STOCK EXCHANGE RELEASE
Free for publication on November 6, 2012, at 8.00 a.m. (CET+1)
EB, ELEKTROBIT CORPORATION, INTERIM REPORT JANUARY-SEPTEMBER 2012
NET SALES AND OPERATING RESULT GREW CLEARLY FROM PREVIOUS YEAR
SUMMARY JULY - SEPTEMBER 2012
* Net sales of the third quarter grew to EUR 47.0 million (EUR 37.0 million,
3Q 2011), representing an increase of 27.0 % year-on-year. Net sales of
Automotive Business Segment grew to EUR 30.2 million (EUR 23.9 million,
3Q 2011), representing a 26.5 % growth year-on-year. The Wireless Business
Segment's net sales grew by 29.2 % to EUR 16.8 million (EUR 13.0 million,
3Q 2011).
* The figures of the third quarter include non-recurring income of EUR 1.2
million and a positive cash flow impact of EUR 10.8 million resulting from
the settlement payment of USD 13.5 million received in the reorganization
case of TerreStar Corporation. Regarding to the impacts on the income
statement, the currency conversion has been made by using the exchange rate
used for the third quarter income statement, and regarding the cash flow
impacts, by using the exchange rate of the date of payment.
* Operating profit was EUR 2.1 million (operating loss of EUR -3.1 million,
3Q 2011). Operating profit without non-recurring items from the
reorganization cases of TerreStar companies was EUR 0.8 million (operating
loss of EUR -2.9 million without non-recurring items related to
reorganization cases of from TerreStar companies, 3Q 2011).
* Operating profit of the Automotive Business Segment was EUR 0.2 million
(operating loss of EUR -1.4 million, 3Q 2011).
* Operating profit of the Wireless Business Segment was EUR 1.9 million
(operating loss of EUR -1.7 million, 3Q 2011). Operating profit of Wireless
Business Segment without non-recurring items related to reorganization cases
of TerreStar companies was EUR 0.6 million (operating loss of EUR -1.4
million without non-recurring items related to reorganization cases of
TerreStar companies, 3Q 2011).
* EBITDA was EUR 3.9 million (EUR -1.2 million, 3Q 2011). Automotive Business
Segment's EBITDA was EUR 1.3 million (EUR -0.2 million, 3Q 2011) and
Wireless Business Segment's EBITDA was EUR 2.6 million (EUR -0.9 million,
3Q 2011).
* Cash flow from operating activities was EUR 2.1 million including an
approximately EUR 10.8 million positive cash flow effect resulting from the
settlement payment in the reorganization cases of TerreStar Corporation (EUR
-6.6 million, 3Q 2011). Net cash flow was EUR 9.7 million (EUR -10.6
million, 3Q 2011).
* Earnings per share were EUR 0.01 (EUR -0.02, 3Q 2011).
* On August 28, 2012 U.S. time, Elektrobit Inc., a subsidiary of Elektrobit
Corporation, received based on a settlement, a cash payment of USD 13.5
million (EUR 10.8 million) in full and final satisfaction of its claim
against TerreStar Corporation and in resolution of all disputes between EB
and other parties in the TerreStar Corporation Chapter 11 reorganization
cases under United States Bankruptcy Code. On August 24, 2012 U.S. time, the
United States Bankruptcy Court formally approved TerreStar Corporation's
motion for final settlement with Elektrobit Inc. (a subsidiary of Elektrobit
Corporation) and TerreStar Corporation and certain of its preferred
shareholders entered into between the parties on August 8, 2012. The
settlement does not include the TerreStar Networks Chapter 11 cases, which
remain pending, and does not include any distribution therefrom that may be
available for EB.
* The settlement payment in the TerreStar Corporation Chapter 11 cases
resulted a non-recurring positive effect of approximately USD 1.6 million
(EUR 1.2 million) to EB's operating result, and a non-recurring positive
effect of USD 13.5 million (EUR 10.8 million) to EB's cash flow in the third
quarter of the year.
SUMMARY JANUARY - SEPTEMBER 2012
* Net sales of the reporting period was EUR 143.6 million (EUR 113.1 million,
1-9 2011), representing an increase of 26.9 % year-on-year. Net sales of
Automotive Business Segment grew to EUR 85.9 million (EUR 70.2 million,
1-9 2011), representing a 22.3 % growth year-on-year. The Wireless Business
Segment's net sales grew by 35.0 %, to EUR 57.9 million (EUR 42.9 million,
1-9 2011).
* Operating profit was EUR 2.6 million (operating loss of EUR -7.5 million,
1-9 2011), including EUR 1.2 million non-recurring costs related to
collecting the receivables from TerreStar Companies (EUR 0.2 million,
1-9 2011) and non-recurring income of EUR 1.2 million resulting from the
settlement payment in TerreStar Corporation's reorganization cases.
Operating profit without these non-recurring items was EUR 2.6 million
(operating loss of EUR -7.3 million, 1-9 2011).
* Operating profit of the Automotive Business Segment was EUR 1.4 million
(operating loss of EUR -1.3 million, 1-9 2011). The Wireless Business
Segment's operating profit was EUR 1.3 million (operating loss of EUR -6.1
million, 1-9 2011), including EUR 1.2 million non-recurring costs related to
collecting the receivables from TerreStar Companies (EUR 0.2 million,
1-9 2011) and non-recurring income of EUR 1.2 million resulting from the
settlement payment in TerreStar Corporation's reorganization cases. Wireless
Business Segment's operating profit without these non-recurring items was
EUR 1.3 million (operating loss of EUR -5.9 million, 1-9 2011).
* EBITDA was EUR 8.0 million (EUR -0.6 million, 1-9 2011). Automotive Business
Segment's EBITDA was EUR 4.4 million (EUR 3.0 million, 1-9 2011) and
Wireless Business Segment's EBITDA was EUR 3.6 million (EUR -3.7 million,
1-9 2011).
* Cash flow from operating activities was EUR 2.1 million (EUR -1.8 million,
1-9 2011) including an approximately EUR 10.8 million positive cash flow
effect resulting from the settlement payment in the reorganization cases of
TerreStar Corporation in the third quarter of 2012. Net cash flow was EUR
8.4 million (EUR -13.3 million, 1-9 2011)
* Cash and other liquid assets totaled EUR 18.3 million (EUR 7.2 million,
1-9 2011).
* Equity ratio was 54.8% (63.6%, 1-9 2011).
* Earnings per share were EUR 0.01 (EUR -0.06, 1-9 2011).
EB'S CEO JUKKA HARJU:
"During the third quarter EB's net sales continued to grow strongly and
operating result improved clearly from previous year. The net sales and
operating result in January-September also grew clearly from previous year in EB
and in its both business segments.
The settlement made with TerreStar Corporation in August, and the settlement
payment of USD 13.5 million from our receivables concluded our 1.5 years long
process of collecting the receivables from TerreStar Corporation in its
reorganization cases in the USA.
The outlook for the final quarter of the year is good and, EB has good
preconditions to achieve this year a clearly better profitability level than in
2011, which is our most important target for this year."
OUTLOOK FOR 2012
Compared to the previous year, the demand for EB's products and services is
estimated to grow year-on-year during 2012 in both Automotive and Wireless
Business Segments. Carmakers continue to invest in software for new car models
and the market for automotive software products and services is estimated to
continue growing. In Wireless Business Segment the demand growth will be driven
by especially the increasing use of the LTE technology that increases the
performance of mobile networks, and the authorities' needs for new communication
solutions that use commercial technologies of smart phones and mobile networks.
EB expects for the year 2012 that net sales and operating result will grow
clearly from the previous year (net sales of EUR 162.2 million, and operating
loss of EUR -4.0 million in 2011). For the second half of 2012 EB expects that
the net sales will grow clearly (EUR 86.1 million in 2H 2011) and operating
result to be clearly positive (EUR 0.4 million in 2H 2011). Due to the seasonal
nature of the EB's business and due to the holiday period during the third
quarter, the net sales and operating result without non-recurring items in the
fourth quarter are expected to be higher than in the third quarter of 2012 (net
sales EUR 47.0 million, operating profit without non-recurring items EUR 0.8
million, 3Q 2012).
More specific market outlook is presented under the "Business Segments'
development during July - September 2012 and Market Outlook" section.
The profit outlook for the year 2012 does not include possible non-recurring
income or costs related to the reorganization cases of TerreStar Networks Inc.
More information about the reorganization cases of TerreStar Networks and the
amount of the receivables and collecting the receivables as well as other
uncertainties regarding the outlook is presented under "Risks and Uncertainties"
section.
In addition, more information on TerreStar Networks Inc.'s and its parent
company TerreStar Corporation's reorganization cases are presented in the
October 20 and 25, November 20 and December 30, 2010, February 17, 2011,
November 18, 2011, June 21, 2012, August 3, 2012, August 24, 2012 and August
28, 2012 stock exchange releases as well as in EB's interim reports and
financial statements at www.elektrobit.com.
INVITATION TO A PRESS CONFERENCE
EB will hold a press conference on the Interim Report 3Q 2012 for media,
analysts and institutional investors in Finland, Oulu, Tutkijantie 8, on
Tuesday, November 6, 2012, at 11.00 a.m. (CET+1). The conference will also be
held as a conference call and the presentation will be shown simultaneously in
the Internet through WebEx. The conference will be held in English. For more
information please go to www.elektrobit.com/investors.
EB, Elektrobit Corporation
EB creates advanced technology and turns it into enriching end-user experiences.
EB is specialized in demanding embedded software and hardware solutions for
wireless and automotive industries. The net sales for the year 2011 totaled MEUR
162.2. Elektrobit Corporation is listed on NASDAQ OMX Helsinki.
www.elektrobit.com
EB, ELEKTROBIT CORPORATION, INTERIM REPORT JANUARY-SEPTEMBER 2012
FINANCIAL PERFORMANCE DURING JANUARY-SEPTEMBER 2012
(Corresponding figures are for January-September 2011 unless otherwise
indicated)
EB's net sales during January-September 2012 grew strongly by 26.9 per cent
year-on-year to EUR 143.6 million (EUR 113.1 million). Operating profit was EUR
2.6 million (operating loss of EUR -7.5 million), including EUR 1.2 million non-
recurring costs related to collecting the receivables from TerreStar Companies
(EUR 0.2 million) and EUR 1.2 million non-recurring income resulting from the
settlement payment in the reorganization cases of TerreStar Corporation.
Operating profit without these non-recurring items was EUR 2.6 million
(operating loss of EUR -7.3 million).
Net sales of the Automotive Business Segment grew in January-September 2012 to
EUR 85.9 million (EUR 70.2 million), representing 22.3 per cent growth year-on-
year. The operating profit was EUR 1.4 million (operating loss of EUR -1.3
million).
The Wireless Business Segment's net sales in January-September 2012 grew
strongly, 35.0 per cent year-on-year, to EUR 57.9 million (EUR 42.9 million).
The net sales grew in the defence and public safety markets, in the mobile
infrastructure markets and in the test tool market. The operating profit of the
Wireless Business Segment in January-September 2012 was EUR 1.3 million
(operating loss of EUR -6.1 million) including EUR 1.2 million non-recurring
costs related to collecting the receivables from TerreStar Companies (EUR 0.2
million) and EUR 1.2 million non-recurring income resulting from the settlement
payment in the reorganization cases of TerreStar Corporation. Wireless Business
Segment's operating profit without non-recurring items was EUR 1.3 million
(operating loss of EUR -5.9 million).
+----------------------------------------------------------+--------+--------+
|CONSOLIDATED INCOME STATEMENT (MEUR) |1-9 2012|1-9 2011|
+----------------------------------------------------------+--------+--------+
| |9 months|9 months|
+----------------------------------------------------------+--------+--------+
|NET SALES | 143.6| 113.1|
+----------------------------------------------------------+--------+--------+
|OPERATING PROFIT (LOSS) | 2.6| -7.5|
+----------------------------------------------------------+--------+--------+
|Financial income and expenses | -0.1| -0.7|
+----------------------------------------------------------+--------+--------+
|RESULT BEFORE TAX | 2.5| -8.2|
+----------------------------------------------------------+--------+--------+
|RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS | 2.0| -8.2|
+----------------------------------------------------------+--------+--------+
|TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 2.0| -8.4|
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Result for the period attributable to: | | |
+----------------------------------------------------------+--------+--------+
| Equity holders of the parent | 1.5| -8.4|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | 0.5| 0.1|
+----------------------------------------------------------+--------+--------+
|Total comprehensive income for the period attributable to:| | |
+----------------------------------------------------------+--------+--------+
| Equity holder of the parent | 1.5| -8.6|
+----------------------------------------------------------+--------+--------+
| Non-controlling interests | 0.5| 0.1|
+----------------------------------------------------------+--------+--------+
| | | |
+----------------------------------------------------------+--------+--------+
|Earnings per share from continuing operations, EUR | 0.01| -0.06|
+----------------------------------------------------------+--------+--------+
* Cash flow from operating activities was EUR 2.1 million (EUR -1.8 million)
including an approximately EUR 10.8 million positive cash flow effect
resulting from the settlement payment in the reorganization cases of
TerreStar Corporation in the third quarter of 2012.
* Equity ratio was 54.8% (63.6%).
* Net gearing was 7.9% (3.0%).
QUARTERLY FIGURES
Elektrobit Group's net sales and operating result, MEUR:
+------------------------------------------------+-----+-----+-----+-----+-----+
| |3Q 12|2Q 12|1Q 12|4Q 11|3Q 11|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Net sales | 47.0| 48.0| 48.6| 49.0| 37.0|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) | 2.1| -0.4| 0.9| 3.5| -3.1|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) without non-recurring | 0.8| 0.6| 1.2| 4.2| -2.9|
|costs | | | | | |
+------------------------------------------------+-----+-----+-----+-----+-----+
|Result before taxes | 1.9| 0.1| 0.5| 3.8| -3.1|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Result for the period | 1.8| -0.1| 0.3| 3.2| -3.1|
+------------------------------------------------+-----+-----+-----+-----+-----+
Wireless Business Segment, net sales and operating result without non-recurring
items, MEUR
+------------------------------------------------+-----+-----+-----+-----+-----+
| |3Q 12|2Q 12|1Q 12|4Q 11|3Q 11|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Net sales | 16.8| 21.0| 20.0| 21.0| 13.0|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) | 1.9| -0.6| -0.0| 1.4| -1.7|
+------------------------------------------------+-----+-----+-----+-----+-----+
|Operating profit (loss) without non-recurring | | | | | |
|items | 0.6| 0.4| 0.3| 2.1| -1.4|
+------------------------------------------------+-----+-----+-----+-----+-----+
Non-recurring items are exceptional gains and costs that are not related to
normal business operations and occur only seldom. These items include capital
gains or losses, significant changes in asset values such as write-downs or
reversals of write-downs, significant restructuring costs, or other items that
the management considers to be non-recurring. When evaluating a non-recurring
item, the euro translation value of the item is considered, and in case of a
change in an asset value, it is measured against the total value of the asset.
Non-recurring items, mentioned in the tables above, are costs related to
collecting the receivables from TerreStar Companies and income resulting from
the settlement payment in the reorganization cases of TerreStar Corporation,
which are reported as a part of the Wireless Business Segment's operating
result. During 2011 and 2012 EB has not reported these costs as non-recurring,
since the amount has not been that significant. However, in June 2012 it has
become obvious that the legal proceedings with TerreStar Companies will continue
and it was estimated that further costs related to the process will be
approximately EUR 0.8 million, due to which EB booked a provision of EUR 0.8
million. Along with this provision, the cumulative costs resulting from
collecting the receivables are of such significance, that the Company sees it
necessary to present the operating result also without those costs. During the
third quarter, settlement payment received from the reorganization cases of
TerreStar Corporation had a positive effect of USD 1.6 million (EUR 1.2 million)
to EB's operating result.
The distribution of net sales by Business Segments, MEUR:
+-----------------+-----+-----+-----+-----+-----+
| |3Q 12|2Q 12|1Q 12|4Q 11|3Q 11|
+-----------------+-----+-----+-----+-----+-----+
|Automotive | 30.2| 27.0| 28.7| 28.0| 23.9|
+-----------------+-----+-----+-----+-----+-----+
|Wireless | 16.8| 21.0| 20.0| 21.0| 13.0|
+-----------------+-----+-----+-----+-----+-----+
|Corporation total| 47.0| 48.0| 48.6| 49.0| 37.0|
+-----------------+-----+-----+-----+-----+-----+
The distribution of net sales by market areas, MEUR and %:
+--------+-----+-----+-----+-----+-----+
| |3Q 12|2Q 12|1Q 12|4Q 11|3Q 11|
+--------+-----+-----+-----+-----+-----+
|Asia | 4.1| 2.2| 3.5| 5.5| 3.3|
| | 8.6%| 4.6%| 7.3%|11.2%| 8.8%|
+--------+-----+-----+-----+-----+-----+
|Americas| 8.5| 8.2| 7.6| 7.6| 4.9|
| |18.2%|17.1%|15.6%|15.5%|13.4%|
+--------+-----+-----+-----+-----+-----+
|Europe | 34.4| 37.6| 37.4| 36.0| 28.8|
| |73.2%|78.4%|77.1%|73.3%|77.8%|
+--------+-----+-----+-----+-----+-----+
Net sales and operating profit development by Business Segments and other
businesses, MEUR:
+-------------------------------+-----+-----+-----+-----+-----+
| |3Q 12|2Q 12|1Q 12|4Q 11|3Q 11|
+-------------------------------+-----+-----+-----+-----+-----+
|Automotive | | | | | |
|Net sales to external customers| 30.2| 27.0| 28.7| 28.0| 23.9|
|Net sales to other segments | 0.0| 0.0| 0.0| 0.0| 0.0|
|Operating profit (loss) | 0.2| 0.2| 0.9| 2.1| -1.4|
+-------------------------------+-----+-----+-----+-----+-----+
|Wireless | | | | | |
|Net sales to external customers| 16.8| 21.0| 19.9| 21.1| 12.9|
|Net sales to other segments | 0.0| 0.0| 0.2| 0.1| 0.1|
|Operating profit (loss) | 1.9| -0.6| -0.0| 1.4| -1.7|
+-------------------------------+-----+-----+-----+-----+-----+
|Other businesses | | | | | |
|Net sales to external customers| 0.0| 0.0| 0.0| 0.0| 0.2|
|Operating profit (loss) | -0.0| -0.0| -0.0| 0.0| -0.1|
+-------------------------------+-----+-----+-----+-----+-----+
|Total | | | | | |
|Net sales | 47.0| 48.0| 48.6| 49.0| 37.0|
|Operating profit (loss) | 2.1| -0.4| 0.9| 3.5| -3.1|
+-------------------------------+-----+-----+-----+-----+-----+
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
Annual General Meeting, held on March 26, 2012, approved the annual accounts for
the financial year 2011, discharged the Company's management from liability,
decided according to the proposal by the Company's Board of Directors, that no
dividend shall be paid, confirmed the Board members and the auditor and their
remuneration. The Board of Directors was authorized to decide on the repurchase
of the Company's own shares, the issuance of shares as well as the issuance of
special rights entitling to shares.
On May 11, 2012 EB announced to have signed committed credit facility agreements
with Nordea Bank Finland plc. According to the agreements, the EUR 10 million
credit facility agreement, valid until June 30, 2012, was extended and, in
addition, a new EUR 10 million revolving credit facility agreement was signed.
These facilities, intended for general financing purposes, are valid until June
30, 2014.
On June 21, 2012 EB lowered its operating result guidance for the first half of
2012 and gave more precise guidance for the whole year 2012 so that EB expected
the operating result of the second quarter of 2012 to stay below the level of
the first quarter 2012 (EUR 0.9 million, 1Q 2012), and that EB expected for the
first half of 2012 that net sales will grow clearly from the previous year (EUR
76.1 million in 1H 2011), and the operating result will be close to zero level
(operating loss of EUR -4.4 million, 1H 2011). EB announced that due to the
lowered operating result outlook for the first half of 2012 also the outlook for
the whole year 2012 was lowered, however, EB still expects for the year 2012,
that the net sales and operating result will grow clearly from the previous year
(net sales of EUR 162.2 million, and operating loss of EUR -4.0 million in
2011). The reason for the changed operating result outlook was, that the company
booked a provision of EUR 0.8 million due to the estimated costs related to
collecting the receivables from TerreStar Companies, and in addition, it became
obvious, that the operating profit in both Automotive and Wireless Business
Segments during the second quarter of 2012 will remain somewhat lower than
planned mainly due to the higher than estimated project costs. Regarding the
company's net sales, the outlook was not changed.
On August 28, 2012 U.S. time, Elektrobit Inc., a subsidiary of Elektrobit
Corporation, received based on a settlement, a cash payment of USD 13.5 million
(EUR 10.8 million) in full and final satisfaction of its claim against TerreStar
Corporation and in resolution of all disputes between EB and other parties in
the TerreStar Corporation Chapter 11 reorganization cases under United States
Bankruptcy Code. On August 24, 2012 U.S. time, the United States Bankruptcy
Court formally approved TerreStar Corporation's motion for final settlement with
Elektrobit Inc. (a subsidiary of Elektrobit Corporation) and TerreStar
Corporation and certain of its preferred shareholders entered into between the
parties on August 8, 2012. The settlement does not include the TerreStar
Networks Chapter 11 cases, which remain pending, and does not include any
distribution therefrom that may be available for EB.
The settlement payment in the TerreStar Corporation Chapter 11 cases resulted a
non-recurring positive effect of approximately USD 1.6 million (EUR 1.2 million)
to EB's operating result, and a non-recurring positive effect of USD 13.5
million (EUR 10.8 million) to EB's cash flow in the third quarter of this year.
BUSINESS SEGMENTS' DEVELOPMENT DURING JULY-SEPTEMBER 2012 AND MARKET OUTLOOK
(Corresponding figures are for July-September 2011 unless otherwise indicated)
EB's reporting is based on two segments which are the Automotive and Wireless
Business Segments.
AUTOMOTIVE
In Automotive Business Segment EB offers software products and R&D services for
carmakers, car electronics suppliers and for other suppliers to the automotive
industry. The offering includes in-car infotainment solutions, such as
navigation and human machine interfaces (HMI), as well as software for
electronic control units (ECU) and driver assistance. By combining its software
products and R&D services, EB is creating unique, customized solutions for the
automotive industry.
EB and AUDI's subsidiary, Audi Electronics Venture GmbH (AEV), have the joint
venture e.solutions GmbH that is currently developing infotainment software for
VW Group's car models. EB owns 51% of e.solutions GmbH and AEV 49%. Since 2009
e.solutions has been included as subsidiary in Elektrobit Corporation's
consolidated financial statements. The joint venture has more than 100
employees, and its head office is in Ingolstadt, Germany. EB also provides
products and R&D services to the joint venture.
During the third quarter of 2012 the net sales of the Automotive Business
Segment amounted to EUR 30.2 million (EUR 23.9 million), representing a growth
of 26.5 % year-on-year. The operating profit was EUR 0.2 million (operating loss
of EUR -1.4 million).
EB's automotive business continued to grow in the infotainment, driver
assistance and ECU (Electronic Control Unit) software markets. e.solutions GmbH
progressed well and according to its targets in developing high-end infotainment
system.
Automotive Market Outlook
The demand for EB's products and services is estimated to develop positively
year-on-year during 2012 in Automotive Business Segment. In the labor market,
particularly in Germany, the competition of talented engineers has continued to
be tight and is slightly slowing down the growth of personnel and thereby the
growth of the services business.
The move to greater electronic content in cars has been underway for several
years and has been responsible for such major innovations as security systems,
anti-lock brakes, engine control units, driver assistance, and infotainment.
These features have become so enormously popular that they are now widely
available, in both low-end and high-end vehicles, demonstrating that consumers
are willing to pay for technology that enhances their driving experience. As a
result from this and the reduced costs as production volumes ramp up, carmakers
have been steadily integrating more electronic components into vehicles. A
Roland Berger study estimates the share of electronics in cars will grow from
23 per cent in 2010 to 33 per cent until 2020.
The increasingly sophisticated and networked features and growing performance
foster the complexity of automotive electronics. At the same time consumers
expect the same richness of features and user experience they know from the
internet and mobile devices also within the car. These development trends are
driving the industry towards gradual separation of software and hardware in
electronics solutions in order to manage the architectural software layer
appropriately and to aim for efficiency in innovation and implementation. The
use of standard software solutions is expected to increase in the automotive
industry. This enables faster innovation, improves quality and development
efficiency and reduces complexity related to deployment of software.
The fundamental industry migration and consequent growth of the automotive
software market will continue. Cost pressures of the automotive industry are
expected to accelerate the need for productized and efficient software solutions
EB is offering. The estimated annual automotive software market growth rate
until 2019 is expected to exceed the growth rate of passenger car production
volume that is estimated to be 5.5% CAGR (LMC Automotive's Q4 2012 Forecast).
Uncertainty regarding the development of the global automotive market in 2013
has increased during the last months. If the prevailing economic uncertainty and
consequent to that, the weakening of the new car sales market continue, the
carmakers' cost adjustment activities will also concern their R&D investments in
2013. However, the carmakers will continue to invest in automotive software for
new car models but the market growth rate in 2013 may be less than in the
previous year.
EB's net sales cumulating from the automotive industry is currently primarily
driven by the development of software and software platforms for new cars and by
sales of software licenses needed in product development. Hence the dependency
of EB's net sales on car production volumes is currently limited; however, the
direct dependency on production volumes is expected to increase as a result of
the EB's transition towards software product business models over the
forthcoming years.
WIRELESS
The Wireless Business Segment offers development services and customized
solutions for wireless communications markets, radio channel emulator products
for industries and authorities utilizing wireless technologies, and products and
product platforms for defence and public safety markets.
Net sales of the Wireless Business Segment during the third quarter of 2012 grew
29.2 % year-on-year to EUR 16.8 million (EUR 13.0 million). The net sales grew
especially in the mobile infrastructure markets, in the test tool markets and in
the public authorities markets.
Operating profit was EUR 1.9 million (operating loss of EUR -1.7 million),
including non-recurring income of EUR 1.2 million resulting from the settlement
payment in TerreStar Corporation's reorganization cases. Wireless Business
Segment's operating profit without this non-recurring income was EUR 0.6 million
(operating loss of EUR -1.4 million without non-recurring items related to
reorganization cases of TerreStar companies).
EB continued its R&D investments in radio channel emulation products and in
products and product platforms targeted for the defence and public safety
markets. Complementing its radio channel emulator product family, EB announced
the new EB Propsim FS8, a compact sized radio channel emulator for 4G LTE
product developers and mobile network operators.
Wireless Market Outlook
Compared to the previous year, the demand for EB's products and services is
estimated to grow year-on-year during 2012 in the Wireless Business Segment.
In the mobile infrastructure market the use of LTE standard, which improves the
performance of mobile networks, is expected to continue to gain strength. EB's
business driven by LTE is expected to increase. Mastering of multi-radio
technologies and end-to-end system architectures covering both terminals and
networks has gained importance in the complex wireless technology industry. Fast
implementation of LTE technology and wide radio spectrum bandwidth needed have
increased the demand for EB's service business, and the demand is expected to
stay at the current level.
The demand in the smart phone services R&D market remains low. Changes in the
business ecosystem of smart phone manufacturers have led to a shift in demand
towards device platform development for chipset manufacturers. Companies outside
traditional wireless markets have a growing interest towards connectivity
solutions creating value for their own products, which creates demand for EB's
R&D services.
The market for communications, jamming and intelligence solutions targeted for
defence and public safety is estimated to remain stable. EB's competence and
long experience in software radio based solutions is expected to bring new
business opportunities. The trend of adopting new commercial technologies, such
as LTE and smart phone related software applications, is expected to continue in
special verticals such as public safety. The networks used by public authorities
often utilize dedicated spectrum blocks outside the commercial frequency bands,
which generates the need for special user terminal variants for these networks.
In the mobile satellite communication industry the demand for terminals for new
data and mobile communications services is expected to slowly increase during
the next few years.
LTE technology is based on multi-antenna technologies which create demand for
advanced radio channel emulation tools when introducing LTE technologies. The
growth of demand in the test tool market is shifting from the performance
testing of LTE base stations to LTE terminals, where increasingly the over-the-
air (OTA) technology will be widely used. EB provides world leading radio
channel emulation tools for the development of MIMO based LTE, LTE-Advanced and
other advanced radio technologies.
RESEARCH AND DEVELOPMENT
EB continued its investments in R&D in the automotive software products and
tools in Automotive Business Segment, and in radio channel emulation products
and products and product platforms for the defence and public safety markets in
Wireless Business Segment.
The total R&D investments during January-September 2012 were EUR 18.2 million
(EUR 18.0 million, 1-9 2011), equaling 12.6% of the net sales (15.9%,
1-9 2011). The share of R&D investments in Automotive Business Segment was EUR
13.4 million (EUR 13.3 million, 1-9 2011) and in Wireless Business Segment EUR
4.8 million (EUR 4.7 million, 1-9 2011).
EUR 2.9 million of R&D investments of the reporting period were capitalized (EUR
4.9 million, 1-9 2011). Depreciations of R&D investments were EUR 0.7 million
during the reporting period (EUR 1.3 million, 1-9 2011). The amount of
capitalized R&D investments at the end of September 2012 was EUR 13.7 million. A
significant part of these capitalizations is related to customer agreements of
Automotive Business Segment, where future license fees, based on the actual car
delivery volumes, are expected to accumulate in the coming years.
OUTLOOK FOR 2012
Compared to the previous year, the demand for EB's products and services is
estimated to grow year-on-year during 2012 in both Automotive and Wireless
Business Segments. Carmakers continue to invest in software for new car models
and the market for automotive software products and services is estimated to
continue growing. In Wireless Business Segment the demand growth will be driven
by especially the increasing use of the LTE technology that increases the
performance of mobile networks, and the authorities' needs for new communication
solutions that use commercial technologies of smart phones and mobile networks.
EB expects for the year 2012 that net sales and operating result will grow
clearly from the previous year (net sales of EUR 162.2 million, and operating
loss of EUR -4.0 million in 2011). For the second half of 2012 EB expects that
the net sales will grow clearly (EUR 86.1 million in 2H 2011) and operating
result to be clearly positive (EUR 0.4 million in 2H 2011). Due to the seasonal
nature of the EB's business and due to the holiday period during the third
quarter, the net sales and operating result without non-recurring items in the
fourth quarter are expected to be higher than in the third quarter of 2012 (net
sales EUR 47.0 million, operating profit without non-recurring items EUR 0.8
million, 3Q 2012).
More specific market outlook is presented under the "Business Segments'
development during July - September 2012 and Market Outlook" section.
The profit outlook for the year 2012 does not include possible non-recurring
income or costs related to the reorganization cases of TerreStar Networks Inc.
More information about the reorganization cases of TerreStar Networks and the
amount of the receivables and collecting the receivables as well as other
uncertainties regarding the outlook is presented under "Risks and Uncertainties"
section.
In addition, more information on TerreStar Networks Inc.'s and its parent
company TerreStar Corporation's reorganization cases are presented in the
October 20 and 25, November 20 and December 30, 2010, February 17, 2011,
November 18, 2011, June 21, 2012, August 3, 2012, August 24, 2012 and August
28, 2012 stock exchange releases as well as in EB's interim reports and
financial statements at www.elektrobit.com.
RISKS AND UNCERTAINTIES
EB has identified a number of business, market and finance related risk factors
and uncertainties that can affect the level of sales and profits.
Market risks
On the ongoing financial period the global economic uncertainty may affect the
demand for EB's services, solutions and products and provide pressure on e.g.
pricing. On a short term it may affect, in particular, the utilization and
chargeability levels and average hourly prices of R&D services.
As EB's customer base consists mainly of companies operating in the fields of
automotive and telecommunications and defense and public safety authorities, the
company is exposed to market changes in these industries. EB believes that
expanding the customer base will reduce dependence on individual companies and
that the company will thereby be mainly affected by the general business climate
in automotive and telecommunication industries. The more specific market outlook
is presented under the "Business Segments' Development during the Third Quarter
2012 and Market Outlook" section.
Business related risks
EB's operative business risks are mainly related to following items:
uncertainties and short visibility on customers' product program decisions,
their make or buy decisions and on the other hand, their decisions to continue,
downsize or terminate current product programs, execution and management of
large customer projects, ramping up and down project resources, availability of
personnel in labour markets (in particular in Germany), timing and on the other
hand successful utilization of the most important technologies and components,
competitive situation and potential delays in the markets, timely closing of
customer and supplier contracts with reasonable commercial terms, delays in R&D
projects, realization of expected return on capitalized R&D investments,
obsolescence of inventories and technology risks in product development causing
higher than planned R&D costs. Revenues expected to come from either existing or
new products and customers include normal timing risks. EB has certain
significant customer projects and deviation in their expected continuation could
result also significant deviations in the Company's outlook. In addition there
are typical industry warranty and liability risks involved in selling EB's
services, solutions and products.
Product delivery business model includes such risks as high dependency on actual
product volumes and development of the cost of materials. The above-mentioned
risks may manifest themselves as lower amounts product delivery or higher cost
of production, and ultimately, as lower profit.
Some of EB's businesses operate in the industries that are heavily patented and
therefore include risks related to management of intellectual property rights,
on the one hand related to accessibility on commercially acceptable terms of
certain technologies in the EB's products and services, and on the other hand
related to an ability to protect technologies, which EB develops or licenses
from others, from claims that third parties' intellectual property rights are
infringed. Also parties outside of the industries operate actively in order to
protect and commercialize their patents and therefore in their part increase the
risks related to the management of intellectual property rights. At worst,
claims that third parties' intellectual property rights are infringed, could
lead to substantial liabilities for damages. Also EB has been formally requested
by one of its customer for indemnification that is unspecified both in terms of
the grounds and the amount. While the analysis of the situation is pending,
based on preliminary information available it does not seem likely that the
claim would result to a significant liability on a short term. It is possible
that based on later information, the above views may need to be reconsidered.
Financing risks
Global economic uncertainty may lead to payment delays and increase the risk for
credit losses and on the other hand weaken the availability and terms of
financing. To fund its operations, EB relies mainly on income from its operative
business and may from time to time seek additional financing from selected
financial institutions. Currently EB has a committed overdraft credit facility
agreement of EUR 10 million and committed revolving credit facility agreement of
EUR 10 million, valid until June 30, 2014. These agreements include financial
covenants related to group's equity ratio and earnings before interests and
taxes (EBITDA), to be reviewed semiannually. There is no assurance that
additional financing will not be needed in case of clearly weaker than expected
development of the EB's businesses.
Some parts of EB's business are more sensitive to customer dependency than
others. Respectively, this may translate as accumulation of risk with respect to
outstanding receivables and ultimately with respect to credit losses. EB has
claimed its receivables in the amount of approximately USD 25.8 million (EUR
20.2 million as per exchange rate of November 5, 2012), in the Chapter 11 cases
of its customers, both TerreStar Networks Inc. and its parent company TerreStar
Corporation. In addition to the booked receivables, EB has also claimed
additional costs in the amount of approximately USD 2.1 million (EUR 1.7 million
as per exchange rate of November 5, 2012) and resulting mainly from the ramp
down of the business operations between the parties. Thus, EB has asserted
claims against each of the TerreStar entities in amounts totaling USD 27.9
million (EUR 21.9 million as per exchange rate of November 5, 2012). Due to
uncertainties related to the accounts receivable, EB booked an impairment of the
accounts receivable in the amount of EUR 8.3 million during the second half of
2010.
On October 19, 2010, TerreStar Networks and certain other affiliates of
TerreStar Corporation and on February 16, 2011, the parent company TerreStar
Corporation filed voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code to strengthen their financial position. Generally
in a Chapter 11 case, any distribution of cash or other assets by a debtor to
satisfy pre-bankruptcy claims of its creditors must be made under a Chapter 11
plan of reorganization or liquidation, or otherwise pursuant to an order of the
bankruptcy court. Such plans must be approved by the United States Bankruptcy
Court and (with limited exceptions) an affirmative vote of all classes of
creditors whose claims will not be paid fully and immediately after the plan is
approved by the court and becomes effective by its terms. Recoveries by holders
of claims against TerreStar Networks and TerreStar Corporation have been or are
to be funded by separate pools or streams of assets.
Following the sale of substantially all assets of TerreStar Networks' assets to
Gamma Acquisition L.L.C., an acquisition subsidiary formed by Dish Network
Corporation for about USD 1.375 billion, Terre Star Networks confirmed a plan of
liquidation, which became effective on March 29, 2012. On that date, EB
received a USD 650,890 distribution on the priority portion of its claim from
TerreStar Networks. Based upon information contained in the debtors' disclosure
statement accompanying the plan, the reorganized debtors' first post-
confirmation status report, or otherwise available to EB, EB estimates that its
pro rata total distribution under the plan may be in the range of 8-10% of the
face amount of its claim. However, this estimate is subject to various
assumptions, and therefore the amount and timing of EB's distribution on the
remaining portion of its claim cannot be predicted with certainty at this time.
As part of the Chapter 11 process, debtors often seek to recover payments
previously made to creditors pursuant to various provisions of the Bankruptcy
Code. While EB received certain payments that total approximately USD 2.5
million during the 90 days prior to TerreStar Networks' bankruptcy filing, and
the liquidating trustee (the "Liquidating Trustee") of The TerreStar Networks
Inc. Liquidating Trust (the trust having been formed in connection with
confirmation of the Chapter 11 plan of TerreStar Networks) contemplates
commencing actions against certain defendants, including EB, to recover such
allegedly preferential transfers, EB believes that it has strong defenses to
any such litigation. Therefore, if the Liquidating Trustee commences litigation
to recover such payments from EB, it will be vigorously contested. EB entered
into a 90-day tolling agreement with the Liquidating Trustee, extending the two-
year avoidance action statute of limitations from October 19, 2012 through and
including January 17, 2013, with a view to determining whether the parties may
be able to reach a consensual resolution of these matters without incurring the
cost and expense of litigation.
Further, as part of the process of reconciling accounts in preparation for
making distributions under a plan, Chapter 11 debtors often challenge the amount
or validity of some creditor claims. To date neither TerreStar Networks nor the
Liquidating Trustee has asserted an objection to the amount or validity of EB's
claims in its bankruptcy proceeding, but EB expects to provide the Liquidating
Trustee with additional information and documents in support of certain elements
of its claim that were filed in estimated or unliquidated amounts as part of the
claims reconciliation process. If the Liquidating Trustee were to commence an
action against EB to recover allegedly preferential transfers, EB anticipates
that the trustee would seek to delay any distribution to EB on its claim pending
resolution of the preference litigation and repayment by EB of any adverse
judgment. The likelihood and outcome of any such dispute cannot be predicted
with certainty at this time.
Pursuant to an order of the bankruptcy court dated August 24, 2012, Elektrobit
Inc., a subsidiary of EB, and TerreStar Corporation and certain of its preferred
shareholders, entered into a full and final settlement of various disputes that
had arisen between them in the TerreStar Corporation reorganization cases.
Pursuant to this settlement, on August 28, 2012 TerreStar Corporation made a
cash payment to Elektrobit Inc. of USD 13.5 million in full and final
satisfaction of EB's claim against that entity. The settlement did not include
the TerreStar Networks Chapter 11 cases, which remain pending, and did not
include any distribution therefrom that may be available for EB. On October
24, 2012, the bankruptcy court entered an order approving a plan of
reorganization for TerreStar Corporation and various affiliates (not including
TerreStar Networks) which contains a provision specifically preserving the
rights of EB and all other parties in interest with respect to EB's claim
against TerreStar Networks.
Based on EB's current understanding, there is no reason to believe that EB would
not be able to collect from the bankruptcy estate of TerreStar Networks the full
amount of the pro rata distribution on its general unsecured claim in due
course. It is possible that based on later information related to the TerreStar
Networks' Chapter 11 cases, the above views may need to be reconsidered. Should
the amount of the pro rata distribution on EB's general unsecured claim not be
collected from the bankruptcy estate of TerreStar Networks, and should the
Liquidating Trustee commence litigation resulting an order for EB to repay
certain allegedly preferential transfers, costs related to the process would
additionally lower EB's operating result on a non-recurring basis by
approximately EUR 2.3 million, at maximum (USD-nominated items as per exchange
rate of November 5, 2012).
More information on the risks and uncertainties affecting EB can be found on the
Company's website at www.elektrobit.com.
STATEMENT OF FINANCIAL POSITION AND FINANCING
The figures presented in the statement of financial position of September
30, 2012, are compared with the statement of the financial position of December
31, 2011 (MEUR).
9/2012 12/2011
Non-current assets 47.1 44.1
Current assets 96.3 71.0
Total assets 143.4 115.1
Share capital 12.9 12.9
Other equity 54.3 52.6
Non-controlling interests 2.0 1.5
Total shareholders' equity 69.2 67.0
Non-current liabilities 13.3 6.9
Current liabilities 60.8 41.3
Total shareholders' equity and liabilities 143.4 115.1
Net cash flow from operations during the period under review:
+ net profit +/- adjustment of accrual basis items EUR +7.5 million
+/- change in net working capital EUR -4.4 million
- interest, taxes and dividends EUR -1.1 million
= cash generated from operations EUR +2.1 million
- net cash used in investment activities EUR -5.9 million
- net cash used in financing EUR +12.2 million
= net change in cash and cash equivalents EUR +8.4 million
The increase in the net working capital during the reporting period is resulting
from EB's customer projects which have longer payment periods than earlier.
The amount of accounts and other receivables, booked in current receivables, was
EUR 75.2 million (EUR 59.3 million on December 31, 2011). Accounts and other
payables, booked in interest-free current liabilities, were EUR 47.8 million
(EUR 36.3 million on December 31, 2011). The amount of non-depreciated
consolidation goodwill at the end of the period under review was EUR 19.3
million (EUR 19.3 million on December 31, 2011).
The amount of gross investments in the period under review was EUR 8.7 million
including R&D capitalizations of EUR 2.9 million. Net investments for the
reporting period totaled EUR 8.4 million. The total amount of depreciation
during the period under review was EUR 5.4 million, including EUR 0.8 million of
depreciation owing to business acquisitions.
The amount of interest-bearing debt at the end of the reporting period was EUR
23.8 million. The distribution of net financing expenses on the income statement
was as follows:
interest dividend and other financial income EUR 0.0 million
interest expenses and other financial expenses EUR -0.5 million
foreign exchange gains and losses EUR 0.3 million
EB's equity ratio at the end of the period was 54.8% (62.8% on December
31, 2012). The decrease in equity ratio is mainly due to increase of interest
bearing debts during the reporting period.
Cash and other liquid assets at the end of the reporting period were EUR 18.3
million (EUR 10.0 million on December 31, 2011). The increase in cash reserves
is mainly consequent of USD 13.5 million payment from TerreStar Corporation and
withdrawal of credit limits. EB has from Nordea Bank plc a committed credit
facility agreement and a revolving credit facility agreement of altogether EUR
20 million, valid until June 30, 2014. EUR 16.1 million of these facilities was
used at the end of the reporting period.
EB follows a hedging strategy, the objective of which is to ensure the margins
of business operations in changing market circumstances by minimizing the
influence of exchange rates. In accordance with the hedging strategy, the agreed
customer commitments net cash flow of the currency in question is hedged. The
net cash flow is determined on the basis of sales receivables, .payables, the
order book and the budgeted net currency cash flow. The hedged foreign currency
exposure at the end of the review period was equivalent to EUR 2.5 million.
PERSONNEL
EB employed an average of 1679 people between January and September 2012. At the
end of September, EB had 1738 employees (1607 at the end of 2011). A significant
part of EB's personnel are R&D engineers.
FLAGGING NOTIFICATIONS
There were no changes in ownership during the period under review that would
have caused flagging notifications which are obligations for disclosure in
accordance with Chapter 2, section 9 of the Securities Market Act.
EVENTS AFTER THE REVIEW PERIOD
On October 26, 2012 EB announced that Elektrobit Automotive GmbH, a subsidiary
of Elektrobit Corporation and Audi Electronics Venture GmbH (AEV), a subsidiary
of AUDI AG, have decided to expand their joint venture activities from
infotainment software to provide systems integration services to AUDI AG and
other VW Group companies for their future connected infotainment solutions. To
build the required engineering competences and capacity, the joint venture will
establish a new site in Ulm, Germany and plans to hire up to 100 R&D engineers
by end of 2013 leveraging the existing knowledge base and competency in systems
integration and software development in Ulm area.
The expansion of the joint venture has no significant impact on the net sales,
operating result and balance sheet of EB in 2012 and 2013, and thereby no
material impact on EB's current financial outlook for 2012.
Oulu, November 6, 2012
EB, Elektrobit Corporation
The Board of Directors
Further Information:
Jukka Harju
CEO
Tel. +358 40 344 5466
Distribution:
NASDAQ OMX Helsinki
Major media
EB, ELEKTROBIT CORPORATION,
CONDENSED FINANCIAL STATEMENTS AND NOTES JANUARY- SEPTEMBER 2012
(unaudited)
The Interim Report has been prepared in accordance with IAS 34 Interim Financial
Reporting.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1-9/2012 1-9/2011 1-12/2011
(MEUR)
9 months 9 months 12 months
NET SALES 143.6 113.1 162.2
Other operating income 2.0 2.0 2.8
Change in work in progress and finished goods -0.1 0.4 0.0
Work performed by the undertaking for its own
purpose
and capitalized 0.2 0.1 0.4
Raw materials -10.3 -8.6 -11.7
Personnel expenses -78.6 -70.0 -95.2
Depreciation -5.4 -7.0 -8.7
Other operating expenses -48.9 -37.5 -53.8
OPERATING PROFIT (LOSS) 2.6 -7.5 -4.0
Financial income and expenses -0.1 -0.7 -0.4
RESULT BEFORE TAXES 2.5 -8.2 -4.5
Income taxes -0.5 -0.0 -0.6
RESULT FOR THE PERIOD FROM CONTINUING
OPERATIONS 2.0 -8.2 -5.1
Other comprehensive income:
Exchange differences on translating foreign
operations 0.0 -0.2 -0.2
Other comprehensive income for the period total 0.0 -0.2 -0.2
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 2.0 -8.4 -5.2
Result for the period attributable to
Equity holders of the parent 1.5 -8.4 -5.3
Non-controlling interests 0.5 0.1 0.2
Total comprehensive income attributable to
Equity holders of the parent 1.5 -8.6 -5.5
Non-controlling interests 0.5 0.1 0.2
Earnings per share EUR continuing operations
Basic earnings per share 0.01 -0.06 -0.04
Diluted earnings per share 0.01 -0.06 -0.04
Average number of shares, 1000 pcs 129 413 129 413 129 413
Average number of shares, diluted, 1000 pcs 130 232 130 088 130 051
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Sept. 30, Sept. 30, Dec. 31,
(MEUR) 2012 2011 2011
ASSETS
Non-current assets
Property, plant and equipment 9.8 8.4 9.0
Goodwill 19.3 19.2 19.3
Intangible assets 17.8 14.3 15.7
Other financial assets 0.1 0.1 0.1
Deferred tax assets 0.0 0.1 0.1
Non-current assets total 47.1 42.1 44.1
Current assets
Inventories 2.7 2.1 1.8
Trade and other receivables 75.2 54.7 59.3
Financial assets at fair value through profit or
loss 0.1
Cash and short term deposits 18.3 7.2 10.0
Current assets total 96.3 64.0 71.0
TOTAL ASSETS 143.4 106.1 115.1
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent
Share capital 12.9 12.9 12.9
Invested non-restricted equity fund 38.7 38.7 38.7
Translation difference 0.4 0.4 0.4
Retained earnings 15.1 10.2 13.4
Non-controlling interests 2.0 1.4 1.5
Total equity 69.2 63.6 67.0
Non-current liabilities
Deferred tax liabilities 0.8 1.1 1.0
Pension obligations 1.3 1.3 1.3
Provisions 0.4 0.6 0.5
Interest-bearing liabilities 10.8 4.3 4.0
Non-current liabilities total 13.3 7.3 6.9
Current liabilities
Trade and other payables 46.1 29.1 34.9
Financial liabilities at fair value through
profit or loss 0.5 0.3
Provisions 1.7 0.7 1.0
Interest-bearing loans and borrowings 13.0 4.9 5.0
Current liabilities total 60.8 35.2 41.3
Total liabilities 74.2 42.5 48.1
TOTAL EQUITY AND LIABILITIES 143.4 106.1 115.1
CONSOLIDATED STATEMENT OF CASH FLOWS (MEUR) 1-9/2012 1-9/2011 1-12/2011
9 months 9 months 12 months
CASH FLOW FROM OPERATING ACTIVITIES
Result for the period 2.0 -8.2 -5.1
Adjustment of accrual basis items 5.6 4.8 7.1
Change in net working capital -4.4 -1.4 0.6
Interest paid on operating activities -0.8 -0.3 -0.4
Interest received from operating activities 0.0 0.2 0.3
Other financial income and expenses, net received 0.0 0.0 0.0
Income taxes paid -0.4 3.1 2.6
NET CASH FROM OPERATING ACTIVITIES 2.1 -1.8 5.3
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of business unit, net of cash acquired -0.8 -0.8
Purchase of property, plant and equipment -1.9 -1.2 -1.9
Purchase of intangible assets -4.3 -5.5 -8.5
Purchase of other investments -0.0 -0.0
Sale of property, plant and equipment 0.3 0.1 0.1
Sale of intangible assets 0.0 0.1
Proceeds from sale of investments 0.0 0.0 0.0
NET CASH FROM INVESTING ACTIVITIES -5.9 -7.4 -11.1
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowing 16.6 0.2 0.2
Repayment of borrowing -2.2 -2.2 -2.2
Payment of finance liabilities -2.1 -2.1 -2.8
NET CASH FROM FINANCING ACTIVITIES 12.2 -4.1 -4.7
NET CHANGE IN CASH AND CASH EQUIVALENTS 8.4 -13.3 -10.6
Cash and cash equivalents at beginning of period 10.0 20.5 20.5
Cash and cash equivalents at end of period 18.3 7.2 10.0
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY (MEUR)
A = Share capital
B = Invested non-restricted equity fund
C = Retained earnings
D = Non-controlling interests
E = Total equity
A B C D E
Equity on January 1, 2011 12.9 38.7 18.9 1.3 71.8
Share-related compensation 0.3 0.3
Total comprehensive income for the period -8.6 0.1 8.4
Other items 0.0 0.0
Equity on September 30, 2011 12.9 38.7 10.6 1.4 63.6
Equity on January 1, 2012 12.9 38.7 13.9 1.5 67.0
Share-related compensation 0.3 0.3
Total comprehensive income for the period 1.5 0.5 2.0
Other items -0.0 -0.0
Equity on September 30, 2012 12.9 38.7 15.6 2.0 69.2
NOTES TO THE INTERIM FINANCIAL REPORTING
Accounting principles for the interim financial reporting:
The same accounting policies and methods of computation are followed in the
interim financial reporting as compared with annual financial statements.
Explanatory comments about the seasonality or cyclicality of reporting period
operations:
The Company operates in business areas which are subject to seasonal
fluctuations.
Payment of dividend:
The General Meeting held on March 26, 2012 decided in accordance with the
proposal of the Board of Directors that no dividend shall be distributed.
SEGMENT INFORMATION (MEUR)
OPERATING SEGMENTS 1-9/2012 1-9/2011 1-12/2011
9 months 9 months 12 months
Automotive
Net sales to external customers 85.9 70.2 98.3
Net sales to other segments 0.0 0.0 0.0
Net sales total 85.9 70.2 98.3
Operating profit (loss) 1.4 -1.3 0.8
Wireless
Net sales to external customers 57.6 42.6 63.6
Net sales to other segments 0.2 0.3 0.4
Net sales total 57.9 42.9 63.9
Operating profit (loss) 1.3 -6.1 -4.7
OTHER ITEMS
Other items
Net sales to external customers 0.1 0.3 0.4
Operating profit (loss) -0.1 -0.1 -0.1
Eliminations
Net sales to other segments -0.3 -0.3 -0.4
Operating profit (loss) 0.0 0.0 0.0
Group total
Net sales to external customers 143.6 113.1 162.2
Operating profit (loss) 2.6 -7.5 -4.0
Net sales of geographical areas (MEUR) 1-9/2012 1-9/2011 1-12/2011
9 months 9 months 12 months
Net sales
Europe 109.4 87.6 123.5
Americas 24.3 15.6 23.2
Asia 9.8 10.0 15.5
Net sales total 143.6 113.1 162.2
Related party transactions: 1-9/2012 1-9/2011 1-12/2011
9 months 9 months 12 months
Employee benefits for key management and stock
option expenses total 1.0 1.2 1.6
CONSOLIDATED STATEMENT OF 7-9/ 4-6/ 1-3/ 10-12/ 7-9/
COMPREHENSIVE INCOME 2012 2012 2012 2011 2011
BY QUARTER (MEUR) 3 months 3 months 3 months 3 months 3 months
NET SALES 47.0 48.0 48.6 49.0 37.0
Other operating income 0.7 0.7 0.6 0.8 0.5
Change in work in progress and
finished goods 0.1 0.1 -0.2 -0.3 0.1
Work performed by the
undertaking
for its own purpose and
capitalized 0.2 0.0 0.0 0.4 0.0
Raw materials -3.1 -4.0 -3.2 -3.1 -2.9
Personnel expenses -25.6 -25.8 -27.1 -25.2 -22.5
Depreciation -1.8 -1.9 -1.7 -1.8 -1.9
Other operating expenses -15.4 -17.4 -16.1 -16.3 -13.4
OPERATING PROFIT (LOSS) 2.1 -0.4 0.9 3.5 -3.1
Financial income and expenses -0.2 0.4 -0.4 0.3 0.0
RESULT BEFORE TAXES 1.9 0.1 0.5 3.8 -3.1
Income taxes -0.1 -0.2 -0.1 -0.6 0.0
RESULT FOR THE PERIOD FROM
CONTINUING OPERATIONS 1.8 -0.1 0.3 3.2 -3.1
Other comprehensive income
for the period total -0.0 -0.0 0.0 0.0 -0.1
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 1.8 -0.2 0.3 3.2 -3.2
Result for the period
attributable to:
Equity holders of the parent 1.6 -0.3 0.2 3.1 -3.1
Non-controlling interests 0.2 0.2 0.2 0.1 0.0
Total comprehensive income
for the period attributable to:
Equity holders of the parent 1.6 -0.3 0.2 3.1 -3.2
Non-controlling interests 0.2 0.2 0.2 0.1 0.0
CONSOLIDATED STATEMENT OF Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
FINANCIAL POSITION (MEUR) 2012 2012 2012 2011 2011
ASSETS
Non-current assets
Property, plant and equipment 9.8 9.7 9.3 9.0 8.4
Goodwill 19.3 19.3 19.3 19.3 19.2
Intangible assets 17.8 17.8 17.2 15.7 14.3
Other financial assets 0.1 0.1 0.1 0.1 0.1
Deferred tax assets 0.0 0.1 0.1 0.1 0.1
Non-current assets total 47.1 47.0 46.0 44.1 42.1
Current assets
Inventories 2.7 2.5 2.0 1.8 2.1
Trade and other receivables 75.2 68.0 62.1 59.3 54.7
Financial assets at fair
value
through profit or loss 0.1 0.1
Cash and short term deposits 18.3 8.6 7.3 10.0 7.2
Current assets total 96.3 79.1 71.4 71.0 64.0
TOTAL ASSETS 143.4 126.2 117.4 115.1 106.1
EQUITY AND LIABILITIES
Equity attributable to equity
holders
of the parent
Share capital 12.9 12.9 12.9 12.9 12.9
Invested non-restricted equity
fund 38.7 38.7 38.7 38.7 38.7
Translation difference 0.4 0.4 0.5 0.4 0.4
Retained earnings 15.1 13.4 13.7 13.4 10.2
Non-controlling interests 2.0 1.8 1.7 1.5 1.4
Total equity 69.2 67.4 67.5 67.0 63.6
Non-current liabilities
Deferred tax liabilities 0.8 0.9 0.9 1.0 1.1
Pension obligations 1.3 1.3 1.3 1.3 1.3
Provisions 0.4 0.5 0.7 0.5 0.6
Interest-bearing liabilities 10.8 4,9 3.7 4.0 4.3
Non-current liabilities total 13.3 7,6 6.7 6.9 7.3
Current liabilities
Trade and other payables 46.1 40.3 35.5 34.9 29.1
Financial liabilities at fair
value
through profit or loss 0.1 0.3 0.5
Provisions 1.7 1.4 0.7 1.0 0.7
Interest-bearing loans and
borrowings (non-current) 13.0 9,4 7.1 5.0 4.9
Current liabilities total 60.8 51,2 43.2 41.3 35.2
Total liabilities 74.2 58.8 49.9 48.1 42.5
TOTAL EQUITY AND LIABILITIES 143.4 126.2 117.4 115.1 106.1
7-9/ 4-6/ 1-3/ 10-12/ 7-9/
CONSOLIDATED STATEMENT
OF CASH FLOWS BY QUARTER 2012 2012 2012 2011 2011
3 months 3 months 3 months 3 months 3 months
Net cash from operating
activities 2.1 0.8 -0.9 7.1 -6.6
Net cash from investing
activities -1.3 -2.1 -2.5 -3.7 -2.3
Net cash from financing
activities 8.9 2.6 0.7 -0.6 -1.7
Net change in cash and cash
equivalents 9.7 1.3 -2.7 2.7 -10.6
FINANCIAL PERFORMANCE RELATED RATIOS 1-9/2012 1-9/2011 1-12/2011
9 months 9 months 12 months
STATEMENT OF COMPREHENSIVE INCOME (MEUR)
Net sales 143.6 113.1 162.2
Operating profit (loss) 2.6 -7.5 -4.0
Operating profit (loss), % of net sales 1.8 -6.7 -2.5
Result before taxes 2.5 -8.2 -4.5
Result before taxes, % of net sales 1.7 -7.3 -2.8
Result for the period 2.0 -8.2 -5.1
PROFITABILITY AND OTHER KEY FIGURES
Interest-bearing net liabilities, (MEUR) 5.5 1.9 -0.9
Net gearing, -% 7.9 3.0 -1.4
Equity ratio, % 54.8 63.6 62.8
Gross investments, (MEUR) 8.7 8.6 12.4
Average personnel during the period 1679 1540 1553
Personnel at the period end 1738 1560 1607
AMOUNT OF SHARE ISSUE ADJUSTMENT Sept. 30, Sept. 30, Dec. 31,
(1,000 pcs) 2012 2011 2011
At the end of period 129 413 129 413 129 413
Average for the period 129 413 129 413 129 413
Average for the period diluted with stock options 130 232 130 088 130 051
1-9/2012 1-9/2011 1-12/2011
STOCK-RELATED FINANCIAL RATIOS (EUR)
9 months 9 months 12 months
Basic earnings per share 0.01 -0.06 -0.04
Diluted earnings per share 0.01 -0.06 -0.04
Equity *) per share 0.52 0.48 0.51
*) Equity attributable to equity holders of the
parent
MARKET VALUES OF SHARES (EUR) 1-9/2012 1-9/2011 1-12/2011
9 months 9 months 12 months
Highest 0.79 0.76 0.76
Lowest 0.38 0.44 0.36
Average 0.63 0.61 0.55
At the end of period 0.66 0.47 0.38
Market value of the stock, (MEUR) 85.4 60.8 49.2
Trading value of shares, (MEUR) 5.2 3.5 5.0
Number of shares traded, (1,000 pcs) 8 288 5 736 9 169
Related to average number of shares % 6.4 4.4 7.1
SECURITIES AND CONTINGENT LIABILITIES Sept. 30, Sept. 30, Dec. 31,
(MEUR) 2012 2011 2011
AGAINST OWN LIABILITIES
Floating charges 18.1 11.4 11.4
Guarantees 23.8 21.1 22.7
Rental liabilities
Falling due in the next year 6.9 6.2 6.9
Falling due after one year 16.8 13.5 17.9
Other contractual liabilities
Falling due in the next year 1.6 2.6 2.5
Falling due after one year 0.0 1.8
Mortgages are pledged for liabilities totaled 20.0 4.3 4.3
NOMINAL VALUE OF CURRENCY DERIVATIVES Sept. 30, Sept. 30, Dec. 31,
(MEUR) 2012 2011 2011
Foreign exchange forward contracts
Market value 0.1 -0.4 -0.3
Nominal value 2.5 7.0 5.5
Purchased currency options
Market value 0.0 0.1
Nominal value 4.3 4.3
Sold currency options
Market value -0.2 -0.1
Nominal value 8.6 8.6
[HUG#1655248]
