Proha Plc Stock Exchange Bulletin November 2, 2006 9.00 a.m
PROHA PLC FINANCIAL STATEMENTS (IFRS) JANUARY 1, - SEPTEMBER 30, 2006
Period January - September 2006:
- The Proha Group net sales for the period January 1, - September 30, 2006 were
EUR 46.0 million (EUR 46.6 million in corresponding period 2005).
- Net sales for the continuing operations grew by 49.1% and were EUR 28.8 (19.3)
million.
- The Group's operating result was EUR 11.4 (-2.7) million.
- The Group’s total operating result of EUR 11.4 million is composed of
EUR -0.1 (-0.8) million operating result for the continuing operations,
EUR 14.5 million gain on disposal from the divestment of Artemis on the
second quarter of 2006 and of EUR -3.0 (-1.9) million operating loss of
Artemis for the period January 1, - June 30, 2006.
- The Group's cash flow from operations was EUR -1.0 (-3.6) million.
- The sale of sub-group Artemis was closed on June 30, 2006. The sale has
material positive impact on Proha’s result and financial position.
- Proha’s subsidiary Dovre International AS acquired net assets including the
business operations and international subsidiaries of Norwegian Fabcon
Management AS with the closing date of May 1, 2006. The acquisition enhances
growth of both Proha and its subsidiary Dovre and strengthens their position
in the fast growing oil and gas industry markets.
Period July - September, 2006:
- The Proha Group net sales decreased by 24.3% and were EUR 11.1 million (EUR
14.6 million for the third quarter of 2005), because Artemis no longer was
consolidated to the Group figures.
- Net sales for the continuing operations grew by 76.1% and were EUR 11.1 (6.3)
million.
- The Group’s operating result improved and was EUR 0.3 (-1.4) million.
- Operating result for the continuing operations improved and was EUR 0.3 (-0.3)
million.
- The strong performance by Dovre and Fabcon increased the net sales and
improved profitability for the continuing operations.
New Strategy for Proha:
- On October 26, 2006 Proha published its new strategy that focuses in providing
a comprehensive set of tools and services with the best project management
practices for customers executing projects and managing project business.
PROHA CEO PEKKA PERE:
Year 2006 has been a year of major restructuring for the Proha Group. Divesting
Artemis decreased the Group net sales but improved the financial position of
Proha. The strong balance sheet enables growth and improved profitability for
the continuing operations of the Group.
Acquiring the business operations and international subsidiaries of Norwegian
Fabcon increased the size and strengthened the international presence of Proha’s
oil and gas market related project management services business.
The new Proha strategy published on October, 26th further clarified the Group’s
structure and business goal setting. Proha Group consists of two divisions:
Dovre Consulting and Services division and Safran Systems division.
In the fourth quarter of 2006 the target for Dovre Consulting and Services
division is to continue improving profitability and increasing the share of
international business.
As part of the new strategy Proha decided to commercialize a new software
product line codenamed SafranOne. SafranOne integrates Proha’s Safran software
products together with the newest Microsoft technologies providing advanced
software architecture for sustainable solution delivery to customers.The new
Safran Systems division is not anticipated to have a material impact on
the year 2006 Group net sales yet.
KEY RATIOS FOR THE CONTINUING OPERATIONS
7-9 7-9 1-9 1-9 1-12
2006 2005 Change % 2006 2005 Change % 2005
(EUR million)
Net sales 11.1 6.3 76.1 % 28.8 19.3 49.1 % 26.4
Operating
result 0.3 -0.3 207.5 % -0.5 -0.8 31.3 % -1.4
% of
net sales 2.7 % -4.4 % -1.9 % -4.1 % -5.3 %
Result
before taxes 0.3 -0.3 188.8 % -0.7 -0.8 19.6 % -1.7
Result for
the period 0.1 -0.4 132.8 % -1.1 -1.1 -4.6 % -1.9
Return on
equity % 3.0 % -9.2 % -9.5 % -8.3 % -11.8 %
Return on
investment % 6.6 % -5.1 % -3.0 % -4.3 % -5.3 %
Cash and
cash
equivalents 12.4 3.5 257.6 % 12.4 3.5 257.6 % 3.8
Debt-equity
ratio % -37.8 % 7.0 % -37.8 % 7.0 % 6.8 %
Equity-
ratio % 48.2 % 62.3 % 48.2 % 62.3 % 59.3 %
Basic
earnings per
share, EUR 0.002 -0.006 132.8 % -0.018 -0.017 -4.6 % -0.032
Equity per
share, EUR 0.25 0.27 -10.3 % 0.25 0.27 -10.3 % 0.26
Diluted
earnings per
share, EUR 0.002 -0.006 132.8 % -0.018 -0.017 -4.6 % -0.032
KEY RATIOS OF THE PROHA GROUP
7-9 7-9 1-9 1-9 1-12
2006 2005 Change % 2006 2005 Change % 2005
(EUR million)
Net sales 11.1 14.6 -24.3 % 46.0 46.6 -1.2 % 64.5
Operating
result 0.3 -1.4 120.7 % 11.4 -2.7 520.4 % -3.6
% of
net sales 2.7 % -9.9 % 24.8 % -5.8 % -5.5 %
Result
before taxes 0.3 -1.8 115.7 % 11.9 -3.8 413.1 % -5.0
Result for
the period 0.1 -1.9 106.7 % 11.0 -4.4 349.6 % -6.0
Return on
equity % 2.9 % -114 % 148.2 % -76.1 % -86.0 %
Return on
investment % 6.5 % -32.7 % 92.9 % -12.7 % -13.4 %
Cash and
cash
equivalents 12.4 6.7 85.2 % 12.4 6.7 85.2 % 7.3
Debt-equity
ratio % -37.3 % 53.9 % -37.3 % 53.9 % 47.0 %
Equity-
ratio % 48.5 % 15.8 % 48.5 % 15.8 % 11.0 %
Basic
earnings per
share, EUR 0.002 -0.032 106.7 % 0.179 -0.072 349.5 % -0.098
Basic
Equity per
share, EUR 0.25 0.10 161.6 % 0.25 0.10 161.6 % 0.07
Diluted
earnings per
share, EUR 0.002 -0.031 106.7 % 0.179 -0.072 349.5 % -0.098
EVENTS AFTER THE PERIOD
New strategy for Proha Oyj
On October 25, 2006 the Proha Board of Directors approved the new strategy for
Proha.
Proha is one of the leading software and service companies specializing in
project management. Proha supports customers executing projects and managing
project business by providing a comprehensive set of tools and services with the
best project management practices.
New Software Product
As part of the new strategy Proha will commercialize a new software product line
codenamed SafranOne which is being developed in Proha’s development organization
in Finland and in Asia.
SafranOne tools contain a selection of project management functionalities, as
well as general configurable framework that customers will use both for
investment oriented management of industrial projects and for people oriented
management of project organizations.
Group Structure
Proha Group consists of two divisions: Dovre Consulting and Services division
and Safran Systems division.
Dovre Consulting and Services Division
Dovre Consulting and Services division provides project and supply chain
management consulting and services. Dovre Consulting and Services division
consists of Dovre International AS and its recently acquired Fabcon companies.
Dovre International AS is a Norwegian based company focusing on international
project management and supply chain management services mainly within oil and
gas sector. Dovre has subsidiaries in the USA and Great Britain already prior
the acquisition. During the period under review, Dovre acquired the business of
Fabcon and its international subsidiaries. Fabcon is an internationally
operating oil and gas industry project management consultant established in 1977
with 70 employees. Fabcon has subsidiaries in Canada, United States, France,
Singapore, Nigeria and Great Britain. In addition, Fabcon has branch offices in
Russia and South Korea.
Safran Systems Division
The software business of Proha is reorganized by establishing the
internationally operating Safran Systems division. Safran Systems division
develops and sells project management software that customers will use both for
management of industrial investment projects, and for management of project
organizations. The operations and products of Proha’s Norwegian subsidiary
Safran Software Solutions AS, Finnish subsidiary Datamar Oy as well as the Proha
Mobile Business Unit are organized as Safran Systems division.
Safran Software Solutions AS is a Norwegian company specializing in project
management software for the oil and gas sector. Finnish Datamar Oy offers
tailored software solutions in client/server and Internet environments.
Proha is a Microsoft Gold Certified partner and Safran is one of the few
official international launch partners for Microsoft Project 2007.
Growth Strategy
Both Safran Systems division and Dovre Consulting and Services division will
focus on profitable international growth. In addition to organic growth, Proha
Group will seek growth by expanding its international sales and services network
through acquisitions. The growth through a series of structured acquisitions is
intended to be gained at a low risk level by maintaining a moderate level of
capital employed and not committing the group’s cash funds extensively.
New Management Responsibilities and Management Team
Pekka Pere continues as the President and CEO of Proha Group. He will also have
the responsibility to manage the Safran Systems division of Proha.
Arve Jensen has been appointed as the Executive Vice President of Proha Group
with the responsibility to manage the Dovre Consulting and Services division of
Proha. He also continues as the Managing Director of Dovre International AS.
Birger Flaa has been appointed as the Senior Vice President of Proha Group with
a special responsibility to manage the international expansion of Dovre
Consulting and Services division of Proha. He continues as a member of Proha
Board of Directors.
Steinar Dalva has been appointed as the Senior Vice President of Proha Group
with the responsibility to manage the existing Safran products and the
relationships with the international partners. He also continues as the Managing
Director of Safran Software Solutions AS.
Pekka Halonen transfers to take responsibility for the Growth Ventures
operations aiming at the inorganic growth of both divisions through
acquisitions.
Sirpa Haavisto continues as the Chief Financial Officer of Proha Group and Janne
Rainvuori as the Proha Group Corporate Counsel.
Proha Group also has a new management team with Pekka Pere as the chairman. The
other members of the management team are Arve Jensen, Birger Flaa, Steinar
Dalva, Sirpa Haavisto and Pekka Halonen. Janne Rainvuori as the corporate
counsel will be the secretary of the management team.
IFRS REPORTING
The Proha Plc’s interim report follows the same accounting policies and methods
of computation as in the financial statement for 2005.
On October 26, 2006 Proha published the new strategy that includes the
establishment of two business divisions. The Group reporting structure will be
changed to follow the new divisional organization with Dovre Consulting and
Services, Safran Systems, and other operations forming separate reporting
business segments. In the future financial statements the figures with their
comparison data will be presented according to the new divisional structure.
PROHA DIVESTED ITS OWNERSHIP AT ARTEMIS
The divestment of Artemis International Solutions Corporation (Artemis) was
closed on June 30, 2006. Proha has issued a stock exchange bulletins on the
transaction on March 13, 2006, April 3, 2006, June 9, 2006 and July 3, 2006.
The agreement of Artemis divestment does not include non-competition clauses.
The future development of Artemis does not cause any obligations for Proha.
The divestment of Artemis has material impact on both the extent of the Group
operations and the Group structure. The Group’s result for the period January 1,
- September 30, 2006 includes approx. EUR 14.5 million gain on disposal for the
sale of Artemis shares. Due to the fixed sale price, Artemis’ result of EUR -3.1
million for the period January 1, - June 30, 2006 increased the gain on disposal
by approximately EUR 3.1 million, because the items of Artemis income statement
were consolidated in the Proha Group’s income statement until the closing date
June 30, 2006.
Artemis sub-group that has been a separate reporting segment and a group of cash
flow generating units has been classified as discontinued operation according to
IFRS 5 standard. According to IFRS 5 standard no depreciations have been
recorded on the fixed assets of Artemis sub-group during the period under
review.
Proha got approximately EUR 10.0 million for its 53.3% ownership in Artemis and
the amount was paid in cash in July 2006.
PROHA ACQUIRED BUSINESS OPERATIONS OF FABCON
Dovre Fabcon AS, founded by Proha’s Norwegian subsidiary Dovre International AS,
purchased the business operations and overseas subsidiaries of Fabcon Management
AS during the period under review. Fabcon is consolidated in Proha’s group
financial statements beginning May 1, 2006. The purchase enhances growth of both
Proha and its subsidiary Dovre and strengthens their position in the fast
growing markets. Proha has issued stock exchange bulletins on the acquisition on
April 4, 2006 and May 12, 2006.
The cost of Fabcon acquisition is approximately NOK 24.8 million (approx. EUR
3.2 million) according to the estimate at the end of the period under review. In
addition to the acquisition price of NOK 24.4 million (approx. EUR 3.1 million)
the cost of acquisition includes costs directly attributable to the acquisition
for approx. NOK 0.4 million (approx. EUR 0.1 million).
The purchase price will be paid in two installments. The first installment of
approximately NOK 16.3 million (approx. EUR 2.1 million) was paid in June 2006.
The final purchase price is dependent on Fabcon's result for 2006 and some other
customary terms and conditions. The rest of the purchase price will be at the
most NOK 8.0 million (approx. EUR 1.0 million) and will be paid on December 31,
2007 at the latest. The estimated second installment of EUR 1.0 million of the
purchase price is included in the accrued liabilities of the current liabilities
in the Group balance sheet on September 30, 2006.
Of the cost of acquisition of approximately EUR 0.5 million was allocated to
customer agreements and customer relations. Consequently approximately EUR 0.2
million was recognized as deferred tax liability. The fair value of the acquired
net assets was approximately EUR 1.8 million. The goodwill of approximately EUR
1.4 million was due to expected synergies and profitability of the acquired
business. For the period May 1, - September 30, 2006 Fabcon’s share of the Group
result was EUR 0.3 million. The assets and liabilities recognized of the
acquiree are presented in the table of this bulletin.
BUSINESS PERFORMANCE
Proha’s net sales mainly consists of oil and gas sector project management
business. The business of the continuing operations of Proha is formed by Dovre
International AS with its subsidiaries and Safran Software Solutions AS that are
reported as the Norwegian subsidiaries segment and Datamar Oy. Dovre and Fabcon
accounted for approximately 96.3% (95.3%) and Safran 3.7% (6.6%) of the net
sales of the Norwegian subsidiaries.
For the Norwegian subsidiaries Dovre and Fabcon, the net sales have increased
and profitability improved both during the period January 1, - September 30,
2006 and in the third quarter of 2006. During the period under review Dovre has
made long term frame agreements with significant customers to replace existing
agreements.
For Fabcon the growth has been most significant in Canada and Russia with the
Exxon Sakhalin project there.
During January 1, - September 30, 2006 approximately 90% of the business of the
Norwegian subsidiaries came from oil and gas sector and approximately 10% from
other project management sales. The business of Fabcon companies acquired in the
period under review is fully focused on oil and gas sector.
During period January 1, - September 30, 2006 and in the third quarter of 2006,
the demand in the oil and gas sector has continued strong. The level of
investments in the oil and gas industry remains high. The positive mood of the
markets is anticipated to continue.
In developing its business operations Dovre focuses on maintaining the leading
position in the Norwegian markets, improving profitability, taking advantage of
the synergies created by the Fabcon acquisition and in continuing the growth in
the international markets. Dovre is planning to add personnel to meet the
increasing demand in the oil and gas industry. In the Norwegian markets in
particular the challenge is to recruit professionals to meet the demand. The
purchase of Fabcon’s business operations increases Dovre’s international
presence considerably. Significant customers of both Dovre and Fabcon have
positively received the acquisition of Fabcon.
NET SALES
Proha Group
The Proha Group net sales for the period January 1, - September 30, 2006 were
EUR 46.0 million (EUR 46.6 million in corresponding period 2005)declining by
1.2% from the corresponding period of 2005, because Artemis no longer was
consolidated to the Group figures in the third quarter. However, the increased
net sales of Dovre and Fabcon partly offset the decline.
In the third quarter of 2006 the Proha Group net sales decreased by 24.3% and
were EUR 11.1 million (EUR 14.6 million for the third quarter of 2005), because
Artemis no longer was consolidated to the Group figures.
Continuing operations
For the period January 1, - September 30, 2006 the net sales for the continuing
operations grew by 49.1% and were EUR 28.8 (19.3) million. The net sales of the
Norwegian subsidiaries grew by 48.8% and totaled EUR 28.1 (18.9) million and
accounted for 61.0% (40.5%) of the Group's net sales and 97.4% (97.6%) of the
net sales of continuing operations.
In the third quarter of 2006 the net sales of the continuing operations grew by
76.1% and were EUR 11.1 (6.3) million. The net sales of the Norwegian
subsidiaries grew by 76.2% and totaled EUR 10.9 (6.2) million accounting for
98.6% (42.3%) of the Group's net sales.
Discontinued operations
In the period January 1, - September 30, 2006 the net sales of the discontinued
operations totaled EUR 17.2 (27.3) million and accounted for 37.4% (58.5%) of
the Group net sales.
Due to the divestment of Artemis sub-group closed on June 30, 2006, the third
quarter net sales of the discontinuing operations were EUR 0.0 (8.3) million and
accounted for 0.0% (57.0%) of the Group's net sales.
Distribution of net sales by revenue type (EUR million and % of net sales):
7-9 7-9 1-9 1-9 1-12
2006 % 2005 % 2006 % 2005 % 2005 %
One time
license
revenue 0.1 0.7 1.8 12.4 2.8 6.0 6.6 14.1 9.7 15.0
Recurring
license
revenue 0.1 1.3 3.5 23.9 7.2 15.6 10.7 23.1 14.3 22.2
Services 10.8 98.1 9.3 63.6 36.1 78.3 29.3 62.9 40.5 62.8
Total 11.1 100.0 14.6 100.0 46.0 100.0 46.6 100.0 64.5 100.0
During the period January 1, - September 30, 2006 the service revenue was EUR
36.1 (29.3) million or 78.3% (62.9%) of the net sales.
During the period January 1, - September 30, 2006 the license sales amounted to
EUR 10.0 (17.3) million, accounting for 21.7% (37.1%) of the net sales. The
share of one-time licenses was EUR 2.8 (6.6) million and that of recurring
licenses EUR 7.2 (10.7) million.
The service revenue for the third quarter of 2006 was EUR 10.8 (9.3) million
accounting for 98.1% (63.6%) of the net sales.
In the third quarter of 2006 the license sales amounted to EUR 0.2 (5.3)
million, accounting for 1.9% (36.4%) of the net sales. The share of one-time
licenses was EUR 0.1 (1.8) million and that of recurring licenses EUR 0.1 (3.5)
million in the third quarter.
In the third quarter of 2006, the increase of service revenue and decrease of
license revenue were due to items of Artemis income statement no longer being
consolidated with the Proha Group. Also the acquisition of Fabcon on May 1, 2006
increased the proportion of service revenue in the Group net sales.
Distribution of net sales by segment:
7-9 7-9 Change 1-9 1-9 Change 1-12
(EUR million) 2006 2005 % 2006 2005 % 2005
Norwegian
Subsidiaries *) 10.9 6.2 76.2 28.1 18.9 48.8 25.8
Unallocated items 0.2 0.2 -25.6 0.8 0.6 29.9 0.9
Discontinued
operations 0.0 8.3 -100.0 17.2 27.3 -37.0 38.1
Inter-segment
net sales 0.0 -0.1 103.2 -0.1 -0.2 64.8 -0.2
Group total 11.1 14.6 -24.3 46.0 46.6 -1.2 64.5
*) Dovre International AS with its subsidiaries and Safran Software Solutions AS
Distribution of net sales by country:
7-9 7-9 1-9 1-9 1-12
(EUR million) 2006 2005 2006 2005 2005
Canada 1.5 2.6
Great Britain 1.4 2.8 4.2 5.9
Italy 1.3 2.2 4.4 5.8
Japan 1.3 3.0 3.6 4.9
Norway 7.3 5.5 20.9 16.7 22.9
France 1.1 2.7 4.6 6.7
Germany 0.4 0.8 1.2 1.8
Finland 0.2 1.0 2.8 3.8 5.2
United States 1.5 2.4 7.0 7.3 10.3
Others 1.2 0.2 1.7 0.8 0.9
Net sales
between countries -0.6 -0.6 -0.1
Total 11.1 14.6 46.0 46.6 64.5
Distribution of net sales by country (% of net sales):
7-9 7-9 1-9 1-9 1-12
(% of net sales) 2006 2005 2006 2005 2005
Canada 13.6 % 5.6 %
Great Britain 0.1 % 9.9 % 6.0 % 9.0 % 9.1 %
Italy 8.9 % 4.9 % 9.5 % 9.0 %
Japan 8.9 % 6.5 % 7.6 % 7.6 %
Norway 65.6 % 37.6 % 45.4 % 35.9 % 35.6 %
France 0.3 % 7.4 % 5.9 % 9.9 % 10.5 %
Germany 2.8 % 1.8 % 2.7 % 2.9 %
Finland 1.4 % 6.6 % 6.1 % 8.1 % 8.1 %
United States 13.5 % 16.5 % 15.3 % 15.7 % 15.9 %
Others 10.5 % 1.5 % 3.7 % 1.8 % 1.5 %
Net sales between
countries -5.0 % 0.0 % -1.2 % 0.0 % -0.1 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
PROFITABILITY
In the period January 1, - September 30, 2006 Proha Group's operating result was
EUR 11.4 (-2.7) million. The Group’s operating result of EUR 11.4 million for
the period under review is composed of EUR 14.5 million in gain of disposal of
Artemis in the second quarter of 2006, EUR -3.0 million of Artemis operating
result for the period January 1, - June 30, 2006, and EUR -0.1 million of the
operating result of the continuing operations for the period January 1, -
September 30, 2006.
The Group’s operating result for the third quarter was EUR 0.3 (-1.4) million.
Distribution of operating result by segment:
7-9 7-9 Change 1-9 1-9 Change 1-12
(EUR million) 2006 2005 % 2006 2005 % 2005
Norwegian
Subsidiaries *) 0.8 0.3 156.8 1.5 0.8 93.8 0.8
Unallocated
items -0.5 -0.6 19.4 -2.0 -1.6 -30.1 -2.2
Discontinued
operations 0.0 -1.2 100.0 12.0 -1.9 723.6 -2.2
Group total 0.3 -1.4 120.7 11.4 -2.7 520.4 -3.6
*) Dovre International AS with its subsidiaries and Safran Software Solutions AS
Continuing operations
The operating result for the continuing operations was EUR -0.5 (-0.8) million
for the period January 1, - September 30, 2006. During the period under review,
the operating result for the continuing operations without non-recurring items
was EUR -0.1 (-0.8) million. In the period January 1, - September 30, 2006 the
operating result for the continuing operations includes approx. EUR -0.5 million
of loss on disposal recognized by the parent company for its divestment of
Artemis shares on the second quarter. The operating profit of the Norwegian
subsidiaries was EUR 1.5 (0.8) million.
In the third quarter of 2006 the operating result for the continuing operations
was EUR 0.3 (-0.3) million. The operating profit of the Norwegian subsidiaries
was EUR 0.8 (0.3) million. The operating result for the third quarter does not
include any non-recurring items.
Discontinued operations
In the period January 1, - September 30, 2006 the operating result for the
discontinued operations was approx. EUR 12.0 (-1.9) million. The operating
result for the discontinued operations is composed of the gain on disposal of
EUR 15.0 million for the divestment of Artemis in the second quarter of 2006 and
of EUR -3.0 million operating loss of Artemis during January-June 2006.
Due to the divestment of Artemis sub-group on June 30, 2006, the third quarter
operating result of the discontinuing operations were EUR 0.0 (-1.2) million.
Proha Group
In the period January 1, - September 30, 2006 the result before tax for Proha
Group was EUR 11.9 (-3.8) million.
For the period January 1, - September 30, 2006 the result for Proha Group was
EUR 11.0 (-4.4) million. The Group’s EUR 11.0 million result for the period
under review is composed of EUR 14.5 million in gain of disposal of Artemis, EUR
-3.1 million of Artemis result and EUR -0.6 million of the result of the
continuing operations.
In the period January 1, - September 30, 2006 the result for the continuing
operations was EUR -1.1 (-1.1) million. In the period January 1, - September 30,
2006 the result without non-recurring items for the continuing operations was
EUR -0.6 (-1.1) million.
Group earnings per share amounted to EUR 0.179 (-0.072). For the continuing
operations the earnings per share were EUR -0.018 (-0.017). For the
discontinued operations the earnings per share were EUR 0.197 (-0.055).
Group return on investment (ROI) was 92.9% (-12.7%).
Goodwill
The Group's goodwill is not amortized but tested for impairment under IAS 36. No
indications of impairment of assets exist.
CASH FLOW, FINANCING AND INVESTMENTS
The balance sheet total on September 30, 2006 was EUR 31.9 (39.2) million.
At the end of the period under review, the Group cash and cash equivalents
totaled EUR 12.4 (6.7) million. The cash and cash equivalents for the continuing
operations were EUR 12.4 (3.5) million on September 30, 2006. The payment from
disposal of Artemis was made in July, which increases the Group’s cash and cash
equivalents by approx. EUR 10.0 million.
In the period January 1, - September 30, 2006, cash flow from operating
activities was EUR -1.0 (-1.8).million
In the period January 1, - September 30, 2006 the gross investments totaled EUR
2.1 (0.3) million. The gross investments of the continuing operations were EUR
2.0 (0.2) million and gross investments of the discontinued operations were EUR
0.1 (0.1) million. The gross investments of the continuing operations consist
mainly of acquisition of Fabcon. Approximately EUR 0.5 million of the
acquisition cost of Fabcon was allocated to customer agreements and customer
relations. Approximately EUR 1.4 million was recognized as goodwill.
The total cash flow of investments was EUR 4.6 (4.0) million. EUR 1.9 million
was invested in Fabcon acquisition. The cash flow of investments was increased
by EUR 6.6 million for the proceeds from the disposal of Artemis net of cash
disposed of.
Total of EUR 2.0 million new loans were drawn mainly for the financing of Fabcon
acquisition. A total of EUR 0.5 million loans were repaid resulting in total EUR
1.5 (1.2) million in cash flow of financing activities.
Group equity to assets ratio was 48.5% (15.8%) and gearing was -37.3% (53.9%).
On September 30, 2006 the interest-bearing liabilities amounted to EUR 6.7 (9.9)
million, accounting for 21.0% (25.2%) of the Group's shareholders' equity and
liabilities total. Of the interest-bearing liabilities, EUR 0.9 (3.8) million
were non-current liabilities and EUR 5.7 (6.0) million current liabilities. The
Group's Quick Ratio was 2.4 (1.1).
STATEMENT ON THE ADEQUACY OF THE COMPANY'S ASSETS
On September 30, 2006 the Group's cash and cash equivalents amounted to EUR 12.4
million. According to Proha's management, the liquid assets of the company are
sufficient for Proha to continue as a going concern during the following 12
months.
RESEARCH AND DEVELOPMENT
In the period January 1, - September 30, 2006 the Group research and development
costs for the strategic products were EUR 3.6 (5.2) million accounting for 7.7%
(11.1%) of the net sales. The research and development costs for the continuing
operations were EUR 0.6 (0.6) million accounting for 2.0% (3.1%) of the net
sales of continuing operations. The research and development costs for the
discontinued operations were EUR 3.0 (4.6) million accounting for 17.4% (16.8%)
of the net sales of the discontinued operations. No research and development
costs were capitalized during the period under review.
PERSONNEL
The Group staff costs amounted to EUR 38.9 (38.0) million, constituting 84.5%
(81.6%) of net sales. The staff costs for the continuing operations were EUR
26.7 (18.0) million accounting for 92.5% (93.2%) of the net sales of the
continuing operations. The staff costs for the discontinuing operations were EUR
12.2 (20.0) million accounting for 71.0% (73.3%) of the net sales of the
discontinuing operations.
On September 30, 2006 the Proha Group employed 325 (516) people worldwide and
the average number of Group personnel was 473 (525) in the period January 1, -
September 30, 2006. At the end of the period, the continuing operations employed
325 (213) people.
Distribution of personnel by segment (average):
7-9 7-9 1-9 1-9 1-12
2006 2005 Change % 2006 2005 Change % 2005
Norwegian
Subsidiaries *) 288 186 54.4 248 186 33.4 188
Others 34 26 29.5 33 29 15.0 29
Discontinued
operations 305 -100.0 192 311 -38.1 308
Total 321 517 -37.8 473 525 -9.9 525
*) Dovre International AS with its subsidiaries and Safran Software Solutions AS
In the period January 1, - September 30, 2006 total of EUR 0.2 (0.3) million of
options were expensed. Of the expensed options the continuing operations
accounted for EUR 0.05 (0.04) million and the discontinued operations for EUR
0.1 (0.3) million.
DECISIONS OF PROHA ANNUAL GENERAL MEETING OF SHAREHOLDERS
On April 25, 2006 the Annual General Meeting of Proha Plc made the following
decisions:
The Annual General Meeting confirmed the 2005 Financial Statements and
discharged the Board of Directors and CEO from liability. The Annual General
Meeting approved the Board of Directors' proposal that the net loss for the
financial period be transferred to profit/loss brought forward account and no
dividend is paid.
The following five members were elected to the Board of Directors of Proha Plc:
Birger Flaa, Pekka Mäkelä, Pekka Pere, Olof Ödman and Ernst Jilderda as a new
member.
The Annual General Meeting decided that the Chairman of the Board be paid EUR
18,000 and each Board member, at the moment of election not employed by the
Proha Group or by such company which owns more than five percents of Proha's
share capital and who does not exercise dominant influence over such company, to
be paid EUR 10,000 per year as remuneration for board work.
Ernst & Young Oy was elected to continue as the Company's auditor, with Ulla
Nykky, APA, as the auditor in charge.
Issue of option rights
The Annual General Meeting approved the Board of Directors' proposal to issue a
maximum of 1,395,000 option rights to be offered deviating from the
shareholders' pre-emptive subscription right to the Board of Directors and to
the management of the Group companies.
The subscription of the option rights began on April 25, 2006 and ended on May
25, 2006. The subscription price EUR 0.48 is the weighted average price of the
Company share from April 4, 2006 through April 25, 2006. The share subscription
period will commence in steps between years 2007 and 2009 and will end on May
25, 2010. If the options are exercised the share capital of Proha Plc may
increase by a maximum of 1,395,000 shares and EUR 362,700.00. The options issued
constitute a maximum of 2.23% of the Company's shares and voting rights after
the potential share capital increase. The complete terms and conditions were
given in a stock exchange bulletin on April 4, 2006.
Authorization of the Board of Directors to increase the company's share capital
The Annual General Meeting authorized the Board of Directors to increase the
Company's share capital through an issue of new shares, stock options, option
warrants and/or convertible bonds deviating from the shareholders' pre-emptive
subscription rights. Pursuant to this authorization, the aggregate maximum
number of new shares to be issued or offered for subscription pursuant to stock
options, option warrants and/or convertible bonds shall not exceed 12,243,734
shares with an account equivalent value of EUR 0.26 each, and the share capital
of the Company may be increased by no more than EUR 3,183,370.84, which
represents 20% of the currently registered share capital and of the votes that
can be cast in the General Meeting of Shareholders. The authorization was
granted for a period of one year from the date of the Annual General Meeting.
CORPORATE GOVERNANCE
Proha Plc follows the recommendations of the Helsinki Stock Exchange, the
Central Chamber of Commerce and the Confederation of Finnish Industries and
Employers regarding the corporate governance of publicly held companies. Proha
makes one exception from the recommendation: A share-based bonus system may also
be applied to those members of the Board, who do not have an employment
relationship with the company. Proha's corporate governance principles can be
found on the company's website at www.proha.com.
SHARE CAPITAL AND AUTHORIZATIONS TO ISSUE SHARES
Proha Plc has one class of shares. The book value of the shares is EUR 0.26 per
share. Each share entitles the shareholder to one vote. Proha Plc shares are
traded on the Helsinki Stock Exchange.
On January 1, 2006, the subscribed capital of Proha Plc was EUR 15,916,854.20
and the number of shares is 61,218,670. No changes were made on the share
capital during the period January 1, - September 30, 2006.
The Board of Directors has the authorization by the Annual General Meeting on
April 25, 2006 to increase the company's share capital. Pursuant to this
authorization, the aggregate maximum number of new shares to be issued shall not
exceed 12,243,734 shares with an account equivalent value of EUR 0.26 each, and
the share capital of the Company may be increased by no more than EUR
3,183,370.84. The authorization is valid for one year following the Annual
General Meeting and the authorization remains fully unused as of now.
In it's meeting on May 30, 2006, Proha Board of Directors approved the
subscriptions of the option issue that is part of Proha Group's incentive and
commitment program and that was decided by the Annual General Meeting on April
25, 2006. In the issue, a total of 1.341.000 Proha Plc stock options were
subscribed, entitling to the subscription of 1.341.000 shares. The stock options
were granted without compensation to the management of the Group companies and
company board. The terms and conditions of the option issue were published in
the Stock Exchange Bulletin on April 4, 2006.
No shares were subscribed for with Proha Plc stock options during the period
under review.
TRADING ON THE HELSINKI STOCK EXCHANGE
Liquidity Providing for Proha Plc's Share
Proha Plc and Swedish Remium AB signed a market making agreement that follows
the guidelines set by the Helsinki Stock Exchange on April 5, 2004. Market
making in accordance with the LP agreement commenced on June 12, 2006. The
agreement will be in force initially for a fixed term of six (6) months and
thereafter until further notice, and the agreement's period of notice is one (1)
month.
According to the agreement Remium AB will quote bids and offers for Proha Plc's
share so that the spread of the bid and offer prices is EUR 0.02. The bids and
offers quoted by the liquidity provider must be for at least 10,000 shares,
which represents 100 trading lots.
The number of registered shareholders of Proha Plc totaled 3,412 on September
30, 2006. During the period January 1 - September 30, 2006, the share price was
EUR 0.35 at its lowest and EUR 0.50 at its highest. The closing price on
September 30, 2006 was EUR 0.36. Market capitalization was approximately EUR
22.0 million at the end of the period. The trading volume of the Proha share on
the Helsinki Stock Exchange was approximately EUR 10.4 million during the period
under review.
PROSPECTS FOR 2006
The divestment of Artemis will have a significant impact on Proha Group's
operations in 2006. The divestment closed on June 30, 2006 will improve
significantly Proha’s result for the financial year. The divestment also
strengthens Proha’s balance sheet significantly and provides a strong basis for
future business development. Because Artemis will no longer be consolidated to
Proha Group for the second half of 2006 the Group net sales for the financial
year will be below that of 2005. However, the increased net sales of Dovre and
Fabcon are anticipated to partly offset the decline.
In the fourth quarter of 2006 the target for Dovre Consulting and Services
division is to continue improving profitability and increasing the share of
international business. The situation in the oil and gas markets has significant
impact on future development both in Norway and internationally. The investments
because of high oil price are anticipated to keep the demand strong for the rest
of 2006. The challenge is to respond to the demand, which calls for successful
use of existing resources and recruiting.
The software business of Proha is reorganized by establishing an internationally
operating Safran Systems division. The new division is not anticipated to have a
material impact on the year 2006 Group net sales yet.
PRESS CONFERENCE
Proha Plc will hold a press conference for the media and financial
analysts on November 2, 2006 at 12.00 a.m., in Cabinet 1 at
World Trade Center, address Aleksanterinkatu 17, Helsinki.
More information
PROHA PLC
CEO Pekka Pere, tel +358 (0)20 4362 000
pekka.pere@proha.com
www.proha.com
DISTRIBUTION:
Helsinki Stock Exchange
Major Media
The figures are unaudited.
GROUP INCOME STATEMENT AND BALANCE SHEET JANUARY 1, - SEPTEMBER 30, 2006
GROUP INCOME STATEMENT
CONTINUING OPERATIONS
7-9 7-9 Change 1-9 1-9 Change 1-12
(EUR thousand) 2006 2005 % 2006 2005 % 2005
NET SALES 11 058 6 279 76,1 28 838 19 336 49,1 26 421
Other operating
income 46 -83 155,1 223 125 78,2 160
Gain on disposal
of discontinued
operations -472
Material and
services 76 -50 251,6 -50 -64 21,7 -97
Employee benefits
expense -10 159 -5 500 -84,7 -26 683 -18 029 -48,0 -24 997
Depreciation
and
amortisation -101 -85 -19,0 -279 -254 -9,8 -346
Other operating
expenses -621 -838 25,8 -2 123 -1 911 -11,1 -2 529
OPERATING
RESULT 299 -278 207,5 -547 -796 31,3 -1 388
Financing
income 56 4 71 97 -26,9 253
Financing
expenses -69 -48 -46,0 -194 -134 -44,7 -539
Share of result
in associates 0 100,0 0 100,0 0
RESULT BEFORE
TAX 286 -322 188,8 -670 -834 19,6 -1 674
Tax on income
from
operations -173 -68 -153,0 -432 -224 -92,7 -263
RESULT FOR
THE PERIOD 113 -390 128,9 -1 102 -1 058 -4,2 -1 937
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable to
equity holders
of the parent 129 -393 132,8 -1 100 -1 052 -4,6 -1 942
Result
attributable
to minority
interest -16 4 -543,3 -2 -6 72,7 4
Earnings/share
(undiluted),
eur 0,002 -0,006 132,8 -0,018 -0,017 -4,6 -0,032
Earnings/share
(diluted), eur 0,002 -0,006 132,8 -0,018 -0,017 -4,6 -0,032
DISCONTINUED OPERATIONS
7-9 7-9 Change 1-9 1-9 Change 1-12
(EUR thousand) 2006 2005 % 2006 2005 % 2005
NET SALES 8 319 -100,0 17 195 27 276 -37,0 38 106
Other operating
income 59 -100,0 116 1 212 -90,4 1 396
Gain on disposal
of discontinued
operations 0 15 006
Material and
services 0 -536 100,0 -1 744 -2 364 26,2 -3 349
Employee benefits
expense -6 450 100,0 -12 210 -20 004 39,0 -27 117
Depreciation
and
amortisation 0 -156 100,0 0 -249 100,0 -325
Other operating
expenses 0 -2 403 100,0 -6 402 -7 789 17,8 -10 883
OPERATING
RESULT 0 -1 167 100,0 11 961 -1 918 723,6 -2 172
Financing
income 0 143 -100,0 1 004 996 0,9 1 146
Financing
expenses 0 -473 100,0 -369 -2 052 82,0 -2 303
Share of result
in associates
RESULT BEFORE
TAX 0 -1 496 100,0 12 596 -2 975 523,4 -3 329
Tax on income
from
operations 0 -40 100,0 -489 -369 -32,6 -759
RESULT FOR
THE PERIOD 0 -1 536 100,0 12 106 -3 344 462,1 -4 088
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable to
equity holders
of the parent 0 -1 536 100,0 12 070 -3 344 461,0 -4 088
Result
attributable
to minority
interest 0 -100,0 36 0 0
Earnings/share
(undiluted), 0,000 -0,025 100,0 0,197 -0,055 461,0 -0,067
eur
Earnings/share
(diluted), eur 0,000 -0,025 100,0 0,197 -0,055 461,0 -0,067
GROUP TOTAL
7-9 7-9 Change 1-9 1-9 Change 1-12
(EUR thousand) 2006 2005 % 2006 2005 % 2005
NET SALES 11 058 14 598 -24,3 46 032 46 612 -1,2 64 527
Other operating
income 46 -24 288,3 339 1 337 -74,7 1 555
Gain on disposal
of discontinued
operations 0 14 534
Material and
services 76 -586 113,0 -1 794 -2 428 26,1 -3 447
Employee benefits
expense -10 159 -11 950 15,0 -38 893 -38 033 -2,3 -52 113
Depreciation
and
amortisation -101 -241 58,1 -279 -503 44,5 -670
Other operating
expenses -621 -3 240 80,8 -8 525 -9 700 12,1 -13 412
OPERATING
RESULT 299 -1 444 120,7 11 413 -2 715 520,4 -3 560
Financing
income 56 147 -61,7 1 075 1 093 -1,6 1 399
Financing
expenses -69 -520 86,7 -563 -2 186 74,2 -2 841
Share of result
in associates
RESULT BEFORE
TAX 286 -1 817 115,7 11 925 -3 808 413,1 -5 003
Tax on income
from -173 -108 -59,7 -921 -593 -55,3 -1 022
operations
RESULT FOR
THE PERIOD 113 -1 925 105,9 11 004 -4 401 350,0 -6 025
ALLOCATION OF
RESULT FOR
THE PERIOD
Result
attributable to
equity holders
of the parent 129 -1 929 106,7 10 970 -4 396 349,6 -6 029
Result
attributable
to minority
interest -16 4 -543,3 34 -6 707,9 4
Earnings/share
(undiluted),
eur 0,002 -0,032 106,7 0,179 -0,072 349,5 -0,098
Earnings/share
(diluted), eur 0,002 -0,031 106,7 0,179 -0,072 349,6 -0,098
GROUP BALANCE SHEET
CONTINUING OPERATIONS
30.9. 30.9. 31.12.
(EUR thousand) 2006 2005 Change 2005
%
ASSETS
Non-current assets
Intangible assets 2 070 1 788 15,8 1 708
Goodwill 4 730 3 521 34,3 3 474
Tangible assets 229 259 -11,3 278
Investments in associates 962 962 0,0 962
Available-for-sale
investments 39 27 45,3 27
Long-term
receivables 0 7 -100,0 0
Long-term trade
Receivables and
other receivables 89 -48 283,9 0
Deferred tax asset 94 110 -14,6 97
Non-current assets 8 213 6 625 24,0 6 545
Current assets
Trade receivables
and other receivables 11 251 5 994 87,7 6 172
Tax receivable, income tax 0 274 -100,0 0
Cash and cash equivalents 12 387 3 464 257,6 3 829
Current assets 23 638 9 731 142,9 10 001
TOTAL 31 851 16 356 94,7 16 546
Minority interest 101 49 107,0 59
Non current liabilities
Deferred tax liability 507 437 16,1 418
Non-current interest
bearing liabilities 5 724 3 421 67,3 3 428
Non-current non-interest
bearing liabilities 0 0 0,0 0
Liabilities from defined
benefit plan 142 182 -22,0 147
Non-current provisions 0 21 -100,0 0
Non current liabilities 6 373 4 060 57,0 3 992
Current liabilities
Current interest
bearing liabilities 950 1 215 -21,8 1 477
Trade payables and
other liabilities 8 601 4 767 80,4 5 400
Tax liability, income tax 602 326 84,7 285
Current provisions 0 0 0,0 21
Current liabilities 10 153 6 308 60,9 7 183
TOTAL 16 627 10 417 -9,1 11 234
DISCONTINUED OPERATIONS *)
30.9. 30.9. 31.12.
(EUR thousand) 2006 2005 Change 2005
%
ASSETS
Non-current assets
Intangible assets 0 88 -100,0 76
Goodwill 0 7 767 -100,0 7 751
Tangible assets 0 397 -100,0 352
Investments in associates 0 5 -100,0 5
Long-term trade
receivables
and other receivables 0 176 -100,0 205
Available-for-sale
investments 0 54 -100,0 54
Non-current assets 0 8 487 -100,0 8 442
Current assets
Trade receivables
and other receivables 0 10 828 -100,0 14 268
Tax receivable, income tax 0 261 -100,0 117
Cash and cash equivalents 0 3 225 -100,0 3 464
Current assets 0 14 313 -100,0 17 849
TOTAL 0 22 800 -100,0 26 291
Minority interest 0 0 14
Non current liabilities
Non-current interest
bearing liabilities 0 2 614 -100,0 1 228
Non-current non-interest
bearing liabilities 0 26 -100,0 0
Liabilities from defined
benefit plan 0 3 180 -100,0 3 258
Non-current provisions 0 411 -100,0 77
Non current liabilities 0 6 230 -100,0 4 564
Current liabilities
Current interest
bearing liabilities 0 2 603 -100,0 3 261
Trade payables and
other liabilities 0 13 763 -100,0 18 049
Tax liability, income tax 0 323 -100,0 1 315
Current liabilities 0 16 689 -100,0 22 625
TOTAL 0 22 919 27 203
*) Assets and liabilities
related to discontinued operations
are classified as held for sale.
GROUP TOTAL
30.9. 30.9. 31.12.
(EUR thousand) 2006 2005 Change 2005
%
ASSETS
Non-current assets
Intangible assets 2 070 1 876 10,3 1 784
Goodwill 4 730 11 289 -58,1 11 225
Tangible assets 229 656 -65,0 629
Investments in associates 962 966 -0,5 966
Available-for-sale
investments 39 27 45,3 27
Long-term
receivables 0 7 -100,0 0
Long-term trade
Receivables and
other receivables 89 128 -30,3 205
Other long-term
investments 0 54 -100,0 54
Deferred tax receivable 94 110 -14,6 97
Non-current assets 8 213 15 112 -45,7 14 987
Current assets
Trade receivables
and other receivables 11 251 16 821 -33,1 20 439
Tax receivable, income tax 0 535 -100,0 117
Cash and cash equivalents 12 387 6 688 85,2 7 293
Current assets 23 638 24 045 -1,7 27 850
ASSETS TOTAL 31 851 39 156 -18,7 42 837
SHAREHOLDERS' EQUITY AND
LIABILITIES
Shareholders' equity
Share capital 15 917 15 917 0,0 15 917
Share premium account 4 379 4 808 -8,9 4 808
Fair value reserve
and other reserves 380 449 -15,4 430
Translation differences 82 -667 112,3 463
Retained earnings -5 533 -14 687 62,3 -17 219
Equity attributable to
equity
holders of the parent 15 224 5 820 161,6 4 400
Minority interest 101 49 107,0 73
Shareholders' equity 15 325 5 869 161,1 4 473
Non current liabilities
Deferred tax liability 507 437 16,1 418
Non-current interest
bearing liabilities 5 724 6 034 -5,1 4 656
Non-current non-interest
bearing liabilities 0 26 -100,0 0
Liabilities from defined
benefit plan 142 3 362 -95,8 3 405
Non-current provisions 0 432 -100,0 77
Non current liabilities 6 373 10 290 -38,1 8 556
Current liabilities
Current interest
bearing liabilities 950 3 819 -75,1 4 823
Trade payables and
other liabilities 8 601 18 529 -53,6 23 449
Tax liability, income tax 602 649 -7,2 1 515
Current provisions 0 0 0,0 21
Current liabilities 10 153 22 997 -55,9 29 808
0
TOTAL EQUITY AND LIABILITIES 31 851 39 156 -18,7 42 837
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 1-9/2006
Share Re- Re-
Sha- pre- valu- tai Min-
re mium ation Trans- ned- ority
(EUR thousand) capi- ac- re- lation earn- inte-
tal count serve diff. ings Total rest Total
SHAREHOLDERS'
EQUITY 1.1.2006 15 917 4 808 430 463 -17 219 4 400 73 4 473
Change in
translation
difference -14 -137 -48 -199 1 -198
Share based
payments 53 53 53
Transfers
between items -37 37
Disposal of
Artemis -429 -244 673 -50 -50
Acquisition of
Fabcon 57 57
NET PROFITS
/LOSSES
RECOGNIZED
DIRECTLY TO
SHAREHOLDERS'
EQUITY -429 -51 -381 715 -146 8 -138
Result for
the period 10 970 10 970 34 11 004
Dividend
distribution -15 -15
TOTAL PROFITS
AND LOSSES -429 -51 -381 11 685 10 824 28 10 852
SHAREHOLDERS'
EQUITY
30.9.2006 15 917 4 379 380 82 -5 533 15 224 101 15 325
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 1-9/2005
Share Re- Re-
Sha- pre- valu- tai Min-
re mium ation Trans- ned- ority
(EUR thousand) capi- ac- re- lation earn- inte-
tal count serve diff. ings Total rest Total
SHAREHOLDERS'
EQUITY 1.1.2005 15 917 4 807 467 -545 -11 171 9 475 70 9 545
Change in
translation
difference 21 -121 469 369 369
Share based
payments 363 363 363
Transfers
between items -39 39
Other change 8 8 -15 -7
NET PROFITS
/LOSSES
RECOGNIZED
DIRECTLY TO
SHAREHOLDERS'
EQUITY -18 -121 879 740 -15 725
Result for
the period -4 396 -4 396 -6 -4 402
TOTAL PROFITS
AND LOSSES -18 -121 -3 517 -3 656 -21 -3 677
Share issue 1 1 1
SHAREHOLDERS'
EQUITY
30.9.2005 15 917 4 808 449 -667 -14 687 5 820 49 5 869
GROUP CASH FLOW STATEMENT
1-9 1-9 1-12
(EUR thousand) 2006 2005 2005
Cash flow from operating activities
Operating result 11 413 -2 715 -3 560
Adjustments
Disposal of Artemis -11 256
Other operating income -1 185 -1 369
Depreciation and amortisation 279 503 670
Employee benefits expense 53 305 995
Other operating expenses 162 253
Other adjustments -129 539 3
Adjustments, total -11 053 325 553
Change in net working capital
Increase (-) / decrease (+)
in current receivables -1 613 504 16
Increase (+) / decrease (-)
in current liabilities 581 -1 894 3 626
Other adjustments -114 728 21
Change in net working capital, total -1 145 -662 3 663
Interest paid -170 -443 -171
Interest received 74 851 434
Other financial expenses paid -353 -1 743 -2 501
Other financial income received 398 1 228 2 188
Income taxes paid -115 -423 -442
Cash flow from operating activities -951 -3 582 163
Cash flow from investing activities
Investments in tangible and
intangible assets -27 -314 -279
Acquisition of subsidiaries net
cash acquired -1 949
Proceeds from disposal of subsidiaries net
cash disposed of 6 579
Partial disposals of subsidiaries 556 629
Disposal of associates 625 619
Proceeds (-) and repayments (+) of
loan receivables 19 3 116 186
Dividends received 2 20
Cash flow from investing activities 4 624 3 983 1 173
Cash flow from financing activities
Proceeds from issuance
of share capital 1 1
Proceeds from short-term loans 2 646 3 563
Repayments of short-term loans -483 -3 742 -3 740
Proceeds from long-term loans 2 037 2 297 1 705
Repayments of long-term loans -44 -782
Dividends paid -15 -9 -9
Cash flow from financing activities 1 495 1 193 738
Change in cash and cash equivalents 5 167 1 594 2 075
Cash and cash equivalents at
beginning of the period 7 293 5 069 5 069
Foreign exchange rate adjustment -73 26 -150
Cash and cash equivalents of
subsidiaries acquired 213
Cash and cash equivalents of
subsidiaries dispsed of -3 464
Change in cash and cash equivalents
for the continuing operations 8 419 1 594
Cash and cash equivalents at
end of the period 12 387 6 689 7 293
The following assets and liabilities were recognized
of Fabcon acquisition:
Carrying
amount
Fair values before
upon business
business
combination combination
Acquisition date May 1, 2006 May 1, 2006
(EUR thousand)
Non-current assets
Intangible assets 544 0
Tangible assets 22 22
Trade and other
receivables 137 137
Available-for-sale
investments 13 13
Current assets
Trade and other
receivables 3 256 3 256
Cash and cash equivalents 213 213
Assets total 4 185 3 641
Minority interest 57 57
Non-current liabilities
Deferred tax liability 152 0
Non-current interest
bearing liabilities 323 323
Current liabilities
Trade payables and
other liabilities 1 901 1 901
Liabilities total 2 376 2 224
Net assets 1 752 1 360
Goodwill on acquisition 1 449
Cost of acquisition total 3 200
Amount of acquisition cost paid
in cash and cash assets 2 162
Amount of deferred income 1 038
Cost of acquisition total 3 200
Amount of acquisition cost paid
in cash and cash equivalents 2 162
- cash and cash equivalents on
acquisition date -213
Impact on cash flow from
investing activities
Jan.1, - Sept. 30, 2006 1 949
The figures of the table are based on exchange rate of
the acquisition date.
COMMITMENTS AND CONTINGENT LIABILITIES
CONTINUING OPERATIONS
30.9 30.9 31.12.
(EUR thousand) 2006 2005 2005
COLLARETAL FOR OWN COMMITENTS
Debts secured by corporate
mortgages
Loans from financing
institutions 3 735
The debt is secured by
current assets of Dovre
International AS and Dovre
Fabcon AS and Dovre Fabcon AS shares
Debts secured by assets
Loans and checking
account credit lines used 364 1 263 1 927
Book value of trade receivables
and fixed assets given
as security 556 4 423 6 880
Debts secured by shares
Loans from financial
institutions 36 60 48
Book value of pledged shares 152 152 152
Future minimum lease payments
under non-cancellable
operating leases:
Not later than one year 303 335 309
Later than one year and not
later than five years 1 280 909 875
Total 1 583 1 244 1 185
DISCONTINUED OPERATIONS
30.9 30.9 31.12.
(EUR thousand) 2006 2005 2005
COLLARETAL FOR OWN COMMITENTS
Debts secured by corporate
mortgages
Pension loans - 93 86
Corporate mortgages given
as security of the loans 168 168
Debts secured by the assets of
the company
Loans from financial
institutions - 718 3 276
Debts secured by the assets
of Artemis International
Solutions Corporation in USA
and in Great Britain except for
intellectual property rights.
Future minimum lease payments
under non-cancellable
operating leases:
Not later than one year - 2 825 2 249
Later than one year and not
later than five years - 2 209 3 992
Total - 5 034 6 240
GROUP
30.9 30.9 31.12.
(EUR thousand) 2006 2005 2005
COLLARETAL FOR OWN COMMITENTS
Debts secured by corporate
mortgages
Pension loans - 93 86
Corporate mortgages given
as security of the loans - 168 168
Debts secured by the assets of
the company
Loans from financial
institutions - 718 3 276
Debts secured by the assets of
Artemis International
Solutions Corporation in USA
and in Great Britain except for
intellectual property rights.
Debts secured by corporate
mortgages
Loans from financing
institutions 3 735
The debt is secured by
current assets of Dovre
International AS and Dovre
Fabcon AS and Dovre Fabcon AS shares
Debts secured by assets
Loans and checking
account credit lines used 364 1 264 1 927
Book value of trade receivables
and fixed assets
given as security 556 4 423 6 880
Debts secured by shares
Loans from financial
institutions 36 60 48
Book value of pledged shares 152 152 152
Future minimum lease payments
under non-cancellable
operating leases:
Not later than one year 303 3 160 2 558
Later than one year and not
later than five years 1 280 3 118 4 867
Total 1 583 6 278 7 425
GROUP QUARTERLY INCOME STATEMENT
CONTINUING OPERATIONS
1-3 4-6 7-9 1-3 4-6 7-9 10-12
(EUR thousand) 2006 2006 2006 2005 2005 2005 2005
NET SALES 7 464 10 316 11 058 6 330 6 727 6 279 7 085
Other operating
income 143 34 46 8 201 -83 35
Gain on disposal
Of discontinued
operations -472
Material and
services -3 -123 76 -5 -8 -50 -34
Employee
benefits expense -6 699 -9 825 -10 159 -6 180 -6 348 -5 500 -6 968
Depreciation
and amortisation -86 -92 -101 -87 -82 -85 -91
Other operating
expenses -748 -753 -621 -379 -694 -838 -618
OPERATING RESULT 70 -915 299 -315 -204 -278 -592
% 0,9 % -8,9 % 2,7 % -5,0 % -3,0 % -4,4 % -8,3 %
Financing income 7 7 56 67 26 4 156
Financing expenses -63 -62 -69 -56 -31 -48 -405
RESULT BEFORE TAX 15 -970 286 -303 -209 -322 -840
% 0,2 % -9,4 % 2,6 % -4,8 % -3,1 % -5,1 % -11,9 %
Tax on income from
operations -156 -103 -173 -60 -95 -68 -39
RESULT FOR THE
PERIOD -141 -1 073 113 -363 -305 -390 -879
% -1,9 % -10,4 % 1,0 -5,7 % -4,5 % -6,2 % -12,4 %
DISCONTINUED OPERATIONS
1-3 4-6 7-9 1-3 4-6 7-9 10-12
(EUR thousand) 2006 2006 2006 2005 2005 2005 2005
NET SALES 8 837 8 357 0 9 113 9 844 8 319 10 829
Other operating
income 37 79 0 730 423 59 184
Gain on disposal
of discontinued
operations 0 15 006
Material and
services -961 -784 0 -856 -972 -536 -985
Employee
benefits expense -6 330 -5 880 0 -6 791 -6 764 -6 450 -7 112
Depreciation
and amortisation 0 0 0 -47 -46 -156 -76
Other operating
expenses -3 263 -3 139 0 -2 495 -2 891 -2 403 -3 094
OPERATING RESULT -1 679 13 640 0 -345 -407 -1 167 -254
% -19,0 % 163,2 % -3,8 % -4,1 % -14,0 % -2,3 %
Financing income 295 709 0 432 420 143 151
Financing expenses -309 -60 0 -832 -748 -473 -251
RESULT BEFORE TAX AND
MINORITY INTEREST -1 694 14 289 0 -744 -735 -1 496 -354
% -19,2 % 171,0 % -8,2 % -7,5 % -18,0 % -3,3 %
Tax on income from
operations -252 -237 0 -165 -164 -40 -390
RESULT FOR THE
PERIOD -1 946 14 052 0 -909 -899 -1 536 -744
% -22,0 % 168,1 % -10,0 % -9,1 % -18,5 % -6,9 %
GROUP TOTAL
1-3 4-6 7-9 1-3 4-6 7-9 10-12
(EUR thousand) 2006 2006 2006 2005 2005 2005 2005
NET SALES 16 301 18 673 11 058 15 443 16 571 14 598 17 915
Other operating
income 180 113 46 737 624 -24 219
Gain on disposal
of discontinued
operations 0 14 534 0
Material and
services -964 -907 76 -861 -980 -586 -1 019
Employee
benefits expense -13 029 -15 705 -10 159 -12 971 -13 112 -11 950 -14 080
Depreciation and
amortisation -86 -92 -101 -134 -128 -241 -167
Other operating
expenses -4 011 -3 892 -621 -2 874 -3 585 -3 240 -3 713
OPERATING RESULT -1 610 12 725 299 -660 -611 -1 444 -846
% -9,9 % 68,1 % 2,7 % -4,3 % -3,7 % -9,9 % -4,7 %
Financing income 302 716 56 500 446 147 307
Financing expenses -372 -122 -69 -887 -779 -520 -655
RESULT BEFORE TAX AND
MINORITY INTEREST -1 679 13 319 286 -1 047 -944 -1 817 -1 194
% -10,3 % 71,3 % 2,6 % -6,8 % -5,7 % -12,4 % -6,7 %
Tax on income from
operations -408 -340 -173 -225 -260 -108 -429
RESULT FOR THE
PERIOD -2 087 12 979 113 -1 273 -1 204 -1 925 -1 623
% -12,8 % 69,5 % 1,0 % -8,2 % -7,3 % -13,2 % -9,1 %
GROUP KEY FIGURES
(EUR million) 1-9 1-9 1-12
2006 2005 2005
Net sales, Group 46,0 46,6 64,5
Net sales
continuing operations 28,8 19,3 26,4
Net sales
discontinued operations 17,2 27,3 38,1
Operating result, Group 11,4 -2,7 -3,6
% of net sales 24,8 % -5,8 % -5,5 %
Operating result
continuing operations -0,5 -0,8 -1,4
Operating result
discontinued operations 12,0 -1,9 -2,2
Result before taxes, Group 11,9 -3,8 -5,0
% of net sales 25,9 % -8,2 % -7,8 %
Result for the period, Group 11,0 -4,4 -6,0
% of net sales 23,8 % -9,4 % -9,3 %
Return on equity, % 148,2 % -76,1 % -86,0 %
Return on investment,% 92,9 % -12,7 % -13,4 %
Interest-bearing liabilities 6,7 9,9 9,4
Cash and cash equivalents 12,4 6,7 7,3
Gearing, % -37,3 % 53,9 % 47,0 %
Equity to assets ratio, % 48,5 % 15,8 % 11,0 %
Balance sheet total 31,9 39,2 42,8
Gross investments 2,1 0,3 0,3
% of net sales 4,6 % 0,7 % 0,4 %
Research and development costs 3,6 5,2 7,3
% of net sales 7,7 % 11,1 % 11,3 %
Personnel average for
the period 473 525 525
Personnel at the end of
the period 325 516 531
Basic earnings
per share, EUR 0,179 -0,072 -0,098
Equity per share, EUR 0,25 0,10 0,07
Diluted earnings
per share, EUR 0,179 -0,072 -0,098
Average number of shares:
Undiluted 61 218 670 61 217 770 61 217 970
Diluted 61 243 036 61 247 194 61 217 970
Number of shares at end of
period: 61 218 670 61 217 770 61 218 670
LARGEST SHAREHOLDERS ON SEPTEMBER 30, 2006
Shareholder Number of Percentage of
shares all shares and
voting rights
Dovregruppen A.S. 6 560 646 10.7
Alec E. Gores Trust 6 328 955 10.3
Etra-Invest Oy 3 600 000 5.9
Pekka Mäkelä 2 882 375 4.7
Pekka Pere* 2 541 105 4.1
Etola Erkki 2 000 000 3.3
Suupohjan Osuuspankki 1 911 500 3.1
Eficor Oyj* 1 700 000 2.8
Lars Nyqvist 1 633 555 2.7
Thominvest Oy 1 043 500 1.7
Eero Ruokostenpohja 700 950 1.1
Risto Saikko 566 390 0.9
Patrick Ternier 550 087 0.9
Lapuan Osuuspankki 540 000 0.9
Reino Jokinen 530 000 0.9
Alexa Marie Gores 474 720 0.8
Astea AS 471 257 0.8
Eric B. Gores 446 020 0.7
Lauren C. Gores 446 020 0.7
Rochelle Francis Gores 446 020 0.7
* Pekka Pere holds control over Eficor Oyj
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