2007-10-25 07:30:00 CEST
2007-10-25 07:30:00 CEST
REGULATED INFORMATION
Scanfil - Quarterly report
SCANFIL PLC'S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2007
SCANFIL PLC'S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2007
January - September
- Turnover for the first nine months of 2007 totalled EUR 170.2 million
(190.0 in the corresponding period 2006)
- Operating profit was EUR 13.1 (8.7) million, which is 7.7 (4.6) % of
turnover.
- Profit for the review period was EUR 10.7 (5.2) million
- Earnings per share were EUR 0.18 (0.09)
July - September
- Turnover for the third quarter totalled EUR 59.1 million (67.5 in the
corresponding period in 2006)
- Operating profit was EUR 5.6 (7.0) million representing 9.4 (10.4)% of
turnover
- Earnings per share amounted EUR 0.08 (0.10)
DEVELOPMENT OF OPERATIONS
In the market for telecommunications network products, the uncertainty caused by
the restructurings of large industry players is mostly over and the situation is
now clearer in that respect. However, some manufacturers of network products
have announced new cost-saving plans, whose potential effects on the market are
difficult to predict. In the contract manufacturing market for
telecommunications technology, the price competition created by Asian players,
in particular, has remained intense.
In addition to price competition and the slow growth of demand, the supply
structures of some of the volume products delivered by Scanfil have become
simpler and their production costs lower, resulting in a drop in the turnover of
telecommunications products compared to the corresponding period last year.
In the industrial electronics market, demand has continued to develop positively
and production volumes have been at a higher level than the year before.
The Chinese plants' sales accounted for 41% of the Group's total sales in the
review period, including the deliveries to the Group's other plants (32% in the
corresponding period last year). A little over half of all staff work in the
Chinese subsidiaries, and on 30 September 2007, the proportion of the Group's
employees working in foreign subsidiaries was 74%.
The reorganisation of Scanfil's Finnish production activities was completed
during the review period. Production was terminated in both Äänekoski and Oulu
at the end of the third quarter. The plants' production was transferred to the
Group's other units in a controlled way, and the measures did not lead to
significant additional expenses. The Äänekoski plant property was sold after the
review period in October. Measures have been initiated to sell the Oulu plant
property. During the review period, Scanfil announced that it is investigating
the possibility to sell the plant properties in Vantaa, Estonia and Hungary. If
these properties were sold, the plants would continue their current operations
as tenants, and the sale of the properties would not have effects on their
operations.
FINANCIAL DEVELOPMENT
The Group's turnover in January - September was EUR 170.2 (190.0) million,
showing a decrease of 10% over the previous year. Distribution of turnover based
on the location of customers was as follows: Finland 42 (43)%, rest of Europe 26
(28)%, Asia 30 (26)%, USA 1 (1)% and the others 1 (2)%.
Scanfil set as its goal for 2007 to maintain its profitability and improve its
efficiency. In a situation where price competition is fierce, the company has
focused on maintaining its profitability by paying particular attention to
product-level profitability, and has managed to retain it at a satisfactory
level. Operating profit amounted to EUR 13.1 (8.7) million, representing 7.7
(4.6)% of turnover. The result for the review period was EUR 10.7 (5.2) million.
Earnings per share were EUR 0.18 (0.09), and return on investment was 13.3
(8.4)%.
A total of EUR 1.3 million of non-recurring income items have been recorded for
the ongoing year, most of which are profits from the sale of fixed assets.
Write-downs of the material and product stores of terminated products totalled
EUR 1.8 million. Last year's result was burdened by a non-recurring expense item
of EUR 7.6 million related to the termination of the Belgian subsidiary's
production.
Turnover in July - September was EUR 59.1 (67.5) million. Operating profit in
the third quarter totalled EUR 5.6 (7.0) million, representing 9.4 (10.4)% of
turnover. Earnings per share were EUR 0.08 (0.10). The result for July -
September includes EUR 0.3 million of positive non-recurring items.
As regards terminated products, a write-down of EUR 0.8 million was made in the
third quarter for material and product stores.
Owing to the structure of the company's operations, the effects of changes in
exchange rates on the result were minimal. If the US dollar remains weak or
continues to weaken, it will mainly have a declining impact on 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 48.5
(71.8) million, EUR 41.0 (54.3) million of which were non-interest-bearing and
EUR 7.5 (17.5) million interest-bearing.
Liquid cash assets totalled EUR 42.0 (39.2) million. The equity ration was 73.0
(63.8)% and gearing -26.4 (-17.1)%.
Cash flow from operating activities in the review period was positive at EUR
13.6 (12.5) million.
Gross investments in fixed assets totalled EUR 1.2 (5.6) million, which is 0.7
(2.9)% of turnover. Investments consists mainly machinery and equipment
purchases. Depreciations were EUR 5.6 (6.6) million.
BOARD OF DIRECTORS' AUTHORISATION
On 12 April 2007, the Annual General Meeting authorised the Board of Directors
to decide on the repurchase of a maximum of 4,000,000 company shares, using
non-restricted equity, and on the disposal of a maximum of 5,998,449 company
shares.
The Board of Directors has no existing share issue authorisations or
authorisations to issue convertible bonds with warrants.
OWN SHARES
On 30 September 2007, the company owned a total of 1,998,449 of its own shares,
the counter-book value of which totalled EUR 499,612 and which represented 3.3%
of the company's share capital and votes.
During the review period, the company disposed of 1,551 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 2.49 and the lowest
EUR 2.13, the closing price for the period standing at EUR 2.22. A total of
5,904,123 shares were traded during the period, corresponding to 9.7% of the
total number of shares. The market value of the shares on 30 September 2007 was
EUR 134,8 million.
PERSONNEL
Scanfil Group's personnel averaged 2,116 (2,212) employees during the review
period and the company employed 2,142 (2,294) employees at the end of the review
period, of whom 1,583 (1,551) were employed in the company's foreign plants.
OTHER EVENTS IN THE REVIEW PERIOD
The prosecutor has decided to press charges for a suspected information offence
regarding an alleged delay in issuing a profit warning at the turn of the year
2005/2006. The charges have been made against Jorma J. Takanen, Chairman of the
Board and Group CEO, as well as the then President of Scanfil, who no longer
works for the company. The prosecutor demands that Scanfil be ordered to pay a
corporate fine of EUR 25,000. Scanfil denies the charges in their entirety.
EVENTS AFTER THE REVIEW PERIOD
On 8 October 2007, the company announced that it had sold the plant property
located in Äänekoski.
FUTURE PROSPECTS
The demand for telecommunications networks is generally estimated to grow only
marginally during the ongoing year. No significant changes are expected to occur
in the market during the rest of the year, and based on available forecasts,
Scanfil predicts that the company's sales for 2007 will fall short of the 2006
level. Profitability for the full year is estimated to be at a satisfactory
level.
The favourable development of the demand for industrial electronics products is
also expected to continue in the last quarter of 2007.
Scanfil plc's primary goals for 2007 are improving efficiency and maintaining
profitability as well as developing operations, taking into account changes in
the market and changing customer needs. The resources tied up in the
reorganisation of production activities in Finland during the past year are now
fully available for business development. The company's strong financial
position as well as any capital freed up as a result of planned property sales
will enable even significant restructurings in the future.
OPERATIONAL RISKS AND UNCERTAINTIES
The key operational risks and uncertainties facing the contract manufacturers of
telecommunications technology include low visibility in the market and the
difficulty of making forecasts, intense price competition, the availability of
materials as well as quick and dramatic fluctuations in market 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 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 2006.
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
2007 2006 2007 2006 2006
7 - 9 7 - 9 1 - 9 1 - 9 1 - 12
NET SALES 59.1 67.5 170.2 190.0 241.4
Increase or decrease of
inventory of finished products 0.0 1.1 - 1.6 - 1.2 - 0.4
Manufacturing for own use 0.0 0.0
Other operating income 0.5 0.7 2.1 1.0 2.1
Expenses - 52.3 - 60.1 - 152.0 -174.5 - 223.5
Depreciation - 1.8 - 2.2 - 5.6 - 6.6 - 8.3
OPERATING PROFIT 5.6 7.0 13.1 8.7 11.4
Financial income and expenses - 0.0 0.4 0.2 0.0 0.7
PROFIT BEFORE TAXES 5.5 7.4 13.3 8.7 12.1
Direct tax - 1.1 - 1.3 - 2.6 - 3.5 - 3.8
NET PROFIT FOR THE PERIOD 4.5 6.1 10.7 5.2 8.2
Attributable to:
Equity holders of the Company 4.5 6.1 10.7 5.2 8.2
Earnings/share (EPS), EUR 0.08 0.10 0.18 0.09 0.14
The taxes included are those corresponding to the review period's profit.
CONSOLIDATED BALANCE SHEET
EUR million 30.9. 30.9. 31.12
2007 2006 2006
ASSETS
Long-term assets
Tangible current assets 38.3 45.1 43.1
Goodwill 2.5 2.3 2.5
Other intangible assets 1.1 1.0 1.0
Sellable investments 0.0 0.3 0.3
Receivables 0.2 0.3 0.2
Deferred tax receivables 0.3 0.1 0.2
Long-term assets total 42.5 49.1 47.4
Short-term assets
Inventories 33.3 42.8 41.4
Sales and other receivables 54.9 59.3 43.0
Prepayments 0.1 0.3 0.0
Financing assets with result
impact entered at current value 1.8 13.3 8.9
Cash and cash equivalents 40.2 25.9 22.9
Short-term assets total 130.2 141.5 116.2
Non-current assets held for sale 6.5 8.0 10.0
ASSETS TOTAL 179.2 198.6 173.6
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity that belongs to
the owners of the parent company
Share capital 15.2 15.2 15.2
Premium fund 16.1 16.1 16.1
Own shares - 6.9 - 4.7 - 6.9
Other funds 2.5 1.9 1.9
Translation differences - 2.1 - 0.5 - 0.7
Value change fund 0.1 0.1
Profits accrued 105.9 98.7 101.7
Shareholders' equity that belongs to
the owners of the parent company total 130.7 126.8 127.4
Long-term liabilities
Deferred tax liabilities 1.1 1.5 1.4
Reserves 7.1 9.6 8.5
Interest-bearing liabilities 17.5 7.5
Long-term liabilities total 8.2 28.5 17.4
Short-term liabilties
Procurement and other liabilities 32.0 42.0 28.2
Current income tax liabilities 0.8 1.2 0.6
Interest-bearing liabilities 7.5
Short-term liabilities total 40.3 43.3 28.8
Liabilities total 48.5 71.8 46.2
SHAREHOLDERS' EQUITY AND
LIABILITIES TOTAL 179.2 198.6 173.6
APPENDIX 2
CONSOLIDATED CASH FLOW STATEMENT 2007 2006 2006
EUR million 1 - 9 1 - 9 1 - 12
Cash flow from operations
Net profit 10.7 5.2 8.2
Adjustment for the net profit of the period 5.4 14.2 13.6
Change in net working capital - 0.0 - 2.1 2.9
Interests paid and other financial expenses - 0.4 - 0.5 - 0.7
Interests received 0.6 0.6 0.8
Taxes paid - 2.7 - 4.8 - 6.1
Net cash flow from operations 13.6 12.5 18.8
Cash flow from investments
Investments in tangible and
intangible assets - 1.5 - 5.2 - 7.8
Proceeds from sale of tangible
and intangible assets 4.3 1.2 2.8
Net cash flow from investments 2.8 - 4.0 - 5.0
Cash flow from funding
Acquiring of own shares - 0.5 - 2.8
Repayment of long-term loans - 0.4 - 10.4
Dividends paid - 5.9 - 6.0 - 6.0
Net cash flow from funding - 5.9 - 6.8 - 19.1
Change in assets 10.6 1.8 - 5.3
Liquid assets at the beginning
of the period 31.8 37.8 37.8
Effect of changes in currency exchange rates - 0.4 - 0.6 - 0.9
Effect of changes in the fair value of investments 0.0 0.2 0.1
Liquid assets at the end of the period 42.0 39.2 31.8
APPENDIX 3
KEY INDICATORS 2007 2006 2006
1 - 9 1 - 9 1 - 12
Return on equity, % 11.1 5.4 6.4
Return on investment, % 13.3 8.4 9.0
Interest-bearing liabilities,
EUR million 7.5 17.5 7.5
Gearing, % - 26.4 - 17.1 - 19.1
Equity ratio, % 73.0 63.8 73.6
Gross investments in fixed
assets, EUR million 1.2 5.6 8.5
% of net turnover 0.7 2.9 3.5
Personnel, average 2 116 2 212 2 213
Earnings per share, EUR 0.18 0.09 0.14
Shareholders' equity per share, EUR 2.23 2.13 2.17
Number of shares at
the end of period, 000's 60 714 60 714 60 714
- not counting own shares 58 716 59 513 58 714
- weighted average 58 716 59 703 59 557
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
1.1.2006 15.2 16.1 -4.1 1.3 2.5 0.1 100.0 131.1 131.1
Translation difference - 3.0 - 3.0 - 3.0
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY - 3.0 - 3.0 - 3.0
Net profit for the period 5.2 5.2 5.2
TOTAL RECOGNIZED INCOME
AND EXPENCE - 3.0 5.2 2.3 2.3
Payment of dividend - 6.0 - 6.0 - 6.0
Transfer to funds 0.6 - 0.6
Acquiring of own shares - 0.6 - 0.6 - 0.6
SHAREHOLDER'S EQUITY
30.9.2006 15.2 16.1 - 4.7 1.9 - 0.5 0.1 98.7 126.8 126.8
SHAREHOLDER'S EQUITY A B C D E F G H I
1.1.2007 15.2 16.1 - 6.9 1.9 - 0.7 0.1 101.7 127.4 127.4
Value change - 0.1 - 0.1 - 0.1
Translation difference - 1.4 - 1.4 - 1.4
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY - 1.4 - 0.1 - 1.5 - 1.5
Net profit for the period 10.7 10.7 10.7
TOTAL RECOGNIZED INCOME
AND EXPENCE - 1.4 - 0.1 10.7 9.2 9.2
Payment of dividend - 5.9 - 5.9 - 5.9
Transfers to funds 0.7 - 0.7
Transfer of own shares 0.0 0.0 0.0
SHAREHOLDER'S EQUITY
30.9.2007 15.2 16.1 - 6.9 2.5 - 2.1 105.9 130.7 130.7
APPENDIX 5
SEGMENT INFORMATION ACCORDING GEOGRAPHICAL AREA
EUR million 2007 2006 2006
1 - 9 1 - 9 1 - 12
TURNOVER
Europe 113.1 148.2 188.1
Asia 70.3 56.8 72.5
Turnover between segments - 13.2 - 15.0 - 19.1
Total 170.2 190.0 241.4
OPERATING PROFIT
Europe 5.1 3.2 4.9
Asia 8.0 5.5 6.5
Total 13.1 8.7 11.4
The Group operates in single sector.
APPENDIX 6
CHANGES IN TANGIBLE CURRENT ASSETS
EUR million 2007 2006 2006
1 - 9 1 - 9 1 - 12
Book value at the beginning of the period 43.1 56.5 56.5
Additions 1.0 5.6 8.5
Disposals and transfers - 0.3 - 9.9 - 12.8
Depreciations - 5.2 - 6.4 - 8.1
Translation differences - 0,3 - 0,7 - 0,9
Book value at the end of the period 38,3 45,1 43,1
Disposals and transfers include transfers to long-term assets classified as
available for sale.
APPENDIX 7
CONSOLIDATED CONTINGENT LIABILITIES
EUR million 2007 2006 2006
1 - 9 1 - 9 1 - 12
Real estate mortgages 2.5 6.2 6.2
Business mortgages 16.4 16.4 16.4
Guarantees pledged 0.7 0.7 0.7
Rental liabilities 0.8 0.6 0.5
The parent company has given a EUR 7.8 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
Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06 Q4/05
Turnover, MEUR 59.1 58.9 52.2 51.5 67.5 62,4 60,1 76,8
Operating
profit, MEUR 5.6 4.0 3.6 2.7 7.0 5.1 - 3.4 6.2
Operating profit, % 9.4 6.7 6.8 5.2 10.4 8.2 - 5.7 8.1
Net income, MEUR 4.5 3.2 3.1 3.0 6.1 3.7 - 4.5 5.3
EPS, EUR 0.08 0.05 0.05 0.05 0.10 0.06 - 0.08 0.09
SCANFIL PLC
Harri Takanen
President
Additional information:
President Harri Takanen
Tel +358 40 555 3500
Distribution Helsinki Exchanges
Major Media
www.scanfil.com
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
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in this stock exchange release, such statements use such words as "may," "will,"
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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
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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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