2011-04-29 07:00:00 CEST
2011-04-29 07:00:53 CEST
REGULATED INFORMATION
Elektrobit Oyj - Interim report (Q1 and Q3)
EB, ELEKTROBIT CORPORATION, INTERIM REPORT, JANUARY-MARCH 2011
STOCK EXCHANGE RELEASE
Free for publication on April 29, 2011, at 8.00 a.m. (CEST+1)
EB, ELEKTROBIT CORPORATION, INTERIM REPORT, JANUARY-MARCH 2011
NET SALES DECREASED AND OPERATING RESULT WAS CLEARLY NEGATIVE. THE AUTOMOTIVE
BUSINESS SEGMENT DEVELOPED AS PLANNED WHEREAS THE DEVELOPMENT OF THE WIRELESS
BUSINESS SEGMENT DID NOT MEET THE TARGETS.
SUMMARY JANUARY-MARCH 2011
- Net sales for the period amounted to EUR 36.5 million (EUR 41.5 million,
1Q 2010), representing a decrease of 12.1 % year-on-year. Net sales of the
Automotive Business Segment grew to EUR 23.6 million (EUR 18.5 million,
1Q 2010), representing a 27.4% growth year-on-year. The Wireless Business
Segment's net sales fell by 44.2% to EUR 12.7 million (EUR 22.8 million,
1Q 2010). The decrease in net sales of the Wireless Business Segment was due to
the significantly lower volume in the satellite terminal business.
- Operating loss was EUR -3.9 million (EUR 1.7 million, 1Q 2010). Operating
profit for the Automotive Business Segment was EUR 0.6 million (EUR 0.9 million,
1Q 2010). The Wireless Business Segment's operating loss was EUR -4.6 million
(EUR 0.9 million, 1Q 2010).
- EBITDA was EUR -1.6 million (EUR 3.8 million, 1Q 2010).
- Operating cash flow was EUR 1.4 million (EUR 10.6 million, 1Q 2010). The net
cash flow was EUR -2.4 million (EUR 8.0 million, 1Q 2010).
- Cash and other liquid assets totaled EUR 18.1 million (EUR 67.1 million,
1Q 2010).
- Equity ratio remained strong at 63.9% (56.0%, 1Q 2010).
- Earnings per share were EUR -0.03 (EUR -0.01, 1Q 2010).
- Earlier on October 19, 2010, EB's customer TerreStar Networks Inc. filed for
voluntary petition for reorganization, and its parent company TerreStar
Corporation filed for voluntary petition for reorganization on February
16, 2011. Under the review period there were no changes in valuation in EB's
receivables from these companies.
- EB lowered the profit guidance for the first half of 2011 on March 29, 2011.
EB expects a clearly negative operating result for the first half of 2011.
Earlier in the Financial Statement Bulletin on February 17, 2011, EB announced
for the first half of 2011 that it expected operating result to be lower than in
the first half of 2010 (EUR 1.8 million). The main reason for the revised profit
outlook is a lowered revenue forecast in the Wireless Business Segment due to
slower than expected order book development in the new satellite communication
service solutions and due to increased competition in the area of smart phones
related R&D services.
EB'S CEO JUKKA HARJU:"During the first quarter of 2011 EB's operating result was clearly negative and
did not meet our expectations. The Automotive Business Segment continued to grow
strongly and the operating result developed as planned. The operating result for
the Wireless Business Segment was clearly negative and did not meet our
expectations due to slower than expected order book development in the new
satellite communication service solutions and due to increased competition in
the area of smart phones related R&D services. Within the Wireless Business
Segment the demand for product development services strengthened towards the end
of the first quarter of the year.
EB's main short-term objective remains to be improving profitability."
OUTLOOK FOR THE FIRST HALF OF 2011
The demand for software products and services is estimated to grow in the
automotive industry and EB's net sales is expected to increase in the Automotive
Business Segment. The net sales of EB's Wireless Business Segment is expected to
remain in the same level than in the second half of 2010 (EUR 32.2 million,
2H 2010) but the revenue forecast still contains uncertainties in particular
with respect to the timing of individual projects.
EB expects for the first half of 2011 that net sales will be lower than in the
first half of 2010 (EUR 86.2 million) and operating result will be clearly
negative (EUR 1.8 million, 1H 2010). It is expected that the operating result
during the second quarter of the year will be better than during the first
quarter of the year. The profit outlook for the first half of 2011 is based on
the assumption that there will not be further bookings of impairments of EB's
accounts receivables from TerreStar Networks Inc. and TerreStar Corporation. It
is possible that, based on later information related to reorganizations of
TerreStar Networks and TerreStar Corporation, this outlook may need to be
reconsidered.
The continuing challenges of TerreStar Networks Inc., a significant customer of
EB, in obtaining funding has resulted in payment delays. TerreStar Network and
certain affiliates of TerreStar Corporation filed for voluntary petitions for
reorganization to strengthen their financial position on October 19, 2010.
TerreStar Corporation filed for voluntary petition for reorganization on
February 16, 2011. Due to the uncertainties related to the outcome of
reorganization processes of TerreStar Networks and TerreStar Corporation, the
credit risk may still grow during the first half of 2011. More specific market
outlook is presented under the "Business Segments' development during January-
March 2011 and market outlook" section, and uncertainties regarding the filings
for reorganization of TerreStar Networks and TerreStar Corporation, collecting
the receivables, and other uncertainties regarding the outlook under "Risks and
Uncertainties" section.
Information on TerreStar Networks' and TerreStar Corporation's reorganizations
are presented in the October 20 and 25, November 20, December 30, 2010, and
February 17, 2011, stock exchange releases at www.elektrobit.com.
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the January-March interim report 2011 for
media, analysts and institutional investors in Finland, Espoo, Keilasatama
5, 2(nd) floor, meeting room Purje on Friday, April 29, 2011, 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 on joining the
conference please go to www.elektrobit.com/investors.
EB, Elektrobit Corporation
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 for the year 2010 totaled MEUR
161.8. Elektrobit Corporation is listed on NASDAQ OMX
Helsinki.www.elektrobit.com
EB, ELEKTROBIT CORPORATION, INTERIM REPORT, JANUARY-MARCH 2011
FINANCIAL PERFORMANCE DURING JANUARY-MARCH 2011
(Corresponding figures are for January-March 2010 unless otherwise indicated)
EB's net sales during January-March 2011 declined by 12.1 per cent to EUR 36.5
million (EUR 41.5 million, 1Q 2010). Operating loss was EUR -3.9 million (EUR
1.7 million).
+----------------------------------------------------------+--------+--------+
|CONSOLIDATED INCOME STATEMENT (MEUR) |1-3 2011|1-3 2010|
+----------------------------------------------------------+--------+--------+
| |3 months|3 months|
+----------------------------------------------------------+--------+--------+
|NET SALES | 36.5| 41.5|
+----------------------------------------------------------+--------+--------+
|OPERATING PROFIT (LOSS) | -3.9| 1.7|
+----------------------------------------------------------+--------+--------+
|Financial income and expenses | -0.4| -1.0|
+----------------------------------------------------------+--------+--------+
|RESULT BEFORE TAX | -4.3| 0.7|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS | -4.3| -0.3|
+----------------------------------------------------------+--------+--------+
|TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | -4.4| 0.3|
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Result for the period attributable to: | | |
+----------------------------------------------------------+--------+--------+
| Equity holders of the parent | -4.4| -0.6|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | 0.1| 0.3|
+----------------------------------------------------------+--------+--------+
|Total comprehensive income for the period attributable to:| | |
+----------------------------------------------------------+--------+--------+
| Equity holder of the parent | -4.5| 0.0|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | 0.1| 0.3|
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Earnings per share EUR continuing operations | -0.03| -0.01|
+----------------------------------------------------------+--------+--------+
- Cash flow from business operations was EUR 1.4 million (EUR 10.6 million).
- Equity ratio was 63.9% (56.0%).
- Net gearing was -9.7% (-59.5%).
QUARTERLY FIGURES
The distribution of the Group's overall net sales and profit, MEUR:
+---------------------------------------------------+----+----+-----+----+----+
| |1Q11|4Q10| 3Q10|2Q10|1Q10|
+---------------------------------------------------+----+----+-----+----+----+
|Net sales |36.5|41.8| 33.7|44.7|41.5|
+---------------------------------------------------+----+----+-----+----+----+
|Operating profit (loss) |-3.9|-7.7|-11.5| 0.1| 1.7|
+---------------------------------------------------+----+----+-----+----+----+
|Operating profit (loss) without non-recurring costs|-3.9|-3.2| -3.2| 0.1| 1.7|
+---------------------------------------------------+----+----+-----+----+----+
|Result before taxes |-4.3|-8.0|-10.6|-0.7| 0.7|
+---------------------------------------------------+----+----+-----+----+----+
|Result for the period |-4.3|-5.4| -9.0|-0.9|-0.3|
+---------------------------------------------------+----+----+-----+----+----+
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.
The distribution of net sales by Business Segments, MEUR:
+-----------------+----+----+----+----+----+
| |1Q11|4Q10|3Q10|2Q10|1Q10|
+-----------------+----+----+----+----+----+
|Automotive |23.6|23.1|19.9|18.6|18.5|
+-----------------+----+----+----+----+----+
|Wireless |12.7|18.6|13.7|25.9|22.8|
+-----------------+----+----+----+----+----+
|Corporation total|36.5|41.8|33.7|44.7|41.5|
+-----------------+----+----+----+----+----+
The distribution of net sales by market areas, MEUR and %:
+--------+-----+---------+-----+-----+-----+
| | 1Q11| 4Q10| 3Q10| 2Q10| 1Q10|
+--------+-----+---------+-----+-----+-----+
|Asia | 2.7|4.4 10.6%| 1.8| 2.6| 2.7|
| | 7.4%| | 5.4%| 5.9%| 6.5%|
+--------+-----+---------+-----+-----+-----+
|Americas| 5.1| 10.8| 9.4| 17.4| 15.8|
| |13.9%| 25.8%|27.7%|39.0%|38.1%|
+--------+-----+---------+-----+-----+-----+
|Europe | 28.7| 26.6| 22.5| 24.6| 23.0|
| |78.7%| 63.6%|66.8%|55.2%|55.4%|
+--------+-----+---------+-----+-----+-----+
Net sales (external) and operating profit development by Business Segments and
Other businesses, MEUR:
+-----------------------+----+----+-----+----+----+
| |1Q11|4Q10| 3Q10|2Q10|1Q10|
+-----------------------+----+----+-----+----+----+
|Automotive | | | | | |
|Net sales |23.6|23.1| 19.9|18.6|18.5|
|Operating profit (loss)| 0.6| 1.1| 0.1|-0.2| 0.9|
+-----------------------+----+----+-----+----+----+
|Wireless | | | | | |
|Net sales |12.7|18.6| 13.7|25.9|22.8|
|Operating profit (loss)|-4.6|-8.8|-11.7| 0.3| 0.9|
+-----------------------+----+----+-----+----+----+
|Other businesses | | | | | |
|Net sales | 0.1| 0.2| 0.2| 0.2| 0.2|
|Operating profit (loss)| 0.1| 0.1| 0.1| 0.0|-0.1|
+-----------------------+----+----+-----+----+----+
|Total | | | | | |
|Net sales |36.5|41.8| 33.7|44.7|41.5|
|Operating profit (loss)|-3.9|-7.7|-11.5| 0.1| 1.7|
+-----------------------+----+----+-----+----+----+
BUSINESS SEGMENTS' DEVELOPMENT DURING JANUARY-MARCH 2011 AND MARKET OUTLOOK
(Corresponding figures are for January-March 2010 unless otherwise indicated)
EB's reporting is based on two segments which are the Automotive and Wireless
Business Segments.
AUTOMOTIVE
The Automotive Business Segment's product offering consists of in-car software
products, navigation software for after market devices and development services
for the automotive industry with leading car manufacturers, car electronics
suppliers and automotive chipset suppliers as customers. By combining its
software products and R&D services EB is creating unique, customized solutions
for its automotive customers.
During the first quarter of 2011 net sales of the Automotive Business Segment
amounted to EUR 23.6 million (EUR 18.5 million, 1Q 2010), representing a strong
27.4% growth year-on-year. The operating profit was EUR 0.6 million (EUR 0.9
million). Solid overall market demand continued for EB's software products,
services and solutions based on own automotive grade software products adapted
and integrated to the customer specific requirements. EB continued to grow
during the first quarter both in the Infotainment and ECU (Electronic Control
Unit) software markets.
Automotive Market Outlook
The majority of the innovation and differentiation in the automotive industry is
brought about by software and electronics. The share of electronics and software
in cars has grown significantly during the past years. It is expected that the
use of software in automotives continues to increase. The estimated annual
automotive software market long-term growth rate in passenger cars is some 15%
(Frost & Sullivan). The underlying world automotive market is also expected to
grow steadily with a yearly rate of about 6% between 2010 and 2015 (CSM).
The increasingly sophisticated and networked features and growing performance
foster the complexity of automotive electronics. The growing complexity is
driving the industry towards gradual separation of software and hardware in
electronics solutions. Hence it is necessary for managing 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 of productized and efficient software solutions
EB is offering.
EB's net sales cumulating from the automotive industry are currently primarily
driven by the development of software and software platforms for new cars. Hence
the dependency of EB's net sales on car production volumes is currently limited,
however, the direct dependency is expected to increase as a result of the EB's
transition towards software product business models over the forthcoming years.
WIRELESS
The Wireless Business Segment offers development services, customized solutions
and radio channel emulator products for industries and authorities utilizing
wireless technologies.
Net sales for the Wireless Business Segment during the first quarter of 2011 was
EUR 12.7 million (EUR 22.8 million, 1Q 2010), representing a decline of 44.2%
year-on-year. Operating loss was EUR -4.6 million (EUR 0.9 million). The
decreased net sales in the Wireless Business Segment was due to the significant
lower business volume in the satellite terminal business. The Wireless Business
Segment's lower than anticipated operating result was due to slower than
expected order book development in the new satellite communication service
solutions and due to increased competition in the area of smart phones related
R&D services.
In the mobile infrastructure market the use of LTE standard, which improves the
performance of radio channel and mobile phone networks, is expected to continue
to gain strength. EB's business driven by LTE is expected to increase. 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. Fast implementation of LTE technology and a wide spectrum of bandwidth
needed are creating opportunities for EB.
The growth of demand for smart phones and transitions in the related software
architectures and platforms are expected to continue during 2011. The R&D
services market for smart phones continues to be challenging and the continuing
price pressure drives increasing off-shoring in the industry. The overall demand
for R&D services for smart phones is expected to decrease in the future due to
changes in the market environment. However, OEMs are expected to continue
relying on outsourcing in order to maintain their R&D flexibility which can
create new business opportunities for EB.
The market for communications, interference and intelligence solutions targeted
for public authorities is estimated to remain stable. The systems used by
authorities are expected to be based on commercial technology in the future.
EB's competence on commercial technologies and mastering the radio channel and
software radio solutions are creating opportunities for EB.
The performance of radio channel is going to increase quickly when introducing
new LTE-technologies. This will create demand for advanced development tools
during the next few years. EB provides world leading channel emulation tools for
the development of MIMO based LTE, LTE-Advanced and other advanced radio
technologies.
The mobile satellite communication service industry is introducing new data and
mobile communication services with new operators being formed and traditional
ones upgrading their solutions and offerings. The Satellite Terrestrial and
Mobile Satellite Services (MMS) market demand is expected to move from the
current reference design phase towards the launch of commercial products and
services during the next few years. The filing for reorganization of TerreStar
Networks Inc. has delayed and brought uncertainties to the development of demand
of the satellite terrestrial "Genus" terminal. Based on the current
understanding there is no reason to expect that the business relationship
between the parties will continue.
RESEARCH AND DEVELOPMENT
EB continued its investments in R&D in the automotive software products and
tools, in radio channel emulation products and in Wireless Solutions' product
platforms.
The total R&D investments during the first quarter of 2011 were EUR 6.3 million
(EUR 4.7 million, 1Q 2010), equaling 17.3% of the net sales (11.2%, 1Q 2010).
EUR 1.6 million of R&D investments were capitalized (EUR 0.7 million, 1Q 2010).
OUTLOOK FOR THE FIRST HALF OF 2011
The demand for software products and services is estimated to grow in the
automotive industry and EB's net sales is expected to increase in the Automotive
Business Segment. The net sales of EB's Wireless Business Segment is expected to
remain in the same level than in the second half of 2010 (EUR 32.2 million,
2H 2010) but the revenue forecast still contains uncertainties in particular
with respect to the timing of individual projects.
EB expects for the first half of 2011 that net sales will be lower than in the
first half of 2010 (EUR 86.2 million) and operating result will be clearly
negative (EUR 1.8 million, 1H 2010). It is expected that the operating result
during the second quarter of the year will be better than during the first
quarter of the year. The profit outlook for the first half of 2011 is based on
the assumption that there will not be further bookings of impairments of EB's
accounts receivables from TerreStar Networks Inc. and TerreStar Corporation. It
is possible that, based on later information related to reorganizations of
TerreStar Networks and TerreStar Corporation, this outlook may need to be
reconsidered.
The continuing challenges of TerreStar Networks Inc., a significant customer of
EB, in obtaining funding has resulted in payment delays. TerreStar Network and
certain affiliates of TerreStar Corporation filed for voluntary petitions for
reorganization to strengthen their financial position on October 19, 2010.
TerreStar Corporation filed for voluntary petition for reorganization on
February 16, 2011. Due to the uncertainties related to the outcome of
reorganization processes of TerreStar Networks and TerreStar Corporation, the
credit risk may still grow during the first half of 2011. More specific market
outlook is presented under the "Business Segments' development during January-
March 2011 and market outlook" section, and uncertainties regarding the filings
for reorganization of TerreStar Networks and TerreStar Corporation, collecting
the receivables, and other uncertainties regarding the outlook under "Risks and
Uncertainties" section.
Information on TerreStar Networks' and TerreStar Corporation's reorganizations
are presented in the October 20 and 25, November 20, December 30, 2010, and
February 17, 2011, stock exchange releases at www.elektrobit.com.
RISKS AND UNCERTAINTIES
EB has identified a number of business, market and finance related risk factors
and uncertainties that can affect the level of sales and profits. Those of the
greatest significance on a short term are those affecting the utilization and
chargeability levels and average hourly prices of R&D services. On the ongoing
financial period the global economic uncertainty may affect the demand for EB's
services, solutions and products and provide pressure on e.g. volumes and
pricing. It may also increase the risk for credit losses.
Challenges in obtaining funding have resulted in payment delays by TerreStar
Networks Inc., a significant customer of EB's subsidiary Elektrobit Inc., and
increased the risk of credit losses. While on October 19, 2010, TerreStar
Networks and certain other affiliates of TerreStar and on February 16, 2011, the
parent company TerreStar Corporation filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code to
strengthen their financial position, the credit risk may still grow during the
first half of 2011. Chapter 11 establishes a process for reorganizing
financially troubled companies. Under such reorganization process, payment by
TerreStar Networks of amounts owed to its creditors will require approval by the
United States Bankruptcy Court and, if made pursuant to a plan of
reorganization, an affirmative vote of TerreStar Networks' creditors. The plan
of reorganization filed earlier by TerreStar Networks and its affiliated debtors
suggested that payment of EB's receivables may take the form of newly issued
common stock in the reorganized debtors. Afterwards the proposed plan was
withdrawn and no new plan has been filed. TerreStar Corporation has not yet
filed its plan of reorganization.
As previously published on November 20, 2010, EB initiated legal proceedings
against TerreStar Networks's parent company TerreStar Corporation to collect its
receivables. The claim is partly based on a guarantee issued by TerreStar
Corporation for EB's accounts receivables from TerreStar Networks and partly
based on TerreStar Corporation's direct contractual obligations towards EB. EB's
legal proceedings against TerreStar Corporation have now been frozen under
Chapter 11 of the United States Bankruptcy Code.
On April 27, 2011, EB's receivables from TerreStar Networks amounted to
approximately USD 25.8 million (EUR 17.6 million as per exchange rate of April
27, 2011). Further, in addition to the amount claimed in the TerreStar Networks'
reorganization process, EB has claimed additional costs to be compensated in the
amount of approximately USD 2.1 million (EUR 1.4 million as per exchange rate of
April 27, 2011) and resulting mainly from the ramp down of the business
operations between the parties. Due to uncertainties related to the accounts
receivables EB booked an impairment of the accounts receivables in the amount of
EUR 8.3 million during the second half of 2010. Based on EB's current
understanding there is no reason to believe that there would be further
impairment losses on EB's receivables from TerreStar Networks. EB aims to
collect the amounts owed to it in full through the reorganization processes of
TerreStar Networks and TerreStar Corporation, and/or for example through selling
of the earlier mentioned accounts receivables.
Based on the current understanding it is unlikely that the business relationship
between TerreStar Networks and EB will continue. TerreStar Networks has with
Court approval determined that it will not comply with its contractual
obligations towards EB as provided by EB. The determination will result into the
termination of the parties' further obligations under the current contracts
between them, but this does not change the EB's current view that there would
not be further impairment losses on EB's receivables from TerreStar Networks. At
worst, TerreStar Networks' reorganization process and challenges in obtaining
funding may, however, result in significant credit losses for EB. Should the
accounts receivables not be collected at all, either from TerreStar Networks or
TerreStar Corporation, this would additionally lower EB's operating result non-
recurringly by approximately EUR 10 million, at maximum (USD-nominated items as
per exchange rate of April 27, 2011). However, this would not have any
significant negative effect on the EB's cash flow. Further, it is possible that
under Chapter 11 reorganization process, debtors may seek to recover payments
made prior to their bankruptcy filing. In addition to the above, the risk of
potential recovery claims by TerreStar Networks against EB cannot be out ruled
at this time.
It is possible that based on later information related to the TerreStar
Networks' and TerreStar Corporation's reorganizations, the view may need to be
reconsidered.
As the EB's customer base consists mainly of companies operating in the fields
of automotive and telecommunications, the company is exposed to market changes
in these industries. EB believes that expanding the customer base will reduce
dependence on individual companies and that the company will thereby be mainly
affected by the general business climate in automotive and telecommunication
industries. However, some parts of EB's business are more sensitive to customer
dependency than others. Respectively, this may translate as accumulation of risk
with respect to outstanding receivables and ultimately with respect to credit
losses. The more specific market outlook is presented under the "Business
Segments' development during the first quarter 2011 and market outlook" section.
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, ramping up and down project
resources, timing 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, activations based on
customer contracts, obsolescence of inventories and technology risks in product
development causing higher than planned R&D costs. In addition there are typical
industry warranty and liability risks as well as risks related to management of
intellectual property rights involved in selling EB's services, solutions and
products. Product delivery business model includes such risks as high dependency
on actual product volumes, development of the cost of materials and production
yields. The above-mentioned risks may manifest themselves as higher cost of
product delivery, and ultimately, as lower profit. Revenues expected to come
from new products for existing and new customers include normal timing risks.
More information on the risks and uncertainties affecting EB can be found on the
Company's website at www.elektrobit.com
STATEMENT OF FINANCIAL POSITION AND FINANCING
The figures presented in the statement of financial position of March 31, 2011,
are compared with the statement of the financial position of December 31, 2010
(MEUR). The figures for the period under review contain provision of EUR 3.4
million.
3/2011 12/2010
Non-current assets 40.9 41.2
Current assets 73.1 83.7
Total assets 114.0 124.9
Share capital 12.9 12.9
Other equity 53.9 58.3
Non-controlling interests 1.3 1.3
Total shareholders' equity 68.2 72.5
Non-current liabilities 10.5 11.6
Current liabilities 35.3 40.8
Total shareholders' equity and liabilities 114.0 124.9
Net cash flow from operations during the period under review:
+ net profit +/- adjustment of accrual basis items EUR -2.0 million
+ decrease in net working capital EUR +2.7 million
- interest, taxes and dividends EUR +0.8 million
= cash generated from operations EUR +1.4 million
- net cash used in investment activities EUR -2.3 million
- net cash used in financing EUR -1.6 million
= net change in cash and cash equivalents EUR -2.4 million
The amount of accounts and other receivables, booked in current receivables, was
EUR 52.9 million (EUR 61.3 million on December 31, 2010). Accounts and other
payables, booked in interest-free current liabilities, were EUR 31.1 million
(EUR 35.7 million on December 31, 2010). The amount of non-depreciated
consolidation goodwill at the end of the period under review was EUR 18.5
million (EUR 18.5 million on December 31, 2010).
The amount of gross investments in the period under review was EUR 2.4 million,
consisting of replacement investments. Net investments for the reporting period
totaled EUR 2.2 million. The total amount of depreciation during the period
under review was EUR 2.4 million, including EUR 0.5 million of depreciation
owing to business acquisitions.
The amount of interest-bearing debt at the end of the reporting period was EUR
11.5 million. The distribution of net financing expenses on the income statement
was as follows:
interest, dividend and other financial income EUR 0.0 million
interest expenses and other financial expenses EUR -0.2 million
foreign exchange gains and losses EUR -0.3 million
EB's equity ratio at the end of the period was 63.9% (62.6% at the end of 2010).
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 14.0 million.
PERSONNEL
EB employed an average of 1,545 people between January and March 2011. At the
end of March, EB had 1,549 employees (1,539 at the end of 2010). A significant
part of EB's personnel are product development engineers.
CHANGE IN COMPANY'S MANAGEMENT
EB appointed M.Sc. (Econ) Gregor Zink, Vice President, Finance of EB Automotive
Business Segment, as Acting President of the EB Automotive Business Segment
effective April 1, 2011. EB announced on December 15, 2010, that the employment
of Jarkko Sairanen (M.Sc (Eng), MBA), the President of the Automotive Business
Segment ended on March 31, 2011. EB continues to look for a successor for this
position.
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
The company has no significant events subsequent to the review period.
RESOLUTIONS MADE BY THE ANNUAL GENERAL MEETING
The Annual General Meeting held on March 31, 2011, decided on the following
topics:
BOARD OF DIRECTORS AND AUDITOR
The Annual General Meeting decided that the Board of Directors shall comprise
five (5) members. Jorma Halonen, Juha Hulkko, Seppo Laine, Staffan Simberg and
Erkki Veikkolainen were elected members of the Board of Directors for a term of
office expiring at the end of the next Annual General Meeting.
At its assembly meeting held on March 31, 2011, the Board of Directors elected
Mr. Seppo Laine Chairman of the Board. Further, the Board resolved to keep the
Audit and Financial Committee with Mr. Staffan Simberg (Chairman of the
committee) and Mr. Seppo Laine as committee members.
Ernst & Young Ltd, authorized public accountants, was re-elected auditor of the
Company for a term of office ending at the end of the next Annual General
Meeting. Ernst & Young Ltd notified that Mr. Jari Karppinen, authorized public
accountant, will act as responsible auditor.
AUTHORIZING THE BOARD OF DIRECTORS TO DECIDE ON THE REPURCHASE OF THE COMPANY'S
OWN SHARES
The General Meeting authorized the Board of Directors to decide on the
repurchase of the Company's own shares as follows. The amount of own shares to
be repurchased shall not exceed 12,500,000 shares, which corresponds to
approximately 9.66 per cent of all of the shares in the Company. Only the
unrestricted equity of the Company can be used to repurchase own shares on the
basis of the authorization. Own shares can be repurchased at a price formed in
public trading on the date of the repurchase or otherwise at a price formed on
the market. The Board of Directors decides how own shares will be repurchased.
Own shares can be repurchased using, inter alia, derivatives. Own shares can be
repurchased otherwise than in proportion to the shareholdings of the
shareholders (directed repurchase). The authorization cancels the authorization
given by the General Meeting on March 25, 2010, to decide on the repurchase of
the Company's own shares. The authorization is effective until June 30, 2012.
AUTHORIZING THE BOARD OF DIRECTORS TO DECIDE ON THE ISSUANCE OF SHARES AS WELL
AS THE ISSUANCE OF SPECIAL RIGHTS ENTITLING TO SHARES
The General meeting authorized the Board of Directors to decide on the issuance
of shares and other special rights entitling to shares referred to in chapter
10 section 1 of the Companies Act as follows. The amount of shares to be issued
shall not exceed 25,000,000 shares, which corresponds to approximately 19.32 per
cent of all of the shares in the Company. The Board of Directors decides on all
the conditions of the issuance of shares and of special rights entitling to
shares. The authorization concerns both the issuance of new shares as well as
the transfer of treasury shares. The issuance of shares and of special rights
entitling to shares may be carried out in deviation from the shareholders' pre-
emptive rights (directed issue). The authorization cancels the authorization
given by the General Meeting on March 25, 2010, to decide on the issuance of
shares as well as the issuance of options and other special rights entitling to
shares. The authorization is effective until June 30, 2012.
USE OF THE PROFITS SHOWN ON THE BALANCE SHEET AND PAYMENT OF DIVIDEND
The General Meeting decided in accordance with the proposal of the Board of
Directors that no dividend shall be distributed.
Oulu, April 29, 2011
EB, Elektrobit Corporation
The Board of Directors
Further Information:
Jukka Harju
CEO
Tel. +358 40 344 5466
Distribution:
NASDAQ OMX Helsinki
Major media
EB, ELEKTROBIT CORPORATION,
CONDENSED FINANCIAL STATEMENTS AND NOTES JANUARY- MARCH 2011
(unaudited)
The Interim Report has been prepared in accordance with IAS 34 Interim Financial
Reporting.
CONSOLIDATED STATEMENT OF 1-3/2011 1-3/2010 1-12/2010
COMPREHENSIVE INCOME (MEUR)
3 months 3 months 12 months
NET SALES 36.5 41.5 161.8
Other operating income 0.7 0.6 2.4
Change in work in progress and
finished goods 0.2 0.1 -0.2
Work performed by the undertaking
for its own purpose
and capitalized 0.1 0.0 0.2
Raw materials -2.8 -3.3 -15.4
Personnel expenses -24.3 -24.2 -97.7
Depreciation -2.4 -2.0 -8.5
Other operating expenses -11.9 -11.1 -59.8
OPERATING PROFIT (LOSS) -3.9 1.7 -17.3
Financial income and expenses -0.4 -1.0 -1.3
RESULT BEFORE TAXES -4.3 0.7 -18.6
Income taxes 0.0 -1.1 2.9
RESULT FOR THE PERIOD FROM
CONTINUING
OPERATIONS -4.3 -0.3 -15.7
Other comprehensive income:
Exchange differences on
translating foreign operations -0.1 0.7 0.8
Other comprehensive income for the
period total -0.1 0.7 0.8
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD -4.4 0.3 -14.9
Result for the period attributable
to
Equity holders of the parent -4.4 -0.6 -16.1
Non-controlling interests 0.1 0.3 0.5
Total comprehensive income
attributable to
Equity holders of the parent -4.5 0.0 -15.4
Non-controlling interests 0.1 0.3 0.5
Earnings per share EUR continuing
operations
Basic earnings per share -0.03 -0.01 -0.12
Diluted earnings per share -0.03 -0.00 -0.12
Average number of shares, 1000 pcs 129 413 129 413 129 413
Average number of shares, diluted,
1000 pcs 130 209 130 380 130 277
CONSOLIDATED STATEMENT OF March. 31, 2011 March. 31, 2010 Dec. 31, 2010
FINANCIAL POSITION (MEUR)
ASSETS
Non-current assets
Property, plant and equipment 9.8 10.4 10.5
Goodwill 18.5 18.5 18.5
Intangible assets 12.2 8.8 11.6
Other financial assets 0.1 0.3 0.2
Receivables 0.3 0.4 0.3
Deferred tax assets 0.1 0.1 0.1
Non-current assets total 40.9 38.5 41.2
Current assets
Inventories 1.6 2.4 1.9
Trade and other receivables 52.9 57.3 61.3
Financial assets at fair value
through profit or loss 6.2 50.4 7.7
Cash and short term deposits 12.4 16.7 12.9
Current assets total 73.1 126.8 83.7
TOTAL ASSETS 114.0 165.3 124.9
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 0.5 0.5 0.6
Retained earnings 14.6 34.5 19.0
Non-controlling interests 1.3 0.7 1.3
Total equity 68.2 87.4 72.5
Non-current liabilities
Deferred tax liabilities 1.2 2.3 1.4
Pension obligations 1.2 1.2 1.2
Provisions 0.9 0.8 1.0
Interest-bearing liabilities 7.2 10.4 8.0
Non-current liabilities total 10.5 14.8 11.6
Current liabilities
Trade and other payables 29.0 56.9 33.3
Financial liabilities at fair
value through profit or loss 0.4
Provisions 2.0 1.2 2.4
Interest-bearing loans and
borrowings 4.3 4.6 5.1
Current liabilities total 35.3 63.1 40.8
Total liabilities 45.9 77.9 52.4
TOTAL EQUITY AND LIABILITIES 114.0 165.3 124.9
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-3/2011 1-3/2010 1-12/2010
3 months 3 months 12 months
CASH FLOW FROM OPERATING ACTIVITIES
Result for the period -4.3 -0.3 -15.7
Adjustment of accrual basis items 2.3 3.5 17.5
Change in net working capital 2.7 8.7 3.5
Interest paid on operating activities -0.9 -1.2 -2.3
Interest received from operating activities 0.0 0.2 0.6
Other financial income and expenses, net received 0.0
Income taxes paid 1.7 -0.2 -2.2
NET CASH FROM OPERATING ACTIVITIES 1.4 10.6 1.5
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of business unit, net of cash acquired -0.3
Purchase of property, plant and equipment -0.6 -0.1 -1.7
Purchase of intangible assets -1.7 -0.8 -6.2
Purchase of other investments -0.0 -0.0 -0.0
Sale of property, plant and equipment 0.1 0.0 0.1
Sale of intangible assets 0.0 0.0
Proceeds from sale of investments 0.0 0.0 0.1
NET CASH FROM INVESTING ACTIVITIES -2.3 -0.9 -7.9
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowing 0.2
Repayment of borrowing -1.0 -1.0 -2.8
Payment of finance liabilities -0.8 -0.8 -3.4
Distribution of funds from the share premium fund -25.9
NET CASH FROM FINANCING ACTIVITIES -1.6 -1,7 -32.1
NET CHANGE IN CASH AND CASH EQUIVALENTS -2.4 8.0 -38.5
Cash and cash equivalents at beginning of period 20.5 59.1 59.1
Cash and cash equivalents at end of period 18.1 67.1 20.5
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY (MEUR)
A = Share capital
B = Share premium
C = Invested non-restricted equity fund
D = Retained earnings
E = Non-controlling interests
F = Total equity
A B C D E F
Equity on January 1, 2010 12.9 64.6 34.9 0.4 112.8
Distribution of funds from the share
premium fund -25.9 -25.9
Transfer from the share premium fund -38.7 38.7 0.0
Share-related compensation 0.3 0.3
Total comprehensive income for the period 0.0 0.0
Other items -0.1 0.3 0.2
Equity on March 31, 2010 12.9 0.0 38.7 35.0 0.7 87.4
Equity on January 1, 2011 12.9 38.7 19.6 1.3 72.5
Share-related compensation 0.1 0.1
Total comprehensive income for the period -4.5 -4.5
Other items -0.0 0.1 0.1
Equity on March 31, 2011 12.9 38.7 15.2 1.3 68.2
NOTES TO THE FINANCIAL STATEMENT BULLETIN
Accounting principles for the Financial Statement Bulletin:
The same accounting policies and methods of computation are followed in the
financial statement bulletin as compared with annual 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.
Payment of dividend:
The General Meeting held on March 31, 2011 decided in accordance with the
proposal of the Board of Directors that no dividend shall be distributed.
SEGMENT INFORMATION (MEUR)
OPERATING SEGMENTS 1-3/2011 1-3/2010 1-12/2010
3 months 3 months 12 months
Automotive
Net sales to external customers 23.6 18.5 80.1
Net sales to other segments 0.0 0.0 0.0
Net sales total 23.6 18.5 80.1
Operating profit (loss) 0.6 0.9 1.9
Wireless
Net sales to external customers 12.7 22.8 80.9
Net sales to other segments 0.0 0.0 0.0
Net sales total 12.7 22.8 81.0
Operating profit (loss) -4.6 0.9 -19.3
OTHER ITEMS
Other items
Net sales to external customers 0.1 0.2 0.8
Operating profit (loss) 0.1 -0.1 0.1
Eliminations
Net sales to other segments -0.0 -0.0 -0.0
Operating profit (loss) 0.0 0.0 0.0
Group total
Net sales to external customers 36.5 41.5 161.8
Operating profit (loss) -3.9 1.7 -17.3
Net sales of geographical areas (MEUR) 1-3/2011 1-3/2010 1-12/2010
3 months 3 months 12 months
Net sales
Europe 28.7 23.0 96.8
Americas 5.1 15.8 53.4
Asia 2.7 2.7 11.6
Net sales total 36.5 41.5 161.8
Material events subsequent to the end of the interim period not reflected in the
financial statements for the interim period:
There are no such material events subsequent to the end of the interim report
period that have not been reflected in this report.
Related party transactions: 1-3/2011 1-3/2010 1-12/2010
Employee benefits for key management and stock
option expenses total 0.4 0.6 2.1
CONSOLIDATED STATEMENT OF 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
COMPREHENSIVE INCOME 2011 2010 2010 2010 2010
BY QUARTER (MEUR) 3 months 3 months 3 months 3 months 3 months
NET SALES 36.5 41.8 33.7 44.7 41.5
Other operating income 0.7 0.6 0.4 0.8 0.6
Change in work in progress and
finished goods 0.2 -0.5 0.2 -0.1 0.1
Work performed by the
undertaking
for its own purpose and
capitalized 0.1 0.0 0.1 0.1 0.0
Raw materials -2.8 -6.1 -2.8 -3.2 -3.3
Personnel expenses -24.3 -26.1 -22.5 -24.9 -24.2
Depreciation -2.4 -2.1 -2.2 -2.2 -2.0
Other operating expenses -11.9 -15.3 -18.4 -15.0 -11.1
OPERATING PROFIT (LOSS) -3.9 -7.7 -11.5 0.1 1.7
Financial income and expenses -0.4 -0.3 0.9 -0.8 -1.0
RESULT BEFORE TAXES -4.3 -8.0 -10.6 -0.7 0.7
Income taxes 0.0 2.6 1.6 -0.2 -1.1
RESULT FOR THE PERIOD FROM
CONTINUING OPERATIONS -4.3 -5.4 -9.0 -0.9 -0.3
Other comprehensive income
for the period total -0.1 0.3 -1.4 1.2 0.7
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD -4.4 -5.1 -10.4 0.3 0.3
Result for the period
attributable to:
Equity holders of the parent -4.4 -5.5 -9.0 -0.9 -0.6
Non-controlling interests 0.1 0.1 0.0 0.0 0.3
Total comprehensive income
for the period attributable to:
Equity holders of the parent -4.5 -5.2 -10.5 0.3 0.0
Non-controlling interests 0.1 0.1 0.0 0.0 0.3
CONSOLIDATED STATEMENT OF March 31, Dec. 31, Sept. 30, June 30, March 31,
FINANCIAL POSITION (MEUR) 2011 2010 2010 2010 2010
ASSETS
Non-current assets
Property, plant and equipment 9.8 10.5 10.6 10.8 10.4
Goodwill 18.5 18.5 18.5 18.5 18.5
Intangible assets 12.2 11.6 10.0 9.1 8.8
Other financial assets 0.1 0.2 0.1 0.1 0.3
Receivables 0.3 0.3 0.4 0.4 0.4
Deferred tax assets 0.1 0.1 0.1 0.1 0.1
Non-current assets total 40.9 41.2 39.7 39.1 38.5
Current assets
Inventories 1.6 1.9 2.9 2.5 2.4
Trade and other receivables 52.9 61.3 53.8 65.6 57.3
Financial assets at fair
value
through profit or loss 6.2 7.7 15.8 45.5 50.4
Cash and short term deposits 12.4 12.9 15.0 14.4 16.7
Current assets total 73.1 83.7 87.5 128.0 126.8
TOTAL ASSETS 114.0 124.9 127.2 167.1 165.3
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 0.5 0.6 0.3 1.7 0.5
Retained earnings 14.6 19.0 24.3 33.3 34.5
Non-controlling interests 1.3 1.3 1.2 1.1 0.7
Total equity 68.2 72.5 77.4 87.8 87.4
Non-current liabilities
Deferred tax liabilities 1.2 1.4 1.2 1.7 2.3
Pension obligations 1.2 1.2 1.2 1.1 1.2
Provisions 0.9 1.0 0.6 0.6 0.8
Interest-bearing liabilities 7.2 8.0 8.9 10.5 10.4
Non-current liabilities total 10.5 11.6 11.8 13.9 14.8
Current liabilities
Trade and other payables 29.0 33.3 32.1 59.3 56.9
Financial liabilities at fair
value
through profit or loss 0.0 0.4
Provisions 2.0 2.4 0.8 1.1 1.2
Interest-bearing loans and
Borrowings (non-current) 4.3 5.1 5.1 5.0 4.6
Current liabilities total 35.3 40.8 38.0 65.4 63.1
Total liabilities 45.9 52.4 49.9 79.3 77.9
TOTAL EQUITY AND LIABILITIES 114.0 124.9 127.2 167.1 165.3
1-3/ 10-12/ 7-9/ 4-6/ 1-3/
CONSOLIDATED STATEMENT
OF CASH FLOWS BY QUARTER 2011 2010 2010 2010 2010
3 months 3 months 3 months 3 months 3 months
Net cash from operating
activities 1.4 -4.9 0.2 -4.5 10.6
Net cash from investing
activities -2.3 -2.9 -2.6 -1.4 -0.9
Net cash from financing
activities -1.6 -1.5 -27.8 -1.1 -1.7
Net change in cash and cash
equivalents -2.4 -9.3 -30.1 -7.1 8.0
FINANCIAL PERFORMANCE RELATED RATIOS 1-3/2011 1-3/2010 1-12/2010
3 months 3 months 12 months
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
Net sales 36.5 41.5 161.8
Operating profit (loss) -3.9 1.7 -17.3
Operating profit (loss), % of net sales -10.8 4.2 -10.7
Result before taxes -4.3 0.7 -18.6
Result before taxes, % of net sales -11.9 1.8 -11.5
Result for the period -4.3 -0.3 -15.7
PROFITABILITY AND OTHER KEY FIGURES
Interest-bearing net liabilities, (MEUR) -6.6 -52.0 -7.4
Net gearing, -% -9.7 -59.5 -10.2
Equity ratio, % 63.9 56.0 62.6
Gross investments, (MEUR) 2.4 1.1 10.7
Average personnel during the period 1545 1537 1561
Personnel at the period end 1549 1543 1539
AMOUNT OF SHARE ISSUE ADJUSTMENT March 31, March 31, Dec. 31,
(1,000 pcs) 2011 2010 2010
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 130 209 130 380 130 277
1-3/2011 1-3/2010 1-12/2010
STOCK-RELATED FINANCIAL RATIOS (EUR)
3 months 3 months 12 months
Basic earnings per share -0.03 -0.01 -0.12
Diluted earnings per share -0.03 -0.00 -0.12
Equity *) per share 0.52 0.67 0.55
*) Equity attributable to equity holders of the
parent
MARKET VALUES OF SHARES (EUR) 1-3/2011 1-3/2010 1-12/2010
Highest 0.76 1.25 1.25
Lowest 0.61 0.93 0.66
Average 0.71 1.08 0.92
At the end of period 0.62 1.23 0.67
Market value of the stock, (MEUR) 80.2 159.2 86.7
Trading value of shares, (MEUR) 1.6 4.7 16.8
Number of shares traded, (1,000 pcs) 2 246 4 349 18 190
Related to average number of shares % 1.7 3.4 14.1
SECURITIES AND CONTINGENT LIABILITIES March 31, March 31, Dec. 31,
(MEUR) 2011 2010 2010
AGAINST OWN LIABILITIES
Floating charges 3.1 3.1 3.1
Pledges 2.3 0.9 2.3
Mortgages are pledged for liabilities totaled 5.5 7.7 6.3
AGAINST OTHER LIABILITIES
Guarantees 3.1 2.7 2.0
Other liabilities 10.1 10.0 10.1
OTHER DIRECT AND CONTINGENT LIABILITIES
Rental liabilities
Falling due in the next year 4.5 5.2 6.0
Falling due after one year 15.9 16.7 15.0
Other contractual liabilities
Falling due in the next year 3.5 3.5 3.9
Falling due after one year 2.0 0.5 2.1
NOMINAL VALUE OF CURRENCY DERIVATIVES March 31, March 31, Dec. 31,
(MEUR) 2011 2010 2010
Foreign exchange forward contracts
Market value 0.4 -0.4 -0.0
Nominal value 7.0 11.0 11.0
Purchased currency options
Market value 0.2 0.0 0.1
Nominal value 7.0 5.0 5.0
Sold currency options
Market value -0.0 -0.0 -0.1
Nominal value 7.0 5.0 10.0
[HUG#1510606]
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