2013-04-26 07:00:00 CEST
2013-04-26 07:01:06 CEST
REGULATED INFORMATION
Elektrobit Oyj - Interim report (Q1 and Q3)
ELEKTROBIT CORPORATION (EB) INTERIM REPORT JANUARY - MARCH 2013
STOCK EXCHANGE RELEASE
Free for publication on April 26, 2013, at 8.00 a.m. (CEST+1)
ELEKTROBIT CORPORATION (EB) INTERIM REPORT JANUARY - MARCH 2013
COMPARABLE NET SALES GREW AND OPERATING RESULT REMAINED AT THE SAME LEVEL AS IN
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 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.
* 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 JANUARY - MARCH 2013
* Net sales of the January - March 2013 from continuing operations grew to EUR
46.2 million (restated net sales of EUR 42.7 million, 1Q 2012), representing
an increase of 8.3 % year-on-year.
* Operating profit from continuing operations was EUR 0.7 million including
non-recurring costs of approximately EUR 0.8 million resulting from the cost
saving measures in the Wireless Business Segment (restated operating profit
of EUR 0.5 million including non-recurring costs of EUR 0.3 million related
to collecting the receivables from TerreStar companies, 1Q 2012).
* Net cash flow was EUR 29.3 million including non-recurring net cash flow of
about EUR 28 million resulting from the sale of the Test Tools product
business (EUR -3.8 million, 1Q 2012).
* Earnings per share from continuing operations were EUR 0.005 and earnings
per share from continuing and discontinuing operations were EUR 0.186.
+--------------------------------------------------+-----+--------+--------+
|Group, continuing operations (MEUR) |1Q 13| 1Q 12| 2012|
| | |restated|restated|
+--------------------------------------------------+-----+--------+--------+
|NET SALES | 46.2| 42.7| 173.9|
+--------------------------------------------------+-----+--------+--------+
|OPERATING PROFIT / LOSS | 0.7| 0.5| 1.1|
+--------------------------------------------------+-----+--------+--------+
|Operating profit /loss without non-recurring items| 1.5| 0.8| 5.1|
+--------------------------------------------------+-----+--------+--------+
|EBITDA | 2.9| 2.1| 8.1|
+--------------------------------------------------+-----+--------+--------+
|CASH AND OTHER LIQUID ASSETS | 43.6| 5.4| 14.3|
+--------------------------------------------------+-----+--------+--------+
|EQUITY RATIO (%) | 63.1| 61.2| 55.0|
+--------------------------------------------------+-----+--------+--------+
|EARNINGS PER SHARE (EUR) |0.005| 0.001| 0.008|
+--------------------------------------------------+-----+--------+--------+
+----------------------------------+-----+--------+--------+
|Automotive Business Segment (MEUR)|1Q 13| 1Q 12| 2012|| | |restated|restated|
+----------------------------------+-----+--------+--------+
|NET SALES | 30.5| 26.4| 110.6|
+----------------------------------+-----+--------+--------+
|OPERATING PROFIT / LOSS | 1.1| 0.7| 3.3|
+----------------------------------+-----+--------+--------+
|EBITDA | 2.5| 1.6| 7.3|
+----------------------------------+-----+--------+--------+
+-------------------------------------------------------+-----+-----+----+
|Wireless Business Segment, continuing operations (MEUR)|1Q 13|1Q 12|2012|
| | | | |
+-------------------------------------------------------+-----+-----+----+
|NET SALES | 15.8| 16.4|63.5|
+-------------------------------------------------------+-----+-----+----+
|OPERATING PROFIT / LOSS | -0.4| -0.1|-2.2|
+-------------------------------------------------------+-----+-----+----+
|Operating profit /loss without non-recurring items | 0.4| 0.2| 1.8|
+-------------------------------------------------------+-----+-----+----+
|EBITDA | 0.4| 0.5| 0.7|
+-------------------------------------------------------+-----+-----+----+
* On January 28, 2013 EB and Anite plc signed an agreement, under the terms of
which, EB agreed to sell its Test Tools product business to Anite. 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. The transferring net assets of the Test
Tools product business in January 31, 2013 was expected to be approximately
EUR 5 million. Closing of the Transaction was subject to completion of
customary closing events.
* On January 31, 2013 EB announced that the sale of the Test Tools productbusiness to Anite plc was completed. 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. 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 transaction price adjustment is not
expected to substantially change the above mentioned impacts on the net
profit and net cash flow.
* On February 19, 2013 EB started measures to improve its cost structure in
the Wireless Business Segment. The measures were completed on April 4, 2013
and EB estimates to reach the targeted approximately EUR 2 million annual
cost savings in the Wireless Business Segment. The measures resulted non-
recurring costs of approximately EUR 0.8 million in the first quarter of
2013.
* On February 19, 2013 EB announced that from the beginning of 2013, it will
change the consolidation method of e.solutions GmbH, the jointly owned
company of EB and AUDI, which decreases the proportion of net sales and
operating result of e.solutions GmbH to be consolidated into Elektrobit
group's consolidated financial statements, but will have no impact on the
consolidated net profit. In this financial report the change has been
applied also to the previous year figures presented for comparison, and the
comparison figures are presented in "restated" form.
EB'S CEO JUKKA HARJU:"During the first quarter of 2013 EB's business developed according to our
plans. The net sales grew by 8.3 per cent year-on-year due to the continued
strong growth of the Automotive Business Segment. Net sales of the Wireless
Business Segment decreased slightly year-on-year. EB's operating result was
slightly positive, and it was decreased by the non-recurring costs of
approximately EUR 0.8 million resulting from the cost saving measures of the
Wireless Business Segment.
At the end of January 2013 EB sold its Test Tools product business to Anite for
EUR 31.0 million. This transaction brought a significant non-recurring effect on
EB's profits and increase of cash and therefore strengthened EB's financial
position. After this divestiture, our Wireless Business Segment is even more
focused on the markets which offer larger long term growth potential for EB.
The demand for EB's products and services is expected to remain good during
2013 and we have good premises to reach same operating profit level as last year
without non-recurring items."
OUTLOOK FOR 2013
From the beginning of 2013 EB has started to apply the new IFRS10 and IFRS11
standards concerning consolidation, and consolidates e.solutions GmbH, the
jointly owned company with Audi, applying the proportionate consolidation
method. EB holds a 51% stake in e.solutions GmbH, Audi holding the remaining
49%. Previously e.solutions GmbH has been included in Elektrobit group's
consolidated financial statements as subsidiary and it has been consolidated in
full. 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 consolidated financial statements will decrease. The change
in the method of consolidation as presented above has been taken into account in
the 2013 outlook for net sales and operating result presented below and the
2012 net sales and operating result, presented for comparison, are restated
figures, assuming that consolidation of e.solutions GmbH to Elektrobit group
would have been done applying proportionate consolidation method already in
2012. More information about this has been presented in the stock exchange
release announced on February 19, 2013 and in this interim report in the section"Change in the consolidation of the jointly owned company of EB and AUDI as of
January 1, 2013".
Carmakers continue to invest in software for new car models and the market for
automotive software products and services is estimated to continue growing.
However the growth rate of the global automotive industry is estimated to be
less than in the previous year due to the financial uncertainties in Europe.
Despite these uncertainties, many carmakers have further continued good
financial performance and slowing down of the markets affects different car
makers in different ways. In the Wireless Business Segment the growth in demand
will be driven especially by the increasing use of the LTE technology that
increases the performance of mobile networks, and the authorities' needs for new
communication solutions that use commercial technologies of smart phones and
mobile networks, as well as the growing need of companies to provide wireless
connectivity of their devices, targeted to consumers and for professional use,
to broader solutions. General cost saving measures of the public sector reflects
the demand in the public safety markets in Europe.
EB expects for the year 2013 that net sales will grow and operating result will
be at the same level as it was in 2012 without non-recurring items (restated net
sales of EUR 173.9 million, and restated operating profit without non-recurring
items of EUR 5.1 million, in 2012). Operating result is expected to be clearly
better in the second half than in the first half of 2013 due to higher product
license sales during the latter half of the year and other seasonality factors
in the Automotive Business Segment, and due to the cost saving measures in the
first half in the Wireless Business Segment.
More specific market outlook is presented under the "Business Segments'
development during January - March 2013 and Market Outlook" section.
The non-recurring net profit of about EUR 23 million, resulted from the sale of
the Test Tools product business, has no impact on the operating result of 2013
and therefore has no impact on the operating result guidance. All profits and
costs related to the mentioned business are presented in the group's income
statement, below operating profit under "result for the period from
discontinuing operations".
The profit outlook for the year 2013 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 under "Risks and Uncertainties"
section.
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the Interim Report January-March 2013 for
media, analysts and institutional investors in Finland, Oulu, Tutkijantie 8, on
Friday, April 26, 2013, at 11.00 a.m. (CEST+1). The conference will also be held
as a conference call and the presentation will be shown simultaneously in the
Internet through WebEx. The conference will be held in English. For more
information please go to www.elektrobit.com/investors.
EB, Elektrobit Corporation
EB creates advanced technology and turns it into enriching end-user experiences.
EB is specialized in demanding embedded software and hardware solutions for
wireless and automotive industries. The net sales from continuing operations in
2012 totaled EUR 185.4 million. Restated net sales from continuing operations in
2012 totaled EUR 173.9 million. Elektrobit Corporation is listed on NASDAQ OMX
Helsinki. www.elektrobit.com
ELEKTROBIT CORPORATION (EB) INTERIM REPORT JANUARY-MARCH 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 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.
* 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-MARCH 2013, CONTINUING OPERATIONS
(Corresponding figures are for January-March 2012 unless otherwise indicated)
EB's net sales from continuing operations during January-March 2013 grew by 8.3
per cent year-on-year to EUR 46.2 million (restated net sales of EUR 42.7
million). Operating profit from continuing operations was EUR 0.7 million
including the non-recurring cost of approximately EUR 0.8 million resulting from
the cost saving measures in the Wireless Business Segment (restated operating
profit of EUR 0.5 million, including EUR 0.3 million non-recurring costs related
to collecting the receivables from TerreStar Companies). Operating profit from
continuing operations without these non-recurring costs was EUR 1.5 million
(restated operating profit of EUR 0.8 million).
Net sales of the Automotive Business Segment grew in January-March 2013 to EUR
30.5 million (restated net sales of EUR 26.4 million), representing 15.6 per
cent growth year-on-year. The operating profit was EUR 1.1 million (restated
operating profit of EUR 0.7 million).
The Wireless Business Segment's net sales from continuing operations in January-
March 2013 decreased 4.0 per cent year-on-year, to EUR 15.8 million (EUR 16.4
million). The operating loss from continuing operations of the Wireless Business
Segment in January-March 2013 was EUR -0.4 million including the non-recurring
cost of approximately EUR 0.8 million resulting from the cost saving measures
(operating loss of EUR -0.1 million including EUR 0.3 million non-recurring
costs related to collecting the receivables from TerreStar Companies). Wireless
Business Segment's operating profit from continuing operations without the above
mentioned non-recurring costs was EUR 0.4 million (operating profit of EUR 0.2
million).
+----------------------------------------------------------+--------+--------+
|CONSOLIDATED INCOME STATEMENT (MEUR) |1-3 2013|1-3 2012|
| | |restated|
+----------------------------------------------------------+--------+--------+
| |3 months|3 months|
+----------------------------------------------------------+--------+--------+
|CONTINUING OPERATIONS | | |
+----------------------------------------------------------+--------+--------+
| Net sales | 46.2| 42.7|
+----------------------------------------------------------+--------+--------+
| Operating profit / loss | 0.7| 0.5|
+----------------------------------------------------------+--------+--------+
| Financial income and expenses | -0.1| -0.4|
+----------------------------------------------------------+--------+--------+
| Result before tax | 0.6| 0.2|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS | 0.6| 0.1|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD FROM DISCONTINUING OPERATIONS | 23.6| 0.1|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD | 24.2| 0.2|
+----------------------------------------------------------+--------+--------+
|TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 24.2| 0.2|
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Result for the period attributable to: | | |
+----------------------------------------------------------+--------+--------+
| Equity holders of the parent | 24.2| 0.2|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | | |
+----------------------------------------------------------+--------+--------+
|Total comprehensive income for the period attributable to:| | |
+----------------------------------------------------------+--------+--------+
| Equity holder of the parent | 24.2| 0.2|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | | |
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Earnings per share from continuing operations, EUR | 0.005| 0.001|
+----------------------------------------------------------+--------+--------+
* Cash flow from operating activities was EUR 1.3 million (EUR -2.0 million)
* Net cash flow was EUR 29.3 million including non-recurring net cash flow of
about EUR 28 million resulting from the sale of the Test Tools product
business (EUR -3.8 million).
* Equity ratio was 63.1% (61.2%).
* Net gearing was -27.5% (8.1%).
QUARTERLY FIGURES, CONTINUING OPERATIONS
Elektrobit Group's net sales and operating result, Continuing Operations, MEUR:
+------------------------------------+-----+--------+--------+--------+--------+
| |1Q 13| 4Q 12| 3Q 12| 2Q 12| 1Q 12|
| | |restated|restated|restated|restated|
+------------------------------------+-----+--------+--------+--------+--------+
|Net sales | 46.2| 48.2| 41.5| 41.5| 42.7|
+------------------------------------+-----+--------+--------+--------+--------+
|Operating profit (loss) | 0.7| -0.5| 2.0| -0.9| 0.5|
+------------------------------------+-----+--------+--------+--------+--------+
|Operating profit (loss) without non-| | 3.6| 0.7| 0.0| 0.8|
|recurring costs | 1.5| | | | |
+------------------------------------+-----+--------+--------+--------+--------+
|Result before taxes | 0.6| -0.9| 1.8| -0.5| 0.2|
+------------------------------------+-----+--------+--------+--------+--------+
|Result for the period | 0.6| -0.1| 1.7| -0.6| 0.1|
+------------------------------------+-----+--------+--------+--------+--------+
Wireless Business Segment, net sales and operating result without non-recurring
items, Continuing Operations, MEUR
+------------------------------------------------+-----+-----+-----+-----+-----+
| |1Q 13|4Q 12|3Q 12|2Q 12|1Q 12|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Net sales | 15.8| 16.4| 14.1| 16.6| 16.4|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) | -0.4| -3.2| 2.0| -0.9| -0.1|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) without non-recurring | | | | | |
|items | 0.4| 0.9| 0.8| 0.0| 0.2|
+------------------------------------------------+-----+-----+-----+-----+-----+
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, mentioned in the tables above are as follows:
* costs related to collecting the receivables from TerreStar Companies and
income resulting from the settlement payment in the reorganization cases of
TerreStar Corporation,
* 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 2013.
These non-recurring items have been reported as part of Wireless Business
Segment's operating result.
The distribution of net sales by Business Segments, Continuing Operations,
MEUR:
+-----------------+-----+--------+--------+--------+--------+
| |1Q 13| 4Q 12| 3Q 12| 2Q 12| 1Q 12|
| | |restated|restated|restated|restated|
+-----------------+-----+--------+--------+--------+--------+
|Automotive | 30.5| 31.9| 27.4| 24.9| 26.4|
+-----------------+-----+--------+--------+--------+--------+
|Wireless | 15.8| 16.4| 14.1| 16.6| 16.4|
+-----------------+-----+--------+--------+--------+--------+
|Corporation total| 46.2| 48.2| 41.5| 41.5| 42.7|
+-----------------+-----+--------+--------+--------+--------+
The distribution of net sales by market areas, Continuing Operations, MEUR and
%:
+--------+------+--------+--------+--------+--------------+
| | 1Q 13| 4Q 12| 3Q 12| 2Q 12|1Q 12 restated|
| | |restated|restated|restated| |
+--------+------+--------+--------+--------+--------------+
|Asia | 1.9| 2.4| 3.1| 1.1| 1.9|
| | 4.2 %| 4.9 %| 7.6 %| 2.8 %| 4.4 %|
+--------+------+--------+--------+--------+--------------+
|Americas| 6.2| 6.4| 7.6| 7.5| 7.1|
| |13.3 %| 13.2 %| 18.3 %| 18.1 %| 16.7 %|
+--------+------+--------+--------+--------+--------------+
|Europe | 38.1| 39.5| 30.7| 32.8| 33.7|
| |82.5 %| 81.9 %| 74.1 %| 79.2 %| 78.9 %|
+--------+------+--------+--------+--------+--------------+
Net sales and operating profit development by Business Segments and other
businesses, Continuing Operations, MEUR:
+-------------------------------+-----+--------+--------+--------+--------+
| |1Q 13| 4Q 12| 3Q 12| 2Q 12| 1Q 12|
| | |restated|restated|restated|restated|
+-------------------------------+-----+--------+--------+--------+--------+
|Automotive | | | | | |
|Net sales to external customers| 30.5| 31.8| 27.4| 24.9| 26.4|
|Net sales to other segments | 0.0| 0.0| 0.0| 0.0| 0.0|
|Operating profit (loss) | 1.1| 2.6| -0.0| -0.0| 0.7|
+-------------------------------+-----+--------+--------+--------+--------+
|Wireless | | | | | |
|Net sales to external customers| 15.8| 16.4| 14.1| 16.6| 16.3|
|Net sales to other segments | 0.0| 0.0| 0.0| 0.0| 0.2|
|Operating profit (loss) | -0.4| -3.2| 2.0| -0.9| -0.1|
+-------------------------------+-----+--------+--------+--------+--------+
|Other businesses | | | | | |
|Net sales to external customers| 0.0| 0.0| 0.0| 0.0| 0.0|
|Operating profit (loss) | 0.0| 0.1| -0.0| -0.0| -0.0|
+-------------------------------+-----+--------+--------+--------+--------+
|Total | | | | | |
|Net sales | 46.2| 48.2| 41.5| 41.5| 42.7|
|Operating profit (loss) | 0.7| -0.5| 2.0| -0.9| 0.5|
+-------------------------------+-----+--------+--------+--------+--------+
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
On January 10, 2013 EB announced to lower its profit guidance for 2012 due to
the weaker than expected fourth quarter. 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 outlook for the net sales the Company expected to develop as
earlier estimated 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).
On January 28, 2013 EB announced to have signed an agreement with Anite plc,
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. Closing of
the Transaction was agreed to take place on January 31, 2013, subject to
completion of customary closing events, such as payment of the cash
consideration. According to the agreement, the cash consideration payable to EB
by Anite 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 net assets of the Test Tools product business in January 31, 2013
was expected to be approximately EUR 5 million.
In addition, on January 28, 2013 EB gave advance information on its fourth
quarter and full year 2012 net sales and operating results. 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.
On January 31, 2013 EB announced that the sale of the Test Tools product
business to Anite plc was completed. 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 and non-recurring net cash flow of about EUR 28 million in the
first quarter of 2013.
On February 19 2013, simultaneously with the announcement of the Financial
Statement Bulletin 2012, 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.
On February 19, 2013, EB announced also that it will start measures to improve
its cost structure in the Wireless Business Segment. 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.
BUSINESS SEGMENTS' DEVELOPMENT DURING JANUARY-MARCH 2013 AND MARKET OUTLOOK
(Corresponding figures are for January-March 2012 unless otherwise indicated)
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 ADTF, an extensive 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 the joint
venture 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%. During 2009 - 2012
e.solutions has been included as subsidiary in Elektrobit Corporation's
consolidated financial statements. From the beginning of 2013 on, e.solutions
GmbH will be consolidated in Elektrobit Corporation's financial statements
according to IFRS standards' proportionate consolidation method in accordance
with EB's 51 % holding of e.solutions GmbH.
EB's automotive business continued to grow in the infotainment, DA (driver
assistance) and ECU (Electronic Control Unit) software markets. During the first
quarter of 2013 the net sales of the Automotive Business Segment amounted to EUR
30.5 million (restated net sales of EUR 26.4 million), representing a growth of
15.6 % year-on-year. The operating profit was EUR 1.1 million (restated
operating profit of EUR 0.7 million).
During the first quarter EB announced the integration of EB street director
navigation software into the QNX CAR(TM) application platform 2.0, a set of pre-
integrated and optimized technologies used to develop advanced infotainment
systems for connected car. EB also announced that the runtime solution of its
development platform for human machine interfaces (HMIs), EB GUIDE Graphic
Target Framework (GTF), has been ported to the Renesas' R-Car H1. The
collaboration will enable car manufacturers to use the high-end Renesas chip in
combination with the EB GUIDE GTF to utilize the advanced graphical capabilities
of the SoC (systems-on-chip).
EB told that it is among the first suppliers to deliver an ASIL-D certified
AUTOSAR operating system and the only one certified for two safety standards.
ASIL D and SIL 3 rank among the highest security levels for functional safety
according to the ISO26262 / IEC 61508 specifications for electric and electronic
components. Functional Safety is getting more and more important for today's
automotive ECUs and these received certificates strengthen EB's position in
these markets.
Automotive Market Outlook
The demand for EB's products and services is estimated to develop positively
year-on-year during 2013 in Automotive Business Segment. Recently the
uncertainty in the market outlook for the global car industry has continued
especially in Europe where the number of cars sold is expected to decrease in
2013 from 2012, while in USA and China and other developing countries the market
is expected to grow. Despite these uncertainties, many carmakers have further
continued good financial performance and slowing down of the markets affects
different car makers in different ways. The slowing down of the markets affects
decreasingly also to the carmakers' R&D investments. However, carmakers will
continue to invest in automotive software for new car models and the market for
automotive software products and services is estimated to continue growing
during 2013, but at a slower pace than in the years before.
In the labor market, particularly in Germany, competition of talented engineers
still is tight and is slightly slowing down the growth of personnel and thereby
impacting the growth of the services business. e.solutions GmbH, the jointly
owned company with AUDI, succeeded to grow its personnel significantly during
the end of 2012 after announcing the decision to expand its business, and the
outlook for the joint venture's growth in 2013 is good.
A Roland Berger study estimates the share of electronics in cars will grow from
23 per cent in 2010 to 33 per cent until 2020. The move to greater electronic
content in cars has been underway for several years and has been responsible for
such major innovations as security systems, anti-lock brakes, engine control
units, driver assistance, and infotainment. These features have become so
enormously popular that they are now widely available, in both low-end and high-
end vehicles, demonstrating that consumers are willing to pay for technology
that enhances their driving experience. Further market growth is expected e.g.
in the areas of Driver Assistance and Connected Car solutions. Connectivity with
the cloud can provide several enhancements to car functions such as navigation.
EB is already working with INRIX and other traffic providers to have real-time
traffic which can provide navigation with daily relevance to the drivers. Audi
Connect is one example of advanced connected services into the car.
The increasingly sophisticated and networked features and growing performance
foster the complexity of automotive electronics. At the same time consumers
expect the same richness of features and user experience they know from the
internet and mobile devices also within the car. Carmakers have been steadily
integrating more electronic components into vehicles. These development trends
are driving the industry towards gradual separation of software and hardware in
electronics solutions in order to manage the architectural software layer
appropriately and to aim for efficiency in innovation and implementation. The
use of standard software solutions is expected to increase in the automotive
industry. This enables faster innovation, improves quality and development
efficiency and reduces complexity related to deployment of software.
The fundamental industry migration and consequent growth of the automotive
software market will continue. Cost pressures of the automotive industry are
expected to accelerate the need for productized and efficient software solutions
EB is offering. The estimated annual automotive software market growth rate
until 2019 is expected to exceed the growth rate of passenger car production
volume that is estimated to be 5.5% CAGR (LMC Automotive's Q4 2012 Forecast).
EB's net sales cumulating from the automotive industry is currently primarily
driven by the development of software and software platforms for new cars and by
sales of software licenses needed in product development. Hence the dependency
of EB's net sales on car production volumes is currently limited. The direct
dependency on production volumes will increase over the forthcoming years as a
result of the EB's transition towards software product business models.
WIRELESS
In the Wireless Business Segment EB offers products and product platforms for
defence and public safety 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, software
and hardware development.
EB signed an agreement with Anite plc on January 28, 2013, under the terms of
which EB agreed to sell its Test Tools product business to Anite. The deal was
completed on January 31, 2013. EB reports its financial results, as provided by
the IFRS5 standard, divided between Continuing and Discontinuing Operations.
Test Tools product business is classified as Discontinuing Operations. The
following figures include only the net sales and operating result of Continuing
Operations.
Net sales of continuing operations of the Wireless Business Segment during the
first quarter of 2013 decreased by 4.0 % year-on-year to EUR 15.8 million (EUR
16.4 million). Operating loss from continuing operations was EUR -0.4 million
including non-recurring costs of approximately EUR 0.8 million resulting from
the cost saving measures (EUR -0.1 million including non-recurring costs of EUR
0.3 million from collecting the receivables from TerreStar Companies). Operating
profit from continuing operations without non-recurring costs was EUR 0.4
million (EUR 0.2 million).
EB continued its R&D investments in continuing operations in products and
product platforms targeted for the defence and public safety markets. During the
first quarter, EB launched its Tough VoIP phone for industrial use. The product
is suitable for demanding environments like manufacturing, construction, power
plants, mining sites, and transportation. EB also broadened its Android-based
product platform (EB Specialized Device Platform) with three new platform
variants: smartphone, tablet and LTE connectivity module.
On February 19, 2013 EB announced to start measures to improve its cost
structure in Wireless Business Segment. 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 safety sector customers are located.
Wireless 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. The implementation of LTE (Long Term Evolution) technology
continues to be the most important technological change driving the demand, and
in 2013 EB's business driven by LTE is expected to stay at the same level as in
2012. Mastering of multi-radio technologies and end-to-end system architectures
covering both terminals and networks has gained importance in the complex
wireless technology industry.
EB currently aims at bringing its products to the global defense market with the
target to gradually increase the product sales in the next few years. The
development of defense budgets varies geographically with budget cuts in the
western markets and increases in Asia and South America. In Tactical
Communications, the growing importance of situational awareness shared by
military forces creates needs for new broadband networks, such as EB's IP
(Internet Protocol) based tactical communications solutions. The defense market
is characterized by long sales cycles driven by purchasing programs of national
governments, and the purchases of the selected products take place over several
years.
For the markets of national security and other authorities, EB offers
specialized customized solutions based on its product platforms. 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. These markets have special
requirements and the volumes are lower than in the mass-markets. The US public
safety market is progressing, although slowly, towards a nationwide LTE
network.
In the mobile infrastructure market the use of LTE technology is expected to
continue strong. For the mobile infrastructure market 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 a need for R&D services for design of product
variants. Need for R&D services for connected devices for various end user needs
emerged during 2012 and this trend is expected to continue in 2013.
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 defence and public safety markets in Wireless Business Segment's continuing
operations.
The total R&D investments for continuing operations during January-March 2013
were EUR 5.3 million (restated EUR 5.4 million, 1Q 2012), equaling 11.4% of the
net sales (restated 12.7 %, 1Q 2012). The share of R&D investments in Automotive
Business Segment was EUR 4.1 million (restated EUR 4.7 million, 1Q 2012) and in
Wireless Business Segment in continuing operations EUR 1.2 million (EUR 0.8
million, 1Q 2012).
EUR 0.0 million of R&D investments of the reporting period were capitalized (EUR
2.0 million, 1Q 2012). The amount of capitalized R&D investments at the end of
December 2012 was EUR 13.1 million (EUR 13.2 million, 1Q 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 0.4 million during the reporting period (EUR 0.2 million,
1Q 2012).
OUTLOOK FOR 2013
From the beginning of 2013 EB has started to apply the new IFRS10 and IFRS11
standards concerning consolidation, and consolidates e.solutions GmbH, the
jointly owned company with Audi, applying the proportionate consolidation
method. EB holds a 51% stake in e.solutions GmbH, Audi holding the remaining
49%. Previously e.solutions GmbH has been included in Elektrobit group's
consolidated financial statements as subsidiary and it has been consolidated in
full. 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 consolidated financial statements will decrease. The change
in the method of consolidation as presented above has been taken into account in
the 2013 outlook for net sales and operating result presented below and the
2012 net sales and operating result, presented for comparison, are restated
figures, assuming that consolidation of e.solutions GmbH to Elektrobit group
would have been done applying proportionate consolidation method already in
2012. More information about this has been presented in the stock exchange
release announced on February 19, 2013 and in this interim report in the section"Change in the consolidation of the jointly owned company of EB and AUDI as of
January 1, 2013".
Carmakers continue to invest in software for new car models and the market for
automotive software products and services is estimated to continue growing.
However the growth rate of the global automotive industry is estimated to be
less than in the previous year due to the financial uncertainties in Europe.
Despite these uncertainties, many carmakers have further continued good
financial performance and slowing down of the markets affects different car
makers in different ways. In the Wireless Business Segment the growth in demand
will be driven especially by the increasing use of the LTE technology that
increases the performance of mobile networks, and the authorities' needs for new
communication solutions that use commercial technologies of smart phones and
mobile networks, as well as the growing need of companies to provide wireless
connectivity of their devices, targeted to consumers and for professional use,
to broader solutions. General cost saving measures of the public sector reflects
the demand in the public safety markets in Europe.
EB expects for the year 2013 that net sales will grow and operating result will
be at the same level as it was in 2012 without non-recurring items (restated net
sales of EUR 173.9 million, and restated operating profit without non-recurring
items of EUR 5.1 million, in 2012). Operating result is expected to be clearly
better in the second half than in the first half of 2013 due to higher product
license sales during the latter half of the year and other seasonality factors
in the Automotive Business Segment, and due to the cost saving measures in the
first half in the Wireless Business Segment.
More specific market outlook is presented under the "Business Segments'
development during January - March 2013 and Market Outlook" section.
The non-recurring net profit of about EUR 23 million, resulted from the sale of
the Test Tools product business, has no impact on the operating result of 2013
and therefore has no impact on the operating result guidance. All profits and
costs related to the mentioned business are presented in the group's income
statement, below operating profit under "result for the period from
discontinuing operations".
The profit outlook for the year 2013 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 under "Risks and Uncertainties"
section.
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. EB believes that
expanding the customer base will reduce dependence on individual companies and
that the company will thereby be mainly affected by the general business climate
in automotive and telecommunication industries. The more specific market outlook
is presented under the "Business Segments' Development during January-March
2013 and Market Outlook" 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), timing and on the other
hand successful utilization of the most important technologies and components,
competitive situation and potential delays in the markets, timely closing of
customer and supplier contracts with reasonable commercial terms, delays in R&D
projects, 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 and development of the cost of materials. The above-
mentioned risks may manifest themselves as lower amounts of product delivered or
higher costs of production, and ultimately, as lower profit. More than earlier
EB's customers in the automotive industry seek paying the software and product
platform development either entirely or mainly through license fees after the
start of the production, which may cause significant additional financing needs
for the R&D phase and again increase the dependency on production volumes of
cars.
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.
While the analysis of the situation is pending, 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.
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.
Some parts of EB's business are more sensitive to customer dependency than
others. Respectively, this may translate as accumulation of risk with respect to
outstanding receivables and ultimately with respect to credit losses. EB has
asserted claims for its receivables in the amount of approximately USD 25.8
million (EUR 19.7 million as per exchange rate of April 25, 2013) 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 has also asserted claims for additional costs in the amount of
approximately USD 2.1 million (EUR 1.6 million as per exchange rate of April
25, 2013) and resulting mainly from the ramp down of the business operations
between the parties. Thus, EB has asserted claims against each of the TerreStar
entities in amounts totaling USD 27.9 million (EUR 21.4 million as per exchange
rate of April 25, 2013). 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.
A plan of liquidation for Terre Star Networks became effective on March
29, 2012. On that date, EB received a USD 650,890 distribution from TerreStar
Networks on that portion of its claim entitled to payment priority under U.S.
bankruptcy law. Based upon information contained in the debtors' disclosure
statement accompanying the plan, the reorganized debtors' post-confirmation
status reports, or otherwise available to EB, EB estimates that its pro rata
total distribution under the plan may be in the range of 8-10% of the face
amount of its claim. However, this estimate is subject to various assumptions,
and therefore the amount and timing of EB's distribution on the remaining
portion of its claim cannot be predicted with certainty at this time.
As part of the Chapter 11 process, debtors often seek to recover payments
previously made to creditors pursuant to various provisions of the Bankruptcy
Code. EB received certain payments that total approximately USD 2.5 million
during the 90 days prior to TerreStar Networks' bankruptcy filing, and the
liquidating trustee (the "Liquidating 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) contemplates commencing actions
against certain defendants, including EB, to recover such allegedly preferential
transfers. EB believes that it has strong defenses to any such litigation and
therefore will, if the Liquidating Trustee commences litigation to recover such
payments from EB, vigorously contest such litigation. EB has entered into a
tolling agreement with the Liquidating Trustee which, as amended, has extended
the two-year avoidance action statute of limitations from October 19, 2012
through and including August 21, 2013, with a view to determining whether the
parties may be able to reach a consensual resolution of these matters without
incurring the cost and expense of litigation.
Further, as part of the process of reconciling accounts in preparation for
making distributions under a plan, Chapter 11 debtors often challenge the amount
or validity of some creditor claims. To date neither TerreStar Networks nor the
Liquidating Trustee has asserted an objection to the amount or validity of EB's
claims in its bankruptcy proceeding but, as part of the claims reconciliation
process, EB expects to provide the Liquidating Trustee with additional
information and documents in support of certain elements of its claim that were
filed in estimated or unliquidated amounts. If the Liquidating Trustee were to
commence an action against EB to recover allegedly preferential transfers, EB
anticipates that the trustee would seek to delay any distribution to EB on its
claim pending resolution of the preference litigation and repayment by EB of any
adverse judgment. The likelihood and outcome of any such dispute cannot be
predicted with certainty at this time.
Pursuant to an 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 contains a provision specifically preserving the rights of EB and all
other parties in interest with respect to EB's claim against TerreStar Networks.
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 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
Liquidating 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.
Based on the information received, the U.S. Internal Revenue Service ("IRS") has
disallowed a deduction taken on EB's subsidiary's, Elektrobit Inc.'s 2010 U.S.
federal income tax return due to an impairment booked with respect to the
receivables from the TerreStar companies. EB has appealed the IRS decision to
the IRS Office of Appeals from which the decision is expected to be given during
the second half of 2013. It is possible to appeal the decision of the IRS Office
of Appeals to the United States Tax Court, in which case the appeal will
typically take approximately two years.
If the appeal would proceed to the United States Tax Court and if the resolution
of the litigation would result in a complete rejection of the booked tax
deduction in 2010, EB would be obliged 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 2.1
million as per exchange rate of April 25, 2013). 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' current
position concerning year 2010 would remain as such in the appellate process. It
is possible that based on later information received the situation may need to
be reconsidered. It is also possible that during the appellate process, the
parties may enter into a settlement of this matter.
More information on the risks and uncertainties affecting EB can be found on the
Company's website at www.elektrobit.com. 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 March 31, 2013,
are compared with the statement of the financial position of December 31, 2012
(MEUR).
3/2013 12/2012
restated
Non-current assets 46.5 46.8
Current assets 104.0 77.6
Assets classified as held for sale 7.7
Total assets 150.5 132.2
Share capital 12.9 12.9
Other equity 77.3 53.7
Non-controlling interests
Total shareholders' equity 90.2 66.6
Non-current liabilities 12.1 7.9
Current liabilities 48.1 53.2
Liabilities classified as held for sale 4.5
Total shareholders' equity and liabilities 150.5 132.2
Net cash flow from operations during the period under review:
+ net profit +/- adjustment of accrual basis items EUR +2.3 million
+/- change in net working capital EUR -1.1 million
- interest, taxes and dividends EUR +0.0 million
= cash generated from operations EUR +1.3 million
- net cash used in investment activities EUR +27.8 million
- net cash used in financing EUR +0.2 million
= net change in cash and cash equivalents EUR +29.3 million
The amount of accounts receivable and other receivables, booked in current
receivables, was EUR 59.9 million (EUR 63.0 million on December 31, 2012
including assets classified as held for sale of EUR 4.5 million). Accounts
payable and other payables, booked in interest-free current liabilities, were
EUR 38.6 million (EUR 44.7 million on December 31, 2012 including liabilities
classified as held for sale of EUR 4.3 million). 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 1.7 million.
Net investments for the reporting period totaled EUR 1.5 million. The total
amount of depreciation of continuing operations during the period under review
was EUR 2.2 million, including EUR 0.3 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 18.8 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 0.1 million
interest expenses and other financial expenses EUR -0.2 million
foreign exchange gains and losses EUR 0.0 million
EB's equity ratio at the end of the period was 63.1% (55.0 % 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
23 million.
Cash and other liquid assets at the end of the reporting period were EUR 43.6
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 12.0
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 EUR 7.0 million.
PERSONNEL
The parent company of the group and its subsidiaries employed an average of
1577 people between January and March 2013. In addition, e.solutions GmbH, the
jointly owned company of EB and AUDI employed 271 people. At the end of March,
the parent company of the group and its subsidiaries had 1556 employees and
e.solutions GmbH 281 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
There were no changes in ownership during the period under review that would
have caused flagging notifications which are obligations for disclosure in
accordance with Chapter 2, section 9 of the Securities Market Act.
EVENTS AFTER THE REVIEW PERIOD
On April 4, 2013 EB announced to have completed the measures to improve its cost
structure that were started on February 19, 2013. With these measures EB
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.
CHANGING THE CONSOLIDATION OF THE JOINTLY OWNED COMPANY OF EB AND AUDI AS OF
JANUARY 1, 2013
EB will start 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%.
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 2012, the Elektrobit group net sales from continuing operations was EUR
185.4 million and the operating profit from continuing operations was EUR 2.5
million. If the proportionate consolidation method would have been applied for
e.solutions GmbH already in 2012, the consolidated net sales of Elektrobit group
would have been EUR 11.6 million and the operating profit EUR 1.4 million less
than was the case when the full consolidation method was applied, as presented
above. In 2012, the external net sales of e.solutions GmbH was EUR 34.6 million
and the operating profit EUR 2.9 million. In the financial reports of 2013, EB
presents the year-on-year information of income statement and balance sheet on
restated comparable basis, assuming that e.solutions GmbH would have been
consolidated to EB group according to the rules of proportionate consolidation
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 will take effect on 1(st) of January 2014, but they may be
applied as of 1(st) 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 fulfil 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.
DECISIONS OF THE ANNUAL GENERAL MEETING
The Annual General Meeting held on April 11, 2013 decided on the following
topics:
USE OF THE PROFITS SHOWN ON THE BALANCE SHEET AND PAYMENT OF DIVIDEND
The Annual General Meeting 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. The
dividend will be paid to the shareholders who are registered in the
shareholders' register maintained by Euroclear Finland Ltd on the dividend
record date April 16, 2013. The dividend will be paid on April 23, 2013.
ELECTION AND REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS
The Annual General Meeting decided that the Board of Directors shall comprise
five (5) members. Jorma Halonen, Juha Hulkko, Seppo Laine, Staffan Simberg and
Erkki Veikkolainen were elected members of the Board of Directors for a term of
office expiring at the end of the next Annual General Meeting. At its assembly
meeting held on April 11, 2013, the Board of Directors has elected Mr. Seppo
Laine Chairman of the Board. Further, the Board has resolved to keep the Audit
and Financial Committee with Mr. Staffan Simberg (Chairman of the committee),
Mr. Seppo Laine and Mr. Erkki Veikkolainen as committee members.
The following monthly remuneration shall be paid to the members of the Board of
Directors: to the chairman of the Board of Directors EUR 3,500 and to the other
members of the Board of Directors EUR 2,000 each. In addition, the members of
the Board of Directors are entitled to compensation for attending Board
Committee meetings as follows: the chairman of the Committee EUR 600 for each
meeting and other Committee members EUR 400 for each meeting. The members of the
Board of Directors, who also act as Board members of other companies belonging
to the Elektrobit Group, are also entitled to compensation for attending Board
meetings of such other group companies as follows: EUR 1,000 for each meeting.
Travel expenses of the members of the Board of Directors shall be reimbursed in
accordance with the Company's travel policy.
ELECTION AND REMUNERATION OF THE AUDITOR AND DEPUTY AUDITOR
Ernst & Young Ltd, authorized public accountants, was re-elected auditor of the
Company for a term of office ending at the end of the next Annual General
Meeting. Ernst & Young Ltd has notified that Mr. Jari Karppinen, authorized
public accountant, will act as responsible auditor. It was decided that the
remuneration to the auditor shall be paid against the auditor's reasonable
invoice.
AUTHORIZING THE BOARD OF DIRECTORS TO DECIDE ON THE REPURCHASE OF THE COMPANY'S
OWN SHARES
The General Meeting authorized the Board of Directors to decide on the
repurchase of the Company's own shares as follows.
The amount of own shares to be repurchased shall not exceed 12,500,000 shares,
which corresponds to approximately 9.66 per cent of all of the shares in the
company. Only the unrestricted equity of the company can be used to repurchase
own shares on the basis of the authorization. Own shares can be repurchased at a
price formed in public trading on the date of the repurchase or otherwise at a
price formed on the market. The Board of Directors decides how own shares will
be repurchased. Own shares can be repurchased using, inter alia, derivatives.
Own shares can be repurchased otherwise than in proportion to the shareholdings
of the shareholders (directed repurchase). The authorization cancels the
authorization given by the General Meeting on March 26, 2012 to decide on the
repurchase of the company's own shares. The authorization is effective until
June 30, 2014.
AUTHORIZING THE BOARD OF DIRECTORS TO DECIDE ON THE ISSUANCE OF SHARES AS WELL
AS THE ISSUANCE OF SPECIAL RIGHTS ENTITLING TO SHARES
The General meeting authorized the Board of Directors to decide on the issuance
of shares and other special rights entitling to shares referred to in chapter
10 section 1 of the Companies Act as follows.
The amount of shares to be issued shall not exceed 25,000,000 shares, which
corresponds to approximately 19.32 per cent of all of the shares in the company.
The Board of Directors decides on all the conditions of the issuance of shares
and of special rights entitling to shares. The authorization concerns both the
issuance of new shares as well as the transfer of treasury shares. The issuance
of shares and of special rights entitling to shares may be carried out in
deviation from the shareholders' pre-emptive rights (directed issue). The
authorization cancels the authorization given by the General Meeting on March
26, 2012 to decide on the issuance of shares as well as the issuance of other
special rights entitling to shares referred to in Chapter 10 Section 1 of the
Companies Act. The authorization is effective until June 30, 2014.
Oulu, April 26, 2013
Elektrobit Corporation
The Board of Directors
Further Information:
Jukka Harju
CEO
Tel. +358 40 344 5466
Distribution:
NASDAQ OMX Helsinki
Major media
ELEKTROBIT CORPORATION (EB)
CONDENSED FINANCIAL STATEMENTS AND NOTES JANUARY- MARCH 2013
(unaudited)
The Interim Report has been prepared in accordance with IAS 34 Interim Financial
Reporting.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1-3/2013 1-3/2012 1-12/2012
(MEUR)
3 months 3 months 12 months
restated restated
Continuing operations
NET SALES 46.2 42.7 173.9
Other operating income 0.9 0.4 2.4
Change in work in progress and finished goods 0.1 -0.2 -0.2
Work performed by the undertaking for its own
purpose
and capitalized 0.0 0.5
Raw materials -2.3 -1.6 -7.3
Personnel expenses -28.9 -25.6 -101.1
Depreciation -2.2 -1.6 -7.1
Other operating expenses -13.2 -13.7 -60.2
OPERATING PROFIT (LOSS) 0.7 0.5 1.1
Financial income and expenses -0.1 -0.4 -0.5
PROFIT BEFORE TAX 0.6 0.2 0.6
Income tax -0.0 -0.1 0.5
PROFIT FOR THE PERIOD FROM CONTINUING
OPERATIONS 0.6 0.1 1.1
Discontinued operations
Profit for the year from discontinued
operations 23.6 0.1 1.2
PROFIT FOR THE PERIOD 24.2 0.2 2.3
Other comprehensive income:
Items that may be reclassified subsequently to
the
statement of income
Exchange differences on translating foreign
operations -0.0 0.0 0.2
Other comprehensive income for the period
total -0.0 0.0 0.2
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 24.2 0.2 2.5
Profit for the year attributable to
Equity holders of the parent 24.2 0.2 2.3
Non-controlling interests
Total comprehensive income for the period
attributable to
Equity holders of the parent 24.2 0.2 2.5
Non-controlling interests
Earnings per share from continuing operations,
EUR
Basic earnings per share 0.005 0.001 0.008
Diluted earnings per share 0.005 0.001 0.008
Earnings per share from discontinued
operations, EUR
Basic earnings per share 0.182 0.001 0.009
Diluted earnings per share 0.181 0.001 0.009
Earnings per share from continuing and
discontinued operations, EUR
Basic earnings per share 0.187 0.001 0.018
Diluted earnings per share 0.186 0.001 0.017
Average number of shares, 1000 pcs 129 413 129 413 129 413
Average number of shares, diluted, 1000 pcs 130 325 130 228 130 238
CONSOLIDATED STATEMENT OF FINANCIAL POSITION March. 31, March. 31, Dec. 31,
(MEUR) 2013 2012 2012
restated restated
ASSETS
Non-current assets
Property, plant and equipment 8.6 9.0 8.7
Goodwill 19.3 19.3 19.3
Intangible assets 17.4 17.1 17.8
Other financial assets 0.1 0.1 0.1
Deferred tax assets 1.0 0.1 0.9
Non-current assets total 46.5 45.6 46.8
Current assets
Inventories 0.5 2.0 0.4
Trade and other receivables 59.9 60.6 63.0
Financial assets at fair value through
profit or loss 34.7 0.1 9.7
Cash and short term deposits 8.8 5.4 4.6
Current assets total 104.0 68.2 77.6
Assets classified as held for sale 7.7
TOTAL ASSETS 150.5 113.7 132.2
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent
Share capital 12.9 12.9 12.9
Invested non-restricted equity fund 38.7 38.7 38.7
Translation difference 0.6 0.5 0.6
Retained earnings 38.0 13.7 14.3
Non-controlling interests
Total equity 90.2 65.8 66.6
Non-current liabilities
Deferred tax liabilities 0.5 0.9 0.7
Pension obligations 2.0 1.3 1.4
Provisions 0.4 0.7 0.5
Interest-bearing liabilities 9.2 3.7 5.4
Non-current liabilities total 12.1 6.7 7.9
Current liabilities
Trade and other payables 35.4 33.5 38.3
Financial liabilities at fair value through
profit or loss 0.2 0.0
Provisions 2.9 0.7 2.2
Interest-bearing loans and borrowings 9.6 7.1 12.7
Current liabilities total 48.1 41.2 53.2
Liabilities classified as held for sale 4.5
Total liabilities 60.2 47.9 65.6
TOTAL EQUITY AND LIABILITIES 150.5 113.7 132.2
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-3/2013 1-3/2012 1-12/2012
3 months 3 months 12 months
restated restated
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year from continuing operations 0.6 0.1 1.1
Profit for the year from discontinued operations 23.6 0.1 1.2
Adjustment of accrual basis items -21.9 2.1 8.7
Change in net working capital -1.1 -3.9 -3.0
Interest paid on operating activities -0.2 -0.4 -0.9
Interest received from operating activities 0.3 0.0 0.1
Other financial income and expenses, net received 0.0
Income taxes paid -0.1 -0.1 -0.3
NET CASH FROM OPERATING ACTIVITIES 1.3 -2.0 6.8
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of business unit, net of cash acquired 29.2
Purchase of property, plant and equipment -0.8 -0.4 -2.8
Purchase of intangible assets -0.7 -2.0 -5.4
Purchase of other investments
Sale of property, plant and equipment 0.1 0.0 0.4
Sale of intangible assets 0.0
Proceeds from sale of investments 0.0
NET CASH FROM INVESTING ACTIVITIES 27.8 -2.5 -7.8
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowing 12.3 2.4 16.6
Repayment of borrowing -11.3 -1.0 -7.5
Payment of finance liabilities -0.8 -0.7 -2.9
NET CASH FROM FINANCING ACTIVITIES 0.2 0.7 6.1
NET CHANGE IN CASH AND CASH EQUIVALENTS 29.3 -3.8 5.1
Cash and cash equivalents at beginning of period 14.3 9.2 9.2
Cash and cash equivalents at end of period 43.6 5.4 14.3
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY (MEUR)
A = Share capital
B = Invested non-restricted equity fund C = Translation difference
D = Retained earnings
E = Total
F = Non-controlling interests
G = Total equity
A B C D E F G
restated
Shareholders equity on January 1, 2012 12.9 38.7 0.4 13.4 65.5 0.0 65.5
Comprehensive income for the period
Profit for the period 0.2 0.2 0.2
Exchange differences on translating
foreign operations 0.0 0.0 0.0
Total comprehensive income for the period 0.0 0.2 0.2 0.0 0.2
Transactions between the shareholders
Share-related compensation 0.2 0.2 0.2
Other changes -0.0 -0.0 -0.0
Shareholders equity on March 31, 2012 12.9 38.7 0.5 13.7 65.8 0.0 65.8
restated
Shareholders equity on December 31, 2012 12.9 38.7 0.6 14.3 66.6 0.0 66.6
Change in accounting policy (IAS 19) -0.6 -0.6 -0.6
Shareholders equity on January 1, 2013
restated 12.9 38.7 0.6 13.8 66.0 0.0 66.0
Comprehensive income for the period
Profit for the period 24.2 24.2 24.2
Exchange differences on translating
foreign operations -0.0 -0.0 -0.0
Total comprehensive income for the period -0.0 24.2 24.2 0.0 24.2
Transactions between the shareholders
Share-related compensation 0.0 0.0 0.0
Other changes -0.0 -0.0 -0.0
Shareholders equity on March 31, 2013 12.9 38.7 0.6 38.0 90.2 0.0 90.2
NOTES TO THE INTERIM FINANCIAL REPORTING
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 1-3/2013 1-3/2012 1-12/2012
3 months 3 months 12 months
restated restated
Automotive
Net sales to external customers 30.5 26.4 110.5
Net sales to other segments 0.0 0.0 0.1
Net sales total 30.5 26.4 110.6
Operating profit (loss) 1.1 0.7 3.3
Wireless
Net sales to external customers 15.8 16.3 63.3
Net sales to other segments 0.0 0.2 0.3
Net sales total 15.8 16.4 63.5
Operating profit (loss) -0.4 -0.1 -2.2
OTHER ITEMS
Other items
Net sales to external customers 0.0 0.0 0.1
Operating profit (loss) -0.0 -0.0 0.0
Eliminations
Net sales to other segments -0.1 -0.2 -0.3
Operating profit (loss) 0.0 0.0 0.0
Group total
Net sales to external customers 46.2 42.7 173.9
Operating profit (loss) 0.7 0.5 1.1
Net sales of geographical areas (MEUR) 1-3/2013 1-3/2012 1-12/2012
3 months 3 months 12 months
restated restated
Net sales
Europe 38.1 33.7 136.7
Americas 6.2 7.1 28.6
Asia 1.9 1.9 8.5
Net sales total 46.2 42.7 173.9
Related party transactions: 1-3/2013 1-3/2012 1-12/2012
3 months 3 months 12 months
Employee benefits for key management and stock
option expenses total 0.3 0.3 1.3
CONSOLIDATED STATEMENT OF 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
COMPREHENSIVE INCOME 2013 2012 2012 2012 2012
BY QUARTER (MEUR) 3 months 3 months 3 months 3 months 3 months
restated restated restated restated
Continuing operations
NET SALES 46.2 48.2 41.5 41.5 42.7
Other operating income 0.9 0.7 0.7 0.6 0.4
Change in work in progress and
finished goods 0.1 -0.1 0.1 0.1 -0.2
Work performed by the
undertaking
for its own purpose and
capitalized 0.4 0.1 0.0 0.0
Raw materials -2.3 -2.1 -1.4 -2.3 -1.6
Personnel expenses -28.9 -27.1 -24.1 -24.3 -25.6
Depreciation -2.2 -2.0 -1.7 -1.7 -1.6
Other operating expenses -13.2 -18.5 -13.2 -14.8 -13.7
OPERATING PROFIT (LOSS) 0.7 -0.5 2.0 -0.9 0.5
Financial income and expenses -0.1 -0.4 -0.2 0.4 -0.4
PROFIT BEFORE TAX 0.6 -0.9 1.8 -0.5 0.2
Income tax -0.0 0.8 -0.1 -0.1 -0.1
PROFIT FOR THE PERIOD FROM
CONTINUING OPERATIONS 0.6 -0.1 1.7 -0.6 0.1
Discontinued operations
Profit for the period from
discontinued operations 23.6 0.9 -0.1 0.3 0.1
PROFIT FOR THE PERIOD 24.2 0.8 1.6 -0.3 0.2
Other comprehensive income -0.0 0.2 -0.0 -0.0 0.0
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 24.2 1.0 1.6 -0.3 0.2
Profit for the period
attributable to:
Equity holders of the parent 24.2 0.8 1.6 -0.3 0.2
Non-controlling interests
Total comprehensive income
for the period attributable
to:
Equity holders of the parent 24.2 1.0 1.6 -0.3 0.2
Non-controlling interests
CONSOLIDATED STATEMENT OF March 31, Dec. 31, Sept. 30, June 30, March 31,
FINANCIAL POSITION (MEUR) 2013 2012 2012 2012 2012
restated restated restated restated
ASSETS
Non-current assets
Property, plant and
equipment 8.6 8.7 9.4 9.3 9.0
Goodwill 19.3 19.3 19.3 19.3 19.3
Intangible assets 17.4 17.8 17.7 17.8 17.1
Other financial assets 0.1 0.1 0.1 0.1 0.1
Deferred tax assets 1.0 0.9 0.0 0.1 0.1
Non-current assets total 46.5 46.8 46.6 46.6 45.6
Current assets
Inventories 0.5 0.4 2.7 2.5 2.0
Trade and other receivables 59.9 63.0 68.6 65.6 60.6
Financial assets at fair
value
through profit or loss 34.7 9.7 0.1 0.1
Cash and short term deposits 8.8 4.6 15.7 5.8 5.4
Current assets total 104.0 77.6 87.0 73.9 68.2
Assets classified as held for
sale 7.7
TOTAL ASSETS 150.5 132.2 133.6 120.5 113.7
EQUITY AND LIABILITIES
Equity attributable to equity
holders
of the parent
Share capital 12.9 12.9 12.9 12.9 12.9
Invested non-restricted
equity fund 38.7 38.7 38.7 38.7 38.7
Translation difference 0.6 0.6 0.4 0.4 0.5
Retained earnings 38.0 14.3 15.1 13.4 13.7
Non-controlling interests
Total equity 90.2 66.6 67.2 65.5 65.8
Non-current liabilities
Deferred tax liabilities 0.5 0.7 0.8 0.9 0.9
Pension obligations 2.0 1.4 1.3 1.3 1.3
Provisions 0.4 0.5 0.4 0.5 0.7
Interest-bearing liabilities 9.2 5.4 10.8 4.9 3.7
Non-current liabilities total 12.1 7.9 13.3 7.5 6.7
Current liabilities
Trade and other payables 35.4 38.3 38.4 36.5 33.5
Financial liabilities at
fair value
through profit or loss 0.2 0.0 0.1
Provisions 2.9 2.2 1.7 1.4 0.7
Interest-bearing loans and
borrowings (non-current) 9.6 12.7 13.0 9.4 7.1
Current liabilities total 48.1 53.2 53.1 47.4 41.2
Liabilities classified as held
for sale 4.5
Total liabilities 60.2 65.6 66.4 55.0 47.9
TOTAL EQUITY AND LIABILITIES 150.5 132.2 133.6 120.5 113.7
1-3/ 10-12/ 7-9/ 4-6/ 1-3/
CONSOLIDATED STATEMENT
OF CASH FLOWS BY QUARTER 2013 2012 2012 2012 2012
3 months 3 months 3 months 3 months 3 months
restated restated restated restated
Net cash from operating
activities 1.3 7.0 2.2 -0.3 -2.0
Net cash from investing
activities 27.8 -2.2 -1.2 -2.0 -2.5
Net cash from financing
activities 0.2 -6.1 8.9 2.6 0.7
Net change in cash and cash
equivalents 29.3 -1.4 9.9 0.3 -3.8
FINANCIAL PERFORMANCE RELATED RATIOS 1-3/2013 1-3/2012 1-12/2012
3 months 3 months 12 months
restated restated
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
Net sales 46.2 42.7 173.9
Operating profit (loss) 0.7 0.5 1.1
Operating profit (loss), % of net sales 1.5 1.2 0.6
Profit before taxes 0.6 0.2 0.6
Profit before taxes, % of net sales 1.4 0.4 0.3
Profit for the period 0.6 0.1 1.1
PROFITABILITY AND OTHER KEY FIGURES
Interest-bearing net liabilities, (MEUR) -24.8 5.4 4.0
Net gearing, -% -27.5 8.1 6.1
Equity ratio, % 63.1 61.2 55.0
Gross investments, (MEUR) 1.7 3.6 12.2
Average personnel during the period, parent and
subsidiaries 1577 1468 1528
Personnel at the period end, parent and
subsidiaries 1556 1478 1583
Average personnel during the period, jointly
owned company 271 106 132
Personnel at the period end, jointly owned
company 281 106 233
AMOUNT OF SHARE ISSUE ADJUSTMENT March 31, March 31, Dec. 31,
(1,000 pcs) 2013 2012 2012
At the end of period 129 413 129 413 129 413
Average for the period 129 413 129 413 129 413
Average for the period diluted with stock
options 130 325 130 228 130 238
1-3/2013 1-3/2012 1-12/2012
STOCK-RELATED FINANCIAL RATIOS (EUR)
3 months 3 months 12 months
restated restated
Earnings per share from continuing operations,
EUR
Basic earnings per share 0.005 0.001 0.008
Diluted earnings per share 0.005 0.001 0.008
Earnings per share from discontinued operations,
EUR
Basic earnings per share 0.182 0.001 0.009
Diluted earnings per share 0.181 0.001 0.009
Earnings per share from continuing and
discontinued operations, EUR
Basic earnings per share 0.187 0.001 0.018
Diluted earnings per share 0.186 0.001 0.017
Equity *) per share 0.70 0.51 0.51
*) Equity attributable to equity holders of
the parent
MARKET VALUES OF SHARES (EUR) 1-3/2013 1-3/2012 1-12/2012
3 months 3 months 12 months
Highest 0.94 0.79 0.79
Lowest 0.64 0.38 0.38
Average 0.81 0.62 0.64
At the end of period 0.80 0.68 0.65
Market value of the stock, (MEUR) 103.5 88.0 84.1
Trading value of shares, (MEUR) 4.8 3.0 6.9
Number of shares traded, (1,000 pcs) 5 910 4 898 10 750
Related to average number of shares % 4.6 3.8 8.3
SECURITIES AND CONTINGENT LIABILITIES March 31, March 31, Dec. 31,
(MEUR) 2013 2012 2012
AGAINST OWN LIABILITIES
Floating charges 18.0 11.4 18.1
Guarantees 21.3 23.4 17.7
Rental liabilities
Falling due in the next year 6.6 7.1 7.0
Falling due after one year 15.6 17.3 16.2
Other contractual liabilities
Falling due in the next year 1.0 2.1 1.3
Falling due after one year 0.0 0.0
Mortgages are pledged for liabilities totaled 15.2 5.8 14.5
NOMINAL VALUE OF CURRENCY DERIVATIVES March 31, March 31, Dec. 31,
(MEUR) 2013 2012 2012
Foreign exchange forward contracts
Market value -0.2 -0.0 0.0
Nominal value 5.0 4.0 5.0
Purchased currency options
Market value 0.0 0.1 0.0
Nominal value 2.0 4.0 2.0
Sold currency options
Market value -0.0 -0.0 -0.0
Nominal value 4.0 8.0 2.0
[HUG#1696666]
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