INTERIM REPORT 1-3/2007
SUMMARY HIGHLIGHTS
-Peter Bamford, Ex Vodafone CEO Appointed as Chairman
-Simon Wilkinson and Dan Harple appointed Directors
-Acquisition of GeoSolutions
-Benefon China launch's into PND business
-Financing plan
-Mobile hardware shifts to OEM business model
-Creation of three operating divisions
-Strategic shift of the business to services and solutions
1. Highlights of the last quarter
Distribution agreement expanded in China
In mid-January Benefon announced an expansion of its distribution agreement with
China Potevio's Capitel group and Lextel to cover the sales, marketing, and
distribution of Benefon's navigation and location products. Under the terms of
the agreement, Lextel Group committed to order an amount of €3,750,000 of
Benefon´s TWIG DISCOVERY devices. The order is conditional on getting CTA
approval and Benefon expected the deliveries to start during the second quarter
of 2007. Due to additional time required in getting CTA approval the Company now
expects the deliveries to commence during second half of 2007.
TWIG DISCOVERY Product Update
On February 9, 2007, Benefon announced that Travel Safety Group (“TSG”) from
Florida has placed an USD 10 million order for Benefon's TWIG Discovery
navigation devices that were expected to be shipped during the first half of
2007. TSG's market introduction of the product is now expected to commence in
June 2007 and sales are now anticipated to commence during the third quarter.
Additionally, with TWIG Discovery being end of life affecting the demand for the
product from other existing customers, it is expected that TSG will only receive
a small allocation of their initial order and that the remaining order will not
be fulfilled, with both parties agreeing to work towards sales on the future
products.
Product Roadmap Update
On February 21, 2007, Benefon announced three new smart devices for its 2007
product portfolio. The new range, comprising the products TWIG Talisman, TWIG
Totem and TWIG Monolith, is a sophisticated collection of WiFi enabled 2.75G and
3.5G Windows smartphone solutions to suit individual preferences. The first new
Twig devices were expected to be available starting in June 2007, with other
versions being released in the last half of the year. The company is now
reviewing its product roadmap for 2008.
GeoSolutions acquisition
Benefon Oyj announced on March 5, 2007, that it has signed a letter of intent to
acquire GeoSolutions BV, a developer of location-based technologies, products,
and services for mobile and Internet-connected devices. This start-up firm
employs 13 people and it did not have activities in 2006.
The announced acquisition was closed after the end of the reporting period on
May 2, 2007, and the principal terms are as detailed in the following.
By virtue of the authorisation granted to it by the Annual General Meeting of
April 16, 2007, the Board of Directors of the Company has decided to issue
agreed number of Benefon Oyj's new investment series shares to GeoHolding B.V.,
to the sole owner of GeoSolutions B.V., and agreed number of option rights to
key resources of GeoSolutions B.V. as follows:
The initial purchase price agreed in the terms of the share Exchange Agreement
entered into with GeoHolding B.V. consists of two parts. The first part is
agreed to be paid by issuing 21,000,000 new investment series shares at closing
and the Company has committed to pay the remainder by issuing 9,000,000 new
investment series shares, with the needed share issue authority to the Company´s
Board registered at the trade register. Due to technical reasons the
above-mentioned shares shall be issued in two separate issues.
The maximum number of new investment series shares offered for subscription in
the first directed share issue (”First Issue”) is 21,000,000 and subscription
price is EUR 0.14 per share, corresponding to EUR 2,940,000. The subscription
price for the shares issued in the Issue shall be paid as a contribution in kind
by transferring all outstanding shares of GeoSolutions B.V., representing the
whole authorised share capital of the company, to Benefon Oyj as agreed in the
Exchange Agreement.
In addition to the Issue the Board of Directors has, in accordance with the
Exchange Agreement, decided to issue a maximum of 9,000,000 new investment
series shares for subscription by GeoHolding without charge (“Second Issue”).
The shares shall be deposited in escrow and released upon meeting the conditions
set forth in the Exchange Agreement. If the conditions are not met within the
agreed time period the shares issued in the Second Issue shall be returned to
Benefon without charge and the purchase price shall be decreased correspondingly
to the agreed value of such shares. At the same with the Second Issue company's
share capital shall be increased by EUR 0.01 for each share issued by
transferring a correspondent amount from the premium fund to share capital. As a
result company's share capital may increase by a maximum of EUR 90,000.00 and
the premium fund may correspondingly decrease by a maximum of EUR 90,000.00.
In addition to aforementioned directed share issues, the Board of Directors has
decided to issue at maximum 9,778,500 option rights to the key resources of
GeoSolutions B.V. as agreed in the Exchange Agreement. The option rights shall
be offered to the senior management, members of the board of directors and key
employees of GeoSolutions B.V. as specified in the terms and conditions of the
option plan. The share subscription price for the option rights is EUR 0.14 per
share and the share subscription period begins on April 27, 2007, at the
earliest and ends on April 7, 2014, at the latest. The option rights are divided
into nine (9) series and the share subscription periods are different for
different series.
Subscription period for the Issue and Second Issue begins on April 27, 2007, and
ends on May 2, 2007. The Board also decided that all subscription made in
accordance with the respective issue terms shall be accepted. As a result of
subscriptions and share capital increase from the premium fund the share capital
of the company shall increase by a maximum of EUR 300,000.00. The shares offered
for subscription in the directed share issues represent at maximum 10,22 % and
the option rights at maximum 3,33 % of the company's registered shares prior the
respective increase in share capital. Subscription period for the option rights
begins on April 27, 2007, and ends on April 27, 2012.
Financing program
The Company announced on January 12, 2007, that it had agreed with Octagon
Solutions Limited about extending the financing commitment between the parties
announced on September 28, 2006, to cover also the agreed additional financing,
and that the Board had accordingly decided to raise the sixth tranch of the
extended commitment. With that decision, the Board directed shares and a
convertible loan of a total of 400,000 euros to Ashland Partners LP. The maximum
number of new S-series shares was 1,666,667 and the subscription price 0.21
euros per share. The amount of the convertible loan was 50,000 euros and the
maximum number of shares it entitles to be subscribed for at a share
subscription price of 0.09 euros per share is 555,556.
To enable the Company to extend the financing program, the extraordinary general
meeting of the Company convened on February 1, 2007, decided to grant an
authorization to the Board to decide on the increase of share capital by a
maximum of EUR 526,832.71 and on issue of new investment series shares, option
rights or specific rights in terms of Article 1 of Chapter 10 of the Companies
Act in one or more installments such that the maximum number of new investment
series shares issued is 52,683,271. The annual general meeting of the Company
convened on April 16, 2007, cancelled this authorisation and granted the Board a
new authority detailed in section 4. hereinafter.
On February 27, 2007, the Company announced that the Board of Directors had
decided to change the terms of the two loans granted by Luben Limited in
connection with tranches 4 and 5 described above into a convertible bond loan
such that each EUR 0.14 of the loan principal entitles to subscribe for one new
investment series share by December 31st, 2012. The maximum number of shares
that can be subscribed for by virtue of the loan is 21,071,429. The change has
been accepted by Luben Limited. The reason for changing the terms is to enable
the company to continue its ongoing financing plan as required and at the same
also to keep its capital structure in balance.
Benefon also announced on February 27, 2007 that it has decided to call the
seventh tranche of financing according to the extended Financing Agreement. The
Board of Directors of the company decided to issue shares and convertible bond
loan for a total maximum amount of EUR 1,400,000 to Villiers Securities Limited.
The maximum number of new investment series shares offered for subscription is
5,104,167 and subscription price is EUR 0.21 per share. The principal amount of
convertible bond loan is EUR 328.125, and each EUR 0.05 of the loan principal
entitles to subscribe for one new investment series share. The maximum number of
shares that can be subscribed for by virtue of the loan is 6,562,500.
After the end of the reporting period Benefon announced on May 8, 2007, that the
company and Octagon Solutions Limited have agreed to the terms of the 8th
tranche of financing to be provided under the extended Financing Agreement
entered into with Octagon Solutions Limited and disclosed on September 28th
2006. The 8th tranche may amount up to 5 million euros and is to be raised in
several parts as separately agreed. Accordingly the Board of Directors has
decided to raise the first part of 400,000 euros.
According to the financing agreement, Octagon Solutions shall have the first
right to make the investments in tranche 8, or, at its option, to assign the
investment right to third party investors in accordance with the extended
Financing Agreement and to the maximum amount of the tranche 8.
The Board has approved the terms for the tranche 8 investments and agreed to
receive such investments as offered by the investors according to the approved
terms. The approved terms are as follows. The share subscription price for the
directed share issues under tranche 8 shall be EUR 0.15 per share. In addition
to new investment series shares the company shall issue convertible bond loan at
share subscription price of EUR 0,025 per share. Each investment is also
combined with issuance of agreed number of option rights at share subscription
price of EUR 0.15. The maximum number of new investment series shares that may
be issued under the tranche 8 is 50,000,000 along with 10,500,000 option rights.
In connection with agreeing to the above terms the Board has also decided to
balance the pricing of previous investments made by Ashland Partners LP as
described below.
1. Raising the first part of tranche 8 financing
The Board of Directors has according to the above terms decided to call the
first part of the eighth tranche as follows.
The Board decided to issue shares and convertible bond loan for a total amount
of EUR 400,000 to Killarney Partners (“directed offering”). The maximum number
of new investment series shares offered for subscription is 2,400,000 and
subscription price is EUR 0.15 per share. The principal amount of convertible
bond loan, which includes a specific right to use the loan to set off
subscription price of shares as according to Chapter 10, Clause 1 of the Finnish
Companies Act, is EUR 40.000 and each EUR 0.025 of the loan principal entitles
its holder to subscribe for one new investment series share. The maximum number
of shares that can be subscribed for by virtue of the loan is 1,600,000. As a
part of the directed offering Killarney Partners is also offered for
subscription at maximum 666,667 option rights entitling to subscribe for
corresponding amount of new investment series shares at share subscription price
of EUR 0.15 per share during the share subscription period from May 18, 2007 to
May 31, 2011.
Of the share subscription price EUR 0.01 is booked to share capital and the
remainder in invested unrestricted equity fund. As a result of share issue
company's share capital may increase by a maximum of EUR 24,000.00 and as a
result of convertible bond loan by a maximum of EUR 16,000.00.
Subscription period for the directed offering, forming the first part of the 8th
tranche investments, begins on May 7, 2007 and ends on May 11, 2007. The shares
offered for subscription in the directed offering represent at maximum 0.82 %,
the convertible bond loan at maximum 0.55 % and option rights 0.23 % of the
company's registered shares. The new shares subscribed for are equivalent of
their right with company's existing investment series shares and will be applied
for listing as soon as the respective share subscriptions have been made and
shares registered in trade register. Listing of the shares subscribed for in the
directed offering of shares is estimated to take place approximately on May
18th, 2007.
2. Balancing the pricing of certain investments
To balance the pricing of previous investments by Ashland Partners LP to
correspond the pricing agreed to with the group of investors participating the
investments under the extended Financing Agreement and to correct an error in
the original pricing the Board also decided to issue a maximum of 1,111,111 new
investment series shares for subscription by Ashland Partners LP without charge
(“issue”). At the same the company's share capital shall be increased by EUR
0.01 for each share issued by transferring a correspondent amount from the
premium fund to share capital. As a result company's share capital may increase
by a maximum of EUR 11,111.11 and the premium fund may correspondingly decrease
by a maximum of EUR 11,111.11.
Subscription period for the issue begins on May 7, 2007 and ends on May 11th,
2007. The shares offered for subscription in the directed share issue represent
at maximum 0.38 % of the company's registered shares prior the respective
increase in share capital. The new shares subscribed for are equivalent of their
right with company's existing investment series shares and will be applied for
listing as soon as the respective share subscriptions have been made and shares
registered in trade register. Listing of the shares subscribed for in the issue
is estimated to take place approximately on May 18th, 2007.
2. Outlook for the remainder of 2007
During 2007 the company established three operating divisions all focusing on
GPS enabled devices and location technology.
The first being the traditional GPS/GSM mobile handset business which will
compete in the B2B and consumer space
Secondly the creation of a services and solutions business which will allow the
company to refocus within this marketplace and the Companies acquisition of
Geosolutions
And thirdly the entrance into the Personal Navigation Devices (PND) market into
emerging and less saturated markets. The creation of Benefon China will allow
the company to enter the relatively immature PND market within China.
The market outlook for navigation devices continues to be promising. The Western
European market alone is projected to need more than 100 million devices over
the next five years (source: Canalys, August 2006). A number of new competitors
are expected to enter the market during 2007, and the Company believes that
pricing in the market will become very competive. On the other hand, this growth
in the market is expected to increase customer awareness of GSM/GPS products as
well as increasing the demand and market share of mobile phones with navigation
functionality.
The Company is currently streamlining its operations during 2007, and has
expanded its sales organisation to secure the favourable development of the
current and future product sales and is putting measures in place to improve the
time needed for launch of new products. TWIG Discovery and TWIG Locator have
been launched in a number of Western European countries, and the TWIG Discovery
has also been launched in the U.S. Due to intensified competition and price
sensitivity, the delays occurred in the launch of Twig Discovery have decreased
its competitiveness in the marketplace. The Company expects to sell the
remaining stock of TWIG Discovery and then to introduce the Talisman product.
However, the introduction of TWIG Discovery Pro for the B2B safety and security
market improved the demand for the TWIG Discovery product. TWIG Discovery Pro is
a product variant of the TWIG Discovery platform with extended telematics
features, but without navigation functionality.
The focus in the current year is in growing the sales volumes and expansion of
the market, launch of TWIG Discovery Pro product for business users,
preparations of the launch of TWIG Talisman to consumer market, manage
end-of-life material planning and logistics of TWIG Discovery and increased
marketing efforts of the web-based back-end applications and solutions.
The sales development in first half of 2007 has been below expectations due to
intensified competition and price erosion, and the Company has decided to focus
on bringing new products to the market. These products are based on product
platforms of OEM-manufacturers as well as refocusing the future business more on
services and solutions where the profitability is significantly higher in that
segment as compared to mobile hardware and the working capital cycles are more
manageable.
Key tasks in the second half of 2007 include the introduction of TWIG Discovery
Pro to B2B sales channels, managing the end-of-life of TWIG Discovery by selling
the existing stock to Europe, USA and China and pursuing the TWIG Talisman
product program.
Sales of TWIG Discovery in China are expected to start in the second half of
2007. The products marketed in China will be sold under the combined ”China
Potevio Capitel” brand. Capitel is a leading mobile phone brand in China and
China Potevio is a division of one of the largest state-owned telecommunications
firms in China.
The realisedmarket launch in the second quarter of the new product version TWIG
Discovery Pro directed to the business market is expected to strengthen the
position of the Company in B2B-markets and will enable the company to sell the
remaining products of TWIG Discovery.
The Company via its acquisition of Geosolutions has entered into a new business
area. Geosolutions is engaged in the business of location aware software and
services. The Geosolutions technology provides Benefon with access to a core
proprietary search and mobile social networking solution. The acquisition
provided the company with a product, the technology and an experienced team
which will allow the company to, a) provide an integrated content rich location
services platform to its product line, b) exploit the oportunity provided to
location enabled various social networking installed bases and, c) deliver an
integrated solution for most network operators and mobile phone manufacturers.
The cost of GeoSolutions personnel will increase the Company costs starting from
the second quarter of 2007.
3. Operational Review
The main operational focus during the first quarter was to continue the TWIG
Discovery and TWIG Locator market introductions. Benefon launched both products
in Russia at the end of January as well as participated the 3GSM Congress held
in Barcelona in the middle of February.
R&D activities were focussed on finalizing the TWIG Discovery Pro development as
well as completing some special features for the animal tracking market.
The Salo factory served as a configuration and distribution centre for the
Company's global customer deliveries.
4. Developments after the reporting period
The Company´s Annual General Meeting convened on April 16, 2007, resolved that
the number of Board members is six and elected the following persons to the
Board: Peter Bamford, Brian Katzen, Jeffrey Crevoiserat, Juha Kiikeri, Simon
Wilkinson and Dan Harple. It was also resolved that the Chairman of the Board is
paid an annual fee of 35,000 GBP corresponding approximately EUR 51,000. No fees
are paid to other Board members. The Board convened immediately after the Annual
General Meeting and appointed Mr. Peter Bamford to the Chairman of the Board. As
a part of his appointment to Chairman Mr. Bamford shall be proposed to be
granted option rights up to amount of 7,500,000. The General Meeting resolved to
keep the number of ordinary auditors in one and re-elected Ernst & Young Oy, CPA
Mr. Erkka Talvinko acting as its responsible auditor, to its auditor, and CPA
Mr. Veikko Soinio to deputy auditor.
The Annual General Meeting accepted the purchase of the entire share capital of
GeoSolutions B.V. through a share exchange in accordance with the proposal of
the Board. The Board was also authorized to decide on increasing the share
capital and issuing new shares, option rights and specific rights such that the
maximum amount of share capital increase is EUR 1,902,500 and number of issued
new investment series shares 190,250,000. The share capital can be increased by
means of using the premium fund or invested unrestricted equity fund for the
increase. The authorization entitles the Board to deviate from the pre-emptive
right of shareholders and also accept set-off or other consideration in kind as
a payment for the shares, option rights or specific rights. The shares can also
be issued without payment provided that there is an especially weighty financial
reason for this as required by the Companies Act. The Board has the right to
decide the terms of any issue by virtue of the authorization for all other
parts.
The authorization is valid for two years from the date of the Annual General
Meeting. At the same the new authorization cancels the previous authorization
granted by the Extraordinary General Meeting of February 1, 2007 for the unused
part.
The Annual General Meeting accepted the amendment of the management agreement
entered between the company and Octagon Consulting Limited in accordance with
the proposal of the Board to include also special projects such as mergers,
acquisitions and divisions.
On April 27, 2007, the Company informed that Simon Wilkinson who was elected as
the member of the Board in the annual general meeting April 16th, 2007, will
work closely with the Board in developing the Company's future strategy and also
with the Management of the business to assist in the delivery of operational
plans and objectives.
On May 4, Benefon announced that it now offers a free three-month introductory
TWIG Web Finder service subscription with purchase of TWIG Locator GPS/GSM
tracking device. The TWIG Web Finder is a service for tracking vehicles and
other mobile assets as well as for securing persons. The location of mobile
objects can be seen on detailed street maps on three continents. The service
enables users of TWIG products also to receive locations on normal mobile phones
as address information. Further features include alarm reception, history
functions, sending of SMS messages and workstation operation from multiple
sites. The TWIG tracking solutions are made with easy use and competitive prices
in mind. No installations are required. Further credits and service extensions
can be conveniently purchased at the TWIG eShop.
On May 10, 2007, Benefon announced its formal entry into the rapidly growing and
dynamic Chinese market with the opening of an office in Shanghai. The office is
planned to have a staffing level scaling up to 15 employees. Jeff Lin, a
seasoned location technologies leader has been recruited as Managing Director to
spearhead company's local activities. Mr. Lin, a digital map and technology
veteran who guided NAVTEQ's entry into China, will use his experience to
leverage both product development and distribution in the region. The creation
of the new Benefon China Division is in response to strong interest on the part
of consumer and business enterprise users in the company's offerings for
location enabled mobile devices and software solutions. The company's goal is to
be the pre-eminent provider of location based mobile technology in China.
Priorities for the new division will include localizing the Benefon Twig product
line, development of a personal navigation product line for vehicles,
cultivating local software content, and expanding the company's Chinese-language
database of Web solutions.
On May 14, 2007 Benefon announced that, related to the announcement on May 2,
2007, about the purchase of GeoSolutions B.V. in accordance with the terms of
the share exchange agreement entered into with GeoHolding B.V. on March 22nd,
2007, the Board of Directors of Benefon Oyj has also decided to establish a
subsidiary in the Netherlands, Benefon Solutions B.V., for holding the
GeoSolutions shares, and according to original transaction plan transfer the
GeoSolutions shares to Benefon Solutions. The transfer price of the shares shall
equal the original purchase price of the shares paid by Benefon Oyj, which
amount Benefon Oyj shall lend to Benefon Solutions B.V. for paying the transfer
price. As the amount of original purchase price has not yet been determined
finally the transfer price and the respective loan are subject to further
adjustments correspondingly to the conditions set forth in the share exchange
agreement.
5. Financial Review
Financial Performance in the period
The net sales of the company in Q1/2007 were 1233 teuros. The comparable net
sales in Q1/2006 were 1124 teuros.
The operating profit in Q1/2007 was -4123 teuros. The comparable operating
profit in Q1/2006 was -1207 teuros.
The total of the balance sheet at the end of Q1/2007 was 14,308 teuros. The
total of the balance sheet at the end of the previous quarter Q4/2006 was 17,397
teuros and at the end of the same period Q1/2006 in the previous year it was
14,321 teuros.
The total shareholders´ equity at the end of Q1/2007 was 7384 teuros, or about
52% of the balance sheet, when at the end of the previous quarter Q4/2006 it was
10,421 teuros, or about 60%. At the end of the same period Q1/2006 in the
previous year it was 12,003 teuros, or about 84%.
The book value of interest-carrying debt at the end of Q1/2007, including the
capital loans, was 2705 teuros. The total liabilities at the end of Q1/2007 were
6924 teuros, whereas they were 6976 teuros at the end of the prior quarter
Q4/2006 and 2318k euros at the end of the same quarter Q1/2006 the previous
year. Cash and cash equivalents at the end of the period was 2,018 teuros of
which 373k euros were pledged.
The Company adopted the International Financial Reporting System (IFRS) during
financial year 2005 and the financial statements for the year 2005 and onwards,
including the interim reports, have been prepared according to IFRS.
Report on sufficient liquidity in period 04/2007-06/2008
The below cash flow statement assumes that sales targets set in financial
projections for financial years 2007 and 2008 are met. These projections are
highly dependent on timely deliveries and sales success of the Company's new
TWIG branded product range.
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| Cash Flow Statement 04/2007-06/2008 | million euros |
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| Cash flow from operations | -3.8 |
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| Share subscription payments | 3.7 |
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| Investments | -0.3 |
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| Change in cash | -0.4 |
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| Cash in the beginning of the period | 2.0 |
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| Cash at the end of the period | 1.6 |
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6. Company information
The number of personnel in quarter 1Q/2007 averaged 84, of whom 24 persons were
affected by alternate forced leaves.
Benefon share (BNFSV) is listed on the small cap -list of OMX Nordic Exchange in
Helsinki.
Founded in 1988 in Finland by the early GSM pioneers, BENEFON is a leader in
GSM/GPS mobile telematics terminals and solutions. Benefon is at the forefront
of innovation and research in mobile telephony and GPS navigation. It is now
with the dawn of TWIG that BENEFON is able to truly offer the world a navigation
system and a series of TWIG handsets that can be easily understood and enjoyed
in both professional and leisure contexts.
Benefon Oyj
Tomi Raita
CEO
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| GROUP INCOME STATEMENT | REPORTING PERIOD |
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| 1000 EUR | 1Q/2007 | 1Q/2006 | FY 2006 |
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| Net sales | 1233 | 1124 | 6959 |
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| Other operating income | 0 | 1 | 25 |
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| Increase (+)/decrease (-) in inventories | | |
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| of finished products | -206 | -10 | 2625 |
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| Production for own use | 0 | 0 | 0 |
--------------------------------------------------------------------------------
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| Use of raw materials and consumables | -579 | -706 | -7190 |
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| Total expense of employees | -1427 | -1000 | -4915 |
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| Depreciations | -703 | -23 | -563 |
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| Impairment loss | 0 | 0 | -872 |
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| Other operating expenses | -2441 | -1448 | -11775 |
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| Capitalised R&D expenses | 0 | 855 | 4163 |
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| Operating result | -4123 | -1207 | -11543 |
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| Financial income | 13 | 15 | 145 |
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| Financial expenses | -290 | -81 | -162 |
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| Result before taxes | -4400 | -1273 | -11560 |
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| Income taxes | 0 | 0 | 0 |
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| Result for the period | -4400 | -1273 | -11560 |
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| Earnings per share, eur | | | |
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| Basic earnings per share, eur | -0,02 | -0,01 | -0,05 |
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| Diluted earnings per share have not been computed | |
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| because dilution effect would improve the key figure. | |
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| The interim financial statements have not been audited. | |
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| GROUP BALANCE SHEET | | REPORTING PERIOD | |
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| 1000 EUR | Note | 31.3.2007 | 31.3.2006 | 31.12.2006 |
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| ASSETS | | | | |
--------------------------------------------------------------------------------
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| Non-current assets | | | | |
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| Property, plant and | | 263 | 126 | 244 |
| equipment | | | | |
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| Development costs | | 2166 | 855 | 2841 |
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| Other intangible assets | | 35 | 26 | 32 |
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| Other financial assets | | 62 | 61 | 61 |
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| Deferred tax assets | | 0 | 0 | 0 |
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| | | 2526 | 1068 | 3178 |
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| Current assets | | | | |
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| Inventories | | 5954 | 1136 | 6194 |
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| Trade receivables and | | 2516 | 1497 | 4585 |
| other receivables | | | | |
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| Prepaid expenses | | 1294 | 569 | 898 |
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| Cash and cash equivalents | | 2018 | 10051 | 2542 |
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| | | 11782 | 13253 | 14219 |
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| Total assets | | 14308 | 14321 | 17397 |
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| Equity and liabilities | | | | |
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| Shareholders´equity | | | | |
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| Share capital | 5 | 2703 | 2138 | 2634 |
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| Share issue | | 561 | 0 | 400 |
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| Share premium account | 5 | 15936 | 15936 | 15936 |
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| Invested distributable | 5 | 5930 | 0 | 4866 |
| equity account | | | | |
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| Retained earnings | | -17746 | -6071 | -13415 |
--------------------------------------------------------------------------------
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| Total shareholders´ equity | | 7384 | 12003 | 10421 |
--------------------------------------------------------------------------------
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| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | 0 | 0 | 0 |
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| Interest bearing debt | 7,8 | 909 | 937 | 2319 |
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| | | 909 | 937 | 2319 |
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| Current liabilities | | | | |
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| Trade payables and other | | 4062 | 1266 | 4500 |
| payables | | | | |
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| Provisions | | 157 | 47 | 157 |
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| Interest bearing debt | 7,8 | 1796 | 68 | 0 |
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| | | 6015 | 1381 | 4657 |
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| Total liabilities | | 6924 | 2318 | 6976 |
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| Total shareholders´equity | | 14308 | 14321 | 17397 |
| and liabilities | | | | |
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| GROUP CASH FLOW STATEMENT | | REPORTING PERIOD | |
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| 1000 EUR | | 1Q/2007 | 1Q/2006 | 2006 |
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| Cash flow from operations | | | | |
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| Result of the period | | -4400 | -1273 | -11560 |
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| Adjustments | | 663 | 212 | 4391 |
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| Changes in working capital | | | | |
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| Change of trade and other | | 1673 | -69 | -3343 |
| receivables | | | | |
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| Change of inventories | | 240 | 146 | -4912 |
--------------------------------------------------------------------------------
| Change of trade and other | | -438 | -804 | 2540 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Paid interests | | -1 | -12 | -62 |
--------------------------------------------------------------------------------
| Received interest payments | | 10 | 5 | 140 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operations, | | -2253 | -1795 | -12806 |
| net | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | | -51 | -871 | -4393 |
| investments, net | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | | |
--------------------------------------------------------------------------------
| Proceeds from issue of | | 1418 | 11676 | 16476 |
| share capital | | | | |
--------------------------------------------------------------------------------
| Transaction expenses of | | -71 | -296 | -1022 |
| share issues | | | | |
--------------------------------------------------------------------------------
| Proceeds from long-term | | 0 | 0 | 1225 |
| borrowings, equity | | | | |
--------------------------------------------------------------------------------
| Proceeds from long-term | | 433 | 0 | 1725 |
| borrowings, liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | | 1780 | 11380 | 18404 |
| financing,net | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash | | -524 | 8714 | 1205 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash in the beginning of | | 2542 | 1337 | 1337 |
| the period | | | | |
--------------------------------------------------------------------------------
| Cash at the end of the | | 2018 | 10051 | 2542 |
| period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| GROUP STATEMENT OF CHANGES IN SHAREHOLDERS´EQUITY | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Share | Share | Share | Inv. | Accrued | Total |
| | capita | issue | premium | Distrib | Result | (1000 |
| | l (1000 | (1000 | Account | . | (1000 | eur) |
| | eur) | eur) | (1000 | Equity | eur) | |
| | | | eur) | Account | | |
| | | | | (1000 | | |
| | | | | eur) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Chareholders´equ | 1313 | 0 | 1211 | 0 | -4855 | -2331 |
| ity 31.12.2005 | | | | | | |
--------------------------------------------------------------------------------
| Share issue, | 556 | 0 | 11120 | 0 | 0 | 11676 |
| cash | | | | | | |
--------------------------------------------------------------------------------
| Share issue | | | | | | |
| offset | | | | | | |
| with capital | | | | | | |
--------------------------------------------------------------------------------
| Loans and | 227 | 0 | 4407 | 0 | 0 | 4634 |
| trade | | | | | | |
| receivables | | | | | | |
--------------------------------------------------------------------------------
| Conversion of | 42 | 0 | 425 | 0 | 0 | 467 |
| convertible | | | | | | |
| bonds into | | | | | | |
| shares | | | | | | |
--------------------------------------------------------------------------------
| Share issue | 0 | 0 | -1227 | 0 | 0 | -1227 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Booked expense | | | | | | |
| of | | | | | | |
| stock options | | | | | | |
--------------------------------------------------------------------------------
| to key personnel | 0 | 0 | 0 | 0 | 57 | 57 |
| and partners | | | | | | |
--------------------------------------------------------------------------------
| Result of the | 0 | 0 | 0 | 0 | -1273 | -1273 |
| period | | | | | | |
--------------------------------------------------------------------------------
| Shareholders´ | 2138 | 0 | 15936 | 0 | -6071 | 12003 |
| equity | | | | | | |
| 31.03.2006 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders´ | 2634 | 400 | 15936 | 4866 | -13415 | 10421 |
| equity | | | | | | |
| 31.12.2006 | | | | | | |
--------------------------------------------------------------------------------
| Share issue, | 63 | 161 | 0 | 1274 | 0 | 1498 |
| cash | | | | | | |
--------------------------------------------------------------------------------
| Conversion of | 6 | 0 | 0 | 45 | 0 | 51 |
| convertible | | | | | | |
| bondsinto shares | | | | | | |
--------------------------------------------------------------------------------
| Booked expense | 0 | 0 | 0 | -255 | 0 | -255 |
| of stock options | | | | | | |
| to key personnel | | | | | | |
| and partners | | | | | | |
--------------------------------------------------------------------------------
| Result of the | 0 | 0 | 0 | 0 | 69 | 69 |
| period | | | | | | |
--------------------------------------------------------------------------------
| Tilikauden tulos | 0 | 0 | 0 | 0 | -4400 | -4400 |
--------------------------------------------------------------------------------
| Shareholders´ | 2703 | 561 | 15936 | 5930 | -17746 | 7384 |
| equity | | | | | | |
| 31.03.2007 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| KEY FIGURES | REPORTING PERIOD |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 1Q/2007 | 1Q/2006 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, 1000 EUR | 1233 | 1124 | 6959 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating result, 1000 EUR | -4123 | -1207 | -11543 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result before taxes, 1000 EUR | -4400 | -1273 | -11560 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross investments, 1000 EUR | 51 | 871 | 4393 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average personnel | 84 | 76 | 82 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, EUR | -0,02 | -0,01 | -0,05 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity per share, EUR | 0,03 | 0,04 | 0,04 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Weighted average number of shares | | | |
--------------------------------------------------------------------------------
| in period, 1000 pcs | 266806 | 177460 | 213490 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of shares | | | |
--------------------------------------------------------------------------------
| at the end of the period, 1000 pcs | 270342 | 213793 | 263416 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NOTES TO THE GROUP INTERIM REPORT |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1. BASIC INFORMATION ABOUT THE COMPANY |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Benefon Oyj ("Group") is a provider of navigation devices intended for |
| personal and professional use, |
--------------------------------------------------------------------------------
| and that of services enabling navigation, tracking and locating by means of |
| personal mobile devices. |
--------------------------------------------------------------------------------
| The Group sells products in 30 countries. |
--------------------------------------------------------------------------------
| The parent company of the Group is Benefon Oyj. Its registered domicile is |
| Salo, Finland, with |
--------------------------------------------------------------------------------
| street address Meriniitynkatu 11, 24100 Salo, Finland, and mail address PL |
| 84, FIN-24101 Salo, Finland. |
--------------------------------------------------------------------------------
| Copy of the Group financial statements FY2006 is available at the internet |
| address www.benefon.com |
--------------------------------------------------------------------------------
| or at the company head office at address Meriniitynkatu 11, FIN-24100 Salo, |
| Finland. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2. ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Foundation: |
--------------------------------------------------------------------------------
| The group interim report has been prepared in accordance with the |
| International Financial Reporting |
--------------------------------------------------------------------------------
| Standards ("IFRS"), and it has been prepared according to the accounting |
| standard IAS 34. |
--------------------------------------------------------------------------------
| Interim reports. An interim report shall be read together with the financial |
| statements for year 2006. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Principles of preparation: |
--------------------------------------------------------------------------------
| The utilised principles of preparation are identical with those utilised by |
| the Group in financial statements |
--------------------------------------------------------------------------------
| for FY 2006. |
--------------------------------------------------------------------------------
| IASB has published new standards and interpretations and changes in existing |
| standards, |
--------------------------------------------------------------------------------
| application of which is mandatory on 1.1.2007, and which the group has not |
| adopted earlier voluntarily. |
--------------------------------------------------------------------------------
| The group has adopted the following standards (and their amendments) and |
| interpretations |
--------------------------------------------------------------------------------
| from 1.1.2007 onwards: |
--------------------------------------------------------------------------------
| IAS 1, Presentation of financial statements, amendents in sections 124A-C. |
--------------------------------------------------------------------------------
| IFRS 7, Financing instruments: Notes. |
--------------------------------------------------------------------------------
| IFRS 8, Business segments. The Company provides an assesment about segment |
| reporting |
--------------------------------------------------------------------------------
| in context of the business acquisition. |
--------------------------------------------------------------------------------
| IFRIC 11, Group and Treasury Share transactions. |
--------------------------------------------------------------------------------
| IFRIC 12, Service Concession Arrangements. Its new interpretation is not |
| applicable to Group´s industry. |
--------------------------------------------------------------------------------
| New standards, interpretations or amendments have not had significance or |
| essential effect to information |
--------------------------------------------------------------------------------
| in the interim report. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 3. SEGMENT INFORMATION |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The primary reported segments of the group comprise business segments. |
| Number of distinct segments |
--------------------------------------------------------------------------------
| at the moment is one: mobile telematics equipment. Its share of net sales, |
| result and assets was |
--------------------------------------------------------------------------------
| almost 100% in the reporting period and in the prior period. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 4. ACQUISITIONS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| There were no business acquisitions in the financial period nor in the |
| preceding period. However, |
--------------------------------------------------------------------------------
| Benefon Oyj has agreed in March 2007 about acquisition of a Netherlands firm |
| GeoSolutions BV. |
--------------------------------------------------------------------------------
| The purchase price of approximately 6 million euros is to be paid in two |
| parts. |
--------------------------------------------------------------------------------
| The transaction is due to be finalised in May 2007. |
--------------------------------------------------------------------------------
| The effect of the to-be-acquired firm is estimated to be small in 2007 but |
| growing thereafter. |
--------------------------------------------------------------------------------
| The said firm is in pre-revenue phase of commercialising products and |
| services. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 5. SHAREHOLDERS´ | | | | | |
| EQUITY | | | | | |
--------------------------------------------------------------------------------
| | | | Share | Inv. | |
| | | | | distrib. | |
--------------------------------------------------------------------------------
| | Number | Share | premium | equity | |
| | of | | | | |
--------------------------------------------------------------------------------
| | shares | capital | account | account | Total |
--------------------------------------------------------------------------------
| | (1000) | (1000eur | (1000eur) | (1000eur | (1000eur |
| | | ) | | ) | ) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31.12.2006 | 263416 | 2634 | 15936 | 4867 | 23437 |
--------------------------------------------------------------------------------
| Share issue | 1667 | 16 | | 334 | 350 |
| 1.2.2007 | | | | | |
--------------------------------------------------------------------------------
| Share conversion | 556 | 6 | | 44 | 50 |
| of | | | | | |
| CBL2007A | | | | | |
| 22.3.2007 | | | | | |
--------------------------------------------------------------------------------
| Share issue | 4703 | 47 | | 940 | 987 |
| 22.3.2007 | | | | | |
--------------------------------------------------------------------------------
| Costs of share | | | | -255 | -255 |
| issues | | | | | |
--------------------------------------------------------------------------------
| 31.03.2007 | 270342 | 2703 | 15936 | 5930 | 24569 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Maximum number of | | | | | |
| shares in | | | | | |
| the Company,as | | | | | |
| stipulated | | | | | |
| in the articles | | | | | |
| of association, | | | | | |
| is 1000 million. | | | | | |
--------------------------------------------------------------------------------
| The share carries | | | | | |
| no | | | | | |
| nominal value but | | | | | |
| the book | | | | | |
| parity value at | | | | | |
| the moment | | | | | |
| is 0.01 euros | | | | | |
| per share. | | | | | |
--------------------------------------------------------------------------------
| Maximum share | | | | | |
| capital is 50 | | | | | |
| million euros.All | | | | | |
| outstanding | | | | | |
| shares are fully | | | | | |
| paid. | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 6. OPTION RIGHTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| No new option rights were given in the reporting period. |
--------------------------------------------------------------------------------
| In the reporting period, booked cost of prior given option rights in |
| accordance with IFRS 2 was 69 teuros. |
--------------------------------------------------------------------------------
| Options have been used as payment for services. In result report, counter |
| account for booked cost is |
--------------------------------------------------------------------------------
| equity account. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 7. DEBTS WITH | | | | | |
| NOMINAL INTEREST | | | | | |
--------------------------------------------------------------------------------
| | Nominal | | | | |
--------------------------------------------------------------------------------
| 1000 EUR | loan value | | 1Q/2007 | 1Q/2006 | 2006 |
--------------------------------------------------------------------------------
| | 1Q/2007 | | | | |
--------------------------------------------------------------------------------
| Non-current loans: | | | | | |
--------------------------------------------------------------------------------
| Cbl 2004A | 955 | | 909 | 937 | 898 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current loans: | | | | | |
--------------------------------------------------------------------------------
| Cbl 2004A | | | 0 | 68 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 8. DEBTS WITH NO | | | | | |
| NOMINAL VALUE | | | | | |
--------------------------------------------------------------------------------
| | Nominal | | | | |
--------------------------------------------------------------------------------
| 1000 EUR | loan value | | 1Q/2007 | 1Q/2006 | 2006 |
--------------------------------------------------------------------------------
| | 1Q/2007 | | | | |
--------------------------------------------------------------------------------
| Non-current loans: | | | | | |
--------------------------------------------------------------------------------
| Interest-free loan | | | 0 | 0 | 703 |
| 1450 teur, year | | | | | |
| 2006 | | | | | |
--------------------------------------------------------------------------------
| Interest-free loan | | | 0 | 0 | 718 |
| 1500 teur, year | | | | | |
| 2006 | | | | | |
--------------------------------------------------------------------------------
| Total | | | 0 | 0 | 1421 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current loans: | | | | | |
--------------------------------------------------------------------------------
| Cbl 2007B | 2950 | | 1494 | 0 | 0 |
--------------------------------------------------------------------------------
| Cbl 2007C | 302 | | 302 | 0 | 0 |
--------------------------------------------------------------------------------
| Total | | | 1796 | 0 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-free loans with nominal value of 1450 teur and 1500 teur, year |
| 2006: |
--------------------------------------------------------------------------------
| In March 2007, these loans were converted into convertible loan 2007B. |
--------------------------------------------------------------------------------
| Convertible loan 2007B was converted into shares in April 2007. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 9. COLLATERAL COMMITMENTS AND | REPORTING PERIOD | |
| CONTINGENCIES | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1000 EUR | 1Q/2007 | 1Q/2006 | 2006 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Contingent liabilities | | | | |
| relating to | | | | |
--------------------------------------------------------------------------------
| chattel mortgage | 1700 | 1655 | 1689 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Collateral for own liabilities: | | | | |
--------------------------------------------------------------------------------
| Chattel mortgage as collateral | 12068 | 12068 | 12068 | |
| for contingent liabilities | | | | |
--------------------------------------------------------------------------------
| Pledged non-current financial assets | 42 | 41 | 41 | |
--------------------------------------------------------------------------------
| Pledged current financial assets | 373 | 358 | 373 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 10. RELATED PARTY TRANSACTIONS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Inner circle transactions have been presented in the financial statements |
| for year 2006. |
--------------------------------------------------------------------------------
| No essential changes have taken place in the reporting period. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest free loans with a nominal capital of 2950 teuros, raised from Luben |
| Limited in year 2006, were |
--------------------------------------------------------------------------------
| converted in March 2007 into convertible loan 2007B, which was converted |
| into shares in April 2007. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 11. EVENTS AFTER THE END OF THE PERIOD |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market bulletin on 16.4.2007 |
--------------------------------------------------------------------------------
| Resolutions of the annual general meeting of Benefon Oyj: |
--------------------------------------------------------------------------------
| The general meeting adopted the financial statements of year 2006 and |
| resolved that no dividend is paid. |
--------------------------------------------------------------------------------
| The general meeting resolved that the number of Board members is six and |
| elected in the Board the |
--------------------------------------------------------------------------------
| following persons: Peter Bamford (new), Brian Katzen, Jeffrey Crevoiserat, |
| Juha Kiikeri, Simon Wilkinson |
--------------------------------------------------------------------------------
| (new) and Dan Harple (new). The Board elected Peter Bamford as the chairman. |
--------------------------------------------------------------------------------
| The general meeting approved the acquisition of GeoSolutions B.V. and |
| authorised the Board to decide |
--------------------------------------------------------------------------------
| about increase of share capital and about issuance of new shares, option |
| rights and special rights. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market bulletin on 2.5.2007 |
--------------------------------------------------------------------------------
| The Board of Benefon Oyj has decided to acquire GeoSolutions B.V. The |
| acquisition price is 6.000.000 |
--------------------------------------------------------------------------------
| euros, paid in two parts. In addition, the Board decided to issue 9.778.500 |
| option rights to key persons of |
--------------------------------------------------------------------------------
| GeoSolutions B.V.. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market bulletin on 8.5.2007 |
--------------------------------------------------------------------------------
| Benefon Oyj and Octagon Solutions Limited have agreed about terms of Tranch |
| Eight of the extended |
--------------------------------------------------------------------------------
| financing agreement made public in 28.9.2006. The total amount of Tranch |
| Eight may be a maximum of |
--------------------------------------------------------------------------------
| 5 million euros and it will be raised in multiple allotments. |
--------------------------------------------------------------------------------
| The Board has decided to raise the first allotment of 400.000 euros. |
--------------------------------------------------------------------------------