VAAHTO GROUP PLC OYJ STOCK EXCHANGE BULLETIN 11.11.2010 at 10.30
VAAHTO GROUP'S PREVIEW OF RESULTS FOR FISCAL YEAR 1.9.2009-31.8.2010
Vaahto Group's turnover for the fiscal period ending in August 2010 was 35.2
million euros (comparative: 75.7 million euros), with an operating loss of 2.9
million euros (2.3 million euros). In the weak market, turnover decreased by 54%
from that of the corresponding period of the previous year, and the fiscal
period's result was negative. Toward the end of the period, the Group's order
book started growing and profitability of the business operations improved. The
result for the latter half of the fiscal period was positive, thanks to
real-estate transactions and improved profitability of the business.
Pulp & Paper Machinery
The Pulp & Paper Machinery division's turnover for the period under review was
21.5 million euros (52.1 million euros), with an operating loss of 4.8 million
euros (operating loss of 2.4 million euros). In weak market conditions, turnover
fell by 59% from the previous year's figure, and the result was negative. Profit
of approx. two million euros from the sale of a building in Tampere improved the
result for the fiscal year. Toward the end of the fiscal period, the Group's
order book began growing and profitability improved.
Significant actions were made in the development of the service business of the
Pulp & Paper Machinery division. Vaahto Service's product selection for paper
machine servicing expanded in line with objectives, contributing to the
considerable increase in order books. By the end of the fiscal period, the order
backlog of the rapidly circulating service business had quadrupled from what it
was at the beginning of the year - thus, the service business shows good
prospects for the next fiscal year.
The Pulp & Paper Machinery division's most significant delivery project during
the period was the tissue-paper machine rebuild for Metsä Tissue in Mänttä. In
spite of the tight schedule, the project was completed sooner than planned, and
the rebuilt machine entered production use in April. The delivery included a new
crescent former, headbox, and reel as well as a rebuilt short-circulation system
and press. The modernization has increased the efficiency of the production
line, thanks to the better runnability of the paper machine and refining lines
as well as the increased running speed.
The order book of the Pulp & Paper Machinery division's project business started
to increase in the latter half of the fiscal year. The most important orders at
the end of the period were an order for four headboxes from Taishan Gypsum Co.
Ltd. in China and a shoe press order from Indonesia's Fajar Paper.
In September, after the end of the fiscal year, Vaahto Pulp & Paper Machinery's
project business received an order for four headboxes from Dongguan Jianhui
Paper Co. Ltd. and Dongguan Jinzhou Paper Co. Ltd., both from China, and an
order for modernization of Fajar Paper's PM7 board machine in Indonesia. The
combined value of these project orders, which were received after the end of the
fiscal year, is approximately 14 million euros, and the deliveries will take
place in 2011.
Vaahto Pulp & Paper Machinery's goal is to keep strengthening its position as
one of the leading suppliers of technology and services in international paper
and board machine markets. One measure in pursuit of this goal is to establish a
production unit in China. This was decided upon by the Board of Directors of the
parent company during the 2009-2010 fiscal year. However, the implementation of
the project has been delayed because of the current economic situation.
Process Machinery
The Process Machinery division's turnover for the fiscal year was 13.8 million
euros (24.7 million euros), with an operating profit of 1.9 million euros (0.1
million euros). In the challenging market, the Group's turnover decreased by 44%
from the previous fiscal year's figure. Sales proceeds of approximately 2.6
million euros, in total, from sales of a building in Pietarsaari and the HVAC
business improved the result for the period.
The market situation was extremely weak for the Process Machinery division's
vessel business. Toward the end of the fiscal year, the number of projects in
the offer phase showed a clear increase, and the outlook for the next fiscal
period has improved considerably.
The market situation for the agitator operations of the Process Machinery
divisions has picked up, and the order book grew notably during the period under
review. The outlook for the current fiscal year is good.
Results
Vaahto Group's turnover for the fiscal period was 35.2 million euros (75.7
million euros), with an operating loss of 2.9 million euros (2.3 million euros).
Turnover decreased by 54% from the previous fiscal year's figure. The operating
loss for the period was 8.1% (comparative: operating loss of 3.1%) of the
Group's turnover. The main reasons for the loss were the strong decline in
turnover and the weak profitability of the Pulp & Paper division's projects.
Sales proceeds of approximately 4.6 million euros, in total, from sale of the
Group's buildings in Tampere and Pietarsaari and the HVAC business improved the
result for the period.
Financing
The Group's cash flow totaled -16.0 million euros (16.5 million euros). The
Group's net financing costs for the period under review came to 1.0 million
euros (1.1 million euros). The investment cash flow for the fiscal year was -0.3
million euros (-3.6 million euros). The Group's equity ratio was 21.8% (23.2%).
The total on the consolidated balance sheet was 39.0 million euros (50.1 million
euros). The decrease in the balance-sheet total is mostly because of a payment
received after the close of that fiscal year for delivery of a significant
project, while payments to suppliers were made, for the most part, before the
end of the fiscal year. This is reflected in the operating cash flow and key
figures in the cash flow calculation.
There were some changes in the Group's financial arrangements after the end of
the fiscal year. The Group's buildings in Tampere and Pietarsaari were sold
during the period under review, but the sale price was paid after the end of the
period, in September 2010, and the amount paid, about eight million euros, was
used primarily for payment of loans from credit institutions and pension loans.
These measures will decrease the balance-sheet total and improve the company's
equity ratio. The Group's interest-bearing borrowing costs after these financial
arrangements consist, for the most part, of long-term loans from financial
institutions. The financing required for the Group's working capital has been
secured through sufficient financial instruments.
Investments
The Group's investments in capital assets for the fiscal period totaled 0.8
million euros (3.7 million euros). Investments consisted mainly of smaller
machinery and equipment acquisitions.
Information systems
The Group's information systems and information management were developed
further, in accordance with the centralized operations model.
Research and development
The Group's research and development activities were focused for the most part
on expansion of the product range for the Pulp & Paper Machinery division's
service operations and improvement of the key components for paper and board
machines. The scope of the Group's R&D activities remained the same as in the
previous fiscal period.
Personnel
The number of Group personnel averaged 371 (410) over the period.
Risks and business uncertainties
Demand for Vaahto Group products depends largely on economic cycles and on
developments in the world economy and our customer industries. Risk caused by
fluctuations in demand is being compensated for through adjustment of the
Group's sales operations in line with the economic cycles of various markets and
customer industries.
Large-scale projects involve the risk of the final result falling short of
expectations, since the project's future costs and other risks that could affect
the delivery cannot be assessed precisely enough at the tender stage. Risks
associated with large projects can be managed by applying various quality
management systems, profitability analyses, directives, and acceptance
procedures.
The Group's financial risk management objectives are to minimize harmful effects
on the Group's result caused by fluctuations in financial markets and to ensure
that the Group can gain equity and liability financing on competitive terms.
Business-related risks of material, consequential, and liability-based losses
are covered by appropriate insurance policies.
Shareholders' equity
Information concerning Vaahto Group Plc Oyj's shares is provided in item 24 of
the Notes to the Consolidated Financial Statements, “Notes on the shareholders'
equity.”
The Board of Directors has no authority to issue new shares, convertible bonds,
or bonds with warrants, nor the authorization to obtain or surrender shares.
Administration
The Annual General Meeting of December 16, 2009, elected the following members
to the Board of Directors of Vaahto Group Plc Oyj:
Seppo Jaatinen
Heikki Marttinen
Martti Unkuri
Antti Vaahto
Mikko Vaahto
The Board elected December 16, 2009 Seppo Jaatinen as chairman and Antti Vaahto
as vice-chairman.
Heikki Marttinen resigned from the Board on January 23, 2010.
An extraordinary general meeting held on June 4, 2010, elected Rainer Häggblom
and Reijo Järvinen to the Board in addition to the existing members.
The Board elected June 4, 2010 Seppo Jaatinen as chairman and Rainer Häggblom as
vice-chairman.
Anssi Klinga was CEO throughout the 2009-2010 fiscal year.
The Group companies have been audited by certified public auditing firm Ernst &
Young Oy, with Panu Juonala, CPA, as chief auditor.
The company follows the NASDAQ OMX Helsinki corporate governance code (2010) for
Finnish listed companies. An account of the Group's corporate governance has
been published on the Group's Web site.
Forecast of developments
The international market situation in the main sectors of Vaahto Group's
operation has improved clearly in the course of 2010. Demand is strong,
particularly in the Asian and Chinese markets, and there are also clear signs of
improvement in Europe.
Vaahto Group's order book started increasing at the end of the period under
review.
The order backlogs for both the service and project business of the Vaahto Pulp
& Paper Machinery division enable profitable business operations. Likewise, the
market outlook for the Vaahto Process Machinery division has improved clearly
and the order book is already growing slightly.
For the current fiscal year, Vaahto Group's result is forecast to improve
significantly from the previous period's figure, and the full-year result is
expected to be positive.
Proposal for distribution of profits
Parent company funds available for distribution of profits total 3,475,392.45
euros, of which 77,972.73 euros represents a loss for the fiscal period.
The Board will propose to the Annual General Meeting that no dividends be paid
and that the operating profit be transferred to the earnings account.
The Annual General Meeting
The Annual General Meeting of Vaahto Group Plc Oyj will be held on December 14,
2010 at 1.00 p.m. in the Sibelius Hall, Lahti.
Interim management statement
Instead of the interim report for the first three months of the accounting
period, Vaahto Group Plc Oyj will disclose the interim management statement on
January 14, 2011.
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| VAAHTO GROUP CONSOLIDATED FIGURES | | |
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| CONSOLIDATED | 2009/10 | % of | 2008/09 | % of |
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| STATEMENT OF | 12 | turn- | 12 | turn- |
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| COMPREHENSIVE | months | over | months | over |
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| INCOME, IFRS | | | | |
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| 1000 EUR | | | | |
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| NET TURNOVER | 35 160 | | 75 694 | |
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| Change in finished | | | | |
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| goods and work | | | | |
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| in progress | 1 264 | | -3 109 | |
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| Production | | | | |
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| for own use | 500 | | 834 | |
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| Other operating | | | | |
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| income | 4 901 | | 401 | |
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| Share of results of | | | | |
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| affiliated companies | 17 | | 13 | |
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| Material and | | | | |
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| services | -17 548 | | -43 503 | |
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| Employee benefits | | | | |
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| expenses | -16 374 | | -19 708 | |
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| Depreciations | -2 547 | | -2 423 | |
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| Other operating | | | | |
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| expenses | -8 230 | | -10 520 | |
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| OPERATING PROFIT | | | | |
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| OR LOSS | -2 857 | -8,1 | -2 320 | -3,1 |
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| Financing income | | | | |
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| and expenses | -984 | | -1 138 | |
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| PROFIT BEFORE TAXES | -3 840 | -10,9 | -3 458 | -4,6 |
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| Tax on income | | | | |
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| from operations | 812 | | 915 | |
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| PROFIT OR LOSS | | | | |
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| FOR THE PERIOD | -3 028 | -8,6 | -2 543 | -3,4 |
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| OTHER COMPREHENSIVE | | | | |
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| INCOME: | | | | |
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| Translation | | | | |
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| differences | 14 | | 21 | |
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| OTHER COMPREHENSIVE | | | | |
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| INCOME, NET OF TAX | 14 | | 21 | |
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| TOTAL COMPREHENSIVE | | | | |
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| INCOME | -3 014 | | -2 522 | |
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| Net profit or loss | | | | |
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| attributable: | | | | |
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| To equity holders | | | | |
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| of the parent | -2 910 | | -2 481 | |
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| To minority | | | | |
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| interest | -118 | | -62 | |
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| Total | -3 028 | | -2 543 | |
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| Total comprehensive | | | | |
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| income attributable: | | | | |
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| To equity holders | | | | |
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| of the parent | -2 896 | | -2 460 | |
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| To minority | | | | |
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| interest | -118 | | -62 | |
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| Total | -3 014 | | -2 522 | |
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| Earnings per share calculated on profit attributable |
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| to equity holders of the parent: | | |
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| EPS undiluted, | | | | |
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| euros/share | -1,01 | | -0,86 | |
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| EPS diluted, | | | | |
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| euros/share | -1,01 | | -0,86 | |
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| Average number of | | | | |
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| shares (1000 shares): | | | | |
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| undiluted | 2 872 | | 2 872 | |
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| diluted | 2 872 | | 2 872 | |
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| CONSOLIDATED | 31.8.10 | | 31.8.09 | |
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| BALANCE SHEET,IFRS | | | | |
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| 1000 EUR | | | | |
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| ASSETS | | | | |
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| NON-CURRENT ASSETS: | | | | |
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| Intangible assets | 1 642 | | 2 495 | |
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| Goodwill | 1 702 | | 1 702 | |
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| Tangible assets | 10 923 | | 16 012 | |
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| Shares in affiliated | | | | |
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| companies | 62 | | 50 | |
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| Available for sale | | | | |
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| investments | 44 | | 44 | |
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| Non-current trade | | | | |
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| and other | | | | |
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| receivables | 11 | | 12 | |
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| Deferred tax asset | 2 172 | | 1 225 | |
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| NON-CURRENT ASSETS | 16 557 | | 21 540 | |
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| CURRENT ASSETS: | | | | |
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| Inventories | 5 241 | | 4 406 | |
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| Trade receivables | | | | |
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| and other | | | | |
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| receivables | 14 732 | | 6 693 | |
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| Current receivables | | | | |
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| for revenue recognised | | | | |
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| in part prior to | | | | |
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| project completion | 1 953 | | 5 046 | |
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| Tax receivable, | | | | |
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| income tax | 2 | | 0 | |
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| Cash and bank | 560 | | 12 400 | |
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| CURRENT ASSETS | 22 488 | | 28 546 | |
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| TOTAL ASSETS | 39 045 | | 50 086 | |
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| CONSOLIDATED | 31.8.10 | | 31.8.09 | |
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| BALANCE SHEET, IFRS | | | |
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| 1000 EUR | | | | |
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| EQUITY AND | | | | |
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| LIABILITIES | | | | |
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| SHAREHOLDERS' | | | | |
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| EQUITY: | | | | |
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| Share capital | 2 872 | | 2 872 | |
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| Share premium | | | | |
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| account | 6 | | 6 | |
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| Contingency | | | | |
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| reserve | 1 995 | | 1 995 | |
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| Translation | | | | |
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| differences | 41 | | 20 | |
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| Retained earnings | 1 864 | | 4 781 | |
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| Equity attributable | | | | |
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| to equity holders | | | | |
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| of the parent | 6 778 | | 9 673 | |
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| Minority share | 1 110 | | 1 229 | |
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| SHAREHOLDERS' | | | | |
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| EQUITY | 7 888 | | 10 902 | |
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| NON-CURRENT LIABILITIES: | | | | |
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| Deferred | | | | |
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| tax liability | 549 | | 528 | |
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| Long-term | | | | |
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| liabilities, | | | | |
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| interest-bearing | 3 042 | | 6 928 | |
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| Non-current | | | | |
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| provisions | 245 | | 355 | |
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| NON-CURRENT | | | | |
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| LIABILITIES | 3 836 | | 7 812 | |
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| CURRENT LIABILITIES: | | | | |
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| Short-term | | | | |
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| liabilities, | | | | |
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| interest-bearing | 15 068 | | 6 679 | |
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| Trade payables and | | | | |
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| other liabilities | 12 072 | | 24 628 | |
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| Tax liability, | | | | |
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| income tax | 182 | | 65 | |
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| CURRENT LIABILITIES | 27 321 | | 31 372 | |
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| TOTAL EQUITY AND | | | | |
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| LIABILITIES | 39 045 | | 50 086 | |
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| KEY FIGURES, IFRS | 2009/10 | | 2008/09 | |
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| Shareholders' | | | | |
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| equity per share, | | | | |
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| euros | 2,36 | | 3,37 | |
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| Earnings per | | | | |
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| share, euros | -1,01 | | -0,86 | |
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| Solidity, % | 21,8 | | 23,2 | |
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| Gross investments, | | | | |
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| 1000 EUR | 776 | | 3 656 | |
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| Total average | | | | |
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| number of | | | | |
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| personnel | 371 | | 410 | |
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| Order backlog at | | | | |
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| the end of the fiscal | | | | |
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| period, 1000 EUR | 15 175 | | 17 098 | |
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| The amount of contract revenue recognized as revenue has | |
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| been deducted from the order backlog. | |
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| OTHER LIABILITIES | 31.8.10 | | 31.8.09 | |
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| 1000 EUR | | | | |
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| Bank guarantees: | | | | |
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| Bank guarantee | | | | |
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| limits total | 25 000 | | 33 700 | |
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| Bank guarantee | | | | |
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| limits used | 5 720 | | 18 038 | |
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| Lease liabilities, | | | | |
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| excluded financial | | | | |
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| lease liabilities: | | | | |
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| Current lease | | | | |
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| liabilities | 220 | | 251 | |
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| Lease liabilities | | | | |
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| maturing | | | | |
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| in 1-5 years | 287 | | 425 | |
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| Total | 508 | | 675 | |
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| Other liabilities: | | | | |
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| Granted guarantees | 660 | | 1 603 | |
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| Guarantees granted | | | | |
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| to secure bank | | | | |
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| guarantees | 17 600 | | 31 000 | |
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| Guarantees granted | | | | |
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| to secure loans | 2 910 | | 1 040 | |
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| Derivative contracts: | | | | |
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| Currency forward agreements are as a rule used to hedge | |
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| against exchange rate risks. The currency forward agreements |
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| have been used to protect receivables and future assets. | |
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| Interest rate agreements are used to hedge against the | |
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| changes of the interests. | | | | |
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| The derivative agreements of the group are booked according |
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| to IAS 39: Financial instruments. Derivative agreements are |
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| initially recognized at their purchase cost which is | |
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| equivalent to the fair value and they are subsequently | |
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| remeasured at fair value. | | | |
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| Fair values | Nominal | Fair | Fair | Fair |
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| of derivative | value | value, | value, | value |
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| agreements | | pos. | neg. | total |
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| 31.8.2010 | | | | arvo |
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| 1000 EUR | | | | |
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| Currency forward | | | | |
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| contracts | 199 | 0 | -14 | -14 |
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| Currency option | | | | |
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| contracts | 1 315 | 0 | -89 | -89 |
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| Interest rate swap | | | | |
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| agreements | 4 930 | 0 | -288 | -288 |
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| Fair values of derivative agreements are determined by using |
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| the market prices for the equivalent agreements on the day of |
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| the closing of the accounts. Fair values state for the income |
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| or expenses the group would book if the derivative agreements |
| |
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| were closed at the end of the fiscal period. | |
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| CONSOLIDATED FLOW | 2009/10 | | 2008/09 | |
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| OF FUNDS | 12 | | 12 | |
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| STATEMENT, IFRS | months | | months | |
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| 1000 EUR | | | | |
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| Flow of funds | | | | |
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| from operations: | | | | |
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| Profit before taxes | -3 840 | | -3 235 | |
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| Adjustments | -1 337 | | 3 199 | |
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| Change in working | | | | |
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| capital | -9 815 | | 17 453 | |
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| Financial income and | | | | |
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| expenses and taxes | -1 055 | | -960 | |
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| Flow of funds from | | | | |
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| operations | -16 047 | | 16 456 | |
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| Flow of funds from | | | | |
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| investments: | | | | |
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| Investments in | | | | |
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| tangible and | | | | |
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| intangible assets | -776 | | -3 656 | |
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| Income from sales | | | | |
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| of tangible and | | | | |
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| intangible assets | 479 | | 61 | |
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| Payments of loans | 1 | | 1 | |
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| Flow of funds from | | | | |
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| investments | -295 | | -3 595 | |
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| Flow of funds from | | | | |
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| financial items: | | | | |
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| Withdrawals of | | | | |
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| short-term loans | 6 172 | | 5 000 | |
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| Payments of | | | | |
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| short-term loans | -869 | | -5 000 | |
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| Withdrawals of | | | | |
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| long-term loans | 238 | | 2 349 | |
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| Payments of | | | | |
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| long-term loans | -1 039 | | -3 207 | |
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| Dividends | 0 | | -333 | |
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| Flow of funds from | | | | |
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| financial items | 4 502 | | -1 191 | |
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| Change of liquid | | | | |
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| funds | -11 840 | | 11 670 | |
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Lahti November 11, 2010
VAAHTO GROUP PLC OYJ
Anssi Klinga
President (CEO)
Information:
Anssi Klinga
CEO, Vaahto Group Plc Oyj
tel. +358 50 4661470
VAAHTO GROUP'S PREVIEW OF RESULTS FOR FISCAL YEAR 1.9.2009-31.8.2010
| Source: Plc Uutechnic Group Oyj