DONE SOLUTIONS' GROWTH CONTINUED IN Q3
Done Solutions Corporation
Interim Report October 29, 2008, at 9:00 am
DONE SOLUTIONS' GROWTH CONTINUED IN Q3
Done Solutions Corporation's Interim Report Q1-Q3/2008 (IFRS)
Q1-Q3/2008:
- Consolidated net sales: EUR 35.1 million (EUR 16.7 million in Q1-Q3/2007), up
by 110 percent.
- Consolidated operating profit: EUR 3.6 million (EUR 2.3 million), or 9.8
percent of net sales (13.3 percent), up by 60 percent.
- Pre-tax profit: EUR 3.4 million (EUR 2.2 million), or 9.8 percent of net
sales (13.3 percent).
- Earnings per share: EUR 0.033 (EUR 0.024). Equity ratio of 54.5 percent (47.4
percent).
- Equity per share: EUR 0.23 (EUR 0.13).
- Cash flow from operating activities: EUR 1.1 million (EUR 3.2 million).
Q3/2008:
- Consolidated net sales: EUR 10.6 million (EUR 6.7 million in Q3/2007), up by
58 percent.
- Consolidated operating profit: EUR 1.1 million (EUR 0.7 million), or 10.0
percent of net sales (10.4 percent), up by 51 percent.
- As previously forecast, the Group's projected total net sales and operating
profit for 2008 should see a significant increase on the previous year's level.
SEGMENTS AND MARKET SITUATION
In the Group's Services segment, net sales for multilingual content production
was on the expected level in Q3, but profitability fell due to higher
production costs and the effect of fiercer competition.
Contact Center services, integrated into the Services segment in December 2007,
experienced stable demand in Q3. However, the gross margin did not rise in line
with expectations, due to difficulties in workforce availability. In addition,
the effects of the downturn in the economic cycle were manifested in consumer
behavior at the end of the quarter.
Nevertheless, the Systems segment still posted a good profit and net sales for
Q3, on account of the strong order backlog created last year. As predicted,
weakening overall economic trends have being clearly reflected in this
segment's operating environment, hampering the securing of new orders.
In Q3, net sales in the Health Care segment were at the same level as in Q1 and
Q2. The company continued to invest in marketing and R&D in Q3.
In the Defense segment, positive developments in demand fed through into
slightly higher net sales and a better gross margin for the segment, compared
to the beginning of the year. Since the customer base for this segment remains
narrow, individual orders are highly significant in terms of net sales
development. Therefore, the segment is striving to expand its customer base
beyond the Baltic Sea area.
The Technology segment posted good Q3 net sales and profit. Demand for price
display systems has remained high. The parking control system is now ready and
on sale.
NET SALES, PROFITABILITY, AND PROFIT
Consolidated net sales in Q1-Q3/2008 came to EUR 35.1 million (EUR 16.7 million
in Q1-Q3/2007), up by 110 percent year on year.
Consolidated operating profit before depreciation (EBITDA) came to EUR 4.7
million, accounting for 13.4 percent of consolidated net sales (EUR 2.5 million
or 14.9 percent of consolidated net sales), up by 89 percent from the previous
year's level.
Consolidated operating profit amounted to EUR 3.6 million, accounting for 10.3
percent of consolidated net sales (EUR 2.3 million, or 13.5 percent of
consolidated net sales), up by 60 percent from the previous year's figure.
Pre-tax profit totaled EUR 3.4 million, accounting for 9.8 percent of net sales
(EUR 2.2 million, or 13.3 percent of net sales), up by 54 percent year on year.
Net profit for the period came to EUR 2.5 million, accounting for 7.2 percent
of net sales (EUR 1.6 million, or 9.7 percent of net sales), up by 56 percent
from the previous year's level.
Undiluted and diluted earnings per share rose to EUR 0.033 (EUR 0.024) Equity
per share improved to EUR 0.23 (EUR 0.13).
Services (Done Information and Midas Touch), Systems (Done Logistics), Health
Care (Tiolat), Defense (Boomeranger Boats), and Technology (Finnish Led-Signs)
form the basis of the Group's primary, IFRS-compliant segment reporting format.
The Defense segment has been consolidated since August 1, 2007; the Technology
segment since September 1, 2007; and Midas Touch with the Services segment
since January 1, 2008.
Net sales Net sales Segment profit
Q1−Q3/2008 Q1−Q3/2007 Q1−Q3/2008 Q1−Q3/2007
MEUR share MEUR share MEUR % MEUR %
Services
Done Information 4.1 12% 4.1 25% 0.27 7 0.62 15
Midas Touch 12.1 34% - - 0.53 4 - -
Systems 10.9 31% 8.2 49% 1.70 16 1.00 12
Health Care 3.0 9% 2.7 16% 1.04 34 0.91 33
Defense 2.1 6% 1.5 9% 0.17 8 0.19 13
Technology 2.9 8% 0.2 1% 0.61 21 0.02 12
Total 35.1 100% 16.7 100% 4.32 12 2.75 17
Parent company costs -0.71 -2 -0.49 -3
Operating profit 3.61 10 2.26 14
Consolidated net sales, profit by segment, and consolidated operating profit by
quarter were:
MEUR Q3/08 Q2/08 Q1/08 Q4/07 Q3/07 Q2/07 Q1/07
Net sales:
Services
Done Information 1.2 1.6 1.3 1.5 1.3 1.4 1.5
Midas Touch 4.1 3.8 4.2 - - - -
Systems 2.6 4.3 4.0 3.6 3.0 2.6 2.6
Health Care 1.0 1.0 1.0 1.6 0.8 0.9 1.1
Defense 0.8 0.5 0.8 0.8 1.5 - -
Technology 1.0 1.0 0.9 0.5 0.2 - -
Total 10.6 12.3 12.2 8.0 6.7 4.8 5.2
Segment profit: Q3/08 Q2/08 Q1/08 Q4/07 Q3/07 Q2/07 Q1/07
Services
Done Information 0.03 0.17 0.07 0.17 0.16 0.17 0.28
Midas Touch 0.12 0.01 0.40 - - - -
Systems 0.45 0.63 0.61 0.34 0.31 0.36 0.33
Health Care 0.35 0.29 0.41 0.56 0.19 0.23 0.49
Defense 0.11 0.03 0.04 0.12 0.19 - -
Technology 0.20 0.32 0.08 0.01 0.02 - -
Total 1.26 1.45 1.61 1.20 0.88 0.76 1.10
Parent co. costs -0.20 -0.29 -0.21 0.08 -0.18 -0.15 -0.16
Operating profit 1.06 1.16 1.39 1.27 0.70 0.61 0.94
Oper. profit % 10.0% 9.4% 11.4% 16.0% 10.4% 12.8% 18.2%
BALANCE SHEET AND FINANCIAL POSITION
On September 30, 2008, the consolidated balance-sheet total amounted to EUR
32.5 million (EUR 20.5 million on September 30, 2007). Shareholders' equity
came to EUR 17.7 million (EUR 9.1 million). Interest-bearing liabilities
totaled EUR 5.0 million (EUR 4.4 million), and gearing stood at 16.1 percent
(17.1 percent). At the period end, the equity ratio was 54.5 percent (47.4
percent) and cash and cash equivalents stood at EUR 2.1 million (EUR 2.8
million).
MAJOR EVENTS IN Q3/2008
In Done Logistics Oy, a subsidiary of Done Solutions Corporation's Systems
segment, cooperation negotiations have been held under the Act on Cooperation
within Undertakings, due to weakening economic trends and the resultant fall in
demand. As a result of the negotiations it was agreed that the company has the
right to use part-time employment, or lay off for a fixed term or until further
notice, or to terminate the employment of, a maximum of 40 employees from 1
October, 2008. This right is valid until 30 June, 2009.
Tiolat Oy, a subsidiary of Done Solutions Corporation within its Health Care
segment, has today changed its name to Icare Finland Oy in line with its
flagship product.
EVENTS AFTER THE PERIOD
In order to streamline its corporate structure, Done Solution's non-operating
subsidiaries, Sunob Holding Oy and GDZ Markkinointi Oy, have been merged with
the parent company, Done Solutions Corporation, and Network Partners Oy Nepa
with Done Logistics Oy, on 17 October, 2008.
HUMAN RESOURCES
During the period, the number of employees averaged 762 (145), two of whom
worked abroad (2). At the end of the period, the company's personnel by segment
were as follows:
Sept. 30, 2008 Sept. 30, 2007
Services 573 67
Systems 68 60
Health Care 8 7
Defense 25 35
Technology 17 10
Parent company 4 3
Total 695 182
As of the publication of this interim report, two employees of Done Logistics
Oy had been laid off on the basis of the recently held cooperation negotiations
within the subsidiary.
MANAGEMENT AND AUDITORS
Done Solutions Corporation's Board of Directors is made up of the following
members: Jyri Merivirta (Chairman), Matti Nevalainen, and Pekka Tammela.
PricewaterhouseCoopers Oy, Authorized Public Accountants, acts as the company's
auditor, with Juha Tuomala, Authorized Public Accountant, as the chief auditor.
Ernst & Young Oy, Authorized Public Accountants, conducts the internal audit.
From October 1, 2008, Pekka Raatikainen (39) M.Sc. (Econ. & Business Adm.) will
become the new CFO and a member of the corporate management group.
Done Solutions Corporation's Board of Directors appointed Master of Law Juha
Kujala (42), a member of the corporate management team, as the Corporation's
Development Director on October 13, 2008.
SHARE CAPITAL AND SHARES
On September 30, 2008, Done Solutions Corporation's share capital came to EUR
5,314,918.72 and the number of shares totaled 76,115,594.
The Board has not exercised its valid authorizations to issue 30,000,000 shares
and buy back 7,593,648 own shares, approved by the AGM of April 2, 2008. The
company had no treasury shares on September 30, 2008.
The reported share turnover of Done Solutions Corporation for January 1 -
September 30, 2008, was EUR 9.9 million, representing 17.9 million shares and
23.6 percent of the total number of the company's shares. The highest share
quotation for the period was EUR 0.78 and the lowest EUR 0.33. The share price
averaged EUR 0.55 and closed at EUR 0.36 on September 30, 2008. The company's
market capitalization on September 30, 2008, totaled EUR 27.4 million.
SHAREHOLDERS
On September 30, 2008, the number of shareholders in the company totaled 3.020.
The company's largest shareholders are listed on Done's website, at
www.donesolutions.com (Investors / Financial Information / Largest
shareholders).
OPTION RIGHTS
On the basis of the rights issue authorization approved by the shareholders'
meeting of April 3 2007, the Executive Board of Done Solutions Oyj decided, on
November 23, 2007, on a new corporate option plan, comprising a maximum of
3,684,365 option rights. The option plan and its terms can be found in the
company's stock exchange release of November 23, 2007.
MANAGEMENT SHAREHOLDINGS
On September 30, 2008, the Board of Directors and the President and CEO held
20.4 percent of the company's shares, totaling 15,505,196 shares, and 18.6
percent of stock options. Moreover, on the same date, Gateway Finland Oy held
15.1 percent of the company's shares: 11,500,000 shares. Matti Nevalainen, a
Board member, holds 50 percent of Gateway Finland Oy shares.
INSIDER ISSUES AND CORPORATE GOVERNANCE
Done Solutions Corporation complies with the Guidelines for Insiders, effective
as of June 2, 2008, set forth by the Helsinki Stock Exchange and, to the
applicable extent, the Corporate Governance Recommendation for Listed Companies
effective as of July 1, 2004. The company's Corporate Governance Statement is
available in the ‘Investors' section of the company's website.
SIGNIFICANT NEAR-TERM RISKS
Increasing uncertainty in the world economy and faltering economic growth are
affecting demand for Done Solutions' products and services. The effects can be
seen in all segments, but most of all in the Systems segment, where the most
profound impact is being felt in the timing and implementation of major
customer projects.
The corporation's main business risks are listed in its financial statements,
released on the stock exchange on 5 March, 2008. It is estimated that the
possibility of these risks being fulfilled has been increased by the prevailing
economic uncertainty emanating from the financial crisis.
LITIGATION
The company is involved in no litigation or legal proceedings that, according
to the Board's view, would have a significant bearing on the Group's financial
position.
SHORT-TERM PROSPECTS
The economic slowdown and uncertainty on the markets, due to the financial
crisis, have weakened the corporation's ability to forecast its short-term
performance.
Due to fiercer competition, Q4 net sales are expected to fall in the Services
segment's multilingual content production (Done Information) compared to
Q4/2007. The business prospects for Contact Center services (Midas Touch) in Q4
are satisfactory.
Economic fluctuation is intense in the Systems segment (Done Logistics).
Because of the solid backlog of orders from last year, this segment is expected
to post higher net sales in 2008 than in 2007. Q4 net sales are expected to be
lower than net sales in the previous year's Q4.
In the Health Care segment (Icare Finland), demand is expected to remain stable
and net sales in Q4 will decrease moderately compared to Q4/2007. This segment
will
invest heavily in R&D and marketing towards the end of the year.
The Defense segment's (Boomeranger Boats) net sales in Q4 is expected to be
higher than previous year's Q4.
Meanwhile, the Technology segment (Finnish Led-Signs) has seen an increase in
product demand, and net sales are expected to show considerable growth in Q4
compared to Q4/2007.
As previously estimated, marked growth is expected in the Group's net sales in
2008 compared to the previous year's figures.
Maintaining profitability in the current uncertain business trend and
increasingly competitive climate will be challenging. However, as previously
estimated, the Group's operating profit in 2008 is expected to increase
significantly from that of the previous year.
Done Solutions Corporation
Board of Directors
For further information, please contact:
Olli-Pekka Salovaara, President and CEO: +358 (0)40 567 5520 (mobile),
olli-pekka.salovaara@donesolutions.com
Pekka Raatikainen, CFO: +358 (0)50 553 4094 (mobile),
pekka.raatikainen@donesolutions.com
http://www.donesolutions.com/
Distribution:
Helsinki Stock Exchange
Financial Supervision Authority
Major media
Done Solutions Corporation, listed on the OMX Nordic Exchange Helsinki, is the
parent company of Done Group. Done's subsidiaries focus on the provision of
advanced Finnish specialist expertise and export-based operations.
GROUP KEY FIGURES AND RATIOS (MEUR) Q1-Q3/2008 Q1-Q3/2007 Q1-Q4/2007
Net sales 35.1 16.7 24.7
Operating profit 3.6 2.3 3.5
Operating profit, % 10.3 13.5 14.3
Pre-tax profit 3.4 2.2 3.5
Pre-tax profit, % 9.8 13.3 14.1
Net profit 2.5 1.6 5.7
Net profit, % 7.2 9.7 23.0
Gross capital expenditure 0.3 7.4 14.5
Gross capital expenditure, % of net sales 0.8 44.0 58.8
R&D costs 0.4 0.4 0.8
R&D costs, % 1.2 2.6 3.2
Gearing, % 16.1 17.1 4.1
Equity ratio, % 54.5 47.4 52.6
Return on investment (ROI), % 21.5 23.3 21.9
Return on equity (ROE), % 18.9 21.6 45.9
Undiluted earnings per share, EUR 0.033 0.024 0.084
Diluted earnings per share, EUR 0.033 0.024 0.084
Equity per share, EUR 0.23 0.13 0.24
Average number of employees 762 145 155
Cash flow from operating activities 1.1 3.3 3.3
Cash flow from investment activities -0.1 -3.2 -2.5
Cash flow from financing activities -2.2 0.3 0.2
Total cash flow -1.2 0.4 1.0
CONSOLIDATED INCOME STATEMENT (MEUR) Q3/2008 Q3/2007
NET SALES 10.6 6.7
Changes in inventory -0.1 -0.5
Other operating income 0.2 0.0
Materials and services -2.8 -2.8
Employee benefits -5.1 -1.9
Depreciation/amortization -0.4 -0.1
Other operating expenses -1.3 -0.7
OPERATING PROFIT 1.1 0.7
Share of associates' results -0.0 -0.0
Financial expenses (net) -0.1 -0.0
PRE-TAX PROFIT 1.0 0.7
Income tax expenses -0.2 -0.2
NET PROFIT 0.7 0.5
CONSOLIDATED INCOME STATEMENT (MEUR) Q1-Q3/2008 Q1-Q3/2007 Q1-Q4/2007
NET SALES 35.1 16.7 24.7
Changes in inventory -0.2 -0.5 -0.2
Other operating income 0.3 0.0 0.0
Materials and services -10.8 -6.6 -10.1
Employee benefits -15.5 -5.1 -7.5
Depreciation/amortization -1.1 -0.2 -0.4
Other operating expenses -4.2 -1.9 -2.9
OPERATING PROFIT 3.6 2.3 3.5
Share of associates' results 0.1 0.0 0.0
Financial expenses (net) -0.2 -0.1 -0.1
PRE-TAX PROFIT 3.4 2.2 3.5
Income tax expenses -0.9 -0.6 2.2
NET PROFIT 2.5 1.6 5.7
Earnings per share, undiluted (EUR) 0.033 0.024 0.084
Earnings per share, diluted (EUR) 0.033 0.024 0.084
CONSOLIDATED BALANCE SHEET (MEUR) Sept. 30, Sept. 30, Dec. 31,
2008 2007 2007
ASSETS
NON-CURRENT ASSETS
Property, plant, and equipment 2.2 1.8 2.3
Goodwill 11.4 5.6 11.4
Intangible assets 3.4 1.9 4.0
Shares in associates 0.5 0.4 0.4
Available-for-sale assets 0.0 0.0 0.0
Receivables 0.3 0.4 0.4
Deferred tax assets 3.3 1.6 4.4
TOTAL NON-CURRENT ASSETS 21.0 11.7 22.9
CURRENT ASSETS
Inventories 1.8 0.9 1.2
Trade and other receivables 7.6 5.1 8.3
Cash and cash equivalents 2.1 2.8 3.4
TOTAL CURRENT ASSETS 11.5 8.8 12.8
TOTAL ASSETS 32.5 20.5 35.7
LIABILITIES AND SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
Share capital 5.3 5.3 5.3
Share premium 2.4 2.4 2.4
Fair value reserve 0.3 0.3 0.3
Invested unrestricted capital reserve 6.5 1.5 6.4
Retained earnings/loss 3.2 -0.5 3.6
TOTAL EQUITY attributable to holders
of parent company equity 17.7 9.1 18.1
MINORITY INTEREST 0.0 0.0 0.0
TOTAL SHAREHOLDERS' EQUITY 17.7 9.1 18.1
LIABILITIES
LONG-TERM LIABILITIES
Deferred tax liabilities 1.0 0.7 1.2
Provisions 0.1 0.6 0.0
Interest-bearing liabilities 2.4 3.8 2.9
Other payables 2.5 0.0 2.4
TOTAL LONG-TERM LIABILITIES 6.1 5.1 6.5
SHORT-TERM LIABILITIES
Advance payments 0.0 1.3 1.3
Trade and other payables 6.1 4.4 8.5
Provisions 0.0 0.0 0.2
Interest-bearing liabilities 2.6 0.6 1.2
TOTAL SHORT-TERM LIABILITIES 8.7 6.2 11.1
TOTAL LIABILITIES 14.8 11.4 17.6
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 32.5 20.5 35.7
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (MEUR)
Share Share Other Retained Min. Total
capital premium reserves earnings int. equity
Balance on Jan. 1, 2007 5.3 2.4 0.3 -1.5 0.0 6.6
Dividend distribution 0.0 0.0 0.0 -0.7 0.0 -0.7
Private placements 0.0 0.0 1.5 0.0 0.0 1.5
Net profit 0.0 0.0 0.0 1.6 0.0 1.6
Balance on Sept. 30, 2007 5.3 2.4 1.8 -0.5 0.0 9.1
Private placements 0.0 0.0 5.0 0.0 0.0 5.0
Net profit 0.0 0.0 0.0 5.7 0.0 5.7
Balance on Dec. 31, 2007 5.3 2.4 6.7 3.6 0.0 18.1
Private placements 0.0 0.0 0.1 0.0 0.0 0.1
Dividend distribution 0.0 0.0 0.0 -3.0 0.0 -3.0
Net profit 0.0 0.0 0.0 2.5 0.0 2.5
Balance on Sept. 30, 2008 5.3 2.4 6.8 3.2 0.0 17.7
CONSOLIDATED CASH FLOW STATEMENT (MEUR)
Q1-Q3/2008 Q1-Q3/2007 Q1-Q4/2007
Net profit 2.5 1.6 5.7
Adjustments to net profit 2.1 0.8 -1.7
Change in working capital -3.4 0.9 -0.3
Interest paid -0.4 -0.1 -0.3
Interest received 0.4 0.0 0.1
Taxes paid 0.0 0.0 -0.2
CASH FLOW FROM OPERATING ACTIVITIES 1.1 3.3 3.3
Acquisition of subsidiary 0.0 -3.0 -2.3
Acquisition of associates 0.0 -0.0 -0.0
Purchase of PPE -0.2 -0.1 -0.2
Purchase of intangible assets -0.1 -0.0 -0.0
Payments of other investments 0.1 0.0 0.0
NET CASH USED IN INVESTMENT ACTIVITIES -0.1 -3.2 -2.5
Rights issue 0.0 0.0 0.0
Dividends paid -3.0 -0.7 -0.7
Long-term borrowing 1.8 3.0 3.0
Repayments of long-term borrowing -0.9 -2.0 -2.1
Finance lease principal payment -0.1 -0.0 -0.1
NET CASH USED IN FINANCING ACTIVITIES -2.2 0.3 0.2
Net change in cash and cash equivalents -1.2 0.4 1.0
Cash and cash equivalents, period-start 3.4 2.4 2.4
Cash and cash equivalents, period-end 2.1 2.8 3.4
CONTINGENT LIABILITIES (MEUR) Sept. 30, Sept. 30, Dec. 31,
2008 2007 2007
Mortgages given 3.3 4.0 3.3
Pledges given 7.4 7.9 8.8
Securities given 1.3 3.6 3.3
Operating lease liabilities 0.3 0.1 0.4
Other rental liabilities 1.6 0.2 1.3
NET SALES AND OPERATING PROFIT BY QUARTER (MEUR)
MEUR Q3/08 Q2/08 Q1/08 Q4/07 Q3/07 Q2/07 Q1/07
Net sales 10.6 12.3 12.2 8.0 6.7 4.8 5.2
Oper. profit 1.1 1.2 1.4 1.3 0.7 0.6 0.9
Oper. profit, % 10.0% 9.4% 11.4% 16.0% 10.4% 12.8% 18.2%
The figures (incl. comparatives) presented in this report are in compliance
with the IAS 34 Interim Reports standard. Moreover, the accounting principles
adhered to are the same as those of the financial report 2007. Information in
this report is based on unaudited figures.
