2007-11-16 08:00:00 CET
2007-11-16 08:00:00 CET
REGULATED INFORMATION
Vaahto Group Plc Oyj - Financial Statement Release
VAAHTO GROUP'S PREVIEW OF RESULTS FOR FISCAL YEAR 1.9.2006-31.8.2007
VAAHTO GROUP PLC OYJ STOCK EXCHANGE RELEASE 16.11.2007 at 9.00 a.m.
VAAHTO GROUP'S PREVIEW OF RESULTS FOR FISCAL YEAR 1.9.2006-31.8.2007
Vaahto Group's turnover for the fiscal period was 88.2 MEUR (65.4
MEUR) and operating profit 5.8 MEUR (2.5 MEUR). Earnings per share
were 1.27 euros. The Board of Directors will propose a dividend of
0.40 euros per share.
Business developments
Vaahto Group's turnover for the fiscal year ending in August 2007 was
88.2 million euros (65.4 million euros), with an operating profit of
5.8 million euros (2.5 million euros). The turnover increased by 34.8%
from that of the previous fiscal period. Due to the increased turnover
and succesful project deliveries, the profitability and result of the
Group improved significantly. The order backlog decreased during the
period under review and came to 42.9 million euros (49.7 million
euros) at the end of the fiscal year.
Pulp & Paper Machinery
Despite the tough competition, the Pulp & Paper Machinery division
achieved fair sales figures for the fiscal year. Significant orders
included a glass nonwovens production line for Ahlstrom Tver in Russia
and the modernization of a board machine for Corenso, a subsidiary of
Stora Enso, in the US. Other notable orders included projects for Lee
& Man (China), Kombassan (Turkey), Anhui Shanying (China), and
Powerflute Savon Sellu (Finland).
The division's order backlog emphasizes technologically advanced key
components of paper and board machines, such as headboxes, formers,
and shoe presses. Product development has enabled the division to
produce new, competitive products, including short-circulation
systems, size presses, and center reels.
The division's roll sales and roll-servicing business have been
moderate. The fiscal year saw product-development and production
investments initiated for polyurethane and composite coatings. The
expansion of the product range strengthens the competitiveness of the
division's roll-servicing business and supports the full-system
deliveries of the Pulp & Paper Machinery division.
The fiscal year also saw Vaahto Group establish a subsidiary company
in Shanghai to strengthen the division's operations in China. The
purpose of the company is to aid the division with sales to the
Chinese market, and to create and develop a subcontractor network that
also serves projects outside China.
The Pulp & Paper Machinery division's turnover for the period under
review was 54.2 million euros (38.4 million euros), with an operating
profit of 3.7 million euros (1.9 million euros). The turnover
increased by 40.9% from that of the previous fiscal period. The fiscal
year's most significant delivery projects included main equipment for
Ninxia Meil's new board machine (China) and a rebuild of Iggesund
Paperboard's board machine (Sweden).
The international market and competitive situation of the division is
challenging. The main demand peak seems to be evening out, and the
order backlog decreased during the fiscal period. However, the
division is processing a significant number of projects in the offer
phase.
Determined product development work has improved the Pulp & Paper
Machinery division's strategic competitive position, and the division
aims to further strengthen its position as one of the leading
suppliers of technology and services in the demanding international
paper and board machine market environments.
Process Machinery
The market situation during the fiscal period was excellent for the
Process Machinery division. The division's turnover for the period
under review was 34.1 million euros (27.0 million euros), with an
operating profit of 2.0 million euros (0.6 million euros). Turnover
increased by 26.2% from that of the previous fiscal period.
The Process Machinery division's tank and pressure vessel manufacture
is the responsibility of a separate Group company, Japrotek Oy Ab. The
company's ability to deliver demanding tank and agitator assemblies
has proven to be a major competitive advantage. During the fiscal
period, Japrotek Oy Ab received several large orders, including for a
storage tank and agitator delivery to Belgium, soaking reactors for
agitators for Outotec in China, storage tanks for Yara in Norway, and
process equipment for OMG Kokkola in Finland. In the 2004-2005 fiscal
year, the division won a delivery contract for demanding pressure
vessels for the nuclear power plant in Olkiluoto. Due to changes in
the customer's schedule, the delivery is still unfinished, and
equipment deliveries will be completed in the current fiscal period.
The agitator business of the Process Machinery division in the German
subsidiary Stelzer R”rtechnik International GmbH developed favorably
during the fiscal period. The company's reorganization of operations
has proven to be successful. In the improved market situation, the
company's turnover and order backlog clearly increased from those of
the previous fiscal period.
Spiral heat exchanger business again was clearly behind the targets
set for the period. After the close of the fiscal period, Vaahto Oy, a
subsidiary of Vaahto Group, made an agreement to sell its spiral heat
exchanger business to German company HES Heat Exchanger System GmbH.
The sale includes the spiral heat exchanger production line and its
machines and equipment, with related intangible rights. Under the
agreement, Vaahto Oy is responsible for the manufacture and delivery
of the existing order backlog. The production machines and equipment
will be transferred to the buyer gradually in spring 2008. The annual
turnover for the spiral heat exchanger business has fluctuated between
two to four million euros.
Results
Vaahto Group's operating profit for the fiscal period was 5.8 million
euros, as compared to 2.5 million euros in the previous fiscal year.
The operating profit for the period was 6.6% (3.8%) of the Group's
turnover. Profits before taxes totaled 5.2 million euros (1.5 million
euros), and the return on investment was 25.8% (12.5%).
Financing
The Group's cash flow was -5.8 million euros (6.5 million euros). In
the decrease of the Group's cash flow, one must consider the advance
payments received in the previous fiscal period that were put toward
large project deliveries completed only in the period that just ended.
Advance payments received decreased during the period under review and
came to 6.3 million euros (11.1 million euros) at the end of the
fiscal year. In addition, the strong growth in turnover considerably
increased the amount of committed working capital.
The Group's net financial expenses came to 0.6 million euros (0.9
million euros), or 0.7% (1.4%) of turnover. Investment cash flow was
less than in the previous year, at -1.1 million euros (-1.8 million
euros). The increase in debt, including interest, was 3.1 million
euros.
Total assets and liabilities on the consolidated balance sheet stood
at 52.2 million euros (42.9 million euros), and the parent company's
balance sheet showed 11.1 million euros (11.3 million euros). The
Group's equity ratio decreased and was 35.5% (39.1%).
Investments
The Group's investments in capital assets for the fiscal period
totaled 1.5 million euros (1.9 million euros). The polyurethane and
composite coating plant of AK-Tehdas Oy and the rebuilding of Vaahto
Oy's production facility heating system were the most significant
investments. Other investments consisted mainly of smaller machinery
and equipment acquisitions and of investments in information systems.
Research and development
The Group's research and development activities continued to
concentrate for the most part on improving the competitiveness of the
Pulp & Paper Machinery division's paper and board machines, key
components, and roll servicing. The scope of the Group's R&D
activities remained the same as in the previous fiscal period.
Information systems
The Group's information systems and information management systems
were developed further, in accordance with the centralized operations
model, and specification of the new Group-wide enterprise resource
planning system began. The system's implementation is scheduled for
the 2007-2008 fiscal year.
Personnel
Group personnel averaged 414 (410) over the fiscal year and numbered
428 (404) at the end of the period. In the Group, salaries and fees
for the fiscal period were 15.9 million euros, pension expenses 2.7
million euros and other employee benefits 1.7 million euros. Employee
benefits expenses totaled 20.2 million euros.
Risks and business uncertainties
Demand for Vaahto Group products depends largely on economic cycles
and developments in the world economy and the customer industries.
Risk caused by fluctuations in demand is being compensated for through
adjustment of the Group's sales operations in line with the economic
cycles of various markets and customer industries.
Large-scale projects involve the risk of the final result falling
short of expectations, since the project's future costs and other
risks that could affect the delivery cannot be assessed explicitly
enough at the tender stage. Risks associated with large projects can
be managed by applying various quality systems, profitability
analyses, directives, and acceptance procedures.
The Group's financial risk management objectives are to minimize
harmful effects on the Group's result caused by fluctuations in
financial markets and ensure that the Group can gain equity and
liability financing on competitive terms.
Business-related risks of material, consequential, and liability
losses are covered by appropriate insurance policies.
Environment
There are no remarkable environmental influences related to the own
production of the Group. The Group strives to minimize the
environmental defects by taking care of the proper sorting and further
handling of its wastes, including hazardous wastes as well as by
decreasing the use of power, raw materials and hazardous substances.
Shareholders' equity
The Board of Directors has no authority to issue new shares,
convertible bonds, or bonds with warrants, nor the authorization to
obtain or surrender shares.
Administration
The Annual General Meeting of December 14, 2006, elected the following
to the Board of Vaahto Group Plc Oyj:
Seppo Jaatinen, chairman
Mikko Vaahto, vice-chairman
Martti Unkuri, member
Antti Vaahto, member
Antti Vaahto served as CEO throughout the fiscal period.
The Group companies have been audited by certified public auditing
firm Ernst & Young Oy, with Pauli Hirviniemi, CPA, as chief auditor.
Forecast of developments
The market situation for the Group's major products is quite
challenging at the moment. In Europe, the forest industry is investing
very carefully, and in North America the weak US dollar is making the
position of European suppliers more difficult. In the largest growing
market area, China, local suppliers are growing stronger and the
competitive situation is tightening up.
Vaahto Group's competitiveness has grown, thanks to determined product
development, the expanded product range, and procedures aimed at
rationalizing the business operations. However, the order backlog was
lower near the start of the fiscal period than at the corresponding
time in the previous period, which poses clear challenges for a
continuing increase of turnover in the new fiscal period.
However, with improved competitiveness and the progressive product
range, it is believed that the Group will succeed in the tough
international competition, and the prerequisites for profitable
business will therefore exist for the 2007-2008 fiscal year.
Proposal for distribution of profits
Parent company funds available for distribution of profits total
4,880,594.79 euros, of which 786,435.40 euros represents profits for
the fiscal period.
The Board will propose to the Annual General Meeting that a dividend
of 0.40 euros per share, for a total of 1,148,920.80 euros, be paid.
The remaining operating profit is to be transferred to the earnings
account.
The Annual General Meeting
The Annual General Meeting of Vaahto Group Plc Oyj will be held on
December 14, 2007 at 1.00 p.m. in the Sibelius Hall, Lahti.
Interim management statement
Instead of the interim report for the first three months of the
accounting period, Vaahto Group Plc Oyj will disclose the interim
management statement on January 17, 2008.
VAAHTO GROUP CONSOLIDATED FIGURES
CONSOLIDATED 2006/07 % of 2005/06 % of
INCOME 12 turn- 12 turn-
STATEMENT,IFRS months over months over
1000 EUR
NET TURNOVER 88 161 65 414
Change in finished
goods and work
in progress 696 -835
Production
for own use 377 359
Other operating
income 303 602
Material and
services -50 629 -33 254
Employee benefits
expenses -20 241 -18 641
Depreciations -1 840 -1 804
Other operating
expenses -11 015 -9 381
OPERATING PROFIT 5 812 6,6 2 461 3,8
Financing income
and expenses -611 -948
Share of results of
affiliated companies 24
PROFIT BEFORE TAXES 5 226 5,9 1 513 2,3
Tax on income
from operations -1 313 -451
PROFIT FOR THE 3 913 4,4 1 062 1,6
PERIOD
Net profit
attributable:
To equity holders
of the parent 3 639 920
To minority
interest 274 143
Total 3 913 1 062
Earnings per share calculated on profit attributable
to equity holders of the parent:
EPS undiluted,
euros/share 1,27 0,32
EPS diluted,
euros/share 1,27 0,32
Average number of
shares (1000
shares):
undiluted 2 872 2 872
diluted 2 872 2 872
CONSOLIDATED 31.8.07 31.8.06
BALANCE SHEET,IFRS
1000 EUR
ASSETS
NON-CURRENT ASSETS:
Intangible assets 621 599
Goodwill 1 702 1 702
Investment
properties 308
Tangible assets 14 644 15 031
Shares in affiliated
companies 24
Non-current trade
and
other receivables 13 3
Other long-term
investments 44 46
Deferred tax asset 120 1
NON-CURRENT ASSETS 17 169 17 690
CURRENT ASSETS:
Inventories 8 188 7 501
Trade receivables
and other 25 276 11 695
receivables
Tax receivable,
income tax 23 16
Cash equivalents 960 3 600
Cash and bank 574 2 391
CURRENT ASSETS 35 021 25 202
TOTAL ASSETS 52 190 42 892
CONSOLIDATED 31.8.07 31.8.06
BALANCE SHEET, IFRS
1000 EUR
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital 2 872 2 872
Share premium
account 6 6
Other reserves 2 128 2 118
Retained earnings 8 436 5 479
Equity attributable
to equity holders
of the parent 13 442 10 475
Minority share 1 393 1 215
SHAREHOLDERS'
EQUITY 14 835 11 689
NON-CURRENT
LIABILITIES:
Deferred
tax liability 928 803
Long-term
liabilities,
interest-bearing 4 923 4 313
Non-current
provisions 684 250
NON-CURRENT
LIABILITIES 6 536 5 367
CURRENT LIABILITIES:
Short-term
liabilities,
interest-bearing 6 331 3 826
Trade payables and
other liabilities 23 558 21 973
Tax liability,
income tax 931 36
CURRENT LIABILITIES 30 819 25 836
TOTAL EQUITY AND
LIABILITIES 52 190 42 892
KEY FIGURES, IFRS 2006/07 2005/06
Shareholders'
equity per share, 4,68 3,65
euros
Earnings per
share, euros 1,27 0,32
Solidity, % 35,5 39,1
Gross
investments,
1000 EUR 1 502 1 859
Total average
number of
personnel 414 410
Order backlog at
the end of the
fiscal period,
1000 EUR 42 894 49 723
The amount of contract revenue recognized as
revenue has been deducted from the order backlog.
OTHER LIABILITIES 31.8.07 31.8.06
1000 EUR
Lease liabilities,
excluded financial
lease liabilities:
Current lease
liabilities 114 252
Lease liabilities
maturing
in 1-5 years 272 138
Total 386 389
Other liabilities:
Granted guarantees 452 637
Derivative
contracts:
Currency forward agreements are as a rule used
to hedge against exchange rate risks. The currency forward
agreements have been used to protect receivables and
future assets. Interest rate agreements are used to hedge
against the changes of the
interests.
The derivative agreements of the group are booked
according to IAS 39: Financial instruments. Derivative agreements
are initially recognized at their purchase cost
which is equivalent to the fair value and they are
subsequently remeasured at fair value.
Fair values Nominal Fair Fair Fair
of derivative value value, value, value
agreements pos. neg. total
31.8.2007
1000 EUR
Currency forward
agreements 1 271 -14 -14
Currency option
agreements 6 401 62 -29 33
Interest rate swap
agreements 5 323 12 -9 2
Fair values of currency forwards are determined by
using the market prices for the equivalent agreements on
the day of the closing of the accounts. Fair values state for the
income or expenses the group would book if the derivative
agreements were closed at the end of the fiscal period.
CONSOLIDATED FLOW 2006/07 2005/06
OF FUNDS 12 12
STATEMENT, IFRS months months
1000 EUR
Flow of funds
from operations:
Profit before taxes 5 226 1 513
Adjustments 2 697 2 731
Change in working
capital -11 797 3 238
Financial income and
expenses and taxes -1 918 -1 012
Flow of funds from
operations -5 792 6 470
Flow of funds
from investments:
Investments in
tangible and
intangible assets 1 502 -1 859
Income from sales
of tangible and
intangible assets 405 54
Granted loans -11 0
Flow of funds from
investments -1 108 -1 805
Flow of funds from
financial items:
Withdrawals of
short-term loans 4 297 30
Payments of
short-term loans -1 792 -1 365
Withdrawals of
long-term loans 2 247 620
Payments of
long-term loans -1 637 -2 350
Dividends -671 -418
Flow of funds from
financial items 2 444 -3 483
Change of liquid
funds -4 457 1 181
Lahti, November 16, 2007
VAAHTO GROUP PLC OYJ
Antti Vaahto
CEO
Information:
Antti Vaahto
CEO, Vaahto Group Plc Oyj
tel. +358 40 8232835
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