CeoTronics Interim Report 2006/2007. Consolidated interim report CeoTronics AG for the first three quarters 1 / 12

Transcription

1 CeoTronics Interim Report 2006/2007 Consolidated interim report CeoTronics AG for the first three quarters 1 / 12

2 1. Business Report Dear Shareholders, Ladies and Gentlemen, CeoTronics increased its consolidated revenues by 4.3% to a record 14,036 thousand in the first nine months of fiscal year 2006/2007, placing it within reach of its target consolidated annual revenues of 18.2 million in fiscal year 2006/2007. This improvement in revenues is due among other things to continued government investment in digital radio technology in Spain (+61.7%) and France (+29.6%). CT Video GmbH increased its consolidated revenues by a substantial 28.7%. The high level of revenues in the German market could not be maintained in the first nine months of fiscal year 2006/2007 (-5.4%). The planned investments in the switch to digital radio (expected launch in late 2007/early 2008) have led to temporary downturn in spending by German law enforcement customers. Revenue levels in Switzerland returned to normal as of February 28, 2007 at 35.9%. However, the high order backlog (+287.4%) confirms our assumption in the 2006/2007 half-yearly report that the country s government security and law enforcement agencies will continue the switch to digital radio in Revenues in United Kingdom rose by 15.9% year-on-year in the period under review. In Poland and the U.S.A., revenues fell from a low level by 15.9% and 28.4% respectively. As a result of the optimization of its cost structure, lower depreciation, amortization, and impairment losses, and higher sales prices, CeoTronics U.S.A. reduced its losses for the nine-month period by 58.1% year-on-year. CeoTronics U.S.A. s current revenues, cost, and earnings forecasts for the next six years do not dictate any further adjustments of goodwill and the carrying amount of the investment at present. The consolidated order backlog as of February 28, 2007 fell by 15.9% as against the record level in the previous year. The order backlog is the second highest in the Company s history. EBITDA (Earnings before Interest, Taxes, Depreciation and goodwill Amortization/impairment) increased by 190 thousand (+10.3%) compared with the Group s prior-year Q1-3 figure, from 1,845 thousand to 2,035 thousand; EBIT improved by 244 thousand (+17.3%) in the same period, from 1,411 thousand to 1,655 thousand; and the profit after tax for the first nine months rose by 197 thousand (+25.4), from 776 thousand in the previous year to 973 thousand. Gross cash flow increased by 143 thousand (+11.8%) year-on-year in the ninemonth period under review, from 1,210 thousand to 1,353 thousand. Investments rose by 2,599 thousand as against the previous year, from 267 thousand to 2,866 thousand. Even excluding real estate investments (which totaled 2,590 thousand including transaction costs), the level is somewhat higher than in the previous year. 2 / 12

3 The Group's extremely high equity ratio fell from 74.9% to 67.6%. The change is due in part to the real estate acquisition. The consolidated key figures (IFRSs, unaudited) for the first nine months of fiscal year 2006/2007 in comparison to the previous year were as follows: Revenues +4.3% -1.3% Cost of sales R&D expenses +22.3% Selling and marketing expenses +0.3% General and administrative expenses +14.4% The decrease in the cost of sales was besides others due changes in the order structure, and the optimized production processes. The reduction in write-downs on inventories also contributed positively to this development. The trend in research and development expenses reflects the increased effort involved in developing new products and modifying existing technologies increased expenditures for external laboratory services, and increased personnel capacity. Selling and marketing expenses remained stable year-on-year. However, CeoTronics anticipates increased expenses in the fourth quarter of the current fiscal year, for example for participation at trade fairs that either took place earlier in fiscal year 2005/2006, or not at all. Administrative expenses increased, primarily as a result of rising employee expenses and personnel capacity, as well as higher listing expenses and increased IR activities. The CeoTronics Croup employs a total of 147 staff (+3). The proportion of vocational trainees at CeoTronics AG and CT-Video GmbH in Germany was 5.4%. At +13.6%, CeoTronics' share price performed positively in the period under review (June 1, 2006 to February 28, 2007). The Board of Management is satisfied with the Company's results for the first nine months and would like to thank the Company's employees for their achievements to date. 3 / 12

4 On April 2, 2007, CeoTronics announced its largest single order to date in an ad hoc disclosure. The German Armed Forces awarded an order to CeoTronics to supply a total of approximately 3,700 CT noise protection helmets with the accompanying communication technology, comprising the CT ContactCom (cranial microphone) and the CT-DECT digital radio system, worth approximately 5.5 million. CeoTronics plans to deliver and invoice approximately 2,000 of these CT-DECT JetCom systems (worth approximately 3.0 million) in fiscal year 2007/2008. The approximately 1,700 remaining systems from the order described above are expected to be delivered and invoiced by the end of September 2008, and thus in fiscal year 2007/2008. As of April 2, 2007, the order backlog had risen by 134% year-on-year as a result of this order. The order backlog is at its highest level by far since CeoTronics was established. CeoTronics is prepared for the smooth completion of the order, so that all other orders can be produced and delivered on schedule. The tender won by CeoTronics also includes the option for a further approximately 2,200 systems. In the event that the German Armed Forces exercises this option during calendar year 2009, the entire order volume would increase by approximately 3.3 million to approximately 8.8 million. The outlook for fiscal year 2007/2008, which begins on June 1, 2007, is positive due to the planed part-deliveries under this major order, among other things. CeoTronics expects business to continue its positive trend in fiscal year 2008/2009 due to the aforementioned delivery of the remaining CT-DECT JetCom systems to the German Armed Forces and e.g. expected investments by German law enforcement customers in communications accessories for the new digital radios. Rödermark, April 13, 2007 Thomas H. Günther Chairman of the Board of Management and Chief Executive Officer Berthold Hemer Deputy Chairman of the Board of Management and Chief Technology Officer Günther Thoma Member of the Board of Management Chief Operating Officer 4 / 12

5 2. Consolidated Balance Sheet (IFRS) Assets Quarterly Report (closing date of the current quarter) February 28, 2007 Annual Report (closing date of last annual report) May 31, 2006 thousand thousand Current assets Cash and cash equivalents 1,202 2,376 Trade receivables 3,810 2,571 Inventories 3,871 3,754 Other current assets Total current assets 9,541 8,930 Noncurrent assets Property, plant, and equipment 5,696 3,262 Intangible assets Goodwill 1,329 1,364 Noncurrent financial assets 0 0 Deferred tax assets Total noncurrent assets 7,653 5,341 Total assets 17,194 14,271 Equity and Liabilities Quarterly Report (closing date of the current quarter) February 28, 2007 Annual Report (closing date of last annual report) May 31, 2006 thousand thousand Current liabilities Current financial liabilities Trade payables Advance payments received Provisions 1, Current tax payables Other current liabilities Total current liabilities 3,223 2,499 Noncurrent liabilities Noncurrent financial liabilities 2, Total noncurrent liabilities 2, Equity Subscribed capital 6,600 6,600 Capital reserves 4,471 4,471 Retained earnings Cumulative other recognized income and expense Net retained profit Equity attributable to shareholders of CeoTronics AG 11,566 11,300 Minority interest Total equity 11,615 11,343 Total equity and liabilities 17,194 14,271 5 / 12

6 3. Consolidated Income Statement (IFRS) Income Statement Quarterly Report (current quarter) Quarterly report (comparative quarter of previous year) Year-to-date (current fiscal year) Year-to-date (comparative period of previous year) June 1, February 28, 2006 June 1, 2007-February December 1, February 28, 2007 December 1, February 28, , 2007 thousand thousand thousand thousand Revenues 4,705 5,349 14,036 13,460 Cost of sales -2,318-3,116-6,948-7,037 Gross profit 2,387 2,233 7,088 6,423 Selling and marketing expenses -1,107-1,067-3,071-3,062 General and administrative expenses ,213-1,060 Research and development expenses , Other operating income and expenses Impairment of goodwill Operating profit (EBIT) ,655 1,411 Interest income/expense Profit before tax ,608 1,389 Income tax expense Consolidated profit Consolidated profit attributable to: Minority interest Shareholders of CeoTronics AG Earnings per share (basic) in Earnings per share (diluted) in Weighted average shares outstanding (basic) 2,199,998 2,199,998 2,199,998 2,199,998 Weighted average shares outstanding (diluted) 2,199,998 2,199,998 2,199,998 2,199,998 6 / 12

7 4. Consolidated Cash Flow statement (IFRS) Cash Flow Statement Year-to-date Year-to-date (current fiscal year) (comparative period of previous June 1, 2006-February 28, 2007 year) June 1, 2005-February 28, 2006 thousand thousand Cash flow from operating activities Profit before tax 1,608 1,389 Income tax expense Consolidated profit Depreciation, amortization, and impairment losses Gross cash flow 1,353 1,210 Changes in assets and liabilities Change in trade receivables -1,239-1,176 Change in inventories Change in other assets Change in trade payables Change in advance payments received Change in other provisions Change in tax payables Change in other current liabilities Change in deferred tax liabilities Total changes in assets and liabilities Net cash provided by operating activities 390 1,327 Cash flow from investing activities Payments to acquire intangible assets Payments to acquire property, plant, and equipment -2, Change in noncurrent financial assets 0 6 Change in foreign currency differences Disposal of noncurrent assets (net carrying amounts) 51 1 Net cash used in investing activities -2, Cash flow from financing activities Change in current financial liabilities Change in noncurrent financial liabilities 1,927-6 Dividend payment to minority interest Dividend payment to shareholders of CeoTronics AG Net cash provided by/used in financing activities 1, Change in cash and cash equivalents -1, Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of period 2,376 2,243 Cash and cash equivalents at end of period 1,202 2,529 7 / 12

8 5. IFRS Statement of Changes In Equity Equity attributable to shareholders of CeoTronics AG Subscribed Capital Retained Net retained Cumulative Total Minority Total equity capital reserves earnings profit/net accumulated losses other recognized income and expense interest thousand thousand thousand thousand thousand thousand thousand Current year Balance at May 31, ,600 4, , ,343 Consolidated profit Dividend distribution Currency translation adjustments Change in minority interest Balance at February 28, ,600 4, , ,615 Previous year's figures for comparison Balance at May 31, ,600 4, , ,819 Consolidated profit Dividend distribution Currency translation adjustments Change in minority interest Balance at February 28, ,600 4, , ,160 The equity ratio of the CeoTronics Croup was 67.6% as of February 28, 2007 (previous year: 74.9%).This decrease can be attributed in particular to the real estate acquisition, which was partially funded by debt. There were no material changes to equity and stock option plans compared with the last annual financial statements. 6. Notes to the Consolidated Report of CeoTronics AG on the First Nine Months Ended February 28, 2007 The unaudited consolidated quarterly report of CeoTronics AG as of February 28, 2007 was prepared in accordance with the International Financial Reporting Standards (IFRSs). This interim report complies with IAS 34 Interim Financial Reporting. The quarterly report was prepared using the accounting, measurement and consolidation principles applied in the preparation of the consolidated annual financial statements as of May 31, Further details can be found in the Annual Report for fiscal year 2005/2006. As of November 1, 2006, the Company acquired a property it had previously been renting, together with an adjacent car park, in Rödermark. The purchase price totaled 2,490 thousand. To finance the acquisition, the Company took out a loan in the amount of 2,100 thousand as of November 1, The amount of 390 thousand exceeding the financing was financed out of the Company's own funds. The loan agreed provides for annual redemption of 4%; the interest rate is fixed for 10 years. The remaining amount of the loan as of February 28, 2007 is 2,072 thousand. The proportion attributable to current financial liabilities is 87 thousand; the remaining amount of 1,985 thousand was classified as noncurrent financial liabilities. 7. Consolidated Segment Reporting The Company assesses the performance of the subsidiaries on the basis of their pre-tax profit. The accounting and reporting principles used for regional reporting comply with the group accounting principles. The subsidiaries in the individual countries are legally independent and have their own management teams. The Company's product groups are comparable in terms of both the production process used and the marketing methods. Internal and external reporting primarily follows geographic criteria. The information below is presented by region. 8 / 12

9 Revenues for the first nine months of 2006/2007 and 2005/2006 fiscal years are attributable as follows: Country of origin (primary segment): Q /2007 Q /2006 Revenues thousand thousand Germany 6,750 6,731 Rest of Europe 7,020 6,353 Rest of world Third-party revenues 14,036 13,460 By customer country (secondary segment): Q /2007 Q /2006 Revenues thousand thousand Germany 4,082 5,286 Rest of Europe 9,557 7,753 Rest of world Third-party revenues 14,036 13,460 The profit or loss for the first nine months of fiscal years 2006/2007 and 2005/2006 is attributable as follows to the subsidiaries in the various regions: Q /2007 Q /2006 Profit/loss thousand thousand Germany Rest of Europe Rest of world Consolidated profit Segment assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of February 28, 2007 and February 28, 2006: February 28, 2007 February 28, 2006 Segment assets thousand thousand Germany 10,579 8,767 Rest of Europe 5,022 4,378 Rest of world 1,593 1,661 Total segment assets 17,194 14,806 Segment liabilities are attributable as follows to the subsidiaries in the various regions (primary segment) as of February 28, 2007 and February 28, 2006: February 28, 2007 February 28, 2006 Segment liabilities thousand thousand Germany 4,633 2,910 Rest of Europe Rest of world 38 8 Total segment liabilities 5,579 3,648 Noncurrent assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of February 28, 2007 and February 28, 2006: February 28, 2007 February 28, 2006 Noncurrent assets thousand thousand Germany 5,746 3,169 Rest of Europe Rest of world Total noncurrent assets 7,216 4,765 9 / 12

10 Investments in the first nine months of fiscal years 2006/2007 and 2005/2006 are attributable to the subsidiaries in the various regions (primary segment) as follows: Q /2007 Q /2006 Investments thousand thousand Germany 2, Rest of Europe Rest of world 0 0 Total investments 2, Depreciation, amortization, and impairment losses are attributable as follows to the subsidiaries in the various regions (primary segment) in the first nine months of fiscal years 2006/2007 and 2005/2006: Q /2007 Q /2006 Depreciation, amortization, and impairment losses thousand thousand Germany Rest of Europe Rest of world Total depreciation, amortization, and impairment losses Reportable Securities Holdings Reportable securities holdings as of February 28, 2007 Board of Management CeoTronics shares (ISIN DE /WKN ) (quantity) Virtual CeoTronics stock options (quantity) Chairman Thomas H. Günther 9,498 2,000 Chief Technology Officer Berthold Hemer 171,050 2,000 Chief Operating Officer Günther Thoma 6,022 2,000 Supervisory Board Chairman Hans-Dieter Günther 371,200 0 Deputy Chairman Horst Schöppner 218,470 0 Member of Supervisory Board Stephan Haack 0 0 The total number of CeoTronics AG shares at the reporting date amounted to 2,199,998. Dividends amounting to 659, were paid in the period under review in accordance with the resolution by the General Meeting on November 3, / 12

11 9. CeoTronics Shares CEOTRONICS AG O.N. TECDAX (PERFORMANCEINDEX) TECHN. ALL SHARE P-IN CeoTronics shares in comparison to indices since June 1, 2006 (indexed) ISIN DE /WKN Source: At +13.6%, CeoTronics AG'S share price performed positively in the period under review. After adjustment for the dividend of 0.30 paid in the reporting period, the increase amounts to 17.9%. The share price remained substantially behind expectations and, in our view, does not reflect the revenue and earnings trends in the current fiscal year 2006/2007. The latest study by German Business Concepts GmbH dated January 2007 calculated a fair value of for CeoTronics shares. The current share price (April 12, 2007) of 8.00 (Xetra) therefore offers long-term investors attractive growth potential. If business continues to develop positively and the revenues and earnings targets are met, the Board of Management plans to propose a dividend for the fourth consecutive time. 10. Changes in the Consolidated Croup Structure There were no changes in the consolidated Group structure in the first six months of fiscal year 2006/2007. The following companies are included in the consolidated financial statements: CeoTronics AG (Rotkreuz, Switzerland), CeoTronics Sarl (Brie Comte Robert, France), CeoTronics Ltd. (Bestwood Village, Nottingham, United Kingdom), CeoTronics Inc. (Virginia Beach, U.S.A.), CeoTronics S.L (Madrid, Spain), CT-Video GmbH (Lutherstadt Eisleben, Germany), AACOM-CeoTronics Sp.z.o.o. (Lodz, Poland). Subsidiaries in which the parent directly or indirectly holds the majority of shares and hence of the voting power are consolidated in accordance with the principles of acquisition accounting under IFRSs. We account for the 25% minority interest in AACOM-CeoTronics Sp.z.o.o. by deducting the minority interest and the resulting effects on profit or loss within equity in the balance sheet, in the income statement, the cash flow statement, and the statement of changes in equity. 11 / 12

12 11. Changes in the Company's Executive Bodies There were no changes in the Company's executive bodies in the first six months of 2006/ Current Financial Calendar (as of April 13, 2007) End of fiscal year 2006/2007 Thursday, May 31, 2007 Preliminary publication of revenue and order backlog of fiscal year 2006/2007 Report on Q4 and annual financial statements 2006/2007 Calendar week 23 Friday, August 17, 2007 Annual earnings press conference 2007 Thursday, August Analyst meeting 2007 Thursday, August 30, 2007 Preliminary publication of revenue and order backlog after 3 months of fiscal year 2007/2008 Calendar week 36 Report on Q1 2007/2008 Friday, October 12, 2007 General Meeting 2007 Friday, November 2, 2007 Preliminary publication of revenue and order backlog after 6 months of fiscal year 2007/2008 Calendar week 49 Report on Q2 2007/2008 Friday, January 11, Events after the Balance Sheet Date February 28, 2007 The German Armed Forces awarded an order to CeoTronics to supply a total of approximately 3,700 CT-DECT JetCom systems (worth approximately 5.5 million), comprising the new CT noise protection helmet, the CT-DECT digital radio, and the CT-ContactCom. These CT-DECT JetCom systems are used during ground handling, takeoff preparation, and maintenance of military aircraft, such as the Eurofighter and Tornado. Without this internally developed CT system, the ground personnel involved in this work process would not be sufficiently protected against noise (up to approximately db (A)140), and would be unable to maintain the necessary voice communication. CeoTronics AG Adam-Opel-Str Rödermark (Germany) Tel Fax investor.relations@ceotronics.com 12 / 12