2014-02-20 07:00:00 CET
2014-02-20 07:00:59 CET
REGULATED INFORMATION
Elektrobit Oyj - Financial Statement Release
Elektrobit Corporation (EB) Financial Statement Bulletin 2013
STOCK EXCHANGE RELEASE
Free for publication on February 20, 2014, at 8.00 a.m. (CET+1)
Elektrobit Corporation (EB) Financial Statement Bulletin 2013
IN 2013 COMPARABLE NET SALES GREW AND OPERATING PROFIT IMPROVED CLEARLY FROM THE
PREVIOUS YEAR
From the beginning of 2013 EB has applied the new IFRS10 and IFRS11 standards.
As a result the proportion of net sales and operating result of e.solutions
GmbH, a jointly owned company of EB and AUDI, to be consolidated into Elektrobit
group's consolidated financial statements has changed. For comparability, all
2012 figures presented for comparison are restated assuming that the
proportionate consolidation method would have been applied already in 2012.
EB's figures are divided between Continuing and Discontinuing Operations as
provided by the IFRS5 standard. In this interim report, Test Tools product
business, sold on January 31, 2013, is classified as Discontinuing Operations.
SUMMARY OCTOBER - DECEMBER 2013
· Net sales of the October - December 2013 from continuing operations grew
to EUR 59.5 million (restated net sales of EUR 48.2 million, 4Q 2012),
representing an increase of 23.4 % year-on-year.
· Operating profit from continuing operations was EUR 5.7 million (restated
operating profit of EUR -0.5 million including non-recurring items of
approximately MEUR 4 weakening Wireless Business Segment operating result,
4Q 2012).
· Net cash flow was EUR -0.9 million (EUR -1.4 million, 4Q 2012). Net cash
flow includes the repayment of capital of EUR 14.3 million, distributed in
December 2013.
· Earnings per share from continuing operations were EUR 0.039 (EUR -0.001,
4Q 2012) and earnings per share from continuing and discontinuing operations
were EUR 0.039 (EUR 0.006, 4Q 2012).
· Extraordinary General Meeting held on December 4, 2013, decided to
distribute funds to shareholders as a repayment of capital, amounting to EUR
0.11 per share. The repayment of total EUR 14,311,096.25 was paid on December
17, 2013.
· In December EB raised its operating result guidance for 2013 due to better
than expected fourth quarter and gave more precise net sales outlook for 2013.
SUMMARY JANUARY - DECEMBER 2013
· Net sales of the January - December 2013 from continuing operations grew
to EUR 199.3 million (restated net sales of EUR 173.9 million, 2012),
representing an increase of 14.6 % year-on-year.
· Operating profit from continuing operations was EUR 8.1 million including
non-recurring costs of approximately EUR 0.8 million resulting from the cost
saving measures in the Wireless Business Segment in the first quarter of 2013
(restated operating profit of EUR 1.1 million including non-recurring items of
approximately MEUR 4 weakening Wireless Business Segment's operating result in
2012).
· Net cash flow was EUR 28.7 million including non-recurring net cash flow
of about EUR 28 million resulting from the sale of the Test Tools product
business (EUR 5.1 million, 2012) and repayment of capital of EUR 14.3 million,
distributed in December.
· Earnings per share from continuing operations were EUR 0.051 (EUR
0.008, 2012) and earnings per share from continuing and discontinuing operations
were EUR 0.238 (EUR 0.017, 2012).
· A total of 688,185 new shares were subscribed during 2013 by virtue of the
option rights 2008A and 2008B. The share subscription prices were recorded in
the Company's invested non-restricted equity fund. After the registration of the
new shares, the number of shares in Elektrobit Corporation's totaled
130,100,875.
· The Board of Directors proposes that the Annual General Meeting to be held
on April 10, 2014 resolve to pay EUR 0.02 per share, as dividend based on the
adopted balance sheet for the financial period of January 1, 2013 - December
31, 2013.
Group, continuing operations (MEUR) 4Q 13 4Q 12 2013 2012
restated restated
-------------------------------------------------------------------------------
NET SALES 59.5 48.2 199.3 173.9
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OPERATING PROFIT / LOSS 5.7 -0.5 8.1 1.1
-------------------------------------------------------------------------------
Operating profit / loss, % of net sales 9.6 % -1.0 % 4.1 % 0.6 %
-------------------------------------------------------------------------------
Operating profit /loss without non-recurring 5.7 3.6 9.0 5.1
items
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EBITDA 8.1 1.5 17.2 8.1
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CASH AND OTHER LIQUID ASSETS 43.0 14.3 43.0 14.3
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EQUITY RATIO (%) 65.1 % 54.5 % 65.1 % 54.5 %
-------------------------------------------------------------------------------
EARNINGS PER SHARE (EUR) 0.039 -0.001 0.051 0.008
-------------------------------------------------------------------------------
Automotive Business Segment (MEUR) 4Q 13 4Q 12 2013 2012
restated restated
-----------------------------------------------------------------------
NET SALES 41.1 31.9 138.3 110.6
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OPERATING PROFIT / LOSS 5.4 2.6 8.5 3.3
-----------------------------------------------------------------------
Operating profit / loss, % of net sales 13.2 % 8.2 % 6.2 % 2.9 %
-----------------------------------------------------------------------
EBITDA 7.0 3.8 14.6 7.3
-----------------------------------------------------------------------
Wireless Business Segment, continuing operations 4Q 13 4Q 12 2013 2012
(MEUR)
restated restated
-------------------------------------------------------------------------------
NET SALES 18.4 16.4 61.2 63.5
-------------------------------------------------------------------------------
OPERATING PROFIT / LOSS 0.3 -3.2 -0.5 -2.2
-------------------------------------------------------------------------------
Operating profit / loss, % of net sales 1.6% -19.4% -0.8% -3.5 %
-------------------------------------------------------------------------------
Operating profit /loss without non-recurring 0.3 0.9 0.4 1.8
items
-------------------------------------------------------------------------------
EBITDA 1.1 -2.3 2.5 0.7
-------------------------------------------------------------------------------
EB'S CEO JUKKA HARJU"During the last quarter of 2013 EB's net sales grew strongly by 23.4 per cent
from the previous year. Operating profit improved clearly and was 9.6 per cent
of net sales, mainly due to the good operating result of the Automotive Business
Segment. Good operating result of the Automotive Business Segment was affected
by the higher software license sales on the latter half of the year and other
seasonality factors, as well as well-developed net sales and improved
profitability of projects. Also Wireless Business Segment's net sales grew from
previous year and operating result was slightly positive in the fourth quarter.
Altogether EB's financial development in 2013 was good. Net sales grew by 14.6
per cent from the previous year and was EUR 199.3 million. Operating profit of
the whole year improved clearly from last year to EUR 8.1million. I am pleased
to say EB reached its main goal for 2013 - to grow its operating profit from the
previous year.
Automotive Business Segment developed according to our objectives in 2013. Net
sales continued its strong growth which has lasted for many years, as car
manufacturers continue to investment in the development of software solutions
for new car models. A significant proportion of the growth in the net sales came
from the rapid growth of e.solutions GmbH, the jointly owned company with AUDI.
During the year EB was selected as the supplier for several long-term product
development and product customization projects for leading car manufacturers,
which strengthens EB's market position as partner for car manufacturers and will
bring net sales for many years forward. Operating profit in Automotive Business
Segment improved clearly from the previous year and was 6.2 per cent of net
sales. Most important factors for the improvement of operating profit were the
growth of the services and software sales, improved project management and
actions to improve the cost structure.
In Wireless Business Segment the net sales in 2013 decreased slightly from
previous year due to the decreased demand in the wireless telecommunication R&D
services market. In the last quarter EB started the product deliveries of the
tactical communication system for Finnish Defence Forces and delivered a batch
of special terminal products for one customer for the authority use. These
product deliveries generated product based net sales of EUR 6.9 million in the
fourth quarter, the rest of the net sales being R&D services sales. Operating
result in 2013 remained slightly negative, despite of the cost saving measures
taken to improve the cost structure. In addition to the decreased net sales, the
profitability was negatively affected in 2013 by the ongoing investments into
the marketing and product development of products targeted for the global
defense and other authority markets, which investments are expected to start
gradually generating net sales from the latter half of 2014 onwards.
EB's balance sheet and financial position strengthened during 2013 due to the
good operative cash flow and the sale of the Test Tools product business in the
beginning of the year. Net cash flow was EUR 28.7 million and equity ratio
raised up to 65.1 per cent.
EB paid dividend of EUR 0.01 per share in April and distributed repayment of
capital of EUR 0.11 per share in December. Company's share price increased
strongly towards the end of the year and the daily trading volume of shares grew
significantly.
In 2014 our main target is to grow our net sales and operating profit from the
previous year. "
OUTLOOK FOR 2014
EB expects for the year 2014 that net sales and operating result will grow from
the previous year (net sales of EUR 199.3 million and operating profit of EUR
8.1 million, in 2013). Net sales growth rate in 2014 is expected to be slower
than in the previous year (net sales growth 14.6 per cent, 2013). Net sales and
operating result are expected to mainly accumulate during the latter half of the
year mostly due to the seasonality factors of Automotive Business Segment.
The growth of net sales and operating result in 2014 is expected to come mainly
or wholly from the Automotive Business Segment, where the demand for EB's
software solutions is expected to remain good. The demand for R&D services in
Wireless Business Segment is driven by the implementations of LTE (Long Term
Evolution) technology and by the growing need to wirelessly connect various
consumer and professional devices to other equipment. The demand for R&D
services in the mobile communication market is expected to decrease slightly
from the previous year. EB aims at bringing its Wireless Business Segment's
products to the global defense and other authority markets, and expects to start
gradually generating net sales from these markets from the latter half of 2014
onwards.
More specific market outlook is presented under sections "market outlook for the
Automotive Business Segment" and "Market outlook for the Wireless Business
Segment".
The profit outlook for the year 2014 does not include possible non-recurring
income or costs related to the reorganization cases of TerreStar Networks Inc.
More information about the reorganization cases of TerreStar Networks and the
amount of the receivables and collecting the receivables as well as other
uncertainties regarding the outlook is presented in the "Identified Risks and
Uncertainties".
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the Financial Statement 2013 for media,
analysts and institutional investors in Finland, Helsinki, in Hotel Kämp,
Pohjoisesplanadi 29, on Thursday, February 20, 2014, at 14.00 p.m. (CET+1). The
conference will also be held as a conference call and the presentation will be
shown simultaneously in the Internet through WebEx. The conference will be held
in English. For more information please go to www.elektrobit.com/investors.
ELEKTROBIT CORPORATION (EB)
EB creates advanced technology and turns it into enriching end-user experiences.
EB is specialized in demanding embedded software and hardware solutions for
wireless and automotive industries. The net sales from continuing operations in
2013 totaled EUR 199.3 million and operating profit of EUR 8.1 million, in
2013. Elektrobit Corporation is listed on NASDAQ OMX Helsinki.
www.elektrobit.com.
ELEKTROBIT CORPORATION (EB) FINANCIAL STATEMENT BULLETIN 2013
From the beginning of 2013 EB has applied the new IFRS10 and IFRS11 standards.
As a result the proportion of net sales and operating result of e.solutions
GmbH, a jointly owned company of EB and AUDI, to be consolidated into Elektrobit
group's consolidated financial statements has changed. For comparability, all
2012 figures presented for comparison are restated assuming that the
proportionate consolidation method according to the above mentioned standards
would have been applied already in 2012.
EB's figures are divided between Continuing and Discontinuing Operations as
provided by the IFRS5 standard. In this interim report, Test Tools product
business, sold on January 31, 2013, is classified as Discontinuing Operations.
FINANCIAL PERFORMANCE DURING JANUARY-DECEMBER 2013, CONTINUING OPERATIONS
EB's net sales from continuing operations during January-December 2013 grew by
14.6 per cent year-on-year to EUR 199.3 million (restated net sales of EUR
173.9 million, 1-12 2012). Operating profit from continuing operations was EUR
8.1 million including the non-recurring cost of approximately EUR 0.8 million
resulting from the cost saving measures in the Wireless Business Segment during
the first quarter of 2013 (restated operating profit of EUR 1.1 million,
1-12 2012 including non-recurring items of approximately MEUR 4 weakening
Wireless Business Segment's operating result). Operating profit from continuing
operations without these non-recurring costs was EUR 9.0 million (restated
operating profit of EUR 5.1 million, 1-12 2012).
Net sales of Automotive Business Segment in January-December 2013 grew to EUR
138.3 million (restated net sales of EUR 110.6 million, 1-12 2012), representing
25.0 per cent growth year-on-year. A significant proportion of the growth in the
net sales came from the rapid growth of e.solutions GmbH, the jointly owned
company with AUDI. Operating profit was EUR 8.5 million (restated operating
profit of EUR 3.3 million, 1-12 2012). Operating profit improved year-on-year
due to the growth of the service and software sales, and improved management of
projects and measures to improve the cost structure. At the beginning of 2013 EB
was selected as the supplier for several long-term product development and
product customization projects for leading car makers. A pricing model, where a
part of the product development fee is moved to license fee based on the actual
delivery volumes of new cars, was increasingly often taken into use in the
largest projects. When using this pricing model, which is common in the
automotive industry, the project specific positive operating result and cash
flow will be typically reached first during the car production years.
The Wireless Business Segment's net sales from continuing operations in January-
December 2013 decreased by 3.7 per cent year-on-year, to EUR 61.2 million (EUR
63.5 million, 1-12 2012). The decrease in the net sales was due to decline in
the demand for R&D services in the wireless telecommunications market. In the
fourth quarter EB started the product deliveries of the tactical communication
system to Finnish Defence Forces and delivered a batch of special terminal
products to one customer for the authority use. These product deliveries
generated product based net sales of EUR 6.9 million in the fourth quarter, the
rest of the net sales being R&D services sales. The operating loss from
continuing operations of the Wireless Business Segment in January-December 2013
was EUR -0.5 million including the non-recurring cost of approximately EUR 0.8
million resulting from the cost saving measures in the first quarter of 2013
(operating profit of EUR -2.2 million including non-recurring items of
approximately EUR 4 million weakening operating result, 1-12 2012). In addition
to the decreased net sales, the profitability was negatively affected in 2013 by
the ongoing investments into the marketing and product development of products
targeted for the global defense and other authority markets, which investments
are expected to start gradually generating net sales from the latter half of
2014 onwards. Operating result of Wireless Business Segment in January-December
2013 without non-recurring costs was EUR 0.4 million (EUR 1.8 million,
1-12 2012).
EB and Anite plc signed an agreement on January 28, 2013, under the terms of
which EB agreed to sell its Test Tools product business to Anite ("the
Transaction"). The Transaction comprised the sale of the shares of EB's
subsidiary Elektrobit System Test Ltd., a company based in Oulu, Finland, and
certain related other assets in the USA and China. EB's Test Tools product
business provided radio channel emulation tools and testing solutions for the
development of the wireless technologies and was part of EB's Wireless Business
Segment employing a total of 54 persons in Finland, USA and China. The EUR 31
million cash consideration paid for EB's Test Tools product business, sold in
January 2013, has been adjusted by EUR 0.9 million based upon the level of net
working capital and cash and debt in the Test Tools product business at the date
of the transaction. Adjustment improves EB's operating result from discontinued
operations in the reporting period and cash flow of the fourth quarter 2013 with
EUR 0.9 million. In the aggregate, the sale of the Test Tools product business
resulted in a non-recurring net profit of about EUR 24 million and a non-
recurring net cash flow of about EUR 28 million in 2013.
CONSOLIDATED INCOME STATEMENT (MEUR) 1-12 2013 1-12 2012
12 months 12 months
restated
-------------------------------------------------------------------------------
CONTINUING OPERATIONS
-------------------------------------------------------------------------------
Net sales 199.3 173.9
-------------------------------------------------------------------------------
Operating profit / loss 8.1 1.1
-------------------------------------------------------------------------------
Financial income and expenses -0.9 -0.5
-------------------------------------------------------------------------------
Result before tax 7.2 0.6
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS 6.7 1.1
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD FROM DISCONTINUING OPERATIONS 24.3 1.2
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD 30.9 2.3
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TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 30.9 1.6
-------------------------------------------------------------------------------
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Result for the period attributable to:
-------------------------------------------------------------------------------
Equity holders of the parent 30.9 2.3
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
Total comprehensive income for the period attributable to:
-------------------------------------------------------------------------------
Equity holder of the parent 30.9 1.6
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing operations, EUR 0.051 0.008
-------------------------------------------------------------------------------
· Cash flow from operating activities was EUR 34.7 million (EUR 6.8 million,
1-12 2012).
· Net cash flow was EUR 28.7 million including non-recurring net cash flow
of about EUR 28 million resulting from the sale of the Test Tools product
business (EUR 5.1 million, 1-12 2012).
· Equity ratio was 65.1% (54.5%, 1-12 2012).
· Net gearing was -46.1% (6.1%, 1-12 2012).
QUARTERLY FIGURES, CONTINUING OPERATIONS
Elektrobit Group's net sales and operating result, Continuing Operations, MEUR:
4Q 13 3Q 13 2Q 13 1Q 13 4Q 12
restated
-------------------------------------------------------------------------------
Net sales 59.5 45.7 47.9 46.2 48.2
-------------------------------------------------------------------------------
Operating profit (loss) 5.7 1.0 0.7 0.7 -0.5
-------------------------------------------------------------------------------
Operating profit (loss) without non-recurring 5.7 1.0 0.7 1.5 3.6
costs
-------------------------------------------------------------------------------
Result before taxes 5.5 0.9 0.2 0.6 -0.9
-------------------------------------------------------------------------------
Result for the period 5.0 0.8 0.2 0.6 -0.1
-------------------------------------------------------------------------------
Non-recurring items are exceptional gains and costs that are not related to
normal business operations and occur only seldom. These items include capital
gains or losses, significant changes in asset values such as write-downs or
reversals of write-downs, significant restructuring costs, or other items that
the management considers to be non-recurring. When evaluating a non-recurring
item, the euro translation value of the item is considered, and in case of a
change in an asset value, it is measured against the total value of the asset.
Non-recurring items during 2012 and 2013 in Wireless Business Segment were as
follows:
· Non-recurring costs related to collecting the receivables from TerreStar
Companies of EUR 1.2 million, during 2012
· Non-recurring income of USD 13.5 million resulting from the settlement
payment in the reorganization cases of TerreStar Corporation, and non-recurring
positive cash flow effect of approximately EUR 10.8 million in the third quarter
of 2012
· non-recurring items of approximately EUR 4 million in total, booked in the
fourth quarter of 2012, as result of the financial challenges faced by a US
based customer of EB's subsidiary, Elektrobit Inc., and
· non-recurring cost of approximately EUR 0.8 million resulting from the
cost saving measures in the Wireless Business Segment in the first quarter of
2013.
Net sales and operating profit development by Business Segments and other
businesses, continuing operations, MEUR:
4Q 13 3Q 13 2Q 13 1Q 13 4Q 12
restated
-----------------------------------------------------------------
Automotive
Net sales to external customers 41.1 34.1 32.5 30.5 31.8
Net sales to other segments 0.0 0.0 0.1 0.0 0.0
Operating profit (loss) 5.4 1.9 0.1 1.1 2.6
-----------------------------------------------------------------
Wireless
Net sales to external customers 18.3 11.5 15.4 15.8 16.4
Net sales to other segments 0.0 0.0 0.0 0.0 0.0
Operating profit (loss) 0.3 -0.9 0.6 -0.4 -3.2
-----------------------------------------------------------------
Other businesses
Net sales to external customers 0.0 0.0 0.0 0.0 0.0
Operating profit (loss) 0.0 0.0 0.1 -0.0 0.1
-----------------------------------------------------------------
Total
Net sales 59.5 45.7 47.9 46.2 48.2
Operating profit (loss) 5.7 1.0 0.7 0.7 -0.5
-----------------------------------------------------------------
The distribution of net sales by market areas, continuing operations, MEUR and
%:
4Q 13 3Q 13 2Q 13 1Q 13 4Q 12
oikaistu
----------------------------------------------
2.3 1.9 1.7 1.9 2.4
Asia
3.9 % 4.3 % 3.6 % 4.2 % 4.9 %
----------------------------------------------
8.0 6.0 6.4 6.2 6.4
Americas
13.4 % 13.2 % 13.4 % 13.3 % 13.2 %
----------------------------------------------
49.2 37.7 39.7 38.1 39.5
Europe
82.7 % 82.5 % 83.0 % 82.5 % 81.9 %
----------------------------------------------
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
EB lowered its profit guidance for 2012 due to the weaker than expected fourth
quarter on January 10, 2013. The reason for the weakening of the fourth quarter
was the non-recurring items of approximately EUR 4 million in total, booked as
result of the financial challenges faced by a US based customer of EB's
subsidiary, Elektrobit Inc. According to the lowered guidance, EB expected the
operating result of the fourth quarter of 2012 to be approximately between EUR
-0.4 million and EUR 1.1 million (EUR 3.5 million, 4Q 2011), the operating
result of the second half of 2012 to be approximately between EUR 1.7 million
and EUR 3.2 million (EUR 0.4 million, 2H 2011), and the operating result of the
whole year 2012 to be approximately between EUR 2.2 million and EUR 3.7 million
(operating loss of EUR -4.0 million in 2011). The expected operating results
presented above included non-recurring items that caused the lowering of the
fourth quarter profit guidance, as well as non-recurring income and costs
related to the reorganization processes of TerreStar companies, booked earlier
in 2012. the Company expected the outlook for the net sales to develop as
estimated earlier and thus EB expected that the net sales of the fourth quarter
of 2012 will be approximately EUR 57 million (EUR 49.0 million, 4Q 2011), the
net sales of the second half of 2012 was expected to be approximately EUR 104
million (EUR 86.1 million, 2H 2011) and the net sales of the whole year 2012 was
expected be approximately EUR 200 million (EUR 162.2 million in 2011).
EB and Anite plc signed an agreement with on January 28, 2013, under the terms
of which EB agreed to sell its Test Tools product business to Anite ("the
Transaction"). The Transaction comprised the sale of the shares of EB's
subsidiary Elektrobit System Test Ltd., a company based in Oulu, Finland, and
certain related other assets in the USA and China. EB's Test Tools product
business provided radio channel emulation tools and testing solutions for the
development of the wireless technologies and was part of EB's Wireless Business
Segment employing a total of 54 persons in Finland, USA and China. The cash
consideration paid by Anite to EB as a result of the Transaction was EUR 31.0
million on a cash and debt free basis subject to a post completion adjustment
based upon the level of net working capital and cash and debt in the Test Tools
product business on January 31, 2013. The closing of the Transaction resulted in
a non-recurring net profit of about EUR 23 million and non-recurring net cash
flow of about EUR 28 million in the first quarter of 2013. The cash
consideration paid for EB's Test Tools product business has been adjusted by EUR
0.9 million based upon the level of net working capital and cash and debt in the
Test Tools product business at the date of the transaction on January 31, 2013.
Adjustment improves EB's operating result from discontinued operations in the
reporting period and cash flow of the fourth quarter 2013 with EUR 0.9 million.
In the aggregate, the sale of the Test Tools product business resulted in a non-
recurring net profit of about EUR 24 million and a non-recurring net cash flow
of about EUR 28 million in 2013.
EB gave advance information on its fourth quarter and full year 2012 net sales
and operating results on January 28, 2013. EB announced also to report its 2012
financial results, as provided by the IFRS5 standard, divided between Continuing
and Discontinuing Operations, and that the Test Tools product business is
classified as Discontinuing Operations in the 2012 financial statements.
Simultaneously with the announcement of the Financial Statement Bulletin 2012 on
February 19, 2013, EB announced it will apply the new IFRS10 and IFRS11
standards from the beginning of 2013 and therefore will consolidate e.solutions
GmbH, the jointly owned company with Audi Electronics Venture GmbH (AEV),
applying the proportionate consolidation method. As a result of the change in
the method of consolidation, the proportion of net sales and operating result of
e.solutions GmbH to be consolidated into Elektrobit group's financial statements
will decrease from the previous 100% to 51%. According to the rules of the
proportionate consolidation method, the consolidated statement will also include
49% of the net sales from other Elektrobit group companies to e.solutions GmbH.
EB started measures to improve its cost structure in the Wireless Business
Segment on February 19, 2013. The measures were completed on April 4, 2013 and
the Company estimates to reach the targeted approximately EUR 2 million annual
cost savings in its Wireless Business Segment, fully effective from the second
half of 2013 on. The measures resulted non-recurring costs of approximately EUR
0.8 million that affect negatively the Company's operating result of the first
quarter of 2013. The underlying reasons for the measures to improve the cost
structure were the changed business requirements. As part of these measures, EB
reduced its personnel in the Wireless Business Segment globally by altogether
32 persons, 8 of them in Finland. In addition, EB also concentrated some of its
Wireless Business Segment operations to Finland and moved the centre of its US
operations from west coast to east coast, where many of the public sector
customers are located.
On August 22, 2013 EB concluded personnel negotiations that were started on
August 8, 2013 in Wireless Business Segment and decided to adjust its cost level
to correspond the weakened demand outlook for the rest of the year. The
temporary layoffs were estimated to last no longer than until the end of January
2014. With temporary layoffs EB aimed at EUR 1.5 million cost savings, which
were expected to materialize mainly during the fourth quarter. The need for
temporary layoffs and thereby actual cost savings may however change as the
outlook for the rest of the year specifies.
EB decided on November 15, 2013 that no further temporary layoffs will be made.
Between September 2013 and January 2014 EB temporarily laid off altogether 74
employees for a maximum of 90 days, part or full-time. With these measures the
company estimated to reach approximately EUR 0.8 million cost savings, which
were expected to materialize mainly during the last quarter of the year. Due to
the Wireless Business Segment's specified outlook for the rest of the year, the
amount of temporary layoffs was reduced from the earlier estimated maximum
amount. The materialized temporary layoffs were reduced to 64 persons and the
cost savings achieved were EUR 0.6 million.
The Extraordinary General Meeting of Elektrobit Corporation was held on
Wednesday December 4, 2013. The General Meeting resolved in accordance with the
proposal of the Board of Directors that on the basis of the financial statements
adopted for the financial period ended on December 31, 2012, funds from the
invested non-restricted equity fund be distributed to shareholders as a
repayment of capital, with the capital repayment amounting to EUR 0.11 per
share. The aggregate amount of the distribution based on the number of shares as
of the date of the General Meeting would amount to EUR 14,311,096.25. The
repayment of capital was paid to shareholders recorded in the company's register
of shareholders maintained by Euroclear Finland Ltd. on the record date of the
capital repayment, December 10, 2013. The repayment of capital was made on
December 17, 2013.
EB raised its profit guidance for 2013 due to the better than expected last
quarter and gave a more precise net sales outlook for 2013 on December
17, 2013. The reason for the improved operating result outlook of the last
quarter was higher than expected net sales and better profitability in projects
in the Automotive Business Segment. EB expected the operating result of the
whole year 2013 to be approximately at level of EUR 8 million (restated
operating profit without non-recurring items of EUR 5.1 million, in 2012). Net
sales was expected to grow slightly more than expected in the last quarter and
net sales of 2013 to be approximately at the level of EUR 200 million (restated
net sales of EUR 173.9 million, in 2012).
Stock options
The Board of Directors of Elektrobit Corporation decided on June 5, 2013 on the
transfer of stock options 2008A and 2008B to the Finnish book-entry system and
to apply for listing of 1.400.000 stock options 2008A and of 1.400.000 stock
options 2008B on the official list of NASDAQ OMX Helsinki. The trading with the
stock options started on June 17, 2013. The share subscription period for stock
options 2008A will end on March 31, 2014. The share subscription period for
stock options 2008B will end on March 31, 2015.
Pursuant to series 2008A-B stock options a total of 97,500 new shares were
subscribed for between April 2 and June 20, 2013, a total of 120,834 new shares
were subscribed for between June 21 and August 22, 2013, a total of 89,356 new
shares were subscribed for between August 22 and October 8, 2013 and a total of
380,495 new shares were subscribed for between October 21, 2013 and November
21, 2013. The share subscription prices were recorded in the Company's invested
non-restricted equity fund. The respective increases in the number of the
Company's shares were entered into the Finnish Trade Register on July 5, 2013,
September 6, 2013, October 18, 2013, and December 4, 2013. The trading with the
registered shares started on July 8, 2013, September 9, 2013, on October
21, 2013, and on December 5, 2013 in NASDAQ OMX Helsinki Ltd. After the
registration of the new shares, the number of shares in Elektrobit Corporation's
totaled 130,100,875. More information and the terms and conditions of stock
options 2008 are available in www.elektrobit.com/investors in the Company's web
pages.
The Extraordinary General Meeting of Elektrobit Corporation, held on Wednesday
December 4, 2013, resolved in accordance with the proposal of the Board of
Directors that on the basis of the financial statements adopted for the
financial period ended on December 31, 2012, funds from the invested non-
restricted equity fund be distributed to shareholders as a repayment of capital.
As a result of the capital repayment the subscription prices of shares pursuant
to the series 2008A-C stock options has been reduced with the amount of the
capital repayment per share on the record date of the capital repayment in
accordance with the terms of the stock options. Hence the share subscription
price pursuant to stock options 2008A has reduced to EUR 0.07, pursuant to stock
options 2008B to EUR 0.73 and pursuant to stock options 2008C to EUR 0.61.
The Board of Directors of Elektrobit Corporation has decided on the transfer of
series 2008C stock options to the Finnish book-entry system on December
20, 2013 and to apply for listing of 1.400.000 stock options 2008C on the
official list of NASDAQ OMX Helsinki. Application was made for the listing to
commence on April 1, 2014. The share subscription period for series 2008C stock
options will commence on April 1, 2014 and will end on March 31, 2016. The share
subscription price for series 2008C stock options is EUR 0.61 per share. The
amount of the dividend or the amount of the distributable non-restricted equity
decided before share subscription will be deducted from the share subscription
price as per the dividend record date or the record date of the repayment of
equity.
BUSINESS SEGMENTS' DEVELOPMENT DURING OCTOBER-DECEMBER 2013 AND MARKET OUTLOOK
EB's reporting is based on two segments which are the Automotive and Wireless
Business Segments.
AUTOMOTIVE
In Automotive Business Segment EB offers software products and R&D services for
carmakers, car electronics suppliers and other suppliers to the automotive
industry. The offering includes in-car infotainment solutions, such as
navigation and human machine interfaces (HMI), as well as software for
electronic control units (ECU) and driver assistance (DA). By combining its
software products and R&D services, EB is creating unique, customized solutions
for the automotive industry. EB's software products are: EB street director
navigation software, EB GUIDE HMI development and speech dialogue platform, EB
tresos product line of software components used in ECUs and tools for their
configuration, and EB Assist, an extensive product line with tooling and a
software development kit for driver assistance solutions. These software
products generate license fees, often combined with supply of R&D services for
customized solutions.
EB and Audi's subsidiary, Audi Electronics Venture GmbH (AEV), have a jointly
owned company e.solutions GmbH that is currently developing infotainment
software and provides systems engineering and systems integration services for
Volkswagen Group car models. EB also delivers products and R&D services to the
joint venture. EB owns 51% of e.solutions GmbH and AEV 49%.
Development of the Automotive Business Segment in October - December 2013
EB's net sales in Automotive Business Segment continued its strong growth during
the fourth quarter of 2013 and amounted to EUR 41.1 million (restated net sales
of EUR 31.9 million, 4Q 2012), representing a growth of 29.1 % year-on-year. A
significant proportion of the growth in the net sales came from the growth of
e.solutions GmbH, a jointly owned company with AUDI. The operating profit was
EUR 5.4 million (restated operating profit of EUR 2.6 million, 4Q 2012). The
good operating result in the fourth quarter was affected by the software license
sales focusing to the latter half of the year and by other seasonality factors,
as well as improved profitability of projects.
The demand for automotive software products and services developed well. The
software license income grew from previous year i.a. from in-car navigation
systems and EB GUIDE development platform, used for developing Human Machine
Interfaces (HMIs).
EB continued its R&D investments into the automotive software products and
tools. In October EB announced a new version of its HMI development platform, EB
GUIDE 5.5, which includes a wide-range of consumer-inspired features including
3D content import, compelling graphical animations and effects, speech
recognition for dynamic data, as well as multi-touch and touch gesture
recognition for smartphone-like user interaction. EB GUIDE 5.5 also enables
carmakers and suppliers to create multi-modal HMIs enriched with HTML5
application-like content.
Automotive Business Segment Market Outlook
As the global economy is showing signs of recovery, the global car market is
expected to grow by 3% in 2014 according to the forecast made by VDA (Verband
der Automobilindustrie). For several years carmakers have continued to invest in
automotive software for new car models and the market for software products and
services is estimated to continue growing during 2014. The demand for EB's
products and services is estimated to develop positively year-on-year during
2014 in Automotive Business Segment.
The market for electronics and software for cars is estimated to continue
growing in a long term. The study "Future Industry Structure of Automotive
(FAST) Electronics 2025" from Berylls assumes a growth of automotive electronics
from EUR 215 billion in 2012 to EUR 456 billion in 2025 (CAGR 6%).
Growth in automotive software market is mainly driven by:
* The majority of in-vehicle innovations come from electronics and software.
Carmakers can develop more vehicle features and create product
differentiation as software innovation allows for great product innovation
jumps in the areas of comfort, information and entertainment, powertrain and
communication.
* The software and hardware in electronics solutions will be gradually
separated from each other in order to speed up the innovation and to improve
the quality and cost efficiency.
* Consumers expect in the car the same richness of features and user
experience they know from the internet and mobile devices, and therefore
infotainment systems become increasingly common in all car price categories.
* Mobile connectivity will become one of the fastest-growing Internet-
connected device platforms among other connected consumer electronics
devices, such as media tablets and smartphones. Gartner estimates that by
2016, the majority of car buyers in automotive markets like in the U.S. and
the Western Europe will view the availability of in-vehicle, web-enabled
dynamic content as a key buying criterion when considering a standard brand
car. This tipping point will be reached even sooner - during 2014 - for
premium-brand cars.
* Connected Car solutions and cloud connections enable bringing of new
applications and enhancements to car functions, for example real-time
traffic information for navigation. The increasing demand to better
integrate mobile devices with the car has been reflected in consumer
electronics companies such as Apples "iOS in the Car" or Google's
announcement of Open Automotive Alliance.
* New Active Safety Systems and Driver Assistance applications are being
brought to markets as automated driving is becoming one of the key trends in
the markets.
WIRELESS
In the Wireless Business Segment EB offers products and product platforms for
defense, public safety and other authorities markets as well as for industrial
use. Further EB offers product development services and customized solutions for
wireless communications markets and for companies needing wireless connectivity
for their products. EB's products in the Wireless Business Segment are the EB
Tactical Wireless IP Network for tactical communications, EB Tough VoIP for
tactical IP-based communication, EB Wideband COMINT Sensor for signals
intelligence. The product platforms are EB Counter RCIED Platform for electronic
warfare, the Android-based EB Specialized Device Platform and EB LTE
Connectivity Module for specialized markets. For the latest wireless
technologies and applications EB offers a broad range of R&D services such as
consulting, integration, and development of software and hardware.
Development of the Wireless Business Segment in October - December 2013
Net sales of continuing operations of the Wireless Business Segment during the
last quarter of 2013 grew by 12.0 per cent year-on-year to EUR 18.4 million (EUR
16.4 million, 4Q 2012). Operating profit from continuing operations was EUR 0.3
million (operating loss of EUR -3.2 million including non-recurring items of
approximately MEUR 4.0 that were booked due to the financial problems of a US-
based large customer of EB, 4Q 2012).
In the last quarter EB started the product deliveries of the tactical
communication system to Finnish Defence Forces and delivered a batch of special
terminal products to one customer for the authority use. These product
deliveries generated product-based net sales of EUR 6.9 million in the fourth
quarter, the rest of the net sales being R&D services sales. Net sales and
operating result were negatively affected by the decreasing demand from a
significant customer in the second half of 2013 due to which the company started
cost level adjustment measures.
Between September and November 2013 EB gave temporary layoff notice to 74
employees for maximum of 90 days, part of full time. On November 15, 2013 EB
decided, that no new temporary layoffs will be given. With these measures the
company estimated to target approximately EUR 0.8 million cost savings, that
were expected to materialize mainly during the fourth quarter. As the demand
outlook of Wireless Business Segment became more accurate, it was possible to
decrease the amount of temporary layoffs from previously estimated maximal
amount. The materialized amount of temporary layoffs decreased to 64 employees
and the cost savings were EUR 0.6 million.
Wireless Business Segment Market Outlook
In the Wireless Business Segment, EB's customers operate in various industries,
each of them having own industry specific factors driving the demand. A common
factor creating demand among the whole customer base is the introduction of new
technologies. In 2014 the implementation of LTE (Long Term Evolution) technology
is expected to continue to be important technological change driving the demand.
Due to the long history in developing smart phones and mobile communication
devices, EB is in a good position to offer solutions, where e.g. mastering of
multi-radio technologies and end-to-end system architectures covering both
terminals and networks is needed.
Following factors are estimated to create demand for EB's products and services
in 2014 and beyond:
* In the mobile infrastructure equipment market the use of LTE technology is
expected to continue strong. This creates the need for services for LTE base
station design. There is a wide range of frequencies allocated for LTE
globally thus creating a need to develop multiple products to cover the
market, and creating demand for R&D services for design of product variants.
* The trend of adopting new commercial technologies, such as LTE and smart
phone related operating systems and applications, is expected to continue in
special verticals such as public safety. The specific LTE frequency band
allocations for authorities create demand for customized LTE devices, such
as EB's specialized terminals, tablets and communication modules.
* The need for R&D services for connected devices for business or consumer
use, such as smart watch and other Wearable devices is evolving and creating
demand for customized solutions based on EB's product platforms.
* In the defense market's tactical communication the need for larger amounts
of information data grows, generating demand for broadband networks, such as
EB's customized IP (Internet Protocol) based tactical communications
solutions.
EB aims at bringing its products to the global defense and other authorities
markets, where they are expected to start gradually generating net sales from
the latter half of 2014 onwards. The public defense budget cuts affect
negatively on the demand for products and product development services in Europe
and also all over the world, simultaneously increasing the competition between
the suppliers.
The defense, authorities and national security markets are by their nature
slowly developing markets. They are characterized by long sales cycles driven by
purchasing programs of national governments, and the purchases of the selected
products take place over several years.
RESEARCH AND DEVELOPMENT
EB continued its investments in R&D in the automotive software products and
tools in Automotive Business Segment, and in products and product platforms for
the defense and public safety markets in Wireless Business Segment.
The total R&D investments for continuing operations during January-December
2013 were EUR 18.5 million (restated EUR 22.0 million, 1-12 2012), equaling
9.3% of the net sales (restated 12.6%, 1-12 2012). The share of R&D investments
in Automotive Business Segment was EUR 14.3 million (restated EUR 17.9 million,
1-12 2012) and in Wireless Business Segment in continuing operations EUR 4.2
million (EUR 4.1 million, continuing operations, 1-12 2012).
EUR 0.0 million of R&D investments of the reporting period were capitalized (EUR
2.9 million, 1-12 2012). The amount of capitalized R&D investments at the end of
December 2013 was EUR 12.0 million (EUR 13.5 million, 31.12.2012). A significant
part of these capitalizations is related to customer agreements of Automotive
Business Segment, where future license fees, based on the actual car delivery
volumes, are expected to accumulate in the coming years. Depreciations of R&D
investments were EUR 1.6 million during the reporting period (EUR 0.9 million,
1-12 2012).
The total negative effect, caused from research and development investments,
their capitalizations and their depreciation, on EB's income statement in 2013
was EUR 20,1 million (EUR 19,9 million, 2012).
OUTLOOK FOR 2014
EB expects for the year 2014 that net sales and operating result will grow from
the previous year (net sales of EUR 199.3 million and operating profit of EUR
8.1 million, in 2013). Net sales growth rate in 2014 is expected to be slower
than in the previous year (net sales growth 14.6 per cent, 2013). Net sales and
operating result are expected to mainly accumulate during the latter half of the
year mostly due to the seasonality factors of Automotive Business Segment.
The growth of net sales and operating result in 2014 is expected to come mainly
or wholly from the Automotive Business Segment, where the demand for EB's
software solutions is expected to remain good. The demand for R&D services in
Wireless Business Segment is driven by the implementations of LTE (Long Term
Evolution) technology and by the growing need to wirelessly connect various
consumer and professional devices to other equipment. The demand for R&D
services in the mobile communication market is expected to decrease slightly
from the previous year. EB aims at bringing its Wireless Business Segment's
products to the global defense and other authority markets, and expects to start
gradually generating net sales from these markets from the latter half of 2014
onwards.
More specific market outlook is presented under sections "Market outlook for the
Automotive Business Segments" and "Market outlook for the Wireless Business
Segment".
The profit outlook for the year 2014 does not include possible non-recurring
income or costs related to the reorganization cases of TerreStar Networks Inc.
More information about the reorganization cases of TerreStar Networks and the
amount of the receivables and collecting the receivables as well as other
uncertainties regarding the outlook is presented in the "Identified Risks and
Uncertainties".
RISKS AND UNCERTAINTIES
Risks and uncertainties
EB has identified a number of business, market and finance related risk factors
and uncertainties that can affect the level of sales and profits.
MARKET RISKS
In the ongoing financial period, global economic uncertainty may affect the
demand for EB's services, solutions and products and provide pressure on e.g.
pricing. In the short term such uncertainty may affect, in particular, the
utilization and chargeability levels and average hourly prices of R&D services.
As EB's customer base consists mainly of companies operating in the fields of
automotive and telecommunications and defense and public safety authorities, the
company is exposed to market changes in these industries. In both of EB's
business segments a significant part of net sales accumulates from just a few
customers. In the Automotive business segment a significant part of net sales
tied to projects carried out with different Volkswagen Group companies. EB and
Audi's subsidiary, Audi Electronics Venture GmbH (AEV), have a jointly owned
company e.solutions GmbH that is developing infotainment software and provides
systems engineering and systems integration services for Volkswagen Group car
models. EB also delivers products and R&D services to the jointly owned company.
In addition, EB delivers products and R&D services directly or through TIER1
suppliers to different Volkswagen Group companies. In the Wireless business
segment a significant part of net sales accumulates from selling R&D services to
a certain mobile communications equipment manufacturer and from selling products
and R&D services to the Finnish Defence Forces. Deviation in anticipated
business development with such customer concentrations may translate as a
significant deviation in the EB's outlook, both in terms of net sales and
operating result, during the ongoing financial period and thereafter. EB seeks
to expand its customer base on a longer term and reduce dependence on individual
companies and hence the company will thereby be mainly affected by the general
business climate in automotive and telecommunication industries. The more
specific market outlook has been presented under the "Market Outlook for the
Automotive Business Segment" and "Market Outlook for the Wireless Business
Segment" section.
BUSINESS RELATED RISKS
EB's operative business risks are mainly related to following items:
uncertainties and short visibility on customers' product program decisions,
their make or buy decisions and on the other hand, their decisions to continue,
downsize or terminate current product programs, execution and management of
large customer projects, ramping up and down project resources, availability of
personnel in labor markets (in particular in Germany), accessibility on
commercially acceptable terms and on the other hand successful utilization of
the most important technologies and components, competitive situation and
potential delays in the markets, timely closing of customer and supplier
contracts with reasonable commercial terms, delays in R&D projects, realization
of expected return on capitalized R&D investments, obsolescence of inventories
and technology risks in product development causing higher than planned R&D
costs. Revenues expected to come from either existing or new products and
customers include normal timing risks. EB has certain significant customer
projects and deviation in their expected continuation could result also
significant deviations in the Company's outlook. In addition there are typical
industry warranty and liability risks involved in selling EB's services,
solutions and products.
EB's product delivery business model faces such risks as high dependency on
actual product volumes, timing risks and potential delays in the markets. The
above-mentioned risks may manifest themselves as lower amounts of product
delivered or higher costs of production, and ultimately, as lower profit. EB's
net sales from the automotive industry is currently primarily driven by the
development of software for electronic devices to be used in new car models, and
sales of licenses for in-car software and software development tools. EB aims
at developing its business model to be more based on software products, which is
expected to increase the direct dependency of net sales on production volumes
over the forthcoming years. The dependency on EB's net sales on car delivery
volumes is also increased by EB's customers tending to allocate a part of the
software development costs to be paid in license fees based on the actual car
delivery volumes. When using this pricing model, which is common in the
automotive industry, the project specific operating result and positive cash
flow will be typically reached first during the car production years and this
may cause significant additional financing needs for the R&D phase. However this
model can offer EB also an opportunity for higher cumulative income, in case the
take rate of additional software products or services, like in-car navigation
system in the new cars sold, would be higher than originally estimated. This is
dependent among others on the amount of additional software products and
services, such as in-car navigation, chosen to new cars at the time of purchase.
Some of EB's businesses operate in industries that are heavily reliant on patent
protection and therefore face risks related to management of intellectual
property rights, on the one hand related to accessibility on commercially
acceptable terms of certain technologies in the EB's products and services, and
on the other hand related to an ability to protect technologies that EB develops
or licenses from others from claims that third parties' intellectual property
rights are infringed. Additionally, parties outside of the industries operate
actively in order to protect and commercialize their patents and therefore in
their part increase the risks related to the management of intellectual property
rights. At worst, claims that third parties' intellectual property rights are
infringed, could lead to substantial liabilities for damages. Also EB has
received a formal request from one of its customers for indemnification that is
unspecified both in terms of the basis of liability and the amount claimed.
Based on information available it does not seem likely that the claim would
result in significant liability in the short term. It is possible that, based on
later information, the above views may need to be reconsidered. In addition, the
progress of the customer projects and delivery capability may be also affected
by potential challenges in global accessibility of key technologies and
components on commercially acceptable terms. In the Wireless business segment
accessibility of chipsets to provide LTE-capabilities on commercially acceptable
terms may affect the development and delivery of competitive special terminal
products.
FINANCING RISKS
Global economic uncertainty may lead to payment delays, increase the risk for
credit losses and weaken the availability and terms of financing. To fund its
operations, EB relies mainly on income from its operative business and may from
time to time seek additional financing from selected financial institutions.
Currently EB has a committed overdraft credit facility agreement of EUR 10
million and committed revolving credit facility agreement of EUR 10 million,
valid until June 30, 2014. These agreements include financial covenants related
to group's equity ratio and earnings before interest and taxes (EBITDA), to be
reviewed semiannually. There is no assurance that additional financing will not
be needed in case of clearly weaker than expected development of EB's businesses
or in case customer commitments of Automotive Business Segment would represent
more than planned funding for R&D phase.
Customer dependency in some parts of EB's business may translate as accumulation
of risk with respect to outstanding receivables and ultimately with respect to
credit losses. EB asserted claims for its receivables in the amount of
approximately USD 25.8 million (EUR 18.8 million as per exchange rate of
February 19, 2014) in the Chapter 11 cases of its customers TerreStar Networks
Inc. and its parent company TerreStar Corporation filed in 2010 and 2011. In
addition to the booked receivables, EB asserted claims for additional costs in
the amount of approximately USD 2.1 million (EUR 1.5 million as per exchange
rate of February 19, 2014) resulting mainly from the ramp down of the business
operations between the parties. Thus, EB asserted claims against each of the
TerreStar entities in amounts totaling USD 27.9 million (EUR 20.3 million as per
exchange rate of February 19, 2014). Due to uncertainties related to the
accounts receivable, EB booked an impairment of the accounts receivable in the
amount of EUR 8.3 million during the second half of 2010.
By order of the bankruptcy court dated August 24, 2012, Elektrobit Inc., a
subsidiary of EB, and TerreStar Corporation and certain of its preferred
shareholders, entered into a full and final settlement of various disputes that
had arisen between them in the TerreStar Corporation reorganization cases.
Pursuant to this settlement, on August 28, 2012 TerreStar Corporation made a
cash payment to Elektrobit Inc. of USD 13.5 million in full and final
satisfaction of EB's claim against that entity. The settlement did not include
the TerreStar Networks Chapter 11 cases and did not include any distribution
from those cases that may be available to EB. On October 24, 2012, the
bankruptcy court entered an order approving a plan of reorganization for
TerreStar Corporation and various affiliates (not including TerreStar Networks)
which preserved EB's rights with respect to EB's claim against TerreStar
Networks.
As to TerreStar Networks, EB presently estimates that its total distribution
under the TerreStar Networks confirmed plan of liquidation may be approximately
8% of the face amount of its claim. However, this estimate is subject to various
assumptions, and the amount and timing of EB's distribution on the remaining
portion of its claim cannot be predicted with certainty at this time. Pursuant
to the plan, on March 29, 2012 EB received a USD 650,890 distribution on that
portion of its claim entitled to payment priority under U.S. bankruptcy law.
As part of the Chapter 11 process, the liquidating trustee (the "Trustee") of
The TerreStar Networks Inc. Liquidating Trust (the trust having been formed in
connection with confirmation of the Chapter 11 plan of TerreStar Networks) is
considering whether the Trustee may recover payments previously made to
creditors pursuant to various provisions of the Bankruptcy Code. During the 90
days prior to TerreStar Networks' bankruptcy filing, EB received approximately
USD 2.5 million that the Trustee has alleged to be preferential payments, and it
remains possible that the Trustee may sue EB to recover these payments. EB
believes that it has strong defenses to any such litigation and therefore would
vigorously contest it, but anticipates that this issue must be adjudicated or
settled before EB receives further distributions on its claim. Further, in
reconciling accounts in preparation for making distributions under the TerreStar
Networks plan, the Trustee requested, and EB provided, additional information
and documents in support of EB's claim. EB has entered into a tolling agreement
with the Trustee which, as amended, extends the avoidance action statute of
limitations through and including April 18, 2014, which date could be further
extended by mutual consent, with a view to determining whether the parties can
settle any outstanding disputes between them. The likelihood and outcome of any
such disputes cannot be predicted with certainty at this time.
Based on EB's current understanding, there is no reason to believe that EB would
not be able to collect from the bankruptcy estate of TerreStar Networks the full
amount (or close to it) of the pro rata distribution on its general unsecured
claim in due course. It is possible that based on later information related to
the TerreStar Networks Chapter 11 cases, the above views may need to be
reconsidered. Should the amount of the pro rata distribution on EB's general
unsecured claim not be collected from the bankruptcy estate of TerreStar
Networks, and should the Trustee commence litigation resulting an order for EB
to repay certain allegedly preferential transfers, costs related to the process
would additionally lower EB's operating result on a non-recurring basis by
approximately EUR 2 million at maximum.
The U.S. Internal Revenue Service ("IRS") disallowed a deduction taken on EB's
subsidiary's, Elektrobit Inc.'s 2010 U.S. federal income tax return for the
impairment of the receivables from the TerreStar companies. EB appealed this
disallowance to the IRS Office of Appeals, which is expected to render a
decision before the end of the third quarter of 2014. An unfavorable decision
can be appealed to the United States Tax Court, in which case the appeal may
take two years.
If the appeal were to proceed to the United States Tax Court and if the
resolution of the litigation results in a complete rejection of the amount
deducted in 2010, EB would be required to pay back the tax refund in full with
accrued interest. At worst, as a result of the pay back of the tax refund and
the respective interest expenses and litigation expenses, there would be a
negative effect on EB's cash flow of approximately of USD 2.7 million (EUR 2.0
million as per exchange rate of February 19, 2014). Depending on the progression
of the appellate process, such effects would be booked probably in 2016. Based
on EB's current understanding, there is no reason to believe that the IRS'
disallowance will be sustained. Based on subsequent information, the situation
may need to be reconsidered. It is also possible that during the appellate
process, the parties may settle this matter.
More short-term description of the risks and uncertainties are described in the
report by the Board of Directors 2013. In addition, more information on
TerreStar Networks Inc.'s and its parent company TerreStar Corporation's
reorganization cases are presented in the October 20 and 25, November 20 and
December 30, 2010, February 17, 2011, November 18, 2011, June 21, 2012, August
3, 2012, August 24, 2012 and August 28, 2012 stock exchange releases as well as
in EB's interim reports and financial statements at www.elektrobit.com.
STATEMENT OF FINANCIAL POSITION AND FINANCING
The figures presented in the statement of financial position of December
31, 2013, are compared with the statement of the financial position of December
31, 2012 (MEUR).
12/2013 12/2012 1.1.2012
restated restated
---------------------------------------------------------------------
Non-current assets 46.1 46.8 43.7
---------------------------------------------------------------------
Current assets 98.2 77.6 68.6
---------------------------------------------------------------------
Assets classified as held for sale 7.7
---------------------------------------------------------------------
Total assets 144.4 132.2 112.3
---------------------------------------------------------------------
Share capital 12.9 12.9 12.9
---------------------------------------------------------------------
Other equity 68.8 53.1 52.8
---------------------------------------------------------------------
Non-controlling interests
---------------------------------------------------------------------
Total shareholders' equity 81.7 66.0 65.8
---------------------------------------------------------------------
Non-current liabilities 6.1 8.5 6.6
---------------------------------------------------------------------
Current liabilities 56.5 53.2 40.0
---------------------------------------------------------------------
Liabilities classified as held for sale 4.5
---------------------------------------------------------------------
Total shareholders' equity and liabilities 144.4 132.2 112.3
---------------------------------------------------------------------
The cash flows during the period under review:
----------------------------------------------------------------------
+ net profit +/- adjustment of accrual basis items EUR +17.6 million
----------------------------------------------------------------------
+/- change in net working capital EUR +18.7 million
----------------------------------------------------------------------
- interest, taxes and dividends EUR -1.6 million
----------------------------------------------------------------------
= cash generated from operations EUR +34.7 million
----------------------------------------------------------------------
- net cash used in investment activities EUR +24.4 million
----------------------------------------------------------------------
- net cash used in financing EUR - 30.3 million
----------------------------------------------------------------------
= net change in cash and cash equivalents EUR +28.7 million
----------------------------------------------------------------------
Net cash from operating activities developed positively thanks to good profit
and reduced need of net working capital, especially on fourth quarter when EB
received advance payments for becoming projects and customers paid well their
trade payables to EB.
In addition to normal investments net cash from investing activities includes
proceeds from Test Tools products business on the first quarter. Net cash from
financing activities includes among others repayment of capital and repayment of
borrowings on fourth quarter.
The amount of accounts receivable and other receivables, booked in current
receivables, was EUR 54.3 million (EUR 63.0 million on December 31, 2012).
Accounts payable and other payables, booked in interest-free current
liabilities, were EUR 54.5 million (EUR 40.5 million on December 31, 2012). The
amount of non-depreciated consolidation goodwill at the end of the period under
review was EUR 19.3 million (EUR 19.3 million on December 31, 2012).
The amount of gross investments in the period under review was EUR 7.9 million.
Net investments for the reporting period totaled EUR 7.5 million. The total
amount of depreciation of continuing operations during the period under review
was EUR 9.0 million, including EUR 1.0 million of depreciation owing to business
acquisitions in Automotive Business Segment.
The amount of interest-bearing debt, including finance lease liabilities, at
the end of the reporting period was EUR 5.3 million (EUR 18.3 million on
December 31, 2012). The distribution of net financing expenses on the income
statement of continuing operations was as follows:
----------------------------------------------------------------
interest dividend and other financial income EUR 0.3 million
----------------------------------------------------------------
interest expenses and other financial expenses EUR -0.7 million
----------------------------------------------------------------
foreign exchange gains and losses EUR -0.5 million
----------------------------------------------------------------
EB's equity ratio at the end of the period was 65.1% (54.5 % on December
31, 2012). The increase in equity ratio is mainly due to the sale of the Test
Tools product business. The transaction resulted in a net profit of about EUR
24 million.
Cash and other liquid assets at the end of the reporting period were EUR 43.0
million (EUR 14.3 million on December 31, 2012). The increase in cash reserves
is mainly due to the sale of the Test Tools product business. EB has from Nordea
Bank plc a committed credit facility agreement and a revolving credit facility
agreement of altogether EUR 20 million, valid until June 30, 2014. EUR 0.0
million of these facilities was used at the end of the reporting period.
EB follows a hedging strategy, the objective of which is to ensure the margins
of business operations in changing market circumstances by minimizing the
influence of exchange rates. In accordance with the hedging strategy, the agreed
customer commitments net cash flow of the currency in question is hedged. The
net cash flow is determined on the basis of sales receivables, payables, the
order book and the budgeted net currency cash flow. The hedged foreign currency
exposure at the end of the review period was equivalent to 8.5 million.
PERSONNEL
The parent company of the group and its subsidiaries employed an average of
1627 people between January and December 2013. In addition, e.solutions GmbH,
the jointly owned company of EB and AUDI employed 300 people. At the end of
December, the parent company of the group and its subsidiaries had 1648
employees and e.solutions GmbH 321 employees (1583 in group's parent company and
subsidiaries and e.solutions GmbH 233 at the end of 2012). A significant part of
EB's personnel are R&D engineers.
FLAGGING NOTIFICATIONS
On August 8, 2013 EB received a flagging announcement, pursuant to chapter 9,
section 5 of the Finnish Securities Markets Act from
Fortel Invest Oy that the amount of shares and votes have decreased below the 5
per cent flagging boundary.
On September 12, 2013 EB received a flagging announcement, pursuant to chapter
9, section 5 of the Finnish Securities Markets Act from Juha Sipilä that the
amount of shares and votes have decreased below the 5 per cent flagging
boundary.
EVENTS AFTER THE REVIEW PERIOD
A total of 508,697 new shares in Elektrobit Corporation were subscribed between
December 5, 2013 and January 28, 2014 by virtue of the option rights 2008A and
2008B. The share subscription price, EUR 150,254.85, was recorded in the
Company's invested non-restricted equity fund. The corresponding increase in the
number of the Company's shares was entered into the Finnish Trade Register on
February 10, 2014. Trading with the newly registered shares started on February
11, 2014 in NASDAQ OMX Helsinki Ltd. After the registration of the new shares,
the number of shares in Elektrobit Corporation's totals 130,609,572.
PROPOSAL BY THE BOARD OF DIRECTORS ON THE USE OF THE PROFIT SHOWN ON THE BALANCE
SHEET AND THE PAYMENT OF DIVIDEND
According to the parent company's balance sheet at December 31, 2013, the
distributable assets of the parent company are EUR 94,291,974.00 of which the
profit of the financial year is EUR 5,387,116.35.
The Board of Directors proposes that the Annual General Meeting to be held on
April 10, 2014 resolve to pay EUR 0.02 per share, as dividend based on the
adopted balance sheet for the financial period of January 1, 2013 - December
31, 2013. The dividend will be paid to the shareholders who are registered as
shareholders in the company's register of shareholders as maintained by
Euroclear Finland Ltd on the dividend record date, Thursday, April 15, 2014. The
Board of Directors proposes that the dividend be paid on Thursday, April
24, 2014.
The Board of Directors emphasized the result of the continuing operations from
the financial period ended on 31.12.2013 as a basis for its proposal for
distribution of dividend. No significant changes have taken place in the
company's financial position since the end of the financial year. The company's
liquidity position is good and in the view of the Board, the proposed
distribution does not jeopardize the company's ability to fulfill its
obligations.
Annual general meeting and annual report
Elektrobit Corporation's Annual General Meeting will be held on Thursday, April
10, 2014, at 1 pm (CET+1) at the University of Oulu, Saalastinsali, Pentti
Kaiteran katu 1, 90570 Oulu, Finland. Elektrobit Corporation's Annual Report,
including the Annual Accounts, the report by the Board of Directors and the
Auditor's report as well as Corporate Governance Statement, is available on the
company's website no later than on Thursday, March 20, 2014.
CHANGING THE CONSOLIDATION OF THE JOINTLY OWNED COMPANY OF EB AND AUDI AS OF
JANUARY 1, 2013
EB has started to apply the new IFRS10 and IFRS11 standards from the beginning
of 2013 and will consolidate e.solutions GmbH, a jointly owned company with Audi
Electronics Venture GmbH (AEV), applying the proportionate consolidation method.
As a result of the change in the method of consolidation, the proportion of net
sales and operating result of e.solutions GmbH consolidated into Elektrobit
group's financial statements will decrease from the previous 100% to 51%. The
change in the consolidation method has no effect on EB's net result. According
to the rules of proportionate consolidation method, the consolidated statement
will also include 49% of the net sales of other Elektrobit group companies to
e.solutions GmbH.
In the 2013 financial reporting EB has presented the profit and loss statement
and balance sheet from 2012 for comparison restated assuming that the
proportionate consolidation method according to the above mentioned standards
would have been applied already in 2012.
Elektrobit Corporation's subsidiary company Elektrobit Automotive GmbH holds a
51% stake in e.solutions GmbH, with AEV holding the remaining 49%. Previously,
since its establishment in 2009, e.solutions GmbH has been brought into the
consolidated statements as subsidiary and its net sales and operating result
have been consolidated in the Elektrobit group's financial statements in full.
The new IFRS10 and IFRS 11 standards for consolidated financial statements and
joint arrangements took effect on 1st of January 2014, but they may be applied
as of 1st of January 2013. The accounting standard IFRS 10 sets out the rules
for presenting and preparing consolidated financial statements when an entity
controls one or more other entities. IFRS11 establishes principles for financial
reporting by parties to a joint arrangement. According to the standard, joint
arrangements are defined either as "joint ventures" or "joint operations".
e.solutions GmbH is deemed to fulfill the criteria of a "joint operation",
whereby it is required that a proportionate consolidation method be applied at
the latest when the new standard takes effect.
Oulu February 20, 2014
Elektrobit Corporation
The Board of Members
Further Information:
Jukka Harju
CEO
Tel. +358 40 344 5466
Distribution:
NASDAQ OMX Helsinki
Major media
ELEKTROBIT CORPORATION (EB) CONDENSED FINANCIAL STATEMENTS 2013
The consolidated financial statement has been prepared in accordance with
International Financial Reporting Standards (IFRS). The Financial Statement of
2013 has been audited and the auditing report has been dated on February
19, 2014.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (MEUR) 1-12/2013 1-12/2012
Continuing operations
12 months 12 months
restated
-------------------------------------------------------------------------------
NET SALES 199.3 173.9
-------------------------------------------------------------------------------
Other operating income 3.5 2.4
-------------------------------------------------------------------------------
Change in work in progress and finished goods -0.0 -0.2
-------------------------------------------------------------------------------
Work performed by the undertaking for its own purpose and 0.0 0.5
capitalized
-------------------------------------------------------------------------------
Raw materials -12.4 -7.3
-------------------------------------------------------------------------------
Personnel expenses -113.2 -101.1
-------------------------------------------------------------------------------
Depreciation -9.0 -7.1
-------------------------------------------------------------------------------
Other operating expenses -60.0 -60.2
-------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 8.1 1.1
-------------------------------------------------------------------------------
Financial income and expenses -0.9 -0.5
-------------------------------------------------------------------------------
PROFIT BEFORE TAX 7.2 0.6
-------------------------------------------------------------------------------
Income tax -0.6 0.5
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS 6.7 1.1
-------------------------------------------------------------------------------
Discontinued operations
-------------------------------------------------------------------------------
Profit for the year from discontinued operations 24.3 1.2
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 30.9 2.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Other comprehensive income:
-------------------------------------------------------------------------------
Items that will not be reclassified to statement of income
-------------------------------------------------------------------------------
Re-measurement gains (losses) on defined benefit plans 0.0 -0.8
-------------------------------------------------------------------------------
Items that may be reclassified subsequently to the
statement of income
-------------------------------------------------------------------------------
Exchange differences on translating foreign operations -0.0 0.2
-------------------------------------------------------------------------------
Other comprehensive income for the period total -0.0 -0.6
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 30.9 1.6
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Profit for the year attributable to
-------------------------------------------------------------------------------
Equity holders of the parent 30.9 2.3
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total comprehensive income for the period attributable to
-------------------------------------------------------------------------------
Equity holders of the parent 30.9 1.6
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.051 0.008
-------------------------------------------------------------------------------
Diluted earnings per share 0.051 0.008
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from discontinued operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.188 0.009
-------------------------------------------------------------------------------
Diluted earnings per share 0.187 0.009
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing and discontinued
operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.239 0.018
-------------------------------------------------------------------------------
Diluted earnings per share 0.238 0.017
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Average number of shares, 1000 pcs 129 528 129 413
-------------------------------------------------------------------------------
Average number of shares, diluted, 1000 pcs 130 092 130 238
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL Dec. 31, 2013 Dec. 31, 2012 Jan. 1, 2012
POSITION (MEUR)
restated restated
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Non-current assets
-------------------------------------------------------------------------------
Property, plant and equipment 9.7 8.7 8.6
-------------------------------------------------------------------------------
Goodwill 19.3 19.3 19.3
-------------------------------------------------------------------------------
Intangible assets 15.5 17.8 15.6
-------------------------------------------------------------------------------
Other financial assets 0.1 0.1 0.1
-------------------------------------------------------------------------------
Deferred tax assets 1.5 0.9 0.1
-------------------------------------------------------------------------------
Non-current assets total 46.1 46.8 43.7
-------------------------------------------------------------------------------
Current assets
-------------------------------------------------------------------------------
Inventories 0.8 0.4 1.8
-------------------------------------------------------------------------------
Trade and other receivables 54.3 63.0 57.6
-------------------------------------------------------------------------------
Financial assets at fair value 20.7 9.7
through profit or loss
-------------------------------------------------------------------------------
Cash and short term deposits 22.4 4.6 9.2
-------------------------------------------------------------------------------
Current assets total 98.2 77.6 68.6
-------------------------------------------------------------------------------
Assets classified as held for sale 7.7
-------------------------------------------------------------------------------
TOTAL ASSETS 144.4 132.2 112.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity attributable to equity holders
of the parent
-------------------------------------------------------------------------------
Share capital 12.9 12.9 12.9
-------------------------------------------------------------------------------
Invested non-restricted equity fund 24.5 38.7 38.7
-------------------------------------------------------------------------------
Translation difference 0.6 0.6 0.4
-------------------------------------------------------------------------------
Retained earnings 43.7 13.7 13.7
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
Total equity 81.7 66.0 65.8
-------------------------------------------------------------------------------
Non-current liabilities
-------------------------------------------------------------------------------
Deferred tax liabilities 0.5 0.7 1.0
-------------------------------------------------------------------------------
Pension obligations 2.1 2.0 1.0
-------------------------------------------------------------------------------
Provisions 0.3 0.5 0.5
-------------------------------------------------------------------------------
Interest-bearing liabilities 3.3 5.4 4.0
-------------------------------------------------------------------------------
Non-current liabilities total 6.1 8.5 6.6
-------------------------------------------------------------------------------
Current liabilities
-------------------------------------------------------------------------------
Trade and other payables 52.2 38.3 33.6
-------------------------------------------------------------------------------
Financial liabilities at fair value 0.0 0.3
through profit or loss
-------------------------------------------------------------------------------
Provisions 2.3 2.2 1.0
-------------------------------------------------------------------------------
Interest-bearing loans and 2.0 12.7 5.0
borrowings
-------------------------------------------------------------------------------
Current liabilities total 56.5 53.2 40.0
-------------------------------------------------------------------------------
Liabilities classified as held for 4.5
sale
-------------------------------------------------------------------------------
Total liabilities 62.6 66.2 46.6
-------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 144.4 132.2 112.3
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-12/2013 1-12/2012
12 months 12 months
restated
-----------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
-----------------------------------------------------------------------
Profit for the year from continuing operations 6.7 1.1
-----------------------------------------------------------------------
Profit for the year from discontinued operations 24.3 1.2
-----------------------------------------------------------------------
Adjustment of accrual basis items -13.3 8.7
-----------------------------------------------------------------------
Change in net working capital 18.7 -3.0
-----------------------------------------------------------------------
Interest paid on operating activities -1.3 -0.9
-----------------------------------------------------------------------
Interest received from operating activities 0.3 0.1
-----------------------------------------------------------------------
Other financial income and expenses, net received 0.0 0.0
-----------------------------------------------------------------------
Income taxes paid -0.7 -0.3
-----------------------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES 34.7 6.8
-----------------------------------------------------------------------
-----------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
-----------------------------------------------------------------------
Acquisition of business unit, net of cash acquired 30.0
-----------------------------------------------------------------------
Purchase of property, plant and equipment -4.0 -2.8
-----------------------------------------------------------------------
Purchase of intangible assets -2.0 -5.4
-----------------------------------------------------------------------
Sale of property, plant and equipment 0.2 0.4
-----------------------------------------------------------------------
Sale of intangible assets 0.0 0.0
-----------------------------------------------------------------------
Proceeds from sale of investments 0.0
-----------------------------------------------------------------------
NET CASH FROM INVESTING ACTIVITIES 24.4 -7.8
-----------------------------------------------------------------------
-----------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
-----------------------------------------------------------------------
Share-option plans exercised 0.1
-----------------------------------------------------------------------
Proceeds from borrowing 16.6 16.6
-----------------------------------------------------------------------
Repayment of borrowing -28.4 -7.5
-----------------------------------------------------------------------
Payment of finance liabilities -3.1 -2.9
-----------------------------------------------------------------------
Dividend paid and repayment of capital -15.6
-----------------------------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES -30.3 6.1
-----------------------------------------------------------------------
-----------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 28.7 5.1
-----------------------------------------------------------------------
Cash and cash equivalents at beginning of period 14.3 9.2
-----------------------------------------------------------------------
Cash and cash equivalents at end of period 43.0 14.3
-----------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (MEUR)
-------------------------------------------------------------------
A = Share capital
-------------------------------------------------------------------
B = Invested non-restricted equity fund
-------------------------------------------------------------------
C = Translation difference
-------------------------------------------------------------------
D = Retained earnings
-------------------------------------------------------------------
F = Non-controlling interests
-------------------------------------------------------------------
G = Total equity
-------------------------------------------------------------------
Restated A B C D E F
------------------------------------------------------------------------------
Shareholders equity on January 1, 2012 12.9 38.7 0.4 13.4 1.5 67.0
------------------------------------------------------------------------------
Change in accounting policy (IFRS 10 and IFRS -1.5 -1.5
11)
------------------------------------------------------------------------------
Change in accounting policy (IAS 19) 0.3 0.3
------------------------------------------------------------------------------
Shareholders equity on January 1, 2012 restated 12.9 38.7 0.4 13.7 0.0 65.8
------------------------------------------------------------------------------
Comprehensive income for the period
------------------------------------------------------------------------------
Profit for the period 2.3 2.3
------------------------------------------------------------------------------
Re-measurement gains (losses) on defined
------------------------------------------------------------------------------
benefits plans (IAS 19) -0.8 -0.8
------------------------------------------------------------------------------
Exchange differences on translating foreign 0.2 0.2
operations
------------------------------------------------------------------------------
Total comprehensive income for the period 0.0 0.0 0.2 1.5 0.0 1.6
------------------------------------------------------------------------------
Transactions between the shareholders
------------------------------------------------------------------------------
Share-related compensation 0.3 0.3
------------------------------------------------------------------------------
Other changes -1.8 -1.8
------------------------------------------------------------------------------
Shareholders equity on Dec. 31, 2012 12.9 38.7 0.6 13.7 0.0 66.0
------------------------------------------------------------------------------
A B C D E F
---------------------------------------------------------------------------
Shareholders equity on Jan. 1, 2013 12.9 38.7 0.6 13.7 66.0
---------------------------------------------------------------------------
Comprehensive income for the period
---------------------------------------------------------------------------
Profit for the period 30.9 30.9
---------------------------------------------------------------------------
Re-measurements gains (losses) on defined
---------------------------------------------------------------------------
benefits plans (IAS 19) 0.0 0.0
---------------------------------------------------------------------------
Exchange differences on translating foreign -0.0 -0.0
operations
---------------------------------------------------------------------------
Total comprehensive income for the period -0.0 30.9 30.9
---------------------------------------------------------------------------
Transactions between the shareholders
---------------------------------------------------------------------------
Dividend distribution -1.3 -1.3
---------------------------------------------------------------------------
Share option plans exercised 0.1 0.1
---------------------------------------------------------------------------
Share option plan exercised 0.2 0.2
---------------------------------------------------------------------------
Share-related compensation -14.3 -14.3
---------------------------------------------------------------------------
Total transactions between the shareholders -14.2 -1.1 -15.3
---------------------------------------------------------------------------
Other changes 0.1 0.1
---------------------------------------------------------------------------
Shareholders equity on Dec. 31. 2013 12.9 24.5 0.6 43.7 81.7
---------------------------------------------------------------------------
NOTES TO THE Financial statements
Accounting principles for the interim financial reporting:
IFRS-amendments
IFRS 10 and IFRS 11
From the beginning of 2013 EB has applied the new IFRS10 and IFRS11 standards.
As a result the proportion of net sales and operating result of e.solutions
GmbH, a jointly owned company of EB and AUDI, to be consolidated into Elektrobit
group's consolidated financial statements will decrease compared to previous
consolidation method. The change will have no impact on consolidated net profit.
For comparability, all figures presented for comparison are restated assuming
that the proportionate consolidation method according to the above mentioned
standards would have been applied already in 2012.
IAS 19 Employee benefits
From the beginning of 2013 EB has applied the revised IAS 19 Employee benefits
-standard. The impact on the equity in the opening balance 2013 was EUR -0.6
million. Pension obligations increased by EUR 0.6 million.
The revised standards have impact on the condensed financial statements.
Explanatory comments about the seasonality or cyclicality of reporting period
operations:
The Company operates in business areas which are subject to seasonal
fluctuations.
Discontinued operations:
EB's figures are divided between Continuing and Discontinued Operations as
provided by the IFRS5 standard. In this interim report, Test Tools product
business, sold on January 31, 2013, is classified as Discontinued Operations.
Payment of dividend:
The Annual General Meeting held on April 11, 2013 decided in accordance with the
proposal of the Board of Directors to pay EUR 0.01 per share as dividend based
on the balance sheet adopted for the financial period January 1, 2012 - December
31, 2012.
SEGMENT-INFORMATION (MEUR)
OPERATING SEGMENTS 1-12/2013 1-12/2012
12 months 12 months
restated
------------------------------------------------------
Automotive
------------------------------------------------------
Net sales to external customers 138.2 110.5
------------------------------------------------------
Net sales to other segments 0.1 0.1
------------------------------------------------------
Net sales total 138.3 110.6
------------------------------------------------------
------------------------------------------------------
Operating profit (loss) 8.5 3.3
------------------------------------------------------
------------------------------------------------------
Wireless
------------------------------------------------------
Net sales to external customers 61.1 63.3
------------------------------------------------------
Net sales to other segments 0.1 0.3
------------------------------------------------------
Net sales total 61.2 63.5
------------------------------------------------------
------------------------------------------------------
Operating profit (loss) -0.5 -2.2
------------------------------------------------------
------------------------------------------------------
OTHER ITEMS
------------------------------------------------------
------------------------------------------------------
Other items
------------------------------------------------------
Net sales to external customers 0.1
------------------------------------------------------
Operating profit (loss) 0.1 0.0
------------------------------------------------------
------------------------------------------------------
Eliminations
------------------------------------------------------
Net sales to other segments -0.2 -0.3
------------------------------------------------------
Operating profit (loss) 0.0 0.0
------------------------------------------------------
------------------------------------------------------
Group total
------------------------------------------------------
Net sales to external customers 199.3 173.9
------------------------------------------------------
Operating profit (loss) 8.1 1.1
------------------------------------------------------
Net sales of geographical areas (MEUR) 1-12/2013 1-12/2012
12 months 12 months
restated
-----------------------------------------------------------
Net sales
-----------------------------------------------------------
Europe 164.8 136.7
-----------------------------------------------------------
Americas 26.6 28.6
-----------------------------------------------------------
Asia 7.9 8.5
-----------------------------------------------------------
Net sales total 199.3 173.9
-----------------------------------------------------------
Related party transactions 1-12/2013 1-12/2012
12 months 12 months
-------------------------------------------------------------------------------
Employee benefits for key management and stock options 1.2 1.3
expenses total
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF 10-12/2013 7-9/2013 4-6/2013 1-3/2013 10-12/2012
COMPREHENSIVE INCOME BY
QUARTER (MEUR) 3 months 3 months 3 months 3 months 3 months
Continuing operations
Restated
-------------------------------------------------------------------------------
NET SALES 59.5 45.7 47.9 46.2 48.2
-------------------------------------------------------------------------------
Other operating income 0.7 0.9 1.0 0.9 0.7
-------------------------------------------------------------------------------
Change in work in progress -0.1 0.1 -0.1 0.1 -0.1
and finished goods
-------------------------------------------------------------------------------
Work performed by the 0.0 0.4
undertaking for its own
purpose and capitalized
-------------------------------------------------------------------------------
Raw materials -6.3 -2.0 -1.9 -2.3 -2.1
-------------------------------------------------------------------------------
Personnel expenses -28.8 -26.6 -28.9 -28.9 -27.1
-------------------------------------------------------------------------------
Depreciation -2.4 -2.3 -2.2 -2.2 -2.0
-------------------------------------------------------------------------------
Other operating expenses -17.0 -14.7 -15.2 -13.2 -18.5
-------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 5.7 1.0 0.7 0.7 -0.5
-------------------------------------------------------------------------------
Financial income and expenses -0.2 -0.1 -0.5 -0.1 -0.4
-------------------------------------------------------------------------------
PROFIT BEFORE TAX 5.5 0.9 0.2 0.6 -0.9
-------------------------------------------------------------------------------
Income tax -0.4 -0.1 0.0 -0.0 0.8
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD FROM 5.0 0.8 0.2 0.6 -0.1
CONTINUING OPERATIONS
-------------------------------------------------------------------------------
Discontinued operations
-------------------------------------------------------------------------------
Profit for the period from 0.7 0.0 23.6 0.9
discontinued operations
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 5.0 1.5 0.2 24.2 0.8
-------------------------------------------------------------------------------
Other comprehensive income -0.1 -0.1 0.2 -0.0 -0.6
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME 4.9 1.4 0.4 24.2 0.2
FOR THE PERIOD
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Profit for the period
attributable to:
-------------------------------------------------------------------------------
Equity holders of the 5.0 1.5 0.2 24.2 0.8
parent
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
Total comprehensive income
for the period attributable
to:
-------------------------------------------------------------------------------
Equity holders of the 4.9 1.4 0.4 24.2 0.2
parent
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
CONSOLIDATED Dec. Sept. Jun. Mar. Dec.
STATEMENT OF 31, 2013 20, 2013 30, 2013 31, 2013 31, 2012
FINANCIAL
POSITION (MEUR) Restated
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Non-current
assets
-------------------------------------------------------------------------------
Property, 9.7 9.3 9.3 8.6 8.7
plant and
equipment
-------------------------------------------------------------------------------
Goodwill 19.3 19.3 19.3 19.3 19.3
-------------------------------------------------------------------------------
Intangible 15.5 16.2 16.5 17.4 17.8
assets
-------------------------------------------------------------------------------
Other 0.1 0.1 0.1 0.1 0.1
financial assets
-------------------------------------------------------------------------------
Deferred tax 1.5 1.2 1.1 1.0 0.9
assets
-------------------------------------------------------------------------------
Non-current 46.1 46.1 46.4 46.5 46.8
assets total
-------------------------------------------------------------------------------
Current assets
-------------------------------------------------------------------------------
Inventories 0.8 0.8 0.5 0.5 0.4
-------------------------------------------------------------------------------
Trade and 54.3 60.2 58.0 59.9 63.0
other
receivables
-------------------------------------------------------------------------------
Financial
assets at fair
value through 20.7 35.0 34.8 34.7 9.7
profit or
loss
-------------------------------------------------------------------------------
Cash and short 22.4 9.0 7.3 8.8 4.6
term deposits
-------------------------------------------------------------------------------
Current assets 98.2 105.0 100.5 104.0 77.6
total
-------------------------------------------------------------------------------
Assets 7.7
classified as
held for sale
-------------------------------------------------------------------------------
TOTAL ASSETS 144.4 151.1 146.9 150.5 132.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EQUITY AND
LIABILITIES
-------------------------------------------------------------------------------
Equity
attributable to
equity holders
of the parent
-------------------------------------------------------------------------------
Share capital 12.9 12.9 12.9 12.9 12.9
-------------------------------------------------------------------------------
Invested non- 24.5 38.7 38.7 38.7 38.7
restricted
equity fund
-------------------------------------------------------------------------------
Translation 0.6 0.7 0.8 0.6 0.6
difference
-------------------------------------------------------------------------------
Retained 43.7 38.6 37.0 38.0 13.7
earnings
-------------------------------------------------------------------------------
Non-
controlling
interests
-------------------------------------------------------------------------------
Total equity 81.7 91.0 89.5 90.2 66.0
-------------------------------------------------------------------------------
Non-current
liabilities
-------------------------------------------------------------------------------
Deferred tax 0.5 0.5 0.5 0.5 0.7
liabilities
-------------------------------------------------------------------------------
Pension 2.1 2.1 2.0 2.0 2.0
obligations
-------------------------------------------------------------------------------
Provisions 0.3 0.3 0.4 0.4 0.5
-------------------------------------------------------------------------------
Interest- 3.3 7.2 5.0 9.2 5.4
bearing
liabilities
-------------------------------------------------------------------------------
Non-current 6.1 10.1 7.8 12.1 8.5
liabilities
total
-------------------------------------------------------------------------------
Current
liabilities
-------------------------------------------------------------------------------
Trade and 52.2 38.5 36.0 35.4 38.3
other payables
-------------------------------------------------------------------------------
Financial 0.2 0.0
liabilities at
fair value
through
profit or loss
-------------------------------------------------------------------------------
Provisions 2.3 2.0 2.1 2.9 2.2
-------------------------------------------------------------------------------
Interest- 2.0 9.6 11.4 9.6 12.7
bearing loans
and borrowings
-------------------------------------------------------------------------------
Current 56.5 50.1 49.6 48.1 53.2
liabilities
total
-------------------------------------------------------------------------------
Liabilities 4.5
classified as
held for sale
-------------------------------------------------------------------------------
Total 62.6 60.2 57.4 60.2 66.2
liabilities
-------------------------------------------------------------------------------
TOTAL EQUITY AND 144.4 151.1 146.9 150.5 132.2
LIABILITIES
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF 10-12/2013 7-9/2013 4-6/2013 1-3/2013 10-12/2012
CASH FLOWS BY QUARTER
3 months 3 months 3 months 3 months 3 months
restated
-------------------------------------------------------------------------------
Net cash from operating 26.0 3.3 4.1 1.3 7.0
activities
-------------------------------------------------------------------------------
Net cash from investing -0.3 -1.6 -1.5 27.8 -2.2
activities
-------------------------------------------------------------------------------
Net cash from financing -26.5 0.1 -4.1 0.2 -6.1
activities
-------------------------------------------------------------------------------
Net change in cash and cash -0.9 1.8 -1.5 29.3 -1.4
equivalents
-------------------------------------------------------------------------------
FINANCIAL PERFORMANCE RELATED RATIOS 1-12/2013 1-12/2012
12 months 12 months
restated
-------------------------------------------------------------------------------
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
-------------------------------------------------------------------------------
Net sales 199.3 173.9
-------------------------------------------------------------------------------
Operating profit (loss) 8.1 1.1
-------------------------------------------------------------------------------
Operating profit (loss), % of net sales 4.1 0.6
-------------------------------------------------------------------------------
Profit before taxes 7.2 0.6
-------------------------------------------------------------------------------
Profit before taxes, % of net sales 3.6 0.3
-------------------------------------------------------------------------------
Profit for the period 6.7 1.1
-------------------------------------------------------------------------------
PROFITABILITY AND OTHER KEY FIGURES
-------------------------------------------------------------------------------
Interest-bearing net liabilities, (MEUR) -37.7 4.0
-------------------------------------------------------------------------------
Net gearing, -% -46.1 6.1
-------------------------------------------------------------------------------
Equity ratio, % 65.1 54.5
-------------------------------------------------------------------------------
Gross investments, (MEUR) 7.9 11.4
-------------------------------------------------------------------------------
Average personnel during the period, parent and 1627 1528
subsidiaries
-------------------------------------------------------------------------------
Personnel at the period end, parent and subsidiaries 1648 1583
-------------------------------------------------------------------------------
Average personnel during the period, jointly owned company 300 132
-------------------------------------------------------------------------------
Personnel at the period end, jointly owned company 321 233
-------------------------------------------------------------------------------
AMOUNT OF SHARE ISSUE ADJUSTMENT (1,000 pcs) Dec. 31, 2013 Dec. 31, 2012
-------------------------------------------------------------------------------
At the end of period 130 101 129 413
-------------------------------------------------------------------------------
Average for the period 129 528 129 413
-------------------------------------------------------------------------------
Average for the period diluted with stock options 130 092 130 238
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1-12/2013 1-12/2012
STOCK-RELATED FINANCIAL RATIOS (EUR)
12 months 12 months
restated
-------------------------------------------------------------------------------
Earnings per share from continuing operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.051 0.008
-------------------------------------------------------------------------------
Diluted earnings per share 0.051 0.008
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from discontinued operations,
EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.188 0.009
-------------------------------------------------------------------------------
Diluted earnings per share 0.187 0.009
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing and
discontinued operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.239 0.018
-------------------------------------------------------------------------------
Diluted earnings per share 0.238 0.017
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity *) per share 0.63 0.51
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
*) Equity attributable to equity holders of the
parent
-------------------------------------------------------------------------------
MARKET VALUES OF SHARES (EUR) 1-12/2013 1-12/2012
12 months 12 months
----------------------------------------------------------
Highest 2.90 0.79
----------------------------------------------------------
Lowest 0.64 0.38
----------------------------------------------------------
Average 1.55 0.64
----------------------------------------------------------
At the end of period 2.66 0.65
----------------------------------------------------------
----------------------------------------------------------
Market value of the stock, (MEUR) 346.1 84.1
----------------------------------------------------------
Trading value of shares, (MEUR) 72.0 6.9
----------------------------------------------------------
Number of shares traded, (1,000 pcs) 46 483 10 750
----------------------------------------------------------
Related to average number of shares % 35.9 8.3
----------------------------------------------------------
SECURITIES AND CONTINGENT LIABILITIES (MEUR) Dec. 31, 2013 Dec. 31, 2012
--------------------------------------------------------------------------
AGAINST OWN LIABILITIES
--------------------------------------------------------------------------
Floating charges 18.0 18.1
--------------------------------------------------------------------------
Guarantees 14.6 17.7
--------------------------------------------------------------------------
Rental liabilities
--------------------------------------------------------------------------
Falling due in the next year 7.6 7.0
--------------------------------------------------------------------------
Falling due after one year 17.6 16.2
--------------------------------------------------------------------------
Other contractual liabilities
--------------------------------------------------------------------------
Falling due in the next year 1.0 1.3
--------------------------------------------------------------------------
Falling due after one year 0.6 0.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Mortgages are pledged for liabilities totaled 2.5 14.5
--------------------------------------------------------------------------
--------------------------------------------------------------------------
NOMINAL VALUE OF CURRENCY DERIVATIVES (MEUR) Dec. 31, 2013 Dec. 31, 2012
--------------------------------------------------------------------------
Foreign exchange forward contracts
--------------------------------------------------------------------------
Market value 0.1 0.0
--------------------------------------------------------------------------
Nominal value 6.0 5.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Purchased currency options
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Market value 0.0 0.0
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Nominal value 2.5 2.0
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Sold currency options
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Market value -0.0 -0.0
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Nominal value 5.0 2.0
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[HUG#1763304]
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