Panostaja Oyj Interim Report, June 6, 2012 10:00 a.m.
PANOSTAJA GROUP INTERIM REPORT NOVEMBER 1, 2011–APRIL 30, 2012 (6 months)
- Net sales for the first six months: MEUR 75.7, growth 10%
- Operating profit for the first six months: MEUR 2.3.
- Operating cash flow has continued to strengthen: growth of MEUR 6.0 was recorded during the six months period.
- In March, Panostaja announced that it was selling its entire shareholding in Lämpö-Tukku Oy to Onninen Oy.
SECOND QUARTER, FEBRUARY–APRIL 2012
- Net sales MEUR 38.0 (MEUR 35.6), growth 7%
- Operating profit MEUR 1.1 (operating profit MEUR 1.8)
- Profit before taxes MEUR 0.9 (MEUR 1.2)
- Earnings per share (undiluted) 0.9 cents (1.1 cents)
- Cash flow from business operations was MEUR 0.7 (MEUR -1.8), growth of MEUR 2.5
The MEUR 2.4 growth in net sales resulted from the operational development of the Digital Printing Services and the organic growth of the Safety segment. The impact of corporate acquisitions on the growth of net sales in the second quarter stood at MEUR 0.4.
The fall of MEUR 0.7 in operating profit for the second quarter was mainly influenced by the considerable decline in the operating profit in the Takoma segment (MEUR -0.9). The reason for the growth of Takoma operating loss was the significant drop in demand from the shipbuilding industry.
NOVEMBER 2011–APRIL 2012
- Net sales MEUR 75.7 (MEUR 68.6), growth 10%
- Operating profit MEUR 2.3 (MEUR 2.5)
- Profit before taxes MEUR 1.4 (MEUR 1.4)
- Earnings per share (undiluted) -0.2 cents (0.7 cents)
- Equity per share EUR 0.60 (EUR 0.65)
- Equity ratio 35.8% (33.1%)
- Cash flow from business operations MEUR 5.8 (MEUR -0.2).
The MEUR 7.1 growth in net sales resulted primarily from the operational development of the Digital Printing Services and Value-added Logistics segments and from the organic growth of the Safety segment. The impact of the acquisitions realized in the previous financial period on the increased net sales for the first six months stood at MEUR 2.0.
The decline in operating profit, MEUR -0.2, during the first six months was mainly a result from the fall of operating profit in the Takoma segment. The operating loss in the Takoma segment grew from MEUR -0.4 to MEUR -1.6. The decline in demand from the shipbuilding industry and the delay in deliveries of hydraulic cylinders resulting from moving into new factory premises were the causes for the growth of Takoma six-month operating loss.
The operating profit for the first six months was burdened by one-time costs incurred from clearing up an error in Lämpö-Tukku Oy's inventory and by other costs related to it (MEUR 0.3). In addition, Panostaja Group recorded a sales loss of MEUR 0.5 relating to the reorganization of Oy Alfa-Kem Ab. The sales loss is listed on the income statement row 'Profit from discontinued operations'. A one-time item that affected the profit for the period was the sales profit recorded from the sale of property by Panostaja’s associated company Pe Kiinteistörahasto I Ky. The effect of the sales profit for Panostaja was MEUR 0.4.
The total effect of one-time items on the interim report's profit/loss is approx. MEUR -0.4.
Panostaja will specify its result management procedures with regard to net sales. During the 2012 financial year, the Group's comparable net sales are expected to grow about 10–15% over the previous year and the Group's operating profit is expected to increase.
Previous result management: During the 2012 financial year, the Group's comparable net sales are expected to grow about 9–16% over the previous year and the Group's operating profit is expected to increase.
The Annual General Meeting on January 31, 2012 approved the capital repayment proposal made by the Board. EUR 0.05 per share of capital repayment was paid from the invested unrestricted equity fund. The record date for the capital repayment was February 3, 2012, with the payment date being February 10, 2012. A total of MEUR 2.6 of capital was repaid to parent company shareholders.
| 6 months | 6 months | 12 months | ||||||
| Key figures | 11/11–01/12 | 11/10–04/11 | 11/10–10/11 | |||||
| Net sales, MEUR | 75.7 | 68.7 | 141.2 | |||||
| Operating profit, MEUR | 2.3 | 2.5 | 6.7 | |||||
| Profit before taxes, MEUR | 1.4 | 1.4 | 4.1 | |||||
| Earnings per share, undiluted, EUR | -0.00 | 0.01 | 0.02 | |||||
| Equity per share, EUR | 0.60 | 0.65 | 0.65 | |||||
| Financial position and cash flow: | 30 April 2012 | 30 April 2011 | 31 October 2011 | |||||
| Net liabilities, MEUR | 44.0 | 48.7 | 47.2 | |||||
| Gearing, % | 96.2 | 102.0 | 99.6 | |||||
| Equity ratio, % | 35.8 | 33.1 | 33.4 | |||||
| Cash flow from business operations, MEUR | 5.8 | -0.2 | 4.4 | |||||
The income statement for discontinued operations during the review period has been separated from the income statement for continuing operations and the result for them is presented in accordance with the IFRS standard on row ‘Earnings from discontinued operations’. Before separating the discontinued operations in the income statement from continuing operations, the Group’s net sales for the six-month review period were MEUR 78.6, while the operating profit stood at MEUR 2.3. Prior to separation, the net sales for the entire 2011 financial year were MEUR 163.2 and operating profit MEUR 5.9.
MARKET SITUATION
Panostaja Group’s business operations during the second quarter did not fully meet expectations, and there was considerable variation in the development of different segments. The Group’s management focuses especially on improving the profitability of these few weak segments to meet the set targets. During the second quarter, the overall economic situation and atmosphere became more uncertain as a result of the European financial crisis. Panostaja believes, however, that the positive development trend will continue during the remaining financial period, even though uncertainty exists. The situation on the financial markets has become more challenging, particularly in the SME sector, and the restraints on credit issue remain a clear risk to financial development. The corporate acquisition market has revitalized after the slow start of early 2012, and the number of potential targets has grown slightly.
THE ECONOMIC DEVELOPMENT OF THE PANOSTAJA GROUP
FEBRUARY–APRIL 2012
Panostaja Group’s net sales in the second quarter were MEUR 38.0 (MEUR 35.6).
The MEUR 2.4 growth in net sales resulted from the operational development of the Digital Printing Services and the organic growth of the Safety segment. The impact of corporate acquisitions on the increase in net sales in the second quarter was MEUR 0.4. During the quarter, net sales increased particularly in the Digital Printing Services and Safety segments.
Of the Group’s ten segments engaged in business, seven exceeded the net sales of the comparison year and three fell short of the comparison year’s net sales levels. The operating profit increased in four segments. The operating profit improved in the following segments: Digital Printing Services, Value-added Logistics, Spare Parts for Motor Vehicles and Carpentry Industry.
In the second quarter, the Group’s operating profit was MEUR 1.1 (MEUR 1.8) and profit before taxes was MEUR 0.9 (MEUR 1.2). The operating profit margin was 3.0% (5.0%). The operating profit for the second quarter fell by MEUR 0.7, primarily as a result of the fall of Takoma*s operating profit. Takoma’s operating profit fell during the second quarter from MEUR -0.1 to MEUR -1.0. This was mainly due to a significant decline in demand from the shipbuilding industry. The impact of corporate acquisitions on operating profit for the second quarter stood at MEUR -0.2.
In the second quarter, Panostaja Oyj recorded a profit of MEUR 0.4 from the profit of associated companies, which was mainly a result of the sales profit from the sale of a property recorded by PE Kiinteistörahasto I Ky at the start of the year.
NOVEMBER 2011 - APRIL 2012
Panostaja Group’s net sales during the six-month period were MEUR 75.7 (MEUR 68.6). Export amounted to MEUR 6,1, or 8.1 %, of net sales. The corporate acquisitions realized during the previous financial period affected the MEUR 7.1 increase in net sales by MEUR 2.0.
Of the Group’s ten segments engaged in business, six exceeded the cumulative net sales for the comparative financial period and four segments exceeded the operating profit levels during the first six-month period. The operating profit improved in the following segments: Digital Printing Services, Safety, Value-added Logistics and Supports.
The operating profit was MEUR 2.3 (MEUR 2.5). The MEUR -0.2 decrease in operating profit primarily originated from the Takoma segment. The operating profit in the Takoma segment fell from MEUR -0.4 to MEUR -1.6. The reasons for the fall in Takoma’s operating profit were a decline in demand from the shipbuilding industry and the delay in deliveries of hydraulic cylinders resulting from moving into new factory premises.
During the first six-month period, the loss from discontinued operations was MEUR -1.4. In the 2011 comparison period, the corresponding loss was MEUR -0.7. The Group’s income statement does not include the income statement for operations discontinued during the reference year, 2011. Instead, the result is shown in the Group’s income statement on row ‘Earnings from discontinued operations’.
Before separating the discontinued operations in the income statement from continuing operations, the Group’s net sales for the review period were MEUR 78.6, while the operating profit stood at MEUR 2.3. As far as the whole 2011 financial year is concerned, net sales from operations discontinued during the review period were MEUR 22.1 and operating profit MEUR -0.8. Prior to the separation of discontinued operations in the income statement from continuing operations, the Group’s net sales for the whole 2011 financial year were MEUR 163.2 and operating profit MEUR 5.9.
The Group’s net financial expenses for the six-month period were approximately MEUR -1.4 (MEUR -1.3). The Group's liquidity was good and cash flow from business operations (MEUR 5.8) was positive.
| Personnel | |||
| 30 April 2012 | 30 April 2011 | 31 October 2011 | |
| Average number of employees | 1,083 | 1,006 | 1,034 |
| Employees at the end of the period | 1,069 | 1,034 | 1,097 |
| Employees in each segment at the end of the period | 30 April 2012 | 30 April 2011 | 31 October 2011 |
| Digital Printing Services | 319 | 309 | 325 |
| Takoma | 202 | 171 | 190 |
| Safety | 202 | 168 | 188 |
| HEPAC Wholesale | 0 | 37 | 37 |
| Value-added Logistics | 134 | 131 | 131 |
| Fittings | 29 | 31 | 32 |
| Spare Parts for Motor Vehicles | 39 | 32 | 35 |
| Heat Treatment | 63 | 61 | 64 |
| Carpentry Industry | 30 | 32 | 32 |
| Supports | 15 | 15 | 16 |
| Fasteners | 26 | 25 | 25 |
| Technochemical | 0 | 12 | 12 |
| Emoyhtiö | 10 | 10 | 10 |
| Group in total | 1,069 | 1,034 | 1,097 |
In the preliminary ruling on the capital repayment in respect of Takoma Oyj shares in spring 2008, the Tax Office for Major Corporations decided on the basis of an overall assessment that Panostaja was a capital investor within the meaning of Section 6, Subsection 1, Item 1 of the Finnish Business Tax Act. For capital investors, capital gains from fixed asset shares are considered taxable income.
Due to the said preliminary ruling, the Tax Office for Major Corporations, in its taxation by direct assessment in 2007, regarded Panostaja Oyj as a capital investor in the aforementioned sense and taxed the company’s certain capital gains from fixed asset shares. Panostaja Oyj submitted a claim for adjustment over the 2007 taxation to the Board of Adjustment claiming that the capital gain from fixed asset shares should be exempt from tax. The Board of Adjustment denied Panostaja Oyj’s claim in August 2009. Panostaja Oyj appealed the decision to the Administrative Court of Helsinki.
In June 2011, Panostaja Oyj was informed that the Administrative Court of Helsinki had rejected the appeal. The Administrative Court considers Panostaja Oyj as a capital investor within the meaning of the Finnish Business Tax Act. Panostaja Oyj has applied to the Supreme Administrative Court for the right to appeal the decision.
GROUP STRUCTURE CHANGES
In December 2011, Panostaja implemented an arrangement, through which Spectra Yhtiöt Oy acquired a 100% holding in Oy Alfa-Kem Ab by means of share exchange. Previously, Oy Alfa-Kem Ab formed Panostaja Group’s Technochemical segment. Panostaja Oyj's holding in the corporate entity is 32%, which Panostaja will report as an associated company as of January 2012. Oy Alfa-Kem Ab's prior parent company Annektor Oy merged with Panostaja Oyj on February 29, 2012.
In March, Panostaja announced that it was selling its entire shareholding in Lämpö-Tukku Oy to Onninen Oy. Lämpö-Tukku Oy was a subsidiary of Eurotermo Holding Oy, a company in which Panostaja owns a 63.3% share. The compensation paid to Panostaja Group comprised of the purchase price and repayment of internal loans, and totaled some MEUR 2.4. Panostaja did not record any sales profit or loss from the transaction. The conclusion of the transaction required the approval of the Finnish Competition Authority. At the beginning of April, Panostaja announced that the Finnish Competition Authority had approved it and that the deal had been concluded.
During the current financial period, Panostaja Group has discontinued two reporting segments, Technochemical and HEPAC Wholesale, as a result of corporate divestments. In the previous financial period, the Group reported its business operations in thirteen segments.
SEGMENT REVIEW
Panostaja Group’s business operations for the period under review are reported in eleven segments: Digital Printing Services, Takoma, Safety, Value-added Logistics, Fittings, Spare Parts for Motor Vehicles, Heat Treatment, Carpentry Industry, Supports, Fasteners and Other (parent company + associated companies).
NOVEMBER 2011–APRIL 2012
Net sales in the Digital Printing Services segment grew from MEUR 15.2 to MEUR 17.2 and operating profit from MEUR 1.7 to MEUR 2.6. The increase in net sales and operating profit was a result of the continued positive development of operations.
Net sales in the Takoma segment increased from MEUR 13.8 to MEUR 15.2. The segment’s operating loss increased from MEUR -0.4 to MEUR -1.6. The decline in demand from the shipbuilding industry and the delay in deliveries of hydraulic cylinders resulting from moving into new factory premises were the causes of the growth of Takoma’s operating loss in the six-month period. During the January–March period, the volume of orders in the global shipbuilding industry fell by more than 50% from last year. The Takoma segment's order book remained at the previous year's level of MEUR 12.
Net sales in the Safety segment grew from MEUR 11.8 to MEUR 14.7 and the operating profit remained at about MEUR 0.6. The growth in net sales was a result of continued strong organic growth in the segment throughout the six-month period. The strong investment in growth made in the early part of the period was evident in increased costs in the segment, which restrained the growth in operating profit.
Net sales in the Value-added Logistics segment increased from MEUR 7.5 to MEUR 8.5, while the reference-period operating loss of MEUR -0.1 improved to MEUR 0.3. The volumes from customers in technology industries increased during the review period. The segment also succeeded in developing its operations, which had a positive impact on net sales and operating profit.
Net sales in the Fittings segment declined from MEUR 5.7 to MEUR 5.4, and the operating profit remained at the comparison year’s level (MEUR 0.3).
The contraction of co-operation with Abloy had a negative effect on net sales, but the segment nevertheless succeeded in keeping its operating profit at the previous year’s level. New product launches are yet to compensate for the drop in net sales resulting from the contraction of co-operation with Abloy.
Net sales in the Spare Parts for Motor Vehicles segment grew from MEUR 4.5 to MEUR 4.9, while the operating profit remained at MEUR 0.4. Demand for original spare parts continued to increase in comparison with the comparison year. The market in the segment has generally slowed down.
Net sales in the Heat Treatment segment declined from MEUR 4.2 to MEUR 3.9, and the MEUR 0.9 operating profit dropped to MEUR 0.6. The segment’s service functions remained at the level of the comparison year. The start-up of new technology industry projects was delayed, which had a negative effect on the net sales and the operating profit of the Swedish company in particular.
Net sales in the Carpentry Industry segment fell slightly in the review period from MEUR 3.1 to MEUR 3.0, while the operating profit remained at MEUR 0.6. The segment continued to strengthen the market position of its own brand in the selected distribution channels.
Net sales in the Supports segment increased from MEUR 1.7 to MEUR 1.9. The breakeven result from the previous year increased to operating profit of MEUR 0.1. The growth in net sales and operating profit resulted from increased demand for the segment’s products and good profit development.
Net sales in the Fasteners segment remained at the level of the comparison year, MEUR 1.4, while operating loss fell to MEUR -0.2 from the MEUR -0.1 of the comparison year. Competition in the segment intensified further on the technology industry market, and customer demand has remained low. These trends adversely affected profit in the segment.
There were no significant changes in the net sales of the Other segment. In the period under review, three associated companies issued reports: Ecosir Group Oy and PE Kiinteistörahasto I Ky as well as, as of January 2012, Spectra Yhtiöt Oy. The profit/loss of the reported associated companies in the review period was MEUR 0.4 (MEUR 0.1), which is presented on a separate row in the Group's income statement. The growth in the profit of associated companies resulted from the sale of a property by PE Kiinteistörahasto I Ky.
INVESTMENTS AND FINANCING
The Group's liquidity was good and cash flow from business operations, MEUR 5.8, was positive (MEUR -0.2). The Group’s liquid assets were MEUR 8.8 (MEUR 16.0). A total of MEUR 7.8 of the parent company's and the merged Annektor Oy's debts, including the convertible subordinated loan, was paid off on March 1, 2012. In this connection, loans in the amount of MEUR 6.3 were reorganized. The Group’s gross capital expenditure in the review period ended was MEUR 2.7 (MEUR 5.9). The Group’s equity ratio was 35.8% (33.1%) and interest-bearing net liabilities totaled MEUR 44.0 (MEUR 48.7). Of the net liabilities (MEUR 20.6), Panostaja Oyj’s convertible subordinated loan amounted to MEUR 15.0. The return on equity was -0.7% (4.3%) and the return on investment 2.2% (4.2%).
| Financial position: | |||||||
| MEUR | 30 April 2012 | 30 April 2011 | 31 October 2011 | ||||
| Interest-bearing liabilities | 57.3 | 69.0 | 66.2 | ||||
| Interest-bearing receivables | 4.5 | 4.3 | 4.4 | ||||
| Cash and cash equivalents | 8.8 | 16.0 | 14.6 | ||||
| Interest-bearing net liabilities | 44.0 | 48.7 | 47.2 | ||||
| Equity (belonging to the parent company’s shareholders as well as minority shareholders) | 45.7 | 47.8 | 47.4 | ||||
| Gearing ratio, % | 96.2 | 102.0 | 99.6 | ||||
| Equity ratio, % | 35.8 | 33.1 | 33.4 | ||||
| Return on equity, % | -0.7 | 4.3 | 5.0 | ||||
| Return on investment, % | 2.2 | 4.2 | 5.6 | ||||
The Annual General Meeting of January 31, 2012 approved the capital repayment proposal made by the Board. EUR 0.05 per share of capital repayment was paid from the invested unrestricted equity fund. The record date for the capital repayment was February 3, 2012, with the payment date being February 10, 2012. A total of MEUR 2.6 of capital was repaid to parent company shareholders.
SHARE PRICE DEVELOPMENT AND SHARE OWNERSHIP
During the six-month period, Panostaja Oyj’s share closing rate fluctuated between EUR 0.87 and EUR 1.05. In the six-month period, the exchange of shares totaled 4,908,045 shares, 9.6% of the share capital. The April share closing rate was EUR 0.88. The market value of the company's share capital at the end of April was MEUR 45.5 and the company had 3,782 shareholders (3,922).
| Development of share exchange | 2Q/2012 | 2Q/2011 | 1–2Q/2012 | 1–2Q/2011 | ||
| Shares exchanged, 1,000 pcs | 656 | 720 | 4,908 | 2,732 | ||
| % of share capital | 1.3 | 1.5 | 9.6 | 5.6 | ||
| Share | 30 April 2012 | 30 April 2011 | 31 October 2011 | ||||
| Shares in total, 1,000 pcs | 51,733 | 51,733 | 51,733 | ||||
| Own shares, 1,000 pcs | 577 | 622 | 602 | ||||
| Closing rate | 0.88 | 1.22 | 1.06 | ||||
| Market value, MEUR | 45.5 | 63.1 | 54.8 | ||||
| Shareholders | 3,782 | 3,922 | 3,826 | ||||
On December 19, 2011, Panostaja Oyj received two notifications pursuant to Chapter 2, Section 9 of the Securities Markets Act concerning changes to holding in the company.
Matti Koskenkorva’s share of Panostaja Oyj's total number of shares was below 10%. Maija Koskenkorva's share was 4,411,873 shares, 8.52% of Panostaja Oyj's share capital and number of votes. Treindex Oy's (former Koskismatti Oy) share of Panostaja Oyj's total number of shares exceeded 5%. Treindex's share was 3,400,000 shares, 6.57% of Panostaja Oyj's share capital and number of votes. Treindex Oy's shareholders are Minna Kumpu, Hanna Malo and Mikko Koskenkorva.
ADMINISTRATION AND GENERAL MEETING
Panostaja Oyj’s Annual General Meeting was held on January 31, 2012 in Tampere. Jukka Ala-Mello, Satu Eskelinen, Hannu Martikainen, Hannu Tarkkonen, Mikko Koskenkorva and Eero Eriksson were re-elected to Panostaja Oyj’s Board of Directors. In the Board’s organizing meeting held immediately after the General Meeting, Jukka Ala-Mello was elected Chairman of the Board. Hannu Tarkkonen was elected Vice Chairman. Authorised Public Accountant Markku Launis and Authorised Public Accountants PricewaterhouseCoopers Oy were selected as general chartered accountants, with Authorised Public Accountant Janne Rajalahti as the responsible public accountant.
The General Meeting approved the closing of the November 1, 2010–October 31, 2011 accounts as well as the proposal by the Board to transfer the profit of the financial period to the profit funds and that capital repayment be paid at a rate of EUR 0.05 per share. The record date for capital repayment was February 3, 2012 and the payment date February 10, 2012. In addition, the Annual Meeting authorized the Board to decide, at its discretion, on the potential distribution of assets to shareholders, the company's financial status permitting, either as dividends from profit funds or as distribution of assets from the invested unrestricted equity fund. The maximum distribution of assets performed on the basis of this authorization totals EUR 5,200,000. The authorization includes the right of the Board to decide on all other terms and conditions relating to the said asset distribution. The authorization will remain valid until the end of the next Annual General Meeting.
In addition, the Annual General Meeting granted exemption from liability to the members of the Board and to the CEO. It was decided at the Annual Meeting that the Chairman of the Board be paid EUR 40,000 as an annual compensation for the term that begins at the end of the Meeting and ends at the end of the 2013 Annual General Meeting, and that the other members of the Board be paid an annual compensation of EUR 20,000. It was further resolved at the Annual General Meeting that approximately 40% of the compensation remitted to the members of the Board be paid on the basis of the share issue authorization given to the Board, by issuing company shares to each Board member if the Board member does not own more than one percent of the company’s shares on the date of the General Meeting. If the holding of a Board member on the date of the General Meeting is over one percent of all company shares, the compensation will be paid in full in monetary form.
In addition, the Annual General Meeting resolved to cancel the authorization concerning the acquisition of the company’s own shares given at the General Meeting of January 27, 2011, and authorized the Board of Directors to decide on the acquisition of the company’s own shares so that the company’s own shares will be acquired in one or several installments and, on the basis of the authorization, a total maximum of 5,100,000 of the company’s own shares may be acquired. By virtue of the authorization, the company’s own shares may be obtained using unrestricted equity only.
The company’s own shares may be acquired at the price in public trade arranged by NASDAQ OMX Helsinki Oy on the date of acquisition or otherwise at the prevailing market price. The Board of Directors will decide how the company’s own shares are to be acquired. The company’s own shares may be acquired not following the proportion of ownership of the shareholders (directed acquisition). The authorization shall be valid until July 31, 2013.
The Board of Directors has not used the authorization granted by the Annual Meeting to acquire its own shares during the review period.
SHARE CAPITAL AND THE COMPANY’S OWN SHARES
At the close of the period under review, Panostaja Oyj’s share capital was EUR 5,568,681.60. The total number of shares is 51,733,110.
The total number of shares held by the company at the end of the review period was 577,112 individual shares (at the beginning of review period: 601,875). The number of the company's own shares corresponded to 1.1% of the number of shares and votes at the end of the entire review period.
In accordance with the decision of the General Meeting of January 27, 2011 and the Board, Panostaja Oyj relinquished a total of 12,000 individual shares as meeting compensation to the members of the Board on December 16, 2011. As per the decisions of the General Meeting of January 31, 2012 and the Board, 12,763 shares were relinquished.
EQUITY CONVERTIBLE SUBORDINATED LOANS
At the end of the review period, EUR 15,000,000 of the 2011 convertible subordinated loan remained. The interest on the loan is 6.5% and the loan period February 7, 2011–April 1, 2016. The original share exchange rate is EUR 2.20, and the loan shares may be exchanged for no more than 6,818,181 company shares. The total number of loan shares is 300, and they are available for public trade on the Nasdaq OMX Helsinki stock exchange. The share exchange rate will be entered into the company’s invested unrestricted equity fund.
The loan period for the 2006 convertible subordinated loan ended on March 1, 2012. The loan was repaid as a single installment on the end date of the loan period. A fixed 6.5% annual interest was paid for the loan. The interest was paid for the last time at the end of the loan period.
NEAR-FUTURE RISKS AND FACTORS OF UNCERTAINTY
The most significant risks of Panostaja Group have been described in the financial statements. The near-future risks the Group faces are mainly tied to the uncertainty resulting from the crisis in the eurozone and the global economic situation as well as their potential impact on achieving the goals set for the various segments. The instability of the overall economic situation may lead to a decline in customer demand as well as the postponement of major investments, particularly in segments serving the technology sector, which may result in a need for consolidated goodwill write-downs. In the current financial period, credit loss risks continue to represent a significant factor of uncertainty in some of the segments. The weakening in the liquidity of the financial markets and the potential restraints on credit issue may hamper the realization of corporate acquisitions and the availability of finance for working capital. Currently, Panostaja's financial situation is solid and the loan portfolio well-diversified, so the potential negative effect of the expansion of the Greek crisis on the financial markets does not jeopardize Panostaja's business operations.
EVENTS AFTER THE REVIEW PERIOD
Panostaja expanded its Value-added Logistics segment when, at the beginning of May, its subsidiary Vindea Group Oy acquired the entire shareholding of HSG Logistics Oy, a company supplying packaging and logistics services. In 2011, HSG Logistics Oy had net sales of MEUR 12.0 and employed 125 staff. The combined net sales in 2011 of the newly-formed company was some MEUR 27 and it employs a total of 260 people. Jouni Arolainen, Managing Director of Vindea Oy, will continue as the Managing Director of the new company and also as a major shareholder. As part of the reorganization, HSG Logistics Oy’s shareholders are also continuing as minority shareholders in the new entity. Since the reorganization, Panostaja Oyj’s shareholding in Vindea Group is about 54%.
Hannu Tarkkonen, Managing Director of Etera Mutual Pension Insurance Company, announced that he would resign from Panostaja’s Board of Directors on May 10, 2012. According to Panostaja Oyj’s Articles of Association, the company’s Board of Directors must comprise at least three (3) and no more than six (6) ordinary members, according to which the Board will continue with five (5) members.
A corporation acquisition took place in the Safety segment 29, May 2012, the Group purchased the business operations IP – Valvonta from Helsinki. The Safety segment acquired expertise, knowledge and resources to develop video monitoring systems.
PROSPECTS FOR THE REMAINDER OF THE FINANCIAL PERIOD
In accordance with its business strategy, Panostaja Group focuses on increasing shareholder value in the business areas owned by the Group. The development of shareholder value will be constantly monitored as part of a changing operating environment, and decisions on the development or divestment of business areas will be made with the maximization of shareholder value in mind. Active development of shareholder value, the effective allocation of capital and financial opportunities create a solid foundation for significant operational expansion. The need for ownership arrangements in SMEs enables both expansion into new business areas and growth in existing ones.
Economic trend expectations in the fields of existing business areas are strongly tied to the prospects of customer enterprises. The current economic trend expectations are uncertain, and the growth forecast has generally been cut due to the credit crisis in the eurozone and decelerated economic growth. In the various business areas of Panostaja Group, prospects still vary from cautiously positive to neutral. An exception to these is Takoma's prospects, as Takoma's customer demand for the post-holiday period is difficult to forecast. The market still provides sufficient opportunities for corporate acquisitions, and Panostaja Group aims to implement its growth strategy by means of controlled acquisitions. In addition, the divestment of certain business areas is being considered in order to release capital for new projects.
Panostaja will specify its result management procedures with regard to net sales. During the 2012 financial year, the Group's comparable net sales are expected to grow about 10–15% over the previous year and the Group's operating profit is expected to increase.
Previous result management: During the 2012 financial year, the Group's comparable net sales are expected to grow about 9–16% over the previous year and the Group's operating profit is expected to increase.
Panostaja Oyj
Board of Directors
For further information, contact CEO Juha Sarsama: tel. +358 (0)40 774 2099.
Panostaja Oyj
Juha Sarsama
CEO
All forecasts and assessments presented in this interim report bulletin are based on the current outlook of the Group and the Management of the various business areas with regard to the state of the economy and its development, and the results attained may be substantially different.
The information in the interim report has not been audited.
| INCOME STATEMENT | 02/12– | 02/11– | 11/11– | 11/10– | |
| 04/12 | 04/11 | 04/12 | 04/11 | 2011 | |
| (EUR 1,000) | |||||
| Net sales | 38,017 | 35,577 | 75,747 | 68,617 | 141,152 |
| Other operating income | 299 | 159 | 428 | 389 | 901 |
| Costs in total | 35,879 | 32,513 | 71,253 | 63,796 | 130,277 |
| Depreciations, amortisations and impairment | 1,305 | 1,439 | 2,574 | 2,695 | 5,041 |
| Operating profit | 1,132 | 1,784 | 2,348 | 2,515 | 6,735 |
| Financial income and costs | -630 | -717 | -1,394 | -1,255 | -2,812 |
| Share of associated company profits | 384 | 103 | 434 | 164 | 205 |
| Profit before taxes | 886 | 1,170 | 1,388 | 1,424 | 4,128 |
| Income taxes | -199 | 244 | -224 | 256 | -524 |
| Profit/loss from continuing operations | 689 | 1,414 | 1,164 | 1,680 | 3,604 |
| Profit/loss from discontinued operations | -460 | -420 | -1,316 | -706 | -1,388 |
| Profit/loss for the financial period | 229 | 994 | -152 | 974 | 2,216 |
| Attributable to | |||||
| the shareholders of the parent company | 442 | 477 | -111 | 329 | 937 |
| to the minority shareholders | -213 | 517 | -41 | 645 | 1,279 |
| Earnings per share from continuing operations | |||||
| EUR, undiluted | 0.018 | 0.020 | 0.024 | 0.021 | 0.046 |
| Earnings per share from continuing operations | |||||
| EUR, diluted | 0.018 | 0.020 | 0.024 | 0.021 | 0.046 |
| Earnings per share from discontinued operations | |||||
| EUR, undiluted | -0.009 | -0.008 | -0.026 | -0.014 | -0.027 |
| Earnings per share from discontinued | |||||
| operations EUR, diluted | -0.009 | -0.008 | -0.026 | -0.014 | -0.027 |
| Earnings per share on continuing and discontinued | |||||
| operations EUR, undiluted | 0.009 | 0.011 | -0.002 | 0.007 | 0.019 |
| Earnings per share on continuing and discontinued | |||||
| operations EUR, diluted | 0.009 | 0.011 | -0.002 | 0.007 | 0.019 |
| EXTENSIVE INCOME STATEMENT | |||||
| Items of the extensive income statement | 229 | 994 | -152 | 974 | 2,216 |
| Translation differences | 14 | 3 | 68 | 13 | -135 |
| Extensive income statement for the period | 243 | 997 | -84 | 987 | 2,081 |
| Attributable to | |||||
| the shareholders of the parent company | 456 | 520 | -34 | 342 | 802 |
| to the minority shareholders | -213 | 477 | -51 | 645 | 1,279 |
| BALANCE SHEET | 30 April 2012 | 30 April 2011 | 31 October 2011 |
| (EUR 1,000) | |||
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 35,571 | 36,561 | 36,529 |
| Other intangible assets | 5,012 | 5,138 | 5,049 |
| Property, plant and equipment | 19,367 | 21,193 | 20,061 |
| Interests in associates | 3,899 | 2,700 | 2,740 |
| Other non-current assets | 14,277 | 11,857 | 13,097 |
| Non-current assets total | 78,126 | 77,449 | 77,476 |
| Current assets | |||
| Stocks | 19,113 | 25,839 | 24,005 |
| Trade and other non-interest-bearing receivables | 22,002 | 24,968 | 26,307 |
| Cash and cash equivalents | 8,828 | 16,017 | 14,643 |
| Current assets total | 49,943 | 66,824 | 64,955 |
| Assets in total | 128,069 | 144,273 | 142,431 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company shareholders | |||
| Share capital | 5,569 | 5,569 | 5,569 |
| Share premium account | 4,646 | 4,646 | 4,646 |
| Translation difference | -101 | -44 | -169 |
| Invested unrestricted equity fund | 16,497 | 18,998 | 19,023 |
| Retained earnings | 3,930 | 4,295 | 4,047 |
| Total | 30,541 | 33,464 | 33,116 |
| Minority interest | 15,206 | 14,296 | 14,270 |
| Equity total | 45,747 | 47,760 | 47,386 |
| Liabilities | |||
| Deferred tax liabilities | 1,464 | 1,821 | 1,520 |
| Equity convertible subordinated loan | 14,347 | 19,800 | 19,895 |
| Non-current liabilities | 33,494 | 42,901 | 32,679 |
| Current liabilities | 33,017 | 31,991 | 40,951 |
| Liabilities total | 82,322 | 96,513 | 95,045 |
| Equity and liabilities in total | 128,069 | 144,273 | 142,431 |
| CASH FLOW STATEMENT | 04/2012 | 04/2011 | 2011 |
| (EUR 1,000) | |||
| Operating net cash flow | 5,796 | -179 | 4,354 |
| Investment net cash flow | -2,023 | -5,908 | -6,782 |
| Loans drawn | 7,169 | 22,102 | 19,437 |
| Loans repaid | -13,637 | -15,450 | -17,743 |
| Share issue | 0 | 6,053 | 6,053 |
| Disposal of own shares | 24 | 918 | 942 |
| Dividends paid and capital repayments | -3,169 | -2,812 | -2,853 |
| Financing net cash flow | -9,613 | 10,811 | 5,836 |
| Change in cash flows | -5,840 | 4,724 | 3,408 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| (EUR 1,000) | Share capital | Share premium reserve | Invested unrestricted equity fund | Translation differences | Profit funds | Minority interest | Total |
| Equity | 5,529 | 4,646 | 11,574 | -57 | 6,497 | 13,923 | 42,112 |
| 1 November 2010 | |||||||
| Profit for the financial period | 328 | 646 | 974 | ||||
| Profit and costs recorded during the financial period, total | 328 | 646 | 974 | ||||
| Dividends paid | -2,555 | -265 | -2,820 | ||||
| Share subscription | 40 | 276 | 316 | ||||
| Share issue | 5,738 | 5,738 | |||||
| Disposal of own shares | 918 | 918 | |||||
| Equity component of convertible subordinated loan | 481 | 481 | |||||
| Reward system | 11 | 11 | |||||
| Translation differences | 13 | 13 | |||||
| Changes in minority interest | 25 | -8 | 17 | ||||
| Other changes in equity, total | 40 | 7,424 | 13 | -2,530 | -273 | 4,674 | |
| Equity | 5,569 | 4,646 | 18,998 | -44 | 4,295 | 14,296 | 47,760 |
| 30 April 2011 | |||||||
| Equity | 5,569 | 4,646 | 19,023 | -169 | 4,047 | 14,270 | 47,386 |
| 1 November 2011 | |||||||
| Profit for the financial period | -111 | -41 | -152 | ||||
| Profit and costs recorded during the financial period, total | -111 | -41 | -152 | ||||
| Dividends paid | -619 | -619 | |||||
| Repayment of capital | -2,557 | -2,557 | |||||
| Disposal of own shares | 25 | 25 | |||||
| Reward system | 6 | 6 | |||||
| Translation differences | 68 | -6 | 62 | ||||
| Changes in minority interest | 1,596 | 1,596 | |||||
| Other changes in equity, total | -2,526 | 68 | -6 | 977 | -1,487 | ||
| Equity | 5,569 | 4,646 | 16,497 | -101 | 3,930 | 15,206 | 45,747 |
| 30 April 2012 |
| KEY FIGURES | |||
| 04/2012 | 04/2011 | 10/2011 | |
| Equity per share, EUR | 0.60 | 0.65 | 0.65 |
| Earnings per share, diluted, EUR | -0.00 | 0.01 | 0.02 |
| Earnings per share, undiluted, EUR | -0.00 | 0.01 | 0.02 |
| Average number of shares during financial period, 1,000 | 51,144 | 49,118 | 50,128 |
| Number of shares at end of financial period, 1,000 | 51,733 | 51,733 | 51,733 |
| Share issues/CL exchanges during financial period, 1,000 | 0 | 4,330 | 4,330 |
| Number of shares, 1,000, diluted | 57,962 | 59,248 | 60,258 |
| Return on equity, % | -0.7 | 4.3 | 5.0 |
| Return on investment, % | 2.2 | 4.2 | 5.6 |
| Gross capital expenditure | |||
| To permanent assets, MEUR | 2.7 | 5.9 | 9.1 |
| % of net sales | 3.6 | 8.6 | 6.4 |
| Interest-bearing liabilities | 57.3 | 69.0 | 66.2 |
| Equity ratio, % | 35.8 | 33.1 | 33.4 |
| Average number of employees | 1,083 | 1,006 | 1,034 |
GROUP DEVELOPMENT BY QUARTER
| (MEUR) | Q2/12 | Q1/12 | Q4/11 | Q3/11 | Q2/11 | Q1/11 | Q4/10 |
| Net sales | 38.0 | 37.7 | 38.6 | 33.9 | 35.6 | 33.1 | 34.1 |
| Other operating income | 0.3 | 0.1 | 0.3 | 0.1 | 0.3 | 0.2 | 1.6 |
| Costs in total | -35.9 | -35.3 | -36.1 | -30.3 | -32.7 | -31.3 | -32.3 |
| Depreciations, amortisations and impairment | -1.3 | -1.3 | -0.8 | -1.5 | -1.4 | -1.3 | -1.5 |
| Operating profit/loss | 1.1 | 1.2 | 2.0 | 2.2 | 1.8 | 0.7 | 1.9 |
| Financing items | -0.6 | -0.7 | -0.7 | -0.8 | -0.7 | -0.5 | -0.6 |
| Share of associated company profits | 0.4 | 0.0 | 0.1 | -0.1 | 0.1 | 0.1 | 0.0 |
| Profit before taxes | 0.9 | 0.5 | 1.4 | 1.3 | 1.1 | 0.3 | 1.3 |
| Taxes | -0.4 | 0.0 | -0.1 | -0.6 | 0.2 | 0.0 | 0.1 |
| Profit from continuing operations | 0.5 | 0.5 | 1.2 | 0.7 | 1.4 | 0.3 | 1.4 |
| Profit from discontinued operations | -0.3 | -0.8 | -0.5 | -0.1 | -0.4 | -0.3 | -2.0 |
| Profit for the financial period | 0.2 | -0.4 | 0.7 | 0.6 | 1.0 | 0.0 | -0.6 |
| Minority interest | -0.2 | 0.2 | 0.3 | 0.3 | 0.5 | 0.1 | 0.4 |
| Parent company shareholder interest | 0.4 | -0.6 | 0.4 | 0.3 | 0.5 | -0.1 | -1.0 |
GUARANTEES GIVEN
| (EUR 1,000) | 04/2012 | 04/2011 | 2011 |
| Guarantees given on behalf of Group companies | |||
| Enterprise mortgages | 40,321 | 40,720 | 41,394 |
| Pledges given | 50,746 | 59,225 | 59,019 |
| Other liabilities | 1,691 | 680 | 1,549 |
| Other rental agreements | |||
| In one year | 7,121 | 5,450 | 7,160 |
| In over one year but within five years maximum | 17,570 | 13,623 | 17,543 |
| In over five years | 3,695 | 4,115 | 3,162 |
| Total | 28,386 | 23,188 | 27,865 |
SEGMENT INFORMATION
| NET SALES | 02/12–04/12 | 02/11–04/11 | 11/11–04/12 | 11/10–04/11 |
| (EUR 1,000) | ||||
| Digital Printing Services | 8,879 | 8,170 | 17,203 | 15,183 |
| Takoma | 7,478 | 7,207 | 15,177 | 13,801 |
| Safety | 7,326 | 6,021 | 14,652 | 11,804 |
| Value-added Logistics | 4,105 | 3,789 | 8,545 | 7,544 |
| Fittings | 2,723 | 2,996 | 5,437 | 5,737 |
| Spare Parts for Motor Vehicles | 2,467 | 2,240 | 4,915 | 4,454 |
| Heat Treatment | 1,925 | 2,156 | 3,878 | 4,163 |
| Carpentry Industry | 1,584 | 1,525 | 2,996 | 3,114 |
| Supports | 960 | 885 | 1,907 | 1,722 |
| Fasteners | 735 | 764 | 1,414 | 1,466 |
| Other | 16 | 14 | 32 | 29 |
| Eliminations | -181 | -190 | -407 | -400 |
| Group in total | 38,017 | 35,577 | 75,749 | 68,617 |
| OPERATING PROFIT | ||||
| (EUR 1,000) | ||||
| Digital Printing Services | 1,442 | 1,149 | 2,597 | 1,737 |
| Takoma | -1,044 | -105 | -1,582 | -351 |
| Safety | 352 | 444 | 633 | 602 |
| Value-added Logistics | 119 | -23 | 278 | -107 |
| Fittings | 164 | 221 | 270 | 284 |
| Spare Parts for Motor Vehicles | 192 | 191 | 371 | 394 |
| Heat Treatment | 223 | 418 | 636 | 902 |
| Carpentry Industry | 373 | 317 | 569 | 629 |
| Supports | 2 | 53 | 133 | -3 |
| Fasteners | -93 | -6 | -161 | -38 |
| Other | -598 | -875 | -1,396 | -1,534 |
| Group in total | 1,132 | 1,784 | 2,348 | 2,515 |
|
SEGMENT INFORMATION BY QUARTER
|
|||||||
| Net sales (MEUR) | 2Q/12 | 1Q/12 | 4Q/11 | 3Q/11 | 2Q/11 | 1Q/11 | 4Q/10 |
| Digital Printing Services | 8.9 | 8.3 | 8.5 | 7.8 | 8.2 | 7.0 | 6.7 |
| Takoma | 7.5 | 7.7 | 7.4 | 6.3 | 7.2 | 6.6 | 6.8 |
| Safety | 7.3 | 7.3 | 7.0 | 5.8 | 6.0 | 5.8 | 6.3 |
| Value-added Logistics | 4.1 | 4.4 | 4.0 | 3.9 | 3.8 | 3.8 | 3.8 |
| Fittings | 2.7 | 2.7 | 3.0 | 2.7 | 3.0 | 2.7 | 3.1 |
| Spare Parts for Motor Vehicles | 2.5 | 2.4 | 2.8 | 2.4 | 2.2 | 2.2 | 2.4 |
| Heat Treatment | 1.9 | 2.0 | 2.7 | 2.2 | 2.2 | 2.0 | 2.0 |
| Carpentry Industry | 1.6 | 1.4 | 1.3 | 1.3 | 1.5 | 1.6 | 1.3 |
| Supports | 1.0 | 0.9 | 1.2 | 1.0 | 0.9 | 0.8 | 1.1 |
| Fasteners | 0.7 | 0.7 | 0.8 | 0.8 | 0.8 | 0.7 | 0.8 |
| Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
| Eliminations | -0.2 | -0.1 | -0.1 | -0.3 | -0.2 | -0.1 | -0.3 |
| Group in total | 38.0 | 37.7 | 38.6 | 33.9 | 35.6 | 33.1 | 34.1 |
| Operating profit (MEUR) | 2Q/12 | 1Q/12 | 4Q/11 | 3Q/11 | 2Q/11 | 1Q/11 | 4Q/10 |
| Digital Printing Services | 1.4 | 1.1 | 1.3 | 1.1 | 1.1 | 0.6 | 1.0 |
| Takoma | -1.0 | -0.5 | -0.6 | -0.4 | -0.1 | -0.2 | -0.6 |
| Safety | 0.4 | 0.3 | 0.3 | 0.4 | 0.4 | 0.1 | 1.2 |
| Value-added Logistics | 0.1 | 0.1 | 0.3 | 0.2 | 0.0 | -0.1 | 0.0 |
| Fittings | 0.2 | 0.1 | 0.0 | 0.0 | 0.2 | 0.1 | 0.2 |
| Spare Parts for Motor Vehicles | 0.2 | 0.2 | 0.4 | 0.3 | 0.2 | 0.2 | 0.3 |
| Heat Treatment | 0.2 | 0.4 | 0.7 | 0.5 | 0.4 | 0.5 | 0.1 |
| Carpentry Industry | 0.4 | 0.2 | 0.1 | 0.3 | 0.3 | 0.3 | -0.1 |
| Supports | 0.0 | 0.1 | 0.2 | 0.2 | 0.1 | -0.1 | 0.1 |
| Fasteners | -0.1 | -0.1 | -0.1 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other | -0.6 | -0.7 | -0.6 | -0.4 | -0.9 | -0.7 | -0.3 |
| Group in total | 1.1 | 1.2 | 2.0 | 2.2 | 1.8 | 0.7 | 1.9 |
Panostaja is an investment company developing Finnish SMEs in the role of an active majority shareholder. The company aims to be the most sought-after partner for business owners selling their companies as well as for the best managers and investors. Together with its partners, Panostaja increases the Group's shareholder value and creates Finnish success stories.
Panostaja Oyj currently operates in ten business areas. Flexim Security Oy (Safety) is a specialist in security technology and services, locking, door automation and access control products and solutions. Heatmasters Group (Heat Treatment) offers thermal treatment services for metals in Finland and internationally, and produces, develops and markets heat treatment technology. KL-Varaosat (Spare Parts for Motor Vehicles) is an importer, wholesale dealer and retailer of original spare parts and supplies for Mercedes Benz and BMW cars. Kopijyvä Oy (Digital Printing Services) is one of Finland’s largest companies offering digital printing services. Suomen Helakeskus Oy (Fittings) is a major wholesale dealer concentrating on construction and furniture fittings. Suomen Kiinnikekeskus Oy (Fasteners) is a supply shop in the fastener field. Matti-Ovi Oy (Carpentry Industry) manufactures and markets, as its main product, solid wood interior doors. Takoma Oyj (Takoma) is a machine shop group with an entrepreneur-driven business model and is registered on the stock exchange. Toimex Oy (Supports) works in the HEPAC field, manufacturing and selling supports. Vindea Oy (Value-added Logistics) is an enterprise specialized in value-added logistics services for the Finnish metal industry.