Stock exchange release
Free for publication on February 19, 2015 at 8.00 a.m. (CET+1)
Elektrobit Corporation's (EB) FInANCIAL Statement bulletin 2014
IN 2014 NET SALES GREW AND OPERATING PROFIT IMPROVED FROM THE PREVIOUS YEAR
The 2013 figures presented in comparison in this Financial Statements include
the figures of Continuing Operations only.
SUMMARY OCTOBER - DECEMBER 2014
* Net sales of October - December 2014 grew to EUR 67.8 million (EUR 59.5
million, 4Q 2013), representing an increase of 13.9 % year-on-year.
* Operating profit was EUR 7.2 million (EUR 5.7 million, 4Q 2013), including
non-recurring costs of EUR 0.6 million resulting from Wireless Business
Segment's personnel layoffs and from the acquisition costs of SafeMove
business.
* Net cash flow was EUR 2.5 million (EUR -0.9 million, 4Q 2013, including the
repayment of capital of EUR 14.3 million, distributed in December 2013).
* Earnings per share were EUR 0.046 (EUR 0.039, 4Q 2013).
* The number of EB's shares increased by altogether 250 652 new shares
subscribed by virtue of the stock option rights 2008B and 2008C. At the end
of the period, the number of shares in Elektrobit Corporation totaled
131 493 144.
* In October Elektrobit Inc., a subsidiary of Elektrobit Corporation, entered
into settlement with Internal Revenue Service (IRS) concerning tax treatment
of impairment of receivables from TerreStar companies. As a result of the
approval of the proposal, during the last quarter of 2014, Elektrobit Inc.
paid IRS USD 1.4 million (EUR 1.1 million as per exchange rate of October
8, 2014) taxes including interests for fiscal year 2010 and received a
carryback refund of USD 1.3 million (EUR 1.0 million as per exchange rate of
October 8, 2014) for fiscal year 2011.
* During the fourth quarter as a result of the personnel negotiations in
Wireless Business Segment in Finland, EB decided to lay off up to a maximum
of 19 employees in its offices in Kajaani and Tampere. This caused non-
recurring costs of EUR 0.4 million that weakened the result of the last
quarter of 2014. With these actions EB will achieve annual cost savings of
approximately EUR 1 million, from the beginning of 2015 onwards.
SUMMARY JANUARY - DECEMBER 2014
* Net sales of January - December 2014 grew to EUR 224.1 million (EUR 199.3
million, in 2013), representing an increase of 12.5 % year-on-year.
* Operating profit was EUR 16.8 million including non-recurring income of EUR
1.1 million resulting from the reorganization cases of TerreStar companies
and non-recurring costs of EUR 0.6 million resulting from Wireless Business
Segment's personnel layoffs and from the acquisition costs of SafeMove
business (EUR 8.1 million, in 2013, including non-recurring costs of
approximately EUR 0.8 million resulting from the cost saving measures in the
Wireless Business Segment).
* Net cash flow was EUR 0.3 million (EUR 28.7 million, in 2013, including non-
recurring net cash flow of about EUR 28 million resulting from the sale of
the Test Tools product business and the repayment of capital of EUR 14.3
million, distributed in December 2013).
* Earnings per share were EUR 0.093 (EUR 0.051, in 2013).
* The number of EB's shares increased during the reporting period by
altogether 1 392 269 new shares subscribed by virtue of the stock option
rights 2008B and 2008C. At the end of the period, the number of shares in
Elektrobit Corporation totaled 131 493 144.
* The Board of Directors proposes that the Annual General Meeting to be held
on April 15, 2015 resolve to pay EUR 0.04 per share, as dividend based on
the adopted balance sheet for the financial period of January 1, 2014 -
December 31, 2014.
Group (MEUR) 4Q 14 4Q 13 2014 2013
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NET SALES 67.8 59.5 224.1 199.3
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Change of net sales, % 13.9 % 23.4 % 12.5 % 14.6 %
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OPERATING PROFIT / LOSS 7.2 5.7 16.8 8.1
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Operating profit / loss, % of net sales 10.6 % 9.6 % 7.5 % 4.1 %
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Operating profit /loss without non-recurring items 7.8 5.7 16.3 9.0
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EBITDA 9.6 8.1 25.5 17.2
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CASH AND OTHER LIQUID ASSETS 43.3 43.0 43.3 43.0
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EQUITY RATIO (%) 62.3 % 65.1 % 62.3 % 65.1 %
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EARNINGS PER SHARE (EUR) 0.046 0.039 0.093 0.051
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Automotive Business Segment (MEUR) 4Q 14 4Q 13 2014 2013
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NET SALES 51.6 41.1 171.4 138.3
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Change of net sales, % 25.5 % 29.1 % 24.0 % 25.0 %
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OPERATING PROFIT / LOSS 5.4 5.4 16.0 8.5
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Operating profit / loss, % of net sales 10.5 % 13.2 % 9.3 % 6.2 %
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EBITDA 7.3 7.0 22.4 14.6
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Wireless Business Segment (MEUR) 4Q 14 4Q 13 2014 2013
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NET SALES 16.3 18.4 53.0 61.2
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Change of net sales, % -11.3 % 12.0 % -13.4 % -3.7 %
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OPERATING PROFIT / LOSS 2.0 0.3 1.0 -0.5
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Operating profit / loss, % of net sales 12.0 % 1.6 % 1.9 % -0.8 %
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Operating profit /loss without non-recurring 2.6 0.3 0.5 0.4
items
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EBITDA 2.5 1.1 3.4 2.5
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EB'S CEO JUKKA HARJU
"EB's net sales and operating profit continued to grow from the previous year
also during the fourth quarter. The net sales grew by 13.9 % year-on-year and
the operating profit was 10.6 % of the net sales. Operating profit of the both
business segments in the fourth quarter was at a good level.
The net sales of the whole year grew by 12.5 % from the previous year to EUR
224.1 million. Operating profit improved clearly year-on-year and was EUR 16.8
million (7.5 % of net sales). The reason for the improved net sales and
operating profit was the good development of the Automotive Business Segment. I
am pleased to state, that EB's financial development in 2014 continued to be
good and the company achieved its key goal for 2014 to improve the operating
profit from the previous year.
In the Automotive Business Segment, the demand for EB's software products and
R&D services remained good as car makers invested in the development of new car
models. Net sales grew strongly by 24.0 % from the previous year to EUR 171.4
million and operating profit improved to 9.3 % of net sales. The growth in
operating profit was driven by the growth in net sales of R&D services and by
the good performance in projects, the growth of software license sales and lower
R&D investments than in the previous year. In the last quarter, R&D investments
were higher than in the previous year.
The net sales of the Wireless Business Segment decreased by 13.4 % from the
previous year to EUR 53.0 million due to the decreased demand for R&D services
for mobile telecommunications network equipment and other markets. The product-
based sales increased clearly from the previous year to EUR 14.1 million
(approximately 26.7 per cent of net sales in 2014), which however did not fully
compensate the decreased R&D services sales. The product-based sales in 2014 was
generated mainly from the Finnish authority markets and the net sales resulting
from the international defense and other authority markets remained low due to
these customers' slower than estimated purchase decisions. Wireless Business
Segment's operating result for the whole year improved year-on-year and was
slightly positive at EUR 1.0 million due to the strong fourth quarter. Operating
result without non-recurring items was at the same level as in the previous
year. In the beginning of January 2015 EB acquired SafeMove business which
provides high-quality information security solutions for mobile devices and
portable computers. This acquisition strengthens Wireless Business Segment's
competitiveness as a provider of secure communication solutions for defence,
public safety and other authority markets.
In accordance with the strategic guidelines, published on February 19, 2015, the
markets of both Automotive and Wireless Business Segments offer EB good growth
potential in the coming years. In both Business Segments, our goal is to grow
the net sales and continue good profitability development during 2015 - 2017. In
2015 our goal is to grow EB's net sales and operating profit from the previous
year.
On February 18, 2015 EB's Board has accepted the partial demerger plan of
Elektrobit Corporation and the listing of Wireless Business Segment as Bittium
Corporation on the Nasdaq Helsinki stock exchange. In case the extraordinary
general meeting, planned to be held on June 11, 2015, approves the plan, the
demerger will come effective on June 30, 2015. Automotive business would remain
in the current company, which will continue to be listed as before. The demerger
plan and the updated strategic guidelines have been announced in more detail in
the stock exchange release, on February 19, 2015.
OUTLOOK FOR 2015
For the year 2015 EB expects that the net sales and operating result will grow
from the previous year (net sales of EUR 224.1 million and operating profit of
EUR 16.8 million, in 2014). Net sales growth rate in 2015 is expected to be
higher than in the previous year (net sales growth of 12.5 %, 2014).
The demand for R&D services and software products of the Automotive Business
Segment is expected to continue as good. Net sales growth is expected to be
almost at the same level as in the previous year (net sales growth of 24.0 per
cent in 2014) and operating profit is expected to be at least at the same level
than in the previous year (operating profit of EUR 16.0 million, in 2014).
In the Wireless Business Segment, the demand for R&D services and products is
expected to develop positively especially in the authority markets and in
various applications where wireless connectivity is needed. The net sales and
operating profit are expected to grow from the previous year (net sales of EUR
53.0 million and operating profit of EUR 1.0 million in 2014).
The operating profit outlooks above do not include non-recurring costs resulting
from the planned partial demerger. The total amount of non-recurring costs is
estimated to be approximately EUR 2 million in 2015 in case the planned partial
demerger will be implemented.
More specific market outlook is presented under the sections "Market outlook for
the Automotive Business Segment" and "Market outlook for the Wireless Business
Segment".
More information about other uncertainties regarding the outlook is presented in
the sections "Risks and uncertainties" and "Events after the review period".
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the Financial Statement 2014 and on the
demerger plan announced today for media, analysts and institutional investors in
Restaurant Savoy, Eteläesplanadi 14, Helsinki, Finland, on Thursday, February
19, 2015, at 2.00 p.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.
ELEKTROBIT CORPORATION (EB)
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. In 2014, the net sales totaled EUR 224.1
million and operating profit was EUR 16.8 million. Elektrobit Corporation is
listed on NASDAQ OMX Helsinki. www.elektrobit.com.
ELEKTROBIT CORPORATION (EB) FINANCIAL STATEMENT BULLETIN 2014
2013 figures presented in comparison in this Financial Statements include only
figures of Continuing Operations.
FINANCIAL PERFORMANCE DURING JANUARY-DECEMBER 2014
EB's net sales during January-December 2014 grew by 12.5 per cent year-on-year
to EUR 224.1 million (EUR 199.3 million, in 2013). Operating profit was EUR
16.8 million including EUR 1.1 million non-recurring income resulting from the
reorganization cases of TerreStar companies, and non-recurring costs of EUR 0.6
million resulting from Wireless Business Segment's personnel layoffs and from
the acquisition costs of SafeMove (EUR 8.1 million, in 2013, including the non-
recurring cost of approximately EUR 0.8 million resulting from the cost saving
measures in the Wireless Business Segment). The growth in net sales and
operating profit was mainly due to the good development of the Automotive
Business Segment.
Net sales of the Automotive Business Segment in January-December 2014 grew to
EUR 171.4 million (EUR 138.3 million, in 2013), representing 24.0 per cent
growth year-on-year. Operating profit improved clearly from the previous year
and was EUR 16.0 million (EUR 8.5 million, in 2013). The demand for EB's
software products and R&D services remained good, including the jointly owned
company e.solutions GmbH. The improvement of the operating profit was driven
mainly by the net sales growth of R&D services and good performance in services
projects, the growth of software license sales and the lower R&D investments.
The Wireless Business Segment's net sales in January-December 2014 decreased by
13.4 per cent year-on-year, to EUR 53.0 million (EUR 61.2 million, in 2013). The
share of the product-based net sales was EUR 14.1 million (EUR 6.9 million in
2013), which resulted mainly from the product deliveries of the tactical
communication system to the Finnish Defence Forces and from the delivery of
special terminal products for the authority use to a customer abroad. The
operating profit of the Wireless Business Segment in January-December 2014 was
EUR 1.0 million, including EUR 1.1 million non-recurring income resulting from
the reorganization cases of TerreStar companies, and non-recurring costs of EUR
0.6 million resulting from Wireless Business Segment's personnel layoffs and
from the acquisition costs of SafeMove (operating loss of EUR -0.5 million, in
2013, including the non-recurring cost of approximately EUR 0.8 million
resulting from the cost saving measures in the Wireless Business Segment). The
decrease in the net sales year-on-year and lower than expected operating result
were due to the decline in the demand for R&D services for mobile
telecommunications network equipment and other markets, the increased product-
based net sales did not fully compensate this decline.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (MEUR) 1-12 2014 1-12 2013
12 months 12 months
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CONTINUING OPERATIONS
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Net sales 224.1 199.3
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Operating profit / loss 16.8 8.1
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Financial income and expenses -1.3 -0.9
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Result before tax 15.5 7.2
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RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS 12.3 6.7
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RESULT FOR THE PERIOD FROM DISCONTINUING OPERATIONS 0.2 24.3
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RESULT FOR THE PERIOD 12.5 30.9
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TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 12.9 30.9
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Result for the period attributable to:
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Equity holders of the parent 12.5 30.9
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Non-controlling interests
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Total comprehensive income for the period attributable to:
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Equity holder of the parent 12.9 30.9
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Non-controlling interests
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Earnings per share from continuing operations, EUR 0.093 0.051
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* Cash flow from operating activities was EUR 10.5 million (EUR 34.7 million,
in 2013).
* Net cash flow was EUR 0.3 million (EUR 28.7 million, in 2013, including non-
recurring net cash flow of about EUR 28 million resulting from the sale of
the Test Tools product business and the repayment of capital of EUR 14.3
million, distributed in December 2013).
* Equity ratio was 62.3 % (65.1 %, December 31, 2013).
* Net gearing was -37.4 % (-46.1 %, December 31, 2013).
QUARTERLY FIGURES
Elektrobit Group's net sales and operating result, MEUR:
4Q 14 3Q 14 2Q 14 1Q 14 4Q 13
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Net sales 67.8 52.5 52.2 51.7 59.5
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Operating profit (loss) 7.2 4.6 3.1 1.9 5.7
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Operating profit (loss) without non-recurring 7.8 3.5 3.1 1.9 5.7
costs
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Result before taxes 6.5 4.2 2.8 1.9 5.5
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Result for the period 6.4 2.6 1.8 1.7 5.0
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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.
In 2014 the result of Wireless Business Segment reported non-recurring items as
follows:
* non-recurring income of approximately EUR 1.1 million resulting from the
reorganization cases of TerreStar companies during the third quarter of the
year
* non-recurring costs of EUR 0.6 million resulting from Wireless Business
Segment's personnel layoffs and from the acquisition costs of SafeMove
during the last quarter
Net sales and operating profit development by Business Segments and other
businesses, MEUR:
4Q 14 3Q 14 2Q 14 1Q 14 4Q 13
--------------------------------------------------------------
Automotive
Net sales to external customers 51.6 42.5 39.8 37.5 41.1
Net sales to other segments 0.0 0.0 0.0 0.0 0.0
Operating profit (loss) 5.4 3.5 4.2 2.9 5.4
--------------------------------------------------------------
Wireless
Net sales to external customers 16.1 10.0 12.4 14.2 18.3
Net sales to other segments 0.2 0.1 0.0 0.0 0.0
Operating profit (loss) 2.0 1.1 -0.9 -1.1 0.3
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Other businesses
Net sales to external customers
Operating profit (loss) -0.2 -0.0 -0.2 0.1 0.0
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Total
Net sales 67.8 52.5 52.2 51.7 59.5
Operating profit (loss) 7.2 4.6 3.1 1.9 5.7
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The distribution of net sales by market areas, MEUR and %:
4Q 14 3Q 14 2Q 14 1Q 14 4Q 13
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Asia 2.1 2.6 1.8 2.5 2.3
3.1 % 5.0 % 3.5 % 4.9 % 3.9 %
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Americas 10.1 7.6 6.6 7.2 8.0
14.9 % 14.5 % 12.7 % 13.8 % 13.4 %
--------------------------------------------
Europe 55.6 42.3 43.8 42.0 49.2
82.0 % 80.6 % 83.8 % 81.3 % 82.7 %
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SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
A total of 1 392 269 new shares were subscribed for between December 5, 2013 and
December 1, 2014 by virtue of the stock option rights 2008A, 2008B and 2008C.
The share subscription price, EUR 568 991.65 was recorded in the Company's
invested non-restricted equity fund. After the registration of the new shares,
the number of shares in Elektrobit Corporation totaled 131 493 144.
On April 30, 2014 EB started personnel negotiations to adjust its cost structure
for the weakened order book for R&D services in the next few months. The
negotiations were concluded on May 15, and the company decided to temporarily
lay off at the maximum of 90 persons in the Wireless Business Segment. With
these temporary dismissals EB targeted cost savings of approximately EUR 0.8
million, which materialized mainly during the third quarter of the year.
EB signed EUR 10.0 million credit facility agreement with Nordea Bank Finland
Plc and EUR 10.0 million credit facility agreement with Pohjola Bank Plc on July
2, 2014. These agreements, intended for general financing purposes, are valid
until June 30, 2017 and include conventional covenants that are, among others,
related to equity ratio, transfer and pledge of the assets. These credit
facility agreements replaced EUR 20.0 million credit facilities from Nordea Bank
Suomi Plc, which were valid until 30.6.2014.
In September Parrot S.A., a supplier of e.solutions GmbH, a jointly owned
company of EB and AUDI, has withdrew the legal proceeding taken against
e.solutions GmbH in the Tribunal de Commerce de Paris (Commercial Court Paris)
in April 2014. In the claim Parrot S.A. requested to collect damages in the
amount of approximately EUR 18.4 million for loss of profit and reputational
damage. According to e.solutions GmbH's initial legal analysis as announced in
EB's stock exchange release on April 4, 2014, the claim was without merit both
in terms of the grounds and the amount of the claim.
After the reporting period EB received information that Parrot filed a request
for arbitration against e.solutions at the International Court of Arbitration of
the International Chamber of Commerce seeking remuneration and/or damages
currently in an amount of approximately EUR 9.4 million in connection with an
automotive supply contract. Based on e.solutions' initial legal analysis the
claim is without merit both in terms of the grounds and the amount of the claim.
Based on the current analysis, the arbitral proceedings will not cause any
financial obligation to e.solutions or to EB that would affect EB's profit
outlook and financial position. It is possible that, based on later information,
this view may need to be reconsidered. At worst, Parrot's claim could have
significant negative impact on e.solutions' and EB's profit, cash flow and
financial position.
December 7, 2014 EB concluded the personnel negotiations (started on November
11, 2014) in order to rationalize its operations in Wireless Business Segment in
Finland by laying off up to a maximum of 19 employees in its offices in Kajaani
and Tampere. As an alternative a few employees were offered new positions in
Oulu. This caused non-recurring costs of EUR 0.4 million that weakened the
result of the last quarter of 2014. With these actions EB will achieve annual
cost savings of approximately EUR 1 million, from the beginning of 2015 onwards.
Events related to the reorganization cases of TerreStar Companies during the
reporting period
In July a subsidiary of Elektrobit Corporation, Elektrobit Inc. and the
TerreStar Networks Inc. liquidating trustee entered into a conditional
settlement agreement in the liquidation case. On July 10, 2014, the trustee
filed a motion with the United States Bankruptcy Court seeking approval of the
settlement. According to the settlement, if the conditions to its effectiveness
are fulfilled, the trust shall be obligated to pay EB, an immediate cash payment
of USD 1 075 000 (EUR 0.8 million as per exchange rate of August 6, 2014) in
full and final satisfaction of its claims against TerreStar Networks and in
resolution of all disputes between EB and the bankruptcy estate of TerreStar
Networks and certain of its subsidiaries and affiliates.
On August 12, 2014 U.S. time the United States Bankruptcy Court formally
approved the conditional agreement of settlement between EB and The Liquidating
Trust of TSN. On August 28, 2014, U.S. time, EB received a cash payment of USD
1 075 000 (EUR 0.8 million as per exchange rate of August 28, 2014) (the
"Settlement Payment") in full and final satisfaction of its claim against TSN
and in resolution of all disputes between EB and The Liquidating Trust of TSN.
Upon receipt by EB of the Settlement Payment, certain mutual releases of
liability and other agreements set forth in the Settlement have become
effective, and it is anticipated that EB's participation in the TSN Chapter 11
cases is concluded.
In October Elektrobit Corporation's subsidiary Elektrobit Inc. entered into a
settlement with Internal Revenue Service (IRS) concerning tax treatment of
impairment of receivables from TerreStar companies and EB reversed the remaining
EUR 0.3 million provision. As a result from the approval of the proposal
Elektrobit Inc. will pay IRS USD 1.4 million (EUR 1.1 million as per exchange
rate of October 8, 2014) taxes including interests for fiscal year 2010 and at
the same time will submit a carryback claim of USD 1.3 million (EUR 1.0 million
as per exchange rate of October 8, 2014) for fiscal year 2011. Both, the payment
to IRS was made and the carryback refund was received during the fourth quarter
of 2014.
The settlement payment of USD 1 075 000 received from TerreStar Networks Inc. in
August (more information on Company's stock exchange release on August
29, 2014) formed the full and final satisfaction of Elektrobit Inc.'s laid and
open claims against TerreStar companies in their reorganization cases. In
consequence of receiving full and final settlement payment and finishing of tax
appeal process, EB's activities related to TerreStar reorganization processes
are expected to be concluded. EB will reverse the remaining EUR 0.3 million
provision made for legal and consulting costs. The reversal of the provision and
the EUR 0.8 million settlement payment will have together approximately EUR 1.1
million non-recurring positive effect on Elektrobit Corporation's third quarter
2014 operating result.
BUSINESS SEGMENTS' DEVELOPMENT DURING OCTOBER-DECember 2014 AND MARKET OUTLOOK
EB's reporting is based on two segments which are the Automotive and Wireless
Business Segments.
AUTOMOTIVE
In the Automotive Business Segment, EB offers a range of software products and
R&D services for in-car embedded software, as well as professional tools that
support the whole process of the in-car software development. Our customers are
carmakers, car electronics suppliers and other suppliers to the automotive
industry. The offering includes secure & safe technologies and solutions for
Connected Car Infrastructure, Driver Assistance and Infotainment solutions
containing navigation and human machine interfaces (HMI) technologies. 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, an extensive product line with
tooling and a 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 a jointly
owned company e.solutions GmbH that is currently developing infotainment
software and provides systems engineering and systems integration services for
Volkswagen Group car models. EB also delivers products and R&D services to the
joint venture. EB owns 51% of e.solutions GmbH and AEV 49%. e.solutions GmbH is
consolidated in EB group's financial statements by applying proportionate
consolidation method.
Development of the Automotive Business Segment in October - December 2014
EB's net sales in Automotive Business Segment continued its strong growth during
the fourth quarter of 2014 and amounted to EUR 51.6 million (EUR 41.1 million,
4Q 2013), representing a growth of 25.5 % year-on-year. The demand for EB's
software products and R&D services remained good in the Automotive Business
Segment, including the jointly owned company e.solutions GmbH. Operating profit
was EUR 5.4 million (EUR 5.4 million, 4Q 2013). The operating profit was at the
same level as last year and was impacted by higher project and R&D costs, as
well as increase in fixed expenses due to investments for information systems,
facilities and personnel.
The R&D investments in the fourth quarter were EUR 5.0 million (EUR 3.3 million,
4Q 2013). The increase in the R&D investments came mainly from new product
features and technologies needed in the future connected car and autonomous
driving applications.
In October EB presented its new operating system EB tresos Safety OS Multi-Core
for automotive ECUs (electronic control units). Car makers need multi-core
architectures for safety functions to create state-of-the-art automotive systems
that satisfy their customers' needs. EB and Nuance unveiled the integration of
voice and natural language understanding (NLU) technology as part of the Virtual
Cockpit in the new Audi TT Roadster. As a result, drivers are able to engage in
a more natural, conversational dialogue with Audi's infotainment and navigation
capabilities.
Automotive Business Segment market outlook
The global car market is expected to grow in 2015 between 2% according to the
forecast made by VDA (Verband der Automobilindustrie) and 4% according to the
study "The global automotive market" by Euler Hermes. The outlook for global
passenger car demand is more mixed than at the corresponding time a year ago,
particularly in view of the sharp fall in the price of oil and varying economic
development in different regions. However the carmakers continue to invest in
automotive software for new car models and the market for software products and
services is estimated to continue growing during 2015. The demand for EB's
products and services is estimated to develop positively year-on-year during
2015 in the Automotive Business Segment.
The market for electronics and software for cars is estimated to continue
growing in the long term. The study "Future Industry Structure of Automotive
(FAST) Electronics 2025" from Berylls assumes a growth of automotive electronics
from EUR 215 billion in 2012 to EUR 456 billion in 2025 (CAGR 6%).
Growth in the automotive software market in 2015 and beyond, and growth for EB,
is expected to be driven mainly by:
* The majority of in-vehicle innovations come from electronics and software.
Using software as a differentiator, carmakers are able to develop feature-
rich vehicles, and differentiate in the areas of comfort, safety and
security, information and entertainment, powertrain and communication. The
trend of separating hardware from software continues in 2015 and beyond,
allowing carmakers to speed up innovation and to improve the quality and
cost efficiency of their vehicles. As a software provider, this direction
gives EB an opportunity to work directly with the major carmakers, providing
them with software development services, products and tools according to
their individual requirements. EB also offers software integration services
to integrate software applications and modules from various suppliers.
* Carmakers continue to work on global modular car platforms to achieve
scalability as well as good ability to handle the complexity of a growing
number of car models and variants. This means volumes for software platforms
will increase and software development programs will become global and
include localization for all regions.
* The Increasing complexity of car electronics and software is resulting in
increasing efforts to provide safety-compliant systems.
* e.solutions, EB's jointly owned company with Audi, is developing high-end
infotainment software solutions for the Volkswagen group companies. During
2015, development of software will continue and deliveries from e.solutions
are planned for several new car models of Volkswagen group.
* Consumers expect in the car the same richness of features and user
experience they know from the Internet and mobile devices, and therefore
infotainment systems become increasingly common in all car price categories.
This is expected to create continuing demand for development of infotainment
software and software development tools, such as EB GUIDE.
* Mobile connectivity will become one of the fastest-growing Internet-
connected device platforms among other connected consumer electronics
devices, such as media tablets and smartphones. Gartner estimates that by
2016, the majority of car buyers in the automotive markets, such as in the
U.S. and the Western Europe, will view the availability of in-vehicle, web-
enabled dynamic content as a key buying criterion when considering a
standard brand car.
* Connected Car solutions and cloud connections enable the introduction of new
applications and enhancements to car functions, for example real-time
traffic information or map updates for navigation. The increasing demand to
better integrate mobile devices with the car has been reflected in the
announcements by consumer electronics companies, such as Apple's "CarPlay"
or Google's Open Automotive Alliance. These drivers are creating demand for
software integration services
* New Active Safety Systems and Driver Assistance applications are being
brought to the market, as automated driving is one of the key trends and an
area with significant investments. Carmakers are preparing highly automated
driving systems for their new car models to be available in the market in
the coming years.
WIRELESS
In the Wireless Business Segment EB offers innovative products and solutions
based on our own platforms for defense, public safety and other authorities
markets, IoT markets (Internet of Things) as well as for industrial use. For the
wireless communication markets and other companies who need wireless
connectivity to their products, EB offers R&D services based on the latest
wireless technologies and applications. EB also offers high quality information
security solutions for mobile devices and portable computers.
Wireless Business Segments products are: EB Tough Mobile LTE smartphone for
demanding Mobile Security and Public Safety needs, EB Tactical Wireless IP
Network, EB Tough VoIP products and EB Tactical LTE Access Point for tactical
communications. EB's product platforms are EB Special Device Platform for
Android-based devices and EB IoT Device Platform for development of different
kind of products that need wireless connectivity and various sensors. EB
SafeMove solutions enable secure, seamless connectivity for mobile workforce.
Development of the Wireless Business Segment in October - December 2014
Net sales of the Wireless Business Segment during the fourth quarter of 2014
decreased by 11.3 per cent year-on-year to EUR 16.3 million (EUR 18.4 million,
4Q 2013). The share of the product based net sales was EUR 6.3 million (EUR 6.9
million 4Q 2013), which resulted mainly from the product deliveries of the
tactical communication system to the Finnish Defence Forces and from the
delivery of special terminal products for the authority use to a customer
abroad. The decrease in the net sales year-on-year was mainly due to the
decrease in the demand for R&D services.
Operating profit was EUR 2.0 million including non-recurring costs of EUR 0.6
million resulting from Wireless Business Segment's personnel layoffs and from
the acquisition costs of SafeMove (operating loss of EUR 0.3 million, 4Q 2013).
The profitability in both service and product based business improved from the
last year.
On December 7, 2014 EB concluded the personnel negotiations (started on November
11, 2014) in order to rationalize its operations in the Wireless Business
Segment in Finland by laying off up to a maximum of 19 employees in its offices
in Kajaani and Tampere. As an alternative a few employees were offered new
positions in Oulu. This caused non-recurring costs of EUR 0.4 million that
weakened the result of the last quarter of 2014. With these actions EB will
achieve annual cost savings of approximately EUR 1 million, from the beginning
of 2015 onwards.
EB aims at bringing its products to the global defense and other authority
markets and continued its sales and marketing efforts and R&D investments into
these markets during the fourth quarter. Customers' purchase decisions proceeded
slower than estimated, and therefore the net sales resulting from the
international defense and other authority markets remained low.
R&D investments in the second quarter were EUR 2.0 million (EUR 1.2 million,
4Q 2013). R&D investments were increased for products for the use by
authorities.
In the beginning of November EB presented the new EB Tough Mobile LTE
smartphone, designed and built for demanding Mobile Security and Public Safety
markets. The EB Tough Mobile is packed with innovative features tailored for
professional users like government agencies, authorities, first responders and
other professionals with critical and secure communication needs.
In the beginning of November EB announced a versatile and easily customizable EB
IoT Device Platform. The platform offers customers a fast way to broaden their
product offering into the IoT market with latest technology and optimized cost.
This device platform, that supports different operating systems like Android,
can be used to develop products with wireless connectivity and various sensors,
such as, smart watches, intelligent jewelry, and wellness wristbands. Due to the
versatility and performance of the device platform, it also suites for
Industrial Internet use, for example to M2M device development.
Wireless Business Segment Market Outlook
In the Wireless Business Segment, EB's customers operate in various industries,
each of them having their own industry specific factors driving the demand. A
common factor creating demand among the whole customer base is the growing need
for even higher speed and higher quality communications.
The following factors are expected to create demand for EB's products and
services in 2015 and beyond:
* In the mobile infrastructure equipment market the use of LTE technology is
expected to continue strong. This creates the need for services for LTE base
station development. There is a wide range of frequencies allocated for LTE
globally thus creating the need to develop multiple products to cover the
market and creating demand for R&D services for development of product
variants.
* The trend of using new commercial technologies, such as LTE, smart phones
and 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, such as EB's specialized
terminals, tablets and communication modules. EB Tough Mobile LTE smart
phone creates the basis for new customer orders in the markets for public
authorities and mobile safety phones.
* Due to the long history in developing smart phones and mobile communication
devices, EB is in a good position to offer solutions, where e.g. mastering
of multi-radio technologies and end-to-end system architectures covering
both terminals and networks is needed.
* The demand for safety devices is expected to grow in the near future. EB
SafeMove product family is expected to increase the performance and
suitability in information security markets.
* IoT (Internet of Things) has become a significant development area in many
industries. The need for R&D services for connected devices for business or
consumer use, such as various wearable devices and solutions, implementing
mobile applications and connected devices both with internet services as
well as with other devices.
* In the tactical defense communication market the need for larger amounts of
information data grows, generating demand for broadband networks, such as
EB's IP (Internet Protocol) based tactical communications solutions.
The general cost savings of the mobile telecommunications network equipment
companies is reflected as increasing price competition in the R&D services.
Despite of that the demand for EB's R&D services is expected to remain steady
during 2015.
EB continues the product development and delivering products and services to
Finnish Defence Forces in 2015, and expects to get initial sales from the global
defence markets.
The defense, national security and other authority markets are slowly developing
markets by their nature. They are characterized by long sales cycles driven by
purchasing programs of national governments, and the purchases of the selected
products take place over several years.
RESEARCH AND DEVELOPMENT
EB continued its investments in R&D for automotive software products and tools
in Automotive Business Segment, and in products and product platforms for the
defense and public safety markets in Wireless Business Segment.
The total R&D investments during January-December 2014 were EUR 20.1 million
(EUR 18.5 million, in 2013), equaling 9.0% of the net sales (9.3%, in 2013). The
share of R&D investments in the Automotive Business Segment was EUR 13.2 million
(EUR 14.3 million, in 2013) and in the Wireless Business Segment EUR 6.9 million
(EUR 4.2 million, in 2013).
EUR 2.1 million of R&D investments was capitalized (EUR 0.0 million, in 2013),
and these capitalizations were R&D investments made in the Wireless Business
Segment. The amount of capitalized R&D investments at the end of December 2014
was EUR 12.2 million (EUR 12.0 million, 31.12.2013). A significant part of these
capitalized R&D investments is related to customer agreements in the Automotive
Business Segment, where future license fees, based on the actual car delivery
volumes, are expected to accumulate in the coming years. Depreciations of R&D
investments were EUR 1.8 million during the reporting period (EUR 1.6 million,
in 2013).
The total negative effect, caused from research and development investments,
their capitalizations and their depreciation, on EB's income statement in
January-December 2014 was EUR -19.8 million (EUR -20.1 million, in 2013).
OUTLOOK FOR 2015
For the year 2015 EB expects that the net sales and operating result will grow
from the previous year (net sales of EUR 224.1 million and operating profit of
EUR 16.8 million, in 2014). Net sales growth rate in 2015 is expected to be
higher than in the previous year (net sales growth of 12.5 %, 2014).
The demand for R&D services and software products of the Automotive Business
Segment is expected to continue as good. Net sales growth is expected to be
almost at the same level as in the previous year (net sales growth of 24.0 per
cent in 2014) and operating profit is expected to be at least at the same level
than in the previous year (operating profit of EUR 16.0 million, in 2014).
In the Wireless Business Segment, the demand for R&D services and products is
expected to develop positively especially in the authority markets and in
various applications where wireless connectivity is needed. The net sales and
operating profit are expected to grow from the previous year (net sales of EUR
53.0 million and operating profit of EUR 1.0 million in 2014).
The operating profit outlooks above do not include non-recurring costs resulting
from the planned partial demerger. The total amount of non-recurring costs is
estimated to be approximately EUR 2 million in 2015 in case the planned partial
demerger will be implemented.
More specific market outlook is presented under the sections "Market outlook for
the Automotive Business Segment" and "Market outlook for the Wireless Business
Segment".
More information about other uncertainties regarding the outlook is presented in
the sections "Risks and uncertainties" and "Events after the review period".
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.
In September 2014, Parrot SA withdrew the legal proceeding taken against
e.solutions GmbH, a jointly owned company of EB and AUDI, in the Tribunal de
Commerce de Paris (Commercial Court Paris). In the claim Parrot SA requested to
collect damages in the amount of approximately EUR 18.4 million for loss of
profit and reputational damage. During the reporting period, in January 2015, EB
has received information that Parrot SA has filed a request for arbitration
against e.solutions GmbH at the International Court of Arbitration of the
International Chamber of Commerce seeking remuneration and/or damages currently
in an amount of approximately EUR 9.4 million in connection with an automotive
supply contract. The place of arbitration is Munich, Germany. Based on
e.solutions GmbH's initial legal analysis the claim is without merit both in
terms of the grounds and the amount of the claim. The claim is based on Parrot
SA's allegation that e.solutions GmbH breached a supply contract between
e.solutions GmbH and Parrot SA by not ordering Parrot SA's products for
e.solutions GmbH's new infotainment software system. Parrot SA, also, claims
that e.solutions GmbH's new infotainment software system infringes its IP
rights. Based on the current analysis, the arbitral proceedings will not cause
any financial obligation to e.solutions GmbH or to EB that would affect EB's
profit outlook and financial position. It is possible that, based on later
information, this view may need to be reconsidered. At worst, Parrot SA's claim
could have significant negative impact on e.solutions' and EB's profit, cash
flow and financial position. More information about Parrot SA's legal
proceedings and its withdrawal as wells as about the request for arbitration is
presented in the "Significant Events during the Reporting Period" and in April
4, 2014, September 22, 2014 and January 9, 2015 stock exchange releases.
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. In both of EB's
business segments a significant part of net sales accumulates from just a few
customers. In the Automotive business segment a significant part of net sales
tied to projects carried out with different Volkswagen Group companies. EB and
Audi's subsidiary, Audi Electronics Venture GmbH (AEV), have a jointly owned
company e.solutions GmbH that is developing infotainment software and provides
systems engineering and systems integration services for Volkswagen Group car
models. EB also delivers products and R&D services to the jointly owned company.
In addition, EB delivers products and R&D services directly or through TIER1
suppliers to different Volkswagen Group companies. In the Wireless business
segment a significant part of net sales accumulates from selling R&D services to
a certain mobile communications equipment manufacturer and from selling products
and R&D services to the Finnish Defence Forces. Deviation in anticipated
business development with such customer concentrations may translate as a
significant deviation in the EB's outlook, both in terms of net sales and
operating result, during the ongoing financial period and thereafter. EB seeks
to expand its customer base on a longer term and reduce dependence on individual
companies and hence the company will thereby be mainly affected by the general
business climate in automotive and telecommunication industries. The more
specific market outlook has been presented under the "Market Outlook for the
Automotive Business Segment" and "Market Outlook for the Wireless Business
Segment" 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), accessibility on
commercially acceptable terms 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, timing risks and potential delays in the markets. The
above-mentioned risks may manifest themselves as lower amounts of product
delivered or higher costs of production, and ultimately, as lower profit. EB's
net sales from the automotive industry is currently primarily driven by the
development of software for electronic devices to be used in new car models, and
sales of licenses for in-car software and software development tools. EB aims
at developing its business model to be more based on software products, which is
expected to increase the direct dependency of net sales on production volumes
over the forthcoming years. The dependency on EB's net sales on car delivery
volumes is also increased by EB's customers tending to allocate a part of the
software development costs to be paid in license fees based on the actual car
delivery volumes. When using this pricing model, which is common in the
automotive industry, the project specific operating result and positive cash
flow will be typically reached first during the car production years and this
may cause significant additional financing needs for the R&D phase. However this
model can offer EB also an opportunity for higher cumulative income, in case the
take rate of additional software products or services, like in-car navigation
system in the new cars sold, would be higher than originally estimated. This is
dependent among others on the amount of additional software products and
services, such as in-car navigation, chosen to new cars at the time of purchase.
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.
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. In addition, the
progress of the customer projects and delivery capability may be also affected
by potential challenges in global accessibility of key technologies and
components on commercially acceptable terms.
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 10.0
million with Nordea Bank Finland Plc and a committed overdraft credit facility
agreement of EUR 10.0 million with Pohjola Bank Plc. These agreements meant for
general financing needs are valid until June 30, 2017. These agreements include
customary covenants related to, among other things, equity ratio, transferring
property and pledging. There is no assurance that additional financing will not
be needed in case of clearly weaker than expected development of EB's businesses
or in case customer commitments of Automotive Business Segment would represent
more than planned funding for R&D phase.
Customer dependency in some parts of EB's business may translate as accumulation
of risk with respect to outstanding receivables and ultimately with respect to
credit losses.
More short-term description of the risks and uncertainties are described in the
report by the Board of Directors 2014.
STATEMENT OF FINANCIAL POSITION AND FINANCING
The figures presented in the statement of financial position of December
31, 2014, are compared with the statement of the financial position of December
31, 2013 (MEUR).
31.12.2014 31.12.2013
-----------------------------------------------------------------
Non-current assets 48.8 46.1
-----------------------------------------------------------------
Current assets 118.0 98.2
-----------------------------------------------------------------
Total assets 166.8 144.4
-----------------------------------------------------------------
Share capital 12.9 12.9
-----------------------------------------------------------------
Other equity 80.5 68.8
-----------------------------------------------------------------
Total shareholders' equity 93.4 81.7
-----------------------------------------------------------------
Non-current liabilities 7.6 6.1
-----------------------------------------------------------------
Current liabilities 65.8 56.5
-----------------------------------------------------------------
Total shareholders' equity and liabilities 166.8 144.4
-----------------------------------------------------------------
The cash flows during the period under review:
---------------------------------------------------------------------
+ net profit +/- adjustment of accrual basis items EUR +27.4 million
---------------------------------------------------------------------
+/- change in net working capital EUR -12.1 million
---------------------------------------------------------------------
- interest, taxes and dividends EUR -4.7 million
---------------------------------------------------------------------
= cash generated from operations EUR +10.5 million
---------------------------------------------------------------------
- net cash used in investment activities EUR -9.2 million
---------------------------------------------------------------------
- net cash used in financing EUR -1.0 million
---------------------------------------------------------------------
= net change in cash and cash equivalents EUR +0.3 million
---------------------------------------------------------------------
The increase in net working capital during the review period resulted mainly
from the increase in non-interest bearing receivables and from the decreased
non-interest bearing liabilities.
The amount of accounts receivable and other receivables, booked in current
receivables, was EUR 72.5 million (EUR 54.3 million on December 31, 2013).
Accounts payable and other payables, booked in interest-free current
liabilities, were EUR 61.3 million (EUR 54.5 million on December 31, 2013). 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, 2013).
The amount of gross investments in the period under review was EUR 11.4 million.
Net investments for the reporting period totaled EUR 11.3 million. The total
amount of depreciation during the period under review was EUR 8.7 million,
including EUR 0.2 million of depreciation owing to business acquisitions in
Automotive Business Segment.
The amount of interest-bearing debt, including finance lease liabilities, at the
end of the reporting period was EUR 8.3 million (EUR 5.3 million on December
31, 2013). The distribution of net financing expenses on the income statement
was as follows:
----------------------------------------------------------------
Interest, dividend and other financial income EUR 0.4 million
----------------------------------------------------------------
Interest expenses and other financial expenses EUR -0.4 million
----------------------------------------------------------------
foreign exchange gains and losses EUR -1.3 million
----------------------------------------------------------------
EB's equity ratio at the end of the period was 62.3% (65.1 % on December
31, 2013).
Cash and other liquid assets at the end of the reporting period were EUR 43.3
million (EUR 43.0 million on December 31, 2013). In July EB signed a EUR 10
million credit facility agreement with Nordea Bank Finland Plc. and a EUR 10
million credit facility agreement with Pohjola Bank Plc. These agreements,
intended for general financing purposes, are valid until June 30, 2017. At the
end of the review period, EUR 3.0 million of these facilities was in use.
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 8.0 million.
PERSONNEL
The parent company of the group and its subsidiaries employed an average of
1699 people between January and December 2014. In addition, e.solutions GmbH,
the jointly owned company of EB and AUDI, employed 380 people. At the end of
December, the parent company of the group and its subsidiaries had 1804
employees and e.solutions GmbH 431 employees (1648 in group's parent company and
subsidiaries and e.solutions GmbH 321 at the end of 2013). A significant part of
EB's personnel are R&D engineers.
FLAGGING NOTIFICATIONS
On May 12, 2014 EB received a flagging announcement pursuant to chapter 9,
section 5 of the Finnish Securities Markets Act, according to which the number
of Juha Hulkko's holdings of the shares and voting rights have decreased below
the 20 per cent flagging threshold. The decrease took place on May 12, 2014.
On October 28, 2014 EB received a flagging announcement pursuant to chapter 9,
section 5 of the Finnish Securities Markets Act, according to which the number
of Elektrobit Corporation's shares increased on October 28, 2014 through share
subscriptions pursuant to stock options, totaling to 131 407 100 shares,
resulting in the decrease in the holdings of the shares and voting rights of
Juha Hulkko below the 15 per cent flagging threshold. The decrease took place on
October 28, 2014. The aggregate holdings of Juha Hulkko total to 19 701 862
shares in Elektrobit Corporation, corresponding to 14.99 per cent of the
Elektrobit Corporation's shares and voting rights.
EVENTS AFTER THE REVIEW PERIOD
Acquisition of the SafeMove business
On January 2, 2015 Elektrobit Technologies Ltd, a subsidiary of Elektrobit
Corporation acquired 100 per cent of the shares of Birdstep Technology Oy, which
was a fully owned Finnish subsidiary of Birdstep Technology ASA, based in
Norway. The acquisition strengthened the competitiveness of EB's Wireless
Business Segment as a provider of secure communication solutions for defence,
safety and other authorities markets. Birdstep Technology Oy provides its
customers high quality information security solutions for mobile devices and
portable computers. Birdstep Technology Oy's (SafeMove Oy from 2nd of January
2015 onwards) net sales was EUR 2.5 in 2013 million and in January-September
2014 EUR 2.1 million. The company employs 19 persons located in Espoo, Finland.
The debt free cash purchase price is EUR 2.0 million, which will be adjusted
based upon the level of networking capital and cash and debt in the Birdstep
Technology Oy on December 31, 2014. The acquisition has no significant impact on
EB's balance sheet, net sales and financial position. The company will be
reported as part of EB's Wireless Business Segment from January 1, 2015 on.
Parrot's REQUEST FOR ARBITRATION AGAINST E.SOLUTIONS
In January EB received information that Parrot filed a request for arbitration
against e.solutions at the International Court of Arbitration of the
International Chamber of Commerce seeking remuneration and/or damages currently
in an amount of approximately EUR 9.4 million in connection with an automotive
supply contract. Based on e.solutions' initial legal analysis the claim is
without merit both in terms of the grounds and the amount of the claim. Based on
the current analysis, the arbitral proceedings will not cause any financial
obligation to e.solutions or to EB that would affect EB's profit outlook and
financial position. It is possible that, based on later information, this view
may need to be reconsidered. At the worst, Parrot's claim could have significant
negative impact on e.solutions' and EB's profit, cash flow and financial
position.
Increase of shares by virtue of the option rights 2008B and 2008C
A total of 508,697 new shares in Elektrobit Corporation were subscribed between
December 15, 2014 and January 26, 2015 by virtue of the option rights 2008B and
2008C. The share subscription price, EUR 61,719.94, was recorded in the
Company's invested non-restricted equity fund. The corresponding increase in the
number of the Company's shares was entered into the Finnish Trade Register on
February 6, 2015. Trading with the newly registered shares started on February
9, 2015 in NASDAQ OMX Helsinki Ltd. After the registration of the new shares,
the number of shares in Elektrobit Corporation's totals 131,588,510.
plan for partial demerger and listing of bittium corporation
The Board of Directors of Elektrobit Corporation has on February 18, 2015
approved a plan for partial demerger of the company and intends to list Bittium
Corporation as a separate entity at Nasdaq Helsinki. The Board of Directors of
EB has also updated the strategic guidelines and financial targets of EB's
Business Segments for the years 2015 -2017.
Based on the demerger plan, the assets and liabilities related to EB's Wireless
Business Segment will be transferred to Bittium Corporation, an entity to be
newly established in the partial demerger that will be listed at Nasdaq
Helsinki. EB's Automotive Business Segment remains as a part of the current EB,
which will continue its listing at Nasdaq Helsinki. The partial demerger will
need to be approved by an extraordinary general meeting, expected to be held on
June 11, 2015. The planned effective date for the demerger is June 30, 2015.
Additional information on the partial demerger plan and the updated strategic
guidelines has been presented today in a separate stock exchange release.
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, 2014, the
distributable assets of the parent company are EUR 89,790,981.58 of which the
profit of the financial year is EUR 2,448,934.17.
The Board of Directors proposes that the Annual General Meeting to be held on
April 15, 2015 resolve to pay EUR 0.04 per share, as dividend based on the
adopted balance sheet for the financial period of January 1, 2014 - December
31, 2014. 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, Friday, April 17, 2015. The
Board of Directors proposes that the dividend be paid on Friday, April 24, 2015.
ANnual general meeting And annual report
Elektrobit Corporation's Annual General Meeting will be held on Wednesday, April
15, 2015, 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 23, 2015.
Oulu February 19, 2015
Elektrobit Corporation
The Board of Members
Further Information:
Jukka Harju
CEO
Tel. +358 40 344 5466
Distribution:
NASDAQ OMX Helsinki
Major media
ELEKTROBIT CORPORATION (EB)
CONDENSED FINANCIAL STATEMENTS 2014
The consolidated financial statement has been prepared in accordance with
International Financial Reporting Standards (IFRS). The Financial Statement of
2014 has been audited and the auditing report has been dated on February
18, 2015.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (MEUR) 1-12/2014 1-12/2013
Continuing operations 12 months 12 months
-------------------------------------------------------------------------------
NET SALES 224.1 199.3
-------------------------------------------------------------------------------
Other operating income 4.7 3.5
-------------------------------------------------------------------------------
Change in work in progress and finished goods 0.0 -0.0
-------------------------------------------------------------------------------
Work performed by the undertaking for its own purpose and 0.1 0.0
capitalized
-------------------------------------------------------------------------------
Raw materials -16.3 -12.4
-------------------------------------------------------------------------------
Personnel expenses -125.6 -113.2
-------------------------------------------------------------------------------
Depreciation -8.7 -9.0
-------------------------------------------------------------------------------
Other operating expenses -61.5 -60.0
-------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 16.8 8.1
-------------------------------------------------------------------------------
Financial income and expenses -1.3 -0.9
-------------------------------------------------------------------------------
PROFIT BEFORE TAX 15.5 7.2
-------------------------------------------------------------------------------
Income tax -3.3 -0.6
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS 12.3 6.7
-------------------------------------------------------------------------------
Discontinued operations
-------------------------------------------------------------------------------
Profit for the year from discontinued operations 0.2 24.3
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 12.5 30.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Other comprehensive income:
-------------------------------------------------------------------------------
Items that will not be reclassified to statement of income
-------------------------------------------------------------------------------
Re-measurement gains (losses) on defined benefit plans -0.8 0.0
-------------------------------------------------------------------------------
Income tax effect 0.2
-------------------------------------------------------------------------------
Items that may be reclassified subsequently to the
statement of income
-------------------------------------------------------------------------------
Exchange differences on translating foreign operations 0.9 -0.0
-------------------------------------------------------------------------------
Other comprehensive income for the period total 0.4 -0.0
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 12.9 30.9
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Profit for the year attributable to
-------------------------------------------------------------------------------
Equity holders of the parent 12.5 30.9
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total comprehensive income for the period attributable to
-------------------------------------------------------------------------------
Equity holders of the parent 12.9 30.9
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.094 0.051
-------------------------------------------------------------------------------
Diluted earnings per share 0.093 0.051
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from discontinued operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.002 0.188
-------------------------------------------------------------------------------
Diluted earnings per share 0.002 0.187
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing and discontinued
operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.096 0.239
-------------------------------------------------------------------------------
Diluted earnings per share 0.095 0.238
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Average number of shares, 1000 pcs 130 975 129 528
-------------------------------------------------------------------------------
Average number of shares, diluted, 1000 pcs 131 663 130 092
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Dec. 31, 2014 Dec. 31, 2013
(MEUR)
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Non-current assets
-------------------------------------------------------------------------------
Property, plant and equipment 10.7 9.7
-------------------------------------------------------------------------------
Goodwill 19.3 19.3
-------------------------------------------------------------------------------
Intangible assets 17.0 15.5
-------------------------------------------------------------------------------
Other financial assets 0.1 0.1
-------------------------------------------------------------------------------
Deferred tax assets 1.7 1.5
-------------------------------------------------------------------------------
Non-current assets total 48.8 46.1
-------------------------------------------------------------------------------
Current assets
-------------------------------------------------------------------------------
Inventories 2.2 0.8
-------------------------------------------------------------------------------
Trade and other receivables 72.5 54.3
-------------------------------------------------------------------------------
Financial assets at fair value through profit or 21.0 20.7
loss
-------------------------------------------------------------------------------
Cash and short term deposits 22.3 22.4
-------------------------------------------------------------------------------
Current assets total 118.0 98.2
-------------------------------------------------------------------------------
TOTAL ASSETS 166.8 144.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity attributable to equity holders of the
parent
-------------------------------------------------------------------------------
Share capital 12.9 12.9
-------------------------------------------------------------------------------
Invested non-restricted equity fund 25.1 24.5
-------------------------------------------------------------------------------
Translation difference 1.5 0.6
-------------------------------------------------------------------------------
Retained earnings 53.8 43.7
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
Total equity 93.4 81.7
-------------------------------------------------------------------------------
Non-current liabilities
-------------------------------------------------------------------------------
Deferred tax liabilities 0.5 0.5
-------------------------------------------------------------------------------
Pension obligations 3.0 2.1
-------------------------------------------------------------------------------
Provisions 0.2 0.3
-------------------------------------------------------------------------------
Interest-bearing liabilities 3.8 3.3
-------------------------------------------------------------------------------
Non-current liabilities total 7.6 6.1
-------------------------------------------------------------------------------
Current liabilities
-------------------------------------------------------------------------------
Trade and other payables 58.5 52.2
-------------------------------------------------------------------------------
Financial liabilities at fair value through 0.2
profit or loss
-------------------------------------------------------------------------------
Provisions 2.6 2.3
-------------------------------------------------------------------------------
Interest-bearing loans and borrowings 4.5 2.0
-------------------------------------------------------------------------------
Current liabilities total 65.8 56.5
-------------------------------------------------------------------------------
Total liabilities 73.4 62.6
-------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 166.8 144.4
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-12/2014 1-12/2013
12 months 12 months
-----------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
-----------------------------------------------------------------------
Profit for the year from continuing operations 12.3 6.7
-----------------------------------------------------------------------
Profit for the year from discontinued operations 0.2 24.3
-----------------------------------------------------------------------
Adjustment of accrual basis items 14.9 -13.3
-----------------------------------------------------------------------
Change in net working capital -12.1 18.7
-----------------------------------------------------------------------
Interest paid on operating activities -1.3 -1.3
-----------------------------------------------------------------------
Interest received from operating activities 0.4 0.3
-----------------------------------------------------------------------
Other financial income and expenses, net received 0.0 0.0
-----------------------------------------------------------------------
Income taxes paid -3.8 -0.7
-----------------------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES 10.5 34.7
-----------------------------------------------------------------------
-----------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
-----------------------------------------------------------------------
Acquisition of business unit, net of cash acquired 30.0
-----------------------------------------------------------------------
Purchase of property, plant and equipment -3.6 -4.0
-----------------------------------------------------------------------
Purchase of intangible assets -5.7 -2.0
-----------------------------------------------------------------------
Sale of property, plant and equipment 0.1 0.2
-----------------------------------------------------------------------
Sale of intangible assets 0.0
-----------------------------------------------------------------------
Proceeds from sale of investments 0.0
-----------------------------------------------------------------------
NET CASH FROM INVESTING ACTIVITIES -9.2 24.4
-----------------------------------------------------------------------
-----------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
-----------------------------------------------------------------------
Share-option plans exercised 0.6 0.1
-----------------------------------------------------------------------
Proceeds from borrowing 19.4 16.6
-----------------------------------------------------------------------
Repayment of borrowing -16.6 -28.4
-----------------------------------------------------------------------
Payment of finance liabilities -1.8 -3.1
-----------------------------------------------------------------------
Dividend paid and repayment of capital -2.6 -15.6
-----------------------------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES -1.0 -30.3
-----------------------------------------------------------------------
-----------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 0.3 28.7
-----------------------------------------------------------------------
Cash and cash equivalents at beginning of period 43.0 14.3
-----------------------------------------------------------------------
Cash and cash equivalents at end of period 43.3 43.0
-----------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (MEUR)
----------------------------------------------------
A = Share capital
----------------------------------------------------
B = Invested non-restricted equity fund
----------------------------------------------------
C = Translation difference
----------------------------------------------------
D = Retained earnings
----------------------------------------------------
E = Non-controlling interests
----------------------------------------------------
Restated A B C D E
---------------------------------------------------------------------------
Shareholders equity on December 31, 2012 12.9 38.7 0.6 14.3 66.6
---------------------------------------------------------------------------
Change in accounting policy (IAS 19) -0.6 -0.6
---------------------------------------------------------------------------
Shareholders equity on January 1, 2013 restated 12.9 38.7 0.6 13.7 66.0
---------------------------------------------------------------------------
Comprehensive income for the period
---------------------------------------------------------------------------
Profit for the period 30.9 30.9
---------------------------------------------------------------------------
Exchange differences on translating foreign -0.0 -0.0
operations
---------------------------------------------------------------------------
Total comprehensive income for the period -0.0 30.9 30.9
---------------------------------------------------------------------------
Transactions between the shareholders
---------------------------------------------------------------------------
Dividend distribution -1.3 -1.3
---------------------------------------------------------------------------
Capital repayment -14.3 -14.3
---------------------------------------------------------------------------
Share option plans exercised 0.1 0.1
---------------------------------------------------------------------------
Share-related compensation 0.2 0.2
---------------------------------------------------------------------------
Total transactions between the shareholders -14.2 -1.1 -15.3
---------------------------------------------------------------------------
Other changes 0.1 0.1
---------------------------------------------------------------------------
Shareholders equity on Dec. 31, 2013 12.9 24.5 0.6 43.7 81.7
---------------------------------------------------------------------------
A B C D E
-------------------------------------------------------------------------------
Shareholders equity on Jan. 1, 2014 12.9 24.5 0.6 43.7 81.7
-------------------------------------------------------------------------------
Comprehensive income for the period
-------------------------------------------------------------------------------
Profit for the period 12.5 12.5
-------------------------------------------------------------------------------
Re-measurement gains (losses) on defined benefit -0.5 -0.5
plans (IAS 19)
-------------------------------------------------------------------------------
Exchange differences on translating foreign 0.9 0.9
operations
-------------------------------------------------------------------------------
Total comprehensive income for the period 0.9 12.0 12.9
-------------------------------------------------------------------------------
Transactions between the shareholders
-------------------------------------------------------------------------------
Dividend distribution -2.6 -2.6
-------------------------------------------------------------------------------
Share option plans exercised 0.6 0.6
-------------------------------------------------------------------------------
Share-related compensation 0.1 0.1
-------------------------------------------------------------------------------
Total transactions between the shareholders 0.6 -2.5 -2.0
-------------------------------------------------------------------------------
Other changes 0.7 0.7
-------------------------------------------------------------------------------
Shareholders equity on Dec. 31, 2014 12.9 25.1 1.5 53.8 93.4
-------------------------------------------------------------------------------
NOTES TO THE Financial statements
Accounting principles for the financial statements :
The consolidated financial statement has been prepared in accordance with
International Financial Reporting Standards (IFRS).
SEGMENT-INFORMATIOn (MEUR)
OPERATING SEGMENTS 1-12/2014 1-12/2013
12 months 12 months
------------------------------------------------------
Automotive
------------------------------------------------------
Net sales to external customers 171.4 138.2
------------------------------------------------------
Net sales to other segments 0.0 0.1
------------------------------------------------------
Net sales total 171.4 138.3
------------------------------------------------------
------------------------------------------------------
Operating profit (loss) 16.0 8.5
------------------------------------------------------
------------------------------------------------------
Wireless
------------------------------------------------------
Net sales to external customers 52.7 61.1
------------------------------------------------------
Net sales to other segments 0.3 0.1
------------------------------------------------------
Net sales total 53.0 61.2
------------------------------------------------------
------------------------------------------------------
Operating profit (loss) 1.0 -0.5
------------------------------------------------------
------------------------------------------------------
OTHER ITEMS
------------------------------------------------------
------------------------------------------------------
Other items
------------------------------------------------------
Net sales to external customers
------------------------------------------------------
Operating profit (loss) -0.2 0.1
------------------------------------------------------
------------------------------------------------------
Eliminations
------------------------------------------------------
Net sales to other segments -0.3 -0.2
------------------------------------------------------
Operating profit (loss) 0.0 0.0
------------------------------------------------------
------------------------------------------------------
Group total
------------------------------------------------------
Net sales to external customers 224.1 199.3
------------------------------------------------------
Operating profit (loss) 16.8 8.1
------------------------------------------------------
Net sales of geographical areas (MEUR) 1-12/2014 1-12/2013
12 months 12 months
-----------------------------------------------------------
Net sales
-----------------------------------------------------------
Europe 183.6 164.8
-----------------------------------------------------------
Americas 31.5 26.6
-----------------------------------------------------------
Asia 9.0 7.9
-----------------------------------------------------------
Net sales total 224.1 199.3
-----------------------------------------------------------
Related party transactions 1-12/2014 1-12/2013
12 months 12 months
-------------------------------------------------------------------------------
Employee benefits for key management and stock options 1.9 1.2
expenses total
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF 10-12/2014 7-9/2014 4-6/2014 1-3/2014 10-12/2013
COMPREHENSIVE INCOME BY 3 months 3 months 3 months 3 months 3 months
QUARTER (MEUR)
Continuing operations
-------------------------------------------------------------------------------
NET SALES 67.8 52.5 52.2 51.7 59.5
-------------------------------------------------------------------------------
Other operating income 1.8 1.1 1.1 0.6 0.7
-------------------------------------------------------------------------------
Change in work in progress -0.0 0.0 0.0 0.0 -0.1
and finished goods
-------------------------------------------------------------------------------
Work performed by the 0.0 0.0 0.1 0.0
undertaking for its own
purpose and capitalized
-------------------------------------------------------------------------------
Raw materials -5.8 -1.9 -3.6 -5.1 -6.3
-------------------------------------------------------------------------------
Personnel expenses -34.0 -29.8 -30.5 -31.4 -28.8
-------------------------------------------------------------------------------
Depreciation -2.4 -2.1 -2.1 -2.2 -2.4
-------------------------------------------------------------------------------
Other operating expenses -20.2 -15.2 -14.2 -11.8 -17.0
-------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 7.2 4.6 3.1 1.9 5.7
-------------------------------------------------------------------------------
Financial income and expenses -0.7 -0.4 -0.3 0.0 -0.2
-------------------------------------------------------------------------------
PROFIT BEFORE TAX 6.5 4.2 2.8 1.9 5.5
-------------------------------------------------------------------------------
Income tax -0.4 -1.6 -1.0 -0.2 -0.4
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD FROM 6.1 2.6 1.8 1.7 5.0
CONTINUING OPERATIONS
-------------------------------------------------------------------------------
Discontinued operations
-------------------------------------------------------------------------------
Profit for the period from
discontinued operations 0.2
-------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 6.4 2.6 1.8 1.7 5.0
-------------------------------------------------------------------------------
Other comprehensive income -0.1 0.2 0.3 -0.1 -0.1
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME 6.3 2.8 2.1 1.6 4.9
FOR THE PERIOD
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Profit for the period
attributable to:
-------------------------------------------------------------------------------
Equity holders of the 6.4 2.6 1.8 1.7 5.0
parent
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
Total comprehensive income
for the period attributable
to:
-------------------------------------------------------------------------------
Equity holders of the 6.3 2.8 2.1 1.6 4.9
parent
-------------------------------------------------------------------------------
Non-controlling interests
-------------------------------------------------------------------------------
CONSOLIDATED Dec. Sept. Jun. Mar. Dec.
STATEMENT OF 31, 2014 30, 2014 30, 2014 31, 2014 31, 2013
FINANCIAL
POSITION (MEUR)
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Non-current
assets
-------------------------------------------------------------------------------
Property, 10.7 9.2 9.1 9.3 9.7
plant and
equipment
-------------------------------------------------------------------------------
Goodwill 19.3 19.4 19.4 19.4 19.3
-------------------------------------------------------------------------------
Intangible 17.0 16.8 14.7 14.8 15.5
assets
-------------------------------------------------------------------------------
Other 0.1 0.1 0.1 0.1 0.1
financial assets
-------------------------------------------------------------------------------
Deferred tax 1.7 1.6 1.5 1.5 1.5
assets
-------------------------------------------------------------------------------
Non-current 48.8 47.1 44.9 45.1 46.1
assets total
-------------------------------------------------------------------------------
Current assets
-------------------------------------------------------------------------------
Inventories 2.2 1.5 1.0 0.9 0.8
-------------------------------------------------------------------------------
Trade and 72.5 60.9 71.6 55.3 54.3
other
receivables
-------------------------------------------------------------------------------
Financial
assets at fair 21.0 20.9 20.9 20.8 20.7
value through
profit or loss
-------------------------------------------------------------------------------
Cash and short 22.3 19.8 10.0 21.8 22.4
term deposits
-------------------------------------------------------------------------------
Current assets 118.0 103.1 103.5 98.8 98.2
total
-------------------------------------------------------------------------------
TOTAL ASSETS 166.8 150.2 148.4 144.0 144.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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- 25.1 24.9 24.9 24.8 24.5
restricted
equity fund
-------------------------------------------------------------------------------
Translation 1.5 1.0 0.8 0.5 0.6
difference
-------------------------------------------------------------------------------
Retained 53.8 47.0 44.7 45.4 43.7
earnings
-------------------------------------------------------------------------------
Non-
controlling
interests
-------------------------------------------------------------------------------
Total equity 93.4 85.9 83.3 83.7 81.7
-------------------------------------------------------------------------------
Non-current
liabilities
-------------------------------------------------------------------------------
Deferred tax 0.5 0.5 0.5 0.5 0.5
liabilities
-------------------------------------------------------------------------------
Pension 3.0 2.2 2.1 2.1 2.1
obligations
-------------------------------------------------------------------------------
Provisions 0.2 0.2 0.3 0.5 0.3
-------------------------------------------------------------------------------
Interest- 3.8 3.0 2.9 3.0 3.3
bearing
liabilities
-------------------------------------------------------------------------------
Non-current 7.6 5.9 5.8 6.1 6.1
liabilities
total
-------------------------------------------------------------------------------
Current
liabilities
-------------------------------------------------------------------------------
Trade and 58.5 51.2 45.4 43.5 52.2
other payables
-------------------------------------------------------------------------------
Financial 0.2 0.4 0.0
liabilities at
fair value
through
profit or loss
-------------------------------------------------------------------------------
Provisions 2.6 2.5 3.0 2.3 2.3
-------------------------------------------------------------------------------
Interest- 4.5 4.3 10.9 8.3 2.0
bearing loans
and borrowings
-------------------------------------------------------------------------------
Current 65.8 58.3 59.3 54.1 56.5
liabilities
total
-------------------------------------------------------------------------------
Total 73.4 64.3 65.1 60.3 62.6
liabilities
-------------------------------------------------------------------------------
TOTAL EQUITY AND 166.8 150.2 148.4 144.0 144.4
LIABILITIES
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF 10-12/2014 7-9/2014 4-6/2014 1-3/2014 10-12/2013
CASH FLOWS BY QUARTER 3 months 3 months 3 months 3 months 3 months
-------------------------------------------------------------------------------
Net cash from operating 5.4 20.5 -9.7 -5.7 26.0
activities
-------------------------------------------------------------------------------
Net cash from investing -2.6 -3.9 -1.7 -1.0 -0.3
activities
-------------------------------------------------------------------------------
Net cash from financing -0.2 -6.7 -0.3 6.2 -26.5
activities
-------------------------------------------------------------------------------
Net change in cash and cash 2.5 9.8 -11.6 -0.5 -0.9
equivalents
-------------------------------------------------------------------------------
FINANCIAL PERFORMANCE RELATED RATIOS 1-12/2014 1-12/2013
12 months 12 months
-------------------------------------------------------------------------------
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
-------------------------------------------------------------------------------
Net sales 224.1 199.3
-------------------------------------------------------------------------------
Operating profit (loss) 16.8 8.1
-------------------------------------------------------------------------------
Operating profit (loss), % of net sales 7.5 4.1
-------------------------------------------------------------------------------
Profit before taxes 15.5 7.2
-------------------------------------------------------------------------------
Profit before taxes, % of net sales 6.9 3.6
-------------------------------------------------------------------------------
Profit for the period 12.3 6.7
-------------------------------------------------------------------------------
PROFITABILITY AND OTHER KEY FIGURES
-------------------------------------------------------------------------------
Interest-bearing net liabilities, (MEUR) -35.0 -37.7
-------------------------------------------------------------------------------
Net gearing, -% -37.4 -46.1
-------------------------------------------------------------------------------
Equity ratio, % 62.3 65.1
-------------------------------------------------------------------------------
Gross investments, (MEUR) 11.4 7.9
-------------------------------------------------------------------------------
Average personnel during the period, parent and 1699 1627
subsidiaries
-------------------------------------------------------------------------------
Personnel at the period end, parent and subsidiaries 1804 1648
-------------------------------------------------------------------------------
Average personnel during the period, jointly owned company 380 300
-------------------------------------------------------------------------------
Personnel at the period end, jointly owned company 431 321
-------------------------------------------------------------------------------
AMOUNT OF SHARE ISSUE ADJUSTMENT (1,000 pcs) Dec. 31, 2014 Dec. 31, 2013
-------------------------------------------------------------------------------
At the end of period 131 493 130 101
-------------------------------------------------------------------------------
Average for the period 130 975 129 528
-------------------------------------------------------------------------------
Average for the period diluted with stock options 131 663 130 092
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1-12/2014 1-12/2013
STOCK-RELATED FINANCIAL RATIOS (EUR) 12 months 12 months
-------------------------------------------------------------------------------
Earnings per share from continuing operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.094 0.051
-------------------------------------------------------------------------------
Diluted earnings per share 0.093 0.051
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from discontinued operations,
EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.002 0.188
-------------------------------------------------------------------------------
Diluted earnings per share 0.002 0.187
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Earnings per share from continuing and
discontinued operations, EUR
-------------------------------------------------------------------------------
Basic earnings per share 0.096 0.239
-------------------------------------------------------------------------------
Diluted earnings per share 0.095 0.238
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity *) per share 0.71 0.63
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
*) Equity attributable to equity holders of the
parent
-------------------------------------------------------------------------------
MARKET VALUES OF SHARES (EUR) 1-12/2014 1-12/2012
12 months 12 months
----------------------------------------------------------
Highest 3.83 2.90
----------------------------------------------------------
Lowest 2.30 0.64
----------------------------------------------------------
Average 2.85 1.55
----------------------------------------------------------
At the end of period 3.36 2.66
----------------------------------------------------------
----------------------------------------------------------
Market value of the stock, (MEUR) 441.8 346.1
----------------------------------------------------------
Trading value of shares, (MEUR) 188.0 72.0
----------------------------------------------------------
Number of shares traded, (1,000 pcs) 66 019 46 483
----------------------------------------------------------
Related to average number of shares % 50.4 35.9
----------------------------------------------------------
SECURITIES AND CONTINGENT LIABILITIES (MEUR) Dec. 31, 2014 Dec. 31, 2013
--------------------------------------------------------------------------
AGAINST OWN LIABILITIES
--------------------------------------------------------------------------
Floating charges 1.0 18.0
--------------------------------------------------------------------------
Guarantees 6.4 14.6
--------------------------------------------------------------------------
Rental liabilities
--------------------------------------------------------------------------
Falling due in the next year 7.2 7.6
--------------------------------------------------------------------------
Falling due after one year 13.0 17.6
--------------------------------------------------------------------------
Other contractual liabilities
--------------------------------------------------------------------------
Falling due in the next year 2.1 1.0
--------------------------------------------------------------------------
Falling due after one year 0.7 0.6
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Mortgages are pledged for liabilities totaled 2.6 2.5
--------------------------------------------------------------------------
--------------------------------------------------------------------------
NOMINAL VALUE OF CURRENCY DERIVATIVES (MEUR) Dec. 31, 2014 Dec. 31, 2013
--------------------------------------------------------------------------
Foreign exchange forward contracts
--------------------------------------------------------------------------
Market value -0.1 0.1
--------------------------------------------------------------------------
Nominal value 3.0 6.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Purchased currency options
--------------------------------------------------------------------------
Market value 0.0 0.0
--------------------------------------------------------------------------
Nominal value 5.0 2.5
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Sold currency options
--------------------------------------------------------------------------
Market value -0.1 -0.0
--------------------------------------------------------------------------
Nominal value 10.0 5.0
--------------------------------------------------------------------------
[HUG#1895660]
