2007-04-26 07:00:00 CEST
2007-04-26 07:00:00 CEST
REGULATED INFORMATION
Perlos - Quarterly report
Interim Report, January-March 2007: PERLOS' FIRST QUARTER IN LINE WITH PLANS
Key figures for January-March: - Net sales amounted to EUR 126.7 million (EUR 182.8 million in 1-3/2006). - The operating result excluding non-recurring items was EUR -4.1 million (EUR 5,5 million). - The operating result including non-recurring items of 38.9 milllion was EUR -43.0 million (EUR -1.3 million). - The result for the period was EUR -48.4 million (EUR -0.7 million). - Earnings per share (diluted) were EUR -0.91 (EUR -0.02). - Net cash flow from operations was EUR 4.4 million (EUR 12.2 million). MATTI VIRTANEN, PRESIDENT AND CEO: - Perlos perfomed according to plan during the first quarter. Net sales and profitability developed as anticipated, and the implementation of the extensive profitability improvement programme launched in January has also proceeded as planned. The objective of the programme is to decrease the company's annual cost base by more than EUR 100 million during 2007, including a reduction of approximately 4,000 jobs worldwide. - Important milestones were reached in the profitability improvement programme in March. As a result of the co-determination negotiations concluded in Finland, a- decision was made to discontinue production operations in Finland by September. In addition, the corporate organisation was streamlined. The Group's headcount has already been reduced by over 2,300 persons, of whom 200 worked in Finland. The company's lighter cost structure is already clearly visible e.g. in lower quality costs as well and sourcing and personnel costs. - For the first time in Perlos' history, Asia has become the company's largest market area, with its share of first-quarter net sales rising to 43 per cent. The net sales in the Americas decreased due to the weak demand for our services. We will continue to increase our capacity in Asia, with current factory projects in Guangzhou, China, and Chennai, India, proceeding on schedule. - The outlook for the current year remains unchanged. The effects of the profitability improvement programme will become visible in profitability during the second year-half, and we anticipate the full-year operating result exclusive of non-recurring items to be substantially better than in 2006. We also expect the April-June operating result exclusive of non-recurring items to be slightly better than in January-March. We anticipate the full-year net sales to fall by about a quarter compared with 2006, and the second-quarter net sales to fall by a third compared with last year. NET SALES AND RESULT IN JANUARY-MARCH 2007 Perlos' net sales in January-March amounted to EUR 126.7 million (EUR 182.8 million), down 31% from the previous year. Net sales development has been affected particularly by BenQ Mobile's decision to cease production operations in Europe, and by the weaker demand of Perlos' services in Finland and North and South America. Of the Group's net sales, 43% (32%) originated in Asia, 41% (38%) in Europe and 16% (30%) from North and South America. Operating profit was EUR -43,0 million (EUR -1.3 million), and the result for the review period was EUR -48.4 million (EUR -0.7 million). Earnings per share were EUR -0.91 negative (EUR -0.02). Profitability was significantly burdened by non-recurring expenses of EUR 38.9 million booked during the review period and related to the discontinuation of production operations in Finland and the reorganisation of global operations. Of the non-recurring items, approximately EUR 10.7 million are affecting cash flows. Net cash flow from operations was EUR 4.4 million (EUR 12.2 million) and cash flow before financing activities was EUR -8.5 million (EUR -2.2 million). INVESTMENTS Among the largest investment items in the first quarter were the new factories in Guangzhou, China, and Chennai, India. The construction of the new facilities has proceeded as planned, with the factories set for completion during the first half of the current year. The floor space of the Chennai manufacturing plant is approximately 20,000 square metres, and that of the Guangzhou factory about 35,000. FINANCING The Group's liquid assets at the end of the review period amounted to EUR 25.0 million (EUR 27.5 million) and unused committed credit limits to EUR 152.4 million (EUR 103.7 million). The Group's net gearing ratio was 1.23 (0.89) and the equity ratio 27.9% (35.8%). Interest-bearing liabilities amounted to EUR 158.1 million (EUR 193.0 million), of which short-term liabilities accounted for EUR 98.4 million (EUR 137.4 million) and long-term liabilities for EUR 59.7 million (EUR 55.6 million). Net interest-bearing liabilities totalled EUR 133.1 million (EUR 165.5 million). A rental liability of EUR 10.9 million connected with factory property being constructed in Guangzhou is increasing the interest-bearing liabilities for the review period. CHANGES IN ORGANISATION AND MANAGEMENT As a part of the profitability improvement programme, Perlos announced on 5 March 2007 that it would streamline its Group organisation by dissolving the regional organisations in Asia, Europe and North and South America. Global Manufacturing and Procurement operations have been combined as one global function, while Sales and Marketing operations are organised on a customer account basis. In addition, the commercialisation of innovations has been boosted by combining research, development and design functions into a Technology Services organisation. After the end of the review period, on April 25, 2007, the Board of Directors confirmed the members of the Executive Board as follows: Matti Virtanen, President and CEO; Juha Torniainen, Chief Financial Officer; Timo Seppä, Chief Technology Officer; Jari Varjotie, Chief Operating Officer; Esa Vuorinen, Senior Vice President, Human Resources; and Vesa Vähämöttönen, Senior Vice President, Global Sales and Marketing. Eila Mustala, Senior Vice President, Human Resources; Tage Johansson, Chief Development Officer; Kari Häyrinen, President, APAC Region; and Eero Laak, President, Americas region will leave the company. For the time being, CFO Juha Torniainen is attending to the Chief Development Officer's tasks in addition to his other responsibilities. NEGOTIATIONS WITH OTHER COMPANIES ON PARTIAL CONTINUATION OF PRODUCTION OPERATIONS IN NORTH KARELIA Perlos has negotiated with several companies on the possibility of continuing parts of its production operations in Finland and the negotiations have produced results. In the end of March, Perlos signed a sales agreement on parts of its assembly automation business in North Karelia with Mecania Ltd, a Jyväskylä based company. This arrangement resulted in employment for 11 Perlos employees. The estimated yearly net sales the business in 2007 was approximately EUR 0.5 million. In March, Perlos also signed an agreement with Joensuun Kauppa ja Kone Ltd on the sale of its land and property located on Ensolantie 6, Joensuu. The floor space of the sold property is approximately 2,400 square metres. After the end of the review period, Perlos concluded another deal, and on April 25, 2007, signed a sales agreement on its injection mould business with Gritech Oy based in Joensuu. According to a current estimate, 42 Perlos employees will be employed by the new company. The estimated yearly net sales of this business was approximately EUR two million. The above mentioned arrangements will not have a significant impact on Perlos' results. In addition to the above agreements, Perlos is still negotiating on the sale of its business segments related with special products and connectors. Perlos is also in talks with other companies concerning, among other things, the possibility of expanding their operations into Perlos' premises and employing Perlos personnel. PERSONNEL At the end of March, the Perlos Corporation employed 10,587 people, including temporary workers. Of them, 5,939 worked in Asia, 3,440 in Europe and 1,208 in North and South America. ANNUAL GENERAL MEETING The Annual General Meeting of Perlos Corporation was held on 28 March 2007. The meeting adopted the company's income statement and balance sheet as well as the consolidated income statement and the consolidated balance sheet, and discharged the members of the Board of Directors and the President and CEO from liability for the 1 January 2006 - 31 December 2006 financial year. As proposed by the Board of Directors, the Annual General Meeting resolved that no dividend be distributed for the 1 January 2006 - 31 December 2006 financial year. The following persons were elected as members of the Board of Directors of Perlos Corporation: Timo Leinilä, Jukka Rinnevaara, Andreas Tallberg, Kari Vuorialho and Petteri Walldén, of whom Andreas Tallberg was elected Chairman of the Board of Directors. Timo Leinilä was elected Vice Chairman of the Board of Directors at the organisation meeting of the Board of Directors held after the Annual General Meeting. The number of the Board member was thus reduced from seven to five. Ernst & Young Oy, Authorised Public Accountants, was appointed as the company's auditor, with Harri Pärssinen, Authorised Public Accountant, acting as the principal auditor. Due to the new Companies Act, which entered into force as from 1 September 2006, the Annual General Meeting resolved to amend the Articles of Association in accordance with the Board's proposal. In accordance with the proposal of the Board of Directors, the Annual General Meeting resolved to extend its authorisation to the Board for the distribution of shares, share options and other special rights entitling to shares. Based on this authorisation, the maximum total number of shares to be distributed is 20,000,000. In accordance with the proposal of the Board of Directors, the Annual General Meeting also resolved to authorise the Board to decide on buying back the company's own shares or taking them as collateral. Based on the authorisation, the Board may buy back or take as collateral a maximum total of 5,000,000 own shares. The Annual General Meeting also resolved that the subscription prices of new shares subscribed for on the basis of the 2002 and 2005 share option programmes are to be booked in full to the invested non-restricted equity reserve. OPTIONS AND SHARE CAPITAL At the end of the review period, Perlos Corporation had two share option programmes. A total of 750,000 shares can be subscribed for on the basis of the 2002 share option programme and 1,000,000 shares on the basis of the 2005 share option programme. No shares have been subscribed for on the basis of the 2002 and 2005 warrants. The A and B warrants issued in connection with the 2002 share option programme are listed on the Main List of OMX Nordic Exchange Helsinki. The Board of Directors of Perlos Corporation resolved on 2 March 2007 to seek admission for the C warrants issued in connection with the 2002 share option programme and the A warrants issued in connection with the 2005 share option programme to the Main List of OMX Nordic Exchange Helsinki. Trading in these warrants began on 2 April 2007. Perlos Corporation's share capital at 31 March 2007 amounted to EUR 31,762,288.80 and the number of shares in issue to 52,937,148. There were no own shares in the company's possession at the end of the review period. EVENTS AFTER THE REVIEW PERIOD The Board of Directors of Perlos Corporation decided on a new share-based incentive plan for the Group's key personnel on 16 April 2007. The incentive plan will cover approximately 10 key employees during 2007. The plan's earning period will be from 2007 to 2009, and potential bonuses will be paid between 2008 and 2010 in company shares and cash. Shares earned as bonuses may not be transferred within two years of the end of each calendar year. The bonuses to be paid under the plan will correspond to a maximum total of approximately 1,620,000 Perlos Corporation shares, including cash bonuses. Other events after the review period have been reported under sections "Changes in organisation and management" and "Negotiations with other companies on partial continuation of production operations in North Karelia". OUTLOOK Growth on the global mobile phone market has continued in early 2007, with several mobile phone manufacturers estimating that slightly over one billion mobile phones will be sold this year, which is an increase of almost 10% on 2006. In 2007, the development of Perlos' net sales will be affected by BenQ Mobile's decision to cease production operations in Europe, and by the weaker demand of Perlos' services in Finland and North and South America. As a result, full-year net sales are expected to fall short of the 2006 figure by about a quarter. Net sales in April-June are forecast to fall by about a third from the previous year. As a result of the profitability improvement programme initiated in January, Perlos expects the full-year operating result, exclusive of non-recurring items, to be significantly better in 2007 than in 2006. Development measures are expected to improve the result during the second half of the year. The second-quarter operating result exclusive of non-recurring items is estimated to be slightly better than in the first quarter. The Interim Report is unaudited. -------------------------------------------------------------------------------- | CONSOLIDATED INCOME STATEMENT | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | Change,% | 1-12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Continuing operations: | | | | | -------------------------------------------------------------------------------- | Net sales | 126,7 | 182,8 | -31 % | 673,6 | -------------------------------------------------------------------------------- | Cost of goods sold | -154,1 | -165,1 | -7 % | -614,8 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Gross profit/loss | -27,4 | 17,7 | | 58,8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other operating income | 1,4 | 0,6 | | 3,5 | -------------------------------------------------------------------------------- | Selling and marketing | -3,3 | -3,7 | | -13,1 | | expenses | | | | | -------------------------------------------------------------------------------- | General and administrative | -13,6 | -15,5 | | -61,0 | | expenses | | | | | -------------------------------------------------------------------------------- | Other operating expenses | -0,1 | -0,4 | | -21,1 | -------------------------------------------------------------------------------- | Operating profit/ loss | -43,0 | -1,3 | | -32,9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income and | -2,8 | -0,5 | | -10,6 | | expenses | | | | | -------------------------------------------------------------------------------- | Share of profit/loss of | -0,3 | 0,0 | | -0,1 | | associates | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit/loss before income | -46,1 | -1,8 | | -43,6 | | tax | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income tax expenses | -2,3 | 0,7 | | 0,0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit/loss from continuing | -48,4 | -1,1 | | -43,6 | | operations | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Discontinued operations; | | | | | -------------------------------------------------------------------------------- | Profit/loss from | 0,0 | 0,4 | | 18,3 | | discontinued operations | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Profit/ loss for the period | -48,4 | -0,7 | | -25,3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to | | | | | -------------------------------------------------------------------------------- | Equity holders of the | -48,4 | -0,7 | | -25,5 | | Company | | | | | -------------------------------------------------------------------------------- | Minority interest | 0,0 | 0,0 | | 0,2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share for profit/loss | | | | | attributable | | | | -------------------------------------------------------------------------------- | to the equity holders of the Company | | | | -------------------------------------------------------------------------------- | Continuing operations: | | | | | -------------------------------------------------------------------------------- | Earnings per share, basic, | -0,91 | -0,02 | | -0,82 | | € | | | | | -------------------------------------------------------------------------------- | Earnings per share, | -0,91 | -0,02 | | -0,82 | | diluted, € | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Geographical diversity of net sales from continuing operations, | | | % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 1-3/2007 | 1-3/2006 | 1-12/2006 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Europe | 41 % | 38 % | 44 % | | -------------------------------------------------------------------------------- | Americas | 16 % | 30 % | 21 % | | -------------------------------------------------------------------------------- | Asia | 43 % | 32 % | 35 % | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE SHEET | | | | -------------------------------------------------------------------------------- | EUR million | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | 3/2007 | 3/2006 | 12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current assets | | | | -------------------------------------------------------------------------------- | Goodwill | 11,6 | 11,9 | 11,6 | -------------------------------------------------------------------------------- | Intangible assets | 11,6 | 16,7 | 13,0 | -------------------------------------------------------------------------------- | Property, plant and equipment | 209,7 | 240,9 | 219,3 | -------------------------------------------------------------------------------- | Non-current trade and other receivables | 0,8 | 0,4 | 1,3 | -------------------------------------------------------------------------------- | Investments in associates | 1,3 | 0,3 | 1,6 | -------------------------------------------------------------------------------- | Available for sale financial assets | 0,1 | 0,1 | 0,1 | -------------------------------------------------------------------------------- | Deferred income tax assets | 7,0 | 9,3 | 7,0 | -------------------------------------------------------------------------------- | | 242,0 | 279,6 | 253,9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | -------------------------------------------------------------------------------- | Inventories | 48,5 | 117,4 | 65,6 | -------------------------------------------------------------------------------- | Trade and other receivables | 75,2 | 115,9 | 75,5 | -------------------------------------------------------------------------------- | Derivative financial instruments | 0,6 | - | 0,4 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 25,0 | 27,5 | 28,1 | -------------------------------------------------------------------------------- | | 149,3 | 260,8 | 169,7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 391,3 | 540,4 | 423,6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDER'S EQUITY AND LIABILITIES | 3/2007 | 3/2006 | 12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholder's equity | | | | -------------------------------------------------------------------------------- | Share capital | 31,8 | 31,8 | 31,8 | -------------------------------------------------------------------------------- | Share premium | - | 48,8 | - | -------------------------------------------------------------------------------- | Far value, hedging and other reserves | 4,6 | 3,1 | 4,3 | -------------------------------------------------------------------------------- | Translation differences | 1,0 | 4,0 | 1,1 | -------------------------------------------------------------------------------- | Reserve, managed by the General Meeting | 48,8 | - | 48,8 | -------------------------------------------------------------------------------- | Retained earnings | 21,5 | 99,0 | 69,6 | -------------------------------------------------------------------------------- | Equity attributable to equity holder's | 107,7 | 186,7 | 155,6 | | of the Company | | | | -------------------------------------------------------------------------------- | Minority interest | 0,1 | 0,1 | 0,2 | -------------------------------------------------------------------------------- | Total shareholder's equity | 107,8 | 186,8 | 155,7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | | -------------------------------------------------------------------------------- | Deferred income tax liabilities | 0,2 | 0,7 | 0,2 | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 59,7 | 55,6 | 51,1 | -------------------------------------------------------------------------------- | Provisions | 3,9 | 3,8 | 2,8 | -------------------------------------------------------------------------------- | | 63,8 | 60,1 | 54,1 | -------------------------------------------------------------------------------- | Current liabilities | | | | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 98,4 | 137,4 | 89,8 | -------------------------------------------------------------------------------- | Current income tax liabilities | 1,1 | -0,1 | 0,2 | -------------------------------------------------------------------------------- | Provisions | 11,3 | 7,0 | 2,9 | -------------------------------------------------------------------------------- | Derivative financial instruments | - | - | 0,3 | -------------------------------------------------------------------------------- | Trade and other payables | 108,9 | 149,2 | 120,6 | -------------------------------------------------------------------------------- | | 219,7 | 293,5 | 213,7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 283,5 | 353,6 | 267,9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total shareholder's equity and | 391,3 | 540,4 | 423,6 | | liabilities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED CASH FLOW STATEMENT | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | 1-12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operating activities | | | | -------------------------------------------------------------------------------- | Operating profit/loss | -43,0 | -0,2 | -7,8 | -------------------------------------------------------------------------------- | Adjustments | 50,0 | 17,1 | 53,2 | -------------------------------------------------------------------------------- | Change in working capital | 3,0 | 1,5 | 40,7 | -------------------------------------------------------------------------------- | Financial income and expenses | -4,0 | -4,6 | -10,8 | -------------------------------------------------------------------------------- | Income taxes paid | -1,6 | -1,6 | -9,9 | -------------------------------------------------------------------------------- | Net cash flow from operations | 4,4 | 12,2 | 65,5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from investing activities | | | | -------------------------------------------------------------------------------- | Investments in subsidiaries | 0,0 | 0,0 | 0,0 | -------------------------------------------------------------------------------- | Investments in associated companies | 0,0 | 0,0 | -7,8 | -------------------------------------------------------------------------------- | Purchase of tangible and intangible | -15,0 | -14,5 | -60,4 | | assets | | | | -------------------------------------------------------------------------------- | Proceeds from tangible and intanbigle | 2,1 | 0,1 | 2,4 | | assets | | | | -------------------------------------------------------------------------------- | Proceeds from divested operations, | 0,0 | 0,0 | 56,0 | | net of cash | | | | -------------------------------------------------------------------------------- | Net cash used in investing activities | -12,9 | -14,4 | -9,8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow before financing activities | -8,5 | -2,2 | 55,7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from financing activities | | | | -------------------------------------------------------------------------------- | Change in loans | 5,5 | 3,4 | -48,7 | -------------------------------------------------------------------------------- | Change in interest-bearing | 0,0 | 0,0 | 0,0 | | receivables | | | | -------------------------------------------------------------------------------- | Dividends paid | 0,0 | 0,0 | -5,3 | -------------------------------------------------------------------------------- | Net cash flow from financing | 5,5 | 3,4 | -54,0 | | activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Translation difference | -0,2 | -0,1 | -3,4 | -------------------------------------------------------------------------------- | Change in cash and cash equivalents | -2,9 | 1,2 | 5,1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents 1.1. | 28,1 | 26,4 | 26,4 | -------------------------------------------------------------------------------- | Cash and cash equivalents at end of | 25,0 | 27,5 | 28,1 | | period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Due to exchange gains and losses during the year and discontinuing | | operations in 2006 | -------------------------------------------------------------------------------- | the amounts in the cash flow statement are not directly reconcilable with | | the balance sheet figures. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated statement of | | | | | | changes in shareholders' equity | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in | Share | Share | Hedging | Other | Translatio | | shareholders' equity | capita | issue | reserve | reserves | n | | 1-3/2006 | l | premium | | | differenci | | | | | | | es | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | 31,8 | 48,7 | -0,2 | 2,9 | 4,5 | | 31.12.2005 | | | | | | -------------------------------------------------------------------------------- | Cash flow hedging | | | | | | -------------------------------------------------------------------------------- | - Increase | | | | | | -------------------------------------------------------------------------------- | - Profit/loss of fair | | | 0,2 | 0,2 | | | value revaluation | | | | | | -------------------------------------------------------------------------------- | - Deferred taxes's | | | | | | | share of period | | | | | | | movements | | | | | | -------------------------------------------------------------------------------- | Translation difference | | | | 0,1 | -0,5 | -------------------------------------------------------------------------------- | Other changes | | | | | | -------------------------------------------------------------------------------- | Net profit/loss | 0,0 | 0,0 | 0,2 | 0,3 | -0,5 | | recoqnised directly to | | | | | | | shareholders' equity | | | | | | -------------------------------------------------------------------------------- | Profit/loss for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Total profits and | 0,0 | 0,0 | 0,2 | 0,3 | -0,5 | | losses | | | | | | -------------------------------------------------------------------------------- | Dividends paid | | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | 31,8 | 48,7 | 0,0 | 3,2 | 4,0 | | TOTAL 31.3.2006 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in | Share | Share | Hedging | Other | Translatio | | shareholders' equity | capita | issue | reserve | reserves | n | | 1-3/2007 | l | premium | | | differenci | | | | | | | es | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | 31,8 | 0,0 | 0,0 | 53,1 | 1,1 | | 31.12.2006 | | | | | | -------------------------------------------------------------------------------- | Cash flow hedging | | | | | | -------------------------------------------------------------------------------- | - Increase | | | | | | -------------------------------------------------------------------------------- | - Profit/loss of fair | | | | | | | value revaluation | | | | | | -------------------------------------------------------------------------------- | - Deferred taxes's | | | | | | | share of period | | | | | | | movements | | | | | | -------------------------------------------------------------------------------- | Translation difference | | | | | -0,5 | -------------------------------------------------------------------------------- | Net gains/losses of | | | | | 0,5 | | net investments | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | | | | compensation | | | | | | -------------------------------------------------------------------------------- | Other changes | | | | 0,3 | | -------------------------------------------------------------------------------- | Net profit/loss | 0,0 | 0,0 | 0,0 | 0,3 | -0,1 | | recoqnised directly | | | | | | | to shareholders' | | | | | | | equity | | | | | | -------------------------------------------------------------------------------- | Profit/loss for the | | | | | | | period | | | | | | -------------------------------------------------------------------------------- | Total profits and | 0,0 | 0,0 | 0,0 | 0,3 | -0,1 | | losses | | | | | | -------------------------------------------------------------------------------- | Dividends paid | | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | 31,8 | 0,0 | 0,0 | 53,4 | 1,0 | | TOTAL 31.3.2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consolidated statement of changes in | | | | | shareholders' equity | | | | -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in shareholders' equity | Retained | Total | Minority | Total | | 1-3/2006 | earnings | | Interest | | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | 100,0 | 187,7 | 0,4 | 188,1 | | 31.12.2005 | | | | | -------------------------------------------------------------------------------- | Cash flow hedging | | | | | -------------------------------------------------------------------------------- | - Increase | | | | | -------------------------------------------------------------------------------- | - Profit/loss of fair value | | 0,4 | | 0,4 | | revaluation | | | | | -------------------------------------------------------------------------------- | - Deferred taxes's share of | | | | | | period movements | | | | | -------------------------------------------------------------------------------- | Translation difference | | -0,4 | -0,3 | -0,7 | -------------------------------------------------------------------------------- | Other changes | -0,3 | -0,3 | | -0,3 | -------------------------------------------------------------------------------- | Net profit/loss recoqnised | -0,3 | -0,3 | -0,3 | -0,6 | | directly to | | | | | | shareholders' | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Profit/loss for the period | -0,7 | -0,7 | | -0,7 | -------------------------------------------------------------------------------- | Total profits and losses | -1,0 | -1,0 | -0,3 | -1,3 | -------------------------------------------------------------------------------- | Dividends paid | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY TOTAL | 99,0 | 186,7 | 0,1 | 186,8 | | 31.3.2006 | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in shareholders' equity | Retained | Total | Minority | Total | | 1-3/2007 | earnings | | Interest | | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | 69,6 | 155,5 | 0,2 | 155,7 | | 31.12.2006 | | | | | -------------------------------------------------------------------------------- | Cash flow hedging | | | | | -------------------------------------------------------------------------------- | - Increase | | | | | -------------------------------------------------------------------------------- | - Profit/loss of fair value | | | | | | revaluation | | | | | -------------------------------------------------------------------------------- | - Deferred taxes's share of | | | | | | period movements | | | | | -------------------------------------------------------------------------------- | Translation difference | 0,2 | -0,3 | | -0,3 | -------------------------------------------------------------------------------- | Net gains/losses of net | | 0,5 | | 0,5 | | investments | | | | | -------------------------------------------------------------------------------- | Share-based compensation | | | | | -------------------------------------------------------------------------------- | Other changes | | 0,3 | | 0,3 | -------------------------------------------------------------------------------- | Net profit/loss recoqnised | 0,2 | 0,5 | 0,0 | 0,5 | | directly | | | | | | to shareholders' | | | | | | equity | | | | | -------------------------------------------------------------------------------- | Profit/loss for the period | -48,3 | -48,3 | -0,1 | -48,4 | -------------------------------------------------------------------------------- | Total profits and losses | -48,1 | -47,8 | -0,1 | -47,9 | -------------------------------------------------------------------------------- | Dividends paid | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY TOTAL | 21,5 | 107,7 | 0,1 | 107,8 | | 31.3.2007 | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NOTES TO THE INTERIM FINANCIAL REPORT | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basis of preparation and accounting | | | | | policies | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The interim financial report has been prepared in accordance with the IAS 34 | | (Interim Financial | -------------------------------------------------------------------------------- | Reporting) standard. The interim financial report has been prepared in | | accordance with the same | -------------------------------------------------------------------------------- | principles as the annual financial | | | | | statements for 2006. | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Changes in property, plant | | | | | | and equipment | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | -------------------------------------------------------------------------------- | | 1-3/2007 | 1-3/2006 | 1-12/2006 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Book value at beginning of | 219,3 | 246,5 | 246,5 | | | the period | | | | | -------------------------------------------------------------------------------- | Additions and transfers | 25,6 | 12,3 | 61,2 | | -------------------------------------------------------------------------------- | Deductions and transfers | -1,9 | 0,0 | -12,3 | | -------------------------------------------------------------------------------- | Discontinued operations | - | - | -23,5 | | -------------------------------------------------------------------------------- | Depreciation | -10,7 | -10,7 | -37,3 | | -------------------------------------------------------------------------------- | Impairment | -23,0 | -6,8 | -8,4 | | -------------------------------------------------------------------------------- | Translation difference and | 0,4 | -0,5 | -6,8 | | | other changes | | | | | -------------------------------------------------------------------------------- | Book value at end of the | 209,7 | 240,9 | 219,3 | | | period | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Provisions | | | | | -------------------------------------------------------------------------------- | | 1.1.2007 | Additiona | Used | 31.3.2007 | | | | l | during the | | | | | provision | period | | | | | s | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Pension benefit | 0,8 | | | 0,8 | -------------------------------------------------------------------------------- | Restructuring | 4,9 | 9,7 | -0,2 | 14,4 | -------------------------------------------------------------------------------- | | 5,7 | 9,7 | -0,2 | 15,2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Exchange rates | | | | | -------------------------------------------------------------------------------- | | 31.3.200 | 31.3.2006 | 31.12.2006 | | | | 7 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | USD | 1,3318 | 1,2104 | 1,317 | | -------------------------------------------------------------------------------- | CNY | 10,2951 | 9,7038 | 10,2793 | | -------------------------------------------------------------------------------- | SEK | 9,3462 | 9,4315 | 9,0404 | | -------------------------------------------------------------------------------- | BRL | 2,73892 | 2,6484 | 2,8202 | | -------------------------------------------------------------------------------- | MXN | 14,6464 | 13,233 | 14,283 | | -------------------------------------------------------------------------------- | INR | 57,486 | 53,969 | 58,2295 | | -------------------------------------------------------------------------------- | HKD | 10,407 | 9,3923 | 10,2409 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Commitments | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | 1-12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The future aggregate minimum | | | | | lease | | | | | payments | | | | -------------------------------------------------------------------------------- | under non-cancellable operating | 19,1 | 21,5 | 19,9 | | leases | | | | -------------------------------------------------------------------------------- | | | | | -------------------------------------------------------------------------------- | Guarantees on behalf of third | | | | | parties | | | | | as | | | | -------------------------------------------------------------------------------- | collateral on other commitments | 12,2 | 6,2 | 1,4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Guarantees on behalf of | 5,0 | 0,0 | 5,6 | | associated | | | | | companies | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Major off-balance sheet | 9,1 | - | 13 | | investment | | | | | commitments | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Nominal values of derivate | | | | | financial | | | | | instruments | | | | -------------------------------------------------------------------------------- | Foreing exchange forwards | | | | -------------------------------------------------------------------------------- | - related to transaction risk | 3,3 | 5,2 | 4,1 | -------------------------------------------------------------------------------- | - related to financing | 32,5 | 70,9 | 46,3 | -------------------------------------------------------------------------------- | Interest rate swaps | 0,0 | 25,0 | 25,0 | -------------------------------------------------------------------------------- | Commodity derivates | 0,3 | 2,6 | 0,4 | -------------------------------------------------------------------------------- | Total nominal values | 36,1 | 103,7 | 75,8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The nominal amounts are presented as gross values. | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fair values of derivates | | | | | financial | | | | | instruments | | | | -------------------------------------------------------------------------------- | Instruments having a positive | | | | | fair | | | | | value | | | | -------------------------------------------------------------------------------- | - Foreign exchange forwards | | | | -------------------------------------------------------------------------------- | -- related to transaction risk | 0,0 | 0,0 | 0,0 | -------------------------------------------------------------------------------- | -- related to financing | 0,6 | 0,4 | 0,2 | -------------------------------------------------------------------------------- | - Commodity derivatives | 0,0 | 0,3 | 0,0 | -------------------------------------------------------------------------------- | Instruments having a negative | | | | | fair | | | | | value | | | | -------------------------------------------------------------------------------- | - Foreign exchange forwards | | | | -------------------------------------------------------------------------------- | -- related to transaction risk | 0,0 | 0,0 | -0,1 | -------------------------------------------------------------------------------- | -- related to financing | 0,0 | -0,7 | -0,2 | -------------------------------------------------------------------------------- | - Interest rate swaps | 0,0 | -0,2 | 0,0 | -------------------------------------------------------------------------------- | - Commodity derivatives | -0,1 | -0,1 | 0,0 | -------------------------------------------------------------------------------- | Total fair values | 0,5 | -0,2 | -0,1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The fair values are based on quoted | | | | | market prices. | | | | -------------------------------------------------------------------------------- | Fair value represents the amount that | | | | | would be | | | | | realised, if the derivative | | | | | contracts were | | | | | closed on the balance | | | | | sheet date. | | | | -------------------------------------------------------------------------------- | All derivative financial instruments | | | | | are fair | | | | | valued through the income | | | | | statement at | | | | | each balance sheet date. | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY FIGURES | | | | -------------------------------------------------------------------------------- | | 1-3/2007 | 1-3/2006 | 1-12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Continuing operations gross investments in | 15,0 | 14,3 | 60,4 | | fixed assets, EUR million | | | | -------------------------------------------------------------------------------- | EBITDA *) from continuing operations, EUR | -30,3 | 9,9 | 11,6 | | million | | | | -------------------------------------------------------------------------------- | EBITDA *) from continuing operations, % | -23,9 | 5,4 | 1,7 | -------------------------------------------------------------------------------- | EBIT from continuing operations, EUR | -43,0 | -1,3 | -32,9 | | million | | | | -------------------------------------------------------------------------------- | EBIT from continuing operations, % | -33,9 | -0,7 | -4,9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales from continuing operations, EUR | 126,7 | 182,8 | 673,6 | | million | | | | -------------------------------------------------------------------------------- | Net sales from discontinued operations, | - | 12,9 | 42,7 | | EUR million | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity ratio, % | 27,9 | 35,8 | 37,3 | -------------------------------------------------------------------------------- | Gearing | 1,23 | 0,89 | 0,72 | -------------------------------------------------------------------------------- | Interest-bearing net liabilities, EUR | 133,1 | 165,5 | 112,8 | | million | | | | -------------------------------------------------------------------------------- | ROE, % p.a. | -146,8 | -1,4 | -14,7 | -------------------------------------------------------------------------------- | ROI, % p.a. | -57,7 | 6,1 | 5,3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share, EUR | -0,91 | -0,01 | -0,48 | -------------------------------------------------------------------------------- | Earnings per share, diluted, EUR | -0,91 | -0,01 | -0,48 | -------------------------------------------------------------------------------- | Earnings per share from continuing | -0,91 | -0,02 | -0,82 | | operations, EUR | | | | -------------------------------------------------------------------------------- | Earnings per share from discontinued | - | 0,01 | 0,35 | | operations, EUR | | | | -------------------------------------------------------------------------------- | Shareholders´ equity per share, EUR | 2,04 | 3,53 | 2,94 | -------------------------------------------------------------------------------- | Shareholders´ equity per share, diluted, | 2,03 | 3,52 | 2,94 | | EUR | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average number of shares during the period | 52 937 | 52 937 | 52 937 | | (1 000) | | | | -------------------------------------------------------------------------------- | Average number of shares (diluted) during | 53 020 | 53 066 | 53 020 | | the period (1 000) | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Personnel of continuing operations | | | | -------------------------------------------------------------------------------- | - average for the period | 6 971 | 7 119 | 7 746 | -------------------------------------------------------------------------------- | - end of period | 6 805 | 7 316 | 7 229 | -------------------------------------------------------------------------------- | - average including workforce | 11 096 | 13 085 | 13 320 | -------------------------------------------------------------------------------- | - end of period including workforce | 10 587 | 13 679 | 12 944 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | *) Earnings before interest, taxes, | | | | | depreciation and amortisation | | | | -------------------------------------------------------------------------------- The Interim Report for January-June 2007 will be published on July 24, 2007. Vantaa, April 25, 2007 PERLOS CORPORATON Board of Directors ADDITIONAL INFORMATION: - A news conference for analysts and media will be held today, April 26, 2007 at 9:30 in Restaurant G.W. Sundmans, Eteläranta 16, Helsinki. Welcome. - President and CEO Matti Virtanen is available today, April 26 at 14:00 - 15:00 Finnish time, tel. +358 9 2500 7200. - Perlos will arrange a conference call and web presentation for analysts, media and investors today, April 26, at 8.30 A.M. US Eastern time / 1.30 P.M. UK time / 3.30 P.M. Finnish time. You can participate over the telephone or through Perlos' Internet site. The results will be presented by Mr. Matti Virtanen, President and CEO. The conference call and presentation will be held in English. To participate in the conference call, please dial +44 (0)20 7162 0025, using the code “Perlos”, a few minutes before the beginning of the conference. PERLOS IN BRIEF Perlos Corporation is a global design and manufacturing partner for the telecommunications and electronics industry. The service offering covers the whole product life cycle from product design to manufacturing, logistics and new product versions. The production facilities are located in Asia, Europe and North and South Americas and the company is headquartered in Finland. in 2006, Perlos Corporation's net sales amounted to EUR 673,6 million and at the end of March 2007 the company employed approximately 10,600 people worldwide. Perlos share (POS1V) is traded on the OMX Nordic Exchange in Helsinki. DISTRIBUTION Helsinki Stock Exchange Central media www.perlos.com
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