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NACON Earnings Release 2010
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Earnings Release
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VAGON
DRIVEN BY DRIVES
100% focus on AC drives.
FINANCIAL STATEMENT BULLETIN
1 JANUARY - 31 DECEMBER 2010
VACON DRIVEN BY DRIVES
Vacon Plc, Stock Exchange Release, 2 February 2011 at 9.30 am
Vacon Plc Financial Statement Bulletin 1 January – 31 December 2010
In this stock exchange release Vacon is publishing information that has a significant impact on securities included in the financial statements. The full financial statements are in the appendix to this release and can be downloaded from the company's website in English at www.vacon.com and in Finnish at www.vacon.fi
October-December summary:
- Order intake totalled MEUR 82.4, an increase of 29.7 % from the corresponding period in the previous year (MEUR 63.5).
- Revenues totalled MEUR 103.2, growth of 60.7 % (MEUR 64.2).
- Operating profit was MEUR 9.1, or 8.8 % of revenues, growth of 111.5 % (MEUR 4.3 or 6.7 %).
- Cash flow from operations was MEUR 1.6 (MEUR 12.1), a decline of 86.4 %.
- Earnings per share were EUR 0.46 (EUR 0.19), growth of 146.3 %.
January-December summary:
- Orders received totalled MEUR 358.2, an increase from 2009 of 39.9 % (MEUR 256.1).
- Revenues were MEUR 338.0, growth of 24.3 % (MEUR 272.0).
- Operating profit was MEUR 28.6, an increase of 26.8 % (MEUR 22.5). Operating profit margin was 8.5 % (8.3 %).
- Cash flow from operations totalled MEUR 15.9, a decline of 57.1 % (MEUR 37.1).
- Earnings per share were EUR 1.22 (EUR 1.01), growth of 20.1 %.
- The Board of Directors proposes to the Annual General Meeting of Shareholders that a dividend of EUR 1.00 per share be paid from the profit in 2010.
January-December result
| MEUR | 10-12/2010 | 10-12/2009 | 1-12/2010 | 1-12/2009 | Change, % |
|---|---|---|---|---|---|
| Revenues | 103.2 | 64.2 | 338.0 | 272.0 | 24.3 |
| EBITDA | 11.9 | 6.9 | 39.7 | 32.1 | 23.4 |
| Depreciation – tangibles | -1.3 | -1.2 | -5.0 | -4.3 | 16.0 |
| Amortization – intangibles | -1.5 | -1.4 | -6.1 | -5.3 | 15.0 |
| Operating profit | 9.1 | 4.3 | 28.6 | 22.5 | 26.8 |
| Operating profit % | 8.8 | 6.7 | 8.5 | 8.3 | |
| Profit before tax | 9.5 | 4.3 | 27.5 | 22.0 | 25.3 |
| Profit for the period | 7.1 | 2.9 | 19.1 | 16.1 | 18.7 |
VAGON DRIVEN BY DRIVES
General review
The global AC drive market picked up significantly in 2010 and Vacon succeeded in raising its market share in all geographical areas. Vacon's revenues increased 24.3%, while the market is thought to have grown about 8% (Frost & Sullivan). Vacon's market share is estimated at some 5% and the company is one of the seven largest AC drive suppliers in the world.
During the final quarter of 2010 revenues rose to EUR 103.2 million, thanks to the excellent order intake in the third quarter. A shortage of components disrupted deliveries to a certain extent, however. Orders received reflected the seasonal variation in the orders from a few major customers.
In the spring Vacon purchased a small company that specializes in solar energy technology, which speeded up the launching of the company's solar energy products. Vacon received its first solar energy orders in the third quarter. Revenues for renewable energy products (wind and solar) accounted for 18% of full-year revenues (12.5% in 2009).
Growth in the operating profit margin was slowed down both in the October-December period and for the whole year by the focus in sales on low-power products with a lower profit margin and by the provision recognized in the fourth quarter of 2010 on account of the legal case relating to the customs procedures employed by the subsidiary in China. The Chinese prosecuting authority is demanding compensation of EUR 3.2 million from Vacon. The total costs relating to this customs issue in the result for 2010 are EUR 3.8 million. Excluding these one-time items, Vacon's operating profit would have been EUR 32.4 million (9.6%) in 2010. A further factor weakening any improvement in the operating profit was the costs for electronic components, which rose in consequence of spot market purchases. The company invested in growth during 2010 by recruiting new personnel especially for product development and production. This has increased the company's fixed costs.
The cash flow from operations was a positive EUR 15.9 million, but EUR 21.2 million less than in the previous year. The reason for this decline was the increase in working capital caused by the sharp growth in business operations, which in turn was due to revenues focusing on the last month in the quarter.
During 2010 Vacon invested heavily in developing AC drive technology for wind power plants. Another new area for Vacon was the inverter product range developed for solar power plants. In the second half of 2010 Vacon launched the Vacon 8000 Solar product family, which has a power range of up to one megawatt. During 2011 Vacon plans to expand the product range still further.
In November 2010 Vacon unveiled its new Vacon 100 Motor Mountable AC drive that can be mounted on a motor or machine, which represents the new principle of distributed drives in Vacon's product range. AC drives designed in accordance with this principle can be placed as close as possible to the electric motor, usually on the electric motor or machine it is controlling.
Market guidance
Vacon estimates that its 2011 revenues will increase 10% - 20% and its operating profit percentage is expected to rise from 2010. Earnings per share are expected to improve from 2010. Vacon's goal is to achieve revenues of EUR 500 million in 2014. Its long-term profitability target is an operating profit of 14% and a return on equity of more than 30%.
VACON DRIVEN BY DRIVES
Financial reports in 2011
Vacon is publishing three interim reports in 2011 as follows:
- January-March: 27 April 2011
- January-June: 3 August 2011
- January-September: 25 October 2011
The 2010 annual report will be published in electronic format in week 8/2011 (21–25 February) and postage of the printed report will begin in week 10 (7–11 March). The Annual General Meeting of Vacon Plc will be held in Vaasa at 3.00 pm on Tuesday, 22 March 2011 at the premises of Åbo Akademi, at Academill, Rantakatu 2, Vaasa.
Formal statement
This release contains certain forward-looking statements that reflect the current views of the company's management. Due to the nature of these statements, they contain risks and uncertainties and are subject to changes in the general economic situation and in the company's business sector.
Vacon in brief
Vacon's operations are driven by a passion to develop, manufacture and sell the best AC drives in the world — and nothing else. AC drives are used to control electric motors and in renewable energy generation. Vacon has R&D and production units in Finland, the USA, China and Italy, and sales offices in 27 countries. In 2010 Vacon had revenues of EUR 338.0 million and globally employed 1,300 people. The shares of Vacon Plc (VAC1V) are quoted on the main list of the Helsinki stock exchange.
Driven by Drives, www.vacon.com
Vaasa, 2 February 2011
VACON PLC
Board of Directors
For more information please contact:
Mr Vesa Laisi, President and CEO, phone +358 (0)40 8371 510
Ms Eriikka Söderström, CFO and Vice President, Finance & Control, phone +358 (0)40 8371 445
Conference for investors and analysts
Vacon will hold a briefing for analysts, investors and the media at 11.30 am on 2 February 2011 at Scandic Simonkenttä, Simonkatu 9, 00100 Helsinki.
Dial-in conference for investors and investment analysts
A dial-in conference in English for investors and investment analysts will be held at 3.00 pm on 2 February 2011. President and CEO Vesa Laisi and Eriikka Söderström, CFO and Vice President, Finance and Control, will participate in the conference. To participate, please call the service number +44 (0)20 7806 1968 and ask to be connected to Vacon's dial-in conference. The conference ID code is 8224599. To hear a recording of the conference, available for three working days, call +44 (0)20 7111 1244, ID code 8224599. Link to the meeting: http://www.thomson-webcast.net/uk/dispatching/?event_id=f4c28f730978fe7b72ae5705f4d5e36d&portal_id=4e8565689f5a5e82ba2d36d9d3fccdef
VACON DRIVEN BY DRIVES
Vacon Plc, Financial Statements Bulletin 2010
Business environment and business development
The global AC drive market picked up considerably in 2010 from its state in 2009. According to business research firm Frost & Sullivan, the AC drive market grew about 8% in 2010. Factors contributing to this growth have been the general recovery in the global economy and investment in renewable energy production and in improving energy efficiency, in industry, buildings and municipal engineering. The AC drive market had a value of USD 9 billion in 2010.
Market growth was still strongest in the Asia Pacific region. In North America and EMEA (Europe, Middle East and Africa) growth was more moderate. According to Frost & Sullivan, the AC drive market grew about 12% in the Asia Pacific region in 2010. Growth in Europe and North America was some 4%. In Europe, Germany was the engine for growth.
The construction industry, renewable energy production and machine building were the industrial sectors that picked up most strongly. Sectors that normally require major investment, such as ship building, were still growing slowly.
Vacon's business operations developed strongly throughout 2010. Growth in demand concentrated on small products with a lower profit margin, which affected the operating profit as a percentage of revenues. Vacon also signed up some major new clients in 2010, and the most important of these was the supplier agreement signed with KONE Corporation for new, energy-efficient AC drives. The products have been designed in close partnership with the customer.
The rapid rise in demand for electronics resulted in a shortage of components in 2010 in the global component market. Vacon also suffered from the shortage of components, which caused delays in deliveries and brought higher material costs.
Order intake and order book
Orders received increased 29.7% during the final quarter of 2010 from the corresponding period in the previous year. The order intake totalled EUR 82.4 million. During the final quarter the volume of orders increased from the corresponding period in the previous year in all geographical regions: in North and South America 43.2%, in Asia 9.9% and in Europe 31.0%. Orders received in the fourth quarter were 25.7% less than in the third quarter. Fourth quarter orders reflect the seasonal variation in orders from a few major customers.
The order intake in 2010 totalled EUR 358.2 million, which corresponds to growth of 39.9% from the previous year. The volume of orders increased in all geographical regions. Relative growth was highest in North and South America 49.5%. In Europe orders increased 38.7% and in Asia 34.2%. The Group's order book stood at EUR 52.1 (32.0) million. The order book rose EUR 20.1 million from the beginning of the year, but declined from its highest point as delivery capabilities improved in the final quarter.
Revenues
During the final quarter of 2010 revenues rose to EUR 103.2 (64.2) million, thanks to the excellent order intake in the third quarter. Growth from the previous quarter was 15.6%. Revenues increased 60.7% from the corresponding period in the previous year. Full year revenues totalled EUR 338.0 (272) million, an increase of 24.3% from the previous year. A shortage of components delayed deliveries to some extent.
VACON DRIVEN BY DRIVES
Operating profit and result
Operating profit in the October-December period was EUR 9.1 million and 8.8% of revenues, compared to EUR 4.3 million and 6.7% of revenues in the corresponding period in the previous year. Operating profit in 2010 was EUR 28.6 million and 8.5% of revenues, compared to EUR 22.5 million and 8.3% of revenues in the previous year.
The growth in the operating profit was boosted by the distinct increase in revenues. Growth in the operating profit percentage was slowed down in the October-December period and for the whole year by the focus in sales on low power products with a smaller profit margin and by the provision recorded in the 2010 result on account of the legal proceedings concerning the customs procedures employed by the subsidiary in China. The costs of electronic components also affected the operating profit as they rose in consequence of spot market purchases. The company invested in growth during 2010 by recruiting new personnel especially for product development and production. This has increased the company's fixed costs.
The company's profitability was weakened by the current court proceedings concerning the subsidiary in China. The Chinese prosecuting authority is demanding compensation of EUR 3.2 million from Vacon. The total costs relating to this customs issue in the result for 2010 are EUR 3.8 million. Excluding these one-time items, Vacon's operating profit would have been EUR 32.4 million (9.6%) in 2010.
The earnings per share in 2010 were EUR 1.22, an increase of EUR 0.21 from the previous year.
Balance sheet and cash flow
The balance sheet remained strong but the cash flow from operations in the final quarter was EUR 1.6 million, a decline of EUR 10.5 million from the corresponding period in the previous year. The main reason for this decline was the increase in committed working capital caused by the sharp growth in business operations, which in turn was due to revenues being concentrated in the last month in the quarter. Solar energy deliveries at the end of the year also increased the volume of trade receivables. The uncertainty arising from the shortage of components increased raw material stocks.
The balance sheet total stood at EUR 203.3 (145.6) million. The equity ratio was 46.0% (56.5%). The cash flow from operations in 2010 was EUR 15.9 (37.1) million. The decline in the cash flow is explained by the increase in committed working capital.
The Group's equity structure and liquidity remained strong. Interest-bearing net debt at the end of the period totalled EUR 9.8 (1.6) million, and gearing was 10.7% (2.0%).
VACON DRIVEN BY DRIVES
Market position
Vacon Group revenues by market area were as follows:
| MEUR | 10-12/2010 | % | 10-12/2009 | % | 1-12/2010 | % | 1-12/2009 | % |
|---|---|---|---|---|---|---|---|---|
| Europe, Middle East, Africa | 72.3 | 70.0 | 42.8 | 66.7 | 227.3 | 67.2 | 190.8 | 70.1 |
| North and South America | 17.4 | 16.9 | 11.1 | 17.3 | 60.3 | 17.8 | 46.3 | 17.0 |
| Asia and Pacific | 13.5 | 13.1 | 10.4 | 16.2 | 50.5 | 14.9 | 34.9 | 12.8 |
| Total | 103.2 | 100.0 | 64.2 | 100.0 | 338.0 | 100.0 | 272.0 | 100.0 |
During 2010 Vacon strengthened its global position. Based on market surveys, the company estimates that it has about five per cent of the global market.
Developments in Vacon's revenues by market region during the final quarter were as follows: Europe, Middle East and Africa in total +69.0%, North and South America +57.1%, and Asia and Pacific +30.4%. It should be noted that Vacon reports its regional sales based on the invoicing addresses, not the final location of the products
Vacon's revenues by region were as follows in 2010: Europe, Middle East and Africa in total 67.2% (70.1% in 2009), North and South America 17.8% (17.0%) and Asia and Pacific 14.9% (12.8%).
Breakdown of Vacon Group revenues by distribution channel:
| MEUR | 10-12/2010 | % | 10-12/2009 | % | 1-12/2010 | % | 1-12/2009 | % |
|---|---|---|---|---|---|---|---|---|
| Direct sales | 5.8 | 5.6 | 5.2 | 8.1 | 27.1 | 8.0 | 26.5 | 9.8 |
| Distributors | 18.1 | 17.6 | 9.6 | 14.9 | 50.4 | 14.9 | 35.3 | 13.0 |
| OEM | 27.2 | 26.4 | 18.6 | 29.0 | 87.7 | 26.0 | 68.0 | 25.0 |
| Brand label customers | 18.1 | 17.5 | 13.0 | 20.2 | 68.1 | 20.2 | 52.6 | 19.4 |
| System integrators | 34.0 | 33.0 | 17.8 | 27.7 | 104.7 | 31.0 | 89.6 | 32.9 |
| Total | 103.2 | 100.0 | 64.2 | 100.0 | 338.0 | 100.0 | 272.0 | 100.0 |
Vacon's sales by distribution channel rose in the October-December period as follows: direct sales +10.7%, OEM +46.1%, distributors +88.9%, brand label customers +39.5% and system integrators +90.9%.
Vacon's revenues by distribution channel for all of 2010 were as follows: direct sales 8.0% (9.8%), OEM 26.0% (25.0%), distributors 14.9% (13.0%), brand label customers 20.2% (19.4%) and system integrators 31.0% (32.9%).
VAGON DRIVEN BY DRIVES
Vacon Group structure
Vacon acquired a controlling interest in a small Spanish R&D company in March 2010. Vacon revised the organization of parent company as from 1 June 2010. Vacon Plc was split into two functional entities: the Vacon Drives Finland profit unit and global group management. At the same time the company renewed its Products and Markets organization. At the end of 2010, Vacon's own sales network comprised 24 subsidiaries as well as branch offices in Romania, Ukraine, United Arab Emirates, Thailand, and Slovakia.
Research and development
R&D expenditure during 2010 totalled EUR 20.8 (17.6) million, and EUR 4.8 (5.4) million of this was capitalized as development costs. R&D costs accounted for 6.2% (6.5%) of the Group's revenues.
During 2010 Vacon invested heavily in developing AC drive technology for wind power plants. Another new area for Vacon was the inverter product range developed for solar power plants. In the second half of 2010 Vacon launched the Vacon 8000 Solar product family, which has a power range of up to one megawatt. During 2011 Vacon plans to expand the product range still further.
In November 2010 Vacon unveiled its new Vacon 100 Motor Mountable AC drive that can be mounted on a motor or machine and represents a new principle in Vacon's product range, distributed drives. AC drives designed in accordance with this principle can be placed as close as possible to the electric motor, usually on the motor itself or on the machine it is controlling.
Investments
Gross investments by the Group during the year totalled EUR 15.9 (18.2) million in 2010. Expenditure focused mainly on increasing and maintaining production capacity and on standardizing and developing information systems. During 2010 the new factory in China was completed and construction began of a new factory in Italy.
Organization and personnel
Vacon's human resources policy is based on the company's values. Skills and expertise are managed in accordance with the company's strategy.
The number of Vacon personnel has increased by 111 during 2010. At the end of December, the Group employed 1,339 (1,228) people, of whom 687 (627) were in Finland and 652 (601) in other countries.
The table below shows the average number of Vacon employees during the year:
| 1-12/2010 | 1-12/2009 | |
|---|---|---|
| Office personnel | 808 | 763 |
| Factory personnel | 493 | 468 |
| TOTAL | 1,301 | 1,231 |
VACON DRIVEN BY DRIVES
Shares and shareholders
Vacon had a market capitalization at the end of December of EUR 593.4 (406.1) million. The closing share price on 31 December 2010 was EUR 39.00. The lowest share price during the January-December period was EUR 24.90 and the highest EUR 39.75.
A total of 2,670,146 Vacon shares (17.6% of the share stock) were traded on the stock exchange during 2010, in monetary terms EUR 86.4 million. According to the shareholder register updated on 31 December 2010, Vacon had 4,687 registered shareholders. Shares that were nominee registered and in foreign ownership amounted to 34.7% (28.9%) of the share stock.
Vacon's main shareholders on 31 December 2010:
| Number of shares | Holding, % | |
|---|---|---|
| Ahlström Capital Oy Group | 3,061,215 | 20.0 |
| Ilmarinen Mutual Pension Insurance Company | 699,877 | 4.6 |
| Tapiola Mutual Pension Insurance Company | 584,500 | 3.8 |
| Vaasa Engineering Oy | 389,514 | 2.5 |
| Koskinen Jari | 362,403 | 2.4 |
| Ehrnrooth Martti | 325,070 | 2.1 |
| Holma Mauri | 302,171 | 2.0 |
| Tapiola Group companies | 245,300 | 1.6 |
| Karppinen Veijo | 143,249 | 0.9 |
| Autio Heikki | 139,213 | 0.9 |
| Nominee registered and in foreign ownership | 5,305,498 | 34.7 |
| Vacon Plc own shares | 80,565 | 0.5 |
| Others | 3,656,425 | 23.9 |
| Total | 15,295,000 | 100.0 |
| Shares outstanding | 15,214,435 |
On 31 December 2010 members of Vacon's Board of Directors, the President and CEO, and the Deputy to the CEO held directly a total of 22,954 shares, or 0.2% of Vacon's share stock.
Own shares
On 31 December 2010 Vacon Plc held a total of 80,565 of its own shares, which it had acquired at an average price of EUR 21.48. This is 0.5% of the share capital and voting rights, so it has no significant impact on the distribution of ownership or voting rights in the company.
Dividend proposal
At the end of the financial year the distributable equity of the parent company stands at EUR 59.9 million. The Board of Directors proposes to the Annual General Meeting of Shareholders to be held on 22 March 2011 that a dividend of EUR 1.00 per share be paid from the parent company's profit for the financial year 2010 of EUR 20.1 million, and the remainder of the profit for the year be transferred to retained earnings. According to this proposal, a total of EUR 15.2 million would be paid in dividend.
VACON DRIVEN BY DRIVES
Risks and uncertainties in the near future
Typical risks for Vacon's business are related to uncertainty in demand and intensifying competition on price, loss of customers, goodwill, the availability of raw materials and components, and exchange rate fluctuations. In the short term the most acute risk concerns the availability of raw materials and components, which has posed challenges in the company's production and slowed down product deliveries. In addition to these, the latest risk analysis has picked out in particular the risks relating to suppliers and the interruption of operations.
Vacon's order book has always been short term in nature, so there are no major risks connected with the timing of deliveries or their cancellation. The share of products delivered to renewable energy applications of Vacon's revenues continues to grow. In this business delivery times are typically longer which increases the risks connected with customer credits and cancellation of deliveries.
Vacon has thousands of customers worldwide. The ten largest customers account for less than half of Vacon's revenues. Vacon does not finance customer projects and is also continuously assessing the creditworthiness of its customers and their ability to pay their debts.
Vacon is able to adjust its production capacity to market demand. The company estimates that its cash funds and available credit facilities are sufficient to ensure its liquidity.
Vacon's balance sheet includes goodwill of EUR 9.1 million, most of which is related to the company acquisition at the beginning of 2008. The company tests goodwill for impairment annually.
Changes in the prices of raw materials and components, their availability and quality can affect the profitability and scale of the company's business. Purchase agreements for raw materials and components are mainly annual agreements, which contain price and exchange rate clauses for changes in the global market prices of raw and other materials. Changes in the global economic situation may harm the business opportunities for some component suppliers.
Some of the most significant financial risks affecting the result are foreign exchange risks. Exchange rate fluctuations may have an impact on business, although the international expansion of business operations reduces the relative importance of individual currencies. The biggest exchange rate risks against the euro relate to the US dollar and the Chinese renminbi. The Group applies cash flow hedge accounting in accordance with IAS 39 for the foreign currency position in its business operations.
Legal proceedings are in progress at the subsidiary in China. The Chinese prosecuting authority is demanding EUR 3.2 million from Vacon, and a provision for this was recorded in the result for the final quarter of 2010. The legal proceedings will begin in March 2011 and the ruling is expected during the second quarter.
Prospects for 2011
Vacon estimates that the AC drive market will grow 6-10% in 2011. Investments to improve energy efficiency and in renewable energy production will support strong growth in all market areas. Market growth is expected to be strongest in the Asia Pacific region. Steady growth is also forecast for EMEA and North America. Demand for Vacon's products is expected to rise in all industrial sectors. Also the demand of high power products is expected to recover during 2011. The financial problems experienced in certain European countries cause uncertainty about economic growth in the euro area. The problems with the availability of raw material and components that affected the company's deliveries in 2010 are forecast to continue during the first months of 2011, but Vacon expects an improvement in their availability by the middle of 2011.
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VACON DRIVEN BY DRIVES
Market guidance
Vacon estimates that its revenues in 2011 will increase 10% – 20% and its operating profit percentage will rise from the 2010 figures. Earnings per share are expected to improve from 2010. Vacon's goal is to achieve revenues of EUR 500 million in 2014. Its long-term profitability target is an operating profit of 14% and a return on equity of more than 30%.
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VACON
DRIVEN BY DRIVES
Accounting principles
The 2010 financial statement bulletin has been prepared in accordance with IFRS recognition and measurement principles. Vacon has prepared this release applying the same IFRS accounting principles as in its 2009 consolidated financial statements, for the new standards have had no significant impact on them. The figures presented in the financial statement release for the full financial year are audited. The quarterly figures are unaudited.
Consolidated statement of income, IFRS
| MEUR | 10-12/ 2010 | 10-12/ 2009 | 1-12/ 2010 | 1-12/ 2009 |
|---|---|---|---|---|
| Revenues | 103.2 | 64.2 | 338.0 | 272.0 |
| Other operating income | 0.2 | 0.0 | 0.4 | 0.3 |
| Change in inventories of finished goods and work in progress | 2.1 | -1.0 | 6.6 | -1.0 |
| Materials and services | -59.1 | -32.0 | -186.7 | -138.1 |
| Employee benefit costs | -18.1 | -12.9 | -64.9 | -53.6 |
| Other operating costs | -16.5 | -11.5 | -53.9 | -47.5 |
| Depreciation | -1.3 | -1.2 | -5.0 | -4.3 |
| Amortization | -1.5 | -1.4 | -6.1 | -5.3 |
| Operating profit | 9.1 | 4.3 | 28.6 | 22.5 |
| Financial income and expenses | 0.4 | 0.0 | -1.1 | -0.6 |
| Profit before taxes | 9.5 | 4.3 | 27.5 | 22.0 |
| Income taxes | -2.4 | -1.4 | -8.5 | -5.9 |
| Profit for the period | 7.1 | 2.9 | 19.1 | 16.1 |
| Attributable to: | ||||
| Equity holders of the parent | 7.0 | 2.8 | 18.5 | 15.4 |
| Non-controlling interests | 0.1 | 0.1 | 0.5 | 0.6 |
| Earnings per share, euro | 0.46 | 0.19 | 1.22 | 1.01 |
| Earnings per share diluted, euro | 0.46 | 0.19 | 1.22 | 1.01 |
Consolidated statement of comprehensive income
| MEUR | 10-12/2010 | 10-12/2009 | 1-12/2010 | 1-12/2009 |
|---|---|---|---|---|
| Profit for the period | 7.1 | 2.9 | 19.1 | 16.1 |
| Other comprehensive income | ||||
| - Cash flow hedging | -0.1 | 0.0 | 0.0 | -0.1 |
| - Exchange differences on translating foreign operations | 0.5 | 0.3 | 1.5 | -0.1 |
| Total comprehensive income | 7.5 | 3.1 | 20.5 | 15.9 |
| Attributable to: | ||||
| Equity holders of the parent | 7.4 | 3.0 | 19.9 | 15.3 |
| Non-controlling interests | 0.1 | 0.1 | 0.5 | 0.6 |
VACON
DRIVEN BY DRIVES
Consolidated statement of financial position, IFRS
| MEUR | 31.12.2010 | 31.12.2009 |
|---|---|---|
| ASSETS | ||
| Goodwill | 9.1 | 8.1 |
| Development costs | 12.6 | 9.1 |
| Intangible assets | 11.1 | 13.3 |
| Tangible assets | 20.7 | 18.5 |
| Loans receivable and other receivables | 0.0 | 0.2 |
| Deferred tax assets | 4.8 | 3.3 |
| Other financial assets | 3.8 | 5.3 |
| Total non-current assets | 62.2 | 57.8 |
| Inventories | 31.9 | 19.3 |
| Trade and other receivables | 90.8 | 51.3 |
| Cash and cash equivalents | 18.4 | 17.2 |
| Total current assets | 141.1 | 87.8 |
| Total assets | 203.3 | 145.6 |
| EQUITY AND LIABILITIES | ||
| Share capital | 3.1 | 3.1 |
| Share premium reserve | 5.0 | 5.0 |
| Own shares | -2.6 | -2.6 |
| Retained earnings | 84.3 | 74.4 |
| Non-controlling interests | 1.6 | 1.5 |
| Total equity | 91.3 | 81.3 |
| Deferred tax liabilities | 5.3 | 4.6 |
| Employee benefits | 1.6 | 1.5 |
| Interest-bearing liabilities | 9.9 | 12.4 |
| Other liabilities | 0.2 | 0.0 |
| Total non-current liabilities | 17.0 | 18.5 |
| Trade and other payables | 62.4 | 36.1 |
| Income tax liabilities | 6.5 | 1.3 |
| Provisions | 7.9 | 1.9 |
| Interest-bearing liabilities | 18.3 | 6.4 |
| Total current liabilities | 95.1 | 45.7 |
| Total equity and liabilities | 203.3 | 145.6 |
VACON
DRIVEN BY DRIVES
Consolidated statement of changes in equity, IFRS (MEUR)
Attributable to equity holders of the parent
| Share capital | Share premium reserve | Own shares | Retained earnings | Total | Non-controlling interests | Total equity | |
|---|---|---|---|---|---|---|---|
| Equity 31 Dec. 2008 | 3.1 | 5.0 | -2.6 | 68.7 | 74.1 | 1.4 | 75.5 |
| Dividend paid | -10.0 | -10.0 | -0.5 | -10.5 | |||
| Total comprehensive income for period | 15.3 | 15.3 | 0.6 | 15.9 | |||
| Share bonuses | 0.3 | 0.3 | 0.0 | 0.3 | |||
| Other changes | 0.1 | 0.1 | 0.1 | ||||
| Equity 31 Dec. 2009 | 3.1 | 5.0 | -2.6 | 74.4 | 79.8 | 1.5 | 81.3 |
Consolidated statement of changes in equity, IFRS (MEUR)
Attributable to equity holders of the parent
| Share capital | Share premium reserve | Own shares | Retained earnings | Total | Non-controlling interests | Total equity | |
|---|---|---|---|---|---|---|---|
| Equity 31 Dec. 2009 | 3.1 | 5.0 | -2.6 | 74.4 | 79.8 | 1.5 | 81.3 |
| Dividend paid | -10.6 | -10.6 | -0.5 | -11.2 | |||
| Total comprehensive income for period | 19.9 | 19.9 | 0.6 | 20.5 | |||
| Share bonuses | 0.6 | 0.6 | 0.6 | ||||
| Other changes | 0.0 | 0.0 | 0.0 | 0.1 | |||
| Equity 31 Dec. 2010 | 3.1 | 5.0 | -2.6 | 84.3 | 89.7 | 1.6 | 91.3 |
VACON
DRIVEN BY DRIVES
Consolidated statement of cash flows, IFRS
| MEUR | 31 Dec. 2010 | 31 Dec. 2009 |
|---|---|---|
| Profit for the period | 19.1 | 16.1 |
| Depreciation | 11.1 | 9.6 |
| Financial income and expenses | 1.1 | 0.6 |
| Taxes | 8.5 | 5.9 |
| Other adjustments | -0.2 | 0.5 |
| Change in working capital | -17.2 | 11.0 |
| Cash flow from financial items and tax | -6.3 | -6.5 |
| Cash flow from operating activities | 15.9 | 37.1 |
| Purchase of subsidiary | -0.7 | 0.0 |
| Investments in tangible and intangible assets | -13.7 | -16.1 |
| Proceeds from disposal of tangible and intangible assets | 0.0 | 1.4 |
| Other investments | 0.0 | -2.3 |
| Repayment of loan receivables | 0.8 | 0.0 |
| Proceeds from disposal of other investments | 0.3 | 0.6 |
| Cash flow from investing activities | -13.4 | -16.5 |
| Proceeds from long-term borrowings | 0.2 | 0.0 |
| Repayment of long-term borrowings | -3.0 | -3.3 |
| Proceeds from short-term borrowings | 12.1 | 0.0 |
| Repayment of short-term borrowings | -0.2 | -5.8 |
| Dividends paid | -11.2 | -10.4 |
| Cash flow from financing activities | -2.2 | -19.5 |
| Change in liquid funds | 0.4 | 1.2 |
| Liquid funds at start of period | 17.2 | 15.7 |
| Translation differences for liquid funds | 0.9 | 0.3 |
| Liquid funds at end of period | 18.4 | 17.2 |
VACON DRIVEN BY DRIVES
Segment information
Vacon has one business segment, AC drives. The figures for the business segment are identical with the figures for the whole Group. Vacon's operations are organized in the following functions: Products and Markets, Production, Research & Development, Finance and Administration, Human Resources, IT and Process Development, and Busines Development. To ensure that the organisation is customer-oriented, operations are governed by sales channel: distributors, system integrators, direct sales, OEM customers and brand label customers.
Key financial indicators
| Per share data | 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
| Earnings per share, EUR | 1.22 | 1.01 | 1.51 | 1.37 | 1.04 |
| Equity per share, EUR | 5.90 | 5.25 | 4.88 | 4.13 | 3.42 |
| Dividend per share, EUR*) | 1.00 | 0.70 | 0.65 | 0.75 | 0.65 |
| Dividend payout ratio, %*) | 82.13 | 69.02 | 42.94 | 54.59 | 62.57 |
| Effective dividend yield, %*) | 2.6 | 2.6 | 3.5 | 2.7 | 2.5 |
| Price/earnings ratio | 32.0 | 26.3 | 12.1 | 20.4 | 25.1 |
| Lowest trading price, EUR | 24.90 | 15.30 | 17.00 | 24.60 | 17.70 |
| Highest trading price, EUR | 39.75 | 28.90 | 32.44 | 38.00 | 26.99 |
| Share price at year end, EUR | 39.00 | 26.70 | 18.30 | 28.00 | 26.10 |
| Average trading price, EUR | 32.49 | 21.51 | 26.65 | 30.01 | 22.60 |
| Market capitalization, MEUR | 593.36 | 406.11 | 278.00 | 426.50 | 397.10 |
| Trading volume, no. of shares | 2,670,146 | 4,493,871 | 4,915,722 | 8,241,357 | 4,439,458 |
| Trading volume, % | 17.6 | 29.6 | 32.3 | 54.1 | 29.2 |
| Adjusted average number of shares during financial year **) | 15,213,083 | 15,204,263 | 15,238,236 | 15,226,997 | 15,209,303 |
| Number of shares at year end **) | 15,214,435 | 15,209,989 | 15,193,188 | 15,232,188 | 15,213,428 |
| Own shares | 80,565 | 85,011 | 101,812 | 62,812 | 81,572 |
) The 2010 dividend is the Board of Directors' proposal to the Annual General Meeting.
*) The average number of shares during the year was 15,213,083. The total number of shares outstanding is 15,214,435.
VACON DRIVEN BY DRIVES
Key figures showing the Group's financial performance
| 2010 | 2009 | 2008 | 2007 | 2006 | |
|---|---|---|---|---|---|
| Revenues, MEUR | 338.0 | 272.0 | 293.2 | 232.2 | 186.4 |
| Change in revenues, % | 24.3 | -7.2 | 26.3 | 24.6 | 24.3 |
| Operating profit, MEUR | 28.6 | 22.5 | 34.6 | 29.2 | 23.1 |
| Change in operating profit, % | 26.8 | -35.0 | 18.5 | 26.4 | 27.6 |
| Operating profit, % of revenues | 8.5 | 8.3 | 11.8 | 12.6 | 12.4 |
| Profit before taxes, MEUR | 27.5 | 22.0 | 32.6 | 28.8 | 22.7 |
| Profit before taxes, % of revenues | 8.1 | 8.1 | 11.1 | 12.4 | 12.2 |
| Return on equity, % | 22.1 | 20.5 | 34.3 | 36.5 | 33.7 |
| Return on investment, % | 27.0 | 23.1 | 37.0 | 41.2 | 45.1 |
| Interest-bearing net debt, MEUR | 9.8 | 1.6 | 12.3 | -11.0 | -8.8 |
| Gearing, % | 10.7 | 2.0 | 16.3 | -17.1 | -16.6 |
| Working capital, MEUR | 45.9 | 31.2 | 42.5 | 27.2 | 21.8 |
| Equity ratio, % | 46.0 | 56.5 | 51.1 | 52.9 | 61.7 |
| Gross capital expenditure, MEUR*1 | 15.9 | 18.2 | 11.2 | 9.1 | 8.5 |
| Gross capital expenditure, % of revenues | 4.7 | 6.7 | 3.8 | 3.9 | 4.6 |
| R & D costs, MEUR | 20.8 | 17.6 | 17.0 | 14.3 | 12.6 |
| R & D costs, % of revenues | 6.2 | 6.5 | 5.8 | 6.2 | 6.7 |
| Number of personnel at end of period | 1,339 | 1,228 | 1,197 | 869 | 675 |
| Order book, MEUR | 52.1 | 32.0 | 48.0 | 34.8 | 29.7 |
*1 The 2008 gross capital expenditure figure does not include the acquisition of TB Wood's.
Commitments and contingencies
| MEUR | 31 Dec. 2010 | 31 Dec. 2009 |
|---|---|---|
| Commitments and contingencies | 11.8 | 7.7 |
| Financing commitments | 0.1 | 0.3 |
Group quarterly performance
| MEUR | 10-12/2010 | 7-9/2010 | 4-6/2010 | 1-3/2010 | 1-12/2010 | 1-9/2010 | 1-6/2010 | 1-3/2010 |
|---|---|---|---|---|---|---|---|---|
| Revenues | 103.2 | 89.3 | 80.2 | 65.3 | 338.0 | 234.8 | 145.5 | 65.3 |
| Operating profit | 9.1 | 8.3 | 6.6 | 4.6 | 28.6 | 19.5 | 11.2 | 4.6 |
| Profit before tax | 9.5 | 7.3 | 6.4 | 4.4 | 27.5 | 18.1 | 10.8 | 4.4 |
VACON
DRIVEN BY DRIVES
Calculation of financial ratios
| Earnings per share = | Profit for the financial year attributable to equity holders of the parent company |
|---|---|
| Adjusted average number of shares | |
| Equity per share = | Total equity – non-controlling interests |
| Adjusted average number of shares at year end | |
| Dividend per share = | Dividend for financial year |
| Adjusted number of shares at year end | |
| Dividend payout ratio = | Dividend for the financial year x 100 |
| Profit for period attributable to equity holders of the parent company | |
| Effective dividend yield, % = | Dividend per share x 100 |
| Adjusted closing share price at year end | |
| Price/earnings ratio = | Adjusted closing share price at year end |
| Earnings per share | |
| Return on equity, % = | Profit for the financial year x 100 |
| Total equity, average of the beginning and end of the year | |
| Return on investment, % = | (Profit before taxes + interest and other financial expenses) x 100 |
| Balance sheet total – non-interest-bearing liabilities, average of the beginning and end of the year | |
| Equity ratio, % = | Total equity x 100 |
| Balance sheet total – advances received | |
| Gearing, % = | (Interest-bearing liabilities – cash, bank balances and financial assets) x 100 |
| Total equity | |
| Working capital = | Inventories + non-interest-bearing short-term receivables - Non-interest-bearing short-term liabilities |
| R & D costs = | Research and development costs recognized in income statement (incl. costs covered with subsidies) and capitalized development expenses |
| Market capitalization of share stock = | Number of shares outstanding at year end x closing share price |
| Share turnover % = | Number of shares traded during the year x 100 |
| Adjusted average number of shares |