REVENIO GROUP CORPORATION INTERIM REPORT Q1-Q2/2011

Revenio Group Corporation
Stock Exchange Release                   August 8, 2011 at 9.00 a.m.

REVENIO GROUP CORPORATION INTERIM REPORT Q1–Q2/2011

- Significant growth in operating profit and cash flow from operating activities

Q1–Q2/2011

- Consolidated net sales came to EUR 18.3 million (EUR 13.0 million), up 40.6%

- Consolidated operating profit/loss (EBIT) EUR 2.3 million
(EUR -0.6 million), or 12.4 (-4,8)% of net sales

- Pre-tax profit EUR 2.1 million (EUR -0.6 million)

- Diluted and undiluted earnings per share EUR 0.021 (-0.006)

- Cash flow from operating activities EUR 2.1 million (EUR 0.4 million)

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

- The Health Care segment developed robustly, almost doubling its operating profit from the previous year

- The Systems and Safety segments also saw strong profit improvement on the reference period

- Midas Touch’s result turned distinctly positive during the period

-Done Information was classified in assets  available-for-sale, and was sold later after the reporting period, with a non-recurring capital gain of approximately EUR 1,5 million to be recorded in third qurter result

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

Q2/2011

- Consolidated net sales came to EUR 9.5 million (EUR 6.4 million), up 48.4%

- Consolidated operating profit/loss (EBIT) EUR 1.3 million
(EUR -0.4 million), or 13.2 (-5.5)% of net sales

Statement by President and CEO Olli-Pekka Salovaara:

“The first half of the year proved to be highly successful for Revenio Group. We attained a profitable operating profit/loss (EBIT) clearly in the black in all of our business areas, with many operations achieving notable profit improvements. Of our companies, Icare Finland developed particularly positively, almost doubling its operating profit year-on-year. Midas Touch’s result turned positive during the period, as a result of operational restructuring carried out late last year, and it is showing promising development within its chosen customer segments and operations.

Done Logistics’ projects in Norway are going through intense installation phases, which translated into clear growth of the company’s net sales and profitability. For Boomeranger Boats, the first half of the year was one of the best ever.

For FLS Finland, while the early part of the year was poor, demand recovered towards the middle of the year. Done Software Solutions developed evenly, maintaining its sound profit level.

During the period in question, Done Information was classified as a available-for-sale- operation and it was sold in July to Swedish conglomerate Semantix Corporation. During the period, Done Information had improved its profit performance over the previous year.

The improvement in business was clearly reflected in all of our key figures. Our high equity ratio and low gearing create a sound basis for further development of business.”

MARKET SITUATION

In the period under review, the market situation within the Group’s segments was better than in the reference period in the previous year.

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

The Health Care segment enjoys a positive market situation. The segment has several growing export markets and its products are highly competitive. In the market, we are facing intense price competition from other equipment manufacturers representing technologies for measuring intraocular pressure.

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 boats manufactured by the company. The prevalent uncertain outlook in traditional European markets is bringing uncertainty to the market situation.

The Technology segment’s market situation improved as the period wore on, and a similar trend is expected to continue. Demand, however, remains at a low level.

For the Systems segment, no changes in the market situation is in sight, although the companies’ traditional clientele are issuing slightly more invitations to tender than last year.

For segments operating on a project basis, continuing this period’s financial performance into 2012 will require major additional orders throughout the remainder of 2011.

NET SALES, PROFITABILITY AND PROFIT

Done Information, in services segment, was classified in available-for-sale-operations .This report presents net sales and profit information separately  for continuing and available-for-sale-operations in accordance with IFRS 5.

Consolidated net sales of Revenio Group’s continuing operations during Q1–Q2/2011 totaled EUR 16.3 million (EUR 11.2 million), representing an increase of 44.6%. For Q2, consolidated net sales of continuing operations came to EUR 8.5 million (EUR 5.5 million), up 54.3%.

In Q1–Q2, earnings before interest, taxes, depreciation and amortization (EBITDA) of continuing operations amounted to EUR 2.5 million (EUR −0.2 million), or 15.4 (-1.4)% of net sales. Consolidated operating profit/loss (EBIT) of continuing operations amounted to EUR 2.1 million (EUR -0.7 million), or 13.1 (-6.1)% of net sales. Pre-tax profit of continuing operations was EUR 2.0 million (EUR -0.7 million), or 12.3 (-5.9)% of net sales. For continuing operations, net profit was EUR 1.4 million (EUR -0.5 million) for Q1–Q2/2011 and EUR 0.8 million (EUR -0.4 million) for Q2/2011, representing 9.6 (-4.5)% of net sales.

For available-for-sale-operations, net sales in Q1-Q2 came to EUR 2.0 (1.8) million and net profit was EUR 0.1 million (EUR 0.1 million). In Q2, net sales came to EUR 1.1 million (EUR 1.0 million) and net profit to EUR 0.1 million  (EUR 0.0 million)

In Q1–Q2/2011, undiluted and diluted earnings per share came to EUR 0.019 (-0.007) for continuing operations and EUR 0.002 (0.001) for discontinued operations. Equity per share was EUR 0.19 (0.19).

The Group grew its net sales year-on-year. This growth was mainly driven by the Health Care, Systems and Safety segments. The Group’s profitability improved markedly, particularly due to higher net sales in Health Care and Systems, as well as enhanced operations in Midas Touch, which thus succeeded in the lowering of its cost level significantly in comparison with the reference period.

BALANCE SHEET, FINANCIAL POSITION AND INVESTMENTS

The consolidated balance sheet total on June 30, 2011 was EUR 25.2 million (EUR 24.8 million). Shareholders' equity came to EUR 14.6 million (EUR 14.5 million). At the end of the period, interest-bearing net liabilities amounted to EUR 0.3 million (EUR 1.8 million) and gearing stood at 1.9 (12.3)%. The consolidated equity ratio was 61.2 (60.4)%. The Group’s liquid assets were EUR 1.9 million (EUR 1.8 million) at the end of the 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 operating activities amounted to EUR 2.1 million (EUR 0.4 million) in Q1–Q2/2011 and EUR -0.3 million (EUR 0.1 million) in Q2/2011.

The Group's purchases of PPE and intangible assets totaled EUR 0.3 million (EUR 0.2 million).

OPERATIONS BY BUSINESS SEGMENT

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

Services

The Service segment's net sales in Q1-Q2 totaled EUR 2.4 million (EUR 3.8 million), down by 35.5%. The segment’s profit margin was EUR 0.1 million (EUR -0.8 million). For Q2, net sales amounted to EUR 1.2 million (EUR 1.8 million), while the profit margin was EUR 0.1 million (EUR -0.4 million).

Midas Touch’s net sales decreased in relation to the previous year. However, as its costs simultaneously reduced, the company’s EBIT improved markedly and turned positive. This profit performance was driven by the adjustment and restructuring measures conducted in the fall of 2010, involving the centralization of operations into two offices and a slightly improved market situation. Furthermore, 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, which provides companies with materials-handling systems associated with their internal logistics, and Done Software Solutions, providing information systems for internal logistics and inventory management, as well as the related services. Done Software Solutions launched operations as an independent company on May 1, 2010, as a result of the partial demerger of Done Logistics. 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-Q2/2010, the Systems segment’s net sales amounted to EUR 5.7 million (EUR 2.0 million), up 184.0%. The segment’s profit margin was EUR 0.5 million (EUR -0.3 million). For Q2, net sales amounted to EUR 3.2 million (EUR 0.8 million), while profit margin was EUR 0.3 million (EUR -0.2 million).

Done Logistics markedly 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 too was able to increase both its net sales and operating profit/loss (EBIT) during the period. Thanks to sound 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-Q2/2010, the Health Care segment’s net sales amounted to EUR 4.4 million (EUR 3.2 million), up 37.5%. The segment’s profit margin was EUR 1.9 million (EUR 1.0 million). For Q2, net sales amounted to EUR 2.2 million (EUR 1.5 million), while profit margin was EUR 0.9 million (EUR 0.5 million).

Demand for tonometers grew year-on-year and was strong in all major export markets and mainly based on first-generation products. For the moment, obtaining sales licenses in the USA has progressed more slowly than expected due to amended FDA regulations concerning the product area.

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-Q2/2010, the Safety segment’s net sales amounted to EUR 2.6 million (EUR 1.6 million), up 63.1%. The segment’s profit margin was EUR 0.4 million (EUR 0.1 million). For Q2, net sales amounted to EUR 1.2 million (EUR 0.9 million), while the profit margin was EUR 0.2 million (EUR 0.0 million).

During the period, several new boat orders were manufactured within a short delivery time. Productivity in short production series was higher than before, which resulted into a notably higher profitability. Systematic efforts were continued 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

FLS Finland (previously 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.

In Q1−Q2, net sales for the Technology segment totaled EUR 1.1 million (EUR 0.7 million), up 63.1%. The segment’s profit margin was EUR 0.0 million (EUR -0.1 million). For Q2, net sales came to EUR 0.7 million (EUR 0.4 million), while the profit margin was
EUR 0.06 million (EUR -0.03 million).

The segment’s net sales grew year-on-year. Order quantities, however, remained minor. 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. 

 For the Group’s continuing operations, net sales, segment profit margin and operating profit/loss (EBIT) by quarter were as follows:

HUMAN RESOURCES

During the period, the number of personnel employed by the Group averaged 252 (353) in continuing operations and 37 (37) in the available-for-sale operations. At the end of the period, the number of employees was 257 (347) in continuing operations and 39 (37) in the available-for-sale operations.

By segment, the number of personnel in the continuing operations during the period averaged:  

Wages, salaries and other remuneration paid in continuing operations during the review period totaled EUR 4.3 million (EUR 5.1 million).

SHARES, SHARE CAPITAL AND MANAGEMENT HOLDINGS

On June 30, 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 June 30, 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 June 30, 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 148,122 Series 2007B option rights and a total of 1,000,000 Series 2007C option rights were issued to personnel during the period between the beginning of the year and this interim report release. After the reporting period, The Board of Directors decided to amend the incentive plan for the company’s President and CEO Olli-Pekka Salovaara. It was determined that a total of 228,122 Series 2007A options held by the President and CEO were to be returned to the company and that, correspondingly, a total of 73,122 Series 2007B options and 155,000 Series 2007C options were to be allocated to the President and CEO. By the release date of this report, the company’s key personnel held a total of 1.081.243 Series 2007A options, a total of 908,122 Series 2007B options and a total of 1,000,000 Series 2007C 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–Q2/2011, Revenio Group Corporation's turnover on the NASDAQ OMX Helsinki exchange totaled EUR 9.1 million (EUR 3.6 million), representing 22.6 (10.6) million shares or 29.4 (13.8)% of shares outstanding. The trading high was EUR 0.62 (0.38) and the low EUR 0.30 (0.28). At the end of the review period, the closing price was EUR 0.53 (0.29), and the average share price EUR 0.40 (0.34). Revenio Group Corporation’s market value on June 30, 2011, was EUR 40.7 million (EUR 22.2 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 decided to re-elect PricewaterhouseCoopers Oy, Authorized Public Accountants, as the company’s auditor, 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 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-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,M.Econ, 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’s major business risks and uncertainties are presented in its financial statements bulletin of February 16, 2011. There are no other changes in said risks than increased trade cycle risk due to the recent development in financial markets and a threath of an economic recession. 

MAJOR EVENTS AFTER THE PERIOD

On July 19, 2011, the company sold all shares of its Service segment subsidiary Done Information to Semantix Lingua Nordica Oy, a part of Swedish conglomerate Semantix Corporation, for EUR 2.5 million. A total of EUR 0.3 million of the sale price will be paid following the fulfillment of specified earn-out terms in 2012. Of the divestment, the company records a non-recurring capital gain of approximately EUR 1.5 million in its Q3/2011 result.

On July 20, 2011, the company’s number of shares increased by 50,000 as a result of share subscriptions based on 2007B options. The subscription price was recognized in full in the invested unrestricted equity fund. Following this increase, the number of the company’s shares is 76,889,730.

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.

THIS INTERIM REPORT HAS BEEN PREPARED IN ACCORDANCE WITH IAS 34.

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.