Tekla Corporation Stock Exchange Release February 6, 2009 at 9:00 a.m. Tekla Corporation's Financial Statements Bulletin January 1 - December 31, 2008: Net sales at previous year's level - profitability was good Net sales of Tekla Group for January-December 2008 totaled 58.90 (comparable net sales for 2007: 58.25) million euros. Growth in net sales was approximately 1%. The operating result was 14.10 (17.90) million euros, 23.9% (30.7%) of net sales. Earnings per share were 0.49 (0.60) euros. The Board's dividend proposal to the AGM is 0.25 euros per share. Net sales for the fourth quarter were 15.80 (comparable net sales for the corresponding period in 2007: 16.44) million euros, approximately 4% less than the year before. The operating result for the quarter was 3.63 (4.99) million euros, 23.0% (30.4%) of net sales. The comparable figures for 2007 have been calculated by excluding the Defence business, which was divested in April 2007. Ari Kohonen, President and CEO, comments on the reporting period: - Tekla's net sales were at the previous year's level. Although our operating result was less than the year before, our profitability was still good and one of the best among Finnish listed companies. - Sales in our main business area, Building & Construction, developed with some difficulty after the favorable first quarters. Sales peak that is normally generated at the end of December did not realize. Our strong market position remained. The customers are cautious with their investments, which makes their decision-making times longer and postpones the start-up of projects until the general economic situation clears up. Therefore, we believe that demand is building up and accumulating in the market. - The building industry commonly acknowledges that information-model-based processes are more efficient than traditional ways of working. The business area's product portfolio was developed significantly, and a new product module for construction and site management was launched toward the end of the year. Building Information Modeling (BIM) is still gaining ground around the world. - Of B&C's main markets, development was negative in the Nordic countries and the United Kingdom due to the recession in the construction industry. In North America, sales fell slightly short of the year before, also in US dollars, due to the rather soft last quarter. Sales developed favorably in Germany, the Middle East and several other Asian countries. In 2008, the largest markets in terms of net sales were North America, Western Europe, the Middle East and India. - B&C's net sales remained at the previous year's level. License sales decreased by 5%, while maintenance sales increased by 11%. Operating result for the year as a whole amounted to 26% of net sales, which means that we maintained excellent profitability. - Infra & Energy's business environment is stable. Some deferred sales was seen, which made the business area's net sales and operating result remain at the previous year's level. I&E's operating result amounted to 15% of net sales, which can be considered very satisfactory. - The number of personnel increased by 64 during the year, mainly during the first two quarters. The increases in personnel during the latter half of the year focused on the customer interface in growing markets. The majority of the additions made are investments to secure future development. As for this year, the Board of Directors has decided not to give estimates on net sales in such an uncertain economic environment and so early into the year. The economic recession will continue for the time being, and its duration is unknown. Operating result will be clearly lower in 2009 than 2008. The beginning of the year is challenging in particular, as the comparable period in 2008 was extremely good. Cost level and possible actions to ensure profitability are continuously monitored. - - - TEKLA CORPORATION'S FINANCIAL STATEMENTS JANUARY 1 - DECEMBER 31, 2008 The figures for the comparison period have been presented for the continuing businesses, i.e. comparable, excluding the figures for the Defence business, which was divested in April 2007. Defence's figures are presented in more detail in the tables of this report. NET SALES AND PROFITABILITY * Net sales of Tekla Group for January-December 2008 were 58.90 (comparable net sales 58.25 in January-December 2007) million euros. * Growth in net sales was 1.1% (comparable). * Operating result was 14.10 (comparable 17.90) million euros. * Operating result percentage was 23.9% (comparable 30.7%). * Earnings per share were 0.49 (comparable 0.60) euros. * Return on investment was 49.0 (74.5) percent. * Return on equity was 35.4 (55.4) percent. FINANCIAL POSITION * Cash flow from operating activities totaled 9.51 (13.55) million euros. * Liquid assets amounted to 26.30 (30.15) million euros on December 31, 2008. The assets have been invested in money market instruments with very low risk. * Equity ratio was 68.4 (67.5) percent. * Interest-bearing debts were 0.12 (0.34) million euros. OTHER KEY FIGURES * International operations accounted for 82.9% (comparable 82.2%) of net sales. * Personnel averaged 430 (374) for January-December. * At year's end, the number of personnel including part-time staff was 464 (400). * Research and product development expenses amounted to 25.7 (21.8) percent of net sales. * Gross investments in property, plant and equipment were 2.02 (1.66) million euros. * Equity per share was 1.35 (1.40) euros. * On the last trading day of December, trading closed at 3.73 (12.70) euros. * Board's dividend proposal is 0.25 euros per share. BUSINESS AREAS NET SALES BY BUSINESS AREA (PRIMARY SEGMENT) Q1-Q4/ Q1-Q4/ Change Q4/ Q4/ Million euros 2008 2007 2008 2007 Building & Construction 46.07 45.50 0.57 11.35 12.04 Infra & Energy 12.95 12.76 0.19 4.50 4.40 Defence *) 1.00 -1.00 0.00 Others 0.00 0.02 -0.02 0.00 0.00 Net sales between segments -0.12 -0.03 -0.09 -0.05 0.00 Total 58.90 59.25 -0.35 15.80 16.44 OPERATING RESULT BY BUSINESS AREA (PRIMARY SEGMENT) Q1-Q4/ Q1-Q4/ Change Q4/ Q4/ Million euros 2008 2007 2008 2007 Building & Construction 12.13 15.96 -3.83 2.36 3.85 Infra & Energy 1.97 1.96 0.01 1.26 1.20 Defence *) 2.78 -2.78 0.25 Others 0.00 -0.02 0.02 0.01 -0.06 Oper. result between segments 0.00 0.00 0.00 0.00 0.00 Total 14.10 20.68 -6.58 3.63 5.24 *) The Defence business was divested in April 2007. GEOGRAPHICAL DISTRIBUTION OF NET SALES (SECONDARY SEGMENT) Million euros 2008 2007 Finland 10.10 10.36 Rest of Europe 22.80 22.89 North America 10.02 11.19 Asia 12.73 10.92 Other countries 3.25 2.89 Total 58.90 58.25 BREAKDOWN OF NET SALES BY CATEGORY*) Building Infra % of && Tekla net sales Construction Energy total 2008 2007 2008 2007 2008 2007 Licenses 59 62 17 23 50 54 Recurring 37 34 51 47 40 37 Services 4 3 18 15 7 6 Others 0 1 14 15 3 3 Total 100 100 100 100 100 100 *) Net sales categories: - License: license to use the sold product version - Recurring: maintenance income (includes annual product versions and customer support) and subscriptions - Services: implementation support, training and consultation - Others: e.g. customer- or customer group-specific product projects BUSINESS AREAS Building & Construction Tekla's Building & Construction business area (B&C) develops and markets the Tekla Structures software product for information-model-based design of steel and concrete structures as well as the management of fabrication and construction. Strong fluctuations in demand are possible in license-based sales. Particularly from the fall onward, the growth of the building industry slowed down in all of Tekla's key market areas. Uncertainty of financing adds to the slowing down of growth, which is particularly seen in new larger projects. The general economic uncertainty affects customers' investments, making their decision-making times longer and postponing the start-up of projects into the future. Built up demand is accumulating in the market. Instead of large one-off sales, software is purchased in smaller batches. Many of the purchases are strategic with customers preparing for information-model-based way of working. Despite the building industry's challenging situation, Tekla's market position remained unchanged. Tekla's position as a supplier of 3D modeling software is strong in all markets and the numbers of users are on the increase. Customers in the building industry are seeking tools that make their operations more efficient, which is what Tekla's products are. Demand for modeling systems continues to increase, and information modeling is strengthening its foothold in structural design and other stages of the building process. The benefits of information modeling are seen more clearly in the site management in particular. It is favorable for Tekla that the building industry's move to information-model-based 3D processes from traditional 2D ways of working continues. Building Information Modeling (BIM) is a trend that is gaining momentum in the industry. BIM means that the information of the product model is transferred and shared between the parties of the construction process. The net sales of B&C amounted to 46.07 (45.50) million euros for January-December 2008. Net sales were on a par with the previous year. License sales decreased by 5%, while maintenance sales increased by 11%. Operating result was 12.13 (15.96) million euros. B&C's operating result percentage for 2008 was 26.3% (35.1%), meaning that its profitability was still excellent. Fluctuations in exchange rates had a minor negative effect on both net sales and operating result on a yearly level. During the fourth quarter, B&C's net sales amounted to 11.35 (12.04) million euros, decreasing by 5.7%. Sales peak that is normally generated at the end of December did not realize. B&C's operating result for October-December was 2.36 (3.85) million euros and operating result percentage was 20.8% (32.0%). International operations accounted for 95% (94%) of B&C's net sales in January-December 2008. Of B&C's main markets, development was negative in the Nordic countries and the United Kingdom due to the recession in construction activity. In North America, sales fell short of the year before, also in US dollars, due to the rather soft last quarter. Sales developed favorably in Germany, the Middle East and several other Asian countries. In 2008, the largest markets in terms of net sales were North America, Western Europe, the Middle East and India. Gulf Steel Work (GSW), a fabricator of process equipment and heavy steel structures in the Kingdom of Saudi Arabia and the Gulf region, expanded its use of Tekla Structures and signed a two-year frame agreement with Tekla in December. In August, Tekla announced a deal with Al Habtoor-Murray & Roberts Joint Venture chosen to construct the Trump International Hotel and Tower in Palm Jumeirah, Dubai. Murray & Roberts purchased a significant number of Tekla Structures software licenses to make the 62-story hotel project and other major projects in the future happen. Construction has not started as yet. In September, US precaster Shockey Precast Group and Barton Marlow, one of the largest general contractors in the United States, announced that they were using Tekla Structures BIM in their collaborative projects. Once complete, Burj Dubai in the U.A.E will be among the tallest buildings in the world. Tekla Structures is also being used in this project. In March, Tekla announced closing a considerable license deal in India. Prothius Engineering Services, one of the world's largest engineering offices, acquired more than one hundred new Tekla Structures licenses. B&C's product offering expanded significantly at the beginning of November with the release of Tekla Structures for Construction Management, a product specially meant for controlling and site management phase of construction projects. Construction companies and developers had already piloted the product in major projects in the United States, the Middle East and Nordic countries. During the fourth quarter, Tekla Structures product development concentrated on improving the usability of the product, support for collaboration between different parties in the planning process and increasing the efficiency of the tools required in planning tasks. Infra & Energy The Infra & Energy business area focuses on the development and sales of model-based software solutions that support customers' core processes. Its key customer industries (products in parentheses) are energy distribution (Tekla Xpower), infrastructure management (Tekla Xcity), water and sewage (Tekla Xpipe) as well as infrastructure construction (Tekla Xstreet). In the energy industry, the importance of distribution companies' information systems is emphasized in asset management with increasing requirements of the reliability and efficiency of energy distribution. Information systems are also seen as a way of improving customer service further. Tekla's market position as a supplier of network information system is strong in the Nordic and Baltic countries. The Finnish municipal sector is undergoing changes. Municipalities seek efficiency and savings through methods of regional collaboration and merging of municipalities. This development emphasizes the role of information systems even further. Service processes are made more efficient with information technology and online customer service is developed. Tekla's market position has strengthened in Finland. The net sales of I&E amounted to 12.95 (12.76) million euros for January-December 2008. I&E's operating result for the reporting period was 1.97 (1.96) million euros. I&E operates in a stable business environment. Some deferred sales was seen, which made the business area's net sales and operating profit remain at the previous year's level. I&E's operating result percentage was 15.2% (15.4%), which can be considered very satisfactory. International operations accounted for 39% (42%) of net sales. I&E's net sales for the fourth quarter amounted to 4.50 (4.40) million euros and operating result was 1.26 (1.20) million euros. I&E's operating result percentage was 28.0% (27.3%). The majority of I&E's net sales consists of additional and service sales to existing customers. New customers are expected from the strong markets in the Nordic countries. Efforts for business growth are underway in Germany and in the new EU countries. Further development of Tekla Xpower to support contractor cooperation in planning and construction activities was agreed with Vattenfall Verkko Oy. Vattenfall Europe Distribution Berlin GmbH in Germany started an implementation project with the aim of adopting Tekla Xpower to production use throughout the Berlin distribution area. In order to strengthen its supply to the energy industry, Tekla acquired the Swedish company OakTree Software AB in September. The beginning of business operations was promising and new customer accounts were gained. Latvenergo acquired the Tekla Xpower Distribution Management System (DMS) for use throughout Latvia. Several municipal mergers were realized in Finland during the year, as a result of which the use of Tekla Xcity expanded considerably in the municipal sector (new municipalities in the Jyväskylä, Lappeenranta, Salo and Seinäjoki regions). The City of Turku was the first Finnish municipality to implement electronic building permit service that extensively utilizes geographic information properties of the standard municipal information system. In Infra & Energy's product development, the main versions of the products were completed during November-December according to plans. Support for the Finnish KuntaGML (geographic information service interface) data transfer was completed in the Tekla Xcity and WebMap systems toward the end of 2008. In Tekla Xpower software product development, the integration projects of operational support and calculation with automatic meter reading (AMR) were completed. In addition, new functionalities for district heating and gas network service outage management were developed. PERSONNEL The Group personnel averaged 430 (374) in January-December 2008; on average 174 (144) worked outside Finland. In these figures, the number of part-time staff has been converted to correspond to full-time work contribution. At the end of the year, Tekla personnel totaled 464 (400) including part-time staff, of them 189 (158) worked outside Finland. The number of personnel increased by 64 during the year, mainly during the first two quarters. The increases in personnel during the latter half of the year focused on the customer interface in growing markets. The average age of Tekla's employees was 37.0 (37.5) years. Of the personnel, 64% (64%) had a higher academic degree or university-level studies. 32% (29%) of Tekla employees were female, 68% (71%) male. The turnover of personnel was 6.6% (7.7%). The company has a compensation and incentive system applied to all employees, and the Tekla Board of Directors decides on its principles on an annual basis. They are connected with the achievement of the previous year's operative and financial goals as well as share price development. Tekla has no option programs. SHARE AND OWNERSHIP STRUCTURE Share repurchase Tekla's Board of Directors decided on August 8, 2008 to start purchases of a maximum of 100,000 Tekla shares for the development of the company's capital structure. The decision was based on the authorization given by the Annual General Meeting on March 19, 2008, authorizing the Board to decide on the acquisition of a maximum of 500,000 Tekla shares. Purchases started on August 18, 2008 and ended on October 10, 2008. Shares and share capital The total number of Tekla Corporation shares at the end of December 2008 was 22,586,200, of which the company owned 169,600. The total book counter value of those was 5,088 euros, representing 0.75% of the company's shares and the total number of votes. A total of 898,212.35 euros had been used for acquiring the company's own shares, and their market value was 632,608 euros on December 31, 2008. The book counter 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-December 2008 was 13.00 (14.94) euros, the lowest 3.25 (7.60) euros. The average quotation was 8.32 (10.88) euros. On the last trading day of December, trading closed at 3.73 (12.70) euros. A total of 6,879,065 (13,797,159) Tekla shares changed hands in January-December 2008 at NASDAQ OMX Helsinki Oy, amounting to 30.5% (61%) of the entire share capital. Changes in ownership structure Threadneedle Asset Management Holdings Limited announced that their holdings in Tekla Corporation crossed above the 5% threshold on January 14, 2008. According to the notification, Threadneedle's holdings stood at 5.098%. Threadneedle Asset Management Holdings Limited announced that their holdings in Tekla Corporation crossed above the 10% threshold on August 1, 2008. According to the notification, Threadneedle's holdings amounted to 2,264,730 Tekla shares, or 10.027% of Tekla's shares and votes. Nominee registered and foreign owners held 25.07% (21.90%) of all shares at the end of 2008. ANNUAL GENERAL MEETING Tekla Corporation's Annual General Meeting on March 19, 2008 adopted the company's financial statements and the Group income statement and balance sheet for 2007. The Annual General Meeting also discharged the CEO and the Board members from liability. The AGM accepted the Board's proposal whereby a dividend of 0.50 euros per share was distributed for 2007. The dividend payment date was April 3, 2008. Ari Kohonen, 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 2009. Reijo Sulonen was elected as a new Board member. 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 acquiring or transferring the company's treasury shares. The Board used its authorization regarding share repurchase during 2008, which is described in more detail elsewhere in this report. SHORT-TERM RISKS AND UNCERTAINTY FACTORS Possible risks and uncertainty factors associated with Tekla's business are mainly related to the market and competition situation and the general economic situation. Trends in the building industry have weakened significantly in several markets, and it has had a negative impact on the demand for Tekla products. 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. The sales of Tekla software are geographically distributed. Also individual customers do not account for a significant share of net sales, and therefore these risks are not significant. BOARD'S PROPOSAL FOR THE DISTRIBUTION OF PROFIT The parent company's distributable assets are 22,803,202 euros, of which net profit for the period accounts for 11,753,367 euros. Tekla Corporation's Board will propose to the Annual General Meeting, to be held on March 18, 2009, that a dividend of 0.25 euros per share be paid for the financial period 2008 for a total dividend payout of 5,604,150 euros. No dividends shall be paid on the 169,600 shares held by the company. OUTLOOK FOR 2009 As for this year, the Board of Directors has decided not to give estimates on net sales in such an uncertain economic environment and so early into the year. The economic recession will continue for the time being, and its duration is unknown. Operating profit will be clearly lower in 2009 than 2008. The beginning of the year is challenging in particular, as the comparable period in 2008 was extremely good. Cost level and possible actions to ensure profitability are continuously monitored. FINANCIAL REPORTING Tekla's Annual Report for 2008 will be published on the company's web site on week 10, 2009. Tekla Corporation's Interim report for January-March 2009 will be published on Wednesday, May 6, 2009. Espoo, February 5, 2009 TEKLA CORPORATION Board of Directors For additional information, please contact: Ari Kohonen, President and CEO, Tel. +358 50 641 24, ari.kohonen (at) tekla.com Timo Keinänen, CFO, Tel. +358 400 813 027, timo.keinanen (at) tekla.com Distribution: NASDAQ OMX Helsinki Ltd, main media - - - Tekla will organize an information meeting for analysts and media atWTC Helsinki (meeting room 2), Aleksanterinkatu 17, on February 6, 2009 at 12.00 - 1:00 p.m. - - - Tekla is an international software product company whose model-based software solutions make customers' core processes more effective in building and construction, energy distribution, infrastructure management and water supply. Tekla has customers in more than 80 countries. Tekla Group's net sales for 2008 were nearly 60 million euros and operating result approximately 14 million euros. International operations accounted for more than 80% of net sales. Tekla Group currently employs over 450 persons, of whom 40 percent work outside Finland. Tekla was established in 1966, making it one of the longest operating software companies in Finland. www.tekla.com CONSOLIDATED FINANCIAL STATEMENTS (unaudited) CONSOLIDATED INCOME STATEMENT Q1-Q4/ Q1-Q4/ Change Q4/ Q4/ Change Million euros 2008 2007 % 2008 2007 % Continuing businesses: Net sales 58.90 58.25 1.1 15.80 16.44 -3.9 Other operating income 1.01 1.02 0.32 0.39 Change in inventories of finished goods and in work in progress -0.04 0.03 -0.12 -0.05 Raw materials and consumables used -2.86 -2.05 -0.98 -0.67 Employee compensation and benefit expense -27.84 -25.49 -7.41 -6.90 Depreciation -1.17 -1.14 -0.33 -0.28 Other operating expenses -13.90 -12.72 -3.65 -3.94 Operating result 14.10 17.90 -21.2 3.63 4.99 -27.3 % of net sales 23.94 30.73 22.97 30.35 Financial income 2.44 1.86 0.74 0.47 Financial expenses -1.39 -1.33 -0.31 -0.42 Profit (loss) before taxes 15.15 18.43 -17.8 4.06 5.04 -19.4 % of net sales 25.72 31.64 25.70 30.66 Income taxes -4.20 -4.92 -1.07 -1.24 Result for the period from continuing businesses 10.95 13.51 -18.9 2.99 3.80 -21.3 Discontinued operations: Result for the period from discontinued operations 2.06 0.19 Result for the period 10.95 15.57 -29.7 2.99 3.99 -25.1 Attributable to the equity holders of the Company Earnings per share for profit attributable to the equity holders of the Company: Earnings per share (EUR) 0.49 0.69 0.13 0.18 Earnings per share from continuing businesses attributable to the equity holders of the Company: Earnings per share (EUR) 0.49 0.60 0.13 0.17 Earnings per share from discontinued operations attributable to the equity holders of the Company: Earnings per share (EUR) 0.09 0.01 Earnings are not diluted. CONDENSED BALANCE SHEET Change, Million euros 12/2008 12/2007 % Assets Non-current assets Property, plant and equipment 1.70 1.79 Goodwill 0.19 0.10 Intangible assets 1.64 0.74 Other financial assets 0.30 0.30 Receivables 0.26 0.49 Deferred tax assets 0.18 0.11 Non-current assets, total 4.27 3.53 21.0 Current assets Inventories 0.03 0.07 Trade and other receivables 13.87 12.96 Tax receivables 0.26 Other financial assets 19.99 25.22 Cash and cash equivalents 6.34 4.97 Current assets, total 40.49 43.22 -6.3 Assets related to discontinued operations 0.25 Assets total 44.76 47.00 -4.8 Equity and liabilities Equity Share capital 0.68 0.68 Share premium account 8.89 8.89 Other own capital 1.87 1.17 Retained earnings 18.89 20.71 Equity total 30.33 31.45 -3.6 Non-current liabilities Deferred tax liabilities 0.08 0.13 Interest-bearing liabilities 0.08 0.07 Non-current liabilities total 0.16 0.20 -20.0 Current liabilities Trade and other payables 14.14 13.35 Tax liabilities 0.09 1.01 Current interest-bearing liabilities 0.04 0.27 Current liabilities total 14.27 14.63 -2.5 Liabilities total 14.43 14.83 -2.7 Liabilities related to discontinued operations 0.72 Equity and liabilities total 44.76 47.00 -4.8 CALCULATION OF RECONCILIATION OF EQUITY Equity attributable to the holders of the Company Share Share Fair Acc. Ret. cap. prem. Res. value transl. earn. acct fund res. diff. Total Equity January 1, 07 0.68 8.89 1.33 0.10 -0.21 13.93 24.72 Transl. differences -0.25 0.22 -0.03 Changes in available-for-sale investments 0.20 0.20 Items recognized directly in equity 0.00 0.00 0.00 0.20 -0.25 0.22 0.17 Net profit for the period 15.57 15.57 Total income and expenses recognized in the period 0.00 0.00 0.00 0.20 -0.25 15.79 15.74 Payment of dividend -9.01 -9.01 Equity Dec.31, 07 0.68 8.89 1.33 0.30 -0.46 20.71 31.45 Equity attributable to the holders of the Company Share Share Fair Acc. Ret. cap. prem. Res. value transl. earn. acct fund res. diff. Total Equity January 1, 08 0.68 8.89 1.33 0.30 -0.46 20.71 31.45 Transl. differences 0.76 -0.83 -0.07 Changes in available-for-sale investments -0.06 -0.06 Items recognized directly in equity 0.00 0.00 0.00 -0.06 0.76 -0.83 -0.13 Net profit for the period 10.95 10.95 Total income and expenses recognized in the period 0.00 0.00 0.00 -0.06 0.76 10.12 10.84 Payment of dividend -11.26 -11.26 Acquisition of own shares -0.68 -0.68 Equity Dec.31, 08 0.68 8.89 1.33 0.24 0.30 18.89 30.33 CONDENSED CASH FLOW STATEMENT Q1-Q4/ Q1-Q4/ Change, Million euros 2008 2007 % Cash flows from operating activities: Continuing businesses 9.51 12.31 Discontinued operations 1.24 Net cash flows from operating activities 9.51 13.55 Cash flows from investing activities: Investments -2.02 -1.66 Sale of intangible assets and property, plant and equipment -0.01 0.25 Cash flow from sale of discontinued operations 2.35 Cash outflow on acquisition -0.15 Purchases of available-for- sale financial assets -52.84 -55.16 Proceeds from sale of available-for-sale financial assets 55.20 50.11 Interests received from available-for-sale financial assets 1.05 0.65 Net cash used in/from investing activities 1.23 -3.46 Cash flows from financing activities: Payment of dividend -11.26 -9.01 Own shares -0.68 Repayments of long-term debt -0.22 -0.39 Payments of finance lease liabilities -0.03 -0.04 Net cash used in financing activities -12.19 -9.44 Net decrease/increase in cash and cash equivalents -1.45 0.65 Cash and cash equivalents at beginning of the period 8.43 7.78 8.4 Cash and cash equivalents at end of the period 6.98 8.43 -17.2 The cash and cash equivalents in the cash flow statement include: Cash and cash equivalents 6.34 4.97 Available-for-sale financial assets, cash equivalents 0.64 3.46 NOTES TO THE FINANCIAL STATEMENTS The notes are presented in millions of euros, unless otherwise stated. In preparing the financial statements, the IAS and IFRS standards and SIC and IFRIC interpretations effective on December 31, 2008 were observed. International Financial Reporting Standards refer to the standards defined in the Finnish Accounting Act and related regulations approved for application in the EU and their interpretations in accordance with the EU regulation (EC) 1606/2992. The figures presented in the financial statements are unaudited. Use of estimates When preparing the financial statements, the Group's management is required to make estimates and assumptions influencing the content of the financial statements, 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 financial statements. 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-Q4/ Q1-Q4/ Change, Q4/ Q4/ Million euros 2008 2007 % 2008 2007 Building & Construction 46.07 45.50 1.3 11.35 12.04 Infra & Energy 12.95 12.76 1.5 4.50 4.40 Defence *) 1.00 -100.0 Others 0.02 -100.0 Net sales between segments -0.12 -0.03 -300.0 -0.05 Total 58.90 59.25 -0.6 15.80 16.44 Operating result by business area (primary segment) Q1-Q4/ Q1-Q4/ Change, Q4/ Q4/ Million euros 2008 2007 % 2008 2007 Building & Construction 12.13 15.96 -24.0 2.36 3.85 Infra & Energy 1.97 1.96 0.5 1.26 1.20 Defence *) 2.78 -100.0 0.25 Others -0.02 100.0 0.01 -0.06 Oper. result betw. segments Total 14.10 20.68 -31.8 3.63 5.24 *) Defence has been processed as discontinued operations for the comparison period. Financial indicators Q1-Q4/ Q1-Q4/ Q4/ Q4/ 2008 2007 2008 2007 Earnings per share (EPS), EUR 0.49 0.69 0.13 0.18 Earnings per share (EPS) from continuing businesses, EUR 0.49 0.60 0.13 0.17 Earnings per share (EPS) from discontinued operations, EUR 0.09 0.01 Equity/share, EUR 1.35 1.40 Interest-bearing liabilities 0.12 0.34 Equity ratio, % 68.4 67.5 Net gearing, % -86.3 -94.8 Return on investment, % 49.0 74.5 56.5 71.6 Return on equity, % 35.4 55.4 41.5 54.3 Number of shares at end of period 22,416,600 22,516,600 22,416,600 22,516,600 Number of shares, on average 22,485,500 22,516,600 22,485,500 22,516,600 Gross investments, MEUR 2.02 1.66 0.95 0.52 % of net sales 3.43 2.80 6.01 3.16 Personnel, on average 430 374 454 384 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 and comparison periods. Result for the Defence business Q1-Q4/ Q1-Q4/ 2008 2007 Net sales 1.00 Expenses -0.81 Profit(loss) before income Taxes 0.00 0.19 Taxes -0.05 Profit (loss) after taxes 0.00 0.14 Sales profit from the Defence business sale 2.59 Taxes -0.67 Sales profit after Taxes 0.00 1.92 Profit/loss for the period from discontinued operations 0.00 2.06 Cash flow statement, Defence Cash flow from operating activities 1.24 Cash flow from investing activities 2.35 Total cash flow 0.00 3.59 The effect of the sale of the Defence business on the financial position of the Group Assets 0.25 Liabilities 0.72 Acquired operations Tekla Corporation strengthened the Tekla Xpower system for the asset management of energy companies by acquiring the Swedish company OakTree Software AB in September 2008. Tekla is liable to pay an additional purchase price depending on the sales development of the acquired operations in 2009-2011. The additional purchase price is estimated as 0.07 million euros in the financial statements, and the resulting liability will possibly be payable in 2010-2012. Had the figures for OakTree Software AB been consolidated from the beginning of the financial period, Tekla's net sales would have been approximately 0.16 million euros higher, but the consolidation would not have had an impact on the operating result. Consolidation as from the acquisition (September 1, 2009) has not had material effects on Tekla's net sales or operating result. Net assets acquired and goodwill Total acquisition cost Consideration paid in cash 0.17 Additional purchase price 0.07 Total 0.24 Assets and liabilities at the date of acquisition Book Fair values values Customer agreements 0.18 Trade and other Receivables 0.02 0.02 Cash and cash equivalents 0.01 0.01 Assets total 0.21 0.03 Deferred tax liabilities -0.05 Other liabilities -0.02 -0.02 Liabilities total -0.07 -0.02 Net assets 0.14 0.01 Goodwill 0.10 Acquisition cost, total 0.24 Consideration paid in cash 0.17 Subsidiary's cash and cash equivalents -0.01 Effect on cash flow 0.16 Consolidated income statement by quarter Q4/ Q3/ Q2/ Q1/ Q4/ Million euros 2008 2008 2008 2008 2007 Continuing businesses: Net sales 15.80 13.72 14.52 14.86 16.44 Other operating income 0.32 0.15 0.42 0.12 0.39 Change in inventories of finished goods and in work in progress -0.12 0.08 -0.05 Raw materials and consumables used -0.98 -0.56 -0.71 -0.61 -0.67 Employee compensation and benefit expense -7.41 -6.56 -7.23 -6.64 -6.90 Depreciation -0.33 -0.29 -0.28 -0.27 -0.28 Other operating expenses -3.65 -3.04 -3.68 -3.53 -3.94 Operating result 3.63 3.50 3.04 3.93 4.99 % of net sales 22.97 25.51 20.94 26.45 30.35 Financial income 0.74 0.49 0.41 0.80 0.47 Financial expenses -0.31 -0.15 -0.19 -0.74 -0.42 Profit (loss) before taxes 4.06 3.84 3.26 3.99 5.04 % of net sales 25.70 27.99 22.45 26.85 30.66 Income taxes -1.07 -1.09 -0.94 -1.10 -1.24 Result for the period from continuing businesses 2.99 2.75 2.32 2.89 3.80 Discontinued operations: Result for the period from discontinued operations 0.19 Result for the period 2.99 2.75 2.32 2.89 3.99 Income taxes Q1-Q4/ Q1-Q4/ 2008 2007 Taxes for the financial period and prior periods -4.37 -4.54 Deferred taxes 0.17 -0.38 Total -4.20 -4.92 Estimated effective tax rate for the financial year has been applied to the result of the reporting period. Property, plant and equipment 12/2008 12/2007 Cost at the beginning of the period 7.20 6.67 Translation differences -0.09 -0.09 Additions 0.81 1.16 Disposals -0.19 -0.54 Cost at the end of the period 7.73 7.20 Accumulated depreciation at the beginning of the period 5.41 4.93 Translation differences -0.09 -0.05 Accumulated depreciation on disposals -0.10 -0.31 Depreciation for the financial period 0.81 0.84 Accumulated depreciation at the end of the period 6.03 5.41 Net book amount at the end of the period 1.70 1.79 The investments consisted of normal acquisitions of hardware, software and equipment. Provisions The Group's provisions, loss-making contracts and provisions for pension obligations have been eliminated on December 31, 2007. Collaterals, contingent liabilities and other Commitments 12/2008 12/2007 Collaterals for own commitments Business mortgages (as collateral for bank guarantee limit) 0.50 0.50 Pledged funds 0.06 0.07 Leasing and rental agreement commitments Premises 5.58 4.75 Others 0.71 0.81 Total 6.29 5.56 Derivative contracts Currency forward contracts: Fair value -0.14 0.31 Nominal value of underlying instruments 2.38 3.63 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 12/2008 12/2007 Gerako Oy Purchases of services 0.21 0.06 Reimbursed expenses 0.01 Management remuneration Salaries and post-employment benefits 1.47 1.33 Management herein refers to members of the Tekla Management Team.
Tekla Corporation's Financial Statements Bulletin January 1 - December 31, 2008: Net sales at previous year's level - profitability was good
| Source: Tekla