2014-05-07 08:00:02 CEST
2014-05-07 08:00:05 CEST
REGULATED INFORMATION
Exel Composites Oyj - Interim report (Q1 and Q3)
Exel Composites Plc's interim report for January 1 - March 31, 2014
EXEL COMPOSITES PLC INTERIM REPORT 7.5.2014 at 9.00
1 (12)
EXEL COMPOSITES PLC'S INTERIM REPORT FOR JANUARY 1 - MARCH 31, 2014
Q1 in brief:
- Net sales increased to 17.8 MEUR, up by 5.4 per cent from previous year
(Q1/2013:16.9 MEUR)
- Operating profit was 1.9 (0.7) MEUR, up by 184 per cent from previous year
- Operating profit margin was 10.6 (3.9) per cent of net sales
- Net operative cash flow was positive at +0.6 (+0.7) MEUR
- Fully diluted earnings per share were 0.09 (0.05) EUR
Near-term outlook
The market has stabilized but remains challenging. Uncertainties relating to
general growth prospects in the economy continue. Some positive signs can be
seen especially in the laminate and demanding carbon tube markets. The Company
invests in growth by reinforcing the organization, especially in sales and
operations development. The Company will monitor the general market development
and react with additional measures if needed. The Company is well-positioned to
grow profitably when the markets recover.
President and CEO Riku Kytömäki:
Exel Composites' net sales for the first quarter increased by 5.4 per cent from
the corresponding period in 2013 from EUR 16.9 million to EUR 17.8 million. Our
order backlog improved to EUR 14.3 million in the first quarter of 2014 from
EUR 10.5 million in the last quarter of 2013, corresponding to a 36 per cent
increase.
In some markets, such as cleaning and maintenance, machine industry and general
industries, we started to see early signs of improvement, but generally the
market remains challenging.
Exel Composites' operating profit nearly tripled from EUR 0.7 million to EUR
1.9 million due to our efficiency improvement and better cost control. We
continued to develop the Group's operations in order to further enhance
productivity and synergies across the units.
CONSOLIDATED KEY FIGURES, EUR million
(unaudited)
1.1. - 1.1.-31.3. Change, % 1.1. -
31.3. 2013 31.12.
2014 2013
Net sales 17.8 16.9 5.4 69.3
Operating profit 1.9 0.7 183.8 4.8
% of net sales 10.6 3.9 7.0
Cash flow from operations 0.6 0.7 7.8
Capital expenditure 0.7 0.6 2.8
Return on capital employed, % 21.1 7.1 13.0
Net gearing, % 14.1 -4.0 15.0
Earnings per share, EUR 0.09 0.05 0.26
Market environment
Market demand increased in the cleaning and maintenance, machine industry and
general industries compared to the corresponding period in 2013. Market demand
decreased in the electrical industry and sports and leisure industry compared
to the corresponding period in 2013.
Order intake and order backlog
Order intake increased in the first quarter by 18.5 per cent to EUR 21.8 (18.4)
million on the corresponding period in 2013.
The Group's order backlog increased to EUR 14.3 (11.8) million on 31 March
2014. The order backlog improved by 36 per cent from EUR 10.5 million in the
last quarter of 2013.
Sales review January-March 2014
Group net sales increased 5.4 per cent to EUR 17.8 (16.9) million on the
corresponding period in 2013.
Net sales increased in the largest region, Europe, by 13.4 per cent compared to
the corresponding period in 2013. The APAC region declined by 30.7 per cent.
The decline in APAC was mainly related to the Australian market, where the
decline was partly due to a one-off project recorded in the first quarter of
2013.
Sales of Industrial applications increased to EUR 9.8 million from EUR 9.5
million in the corresponding period in 2013. Sales increased especially to the
machine, transportation and energy industries.
Sales of Construction and Infrastructure applications in the first quarter of
2014 decreased by 4.7 per cent compared to the corresponding period in 2013.
The decrease was due to a one-off project recorded in the first quarter of 2013
in the Australian unit.
Sales of Other applications grew by 28.0 per cent compared to the corresponding
period in 2013. Sales increased in the cleaning and maintenance market
applications, but decreased in the general industries market applications.
Sports and leisure market applications were stable.
Net sales by Region
MEUR I/2014 I/2013 Change, % I -IV
2013
Europe 15.1 13.4 13.2 56.0
APAC 2.0 2.8 -30.7 10.6
Rest of world 0.7 0.7 2.4 2.7
Total 17.8 16.9 5.4 69.3
Sales by Customer Industry
MEUR I/2014 I/2013 Change, % I -IV
2013
Construction and infrastructure 4.1 4.3 -4.7 15.8
Industrial applications 9.8 9.5 2.8 40.7
Other applications 3.9 3.0 28.0 12.8
Total 17.8 16.9 5.4 69.3
Financial performance
The Group's operating profit continued to develop positively in the first
quarter of 2014 thanks to efficiency improvement, lower material spend, and
better cost control. The Group's operating profit in the first quarter of 2014
was EUR 1.9 (0.7) million or 10.6 (3.9) per cent of net sales.
The turnaround measures in Australia, including change in the operating model
and transfer of Brisbane unit to Melbourne, have been completed but have not
yet resulted in satisfactory profitability. The focus is on generating more
sales.
The Group's net financial expenses during the period under review were EUR 0.2
(0.0) million. The Group's profit before taxes was EUR 1.7 (0.7) million and
profit after taxes EUR 1.1 (0.6) million.Financial position
Net cash flow from operating activities was positive at EUR +0.6 (+0.7) million
due to improved operating profit. However, working capital increased in the
review period. Cash flow before financing, but after capital expenditure,
amounted to EUR 0.0 (0.1) million. The capital expenditure on fixed assets
amounted to EUR 0.7 (0.6) million. Capital expenditure was financed with cash
flow from business operations. Long-term loans were installed by EUR 0.7
million. At the end of the period under review, the Group's liquid assets stood
at EUR 9.6 (8.5) million.
The Group's consolidated total assets at the end of the review period were EUR
51.4 (53.3) million.
Interest-bearing liabilities amounted to EUR 13.1 (7.3) million. Net
interest-bearing liabilities were EUR 3.4 (-1.1) million.
Equity at the end of the first quarter of 2014 was EUR 24.4 (28.7) million and
equity ratio 47.5 (54.0) per cent. The net gearing ratio was 14.1 (-4.0) per
cent.
Business development and strategy implementation
Exel Composites is revisiting its strategy. The new strategy will target
boosting profitable growth in the future. The new strategy is expected to be
disclosed during the second half of 2014.
Strategic improvement projects are being continued. In 2014 focus is on
improving production speed and yield. Advanced laminates production is in the
ramp up phase at the Mäntyharju factory.
Research and development
Exel Composites has continued to develop several new customer-specific
applications during the period under review, especially to the building and
construction, machine industry, and transportation industry markets.
Product and technology development costs totaled EUR 0.4 (0.3) million,
representing 2.3 (1.9) per cent of net sales. The main projects were connected
with the development of new products and customer applications.
Shares and share performance
At the end of March 2014, Exel Composites' share capital was EUR 2,141,431.74
and the number of shares was 11,896,843 each having the counter-book value of
EUR 0.18. There were no changes in the share capital during the review period.
There is only one class of shares and all shares are freely assignable under
Finnish law. Exel Composites' share is listed in the Small Cap segment of the
NASDAQ OMX Helsinki Ltd. in the Industrials sector.
Exel Composites did not hold any of its own shares during the period under
review.
During the period under review the highest share price quoted was EUR 6.28
(6.50) and the lowest EUR 5.56 (5.70). The share price closed at EUR 5.78
(5.80). The average share price during the period under review was EUR 5.98
(6.16).
A total of 1,706,213 (198,853) shares were traded during the reporting period,
which represents 14.3 (1.7) per cent of the average number of shares. Based on
the closing price on 31 March 2014, Exel Composites' market capitalization was
EUR 68.8 (69.0) million.
Shareholders and disclosures
Exel Composites had a total of 2,712 (2,795) shareholders on 31 March 2014.
Information on Exel Composites' shareholders is available on the Company
website at www.exelcomposites.com.
Exel Composites received two flagging announcements during the period under
review.
On 13 February 2014 Exel Composites received a flagging announcement according
to which the holding of Nordstjernan AB had fallen under 15 per cent of the
voting rights and share capital in Exel Composites Plc. Through share
transactions concluded on 13 February 2014, the holding of Nordstjernan AB
decreased from 2,656,506 shares (22.3 per cent) to 1,656,506 shares,
representing 13.9 per cent of the shares and voting rights of the Company.
On 14 February 2014 Exel Composites received a flagging announcement according
to which the holding of Lannebo Fonder AB had exceeded 5 per cent of the voting
rights and share capital in Exel Composites Plc. Through share transactions
concluded on 13 February 2014, the holding of Lannebo Fonder AB rose to
1,000,000 shares, representing 8.4 per cent of the shares and voting rights of
the Company.
Decisions of the 2014 Annual General Meeting
Exel Composites' Annual General Meeting (“AGM”) was held on 27 March 2014. The
financial accounts of the Group were approved and the members of the Board of
Directors and the President were discharged from their liabilities for the
financial year 2013. The AGM approved the Board's proposal not to distribute
any dividend for the financial period that ended on 31 December 2013.
The Annual General Meeting authorized the Board of Directors to acquire the
Company's own shares by using unrestricted equity. The maximum amount to be
acquired is 600,000 shares. The authorization is valid until 30 June 2015.
The AGM elected to the Board of Directors five members based on the proposal by
the Nomination Board. The following members of the Board of Directors were
re-elected: Heikki Hiltunen, Peter Hofvenstam, Göran Jönsson and Reima
Kerttula. Kerstin Lindell was elected as new member of the Board of Directors.
The term of office of the Board members continues until the end of next Annual
General Meeting. At the formative meeting of the Board of Directors held after
the Annual General Meeting, the Board of Directors elected from among its
members Peter Hofvenstam as its Chairman.
The AGM decided that the annual remuneration for the Board members be
unchanged, i.e. the Chairman of the Board of Directors be paid a yearly
remuneration of EUR 34,000 and additionally EUR 1,500 for attendance at Board
and committee meetings and other similar Board assignments and the other Board
members be paid a yearly remuneration of EUR 16,000 and additionally EUR 1,000
for attendance at Board and committee meetings and other similar Board
assignments and that travel expenses and other out-of-pocket expenses arising
from the Board work be compensated in accordance with the Company's established
practice and travel rules. Out of the yearly remuneration 60 per cent will be
paid in cash and 40 per cent in Exel Composites Plc shares, which were acquired
directly for and on behalf of the members of the Board of Directors during 2
April - 10 April 2014 from the stock exchange in amounts corresponding to EUR
13,600 for the Chairman and EUR 6,400 for each of the other members.
Management
A new incentive program for the Company executives was approved by the Board of
Directors in February 2014. The aim of the new program is to combine the
objectives of the shareholders and the executives in order to increase the
value of the Company, to commit the executives to the Company and to offer the
executives a competitive reward program. The new program is based on a
long-term monetary performance reward, and the program is targeted at
approximately 20 executives for the earning period 2014 − 2016. The President
and CEO and the members of the Group Management Team are included in the target
group of the new incentive program.
The incentive program includes one earning period, the calendar years 2014 −
2016. The potential long-term monetary performance reward from the program for
the earning period 2014 - 2016 will be based on the Group's cumulative Economic
Profit and on the Group's Total Shareholder Return (TSR).
The potential reward from the earning period 2014 - 2016 will be paid in 2017.
No reward will be paid to an executive, if his or her employment or service
with the Group Company ends before the reward payment.
The maximum reward to be paid on the basis of the earning period 2014 - 2016
will be one million EUR.
Significant related-party transactions
Exel Composites' permanent public insiders include Exel Composites' Board
members, the President and CEO and the members of the Group Management Team. No
significant related-party transactions were conducted by the Group or the
permanent insiders during the period under review.
Organization and personnel
The number of employees on 31 March 2014 was 421 (436), of whom 202 (209)
worked in Finland and 219 (227) in other countries. The average number of
personnel during the first quarter of 2014 was 418 (439).
Health, safety and environment
Special attention will be given to occupational health and safety issues in
2014. The Nanjing unit in China achieved the Health and Safety standard ISO
18001 in 2013. It is our intention to roll out this certification over all
sites.
Risks and uncertainties
The most significant near-term business risks are related to the general
economic development, government regulations and financial crisis in the Euro
area as well as to market demand. Continuing low demand in certain markets or
regions may require further corrective actions which can have an impact on the
profitability. The possible uncertainties in the Russian market will have
limited impact on Exel Composites.
Raw material prices, energy cost and other cost increases may continue to put
pressure on profitability. The possible new European Community's anti-dumping
tariffs on Chinese glass fiber may have a negative effect on the result in
terms of increased raw material prices. Currency rate changes, price
competition and alternative competing materials may also have a negative effect
on the result. The availability and cost of financing may continue to have an
effect on the demand and increase the risk of credit losses.
Near-term outlook
The market has stabilized but remains challenging. Uncertainties relating to
general growth prospects in the economy continue. Some positive signs can be
seen especially in the laminate and demanding carbon tube markets. The Company
invests in growth by reinforcing the organization, especially in sales and
operations development. The Company will monitor the general market development
and react with additional measures if needed. The Company is well-positioned to
grow profitably when the markets recover.
Vantaa, 7 May 2014
Board of Directors of Exel Composites Plc
For further information, please contact:
Riku Kytömäki, President and CEO
tel. +358 50 511 8288, or email riku.kytomaki@exelcomposites.com
Ilkka Silvanto, CFO and Administrative Director
tel. +358 50 598 9553, or email ilkka.silvanto@exelcomposites.com
Distribution
NASDAQ OMX Helsinki Ltd.
Main news media
www.exelcomposites.com
Press conference
Exel Composites will hold an analyst and press conference regarding the interim
report today Wednesday 7 May 2014 at 12.30 p.m. in the Talisman Cabinet of the
Scandic Hotel Marski at the address of Mannerheimintie 10, Helsinki, Finland.
Exel Composites in brief
Exel Composites (www.exelcomposites.com) is a technology company which designs,
manufactures and markets composite profiles and tubes for industrial
applications. The Group is the leading composite profile manufacturer in the
world and concentrates on growing niche segments.
The core of the operations is based on own, internally developed composite
technology, product range based on it and a strong market position in selected
segments with a strong quality and brand image. Profitable growth is pursued by
a relentless search for new applications and development in co-operation with
customers. The personnel's expertise and high level of technology play a major
role in Exel Composites' operations.
Exel Composites Plc share is listed in the Small Cap segment of NASDAQ OMX
Helsinki Ltd.
Summary of Financial Statements and notes to the Financial Statements 1 January
- 31 March 2014
Accounting principles:
This interim report has been prepared in accordance with IAS 34, Interim
Financial Reporting. The same accounting policies have been followed as in the
previous Financial Statements. Key indicator calculations remain unchanged and
have been presented in the 2013 Financial Statements.
Preparation of financial statements in accordance with the IFRS standards
requires Exel Composites' management to make estimates and assumptions that
have an effect on the amount of assets and liabilities on the balance sheet at
the closing date as well as the amounts of income and expenses for the
financial period. In addition, the management must exercise its judgement
regarding the application of accounting policies. Since the estimates and
assumptions are based on the views at the date of the Interim Report, they
include risks and uncertainties. The actual results may differ from the
estimates and assumptions.
The amounts presented in the income statement and balance sheet are Group
figures. The amounts presented in the release are rounded, so the sum of
individual figures may differ from the sum reported. The Interim Report is
unaudited.
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
EUR thousand 1.1. - 1.1. - Change, 1.1. -
31.3. 31.3. % 31.12.
2014 2013 2013
Net sales 17,811 16,897 5.4 69,290
Materials and services -5,976 -6,430 7.1 -26,037
Employee benefit expenses -5,393 -5,309 -1.6 -21,128
Depreciation and impairment -663 -673 1.5 -2,691
Other operating expenses -4,089 -3,981 -2.7 -15,258
Other operating income 200 163 22.7 667
Operating profit 1,890 666 183.8 4,843
Net financial items -229 24 -1,054.2 -286
Profit before tax 1,661 691 140.4 4,557
Income taxes -545 -136 -300.7 -1,477
Profit/loss for the period 1,116 555 101.1 3,080
Other comprehensive income:
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods:
Exchange differences on translating 404 298 35.6 -2,174
foreign operations
Other comprehensive income, net of tax 404 298 35.6 -2,174
Total comprehensive income 1,520 853 78.2 906
Profit/loss attributable to:
Equity holders of the parent company 1,116 555 3,080
Comprehensive income
attributable to:
Equity holders of the parent company 1,520 853 906
Earnings per share, diluted and undiluted, 0.09 0.05 0.26
EUR
CONDENSED CONSOLIDATED BALANCE SHEET
EUR thousand 31.3.2014 31.3.2013 Change 31.12.2013
ASSETS
Non-current assets
Goodwill 9,621 11,179 -1,558 9,393
Other intangible assets 855 1,153 -298 921
Tangible assets 10,824 10,768 56 10,796
Deferred tax assets 690 858 -168 641
Other non-current assets 72 62 10 70
Non-current assets total 22,062 24,021 -1,958 21,821
Current assets
Inventories 8,996 9,276 -280 7,936
Trade and other receivables 10,700 11,488 -788 9,273
Cash at bank and in hand 9,617 8,465 1,152 9,438
Current assets total 29,313 29,229 84 26,648
Total assets 51,375 53,250 -1,875 48,468
EQUITY AND LIABILITIES
Shareholders´ equity
Share capital 2,141 2,141 0 2,141
Other reserves 72 45 27 72
Invested unrestricted equity fund 2,539 8,488 -5,949 2,539
Translation differences 2,568 4,636 -2,068 2,164
Retained earnings 15,924 12,874 3,050 12,844
Profit for the period 1,116 555 561 3,080
Total equity attributable to equity 24,361 28,738 -4,377 22,841
holders of the parent company
Total equity 24,361 28,738 -4,377 22,841
Non-current liabilities
Interest-bearing liabilities 1,044 2,497 -1,453 1,761
Interest-free liabilities 423 426 -3 402
Deferred tax liabilities 430 376 54 440
Current liabilities
Interest-bearing liabilities 12,007 4,823 7,184 11,105
Trade and other non-current 13,111 16,390 -3,279 11,920
liabilities
Total liabilities 27,014 24,512 2,502 25,628
Total equity and liabilities 51,375 53,250 -1,875 48,468
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
EUR thousand Share Other Invested Translation Retained Total
Capita Reserves Unrestricted Differences Earnings
l Equity Fund
Balance at 1 2,141 45 8,488 4,337 16,427 31,438
January 2013
Comprehensive 298 555 853
result
Other items 16 16
Dividend -3,569 -3,569
Balance at 31 2,141 45 8,488 4,636 13,429 28,738
March 2013
Balance at 2,141 72 2,539 2,164 15,924 22,841
1st January
2014
Comprehensive 404 1,116 1,520
result
Other items 0 0
Dividend 0 0
Balance at 31 2,141 72 2,539 2,568 17,040 24,361
March 2014
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
EUR thousand 1.1. - 1.1. - Change 1.1.-
31.3. 31.3. 31.12.
2014 2013 2013
Cash Flow from Operating Activities
Profit for the period 1,116 555 561 3,080
Adjustments 1,608 810 798 4,088
Change in working capital -1,476 -371 -1,105 1,658
Cash Flow Generated by Operations 1,248 994 254 8,826
Interest paid -63 -37 -26 -213
Interest received 35 3 32 39
Other financial items -65 -25 -40 -196
Income taxes paid -507 -236 -271 -668
Net Cash Flow from Operating Activities 648 699 -51 7,788
Cash Flow from Investing Activities
Acquisitions 0 0 0 0
Disposal of business 0 0 0 0
Capital expenditure -651 -610 -41 -2,767
Proceeds from sale of fixed assets 0 0 0 0
Cash Flow from Investing Activities -651 -610 -41 -2,767
Cash Flow from Financing
Share issue 0 0 0 0
Proceeds from long-term borrowings 0 0 0 0
Instalments of long-term borrowings -680 -5,000 4,320 -5,000
Change in short-term loans 865 4,134 -3,269 9,700
Instalments of finance lease liabilities -3 -3 0 -11
Additional capital repayment 0 0 0 -5,948
Dividends paid 0 0 0 -3,569
Net Cash Flow from Financing 182 -869 1,051 -4,828
Change in Liquid Funds 179 -780 959 193
Liquid funds in the beginning of period 9,438 9,245 193 9,245
Change in liquid funds 179 -780 959 193
Liquid funds at the end of period 9,617 8,465 1,152 9,438
QUARTERLY KEY FIGURES
EUR thousand I/ IV/ III/ II/ I/
2014 2013 2013 2013 2013
Net sales 17,811 17,770 17,075 17,548 16,897
Materials and services -5,976 -6,443 -6,709 -6,455 -6,430
Employee benefit expenses -5,393 -5,388 -4,983 -5,448 -5,309
Depreciation and impairment -663 -683 -650 -684 -673
Operating expenses -4,089 -4,035 -3,731 -3,510 -3,981
Other operating income 200 267 79 159 163
Operating profit 1,890 1,486 1,081 1,609 666
Net financial items -229 9 -271 -48 24
Profit before taxes 1,661 1,495 810 1,562 691
Income taxes -545 -705 -237 -399 -136
Profit/loss for the period 1,116 790 573 1,162 555
Earnings per share, EUR 0.09 0.07 0.05 0.10 0.05
Earnings per share, EUR, diluted 0.09 0.07 0.05 0.10 0.05
Average number of shares, undiluted,
1,000 shares 11,897 11,897 11,897 11,897 11,897
Average number of shares, diluted,
1,000 shares 11,897 11,897 11,897 11,897 11,897
Average number of personnel 418 417 427 427 436
COMMITMENTS AND CONTINGENCIES
EUR thousand 31.3.2014 31.3.2013
On own behalf
Mortgages 2,783 2,783
Corporate mortgages 12,500 12,500
Lease liabilities
- in next 12 months 795 837
- in next 1-5 years 1,309 2,213
Other commitments 6 6
DERIVATIVE FINANCIAL INSTRUMENTS
Nominal values 31.3.2014 31.3.2013
EUR thousand
Interest rate derivatives
Interest rate swaps 5,000 5,000
Purchased interest rate options 0 0
CONSOLIDATED KEY FIGURES
EUR thousand 1.1. - 31.3. 1.1. - Change, % 1.1. -
2014 31.3. 31.12.
2013 2013
Net sales 17,811 16,897 69,290
Operating profit 1,890 666 4,843
% of net sales 10.6 3.9 7.0
Profit before tax 1,661 691 4,557
% of net sales 9.3 4.1 6.6
Profit for the period 1,116 555 3,080
% of net sales 6.3 3.3 4.4
Shareholders´ equity 24,361 28,738 22,841
Interest-bearing liabilities 13,051 7,320 12,866
Cash and cash equivalents 9,617 8,465 9,483
Net interest-bearing liabilities 3,434 -1,145 3,428
Capital employed 37,412 36,058 35,707
Return on equity, % 18.9 7.4 11.3
Return on capital employed, % 21.1 7.1 13.0
Equity ratio, % 47.5 54.0 47.2
Net gearing, % 14.1 -4.0 15.0
Capital expenditure 651 610 2,767
% of sales 3.7 3.6 4.0
Research and development costs 412 321 1,511
% of net sales 2.3 1.9 2.2
Order intake 21,759 18,358 69,784
Order backlog 14,269 11,763 10,458
Earnings per share, EUR 0.09 0.05 0.26
Earnings per share, EUR, diluted 0.09 0.05 0.26
Equity per share, EUR 2.05 2.42 1.92
Average number of shares
- cumulative 11,897 11,897 11,897
- cumulative, diluted 11,897 11,897 11,897
Average number of employees 418 436 427
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