Financial Statement Bulletin 2007:
PERLOS READY FOR PROFITABLE GROWTH
Key Figures in October-December 2007:
- The Group's net sales totaled EUR 103.4 million (EUR 143.9 million
in 10-12/2006).
- The operating result was EUR 4.7 million (EUR -4.3 million).
- Earnings per share were -0.03 EUR (EUR -0.07).
- Net cash flow from operations was EUR 3.8 million (EUR 43.1
million).
- Gross investments amounted to 3.2 % (9.5 %) of net sales.
Year 2007:
- The Group's net sales totaled EUR 453.7 million (EUR 673.6 million
in 2006).
- The operating result was EUR -33.7 million (EUR -32.9 million),
including non-recurring items EUR -39.6 million (EUR -43.6 million).
- Earnings per share were EUR -1.06 (EUR -0.82).
- Net cash flow from operations was EUR 13.0 million (EUR 65.5
million).
- Gross investments amounted to 8.6 % (9.0 %) of net sales.
MATTI VIRTANEN, PRESIDENT AND CEO OF PERLOS:
- Year 2007 brought along major changes for Perlos. Firstly, a
restructuring program to reduce annual expenses by more than EUR 100
million was successfully implemented. As a result, the operating
result turned positive during the second half of the year and the
business model is now healthy.
- Secondly, a strategic decision was made to join forces with the
Taiwanese electronics supplier Lite-On Technology through a Public
Tender Offer, under which Lite-On has now acquired the majority of
Perlos shares and stock options.
- Now, at the beginning of 2008, Perlos is ready to take the next
steps in building a major player in the mobile handset industry. This
year, we shall focus in developing our service portfolio, especially
in visual mechanics, decoration and metal capabilities as well as in
R&D competence.
- Restructuring the business model improved our competitiveness and
the Lite-On transaction strengthened significantly the strategic
position of the company. These changes have been well appreciated by
our customers and we are now ready for profitable growth. We aim to
be among the top three players in the handset supply chain in a few
years time.
NET SALES AND RESULT
October-December 2007
Perlos' net sales in October-December 2007 amounted to EUR 103.4
million (EUR 143.9 million in 10-12/2006). Of the Group's net sales,
47% came from Asia (37%), 33% from Europe (49%) and 20% from North
and South America (14%).
The operating result for the review period was EUR 4,7 million (EUR
-4,3 million) and earnings per share amounted to EUR -0.03 (EUR
-0.07).
Net cash flow from operations totaled EUR 3.8 million (EUR 43.1
million) and cash flow after investments was EUR 2.2 million (EUR
79.3 million).
Year 2007
Perlos' net sales in 2007 amounted to EUR 453.7 million (EUR 673.6
million in 2006) of which 44% came from Asia (35%), 36% from Europe
(44%) and 20% from North and South America (21%). During 2007, the
company's net sales were especially affected by the discontinuation
of BenQ Mobile's production operations in Europe and decline in
demand for Perlos' services in Finland and North and South America.
The operating result exclusive of non-recurring items was EUR 5.9
million (EUR 10.7 million), and including non-recurring items EUR
-33.7 million (EUR -32.9 million). The result is weakened by
non-recurring expenses of EUR 0.7 (EUR 0) million in connection with
the Lite-On combination agreement and EUR 38.9 (EUR 43.6) million
related to the discontinuation of production operations in Finland
and the reorganisation of global operations. Of the non-recurring
items, approximately EUR 10.7 million are affecting cash flows.
The result for the continuing operations was EUR -56.2 million (EUR
-43.6 million) and earnings per share amounted to EUR -1.06 (EUR
-0.82).
Net cash flow from operations totaled EUR 13.1 million (EUR 65.5
million) and cash flow after investments was EUR -17.4 million (EUR
55.7 million).
INVESTMENTS
The Group's gross investments in 2007 amounted to EUR 38.9 million
(EUR 60.4 million in 2006), representing 8.6% (9.0%) of net sales.
Among the largest investment items in early 2007 were the new
factories in Guangzhou, China, and Chennai, India, which have started
production operations.
The Group's investment in research and development activities
represented about 1% (1%) of net sales in 2007.
FINANCING
The Group's cash and cash equivalents at the end of the report period
amounted to EUR 55.2 million (EUR 28.1 million in 2006). The Group's
net gearing ratio was 1.44 (0.72) and its equity ratio was 26.2%
(37.3%). Interest-bearing liabilities amounted to EUR 196.6 million
(EUR 140.9 million), of which short-term liabilities accounted for
EUR 137.7 million (EUR 89.8 million) and long-term liabilities for
EUR 58.9 million (EUR 51.1 million). The net interest-bearing
liabilities were EUR 141.5 million (EUR 112.8 million).
PERSONNEL
In 2007, the Perlos Group had 9,693 employees on average including
temporary workers (13,320 employees in 2006).
At the end of the year, the number of personnel inclusive of
temporary workers was 8,647 (12,944). Of the total payroll, 1,860
employees (3,871 employees) worked in Europe, 5,685 employees (7,973
employees) in Asia and 1,102 employees (1,100 employees) in North and
South America.
In line with the profitability improvement program launched in
January, Perlos' production operations in Finland were discontinued
during the third quarter. The number of personnel in Finland was
approximately 260 (1,600) persons by the end of the year.
MAJOR BUSINESS RISKS
Perlos' services and products are targeted mostly for customers in
the mobile phone industry and the majority of Perlos' net sales are
generated from the supply of mobile phone mechanics and electronics.
The focus on a single industry and the dependence on a few customers
carry certain risks. Changes in the demand for mobile phones or in
the market position of Perlos or its key customers may have
unfavourable effects on Perlos' business operations.
ANNUAL GENERAL MEETING
The Annual General Meeting of Perlos Corporation was held on 28 March
2007. The meeting adopted the company's income statement and balance
sheet as well as the consolidated income statement and the
consolidated balance sheet, and discharged
the members of the Board of Directors and the President and CEO from
liability for the 1 January 2006 - 31 December 2006 financial year.
As proposed by the Board of Directors, the Annual General Meeting
resolved that no dividend be distributed for the 1 January 2006 - 31
December 2006 financial year.
The following persons were elected as members of the Board of
Directors of Perlos Corporation: Timo Leinilä, Jukka Rinnevaara,
Andreas Tallberg, Kari Vuorialho and Petteri Walldén, of whom Andreas
Tallberg was elected Chairman of the Board of Directors. Timo Leinilä
was elected Vice Chairman of the Board of Directors at the
organisation meeting of the Board of Directors held after the Annual
General Meeting.
EXTRAORDINARY GENERAL MEETING
The Extraordinary General Meeting of Perlos Corporation was held on
15 November 2007. The Extraordinary General Meeting decided to
confirm the number of the board members to be five (5) and elected
the board members as well as the chairman and two (2) deputy chairmen
of the Board of Directors.
The Extraordinary General Meeting decided that Mr. Andreas Tallberg
continues as a member of the Board of Directors and elected four new
members to the Board of Directors: Mr. Raymond Soong, Mr. Warren
Chen, Mr. David Lin and Mr. Cor Saris.
In addition, Mr. Raymond Soong was elected as chairman of the board
of directors and Mr. Warren Chen and Mr. Andreas Tallberg were
elected as deputy chairmen of the Board of Directors.
Mr. Timo Leinilä, Mr. Jukka Rinnevaara, Mr. Kari Vuorialho and Mr.
Tapio Walldén who were Board members until the Extraordinary General
Meeting, have resigned.
EXECUTIVE BOARD
The composition of the Executive Board changed during the year. The
current Executive Board members are Matti Virtanen, CEO; Juha
Torniainen, CFO; Petri Perälä, CTO; Tsong-Da Chou, Senior Vice
President, Global Operations; Esa Vuorinen, Senior Vice President,
Human Resources and Vesa Vähämöttönen, Senior Vice President, Global
Sales and Marketing.
CHANGE OF PERLOS' OWNERSHIP TO LITE-ON (FINLAND) OY
Perlos Corporation's share capital at 31 December 2007 amounted to
EUR 31,762,288.80 and the number of shares in issue to 52,937,148.
Lite-On (Finland) Oy acquired 95.84 per cent of the shares and votes
in Perlos Corporation through a public cash tender offer for all
issued and outstanding shares and options of Perlos.
Lite-On (Finland) Oy 's intention is to acquire all issued and
outstanding shares and options in Perlos, and therefore Lite-On
(Finland) Oy initiated redemption proceedings to redeem the other
shareholders of Perlos in accordance with Chapter 18 of the Finnish
Companies Act. This also included initiation of arbitral proceedings
pursuant to Chapter 18, Sections 3 - 9 of the Finnish Companies Act.
DELISTING OF PERLOS SHARES
Perlos filed on 15 November 2007 applications to OMX Nordic Exchange
Helsinki Oy's listing committee and CEO for the purpose of ending the
quotation of its shares and options and delisting its shares and
options from OMX Nordic Exchange Helsinki Oy.
The listing committee and CEO of OMX Nordic Exchange Helsinki Oy
approved on December 14, 2007 the delisting applications concerning
shares and options as conditional and subject to the fact that as a
result of the redemption proceeding in accordance with the Finnish
Companies Act, Lite-On (Finland) Oy will own 100 per cent of the
shares in Perlos.
EVENTS AFTER THE BALANCE SHEET DATE
Perlos has on 4 February 2008 signed an agreement for purchasing the
remaining 25 % of CIM Precision Molds (HK) Limited. The transaction
is conditional on receiving the relevant regulatory approvals. The
other 75 % were purchased already in 2005. CIM Precision Molds is a
holding company for Perlos' Shenzhen plant.
Perlos President and CEO Matti Virtanen told on February 26th that he
will resign from Perlos' service due to family reasons. Perlos' Board
has nominated Board member Cor Saris as the new President and CEO as
of May 27th, 2008.
OUTLOOK FOR 2008
The growth in the number of units in the mobile phone markets is
anticipated to continue strongly during the current year. The
manufacturing of mobile phones is predicted to increase especially in
China and India. Several mobile phone manufacturers aim to focus
their acquisitions policy on producers able to provide a wide range
of product and service packages.
Perlos' factory network has been built following trends in the
industry sector and the majority of the company's factories are
located in the growing markets of Asia. The mutual product and
service range offered by Perlos and Lite-On corresponds well with the
needs of the mobile phone manufacturers to obtain ever-increasingly
larger packages from their suppliers. The company believes that it
has the right foundations in place to become one of the most
important suppliers for the global mobile phone industry.
DIVIDEND
The loss of Perlos Corporation for the financial year 2007 was EUR
16 950 thousand and the distributable equity at December 31, 2007 was
EUR 61 431 thousand. Perlos' Board of Directors will propose to the
Annual General Meeting that no dividend be paid for 2007.
COLLAGE OF ANNUAL INFORMATION
According to Finnish Securities Market Act, Chapter 2, Section 10 c,
Perlos has today published the annual collage of stock exchange
releases and announcements published in 2007. The document is
available on the company web site at www.perlos.com.
The information in the financial statement bulletin is not audited.
CONSOLIDATED INCOME STATEMENT
EUR million 10-12/2007 10-12/2006 Change,% 1-12/2007 1-12/2006
Continuing
operations:
Net sales 103,4 143,9 -28 % 453,7 673,6
Cost of goods
sold -88,9 -131,0 -32 % -437,2 -614,8
Gross
profit/loss 14,5 12,9 16,5 58,8
Other operating
income 1,2 1,1 3,5 3,5
Selling and
marketing
expenses -2,5 -3,0 -11,0 -13,1
General and
administrative
expenses -8,5 -15,0 -41,9 -61,0
Other operating
expenses 0,0 -0,3 -0,8 -21,1
Operating
profit/ loss 4,7 -4,3 -33,7 -32,9
Financial income
and expenses -4,0 -3,1 -12,4 -10,6
Share of
profit/loss of
associates -0,2 0,0 -1,1 -0,1
Profit/loss
before income
tax 0,6 -7,4 -47,1 -43,6
Income tax
expenses -2,0 3,5 -9,1 0,0
Profit/loss from
continuing
operations -1,4 -3,9 -56,2 -43,6
Discontinued
operations;
Profit/loss from
discontinued
operations 0,0 18,9 0,0 18,3
Profit/ loss for
the period -1,4 15,0 -56,2 -25,3
Attributable to
Equity holders
of the Company -56,0 -25,5
Minority
interest -0,2 0,2
Earnings per share for
profit/loss attributable
to the equity
holders of the
Company
Continuing
operations:
Earnings per
share, basic, € -1,06 -0,82
Earnings per
share, diluted,
€ -1,06 -0,82
Geographical diversity of net sales from
continuing operations, %
10-12/2007 10-12/2006 1-12/2007 1-12/2006
Europe 33 % 49 % 36 % 44 %
Americas 20 % 14 % 20 % 21 %
Asia 47 % 37 % 44 % 35 %
CONSOLIDATED BALANCE SHEET
EUR million
ASSETS 12/2007 12/2006
Non-current assets
Goodwill 11,2 11,6
Intangible assets 8,5 13,0
Property, plant and equipment 192,6 219,3
Non-current trade and other
receivables 1,0 1,3
Investments in associates 0,5 1,6
Available for sale financial
assets 0,1 0,1
Deferred income tax assets 7,0 7,0
220,9 253,9
Current assets
Inventories 27,3 65,6
Trade and other receivables 65,6 75,5
Derivative financial instruments 0,2 0,4
Cash and cash equivalents 55,2 28,1
148,3 169,7
Assets held for sale 8,4 -
Total assets 377,6 423,6
SHAREHOLDER'S EQUITY AND
LIABILITIES 12/2007 12/2006
Shareholder's equity
Share capital 31,8 31,8
Far value, hedging and other
reserves 6,4 4,3
Translation differences -6,4 1,1
Reserve, managed by the General
Meeting 48,8 48,8
Retained earnings 18,0 69,6
Equity attributable to equity
holder's of the Company 98,6 155,6
Minority interest 0,0 0,2
Total shareholder's equity 98,6 155,7
Liabilities
Non-current liabilities
Deferred income tax liabilities 0,0 0,2
Interest-bearing liabilities 58,9 51,1
Provisions 2,1 2,8
61,1 54,1
Current liabilities
Interest-bearing liabilities 137,7 89,8
Current income tax liabilities 1,5 0,2
Provisions 1,4 2,9
Derivative financial instruments 1,6 0,3
Trade and other payables 75,8 120,6
218,0 213,7
Total liabilities 279,1 267,9
Total shareholder's equity and
liabilities 377,6 423,6
CONSOLIDATED CASH FLOW STATEMENT
EUR million 10-12/2007 10-12/2006 1-12/2007 1-12/2006
Cash flow from
operating activities
Operating
profit/loss 4,7 20,0 -33,7 -7,8
Adjustments 5,2 -19,7 58,4 53,2
Change in working
capital -0,7 48,5 7,6 40,7
Financial income and
expenses -2,3 -2,9 -10,8 -10,8
Income taxes paid -3,0 -2,8 -8,5 -9,9
Net cash flow from
operations 3,8 43,1 13,0 65,5
Cash flows from
investing activities
Investments in
associated companies 0,0 -7,8 0,0 -7,8
Purchase of tangible
and intangible
assets -3,3 -12,3 -38,9 -60,4
Proceeds from
tangible and
intangible assets 1,7 0,3 8,5 2,4
Proceeds from
divested operations,
net of cash 0,0 56,0 0,0 56,0
Net cash used in
investing activities -1,7 36,2 -30,5 -9,8
Cash flow before
financing activities 2,2 79,3 -17,4 55,7
Cash flow from
financing activities
Change in loans 31,9 -73,9 44,5 -48,7
Change in
interest-bearing
receivables 0,0 0,0 0,0 0,0
Dividends paid 0,0 0,0 0,0 -5,3
Net cash flow from
financing activities 32,0 -73,9 44,5 -54,0
Translation
difference -0,4 -1,2 -1,2 -3,4
Change in cash and
cash equivalents 34,6 6,7 28,3 5,1
Cash and cash
equivalents 1.1. 21,0 22,6 28,1 26,4
Cash and cash
equivalents at end
of period 55,2 28,1 55,2 28,1
Due to translation differences during the year and
discontinuing operations
the amounts in the cash flow statement are not directly reconcilable
with the balance sheet figures.
Consolidated statement of changes in
shareholders' equity
EUR million
1) Share capital
2) Share issue
premium
3) Hedging reserve
4) Other reserves
5) Translation
differences
6) Retained earnings
7) Total
8) Minority interest
9) Total
Shareholders'
equity 1-12/2006 1) 2) 3) 4) 5) 6) 7) 8) 9)
Shareholders'
equity
31.12.2005 31,8 48,8 -0,2 2,9 4,5 100,0 187,8 0,4 188,2
Cash flow
hedging
- Increase
- Decrease
(hedging reserve) 0,2 0,2 0,2
- Deferred taxes's
share of period
movements
Translation
difference -3,4 -3,4 -3,4
Other changes -48,8 50,2 -0,1 1,3 1,3
Net profit/loss
recoqnised directly
to shareholders'
equity 0,0 -48,8 0,2 50,2 -3,4 -0,1 -1,9 0,0 -1,9
Profit/loss
for the period -25,1 -25,1 -0,2 -25,3
Total profits
and losses 0,0 -48,8 0,2 50,2 -3,4 -25,2 -27,0 -0,2 -27,2
Dividends paid -5,3 -5,3 -5,3
SHAREHOLDERS'
EQUITY
31.12.2006 31,8 0,0 0,0 53,1 1,1 69,5 155,5 0,2 155,7
Shareholders'
equity 1-12/2007 1) 2) 3) 4) 5) 6) 7) 8) 9)
Shareholders'
equity
31.12.2006 31,8 0,0 0,0 53,1 1,1 69,6 155,5 0,2 155,7
Cash flow
hedging
- Increase
- Decrease
(hedging reserve)
- Deferred taxes's
share of period
Net gains/losses
of net investments -0,6 -0,6 -0,6
Translation
difference -6,9 4,8 -2,1 -2,1
Other changes 2,1 -0,3 1,8 1,8
Net profit/loss
recoqnised directly
to shareholders'
equity 0,0 0,0 0,0 2,1 -7,5 4,5 -0,9 0,0 -0,9
Profit/loss
for the period -56,0 -56,0 -0,2 -56,2
Total profits
and losses 0,0 0,0 0,0 2,1 -7,5 -51,6 -56,9 -0,2 -57,1
Dividends paid
SHAREHOLDERS'
EQUITY
31.12.2007 31,8 0,0 0,0 55,2 -6,4 18,0 98,6 0,0 98,6
NOTES TO THE FINANCIAL STATEMENT REVIEW
Basis of preparation and
accounting policies
The financial statement review has been prepared in accordance with
the IAS 34 standard
(Interim Financial Reporting) and the same principles as in the
recent annual financial statements.
In 2007 Perlos has adopted the following new standards
which have become effective
on January 1, 2007: IFRS 7 Financial instruments: Disclosures and
Amendment to IAS 1:
Presentation of financial statements: Capital disclosures.
The adoption of those new
standards has mainly impact on the notes to the consolidated
financial statements 2007.
Changes in property,
plant and equipment
EUR million
1-12/2007 1-12/2006
Book value at beginning
of the period 219,3 246,5
Additions and transfers 66,5 61,2
Deductions and
transfers -26,4 -12,3
Discontinued operations - -23,5
Depreciation -38,0 -37,3
Impairment -17,6 -8,4
Translation difference
and other changes -11,3 -6,8
Book value at end of
the period 192,6 219,3
Provisions
Additional Used during
1.1.2007 provisions the period 31.12.2007
Pension benefit 0,8 0,0 0,0 0,8
Restructuring 4,9 15,8 -18,0 2,7
5,7 15,8 -18,0 3,5
Exchange rates
31.12.2007 31.12.2006
USD 1,4721 1,3170
CNY 10,7524 10,2793
SEK 9,4415 9,0404
BRL 2,60859 2,8202
MXN 16,0739 14,283
INR 57,8635 58,2295
HKD 11,4800 10,2409
COMMITMENTS
EUR million 1-12/2007 1-12/2006
The future aggregate minimum lease payments
under non-cancelable operating leases 23,1 18,3
Guarantees on behalf of third parties as
collateral on other commitments 0,4 1,4
Guarantees on behalf of associated companies 0,0 5,6
Major off-balance sheet investment
commitments 2,6 13,0
Nominal values of derivate financial
instruments
Foreign exchange forwards
- related to transaction risk 0,0 4,1
- related to financing 84,4 46,3
Interest rate swaps 0,0 25,0
Commodity derivates 0,0 0,4
Total nominal values 84,4 75,8
The nominal amounts are presented as gross
values.
Fair values of derivates financial
instruments
Instruments having a positive fair value
- Foreign exchange forwards
-- related to transaction risk 0,0 0,0
-- related to financing 0,1 0,2
- Commodity derivatives 0,0 0,0
Instruments having a negative fair value
- Foreign exchange forwards
-- related to transaction risk 0,0 -0,1
-- related to financing -1,6 -0,2
- Interest rate swaps 0,0 0,0
- Commodity derivatives 0,0 0,0
Total fair values -1,5 -0,1
The fair values are based on quoted market
prices.
Fair value represents the amount that would be realized, if the
derivative contracts
were closed on the balance sheet date. All derivative financial
instruments
are fair valued through the income statement at each balance sheet
date.
KEY FIGURES
10-12/2007 10-12/2006 1-12/2007 1-12/2006
Continuing operations gross
investments in fixed
assets, EUR million 3,3 13,6 38,9 60,4
EBITDA *) from continuing
operations, EUR million 14,3 6,3 10,1 11,6
EBITDA *) from continuing
operations, % 13,8 4,4 2,2 1,7
EBIT from continuing
operations, EUR million 4,7 -4,3 -33,7 -32,9
EBIT from continuing
operations, % 4,5 -3,0 -7,4 -4,9
Net sales from continuing
operations, EUR million 103,3 143,9 453,7 673,6
Net sales from discontinued
operations, EUR million - 3,1 - 42,7
Equity ratio, % 26,2 37,3 26,2 37,3
Gearing 1,44 0,72 1,44 0,72
Interest-bearing net
liabilities, EUR million 141,5 112,8 141,5 112,8
ROE, % p.a. -5,4 40,5 -44,2 -14,7
ROI, % p.a. 15,6 32,7 -6,1 5,3
Earnings per share, EUR -0,03 0,28 -1,06 -0,48
Earnings per share,
diluted, EUR -0,03 0,28 -1,06 -0,48
Earnings per share from
continuing operations, EUR -0,03 -0,07 -1,06 -0,82
Earnings per share from
discontinued operations,
EUR - 0,36 - 0,35
Shareholders' equity per
share, EUR 1,86 2,94 1,86 2,94
Shareholders' equity per
share, diluted, EUR 1,86 2,94 1,86 2,94
Average number of shares
during the period (1 000) 52 937 52 937
Average number of shares
(diluted) during the period
(1 000) 52 937 53 020
Personnel of continuing
operations
- average for the period 5335 7 473 5 951 7 746
- end of period 5350 7 229 5 350 7 229
- average including
workforce 9142 13 616 9 693 13 320
- end of period including
workforce 8647 12 944 8 647 12 944
*) Earnings before
interest, taxes,
depreciation and
amortisation
Vantaa, February 29, 2008
PERLOS CORPORATION
Board of Directors
Additional Information:
President and CEO Matti Virtanen is available on February 29th, 2008
at 11.00-12.00 Finnish time, tel. +358 9 2500 7200
PERLOS IN BRIEF
Perlos Corporation is a global design and manufacturing partner for
the telecommunications and electronics industry. The service offering
covers the whole product life cycle from product design to
manufacturing, logistics and new product versions. The production
facilities are located in Asia, Europe and North and South America
and the company is headquartered in Finland. In 2006, Perlos
Corporation's net sales amounted to EUR 673,6 million. The company
employed approximately 9,200 people worldwide in the end of
September, 2007. Perlos share (POS1V) is traded on the OMX Nordic
Exchange Helsinki. Perlos is a part of Lite-On Group since November
2007.
DISTRIBUTION
Helsinki Stock Exchange
Central media
www.perlos.com
Financial Statement Bulletin 2007: PERLOS READY FOR PROFITABLE GROWTH
| Source: Perlos
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