NACON — Interim / Quarterly Report 2013

Apr 23, 2013

VACON
DRIVEN BY DRIVES

VACON PLC
INTERIM REPORT
JANUARY - MARCH 2013

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VACON DRIVEN BY DRIVES

Vacon Plc Interim Report 1 January – 31 March 2013

January-March summary:

• Order intake totalled MEUR 100.2 (MEUR 96.9), an increase of 3.4 % from the corresponding period in the previous year.
• Revenues totalled MEUR 91.3 (MEUR 84.2), growth of 8.5 % from the corresponding period in the previous year.
• Operating profit was MEUR 5.8, or 6.3 % of revenues (MEUR 6.4 and 7.7 %). One-time items totalling MEUR 1.4 boosted the operating profit in the previous year. Comparable operating profit in January-March 2012 was MEUR 5.0 and 5.9 % of revenues.
• Net cash flow from operating activities was MEUR 16.6 (MEUR 18.3).
• Earnings per share were EUR 0.25 (EUR 0.29).
• The AGM adopted the proposal of the Board of Directors to pay a dividend of EUR 1.10 per share.
• At its constituency meeting after the AGM, the Board of Directors elected Panu Routila as its new chairman.

January-March key indicators:

| MEUR | 1-3/2013 | restated
1-3/2012 | Change, % | restated
1-12/2012 |
| --- | --- | --- | --- | --- |
| Order intake | 100.2 | 96.9 | 3.4 % | 401.9 |
| Order book | 58.9 | 49.3 | 19.6 % | 50.0 |
| Revenues | 91.3 | 84.2 | 8.5 % | 388.4 |
| Operating profit | 5.8 | 6.4 | -10.1 % | 38.0 |
| % of revenues | 6.3 % | 7.7 % | | 9.8% |
| Operating profit excluding one-time items | 5.8 | 5.0 | 16.0 % | 36.5 |
| % of revenues | 6.3 % | 5.9 % | | 9.4 % |
| Profit before taxes | 6.0 | 6.2 | -2.3 % | 37.1 |
| Net cash flow from operating activities | 16.6 | 18.3 | -9.0 % | 52.2 |
| Earnings per share, EUR | 0.25 | 0.29 | -14.4 % | 1.72 |
| Interest-bearing net liabilities | -21.1 | -3.0 | | -10.3 |
| Gearing, % | -22.2 % | -3.4 % | | -9.5% |
| Gross capital expenditure | 4.2 | 3.1 | 35.2 % | 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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Business environment and business development

According to assessments by market research institutions and by Vacon, the global AC drive market declined slightly in 2012. No significant changes took place in the state of the market in the January-March 2013 period compared to 2012. Vacon estimates that the market did not grow during the first quarter of 2013.

Taking market developments into account, Vacon's business developed positively during the first quarter of 2013. The company's revenues and order intake increased in the January-March period from the corresponding period in the previous year. Sales increased in the first quarter especially in building automation and the marine and offshore industry. In contrast, sales to distributors, brand label customers and the general process industry declined from the period for comparison.

Vacon's revenues increased in January-March in the Asia Pacific (APAC) region and in the Europe, Middle East and Africa (EMEA) region. Sales in North and South America fell from the period for comparison.

The company's comparable profitability, measured in terms of the operating profit percentage, improved slightly in the January-March period. However, slower growth in revenues than expected and the emphasis in sales on low power drives with a smaller profit margin slowed down the improvement in the company's profitability.

Order intake and order book

Orders received in January – March totalled EUR 100.2 (96.9) million. The volume of orders improved particularly in the EMEA region. Developments in orders received by Vacon during the first quarter of 2013, compared to the corresponding period in the previous year, by market region were as follows: Asia and Pacific (APAC) growth of 9.8 %, Europe, Middle East and Africa (EMEA) growth of 8.9 % and North and South America, decline of 19.4 %.

The order book rose by 19.6 % from the beginning of the year, standing at EUR 58.9 million at the end of the period (EUR 49.3 million).

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VACON DRIVEN BY DRIVES

Revenues

During the first quarter of 2013 revenues totalled EUR 91.3 (84.2) million. Revenues increased 8.5% from the corresponding period in the previous year, but declined from the final quarter of 2012, when they stood at EUR 103.2 million. Lower than expected revenues in North and South America had a negative impact on revenues.

Vacon Group revenues by region:

MEUR	1-3/2013	% of revenues	1-3/2012	% of revenues	1-12/2012	% of revenues
Europe, Middle East, Africa	57.5	63.0 %	50.7	60.2 %	225.5	58.1%
North and South America	15.4	16.9 %	17.7	21.0 %	76.6	19.7%
Asia and Pacific	18.4	20.2 %	15.8	18.8 %	86.2	22.2%
Total	91.3	100.0 %	84.2	100.0 %	388.4	100.0%

Geographically the area with strongest growth was Asia Pacific, where revenues increased 16.4% in January-March. Revenues in the APAC region increased especially in building automation. Business in the Europe, Middle East and Africa region developed encouragingly and sales in the region increased 13.5% in the January-March period. The marine and offshore industry recorded the biggest growth among customer sectors in Europe.

Revenues in North and South America declined 12.9% in January-March from the period for comparison. Weaker sales than expected to distributors and brand label customers were a particular factor in the decline in revenues. Sales for building automation increased to some extent. Sales in other sectors were at the same level as in the period for comparison.

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

Vacon Group revenues by distribution channel:

MEUR	1-3/2013	% of revenues	1-3/2012	% of revenues	1-12/2012	% of revenues
Direct sales	6.8	7.5 %	6.6	7.8 %	32.1	8.3%
Distributors	15.5	17.0 %	14.1	16.7 %	62.6	16.1%
OEM	31.5	34.5 %	26.0	30.9 %	124.5	32.1%
Brand label customers	13.5	14.8 %	17.1	20.3 %	69.9	18.0%
System integrators	23.9	26.2 %	20.5	24.3 %	99.3	25.6%
Total	91.3	100.0 %	84.2	100.0 %	388.4	100.0%

Vacon's sales to own equipment manufacturers and system integrators increased in January-March. Direct sales and sales to distributors were unchanged from the period for comparison. Sales to brand label customers fell sharply in the first quarter.

A significant portion of the products supplied to the marine industry is sold via system integrators. OEM manufacturers are a key sales channel for products for building automation.

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Operating profit and result

The comparable operating profit improved in January-March from the corresponding period in the previous year. The January-March operating profit was EUR 5.8 million, or 6.3 % of revenues (operating profit excluding one-time items EUR 5.0 million and 5.9 % in January-March 2012).

Slower growth in revenues than expected and the emphasis in sales on low power drives with a smaller profit margin slowed down the improvement in the company's profitability.

Earnings per share in January-March were EUR 0.25 (EUR 0.29), a decline of 14.4 %.

Balance sheet and cash flow

The balance sheet remained strong and the net cash flow from operating activities in the January-March period totalled EUR 16.6 (18.3) million. The strong net cash flow is very largely due to effective control of working capital.

The company has no net debt. Thanks to the strong net cash flow from operating activities the company's equity ratio was -22.2 % (-3.4 %). Net debt at the end of the quarter was EUR -21.1 million. The balance sheet total was EUR 216.5 (194.4) million. The equity ratio was 44.2 % (46.0 %). The Group's equity structure and liquidity remained strong. Interest-bearing debt at the end of March totalled EUR 19.3 (20.3) million.

Research and development

R&D expenditure in the first quarter of 2013 totalled EUR 6.6 (5.9) million, and EUR 1.0 (1.3) million of this was capitalized as development costs. R&D costs accounted for 7.2 % of revenues (7.0 %).

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

Investments

Gross investments by the Group in the January - March period totalled EUR 4.2 (3.1) million. Expenditure focused particularly on projects for developing new products and on developing production in China and the USA.

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Organization and personnel

At the end of March the Group employed 1,510 (1,438) people, and 708 (701) of these were in Finland and 803 (737) in other countries. The number of personnel grew fastest in China.

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

	1-3/2013	1-3/2012	1-12/2012
Office personnel	972	954	955
Factory personnel	535	494	513
TOTAL	1,507	1,449	1,468

Changes in senior management

Pia Aaltonen-Forsell, M. Soc.Sc. (born in 1974), was appointed Chief Financial Officer of Vacon Plc and member of the company's Executive Management Team on 22 January 2013. Pia Aaltonen-Forsell will start working at Vacon on 1 May 2013.

Key events after end of period

Vacon Plc, the parent company of Vacon Group, has had tax proceedings in progress relating to a tax inspection of its transfer pricing in 2007 – 2008. According to information received by Vacon from the Finnish Large Taxpayers' Office, after examining the case the tax authority has stated that it is not demanding a correction from Vacon to its taxation in 2007 – 2008. The tax authority has previously given up its demands in relation to 2006.

In its interim reviews, Vacon has assessed these tax proceedings as one of the key risks and uncertainties facing the company in the near future. On the basis of the decision obtained now, Vacon considers that there are no risks or uncertainties relating to this matter.

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Shares and shareholders

Vacon had a market capitalization at the end of March of EUR 800.3 (610.4) million. The closing share price on 31 March 2013 was EUR 52.50. The lowest share price during the January-March period was EUR 40.00 and the highest EUR 55.07.

A total of 545,665 shares, 3.6 % of the share stock, were traded on the stock exchange in the January-March period, in monetary terms EUR 25.1 million. According to the shareholder register updated on 31 March 2013, Vacon had 4,623 registered shareholders. Shares that were nominee registered and in foreign ownership amounted to 51.4 % (53.2 %) of the total share stock.

Vacon's main shareholders on 31 March 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	230,000	1.5 %
Special Fund Handelsbanken Nordic Selective	184,000	1.2 %
Fondita Nordic Micro Cap	167,100	1.1 %
OP-Finland Small Firms Fund	165,923	1.1 %
Vacon Plc own shares	51,415	0.3 %
Others	9,997,562	65.4 %
Total	15,295,000	100.0 %
Shares outstanding	15,243,585

On 31 March 2013 members of Vacon's Board of Directors, the President and CEO, and the Deputy to the CEO held directly a total of 36,470 shares, or 0.2 % of Vacon's share stock.

Own shares

On 31 March 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.

During the January-March period altogether 916 of the company's own shares were returned to the company under the regulations of the share bonus scheme. During the period the company allocated in total 32,728 of the company's own shares in share bonuses.

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Allocation of Vacon's own shares for the 2012 earning period in the 2011 – 2013 share bonus scheme

Vacon's Board of Directors confirmed that the bonus for 2012 in the share bonus scheme would be 56.3 % of the maximum amount. For the portion of the total bonus to be paid in shares, the Board decided to allocate in total 32,728 of the company's own shares held by the company free of charge to recipients of the bonus. The total bonus for the 2012 earning period was based on Vacon Group's revenues, operating profit and capital turnover rate, and was paid in 2013 partly in company shares and partly in cash. The recipients were 65 people in company management and employed by the company. The transfer date for the shares was 27 March 2013.

The share bonus scheme in use in the company and its principles are explained in detail in the statement of salaries and fees, which can be seen on the company's Internet site at www.vacon.com.

AGM and organization of new Board

Vacon Plc's Annual General Meeting of Shareholders was held in Vaasa on 26 March 2013. The AGM adopted the proposal of the Board of Directors to pay a dividend of EUR 1.10 per share. The record date for the dividend payment was 2 April 2013 and the payment date 9 April 2013.

The AGM confirmed that the Board of Directors would have seven (7) members. Pekka Ahlqvist, Jari Eklund, Jan Inborr, Juha Kytölä, Panu Routila, Mika Vehviläinen and Riitta Viitala were re-elected as Board members.

At its constituency meeting after the AGM, the Board of Directors elected Panu Routila as its chairman and Mika Vehviläinen as vice-chairman. The Board elected Jan Inborr (chairman), Mika Vehviläinen and Riitta Viitala to its Remuneration and Nomination Committee. The Board elected Panu Routila (chairman), Jari Eklund and Juha Kytölä to the Audit Committee.

PricewaterhouseCoopers Oy was elected as the Company's auditor with Markku Katajisto (APA) as the principal auditor.

Full details of the decisions of the AGM and the minutes of the meeting can be seen on the company's Internet site at www.vacon.com.

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 the court proceedings.

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.

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VACON DRIVEN BY DRIVES

Prospects for 2013

There were no signs of growth in the AC drive market in January-March, but Vacon expects the market to pick up towards the end of the year. The company still estimates that the global AC drive market will grow much faster than average growth in industrial production, at an estimated rate of 5-10 % in 2013.

Vacon's strong order intake in January-March supports growth in the company's revenues and improving profitability towards the end of the year. Other key factors contributing to an improvement in profitability, in addition to the growth in revenues, are the cost benefits from transferring material sourcing to low cost countries and raising overall efficiency in operations. Improving the company's profitability does not require a change in the sales product breakdown, the profitability targets set can also be achieved with the existing product breakdown.

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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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

| | 1-3/2013 | restated
1-3/2012 | restated
1-12/2012 |
| --- | --- | --- | --- |
| Revenues | 91.3 | 84.2 | 388.4 |
| Other operating income | 0.1 | 0.1 | 0.2 |
| Change in inventories of finished goods and work in progress | 0.3 | 0.6 | -1.9 |
| Materials and services | -46.8 | -43.8 | -201.5 |
| Employee benefit related expenses | -21.1 | -19.6 | -76.7 |
| Other operating expenses | -14.7 | -11.9 | -56.8 |
| Depreciation | -1.6 | -1.5 | -6.4 |
| Amortization | -1.8 | -1.7 | -7.3 |
| Operating profit | 5.8 | 6.4 | 38.0 |
| Financial income and expenses | 0.3 | -0.3 | -0.9 |
| Profit before taxes | 6.0 | 6.2 | 37.1 |
| Income taxes | -2.1 | -1.6 | -10.3 |
| Profit for the period | 3.9 | 4.6 | 26.9 |
| Attributable to: | | | |
| Equity holders of the parent | 3.8 | 4.4 | 26.2 |
| Non-controlling interests | 0.2 | 0.2 | 0.7 |
| Earnings per share, euro | 0.25 | 0.29 | 1.72 |
| Diluted earnings per share, euro | 0.25 | 0.29 | 1.72 |

Consolidated statement of comprehensive income, MEUR

| | 1-3/2013 | restated
1-3/2012 | restated
1-12/2012 |
| --- | --- | --- | --- |
| Profit for the period | 3.9 | 4.6 | 26.9 |
| Other comprehensive income | | | |
| Remeasurement | 0.0 | -0.1 | -0.5 |
| Items not transferred to profit or loss | 0.0 | -0.1 | -0.5 |
| Cash flow hedging | | 0.0 | 0.0 |
| Translation differences | 0.5 | -0.3 | 0.1 |
| Items that may subsequently be transferred to profit or loss | 0.5 | -0.3 | 0.1 |
| Total comprehensive income | 4.4 | 4.2 | 26.5 |
| Attributable to: | | | |
| Equity holders of the parent | 4.2 | 4.0 | 25.8 |
| Non-controlling interests | 0.2 | 0.2 | 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

| | 31.3.2013 | restated
31.3.2012 | restated
31.12.2012 |
| --- | --- | --- | --- |
| ASSETS | | | |
| Goodwill | 9.3 | 9.1 | 9.2 |
| Development costs | 18.7 | 18.1 | 18.7 |
| Other intangible assets | 7.3 | 8.3 | 6.8 |
| Property, plant and equipment | 24.8 | 24.9 | 24.4 |
| Available-for-sale financial assets | 3.7 | 3.7 | 3.7 |
| Deferred tax assets | 7.4 | 5.8 | 7.2 |
| Other financial assets | 3.2 | 2.1 | 3.1 |
| Total non-current assets | 74.4 | 72.0 | 73.0 |
| Inventories | 26.4 | 28.6 | 25.7 |
| Trade and other receivables | 75.4 | 70.6 | 76.9 |
| Cash and cash equivalents | 40.4 | 23.3 | 31.1 |
| Total current assets | 142.1 | 122.5 | 133.7 |
| Total assets | 216.5 | 194.4 | 206.7 |
| EQUITY AND LIABILITIES | | | |
| Share capital | 3.1 | 3.1 | 3.1 |
| Share premium reserve | 5.0 | 5.0 | 5.0 |
| Other reserves | 0.1 | 0.1 | 0.1 |
| Own shares | -5.0 | -2.6 | -5.0 |
| Revaluation reserve | 2.3 | 2.4 | 2.3 |
| Retained earnings | 87.4 | 78.6 | 100.8 |
| Non-controlling interests | 1.6 | 1.6 | 2.0 |
| Total equity | 94.5 | 88.1 | 108.3 |
| Deferred tax liabilities | 6.4 | 6.0 | 5.9 |
| Employee benefits | 2.2 | 1.8 | 2.1 |
| Interest-bearing liabilities | 16.4 | 20.2 | 17.9 |
| Total non-current liabilities | 25.0 | 28.0 | 25.9 |
| Trade and other payables | 79.9 | 67.6 | 54.7 |
| Income tax liabilities | 3.3 | 1.1 | 3.8 |
| Provisions | 11.0 | 9.6 | 11.1 |
| Interest-bearing liabilities | 2.9 | 0.1 | 2.9 |
| Total current liabilities | 97.0 | 78.4 | 72.5 |
| Total equity and liabilities | 216.5 | 194.4 | 206.7 |

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Q1 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
Profit for the period						3.8	3.8	0.2	3.9
Other total comprehensive income:
Remeasurement						0.0	0.0		0.0
Translation differences						0.5	0.5		0.5
Total comprehensive income for the period						4.2	4.2	0.2	4.4
Share bonuses						0.4	0.4		0.4
Dividends paid						-17.1	-17.1	-0.3	-17.4
Acquisition of non-controlling interests						-1.0	-1.0	-0.3	-1.2
Equity March 31, 2013	3.1	5.0	0.1	-5.0	2.3	87.4	92.9	1.6	94.5

Q1 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						4.4	4.4	0.2	4.6
Other total comprehensive income:
Cash flow hedging					0.0		0.0		0.0
Remeasurement						-0.1	-0.1		-0.1
Translation differences						-0.3	-0.3		-0.3
Total comprehensive income for the period					0.0	4.0	4.0	0.2	4.2
Share bonuses						0.4	0.4		0.4
Dividends paid						-13.7	-13.7	-0.5	-14.2
Acquisition of non-controlling interests						0.0	0.0	0.0	0.0
Equity March 31, 2012	3.1	5.0	0.1	-2.6	2.4	78.6	86.5	1.6	88.1

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Consolidated statement of cash flow, IFRS, MEUR

	1-3/2013	restated 1-3/2012	restated 1-12/2012
Profit for the period	3.9	4.6	26.9
Depreciation	3.4	3.2	13.7
Financial income and expenses	-0.3	0.3	0.9
Taxes	2.1	1.6	10.3
Other adjustments	0.1	-1.1	-1.4
Change in working capital	9.6	12.4	12.9
Net cash flow from financial items and tax	-2.3	-2.7	-10.9
Net cash flow from operating activities	16.6	18.3	52.3
Acquisition of subsidiary	-1.4	-0.1	-0.5
Investments in tangible and intangible assets	-3.8	-3.1	-11.8
Other investments	-0.1	0.3	-0.5
Net cash flow from investing activities	-5.4	-2.9	-12.9
Proceeds from long-term borrowings	0.0	0.6	0.5
Proceeds from short-term borrowings	0.0	7.0	13.0
Repayment of short-term loans	-2.3	-15.4	-21.0
Purchase of own shares	0.0	0.0	-2.3
Dividends paid	-0.3	-0.5	-14.6
Net cash flow from financing activities	-2.6	-8.3	-24.4
Change in cash and cash equivalents	8.7	7.1	15.0
Cash and cash equivalents at start of period	31.1	16.3	16.3
Translation differences for cash and cash equivalents	0.6	-0.1	-0.3
Cash and cash equivalents at end of period	40.4	23.3	31.1

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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	31.3.2013	restated 31.3.2012	restated 31.12.2012
Earnings per share, EUR	0.25	0.29	1.72
Equity per share, EUR	6.09	5.67	6.99
Lowest trading price, EUR	40.00	31.11	31.11
Highest trading price, EUR	55.07	41.87	42.54
Share price at year end, EUR	52.50	40.00	40.20
Average trading price, EUR	46.06	36.76	38.36
Market capitalization, MEUR	800.3	610.4	611.5
Trading volume, no. of shares	545,665	529,655	3,150,916
Trading volume, %	3.6	3.5	20.7
Adjusted average number of shares during financial year	15,212,997	15,259,992	15,254,256
Number of shares at year end	15,243,585	15,259,992	15,211,773
Own shares	51,415	35,008	83,227

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Key indicators showing the Group's financial performance

	31.3.2013	restated 31.3.2012	restated 31.12.2012
Revenues, MEUR	91.3	84.2	388.4
Change in revenues, %	8.5	-11.4	2.0
Operating profit, MEUR	5.8	6.4	38.0
Change in operating profit, %	-10.1	27.4	53.6
Operating profit, % of revenues	6.3	7.7	9.8
Profit before taxes, MEUR	6.0	6.2	37.1
Profit before taxes, % of revenues	6.6	7.3	9.6
Interest-bearing net liabilities, MEUR	-21.1	-3.0	-10.3
Gearing, %	-22.2	-3.4	-9.5
Working capital, MEUR	24.4	34.6	33.0
Equity ratio, %	44.2	46.0	53.0
Gross capital expenditure, MEUR	4.2	3.1	14.0
Gross capital expenditure, % of revenues	4.6	3.7	3.6
R & D expenditure, MEUR	6.6	5.9	25.1
R & D expenditure, % of revenues	7.2	7.0	6.5
Number of personnel at end of period	1,510	1,438	1,513
Order book, MEUR	58.9	49.3	50.0

Commitments and contingencies, MEUR

	31.3.2013	31.3.2012	31.12.2012
Commitments and contingencies	16.5	12.0	16.1
Financing commitments	0.0	0.1	0.0

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Impact of IAS 19 revision, MEUR

	reported 31.3.2012	adjust-ment	restated 31.3.2012	reported 31.12.2012	adjust-ment	restated 31.12.2012
Consolidated statement of income
Employee benefit related expenses	-19.7	0.1	-19.6	-77.0	0.3	-76.7
Operating profit	6.4	0.1	6.4	37.7	0.3	38.0
Profit before taxes	6.1	0,1	6.2	36.8	0.3	37.1
Income taxes	-1.6	0.0	-1.6	-10.2	-0.1	-10.3
Profit for the period	4.5	0.1	4.6	26.6	0.2	26.9
Impact on income statement		0.1			0.2
Attributable to:
Equity holders of the parent	4.3	0.1	4.4	25.9	0.2	26.2
Non-controlling interests	0.2		0.2	0.7		0.7
Consolidated statement of comprehensive income
Profit for the period	4.5	0.1	4.6	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		-0.1	-0.1		-0.5	-0.5
Total comprehensive income	4.2	0.0	4.2	26.7	-0.2	26.5
Impact on statement of comprehensive income		0.0			-0.2
Attributable to:
Equity holders of the parent	4.1	0.0	4.0	26.1	-0.2	25.8
Non-controlling interests	0.2		0.2	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	88.1	0.0	88.1	108.5	-0.2	108.3
Deferred tax liabilities	6.0	0.0	6.0	6.0	-0.1	5.9
Employee benefits	1.7	0.1	1.8	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	31.3.2013	31.3.2012	31.12.2012
Profit for the period before IAS 19 revision	3.9	4.5	26.6
IAS 19 revision		0.1	0.2
Profit for the period after IAS 19 revision	3.9	4.6	26.9
Comprehensive income for the period before IAS revision	4.4	4.2	26.7
IAS 19 revision	0.0	0.0	-0.2
Comprehensive income for period after IAS 19 revision	4.4	4.2	26.5
Equity	31.3.2013	31.3.2012	31.12.2012
---	---	---	---
Equity before IAS 19 revision	94.7	88.1	108.5
IAS 19 revision	-0.2	0.0	-0.2
Equity after IAS 19 revision	94.5	88.1	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

	31.3.2013	Level 1	Level 2	Level 3
Financial assets to be recognized at fair value through profit and loss
Currency forward contracts and currency options	0.1		0.1
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	6.5	0.0	0.1	6.5
Liabilities valued at fair value
Currency forward contracts and currency options	0.7		0.7
Those used for cash flow hedging	0.0		0.0
Total	0.7	0.0	0.7	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

	1-3/2013	restated 10-12/2012	restated 7-9/2012	restated 4-6/2012	restated 1-3/2012
Revenues	91.3	103.2	101.5	99.5	84.2
Operating profit	5.8	11.0	10.3	10.3	6.4
Profit before taxes	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