2013-08-08 07:00:00 CEST
2013-08-08 07:01:56 CEST
REGULATED INFORMATION
Elektrobit Oyj - Interim report (Q1 and Q3)
ELEKTROBIT CORPORATION (EB) INTERIM REPORT JANUARY - JUNE 2013
STOCK EXCHANGE RELEASE
Free for publication on August 8, 2013, at 8.00 a.m. (CEST+1)
ELEKTROBIT CORPORATION (EB) INTERIM REPORT JANUARY - JUNE 2013
COMPARABLE NET SALES GREW AND OPERATING RESULT IMPROVED FROM THE PREVIOUS YEAR
* From the beginning of 2013 EB has applied the new IFRS10 and IFRS11
standards. As a result the proportion of net sales and operating result of
e.solutions GmbH, a jointly owned company of EB and AUDI, to be consolidated
into Elektrobit group's consolidated financial statements has changed. For
comparability, all 2012 figures presented for comparison are restated
assuming that the proportionate consolidation method would have been applied
already in 2012.
* EB's figures are divided between Continuing and Discontinuing Operations as
provided by the IFRS5 standard. In this interim report, Test Tools product
business, sold on January 31, 2013, is classified as Discontinuing
Operations.
SUMMARY APRIL - JUNE 2013
* Net sales of the April - June 2013 from continuing operations grew to EUR
47.9 million (restated net sales of EUR 41.5 million, 2Q 2012), representing
an increase of 15.5 % year-on-year.
* Operating profit from continuing operations was EUR 0.7 million (restated
operating loss of EUR -0.9 million including non-recurring costs of EUR 0.9
million related to collecting the receivables from TerreStar companies,
2Q 2012).
* Net cash flow was EUR -1.5 million (EUR 0.3 million, 2Q 2012).
* Earnings per share from continuing operations were EUR 0.001 and earnings
per share from continuing and discontinuing operations were EUR 0.001.
* On June 5, 2013 the Board of Directors of the Company decided on the
transfer of stock options 2008A and 2008B to the Finnish book-entry system
and to apply for listing on the official list of NASDAQ OMX Helsinki.
Trading with the stock options started on June 17, 2013.
* A total of 97,500 new shares were subscribed between April 2 and June
20, 2013 by virtue of the option rights 2008A. The share subscription price,
EUR 17,550, has been recorded in the Company's invested non-restricted
equity fund. The corresponding increase in the number of the Company's
shares was entered into the Finnish Trade Register on July 5, 2013 and the
trading with the newly registered shares started on July 8, 2013 in NASDAQ
OMX Helsinki Ltd. After the registration of the new shares, the number of
shares in Elektrobit Corporation's totals 129,510,190.
SUMMARY JANUARY - JUNE 2013
* Net sales of the January - June 2013 from continuing operations grew to EUR
94.1 million (restated net sales of EUR 84.2 million, 1H 2012), representing
an increase of 11.8 % year-on-year.
* Operating profit from continuing operations was EUR 1.4 million including
non-recurring costs of approximately EUR 0.8 million resulting from the cost
saving measures in the Wireless Business Segment in the first quarter of
2013 (restated operating loss of EUR -0.4 million including non-recurring
costs of EUR 1.2 million related to collecting the receivables from
TerreStar companies, 1H 2012).
* Net cash flow was EUR 27.8 million including non-recurring net cash flow of
about EUR 28 million resulting from the sale of the Test Tools product
business (EUR -3.5 million, 1H 2012).
* Earnings per share from continuing operations were EUR 0.006 and earnings
per share from continuing and discontinuing operations were EUR 0.187.
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|Group, continuing operations |2Q 13| 2Q 12| |1H 13| | | 2012|
|(MEUR) | | | | | | | |
| | |restated| | |1H 12 restated| |restated|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|NET SALES | 47.9| 41.5| | 94.1| 84.2| | 173.9|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|OPERATING PROFIT / LOSS | 0.7| -0.9| | 1.4| -0.4| | 1.1|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|Operating profit /loss | | | | | | | |
|without non-recurring items | 0.7| 0.0| | 2.2| 0.8| | 5.1|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|EBITDA | 2.9| 0.8| | 5.8| 2.9| | 8.1|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|CASH AND OTHER LIQUID ASSETS | 42.1| 5.8| | 42.1| 5.8| | 14.3|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|EQUITY RATIO (%) | 64.0| 58.1| | 64.0| 58.1| | 55.0|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
|EARNINGS PER SHARE (EUR) |0.001| -0.005| |0.006| -0.004| | 0.008|
+-----------------------------+-----+--------+-+-----+--------------+-+--------+
+-----------------------+-----+--------------+-+-----+--------------+-+--------+
|Automotive Business |2Q 13| | |1H 13| | | 2012|
|Segment (MEUR) | | | | | | | |
| | |2Q 12 restated| | |1H 12 restated| |restated|
+-----------------------+-----+--------------+-+-----+--------------+-+--------+
|NET SALES | 32.6| 24.9| | 63.0| 51.3| | 110.6|
+-----------------------+-----+--------------+-+-----+--------------+-+--------+
|OPERATING PROFIT / LOSS| 0.1| -0.0| | 1.2| 0.7| | 3.3|
+-----------------------+-----+--------------+-+-----+--------------+-+--------+
|EBITDA | 1.6| 1.0| | 4.1| 2.6| | 7.3|
+-----------------------+-----+--------------+-+-----+--------------+-+--------+
+---------------------------------------------+-----+-----+-+-----+-----+-+----+
|Wireless Business Segment, |2Q 13|2Q 12| |1H 13| | |2012|
| | | | | | | | |
|continuing operations (MEUR) | | | | |1H 12| | |
+---------------------------------------------+-----+-----+-+-----+-----+-+----+
|NET SALES | 15.4| 16.6| | 31.2| 33.0| |63.5|
+---------------------------------------------+-----+-----+-+-----+-----+-+----+
|OPERATING PROFIT / LOSS | 0.6| -0.9| | 0.1| -1.0| |-2.2|
+---------------------------------------------+-----+-----+-+-----+-----+-+----+
|Operating profit /loss without non-recurring | | | | | | | |
|items | 0.6| 0.0| | 1.0| 0.2| | 1.8|
+---------------------------------------------+-----+-----+-+-----+-----+-+----+
|EBITDA | 1.2| -0.2| | 1.7| 0.4| | 0.7|
+---------------------------------------------+-----+-----+-+-----+-----+-+----+
EB'S CEO JUKKA HARJU:"During the first half of 2013 EB's business developed in line with our plans.
The net sales grew by 11.8 per cent year-on-year due to the continued strong
growth of the Automotive Business Segment. Net sales of the Wireless Business
Segment decreased slightly year-on-year. EB's operating result improved from
previous year and was EUR 1.4 million positive. The operating result was
negatively affected by the non-recurring costs of approximately EUR 0.8 million
resulting from the cost saving measures of the Wireless Business Segment.
Operating result of the both Business Segments improved year-on-year.
EB's financial position and financing strengthened significantly in the
beginning of the year as EB sold its Test Tools product business for EUR 31.0
million at the end of January 2013.
Although the demand outlook in Wireless Business Segment is temporarily weakened
for the rest of the year, the outlook for the growth in net sales in 2013 is
still good due to the continued strong growth of Automotive Business Segment.
This gives a good opportunity to reach the same operating profit level as last
year without non-recurring items."
OUTLOOK FOR 2013
From the beginning of 2013 EB has started to apply the new IFRS10 and IFRS11
standards concerning consolidation, and consolidates e.solutions GmbH, the
jointly owned company with AUDI, by applying the proportionate consolidation
method. Previously e.solutions GmbH has been included in Elektrobit group's
consolidated financial statements as subsidiary. As a result of the change in
the method of consolidation, the proportion of net sales and operating result of
e.solutions GmbH to be consolidated into Elektrobit group's consolidated
financial statements will decrease. The change does not affect the net profit of
the Company. The change in the method of consolidation as presented above has
been taken into account in the 2013 outlook for net sales and operating result
presented below. More information about this has been presented in this interim
report in the section "Change in the consolidation of the jointly owned company
of EB and AUDI as of January 1, 2013".
Carmakers continue to invest in software for new car models and the market for
automotive software products and services is estimated to continue growing.
However the growth rate of the global automotive industry is estimated to be
less than in the previous year due to the financial uncertainties in Europe.
Despite these uncertainties, many carmakers have further continued good
financial performance and slowing down of the markets affects different car
makers in different ways. The demand for EB's automotive software solutions is
estimated to remain good. In the Automotive Business Segment the operating
profit in 2013 is expected to accumulate mainly during the second half of the
year (EUR 1.2 million, 1H 2013) due to higher product license sales during the
latter half of the year and other seasonality factors.
In the Wireless Business Segment the growth in demand will be driven especially
by the increasing use of the LTE technology that increases the performance of
mobile networks, and the authorities' needs for new communication solutions that
use commercial technologies of smart phones and mobile networks, as well as the
growing need of companies to provide wireless connectivity of their devices,
targeted to consumers and for professional use, to broader solutions. General
cost saving measures of the public sector reflects the demand negatively in the
public authority markets in Europe. In the Wireless Business Segment the demand
outlook for the rest of the year has weakened due to the decreased order volume
from a large customer of EB and due to the delay in some special terminal
projects. Due to the weakened demand outlook, the operating result in the second
half of 2013 is expected to be at the same level or less than in the first half
of 2013 (EUR 0.1 million, 1H 2013). Additionally, the operating result is
affected by seasonality factors and by cost savings materializing during the
last quarter of 2013 as a result from planned temporary layoffs.
EB expects for the year 2013 that net sales will grow and operating result will
be at the same level as it was in 2012 without non-recurring items (restated net
sales of EUR 173.9 million, and restated operating profit without non-recurring
items of EUR 5.1 million, in 2012).
More specific market outlook is presented under the "Business Segments'
development during April - June 2013 and Market Outlook" section. The Wireless
Business Segment's weakened demand outlook for the rest of the year and the
aimed cost savings resulting from the temporary layoffs have been taken into
account in the outlook for 2013.
The non-recurring net profit of about EUR 23 million, resulted from the sale of
the Test Tools product business, has no impact on the operating result of 2013
and therefore has no impact on the operating result guidance. All profits and
costs related to the mentioned business are presented in the group's income
statement, below operating profit under "result for the period from
discontinuing operations".
The profit outlook for the year 2013 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 under "Risks and Uncertainties"
section.
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the Interim Report January-June 2013 for
media, analysts and institutional investors in Finland, Oulu, Tutkijantie 8, on
Thursday, August 8, 2013, 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 WebEx. 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 from continuing operations in
2012 totaled EUR 185.4 million. Restated net sales from continuing operations in
2012 totaled EUR 173.9 million. Elektrobit Corporation is listed on NASDAQ OMX
Helsinki. www.elektrobit.com
ELEKTROBIT CORPORATION (EB) INTERIM REPORT JANUARY-JUNE 2013
* From the beginning of 2013 EB has applied the new IFRS10 and IFRS11
standards. As a result the proportion of net sales and operating result of
e.solutions GmbH, a jointly owned company of EB and AUDI, to be consolidated
into Elektrobit group's consolidated financial statements has changed. For
comparability, all 2012 figures presented for comparison are restated
assuming that the proportionate consolidation method according to the above
mentioned standards would have been applied already in 2012.
* EB's figures are divided between Continuing and Discontinuing Operations as
provided by the IFRS5 standard. In this interim report, Test Tools product
business, sold on January 31, 2013, is classified as Discontinuing
Operations.
FINANCIAL PERFORMANCE DURING JANUARY-JUNE 2013, CONTINUING OPERATIONS
EB's net sales from continuing operations during January-June 2013 grew by 11.8
per cent year-on-year to EUR 94.1 million (restated net sales of EUR 84.2
million, 1H 2012). Operating profit from continuing operations was EUR 1.4
million including the non-recurring cost of approximately EUR 0.8 million
resulting from the cost saving measures in the Wireless Business Segment during
the first quarter of 2013 (restated operating loss of EUR -0.4 million,
including EUR 1.2 million non-recurring costs related to collecting the
receivables from TerreStar Companies, 1H 2012). Operating profit from continuing
operations without these non-recurring costs was EUR 2.2 million (restated
operating profit of EUR 0.8 million, 1H 2012).
Net sales of the Automotive Business Segment grew in January-June 2013 to EUR
63.0 million (restated net sales of EUR 51.3 million, 1H 2012), representing
22.9 per cent growth year-on-year. A significant proportion of the growth in the
net sales came from the rapid growth of e.solutions GmbH, the jointly owned
company with AUDI. The operating profit was EUR 1.2 million (restated operating
profit of EUR 0.7 million, 1H 2012). At the beginning of 2013 EB was selected as
the supplier for several long-term product development and product customization
projects for leading car makers. A pricing model, where a part of the product
development fee is moved to license fee based on the actual delivery volumes of
new cars, was taken into use in the largest projects. This pricing model is
common in the automotive industry.
The Wireless Business Segment's net sales from continuing operations in January-
June 2013 decreased 5.5 per cent year-on-year, to EUR 31.2 million (EUR 33.0
million, 1H 2012). The decrease in the net sales compared to previous year was
due to decline in the product development services for the authority markets.
The operating profit from continuing operations of the Wireless Business Segment
in January-June 2013 was EUR 0.1 million including the non-recurring cost of
approximately EUR 0.8 million resulting from the cost saving measures in the
first quarter of 2013 (operating loss of EUR -1.0 million including EUR 1.2
million non-recurring costs related to collecting the receivables from TerreStar
Companies, 1H 2012). Wireless Business Segment's operating profit from
continuing operations without the above mentioned non-recurring costs was EUR
1.0 million (EUR 0.2 million, 1H 2012).
+----------------------------------------------------------+--------+--------+
|CONSOLIDATED INCOME STATEMENT (MEUR) |1-6 2013|1-6 2012|
| | | |
| | |restated|
+----------------------------------------------------------+--------+--------+
| |6 months|6 months|
+----------------------------------------------------------+--------+--------+
|CONTINUING OPERATIONS | | |
+----------------------------------------------------------+--------+--------+
| Net sales | 94.1| 84.2|
+----------------------------------------------------------+--------+--------+
| Operating profit / loss | 1.4| -0.4|
+----------------------------------------------------------+--------+--------+
| Financial income and expenses | -0.6| 0.1|
+----------------------------------------------------------+--------+--------+
| Result before tax | 0.8| -0.3|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS | 0.8| -0.5|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD FROM DISCONTINUING OPERATIONS | 23.6| 0.4|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD | 24.4| -0.1|
+----------------------------------------------------------+--------+--------+
|TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 24.6| -0.1|
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Result for the period attributable to: | | |
+----------------------------------------------------------+--------+--------+
| Equity holders of the parent | 24.4| -0.1|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | 0.0| 0.0|
+----------------------------------------------------------+--------+--------+
|Total comprehensive income for the period attributable to:| | |
+----------------------------------------------------------+--------+--------+
| Equity holder of the parent | 24.6| -0.1|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | 0.0| 0.0|
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Earnings per share from continuing operations, EUR | 0.006| -0.004|
+----------------------------------------------------------+--------+--------+
* Cash flow from operating activities was EUR 5.4 million (EUR -2.4 million,
1H 2012)
* Net cash flow was EUR 27.8 million including non-recurring net cash flow of
about EUR 28 million resulting from the sale of the Test Tools product
business (EUR -3.5 million, 1H 2012).
* Equity ratio was 64.0% (58.1%, 1H 2012).
* Net gearing was -28.7% (13.1%, 1H 2012).
QUARTERLY FIGURES, CONTINUING OPERATIONS
Elektrobit Group's net sales and operating result, Continuing Operations, MEUR:
+---------------------------------------+-----+-----+--------+--------+--------+
| |2Q 13|1Q 13| 4Q 12| 3Q 12| 2Q 12|
| | | | | | |
| | | |restated|restated|restated|
+---------------------------------------+-----+-----+--------+--------+--------+
|Net sales | 47.9| 46.2| 48.2| 41.5| 41.5|
+---------------------------------------+-----+-----+--------+--------+--------+
|Operating profit (loss) | 0.7| 0.7| -0.5| 2.0| -0.9|
+---------------------------------------+-----+-----+--------+--------+--------+
|Operating profit (loss) without non- | | | | | |
|recurring costs | | | | | |
| | 0.7| 1.5| 3.6| 0.7| 0.0|
+---------------------------------------+-----+-----+--------+--------+--------+
|Result before taxes | 0.2| 0.6| -0.9| 1.8| -0.5|
+---------------------------------------+-----+-----+--------+--------+--------+
|Result for the period | 0.2| 0.6| -0.1| 1.7| -0.6|
+---------------------------------------+-----+-----+--------+--------+--------+
Wireless Business Segment, net sales and operating result without non-recurring
items, Continuing Operations, MEUR
+------------------------------------------------+-----+-----+-----+-----+-----+
| |2Q 13|1Q 13|4Q 12|3Q 12|2Q 12|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Net sales | 15.4| 15.8| 16.4| 14.1| 16.6|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) | 0.6| -0.4| -3.2| 2.0| -0.9|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) without non-recurring | | | | | |
|items | 0.6| 0.4| 0.9| 0.8| 0.0|
+------------------------------------------------+-----+-----+-----+-----+-----+
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.
Non-recurring items, mentioned in the tables above are as follows:
* costs related to collecting the receivables from TerreStar Companies and
income resulting from the settlement payment in the reorganization cases of
TerreStar Corporation during 2012,
* non-recurring items of approximately EUR 4 million in total, booked in the
fourth quarter of 2012, as result of the financial challenges faced by a US
based customer of EB's subsidiary, Elektrobit Inc., and
* 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.
These non-recurring items have been reported as part of Wireless Business
Segment's operating result.
The distribution of net sales by Business Segments, Continuing Operations,
MEUR:
+-----------------+-----+-----+--------+--------+--------+
| |2Q 13|1Q 13| 4Q 12| 3Q 12| 2Q 12|
| | | | | | |
| | | |restated|restated|restated|
+-----------------+-----+-----+--------+--------+--------+
|Automotive | 32.6| 30.5| 31.9| 27.4| 24.9|
+-----------------+-----+-----+--------+--------+--------+
|Wireless | 15.4| 15.8| 16.4| 14.1| 16.6|
+-----------------+-----+-----+--------+--------+--------+
|Corporation total| 47.9| 46.2| 48.2| 41.5| 41.5|
+-----------------+-----+-----+--------+--------+--------+
The distribution of net sales by market areas, Continuing Operations, MEUR and
%:
+--------+------+------+--------+--------+--------------+
| | 2Q 13| 1Q 13| 4Q 12| 3Q 12|2Q 12 restated|
| | | | | | |
| | | |restated|restated| |
+--------+------+------+--------+--------+--------------+
|Asia | 1.7| 1.9| 2.4| 3.1| 1.1|
| | | | | | |
| | 3.6 %| 4.2 %| 4.9 %| 7.6 %| 2.8 %|
+--------+------+------+--------+--------+--------------+
|Americas| 6.4| 6.2| 6.4| 7.6| 7.5|
| | | | | | |
| |13.4 %|13.3 %| 13.2 %| 18.3 %| 18.1 %|
+--------+------+------+--------+--------+--------------+
|Europe | 39.7| 38.1| 39.5| 30.7| 32.8|
| | | | | | |
| |83.0 %|82.5 %| 81.9 %| 74.1 %| 79.2 %|
+--------+------+------+--------+--------+--------------+
Net sales and operating profit development by Business Segments and other
businesses, Continuing Operations, MEUR:
+-------------------------------+-----+-----+--------+--------+--------+
| |2Q 13|1Q 13| 4Q 12| 3Q 12| 2Q 12|
| | | | | | |
| | | |restated|restated|restated|
+-------------------------------+-----+-----+--------+--------+--------+
|Automotive | | | | | |
| | | | | | |
|Net sales to external customers| 32.5| 30.5| 31.8| 27.4| 24.9|
| | | | | | |
|Net sales to other segments | 0.1| 0.0| 0.0| 0.0| 0.0|
| | | | | | |
|Operating profit (loss) | 0.1| 1.1| 2.6| -0.0| -0.0|
+-------------------------------+-----+-----+--------+--------+--------+
|Wireless | | | | | |
| | | | | | |
|Net sales to external customers| 15.4| 15.8| 16.4| 14.1| 16.6|
| | | | | | |
|Net sales to other segments | 0.0| 0.0| 0.0| 0.0| 0.0|
| | | | | | |
|Operating profit (loss) | 0.6| -0.4| -3.2| 2.0| -0.9|
+-------------------------------+-----+-----+--------+--------+--------+
|Other businesses | | | | | |
| | | | | | |
|Net sales to external customers| 0.0| 0.0| 0.0| 0.0| 0.0|
| | | | | | |
|Operating profit (loss) | 0.1| -0.0| 0.1| -0.0| -0.0|
+-------------------------------+-----+-----+--------+--------+--------+
|Total | | | | | |
| | | | | | |
|Net sales | 47.9| 46.2| 48.2| 41.5| 41.5|
| | | | | | |
|Operating profit (loss) | 0.7| 0.7| -0.5| 2.0| -0.9|
+-------------------------------+-----+-----+--------+--------+--------+
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
On January 10, 2013 EB announced to lower its profit guidance for 2012 due to
the weaker than expected fourth quarter. The reason for the weakening of the
fourth quarter was the non-recurring items of approximately EUR 4 million in
total, booked as result of the financial challenges faced by a US based customer
of EB's subsidiary, Elektrobit Inc. According to the lowered guidance, EB
expected the operating result of the fourth quarter of 2012 to be approximately
between EUR -0.4 million and EUR 1.1 million (EUR 3.5 million, 4Q 2011), the
operating result of the second half of 2012 to be approximately between EUR 1.7
million and EUR 3.2 million (EUR 0.4 million, 2H 2011), and the operating result
of the whole year 2012 to be approximately between EUR 2.2 million and EUR 3.7
million (operating loss of EUR -4.0 million in 2011). The expected operating
results presented above included non-recurring items that caused the lowering of
the fourth quarter profit guidance, as well as non-recurring income and costs
related to the reorganization processes of TerreStar companies, booked earlier
in 2012. The outlook for the net sales the Company expected to develop as
earlier estimated and thus EB expected that the net sales of the fourth quarter
of 2012 will be approximately EUR 57 million (EUR 49.0 million, 4Q 2011), the
net sales of the second half of 2012 was expected to be approximately EUR 104
million (EUR 86.1 million, 2H 2011) and the net sales of the whole year 2012 was
expected be approximately EUR 200 million (EUR 162.2 million in 2011).
On January 28, 2013 EB announced to have signed an agreement with Anite plc,
under the terms of which EB agreed to sell its Test Tools product business to
Anite ("the Transaction"). The Transaction comprised the sale of the shares of
EB's subsidiary Elektrobit System Test Ltd., a company based in Oulu, Finland,
and certain related other assets in the USA and China. EB's Test Tools product
business provided radio channel emulation tools and testing solutions for the
development of the wireless technologies and was part of EB's Wireless Business
Segment employing a total of 54 persons in Finland, USA and China. Closing of
the Transaction was agreed to take place on January 31, 2013, subject to
completion of customary closing events, such as payment of the cash
consideration. According to the agreement, the cash consideration payable to EB
by Anite as a result of the Transaction was EUR 31.0 million on a cash and debt
free basis, subject to a post completion adjustment based upon the level of net
working capital and cash and debt in the Test Tools product business on January
31, 2013. The net assets of the Test Tools product business in January 31, 2013
was expected to be approximately EUR 5 million.
In addition, on January 28, 2013 EB gave advance information on its fourth
quarter and full year 2012 net sales and operating results. EB announced also to
report its 2012 financial results, as provided by the IFRS5 standard, divided
between Continuing and Discontinuing Operations, and that the Test Tools product
business is classified as Discontinuing Operations in the 2012 financial
statements.
On January 31, 2013 EB announced that the sale of the Test Tools product
business to Anite plc was completed. The cash consideration paid by Anite to EB
as a result of the Transaction was EUR 31.0 million on a cash and debt free
basis, subject to a post completion adjustment based upon the level of net
working capital and cash and debt in the Test Tools product business on January
31, 2013. The closing of the Transaction resulted in a non-recurring net profit
of about EUR 23 and non-recurring net cash flow of about EUR 28 million in the
first quarter of 2013.
On February 19, 2013, simultaneously with the announcement of the Financial
Statement Bulletin 2012, EB announced it will apply the new IFRS10 and IFRS11
standards from the beginning of 2013 and therefore will consolidate e.solutions
GmbH, the jointly owned company with Audi Electronics Venture GmbH (AEV),
applying the proportionate consolidation method. As a result of the change in
the method of consolidation, the proportion of net sales and operating result of
e.solutions GmbH to be consolidated into Elektrobit group's financial statements
will decrease from the previous 100% to 51%. According to the rules of the
proportionate consolidation method, the consolidated statement will also include
49% of the net sales from other Elektrobit group companies to e.solutions GmbH.
On February 19, 2013, EB announced also that it will start measures to improve
its cost structure in the Wireless Business Segment. The measures were completed
on April 4, 2013 and the Company estimates to reach the targeted approximately
EUR 2 million annual cost savings in its Wireless Business Segment, fully
effective from the second half of 2013 on. The measures resulted non-recurring
costs of approximately EUR 0.8 million that affect negatively the Company's
operating result of the first quarter of 2013. The underlying reasons for the
measures to improve the cost structure were the changed business requirements.
As part of these measures, EB reduced its personnel in the Wireless Business
Segment globally by altogether 32 persons, 8 of them in Finland. In addition, EB
also concentrated some of its Wireless Business Segment operations to Finland
and moved the centre of its US operations from west coast to east coast, where
many of the public sector customers are located.
On June 5, 2013 the Board of Directors of Elektrobit Corporation decided on the
transfer of stock options 2008A and 2008B to the Finnish book-entry system and
to apply for listing of 1.400.000 stock options 2008A and of 1.400.000 stock
options 2008B on the official list of NASDAQ OMX Helsinki. The trading with the
stock options started on June 17, 2013. The share subscription period for stock
options 2008A will end on March 31, 2014. The share subscription period for
stock options 2008B will end on March 31, 2015.
On July 5, 2013 EB told that a total of 97,500 new shares in Elektrobit
Corporation were subscribed between April 2 and June 20, 2013 by virtue of the
option rights 2008A. The share subscription price, EUR 17,550, was recorded in
the Company's invested non-restricted equity fund. The corresponding increase in
the number of the Company's shares was entered into the Finnish Trade Register
on July 5, 2013. Trading with the newly registered shares started on July
8, 2013 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's totals 129,510,190. More information and the terms and
conditions of stock options 2008 are available in www.elektrobit.com/investors
in the Company's web pages.
BUSINESS SEGMENTS' DEVELOPMENT DURING APRIL-JUNE 2013 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 the joint
venture 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%.
EB's net sales in Automotive Business Segment continued its strong growth during
the second quarter of 2013 and amounted to EUR 32.6 million (restated net sales
of EUR 24.9 million, 2Q 2012), representing a growth of 30.6 % year-on-year. A
significant proportion of the growth in the net sales came from the rapid growth
of e.solutions GmbH, a jointly owned company with AUDI. The operating profit was
EUR 0.1 million (restated operating loss of EUR -0.0 million, 2Q 2012).
In April, EB announced to have opened a new office in Brasov, Romania for
automotive software development. The new location will allow the company to
expand its existing automotive software development teams in Romania. EB plans
to grow the local team to more than 100 software developers over time. The
Brasov office will focus on automotive software product development and testing.
In June EB and Daimler announced to have strengthened their long-term successful
partnership for developing Daimler's embedded driver assistance software.
Through this partnership, a new collaboration model is being introduced, where
EB is taking the role of direct software supplier for Driver Assistance to
Daimler. By separating hardware and software development, EB and Daimler are
able to manage the growing complexity of software in the Driver Assistance
domain. It also enables both parties to focus on their core competencies.
Automotive Market Outlook
The demand for EB's products and services is estimated to develop positively
year-on-year during 2013 in Automotive Business Segment. Recently the
uncertainty in the market outlook for the global car industry has continued
especially in Europe where the number of cars sold is expected to decrease in
2013 from 2012, while in USA and China and other developing countries the market
is expected to grow. Despite these uncertainties, many carmakers have further
continued good financial performance and slowing down of the markets affects
different car makers in different ways. The slowing down of the markets affects
decreasingly also to the carmakers' R&D investments. However, carmakers will
continue to invest in automotive software for new car models and the market for
automotive software products and services is estimated to continue growing
during 2013, but at a slower pace than in the years before. The demand for EB's
software solutions is estimated to continue as good in 2013.
In the labor market, particularly in Germany, competition of talented engineers
still is tight and is slightly slowing down the growth of personnel and thereby
impacting the growth of the services business. e.solutions GmbH, the jointly
owned company with AUDI, succeeded to grow its personnel significantly during
the end of 2012 after announcing the decision to expand its business, and the
outlook for the joint venture's growth in 2013 is good.
A Roland Berger study estimates the share of electronics in cars will grow from
23 per cent in 2010 to 33 per cent until 2020. The move to greater electronic
content in cars has been underway for several years and has been responsible for
such major innovations as security systems, anti-lock brakes, engine control
units, driver assistance, and infotainment. These features have become so
enormously popular that they are now widely available, in both low-end and high-
end vehicles, demonstrating that consumers are willing to pay for technology
that enhances their driving experience. Further market growth is expected e.g.
in the areas of Driver Assistance and Connected Car solutions. Connectivity with
the cloud can provide several enhancements to car functions such as navigation,
for example real-time traffic information.
The increasingly sophisticated and networked features and growing performance
foster the complexity of automotive electronics. At the same time consumers
expect the same richness of features and user experience they know from the
internet and mobile devices also within the car. Carmakers have been steadily
integrating more electronic components into vehicles. These development trends
are driving the industry towards gradual separation of software and hardware in
electronics solutions in order to manage the architectural software layer
appropriately and to aim for efficiency in innovation and implementation. The
use of standard software solutions is expected to increase in the automotive
industry. This enables faster innovation, improves quality and development
efficiency and reduces complexity related to deployment of software.
The fundamental industry migration and consequent growth of the automotive
software market will continue. Cost pressures of the automotive industry are
expected to accelerate the need for productized and efficient software solutions
EB is offering. The estimated annual automotive software market growth rate from
2012 until 2020 is expected to exceed the growth rate of passenger car
production volume that is estimated to be 4.5% CAGR (LMC Automotive's Q3 2013
Forecast).
EB's net sales from the automotive industry is currently primarily driven by the
development of software and software platforms for new cars and by sales of
software licenses needed in product development. Hence the dependency of EB's
net sales on car production volumes is currently limited. The direct dependency
on production volumes will increase over the forthcoming years as a result of
the EB's transition towards software product business models. The dependency on
EB's net sales on car delivery volumes is also increased by EB's customers
tending to allocate a part of the software development costs to be paid in
license fees based on the actual car delivery volumes. This pricing model is
common in the automotive industry. It can offer EB also an opportunity for
higher cumulative income, in case the amount of the new cars sold would be high.
WIRELESS
In the Wireless Business Segment EB offers products and product platforms for
defence and public safety 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 EB Counter RCIED Platform for electronic warfare, 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, software
and hardware development.
Net sales of continuing operations of the Wireless Business Segment during the
second quarter of 2013 decreased by 7.0 % year-on-year to EUR 15.4 million (EUR
16.6 million, 2Q 2012). Operating profit from continuing operations was EUR 0.6
million (operating loss of EUR -0.9 million including non-recurring costs of EUR
0.9 million from collecting the receivables from TerreStar Companies, 2Q 2012).
The decrease in the net sales compared to previous year was due to decline in
the product development services for the authority markets. Net sales to mobile
communication markets and other companies increased from previous year.
During the second quarter of 2013 EB continued its R&D investments in products
and product platforms targeted for the defense and public safety markets and
related international sales and marketing efforts.
In April EB signed a contract with the Finnish Defence Forces for deliveries of
the EB Tactical Wireless IP Network communication system. The product delivery
contains tactical routers and radio head units for the land force's
communication needs. This contract is a continuation to the EB's Tactical
Wireless IP Network development and pilot delivery contract signed in September
2011. The value of the purchase is EUR 7.0 million (excl. VAT). The deliveries
are to be finalized by the end of March 2014.
In April EB concluded measures to improve its cost structure in Wireless
Business Segment, started on February 19, 2013, and estimates to reach the
targeted approximately EUR 2 million annual cost savings in its Wireless
Business Segment, fully effective from the second half of 2013 on. The measures
resulted non-recurring costs of approximately EUR 0.8 million that affected
negatively the Company's operating result of the first quarter of 2013. The
underlying reasons for the measures to improve the cost structure were the
changed business requirements.
Wireless 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. The implementation of LTE (Long Term Evolution) technology
continues to be the most important technological change driving the demand, and
in 2013 EB's business driven by LTE is expected to stay at the same level as in
2012. Mastering of multi-radio technologies and end-to-end system architectures
covering both terminals and networks has gained importance in the complex
wireless technology industry.
EB currently aims at bringing its products to the global defense market with the
target to gradually increase the product sales in the next few years. The
development of defense budgets varies geographically with budget cuts in the
western markets and increases in Asia and South America. In Tactical
Communications, the growing importance of situational awareness shared by
military forces creates needs for new broadband networks, such as EB's IP
(Internet Protocol) based tactical communications solutions. The defense market
is characterized by long sales cycles driven by purchasing programs of national
governments, and the purchases of the selected products take place over several
years. In 2013, the public defense budget cuts have negative affect on the
demand for product development services in Europe.
For the markets of national security and other authorities, EB offers
specialized customized solutions based on its product platforms. The trend of
adopting new commercial technologies, such as LTE and smart phone related
operating systems 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. These markets have special
requirements and the volumes are lower than in the mass-markets. The US public
safety market is progressing, although slowly, towards a nationwide LTE network.
In the mobile infrastructure market the use of LTE technology is expected to
continue strong. For the mobile infrastructure market 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 a need for R&D services for design of product
variants. Need for R&D services for connected devices for various end user needs
emerged during 2012 and this trend is expected to continue in 2013.
RESEARCH AND DEVELOPMENT
EB continued its investments in R&D in the automotive software products and
tools in Automotive Business Segment, and in products and product platforms for
the defence and public safety markets in Wireless Business Segment.
The total R&D investments for continuing operations during January-June 2013
were EUR 10.3 million (restated EUR 10.9 million, 1H 2012), equaling 11.0% of
the net sales (restated 13.0 %, 1H 2012). The share of R&D investments in
Automotive Business Segment was EUR 8.1 million (restated EUR 8.9 million,
1H 2012) and in Wireless Business Segment in continuing operations EUR 2.2
million (EUR 2.0 million, continuing operations, 1H 2012).
EUR 0.0 million of R&D investments of the reporting period were capitalized (EUR
2.8 million, 1H 2012). The amount of capitalized R&D investments at the end of
June 2013 was EUR 12.7 million (EUR 13.9 million, 1H 2012). A significant part
of these capitalizations is related to customer agreements of 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 0.4 million,
1H 2012).
OUTLOOK FOR 2013
From the beginning of 2013 EB has started to apply the new IFRS10 and IFRS11
standards concerning consolidation, and consolidates e.solutions GmbH, the
jointly owned company with AUDI, by applying the proportionate consolidation
method. Previously e.solutions GmbH has been included in Elektrobit group's
consolidated financial statements as subsidiary. As a result of the change in
the method of consolidation, the proportion of net sales and operating result of
e.solutions GmbH to be consolidated into Elektrobit group's consolidated
financial statements will decrease. The change does not affect the net profit of
the Company. The change in the method of consolidation as presented above has
been taken into account in the 2013 outlook for net sales and operating result
presented below. More information about this has been presented in this interim
report in the section "Change in the consolidation of the jointly owned company
of EB and AUDI as of January 1, 2013".
Carmakers continue to invest in software for new car models and the market for
automotive software products and services is estimated to continue growing.
However the growth rate of the global automotive industry is estimated to be
less than in the previous year due to the financial uncertainties in Europe.
Despite these uncertainties, many carmakers have further continued good
financial performance and slowing down of the markets affects different car
makers in different ways. The demand for EB's automotive software solutions is
estimated to remain good. In the Automotive Business Segment the operating
profit in 2013 is expected to accumulate mainly during the second half of the
year (EUR 1.2 million, 1H 2013) due to higher product license sales during the
latter half of the year and other seasonality factors.
In the Wireless Business Segment the growth in demand will be driven especially
by the increasing use of the LTE technology that increases the performance of
mobile networks, and the authorities' needs for new communication solutions that
use commercial technologies of smart phones and mobile networks, as well as the
growing need of companies to provide wireless connectivity of their devices,
targeted to consumers and for professional use, to broader solutions. General
cost saving measures of the public sector reflects the demand negatively in the
public authority markets in Europe. In the Wireless Business Segment the demand
outlook for the rest of the year has weakened due to the decreased order volume
from a large customer of EB and due to the delay in some special terminal
projects. Due to the weakened demand outlook, the operating result in the second
half of 2013 is expected to be at the same level or less than in the first half
of 2013 (EUR 0.1 million, 1H 2013). Additionally, the operating result is
affected by seasonality factors and by cost savings materializing during the
last quarter of 2013 as a result from planned temporary layoffs.
EB expects for the year 2013 that net sales will grow and operating result will
be at the same level as it was in 2012 without non-recurring items (restated net
sales of EUR 173.9 million, and restated operating profit without non-recurring
items of EUR 5.1 million, in 2012).
More specific market outlook is presented under the "Business Segments'
development during April - June 2013 and Market Outlook" section. The Wireless
Business Segment's weakened demand outlook for the rest of the year and the
aimed cost savings resulting from the temporary layoffs have been taken into
account in the outlook for 2013.
The non-recurring net profit of about EUR 23 million, resulted from the sale of
the Test Tools product business, has no impact on the operating result of 2013
and therefore has no impact on the operating result guidance. All profits and
costs related to the mentioned business are presented in the group's income
statement, below operating profit under "result for the period from
discontinuing operations".
The profit outlook for the year 2013 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 under "Risks and Uncertainties"
section.
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.
Market risks
In the ongoing financial period, global economic uncertainty may affect the
demand for EB's services, solutions and products and provide pressure on e.g.
pricing. In the short term such uncertainty may affect, in particular, the
utilization and chargeability levels and average hourly prices of R&D services.
As EB's customer base consists mainly of companies operating in the fields of
automotive and telecommunications and defense and public safety authorities, the
company is exposed to market changes in these industries. Some parts of EB's
business are more sensitive than others to dependency on an individual customer.
Deviation in anticipated business development with such a customer may translate
as a significant deviation in the EB's outlook during the ongoing financial
period and thereafter. EB seeks to expand its customer base on a longer term and
reduce dependence on individual companies and hence the company will thereby be
mainly affected by the general business climate in automotive and
telecommunication industries. The more specific market outlook is presented
under the "Business Segments' Development during April-June 2013 and Market
Outlook" section.
Business related risks
EB's operative business risks are mainly related to following items:
uncertainties and short visibility on customers' product program decisions,
their make or buy decisions and on the other hand, their decisions to continue,
downsize or terminate current product programs, execution and management of
large customer projects, ramping up and down project resources, availability of
personnel in labor markets (in particular in Germany), accessibility on
commercially acceptable terms and on the other hand successful utilization of
the most important technologies and components, competitive situation and
potential delays in the markets, timely closing of customer and supplier
contracts with reasonable commercial terms, delays in R&D projects, realization
of expected return on capitalized R&D investments, obsolescence of inventories
and technology risks in product development causing higher than planned R&D
costs. Revenues expected to come from either existing or new products and
customers include normal timing risks. EB has certain significant customer
projects and deviation in their expected continuation could result also
significant deviations in the Company's outlook. In addition there are typical
industry warranty and liability risks involved in selling EB's services,
solutions and products.
EB's product delivery business model faces such risks as high dependency on
actual product volumes and development of the cost of materials. The above-
mentioned risks may manifest themselves as lower amounts of product delivered or
higher costs of production, and ultimately, as lower profit. More than earlier
EB's customers in the automotive industry seek paying the software and product
platform development either entirely or mainly through license fees after the
start of the production, which may cause significant additional financing needs
for the R&D phase and again increase the dependency on production volumes of
cars.
Some of EB's businesses operate in industries that are heavily reliant on patent
protection and therefore face risks related to management of intellectual
property rights, on the one hand related to accessibility on commercially
acceptable terms of certain technologies in the EB's products and services, and
on the other hand related to an ability to protect technologies that EB develops
or licenses from others from claims that third parties' intellectual property
rights are infringed. Additionally, parties outside of the industries operate
actively in order to protect and commercialize their patents and therefore in
their part increase the risks related to the management of intellectual property
rights. At worst, claims that third parties' intellectual property rights are
infringed, could lead to substantial liabilities for damages. Also EB has
received a formal request from one of its customers for indemnification that is
unspecified both in terms of the basis of liability and the amount claimed.
Based on information available it does not seem likely that the claim would
result in significant liability in the short term. It is possible that, based on
later information, the above views may need to be reconsidered.
Financing risks
Global economic uncertainty may lead to payment delays, increase the risk for
credit losses and weaken the availability and terms of financing. To fund its
operations, EB relies mainly on income from its operative business and may from
time to time seek additional financing from selected financial institutions.
Currently EB has a committed overdraft credit facility agreement of EUR 10
million and committed revolving credit facility agreement of EUR 10 million,
valid until June 30, 2014. These agreements include financial covenants related
to group's equity ratio and earnings before interest and taxes (EBITDA), to be
reviewed semiannually. There is no assurance that additional financing will not
be needed in case of clearly weaker than expected development of EB's businesses
or in case customer commitments of Automotive Business Segment would represent
more than planned funding for R&D phase.
Customer dependency in some parts of EB's business may translate as accumulation
of risk with respect to outstanding receivables and ultimately with respect to
credit losses. EB asserted claims for its receivables in the amount of
approximately USD 25.8 million (EUR 19.4 million as per exchange rate of August
7, 2013) in the Chapter 11 cases of its customers TerreStar Networks Inc. and
its parent company TerreStar Corporation filed in 2010 and 2011. In addition to
the booked receivables, EB asserted claims for additional costs in the amount of
approximately USD 2.1 million (EUR 1.6 million as per exchange rate of August
7, 2013) resulting mainly from the ramp down of the business operations between
the parties. Thus, EB asserted claims against each of the TerreStar entities in
amounts totaling USD 27.9 million (EUR 21.0 million as per exchange rate of
August 7, 2013). Due to uncertainties related to the accounts receivable, EB
booked an impairment of the accounts receivable in the amount of EUR 8.3 million
during the second half of 2010.
EB presently estimates that its total distribution under the Terre Star Networks
confirmed plan of liquidation may be in the range of 8-10% of the face amount of
its claim. However, this estimate is subject to various assumptions, and the
amount and timing of EB's distribution on the remaining portion of its claim
cannot be predicted with certainty at this time. Pursuant to the plan, on March
29, 2012 EB received a USD 650,890 distribution on that portion of its claim
entitled to payment priority under U.S. bankruptcy law.
As part of the Chapter 11 process, the liquidating trustee (the "Trustee") of
The TerreStar Networks Inc. Liquidating Trust (the trust having been formed in
connection with confirmation of the Chapter 11 plan of TerreStar Networks) is
considering whether the Trustee may recover payments previously made to
creditors pursuant to various provisions of the Bankruptcy Code. During the 90
days prior to TerreStar Networks' bankruptcy filing, EB received approximately
USD 2.5 million that the Trustee has alleged to be preferential payments, and it
remains possible that the Trustee may sue EB to recover these payments. EB
believes that it has strong defenses to any such litigation and therefore would
vigorously contest it, but anticipates that this issue must be adjudicated or
settled before EB receives further distributions on its claim. Further, in
reconciling accounts in preparation for making distributions under the TerreStar
Networks plan, the Trustee requested, and EB provided, additional information
and documents in support of EB's claim. EB has entered into a tolling agreement
with the Trustee which, as amended, extends the avoidance action statute of
limitations through and including August 21, 2013, which date could be further
extended by mutual consent, with a view to determining whether the parties can
settle any outstanding disputes between them. The likelihood and outcome of any
such disputes cannot be predicted with certainty at this time.
By order of the bankruptcy court dated August 24, 2012, Elektrobit Inc., a
subsidiary of EB, and TerreStar Corporation and certain of its preferred
shareholders, entered into a full and final settlement of various disputes that
had arisen between them in the TerreStar Corporation reorganization cases.
Pursuant to this settlement, on August 28, 2012 TerreStar Corporation made a
cash payment to Elektrobit Inc. of USD 13.5 million in full and final
satisfaction of EB's claim against that entity. The settlement did not include
the TerreStar Networks Chapter 11 cases and did not include any distribution
from those cases that may be available to EB. On October 24, 2012, the
bankruptcy court entered an order approving a plan of reorganization for
TerreStar Corporation and various affiliates (not including TerreStar Networks)
which preserved EB's rights with respect to EB's claim against TerreStar
Networks.
Based on EB's current understanding, there is no reason to believe that EB would
not be able to collect from the bankruptcy estate of TerreStar Networks the full
amount of the pro rata distribution on its general unsecured claim in due
course. It is possible that based on later information related to the TerreStar
Networks Chapter 11 cases, the above views may need to be reconsidered. Should
the amount of the pro rata distribution on EB's general unsecured claim not be
collected from the bankruptcy estate of TerreStar Networks, and should the
Trustee commence litigation resulting an order for EB to repay certain allegedly
preferential transfers, costs related to the process would additionally lower
EB's operating result on a non-recurring basis by approximately EUR 2 million at
maximum.
The U.S. Internal Revenue Service ("IRS") disallowed a deduction taken on EB's
subsidiary's, Elektrobit Inc.'s 2010 U.S. federal income tax return for the
impairment of the receivables from the TerreStar companies. EB appealed this
disallowance to the IRS Office of Appeals, which is expected to render a
decision before the end of 2013. An unfavorable decision can be appealed to the
United States Tax Court, in which case the appeal will take two years.
If the appeal were to proceed to the United States Tax Court and if the
resolution of the litigation results in a complete rejection of the amount
deducted in 2010, EB would be required to pay back the tax refund in full with
accrued interest. At worst, as a result of the pay back of the tax refund and
the respective interest expenses and litigation expenses, there would be a
negative effect on EB's cash flow of approximately of USD 2.7 million (EUR 2.0
million as per exchange rate of August 7, 2013). Depending on the progression of
the appellate process, such effects would be booked probably in 2016. Based on
EB's current understanding, there is no reason to believe that the IRS'
disallowance will be sustained. Based on subsequent information, the situation
may need to be reconsidered. It is also possible that during the appellate
process, the parties may settle this matter.
STATEMENT OF FINANCIAL POSITION AND FINANCING
The figures presented in the statement of financial position of June 30, 2013,
are compared with the statement of the financial position of December 31, 2012
(MEUR).
6/2013 12/2012
restated
Non-current assets 46.5 46.8
Current assets 100.5 77.6
Assets classified as held for sale 7.7
Total assets 146.9 132.2
Share capital 12.9 12.9
Other equity 76.6 53.7
Non-controlling interests
Total shareholders' equity 89.5 66.6
Non-current liabilities 7.8 7.9
Current liabilities 49.6 53.2
Liabilities classified as held for sale 4.5
Total shareholders' equity and liabilities 146.9 132.2
Net cash flow from operations during the period under review:
+ net profit +/- adjustment of accrual basis items EUR +6.1 million
+/- change in net working capital EUR +0.2 million
- interest, taxes and dividends EUR -1.0 million
= cash generated from operations EUR +5.4 million
- net cash used in investment activities EUR +26.3 million
- net cash used in financing EUR -3.9 million
= net change in cash and cash equivalents EUR +27.8 million
The amount of accounts receivable and other receivables, booked in current
receivables, was EUR 58.0 million (EUR 63.0 million on December 31, 2012).
Accounts payable and other payables, booked in interest-free current
liabilities, were EUR 38.2 million (EUR 40.5 million on December 31, 2012). The
amount of non-depreciated consolidation goodwill at the end of the period under
review was EUR 19.3 million (EUR 19.3 million on December 31, 2012).
The amount of gross investments in the period under review was EUR 3.9 million.
Net investments for the reporting period totaled EUR 3.5 million. The total
amount of depreciation of continuing operations during the period under review
was EUR 4.4 million, including EUR 0.5 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 16.4 million (EUR 18.1 million on
December 31, 2012). The distribution of net financing expenses on the income
statement of continuing operations was as follows:
interest dividend and other financial income EUR 0.1 million
interest expenses and other financial expenses EUR -0.3 million
foreign exchange gains and losses EUR -0.4 million
EB's equity ratio at the end of the period was 64.0% (55.0 % on December
31, 2012). The increase in equity ratio is mainly due to the sale of the Test
Tools product business. The transaction resulted in a net profit of about EUR
23 million.
Cash and other liquid assets at the end of the reporting period were EUR 42.1
million (EUR 14.3 million on December 31, 2012). The increase in cash reserves
is mainly due to the sale of the Test Tools product business. EB has 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. EUR 10.1
million of these facilities was used at the end of the reporting period.
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 EUR 9.0 million.
PERSONNEL
The parent company of the group and its subsidiaries employed an average of
1608 people between January and June 2013. In addition, e.solutions GmbH, the
jointly owned company of EB and AUDI employed 283 people. At the end of June,
the parent company of the group and its subsidiaries had 1648 employees and
e.solutions GmbH 303 employees (1583 in group's parent company and subsidiaries
and e.solutions GmbH 233 at the end of 2012). A significant part of EB's
personnel are R&D engineers.
FLAGGING NOTIFICATIONS
There were no changes in ownership during the period under review that would
have caused flagging notifications which are obligations for disclosure in
accordance with Chapter 2, section 9 of the Securities Market Act.
EVENTS AFTER THE REVIEW PERIOD
After the reporting period, on July 5, 2013, EB told that a total of 97,500 new
shares in Elektrobit Corporation were subscribed between April 2 and June
20, 2013 by virtue of the option rights 2008A. The share subscription price, EUR
17,550, was recorded in the Company's invested non-restricted equity fund. The
corresponding increase in the number of the Company's shares was entered into
the Finnish Trade Register on July 5, 2013. Trading with the newly registered
shares started on July 8, 2013 in NASDAQ OMX Helsinki Ltd. After the
registration of the new shares, the number of shares in Elektrobit Corporation's
totals 129,510,190. More information and the terms and conditions of stock
options 2008 are available in www.elektrobit.com/investors in the Company's web
pages.
EB announced today, on August 8, 2013 to start personnel negotiations in
Wireless Business Segment to adjust its cost level to correspond the weakened
demand outlook for the rest of the year. With temporary layoffs EB aims at EUR
1.5 million cost savings, which are expected to materialize mainly during the
fourth quarter. In order to achieve the targeted cost savings, EB plans to
temporarily lay off 150 employees at the maximum, for 90 days at the maximum,
part-time or full-time. The negotiations concern employees working in Elektrobit
Wireless Communications Ltd. Currently 548 employees are working in Wireless
Business Segment. The underlying reasons for the planned layoffs are the
decreased order volume for the second half of 2013 from a large customer of EB,
and delays in some special terminal projects. The weakened demand outlook for
the rest of the year and the aimed cost savings resulting from the temporary
layoffs have been taken into account in the outlook for 2013 given in this
interim report.
CHANGING THE CONSOLIDATION OF THE JOINTLY OWNED COMPANY OF EB AND AUDI AS OF
JANUARY 1, 2013
EB will start to apply the new IFRS10 and IFRS11 standards from the beginning of
2013 and will consolidate e.solutions GmbH, a jointly owned company with Audi
Electronics Venture GmbH (AEV), applying the proportionate consolidation method.
As a result of the change in the method of consolidation, the proportion of net
sales and operating result of e.solutions GmbH consolidated into Elektrobit
group's financial statements will decrease from the previous 100% to 51%. The
change in the consolidation method has no effect on EB's net result. According
to the rules of proportionate consolidation method, the consolidated statement
will also include 49% of the net sales of other Elektrobit group companies to
e.solutions GmbH.
In 2012, the Elektrobit group net sales from continuing operations was EUR
185.4 million and the operating profit from continuing operations was EUR 2.5
million. If the proportionate consolidation method would have been applied for
e.solutions GmbH already in 2012, the consolidated net sales of Elektrobit group
would have been EUR 11.6 million and the operating profit EUR 1.4 million less
than was the case when the full consolidation method was applied, as presented
above. In 2012, the external net sales of e.solutions GmbH was EUR 34.6 million
and the operating profit EUR 2.9 million. In the financial reports of 2013, EB
presents the year-on-year information of income statement and balance sheet on
restated comparable basis, assuming that e.solutions GmbH would have been
consolidated to EB group according to the rules of proportionate consolidation
already in 2012.
Elektrobit Corporation's subsidiary company Elektrobit Automotive GmbH holds a
51% stake in e.solutions GmbH, with AEV holding the remaining 49%. Previously,
since its establishment in 2009, e.solutions GmbH has been brought into the
consolidated statements as subsidiary and its net sales and operating result
have been consolidated in the Elektrobit group's financial statements in full.
The new IFRS10 and IFRS 11 standards for consolidated financial statements and
joint arrangements will take effect on 1(st) of January 2014, but they may be
applied as of 1(st) of January 2013. The accounting standard IFRS 10 sets out
the rules for presenting and preparing consolidated financial statements when an
entity controls one or more other entities. IFRS11 establishes principles for
financial reporting by parties to a joint arrangement. According to the
standard, joint arrangements are defined either as "joint ventures" or "joint
operations". e.solutions GmbH is deemed to fulfil the criteria of a "joint
operation", whereby it is required that a proportionate consolidation method be
applied at the latest when the new standard takes effect.
Oulu, August 8, 2013
Elektrobit Corporation
The Board of Directors
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 2013
(unaudited)
The Interim Report has been prepared in accordance with IAS 34 Interim Financial
Reporting.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1-6/2013 1-6/2012 1-12/2012
(MEUR)
6 months 6 months 12 months
restated restated
Continuing operations
NET SALES 94.1 84.2 173.9
Other operating income 2.0 1.1 2.4
Change in work in progress and finished goods -0.0 -0.1 -0.2
Work performed by the undertaking for its own
purpose
and capitalized 0.0 0.5
Raw materials -4.2 -3.8 -7.3
Personnel expenses -57.7 -49.9 -101.1
Depreciation -4.4 -3.3 -7.1
Other operating expenses -28.4 -28.5 -60.2
OPERATING PROFIT (LOSS) 1.4 -0.4 1.1
Financial income and expenses -0.6 0.1 -0.5
PROFIT BEFORE TAX 0.8 -0.3 0.6
Income tax -0.0 -0.2 0.5
PROFIT FOR THE PERIOD FROM CONTINUING
OPERATIONS 0.8 -0.5 1.1
Discontinued operations
Profit for the year from discontinued operations 23.6 0.4 1.2
PROFIT FOR THE PERIOD 24.4 -0.1 2.3
Other comprehensive income:
Items that may be reclassified subsequently to the
statement of income
Exchange differences on translating foreign
operations 0.2 0.0 0.2
Other comprehensive income for the period total 0.2 0.0 0.2
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 24.6 -0.1 2.5
Profit for the year attributable to
Equity holders of the parent 24.4 -0.1 2.3
Non-controlling interests
Total comprehensive income for the period
attributable to
Equity holders of the parent 24.6 -0.1 2.5
Non-controlling interests
Earnings per share from continuing operations, EUR
Basic earnings per share 0.006 -0.004 0.008
Diluted earnings per share 0.006 -0.004 0.008
Earnings per share from discontinued operations,
EUR
Basic earnings per share 0.182 0.003 0.009
Diluted earnings per share 0.181 0.003 0.009
Earnings per share from continuing and
discontinued operations, EUR
Basic earnings per share 0.189 -0.001 0.018
Diluted earnings per share 0.187 -0.001 0.017
Average number of shares, 1000 pcs 129 413 129 413 129 413
Average number of shares, diluted, 1000 pcs 130 338 130 230 130 238
CONSOLIDATED STATEMENT OF FINANCIAL POSITION June 30, June 30, Dec. 31,
(MEUR)
2013 2012 2012
restated restated
ASSETS
Non-current assets
Property, plant and equipment 9.3 9.3 8.7
Goodwill 19.3 19.3 19.3
Intangible assets 16.5 17.8 17.8
Other financial assets 0.1 0.1 0.1
Deferred tax assets 1.1 0.1 0.9
Non-current assets total 46.4 46.6 46.8
Current assets
Inventories 0.5 2.5 0.4
Trade and other receivables 58.0 65.6 63.0
Financial assets at fair value through profit or
loss 34.8 9.7
Cash and short term deposits 7.3 5.8 4.6
Current assets total 100.5 73.9 77.6
Assets classified as held for sale 7.7
TOTAL ASSETS 146.9 120.5 132.2
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent
Share capital 12.9 12.9 12.9
Invested non-restricted equity fund 38.7 38.7 38.7
Translation difference 0.8 0.4 0.6
Retained earnings 37.0 13.4 14.3
Non-controlling interests
Total equity 89.5 65.5 66.6
Non-current liabilities
Deferred tax liabilities 0.5 0.9 0.7
Pension obligations 2.0 1.3 1.4
Provisions 0.4 0.5 0.5
Interest-bearing liabilities 5.0 4.9 5.4
Non-current liabilities total 7.8 7.5 7.9
Current liabilities
Trade and other payables 36.0 36.5 38.3
Financial liabilities at fair value through
profit or loss 0.1 0.0
Provisions 2.1 1.4 2.2
Interest-bearing loans and borrowings 11.4 9.4 12.7
Current liabilities total 49.6 47.4 53.2
Liabilities classified as held for sale 4.5
Total liabilities 57.4 55.0 65.6
TOTAL EQUITY AND LIABILITIES 146.9 120.5 132.2
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-6/2013 1-6/2012 1-12/2012
6 months 6 months 12 months
restated restated
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year from continuing operations 0.8 -0.5 1.1
Profit for the year from discontinued operations 23.6 0.4 1.2
Adjustment of accrual basis items -18.3 4.7 8.7
Change in net working capital 0.2 -6.1 -3.0
Interest paid on operating activities -0.7 -0.6 -0.9
Interest received from operating activities 0.1 0.0 0.1
Other financial income and expenses, net received 0.0 0.0 0.0
Income taxes paid -0.3 -0.2 -0.3
NET CASH FROM OPERATING ACTIVITIES 5.4 -2.4 6.8
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of business unit, net of cash acquired 29.2
Purchase of property, plant and equipment -2.2 -1.1 -2.8
Purchase of intangible assets -0.8 -3.6 -5.4
Purchase of other investments
Sale of property, plant and equipment 0.2 0.3 0.4
Sale of intangible assets 0.0 0.0 0.0
Proceeds from sale of investments 0.0
NET CASH FROM INVESTING ACTIVITIES 26.3 -4.4 -7.8
CASH FLOW FROM FINANCING ACTIVITIES
Share-option plans exercised 0.0
Proceeds from borrowing 14.3 5.9 16.6
Repayment of borrowing -15,4 -1.2 -7.5
Payment of finance liabilities -1.6 -1.4 -2.9
Dividend paid -1.3
NET CASH FROM FINANCING ACTIVITIES -3.9 3.4 6.1
NET CHANGE IN CASH AND CASH EQUIVALENTS 27.8 -3.5 5.1
Cash and cash equivalents at beginning of period 14.3 9.2 9.2
Cash and cash equivalents at end of period 42.1 5.8 14.3
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY (MEUR)
A = Share capital
B = Invested non-restricted equity fund
C = Translation difference
D = Retained earnings
E = Total
F = Non-controlling interests
G = Total equity
A B C D E F G
restated
Shareholders equity on January 1, 2012 12.9 38.7 0.4 13.4 65.5 0.0 65.5
Comprehensive income for the period
Profit for the period -0.1 -0.1 -0.1
Exchange differences on translating
foreign operations 0.0 0.0 0.0
Total comprehensive income for the period 0.0 -0.1 -0.1 -0.1
Transactions between the shareholders
Share-related compensation 0.2 0.2 0.2
Other changes -0.1 -0.1 -0.1
Shareholders equity on June 30, 2012 12.9 38.7 0.4 13.4 65.5 0.0 65.5
restated
Shareholders equity on December 31, 2012 12.9 38.7 0.6 14.3 66.6 0.0 66.6
Change in accounting policy (IAS 19) -0.6 -0.6 -0.6
Shareholders equity on January 1, 2013
restated 12.9 38.7 0.6 13.8 66.0 0.0 66.0
Comprehensive income for the period
Profit for the period 24.4 24.4 24.4
Exchange differences on translating 0.2 0.2 0.2
foreign operations
Total comprehensive income for the period 0.2 24.4 24.6 24.6
Transactions between the shareholders
Dividend distribution -1.3 -1.3 -1.3
Share option plans exercised 0.0 0.0 0.0
Share-related compensation 0.1 0.1 0.1
Total transactions between the shareholders 0.0 -1.2 -1.2 -1.2
Other changes -0.0 -0.0 -0.0
Shareholders equity on June 30, 2013 12.9 38.7 0.8 37.0 89.5 0.0 89.5
NOTES TO THE INTERIM FINANCIAL REPORTING
Accounting principles for the interim financial reporting:
IFRS amendments
IFRS 10 and IFRS 11
From the beginning of 2013 EB has applied the new IFRS10 and IFRS11 standards.
As a result the proportion of net sales and operating result of e.solutions
GmbH, a jointly owned company of EB and AUDI, to be consolidated into Elektrobit
group's consolidated financial statements will decrease compared to previous
consolidation method. The change will have no impact on consolidated net profit.
For comparability, all figures presented for comparison are restated assuming
that the proportionate consolidation method according to the above mentioned
standards would have been applied already in 2012.
IAS 19 Employee benefits
From the beginning of 2013 EB has applied the revised IAS 19 Employee benefits
-standard. The impact on the equity in the opening balance 2013 was EUR -0.6
million. Pension obligations increased by EUR 0.6 million.
The revised standards have impact on the condensed financial statements.
Explanatory comments about the seasonality or cyclicality of reporting period
operations:
The Company operates in business areas which are subject to seasonal
fluctuations.
Discontinued operations
EB's figures are divided between Continuing and Discontinued Operations as
provided by the IFRS5 standard. In this interim report, Test Tools product
business, sold on January 31, 2013, is classified as Discontinued Operations.
Payment of dividend:
The Annual General Meeting held on April 11, 2013 decided in accordance with the
proposal of the Board of Directors to pay EUR 0.01 per share as dividend based
on the balance sheet adopted for the financial period January 1, 2012 - December
31, 2012.
SEGMENT INFORMATION (MEUR)
OPERATING SEGMENTS 1-6/2013 1-6/2012 1-12/2012
6 months 6 months 12 months
restated restated
Automotive
Net sales to external customers 63.0 51.3 110.5
Net sales to other segments 0.1 0.0 0.1
Net sales total 63.0 51.3 110.6
Operating profit (loss) 1.2 0.7 3.3
Wireless
Net sales to external customers 31.2 32.8 63.3
Net sales to other segments 0.1 0.2 0.3
Net sales total 31.2 33.0 63.5
Operating profit (loss) 0.1 -1.0 -2.2
OTHER ITEMS
Other items
Net sales to external customers 0.0 0.0 0.1
Operating profit (loss) 0.1 -0.0 0.0
Eliminations
Net sales to other segments -0.1 -0.2 -0.3
Operating profit (loss) 0.0 0.0 0.0
Group total
Net sales to external customers 94.1 84.2 173.9
Operating profit (loss) 1.4 -0.4 1.1
Net sales of geographical areas (MEUR) 1-6/2013 1-6/2012 1-12/2012
6 months 6 months 12 months
restated restated
Net sales
Europe 77.9 66.5 136.7
Americas 12.6 14.6 28.6
Asia 3.7 3.0 8.5
Net sales total 94.1 84.2 173.9
Related party transactions: 1-6/2013 1-6/2012 1-12/2012
6 months 6 months 12 months
Employee benefits for key management and stock
option expenses total 0.6 0.6 1.3
CONSOLIDATED STATEMENT OF 4-6/ 1-3/ 10-12/ 7-9/ 4-6/
COMPREHENSIVE INCOME 2013 2013 2012 2012 2012
BY QUARTER (MEUR) 3 months 3 months 3 months 3 months 3 months
restated restated restated
Continuing operations
NET SALES 47.9 46.2 48.2 41.5 41.5
Other operating income 1.0 0.9 0.7 0.7 0.6
Change in work in progress and
finished goods -0.1 0.1 -0.1 0.1 0.1
Work performed by the
undertaking
for its own purpose and
capitalized 0.4 0.1 0.0
Raw materials -1.9 -2.3 -2.1 -1.4 -2.3
Personnel expenses -28.9 -28.9 -27.1 -24.1 -24.3
Depreciation -2.2 -2.2 -2.0 -1.7 -1.7
Other operating expenses -15.2 -13.2 -18.5 -13.2 -14.8
OPERATING PROFIT (LOSS) 0.7 0.7 -0.5 2.0 -0.9
Financial income and expenses -0.5 -0.1 -0.4 -0.2 0.4
PROFIT BEFORE TAX 0.2 0.6 -0.9 1.8 -0.5
Income tax 0.0 -0.0 0.8 -0.1 -0.1
PROFIT FOR THE PERIOD FROM
CONTINUING OPERATIONS 0.2 0.6 -0.1 1.7 -0.6
Discontinued operations
Profit for the period from
discontinued operations 0.0 23.6 0.9 -0.1 0.3
PROFIT FOR THE PERIOD 0.2 24.2 0.8 1.6 -0.3
Other comprehensive income 0.2 -0.0 0.2 -0.0 -0.0
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 0.4 24.2 1.0 1.6 -0.3
Profit for the period
attributable to:
Equity holders of the parent 0.2 24.2 0.8 1.6 -0.3
Non-controlling interests
Total comprehensive income
for the period attributable to:
Equity holders of the parent 0.4 24.2 1.0 1.6 -0.3
Non-controlling interests
CONSOLIDATED STATEMENT OF June 30, March 31, Dec. 31, Sept. 30, June 30,
FINANCIAL POSITION (MEUR) 2013 2013 2012 2012 2012
restated restated restated
ASSETS
Non-current assets
Property, plant and equipment 9.3 8.6 8.7 9.4 9.3
Goodwill 19.3 19.3 19.3 19.3 19.3
Intangible assets 16.5 17.4 17.8 17.7 17.8
Other financial assets 0.1 0.1 0.1 0.1 0.1
Deferred tax assets 1.1 1.0 0.9 0.0 0.1
Non-current assets total 46.4 46.5 46.8 46.6 46.6
Current assets
Inventories 0.5 0.5 0.4 2.7 2.5
Trade and other receivables 58.0 59.9 63.0 68.6 65.6
Financial assets at fair
value
through profit or loss 34.8 34.7 9.7 0.1
Cash and short term deposits 7.3 8.8 4.6 15.7 5.8
Current assets total 100.5 104.0 77.6 87.0 73.9
Assets classified as held for
sale 7.7
TOTAL ASSETS 146.9 150.5 132.2 133.6 120.5
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-restricted
equity fund 38.7 38.7 38.7 38.7 38.7
Translation difference 0.8 0.6 0.6 0.4 0.4
Retained earnings 37.0 38.0 14.3 15.1 13.4
Non-controlling interests
Total equity 89.5 90.2 66.6 67.2 65.5
Non-current liabilities
Deferred tax liabilities 0.5 0.5 0.7 0.8 0.9
Pension obligations 2.0 2.0 1.4 1.3 1.3
Provisions 0.4 0.4 0.5 0.4 0.5
Interest-bearing liabilities 5.0 9.2 5.4 10.8 4.9
Non-current liabilities total 7.8 12.1 7.9 13.3 7.5
Current liabilities
Trade and other payables 36.0 35.4 38.3 38.4 36.5
Financial liabilities at fair
value
through profit or loss 0.2 0.0 0.1
Provisions 2.1 2.9 2.2 1.7 1.4
Interest-bearing loans and
borrowings (non-current) 11.4 9.6 12.7 13.0 9.4
Current liabilities total 49.6 48.1 53.2 53.1 47.4
Liabilities classified as held
for sale 4.5
Total liabilities 57.4 60.2 65.6 66.4 55.0
TOTAL EQUITY AND LIABILITIES 146.9 150.5 132.2 133.6 120.5
CONSOLIDATED STATEMENT 4-6/ 1-3/ 10-12/ 7-9/ 4-6/
OF CASH FLOWS BY QUARTER 2013 2013 2012 2012 2012
3 months 3 months 3 months 3 months 3 months
restated restated restated
Net cash from operating
activities 4.1 1.3 7.0 2.2 -0.3
Net cash from investing
activities -1.5 27.8 -2.2 -1.2 -2.0
Net cash from financing
activities -4.1 0.2 -6.1 8.9 2.6
Net change in cash and cash
equivalents -1.5 29.3 -1.4 9.9 0.3
FINANCIAL PERFORMANCE RELATED RATIOS 1-6/2013 1-6/2012 1-12/2012
6 months 6 months 12 months
restated restated
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
Net sales 94.1 84.2 173.9
Operating profit (loss) 1.4 -0.4 1.1
Operating profit (loss), % of net sales 1.5 -0.5 0.6
Profit before taxes 0.8 -0.3 0.6
Profit before taxes, % of net sales 0.9 -0.4 0.3
Profit for the period 0.8 -0.5 1.1
PROFITABILITY AND OTHER KEY FIGURES
Interest-bearing net liabilities, (MEUR) -25.7 8.6 4.0
Net gearing, -% -28.7 13.1 6.1
Equity ratio, % 64.0 58.1 55.0
Gross investments, (MEUR) 3.9 6.8 12.2
Average personnel during the period, parent and
subsidiaries 1608 1496 1528
Personnel at the period end, parent and
subsidiaries 1648 1544 1583
Average personnel during the period, jointly owned
company 283 109 132
Personnel at the period end, jointly owned company 303 113 233
AMOUNT OF SHARE ISSUE ADJUSTMENT June 30, June 30, Dec. 31,
(1,000 pcs) 2013 2012 2012
At the end of period 129 413 129 413 129 413
Average for the period 129 413 129 413 129 413
Average for the period diluted with stock options 130 338 130 230 130 238
STOCK-RELATED FINANCIAL RATIOS (EUR) 1-6/2013 1-6/2012 1-12/2012
6 months 6 months 12 months
restated restated
Earnings per share from continuing operations, EUR
Basic earnings per share 0.006 -0.004 0.008
Diluted earnings per share 0.006 -0.004 0.008
Earnings per share from discontinued operations,
EUR
Basic earnings per share 0.182 0.003 0.009
Diluted earnings per share 0.181 0.003 0.009
Earnings per share from continuing and
discontinued operations, EUR
Basic earnings per share 0.189 -0.001 0.018
Diluted earnings per share 0.187 -0.001 0.017
Equity *) per share 0.69 0.51 0.51
*) Equity attributable to equity holders of the
parent
MARKET VALUES OF SHARES (EUR) 1-6/2013 1-6/2012 1-12/2012
6 months 6 months 12 months
Highest 1.06 0.79 0.79
Lowest 0.64 0.38 0.38
Average 0.85 0.63 0.64
At the end of period 1.03 0.62 0.65
Market value of the stock, (MEUR) 133.3 80.2 84.1
Trading value of shares, (MEUR) 7.6 5.1 6.9
Number of shares traded, (1,000 pcs) 8 965 8 222 10 750
Related to average number of shares % 6.9 6.4 8.3
SECURITIES AND CONTINGENT LIABILITIES June 30, June 30, Dec. 31,
(MEUR) 2013 2012 2012
AGAINST OWN LIABILITIES
Floating charges 18.0 18.1 18.1
Guarantees 13.8 23.5 17.7
Rental liabilities
Falling due in the next year 6.7 6.8 7.0
Falling due after one year 14.7 16.6 16.2
Other contractual liabilities
Falling due in the next year 1.4 2.3 1.3
Falling due after one year 0.3 0.0 0.0
Mortgages are pledged for liabilities totaled 13.1 9.7 14.5
NOMINAL VALUE OF CURRENCY DERIVATIVES June 30, June 30, Dec. 31,
(MEUR) 2013 2012 2012
Foreign exchange forward contracts
Market value 0.0 0.0 0.0
Nominal value 5.0 4.0 5.0
Purchased currency options
Market value 0.1 0.0 0.0
Nominal value 4.0 5.0 2.0
Sold currency options
Market value -0.1 -0.2 -0.0
Nominal value 8.0 10.0 2.0
[HUG#1721885]
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