Vaahto Group’s Financial Statement release for 1.9.2010 – 31.8.2011

VAAHTO GROUP PLC OYJ STOCK EXCHANGE RELEASE 11.11.2011 at 10.00

VAAHTO GROUP’S FINANCIAL STATEMENT RELEASE FOR 1.9.2010 – 31.8.2011

For the financial year ending in August 2011, Vaahto Group’s turnover was 55.3 MEUR (comparative from the previous financial year: 35.2 MEUR) and operating loss 1.3 MEUR (comparative: operating loss of 2.9 MEUR). Turnover increased by 57 per cent from the reference period’s level, and the operating result improved. Loss for the fiscal year was 2.1 MEUR (loss 3.0 MEUR) and earning per share was -0.75 euros (-1.01 euros). The Group’s outstanding orders stood at 22.4 MEUR (15.2 MEUR) at the closing of the financial year.

Vaahto Paper Technology

Vaahto Paper Technology’s turnover was 39.7 MEUR (21.5 MEUR) and net result an operating loss of 0.1 MEUR (operating loss of 4.8 MEUR). The result of the previous financial year was improved upon through sales profit of approximately 2 MEUR resulting from the Group’s sale of real estate in Tampere. Vaahto Paper Technology’s turnover increased by 85 per cent from the reference period’s figure, and the result of the financial year was approximately 6.6 MEUR higher than that of the previous financial year (with the real-estate transaction included).

The most important orders received by Vaahto Paper Technology’s project business unit during the financial year under review were an order for four headboxes received from Dongguan Jianhui Paper Co. Ltd and Dongguan Jinzhou Paper Co. Ltd in China; an order for five headboxes for two exterior package board production lines of Vantage Dragon Ltd, also in China; and a paper machine modernisation project commissioned by Fajar Paper in Indonesia. In addition, the business unit received substantial domestic orders from Finland, including the modernisation of a drying machine at the Stora Enso pulp mill in Imatra and the modernisation of the press section of a cardboard machine at Stora Enso’s mill in Inkeroinen.

The financial year also saw continued efforts toward developing Vaahto Paper Technology’s service business branch. Service and maintenance operations, however, fell short of the objectives set for the period, especially during the first half of the financial year. Toward the end of the financial year, however, the market situation for short-circulation maintenance services improved and orders started accumulating.

The objective of the Vaahto Paper Technology business unit is to continue strengthening its position as a leading supplier of technologies and services for the international paper and cardboard market.

Vaahto Process Technology

Vaahto Process Technology’s turnover was 15.7 MEUR (13.8 MEUR) and result an operating loss of 1.2 MEUR (operating profit of 1.9 MEUR). The result of the previous financial year was improved upon, thanks to sales profit of approximately 2.6 MEUR resulting from the sale of real estate in Pietarsaari and the sale of the HVAC business. Turnover increased from the reference period’s level by 14 per cent, but the result remained negative and was 0.4 MEUR weaker than that of the reference period (including real-estate transactions and the selling of business operations). The division’s negative operating result was principally caused by the low profitability of the tank business.

Vaahto Process Technology’s market situation in the vessel business was extremely weak. At the end of the financial year the order book started to increase, and the outlook for the next financial year is better.

Vaahto Process Technology’s market situation in the agitator business was good, and order book increased significantly in the course of the financial year. The agitator business objectives have been met, and the outlook for our agitator operations in the 2011–2012 financial year is good.

Profitability

Vaahto Group’s turnover during the financial year was 55.3 MEUR (35.2 MEUR) and operating loss 1.3 MEUR (operating loss 2.9 MEUR). The operating loss represented 2.3 per cent (8.1 per cent) of the turnover. The primary reason for the negative result was weak profitability in the tank business.

We improved on the result of the previous financial year through sales profit of approximately 4.6 MEUR from the sale of real estate in Tampere and Pietarsaari and the sale of the Group’s HVAC business. Turnover increased by 57 per cent from the reference period’s level, and the result for the financial year showed an increase of approximately 6.2 MEUR from the previous financial year’s figure (including the real-estate transactions and the sale of business operations).

Financing

The cash flow of the Group’s business operations was -3.8 MEUR (-16.0 MEUR). The Group’s net financing costs came to 0.6 MEUR (1.0 MEUR). The cash flow for investments made during the financial year was 7.1 MEUR (-0.3 MEUR). The Group’s consolidated balance sheet total was 36.5 MEUR (39.0 MEUR), with an equity ratio of 17.8 per cent (21.8 per cent).

Important changes were made in the Group’s financing arrangements during the financial year under review. The Group sold real estate in Tampere and Pietarsaari during the previous financial year, but the payment was received only in September 2010. The purchase price, approximately eight million euros, was primarily used to pay off bank and pension loans.

The Group is constantly monitoring and tracking the level of financing required for its operations, to ensure the availability of sufficient liquid assets to finance the Group’s operations and repay its loans.  Availability of the working capital required by the Group’s normal operations is aimed to ensure by means of sufficient financing instruments.

The Group’s financing agreement includes covenant condition restrictions that are specified in more detail in Item 27 of the Notes to the Consolidated Financial Statements, “Financial Risk Management”.

Investments

The Group’s capital expenditure during the financial year was 1.9 MEUR (0.8 MEUR), mostly consisting of small-scale machine and equipment investments.

Information systems

Development of the Group’s information administration efforts and information systems was continued in accordance with the centralised model.

Research and development

The Group’s research and development activities focused on expansion of Vaahto Paper Technology’s service business product range and improvement to the competitive features of the key components of paper and cardboard machines. The scope of research and development activities remains at the level seen in the previous financial year.

Human resources

The average number of personnel employed by the Group during the financial year was 348 (371).

Risks and uncertainty factors

Demand for Vaahto Group’s products is highly dependent on trends and other developments in the global economy and the Group’s primary customer industries. Attempts are made to balance out the risks caused by market fluctuations by adapting the Group’s sales operations in accordance with current trends in the relevant market areas and customer industries.

Large-scale projects entail the risk of inaccurate assessment of project costs and other risks inherent to projects in the tender stage, which may cause a project’s financial result to be lower than expected. Attempts are made to control the risks involved in large-scale projects, by means of several quality management systems, profitability analyses, operation guidelines, and approval procedures.

The objective of the efforts to manage the Group’s financing risks is to minimise the negative impact of changes in financing markets on the Group’s result and to ensure the availability of internal and external capital on competitive terms.

The risk of property losses, consequential losses, and liability losses caused by business operations is addressed by means of appropriate insurance arrangements.

Equity capital

Information on Vaahto Group Plc Oyj’s shares is presented in Item 24 of the Notes to the Consolidated Financial Statements, “Notes on the Shareholders’ Equity”.

The Annual General Meeting of 14 December 2010 authorised the Board of Directors to decide on the issuing of new shares in one or more instalments. The maximum number of new shares that may be issued is 300,000. The authorisation is valid until 31 December 2011 unless a general meeting amends or revokes the authorisation prior to that date.

The Board of Directors has no authorisation to issue convertible bonds or warrant bonds or for purchasing or transferring the Group’s own stock.

Administration

The Annual General Meeting of 14 December 2010 nominated the following members to the Board of Directors of Vaahto Group Plc Oyj:

Reijo Järvinen, as chairman

Rainer Häggblom, as deputy chairman

Topi Karppanen, as an ordinary member

Antti Vaahto, as an ordinary member

Mikko Vaahto, as an ordinary member

Antti Vaahto resigned from the Board on 28 April 2011.

 

The Group’s managing director throughout the 2010–2011 financial year was Anssi Klinga.

The Group’s accounts have been audited by certified auditing company Ernst & Young Oy. The head auditor was Certified Public Accountant Panu Juonala.

The company follows the 2010 Corporate Governance Code issued for companies listed on the NASDAQ OMX Helsinki exchange. A report on the Group’s management and steering system is available on the Group’s Web site.

Development prospects

The development of the international economy has shown alarming signals, and the market situation of Vaahto Group’s principal customer industries is increasingly uncertain. No significant changes, however, had occurred in demand for Vaahto Group products by the beginning of the new financial year, and the volume of outstanding orders is higher than that at the start of the 2010–2011 financial year.  Vaahto Group’s profitability can be expected to increase from the previous financial year’s level. The result for the financial year is expected to be positive.

Distribution of profit

The parent company’s financial resources available for distribution of profit stood at 3,120,471.55 EUR, with the operating loss for the financial year at 354,920.90 EUR.

The Board will propose to the Annual General Meeting that no dividend be distributed and that the retained earnings be deposited in the profit account.

The Annual General Meeting

The Annual General Meeting of Vaahto Group Plc Oyj will be held on December 12, 2011 at 1.00 p.m. in the Sibelius Hall, Lahti.

Interim management statement

Instead of the interim report for the first three months of the accounting period, Vaahto Group Plc Oyj will disclose the interim management statement on January 13, 2012.

 

VAAHTO GROUP CONSOLIDATED FIGURES
CONSOLIDATED	2010-2011	% of	2009-2010	% of
STATEMENT OF	12	turn-	12	turn-
COMPREHENSIVE	months	over	months	over
INCOME, IFRS
1000 EUR
NET TURNOVER	55 318		35 160
Change in finished
goods and work
in progress	547		1 264
Production
for own use	1 183		500
Other operating
income	390		4 901
Share of results of
affiliated companies	-4		17
Material and
services	-28 613		-17 548
Employee benefits
expenses	-17 586		-16 374
Depreciations	-2 115		-2 547
Other operating
expenses	-10 424		-8 230
OPERATING PROFIT
OR LOSS	-1 304	-2,4	-2 857	-8,1
Financing income	320		91
Financing expenses	-963		-1 075
PROFIT BEFORE TAXES	-1 946	-3,5	-3 840	-10,9
Tax on income
from operations	-172		812
PROFIT OR LOSS
FOR THE PERIOD	-2 118	-3,8	-3 028	-8,6
OTHER COMPREHENSIVE
INCOME:
Translation
differences	-1		14
OTHER COMPREHENSIVE
INCOME, NET OF TAX	-1		14
TOTAL COMPREHENSIVE
INCOME	-2 120		-3 014
Net profit or loss
attributable:
Equity holders
of the parent	-2 225		-2 910
Non-controlling
interest	107		-118
Total	-2 118		-3 028
Total comprehensive
income attributable:
Equity holders
of the parent	-2 226		-2 896
Non-controlling
interest	107		-118
Total	-2 120		-3 014
Earnings per share calculated on profit attributable
to equity holders of the parent:
Tulos/osake euroa
EPS undiluted,
euros/share	-0,75		-1,01
EPS diluted,
euros/share	-0,75		-1,01
Average number of
shares (1000 shares):
undiluted	2 953		2 872
diluted	2 953		2 872
CONSOLIDATED	31.8.2011		31.8.2010
BALANCE SHEET,IFRS
1000 EUR
ASSETS
NON-CURRENT ASSETS:
Intangible assets	1 030		1 642
Goodwill	1 702		1 702
Tangible assets	10 907		10 923
Shares in affiliated
companies	57		62
Available for sale
investments	44		44
Non-current trade
and other
receivables	11		11
Deferred tax asset	2 274		2 172
NON-CURRENT ASSETS	16 026		16 557
CURRENT ASSETS:
Inventories	5 601		5 241
Trade receivables
and other
receivables	7 305		14 732
Current receivables
for revenue recognised
in part prior to
project completion	6 818		1 953
Tax receivable,
income tax	0		2
Cash and bank	775		560
CURRENT ASSETS	20 500		22 488
TOTAL ASSETS	36 525		39 045
CONSOLIDATED	31.8.2011		31.8.2010
BALANCE SHEET, IFRS
1000 EUR
EQUITY AND
LIABILITIES
SHAREHOLDERS’
EQUITY:
Share capital	2 872		2 872
Share premium
account	6		6
Contingency
reserve	1 995		1 995
Translation
differences	29		41
Retained earnings	-351		1 864
Equity attributable
to equity holders
of the parent	4 552		6 778
Non-controlling
interest	1 217		1 110
SHAREHOLDERS’
EQUITY	5 768		7 888
NON-CURRENT LIABILITIES:
Deferred
tax liability	624		549
Long-term
liabilities,
interest-bearing	6 831		3 042
Non-current
provisions	273		245
NON-CURRENT
LIABILITIES	7 728		3 836
CURRENT LIABILITIES:
Short-term
liabilities,
interest-bearing	8 269		15 068
Trade payables and
other liabilities	14 573		12 072
Tax liability,
income tax	186		182
CURRENT LIABILITIES	23 028		27 321
TOTAL EQUITY AND
LIABILITIES	36 525		39 045
KEY FIGURES, IFRS	2010-2011		2009-2010
Shareholders’
equity per share,
euros	1,52		2,36
Earnings per
share, euros	-0,75		-1,01
Equity ratio %	17,8		21,8
Gross investments	1 876		776
Total average
number of
personnel	348		371
Order backlog at
the end of the fiscal
period	22 401		15 175
The amount of contract revenue recognized as revenue has
been deducted from the order backlog.
OTHER LIABILITIES	31.8.2011		31.8.2010
1000 EUR
Bank guarantees:
Bank guarantee
limits total	18 000		25 000
Bank guarantee
limits used	11 218		5 720
Lease liabilities,
excluded financial
lease liabilities:
Current lease
liabilities	246		220
Lease liabilities
maturing
in 1-5 years	275		287
Total	521		508
Rent liabilities:
Current lease
liabilities	804		804
Lease liabilities
maturing
in 1-5 years	3 216		3 216
Later	3 216		4 020
Total	7 236		8 040
Other liabilities:
Granted guarantees
to customers and
creditors	500		660
Guarantees granted
to secure bank
guarantee limits	17 600		17 600
Guarantees granted
to secure bank
guarantees	290		0
Guarantees granted
to secure bank loans	2 910		2 910
Guarantees granted
to secure rent
guarantees	400		0
Total	21 700		21 170
Derivative contracts:
Currency forward agreements are as a rule used to hedge
against exchange rate risks. The currency forward agreements
have been used to protect receivables and future assets.
Interest rate agreements are used to hedge against the
changes of the interests.
The derivative agreements of the group are booked according
to IAS 39: Financial instruments. Derivative agreements are
initially recognized at their purchase cost which is
equivalent to the fair value and they are subsequently
remeasured at fair value.
Fair values	Nominal	Fair	Fair	Fair
of derivative	value	value,	value,	value
agreements		pos.	neg.	total
31.8.2011				arvo
1000 EUR
Koronvaihto-
sopimukset	6 666	0	-241	-241
Fair values of derivative agreements are determined by using
the market prices for the equivalent agreements on the day of
the closing of  the accounts. Fair values state for the income
or expenses the group would book if the derivative agreements
were closed at the end of the fiscal period.
CONSOLIDATED FLOW	2010-2011		2009-2010
OF FUNDS	12		12
STATEMENT, IFRS	months		months
1000 EUR
Flow of funds
from operations:
Profit before taxes	-1 946		-3 840
Adjustments	2 429		-1 337
Change in working
capital	-3 470		-9 815
Financial income and
expenses and taxes	-843		-1 055
Flow of funds from
operations	-3 831		-16 047
Flow of funds from
investments:
Investments in
tangible and
intangible assets	-1 879		-776
Income from sales
of tangible and
intangible assets	8 933		479
Payments of loans	1		1
Flow of funds from
investments	7 055		-295
Flow of funds from
financial items:
Withdrawals of
short-term loans	55		6 172
Payments of
short-term loans	-6 793		-869
Withdrawals of
long-term loans	5 274		238
Payments of
long-term loans	-1 545		-1 039
Flow of funds from
financial items	-3 009		4 502
Change of liquid
funds	215		-11 840

 

Lahti November 11, 2011

VAAHTO GROUP PLC OYJ

The Board of Directors

 

Information:

Anssi Klinga

CEO, Vaahto Group Plc Oyj

tel. +358 50 4661470

www.vaahto.fi