2012-02-17 13:00:00 CET
2012-02-17 13:00:08 CET
REGULATED INFORMATION
Cencorp - Financial Statement Release
Cencorp Corporation's Financial Statement Release 2011
Net Sales markedly up, operating profit down
Cencorp Corporation Financial Statement Release 17 February 2012 at 14.00
Finnish time
Cencorp Corporation's Financial Statement Release 2011
NET SALES MARKEDLY UP, OPERATING PROFIT DOWN
SUMMARY
-The figures in brackets are comparison figures for the corresponding period in
2010, unless stated otherwise.
-Following the corporate transaction carried out in December 2010, the Face
(Telecom) business's, i.e. the current Special Components segment's, result and
balance sheet have been consolidated in all of Cencorp's consolidated figures
as of 1 December 2010.
-When comparing the figures of the entire Group and those of the Special
Components segment with the figures for 2010, it must be noted that the figures
for 2010 only include the Face (Telecom) business's figures for December 2010.
-The Laser and Automation Applications segment's figures for 2011 and 2010 are
comparable.
October-December 2011
-Cencorp Group's net sales increased during the final quarter of the year by 18
percent to EUR 6.6 million (EUR 5.5 million).
-EBITDA was EUR -0.8 million (EUR -0.4 million).
-Operating result was EUR -2.1 million (EUR -0.9 million).
-The Group's result before taxes amounted to EUR -1.9 million (EUR -1.2
million).
-Earnings per share were EUR -0.01 (EUR -0.01).
-The Laser and Automation Applications segment's net sales decreased 29 percent
to EUR 2.7 million (EUR 3.8 million) and its operating result was EUR -1.3
million (EUR -0.1 million).
-The Special Components segment's net sales were EUR 3.8 million (EUR 1.7
million in December 2010) and its operating result was EUR -0.8 million (EUR
-0.02 million in December 2010).
January-December 2011
-Cencorp Group's net sales increased 107 percent to EUR 26.5 million (EUR 12.8
million).
-The order book at year-end stood at approximately EUR 2.8 million (EUR 6.0
million).
-EBITDA was EUR -3.1 million (EUR -2.0 million).
-Operating result was EUR -7.0 million (EUR -3.1 million).
-The Group's result before taxes amounted to EUR -7.5 million (EUR -3.5
million).
-Earnings per share were EUR -0.02 (EUR -0.02).
-The equity ratio at year-end was 51.2 percent (52.2%).
-The Laser and Automation Applications segment's net sales increased 36 percent
to EUR 15.1 million (EUR 11.1 million) and its operating result was EUR -2.5
million (EUR -2.3 million).
-The Special Components segment's net sales were EUR 11.4 million (EUR 1.7
million in December 2010) and its operating result was EUR -4.5 million (EUR
-0.02 million in December 2010).
-The Board of Directors proposes to the Annual General Meeting that the loss
for the period ended on 31 December 2011 be entered in retained earnings and
that no dividend be paid.
Outlook for 2012
Despite the uncertain economic situation, Cencorp estimates its net sales to
increase compared to 2011 and the full-year EBITDA is estimated to be positive
provided that no essential change takes place in the operating environment or
in the current economic outlook.
PRESIDENT AND CEO MATS ERIKSSON:
“Our net sales more than doubled during 2011, albeit most of the growth came
from the integration of the Face business into the Cencorp Group. The segments'
net sales developed along two different paths during the year. During the first
half of the year, demand for laser automation solutions and other automation
products increased especially in Europe and in North America. The good market
situation and our own sales efforts increased net sales substantially. At the
same time, demand for special components was slowed down by the dependence on
customer projects that developed unfavorably, by the piling up of stocks at the
turn of the year and by changes in the competitive arena for mobile phones.
During the latter half of the year, uncertainty in the global economy increased
and investments were deferred, which reduced demand for laser and automation
equipment. On the other hand, demand for special components markedly increased
towards the end of the year. During the final quarter of the year, this
segment's net sales were around a third higher than in the third quarter.
Despite the increase in net sales, our profitability weakened clearly
year-on-year. Profitability was burdened by problems in the Special Components
segment, particularly in product groups related to the mobile phone sector. The
Laser and Automation Applications segment's profitability had initially
developed favorably, but as net sales declined later during the year,
profitability took yet another downward trend during the latter half of the
year.
To improve the Group's profitability, operations have been streamlined and
fixed costs have been cut, for example by concentrating production and
adjusting it to demand. In the Special Components segment, work to identify the
product groups with the highest profitability and growth is underway.
Although the year was not particularly good, I am satisfied with our new
breakthrough: at the beginning of 2012, we concluded a significant multi-year
agreement on the supply of flexible circuits to a customer operating in the
renewable energy sector. Trial deliveries have already started. I believe that
we will be able to increase sales in both our segments in this growing sector.
Our main goal is, however, to improve profitability during 2012. We will also
develop our service concept to make it more proactive and improve our
maintenance and spare part service offering. Although the economic situation in
2012 is unclear, our focus this year in the Laser and Automation Applications
segment will be on growth in the Asian market, where rising salaries favor the
development of automation.”
GENERAL
The financial statement release has been drawn up in compliance with the IAS 34
Interim Financial Reporting standard. The financial statement release has not
been audited.
More information on events that have taken place during the reporting period
can be found in the stock exchange releases published on Cencorp's website at
www.cencorp.com. At the same address, you can also find the flagging
notifications concerning changes in ownership according to the Securities
Markets Act.
Cencorp is part of the Finnish Savcor Group. Savcor Group Oy owns 34.8 percent
and Savcor Group Limited 39.0 percent of Cencorp.
SEGMENT-BASED REPORTING
The Face (Telecom) corporate transaction was completed on 30 November 2010, and
Cencorp's reporting structure was altered as of 1 December 2010. The Face
(Telecom) business result and balance sheet have been consolidated in Cencorp's
consolidated figures starting on 1 December 2010. Cencorp's reporting for 2010
is based on two business segments.
The business segments are Laser and Automation Applications, and Special
Components. The Laser and Automation Applications segment comprises Cencorp's
former business and the Special Components segment the business acquired
through the Face transaction.
FINANCIAL DEVELOPMENT IN OCTOBER-DECEMBER 2011
Net sales increased 18 percent to EUR 6.6 million (EUR 5.5 million). The
increase in net sales was mainly due to the integration of the Face (Telecom)
business, i.e. the current Special Components segment, into the Cencorp Group
and the favorable net sales development in this segment during the final
quarter of the year. On the other hand, demand for laser and automation
equipment declined from both last year's corresponding period and the third
quarter of 2011. The decline in the segment's net sales was due to the deferral
of investments as a result of the uncertainty in the global economy.
EBITDA was EUR -0.8 million (EUR -0.4 million). The operating result during the
final quarter of the year was EUR -2.1 million (EUR -0.9 million). The
operating result was burdened by the declining profitability of both business
segments. The Group's depreciation has also significantly increased since the
integration of the Face (Telecom) business in China, i.e. the current Special
Components segment, into Cencorp in December 2010.
The Group's result before taxes amounted to EUR -1.9 million (EUR -1.2
million). The result for the reporting period was EUR -1.9 million (EUR -1.2
million).
Earnings per share were EUR -0.01 (-0.01) and diluted earnings per share EUR
-0.01 (-0.01).
FINANCIAL YEAR 2011
Operating environment in 2011
Cencorp operates in industries applying electronics and energy technology. Its
main geographical market areas are Europe, North America, South America and
Asia. Cencorp's key customers for laser and automation applications operate
globally and require local service. The global electronics industry, including
the manufacture of mobile phones, is mostly concentrated in Asia, the domestic
market area for the special components manufactured by Cencorp.
The year was twofold in the market for laser and automation applications.
During the first half of the year, a favorable economic situation boosted
demand for investment commodities, such as the laser and automation
applications manufactured by Cencorp. During the latter half of the year,
uncertainty in the global economy increased and demand for laser and automation
equipment declined strongly, in particular in Europe and in the US. Demand for
maintenance services and spare parts also decreased substantially.
Demand for special components was low during the first quarter of the year as a
result of the seasonal character of the business. During the second quarter,
demand returned to normal, even though the changes in the competition and in
the operators' market shares in the mobile phone market altered the demand
situation and made forecasting more difficult. During the latter half of the
year, however, demand grew especially in the mobile phone sector.
The market for renewable energy applications continued to grow, even though
their share of the total energy applications market still remains minor.
Cencorp has strengthened its position in this market.
Competition
In laser and automation applications, Cencorp has a few significant global
competitors that focus either on laser or automation applications. Cencorp's
unique expertise in laser and automation combinations thus gives the company a
major competitive edge. In addition to global players, there are local
competitors, especially in China. Low-cost manufacturing in China has managed
to increase its market share in simple applications during the past few years.
The special components market typically faces competition from one or at most
two major competitors and several minor competitors, depending on the product
category. The strongest competitors are local and foreign manufacturers
operating in Asia. In special components, the competitive arena includes direct
competitors manufacturing the same or a similar product, customers' in-house
manufacturing that replaces subcontracting, and technology competition where
products included in Cencorp's product range can be replaced by another
technology.
Market outlook
Demand for laser and automation applications is expected to increase as the
economic upswing puts investment activity back on track. The outlook is good
especially in North America. Rising labor costs, especially in China, are also
contributing to the increasing need for production process automation and thus
demand for automation products. Labor costs have risen tens of percent in
China's industrial areas during the last few years, and this development is
expected to continue over the coming years.
Dependence on the telecom market in the special components business decreased
significantly in 2011, and the same development is estimated to continue in
2012. The growth outlook for other flexible circuits, important for Cencorp,
such as RFID antennas, is also positive.
Cencorp views the energy industry, and renewable energy applications in
particular, as a new interesting market. This market is still in the
development phase, but it is expected to grow during the next few years.
Cencorp is able to provide this industry sector with solutions based on both
its laser and automation applications and special components product range.
Net sales and result
The Group's net sales totaled EUR 26.5 million (EUR 12.8 million). The increase
in net sales was mainly due to the integration of the Face business, i.e. the
current Special Components segment, into the Cencorp Group. Demand for laser
and other automation equipment also increased during the first half of the
year, which resulted in higher net sales through to the third quarter. In
addition, Cencorp substantially boosted its sales efforts and strengthened its
sales organization.
EBITDA was EUR -3.1 million (EUR -2.0 million). The Group's operating result
was EUR -7.0 million (EUR -3.1 million). The Group's depreciation has
significantly increased since the integration of the Face (Telecom) business in
China, i.e. the current Special Components segment, into Cencorp in December
2010.
The operating result was also burdened by the poor profitability of the Special
Components segment. The operating result of the Laser and Automation
Applications segment remained negative, even though year-on-year profitability
improved slightly.
The Group's result before taxes amounted to EUR -7.5 million (EUR -3.5
million). The result for the reporting period was EUR -7.5 million (EUR -3.5
million).
Earnings per share were EUR -0.02 (-0.02) and diluted earnings per share EUR
-0.02 (-0.02).
Significant orders received during the reporting period
In January 2011, Cencorp announced that it had signed an agreement on the
delivery of a production line to a European company operating in the
electronics industry. In March, Cencorp announced that it had signed an
agreement on the delivery of another production line to the same company. The
value of both orders was around EUR 0.6 million. The third agreement with the
same customer concerning the same kind of production line was signed in
February 2012.
In February 2011, Cencorp announced that it had signed an agreement on the
delivery of odd-form assembly machinery to a European company operating in the
electronics industry. The value of the order was over EUR 1.7 million.
Financing
Cash flow from business operations before investments was EUR -1.9 million (EUR
-1.8 million). Trade receivables at the end of the year were EUR 6.4 million
(EUR 7.8 million). Net financial items amounted to EUR 0.5 (EUR 0.4 million).
At the end of the year, the equity ratio was 51.2 percent (52.2 percent) and
equity per share was EUR 0.05 (EUR 0.07). At the end of the reporting period,
the Group's liquid assets totaled EUR 0.3 million (EUR 1.6 million), and unused
export credit limits, bank guarantee limits and factoring loans amounted to EUR
1.1 million (EUR 1.1 million).
Financing agreement negotiations with Sampo Bank Plc came to a positive
conclusion in January 2011. The financing agreement remained in force unchanged
in all of its terms and conditions.
In June 2011 Cencorp agreed with AC Finance BV, a subsidiary of Ahlström
Capital Oy, on a short-term loan of EUR 1 million. The loan period was extended
at the turn of the year from 31 December 2011 to 31 January 2012. At the end of
January 2012, Cencorp and AC Finance BV agreed to extend the loan maturity date
until 30 June 2012.
In June 2011, Savcor Group Oy and Cencorp agreed on extending the maturity date
of a loan of some EUR 1.2 million, granted to Cencorp by Savcor Group Oy in
2009 and converted into a convertible bond on 25 May 2010, from the end of June
2011 to the end of 2011. Cencorp has agreed with Savcor Group Oy on extending
the loan maturity date until 30 June 2012.
In December 2011, Cencorp was notified by the Australian company Savcor Group
Ltd that the due date for the unpaid share of around EUR 560,000 of the
purchase price for the Face (Telecom) corporate transaction will be extended to
the end of March 2012.
Cencorp's Chinese subsidiary Savcor Face (Beijing) Technologies Co., Ltd has
negotiated with real-estate investors on a sale-leaseback transaction regarding
the plant building in Beijing. The transaction has not yet been finalized, but
the company expects it to be realized during the first quarter of the year. The
intention is to use the sales price to repay the Bank of China a loan of RMB 33
million, i.e. some EUR 4.0 million. Some RMB 13 million, i.e. EUR 1.6 million
was due on 31 December 2011 and some RMB 15 million, i.e. EUR 1.8 million is
due in November 2012. Negotiations with the Bank of China continue, including
on amending the loan installment program.
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 for next twelve (12) months.
Cencorp has loans which will be due in following twelve (12) months. 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 next twelve (12) months.
Cencorp's Extraordinary General Meeting held on 30 January 2012 decided to
authorize the Board of Directors to issue 100,000,000 new shares. This
authorization gives the Board of Directors the possibility to act quickly if
required, for example, to finance investments and to increase working capital
through equity arrangements.
Product development
The Group's product development costs during the financial year amounted to EUR
1.6 (0.8) million or 6.2 (5.9) percent of net sales.
Cencorp introduced in 2011 a completely new 1300 BR PCB depaneling cell that
uses linear servo motor technology to separate printed circuit board panels. It
is capable of faster in-line production than its predecessor, thus increasing
customers' capacity. Cencorp has also showcased a linear servo motor based
version of the 1300 SR off-line depaneling machine introduced in 2010, which is
more competitive than its predecessor and meets customers' requirements for
faster, more silent and maintenance-free equipment. The company has developed
further the Cencorp iSolutions production control system, which can also be
used to collect data on the operation of the systems.
Investments
Gross investments during the reporting period amounted to EUR 1.2 million (EUR
1.8 million). The largest investments were EUR 0.4 million in machinery and
equipment and EUR 0.6 million in development costs.
Segment information
Laser and Automation Applications
Net sales of the Laser and Automation Applications segment in the final quarter
of 2011 were EUR 2.7 million (EUR 3.8 million). The decline in net sales
resulted from the uncertainty in the global economy, which led to investments
being deferred and weakened demand for laser and automation equipment.
The Laser and Automation Applications segment's full year net sales increased
36 percent to EUR 15.1 million (EUR 11.1 million). The increase was due to
strong sales during the first half of the year, whereas demand declined
substantially during the last quarter of the year. The segment accounted for 57
percent of the Group's net sales.
The operating result of the Laser and Automation Applications segment in the
last quarter was EUR -1.3 million (EUR -0.1 million). The operating result for
the full year was EUR -2.5 million (EUR -2.3 million). In the first half of the
year, the operating result was burdened by ramp-up of a subcontractor network,
according to the strategy, as well as a poor development of net sales during
the latter part of the year. However, the year includes months in which
profitability was positive when measured in terms of operating profit.
Special Components
The Face (Telecom) business's, i.e. the current Special Components segment's
result and balance sheet were consolidated in Cencorp's consolidated figures as
of 1 December 2010. The comparison figures thus only include figures for
December 2010.
Net sales of the Special Components segment in the final quarter of 2011 were
EUR 3.8 million and for the full year EUR 11.4 million (EUR 1.7 million in
December 2010). Net sales increased in every quarter and developed particularly
favorably in October-December. The increase is partly due to the seasonal
character of the business, but also to internal sales efforts. The segment
accounted for 43 percent of the Group's net sales.
The segment's operating result in the last quarter was EUR -0.8 million and for
the full year EUR -4.5 million (EUR -0.02 million in December 2010). The
operating profit was weakened by a poor development of net sales early in the
year, due to a decrease in the demand concerning the biggest customer. In the
final quarter, the operating profit improved slightly but remained negative.
The Special Components segment has earlier been very dependent on needs of the
most important customer operating in the telecom sector. In 2011, Cencorp
succeeded in broadening the customer base, in addition to the telecom sector,
especially also in the renewable energy technologies.
Personnel
During the period under review, the Group employed an average of 336 (98)
people, 60 of whom worked in Finland, 264 in China and 12 in other countries.
During the reporting period, salaries and fees totaled EUR 6.5 million (EUR 4.1
million).
Cencorp Corporation's President and CEO during the period under review was Mats
Eriksson. The other members of the Management Team on 31 December 2011 were
Anssi Jansson, Vice President, Sales and Marketing (until 29 February 2012);
Jari Ketoluoto, Vice President, Laser Business Development; Petri Kivelä, Vice
President, Customer Service; Päivi Lehtovaara, Chief Financial Officer (until
31 January 2012); Sami Lindfors, Vice President, Face (Telecom) Business and
Henrikki Pantsar, Vice President, Product Development. Simo Hietaniemi, Vice
President, Project Business, left Cencorp on 31 July 2011. Iikka Savisalo was
appointed the Group's new Chief Financial Officer starting on 1 February 2012.
During the statutory negotiations started in September, it was agreed to
temporarily lay off Cencorp's personnel in Finland in a staggered manner, for
economic and production-related reasons, for seven days per calendar month on
average, starting on 3 October 2011. The decision was made to discontinue the
lay-offs in January 2012, as the markets in North America, in particular, are
picking up. Cencorp expects the Group's order book to develop favorably over
the next few months. The company is also seeking to increase its investments in
product development, especially in the area of renewable energy technologies.
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
financial year.
The company had a total of 4,425 shareholders at the end of the year, and 45.1
percent of the shares were owned by foreigners. The ten largest shareholders
held 90.1 percent of the company's shares and voting rights on 31 December
2011.
The largest shareholders at the end of the financial year:
Shares Votes
-------------------------------------------------------------
1. SAVCOR GROUP LIMITED 133,333,333 39.0
-------------------------------------------------------------
2. SAVCOR GROUP OY 119,235,078 34.8
-------------------------------------------------------------
3. AC INVEST BV 17,499,999 5.1
-------------------------------------------------------------
4. ETERA MUTUAL PENSION INSURANCE COMPANY 16,394,735 4.8
-------------------------------------------------------------
5. TILITOIMISTO CAPITAL OY 11,000,000 3.2
-------------------------------------------------------------
6. PAASILA MATTI 2,777,777 0.8
-------------------------------------------------------------
7. JOKELA MARKKU 2,287,519 0.7
-------------------------------------------------------------
8. TIMMERBACKA HANNU 2,222,222 0.6
-------------------------------------------------------------
9. TUOHI & PAALU OY 2,050,000 0.6
-------------------------------------------------------------
10. PARPOLA VILLE 1,478,759 0.4
-------------------------------------------------------------
OTHERS 33,881,848 10.0
-------------------------------------------------------------
TOTAL 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 31 December 2011, representing about 79 percent of the
Company's shares and voting rights. The company's President and CEO Mats
Eriksson did not hold any shares in the company at the end of the year.
The price of Cencorp's share varied between EUR 0.07 and EUR 0.20 during the
year. The average price was EUR 0.12, and the closing price at the end of the
year EUR 0.09. A total of 16.7 million Cencorp shares were traded at a value of
EUR 2.0 million. The company's market capitalization at the end of the year
stood at EUR 30.8 million.
No share options were granted to the company's management during the financial
year 1 January 2011-31 December 2011. On 31 December 2011, 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.
The subscription period for the 2006B options, which number 250,000, ended on
30 April 2011. The 2007A options number 1,801,400 and their subscription period
ended on 30 September 2011. No 2006C series options have been allocated and
Cencorp Group continues to hold them.
Share issue
On 18 February 2011, Cencorp Corporation's Board of Directors decided, based on
the authorization of the Extraordinary General Meeting of 12 October 2010, to
organize a share issue where the Company offered a maximum of 33,094,145 new
shares in Cencorp to be subscribed to by the shareholders based on the
shareholders' preemptive rights.
A total of 27,766,886 shares, ie. 84 percent of the total number of shares
offered, were subscribed to in the rights issue carried out in February-March
based on primary and secondary subscriptions. Through the rights issue, Cencorp
raised a total of EUR 3,332,026 in new equity. This amount also includes the
decrease in the Company's liabilities by a total of EUR 2,333,945 as Savcor
Group Oy offset the subscription price of the shares it subscribed to in the
rights issue against its capital and interest receivables from the Company
related to interest-bearing loans. The subscription price, EUR 3,332,026, was
recognized in full in the Company's distributable non-restricted equity fund.
Decisions by the Annual General Meeting
The Annual General Meeting held on 28 April 2011 confirmed the financial
statements for the financial year 2010. According to the proposal of the Board
of Directors, it was decided that no dividend be paid for the financial year 1
January-31 December 2010. It was also decided that the loss for the financial
year ended on 31 December 2010 be entered in retained earnings. The persons who
were working on the Company's Board during the financial year and the President
and CEOs who acted during the financial year were discharged from liability for
the financial year 1 January-31 December 2010.
Hannu Savisalo, Matti Paasila, Ismo Rautiainen and Iikka Savisalo were elected
to Cencorp Corporation's Board of Directors. At the constitutive meeting of the
Board of Directors, held after the Annual General Meeting, Hannu Savisalo was
elected Chairman of the Board of Directors and Matti Paasila Vice-Chairman.
The Annual General Meeting decided that an annual remuneration of EUR 40,000 be
paid to both the Chairman and the Vice-Chairman of the Board of Directors and
an annual remuneration of EUR 30,000 be paid to the Board members.
Ernst & Young Oy was elected as the company's auditor, with Mikko Rytilahti,
Authorized Public Accountant, acting as the principal auditor.
The Annual General Meeting decided to amend Article 8 of the Company's Articles
of Association to read as follows: Article 8 Invitation to the General Meeting:
The invitation to the General Meeting shall be published, through a stock
exchange release and on the Company's website, at the earliest three calendar
months prior to the record date of the General Meeting and at the latest three
weeks prior to the General Meeting, however, always at least nine days prior to
the record date of the General Meeting. When the Board of Directors so decides,
the invitation to the meeting can also be published in a national newspaper
determined by the Board of Directors.
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.
The charges that have come to Cencorp's knowledge
According to the information received by Cencorp in July 2011, the District
Prosecutor has decided to prosecute some of the Company's former employees,
former President and CEO and former Board Members for an information offence
and/or abuse of insider information. According to the charge concerning the
information offence, the time of commission is the period between August 2005
and August 2006. All of the suspected persons have denied the criminal
allegations made against them. The accused persons are no longer employed by
Cencorp nor are they members of its administrative bodies. Cencorp is not
involved in this matter as an interested party.
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 the limited scope of 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 financial
statement release. As stated in the item Financing, the company has a loans to
the Bank of China of some EUR 1.6 million which were due on 31 December 2011.
In addition, some EUR 1.8 million is due in November 2012 to the Bank of China.
Negotiations with the Bank of China continue.
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 both 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.
Other risks connected to Cencorp have been presented in more detail in the
Annual Report for 2010 and in the base prospectus and its notes published on 25
October 2010.
Governance principles
Cencorp's Board of Directors handled and approved the company's Corporate
Governance Statement on 17 February 2012. The statement describes the main
features of the internal control and risk management related to the company's
financial reporting process, and the operations and composition of the Board of
Directors, including information on the President and CEO. The Annual Report
for the financial year 2011 will be published in the week of 26 March 2012 at
www.cencorp.com and will include the Financial Statements, the Report of the
Board of Directors and the Auditors' Report. The company's Corporate Governance
Statement will be published as a separate report in the same connection. It is
also available at the company's website.
Major events after the financial year
In January 2012, Cencorp signed a significant framework agreement on the supply
of flexible circuits for renewable energy applications. The value of the
agreement may amount to over EUR 50 million over three years. The parties to
the framework agreement have agreed on the terms and conditions of the deal and
production volume estimates that will not be binding on the buyer for
2012-2014.
Cencorp Corporation's Extraordinary General Meeting held on 30 January 2012
authorized the Board of Directors to decide on a share issue, share options and
other share-entitling rights referred to in Chapter 10, Section 1 of the
Companies Act, in one or more instalments as follows. The total number of
shares issued under the authorization may not exceed 100,000,000 shares. The
Board of Directors is authorized to decide on all terms and conditions of share
issues and other share-entitling rights. The Board of Directors is authorized
to grant directed issues and share-entitling rights. The authorization shall
remain valid until further notice, but for no longer than five years from the
decision by the General Meeting.
In June 2011, Cencorp agreed with AC Finance BV, a subsidiary of Ahlström
Capital Oy, on a short-term loan of EUR 1 million. The loan period was extended
at the turn of the year from the end of December 2011 to 31 January 2012, and
in January 2012 the loan maturity date was extended until 30 June 2012.
Cencorp's Chinese subsidiary Savcor Face (Beijing) Technologies Co., Ltd has
negotiated with real-estate investors on a sale-leaseback transaction regarding
the plant building in Beijing. The transaction has not yet been finalized, but
the company expects it to be realized during the first quarter of the year.
Matti Paasila, Vice-Chairman of Cencorp's Board of Directors, announced on 2
February 2012 that he will resign from the Board of Directors for personal
reasons. Ismo Rautiainen, MSc (Econ), eMBA (born 1952) was elected as the new
Vice-Chairman. Rautiainen has been a member of Cencorp's Board of Directors
since October 2010. For the time being, Cencorp's Board of Directors will
continue with three members until the Annual General Meeting, which will be
held on 19 April 2012.
In the beginning of February, Cencorp signed an agreement on the delivery of a
production line to a European company operating in the electronics industry.
Two similar production lines were delivered to the same company during 2011.
The value of the new deal is approximately EUR 0.7 million.
The Board of Directors' proposal concerning the distribution of profit
The Board of Directors proposes to the Annual General Meeting that the loss for
the period that ended on 31 December 2011 be entered in retained earnings and
that no dividend be paid.
Outlook for 2012
The economic cycles in the global markets have a significant impact on demand
for laser and automation equipment. Even though the year has started off with a
moderately positive market outlook, it is uncertain whether the situation will
remain positive throughout the year. The demand for special components will
greatly depend on when the mass production for the deliveries according to the
framework agreement related to renewable energy disclosed by Cencorp on 23
January 2012 will start. The value of the agreement may amount to over EUR 50
million over three years. The parties to the framework agreement have agreed on
the terms and conditions of the deal and production volume estimates that will
not be binding on the buyer for 2012-2014. The shift that is taking place in
the mobile phone sector in general may also positively affect the demand for
the special components manufactured by Cencorp.
Despite the uncertain economic situation, Cencorp estimates its net sales to
increase compared to 2011 and the full-year EBITDA is estimated to be positive
provided that no essential change takes place in the operating environment or
in the current economic outlook.
In Mikkeli, on 17 February 2012
Cencorp Corporation
BOARD OF DIRECTORS
Statement of Consolidated Comprehensive Income
(unaudited)
1 000 EUR 10-12/2 10-12/2010 1-12/2011 1-12/2
011 010
-------------------------------------------------------------------------------
Net sales 6 552 5 532 26 465 12 811
Cost of sales -6 656 -4 440 -25 977
-10
349
------------------------------------------------------
Gross profit -104 1 092 488
2 461
Other operating income 108 213 243
278
Product development expenses -377 -283 -1 642
-761
Sales and marketing expenses -713 -742 -2 335
-2 031
Administrative expenses -856 -1 162 -3 607
-3 000
Other operating expenses -139 -40 -160
-76
Operating profit -2 081 -922 -7 014
-3 128
Financial income 418 154 1 701
605
Financial expenses -263 -412 -2 197
-973
Profit before taxes -1 926 -1 181 -7 510
-3 496
Income taxes 37 -13 -6
12
Profit/loss for the period -1 889 -1 194 -7 516
-3 484
======================================================
Profit/loss attributable to:
Shareholders of the parent -1 889 -1 194 -7 516
-3 484
company
Earnings/share (basic), eur -0,01 -0,01 -0,02
-0,02
Earnings/share (diluted), eur -0,01 -0,01 -0,02
-0,02
Other comprehensive income
Translation difference 563 -226 794
-320
Other comprehensive income 0 0 0
0
Total comprehensive income for -1 326 -1 420 -6 721
-3 805
the year
======================================================
Total comprehensive income
attributable to:
Shareholders of the parent -1 326 -1 420 -6 721
-3 805
company
Consolidated Balance Sheet
(unaudited)
1 000 EUR 31.12.2011 31.12.2010
-------------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 16 305 17 332
Goodwill 2 967 2 967
Other intangible assets 3 337 3 537
Available-for-sale investment 10 10
Deferred tax assets 10 0
Total non-current assets 22 629 23 845
---------------------------------
Current assets
Inventories 4 184 4 940
Trade and other non-interest-bearing receivables 7 402
10 406
Cash and cash equivalents 317 1 647
Total current assets 11 903 16 994
---------------------------------
Total assets 34 532 40 839
EQUITY AND LIABILITIES
Equity attributable to shareholders of the parent
company
Share capital 3 425 3 425
Other reserves 43 344 40 012
Translation difference 584 -210
Retained earnings -29 735 -22 082
Total equity 17 618 21 145
---------------------------------
Non-current liabilities
Non-current loans 0 4 534
Deferred tax liabilities 34 70
Total non-current liabilities 34 4 604
---------------------------------
Current liabilities
Current interest-bearing liabilities 8 475 5 905
Trande and other payables 8 196 9 136
Current provisions 209 49
Total current liabilities 16 880 15 090
---------------------------------
Total liabilities 16 914 19 694
Equity and liabilities total 34 532 40 839
Consolidated Cash Flow Statement
(unaudited)
1 000 EUR 1-12/2011
1-12/2010
--------------------------------------------------------------------------------
-----
Cash flow from operating activities
Income statement profit/loss -7 516
-3 484
Non-monetary items adjusted on income
statement
--------------------------------------------------------------------------------
-----
Depreciation and impairment + 3 949
1 085
Gains/losses on disposals of +/- 88
24
non-current assets
Unrealized exchange rate gains +/- -507
104
(-) and losses (+)
Other non-cash transactions +/- 62
22
Financial income and expense + 1 003
264
Interest gains - 0
0
Taxes - 6
-12
------------------------------------
Total cash flow before change in working -2 915
-1 998
capital
-------------------------------------------------
Change in working capital
Increase (-) / decrease (+) in 520
387
inventories
Increase (-) / decrease (+) in 1 957
-95
trade and other receivables
Increase (+) / decrease (-) in -524
121
trade and other payables
------------------------------------
Change in working capital 1 953
413
-------------------------------------------------
Adjustment of financial items and taxes to
cash-based accounting
Interest paid - -429
-314
Interest received + 14
47
Other financial items - -397
15
Taxes paid - -120
0
--------------------------------------------------------------------------------
-----
Financial items and taxes -932
-252
NET CASH FLOW FROM BUSINESS OPERATIONS -1 894
-1 837
CASH FLOW FROM INVESTING ACTIVITIES
Investments in tangible and intangible - -1 424
-1 201
assets
Proceeds on disposal of tangible and + 70
10
intangible assets
Loans given - 0
0
Repayment of loan receivables + 1 468
1 042
Acquisition of subsidiaries and other - 0
-2 504
business units
Disposal of subsidiaries and other + 0
0
business units
--------------------------------------------------------------------------------
-----
NET CASH FLOW FROM INVESTMENTS 114
-2 653
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from share issue + 862
5 268
Proceeds from non-current borrowings + 0
0
Repayment of non-current borrowings - 0
0
Proceeds from current borrowings + 10 083
14 052
Repayment of current borrowings - -10 244
-13 289
Dividends paid - -4
0
--------------------------------------------------------------------------------
-----
NET CASH FLOW FROM FINANCING ACTIVITIES 697
6 030
INCREASE (+) OR DECREASE (-) IN CASH FLOW -1 083
1 540
Statement of Changes in Equity
(unaudited
)
1 000 EUR Share Other Translatio Distributa Retained
Total
capita reserve n ble earnings
l s difference non-restri
cted
equity
fund
--------------------------------------------------------------------------------
31.12.2010 3 425 4 908 -210 35 104 -22 082
21 145
Directed 3 332
3 332
issue
Decrease -137
-137
from
share
issue
Translatio 794
794
n
differenc
e,
comprehen
sive
income
Profit/los -7 516
-7 516
s for the
period
31.12.2011 3 425 4 908 584 38 436 -29 735
17 618
1 000 EUR Share Other Translatio Distributa Retained
Total
capita reserve n ble earnings
l s difference non-restri
cted
equity
fund
--------------------------------------------------------------------------------
31.12.2009 3 425 4 908 110 13 524 -19 266
2 701
Direct -20
-20
entries in
retained
earnings
Directed 21 580
21 580
issue
Decrease -591
-591
from
share
issue
Arrangemen 1 280
1 280
t under
common
control
Translatio -320
-320
n
differenc
e,
comprehen
sive
income
Profit/los -3 484
-3 484
s for the
period
31.12.2010 3 425 4 908 -210 35 104 -22 082
21 145
When consolidating businesses under common control, the difference
between
acquisition cost and acquired net assets resulted in an item in the
amount of
EUR 1.28 million, which is recognized in retained earnings.
Segment information
(unaudited)
Reported business segments are Laser- and Automation Applications and Special
Components. Laser- and Automation Applications segment consists of Cencorp
Oy's
preexisting business and Special Components segment of acquired Face -business
in
2010.
1 000 EUR 10-12/2 10-12/2010 1-12/2011
1-12/2010
011
--------------------------------------------------------------------------------
--
Net sales
Laser and Automation 2 719 3 810 15 099
11 089
Applications
Special Components 3 837 1 733 11 439 1
733
Eliminations -4 -12 -73
-12
Total 6 552 5 532 26 465 12
811
Operating profit
Laser and Automation -1 276 -99 -2 497
-2 305
Applications
Special Components -805 -16 -4 468
-16
Eliminations 0 -807 -49
-807
Total -2 081 -922 -7 014 -3
128
EBITDA
Laser and Automation -839 179 -1 263
-1 445
Applications
Special Components 74 209 -1 753
209
Eliminations 0 -807 -49
-807
Total -765 -418 -3 065 -2
043
Profit/loss for the
period
Laser and Automation -1 228 -598 -2 984
-2 888
Applications
Special Components -667 -367 -4 658
-367
Eliminations 6 -229 127
-229
Total -1 889 -1 194 -7 516 -3
484
Assets
Laser and Automation 28 651 31 678 28 651
31 678
Applications
Special Components 25 962 28 712 25 962 28
712
Eliminations -20 081 -19 551 -20 081 -19
551
Total 34 532 40 839 34 532 40
839
Liabilities
Laser and Automation 8 965 10 379 8 965
10 379
Applications
Special Components 15 174 14 161 15 174 14
161
Eliminations -7 225 -4 845 -7 225 -4
845
Total 16 914 19 694 16 914 19
694
Investments
Laser and Automation 123 1 123 729
1 674
Applications
Special Components 40 259 463
259
Eliminations 0 -127 0
-127
Total 163 1 255 1 191 1
806
Depreciation
Laser and Automation 191 226 977
799
Applications
Special Components 702 226 2 538
226
Eliminations 0 0 0
0
Total 892 451 3 515 1
024
Impairment
Laser and Automation 247 52 257
61
Applications
Special Components 177 0 177
0
Eliminations 0 0 0
0
Total 424 52 434
61
Key Figures
(unaudited)
1 000 EUR 10-12 10-12/201 1-12/2011 1-12/2
/2011 0 010
--------------------------------------------------------------------------------
Net sales 6 552 5 532 26 465 12 811
Operating profit -2 -922 -7 014 -3 128
081
% of net sales -31,8 -16,7 -26,5 -24,4
EBITDA -765 -418 -3 065 -2 043
% of net sales -11,7 -7,6 -11,6 -15,9
Profit before taxes -1 -1 181 -7 510 -3 496
926 % of net sales -29,4 -21,3 -28,4 -27,3
Balance Sheet value 34 40 839 34 532 40 839
532
Equity ratio, % 51,2 52,2 51,2 52,2
Net gearing, % 46,3 41,6 46,3 41,6
Gross investments 163 1 255 1 191 1 806
% of net sales 2,5 22,7 4,5 14,1
Research and development costs 377 283 1 642 761
% of net sales 5,8 5,1 6,2 5,9
Order book 2 793 6 013 2 793 6 013
Personnel on average 330 172 343 98
Personnel at the end of the period 328 371 328 371
Non-interest-bearing liabilities 8 196 9 136 8 196 9 136
Interest-bearing liabilities 8 475 10 440 8 475 10 440
Share key indicators
Earnings/share (basic) -0,01 -0,01 -0,02 -0,02
Earnings/share (diluted) -0,01 -0,01 -0,02 -0,02
Equity/share 0,05 0,07 0,05 0,07
P/E ratio -16,3 -18,80 -4,02 -6,44
0
Highest price 0,10 0,17 0,20 0,19
Lowest price 0,07 0,11 0,07 0,10
Average price 0,08 0,15 0,12 0,14
Closing price 0,09 0,15 0,09 0,15
Market capitalisation, at the end of the 30,8 47,2 30,8 47,2
period, MEUR
Calculation of Key Figures
EBITDA, % Operating profit for the period +
depreciation +
impai
rment
------------------------------------
Net sales for
the period
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 Closi
ng
pric
e
------------------------------------
Earnings/share
Commitments and contingent liabilities
(unaudited)
1 000 EUR 31.12.2011 31.12.2010
--------------------------------------------------------------------------------
Loans from financial institutions 5 206 5 424
Promissory notes secured by pledge 12 691 12 691
Mortgages on real estate 5 413 5 006
Deposits 0 567
Factoring loan and export credit limit facility 833 1 355
Trade receivables 833 1 720
Promissory notes secured by pledge 12 691 12 691
Operating leases
Payable within one year 60 28
Payable over one year 83 5
Commitments
Payable within one year 786 783
Payable over one year 4 320 5 071
For more information, please contact:
President and CEO Mats Eriksson, tel. +358 400 358 982,
mats.eriksson@cencorp.com
Cencorp Corporation's Annual Report will be published in the week of 26 March
and its Interim Report January-March 2012 on Tuesday 8 May 2012. Cencorp
Corporation's Annual General Meeting will be held on Thursday 19 April 2012.
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