NovaCast Technologies AB (JSC) 556211-0790 INTERIM REPORT FOR PERIOD JANUARY-SEPTEMBER 2010 July- September 2010 Net sales for the quarter were 24,2 MSEK (19,0) Operating loss for the quarter was -12,1 MSEK (-6,8) Loss after tax was -12,9 MSEK (-8,0) Earnings per share -0,64 SEK (-0,59) Considerable order intake during period Camito/Swepart received new large order from Magna Cosma Additional order from Volvo Cars - order value now approximately 35 MSEK CGI order from Turkey January - September 2010 Net sales for the period were at 63,2 MSEK (78,3) Operating loss for the period was -38,7 MSEK (-26,6) Loss after tax was -41,7 MSEK (-30,1) Earnings per share before and after dilution were -2,06 SEK (-2,21) Currency rate effects were -0,6 MSEK (5,5) Order intake was 107,4 MSEK (83,2) and order backlog was 73,5 MSEK (36,3) Cash flow from operating activities was - 31,5 MSEK (-11,3) Private placement new share issue provided 40 MSEK Camito/SwePart approved supplier to Magna Cosma Events after reporting period New project financing in place through Camito Financial Services Group development during reporting period Net sales Net sales for the group during the first three quarters of 2010 were 63,2 MSEK (78,3). The volume drop was mainly due to low order intake from the automotive industry during 2009, which resulted in an unusually weak first six months. Interruptions in production were also caused by a break in the melting furnace at CTC foundry. A considerable increase in order intake started during May of 2010 but did not give results in increased invoicing until the latter months of the period. Net sales during September 2010 were 11,1 MSEK (8,7). Result after tax Result after tax for the period was -41,7 MSEK (-30,1). The poor result was mainly due to volume drop. Of the 35 notices of dismissal given during the beginning of the year, 10 have been executed. No further reductions in personnel are planned as a result of improved order intake. One-off items mainly due to personnel terminations charged the operating loss with approximately -1,9 MSEK (-1,2). Positive currency rate effects of 5,5 MSEK were included in the corresponding period of the preceding year, while the current year's result is charged with currency losses of 0,6 MSEK. Cash Cash and cash equivalents at end of accounting period were 5,4 MSEK (16,0) including unutilized check credit of 3,5 MSEK (11,4). Accounts receivable for the group were at 20,9 MSEK (23,1). A new project financing facility has been created after the reporting period. Camito Financial Services has been able, via Sparbanken 1826, ALMI Skåne, Swedbank and Fouriertransform, to negotiate a credit facility that will provide 15 MSEK in new cash, as well as 5 MSEK in other positive liquidity. The facility is connected to the export of dies and 50% is guaranteed by The Swedish National Export Credits Guarantee Board, EKN. Order intake and order backlog A considerable increase in order intake has taken place from May and order backlog during the whole period was 107,4 MSEK (83,2), of which 93,8 MSEK (68,1) applies to the Automotive business area and 13,6 MSEK (15,1) to activities within foundry technology. Outgoing order backlog was 73,5 MSEK (36,3) of which the Automotive business area reached 71,3 MSEK (34,8) and Foundry Technology reached 2,2 MSEK (1,5). Investments Expenditure related to investments during the period was 0,9 MSEK (1,4). Development per business area and market during reporting period Automotive Net sales for this business area were 51,0 MSEK (64,7). Operating loss was -34,4 MSEK (-26,1). Order intake was 93,8 MSEK (68,1) and outgoing order backlog was 71,3 MSEK (34,8). One-off items charged the operating loss with XX1,2 MSEK. On the whole, the market situation for the Automotive business area improved considerably during the end of the period but the effects of increased demand from the automotive sector expressed in higher production utilization at our production sites have not been noticeable until the latter month. Camito AB Marketing activities have continued at a high pace during the period and the new marketing strategy that was implemented during the first quarter has given results. This strategy means increased focus on ten top priority customer groups, of which three are automotive manufacturers (OEM) and seven are sub-contractors (Tier 1). With these prioritized customers we will strive towards a closer relationship aimed at improving advance planning and achieving more even production utilization at production facilities. The effects of good order intake have however not had time to give any positive effect on the result during the period. One of the most important market events for Camito/SwePart during the period was their being approved as supplier to Magna Heavy Stamping within Magna-Cosma, one of the largest Tier 1 suppliers in the world. During the period Camito's marketing organization finalized orders from among others Volvo Car Corporation, approx. 35 MSEK, the new Saab Automotive, approx. 5 MSEK and Magna Heavy Stamping, approx. ca 22 MSEK. A new customer in Germany has also placed an order for dies worth approx. 8 MSEK. Schweikert GmbH ordered further Camito dies during the period, which is Schweikert's third order for Camito dies during the last eight months. Camito has also received an interesting long-term order from a leading global customer in the industry. The order includes completion and adjustment of stamping dies to one of the leading truck manufacturers in the world. Discussions that have been taking place continuously regarding deeper cooperation have resulted in several smaller orders during the period. Camito Technology Center AB (CTC) Production volumes have been low during the whole period, partly due to weak order flow during a large part of the period, as well as a two-week standstill of the melting furnace at the beginning of the year and to production development of new products. This has mostly disrupted production of castings to the wind power industry within the framework agreement with Enercon. Production of castings for wind power increased during the end of the period and reached the expected annual pace and at the same time production of die shoe castings increased during September. Parts of the completion process at the foundry have been made more efficient, resulting in lower staff requirements. Personnel have been reduced with six persons to 24 due to notices of dismissal as well as various resignations during the period. Swepart Verktyg AB Apart from September, production volumes were very low during the period. Future delivery capacity has been prioritized as a result of the good order intake from May 2010 and of the notices of dismissal given at the beginning of the year only 4 have been executed, which has resulted in lower personnel costs of approximately 1,0 MSEK (approx. 7%) on a quarterly basis. Increased production at sub-contractors, in combination with the projects for increasing efficiency that were conducted, will allow SwePart to retain or raise their delivery capacity before the expected demand increase in the coming years. Foundry Technology (including Graphyte product area) NovaCast Foundry Solutions AB Net sales for the business area during the period were 12,2 MSEK (13,6). Operating loss was -4,3 MSEK (-0,5), including one-off items that charged the loss with approximately -0,7 MSEK. A program of measures has been decided on and has commenced. Demand and invoicing have been low during the whole period but a certain increase has taken place in September. An order for the ATAS process control system was received from American Casting LLC, Oklahoma, USA and for the NovaFlow&Solid and NovaStress simulation packages from Olazabal y Huarte SA, Spain. The total customer base increased to 473 customers (438) and the installed licence base to 684 (662). The number of Technology Partner Agreements, TPA, which generate annual income to the company, is 178 (203). Current CGI projects within the Graphyte business area are proceeding with good results and a definite increase in marketing activities has been noted. Parent company Income in the parent company consists mainly of sales of services within the group. Net sales were 7,1 MSEK (7,7) during the period, of which intra group sales were 7,1 MSEK (7,7). Operating loss was -1,2 MSEK (-0,2). Risks and uncertainty factors After a very weak six-month period we were able to get several important orders during the third quarter. This means that we now have an interesting backlog of orders and it is very important that we produce this backlog with high quality, delivery precision, improved production efficiency and thereby profitability. We continue to adapt our fixed costs in order to quickly achieve balance between income and expenses for the group. The expansion we can expect also demands access to project financing. This depends primarily on the fact that the market still tends to see sub-contractors as financiers within the die area. For further information about the group's operational and financial risks, risk management and risk exposure, please see NovaCast Technologies' annual report on www.novacast.se (http://www.novacast.se). Contingent assets and (contingent) liabilities No considerable change has taken place in the group's or parent company's contingent assets or liabilities since the end of the last fiscal year. Related party transactions No related party transactions relevant for understanding changes in the group's or parent company's financial standing and development since the end of the last fiscal year have taken place other than the private placement new share issue to Fouriertransform during the first quarter of 2010. Future developments As in previous years, NovaCast Technologies does not give any prognoses, mainly since business activities are still in the construction phase, where individual orders or business deals can create significant swings in these activities. The Board and management focus on adapting business activities according to current market conditions, liquidity and cash flow, as well as on creating a platform for expansion. Board signatures Tyringe October 29, 2010 Hans Golteus Jan Erik Dantoft Hans Wikman Chairman of the Board Board member Board member Lars-Olof Strand Monica Svenner Sten Thunberg Board member Board member Board member Hans Svensson Group CEO and CEO For further information contact Hans Svensson, CEO NovaCast Technologies AB, +46 705 652 250. Review report We have reviewed this report for the period 1 January 2010 to 30 September 2010 for NovaCast Technologies AB (publ). The board of directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden, RS, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company. Tyringe, 29 October 2010 Öhrlings PricewaterhouseCoopers Claes Thimfors Authorised Public Accountant See attached file for complete report.
NovaCast Technologies AB (JSC) 556211-0790 INTERIM REPORT FOR PERIOD JANUARY-SEPTEMBER 2010
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