ETTEPLAN OYJ: FINANCIAL STATEMENT BULLETIN 1 JANUARY-31 DECEMBER 2005
Stock exchange release – Published: 17.02.2006 10:00:02
FINANCIAL STATEMENT BULLETIN 1 JANUARY-31 DECEMBER 2005
Revenue: EUR 79.4 million +28%
Operating profit: EUR 3.4 million -37%
Net profit for the financial year: EUR 2.2 million -30%
Earnings per share: EUR 0.25 -33%
Proposed dividend: EUR 0.20 per share
Etteplan continued its rapid growth in 2005. The growth in revenue of
28% was attributable to acquisitions and to organic growth. Organic
growth accounted for 8 percentage points of overall annual growth.
During the year the company strengthened its position in Sweden by
acquiring a majority stake in ProTang AB. The acquisition was a
means for the company to establish a secure position in the
traditional customer segment as well as to procure expertise in,
for instance, nuclear power plant automation. In Finland operations
were expanded to include information technology by means of the
acquisition of a majority stake in DokuMentori Oy. During the year
a new unit was established in China. In line with objectives, it
devoted efforts in its first year of operations to recruiting and
training staff as well as to marketing. Extended service provision
helped land new customers and deepen co-operation with existing
customers.
In 2005 the demand for design services was at normal levels, with
the exception of late summer and early autumn, when there were
delays in getting new assignments underway. Owing to significant
changes that took place within the operating environment of some
individual customers, the demand for design services on their part
fell sharply, and consequently, units serving these customers were
clearly loss-making. The effects were felt in Central Europe in
particular as well as in areas in the electronics industry. In the
final quarter, adjustments were made in order to rectify the
situation as a result of which the company booked non-recurring
expenses amounting to EUR 0.3 million for the period. The losses
incurred by the units affected the result for the full year,
causing it to remain short of the set targets.
Revenue and result
The Etteplan Group's revenue increased significantly compared to
the previous year. Revenue grew by 28.1% to EUR 79.4 million
(EUR 62.0 million in 2004). Growth was attributable to the
acquisition of the majority stake in the Swedish ProTang AB and
the Finnish DokuMentori Oy as well as to organic growth, mainly
customers' outsourced units taken on.
Operating profit was EUR 3.4 million (EUR 5.4 million), or 4.3%
of revenue (8.8%). Operating profit declined by 37.3% on the
previous year. Profit for the financial period before taxes and
minority interest was EUR 3.4 million (EUR 5.5 million). Net profit
for the financial year amounted to EUR 2.2 million (EUR 3.2 million).
Earnings per share were EUR 0.25 (EUR 0.37). Equity per share was
EUR 1.99 (EUR 1.57). The return on investment was 18.2% (34.7%)
and the return on equity 12.8% (25.9%).
Business operations
Etteplan operates as a partner of large and medium-sized
internationally operating industrial companies, providing
industrial engineering design services. The Group's design
services are divided into two segments: Delivery Design and
Product Development.
The Delivery Design segment provides services for the design of
machinery, devices as well as production facilities. Mechanical,
electrical, automation and plant design and commissioning
services are provided for project and equipment suppliers as
well as for plant owners and operators. The Product Development
segment provides design services for product development. The
services are based on long-term partnerships with customers and
are aimed to ensure the customer's competitiveness in the future.
In addition, the company has an accredited laboratory which is
specialized in electromagnetic disturbance measurements. Etteplan's
customer base comprises equipment manufacturers and end-users
in the wood-processing industry as well as the process, automotive,
lifting and hoisting equipment and electronics industries.
In 2005 demand for the Delivery Design segment was at normal levels,
with the exception of late summer and early autumn, when there were
delays in getting new assignments underway. The segment's business
operations grew, mainly by way of acquisitions, but growth was also
organic. The segment's profitability weakened to some extent; profit
was burdened by the restructuring of operations carried out by some
customers.
The number of assignments in 2005 for the Product Development segment
remained at previous levels in Finland and developed positively in
Sweden. The segment's revenue showed marginal growth but the result
was significantly weakened, mainly due to a temporary low workload
as well as to the one-off measures taken in response to the
restructuring of operations carried out by some customers.
Major events in 2005
At the beginning of 2005, Etteplan Oyj adopted IFRS standards in
its financial reporting.
Etteplan Oyj's stock option programme ended on 31 January 2005.
A total of 24,130 stock options were subscribed for within the
framework of the programme.
In January name changes were made, in response to wishes by units,
to three of Etteplan's subsidiaries in order to facilitate marketing
efforts. In Finland Konette Design Center Oy changed its name to
Etteplan Design Center Oy and in Sweden, J.A. Produktutveckling AB
was changed to Etteplan Technical Systems AB and Timatec AB to
Etteplan Industriteknik AB.
In February Etteplan Oyj acquired a majority stake in the Swedish
ProTang AB. Established in 1995, the company provides machine and
equipment design services for the mechanical engineering industry,
plant design and maintenance and rationalization design for nuclear
power plants.
On 23 February 2005 Etteplan Oyj published a stock exchange release
which presented the opening IFRS balance sheet dated 1 January 2004
and the most significant impacts of the adoption of IFRS on Etteplan
Oyj's reporting.
In March Etteplan Oyj's Annual General Meeting resolved, in accordance
with the proposal of the Board of Directors, to pay a dividend of
EUR 0.30 per share for the 2005 financial year and it authorized the
Board of Directors to increase the share capital through a rights issue
as well as to purchase the company's own shares and to transfer them.
Furthermore, the Annual General Meeting authorized the Board of
Directors to raise the company's share capital through a bonus issue
and it resolved, in accordance with the proposal of the Board of
Directors, to lower the accounting counter value of the company's
share without reducing share capital (split).
The split of Etteplan Oyj's shares was registered on 31 March 2005.
The split became valid in the Helsinki Stock Exchange's SAXESS system
as of 1 April 2005 and the split shares have been traded on the
Helsinki Stock Exchange from that date.
On 22 April 2005 Etteplan published a stock exchange release which
presented the preliminary comparative information for 2004 in
compliance with the IFRS standard's recognition and measurement
principles as well as the reconciliation calculation for the
consolidated result and shareholders' equity as at 31 December 2004.
Etteplan Oyj's share was transferred to the Main List of the Helsinki
Stock Exchange on 24 May 2005. Etteplan is quoted within the Other
Services business sector of the Main List. The company's share was
previously quoted on the NM List of the Helsinki Stock Exchange.
In August Etteplan Oyj and ABB Oy signed a cooperation agreement.
Under the agreement, Etteplan provides design services to ABB Oy.
As part of the agreement, nine mechanical engineering designers
from ABB Oy's Transformers Unit transferred to Etteplan on
1 September 2005 under their current terms of employment.
In September Etteplan Oyj's Extraordinary General Meeting passed
the motions put forward by the Board of Directors to authorize
the Board to increase the share capital, to take convertible
bonds and/or grant stock options. Pertti Nupponen D.Sc. (Econ.
& Bus. Adm.), M.Sc. (Tech.) was elected as the new member of the
Board in place of the late Tapani Tuori.
In October, Etteplan acquired a majority stake in the Tampere-
based company DokuMentori Oy. Established in 1998, the company
offers products and services for information technology.
Personnel
The operations and number of personnel of the Etteplan Group have
grown steadily. During the financial year the Group employed an
average of 1,230 people (965), an increase of 27.5%. At the end
of the period on 31 December 2005, the payroll numbered 1,294
employees (1,049). The increases in staff were due mainly to
acquisitions and to organic growth attributable to outsourcing by
key customers. At the end of the period the Group employed in
Finland 865 persons, in Sweden 315, in Germany 64 and in other
countries 50 persons.
Capital expenditures
The Group's total capital expenditures amounted to EUR 8.3 million
(EUR 2.4 million). The majority of capital expenditures went for
expanding the business operations. The major acquisitions were
carried out fully or partially by an exchange of shares.
Risks and risk management
Risk management within the Group encompasses corporate governance
within the Group as well as the management of operational and
financial risks. The Group's corporate governance guidelines
and quality system are the means used for the supervision of
administrative risk within the Group. The risks are itemized in
the Notes to the financial statements.
Owing to their very nature, the company's business operations involve
no significant credit, environmental or foreign currency risks.
Financial position
Etteplan's financial position remained sound. Total assets at
31 December 2005 stood at EUR 37.6 million (EUR 28.1 million),
of which cash and cash equivalents as well as marketable
securities totalled EUR 4.9 million (EUR 6.8 million). The
Group's interest-bearing liabilities at the end of the period
totalled EUR 2.2 million (EUR 1.4 million). The equity ratio
was 54.7% (52.9%). Liquidity was good throughout the report
period.
Shares, share price trend and share buy-back
The company's share capital at 31 December 2005 was
EUR 2,403,282.50 and the number of shares outstanding was
9,613,130.
The number of Etteplan Oyj shares traded during the financial
year was 4,369,064, to a total value of EUR 25.2 million. The
share price low was EUR 4.59, the average EUR 5.78 and the
closing price was EUR 4.77. The Group's market capitalization
at 31 December 2005 was EUR 45.9 million and it had 1,962
shareholders.
During the financial year the company did not buy back or
transfer its own shares (treasury shares). At the end of the
financial year the company held 200 of its own shares and
consideration paid for the shares amounted to EUR 481.00.
Stock options, share issue authorizations and the option programme
The Annual General Meeting held on 23 March 2005 granted the
Board of Directors an authorization to
- decide, within one year from the date of the Annual General
Meeting to take one or more convertible bonds and/or issue option
rights and/or decide to increase the share capital in one or more
lots by using new issue so that when issuing convertible bonds or
option rights or new issues together, the Board of Directors'
unexercised, valid authorizations shall, however, with regard to
the total amount of increase and the total number of voting rights
attached to the shares to be issued, correspond to no more than
one-fifth of the registered share capital and the aggregate number
of voting rights attached to the shares at the date of the resolution
of the General Meeting of Shareholders concerning the authorization
and the decision of the Board of Directors to increase the share
capital. Pursuant to the authorization the company's share capital
may be increased by a maximum of EUR 86,969.
- decide to acquire the company's own shares in one or more lots
to the effect that the company may use funds distributable as
profit otherwise than in proportion to the holdings of the
shareholders. The authorization includes the right to acquire the
company's shares in public trade at the applicable quoted price
to the effect that the total accounting par value and the voting
rights attached to the acquired shares shall be no more than
five (5) per cent of the company's share capital and the aggregate
number of voting rights after the acquisition of the shares.
- decide to convey, in one or more lots, the company's own shares
acquired pursuant to the authorization set forth. The authorization
to the Board of Directors includes the right to convey to the effect
that the aggregate accounting par value and the voting rights
attached to the shares shall be no more than five (5) per cent
of the company's share capital and the aggregate number of voting
rights attached to the shares at the time of the convey.
The Extraordinary General Meeting held on 21 September 2005 made
a resolution to cancel and remove from the Trade Register the
authorization of the Board of Directors to take convertible loans
and/or issue option rights and/or decide to increase the share
capital resolved by the Annual General Meeting on March 23rd, 2005.
The Extraordinary General Meeting granted the Board of Directors an
authorization to decide, within one year from the date of the
Extraordinary General Meeting to take one or more convertible bond
loans and/or issue option rights and/or decide to increase the
share capital in one or more lots by using new issue so that when
issuing convertible bonds or option rights or new issues, the
Board of Directors' unexercised, valid authorizations shall, with
regard to the total amount of increase and the total number of
voting rights attached to the shares to be issued, correspond
together to no more than one-fifth of the registered share capital
and the aggregate number of voting rights attached to the shares
at the date of the resolution of the General Meeting of Shareholders
concerning the authorization and the decision of the Board of
Directors to increase the share capital. Pursuant to the
authorization the company's share capital may be increased by a
maximum of EUR 454,802.25.
In March Etteplan increased its share capital as a consequence of
the subscribed options in 2004 according to Etteplan Oyj's stock
option programme I 2000-2005. The 6,000 new shares registered in
the directed share issue were admitted for trading on 10 March 2005.
In April Etteplan increased its share capital as a consequence of
the subscribed options in January 2005 according to Etteplan Oyj's
stock option programme I 2000-2005. The 36,260 new shares registered
in the directed share issue were admitted for trading on 5 April 2005.
Furthermore, Etteplan increased its share capital as a consequence
of the agreement made in February to acquire a majority stake in
ProTang AB. The 362,886 new shares registered in the directed share
issue were also admitted for trading on 5 April 2005.
In October Etteplan increased its share capital as a consequence
of the agreement made in October to acquire a majority stake in
DokuMentori Oy. The 517,084 new shares registered in the directed
share issue were admitted for trading on 14 October 2005.
All the company's permanently employed staff came within the sphere
of Etteplan's stock option programme up to 31 January 2005.
Board of Directors, CEO and auditors
The members of Etteplan Oyj's Board of Directors during the report
period were Tapani Mönkkönen, Chairman, and Tapio Hakakari,
Heikki Hornborg, Tapani Tuori and Matti Virtaala as well as
Pertti Nupponen who was elected by the Extraordinary General Meeting
as the new member in place of the late Tapani Tuori. Tapio Hakakari,
Tapani Tuori, Matti Virtaala and Pertti Nupponen were impartial
members in 2005.
The company's Chief Executive Officer was Heikki Hornborg,
M. Sc.(Tech.).
The company's auditor was PricewaterhouseCoopers Oy, a firm of
authorized public accountants, with Mika Kaarisalo APA acting
as chief auditor.
As of 1 January 2006, the company has complied with the amended
Insider Guidelines issued by the Helsinki Stock Exchange. Etteplan's
statutory insiders include the members of the Board of Directors,
the CEO, the Executive Vice President and the auditor. Furthermore,
the members of the Management Group are considered as Etteplan's
public insiders.
Board of Directors proposal for the disposal of profits
The Group's distributable shareholders' equity according to the
balance sheet at 31 December 2005 is EUR 8.2 million and the parent
company's distributable shareholders' equity is EUR 7.9 million.
The Board of Directors is proposing to the Annual General Meeting,
which will convene on 29 March 2006, that on the dividend payout date
a dividend of EUR 0.20 per share be paid on the company's externally
owned shares and that the remainder be transferred to retained earnings.
In accordance with the Board of Directors' proposal, the record date
for the dividend payout is 3 April 2006 and the dividend will be paid
on 10 April 2006.
Transition to International Financial Reporting Standards (IFRS)
Etteplan prepared its first financial statements in compliance with
the IFRS standard for the 2005 financial year. On 23 February 2005
Etteplan Oyj released a stock exchange release which presented the
opening IFRS balance sheet dated 1 January 2004 as well as the most
significant impacts of the adoption of the IFRS standard on the
accounting policies of the Group's financial statements. The
preliminary comparative data for 2004 were published in a stock
exchange release dated 22 April 2005. The interim reports for 2005
have been drawn up in compliance with the IFRS standard's recognition
and calculation principles.
Outlook for the future
The demand for design services is expected to remain strong within
the company's main market area, the Nordic countries. Investments
in China have led to the launch of actual design operations. Outlays
in Central Europe have focused much effort into marketing as well
as to stepping up efficiency, which are expected to result in
considerably improved earnings in these units after the first quarter.
The programme aimed at improving profitability carried out in the
units will not call for any major non-recurring expenses.
Improved profitability has been set as the primary objective for
the operating year. In order to achieve this objective, the
organization has been fine-tuned to respond to changed customer
needs, reporting has been speeded up and several development
projects have been launched, the combined effects of which stand
to boost the result. In line with its strategy, the Group's goal
is to continue on a path of profitable growth. Growth will be
achieved organically, by means of acquisitions and by taking on
customers' design functions through out-sourcing.
Hollola, 17 February 2006
Etteplan Oyj
Board of Directors
For additional information, please contact Heikki Hornborg, CEO,
tel. + 358 400 873 063 or Pia Björk, CFO, Vice President Corporate
Planning, tel. + 358 400 241 815
No auditor's report on the financial statement bulletin has been
submitted.
APPENDICES
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Key figures for Etteplan Group
Revenue and operating profit quarterly
Etteplan Oyj's first interim report for 2006 will be published
on 28 April 2006. Releases and other corporate information are
available on Etteplan's website at www.etteplan.fi.
DISTRIBUTION
Helsinki Stock Exchange
Principal media
CONSOLIDATED INCOME STATEMENT (EUR 1 000)
1.1.-31.12.05 1.1.-31.12.04
Revenue 79 365 61 967
Other operating income 98 121
Materials and services -2 920 -1 926
Staff costs -58 072 -44 036
Other operating expenses -13 129 -9 053
Depreciation and amortization expense -1 930 -1 630
Operating profit 3 411 5 443
Net financial expenses 18 42
Profit before taxes and
minority interest 3 429 5 485
Income taxes -1 167 -1 686
Profit before minority interest 2 262 3 799
Minority interest -17 -588
Net profit for the financial year 2 244 3 211
Basic earnings per share, EUR 0.25 0.09
Diluted earnings per share, EUR 0.25 0.09
CONSOLIDATED BALANCE SHEET (EUR 1 000)
31.12.2005 31.12.2004
ASSETS
Non-current assets
Goodwill 337 8
Intangible assets 1 914 1 309
Goodwill on consolidation 8 921 3 743
Property, plant and equipment 3 193 3 904
Investments available for sales 425 95
Other non-current receivables 40 0
Deferred tax assets 96 0
Non-current assets, total 14 926 9 059
Current assets
Stocks 25 0
Trade and other receivables 17 712 12 201
Financial assets through
income statement 475 234
Cash and cash equivalents 4 445 6 601
Current assets, total 22 657 19 035
TOTAL ASSETS 37 582 28 095
EQUITY AND LIABLITIES
Capital attributable to equity holders
Share capital 2 403 434
Share premium account 8 269 5 434
Cumulative translation difference -252 -19
Retained earnings 6 439 4 532
Net profit for the financial year 2 244 3 211
Minority interest 1 360 1 208
Equity, total 20 463 14 800
Non-current liabilities
Deferred tax liability 193 166
Non-current interest-bearing
liabilities 1 596 1 342
Non-current liabilities, total 1 789 1 509
Current liabilities
Pension liability 0 13
Current interest-bearing liabilities 584 55
Trade and other payables 14 746 11 718
Current liabilities, total 15 330 11 786
Liabilities, total 17 119 13 295
TOTAL EQUITY AND LIABILITIES 37 582 28 095
CONSOLIDATED CASH FLOW STATEMENT (EUR 1 000)
1.1.-31.12.05 1.1.-31.12.04
OPERATING CASH FLOW
Cash receipts from customers 73 864 60 685
Cash receipts from other
operating income 78 121
Operating expenses paid 72 836 53 212
OPERATING CASH FLOW BEFORE
FINANCIAL ITEMS AND TAXES 1 106 7 594
Interest and payment paid
for financial expenses 103 54
Interest received 120 90
Dividends received 0 6
Income taxes paid 980 1 725
OPERATING CASH FLOW (A) 144 5 910
INVESTING CASH FLOW
Purchase of tangible and
intangible assets 1 730 1 918
Acquisition of subsidiaries 672 1 769
Proceeds from sale of tangible
and intangible assets 295 371
Purchase of other investment 360 42
INVESTMENT CASH FLOW (B) -2 467 -3 358
FINANCING CASH FLOW
Proceeds from issuance of share capital 317 7
Short-terms loans, decrease 28 105
Long-term loans, increase 1 423 126
Dividend paid and other
profit distribution 1 305 2 351
FINANCING CASH FLOW 409 -2 323
VARIATION IN WORKING CAPITAL (A + B + C)
INCREASE (+)/DECREASE (-) -1 915 229
ASSETS IN THE BEGINNING OF THE PERIOD 6 835 6 606
ASSETS AT THE END OF THE PERIOD 4 920 6 835
KEY FIGURES FOR ETTEPLAN GROUP (EUR 1 000)
1.1.-31.12.05 1.1.-31.12.04 Change
for prev.
year
Revenue 79 365 61 967 28.1 %
Operating profit 3 411 5 443 -37.3 %
% of revenue 4.3 % 8.8 %
Profit before taxes and
minority interest 3 429 5 485 -37.5 %
Net profit for the
financial year 2 244 3 211 -30.1 %
Return on investment, % 18.2 34.7
Return on equity, % 12.8 25.9
Equity ratio, % 54.7 52.9
Gross interest-bearing loans 2 180 1 398 56.0 %
Dept-equity ratio, % -13.4 -36.7
Total balance 37 582 28 095 33.8 %
Gross investments 8 311 2 384 248.6 %
Earnings per share 0.25 0.37 -32.8 %
Equity per share 1.99 1.57 27.0 %
Personnel at the end of period 1 294 1 049 23.4 %
Personnel, average 1 230 965 27.5 %
REVENUE AND OPERATING PROFIT QUARTERLY
Q4/2005 Q3/2005 Q2/2005 Q1/2005
Revenue 22 762 16 088 21 069 19 446
Operating profit 1 110 -181 1 514 968
% of revenue 4.9 -1.1 7.2 5.0
