High energy prices boost AC drive sales April-June summary: * Order intake totalled MEUR 60.0, growth of 21.2 % from the corresponding period in the previous year (MEUR 49.5). * Revenues totalled MEUR 59.8, growth of 32.9 % (MEUR 45.0). * Operating profit was MEUR 7.7, an increase of 35.1 % (MEUR 5.7). * Cash flow from operations was MEUR 3.7(MEUR 4.2). * Earnings per share was EUR 0.35 (EUR 0.26), growth from the previous year of 34.6 %. January-June summary: * Order intake totalled MEUR 116.1, growth of 24.0 % from the corresponding period in the previous year (MEUR 93.6). * Revenues totalled MEUR 112.1, growth of 27.5 % (MEUR 87.9). * Operating profit was MEUR 14.0, an increase of 23.9 % (MEUR 11.3). * Cash flow from operations was MEUR 6.2 (MEUR 6.7). * Earnings per share was EUR 0.63 (EUR 0.51), growth from the previous year of 23.5 %. The AC drive market continued to grow in the second quarter of 2007. Demand for AC drives was strong in Europe and Asia. Demand in North America, which had been weaker at the end of last year and the start of this year, started to pick up during the second quarter. Market prospects for the second half of the year are encouraging in all market areas. High energy prices are boosting investments in energy-saving equipment, and AC drives are one of the most important of these. Vacon's order intake, revenues and operating profit all increased strongly in the second quarter compared to the corresponding period in the previous year. Sales grew fastest in Europe and Asia. Sales in North America fell short of its targets but performed better than in the first quarter. Direct sales and OEM were the distribution channels showing strongest growth. Earnings per share rose to EUR 0.35, an increase of EUR 0.09 on the previous year. The company improved its profitability through the strong growth in revenues, even though the US dollar, important for the company's markets, weakened against the euro. In June Vacon launched the new Vacon 10 drive family. It is the first product family of Vacon third product generation. Vacon 10 is one of the smallest micro drives in size on the market. It can be flexibly adapted to customer needs. The Vacon 10 gives excellent opportunities to win new customers in the highly competitive and rapidly growing micro drive market. The Vacon 10 supports the core issues in our product leadership strategy: a wide product range, outstanding drives knowhow, customer relations management, the latest technology and mass customization. Result in January-June and equity structure 4-6/ 4-6/ 1-6/ 1-6/ Change 1-12/ MEUR 2007 2006 2007 2006 % 2006 Revenues 59.8 45.0 112.1 87.9 27.5 186.4 EBITDA 8.9 6.6 16.3 13.3 22.6 27.3 Deprecia- tion -1.2 -0.9 -2.3 -2.0 15.0 -4.2 Operating profit 7.7 5.7 14.0 11.3 23.9 23.1 Profit before tax 7.5 5.5 13.7 11.1 23.4 22.7 Profit For period 5.4 4.0 9.8 7.8 25.6 16.1 Revenues in the first half of 2007 totalled EUR 112.1 million and operating profit was EUR 14.0 million. Profitability improved during the second quarter. The operating profit as a percentage of revenues was 12.9 per cent, compared with 12.0 per cent in the first quarter and 12.7 per cent in the second quarter in the previous year. The balance sheet total was EUR 98.4 (81.3) million. The equity ratio was 54.2 per cent. The Group's cash flow from operations for the January-June period was EUR 6.2 (6.7) million. Total receivables increased EUR 8.5 million from the beginning of the year. The Group's equity structure and liquidity remained strong. Interest-bearing net debt at the end of the period totalled EUR -2.0 (-3.7) million and gearing was -3.9 per cent (-8.4 per cent). The Group's order book stood at EUR 33.7 (24.6) million. The order book has risen by EUR 4.0 million since the start of the year. Market position Vacon Group revenues by market area were as follows: 4-6/ 4-6/ 1-6/ 1-6/ 1-12/ MEUR 2007 % 2006 % 2007 % 2006 % 2006 % Eur- ope 43.5 72.7 31.3 69.6 81.7 72.9 61.9 70.4 129.7 69.6 North Ame- rica 9.9 16.6 9.3 20.7 17.7 15.8 17.1 19.5 37.9 20.3 Asia And Aust- ralia 5.2 8.7 3.8 8.4 9.6 8.5 7.5 8.5 15.8 8.5 Other cou- ntries 1.2 2.0 0.6 1.3 3.1 2.8 1.4 1.6 3.0 1.6 To tal 59.8 100.0 45.0 100.0 112.1 100.0 87.9 100.0 186.4 100.0 Vacon's revenues in the January-June period grew in Europe by 32 per cent. In Asia and Australia revenues grew 28 per cent, but in North America the growth in revenues was 3.5 per cent. USD based growth was about 7 per cent. Vacon Group's revenues by distribution channel were as follows: 4-6/ 4-6/ 1-6/ 1-6/ 1-12/ MEUR 2007 % 2006 % 2007 % 2006 % 2006 % Direct sales 24.6 41.1 17.9 39.8 47.2 42.1 36.4 41.4 76.4 41.0 Distri- butors 7.7 12.9 6.4 14.2 15.1 13.5 12.0 13.7 24.8 13.3 OEM 16.1 26.9 10.9 24.2 29.1 25.9 21.2 24.1 43.9 23.6 Brand Label 11.4 19.1 9.8 21.8 20.7 18.5 18.3 20.8 41.4 22.2 Total 59.8 100.0 45.0 100.0 112.1 100.0 87.9 100.0 186.4 100.0 The Group's revenues by distribution channel increased in the first half of the year as follows: direct sales 30 per cent, distributors 26 per cent, OEM 37 per cent and brand label customers 13 per cent. Vacon Group structure No significant changes took place in the Group structure during the second quarter. Research and development R&D expenditure during the first half of the year totalled EUR 6.6 (6.1) million, and EUR 0.7 (0.1) million of this was capitalized as development costs. R&D costs accounted for 5.9 per cent (7.0 per cent) of the Group's revenues. Work on developing new products continues in line with the Company's plans. Investments Gross investments by the Group during the first six months of the year totalled EUR 3.0 (4.9) million. Expenditure focused on information systems and on increasing and maintaining production capacity. Planning has started for enlarging Vacon's factory premises in Vaasa. The purpose of the expansion is to safeguard growth in production of high-power drives and to build production space for the new generation AC drives. Organization and personnel The number of Vacon personnel has increased by 87 persons since the beginning of the year. At the end of June the Group employed 762 (611) people, of whom 494 (406) were in Finland and 268 (205) in other countries. The table below shows the average number of Vacon personnel during the review period: 1-6/2007 1-6/2006 1-12/2006 Office personnel 493 433 424 Factory personnel 232 164 194 TOTAL 725 597 618 Shares and shareholders Vacon had a market capitalization at the end of June of EUR 483.6 million. The closing share price on 30 June 2007 was EUR 31.75. The lowest share price during the January-June period was EUR 24.6 and the highest was EUR 32.0. A total of 4,374,260 Vacon shares were traded in the January-June period, in monetary terms EUR 122.9 million. Vacon's main shareholders on 30 June 2007: Number of shares Holding, % Ahlström Capital Oy 2,297,996 15.0 Tapiola Mutual Pension Insurance Company 584,500 3.8 Vaasa Engineering Oy 436,433 2.9 Kosk- inen Jari 358,590 2.3 Holma Mauri 347,171 2.3 Ehrn- rooth Martti 325,423 2.1 Tapiola Group companies 325,300 2.1 Niemelä Harri 309,840 2.0 Karpp- inen Veijo 209,349 1.4 Mutual Insur- ance Com- pany Pension Fennia 185,000 1.2 Nominee registered 4,665,745 30.5 Others 5,249,653 34.3 Total 15,295,000 100.0 Vacon Plc's own shares -62,812 Shares in circ- ulation 15,232,188 On 30 June 2007 the members of Vacon's Board of Directors, the President and CEO, and the Deputy to the CEO held directly a total of 568,296 shares or 3.7 per cent of Vacon's share stock. Own shares On 30 June 2007 Vacon Plc held a total of 62,812 of its own shares. In accordance with the terms of Vacon's share bonus scheme, a total of 18,760 shares were issued as a bonus to the key personnel in the scheme on 12 April 2007. The shares issued were own shares held by the Company. In consequence, as from 13 April 2007 the number of own shares held by the Company has been 62,812 (purchased at an average price of EUR 12.46). These own shares account for 0.4 % of the share capital and voting rights, so they have no significant impact on the distribution of ownership and voting rights. Dividend payment The Annual General Meeting of Shareholders decided on 28 March 2007 to pay a dividend of EUR 0.65 per share, a total of EUR 9.9 million. The dividend was paid in accordance with the AGM's decision on 11 April 2007. Prospects AC drives are one of the most significant means of enhancing the efficient use of energy. Improving energy efficiency is an important factor in restricting greenhouse gas emissions, and AC drives play a key role in this. The long-term demand factors for AC drives are positive. Vacon's market prospects for the final half of the year are good. Based on market surveys Vacon estimates that the AC drive market is currently growing at an annual rate of 7-9 %. Vacon is growing at a much faster rate than the market. Vacon considers that potential risks to its financial performance in 2007 are problems that material suppliers may have with capacity, difficulties with the availability of key components, and the weakening of the dollar. Vacon forecasts that revenues in 2007 will grow by about 20 per cent and profitability will improve from 2006. Following interim reports Vacon will publish its 2007 January-September interim report on Thursday, 25 October 2007 at 10.00 am. Formal statement This release contains certain forward-looking statements that reflect the current views of the company's management. Due to the nature of these statements, they contain risks and uncertainties and are subject to changes in the general economic situation and in the company's business sector. The interim report is unaudited. Vacon was established in 1993 from a passion to create, develop and produce unique AC drives for demanding needs, globally. We are driven by a burning desire to serve our customers as they look for ever more efficient, reliable and easy to use options to save energy and costs. Vacon provides AC drives in the power range 0.25 kW - 5 MW. Vaasa, 2 August 2007 VACON PLC Board of Directors For more information please contact: Mr Vesa Laisi, President, phone: +358 (0)40 8371 510, email: vesa.laisi@vacon.com Mr Mika Leppänen, Vice President, Finance & Control, phone: +358 (0)40 8371 235, email: mika.leppanen@vacon.com Conference for the media and analysts Vacon will hold a briefing for analysts and the media on 2 August 2007 at 11.30 am in the Neptun meeting room at the Scandic Marski Hotel, Mannerheimintie 10, Helsinki. Dial-in conference for investors and investment analysts A dial-in conference in English for investors and investment analysts will be held on 2 August 2007 at 3.00 pm. President Vesa Laisi and Mika Leppänen, Vice President, Finance and Control, will participate in the conference. Lines can be booked ten minutes before the conference by calling the service number +44 207 162 0025. The conference ID code is "Vacon Oyj". Conference link: http://wcc.webeventservices. com/view/wl/r.htm?e=36279&s=1&k= 0911B13C1544BBFA738DF86B924445F7&cb=genesys To hear a recording of the conference, available for two working days, call +44 207 031 4064, ID code 735873. Distribution: Helsinki Exchanges Financial Supervision Authority Main media Accounting principles This interim report has been prepared in accordance with IFRS (International Financial Reporting Standards) standard IAS 34 on Interim Financial Reporting. The interim report does not contain all the information required for annual financial statements. Vacon has prepared this interim report applying the same IFRS accounting principles as in its 2006 consolidated financial statements. The interim report is unaudited. Consolidated income statement, MEUR 4-6/ 2007 4-6/ 2006 1-6/ 2007 1-6/ 2006 1-12/ 2006 Rev- enues 59.8 45.0 112.1 87.9 186.4 EBITDA 8.9 6.6 16.3 13.3 27.3 Depr- eciation -1.2 -0.9 -2.3 -2.0 -4.2 Operating profit 7.7 5.7 14.0 11.3 23.1 Financial income 0.1 0.1 0.2 0.1 0.3 Financial expenses -0.3 -0.2 -0.4 -0.2 -0.7 Share of result of asso- ciated companies 0.0 -0.1 0.0 -0.1 0.0 Profit Before taxes 7.5 5.5 13.7 11.1 22.7 Income taxes -2.1 -1.5 -3.9 -3.3 -6.6 Profit for the period 5.4 4.0 9.8 7.8 16.1 Attri- butable to: Equity holders of the parent 5.3 3.9 9.6 7.7 15.8 Minority interest 0.1 0.1 0.2 0.1 0.3 Earnings per share, euro 0.35 0.26 0.63 0.51 1.04 Earnings per share diluted, euro 0.35 0.26 0.63 0.51 1.04 Consolidated balance sheet, MEUR 30.6.2007 30.6.2006 31.12.2006 ASSETS Intangible assets 8.4 5.1 7.8 Tangible assets 12.9 14.7 13.3 Inves- tments 1.8 1.2 1.4 Loans Receivable And Other Receiv- ables 0.5 0.8 0.8 Deferred Tax assets 1.5 1.1 1.1 Total non- current assets 25.1 22.9 24.3 Inven- tories 13.7 9.9 11.7 Trade and other receiv- ables 46.3 37.0 37.8 Cash and Cash Equival- ents 13.2 11.5 13.0 Total Current assets 73.2 58.4 62.6 Total assets 98.4 81.3 86.9 EQUITY AND LIA- BILITIES Equity Attributable to equity holders of the parent company 51.8 43.8 52.0 Minority interest 0.9 0.6 1.0 Total equity 52.7 44.4 53.0 Deferred tax liabilities 1.4 0.7 1.2 Employee pension benefits 0.8 0.7 0.7 Interest- bearing liabilities 1.7 2.0 1.8 Total non- current liabilities 3.9 3.4 3.7 Trade and other payables 29.5 25.2 25.6 Income tax liabilities 1.9 1.8 1.5 Provi- sions 0.9 0.8 0.7 Interest- Bearing liabilities 9.5 5.7 2.4 Total Current Liabi- lities 41.8 33.5 30.2 Total Equity And liabilities 98.4 81.3 86.9 Q2/2007 Calculation of changes in shareholders' equity, MEUR Minor- ity Attributable to equity holders of the parent inter- Total est equity Share Transla- Re- Pre- tion Revalu- tained Share mium Own diffe- ation earn- capital reserve shares rence fund ings Total Share holders' equity 31. 12. 2006 3.1 5.0 -1.2 -0.1 0.1 45.2 52.0 1.0 53.0 Cash flow hed ging: Hedging Result allo cated to equity 0.0 0.0 0.0 Hedging result carried to income state ment -0.1 -0.1 -0.1 Trans lation diffe rence 0.0 0.0 0.0 Profit/ loss from hedging of net invest ment 0.0 0.0 0.0 Reco gnized tax 0.0 0.0 0.0 Other changes 0.1 0.1 0.1 Net income re corded dir ectly in equity 0.0 0.0 0.0 0.1 -0.1 0.1 0.1 0.0 0.1 Profit for the peri- od 9.6 9.6 0.2 9.8 Total income and ex penses re corded for the period 0.0 0.0 0.0 0.1 -0.1 9.7 9.7 0.2 9.9 Divid- ends paid -9.9 -9.9 -0.3 -10.2 Share- holders' equity 30.6. 2007 3.1 5.0 -1.2 0.0 0.0 45.0 51.8 0.9 52.7 Q2/2006 Calculation of changes in shareholders' equity, MEUR Minor- ity Attributable to equity holders of the parent inter- Total est equity Share Transla- Re- Pre- Tion Revalu- Tained Share mium Own diffe- ation earn- capital reserve shares rence fund ings Total Share holders' equity 31.12 .2005 3.1 5.0 -1.2 -0.1 -0.1 35.6 42.3 0.5 42.8 Cash Flow Hed- ging: Hed- Ging result allo cated to equity 0.1 0.1 0.1 Hedgi- ng result Carr- ied to inco- me state ment 0.1 0.1 0.1 Trans lation differ ence 0.0 0.0 0.0 Reco gniz- ed tax 0.0 0.0 0.0 Other cha- nges 0.0 0.0 0.0 Net In- come reco- rded direct- ly in equity 0.0 0.0 0.0 0.0 0.2 0.0 0.2 0.0 0.2 Profit For the period 7.7 7.7 0.1 7.8 Total Inco- me and expen ses reco- rded for the per- iod 0.0 0.0 0.0 0.0 0.2 7.7 7.9 0.1 8.0 Divi Dends paid -6.3 -6.3 -6.3 Share repur chase 0.0 0.0 0.0 Share holders' equity 31.6. 2006 3.1 5.0 -1.2 -0.1 0.1 37.0 43.8 0.6 44.4 Consolidated cash flow statement, MEUR 30.6.2007 30.6.2006 31.12.2006 Profit for the period 9.8 7.8 16.1 Depre ciation 2.3 2.0 4.2 Other Adjust tments 4.3 3.2 6.9 Change in working capital -6.4 -3.4 -5.7 Cash flow from financial items and tax -3.8 -2.9 -6.4 Cash flow from oper- ating activ- ities 6.2 6.7 15.1 Invest ments in tangi- ble and inta- ngible assets -2.6 -3.4 -7.0 Proc- eeds from disp- osal of tang- ible and intan- gible assets 0.0 0.3 0.5 Loans granted 0.0 0.0 -1.4 Other Invest ments -0.2 -1.6 -0.5 Proc eeds from disp osal of other invest ments 0.0 0.0 0.3 Change in long- term loan receiv ables 0.0 0.1 0.0 Cash flow from invest ting active ties -2.8 -4.6 -8.1 Share issue 0.0 0.0 0.1 Pro ceeds from long- term borro wings 0.0 0.5 0.4 Repay ments of long- term loans -0.1 -0.1 -0.2 Proc- eeds from short- term borro wings 9.3 5.0 5.0 Repay ments of short- term loans -2.0 -1.0 -4.3 Finan cial leas ing paym ents -0.3 -0.2 -0.3 Divid ends paid -10.2 -6.3 -6.3 Cash flow from finan cing active ities -3.3 -2.1 -5.5 Change in liquid funds 0.2 0.0 1.6 Segment information Reporting on Vacon Group's operations is firstly by business segment and secondly by geographical segment. Vacon has one business segment, AC drives. The figures for the primary segment are identical with the figures for the whole Group. Vacon's operations are organized in the following functions: Products and Markets, Production, Research & Development, Finance and Administration, Human Resources, IT and Process Development, and Corporate Development. To ensure that the organisation is customer-oriented, operations are controlled by customer segments that are called business areas. These business areas are: Component Customers, Solutions Customers, OEM and Brand Label Customers, and Service and After-Market Services. The secondary, geographical segment is divided into four sales areas: Europe, North America, Asia and Australia, and Other Countries. Key indicators 30.6.2007 30.6.2006 31.12.2006 Equity per share, EUR 3.40 2.88 3.42 Equity ratio, % 54.2 55.3 61.7 Gross capital expen- diture, MEUR 3.0 4.9 8.5 Gross capital expen- diture as % of revenues 2.7 5.6 4.6 Interest- bearing net liabi- lities, MEUR -2.0 -3.7 -8.8 Gearing, % -3.9 -8.4 -16.6 Order book, MEUR 33.7 24.6 29.7 Adju- sted Average number of shares during the period 15,221,720 15,205,109 15,209,303 Number of shares at end of period 15,232,188 15,213,428 15,213,428 Average number of personnel 725 597 618 Commitments and contingencies. MEUR 30.6.2007 30.6.2006 31.12.2006 Commit- ments and contin- gencies 1.2 2.2 1.8 Financing commi- tments 1.1 1.6 1.5 Currency derivatives. MEUR 30.6.2007 30.6.2006 31.12.2006 Forward exchange contracts Fair value 0.1 0.3 0.1 Nominal value 14.3 13.5 14.9 Events after end of review period No events have taken place after the end of the review period that will have an impact on the Company's result or financial position. Calculation of financial ratios Earnings per share = Profit for period attributable to equity holders of parent company ------------------------------------------------------- Adjusted average number of shares Equity per share = Equity attributable to equity holders of parent company ------------------------------------------------------- Adjusted number of shares at end of period Equity ratio = Shareholders' equity (incl. min. interest) x 100 ------------------------------------------------------- Balance sheet total - advances received Gearing = (Interest-bearing liabilities - cash, bank balances and financial assets) x 100 ------------------------------------------------------------ Shareholders' equity (incl. minority interest)
ADDITIONAL TABLES INCLUDED: VACON PLC FINANCIAL BULLETIN 1 January - 30 June 2007
| Source: Vacon.