First quarter in brief (November 1, 2005 – January 31, 2006):
- Net sales totaled EUR 22.1 million (EUR 19.1 million), an increase of
16.0% on the same period the previous fiscal year.
- Operating profit was EUR -0.9 million (EUR 1.1 million).
- Profit before taxes was EUR -0.8 million (EUR 1.0 million).
- Net profit was EUR -0.9 million (EUR 1.2 million).
- Earnings per share amounted to EUR –0.02 (EUR 0.03).
- Return on investment (ROI) was –6.7% (9.7%).
- Return on equity (ROE) was –10.0% (12.0%).
- Solvency ratio was 68.2% (70.0%).
- Cash flow from business operations EUR -5.2 million (EUR 2.4 million).
- Gearing was –36.3 % (-43.8%). Interest-bearing cash reserves exceeded
interest-bearing liabilities by EUR 13.5 million.
IAS/IFRS REPORTING
Efore transferred to financial reporting in accordance with the International
Financial Reporting Standards (IFRS) in the beginning of fiscal year 2006. The
comparison data used for this report are IFRS-compatible figures for 2005,
published on February 27, 2006. The calculation principles for the interim
report are the same as in the release published on February 27, 2006, which can
be found on the Efore website at www.efore.fi (under 'releases').
In the IFRS segment reporting, which began at the start of the 2006 fiscal year,
the entire Group constitutes the primary segment and the geographical areas the
secondary segment. The geographical areas are based on customer locations and
are as follows: the Americas (North, Central, and South America), EMEA (Europe,
Middle East, and Africa), and APAC (Asia Pacific).
NET SALES AND FINANCIAL PERFORMANCE
First-quarter net sales rose to EUR 22.1 million (EUR 19.1 million), an increase
of 16.0% on the same period the previous fiscal year. The growth in first-
quarter net sales was mainly attributable to the reasonably favorable market for
deliveries of volume products to existing customers and the deliveries to new
customers. Geographically, sales were as follows: EMEA EUR 11.1 million (EUR
12.7 million), the Americas EUR 8.4 million (EUR 4.8 million), and APAC EUR 2.6
million (EUR 1.6 million). By customer segment, sales were as follows:
telecommunications 67.1% (74.0%), industrial electronics 28.4% (21.7%), and
health-care electronics 4.5% (4.3%).
The operating profit for the first quarter was EUR -0.9 million (EUR 1.1
million). The operating profit was mainly attributable to the structural costs
incurred in transferring the production focus from Finland and the United States
to factories in Estonia and China. These additional costs were mainly incurred
in the relocation process, equipment installation, and product transfers to the
new factory in Estonia, where production started at the beginning of December
2005. Operating profits were also affected by the non-recurring costs from the
start-up in Estonia and China that meet the RoHS requirements, and the
additional costs incurred in ending the production of earlier product versions,
especially in the United States. The first-quarter profit before taxes was EUR -
0.8 million (EUR 1.0 million), and the net profit was EUR -0.9 million (EUR 1.2
million).
BUSINESS OPERATIONS
During the review period, agreements on new products were negotiated and signed
with existing and new customers. The Group's market position as a supplier of
power electronics for leading manufacturers of mobile phone networks was further
strengthened. New product development projects were launched during the period,
in particular with customers in the telecommunications sector.
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 are connected with new product families for
2.5G and 3G base stations, with fixed telecommunication networks, broadband
networks and with DC power systems sold as standard products. Various customer-
specific product development projects related to health-care equipment are also
under way. Product development continued in other areas too, for example new
power-supply technology platforms.
During the review period, a total of EUR 1.4 million (EUR 1.4 million) was spent
on developing new products and technological solutions. The number of personnel
working in product development and in functions directly assisting product
development stood at 96 at the end of the period.
The handover of the newly completed 7,200 m2 factory in Estonia to Efore was
made on November 15, 2005, and the factory was officially opened on January 17,
2006. The new factory will concentrate on manufacturing high-volume products
mainly for the European market, though some deliveries will be made to the
American and Asian markets. Manufacture of low-volume products in Estonia will
continue in the form of cooperation with subcontractors. With the expansion of
production in Estonia and China, the proportion of Efore's production undertaken
in countries with lower production costs had already risen to 62,5% (43,5%) by
the end of the review period.
INVESTMENT
Investment in fixed assets during the period under review amounted to EUR 1.3
million (EUR 1.4 million), of which the capitalization of product development
accounted for EUR 0.4 million (EUR 0.5 million). The level of
investment was mainly attributable to the expenditure on equipment needed for
the expansion of production, particularly in Estonia. 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 0.1 million (EUR -0.1 million). The Group's
solvency ratio at the end of the period was 68.2% (70.0%) and its gearing was
–36.3% (-43.8%). Consolidated net interest-bearing liabilities totaled EUR –13.5
million (EUR –17.5 million), i.e. consolidated interest-bearing cash reserves
exceeded interest-bearing liabilities by EUR 13.5 million.
The cash flow from business operations was EUR -5.2 million (EUR 2.4 million),
and the change in the cash flow showed a decrease of EUR 6.5 million (an
decrease of EUR 4.0 million). Cash flow after investment amounted to a total of
EUR -6.5 million (EUR -0.9 million). Working capital included larger items than
before, due to the start-up of the new Estonian factory, certain new customer
accounts and decrease in accounts payable.
Liquid assets excluding undrawn credit facilities totaled EUR 15.3 million (EUR
19.9 million) at the end of the period. The balance sheet total was EUR 54.7
million (EUR 56.9 million).
Consolidated working capital was equivalent to 13.4% (12.8%) of net sales in the
preceding 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 period and local tax regulations. In the consolidated profit and loss
statement, a change of EUR 0.1 million in deferred tax assets and deferred tax
liabilities has been included as an expense under income taxes.
PERSONNEL
The number of Group personnel averaged 750 (587) during the period under review
and 758 (602) at the end of it. The number of personnel increased by 7 during
the period. In addition to its own personnel, the Group's contract staff
numbered 184 at the end of the review period, an increase of 34 during the
period. The geographical distribution of Efore's personnel (including contract
staff) at the end of the period was as follows: Europe 447 (395), the Americas
144 (126), and Asia 351 (218).
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.
ANNUAL GENERAL MEETING JANUARY 25, 2006
The Efore Plc Annual General Meeting concerning the fiscal year which ended
October 31, 2005 was held on January 25, 2006. The decisions made by the AGM are
given below.
Board of Directors
The Annual General Meeting elected seven members to the company's Board of
Directors, in accordance with the proposals of the Nomination Committee. These
were all existing members re-elected to the Board and are as follows: Johan Ek,
Isto Hantila, Reijo Mäihäniemi, Outi Raitasuo, Olli Riikkala, Timo Syrjälä and
Matti Tammivuori.
At its inaugural meeting, the Board of Directors elected Timo Syrjälä as its
chairman and Reijo Mäihäniemi as deputy chairman. Reijo Mäihäniemi was elected
chairman of the Board's Audit Committee, and Timo Syrjälä and Matti Tammivuori
were elected as members of the Committee. Olli Riikkala was elected chairman of
the Compensation Committee, and Reijo Mäihäniemi and Outi Raitasuo as members of
the Committee.
Auditors
The Annual General Meeting appointed Authorized Accounting Firm Ernst & Young as
Efore's auditors.
Dividend
In accordance with the proposal of the Board of Directors, the Annual General
Meeting decided that no dividend will be paid on the 2005 fiscal year.
Reducing the share premium
The Annual General Meeting decided to reduce the company's share premium by EUR
3,971,543.60 by transferring this amount to the company's unrestricted equity.
The reduction in the share premium requires permission from the National Board
of Patents and Registration of Finland, which is expected to be granted six
months after the decision was made by the Annual General Meeting.
Board authorizations
The Board of Directors was authorized to decide on raising the company's share
capital by a maximum of EUR 6,890,039.65, which is equivalent to 8,105,929 new
shares at an accounting countervalue of EUR 0.85. The authorization is valid
until the next Annual General Meeting, but for no more than one year from the
date of the AGM's authorization decision. The authorization includes the right
to not to apply the shareholders' right of pre-emption if, from the company's
viewpoint, there is an important financial reason for so deciding.
The Board's proposal that the Annual General Meeting authorize it to decide on
acquiring or relinquishing Efore shares was withdrawn by the Board during the
Annual General Meeting.
SHARES AND SHAREHOLDERS
The total number of Efore Plc shares at the end of the review period was
40.529.648 and Efore's registered share capital was EUR 34.450.200,80.
The highest share price during the period was EUR 2.06 and the lowest price was
EUR 1.72. The average price during the period was EUR 1.89 and the closing price
was EUR 1.87. The market capitalization calculated at the final trading price of
the shares in the period under review was EUR 75.8 million.
The total number of Efore Plc shares traded on the Helsinki Stock Exchange
during the period was 7.2 million and their turnover value was EUR 13.6 million.
This accounted for 17.7% of the total number of shares at the end of the period.
The number of shareholders totaled 4,559 at the end of the period.
OUTLOOK
The telecommunication networks market, which is the most important market for
Efore's net sales growth, is expected to continue growing at a moderate rate,
measured by its value in euros, during 2006. In the later part of the year, the
timing of China's 3G decision will have an impact on this market.
As a result of the reasonably favorable market outlook for the
telecommunications sector and Efore's new customers and products, the company's
net sales for the current fiscal year (12 months) are expected to be up on the
previous fiscal year's figures. On the basis of the sales growth, improved
efficiency of operations and the production transfers taking place Efore's
operating profit and earnings per share are expected to be up on the previous
fiscal year's figures, in line with the guidelines given earlier.
In addition to expanding its existing business, Efore will also investigate the
potential for involvement in the consolidation process under way in the power
supplies sector.
CONSOLIDATED PROFIT AND LOSS
STATEMENT
EUR million Nov./05- Nov./04- change Nov./04-
Jan./06 Jan./05 Oct./05
3 months 3 months % 12 months
Net sales 22,1 19,1 16,0 81,6
Changes in inventories of
finished goods and work in progress 0,0 0,2 -100,1 -0,1
Other operating income 0,1 0,1 16,6 0,2
Other operating expenses -22,2 -17,5 26,9 -79,3
Depreciation -0,9 -0,6 38,6 -2,8
Impairment 0,0 -0,1 -67,5 -0,4
OPERATING PROFIT (-LOSS) -0,9 1,1 -181,4 -0,8
% net sales -4,0 5,7 -1,0
Financing income and expenses 0,1 -0,1 -225,6 0,4
Share of loss of associated
companies 0,0 0,0 -100,0 0,0
PROFIT (-LOSS) BEFORE TAX -0,8 1,0 -178,0 -0,4
% net sales -3,5 5,2 -0,5
Tax on income from operations -0,2 0,3 -166,2 -1,0
PROFIT (-LOSS) FOR THE PERIOD -0,9 1,2 -175,6 -1,5
Earnings per share,eur -0,02 0,03 -166,7 -0,04
Earnings per share, diluted, eur -0,02 0,03 -166,7 -0,04
CONSOLIDATED BALANCE SHEET
EUR million Jan. 31, Jan. 31, change Oct. 31,
2006 2005 % 2005
ASSETS
NON-CURRENT ASSETS
Intangible assets 4,5 3,7 23,3 4,4
Tangible assets 8,8 7,2 21,2 8,6
Investments in associates 0,0 0,1 -100,0 0,0
Long-term receivables and 1,7 2,5 -31,3 1,8
investments
NON-CURRENT ASSETS 15,0 13,5 11,3 14,8
CURRENT ASSETS
Inventories 13,7 12,1 12,8 13,2
Trade receivables and other 10,6 11,4 -6,4 10,2
receivables
Cash equivalents 11,1 0,8 1349,0 11,5
Cash in hand and at banks 4,2 19,2 -77,9 10,3
CURRENT ASSETS 39,6 43,4 -8,7 45,2
ASSETS 54,7 56,9 -4,0 59,9
EQUITY AND LIABILITEIS
SHAREHOLDERS' EQUITY
Share capital 34,5 34,5 0,0 34,5
Share premium account and other 4,8 4,3 11,7 4,7
reserves
Retairned earnigs -1,9 1,1 -273,3 -1,0
SHAREHOLDERS' EQUITY 37,3 39,8 -6,4 38,2
LIABILITIES
Long-term liabilities 0,8 1,2 -27,5 0,8
Current liabilities 16,5 15,9 3,9 20,9
LIABILITIES 17,4 17,1 1,8 21,7
TOTAL EQUITY AND LIABILITIES 54,7 56,9 -4,0 59,9
NET SALES BY SECONDARY SEGMENTS, Nov./05- Nov./04- change Nov./04-
EUR million Jan./06 Jan./05 % Oct./05
Americas 8,4 4,8 74,1 24,8
EMEA 11,1 12,7 -12,3 50,5
APAC 2,6 1,6 66,4 6,3
TOTAL 22,1 19,1 16,0 81,6
GROUP KEY FIGURES, EUR million Nov./05- Nov./04- change Nov./04-
Jan./06 Jan./05 % Oct./05
Earnings per share,eur -0,02 0,03 -166,7 -0,04
Earnings per share, diluted, eur -0,02 0,03 -166,7 -0,04
Shareholders' equity per share, eur 0,92 0,98 -6,1 0,94
Solvency ratio,% 68,2 70,0 -2,6 63,7
Return on equity-%(ROE) -10,0 12,0 -183,3 -14,4
Return on investment-%(ROI) -6,7 9,7 -169,1 -1,1
Gearing, % -36,3 -43,8 -17,1 -52,2
Net interest-bearing debt, EUR -13,5 -17,5 -22,9 -19,9
million
Gross investments, Me 1,3 1,4 -11,5 5,6
as percentage of net sales 5,8 7,5 6,8
Average personnel 750 587 27,8 668
CASH FLOW STATEMENT Nov./05- Nov./04- change Nov./04-
EUR million Jan./06 Jan./05 % Oct./05
Cash flow from business operations
before financing items ans taxes -5,2 2,8 8,1
Financing items and taxes 0,1 -0,4 0,5
Cash flow from business operations -5,2 2,4 -314,4 8,7
(A)
Investments -1,3 -1,5 -5,9
Cash flow from investments (B) -1,3 -1,5 -11,1 -5,9
Directed share issue and 0,0 1,0 1,0
subscription of shares with warrants
Change in liabilities 0,0 0,0 -0,3
Dividends paid 0,0 -6,0 -6,0
Cash flow from financing (C) 0,0 -4,9 -99,6 -5,3
Change in cash flow (A+B+C),
increase
(+), decrease (-) -6,5 -4,0 61,3 -2,5
GROUP CONTINGENT LIABILITIES Jan. 31, Jan. 31, change Oct. 31,
Contingent liabilities, EUR million 2006 2005 % 2005
On own behalf
- Corporate mortages 0,0 6,7 -100,0 0,0
- Pledges given 0,0 0,1 -82,3 0,1
- Other contingent liabilities 0,2 0,2 -3,9 0,2
- Rent and leasing commitments 6,8 4,0 70,7 7,4
Derivative contracts
-Forward currency contracts
Market value 0,7 0,0 n.a. 1,9
Value of underlying Instruments 0,7 0,0 n.a. 1,9
Percentage changes calculated on
basis of exact figures.
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million Share- Share Other Translation Retained
holders' premium reserves differences earnings Total
equity account
Shareholders' equity 34,5 4,0 0,7 0,2 -1,2 38,2
Nov.1, 2005
Change in 0,0 0,0 0,0 0,1 -0,1 0,0
translation
defference
Other changes 0,0 0,0 0,0 0,0 0,0 0,0
Loss for the period 0,0 0,0 0,0 0,0 -0,9 -0,9
Shareholders' equity 34,5 4,0 0,8 0,3 -2,2 37,3
Jan. 31, 2006
EUR million Share- Share Other Translation Retained
holders' premium reserves differences earnings Total
equity account
Shareholders' equity 17,1 20,1 0,3 0,0 5,9 43,4
Nov.1, 2004
Change in 0,0 0,0 0,0 0,0 0,0 -0,1
translation
defference
Annulment of shares -0,2 0,2 0,0 0,0 0,0 0,0
Profit for the 0,0 0,0 0,0 0,0 1,2 1,2
period
Dividend 0,0 0,0 0,0 0,0 -6,0 -6,0
Bonus issue 17,0 -17,0 0,0 0,0 0,0 0,0
Exercised options 0,6 0,7 0,0 0,0 0,0 1,2
Shareholders' equity 34,5 4,0 0,3 0,0 1,1 39,8
Jan. 31, 2005
EFORE PLC
Board of Directors
Additional information is available from President and CEO Markku Hangasjärvi,
tel. +358 40 731 0114.
DISTRIBUTION
Helsinki Stock Exchange
Principal media
Efore Group
The Efore electronics group is an international company providing services for
the telecommunications, industrial electronics and health-care industries. Its
operations comprise custom-designed power supplies, DC power systems,
electronics design and manufacturing services (EDMS), and maintenance and repair
services.
Efore's registered office is in Espoo, Finland. The company also has operations
elsewhere in Finland, in Saarijärvi and Tampere. Efore's other product
development and production units are located in China, Estonia and the USA. The
Group also has production in Brazil and an associate company in Germany. In the
fiscal year ending in October 2005, consolidated net sales totaled approximately
EUR 81.8 million and the Group's personnel numbered 751. The parent company
Efore Plc is quoted on the Main List of the Helsinki Stock Exchange.
