SCANFIL GROUP'S FINANCIAL STATEMENTS FOR 1 JANUARY - 31 DECEMBER 2007
January - December
- Turnover for the year 2007 totalled EUR 224.6 million (241,4 year 2006)
decrease of 7,0%
- Operating profit was EUR 18.6 (11.4) million, which is 8.3 (4.7) % of
turnover.
- Profit for the review period was EUR 14.1 (8.2) million
- Earnings per share were EUR 0.24 (0.14)
- The Board of Directors proposes to the Annual General Meeting a dividend
of EUR 0,08 (0,10) and an additional dividend of EUR 0,04 per share
October - December
- Turnover for the fourth quarter totalled EUR 54.4 million (51.5 in the
corresponding period in 2006), increase of 5.7%
- Operating profit was EUR 5.5 (2.7) million representing 10.2 (5.2)% of
turnover
- Earnings per share amounted EUR 0.06 (0.05)
DEVELOPMENT OF OPERATIONS
Harri Takanen, President of Scanfil plc:
“The year 2007 was challenging in many ways. In the midst of tough price
competition and structural changes in the business, we achieved our goals and
retained profitability at a satisfactory level. Profitable business is the only
means of ensuring the company's future and development. Therefore, maintaining
profitability will continue to be Scanfil's primary goal. The Company's
excellent financial position is the result of Scanfil's cost-efficient
operations, competitiveness, good service competence and successful
implementation of the chosen strategy. We have been more successful than our
competitors in managing the changes in the business and the market. With correct
timing, this gives Scanfil the opportunity to grow and strengthen its market
position.”
In the industrial electronics products market, both the volume of production and
the sales continued to grow steadily throughout the year. Scanfil's customers
have been successful in the market. Building and modernisation of infrastructure
in developing regions, higher energy prices, increasing environmental awareness
and concern over the warming of climate are global factors that have had a
positive effect on the markets where Scanfil's industrial electronics customers
operate.
In 2007, the telecommunications network products market was characterised by
corporate restructurings implemented by large players in the field. These
affected the operations of contract manufacturers of network products. The
lower-cost product and supply structures of new products have cut the value and
volume of the material flow through contract manufacturers. The network
suppliers' increasing engagement in service business activities has contributed
to slower growth in the equipment market. For Scanfil plc's operations, the main
effects of this development included downsizing of operations in Finland,
relocation of production to lower-cost plants in Europe and Asia and a drop in
turnover compared with the year before.
Telecommunications customers accounted for about 69 (72)% and industrial
electronics customers for about 31 (28)% of the turnover.
The reorganisation of operations in Finland was completed during the year, and
the operations in Finland were concentrated in Sievi and Vantaa. The
reorganisation of production was completed successfully and did not cause any
significant extra costs. All the resources assigned to the reorganisation of
operations in Finland were released and engaged in business development again by
the end of the year.
The Chinese subsidiaries' sales accounted for 39% of the Group's sales during
the review period (32% in 2006), including deliveries to the Group's other
plants. Of the Group's personnel, 54% (46) worked in China at the end of 2007,
and a total of 75% (70%) worked in the international subsidiaries on 31 December
2007.
Scanfil plc's Belgian subsidiary Scanfil N.V. sold its plant site in Belgium on
20 March 2007. In Finland, Scanfil plc sold its Äänekoski plant site on 8
October 2007. In addition, the Company has initiated the process to sell the
Oulu plant site. The plant site deals were concluded at prices that were higher
than their balance sheet values. In addition, on 17 September 2007 the Company
announced that it is investigating the option to sell its plant sites in Vantaa,
Estonia and Hungary. If these deals are concluded, the Company will continue its
operations at the sites as a tenant.
The Company's new President Harri Takanen, MSc(Eng), took up his duties on 15
May 2007.
Near the end of the review period, the Company initiated negotiations with
Helkama Forste Oy to start co-operation in manufacturing in Hungary.
The planned co-operation would involve manufacturing of sheet metal components
and lease of production facilities from Scanfil's Hungarian subsidiary Kft.
The negotiations continue.
FINANCIAL DEVELOPMENT
The Group's turnover in 2007 was EUR 224.6 (241,4) million, showing a decrease
of 7.0% over the previous year. Distribution of turnover based on the location
of customers was as follows: Finland 43 (43)%, rest of Europe 25 (29)%, Asia 30
(25)%, USA 1 (1)% and the others 1 (2)%.
Competitiveness can only be maintained by continual development of production
activities and by efficient management of costs with respect to the increasingly
complex logistic supply chains. Scanfil has taken into account the changes in
its operating environment. By planning and reorganising production within the
Group, the Company has been able to retain its profitability at a satisfactory
level. Operating profit for the review period totalled EUR 18.6 (11.4) million,
representing 8.3 (4.7)% of turnover. Net profit amounted to EUR 14.1 (8.2)
million or 6.3 (3.4)% of turnover. Earnings per share amounted to EUR 0.24
(0.14) and return on investment was 14.1 (9.0)%.
A total of EUR 1.4 million of non-recurring income items have been recorded for
the year 2007, most of which are profits from the sale of fixed assets.
Write-downs of the material and product stores of terminated products totalled
EUR 1.5 million. Year of comparison 2006 result was burdened by a non-recurring
expense item of EUR 7.6 million related to the termination of the Belgian
subsidiary's production.
Income tax includes taxes corresponding to the result for the financial year. A
deferred tax liability of EUR 1.2 million was entered for the total retained
earnings of the Estonian subsidiary, as the retained earnings will be paid out
as dividends in 2008. Taxes based on result have not been entered before.
Turnover in October - December was EUR 54.4 (51.5) million. Operating profit in
the fourth quarter totalled EUR 5.5 (2.7) million, representing 10.2 (5.2)% of
turnover. Earnings per share were EUR 0.06 (0.05). When comparing the figures of
the periods, it should be kept in mind that operations in the final quarter of
2006 were exceptional because of a very rapid and dramatic drop in demand, due
to structural arrangements in the sector. In the final quarter of 2007, both
operations and performance were normal, and comparison with the third quarter of
2007 gives the correct picture of the development.
Owing to the structure of the company's operations, the effects of changes in
exchange rates on the result were minimal. If the US dollar remains weak or
continues to weaken, it will mainly have a declining impact on the turnover and
expenses of the Asian operations. Changes in the US dollar exchange rate will
not have a significant effect on the relative profitability of the Asian
operations.
FINANCING AND CAPITAL EXPENDITURE
The Group enjoys a strong financial position. Liabilities amounted to EUR 47.9
(46.2) million, EUR 40.4 (38.7) million of which were non-interest-bearing and
EUR 7.5 (7.5) million interest-bearing.
Liquid cash assets totalled EUR 50.0 (31.8) million. The equity ration was 73.6
(73.6)% and gearing -31.8 (-19.1)%.
Cash flow from operating activities in the review period was positive at EUR
20.2 (18.8) million. Cash flow from investments was EUR 4.9 (-5.0) million, and
cash flow from funding stood at EUR -5.9 (-19.1) million. Change in working
capital during the financial period was EUR 0.4 (2.9) million and dividends for
previous financial period were paid to the amount of EUR 5.9 (6.0) million.
Gross investments in fixed assets totalled EUR 1.4 (8.5) million, which is 0.6
(3.5)% of turnover. Investments consists mainly machinery and equipment
purchases. Depreciations were EUR 7.2 (8.3) million. During the financial period
the company sold its industrial property in Äänekoski (Finland) and Hoboken
(Belgium).
BOARD OF DIRECTORS' AUTHORISATION
On 12 April 2007, the Annual General Meeting authorised the Board of Directors
to decide on the repurchase of a maximum of 4,000,000 company shares, using
non-restricted equity, and on the disposal of a maximum of 5,998,449 company
shares.
The Board of Directors has no existing share issue authorisations or
authorisations to issue convertible bonds with warrants.
OWN SHARES
On 31 December 2007, the company owned a total of 1,998,449 of its own shares,
the counter-book value of which totalled EUR 499,612 and which represented 3.3%
of the company's share capital and votes.
During the review period, the company disposed of 1,551 of its own shares in
conjunction with the share-based profit-sharing scheme of the Group's Management
Team.
SHARE TRADING AND SHARE PERFORMANCE
The highest trading price during the review period was EUR 2.49 and the lowest
EUR 1.92, the closing price for the period standing at EUR 1.95. A total of
8,947,228 shares were traded during the period, corresponding to 14.7% of the
total number of shares. The market value of the shares on 31 December 2007 was
EUR 118,4 million.
GROUP STRUCTURE
On 31 December 2007, the Scanfil Group consisted of parent company Scanfil plc
(Sievi), Scanfil (Suzhou) Co., Ltd. and Scanfil (Hangzhou) Co., Ltd. in China,
Scanfil Kft. (Biatorbagy) in Hungary and Scanfil Oü (Pärnu) in Estonia.
Scanfil's Belgian subsidiary Scanfil N.V. (Hoboken) has not been engaged in any
production activities after the year 2006. The Group holds the entire share
capital in all of its subsidiaries.
CPS Elektroniikka Oy, a subsidiary of the Scanfil Group, was dissolved on
15 June 2007 in accordance with the decision of the Annual General Meeting. The
company has not engaged in any production activities since 30 April 2005.
PERSONNEL
At the end of the review period the Group employed 2,061 (2,073) people, of whom
1548 (1444) worked abroad. The Group employed an average 2,105 (2,213) people
during the year.
BOARD OF DIRECTORS' PROPOSALS TO THE ANNUAL GENERAL MEETING
Dividend for 2007
The Board of Directors proposes to the Annual General Meeting that a dividend of
EUR 0.08 per share be paid based on the annual result of the financial year
ending on 31 December 2007 according to the dividend policy, plus an additional
dividend of EUR 0.04 per share, totalling EUR 7,045,898.52.
The Board proposes that the matching date for payment of dividend be 8 April
2008 and that the dividend is paid on 15 April 2008.
OTHER EVENTS IN THE REVIEW PERIOD
The prosecutor pressed charges against Scanfil plc's Chairman of the Board of
Directors and Group CEO Jorma J. Takanen and the President at that time, who is
no longer working for Scanfil plc, in a suspected information offence concerning
alleged delay of profit warning at the turn of 2005-2006. The prosecutor called
for Scanfil plc to be sentenced to a fine imposed on a corporation of EUR
25,000. Scanfil plc denied all charges.
EVENTS AFTER THE REVIEW PERIOD
In its decision issued on 21 January 2008, the District Court of Helsinki
dismissed all charges against the Chairman of Scanfil plc's Board of Directors
and Scanfil plc's former President in legal proceedings that concerned a delayed
profit warning at the turn of 2005-2006.
The District Court of Helsinki also dismissed the prosecutor's call to sentence
Scanfil plc to a fine imposed on a corporation of EUR 25,000.
FUTURE PROSPECTS
Demand in the industrial electronics sector is expected to continue growing in
2008. In addition, negotiations are in progress with potential new customers in
the industrial electronics sector.
The growth of the telecommunications equipment market is generally estimated to
remain very low in 2008. Turnover from telecommunications equipment supplied by
Scanfil is expected to remain unchanged from year-end 2007.
Scanfil expects its turnover in 2008 to be about the same as in 2007.
Profitability for the full year is estimated to be at a satisfactory level.
However, market predictability is still poor.
The Company's good financial position provides an opportunity to actively seek
various means and arrangements that will put Scanfil's operations back on a
growth track.
OPERATIONAL RISKS AND UNCERTAINTIES
The most important operational uncertainties and risks associated with
telecommunications technology contract manufacturing include low visibility in
the market and extremely poor predictability, tough price competition,
availability of materials and rapid and significant fluctuation of demand.
In the industrial electronics sector, the demand looks more stable, with risks
and uncertainties mainly associated with global economic development and
subsequent changes in demand.
For more information on risk management, please visit the Company website at
www.scanfil.com. Select Investors and Corporate Governance.
APPENDICES:
Appendix 1: Consolidated profit and loss statements and balance sheet
Appendix 2: Consolidated cash flow statement
Appendix 3: Key indicators
Appendix 4: Calculation of changes in shareholders' equity
Appendix 5: Segment information
Appendix 6: Consolidated contingent liabilities
Appendix 7: Key indicators quarterly
Financial statements have been prepared in accordance with the recognition and
measurement principles of the IFRS.
Individual figures and grand totals have been rounded to the nearest million
euros, so they will not always add up. The figures are unaudited.
APPENDIX 1
CONSOLIDATED PROFIT AND LOSS STATEMENT
EUR million
2007 2006 2007 2006
10 - 12 10 - 12 1 - 12 1 - 12
NET SALES 54.4 51.5 224.6 241.4
Increase or decrease of
inventory of finished products 1.0 0.7 - 0.6 - 0.4
Manufacturing for own use 0.0
Other operating income 0.0 1.2 2.1 2.1
Expenses - 48.3 - 49.0 -200.3 - 223.5
Depreciation - 1.6 - 1.7 - 7.2 - 8.3
OPERATING PROFIT 5.5 2.7 18.6 11.4
Financial income and expenses 0.1 0.7 0.4 0.7
PROFIT BEFORE TAXES 5.7 3.3 19.0 12.1
Direct tax - 2.3 - 0.3 - 4.9 - 3.8
NET PROFIT FOR THE PERIOD 3.4 3.0 14.1 8.2
Attributable to:
Equity holders of the Company 3.4 3.0 14.1 8.2
Earnings/share (EPS), EUR 0.06 0.05 0.24 0.14
CONSOLIDATED BALANCE SHEET
EUR million 30.12. 31.12.
2007 2006
ASSETS
Long-term assets
Tangible current assets 36.5 43.1
Goodwill 2.5 2.5
Other intangible assets 1.1 1.0
Sellable investments 0.0 0.3
Receivables 0.2 0.2
Deferred tax receivables 0.4 0.2
Long-term assets total 40.8 47.4
Short-term assets
Inventories 33.6 41.4
Sales and other receivables 52.3 43.0
Prepayments 0.1 0.0
Financing assets with result
impact entered at current value 8.9
Cash and cash equivalents 50.0 22.9
Short-term assets total 136.1 116.2
Non-current assets held for sale 4.6 10.0
ASSETS TOTAL 181.5 173.6
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity that belongs to
the owners of the parent company
Share capital 15.2 15.2
Premium fund 16.1 16.1
Own shares - 6.9 - 6.9
Other funds 2.6 1.9
Translation differences - 2.6 - 0.7
Value change fund 0.1
Profits accrued 109.3 101.7
Shareholders' equity that belongs to
the owners of the parent company total 133.6 127.4
Shareholders' equity total 133.6 127.4
Long-term liabilities
Deferred tax liabilities 2.3 1.4
Reserves 7.0 8.5
Interest-bearing liabilities 7.5
Long-term liabilities total 9.3 17.4
Short-term liabilties
Procurement and other liabilities 30.4 28.2
Current income tax liabilities 0.7 0.6
Interest-bearing liabilities 7.5
Short-term liabilities total 38.6 28.8
Liabilities total 47.9 46.2
SHAREHOLDERS' EQUITY AND
LIABILITIES TOTAL 181.5 173.6
APPENDIX 2
CONSOLIDATED CASH FLOW STATEMENT 2007 2006
EUR million 1 - 12 1 - 12
Cash flow from operations
Net profit 14.1 8.2
Adjustment for the net profit of the period 8.7 13.6
Change in net working capital 0.4 2.9
Interests paid and other financial expenses - 0.4 - 0.7
Interests received 1.3 0.8
Taxes paid - 4.0 - 6.1
Net cash flow from operations 20.2 18.8
Cash flow from investments
Investments in tangible and
intangible assets - 1.7 - 7.8
Proceeds from sale of tangible
and intangible assets 6.3 2.8
Proceeds from sale of other investments 0.2 0.0
Net cash flow from investments 4.9 - 5.0
Cash flow from funding
Acquiring of own shares 0.0 - 2.8
Repayment of long-term loans - 10.4
Dividends paid - 5.9 - 6.0
Net cash flow from funding - 5.9 - 19.1
Change in assets 19.2 - 5.3
Liquid assets at the beginning
of the period 31.8 37.8
Changes in exchange rates - 0.6 - 0.9
Changes in fair value of investments - 0.3 0.1
Liquid assets at the end of the period 50.0 31.8
APPENDIX 3
KEY INDICATORS 2007 2006
1 - 12 1 - 12
Return on equity, % 10.8 6.4
Return on investment, % 14.1 9.0
Interest-bearing liabilities,
EUR million 7.5 7.5
Gearing, % - 31.8 - 19.1
Equity ratio, % 73.6 73.6
Gross investments in fixed
assets, EUR million 1.4 8.5
% of net turnover 0.6 3.5
Personnel, average 2 105 2 213
Earnings per share, EUR 0.24 0.14
Shareholders' equity per share, EUR 2.27 2.17
Dividend per share, EUR 0.12 0.10
Dividend per earnings, % 49.8 72.4
Effective dividend yield, % 6.15 4.22
Price-to-earnings ratio (P/E) 8.1 17.2
Share price
Year's lowest share price, EUR 1.92 2.30
Year's highest share price, EUR 2.49 4.67
Average share price for year, EUR 2.19 3.47
Share price at year's end, EUR 1.95 2.37
Market capitalisation at end of year, EUR million 118.4 143.9
Number of shares at
the end of period, 000's 60 714 60 714
- not counting own shares 58 716 58 714
- weighted average 58 716 59 557
The company does not have any liabilities resulting from derivative instruments.
Owing to the nature of the sector, the company's order book covers only a short
period of time and does not give an accurate picture of future development.
APPENDIX 4
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million
A = Share capital
B = Premium fund
C = Own shares
D = Other reserves
E = Translation differences
F = Fair value reserve
G = Retained earnings
H = Total
I = Shareholder's equity total
SHAREHODER'S A B C D E F G H I
EQUITY
1.1.2006 15.2 16.1 -4.1 1.3 2.5 0.1 100.0 131.1 131.1
Translation difference - 3.1 - 3.1 - 3.1
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY - 3.1 - 3.1 - 3.1
Net profit for the period 8.2 8.2 8.2
TOTAL RECOGNIZED INCOME
AND EXPENCE - 3.1 8.2 5.1 5.1
Payment of dividend - 6.0 - 6.0 - 6.0
Transfer to funds 0.6 - 0.6 0 0
Acquiring of own shares - 2.8 - 2.8 - 2.8
SHAREHOLDER'S EQUITY
31.12.2006 15.2 16.1 - 6.9 1.9 - 0.7 0.1 101.7 127.4 127.4
SHAREHOLDER'S EQUITY A B C D E F G H I
1.1.2007 15.2 16.1 - 6.9 1.9 - 0.7 0.1 101.7 127.4 127.4
Value change - 0.1 - 0.1 - 0.1
Translation difference - 2.0 - 2.0 - 2.0
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY - 2.0 - 0.1 - 2.1 - 2.1
Net profit for the period 14.1 14.1 14.1
TOTAL RECOGNIZED INCOME
AND EXPENCE - 2.0 14.1 12.0 12.0
Payment of dividend - 5.9 - 5.9 - 5.9
Transfers to funds 0.7 - 0.7 0 0
Acquiring of own shares 0.0 0.0 0.0
SHAREHOLDER'S EQUITY
31.12.2007 15.2 16.1 - 6.9 2.6 - 2.6 0.0 109.3 133.6 133.6
APPENDIX 5
SEGMENT INFORMATION ACCORDING GEOGRAPHICAL AREA
EUR million 2007 2006
1 - 12 1 - 12
TURNOVER
Europe 150.2 188.1
Asia 92.4 72.5
Turnover between segments - 18.0 - 19.1
Total 224.6 241.4
OPERATING PROFIT
Europe 7.5 4.9
Asia 11.1 6.5
Total 18.6 11.4
The Group operates in single sector.
APPENDIX 6
CONSOLIDATED CONTINGENT LIABILITIES
EUR million 2007 2006
1 - 12 1 - 12
Real estate mortgages 6.2
Business mortgages 16.4 16.4
Guarantees pledged 0.7 0.7
Rental liabilities 0.7 0.5
The parent company has arranged a EUR 7.8 million bank guarantee to secure the
payment of contributions related to Scanfil NV's restructuring. Scanfil NV's
balance sheet includes a corresponding provision.
APPENDIX 7
KEY INDICATORS QUARTERLY
EUR million
Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06
Turnover, MEUR 54.4 59.1 58.9 52.2 51.5 67.5 62,4 60,1
Operating
profit, MEUR 5.5 5.6 4.0 3.6 2.7 7.0 5.1 - 3.4
Operating profit, % 10.2 9.4 6.7 6.8 5.2 10.4 8.2 - 5.7
Net income, MEUR 3.4 4.5 3.2 3.1 3.0 6.1 3.7 - 4.5
EPS, EUR 0.06 0.08 0.05 0.05 0.05 0.10 0.06 - 0.08
The company's Annual Report for 2007 will be published in week 13. The company
will publish interim reports in 2008 as follows: January-March on 25 April,
January-June on 5 August and January-September on 24 October.
Scanfil plc's Annual General Meeting will be held on 3 April 2008 at the
company's head office in Sievi, Finland, at 2.00 pm.
SCANFIL PLC
Harri Takanen
President
Additional information:
President Harri Takanen
Tel +358 8 4882 111
Distribution Helsinki Exchanges
Major Media
www.scanfil.com
Scanfil plc is a global contract manufacturer and systems supplier for
communication and industrial electronics with over 30 years experience in
demanding contract manufacturing
Scanfil offers contract-manufacturing services as a systems supplier to the
telecommunication industry, mainly to wireless communication sector, as well as
to the industrial electronics industry. Main telecommunication products are
among others integrated enclosure systems for mobile phone and ADSL networks and
assembly and testing of modules related to enclosure systems. Examples of
industrial electronics products include box-built tested devices, various
electronic modules, backplanes and assembled circuit boards as well as cable
assemblies. Production plants are situated in China, Hungary, Estonia and
Finland.
Not for release over US newswire services. Forward looking statements: certain
statements in this stock exchange release may constitute "forward-looking"
statements which involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements of Scanfil
Oyj to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. When used
in this stock exchange release, such statements use such words as "may," "will,"
"expect," "anticipate," "project," "believe," "plan" and other similar
terminology. New risk factors may arise from time to time and it is not possible
for management to predict all of those risk factors or the extent to which any
factor or combination of factors may cause actual results, performance and
achievements of Scanfil Oyj to be materially different from those contained in
forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction of
actual results. The forward-looking information contained in this stock exchange
release is current only as of the date of this stock exchange release. There
should not be an expectation that such information will in all circumstances be
updated, supplemented or revised, except as provided by the law or obligatory
regulations, whether as a result of new information, changing circumstances,
future events or otherwise.