STOCK EXCHANGE RELEASE Free for publication on October 29, 2009 at 8.00 am. (CET+1) EB, ELEKTROBIT CORPORATION, INTERIM REPORT, JANUARY TO SEPTEMBER 2009 EB'S OPERATING CASH FLOW POSITIVE AND 3Q FINANCIAL PERFORMANCE ACCORDING TO THE EXPECTATIONS SUMMARY 3Q 2009 - Net sales amounted to EUR 33.5 million (EUR 34.5 million, 3Q 2008), representing a -2.7 per cent decrease year-on-year. - Operating loss improved to EUR -0.8 million (EUR -12.9 million, 3Q 2008). - Operating cash flow amounted to EUR 4.6 million (EUR -7.7 million, 3Q 2008). The net cash flow increased to EUR 1.8 million (EUR -7.6 million, 3Q 2008). - Cash and other liquid assets totaled to EUR 62.2 million (EUR 67.2 million, 3Q 2008) - Equity ratio remained at a high level of 71.1% (69.5%, 3Q 2008) - Earnings per share were EUR -0.00 (EUR -0.11, 3Q 2008) Decrease of -10.3 per cent in the net sales (EUR 37.4 million, 2Q 2009) is mainly due to the typical seasonality effect in R&D services business as stated in the outlook given for the second half of 2009. EB'S CEO JUKKA HARJU: "EB's net sales and consequently the operating result were at the expected level and generated clearly positive cash flow, despite the market environment prevailed challenging. However, the operating result is by no means satisfactory and profitability improvement maintains to be our most important short term target." FINANCIAL PERFORMANCE DURING JANUARY - SEPTEMBER 2009 (Comparisons are given to January-September 2008, unless otherwise indicated) EB's net sales during January - September 2009 decreased -7.4 per cent to EUR 113.7 million (EUR 122.8 million). Operating loss from business operations amounted to EUR -0.3 million and the non-recurring costs totaled to EUR -1.6 million, resulting to the operating loss of EUR -1.9 million (EUR -34.2 million). The Automotive Business Segment's net sales during January - September 2009 amounted to EUR 44.7 million (EUR 44.6 million) representing a slight growth of 0.3 per cent. The operating loss reduced to EUR -4.0 million (EUR -9.8 million). The significant improvement of operating result with flat turnover reflects the profitability improvement measures taken. The Wireless Business Segment's net sales during January - September 2009 amounted to EUR 68.6 million (EUR 77.9 million), representing a decline of -11.9 per cent. Operating result from business operations amounted to EUR 2.5 million and the non-recurring costs totaled to EUR -1.2 million, resulting to the operating profit of EUR 1.3 million (EUR -23.6 million). The significant improvement of operating result with lower turnover year-on-year was mainly due to the execution of the earlier announced profitability improvement program. The total R&D investments during the reporting period were EUR 10.5 million (EUR 30.5 million), equaling 9.2 per cent of the net sales (24.8 per cent in 2008). The significant reduction of the R&D investments was mostly due to the change of the business model (and consequent exit from developing own products) in Mobile WiMAX in October 2008 and exit from RFID technology business in February 2009. CONSOLIDATED INCOME STATEMENT (MEUR) 1-9 2009 1-9 2008 9 months 9 months NET SALES 113.7 122.8 OPERATING PROFIT (LOSS) -1.9 -34.2 Financial income and expenses -0.3 -1.4 RESULT BEFORE TAX -2.2 -35.6 RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS -3.1 -35.8 Profit after tax for the year from discontinued 0.3 operations 0.1 RESULT FOR THE PERIOD -2.8 -35.6 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -3.4 -35.1 Result for the period attributable to: Equity holders of the parent -2.7 -35.6 Minority interest -0.0 Total comprehensive income for the period attributable to: Equity holder of the parent -3.4 -35.1 Minority interest -0.0 Earnings per share EUR continuing operations -0.02 -0.28 Earnings per share EUR discontinued operations 0.00 0.00 Earnings per share EUR continuing and discontinued operations -0.02 -0.28 - Cash flow from Business Operations amounted to EUR 0.9 million (EUR -24.1 million). - Equity ratio was 71.1% (69.5%). - Net gearing was -39.5% (-32.2%). QUARTERLY FIGURES The distribution of the Group's overall net sales and profit, MEUR: +-------------------------------------------------------------------+ | | 3Q 09 | 2Q 09 | 1Q 09 | 4Q 08 | 3Q 08 | |---------------------------+-------+-------+-------+-------+-------| | Net sales | 33.5 | 37.4 | 42.8 | 49.5 | 34.5 | |---------------------------+-------+-------+-------+-------+-------| | Operating profit (loss) | -0.8 | -1.1 | 0.0 | -8.5 | -12.9 | |---------------------------+-------+-------+-------+-------+-------| | Operating profit (loss) | -0.8 | -0.4 | 0.9 | -2.8 | -11.3 | | without non-recurring | | | | | | | costs | | | | | | |---------------------------+-------+-------+-------+-------+-------| | Result before taxes | -0.6 | -0.7 | -0.9 | -11.8 | -14.4 | |---------------------------+-------+-------+-------+-------+-------| | Result for the period | -0.5 | -1.6 | -1.1 | -14.0 | -14.6 | +-------------------------------------------------------------------+ The distribution of the net sales by Business Segment, MEUR: +-----------------------------------------------------------+ | | 3Q 09 | 2Q 09 | 1Q 09 | 4Q 08 | 3Q 08 | |-------------------+-------+-------+-------+-------+-------| | Automotive | 14.8 | 13.5 | 16.4 | 18.7 | 15.9 | |-------------------+-------+-------+-------+-------+-------| | Wireless | 18.6 | 23.7 | 26.3 | 30.7 | 18.5 | |-------------------+-------+-------+-------+-------+-------| | Corporation total | 33.5 | 37.4 | 42.8 | 49.5 | 34.5 | +-----------------------------------------------------------+ The distribution of the net sales by market area, MEUR and %: +--------------------------------------------------+ | | 3Q 09 | 2Q 09 | 1Q 09 | 4Q 08 | 3Q 08 | |----------+-------+-------+-------+-------+-------| | Asia | 1.8 | 2.5 | 4.4 | 3.1 | 0.9 | | | 5.5% | 6.8% | 10.3% | 6.2% | 2.6% | |----------+-------+-------+-------+-------+-------| | Americas | 11.1 | 12.5 | 11.9 | 10.9 | 7.1 | | | 33.1% | 33.5% | 27.7% | 22.0% | 20.7% | |----------+-------+-------+-------+-------+-------| | Europe | 20.6 | 22.3 | 26.6 | 35.5 | 26.4 | | | 61.4% | 59.7% | 62.1% | 71.8% | 76.7% | +--------------------------------------------------+ Net sales (external) and operating profit development by Business Segments and Other businesses, MEUR: +-----------------------------------------------------------------+ | | 3Q 09 | 2Q 09 | 1Q 09 | 4Q 08 | 3Q 08 | |-------------------------+-------+-------+-------+-------+-------| | Automotive | | | | | | | Net sales | 14.8 | 13.5 | 16.4 | 18.7 | 15.9 | | Operating profit (loss) | -0.9 | -2.5 | -0.7 | -2.3 | -4.1 | |-------------------------+-------+-------+-------+-------+-------| | Wireless | | | | | | | Net sales | 18.6 | 23.7 | 26.3 | 30.7 | 18.5 | | Operating profit (loss) | -0.1 | 0.9 | 0.5 | -4.9 | -8.1 | |-------------------------+-------+-------+-------+-------+-------| | Other businesses | | | | | | | Net sales | 0.2 | 0.2 | 0.1 | 0.1 | 0.1 | | Operating profit (loss) | 0.2 | 0.4 | 0.2 | -1.3 | -0.7 | |-------------------------+-------+-------+-------+-------+-------| | Total | | | | | | | Net sales | 33.5 | 37.4 | 42.8 | 49.5 | 34.5 | | Operating profit (loss) | -0.8 | -1.1 | 0.0 | -8.5 | -12.9 | +-----------------------------------------------------------------+ BUSINESS SEGMENTS' MAIN EVENTS DURING 3Q 2009 EB's reporting is based on the Automotive and Wireless Business Segments. AUTOMOTIVE The Automotive Business Segment consists of in-car software products, navigation software for after market devices (PND, personal navigation devices) and R&D services for the automotive industry with leading car manufacturers, car electronics suppliers (Tier 1) and automotive chipset suppliers as customers. By combining its software products and engineering services EB is creating unique, customized solutions for its automotive customers. During the third quarter of 2009, the net sales of the Automotive Business Segment amounted to EUR 14.8 million (EUR 15.9 million, 3Q 2008), representing a year-on-year decline of -6.6 per cent. The decline in net sales reflects the challenging automotive market conditions in which customers constrained their R&D investments. Despite of the slight decline in net sales, the operating result improved significantly to EUR -0.9 million (EUR -4.1 million, 3Q 2008) due to the taken profitability improvement measures. Automotive Business Segment continued the execution of its announced strategy including investments into EB's automotive software products and global solution services to its customers. The joint venture between EB and AEV (Audi Electronics Venture GmbH) named e.solutions GmbH started its operations in July. It concentrates on the development of a software framework and control system for in-vehicle infotainment systems. In September EB and NEC Electronics announced their collaboration for AUTOSAR solutions including availability of an AUTOSAR 3.0 compatible software package with basic software and comprehensive tool chain for various hardware platforms. This enables easy design of application software without the need for new developments. WIRELESS The Wireless Business Segment comprises the following businesses: - Wireless Solutions provides customized solutions and R&D services for wireless industry and other industries utilizing wireless technologies. - Wireless Communications Tools provides test tools for measuring, modeling and emulating radio channel environments. During the third quarter of 2009, the net sales of the Wireless Business Segment amounted to EUR 18.6 million (EUR 18.5 million, 3Q 2008), representing a slight increase of 0.2 per cent. The operating loss was EUR -0.1 million (EUR -8.1 million, 3Q 2008). The significant improvement of operating result with flat turnover year-on-year was mainly due to the execution of the earlier announced profitability improvement program. EB continued to further develop its offering towards customized solutions by integrating own and 3rd party technologies and providing own R&D services. Even though the challenging economic situation prevailed in the mobile communication R&D services market, Wireless Solutions business managed to keep the volumes of R&D services at expected level. The demand for satellite-terrestrial network device solutions continued to be strong during the quarter. The sales of wireless communications emulation and design tools continued to be driven mainly by development of LTE systems and devices. In July EB announced that the EB-designed satellite-terrestrial smartphone, used by TerreStar Networks, successfully completed a first ever handset-to-handset VoIP call over satellite network, highlighting EB's strength in device development. In August EB announced it has joined the Symbian Foundation. EB holds a seat on the Release Council, which coordinates the integration of contributions to the Symbian source code into stable and timely platform and tools releases. In September the EB MID Reference Device was recognized as a finalist at the annual 4G World Awards for Best Mobile Internet Device. Further in September EB introduced multimedia improvements to its MID reference design. The earlier announced closing of the EB Turku site was finalized by the end of September. MARKET OUTLOOK As a consequence of the general economic environment, both automotive and wireless communication market growth is unlikely before the global economic environment starts to improve. The share of electronics and software in cars has grown significantly during the past years and it is expected that the trend of increased use of software in automotive continues to prevail in the market. The majority of the innovation and differentiation in the automotive industry is brought about by software and electronics. In order to enable faster innovation, to improve quality and development efficiency and to reduce complexity related to software, the use of standard software solutions is expected to increase. The estimated automotive software general market growth rate of some 15 per cent (Frost & Sullivan) is negatively affected by the current downturn of the automotive industry. According to Strategy Analytics the global market for automotive electronic systems fell by 3 per cent in 2008 and is forecasted to fall by a further 15 per cent in 2009, due to the global recession. However, the underlying growth of the automotive software market is expected to continue past the crisis and the cost pressures of the automotive industry are expected to accelerate the need of productized, efficient software solutions EB is offering. EB's net sales cumulating from the automotive industry is currently driven by the development of new cars and platforms and is not directly dependent on production volumes of the car industry. While customers remain very cost conscious there are early signs that the demand starts to slowly recover. The global mobile infrastructure market is decreasing and the consolidation of the industry is expected to continue. LTE standard is gaining strength while the momentum of Mobile WiMAX standard has been decreasing. Going forward, EB's business driven by LTE is increasing while EB's future sales revenues are not materially dependent on Mobile WiMAX technology. The global mobile phone market is leveling off and it is expected to decrease in volume in short-term. The value share is expected to move towards higher-end due to the increased demand for new features and services. New open software architectures and platforms are creating opportunities for companies such as EB with strong integration capabilities. The mobile satellite communication service industry is introducing new data and mobile communication services with new operators being formed and traditional ones upgrading their solutions and offerings. Mastering of multi-radio technologies and end-to-end system architectures covering both terminal and network technologies, has gained importance in the complex wireless technology industry. The demand for EB's satellite-terrestrial device solutions is expected to continue. The satellite-terrestrial and Mobile Satellite Services (MSS) market demand is expected to start moving from the current reference design phase towards the launch of commercial products and services. This can create new service and product related business opportunities for companies such as EB. The mobile communication R&D services market continues to be challenging and the continuing price pressure drives increasing off-shoring in the industry. However, attractive niches continue to exist (OVUM). Because of the economical slowdown, companies will review their R&D costs and project portfolios resulting in reduction of the overall R&D expenditures and activities during the next couple of years, resulting in less demand for external R&D services. However, continuing OEMs need to reduce their fixed costs and increase flexibility that can create new opportunities for partnering for companies such as EB. The overall wireless communications tools market was weak following the current economic downturn. However, there is a need for advanced development tools for 3GPP LTE technology and that is expected to remain as a driver for the demand in the medium and long term. EB provides world leading channel emulation tools for the development of MIMO based 3GPP LTE and other advanced radio technologies. RESEARCH AND DEVELOPMENT DURING 3Q 2009 EB continued to invest in R&D in the automotive software products and tools and radio channel emulation products. The total R&D investments during the third quarter of 2009 were EUR 3.5 million (EUR 8.9 million, 3Q 2008), equaling 10.5 per cent of the net sales (25.7 % in 2008). The reduction was mostly due to the change of the business model (and consequent exit from developing own products) in Mobile WiMAX in October 2008 and exit from RFID technology business in February 2009. OUTLOOK FOR THE SECOND HALF OF 2009 The more general market outlook by the businesses is presented under the Market Outlook section. Improving the profitability further continues to be the main focus of EB during the second half of 2009. EB expects the net sales during the second half of 2009 to be lower than during the first half of 2009 (EUR 80.2 million). The operating result in the second half of 2009 is expected to be at the level of or lower than the operating profit from business operations without non-recurring items in the first half of 2009 (EUR 0.5 million). As earlier announced in the Interim Report January - June 2009, the third quarter of 2009 is estimated to be weaker than the latter part of the half due to the holiday period and the nature of R&D services business. RISKS AND UNCERTAINTIES EB has identified a number of business, market and finance related factors that can affect the level of sales and profits. Those of the greatest significance on a short term are those affecting the utilization and chargeability levels and average hourly prices of R&D services. On the ongoing financial period the global economic slowdown may affect the demand for the EB's services, solutions and products and provide pressure on e.g. volumes and pricing. It may also increase the risk for credit losses. As the EB's customer base consists mainly of companies operating in the fields of automotive and telecommunications, the company is exposed to market changes in these industries. EB believes that expanding the customer base will reduce dependence on individual companies and that the company will thereby be mainly affected by the general business climate in automotive and telecommunication industries. However, some parts of EB's business are more sensitive to customer dependency than others. The more general market outlook by the businesses is presented under the Market Outlook section. EB's operative business risks are mainly related to following items: uncertainties and short visibility on customers' product program decisions, their make or buy decisions and on the other hand, their decisions to continue, downsize or terminate current product programs, ramping up and down project resources, timing and on the other hand successful utilization of the most important technologies and components, competitive situation and potential delays in the markets, timely closing of customer and supplier contracts with reasonable commercial terms, delays in R&D projects, activations based on customer contracts, obsolescence of inventories and technology risks in product development causing higher than planned R&D costs. In addition there are typical industry warranty and liability risks involved in selling EB's services, solutions and products. Revenues expected to come from new products for existing and new customers include normal timing risks. More information on the risks and uncertainties affecting EB can be found on the Company website at www.elektrobit.com STATEMENT OF FINANCIAL POSITION AND FINANCING The figures presented in the statement of financial position of September 30, 2009, are compared with the statement of financial position of December 31, 2008 (EUR 1,000). 9/2009 12/2008 Non-current assets 40,680 46,724 Current assets 120,673 133,797 Total assets 161,353 180,520 Share capital 12,941 12,941 Other equity 99,250 102,181 Minority interest 47 Total shareholders' equity 112,239 115,123 Non-current liabilities 16,188 19,690 Current liabilities 32,926 45,708 Total shareholders' equity and liabilities 161,353 180,520 Net cash flow from operations during the period under review: + net profit +/- adjustment of accrual basis items EUR +3,7 million + increase in net working capital EUR -1,6 million + interest, taxes and dividends EUR -1,2 million = cash generated from operations EUR 0,9 million - net cash used in investment activities EUR -2,8 million - net cash used in financing EUR -4,6 million = net change in cash and cash equivalents EUR -6,4 million The amount of accounts and other receivables, booked in current receivables, was EUR 55.6 million (EUR 61.9 million on December 31, 2008). Accounts and other payables, booked in interest-free current liabilities, were EUR 27.7 million (EUR 38.7 million on December 31, 2008). The amount of non-depreciated consolidation goodwill at the end of the period under review was EUR 18.5 million (EUR 18.3 million on December 31, 2008). The amount of gross investments in the period under review was EUR 2.4 million, consisting of replacement investments. Net investments for the reporting period totaled EUR 1.5 million. The total amount of depreciation during the period under review was EUR 7.5 million, including EUR 1.6 million of depreciation owing to business acquisitions. The amount of interest-bearing debt at the end of the reporting period was EUR 17.8 million. The distribution of net financing expenses on the income statement was as follows: interest, dividend and other financial income EUR 0.7 million interest expenses and other financial expenses EUR -0.7 million foreign exchange gains and losses EUR -0.3 million EB's equity ratio at the end of the period was 71.1 per cent (64.9 per cent at the end of 2008). The figures from the period under review includes the statutory reserves EUR 3.2 million. EB follows a hedging strategy, the objective of which is to ensure the margins of business operations in changing market circumstances by minimizing the influence of exchange rates. In accordance with the hedging strategy, the agreed customer commitments net cash flow of the currency in question is hedged. The net cash flow is determined on the basis of sales receivables, payables, the order book and the budgeted net currency cash flow. The hedged foreign currency exposure at the end of the review period was equivalent to EUR 10.5 million. PERSONNEL EB employed an average of 1610 people between January and September 2009. At the end of September, EB had 1556 employees (1735 at the end of 2008). A significant part of EB's personnel are product development engineers. CHANGES IN COMPANY'S MANAGEMENT EB appointed M.Sc (Eng.), M.Sc (Econ.) Jukka Harju as CEO of the Company as of June 4, 2009. Along with the appointment Harju resigned from the membership of the EB's Board of Directors and from the Chairmanship of the Board's committee for Automotive Segment. Jorma Halonen, member of EB's Board of Directors, was elected as the new Chairman of the Automotive committee. In addition to Halonen, Seppo Laine, Staffan Simberg and Erkki Veikkolainen continued to serve as EB Board members and Juha Hulkko continued as the Chairman of the Board. CEO Pertti Korhonen resigned from EB as of June 3, 2009. EB's Board of Directors and Corporate Executive Board can be found from the Company's Internet pages at: www.elektrobit.com/corporate_governance. FLAGGING NOTIFICATIONS There were no changes in ownership during the period under review that would have caused flagging notifications which are obligations for disclosure in accordance with Chapter 2, section 9 of the Securities Market Act. Oulu, October 29, 2009 EB, Elektrobit Corporation The Board of Directors Further Information: Jukka Harju CEO Tel. +358 40 344 5501 Panu Miettinen CFO Tel. +358 40 344 5338 Distribution: NASDAQ OMX Helsinki Principal media INVITATION TO PRESS CONFERENCE ON EB'S 3Q 2009 RESULT EB, Elektrobit Corporation's Interim Report January - September 2009 will be published on Thursday, October 29, 2009 at 8.00 am (CET+1). The release will be available at EB's website immediately after that. EB will hold a conference call for media, analysts and institutional investors on the same day at 12.00 am (CET+1). The presentation will be shown simultaneously in the Internet through WebEx. The conference will be held in English. To join the conference call please dial +358 20 699 101. The access code is 757344# To follow the presentation online through WebEx, please go to www.elektrobit.com/investors. In technical problems, please go to www.elektrobit.com/webcast/instructions or call number +358 40 344 5148. The recording of the conference call and the presentation will be available after the conference on EB's website www.elektrobit.com/investors. October 22, 2009 EB, Elektrobit Corporation Corporate Communications EB, ELEKTROBIT CORPORATION, INTERIM REPORT JANUARY - SEPTEMBER 2009 (unaudited) The Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting. CONSOLIDATED STATEMENT OF 1-9/2009 1-9/2008 1-12/2008 COMPREHENSIVE INCOME (MEUR) 9 months 9 months 12 months NET SALES 113.7 122.8 172.3 Other operating income 2.8 4.7 6.2 Change in work in progress and finished goods -0.8 -1.5 -2.8 Work performed by the undertaking for its own purpose and capitalized 0.4 0.1 0.1 Raw materials -5.8 -11.4 -18.0 Personnel expenses -67.6 -76.3 -104.0 Depreciation -7.5 -12.6 -16.4 Other operating expenses -37.1 -60.0 -80.1 OPERATING PROFIT (LOSS) -1.9 -34.2 -42.7 Financial income and expenses -0.3 -1.4 -4.7 RESULT BEFORE TAXES -2.2 -35.6 -47.4 Income taxes -0.9 -0.1 -2.4 RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS -3.1 -35.8 -49.8 Result after taxes for the period from discontinued Operations 0.3 0.1 0.3 RESULT FOR THE PERIOD -2.8 -35.6 -49.5 Other comprehensive income: Exchange differences on translating foreign operations -0.6 0.5 0.6 Other comprehensive income for the period total -0.6 0.5 0.6 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -3.4 -35.1 -48.9 Result for the period attributable to Equity holders of the parent -2.7 -35.6 -49.5 Minority interest 0.0 Total comprehensive income attributable to Equity holders of the parent -3.4 -35.1 -48.9 Minority interest 0.0 Earnings per share EUR continuing operations Basic earnings per share -0.02 -0.28 -0.38 Diluted earnings per share -0.02 -0.28 -0.38 Earnings per share EUR discontinued operations Basic earnings per share 0.00 0.00 0.00 Diluted earnings per share 0.00 0.00 0.00 Earnings per share EUR continuing and discontinued Operations Basic earnings per share -0.02 -0.28 -0.38 Diluted earnings per share -0.02 -0.28 -0.38 Average number of shares, 1000 pcs 129 413 129 413 129 413 CONSOLIDATED STATEMENT OF FINANCIAL Sept. 30, Sept. 30, Dec. 31, 2008 POSITION (MEUR) 2009 2008 ASSETS Non-current assets Property, plant and equipment 12.2 17.4 16.2 Goodwill 18.5 18.2 18.3 Intangible assets 8.8 15.8 11.0 Other financial assets 0.3 0.3 0.4 Receivables 0.8 0.9 0.8 Deferred tax assets 0.0 2.6 0.1 Non-current assets total 40.7 55.3 46.7 Current assets Inventories 2.6 5.8 3.3 Trade and other receivables 55.6 60.2 61.9 Financial assets at fair value through profit or loss 0.3 Cash and short term deposits 62.2 67.2 68.6 Current assets total 120.7 133.2 133.8 TOTAL ASSETS 161.4 188.5 180.5 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 12.9 12.9 12.9 Share premium 64.6 64.6 64.6 Translation difference -0.4 0.1 0.2 Retained earnings 35.1 51.0 37.4 Minority interest 0.0 Total equity 112.2 128.6 115.1 Non-current liabilities Deferred tax liabilities 2.2 3.2 2.6 Provisions 1.3 1.2 1.0 Interest-bearing liabilities 12.5 15.9 15.4 Other liabilities 0.1 0.6 0.7 Non-current liabilities total 16.2 20.8 19.7 Current liabilities Trade and other payables 24.5 26.2 35.1 Financial liabilities at fair value through profit or loss 1.1 0.1 Pension obligations 1.2 1.1 1.0 Provisions 1.9 0.7 2.5 Interest-bearing loans and borrowings 5.2 9.9 7.0 Current liabilities total 32.9 39.1 45.7 Total liabilities 49.1 59.9 65.4 TOTAL EQUITY AND LIABILITIES 161.4 188.5 180.5 CONSOLIDATED STATEMENT OF CASH FLOWS 1-9/2009 1-9/2008 1-12/2008 (MEUR) 9 months 9 months 12 months CASH FLOW FROM OPERATING ACTIVITIES Result for the period -2.8 -35.6 -49.5 Adjustment of accrual basis items 6.6 15.9 27.0 Change in net working capital -1.6 -3.6 2.4 Interest paid on operating activities -1.8 -1.9 -7.3 Interest received from operating activities 1.4 3.0 4.4 Other financial income and expenses, net received 0.0 0.0 0.0 Income taxes paid -0.8 -2.0 -1.7 NET CASH FROM OPERATING ACTIVITIES 0.9 -24.1 -24.7 CASH FLOW FROM INVESTING ACTIVITIES Acquisition of business unit, net of cash acquired -0.9 -0.9 Disposal of business unit, net of cash acquired -0.6 20.4 26.8 Purchase of property, plant and equipment -1.5 -1.2 -1.8 Purchase of intangible assets -0.9 -2.3 -2.6 Purchase of other investments 0.0 -0.5 -0.5 Sale of property, plant and equipment 0.1 0.2 0.2 Sale of intangible assets 0.0 Proceeds from sale of investments 0.1 10.5 10.6 NET CASH FROM INVESTING ACTIVITIES -2.8 26.1 31.8 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowing 1.1 2.1 0.1 Repayment of borrowing -2.6 -1.6 -1.9 Payment of finance liabilities -3.0 -4.6 -6.0 Dividends paid -2.6 -2.6 NET CASH FROM FINANCING ACTIVITIES -4.6 -6.7 -10.5 NET CHANGE IN CASH AND CASH EQUIVALENTS -6.4 -4.7 -3.3 Cash and cash equivalents at beginning of period 68.6 71.9 71.9 Cash and cash equivalents at end of period 62.2 67.2 68.6 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (MEUR) A = Share capital B = Share premium C = Retained earnings D = Total equity A B C D Equity on January 1, 2008 12.9 64.6 88.1 165.7 Dividend distribution -2.6 -2.6 Share-related compensation 0.7 0.7 Total comprehensive income for the period -35.1 -35.1 Other items 0.0 0.0 Equity on September 30, 2008 12.9 64.6 51.1 128.6 Equity on January 1, 2009 12.9 64.6 37.6 115.1 Share-related compensation 0.2 0.2 Total comprehensive income for the period -3.4 -3.4 Other items 0.3 0.3 Equity on September 30, 2009 12.9 64.6 34.7 112.2 NOTES TO THE INTERIM REPORT Accounting principles for the Interim Report: The Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies and methods of computation are followed in the interim report as compared with annual financial statements. The Group has adopted following standards: IAS 1 (Revised) Presentation of Financial Statements. The revision mainly addresses the presentation in the income statement and the statement of changes in equity. IFRS 8 Operating Segments. The new standard replaces IAS 14 Segment Reporting. Under IFRS 8, the reporting is based on the management's internal reporting system and measurement principles. The new standard doesn't have any impact on the comparative information. From January 1, 2009 the reporting segments have been the same, Automotive and Wireless, as they are according to the IAS 14 standard. Items not allocated to segments are included under Other items. Explanatory comments about the seasonality or cyclicality of reporting period operations: The Company operates in business areas which are subject to seasonal fluctuations. The nature and amount of items affecting assets, liabilities, equity, net income, or cash flows which are unusual because of their nature, size or incidence: The result of the reporting period comprises non-recurring restructuring costs of EUR -1.6 million. Dividends paid: The General Meeting held on March 19, 2009 decided in accordance with the proposal of the Board of Directors that no dividend shall be distributed. SEGMENT INFORMATION (MEUR) OPERATING SEGMENTS 1-9/2009 1-9/2008 1-12/2008 9 months 9 months 12 months Automotive Net sales to external customers 44.7 44.6 63.3 Net sales to other segments 0.0 0.1 0.1 Net sales total 44.7 44.7 63.4 Operating profit (loss) -4.0 -9.8 -12.1 Wireless Net sales to external customers 68.6 77.9 108.6 Net sales to other segments 0.2 0.1 0.1 Net sales total 68.7 78.0 108.6 Operating profit (loss) 1.3 -23.6 -28.5 OTHER ITEMS Other items Net sales to external customers 0.4 0.3 0.4 Operating profit (loss) 0.9 -0.8 -2.1 Eliminations Net sales to other segments -0.2 -0.2 -0.2 Operating profit (loss) 0.0 0.0 0.0 Group total Net sales to external customers 113.7 122.8 172.3 Operating profit (loss) -1.9 -34.2 -42.7 Net sales of geographical areas (MEUR) 1-9/2009 1-9/2008 1-12/2008 9 months 9 months 12 months Net sales Europe 69.5 79.4 114.9 Americas 35.5 38.4 49.2 Asia 8.8 5.1 8.1 Net sales total 113.7 122.8 172.3 Material events subsequent to the end of the interim period not reflected in the financial statements for the interim period: There are no such material events subsequent to the end of the interim report period that have not been reflected in this report. The effect of changes in the composition of the group structure during the interim period: On February 2, 2009 EB exited from RFID technology business by selling 7iD Technologies GmbH to the acting management of the said company in Austria. On June 22, 2009 EB and AEV (Audi Electronics Venture GmbH) established a joint venture named e.solutions GmbH. EB holds a 51% stake of the new company, and thus it will be recorded as EB's subsidiary in the consolidated financial statement. AEV holds the remaining 49% stake. Related party transactions: 1-9/2009 1-9/2008 1-12/2008 Employee benefits for key management and stock option expenses total 1.8 2.1 2.7 CONSOLIDATED STATEMENT 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ OF COMPREHENSIVE INCOME 2009 2009 2009 2008 2008 BY QUARTER (MEUR) 3 months 3 months 3 months 3 months 3 months NET SALES 33.5 37.4 42.8 49.5 34.5 Other operating income 0.9 1.3 0.6 1.5 2.6 Change in work in progress and finished goods 0.4 -0.9 -0.3 -1.2 -0.8 Work performed by the undertaking for its own purpose and capitalized 0.0 0.3 0.1 0.0 -0.0 Raw materials -2.1 -1.5 -2.2 -6.6 -2.3 Personnel expenses -20.3 -22.7 -24.6 -27.8 -24.3 Depreciation -2.4 -2.4 -2.7 -3.8 -2.9 Other operating expenses -10.8 -12.6 -13.7 -20.1 -19.7 OPERATING PROFIT (LOSS) -0.8 -1.1 0.0 -8.5 -12.9 Financial income and expenses 0.2 0.5 -0.9 -3.3 -1.6 RESULT BEFORE TAXES -0.6 -0.7 -0.9 -11.8 -14.4 Income taxes 0.1 -0.9 -0.2 -2.3 -0.1 RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS -0.5 -1.6 -1.1 -14.0 -14.6 Result after taxes for the period from discontinued operations 0.3 0.1 0.0 RESULT FOR THE PERIOD -0.1 -1.6 -1.1 -13.9 -14.6 Other comprehensive income for the period total -0.4 -0.5 0.3 0.1 0.8 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -0.5 -2.1 -0.8 -13.8 -13.7 Result for the period attributable to: Equity holders of the parent -0.1 -1.6 -1.1 -13.9 -14.6 Minority interest 0.0 Total comprehensive income for the period attributable to: Equity holders of the parent -0.5 -2.1 -0.8 -13.8 -13.7 Minority interest 0.0 CONSOLIDATED STATEMENT Sept. 30, June 30, March 31, Dec. 31, Sept. OF 30, FINANCIAL POSITION 2009 2009 2009 2008 2008 (MEUR) ASSETS Non-current assets Property, plant and equipment 12.2 13.9 14.9 16.2 17.4 Goodwill 18.5 18.5 18.3 18.3 18.2 Intangible assets 8.8 9.2 10.0 11.0 15.8 Other financial assets 0.3 0.4 0.4 0.4 0.3 Receivables 0.8 0.8 0.8 0.8 0.9 Deferred tax assets 0.0 0.1 2.6 Non-current assets total 40.7 42.7 44.4 46.7 55.3 Current assets Inventories 2.6 2.2 2.6 3.3 5.8 Trade and other receivables 55.6 60.4 62.9 61.9 60.2 Financial assets at fair value through profit or loss 0.3 0.2 0.2 Cash and short term deposits 62.2 60.3 62.8 68.6 67.2 Current assets total 120.7 123.2 128.5 133.8 133.2 TOTAL ASSETS 161.4 165.9 172.9 180.5 188.5 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 12.9 12.9 12.9 12.9 12.9 Share premium 64.6 64.6 64.6 64.6 64.6 Translation difference -0.4 -0.0 0.5 0.2 0.1 Retained earnings 35.1 35.2 36.8 37.4 51.0 Minority interest 0.0 Total equity 112.2 112.7 114.8 115.1 128.6 Non-current liabilities Deferred tax liabilities 2.2 2.3 2.5 2.6 3.2 Provisions 1.3 1.7 0.8 1.0 1.2 Interest-bearing liabilities 12.5 13.6 14.2 15.4 15.9 Other liabilities 0.1 0.1 0.2 0.7 0.6 Non-current liabilities total 16.2 17.6 17.7 19.7 20.8 Current liabilities Trade and other payables 24.5 26.3 30.8 35.1 26.2 Financial liabilities at fair value through profit or loss 0.1 1.1 Pension obligations 1.2 1.2 1.2 1.0 1.1 Provisions 1.9 1.9 2.3 2.5 0.7 Interest-bearing loans and Borrowings (non-current) 5.2 6.3 6.2 7.0 9.9 Current liabilities total 32.9 35.7 40.4 45.7 39.1 Total liabilities 49.1 53.3 58.1 65.4 59.9 TOTAL EQUITY AND LIABILITIES 161.4 165.9 172.9 180.5 188.5 CONSOLIDATED STATEMENT 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ OF CASH FLOWS BY QUARTER 2009 2009 2009 2008 2008 3 months 3 months 3 months 3 months 3 months Net cash from operating activities 4.6 -1.0 -2.7 -0.5 -7.7 Net cash from investing activities -0.7 -0.7 -1.4 5.7 0.5 Net cash from financing activities -2.1 -0.7 -1.7 -3.8 -0.4 Net change in cash and cash equivalents 1.8 -2.5 -5.8 1.4 -7.6 FINANCIAL PERFORMANCE RELATED RATIOS 1-9/2009 1-9/2008 1-12/2008 9 months 9 months 12 months STATEMENT OF COMPREHENSIVE INCOME (MEUR) Net sales 113.7 122.8 172.3 Operating profit (loss) -1.9 -34.2 -42.7 Operating profit (loss), % of net sales -1.7 -27.9 -24.8 Result before taxes -2.2 -35.6 -47.4 Result before taxes, % of net sales -1.9 -29.0 -27.5 Result for the period -3.1 -35.8 -49.8 PROFITABILITY AND OTHER KEY FIGURES Interest-bearing net liabilities, (MEUR) -44.4 -41.4 -46.2 Net gearing, -% -39.5 -32.2 -40.2 Equity ratio, % 71.1 69.5 64.9 Gross investments, (MEUR) 2.4 8.5 9.8 Average personnel during the period 1610 1772 1768 Personnel at the period end 1556 1780 1735 AMOUNT OF SHARE ISSUE ADJUSTMENT Sept. 30, Sept. 30, Dec. 31, (1,000 pcs) 2009 2008 2008 At the end of period 129 413 129 413 129 413 Average for the period 129 413 129 413 129 413 Average for the period diluted with stock options 129 413 129 413 129 413 STOCK-RELATED FINANCIAL RATIOS (EUR) 1-9/2009 1-9/2008 1-12/2008 9 months 9 months 12 months Basic earnings per share -0.02 -0.28 -0.38 Diluted earnings per share -0.02 -0.28 -0.38 Equity *) per share 0.87 0.99 0.89 *) Equity attributable to equity holders of the parent MARKET VALUES OF SHARES (EUR) 1-9/2009 1-9/2008 1-12/2008 Highest 0.80 1.79 1.79 Lowest 0.33 0.63 0.29 Average 0.52 1.34 0.82 At the end of period 0.75 0.70 0.33 Market value of the stock, (MEUR) 97.1 90.6 42.7 Trading value of shares, (MEUR) 7.0 7.0 9.6 Number of shares traded, (1,000 pcs) 13 360 5 230 11 770 Related to average number of shares % 10.3 4.0 9.1 SECURITIES AND CONTINGENT LIABILITIES Sept. 30, Sept. 30, Dec. 31, (MEUR) 2009 2008 2008 AGAINST OWN LIABILITIES Floating charges 3.3 3.1 3.1 Mortgages Pledges 0.9 2.0 1.1 Guarantees 2.8 4.1 4.1 Mortgages are pledged for liabilities totaled 8.8 12.1 9.9 OTHER DIRECT AND CONTINGENT LIABILITIES Rental liabilities Falling due in the next year 3.6 4.4 4.2 Falling due after one year 4.4 4.9 5.1 NOMINAL VALUE OF CURRENCY DERIVATIVES Sept. 30, Sept. 30, Dec. 31, (MEUR) 2009 2008 2008 Foreign exchange forward contracts Market value 0.1 -1.1 -0.1 Nominal value 2.0 34.9 11.9 Purchased currency options Market value 0.4 Nominal value 8.5 Sold currency options Market value -0.1 Nominal value 17.0