Evox Rifa Group Oyj Stock Exchange Release on 6 August 2007 * Net sales of the first half of 2007 were EUR 46.5 million (EUR 43.9 million in 2006). Net sales increased by 5.9 % compared to the previous year. * Operating profit was EUR 0.1 million (EUR 0.2 million). Operating profit includes EUR 1.5 million of costs related to the public tender offer made by KEMET Electronics Corporation ("KEMET")for Evox Rifa Group Oyj's shares and to the organization restructuring that followed (restructuring costs in the corresponding period in 2006 were EUR 0.6 million and profits of the sale of real estate were EUR 1.2 million). * Loss before taxes was EUR 0.9 million (loss EUR 1.0 million). * Loss per share was EUR -0.009 (EUR -0.008). * Order backlog on 30 June 2007 was EUR 20 million (EUR 23.5 million). ECONOMIC DEVELOPMENT Net Sales Net sales of the Group totalled EUR 46.5 million (EUR 43.9 million in 2006). In the first half of 2007, demand remained at a satisfactory level, but price competition was challenging in all market areas. Profit Operating profit of the Group was EUR 0.1 million (EUR 0.2 million) and loss before taxes was EUR 0.9 million (loss EUR 1.0 million). The operating profit was reduced by a EUR 0.4 million customer reclamation payment. The operating profit also includes EUR 1.5 million of costs related to the public tender offer made by KEMET for Evox Rifa Group Oyj's shares and to the organization restructuring that followed. In the corresponding period last year, the costs related to restructuring were EUR 0.6 million and profits of the sale of real estate were EUR 1.2 million. Loss per share were EUR -0.009 (EUR -0.008) and shareholders' equity per share was EUR 0.025 (EUR 0.032). Order backlog The order backlog of the Group was EUR 20 million at the end of June 2007 (EUR 23.5 million at the end of the corresponding period in 2006). FINANCIAL STATUS AND CAPITAL EXPENDITURE Liquid assets of the Group were EUR 3.1 million (EUR 0.8 million) and the equity ratio was 9.2% (11.5%) at the end of June. If the convertible capital loan is counted as shareholders' equity, the equity ratio was 19.9% (21.5%). During the second quarter, long-term bank loans of EUR 4.5 million and short- term credit lines of EUR 4.2 million were paid back. The repayments of borrowings and the need for working capital were financed by taking loans of total EUR 13.2 million from the immediate parent company, KEMET Electronics Corporation. Gross capital expenditure was EUR 0.9 million (EUR 0.4 million). SHARES AND SHARE CAPITAL The number of shares of Evox Rifa Group Oyj was 178 156 018 on 30 June 2007 and the share capital was EUR 8 908 400,90. Evox Rifa is a subsidiary of KEMET Electronics, a US corporation. REDEMPTION OF EVOX RIFA'S MINORITY SHARES On 9 March 2007 KEMET Electronics Corporation announced a voluntary public tender offer for all shares and convertible capital loan notes in Evox Rifa Group Oyj. The acceptance period under the tender offer expired on 12 April 2007. KEMET has, pursuant to the tender offer, acquired title to more than nine-tenths of all the shares and votes in Evox Rifa. Accordingly, KEMET has a right to redeem all the minority shares in Evox Rifa in accordance with Chapter 18, Section 1 of the Companies Act. KEMET owns 92.7% of Evox Rifa Group Oyj's shares and 95.7% of the convertible capital loan notes. KEMET has in its application dated 25 April 2007, requested the Redemption Committee of the Central Chamber of Commerce to appoint an Arbitral Tribunal and to commence arbitral proceedings in the redemption matter. The redemption right has been entered into the Trade Register on 2 May 2007. The District Court of Helsinki has with its decision dated 23 May 2007 ordered Rabbe Nevalainen, Chartered Accountant, to act as trustee in the matter. The order has been entered into the Trade Register on 5 June 2007. Olli Iirola, attorney-at-law, was appointed arbitrator in the meeting of the Redemption Committee of the Central Chamber of Commerce held on 27 June 2007. An arbitral award in the matter is expected to be rendered in the course of the autumn of 2007. THE CONVERTIBLE CAPITAL LOAN The Board of Directors of Evox Rifa Group Oyj resolved on 5 June 2007, in accordance with the terms and conditions of the convertible capital loan issued by the Company on 28 February 2005, to change the conversion period for the loan notes issued under the convertible capital loan so as to expire on 30 June 2007. By the expiry of the conversion period, loan note holders, who in the aggregate hold 2 019 loan notes with a nominal value of EUR 100 each, have notified Evox Rifa of their decision to convert the loan notes into shares in accordance with the terms and conditions of the convertible capital loan. Pursuant to the conversion notices the Board of Directors of Evox Rifa has on 5 July 2007, resolved to approve the subscription of 1 514 250 new shares by virtue of the loan notes at a conversion rate of EUR 0.1333 per share. As a result of the share subscriptions the share capital of Evox Rifa has been increased by EUR 75 712.50. After the increase the share capital of Evox Rifa amounts to EUR 8 984 113.40 and the total amount of issued shares is 179 670 268 shares. The increase in the share capital was entered into the Trade Register on 17 July 2007, and the new shares were admitted to public trading together with the Company's existing shares on 18 July 2007. As the conversion period for the convertible capital loan notes has expired, the initially recognized amounts from loan amount to equity and deferred tax liabilities under the IFRS have been reversed, therefore an amount of EUR 201 900 equaling the above described note conversions remains in retained earnings. Accordingly the loan amount, EUR 5 386 900, in the balance sheet is equal to the amount of outstanding loan notes. PERSONNEL The average number of personnel in Evox Rifa Group was 1346 during the first half of 2007 (1360 in the same period in 2006). BUSINESS DEVELOPMENT Net sales of the electrolytic capacitors product group were EUR 26.3 million in the first half of 2007 (EUR 23.6 million in 2006). Profitability of the product group continued at a good level. Net sales of the film capacitors product group were EUR 20.2 million (EUR 20.3 million in 2006). Profitability of the product group was still at an unsatisfactory level. MATERIAL RISKS AND UNCERTAINTIES IN THE NEAR FUTURE The capacitor industry market has become increasingly global, which has eliminated geographical market differences. A visible impact of this has been the harmonization of prices and logistics requirements. Major customers tend to concentrate their purchases with fewer suppliers, keeping just one or two suppliers instead of three or four. Half a dozen global suppliers dominate competition in certain product areas. Evox Rifa Group's customers compete in areas in which technologies change rapidly and products have a short life cycle. Product development is exceptionally fast in the telecommunications market, as new technologies weaken the competitiveness of existing technologies or render them obsolete. The Group continuously evaluates benefits and profitability of new production processes and technologies. Evox Rifa Group has received product reclamations that are still being processed. The Group's management believes that the provisions contained in the consolidated balance sheet are sufficient to cover potential currently known compensation risks. OUTLOOK FOR THE YEAR 2007 KEMET Electronics Corporation, the majority owner of Evox Rifa Group Oyj, has announced its intention to integrate the business of Evox Rifa Group into KEMET's global organization of business units and sales region units. The planning and implementation of such activites are ongoing. During the course of completing the compulsory redemption proceedings under the Companies Act, the company's shares will be delisted from the Helsinki Stock Exchange. This Financial Report is in compliance with the requirements of IAS 34 as adopted by the EU. The figures in this Financial Report are unaudited. In Espoo on 6 August 2007 EVOX RIFA GROUP OYJ Board of Directors For further information please contact: Evox Rifa Group Oyj, Juhani Pöhö, Chief Financial Officer, tel. +358 9 5406 5011 DISTRIBUTION: Helsinki Stock Exchange, Main Media INCOME STATEMENT OF EVOX RIFA GROUP 1.4.- 1.4.- 1.1.- 1.1.- 1.1.- 30.6.07 30.6.06 30.6.07 30.6.06 31.12.06 1000 EUR 1000 EUR 1000 EUR 1000 EUR 1000 EUR NET SALES 22 884 22 301 46 462 43 936 89 787 Operating expenses -22 292 -20 930 -45 046 -42 414 -85 220 Depreciation and amortisation -659 -699 -1 332 -1 356 -2 702 expenses OPERATING PROFIT (LOSS) -67 672 84 166 1 865 Financial income and expenses -610 -675 -988 -1 177 -2 090 LOSS BEFORE TAXES -677 -3 -904 -1 011 -225 Income Taxes -286 -253 -672 -416 -716 NET LOSS FOR THE PERIOD -963 -256 -1 576 -1 427 -941 Attributable to: Shareholders of -980 -264 -1 605 -1 416 -948 the parent 17 8 29 -11 7 Minority -963 -256 -1 576 -1 427 -941 interest Loss per share (EUR) -0.006 -0.001 -0.009 -0.008 -0.005 Loss per share (EUR),diluted -0.006 -0.001 -0.009 -0.008 -0.005 BALANCE SHEET OF EVOX RIFA GROUP 30.6.07 30.6.06 31.12.06 ASSETS 1000 EUR 1000 EUR 1000 EUR NON-CURRENT ASSETS Property, plant and equipment 11 967 13 461 12 821 Intangible assets 1 403 1 266 1 266 Other receivables 247 332 285 CURRENT ASSETS Inventories 16 488 16 368 16 615 Trade and other receivables 17 024 18 289 17 109 Cash and cash equivalents 3 092 831 1 313 TOTAL ASSETS 50 221 50 547 49 409 EQUITY AND LIABILITIES Share capital 8 909 8 905 8 909 Other restricted equity 2 611 2 612 2 611 Retained earnings -7 085 -5 844 -5 276 Minority interest 162 116 133 TOTAL EQUITY 4 597 5 789 6 377 LIABILITIES Deferred tax liabilities 390 709 515 Convertible capital loan 5 386 5 073 5 125 Pension obligations 1 729 2 269 1 904 Non-current liabilities 3 629 8 775 7 557 Current liabilities 34 490 27 932 27 931 TOTAL EQUITY AND LIABILITIES 50 221 50 547 49 409 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 1.1. - 30.6.2007 Share Other Transl. Retained Minority Total capital reserves difference earnings interest Shareholders' equity on 31.12.2006 8 909 2 611 -1 589 -3 687 133 6 377 Movements: Translation -112 difference -112 Loss/profit for the period -1 605 29 -1 576 Capital loan reversal -92 -92 Shareholders' equity on 30.6.2007 8 909 2 611 -1 701 -5 384 162 4 597 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 1.1. - 30.6.2006 Share Other Transl. Retained Minority Total capital reserves difference earnings interest Shareholders' equity on 31.12.2005 8 861 2 603 -1 481 -2 739 142 7 386 Movements: Used option rights 44 9 53 Translation difference -208 -15 -223 Loss for the period -1 416 -11 -1 427 Shareholders' equity on 30.6.2006 8 905 2 612 -1 689 -4 155 116 5 789 EVOX RIFA GROUP CASH FLOW STATEMENT 1.1.- 1.1.- 1.1.- 30.6.07 30.6.06 31.12.06 1000 EUR 1000 EUR 1000 EUR Net cash flow from operating activities -611 -4 117 -1 765 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment* -618 -159 -738 Acquisition of intangible assets -145 -10 -16 Proceeds from sale of property, plant and equipment 51 5 927 5 952 Net cash from investing activities -712 5 758 5 198 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 13 695 458 658 Repayment of borrowings -5 599 -3 470 -5 169 Payment of finance lease liabilities -65 -77 -141 Proceeds from the issue of shares 53 56 Net cash from financing activities 8 031 -3 036 -4 595 Net change in cash and cash equivalents 6 708 -1 395 -1 163 Cash and cash equivalents at the beginning of the period -5 183 -3 883 -3 883 Translation difference 164 17 137 Cash and cash equivalents at the end of the period 1 689 -5 295 -5 183 Cash and cash equivalents: Cash in bank and in hand 3 092 831 1 313 Bank overdrafts -1 403 -6 126 -6 496 Total 1 689 -5 295 -5 183 * New investment grant of 151 thousand euros has been deducted (Q2/2006 and in 2006 260 thousand euros). The figures in the Group cash flow statement cannot be directly traced from the balance sheet due to translation differences and elimination of non-cash items. EVOX RIFA GROUP KEY FIGURES 30.6.07 30.6.06 31.12.06 Return on equity %, ROE -57.4 % -43.3 % -13.7 % Return on investment %, ROI 0.6 % 1.0 % 5.6 % Equity ratio % 9.2 % 11.5 % 12.9 % Equity ratio %*) 19.9 % 21.5 % 23.3 % Gross investments in fixed assets, TEUR 914 429 1 021 % of net sales 2.0 % 1.0 % 1.1 % Loss per share (EUR) -0.009 -0.008 -0.005 Equity of parent shareholders/ share (EUR) 0.025 0.032 0.036 Order backlog, (MEUR) 20.0 23.5 23.2 Average number of personnel 1 346 1 360 1 391 *) The convertible capital loan is included in the shareholders' equity. NOTES TO THE INTERIM REPORT 1. Basis of preparation The interim report has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU. The interim report should be read in conjunction with the annual financial statements for the year ended 31 December 2006. 2. Accounting policies The accounting policies adopted are consistent with those of the Group's annual financial statements for the year ended 31 December 2006, except for changes listed below. The following new standards, amendments to standards and interpretations have been adopted as of 1 January 2007: IFRS 7 Financial Instruments: Disclosures (effective from 1 January 2007). IFRS 7 requires disclosures about the significance of financial instruments for an entity's financial position and performance as well as qualitative and quantitative disclosures on the nature and extent of risks. The new standard will increase the disclosure requirements, the main additional disclosures will be the sensitivity analyses. Amendment to IAS 1 Presentation of Financial Statements: Capital Disclosures (effective from 1 January 2007). This is a complementary amendment due to issuance of IFRS 7 and introduces new disclosures about the level of an entity's capital and how it manages capital. IFRIC 9 Reassessment of Embedded Derivatives (effective for annual periods beginning on or after 1 June 2006). The interpretation requires that a reassessment of whether embedded derivative should be separated from the underlying host contract should be made only when there are changes to the contract. Evox Rifa does not expect the adoption of IFRIC 9 will have a material impact on the Group's financial statements. IFRIC 10 Interim Financial Reporting and Impairment (effective for annual periods beginning on or after 1 November, 2006). IFRIC 10 prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equity instrument or a financial asset carried at cost. The interpretation is not expected to have any impact on the Group's accounts. IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2009). IFRS 8 replaces IAS 14 Segment Reporting. It adopts a management approach to segment reporting. The information reported would be that which is used internally by management for evaluating the performance of operating segments and allocating resources. Also additional disclosures are required. The Group is currently assessing the impact of IFRS 8. These newly adopted standards and interpretations have not had any effect on the income statement, balance sheet or disclosures in this interim report. IFRIC 8 Scope of IFRS 2 is not relevant to the Group's operations. IFRIC 11 IFRS 2 - Group and Treasury Share Transactions and IFRIC 12 Service Concession Arrangements are not relevant to the Group's operations. 3. Critical accounting estimates and judgements The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses. Annual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial statements as at and for the year ended 31 December 2006. 4. Business segment information Capacitors Others Total II/07 II/06 II/07 II/06 II/07 II/06 Net 22 884 22 301 0 0 22 884 22 301 sales Operating 919 840 -986 -168 -67 672 result Capacitors Others Total I+II/07 I+II/06 I+II/07 I+II/06 I+II/07 I+II/06 Net 46 462 43 936 0 0 46 462 43 936 sales Operating 1 912 -244 -1 828 410 84 166 result 5. Financial risk management The Group has not made any significant changes in policies regarding risk management during the period. Aspects of the Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2006. 6. Acquisitions and disposals No acquisitions or disposals have been made during 2007. 7. Commitments and contingencies There are no essential changes in the Group's commitments and contingencies after the end of 2006.
EVOX RIFA GROUP INTERIM REPORT 1 JANUARY - 30 JUNE 2007
| Source: Evox Rifa Group