2012-02-16 07:15:00 CET
2012-02-16 07:15:10 CET
REGULATED INFORMATION
PKC Group Oyj - Financial Statement Release
PKC GROUP’S FINANCIAL STATEMENT RELEASE, 1 January – 31 December 2011
PKC Group Oyj FINANCIAL STATEMENT RELEASE 16 February 2012 8.15 a.m.
PKC GROUP'S FINANCIAL STATEMENT RELEASE, 1 January - 31 December 2011
-- Consolidated net sales grew 74.1% on the previous year (1-12/2010),
totalling EUR 550.2 million (EUR 316.1 million).
-- Consolidated operating profit was EUR 34.5 million (EUR 29.7 million) i.e.
6.3% (9.4%) of net sales. Comparable operating profit without non-recurring
items was EUR 42.0 million (EUR 31.5 million), 7.6% (10.0%) of net sales.
-- Profit for the financial year amounted to EUR 23.4 million (EUR 19.7
million).
-- Diluted earnings per share were EUR 1.16 (EUR 1.09).
-- Gross capital expenditure was EUR 101.5 million (EUR 8.6 million)
-- Net cash from operating activities was EUR 40.0 million
-- Cash flows after investments were EUR 50.2 million negative (EUR 14.9
million).
-- Gearing was 72.6% (1.7% negative).
-- Equity ratio was 30.0% (56.5%)
-- Net liabilities were EUR 110.7 million (EUR 1.2 million negative).
-- Dividend proposal is EUR 0.60 per share.
-- PKC Group announced on 28 February 2011 that it had signed an agreement for
the purchase of shares in the Segu companies. The requirements of closing
have been fulfilled and the closing became effective on April 30, 2011.
-- PKC Group announced on 9 August 2011 that it had signed an agreement for
the purchase of shares in the AEES companies. The requirements of closing
have been fulfilled and the closing became effective on 1 October 2011.
KEY FIGURES 1-12/11 1-12/10
Net sales, EUR 1,000 550,208 316,081
Operating profit, EUR 1,000 34,505 29,689
% of net sales 6.3 9.4
Profit for the financial year, EUR 1,000 23,445 19,683
Earnings per share (EPS), EUR 1.16 1.09
ROI,% 18.9 25.8
Net liabilities, EUR 1,000 110,739 -2,068
Gearing, % 72.6 -1.7
Average number of personnel 10,793 5,277
HARRI SUUTARI, PRESIDENT AND CEO:
”PKC Group's net sales increased about 74% on the previous year and profit
before non-recurring items about 33%. Net sales increased both organically and
through corporate acquisitions. The result of the 2011 financial year was
burdened by non-recurring costs of about EUR 7.5 million, EUR 7.1 million of
which were costs of advisory services related to acquisitions. Despite sizeable
acquisitions and due to strong cash flow, the Group's gearing decreased
significantly during the last quarter.
PKC Group's market position strengthened during the financial year that has
ended. After the acquisitions, PKC Group is a leading global supplier of
electrical systems for trucks and also a significant supplier of electrical
systems for light vehicles and construction equipment.
Concern on the availability of investment financing has decreased after the
Central Bank of Europe decreased its key interest rates and released a low
interest loan program. It is my view that reasonably priced financing will be
available for truck investments also in the future. I also believe that demand
for transportation will increase in all our market areas. The significant fall
in the level of truck replacement investments in Europe in 2008-2010 and in
North America in 2007-2010 resulted in the ageing of transport equipment. The
2011 level of investment is at a sustainable replacement investment level. I
believe that as financial preconditions are now returning, the level of
replacement investments will grow in the coming years. During autumn 2011,
order flows for trucks weakened gradually but began to pick up again in
November and December. It seems that this trend continues in early 2012. In
North America, where a significant part of PKC Group's net sales is created
today, there is currently a particularly good truck order book and outlook for
2012.
PKC Group's Wiring Systems business developed very positively during the
financial year that has ended. Wiring Systems' operating profit without
non-recurring items improved 62%. The decrease in PKC's Electronics business
design and manufacturing services weakened the business's operating profit to a
third of what it was last year. We have launched a program to boost
profitability in the Electronics business.
OPERATING ENVIRONMENT
Wiring Systems business
- Vehicles, Europe
The registration of heavy-duty trucks increased in Europe (the EU countries,
Switzerland and Norway) by 36% in 2011 over the previous year. All in all,
about 236,500 heavy-duty trucks were registered during 2011. In Europe, the
order books of our customers are forecast to be on a level equivalent to 2-3
months' production. Forecasts on the production volumes in Europe for 2012
would seem to indicate a fall of about 10% over 2011.
Registrations of medium and heavy commercial vehicles over 3.5 tonnes in the
EU-27 rose by 29.0% in 2011. A total 315,447 new trucks were registered during
the year.
New car sales in the European Union (EU-27) year 2011 was 13,111,209 - a 1.7%
decline from the 2010 total of 13,343,302 and the fourth consecutive yearly
fall.
The number of orders received by truck manufacturers in Europe during the
fourth quarter fell about a fourth short of the level of deliveries made.
- Vehicles, North America
The freight volume in the NAFTA region has returned to pre-crisis level, and
vehicle fleets are being replaced. Demand has been particularly strong for
heavy-duty long-haulage trucks. Some truck models now have backorders
stretching for six months.
The North America heavy-duty truck market strengthened during the report
period. All in all, about 249,800 heavy-duty trucks were produced in 2011 which
represents an increase of 62% when compared to 2010. During the fourth
quarter, a total of 69,100 new heavy-duty trucks were produced. Production
volumes for 2012 are projected to increase 20 % to over 300,000 units.
Forecasts for North American class 8 truck retail sales are around 232,000
units in 2012. This implies overall market growth of around 26 - 27% versus
2011 total of around 183,000.
The North America medium-duty truck market continued to gain momentum during
the report period. 2011 production of medium-duty trucks increased in North
America by 42.3% over the comparison period to 160,731 units. During the fourth
quarter, a total of 41,147 new medium-duty trucks were produced. Production
volumes for 2012 are projected to increase 6% to 170,000 units. Forecasts for
North American class 6-7 truck retail sales are around 108,000 units in 2012.
North America light-duty truck assembly in 2011 rose to 6,912,666 units from
6,299,976 units in 2010.
North America Light Vehicle 2011 sales were up 9.4% to 15.28 million units over
the comparison period. The momentum gained in 2011 in the automotive industry
is expected to continue throughout 2012 and sales growth is projected at 6.4%
for 2012.
In North America, the orders received by truck manufacturers during the fourth
quarter were almost on level with the volume of deliveries made in the
corresponding period.
- Vehicles, South America
The South America heavy-duty 2011 production was at 140,114 which represents an
increase of 8.2% when compared to 2010. Fourth quarter production levels
decreased 18% from the previous quarter to 33,764 units. The fourth quarter
production decline was anticipated as production levels are historically lower
in the fourth quarter. Production volumes for 2012 are projected to decrease
12% to 123,000 units.
The South America medium-duty 2011 production was at 63,696 units which
represents an increase of 5.8% when compared to 2010. Fourth quarter
production levels decreased 14% from the previous quarter to 15,805 units. The
fourth quarter production decline was anticipated as production levels are
historically lower in the fourth quarter. Production volumes for 2012 are
projected to decrease 7% to 59,000 units.
The number of orders received by truck manufacturers in Brazil during the
fourth quarter fell about a fifth short of the level of deliveries made.
The 2011 South America light vehicle market sales reached 5.53 million units
which is an all-new high. Overall sales were up 8.1% compared with 2010 which
reflects the promising outlook of the South American automobile industry. A
major development in the region in 2011 was the closing of boarders to imported
vehicles which was expanded from Venezuela to include Argentina, Brazil and
Ecuador as the country continues to drive localized production. The explosive
growth that the region experienced in recent history is expected to slow down
and 2012 projected sales in the region is expected to reach 5.7 million units
which represents little growth over the record 2011 sales rate.
New vehicle sales in Brazil set a fifth consecutive annual record in 2011.
Sales of new vehicles increased 3.4% to 3.63 million units last year.
Production levels also reached a new record last year at 3.41 million units, up
0.7% from the 3.38 million vehicles build in 2010. This year production is
expected to reach 3.49 million units.
- Agricultural Equipment Industry
Agricultural Equipment Industry and Market Worldwide agricultural industry unit
sales increased 12% compared to 2010. Global tractor sales grew 12% while
global combine sales grew 16%. North American tractor sales, both over and
under 40 horsepower segments, were up 2%, and combine sales were down 5%. Latin
America sales of tractors decreased 2% and combine sales increased 21%. EAME &
CIS markets continued to improve in 2011, with tractor sales up 25% and combine
sales up 39%. Production volumes for 2012 are projected to equal 2011 volumes
in North America and to decrease 5-10% in South America.
- Construction Equipment Industry
Construction Equipment Industry and Market Global construction equipment
industry unit sales rose 27% in 2011 compared to the prior year, with positive
trends in every region. Light equipment was up 30% and heavy equipment up 23%.
North American demand was up 38% and EAME & CIS markets rose 35% as the
industry continued to rebuild from the prior year's low levels. In Latin
America, the market was up 25%, driven by strong demand from projects in both
the public and private sectors. In APAC markets, industry sales were up 19% for
the year, although significantly weaker in the second half of the year.
Production volumes for 2012 are projected to increase 10-20% from 2011 volumes
in North America and to increase 5 - 10 % in South America. Production volumes
in AEME & CIS markets are projected to stay flat or grow up to 5%.
Electronics business
Demand for the products of PKC Group's key industrial electronics customers
increased during the first half of 2011 but turned down during the second half
of the year. The weakening was a result of growing economic uncertainty in
Europe and a reduction in wind power investments globally.
Due to a change in the product strategy of a telecommunications customer, the
demand for PKC Group's Electronics business design and manufacturing services
was significantly smaller than the previous year.
NET SALES AND FINANCIAL PERFORMANCE
October-December 2011
Consolidated net sales from October-December amounted to EUR 242.0 million (EUR
91.9 million), up 163.2% on the same period a year earlier. During the report
period were reported EUR 3.6 million (EUR 0.2 million) in non-recurring items.
Consolidated operating profit before non-recurring items totalled EUR 12.4
million, accounting for 5.1% of net sales. Consolidated operating profit
totalled EUR 8.8 million (EUR 9.8 million), accounting for 3.6% of net sales
(10.6%). Comparative profitability was burdened by the significant decrease of
Electronics Business' ODM deliveries and and Wiring Systems business'
higher-than-expected costs related to the start-up of the new factory in Brazil
and the exceptionally low production volumes of light vehicles in Brazil and
trucks in Europe due to customer's longer-than-usual production stoppages in
December. Depreciation amounted to EUR 8.2 million (EUR 2.5 million). Increase
of depreciation is mainly due to business acquisitions. Recognition of
acquisitions increased the depreciation in the last quarter by EUR 4.8 million.
Management estimates that the annual depreciation related to acquisitions
amounts to EUR 12 million in the coming years. Financial items were EUR 1.1
million negative (EUR 3.1 million negative). Financial items contain EUR 2.1
million interest expenses, EUR 0.2 million interest income and exchange rate
profit totalling EUR 0.9 million net. Profit before taxes was EUR 7.7 million
(EUR 6.6 million). Profit for the report period totalled EUR 5.9 million (EUR
5.3 million). Diluted earnings per share were EUR 0.29 (EUR 0.29).
Net sales generated by the Wiring Systems business in the report period
amounted to EUR 224.5 million (EUR 70.8 million), or 217.2% more than in the
comparison period. The segment's share of the consolidated net sales was 92.8%
(77.0%). Net sales increased along with the acquisition of AEES companies.
During the report period were reported EUR 4.7 million (EUR 0.2 million) in
non-recurring advisory services related to AEES acquisition. Wiring Systems
business generated an operating profit before non-recurring items of EUR 13.7
million (EUR 8.9 million), equivalent to 6.1% of the segment's net sales
(12.6%). Wiring Systems business generated an operating profit of EUR 8.7
million (EUR 8.7 million), equivalent to 3.9% of the segment's net sales
(12.3%). The comparable profitability weakened due to the higher-than-expected
costs related to the start-up of the new factory in Brazil and the
exceptionally low production volumes of light vehicles in Brazil and trucks in
Europe due to customer's longer-than-usual production stoppages in December.
Recognition of acquisitions increased the depreciation in the last quarter by
EUR 4.8 million
Net sales generated by the Electronics business decreased by 17.4% to EUR 17.5
million (EUR 21.1 million). The segment's share of the consolidated net sales
was 7.2% (23.0%). During the report period were reported EUR 0.3 million in
non-recurring items. During the comparison period no non-recurring items were
recorded. Electronics business generated an operating profit before
non-recurring items of EUR 0.1 million, equivalent to 0.6% of the segment's net
sales Electronics business generated an operating profit of EUR 0.2 million
negative (EUR 2.0 million), equivalent to -1.2% of the segment's net sales
(9.6%). The decline of net sales and operating profit is due to decreased
demand of design and manufacturing services (ODM) of production and service
devices for telecommunication devices. Decrease in demand was due to change of
customer's product strategy. Electronics segment's result was further burdened
by costs related to production transfers from Finland to more competitive
production facilities.
January-December 2011
Consolidated net sales from January-December amounted to EUR 550.2 million (EUR
316.1 million), up 74.1% on the previous financial year. Consolidated operating
profit totalled EUR 34.5 million (EUR 29.7 million), accounting for 6.3% of net
sales (9.4%). During the report period were reported EUR 7.5 million (EUR 1.8
million) in non-recurring items. Depreciation amounted to EUR 17.5 million (EUR
10.7 million). Recognition of acquisitions increased the depreciation in the
last quarter by EUR 4.8 million. Management estimates that the annual
depreciation related to acquisitions amounts to EUR 12 million in the coming
years. Financial items were EUR 5.1 million negative (EUR 4.7 million
negative). Financial items contain EUR 4.3 million interest expenses, EUR 0.6
million interest income and exchange rate loss totalling EUR 1.4 million net.
Profit before taxes was EUR 29.4 million (EUR 25.0 million). Profit for the
financial year totalled EUR 23.4 million (EUR 19.7 million). Diluted earnings
per share were EUR 1.16 (EUR 1.09).
Net sales generated by the Wiring Systems business in the financial year
amounted to EUR 477.2 million (EUR 242.4 million), or 96.9% more than in the
previous financial year. The segment's share of the consolidated net sales was
86.7% (76.7%). Wiring Systems business generated an operating profit of EUR
35.5 million (EUR 24.5 million), equivalent to 7.4% of the segment's net sales
(10.1%). During the financial year were reported EUR 7.0 million (EUR 1.8
million) in non-recurring items. The improvement of operating profit is mainly
due to increased sales as a result of business acquisitions. Recognition of
acquisitions increased the depreciation in the last quarter by EUR 4.8 million
Net sales generated by the Electronics business increased by 1.0% to EUR 73.0
million (EUR 73.7 million). The segment's share of the consolidated net sales
was 13.3% (23.3%). Electronics business generated an operating profit of EUR
2.4 million (EUR 7.7 million), equivalent to 3.2% of the segment's net sales
(10.4%). During the financial were reported EUR 0.5 million in non-recurring
expenses. During the previous financial year no non-recurring items were
recorded. The decline of operating profit is due to decreased demand of design
and manufacturing services (ODM) of production and service devicesfor
telecommunication devices. Electronics segment's result was further burdened by
costs related to production transfers from Finland to more competitive
production facilities.
FINANCIAL POSITION AND CASH FLOW
Consolidated total assets at 31 December 2011 amounted to EUR 508.8 million
(EUR 219.0 million). Increase in total assets is mainly due to the acquisition
cost recognition and profit for the report period. Interest-bearing liabilities
totalled EUR 163.0 million at the close of the financial year (EUR 35.0
million). The Group's equity ratio was 30.0% (56.5%). Net liabilities totalled
EUR 110.7 million (EUR 2.1 million negative) and the gearing was 72.6% (1.7%
negative).
Inventories amounted to EUR 110.5 million (EUR 58.1 million). Current
receivables totalled EUR 124.6 million (EUR 57.8 million). Net cash from
operating activities was EUR 40.0 million and cash flows after investments
during the financial year were EUR 50.2 million negative (EUR 14.9 million).
Cash and cash equivalents amounted to EUR 52.3 million (EUR 37.1 million).
CAPITAL EXPENDITURE
During the financial year, the Group's gross capital expenditure totalled EUR
101.6 million (EUR 8.6 million), representing 18.5% of net sales (2.7%). The
capital expenditure consisted, in addition to the acquisition of Segu and AEES
companies, mostly of acquisition of production machinery and equipment.
RESEARCH & DEVELOPMENT
Research and development costs totalled EUR 6.9 million (EUR 5.7 million),
representing 1.3% (1.8%) of the consolidated net sales. At the end of the
report period, 143 (120) people worked in product development, excluding
production development and process development personnel.
PERSONNEL
During the report period, the Group had an average payroll of 10 793 employees
(5,277). At the end of the report period, the Group's personnel numbered 21 528
employees (5,977), of whom 21 161 (5,512) worked abroad and 367 (465) in
Finland. In addition the Group had at the end of the report period 367 rented
employees.
As a result of the co-determination negotiations concluded in October, it was
decided to lay off a total of 77 persons from PKC Electronics Oy, of which 28
persons were laid off in 2011. Rationalisation measures led to approximately
EUR 0.3 million in non-recurring expenses for the last quarter on year 2011.
QUALITY AND THE ENVIRONMENT
All of the Group's factories are certified in accordance with requirements of
the ISO/TS16949 quality standard for the automotive industry excluding factory
in Traverse City (USA), which is certified in accordance with requirements of
ISO9001 standard. In addition all of the Group's factories, except factories in
Sosnowiec (Poland), Mukachevo (Ukraine), Campo Alegre (Brazil) and Sao Bento do
Sul (Brazil), are certified in accordance with the ISO14001 environmental
standard and all factories operate in accordance with the ISO9001 quality
standard. Production units in Curitiba (Brazil), Itajuba (Brazil) and Suzhou
(China) have also certification in accordance with the OHSAS18001 occupational
health and safety management system standard.
The Sosnowiec and Mukachevo factories continue building a system in accordance
with ISO14001 environmental standard on schedule. The aim is to certify it in
the first quarter of 2012. The certification in accordance with ISO14001
environmental standard in Campo Alegre (Brazil) and Sao Bento do Sul (Brazil)
is planned to be completed during 2012. The certification of Occupational
health and safety management system in accordance with OHSAS18001 standard will
be achieved in all Electronics units during the first quarter of 2012.
MANAGEMENT
The Annual General Meeting held on 30 March 2011, re-elected Matti Hyytiäinen,
Outi Lampela, Endel Palla, Olli Pohjanvirta, Matti Ruotsala and Jyrki Tähtinen
as Board members. In the Board's organisation meeting, Matti Ruotsala was
elected as Chairman of the Board with Jyrki Tähtinen as Vice-Chairman.
Outi Lampela was elected as chairman of the Audit Committee with Matti
Hyytiäinen and Olli Pohjanvirta as its members. The Board of Directors also
elected Matti Ruotsala as chairman of the Nomination Committee and Endel Palla
and Jyrki Tähtinen as members.
Authorised public accounting firm KPMG Oy Ab, which has announced Virpi
Halonen, APA, to be the Auditor with principal responsibility, was selected as
auditor.
The Group's Executive Board consists of the following persons: Harri Suutari,
Chairman (President and CEO); Harri Ojala (President, Wiring Systems); Jarmo
Rajala (President, Electronics); Sanna Raatikainen (General Counsel); Marja
Sarajärvi (CFO); and Jarkko Kariniemi (Director, HR and Risk Management).
The Board of Directors of PKC Group Oyj has appointed Mr. Matti Hyytiäinen (b.
1960), M.Sc. Economics, new President and CEO of PKC Group Oyj as of the date
of the next AGM. Following the proposal of the nomination committee, the Board
of Directors has decided to propose to the next Annual General Meeting that the
current President & CEO Harri Suutari be elected to Board of Directors. The AGM
is currently estimated to take place on 4 April 2012. Matti Hyytiäinen started
in the employ of PKC Group Oyj as of 1 January 2012 and resigned from the Board
of Directors on 31.12.2011, after which the Board will continue with five
members.
SHARE TURNOVER AND SHAREHOLDERS
PKC Group Oyj's share turnover on NASDAQ OMX Helsinki Ltd from 1 January to 31
December 2011 was 11 803 605 shares (10,172,914 shares), representing 59.6% of
the average number of shares (56.5%). Shares were traded to a total value of
EUR 158.1 million (EUR 107.7 million). The lowest share value during the
financial year was EUR 8.60 (EUR 6.55) and the highest EUR 18.36 (EUR 15.40).
The closing price on the last trading day of the financial year was EUR 11.48
(EUR 15.40) and the average price during the financial year was EUR 13.44 (EUR
10.72). The company's market capitalisation at 31 December 2011 was EUR 228.5
million (EUR 301.1 million).
Flaggins 2011
-- The share of votes and share capital in PKC Group Oyj held by Ilmarinen
Mutual Pension Insurance Company (0107638-1) exceeded the limit of 10% on
30 August 2011. Following the transaction Ilmarinen Mutual Pension
Insurance Company owned 2,017,955 PKC Group Oyj shares i.e. 10.14% of the
shares and votes.
-- The share of votes and share capital in PKC Group Oyj held by PEA Escrow,
LLC (X00832908), an entity controlled by Platinum Equity Advisors, LLC,
exceeded the limit of 5% on 1 October 2011 after the closing of the
agreement between PKC Wiring Systems Oy and PKC Group USA Inc. (as buyers)
and PKC Group Oyj (as guarantor) and the funds controlled by Platinum
Equity (as sellers) signed on 9 August 2011 for the purchase of
AEES-companies. As part of the purchase price payable for the shares in the
AEES-companies, PEA Escrow received on behalf of the funds controlled by
Platinum Equity 1,250,000 PKC Group Oyj's shares corresponding to 5.9% of
shares and votes.
-- The share of votes and share capital in PKC Group Oyj held by PEA Escrow,
LLC (X00832908), an entity controlled by Platinum Equity Advisors, LLC, has
fallen below the limit of 5% on 30 December 2011 and the share of votes and
share capital in PKC Group Oyj held by Project Del Holdings, LLC
(X00840083), an entity controlled by Platinum Equity Advisors, LLC,
exceeded the limit of 5% on 30 December 2011. As part of the purchase price
payable for the shares in the AEES-companies pursuant to the agreement
between PKC Wiring Systems Oy and PKC Group USA Inc. (as buyers) and PKC
Group Oyj (as guarantor) and the funds controlled by Platinum Equity (as
sellers) signed on 9 August 2011 for the purchase of AEES-companies, PEA
Escrow received on behalf of the funds controlled by Platinum Equity
1,250,000 PKC Group Oyj's shares corresponding to 5.9% of shares and votes
and all these shares have been transferred to Project Del Holdings, LLC on
behalf of the funds controlled by Platinum Equity.
The shares held by Board members, their closely associated persons and
corporations in which they have a controlling interest accounted for 0.6%
(0.7%) of the total number of shares at the end of the financial year. PKC
Group Oyj had a total of 9 041 shareholders (7,207) at the end of the financial
year. The shares held by foreigners and through nominee registrations at the
close of the financial year totalled 24.4% of the share capital (19.8%).
SHARES AND SHARE CAPITAL
PKC Group Oyj's shares and share capital has changed during the financial year
as follows:
-- A total of 49,400 PKC Group Oyj's shares have been subscribed for with 2006
options (31,600 with 2006A options and 17,800 with 2006B options). The new
shares and the corresponding increase in the share capital, EUR 16,796,
have been entered into the Trade Register on 1 February 2011. The new
shares were traded on the main list of the NASDAQ OMX Helsinki Ltd together
with the old shares as of 2 February 2011. After the increase the Company's
registered share capital was EUR 5,999,523.36, divided into 19,601,332
shares.
-- A total of 199,270 PKC Group Oyj's shares have been subscribed for with
2006 options (136,230 with 2006A options and 63,040 with 2006B options).
The new shares and the corresponding increase in the share capital, EUR
67,751.80, have been entered into the Trade Register on 29 March 2011. The
new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd
together with the old shares as of 30 March 2011. After the increase the
Company's registered share capital was EUR 6,067,275.16, divided into
19,800,602 shares.
-- A total of 103,840 PKC Group Oyj's shares have been subscribed for with
2006 options (32,060 with 2006A options, 20,780 with 2006B options and
51,000 with 2006C options). The new shares and the corresponding increase
in the share capital, EUR 35,350.60, have been entered into the Trade
Register on 12 May 2011. The new shares were traded on the main list of the
NASDAQ OMX Helsinki Ltd together with the old shares as of 13 May 2011.
After the increase the Company's registered share capital was EUR
6,102,580.76, divided into 19,904,442 shares.
-- A total of 1,414 PKC Group Oyj's shares have been subscribed for with 2006
options (950 with 2006B options and 464 with 2006C options). The new shares
and the corresponding increase in the share capital, EUR 480.76, have been
entered into the Trade Register on 30 August 2011. The new shares were
traded on the main list of the NASDAQ OMX Helsinki Ltd together with the
old shares as of 31 August 2011. After the increase the Company's
registered share capital was EUR 6,103,061.52, divided into 19,905,856
shares.
-- PKC Group Oyj's Board of Directors has, on the basis of the authorisation
granted by the shareholders' meeting on 30 March 2011, resolved on a
directed share issue without payment of 1,250,000 new shares to company's
wholly owned subsidiary PKC Group USA Inc for the payment of purchase price
for the shares in the AEES-companies. After the increase the Company's
registered share capital was EUR 6,103,061.52, divided into 21,155,856
shares. As part of the purchase price for the AEES companies, the sellers
received 1,250,000 PKC Group Oyj's shares on 1 October 2011. The new shares
were not listed at the time of acquisition as according to the agreement
the shares would be listed on the main list of the NASDAQ OMX Helsinki Ltd
together with the old shares within 180 days after the closing date of AEES
acquisition
After the financial year a total of 110 PKC Group Oyj's shares have been
subscribed for with 2006B options. The new shares and the corresponding
increase in the share capital, EUR 37.4, have been entered into the Trade
Register on 12 January 2012. The new shares will be traded on the main list of
the NASDAQ OMX Helsinki Ltd together with the old shares as of 13 January 2012.
After the increase the Company's registered share capital was EUR 6,103,098.92,
divided into 21,155,966 shares. The shares entitled their holders to dividends
and other shareholder rights in the Company as of the date of registration of
the shares in the Trade Register. After the increase, the number of shares
listed in NASDAQ OMX Helsinki Ltd was 19,905,966 as the 1,250,000 shares
related to the AEES acquisition were not listed on the main list of the NASDAQ
OMX Helsinki Ltd.
The 1,250,000 shares related to the AEES acquisition were listed on the main
list of the NASDAQ OMX Helsinki Ltd together with the old shares as of 1
February 2012.
THE BOARD'S AUTHORISATIONS
Authorisation to the Board of Directors to decide on share issue
The Board of Directors was granted authorisation by the Annual General Meeting
on 30 March 2011 to decide on share issue and granting of special rights
defined in Chapter 10, Section 1 of the Companies Act and all the terms and
conditions thereof. A maximum total of 6,000,000 shares may be issued or
subscribed for on the basis of authorisation. The authorisation includes the
right to decide on directed share issue. The authorisation is in force for five
years from the date of the General Meeting's decision. At Board of Directors'
discretion the authorisation may be used e.g. in financing possible corporate
acquisitions, inter-company co-operation or similar arrangement, or
strengthening company's financial or capital structure etc. PKC Group Oyj's
Board of Directors has, on the basis of the authorisation granted by the
shareholders' meeting on 30 March 2011, resolved on a directed share issue
without payment of 1,250,000 new shares to company's wholly owned subsidiary
PKC Group USA Inc for the payment of the purchase price for the shares in the
AEES-companies. After this share issue, a maximum total of 4,750,000 shares may
be issued or subscribed for on the basis of authorisation.
The Board of Directors does not possess a valid authorisation to acquire
company's own shares, and the company does not have any own shares (treasury
shares) in its possession.
Donations to good causes
The Annual General Meeting granted on 30 March 2011 to the Board of Directors
an authorisation to decide on a donation of no more than EUR 150,000 to Finnish
universities either directly by the company or through its subsidiaries.
According to the decision of the Board of Directors PKC Electronics Oy donated
EUR 100,000 to the University of Oulu and EUR 50,000 to the University of Vaasa
STOCK OPTION SCHEMES
2006 options
The stock option scheme initiated in 2006, comprises a total of 697,500 options
divided into A, B and C warrants. At the close of financial year, the
outstanding options and options held by key personnel totals 129,930 2006B
warrants and 209,386 2006C warrants.
The share subscription price for the 2006 stock options is the volume-weighted
average price of the PKC Group Oyj share on NASDAQ OMX Helsinki, with dividend
adjustments, as defined in the stock option terms (at present, EUR 9.54 for the
2006B and 2006C warrants). Through the exercise of the 2006 stock options, the
share capital of PKC Group Oyj may be increased by a maximum total of 697,500
new shares and EUR 237,150. After the registration of subscription made on 12
January 2012, the Company's share capital can increase by a maximum of 340,856
shares i.e. EUR 115,891.04 as a result of the exercise of the remaining
outstanding option rights. The share subscription period is for 2006B warrants
1 April 2010 - 30 April 2012, and for 2006C warrants 1 April 2011 - 30 April
2013. The 2006 stock options are subject to a share ownership plan. Key
personnel are obliged to subscribe for or purchase the company's shares with
20% of the gross income earned from stock options and to own these shares for
two years. The company's President and CEO is obliged to own these shares for
the duration of his managerial contract.
The share subscription period for 2006A warrants has ended 30 April 2011.
During the share subscription period a total 200,300 shares were subscribed and
2,200 warrants remained unused.
2009 options
The Annual General Meeting held on 27 March 2009 decided to issue stock options
to key personnel in the company and its subsidiaries. The maximum total number
of stock options issued is 600,000 and they are divided into A, B and C
warrants. At the close of the financial year, the outstanding options and
options held by key personnel totals 195,500 2009A, 190,000 2009B and 140,000
2009C warrants.
The subscription price for shares through the exercise of the 2009 stock
options is the volume-weighted average price of the PKC Group Oyj share on
NASDAQ OMX Helsinki for April 2009, 2010 and 2011 + 20% with dividend
adjustments, (at present, EUR 2.90 for the 2009A warrants, EUR 12,71 for the
2009B warrants and EUR 18.58 for the 2009C warrants). The subscription price
for shares will be recorded in the invested non-restricted equity fund. The
stock options entitle their owners to subscribe for a maximum total of 600,000
new shares in the company or existing shares held by the company. The share
subscription period for 2009A warrants is 1 April 2012 — 30 April 2014, for
2009B warrants 1 April 2013 — 30 April 2015 and for 2009C warrants 1 April 2014
— 30 April 2016. The 2009 stock options are subject to a share ownership plan.
Key personnel are obliged to subscribe for or purchase the company's shares
with 20% of the gross income earned from stock options and to own these shares
for two years. The company's President and CEO is obliged to own these shares
for the duration of his managerial contract.
BUSINESS COMBINATIONS
Segu companies
PKC Group announced on 28 February 2011 that it had signed an agreement to
purchase 100% of the shares in SEGU companies. Under the share purchase
agreement, PKC Group's subsidiaries shall purchase all shares in SEGU
Systemelektrik GmbH (Germany), SEGU Polska Sp. z o.o. (Poland) and TZOV HBM
Kabel Corp (Ukraine). The closing of the acquisition was subject to fulfilment
of customary terms including Ukrainian competition authority approval. The
requirements of closing have been fulfilled and PKC gained control of the
acquired companies on April 30, 2011, which is also the day of consolidation.
SEGU companies and PKC's Polish unit will form a business unit servicing the
Central European markets with annual sales of about hundred million and about
2,800 employees.
AEES companies
PKC Group has on 9 August 2011 signed an agreement for the purchase of AEES
companies from funds controlled by Platinum Equity. AEES is one of the leading
North American wiring harness manufacturers for heavy and medium duty trucks
and it also has a significant position in light vehicle wiring harnesses. In
addition, AEES provides components and wires to other contract manufacturers.
AEES' largest customer accounts within the truck industry are e.g. Daimler
Trucks North America, Navistar and PACCAR. Major light vehicle customers
include i.a. Continental, Ford, General Motors, Harley Davidson and Lear. In
2010, AEES generated net sales of EUR 454.0 million. AEES has operations in
USA, Mexico, Brazil and Ireland and had about 13,722 employees at the end of
December 2011. The closing became effective and ownership and control were
transferred on 1 October 2011.
As a result of the acquisition, PKC Group strengthened its position as a
supplier of electrical systems for heavy-duty trucks in the western world. PKC
also became a significant manufacturer of electrical systems for light vehicles
in North America. The primary reason for the acquisition was that PKC believes
that the combined businesses are able to increase their net sales organically
significantly more rapidly than PKC would have been able to without the
acquisition. It is PKC's view that global customers will concentrate their
purchases to a few globally operating suppliers and that the combined entities'
ability to serve current customers and maintain acquired customers will be
substantially better than PKC Group's ability before the acquisition. It is
PKC's view that companies' combined technical know-how and technical capacity
will be able to create more added value services to customers than PKC
previously could. The preliminary acquisition cost calculation is presented in
note 3.
SHORT-TERM RISKS AND UNCERTAINTIES
The public deficit and high indebtedness of many European countries and the
United States may weaken economic growth and availability of financing for
investment goods and increase uncertainty in the markets.
A potential weakening of the euro against the Polish zloty and the Russian
rouble as well as the potential weakening of the USD against the Mexican peso
may increase PKC's processing costs.
A significant increase in copper price may weaken PKC Group's profit in short
term. The customer prices are updated on average with 5 month delay on the
basis of copper price changes.
OUTLOOK FOR THE FUTURE
PKC expects that its net sales and comparable operating profit will increase in
2012 from the previous year's level. Net sales in 2011 amounted to EUR 550.2
million and operating profit without non-recurring items was EUR 42.6 million.
Major part of net sales and profit is generated by the Wiring Systems business.
THE BOARD OF DIRECTORS' PROPOSAL FOR THE DISPOSAL OF PROFITS
The parent company's distributable funds are EUR 56.8 million, of which the net
profit for the financial year is EUR 0.2 million negative. The Board of
Directors will propose to the Annual General Meeting to be held on 4 April 2012
that a dividend of EUR 0.60 per share be paid for a total of EUR 12.7 million
and that the remainder of the distributable funds be transferred to
shareholders' equity. The record date for the dividend payout is 11 April 2012
and the payment date is 18 April 2012. In the view of the Board of Directors,
the proposed dividend payout will not put the company's liquidity at risk.
ANNUAL REPORT 2011 AND CORPORATE GOVERNANCE STATEMENT
PKC will publish its Annual Report for 2011, which contains the report by the
Board of Directors and financial statements, auditor's report and a separate
corporate governance statement on 13 March 2012 on its website at
www.pkcgroup.com.
ANNUAL GENERAL MEETING AND FINANCIAL REPORTS IN 2012
The Annual General Meeting of PKC Group Oyj will be held on Wednesday 4 April
2012.
In 2012, the Interim Reports will be published as follows:
Interim Report 1-3/2012 Friday, May 4, 2012 at about 8.15 a.m.
Interim Report 1-6/2012 Thursday, August 9, 2012 at about 8.15 a.m.
Interim Report 1-9/2012 Thursday, November 1, 2012 at about 8.15 a.m.
The text section of this release focuses on the annual accounts. Comparisons in
accordance with IFRS standards have been made to the figures of the
corresponding period in 2010, unless otherwise mentioned. The figures presented
in the tables are independently rounded figures.
TABLES
The annual figures have been audited. This financial statement release has been
prepared in accordance with IAS 34 (Interim Financial Reporting) standard. The
financial statement has been prepared in accordance with the same principles as
the annual financial statements for 2010. The year 2011 IFRS standard changes
have not had any effect.
CONSOLIDATED STATEMENT OF COMPREHENSIVE 10-12/11 10-12/10 1-12/11 1-12/10
INCOME (EUR 1,000) 3 mon. 3 mon. 12 mon. 12 mon.
NET SALES 242,001 91,940 550,208 316,081
Other operating income 784 1,139 4,042 4,597
Increase (+) / decrease (-) in stocks of -2,218 3,639 -1,679 5,983
finished goods and work in progress
Production for own use 84 0 208 0
Materials and services 145,378 56,689 332,646 190,940
Employee benefit expenses 49,853 19,210 109,800 66,442
Depreciation 8,215 2,483 17,531 10,684
Other operating expenses 28,411 8,559 58,296 28,906
OPERATING PROFIT 8,794 9,776 34,505 29,689
Interest expenses -2,139 -742 -4,253 -1,964
Other financial income 186 41 599 132
Other financial expenses 892 -2,437 -1,437 -2,829
PROFIT BEFORE TAXES 7,733 6,639 29,414 25,029
Income tax -1,871 -1,366 -5,969 -5,346
PROFIT FOR THE REPORT PERIOD 5,862 5,272 23,445 19,683
Other comprehensive income:
Interest derivatives -464 0 -464 0
Foreign currency translation differences 5,308 5,241 -1,112 10,499
- foreign operations
Total comprehensive income for the 10,706 10,513 21,869 30,182
period
Attributable to equity holders of the
parent company:
Basic earnings per share (EPS), EUR 0.30 0.29 1.18 1.09
Diluted earnings per share (EPS), EUR 0.29 0.29 1.16 1.09
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000) 12/11 12/10
ASSETS
NON-CURRENT ASSETS
Goodwill 29,813 15,662
Other intangible assets 50,099 9,196
Property, plant and equipment 113,556 36,232
Deferred tax assets 7,697 4,794
Other receivables 20,207 38
Total non-current assets 221,371 65,923
CURRENT ASSETS
Inventories 110,526 58,127
Receivables
Trade receivables 103,965 45,797
Other receivables 20,490 10,545
Current tax assets 165 1,460
Total receivables 124,621 57,803
Cash and cash equivalents 52,280 37,104
Total current assets 287,426 153,034
Total assets 508,798 218,956
EQUITY AND LIABILITIES
EQUITY
Share capital 6,103 5,983
Share premium account 8,259 4,850
Invested non-restricted equity fund 35,639 21,852
Translation reserve 6,257 958
Fair value reserve -464 0
Share-based payments 2,340 1,663
Retained earnings 70,902 68,789
Profit for the report period 23,445 19,683
Total equity 152,482 123,776
LIABILITIES
Non-current liabilities
Interest-bearing liabilities 146,789 26,097
Non-interest-bearing liabilities 24,321 0
Provisions 1,541 472
Deferred tax liabilities 32,957 4,804
Total non-current liabilities 205,608 31,373
Current liabilities
Interest-bearing liabilities 16,230 8,939
Trade payables 90,779 33,291
Other non-interest-bearing liabilities 43,700 21,577
Total current liabilities 150,708 63,807
Total liabilities 356,316 95,180
TOTAL EQUITY AND LIABILITIES 508,798 218,956
CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000) 1-12/11 12 1-12/10 12
mon. mon.
Cash flows from operating activities
Cash receipts from customers 564,533 305,662
Cash receipts from other operating activities 5,357 4,625
Cash paid to suppliers and employees -520,867 -284,392
Cash flows from operations before financial income 49,022 25,895
and expenses and taxes
Interest paid and financial expenses -3,695 -1,915
Translation difference 2,489 857
Interest received 1,995 342
Income taxes paid -9,822 -2,244
Net cash from operating activities (A) 39,990 22,935
Cash flows from investing activities
Acquisition of property and equipment and intangible -11,845 -8,542
assets
Proceeds from sale of property and equipment and 1,393 466
intangible assets
Acquisitions of subsidiaries -79,565 0
Loans granted -514 -1
Proceeds from repayments of loans 16 17
Dividends received 301 0
Net cash used in investment activities (B) -90,213 -8,060
Cash flows after investments -50,223 14,875
Cash flows from financing activities
Drawing of long-term borrowings 153,703 0
Drawing of short-term borrowings 12,175 0
Share issue 4,000 21,708
Repayment of short-term/long-term borrowings -93,596 -8,697
Dividends paid -10,890 -7,113
Net cash used in financing activities (C) 65,391 5,898
Net increase (+) or decrease (-) in cash and 15,168 20,774
equivalents (A+B+C)
Cash and cash equivalents in the beginning of the 37,104 15,326
period
Effect of exchange rate fluctuations 8 1,004
Cash and cash equivalents in the end of the period 52,280 37,104
KEY FINANCIAL INDICATORS 1-12/11 12 1-12/10 12
mon. mon.
Net sales, EUR 1,000 550,208 316,081
Operating profit, EUR 1,000 34,505 29,689
% of net sales 6.3 9.4
Profit before taxes, EUR 1,000 29,414 25,029
% of net sales 5.3 7.9
Net profit for the period, EUR 1,000 23,445 19,683
% of net sales 4.3 6.2
Return on equity (ROE), % 17.0 19.4
Return on investments (ROI), % 18.9 25.8
Net liabilities, EUR 1,000 110,739 -2,068
Gearing, % 72.6 -1.7
Equity ratio, % 30.0 56.5
Current ratio 1.9 2.4
Gross capital expenditure, EUR 1,000 101,532 8,575
% of net sales 18.5 2.7
R&D expenditures, EUR 1,000 6,922 5,692
% of net sales 1.3 1.8
Personnel average 10,793 5,277
PER-SHARE KEY INDICATORS 1-12/11 12 1-12/10 12
mon. mon.
Earnings per share (EPS), EUR 1.18 1.09
Earnings per share (EPS),diluted, EUR 1.16 1.09
Equity per share, EUR 7.66 6.33
Share price at close of period, EUR 11.48 15.40
Dividend per share, EUR *) 0.60 0.55
Dividend per earnings, % *) 50.71 50.50
Effective dividend yield, % *) 4.42 3.30
Price/earnings ratio (P/E) 9.70 14.10
Lowest share price, EUR 8.60 6.55
Highest share price, EUR 18.36 15.58
Average share price, EUR 13.44 10.72
Turnover in shares, 1,000 shares 11,804 10,173
Turnover in shares per (share issue adjusted) share 59.6 56.5
capital, %
Average number of shares, 1,000 shares 19,816 17,990
Average number of shares, diluted, 1,000 shares 20,127 18,054
Shares at end of period, 1,000 shares 19,906 19,552
Unlisted shares at the end of period, 1,000 shares 1,250 0
Market capitalisation, EUR 1,000 228,519 301,100
*) The figures of 2011 are based on the Board of
Director's proposal
1. SEGMENT INFORMATION
1.1.-31.12.2011 (EUR 1,000) Wiring Electro Unallocated amounts Group
Systems nics and eliminations Total
Sales to external customers 477,212 72,995 0 550,208
Sales to other segments 755 132 -887 0
Net sales 477,967 73,127 -887 550,208
Operating profit before 42,467 2,825 -3,326 41,967
non-recurring items
% of net sales 8.9 3.9 0 7.6
Donations to the 0 150 0 150
universities
Advisor fees 7,100 0 0 7,100
Cancellation of the -317 0 0 -317
write-down of inventories
Non-recurring employee 218 310 0 528
benefit expenses
Total non-recurring other 7,001 460 0 7,461
operating items
Operating profit 35,466 2,365 -3,326 34,505
% of net sales 7.4 3.2 0.0 6.3
Segment's assets 483,593 48,910 -31,402 501,101
Unallocated assets *) 0 0 7,697 7,697
Total assets 483,593 48,910 -23,706 508,798
*) Segment's assets do not include deferred taxes
1.1.-31.12.2010 (EUR 1,000) Wiring Electro Unallocated amounts Group
Systems nics and eliminations Total
Sales to external customers 242,384 73,697 0 316,081
Sales to other segments 411 243 -654 0
Net sales, EUR 1,000 242,795 73,940 -654 316,081
Operating profit before 26,260 7,691 -2,452 31,499
non-recurring expenses
% of net sales 10.8 10.4 0 10.0
Non-recurring employee 1,363 0 0 1,363
benefit expenses
Non-recurring other 447 0 0 447
operating expenses
Total non-recurring expenses 1,810 0 0 1,810
Operating profit 24,450 7,691 -2,452 29,689
% of net sales 10.1 10.4 0 9.4
Segment's assets 151,634 52,348 10,181 214,162
Unallocated assets *) 0 0 4,794 4,794
Total assets 151,634 52,348 14,975 218,956
*)Segment's assets do not include deferred taxes
NET SALES BY GEOGRAPHICAL 10-12/11 3 10-12/10 3 1-12/11 1-12/10 12
LOCATIONS (EUR 1,000) mon. mon. 12 mon. mon.
Finland 15,684 15,513 62,521 53,720
Other Europe 59,752 43,185 236,006 154,588
North America 138,107 4,171 157,458 20,732
South America 22,814 14,408 73,514 56,958
Other countries 5,645 14,663 20,708 30,083
Total 242,001 91,940 550,208 316,081
2. CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY (EUR MILLION)
A = Share Capital
B = Share premium account
C = Invested non-restricted equity
fund
D = Fair value reserve
E = Translation difference
F = Retained earnings
G = Total equity
A B C D E F G
Equity at 1.1.2010 6.0 4.9 0.4 0.0 -2.9 70.3 78.6
Dividends 0.0 0.0 0.0 0.0 0.0 -7.1 -7.1
Share-based payments 0.0 0.0 0.0 0.0 0.0 0.6 0.6
Subscription of shares 0.0 0.0 21.4 0.0 0.0 0.0 21.4
Comprehensive income for the period 0.0 0.0 0.0 0.0 10.5 19.7 30.2
Equity at 31.12.2010 6.0 4.9 21.8 0.0 7.6 83.5 123.8
Equity at 1.1.2011 6.0 4.9 21.8 0.0 7.6 83.5 123.8
Dividends 0.0 0.0 0.0 0.0 0.0 -10.9 -10.9
Share-based payments 0.0 0.0 0.0 0.0 0.0 0.7 0.7
Share issue, exercise of options 0.1 3.4 13.5 0.0 0.0 0.0 17.1
Comprehensive income for the period 0.0 0.0 0.3 -0.5 -1.4 23.4 21.9
Equity 31.12.2011 6.1 8.3 35.6 -0.5 6.3 96.7 152.5
3. BUSINESS COMBINATIONS
The profit effect of business combinations
EUR million Recognised in 2011 Pro forma of the whole year
Net sales 152.8 962.3
Net profit 6.7 27.1
Pro forma of the whole year presents the effect of business combinations if the
acquisitions made in 2011 had been consolidated to the consolidated financial
statements since 1 January 2011.
Segu
PKC Group signed on 28 February 2011 an agreement for the purchase of shares in
the Segu companies. The ownership and control have been transferred to PKC
Group on 30 April 2011, which is also the date of consolidation.
The acquisition cost is calculated on the basis of the Segu companies'
preliminary balance sheet as per 30 April 2011 prepared, essentially, in
accordance with IFRS and the PKC Group's accounting principles.
The preliminary goodwill of EUR 0.1 million arising from the acquisition is
mainly attributable to the acquired workforce and economies of scale and
synergies expected from combining the operations of Segu and PKC Group. None of
the goodwill recognized for the Segu companies is tax deductible.
The following table summarizes the consideration paid for Segu companies and
the amounts of the assets acquired and liabilities assumed recognized at the
acquisition date. The below mentioned acquisition consideration and the fair
values at 31 December 2011 are preliminary as the finalisation of the
acquisition cost calculation is still on-going.
Consideration at 30 April 2011 (EUR million)
Cash 13.7
Total consideration transferred 13.7
Consideration paid in cash 13,7
Acquired cash and cash equivalents -0,5
Cash flow effect 13,2
The assets and liabilities arising from the acquisition are as follows
(EUR million)
Property, plant and equipment 12.0
Intangible assets 2.8
Inventories 8.0
Trade and other receivables 6.1
Cash and cash equivalents 0.5
Total assets 29.4
Provisions 0.2
Retirement benefit obligation 0.3
Interest-bearing liabilities 5.7
Trade and other liabilities 8.8
Deferred tax liabilities 0.8
Total liabilities 15.8
Total identifiable net assets 13.6
Goodwill 0.1
The fair value of the acquired identifiable intangible assets of EUR 2.8
million (including customer relationships and software) is preliminary pending
receipt of the final valuations for those assets.
The fair value of current trade receivables and other receivables is EUR 6.1
million and includes trade receivables with a fair value of EUR 2.7 million.
The fair value of trade receivables does not include any significant risk.
The total acquisition-related costs totalled to approximate EUR 0.8 million.
Acquisition-related cost included in other operating expenses in the
consolidated statement of comprehensive income amount to EUR 0.4 million for
the year ended 31 December 2010 and EUR 0.4 million for the year ended 31
December 2011.
The net sales included in the consolidated statement of comprehensive income
since 30 April 2011 contributed by Segu companies was EUR 28.8 million. Segu
companies also contributed profit of EUR 0.0 million over the same period.
Had the Segu companies been consolidated from 1 January 2011, the consolidated
statement of comprehensive income would show net sales of EUR 564.7 million and
profit of EUR 24.4 million.
AEES
PKC Group signed an agreement for the purchase of shares in the AEES companies,
which produce and market wires, cables, components and wiring harnesses in
North America, Brazil and Ireland, on 9 August 2011. The ownership and control
transferred to PKC on 1 October 2011, which is the date of acquisition.
As a result of the acquisition, PKC Group strengthened its position as a
supplier of electrical systems for heavy-duty trucks in the western world. PKC
also became a significant manufacturer of electrical systems for light vehicles
in North America. The primary reason for the acquisition was that PKC believes
that the combined businesses are able to increase their net sales organically
significantly more rapidly than PKC would have been able to without the
acquisition. It is PKC's view that global customers will concentrate their
purchases to a few globally operating suppliers and that the combined entities'
ability to serve current customers and maintain acquired customers will be
substantially better than PKC Group's ability before the acquisition. It is
PKC's view that companies' combined technical know-how and technical capacity
will be able to create more added value services to customers than PKC
previously could. None of the goodwill, about EUR 15.6 million, recognized is
expected to be deductible for income tax purposes.
Consideration at 1 October 2011 (EUR million):
Cash 72.5
Equity instruments 13.0
----------------------------------------
----------------------------------------
Total consideration transferred 85.5
Acquired cash and cash equivalents 5.9
Cash flow effect 66.6
In 2011 EUR 83.6 million was paid as purchase price and EUR 1.9 million in
January 2012.
Assets acquired and liabilities assumed at the date of acquisition are
presented below (EUR million). The purchase price allocation (PPA) is still
provisional pending finalization of valuation of the identifiable assets and
liabilities.
Property, plant and equipment 56.4
Intangible assets 44.1
Deferred tax assets 3.5
Inventories 49.7
Trade receivables 65.7
Other assets 31.7
Cash and cash equivalents 5.9
------------------------------------
Total assets 256.9
Retirement benefit obligation 8.9
Interest-bearing liabilities 42.3
Trade and other liabilities 109.9
Deferred tax liabilities 25.9
------------------------------------
------------------------------------
Total liabilities 187.1
Total identifiable net assets 69.8
Goodwill 15.6
Acquisition related costs of EUR 6.7 million have been charged to other
operating expenses in the consolidated statement of comprehensive income for
the current year.
The fair value of the 1,250,000 PKC Group Oyj's shares transferred to the
sellers (EUR 13.0 million) was determined based on the share price at date of
acquisition.
The fair value of trade receivables is EUR 65.7 million.
The net sales included in the consolidated statement of comprehensive income
since 1 October 2011 contributed by AEES companies is EUR 124.0 million. AEES
companies also contributed profit of EUR 6.7 million over the same period.
Had the AEES companies been consolidated from 1 January 2011, the consolidated
statement of comprehensive income would show net sales of EUR 947.8 million and
profit of EUR 26.7 million.
4. PROPERTY, PLANT AND EQUIPMENT (EUR 1,000) 12/11 12/10
Acquisition cost 1.1. 74,917 75,193
+ Additions 11,855 11,128
+ Acquisitions 68,003 0
- Disposals -10,166 -9,352
Acquisition cost 31.12. 144,609 76,969
Accumulated depreciation 1.1. 40,098 38,896
- Accumulated depreciation on disposals -17,444 -5,335
+ Depreciation 9,512 7,132
+/- Exchange difference -31 44
Depreciation 31.12. 32,135 40,736
Carrying amount 31.12. 112,474 36,232
5. OTHER INTANGIBLE ASSETS (EUR 1,000) 12/11 12/10
Acquisition cost 1.1. 40,102 38,459
+ Additions 929 1,177
+ Acquisitions 65,705 0
+/- Exchange difference -1,345 0
Acquisition cost 31.12. 105,391 39,636
Accumulated depreciation 1.1. 15,271 11,512
- Accumulated depreciation on disposals 1,853 -308
+ Depreciation 8,355 3,552
+/- Exchange difference 0 22
Depreciation 31.12. 25,479 14,778
Carrying amount 31.12. 79,912 24,858
6. CONTINGENT LIABILITIES AT END OF PERIOD (EUR 1,000) 12/11 12/10
Leasing liabilities 1,898 2,982
Liabilities for derivative instruments
Nominal values
Interest rate swaps 45,974 0
Currency derivatives
Forward contracts 5,944 0
Copper derivatives
Forward contracts 2,450 2,010
Total 54,367 2,010
Fair values
Interest rate swaps -480 0
Currency derivatives
Forward contracts -64 0
Copper derivatives
Forward contracts 188 307
Total -356 307
Currency and copper derivatives are used only in hedging currency and copper
risks. PKC Group does not apply hedge accounting to currency and copper
derivative instruments in accordance with IAS 39. Fair values of currency and
copper derivatives are recognised through profit and loss. PKC Group applies
hedge accounting to interest rate swaps.
7. QUARTERLY KEY 7-9/10 10-12/10 1-3/10 4-6/11 7-9/11 10-12/11
INDICATORS, 3 mon. 3 mon. 3 mon. 3 mon. 3 mon. 3 mon.
CONSOLIDATED
Net sales, EUR 82.3 91.9 96.9 109.3 102.0 242.0
million
Operating profit, 9.5 9.8 9.7 7.1 9.0 8.8
EUR million
% of net sales 11.5 10.6 10.0 6.5 8.8 3.6
Profit before taxes, 13.4 6.6 9.4 7.7 4.6 7.7
EUR million
% of net sales 16.2 7.2 9.7 7.0 4.5 3.2
Equity ratio, % 50.2 56.5 52.4 54.3 36.1 30.0
Earnings per share 0.56 0.29 0.38 0.31 0.19 0.29
(EPS), diluted
(EUR)
Equity per share, 5.15 6.33 6.09 6.38 6.44 7.66
EUR
QUARTERLY KEY
INDICATORS, WIRING
SYSTEMS
Net sales, EUR 61.8 70.8 78.2 90.2 84.3 224.5
million
Operating profit, 6.8 8.7 10.1 9.6 7.1 8.7
EUR million
% of net sales 11.0 12.3 12.9 10.6 8.4 3.9
QUARTERLY KEY
INDICATORS,
ELECTRONICS
Net sales, EUR 20.5 21.1 18.7 19.1 17.7 17.5
million
Operating profit, 3.3 2.0 0.4 0.4 1.7 -0.2
EUR million
% of net sales 15.9 9.6 2.4 2.1 9.8 -1.2
CALCULATION OF INDICATORS
Return on equity (ROE), %
= 100 x Profit for the financial period / Total equity (average)
Return on investments (ROI), %
= 100 x (Profit before taxes + financial expenses) / (Total equity +
interest-bearing liabilities (average))
Gearing, %
= 100 x (Interest-bearing liabilities - cash and cash equivalents) / Total
equity
Equity ratio, %
= 100 x Total equity / (Total of the statement of financial position - advance
payments received)
Current ratio
= Total current assets / Total current liabilities
Earnings per share (EPS), EUR
= Profit for the financial period attributable to equity holders of the parent
company / Average share issue-adjusted number of shares
Shareholders' equity per share, EUR
= Equity attributable to equity holders of the parent company / Share
issue-adjusted number of shares at the date of the statement of financial
position
Market capitalisation
= Number of shares at the end of the financial period x the last trading price
of the financial period
All the future estimates and forecasts presented in this stock exchange release
are based on the best current knowledge of the company's management. The
estimates and forecasts contain certain elements of risk and uncertainty which,
if they materialise, may lead to results that differ from present estimates.
The main factors of uncertainty are related, among other things, to the general
economic situation, the trend in the operating environment and the sector as
well as the success of the Group's strategy.
PKC GROUP OYJ
Board of Directors
Harri Suutari
President and CEO
For additional information, contact:
Harri Suutari, President & CEO, PKC Group Oyj, +358 400 384 937
PRESS CONFERENCE
A press conference on the financial statement will be arranged for analysts and
investors today, 16 February 2012, at 10.00 a.m., at the address World Trade
Center, Aleksanterinkatu 17, meeting room 2, 2nd floor, Helsinki. Link to
recorded audiocast may be found today in PKC's website at the front page and
Investor Information pages.
DISTRIBUTION
NASDAQ OMX
Main media
www.pkcgroup.com
The PKC Group offers design and contract manufacturing services for wiring
systems and electronics. The Group has production facilities in, Brazil, China,
Estonia, Finland, Germany, Ireland, Mexico, Poland, Russia, Ukraine and the
USA. The Group's net sales in 2011 totalled EUR 550.2 million. PKC Group Oyj is
listed on NASDAQ OMX Helsinki Ltd.
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