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Investor Relations |
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Fiscal period in brief (November 1, 2004 – October 31, 2005): - Net sales EUR 81.8 million (EUR 73.2 million), an increase of 11.7% on the same period in the previous fiscal year. - Operating profit EUR 0.2 million (EUR 8.0 million). - Profit before extraordinary items EUR 0.6 million (EUR 7.8 million). - Net profit EUR –1.7 million (EUR 7.5 million). - Earnings per share EUR –0.01 (EUR 0.20). - Return on investment (ROI) 2.0% (23.2%). - Return on equity (ROE) –1.0% (22.6%). - Solvency ratio 64.8% (75.1%). - Cash flow from business operations EUR 8.5 million (EUR 3.6 million). - Gearing –51.6 % (-49.6%). Interest-bearing cash reserves exceeded interest-bearing liabilities by EUR 20.3 million. Fourth quarter in brief: - Net sales EUR 26.1 million (EUR 21.7 million), an increase of 20.4% on the same quarter in the previous fiscal year. - Operating profit EUR 1.5 million (EUR 2.8 million). - Net profit EUR 1.0 million (EUR 3.5 million). NET SALES AND FINANCIAL PERFORMANCE Net sales for the period under review rose to EUR 81.8 million (EUR 73.2 million), with growth compared with the same period of the previous fiscal year amounting to 11.7%. Net sales for the first six months of the period fell short of the goals at the beginning of the fiscal year. The original target growth rate was reached only in the second half of the fiscal year when volume deliveries of new products began and new customer relationships had been established. Sales during the period were divided as follows: telecommunications 70.4% (74.2%), industrial electronics 24.3% (22.5%) and health-care electronics 5.3% (3.3%). Geographically, sales were split up as follows: Europe 57.2% (63.5%), the Americas 30.3% (29.4) and Asia 12.5% (7.1%). The operating profit for the fiscal period was EUR 0.2 million (EUR 8.0 million). Operating profit was adversely affected by low sales in the first half of the fiscal year and by the additional costs incurred in transferring the manufacturing focus to Efore's plants in Estonia and China.The operating profit was also reduced by the unfavorable trend in material prices caused in the main by the shift to lead-free components and to components that are compatible with the requirements of RoHS (Restriction of Hazardous Substances) Directive. The operating profit was also affected by price erosion resulting from competition in the power supply sector. The downward trend is expected to continue. The profit for the fiscal period before extraordinary items came to EUR 0.6 million (EUR 7.8 million) and there was a net loss of EUR - 1.7 million (EUR 7.5 million). FOURTH QUARTER NET SALES AND FINANCIAL PERFORMANCE Net sales for the fourth quarter went up to EUR 26.1 million (EUR 21.7 million), an increase of 20.4% over the fourth quarter of the previous fiscal year. Sales during the period were divided as follows: telecommunications 71.1% (72.9%), industrial electronics 24.4% (23.5%) and health-care electronics 4.5% (3.6%). Geographically, sales were split up as follows: Europe 50.4% (76.0%), the Americas 35.2% (18.7%) and Asia 14.4% (5.3%). The operating profit for the fourth quarter was EUR 1.5 million (EUR 2.8 million). In addition to the previously mentioned reasons, it was also adversely affected by the costs that resulted from the start-up of certain new high-volume products and non-recurring write-offs of excess materials for certain products that had been run down. The profit for the fourth quarter before extraordinary items was EUR 1.4 million (EUR 3.2 million) and the net profit was EUR 1.0 million (EUR 3.5 million). BUSINESS OPERATIONS Efore continued to strengthen its market position and expand its customer base during the period under review by beginning the manufacture of new products. Moreover, agreements on new products were negotiated and concluded during the period, especially for new customers. Efore's market position as a supplier of power electronics for leading mobile-phone-network manufacturers was further strengthened. The most significant new product deliveries in the health-care field were started with the Finnish company Planmeca. Furthermore, new product development projects were launched with remarkable American companies. The Group's product development centers in Finland, the United States, and China focused their efforts on custom-designed power supplies and other electronic products. Many of the new products were linked with new product families for 2.5G and 3G base stations and to fixed telecommunication networks. Numerous product development projects related to health-care equipment were also undertaken. Product development also continued on new power-supply technology platforms and lead-free and other products conforming to the RoHS directive. Volume deliveries of the first products in conformance with the RoHS directive began during the final quarter of the fiscal year. During the fiscal year, new products and technological solutions were developed with a total of EUR 4.6 million (EUR 4.3 million). At the end of the period under review 70 staff members worked in product development. In addition, there were also 35 people engaged in functions directly assisting product development at the end of the period. The shift in priority of Efore's production to plants with a more favorable cost level in Estonia and China continued throughout the whole fiscal year. Thanks to expanded production in Estonia and China, 52.6% (40.1%) of Efore's production was located in countries with lower costs at the end of the period under review. A new production facility in Estonia approximately four times the size of the present plant was completed and will become operational during the first quarter of the 2006 fiscal year. The improvement in cost-effectiveness will be given more focus in material functions. At the outset of the third quarter of the fiscal year the new Strategic Sourcing unit, which serves the entire Group, started operations in China. INVESTMENT Investment in fixed assets during the period under review rose to EUR 5.6 million (EUR 5.0 million), of which the capitalization of product development accounted for EUR 1.9 million (EUR 1.3 million). Investment in equipment related to increases in production contributed to the growth in investment, particularly in China and Estonia. Efore also invested in production equipment that meets the demands of the RoHS Directive. In the next few years the objective will still be for investment not to exceed planned depreciation. FINANCIAL POSITION The Group's financial position during the period was good. Consolidated net financial yields totaled EUR 0.4 million (EUR –0.2 million). The Group's solvency ratio at the end of the period under review was 64.8% (75.1%) and its gearing was –51.6% (-49.6%). Consolidated net interest-bearing liabilities totaled EUR –20.3 million (EUR –22.3 million). Hence, consolidated interest-bearing cash reserves exceeded interest-bearing liabilities by EUR 20.3 million. The cash flow from business operations was EUR 8.5 million (EUR 3.6 million), and the change in the cash flow showed a decrease of EUR 2.5 million (an increase of EUR 17.4 million). Cash flow after investment amounted to EUR 2.8 million (EUR –1.7 million). The cash flow of EUR –5.3 million from financing activities comprises a total of EUR 1.0 million from share subscriptions with stock options, EUR 6.0 million in dividend payments, and EUR 0.3 million in long-term loan installments. Liquid assets excluding undrawn credit facilities totaled EUR 21.8 million (EUR 24.4 million) at the end of the period under review. The balance sheet total was EUR 60.6 million (EUR 60.3 million). Consolidated working capital in relation to net sales was 7.6 % (14.8%) of net sales in the past 12-month period. The Group's aim is to ensure that this percentage remains below 10%. TAXATION The tax figures include taxes calculated on the basis of Group company results for the fiscal year and local tax regulations. In the consolidated profit and loss statement, a change of EUR 0.2 million in deferred tax assets is included as an expense under income taxes. The Group's tax rate for 2006 and the following fiscal years is expected to remain well below the Finnish tax rate, because of the low tax rates for the Chinese and Estonian subsidiaries. PERSONNEL The number of Group personnel averaged 668 (512) during the period under review and 751 (567) at the end of it. The number of personnel increased by 184 during the period. The operating units in Estonia and China accounted for over 95% of the growth. In addition to its own personnel, the Group's contract staff numbered 218 at the end of the period under review, an increase of 97 during the period. The geographical distribution of Efore's personnel at the end of the period under review was as follows: Europe 448 (381), the Americas 178 (102), and Asia 343 (205), making a total of 969 (688). These figures include contract personnel. GROUP STRUCTURE AND ORGANIZATION Efore Group consists of the parent company Efore Plc, and its wholly owned subsidiaries Efore (UK) Ltd, Efore (USA) Inc., Efore (Suzhou) Electronics Co. Ltd., Efore (SIP) Technologies Co. Ltd., Efore Ltda, Efore AS and FI-Systems Oy. In addition, Efore Plc has a 25% holding in the German power electronics company Power Innovation GmbH. BOARD OF DIRECTORS AND PRESIDENT AND CEO The Efore Plc Annual General Meeting, which was held on December 16, 2004, elected ten members to the company's Board of Directors. The new members elected were Johan Ek, Isto Hantila, Anne Leppälä- Nilsson, Reijo Mäihäniemi, Rauno Puolimatka, Outi Raitasuo and Olli Riikkala, while Heikki Marttinen, Timo Syrjälä and Matti Tammivuori, all previous Board members, were re-elected. At its inaugural meeting the Board of Directors elected Timo Syrjälä as its chairman and Heikki Marttinen as deputy chairman. The Board convened 15 times during the year. Markku Hangasjärvi continued as Efore's President and CEO for the entire fiscal year. AUDITORS The Annual General Meeting appointed Authorized Accounting Firm Ernst & Young as Efore's auditors, with Authorized Public Accountant Juha Nenonen as principal auditor. SHARES AND SHAREHOLDERS The total number of Efore Plc shares at the end of the period under review on October 31, 2005, was 40,529,648 and Efore's registered share capital was EUR 34,450,200.80. The company's share capital changed during the fiscal year through share subscriptions based on the 1998 stock options program in addition to a bonus issue and the cancellation of Efore shares held by the company, which were both implemented under a decision of the Annual General Meeting. The highest split-adjusted share price during the period under review was EUR 3.65 and the lowest price was EUR 1.60. The average price during the period was EUR 2.65 and the closing price was EUR 1.84. The market capitalization calculated at the final trading price of the shares in the period under review was EUR 74.6 million. The total number of Efore Plc shares traded on the Helsinki Stock Exchange during the period under review was 49.1 million and their turnover value was EUR 130.1 million. This accounted for 121.03% of the total number of shares at the end of the period under review. The number of shareholders totaled 4,668 at the end of the period under review. EFORE SHARES HELD BY COMPANY The Annual General Meeting on December 16, 2004 decided, in accordance with a proposal by the Board of Directors, to cancel 238,400 Efore shares held by the company. At the end of the period under review the company held no Efore shares. VALID AUTHORIZATIONS OF BOARD OF DIRECTORS The Annual General Meeting on December 16, 2004 gave the company's Board of Directors authorization with a maximum deadline of one year to decide on raising the share capital. With the expiry of the deadline the Board has no valid authorization to increase the share capital. Nor does the Board have a valid authorization to acquire or relinquish Efore shares. STOCK OPTIONS PROGRAM 2005 In March 2005 the Board of Directors of Efore Plc decided on a stock options program aimed at key personnel on the basis of which a total of 2,250,000 stock options were issued. The stock options are divided into stock options 2005A, 2005B and 2005C. They are part of a share ownership program. The subscription period for the shares with stock options is staggered, and the first period will start on November 1, 2007. ADOPTION OF IFRS STANDARDS Efore Plc transferred to IFRS reporting in the fiscal year starting on November 1, 2005. The first IFRS interim report will be published for the first quarter of the 2006 fiscal year. An IFRS balance sheet opening on November 1, 2004 and comparative information for the fiscal year November 1, 2004 – October 31, 2005 will be published before the publication of the financial performance for the first quarter of 2006. The biggest changes in the principles for drawing up the financial statements will be related to the treatment of unrealized exchange rate differences on long-term loan receivables and financial leasing agreements, Efore shares held by the company, adjusting the depreciation of capitalized product-development costs, the stock option program for the personnel and to segment reporting. OUTLOOK In spite of the price erosion resulting from competition in the power supply sector, net sales for the new fiscal year are expected to increase compared with the previous fiscal year. With growth in sales that has accompanied new products and new customer relationships, an improvement in the operations and the restructuring, most of which is complete, the operating profit for the fiscal year and the earnings per share are expected to show improvement over the previous fiscal year. In addition to expanding its present business, Efore is looking into participating in the consolidation process within the power supply sector. BOARD OF DIRECTORS' PROPOSAL FOR DISTRIBUTION OF PROFIT The Board of Directors proposes to the Annual General Meeting on January 25, 2006 that no dividend be paid for the fiscal year November 1, 2004 – October 31, 2005. CONSOLIDATED PROFIT AND LOSS STATEMENT, CONSOLIDATED BALANCE SHEET, AND CASH FLOW STATEMENT CONSOLIDATED PROFIT AND LOSS Nov./04- Nov./03- change STATEMENT Oct./05 Oct./04 EUR million 12 months 12 months % Net sales 81,8 73,2 11,7 Change in stocks of finished -0,1 1,2 -109,8 and unfinished goods Other operating income 0,2 0,3 -35,0 Other operating expenses -78,4 -64,2 22,2 Depreciation and reductions in -3,2 -2,5 28,7 value Share of loss of associated 0,0 0,0 -100,0 companies OPERATING PROFIT (-LOSS) 0,2 8,0 -97,8 % net sales 0,2 10,9 Financial income and expenses 0,4 -0,2 -338,4 (net) PROFIT (-LOSS) BEFORE 0,6 7,8 -92,7 EXTRAORDINARY ITEMS Extraordinary items -1,3 0,5 -377,8 PROFIT (-LOSS) BEFORE -0,8 8,3 -109,1 APPROPRIATIONS AND TAXES % net sales -0,9 11,3 Income taxes -1,0 -0,8 24,5 PROFIT (-LOSS) FOR THE PERIOD -1,7 7,5 -123,2 CONSOLIDATED BALANCE SHEET Oct. 31, Oct. 31, change 2005 2004 EUR million % ASSETS NON-CURRENT ASSETS Intangible assets 3,9 3,0 30,0 Group goodwill 0,0 0,0 -41,4 Tangible assets 8,2 6,7 23,8 Financial assets 0,0 0,2 -87,3 CURRENT ASSETS Stocks 13,0 11,0 18,6 Non-current receivables 1,8 2,0 -9,5 Current receivables 11,8 13,0 -9,6 Investments 11,5 1,5 667,6 Cash in hand and at banks 10,3 22,9 -55,2 TOTAL ASSETS 60,6 60,3 0,5 LIABILITIES Shareholders' equity 39,3 45,4 -13,5 Statutory Provisions 0,4 0,0 CREDITORS Non-current creditors 0,5 0,9 -43,4 Current creditors 20,4 14,0 45,6 TOTAL LIABILITIES 60,6 60,3 0,5 CASH FLOW STATEMENT EUR million Nov./04- Nov./03- change Oct./05 Oct./04 % Cash flow from business operations before financing items ans 8,9 6,2 taxes Financing items and taxes 0,6 -2,6 Extraordinary business -0,9 0,0 oeprations Cash flow from business 8,5 3,6 137,2 operations (A) Investments -5,7 -5,3 Cash flow from investments (B) -5,7 -5,3 8,8 Directed share issue and 1,0 23,5 subscription of shares with warrants Change in liabilities -0,3 -1,5 Dividends paid -6,0 -3,0 Cash flow from financing (C) -5,3 19,1 -127,6 Change in cash flow (A+B+C), increase (+), decrease (-) -2,5 17,4 -114,4 EFORE GROUP KEY FIGURES Earnings per share, € -0,01 0,20 -105,0 Shareholders' equity per 0,97 1,13 -14,2 share, € Solvency ratio, % 64,8 75,1 -13,7 Gross investments, M€ 5,6 5,0 12,0 as percentage of net sales 6,8 6,8 Average personnel 668 512 30,5 Return on equity-% (ROE) -1,0 22,6 -104,4 Return on investment-% (ROI) 2,0 23,2 -91,4 Gearing, % -51,6 -49,6 4,0 Net interest-bearing debt -20,3 -22,3 -9,0 GROUP CONTINGENT LIABILITIES Oct. 31, Oct. 31, change 2005 2004 Contingent liabilities, EUR % million On own behalf - Corporate mortgages 0,0 6,7 -100,0 - Pledges given 0,1 0,1 0,0 -Other contingent liabilities 0,2 0,1 81,4 - Rent and leasing commitments 7,7 4,8 61,2 Derivative contracts -Forward currency contracts Market value 1,9 1,6 21,8 Value of underlying 1,9 1,6 14,6 Instruments Percentage changes calculated on basis of exact figures. EFORE PLC Board of Directors For additional information contact Markku Hangasjärvi, President and CEO, tel. +358 40 731 0114 COPIES TO Helsinki Stock Exchange Principal media Efore Group The Efore electronics group is an international company providing services for the telecommunications, industrial automation and health- care industries. Its operations comprise custom-designed power supplies, DC power systems and electronics design and manufacturing services (EDMS). Efore's domicile is Espoo, Finland. In Finland the company also has operations in Saarijärvi and Tampere. Its other product development and production units are located in China, Estonia and the USA. The Group also has production in Brazil and an affiliate company in Germany. In the fiscal year ending in October 2005, consolidated net sales totaled some EUR 81.8 million and the personnel numbered 751. The parent company Efore Plc is quoted on the Main List of the Helsinki Stock Exchange. |