2007-04-27 12:01:34 CEST
2007-04-27 12:01:34 CEST
REGULATED INFORMATION
Tekla - Quarterly report
Tekla Corporation s Interim Report January 1-March 31, 2007: Tekla s net sales and operating result remained on a growth track
Tekla Corporation Stock Exchange Release 27.4.2007
Tekla Corporation's Interim Report January 1-March 31, 2007:
Tekla's net sales and operating result remained on a growth track
Net sales of Tekla Group for January-March 2007 totaled 13.60 (10.53)
million euros. Growth in net sales was approximately 29 percent. The
operating profit for the reporting period was approximately twice as
good as that for the corresponding period the previous year, 3.78
(1.85) million euros. The operating result percentage for the
reporting period was 27.8% (17.6%).
Ari Kohonen, President and CEO, comments on the first three months of
2007:
- Net sales and result for the first quarter were outstanding. Our
main business area, Building & Construction, continued to prosper.
The trends in the building industry remained favorable. Our position
as a supplier of 3D modeling software strengthened further in all
markets, and the number of users of these software products is still
growing. The situation was good nearly everywhere; there is still a
lot of construction going on in the Middle East, and sales in India
are strong as well. North America is our largest market area, and
sales have remained at a favorable level there.
- As for the other business area, Infra & Energy, the first quarter
was softer than in the previous year. This was due to strong sales in
the energy industry during the corresponding quarter in 2006. This
year, sales will mainly take place during the upcoming quarters.
- The sale of the project-based Defence business to Patria has been
completed, and the business operations will be transferred to the new
owner on May 1, 2007. We announced the signing of the final agreement
on April 26, 2007. The business deal will be recognized in the second
quarter of 2007, and its effect on Tekla's operating result is
approximately 2.3 million euros. For Tekla, this means that we will
focus further on product-based software business in the future.
- Last week, we announced preliminary information on a strong interim
result for January-March. In the software product business, it is
possible to react swiftly to fluctuation in demand and the
profitability of additional sales is good. The Board estimates that
according to currently available information, the net sales of
continuing business operations will increase by some 20%. In order to
guarantee long-term growth, personnel resources have been increased
and will be increased even further. Therefore, costs will increase,
but we expect the operating result of the continuing business
operations to be clearly better than in the previous year. The
Building & Construction business area is spearheading the growth in
net sales and operating profit, whereas also Infra & Energy's net
sales are expected to experience moderate growth and its result to be
positive.
- - -
Tekla will organize an information conference for analysts and media
in connection with the Tekla Capital Market Afternoon on May 3, 2007.
- - -
TEKLA CORPORATION'S INTERIM REPORT JANUARY 1-MARCH 31, 2007
NET SALES AND PROFITABILITY
* Net sales of Tekla Group for January-March 2007 were 13.60 million
euros
(10.53 million euros for January-March 2006).
* Growth in net sales was 29.2%.
* Operating result was 3.78 (1.85) million euros.
* Operating profit percentage was 27.8 (17.6).
* Earnings per share were 0.13 (0.06) euros
* Return on investment was 73.1 (44.2) percent.
* Return on equity was 54.2 (34.6) percent.
FINANCIAL POSITION
* Cash flow from operating activities totaled 8.50 (6.82) million
euros.
* Liquid assets amounted to 23.10 (18.95) million euros on March 31,
2007 and
24.24 million euros on December 31, 2006.
* Equity ratio was 46.5 (50.6) percent.
* Interest-bearing debts were 0.37 (0.96) million euros.
OTHER KEY FIGURES
* International operations accounted for 80% (74%) of net sales.
* Personnel averaged 373 (310) for January - March.
* At the end of March, the number of personnel including part-time
staff was 393
(326).
* Gross investments in property, plant and equipment were 0.50 (0.32)
million
euros.
* Equity per share was 0.83 (0.71) euros.
* On the last trading day of March, trading closed at 8.80 (5.92)
euros.
NET SALES AND OPERATING RESULT BY BUSINESS AREA (PRIMARY SEGMENT)
Million euros Net sales Operating result
1-3/07 1-3/06 change 1-3/07 1-3/06 change
Building & 10.62 7.33 3.29 3.85 2.15 1.70
Construction
Infra & 2.49 2.73 -0.24 -0.17 0.01 -0.18
Energy *)
Defence **) 0.49 0.47 0.02 0.02 -0.03 0.05
Other 0.00 0.00 0.00 0.08 -0.28 0.36
Total 13.60 10.53 3.07 3.78 1.85 1.93
*) The Energy & Utilities and Public Infra business areas were merged
at the beginning of 2007. The comparison figures for 2006 have been
calculated in accordance with the new grouping of business areas.
**) Defence has been treated as a discontinued business for the
comparison period as well.
NET SALES AND RESULT BY QUARTER IN 2007 AND 2006
Million euros 1-3/07 10-12/06 7-9/06 4-6/06 1-3/06
Net sales 13.60 15.49 11.71 12.05 10.53
Operating profit (loss) 3.78 4.79 3.88 3.10 1.85
Profit (loss) before taxes 4.02 4.71 4.08 3.03 1.95
Profit (loss) for the period 2.93 3.51 2.90 2.32 1.43
BUSINESS AREAS
Building & Construction
Tekla's Building & Construction business area (B&C) develops and
markets the Tekla Structures software product for model-based design
of steel and concrete structures as well as the management of
fabrication and construction.
The trends in the building industry have remained favorable in all
key market areas. Demand for modeling systems in the industry
continues to increase, and product modeling is strengthening its
foothold in structural design and other stages of the building
process. Tekla's market position as a supplier of 3D modeling
software continued strengthening in all markets and the numbers of
users were on the increase.
The net sales of B&C amounted to 10.62 (7.33) million euros for
January-March 2007. Net sales increased by approximately 45% compared
to the previous year. Its operating result was 3.85 (2.15) million
euros. B&C's operating profit percentage for the reporting period was
36.3% (29.3%).
International operations accounted for 95% (96%) of B&C's net sales
in January-March 2007. North America, the United Kingdom and France
were the largest markets. With regard to the key market areas, the
highest proportional growth in Q1 net sales was seen in the Middle
East, India, North America and Western Europe.
By far the most of B&C's net sales is generated by the product
offering for structural steel engineering. Sales of B&C's other
products developed according to plans as well during the first
quarter, and personnel resources have been increased and will be
further increased to guarantee favorable development.
During the reporting period, Tekla joined the Business Software
Alliance. The BSA is a global association that aims to reduce
software piracy and promote a legal network environment.
Infra & Energy
The Energy & Utilities and Public Infra business areas merged into a
new business area, Infra & Energy as of the beginning of 2007. Infra& Energy focuses on the development and sales of model-based software
solutions that support its customers' core processes. The key
customer industries (products in brackets) are energy distribution
(Tekla Xpower), infrastructure management (Tekla Xcity, Tekla
Xstreet) and water supply (Tekla Xpipe).
Structural changes in the energy industry and end users' growing
expectations of the reliability of energy distribution and customer
service increase the need for developing and renewing network
information systems. Tekla has a firm market position in the industry
in the Nordic countries and the Baltic States. In Finland, increasing
regional collaboration will increase the public sector's need to
develop geographic information systems. Tekla's market position is
strong in large and medium-sized Finnish municipalities.
The net sales of I&E amounted to 2.49 (2.73) million euros for
January-March 2007. Net sales decreased by 8.8%. I&E's operating
result for the reporting period was -0.17 (0.01) million euros.
International operations accounted for 31% (30%) of net sales. I&E's
operating profit percentage was -6.8% (0.4%).
I&E's first quarter was softer than in the previous year. This was
due to strong sales in the energy industry during the corresponding
quarter in 2006. This year, sales will mainly take place during the
upcoming quarters. As for I&E's other products, sales and product
projects with customers proceeded according to plans.
The majority of net sales consists or additional and service sales to
existing customers. New customers are mainly expected from among
Swedish energy companies as well as Finnish and Swedish water
utilities. New business opportunities in Eastern Europe are being
explored with local partners. The customer base in the infrastructure
management sector is expected to expand with the adoption of regional
services in Finland.
Defence
The Defence business area develops reconnaissance, command and
control systems in close cooperation with the Finnish Defence Forces.
The Defence business area is treated as a discontinued business in
the Interim Report. The business area's net sales in January-March
2007 amounted to 0.49 (0.47) million euros. Its operating result was
0.02 (-0.03) million euros and operating profit percentage 4.1
(-6.4).
Tekla announced the sale of the Defence business to Patria on April
26, 2007. The business will be transferred to Patria on May 1, 2007.
In connection with the transaction, slightly more than 20 Defence
employees will transfer to Patria.
Tekla will recognize the business deal in the second quarter of 2007.
The impact of the sale on the operating result is some 2.3 million
euros. Tekla has also a possibility to receive an additional price
depending on the sales development of the transferred business.
FOCUSING ON SOFTWARE PRODUCT BUSINESS
As a consequence of the above-mentioned sale of the Defence business
and the formation of the new Infra & Energy business area, Tekla will
focus further on the software product business. The company develops
and sells software products to select customer industries in the
international market. Tekla's software products are meant for
professional use in supporting the customers' core businesses.
Focusing on the software product business facilitates more uniform
processes in product development and e.g. customer relationship
management.
PRODUCT DEVELOPMENT
A decision has been made to change the name of Tekla's software
development unit (Software Production). The new name, Product
Development, better describes Tekla's increasing focus on the
development of its own products and abandonment of the development of
customer-specific information system projects.
Product projects where product features are developed in cooperation
with individual customers and customer groups continue as a part of
the I&E business area's product-based solution offering.
In the first quarter of 2007, product development for the building
sector focused on the annual main version of Tekla Structures, which
was launched in mid-April. Version 13 contains improvements
concerning e.g. software performance and usability. In connection
with the launch of the version it was also announced that in the
future, Tekla will move from releasing three versions to releasing
two versions per year. The annual main version will be released in
the spring and an intermediate version towards the end of the year.
As for Tekla Xpower and Tekla Xpipe software, focus was on the main
versions which will be completed in June, featuring improved
calculation and other electrotechnical properties.
Development of the Tekla Xcity and Tekla Xstreet software products
continued in close cooperation with customers. Tekla Xcity will be
supplemented with improvements that facilitate system integration.
PERSONNEL AND ORGANIZATION
Personnel
The Group personnel averaged 373 (310) for January-March 2007; on
average 132 (102) worked outside Finland. In these figures, the
number of part-time staff has been converted to correspond to
full-time work contribution. At the beginning of the year, Tekla
personnel totaled 365 (324) including part-time staff, and at the end
of March 393 (326), of whom 137 (104) worked outside Finland. Largest
increases to personnel have taken place in product development and
sales.
Senior Management
Members of the Tekla Management Team as of the beginning of 2007 are:
Ari Kohonen, President and CEO; Heikki Multamäki, Executive Vice
President (responsible for Tekla's business development); Risto Räty,
Executive Vice President (Building & Construction); Kai Lehtinen,
Senior Vice President (Infra & Energy); Petri Raitio, Senior Vice
President (Product Development); Leif Granholm, Senior Vice President
(Tekla Nordic); Harald Lundberg, Vice President (Tekla Information
Management); Anneli Bergström, Vice President (Human Resources); and
Timo Keinänen, CFO.
SHARE AND OWNERSHIP STRUCTURE
Shares and Share Capital
The total number of Tekla Corporation shares at the end of March 2007
was 22,586,200, of which the company owned 69,600. The total nominal
value of those was 2,088 euros, representing 0.3% of the total share
capital and the total number of votes. A total of 220,702.46 euros
had been used for acquiring the company's own shares, and their
market value was 612,480 euros on March 31, 2007. The nominal value
of the share is 0.03 euros. At the end of the period, share capital
stood at 677,586 euros.
Share Price Trends and Trading
The highest quotation of the share in January-March 2007 was 9.20
(6.10) euros, the lowest 7.60 (3.38) euros. The average quotation was
8.43 (4.74) euros. On the last trading day of March, trading closed
at 8.80 (5.92) euros.
A total of 3,494,944 (5,103,040) Tekla shares changed hands in
January-March 2007, amounting to 15.5% (23%) of the entire share
capital.
Flagging Announcements
According to a notification by Fidelity International Ltd and its
subsidiaries dated March 19, 2007, their holdings in Tekla
Corporation had decreased below the 5% threshold to 4.09%.
At the end of March, Fidelity International and its subsidiaries
announced that their holdings had crossed above the 5% threshold
after the security lending ended on March, 23, 2007. According to the
notification, the new holdings amounted to 8.37%.
ANNUAL GENERAL MEETING
Tekla Corporation's Annual General Meeting on March 15, 2007 adopted
the financial statements, consolidated income statement and balance
sheet for 2006. The Annual General Meeting also discharged the CEO
and the Board members from liability. The Annual General Meeting also
approved the Board's proposal that a dividend of 0.20 euros plus an
extra dividend of 0.20 euros due to Tekla's anniversary, in total of
0.40 euros per share, be distributed for the financial period 2006.
Ari Kohonen, Esa Korvenmaa, Olli-Pekka Laine (Vice Chair), Heikki
Marttinen (Chair) and Erkki Pehu-Lehtonen were re-elected Board
members until the conclusion of the Annual General Meeting in 2008.
Timo Keinänen was re-elected deputy member of the Board. Juha Kajanen
is the Tekla personnel representative on the Board and Pirjo Lundén
his personal deputy.
PricewaterhouseCoopers were re-elected as auditors, with Markku
Marjomaa, Authorized Public Accountant, as the auditor in charge.
The AGM renewed the Board's authorizations regarding the increase of
the company's share capital and transferring the company's treasury
shares. In addition, the AGM authorized the Board to acquire a
maximum of 500,000 Tekla shares.
SHORT-TERM RISKS AND UNCERTAINTY FACTORS
Possible risks and uncertainty factors associated with Tekla's
business may include the softening of the market situation and the
general economic situation.
In the software product business, it is possible to react swiftly to
fluctuation in demand and the profitability of additional sales is
good. The majority of net sales comprises of sales of licences
entitling to use software products. Fluctuation in their demand can
be rapid and significant.
The company has not observed such risks, since software sales are
geographically diverse and individual customers do not account for a
significant proportion of the net sales.
OUTLOOK FOR 2007
The Board estimates that according to currently available
information, the net sales of continuing business operations will
increase by some 20%. In order to guarantee long-term growth,
personnel resources have been increased and will be increased even
further. Therefore, costs will increase, but the operating result of
the continuing business operations is estimated to be clearly better
than in the previous year. The Building & Construction business area
is spearheading the growth in net sales and operating profit, whereas
also Infra & Energy's net sales are expected to experience moderate
growth well and its result to be positive.
In the financial statements bulletin in February, the Tekla Board of
Directors estimated the net sales of the continuing business
operations to increase by some 15% with operating profit exceeding
that of 2006.
NEXT FINANCIAL REPORT
Tekla Corporation's Interim report for January-June 2007 will be
published on August 3, 2007.
Espoo, April 27, 2007
TEKLA CORPORATION
Board of Directors
For additional information, please contact:
Ari Kohonen, President and CEO, Tel. +358 30 661 1468, +358 50 641
24,
ari.kohonen (at) tekla.com
Timo Keinänen, CFO, Tel. +358 30 661 1773, +358 400 813 027,
timo.keinanen (at) tekla.com
Distribution: Helsinki Exchanges, main media
Enclosures: Consolidated income statement, balance sheet (condensed)
and cash flow statement (condensed)
Calculation of reconciliation of equity
Notes to the Interim Report
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
CONSOLIDATED INCOME STATEMENT
Q1/ Q1/ Change, 1-12/
Million euros 2007 2006 % 2006
Continuing operations:
Net sale 13.11 10.06 30.3 47.64
Other operating income 0.24 0.18 1.02
Change in inventories of finished
goods and in work in progress 0.05 0.00 0.02
Raw material and consumables used -0.58 -0.40 -2.01
Employee compensation and benefit
expense -6.10 -5.12 -21.70
Deprecation -0.30 -0.30 -1.19
Other operating expense -2.66 -2.54 -10.40
Operating profit(loss) 3.76 1.88 100.0 13.38
% of net sales 28.68 18.69 28.09
Financial income 0.50 0.22 1.06
Financial expenses -0.26 -0.12 -0.91
Profit(loss) before taxes 4.00 1.98 102.0 13.53
% of net sales 30.51 19.68 28.40
Income taxes -1.08 -0.52 -3.55
Result for the period from continuing
operations 2.92 1.46 100.0 9.98
Discontinued operations:
Result for the period from
discontinued operations 0.01 -0.03 0.18
Result for the period 2.93 1.43 104.9 10.16
Attributable to the equity holders
of the Company
Earnings per share for profit attributable
to the equity holders of the Company:
Earning per share (EUR) 0.13 0.06 0.45
Earnings are not diluted.
Earnings per share from continuing
operations attributable to the equity
holders of the Company:
Earning per share (EUR) 0.13 0.06 0.44
Earnings are not diluted.
Earnings per share from discontinued
operations attributable to the equity
holders of the Company:
Earning per share (EUR) 0.00 0.00 0.01
Earnings are not diluted.
CONDENSED BALANCE SHEET
Change,
Million euros 3/2007 3/2006 % 12/2006
Assets
Non-current assets
Property, plant and equipment 1.64 1.77 1.74
Goodwill 0.10 0.10 0.10
Intangible assets 0.75 0.41 0.49
Other financial assets 0.30 0.30 0.30
Receivables 0.53 0.00 0.56
Deferred tax assets 0.24 0.32 0.36
Non-current assets, total 3.56 2.90 22.8 3.55
Current assets
Inventories 0.08 0.02 0.04
Trade and other receivables 12.89 9.21 10.90
Other financial assets 14.08 12.23 18.60
Cash and cash equivalents 9.07 6.79 5.69
Current assets, total 36.12 28.25 27.9 35.23
Assets held for sale 0.76 0.68 0.97
Assets total 40.44 31.83 27.0 39.75
Equity and liabilities
Equity
Share capital 0.68 0.68 0.68
Share premium account 8.89 8.89 8.89
Other own capital 1.13 1.31 1.22
Retained earnings 7.89 5.08 13.93
Equity total 18.59 15.96 16.5 24.72
Non-current liabilities
Provisions 0.68 0.83 0.83
Interest bearing liabilities 0.11 0.59 0.27
Non-current liabilities total 0.79 1.42 -44.4 1.10
Current liabilities
Trade and other payables 19.35 13.58 12.17
Tax liabilities 1.07 0.16 0.80
Current interest bearing
liabilities 0.27 0.37 0.43
Current liabilities total 20.69 14.11 46.6 13.40
Liabilities total 21.48 15.53 38.3 14.50
Liabilities related to assets held
for sale 0.37 0.34 0.53
Equity and liabilities total 40.44 31.83 27.0 39.75
CALCULATION OF RECONCILIATION OF EQUITY
Share Fair Acc.
Share prem. Res. value transl Ret.
cap. acct fund res. diff. earn. Total
Equity January 1, 2007 0.68 8.89 1.33 0.10 -0.21 13.93 24.72
Translation differences -0.05 0.04 -0.01
Available-for-sale
financial assets -0.04 -0.04
Payment of dividend -9.01 -9.01
Net profit for the period 2.93 2.93
Equity March 31, 2007 0.68 8.89 1.33 0.06 -0.26 7.89 18.59
Share Fair Acc.
Share prem. Res. value transl Ret.
cap. acct fund res. diff. earn. Total
Equity January 1, 2006 0.68 8.89 1.33 0.04 -0.05 6.32 17.21
Translation differences -0.01 -0.11 -0.12
Available-for-sale
financial assets 0.00
Payment of dividend -2.56 -2.56
Net profit for the period 1.43 1.43
Equity March 31, 2006 0.68 8.89 1.33 0.04 -0.06 5.08 15.96
CONDENSED CASH FLOW STATEMENT
Q1/ Q1/ Change, 1-12/
Million euros 2007 2006 % 2006
Cash flows from operating activities 8.50 6.82 13.01
Cash flows from investing activities:
Investments -0.50 -0.32 -1.33
Sale of intangible assets and
property, plant and equipment 0.00 0.00 0.13
Purchases of available-for-sale
financial assets -15.35 -15.94 -48.64
Proceeds from sale of
available-for-sale financial assets 17.74 15.36 43.84
Interests received from
available-for-sale financial assets 0.22 0.08 0.40
Net cash used in/from investing
activities 2.11 -0.82 -5.60
Cash flows from financing activities:
Payment of dividend -9.01 -2.56 -2.70
Repayments of long-term debt -0.31 -0.35 -0.59
Payments of finance lease
liabilities 0.00 -0.02 -0.06
Net cash used in financing activities -9.32 -2.93 -3.35
Net decrease/increase in cash and cash
equivalents 1.29 3.07 4.06
Cash and cash equivalents at beginning
of the period 7.78 3.72 109.1 3.72
Cash and cash equivalents at end of
the period 9.07 6.79 33.6 7.78
The cash and cash equivalents in the cash
flow statement include:
Cash and cash equivalents 9.07 6.79 5.69
Available-for-sale financial assets,
cash equivalents 0.00 0.00 2.09
NOTES TO THE INTERIM REPORT
This interim report has been prepared in accordance with the IFRS
principles of accounting and valuation; however, the report does not
fully comply with all the requirements of the IAS 34 (Interim
Financial Reporting) standard (so called condensed tables, except for
segment information). The same accounting policies and methods of
computation have been followed in the interim financial statements as
in the annual financial statements for 2006. The amendments and
interpretations to published standards as well as new standards,
effective January 1, 2007, are presented in detail in the financial
statement for 2006. The adopted standards had no such effect on the
basis of preparation of financial statements that the presented
comparison figures should be amended regressively.
Use of estimates
When preparing the interim report, the Group's management is required
to make estimates and assumptions influencing the content of the
interim report, and it must exercise its judgment regarding the
application of accounting policies. These estimates are based on the
management's best knowledge, but it is possible that actual results
may ultimately differ from the estimates used in the interim report.
Tax losses carried forward are recognized as deferred tax assets only
to the extent that it is probable that future taxable profits will be
available against which unused tax losses can be utilized. Actual
results could differ from those estimates.
Financial indicators 3/2007 3/2006 12/2006
Earnings per share (EPS), EUR 0.13 0.06 0.45
Earnings per share from continuing
operations (EPS), EUR 0.13 0.06 0.44
Earnings per share from discontinued
operations (EPS), EUR 0.00 0.00 0.01
Equity/share, EUR 0.83 0.71 1.10
Interest-bearing liabilities 0.37 0.96 0.69
Equity ratio, % 46.5 50.6 63.4
Net gearing, % -122.2 -112.7 -95.2
Return on investment, % 73.1 44.2 63.1
Return on equity, % 54.2 34.6 48.5
Number of shares, end of period
22,516,600 22,516,600 22,516,600
Number of shares, average
22,516,600 22,516,600 22,516,600
Gross investments, MEUR 0.50 0.32 1.33
% of net sales 3.81 3.18 2.79
Personnel, on average 373 310 324
Non-current assets held for sale and discontinued operations
Defence business
Tekla announced the sale of the Defence business to Patria on April
26, 2007. The business will be transferred to Patria on May 1, 2007.
In connection with the transaction, slightly more than 20 Defence
employees will transfer to Patria.
Tekla will recognize the business deal in the second quarter of 2007.
The impact of the sale on the operating result is some 2.3 million
euros. Tekla has also a possibility to receive an additional price
depending on the sales development of the transferred business.
Income and result, Defence
Q1/ Q1/ 1-12/
2007 2006 2006
Income 0.49 0.47 2.14
Expenses -0.47 -0.50 -1.90
Profit before taxes 0.02 -0.03 0.24
Taxes -0.01 -0.06
Profit after taxes 0.01 -0.03 0.18
Result for the period from discontinued
operations 0.01 -0.03 0.18
Balance sheet, Defence
3/2007 3/2006 12/2006
Property, plant and equipment 0.09 0.11 0.10
Intangible assets 0.03 0.04 0.03
Inventories 0.07 0.02 0.02
Trade and other current receivables 0.57 0.51 0.82
Assets total 0.76 0.68 0.97
Trade and other payables 0.36 0.34 0.47
Tax liabilities 0.01 0.00 0.06
Liabilities total 0.37 0.34 0.53
Cash flow statement, Defence
Q1/ Q1/ 1-12/
2007 2006 2006
Cash flows from operating activities 0.15 -0.21 -0.14
Cash flows from investing activities *) 0 0 0
Cash flows from financing activities 0 0 0
Total cash flow 0.15 -0.21 -0.14
*) At Tekla the investments are made centralized and not allocated to
the businesses.
Collaterals, contingent liabilities and other commitments
3/2007 3/2006 12/2006
Collaterals for own commitments
Business mortgages (as collateral for bank
guarantee limit) 0.50 0.50 0.50
Pledged funds 0.07 0.03 0.08
Other contingent liabilities
Guarantees 0.06 0.06 0.07
Leasing and rental agreement
commitments
Premises 3.09 3.92 3.38
Others 0.78 0.77 0.87
Total 3.87 4.69 4.25
Derivative contracts
Currency forward contracts:
Fair value 0.08 0.00 0.06
Nominal value of underlying instruments 5.70 1.65 3.85
The Group makes derivative contracts to hedge against the exchange
rate risks of prospective sales agreements. Forward contracts and
currency options are stated at fair value, and related foreign
exchange gains and losses are recognized in the income statement. The
derivative contracts hedge sales in US dollars.
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