Year end report January-December 2010

Year end report January-December 2010



October - December 2010
  · Net sales for the quarter were 37,7 MSEK (25,6)
  · Operating loss for the quarter was -12,1 MSEK (-12,1)
  · Loss after tax was -13,8 MSEK (-13,1)
  · Earnings per share -0,68 SEK (-0,96)
January - December 2010
  · Net sales for the period were 100,9 MSEK (103,9)
  · Operating loss for the period was -50,7 MSEK (-38,8)
  · Loss after tax was -55,5 MSEK (-43,2)
  · Earnings per share before and after dilution were -2,74 SEK (-3,17)
  · Currency rate effects were -1,8 MSEK (+5,2)
  · Order intake was 124,7 MSEK (104,2) and order backlog was
55,1 MSEK (32,2)
  ·  Cash flow from operations was -42,0 MSEK (-18,4)
Events after reporting period
  · Decision on new share issue 80-90 MSEK
  · Bridge financing opportunities are ongoing
  · New order for die engineering changes from Scania
  · New order for complete stamping dies from Saab Automobile AB

Group development during reporting period

Net sales

Group net sales for the period were at 100,9 MSEK (103,9). The volume
drop was mainly due to low order intake from the automotive industry
during 2009, which resulted in an unusually weak first six months.
Interruptions in production were also caused by a break in the melting
furnace at CTC foundry. A considerable increase in order intake started
during May of 2010 but did not give results in increased invoicing until
the last quarter of the period.

Result after tax

Result after tax for the year was -55,5 MSEK (-43,2). The poor result is
primarily due to the orders that were taken during the automotive crisis
year of 2009 had low margins and volumes remained low during the first
six months. Production stop due to technical issues also had a negative
impact. Of the 35 notices of dismissal given during the beginning of the
year, 10 have been executed. One-off items mainly due to personnel
terminations charged the operating loss with approximately -1,9 MSEK
(-1,2). The result has been impacted by exchange rate losses of -1.8
MSEK (+5.2).

Cash

Cash and cash equivalents at end of accounting period were 4,4 MSEK
(7,2) including unutilized check credit of 1,5 MSEK (5,8). Accounts
receivable for the group were at

12,9 MSEK (13,5).

The Board of Directors has reached a decision on new shares issue which
expects to provide 80-90 MSEK during the second quarter of 2011. Until
the proceeds of issue are expected to be paid in, the company will need
a short term bridge financing. Several solutions are being negotiated
but no final solution is currently in place. The Board of Directors
expects that a solution will be reached within a few weeks.

A new project financing facility has been created during the autumn.
Camito Financial Services has been able, via Sparbanken 1826, ALMI
Skåne, Swedbank and Fouriertransform, to negotiate a credit facility
that will provide 15 MSEK in new cash, as well as 5 MSEK in other
positive liquidity, of which 10,7 MSEK are realized during the period.
 The facility is connected to the export of dies and 50% is guaranteed
by The Swedish National Export Credits Guarantee Board, EKN.

Order intake and order backlog

The order intake during the period was 124,7 MSEK (104,2), of which
106,9 MSEK (85,9) applies to the Automotive business area and 17,8 MSEK
(18,3) to the Foundry Technology. Outgoing order backlog was 55,1 MSEK
(32,2) of which the Automotive business area represent 53,6 MSEK (31,4)
and Foundry Technology 1,5 MSEK (0,8).

Investments

Expenditure related to investments during the period was 2,7 MSEK (2,4).

Development per business area during the reporting period

Automotive

Net sales for the business area were 85,3 MSEK (86,4). Operating loss
was -44,1 MSEK

(-37,2). Order intake was 106,9 MSEK (85,9) and outgoing backlog was
53,6 MSEK (31,4). One-off items charged the operating loss with -1,9
MSEK.

On the whole, the market situation for the Automotive business area
considerably improved during the end of the period but the effects of
increased demand from the automotive sector, expressed in higher
production utilization at our production sites, have not been noticeable
until the latest quarter.

Camito AB

Marketing activities have continued at a high pace during the period and
the new marketing strategy that was implanted during the first quarter
has given results. This strategy means increased focus on ten top
priority customer groups, of which three are automotive manufacturers
(OEM) and seven are sub-contractors (Tier 1). With these prioritized
customers we will strive towards a closer relationship aimed at
improving advance planning and achieving a more even utilization at our
production facilities.

The effects of good order intake have however not had time to give any
positive effect on the result during the period.

Camito Technology Center AB (CTC)

Produced volume has been low during the whole period, which is the main
reason for the very poor result. Two longer stand stills of the melting
furnace at the beginning and end of the year, as well as production
development of new products, has also affected negatively. Furnace
breakdown and generally low volume has disrupted mainly the production
of castings to the wind mill power industry within the framework
agreement with Enercon. Production of castings for wind power increased
during the end of the period and reached the expected annual pace and at
the same time production of die shoe castings increased slightly.

Parts of the completion process at the foundry have been made more
efficient, resulting in lower staff requirements. Personnel have been
reduced with six persons to 24 due to notices of dismissal as well as
various resignations during the period.

Swepart Verktyg AB

Production volumes up to September have been very low. Future delivery
capacity has been prioritized as a result of the good order intake from
May 2010 and of the notices of dismissal given at the beginning of the
year only 4 have been executed, which has resulted in lower personnel
costs of approximately 1,0 MSEK (approx 7%) on a quarterly basis.
Increased production at sub-contractors, in combination with the
projects for increasing efficiency that were conducted, will allow
SwePart to retain or raise their delivery capacity before the expected
demand increase in the coming years.

Foundry Technology (including Graphyte product area)

NovaCast Foundry Solutions AB

Net sales for the business area during the period were 15,6 MSEK (17,5).
Operating loss was -6,6 MSEK (-1,6).

Demand and invoicing have been low during the whole period.

The total customer base increased to 480 customers (447) and the
installed license base to  690 (684). The number of Technology Partner
Agreements, TPA, which generate annual income to the company, is 187
(211).

Current CGI projects within the Graphyte business area are proceeding
with good results and a definite increase in marketing activities has
been noted.  

Parent company

Income in the parent company consists mainly of sales of services within
the group. Net sales were 9,9 MSEK (9,8) during the period, of which
intra group sales were 9,9 MSEK (9,8). Operating loss was -1,9 MSEK
(-0,2).

The value of the shares of the subsidiary Camito Technology Center AB
has been written down by 40,0 MSEK in the parent company´s balance
sheet.

Risks and uncertainty factors

After another year of heavy losses, it is of great importance to provide
new equity capital, to increase both the liquidity and the solidity. The
Group's cash position means that short-term contributions are needed to
strengthen the liquidity.

The expansion we can expect also demands access to project financing.
This depends primarily on the fact that the market still tends to view
sub-contractors as financiers within the die area.

Further information about the Group's operational and financial risks,
risk management and risk exposure, is to be found in NovaCast
Technologies' annual report on www.novacast.se.

Contingent assets and contingent liabilities

No considerable change has taken place in the Group's or parent
company's contingent assets or liabilities since the end of the last
fiscal year.

Related party transactions

No related party transactions relevant for understanding changes in the
Group's or parent company's financial standing and development since the
end of the last fiscal year have taken place other than the private
placement of new share issues to Fouriertransform during the first
quarter of 2010.

Future developments

As in previous years NovaCast Technologies does not communicate any
projections, mainly due to that the business activities still are in the
construction phase, where individual orders or business deals can create
significant swings in these activities.

The Board of directors and management focus on adapting business
activities according to current market conditions, liquidity, solidity
and cash flow, as well as creating a platform for expansion.

Annual general meeting and dividend proposal

The annual general meeting will be held on 18 April 2011 in Stockholm
with separate notice accordingly. The annual report is expected to be
distributed to registered shareholders at the beginning of April 2011.
The annual report will also be available at head office from 4 April
2011.

The Board of Directors has proposed not to give any dividends for 2010.

The Board of Directors signature

Tyringe 25 February 2011

Hans Golteus                   Jan Erik Dantoft                 Hans
Wikman

Chairman of the Board       Board member                 Board member

Lars-Olof Strand                 Monica Svenner                 Sten
Thunberg

Board member                   Board member                   Board
member

Rolf Mastenstrand

Group CEO and CEO

For further information contact Rolf Mastenstrand, CEO NovaCast
Technologies AB,

+46 454 75 10 37 or +46 707-17 47 01.

 

Definitions

Equity ratio:        Equity in relation to balance sheet total.

Liquidity ratio:     Current assets minus stock in relation to current
liabilities.

Earnings per share:  Profit for the period attributable to equity
holders of the parent company divided by the average number of shares.

Equity per share:    Equity in relation to number of outstanding shares
per respective balance sheet date.

Accounting principles

The Group applies international accounting standards IAS as adopted by
the EU as well as the Annual Accounts Act and Swedish Financial
Reporting Board RFR 1, additional accounting standards for Groups. The
interim report was prepared in accordance with IAS 34 “Interim financial
reporting”. The same accounting principles were used in our latest
annual report. Parent company reports according to the Annual Accounts
Act and RFR 2 Accounting for Legal Entities.

Coming reports

NovaCast Technologies' interim reports are expected to be published on
April 18, August 18, October 26 2011 and yearend report in February
2012.

NovaCast Technologies develops and markets anhanced castings for the
production dies for car body parts as well as software for methoding,
simulating and process control, for better and faster production
processes to the global automotive industry and its subcontractors,
mainly foundries and tool manufacturers.

NovaCast Foundry Solutions AB offers powerful software packages that
basically cover the complete needs in a foundry, from planning to
process control and quality control. Graphyte technology offers advanced
process control systems for serial production of castings in compacted
graphite iron related to automotive industry.

NovaCast subsidiary Camito AB markets Camito enhanced castings
manufactured in one solid piece for the production of dies for forming
and stamping automotive body components in a considerably shorter time
than production of traditional dies.

Camito Technology Center AB mainly produces heavy castings, primarily to
the automotive industry. The foundry is also the development center for
Camito technology.

SwePart Verktyg (http://www.swepartverktyg.se/) is Scandinavia's leading
die manufacturer. SwePart provides the group with expertise within the
whole value chain for the manufacture and sales of stamping dies.

NovaCast Technologies' (founded 1981) head office is in Tyringe, Sweden

NovaCast Technologies AB (publ)                                Org nr:
         556211-0790

Box 158
                                                                        
Telephone:    +46 454-75 10 30

282 23
Tyringe                                                              
Homepage:   www.novacast.se