REVENIO GROUP CORPORATION INTERIM REPORT Q1/2012

Revenio Group Corporation                            Stock Exchange Release
      April 19, 2012, 9:00 hrs

REVENIO GROUP CORPORATION INTERIM REPORT Q1/2012-Health Care segment’s vigorous and profitable growth continued

- Consolidated net sales came to EUR 7.7. million (EUR 7.8 million), down 0.9%.

- Consolidated operating profit (EBIT) was EUR 0.4 million (EUR 1.0 million), representing 5.1 (12.3)% of net sales.

- Pre-tax profit amounted to EUR 0.3 million (EUR 0.9 million).

- Diluted and undiluted earnings per share came to EUR 0.003 (EUR 0.008).

- Cash flow from operating activities amounted to EUR -1.8 million (EUR 2.3 million). Negative cash flow due to working capital tied in Done Logistic’s projects in Norway

- The Health Care segment continued its vigorous development.

- Midas Touch, Done Software Solutions and FLS Finland saw their operating profit improve.

- Done Logistics showed a loss

- The AGM of March 28, 2012 decided on the distribution of a per-share dividend of EUR 0.02 (0.02).

- Financial guidance for 2012 will remain unchanged at the Group: Net sales and operating profit for 2012 are forecast to fall in comparison to 2011 figures due to developments at the Systems segment. Operating profit excluding non-recurring items is expected to remain clearly positive.

Statement by President and CEO Olli-Pekka Salovaara:

“The beginning of the year was dichotomous at Revenio Group. The continued growth of the Health Care segment ― in the USA but also in our other main markets – provided a reason for joy. Markedly improved profits at our smaller companies also pleased us:Done Software Solutions was successful in winning new customers, and its operations are seeing clear growth. Traditionally, Q1 is a difficult period for FLS Finland due to the wintery installation conditions, but this year, the company had markedly more export deliveries than the previous year, while its profit also picked up.  Midas Touch’s business operations are growing; its operating profit saw a marked increase year-on-year.

In February, Boomeranger Boats received an order from Malta, thus being able to expand to a new market area. However, this new order did not have an impact on the beginning of the year, which proved slow for the company.

Done Logistics’ struggles with profitability, which had started in Q4/2011, continued unabated. The high costs of the installation and implementation phases of the Norwegian projects and the lack of any other significant orders weigh down the company’s profit.  Due to the poor economic outlook, the measures of reorganization of business operations have been undertaken.  The company’s losses throw a shadow over the Group’s otherwise stellar beginning of 2012.”

MARKET SITUATION 

During the financial year, the Services segment continued seeing positive development in its market situation – particularly with regard to inbound operations, an area towards which the segment’s focus is being shifted, due to its lower risks and more stable future prospects compared to telemarketing. The situation in the telecommunications market was also reasonably good. The pending legislative amendment concerning a ban on the telemarketing of mobile phone subscriptions does not impact on segment operations. Overall, the segment enjoyed, in terms of its production capacity, an adequate number of customer assignments matching the company's current strategy in Q1.

In the Systems segment, the demand for internal-logistics automation systems was weak and the market situation was exceptionally difficult. On the other hand, the demand for internal-logistics information systems picked up over the review period, and the market situation is expected to remain favorable during the current year.

Over the start of the review period, the Health Care segment saw demand for Icare Finland tonometers continue to grow, while the market situation remained good. The demand for the probes used in tonometers is growing due to the growth of the number of devices in the market.

In Q1, the demand situation in the Safety segment resembled the situation seen at the end of last year. Demand tends to fluctuate from quarter to quarter in accordance with the scheduling of customer’s procurement decisions. The order from Malta secured by the company during the review period represents the typical size of call for tenders currently available in the market. The uncertainties related to national economies in our traditional market areas serve to somewhat slow down the decision-making processes.  In spite of this, public investments in defense and safety are expected to continue, since some customers need to modernize their equipment and have other, concrete investment needs based on a requirement for additional equipment.

In the Technology segment, the demand for fuel price displays saw some growth year-on-year.  The first quarter is typically slow in the Nordic price display market, since the weather conditions make it difficult to install price displays.

NET SALES, PROFITABILITY AND PROFIT

Consolidated net sales from Revenio Group’s continuing operations for the period from January 1 to March 31, 2012 were EUR 7.7 million (EUR 7.8 million), showing a decrease of -0.9 percent.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations amounted to EUR 0.6 million (EUR 1.2 million), or 7.7 (14.8) percent of net sales.

Consolidated operating profit (EBIT) from continuing operations was EUR 0.4 million (EUR 1.0 million), representing 5.1 (12.3) percent of net sales. The pre-tax result was EUR 0.3 million (EUR 0.9 million), or 3.6 (11.2) percent of net sales. Net profit for the review period was EUR 0.2 million (EUR 0.6 million), representing 3.1 (8.1) percent of net sales.

Both undiluted and diluted earnings per share totaled EUR 0.003 (EUR 0.008). Equity per share was EUR 0.20(EUR 0.20).

The decrease in the net sales accumulated from the Norwegian projects contributed to the slight decrease in Group net sales. The Safety segment also saw a decrease in net sales. The other segments saw an increase in net sales. The poor profitability of the Systems segment’s delivery phase and the lack of new projects were the primary contributing factors to the decrease in operating profit. Low production volume during the review period impacted on the profitability of the Safety segment. The other segments saw marked year-on-year increases in operating profit.

The Shares of Ametro Oy, formerly an associated company of the goup, were sold during the review period. A capital loss of EUR 0,15 million was posted for the sale.

BALANCE SHEET, FINANCIAL POSITION AND INVESTMENTS

The consolidated balance sheet total on March 31, 2012 was EUR 23.8 million (EUR 25.5 million).

Shareholders’ equity came to EUR 15.2 million (EUR 15.2 million). At the end of the review period, interest-bearing net liabilities amounted to EUR -1.1 million (EUR -1.5 million) and gearing stood at -7.0 (-9.7) percent. The consolidated equity ratio was 64.9 (64.1) percent. The Group’s liquid assets amounted to EUR 2.3 million (EUR 3.9 million) at the end of the review period.

The Group’s financial position remained stable in the period under review. 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 -1.8 million (EUR 2.3 million). The working capital tied in Done Logistics’ Norwegian projects put a strain on cash flow from business operations. The Group’s purchases of PPE and intangible assets totaled EUR 0.2 million (EUR 0.2 million).

OPERATIONS BY BUSINESS SEGMENT

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

Services

The Services segment comprises Midas Touch, one of the leading contact center companies in Finland. Midas Touch provides outsourced telephone services, including customer service, help desk services, exchange management, telemarketing and market surveys for the private and public sectors alike.

The Services segment's net sales in Q1/2012 totaled EUR 1.4 million (EUR 1.2 million), up 18.5 percent. The segment’s profit margin was EUR 0.1 million (EUR 0.0 million).

Midas Touch Oy’s net sales saw an increase year-on-year due to the growth in inbound operations and successful telemarketing assignments. Accordingly, the operating profit for the review period saw a favorable development, representing clearly the best quarterly profit during the company’s lifespan in its current configuration.

Systems

The Systems segment comprises Done Logistics, which provides companies with materials handling systems related to their internal logistics, and Done Software Solutions, which provides information systems for internal logistics and inventory management, as well as the related services.

In Q1 2012, the Systems segment’s net sales amounted to EUR 2.4 million (EUR 2.5 million), down 7.2 percent. The segment’s profit margin was EUR -0.6 million (EUR 0.1 million).

Done Logistics’ net sales and profitability saw a pronounced decrease year-on-year. This turn of events was caused by installation work in the Norwegian projects entering its final phase and the poor profitability of the installation phase, and the fact that the company has been unable to obtain new significant orders to replace the Norwegian projects, which are drawing to their end. 

The performance of Done Software Solutions saw favorable development during the period, while its net sales and operating profit grew. The factors contributing to the increase in net sales were the successful acquisition of new customers as well as system development work ordered by existing customers.  In addition to the increase in net sales, great cost-efficiency of operations also contributed to the growth of the operating profit.

Health Care

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

In Q1/2012, the Health Care segment’s net sales amounted to EUR 2.6 million (EUR 2.3 million), up 15.0 percent. The segment’s profit margin was EUR 1.3 million (EUR 1.0 million), representing 50.4 percent (46.1 percent) of net sales.

Year-on-year, the demand for tonometers grew, with growth gaining pace towards the end of the review period. The operating profit for this quarter was the best in the company’s history.

Safety

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

In Q1/2012, the Safety segment’s net sales amounted to EUR 0.6 million (EUR 1.4 million),down 54.6 percent. The segment’s profit margin was EUR 0.0 million (EUR 0.2 million).

Only a small number of orders for boats were in production in Q1, bringing net sales and operating profit clearly down year-on-year.

In February, the company obtained an order for three RIB boats from the Armed Forces of Malta. This order will be delivered in 2012. During Q1, company performed systematic work for international brand development i.e. by means of Volvo Ocean race-related marketing.          

Technology

Representing the Technology segment, FLS Finland is the largest supplier of LED price displays in the Nordic region and Finland’s leading manufacturer of LED information displays and parking guidance systems.

In Q1/2012, the Technology segment’s net sales totaled EUR 0.7 million (EUR 0.4 million), up 52.5 percent. The segment’s profit margin was EUR 0.1 million (EUR 0.0 million).

In a departure from previous years' winter periods, the company carried out several minor-scale price display delivery projects to new and existing European customers. The European distribution network for products was expanded via delivery agreements made with new partners.

Net sales and segment margins for Q1/2012 and Q1/2011, excluding non-recurring items: 

HUMAN RESOURCES

During the period, the number of personnel employed by the Group averaged 251 (246).

At the end of the period, the number of employees was 253 (242).

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 2.1 million).

SHARES, SHARE CAPITAL AND MANAGEMENT HOLDINGS

On March 31, 2012, 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 76,889,730. 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, 2012, the Board of Directors and the President and CEO held 1.6 percent of the company's shares, totaling 1,202,600 shares, and 18.6 percent of the option rights, for a total of 684,365 options.

CHANGES IN SHAREHOLDING

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 to one Revenio Group Corporation share. Against the total number of the company’s shares on March 31, 2012, 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 0.62, Series A); April 1–30, 2009 (EUR 0.27, Series B); and November 1–30, 2010 (EUR 0.26, Series C). No new option rights were distributed to the personnel during the review period.

Series 2007B option rights, a total of 1,000,000 option rights, have been available for trading on the NASDAQ OMX Helsinki exchange since March 30, 2011.

TRADING ON THE NASDAQ OMX HELSINKI

During Q1/2012, Revenio Group Corporation’s turnover on the NASDAQ OMX Helsinki exchange totaled EUR 5.5 million (EUR 4.8 million), representing 12.0 (13.8) million shares or 15.6 (17.9) percent of shares outstanding. The trading high was EUR 0.50 (0.44) and the low EUR 0.41 (0.30). At the end of the review period, the closing price was EUR 0.42 (EUR 0.43), and the average share price was EUR 0.46 (EUR 0.35). Revenio Group Corporation’s market value on March 31, 2012, was EUR 32.3 million (EUR 33.0 million).

ANNUAL GENERAL MEETING AND BOARD AUTHORIZATIONS IN EFFECT

The Annual General Meeting (AGM) held on March 28, 2012 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, 2011.

The AGM re-selected the following persons as members of the Board of Directors: 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 Accountants, 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 2,056,691.01, will be added to retained earnings, and a dividend of EUR 0.02 per share will be paid, totaling EUR 1,531,342.42.

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 7,688,973 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 Section 1 of Chapter 10 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-emptive subscription 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, 2013.

BOARD OF DIRECTORS AND AUDITORS

Since March 28, 2012, 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, Rolf Fryckman, optician, Chairman of the Board of Eyemaker’s Finland Oy, Julia Ormio, Senior Legal Counsel at Foster Wheeler Energy Oy, and Matti Hyytiäinen, M.Econ, Managing Director and CEO of PKC Group Oyj.

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, 2012. 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 2012

Net sales and operating profit for 2012 are forecast to fall in comparison to 2011 figures due to developments at the Systems segment. Operating profit excluding non-recurring items is expected to remain clearly positive.

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. 

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 six independent subsidiaries in five business segments. These subsidiaries are Done Logistics Oy, Done Software Solutions Oy, Icare Finland Oy, Boomeranger Boats Oy, FLS Finland Oy and Midas Touch Oy.