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2008-10-29 08:00:00 CET 2008-10-29 08:00:00 CET REGULATED INFORMATION Done Solutions Oyj - Interim report (Q1 and Q3)DONE SOLUTIONS' GROWTH CONTINUED IN Q3Done Solutions Corporation Interim Report October 29, 2008, at 9:00 am DONE SOLUTIONS' GROWTH CONTINUED IN Q3 Done Solutions Corporation's Interim Report Q1-Q3/2008 (IFRS) Q1-Q3/2008: - Consolidated net sales: EUR 35.1 million (EUR 16.7 million in Q1-Q3/2007), up by 110 percent. - Consolidated operating profit: EUR 3.6 million (EUR 2.3 million), or 9.8 percent of net sales (13.3 percent), up by 60 percent. - Pre-tax profit: EUR 3.4 million (EUR 2.2 million), or 9.8 percent of net sales (13.3 percent). - Earnings per share: EUR 0.033 (EUR 0.024). Equity ratio of 54.5 percent (47.4 percent). - Equity per share: EUR 0.23 (EUR 0.13). - Cash flow from operating activities: EUR 1.1 million (EUR 3.2 million). Q3/2008: - Consolidated net sales: EUR 10.6 million (EUR 6.7 million in Q3/2007), up by 58 percent. - Consolidated operating profit: EUR 1.1 million (EUR 0.7 million), or 10.0 percent of net sales (10.4 percent), up by 51 percent. - As previously forecast, the Group's projected total net sales and operating profit for 2008 should see a significant increase on the previous year's level. SEGMENTS AND MARKET SITUATION In the Group's Services segment, net sales for multilingual content production was on the expected level in Q3, but profitability fell due to higher production costs and the effect of fiercer competition. Contact Center services, integrated into the Services segment in December 2007, experienced stable demand in Q3. However, the gross margin did not rise in line with expectations, due to difficulties in workforce availability. In addition, the effects of the downturn in the economic cycle were manifested in consumer behavior at the end of the quarter. Nevertheless, the Systems segment still posted a good profit and net sales for Q3, on account of the strong order backlog created last year. As predicted, weakening overall economic trends have being clearly reflected in this segment's operating environment, hampering the securing of new orders. In Q3, net sales in the Health Care segment were at the same level as in Q1 and Q2. The company continued to invest in marketing and R&D in Q3. In the Defense segment, positive developments in demand fed through into slightly higher net sales and a better gross margin for the segment, compared to the beginning of the year. Since the customer base for this segment remains narrow, individual orders are highly significant in terms of net sales development. Therefore, the segment is striving to expand its customer base beyond the Baltic Sea area. The Technology segment posted good Q3 net sales and profit. Demand for price display systems has remained high. The parking control system is now ready and on sale. NET SALES, PROFITABILITY, AND PROFIT Consolidated net sales in Q1-Q3/2008 came to EUR 35.1 million (EUR 16.7 million in Q1-Q3/2007), up by 110 percent year on year. Consolidated operating profit before depreciation (EBITDA) came to EUR 4.7 million, accounting for 13.4 percent of consolidated net sales (EUR 2.5 million or 14.9 percent of consolidated net sales), up by 89 percent from the previous year's level. Consolidated operating profit amounted to EUR 3.6 million, accounting for 10.3 percent of consolidated net sales (EUR 2.3 million, or 13.5 percent of consolidated net sales), up by 60 percent from the previous year's figure. Pre-tax profit totaled EUR 3.4 million, accounting for 9.8 percent of net sales (EUR 2.2 million, or 13.3 percent of net sales), up by 54 percent year on year. Net profit for the period came to EUR 2.5 million, accounting for 7.2 percent of net sales (EUR 1.6 million, or 9.7 percent of net sales), up by 56 percent from the previous year's level. Undiluted and diluted earnings per share rose to EUR 0.033 (EUR 0.024) Equity per share improved to EUR 0.23 (EUR 0.13). Services (Done Information and Midas Touch), Systems (Done Logistics), Health Care (Tiolat), Defense (Boomeranger Boats), and Technology (Finnish Led-Signs) form the basis of the Group's primary, IFRS-compliant segment reporting format. The Defense segment has been consolidated since August 1, 2007; the Technology segment since September 1, 2007; and Midas Touch with the Services segment since January 1, 2008. Net sales Net sales Segment profit Q1−Q3/2008 Q1−Q3/2007 Q1−Q3/2008 Q1−Q3/2007 MEUR share MEUR share MEUR % MEUR % Services Done Information 4.1 12% 4.1 25% 0.27 7 0.62 15 Midas Touch 12.1 34% - - 0.53 4 - - Systems 10.9 31% 8.2 49% 1.70 16 1.00 12 Health Care 3.0 9% 2.7 16% 1.04 34 0.91 33 Defense 2.1 6% 1.5 9% 0.17 8 0.19 13 Technology 2.9 8% 0.2 1% 0.61 21 0.02 12 Total 35.1 100% 16.7 100% 4.32 12 2.75 17 Parent company costs -0.71 -2 -0.49 -3 Operating profit 3.61 10 2.26 14 Consolidated net sales, profit by segment, and consolidated operating profit by quarter were: MEUR Q3/08 Q2/08 Q1/08 Q4/07 Q3/07 Q2/07 Q1/07 Net sales: Services Done Information 1.2 1.6 1.3 1.5 1.3 1.4 1.5 Midas Touch 4.1 3.8 4.2 - - - - Systems 2.6 4.3 4.0 3.6 3.0 2.6 2.6 Health Care 1.0 1.0 1.0 1.6 0.8 0.9 1.1 Defense 0.8 0.5 0.8 0.8 1.5 - - Technology 1.0 1.0 0.9 0.5 0.2 - - Total 10.6 12.3 12.2 8.0 6.7 4.8 5.2 Segment profit: Q3/08 Q2/08 Q1/08 Q4/07 Q3/07 Q2/07 Q1/07 Services Done Information 0.03 0.17 0.07 0.17 0.16 0.17 0.28 Midas Touch 0.12 0.01 0.40 - - - - Systems 0.45 0.63 0.61 0.34 0.31 0.36 0.33 Health Care 0.35 0.29 0.41 0.56 0.19 0.23 0.49 Defense 0.11 0.03 0.04 0.12 0.19 - - Technology 0.20 0.32 0.08 0.01 0.02 - - Total 1.26 1.45 1.61 1.20 0.88 0.76 1.10 Parent co. costs -0.20 -0.29 -0.21 0.08 -0.18 -0.15 -0.16 Operating profit 1.06 1.16 1.39 1.27 0.70 0.61 0.94 Oper. profit % 10.0% 9.4% 11.4% 16.0% 10.4% 12.8% 18.2% BALANCE SHEET AND FINANCIAL POSITION On September 30, 2008, the consolidated balance-sheet total amounted to EUR 32.5 million (EUR 20.5 million on September 30, 2007). Shareholders' equity came to EUR 17.7 million (EUR 9.1 million). Interest-bearing liabilities totaled EUR 5.0 million (EUR 4.4 million), and gearing stood at 16.1 percent (17.1 percent). At the period end, the equity ratio was 54.5 percent (47.4 percent) and cash and cash equivalents stood at EUR 2.1 million (EUR 2.8 million). MAJOR EVENTS IN Q3/2008 In Done Logistics Oy, a subsidiary of Done Solutions Corporation's Systems segment, cooperation negotiations have been held under the Act on Cooperation within Undertakings, due to weakening economic trends and the resultant fall in demand. As a result of the negotiations it was agreed that the company has the right to use part-time employment, or lay off for a fixed term or until further notice, or to terminate the employment of, a maximum of 40 employees from 1 October, 2008. This right is valid until 30 June, 2009. Tiolat Oy, a subsidiary of Done Solutions Corporation within its Health Care segment, has today changed its name to Icare Finland Oy in line with its flagship product. EVENTS AFTER THE PERIOD In order to streamline its corporate structure, Done Solution's non-operating subsidiaries, Sunob Holding Oy and GDZ Markkinointi Oy, have been merged with the parent company, Done Solutions Corporation, and Network Partners Oy Nepa with Done Logistics Oy, on 17 October, 2008. HUMAN RESOURCES During the period, the number of employees averaged 762 (145), two of whom worked abroad (2). At the end of the period, the company's personnel by segment were as follows: Sept. 30, 2008 Sept. 30, 2007 Services 573 67 Systems 68 60 Health Care 8 7 Defense 25 35 Technology 17 10 Parent company 4 3 Total 695 182 As of the publication of this interim report, two employees of Done Logistics Oy had been laid off on the basis of the recently held cooperation negotiations within the subsidiary. MANAGEMENT AND AUDITORS Done Solutions Corporation's Board of Directors is made up of the following members: Jyri Merivirta (Chairman), Matti Nevalainen, and Pekka Tammela. PricewaterhouseCoopers Oy, Authorized Public Accountants, acts as the company's auditor, with Juha Tuomala, Authorized Public Accountant, as the chief auditor. Ernst & Young Oy, Authorized Public Accountants, conducts the internal audit. From October 1, 2008, Pekka Raatikainen (39) M.Sc. (Econ. & Business Adm.) will become the new CFO and a member of the corporate management group. Done Solutions Corporation's Board of Directors appointed Master of Law Juha Kujala (42), a member of the corporate management team, as the Corporation's Development Director on October 13, 2008. SHARE CAPITAL AND SHARES On September 30, 2008, Done Solutions Corporation's share capital came to EUR 5,314,918.72 and the number of shares totaled 76,115,594. The Board has not exercised its valid authorizations to issue 30,000,000 shares and buy back 7,593,648 own shares, approved by the AGM of April 2, 2008. The company had no treasury shares on September 30, 2008. The reported share turnover of Done Solutions Corporation for January 1 - September 30, 2008, was EUR 9.9 million, representing 17.9 million shares and 23.6 percent of the total number of the company's shares. The highest share quotation for the period was EUR 0.78 and the lowest EUR 0.33. The share price averaged EUR 0.55 and closed at EUR 0.36 on September 30, 2008. The company's market capitalization on September 30, 2008, totaled EUR 27.4 million. SHAREHOLDERS On September 30, 2008, the number of shareholders in the company totaled 3.020. The company's largest shareholders are listed on Done's website, at www.donesolutions.com (Investors / Financial Information / Largest shareholders). OPTION RIGHTS On the basis of the rights issue authorization approved by the shareholders' meeting of April 3 2007, the Executive Board of Done Solutions Oyj decided, on November 23, 2007, on a new corporate option plan, comprising a maximum of 3,684,365 option rights. The option plan and its terms can be found in the company's stock exchange release of November 23, 2007. MANAGEMENT SHAREHOLDINGS On September 30, 2008, the Board of Directors and the President and CEO held 20.4 percent of the company's shares, totaling 15,505,196 shares, and 18.6 percent of stock options. Moreover, on the same date, Gateway Finland Oy held 15.1 percent of the company's shares: 11,500,000 shares. Matti Nevalainen, a Board member, holds 50 percent of Gateway Finland Oy shares. INSIDER ISSUES AND CORPORATE GOVERNANCE Done Solutions Corporation complies with the Guidelines for Insiders, effective as of June 2, 2008, set forth by the Helsinki Stock Exchange and, to the applicable extent, the Corporate Governance Recommendation for Listed Companies effective as of July 1, 2004. The company's Corporate Governance Statement is available in the ‘Investors' section of the company's website. SIGNIFICANT NEAR-TERM RISKS Increasing uncertainty in the world economy and faltering economic growth are affecting demand for Done Solutions' products and services. The effects can be seen in all segments, but most of all in the Systems segment, where the most profound impact is being felt in the timing and implementation of major customer projects. The corporation's main business risks are listed in its financial statements, released on the stock exchange on 5 March, 2008. It is estimated that the possibility of these risks being fulfilled has been increased by the prevailing economic uncertainty emanating from the financial crisis. LITIGATION The company is involved in no litigation or legal proceedings that, according to the Board's view, would have a significant bearing on the Group's financial position. SHORT-TERM PROSPECTS The economic slowdown and uncertainty on the markets, due to the financial crisis, have weakened the corporation's ability to forecast its short-term performance. Due to fiercer competition, Q4 net sales are expected to fall in the Services segment's multilingual content production (Done Information) compared to Q4/2007. The business prospects for Contact Center services (Midas Touch) in Q4 are satisfactory. Economic fluctuation is intense in the Systems segment (Done Logistics). Because of the solid backlog of orders from last year, this segment is expected to post higher net sales in 2008 than in 2007. Q4 net sales are expected to be lower than net sales in the previous year's Q4. In the Health Care segment (Icare Finland), demand is expected to remain stable and net sales in Q4 will decrease moderately compared to Q4/2007. This segment will invest heavily in R&D and marketing towards the end of the year. The Defense segment's (Boomeranger Boats) net sales in Q4 is expected to be higher than previous year's Q4. Meanwhile, the Technology segment (Finnish Led-Signs) has seen an increase in product demand, and net sales are expected to show considerable growth in Q4 compared to Q4/2007. As previously estimated, marked growth is expected in the Group's net sales in 2008 compared to the previous year's figures. Maintaining profitability in the current uncertain business trend and increasingly competitive climate will be challenging. However, as previously estimated, the Group's operating profit in 2008 is expected to increase significantly from that of the previous year. Done Solutions Corporation Board of Directors For further information, please contact: Olli-Pekka Salovaara, President and CEO: +358 (0)40 567 5520 (mobile), olli-pekka.salovaara@donesolutions.com Pekka Raatikainen, CFO: +358 (0)50 553 4094 (mobile), pekka.raatikainen@donesolutions.com http://www.donesolutions.com/ Distribution: Helsinki Stock Exchange Financial Supervision Authority Major media Done Solutions Corporation, listed on the OMX Nordic Exchange Helsinki, is the parent company of Done Group. Done's subsidiaries focus on the provision of advanced Finnish specialist expertise and export-based operations. GROUP KEY FIGURES AND RATIOS (MEUR) Q1-Q3/2008 Q1-Q3/2007 Q1-Q4/2007 Net sales 35.1 16.7 24.7 Operating profit 3.6 2.3 3.5 Operating profit, % 10.3 13.5 14.3 Pre-tax profit 3.4 2.2 3.5 Pre-tax profit, % 9.8 13.3 14.1 Net profit 2.5 1.6 5.7 Net profit, % 7.2 9.7 23.0 Gross capital expenditure 0.3 7.4 14.5 Gross capital expenditure, % of net sales 0.8 44.0 58.8 R&D costs 0.4 0.4 0.8 R&D costs, % 1.2 2.6 3.2 Gearing, % 16.1 17.1 4.1 Equity ratio, % 54.5 47.4 52.6 Return on investment (ROI), % 21.5 23.3 21.9 Return on equity (ROE), % 18.9 21.6 45.9 Undiluted earnings per share, EUR 0.033 0.024 0.084 Diluted earnings per share, EUR 0.033 0.024 0.084 Equity per share, EUR 0.23 0.13 0.24 Average number of employees 762 145 155 Cash flow from operating activities 1.1 3.3 3.3 Cash flow from investment activities -0.1 -3.2 -2.5 Cash flow from financing activities -2.2 0.3 0.2 Total cash flow -1.2 0.4 1.0 CONSOLIDATED INCOME STATEMENT (MEUR) Q3/2008 Q3/2007 NET SALES 10.6 6.7 Changes in inventory -0.1 -0.5 Other operating income 0.2 0.0 Materials and services -2.8 -2.8 Employee benefits -5.1 -1.9 Depreciation/amortization -0.4 -0.1 Other operating expenses -1.3 -0.7 OPERATING PROFIT 1.1 0.7 Share of associates' results -0.0 -0.0 Financial expenses (net) -0.1 -0.0 PRE-TAX PROFIT 1.0 0.7 Income tax expenses -0.2 -0.2 NET PROFIT 0.7 0.5 CONSOLIDATED INCOME STATEMENT (MEUR) Q1-Q3/2008 Q1-Q3/2007 Q1-Q4/2007 NET SALES 35.1 16.7 24.7 Changes in inventory -0.2 -0.5 -0.2 Other operating income 0.3 0.0 0.0 Materials and services -10.8 -6.6 -10.1 Employee benefits -15.5 -5.1 -7.5 Depreciation/amortization -1.1 -0.2 -0.4 Other operating expenses -4.2 -1.9 -2.9 OPERATING PROFIT 3.6 2.3 3.5 Share of associates' results 0.1 0.0 0.0 Financial expenses (net) -0.2 -0.1 -0.1 PRE-TAX PROFIT 3.4 2.2 3.5 Income tax expenses -0.9 -0.6 2.2 NET PROFIT 2.5 1.6 5.7 Earnings per share, undiluted (EUR) 0.033 0.024 0.084 Earnings per share, diluted (EUR) 0.033 0.024 0.084 CONSOLIDATED BALANCE SHEET (MEUR) Sept. 30, Sept. 30, Dec. 31, 2008 2007 2007 ASSETS NON-CURRENT ASSETS Property, plant, and equipment 2.2 1.8 2.3 Goodwill 11.4 5.6 11.4 Intangible assets 3.4 1.9 4.0 Shares in associates 0.5 0.4 0.4 Available-for-sale assets 0.0 0.0 0.0 Receivables 0.3 0.4 0.4 Deferred tax assets 3.3 1.6 4.4 TOTAL NON-CURRENT ASSETS 21.0 11.7 22.9 CURRENT ASSETS Inventories 1.8 0.9 1.2 Trade and other receivables 7.6 5.1 8.3 Cash and cash equivalents 2.1 2.8 3.4 TOTAL CURRENT ASSETS 11.5 8.8 12.8 TOTAL ASSETS 32.5 20.5 35.7 LIABILITIES AND SHAREHOLDERS' EQUITY SHAREHOLDERS' EQUITY Share capital 5.3 5.3 5.3 Share premium 2.4 2.4 2.4 Fair value reserve 0.3 0.3 0.3 Invested unrestricted capital reserve 6.5 1.5 6.4 Retained earnings/loss 3.2 -0.5 3.6 TOTAL EQUITY attributable to holders of parent company equity 17.7 9.1 18.1 MINORITY INTEREST 0.0 0.0 0.0 TOTAL SHAREHOLDERS' EQUITY 17.7 9.1 18.1 LIABILITIES LONG-TERM LIABILITIES Deferred tax liabilities 1.0 0.7 1.2 Provisions 0.1 0.6 0.0 Interest-bearing liabilities 2.4 3.8 2.9 Other payables 2.5 0.0 2.4 TOTAL LONG-TERM LIABILITIES 6.1 5.1 6.5 SHORT-TERM LIABILITIES Advance payments 0.0 1.3 1.3 Trade and other payables 6.1 4.4 8.5 Provisions 0.0 0.0 0.2 Interest-bearing liabilities 2.6 0.6 1.2 TOTAL SHORT-TERM LIABILITIES 8.7 6.2 11.1 TOTAL LIABILITIES 14.8 11.4 17.6 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 32.5 20.5 35.7 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (MEUR) Share Share Other Retained Min. Total capital premium reserves earnings int. equity Balance on Jan. 1, 2007 5.3 2.4 0.3 -1.5 0.0 6.6 Dividend distribution 0.0 0.0 0.0 -0.7 0.0 -0.7 Private placements 0.0 0.0 1.5 0.0 0.0 1.5 Net profit 0.0 0.0 0.0 1.6 0.0 1.6 Balance on Sept. 30, 2007 5.3 2.4 1.8 -0.5 0.0 9.1 Private placements 0.0 0.0 5.0 0.0 0.0 5.0 Net profit 0.0 0.0 0.0 5.7 0.0 5.7 Balance on Dec. 31, 2007 5.3 2.4 6.7 3.6 0.0 18.1 Private placements 0.0 0.0 0.1 0.0 0.0 0.1 Dividend distribution 0.0 0.0 0.0 -3.0 0.0 -3.0 Net profit 0.0 0.0 0.0 2.5 0.0 2.5 Balance on Sept. 30, 2008 5.3 2.4 6.8 3.2 0.0 17.7 CONSOLIDATED CASH FLOW STATEMENT (MEUR) Q1-Q3/2008 Q1-Q3/2007 Q1-Q4/2007 Net profit 2.5 1.6 5.7 Adjustments to net profit 2.1 0.8 -1.7 Change in working capital -3.4 0.9 -0.3 Interest paid -0.4 -0.1 -0.3 Interest received 0.4 0.0 0.1 Taxes paid 0.0 0.0 -0.2 CASH FLOW FROM OPERATING ACTIVITIES 1.1 3.3 3.3 Acquisition of subsidiary 0.0 -3.0 -2.3 Acquisition of associates 0.0 -0.0 -0.0 Purchase of PPE -0.2 -0.1 -0.2 Purchase of intangible assets -0.1 -0.0 -0.0 Payments of other investments 0.1 0.0 0.0 NET CASH USED IN INVESTMENT ACTIVITIES -0.1 -3.2 -2.5 Rights issue 0.0 0.0 0.0 Dividends paid -3.0 -0.7 -0.7 Long-term borrowing 1.8 3.0 3.0 Repayments of long-term borrowing -0.9 -2.0 -2.1 Finance lease principal payment -0.1 -0.0 -0.1 NET CASH USED IN FINANCING ACTIVITIES -2.2 0.3 0.2 Net change in cash and cash equivalents -1.2 0.4 1.0 Cash and cash equivalents, period-start 3.4 2.4 2.4 Cash and cash equivalents, period-end 2.1 2.8 3.4 CONTINGENT LIABILITIES (MEUR) Sept. 30, Sept. 30, Dec. 31, 2008 2007 2007 Mortgages given 3.3 4.0 3.3 Pledges given 7.4 7.9 8.8 Securities given 1.3 3.6 3.3 Operating lease liabilities 0.3 0.1 0.4 Other rental liabilities 1.6 0.2 1.3 NET SALES AND OPERATING PROFIT BY QUARTER (MEUR) MEUR Q3/08 Q2/08 Q1/08 Q4/07 Q3/07 Q2/07 Q1/07 Net sales 10.6 12.3 12.2 8.0 6.7 4.8 5.2 Oper. profit 1.1 1.2 1.4 1.3 0.7 0.6 0.9 Oper. profit, % 10.0% 9.4% 11.4% 16.0% 10.4% 12.8% 18.2% The figures (incl. comparatives) presented in this report are in compliance with the IAS 34 Interim Reports standard. Moreover, the accounting principles adhered to are the same as those of the financial report 2007. Information in this report is based on unaudited figures. |
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