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Technology
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Market Cap £210.9m
Enterprise Value £209.1m
Revenue £68.1m
Position in Universe 705th / 1836

Elektrobit Corporation (EB) Financial Statement Bulletin 2013

Thu 20th February, 2014 6:01am

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20140220:nHUGdx5H


STOCK EXCHANGE RELEASE


Free for publication on February 20, 2014, at 8.00 a.m. (CET+1)


Elektrobit Corporation (EB) Financial Statement Bulletin 2013

IN 2013 COMPARABLE NET SALES GREW AND OPERATING PROFIT IMPROVED CLEARLY FROM THE PREVIOUS YEAR

 

From the beginning of 2013 EB has applied the new IFRS10 and IFRS11 standards. As a result the
proportion of net sales and operating result of e.solutions GmbH, a jointly owned company of EB
and AUDI, to be consolidated into Elektrobit group's consolidated financial statements has
changed. For comparability, all 2012 figures presented for comparison are restated assuming that
the proportionate consolidation method would have been applied already in 2012.

EB's figures are divided between Continuing and Discontinuing Operations as provided by the IFRS5
standard. In this interim report, Test Tools product business, sold on January 31, 2013, is
classified as Discontinuing Operations.

 

SUMMARY OCTOBER - DECEMBER 2013

·         Net sales of the October - December 2013 from continuing operations grew to EUR 59.5
million (restated net sales of EUR 48.2 million, 4Q 2012), representing an increase of 23.4 %
year-on-year.

·         Operating profit from continuing operations was EUR 5.7 million (restated operating
profit of EUR -0.5 million including non-recurring items of approximately MEUR 4 weakening
Wireless Business Segment operating result, 4Q 2012).

·         Net cash flow was EUR -0.9 million (EUR -1.4 million, 4Q 2012). Net cash flow includes
the repayment of capital of EUR 14.3 million, distributed in December 2013.

·         Earnings per share from continuing operations were EUR 0.039 (EUR -0.001, 4Q 2012) and
earnings per share from continuing and discontinuing operations were EUR 0.039 (EUR 0.006, 4Q
2012).

·         Extraordinary General Meeting held on December 4, 2013, decided to distribute funds to
shareholders as a repayment of capital, amounting to EUR 0.11 per share. The repayment of total
EUR 14,311,096.25 was paid on December 17, 2013.

·         In December EB raised its operating result guidance for 2013 due to better than expected
fourth quarter and gave more precise net sales outlook for 2013.

 

SUMMARY JANUARY - DECEMBER 2013

·         Net sales of the January - December 2013 from continuing operations grew to EUR 199.3
million (restated net sales of EUR 173.9 million, 2012), representing an increase of 14.6 %
year-on-year.

·         Operating profit from continuing operations was EUR 8.1 million including non-recurring
costs of approximately EUR 0.8 million resulting from the cost saving measures in the Wireless
Business Segment in the first quarter of 2013 (restated operating profit of EUR 1.1 million
including non-recurring items of approximately MEUR 4 weakening Wireless Business Segment's
operating result in 2012).

·         Net cash flow was EUR 28.7 million including non-recurring net cash flow of about EUR 28
million resulting from the sale of the Test Tools product business (EUR 5.1 million, 2012) and
repayment of capital of EUR 14.3 million, distributed in December.

·         Earnings per share from continuing operations were EUR 0.051 (EUR 0.008, 2012) and
earnings per share from continuing and discontinuing operations were EUR 0.238 (EUR 0.017, 2012).

·         A total of 688,185 new shares were subscribed during 2013 by virtue of the option rights
2008A and 2008B. The share subscription prices were recorded in the Company's invested
non-restricted equity fund. After the registration of the new shares, the number of shares in
Elektrobit Corporation's totaled 130,100,875.

·         The Board of Directors proposes that the Annual General Meeting to be held on April 10,
2014 resolve to pay EUR 0.02 per share, as dividend based on the adopted balance sheet for the
financial period of January 1, 2013 - December 31, 2013. 
 
 Group, continuing operations (MEUR)                   4Q 13      4Q 12     2013       2012  
                                                                restated            restated 
 NET SALES                                              59.5        48.2   199.3       173.9 
 OPERATING PROFIT / LOSS                                 5.7        -0.5     8.1         1.1 
 Operating profit / loss, % of net sales               9.6 %      -1.0 %   4.1 %       0.6 % 
 Operating profit /loss without non-recurring items      5.7         3.6     9.0         5.1 
 EBITDA                                                  8.1         1.5    17.2         8.1 
 CASH AND OTHER LIQUID ASSETS                           43.0        14.3    43.0        14.3 
 EQUITY RATIO (%)                                     65.1 %      54.5 %  65.1 %      54.5 % 
 EARNINGS PER SHARE (EUR)                              0.039      -0.001   0.051       0.008 
 
 
 Automotive Business Segment (MEUR)         4Q 13      4Q 12    2013       2012  
                                                     restated           restated 
 NET SALES                                   41.1        31.9  138.3       110.6 
 OPERATING PROFIT / LOSS                      5.4         2.6    8.5         3.3 
 Operating profit / loss, % of net sales   13.2 %       8.2 %  6.2 %       2.9 % 
 EBITDA                                       7.0         3.8   14.6         7.3 
 
 
 Wireless Business Segment, continuing operations (MEUR)   4Q 13      4Q 12   2013       2012 
                                                                  
restated         
restated 
 NET SALES                                                  18.4       16.4   61.2       63.5 
 OPERATING PROFIT / LOSS                                     0.3       -3.2   -0.5       -2.2 
 Operating profit / loss, % of net sales                    1.6%     -19.4%  -0.8%     -3.5 % 
 Operating profit /loss without non-recurring items          0.3        0.9    0.4        1.8 
 EBITDA                                                      1.1       -2.3    2.5        0.7 
 
 
EB'S CEO JUKKA HARJU

"During the last quarter of 2013 EB's net sales grew strongly by 23.4 per cent from the previous
year. Operating profit improved clearly and was 9.6 per cent of net sales, mainly due to the good
operating result of the Automotive Business Segment. Good operating result of the Automotive
Business Segment was affected by the higher software license sales on the latter half of the year
and other seasonality factors, as well as well-developed net sales and improved profitability of
projects. Also Wireless Business Segment's net sales grew from previous year and operating result
was slightly positive in the fourth quarter.

Altogether EB's financial development in 2013 was good. Net sales grew by 14.6 per cent from the
previous year and was EUR 199.3 million. Operating profit of the whole year improved clearly from
last year to EUR 8.1million. I am pleased to say EB reached its main goal for 2013 - to grow its
operating profit from the previous year.

Automotive Business Segment developed according to our objectives in 2013. Net sales continued its
strong growth which has lasted for many years, as car manufacturers continue to investment in the
development of software solutions for new car models. A significant proportion of the growth in
the net sales came from the rapid growth of e.solutions GmbH, the jointly owned company with AUDI.
During the year EB was selected as the supplier for several long-term product development and
product customization projects for leading car manufacturers, which strengthens EB's market
position as partner for car manufacturers and will bring net sales for many years forward.
Operating profit in Automotive Business Segment improved clearly from the previous year and was
6.2 per cent of net sales. Most important factors for the improvement of operating profit were the
growth of the services and software sales, improved project management and actions to improve the
cost structure.

In Wireless Business Segment the net sales in 2013 decreased slightly from previous year due to
the decreased demand in the wireless telecommunication R&D services market. In the last quarter EB
started the product deliveries of the tactical communication system for Finnish Defence Forces and
delivered a batch of special terminal products for one customer for the authority use. These
product deliveries generated product based net sales of EUR 6.9 million in the fourth quarter, the
rest of the net sales being R&D services sales. Operating result in 2013 remained slightly
negative, despite of the cost saving measures taken to improve the cost structure. In addition to
the decreased net sales, the profitability was negatively affected in 2013 by the ongoing
investments into the marketing and product development of products targeted for the global defense
and other authority markets, which investments are expected to start gradually generating net
sales from the latter half of 2014 onwards.

EB's balance sheet and financial position strengthened during 2013 due to the good operative cash
flow and the sale of the Test Tools product business in the beginning of the year. Net cash flow
was EUR 28.7 million and equity ratio raised up to 65.1 per cent.

EB paid dividend of EUR 0.01 per share in April and distributed repayment of capital of EUR 0.11
per share in December. Company's share price increased strongly towards the end of the year and
the daily trading volume of shares grew significantly.

In 2014 our main target is to grow our net sales and operating profit from the previous year. "

 

OUTLOOK FOR 2014

EB expects for the year 2014 that net sales and operating result will grow from the previous year
(net sales of EUR 199.3 million and operating profit of EUR 8.1 million, in 2013). Net sales
growth rate in 2014 is expected to be slower than in the previous year (net sales growth 14.6 per
cent, 2013). Net sales and operating result are expected to mainly accumulate during the latter
half of the year mostly due to the seasonality factors of Automotive Business Segment.

The growth of net sales and operating result in 2014 is expected to come mainly or wholly from the
Automotive Business Segment, where the demand for EB's software solutions is expected to remain
good. The demand for R&D services in Wireless Business Segment is driven by the implementations of
LTE (Long Term Evolution) technology and by the growing need to wirelessly connect various
consumer and professional devices to other equipment. The demand for R&D services in the mobile
communication market is expected to decrease slightly from the previous year.  EB aims at bringing
its Wireless Business Segment's products to the global defense and other authority markets, and
expects to start gradually generating net sales from these markets from the latter half of 2014
onwards.

More specific market outlook is presented under sections "market outlook for the Automotive
Business Segment" and "Market outlook for the Wireless Business Segment".

The profit outlook for the year 2014 does not include possible non-recurring income or costs
related to the reorganization cases of TerreStar Networks Inc. More information about the
reorganization cases of TerreStar Networks and the amount of the receivables and collecting the
receivables as well as other uncertainties regarding the outlook is presented in the "Identified
Risks and Uncertainties".  

 

INVITATION TO A PRESS CONFERENCE

EB will hold a press conference on the Financial Statement 2013 for media, analysts and
institutional investors in Finland, Helsinki, in Hotel Kämp, Pohjoisesplanadi 29, on Thursday,
February 20, 2014, at 14.00 p.m. (CET+1). The conference will also be held as a conference call
and the presentation will be shown simultaneously in the Internet through WebEx. The conference
will be held in English. For more information please go to www.elektrobit.com/investors
http://www.elektrobit.com/investors . 

 

ELEKTROBIT CORPORATION (EB)

EB creates advanced technology and turns it into enriching end-user experiences. EB is specialized
in demanding embedded software and hardware solutions for wireless and automotive industries. The
net sales from continuing operations in 2013 totaled EUR 199.3 million and operating profit of EUR
8.1 million, in 2013. Elektrobit Corporation is listed on NASDAQ OMX Helsinki. www.elektrobit.com
http://www.elektrobit.com/ . 

 

ELEKTROBIT CORPORATION (EB) FINANCIAL STATEMENT BULLETIN 2013

 

From the beginning of 2013 EB has applied the new IFRS10 and IFRS11 standards. As a result the
proportion of net sales and operating result of e.solutions GmbH, a jointly owned company of EB
and AUDI, to be consolidated into Elektrobit group's consolidated financial statements has
changed. For comparability, all 2012 figures presented for comparison are restated assuming that
the proportionate consolidation method according to the above mentioned standards would have been
applied already in 2012.

EB's figures are divided between Continuing and Discontinuing Operations as provided by the IFRS5
standard. In this interim report, Test Tools product business, sold on January 31, 2013, is
classified as Discontinuing Operations. 

 

FINANCIAL PERFORMANCE DURING JANUARY-DECEMBER 2013, CONTINUING OPERATIONS

 

EB's net sales from continuing operations during January-December 2013 grew by 14.6 per cent
year-on-year to EUR 199.3 million (restated net sales of EUR 173.9 million, 1-12 2012). Operating
profit from continuing operations was EUR 8.1 million including the non-recurring cost of
approximately EUR 0.8 million resulting from the cost saving measures in the Wireless Business
Segment during the first quarter of 2013 (restated operating profit of EUR 1.1 million, 1-12 2012
including non-recurring items of approximately MEUR 4 weakening Wireless Business Segment's
operating result). Operating profit from continuing operations without these non-recurring costs
was EUR 9.0 million (restated operating profit of EUR 5.1 million, 1-12 2012).

Net sales of Automotive Business Segment in January-December 2013 grew to EUR 138.3 million
(restated net sales of EUR 110.6 million, 1-12 2012), representing 25.0 per cent growth
year-on-year. A significant proportion of the growth in the net sales came from the rapid growth
of e.solutions GmbH, the jointly owned company with AUDI. Operating profit was EUR 8.5 million
(restated operating profit of EUR 3.3 million, 1-12 2012). Operating profit improved year-on-year
due to the growth of the service and software sales, and improved management of projects and
measures to improve the cost structure. At the beginning of 2013 EB was selected as the supplier
for several long-term product development and product customization projects for leading car
makers. A pricing model, where a part of the product development fee is moved to license fee based
on the actual delivery volumes of new cars, was increasingly often taken into use in the largest
projects. When using this pricing model, which is common in the automotive industry, the project
specific positive operating result and cash flow will be typically reached first during the car
production years.

The Wireless Business Segment's net sales from continuing operations in January-December 2013
decreased by 3.7 per cent year-on-year, to EUR 61.2 million (EUR 63.5 million, 1-12 2012). The
decrease in the net sales was due to decline in the demand for R&D services in the wireless
telecommunications market. In the fourth quarter EB started the product deliveries of the tactical
communication system to Finnish Defence Forces and delivered a batch of special terminal products
to one customer for the authority use. These product deliveries generated product based net sales
of EUR 6.9 million in the fourth quarter, the rest of the net sales being R&D services sales. The
operating loss from continuing operations of the Wireless Business Segment in January-December
2013 was EUR -0.5 million including the non-recurring cost of approximately EUR 0.8 million
resulting from the cost saving measures in the first quarter of 2013 (operating profit of EUR -2.2
million including non-recurring items of approximately EUR 4 million weakening operating result,
1-12 2012). In addition to the decreased net sales, the profitability was negatively affected in
2013 by the ongoing investments into the marketing and product development of products targeted
for the global defense and other authority markets, which investments are expected to start
gradually generating net sales from the latter half of 2014 onwards. Operating result of Wireless
Business Segment in January-December 2013 without non-recurring costs was EUR 0.4 million (EUR 1.8
million, 1-12 2012).

EB and Anite plc signed an agreement on January 28, 2013, under the terms of which EB agreed to
sell its Test Tools product business to Anite ("the Transaction"). The Transaction comprised the
sale of the shares of EB's subsidiary Elektrobit System Test Ltd., a company based in Oulu,
Finland, and certain related other assets in the USA and China. EB's Test Tools product business
provided radio channel emulation tools and testing solutions for the development of the wireless
technologies and was part of EB's Wireless Business Segment employing a total of 54 persons in
Finland, USA and China. The EUR 31 million cash consideration paid for EB's Test Tools product
business, sold in January 2013, has been adjusted by EUR 0.9 million based upon the level of net
working capital and cash and debt in the Test Tools product business at the date of the
transaction. Adjustment improves EB's operating result from discontinued operations in the
reporting period and cash flow of the fourth quarter 2013 with EUR 0.9 million. In the aggregate,
the sale of the Test Tools product business resulted in a non-recurring net profit of about EUR 24
million and a non-recurring net cash flow of about EUR 28 million in 2013. 
 
 CONSOLIDATED INCOME STATEMENT (MEUR)                          1-12 2013   1-12 2012 
                                                              
12 months  
12 months 
                                                                           
restated 
 CONTINUING OPERATIONS                                                               
 Net sales                                                         199.3       173.9 
 Operating profit / loss                                             8.1         1.1 
 Financial income and expenses
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