Quarterly Report • Oct 12, 2007
Quarterly Report
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Ladies and Gentlemen, dear Shareholders,
The CeoTronics Group's consolidated results in accordance with IFRSs for the first quarter of fiscal year 2007/2008 (the summer months of June, July, and August) did not match the excellent prior-year figures because a delayed technical definition for a system component by a customer prevented the timely delivery and invoicing of a major project in Spain worth approximately €980 thousand as of August 31, 2007.
If this order had been delivered and invoiced on schedule, we would have exceeded both our high prior-year period revenues and the corresponding record quarter for revenues in 2005/2006; we would also have achieved substantially improved consolidated earnings figures. This shift in revenues into the second quarter of fiscal year 2007/2008 means that CeoTronics is reporting a year-on-year drop in revenues of €654 thousand from €3,799 thousand to €3,145 thousand as of August 31, 2007.
In the first quarter of 2007/2008, preparatory work was also performed in the areas of research and development and production for the order placed by the German Armed Forces (total value: €5.5 million). This work will be included in the delivery of the first lot and is expected to be invoiced in the second quarter of 2007/2008.
The Group's order backlog increased by 119.9% year-on-year as of August 31, 2007.
As expected, the Company's key earnings figures deteriorated as against the prioryear period due to the above-mentioned shift in revenues. EBITDA (Earnings before Interest, Taxes, Depreciation and goodwill Amortization/impairment) fell by €420 thousand from €491 thousand to €71 thousand. EBIT decreased by €424 thousand, from €366 thousand to €-58 thousand. In contrast to the previous year's consolidated profit before tax of €371 thousand, a loss of €80 thousand was generated. The consolidated profit after tax of €210 thousand in the prior-year period changed by €307 thousand, for a loss of €97 thousand.
Gross cash flow decreased by €303 thousand in the period under review, from €335 thousand in the prior-year period to €32 thousand. Earnings per share declined by €0.14 to €-0.04, compared with €0.10 for the same period last year.
Consolidated equity as of August 31, 2007 amounted to €11,613 thousand (up €59 thousand), while the equity ratio was 70.4% (prior-year period: 80.5%). This decrease in the equity ratio is due in particular to real estate acquisitions in November 2006 that were partially debt-financed.
CeoTronics increased its revenues year-on-year in France, the U.S.A., and the United Kingdom extremely substantially in the first quarter of 2007/2008.
Revenues in Germany, Spain, Switzerland, Poland, the rest of Europe, and the rest of the world were in the quarter comparatively lower. This was due to low volume in some cases (Poland and the rest of the world) and to extremely high prior-year revenues in others (Germany, Spain, and Switzerland). Year-on-year, the order backlog increased by 502.7% in Germany, by 311.1% in Switzerland, and by 478.6% in Poland.
The consolidated key figures (IFRSs, unaudited) for the first three months of fiscal year 2007/2008 in comparison to the previous year were as follows:
The decrease in the cost of sales was due to the lower proportion of higher-value components and changes in the order structure.
The trend in research and development expenses reflected the increased effort involved in developing new products and modifying existing technologies, greater testing and laboratory costs, and increased personnel capacity.
Selling and marketing expenses were up as planned due to greater personnel capacity and intensified sales activities, among other things.
Administrative expenses declined primarily due to lower employee expenses, depreciation, amortization, and impairment losses, and occupancy costs.
The number of employees in the Group (including trainees) increased to 144 as of August 31, 2007 (August 31, 2006: 134). 9 new jobs were created in Germany and 1 in Poland.
At +24.2%, CeoTronics AG's share price performed extremely positively in the period under review (June 1 to August 31, 2007).
In keeping with tradition, CeoTronics does not expect to issue its revenues and earnings targets for fiscal year 2007/2008 until January 2008, at the time of publication of its interim results for the first half of the year.
We are upbeat about the future given our extremely high order backlog (approx. +120%) and the expected deliveries and invoices stretching into the third quarter of fiscal year 2007/2008, as well as the announced switch to digital radio by German security authorities and organizations (BOS – Behörden und Organisationen mit Sicherheitsaufgaben).
Rödermark, October 12, 2007
Thomas H. Günther Berthold Hemer Chief Executive Officer
Chairman of the Board Deputy Chairman of the Board of of Management and Management and Chief Technology Officer
| Assets | Quarterly report | Annual Report |
|---|---|---|
| (closing date of the current | (closing date of last annual | |
| quarter) | report) | |
| August 31, 2007 | May 31, 2007 | |
| € thousand | € thousand | |
| Current assets | ||
| Cash and cash equivalents | 653 | 783 |
| Trade receivables | 2,861 | 4,886 |
| Inventories | 4,692 | 3,861 |
| Other current assets | 463 | 241 |
| Total current assets | 8,669 | 9,771 |
| Noncurrent assets | ||
| Property, plant, and equipment | 5,805 | 5,740 |
| Intangible assets | 211 | 194 |
| Goodwill | 1,298 | 1,308 |
| Deferred tax assets | 510 | 520 |
| Total noncurrent assets | 7,824 | 7,762 |
| Total assets | 16,493 | 17,533 |
| Equity and Liabilities | Quarterly report | Annual Report |
|---|---|---|
| (closing date of the current | (closing date of last annual | |
| quarter) | report) | |
| August 31, 2007 | May 31, 2007 | |
| € thousand | € thousand | |
| Current liabilities | ||
| Current financial liabilities | 353 | 291 |
| Trade payables | 815 | 814 |
| Advance payments received | 50 | 208 |
| Provisions | 525 | 1,058 |
| Current tax payables | 569 | 816 |
| Other current liabilities | 300 | 336 |
| Total current liabilities | 2,612 | 3,523 |
| Noncurrent liabilities | ||
| Noncurrent financial liabilities | 2,268 | 2,305 |
| Total noncurrent liabilities | 2,268 | 2,305 |
| Equity | ||
| Subscribed capital | 6,600 | 6,600 |
| Capital reserves | 4,471 | 4,471 |
| Retained earnings | 16 | 16 |
| Cumulative other recognized income and expense | -30 | -36 |
| Net retained profit | 514 | 609 |
| Equity attributable to shareholders of CeoTronics AG | 11,571 | 11,660 |
| Minority interest | 42 | 45 |
| Total equity | 11,613 | 11,705 |
| Total equity and liabilities | 16,493 | 17,533 |
| Income Statement | Quarterly report | Quarterly report |
|---|---|---|
| (current quarter) | (comparative quarter | |
| of previous year) | ||
| June 1, 2007- | June 1, 2006- | |
| August 31, 2007 | August 31, 2006 | |
| € thousand | € thousand | |
| Revenues | 3,145 | 3,799 |
| Cost of sales | -1,567 | -1,929 |
| Gross profit | 1,578 | 1,870 |
| Selling and marketing expenses | -955 | -869 |
| General and administrative expenses | -322 | -359 |
| Research and development expenses | -343 | -272 |
| Other operating income and expenses | -16 | 5 |
| Impairment of goodwill | 0 | -9 |
| Operating profit/loss (EBIT) | -58 | 366 |
| Interest income/expense | -22 | 5 |
| Profit/loss before tax | -80 | 371 |
| Income tax expense | -17 | -161 |
| Consolidated profit/loss | -97 | 210 |
| Consolidated profit/loss attributable to: | ||
| Minority interest | -2 | 0 |
| Shareholders of CeoTronics AG | -95 | 210 |
| Earnings per share (basic) in € | -0.04 | 0.10 |
| Earnings per share (diluted) in € | -0.04 | 0.10 |
| Weighted average shares outstanding (basic) | 2,199,998 | 2,199,998 |
| Weighted average shares outstanding (diluted) | 2,199,998 | 2,199,998 |
| Cash Flow Statement | Year-to-date | Year-to-date |
|---|---|---|
| (current fiscal year) | (comparative period of previous | |
| June 1, 2007-August 31, 2007 | year) | |
| June 1, 2006-August 31, 2006 | ||
| € thousand | € thousand | |
| Cash flow from operating activities | ||
| Profit/loss before tax | -80 | 371 |
| Income tax expense | -17 | -161 |
| Consolidated profit/loss | -97 | 210 |
| Depreciation, amortization, and impairment losses | 129 | 125 |
| Gross cash flow | 32 | 335 |
| Changes in assets and liabilities | ||
| Change in trade receivables | 2,025 | -354 |
| Change in inventories | -831 | -255 |
| Change in other assets | -222 | -303 |
| Change in trade payables | 1 | -149 |
| Change in advance payments received | -158 | -121 |
| Change in other provisions | -533 | -353 |
| Change in tax payables | -247 | 178 |
| Change in other current liabilities | -36 | 231 |
| Change in deferred tax assets | 10 | -18 |
| Total changes in assets and liabilities | 9 | -1.144 |
| Net cash provided by/used in operating activities | 41 | -809 |
| Cash flow from investing activities | ||
| Payments to acquire intangible assets | -32 | -18 |
| Payments to acquire property, plant, and equipment | -179 | -68 |
| Change in noncurrent financial assets | 0 | 0 |
| Change in foreign currency differences | 10 | -3 |
| Disposal of noncurrent assets (net carrying amounts) | 0 | 1 |
| Net cash used in investing activities | -201 | -88 |
| Cash flow from financing activities | ||
| Change in current financial liabilities | 62 | 85 |
| Change in noncurrent financial liabilities | -37 | -1 |
| Dividend payment to minority interest | 0 | 0 |
| Dividend payment to shareholders of CeoTronics AG | 0 | 0 |
| Net cash provided by financing activities | 25 | 84 |
| Change in cash and cash equivalents | -135 | -813 |
| Effect of exchange rate changes on cash and cash equivalents | 5 | 1 |
| Cash and cash equivalents at beginning of period | 783 | 2,376 |
| Cash and cash equivalents at end of period | 653 | 1,564 |
| Equity attributable to shareholders of CeoTronics AG | ||||||||
|---|---|---|---|---|---|---|---|---|
| Subscribed capital |
Capital reserves |
Retained earnings |
Net retained profit/net accumulated losses |
Cumulative other recognized income and expense |
Total | Minority interest |
Total equity | |
| € thousand | € thousand | € thousand |
€ thousand | € thousand | € thousand |
€ thousand |
||
| Current year | ||||||||
| Balance at May 31, 2007 | 6,600 | 4,471 | 16 | 609 | -36 | 11,660 | 45 | 11,705 |
| Consolidated loss | -95 | -95 | -2 | -97 | ||||
| Dividend distribution | 0 | 0 | ||||||
| Currency translation adjustments | 6 | 6 | -1 | 5 | ||||
| Change in minority interest | 0 | 0 | ||||||
| Balance at August 31, 2007 | 6,600 | 4,471 | 16 | 514 | -30 | 11,571 | 42 | 11,613 |
| Previous year's figures for comparison |
||||||||
| Balance at May 31, 2006 | 6,600 | 4,471 | 16 | 226 | -13 | 11,300 | 43 | 11,343 |
| Consolidated profit | 210 | 210 | 210 | |||||
| Dividend distribution | ||||||||
| Currency translation adjustments | 1 | 1 | ||||||
| Change in minority interest | ||||||||
| Balance at August 31, 2006 | 6,600 | 4,471 | 16 | 436 | -13 | 11,510 | 44 | 11,554 |
The equity ratio of the CeoTronics Group was 70.4% as of August 31, 2007 (prior-year period: 80.5%). This decrease is due in particular to the real estate acquisition in November 2006 that was partially debt-financed.
There were no material changes to equity compared with the last annual financial statements.
The unaudited consolidated quarterly report of CeoTronics AG as of August 31, 2007 was prepared in accordance with the International Financial Reporting Standards (IFRSs). This interim report complies with IAS 34 Interim Financial Reporting.
The quarterly report was prepared using the accounting, measurement, and consolidation principles applied in the preparation of the consolidated annual financial statements as of May 31, 2007. Further details can be found in the Annual Report for fiscal year 2006/2007.
All options on virtual shares outstanding at the end of fiscal year 2006/2007 were exercised on June 4, 2007. The exercise price was €11.84. €9.72 was paid as a cash settlement per option for the fourth stock option plan, and €8.08 per option for the fifth stock option plan. A total of €107 thousand was paid out to entitled employees. Provisions for outstanding options amounted to €64 thousand at the end of fiscal year 2006/2007.
The Company assesses the performance of the subsidiaries on the basis of their pre-tax profit. The accounting and reporting principles used for regional reporting comply with the group accounting principles. The subsidiaries in the individual countries are legally independent and have their own management teams.
The Company's product groups are comparable in terms of both the production process used and the marketing methods. Internal and external reporting primarily follows geographic criteria.
The information below is presented by region.
Revenues for the first quarter of 2007/2008 and 2006/2007 are attributable as follows:
Country of origin (primary segment):
| Q1 2007/2008 | Q1 2006/2007 | |
|---|---|---|
| Revenues | € thousand | € thousand |
| Germany | 1,793 | 2,453 |
| Rest of Europe | 1,248 | 1,276 |
| Rest of world | 104 | 70 |
| Third-party revenues | 3,145 | 3,799 |
| Q1 2007/2008 | Q1 2006/2007 | |
|---|---|---|
| Revenues | € thousand | € thousand |
| Germany | 920 | 1,494 |
| Rest of Europe | 2,106 | 2,227 |
| Rest of world | 119 | 78 |
| Third-party revenues | 3,145 | 3,799 |
The profit or loss for the first quarter of 2007/2008 and 2006/2007 is attributable as follows to the subsidiaries in the various regions (primary segment):
| Q1 2007/2008 | Q1 2006/2007 | |
|---|---|---|
| Profit/loss | € thousand | € thousand |
| Germany | -43 | 232 |
| Rest of Europe | 6 | 49 |
| Rest of world | -60 | -71 |
| Consolidated profit/loss | -97 | 210 |
Segment assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of August 31, 2007 and August 31, 2006:
| August 31, 2007 | August 31, 2006 | |
|---|---|---|
| Segment assets | € thousand | € thousand |
| Germany | 11,162 | 8,871 |
| Rest of Europe | 3,710 | 3,858 |
| Rest of world | 1,621 | 1,623 |
| Total segment assets | 16,493 | 14,352 |
Segment liabilities are attributable as follows to the subsidiaries in the various regions (primary segment) as of August 31, 2007 and August 31, 2006:
| August 31, 2007 | August 31, 2006 | |
|---|---|---|
| Segment liabilities | € thousand | € thousand |
| Germany | 4,213 | 2,262 |
| Rest of Europe | 640 | 543 |
| Rest of world | 27 | 41 |
| Total segment liabilities | 4.880 | 2.846 |
Noncurrent assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of August 31, 2007 and August 31, 2006:
| August 31, 2007 | August 31, 2006 | |
|---|---|---|
| Noncurrent assets | € thousand | € thousand |
| Germany | 5,909 | 3,262 |
| Rest of Europe | 559 | 586 |
| Rest of world | 846 | 921 |
| Total noncurrent assets | 7,314 | 4,769 |
Investments in the first quarter of 2007/2008 and 2006/2007 are attributable to the subsidiaries in the various regions (primary segment) as follows:
| Q1 2007/2008 | Q1 2006/2007 | |
|---|---|---|
| Investments | € thousand | € thousand |
| Germany | 209 | 61 |
| Rest of Europe | 2 | 25 |
| Rest of world | 0 | 0 |
| Total investments | 211 | 86 |
Depreciation, amortization, and impairment losses are attributable as follows to the subsidiaries in the various regions (primary segment) in the first quarter of 2007/2008 and 2006/2007:
| Q1 2007/2008 | Q1 2006/2007 | |
|---|---|---|
| Depreciation, amortization, and impairment losses | € thousand | € thousand |
| Germany | 118 | 101 |
| Rest of Europe | 11 | 19 |
| Rest of world | 0 | 5 |
| Total depreciation, amortization, and impairment losses | 129 | 125 |
| Reportable securities holdings as of August 31, 2007 | CeoTronics shares (ISIN DE0005407407/WKN 540740) (quantity) |
Virtual CeoTronics stock options (quantity) |
|
|---|---|---|---|
| Board of Management | |||
| Chairman | Thomas H. Günther | 9,498 | 0 |
| Chief Technology Officer | Berthold Hemer | 171,050 | 0 |
| Chief Operating Officer | Günther Thoma | 6,022 | 0 |
| Supervisory Board | |||
| Chairman | Hans-Dieter Günther | 371,200 | 0 |
| Deputy Chairman | Horst Schöppner | 218,470 | 0 |
| Member of Supervisory Board | Stephan Haack | 0 | 0 |
The total number of CeoTronics AG shares at the reporting date amounted to 2,199,998.
At +24.2%, CeoTronics' shares highly outperformed the TECDAX (-0.7%) and Technology All Share (-4.4%) indices in the period under review.
The Company's strong results for 2006/2007, which included its second-best revenues figure, record EBITDA (up 8.8%) and EBIT (up 13.0%) plus a record profit before tax (up 12.3%) and the second-best profit for the year (up 6.9%), boosted CeoTronics' share price performance, as did the press release published by German Interior Ministers' Conference on the introduction of BOS digital radio in Germany.
There were no changes in the consolidated Group structure in the first quarter of fiscal year 2007/2008.
The following companies are included in the consolidated financial statements:
CeoTronics AG (Rotkreuz, Switzerland), CeoTronics S.A.R.L. (Brie Comte Robert, France), CeoTronics Ltd. (Aberdeen, United Kingdom), CeoTronics Inc. (Virginia Beach, U.S.A.), CeoTronics S.L. (Madrid, Spain), CT-Video GmbH (Lutherstadt Eisleben, Germany), CeoTronics Sp.z o.o. (Lodz, Poland).
The subsidiary AACOM-CeoTronics Sp. z o.o. (Lodz, Poland) was renamed CeoTronics Sp. z o.o. as of June 1, 2007.
Subsidiaries in which the parent directly or indirectly holds the majority of shares and hence of the voting power are consolidated in accordance with the principles of acquisition accounting under IFRSs.
We account for the 25% minority interest in CeoTronics Sp.z o.o. by deducting the minority interest and the resulting effects on profit or loss within equity in the balance sheet, in the income statement, the cash flow statement, and the statement of changes in equity.
There were no changes in the Company's executive bodies in the first quarter of 2007/2008.
General Meeting 2007 Friday, November 2, 2007 MKK Munich Capital Market Conference December 11/12, 2007 Report on Q2 2007/2008 Friday, January 14, 2008 Report on Q3 2007/2008 Friday, April 11, 2008 End of fiscal year 2007/2008 Saturday, May 31, 2008 Report on Q4 and annual financial statements 2007/2008 Friday, August 14, 2008 Annual earnings press conference 2008 Thursday, August 28, 2008 Analyst meeting 2008 Thursday, August 28, 2008 Report on Q1 2008/2009 Friday, October 10, 2008 General Meeting 2008 Friday, November 7, 2008
CeoTronics AG 63322 Rödermark (Germany) Adam-Opel-Str. 6 Tel. +49 6074 8751-722 Fax +49 6074 8751-720 E-mail: [email protected]
www.ceotronics.com
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