PKC Group Oyj INTERIM REPORT 4 August 2011 8.15 a.m.
PKC GROUP’S INTERIM REPORT 1-6/2011
- Consolidated net sales grew 45.4% on the comparison period (1-6/2010), totalling EUR 206.2 million (EUR 141.8 million).
- Consolidated operating profit was EUR 16.7 million (EUR 10.4 million) i.e. 8.1% (7.3%) of net sales. Comparable operating profit without non-recurring items was EUR 18.9 million (EUR 11.0 million), 9.2% (7.8%) of net sales.
- Profit for the report period amounted to EUR 13.9 million (EUR 4.4 million).
- Diluted earnings per share were EUR 0.69 (EUR 0.25).
- Cash flows after investments were EUR 9.1 million negative (EUR 3.2 million negative).
- Gearing was 14.8% (42.1%).
- Equity ratio was 54.3% (47.7%)
- Net liabilities were EUR 18.7 million (EUR 37.1 million).
- PKC Group announced on 28 February 2011 that it had signed an agreement for the purchase of shares in the Segu companies. The requirements of closing have been fulfilled and the closing became effective on April 30, 2011.
|
KEY FIGURES |
1-6/11 |
1-6/10 |
1-12/10 |
| Net sales, EUR 1,000 | 206,193 | 141,839 | 316,081 |
| Operating profit, EUR 1,000 | 16,745 | 10,415 | 29,689 |
| % of net sales | 8.1 | 7.3 | 9.4 |
| Profit for the report period, EUR 1,000 | 13,854 | 4,438 | 19,683 |
| Earnings per share (EPS), EUR | 0.69 | 0.25 | 1.09 |
| ROI,% | 27.7 | 23.8 | 25.8 |
| Net liabilities, EUR 1,000 | 18,727 | 37,085 | -2,068 |
| Gearing, % | 14.8 | 42.1 | -1.7 |
| Average number of personnel | 6,513 | 4,568 | 5,039 |
HARRI SUUTARI, PRESIDENT AND CEO:
”The manufacture of commercial vehicles, tractors and industrial equipment continued to grow in our key market areas in Europe and Brazil. The production of recreation vehicles also continued to grow in Europe and North America. PKC’s Wiring Harnesses business continued to grow, by about 15% over the previous quarter. Our customers' volume of orders received during the second quarter for trucks remained at the same level as deliveries. The profitability of the Wiring Harnesses business fell in comparison with the previous quarter as a result of an increase in material and manufacturing costs and a drop in some product sales prices. Production transfers to lower cost factories will be continued according to plan.
Deliveries in the Electronics business remained at the level of the previous quarter. Deliveries from Electronics Manufacturing Services (EMS) continued to grow, but deliveries from Original Design Manufacturing (ODM) fell during the first half of the year. As a result of weakened profitability, special measures to improve profitability will be targeted at the Electronics business.
In line with our strategy, our aim is not only organic growth but also through acquisitions.”
OPERATING ENVIRONMENT
Wiring Harness business
European heavy-duty trucks’ markets strengthened during the report period. During the first half of the year, the registrations of heavy-duty trucks increased in Europe (the EU countries, Switzerland and Norway) by 56% over the comparison period. All in all, about 120,000 heavy trucks were registered during the first half of the year. During the second quarter, a total of almost 62,000 new heavy-duty trucks were registered. During the second quarter, the number of vehicle orders received by our customers was at about the same level as the number of vehicles delivered to their customers. Deliveries for the full year are forecast to increase to 230,000 – 250,000 vehicles.
In Brazil during the first half of the year, our key customers’ heavy truck deliveries increased by 20% over the comparison period. The vehicle orders received by our customers were 16% less than volume of customer deliveries during the second quarter, which indicates a turn in growth. The changes in emissions regulations scheduled to enter into force at the end of this year are expected to increase production towards the end of the year. In 2010, about 110,000 heavy-duty trucks were registered in Brazil. The industry expects registrations over the full year to increase by about 10% over the previous year.
Deliveries for heavy-duty trucks in North America increased during the first half of the year by approximately 45% compared to the comparison period totalling approximately 93,000 vehicles. Truck manufacturers combined orderbook was about 125,000 heavy duty trucks at the end of June. Deliveries for the full year are forecast to be 180,000–250,000 vehicles.
PKC’s delivery volumes for recreation vehicle wiring harnesses increased in the first half of the year in North America by 30% over the corresponding period the previous year.
Sales of agricultural tractors in Europe increased during the first half of the year by 14% over the comparison period the previous year. Full year sales are forecast to grow by 15%.
Sales of construction equipment increased during the first half of the year by 44% in Europe and by 28% in South America over the comparison period the previous year. Full year sales are forecast to grow by 15-25% in Europe and by 10-20% in South America.
Production volumes of forestry equipment in Europe increased during the first half of the year by 40% over the comparison period the previous year.
Although PKC Group does not have its own wiring harness production in Asia, growing export to Asia by our customers is supporting the growth of PKC’s production volumes.
Electronics business
Demand for electronic subcontracting services remained at the level of the previous quarter in PKC's key markets. The availability of electronic components improved.
Deliveries by PKC’s Electronics business increased over the comparison period, but failed to reach the level of the previous quarter on account of the postponement of certain customer projects.
NET SALES AND FINANCIAL PERFORMANCE
April-June 2011
Consolidated net sales from April-June amounted to EUR 109.3 million (EUR 81.0 million), up 34.9% on the same period a year earlier. Consolidated operating profit totalled EUR 7.1 million (EUR 7.6 million), accounting for 6.5% of net sales (9.4%). During the report period were reported EUR 1.8 million in non-recurring items. During the comparison period no non-recurring items were reported. Depreciation amounted to EUR 3.2 million (EUR 2.7 million). Financial items were EUR 0.6 million (EUR 2.9 million negative). Financial items contain exchange rate profit totalling EUR 0.9 million net. Profit before taxes was EUR 7.7 million (EUR 4.7 million). Profit for the report period totalled EUR 6.3 million (EUR 4.2 million). Diluted earnings per share were EUR 0.31 (EUR 0.24).
Net sales generated by the Wiring Harness business in the report period amounted to EUR 90.2 million (EUR 64.1 million), or 40.7% more than in the comparison period. The segment’s share of the consolidated net sales was 82.5% (79.1%). Wiring Harness business generated an operating profit of EUR 9.6 million (EUR 7.0 million), equivalent to 10.6% of the segment’s net sales (10.9%). During the report period were reported EUR 0.1 million in non-recurring items. During the comparison period no non-recurring items were reported. The improvement of operating profit is due to increased delivery volumes and efficient cost base.
Net sales generated by the Electronics business increased by 13.0% to EUR 19.1 million (EUR 16.9 million). The segment’s share of the consolidated net sales was 17.5% (20.9%). Electronics business generated an operating profit of EUR 0.4 million (EUR 1.1 million), equivalent to 2.1% of the segment’s net sales (6.5%). During the report period were reported EUR 0.2 million in non-recurring expenses. During the comparison period no non-recurring items were recorded. The decline of operating profit is due to postponement of some customer projects and costs related to production transfers.
January-June 2011
Consolidated net sales from January-June amounted to EUR 206.2 million (EUR 141.8 million), up 45.4% on the same period a year earlier. Consolidated operating profit totalled EUR 16.7 million (EUR 10.4 million), accounting for 8.1% of net sales (7.3%). During the report period were reported EUR 2.2 million (EUR 0.6 million) in non-recurring items. Depreciation amounted to EUR 6.1 million (EUR 5.5 million). Financial items were EUR 0.3 million (EUR 5.4 million negative). Financial items contain exchange rate profit totalling EUR 1.1 million net. Profit before taxes was EUR 17.1 million (EUR 5.0 million). Profit for the report period totalled EUR 13.9 million (EUR 4.4 million). Diluted earnings per share were EUR 0.69 (EUR 0.25).
Net sales generated by the Wiring Harness business in the report period amounted to EUR 168.3 million (EUR 109.8 million), or 53.3% more than in the comparison period. The segment’s share of the consolidated net sales was 81.6% (77.4%). Wiring Harness business generated an operating profit of EUR 19.7 million (EUR 9.0 million), equivalent to 11.7% of the segment’s net sales (8.2%). During the report period were reported EUR 0.1 million (EUR 0.6 million) in non-recurring items. The improvement of operating profit is due to increased delivery volumes and efficient cost base.
Net sales generated by the Electronics business increased by 18.2% to EUR 37.9 million (EUR 32.0 million). The segment’s share of the consolidated net sales was 18.4% (22.6%). Electronics business generated an operating profit of EUR 0.8 million (EUR 2.4 million), equivalent to 2.2% of the segment’s net sales (7.5%). During the report period were reported EUR 0.2 million in non-recurring expenses. During the comparison period no non-recurring items were recorded. The decline of operating profit is due to postponement of some customer projects and costs related to production transfers.
FINANCIAL POSITION AND CASH FLOW
Consolidated total assets at 30 June 2011 amounted to EUR 233.7 million (EUR 184.7 million). Interest-bearing liabilities totalled EUR 33.8 million at the close of the report period (EUR 44.7 million). The Group’s equity ratio was 54.3% (47.7%). Net liabilities totalled EUR 18.7 million (EUR 37.1 million) and the gearing was 14.8% (42.1%).
Inventories amounted to EUR 71.1 million (EUR 44.5 million). Current receivables totalled EUR 68.1 million (EUR 66.5 million). Cash flows after investments during the report period were EUR 9.1 million negative (EUR 3.2 million negative). Cash and cash equivalents amounted to EUR 15.1 million (EUR 7.6 million). In order to ensure financing flexibility, PKC has available a total of EUR 15 million financing and credit facilities, of which EUR 15 million has remained unused.
CAPITAL EXPENDITURE
During the report period, the Group’s gross capital expenditure totalled EUR 19.5 million (EUR 3.3 million), representing 9.5% of net sales (2.4%). The capital expenditure consisted, in addition to the acquisition of Segu companies, mostly of acquisition of production machinery and equipment.
RESEARCH & DEVELOPMENT
Research and development costs totalled EUR 3.2 million (EUR 2.8 million), representing 1.6% (2.0%) of the consolidated net sales. At the end of the report period, 121 (114) people worked in product development.
PERSONNEL
During the report period, the Group had an average payroll of 6,513 employees (4,568). At the end of the report period, the Group’s personnel numbered 7,399 employees (5,076), of whom 7,027 (4,554) worked abroad and 372 (522) in Finland. At the end of the report period, the Segu companies’ personnel numbered 1,125 employees. In addition the Group had at the end of the report period 1,056 rented employees.
QUALITY AND THE ENVIRONMENT
All of the Group’s factories are certified in accordance with requirements of the ISO/TS16949 quality standard for the automotive industry. All of the Group’s factories, except factories in Sosnowiec (Poland) and Mukachevo (Ukraine) are certified in accordance with the ISO9001 quality standard and with the ISO14001 environmental standard. Production unit in Curitiba (Brazil) has also certification in accordance with the OHSAS18001 occupational health and safety management system standard.
The Sosnowiec and Mukachevo factories have started to build a system in accordance with ISO14001 environmental standard with the aim to certify it in the first quarter of 2012. During 2011 occupational health and safety management system will be implemented to all Eletronics units in conformity with the OHSAS18001 standard.
MANAGEMENT
The Annual General Meeting held on 30 March 2011, re-elected Matti Hyytiäinen, Outi Lampela, Endel Palla, Olli Pohjanvirta, Matti Ruotsala and Jyrki Tähtinen as Board members. In the Board’s organisation meeting, Matti Ruotsala was elected as Chairman of the Board with Jyrki Tähtinen as Vice-Chairman.
Outi Lampela was elected as chairman of the Audit Committee with Matti Hyytiäinen and Olli Pohjanvirta as its members. The Board of Directors also elected Matti Ruotsala as chairman of the Nomination Committee and Endel Palla and Jyrki Tähtinen as members.
Authorised public accounting firm KPMG Oy Ab, which has announced Virpi Halonen, APA, to be the Auditor with principal responsibility, was selected as auditor.
The Group’s Executive Board consists of the following persons: Harri Suutari, Chairman (President and CEO); Harri Ojala (President, Wiring Harnesses); Jarmo Rajala (President, Electronics); Sanna Raatikainen (General Counsel); Marja Sarajärvi (CFO); and Jarkko Kariniemi (Director, HR and Risk Management).
DIVIDEND FOR 2010
The annual general meeting held on 30 March 2011 resolved to pay a dividend of EUR 0.55 per share: i.e. a total of about EUR 10.9 million. The dividend was paid out on 11 April 2011.
SHARE TURNOVER AND SHAREHOLDERS
PKC Group Oyj’s share turnover on NASDAQ OMX Helsinki Ltd from 1 January to 30 June 2011 was 5,402,828 shares (6,712,107 shares), representing 27.4% of the average number of shares (37.7%). Shares were traded to a total value of EUR 84.2 million (EUR 65.0 million). The lowest share value during the report period was EUR 13.90 (EUR 6.55) and the highest EUR 18.36 (EUR 11.90). The closing price on the last trading day of the report period was EUR 15.78 (EUR 10.87) and the average price during the period was EUR 15.59 (EUR 10.69). The company’s market capitalisation at 30 June 2011 was EUR 314.1 million (EUR 193.3 million).
The shares held by Board members, their closely associated persons and corporations in which they have a controlling interest accounted for 0.7% (0.8%) of the total number of shares at the end of the report period. PKC Group Oyj had a total of 8,123 shareholders (6,853) at the end of the report period. The shares held by foreigners and through nominee registrations at the close of the report period totalled 22.9% of the share capital (15.5%).
SHARES AND SHARE CAPITAL
PKC Group Oyj’s shares and share capital has changed during the report period as follows:
- A total of 103,840 PKC Group Oyj’s shares have been subscribed for with 2006 options (32,060 with 2006A options, 20,780 with 2006B options and 51,000 with 2006C options). The new shares and the corresponding increase in the share capital, EUR 35,350.60, have been entered into the Trade Register on 12 May 2011. The new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd together with the old shares as of 13 May 2011. After the increase the Company’s registered share capital is EUR 6,102,580.76, divided into 19,904,442 shares.
THE BOARD'S AUTHORISATIONS
Authorisation to the Board of Directors to decide on share issue
The Board of Directors was granted authorisation by the Annual General Meeting on 30 March 2011 to decide on share issue and granting of special rights defined in Chapter 10, Section 1 of the Companies Act and all the terms and conditions thereof. A maximum total of 6,000,000 shares may be issued or subscribed for on the basis of authorisation. The authorisation includes the right to decide on directed share issue. The authorisation is in force for five years from the date of the General Meeting's decision. At Board of Directors' discretion the authorisation may be used e.g. in financing possible corporate acquisitions, inter-company co-operation or similar arrangement, or strengthening company's financial or capital structure etc.
The Board of Directors does not possess a valid authorisation to acquire company’s own shares, and the company does not have any own shares (treasury shares) in its possession.
Donations to good causes
The Annual General Meeting granted on 30 March 2011 to the Board of Directors an authorisation to decide on a donation of no more than EUR 150,000 to Finnish universities either directly by the company or through its subsidiaries. According to the decision of the Board of Directors PKC Electronics Oy donated EUR 100,000 to the University of Oulu and EUR 50,000 to the University of Vaasa
STOCK OPTION SCHEMES
2006 options
The stock option scheme initiated in 2006, comprises a total of 697,500 options divided into A, B and C warrants. At the close of report period, the outstanding options and options held by key personnel totals 130,880 2006B warrants and 209,850 2006C warrants.
The share subscription price for the 2006 stock options is the volume-weighted average price of the PKC Group Oyj share on NASDAQ OMX Helsinki, with dividend adjustments, as defined in the stock option terms (at present, EUR 9.54 for the 2006A, 2006B and 2006C warrants). Through the exercise of the 2006 stock options, the share capital of PKC Group Oyj may be increased by a maximum total of 697,500 new shares and EUR 237,150. After the registration of subscription to be made on 12 May 2011, the Company’s share capital can increase by a maximum of 342,380 shares i.e. EUR 116,409.20 as a result of the exercise of the remaining outstanding option rights. The share subscription period is for 2006A warrants 1 April 2009 – 30 April 2011, for 2006B warrants 1 April 2010 – 30 April 2012, and for 2006C warrants 1 April 2011 – 30 April 2013. The 2006 stock options are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.
The share subscription period for 2006A warrants has ended 30 April 2011. During the share subscription period a total 200,300 shares were subscribed and 2,200 warrants remained unused.
2009 options
The Annual General Meeting held on 27 March 2009 decided to issue stock options to key personnel in the company and its subsidiaries. The maximum total number of stock options issued is 600,000 and they are divided into A, B and C warrants. At the close of the report period, the outstanding options and options held by key personnel totals 200,000 2009A and 200,000 2009B warrants.
The subscription price for shares through the exercise of the 2009 stock options is the volume-weighted average price of the PKC Group Oyj share on NASDAQ OMX Helsinki for April 2009, 2010 and 2011 + 20% with dividend adjustments, (at present, EUR 2.90 for the 2009A warrants, EUR 12,71 for the 2009B warrants and EUR 18.58 for the 2009C warrants). The subscription price for shares will be recorded in the invested non-restricted equity fund. The stock options entitle their owners to subscribe for a maximum total of 600,000 new shares in the company or existing shares held by the company. The share subscription period for 2009A warrants is 1 April 2012 — 30 April 2014, for 2009B warrants 1 April 2013 — 30 April 2015 and for 2009C warrants 1 April 2014 — 30 April 2016. The 2009 stock options are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.
BUSINESS COMBINATIONS
PKC Group announced on 28 February, 2011 that it had signed an agreement to purchase 100% of the shares in SEGU companies. Under the share purchase agreement, PKC Group’s subsidiaries shall purchase all shares in SEGU Systemelektrik GmbH (Germany), SEGU Polska Sp. z o.o. (Poland) and TZOV HBM Kabel Corp (Ukraine). The closing of the acquisition was subject to fulfillment of customary terms including Ukrainian competition authority approval. The requirements of closing have been fulfilled and PKC gained control of the acquired companies on April 30, 2011, which is also the day of consolidation. SEGU companies and PKC’s Polish unit will form a business unit servicing the Central European markets with annual sales of about hundred million and about 2,500 employees. In addition to access to interesting new OEMs, the acquisition of SEGU companies will bring a strategically important footprint in Germany as well as benefit of scale and increased credibility for PKC.
SHORT-TERM RISKS AND UNCERTAINTIES
The public deficit and high indebtedness of many European countries and the United States may weaken economic growth and availability of financing for investment goods.
Due to the global growth in industrial production, the prices and availability of raw materials and components may develop in an unfavourable direction. This might increase PKC’s processing and freight costs during this year.
A potential weakening of the euro against the Polish zloty and the Russian rouble as well as the potential weakening of the USD against the Mexican peso may increase PKC’s processing costs.
The principles, objectives and organisation of the company’s risk management as well as key risk areas are described in the risk management section of the Corporate Governance guidelines, which are available on the company's website at www.pkcgroup.com.
OUTLOOK FOR THE FUTURE
During the first half of the year, the customers of PKC’s Wiring Harnesses segment received more new orders than the average level the previous year.
PKC expects that net sales of the Wiring Harnesses business will grow in comparison with the previous year.
During the first half of the year, sales of customers of the Electronics segment increased over the average level of the previous year. PKC expects that the net sales of the Electronics business will grow in comparison with the previous year.
PKC expects that its net sales and comparable operating profit in 2011 will be greater than the level in 2010. Net sales in 2010 amounted to EUR 316.1 million and operating profit without non-recurring items was EUR 31.5 million.
FINANCIAL REPORTS IN 2011
In 2011, the Interim Reports will be published as follows:
Interim Report 1-9/2011 on Thursday 3 November 2011 at 8:15 a.m.
The text section of this release focuses on the interim report. Comparisons in accordance with IFRS standards have been made to the figures of the corresponding period in 2010, unless otherwise mentioned. The figures presented in the tables are independently rounded figures.
TABLES
The quarterly figures have not been audited. This interim report has been prepared in accordance with IAS 34 (Interim Financial Reporting) standard. The interim report has been prepared in accordance with the same principles as the annual financial statements for 2010. The year 2011 IFRS standard changes have not had any effect.
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000) | 4-6/11 3 mon. | 4-6/10 3 mon. | 1-6/11 6 mon. | 1-6/10 6 mon. | 1-12/10 12 mon. |
| NET SALES | 109,307 | 81,005 | 206,193 | 141,839 | 316,081 |
| Other operating income | 1,755 | 1,070 | 2,413 | 1,626 | 4,597 |
| Increase (+) / decrease (-) in stocks of finished goods and work in progress | -558 | 566 | 1,107 | 249 | 5,983 |
| Production for own use | 74 | 0 | 74 | 0 | 0 |
| Materials and services | 67,459 | 48,205 | 127,679 | 83,092 | 190,940 |
| Employee benefit expenses | 21,649 | 16,676 | 40,374 | 31,144 | 66,442 |
| Depreciation | 3,243 | 2,692 | 6,056 | 5,459 | 10,684 |
| Other operating expenses | 11,153 | 7,480 | 18,933 | 13,604 | 28,906 |
| OPERATING PROFIT | 7,074 | 7,588 | 16,745 | 10,415 | 29,689 |
| Interest expenses | -591 | -335 | -1,129 | -819 | -1,964 |
| Other financial income | 1,213 | 19 | 1,460 | 42 | 132 |
| Other financial expenses | 0 | -2,599 | 0 | -4,612 | -2,829 |
| PROFIT BEFORE TAXES | 7,696 | 4,674 | 17,076 | 5,025 | 25,029 |
| Income tax | -1,434 | -482 | -3,222 | -587 | -5,346 |
| PROFIT FOR THE REPORT PERIOD | 6,262 | 4,192 | 13,854 | 4,438 | 19,683 |
| Other comprehensive income: | |||||
| Foreign currency translation differences - foreign operations | -590 | 4,232 | -3,329 | 11,830 | 10,499 |
| Total comprehensive income for the period | 5,672 | 8,424 | 10,525 | 16,268 | 30,182 |
| Attributable to equity holders of the parent company: | |||||
| Basic earnings per share (EPS), EUR | 0.32 | 0.24 | 0.70 | 0.25 | 1.09 |
| Diluted earnings per share (EPS), EUR | 0.31 | 0.24 | 0.69 | 0.25 | 1.09 |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000) | 6/11 | 6/10 | 12/10 |
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Goodwill | 15,384 | 15,159 | 15,662 |
| Other intangible assets | 10,650 | 10,579 | 9,196 |
| Property, plant and equipment | 48,091 | 35,115 | 36,232 |
| Assets held for sale | 387 | 0 | 0 |
| Deferred tax assets | 4,895 | 5,166 | 4,794 |
| Other receivables | 31 | 55 | 38 |
| Total non-current assets | 79,438 | 66,074 | 65,923 |
| CURRENT ASSETS | |||
| Inventories | 71,083 | 44,461 | 58,127 |
| Receivables | |||
| Trade receivables | 55,766 | 54,667 | 45,797 |
| Other receivables | 12,334 | 11,870 | 12,005 |
| Total receivables | 68,100 | 66,537 | 57,803 |
| Cash and cash equivalents | 15,056 | 7,641 | 37,104 |
| Total current assets | 154,240 | 118,639 | 153,034 |
| Total assets | 233,677 | 184,713 | 218,956 |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Share capital | 6,103 | 5,983 | 5,983 |
| Share premium account | 8,246 | 4,862 | 4,850 |
| Invested non-restricted equity fund | 21,852 | 368 | 21,852 |
| Translation reserve | 733 | 1,074 | 958 |
| Share-based payments | 1,993 | 1,312 | 1,663 |
| Retained earnings | 74,179 | 70,003 | 68,789 |
| Profit for the report period | 13,854 | 4,438 | 19,683 |
| Total equity | 126,960 | 88,039 | 123,776 |
| LIABILITIES | |||
| Non-current liabilities | |||
| Interest-bearing liabilities | 25,228 | 30,146 | 26,097 |
| Non-interest-bearing liabilities | |||
| Provisions | 1,037 | 420 | 472 |
| Deferred tax liabilities | 6,762 | 2,202 | 4,804 |
| Total non-current liabilities | 33,026 | 32,768 | 31,373 |
| Current liabilities | |||
| Interest-bearing liabilities | 8,556 | 14,580 | 8,939 |
| Trade payables | 37,306 | 28,433 | 33,291 |
| Other non-interest-bearing liabilities | 27,830 | 20,893 | 21,577 |
| Total current liabilities | 73,692 | 63,905 | 63,807 |
| Total liabilities | 106,718 | 96,673 | 95,180 |
| TOTAL EQUITY AND LIABILITIES | 233,677 | 184,713 | 218,956 |
| CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000) | 1-6/11 6 mon. | 1-6/10 6 mon. | 1-12/10 12 mon. |
| Cash flows from operating activities | |||
| Cash receipts from customers | 220,549 | 123,285 | 305,662 |
| Cash receipts from other operating activities | 2,224 | 1,212 | 4,625 |
| Cash paid to suppliers and employees | -212,053 | -122,802 | -284,392 |
| Cash flows from operations before financial income and expenses and taxes | 10,719 | 1,695 | 25,895 |
| Interest paid | -1,164 | -736 | -1,915 |
| Translation difference | 994 | 1,139 | 857 |
| Interest received and other financial income | 713 | -136 | 342 |
| Income taxes paid | -2,469 | -2,468 | -2,244 |
| Net cash from operating activities (A) | 8,794 | -506 | 22,935 |
| Cash flows from investing activities | |||
| Acquisition of property and equipment and intangible assets | -5,674 | -3,260 | -8,542 |
| Proceeds from sale of property and equipment and intangible assets | 293 | 615 | 466 |
| Acquisitions of subsidiaries | -12,552 | 0 | 0 |
| Loans granted | 0 | -1 | -1 |
| Proceeds from repayments of loans | 16 | 1 | 17 |
| Net cash used in investment activities (B) | -17,917 | -2,644 | -8,060 |
| Cash flows after investments | -9,123 | -3,150 | 14,875 |
| Cash flows from financing activities | |||
| Drawing of credits and use of financing and credit facilities | 0 | 6,101 | 0 |
| Share issue | 3,500 | 0 | 21,708 |
| Repayment of short-term/long-term borrowings | -5,355 | -4,963 | -8,697 |
| Dividends paid | -10,891 | -7,113 | -7,113 |
| Net cash used in financing activities (C) | -12,746 | -5,975 | 5,898 |
| Net increase (+) or decrease (-) in cash and equivalents (A+B+C) | -21,868 | -9,125 | 20,774 |
| Cash and cash equivalents in the beginning of the period | 37,104 | 15,378 | 15,326 |
| Effect of exchange rate fluctuations | -179 | 1,388 | 1004 |
| Cash and cash equivalents in the end of the period | 15,056 | 7,641 | 37,104 |
| KEY FINANCIAL INDICATORS | 1-6/11 6 mon. | 1-6/10 6 mon. | 1-12/10 12 mon. |
| Net sales, EUR 1,000 | 206,193 | 141,839 | 316,081 |
| Operating profit, EUR 1,000 | 16,745 | 10,415 | 29,689 |
| % of net sales | 8.1 | 7.3 | 9.4 |
| Profit before taxes, EUR 1,000 | 17,076 | 5,025 | 25,029 |
| % of net sales | 8.3 | 3.5 | 7.9 |
| Net profit for the period, EUR 1,000 | 13,854 | 4,438 | 19,683 |
| % of net sales | 6.7 | 3.1 | 6.2 |
| Return on equity (ROE), % | 22.1 | 10.7 | 19.4 |
| Return on investments (ROI), % | 27.7 | 23.8 | 25.8 |
| Net liabilities, EUR 1,000 | 18,727 | 37,085 | -2,068 |
| Gearing, % | 14.8 | 42.1 | -1.7 |
| Equity ratio, % | 54.3 | 47.7 | 56.5 |
| Current ratio | 2.1 | 1.9 | 2.4 |
| Gross capital expenditure, EUR 1,000 | 19,493 | 3,335 | 8,575 |
| % of net sales | 9.5 | 2.4 | 2.7 |
| R&D expenditures, EUR 1,000 | 3,196 | 2,826 | 5,692 |
| % of net sales | 1.6 | 2.0 | 1.8 |
| Personnel average | 6,513 | 4,568 | 5,039 |
| PER-SHARE KEY INDICATORS | 1-6/11 6 mon. | 1-6/10 6 mon. | 1-12/10 12 mon. |
| Earnings per share (EPS), EUR | 0.70 | 0.25 | 1.09 |
| Earnings per share (EPS),diluted, EUR | 0.69 | 0.25 | 1.09 |
| Equity per share, EUR | 6.38 | 4.95 | 6.33 |
| Share price at close of period, EUR | 15.78 | 10.87 | 15.40 |
| Lowest share price, EUR | 13.90 | 6.55 | 6.55 |
| Highest share price, EUR | 18.36 | 11.90 | 15.58 |
| Average share price, EUR | 15.59 | 9.69 | 10.72 |
| Turnover in shares, 1,000 shares | 5,403 | 6,712 | 10,173 |
| Turnover in shares per (share issue adjusted) share capital, % | 27.4 | 37.7 | 56.5 |
| Average number of shares, 1,000 shares | 19,725 | 17,782 | 17,990 |
| Average number of shares, diluted, 1,000 shares | 20,104 | 17,816 | 18,054 |
| Shares at end of period, 1,000 shares | 19,904 | 17,782 | 19,552 |
| Market capitalisation, EUR 1,000 | 314,092 | 193,285 | 301,100 |
| 1. SEGMENT INFORMATION | ||||
| 1.1.-30.6.2011 (EUR 1,000) | Wiring Harness | Electronics | Unallocated amounts and eliminations | Group Total |
| Sales to external customers | 168,333 | 37,860 | 0 | 206,193 |
| Sales to other segments | 419 | 59 | -478 | 0 |
| Net sales, EUR 1,000 | 168,752 | 37,920 | -478 | 206,193 |
| Operating profit before non-recurring items | 19,756 | 986 | -1,810 | 18,932 |
| % of net sales | 11.7 | 2.6 | 0 | 9.2 |
| Donations to the universities | 0 | 150 | 0 | 150 |
| Advisor fees | 410 | 0 | 1,994 | 2,354 |
| Cancellation of the write-down of inventories | -317 | 0 | 0 | -317 |
| Total non-recurring other operating items | 93 | 150 | 1,994 | 2,187 |
| Operating profit | 19,663 | 836 | -3,754 | 16,745 |
| % of net sales | 11.7 | 2.2 | 0 | 8.1 |
| Segment's assets | 193,376 | 50,026 | 4,858 | 248,260 |
| Unallocated assets *) | 0 | 0 | -14,583 | -14,583 |
| Total assets | 193,376 | 50,026 | -9,725 | 233,677 |
| *) Segment's assets do not include deferred taxes | ||||
| 1.1.-30.6.2010 (EUR 1,000) | Wiring Harness | Electronics | Unallocated amounts and eliminations | Group Total |
| Sales to external customers | 109,807 | 32,032 | 0 | 141,839 |
| Sales to other segments | 956 | 133 | -1,089 | 0 |
| Net sales, EUR 1,000 | 110,763 | 32,165 | -1,089 | 141,839 |
| Operating profit before non-recurring expenses | 9,617 | 2,404 | -960 | 11,061 |
| % of net sales | 8.7 | 7.5 | 0 | 7.8 |
| Non-recurring employee benefit expenses | 646 | 0 | 0 | 646 |
| Operating profit | 8,971 | 2,404 | -960 | 10,415 |
| % of net sales | 8.2 | 7.5 | 0 | 7.3 |
| Segment's assets | 123,840 | 46,710 | 8,998 | 179,548 |
| Unallocated assets *) | 0 | 0 | 5,166 | 5,166 |
| Total assets | 123,840 | 46,710 | 14,164 | 184,714 |
| *) Segment's assets do not include deferred taxes | ||||
| 1.1.-31.12.2010 (EUR 1,000) | Wiring Harness | Electronics | Unallocated amounts and eliminations | Group Total |
| Sales to external customers | 242,384 | 73,697 | 0 | 316,081 |
| Sales to other segments | 411 | 243 | -654 | 0 |
| Net sales, EUR 1,000 | 242,795 | 73,940 | -654 | 316,081 |
| Operating profit before non-recurring expenses | 26,260 | 7,691 | -2,452 | 31,499 |
| % of net sales | 10.8 | 10.4 | 0 | 10.0 |
| Non-recurring employee benefit expenses | 1,363 | 0 | 0 | 1,363 |
| Non-recurring other operating expenses | 447 | 0 | 0 | 447 |
| Total non-recurring expenses | 1,810 | 0 | 0 | 1,810 |
| Operating profit | 24,450 | 7,691 | -2,452 | 29,689 |
| % of net sales | 10.1 | 10.4 | 0 | 9.4 |
| Segment's assets | 151,634 | 52,348 | 10,181 | 214,162 |
| Unallocated assets *) | 0 | 0 | 4,794 | 4,794 |
| Total assets | 151,634 | 52,348 | 14,975 | 218,956 |
| *) Segment's assets do not include deferred taxes | ||||
| NET SALES BY GEOGRAPHICAL LOCATIONS (EUR 1,000) | 4-6/11 3 mon. | 4-6/10 3 mon. | 1-6/11 6 mon. | 1-6/10 6 mon. | 1-12/10 12 mon. |
| Finland | 16,521 | 13,169 | 32,107 | 23,988 | 53,720 |
| Other Europe | 62,790 | 38,380 | 117,615 | 67,719 | 154,588 |
| North America | 6,913 | 5,889 | 13,283 | 10,804 | 20,732 |
| South America | 17,329 | 14,735 | 33,111 | 26,590 | 56,958 |
| Other countries | 5,755 | 8,831 | 10,078 | 12,738 | 30,083 |
| Total | 109,307 | 81,005 | 206,193 | 141,839 | 316,081 |
| 2. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR MILLION) | ||||||
| A = Share Capital | ||||||
| B = Share premium account | ||||||
| C = Invested non-restricted equity fund | ||||||
| D = Translation difference | ||||||
| E = Retained earnings | ||||||
| F = Total equity | ||||||
| A | B | C | D | E | F | |
| Equity at 1.1.2010 | 6.0 | 4.9 | 0.4 | -2.9 | 70.3 | 78.6 |
| Dividends | 0.0 | 0.0 | 0.0 | 0.0 | -7.1 | -7.1 |
| Share-based payments | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 |
| Comprehensive income for the period | 0.0 | 0.0 | 0.0 | 11.8 | 4.3 | 16.1 |
| Equity at 30.6.2010 | 6.0 | 4.9 | 0.4 | 8.9 | 67.8 | 88.0 |
| Equity at 1.1.2011 | 6.0 | 4.9 | 21.8 | 7.6 | 83.5 | 123.7 |
| Dividends | 0.0 | 0.0 | 0.0 | 0.0 | -10.7 | -10.7 |
| Share-based payments | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 |
| Subscription of shares | 0.1 | 3.4 | 0.0 | 0.0 | 0.0 | 3.5 |
| Comprehensive income for the period | 0.0 | 0.0 | 0.0 | -3.3 | 13.8 | 10.5 |
| Other changes | 0.0 | 0.0 | 0.0 | -0.5 | 0.0 | -0.5 |
| Equity 30.6.2011 | 6.1 | 8.3 | 21.8 | 3.8 | 86.9 | 126.9 |
3. BUSINESS COMBINATIONS
PKC Group signed on 28 February 2011 an agreement for the purchase of shares in the Segu companies. The ownership and control have been transferred to PKC Group on 30 April 2011, which is also the date of consolidation.
The acquisition cost is calculated on the basis of the Segu companies’ preliminary balance sheet as per 30 April 2010 prepared, essentially, in accordance with IFRS and the PKC Group's accounting principles.
The preliminary goodwill of EUR 0.1 million arising from the acquisition is mainly attributable to the acquired workforce and economies of scale and synergies expected from combining the operations of Segu and PKC Group. None of the goodwill recognized for the Segu companies is tax deductible.
The following table summarizes the consideration paid for Segu companies and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date. The below mentioned acquisition consideration and the fair values at 30 June 2011 are preliminary as the finalisation of the acquisition cost calculation is still ongoing.
| Consideration at 30 April 2011 (EUR million) | |
| Cash | 13.7 |
| Total consideration transferred | 13.7 |
| The assets and liabilities arising from the acquisition are as follows | |
| (EUR million) | |
| Property, plant and equipment | 11.6 |
| Intangible assets | 2.8 |
| Inventories | 8.0 |
| Trade and other receivables | 6.1 |
| Cash and cash equivalents | 0.5 |
| Non-current assets held for sale | 0.4 |
| Total assets | 29.4 |
| Provisions | 0.2 |
| Retirement benifit obligation | 0.3 |
| Interest-bearing liabilities | 5.7 |
| Trade and other liabilities | 8.8 |
| Deferred tax liabilities | 0.8 |
| Total liabilities | 15.8 |
| Total identifiable net assets | 13.6 |
| Goodwill | 0.1 |
The fair value of the acquired identifiable intangible assets of EUR 2.8 million (including customer relationships and software) is preliminary pending receipt of the final valuations for those assets.
The fair value of current trade receivables and other receivables is EUR 6.1 million and includes trade receivables with a fair value of EUR 2.7 million. The fair value of trade receivables does not include any significant risk.
A building in Germany has been presented as a non-current asset held for sale as agreed in pursuance of the Segu acquisition. The sale is expected to be completed by 30 September 2011.
The total acquisition-related costs are estimated to approximate EUR 0.8 million. Acquisition-related cost included in other operating expenses in the consolidated statement of comprehensive income amount to EUR 0.4 million for the year ended 31 December 2010 and EUR 0.4 million for the 6 months ended 30 June 2011.
The net sales included in the consolidated statement of comprehensive income since 30 April 2011 contributed by Segu companies was EUR 7.9 million. Segu companies also contributed profit of EUR 0.4 million over the same period.
Had the Segu companies been consolidated from 1 January 2011, the consolidated statement of comprehensive income would show net sales of EUR 220.7 million and profit of EUR 14.5 million.
| 4. PROPERTY, PLANT AND EQUIPMENT (EUR 1,000) | 6/11 | 6/10 |
| Acquisition cost 1.1. | 76,969 | 73,772 |
| +/- Translation difference 1.1. | -458 | 1,033 |
| + Additions | 5,091 | 2,969 |
| + Acquisitions | 15,738 | 0 |
| - Disposals | -689 | -1,340 |
| Acquisition cost 30.6. | 96,651 | 76,434 |
| Accumulated depreciation 1.1. | 40,737 | 39,395 |
| +/- Translation difference 1.1. | -232 | -574 |
| - Accumulated depreciation on disposals | 3,409 | -1,106 |
| + Depreciation | 4,257 | 3,604 |
| Depreciation 30.6. | 48,171 | 41,319 |
| Carrying amount 30.6. | 48,478 | 35,115 |
| 5. OTHER INTANGIBLE ASSETS (EUR 1,000) | 6/11 | 6/10 |
| Acquisition cost 1.1. | 39,636 | 37,167 |
| +/- Translation difference 1.1. | -390 | 1,175 |
| + Additions | 551 | 367 |
| + Acquisitions | 2,918 | 0 |
| - Disposals | 0 | -133 |
| Acquisition cost 30.6. | 42,715 | 38,576 |
| Accumulated depreciation 1.1. | 13,516 | 11,418 |
| +/- Translation difference 1.1. | 1,247 | -216 |
| - Accumulated depreciation on disposals | 119 | -132 |
| + Depreciation | 1,799 | 1,766 |
| Depreciation 30.6. | 16,681 | 12,837 |
| Carrying amount 30.6. | 26,034 | 25,739 |
| 6. CONTINGENT LIABILITIES AT END OF PERIOD (EUR 1,000) | 6/11 | 6/10 | 12/10 | |
| Leasing liabilities | 2,712 | 3,226 | 2,982 | |
| Liabilities for derivative instruments | ||||
| Nominal values | ||||
| Currency derivatives | ||||
| Forward contracts | 347 | 405 | 0 | |
| Copper derivatives | ||||
| Forward contracts | 2,524 | 1,548 | 2,010 | |
| Total | 2,872 | 1,953 | 2,010 | |
| Fair values | ||||
| Currency derivatives | ||||
| Forward contracts | 0 | 3 | 0 | |
| Copper derivatives | ||||
| Forward contracts | 11 | 0 | 307 | |
| Total | 12 | 3 | 307 | |
| Currency and copper derivatives are used only in hedging currency and copper risks. PKC Group does not apply hedge accounting to derivate instruments in accordance with IAS 39. Fair values of the derivatives are entered directly in the income statement. | ||||
| 7. QUARTERLY KEY INDICATORS, CONSOLIDATED | 1-3/10 3 mon. | 4-6/10 3 mon. | 7-9/10 3 mon. | 10-12/10 3 mon. | 1-3/11 3 mon. | 4-6/11 3 mon. |
| Net sales, EUR million | 60.8 | 81.0 | 82.3 | 91.9 | 96.9 | 109.3 |
| Operating profit, EUR million | 2.8 | 7.6 | 9.5 | 9.8 | 9.7 | 7.1 |
| % of net sales | 4.6 | 9.4 | 11.5 | 10.6 | 10.0 | 6.5 |
| Profit before taxes, EUR million | 0.4 | 4.7 | 13.4 | 6.6 | 9.4 | 7.7 |
| % of net sales | 0.6 | 5.8 | 16.2 | 7.2 | 9.7 | 7.0 |
| Equity ratio, % | 46.1 | 47.7 | 50.2 | 56.5 | 52.4 | 54.3 |
| Earnings per share (EPS), diluted (EUR) | 0.01 | 0.24 | 0.56 | 0.29 | 0.38 | 0.31 |
| Equity per share, EUR | 4.47 | 4.95 | 5.15 | 6.33 | 6.09 | 6.38 |
| QUARTERLY KEY INDICATORS, WIRING HARNESS | ||||||
| Net sales, EUR million | 45.7 | 64.1 | 61.8 | 70.8 | 78.2 | 90.2 |
| Operating profit, EUR million | 2.0 | 7.0 | 6.8 | 8.7 | 10.1 | 9.6 |
| % of net sales | 4.4 | 10.9 | 11.0 | 12.3 | 12.9 | 10.6 |
| QUARTERLY KEY INDICATORS, ELECTRONICS | ||||||
| Net sales, EUR million | 15.1 | 16.9 | 20.5 | 21.1 | 18.7 | 19.1 |
| Operating profit, EUR million | 1.3 | 1.1 | 3.3 | 2.0 | 0.4 | 0.4 |
| % of net sales | 8.6 | 6.5 | 15.9 | 9.6 | 2.4 | 2.1 |
CALCULATION OF INDICATORS
Return on equity (ROE), %
= 100 x (Profit/loss) / Shareholders’ equity (average)
Return on investments (ROI), %
= 100 x (Profit before taxes + financial expenses) / Shareholders’ equity + interest-bearing liabilities (average)
Gearing, %
= 100 x (Interest-bearing liabilities – cash and cash equivalents and investments) / Shareholders’ equity + non-controlling interests
Equity ratio, %
= 100 x (Shareholders’ equity + non-controlling interests) / Total of statement of financial position – advance payments received
Quick ratio
= Receivables and cash and cash equivalents / Current liabilities – advance payments received
Current ratio
= Receivables and cash and cash equivalents + inventories / Current liabilities
Earnings per share (EPS), EUR
= Profit/loss +/- non-controlling interests / Average share issue-adjusted number of shares
Shareholders’ equity per share, EUR
= Shareholders’ equity / Share issue-adjusted number of shares at the date of the statement of financial position
Market capitalisation
= Number of shares at the end of the financial period x the last trading price of the financial period
All the future estimates and forecasts presented in this stock exchange release are based on the best current knowledge of the company’s management. The estimates and forecasts contain certain elements of risk and uncertainty which, if they materialise, may lead to results that differ from present estimates. The main factors of uncertainty are related, among other things, to the general economic situation, the trend in the operating environment and the sector as well as the success of the Group’s strategy.
PKC GROUP OYJ
Board of Directors
Harri Suutari
President and CEO
For additional information, contact:
Harri Suutari, President & CEO, PKC Group Oyj, +358 400 384 937
PRESS CONFERENCE
A press conference on the interim report will be arranged for analysts and investors today, 4 August 2011, at 10.00 a.m., at the address World Trade Center, Aleksanterinkatu 17, meeting room 2, 2nd floor, Helsinki.
DISTRIBUTION
NASDAQ OMX
Main media
The PKC Group offers design and contract manufacturing services for wiring harnesses, cabling and electronics. The Group has production facilities in, Brazil, China, Estonia, Finland, Germany, Mexico, Poland, Russia and Ukraine. The Group's net sales in 2010 totalled EUR 316.1 million. PKC Group Oyj is listed on NASDAQ OMX Helsinki Ltd.
