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Vaahto Group Interim Report for the Period September 1, 2010 – February 28, 2011

VAAHTO GROUP PLC OYJ STOCK EXCHANGE RELEASE 8.4.2011 at 10.00

VAAHTO GROUP INTERIM REPORT FOR THE PERIOD SEPTEMBER 1, 2010 – FEBRUARY 28, 2011

Vaahto Group’s turnover for September 1, 2010, to February 28, 2011, was 24.9 million euros (compared with 18.2 million euros for the corresponding period in the previous fiscal year), with an operating loss of 1.3 million euros (comparative: operating loss of 3.7 million euros). Turnover grew by 37% from the reference period, and the operating result was better than in the comparative period. The Group’s order book increased by 82% in the review period and stood at 27.6 million euros on February 28, 2011. Vaahto Group’s result is expected to improve from the previous fiscal year’s figure, and the full-year result is expected to be positive.

Pulp & Paper Machinery

The Pulp & Paper Machinery division’s turnover for the period under review was 17.4 million euros (comparative: 12.1 million euros), with an operating loss of 0.6 million euros (operating loss of 3.5 million euros). Turnover grew by 44% from the reference period’s level, and the operating result was clearly better.

The division’s order book grew considerably during the review period. In the project business, the most significant orders for the period were the orders for four headboxes placed by Dongguan Jianhui Paper Co. Ltd. and Dongguan Jinzhou Paper Co. Ltd., both from China; an order for five headboxes from Vantage Dragon Ltd. for two new exterior package board production lines; and an order for modernization of Fajar Paper’s board machine in Indonesia. Furthermore, in March–April, after the end of the period under review, Vaahto Pulp & Paper Machinery received orders from Finland for modernization of a pulp drying machine at Stora Enso’s Imatra mill and for the rebuild of a board machine at the same company’s Inkeroinen mill.

The Pulp & Paper Machinery division’s service business fell short of its targets set for the review period. Contributing factors were December–January sales and a result that was weaker than forecast. Toward the end of the period, the market situation improved and the order book of the Service branch began to grow considerably.

Process Machinery

The Process Machinery division’s turnover for the period under review was 7.5 million euros (comparative: 6.2 million euros), with an operating loss of 0.7 million euros (operating loss of 0.3 million euros). The turnover increased by 21% from that of the reference period, but the result was still lower than the comparative figure. The result was affected by poor profitability of the vessel business.

The market situation for the division’s vessel business has remained weak. The number of projects in the offer phase has been on the increase, but few projects have entered the decision stage and the price level has been weak.

The market situation for the Process Machinery division’s agitator business has remained strong, and the order book grew during the review period. The profitability of agitator business was in line with the objectives during the period under review, and the prospects for the latter half of the fiscal year are good.

In order to improve the profitability of the Process Machinery division, the company has launched an action program that includes rearrangements of operations and the option of mergers or acquisitions.

Research and development

The Group’s research and development activities during the period under review concentrated for the most part on improving the competitiveness of the Pulp & Paper Machinery division’s key components for paper and board machines, and on expansion of the roll servicing product selection. The scope of the Group’s R&D activities remained the same as in the previous fiscal period.

Investments

The Group’s capital expenditure for the period came to 1.1 million euros (comparative: 0.3 million euros). The investments consisted mainly of machinery and equipment acquisitions in the Pulp & Paper Machinery division’s service business and of investments in information systems. 

Financing

The Group’s cash flow for the period under review was -1.3 million euros (comparative: 14.2 million euros to the negative), with an investment cash flow of 7.7 million euros (0.2 million euros). The decrease in debt, including interest, during the period was 5.4 million euros and they were 12.7 million euros at the end of the period. The total on the consolidated balance sheet was 35.8 million euros (36.9 million euros), and the Group’s equity ratio was 22.8% (22.3%).

There were some significant changes in the Group’s financial arrangements during the period under review. The Group’s buildings in Tampere and Pietarsaari had been sold in the previous fiscal year, but the sale price was paid during the period under review, in September 2010, and the amount paid, roughly eight million euros, was used primarily for payment of loans from credit institutions and pension loans.

Personnel

The number of Group personnel averaged 342 (comparative: 376) over the period.

Combination of the share classes through amendment to the Articles of Association and a related free share issue

On December 14, 2010, the Annual General Meeting of Vaahto Group Plc Oyj decided on a combination of the company’s share classes through amendment of the Articles of Association and a directed share issue to the holders of class-K shares. The new shares issued, totaling 113,564 shares, were registered in the Trade Register on December 17, 2010, along with the combination of the share classes and the amendments to the Articles of Association. As a result of the share issue and the combination of the share classes, the total number of Vaahto Group Plc Oyj’s shares is 2,985,866 shares. Each share confers on its holder one vote, with all shares conferring equal rights in all other respects, too. Neither the share issue nor the combination of share classes had an effect on the company’s share capital.

Share issue authorizations

The Annual General Meeting held on December 14, 2010, decided to authorize the Board of Directors to decide on an issue of new shares in one or several lots. The number of new shares issued would be no more than 300,000 shares. The maximum number in the authorization concerning the shares corresponds roughly to 10 percent of all of the company’s shares after the combination of the class-A and class-K shares. The authorization entitles the Board to decide on all the terms of the share issue, including the right to deviate from the shareholders’ subscription privilege.

International Financial Reporting Standards

The interim report was drawn up in accordance with the International Financial Reporting Standards (IFRS) standard IAS 34 (“Interim Financial Reporting”).

Forecast of developments

The international market situation for the main sectors of Vaahto Group’s operation has improved. Demand is moderate, particularly in Chinese and other Asian markets, and there are also signs of improvement in Europe.

In the period under review, Vaahto Group’s order book has grown significantly, enabling profitable business operations. Recognition of projects in the order backlog will be weighted toward the latter half of the fiscal year. Vaahto Group’s result is forecast to improve from the previous period’s figure, and the full-year result is expected to be positive.

Interim Management Statement

In the second half of the September 1, 2010, to August 31, 2011, financial year, Vaahto Group Plc Oyj will publish an interim management statement instead of an interim report on operations during a nine-month period. The interim management statement will be published on July 1, 2011.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME, IFRS
1000 EUR

Interim
Report
1.9.2010-28.2.2011
6 months

Interim
Report
1.9.2009-
28.2.2010
6 months

Annual
Report
1.9.2009-
31.8.2010
12 months

Net sales

24 914

18 234

35 160

Change in finished goods
and work in progress

182

927

1 264

Production for own use

751

244

500

Other operating income

168

524

4 901

Share of profits of affiliated companies

2

9

17

Material and services

-12 052

-9 417

-17 548

Employee benefit
expenses

-8 910

-8 570

-16 374

Depreciations

-1 056

-1 246

-2 547

Other operating expenses

-5 323

-4 423

-8 230

Operating profit

-1 325

-3 717

-2 857

Financing income

287

32

91

Financing expenses

-402

-379

-1075

Profit or loss before taxes

-1 440

-4 064

-3 840

Tax on income from operations

500

893

812

Profit or loss for the period

-940

-3 171

-3 028

Other comprehensive income:
Translation differences

-6

-5

14

Other comprehensive income,
net of tax

-6

-5

14

Total comprehensive income

-946

-3 176

-3 014

Net profit or loss attributable:
To equity holders of the parent

-998

-2 999

-2 910

To minority interest

59

-171

-118

Total

-940

-3 171

-3 028

Total comprehensive income attributable:             
To equity holders of the parent

-1 005

-3 004

-2 896

To minority interest

59

-171

-118

Total

-946

-3 176

-3 014

Earnings per share calculated
on profit attributable to
equity holders of the parent:            
  
EPS undiluted, euros/share

-0,34

-1,04

-1,01

EPS diluted, euros/share

-0,34

-1,04

-1,01

Average number of shares (1000 shares)

2 919

2 872

2 872

CONSOLIDATED
BALANCE SHEET, IFRS
1000 EUR

Interim
Report
28.2.2011

Interim
Report
28.2.2010

Annual
Report
31.8.2010

Assets
Intangible assets

1 309

2 086

1 642

Goodwill

1 702

1 702

1 702

Tangible assets

10 919

15 431

10 923

Shares in affiliated companies

57

54

62

Non-current trade and other
receivables

44

44

44

Other long-term investments

11

12

11

Deferred tax asset

2 752

2 233

2 172

Non-current assets

16 795

21 562

16 557

Inventories

5 303

4 850

5 241

Trade receivables
and other receivables

12 067

10 224

16 685

Tax receivable,
income tax

0

0

2

Cash and bank

1 601

217

560

Current assets

18 971

15 291

22 488

Total assets

35 765

36 853

39 045

Equity and liabilities
Share capital

2 872

2 872

2 872

Share premium account

6

6

6

Other reserves

1 995

1 995

1 995

Translation differences

41

20

41

Retained earnings

859

1 777

1 864

Equity attributable to
equity holders of the parent

5 773

6 669

6 778

Minority share

1 169

1 057

1 110

Shareholders’ equity

6 942

7 726

7 888

Deferred tax liability

597

580

549

Long-term liabilities, interest-bearing

8 057

5 760

3 042

Non-current provisions

245

268

245

Non-current liabilities

8 899

6 607

3 836

Short-term liabilities, interest-bearing

4 690

9 716

15 068

Trade payables and other liabilities

15 151

12 672

12 072

Tax liability

84

132

182

Current liabilities

19 925

22 520

27 322

Liabilities

28 823

29 127

31 157

Total equity and  liabilities

35 765

36 853

39 045

KEY FIGURES, IFRS

Interim
Report
1.9.2010-28.2.2011
6 months

Interim
Report
1.9.2009-
28.2.2010
6 months

Annual
Report
1.9.2009-
31.8.2010
12 months

Operating profit or loss 1000 EUR

-1 325

-3 717

-2 857

Operating profit or loss % of turnover

-5,3

-20,4

-8,1

Return on equity %, 12 months 1)

-25,4

-68,4

-32,2

Return on investment %, 12 months 1)

-9,4

-31,1

-11,0

Earnings per share EUR

-0,34

-1,04

-1,01

Shareholders’  equity per share EUR

1,93

2,32

2,36

Solidity %

22,8

22,3

21,8

Gearing

160,6

197,5

222,5

Order backlog 1000 EUR

27 560

12 015

15 175

Gross investments 1000 EUR

1 148

258

776

Total average number of personnel

342

376

371

1) Return on equity % and return on investment % has been calculated by converting the profit or loss for the reporting period September 1, 2010 – February 28, 2011 to correspond the profit or loss for the fiscal period. The key figures for the comparison period September 1, 2009 – February 28, 2010 has been amended accordingly.
CONSOLIDATED FLOW OF
FUNDS STATEMENT, IFRS
1000 EUR

Interim
Report
1.9.2010-28.2.2011
6 months

Interim
Report
1.9.2009-
28.2.2010
6 months

Annual
Report
1.9.2009-
31.8.2010
12 months

Profit or loss before taxes

-1 440

-4 064

-3 840

Adjustments

962

1 065

-1 336

Change in working capital

-670

-10 794

-9 815

Financial income and expenses and taxes

-147

-456

-1 056

Flow of funds from operations

-1 294

-14 249

-16 047

Investments in tangible and
intangible assets

-1 148

-258

-776

Income from sales of tangible
and intangible assets

8 846

457

479

Repayments of loans

0

0

1

Flow of funds from investments

7 698

198

-295

Increase of the interest-bearing liabilities

2 902

3 199

6 410

Decrease of the interest-bearing liabilities

-8 265

-1 331

-1 908

Flow of funds from financial items

-5 363

1 868

4 502

Change of liquid funds         

1 041

-12 183

-11 840

 

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY, IFRS

1000 EUR

Changes in shareholders’ equity
1.9.2010 – 28.2.2011

Share capital

Share premium account

Emergency reserve

Translation differences

Re-
tained
earn-
ings

Total

Minority shares

Total

Shareholders’ equity in the beginning of the fiscal period

2 872

6

1 995

41

1 864

6 778

1 110

7 888

Total comprehensive income

0

0

0

0

-1 005

-1 005

59

-946

Shareholders’ equity at the end of the period

2 872

6

1 995

41

859

5 773

1 169

6 942

Changes in shareholders’ equity
1.9.2009 – 28.2.2010

Share capital

Share premium account

Emergency reserve

Translation differences

Re-
tained
earn-
ings

Total

Minority shares

Total

Shareholders’ equity in the beginning of the fiscal period

2 872

6

1 995

20

4 781

9 673

1 229

10 902

Total comprehensive income

0

0

0

0

-3 004

-3 004

-171

-3 176

Shareholders’ equity at the end of the period

2 872

6

1 995

20

1 777

6 669

1 057

7 726

Changes in shareholders’ equity
1.9.2009 – 31.8.2010

Share capital

Share premium account

Emergency reserve

Translation differences

Re-
tained
earn-
ings

Total

Minority shares

Total

Shareholders’ equity in the beginning of the fiscal period

2 872

6

1 995

20

4 781

9 673

1 229

10 902

Total comprehensive income

0

0

0

22

-2 917

-2 896

-118

-3 014

Shareholders’ equity at the end of the period

2 872

6

1 995

41

1 864

6 778

1 110

7 888

 

SEGMENT INFORMATION, IFRS
NET SALES BY OPERATING SEGMENTS, IFRS
1000 EUR

Interim
Report
1.9.2010-
28.2.2011
6 months

Interim
Report
1.9.2009-
28.2.2010
6 months

Annual
Report
1.9.2009-
31.8.2011
12 months

Pulp & Paper Machinery

17 438

12 148

21 501

Process Machinery

7 512

6 183

13 806

Net sales
between segments

-36

-96

-146

Group total

24 914

18 234

35 160

NET SALES BY MARKET AREAS,  IFRS
1000 EUR

Interim
Report
1.9.2010-
28.2.2011
6 months

Interim
Report
1.9.2009-
28.2.2010
6 months

Annual
Report
1.9.2009-
31.8.2011
12 months

Finland

6 679

9 051

15 600

Other Europe

8 481

7 628

15 468

North America

300

92

130

Asia

9 358

982

2 813

Africa

63

128

468

Other

33

353

681

Group total

24 914

18 234

35 160

OPERATING PROFIT OR
LOSS BY OPERATING
SEGMENTS, IFRS
1000 EUR

Interim
Report
1.9.2010-
28.2.2011
6 months

Interim
Report
1.9.2009-
28.2.2010
6 months

Annual
Report
1.9.2009-
31.8.2011
12 months

Pulp & Paper Machinery

-578

-3 464

-4 795

Process Machinery

-740

-255

1 922

Operating profit or
loss between segments

-7

2

16

Group total

-1 325

-3 717

-2 857

TOTAL AVERAGE NUMBER OF PERSONNEL BY OPERATING SEGMENTS

Interim
Report
1.9.2010-
28.2.2011
6 months

Interim
Report
1.9.2009-
28.2.2010
6 months

Annual
Report
1.9.2009-
31.8.2011
12 months

Pulp & Paper Machinery

226

241

242

Process Machinery

116

135

129

Group total

342

376

371

 

Figures are in thousand euros unless stated otherwise. Figures are unaudited.

RETROACTIVE ADJUSTMENTS

The Group has retroactively adjusted the application of hedge accounting in the previous Interim report, because the documentation of hedge accounting did not meet the criteria of IAS 39. The adjustment increased the financing income and improved the profit for the reporting period September 1, 2009 – February 28, 2010 approximately 17 thousand euros. The adjustment changed the key figure “earning per share” as per 28.2.2010 from -1.05 euros/share to -1.04 euros/share.

NOTES REQUIRED BY IAS 34

Accounting principles

The Interim Report was drawn up according to the same accounting principles and calculation methods as the previous financial statement, for the fiscal period that ended on August 31, 2010.

Dividends paid

During the period under review, Vaahto Group Plc Oyj paid no dividends.

 

Lahti, April 8, 2011

VAAHTO GROUP PLC OYJ

Anssi Klinga

CEO

 

Further information:

Anssi Klinga

CEO

tel.  +358 50 466 1470