Elcoteq SE
Interim Report
July 21, 2010 at 9.00 am (EET)
Significant improvement from previous quarter as operating result improves, cash
flow turns positive and net debt decreases considerably
April - June
- Net sales 332.3 million euros (436.0 in April - June 2009)
- Operating loss -6.9 million euros (-11.5). Operating loss excluding
restructuring costs -3.0 million euros (-11.0)
- Loss before taxes -1.7 million euros (-23.4)
- Earnings per share (EPS) -0.18 euros (-0.67)
- Cash flow after investing activities 5.3 million euros (72.2)
- Rolling 12-month return on capital employed (ROCE) 16.8% (-14.4%)
January - June
- Net sales 552.9 million euros (906.0 in January - June 2009)
- Operating loss -19.8 million euros (-49.8). Operating loss excluding
restructuring costs -13.6 million euros (-35.7)
- Income before taxes 61.3 million euros (loss -73.3)
- Earnings per share (EPS) 1.05 euros (-2.07)
- Cash flow after investing activities -18.0 million euros (21.5)
- Interest-bearing net debt 76.3 million euros (215.9)
- Gearing 0.7 (2.9)
- Solvency 18.7% (10.0%)
This interim report has been prepared in accordance with IFRS. Tables have been
prepared in compliance with the IAS 34 requirements approved by the EU. The
comparative figures given in the body text of this report are figures for the
corresponding period in the previous year, unless stated otherwise.
Elcoteq's President and CEO Jouni Hartikainen:
"The second quarter of 2010 clearly proved that we have been able to restore
customer confidence through the actions executed earlier this year to strengthen
the balance sheet. Furthermore, the new product life cycle services strategy has
been well received by our customers. Revenues increased by 51% from the previous
quarter due to increased volumes from existing customers and the new customer
programs started this year. The operating result continued to improve.
During the past six months we have signed over ten new customer accounts with
both large and smaller companies for a large variety of different types of
services that cover the whole life cycle of products. We also have successfully
started manufacturing LED lighting products for Philips in China and will expand
their production to other Elcoteq locations in the second half of 2010.
We also successfully concluded the divestment of the St. Petersburg production
facility and managed to reduce the net debt by 26% from the first quarter of
2010.
A major disappointment in early July 2010 was Sharp's decision to put the KIN
smartphone deliveries on hold after a rapid and successful ramp-up. We are
presently in discussions with the customer on how to continue the cooperation.
During the latter half of the year, our focus will be on further improving our
profitability and continuing to strengthen the balance sheet."
April - June
Elcoteq recorded net sales of 332.3 million euros between April and June (436.0
million euros in April-June 2009). Operating loss totaled -6.9 million euros
(-11.5), excluding restructuring costs it was -3.0 million euros (-11.0). Net
sales have decreased significantly from last year, but clearly improved from the
first quarter of 2010, mainly due to high demand for Flat TVs and set-top
products, increased deliveries of communications network products as well as
ramp-up of new customer programs, including the KIN smartphone. Operating result
continued to improve due to increased sales and the consistent cost savings
actions carried out during the review period.
The Group's net financial income was 5.2 million euros (net financial expenses
11.9 million euros in April-June 2009) due to foreign exchange gains resulting
from the favorable EUR/USD exchange rate development during the review period.
Loss before taxes was -1.7 million euros (-23.4) and net loss totaled -5.8
million euros (-21.8). Earnings per share (EPS) were -0.18 euros (-0.67).
The Group's gross capital expenditures on fixed assets between April and June
were 2.6 million euros (1.5), or 0.8% of net sales (0.4%). Depreciation amounted
to 8.7 million euros (16.0). During the review period, investments were
earmarked mainly for the test equipment of new customer programs.
Cash flow after investing activities was 5.3 million euros (72.2). The Group had
3.3 million euros sold accounts receivable without recourse at the end of June
2010 (18.7 million euros at the end of June 2009). Positive cash flow includes
the proceeds from the St. Petersburg facility divestment.
At the end of June 2010, Elcoteq had cash totaling 72.5 million euros (154.8).
The company reduced the 100 million euros syndicated committed credit facility
signed in April 2010 by 16.5 million euros to 83.5 million euros. The credit
facility was fully utilized.
At the end of June, the Group's interest-bearing net debt amounted to 76.3
million euros (215.9). The net debt decreased 26.4% from the first quarter. The
solvency ratio was 18.7% (10.0%) and gearing was 0.7 (2.9). Rolling 12-month
return on capital employed (ROCE) was 16.8% (-14.4%).
January - June
Net sales in January - June decreased significantly compared to the same period
last year, standing at 552.9 million euros (906.0 million euros in January -
June 2009). Operating loss was -19.8 million euros (-49.8) and excluding
restructuring costs -13.6 million euros (-35.7). Income before taxes was 61.3
million euros (-73.3). Earnings per share (EPS) were 1.05 euros (-2.07). Cash
flow after investing activities was -18.0 million euros (21.5).
Gross capital expenditures on fixed assets in January - June amounted to 5.6
million euros (3.5), 1.0% of net sales (0.4%). Depreciation totaled 16.7 million
euros (34.9).
Strategic Business Units
Elcoteq has two Strategic Business Units (SBUs) as its segments: Consumer
Electronics and System Solutions. In the second quarter of 2010, Consumer
Electronics contributed 76% (75%) and System Solutions 24% (25%) of the Group's
net sales.
Net sales of the Consumer Electronics SBU in the second quarter were 251.7
million euros (328.1). The segment's operating income was 1.3 million euros
(loss -4.6) and excluding restructuring costs 4.3 million euros (loss -4.6). The
Consumer Electronics SBU made strong progress in reducing operating costs,
expanding service content and developing the business mix towards higher margin
products.
Net sales of the System Solutions SBU in April-June were 80.6 million euros
(107.9). The decline was mainly due to the divestment of Ericsson-related
operations in Tallinn, Estonia to Ericsson in July 2009. The segment's operating
income was 1.7 million euros (1.5) and excluding restructuring costs 2.6 million
euros (1.9).
Personnel
At the end of June 2010, the Group employed 9,999 (12,996) people. The
geographical distribution of the workforce was as follows: Europe 3,807 (5,928),
Asia-Pacific 2,820 (3,187) and Americas 3,372 (3,881). The average number of
employees on Elcoteq's direct payroll between January and June was 8,369
(13,088).
Balance Sheet Strengthening
On April 16, the company announced an exchange offer containing both a hybrid
loan and warrants for the holders of its remaining outstanding debentures in an
aggregate nominal amount of approximately 35 million euros. The exchange offer
was completed on May 7, 2010, and as a result the holders of debentures valued
at 21.5 million euros tendered their debentures for a hybrid bond and warrants.
As a result of this transaction as well as the issuance of 29 million euros in
hybrid bonds and the redemption of 105 million euros of debentures in January
2010, the company's indebtedness and solvency have improved significantly. The
solvency has improved from 10.0% in the second quarter of 2009 to 18.7% in the
second quarter of 2010 and gearing from 2.9 to 0.7, respectively.
Also, as earlier announced the company aims at arranging a rights issue during
2010 to increase liquidity and to further strengthen the balance sheet. During
the second half of 2010, the actions in support of the strengthening of the
balance sheet will have a significant role in the agenda of the company's
management and board.
Restructuring Plan
On May 19, Elcoteq and Optogan CJSC completed the transaction whereby Optogan
acquired 100 percent of the shares in Elcoteq's subsidiary in St. Petersburg,
Russia including its premises and personnel of about 40 employees but excluding
any customer agreements. The transaction reduces Elcoteq's total costs by
approximately 2 million euros on an annual basis and had a considerable positive
impact on the second-quarter cash flow.
Elcoteq has now consolidated all European electronics manufacturing and after
market service activities to its units in Pécs, Hungary and Tallinn, Estonia.
Shares and Shareholders
At the end of June 2010, the company had 128,132,185 shares divided into
22,362,185 series A shares and 105,770,000 series K Founders' shares. All the
series K Founders' shares are held by the company's three principal owners.
Elcoteq had 10,654 shareholders on June 30, 2010. There were a total of
4,009,399 foreign and nominee registered A shares.
Decisions of the Annual General Meeting on April 28, 2010 and Constitutive Board
Meeting on May 3, 2010
Elcoteq SE's Annual General Meeting (AGM) took place on April 28, 2010, in
Luxembourg. The Meeting confirmed the consolidated and parent company's income
statements and balance sheets for the financial year 2009 and discharged the
members of the Board of Directors and the statutory auditor from liability for
the financial year. The Meeting approved the Board's proposal that no dividend
will be distributed for the financial year January 1 - December 31, 2009.
The Meeting re-elected the following persons to the Board of Directors:
President Martti Ahtisaari; Mr. Heikki Horstia, BSc (Econ.); Mr. Eero Kasanen,
Executive Dean, Aalto University School of Economics; Mr. François Pauly,
General Manager of Sal. Oppenheim Jr. & Cie S.C.A; and Mr. Jorma Vanhanen,
founder-shareholder of Elcoteq SE. Mr. Pauli Aalto-Setälä, Managing Director of
Aller Media Oy, and Dr. Sándor Csányi, Chairman and CEO of OTP Bank, were
elected as new members to the Board of Directors. President Ahtisaari, Mr.
Horstia, Mr. Kasanen, Mr. Pauly, Mr. Aalto-Setälä and Dr. Csányi are independent
Board members, and they represent more than half of the Board's members.
The AGM approved the proposal of the Audit Committee of the Board of Directors
to appoint the firm of authorized public accountants KPMG Audit S.à.r.l under
the supervision of Mr. Philippe Meyer as the company's auditors for the
financial year ending on December 31, 2010.
Elcoteq SE's Board of Directors held its constitutive meeting on Monday, May
3, 2010. The Board of Directors elected Mr. Jorma Vanhanen as its Chairman and
Mr. Heikki Horstia as the Deputy Chairman.
Mr. Heikki Horstia was elected as the Chairman of the Audit Committee and Mr.
Martti Ahtisaari, Mr. Eero Kasanen and Mr. François Pauly were elected as
members of this committee. Mr. Heikki Horstia was also elected as the Chairman
of the Compensation Committee and Mr. Martti Ahtisaari, Mr. Eero Kasanen, Mr.
François Pauly and Mr. Pauli Aalto-Setälä were elected as members of this
committee.
When appointing the Nomination Committee, the Board of Directors took into
consideration the recommendation made by the company's largest shareholders at
the Annual General Meeting. The Nomination Committee consists of the largest
shareholders and an independent advisor. The members from outside the Board are
Mr. Antti Piippo, Mr. Henry Sjöman and Mr. Juha Toivola. In addition, the
Chairman of the Board, Mr. Jorma Vanhanen, was elected from among the Board
members.
No working committee was re-established.
Changes in Elcoteq's Board of Directors
On June 24, Dr. Sándor Csányi announced his resignation from the Board of
Directors with immediate effect. Dr. Csányi resigned at his own request and due
to personal reasons.
Events After the Review Period
On July 1, Sharp informed Elcoteq that further deliveries of the KIN smartphone
product lineup will be put on hold. Elcoteq had already delivered to Sharp the
KIN smartphones for the US markets with revenues amounting to more than one
third of the original guidance for Sharp business in 2010, i.e. over 150 million
euros in net sales in 2010. Deliveries for the European markets were scheduled
to start later in the autumn.
On July 5, a total of 12,625 Elcoteq series A shares were returned free of
consideration to the company in connection with the resignation of Dr. Sándor
Csányi from the company's Board of Directors. Elcoteq had transferred in May
2010 12,625 shares to each member of the Board of Directors as part of the
remuneration of the Board and after Dr. Sándor Csányi's resignation from the
Board of Directors on June 24, 2010, the shares allocated to him were
transferred back to the company. The company now holds a total of 12,625 own
shares.
On July 20, a total of 105,770,000 Elcoteq SE's series K founders' shares owned
by the three founder shareholders of the company, Mr. Antti Piippo, Mr. Henry
Sjöman and Mr. Jorma Vanhanen, were converted into Series A shares in accordance
with Article 18 of the Articles of Association of the company. The conversion
took place at a ratio of ten series K founders' shares to one series A share,
i.e. the total number of series A shares grew by 10,577,000 from 22,362,185 to
32,939,185. After the conversion Mr. Piippo, Mr. Sjöman and Mr. Vanhanen hold in
total 13,452,862 Series A shares, which corresponds to 40.85% ownership in the
company. The conversion reduced the total voting share of Mr. Piippo, Mr. Sjöman
and Mr. Vanhanen from 84.81% to current 40.85%.
Short-Term Risks and Uncertainty Factors
The company operates in a working capital intensive business environment where
the access to and availability of sufficient financing represents a risk factor.
The Board of Directors has assessed the company's financing requirements against
the business plan. The company's ability to implement its business plan is
highly dependent on the availability of debt financing, better control of
working capital and cash pooling as well as ability to stabilize the financing
structure, including the strengthening of shareholders' equity under volatile
market conditions.
The company bases component purchases and resource commitments on customers'
forecasts. Sudden changes in customers' demand may cause the company to have
excess inventories which are under customers' liability but which the company
may have to finance for a certain period of time. The company makes a
significant part of its purchases and sales in currencies other than the euro
and currency fluctuations may result in deviations from business plans. The
ability to provide the right service offering to customers is a key element in
keeping existing customers and winning new customers. Under the changing market
conditions, a failure to identify and respond to the customer requirements may
prevent the company from achieving its strategic objectives and the above
operative targets.
The company's key short-term operative challenges are to increase sales,
proactively manage fixed costs according to sales fluctuations and significantly
improve profitability.
Prospects
Third-quarter net sales are expected to be lower than in the second quarter,
mainly because the KIN smartphone product deliveries were put on hold at the
beginning of July. Operating income is expected to further improve from the
second quarter.
As communicated earlier, the company expects the operating profit to turn
positive for the second half of 2010 based on the impact of implemented cost
reduction actions, the stabilization of underlying business and the contribution
of recently won new customer contracts. Due to the restructuring of subordinated
debt, the net income for 2010 will be clearly positive.
The Board's and management's key activities are focused towards further
strengthening the balance sheet through equity-related transactions and
long-term financing arrangements. In the second half of 2010, the company will
continue to carry out actions to further optimize its cost structure and
increase working capital efficiency.
Elcoteq plans its material purchases and capacity based on the forecasts
received from customers and market analysis. Such forecasts may fluctuate during
the forecast period, causing uncertainty in the company's own forecasts.
July 20, 2010
Board of Directors
Further information:
Jouni Hartikainen, President and CEO, +358 10 413 11
Mikko Puolakka, CFO, tel. +358 10 413 1287
Press Conference and Webcast
Elcoteq will hold a combined press conference, conference call and webcast in
English at 2.30 pm (EET) on Wednesday, July 21, in the Bulsa-Freda room at
Scandic Hotel Simonkenttä (address: Simonkatu 9, Helsinki, Finland).
To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event: +44 (0)20 7162 0125 (Europe) or +1 334 323 6203 (USA).
When dialing in, the participants should quote 869213 as the conference ID. The
password is Elcoteq.
The press conference can also be followed as a live webcast or later as a
recording via Elcoteq's website www.elcoteq.com.
The presentation material used at the press conference (pdf file) will be
available on the company's website www.elcoteq.com on July 21, 2010.
Elcoteq will publish its Interim Report for January-September 2010 at around
9.00 am (EET) on Wednesday, October 27, 2010.
Enclosures:
1 Consolidated statement of comprehensive income
2 Consolidated Balance Sheet
3 Consolidated Cash Flow statement
4 Consolidated statement of changes in equity
5 Formulas for the calculation of key figures
6 Key figures
7 Segment reporting
8 Restructuring expenses
9 Assets pledged and contingent liabilities
10 Quarterly figures
The Group adopted the following standards on January 1, 2010:
- Revised IFRS 3 Business combinations
This adopted standard has not had impact on the reported results.
Other new interpretations or amendments to standards effective as of January
1, 2010 have not been relevant to the Group.
APPENDIX 1
CONSOLIDATED STATEMENT
OF COMPREHENSIVE Q2/ Q2/ 1-6/ 1-6/ 1-12/
INCOME, MEUR 2010 2009 Change,% 2010 2009 Change, % 2009
-------------------------------------------------------------------------------
NET SALES 332.3 436.0 -23.8 552.9 906.0 -39.0 1,503.2
Change in work in progress
and finished goods 4.8 -4.4 9.6 -26.3 -44.4
Other operating income 1.1 1.4 -20.6 2.0 3.6 -44.0 13.3
Operating expenses -332.6 -428.0 -22.3 -561.4 -884.1 -36.5 -1,451.5
Restructuring expenses -3.9 -0.4 -6.2 -14.1 -37.0
Depreciation and
impairment -8.7 -16.0 -45.9 -16.7 -34.9 -52.1 -60.1
-------------------------------------------------------------------------------
OPERATING LOSS -6.9 -11.5 -19.8 -49.8 -60.2 -76.5
% of net sales -2.1 -2.6 -3.6 -5.5 -5.1
Financial income and
expenses 5.2 -11.9 81.1 -23.5 -40.5
Share of profits and
losses of associates 0.0 0.0 0.0 0.0 -0.1
-------------------------------------------------------------------------------
PROFIT/LOSS BEFORE
TAXES -1.7 -23.4 61.3 -73.3 -117.1
Income taxes -4.8 1.5 -27.8 5.3 8.1
-------------------------------------------------------------------------------
NET PROFIT/LOSS -6.5 -21.8 33.5 -68.0 -109.0
-------------------------------------------------------------------------------
Other comprehensive income
Cash flow hedges -0.3 4.4 0.0 3.3 3.4
Net gain/loss on
hedges of net
investments in foreign
operations 0.0 1.7 -0.6 3.2 3.0
Foreign currency
translation
differences for
foreign operations -1.7 0.3 -1.7 0.4 1.2
Income tax relating to
components of other
comprehensive income 0.0 -1.5 0.0 -1.2 -0.4
-------------------------------------------------------------------------------
Other comprehensive
income for the period,
net of tax -2.0 4.9 -2.3 5.7 7.2
TOTAL COMPREHENSIVE
PROFIT/LOSS FOR THE
PERIOD -8.5 -16.9 31.2 -62.3 -101.8
PROFIT/LOSS FOR THE PERIOD ATTRIBUTABLE TO:
Equity holders of the
parent company * -5.8 -21.8 34.6 -67.4 -105.0
Minority interests -0.7 0.0 -1.1 -0.6 -3.9
-------------------------------------------------------------------------------
-6.5 -21.8 33.5 -68.0 -109.0
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE PROFIT/LOSS ATTRIBUTABLE TO:
Equity holders of the
parent company -8.5 -16.1 31.0 -61.5 -98.4
Non-controlling
interest 0.0 -0.8 0.2 -0.8 -3.3
-------------------------------------------------------------------------------
-8.5 -16.9 31.2 -62.3 -101.8
-------------------------------------------------------------------------------
Earnings per share
(EPS), A shares EUR -0.18 -0.67 1.05 -2.07 -3.22
Diluted earnings per
share (EPS), A shares
EUR - - 1.02 - -
Earnings per share
(EPS), K founders'
shares EUR -0.02 -0.07 0.10 -0.21 -0.32
Income tax is the amount corresponding to the actual effective rate based on
year-to-date actual tax calculation.
* The Group's reported net income for the period.
APPENDIX 2
BALANCE SHEET, MEUR June 30, 2010 Dec. 31, 2009 Change, %
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 26.1 25.4 3,0
Tangible assets 76.2 81.0 -5,9
Investments 0.7 0.7 -2,2
Long-term receivables 19.9 41.9 -52,5
--------------------------------------------------------------------------------
Non-current assets, total 122.9 148.9 -17.5
Current assets
Inventories 125.3 69.4 80,4
Current receivables 290.0 189.9 52,7
Cash and equivalents 72.5 87.9 -17,6
--------------------------------------------------------------------------------
Current assets, total 487.8 347.3 40.4
Assets classified as held for sale - 19.0
--------------------------------------------------------------------------------
ASSETS, TOTAL 610.6 515.3 18.5
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital* 13.2 13.2 0.0
Other shareholders' equity 42.9 11.6 269.6
--------------------------------------------------------------------------------
Equity attributable to equity holders of
the parent company, total 56,0 24.8 126.2
Non-controlling interest 8.1 7.8 3.1
--------------------------------------------------------------------------------
Hybrid capital loans 50.2 - -
--------------------------------------------------------------------------------
Total equity 114.3 32.6 250.5
Long-term liabilities
Long-term loans 28.1 109.8 -74.4
Other long-term debt 3.3 2.8 19.6
--------------------------------------------------------------------------------
Long-term liabilities, total 31.4 112.5 -72.1
Current liabilities
Current loans 120.4 165.4 -27.2
Other current liabilities 340.3 200.0 70.1
Provisions 4.2 4.7 -10.7
--------------------------------------------------------------------------------
Current liabilities, total 464.9 370.1 25.6
SHAREHOLDERS' EQUITY AND LIABILITIES,
TOTAL 610.6 515.3 18.5
* Share capital includes both A shares listed in Nasdaq OMX Helsinki Exchange
and K founders' shares.
APPENDIX 3
CONSOLIDATED CASH FLOW STATEMENT, MEUR 1-6/2010 1-6/2009 Change, % 1-12/2009
--------------------------------------------------------------------------------
Cash flow before change in working capital 38.2 -13.5 14.0
Change in working capital -53.8 42.2 50.5
Financial items and taxes -13.2 -9.7 36.5 -24.2
--------------------------------------------------------------------------------
Cash flow from operating activities -28.9 19.0 40.4
Purchases of non-current assets -5.9 -2.5 136.3 -4.4
Acquisitions 0.0 0.0 0.3
Disposals of non-current assets 16.8 4.9 242.3 16.6
--------------------------------------------------------------------------------
Cash flow before financing activities -18.0 21.5 52.9
--------------------------------------------------------------------------------
Hybrid capital loans 27.9 - -
Change in current debt -15.1 39.2 -56.1
Repayment of long-term debt -19.0 - 0.0
Dividends paid 0.0 - -2.4
--------------------------------------------------------------------------------
Cash flow from financing activities -6.1 39.2 -58.6
Change in cash and equivalents -24.1 60.6 -5.7
Cash and equivalents on January 1 87.9 95.1 -7.5 95.1
Effect of exchange rate changes on cash
held 8.6 -0.9 -1.5
Cash and equivalents at the end of the
period 72.5 154.8 -53.2 87.9
APPENDIX 4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
of the parent
Addi- Trans- Non-
tio- Ot- Hed- la- Re- cont- Hybrid
Sha- nal her ging tion serve Retai- rol- ca To-
re paid-in re re- re- for ned ling pi tal
capi- capi- ser ser- ser- own sha earn- To inte- tal equi
MEUR tal tal ves ve ve res ings tal rest lo-ans ty
--------------------------------------------------------------------------------
BALAN
CE AT
JAN 1,
2010 13.2 225.0 8.4 -0.1 6.8 -0.1 -228.4 24.8 7.8 - 32.6
Total
comp
re
hen
sive
in
come 0.0 -3.6 0.1 34.5 30.9 0.2 31.2
Hybrid
capi
tal
loans 50.2 50.2
Option
rights 0.3 0.3 0.3
--------------------------------------------------------------------------------
BALAN
CE AT
JUNE
30,
2010 13.2 225.0 8.4 -0.1 3.2 0.0 -193.6 56.0 8.1 50.2 114.3
--------------------------------------------------------------------------------
BALAN
CE AT
JAN 1,
2009 13.0 225.0 8.4 -3.1 3.2 -0.1 -124.0 122.5 12.7 - 135.2
Total
Comp
re
hen
sive
in
come 2.9 2.9 -67.4 -61.5 -0.8 -62.3
Share-
based
pay
ments 0.8 0.8 0.8
--------------------------------------------------------------------------------
BALAN
CE AT
JUNE
30,
2009 13.0 225.0 8.4 -0.2 6.1 -0.1 -190.5 61.8 12.0 - 73.7
--------------------------------------------------------------------------------
APPENDIX 5
FORMULAS FOR THE CALCULATION OF KEY FIGURES
Return on equity (ROE) =
Net income x 100
---------------------------------------------
Total equity, average of opening and closing balances
Return on investments (ROI/ROCE) =
(Income before taxes + interest and other financial expenses +
income from discontinued operations before taxes and
financial expenses) x 100
-------------------------------------------------------------
Total assets - non-interest bearing liabilities, average of opening
and closing balances
Return on investment (ROI/ROCE) for trailing 12 months =
(Income before taxes + interest and other financial expenses +
income from discontinued operations before taxes and
financial expenses) x 100
----------------------------------------------------------
Total assets - non interest-bearing liabilities, average of opening
and closing balances
Current ratio =
Current assets + assets classified as held for sale
----------------------------------------------------------
Current liabilities + liabilities classified as held for sale
Solvency =
Total equity x 100
--------------------------------------------
Total assets - advance payments received
Gearing =
Interest-bearing liabilities - cash and equivalents
---------------------------------------------------------
Total equity
Equity per share =
Equity attributable to equity holders of the parent company
----------------------------------------------------------------------
Adjusted average number of A shares outstanding end of the
period + (adjusted average number of K founders´ shares
outstanding end of the period/10)
Earnings per share, A shares (EPS) =
Net income attributable to equity holders of the parent, A shares
-------------------------------------------------------------------
Adjusted average number of A shares outstanding during
the period
Earnings per share, diluted, A shares (EPS) =
Net income attributable to equity holders of the parent, A shares
----------------------------------------------
Adjusted average number of A shares outstanding during the
Period + effect of dilution on the number of shares
Earnings per shares, K founders´ shares (EPS) =
Net income attributable to equity holders of the parent,
K founders´ shares
------------------------------------------------------------
Adjusted average number of K founders' shares outstanding
during the period
APPENDIX 6
1-6/ 1-6/ 1-12/
KEY FIGURES 2010 2009 Change-% 2009
--------------------------------------------------------------------------------
Personnel on average during the period 8,369 13,088 -36.1 11,271
Gross capital expenditures, MEUR 5.6 3.5 60.0 6.4
Return on equity (ROE), % 45.6 -65.1 -129.9
Return on investment (ROI/ROCE), % 27.1 -12.2 -18.9
From 12 preceding months:
Return on equity (ROE), % -8.0 -85.8 -129.9
Return on investment (ROI/ROCE), % 16.8 -14.4 -18.9
Earnings per share (EPS), A shares, EUR 1.05 -2.07 -3.22
Earnings per share (EPS), K founders' shares, EUR 0.10 -0.21 -0.32
Diluted earnings per share (EPS), A shares, EUR 1.02 - -
Current ratio 1.0 1.1 1.0
Solvency, % 18.7 10.0 6.3
Gearing 0.7 2.9 5,8
Shareholders' equity per share, A shares, EUR 3.22 1.89 0.75
Shareholders' equity per share, K founders'
shares, EUR 0.32 0.19 0.08
Interest-bearing liabilities, MEUR 148.7 370.7 -59.9 275.4
Interest-bearing net debt, MEUR 76.3 215.9 -64.7 187.5
Non-interest-bearing liabilities, MEUR 347.6 290.8 19.5 207.3
APPENDIX 7
SEGMENT REPORTING
Elcoteq applies IFRS 8 Operating Segments in its segment reporting. The
presented segment information is based on the information provided to the
Group's management.
Elcoteq has two Strategic Business Units (SBUs): Consumer Electronics and
System Solutions. Elcoteq reports these strategic business units as its
segments. Both SBUs are responsible for managing and developing their existing
customer relationships and applicable service offerings, while Group Operations
and Sourcing is responsible for supply chain and production.
Strategic Business Unit Consumer Electronics covers products such as mobile and
wireless phones, their parts and accessories, set-top boxes, flat panel TVs and
other consumer products as well as related after market services.
Strategic Business Unit System Solutions covers wireless and wireline
infrastructure systems and modules, enterprise network products and various
other industrial segment products as well as related after market services.
STRATEGIC BUSINESS UNITS, MEUR 1-6/2010 1-6/2009 1-12/2009
------------------------------------------------------------------------
Net sales
Consumer Electronics 421.7 672.7 1,127.3
System Solutions 131.2 233.2 375,9
------------------------------------------------------------------------
Net sales, total 552.9 906.0 1,503.2
Segment's operating income/loss
Consumer Electronics -2.5 -24.7 -38.2
System Solutions 3.9 -8.8 -2.0
Group's non-allocated expenses/income
General & Administrative expenses -18.5 -15.4 -35.2
Other expenses -2.7 -0,9 -1.2
------------------------------------------------------------------------
Operating income/loss, total -19.8 -49.8 -76.5
Group's financial income and expenses 81.1 -23.5 -40.5
Share of profits and losses of associates 0.0 0.0 -0.1
------------------------------------------------------------------------
Income before taxes 61.3 -73.3 -117.1
Segments' operating income for January-June 2010 include following restructuring
expenses: Consumer Electronics 4.2 million euros and System Solutions 1.8
million euros. Group's non-allocated expenses/income include restructuring costs
of 0.2 million euros.
APPENDIX 8
RESTRUCTURING EXPENSES
During the first quarter of 2009, Elcoteq launched a restructuring plan that
applies to whole Group.
The plan targets is to assure the company drive to increase profitability,
cost-efficiency and operational excellence.
The plan has contained several elements already in year 2009 such as the closure
of several plants and the merge of the plant in Shenzhen (China) to the plant in
Beijing, organizational changes to aim for further cost reduction and various
assets impairment charges.
The Restructuirng plan actions continues still in year 2010 and the Group's
restructuring expenses, 6.167 thousands euros, comprise of the following items:
EUR 1,000 2010
---------------------------------------
Personnel expenses 748
Production material and services -26
Reversal of impairment -1,225
Sales loss of fixed assets 6,670
---------------------------------------
Restructuring expenses, total 6,167
The above restructuring expenses include also the effect of sales of Elcoteq's
subsidiary in St. Petersburg, Russia.
APPENDIX 9
ASSETS PLEDGED AND CONTINGENT LIABILITIES, MEUR
June 30, June 30, Change, Dec. 31,
2010 2009 % 2009
--------------------------------------------------------------------------------
BUSINESS MORTGAGES 100.0 - 100.0
PLEDGED OTHER RECEIVABLES 3.0
PLEDGED CASH AND CASH EQUIVALENTS 49.0 - 56.2
PLEDGED ACCOUNTS RECEIVABLES - 5.0 -
PLEDGED LOAN RECEIVABLES - 0.1 0.1
ON BEHALF OF OTHERS
Guarantees 1.0 1.0 1.0
LEASE COMMITMENTS
Operating leases, production machinery (excl.
VAT) 0.7 4.6 -84.9 1.2
Operating leases, real estate (excl. VAT) 14.2 12.6 12.9 12.3
Operating leases, others (excl. VAT) 0.5 1.3 -56.4 0.9
DERIVATIVE CONTRACTS
Currency forward contracts, transaction risk,
hedge accounting not applied
- Nominal value, open deals 14.9 86.7 -82.8 43.2
- Nominal value, closed deals - - 130.1
- Fair value 0.0 -0.3 0.0
Currency forward contracts, transaction risk,
hedge accounting applied
- Nominal value, open deals 1.6 19.1 -91.8 70.6
- Nominal value, closed deals - - 11.4
- Fair value -0.1 -0.3 -0.1
Currency option contracts, transaction risk,
hedge accounting not applied, bought options
- Nominal value - 11.3 -
- Fair value - 0.0 -
Currency forward contracts, translation risk
- Nominal value - 20.8 -
- Fair value - 0.1 -
Currency forward contracts, financial risk
- Nominal value - 120.4 110.7
- Fair value - 0.3 -0.2
APPENDIX 10
QUARTERLY FIGURES
INCOME STATEMENT, MEUR Q2/2010 Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
--------------------------------------------------------------------------------
NET SALES 332.3 220.5 265.5 331.7 436.0 470.0
Change in work in progress
and finished goods 4.8 4.8 -9.9 -8.2 -4.4 -21.9
Other operating income 1.1 0.9 4.2 5.5 1.4 2.3
Operating expenses -332.6 -228.8 -250.2 -317.2 -428.0 -456.1
Restructuring expenses -3.9 -2.3 -21.3 -1.7 -0.4 -13.6
Depreciation and impairments -8.7 -8.1 -11.7 -13.5 -16.0 -18.9
--------------------------------------------------------------------------------
OPERATING INCOME -6.9 -12.9 -23.4 -3.3 -11.5 -38.3
% of net sales -2.1 -5.9 -8.8 -1.0 -2.6 -8.2
Financial income and expenses 5.2 75.9 -12.9 -4.1 -11.9 -11.5
Share of profits and losses of
associates 0.0 0.0 0.0 -0.1 0.0 0.0
--------------------------------------------------------------------------------
INCOME BEFORE TAXES -1.7 63.0 -36.4 -7.5 -23.4 -49.9
Income taxes -4.8 -23.0 2.2 0.7 1.5 3.7
--------------------------------------------------------------------------------
NET INCOME
FOR THE
PERIOD -6.5 40.0 -34.2 -6.8 -21.8 -46.1
ATTRIBUTABLE TO:
Equity holders of the parent
company -5.8 40.3 -31.3 -6.3 -21.8 -45.6
Non-controlling interest -0.7 -0.4 -2.9 -0.5 0.0 -0.5
--------------------------------------------------------------------------------
-6.5 40.0 -34.2 -6.8 -21.8 -46.1
BALANCE SHEET, MEUR Q2/2010 Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 26.1 26.0 25.4 25.9 26.6 27.4
Tangible assets 76.2 79.1 81.0 110.3 129.8 149.7
Investments 0.7 0.7 0.7 2.1 2.2 2.3
Long-term
receivables 19.9 22.3 41.9 46.8 45.8 53.0
--------------------------------------------------------------------------------
Non-current assets, total 122,9 128.1 148.9 185.1 204.3 232.4
Current assets
Inventories 125.3 102.9 69.4 101.1 113.7 174.2
Current receivables 290.0 202.2 189.9 193.4 221.4 221.9
Cash and
equivalents 72.5 69.8 87.9 201.0 154.8 98.0
--------------------------------------------------------------------------------
Current assets, total 487.8 374.9 347.3 495.5 489.8 494.1
Assets classified as held for
sale 0.0 17.2 19.0 21.0 41.0 20.7
--------------------------------------------------------------------------------
ASSETS, TOTAL 610.6 520.3 515.3 701.6 735.1 747.1
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 13.2 13.2 13.2 13.0 13.0 13,0
Other shareholders'
equity 42.9 51.1 11.6 43.5 48.7 64,5
--------------------------------------------------------------------------------
Equity attributable to equity
holders 56.0 64.3 24.8 56.6 61.8 77.5
of the parent company, total
Non-controlling interest 8.1 8.0 7.8 11.1 12.0 12.8
--------------------------------------------------------------------------------
Hybrid capital loans 50.2 28.7 - - - -
--------------------------------------------------------------------------------
Total equity 114.3 100.9 32.6 67.7 73.7 90,3
Long-term liabilities
Long-term loans 28.1 44.4 109.8 110.1 159.6 158.9
Other long-term
debt 3.3 3.5 2.8 2.8 5.7 6.7
--------------------------------------------------------------------------------
Long-term liabilities, total 31.4 47.8 112.5 113.0 165.2 165.6
Current liabilities
Current loans 120.4 128.9 165.4 263.8 210.7 225.4
Other current
liabilities 340.3 238.0 200.0 250.2 279.0 257.4
Provisions 4.2 4.6 4.7 6.9 5.7 8.4
--------------------------------------------------------------------------------
Current liabilities, total 464.9 371.5 370.1 520.9 495.4 491.2
Liabilities classified as held
for sale - - - - 0.8 -
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
AND LIABILITIES, TOTAL 610.6 520.3 515.3 701.6 735.1 747.1
Personnel on average during the
period 8,541 10,024 8,882 9,877 11,693 14,446
Gross capital expenditures, MEUR 2.6 3.0 1.8 1.1 1.5 2.0
ROI/ROCE from 12 preceding
months, % 16.8 11.4 -18.9 -14.4 -14.4 -11.3
Earnings per share (EPS),
A-shares, EUR -0.18 1.22 -0.96 -0.19 -0.67 -1.40
Solvency, % 18.7 19.4 6.3 9.7 10.0 12.1
CONSOLIDATED CASH FLOW
STATEMENT, MEUR
Q2/2010 Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
--------------------------------------------------------------------------------
Cash flow before change in
working capital 25.9 12.3 20.5 7.0 -6.4 -7.1
Change in working capital -28.5 -25.3 -25.8 34.1 81.1 -38.8
Financial items and taxes -5.5 -7.7 -9.5 -5.0 -3.9 -5.8
--------------------------------------------------------------------------------
Cash flow from operating
activities -8.1 -20.8 -14.8 36.1 70.7 -51.7
Purchases of non-current assets -3.3 -2.6 -0.8 -1.1 -0.4 -2.1
Acquisitions 0.0 0.0 0.3 - - -
Disposals of non-current assets 16.7 0.1 3.9 7.8 1.8 3.1
--------------------------------------------------------------------------------
Cash flow before financing
activities 5.3 -23.3 -11.3 42.7 72.2 -50.7
--------------------------------------------------------------------------------
Hybrid capital loans 0.1 27.8 - - - -
Change in current debt -8.6 -6.5 -100.5 5.2 -12.2 51.4
Repayment of long-term debt 1.6 -20.6 - - - -
Dividends paid 0.0 0.0 -2.4 - - -
--------------------------------------------------------------------------------
Cash flow from financing
activities -6.8 0.7 -103.0 5.2 -12.2 51.4
Change in cash and equivalents -1.5 -22.6 -114.3 48.0 59.9 0.7
Cash and equivalents at the
beginning of the period 69.8 87.9 201.0 154.8 98.0 95.1
Effect of exchange rate changes
on cash held 4.1 4.5 1.1 -1.7 -3.1 2.2
Cash and equivalents at the end
of period 72.5 69.8 87.9 201.0 154.8 98.0
STRATEGIC BUSINESS UNITS, MEUR Q2/2010 Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
--------------------------------------------------------------------------------
Net sales
Consumer Electronics 251.7 170.0 211.1 243.5 328.1 344.6
System Solutions 80.6 50.6 54.5 88.2 107.9 125.3
--------------------------------------------------------------------------------
Net sales, total 332.3 220.5 265.5 331.7 436.0 470.0
Operating income
Consumer Electronics 1.3 -3.8 -11.2 -2.3 -4.6 -20.1
System Solutions 1.7 2.1 -0.1 6.9 1.5 -10.3
Group's non-allocated expenses/income
General &
Administrative
expenses -7.8 -10.7 -12.1 -7.6 -8.2 -7,2
Other expenses -2.2 -0.5 0.0 -0.3 -0.1 -0,7
--------------------------------------------------------------------------------
Operating income, total -6.9 -12.9 -23.4 -3.3 -11.5 -38.3
Restructuring expenses recognized in segment's operating income
Consumer Electronics -3.0 -1.3 -15.6 -1.5 0.0 -7.2
System Solutions -0.9 -0.9 -5.7 0.0 -0.4 -5.8
Group's non-allocated
expenses/income 0.0 -0.2 0.0 -0.2 0.0 -0.6
--------------------------------------------------------------------------------
Restructuring expenses, total -3.9 -2.3 -21.3 -1.7 -0.4 -13.6
Financial income and expenses 5.2 75.9 -12.9 -4.1 -11.9 -11.5
Share of profits and losses of
associates 0.0 0.0 0.0 -0.1 0.0 0.0
--------------------------------------------------------------------------------
Income before taxes -1.7 63.0 -36.4 -7.5 -23.4 -49.9
[HUG#1433073]
Elcoteq SE's Interim Report January - June 2010 (Unaudited)
| Source: Elcoteq
Pièces jointes
