2014-08-20 16:50:00 CEST
2014-08-20 16:50:03 CEST
REGULATED INFORMATION
Cencorp - Interim report (Q1 and Q3)
CENCORP CORPORATION, INTERIM REPORT JANUARY - JUNE 2014
Cencorp Corporation Interim Report 20.8.2014
at 17.50 Finnish time
CENCORP CORPORATION, INTERIM REPORT JANUARY - JUNE 2014
SUMMARY
The restructuring of Cencorp Corporation (“Cencorp”) continues. In the
reporting period the company started actions aiming to close the factory in
Beijing. The figures below include a write-down of EUR 3.2 million in the
assets related to the factory and production machinery in Beijing.
The net sales of Cencorp for the reporting period January - June 2014 was EUR
4.6 million (EUR 5.9 million in 2013). The operating profit of continuing
operations was EUR -6.3 million (-1.8), profit for the period EUR -7.0 million
(-2.3), earnings per share were EUR -0.009 (-0.004) and EBITDA was EUR -2.0
million (-0.8).
- The financing situation of Cencorp continues to be very tight. Cencorp is
moving on to the next phase in its cleantech strategy. According to the
strategy and in order to obtain finance for it Cencorp has decided to sell the
operations outside the strategy, i.e. the automation business for the
electronics industry as well as the production of RFID components and flexible
electronics for mobile phones, to become a company providing solely clean
energy solutions. Cencorp is having negotiations for the sale of the aforesaid
businesses but they are still going on.
- According to the strategy, to protect the company's technology, by
centralizing the research and development for clean energy solutions, and to
save in administration costs, Cencorp has decided to relocate the Conductive
Back Sheet production for solar modules from Beijing to the company's factory
in Mikkeli. The company makes a write-down of EUR 3.2 million in the assets
related to the factory and the production machinery in Beijing and prepares to
close the factory.
- In the reporting period Cencorp's solar module passed the test programme of
the Fraunhofer Institute for Solar Energy Systems, which enables Cencorp's
solar module to be certified by administrative process in all market areas
important for Cencorp.
OVERVIEW
Cencorp belongs to the Finnish Savcor Group Corporation (“Savcor”). Savcor
Group companies owned approximately 60.8 percent of the Cencorp shares on 30
June 2014.
More information on principle activities and events during the reporting period
can be found in the stock exchange releases published on Cencorp's website at
www.cencorp.com.
The Interim Report has been drawn up in compliance with the IAS 34 Interim
Financial Reporting standard. In the Interim Report Cencorp has applied the
same accounting principles as in the Annual Report 2013. The Interim Report has
not been audited.
FINANCIAL DEVELOPMENT
Cencorp reports on the results of three business segments. The segments are
Laser and Automation Applications (LAS), Life Cycle Management (LCM) and
Cencorp Clean Energy (CCE). CCE also includes the former Special Components
segment. Cencorp's segment information is based on the management's internal
reporting and on the organisation structure of the company.
The figures in brackets are comparison figures for the corresponding period in
2013, unless stated otherwise. Since the shutdown of the factory in Guangzhou,
China, and the exit from decoration business Cencorp reports on corresponding
figures in the discontinued operations in the comparison figures for 2013.
April - June 2014
- Cencorp Group's net sales decreased by 34.7 percent to EUR 2.2 million (EUR
3.4 million).
- EBITDA was EUR -0.8 million (EUR -0.6 million).
- Operating profit was EUR -4.6 million (EUR -1.1 million).
- The Group's profit before taxes was EUR -4.9 million (EUR -1.6 million).
- Profit for the period was EUR -4.9 million (EUR -1.6 million).
- Earnings per share were EUR -0.006 (EUR -0.003) and diluted earnings per
share EUR -0.006 (EUR -0.003).
- Net sales of the Laser and Automation Applications segment (LAS) decreased by
23.2 percent to EUR 1.4 million (EUR 1.8 million) and operating profit was EUR
-0.1 million (EUR -0.3 million). The segment's EBITDA was EUR -0.1 million (EUR
-0.2 million).
- Net sales of the Life Cycle Management segment (LCM) increased by 7.3 percent
to EUR 0.8 million (EUR 0.7 million) and operating profit was EUR 0.1 million
(EUR 0.0 million). The segment's EBITDA was EUR 0.1 million (EUR 0.04 million).
- Net sales of the Cencorp Clean Energy segment (CCE) decreased by 91.0 percent
to EUR 0.1 million (EUR 0.9 million) due to close-down of antenna production at
the Beijing factory and operating profit was EUR -4.5 million (EUR -0.8
million). The segment's EBITDA was EUR -0.9 million (EUR -0.5 million).
January - June 2014
- Cencorp Group's net sales decreased by 20.9 percent to EUR 4.6 million (EUR
5.9 million).
- EBITDA was EUR -2.0 million (EUR -0.8 million).
- Operating profit was EUR -6.3 million (EUR -1.8 million).
- The Group's profit before taxes was EUR -7.0 million (EUR -2.3 million).
- Profit for the period was EUR -7.0 million (EUR -2.3 million).
- Earnings per share were EUR -0.009 (EUR -0.004) and diluted earnings per
share EUR -0.009 (EUR -0.004).
- Net sales of the Laser and Automation Applications segment (LAS) decreased by
3.9 percent to EUR 2.4 million (EUR 2.6 million) and operating profit was EUR
-0.7 million (EUR -0.9 million). The segment's EBITDA was EUR -0.5 million (EUR
-0.6 million).
- Net sales of the Life Cycle Management segment (LCM) decreased by 2.0 percent
to EUR 1.6 million (EUR 0.9 million) and operating profit was EUR 0.1 million
(EUR 0.1 million). The segment's EBITDA was EUR 0.2 million (EUR 0.2 million).
- Net sales of the Cencorp Clean Energy segment (CCE) decreased by 63.6 percent
to EUR 0.7 million (EUR 1.8 million) due to close-down of antenna production at
the Beijing factory and operating profit was EUR -5.7 million (EUR -1.0
million). The segment's EBITDA was EUR -1.7 million (EUR -0.3 million).
MANAGING DIRECTOR IIKKA SAVISALO'S REVIEW
In the near future, Cencorp's success will depend on the development of the
Cencorp Clean Energy segment and on Photovoltaic (PV) related business, in
particular. There are high expectations for this business. Cencorp is having
several negotiations for delivering whole solar module plants or production
lines to partners interested in the company's production technology. The
negotiations are still going on.
Cencorp has decided to sell the operations outside the company's cleantech
strategy, i.e. the automation business for the electronics industry as well as
the production of RFID components and flexible electronics for mobile phones,
to become a company providing solely clean energy solutions. The company
continues to streamline its traditional laser and automation business (LAS and
LCM) to improve profitability and to enable transactions in its automation
business segment for which Cencorp is having negotiations with several
companies operating in the industry. In the reporting period April - June it
was especially positive to find out that the total Ebitda of the traditional
LAS and LCM business segments turned slightly positive even with low sales
volume. This improves Cencorp's possibilities to be involved in consolidation
should it take place within the industry in the near future.
On the second quarter of the fiscal year the company carried out statutory
negotiations. As a result of the negotiations the company decided to transfer
major part of its LCM business activities to Estonia. With the transfer the
company estimates to make remarkable savings. Even though LCM business has been
profitable in terms of Ebitda during the first half of the year, the operation
will be made even more effective. Additionally, the restructured organization
will strengthen cooperation between the new machine sales and the LCM business
operations improving competitiveness in both organizations.
The Cencorp product family for customers operating in the automation business
has just been renewed and there are immediate needs for developing new
equipment. Thus, the company focuses the major part of its research and
development investments on the clean energy solutions and on the solutions
increasing the profitability of the automation product family business.
Risks are handled in more detail in the item “Risk management, risks and
uncertainties” of this Interim Report.
REVIEW BY SEGMENTS
The net sales for the reporting period April - March decreased by 34.7 percent
to EUR 2.2 million compared to the corresponding period in 2013. The EBITDA
decreased to EUR -0.8 million from the previous year's EUR -0.6 million.
CENCORP CLEAN ENERGY (CCE)
During the second quarter Cencorp continued closing down the production of
unprofitable products at the Beijing factory, as the company had earlier
announced. At the end of the reporting period practically no deliveries of
mobile phone components or RFID components were made. Thus, the company is
actively looking for a buyer for the company's production technology who could
utilize the technology in its production.
Cencorp resolved to make a write-down of EUR 3.2 million in the assets related
to the Beijing factory and to relocate the production of Conductive Back Sheets
for solar modules to the company's factory in Mikkeli. Cencorp views is it
rational to centralize the clean energy related operations in Finland as it
generates benefits in terms of efficiency and focused operations as well as
savings in administration and operational costs. The level of automation in
Cencorp's production of CBS components for solar modules is high and the
production process is highly automated due to which labor costs do not have
major impact on final product's price. The excellent Finnish engineering
competence enables cost efficient development, project management and
production also in Finland and in other countries with high labor costs.
The Cencorp Clean Energy segment is the key factor of the company's growth
strategy and the company continued investing in it according to the company's
strategy. During the reporting period the gross investments in the Cencorp
Clean Energy totaled EUR 0.2 million as the other investments amounted to EUR
0.1 million. The company expects to generate remarkable net sales from the new
business in the financial year 2014.
In the first quarter of the year Cencorp signed a significant Term Sheet with
Vikram Solar that is one of the biggest module manufacturers in India. This
agreement got a lot of attention in the global business journals. Business
negotiations with Vikram Solar are going on, and the companies also test
together Cencorp's CBS based solar modules. Cencorp will give a separate
announcement as contract negotiations with Vikram Solar move on to the next
phase.
During the reporting period Cencorp has delivered several small solar module
systems in Finland. For the moment the company is having negotiations for
delivering production plants or production lines for solar modules with several
customers interested in Cencorp's production technology. The value of the
contracts Cencorp is negotiating for varies from ca. four million Euros to ca.
20 million Euros. During the reporting period Cencorp's first module
manufacturing recipes fully developed by Cencorp passed the demanding test
programme of the German Fraunhofer Institute for Solar Energy Systems, which
enables Cencorp's modules to be certified in all market areas the company is
targeting. After required administrative certification Cencorp or its
manufacturing partners are able to quote for their modules in competitive
tendering where the certification, in question, is required.
LASER AND AUTOMATION SOLUTIONS SEGMENT (LAS)
Difficulties in the new machine sales have continued in the second quarter of
the fiscal year. This is partially due to fluctuation in demand which is
typical of the industry. Another reason is that many of the Cencorp customers
interested in the new odd-form assembly solution are waiting for the first
reference delivery to be launched. The company trusts it has overcome the
technical challenges related to the delays in deliveries and believes it will
deliver the first new odd-form solutions during the current quarter. The new
odd-form assembly solution, among other things, will replace hundreds of robots
of the Cencorp HiSac product line that are coming to the end of their economic
life and that are still being used by Cencorp's customers. According to the
company's view major part of the robots will be replaced over the next five
years. Despite a decrease in the net sales the LAS business segment succeeded
to improve its profitability compared to the corresponding period last year.
LIFE CYCLE MANAGEMENT (LCM)
The LCM segment's net sales increased slightly compared to corresponding period
last year. The profitability improved on the Ebitda level, as well. It was
especially pleasing to notice that the total Ebitda of the traditional LAS and
LCM business segments returned to profit for the first time in Savcor's
ownership. This is a result of many actions taken to improve profitability and
carried out with determination during the last few years. In the next few
months the company will focus on improving the operations of the LCM segment by
increasing sales of new services to Cencorp's wide, global customer base, in
particular.
Cencorp's automation solutions are known to be reliable as well as for their
extremely long economic lifetime. Cencorp's products operate mechanically
clearly longer than software and electronics components used in them, thanks to
the equipment's strong structure. This makes refurbishment of equipment
economically reasonable. Cencorp's customers have an opportunity to refurbish
their equipment and to extend the lifetime of their equipment with low cost and
thus decrease the cost per processed product and component remarkably. Cencorp
believes that the future growth in the LCM business segment will be based on
the sales of these refurbishment and modernization services in particular.
OPERATING ENVIRONMENT
Cencorp operates in industries applying electronics and clean energy technology.
Cencorp's operating environment is global. The company's traditional customers
in the electronics industry as well as new customers operating in the clean
energy business are companies that provide products and services worldwide.
MARKET OUTLOOK
In Cencorp's LAS segment the short and middle-term outlook has not changed
during the reporting period. Many of Cencorp's traditional customers have shown
interest in the company's new products, in spite of which the net sales of the
new machine sales fell short of the expectations clearly. However, the company
views the sales will recover towards the end of the fiscal year.
The new industrial automation solutions Cencorp brought in the market in the
last quarter of 2013 give the company's long-term customers a good opportunity
to bring up to date the automation applications bought at the beginning of the
21st century. After an upgrade they meet the latest technological requirements.
The company believes it will be in renewing major part of these applications
within the next five years if customers start to invest in new machines as
Cencorp assumes. Thus, the LAS segment's future growth will be driven by
maximizing the potential of refurbishment of the automation solutions that are
coming to the end of their lifetime.
Finally at the second quarter of the financial year there were seen some signs
of growth in the LCM segment. As the costs continue to decrease even minor
growth in the net sales increases the profitability clearly. In the future the
LCM segment intents to provide refurbished automation solutions and life cycle
management more and more actively, the services of which the company has
already got good feedback in the US market. In the future the LCM business will
be the keystone of the profitability of the traditional electronics automation
business.
Cencorp has its biggest growth expectations in the CCE segment. Cencorp's key
products and services have been designed for the photovoltaic market. Cencorp
has its own “recipes” for module manufacturing including detailed material
selection and process parameters. With its module manufacturing recipes and
automated production Cencorp is able to manufacture modern next generation
solar modules based on conductive back sheet.
In the market, general attitude to the solar energy investments improved
clearly at the end of 2013. The same trend has continued in the first half of
the year. Many solar module manufacturers with solid market position have
started to plan investment in capacity, partly to increase the amount of their
production capacity and partly to replace old production capacity for old
H-pattern solar modules. During the first half of the year there have been
clear signs of increasing interest in the solar energy also in Finland, both in
private demand and in political decision-making. Cencorp has actively tried to
bring up the topic and to share its view on which direction decision-making
should be directed.
Many new local operators are entering the industry worldwide. Their interest in
the latest production automation and in Cencorp's module manufacturing recipes
is increasing. Cencorp is actively negotiating with this kind of new operators
on technology transfer agreements. According to the information available to
the company there is no full-scale offering with turnkey delivery similar to
Cencorp's concept available in the world for the moment. Cencorp's technology
is already now ready to meet the growing demand if the company is able to
secure financing arrangements.
The first phase of Cencorp' pilot production line for solar modules has been
started in Mikkeli. The first commercial sample modules have been delivered.
Further, Cencorp has started to offer turnkey solar plants with Cencorp's own
modules at first mainly in Finland. In May 2014 the company signed an agreement
on delivering a solar power plant of about 50 kWp with Etelä-Savon Energia
(“ESE”). These kind of small solar power plant deliveries do not exceed the
company's limit of EUR 0.4 million set for public releases in normal
conditions. Thus, in the future the company announces only agreements with
value bigger than this or with strategic importance.
However, Cencorp emphasizes that the focus of the company's future strategy is
in delivering production technology to the global markets. In the near future
the developing markets will be among the most interesting market areas for the
company. The company is having negotiations on technology transfer to India,
China, Brazil, Dominican Republic and to several African countries. Further,
Cencorp has entered into negotiations with several companies operating in the
developed countries such as Japan.
For about two years Cencorp has been developing fully automated production
technology for CBS modules. The technology has been introduced to almost all of
the most significant solar module manufacturers. Innovations relating to the
technology have been protected by applying several patents. There is only a
limited amount of competitors in the market and the customer feedback on
Cencorp's production technology has been positive. Cencorp's production
technology has special features: production lines have high level of
automation, they are easy to use and require only little space. Start-up cost
for setting up solar module production from zero amounts to ca. EUR 6 - 15
million depending on the existing level of the infrastructure and required
capacity.
Cencorp's Clean Energy strategy, if realized, will remarkably change the
company's cost structure and the targets set for the near future. Cencorp
cannot assess how the change in company's business focus will impact to the
company as the transition period is still going on. Due to this the company has
decided not to give any financial guidance for the time being, as stated in the
release of 21 August 2012. As the transition period is still continuing Cencorp
does not give any financial guidance for the 2014, either.
Cencorp's future outlook will be highly dependent on the company's ability to
reach the targeted market position in the global photovoltaic module market as
well as on the company's long-term and short-term financing. However, should
the company fail to arrange financing, it is possible that the company will not
be able to realize its assets and repay its liabilities to a sufficient extent
or quickly enough to secure the going concern of the company. Risks are handled
in more detail in the item “Risk management, risks and uncertainties of this
Interim Report”.
LONG-TERM OBJECTIVES FOR MANAGING DIRECTOR
On 21 August 2012 Cencorp's Board of Directors published its long-term
financial and other objectives for Managing Director as follows:
- Thorough but fast transition from a company manufacturing only
production automation systems and special components into a company that
develops and provides Cleantech applications using laser and automation
technology. The company's objective is to have a strong market position, in
various market areas, as a provider, of locally produced, high-quality
photovoltaic modules and, particularly, of solar module plants.
- Cencorp's goal is to increase its shareholder value with growth and
profitability. Cencorp aims for growth in Cleantech business where the company
has good possibilities, thanks to its product solutions, to achieve a strong
global position and fast growth.
- Laser and Automation Applications segment has its main focus on the
Life Cycle Management of systems and equipment with growth expectations for
service business.
- In the long run Cencorp is aiming for remarkable growth in its net
sales with net sales target of more than EUR 200 million for 2016, with growth
coming mainly from Cleantech operations, especially from solar photovoltaic and
fuel cell applications, provided the company has sufficient capital.
Cencorp has thoroughly reviewed its possibilities to achieve the net sales
target of EUR 200 million by the end of 2016 set for the Managing Director.
According to the Managing Director the target is very challenging but he trusts
it can be achieved if Cencorp succeeds to sign a contract for delivering at
least one normal sized solar module plant during the fiscal year 2014 and three
other in 2015, and if Cencorp's partners commit themselves to Cencorp's module
manufacturing recipes and components.
The long-term objectives set for the Managing Director involve also significant
risks and the long-term objectives should not be considered as the company's
financial guidance. Even though the objectives are based on market knowledge
and technical surveys, the risks are significant and it is not certain if the
Managing Director reaches all or part of the targets set for him. If Cencorp's
strategy change is delayed, the risk of the Managing Director reaching the
objectives set for him in the stated timetable will increase. If Cencorp does
not succeed to sign a contract for delivering at least one normal sized solar
module plant during the fiscal year 2014, the company has to re-evaluate the
objectives set for the Managing Director and their timetable in the second half
of 2014.
FINANCING
Cash flow from business operations before investments in January - June was EUR
-2.0 million (EUR -1.7 million). Trade receivables at the end of the reporting
period were EUR 1.1 million (EUR 2.0 million). Net financial items amounted to
EUR 0.7 million (EUR 0.5 million).
At the end of June, the equity ratio was -26.0 percent (16.8 %) and equity per
share was EUR -0.0004 (EUR 0.01). The equity ratio including capital loans was
-3.9 percent (37.7 %). At the end of the reporting period, the Group's liquid
assets totaled EUR 0.2 million (EUR 0.2 million) unused export credit limits,
bank guarantee limits and factoring loans amounted to EUR 0.8 million (EUR 1.5
million).
Based on an authorisation given to Cencorp's Board of Directors on 4 December
2013 by the extraordinary general meeting, the Board of Directors resolved on 9
December 2013 on a share issue to the shareholders of the company and to the
holders of the convertible bonds of I/2010, I/2012 and I/2013 with maximum
number of 508,151,045 new shares to be issued. The subscription period ended on
24 January 2014.
According to the result of the Share Issue, the total amount of subscriptions
was 627.064.325 shares, which represented 123 percent of the 508.151.045 shares
offered in the Share Issue. Due to the oversubscription, the Board had to
reject part of the subscriptions made on the basis of the secondary
subscription rights in accordance with the terms of the Share Issue. In total,
2.413 subscribers participated in the Share Issue.
The Company collected 4,911,973 Euros of new equity through the Share Issue.
Approximately 2.4 million Euros of the total subscription price was paid by the
capital and/or interest receivables related to loans with interest that the
Company owed to the respective subscribers. This includes the subscription of
approximately 2.1 million Euros by Savcor Group Oy. The subscription price of
4,911,973 Euros for the Share Issue was entered in whole into the fund of the
invested unrestricted equity of the Company. The Share Issue did not have any
effects to the registered share capital of the company. The new shares were
registered with the Trade Register on 4 February 2014 and were entered into
public trading on 5 February 2014.
In June Cencorp approved Finnvera Plc's quotation for extending the guarantee
for the financing facility agreement between Cencorp and Danske Bank Plc until
31 March 2015. As a result of the extension of Finnvera Plc's guarantee, the
financing facility agreement between Cencorp and Danske Bank Plc is effective
until 31 March 2015 as previously announced.
The extension of the maturity dates of a loan of some EUR 1.2 million, granted
to Cencorp by Savcor Group Oy in 2009 and converted into a convertible bond on
25 May 2010, and of a loan of EUR one million from Savcor Invest B.V , until 31
March 2015 was subject to extending the financing facility agreement between
Cencorp and Danske Bank Plc until 31 March 2015. At the share issue with
subscription period ending on 24 January 2014 Savcor Group Oy subscribed
Cencorp shares for the total amount of the loan. The loan period of the loan
from Savcor Invest BV is extended until 31 March 2015 as previously announced
as Danske Bank's financing facility agreement will be effective until 31 March
2015.
In the directed share issue for a fee to certain Cencorp´s directors and a
previous Board Member, released on April 11, 2014 altogether 8,159,821 new
company shares were subscribed. The subscription price for the shares in the
directed share issue was 0.025 Euro per share. Company has accepted the
subscriptions. The company collected approx. 203,996 Euros of new equity
through the directed share issue and 201,996 Euro of the subscriptions has been
paid by the setting-off non-disputed contractual based receivables. According
to the terms and conditions of the directed share issue, the subscription price
shall be recorded entirely to the company's invested free equity fund. The
shares were listed at the official list of NASDAQ OMX Helsinki Ltd together
with the shares already issued and listed on 31 July 2014.
The financing situation of Cencorp continues to be very tight. The company has
reviewed different options for its long-term financing and for ensuring the
company's strategy to be materialized as planned. Cencorp has begun
negotiations with international investors to find an arrangement for its
financing. The negotiations, run by an investment bank in London hired by
Cencorp, are going on and based on Cencorp's view results from these
negotiations could be expected in the first quarter of 2015. Cencorp is aiming
not to put too much pressure in the negotiations for long-term financing in
terms of schedule to be able to ensure the best possible shareholder value to
the current shareholders of the company.
According to the next phase of the cleantech strategy of Cencorp and in order
to obtain finance for it Cencorp has decided to sell the operations outside the
strategy, i.e. the automation business for the electronics industry as well as
the production of RFID components and flexible electronics for mobile phones,
to become a company providing solely clean energy solutions. Cencorp is having
several negotiations for the sale of the aforesaid businesses and the company
is aiming to conclude all or part of the negotiations in the third quarter of
2014.
In terms of the short-term financing of the company, Cencorp's preliminary
object is to turn the cash flow before investments, with the company's current
cost structure, into profit during the fourth quarter of 2014. This requires
that the company achieves its minimum turnover objective for 2014 the
likelihood of which is difficult to estimate as the strategic change in the
company is still going on.
Should there be delays in getting orders or should the market conditions weaken
from the company's current view, changing orders into sales may slow down and
have a major impact in the schedule in which the cash flow of the business
operations turns positive. In such case the financing situation of the company
would further tighten if all or part of the other financing arrangements that
are going on would not have been materialized.
Another object relating to short-term financing is to obtain bridging loan for
the company until the aforesaid long-term financing has been secured. In the
company's view a bridging loan together with cash flow of business operations
before investments turning positive would ensure sufficiency of financing for
the next twelve months or until long-term financing arrangement has been
concluded, which is estimated to happen in the first quarter of 2015.
In case the cash flow of the company will not turn positive during the fourth
quarter of the year 2014, at the latest, pursuant to the objective of the
company; and/ or the company does not have at least the credit limits
corresponding to the current limits of 4.0 million Euros; and/or the company
does not manage to acquire separate financing for its investments pursuant to
the investment program of the company (from clients, partners, venture capital
investors or from other third parties such as Tekes - the Finnish Funding
Agency for Technology and Innovation); and/or the company does not succeed in
several negotiations, the company is having, for selling the automation
business and the production of RFID components and flexible electronics for
mobile phones; and/or the company is not able to get a required bridging loan
until long-term financing arrangement has been concluded, the company may be
obliged to reconsider the scope of its clean energy business and to lower its
growth target for the future as well as to adjust its operations in wide
extend. Should Cencorp fail to arrange financing otherwise, it is possible that
the company will not be able to realize its assets to a sufficient extent or
quickly enough.
In the Auditor's Report in the Annual Report 2013 the company's auditor drew
attention to the financial risk management with a so called Emphasis of Matter
as follows: “Without qualifying our opinion, we draw attention to the basis of
preparation of the financial statements and to the note 29. Financial risk
management. The financial statements have been repared under the going concern
assumption. The continuity of operations requires that during the year 2014 the
company is able to obtain supplementary funding, to negotiate changes to the
terms of payment and that cash flow from business operations turns positive.
However, should the company fail to arrange financing, it is possible that the
company will not be able to realize its assets and repay its liabilities within
usual business operations to a sufficient extent or quickly enough. These
factors, together with other issues mentioned in the report of the Board of
Directors and the notes to the financial statements show material uncertainty,
which may challenge the company's going concern assumption.”
RESEARCH AND DEVELOPMENT
The Group's research and development costs during the January - June period
amounted to EUR 0.8 million (EUR 0.9 million) or 18.1 (16.0) percent of net
sales.
INVESTMENTS
Gross investments during the January - June period amounted to EUR 0.3 million
(EUR 2.4 million). Almost all of the investments were in development costs.
PERSONNEL
At the end of June the Group employed 71 (152) people, out of which 52 persons
worked in Finland, 5 persons in China and 14 persons in other countries. During
the reporting period, salaries and fees totalled EUR 2.2 million (EUR 2.1
million).
SHARES AND SHAREHOLDERS
Cencorp's share capital amounted to EUR 3 425 059.10 at the end of the
reporting period. The number of shares was 854 312 315. The company has one
series of shares, which confer equal rights in the company. Cencorp did not own
any of its own shares at the end of the reporting period.
The company had a total of 6 184 shareholder at the end of June 2014, and 0.6
percent of the shares were owned by foreigners. The ten largest shareholders
held 82.4 percent of the company's shares and voting rights on 30 June 2014.
The largest shareholders on 30 June 2014
Shares Votes
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1. SAVCOR GROUP OY 346 591 142 40.6
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2. SAVCOR GROUP LIMITED 133 333 333 15.6
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3. GASELLI CAPITAL OY 95 000 000 11.1
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4. KESKINÄINEN ELÄKEVAKUUTUSYHTIÖ ETERA 63 673 860 7.5
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5. SAVCOR INVEST B.V. 39 374 994 4.6
--------------------------------------------------------------
6. FRATELLI OY 9 223 250 1.1
--------------------------------------------------------------
7. SCI INVEST OY 6 870 645 0.8
--------------------------------------------------------------
8. TROBE OY 4 000 000 0.5
--------------------------------------------------------------
9. HUHTALA KAI 3 687 500 0.4
--------------------------------------------------------------
10.PARPOLA VILLE 2 498 759 0.3
--------------------------------------------------------------
OTHERS 150 058 832 17.5
--------------------------------------------------------------
TOTALLY 854 312 315 100.0
--------------------------------------------------------------
The members of the Board of Directors and the President and CEO, either
directly or through companies under their control, held a total of 621,170,114
shares in the company on 30 June 2014, representing about 72.7 percent of the
company's shares and voting rights. Iikka Savisalo, Cencorp's Managing
Director, either directly or through companies under his control, held a total
of 526,170,114 shares in the company and 15,852,856 options connected to bond
I/2012.
The price of Cencorp's share varied between EUR 0.01 and 0.04 during the
January - June period. The average price was EUR 0.02 and the closing price at
the end of June EUR 0.02. A total of 89.2 million Cencorp shares were traded at
a value of EUR 2.0 million during the January - June period. The company's
market capitalization at the end of June stood at EUR 18.8 million.
No share options were granted to the company's management during the reporting
period. On 30 June 2014, the company hold 15,852,856 options connected to bond
I/2012 with subscription period ending on 7 December 2014. Options connected to
bond I/2012 are held by SCI Invest Oy and Savcor Group Oy. On 30 June 2014 the
company had 30,000,000 options connected to bond I/2013 with a subscription
period ending on 2 June 2015. The options connected to bond I/2013 are held by
Keskinäinen Vakuutusyhtiö Etera and Oy Ingman Finance Ab.
SHARE ISSUE AUTHORIZATIONS IN FORCE
Cencorp's Extraordinary General Meeting held on 30 January 2012 decided to
authorize the Board of Directors to issue 100,000,000 new shares. 36,411,608
shares remain under the authorization.
The Extraordinary General Meeting of Cencorp Corporation held on 4 December
2013 authorized the Board of Directors of the company to decide on a share
issue to the shareholders of the company and to the holders of the convertible
bonds of the company, so that the maximum number of new shares to be issued
based on the authorization is 510 000 000 new shares of the company. The Board
of Directors is entitled to resolve on any other terms and conditions of the
share issue. The authorization is in force until further notice, however, in
maximum for five years as of the resolution of the General Meeting. The
authorization does not revoke the earlier authorizations. 508,151,045 shares,
under the authorization, were issued in the share issue ended on 24 January
2014. There remain 1,848,955 shares under the authorization.
THE MAJOR EVENTS ON THE REPORTING PERIOD
Reverse stock split
Cencop has previously announced that the company's Board of Directors has
commenced preparations for convening an extraordinary general meeting to decide
on reduction of the number of the shares without reducing the value of the
shares (so called reverse stock split). The purpose of the reverse stock split
is to boost trading and pricing of the shares of the company. At that point it
was estimated that the issue will be handled either at an extraordinary general
meeting during the spring 2014 or at Cencorp's annual general meeting.
On 1 April 2014 the company's Board of Directors resolved not to take the
reverse stock split to the annual general meeting held on 25 April 2014.
However, preparations of the issue continue. According to the current
estimation the issue will be handled at an extraordinary general meeting to be
held during year 2014.
Directed share issue for the fee for certain directors and employees and a
former member of the Board of Directors of the company
In directed share issue for a fee to certain Cencorp´s directors and a previous
board member, released on April 11, 2014 alltogether 8,159,821 new company
shares were subscribed. The subscription price for the shares in the directed
share issue was 0.025 euro per share. Company has accepted the subscriptions.
The company collected approx. 203,996 Euros of new equity through the directed
share issue and 109,375 Euro of the subscriptions has been paid by the
setting-off non-disputed contractual based receivables. According to the terms
and conditions of the directed share issue, the subscription price shall be
recorded entirely to the company's invested free equity fund.
Due to the accepted share subscriptions the amount of the shares in the company
increased from 854,312,315 shares to 862,472,136 shares. The shares were listed
at the official list of NASDAQ OMX Helsinki Ltd together with the shares
already issued and listed on 31 July 2014. The company did not publish a
separate supplement to the Registration Document dated December 9, 2013 or a
Summary and a Securities Note prior to the listing of the new shares.
Decisions at the annual general meeting and organizing of the Board of Directors
Cencorp Corporation's Annual General Meeting was held on 25 April 2014 in
Mikkeli, Finland. The AGM approved the 2013 financial statements and discharged
the members of the Board and the President and CEO from liability for the
financial year 2013. According to the Board' proposal, it was decided that no
dividend for the financial year 2013 will be distributed. It was also decided
that the loss for the financial period that ended on 31 December 2013 will be
entered in retained earnings.
It was decided that 4 members will be elected to the Board of Directors of
Cencorp. MSc (economics) Mr. Sauli Kiuru (b. 1972) who was elected as new board
member, works as Chairman of the Board of Gaselli Capital Oy and CEO of Siesta
Group Oy. Previously Mr. Kiuru has been working as CFO and board member of
Barona Group Oy, as auditor in KPMG and as secretary of the Auditor´s Committee
of Finnish Central Chamber of Commerce. Mr. Kiuru has wide experience
concerning board work in growth companies. Sauli Kiuru is the chairman of the
board of Siesta Group Oy, BiiSafe Oy and Stata Oy. He has been board member of
Cencorp previously in years 2006 - 2008. Gaselli Capital Oy which is controlled
by Mr. Kiuru owns 95,000,000 Cencorp shares, which represents approx. 11.1
percent of the share capital of Cencorp.
Mrs. Marjukka Karttunen, industrial counsellor Mr. Hannu Savisalo and CEO Mr.
Iikka Savisalo continue as old Board members in the Cencorp Corporation´s Board
of Directors.
At its organizing meeting following the AGM, Cencorp's Board of Directors
elected Hannu Savisalo as the Chairman and Marjukka Karttunen as the Vice
Chairman of the Board. The Board of Directors decided, due to the scope of the
company's business, that it is not necessary to establish any separate Board
committees.
The AGM decided that an annual remuneration of EUR 40,000 will be paid to the
Chairman and to the Vice Chairman of the Board, and EUR 30,000 to the members
of the Board of Directors. Travel costs of the Board members will be paid
according to the company's travel policy.
Ernst & Young Oy, Authorized Public Accounting Firm, continues as the Company
auditor and Mikko Rytilahti, APA, as the responsible auditor.
Change in Cencorp's management team on 7 May 2014
Mr Jari Ketoluoto, (Diploma in Business Administration, born 1962) has been
appointed as CEO of Laser and Automation Solutions segment (LAS). Previously he
acted as Vice President of Laser and Automation Solutions. Mr Ketoluoto
continues in Cencorp's Management Team. He reports to Mr Iikka Savisalo,
Cencorp's CEO.
Mr Petri Kivelä's, Vice President LCM, employment with Cencorp and membership
in the company's Management Team has ended. Mr Jari Ketoluoto is responsible
for the Life Cycle Management segment as well.
An agreement with Etelä-Savon Energia
In May 2014 Etelä-Savon Energia Oy ("ESE") and Cencorp signed a cooperation
agreement with objective to develop together solar energy markets in the region
of South Savo. In the first phase a pilot plant will be built in Karikko,
Mikkeli. A pilot solar power plant, built as a pilot project, is an investment
that opens the solar energy markets in the region of South Savo. The solar
power plant includes 200 solar modules with capacity of max. 49.5 kW. The power
plant generates annually about 40.000 kWh. The solar power plant of this size
is the only one in the region of South Savo. Cencorp will deliver the solar
power plant as a turnkey project. The customer is ESE who is responsible for
connecting the power plant to the grid. Based on experience got from this pilot
project a model for wider cooperation can be developed.
Statutory negotiations
Cencorp´s statutory negotiations, started at 16 May 2014 were closed 4 June
2014. As the result of the negotiations personnel of Life Cycle Management
segment ("LCM") and Laser and Automation Solutions segment ("LAS") will be
reduced by seven employees. Furthermore, Cencorp´s spare parts operations and
service will be relocated to Cencorp´s Estonian based subsidiary by the end of
2014. Reductions will be carried out by dismissals and retirement arrangements.
By the decided actions Cencorp will improve its profitability and
cost-effectiveness of the operations as well as to strengthen competitiveness
in its production automation segments. The personnel working within Cencorp's
Clean Energy segment were excluded from the statutory negotiations.
Extension of Finnvera's guarantee
On 27 June 2014 Cencorp approved Finnvera Plc's quotation for extending the
guarantee for the financing facility agreement between Cencorp and Danske Bank
Plc until 31 March 2015. As a result of the extension of Finnvera Plc's
guarantee, the financing facility agreement between Cencorp and Danske Bank Plc
is effective until 31 March 2015 as previously announced. The extension of the
maturity dates of a loan of some EUR 1.2 million, granted to Cencorp by Savcor
Group Oy in 2009 and converted into a convertible bond on 25 May 2010, and of a
loan of EUR one million from Savcor Invest B.V , until 31 March 2015 has been
subject to extending the financing facility agreement between Cencorp and
Danske Bank Plc until 31 March 2015. At the share issue with subscription
period ending on 24 January 2014 Savcor Group Oy subscribed Cencorp shares for
the total amount of the loan. The loan period of the loan from Savcor Invest BV
is extended until 31 March 2015 as previously announced as Danske Bank's
financing facility agreement will be effective until 31 March 2015.
THE MAJOR EVENTS SINCE THE END OF THE REPORTING PERIOD
There were no major events since the end of the reporting period.
RISK MANAGEMENT, RISKS AND UNCERTAINTIES
Cencorp's Board of Directors is responsible for the control of the company's
accounts and finances. The Board is responsible for internal control, while the
President and CEO handles the practical arrangement and monitors the efficiency
of internal control. Business management and control are taken care of using a
Group-wide reporting and forecasting system.
The purpose of risk management is to ensure that any significant business risks
are identified and monitored appropriately. The company's business and
financial risks are managed centrally by the Group's financial department, and
reports on risks are presented to the Board of Directors as necessary.
Due to the small size of the company and its business operations, Cencorp does
not have an internal auditing organization or an audit committee.
The sufficiency of the company's financing and working capital for the next
twelve months involve significant risks. According to the current view of
Cencorp's management the company needs to obtain a bridging loan until
long-term financing arrangement mentioned in the item “Financing” in this
Interim Report has been secured and the cash flow of the business operations of
the company has turned positive. The company will have a significant deficit in
its working capital until the first delivery of production technology for solar
modules will start to generate positive cash flow, or the electronics
automation business and/or production of RFID components and flexible
electronics for mobile phones has been sold.
In the Auditor's Report in the Annual Report 2013 the company's auditor drew
attention to the financial risk management with a so called Emphasis of Matter
as follows: “Without qualifying our opinion, we draw attention to the basis of
preparation of the financial statements and to the note 29. Financial risk
management. The financial statements have been repared under the going concern
assumption. The continuity of operations requires that during the year 2014 the
company is able to obtain supplementary funding, to negotiate changes to the
terms of payment and that cash flow from business operations turns positive.
However, should the company fail to arrange financing, it is possible that the
company will not be able to realize its assets and repay its liabilities within
usual business operations to a sufficient extent or quickly enough. These
factors, together with other issues mentioned in the report of the Board of
Directors and the notes to the financial statements show material uncertainty,
which may challenge the company's going concern assumption.”
In case the cash flow of the company will not turn positive at the latest
during the fourth quarter of 2014 pursuant to the objective of the company;
and/ or the company does not have at least the credit limits corresponding to
the current limits of 4.0 million euros; and/or the company does not manage to
acquire separate financing for its investments pursuant to the investment
program of the company (from clients, partners, venture capital investors or
from other third parties such as Tekes - the Finnish Funding Agency for
Technology and Innovation); and/or the company does not succeed in several
negotiations, the company is having, for selling the automation business and
the production of RFID components and flexible electronics for mobile phones;
and/or the company is not able to get a required bridging loan until long-term
financing arrangement has been concluded, the company may be obliged to
reconsider the scope of its clean energy business and to lower its growth
target for the future.
Should the company fail to arrange financing, it is possible that the company
will not be able to realize its assets to a sufficient extent or quickly
enough. According to the next phase of the strategy of the company and in order
to obtain finance for it Cencorp has decided to sell the operations outside the
strategy, i.e. the automation business for the electronics industry as well as
the production of RFID components and flexible electronics for mobile phones,
to become a company providing solely clean energy solutions. Cencorp is having
negotiations for the sale of the aforesaid businesses. Transactions, their
materialization and schedule involve risks. Although the management of the
company has considered and reviewed business transactions, it is possible that
transactions cannot be carried out fast enough to strengthen the company's
financing situation.
As it is difficult to make forecasts in an industry that is dependent on
economic cycles, the biggest business risks are related to fluctuations in the
demand for products and to the adjustment of operations to meet demand.
In terms of profitability, the most essential risks are related to the
achievement of a sufficient invoicing volume in all three business segments and
the success achieved with the programs underway at Cencorp to improve
profitability, such as improvements in productivity and business flexibility
through outsourcing production.
Cencorp has announced that its objective is to transform from a company
manufacturing only production automation systems and special components into a
company that develops and provides cleantech applications using laser and
automation technology as well as into a company that has a strong market
position as a provider of, in various geographical areas, locally produced
high-quality photovoltaic modules. Achievement of the objectives as well as
realization of the transformation involves risks. Even though Cencorp's
strategy and objectives are based on market knowledge and technical surveys,
the risks are significant and it is not certain if the company reaches all or
part of the targets set for it. Cencorp's future outlook will be highly
dependent on the company's ability to reach the targeted market position in the
global photovoltaic module market as well as on the company's short and
long-term financing.
The execution of the non-binding Memorandum of Understanding signed with a
major Chinese photovoltaic module manufacturer involves risks. The final terms
of an agreement are still under negotiations, thus execution of the agreement
is not yet guaranteed. Additionally, the agreement is subject to Cencorp's
short-term and long-term financing. Thus, Cencorp is not yet able to estimate
the agreement's possible execution, effective date neither the agreement's
impact in Cencorp nor the final risks relating to it. However, in regard to the
Memorandum of Understanding on delivering CBS to the Chinese photovoltaic
module manufacturer, the estimated minimum value of EUR 20 million for three
years' period from the start of mass production will probably stay non-binding
even though the actual Memorandum of Understanding turns into a binding supply
contract. In this business customers do not give binding order estimations.
The execution of the non-binding cooperation agreement signed between Cencorp
and Vikram Solar involves risks. The negotiations for business and partnership
collaboration between the parties, including detailed terms, are still under
negotiations, thus it is not yet certain that the transactions will be
materialized. Further, realization of the transactions defined in the
non-binding Term Sheet is subject to several issues such as due diligence and
especially to Cencorp's short and long term financing. Therefore, Cencorp is
not yet able to estimate possible realization and effective date of the
transactions, the transactions' influence in Cencorp or risks relating to them.
Cencorp will announce further information as soon as the negotiations have been
finished.
The long-term objectives set for the Managing Director involves also risks and
the long-term objective should not be considered as the company's financial
guidance. Even though the objectives are based on market knowledge and
technical surveys, the risks are significant and it is not certain if the
Managing Director reaches all or part of the targets set for him within
estimated timetable. If Cencorp's strategy change is delayed, the risk of the
Managing Director reaching the objectives set for him in the stated timetable
will increase. If Cencorp does not succeed to sign a contract for delivering at
least one normal sized solar module plant during the fiscal year 2014, the
company has to re-evaluate the objectives set for the Managing Director and
their timetable in the second half of 2014.
Other risks connected to Cencorp have been presented in more detail in the
Share Issue Registration Document and its appendixes published on 9 December
2013 as well as in the Annual Report.
In Mikkeli, 20 August 2014
Cencorp Corporation
BOARD OF DIRECTORS
For more information please contact:
Cencorp: Iikka Savisalo, President and CEO, tel. +358 40 521 6082,
iikka.savisalo@savcor.com
Distribution:
NASDAQ OMX, Helsinki
Main media
www.cencorp.com
Consolidated statement of comprehensive income
(unaudited)
1 000 EUR 4-6/2014 4-6/2013 1-6/2014 1-6/2013 1-12/2013
--------------------------------------------------------------------------------
Continuing
operations
Net sales 2 211 3 385 4 647 5 877 11 126
Cost of sales -5 473 -3 151 -8 193 -5 478 -10 662
Gross profit -3 262 234 -3 546 398 464
--------------------------------------------------------------------------------
Other operating 24 189 78 891 933
income
Product development -421 -467 -840 -942 -2 002
expenses
Sales and marketing -403 -368 -890 -782 -1 512
expenses
Administrative -435 -542 -1 015 -1 082 -1 945
expenses
Other operating -55 -133 -69 -255 -1 103
expenses
Operating profit -4 552 -1 088 -6 281 -1 772 -5 165
Financial income 97 19 193 386 460
Financial expenses -427 -578 -931 -932 -2 247
Profit before taxes -4 882 -1 648 -7 018 -2 318 -6 953
from continuing
operations
Income taxes -2 -1 -3 1 -11
Profit/loss for the -4 884 -1 649 -7 021 -2 317 -6 964
period from
continuing
operations
Discontinued
operations
Profit/loss after 0 0 0 -9 -44
tax for the period
from discontinued
operations
Profit/loss for the -4 884 -1 649 -7 021 -2 326 -7 008
period
--------------------------------------------------------------------------------
Profit/loss
attributable to:
Shareholders of the -4 884 -1 649 -7 021 -2 326 -7 008
parent company
Earnings/share -0,006 -0,003 -0,009 -0,004 -0,01
(diluted), eur
Earnings/share -0,006 -0,003 -0,009 -0,004 -0,01
(basic), eur
Continuing
operations:
Earnings/share -0,006 -0,003 -0,009 -0,004 -0,01
(diluted), eur
Earnings/share -0,006 -0,003 -0,009 -0,004 -0,01
(basic), eur
Profit/loss for the -4 884 -1 649 -7 021 -2 326 -7 008
period
Other comprehensive
income
Translation -24 48 -122 72 155
difference
Net other comprehensive income to be
reclassified to
profit or loss in -24 48 -122 72 155
subsequent periods
Total comprehensive -4 908 -1 600 -7 143 -2 254 -6 853
income for the
period
--------------------------------------------------------------------------------
Total comprehensive
income attributable
to:
Shareholders of the -4 908 -1 600 -7 143 -2 254 -6 853
parent company
Consolidated statement of financial position
(unaudited)
1 000 EUR 30.6.2014 30.6.2013 31.12.2013
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 2 653 6 511 5 604
Consolidated goodwill 2 538 2 967 2 538
Other intangible assets 4 852 4 615 5 512
Available-for-sale investment 9 10 9
Deferred tax assets 6 8 7
Total non-current assets 10 058 14 110 13 670
--------------------------------------------------------------------------------
Current assets
Inventories 1 565 2 638 2 198
Trade and other 1 777 3 072 2 514
non-interest-bearing
receivables
Cash and cash equivalents 193 205 116
Total current assets 3 535 5 916 4 828
--------------------------------------------------------------------------------
Assets classified as held for 0 36 0
sale
Total assets 13 593 20 063 18 498
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
Equity attributable to shareholders of the parent
company
Share capital 3 425 3 425 3 425
Other reserves 49 466 44 123 44 568
Translation difference 711 749 833
Retained earnings -57 116 -44 937 -50 095
Total equity -3 514 3 360 -1 269
--------------------------------------------------------------------------------
Non-current liabilities
Non-current loans 1 528 4 243 3 222
Deferred tax liabilities 5 22 7
Total non-current liabilities 1 532 4 265 3 229
--------------------------------------------------------------------------------
Current liabilities
Current interest-bearing 7 319 4 986 6 795
liabilities
Trande and other payables 8 146 7 220 9 594
Current provisions 110 231 150
Total current liabilities 15 575 12 437 16 538
--------------------------------------------------------------------------------
Liabilities directly associated 0 1 0
with assets classified as held
for sale
Total liabilities 17 107 16 703 19 768
--------------------------------------------------------------------------------
Equity and liabilities total 13 593 20 063 18 498
--------------------------------------------------------------------------------
Consolidated statement of cash flows
(unaudited)
1 000 EUR 1-6/201 1-6/201 1-12/201
4 3 3
--------------------------------------------------------------------------------
Cash flow from operating activities
Income statement profit/loss from continuing -7 018 -2 318 -6 953
operations before taxes
Income statement profit/loss from discontinued 0 -9 -44
operations before taxes
Income statement profit/loss before taxes -7 018 -2 327 -6 997
---------------------------
Non-monetary items adjusted on income statement
--------------------------------------------------------------------------------
Depreciation and impairment + 4 279 990 2 463
Gains/losses on disposals of non-current +/- 0 -28 -8
assets
Unrealized exchange rate gains (-) and +/- -40 -152 259
losses (+)
Other non-cash transactions +/- 109 16 21
Financial income and expense + 777 698 1 564
Total cash flow before change in working -1 893 -803 -2 698
capital
--------------------------------------------------------------------------------
Change in working capital
Increase (-) / decrease (+) in inventories 13 229 319
Increase (-) / decrease (+) in trade and 854 -340 161
other receivables
Increase (+) / decrease (-) in trade and -611 -433 2 248
other payables
Change in provisions -39 -26 -108
Change in working capital 217 -570 2 620
--------------------------------------------------------------------------------
Adjustment of financial items and taxes to
cash-based accounting
Interest paid - -157 -196 -361
Interest received + 0 0 2
Other financial items - -142 -93 -300
Taxes paid - -10 -3 -11
Financial items and taxes -309 -292 -670
--------------------------------------------------------------------------------
NET CASH FLOW FROM BUSINESS OPERATIONS -1 985 -1 665 -748
CASH FLOW FROM INVESTING ACTIVITIES
Investments in tangible and intangible assets - -568 -1 558 -2 963
Proceeds on disposal of tangible and intangible + 0 69 55
assets
Proceeds on disposal of other investments - 0 33 33
NET CASH FLOW FROM INVESTMENTS -568 -1 455 -2 875
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from share issue + 2 352 0 0
Proceeds from non-current borrowings + 256 2 017 2 425
Repayment of non-current borrowings - -7 -5 -12
Stock options of the convertible bond + 0 432 432
Proceeds from current borrowings + 3 169 2 148 5 399
Repayment of current borrowings - -3 159 -1 893 -5 102
NET CASH FLOW FROM FINANCING ACTIVITIES 2 611 2 699 3 141
--------------------------------------------------------------------------------
INCREASE (+) OR DECREASE (-) IN CASH FLOW 58 -421 -483
Consolidated statement of changes in equity
(unaudited)
1 000 EUR Share Other Translatio Distributable Retained Total
capit reser n non-restricted earning
al ves differenc equity fund s
e
--------------------------------------------------------------------------------
31.12.2013 3 425 4 908 833 39 661 -50 095 -1 269
Directed share - - - 204 - 204
issue Share issue 4 882
Share issue - - - -188 - -188
expenses
Translation - - -122 - - -122
difference,
comprehensive
income
Profit/loss for - - - - -7 021 -7 021
the period
30.6.2014 3 425 4 908 711 44 558 -57 116 -3 514
1 000 EUR Share Other Translatio Distributable Retained Total
capit reser n non-restricted earning
al ves differenc equity fund s
e
--------------------------------------------------------------------------------
31.12.2012 3 425 4 908 677 38 783 -43 091 4 703
Stock options of - - - 432 432
the convertible
bond
Share related 480
payments
Translation - - 72 - - 72
difference,
comprehensive
income
Profit/loss for - - - - -2 326 -2 326
the period
30.6.2013 3 425 4 908 749 39 215 -44 937 3 360
Segment information
(unaudited)
From 1 January 2013 Cencorp reports of three business segments to comply with
the company's Cleantech strategy. The segments are Laser and Automation
Applications, Life Cycle Management and Clean Energy Solutions (including also
the former Special Components segment). Segment information is not available
after operating profit in profit and loss statement. Financial income and
expenses or balance sheet items are not booked to segments. Cencorp's new
segment information is based on the management's internal reporting and on the
organisation structure.
The segment information include only continuing operations. Information
regarding discontinued operations is given in attachment "Discontinued
operations" (2013).
1 000 EUR 4-6/2014 4-6/2013 1-6/2014 1-6/2013 1-12/2013
--------------------------------------------------------------------------------
Net sales
Laser and Automation 1 360 1 771 2 450 2 550 4 881
Applications
Life Cycle Management 797 743 1 588 1 621 3 101
of Laser and
Automation
Applications
Clean Energy Solutions 83 927 663 1 821 3 340
Eliminations -29 -56 -53 -115 -196
Total 2 211 3 385 4 647 5 877 11 126
0 0 0
Operating profit
Laser and Automation -142 -292 -666 -884 -2 063
Applications
Life Cycle Management 76 -4 106 83 94
of Laser and
Automation
Applications
Clean Energy Solutions -4 488 -787 -5 720 -972 -3 197
Eliminations 3 -5 -1 1 2
Total -4 552 -1 088 -6 281 -1 772 -5 165
0 0 0
EBITDA
Laser and Automation -80 -164 -502 -605 -1 129
Applications
Life Cycle Management 109 43 174 166 281
of Laser and
Automation
Applications
Clean Energy Solutions -856 -469 -1 673 -343 -1 856
Eliminations 3 -5 -1 1 2
Total -825 -594 -2 002 -782 -2 703
Depreciation
Laser and Automation 62 129 164 265 492
Applications
Life Cycle Management 33 36 67 70 138
of Laser and
Automation
Applications
Clean Energy Solutions 432 318 847 629 1 288
Total 527 482 1 079 964 1 919
0 0 0 - -
Impairment
Laser and Automation 0 0 0 14 442
Applications
Life Cycle Management 0 12 0 12 49
of Laser and
Automation
Applications
Clean Energy Solutions 3 200 0 3 200 0 53
Total 3 200 12 3 200 26 544
Discontinued
operations
(unaudited)
29 May 2012 Cencorp announced that it exits from its unprofitable decoration
business and closes down its plant in Guangzhou, China, producing decoration
applications. In consequence of the closing down of the Guangzhou plant and the
exit from decoration business Cencorp reports the financial figures relating to
the Guangzhou plant's decoration business as discontinued operations from now
on.
The assets of Savcor Face (Guangzhou) Technologies Co., Ltd, reported as
discontinued operation, were written- off at fair value in the second quarter
of 2012 and sold in the fourth quarter of 2012.
The results and major classes of assets and liabilities of Savcor Face
(Guangzhou) Technolgies Co., are as follows:
1 000 EUR 1-6/2014 1-6/2013 1-12/2013
--------------------------------------------------------------------------------
Revenue 0 0 0
Expenses 0 -9 -8
Other opeating 0 0 0
income
Loss recognised 0 0 0
on the
remeasurement to
fair value
Operating profit 0 -9 -8
--------------------------------------------------------------
Finance costs 0 0 -36
Profit/loss 0 -9 -44
before tax from
discontinued
operation
Income tax 0 0 0
Profit/loss after 0 -9 -44
tax from
discontinued
operation
--------------------------------------------------------------
Assets
Property, plant 0 0 0
and equipment
Other intangible 0 0 0
assets
Inventories 0 0 0
Trade and other 0 36 0
non-interest-bea
ring receivables
Cash and cash 0 0 0
equivalents
Assets classified 0 36 0
as held for sale
--------------------------------------------------------------
Liabilities
Trande and other 0 1 0
payables
Provisions 0 0 0
Liabilities 0 1 0
directly
associated with
assets
classified as
held for sale
--------------------------------------------------------------
Net assets 0 36 0
directly
associated with
disposal group
--------------------------------------------------------------
Savcor Face
(Guangzhou)
Technolgies Co.,
Ltd:n net cash
flow:
1 000 EUR 1-6/2014 1-6/2013 1-12/2013
--------------------------------------------------------------------------------
Operating 0 -40 -41
Investing 0 0 0
Financing 0 0 0
Net cash flow 0 -40 -41
--------------------------------------------------------------
Earnings/share 0,00 -0,00001 -0,0001
(basic), from
discontinued
operations
Earnings/share 0,00 -0,00001 -0,0001
(diluted) from
discontinued
operations
Key figures
(unaudited)
1 000 EUR 4-6/201 4-6/20 1-6/20 1-6/201 1-12/20
4 13 14 3 13
--------------------------------------------------------------------------------
Net sales 2 211 3 385 4 647 5 877 11 126
Operating profit -4 552 -1 088 -6 281 -1 772 -5 165
% of net sales -205,9 -32,1 -135,2 -30,1 -46,4
EBITDA -825 -594 -2 002 -782 -2 703
% of net sales -37,3 -17,5 -43,1 -13,3 -24,3
Profit before taxes -4 882 -1 648 -7 018 -2 318 -6 953
% of net sales -220,8 -48,7 -151,0 -39,4 -62,5
Balance Sheet value 13 593 20 063 13 593 20 063 18 498
Equity ratio, % -26,0 16,8 -26,0 16,8 -6,9
Net gearing, % n/a 268,6 n/a 268,6 n/a
Gross investments 126 646 276 2 417 3 394
% of net sales 5,7 19,1 5,9 41,1 30,5
Research and development costs 421 467 840 942 2 002
% of net sales 19,1 13,8 18,1 16,0 18,0
Order book 2 148 2 377 2 148 2 377 3 703
Personnel on average 71 152 108 159 155
Personnel at the end of the period 71 152 71 152 149
Non-interest-bearing liabilities 8 146 7 220 8 146 7 220 9 594
Interest-bearing liabilities 8 846 9 229 8 846 9 229 10 017
Share key indicators
Earnings/share (basic) -0,006 -0,003 -0,009 -0,004 -0,01
Earnings/share (diluted) -0,006 -0,003 -0,009 -0,004 -0,01
Earnings/share (basic), from -0,006 -0,003 -0,009 -0,0035 -0,01
continuing operations
Earnings/share (diluted) from -0,006 -0,003 -0,009 -0,0035 -0,01
continuing operations
Equity/share -0,004 0,01 -0,004 0,01 -0,004
P/E ratio -3,51 -36,00 -2,35 -25,00 -3,74
Highest price 0,03 0,09 0,04 0,1 0,09
Lowest price 0,01 0,07 0,01 0,06 0,03
Average price 0,02 0,08 0,02 0,08 0,07
Closing price 0,02 0,09 0,02 0,09 0,04
Market capitalisation, at the end of 18,8 30,8 18,8 30,8 13,8
the period, MEUR
Calculation of Key Figures
EBITDA, %: Operating profit + depreciation
+ impairment
------------------------------------------
Net
sales
Equity ratio, %: Total equity x
100
------------------------------------------
Total assets - advances
received
Net gearing, %: Interest-bearing liabilities - cash and
cash equivalents
and marketable
securities x 100
------------------------------------------
Shareholders' equity + minority
interest
Earnings/share (EPS): Profit/loss for the period to the owner
of the parent company
------------------------------------------
Average number of shares adjusted for
share issue
at the end of the
financial year
Equity/share: Equity attributable to shareholders of
the parent company
------------------------------------------
Undiluted number of shares on the balance
sheet date
P/E ratio: Price on the balance
sheet date
------------------------------------------
Earnings per
share
Related party
transactions
(unaudited)
Cencorp Corporation is part of Savcor Group Oy. The Group has purchased goods
and services from companies in which the majority holding and/or power of
decision granting control of the company is held by members of the Group's
related parties. Sales of goods and services carried out with related parties
are based on market prices.
The Group entered into the following
transactions with related parties:
1 000 EUR 1-6/2014 1-6/2013 1-12/2013
--------------------------------------------------------------------------------
Sales of goods and
services
Savcor companies 26 80 175
Others 0 0 9
Total 26 80 184
Purchases of goods
and services
Savcor companies 226 259 474
Savcor Face Ltd 47 42 81
Idem Finland Oy 0 15 15
Others 0 1 2
Total 273 316 571
Interest income
Savcor companies 0 0 2
Interest expenses
and other
financial expenses
Savcor companies 103 166 354
SCI Invest Oy 30 30 60
Iikka Savisalo 0 0 2
Total 133 195 416
Other non-current 0 519 185
liabilities to
related parties
Non-current 0 2 499 0
convertible
subordinated loan
from related
parties
Interest payable to 290 666 795
related parties
Other current 1 519 1 000 1 455
liabilities to
related parties
Current convertible 1 085 0 2 598
subordinated loan
from related
parties
Trade payables and 789 713 916
other
non-interest-beari
ng liabilities to
related parties
Trade receivables 103 94 136
from related
parties
SCI Invest Oy is a company under control of Iikka Savisalo,
Cencorp's CEO.
1 000 EUR 1-6/2014 1-6/2013 1-12/2013
--------------------------------------------------------------------------------
Wages and
remuneration
Salaries of the 537 357 730
management and
Board
Fair values
(unaudited)
Carrying Fair value
amount
1 000 EUR 30.6.2014 30.6.2014
--------------------------------------------------------------------------------
Financial assets
Available-for-sale investments 9 9
Trade and other receivables 1 777 1 777
Cash and cash equivalents 193 193
The fair value of trade and other receivables is expected to correspond to the
carrying amount due to their short maturity.
Financial liabilities
R&D loan, non-current 1 513 1 513
Other liabilities, non-current 15 15
Loans from financial institutions, current 2 662 2 662
Other liabilities, current 4 657 4 657
Trade payables and other non-interest-bearing 6 142 6 142
liabilities
The fair value of non-current liabilities is expected to correspond to the
carrying amount as the loans were withdrawn in late 2012 and in 2013 and
recognized to their fair value when recorded. There has been no significant
change in common interest rate after the withdrawal of the loans.
EUR 5.8 million out of trade payables and other current liabilites was overdue
at the end of the reporting period. That included EUR 2.5 million of Savcor
Face Bejing's overdue liabilities.
Change in intangible and tangible assets
(unaudited)
1 000 EUR 30.6.2014 30.6.2013 31.12.2013
--------------------------------------------------------------------------------
Includes tangible assets, consolidated
goodwill and other intangible assets
Carrying amount, beginning of period 13 654 12 634 12 634
Depreciation and impairment -3 650 -964 -2 221
Additions 276 2 463 3 691
Disposals -129 -224 -356
Exchange rate difference -108 185 -94
Carrying amount, end of period 10 043 14 093 13 654
Inventories
(unaudited)
1 000 EUR 4-6/20 4-6/20 1-6/20 1-6/20 1-12/2
14 13 14 13 013
--------------------------------------------------------------------------------
Impairment losses and reversals of
impairment losses for inventories
booked in Income Statement
Impairment loss 629 12 629 26 115
Reversal of impairment loss 0 0 0 0 0
Commitments and contingent liabilities
(unaudited)
1 000 EUR 30.6.2014 30.6.2013 31.12.2013
------------------------------------------------------------------------
Loans from financial institutions 1 186 1 651 1 245
Promissory notes secured by pledge 12 691 12 691 12 691
Mortgages on real estate 0 0 0
Factoring loan and export credit limit 1 463 952 1 338
Trade receivables 479 951 499
Promissory notes secured by pledge 12 691 12 691 12 691
Operating leases
Payable within one year 5 24 17
Payable over one year 0 5 1
Commitments
Payable within one year 884 937 948
Payable over one year 807 814 830
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