STOCK EXCHANGE RELEASE
Free for publication on February 19, 2013, at 8.00 a.m. (CET+1)
ELEKTROBIT CORPORATION (EB) FINANCIAL STATEMENT BULLETIN 2012
NET SALES AND OPERATING RESULT OF 2012 GREW CLEARLY FROM THE PREVIOUS YEAR
EB reports its 2012 financial results, as provided by the IFRS5 standard,
divided between Continuing and Discontinuing Operations. Test Tools product
business, sold after the reporting period on January 31, 2013, is classified as
Discontinuing Operations in this financial statement. Summary of Continuing and
Discontinuing Operations is presented under section "Summary of Continuing and
Discontinuing Operations".
SUMMARY OCTOBER - DECEMBER 2012, CONTINUING OPERATIONS
* The fourth quarter financial figures include non-recurring items of
approximately EUR 4 million in total, booked as result of the financial
challenges faced by a Wireless Business Segment's US based customer of EB's
subsidiary, Elektrobit Inc.
* Net sales of the fourth quarter from continuing operations grew to EUR 52.6
million (EUR 44.1 million, 4Q 2011), representing an increase of 19.1 %
year-on-year. Net sales of Automotive Business Segment grew to EUR 36.2
million (EUR 28.0 million, 4Q 2011), representing a 29.2 % growth year-on-
year. The Wireless Business Segment's net sales from continuing operations
grew by 1.6 % to EUR 16.4 million (EUR 16.1 million, 4Q 2011).
* Operating profit from continuing operations was EUR 0.2 million including
the above mentioned non-recurring items of approximately EUR 4 million in
total (EUR 2.2 million including EUR 0.7 million non-recurring costs related
to collecting the receivables from TerreStar companies, 4Q 2011). Operating
profit from continuing operations without the above mentioned non-recurring
items was EUR 4.3 million (EUR 2.9 million, 4Q 2011).
* Operating profit of the Automotive Business Segment was EUR 3.3 million (EUR
2.1 million, 4Q 2011).
* Operating loss from continuing operations of the Wireless Business Segment's
was EUR -3.2 million including the above mentioned non-recurring items of
approximately EUR 4 million in total (operating profit of EUR 0.1 million
including EUR 0.7 million non-recurring costs related to the reorganization
cases of TerreStar companies, 4Q 2011). Operating profit from continuing
operations of Wireless Business Segment without the above mentioned non-
recurring items was EUR 0.9 million (EUR 0.8 million, 4Q 2011).
* EBITDA from continuing operations was EUR 2.3 million (EUR 3.8 million,
4Q 2011). Automotive Business Segment's EBITDA was EUR 4.5 million (EUR 3.1
million, 4Q 2011) and Wireless Business Segment's EBITDA from continuing
operations was EUR -2.3 million (EUR 0.7 million, 4Q 2011).
* Cash flow from operating activities was EUR 6.0 million (EUR 7.1 million,
4Q 2011). Net cash flow was EUR -2.8 million (EUR 2.7 million, 4Q 2011).
Both cash flows include continuing and discontinuing operations.
* Earnings per share from continuing operations were EUR 0.00 (EUR
0.01, 4Q 2011).
* On October 26, 2012 EB announced that Elektrobit Automotive GmbH, a
subsidiary of Elektrobit Corporation and Audi Electronics Venture GmbH
(AEV), a subsidiary of AUDI AG, have decided to expand their joint venture
activities from infotainment software to provide systems integration and
systems engineering services to AUDI AG and other VW Group companies for
their future connected infotainment solutions. To build the required
engineering competences and capacity, the joint venture has established a
new site in Ulm, Germany and plans to hire up to 100 R&D engineers by end of
2013 leveraging the existing knowledge base and competency in systems
integration and software development in Ulm area.
SUMMARY JANUARY - DECEMBER 2012, CONTINUING OPERATIONS
* The figures of the 2012 include following non-recurring items totaling
approximately EUR 4 million: non-recurring costs of EUR 1.2 million related
collecting the receivables from TerreStar Companies and non-recurring
income of EUR 1.2 million and a positive cash flow impact of EUR 10.8
million resulting from the settlement payment of USD 13.5 million received
in the reorganization case of TerreStar Corporation in the third quarter;
and non-recurring items of approximately EUR 4 million in total, booked in
the fourth quarter of 2012, as result of the financial challenges faced by a
US based customer of EB's subsidiary, Elektrobit Inc.
* Net sales from continuing operations in the reporting period was EUR 185.4
million (EUR 148.0 million in 2011), representing an increase of 25.3 %
year-on-year. Net sales of Automotive Business Segment grew to EUR 122.1
million (EUR 98.3 million in 2011), representing a 24.3 % growth year-on-
year. The Wireless Business Segment's net sales from continuing operations
grew by 27.7 %, to EUR 63.5 million (EUR 49.8 million in 2011).
* Operating profit from continuing operations was EUR 2.5 million including
the above mentioned non-recurring items of approximately EUR 4 million in
total (operating loss of EUR -5.5 million, including EUR 0.9 million non-
recurring costs related to collecting the receivables from TerreStar
Companies in 2011). Operating profit from continuing operations without
these above mentioned non-recurring items was EUR 6.5 million (operating
loss of EUR -4.6 million in 2011).
* Operating profit of the Automotive Business Segment was EUR 4.7 million (EUR
0.8 million in 2011). The Wireless Business Segment's operating loss from
continuing operations was EUR -2.2 million including the above mentioned
non-recurring items of approximately EUR 4 million in total (EUR -6.2
million, including EUR 0.9 million non-recurring costs related to collecting
the receivables from TerreStar Companies in 2011). Wireless Business
Segment's operating profit from continuing operations without these above
mentioned non-recurring items was EUR 1.8 million (operating loss of EUR
-5.3 million in 2011).
* EBITDA from continuing operations was EUR 9.8 million (EUR 3.0 million in
2011). Automotive Business Segment's EBITDA was EUR 9.0 million (EUR 6.0
million in 2011) and Wireless Business Segment's EBITDA from continuing
operations was EUR 0.7 million (EUR -3.3 million in 2011).
* Cash flow from operating activities was EUR 8.1 million (EUR 5.3 million in
2011) including an approximately EUR 10.8 million positive cash flow effect
resulting from the settlement payment in the reorganization cases of
TerreStar Corporation in the third quarter of 2012. Net cash flow was EUR
5.5 million (EUR -10.6 million in 2011). Both cash flows include continuing
and discontinuing operations.
* Cash and other liquid assets totaled EUR 15.5 million at the end of the
reporting period (EUR 10.0 million in 2011).
* Equity ratio was 54.7% (62.8% in 2011).
* Earnings per share from continuing operations were EUR 0.01 (EUR -0.05 in
2011).
* The Board of Directors proposes that the Annual General Meeting to be held
on April 11, 2013 resolve to pay EUR 0.01 per share, i.e. in total EUR
1,294,126.90, as dividend based on the adopted balance sheet for the
financial period of January 1, 2012 - December 31, 2012.
EB'S CEO JUKKA HARJU:
"During the last quarter of 2012 EB's net sales continued its strong growth.
Operating result from continuing operations was only slightly positive because
of the EUR 4.0 million non-recurring items that we had to book due to the
financial challenges of our Wireless Business Segment's US based customer. The
growth of Automotive Business Segment's net sales and operating profit were both
according to our plans. The net sales of Wireless Business Segment from
continuing operations grew slightly year-on-year but the operating result was
negative due to the non-recurring items mentioned above. With the exception of
these non-recurring items, net sales and operating result of Wireless Business
Segment developed as planned.
At the end of January 2013 EB sold its Test Tools product business to Anite for
EUR 31.0 million. For EB, this transaction gives good cash consideration for the
business, a significant non-recurring profit and cash increase, and it further
strengthens EB's financial position. After this divestiture, our Wireless
Business Segment is more focused in the markets which offer EB larger long term
growth potential.
EB's net sales from continuing operations during the whole year 2012 grew
strongly by approximately 25 per cent due to the growth of the both Business
Segments. Automotive Business Segment continued its strong growth that has
lasted for several years in the automotive software markets. It was especially
delightful that the Wireless Business Segment turned to growth, which growth
came from defence and public safety markets, as well as from the R&D services
markets for mobile infrastructure and wireless connectivity.
EB's operating result in 2012 improved clearly year-on-year and was EUR 2.5
million positive. Operating result was less than targeted due to the non-
recurring items and higher than expected costs in some projects. Operating
result without non-recurring items was EUR 6.5 million.
The settlement made with TerreStar Corporation in August, and the related
settlement payment of USD 13.5 million for our receivables concluded our 1.5
years long process of collecting the receivables from TerreStar Corporation in
its reorganization cases in the USA. The reorganization case of TerreStar
Networks is still ongoing.
The demand for EB's products and services is expected to remain good during
2013 and our main target is to increase the operating profit from the previous
year.
OUTLOOK FOR 2013
EB will apply the new IFRS10 and IFRS11 standards from the beginning of 2013 and
will consolidate e.solutions GmbH, the jointly owned company with Audi, applying
the proportionate consolidation method. EB holds a 51% stake in e.solutions
GmbH, Audi holding the remaining 49%. Previously e.solutions GmbH has been
included in EB's consolidated financial statements as subsidiary and it has been
consolidated in full. As a result of the change in the method of consolidation,
the proportion of net sales and operating result of e.solutions GmbH to be
consolidated into EB's consolidated financial statements will decrease. The
change in the method of consolidation as presented above has been taken into
account in the 2013 outlook for net sales and operating result presented below
and the 2012 net sales and operating result, presented for comparison, are pro
forma figures, assuming that proportionate consolidation method would have been
applied already in 2012. More information about this has been presented in the
stock exchange release announced today on February 19, 2013 and in this
financial statement bulletin in the section "Change in the consolidation of the
jointly owned company of EB and AUDI as of January 1, 2013".
Carmakers continue to invest in software for new car models and the market for
automotive software products and services is estimated to continue growing.
However the growth rate of the global automotive industry is estimated to be
less than in the previous year due to the financial uncertainties in Europe.
Despite these uncertainties, many carmakers have continued good financial
performance also during the end of 2012 and slowing down of the markets affects
different car makers in different ways. In the Wireless Business Segment the
demand growth will be driven especially by the increasing use of the LTE
technology that increases the performance of mobile networks, and the
authorities' needs for new communication solutions that use commercial
technologies of smart phones and mobile networks, as well as the growing need of
companies to provide wireless connectivity of their devices, targeted to
consumers and for professional use, to broader solutions. General cost saving
measures of the public sector reflects the demand in the public safety markets
in Europe.
EB expects for the year 2013 that net sales will grow and operating result to be
at the same level as it was in 2012 without non-recurring items (pro forma net
sales of EUR 173.8 million, and pro forma operating profit without non-recurring
items of EUR 5.1 million, in 2012). Operating result is expected to be clearly
better in the second half than in the first half of 2013 due to higher product
license sales in the Automotive Business Segment during the latter half of the
year and other seasonality factors, and due to the planned cost saving measures
in the first half in the Wireless Business Segment. The background to the cost
saving measures in the Wireless Business Segment are the planned sale of the
products and services to a US based customer will not materialize due to the
customer's financial challenges, and part of the common cost base of the
Wireless Business Segment that was previously allocated to the sold Test Tools
product business, was not included in the transaction.
More specific market outlook is presented under the "Business Segments'
development during October - December 2012 and Market Outlook" section.
The profit outlook for the year 2013 does not include the non-recurring net
profit of about EUR 23 million in the first quarter of 2013 resulting from the
sale of the Test Tools product business.
In addition, the profit outlook for the year 2013 does not include possible non-
recurring income or costs related to the reorganization cases of TerreStar
Networks Inc. More information about the reorganization cases of TerreStar
Networks and the amount of the receivables and collecting the receivables as
well as other uncertainties regarding the outlook is presented under "Risks and
Uncertainties" section.
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the Financial Statement Bulletin 2012 for
media, analysts and institutional investors in Finland, Oulu, Tutkijantie 8, on
Tuesday, February 19, 2013, at 11.00 a.m. (CET+1). The conference will also be
held as a conference call and the presentation will be shown simultaneously in
the Internet through WebEx. The conference will be held in English. For more
information please go to www.elektrobit.com/investors.
EB, Elektrobit Corporation
EB creates advanced technology and turns it into enriching end-user experiences.
EB is specialized in demanding embedded software and hardware solutions for
wireless and automotive industries. The net sales from continuing operations in
2012 totaled MEUR 185.4. Elektrobit Corporation is listed on NASDAQ OMX
Helsinki. www.elektrobit.com
ELEKTROBIT CORPORATION (EB) FINANCIAL STATEMENT BULLETIN 2012
EB reports its 2012 financial results, as provided by the IFRS5 standard,
divided between Continuing and Discontinuing Operations. Test Tools product
business, sold after the reporting period on January 31, 2013, is classified as
Discontinuing Operations in this financial statement. Summary of Continuing and
Discontinuing Operations is presented under section "Summary of Continuing and
Discontinuing Operations".
FINANCIAL PERFORMANCE DURING JANUARY-DECEMBER 2012, CONTINUING OPERATIONS
(Corresponding figures are for January-December 2011 unless otherwise indicated)
The figures of the 2012 include the following non-recurring items totaling
approximately EUR 4 million:
* non-recurring costs of EUR 1.2 million related collecting the receivables
from TerreStar Companies and non-recurring income of EUR 1.2 million and a
positive cash flow impact of EUR 10.8 million resulting from the settlement
payment of USD 13.5 million received in the reorganization case of TerreStar
Corporation in the third quarter; and
* non-recurring items of approximately EUR 4 million in total, booked in the
fourth quarter of 2012, as result of the financial challenges faced by a US
based customer of EB's subsidiary, Elektrobit Inc.
EB's net sales from continuing operations during January-December 2012 grew by
25.3 per cent year-on-year to EUR 185.4 million (EUR 148.0 million). Operating
profit from continuing operations, including the above mentioned non-recurring
items of approximately EUR 4 million in total, was EUR 2.5 million (operating
loss of EUR -5.5 million, including EUR 0.9 million non-recurring costs related
to collecting the receivables from TerreStar Companies). Operating profit from
continuing operations without these non-recurring items was EUR 6.5 million
(operating loss of EUR -4.6 million).
Net sales of the Automotive Business Segment grew in January-December 2012 to
EUR 122.1 million (EUR 98.3 million), representing 24.3 per cent growth year-on-
year. The operating profit was EUR 4.7 million (EUR 0.8 million).
The Wireless Business Segment's net sales from continuing operations in January-
December 2012 grew 27.7 per cent year-on-year, to EUR 63.5 million (EUR 49.8
million). The net sales grew in the defence and public safety markets, and in
the mobile infrastructure markets. The operating loss from continuing operations
of the Wireless Business Segment in January-December 2012 was EUR -2.2 million
including the above mentioned non-recurring items of approximately EUR 4 million
in total (operating loss of EUR -6.2 million including EUR 0.9 million non-
recurring costs related to collecting the receivables from TerreStar Companies).
Wireless Business Segment's operating profit from continuing operations without
the above mentioned non-recurring items was EUR 1.8 million (operating loss of
EUR -5.3 million).
+----------------------------------------------------------+---------+---------+
|CONSOLIDATED INCOME STATEMENT (MEUR) |1-12 2012|1-12 2011|
+----------------------------------------------------------+---------+---------+
| |12 months|12 months|
+----------------------------------------------------------+---------+---------+
|CONTINUING OPERATIONS | | |
+----------------------------------------------------------+---------+---------+
| Net sales | 185.4| 148.0|
+----------------------------------------------------------+---------+---------+
| Operating profit / loss | 2.5| -5.5|
+----------------------------------------------------------+---------+---------+
| Financial income and expenses | -0.5| -0.4|
+----------------------------------------------------------+---------+---------+
| Result before tax | 2.0| -5.9|
+----------------------------------------------------------+---------+---------+
|RESULT FOR THE YEAR FROM CONTINUING OPERATIONS | 2.1| -6.5|
+----------------------------------------------------------+---------+---------+
|RESULT FOR THE YEAR FROM DISCONTINUING OPERATIONS | 1.2| 1.5|
+----------------------------------------------------------+---------+---------+
|RESULT FOR THE YEAR | 3.3| -5.1|
+----------------------------------------------------------+---------+---------+
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 3.5| -5.2|
+----------------------------------------------------------+---------+---------+
| | | |
+----------------------------------------------------------+---------+---------+
|Result for the period attributable to: | | |
+----------------------------------------------------------+---------+---------+
| Equity holders of the parent | 2.3| -5.3|
+----------------------------------------------------------+---------+---------+
| Non-controlling interests | 1.0| 0.2|
+----------------------------------------------------------+---------+---------+
|Total comprehensive income for the period attributable to:| | |
+----------------------------------------------------------+---------+---------+
| Equity holder of the parent | 2.5| -5.5|
+----------------------------------------------------------+---------+---------+
| Non-controlling interests | 1.0| 0.2|
+----------------------------------------------------------+---------+---------+
| | | |
+----------------------------------------------------------+---------+---------+
|Earnings per share from continuing operations, EUR | 0.01| -0.05|
+----------------------------------------------------------+---------+---------+
* Cash flow from operating activities was EUR 8.1 million (EUR 5.3 million)
including an approximately EUR 10.8 million positive cash flow effect
resulting from the settlement payment in the reorganization cases of
TerreStar Corporation in the third quarter of 2012. Both cash flows include
continuing and discontinuing operations.
* Equity ratio was 54.7% (62.8%).
* Net gearing was 4.1% (-1.4%).
QUARTERLY FIGURES, CONTINUING OPERATIONS
Elektrobit Group's net sales and operating result, Continuing Operations, MEUR:
+------------------------------------------------+-----+-----+-----+-----+-----+
| |4Q 12|3Q 12|2Q 12|1Q 12|4Q 11|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Net sales | 52.6| 44.3| 43.6| 45.0| 44.1|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) | 0.2| 2.2| -0.7| 0.8| 2.2|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) without non-recurring | 4.3| 1.0| 0.2| 1.1| 2.9|
|costs | | | | | |
+------------------------------------------------+-----+-----+-----+-----+-----+
|Result before taxes | -0.2| 2.0| -0.3| 0.4| 2.4|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Result for the period | 1.3| 1.8| -0.1| 0.3| 3.2|
+------------------------------------------------+-----+-----+-----+-----+-----+
Wireless Business Segment, net sales and operating result without non-recurring
items, Continuing Operations, MEUR
+------------------------------------------------+-----+-----+-----+-----+-----+
| |4Q 12|3Q 12|2Q 12|1Q 12|4Q 11|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Net sales | 16.4| 14.1| 16.6| 16.4| 16.1|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) | -3.2| 2.0| -0.9| -0.1| 0.1|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) without non-recurring | | | | | |
|items | 0.9| 0.8| 0.0| 0.2| 0.8|
+------------------------------------------------+-----+-----+-----+-----+-----+
Non-recurring items are exceptional gains and costs that are not related to
normal business operations and occur only seldom. These items include capital
gains or losses, significant changes in asset values such as write-downs or
reversals of write-downs, significant restructuring costs, or other items that
the management considers to be non-recurring. When evaluating a non-recurring
item, the euro translation value of the item is considered, and in case of a
change in an asset value, it is measured against the total value of the asset.
Non-recurring items, mentioned in the tables above, are costs related to
collecting the receivables from TerreStar Companies and income resulting from
the settlement payment in the reorganization cases of TerreStar Corporation,
which are reported as a part of the Wireless Business Segment's operating
result, and non-recurring items of approximately EUR 4 million in total, booked
in the fourth quarter of 2012, as result of the financial challenges faced by a
US based customer of EB's subsidiary, Elektrobit Inc. These non-recurring items
have been reported as part of Wireless Business Segment's operating result.
The distribution of net sales by Business Segments, Continuing Operations,
MEUR:
+-----------------+-----+-----+-----+-----+-----+
| |4Q 12|3Q 12|2Q 12|1Q 12|4Q 11|
+-----------------+-----+-----+-----+-----+-----+
|Automotive | 36.2| 30.2| 27.0| 28.7| 28.0|
+-----------------+-----+-----+-----+-----+-----+
|Wireless | 16.4| 14.1| 16.6| 16.4| 16.1|
+-----------------+-----+-----+-----+-----+-----+
|Corporation total| 52.6| 44.3| 43.6| 45.0| 44.1|
+-----------------+-----+-----+-----+-----+-----+
The distribution of net sales by market areas, Continuing Operations, MEUR and
%:
+--------+------+------+------+------+------+
| | 4Q 12| 3Q 12| 2Q 12| 1Q 12| 4Q 11|
+--------+------+------+------+------+------+
|Asia | 2.4| 3.1| 1.1| 1.9| 3.1|
| | 4.5 %| 7.1 %| 2.6 %| 4.2 %| 7.0 %|
+--------+------+------+------+------+------+
|Americas| 6.4| 7.6| 7.5| 7.1| 6.3|
| |12.1 %|17.2 %|17.2 %|15.9 %|14.2 %|
+--------+------+------+------+------+------+
|Europe | 43.8| 33.5| 34.9| 36.0| 34.8|
| |83.4 %|75.7 %|80.2 %|79.9 %|78.8 %|
+--------+------+------+------+------+------+
Net sales and operating profit development by Business Segments and other
businesses, Continuing Operations, MEUR:
+-------------------------------+-----+-----+-----+-----+-----+
| |4Q 12|3Q 12|2Q 12|1Q 12|4Q 11|
+-------------------------------+-----+-----+-----+-----+-----+
|Automotive | | | | | |
|Net sales to external customers| 36.2| 30.2| 27.0| 28.7| 28.0|
|Net sales to other segments | 0.0| 0.0| 0.0| 0.0| 0.0|
|Operating profit (loss) | 3.3| 0.2| 0.2| 0.9| 2.1|
+-------------------------------+-----+-----+-----+-----+-----+
|Wireless | | | | | |
|Net sales to external customers| 16.4| 14.1| 16.6| 16.3| 16.1|
|Net sales to other segments | 0.0| 0.0| 0.0| 0.2| 0.1|
|Operating profit (loss) | -3.2| 2.0| -0.9| -0.1| 0.1|
+-------------------------------+-----+-----+-----+-----+-----+
|Other businesses | | | | | |
|Net sales to external customers| 0.0| 0.0| 0.0| 0.0| 0.0|
|Operating profit (loss) | 0.1| -0.0| -0.0| -0.0| 0.0|
+-------------------------------+-----+-----+-----+-----+-----+
|Total | | | | | |
|Net sales | 52.6| 44.3| 43.6| 45.0| 44.1|
|Operating profit (loss) | 0.2| 2.2| -0.7| 0.8| 2.2|
+-------------------------------+-----+-----+-----+-----+-----+
SUMMARY OF CONTINUING AND DISCONTINUING OPERATIONS
+--------------------------+-----+-----+-----+-----+-----+
| | 2012|4Q 12|3Q 12|2Q 12|1Q 12|
+--------------------------+-----+-----+-----+-----+-----+
|Net sales | | | | | |
+--------------------------+-----+-----+-----+-----+-----+
| Continuing operations |185.4| 52.6| 44.3| 43.6| 45.0|
+--------------------------+-----+-----+-----+-----+-----+
| Discontinuing operations| 16.1| 5.4| 2.7| 4.4| 3.6|
+--------------------------+-----+-----+-----+-----+-----+
| Total |201.5| 57.9| 47.0| 48.0| 48.6|
+--------------------------+-----+-----+-----+-----+-----+
| | | | | | |
+--------------------------+-----+-----+-----+-----+-----+
|Operating profit / loss | | | | | |
+--------------------------+-----+-----+-----+-----+-----+
| Continuing operations | 2.5| 0.2| 2.2| -0.7| 0.8|
+--------------------------+-----+-----+-----+-----+-----+
| Discontinuing operations| 1.3| 1.0| -0.1| 0.3| 0.1|
+--------------------------+-----+-----+-----+-----+-----+
| Total | 3.7| 1.2| 2.1| -0.4| 0.9|
+--------------------------+-----+-----+-----+-----+-----+
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
Annual General Meeting, held on March 26, 2012, approved the annual accounts for
the financial year 2011, discharged the Company's management from liability,
decided according to the proposal by the Company's Board of Directors, that no
dividend shall be paid, confirmed the Board members and the auditor and their
remuneration. The Board of Directors was authorized to decide on the repurchase
of the Company's own shares, the issuance of shares as well as the issuance of
special rights entitling to shares.
On May 11, 2012 EB announced to have signed committed credit facility agreements
with Nordea Bank Finland plc. According to the agreements, the EUR 10 million
credit facility agreement, valid until June 30, 2012, was extended and, in
addition, a new EUR 10 million revolving credit facility agreement was signed.
These facilities, intended for general financing purposes, are valid until June
30, 2014.
On June 21, 2012 EB lowered its operating result guidance for the first half of
2012 and gave more precise guidance for the whole year 2012 so that EB expected
the operating result of the second quarter of 2012 to stay below the level of
the first quarter 2012 (EUR 0.9 million, 1Q 2012), and that EB expected for the
first half of 2012 that net sales will grow clearly from the previous year (EUR
76.1 million in 1H 2011), and the operating result will be close to zero level
(operating loss of EUR -4.4 million, 1H 2011). EB announced that due to the
lowered operating result outlook for the first half of 2012 also the outlook for
the whole year 2012 was lowered, however, EB still expects for the year 2012,
that the net sales and operating result will grow clearly from the previous year
(net sales of EUR 162.2 million, and operating loss of EUR -4.0 million in
2011). The reason for the changed operating result outlook was, that the company
booked a provision of EUR 0.8 million due to the estimated costs related to
collecting the receivables from TerreStar Companies, and in addition, it became
obvious, that the operating profit in both Automotive and Wireless Business
Segments during the second quarter of 2012 will remain somewhat lower than
planned mainly due to the higher than estimated project costs. Regarding the
company's net sales, the outlook was not changed.
On August 2, 2012 Elektrobit Inc. (a subsidiary of Elektrobit Corporation) and
TerreStar Corporation and certain of its preferred shareholders entered into a
settlement between the parties in resolution of all disputes between EB and
other parties in the TerreStar Corporation Chapter 11 reorganization cases under
United States Bankruptcy Code. On August 24, 2012, the United States Bankruptcy
Court formally approved the settlement. EB received a cash payment of USD 13.5
million (EUR 10.8 million) in full and final satisfaction of its claim against
TerreStar Corporation and in resolution of all disputes between EB and other
parties on August 28, 2012. The settlement does not include the TerreStar
Networks Chapter 11 cases, which remain pending, and does not include any
distribution therefrom that may be available for EB. The settlement payment in
the TerreStar Corporation Chapter 11 cases resulted a non-recurring positive
effect of approximately USD 1.6 million (EUR 1.2 million) to EB's operating
result, and a non-recurring positive effect of USD 13.5 million (EUR 10.8
million) to EB's cash flow in the third quarter of this year.
On October 26, 2012 EB announced that Elektrobit Automotive GmbH, a subsidiary
of Elektrobit Corporation and Audi Electronics Venture GmbH (AEV), a subsidiary
of AUDI AG, have decided to expand their joint venture activities from
infotainment software to provide systems integration and systems engineering
services to AUDI AG and other VW Group companies for their future connected
infotainment solutions. To build the required engineering competences and
capacity, the joint venture announced to establish a new site in Ulm, Germany
and plans to hire up to 100 R&D engineers by end of 2013 leveraging the existing
knowledge base and competency in systems integration and software development in
Ulm area. EB announced, that the expansion of the joint venture has no
significant impact on the net sales, operating result and balance sheet of EB in
2012 and 2013, and thereby no material impact on EB's financial outlook for
2012.
BUSINESS SEGMENTS' DEVELOPMENT DURING OCTOBER-DECEMBER 2012 AND MARKET OUTLOOK
(Corresponding figures are for October-December 2011 unless otherwise indicated)
EB's reporting is based on two segments which are the Automotive and Wireless
Business Segments.
AUTOMOTIVE
In Automotive Business Segment EB offers software products and R&D services for
carmakers, car electronics suppliers and other suppliers to the automotive
industry. The offering includes in-car infotainment solutions, such as
navigation and human machine interfaces (HMI), as well as software for
electronic control units (ECU) and driver assistance. By combining its software
products and R&D services, EB is creating unique, customized solutions for the
automotive industry. EB's software products are: EB street director navigation
software, EB GUIDE HMI development and speech dialogue platform, EB tresos
product line of software components used in ECUs and tools for their
configuration, and EB Assist ADTF, an extensive software development kit for
driver assistance solutions. These software products generate license fees,
often combined with supply of R&D services for customized solutions.
EB and Audi's subsidiary, Audi Electronics Venture GmbH (AEV), have the joint
venture e.solutions GmbH that is currently developing infotainment software and
provides systems engineering and systems integration services for Volkswagen
Group car models. EB owns 51% of e.solutions GmbH and AEV 49%. During 2009 -
2012 e.solutions has been included as subsidiary in Elektrobit Corporation's
consolidated financial statements. From the beginning of 2013 on, e.solutions
GmbH will be consolidated in Elektrobit Corporation's financial statements
according to IFRS standards' proportionate consolidation method in accordance
with EB's 51 % holding of e.solutions GmbH. At the end of 2012, the joint
venture had more than 200 employees, and its head office is located in
Ingolstadt, Germany. EB also delivers products and R&D services to the joint
venture.
During the fourth quarter of 2012 the net sales of the Automotive Business
Segment amounted to EUR 36.2 million (EUR 28.0 million), representing a growth
of 29.2 % year-on-year. The operating profit was EUR 3.3 million (2.1 million).
EB's automotive business continued to grow in the infotainment, driver
assistance and ECU (Electronic Control Unit) software markets. In October, EB
GUIDE 5.4 was launched. The new version of EB GUIDE is a complete software
solution that includes support for speech, multi-touch, gesture interaction and
a technology demonstrator for integration of web-based applications based on
HTML5.
e.solutions GmbH progressed well and according to its targets in developing
high-end infotainment systems. In October, EB announced to expand their joint
venture activities in e.solutions GmbH to include systems engineering and
provide systems integration services to AUDI AG and other VW Group companies for
their future connected infotainment solutions. To build the required engineering
competences and capacity, the joint venture announced to establish a new site in
Ulm, Germany. By end of 2013 e.solutions is planning to hire up to 100 R&D
engineers in Ulm, leveraging the existing knowledge base and competency in
systems integration and software development.
In December, EB announced that the new VW Gold VII, launched in autumn 2012, has
EB's speech dialogue software EB GUIDE STF and navigation software, EB street
director, integrated in its standard infotainment system.
Automotive Market Outlook
The demand for EB's products and services is estimated to develop positively
year-on-year during 2013 in Automotive Business Segment. Recently the
uncertainty in the market outlook for the global car industry has grown
especially in Europe where the number of cars sold is expected to decrease in
2013 from 2012, while in USA, China and other developing countries the market is
expected to grow. Despite the uncertainties, many carmakers have continued good
financial performance also during the second half of 2012. The slowing down of
the markets affects decreasingly also to the carmakers' R&D investments.
However, carmakers will continue to invest in automotive software for new car
models and the market for automotive software products and services is estimated
to continue growing during 2013, but at a slower pace than in the years before.
In the labor market, particularly in Germany, competition of talented engineers
still is tight and is slightly slowing down the growth of personnel and thereby
impacting the growth of the services business. e.solutions GmbH, the joint
venture with Audi, succeeded to grow its personnel significantly during the end
of 2012 after announcing the decision to expand its business, and the outlook
for the joint venture's growth in 2013 is good.
A Roland Berger study estimates the share of electronics in cars will grow from
23 per cent in 2010 to 33 per cent until 2020. The move to greater electronic
content in cars has been underway for several years and has been responsible for
such major innovations as security systems, anti-lock brakes, engine control
units, driver assistance, and infotainment. These features have become so
enormously popular that they are now widely available, in both low-end and high-
end vehicles, demonstrating that consumers are willing to pay for technology
that enhances their driving experience. Further market growth is expected e.g.
in the areas of Driver Assistance and Connected Car solutions. Connectivity with
the cloud can provide several enhancements to car functions such as navigation.
EB is already working with Inrix and other traffic providers to have real-time
traffic which, when accurate, can provide navigation with daily relevance to the
drivers. Audi Connect is one example of advanced connected services into the
car.
The increasingly sophisticated and networked features and growing performance
foster the complexity of automotive electronics. At the same time consumers
expect the same richness of features and user experience they know from the
internet and mobile devices also within the car. Carmakers have been steadily
integrating more electronic components into vehicles. These development trends
are driving the industry towards gradual separation of software and hardware in
electronics solutions in order to manage the architectural software layer
appropriately and to aim for efficiency in innovation and implementation. The
use of standard software solutions is expected to increase in the automotive
industry. This enables faster innovation, improves quality and development
efficiency and reduces complexity related to deployment of software.
The fundamental industry migration and consequent growth of the automotive
software market will continue. Cost pressures of the automotive industry are
expected to accelerate the need for productized and efficient software solutions
EB is offering. The estimated annual automotive software market growth rate
until 2019 is expected to exceed the growth rate of passenger car production
volume that is estimated to be 5.5% CAGR (LMC Automotive's Q4 2012 Forecast).
EB's net sales cumulating from the automotive industry is currently primarily
driven by the development of software and software platforms for new cars and by
sales of software licenses needed in product development. Hence the dependency
of EB's net sales on car production volumes is currently limited; however, the
direct dependency on production volumes is expected to increase over the
forthcoming years as a result of the EB's transition towards software product
business models.
WIRELESS
In the Wireless Business Segment EB offers products and product platforms for
defence and public safety markets as well as for the industrial use, and product
development services and customized solutions for wireless communications
markets and for other companies needing wireless connectivity for their devices
targeted for consumers or professional use. EB's products in the Wireless
Business Segment are the EB Tactical Wireless IP Network for tactical
communications, EB Tough Voip for tactical IP-based communication, EB Wideband
COMINT Sensor for signals intelligence. The product platforms are EB Counter
RCIED Platform for electronic warfare, the Android-based EB Specialized Device
Platform and EB LTE Connectivity Module for specialized markets. For the latest
wireless technologies and applications EB offers a broad range of R&D services
such as consulting, integration, software and hardware development.
EB signed an agreement with Anite plc on January 28, 2013, under the terms of
which EB agreed to sell its Test Tools product business to Anite. The deal was
completed on January 31, 2013. EB reports its 2012 financial results, as
provided by the IFRS5 standard, divided between Continuing and Discontinuing
Operations. Test Tools product business is classified as Discontinuing
Operations in this financial statement. The following figures include only the
net sales and operating result of Continuing Operations.
Net sales of continuing operations of the Wireless Business Segment during the
fourth quarter of 2012 grew by 1.6 % year-on-year to EUR 16.4 million (EUR 16.1
million). Operating loss from continuing operations was EUR -3.2 million
including non-recurring items of approximately EUR 4 million in total that was
booked due to the financial challenges of Wireless Business Segment's US based
customer of EB's subsidiary Elektrobit Inc. (operating profit of EUR 0.1 million
including non-recurring costs of EUR 0.7 million from collecting the receivables
from TerreStar Companies). Wireless Business Segment's operating profit without
these above mentioned non-recurring items was EUR 0.9 million (operating profit
of EUR 0.8 million).
EB continued its R&D investments in continuing operations in products and
product platforms targeted for the defence and public safety markets. During the
fourth quarter, EB made the first deliveries of its Tough VoIP tactical
communications system and the first series of Tactical Wireless IP network
products to the Finnish Defence Forces.
Wireless Market Outlook
In the Wireless Business Segment, EB's customers operate in various industries,
each of them having own industry specific factors driving the demand. A common
factor creating demand among the whole customer base is the introduction of new
technologies. The implementation of LTE (Long Term Evolution) technology
continues to be the most important technological change driving the demand, and
in 2013 EB's business driven by LTE is expected to stay at the same level as in
2012. Mastering of multi-radio technologies and end-to-end system architectures
covering both terminals and networks has gained importance in the complex
wireless technology industry.
The global defence market is estimated to remain stable during 2013. EB
currently aims at bringing its products to the global defence market with the
target to gradually increase the product sales in the next few years. The
development of defence budgets varies geographically with budget cuts in the
western markets and increases in Asia and South America. In Tactical
Communications, the growing importance of situational awareness shared by
military forces creates a need for new broadband networks, such as EB's IP
(Internet Protocol) based tactical communications solutions. The defence market
is characterized by long sales cycles driven by purchasing programs of national
governments, and the purchases of the selected products take place over several
years.
For the markets of national security and other authorities, EB offers
specialized customized solutions based on its product platforms. The trend of
adopting new commercial technologies, such as LTE and smart phone related
software applications, is expected to continue in special verticals such as
public safety. The specific LTE frequency band allocations for authorities
create demand for customized LTE devices. These markets have special
requirements and the volumes are lower than in the mass-markets. The US public
safety market is progressing, although slowly, towards a nationwide LTE
network.
In the mobile infrastructure market the use of LTE technology is expected to
continue strong. For the mobile infrastructure market this creates the need for
services for LTE base station design. There is a wide range of frequencies
allocated for LTE globally thus creating a need to develop multiple products to
cover the market, and creating a need for R&D services for design of product
variants. Need for R&D services for connected devices for various end user needs
emerged during 2012 and this trend is expected to continue in 2013.
RESEARCH AND DEVELOPMENT
EB continued its investments in R&D in the automotive software products and
tools in Automotive Business Segment, and in products and product platforms for
the defence and public safety markets in Wireless Business Segment's continuing
operations.
The total R&D investments for continuing operations during January-December
2012 were EUR 22.2 million (EUR 22.1 million in 2011), equaling 12.0% of the net
sales (15.0 % in 2011). The share of R&D investments in Automotive Business
Segment was EUR 18.1 million (EUR 18.0 million in 2011) and in Wireless Business
Segment in continuing operations EUR 4.1 million (EUR 4.1 million in 2011). In
addition, R&D investments for the discontinuing operations were EUR 2.6 million.
EUR 2.9 million of R&D investments of the reporting period were capitalized (EUR
6.6 million in 2011). Depreciations of R&D investments were EUR 0.9 million
during the reporting period (EUR 1.6 million in 2011). The amount of capitalized
R&D investments at the end of December 2012 was EUR 13.5 million. A significant
part of these capitalizations is related to customer agreements of Automotive
Business Segment, where future license fees, based on the actual car delivery
volumes, are expected to accumulate in the coming years.
OUTLOOK FOR 2013
EB will apply the new IFRS10 and IFRS11 standards from the beginning of 2013 and
will consolidate e.solutions GmbH, the jointly owned company with Audi, applying
the proportionate consolidation method. EB holds a 51% stake in e.solutions
GmbH, Audi holding the remaining 49%. Previously e.solutions GmbH has been
included in EB's consolidated financial statements as subsidiary and it has been
consolidated in full. As a result of the change in the method of consolidation,
the proportion of net sales and operating result of e.solutions GmbH to be
consolidated into EB's consolidated financial statements will decrease. The
change in the method of consolidation as presented above has been taken into
account in the 2013 outlook for net sales and operating result presented below
and the 2012 net sales and operating result, presented for comparison, are pro
forma figures, assuming that proportionate consolidation method would have been
applied already in 2012. More information about this has been presented in the
stock exchange release announced today on February 19, 2013 and in this
financial statement bulletin in the section "Change in the consolidation of the
jointly owned company of EB and AUDI as of January 1, 2013".
Carmakers continue to invest in software for new car models and the market for
automotive software products and services is estimated to continue growing.
However the growth rate of the global automotive industry is estimated to be
less than in the previous year due to the financial uncertainties in Europe.
Despite these uncertainties, many carmakers have continued good financial
performance also during the end of 2012 and slowing down of the markets affects
different car makers in different ways. In the Wireless Business Segment the
demand growth will be driven especially by the increasing use of the LTE
technology that increases the performance of mobile networks, and the
authorities' needs for new communication solutions that use commercial
technologies of smart phones and mobile networks, as well as the growing need of
companies to provide wireless connectivity of their devices, targeted to
consumers and for professional use, to broader solutions. General cost saving
measures of the public sector reflects the demand in the public safety markets
in Europe.
EB expects for the year 2013 that net sales will grow and operating result to be
at the same level as it was in 2012 without non-recurring items (pro forma net
sales of EUR 173.8 million, and pro forma operating profit without non-recurring
items of EUR 5.1 million, in 2012). Operating result is expected to be clearly
better in the second half than in the first half of 2013 due to higher product
license sales in the Automotive Business Segment during the latter half of the
year and other seasonality factors, and due to the planned cost saving measures
in the first half in the Wireless Business Segment. The background to the cost
saving measures in the Wireless Business Segment are the planned sale of the
products and services to a US based customer will not materialize due to the
customer's financial challenges, and part of the common cost base of the
Wireless Business Segment that was previously allocated to the sold Test Tools
product business, was not included in the transaction.
More specific market outlook is presented under the "Business Segments'
development during October - December 2012 and Market Outlook" section.
The profit outlook for the year 2013 does not include the non-recurring net
profit of about EUR 23 million in the first quarter of 2013 resulting from the
sale of the Test Tools product business.
In addition, the profit outlook for the year 2013 does not include possible non-
recurring income or costs related to the reorganization cases of TerreStar
Networks Inc. More information about the reorganization cases of TerreStar
Networks and the amount of the receivables and collecting the receivables as
well as other uncertainties regarding the outlook is presented under "Risks and
Uncertainties" section.
RISKS AND UNCERTAINTIES
EB has identified a number of business, market and finance related risk factors
and uncertainties that can affect the level of sales and profits.
Market risks
In the ongoing financial period, global economic uncertainty may affect the
demand for EB's services, solutions and products and provide pressure on e.g.
pricing. In the short term such uncertainty may affect, in particular, the
utilization and chargeability levels and average hourly prices of R&D services.
As EB's customer base consists mainly of companies operating in the fields of
automotive and telecommunications and defense and public safety authorities, the
company is exposed to market changes in these industries. EB believes that
expanding the customer base will reduce dependence on individual companies and
that the company will thereby be mainly affected by the general business climate
in automotive and telecommunication industries. The more specific market outlook
is presented under the "Business Segments' Development during the fourth quarter
2012 and Market Outlook" section.
Business related risks
EB's operative business risks are mainly related to following items:
uncertainties and short visibility on customers' product program decisions,
their make or buy decisions and on the other hand, their decisions to continue,
downsize or terminate current product programs, execution and management of
large customer projects, ramping up and down project resources, availability of
personnel in labor markets (in particular in Germany), timing and on the other
hand successful utilization of the most important technologies and components,
competitive situation and potential delays in the markets, timely closing of
customer and supplier contracts with reasonable commercial terms, delays in R&D
projects, realization of expected return on capitalized R&D investments,
obsolescence of inventories and technology risks in product development causing
higher than planned R&D costs. Revenues expected to come from either existing or
new products and customers include normal timing risks. EB has certain
significant customer projects and deviation in their expected continuation could
result also significant deviations in the Company's outlook. In addition there
are typical industry warranty and liability risks involved in selling EB's
services, solutions and products.
EB's product delivery business model faces such risks as high dependency on
actual product volumes and development of the cost of materials. The above-
mentioned risks may manifest themselves as lower amounts of product delivered or
higher costs of production, and ultimately, as lower profit.
Some of EB's businesses operate in industries that are heavily reliant on patent
protection and therefore face risks related to management of intellectual
property rights, on the one hand related to accessibility on commercially
acceptable terms of certain technologies in the EB's products and services, and
on the other hand related to an ability to protect technologies that EB develops
or licenses from others from claims that third parties' intellectual property
rights are infringed. Additionally, parties outside of the industries operate
actively in order to protect and commercialize their patents and therefore in
their part increase the risks related to the management of intellectual property
rights. At worst, claims that third parties' intellectual property rights are
infringed, could lead to substantial liabilities for damages. Also EB has
received a formal request from one of its customers for indemnification that is
unspecified both in terms of the basis of liability and the amount claimed.
While the analysis of the situation is pending, based on information available
it does not seem likely that the claim would result in significant liability in
the short term. It is possible that, based on later information, the above views
may need to be reconsidered.
Financing risks
Global economic uncertainty may lead to payment delays, increase the risk for
credit losses and weaken the availability and terms of financing. To fund its
operations, EB relies mainly on income from its operative business and may from
time to time seek additional financing from selected financial institutions.
Currently EB has a committed overdraft credit facility agreement of EUR 10
million and committed revolving credit facility agreement of EUR 10 million,
valid until June 30, 2014. These agreements include financial covenants related
to group's equity ratio and earnings before interest and taxes (EBITDA), to be
reviewed semiannually. There is no assurance that additional financing will not
be needed in case of clearly weaker than expected development of EB's
businesses.
Some parts of EB's business are more sensitive to customer dependency than
others. Respectively, this may translate as accumulation of risk with respect to
outstanding receivables and ultimately with respect to credit losses. EB has
asserted claims for its receivables in the amount of approximately USD 25.8
million (EUR 19.3 million as per exchange rate of February 18, 2013) in the
Chapter 11 cases of its customers TerreStar Networks Inc. and its parent company
TerreStar Corporation. In addition to the booked receivables, EB has also
asserted claims for additional costs in the amount of approximately USD 2.1
million (EUR 1.6 million as per exchange rate of February 18, 2013) and
resulting mainly from the ramp down of the business operations between the
parties. Thus, EB has asserted claims against each of the TerreStar entities in
amounts totaling USD 27.9 million (EUR 20.9 million as per exchange rate of
February 18, 2013). Due to uncertainties related to the accounts receivable, EB
booked an impairment of the accounts receivable in the amount of EUR 8.3 million
during the second half of 2010.
On October 19, 2010, TerreStar Networks and certain other affiliates of
TerreStar Corporation, and on February 16, 2011, the parent company TerreStar
Corporation filed voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code to strengthen their financial position. Generally
in a Chapter 11 case, any distribution of cash or other assets by a debtor to
satisfy pre-bankruptcy claims of its creditors must be made under a Chapter 11
plan of reorganization or liquidation, or otherwise pursuant to an order of the
bankruptcy court.
A plan of liquidation for Terre Star Networks became effective on March
29, 2012. On that date, EB received a USD 650,890 distribution from TerreStar
Networks on that portion of its claim entitled to payment priority under U.S.
bankruptcy law. Based upon information contained in the debtors' disclosure
statement accompanying the plan, the reorganized debtors' post-confirmation
status reports, or otherwise available to EB, EB estimates that its pro rata
total distribution under the plan may be in the range of 8-10% of the face
amount of its claim. However, this estimate is subject to various assumptions,
and therefore the amount and timing of EB's distribution on the remaining
portion of its claim cannot be predicted with certainty at this time.
As part of the Chapter 11 process, debtors often seek to recover payments
previously made to creditors pursuant to various provisions of the Bankruptcy
Code. While EB received certain payments that total approximately USD 2.5
million during the 90 days prior to TerreStar Networks' bankruptcy filing, and
the liquidating trustee (the "Liquidating Trustee") of The TerreStar Networks
Inc. Liquidating Trust (the trust having been formed in connection with
confirmation of the Chapter 11 plan of TerreStar Networks) contemplates
commencing actions against certain defendants, including EB, to recover such
allegedly preferential transfers, EB believes that it has strong defenses to
any such litigation. Therefore, if the Liquidating Trustee commences litigation
to recover such payments from EB, such litigation will be vigorously contested
by EB. EB has entered into a tolling agreement with the Liquidating Trustee
which, as amended, has extended the two-year avoidance action statute of
limitations from October 19, 2012 through and including April 23, 2013, with a
view to determining whether the parties may be able to reach a consensual
resolution of these matters without incurring the cost and expense of
litigation.
Further, as part of the process of reconciling accounts in preparation for
making distributions under a plan, Chapter 11 debtors often challenge the amount
or validity of some creditor claims. To date neither TerreStar Networks nor the
Liquidating Trustee has asserted an objection to the amount or validity of EB's
claims in its bankruptcy proceeding but, as part of the claims reconciliation
process, EB expects to provide the Liquidating Trustee with additional
information and documents in support of certain elements of its claim that were
filed in estimated or unliquidated amounts. If the Liquidating Trustee were to
commence an action against EB to recover allegedly preferential transfers, EB
anticipates that the trustee would seek to delay any distribution to EB on its
claim pending resolution of the preference litigation and repayment by EB of any
adverse judgment. The likelihood and outcome of any such dispute cannot be
predicted with certainty at this time.
Pursuant to an order of the bankruptcy court dated August 24, 2012, Elektrobit
Inc., a subsidiary of EB, and TerreStar Corporation and certain of its preferred
shareholders, entered into a full and final settlement of various disputes that
had arisen between them in the TerreStar Corporation reorganization cases.
Pursuant to this settlement, on August 28, 2012 TerreStar Corporation made a
cash payment to Elektrobit Inc. of USD 13.5 million in full and final
satisfaction of EB's claim against that entity. The settlement did not include
the TerreStar Networks Chapter 11 cases and did not include any distribution
from those cases that may be available to EB. On October 24, 2012, the
bankruptcy court entered an order approving a plan of reorganization for
TerreStar Corporation and various affiliates (not including TerreStar Networks)
which contains a provision specifically preserving the rights of EB and all
other parties in interest with respect to EB's claim against TerreStar Networks.
Based on EB's current understanding, there is no reason to believe that EB would
not be able to collect from the bankruptcy estate of TerreStar Networks the full
amount of the pro rata distribution on its general unsecured claim in due
course. It is possible that based on later information related to the TerreStar
Networks Chapter 11 cases, the above views may need to be reconsidered. Should
the amount of the pro rata distribution on EB's general unsecured claim not be
collected from the bankruptcy estate of TerreStar Networks, and should the
Liquidating Trustee commence litigation resulting an order for EB to repay
certain allegedly preferential transfers, costs related to the process would
additionally lower EB's operating result on a non-recurring basis by
approximately EUR 2 million at maximum.
Based on the information received, the U.S. Internal Revenue Service ("IRS") has
disallowed a deduction taken on EB's subsidiary's, Elektrobit Inc.'s 2010 U.S.
federal income tax return due to an impairment booked with respect to the
receivables from the TerreStar companies. EB has appealed the IRS decision to
the IRS Office of Appeals from which the decision is expected to be given during
the second half of 2013. It is possible to appeal the decision of the IRS Office
of Appeals to the United States Tax Court, in which case the appeal will
typically take approximately two years.
If the appeal would proceed to the United States Tax Court and if the resolution
of the litigation would result in a complete rejection of the booked tax
deduction in 2010, EB would be obliged to pay back the tax refund in full with
accrued interest. At worst, as a result of the pay back of the tax refund and
the respective interest expenses and litigation expenses, there would be a
negative effect on EB's cash flow of approximately of EUR 2.0 million (USD 2.7
million as per exchange rate of February 18, 2013). Depending on the progression
of the appellate process, such effects would be booked probably in 2016. Based
on EB's current understanding, there is no reason to believe that the IRS'
current position concerning year 2010 would remain as such in the appellate
process. It is possible that based on later information received the situation
may need to be reconsidered. It is also possible that during the appellate
process, the parties may enter into a settlement of this matter.
More information on the risks and uncertainties affecting EB can be found on the
Company's website at www.elektrobit.com. In addition, more information on
TerreStar Networks Inc.'s and its parent company TerreStar Corporation's
reorganization cases are presented in the October 20 and 25, November 20 and
December 30, 2010, February 17, 2011, November 18, 2011, June 21, 2012, August
3, 2012, August 24, 2012 and August 28, 2012 stock exchange releases as well as
in EB's interim reports and financial statements at www.elektrobit.com.
STATEMENT OF FINANCIAL POSITION AND FINANCING
The figures presented in the statement of financial position of December
31, 2012, are compared with the statement of the financial position of December
31, 2011 (MEUR).
12/2012 12/2011
Non-current assets 47.8 44.1
Current assets 87.2 71.0
Assets classified as held for sale 7.7
Total assets 142.7 115.1
Share capital 12.9 12.9
Other equity 53.7 52.6
Non-controlling interests 2.5 1.5
Total shareholders' equity 69.1 67.0
Non-current liabilities 7.9 6.9
Current liabilities 61.2 41.3
Liabilities classified as held for sale 4.5
Total shareholders' equity and liabilities 142.7 115.1
Net cash flow from operations during the period under review:
+ net profit +/- adjustment of accrual basis items EUR +12.6 million
+/- change in net working capital EUR -3.3 million
- interest, taxes and dividends EUR -1.3 million
= cash generated from operations EUR +8.1 million
- net cash used in investment activities EUR -8.7 million
- net cash used in financing EUR +6.1 million
= net change in cash and cash equivalents EUR +5.5 million
The increase in the net working capital during the reporting period is resulting
from EB's customer projects which have longer payment periods than earlier.
The amount of accounts receivable and other receivables, booked in current
receivables, was EUR 75.9 million including assets classified as held for sale
of EUR 4.5 million (EUR 59.3 million on December 31, 2011). Accounts payable and
other payables, booked in interest-free current liabilities, were EUR 52.8
million including liabilities classified as held for sale of EUR 4.3 million
(EUR 36.3 million on December 31, 2011). The amount of non-depreciated
consolidation goodwill at the end of the period under review was EUR 19.3
million (EUR 19.3 million on December 31, 2011).
The amount of gross investments in the period under review was EUR 12.2 million
including R&D capitalizations of EUR 2.9 million. Net investments for the
reporting period totaled EUR 11.8 million. The total amount of depreciation of
continuing operations during the period under review was EUR 7.3 million,
including EUR 1.0 million of depreciation owing to business acquisitions.
The amount of interest-bearing debt, including finance lease liabilities, at
the end of the reporting period was EUR 18.3 million including liabilities of
disposal group classified as held for sale of EUR 0.3 million. The distribution
of net financing expenses on the income statement of continuing operations was
as follows:
interest dividend and other financial income EUR 0.1 million
interest expenses and other financial expenses EUR -0.8 million
foreign exchange gains and losses EUR 0.2 million
EB's equity ratio at the end of the period was 54.7% (62.8% on December
31, 2012). The decrease in equity ratio is mainly due to the increase of
interest bearing debt during the reporting period.
Cash and other liquid assets at the end of the reporting period were EUR 15.5
million (EUR 10.0 million on December 31, 2011). The increase in cash reserves
is mainly result of USD 13.5 million payment from TerreStar Corporation and
withdrawal of credit limits. EB has from Nordea Bank plc a committed credit
facility agreement and a revolving credit facility agreement of altogether EUR
20 million, valid until June 30, 2014. EUR 11.3 million of these facilities was
used at the end of the reporting period.
EB follows a hedging strategy, the objective of which is to ensure the margins
of business operations in changing market circumstances by minimizing the
influence of exchange rates. In accordance with the hedging strategy, the agreed
customer commitments net cash flow of the currency in question is hedged. The
net cash flow is determined on the basis of sales receivables, payables, the
order book and the budgeted net currency cash flow. The hedged foreign currency
exposure at the end of the review period was equivalent to EUR 7.0 million.
PERSONNEL
EB employed an average of 1713 people between January and December 2012. At the
end of December, EB had 1870 employees (1607 at the end of 2011) of which 54
employees were working for the discontinuing operations. A significant part of
EB's personnel are R&D engineers.
FLAGGING NOTIFICATIONS
There were no changes in ownership during the period under review that would
have caused flagging notifications which are obligations for disclosure in
accordance with Chapter 2, section 9 of the Securities Market Act.
EVENTS AFTER THE REVIEW PERIOD
On January 10, 2013 EB announced to lower its profit guidance for 2012 due to
the weaker than expected fourth quarter. The reason for the weakening of the
fourth quarter was the non-recurring items of approximately EUR 4 million in
total, booked as result of the financial challenges faced by a US based customer
of EB's subsidiary, Elektrobit Inc. According to the lowered guidance, EB
expected the operating result of the fourth quarter of 2012 to be approximately
between EUR -0.4 million and EUR 1.1 million (EUR 3.5 million, 4Q 2011), the
operating result of the second half of 2012 to be approximately between EUR 1.7
million and EUR 3.2 million (EUR 0.4 million, 2H 2011), and the operating result
of the whole year 2012 to be approximately between EUR 2.2 million and EUR 3.7
million (operating loss of EUR -4.0 million in 2011). The expected operating
results presented above included non-recurring items that caused the lowering of
the fourth quarter profit guidance, as well as non-recurring income and costs
related to the reorganization processes of TerreStar companies, booked earlier
in 2012. The outlook for the net sales the Company expected to develop as
earlier estimated and thus EB expected that the net sales of the fourth quarter
of 2012 will be approximately EUR 57 million (EUR 49.0 million in 4Q 2011), the
net sales of the second half of 2012 was expected to be approximately EUR 104
million (EUR 86.1 million in 2H 2011) and the net sales of the whole year 2012
was expected be approximately EUR 200 million (EUR 162.2 million in 2011).
On January 28, 2013 EB announced to have signed an agreement with Anite plc,
under the terms of which EB agreed to sell its Test Tools product business to
Anite ("the Transaction"). The Transaction comprised the sale of the shares of
EB's subsidiary Elektrobit System Test Ltd., a company based in Oulu, Finland,
and certain related other assets in the USA and China. EB's Test Tools product
business provided radio channel emulation tools and testing solutions for the
development of the wireless technologies and was part of EB's Wireless Business
Segment employing a total of 54 persons in Finland, USA and China. Closing of
the Transaction was agreed to take place on January 31, 2013, subject to
completion of customary closing events, such as payment of the cash
consideration. According to the agreement, the cash consideration payable to EB
by Anite as a result of the Transaction was EUR 31.0 million on a cash and debt
free basis, subject to a post completion adjustment based upon the level of net
working capital and cash and debt in the Test Tools product business on January
31, 2013. The net assets of the Test Tools product business in January 31, 2013
was expected to be approximately EUR 5 million.
In addition, on January 28, 2013 EB gave advance information on its fourth
quarter and full year 2012 net sales and operating results. EB announced also to
report its 2012 financial results, as provided by the IFRS5 standard, divided
between Continuing and Discontinuing Operations, and that the Test Tools product
business is classified as Discontinuing Operations in the 2012 financial
statements.
On January 31, 2013 EB announced that the sale of the Test Tools product
business to Anite plc was completed. The cash consideration paid by Anite to EB
as a result of the Transaction was EUR 31.0 million on a cash and debt free
basis, subject to a post completion adjustment based upon the level of net
working capital and cash and debt in the Test Tools product business on January
31, 2013. The closing of the Transaction results in a non-recurring net profit
of about EUR 23 million in the first quarter of 2013, and non-recurring net cash
flow of about EUR 28 million, in the first half of 2013.
On February 19 2013, simultaneously with the announcement of the Financial
Statement Bulletin 2012, EB announced it will apply the new IFRS10 and IFRS11
standards from the beginning of 2013 and therefore will consolidate e.solutions
GmbH, the jointly owned company with Audi Electronics Venture GmbH (AEV),
applying the proportionate consolidation method. As a result of the change in
the method of consolidation, the proportion of net sales and operating result of
e.solutions GmbH to be consolidated into EB group's financial statements will
decrease from the previous 100% to 51%. According to the rules of the
proportionate consolidation method, the consolidated statement will also include
49% of the net sales from other EB group companies to e.solutions GmbH.
On February 19, 2019, EB announced also that it will start measures to improve
its cost structure in the Wireless Business Segment. These measures target at
EUR 2 million annual cost savings, in order to better align the operations with
the current business requirements. The actions are expected to cause
approximately EUR 1 million non-recurring costs in the first quarter of 2013. As
part of the measures to improve the cost structure, EB plans to reduce its
personnel in the Wireless Business Segment globally by approximately 30 persons
in total.
CHANGING THE CONSOLIDATION OF THE JOINTLY OWNED COMPANY OF EB AND AUDI AS OF
JANUARY 1, 2013
EB will start to apply the new IFRS10 and IFRS11 standards from the beginning of
2013 and will consolidate e.solutions GmbH, a jointly owned company with Audi
Electronics Venture GmbH (AEV), applying the proportionate consolidation method.
As a result of the change in the method of consolidation, the proportion of net
sales and operating result of e.solutions GmbH consolidated into EB group's
financial statements will decrease from the previous 100% to 51%. According to
the rules of proportionate consolidation method, the consolidated statement will
also include 49% of the net sales of other EB group companies to e.solutions
GmbH.
In 2012, the EB group net sales from continuing operations was EUR 185.4 million
and the operating profit from continuing operations was EUR 2.5 million. If the
proportionate consolidation method would have been applied for e.solutions GmbH
already in 2012, the consolidated net sales of EB group would have been EUR
11.6 million and the operating profit EUR 1.4 million less than was the case
when the full consolidation method was applied, as presented above. In 2012, the
external net sales of e.solutions GmbH was EUR 34.6 million and the operating
profit EUR 2.9 million. In the financial reports of 2013, EB will present the
year-on-year information of income statement and balance sheet with pro forma
principle, assuming that e.solutions GmbH would have been consolidated to EB
group according to the rules of proportionate consolidation already in 2012.
Elektrobit Corporation's subsidiary company Elektrobit Automotive GmbH holds a
51% stake in e.solutions GmbH, with AEV holding the remaining 49%. Previously,
since its establishment in 2009, e.solutions GmbH has been brought into the
consolidated statements as subsidiary and its net sales and operating result
have been consolidated in the statements in full.
The new IFRS10 and IFRS 11 standards for consolidated financial statements and
joint arrangements will take effect on 1(st) of January 2014, but they may be
applied as of 1(st) of January 2013. The accounting standard IFRS 10 sets out
the rules for presenting and preparing consolidated financial statements when an
entity controls one or more other entities. IFRS11 establishes principles for
financial reporting by parties to a joint arrangement. According to the
standard, joint arrangements are defined either as "joint ventures" or "joint
operations". e.solutions GmbH is deemed to fulfil the criteria of a "joint
operation", whereby it is required that a proportionate consolidation method be
applied at the latest when the new standard takes effect.
PROPOSAL BY THE BOARD OF DIRECTORS ON THE USE OF THE PROFIT SHOWN ON THE BALANCE
SHEET AND THE PAYMENT OF DIVIDEND
According to the parent company's balance sheet at December 31, 2012, the
distributable assets of the parent company are EUR 104,362,407.50 of which the
loss of the financial year is EUR -119,399.75.
The Board of Directors proposes that the Annual General Meeting to be held on
April 11, 2013 resolve to pay EUR 0.01 per share, i.e. in total EUR
1,294,126.90, as dividend based on the adopted balance sheet for the financial
period of January 1, 2012 - December 31, 2012. The dividend will be paid to the
shareholders who are registered as shareholders in the company's register of
shareholders as maintained by Euroclear Finland Ltd on the dividend record date,
Tuesday, April 16, 2013. The Board of Directors proposes that the dividend be
paid on Tuesday, April 23, 2013.
The Board of Directors emphasized the result from the financial period ended on
31.12.2012 as a basis for its proposal for distribution of dividend.
ANNUAL GENERAL MEETING AND ANNUAL REPORT
Elektrobit Corporation's Annual General Meeting will be held on Thursday, April
11, 2013, at 1 pm (CET+1) at the University of Oulu, Saalastinsali, Pentti
Kaiteran katu 1, 90570 Oulu, Finland. Elektrobit Corporation's Annual Report,
including the Annual Accounts, the report by the Board of Directors and the
Auditor's report as well as Corporate Governance Statement, is available on the
company's website no later than on Monday, March 18, 2013.
Oulu, February 19, 2013
EB, Elektrobit Corporation
The Board of Directors
Further Information:
Jukka Harju
CEO
Tel. +358 40 344 5466
Distribution:
NASDAQ OMX Helsinki
Major media
EB, ELEKTROBIT CORPORATION,
FINANCIAL STATEMENT BULLETIN 2012
The consolidated financial statement has been prepared in accordance with
International Financial
Reporting Standards (IFRS). The Financial Statement of 2012 has been audited and
the auditing
report has been dated on February 18, 2013.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (MEUR) 1-12/2012 1-12/2011
12 months 12 months
Continuing operations
NET SALES 185.4 148.0
Other operating income 2.3 2.3
Change in work in progress and finished goods -0.2 0.0
Work performed by the undertaking for its own purpose
and capitalized 0.6 0.4
Raw materials -7.4 -6.7
Personnel expenses -105.5 -92.7
Depreciation -7.3 -8.5
Other operating expenses -65.4 -48.4
OPERATING PROFIT (LOSS) 2.5 -5.5
Financial income and expenses -0.5 -0.4
PROFIT BEFORE TAX 2.0 -5.9
Income tax 0.1 -0.6
PROFIT FOR THE YEAR FROM CONTINUING
OPERATIONS 2.1 -6.5
Discontinued operations
Profit for the year from discontinued operations 1.2 1.5
PROFIT FOR THE YEAR 3.3 -5.1
Other comprehensive income:
Exchange differences on translating foreign
operations 0.2 -0.2
Other comprehensive income for the period total 0.2 -0.2
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3.5 -5.2
Profit for the year attributable to
Equity holders of the parent 2.3 -5.3
Non-controlling interests 1.0 0.2
Total comprehensive income for the period attributable
to
Equity holders of the parent 2.5 -5.5
Non-controlling interests 1.0 0.2
Earnings per share from continuing operations, EUR
Basic earnings per share 0.01 -0.05
Diluted earnings per share 0.01 -0.05
Earnings per share from discontinued operations, EUR
Basic earnings per share 0.01 0.01
Diluted earnings per share 0.01 0.01
Earnings per share from continuing and
discontinued operations, EUR
Basic earnings per share 0.02 -0.04
Diluted earnings per share 0.02 -0.04
Average number of shares, 1000 pcs 129 413 129 413
Average number of shares, diluted, 1000 pcs 130 238 130 051
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (MEUR) Dec. 31, Dec. 31,
2012 2011
ASSETS
Non-current assets
Property, plant and equipment 9.2 9.0
Goodwill 19.3 19.3
Intangible assets 18.2 15.7
Other financial assets 0.1 0.1
Deferred tax assets 0.9 0.1
Non-current assets total 47.8 44.1
Current assets
Inventories 0.4 1.8
Trade and other receivables 71.3 59.3
Financial assets at fair value through profit or loss 9.7
Cash and short term deposits 5.8 10.0
Current assets total 87.2 71.0
Assets classified as held for sale 7.7
TOTAL ASSETS 142.7 115.1
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 12.9 12.9
Invested non-restricted equity fund 38.7 38.7
Translation difference 0.6 0.4
Retained earnings 14.3 13.4
Non-controlling interests 2.5 1.5
Total equity 69.1 67.0
Non-current liabilities
Deferred tax liabilities 0.7 1.0
Pension obligations 1.4 1.3
Provisions 0.5 0.5
Interest-bearing liabilities 5.4 4.0
Non-current liabilities total 7.9 6.9
Current liabilities
Trade and other payables 46.4 34.9
Financial liabilities at fair value through profit or
loss 0.0 0.3
Provisions 2.2 1.0
Interest-bearing loans and borrowings 12.7 5.0
Current liabilities total 61.2 41.3
Liabilities classified as held for sale 4.5
Total liabilities 73.6 48.1
TOTAL EQUITY AND LIABILITIES 142.7 115.1
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-12/2012 1-12/2011
12 months 12 months
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year from continuing operations 2.1 -6.5
Profit for the year from discontinued operations 1.2 1.5
Adjustment of accrual basis items 9.3 7.1
Change in net working capital -3.3 0.6
Interest paid on operating activities -0.9 -0.4
Interest received from operating activities 0.1 0.3
Other financial income and expenses, net received 0.0 0.0
Income taxes paid -0.4 2.6
NET CASH FROM OPERATING ACTIVITIES 8.1 5.3
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of business unit, net of cash acquired -0.8
Purchase of property, plant and equipment -3.2 -1.9
Purchase of intangible assets -5.9 -8.5
Purchase of other investments -0.0
Sale of property, plant and equipment 0.4 0.1
Sale of intangible assets 0.0 0.1
Proceeds from sale of investments 0.0 0.0
NET CASH FROM INVESTING ACTIVITIES -8.7 -11.1
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowing 16.6 0.2
Repayment of borrowing -7.5 -2.2
Payment of finance liabilities -2.9 -2.8
NET CASH FROM FINANCING ACTIVITIES 6.1 -4.7
NET CHANGE IN CASH AND CASH EQUIVALENTS 5.5 -10.6
Cash and cash equivalents at beginning of period 10.0 20.5
Cash and cash equivalents at end of period 15.5 10.0
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY (MEUR)
A = Share capital
B = Invested non-restricted equity fund
C = Translation difference
D = Retained earnings
E = Total
F = Non-controlling interests
G = Total equity
A B C D E F G
Shareholders equity on January 1, 2011 12.9 38.7 0.6 18.3 70.5 1.3 71.8
Comprehensive income for the period
Profit for the period -5.3 -5.3 0.2 -5.1
Exchange differences on translating
foreign operations -0.2 -0.2 -0.2
Total comprehensive income for the period -0.2 -5.3 -5.5 0.2 -5.2
Transactions between the shareholders
Share-related compensation 0.4 0.4 0.4
Other changes 0.1 0.1 0.1
Shareholders equity on December 31, 2011 12.9 38.7 0.4 13.4 65.5 1.5 67.0
Shareholders equity on January 1, 2012 12.9 38.7 0.4 13.4 65.5 1.5 67.0
Comprehensive income for the period
Profit for the period 2.3 2.3 1.0 3.3
Exchange differences on translating
foreign operations 0.2 0.2 0.2
Total comprehensive income for the period 0.2 2.3 2.5 1.0 3.5
Transactions between the shareholders
Share-related compensation 0.3 0.3 0.3
Other changes -1.7 -1.7 -1.7
Shareholders equity on December 31, 2012 12.9 38.7 0.6 14.3 66.6 2.5 69.1
NOTES TO THE FINANCIAL STATEMENT BULLETIN
Accounting principles for the Financial Statements Bulletin:
The same accounting policies and methods of computation are followed in the
financial statement bulletin as compared with annual financial statements.
Explanatory comments about the seasonality or cyclicality of reporting period
operations:
The Company operates in business areas which are subject to seasonal
fluctuations.
Discontinued operations
Test Tools product business in Wireless segment is classified as Discontinued
Operations in the 2012 financial statements because at the end of year 2012,
during the discussions with the buyer and ongoing due diligence process, it
turned out that the execution of the transaction is very probable and EB was
committed to the sales plan.
Payment of dividend:
The General Meeting held on March 26, 2012 decided in accordance with the
proposal of the Board of Directors that no dividend shall be distributed.
SEGMENT INFORMATION (MEUR)
OPERATING SEGMENTS 1-12/2012 1-12/2011
12 months 12 months
Automotive
Net sales to external customers 122.1 98.3
Net sales to other segments 0.1 0.0
Net sales total 122.1 98.3
Operating profit (loss) 4.7 0.8
Wireless
Net sales to external customers 63.3 49.4
Net sales to other segments 0.3 0.4
Net sales total 63.5 49.8
Operating profit (loss) -2.2 -6.2
OTHER ITEMS
Other items
Net sales to external customers 0.1 0.4
Operating profit (loss) 0.0 -0.1
Eliminations
Net sales to other segments -0.3 -0.4
Operating profit (loss) 0.0 0.0
Group total
Net sales to external customers 185.4 148.0
Operating profit (loss) 2.5 -5.5
Net sales of geographical areas (MEUR) 1-12/2012 1-12/2011
12 months 12 months
Net sales
Europe 148.3 120.6
Americas 28.6 20.3
Asia 8.5 7.2
Net sales total 185.4 148.0
Related party transactions: 1-12/2012 1-12/2011
12 months 12 months
Employee benefits for key management and stock
option expenses total 1.3 1.6
CONSOLIDATED STATEMENT OF 10-12/ 7-9/ 4-6/ 1-3/ 10-12/
COMPREHENSIVE INCOME 2012 2012 2012 2012 2011
BY QUARTER (MEUR) 3 months 3 months 3 months 3 months 3 months
Continuing operations
NET SALES 52.6 44.3 43.6 45.0 44.1
Other operating income 0.7 0.6 0.6 0.4 0.6
Change in work in progress and
finished goods -0.1 0.1 0.1 -0.2 -0.3
Work performed by the
undertaking
for its own purpose and
capitalized 0.4 0.2 0.0 0.0 0.4
Raw materials -2.0 -1.5 -2.3 -1.6 -1.6
Personnel expenses -28.8 -25.1 -25.2 -26.5 -24.6
Depreciation -2.1 -1.8 -1.8 -1.6 -1.7
Other operating expenses -20.3 -14.6 -15.6 -14.8 -14.8
OPERATING PROFIT (LOSS) 0.2 2.2 -0.7 0.8 2.2
Financial income and expenses -0.4 -0.2 0.4 -0.4 0.2
PROFIT BEFORE TAX -0.2 2.0 -0.3 0.4 2.4
Income tax 0.6 -0.1 -0.2 -0.1 -0.6
PROFIT FOR THE PERIOD FROM
CONTINUING OPERATIONS 0.4 1.9 -0.5 0.3 1.8
Discontinued operations
Profit for the period from
discontinued operations 0.9 -0.1 0.3 0.1 1.4
PROFIT FOR THE PERIOD 1.3 1.8 -0.1 0.3 3.2
Other comprehensive income 0.2 -0.0 -0.0 0.0 0.0
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 1.5 1.8 -0.2 0.3 3.2
Profit for the period
attributable to:
Equity holders of the parent 0.8 1.6 -0.3 0.2 3.1
Non-controlling interests 0.5 0.2 0.2 0.2 0.1
Total comprehensive income
for the period attributable to:
Equity holders of the parent 1.0 1.6 -0.3 0.2 3.1
Non-controlling interests 0.5 0.2 0.2 0.2 0.1
CONSOLIDATED STATEMENT OF Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
FINANCIAL POSITION (MEUR) 2012 2012 2012 2012 2011
ASSETS
Non-current assets
Property, plant and equipment 9.2 9.8 9.7 9.3 9.0
Goodwill 19.3 19.3 19.3 19.3 19.3
Intangible assets 18.2 17.8 17.8 17.2 15.7
Other financial assets 0.1 0.1 0.1 0.1 0.1
Deferred tax assets 0.9 0.0 0.1 0.1 0.1
Non-current assets total 47.8 47.1 47.0 46.0 44.1
Current assets
Inventories 0.4 2.7 2.5 2.0 1.8
Trade and other receivables 71.3 75.2 68.0 62.1 59.3
Financial assets at fair
value
through profit or loss 9.7 0.1 0.1
Cash and short term deposits 5.8 18.3 8.6 7.3 10.0
Current assets total 87.2 96.3 79.1 71.4 71.0
Assets classified as held for
sale 7.7
TOTAL ASSETS 142.7 143.4 126.2 117.4 115.1
EQUITY AND LIABILITIES
Equity attributable to equity
holders
of the parent
Share capital 12.9 12.9 12.9 12.9 12.9
Invested non-restricted
equity fund 38.7 38.7 38.7 38.7 38.7
Translation difference 0.6 0.4 0.4 0.5 0.4
Retained earnings 14.3 15.1 13.4 13.7 13.4
Non-controlling interests 2.5 2.0 1.8 1.7 1.5
Total equity 69.1 69.2 67.4 67.5 67.0
Non-current liabilities
Deferred tax liabilities 0.7 0.8 0.9 0.9 1.0
Pension obligations 1.4 1.3 1.3 1.3 1.3
Provisions 0.5 0.4 0.5 0.7 0.5
Interest-bearing liabilities 5.4 10.8 4,9 3.7 4.0
Non-current liabilities total 7.9 13.3 7,6 6.7 6.9
Current liabilities
Trade and other payables 46.4 46.1 40.3 35.5 34.9
Financial liabilities at fair
value
through profit or loss 0.0 0.1 0.3
Provisions 2.2 1.7 1.4 0.7 1.0
Interest-bearing loans and
borrowings (non-current) 12.7 13.0 9,4 7.1 5.0
Current liabilities total 61.2 60.8 51,2 43.2 41.3
Liabilities classified as held
for sale 4.5
Total liabilities 73.6 74.2 58.8 49.9 48.1
TOTAL EQUITY AND LIABILITIES 142.7 143.4 126.2 117.4 115.1
10-12/ 7-9/ 4-6/ 1-3/ 10-12/
CONSOLIDATED STATEMENT
OF CASH FLOWS BY QUARTER 2012 2012 2012 2012 2011
3 months 3 months 3 months 3 months 3 months
Net cash from operating
activities 6.0 2.1 0.8 -0.9 7.1
Net cash from investing
activities -2.7 -1.3 -2.1 -2.5 -3.7
Net cash from financing
activities -6.1 8.9 2.6 0.7 -0.6
Net change in cash and cash
equivalents -2.8 9.7 1.3 -2.7 2.7
FINANCIAL PERFORMANCE RELATED RATIOS 1-12/2012 1-12/2011
12 months 12 months
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
Net sales 185.4 148.0
Operating profit (loss) 2.5 -5.5
Operating profit (loss), % of net sales 1.3 -3.7
Profitt before taxes 2.0 -5.9
Profit before taxes, % of net sales 1.1 -4.0
Profit for the period 2.1 -6.5
PROFITABILITY AND OTHER KEY FIGURES
Interest-bearing net liabilities, (MEUR) 2.8 -0.9
Net gearing, -% 4.1 -1.4
Equity ratio, % 54.7 62.8
Gross investments, (MEUR) 12.2 12.4
Average personnel during the period 1713 1553
Personnel at the period end 1870 1607
AMOUNT OF SHARE ISSUE ADJUSTMENT Dec. 31, Dec. 31,
(1,000 pcs) 2012 2011
At the end of period 129 413 129 413
Average for the period 129 413 129 413
Average for the period diluted with stock options 130 238 130 051
1-12/2012 1-12/2011
STOCK-RELATED FINANCIAL RATIOS (EUR)
12 months 12 months
Earnings per share from continuing operations, EUR
Basic earnings per share 0.01 -0.05
Diluted earnings per share 0.01 -0.05
Earnings per share from discontinued operations, EUR
Basic earnings per share 0.01 0.01
Diluted earnings per share 0.01 0.01
Earnings per share from continuing and
discontinued opeariontions, EUR
Basic earnings per share 0.02 -0.04
Diluted earnings per share 0.02 -0.04
Equity *) per share 0.51 0.51
*) Equity attributable to equity holders of the parent
MARKET VALUES OF SHARES (EUR) 1-12/2012 1-12/2011
12 months 12 months
Highest 0.79 0.76
Lowest 0.38 0.36
Average 0.64 0.55
At the end of period 0.65 0.38
Market value of the stock, (MEUR) 84.1 49.2
Trading value of shares, (MEUR) 6.9 5.0
Number of shares traded, (1,000 pcs) 10 750 9 169
Related to average number of shares % 8.3 7.1
SECURITIES AND CONTINGENT LIABILITIES Dec. 31, Dec. 31,
(MEUR) 2012 2011
AGAINST OWN LIABILITIES
Floating charges 18.1 11.4
Guarantees 17.7 22.7
Rental liabilities
Falling due in the next year 7.0 6.9
Falling due after one year 16.2 17.9
Other contractual liabilities
Falling due in the next year 1.3 2.5
Falling due after one year 0.0
Mortgages are pledged for liabilities totaled 14.5 4.3
NOMINAL VALUE OF CURRENCY DERIVATIVES Dect. 31, Dec. 31,
(MEUR) 2012 2011
Foreign exchange forward contracts
Market value 0.0 -0.3
Nominal value 5.0 5.5
Purchased currency options
Market value 0.0 0.1
Nominal value 2.0 4.3
Sold currency options
Market value -0.0 -0.1
Nominal value 2.0 8.6
[HUG#1679175]
