2014-08-07 07:00:00 CEST
2014-08-07 07:01:16 CEST
REGULATED INFORMATION
Elektrobit Oyj - Interim report (Q1 and Q3)
Elektrobit Corporation's (EB) Interim Report January-June 2014
Stock exchange release
Free for publication on August 7, 2014 at 8.00 a.m. (CEST+1)
Elektrobit Corporation's (EB) Interim Report January-June 2014
IN JANUARY-JUNE 2014 NET SALES GREW AND OPERATING PROFIT IMPROVED FROM THE
PREVIOUS YEAR
The 2013 figures presented in comparison in this interim report include the
figures of Continuing Operations only.
SUMMARY APRIL - JUNE 2014
* Net sales of April - June 2014 grew to EUR 52.2 million (EUR 47.9 million,
2Q 2013), representing an increase of 9.0 % year-on-year.
* Operating profit was EUR 3.1 million (EUR 0.7 million, 2Q 2013).
* Net cash flow was EUR -11.6 million (EUR -1.5 million, 2Q 2013).
* Earnings per share were EUR 0.014 (EUR 0.001, 2Q 2013).
* The number of EB's shares increased during the reporting period by
altogether 581 624 new shares subscribed by virtue of the stock option
rights 2008A, 2008B and 2008C. At the end of the period, the number of
shares in Elektrobit Corporation totaled 131,191,196.
* Parrot S.A. initiated legal proceeding against e.solutions GmbH, a jointly
owned company of Elektrobit Corporation (EB) and AUDI, seeking to collect
damages in the amount of approximately EUR 18.4 million for loss of profit
and reputational damage. Based on the e.solutions' initial legal analysis
the claim is without merit both in terms of the grounds and the amount of
the claim.
* Elektrobit (EB) has decided to temporarily lay off 90 persons at the
maximum, for 90 days at the maximum, part-time or full-time in Wireless Business Segment and targets to achieve EUR 0.8 million cost savings, which
are expected to materialize mainly during the third quarter of the year.
SUMMARY JANUARY - JUNE 2014
* Net sales of January - June 2014 grew to EUR 103.9 million (EUR 94.1
million, 1H 2013), representing an increase of 10.4 % year-on-year.
* Operating profit was EUR 5.0 million (EUR 1.4 million, 1H 2013, including
non-recurring costs of approximately EUR 0.8 million resulting from the cost
saving measures in the Wireless Business Segment).
* Net cash flow was EUR -12.1 million (EUR 27.8 million, 1H 2013, including
non-recurring net cash flow of about EUR 28 million resulting from the sale
of the Test Tools product business).
* Earnings per share were EUR 0.027 (EUR 0.006, 1H 2013).
Group (MEUR) 2Q 14 2Q 13 1H 14 1H 13 2013
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NET SALES 52.2 47.9 103.9 94.1 199.3
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Change of net sales, % 9.0 % 15.5 % 10.4 % 11.8 % 14.6 %
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OPERATING PROFIT / LOSS 3.1 0.7 5.0 1.4 8.1
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Operating profit / loss, % of net sales 5.9 % 1.5 % 4.8 % 1.5 % 4.1 %
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Operating profit /loss without non- 3.1 0.7 5.0 2.2 9.0
recurring items
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EBITDA 5.1 2.9 9.2 5.8 17.2
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CASH AND OTHER LIQUID ASSETS 30.9 42.1 30.9 42.1 43.0
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EQUITY RATIO (%) 61.7 % 64.0 % 61.7 % 64.0 % 65.1 %
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EARNINGS PER SHARE (EUR) 0.014 0.001 0.027 0.006 0.051
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Automotive Business Segment (MEUR) 2Q 14 2Q 13 1H 14 1H 13 2013
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NET SALES 39.8 32.6 77.3 63.0 138.3
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Change of net sales, % 22.4 % 30.6 % 22.6 % 22.9 % 25.0 %
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OPERATING PROFIT / LOSS 4.2 0.1 7.1 1.2 8.5
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Operating profit / loss, % of net sales 10.4 % 0.2 % 9.1 % 1.9 % 6.2 %
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EBITDA 5.6 1.6 10.1 4.1 14.6
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Wireless Business Segment (MEUR) 2Q 14 2Q 13 1H 14 1H 13 2013
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NET SALES 12.4 15.4 26.6 31.2 61.2
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Change of net sales, % -19.4 % -7.0 % -14.7 % -5.5 % -3.7 %
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OPERATING PROFIT / LOSS -0.9 0.6 -2.0 0.1 -0.5
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Operating profit / loss, % of net sales -7.4 % 3.6 % -7.6 % 0.5 % -0.8 %
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Operating profit /loss without non- -0.9 0.6 -2.0 1.0 0.4
recurring items
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EBITDA -0.3 1.2 -0.8 1.7 2.5
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EB'S CEO JUKKA HARJU"In January-June, EB's net sales grew by 10.4 per cent year-on-year to EUR
103.9 million. Operating profit improved and was EUR 5.0 million. The reason for
the improved net sales and operating profit was the good development of
Automotive Business Segment.
In Automotive Business Segment, the demand for EB's software products and R&D
services remained good as car makers invested in the development of new car
models. Net sales of Automotive Business Segment grew strongly by 22.6 % from
the previous year and operating profit improved to 9.1 % of net sales. The
improvement of the operating profit resulted from the good performance in
services projects, the growth of software license sales especially for the in-
car navigation software and lower R&D investments.
The net sales in Wireless Business Segment decreased by 14.7 % from the previous
year due to the decreased demand for R&D services for mobile telecommunications
network equipment. The operating result in the Wireless Business Segment was
below our target and remained negative. In the second half of the year, we
expect the Wireless Business Segment to develop positively and operating result
to be profitable.
Our main target in 2014 is to grow net sales and operating profit from the
previous year and EB is in a good position to achieve this target."
OUTLOOK FOR 2014
EB expects for the year 2014 that net sales and operating result will grow from
the previous year (net sales of EUR 199.3 million and operating profit of EUR
8.1 million, in 2013). Net sales growth rate in 2014 is expected to be slower
than in the previous year (net sales growth 14.6 %, 2013). Operating profit in
the second half of the year is expected to be higher than in the first half
(operating profit of EUR 5.0 million, 1H 2014).
The demand for R&D services and software products of the Automotive Business
Segment is expected to continue good in the second half of the year, and
operating profit of Automotive Business Segment is expected to be at the same
level or better than in the first half of the year (operating profit of EUR 7.1
million, 1H 2014). Operating result of the Wireless Business Segment in the
second half of 2014 is expected to be positive (operating loss of EUR -2.0
million, 1H 2014). In the Wireless Business Segment in the second half of 2014,
the demand for R&D services is expected to recover and product-based net sales
is expected to grow compared to the first half of the year. EB aims at bringing
its Wireless Business Segment's products to the global defense and other
authority markets, and expects to start gradually generating net sales from
these markets from the latter half of 2014 onwards. In the second half of the
year the product-based net sales is expected to accumulate mainly from the
domestic customers and mainly during the fourth quarter.
More specific market outlook is presented under sections "Market outlook for the
Automotive Business Segment" and "Market outlook for the Wireless Business
Segment".
The profit outlook for the year 2014 does not include possible non-recurring
income or costs related to the reorganization cases of TerreStar Networks Inc.
More information about the reorganization cases of TerreStar Networks and the
amount of the receivables and collecting the receivables as well as other
uncertainties regarding the outlook is presented in the "Events after the review
period" and in the Report by the Board of Directors 2013, available at
http://annualreport.elektrobit.com.
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the January-June 2014 Interim Report for
media, analysts and institutional investors in in Restaurant Savoy,
Eteläesplanadi 14, Helsinki, Finland, on Thursday, August 7, 2014, at 11.00 a.m.
(CEST+1). The conference will also be held as a conference call and the
presentation will be shown simultaneously in the Internet through GlobalMeet.
The conference will be held in English. For more information please go to
www.elektrobit.com/investors.
ELEKTROBIT CORPORATION (EB)
EB creates advanced technology and turns it into enriching end-user experiences.
EB is specialized in demanding embedded software and hardware solutions for
wireless and automotive industries. The net sales in 2013 totaled EUR 199.3
million and the operating profit was EUR 8.1 million, in 2013. Elektrobit
Corporation is listed on NASDAQ OMX Helsinki. www.elektrobit.com.
ELEKTROBIT CORPORATION (EB) INTERIM REPORT JANUARY-JUNE 2014
2013 figures presented in comparison in this interim report include only figures
of Continuing Operations.
FINANCIAL PERFORMANCE DURING JANUARY-JUNE 2014
EB's net sales during January-June 2014 grew by 10.4 per cent year-on-year to
EUR 103.9 million (EUR 94.1 million, 1H 2013). Operating profit was EUR 5.0
million (EUR 1.4 million, 1H 2013, including the non-recurring cost of
approximately EUR 0.8 million resulting from the cost saving measures in the
Wireless Business Segment).
Net sales of Automotive Business Segment in January-June 2014 grew to EUR 77.3
million (EUR 63.0 million, 1H 2013), representing 22.6 per cent growth year-on-
year. Operating profit improved clearly from the previous year and was EUR 7.1
million (EUR 1.2 million, 1H 2013). The demand for EB's software products and
R&D services in Automotive Business Segment remained good, including the jointly
owned company e.solutions GmbH. The improvement of the operating profit resulted
from the good performance in services projects, the growth of software license
sales especially for the in-car navigation software and the lower R&D
investments.
The Wireless Business Segment's net sales in January-June 2014 decreased by
14.7 per cent year-on-year, to EUR 26.6 million (EUR 31.2 million, 1H 2013). The
share of the product-based net sales was EUR 5.9 million, which resulted mainly
from the product deliveries of the tactical communication system to the Finnish
Defence Forces and from the delivery of a batch of special terminal products for
the authority use to certain customer abroad. The operating loss of the Wireless
Business Segment in January-June 2014 was EUR -2.0 million (operating profit of
EUR 0.1 million, 1H 2013, including the non-recurring cost of approximately EUR
0.8 million resulting from the cost saving measures in Wireless Business
Segment). The decrease in the net sales year-on-year and lower than expected
operating result were due to the decline in the demand for R&D services for
mobile telecommunications network equipment, delays in acquiring and starting
new R&D service projects and delays in some product deliveries.
CONSOLIDATED INCOME STATEMENT (MEUR) 1-6 2014 1-6 2013
6 months 6 months
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CONTINUING OPERATIONS
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Net sales 103.9 94.1
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Operating profit / loss 5.0 1.4
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Financial income and expenses -0.2 -0.6
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Result before tax 4.7 0.8
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RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS 3.6 0.8
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RESULT FOR THE PERIOD FROM DISCONTINUING OPERATIONS 23.6
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RESULT FOR THE PERIOD 3.6 24.4
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TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3.8 24.6
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Result for the period attributable to:
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Equity holders of the parent 3.6 24.4
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Non-controlling interests 0.0
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Total comprehensive income for the period attributable to:
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Equity holder of the parent 3.8 24.6
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Non-controlling interests 0.0
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Earnings per share from continuing operations, EUR 0.027 0.006
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* Cash flow from operating activities was EUR -15.4 million (EUR 5.4 million,
1H 2013). The negative cash flow was caused by the increased working
capital. This was mainly due to the timing of the payment milestones of big
projects.
* Net cash flow was EUR -12.1 million (EUR 27.8 million, 1H 2013, including
non-recurring net cash flow of about EUR 28 million resulting from the sale
of the Test Tools product business).
* Equity ratio was 61.7 % (64.0 %, June 30, 2013).
* Net gearing was -20.6 % (-28.7 %, June 30, 2013).
QUARTERLY FIGURES
Elektrobit Group's net sales and operating result, MEUR:
2Q 14 1Q 14 4Q 13 3Q 13 2Q 13
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Net sales 52.2 51.7 59.5 45.7 47.9
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Operating profit (loss) 3.1 1.9 5.7 1.0 0.7
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Operating profit (loss) without non-recurring 3.1 1.9 5.7 1.0 0.7
costs
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Result before taxes 2.8 1.9 5.5 0.9 0.2
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Result for the period 1.8 1.7 5.0 0.8 0.2
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Non-recurring items are exceptional gains and costs that are not related to
normal business operations and occur only seldom. These items include capital
gains or losses, significant changes in asset values such as write-downs or
reversals of write-downs, significant restructuring costs, or other items that
the management considers to be non-recurring. When evaluating a non-recurring
item, the euro translation value of the item is considered, and in case of a
change in an asset value, it is measured against the total value of the asset.
In 2013 Wireless Business Segment reported non-recurring cost of approximately
EUR 0.8 million resulting from the cost saving measures in the Wireless Business
Segment in the first quarter of 2013. In the review period and in the periods
presented for comparison in the table above, no non-recurring items occurred.
Net sales and operating profit development by Business Segments and other
businesses, MEUR:
2Q 14 1Q 14 4Q 13 3Q 13 2Q 13
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Automotive
Net sales to external customers 39.8 37.5 41.1 34.1 32.5
Net sales to other segments 0.0 0.0 0.0 0.0 0.1
Operating profit (loss) 4.2 2.9 5.4 1.9 0.1
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Wireless
Net sales to external customers 12.4 14.2 18.3 11.5 15.4
Net sales to other segments 0.0 0.0 0.0 0.0 0.0
Operating profit (loss) -0.9 -1.1 0.3 -0.9 0.6
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Other businesses
Net sales to external customers 0.0 0.0 0.0 0.0 0.0
Operating profit (loss) -0.2 0.1 0.0 0.0 0.1
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Total
Net sales 52.2 51.7 59.5 45.7 47.9
Operating profit (loss) 3.1 1.9 5.7 1.0 0.7
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The distribution of net sales by market areas, MEUR and %:
2Q 14 1Q 14 4Q 13 3Q 13 2Q 13
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Asia 1.8 2.5 2.3 1.9 1.7
3.5 % 4.9 % 3.9 % 4.3 % 3.6 %
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Americas 6.6 7.2 8.0 6.0 6.4
12.7 % 13.8 % 13.4 % 13.2 % 13.4 %
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Europe 43.8 42.0 49.2 37.7 39.7
83.8 % 81.3 % 82.7 % 82.5 % 83.0 %
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SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
A total of 1,090,321 new shares were subscribed for between December 5, 2013 and
June 9, 2014 by virtue of the stock option rights 2008A, 2008B and 2008C. The
share subscription price, EUR 368,396.45 was recorded in the Company's invested
non-restricted equity fund. The increases in the number of the Company's shares
were entered into the Finnish Trade Register on February 10, 2014, April
14, 2014 and on June 26, 2014. The trading with the registered shares started on
February 11, 2014, April 15, 2014 and on June 27, 2014 as an additional lot of
Elektrobit Corporation's shares in NASDAQ OMX Helsinki Ltd. After the
registration of the new shares, the number of shares in Elektrobit Corporation
totaled 131,191,196.
In April, a supplier of e.solutions GmbH, Parrot S.A, has filed a lawsuit
against e.solutions in the Tribunal de Commerce de Paris (Commercial Court
Paris) seeking to collect damages in the amount of approximately EUR 18.4
million for loss of profit and reputational damage. Based on the e.solutions'
initial legal analysis the claim is without merit both in terms of the grounds
and the amount of the claim. Based on the current estimate, the legal
proceedings will not cause any such financial obligation to e.solutions or to EB
that would affect EB's profit outlook and financial position. It is possible
that, based on later information, this view may need to be reconsidered. At the
worst, Parrot's claim could result significant negative impact on e.solutions'
and EB's profit, cash flow and financial position.
On April 30, 2014 EB started personnel negotiations to adjust its cost structure
for the weakened order book for R&D services in the next few months. The
negotiations were concluded on May 15, and the company decided to temporarily
lay off at the maximum of 90 persons in the Wireless Business Segment With these
temporary dismissals EB targets cost savings of approximately EUR 0.8 million,
which would materialize mainly during the third quarter of the year.
BUSINESS SEGMENTS' DEVELOPMENT DURING APRIL-JUNE 2014 AND MARKET OUTLOOK
EB's reporting is based on two segments which are the Automotive and Wireless
Business Segments.
AUTOMOTIVE
In Automotive Business Segment EB offers software products and R&D services for
carmakers, car electronics suppliers and other suppliers to the automotive
industry. The offering includes in-car infotainment solutions, such as
navigation and human machine interfaces (HMI), as well as software for
electronic control units (ECU) and driver assistance (DA). By combining its
software products and R&D services, EB is creating unique, customized solutions
for the automotive industry. EB's software products are: EB street director
navigation software, EB GUIDE HMI development and speech dialogue platform, EB
tresos product line of software components used in ECUs and tools for their
configuration, and EB Assist, an extensive product line with tooling and a
software development kit for driver assistance solutions. These software
products generate license fees, often combined with supply of R&D services for
customized solutions.
EB and Audi's subsidiary, Audi Electronics Venture GmbH (AEV), have a jointly
owned company e.solutions GmbH that is currently developing infotainment
software and provides systems engineering and systems integration services for
Volkswagen Group car models. EB also delivers products and R&D services to the
joint venture. EB owns 51% of e.solutions GmbH and AEV 49%. e.solutions GmbH is
consolidated in EB group's financial statements by applying proportionate
consolidation method.
Development of the Automotive Business Segment in April - June 2014
EB's net sales in Automotive Business Segment continued its strong growth during
the second quarter of 2014 and amounted to EUR 39.8 million (EUR 32.6 million,
2Q 2013), representing a growth of 22.4 % year-on-year. Operating profit
improved clearly and was EUR 4.2 million (EUR 0.1 million, 2Q 2013). The demand
for EB's software products and R&D services remained good in the Automotive
Business Segment, including the jointly owned company e.solutions GmbH. The
improvement of the operating profit resulted from the good performance in
services projects, growth of software license sales especially for the in-car
navigation software and lower R&D investments.
The R&D investments in the second quarter were EUR 2.5 million (EUR 3.7 million,
2Q 2013). The reason for the decrease in the R&D investments was the transfer of
certain product platform development from an initial investment phase to a
continuing development phase.
In June EB introduced new functions for its EB Assist Electronic Horizon
Solution, offering more flexibility for carmakers and suppliers for implementing
predictive driver assistance systems. The new version enables them to use
digital map information across car lines and model configurations, without the
need for having an active navigation system.
As recognition to EB's long-standing expertise in the development of driver
assistance software solutions that provide maximum safety, quality and
performance, EB received Best Telematics Safety and Security Award for driver
assistance software solutions developed with Daimler for Daimler, during the
Telematics Detroit 2014 conference and exhibition (June 4-5) in the Detroit
suburb of Novi, Michigan.
Automotive Business Segment Market Outlook
The global car market is expected to grow by 3% in 2014 according to the
forecast made by VDA (Verband der Automobilindustrie). Carmakers continued to
invest in automotive software for new car models and the market for software
products and services is estimated to continue growing during 2014. The demand
for EB's products and services is estimated to develop positively year-on-year
during 2014 in Automotive Business Segment.
The market for electronics and software for cars is estimated to continue
growing in the long term. The study "Future Industry Structure of Automotive
(FAST) Electronics 2025" from Berylls assumes a growth of automotive electronics
from EUR 215 billion in 2012 to EUR 456 billion in 2025 (CAGR 6%).
Growth in the automotive software market, and growth for EB, is mainly expected
to be driven by:
* The majority of in-vehicle innovations come from electronics and software.
Carmakers can develop more vehicle features and create product
differentiation as software innovation allows for great product innovation
jumps in the areas of comfort, information and entertainment, powertrain and
communication.
* The software and hardware in electronics solutions will be gradually
separated from each other in order to speed up the innovation and to improve
the quality and cost efficiency.
* Consumers expect in the car the same richness of features and user
experience they know from the Internet and mobile devices, and therefore
infotainment systems become increasingly common in all car price categories.
* Mobile connectivity will become one of the fastest-growing Internet-
connected device platforms among other connected consumer electronics
devices, such as media tablets and smartphones. Gartner estimates that by
2016, the majority of car buyers in automotive markets like in the U.S. and
the Western Europe will view the availability of in-vehicle, web-enabled
dynamic content as a key buying criterion when considering a standard brand
car. This tipping point will be reached even sooner - during 2014 - for
premium-brand cars.
* Connected Car solutions and cloud connections enable bringing of new
applications and enhancements to car functions, for example real-time
traffic information or map updates for navigation. The increasing demand to
better integrate mobile devices with the car has been reflected in consumer
electronics companies such as Apples "CarPlay" or Google's announcement of
Open Automotive Alliance.
* New Active Safety Systems and Driver Assistance applications are being
brought to the market as automated driving is becoming one of the key trends
and an area with significant investments.
WIRELESS
In the Wireless Business Segment EB offers products and product platforms for
defense, public safety and other authorities markets as well as for industrial
use. Further EB offers product development services and customized solutions for
wireless communications markets and for companies needing wireless connectivity
for their products. EB's products in the Wireless Business Segment are the EB
Tactical Wireless IP Network for tactical communications, EB Tough VoIP for
tactical IP-based communication, EB Wideband COMINT Sensor for signals
intelligence. The product platforms are the Android-based EB Specialized Device
Platform and EB LTE Connectivity Module for specialized markets. For the latest
wireless technologies and applications EB offers a broad range of R&D services
such as consulting, integration, and development of software and hardware.
Development of the Wireless Business Segment in April - June 2014
Net sales of the Wireless Business Segment during the second quarter of 2014
decreased by 19.4 per cent year-on-year to EUR 12.4 million (EUR 15.4 million,
2Q 2013). The share of the product based net sales was EUR 2.3 million, which
resulted mainly from the product deliveries of the tactical communication system
to the Finnish Defence Forces and from the delivery of a batch of special
terminal products for the authority use to certain customer abroad.
Operating loss was EUR -0.9 million (operating profit EUR 0.6 million,
2Q 2013). The decrease in the net sales year-on-year and lower than expected
operating result were due to the decline in the demand for the mobile
telecommunications network equipment R&D services, delays in acquiring and
starting new R&D service projects and delays in some product deliveries.
EB aims at bringing its products to the global defense and other authority
markets, and expects to start gradually generating net sales from these markets
from the latter half of 2014 onwards. During the second quarter EB continued its
sales and marketing efforts and R&D investments into these markets.
R&D investments in the second quarter were EUR 1.8 million (EUR 1.0 million,
2Q 2013). R&D investments were increased for products for the authorities use.
On April 30, 2014 EB started personnel negotiations to adjust its cost structure
for the weakened order book for R&D services in the next few months. The
negotiations were concluded on May 15, and the company decided to temporarily
lay off at the maximum of 90 persons in the Wireless Business Segment With these
temporary dismissals EB targets cost savings of approximately EUR 0.8 million,
which would materialize mainly during the third quarter of the year.
In June EB told that it is developing an EB Tactical LTE Access Point solution
(Long Term Evolution, 4G) alongside its tactical communications products and
systems to enable the utilization of regular terminals designed for civilian use
in military purposes. This solution serves to establish a wireless broadband
access point to cover data transfer and a call service within a specific area of
the battlefield. EB presented its expanding product portfolio at the Eurosatory
2014 exhibition in Paris.
Wireless Business Segment Market Outlook
In the Wireless Business Segment, EB's customers operate in various industries,
each of them having own industry specific factors driving the demand. A common
factor creating demand among the whole customer base is the introduction of new
technologies. In 2014 the implementation of LTE (Long Term Evolution) technology
is expected to continue to be important technological change driving the demand.
Due to the long history in developing smart phones and mobile communication
devices, EB is in a good position to offer solutions, where e.g. mastering of
multi-radio technologies and end-to-end system architectures covering both
terminals and networks is needed.
Following factors are expected to create demand for EB's products and services
in 2014 and beyond:
* In the mobile infrastructure equipment market the use of LTE technology is
expected to continue strong. This creates the need for services for LTE base
station design. There is a wide range of frequencies allocated for LTE
globally thus creating a need to develop multiple products to cover the
market and creating demand for R&D services for design of product variants.
* The trend of adopting new commercial technologies, such as LTE, smart phones
and applications, is expected to continue in special verticals such as
public safety. The specific LTE frequency band allocations for authorities
create demand for customized LTE devices, such as EB's specialized
terminals, tablets and communication modules.
* The need for R&D services for connected devices for business or consumer
use, such as smart watch and other Wearable devices is evolving and creating
demand for customized solutions based on EB's product platforms.
* In the defense market's tactical communication the need for larger amounts
of information data grows, generating demand for broadband networks, such as
EB's customized IP (Internet Protocol) based tactical communications
solutions.
The general cost savings of the mobile telecommunications network companies
reflect as decrease in the demand for R&D services despite of the base station
development needs generated by the LTE technology.
EB aims at bringing its products to the global defense and other authorities
markets and expects to start gradually generating net sales from these markets
from the latter half of 2014 onwards. The public defense budget cuts affect
negatively on the demand for products and product development services in Europe
and also elsewhere in the world, and simultaneously increases the competition
between the suppliers.
The defense, national security and other authority markets are slowly developing
markets by their nature. They are characterized by long sales cycles driven by
purchasing programs of national governments, and the purchases of the selected
products take place over several years.
RESEARCH AND DEVELOPMENT
EB continued its investments in R&D for automotive software products and tools
in Automotive Business Segment, and in products and product platforms for the
defense and public safety markets in Wireless Business Segment.
The total R&D investments during January-June 2014 were EUR 8.4 million (EUR
9.9 million, 1H 2013), equaling 8.1% of the net sales (10.5%, 1H 2013). The
share of R&D investments in Automotive Business Segment was EUR 5.0 million (EUR
7.7 million, 1H 2013) and in Wireless Business Segment EUR 3.4 million (EUR 2.2
million, 1H 2013).
EUR 0.7 million of R&D investments was capitalized (EUR 0.0 million, 1H 2013).
The amount of capitalized R&D investments at the end of June 2014 was EUR 11.8
million (EUR 12.7 million, 30.6.2013). A significant part of these
capitalizations is related to customer agreements in Automotive Business
Segment, where future license fees, based on the actual car delivery volumes,
are expected to accumulate in the coming years. Depreciations of R&D investments
were EUR 0.8 million during the reporting period (EUR 0.8 million, 1H 2013).
The total negative effect, caused from research and development investments,
their capitalizations and their depreciation, on EB's income statement in
January-June 2014 was EUR- 8.5 million (EUR -10.7 million, 1H 2013).
OUTLOOK FOR 2014
EB expects for the year 2014 that net sales and operating result will grow from
the previous year (net sales of EUR 199.3 million and operating profit of EUR
8.1 million, in 2013). Net sales growth rate in 2014 is expected to be slower
than in the previous year (net sales growth 14.6 %, 2013). Operating profit in
the second half of the year is expected to be higher than in the first half
(operating profit of EUR 5.0 million, 1H 2014).
The demand for R&D services and software products of the Automotive Business
Segment is expected to continue good in the second half of the year, and
operating profit of Automotive Business Segment is expected to be at the same
level or better than in the first half of the year (operating profit of EUR 7.1
million, 1H 2014). Operating result of the Wireless Business Segment in the
second half of 2014 is expected to be positive (operating loss of EUR -2.0
million, 1H 2014). In the Wireless Business Segment in the second half of 2014,
the demand for R&D services is expected to recover and product-based net sales
is expected to grow compared to the first half of the year. EB aims at bringing
its Wireless Business Segment's products to the global defense and other
authority markets, and expects to start gradually generating net sales from
these markets from the latter half of 2014 onwards. In the second half of the
year the product-based net sales is expected to accumulate mainly from the
domestic customers and mainly during the fourth quarter.
More specific market outlook is presented under sections "Market outlook for the
Automotive Business Segment" and "Market outlook for the Wireless Business
Segment".
The profit outlook for the year 2014 does not include possible non-recurring
income or costs related to the reorganization cases of TerreStar Networks Inc.
More information about the reorganization cases of TerreStar Networks and the
amount of the receivables and collecting the receivables as well as other
uncertainties regarding the outlook is presented in the "Events after the review
period" and in the Report by the Board of Directors 2013, available at
http://annualreport.elektrobit.com.
RISKS AND UNCERTAINTIES
EB has identified a number of business, market and finance related risk factors
and uncertainties that can affect the level of sales and profits.
In April, according to the information EB has received, a supplier of
e.solutions GmbH, Parrot S.A, filed a lawsuit against e.solutions in the
Tribunal de Commerce de Paris (Commercial Court Paris) seeking to collect
damages in the amount of approximately EUR 18.4 million for loss of profit and
reputational damage. Based on the e.solutions' initial legal analysis the claim
is without merit both in terms of the grounds and the amount of the claim. Based
on the current estimate, the legal proceedings will not cause any such financial
obligation to e.solutions or to EB that would affect EB's profit outlook and
financial position. It is possible that, based on later information, this view
may need to be reconsidered. At the worst, Parrot's claim could result
significant negative impact on e.solutions' and EB's profit, cash flow and
financial position. More information about the Parrot's lawsuit is presented in
the stock exchange release, published on April 4, 2014.
More short-term description of the risks and uncertainties are described in the
report by the Board of Directors 2013. More information about risks and
uncertainties are presented at the company's internet pages at
www.elektrobit.com.
STATEMENT OF FINANCIAL POSITION AND FINANCING
The figures presented in the statement of financial position of June 30, 2014,
are compared with the statement of the financial position of December 31, 2013
(MEUR).
30.6.2014 31.12.2013
----------------------------------------------------------------
Non-current assets 44.9 46.1
----------------------------------------------------------------
Current assets 103.5 98.2
----------------------------------------------------------------
Total assets 148.4 144.4
----------------------------------------------------------------
Share capital 12.9 12.9
----------------------------------------------------------------
Other equity 70.4 68.8
----------------------------------------------------------------
Total shareholders' equity 83.3 81.7
----------------------------------------------------------------
Non-current liabilities 5.8 6.1
----------------------------------------------------------------
Current liabilities 59.3 56.5
----------------------------------------------------------------
Total shareholders' equity and liabilities 148.4 144.4
----------------------------------------------------------------
The cash flows during the period under review:
---------------------------------------------------------------------
+ net profit +/- adjustment of accrual basis items EUR +9.9 million
---------------------------------------------------------------------
+/- change in net working capital EUR -25.0 million
---------------------------------------------------------------------
- interest, taxes and dividends EUR -0.3 million
---------------------------------------------------------------------
= cash generated from operations EUR -15.4 million
---------------------------------------------------------------------
- net cash used in investment activities EUR -2.7 million
---------------------------------------------------------------------
- net cash used in financing EUR +5.9 million
---------------------------------------------------------------------
= net change in cash and cash equivalents EUR -12.1 million
---------------------------------------------------------------------
The increase of the net working capital during the review period resulted mainly
from the increas in accounts receivables and other non-interest bearing debt, as
well as from the decreased accounts payable, advance payments and other non-
interest bearing debts during the review period. Strong changes in the net
working capital were mainly caused by the timing of the payment milestones of
big projects.
The amount of accounts receivables and other receivables, booked in current
receivables, was EUR 71.6 million (EUR 54.3 million on December 31, 2013).
Accounts payable and other payables, booked in interest-free current
liabilities, were EUR 48.4 million (EUR 54.5 million on December 31, 2013). The
amount of non-depreciated consolidation goodwill at the end of the period under
review was EUR 19.4 million (EUR 19.3 million on December 31, 2013).
The amount of gross investments in the period under review was EUR 3.0 million.
Net investments for the reporting period totaled EUR 3.0 million. The total
amount of depreciation during the period under review was EUR 4.2 million,
including EUR 0.2 million of depreciation owing to business acquisitions in
Automotive Business Segment.
The amount of interest-bearing debt, including finance lease liabilities, at
the end of the reporting period was EUR 13.8 million (EUR 5.3 million on
December 31, 2013). The distribution of net financing expenses on the income
statement was as follows:
----------------------------------------------------------------
Interest, dividend and other financial income EUR 0.3 million
----------------------------------------------------------------
Interest expenses and other financial expenses EUR -0.2 million
----------------------------------------------------------------
foreign exchange gains and losses EUR -0.3 million
----------------------------------------------------------------
EB's equity ratio at the end of the period was 61.7% (65.1 % on December
31, 2013).
Cash and other liquid assets at the end of the reporting period were EUR 30.9
million (EUR 43.0 million on December 31, 2013). At the end of the review
period, EB had from Nordea Bank Plc. a committed credit facility agreement and a
revolving credit facility agreement of altogether EUR 20 million, valid until
June 30, 2014. At the end of the review period, EUR 9.3 million of these
facilities was in use. In July EB signed a EUR 10 million credit facility
agreement with Nordea Bank Finland Plc. and a EUR 10 million credit facility
agreement with Pohjola Bank Plc. These agreements, intended for general
financing purposes, are valid until June 30, 2017.
EB follows a hedging strategy, the objective of which is to ensure the margins
of business operations in changing market circumstances by minimizing the
influence of exchange rates. In accordance with the hedging strategy, the agreed
customer commitments net cash flow of the currency in question is hedged. The
net cash flow is determined on the basis of sales receivables, payables, the
order book and the budgeted net currency cash flow. The hedged foreign currency
exposure at the end of the review period was equivalent to 11.0 million.
PERSONNEL
The parent company of the group and its subsidiaries employed an average of
1659 people between January and June 2014. In addition, e.solutions GmbH, the
jointly owned company of EB and AUDI, employed 350 people. At the end of June,
the parent company of the group and its subsidiaries had 1661 employees and
e.solutions GmbH 372 employees (1648 in group's parent company and subsidiaries
and e.solutions GmbH 321 at the end of 2013). A significant part of EB's
personnel are R&D engineers.
CHANGES IN THE COMPANY'S MANAGEMENT
Kari Jokela (LL.M. / Mag.Iur.), 45, was appointed Chief Legal Officer of
Elektrobit Corporation as of September 1, 2014. He will report to Jukka Harju,
CEO. Kari Jokela has been working for EB as Senior Legal Counsel since 2007 in
both Automotive and Wireless Business Segments in Finland and in Germany, having
the focus on business agreements. Before that, he has worked as Legal Counsel in
Polar Electro Ltd and in Attorneys Office Gilbert, Segall and Young Ltd. On May
7, 2014 EB announced that the employment of Päivi Timonen, Chief Legal Officer,
will end in the autumn 2014 as she will assume a new role outside of EB.
FLAGGING NOTIFICATIONS
EB received on May 12, 2014 a flagging announcement pursuant to chapter 9,
section 10 of the Finnish Securities Markets Act according to which the holdings
of the shares and voting rights of Juha Hulkko have decreased below the 20 per
cent flagging threshold.
EVENTS AFTER THE REVIEW PERIOD
EB signed EUR 10.0 million credit facility agreement with Nordea Bank Finland
Plc and EUR 10.0 million credit facility agreement with Pohjola Bank Plc on July
2, 2014. These agreements, intended for general financing purposes, are valid
until June 30, 2017 and include conventional covenants that are, among others,
related to equity ratio, transfer and pledge of the assets. These credit
facility agreements replaced EUR 20.0 million credit facilities from Nordea Bank
Suomi Plc, which were valid until 30.6.2014.
Subsidiary of Elektrobit Corporation, Elektrobit Inc. and the TerreStar Networks
Inc. liquidating trustee entered into a conditional settlement agreement in the
liquidation case. On July 10, 2014, the trustee filed a motion with the United
States Bankruptcy Court seeking approval of the settlement. According to the
settlement, if the conditions to its effectiveness are fulfilled (as described
in more detail in the stock exchange release of July 11, 2014), the trust shall
be obligated to pay to EB, an immediate cash payment of USD 1,075,000 (EUR 0.8
million as per exchange rate of August 6, 2014) in full and final satisfaction
of its claims against TerreStar Networks and in resolution of all disputes
between EB and the bankruptcy estate of TerreStar Networks and certain of its
subsidiaries and affiliates.
If the settlement is approved by the Bankruptcy Court and becomes effective by
its terms, the settlement payment would be paid within ten days after the
settlement becomes effective, i.e. during the third year quarter of 2014. The
settlement payment would result a non-recurring positive effect of approximately
EUR 0.8 million as on Elektrobit Corporation's operating result and a positive
effect on Elektrobit Corporation's cash flow of approximately EUR 0.8 million on
the third quarter 2014. The profit outlook for the year 2014 does not include
possible non-recurring income or costs related to the reorganization cases of
TerreStar Networks Inc. This settlement follows a settlement agreement
previously entered into between EB and TerreStar Corporation and certain of its
preferred shareholders in TerreStar Corporation's Chapter 11 reorganization case
in August 2012. Pursuant to that settlement, on August 28, 2012 Elektrobit Inc.
received USD 13.5 million in full and final satisfaction of EB's claim against
that entity and the parties exchanged mutual releases.
The full implications of the TerreStar Networks and TerreStar Corporation
Chapter 11 cases on EB's profit, financial position and outlook can be finally
determined only when EB has accounted for all costs related to collecting the
receivables and the tax treatment of its receivables is confirmed. As more fully
discussed in EB's interim reports and financial statement at www.elektrobit.com
, EB has appealed a ruling by the U.S. Internal Revenue Service ("IRS")
disallowing a deduction taken on Elektrobit Corporation's subsidiary's,
Elektrobit Inc.'s 2010 U.S. federal income tax return for the impairment of the
receivables from the TerreStar companies. The appeal is presently pending before
the IRS Office of Appeals.
More information about the uncertainties concerning the conditional agreement of
settlement with the liquidating trustee of The Liquidating Trust, reorganization
cases, possible proportional share and the amount of the receivables and
collecting the receivables are presented in more detail in the company's stock
exchange release announced on July 11, 2014 and in the Report by the Board of
Directors 2013 in the company's internet pages at
www.annualreport.elektrobit.com.
Oulu August 7, 2014
Elektrobit Corporation
The Board of Members
Further Information:
Jukka Harju
CEO
Tel. +358 40 344 5466
Distribution:
NASDAQ OMX Helsinki
Major media
ELEKTROBIT CORPORATION (EB)
CONDENSED FINANCIAL STATEMENTS and notes january - JUNE 2014
(unaudited)
The Interim Report has been prepared in accordance with IAS 34 Interim Financial
Reporting.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1-6/2014 1-6/2013 1-12/2013
(MEUR) 6 months 6 months 12 months
Continuing operations
-------------------------------------------------------------------------------
NET SALES 103.9 94.1 199.3
-------------------------------------------------------------------------------
Other operating income 1.8 2.0 3.5
-------------------------------------------------------------------------------
Change in work in progress and finished goods 0.0 -0.0 -0.0
-------------------------------------------------------------------------------
Work performed by the undertaking for its own 0.1 0.0
purpose and capitalized
-------------------------------------------------------------------------------
Raw materials -8.6 -4.2 -12.4
-------------------------------------------------------------------------------
Personnel expenses -61.8 -57.7 -113.2
-------------------------------------------------------------------------------
Depreciation -4.2 -4.4 -9.0
-------------------------------------------------------------------------------
Other operating expenses -26.0 -28.4 -60.0
-------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 5.0 1.4 8.1
-------------------------------------------------------------------------------
Financial income and expenses -0.2 -0.6 -0.9
-------------------------------------------------------------------------------
PROFIT BEFORE TAX 4.7 0.8 7.2
-------------------------------------------------------------------------------
Income tax -1.2 -0.0 -0.6
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS 3.6 0.8 6.7
-------------------------------------------------------------------------------
Discontinued operations
-------------------------------------------------------------------------------
Profit for the year from discontinued operations 23.6 24.3
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 3.6 24.4 30.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Other comprehensive income:
-------------------------------------------------------------------------------
Items that will not be reclassified to statement
of income
-------------------------------------------------------------------------------
Re-measurement gains (losses) on defined 0.0
benefit plans
-------------------------------------------------------------------------------
Items that may be reclassified subsequently to the
statement of income
-------------------------------------------------------------------------------
Exchange differences on translating foreign 0.2 0.2 -0.0
operations
-------------------------------------------------------------------------------
Other comprehensive income for the period total 0.2 0.2 -0.0
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3.8 24.6 30.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Profit for the year attributable to
-------------------------------------------------------------------------------
Equity holders of the parent 3,6 24.4 30.9
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total comprehensive income for the period
attributable to
-------------------------------------------------------------------------------
Equity holders of the parent 3.8 24.6 30.9
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.027 0.006 0.051
-------------------------------------------------------------------------------
Diluted earnings per share 0.027 0.006 0.051
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from discontinued operations,
EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.182 0.188
-------------------------------------------------------------------------------
Diluted earnings per share 0.181 0.187
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing and
discontinued operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.027 0.189 0.239
-------------------------------------------------------------------------------
Diluted earnings per share 0.027 0.187 0.238
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Average number of shares, 1000 pcs 130 693 129 413 129 528
-------------------------------------------------------------------------------
Average number of shares, diluted, 1000 pcs 131 462 130 338 130 092
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL June 30, 2014 June 30, 2013 Dec. 31, 2013
POSITION (MEUR)
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Non-current assets
-------------------------------------------------------------------------------
Property, plant and equipment 9.1 9.3 9.7
-------------------------------------------------------------------------------
Goodwill 19.4 19.3 19.3
-------------------------------------------------------------------------------
Intangible assets 14.7 16.5 15.5
-------------------------------------------------------------------------------
Other financial assets 0.1 0.1 0.1
-------------------------------------------------------------------------------
Deferred tax assets 1.5 1.1 1.5
-------------------------------------------------------------------------------
Non-current assets total 44.9 46.4 46.1
-------------------------------------------------------------------------------
Current assets
-------------------------------------------------------------------------------
Inventories 1.0 0.5 0.8
-------------------------------------------------------------------------------
Trade and other receivables 71.6 58.0 54.3
-------------------------------------------------------------------------------
Financial assets at fair value 20.9 34.8 20.7
through profit or loss
-------------------------------------------------------------------------------
Cash and short term deposits 10.0 7.3 22.4
-------------------------------------------------------------------------------
Current assets total 103.5 100.5 98.2
-------------------------------------------------------------------------------
Assets classified as held for sale
-------------------------------------------------------------------------------
TOTAL ASSETS 148.4 146.9 144.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity attributable to equity
holders of the parent
-------------------------------------------------------------------------------
Share capital 12.9 12.9 12.9
-------------------------------------------------------------------------------
Invested non-restricted equity 24.9 38.7 24.5
fund
-------------------------------------------------------------------------------
Translation difference 0.8 0.8 0.6
-------------------------------------------------------------------------------
Retained earnings 44.7 37.0 43.7
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
Total equity 83.3 89.5 81.7
-------------------------------------------------------------------------------
Non-current liabilities
-------------------------------------------------------------------------------
Deferred tax liabilities 0.5 0.5 0.5
-------------------------------------------------------------------------------
Pension obligations 2.1 2.0 2.1
-------------------------------------------------------------------------------
Provisions 0.3 0.4 0.3
-------------------------------------------------------------------------------
Interest-bearing liabilities 2.9 5.0 3.3
-------------------------------------------------------------------------------
Non-current liabilities total 5.8 7.8 6.1
-------------------------------------------------------------------------------
Current liabilities
-------------------------------------------------------------------------------
Trade and other payables 45.4 36.0 52.2
-------------------------------------------------------------------------------
Financial liabilities at fair 0.0
value through profit or loss
-------------------------------------------------------------------------------
Provisions 3.0 2.1 2.3
-------------------------------------------------------------------------------
Interest-bearing loans and 10.9 11.4 2.0
borrowings
-------------------------------------------------------------------------------
Current liabilities total 59.3 49.6 56.5
-------------------------------------------------------------------------------
Liabilities classified as held for
sale
-------------------------------------------------------------------------------
Total liabilities 65.1 57.4 62.6
-------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 148.4 146.9 144.4
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-6/2014 1-6/2013 1-12/2013
6 months 6 months 12 months
-------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
-------------------------------------------------------------------------------
Profit for the year from continuing operations 3.6 0.8 6.7
-------------------------------------------------------------------------------
Profit for the year from discontinued operations 23.6 24.3
-------------------------------------------------------------------------------
Adjustment of accrual basis items 6.4 -18.3 -13.3
-------------------------------------------------------------------------------
Change in net working capital -25.0 0.2 18.7
-------------------------------------------------------------------------------
Interest paid on operating activities -0.2 -0.7 -1.3
-------------------------------------------------------------------------------
Interest received from operating activities 0.3 0.1 0.3
-------------------------------------------------------------------------------
Other financial income and expenses, net received 0.0 0.0 0.0
-------------------------------------------------------------------------------
Income taxes paid -0.4 -0.3 -0.7
-------------------------------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES -15.4 5.4 34.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
-------------------------------------------------------------------------------
Acquisition of business unit, net of cash acquired 29.2 30.0
-------------------------------------------------------------------------------
Purchase of property, plant and equipment -1.4 -2.2 -4.0
-------------------------------------------------------------------------------
Purchase of intangible assets -1.3 -0.8 -2.0
-------------------------------------------------------------------------------
Sale of property, plant and equipment 0.0 0.2 0.2
-------------------------------------------------------------------------------
Sale of intangible assets 0.0 0.0 0.0
-------------------------------------------------------------------------------
Proceeds from sale of investments 0.0
-------------------------------------------------------------------------------
NET CASH FROM INVESTING ACTIVITIES -2.7 26.3 24.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
-------------------------------------------------------------------------------
Share-option plans exercised 0.4 0.0 0.1
-------------------------------------------------------------------------------
Proceeds from borrowing 16.2 14.3 16.6
-------------------------------------------------------------------------------
Repayment of borrowing -7.1 -15.4 -28.4
-------------------------------------------------------------------------------
Payment of finance liabilities -0.9 -1.6 -3.1
-------------------------------------------------------------------------------
Dividend paid and repayment of capital -2.6 -1.3 -15.6
-------------------------------------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES 5.9 -3.9 -30.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS -12.1 27.8 28.7
-------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 43.0 14.3 14.3
-------------------------------------------------------------------------------
Cash and cash equivalents at end of period 30.9 42.1 43.0
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (MEUR)
-------------------------------------------------------------------
A = Share capital
-------------------------------------------------------------------
B = Invested non-restricted equity fund
-------------------------------------------------------------------
C = Translation difference
-------------------------------------------------------------------
D = Retained earnings
-------------------------------------------------------------------
F = Non-controlling interests
-------------------------------------------------------------------
G = Total equity
-------------------------------------------------------------------
Restated A B C D E F
--------------------------------------------------------------------------
Shareholders equity on December 31, 2012 12.9 38.7 0.6 14.3 66.6
--------------------------------------------------------------------------
Change in accounting policy (IAS 19) -0.6 -0.6
--------------------------------------------------------------------------
Shareholders equity on January 1, 2013 restated 12.9 38.7 0.6 13.8 66.0
--------------------------------------------------------------------------
Comprehensive income for the period
--------------------------------------------------------------------------
Profit for the period 24.4 24.4
--------------------------------------------------------------------------
Exchange differences on translating foreign 0.2 0.2
operations
--------------------------------------------------------------------------
Total comprehensive income for the period 0.2 24.4 24.6
--------------------------------------------------------------------------
Transactions between the shareholders
--------------------------------------------------------------------------
Dividend distribution -1.3 -1.3
--------------------------------------------------------------------------
Share option plans exercised 0.0 0.0
--------------------------------------------------------------------------
Share-related compensation 0.1 0.1
--------------------------------------------------------------------------
Total transactions between the shareholders 0.0 -1.2 -1.2
--------------------------------------------------------------------------
Other changes 0.0 0.0
--------------------------------------------------------------------------
Shareholders equity on June 30, 2013 12.9 38.7 0.8 37.0 89.5
--------------------------------------------------------------------------
A B C D E F
------------------------------------------------------------------------
Shareholders equity on Jan. 1, 2014 12.9 24.5 0.6 43.7 81.7
------------------------------------------------------------------------
Comprehensive income for the period
------------------------------------------------------------------------
Profit for the period 3.6 3.6
------------------------------------------------------------------------
Exchange differences on translating foreign 0.2 0.2
operations
------------------------------------------------------------------------
Total comprehensive income for the period 0.2 3.6 3.8
------------------------------------------------------------------------
Transactions between the shareholders
------------------------------------------------------------------------
Dividend distribution -2.6 -2.6
------------------------------------------------------------------------
Share option plans exercised 0.4 0.4
------------------------------------------------------------------------
Share-related compensation 0.1 0.1
------------------------------------------------------------------------
Total transactions between the shareholders 0.4 -2.5 -2,1
------------------------------------------------------------------------
Other changes 0.0 0.0
------------------------------------------------------------------------
Shareholders equity on June 30, 2014 12.9 24.9 0.8 44.7 83.3
------------------------------------------------------------------------
NOTES TO THE interim Financial reporting
Accounting principles for the interim financial reporting:
The Interim Report has been prepared in accordance with IAS 34 Interim Financial
Reporting. Elektrobit Corporation has applied the same accounting principles in
the preparation of this Interim Report as in its Financial Statements for 2013,
except for the adoption of new standards and interpretations effective during
2014. The changes did not have material impact on the Interim Report.
SEGMENT-INFORMATIOn (MEUR)
OPERATING SEGMENTS 1-6/2014 1-6/2013 1-12/2013
6 months 6 months 12 months
--------------------------------------------------------------
Automotive
--------------------------------------------------------------
Net sales to external customers 77.3 63.0 138.2
--------------------------------------------------------------
Net sales to other segments 0.0 0.1 0.1
--------------------------------------------------------------
Net sales total 77.3 63.0 138.3
--------------------------------------------------------------
--------------------------------------------------------------
Operating profit (loss) 7.1 1.2 8.5
--------------------------------------------------------------
--------------------------------------------------------------
Wireless
--------------------------------------------------------------
Net sales to external customers 26.6 31.2 61.1
--------------------------------------------------------------
Net sales to other segments 0.1 0.1 0.1
--------------------------------------------------------------
Net sales total 26.6 31.2 61.2
--------------------------------------------------------------
--------------------------------------------------------------
Operating profit (loss) -2.0 0.1 -0.5
--------------------------------------------------------------
--------------------------------------------------------------
OTHER ITEMS
--------------------------------------------------------------
--------------------------------------------------------------
Other items
--------------------------------------------------------------
Net sales to external customers
--------------------------------------------------------------
Operating profit (loss) -0.0 0.1 0.1
--------------------------------------------------------------
--------------------------------------------------------------
Eliminations
--------------------------------------------------------------
Net sales to other segments -0.1 -0.1 -0.2
--------------------------------------------------------------
Operating profit (loss) 0.0 0.0 0.0
--------------------------------------------------------------
--------------------------------------------------------------
Group total
--------------------------------------------------------------
Net sales to external customers 103.9 94.1 199.3
--------------------------------------------------------------
Operating profit (loss) 5.0 1.4 8.1
--------------------------------------------------------------
Net sales of geographical areas (MEUR) 1-6/2014 1-6/2013 1-12/2013
6 months 6 months 12 months
-------------------------------------------------------------------
Net sales
-------------------------------------------------------------------
Europe 85.8 77.9 164.8
-------------------------------------------------------------------
Americas 13.8 12.6 26.6
-------------------------------------------------------------------
Asia 4.3 3.7 7.9
-------------------------------------------------------------------
Net sales total 103.9 94.1 199.3
-------------------------------------------------------------------
Related party transactions 1-6/2014 1-6/2013 1-12/2013
6 months 6 months 12 months
-------------------------------------------------------------------------------
Employee benefits for key management and stock 0.7 0.6 1.2
options expenses total
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF 4-6/2014 1-3/2014 10-12/2013 7-9/2013 4-6/2013
COMPREHENSIVE INCOME BY QUARTER 3 months 3 months 3 months 3 months 3 months
(MEUR)
Continuing operations
-------------------------------------------------------------------------------
NET SALES 52.2 51.7 59.5 45.7 47.9
-------------------------------------------------------------------------------
Other operating income 1.1 0.6 0.7 0.9 1.0
-------------------------------------------------------------------------------
Change in work in progress and 0.0 0.0 -0.1 0.1 -0.1
finished goods
-------------------------------------------------------------------------------
Work performed by the 0.1 0.0
undertaking for its own purpose
and capitalized
-------------------------------------------------------------------------------
Raw materials -3.6 -5.1 -6.3 -2.0 -1.9
-------------------------------------------------------------------------------
Personnel expenses -30.5 -31.4 -28.8 -26.6 -28.9
-------------------------------------------------------------------------------
Depreciation -2.1 -2.2 -2.4 -2.3 -2.2
-------------------------------------------------------------------------------
Other operating expenses -14.2 -11.8 -17.0 -14.7 -15.2
-------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 3.1 1.9 5.7 1.0 0.7
-------------------------------------------------------------------------------
Financial income and expenses -0.3 0.0 -0.2 -0.1 -0.5
-------------------------------------------------------------------------------
PROFIT BEFORE TAX 2.8 1.9 5.5 0.9 0.2
-------------------------------------------------------------------------------
Income tax -1.0 -0.2 -0.4 -0.1 0.0
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD FROM 1.8 1.7 5.0 0.8 0.2
CONTINUING OPERATIONS
-------------------------------------------------------------------------------
Discontinued operations
-------------------------------------------------------------------------------
Profit for the period from 0.7 0.0
discontinued operations
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 1.8 1.7 5.0 1.5 0.2
-------------------------------------------------------------------------------
Other comprehensive income 0.3 -0.1 -0.1 -0.1 0.2
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR 2.1 1.6 4.9 1.4 0.4
THE PERIOD
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Profit for the period
attributable to:
-------------------------------------------------------------------------------
Equity holders of the parent 1.8 1.7 5.0 1.5 0.2
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
Total comprehensive income for
the period attributable to:
-------------------------------------------------------------------------------
Equity holders of the parent 2.1 1.6 4.9 1.4 0.4
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
CONSOLIDATED Jun. Mar. Dec. Sept. Jun.
STATEMENT OF 30, 2014 31, 2014 31, 2013 30, 2013 30, 2013
FINANCIAL
POSITION (MEUR)
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Non-current
assets-------------------------------------------------------------------------------
Property, 9.1 9.3 9.7 9.3 9.3
plant and
equipment
-------------------------------------------------------------------------------
Goodwill 19.4 19.4 19.3 19.3 19.3
-------------------------------------------------------------------------------
Intangible 14.7 14.8 15.5 16.2 16.5
assets
-------------------------------------------------------------------------------
Other 0.1 0.1 0.1 0.1 0.1
financial assets
-------------------------------------------------------------------------------
Deferred tax 1.5 1.5 1.5 1.2 1.1
assets
-------------------------------------------------------------------------------
Non-current 44.9 45.1 46.1 46.1 46.4
assets total
-------------------------------------------------------------------------------
Current assets
-------------------------------------------------------------------------------
Inventories 1.0 0.9 0.8 0.8 0.5
-------------------------------------------------------------------------------
Trade and 71.6 55.3 54.3 60.2 58.0
other
receivables
-------------------------------------------------------------------------------
Financial
assets at fair 20.9 20.8 20.7 35.0 34.8
value through
profit or
loss
-------------------------------------------------------------------------------
Cash and short 10.0 21.8 22.4 9.0 7.3
term deposits
-------------------------------------------------------------------------------
Current assets 103.5 98.8 98.2 105.0 100.5
total
-------------------------------------------------------------------------------
TOTAL ASSETS 148.4 144.0 144.4 151.1 146.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EQUITY AND
LIABILITIES
-------------------------------------------------------------------------------
Equity
attributable to
equity holders
of the parent
-------------------------------------------------------------------------------
Share capital 12.9 12.9 12.9 12.9 12.9
-------------------------------------------------------------------------------
Invested non- 24.9 24.8 24.5 38.7 38.7
restricted
equity fund
-------------------------------------------------------------------------------
Translation 0.8 0.5 0.6 0.7 0.8
difference
-------------------------------------------------------------------------------
Retained 44.7 45.4 43.7 38.6 37.0
earnings
-------------------------------------------------------------------------------
Non-
controlling
interests
-------------------------------------------------------------------------------
Total equity 83.3 83.7 81.7 91.0 89.5
-------------------------------------------------------------------------------
Non-current
liabilities
-------------------------------------------------------------------------------
Deferred tax 0.5 0.5 0.5 0.5 0.5
liabilities
-------------------------------------------------------------------------------
Pension 2.1 2.1 2.1 2.1 2.0
obligations
-------------------------------------------------------------------------------
Provisions 0.3 0.5 0.3 0.3 0.4
-------------------------------------------------------------------------------
Interest- 2.9 3.0 3.3 7.2 5.0
bearing
liabilities
-------------------------------------------------------------------------------
Non-current 5.8 6.1 6.1 10.1 7.8
liabilities
total
-------------------------------------------------------------------------------
Current
liabilities
-------------------------------------------------------------------------------
Trade and 45.4 43.5 52.2 38.5 36.0
other payables
-------------------------------------------------------------------------------
Financial 0.0
liabilities at
fair value
through
profit or loss
-------------------------------------------------------------------------------
Provisions 3.0 2.3 2.3 2.0 2.1
-------------------------------------------------------------------------------
Interest- 10.9 8.3 2.0 9.6 11.4
bearing loans
and borrowings
-------------------------------------------------------------------------------
Current 59.3 54.1 56.5 50.1 49.6
liabilities
total
-------------------------------------------------------------------------------
Liabilities
classified as
held for sale
-------------------------------------------------------------------------------
Total 65.1 60.3 62.6 60.2 57.4
liabilities
-------------------------------------------------------------------------------
TOTAL EQUITY AND 148.4 144.0 144.4 151.1 146.9
LIABILITIES
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH 4-6/2014 1-3/2014 10-12/2013 7-9/2013 4-6/2013
FLOWS BY QUARTER 3 months 3 months 3 months 3 months 3 months
-------------------------------------------------------------------------------
Net cash from operating -9.7 -5.7 26.0 3.3 4.1
activities
-------------------------------------------------------------------------------
Net cash from investing -1.7 -1.0 -0.3 -1.6 -1.5
activities
-------------------------------------------------------------------------------
Net cash from financing -0.3 6.2 -26.5 0.1 -4.1
activities
-------------------------------------------------------------------------------
Net change in cash and cash -11.6 -0.5 -0.9 1.8 -1.5
equivalents
-------------------------------------------------------------------------------
FINANCIAL PERFORMANCE RELATED RATIOS 1-6/2014 1-6/2013 1-12/2013
6 months 6 months 12 months
-------------------------------------------------------------------------------
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
-------------------------------------------------------------------------------
Net sales 103.9 94.1 199.3
-------------------------------------------------------------------------------
Operating profit (loss) 5.0 1.4 8.1
-------------------------------------------------------------------------------
Operating profit (loss), % of net sales 4.8 1.5 4.1
-------------------------------------------------------------------------------
Profit before taxes 4.7 0.8 7.2
-------------------------------------------------------------------------------
Profit before taxes, % of net sales 4.6 0.9 3.6
-------------------------------------------------------------------------------
Profit for the period 3.6 0.8 6.7
-------------------------------------------------------------------------------
PROFITABILITY AND OTHER KEY FIGURES
-------------------------------------------------------------------------------
Interest-bearing net liabilities, (MEUR) -17.1 -25.7 -37.7
-------------------------------------------------------------------------------
Net gearing, -% -20.6 -28.7 -46.1
-------------------------------------------------------------------------------
Equity ratio, % 61.7 64.0 65.1
-------------------------------------------------------------------------------
Gross investments, (MEUR) 3.0 3.9 7.9
-------------------------------------------------------------------------------
Average personnel during the period, parent and 1659 1608 1627
subsidiaries
-------------------------------------------------------------------------------
Personnel at the period end, parent and 1661 1648 1648
subsidiaries
-------------------------------------------------------------------------------
Average personnel during the period, jointly owned 350 283 300
company
-------------------------------------------------------------------------------
Personnel at the period end, jointly owned company 372 303 321
-------------------------------------------------------------------------------
AMOUNT OF SHARE ISSUE ADJUSTMENT Jun. 30, 2014 Jun. 30, 2013 Dec. 31, 2013
(1,000 pcs)
-------------------------------------------------------------------------------
At the end of period 131 191 129 413 130 101
-------------------------------------------------------------------------------
Average for the period 130 693 129 413 129 528
-------------------------------------------------------------------------------
Average for the period diluted with 131 462 130 338 130 092
stock options
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1-6/2014 1-6/2013 1-12/2013
STOCK-RELATED FINANCIAL RATIOS 6 months 6 months 12 months
(EUR)
-------------------------------------------------------------------------------
Earnings per share from continuing
operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.027 0.006 0.051
-------------------------------------------------------------------------------
Diluted earnings per share 0.027 0.006 0.051
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from discontinued
operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.182 0.188
-------------------------------------------------------------------------------
Diluted earnings per share 0.181 0.187
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing
and discontinued operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.027 0.189 0.239
-------------------------------------------------------------------------------
Diluted earnings per share 0.027 0.187 0.238
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity *) per share 0.64 0.69 0.63
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
*) Equity attributable to equity
holders of the parent
-------------------------------------------------------------------------------
MARKET VALUES OF SHARES (EUR) 1-6/2013 1-6/2013 1-12/2012
6 months 6 months 12 months
------------------------------------------------------------------
Highest 3.23 1.06 2.90
------------------------------------------------------------------
Lowest 2.35 0.64 0.64
------------------------------------------------------------------
Average 2.71 0.85 1.55
------------------------------------------------------------------
At the end of period 2.69 1.03 2.66
------------------------------------------------------------------
------------------------------------------------------------------
Market value of the stock, (MEUR) 352.9 133.3 346.1
------------------------------------------------------------------
Trading value of shares, (MEUR) 112.1 7.6 72.0
------------------------------------------------------------------
Number of shares traded, (1,000 pcs) 41 335 8 965 46 483
------------------------------------------------------------------
Related to average number of shares % 31.6 6.9 35.9
------------------------------------------------------------------
SECURITIES AND CONTINGENT Jun. 30, 2014 Jun. 30, 2013 Dec. 31, 2013
LIABILITIES (MEUR)
-------------------------------------------------------------------------------
AGAINST OWN LIABILITIES
-------------------------------------------------------------------------------
Floating charges 18.0 18.0 18.0
-------------------------------------------------------------------------------
Guarantees 15.2 13.8 14.6
-------------------------------------------------------------------------------
Rental liabilities
-------------------------------------------------------------------------------
Falling due in the next year 7.5 6.7 7.6
-------------------------------------------------------------------------------
Falling due after one year 15.4 14.7 17.6
-------------------------------------------------------------------------------
Other contractual liabilities
-------------------------------------------------------------------------------
Falling due in the next year 0.7 1.4 1.0
-------------------------------------------------------------------------------
Falling due after one year 0.4 0.3 0.6
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Mortgages are pledged for 11.1 13.1 2.5
liabilities totaled
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NOMINAL VALUE OF CURRENCY Jun. 30, 2014 Jun. 30, 2014 Dec. 31, 2013
DERIVATIVES (MEUR)
-------------------------------------------------------------------------------
Foreign exchange forward contracts
-------------------------------------------------------------------------------
Market value -0.0 0.0 0.1
-------------------------------------------------------------------------------
Nominal value 6.0 5.0 6.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Purchased currency options
-------------------------------------------------------------------------------
Market value 0.1 0.1 0.0
-------------------------------------------------------------------------------
Nominal value 5.0 4.0 2.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Sold currency options
-------------------------------------------------------------------------------
Market value -0.0 -0.1 -0.0
-------------------------------------------------------------------------------
Nominal value 8.0 8.0 5.0
-------------------------------------------------------------------------------
[HUG#1847070]
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