NACON — Interim / Quarterly Report 2013

Oct 22, 2013

VACON
DRIVEN BY DRIVES

VACON PLC
INTERIM REPORT
JANUARY-SEPTEMBER 2013

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VACON DRIVEN BY DRIVES

Vacon Plc Interim Report 1 January – 30 September 2013

July–September summary:

• Order intake totalled MEUR 97.9 (MEUR 101.6), a decline of 3.6% from the corresponding period in the previous year.
• Revenues totalled MEUR 110.4 (MEUR 101.5), an increase of 8.8% from the corresponding period in the previous year.
• Operating profit was MEUR 14.8, or 13.4% of revenues (MEUR 10.3 and 10.1%).
• Net cash flow from operating activities was MEUR 9.5 (MEUR 17.4).
• Earnings per share were EUR 0.65 (EUR 0.45).

January–September summary:

• Order intake totalled MEUR 312.1 (MEUR 307.4), an increase of 1.5% from the corresponding period in the previous year.
• Revenues totalled MEUR 305.1 (MEUR 285.2), an increase of 7.0% from the corresponding period in the previous year.
• Operating profit was MEUR 31.0, or 10.2% of revenues (operating profit excluding one-time items was MEUR 24.3 and 8.5% of revenues in January–September 2012).
• Net cash flow from operating activities was MEUR 32.0 (MEUR 37.2).
• Earnings per share were EUR 1.40 (EUR 1.21).

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July-September key indicators:

| MEUR | 7-9/2013 | restated*
7-9/2012 | Change, % |
| --- | --- | --- | --- |
| Order intake | 97.9 | 101.6 | -3.6% |
| Revenues | 110.4 | 101.5 | 8.8% |
| Operating profit | 14.8 | 10.3 | 44.4% |
| % of revenues | 13.4% | 10.1% | |
| Profit before taxes | 14.2 | 10.0 | 42.2% |

January-September key indicators:

| MEUR | 1-9/2013 | restated
1-9/2012 | Change, % | restated
1-12/2012 |
| --- | --- | --- | --- | --- |
| Order intake | 312.1 | 307.4 | 1.5% | 401.9 |
| Order book | 57.0 | 58.8 | -3.1% | 50.0 |
| Revenues | 305.1 | 285.2 | 7.0% | 388.4 |
| Operating profit excluding one-time items | 31.0 | 24.3 | 27.4% | 36.5 |
| % of revenues | 10.2% | 8.5% | | 9.4% |
| Operating profit | 31.0 | 27.0 | 14.7% | 38.0 |
| % of revenues | 10.2% | 9.5% | | 9.8% |
| Profit before taxes | 30.5 | 26.4 | 15.3% | 37.1 |
| Net cash flow from operating activities | 32.0 | 37.2 | -13.9% | 52.3 |
| Earnings per share, EUR | 1.40 | 1.21 | | 1.72 |
| Interest-bearing net liabilities | -8.8 | -1.7 | | -10.3 |
| Gearing, % | -7.8% | -1.6% | | -9.5% |
| Gross capital expenditure | 14.1 | 8.7 | 61.7% | 14.0 |

*Figures adjusted in accordance with IAS 19. More details of changes in IFRS standards are given in the final section of this interim report.

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VACON DRIVEN BY DRIVES

Business environment and business development

According to market surveys, the global AC drive market increased by some 3% in the first six months of 2013 compared to the corresponding period in the previous year. All geographical regions showed growth.

Vacon's revenues increased strongly in the July–September period, and this growth helped the company improve its profitability. Revenues were the highest in the company's history.

The company's order intake declined from the third quarter of 2012 and from the second quarter of 2013. The fall in orders received compared to the previous year and the previous quarter was due in particular to the decline in orders for renewable energy products. Typically, there is strong seasonal fluctuation in demand for Vacon's products for the production of renewable energy.

The volume of orders increased in the July–September period in the Asia and Pacific (APAC) region, but declined in the Europe, Middle East and Africa (EMEA) region and in North and South America from the corresponding period in the previous year. The decline in orders for renewable energy products mentioned above contributed to the decline in orders in the EMEA region.

Revenues increased most strongly in July–September in building automation, the chemical industry, the food and beverage industry and renewable energy production. Revenues rose in the EMEA region. Revenues for the APAC region were similar to the corresponding period in the previous year, and revenues in North and South America fell from the previous year.

The company's operating profit percentage improved in the July–September period compared to the same period in 2012 and was at a good level. Factors contributing to this improvement in July–September were the growth in revenues and the cost benefits obtained from transferring material sourcing to lower-cost countries. A change in the sales mix also made a slight improvement to profitability.

Order intake and order book

Orders received in July–September totalled EUR 97.9 (101.6) million. Developments in orders received during the third quarter, compared to the corresponding period in the previous year, by market region were as follows: APAC growth of 7.7%, EMEA decline of 8.5% and North and South America decline of 3.4%.

Orders received in the January–September period totalled EUR 312.1 (307.4) million. The order book rose 13.9% from the beginning of the year, standing at EUR 57.0 million at the end of the period (EUR 58.8 million).

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VACON DRIVEN BY DRIVES

Revenues

During the July–September period Vacon's revenues totalled EUR 110.4 (101.5) million, an increase of 8.8% on the corresponding period in the previous year.

Vacon Group revenues by region:

MEUR	7-9/2013	% of revenues	7-9/2012	% of revenues	1-9/2013	% of revenues	1-9/2012	% of revenues	1-12/2012	% of revenues
Europe, Middle East, Africa	67.2	60.9%	55.3	54.5%	187.0	61.3%	165.1	57.9%	225.5	58.1%
North and South America	19.1	17.3%	22.1	21.8%	51.8	17.0%	56.7	19.9%	76.6	19.7%
Asia and Pacific	24.0	21.8%	24.1	23.7%	66.4	21.8%	63.4	22.2%	86.2	22.2%
Total	110.4	100.0%	101.5	100.0%	305.1	100.0%	285.2	100.0%	388.4	100.0%

Revenues in the EMEA region increased some 21.6% in July–September from the corresponding period in the previous year. Growth took place in sectors such as building automation, the chemical industry, marine and offshore and renewable energy.

In the APAC region revenues in July–September were similar to those in the same period in the previous year. Positive developments took place particularly in building automation.

Revenues in North and South America declined 13.6% in July–September from the period for comparison. Revenues declined in several industrial sectors. Revenues increased in the oil and gas and process industries.

Vacon reports its regional sales based on the invoicing addresses, not the final location of the products.

Vacon Group revenues by distribution channel:

MEUR	7-9/2013	% of revenues	7-9/2012	% of revenues	1-9/2013	% of revenues	1-9/2012	% of revenues	1-12/2012	% of revenues
Direct sales	7.8	7.1%	7.4	7.3%	23.1	7.6%	21.6	7.6%	32.1	8.3%
Distributors	17.6	15.9%	16.3	16.0%	48.1	15.8%	44.0	15.4%	62.6	16.1%
OEM	37.1	33.6%	33.3	32.8%	104.9	34.4%	89.9	31.5%	124.5	32.1%
Brand label customers	17.9	16.2%	20.3	20.0%	47.0	15.4%	53.7	18.8%	69.9	18.0%
System integrators	30.0	27.2%	24.2	23.8%	82.1	26.9%	75.9	26.6%	99.3	25.6%
Total	110.4	100.0%	101.5	100.0%	305.1	100.0%	285.2	100.0%	388.4	100.0%

Vacon's sales to original equipment manufacturers increased in July–September, accounting for 33.6% of revenues. Sales to system integrators also rose. Direct sales and sales to distributors were unchanged from the period for comparison. Sales to brand label customers, however, fell in the third quarter.

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VACON DRIVEN BY DRIVES

Operating profit and result

The operating profit improved 44.4% in July–September from the corresponding period in the previous year. The July–September operating profit was EUR 14.8 million, or 13.4% of revenues (EUR 10.3 million and 10.1%). The January–September operating profit was EUR 31.0 million, or 10.2% of revenues (the operating profit excluding one-time items was EUR 24.3 million and 8.5% in January–September 2012). The January–September 2012 operating profit was boosted by one-time items totalling EUR 2.7 million.

Factors contributing to the improvement in the company's profitability in July–September were the growth in revenues and the cost benefits obtained from transferring material sourcing to lower-cost countries. A change in the sales mix also made a slight improvement to profitability.

Earnings per share were EUR 0.65 in July–September (EUR 0.45) and EUR 1.40 in January–September (EUR 1.21).

Balance sheet and cash flow

The balance sheet remained strong and the net cash flow from operating activities in the July–September period totalled EUR 9.5 (17.4) million. The increase in revenues tied up more working capital. The net cash flow from operating activities in the January–September period totalled EUR 32.0 (37.2) million.

The company has no net debt. Thanks to the strong net cash flow from operating activities the company's gearing was -7.8% (-1.6%). Net debt at the end of September was EUR -8.8 million and the cash at hand was EUR 32.6 million. The balance sheet total was EUR 216.9 (206.5) million. The equity ratio was 52.6% (50.1%). The Group's equity structure and liquidity remained strong. Interest-bearing debt at the end of September totalled EUR 23.8 (22.9) million.

Research and development

R&D expenditure in the January–September period totalled EUR 20.2 (17.4) million, and EUR 4.1 (3.4) million of this was capitalized as development costs. R&D costs accounted for 6.6% of the Group's revenues (6.1%).

In its R&D activities Vacon has invested in research into high power AC drives, and developing tailored solutions for individual customers.

Investments

Gross investments by the Group in the January–September period totalled EUR 14.1 (8.7) million. Expenditure focused particularly on developing information systems and production. The company has launched a programme to develop its information systems in support of its growth targets for the future. The one-time costs in launching the programme contributed to the increase in investments compared to the corresponding period in the previous year.

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VACON DRIVEN BY DRIVES

Organization and personnel

At the end of September the Group employed 1,579 (1,466) people, and 738 (681) of these were in Finland and 841 (786) in other countries. The number of personnel grew fastest in Finland, and a major factor in this growth was recruitment for the programme for developing the company's information systems and for product development.

The table below shows the average number of Vacon employees during the review period:

	1-9/2013	1-9/2012	1-12/2012
Office personnel	1,003	950	955
Factory personnel	537	507	513
TOTAL	1,540	1,457	1,468

Shares and shareholders

Vacon had a market capitalization at the end of September of EUR 887.2 (612.9) million. The closing share price on 30 September 2013 was EUR 58.20. The lowest share price during the January-September period was EUR 40.00 and the highest EUR 59.90.

A total of 1,554,424 shares, 10.2% of the share stock, were traded on the stock exchange in the January-September period, in monetary terms EUR 78.7 million. According to the shareholder register updated on 30 September 2013, Vacon had 4,710 registered shareholders. Shares that were nominee registered and in foreign ownership amounted to 51.0% (53.5%) of the total share stock.

Vacon's main shareholders on 30 September 2013:

	Number of shares	Holding, %
AC Invest Three B.V.	2,064,844	13.5%
Ilmarinen Mutual Pension Insurance Company	858,968	5.6%
Tapiola Mutual Pension Insurance Company	584,500	3.8%
Koskinen Jari	366,104	2.4%
Ehrnrooth Martti	325,070	2.1%
Vaasa Engineering Ltd	299,514	2.0%
Holma Mauri	220,000	1.4%
Special Fund Handelsbanken Nordic Selective	206,000	1.3%
Fondita Nordic Micro Cap	166,000	1.1%
OP-Finland Small Firms Fund	159,368	1.1%
Vacon Plc own shares	51,415	0.3%
Others	9,993,217	65.3%
Total	15,295,000	100.0%
Shares outstanding	15,243,585

On 30 September 2013 members of Vacon's Board of Directors, the President and CEO, and the Deputy to the CEO held directly a total of 35,870 shares, or 0.2% of Vacon's share stock.

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VACON DRIVEN BY DRIVES

Own shares

On 30 September 2013 Vacon Plc held a total of 51,415 of its own shares, which it had acquired at an average price of EUR 38.08. This is 0.3% of the share capital and voting rights, so it has no significant impact on the distribution of ownership or voting rights in the company. At the end of 2012 the company held altogether 83,227 of its own shares, or 0.5% of the share capital and voting rights.

Risks and uncertainties in the near future

There are still uncertainties relating to developments in the global economy, and these may weaken demand for AC drives globally or in certain regions.

The court proceedings relating to the customs procedures followed by Vacon's subsidiary in China continue in the higher court, since two of the parties appealed against the ruling given by the lower court in December 2011. It is possible that the sentence imposed on Vacon may also change in the higher court, so some uncertainty still remains in this matter. Vacon made provisions in 2010 and 2011 relating to this risk.

Vacon's 2012 annual report gives a detailed description of the risks and uncertainties relating to the company's business and of the principles for risk management.

Prospects for 2013

According to market surveys, the global AC drive market increased by some 3% in the first six months of 2013 compared to the corresponding period in the previous year. All geographical regions showed growth.

Vacon has previously estimated, based on information from market research institutes, that the global AC drive market would grow faster than average growth in industrial production, at an estimated rate of 5-10% in 2013. Taking into account market developments in the first part of the year, the company considers that there is greater uncertainty relating to the market growth estimate.

Vacon's estimate of the company's performance in the final part of the year supports the market guidelines it has issued, even though the volume of orders received declined in July–September from the previous quarter.

Market guidelines for 2013

Vacon is retaining the market guidelines it published earlier and estimates that its revenues will increase 5-15% and that its operating profit percentage excluding one-time items will be 10-12% in 2013.

Revenues in 2012 totalled EUR 388.4 million and the operating profit percentage excluding one-time items was 9.4%.

Vacon's goal is to achieve revenues of EUR 500 million in 2014. Its profitability target for 2014 is an operating profit of 14%, and for return on equity the target is more than 30%.

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VACON DRIVEN BY DRIVES

Accounting principles

This interim report has been prepared in accordance with IFRS (International Financial Reporting Standards) standard IAS 34 on Interim Financial Reporting. Vacon has prepared this interim report applying the same accounting principles as those described in its 2012 consolidated financial statements as well as the IFRS standards that came into force on 1 January 2013. These are IAS 19 Employee Benefits, IFRS 7 Financial Instruments and IFRS 13 Fair Value Measurement.

IAS 19 Employee Benefits

The revision to IAS 19 eliminates the possibility of applying deferred recognition through the corridor approach that has been used by the company. According to the standard, all actuarial gains and losses are recognized through a remeasurement item in the statement of comprehensive income. Past service costs are recognized immediately in employee costs as part of pension costs. The change removes the concept of expected return on plan assets and the discount rate is also used for defining the return on assets. The pension liability of Group companies is defined by calculating the current value of estimated cash flows using the high-quality corporate bond rate as the discount rate. If there is no deep market in these bonds, market yields on government bonds are used. The bonds used in defining the rate are in the same currency as the benefits to be paid. The discount rate chosen reflects the estimated average payment date for the benefits. To define the fair value of the plan assets, in the first instance the market price on the closing date is used. If the market price is not available, the fair value is estimated by discounting expected future cash flows using the same discount rate as when measuring the pension liability. The revisions have only a small impact on the company's shareholders' equity and the amount of the pension liability. As the result of the revision, the pension liability as of 31 December 2012 increases by EUR 0.2 million and equity is reduced by EUR 0.2 million. The company applied the revised standard as from the beginning of 2013.

IFRS 7 Financial instruments: Information presented in the financial statements

The amendment to IFRS 7 revises the requirements for disclosures relating to financial instruments presented in the balance sheet at net value and to netting arrangements in general or similar agreements. The revision has no significant impact. The company applied the revised standard as from the beginning of 2013.

IFRS 13 Fair value measurement

The standard contains standard requirements concerning the measurement of fair value and disclosures that relate to all IFRS standards. The revision has no significant impact. The company applied the revised standard as from the beginning of 2013.

The interim report is unaudited.

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Consolidated statement of income, IFRS, MEUR

	7-9/2013	restated* 7-9/2012	1-9/2013	restated* 1-9/2012	restated* 1-12/2012
Revenues	110.4	101.5	305.1	285.2	388.4
Other operating income	0.1	0.1	0.2	0.2	0.2
Change in inventories of finished goods and work in progress	-0.9	0.1	0.8	-0.7	-1.9
Materials and services	-55.6	-55.0	-156.2	-150.8	-201.5
Employee benefit related expenses	-20.4	-18.9	-62.5	-57.0	-76.7
Other operating expenses	-15.3	-13.9	-46.2	-39.9	-56.8
Depreciation	-1.7	-1.6	-4.8	-4.7	-6.4
Amortization	-1.8	-1.9	-5.4	-5.4	-7.3
Operating profit	14.8	10.3	31.0	27.0	38.0
Financial income and expenses	-0.6	-0.3	-0.5	-0.6	-0.9
Profit before taxes	14.2	10.0	30.5	26.4	37.1
Income taxes	-4.2	-2.9	-8.5	-7.5	-10.3
Profit for the period	10.0	7.1	22.0	18.9	26.9
Attributable to:
Equity holders of the parent	9.9	6.9	21.4	18.4	26.2
Non-controlling interests	0.2	0.2	0.6	0.5	0.7
Earnings per share, euro	0.65	0.45	1.40	1.21	1.72
Diluted earnings per share, euro	0.65	0.45	1.40	1.21	1.72

Consolidated statement of comprehensive income, MEUR

	7-9/2013	restated 7-9/2012	1-9/2013	restated 1-9/2012	restated 1-12/2012
Profit for the period	10.0	7.1	22.0	18.9	26.9
Other comprehensive income
Remeasurement	0.1	-0.3	0.1	-0.5	-0.5
Items not transferred to profit or loss	0.1	-0.3	0.1	-0.5	-0.5
Translation differences	-0.5	0.0	-0.2	0.3	0.1
Items that may subsequently be transferred to profit or loss	-0.5	0.0	-0.2	0.3	0.1
Total comprehensive income	9.6	6.9	22.0	18.8	26.5
Attributable to:
Equity holders of the parent	9.4	6.7	21.4	18.3	25.8
Non-controlling interests	0.2	0.2	0.6	0.5	0.7

*Figures adjusted in accordance with IAS 19. The restated figures later shown in the table section are based on the aforementioned renewed IAS 19 standard.

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Consolidated statement of financial position, IFRS, MEUR

| | 30.9.2013 | restated
30.9.2012 | restated
31.12.2012 |
| --- | --- | --- | --- |
| ASSETS | | | |
| Goodwill | 9.1 | 9.2 | 9.2 |
| Development costs | 19.6 | 18.5 | 18.7 |
| Other intangible assets | 6.8 | 6.9 | 6.8 |
| Property, plant and equipment | 26.8 | 24.9 | 24.4 |
| Available-for-sale financial assets | 3.7 | 3.7 | 3.7 |
| Deferred tax assets | 7.5 | 6.2 | 7.2 |
| Other financial assets | 3.2 | 2.1 | 3.1 |
| Total non-current assets | 76.6 | 71.6 | 73.0 |
| Inventories | 26.1 | 28.1 | 25.7 |
| Trade and other receivables | 81.6 | 82.2 | 76.9 |
| Cash and cash equivalents | 32.6 | 24.6 | 31.1 |
| Total current assets | 140.3 | 134.9 | 133.7 |
| Total assets | 216.9 | 206.5 | 206.7 |
| EQUITY AND LIABILITIES | | | |
| Share capital | 3.1 | 3.1 | 3.1 |
| Share premium reserve | 5.0 | 5.0 | 5.0 |
| Other reserves | 2.0 | 0.1 | 0.1 |
| Own shares | -5.0 | -3.6 | -5.0 |
| Revaluation reserve | 2.3 | 2.3 | 2.3 |
| Retained earnings | 102.9 | 93.3 | 100.8 |
| Non-controlling interests | 1.8 | 1.9 | 2.0 |
| Total equity | 112.2 | 102.0 | 108.3 |
| Deferred tax liabilities | 6.5 | 5.8 | 5.9 |
| Employee benefits | 2.2 | 2.0 | 2.1 |
| Interest-bearing liabilities | 15.0 | 20.7 | 17.9 |
| Total non-current liabilities | 23.6 | 28.6 | 25.9 |
| Trade and other payables | 59.0 | 61.1 | 54.7 |
| Income tax liabilities | 1.9 | 2.6 | 3.8 |
| Provisions | 11.3 | 10.0 | 11.1 |
| Interest-bearing liabilities | 8.8 | 2.2 | 2.9 |
| Total current liabilities | 81.1 | 75.9 | 72.5 |
| Total equity and liabilities | 216.9 | 206.5 | 206.7 |

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Q3 2013 Consolidated statement of changes in equity, IFRS, MEUR

Attributable to equity holders of the parent

	Share capital	Share premium reserve	Other reserves	Own shares	Re-valuation reserve	Retained earnings	Total	Non-controlling interests	Total equity
Equity Jan 1, 2013, restated	3.1	5.0	0.1	-5.0	2.3	100.8	106.3	2.0	108.3
Other adjustments *)			1.9			-2.3	-0.3	0.0	-0.3
Profit for the period						21.4	21.4	0.6	22.0
Other total comprehensive income:
Remeasurement						0.1	0.1		0.1
Translation differences						-0.2	-0.2		-0.2
Total comprehensive income for the period						21.4	21.4	0.6	22.0
Share bonuses						1.0	1.0		1.0
Dividends paid						-16.8	-16.8	-0.5	-17.3
Acquisition of non-controlling interests						-1.2	-1.2	-0.3	-1.4
Equity Sep 30, 2013	3.1	5.0	2.0	-5.0	2.3	102.9	110.3	1.8	112.2

*) Reserve fund transfer MEUR 1.9 within equity.

Q3 2012 Consolidated statement of changes in equity, IFRS, MEUR

Attributable to equity holders of the parent

	Share capital	Share premium reserve	Other reserves	Own shares	Re-valuation reserve	Retained earnings	Total	Non-controlling interests	Total equity
Equity Dec 31, 2011	3.1	5.0	0.1	-2.6	2.3	88.0	95.8	1.9	97.7
Remeasurement (IAS 19)						0.0	0.0		0.0
Equity Jan 1, 2012, restated	3.1	5.0	0.1	-2.6	2.3	88.0	95.8	1.9	97.7
Profit for the period						18.4	18.4	0.5	18.9
Other total comprehensive income:
Remeasurement						-0.5	-0.5		-0.5
Translation differences						0.3	0.3		0.3
Total comprehensive income for the period						18.3	18.3	0.5	18.8
Share bonuses						1.1	1.1		1.1
Dividends paid						-13.7	-13.7	-0.6	-14.3
Purchase of own shares				-1.0			-1.0		-1.0
Acquisition of non-controlling interests						-0.3	-0.3	0.0	-0.3
Equity Sep 30, 2012	3.1	5.0	0.1	-3.6	2.3	93.3	100.1	1.9	102.0

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Consolidated statement of cash flow, IFRS, MEUR

	7-9/2013	restated 7-9/2012	1-9/2013	restated 1-9/2012	restated 1-12/2012
Profit for the period	10.0	7.1	22.0	18.9	26.9
Depreciation	3.5	3.5	10.2	10.1	13.7
Financial income and expenses	0.6	0.3	0.5	0.6	0.9
Taxes	4.2	2.9	8.5	7.5	10.3
Other adjustments	1.0	0.5	2.2	-1.9	-1.4
Change in working capital	-7.1	5.9	-2.3	11.8	12.9
Net cash flow from financial items and tax	-2.6	-2.8	-9.1	-9.9	-10.9
Net cash flow from operating activities	9.5	17.4	32.0	37.2	52.3
Acquisition of subsidiary	0.0	-0.1	-1.5	-0.4	-0.5
Investments in tangible and intangible assets	-3.9	-2.1	-13.7	-8.5	-11.8
Other investments	-0.1	0.0	-0.2	0.3	-0.5
Net cash flow from investing activities	-4.0	-2.2	-15.4	-8.6	-12.9
Proceeds from long-term borrowings	0.0	1.0	0.0	1.4	0.5
Proceeds from short-term borrowings	-2.6	0.0	5.7	13.0	13.0
Repayment of short-term loans	-1.4	-9.3	-2.9	-19.4	-21.0
Purchase of own shares	0.0	-1.0	0.0	-1.0	-2.3
Dividends paid	0.0	-0.1	-17.3	-14.4	-14.6
Net cash flow from financing activities	-4.0	-9.4	-14.5	-20.4	-24.4
Change in cash and cash equivalents	1.6	5.9	2.2	8.1	15.0
Cash and cash equivalents at start of period	31.7	18.8	31.1	16.3	16.3
Translation differences for cash and cash equivalents	-0.7	-0.1	-0.7	0.1	-0.3
Cash and cash equivalents at end of period	32.6	24.6	32.6	24.6	31.1

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VACON DRIVEN BY DRIVES

Segment information

Vacon has focused on one product, AC drives, and this is also Vacon's only business segment.

The figures for the business segment are identical to the figures for the whole Group. Vacon's operations are organized in the following main functions: Market Operations, Product Operations and Support Functions. To ensure that the organization is customer-oriented, operations are controlled by sales channels: distributors, systems integrators, direct sales, OEM customers and brand label customers.

Key financial indicators

Per share data	30.9.2013	restated 30.9.2012	restated 31.12.2012
Earnings per share, EUR	1.40	1.21	1.72
Equity per share, EUR	7.24	6.57	6.99
Lowest trading price, EUR	40.00	31.11	31.11
Highest trading price, EUR	59.90	42.00	42.54
Share price at end of period, EUR	58.20	40.20	40.20
Average trading price, EUR	50.44	37.49	38.36
Market capitalization, MEUR	887.2	612.9	611.5
Trading volume, no. of shares	1,554,424	1,243,123	3,150,916
Trading volume, %	10.2	8.1	20.7
Adjusted average number of shares during financial period	15,233,501	15,264,091	15,254,256
Number of shares at end of period	15,243,585	15,246,206	15,211,773
Own shares	51,415	48,794	83,227

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Key indicators showing the Group's financial performance

	30.9.2013	restated 30.9.2012	restated 31.12.2012
Revenues, MEUR	305.1	285.2	388.4
Change in revenues, %	7.0	-2.8	2.0
Operating profit excluding one-time items, MEUR	31.0	24.3	36.5
Change in operating profit excluding one-time items, %	27.4	-16.4	4.9
Operating profit excluding one-time items, % of revenues	10.2	8.5	9.4
Operating profit, MEUR	31.0	27.0	38.0
Change in operating profit, %	14.7	-5.5	53.6
Operating profit, % of revenues	10.2	9.5	9.8
Profit before taxes, MEUR	30.5	26.4	37.1
Profit before taxes, % of revenues	10.0	9.3	9.6
Interest-bearing net liabilities, MEUR	-8.8	-1.7	-10.3
Gearing, %	-7.8	-1.6	-9.5
Working capital, MEUR	35.5	36.6	33.0
Equity ratio, %	52.6	50.1	53.0
Gross capital expenditure, MEUR	14.1	8.7	14.0
Gross capital expenditure, % of revenues	4.6	3.0	3.6
R & D expenditure, MEUR	20.2	17.4	25.1
R & D expenditure, % of revenues	6.6	6.1	6.5
Number of personnel at end of period	1,579	1,466	1,513
Order book, MEUR	57.0	58.8	50.0

Commitments and contingencies, MEUR

	30.9.2013	30.9.2012	31.12.2012
Commitments and contingencies	15.0	14.3	16.1
Financing commitments	0.0	0.0	0.0

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Impact of IAS 19 revision, MEUR

	reported 30.9.2012	adjust-ment	restated 30.9.2012	reported 31.12.2012	adjust-ment	restated 31.12.2012
Consolidated statement of income
Employee benefit related expenses	-57.2	0.2	-57.0	-77.0	0.3	-76.7
Operating profit	26.8	0.2	27.0	37.7	0.3	38.0
Financial income and expenses	-0.6	0.0	-0.6	-0.9	0.0	-0.9
Profit before taxes	26.2	0.2	26.4	36.8	0.3	37.1
Income taxes	-7.4	-0.1	-7.5	-10.2	-0.1	-10.3
Profit for the period	18.8	0.2	18.9	26.6	0.2	26.9
Impact on income statement		0.2			0.2
Attributable to:
Equity holders of the parent	18.2	0.2	18.4	25.9	0.2	26.2
Non-controlling interests	0.5		0.5	0.7		0.7
Consolidated statement of comprehensive income
Profit for the period	18.8	0.2	18.9	26.6	0.2	26.9
Other comprehensive income
Cash flow hedging	0.0		0.0	0.0		0.0
Translation differences	0.3		0.3	0.1		0.1
Remeasurement		-0.5	-0.5		-0.5	-0.5
Total comprehensive income	19.1	-0.3	18.8	26.7	-0.2	26.5
Impact on statement of comprehensive income		-0.3			-0.2
Attributable to:
Equity holders of the parent	18.5	-0.3	18.3	26.1	-0.2	25.8
Non-controlling interests	0.5		0.5	0.7		0.7
Consolidated statement of financial position
ASSETS
Assets from defined benefit pension schemes	0.0	0.0	0.0	0.1	-0.1	0.0
Impact on assets		0.0			-0.1
EQUITY AND LIABILITIES
Equity	102.3	-0.3	102.0	108.5	-0.2	108.3
Deferred tax liabilities	5.9	-0.1	5.8	6.0	-0.1	5.9
Employee benefits	1.7	0.4	2.0	1.9	0.2	2.1
Impact on equity and liabilities		0.0			-0.1

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Impact of IAS 19 revision, MEUR

Profit for the period	30.9.2013	30.9.2012	31.12.2012
Profit for the period before IAS 19 revision	21.2	18.8	26.6
IAS 19 revision	0.2	0.2	0.2
Profit for the period after IAS 19 revision	21.5	18.9	26.9
Comprehensive income for the period before IAS revision	21.5	19.1	26.7
IAS 19 revision	-0.1	-0.3	-0.2
Comprehensive income for period after IAS 19 revision	21.4	18.8	26.5
Equity	30.9.2013	30.9.2012	31.12.2012
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Equity before IAS 19 revision	111.7	102.3	108.5
IAS 19 revision	-0.1	0.0	-0.2
Equity after IAS 19 revision	111.6	102.3	108.3

Impact of 1 January 2012 opening balance on equity is around EUR -16,000.

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Fair value hierarchy of financial assets and liabilities valued at fair value, MEUR

Fair values at end of reporting period

	30.9.2013	Level 1	Level 2	Level 3
Financial assets to be recognized at fair value through profit and loss
Currency forward contracts and currency options	0.2		0.2
Those used for cash flow hedging	0.0		0.0
Available for sale financial assets
Investments in shares	5.5			5.5
Loans and other receivables
Covertible bond	1.0			1.0
Total	6.6	0.0	0.2	6.5
Liabilities valued at fair value
Currency forward contracts and currency options	0.1		0.1
Those used for cash flow hedging	0.0		0.0
Total	0.1	0.0	0.1	0.0

The fair values at hierarchy level 1 are based on the quoted prices of completely identical asset items or liabilities in an active market.

The fair values of level 2 instruments are to a significant extent based on inputs other than quoted prices included in level 1; however, they are based on information that is observable for the asset item either directly or indirectly. The Group uses market value reports compiled by Nordea Bank, Danske Bank, and Svenska Enskilda Bank in determining the fair value of these instruments.

The fair values of level 3 instruments are based on acquisition cost or inputs concerning the asset item which are not based on observable market information but to a significant extent on the management's estimates.

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Group quarterly performance, MEUR

	7-9/2013	4-6/2013	1-3/2013	restated 10-12/2012	restated 7-9/2012	restated 4-6/2012	restated 1-3/2012
Revenues	110.4	103.4	91.3	103.2	101.5	99.5	84.2
Operating profit	14.8	10.4	5.8	11.0	10.3	10.3	6.4
Profit before taxes	14.2	10.2	6.0	10.7	10.0	10.3	6.2

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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
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