Cencorp Corporation Interim Report 12 September 2014 at 17.30 Finnish time
- The restructuring of Cencorp Corporation (“Cencorp”) continues. During the reporting period Cencorp agreed on selling its electronics automation business (LAS and LCM business segments) to FTTK Company Limited (“FTTK”). The sold electronics automation business has been incorporated and has been operating under the name Cencorp Automation Oy since the transaction. Cencorp owns 30 percent and FTTK 70 percent of the shares in Cencorp Automation Oy. FTTK has an option to decide by 17 December 2014 whether it will use its option to purchase the remaining 30 percent of the shares in Cencorp Automation for EUR 1.14 million, payable in cash.
- The net sales of the continuing operations of Cencorp for the reporting period January – September 2014 was EUR 0.8 million (EUR 2.7 million in 2013). The operating profit of continuing operations was EUR -6.6 million (EUR -1.8 million), profit for the period EUR -7.1 million (EUR -3.0 million), earnings per share were EUR -0.009 (-0.005) and EBITDA was EUR -2.3 million (EUR -0.8 million). In the reporting period a write-down of EUR 3.2 million was done in the current assets of the Beijing factory.
- The financing situation of Cencorp continues to be very tight. If the company does not succeed in securing sufficient short-term and long-term financing, the continuity of the company’s operation may be jeopardized.
- Since the sale of the electronics automation business Cencorp has moved on to the next phase in its cleantech strategy. In August 2014, according to the strategy and in order to obtain finance for it, Cencorp decided to sell the remaining operations not included in its strategy, i.e. the production of RFID components and flexible electronics for mobile phones, to become a company providing solely clean energy solutions. Cencorp is having ongoing negotiations for the sale of the aforesaid businesses.
- Cencorp has previously announced that if required it will re-evaluate the long-term objectives set for Managing Director in the second half of 2014. The company has now re-evaluated the financial objectives set for Managing Director as part of development of the company’s financing structure. Re-evaluation is based on calculations made together with an investment bank that assists Cencorp in obtaining long-term financing.
As announced on 21 August 2012 Cencorp has decided not to give any financial guidance for the time being as the company is transforming into a company that develops and provides only cleantech applications. As the transition period is still partly continuing Cencorp does not give any financial guidance for the year 2014 and the objectives set for Managing Director for 2015 – 2017 should not be considered as the financial guidance, either. Attainment of the objectives involves significant risks.
Based on Cencorp’s experience in the clean energy business so far and knowledge of technological development in the industry as well as the company’s evaluation of market development the Board of Directors of the company has in its meeting on 12 November 2014 specified the long-term financial objectives set for Managing Director and their schedule. The objectives set for Managing Director are based on the company’s business model presented earlier which assumes that the customers buying Cencorp’s production technology will buy part of main components for solar modules from Cencorp as well. In the objectives set for Managing Director one solar module plant and one production line are estimated to be sold in 2015. The company’s objective is to deliver totally about ten solar module plants and about ten production lines by the end of 2017.
The previous net sales target set for Managing Director was more than 200 million Euros by the end of 2016. Apart from the previously published objectives lead time of sales cases has been continued especially because more sales are estimated to be made in developing countries than earlier anticipated. Decision making process in developing countries is expected to take longer time compared to similar processes in developed countries.
In the developed countries CBS back contact technology has been taken into use more slowly than expected because overcapacity of traditional solar modules has not yet reduced in the market to the extent that investments in the new CBS based technology would have been started. However, according to the information available to Cencorp one of the world’s biggest manufacturers has announced in public that it will start using CBS technology already in 2015. Cencorp views that the company’s CBS components are ready to meet the demand as the investments commence.
Based on the assumptions presented above the Board of Directors of the company has specified the objectives set for Managing Director that should not be considered as the company’s financial guidance as follows: A net sales target for 2015 is approximately EUR 10 – 15 million. A net sales target for 2016 is approximately EUR 45 – 55 million and for 2017 approximately EUR 150 – 200 million. Attainment of the objectives set for Managing Director requires that component sales will realize as planned resulting the sales of components will be about two thirds of the company’s net sales in 2017.
The long-term objectives set for Managing Director and realization of the company’s business model involve significant risks and the objectives should not be considered as the company’s financial guidance. The long-term objectives set for Managing Director and their attainment fully depend on sufficiency of the company’s short-term financing and success in securing the long-term financing. Negotiations for the long-term financing are going on. The long-term objectives set for Managing Director and risks related to them are described in detail in the items “Long-term objectives for Managing Director” and “Risk management, risks and uncertainties” of this Interim Report.
- According to the strategy and to protect the company’s technology by centralizing the research and development for clean energy solutions and to save further in the administration costs, Cencorp decided in August 2014 to relocate the production of the Conductive Back Sheet (CBS) for solar modules to the company’s factory in Mikkeli. Implementation process has progressed as planned.
OVERVIEW
Cencorp belongs to the Finnish Savcor Group Corporation (“Savcor”). Savcor Group companies owned approximately 59.7 percent of the Cencorp shares on 30 September 2014.
More information on principle activities and events during the reporting period can be found in the stock exchange releases published on Cencorp’s website at www.cencorp.com.
The Interim Report has been drawn up in compliance with the IAS 34 Interim Financial Reporting standard. In the Interim Report Cencorp has applied the same accounting principles as in its Annual Report 2013. The Interim Report has not been audited.
FINANCIAL DEVELOPMENT
Since Cencorp transferred its electronics automation business to Cencorp Automation Oy and sold 70 percent of this company to FTTK Cencorp reports on the results of only one business segments, the Cencorp Clean Energy segment.
Part of the deliveries of orders received by LAS and LCM segments before the transaction remained in Cencorp. Net sales originating from these orders decreases and gradually finishes as the orders will be delivered approximately by the end of this fiscal year. In Cencorp’s financial reports the profit of discontinued operations is reported on a separate line, apart from continuing operations, thus, the income statement, excluding the discontinued operations item, concern the company’s continuing operations only. Cencorp’s segment information is based on the management’s internal reporting and on the organisation structure of the company.
The figures in brackets are comparison figures for the corresponding period in 2013, unless stated otherwise. Since the shutdown of the factory in Guangzhou, China, and the exit from the decoration business Cencorp reports on corresponding figures in the discontinued operations in the comparison figures for 2013.
July - September 2014 (continuing operations)
- Cencorp Group’s net sales decreased by 85.0 percent to EUR 0.1 million (EUR 0.9 million).
- EBITDA was EUR -0.6 million (EUR -0.5 million).
- Operating profit was EUR -0.9 million (EUR -0.8 million).
- The Group’s profit before taxes was EUR -0.6 million (EUR -1.4 million).
- Profit for the period was EUR -0.7 million (EUR -1.4 million).
- Earnings per share were EUR -0.0008 (EUR -0.002) and diluted earnings per share EUR -0.0008 (EUR -0.002).
- Net sales of the Cencorp Clean Energy segment (CCE) decreased by 85.0 percent to EUR 0.1 million (EUR 0.9 million) due to close-down of antenna production at the Beijing factory and operating profit was EUR -0.9 million (EUR -0.8 million). The segment’s EBITDA was EUR -0.6 million (EUR -0.5 million).
January - September 2014 (continuing operations)
- Cencorp Group’s net sales decreased by 70.9 percent to EUR 0.8 million (EUR 2.7 million).
- EBITDA was EUR -2.3 million (EUR -0.8 million).
- Operating profit was EUR -6.6 million (EUR -1.8 million).
- The Group’s profit before taxes was EUR -7.1 million (EUR -2.9 million).
- Profit for the period was EUR -7.1 million (EUR -3.0 million).
- Earnings per share were EUR -0.009 (EUR -0.005) and diluted earnings per share EUR -0.009 (EUR -0.005).
- Net sales of the Cencorp Clean Energy segment (CCE) decreased by 70.9 percent to EUR 0.8 million (EUR 2.7 million) due to close-down of antenna production at the Beijing factory and operating profit was EUR -6.6 million (EUR -1.8 million). The segment’s EBITDA was EUR -2.3 million (EUR -0.8 million).
MANAGING DIRECTOR IIKKA SAVISALO’S REVIEW
Cencorp’s success will depend on the development of the Cencorp Clean Energy business. There are high expectations but also very significant risks in this business. Cencorp is having several negotiations for the deliveries of whole solar module plants or production lines of remarkable Euro value to partners interested in the company’s production technology. The negotiations are still going on.
The biggest change in Cencorp’s history took place in the third quarter of 2014. With an agreement signed on 17 September 2014 Cencorp sold 70 percent of its traditional business for more than 30 years, the electronics automation, to FTTK. A decision to exit from the electronics automation business was part of the company’s strategy to focus on developing and providing clean energy solutions. At this point Cencorp is focusing on selling, producing and developing photovoltaic (PV) technology, in particular. The company trusts the first deals for solar energy technology and plants will be made at the end of this fiscal year or at the beginning of 2015.
The exit from the original main business involves also significant risks. The main risk is the influence of potential delays in closing cleantech deals that are expected to be closed soon on the company’s financial situation and on the continuity of its operations.
Risks are described in detail in the item “Risk management, risks and uncertainties” of this Interim Report.
REVIEW BY SEGMENTS
The net sales for the reporting period July - September decreased by 85.0 percent to EUR 0.1 million compared to the corresponding period in 2013. The EBITDA decreased to EUR -0.6 million from the previous year’s EUR -0.5 million. Cencorp will no longer give written reports on LAS and LCM segments. From 17 September 2014 the LAS and LCM business has been operated by Cencorp Automation Oy out of which Cencorp owns 30 percent and FTTK 70 percent at the moment.
CENCORP CLEAN ENERGY (CCE)
In the third quarter of the fiscal year Cencorp’s operations in its Clean Energy business segment were focused on implementing CBS production at the Mikkeli factory and closing open sales cases. As announced previously the company is having negotiations for selling production technology related projects. In the third quarter the company concentrated on advancing ongoing sales negotiations actively. Though, it is hard to fully predict decision making process of customers operating in various countries with different cultural backgrounds, Cencorp is quite confident that it will close remarkable delivery and cooperation deals yet before the end of this year or at the beginning of 2015.
In the future net sales of Cencorp Clean Energy segment will be generated by the following four product concepts:
1. Photovoltaic modules and systems
Sales of modules and small photovoltaic systems are probably Cencorp’s most visible but in terms of revenue potential the smallest product group. All of Cencorp’s PV modules are manufactured at the company’s factory in Mikkeli. They are mainly delivered to the company’s distributors and manufacturing partners. Further, the company provides small quantities of solar power plants and systems directly to its customers in Finland. So far Cencorp has delivered totally 14 small solar power plants in Finland.
Current capacity of the company’s Mikkeli factory is designed to annually produce PV modules worth max. EUR 6 – 8 million at the current market prices. Thus, the module sales do not form a major part of the sales of the company.
The first module manufacturing recipes fully developed by Cencorp has passed the demanding test programs of the German Fraunhofer Institute for Solar Energy Systems, which enables Cencorp’s modules to be certified in all market areas the company is targeting. After required administrative certification Cencorp or its manufacturing partners are able to quote for their modules in competitive tendering where the certification in question is required.
2. Production lines and related components
Typical customers for production lines in developing markets, e.g. in China are companies that already produce H-pattern modules and wish to start to manufacture next generation modules using CBS technology. According to the information available to Cencorp at least one of the world’s biggest manufacturers has announced in public that it will start using CBS technology already in 2015. These kinds of customers usually have their own module manufacturing recipe and need only production equipment. According to Cencorp’s estimation typical price of production equipment or a production line for solar modules is EUR 4 – 6 million.
The company is having negotiations for delivering solar module plants or production lines with several potential customers interested in Cencorp’s production technology worldwide. The value of the contracts Cencorp is negotiating for varies from approximately 4 million Euros to approximately 20 million Euros.
If Cencorp is able to achieve market position it is targeting as a supplier of CBS production lines expected development in the market facilitates orders for tens of production lines in the next five years. The company estimates it will get the first order for this kind of production line in 2015.
3. Manufacturing partners
For the moment Cencorp is negotiating for cooperation agreements with several potential manufacturing partners who as newcomers on the market would commit themselves to Cencorp’s production technology and module manufacturing recipe. In these cases Cencorp would provide a partner with a turnkey delivery project and commit to minority shareholding in a manufacturing company if required. Manufacturing partners operate mainly in developing markets and produce solar energy modules for local and nearby markets. Value of a typical turnkey plant delivery is more than ten million euros. Cencorp is aiming to sign at least 10 manufacturing partner contracts in the next five years. It is possible that the first contract for manufacturing partnership will be signed yet during this fiscal year or in the first quarter of 2015 at the latest.
4. Special components
Special components are the most important part in Cencorp’s strategy and most remarkable in terms of net sales potential. Cencorp’s first component is Conductive Back Sheet (CBS) developed by the company. All back contact modules require conductive back sheet in order to function. One normal size production line using back contact technology needs approximately 300,000 – 500,000 conductive back sheets in a year when operating at full capacity. Based on current estimation, considering price level in the near future, each production line will annually require back sheets worth approximately 5 – 11 million Euros.
In the future Cencorp is planning to offer its partners other components too. These components might include e.g. various intelligent components, components relating to energy storages and special silicon wafer technology based on back contact.
Cencorp’s objectives for both market share and number of partners are ambitious and their accomplishment involves significant risks. However, considering the technological concept the company is having Cencorp believes it is in good position to meet the targets. Attainment of the objectives requires sufficient financing.
During the reporting period the gross investments in the Cencorp Clean Energy i.e. the continuing operations totaled EUR 0.1 million as the investments in discontinued operations amounted to EUR 0.2 million. In the first quarter of the year Cencorp signed a Term Sheet with Vikram Solar that is one of the biggest module manufacturers in India. Business negotiations with Vikram Solar are going on. Further, the companies test together Cencorp’s CBS based solar modules. Vikram Solar has also started test-marketing of modules that are based on Cencorp’s technology. Cencorp will separately announce when contract negotiations with Vikram Solar move on to the next phase. However, reaching an agreement involves still risks.
LASER AND AUTOMATION SOLUTIONS (LAS)
As Cencorp has exited the LAS and LCM business the company does no longer report on these segments’ operations. From now on the results of the associated company Cencorp Automation Oy will be reported in the item "Share of profit/loss in associates" in the income statement.
OPERATING ENVIRONMENT
Cencorp operates in industries applying clean energy technology.
Cencorp’s operating environment is global. The company’s customers operating in the clean energy business are companies that provide products and services locally and/or worldwide.
MARKET OUTLOOK
Cencorp’s key products and services have been designed for the photovoltaic market. With Cencorp’s own module manufacturing recipe and automated production Cencorp is able to manufacture modern next generation solar modules based on conductive back sheet.
In the market, general attitude to the solar energy investments improved clearly at the end of 2013. The same trend continued in the first half of 2014. Many solar module manufacturers with solid market position have started to plan investment in capacity, partly to increase the amount of their production capacity and partly to replace old production capacity for old H-pattern solar modules. According to the information available to the company at least one of the world’s biggest PV module manufacturers announced in public in the reporting period that it will start using CBS based module technology already in 2015. This enhances Cencorp’s view on back contact technology’s superiority over traditional H-pattern technology.
During the first half of the year there have been seen signs of increasing interest in the solar energy also in Finland, both in private demand and in political decision-making. Cencorp has actively tried to bring up the topic and to share its view on which direction decision-making should be directed.
Many new local operators are entering the industry worldwide. Their interest in the latest production automation and in Cencorp’s module manufacturing recipes is increasing. According to the information available to the company there is no full-scale offering with turnkey delivery similar to Cencorp’s concept available in the world for the moment. Cencorp’s technology is already now ready to meet the growing demand if the company is able to secure a proper financing for its operations.
The first phase of Cencorp’ pilot production line for solar modules is running in Mikkeli. The first commercial module deliveries have been made. Value of the deliveries has not yet been significant. Further, Cencorp has started to offer turnkey solar plants with Cencorp’s own modules at first mainly in Finland. In May 2014 the company signed an agreement on delivering a solar power plant of about 50 kWp with Etelä-Savon Energia (“ESE”). These kind of small solar power plant deliveries do not exceed the company’s limit of EUR 0.4 million set for public releases in normal conditions, and the company announces only agreements with value bigger than this or with strategic importance.
However, Cencorp emphasizes that the focus of the company’s strategy is in delivering production technology and special components to mainly global markets. In the near future the developing markets will be among the most interesting market areas for the company. The company is having negotiations on technology transfer to India, China, Brazil, Dominican Republic and to several African countries. Further, Cencorp has entered into negotiations with several companies operating in the developed countries such as Japan.
For about two years Cencorp has been developing fully automated production technology for CBS modules. The technology has been introduced to almost all of the most significant solar module manufacturers. Innovations relating to the technology have been protected by applying several patents. There is only a limited amount of competitors in the market and the customer feedback on Cencorp’s production technology has been positive. Cencorp’s production technology has special features: production lines have high level of automation, they are easy to use and require only little space. Start-up cost for setting up solar module production from zero amounts to approximately EUR 6 – 15 million depending on the existing level of the infrastructure and required capacity.
As announced on 21 August 2012 Cencorp has decided not to give any financial guidance for the time being as the company is transforming into a company that develops and provides only cleantech applications. As the transition period is still partly continuing Cencorp does not give any financial guidance for the year 2014 neither the objectives set for Managing Director for 2015 – 2017 should not be considered as the financial guidance. Attainment of the objectives involves significant risks.
Cencorp’s future outlook will be totally dependent on the company’s ability to reach the targeted market position in the global photovoltaic module market as well as on the company’s short-term bridging financing and long-term financing. However, should the company fail to arrange financing, it is possible that the company will not be able to realize its assets and repay its liabilities to a sufficient extent or quickly enough to secure the going concern of the company. Risks are handled in detail in the item “Risk management, risks and uncertainties of this Interim Report”.
LONG-TERM OBJECTIVES FOR MANAGING DIRECTOR
The long-term objectives for Managing Director are as follows:
- To secure the short-term and long-term financing for Cencorp.
- Thorough but fast transition to become a company developing and providing solely clean energy solutions. With regard to this objective the sale of the electronics automation business to FTTK has already been completed by 70 percent and negotiations for the sale of RFID components and flexible electronics for mobile phones are going on.
- Cencorp’s future goal is to gain a strong market position in various market areas as a company that provides locally produced high quality PV modules, special components for modules, and especially solar energy plants using automation and laser technology.
- Cencorp’s goal is to increase its shareholder value with growth and profitability. Cencorp aims for growth in Cleantech business where the company has good possibilities, thanks to its product solutions, to achieve a strong global position and fast growth.
Cencorp has previously announced that if required it will re-evaluate the long-term objectives set for Managing Director in the second half of 2014. The company has now re-evaluated the financial objectives set for Managing Director as part of development of the company’s financing structure. Re-evaluation is based on calculations made together with an investment bank that assists Cencorp in obtaining long-term financing.
As announced on 21 August 2012 Cencorp has decided not to give any financial guidance for the time being as the company is transforming into a company that develops and provides only cleantech applications. As the transition period is still partly continuing Cencorp does not give any financial guidance for the year 2014 and the objectives set for Managing Director for 2015 – 2017 should not be considered as the financial guidance, either. Attainment of the objectives involves significant risks.
Based on Cencorp’s experience in the clean energy business so far and knowledge of technological development in the industry as well as the company’s evaluation of market development the Board of Directors of the company has in its meeting on 12 November 2014 specified the long-term financial objectives set for Managing Director and their schedule. The objectives set for Managing Director are based on the company’s business model presented earlier which assumes that the customers buying Cencorp’s production technology will buy part of main components for solar modules from Cencorp as well. In the objectives set for Managing Director one solar module plant and one production line are estimated to be sold in 2015. The company’s objective is to deliver totally about ten solar module plants and about ten production lines by the end of 2017.
The previous net sales target set for Managing Director was more than 200 million Euros by the end of 2016. Apart from the previously published objectives lead time of sales cases has been continued especially because more sales are estimated to be made in developing countries than earlier anticipated. Decision making process in developing countries is expected to take longer time compared to similar processes in developed countries.
In the developed countries CBS back contact technology has been taken into use more slowly than expected because overcapacity of traditional solar modules has not yet reduced in the market to the extent that investments in the new CBS based technology would have been started. However, according to the information available to Cencorp one of the world’s biggest manufacturers has announced in public that it will start using CBS technology already in 2015. Cencorp views that the company’s CBS components are ready to meet the demand as the investments commence.
Based on the assumptions presented above the Board of Directors of the company has specified the objectives set for Managing Director that should not be considered as the company’s financial guidance as follows: A net sales target for 2015 is approximately EUR 10 – 15 million. A net sales target for 2016 is approximately EUR 45 – 55 million and for 2017 approximately EUR 150 – 200 million. Attainment of the objectives set for Managing Director requires that component sales will realize as planned resulting the sales of components will be about two thirds of the company’s net sales in 2017.
The long-term objectives set for Managing Director and realization of the company’s business model involve significant risks and the objectives should not be considered as the company’s financial guidance. The long-term objectives set for Managing Director and their attainment fully depend on sufficiency of the company’s short-term financing and success in securing the long-term financing. Negotiations for the long-term financing are going on. The risks related to the long-term objectives set for Managing Director are described in detail in the item “Risk management, risks and uncertainties” of this Interim Report.
FINANCING
Cash flow from business operations before investments in January – September was EUR -3.4 million (EUR -1.6 million). Trade receivables at the end of the reporting period were EUR 0.9 million (EUR 1.7 million). Net financial items amounted to EUR -0.5 million (EUR -1.2 million).
At the end of September the equity ratio was -37.6 percent (8.5 %) and equity per share was EUR -0.006 (EUR 0.005). The equity ratio including capital loans was -12.6 percent (30.6 %). At the end of the reporting period, the Group’s liquid assets totaled EUR 0.9 million (EUR 0.2 million) unused export credit limits, bank guarantee limits and factoring loans amounted to EUR 0.0 million (EUR 1.1 million).
The financing situation of Cencorp continues to be very tight. The company has reviewed different options for its short-term and long-term financing and for ensuring the company’s strategy to be materialized as planned. Cencorp has begun negotiations with international investors to find an arrangement for its financing. The negotiations, where an investment bank in London assists Cencorp, are going on and based on Cencorp’s view results from these negotiations could be expected in the first quarter of 2015. Cencorp is aiming not to put too much pressure in the negotiations for long-term financing in terms of schedule to be able to ensure the best possible shareholder value to the current shareholders of the company.
In the reporting period Cencorp agreed to sell its electronics automation business to FTTK. The business transaction generated working capital to the company but decrease in the company’s financing limits agreed at the sale reduced the transaction’s positive effects on the company’s working capital. According to Cencorp’s estimate the transaction will have slightly positive effect on Cencorp Group’s result considering translation difference. The final effect on the result will be known during the fourth quarter.
In terms of the short-term financing of the company, Cencorp’s preliminary object is to turn the cash flow before investments with the company's current cost structure into profit as soon as possible.
Should there be delays in getting orders in the Cencorp Clean Energy business segment or should the market conditions weaken from the company’s current view, changing orders into sales may slow down and have a major impact in the schedule in which the cash flow of the business operations turns positive. In such case the financing situation of the company would further tighten if all or part of the other financing and business transaction arrangements that are going on would not have been materialized by then.
Another object relating to short-term financing is to obtain bridging loan for the company until the aforesaid long-term financing has been secured. In the company’s view a bridging loan together with cash flow of business operations before investments turning positive would ensure sufficiency of financing for the next twelve months or until long-term financing arrangement has been concluded, which is estimated to happen in the first quarter of 2015.
As a part of the closing of the Transaction Cencorp agreed with Danske Bank that the export credit limit available to the company decreases from EUR 1.5 million to EUR 1.0 million; the bank guarantee limit decreases from EUR 1.25 million to EUR 0.75 million; and the limit of the overdraft facility decreases from EUR 1.25 million to EUR 0.95 million. Additionally, the company agreed with Danske Bank on a cash deposit of EUR 0.4 million that was released in October when a bank guarantee arranged by Cencorp for advance payment of EUR 0.4 million from FTTK was released. Further, the company has agreed with Finnvera that Finnvera’s guarantee for the company’s financing limits continues to be in force against a cash deposit of EUR 0.3 million. In the short run decrease in the limit of the overdraft facility together with decreasing export credit limit and presumably short-term cash deposits of totally EUR 0.7 million for Danske Bank and Finnvera have affected and continue to affect sufficiency of the company’s financing.
Cencorp has previously estimated that with the Transaction closed with FTTK Cencorp’s bridging financing will be secured until the end of the first quarter of 2015, provided the company has at least the credit limits corresponding to its current limits of EUR 4.0 million. However, decrease in the financing limits to EUR 2.7 million will put pressure in schedule terms on the company to arrange long-term financing and to secure realization of the company’s cleantech strategy according to the plans. In the future Cencorp may require clearly bigger limits for the company’s technology export projects accordant with its cleantech strategy.
Cencorp is having negotiations with international investors to find an arrangement for its long-term financing. The negotiations, in which an investment bank in London assists Cencorp, are going on and based on Cencorp’s view results from these negotiations could be expected in the first quarter of 2015.
Very significant and continuous risks are existing in sufficiency of Cencorp’s financing and working capital for the next twelve months. In Cencorp’s current view, due to decrease in the financing limits from Danske Bank the company may require more bridging financing until long-term financing arrangement has been secured and the cash flow from the business operations of the company has turned positive. The company continues to have a significant deficit in its working capital until the first delivery of production technology for solar modules will start to generate positive cash flow, and/or production of RFID components and flexible electronics for mobile phones has been sold.
In the Auditor’s Report in the Annual Report 2013 the company’s auditor drew attention to the financial risk management with a so called Emphasis of Matter as follows: “Without qualifying our opinion, we draw attention to the basis of preparation of the financial statements and to the note 29. Financial risk management. The financial statements have been repared under the going concern assumption. The continuity of operations requires that during the year 2014 the company is able to obtain supplementary funding, to negotiate changes to the terms of payment and that cash flow from business operations turns positive. However, should the company fail to arrange financing, it is possible that the company will not be able to realize its assets and repay its liabilities within usual business operations to a sufficient extent or quickly enough. These factors, together with other issues mentioned in the report of the Board of Directors and the notes to the financial statements show material uncertainty, which may challenge the company’s going concern assumption.”
If the company does not succeed to secure sufficient short-term and long-term financing, the continuity of the company’s operation may be jeopardized.
RESEARCH AND DEVELOPMENT
The Group’s research and development costs during the January – September period amounted to EUR 1.3 million (EUR 1.4 million) or 22.5 (15.3) percent of net sales. The research and development costs of the Group’s continuing operations during the January – September period totaled EUR 0.8 million (EUR 0.6 million) or 103.7 (21.2) percent of net sales.
INVESTMENTS
Gross investments in the continuing operations during the January – September period amounted to EUR 0.1 million (EUR 2.6 million). Almost all of the investments were in development costs.
PERSONNEL
At the end of September the Group employed 26 (152) people, out of which 19 persons worked in Finland, 5 persons in China and 2 persons in other countries. During the reporting period, salaries and fees totalled EUR 2.7 million (EUR 3.1 million).
SHARES AND SHAREHOLDERS
Cencorp’s share capital amounted to EUR 3 425 059.10 at the end of the reporting period. The number of shares was 862 472 136. The company has one series of shares, which confer equal rights in the company. Cencorp did not own any of its own shares at the end of the reporting period.
The company had a total of 6 251 shareholder at the end of September 2014, and 0.6 percent of the shares were owned by foreigners. The ten largest shareholders held 81.4 percent of the company’s shares and voting rights on 30 September 2014.
The largest shareholders on 30 September 2014
| Shares | Votes | |
| 1. SAVCOR GROUP OY | 342 191 142 | 39.7 |
| 2. SAVCOR GROUP LIMITED | 133 333 333 | 15.5 |
| 3. GASELLI CAPITAL OY | 95 000 000 | 11.0 |
| 4. KESKINÄINEN ELÄKEVAKUUTUSYHTIÖ ETERA | 63 673 860 | 7.4 |
| 5. SAVCOR INVEST B.V. | 39 374 994 | 4.6 |
| 6. FRATELLI OY | 9 223 250 | 1.1 |
| 7. SCI INVEST OY | 6 870 645 | 0.8 |
| 8. NORDEA PANKKI SUOMI OYJ | 4 439 419 | 0.5 |
| 9. TROBE OY | 4 000 000 | 0.5 |
| 10.HUHTALA KAI | 3 687 500 | 0.4 |
| OTHERS | 160 677 993 | 18.6 |
| TOTALLY | 862 472 136 | 100.0 |
The members of the Board of Directors and the President and CEO, either directly or through companies under their control, held a total of 616,770,114 shares in the company on 30 September 2014, representing about 71.5 percent of the company’s shares and voting rights. Iikka Savisalo, Cencorp’s Managing Director, either directly or through companies under his control, held a total of 521,770,114 shares in the company and 15,852,856 options connected to bond I/2012.
The price of Cencorp’s share varied between EUR 0.01 and 0.04 during the January – September period. The average price was EUR 0.02 and the closing price at the end of September EUR 0.01. A total of 125.3 million Cencorp shares were traded at a value of EUR 2.7 million during the January – September period. The company’s market capitalization at the end of September stood at EUR 12.1 million.
No share options were granted to the company’s management during the reporting period. On 30 September 2014, the company hold 15,852,856 options connected to bond I/2012 with subscription period ended on 7 December 2014. Options connected to bond I/2012 are held by SCI Invest Oy and Savcor Group Oy. On 30 September 2014 the company had 30,000,000 options connected to bond I/2013 with a subscription period ending on 2 June 2015. The options connected to bond I/2013 are held by Keskinäinen Vakuutusyhtiö Etera and Oy Ingman Finance Ab.
SHARE ISSUE AUTHORIZATIONS IN FORCE
Cencorp’s Extraordinary General Meeting held on 30 January 2012 decided to authorize the Board of Directors to issue 100,000,000 new shares. 36,411,608 shares remain under the authorization.
The Extraordinary General Meeting of Cencorp Corporation held on 4 December 2013 authorized the Board of Directors of the company to decide on a share issue to the shareholders of the company and to the holders of the convertible bonds of the company, so that the maximum number of new shares to be issued based on the authorization is 510 000 000 new shares of the company. The Board of Directors is entitled to resolve on any other terms and conditions of the share issue. The authorization is in force until further notice, however, in maximum for five years as of the resolution of the General Meeting. The authorization does not revoke the earlier authorizations. 508,151,045 shares, under the authorization, were issued in the share issue ended on 24 January 2014. There remain 1,848,955 shares under the authorization.
THE MAJOR EVENTS ON THE REPORTING PERIOD
The sale of Cencorp’s electronics automation business was completed on 17 September 2014
On 25 August 2014 Cencorp announced that the company had signed an agreement according to which FTTK acquires a majority shareholding in the electronics automation business of Cencorp (“Transaction”).
Pursuant to the agreement between Cencorp and FTTK, Cencorp transferred the company’s electronics automation business into Cencorp Automation Oy, a fully-owned subsidiary of Cencorp. Further, in accordance to the agreement signed earlier, FTTK purchased 70 percent of the shares in Cencorp Automation for EUR 2.66 million payable in cash. On 17 September 2014 the parties confirmed that the conditions precedents to the Transaction had been fulfilled and thus the Transaction was closed. At the closing a shareholders’ agreement regarding Cencorp Automation Oy between FTTK and Cencorp came into force as well.
FTTK has an option to decide by 17 December 2014 whether it will use its option to purchase the remaining 30 percent of the shares in Cencorp Automation for EUR 1.14 million, payable in cash, added with a yearly interest of 10 percent until the purchase price has been paid. Should FTTK decide to exercise the aforesaid option, FTTK pays the corresponding purchase price in twelve equal installments. The first installment shall be paid after twelve months from the closing i.e. from today. The option is subject to FTTK to arrange a bank guarantee for the remaining unpaid purchase price issued by a bank accepted by Cencorp.
THE MAJOR EVENTS SINCE THE END OF THE REPORTING PERIOD
There were no major events since the end of the reporting period.
RISK MANAGEMENT, RISKS AND UNCERTAINTIES
Cencorp’s Board of Directors is responsible for the control of the company’s accounts and finances. The Board is responsible for internal control, while the President and CEO handles the practical arrangement and monitors the efficiency of internal control. Business management and control are taken care of using a Group-wide reporting and forecasting system.
The purpose of risk management is to ensure that any significant business risks are identified and monitored appropriately. The company’s business and financial risks are managed centrally by the Group’s financial department, and reports on risks are presented to the Board of Directors as necessary.
Due to the small size of the company and its business operations, Cencorp does not have an internal auditing organization or an audit committee.
The sufficiency of the company’s financing and working capital for the next twelve months involve very significant risks. According to the current view of Cencorp’s management the company needs to obtain a bridging loan until long-term financing arrangement mentioned in the item “Financing” in this Interim Report has been secured and the cash flow of the business operations of the company has turned positive. The company will have a significant deficit in its working capital until the first delivery of production technology for solar modules will start to generate positive cash flow or production of RFID components and flexible electronics for mobile phones has been sold.
In the Auditor’s Report in the Annual Report 2013 the company’s auditor drew attention to the financial risk management with a so called Emphasis of Matter as follows: “Without qualifying our opinion, we draw attention to the basis of preparation of the financial statements and to the note 29. Financial risk management. The financial statements have been repared under the going concern assumption. The continuity of operations requires that during the year 2014 the company is able to obtain supplementary funding, to negotiate changes to the terms of payment and that cash flow from business operations turns positive. However, should the company fail to arrange financing, it is possible that the company will not be able to realize its assets and repay its liabilities within usual business operations to a sufficient extent or quickly enough. These factors, together with other issues mentioned in the report of the Board of Directors and the notes to the financial statements show material uncertainty, which may challenge the company’s going concern assumption.”
If the company does not succeed to secure sufficient short-term and long-term financing, the continuity of the company’s operation may be jeopardized.
As a part of the closing of the sale of the electronics automation business between Cencorp and FTTK Cencorp agreed with Danske Bank that the export credit limit available to the company decreases from EUR 1.5 million to EUR 1.0 million; the bank guarantee limit decreases from EUR 1.25 million to EUR 0.75 million; and the limit of the overdraft facility decreases from EUR 1.25 million to EUR 0.95 million. Additionally, the company agreed with Danske Bank on a cash deposit of EUR 0.4 million that was released when a bank guarantee, arranged by Cencorp for advance payment of EUR 0.4 million from FTTK, was released, in October. Further, the company has agreed with Finnvera that Finnvera's guarantee for the company's financing limits continues to be in force against a cash deposit of EUR 0.3 million. In the short run decrease in the limit of the overdraft facility together with decreasing export credit limit and presumably short-term cash deposits of totally EUR 0.7 million for Danske Bank and Finnvera have affected and continue to affect sufficiency of the company's financing.
Cencorp has previously estimated that with the Transaction closed with FTTK Cencorp’s bridging financing will be secured until the end of the first quarter of 2015, provided the company has at least the credit limits corresponding to its current limits of EUR 4.0 million. However, decrease in the financing limits to EUR 2.7 million will put pressure in schedule terms on the company to arrange long-term financing and to secure realization of the company’s cleantech strategy according to the plans. In the future Cencorp may require clearly bigger limits for the company’s technology export projects accordant with its cleantech strategy.
Cencorp is having negotiations with international investors to find an arrangement for its long-term financing. The negotiations, in which an investment bank in London assists Cencorp, are going on and based on Cencorp’s previous view results from these negotiations could be expected in the first quarter of 2015. However, success in the financing negotiations involves significant risks and the company is not sure whether only part or all of the negotiations will be successful.
There continue to be very significant risks in sufficiency of Cencorp’s financing and working capital for the next twelve months. In Cencorp’s current view, due to decrease in the financing limits from Danske Bank the company may require more bridging financing until long-term financing arrangement has been secured and the cash flow from the business operations of the company has turned positive. The company continues to have a significant deficit in its working capital until the first delivery of production technology for solar modules will start to generate positive cash flow, and/or production of RFID components and flexible electronics for mobile phones has been sold.
Should the company fail to arrange financing, it is possible that the company will not be able to realize its assets to a sufficient extent or quickly enough. According to the next phase of the strategy of the company and in order to obtain finance for it Cencorp decided to sell the operations outside the strategy, i.e. the automation business for the electronics industry, which was sold in October, as well as the production of RFID components and flexible electronics for mobile phones, to become a company providing solely clean energy solutions. Cencorp is having negotiations for the sale of RFID components and flexible electronics for mobile phones. Transactions, their materialization and schedule involve risks. Although the management of the company has considered and reviewed business transactions, it is possible that transactions cannot be carried out fast enough to strengthen the company’s financing situation.
Exiting the electronics automation business that was Cencorp’s main business involves significant risks as major part of the company’s net sales originated from the sold business. Should there be considerable delays in getting orders for clean energy solutions, compared to the planned schedule, it would have negative effect on the company’s financing situation.
As it is difficult to make forecasts in an industry that is dependent on economic cycles, the biggest business risks are related to fluctuations in the demand for products and to the adjustment of operations to meet demand.
In terms of profitability, the most essential risks are related to the achievement of a sufficient invoicing volume in the Clean Energy business segment.
Cencorp has announced that its objective is to transform into a company that develops and provides cleantech applications using laser and automation technology as well as into a company that has a strong market position as a provider of, in various geographical areas, locally produced high-quality photovoltaic modules. Achievement of the objectives as well as realization of the transformation involves risks. Even though Cencorp's strategy and objectives are based on market knowledge and technical surveys, the risks are significant and it is not certain if the company reaches all or part of the targets set for it. Cencorp's future outlook will be highly dependent on the company's ability to reach the targeted market position in the global photovoltaic module market as well as on the company's short and long-term financing.
The execution of the non-binding Memorandum of Understanding signed with a major Chinese photovoltaic module manufacturer involves risks. The final terms of an agreement are still under negotiations, thus execution of the agreement is not yet guaranteed. Additionally, the agreement is subject to Cencorp's short-term and long-term financing. Thus, Cencorp is not yet able to estimate the agreement's possible execution, effective date neither the agreement's impact in Cencorp nor the final risks relating to it. However, in regard to the Memorandum of Understanding on delivering CBS to the Chinese photovoltaic module manufacturer, the estimated minimum value of EUR 20 million for three years’ period from the start of mass production will probably stay non-binding even though the actual Memorandum of Understanding turns into a binding supply contract. In this business customers do not give binding order estimations.
The execution of the non-binding cooperation agreement signed between Cencorp and Vikram Solar involves risks. The negotiations for business and partnership collaboration between the parties, including detailed terms, are still under negotiations, thus it is not yet certain that the transactions will be materialized. Further, realization of the transactions defined in the non-binding Term Sheet is subject to several issues such as due diligence and especially to Cencorp's short and long term financing. Therefore, Cencorp is not yet able to estimate possible realization and effective date of the transactions, the transactions' influence in Cencorp or risks relating to them. Cencorp will announce further information as soon as the negotiations have been finished.
The new long-term objectives set for the Managing Director involves also significant risks and the long-term objective should not be considered as the company’s financial guidance. Even though the objectives are based on market knowledge and technical surveys, the risks are significant and it is not certain if the Managing Director reaches all or part of the targets set for him within estimated new timetable. If Cencorp’s strategy change is delayed, the risk of the Managing Director reaching the objectives set for him in the stated timetable will increase.
Other risks connected to Cencorp have been presented in more detail in the Share Issue Registration Document and its appendixes published on 9 December 2013 as well as in the Annual Report.
In Mikkeli, 12 September 2014
Cencorp Corporation
BOARD OF DIRECTORS
For more information please contact:
Cencorp: Iikka Savisalo, President and CEO, tel. +358 40 521 6082, iikka.savisalo@savcor.com
Distribution:
NASDAQ OMX, Helsinki
Main media
www.cencorp.com
| Consolidated statement of comprehensive income | ||||||
| (unaudited) | ||||||
| 1 000 EUR | 7-9/2014 | 7-9/2013 | 1-9/2014 | 1-9/2013 | 1-12/2013 | |
| Continuing operations | ||||||
| Net sales | 128 | 854 | 778 | 2 670 | 3 315 | |
| Cost of sales | -230 | -1 088 | -5 074 | -3 066 | -4 138 | |
| Gross profit | -102 | -234 | -4 296 | -396 | -822 | |
| Other operating income | 18 | 35 | 27 | 817 | 818 | |
| Product development expenses | -348 | -179 | -807 | -566 | -903 | |
| Sales and marketing expenses | -152 | -190 | -564 | -521 | -514 | |
| Administrative expenses | -226 | -218 | -837 | -842 | -1 181 | |
| Other operating expenses | -66 | -27 | -133 | -271 | -543 | |
| Operating profit | -876 | -813 | -6 609 | -1 779 | -3 144 | |
| Financial income | 485 | -85 | 812 | 301 | 460 | |
| Financial expenses | -244 | -534 | -1 309 | -1 466 | -2 247 | |
| Profit before taxes from continuing operations | -636 | -1 432 | -7 106 | -2 945 | -4 932 | |
| Income taxes | -21 | -15 | -24 | -14 | -11 | |
| Profit/loss for the period from continuing operations | -657 | -1 447 | -7 130 | -2 959 | -4 943 | |
| Discontinued operations | ||||||
| Profit/loss after tax for the period from discontinued operations | 70 | -276 | -477 | -1 089 | -2 065 | |
| Profit/loss for the period | -586 | -1 722 | -7 607 | -4 048 | -7 008 | |
| Profit/loss attributable to: | ||||||
| Shareholders of the parent company | -586 | -1 722 | -7 607 | -4 048 | -7 008 | |
| Earnings/share (diluted), eur | -0,0007 | -0,003 | -0,009 | -0,006 | -0,011 | |
| Earnings/share (basic), eur | -0,0007 | -0,003 | -0,009 | -0,006 | -0,011 | |
| Continuing operations: | ||||||
| Earnings/share (diluted), eur | -0,0008 | -0,002 | -0,009 | -0,005 | -0,008 | |
| Earnings/share (basic), eur | -0,0008 | -0,002 | -0,009 | -0,005 | -0,008 | |
| Profit/loss for the period | -586 | -1 722 | -7 607 | -4 048 | -7 008 | |
| Other comprehensive income | ||||||
| Translation difference | -533 | 10 | -654 | 82 | 155 | |
| Net other comprehensive income to be reclassified to | ||||||
| profit or loss in subsequent periods | -533 | 10 | -654 | 82 | 155 | |
| Total comprehensive income for the period | -1 119 | -1 712 | -8 261 | -3 965 | -6 853 | |
| Total comprehensive income attributable to: | ||||||
| Shareholders of the parent company | -1 119 | -1 712 | -8 261 | -3 965 | -6 853 | |
| Consolidated statement of financial position | ||||
| (unaudited) | ||||
| 1 000 EUR | 30.9.2014 | 30.9.2013 | 31.12.2013 | |
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 3 182 | 6 010 | 5 604 | |
| Consolidated goodwill | 441 | 2 967 | 2 538 | |
| Other intangible assets | 4 042 | 5 186 | 5 512 | |
| Holdings in associated companies | 1 141 | 0 | 0 | |
| Available-for-sale investment | 9 | 10 | 9 | |
| Deferred tax assets | 5 | 7 | 7 | |
| Total non-current assets | 8 820 | 14 179 | 13 670 | |
| Current assets | ||||
| Inventories | 359 | 2 491 | 2 198 | |
| Trade and other non-interest-bearing receivables | 2 197 | 2 624 | 2 514 | |
| Cash and cash equivalents | 212 | 237 | 116 | |
| Other financial resources | 700 | 0 | 0 | |
| Total current assets | 3 468 | 5 351 | 4 828 | |
| Assets classified as held for sale | 128 | 0 | 0 | |
| Total assets | 12 415 | 19 530 | 18 498 | |
| EQUITY AND LIABILITIES | ||||
| Equity attributable to shareholders of the parent company | ||||
| Share capital | 3 425 | 3 425 | 3 425 | |
| Other reserves | 49 460 | 44 123 | 44 568 | |
| Translation difference | 178 | 760 | 833 | |
| Retained earnings | -57 702 | -46 659 | -50 095 | |
| Total equity | -4 639 | 1 649 | -1 269 | |
| Non-current liabilities | ||||
| Non-current loans | 1 547 | 3 142 | 3 222 | |
| Deferred tax liabilities | 25 | 20 | 7 | |
| Total non-current liabilities | 1 572 | 3 162 | 3 229 | |
| Current liabilities | ||||
| Current interest-bearing liabilities | 7 448 | 6 585 | 6 795 | |
| Trande and other payables | 7 906 | 7 919 | 9 594 | |
| Current provisions | 128 | 215 | 150 | |
| Total current liabilities | 15 482 | 14 719 | 16 538 | |
| Liabilities directly associated with assets classified as held for sale | 0 | 0 | 0 | |
| Total liabilities | 17 054 | 17 881 | 19 768 | |
| Equity and liabilities total | 12 415 | 19 530 | 18 498 | |
| Consolidated statement of cash flows | |||||
| (unaudited) | |||||
| 1 000 EUR | 1-9/2014 | 1-9/2013 | 1-12/2013 | ||
| Cash flow from operating activities | |||||
| Income statement profit/loss from continuing operations before taxes | -7 106 | -2 945 | -4 932 | ||
| Income statement profit/loss from discontinued operations before taxes | -477 | -1 089 | -2 065 | ||
| Income statement profit/loss before taxes | -7 583 | -4 033 | -6 997 | ||
| Non-monetary items adjusted on income statement | |||||
| Depreciation and impairment | + | 4 571 | 1 440 | 2 463 | |
| Gains/losses on disposals of non-current assets | +/- | -319 | -28 | -8 | |
| Unrealized exchange rate gains (-) and losses (+) | +/- | -648 | 105 | 259 | |
| Other non-cash transactions | +/- | 89 | 214 | 21 | |
| Financial income and expense | + | 1 145 | 1 096 | 1 564 | |
| Total cash flow before change in working capital | -2 746 | -1 207 | -2 698 | ||
| Change in working capital | |||||
| Increase (-) / decrease (+) in inventories | 85 | 38 | 319 | ||
| Increase (-) / decrease (+) in trade and other receivables | 349 | 70 | 161 | ||
| Increase (+) / decrease (-) in trade and other payables | -595 | -14 | 2 248 | ||
| Change in provisions | -21 | -43 | -108 | ||
| Change in working capital | -181 | 51 | 2 620 | ||
| Adjustment of financial items and taxes to cash-based accounting | |||||
| Interest paid | - | -241 | -253 | -361 | |
| Interest received | + | 2 | 0 | 2 | |
| Other financial items | - | -217 | -151 | -300 | |
| Taxes paid | - | -16 | -4 | -11 | |
| Financial items and taxes | -472 | -408 | -670 | ||
| NET CASH FLOW FROM BUSINESS OPERATIONS | -3 399 | -1 563 | -748 | ||
| CASH FLOW FROM INVESTING ACTIVITIES | |||||
| Investments in tangible and intangible assets | - | -849 | -1 972 | -2 963 | |
| Proceeds on disposal of tangible and intangible assets | + | 24 | 70 | 55 | |
| Proceeds on disposal of other investments | - | 0 | 33 | 33 | |
| Loans granted to associated companies | - | -103 | 0 | 0 | |
| Acquisition of subsidiaries and other business units | + | -1 | 0 | 0 | |
| Disposal of subsidiaries and other business units | 2 648 | ||||
| NET CASH FLOW FROM INVESTMENTS | 1 720 | -1 869 | -2 875 | ||
| CASH FLOW FROM FINANCING ACTIVITIES | |||||
| Proceeds from share issue | + | 2 400 | 0 | 0 | |
| Proceeds from non-current borrowings | + | 256 | 2 319 | 2 425 | |
| Repayment of non-current borrowings | - | -7 | -9 | -12 | |
| Stock options of the convertible bond | + | 0 | 432 | 432 | |
| Proceeds from current borrowings | + | 3 738 | 4 470 | 5 399 | |
| Repayment of current borrowings | - | -3 693 | -4 134 | -5 102 | |
| NET CASH FLOW FROM FINANCING ACTIVITIES | 2 694 | 3 078 | 3 141 | ||
| INCREASE (+) OR DECREASE (-) IN CASH FLOW | 1 015 | -354 | -483 | ||
| Consolidated statement of changes in equity | ||||||
| (unaudited) | ||||||
| 1 000 EUR | Share capital | Other reserves | Translation difference | Distributable non-restricted equity fund | Retained earnings | Total |
| 31.12.2013 | 3 425 | 4 908 | 833 | 39 661 | -50 095 | -1 269 |
| Directed share issue | - | - | - | 204 | - | 204 |
| Share issue | 4 882 | |||||
| Share issue expenses | - | - | - | -194 | - | -194 |
| Translation difference, comprehensive income | - | - | -654 | - | - | -654 |
| Profit/loss for the period | - | - | - | - | -7 607 | -7 607 |
| 30.9.2014 | 3 425 | 4 908 | 178 | 44 552 | -57 702 | -4 639 |
| 1 000 EUR | Share capital | Other reserves | Translation difference | Distributable non-restricted equity fund | Retained earnings | Total |
| 31.12.2012 | 3 425 | 4 908 | 677 | 38 783 | -43 091 | 4 703 |
| Stock options of the convertible bond | - | - | - | 432 | 432 | |
| Share related payments | 480 | |||||
| Translation difference, comprehensive income | - | - | 82 | - | - | 82 |
| Profit/loss for the period | - | - | - | - | -4 048 | -4 048 |
| 30.9.2013 | 3 425 | 4 908 | 760 | 39 215 | -46 659 | 1 649 |
| Segment information | |||||||
| (unaudited) | |||||||
| From 1 January 2013 Cencorp has reported of three business segments to comply with the company's Cleantech strategy. The segments are Laser and Automation Applications (LAS), Life Cycle Management (LCM) and Cencorp Clean Energy (CCE). 17 September Cencorp announced that it has transfered the company's electronics automation business into Cencorp Automation Oy, a fully-owned subsidiary of Cencorp. Further, in accordance to the agreement signed earlier, FTTK Company Limited has purchased 70 percent of the shares in Cencorp Automation Oy. In consequence of the sale of the shares Cencorp reports the financial figures relating to the electronics automation business, i.e. LAS and LCM segments, as discontinued operations from now on. Segment information is not available after operating profit in profit and loss statement. Financial income and expenses or balance sheet items are not booked to segments. Cencorp's new segment information is based on the management's internal reporting and on the organisation structure. | |||||||
| 1 000 EUR | 7-9/2014 | 7-9/2013 | 1-9/2014 | 1-9/2013 | 1-12/2013 | ||
| Net sales | |||||||
| Cencorp Clean Energy - continuing operations | 128 | 854 | 778 | 2 670 | 3 315 | ||
| Discontinued operations | 1 207 | 2 210 | 5 204 | 6 274 | 7 811 | ||
| Total | 1 335 | 3 063 | 5 982 | 8 944 | 11 126 | ||
| Operating profit | |||||||
| Cencorp Clean Energy - continuing operations | -876 | -813 | -6 609 | -1 779 | -3 144 | ||
| Discontinued operations | 84 | -245 | -476 | -1 045 | -2 021 | ||
| Eliminations | -2 | 0 | -2 | 0 | 0 | ||
| Total | -794 | -1 058 | -7 088 | -2 824 | -5 165 | ||
| EBITDA | |||||||
| Cencorp Clean Energy - continuing operations | -650 | -491 | -2 322 | -834 | -1 856 | ||
| Discontinued operations | 136 | -105 | -192 | -544 | -848 | ||
| Eliminations | 0 | -7 | -1 | -6 | 2 | ||
| Total | -513 | -603 | -2 515 | -1 385 | -2 703 | ||
| Depreciation | |||||||
| Cencorp Clean Energy - continuing operations | 226 | 312 | 1 073 | 940 | 1 288 | ||
| Discontinued operations | 66 | 149 | 298 | 485 | 630 | ||
| Total | 292 | 461 | 1 371 | 1 426 | 1 919 | ||
| Impairment | |||||||
| Cencorp Clean Energy - continuing operations | 0 | 0 | 3 200 | 0 | 53 | ||
| Discontinued operations | 0 | -12 | 0 | 14 | 491 | ||
| Total | 0 | -12 | 3 200 | 14 | 544 | ||
| Discontinued operations | ||||
| (unaudited) | ||||
| 29 May 2012 Cencorp announced that it exits from its unprofitable decoration business and closes down its plant in Guangzhou, China, producing decoration applications. In consequence of the closing down of the Guangzhou plant and the exit from decoration business Cencorp reports the financial figures relating to the Guangzhou plant’s decoration business as discontinued operations from now on. | ||||
| The assets of Savcor Face (Guangzhou) Technologies Co., Ltd, reported as discontinued operation, were written- off at fair value in the second quarter of 2012 and sold in the fourth quarter of 2012. | ||||
| The results and major classes of assets and liabilities of Savcor Face (Guangzhou) Technolgies Co., are as follows: | ||||
| 1 000 EUR | 1-9/2014 | 1-9/2013 | 1-12/2013 | |
| Revenue | 0 | 0 | 0 | |
| Expenses | 0 | -8 | -8 | |
| Other opeating income | 0 | 0 | 0 | |
| Loss recognised on the remeasurement to fair value | 0 | 0 | 0 | |
| Operating profit | 0 | -8 | -8 | |
| Finance costs | 0 | -36 | -36 | |
| Profit/loss before tax from discontinued operation | 0 | -44 | -44 | |
| Income tax | 0 | 0 | 0 | |
| Profit/loss after tax from discontinued operation | 0 | -44 | -44 | |
| Assets | ||||
| Property, plant and equipment | 0 | 0 | 0 | |
| Other intangible assets | 0 | 0 | 0 | |
| Inventories | 0 | 0 | 0 | |
| Trade and other non-interest-bearing receivables | 0 | 0 | 0 | |
| Cash and cash equivalents | 0 | 0 | 0 | |
| Assets classified as held for sale | 0 | 0 | 0 | |
| Liabilities | ||||
| Trande and other payables | 0 | 0 | 0 | |
| Provisions | 0 | 0 | 0 | |
| Liabilities directly associated with assets classified as held for sale | 0 | 0 | 0 | |
| Net assets directly associated with disposal group | 0 | 0 | 0 | |
| Savcor Face (Guangzhou) Technolgies Co., Ltd:n net cash flow: | ||||
| 1 000 EUR | 1-9/2014 | 1-9/2013 | 1-12/2013 | |
| Operating | 0 | -41 | -41 | |
| Investing | 0 | 0 | 0 | |
| Financing | 0 | 0 | 0 | |
| Net cash flow | 0 | -41 | -41 | |
| Earnings/share (basic), from discontinued operations | 0,00 | -0,0001 | -0,0001 | |
| Earnings/share (diluted) from discontinued operations | 0,00 | -0,0001 | -0,0001 | |
| Discontinued operations | ||||
| (unaudited) | ||||
| 17 September Cencorp announced that it has transfered the company's electronics automation business into Cencorp Automation Oy, a fully-owned subsidiary of Cencorp. Further, in accordance to the agreement signed earlier, FTTK Company Limited has purchased 70 percent of the shares in Cencorp Automation Oy. In consequence of the sale of the shares Cencorp reports the financial figures relating to the electronics automation business as discontinued operations from now on. | ||||
| The results and major classes of assets and liabilities of Cencorp's electronics automation business are as follows: | ||||
| 1 000 EUR | 1-9/2014 | 1-9/2013 | 1-12/2013 | |
| Revenue | 5 204 | 6 274 | 7 811 | |
| Expenses | -6 098 | -7 435 | -9 518 | |
| Other opeating income | 114 | 116 | 115 | |
| Impairment | 0 | 0 | -429 | |
| Operating profit/loss from discontinued operation | -780 | -1 045 | -2 021 | |
| Gain on discontinued operations | 304 | |||
| Assets | ||||
| Property, plant and equipment | 0 | - | - | |
| Other intangible assets | 0 | - | - | |
| Inventories | 128 | - | - | |
| Trade and other non-interest-bearing receivables | 0 | - | - | |
| Cash and cash equivalents | 0 | - | - | |
| Assets classified as held for sale | 128 | 0 | 0 | |
| Liabilities | ||||
| Trande and other payables | 0 | - | - | |
| Provisions | 0 | - | - | |
| Liabilities directly associated with assets classified as held for sale | 0 | 0 | 0 | |
| Net assets directly associated with disposal group | 128 | 0 | 0 | |
| Earnings/share (basic), from discontinued operations | -0,001 | -0,002 | -0,003 | |
| Earnings/share (diluted) from discontinued operations | -0,001 | -0,002 | -0,003 | |
| Key figures | |||||
| (unaudited) | |||||
| 1 000 EUR | 7-9/2014 | 7-9/2013 | 1-9/2014 | 1-9/2013 | 1-12/2013 |
| Net sales | 128 | 854 | 778 | 2 670 | 3 315 |
| Operating profit | -876 | -813 | -6 609 | -1 779 | -3 144 |
| % of net sales | -686,2 | -95,2 | -849,6 | -66,6 | -94,8 |
| EBITDA | -650 | -501 | -2 336 | -839 | -1 803 |
| % of net sales | -509,4 | -58,7 | -300,3 | -31,4 | -54,4 |
| Profit before taxes | -636 | -1 432 | -7 106 | -2 945 | -4 932 |
| % of net sales | -497,8 | -167,7 | -913,5 | -110,3 | -148,8 |
| Balance Sheet value | 12 415 | 19 530 | 12 415 | 19 530 | 18 498 |
| Equity ratio, % | -37,6 | 8,5 | -37,6 | 8,5 | -6,9 |
| Net gearing, % | n/a | 575,5 | n/a | 575,5 | n/a |
| Gross investments (continuing operations) | 8 | 397 | 146 | 2 624 | 3 045 |
| % of net sales | 5,9 | 46,5 | 18,8 | 98,3 | 91,9 |
| Research and development costs | 348 | 179 | 807 | 566 | 903 |
| % of net sales | 272,9 | 21,0 | 103,7 | 21,2 | 27,2 |
| Order book | 414 | 2 017 | 414 | 2 017 | 3 703 |
| Personnel on average | 55 | 151 | 90 | 156 | 155 |
| Personnel at the end of the period | 26 | 152 | 26 | 152 | 149 |
| Non-interest-bearing liabilities | 7 906 | 7 919 | 7 906 | 7 919 | 9 594 |
| Interest-bearing liabilities | 8 994 | 9 727 | 8 994 | 9 727 | 10 017 |
| Share key indicators | |||||
| Earnings/share (basic) | -0,0007 | -0,003 | -0,009 | -0,006 | -0,011 |
| Earnings/share (diluted) | -0,0007 | -0,003 | -0,009 | -0,006 | -0,011 |
| Earnings/share (basic), from continuing operations | -0,0008 | -0,002 | -0,009 | -0,005 | -0,008 |
| Earnings/share (diluted) from continuing operations | -0,0008 | -0,002 | -0,009 | -0,005 | -0,008 |
| Equity/share | -0,005 | 0,00 | -0,005 | 0,00 | -0,004 |
| P/E ratio | -14,29 | -30,77 | -1,10 | -12,90 | -3,74 |
| Highest price | 0,02 | 0,09 | 0,04 | 0,1 | 0,09 |
| Lowest price | 0,01 | 0,07 | 0,01 | 0,06 | 0,03 |
| Average price | 0,02 | 0,08 | 0,02 | 0,08 | 0,07 |
| Closing price | 0,01 | 0,08 | 0,01 | 0,08 | 0,04 |
| Market capitalisation, at the end of the period, MEUR | 12,1 | 27,4 | 12,1 | 27,4 | 13,8 |
| Calculation of Key Figures | |||||
| EBITDA, %: | Operating profit + depreciation + impairment | ||||
| Net sales | |||||
| Equity ratio, %: | Total equity x 100 | ||||
| Total assets - advances received | |||||
| Net gearing, %: | Interest-bearing liabilities - cash and cash equivalents | ||||
| and marketable securities x 100 | |||||
| Shareholders' equity + minority interest | |||||
| Earnings/share (EPS): | Profit/loss for the period to the owner of the parent company | ||||
| Average number of shares adjusted for share issue | |||||
| at the end of the financial year | |||||
| Equity/share: | Equity attributable to shareholders of the parent company | ||||
| Undiluted number of shares on the balance sheet date | |||||
| P/E ratio: | Price on the balance sheet date | ||||
| Earnings per share | |||||
| Related party transactions | |||||||
| (unaudited) | |||||||
| Cencorp Corporation is part of Savcor Group Oy. The Group has purchased goods and services from companies in which the majority holding and/or power of decision granting control of the company is held by members of the Group's related parties. Sales of goods and services carried out with related parties are based on market prices. | |||||||
| The Group entered into the following transactions with related parties: | |||||||
| 1 000 EUR | 1-9/2014 | 1-9/2013 | 1-12/2013 | ||||
| Continuing operations | |||||||
| Sales of goods and services | |||||||
| Savcor companies | 39 | 127 | 175 | ||||
| Others | 0 | 0 | 9 | ||||
| Total | 39 | 127 | 184 | ||||
| Purchases of goods and services | |||||||
| Savcor companies | 146 | 209 | 255 | ||||
| Savcor Face Ltd | 24 | 0 | 78 | ||||
| Cencorp Automation Oy | 7 | 0 | 0 | ||||
| Others | 0 | 15 | 15 | ||||
| Total | 177 | 224 | 348 | ||||
| Interest income | |||||||
| Savcor companies | 2 | 0 | 2 | ||||
| Interest expenses and other financial expenses | |||||||
| Savcor companies | 149 | 250 | 354 | ||||
| SCI Invest Oy | 45 | 45 | 60 | ||||
| Iikka Savisalo | 0 | 1 | 2 | ||||
| Total | 194 | 295 | 416 | ||||
| Discontinued operations | |||||||
| Purchases of goods and services | |||||||
| Savcor companies | 187 | 166 | 219 | ||||
| Savcor Face Ltd | 40 | 60 | 3 | ||||
| Cencorp Automation Oy | 130 | 0 | 0 | ||||
| Others | 0 | 1 | 1 | ||||
| Total | 357 | 226 | 223 | ||||
| Other non-current liabilities to related parties | 0 | 319 | 185 | ||||
| Non-current convertible subordinated loan from related parties | 0 | 0 | 0 | ||||
| Interest payable to related parties | 350 | 883 | 795 | ||||
| Other current liabilities to related parties | 1 769 | 1 255 | 1 455 | ||||
| Current convertible subordinated loan from related parties | 1 122 | 2 549 | 2 598 | ||||
| Trade payables and other non-interest-bearing liabilities to related parties | 805 | 845 | 916 | ||||
| Trade and other current receivables from related parties | 233 | 112 | 136 | ||||
| SCI Invest Oy is a company under control of Iikka Savisalo, Cencorp's CEO. | |||||||
| 1 000 EUR | 1-9/2014 | 1-9/2013 | 1-12/2013 | ||||
| Wages and remuneration | |||||||
| Salaries of the management and Board | 692 | 562 | 730 | ||||
| Fair values | ||
| (unaudited) | ||
| Carrying amount | Fair value | |
| 1 000 EUR | 30.9.2014 | 30.9.2014 |
| Financial assets | ||
| Available-for-sale investments | 9 | 9 |
| Trade and other receivables | 2 197 | 2 197 |
| Cash and cash equivalents | 212 | 212 |
| The fair value of trade and other receivables is expected to correspond to the carrying amount due to their short maturity. | ||
| Financial liabilities | ||
| R&D loan, non-current | 1 535 | 1 535 |
| Other liabilities, non-current | 12 | 12 |
| Loans from financial institutions, current | 2 450 | 2 450 |
| Other liabilities, current | 4 998 | 4 998 |
| Trade payables and other non-interest-bearing liabilities | 6 179 | 6 179 |
| The fair value of non-current liabilities is expected to correspond to the carrying amount and recognized to their fair value when recorded. There has been no significant change in common interest rate after the withdrawal of the loans. | ||
| EUR 5.9 million out of trade payables and other current liabilites was overdue at the end of the reporting period. That included EUR 3.1 million of Savcor Face Bejing's overdue liabilities. There was an increase of 0.6 million in Savcor Face Beijing's overdue liabilities during Q3, of which 0.3 million was caused by exchange rate difference. | ||
| Change in intangible and tangible assets | |||
| (unaudited) | |||
| 1 000 EUR | 30.9.2014 | 30.9.2013 | 31.12.2013 |
| Includes tangible assets, consolidated goodwill and other intangible assets | |||
| Carrying amount, beginning of period | 13 654 | 12 634 | 12 634 |
| Depreciation and impairment | -5 949 | -1 425 | -2 221 |
| Additions | 420 | 3 204 | 3 691 |
| Disposals | -142 | -225 | -356 |
| Discontinued operations | -857 | 0 | 0 |
| Exchange rate difference | 537 | -26 | -94 |
| Carrying amount, end of period | 7 664 | 14 162 | 13 654 |
| Inventories | |||||
| (unaudited) | |||||
| 1 000 EUR | 7-9/2014 | 7-9/2013 | 1-9/2014 | 1-9/2013 | 1-12/2013 |
| Impairment losses and reversals of impairment losses for inventories booked in Income Statement | |||||
| Continuing operations | |||||
| Impairment loss | 90 | 0 | 719 | 0 | 53 |
| Reversal of impairment loss | 0 | 0 | 0 | 0 | 0 |
| Discontinued operations | |||||
| Impairment loss | 0 | 0 | 0 | 14 | 63 |
| Reversal of impairment loss | 0 | 12 | 0 | 0 | 0 |
| Commitments and contingent liabilities | |||
| (unaudited) | |||
| 1 000 EUR | 30.9.2014 | 30.9.2013 | 31.12.2013 |
| Loans from financial institutions | 950 | 1 253 | 1 245 |
| Promissory notes secured by pledge | 12 691 | 12 691 | 12 691 |
| Factoring loan and export credit limit | 1 487 | 1 370 | 1 338 |
| Trade receivables | 373 | 1 370 | 499 |
| Promissory notes secured by pledge | 12 691 | 12 691 | 12 691 |
| Operating leases - continuing operations | |||
| Payable within one year | 0 | 8 | 6 |
| Payable over one year | 0 | 0 | 0 |
| Operating leases - discontinued operations | |||
| Payable within one year | 0 | 14 | 11 |
| Payable over one year | 0 | 2 | 1 |
| Commitments - continuing operations | |||
| Payable within one year | 844 | 771 | 769 |
| Payable over one year | 810 | 736 | 733 |
| Commitments - discontinued operations | |||
| Payable within one year | 33 | 175 | 178 |
| Payable over one year | 0 | 142 | 96 |