2015-02-18 16:00:00 CET
2015-02-18 16:00:04 CET
REGULATED INFORMATION
Cencorp - Financial Statement Release
CENCORP CORPORATION, FINANCIAL STATEMENT RELEASE 2014
CENCORP CORPORATION, FINANCIAL STATEMENT RELEASE 2014
SUMMARY
- The restructuring of Cencorp Corporation (“Cencorp”) continues. In the
previous reporting period January - September Cencorp agreed on selling 70
percent of its electronics automation business (LAS and LCM business segments)
to FTTK Company Limited (“FTTK”). During the reporting period October -
December FTTK has used its option to purchase the remaining 30 percent of the
shares in Cencorp Automation Oy and the parties have signed an agreement on
exercising the option in December 2014. The transaction is expected to be
completed by 1 March 2015. From the conclusion of the first part of the FTTK
transaction Cencorp has reported of only one business segment i.e. Clean Energy
Segment that is the company's only continuing business.
- The net sales of the continuing operations of Cencorp for the financial year
2014 was EUR 0.8 million (EUR 3.3 million in 2013). The operating profit of
continuing operations was EUR -10.9 million (EUR -3.1 million), profit for the
period EUR -11.7 million (EUR -4.9 million), earnings per share were EUR -0.014
(-0.008) and EBITDA was EUR -3.3 million (EUR -1.8 million). In the reporting
period January - December a write-down of totally EUR 6.2 million was made in
the fixed assets and inventories of the Beijing factory.
- The financing situation of Cencorp continues to be very tight. If the
company does not succeed in securing sufficient short-term and long-term
financing, the continuity of the company's operation may be jeopardized.
- Since the sale of the electronics automation business Cencorp has moved on
to the next phase in its Cleantech strategy. In August 2014, according to the
strategy and in order to obtain finance for it, Cencorp decided to sell the
remaining operations not included in its strategy, i.e. the production of RFID
components and flexible electronics for mobile phones, to become a company
providing solely clean energy solutions. Cencorp is having ongoing negotiations
for the sale of the operations and production machinery but likelihood of a
sale has decreased in the course of time. Thus the company has decided to write
down the remaining part of its assets in Beijing as announced on 16 February
2015. After the write-down the company has no longer any future expectations or
assets relating to the factory in Beijing in its balance sheet.
OVERVIEW
Cencorp belongs to the Finnish Savcor Group Corporation (“Savcor”). Savcor
Group companies owned approximately 58.3 percent of the Cencorp shares on 31
December 2014.
More information on principle activities and events during the reporting period
can be found in the stock exchange releases published on Cencorp's website at
www.cencorp.com.
The Financial Statement Release has been drawn up in compliance with the IAS 34
Interim Financial Reporting standard. In the Interim Report Cencorp has applied
the same accounting principles as in its Annual Report 2013. The Interim Report
has not been audited.
FINANCIAL DEVELOPMENT
Since Cencorp transferred its electronics automation business to Cencorp
Automation Oy and sold at first 70 percent and in December 2014 the remaining
30 percent of this company to FTTK Cencorp reports of only one business
segments, the Cencorp Clean Energy segment. The company is aiming to fully
conclude the transaction by 1 March 2015.
Part of the deliveries of orders received by LAS and LCM segments before the
transaction remained in Cencorp. Net sales originating from these orders
decreases and gradually finishes as the orders will be delivered at the
beginning of 2015. The LAS and LCM Segments are reported in the discontinued
operations. In Cencorp's financial reports the profit of discontinued
operations is reported on a separate line, apart from continuing operations,
thus, the income statement, excluding the discontinued operations item, concern
the company's continuing operations only. Cencorp's segment information is
based on the management's internal reporting and on the organisation structure
of the company.
The figures in brackets are comparison figures for the corresponding period in
2013, unless stated otherwise. Since the exit from the decoration business in
Guangzhou Cencorp reports on corresponding figures in the discontinued
operations in the comparison figures for 2013. In this Financial Statement
Release the figures for Beijing have been reported in the continuing
operations.
October - December 2014 (continuing operations)
- Cencorp Group's net sales decreased by 90.2 percent to EUR 0.1 million (EUR
0.6 million).
- EBITDA was EUR -1.1 million (EUR -1.0 million).
- Operating profit was EUR -4.4 million (EUR -1.4 million).
- The profit before taxes was EUR -4.7 million (EUR -2.0 million).
- Profit for the period was EUR -4.7 million (EUR -2.0 million).
- Earnings per share were EUR -0.005 (EUR -0.003) and diluted earnings per
share EUR -0.005 (EUR -0.003).
- Net sales of the Cencorp Clean Energy segment (CCE) decreased by 90.2 percent
to EUR 0.1 million (EUR 0.6 million) due to close-down of antenna production at
the Beijing factory and operating profit was EUR -4.4 million (EUR -1.4
million). The segment's EBITDA was EUR -1.1 million (EUR -1.0 million). The
operating profit decreased due to the write-down of EUR 3.0 million in the
fixed assets and inventories of the Beijing factory done in the reporting
period. After the write-down the fixed assets and inventories of the Beijing
factory have been fully written down.
January - December 2014 (continuing operations)
- Cencorp Group's net sales decreased by 74.6 percent to EUR 0.8 million (EUR
3.3 million).
- EBITDA was EUR -3.3 million (EUR -1.8 million).
- Operating profit was EUR -10.9 million (EUR -3.1 million).
- The profit before taxes was EUR -11.7 million (EUR -4.9 million).
- Profit for the period was EUR -11.7 million (EUR -4.9 million).
- Earnings per share were EUR -0.014 (EUR -0.008) and diluted earnings per
share EUR -0.014 (EUR -0.008).
MANAGING DIRECTOR IIKKA SAVISALO'S REVIEW
Due to the sale of the electronics automation business conducted in the third
quarter Cencorp's future expectations rest totally with the company's Cleantech
strategy. There are high expectations but also very significant risks in this
business. The risks relate particularly to materialization of Clean Energy
projects in schedule terms and to the sufficiency of the company's working
capital. According to Cencorp's view the company's technological risks have
decreased as the company's transition progresses thanks to technological
innovations and gained know-how on production. Cencorp is having several
negotiations of remarkable Euro value for deliveries of solar module plants or
production lines to partners interested in the company's production technology.
Part of the negotiations have proceeded well, however, all of them are still
going on.
In the last quarter of 2014 the company has focused on improving sales but
especially on further development of Conductive Back Sheets (“CBS”) that are
very significant for the company's future and on finalizing mass production
capability at the company's factory in Mikkeli. CBS mass production capability
has been achieved in the fourth quarter of the year. However, production
capacity has to be further increased in order for Cencorp to meet delivery
requirements estimated in the company's business plan. The renewed production
process has proved to be efficient and scalable. Cencorp is already now able to
produce enough CBS for the company's own needs and to offer them for other
manufacturers' modules as well. Cencorp is aiming to produce CBS for the
company's future manufacturing partners around the world in Mikkeli in the
future.
In 2015 Cencorp's most important objectives include concluding ongoing business
negotiations successfully; securing short- and long-term financing facility;
and signing manufacturing partnership agreements. In the reporting period
Cencorp has made remarkable progress on negotiations with manufacturing
partners. Further, in the reporting period and since then Cencorp has signed
agreements on test deliveries that are expected to lead to long-term customer
relationships with remarkable sales volume.
Cencorp has earlier announced that it has signed a Term Sheet with Vikram
Solar, an Indian based company. During the reporting period the companies have
discussed various cooperation models. Additionally, Vikram Solar has introduced
Cencorp's product in its marketing programme. The companies continue
negotiating to find a cooperation model acceptable for both parties.
Risks are described in detail in the item “Risk management, risks and
uncertainties” of this Financial Statement Release.
REVIEW BY SEGMENTS
- The net sales for the reporting period October - December decreased by 90.2
percent to EUR 0.1 million compared to the corresponding period in 2013. The
EBITDA decreased to EUR -1.1 million from the previous year's EUR -1.0 million.
Cencorp will no longer give written reports on LAS and LCM segments. From 17
September 2014 the LAS and LCM business has been operated by Cencorp Automation
Oy.
- FTTK has used its option to purchase the remaining 30 percent of the shares
in Cencorp Automation Oy and the parties have signed an agreement on exercising
the option in December 2014. The parties are aiming to complete the transaction
by 1 March 2015.
The net sales of Cencorp Clean Energy segment will be generated by the
following four product concepts:
1. Photovoltaic modules and systems
Sales of modules and small photovoltaic systems are probably Cencorp's most
visible but in terms of revenue potential the smallest product group. All
Cencorp's PV modules are manufactured at the company's factory in Mikkeli. They
are mainly delivered to the company's distributors and future manufacturing
partners. Further, the company provides solar power plants and systems to its
customers in Finland.
Current capacity of the company's Mikkeli factory is designed to annually
produce PV modules worth max EUR 6 - 8 million at the current market prices.
Thus, the module sales do not form a major part of the sales of the company.
The first module manufacturing recipes fully developed by Cencorp has passed
the demanding test programs of the German Fraunhofer Institute for Solar Energy
Systems, which enables Cencorp's modules to be certified in all market areas
the company is targeting. After required administrative certification Cencorp
or its manufacturing partners are able to quote for their modules in
competitive tendering where the certification in question is required.
2. Production lines and related components
Typically, manufacturers operating in the developing markets, e.g. in China,
could be interested in investing in new production lines. These Cencorp's
potential customers are producing traditional H-pattern modules. According to
the information available to Cencorp many manufacturers are going to start to
manufacture next generation modules using the CBS technology. At least one of
the world's biggest manufacturers has already announced in public that it will
start using CBS technology in 2015. These kinds of customers usually have their
own module manufacturing recipe and require only production equipment or lines.
According to Cencorp's estimation typical price of production equipment or a
production line for solar modules is EUR 4 - 6 million.
The company is having negotiations for delivering solar module plants or
production lines with several potential customers interested in Cencorp's
production technology worldwide. The value of the contracts Cencorp is
negotiating for varies from approximately 4 million Euros to approximately 20
million Euros.
If Cencorp is able to achieve market position it is targeting as a supplier of
CBS production lines expected development in the market facilitates orders for
tens of production lines in the next five years. The company estimates it will
get the first order for this kind of production line in 2015.
3. Manufacturing partners
For the moment Cencorp is negotiating for cooperation agreements with several
potential manufacturing partners who as newcomers on the market would commit
themselves to both Cencorp's production technology and module manufacturing
recipe. In these cases Cencorp would provide a partner with a turnkey delivery
project and commit to minority shareholding in a manufacturing company if
required. Manufacturing partners operate mainly in developing markets and
produce solar energy modules for local and nearby markets. Value of a typical
turnkey plant delivery is more than ten million euros. Cencorp is aiming to
sign at least 10 manufacturing partner contracts in the next five years. It is
still possible that the first contract for manufacturing partnership will be
signed in the first quarter of 2015.
4. Special components
Special components are the most important part in Cencorp's strategy and most
remarkable in terms of net sales potential. Cencorp's first component is
Conductive Back Sheet (CBS) developed by the company. All back contact modules
require conductive back sheet in order to function. One normal size production
line using back contact technology needs approximately 300,000 - 500,000
conductive back sheets in a year when operating at full capacity. Based on
current estimation, considering price level in the near future, each production
line will annually require back sheets worth approximately 5 - 11 million
Euros.
In the future Cencorp is planning to offer its partners other components too.
These components might include e.g. various intelligent components, components
relating to energy storages and special silicon wafer technology based on back
contact.
Cencorp's objectives for both market share and number of partners are ambitious
and their accomplishment involves significant risks. However, considering the
technological concept the company is having Cencorp believes it is in good
position to meet the targets. Attainment of the objectives requires sufficient
financing.
During the reporting period October - December the gross investments in the
Cencorp Clean Energy i.e. the continuing operations totaled EUR 0.2 million as
the investments in discontinued operations amounted to EUR 0.0 million.
OPERATING ENVIRONMENT
Cencorp operates in industries applying clean energy technology.
Cencorp's operating environment is global. The company's customers operating in
the clean energy business are companies that provide products and services
locally and/or worldwide.
Cencorp's key products and services have been designed for the photovoltaic
market. Modern next generation conductive back sheet based solar modules can be
manufactured with Cencorp's own module manufacturing recipe and automated
production.
In the market, general attitude to the solar energy investments improved
clearly already at the end of 2013. The same trend continued the whole year
2014 and still continues at the beginning of 2015. Many solar module
manufacturers with solid market position have started to plan investing in
capacity, partly to increase the amount of their production capacity and partly
to replace production capacity for old H-pattern solar modules.
Cencorp has previously announced that it views the focus of its future business
will be in the developing countries. This view has further strengthened during
the last quarter of the year 2014. Many of the mega trends such as national
climate protection objectives; increasing industrialisation in the developing
countries and increasing energy self-sufficiency, favour local manufacturing of
solar modules. For the moment major part of the world's solar module
manufacturing is concentrated in China. Modules are manufactured in large
labour-intensive units and are delivered to the world market to be installed.
In the developed countries solar electricity is mainly produced in large solar
power plants located in open landscape feeding electricity to main grid. In
this kind of power plants logistics costs, among others, can be optimized and
such parameters as module's efficiency per square meter have not had major
importance. In the developing countries logistics costs, in particular, are
significant and demand is focused on so called mini grid systems where solar
power plants have been decentralized and new local grid is built around them.
Grids are connected to each other and to new small power plants as electricity
consumption, distribution and production increases steadily. Electricity
production is decentralized and electricity is distributed through a new type
of grid infrastructure. Small power plants are often so called hybrids where
solar power plants are operated together with diesel, water and wind power
plants in same grid and where various energy storages can be integrated.
In an environment described above a local producer has much better
possibilities to control logistics costs and adopt legislation favouring local
production. Many of the partners Cencorp is negotiating with have noticed that
local production costs are clearly lower than prices of modules imported from
China. When modules are produced locally possibilities to control the quality
increase, too. In Cencorp's view CBS based modules have typically solid quality
which improves module efficiency in most of the cases.
MARKET OUTLOOK
Demand for high efficiency modules has increased in the EU, US and Japanese
markets as well during the last six months. Cencorp currently negotiates on
delivering PV solar modules developed by the company to these markets. Cencorp
views that major part of its modules sold by distributors will be manufactured
by Cencorp's manufacturing partners, in the future.
All module manufacturers are aiming to increase the efficiency of their
modules. Nominal efficiency of modules manufactured using Cencorp's technology
vary typically between 250 W - 265 W that is considered to be high for a
polycrystalline silicon module. The company trusts that it is able to further
improve its module and is aiming to a nominal efficiency of 290 W. According to
the information available to the company there are only few manufacturers in
the world who have been able to manufacture a module with efficiency of 300 W
by using very expensive silicon or costly and difficult to control production
processes.
Market price of a module with higher efficiency is higher than price of a
standard module. The demand for these high efficiency modules is strong,
especially on the developed markets. In Cencorp's view the proven high
efficiency rating of its modules have will help Cencorp in finding
manufacturing partners on the developed markets as well.
As announced on 21 August 2012 Cencorp has decided not to give any financial
guidance for the time being as the company is in a transition phase to become a
company providing solely clean energy solutions. As the transition phase is
still partly continuing Cencorp does not give any financial guidance either for
the 2015.
LONG-TERM OBJECTIVES FOR MANAGING DIRECTOR
The long-term objectives for Managing Director are as follows:
- To secure the short-term and long-term financing for Cencorp.
- Thorough but fast transition to become a company developing and providing
solely clean energy solutions.
- Cencorp's future goal is to gain a strong market position in various market
areas as a company that provides locally produced high quality PV modules,
special components for modules, and especially solar energy plants using
automation and laser technology.
- Cencorp's goal is to increase its shareholder value with growth and
profitability. Cencorp aims for growth in Cleantech business where the company
has good possibilities, thanks to its product solutions, to achieve a strong
global position and fast growth.
As announced on 21 August 2012 Cencorp has decided not to give any financial
guidance for the time being as the company is transforming into a company that
develops and provides only Cleantech applications. As the transition period is
still partly continuing Cencorp does not give any financial guidance for the
year 2015 and the objectives set for Managing Director for 2015 - 2017 should
not be considered as the financial guidance, either. Attainment of the
objectives involves significant risks.
Based on Cencorp's experience in the clean energy business so far and knowledge
of technological development in the industry as well as the company's
evaluation of market development the Board of Directors of the company has
specified the long-term financial objectives set for Managing on 12 November
2014. The objectives set for Managing Director are based on the company's
business model which assumes that the customers buying Cencorp's production
technology will buy part of main components for solar modules from Cencorp as
well. In the objectives set for Managing Director one solar module plant and
one production line are estimated to be sold in 2015. The company's objective
is to deliver totally about ten solar module plants and about ten production
lines by the end of 2017.
In the developed countries CBS back contact technology has been taken into use
more slowly than expected because overcapacity of traditional solar modules has
not yet reduced in the market to the extent that investments in the new CBS
based technology would have been started. However, according to the information
available to Cencorp one of the world's biggest manufacturers has announced in
public that it will start using CBS technology already in 2015. Cencorp views
that the company's CBS components are ready to meet the demand as the
investments commence.
Based on the assumptions presented above the objectives set for Managing
Director that should not be considered as the company's financial guidance are
as follows: A net sales target for 2015 is approximately EUR 10 - 15 million. A
net sales target for 2016 is approximately EUR 45 - 55 million and for 2017
approximately EUR 150 - 200 million. Attainment of the objectives set for
Managing Director requires that component sales will realize as planned
resulting the sales of components will be about two thirds of the company's net
sales in 2017.
The long-term objectives set for Managing Director and realization of the
company's business model involve significant risks and the objectives should
not be considered as the company's financial guidance. The long-term objectives
set for Managing Director and their attainment fully depend on sufficiency of
the company's short-term financing and success in securing the long-term
financing. Negotiations for the long-term financing are going on. The risks
related to the long-term objectives set for Managing Director are described in
detail in the item “Risk management, risks and uncertainties” of this Financial
Release Statement.
FINANCING
Cash flow from business operations before investments in January - December was
EUR -4.0 million (EUR -0.7 million). Trade receivables at the end of the
reporting period were EUR 1.0 million (EUR 1.6 million). Net financial items
amounted to EUR -0.8 million (EUR -1.8 million).
At the end of December the equity ratio was -130.9 percent (-6.9 %) and equity
per share was EUR -0.011 (EUR -0.004). The equity ratio including capital loans
was -88.8 percent (30.6 %). At the end of the reporting period, the Group's
liquid assets totaled EUR 0.2 million (EUR 0.1 million) unused export credit
limits, bank guarantee limits and factoring loans amounted to EUR 0.3 million
(EUR 1.1 million).
The financing situation of Cencorp continues to be very tight. The company has
reviewed different options for its short-term and long-term financing and for
ensuring the company's strategy to be materialized as planned. Cencorp has
begun negotiations with international investors to find an arrangement for its
financing. The negotiations, where an investment bank in London assists
Cencorp, are going on and based on Cencorp's view results from these
negotiations could be expected in the first quarter of 2015. The schedule of
the long-term financing negotiations will be highly depended on whether the
company succeeds to sign its first manufacturing partnership agreement during
the first quarter of 2015. Should the signing of the first manufacturing
partnership agreement be delayed the long-term financing arrangement would be
delayed too and the company would have to seek for bridge financing. It is not
yet secured that the company succeeds in securing bridge financing by the end
of the first quarter. However, Cencorp is aiming not to put too much pressure
in the negotiations for long-term financing in terms of schedule to be able to
ensure the best possible shareholder value to the current shareholders of the
company.
In the reporting period Cencorp agreed to sell its electronics automation
business to FTTK. The business transaction generated working capital to the
company but decrease in the company's financing limits agreed at the sale
reduced the transaction's positive effects on the company's working capital.
The transaction generated positive result of EUR 0.3 million on Cencorp Group's
result for 2014.
In terms of the short-term financing of the company, Cencorp's preliminary
object is to turn the cash flow before investments with the company's current
cost structure into profit as soon as possible.
Should there be delays in getting new orders or should the market conditions
weaken compared to the company's current view, changing orders into sales may
slow down and have a major impact in the schedule in which the cash flow of the
business operations turns positive. In such case the financing situation of the
company would further tighten if all or part of the other on-going financing
negotiations would not have been materialized by then.
Another object relating to short-term financing is to obtain bridging loan for
the company until the aforesaid long-term financing has been secured. In the
company's view a bridging loan together with cash flow of business operations
before investments turning positive would ensure sufficiency of financing for
the next twelve months or until long-term financing arrangement has been
concluded.
As a part of the closing of the Transaction Cencorp agreed with Danske Bank
that the export credit limit available to the company decreases from EUR 1.5
million to EUR 1.0 million; the bank guarantee limit decreases from EUR 1.25
million to EUR 0.75 million; and the limit of the overdraft facility decreases
from EUR 1.25 million to EUR 0.95 million. Additionally, the company agreed
with Danske Bank on a cash deposit of EUR 0.4 million that was released in
October when a bank guarantee arranged by Cencorp for advance payment of EUR
0.4 million from FTTK was released. Further, the company has agreed with
Finnvera that Finnvera's guarantee for the company's financing limits continues
to be in force against a cash deposit of EUR 0.3 million. In the short run
decrease in the limit of the overdraft facility together with decreasing export
credit limit and presumably short-term cash deposits of totally EUR 0.7 million
for Danske Bank and Finnvera have affected and continue to affect sufficiency
of the company's financing. As the FTTK transaction will be fully concluded the
overdraft facility at Danske Bank further decreases from EUR 0.95 million to
EUR 0.65 million.
Cencorp has previously estimated that with the Transaction closed with FTTK
Cencorp's bridging financing will be secured until the end of the first quarter
of 2015, provided the company has at least the credit limits corresponding to
its current limits of EUR 4.0 million. However, decrease in the financing
limits to EUR 2.4 - 2.7 million will put high pressure in schedule terms on the
company to arrange long-term financing and to secure realization of the
company's Cleantech strategy according to the plans. In the future Cencorp may
require clearly bigger limits for the company's technology export projects
accordant with its Cleantech strategy.
Very significant risks are involved in sufficiency of Cencorp's working capital
for the next twelve months. In Cencorp's current view, due to decrease in the
financing limits from Danske Bank the company requires more bridging financing
until long-term financing arrangement has been secured and the cash flow from
the business operations of the company has turned positive. The company
continues to have a significant deficit in its working capital until the first
delivery of production technology for solar modules will start to generate
positive cash flow.
In the Auditor's Report in the Annual Report 2013 the company's auditor drew
attention to the financial risk management with a so called Emphasis of Matter
as follows: “Without qualifying our opinion, we draw attention to the basis of
preparation of the financial statements and to the note 29. Financial risk
management. The financial statements have been repaired under the going concern
assumption. The continuity of operations requires that during the year 2014 the
company is able to obtain supplementary funding, to negotiate changes to the
terms of payment and that cash flow from business operations turns positive.
However, should the company fail to arrange financing, it is possible that the
company will not be able to realize its assets and repay its liabilities within
usual business operations to a sufficient extent or quickly enough. These
factors, together with other issues mentioned in the report of the Board of
Directors and the notes to the financial statements show material uncertainty,
which may challenge the company's going concern assumption.”
If the company does not succeed to secure sufficient short-term and long-term
financing, the continuity of the company's operation may be jeopardized.
RESEARCH AND DEVELOPMENT
The Group's research and development costs during the January - December period
amounted to EUR 1.7 million (EUR 2.0 million) or 25.7 (18.0) percent of net
sales. The research and development costs of the Group's continuing operations
during the January - December period totaled EUR 1.1 million (EUR 0.9 million)
or 131.8 (27.2) percent of net sales.
INVESTMENTS
Gross investments in the continuing operations during the January - December
period amounted to EUR 0.4 million (EUR 3.0 million). Almost all of the
investments were in development costs.
PERSONNEL
At the end of December the Group employed 26 (149) people, out of which 20
persons worked in Finland, 4 persons in China and 2 persons in the USA. During
the reporting period the Group's salaries and fees totalled EUR 3.3 million
(EUR 4.2 million).
SHARES AND SHAREHOLDERS
Cencorp's share capital amounted to EUR 3,425,059.10 at the end of the
reporting period. The number of shares was 862,472,136. The company has one
series of shares, which confer equal rights in the company. Cencorp did not own
any of its own shares at the end of the reporting period.
The company had a total of 6,205 shareholders at the end of December 2014, and
0.6 percent of the shares were owned by foreigners. The ten largest
shareholders held 80.1 percent of the company's shares and voting rights on 31
December 2014.
The largest shareholders on 31 December 2014
Shares Votes
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1. SAVCOR GROUP OY 330 533 522 38.3
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2. SAVCOR GROUP LIMITED 133 333 333 15.5
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3. GASELLI CAPITAL OY 95 000 000 11.0
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4. KESKINÄINEN ELÄKEVAKUUTUSYHTIÖ ETERA 63 673 860 7.4
--------------------------------------------------------------
5. SAVCOR INVEST B.V. 39 374 994 4.6
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6. FRATELLI OY 9 223 250 1.1
--------------------------------------------------------------
7. SCI INVEST OY 6 870 645 0.8
--------------------------------------------------------------
8. NORDEA PANKKI SUOMI OYJ 4 439 197 0.5
--------------------------------------------------------------
9. HUHTALA KAI 4 187 500 0.5
--------------------------------------------------------------
10. TROBE OY 3 986 000 0.5
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OTHERS 171 849 835 19.9
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TOTALLY 862 472 136 100.0
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The members of the Board of Directors and the President and CEO, either
directly or through companies under their control, held a total of 605,112,494
shares in the company on 31 December 2014, representing about 70.2 percent of
the company's shares and voting rights. Iikka Savisalo, Cencorp's Managing
Director, either directly or through companies under his control, held a total
of 510,112,494 shares in the company and 15,852,856 options connected to bond
I/2012.
The price of Cencorp's share varied between EUR 0.01 and 0.04 during the
January - December period. The average price was EUR 0.02 and the closing price
at the end of December EUR 0.01. A total of 161.2 million Cencorp shares were
traded at a value of EUR 3.1 million during the January - December period. The
company's market capitalization at the end of December stood at EUR 7.8
million.
No share options were granted to the company's management during the reporting
period. On 31 December 2014, the company hold 15,852,856 options connected to
bond I/2012 with subscription period ended on 7 December 2014. Options
connected to bond I/2012 are held by SCI Invest Oy and Savcor Group Oy. On 31
December 2014 the company had 30,000,000 options connected to bond I/2013 with
a subscription period ending on 2 June 2015. The options connected to bond
I/2013 are held by Keskinäinen Vakuutusyhtiö Etera and Oy Ingman Finance Ab.
SHARE ISSUE AUTHORIZATIONS IN FORCE
Cencorp's Extraordinary General Meeting held on 30 January 2012 decided to
authorize the Board of Directors to issue 100,000,000 new shares. 36,411,608
shares remain under the authorization.
The Extraordinary General Meeting of Cencorp Corporation held on 4 December
2013 authorized the Board of Directors of the company to decide on a share
issue to the shareholders of the company and to the holders of the convertible
bonds of the company, so that the maximum number of new shares to be issued
based on the authorization is 510 000 000 new shares of the company. The Board
of Directors is entitled to resolve on any other terms and conditions of the
share issue. The authorization is in force until further notice, however, in
maximum for five years as of the resolution of the General Meeting. The
authorization does not revoke the earlier authorizations. 508,151,045 shares,
under the authorization, were issued in the share issue ended on 24 January
2014. There remain 1,848,955 shares under the authorization.
THE MAJOR EVENTS ON THE FINANCIAL YEAR 2014
SHARE ISSUE
In Cencorp's share issue, ended on 24 January 2014, the total amount of
subscriptions was 627,064,325 shares, which represents 123 per cent of the
508,151,045 shares offered in the Share Issue. Due to the oversubscription, the
Board had to reject part of the subscriptions made on the basis of the
secondary subscription rights in accordance with the terms of the Share Issue.
As a result of the Share Issue, the number of the Company's shares shall
increase by 508,151,045 to 854,312,315 shares. In total, 2,413 subscribers
participated in the Share Issue.
The Company collected 4,911,973 Euros of new equity through the Share Issue.
Approximately 2.4 million Euros of the total subscription price was paid by the
capital and/or interest receivables related to loans with interest that the
Company owed to the respective subscribers. This includes the subscription of
approximately 2.1 million Euros by Savcor Group Oy. The subscription price of
4,911,973 Euros for the Share Issue shall be in whole entered into the fund of
the invested unrestricted equity of the Company. The Share Issue has no effects
to the registered share capital of the company. The new shares were registered
with the Trade Register on 4 February 2014 and were entered into public trading
on 5 February 2014.
TERM SHEET SIGNED BETWEEN VIKRAM SOLAR AND CENCORP
Vikram Solar Pvt, Ltd ("Vikram Solar"), an Indian company, and Cencorp have
started to review collaboration opportunities for using Cencorp's MWT (Metal
Wrap Through) technology for photovoltaic modules in Vikram Solar's solar
energy projects. MWT technology refers to Conductive Back Sheet (CBS) based
module structure.
The parties have signed a Term Sheet on collaboration on 7 February 2014. As
agreed in the Term Sheet consideration of collaboration options shall take six
months, at the most. During that time the parties negotiate both business
opportunities in photovoltaic module business and opportunities for ownership
arrangements between the companies. The negotiations are still going on.
Vikram Solar is the leading provider of solar energy projects in India and it
belongs to a technology group Vikram Group (www.vikram.in).
The non-binding Term Sheet Cencorp has signed with Vikram Solar involves risks
which have been handled in the item “Risk management, Risks and Uncertainties”
of this Financial Statement Release.
CENCORP'S DIRECTED SHARE ISSUE FOR A FEE TO CERTAIN DIRECTORS AND A PREVIOUS
BOARD MEMBER
In directed share issue for a fee to certain Cencorp´s directors and previous
board member, released on April 11, 2014 altogether 8,159,821 new company
shares were subscribed. The subscription price for the shares in the directed
share issue was 0.025 euro per share. Company has accepted the subscriptions.
The company collected approx. 203,996 euros of new equity through the directed
share issue and 109,375 euro of the subscriptions has been paid by the
setting-off non-disputed contractual based receivables. According to the terms
and conditions of the directed share issue, the subscription price shall be
recorded entirely to the company's invested free equity fund.
Due to the accepted share subscriptions the amount of the shares in the company
shall increase from 854,312,315 shares to 862,472,136 shares. The shares were
listed at the official list of NASDAQ OMX Helsinki Ltd together with the shares
already issued and listed on 31 July 2014. The company did not separately
publish a supplement to the Registration Document dated December 9, 2013 or a
Summary or a Securities Note prior to the listing of the new shares.
DECISIONS AT THE ANNUAL GENERAL MEETING AND ORGANIZING OF THE BOARD OF DIRECTORS
Cencorp Corporation's Annual General Meeting was held on 25 April 2014 in
Mikkeli, Finland. The AGM approved the 2013 financial statements and discharged
the members of the Board and the President and CEO from liability for the
financial year 2013. According to the Board' proposal, it was decided that no
dividend for the financial year 2013 will be distributed. It was also decided
that the loss for the financial period that ended on 31 December 2013 will be
entered in retained earnings.
It was decided that 4 members will be elected to the Board of Directors of
Cencorp. MSc (economics) Mr. Sauli Kiuru (b. 1972) who was elected as new board
member, works as Chairman of the Board of Gaselli Capital Oy and CEO of Siesta
Group Oy. Previously Mr. Kiuru has been working as CFO and board member of
Barona Group Oy, as auditor in KPMG and as secretary of the Auditor´s Committee
of Finnish Central Chamber of Commerce. Mr. Kiuru has wide experience
concerning board work in growth companies. Sauli Kiuru is the chairman of the
board of Siesta Group Oy, BiiSafe Oy and Stata Oy. He has been board member of
Cencorp previously in years 2006 - 2008. Gaselli Capital Oy which is controlled
by Mr. Kiuru owns 95,000,000 Cencorp shares, which represents approx. 11.1
percent of the share capital of Cencorp.
Mrs. Marjukka Karttunen, industrial counsellor Mr. Hannu Savisalo and CEO Mr.
Iikka Savisalo continue as old Board members in the Cencorp Corporation´s Board
of Directors.
At its organizing meeting following the AGM, Cencorp's Board of Directors
elected Hannu Savisalo as the Chairman and Marjukka Karttunen as the Vice
Chairman of the Board. The Board of Directors decided, due to the scope of the
company's business, that it is not necessary to establish any separate Board
committees.
The AGM decided that an annual remuneration of EUR 40,000 will be paid to the
Chairman and to the Vice Chairman of the Board, and EUR 30,000 to the members
of the Board of Directors. Travel costs of the Board members will be paid
according to the company's travel policy.
Ernst & Young Oy, Authorized Public Accounting Firm, continues as the Company
auditor and Mikko Rytilahti, APA, as the responsible auditor.
CHANGE IN CENCORP'S MANAGEMENT TEAM ON 7 MAY 2014
Mr Jari Ketoluoto, (Diploma in Business Administration, born 1962) has been
appointed as CEO of Laser and Automation Solutions segment (LAS). Previously he
acted as Vice President of Laser and Automation Solutions. Mr Ketoluoto
continued in Cencorp's Management Team over transition phase of the transaction
between Cencorp and FTTK. Mr Petri Kivelä's, Vice President LCM, employment
with Cencorp and membership in the company's Management Team ended
simultaneously.
AN AGREEMENT WITH ETELÄ-SAVON ENERGIA
In May 2014 Etelä-Savon Energia Oy ("ESE") and Cencorp signed a cooperation
agreement with objective to develop together solar energy markets in the region
of South Savo. In the first phase a pilot plant will be built in Karikko,
Mikkeli. A pilot solar power plant, built as a pilot project, is an investment
that opens the solar energy markets in the region of South Savo. The solar
power plant includes 200 solar modules with capacity of max. 49.5 kW. The power
plant generates annually about 40,000 kWh. The solar power plant of this size
is the only one in the region of South Savo. Cencorp will deliver the solar
power plant as a turnkey project. The customer is ESE who is responsible for
connecting the power plant to the grid. Based on experience got from this pilot
project a model for wider cooperation can be developed.
STATUTORY NEGOTIATIONS
Cencorp´s statutory negotiations, started at 16 May 2014 were closed 4 June
2014. As the result of the negotiations personnel of Life Cycle Management
segment ("LCM") and Laser and Automation Solutions segment ("LAS") will be
reduced by seven employees. Furthermore, Cencorp´s spare parts operations and
service will be relocated to Cencorp´s Estonian based subsidiary by the end of
2014. Reductions will be carried out by dismissals and retirement arrangements.
After the sale of Cencorp's electronics automation business to FTTK was
concluded the actions decided on the statutory negotiations did not concern
Cencorp.
EXTENSION OF FINNVERA'S GUARANTEE
On 27 June 2014 Cencorp approved Finnvera Plc's quotation for extending the
guarantee for the financing facility agreement between Cencorp and Danske Bank
Plc until 31 March 2015. As a result of the extension of Finnvera Plc's
guarantee, the financing facility agreement between Cencorp and Danske Bank Plc
is effective until 31 March 2015 as previously announced. The extension of the
maturity dates 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, and of a
loan of EUR one million from Savcor Invest B.V , until 31 March 2015 has been
subject to extending the financing facility agreement between Cencorp and
Danske Bank Plc until 31 March 2015. At the share issue with subscription
period ending on 24 January 2014 Savcor Group Oy subscribed Cencorp shares for
the total amount of the loan. The loan period of the loan from Savcor Invest BV
is extended until 31 March 2015 as previously announced as Danske Bank's
financing facility agreement will be effective until 31 March 2015.
WRITE-DOWNS IN THE ASSETS RELATED TO THE FACTORY IN BEIJING
In the reporting period January - December 2014 a write-down of totally EUR 6.2
million has been made in the continuing operations in in the fixed assets and
inventories of the Beijing factory.
On 20 August 2014 the Board of Directors of the company decided to make a
write-down of EUR 3.2 million in the assets related to the factory and the
production machinery in Beijing and transferred the CBS production to its
factory in Mikkeli.
As Cencorp has not been able to find a buyer for the production of RFID
components and flexible electronics for mobile phones who could utilize the
technology in its production the company made another write-down of EUR 3.0
million in the assets related to its factory in Beijing in the Financial
Statement for 2014. After the write-downs the value of the Beijing factory has
been fully written down. However, despite the write-down Cencorp continues to
take actions to sell the technology and production machinery related to the
production of RFID components and flexible electronics for mobile phones.
THE SALE OF CENCORP'S ELECTRONICS AUTOMATION BUSINESS WAS COMPLETED ON 17
SEPTEMBER 2014
On 25 August 2014 Cencorp announced that the company had signed an agreement
according to which FTTK acquires a majority shareholding in the electronics
automation business of Cencorp (“Transaction”).
Pursuant to the agreement between Cencorp and FTTK, Cencorp transferred the
company's electronics automation business into Cencorp Automation Oy, a
fully-owned subsidiary of Cencorp. Further, in accordance to the agreement
signed earlier, FTTK purchased 70 percent of the shares in Cencorp Automation
for EUR 2.66 million payable in cash. On 17 September 2014 the parties
confirmed that the conditions precedents to the Transaction had been fulfilled
and thus the Transaction was closed. At the closing a shareholders' agreement
regarding Cencorp Automation Oy between FTTK and Cencorp came into force as
well.
FTTK has an option to decide by 17 December 2014 whether it will use its option
to purchase the remaining 30 percent of the shares in Cencorp Automation for
EUR 1.14 million, payable in cash, added with a yearly interest of 10 percent
until the purchase price has been paid. Should FTTK decide to exercise the
aforesaid option, FTTK pays the corresponding purchase price in twelve equal
installments. The first installment shall be paid after twelve months from the
closing i.e. from today. The option is subject to FTTK to arrange a bank
guarantee for the remaining unpaid purchase price issued by a bank accepted by
Cencorp. FTTK has used its purchase option on 17 December 2014, which has been
handled in the item Major events in the financial year below.
LONG-TERM OBJECTIVES FOR MANAGING DIRECTOR
In the Interim Report for the third quarter of 2014 published on 12 November
2014 the Board of Directors of Cencorp has updated the long-term objectives set
for Managing Director as presented in the item Long-term objectives for
Managing Director in this Financial Statement Release.
CENCORP WILL NOT CONVENE AN EXTRAORDINARY GENERAL MEETING TO HANDLE REVERSE
STOCK SPLIT IN 2014 - PREPARATION OF THE ISSUE CONTINUES
Cencorp has previously announced that the Board of Directors of the company has
commenced preparations for convening a general meeting to decide on reduction
of the number of the shares without reducing the value of the shares (so called
reverse stock split). The purpose of the reverse stock split is to boost
trading and pricing of the shares of the company. It was estimated that the
issue will be addressed in an extraordinary general meeting to be held during
2014.
On 21 November 2014 the Board of Directors has decided that it will not convene
an extraordinary general meeting to address the issue in 2014. However,
preparation of the issue continues. According to the current knowledge the
reverse stock split issue will be addressed in a general meeting during 2015.
FTTK AND CENCORP HAVE SIGNED A SHARE TRANSFER AGREEMENT FOR ALL THE SHARES IN
CENCORP AUTOMATION OY OWNED BY CENCORP
On 25 August 2014 Cencorp Corporation announced that the company had signed an
agreement according to which FTTK Company Limited (”FTTK”) acquires a majority
shareholding in the electronics automation business of Cencorp.
Pursuant to the agreement between Cencorp and FTTK, Cencorp transferred the
company's electronics automation business into Cencorp Automation Oy, a
fully-owned subsidiary of Cencorp. Further, in accordance to the agreement
signed earlier, FTTK has purchased 70 percent of the shares in Cencorp
Automation for EUR 2.66 million payable in cash. On 17 September 2014 the
parties confirmed that the conditions precedents to the Transaction had been
fulfilled and thus the Transaction had been closed.
According to the Agreement FTTK has an option to decide by 17 December 2014
whether it will use its option to purchase the remaining 30 percent of the
shares in Cencorp Automation for EUR 1.14 million, payable in cash, added with
a yearly interest of 10 percent until the purchase price has been paid. Should
FTTK decide to exercise the aforesaid option, FTTK pays the corresponding
purchase price in twelve equal installments. The first installment shall be
paid after twelve months from the closing i.e. 17 September 2014. The option is
subject to FTTK to arrange a bank guarantee for the remaining unpaid purchase
price issued by a bank accepted by Cencorp.
On 17 December 2014 FTTK has used its option to purchase the remaining 30
percent of the shares in Cencorp Automation Oy and the parties have signed an
agreement for the exercise of the option. With regard to the option the Parties
have agreed on the following changes in the original terms of the transaction:
a) The purchase price decreases from EUR 1.14 million to EUR 1.04 million.
b) The purchase price shall be paid faster than originally agreed so that the
entire purchase price shall be paid by 1 March 2015.
c) A bank guarantee for the unpaid purchase price is no longer required.
d) The shares shall be transferred and the ownership and title to the shares
shall pass to the purchaser only against the payment of the entire Purchase
Price.
The company is aiming to fully conclude the transaction by 1 March 2015.
CHANGE IN CENCORP'S MANAGEMENT TEAM 29 DECEMBER 2014
Due to the fact that Cencorp Corporation sold all its shares in Cencorp
Automation Oy on 17 December 2014 to FTTK Company Limited Mr. Jari Ketoluoto,
Managing Director of Cencorp Automation Oy, has resigned from the Management
Group of Cencorp Corporation. From 29 December 2014 the members in the
Management Group of Cencorp Corporation are Managing Director Iikka Savisalo;
Chief Financial Officer Seija Kurki; Chief Executive Officer, Cencorp Clean
Energy Sami Lindfors; and Chief Technology Officer Henrikki Pantsar.
RISK MANAGEMENT, RISKS AND UNCERTAINTIES
Cencorp's Board of Directors is responsible for the control of the company's
accounts and finances. The Board is responsible for internal control, while the
President and CEO handles the practical arrangement and monitors the efficiency
of internal control. Business management and control are taken care of using a
Group-wide reporting and forecasting system.
The purpose of risk management is to ensure that any significant business risks
are identified and monitored appropriately. The company's business and
financial risks are managed centrally by the Group's financial department, and
reports on risks are presented to the Board of Directors as necessary.
Due to the small size of the company and its business operations, Cencorp does
not have an internal auditing organization or an audit committee.
The sufficiency of the company's financing and working capital for the next
twelve months involve very significant risks. According to the current view of
Cencorp's management the company needs to obtain a bridging loan until
long-term financing arrangement mentioned in the item “Financing” in this
Financial Statement Release has been secured and the cash flow of the business
operations of the company has turned positive. The company will have a
significant deficit in its working capital until the first delivery of
production technology for solar modules will start to generate positive cash
flow. Negotiations for the sale of the technology and production machinery
related to the production of RFID components and flexible electronics for
mobile phones are still going on, even though likelihood of a sale decreases as
more time passes.
In the Auditor's Report in the Annual Report 2013 the company's auditor drew
attention to the financial risk management with a so called Emphasis of Matter
as follows: “Without qualifying our opinion, we draw attention to the basis of
preparation of the financial statements and to the note 29. Financial risk
management. The financial statements have been repared under the going concern
assumption. The continuity of operations requires that during the year 2014 the
company is able to obtain supplementary funding, to negotiate changes to the
terms of payment and that cash flow from business operations turns positive.
However, should the company fail to arrange financing, it is possible that the
company will not be able to realize its assets and repay its liabilities within
usual business operations to a sufficient extent or quickly enough. These
factors, together with other issues mentioned in the report of the Board of
Directors and the notes to the financial statements show material uncertainty,
which may challenge the company's going concern assumption.”
If the company does not succeed to secure sufficient short-term and long-term
financing, the continuity of the company's operation may be jeopardized.
As a part of the closing of the sale of the electronics automation business
between Cencorp and FTTK Cencorp agreed with Danske Bank that the export credit
limit available to the company decreases from EUR 1.5 million to EUR 1.0
million; the bank guarantee limit decreases from EUR 1.25 million to EUR 0.75
million; and the limit of the overdraft facility decreases from EUR 1.25
million to EUR 0.95 million. Additionally, the company agreed with Danske Bank
on a cash deposit of EUR 0.4 million that was released when a bank guarantee,
arranged by Cencorp for advance payment of EUR 0.4 million from FTTK, was
released, in October. Further, the company has agreed with Finnvera that
Finnvera's guarantee for the company's financing limits continues to be in
force against a cash deposit of EUR 0.3 million. In the short run decrease in
the limit of the overdraft facility together with decreasing export credit
limit and presumably short-term cash deposits of totally EUR 0.7 million for
Danske Bank and Finnvera have affected and continue to affect sufficiency of
the company's financing.
Cencorp has previously estimated that with the Transaction closed with FTTK
Cencorp's bridging financing will be secured until the end of the first quarter
of 2015, provided the company has at least the credit limits corresponding to
its current limits of EUR 4.0 million. However, decrease in the financing
limits to EUR 2.7 million will put pressure in schedule terms on the company to
arrange long-term financing and to secure realization of the company's
Cleantech strategy according to the plans. In the future Cencorp may require
clearly bigger limits for the company's technology export projects accordant
with its Cleantech strategy.
Cencorp is having negotiations with international investors to find an
arrangement for its long-term financing. The negotiations, in which an
investment bank in London assists Cencorp, are going on and based on Cencorp's
previous view results from these negotiations could be expected in the first
quarter of 2015. However, success in the financing negotiations involves
significant risks and the company is not sure whether only part or all of the
negotiations will be successful. The schedule of the long-term financing
negotiations will be highly depended on whether the company succeeds to sign
its first manufacturing partnership agreement during the first quarter of 2015.
Should the signing of the first manufacturing partnership agreement be delayed
the long-term financing arrangement would be delayed too and the company would
have to seek for bridge financing. It is not yet secured that the company
succeeds in securing bridge financing by the end of the first quarter.
Should the company fail to arrange financing, it is possible that the company
will not be able to realize its assets to a sufficient extent or quickly enough
or the realization value of the assets will not be sufficient.
Should there be delays in signing contracts for clean energy solutions in
planned schedule, it could have significant negative effect on the company's
financing situation and continuity of operations.
In terms of profitability, the most essential risks are related to the
achievement of a sufficient invoicing volume in the Clean Energy business
segment.
Cencorp has announced that its objective is to transform into a company that
develops and provides Cleantech applications using laser and automation
technology as well as into a company that has a strong market position as a
provider of, in various geographical areas, locally produced high-quality
photovoltaic modules. Achievement of the objectives as well as realization of
the transformation involves risks. Even though Cencorp's strategy and
objectives are based on market knowledge and technical surveys, the risks are
significant and it is not certain if the company reaches all or part of the
targets set for it. Cencorp's future outlook will be highly dependent on the
company's ability to reach the targeted market position in the global
photovoltaic module market as well as on the company's short and long-term
financing.
The execution of the non-binding Memorandum of Understanding signed with a
major Chinese photovoltaic module manufacturer involves risks. The final terms
of an agreement are still under negotiations, thus execution of the agreement
is not yet guaranteed. Additionally, the agreement is subject to Cencorp's
short-term and long-term financing. Thus, Cencorp is not yet able to estimate
the agreement's possible execution, effective date neither the agreement's
impact in Cencorp nor the final risks relating to it. However, in regard to the
Memorandum of Understanding on delivering CBS to the Chinese photovoltaic
module manufacturer, the estimated minimum value of EUR 20 million for three
years' period from the start of mass production will probably stay non-binding
even though the actual Memorandum of Understanding turns into a binding supply
contract. In this business customers do not give binding order estimations.
The execution of the non-binding cooperation agreement signed between Cencorp
and Vikram Solar involves risks. The negotiations for business and partnership
collaboration between the parties, including detailed terms, are still under
negotiations, thus it is not yet certain that the transactions will be
materialized. Further, realization of the transactions defined in the
non-binding Term Sheet is subject to several issues and especially to Cencorp's
short- and long-term financing. Therefore, Cencorp is not yet able to estimate
possible realization and effective date of the transactions, the transactions'
influence in Cencorp or risks relating to them. Cencorp will announce further
information as soon as the negotiations have been finished.
The long-term objectives set for the Managing Director involves also
significant risks and the long-term objective should not be considered as the
company's financial guidance. Even though the objectives are based on market
knowledge and technical surveys, the risks are significant and it is not
certain if the Managing Director reaches all or part of the targets set for him
within estimated new timetable. If Cencorp's financing arrangements are
delayed, the risk of the Managing Director reaching the objectives set for him
in the stated timetable will increase.
Other risks connected to Cencorp have been presented in more detail in the
Share Issue Registration Document and its appendixes published on 9 December
2013 as well as in the Annual Report.
GOVERNANCE PRINCIPLES
Cencorp's Board of Directors has handled and approved the company's Corporate
Governance Statement on 18 February 2015. 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 2014 will be published on 25 March
2015 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 on the company's website.
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 ended on 31 December 2014 will be entered in retained earnings and
that no dividend will be paid. Cencorp's annual general meeting will be held on
29 April 2015. A notice of a general meeting will be published later on.
In Mikkeli, 18 February 2015
Cencorp Corporation
BOARD OF DIRECTORS
For more information please contact:
Cencorp: Iikka Savisalo, President and CEO, tel. +358 40 521 6082,
iikka.savisalo@savcor.com
Distribution:
NASDAQ OMX, Helsinki
Main media
www.cencorp.com
Consolidated statement of comprehensive income
(unaudited)
1 000 EUR 10-12/2014 10-12/2013 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Continuing operations
Net sales 63 645 841 3 315
Cost of sales -3 324 -1 072 -8 398 -4 138
--------------------------------------------------------------------------------
Gross profit -3 261 -426 -7 557 -822
Other operating income -4 1 23 818
Product development -383 -337 -1 109 -903
expenses
Sales and marketing -276 7 -840 -514
expenses
Administrative expenses -309 -340 -1 146 -1 192
Other operating -123 -271 -256 -532
expenses
Operating profit -4 357 -1 365 -10 885 -3 144
Financial income 225 159 903 460
Financial expenses -532 -781 -1 707 -2 247
Profit before taxes -4 664 -1 987 -11 689 -4 932
from continuing
operations
Income taxes 20 3 -4 -11
Profit/loss for the -4 645 -1 984 -11 693 -4 943
period from continuing
operations
Discontinued operations
Profit/loss after tax -154 -976 -712 -2 065
for the period from
discontinued
operations
Profit/loss for the -4 798 -2 960 -12 405 -7 008
period
--------------------------------------------------------------------------------
Profit/loss
attributable to:
Shareholders of the -4 798 -2 960 -12 405 -7 008
parent company
Earnings/share -0,006 -0,005 -0,015 -0,011
(diluted), eur
Earnings/share (basic), -0,006 -0,005 -0,015 -0,011
eur
Continuing operations:
Earnings/share -0,005 -0,003 -0,014 -0,008
(diluted), eur
Earnings/share (basic), -0,005 -0,003 -0,014 -0,008
eur
Profit/loss for the -4 798 -2 960 -12 405 -7 008
period
Other comprehensive
income
Translation difference -460 96 -1 114 155
Net other comprehensive income to be
reclassified to
profit or loss in -460 96 -1 114 155
subsequent periods
Total comprehensive -5 258 -2 864 -13 519 -6 853
income for the period
--------------------------------------------------------------------------------
Total comprehensive
income attributable
to:
Shareholders of the -5 258 -2 864 -13 519 -6 853
parent company
Consolidated statement of financial position
(unaudited)
1 000 EUR 31.12.2014 31.12.2013
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 44 5 604
Consolidated goodwill 441 2 538
Other intangible assets 4 092 5 512
Holdings in associated companies 0 0
Available-for-sale investment 9 9
Deferred tax assets 0 7
Total non-current assets 4 586 13 670
--------------------------------------------------------------------------------
Current assets
Inventories 67 2 198
Trade and other non-interest-bearing receivables 2 013 2 514
Cash and cash equivalents 161 116
Other financial resources 0 0
Total current assets 2 240 4 828
--------------------------------------------------------------------------------
Assets classified as held for sale 733 0
Total assets 7 560 18 498
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
Equity attributable to shareholders of the parent
company
Share capital 3 425 3 425
Other reserves 49 460 44 568
Translation difference -281 833
Retained earnings -62 500 -50 095
Total equity -9 897 -1 269
--------------------------------------------------------------------------------
Minority share 8 0
Non-current liabilities
Non-current loans 1 571 3 222
Deferred tax liabilities 0 7
Total non-current liabilities 1 571 3 229
--------------------------------------------------------------------------------
Current liabilities
Current interest-bearing liabilities 7 357 6 795
Trande and other payables 6 693 9 594
Current provisions 0 150
Total current liabilities 14 050 16 538
--------------------------------------------------------------------------------
Liabilities directly associated with assets 1 828 0
classified as held for sale
Total liabilities 17 449 19 768
--------------------------------------------------------------------------------
Equity and liabilities total 7 560 18 498
--------------------------------------------------------------------------------
Consolidated statement of cash flows
(unaudited)
1 000 EUR 1-12/20 1-12/2
14 013
--------------------------------------------------------------------------------
Cash flow from operating activities
Income statement profit/loss from continuing operations -11 689 -4 932
before taxes
Income statement profit/loss from discontinued operations -712 -2 065
before taxes
Income statement profit/loss before taxes -12 401 -6 997
----------------
Non-monetary items adjusted on income statement
--------------------------------------------------------------------------------
Depreciation and impairment + 7 844 2 463
Gains/losses on disposals of +/- -298 -8
non-current assets
Unrealized exchange rate gains +/- -256 259
(-) and losses (+)
Other non-cash transactions +/- 87 21
Financial income and expense + 1 060 1 564
Total cash flow before change in working capital -3 964 -2 698
--------------------------------------------------------------------------------
Change in working capital
Increase (-) / decrease (+) in 179 319
inventories
Increase (-) / decrease (+) in 289 161
trade and other receivables
Increase (+) / decrease (-) in -516 2 248
trade and other payables
Change in provisions -5 -108
Change in working capital -53 2 620
--------------------------------------------------------------------------------
Adjustment of financial items and taxes to cash-based
accounting
Interest paid - -308 -361
Interest received + 3 2
Other financial items - 304 -300
Taxes paid - -17 -11
Financial items and taxes -17 -670
--------------------------------------------------------------------------------
NET CASH FLOW FROM BUSINESS OPERATIONS -4 034 -748
CASH FLOW FROM INVESTING ACTIVITIES
Investments in tangible and intangible assets - -1 084 -2 963
Proceeds on disposal of tangible and intangible assets + 29 55
Proceeds on disposal of other investments - 0 33
Loans granted to associated companies - -103 0
Acquisition of subsidiaries and other business units + -1 0
Disposal of subsidiaries + 3 048 0
and other business units
--------------------------------
NET CASH FLOW FROM INVESTMENTS 1 890 -2 875
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from share issue + 2 400 0
Proceeds from non-current borrowings + 256 2 425
Repayment of non-current borrowings - -7 -12
Stock options of the convertible bond + 0 432
Proceeds from current borrowings + 3 737 5 399
Repayment of current borrowings - -3 878 -5 102
NET CASH FLOW FROM FINANCING ACTIVITIES 2 509 3 141
--------------------------------------------------------------------------------
INCREASE (+) OR DECREASE (-) IN CASH FLOW 364 -483
Consolidated statement of changes in equity
(unaudited)
1 000 EUR Share Other Translati Distributable Retaine Total
capit reser on non-restricted d
al ves differen equity fund earnin
ce gs
--------------------------------------------------------------------------------
31.12.2013 3 425 4 908 833 39 661 -50 095 -1 269
Directed share - - - 204 - 204
issue
Share issue 4 882 4 882
Share issue - - - -194 - -194
expenses
Translation - - -1 114 - - -1 114
difference,
comprehensive
income
Profit/loss for - - - - -12 405 -12 405
the period
31.12.2014 3 425 4 908 -281 44 552 -62 500 -9 897
1 000 EUR Share Other Translati Distributable Retaine Total
capit reser on non-restricted d
al ves differen equity fund earnin
ce gs
--------------------------------------------------------------------------------
31.12.2012 3 425 4 908 677 38 783 -43 091 4 703
Stock options of - - - 432 432
the convertible
bond
Share related 480 480
payments
Decrease from -34 -34
share issue
Translation - - 155 3 158
difference,
comprehensive
income
Profit/loss for - - - - -7 008 -7 008
the period
31.12.2013 3 425 4 908 833 39 661 -50 095 -1 269
Segment
information
(unaudited)
From 1 January 2013 Cencorp reports of three business segments to comply with
the company's Cleantech strategy. The segments are Laser and Automation
Applications (LAS), Life Cycle Management (LCM) and Cencorp Clean Energy (CCE).
17 September Cencorp announced that it has transfered the company's electronics
automation business into Cencorp Automation Oy, a fully-owned subsidiary of
Cencorp. Further, in accordance to the agreement signed earlier, FTTK Company
Limited has purchased 70 percent of the shares in Cencorp Automation Oy.
Further FTTK has used its option to purchase the remaining 30 percent of the
shares in Cencorp Automation Oy and the parties have signed an agreement on
exercising the option in December 2014. In consequence of the sale of the
shares Cencorp reports the financial figures relating to the electronics
automation business, i.e. LAS and LCM segments, as discontinued operations from
Q3/2014. Segment information is not available after operating profit in profit
and loss statement. Financial income and expenses or balance sheet items are
not booked to segments. Cencorp's new segment information is based on the
management's internal reporting and on the organisation structure.
1 000 EUR 10-12/2014 10-12/2013 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Net sales
Cencorp 63 645 841 3 315
Clean
Energy -
continuin
g
operation
s
Discontinu 461 1 537 5 665 7 811
ed
operation
s
Total 524 2 182 6 506 11 126
Operating profit
Cencorp -4 357 -1 365 -10 885 -3 144
Clean
Energy -
continuin
g
operation
s
Discontinu -154 -976 -712 -2 029
ed
operation
s
Total -4 511 -2 341 -11 597 -5 173
EBITDA
Cencorp -1 087 -964 -3 342 -1 803
Clean
Energy -
continuin
g
operation
s
Discontinu -150 -354 -411 -908
ed
operation
s
Total -1 238 -1 318 -3 753 -2 711
Depreciation
Cencorp 245 348 1 318 1 288
Clean
Energy -
continuin
g
operation
s
Discontinu 4 145 301 630
ed
operation
s
Total 248 493 1 619 1 919
Impairment
Cencorp 3 025 53 6 225 53
Clean
Energy -
continuin
g
operation
s
Discontinu 0 477 0 491
ed
operation
s
Total 3 025 530 6 225 544
Discontinued operations
(unaudited)
29 May 2012 Cencorp announced that it exits from its unprofitable decoration
business and closes down its plant in Guangzhou, China, producing decoration
applications. In consequence of the closing down of the Guangzhou plant and the
exit from decoration business Cencorp reports the financial figures relating to
the Guangzhou plant's decoration business as discontinued operations from now
on.
The assets of Savcor Face (Guangzhou) Technologies Co., Ltd, reported as
discontinued operation, were written- off at fair value in the second quarter
of 2012 and sold in the fourth quarter of 2012.
The results and major classes of assets and liabilities of Savcor Face
(Guangzhou) Technolgies Co., are as follows:
1 000 EUR 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Revenue 0 0
Expenses 0 -8
Other opeating income 0 0
Loss recognised on the 0 0
remeasurement to fair
value
Operating profit 0 -8
-------------------------------------------------------
Finance costs 0 -36
-------------------------------------------------------
Profit/loss before tax 0 -44
from discontinued
operation
Income tax 0 0
Profit/loss after tax 0 -44
from discontinued
operation
-------------------------------------------------------
Assets
Property, plant and 0 0
equipment
Other intangible assets 0 0
Inventories 0 0
Trade and other 0 0
non-interest-bearing
receivables
Cash and cash 0 0
equivalents
Assets classified as 0 0
held for sale
-------------------------------------------------------
Liabilities
Trande and other 0 0
payables
Provisions 0 0
Liabilities directly 0 0
associated with assets
classified as held for
sale
-------------------------------------------------------
Net assets directly 0 0
associated with
disposal group
-------------------------------------------------------
Net cash flow of Savcor
Face (Guangzhou)
Technolgies Co., Ltd:
1 000 EUR 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Operating 0 -41
Investing 0 0
Financing 0 0
Net cash flow 0 -41
-------------------------------------------------------
Earnings/share (basic), 0,00 -0,0001
from discontinued
operations
Earnings/share (diluted) 0,00 -0,0001
from discontinued
operations
Discontinued operations
(unaudited)
17 September Cencorp announced that it has transfered the company's electronics
automation business into Cencorp Automation Oy, a fully-owned subsidiary of
Cencorp. Further, in accordance to the agreement signed earlier, FTTK Company
Limited has purchased 70 percent of the shares in Cencorp Automation Oy.
Further FTTK has used its option to purchase the remaining 30 percent of the
shares in Cencorp Automation Oy and the parties have signed an agreement on
exercising the option in December 2014. In consequence of the sale of the
shares Cencorp reports the financial figures relating to the electronics
automation business as discontinued operations from Q3/2014.
The results and major classes of assets and liabilities of Cencorp's electronics
automation business are as follows:
1 000 EUR 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Revenue 5 665 7 811
Expenses -6 824 -9 518
Other opeating income 171 115
Impairment 0 -429
Operating profit/loss from discontinued operation -988 -2 021
---------------------
Gain on discontinued operations 276 -
Assets
Property, plant and equipment 0 -
Other intangible assets 0 -
Inventories 28 -
Trade and other non-interest-bearing receivables 705 -
Cash and cash equivalents 0 -
Assets classified as held for sale 733 0
---------------------
Liabilities
Trande and other payables 1 683 -
Provisions 145 -
Liabilities directly associated with assets classified as 1 828 0
held for sale
---------------------
Net assets directly associated with disposal group -1 094 0
---------------------
Cumulative translation difference
Net cash flow of Cencorp's electronics automation
business:
1 000 EUR 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Operating -1 858 -1 018
Investing 2 701 -219
(includes the return on sales of discontinued
operations 2014)
Earnings/share (basic), from discontinued operations -0,001 -0,003
Earnings/share (diluted) from discontinued operations -0,001 -0,003
Key figures
(unaudited)
1 000 EUR 10-12/20 10-12/20 1-12/201 1-12/201
14 13 4 3
--------------------------------------------------------------------------------
Net sales 63 645 841 3 315
Operating profit -4 357 -1 365 -10 885 -3 144
% of net sales n/a -211,5 n/a -94,8
EBITDA -1 087 -964 -3 342 -1 803
% of net sales n/a -149,4 n/a -54,4
Profit before taxes -4 664 -1 987 -11 689 -4 932
% of net sales n/a -307,9 n/a -148,8
Balance Sheet value 7 560 18 498 7 560 18 498
Equity ratio, % -130,9 -6,9 -130,9 -6,9
Net gearing, % n/a n/a n/a n/a
Gross investments (continuing 231 421 377 3 045
operations)
% of net sales 366,9 65,3 44,9 91,9
Research and development costs 383 337 1 109 903
% of net sales 608,2 52,2 131,8 27,2
Order book 314 3 703 314 3 703
Personnel on average 26 150 74 155
Personnel at the end of the period 26 149 26 149
Non-interest-bearing liabilities 6 693 9 594 6 693 9 594
Interest-bearing liabilities 8 928 10 017 8 928 10 017
Share key indicators
Earnings/share (basic) -0,006 -0,005 -0,015 -0,011
Earnings/share (diluted) -0,006 -0,005 -0,015 -0,011
Earnings/share (basic), from continuing -0,005 -0,003 -0,014 -0,008
operations
Earnings/share (diluted) from continuing -0,005 -0,003 -0,014 -0,008
operations
Equity/share -0,011 -0,004 -0,011 -0,004
P/E ratio -1,61 -8,89 -0,61 -3,74
Highest price 0,02 0,09 0,04 0,09
Lowest price 0,01 0,03 0,01 0,03
Average price 0,01 0,05 0,02 0,07
Closing price 0,01 0,04 0,01 0,04
Market capitalisation, at the end of the 7,8 13,8 7,8 13,8
period, MEUR
Calculation of Key Figures
EBITDA, %: Operating profit + depreciation +
impairment
---------------------------------------
Net
sales
Equity ratio, %: Total equity x 100
---------------------------------------
Total assets - advances
received
Net gearing, %: Interest-bearing liabilities - cash
and cash equivalents
and marketable securities x
100 ---------------------------------------
Shareholders' equity +
minority interest
Earnings/share (EPS): Profit/loss for the period to the
owner of the parent company
---------------------------------------
Average number of shares adjusted for
share issue
at the end of the financial
year
Equity/share: Equity attributable to shareholders of
the parent company
---------------------------------------
Undiluted number of shares on the
balance sheet date
P/E ratio: Price on the balance sheet
date
---------------------------------------
Earnings per share
Related party transactions
(unaudited)
Cencorp Corporation is part of Savcor Group Oy. The Group hassold and purchased
goods and services from companies in which the majority holding and/or power of
decision granting control of the company is held by members of the Group's
related parties. Sales of goods and services carried out with related parties
are based on market prices. Cencorp Corporation has also sold and purchased
goods and services from its associated company, Cencorp Automation Oy. Sales of
goods and services carried out with the associated company are based on the
costs, according to the agreement.
The Group entered into the
following transactions
with related parties:
1 000 EUR 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Continuing operations
Sales of goods and
services
Savcor companies 67 175
Cencorp Automation Oy 19 0
Savcor Face Ltd 20 0
Others 0 9
Total 106 184
Purchases of goods and
services
Savcor companies 196 255
Savcor Face Ltd 36 78
SCI-Finance Oy 14 0
Others 0 15
Total 246 348
Interest income
Savcor companies 3 2
Interest expenses and
other financial expenses
Savcor companies 213 354
SCI Invest Oy 60 60
Iikka Savisalo 0 2
Total 273 416
Discontinued operations
Sales of goods and
services
Cencorp Automation Oy 87 0
Purchases of goods and
services
Savcor companies 194 219
Savcor Face Ltd 46 3
Cencorp Automation Oy 395 0
SCI-Finance Oy 30 0
Others 0 1
Total 665 223
Other non-current 0 185
liabilities to related
parties
Interest payable to 416 795
related parties
Other current liabilities 1 769 1 455
to related parties
Current convertible 1 159 2 598
subordinated loan from
related parties
Trade payables and other 1 363 916
non-interest-bearing
liabilities to related
parties
Trade and other current 371 136
receivables from related
parties
SCI Invest Oy is a company under control of Iikka
Savisalo, Cencorp's CEO.
1 000 EUR 1-12/2014 1-12/2013
--------------------------------------------------------------------------------
Wages and remuneration
Salaries of the management 867 730
and Board
Fair values
(unaudited)
Carrying Fair value
amount
1 000 EUR 31.12.2014 31.12.2014
--------------------------------------------------------------------------------
Financial assets
Available-for-sale investments 9 9
Trade and other receivables 2 013 2 013
Cash and cash equivalents 161 161
The fair value of trade and other receivables is expected to correspond to the
carrying amount due to their short maturity.
Financial liabilities
R&D loan, non-current 1 563 1 563
Other liabilities, non-current 8 8
Loans from financial institutions, current 2 269 2 269
Other liabilities, current 5 088 5 088
Trade payables and other non-interest-bearing 6 769 6 769
liabilities
The fair value of non-current liabilities is expected to correspond to the
carrying amount and recognized to their fair value when recorded. There has
been no significant change in common interest rate after the withdrawal of the
loans.
EUR 6.5 million out of trade payables and other current liabilites was overdue
at the end of the reporting period. That included EUR 3.2 million of Savcor
Face Bejing's overdue liabilities. There was an increase of 0.7 million in
Savcor Face Beijing's overdue liabilities during H2, of which 0.4 million was
caused by exchange rate difference. In addition, an interest-bearing loan of
0,4 million to Savcor Group Limited was overdue.
Change in intangible and tangible assets
(unaudited)
1 000 EUR 31.12.2014 31.12.2013
--------------------------------------------------------------------------------
Includes tangible assets, consolidated goodwill and
other intangible assets
Carrying amount, beginning of period 13 654 12 634
Depreciation and impairment -6 905 -2 221
Additions 659 3 691
Disposals -142 -356
Discontinued operations -2 955 0
Exchange rate difference 265 -94
Carrying amount, end of period 4 577 13 654
Inventories
(unaudited)
1 000 EUR 10-12/ 10-12/ 1-12/2 1-12/2
2014 2013 014 013
--------------------------------------------------------------------------------
Impairment losses and reversals of impairment
losses for inventories booked in Income
Statement
Continuing operations
Impairment loss 220 53 939 53
Reversal of impairment loss 0 0 0 0
Discontinued operations
Impairment loss 0 49 0 63
Reversal of impairment loss 0 0 0 0
Commitments and contingent liabilities
(unaudited)
1 000 EUR 31.12.2014 31.12.2013
---------------------------------------------------------------------
Loans from financial institutions 948 1 245
Promissory notes secured by pledge 12 691 12 691
Factoring loan and export credit limit 1 307 1 338
Trade receivables 91 499
Promissory notes secured by pledge 12 691 12 691
Collaterals given from other short-term loans
Deposits 477 0
Operating leases - continuing operations
Payable within one year 0 6
Payable over one year 0 0
Operating leases - discontinued operations
Payable within one year 0 11
Payable over one year 0 1
Commitments - continuing operations
Payable within one year 58 769
Payable over one year 0 733
Commitments - discontinued operations
Payable within one year 0 178
Payable over one year 0 96
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