Source: Sievi Capital Oyj
SCANFIL GROUP'S INTERIM REPORT 1 JANUARY - 30 JUNE 2008
SCANFIL PLC STOCK EXCHANGE RELEASE 5 AUGUST 2008 8.30 a.m.
SCANFIL GROUP'S INTERIM REPORT 1 JANUARY - 30 JUNE 2008
January - June
- Turnover for the first six months of 2008 totalled EUR 108.7 million
(111.1 in the corresponding period 2007)
- Operating profit was EUR 11.4 (7.5) million, which is 10.5 (6.8) % of
turnover.
- Profit for the review period was EUR 9.8 (6.3) million
- Earnings per share were EUR 0.17 (0.11)
April - June
- Turnover for the second quarter totalled EUR 58.7 million (58.9 in the
corresponding period in 2007)
- Operating profit was EUR 6.6 (4.0) million representing 11.3 (6.7)% of
turnover
- Earnings per share amounted EUR 0.11 (0.05)
DEVELOPMENT OF OPERATIONS
Scanfil plc
On 30 April 2008, Scanfil plc's Board of Directors approved a business transfer
agreement based on the authorisation given by the Annual General Meeting on 3
April 2008 and executed the transfer on 1 May 2008. The business transfer split
the company into Scanfil plc, an investment company, and Scanfil EMS Oy, a
subgroup engaged in contract manufacturing. The company announced the transfer
in a stock exchange release on 30 April 2008.
Harri Takanen, President:
“The strategic, structural and operative changes made to Scanfil Group's
operations provide an excellent opportunity to develop and increase contract
manufacturing, as well as to effectively invest the company's assets. Scanfil's
core processes are in good shape, as indicated by the good profitability in the
review period. It is still difficult to predict future development. The
better-than-expected profitability of the period gives reason to believe that
the full-year profitability will be very satisfactory. Our goal is to expand the
company's operations profitably and strengthen our market position in the
contract manufacturing business.”
Scanfil EMS Group
Urbanisation, the need to save energy and enhance its use, as well as the
growing concern for the state of the environment boost demand on the markets of
Scanfil's industrial electronics customers. These global development trends have
kept the demand and production volumes of Scanfil's industrial electronics
products at a good level in the review period. The company continues its
measures to balance the distribution of sales and is involved in ongoing
negotiations for new opportunities in the market for industrial electronics
products.
The situation in telecommunications products has continued in the same vein as
in the early part of the year, with overall market demand lower year-over-year.
Telecommunications customers accounted for approximately 63 (71) % and
industrial electronics customers for approximately 37 (29) % of the review
period's turnover.
The subsidiaries in China accounted for 35 (38) % of the Group's overall sales,
including deliveries to other Group factories. The Chinese subsidiaries employ
52 (50) % of the Group's personnel. In all, subsidiaries outside Finland
employed 75 (73) % of the Group's personnel on 30 June 2008.
Co-operation between Scanfil EMS Oy's Hungarian subsidiary, Scanfil Kft, and
Helkama Forste Oy has begun as planned, encompassing the manufacture of sheet
metal components and the rental of facilities from Scanfil Kft. The co-operation
is expected to generate a turnover of some EUR 1.5 million in 2008.
FINANCIAL DEVELOPMENT
The Group's turnover in January - June was EUR 108.7 (111.1) million, showing a
decrease of 2% over the previous year. Distribution of turnover based on the
location of customers was as follows: Finland 51 (42)%, rest of Europe 18 (26)%,
Asia 29 (30)%, USA 1 (1)% and the others 1 (1)%.
As concerns the development of production, Scanfil has paid special attention to
cost management, flexible and efficient production processes and the ability to
manage risks in supply chains. Changes in the product portfolio and the
successful development of operations ensured good profitability in the review
period, with operating profit amounting to EUR 11.4 (7.5) million, or 10.5
(6.8)% of turnover. Earnings for the review period amounted to EUR 9.8 (6.3)
million. Earnings per share were EUR 0.17 (0.11) and return on investment was
18.3 (11.9)%. The increase in net financial income resulted mainly from the
improved yield of the parent company's cash reserves and the strengthening of
the Hungarian currency.
Turnover in April - June was EUR 58.7 (58.9) million. Operating profit in the
second quarter totalled EUR 6.6 (4.0) million, representing 11.3 (6.7)% of
turnover. Earnings per share were EUR 0.11 (0.05).
Owing to the structure of business, fluctuations in exchange rates have had only
a minor impact on performance. The weakening US dollar has had a minor positive
effect on the operating income in Europe. On the other hand, if the US dollar
remains weak or continues to weaken, its main impact will be to reduce the
turnover and expenses of the Asian operations. Changes in the US dollar exchange
rate will not have a significant effect on the relative profitability of the
Asian operations.
FINANCING AND CAPITAL EXPENDITURE
The consolidated balance sheet totalled EUR 191.0 (178.8) million. The Group
enjoys a strong financial position. Liabilities amounted to EUR 54.0 (50.7)
million, EUR 42.0 (43.2) million of which were non-interest-bearing and EUR 12.0
(7.5) million interest-bearing.
Liquid cash assets totalled EUR 37.8 (36.0) million. An additional EUR 20.8 (0)
million of cash assets has been invested in financial instruments mainly to
bonds, credit linked notes and FX carry notes, EUR 12.0 million of which will
mature in less than a year. The equity ration was 71.7 (71.6)% and gearing -34.1
(-22.2)%.
Cash flow from operating activities in the review period was positive at EUR
13.1 (6.3) million, and the change in working capital was EUR 2.1 (-1.2)
million. Dividends amounted to EUR 7.0 (5.9) million. Parent company's long-term
loan of EUR 7.5 million has been settled. To hedge against the possible decline
in the value of the Estonian kroon, the Estonian subsidiary has obtained an EEK
loan with a counter-value of EUR 12 million.
Gross investments in fixed assets totalled EUR 2.1 (0.9) million, which is 1.9
(0.9)% of turnover. Depreciations were EUR 3.2 (3.8) million.
On 17 September 2007 Scanfil announced it was looking into selling its plant
facilities in Vantaa, Estonia and Hungary. The real estate markets have weakened
over the past year, and full or partial sale of the facilities looks improbable
at the moment.
BOARD OF DIRECTORS' AUTHORISATION
The Annual General Meeting decided on 3 April 2008 according to the Board of
Directors' proposal to authorize the Board of Directors to decide on the
acquisition of the Company's own shares with distributable assets.
The Board of Directors has no existing share issue authorisations or
authorisations to issue convertible bonds with warrants.
OWN SHARES
On 30 June 2008, the company owned a total of 1,993,146 of its own shares, the
counter-book value of which totalled EUR 498,287 and which represented 3.3% of
the company's share capital and votes.
During the review period, the company disposed of 5,303 of its own shares in
conjunction with the share-based profit-sharing scheme of the Group's Management
Team.
SHARE TRADING AND SHARE PERFORMANCE
The highest trading price during the review period was EUR 2.27 and the lowest
EUR 1.76, the closing price for the period standing at EUR 2.01. A total of
3,235,730 shares were traded during the period, corresponding to 5.3% of the
total number of shares. The market value of the shares on 30 June 2008 was EUR
122.0 million.
PERSONNEL
Scanfil Group's personnel averaged 2,104 (2,105) employees during the review
period and the company employed 2,157 (2,116) employees at the end of the review
period, of whom 1,619 (1,537) were employed in the company's foreign plants.
CHANGES IN THE GROUP STRUCTURE
A business transfer carried out on 1 May 2008 split Scanfil Group's parent
company, Scanfil plc, into Scanfil plc (Finland), an investment company, and its
fully-owned subgroup Scanfil EMS Oy (Finland), which engages in contract
manufacturing. Scanfil N.V. (Hoboken), located in Belgium and owned 100% by
Scanfil plc, has not had any production activities since 2006.
The Scanfil EMS Group consists of parent company Scanfil EMS Oy (Finland),
Scanfil (Suzhou) Co., Ltd. and Scanfil (Hangzhou) Co., Ltd. in China, Scanfil
Kft. (Budapest) in Hungary and Scanfil Oü (Pärnu) in Estonia. The Scanfil EMS
Group holds the entire share capital in all of its subsidiaries.
EVENTS AFTER THE REVIEW PERIOD
The preliminary agreement concerning the sale of the plant facilities in Oulu
expired on 1 July 2008 without an actual sale contract being signed. Scanfil
continues its active measures and negotiations to sell the facilities in Oulu or
rent them for industrial or commercial use. The change made to the land use
plan, which has now entered into force, also allows spacious commercial
facilities on the lot.
FUTURE PROSPECTS
The industrial electronics sector is expected to see continued growth in demand
in the latter part of 2008. To balance the distribution of sales, the focus of
operations has been shifted towards industrial electronics, and the company is
involved in negotiations with new, potential customers.
According to the latest forecasts made by the biggest players in the field, the
market for telecommunications equipment and related services will remain at the
previous year's level. The turnover from telecommunications equipment supplied
by Scanfil is expected to remain at the same level as at the end of 2007.
Scanfil forecasts that its turnover in 2008 will correspond to that of 2007.
Profitability improved in the review period especially thanks to other products
coming in to replace the sales drop in highly competed telecommunications
equipment, as well as to operations being enhanced. The situation is not
expected to change in the latter part of the year, and full-year profitability
is predicted to be at a very satisfactory level. However, it is still very
difficult to make market predictions. Tough price competition and the price
development of materials and components may weaken the performance development
in the latter half of 2008.
The purpose of Scanfil plc's split is to create growth opportunities in contract
manufacturing, as well as in new business sectors. The new company structure
gives the parent company the opportunity to invest its accumulated assets in a
more versatile and efficient manner. By making long-term investments Scanfil
aims to get a holding in companies operating in the selected business sectors,
which will enable it to actively influence their operations.
OPERATIONAL RISKS AND UNCERTAINTIES
Customer risk is one of the main operative risks in telecom contract
manufacturing. Extremely short visibility in the market makes it difficult to
forecast the success of our customers in the global market and the development
of customer demand. Other operative risks include intense price competition,
material availability and significant and quick fluctuations in demand.
In the industrial electronics sector, the demand looks more stable, with risks
and uncertainties mainly associated with global economic development and
subsequent changes in demand.
Risks and risk management are described in greater detail on Scanfil's website
under Corporate Governance, as well as in the notes to the consolidated
financial statements.
APPENDICES:
Appendix 1: Consolidated profit and loss statements and balance sheet
Appendix 2: Consolidated cash flow statement
Appendix 3: Key indicators
Appendix 4: Calculation of changes in shareholders' equity
Appendix 5: Segment information
Appendix 6: Changes in tangible non current assets
Appendix 7: Consolidated contingent liabilities
Appendix 8: Key indicators quarterly
This interim report has been prepared in accordance with the recognition and
measurement principles of the IFRS.
The accounting policies and methods for calculating key indicators are the same
as those published in the financial statements for 2007.
Individual figures and grand totals have been rounded to the nearest million
euros, so they will not always add up. The figures are unaudited.
APPENDIX 1
CONSOLIDATED PROFIT AND LOSS STATEMENT
EUR million
2008 2007 2008 2007 2007
4 - 6 4 - 6 1 - 6 1 - 6 1 - 12
NET SALES 58,7 58,9 108,7 111,1 224,6
Increase or decrease of inventory
of finished products 0,6 - 1,0 - 0,0 - 1,6 - 0,6
Other operating income 0,1 0,6 0,3 1,6 2,1
Expenses - 51,2 - 52,7 - 94,4 - 99,7 - 200,3
Depreciation - 1,6 - 1,8 - 3,2 - 3,8 - 7,2
OPERATING PROFIT 6,6 4,0 11,4 7,5 18,6
Financial income and expenses 1,2 0,0 1,3 0,3 0,4
PROFIT BEFORE TAXES 7,8 4,0 12,7 7,8 19,0
Direct tax - 1,6 - 0,8 - 2,9 - 1,5 - 4,9
NET PROFIT FOR THE PERIOD 6,2 3,2 9,8 6,3 14,1
Attributable to:
Equity holders of the parent 6,2 3,2 9,8 6,3 14,1
Earnings/share (EPS), EUR 0,11 0,05 0,17 0,11 0,24
CONSOLIDATED BALANCE SHEET
EUR million 30.6. 30.6. 31.12.
2008 2007 2007
ASSETS
Non-current assets
Property, plant and equipment 36.0 40.3 36.5
Goodwill 2.7 2.6 2.5
Other intangible assets 1.1 1.2 1.1
Available-for-sale investments 8.9 0.2 0.0
Receivables 0.2 0.2 0.2
Deferred tax assets 0.2 0.2 0.4
Total non-current assets 49.1 44.6 40.8
Current assets
Inventories 32.5 35.3 33.6
Trade and other receivables 54.7 56.3 52.3
Advance payments 0.2 0.1 0.1
Available-for-sale investments 12.0
Financial assets with result
impact entered at current value 11.9
Cash and cash equivalents 37.8 24.1 50.0
Total current assets 137.3 127.7 136.1
Non current assets held for sale 4.6 6.5 4.6
TOTAL ASSETS 191.0 178.8 181.5
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity
Share capital 15.2 15.2 15.2
Share premium account 16.1 16.1 16.1
Own shares - 6.9 - 6.9 - 6.9
Other reserves 3.5 2.5 2.6
Translation differences - 2.0 - 0.4 - 2.6
Fair value reserve 0.1
Retained earnings 111.1 101.4 109.3
Total equity 137.0 128.0 133.6
Non-current liabilities
Deferred tax liabilities 1.0 1.3 2.3
Reserves 6.5 7.3 7.0
Interest bearing liabilities 12.0 7.5
Total non-current liabilities 19.5 16.1 9.3
Current liabilities
Trade and other payables 33.9 34.3 30.4
Current tax 0.6 0.3 0.7
Interest bearing liabilities 7.5
Total current liabilities 34.5 34.6 38.6
Total liabilities 54.0 50.7 47.9
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES 191.0 178.8 181.5
APPENDIX 2
CONSOLIDATED CASH FLOW STATEMENT 2008 2007 2007
EUR million 1 - 6 1 - 6 1 - 12
Cash flow from operations
Net profit 9.8 6.3 14.1
Adjustment for the net profit of the period 4.2 2.9 8.7
Change in net working capital 2.1 - 1.2 0.4
Interests paid and other financial expenses - 0.4 - 0.2 - 0.4
Interests received 0.8 0.3 1.3
Taxes paid - 3.5 - 1.8 - 4.0
Net cash flow from operations 13.1 6.3 20.2
Cash flow from investments
Investments in tangible and
intangible assets - 2.2 - 0.8 - 1.7
Proceeds from sale of tangible
and intangible assets 0.2 4.3 6.3
Investments in other investments - 20.8
Proceeds from other investments 0.2
Net cash flow from investments - 22.8 3.5 4.9
Cash flow from funding
Raising of long-term loans 12.0
Repayment of long-term loans - 7.5
Dividends paid - 7.0 - 5.9 - 5.9
Net cash flow from funding - 2.5 - 5.9 - 5.9
Change in assets - 12.3 3.9 19.2
Liquid assets at the beginning
of the period 50.0 31.8 31.8
Effect of changes in currency exchange rates 0.1 0.1 - 0.6
Effect of changes in the fair value of investments 0.2 - 0.3
Liquid assets at the end of the period 37.8 36.0 50.0
APPENDIX 3
KEY INDICATORS 2008 2007 2007
1 - 6 1 - 6 1 - 12
Return on equity, % 14.9 9.8 10.8
Return on investment, % 18.3 11.9 14.1
Interest bearing liabilities,
EUR million 12.0 7.5 7.5
Gearing, % - 34.1 - 22.2 - 31.8
Equity ratio, % 71.7 71.6 73.6
Gross investments in fixed
assets, EUR million 2.1 0.9 1.4
% of net turnover 1.9 0.9 0.6
Personnel, average 2 104 2 105 2 105
Earnings per share, EUR 0.17 0.11 0.24
Shareholders' equity per share, EUR 2.33 2.18 2.27
Number of shares at
the end of period, 000's 60 714 60 714 60 714
- not counting own shares 58 721 58 716 58 716
- weighted average 58 719 58 716 58 716
The company does not have any liabilities resulting from derivative instruments.
Owing to the nature of the sector, the company's order book covers only a short
period of time and does not give an accurate picture of future development.
APPENDIX 4
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million
A = Share capital
B = Premium fund
C = Own shares
D = Other reserves
E = Translation differences
F = Fair value reserve
G = Retained earnings
H = Total
I = Shareholder's equity total
SHAREHODER'S A B C D E F G H I
EQUITY
1.1.2007 15.2 16.1 -6.9 1.9 - 0.7 0.1 101.7 127.4 127.4
Translation difference 0.3 0.3 0.3
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY 0.3 0.3 0.3
Net profit for the period 6.3 6.3 6.3
TOTAL RECOGNIZED INCOME
AND EXPENCE 0.3 6.3 6.5 6.5
Payment of dividend - 5.9 - 5.9 - 5.9
Transfer to reserves 0.7 - 0.7
Distribution of own shares 0.0 0.0 0.0
SHAREHOLDER'S EQUITY
30.6.2007 15.2 16.1 - 6.9 2.5 - 0.4 0.1 101.4 128.0 128.0
SHAREHOLDER'S EQUITY
1.1.2008 15.2 16.1 - 6.9 2.6 - 2.6 0 109.3 133.6 133.6
Translation difference 0.6 0.6 0.6
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY 0.6 0.6 0.6
Net profit for the period 9.8 9.8 9.8
TOTAL RECOGNIZED INCOME
AND EXPENCE 0.6 9.8 10.4 10.4
Payment of dividend - 7.0 - 7.0 - 7.0
Transfers to reserves 1.0 - 1.0 0 0
Distribution of own shares 0.0 0.0 0.0
SHAREHOLDER'S EQUITY
30.6.2008 15.2 16.1 - 6.9 3.5 - 2.0 0 111.1 137.0 137.0
APPENDIX 5
SEGMENT INFORMATION ACCORDING GEOGRAPHICAL AREA
EUR million 2008 2007 2007
1 - 6 1 - 6 1 - 12
TURNOVER
Europe 76.8 75.2 150.2
Asia 40.7 44.3 92.4
Turnover between segments - 8.8 - 8.5 - 18.0
Total 108.7 111.1 224.6
OPERATING PROFIT
Europe 6.3 3.7 7.5
Asia 5.0 3.9 11.1
Total 11.4 7.5 18.6
The Group operates in single sector.
APPENDIX 6
CHANGES IN TANGIBLE NON CURRENT ASSETS
EUR million 2008 2007 2007
1 - 6 1 - 6 1 - 12
Book value at the beginning of the period 36.5 43.1 43.1
Additions 2.0 0.5 0.9
Deductions - 0.1 - 0.1 - 0.2
Depreciations - 3.0 - 3.5 - 6.9
Translation differences 0.6 0.2 - 0.5
Book value at the end of the period 36.0 40.3 36.5
APPENDIX 7
CONSOLIDATED CONTINGENT LIABILITIES
EUR million 2008 2007 2007
1 - 6 1 - 6 1 - 12
Real estate mortgages 3.4 2.5
Business mortgages 28.4 16.4 16.4
Guarantees pledged 0.1 0.7 0.7
Rental liabilities 0.6 0.9 0.7
The parent company has given a EUR 6.9 million bank guarantee to secure the
payment of contributions related to Scanfil NV's restructuring. Scanfil NV's
balance sheet includes a corresponding provision.
APPENDIX 8
KEY INDICATORS QUARTERLY
EUR million
Q2/08 Q1/08 Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06
Turnover, MEUR 58.7 50.0 54.4 59.1 58.9 52.2 51.5 67.5
Operating
Profit, MEUR 6.6 4.7 5.5 5.6 4.0 3.6 2.7 7.0
Operating profit, % 11.3 9.5 10.2 9.4 6.7 6.8 5.2 10.4
Net income, MEUR 6.2 3.6 3.4 4.5 3.2 3.1 3.0 6.1
EPS, EUR 0.11 0.06 0.06 0.08 0.05 0.05 0.05 0.10
SCANFIL PLC
Harri Takanen
President
Additional information:
President Harri Takanen
Tel +358 8 4882 111
Distribution OMX Nordic Exchanges, Helsinki
Major Media
www.scanfil.com
Scanfil plc is a global contract manufacturer and systems supplier for
communication and industrial electronics with over 30 years experience in
demanding contract manufacturing
Scanfil offers contract-manufacturing services as a systems supplier to the
telecommunication industry, mainly to wireless communication sector, as well as
to the industrial electronics industry. Main telecommunication products are
among others integrated enclosure systems for mobile phone and ADSL networks and
assembly and testing of modules related to enclosure systems. Examples of
industrial electronics products include box-built tested devices, various
electronic modules, backplanes and assembled circuit boards as well as cable
assemblies. Production plants are situated in China, Hungary, Estonia and
Finland.
Not for release over US newswire services. Forward looking statements: certain
statements in this stock exchange release may constitute "forward-looking"
statements which involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements of Scanfil
Oyj to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. When used
in this stock exchange release, such statements use such words as "may," "will,"
"expect," "anticipate," "project," "believe," "plan" and other similar
terminology. New risk factors may arise from time to time and it is not possible
for management to predict all of those risk factors or the extent to which any
factor or combination of factors may cause actual results, performance and
achievements of Scanfil Oyj to be materially different from those contained in
forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction of
actual results. The forward-looking information contained in this stock exchange
release is current only as of the date of this stock exchange release. There
should not be an expectation that such information will in all circumstances be
updated, supplemented or revised, except as provided by the law or obligatory
regulations, whether as a result of new information, changing circumstances,
future events or otherwise.