in Helsinki Stock
Exchange and K-founders' shares.
APPENDIX 3
CONSOLIDATED CASH FLOW
STATEMENT, MEUR 1-6/2009 1-6/2008 Change, % 1-12/2008
Cash flow before change in
working capital -13.5 17.5 71.9
Change in working capital * 42.2 -41.7 -60.2
Financial items and taxes -9.7 -13.1 -25.6 -33.7
Cash flow from operating
activities 19.0 -37.3 -22.0
Purchases of non-current
assets -2.5 -44.6 -94.5 -85.8
Disposals of non-current
assets 4.9 2.3 113.3 8.2
Cash flow before financing
activities 21.5 -79.6 -127.0 -99.7
Change in current debt 39.2 38.7 1.3 119.7
Repayment of long-term debt - -0.2 -20.4
Dividends paid - - -2.0
Cash flow from financing
activities 39.2 38.5 1.9 97.3
Change in cash and
equivalents 60.6 -41.1 -247.4 -2.5
Cash and equivalents on
January 1 95.1 92.7 2.6 92.7
Cash and equivalents classified
as held for sale - - -
Effect of exchange rate changes
on cash held -0.9 -1.1 4.9
Cash and equivalents at the end
of the period 154.8 50.5 206.5 95.1
* The change in working capital includes the change in sold accounts
receivable. The impact of this change is to weaken the cash flow by
82.3 million euros during the reporting period 1-6/2009 and by 112.7
million euros during the reporting period
1-6/2008.
APPENDIX 4
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY,
MEUR
Attributable to equity holders of the parent
Addi- Mino
tional Re- rity
paid- Hed- Trans- tained inte- Total
Share in Other ging lation Re- ear- rests equity
serve
ca- ca- reser- reser- diffe- for nings
own
pital pital ves ve rences shares Total
BALANCE
AT JAN.
1, 2009 13.0 225.0 8.4 -3.1 3.2 -0.1 -124.0 122.5 12.7 135.2
Other comprehensive
income 2.9 2.9 -67.4 -61.5 -0.8 -62.3
Share-based payments 0.8 0.8 0.8
BALANCE
AT JUNE
30,
2009 13.0 225.0 8.4 -0.2 6.1 -0.1 -190.6 61.8 11.9 73.7
BALANCE
AT JAN.
1, 2008 13.0 225.0 8.4 -1.0 0.0 -0.1 -58.7 186.6 11.3 197.9
Other comprehensive
income -0.9 5.0 -25.3 -21.2 1.2 -20.0
BALANCE
AT JUNE
30,
2008 13.0 225.0 8.4 -1.9 5.0 -0.1 -84.0 165.4 12.5 177.9
*) The Group has applied hedge accounting to derivative instruments
related to purchases from June 30,2007 and related to personnel
expenses from October 15,
2008.
APPENDIX 5
FORMULAS FOR THE CALCULATION OF KEY FIGURES
Return on equity (ROE) =
Net income x 100
----------------------------------------------------------------
Total equity, average of opening and closing balances
Return on investments (ROI/ROCE) =
(Income before taxes + interest and other financial expenses +
income from discontinued operations before taxes and
financial expenses) x 100
--------------------------------------------------------------------------------------
Total assets - non-interest bearing liabilities, average of opening
and closing balances
Return on investment (ROI/ROCE) for trailing 12 months =
(Income before taxes + interest and other financial expenses +
income from discontinued operations before taxes and
financial expenses) x 100
------------------------------------------------------------------------------------
Total assets - non interest-bearing liabilities, average of opening
and closing balances
Current ratio =
Current assets + assets classified as held for sale
--------------------------------------------------------------
Current liabilities + liabilities classified as held for sale
Solvency =
Total equity x 100
--------------------------------------------
Total assets - advance payments received
Gearing =
Interest-bearing liabilities - cash and equivalents
-------------------------------------------------------------------
Total equity
Equity per share =
Equity attributable to equity holders of the parent company
--------------------------------------------------------------------------------
Adjusted average number of A shares outstanding end of the
period + (adjusted average number of K founders' shares
outstanding end of the period/10)
Earnings per share, A shares (EPS) =
Net income attributable to equity holders of the parent, A shares
-------------------------------------------------------------------------------------
Adjusted average number of A shares outstanding during the period
Earnings per shares, K founders' shares (EPS) =
Net income attributable to equity holders of the parent,
K founders' shares
--------------------------------------------------------------------------
Adjusted average number of K founders' shares outstanding
during the period
APPENDIX 6
Change,
KEY FIGURES 1-6/2009 1-6/2008 % 1-12/2008
Personnel on average during
the period 13,088 17,685 -26.0 17,401
Gross capital expenditures,
MEUR 3.5 44.3 -92.1 71.4
Return on equity (ROE), % -65.1 -12.8 -38.4
Return on investment
(ROI/ROCE), % -12.2 -1.2 -3.1
From 12 preceding months:
Return on equity (ROE), % -85.8 -31.0 -38.4
Return on investment
(ROI/ROCE), % -14.4 -6.2 -3.1
Earnings per share (EPS),
A-shares, EUR -2.07 -0.78 165.1 -2.02
Earnings per share (EPS),
K-founders' shares, EUR -0.21 -0.08 158.4 -0.20
Current ratio 1.1 1.1 1.1
Solvency, % 10.0 18.0 14.2
Gearing 2.9 1.2 1.8
Shareholders' equity per
share, A-shares, EUR 1.89 5.08 3.76
Shareholders' equity per
share, K-founders' shares, EUR 0.19 0.51 0.38
Interest-bearing
liabilities, MEUR 370.7 270.7 36.9 333.6
Interest-bearing net debt,
MEUR 215.9 220.2 -2.0 238.5
Non-interest-bearing
liabilities, MEUR 290.8 538.1 -46.0 486.7
APPENDIX 7
From 2009, Elcoteq has applied IFRS 8 Operating Segments in its
segment reporting. The transfer to IFRS 8 has not changed the
previously reported information. The presented segment reporting is
based on the figures provided to the company's management.
Elcoteq has three business areas: Personal Communications, Home
Communications and Communications Networks. Each of the business
areas attend to their own customer accounts and develop their service
offering in their own area.
The main product group for Personal Communications business area is
mobile phones, their parts, modules and accessories. The company's
Home Communications products include set-top boxes, flat panel
televisions, and other home communications devices. Communications
Networks products include wireless infrastructure equipment, wireline
infrastructure components as well as enterprise network products.
BUSINESS AREAS, MEUR 1-6/2009 1-6/2008 1-12/2008
Net Sales
Personal Communications 486.8 1,319.4 2,222.2
Home Communications 186.0 171.9 517.3
Communications Networks 233.2 322.3 703.7
Net sales,
total 906.0 1,813.6 3,443.2
Segment's operating income
Personal Communications -8.1 11.0 19.6
Home Communications -16.6 0.4 -4.6
Communications Networks -8.8 -0.9 1.6
Group's non-allocated expenses/income
General &
Administrative expenses -15.4 -19.3 -37.1
Other expenses -0.9 - 0.2
Operating
income, total -49.8 -8.9 -20.4
Group's financial income and expenses -23.5 -12.1 -32.4
Share of profits and losses of
associates 0.0 0.0 -0.1
Income before
taxes -73.3 -21.0 -52.9
Segments' operating income for January-June 2009 includes following
restructuring expenses: Personal Communications 1.9 million euros,
Home Communications 5.4 million euros and Communications Networks 6.2
million euros. Group's non-allocated expenses/income includes
restructuring costs of 0.6 million euros.
APPENDIX 8
During the first quarter of 2009, Elcoteq launched a restructuring
plan that applies to whole Group and some part of the costs relating
to the plan were recognized already in 2008. The plan targets to
prepare the company for the exceptionally uncertain market situation
and general economic development. This plan is the next step in the
company's drive to increase profitability, cost-efficiency and
operational excellence. The plan has contained several elements such
as the closure of the plants in Arad (Romania), Richardson (USA) and
St. Petersburg (Russia) as well as to consolidate the plant in
Shenzhen (China) to the plant in Beijing. Processes with the target
to reduce personnel at several plants globally have been carried out.
In addition the company has reduced other operative costs.
The Group's restructuring expenses 14,066 thousand euros, comprise
the following items:
EUR 1,000 2009
Personnel expenses 7,356
Impairments 3,253
Production materials and services 1,124
Other operating expenses 2,333
Restructuring expenses, total 14,066
Impairments of non-current assets:
EUR 1,000 2009
Intangible rights -
Goodwill -
Buildings 1,231
Machinery and equipment 2,022
ADP software -
Other financial assets -
Impairments, total 3,253
Impairments of buildings as well as machinery and equipment are
primarily due to plant closures.
APPENDIX 9
Assets classified as held for sale relate to real estates on sale as
well as to sale of the operations in Tallinn.
Liabilities classified as held for sale relate to the sale of Tallinn
operations.
Assets classified as held for sale:
MEUR June 30, 2009
Non-current assets 22.4
Current assets 18.6
Total 40.9
Liabilities classified as held for sale:
MEUR June 30, 2009
Non-current assets -
Current assets 0.8
Total 0.8
APPENDIX 10
ASSETS PLEDGED AND CONTINGENT June 30, June 30, Dec. 31,
LIABILITIES, MEUR 2009 2008 Change, % 2008
PLEDGED SALES RECEIVABLE 5.0 - 26.9
PLEDGED LOAN RECEIVABLES 0.1 - 0.8
ON BEHALF OF OTHERS
Guarantees 1.0 1.0 1.0
LEASING COMMITMENTS
Operating leases,
production machinery (excl.
VAT) 4.6 17.2 -73.1 9.0
Rental commitments,
real-estate (excl. VAT) 12.6 13.7 -8.5 15.4
DERIVATIVE CONTRACTS
Currency forward contracts,
transaction risk,
hedge accounting not
applied
Nominal value 86.7 168.8 -48.7 118.3
Fair value -0.3 -4.2 -92.5 -0.2
Currency forward contracts,
transaction risk,
hedge accounting applied
Nominal value 19.1 -124.0 -115.4 69.4
Fair value -0.3 -1.9 -86.3 -3.5
Currency option contracts,
transaction risk,
hedge accounting applied,
bought options
Nominal value - - 17.0
Fair value - - 0.3
Currency option contracts,
transaction risk,
hedge accounting not
applied, bought options
Nominal value 11.3 - -
Fair value 0.0 - -
Currency forward contracts,
translation risk
Nominal value 20.8 43.8 -52.5 20.2
Fair value 0.1 0.8 -0.8
Currency forward contracts,
financial risk
Nominal value 120.4 159.5 -24.5 172.3
Fair value 0.3 -0.3 -3.1
Interest rate and foreign
exchange swap contracts
Nominal value - 4.0 1.5
Fair value - 0.7 0.2
The derivative contracts have been valued using the market prices and
the exchange reference rates of the European Central Bank on the
balance sheet date. The figures also include closed positions.
APPENDIX 11
Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
INCOME STATEMENT, MEUR 2009 2009 2008 2008 2008 2008
NET SALES 436.0 470.0 889.1 740.5 904.8 908.7
Change in work in progress
and finished
goods -4.4 -21.9 -23.9 -4.4 -10.1 2.9
Other operating income 1.4 2.3 2.2 4.4 3.1 1.6
Operating
expenses -428.0 -456.1 -842.6 -719.7 -878.9 -905.6
Restructuring expenses -0.4 -13.6 -13.5 - - -
Depreciation and impairments -16.0 -18.9 -23.2 -20.5 -18.2 -17.1
OPERATING INCOME -11.5 -38.3 -11.8 0.3 0.6 -9.5
% of net sales -2.6 -8.2 -1.3 0.0 0.1 -1.0
Financial income and expenses -11.9 -11.5 -13.3 -7.0 -6.1 -6.0
Share of profits and losses of
associates 0.0 0.0 0.0 -0.1 - -
INCOME BEFORE TAXES -23.4 -49.9 -25.2 -6.8 -5.5 -15.4
Income taxes 1.5 3.7 -4.0 -4.0 -7.3 4.2
NET INCOME
FOR THE
PERIOD -21.8 -46.1 -29.2 -10.7 -12.8 -11.3
ATTRIBUTABLE TO:
Equity holders of the parent
company -21.8 -45.6 -29.1 -11.5 -13.7 -11.6
Minority
interests 0.0 -0.5 -0.1 0.8 0.9 0.3
-21.8 -46.1 -29.2 -10.7 -12.8 -11.3
Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
BALANCE SHEET, MEUR 2009 2009 2008 2008 2008 2008
ASSETS
Non-current
assets
Intangible
assets 26.6 27.4 27.6 28.4 28.5 29.5
Tangible assets 129.8 149.7 167.8 190.0 184.0 182.0
Investments 2.2 2.3 2.2 2.2 2.1 2.1
Long-term
receivables 45.8 53.0 46.4 49.2 48.5 47.3
Non-current assets, total 204.3 232.4 244.0 269.8 263.2 260.9
Current assets
Inventories 113.7 174.2 256.2 358.2 322.5 321.7
Current
receivables 221.4 221.9 336.3 326.4 320.0 271.7
Cash and
equivalents 154.8 98.0 95.1 59.5 50.5 91.9
Current assets,
total 489.8 494.1 687.5 744.0 692.9 685.3
Assets classified as held for
sale 41.0 20.7 23.9 28.7 30.5 30.2
ASSETS, TOTAL 735.1 747.1 955.4 1,042.6 986.6 976.4
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent company
Share capital 13.0 13.0 13.0 13.0 13.0 13.0
Other
shareholders'
equity 48.7 64.5 109.4 139.7 152.4 162.8
Equity attributable to equity
holders
of the parent company, total 61.8 77.5 122.5 152.8 165.4 175.9
Minority
interests 12.0 12.8 12.7 13.4 12.5 11.3
Total equity 73.7 90.3 135.2 166.2 177.9 187.2
Long-term
liabilities
Long-term loans 159.6 158.9 159.3 159.4 159.3 159.4
Other long-term
debt 5.7 6.7 5.6 5.5 5.2 5.0
Long-term liabilities, total 165.2 165.6 165.0 164.9 164.5 164.4
Current
liabilities
Current loans 210.7 225.4 173.9 187.2 111.2 75.7 Other current
liabilities 279.0 257.4 473.9 519.9 526.8 544.7
Provisions 5.7 8.4 7.5 4.4 4.8 3.7
Current liabilities, total 495.4 491.2 655.3 711.5 642.8 624.1
Liabilities classified as held
for sale 0.8 - - - 1.4 0.7
SHAREHOLDERS' EQUITY
AND LIABILITIES, TOTAL 735,1 747,1 955.4 1,042.6 986.6 976.4
Personnel on average during
the period 11,693 14,446 17,050 17,304 17,543 17,894
Gross capital expenditures,
MEUR 1.5 2.0 9.9 17.2 16.6 27.7
ROI/ROCE from 12 preceding
months, % -14.4 -11.3 -3.1 -5.6 -6.2 -10.7
Earnings per share (EPS),
A-shares, EUR -0.67 -1.40 -0.89 -0.35 -0.42 -0.35
Solvency, % 10.0 12.1 14.2 15.9 18.0 19.2
CONSOLIDATED CASH FLOW Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
STATEMENT, MEUR 2009 2009 2008 2008 2008 2008
Cash flow before change in
working capital -6.4 -7.1 21.5 32.8 16.2 1.3
Change in working capital 81.1 -38.8 46.6 -65.2 -66.3 24.7
Financial items and taxes -3.9 -5.8 -13.0 -7.6 -5.6 -7.5
Cash flow from operating
activities 70.7 -51.7 55.2 -39.9 -55.8 18.4
Purchases of non-current
assets -0.4 -2.1 -4.4 -12.8 -24.6 -20.0
Acquisitions - - -8.4 -15.5 - -
Disposals of non-current
assets 1.8 3.1 4.1 1.5 1.8 0.5
Cash flow before financing
activities 72.2 -50.7 46.6 -66.7 -78.5 -1.1
Change in current debt -12.2 51.4 8.9 72.2 36.3 2.4
Repayment of long-term debt - - -20.2 - -0.2 -
Dividends paid - - -1.0 -1.0 - -
Cash flow from financing
activities -12.2 51.4 -12.3 71.1 36.1 2.4
Change in cash and equivalents 59.9 0.7 34.2 4.4 -42.4 1.3
Cash and equivalents at the
beginning of the period 98.0 95.1 59.5 50.5 91.9 92.7
Cash and cash equivalents
classified as held for sale - - - - 0.2 -0.2
Effect of exchange rate
changes on cash held -3.1 2.2 1.4 4.6 0.9 -1.9
Cash and equivalents at the
end of period 154.8 98.0 95.1 59.5 50.5 91.9
Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
BUSINESS AREAS, MEUR 2009 2009 2008 2008 2008 2008
Net sales
Personal
Communications 259.1 227.7 465.2 437.6 631.0 688.4
Home
Communications 69.0 116.9 218.8 126.6 90.5 81.4
Communications
Networks 107.9 125.3 205.2 176.3 183.3 139.0
Net sales,
total 436.0 470.0 889.1 740.5 904.8 908.7
Segment's operating income
Personal
Communications 2.1 -10.2 6.7 1.9 5.6 5.4
Home
Communications -6.7 -9.9 -4.1 -0.9 0.9 -0.5
Communications
Networks 1.5 -10.3 -5.1 7.6 3.3 -4.2
Group's non-allocated
expenses/income
General &
Administrative
expenses -8.2 -7.2 -9.5 -8.3 -9.2 -10.1
Other expenses -0.1 -0.7 0.2 -0.1 - -
Operating
income, total -11.5 -38.3 -11.8 0.3 0.6 -9.5
Group's financial income and
expenses -11.9 -11.5 -13.3 -7.0 -6.1 -6.0
Share of profits and losses of
associates 0.0 0.0 0.0 -0.1 - -
Income before
taxes -23.4 -49.9 -25.2 -6.8 -5.5 -15.4
Restructuring expenses recognized in
segment's operating income
Personal
Communications -1.1 -0.8 -6.0 - - -
Home
Communications 1.1 -6.4 -2.1 - - -
Communications
Networks -0.4 -5.8 -5.4 - - -
Group's
non-allocated
expenses/income 0.0 -0.6 - - - -
Restructuring
expenses,
total -0.4 -13.6 -13.5 - - -
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