Tekla Corporation Stock Exchange Release 3.8.2007
Tekla Corporation's Interim Report January 1-June 30, 2007:
Growth in Tekla's net sales and operating result continued
Net sales of Tekla Group for January-June 2007 totaled 28.03 (22.58)
million euros. Growth in net sales was approximately 24 percent. The
operating result for the reporting period was nearly twice that of
the corresponding period the previous year, 9.62 (4.95) million
euros. The operating result was 34.3% (21.9%) of net sales.
Net sales for the second quarter were 14.43 (12.05) million euros,
increasing by some 20% compared to the same period in 2006. The
operating result for the quarter was 5.84 (3.10) million euros,
including approximately 2.3 million euros generated by the sale of
the Defence business.
The divested Defence business is included in the 2007 figures for the
first four months. Growth in the net sales of the continuing business
in January-June 2007 amounted to some 25%, with an operating result
of 7.09 (4.98) million euros. The operating result percentage was
26.2% (23.0%).
- The net sales and operating profit of the Building & Construction
business area developed favorably during the first two quarters. The
key markets are still strong. At the end of the reporting period
India became the second largest market area after the United States.
Also in the Middle East the sales have been on a good level. We have
seen very favorable development in the Nordic countries as well; it
is noteworthy that our Nordic customers are using the features of
Tekla Structures increasingly more extensively, comments Ari Kohonen,
Tekla's President and CEO.
- We are also pleased about the favorable development of the other
business area, Infra & Energy, during the second quarter.
- Tekla has chosen the strategy of focusing on the software product
business. In accordance with this strategy, the Infra & Energy
business area was formed at the beginning of the year, and the
project-based Defence business was divested in the second quarter.
- The Board's estimates of the net sales and operating profit for
2007 remain unchanged. Net sales of the continued business operations
will increase by approximately 20%. In order to guarantee long-term
growth, personnel resources have been and will be further increased.
Therefore, costs will increase, but we nevertheless expect the
operating result of the continued business operations to clearly
exceed that of the previous year. The Building & Construction
business area generates the majority of Tekla's net sales and
operating profit, but net sales of Infra & Energy are expected to
experience moderate annual growth as well, and its result to be
positive.
- - -
Tekla will organize a joint information conference for analysts and
media at the Scandic Hotel Simonkenttä (address Simonkatu 9,
Helsinki, Pavilion Cabinet) on August 3, 2007 from 11:30 a.m. to
12:30 p.m.
- - -
Tekla is the industry-leading international software product company
whose innovative software solutions make customers' core business
more effective in building and construction, energy distribution and
in municipalities. The company's model-based software products and
related services are used in more than 80 countries. Tekla Group's
net sales for 2006 were approximately 50 million euros and operating
result 13.6 million euros. International operations accounted for 75%
of net sales. Tekla Group employs more than 350 persons, of whom a
third work outside Finland. Tekla was established in 1966, making it
one of the oldest software companies in Finland. For additional
information on Tekla, please visit www.tekla.com
TEKLA CORPORATION'S INTERIM REPORT JANUARY 1-JUNE 30, 2007
NET SALES AND PROFITABILITY
* Net sales of Tekla Group for January-June 2007 were 28.03 million
euros (22.58 million euros in January-June 2006).
* Growth in net sales was 24.1%.
* Operating result was 9.62 (4.95) million euros.
* Operating result of the continuing operations was 7.09 (4.98)
million euros.
* Operating profit percentage was 34.3 (21.9).
* Operating profit percentage of the continuing operations was 26.2
(23.0).
* Earnings per share were 0.32 (0.17) euros.
* Earnings per share of the continuing operations were 0.23 (0.17)
euros.
* Return on investment was 81.7 (53.4) percent.
* Return on equity was 59.8 (42.4) percent.
FINANCIAL POSITION
* Cash flows from operating activities totaled 10.35 (10.36) million
euros.
* Liquid assets amounted to 27.13 (22.22) million euros on June 30,
2007 and 24.24 million euros on December 31, 2006.
* Equity ratio was 56.1 (55.0) percent.
* Interest-bearing debts were 0.31 (0.88) million euros.
OTHER KEY FIGURES
* International operations accounted for 79% (75%) of net sales.
* Personnel averaged 371 (312) for January-June.
* At the end of June, the number of personnel including part-time
staff was 377 (336).
* Gross investments in property, plant and equipment were 0.76 (0.46)
million euros.
* Equity per share was 1.02 (0.81) euros.
* On the last trading day of June, trading closed at 14.22 (4.75)
euros.
BUSINESS AREAS
NET SALES BY BUSINESS AREA (PRIMARY SEGMENT)
Q1-Q2/ Q1-Q2/ Change 1-12/ Q2/ Q2/
Million euros 2007 2006 2006 2007 2006
Building & Construction 21.43 15.97 5.46 35.88 10.81 8.64
Infra & Energy *) 5.60 5.69 -0.09 11.76 3.11 2.96
Defence **) 1.00 0.92 0.08 2.14 0.51 0.45
Others 0.00 0.00 - 0.00 0.00 0.00
Total 28.03 22.58 5.45 49.78 14.43 12.05
OPERATING RESULT BY BUSINESS AREA (PRIMARY SEGMENT)
Q1-Q2/ Q1-Q2/ Change 1-12/ Q2/ Q2/
Million euros 2007 2006 2006 2007 2006
Building & Construction 6.94 5.05 1.89 12.77 3.09 2.90
Infra & Energy *) 0.14 0.31 -0.17 1.04 0.31 0.30
Defence **) 2.53 -0.03 2.56 0.24 2.51 0.00
Others 0.01 -0.38 0.39 -0.43 -0.07 -0.10
Total 9.62 4.95 4.67 13.62 5.84 3.10
*) At the beginning of 2007, the Energy & Utilities and Public Infra
business areas
were merged. Comparison figures for 2006 have been calculated to
correspond with the new division of business areas.
**) Defence has been processed as discontinued operations also for
the comparison period. The Defence operating result for Q2/2007
includes sales profits amounting to approximately 2.3 million euros.
Building & Construction
Tekla's Building & Construction business area (B&C) develops and
markets the Tekla Structures software product for model-based design
of steel and concrete structures as well as the management of
fabrication and construction.
The trends in the building industry have remained favorable in all
key market areas. Demand for modeling systems is on the rise, and
product modeling is strengthening its position in structural design
and other stages of the building process. Tekla's market position as
a supplier of 3D modeling software is strong in all markets and the
numbers of users have increased further.
B&C's customers' business volumes show no sign of letting up. Effects
of volume changes on the demand for Tekla's products are not linear,
and in addition they are difficult to predict. B&C's most significant
single market is the United States, where the outlook for residential
construction has recently weakened. Tekla's products are not widely
used in residential construction. Instead the software is primarily
used in commercial, office and industrial buildings.
The net sales of B&C amounted to 21.43 (15.97) million euros for
January-June 2007. Net sales increased by approximately 34% compared
to the same period the previous year. Its operating result was 6.94
(5.05) million euros. B&C's operating profit percentage for the
reporting period was 32.4 (31.6). Fluctuations in the exchange rate
between the US dollar and the euro had a slightly negative effect on
B&C's net sales and operating result.
During the second quarter, B&C's net sales amounted to 10.81 (8.64)
million euros and its operating result was 3.09 (2.90) million euros.
Personnel resources were further increased during the second quarter
in order to ensure favorable development.
By far the most of B&C's net sales were due to the product offering
for structural steel engineering. Sales of B&C's other products
developed favorably as well during the reporting period. Nordic
customers in particular are using the features of Tekla Structures
increasingly more extensively. A significant part of the resource
additions has, in fact, been and will be allocated to the expanded
product offering.
International operations accounted for 94% (95%) of B&C's net sales
in January-June 2007. The biggest market areas were North America,
India and the Nordic countries, which increased their net sales also
proportionally the most. In the Middle East the sales continued on a
good level. As for Western Europe, the most favorable development was
seen in Germany.
During the reporting period, Tekla joined the Business Software
Alliance. The BSA is a global association that aims to reduce
software piracy and promote a legal network environment.
Infra & Energy
As of the beginning of 2007, the Energy & Utilities and Public Infra
business areas merged into a new business area, Infra & Energy. Infra& Energy focuses on development and sales of model-based software
solutions that support customers' core processes. Its key customer
industries (products in brackets) are energy distribution (Tekla
Xpower), infrastructure management (Tekla Xcity, Tekla Xstreet) and
water supply (Tekla Xpipe).
Structural changes in the energy industry and end users' increasing
expectations of the reliability of energy distribution and customer
service increase the need for developing and renewing network
information systems. Tekla has a firm market position in the industry
in the Nordic countries and the Baltic states. In Finland, increasing
regional collaboration will increase the public sector's GIS
development needs. Tekla's market position is strong in large and
medium-sized Finnish municipalities.
The net sales of I&E amounted to 5.60 (5.69) million euros for
January-June 2007. Net sales decreased by 1.6%. I&E's operating
result for the reporting period was 0.14 (0.31) million euros. I&E's
operating profit percentage was 2.5 (5.4). International operations
accounted for 37 (32) of net sales.
I&E's second quarter was on the same level with the corresponding
quarter the previous year. The net sales for the second quarter
amounted to 3.11 (2.96) million euros and operating result was 0.31
(0.30) million euros.
I&E's prospects for the rest of the year are favorable, and the
result of the year is expected to be positive.
The majority of net sales consisted of additional and service sales
to existing customers. In the field of energy distribution, expanding
the use of Tekla Xpower was agreed with several Nordic customers. In
the field of infrastructure management, a project to develop
electronic building supervision services was agreed with six major
Finnish cities. In the future, the application will comprise a key
part of the Tekla Xcity-based electronic service entity for
infrastructure management.
New customers are mainly expected from among Swedish energy companies
as well as Finnish and Swedish water utilities. In Eastern Europe,
exploration of new business opportunities continues with local
partners. The customer base in the infrastructure management sector
is expected to broaden with the adoption of regional services in
Finland.
Defence
Tekla announced on April 26, 2007, that it will sell the
project-based Defence business to Patria on May 1, 2007. In
connection with the transaction, some 20 employees transferred to
Patria.
The Defence business area's net sales for January-June 2007 amounted
to 1.00 (0.92) million euros. Operating profit for the periods was
2.53 (-0.03) million euros, respectively. The operating profit for
2007 includes sales profits amounting to approximately 2.3 million
euros.
The Defence business area will be processed as discontinued
operations in the financial reporting for 2007.
STRATEGY TO FOCUS ON SOFTWARE PRODUCT BUSINESS
After the realization of the sale of the Defence business and the
formation of the new Infra & Energy business area, Tekla will focus
further on the software product business. The company develops and
sells software products to clearly defined customer industries in the
international market. Tekla's software products are meant for
professional use and supporting the customers' core business
functions. Focusing on the software product business facilitates more
uniform processes in product development and e.g. customer
relationship management.
PRODUCT DEVELOPMENT
The name of Tekla's software developer unit, Software Production, was
changed during the reporting period. The new name is Product
Development, which better describes Tekla's increasing focus on the
development of its own products and abandonment of the development of
customer-specific information system projects.
However, product projects where product features are developed in
cooperation with individual customers and customer groups continue as
a part of the I&E business area's product-based solution portfolio.
During the first two quarters of 2007, building industry product
development focused on the main version of Tekla Structures. The 2007
main version was launched in mid-April. Version 13 contains
improvements concerning e.g. software performance and usability.
In the future, two Tekla Structures versions will be released
annually instead of the previous three versions. The annual main
version will be released in the spring and the intermediate version
towards the end of the year.
As for Tekla Xpower and Tekla Xpipe software, focus was on the main
versions which were completed in June, with various new features,
especially in network calculations.
Development of the Tekla Xcity and Tekla Xstreet software products
continued in close cooperation with customers. Main versions of both
products were released in June.
PERSONNEL AND ORGANIZATION
Personnel
The Group personnel averaged 371 (312) for January-June 2007; on
average 136 (101) worked outside Finland. In these figures, the
number of part-time staff has been converted to correspond to
full-time work contribution. At the beginning of the year, Tekla
personnel totaled 365 (324) including part-time staff, and at the end
of June 377 (336), of whom 147 (105) worked outside Finland. Largest
increases to personnel took place in product development and sales.
Senior management
Members of the Tekla Management Team as of the beginning of 2007 are:
Ari Kohonen, President and CEO; Heikki Multamäki, Executive Vice
President (responsible for Tekla's business development); Risto Räty,
Executive Vice President (Building & Construction); Kai Lehtinen,
Senior Vice President (Infra & Energy); Petri Raitio, Senior Vice
President (Product Development); Leif Granholm, Senior Vice President
(Tekla Nordic); Harald Lundberg, Vice President (Tekla Information
Management); Anneli Bergström, Vice President (Human Resources); and
Timo Keinänen, CFO.
SHARE AND OWNERSHIP STRUCTURE
Shares and Share Capital
The total number of Tekla Corporation shares at the end of June 2007
was 22,586,200, of which the company owned 69,600. The total nominal
value of those was 2,088 euros, representing 0.3% of the total share
capital and the total number of votes. A total of 220,702.46 euros
had been used for acquiring the company's own shares, and their
market value was 989,712 euros on 30.06.2007. The nominal value of
the share is 0.03 euros. At the end of the period, share capital
stood at 677,586 euros.
Share Price Trends and Trading
The highest quotation of the share in January-June 2007 was 14.94
(6.49) euros, the lowest 7.60 (3.38) euros. The average quotation was
10.27 (4.76) euros. On the last trading day of June, trading closed
at 14.22 (4.75) euros.
A total of 6,967,468 (8,293,147) Tekla shares changed hands in
January-June 2007, amounting to 30.8% (36.7%) of the entire share
capital.
Flagging Announcements
According to a notification by Fidelity International Ltd and its
subsidiaries dated March 19, 2007, their holdings in Tekla
Corporation had decreased below the 5% threshold to 4.09%.
At the end of March, Fidelity International and its subsidiaries
announced that their holdings had crossed above the 5% threshold
after the security lending ended on March, 23, 2007. According to the
notification, the new holdings amounted to 8.37%.
ANNUAL GENERAL MEETING
Tekla Corporation's Annual General Meeting on March 15, 2007 adopted
the financial statements, consolidated income statement and balance
sheet for 2006. The Annual General Meeting also discharged the CEO
and the Board members from liability. The Annual General Meeting also
approved the Board's proposal that a dividend of 0.20 euros plus an
extra dividend of 0.20 euros due to the anniversary, or a total of
0.40 euros per share, be distributed for the financial period 2006.
Ari Kohonen, Esa Korvenmaa, Olli-Pekka Laine (Vice Chair), Heikki
Marttinen (Chair) and Erkki Pehu-Lehtonen were re-elected Board
members until the conclusion of the Annual General Meeting in 2008.
Timo Keinänen was re-elected deputy member of the Board. Juha Kajanen
is the Tekla personnel representative on the Board and Pirjo Lundén
his personal deputy.
PricewaterhouseCoopers were re-elected as auditors, with Markku
Marjomaa, Authorized Public Accountant, as the auditor in charge.
The AGM renewed the Board's authorizations regarding the increase of
the company's share capital and transferring the company's treasury
shares. In addition, the AGM authorized the Board to acquire a
maximum of 500,000 Tekla shares.
SHORT-TERM RISKS AND UNCERTAINTY FACTORS
Possible risks and uncertainty factors associated with Tekla's
business are mainly connected with the market and competition
situation and the general economic situation.
In the software product business, it is possible to react swiftly to
growing demand, and profits from additional sales are good. The
majority of net sales comprises of sales of licenses entitling to use
software products. Fluctuation in their demand can be rapid and
significant. In the short term and in case of quick changes, it is
challenging to proportion fixed personnel expenses, which account for
the majority of Tekla's costs.
Sales of Tekla's software are geographically diverse and individual
customers do not account for a significant proportion of the net
sales, and therefore the above mentioned risks are not remarkable.
EVENTS AFTER THE REPORTING PERIOD
The Al Attar Group, a U.A.E.-based business and real estate
development group, chose to adopt Tekla Structures in its key
business processes. The contract with the Al Attar Group is one of
the largest for Tekla's Middle East office, and it consolidates
Tekla's position as the leading BIM solution provider for the
construction industry in the Middle East.
Tekla terminated the Liquidity Providing agreement between Tekla
Corporation and FIM Securities Ltd on July 26, 2007. Market making in
accordance with the LP agreement will end on August 31, 2007.
OUTLOOK FOR 2007
The Board estimates that the net sales of continued business
operations will increase by some 20%. In order to guarantee long-term
growth, personnel resources have been and will be increased further.
Therefore, costs will increase, but the operating result of the
continuing business operations is estimated to clearly exceed that of
the previous year. The Building & Construction business area is
spearheading the growth in net sales and operating profit, but Infra& Energy is expected to experience moderate growth in net sales as
well, and its result to be positive.
NEXT FINANCIAL REPORT
Tekla Corporation's Interim Report for January-September 2007 will be
published on October 26, 2007.
Espoo, August 3, 2007
TEKLA CORPORATION
Board of Directors
For additional information, please contact:
Ari Kohonen, President and CEO, Tel. +358 30 661 1468, +358 50 641
24,
ari.kohonen (at) tekla.com
Timo Keinänen, CFO, Tel. +358 30 661 1773, +358 400 813 027,
timo.keinanen (at) tekla.com
Distribution: Helsinki Exchanges, main media
Enclosures:
- Consolidated income statement, balance sheet (condensed) and cash
flow statement (condensed)
- Calculation of reconciliation of equity
- Notes to the Interim Report
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
CONSOLIDATED INCOME STATEMENT
Q1-Q2/ Q1-Q2/ 1-12/ Q2/ Q2/
Million euros 2007 2006 2006 2007 2006
Continuing operations:
Net sales 27.03 21.66 47.64 13.92 11.60
Other operating income 0.46 0.43 1.02 0.22 0.25
Change in inventories of finished
goods and in work in progress 0.10 0.03 0.02 0.05 0.03
Raw materials and consumables
used -1.10 -0.89 -2.01 -0.52 -0.49
Employee compensation and benefit
expense -12.87 -10.49 -21.70 -6.77 -5.37
Depreciation -0.58 -0.61 -1.19 -0.28 -0.31
Other operating expenses -5.95 -5.15 -10.40 -3.29 -2.61
Operating profit (loss) 7.09 4.98 13.38 3.33 3.10
% of net sales 26.23 22.99 28.09 23.92 26.72
Financial income 0.77 0.42 1.06 0.27 0.20
Financial expenses -0.50 -0.39 -0.91 -0.24 -0.27
Profit (loss) before taxes 7.36 5.01 13.53 3.36 3.03
% of net sales 27.23 23.13 28.40 24.14 26.12
Income taxes -2.11 -1.23 -3.55 -1.03 -0.71
Result for the period from
continuing operations 5.25 3.78 9.98 2.33 2.32
Discontinued operations:
Result for the period from
discontinued operations 1.87 -0.03 0.18 1.86 0.00
Result for the period 7.12 3.75 10.16 4.19 2.32
Attributable to the equity holders of the
Company
Earnings per share for profit
attributable to the equity holders
of the Company:
Earning per share (EUR) 0.32 0.17 0.45 0.19 0.10
Earnings are not diluted.
Earnings per share from continuing
operations attributable to the
equity holders of the Company:
Earning per share (EUR) 0.23 0.17 0.44 0.10 0.10
Earnings are not diluted.
Earnings per share from discontinued
operations attributable to the
equity holders of the Company:
Earning per share (EUR) 0.08 0.00 0.01 0.08 0.00
Earnings are not diluted.
CONDENSED BALANCE SHEET
Million euros 6/2007 6/2006 12/2006
Assets
Non-current assets
Property, plant and equipment 1.63 1.69 1.74
Goodwill 0.10 0.10 0.10
Intangible assets 0.76 0.37 0.49
Other financial assets 0.30 0.30 0.30
Receivables 0.49 0.70 0.56
Deferred tax assets 0.14 0.30 0.36
Non-current assets, total 3.42 3.46 3.55
Current assets
Inventories 0.14 0.05 0.04
Trade and other receivables 10.57 7.28 10.90
Other financial assets 21.15 15.89 18.60
Cash and cash equivalents 6.03 6.39 5.69
Current assets, total 37.89 29.61 35.23
Assets related to discontinued operations 0.00 0.69 0.97
Assets total 41.31 33.76 39.75
Equity and liabilities
Equity
Share capital 0.68 0.68 0.68
Share premium account 8.89 8.89 8.89
Other own capital 1.14 1.37 1.22
Retained earnings 12.22 7.28 13.93
Equity total 22.93 18.22 24.72
Non-current liabilities
Provisions 0.62 0.83 0.83
Interest-bearing liabilities 0.04 0.28 0.27
Non-current liabilities total 0.66 1.11 1.10
Current liabilities
Trade and other payables 16.31 12.58 12.17
Tax liabilities 0.46 0.89 0.80
Current interest-bearing liabilities 0.27 0.60 0.43
Current liabilities total 17.04 14.07 13.40
Liabilities total 17.70 15.18 14.50
Liabilities related to discontinued
operations 0.68 0.36 0.53
Equity and liabilities total 41.31 33.76 39.75
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of the
Company
Share Fair Acc.
Share prem. Res. value transl Ret.
cap. acct fund res. diff. earn. Total
Equity January 1,
2006 0.68 8.89 1.33 0.04 -0.05 6.32 17.21
Translation
differences -0.02 -0.09 -0.11
Changes in
available-for-sale
investments 0.07 0.07
Items recognized
directly in equity 0.00 0.00 0.00 0.07 -0.02 -0.09 -0.04
Net profit for the
period 3.75 3.75
Total income andexpenses recognized
in the period 0.00 0.00 0.00 0.07 -0.02 3.66 3.71
Payment of dividend -2.70 -2.70
Equity June 30, 2006 0.68 8.89 1.33 0.11 -0.07 7.28 18.22
Attributable to the equity holders of the
Company
Share Fair Acc.
Share prem. Res. value transl Ret.
cap. acct fund res. diff. earn. Total
Equity January 1,
2007 0.68 8.89 1.33 0.10 -0.21 13.93 24.72
Translation
differences -0.10 0.18 0.08
Changes in
available-for-sale
investments 0.02 0.02
Items recognized
directly in equity 0.00 0.00 0.00 0.02 -0.10 0.18 0.10
Net profit for the
period 7.12 7.12
Total income and
expenses recognized
in the period 0.00 0.00 0.00 0.02 -0.10 7.30 7.22
Payment of dividend -9.01 -9.01
Equity June 30, 2007 0.68 8.89 1.33 0.12 -0.31 12.22 22.93
CONDENSED CASH FLOW STATEMENT
Q1-Q2/ Q1-Q2/ 1-12/
Million euros 2007 2006 2006
Cash flows from operating activities:
Continuing operations 9.75 10.61 13.15
Discontinued operations 0.60 -0.25 -0.14
Cash flows from operating activities 10.35 10.36 13.01
Cash flows from investing activities:
Investments -0.76 -0.46 -1.33
Sale of intangible assets and property,
plant and equipment 0.02 0.00 0.13
Cash flow from sale of discontinued business 2.35
Purchases of available-for-sale financial
assets -28.57 -22.71 -48.64
Proceeds from sale of available-for-sale
financial assets 25.34 18.54 43.84
Interests received from available-for-sale
financial assets 0.33 0.10 0.40
Net cash used in/from investing activities -1.29 -4.53 -5.60
Cash flows from financing activities:
Payment of dividend -9.01 -2.70 -2.70
Repayments of long-term debt -0.39 -0.41 -0.59
Payments of finance lease liabilities -0.02 -0.05 -0.06
Net cash used in financing activities -9.42 -3.16 -3.35
Net decrease/increase in cash and cash
equivalents -0.36 2.67 4.06
Cash and cash equivalents at beginning of the
period 7.78 3.72 3.72
Cash and cash equivalents at end of the period 7.42 6.39 7.78
The cash and cash equivalents in the cash flow
statement include:
Cash and cash equivalents 6.03 6.39 5.69
Available-for-sale financial assets,
cash equivalents 1.39 0.00 2.09
NOTES TO THE INTERIM REPORT
The notes are presented in millions of euros, unless otherwise
specified.
This interim report has been prepared in accordance with the IAS 34
(Interim Financial Reporting) standard. The same accounting policies
and methods of computation have been followed in the interim
financial statements as in the annual financial statements for 2006.
The amendments and interpretations to published standards as well as
new standards, effective January 1, 2007, are presented in detail in
the financial statement for 2006. The adopted standards have not had
a significant effect on the result or the data presented in the
interim report. The notes to the interim report are unaudited.
Use of estimates
When preparing the interim report, the Group's management is required
to make estimates and assumptions influencing the content of the
interim report, and it must exercise its judgment regarding the
application of accounting policies. Although these estimates are
based on the management's best knowledge, actual results may
ultimately differ from the estimates used in the interim report. Tax
losses carried forward are recognized as deferred tax assets only to
the extent that it is probable that future taxable profits will be
available against which unused tax losses can be utilized. Actual
results could differ from those estimates.
Segment information
Net sales by business area (primary segment)
Q1-Q2/ Q1-Q2/ 1-12/ Q2/ Q2/
Million euros 2007 2006 2006 2007 2006
Building & Construction 21.43 15.97 35.88 10.81 8.64
Infra & Energy *) 5.60 5.69 11.76 3.11 2.96
Defence **) 1.00 0.92 2.14 0.51 0.45
Others 0.00 0.00 0.00 0.00 0.00
Total 28.03 22.58 49.78 14.43 12.05
Operating result by business area (primary segment)
Q1-Q2/ Q1-Q2/ 1-12/ Q2/ Q2/
2007 2006 2006 2007 2006
Building & Construction 6.94 5.05 12.77 3.09 2.90
Infra & Energy *) 0.14 0.31 1.04 0.31 0.30
Defence **) 2.53 -0.03 0.24 2.51 0.00
Others 0.01 -0.38 -0.43 -0.07 -0.10
Total 9.62 4.95 13.62 5.84 3.10
*) The Energy & Utilities and Public Infra business areas were merged
at the beginning of 2007. Comparison figures for 2006 have been
calculated to correspond with the new division of business areas.
**) Defence has been processed as discontinued operations also for
the comparison period. The Defence operating result for Q2/2007
includes sales profits amounting to approximately 2.3 million euros.
Financial indicators 6/2007 6/2006 12/2006
Earnings per share (EPS), EUR 0.32 0.17 0.45
Earnings per share (EPS) from continuing
operations, EUR 0.23 0.17 0.44
Earnings per share (EPS) from
discontinued operations, EUR 0.08 0.00 0.01
Equity/share, EUR 1.02 0.81 1.10
Interest-bearing liabilities 0.31 0.88 0.69
Equity ratio, % 56.1 55.0 63.4
Net gearing, % -117.0 -117.1 -95.2
Return on investment, % 81.7 53.4 63.1
Return on equity, % 59.8 42.4 48.5
Number of shares, end of period
22,516,600 22,516,600 22,516,600
Number of shares, average
22,516,600 22,516,600 22,516,600
Gross investments, MEUR 0.76 0.46 1.33
% of net sales 2.81 2.12 2.79
Personnel, on average 371 312 324
Discontinued operations
Defence business
Tekla's Defence business was transferred to Patria on May 1, 2007.
The calculations below show the effect of the business sale on the
result and the cash flow during the reporting period. Tekla has also
a possibility to receive an additional price depending on the sales
development of the sold business.
Q1-Q2/ Q1-Q2/ 1-12/
Result of the Defence business 2007 2006 2006
Net sales 1.00 0.92 2.14
Expenses -0.81 -0.95 -1.90
Profit (loss) before taxes 0.19 -0.03 0.24
Taxes -0.05 -0.06
Profit (loss) after taxes 0.14 -0.03 0.18
Sales profit from the Defence business
sale 2.34
Taxes -0.61
Sales profit after taxes 1.73 0.00 0.00
Profit (loss) for the period from discontinued
operations 1.87 -0.03 0.18
Cash flow statement, Defence
Cash flows from operating activities 0.60 -0.25 -0.14
Cash flows from investing activities *) 2.35 0.00 0.00
Cash flows from financing activities 0.00 0.00 0.00
Total cash flow 2.95 -0.25 -0.14
*) At Tekla the investments are made centralized and not allocated to
the businesses.
The effect of the sale of the Defence business to the financial
position of the Group
June 30, 2007
Trade and other
payables 0.02
Tax liabilities 0.66
Liabilities total 0.68
Consideration received and effect on cash
flow
Cash received 2.35
Cash and cash
equivalents of the
discontinued
operations 0.00
Total net disposal
consideration 2.35
Consolidated income statement by quarter
Q2/ Q1/ Q4/ Q3/ Q2/
Million euros 2007 2007 2006 2006 2006
Continuing
operations:
Net sales 13.92 13.11 14.55 11.43 11.60
Other operating
income 0.22 0.24 0.33 0.26 0.25
Change in
inventories of
finished goods and
in work in progress 0.05 0.05 -0.04 0.03 0.03
Raw materials and
consumables used -0.52 -0.58 -0.87 -0.25 -0.49
Employee
compensation and
benefit expense -6.77 -6.10 -6.14 -5.07 -5.37
Depreciation -0.28 -0.30 -0.30 -0.28 -0.31
Other operating
expenses -3.29 -2.66 -3.07 -2.18 -2.61
Operating profit
(loss) 3.33 3.76 4.46 3.94 3.10
% of net sales 23.92 28.68 30.65 34.47 26.72
Financial income 0.27 0.50 0.35 0.29 0.20
Financial expenses -0.24 -0.26 -0.43 -0.09 -0.27
Profit (loss) before
taxes 3.36 4.00 4.38 4.14 3.03
% of net sales 24.14 30.51 30.10 36.22 26.12
Income taxes -1.03 -1.08 -1.14 -1.18 -0.71
Result for the
period from
continuing
operations 2.33 2.92 3.24 2.96 2.32
Discontinued operations:
Result for the
period from
discontinued
operations 1.86 0.01 0.27 -0.06 0.00
Result for the
period 4.19 2.93 3.51 2.90 2.32
Q1-Q2/ Q1-Q2/ 1-12/
Income taxes 2007 2006 2006
Taxes for the financial period
and prior periods -1.90 -0.86 -3.23
Deferred taxes -0.21 -0.37 -0.32
Total -2.11 -1.23 -3.55
Estimated effective tax rate for
the financial year has been
applied to the result of the
reporting period.
Property, plant and equipment 6/2007 6/2006 12/2006
Cost at the beginning of the
period 6.82 6.47 6.47
Exchange differences -0.02 -0.02 -0.03
Additions 0.37 0.39 0.98
Disposals -0.23 -0.33 -0.60
Cost at the end of the period 6.94 6.51 6.82
Accumulated depreciation at the
beginning of the period 5.08 4.61 4.61
Exchange differences -0.02 -0.02 -0.03
Accumulated depreciation on
disposals -0.18 -0.25 -0.44
Depreciation for the financial
period 0.43 0.48 0.94
Accumulated depreciation at the
end of the period 5.31 4.82 5.08
Net book amount at the end of
the period
1.63 1.69 1.74
The investments consisted of
normal acquisitions of hardware,software and equipment.
Provisions
Loss-making
contracts Provisions
for pensions Total
1.1.2007 0.75 0.08 0.83
Deductions of provisions -0.21 -0.21
30.6.2007 0.54 0.08 0.62
Collaterals, contingent liabilities and other commitments
Collaterals for own commitments 6/2007 6/2006 12/2006
Business mortgages (as
collateral for bank guarantee
limit) 0.50 0.50 0.50
Pledged funds 0.07 0.03 0.08
Other contingent liabilities
Guarantees 0.06 0.06 0.07
Leasing and rental agreement
commitments
Premises 5.62 3.55 3.38
Others 0.74 0.76 0.87
Total 6.36 4.31 4.25
Derivative contracts
Currency forward contracts:
Fair value 0.07 0.05 0.06
Nominal value of underlying
instruments 3.76 1.62 3.85
The Group makes derivative contracts to hedge against the exchange
rate risks of prospective sales agreements. Forward contracts and
currency options are stated at fair value, and related foreign
exchange gains and losses are recognized in the income statement.
The derivative contracts hedge sales in US dollars.
Related party transactions 6/2007 6/2006 12/2006
Gerako Oy
Purchases of services 0.03 0.03 0.07
Reimbursed expenses 0.00 0.01 0.02
Management remuneration
Salaries and post-employment
benefits 0.82 0.69 1.44
Management herein refers to members of the Tekla Corporation
Management Team.
Tekla Corporation s Interim Report January 1-June 30, 2007
| Source: Tekla
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