REVENIO GROUP CORPORATION INTERIM REPORT Q1/2011

Revenio Group Corporation
Stock Exchange Release                April 27, 2011 at 9.00 a.m.

REVENIO GROUP CORPORATION INTERIM REPORT Q1/2011

Strong growth on both Net sales and Ebit on 1st Quarter

- Consolidated net sales came to EUR 8.8 million (EUR 6.6 million), up 33.0%

- Consolidated operating profit/loss (EBIT) EUR 1.0 million (EUR -0.3 million), or 11.7 (-4.4)% of net sales

- Pre-tax profit EUR 0.9 million (EUR -0.3 million)

- Diluted and undiluted earnings per share EUR 0.009 (-0.003)

- Cash flow from operating activities EUR 2.4 million (EUR 0.5 million)

- The Health Care segment continued its vigorous development

- Midas Touch Oy’s result turned positive

- The AGM of March 31, 2011 decided on the distribution of a per-share dividend of EUR 0.02 (0.01)

- Net sales for 2011 are forecast to grow in comparison to the 2010 figures. Consolidated operating profit/loss (EBIT) without non-recurring items is expected to be positive, showing a significant improvement on 2010.

Statement by President and CEO Olli-Pekka Salovaara:

”The beginning of the year was highly positive for Revenio Group as a whole, with our operating profit/loss clearly in the black. We were delighted in particular to see Icare Finland continue its robust business development and Midas Touch turn positive after a long, challenging period. While, with its current size and operating model, Midas Touch still has a short history, we expect it to become established within its chosen business area and customer relationships. The part of its operations based on fixed monthly fee should account for a greater share of net sales. Reforms conducted to date within the company give us reason to believe in its capabilities to achieve long-term profitability.

The year also began favorably in project-based operations. In the forthcoming quarters, Done Logistics’ projects in Norway will progress to the installation and delivery phases, during which time the company should register its most marked impact on net sales and profit. Boomeranger Boats improved its productivity, markedly raising the company’s profit. Done Software continued its operations as planned, maintaining its profitability level, as did Done Information. Finnish Led-Signs, on the contrary, had a less than successful first quarter, with fewer orders and installations, due to e.g. the strict winter conditions.

This business development was also reflected in our key figures: the Group’s gearing turned negative while its financial position and equity ratio further improved.”

MARKET SITUATION

In the period under review, the market situation within the Group’s segments was slightly better than at the year-end for the previous year.

In the Services segment, the centralization of contact center services has enabled more efficient utilization of capacity. Market demand is thought to be sufficiently high for the company to utilize its capacity efficiently. Modest growth opportunities can be seen in the inbound services market.

Also within the Services segment, demand for translation services has somewhat improved year-on-year. This is due to growth trends in customer industries and large individual customer projects.

For the Health Care segment, the market situation is positive. The segment has several growing export markets and its products are highly competitive.

For the Safety segment, several invitations to tender are arising in both traditional and new markets. Impressive international references and the accompanying exposure have been raising interest in the company’s boats.

In Technology, the market situation is expected to improve during the year. In view of the events in Japan, the company has attempted to secure component availability by expediting its component procurement.

Within the Systems segment, changes in the market situation are slow at the current point of the business cycle. This segment’s companies have achieved their strongest market position with their traditional customer base, which has been showing signs of activation in the form of new invitations to tender.

For segments operating on a project basis, the continuation of these financial trends in 2012 will require major additional orders during 2011.

NET SALES, PROFITABILITY AND PROFIT

Revenio Group’s consolidated net sales during Q1/2011 totaled EUR 8.8 million (EUR 6.6 million), representing an increase of 33.0%. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to EUR 1.2 million (EUR -0.0 million), or 14.0 (-0.4)% of net sales. The consolidated operating profit/loss (EBIT) was EUR 1.0 million  (EUR -0.3 million), representing 11.7 (-4.2)% of net sales. The pre-tax result amounted to EUR 0.9 million (EUR -0.3 million), or 10.7 (-4.9)% of net sales. Net profit for the period was EUR 0.7 million (EUR -0.2 million), representing 7.9 (-3.6)% of net sales. Both undiluted and diluted earnings per share totaled EUR 0.009 (-0.003). Equity per share was EUR 0.20 (0.20).

The increase in consolidated net sales and profitability year-on-year was mainly due to business growth in the Health Care segment and the positive turn in Midas Touch’s results. In parallel, Systems and Safety improved their respective net sales and net profit. While the Technology segment grew its net sales year-on-year, its operating profit/loss (EBIT) remained negative.

BALANCE SHEET, FINANCIAL POSITION AND INVESTMENTS

The consolidated balance sheet total on March 31, 2011 was EUR 25.5 million (EUR 27.0 million). Shareholders' equity came to EUR 15.2 million (EUR 15.5 million). At the end of the period, interest-bearing net liabilities amounted to EUR -1.5 million (EUR 0.7 million) and gearing stood at -9.7 (4.6)%. The consolidated equity ratio was 64.1 (59.0)%. The Group’s liquid assets were EUR 3.9 million (EUR 2.9 million) at the end of the period.

The Group’s financial position improved during the period. In addition to its liquid assets, the Group has a EUR 2.0 million credit facility, from which no funds had been withdrawn at the end of the review period.

Cash flow from business operations came to EUR 2.4 million (EUR 0.5 million).

The Group's purchases of PPE and intangible assets totaled EUR 0.2 million (EUR 0.1 million).

OPERATIONS BY BUSINESS SEGMENT

Revenio Group Corporation’s business operations are organized into five segments: Services (Done Information Oy and Midas Touch Oy), Systems (Done Logistics Oy and Done Software Solutions Oy), Health Care (Icare Finland Oy), Safety (Boomeranger Boats Oy) and Technology (Finnish Led-Signs Oy). This structure is in line with the Group’s organization and internal reporting.

Services

Included in the Services segment, Done Information Oy is one of Finland’s biggest translation and content creation companies, while Midas Touch Oy is a Finnish company providing outsourced call centre services and serving many companies and the public sector.

The Services segment's net sales in Q1/2011 totaled EUR 2.2 million (EUR 2.8 million), down -21.2%. The segment’s profit margin was EUR 0.1 million (EUR -0.4 million).

Done Information Oy’s net sales and operating profit/loss (EBIT) grew from the previous year, mainly due to higher demand for translation services.

Midas Touch Oy’s net sales decreased from the previous year, but its operating profit/loss (EBIT) improved markedly, turning positive. Underlying this profit performance are the adjustment and restructuring measures conducted in the fall of 2010, as well as a slightly improved market situation. Alongside this, the company has been able to reduce the share of its business operations based on telemarketing campaigns with high-risk yield expectations.

Systems

The Systems segment comprises Done Logistics Oy, which provides companies with materials-handling systems associated with their internal logistics, and Done Software Solutions Oy, providing information systems for internal logistics and inventory management, as well as the related services. As of May 1, 2010, Done Software Solutions Oy has been operating as an independent company, due to the partial demerger of Done Logistics Oy. The reference information in this Interim Report is presented as if this arrangement had been effective throughout the period described by the reference information.

In Q1/2011, the Systems segment’s net sales amounted to EUR 2.6 million (EUR 1.2 million), up 115.1%. The segment’s margin was EUR 0.1 million (EUR -0.1 million). Done Logistics Oy improved its net sales and profitability year-on-year. The most important driver of this trend was orders received from Norway in 2010. During the period, the company also landed some other minor orders for 2011.

Done Software Solutions Oy too was able to increase both its net sales and operating profit/loss (EBIT) during the period. Thanks to high cost-efficiency, its operations as an independent company were also clearly profitable in a challenging market situation.

Health Care

The Health Care segment consists of Icare Finland, which specializes in the development, manufacture and sale of tonometers measuring intraocular pressure.

In Q1/2011, the Health Care segment’s net sales amounted to EUR 2.3 million (EUR 1.7 million), up 34.9%. The segment’s margin amounted to EUR 1.0 million (EUR 0.6 million), representing 44.1 (33.4)% of net sales.

Year-on-year, demand for tonometers grew markedly. Demand was strong in all major export markets.

Safety

The Safety segment consists of Boomeranger Boats, which designs, manufactures, and sells Rigid Inflatable Boats (RIBs) of the highest quality, primarily for navy rescue units, authorities and security forces of various countries.

In Q1/2011, the Safety segment’s net sales amounted to EUR 1.4 million (EUR 0.7 million), up 89.6%. The profit margin for the segment was EUR 0.2 million (EUR 0.0 million).

During Q1, several new boat orders were manufactured within a short delivery time, with high productivity. This translated into much improved profitability. In order to secure more even demand, systematic efforts have been made to further expand the customer base into new export markets. During the period, the company received a major new order, involving the supply of boats to be used in the support operations of the Volvo Ocean Race.

Technology

Finnish Led-Signs, which constitutes the Technology segment, is the largest supplier of LED price displays in the Nordic region and is Finland's leading manufacturer of LED information displays and parking guidance systems.

The net sales of the Technology segment in Q1 totaled EUR 0.43 million (EUR 0.25 million), up 70.8%. The segment’s margin was EUR -0.06 million (EUR -0.11 million).

While year-on-year the segment grew its net sales, their overall level remained low. The period’s most important customer delivery was the expansion of the parking guidance system at Helsinki Airport. During the period, the company also concluded a new 3-year delivery agreement for LED price displays, with Neste Oil.

Net sales and segment margins for Q1/2011 and Q1/2010, excluding non-recurring items:

The Groups's Net sales, margin and profit by segment and quarter, excluding non-recurring
items, were as follows:

HUMAN RESOURCES

During the period, the number of personnel employed by the Group averaged 276 (471). At the end of the period, the number of employees was 273 (468). Adjustment measures in Midas Touch Oy in the fall of 2010 were the most important factor affecting the number of employees.

The number of personnel employed by the Group during the period, by segment, averaged:

Wages, salaries and other remuneration paid during the period totaled EUR 2.5 million (EUR 3.0 million).

SHARES, SHARE CAPITAL AND MANAGEMENT HOLDINGS

On March 31, 2011, Revenio Group Corporation's fully paid share capital registered in the Trade Register was EUR 5,314,918.72 and the number of shares outstanding totaled 76,839,730. The company has one series of shares. All shares confer the same voting rights and an equal right to dividends and the company’s funds.

On March 31, 2011, the Board of Directors and the President and CEO held 1.4% of the company's shares, totaling 1,076,210 shares, and 18.6% of the option rights, for a total of 684,365 options.

CHANGES IN SHAREHOLDINGS

There were no significant changes in ownership to report during the review period.

OPTION RIGHTS

On the basis of the share issue authorization approved by the Annual General Meeting on April 3, 2007, the Board of Revenio Group Corporation decided, on November 23, 2007, on a new corporate option plan, comprising a maximum of 3,684,365 option rights. Each option right entitles the holder to subscribe for one Revenio Group Corporation share. Against the total number of the company’s shares on March 31, 2011, the proportion of shares to be subscribed for on the basis of the option rights issued represents a maximum of 2.5% of the company’s shares and votes, once all new shares subscribed for with these option rights have been registered.

Share subscriptions via the option program entitle the holder to a dividend from the subscription year onwards.

The option rights have been divided into three series: Series A (1,684,365 shares), Series B (1,000,000) and Series C (1,000,000). The subscription periods for options are as follows: for Series A, May 1, 2009 – May 1, 2013; for Series B, November 1, 2010 – November 1, 2014; and for Series C, May 1, 2012 – May 1, 2016. The share subscription price will be the trade-weighted average price over the periods November 1–30, 2007 (EUR 0.64, Series A); April 1–30, 2009 (EUR 0.31, Series B); and November 1–30, 2010 (EUR 0.28, Series C).

A total of 75,000 Series 2007B option rights were issued to personnel during the period. At the end of the period, the company’s key personnel held a total of 1,159,365 Series 2007A options and a total of 835,000 Series 2007B options.

On March 23, 2011, the company decided to apply for listing of its Series 2007B options on NASDAQ OMX Helsinki. As a consequence, a total of 1,000,000 option rights have been subject to trading since March 30, 2011. During the period, no trading took place with these option rights.

TRADING ON THE NASDAQ OMX HELSINKI

During Q1/2011, Revenio Group Corporation's turnover on the NASDAQ OMX Helsinki exchange totaled EUR 4.8 million (EUR 2.2 million), representing 13.8 (6.2) million shares or 17.9 (8.1)% of shares outstanding. The trading high was EUR 0.44 (0.38) and the low EUR 0.30 (0.33). At the end of the review period, the closing price was EUR 0.43 (0.37), and the average share price EUR 0.35 (0.36). Revenio Group Corporation’s market value on March 31, 2011, was EUR 33.0 million (EUR 28.4 million).

ANNUAL GENERAL MEETING AND BOARD AUTHORIZATIONS IN EFFECT

The Annual General Meeting (AGM) held on March 31, 2011 approved the company’s financial statements and discharged the members of the Board of Directors and the President and CEO from liability for the financial year January 1 - December 31, 2010.

The AGM selected as members of the Board of Directors the following persons: Timo Mänty, Pekka Tammela, Rolf Fryckman, Julia Ormio and Matti Hyytiäinen. The AGM decided that the Chairman of the Board should be entitled to an annual emolument of EUR 60,000 and the other Board members to an annual emolument of EUR 36,000, with the exception that any member who holds a stake of at least five percent in Revenio Group Corporation, either directly or through a company in which he or she has a minimum holding of 50%, should not be entitled to a separate emolument. In total, 40% of Board members’ emoluments will be settled in the form of shares in the company, while 60% will consist of monetary payment.

The AGM re-elected PricewaterhouseCoopers Oy, Authorized Public Accountant, as the company’s auditors, with Juha Tuomala, Authorized Public Accountant, acting as the principal auditor. The AGM decided to compensate the auditors upon the presentation of an approved invoice.

The AGM decided to accept the Board’s proposal on profit distribution, according to which the profit for the financial period, EUR 243,391.03, will be added to retained earnings, and a dividend of 0.02 EUR per share will be paid, totaling EUR 1,536,794.60.

The AGM rescinded its earlier authorization to buy back 7,683,973 of the company’s own shares and authorized the Board to make the decision to buy back a maximum of 7,683,973 of the company’s own shares, in one or more installments, using the company’s unrestricted equity, in which case any buyback will reduce the amount of company distributable earnings.

The AGM decided to rescind the Board’s valid unexercised share-issue authorizations. The AGM authorized the Board of Directors to decide to issue a maximum of 30,000,000 shares or to grant special rights (including stock options) entitling to shares, as referred to in chapter 10(1) of the Limited Liability Companies Act, in one or several tranches.

This authorization was granted to be used to finance and implement any prospective corporate acquisitions or other transactions, to implement the company’s share-based incentive plans, or for other purposes determined by the Board.

It was decided that the authorization also grants the Board the right to decide on all terms and conditions governing said share issue and the granting of special rights, including the subscribers or the grantees of said special rights and the payable consideration. Moreover, the authorization also includes the right to waive shareholders’ pre-emption rights, thus enabling private placement of shares. The Board’s authorization covers both the issue of new shares and the transfer of any treasury shares possibly held by the company.

This authorization will be valid until April 30, 2012.

BOARD OF DIRECTORS AND AUDITORS

Since March 31, 2011, Revenio Group Corporation’s Board of Directors has included Timo Mänty, M.Econ, Managing Director of Onninen Oy (Chairman of the Board), Pekka Tammela, M.Econ, Authorized Public Accountant, partner in Pajamaa Partners Oy and Rolf Fryckman, Chairman of Eyemaker's Finland Oy; and as new members, Julia Ormio, qualified under an EEA aptitude test in law, Senior Legal Counsel at Outotec Oyj and Matti Hyytiäinen, Managing Director of Etteplan Oyj.

Until March 31, 2011, the members of the Board were Jyri Merivirta, Pekka Tammela, Rolf Fryckman and Timo Mänty.

PricewaterhouseCoopers Oy, Authorized Public Accountants, serves as the company’s auditor, with Juha Tuomala, Authorized Public Accountant, as the principal auditor.

MAJOR BUSINESS RISKS AND UNCERTAINTIES

The Group issued a notification to the stock exchange of its major business risks and uncertainties in its financial statements bulletin of February 16, 2011. No changes in said risks have occurred since the bulletin's release.

MAJOR EVENTS AFTER THE PERIOD

There have been no major events since the period ended.

OUTLOOK FOR 2011

Net sales for 2011 are forecast to grow in comparison to 2010 figures. Consolidated operating profit/loss (EBIT) without non-recurring items is expected to be positive, with significant improvement seen from 2010.

The goal of Revenio Group Corporation is to continue growing by means of both corporate restructuring and expansion of current business operations.

STATEMENT OF ACCOUNTING POLICIES

The recognition and valuation principles underlying the financial information presented in this Interim Report comply with the principles of the International Financial Reporting Standards (IFRS). The report does not comply with all the requirements of IAS 34, Interim Financial Reporting. The figures are unaudited.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (MEUR)

MAIN SHAREHOLDERS    31.3.2011

Revenio Group Corporation

Board of Directors 

For further information, please contact:

Olli-Pekka Salovaara, President and CEO, mobile +358 (0) 40 5675520

olli-pekka.salovaara@revenio.fi

http://www.revenio.fi/

DISTRIBUTION: 

NASDAQ OMX Helsinki

Financial Supervisory Authority (FIN-FSA)

Key media

www.revenio.fi

Revenio Group Corporation, listed on the NASDAQ OMX Helsinki, is the parent company of the Finnish conglomerate Revenio Group. Revenio Group Corporation’s subsidiaries share a focus on Finnish specialist expertise and export-based operations.

Revenio Group consists of seven independent subsidiaries in five business areas. These subsidiaries are Done Information Oy, Done Logistics Oy, Done Software Solutions Oy, Icare Finland Oy, Boomeranger Boats Oy, Finnish Led-Signs Oy and Midas Touch Oy.