2013-11-13 11:00:00 CET
2013-11-13 11:00:04 CET
REGULATED INFORMATION
Cencorp - Interim report (Q1 and Q3)
CENCORP CORPORATION´S INTERIM REPORT JANUARY - SEPTEMBER 2013
Cencorp Corporation Interim Report 13 November 2013 at 12.00 Finnish time
CENCORP CORPORATION'S INTERIM REPORT JANUARY - SEPTEMBER 2013
The net sales of Cencorp Corporation's (“Cencorp”) continuing operations for
the reporting period January - September 2013 was EUR 8.9 million (EUR 12.1
million in 2012). The operating profit of continuing operations was EUR -2.8
million (-2.4), profit for the period EUR -4.0 million (-2.9), earnings per
share were EUR -0.01 (-0.008) and EBITDA was EUR -1.4 million (-0.8).
Major part of the loss (operating profit for the period EUR-2.8 million)
generates from low production volume of mobile phones and antennas at the
Beijing factory which belongs to Cencorp's Clean Energy Solutions segment. The
company is trying to give up production of other products except for Conductive
Back Sheets (CBS).
GENERAL
Cencorp belongs to the Finnish Savcor Corporation (“Savcor”). Savcor Group
companies owned approximately 78.9 % of the Cencorp shares on 30 September
2013.
More information on principle activities and events during the reporting period
can be found in the stock exchange releases published on Cencorp's website at
www.cencorp.com.
The Interim Report has been drawn up in compliance with the IAS 34 Interim
Financial Reporting standard. In the Interim Report Cencorp has applied the
same accounting principles as in the annual report 2012. The Interim Report has
not been audited.
FINANCIAL DEVELOPMENT
14 May 2013 Cencorp announced that the company changes its reporting system to
comply with the company's Cleantech strategy. As from 1 January 2013 Cencorp
reports of three business segments. The segments are Laser and Automation
Applications (LAS), Life Cycle Management (LCM) and Clean Energy Solutions
(CES). CES also includes the former Special Components segment. The comparison
figures for the corresponding period in 2012 are only available of the net
sales. Other figures that would be comparable and reliable enough are not
available. Cencorp's new segment information is based on the management's
internal reporting and on the organisation structure of the company.
The figures in brackets are comparison figures for the corresponding period in
2012, unless stated otherwise. 29 May 2012 Cencorp announced that it exits from
its unprofitable decoration business and closes down its plant in Guangzhou,
China, producing components for decorative applications. Thus, comparison
figures for the last year do not include operations in Guangzhou.
July - September 2013 (continuing operations)
- Cencorp Group's net sales increased by 0.7 per cent to EUR 3.07 million (EUR
3.05 million).
- EBITDA was EUR -0.6 million (EUR -0.8 million).
- Operating profit was EUR -1.1 million (EUR -1.3 million).
- The Group's profit before taxes was EUR -1.7 million (EUR -1.6 million).
- Profit for the period was EUR -1.7 million (EUR -1.6 million).
- Earnings per share were EUR -0.005 (EUR -0.005) and diluted earnings per
share EUR -0.005 (EUR -0.005).
- Net sales of the Laser and Automation Applications segment (LAS) increased by
89.5 per cent to EUR 1.5 million (EUR 0.8 million) and operating profit was EUR
-0.3 million. The segment's EBITDA was
EUR -0.2 million.
- Net sales of the Life Cycle Management segment (LCM) decreased by 18.4 per
cent to EUR 0.7 million (EUR 0.8 million) and operating profit was EUR 0.03
million. The segment's EBITDA was EUR 0.05 million.
- Net sales of the new Clean Energy Solutions segment (CES) decreased by 38.2
per cent to EUR 0.9 million (EUR 1.4 million) due to decrease in the antenna
production in Beijing and operating profit was EUR -0.8 million. The segment's
EBITDA was
EUR -0.5 million.
January - September 2013 (continuing operations)
- Cencorp Group's net sales decreased by 26.3 per cent to EUR 8.9 million (EUR
12.1 million).
- EBITDA was EUR -1.4 million (EUR -0.8 million).
- Operating profit was EUR -2.8 million (EUR -2.4 million).
- The Group's profit before taxes was EUR -4.0 million (EUR -2.9 million).
- Profit for the period was EUR -4.0 million (EUR -2.9 million).
- Earnings per share were EUR -0.01 (EUR -0.008) and diluted earnings per share
EUR -0.01 (EUR -0.008).
- Net sales of the Laser and Automation Applications segment (LAS) decreased by
11.0 per cent to EUR 4.1 million (EUR 4.6 million) and operating profit was EUR
-1.2 million. The segment's EBITDA was
EUR -0.8 million.
- Net sales of the Life Cycle Management segment (LCM) decreased by 18.3 per
cent to EUR 2.3 million (EUR 2.8 million) and operating profit was EUR 0.1
million. The segment's EBITDA was EUR 0.2 million.
- Net sales of the new Clean Energy Solutions segment (CES) decreased by 43.3
per cent to EUR 2.7 million (EUR 4.7 million) and operating profit was EUR -1.8
million. The segment's EBITDA was
EUR -0.8 million.
MANAGING DIRECTOR IIKKA SAVISALO'S REVIEW
The net sales for the reporting period increased slightly compared to the
corresponding period in 2012. The EBITDA improved as well. There was remarkable
growth in the LAS segment as many of the orders received in the spring
proceeded in delivery phase. However, the EBITDA of the LAS segment did not yet
turn into profit. The LCM segment was able to make positive EBITDA despite the
segment's decreased net sales. The CES segment's decreasing net sales and loss
are generating from decreasing amount of orders in mobile phone component
projects. Cencorp does no longer consider production of low-profit mobile phone
components as the company's focus area and is reviewing opportunities to
totally give up producing these components as soon as possible. In the
reporting period Conductive Back Sheets for photovoltaic modules produced in
Beijing did not yet generate any remarkable net sales. Since the end of the
reporting period CBS deliveries to Cencorp's own module factory in Mikkeli have
started.
Although Cencorp's quotation base stayed on good level for the whole third
quarter the company did not succeed to turn the quotations into orders as
expected, particularly among European customers who in uncertain economical
conditions considered carefully their future capacity needs. However, Cencorp
did not lose the orders and since the end of the reporting period Cencorp has
been able to secure major part of them. Further, Cencorp succeeded to turn its
order book that was decreasing during the summer, back to growth.
In the reporting period and since then Cencorp has continued actions to improve
profitability in the traditional LAS and LCM segments. In September and October
Cencorp carried out statutory negotiations in order to focus its business model
and to decrease costs. As a result of the negotiations no notices were given
but the targeted savings will be gained with lay-offs carried out in phases,
with flexible working hour arrangements and by decreasing certain remunerations
as well as by outsourcing certain ramp up functions. The lay-offs do not
concern
Cencorp's Clean Energy Solutions segment. Cencorp is aiming to increase
profitability in its traditional industrial automation business by targeting
resources to improve key customer service. The company will give up low-profit
or unprofitable operations and costs in support functions will be decreased.
Investments in products for Cencorp's industrial automation customers will from
now on be focused on the company's key areas: solutions for depaneling,
odd-form assembly for special components, laser applications and final
assembly. By focusing its operations on these core business areas Cencorp
believes it can provide its customers with automation offering that is one of
the most modern and most competitive in the world, and further, with less costs
than earlier.
In the future Cencorp's CES segment will be the heart of the company's growth.
The company's gross investments in photovoltaic module technology amounted to
EUR 2.4 million. The investment program continues intensively for more than a
year. At the end of 2014 Cencorp is going to open a full-sized and
fully-automated production line for next generation CBS based modules in
Mikkeli. In the reporting period ProxEnergy BV and Cencorp Corporation signed a
distribution agreement on selling photovoltaic modules, manufactured by
Cencorp, in Cape Verde and the Netherlands. The first order based on the
distribution agreement values for ca. EUR 0.15 million.
OPERATING ENVIRONMENT
Cencorp operates in industries applying electronics and Cleantech technology.
Cencorp's operating environment is global. The company's traditional customers
in the electronics industry as well as new CES customers are companies that
provide products and services worldwide. 93.3 per cent of Cencorp's products
and services are either exported from Finland or they are manufactured by
Cencorp in the US and in China.
MARKET OUTLOOK
In Cencorp's LAS segment short and middle-term outlook has improved. The amount
of Cencorp's quotations has clearly risen and opportunities for significant
growth can been seen in odd-form assembly applications, in particular. Cencorp
has succeeded to update its application range. Cencorp's next generation
odd-form solutions, including Cencorp 1500 OF which will be the first one to be
introduced in Productronica trade fair in Munich this week.
The LAS segment's EBITDA target of 5 % at the minimum is reachable in within a
reasonable time.
The demand for LCM services has continued to be reasonable and the company's
organization and products are ready to meet growing demand. The segment's
operations are profitable. However, the segment's EBITDA target of 15 % at the
minimum has not yet been achieved. The company continues improving the
efficiency of its operations.
In the CES segment the expectations lie in sales of solar modules, module
components and production technology. In negotiations with several photovoltaic
module manufactures concerning CBS deliveries it has become clear that
customers' product development don't enhance the transition from old technology
to next generation modules as fast as expected. However, Cencorp's CBS seems to
be very competitive product, as mass production is about to begin, and the
company has not dropped its internal expectations for the product. Close
cooperation with several photovoltaic module manufacturers has generated many
new opportunities for Cencorp to utilize its innovation capabilities and to
bring its customers significant added value.
For about one year Cencorp has been developing fully automated production
technology for CBS modules. The technology has been introduced to almost all of
the most significant solar module manufacturers. Innovations relating to the
technology have been protected by applying patents. There is only a limited
amount of competitors in the market and the customer feedback on Cencorp's
production technology has been positive. Cencorp's production technology has
special features: production lines have high level of automation, they are easy
to use and require only little space. Start-up cost for setting up solar module
production from zero amounts to only EUR 10 - 15 million depending on the
existing level of existing infrastructure and required capacity. Cencorp is
negotiating with several existing module manufacturers as well as with
companies planning to establish local module production. Cencorp's first
full-size production plant, based on the company's own design, planned to
operate as the company's sample factory, is expected to be opened in Mikkeli in
2014, provided the company has sufficient capital for the project.
The third product group in Cencorp's solar module strategy includes a series of
photovoltaic modules based on Cencorp's own CBS technology. The first ready
products have already been delivered. Cencorp will soon launch a product family
with various cell structures. Cencorp is negotiating with several traditional
energy companies and with global companies producing solar energy on providing
module installations for their use.
Cencorp's Cleantech strategy, if realized, will remarkably change the company's
cost structure and the targets set for the near future. As Cencorp is now in a
strong transition phase, following the new strategy, Cencorp cannot assess how
the change in company's business focus will impact to the company and Cencorp
has decided not to give any financial guidance for the time being, as stated in
the release of 21 August 2012. As the transition phase is still continuing
Cencorp does not give any financial guidance either during 2013.
Cencorp informs of its Cleantech strategy in more detail in a separate release
of 13 November 2013.
Cencorp's future outlook will be highly dependent on the company's ability to
reach the targeted market position in the global photovoltaic module market as
well as on the company's long-term and short-term financing. Cencorp's goal is
to reach strong market position as provider of locally produced high-quality
photovoltaic modules. Risks are handled in more detail in the item Risk
management, risks and uncertainties of this Interim Report.
LONG-TERM OBJECTIVES FOR MANAGING DIRECTOR
On 21 August 2012 Cencorp's Board of Directors published its long-term
financial and other objectives for Managing Director as follows:
- Thorough but fast transition from a company manufacturing only
production automation systems and special components into a company that
develops and provides Cleantech applications using laser and automation
technology, a company with a strong market position as a provider, of locally,
produced, high-quality photovoltaic modules and a company operating in various
geographical markets.
- Cencorp's goal is to increase its shareholder value with growth and
profitability. Cencorp aims for growth in Cleantech business where the company
has good possibilities to achieve a strong global position and faster growth.
- Laser and Automation Applications segment has its main focus on the
Life Cycle Management of systems and on equipment with growth expectations for
service business.
- In the long run Cencorp is aiming for remarkable growth in its net
sales with net sales target of more than EUR 200 million for 2016, with growth
coming mainly from Cleantech operations, especially from solar photovoltaic and
fuel cell applications, provided the company has sufficient capital.
The long-term objectives set for the Managing Director involve also risks and
the long-term objectives should not be considered as the company's financial
guidance. Even though the objectives are based on market knowledge and
technical surveys, the risks are significant and it is not certain if the
Managing Director reaches all or part of the targets set for him.
FINANCING
Cash flow from business operations before investments in January - September
was EUR -1.6 million (EUR 0.95 million). Trade receivables at the end of the
reporting period were EUR 1.7 million (EUR 2.2 million). Net financial items
amounted to EUR -1.2 million (EUR -0.5 million).
At the end of September, the equity ratio was 8.5 per cent (27.3 %) and equity
per share was EUR 0.005 (EUR 0.02). The equity ratio including capital loans
was 30.6 per cent (33.2 %). At the end of the reporting period, the Group's
liquid assets totaled EUR 0.2 million (EUR 0.5 million) unused export credit
limits, bank guarantee limits and factoring loans amounted to EUR 1.1 million
(EUR 1.6 million).
Keskinäinen Eläkevakuutusyhtiö Etera and Oy Ingman Finance Ab subcribed all of
the convertible bond I/2013 of EUR 2.1 million, issued by Cencorp 17 May 2013.
As previously announced, Cencorp's financing position has been tight and it
involves risks. As the investments are still continuing and the company is
preparing for significant increase in its net sales, working capital is
probably to be tight until the operations turn into profit in terms of EBITDA.
As previously announced Cencorp has commenced preparations for a share issue.
For this purpose Cencorp's Board of Directors have given a notice, as published
on 13 November 2013, to extraordinary general meeting to be held on 4 December
2013 to decide on an authorisation to the Board of Directors, based on which
the Board of Directors can decide on a share issue to the shareholders of the
company and to the holders of the convertible bonds of the company, either in
one or in several occasions, so that the maximum number of new shares to be
issued based on the authorization is 510 000 000 new shares of the company.
The objective of the share issue is to finance the execution of the company's
photovoltaic module business plan. Cencorp will inform later on the terms and
schedule of the share issue. In addition, the Board of Directors has commenced
preparations for convening another extraordinary general meeting to be held
after the execution of the aforesaid share issue to decrease the amount of
shares of the company without reducing share capital (so called reverse
split)in order to increase trading activity and improve price formation of
shares of the company.
Cencorp agreed with its financiers on amendment of the financial agreements and
announced on 27 September 2013 that:
- Danske Bank Oyj's financial facility agreement totaling EUR 4 million was
continued until the end of January 2014;
- the maturity date of a convertible bond of some EUR 1.2 million from Savcor
Group Oy was extended until the end of January 2014; and
- the maturity date of a loan of EUR one million from Savcor Invest BV (former
AC Invest BV), a daughter company of Savcor Group Oy, was extended until the
end of January 2014.
According to estimates available, the company's financing position will
continue to be tight. According to the opinion of Cencorp management the
working capital of the company is not sufficient to complete the ongoing
investment plan, based on the company's strategy, for next twelve (12) months.
From the company's point of view, one of the most important risks is
sufficiency of working capital. Cencorp has loans which will be due in
following twelve (12) months. Cencorp's operational conditions will be highly
dependent on whether Cencorp manages to rearrange the loans. Therefore the
company has, in addition to the above-mentioned measures, started negotiations
with its main financiers and owners on measures to strengthen the financing
position until the company's cash flow is expected to return to positive. With
these actions Cencorp believes that the company has secured sufficient working
capital for the next twelve (12) months and will be able to complete its
strategic investments.
RESEARCH AND DEVELOPMENT
The Group's research and development costs during the January - September
period amounted to EUR 1.4 million (EUR 1.0 million) or 15.3 (8.1) per cent of
net sales.
INVESTMENTS
Gross investments during the January - September period amounted to EUR 3.0
million (EUR 1.2 million). The largest investments were EUR 2.5 million in
development costs.
PERSONNEL
At the end of September the Group employed 152 (177) people, out of which 54
persons worked in Finland, 85 persons in China and 13 persons in other
countries. During the reporting period, salaries and fees totalled EUR 3.1
million (EUR 3.9 million).
SHARES AND SHAREHOLDERS
Cencorp's share capital amounts to EUR 3 425 059.10. The number of shares is
342 161 270. The company has one series of shares, which confer equal rights in
the company. Cencorp did not own any of its own shares at the end of the
reporting period.
The company had a total of 4859 shareholder at the end of September 2013, and
0.8 per cent of the shares were owned by foreigners. The ten largest
shareholders held 89.0 per cent of the company's shares and voting rights on 30
September 2013.
The largest shareholders on 30 September 2013
Shares Votes
-----------------------------------------------------------
1. SAVCOR GROUP LIMITED 133 333 333 39,0
-----------------------------------------------------------
2. SAVCOR GROUP OY 119 235 078 34,8
-----------------------------------------------------------
3. SAVCOR INVEST BV 17 499 999 5,1
-----------------------------------------------------------
4. KESKINÄINEN ELÄKEVAKUUTUSYHTIÖ ETERA 16 394 735 4,8
-----------------------------------------------------------
5. GASELLI CAPITAL OY 11 000 000 3,2
-----------------------------------------------------------
6. GASELLI CAPITAL PARTNERS OY 2 050 000 0,6
-----------------------------------------------------------
7. JOKELA MARKKU 1 804 728 0,5
-----------------------------------------------------------
8. PARPOLA VILLE 1 478 759 0,4
-----------------------------------------------------------
9. FRATELLI OY 877 000 0,26
-----------------------------------------------------------
10. PAASILA MATTI 812 001 0,24
-----------------------------------------------------------
Other 37 710 597 11,0
-----------------------------------------------------------
TOTALLY 342 161 270 100,0
-----------------------------------------------------------
The members of the Board of Directors and the President and CEO, either
directly or through companies under their control, held a total of 270 068 410
shares in the company on 30 September 2013, representing about 78.9 per cent of
the company's shares and voting rights. Iikka Savisalo, Cencorp's Managing
Director, either directly or through companies under his control, held a total
of 270 068 410 shares in the company, 8,931,000 options connected to bond
I/2010 and 21,428,571 options connected to bond I/2012.
The price of Cencorp's share varied between EUR 0.06 and 0.10 during the
January - September period. The average price was EUR 0.08 and the closing
price at the end of September EUR 0.08. A total of 18.2 million Cencorp shares
were traded at a value of EUR 1.5 million during the January - September
period. The company's market capitalization at the end of September stood at
EUR 27.4 million.
No share options were granted to the company's management during the reporting
period. On 30 September 2013, the company had 8,931,000 options connected to
bond I/2010 with a subscription period ending on 25 May 2015. Savcor Group Oy
holds the options connected to bond I/2010. On 30 September 2013 the company
hold 21,428,571 options connected to bond I/2012 with subscription period
ending on 7 September 2014. Options connected to bond I/2012 are held by SCI
Invest Oy and Savcor Group Oy. On 30 September 2013 the company had 30,000,000
options connected to bond I/2013 with a subscription period ending on 2 June
2015. The options connected to bond I/2013 are held by Keskinäinen
Vakuutusyhtiö Etera and Oy Ingman Finance Ab.
SHARE ISSUE AUTHORIZATIONS IN FORCE
1,069,000 shares remain under the authorization given by Cencorp's Annual
General Meeting on 28 April 2009 to issue 10,000,000 new shares in Cencorp.
Cencorp's Extraordinary General Meeting held on 30 January 2012 decided to
authorize the Board of Directors to issue 100,000,000 new shares. There were no
other resolutions made at the Extraordinary General Meeting. 48,571,429 shares
remain under the authorization. In the second half of 2013, 4,000,000 shares,
under the authorization, will be issued in a directed share issue for Sunweb
Solar to pay part of the purchase price of the transaction carried out in
January.
LIQUIDITY PROVIDING IN CENCORP CORPORATION'S SHARE ENDED
FIM Pankki Oyj's liquidity providing in Cencorp Corporation's share ends as
published on 1 November 2013. The liquidity providing is valid until on 29
November 2013.
NEGOTIATIONS WITH AVERY DENNISON HAVE BEEN CLOSED
On 21 August Cencorp announced that the company and Avery Dennison Corporation
(”Avery Dennison”), a US based company, have signed a Memorandum of
Understanding (MOU) according to which Cencorp acquires Avery Dennison's
Conductive Back Sheet (CBS) business and related intellectual property rights.
The MOU was non-binding. The negotiations between Avery Dennison and Cencorp
have been closed for now as published on 21 August 2013.
MAIN TERMS OF THE MEMORANDUM OF UNDERSTANDING SIGNED WITH A MAJOR CHINESE SOLAR
PHOTOVOLTAIC (PV) MODULE MANUFACTURER ON DELIVERING CONDUCTIVE BACK SHEETS
On 5 November 2012 Cencorp announced that the company has signed a Memorandum
of Understanding on delivering Conductive Back Sheets (CBS) to one of the
leading Chinese PV (photovoltaic) module manufacturers. The Memorandum of
Understanding is non-binding. According to the customer's written estimate
received from the customer at the end of January 2013 CBS mass deliveries
should have commenced during the first half of 2013. Commencing of the mass
production always requires customer's internal evaluating process which still
continues and the customer has not yet started mass production. However, CBS
components have passed Cencorp´s internal technical requirements.
The risks related to the non-binding MOU signed with the Chinese solar
photovoltaic module manufacturer have been handled in more detail in the item
“Risk management, risks and uncertainties” of this Interim Report.
RISK MANAGEMENT, RISKS AND UNCERTAINTIES
Cencorp's Board of Directors is responsible for the control of the company's
accounts and finances. The Board is responsible for internal control, while the
President and CEO handles the practical arrangement and monitors the efficiency
of internal control. Business management and control are taken care of using a
Group-wide reporting and forecasting system.
The purpose of risk management is to ensure that any significant business risks
are identified and monitored appropriately. The company's business and
financial risks are managed centrally by the Group's financial department, and
reports on risks are presented to the Board of Directors as necessary.
Due to the small size of the company and its business operations, Cencorp does
not have an internal auditing organization or an audit committee.
The sufficiency of the company's financing and working capital involve risks
that are handled in more detail in the item Financing of this Interim Report.
According to available estimates, the company's financing position will
continue to be tight. According to the opinion of the Cencorp management the
working capital of the company is not sufficient for the next twelve (12)
months to realize the strategic investment plan going on in the company. From
the company's point of view one of the most significant risks is the
sufficiency of working capital. Cencorp has loans which will be due in the
following twelve (12) months, and whether the company succeeds or fails to
rearrange the loans will have a significant effect in the company's operations.
Therefore the company has, in addition to the above-mentioned measures, started
negotiations with its main financiers and owners on measures to strengthen the
financing position until the company's cash flow is expected to return to
positive. By these actions Cencorp believes to secure sufficiency of working
capital for the next twelve (12) months and to finalize investments according
to the company's strategy.
As announced earlier Cencorp has commenced preparations for a share issue.
Cencorp's Board of Directors have given a notice, as published on 13 November
2013, to extraordinary general meeting to be held on 4 December 2013 to decide
on an authorisation to the Board of Directors, based on which the Board of
Directors can decide on a share issue to the shareholders of the company and to
the holders of the convertible bonds of the company, either in one or in
several occasions, so that the maximum number of new shares to be issued based
on the authorization is 510 000 000 new shares of the company. A share issue to
be arranged based on the aforesaid authorization involves risks. It is not
secured that the company will be able to collect capital to finance the
establishing of photovoltaic module business plan. If the share issue doesn't
materialize as planned, there is a risk that the establishment of Cencorp's
Cleantech strategy will be postponed or even fail, partly or totally.
As it is difficult to make forecasts in an industry that is dependent on
economic cycles, the biggest business risks are related to fluctuations in the
demand for products and to the adjustment of operations to meet demand.
In terms of profitability, the most essential risks are related to the
achievement of a sufficient invoicing volume in all three business segments and
the success achieved with the programs underway at Cencorp to improve
profitability, such as improvements in productivity and business flexibility
through outsourcing production.
In terms of operations, the biggest risks are related to outsourcing in-house
equipment production to contract manufacturers, in particular to whether the
production chain efficiency targets are achieved as planned.
Cencorp has announced that its objective is to transform from a company
manufacturing only production automation systems and special components into a
company that develops and provides cleantech applications using laser and
automation technology as well as into a company that has a strong market
position as a provider of, in various geographical areas, locally produced
high-quality photovoltaic modules. Achievement of the objectives as well as
realization of the transformation involves risks. Even though Cencorp's
strategy and objectives are based on market knowledge and technical surveys,
the risks are significant and it is not certain if the company reaches all or
part of the targets set for it. Cencorp's future outlook will be highly
dependent on the company's ability to reach the targeted market position in the
global photovoltaic module market as well as on the company's long-term
financing.
The execution of the non-binding Memorandum of Understanding signed with a
major Chinese photovoltaic module manufacturer involves risks. The final terms
of an agreement are still under negotiations, thus execution of the agreement
is not yet guaranteed. Additionally, the agreement is subject to Cencorp's
short-term and long-term financing which is still under negotiation. Thus,
Cencorp is not yet able to estimate the agreement's possible execution,
effective date neither the agreement's impact in Cencorp nor the final risks
relating to it. However, in regard to the Memorandum of Understanding on
delivering CBS to the Chinese photovoltaic module manufacturer, the estimated
minimum value of EUR 20 million for three years' period from the start of mass
production will probably stay non-binding even though the actual Memorandum of
Understanding turns into a binding supply contract. In this business customers
do not give binding order estimations.
The long-term objectives set for the Managing Director involves also risks and
the long-term objective should not be considered as the company's financial
guidance. Even though the objectives are based on market knowledge and
technical surveys, the risks are significant and it is not certain if the
Managing Director reaches all or part of the targets set for him.
Other risks connected to Cencorp have been presented in more detail in the
Annual Report for 2012.
In Mikkeli, 13 November 2013
Cencorp Corporation
BOARD OF DIRECTORS
For more information please contact:
Cencorp: Iikka Savisalo, President and CEO, tel. +358 40 521 6082,
iikka.savisalo@savcor.com
Distribution:
NASDAQ OMX, Helsinki
Main media
www.cencorp.com
Consolidated statement of comprehensive income
(unaudited)
1 000 EUR 7-9/2013 7-9/2012 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Continuing
operations
Net sales 3 067 3 045 8 944 12 129 15 441
Cost of sales -2 909 -2 994 -8 387 -11 396 -14 731
Gross profit 159 52 557 733 710
--------------------------------------------------------------------------------
Other operating 41 49 932 1 358 1 791
income
Product development -429 -306 -1 371 -988 -1 458
expenses
Sales and marketing -442 -487 -1 225 -1 452 -2 072
expenses
Administrative -354 -614 -1 436 -2 007 -2 669
expenses
Other operating -27 -7 -282 -56 -235
expenses
Operating profit -1 052 -1 314 -2 824 -2 412 -3 932
Financial income -85 309 301 1 255 380
Financial expenses -534 -605 -1 466 -1 747 -1 224
Profit before taxes -1 672 -1 610 -3 989 -2 904 -4 776
from continuing
operations
Income taxes -15 1 -14 27 26
Profit/loss for the -1 686 -1 609 -4 004 -2 877 -4 750
period from
continuing
operations
Discontinued
operations
Profit/loss after -35 -255 -44 -9 079 -8 606
tax for the period
from discontinued
operations
Profit/loss for the -1 722 -1 864 -4 048 -11 956 -13 356
period
--------------------------------------------------------------------------------
Profit/loss
attributable to:
Shareholders of the -1 722 -1 864 -4 048 -11 956 -13 356
parent company
Earnings/share -0,005 -0,01 -0,01 -0,03 -0,04
(diluted), eur
Earnings/share -0,005 -0,01 -0,01 -0,03 -0,04
(basic), eur
Continuing
operations:
Earnings/share -0,005 -0,005 -0,01 -0,008 -0,01
(diluted), eur
Earnings/share -0,005 -0,005 -0,01 -0,008 -0,01
(basic), eur
Profit/loss for the -1 722 -1 864 -4 048 -11 956 -13 356
period
Other comprehensive
income
Translation 11 -5 82 59 93
difference
Net other comprehensive income to be
reclassified to
profit or loss in 11 -5 82 59 93
subsequent periods
Total comprehensive -1 711 -1 870 -3 966 -11 897 -13 263
income for the
period
--------------------------------------------------------------------------------
Total comprehensive
income attributable
to:
Shareholders of the -1 711 -1 870 -3 966 -11 897 -13 263
parent company
Consolidated statement of financial position
(unaudited)
1 000 EUR 30.9.2013 30.9.2012 31.12.2012
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 6 010 7 000 6 688
Consolidated goodwill 2 967 2 967 2 967Other intangible assets 5 186 3 049 2 979
Available-for-sale investment 10 10 10
Deferred tax assets 7 9 9
Total non-current assets 14 179 13 035 12 652
--------------------------------------------------------------------------------
Current assets
Inventories 2 491 3 293 2 693
Trade and other 2 624 3 083 2 695
non-interest-bearing
receivables
Cash and cash equivalents 237 300 583
Total current assets 5 351 6 676 5 971
--------------------------------------------------------------------------------
Assets classified as held for 0 1 284 79
sale
Total assets 19 530 20 996 18 702
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
Equity attributable to shareholders of the parent
company
Share capital 3 425 3 425 3 425
Other reserves 44 123 43 344 43 691
Translation difference 3 441 643 677
Retained earnings -49 340 -41 692 -43 091
Total equity 1 649 5 721 4 703
--------------------------------------------------------------------------------
Non-current liabilities
Non-current loans 3 142 519 2 095
Deferred tax liabilities 20 22 26
Total non-current liabilities 3 162 542 2 121
--------------------------------------------------------------------------------
Current liabilities
Current interest-bearing 6 585 4 824 4 731
liabilities
Trande and other payables 7 919 7 426 6 850
Current provisions 215 269 257
Total current liabilities 14 719 12 519 11 839
--------------------------------------------------------------------------------
Liabilities directly associated 0 2 214 40
with assets classified as held
for sale
Total liabilities 17 881 15 275 14 000
--------------------------------------------------------------------------------
Equity and liabilities total 19 530 20 996 18 702
--------------------------------------------------------------------------------
Consolidated statement of cash flows
(unaudited)
1 000 EUR 1-9/201 1-9/201 1-12/201
3 2 2
--------------------------------------------------------------------------------
Cash flow from operating activities
Income statement profit/loss from continuing -3 989 -2 905 -4 776
operations before taxes
Income statement profit/loss from discontinued -44 -9 079 -8 606
operations before taxes
Income statement profit/loss before taxes -4 034 -11 984 -13 382
---------------------------
Non-monetary items adjusted on income statement
--------------------------------------------------------------------------------
Depreciation and impairment + 1 440 7 977 8 682
Gains/losses on disposals of non-current +/- -28 -1 166 -655
assets
Unrealized exchange rate gains (-) and +/- 105 57 108
losses (+)
Other non-cash transactions +/- 214 0 -1 181
Financial income and expense + 1 096 545 845
Total cash flow before change in working -1 207 -4 570 -5 583
capital
--------------------------------------------------------------------------------
Change in working capital
Increase (-) / decrease (+) in inventories 38 298 827
Increase (-) / decrease (+) in trade and 70 4 230 4 863
other receivables
Increase (+) / decrease (-) in trade and -14 1 285 -210
other payables
Change in provisions -43 0 48
Change in working capital 51 5 814 5 529
--------------------------------------------------------------------------------
Adjustment of financial items and taxes to
cash-based accounting
Interest paid - -253 -182 -257
Interest received + 0 8 4
Other financial items - -151 -135 -258
Taxes paid - -4 15 18
Financial items and taxes -408 -294 -492
--------------------------------------------------------------------------------
NET CASH FLOW FROM BUSINESS OPERATIONS -1 563 950 -547
CASH FLOW FROM INVESTING ACTIVITIES
Investments in tangible and intangible assets - -1 972 -1 240 -1 757
Proceeds on disposal of tangible and intangible + 70 3 677 4 465
assets
Repayment of loan receivables + 0 0 0
NET CASH FLOW FROM INVESTMENTS -1 869 2 437 2 708
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from non-current borrowings + 2 319 0 1 559
Stock options of the convertible bond + 432 0 347
Proceeds from current borrowings + 4 470 4 572 5 404
Repayment of current borrowings - -4 134 -7 728 -9 174
Dividends paid - 0 0 0
--------------------------------------------------------------------------------
NET CASH FLOW FROM FINANCING ACTIVITIES 3 078 -3 155 -1 865
INCREASE (+) OR DECREASE (-) IN CASH FLOW -355 231 296
Consolidated statement of changes in equity
(unaudited)
1 000 EUR Share Other Translati Distributable Retaine Total
capit reser on non-restricted d
al ves differen equity fund earnin
ce gs
--------------------------------------------------------------------------------
31.12.2012 3 425 4 908 677 38 783 -43 091 4 703
Stock options of 432 432
the convertible
bond
Share related - - - - 480 480
payments
Translation - - 82 - 82
difference,
comprehensive
income
Profit/loss for - - - - -4 048 -4 048
the period
30.9.2013 3 425 4 908 760 39 215 -46 659 1 649
1 000 EUR Share Other Translati Distributable Retaine Total
capit reser on non-restricted d
al ves differen equity fund earnin
ce gs
--------------------------------------------------------------------------------
31.12.2011 3 425 4 908 584 38 436 -29 735 17 618
Translation - - 59 - - 59
difference,
comprehensive
income
Profit/loss for - - - - -11 956 -11 956
the period
30.9.2012 3 425 4 908 643 38 436 -41 692 5 721
Segment information
(unaudited)
14 May 2013 Cencorp announced that the company changes its reporting system to
comply with the company's Cleantech strategy and as from 1 January 2013 Cencorp
reports of three business segments. The segments are Laser and Automation
Applications, Life Cycle Management and Clean Energy Solutions (including also
the former Special Components segment). The comparison figures for the
corresponding period in 2012 concern only the net sales. Other figures that
would be compareble and reliable enough are not available. Cencorp's new
segment information is based on the management's internal reporting and on the
organisation structure.
The segment information include only continuing operations. Information
regarding discontinued operations is given in attachment "Discontinued
operations".
1 000 EUR 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Net sales
Laser and Automation 4 066 4 571 5 909
Applications
Life Cycle Management of 2 309 2 826 3 708
Laser and Automation
Applications
Clean Energy Solutions 2 684 4 737 5 865
Eliminations -115 -5 -41
Total 8 944 12 129 15 441
Operating profit
Laser and Automation -1 156 - -
Applications
Life Cycle Management of 112 - -
Laser and Automation
Applications
Clean Energy Solutions -1 780 - -
Eliminations -1 - -
Total -2 824 - -
EBITDA
Laser and Automation -761 - -
Applications
Life Cycle Management of 216 - -
Laser and Automation
Applications
Clean Energy Solutions -834 - -
Eliminations -6 - -
Total -1 385 - -
Depreciation
Laser and Automation 381 - -
Applications
Life Cycle Management of 104 - -
Laser and Automation
Applications
Clean Energy Solutions 940 - -
Total 1 426 - -
Impairment
Laser and Automation 14 - -
Applications
Life Cycle Management of 1 - -
Laser and Automation
Applications
Clean Energy Solutions 0 - -
Total 14 - -
Segment information
(unaudited)
When the comparison figures that would be comparable and reliable enough are not
available for the corresponding period in 2012, Cencorp reports the segment
information also according the old reporting system with two segments. The
segment information include only continuing operations.
The Group had two reporting segments till 31 December 2012: Laser and Automation
Applications, and Special Components. The Laser and Automation Applications
segment comprised Cencorp's former business and the Special Components segment
the business acquired through the Face transaction in 2010.
1 000 EUR 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Net sales
Laser and Automation Applications 6 340 7 400 9 624
Special Components 2 655 4 735 5 858
Eliminations -51 -5 -41
Total 8 944 12 129 15 441
Operating profit
Laser and Automation Applications -1 333 -2 143 -3 221
Special Components -1 497 -270 -712
Eliminations 6 0 1
Total -2 824 -2 412 -3 932
EBITDA
Laser and Automation Applications -811 -1 636 -2 401
Special Components -579 851 812
Eliminations 6 0 1
Total -1 385 -785 -1 588
Profit/loss for the period
Laser and Automation Applications -2 235 -2 375 -3 644
Special Components -1 772 -465 -1 120
Eliminations 3 -38 14
Total -4 004 -2 877 -4 750
Assets
Laser and Automation Applications 16 457 28 530 27 995
Special Components 9 850 11 378 10 964
Assets classified as held for sale 0 1 284 79
Eliminations -6 777 -20 196 -20 336
Total 19 530 20 996 18 702
Liabilities
Laser and Automation Applications 15 500 11 025 11 873
Special Components 9 141 7 755 8 003
Liabilities directly associated with 0 2 214 40
assets held for sale
Eliminations -6 760 -5 719 -5 917
Total 17 881 15 275 14 000
Gross investments
Laser and Automation Applications 2 008 412 849
Special Components 950 736 989
Assets classified as held for sale 0 4 4
Total 2 958 1 152 1 842
Depreciation
Laser and Automation Applications 507 507 675
Special Components 918 1 121 1 434
Total 1 426 1 627 2 109
Impairment
Laser and Automation Applications 14 0 145
Special Components 0 0 90
Total 14 0 235
Discontinued
operations
(unaudited)
29 May 2012 Cencorp announced that it exits from its unprofitable decoration
business and closes down its plant in Guangzhou, China, producing decoration
applications. In consequence of the closing down of the Guangzhou plant and the
exit from decoration business Cencorp reports the financial figures relating to
the Guangzhou plant's decoration business as discontinued operations from now
on.
The assets of Savcor Face (Guangzhou) Technologies Co., Ltd, reported as
discontinued operation, were written- off at fair value in the second quarter
of 2012 and sold in the fourth quarter of 2012.
The results and major classes of assets and liabilities of Savcor Face
(Guangzhou) Technolgies Co., are as follows:
1 000 EUR 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Revenue 0 1 876 1 878
Expenses -8 -5 484 -5 620
Other opeating 0 0 1 031
income
Loss recognised 0 -5 397 -5 833
on the
remeasurement to
fair value
Operating profit -8 -9 005 -8 544
--------------------------------------------------------------
Finance costs -36 -74 -62
Profit/loss -44 -9 079 -8 606
before tax from
discontinued
operation
Income tax 0 0 0
Profit/loss after -44 -9 079 -8 606
tax from
discontinued
operation
--------------------------------------------------------------
Assets
Property, plant 0 757 0
and equipment
Other intangible 0 0 0
assets
Inventories 0 184 0
Trade and other 0 115 39
non-interest-bea
ring receivables
Cash and cash 0 228 40
equivalents
Assets classified 0 1 284 79
as held for sale
--------------------------------------------------------------
Liabilities
Trande and other 0 2 164 40
payables
Provisions 0 50 0
Liabilities 0 2 214 40
directly
associated with
assets
classified as
held for sale
--------------------------------------------------------------
Net assets 0 -930 39
directly
associated with
disposal group
--------------------------------------------------------------
Savcor Face
(Guangzhou)
Technolgies Co.,
Ltd:n net cash
flow:
1 000 EUR 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Operating 41 204 17
Investing 0 -20 -20
Financing 0 0 0
Net cash flow 41 184 -3
--------------------------------------------------------------
Earnings/share -0,0001 -0,03 -0,03
(basic), from
discontinued
operations
Earnings/share -0,0001 -0,03 -0,03
(diluted) from
discontinued
operations
Key figures
(unaudited)
1 000 EUR 7-9/201 7-9/20 1-9/20 1-9/20 1-12/20
3 12 13 12 12
--------------------------------------------------------------------------------
Net sales 3 067 3 045 8 944 12 129 15 441
Operating profit -1 052 -1 314 -2 824 -2 412 -3 932
% of net sales -34,3 -43,1 -31,6 -19,9 -25,5
EBITDA -603 -796 -1 385 -785 -1 588
% of net sales -19,7 -26,1 -15,5 -6,5 -10,3
Profit before taxes -1 672 -1 610 -3 989 -2 905 -4 776
% of net sales -54,5 -52,9 -44,6 -23,9 -30,9
Balance Sheet value 19 530 20 996 19 530 20 996 18 702
Equity ratio, % 8,5 27,3 8,5 27,3 25,2
Net gearing, % 575,7 88,1 575,7 88,1 132,7
Gross investments 541 298 2 958 1 152 1 842
% of net sales 17,6 9,8 33,1 9,5 11,9
Research and development costs 429 306 1 371 988 1 458
% of net sales 14,0 10,0 15,3 8,1 9,4
Order book 2 017 2 168 2 017 2 168 1 438
Personnel on average 151 182 156 264 241
Personnel at the end of the period 152 177 152 177 168
Non-interest-bearing liabilities 7 919 7 426 7 919 7 426 6 850
Interest-bearing liabilities 9 727 5 343 9 727 5 343 6 825
Share key indicators
Earnings/share (basic) -0,005 -0,01 -0,012 -0,03 -0,04
Earnings/share (diluted) -0,005 -0,01 -0,012 -0,03 -0,04
Earnings/share (basic), from -0,005 -0,005 -0,012 -0,008 -0,01
continuing operations
Earnings/share (diluted) from -0,005 -0,005 -0,012 -0,008 -0,01
continuing operations
Equity/share 0,005 0,02 0,005 0,02 0,01
P/E ratio -15,90 -9,18 -6,76 -1,43 -1,54
Highest price 0,09 0,06 0,10 0,12 0,12
Lowest price 0,07 0,05 0,06 0,05 0,05
Average price 0,08 0,05 0,08 0,09 0,08
Closing price 0,08 0,05 0,08 0,05 0,06
Market capitalisation, at the end of 27,4 17,1 27,4 17,1 20,5
the period, MEUR
Calculation of Key Figures
EBITDA, %: Operating profit + depreciation
+ impairment
-----------------------------------------
Net
sales
Equity ratio, %: Total equity x
100
-----------------------------------------
Total assets - advances
received
Net gearing, %: Interest-bearing liabilities - cash and
cash equivalents
and marketable
securities x 100
-----------------------------------------
Shareholders' equity + minority
interest
Earnings/share (EPS): Profit/loss for the period to the owner of the parent company
-----------------------------------------
Average number of shares adjusted for
share issue
at the end of the
financial year
Equity/share: Equity attributable to shareholders of
the parent company
-----------------------------------------
Undiluted number of shares on the
balance sheet date
P/E ratio: Price on the balance
sheet date
-----------------------------------------
Earnings per
share
Related party
transactions
(unaudited)
Cencorp Corporation is part of Savcor Group Oy. The Group has purchased goods
and services from companies in which the majority holding and/or power of
decision granting control of the company is held by members of the Group's
related parties. Sales of goods and services carried out with related parties
are based on market prices.
The Group entered into the following
transactions with related parties:
1 000 EUR 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Sales of goods and
services
Savcor companies 127 88 120
Purchases of goods
and services
Savcor companies 374 413 548
Interest income
Savcor companies 0 0 1
Interest expenses
and other
financial expenses
Savcor companies 250 267 348
SCI Invest Oy 45 0 10
Iikka Savisalo 1 0 0
Discontinued
operations
Sales of goods and
services
Savcor companies 0 22 143
Purchases of goods
and services
Savcor companies 0 20 20
Other non-current 319 519 519
liabilities to
related parties
Convertible 2 549 1 230 2 400
subordinated loan
from related
parties
Interest payable to 838 395 480
related parties
Other current 1 255 1 000 1 000
liabilities to
related parties
Trade payables and 599 901 549
other
non-interest-beari
ng liabilities to
related parties
Trade receivables 112 99 87
from related
parties
SCI Invest Oy is a company under control of Iikka Savisalo,
Cencorp's CEO.
1 000 EUR 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Wages and
remuneration
Salaries of the 562 617 807
management and
Board
Fair values
(unaudited)
Carrying Fair value
amount
1 000 EUR 30.9.2013 30.9.2013
--------------------------------------------------------------------------------
Financial assets
Available-for-sale investments 10 10
Trade and other receivables 2 624 2 624
Cash and cash equivalents 237 237
The fair value of trade and other receivables is expected to correspond to the
carrying amount due to their short maturity.
Financial liabilities
R&D loan, non-current 1 057 1 057
Other liabilities, non-current 345 345
Loans from financial institutions, current 2 636 2 636
Other liabilities, current 1 496 1 496
Trade payables and other non-interest-bearing 7 579 7 579
liabilities
The fair value of non-current liabilities is expected to correspond to the
carrying amount as the loans were withdrawn in late 2012 and in 2013 and
recognized to their fair value when recorded.
Change in intangible and tangible assets
(unaudited)
1 000 EUR 30.9.2013 30.9.2012 31.12.2012
--------------------------------------------------------------------------------
Includes tangible assets, consolidated
goodwill and other intangible assets
Carrying amount, beginning of period 12 634 22 609 22 609
Depreciation and impairment -1 425 -7 557 -2 109
Additions 3 204 1 152 1 838
Disposals -225 -2 507 -2 989
Discontinued operations 0 -757 -6 654
Exchange rate difference -26 76 -61
Carrying amount, end of period 14 162 13 016 12 634
Commitments and contingent liabilities
(unaudited)
1 000 EUR 30.9.2013 30.9.2012 31.12.2012
------------------------------------------------------------------------
Loans from financial institutions 1 253 1 195 1 247
Promissory notes secured by pledge 12 691 12 691 12 691
Mortgages on real estate 0 0 0
Factoring loan and export credit limit 1 370 1 235 1 090
Trade receivables 1 370 841 695
Promissory notes secured by pledge 12 691 12 691 12 691
Operating leases
Payable within one year 22 51 50
Payable over one year 2 49 38
Commitments Payable within one year 945 897 922
Payable over one year 878 896 849
Commitments discontinued operations
Payable within one year 0 629 0
Payable over one year 0 3 348 0
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