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2008-04-25 07:30:00 CEST 2008-04-25 07:30:01 CEST REGULATED INFORMATION Scanfil - Interim report (Q1 and Q3)SCANFIL PLC'C INTERIM REPORT 1 JANUARY - 31 MARCH 2008SCANFIL PLC INTERIM REPORT 25 APRIL 2008 8.30 a.m. SCANFIL PLC'C INTERIM REPORT 1 JANUARY - 31 MARCH 2008 - Turnover for the first quarter of 2008 totalled EUR 50.0 million (52.2 in the corresponding period 2007) - Operating profit was EUR 4.7 (3.6) million, which is 9.5 (6.8) % of turnover. - Profit for the review period was EUR 3.6 (3.1) million - Earnings per share were EUR 0.06 (0.05) DEVELOPMENT OF OPERATIONS Scanfil plc President Harri Takanen: ”Sales are off to a satisfactory start in 2008. Maintaining profitability is a sign of effectiveness of operations and personnel and provides Scanfil with good opportunities for competing successfully in the markets also in the future. The strategic decisions made by the Annual General Meeting and the Board of Directors together with the ability to operate profitably support the further development of our operations and the enhancement of our market position.” The positive development in the operating environment of our industrial electronics customers has continued in the first quarter. The global environmental concerns, rising energy prices and urbanisation have a positive effect on the markets of Scanfil's industrial electronics customers. The sales and production amounts of industrial electronics products have been good during the review period. Scanfil has focused on industrial electronics to even out the distribution of sales and is actively exploring new opportunities for increasing the sales of industrial electronics products. The total demand from telecommunications customers has been lower than during the corresponding period last year. This is mainly due to product structure changes implemented by one of the customers. These changes in particular have affected the sales of the Chinese units. Telecom customers accounted for approximately 63 (70)% and industrial electronics customers for approximately 37 (30)% of the review period's turnover. The Chinese subsidiaries' sales accounted for 32% of the Group's sales during the review period (34% in the corresponding period in 2007) including deliveries to the Group's other plants. Of the Group's personnel, 53 (49)% worked in China at the end of 2007, and a total of 74 (71)% worked in the international subsidiaries on 31 March 2008. The Scanfil Board of Directors decided on 27 February 2008 to propose to the Annual General Meeting that the company be split up with a business transfer to an investment company and a sub-concern engaged in the contract manufacturing business. The Board also confirmed the new business strategy. With the business transfer, Scanfil plc's electronics contract manufacturing business will be turned into a sub-concern owned in its entirety by Scanfil. Scanfil plc will remain the parent company and will act as the owner in other business areas, too. The electronics contract manufacturing business will be developed as a strong Nordic operator, and the objective is to structure the contract manufacturing business in a way, which will enhance the company's global market position. The Scanfil EMS Oy concern created by the business transfer is a competitive and profitable company in its own sector. Scanfil plc will focus on its ownership role in contract manufacturing and other new sectors. The aim is to invest the company assets profitably in selected companies that operate in the chosen sectors. Scanfil will strive to acquire an ownership share, which will allow it to have a say in the operations of the selected companies. In addition, the company can own shares and invest assets in other targets. The Annual General Meeting that convened after the review period on 3 April 2008 approved the Board of Director's proposal unanimously. The planned implementation date of the business transfer is 1 May 2008. On 21 January 2008, the District Court of Helsinki dismissed all charges against the Chairman of Scanfil plc's Board of Directors and against Scanfil plc's former CEO in legal proceedings that concerned a delayed profit warning at the turn of 2005-2006. The District Court of Helsinki also dismissed the prosecutor's claim for sentencing Scanfil plc to a fine imposed on a corporation of EUR 25,000. The prosecutor has appealed against the district court's decision to the court of appeal. Negotiations on cooperation between Scanfil plc's Hungarian subsidiary Scanfil Kft and Helkama Forste Oy continue. FINANCIAL DEVELOPMENT The Group's turnover for January-March fell a bit compared with the previous year, amounting to EUR 50.0 (52.2) million, down 4% year-on-year. Distribution of turnover based on the location of customers was as follows: Finland 47 (41) %, rest of Europe 25 (28) %, Asia 26 (29) %, USA 1 (1) % and the others 1 (1) %. Scanfil plc has organised its logistics from material sourcing to delivery of finished products into a flexible and cost-effective chain. Operating profit was at very satisfactory level EUR 4.7 (3.6) million, representing 9.5 (6.8)% of turnover. Earnings for the review period amounted to EUR 3.6 (3.1) million. Earnings per share were EUR 0.06 (0.05) and return on investment was 14.2 (11.3)%. Owing to the structure of the company's operations, the effects of change in exchange rates on the result were minimal. The weakening US dollar has had a minor positive effect on the operating income in Europe. On the other hand, if the US dollar remains weak or continues to weaken, its main impact will be to reduce the turnover and expenses of the Asian operations. Changes in the US dollar exchange rate will not have a significant effect on the relative profitability of the Asian operations. FINANCING AND CAPITAL EXPENDITURE The Group enjoys a strong financial position. Liabilities amounted to EUR 50.0 (47.7) million, EUR 38.0 (40.2) million of which were non-interest bearing and EUR 12.0 (7.5) million interest bearing. Liquid cash assets totalled EUR 48.0 (36.5) million.Liquid cash assets totalled EUR 48.0 (36.5) million. An additional EUR 14.3 (0) million of cash assets has been invested in financial instruments mainly to bonds, credit linked notes and FX carry notes, EUR 9.5 million of which will mature in less than a year. Equity ratio was 73.1 (73.3)% and net gearing -26.5 (-22.2)%. Cash flow from operating activities totalled EUR 8.5 (1.6) million, and the change in working capital was EUR 4.3 (-1.9) million. Parent company's long-term loan of EUR 7.5 million has been settled. To hedge against the possible decline in the value of the Estonian kroon, the Estonian subsidiary has obtained an EEK loan with a counter-value of EUR 12 million. Gross investments in fixed assets totalled EUR 0.3 (0.6) million, which is 0.6 (1.2)% of turnover. Depreciations were EUR 1.6 (2.0) million. DECISIONS BY THE ANNUAL GENERAL MEETING AND BOARD OF DIRECTORS' AUTHORISATION Scanfil plc's Annual General Meeting held on 3 April 2008 confirmed the Financial Statements for 2007 and discharged the Board of Directors and the President from liability. According to Board of Directors' proposal The Annual General Meeting decided to distribute a dividend of EUR 0.12 per share, or a total of EUR 7,045,898.52. The record date for the payment of dividend was 8 April 2008 and the date of payment of the dividend was 15 April 2008. The Meeting resolved that the Board of Directors consists of five members. Asa-Matti Lyytinen, Jorma J. Takanen, Reijo Pöllä, Jarkko Takanen and Tuomo Lähdesmäki were re-elected as members of the Board of Directors. In it's meeting, held after the General Meeting, the Board of Directors elected Jorma J. Takanen as the Chairman of the Board of Directors and Asa-Matti Lyytinen as Vice Chairman of the Board of Directors. The Meeting decided according to the Board of Directors' proposal to authorize the Board of Directors to decide on the acquisition of the Company's own shares with distributable assets. The Meeting approved the Board of Directors' proposal to split up the company with a business transfer to an investment company Scanfil plc and sub-concern Scanfil EMS Oy engaged in the contract manufacturing business. The meeting authorised the Board to decide on all required measures to execute and implement the business transfer. The Meeting approved the Board of Directors' proposal to amend the Articles of Association. OWN SHARES On 31 March 2008, the company owned a total of 1,993,146 of its own shares, the counter-book value of which totalled EUR 498,287 and which represented 3.3% of the company's share capital and votes. During the review period, the company disposed of 5,303 of its own shares in conjunction with the share-based profit-sharing scheme of the Group's Management Team. SHARE TRADING AND SHARE PERFORMANCE The highest trading price during the review period was EUR 2.19 and the lowest EUR 1.76, the closing price for the period standing at EUR 2.10. A total of 1,852,791 shares were traded during the period, corresponding to 3.1% of the total number of shares. The market value of the shares on 31 March 2008 was EUR 127,5 million. PERSONNEL Scanfil Group's personnel averaged 2,074 (2,117) employees during the review period and the company employed 2,116 (2,113) employees at the end of the review period, of whom 1,571 (1,509) were employed in the company's foreign plants. EVENTS AFTER THE REVIEW PERIOD After the review period, the company has made a preliminary agreement on the sale of the property of the Oulu plant. The preliminary agreement is valid until the end of the year and may lead to a sales agreement during 2008. FUTURE PROSPECTS Demand in the industrial electronics sector is expected to continue growing in 2008. In addition, negotiations are in progress with potential new customers in the industrial electronics sector. According to recent forecasts, the value of the telecom equipment market is expected to remain at the same level as in 2007. The net sales of telecom equipment delivered by Scanfil is expected to remain at the same level as in 2007. Scanfil expects its turnover in 2008 to be about the same as in 2007. Profitability for the full year is estimated to be at a satisfactory level. However, market predictability is still poor. The company hopes to find new growth opportunities by splitting up into an investment company called Scanfil plc and a sub-concern, Scanfil EMS Oy, which engages in contract manufacturing business. With the new company structure, we can utilise the Group's strengths even better and are better equipped for monitoring the business development in different areas. Scanfil plc is also actively looking for new business areas in which it can operate as an active owner. OPERATIONAL RISKS AND UNCERTAINTIES Customer risk is one of the main operative risks in telecom contract manufacturing. Extremely short visibility in the market makes it difficult to forecast the success of our customers in the global market and the development of customer demand. Other operative risks include intense price competition, material availability and significant and quick fluctuations in demand. In the industrial electronics sector, the demand looks more stable, with risks and uncertainties mainly associated with global economic development and subsequent changes in demand. APPENDICES: Appendix 1: Consolidated profit and loss statements and balance sheet Appendix 2: Consolidated cash flow statement Appendix 3: Key indicators Appendix 4: Calculation of changes in shareholders' equity Appendix 5: Segment information Appendix 6: Changes in tangible non current assets Appendix 7: Consolidated contingent liabilities Appendix 8: Key indicators quarterly This interim report has been prepared in accordance with the recognition and measurement principles of the IFRS. The accounting policies and methods for calculating key indicators are the same as those published in the financial statements for 2007. Individual figures and grand totals have been rounded to the nearest million euros, so they will not always add up. The figures are unaudited. APPENDIX 1 CONSOLIDATED PROFIT AND LOSS STATEMENT EUR million 2008 2007 2007 1 - 3 1 - 3 1 - 12 NET SALES 50.0 52.2 224.6 Increase or decrease of inventory of finished products - 0.7 - 0.6 - 0.6 Other operating income 0.2 1.0 2.1 Expenses - 43.2 - 47.0 - 200.3 Depreciation - 1.6 - 2.0 - 7.2 OPERATING PROFIT 4.7 3.6 18.6 Financial income and expenses 0.1 0.2 0.4 PROFIT BEFORE TAXES 4.9 3.8 19.0 Direct tax - 1.3 - 0.7 - 4.9 NET PROFIT FOR THE PERIOD 3.6 3.1 14.1 Attributable to: Equity holders of the parent 3.6 3.1 14.1 Earnings/share (EPS), EUR 0.06 0.05 0.24 CONSOLIDATED BALANCE SHEET EUR million 31.3. 31.3. 31.12. 2008 2007 2007 ASSETS Non-current assets Property, plant and equipment 34.8 42.0 36.5 Goodwill 2.5 2.6 2.5 Other intangible assets 1.0 1.0 1.1 Available-for-sale investments 4.9 0.3 0.0 Receivables 0.2 0.2 0.2 Deferred tax assets 0.3 0.2 0.4 Total non-current assets 43.6 46.2 40.8 Current assets Inventories 32.0 38.3 33.6 Trade and other receivables 48.1 50.7 52.3 Advance payments 0.1 0.1 0.1 Available-for-sale investments 9.5 Financial assets with result impact entered at current value 7.0 Cash and cash equivalents 48.0 29.5 50.0 Total current assets 137.6 125,5 136.1 Non current assets held for sale 4.6 6.5 4.6 TOTAL ASSETS 185.8 178.2 181.5 SHAREHOLDERS' EQUITY AND LIABILITIES Equity Share capital 15.2 15.2 15.2 Share premium account 16.1 16.1 16.1 Own shares - 6.9 - 6.9 - 6.9 Other reserves 3.2 2.3 2.6 Translation differences - 4.0 - 0.7 - 2.6 Fair value reserve 0.1 Retained earnings 112.2 104.4 109.3 Total equity 135.8 130.5 133.6 Non-current liabilities Deferred tax liabilities 1.1 1.3 2.3 Reserves 6.7 7.9 7.0 Interest bearing liabilities 12.0 7.5 Total non-current liabilities 19.8 16.7 9.3 Current liabilities Trade and other payables 29.1 30.1 30.4 Current tax 1.1 0.9 0.7 Interest bearing liabilities 0.0 7.5 Total current liabilities 30.2 31.0 38.6 Total liabilities 50.0 47.7 47.9 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 185.8 178.2 181.5 APPENDIX 2 CONSOLIDATED CASH FLOW STATEMENT 2008 2007 2007 EUR million 1 - 3 1 - 3 1 - 12 Cash flow from operations Net profit 3.6 3.1 14.1 Adjustment for the net profit of the period 2.3 1.1 8.7 Change in net working capital 4.3 - 1.9 0.4 Interests paid and other financial expenses - 0.2 - 0.2 - 0.4 Interests received 0.4 0.1 1.3 Taxes paid - 1.9 - 0.5 - 4.0 Net cash flow from operations 8.5 1.6 20.2 Cash flow from investments Investments in tangible and intangible assets - 0.4 - 0.9 - 1.7 Proceeds from sale of tangible and intangible assets 0.2 3.9 6.3 Investments in other investments - 14.3 Proceeds from other investments 0.2 Net cash flow from investments - 14.5 3.0 4.9 Cash flow from funding Raising of long-term loans 12.0 Repayment of long-term loans - 7.5 Dividends paid - 5.9 Net cash flow from funding 4.5 - 5.9 Change in assets - 1.5 4.6 19.2 Liquid assets at the beginning of the period 50.0 31.8 31.8 Effect of changes in currency exchange rates - 0.5 0.0 - 0.6 Effect of changes in the fair value of investments 0.0 0.1 - 0.3 Liquid assets at the end of the period 48.0 36.5 50.0 APPENDIX 3 KEY INDICATORS 2008 2007 2007 1 - 3 1 - 3 1 - 12 Return on equity, % 11.0 9.5 10.8 Return on investment, % 14.2 11.3 14.1 Interest bearing liabilities, EUR million 12.0 7.5 7.5 Gearing, % - 26.5 - 22.2 - 31.8 Equity ratio, % 73.1 73.3 73.6 Gross investments in fixed assets, EUR million 0.3 0.6 1.4 % of net turnover 0.6 1.2 0.6 Personnel, average 2 074 2 117 2 105 Earnings per share, EUR 0.06 0.05 0.24 Shareholders' equity per share, EUR 2.31 2.22 2.27 Number of shares at the end of period, 000's 60 714 60 714 60 714 - not counting own shares 58 721 58 716 58 716 - weighted average 58 716 58 716 58 716 The company does not have any liabilities resulting from derivative instruments. Owing to the nature of the sector, the company's order book covers only a short period of time and does not give an accurate picture of future development. APPENDIX 4 CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY EUR million A = Share capital B = Premium fund C = Own shares D = Other reserves E = Translation differences F = Fair value reserve G = Retained earnings H = Total I = Shareholder's equity total SHAREHODER'S A B C D E F G H I EQUITY 1.1.2007 15.2 16.1 -6.9 1.9 - 0.7 0.1 101.7 127.4 127.4 Translation difference - 0.0 - 0.0 - 0.0 NET INCOME RECOGNIZED DIRECTLY IN EQUITY - 0.0 - 0.0 - 0.0 Net profit for the period 3.1 3.1 3.1 TOTAL RECOGNIZED INCOME AND EXPENCE - 0.0 3.1 3.1 3.1 Transfer to reserves 0.4 - 0.4 0 0 Distribution of own shares 0.0 0.0 0.0 SHAREHOLDER'S EQUITY 31.3.2007 15.2 16.1 - 6.9 2.3 - 0.7 0.1 104.4 130.5 130.5 SHAREHOLDER'S EQUITY 1.1.2008 15.2 16.1 - 6.9 2.6 - 2.6 0 109.3 133.6 133.6 Translation difference - 1.4 - 1.4 - 1.4 NET INCOME RECOGNIZED DIRECTLY IN EQUITY - 1.4 - 1.4 - 1.4 Net profit for the period 3.6 3.6 3.6 TOTAL RECOGNIZED INCOME AND EXPENCE - 1.4 3.6 2.3 2.3 Transfers to reserves 0.6 - 0.6 0 0 Distribution of own shares 0.0 0.0 0.0 SHAREHOLDER'S EQUITY 31.3.2008 15.2 16.1 - 6.9 3.2 - 4.0 0 112.2 135.8 135.8 APPENDIX 5 SEGMENT INFORMATION ACCORDING GEOGRAPHICAL AREA EUR million 2008 2007 2007 1 - 3 1 - 3 1 - 12 TURNOVER Europe 36.8 37.3 150.2 Asia 16.9 18.2 92.4 Turnover between segments - 3.6 - 3.3 - 18.0 Total 50.0 52.2 224.6 OPERATING PROFIT Europe 3.0 2.0 7.5 Asia 1.8 1.5 11.1 Total 4.7 3.6 18.6 The Group operates in single sector. APPENDIX 6 CHANGES IN TANGIBLE NON CURRENT ASSETS EUR million 2008 2007 2007 1 - 3 1 - 3 1 - 12 Book value at the beginning of the period 36.5 43.1 43.1 Additions 0.3 0.5 0.9 Deductions - 0.0 - 0.1 - 0.2 Depreciations - 1.5 - 1.8 - 6.9 Translation differences - 0.5 0.1 - 0.5 Book value at the end of the period 34.8 42.0 36.5 APPENDIX 7 CONSOLIDATED CONTINGENT LIABILITIES EUR million 2008 2007 2007 1 - 3 1 - 3 1 - 12 Real estate mortgages 6.2 Business mortgages 16.4 16.4 16.4 Guarantees pledged 0.1 0.7 0.7 Rental liabilities 0.6 0.4 0.7 The parent company has given a EUR 6.9 million bank guarantee to secure the payment of contributions related to Scanfil NV's restructuring. Scanfil NV's balance sheet includes a corresponding provision. APPENDIX 8 KEY INDICATORS QUARTERLY EUR million Q1/08 Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Turnover, MEUR 50.0 54.4 59.1 58.9 52.2 51.5 67.5 62.4 Operating Profit, MEUR 4.7 5.5 5.6 4.0 3.6 2.7 7.0 5.1 Operating profit, % 9.5 10.2 9.4 6.7 6.8 5.2 10.4 8.2 Net income, MEUR 3.6 3.4 4.5 3.2 3.1 3.0 6.1 3.7 EPS, EUR 0.06 0.06 0.08 0.05 0.05 0.05 0.10 0.06 SCANFIL PLC Harri Takanen President Additional information: President Harri Takanen Tel +358 8 4882 111 Distribution OMX Nordic Exchanges, Helsinki Major Media www.scanfil.com Scanfil plc is a global contract manufacturer and systems supplier for communication and industrial electronics with over 30 years experience in demanding contract manufacturing Scanfil offers contract-manufacturing services as a systems supplier to the telecommunication industry, mainly to wireless communication sector, as well as to the industrial electronics industry. Main telecommunication products are among others integrated enclosure systems for mobile phone and ADSL networks and assembly and testing of modules related to enclosure systems. Examples of industrial electronics products include box-built tested devices, various electronic modules, backplanes and assembled circuit boards as well as cable assemblies. Production plants are situated in China, Hungary, Estonia and Finland. Not for release over US newswire services. Forward looking statements: certain statements in this stock exchange release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Scanfil Oyj to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this stock exchange release, such statements use such words as "may,""will,""expect,""anticipate,""project,""believe,""plan" and other similar terminology. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of Scanfil Oyj to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking information contained in this stock exchange release is current only as of the date of this stock exchange release. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised, except as provided by the law or obligatory regulations, whether as a result of new information, changing circumstances, future events or otherwise. |
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