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Consolidated Annual Earnings Figures (IFRSs) as of May 31, 2010 / Figures for Q4 2009/2010
Revenues €14,361 thousand / EBITDA €102 thousand / EBIT €-1,130 thousand / Consolidated loss €1,396 thousand / Gross cash flow €-164 thousand / Order backlog €2,409 thousand (+7.9%) / Incoming orders in Q4 +44.6% / Impairment losses impact annual earnings
Fiscal year 2009/2010 closed with EBITDA of €102 thousand (previous year: €2,533 thousand) and EBIT of €-1,130 thousand (previous year: €2,006 thousand). The EBIT margin was -7.9% (previous year: 10.7%).
The consolidated loss before tax amounted to €1,297 thousand, after profit before tax of €1,906 thousand in the previous year. The consolidated loss after tax was €1,396 thousand (previous year: consolidated profit after tax of €1,279 thousand). This corresponds to earnings per share of €-0.21 (previous year: €0.19).
Consolidated equity as of May 31, 2010 amounted to €10,863 thousand, while the equity ratio was 68.7% (previous year: 72.5%). Gross cash flow was €-164 thousand (previous year: €1,806 thousand).
CeoTronics identified a need to charge impairment losses due to current business growth and future prospects at CeoTronics, Inc., U.S.A. As things stand today, CeoTronics, Inc.'s current business growth and prospects for fiscal year 2010/2011 do not appear to be sufficiently positive to support the original planning, due among other things to the fact that the market launch of new products is expected to be put back (as a result of delays in approvals by the U.S. authorities), the training of new sales team members, which is a timeconsuming task for sales management, and the development of a stronger indirect sales channel.
The impairment test performed after completion of the annual planning process has identified a need to charge an impairment loss on the goodwill reported in CeoTronics AG's consolidated financial statements (€643 thousand, of which €28 thousand are currency effects). Moreover, previously recognized deferred tax assets relating to tax loss carryforwards at CeoTronics, Inc. were no longer recognized, impacting earnings by €280 thousand. In addition, the carrying amount of the investment in CeoTronics, Inc. in CeoTronics AG's singleentity financial statements has been written down by €777 thousand and receivables from CeoTronics, Inc. by €1,342 thousand. These impairment losses significantly reduce the risk of future business development related to CeoTronics, Inc.
These onetime factors reduced CeoTronics, Inc.'s profit for fiscal year 2009/2010 by USD 903 thousand, CeoTronics AG's net income reported in its singleentity financial statements by €2,119 thousand, and CeoTronics' IFRS consolidated profit for the period by €923 thousand.
The consolidated order backlog as of the reporting date increased by 7.9% as against the prioryear level to €2,409 thousand. Incoming orders in the fourth quarter of fiscal year 2009/2010 were up 44.6% year-on-year.
The number of employees (including vocational trainees) as of May 31, 2010 was 154 (previous year: 155).
In comparison with Q4 2008/2009, Q4 2009/2010 (March 1 to May 31, 2010) saw a decline in consolidated revenues of €1,317 thousand (-28.2%), from €4,675 thousand to €3,358 thousand, and a decrease in EBIT of €1,295 thousand, from €413 thousand to €-882 thousand. Profit for the quarter was down by €1,198 thousand yearonyear, from €90 thousand to €-1,108 thousand. As a result, quarterly earnings per share declined to €-0.17 (previous year: €0.01).
Issuer's information and explanatory remarks on this ad hoc disclosure:
Fiscal year 2009/2010 was impacted by the effects of the global economic and financial crisis, which while they did not occur immediately were all the more severe, further delays in the switch to digital radio in Germany and Northern Europe, and the calling of a halt to the German Armed Forces project worth a total of approximately €4 million due to budget restraints.
In addition to these unforeseeable external negative influences, CeoTronics faced the expected return to normal of its business in Spain, Switzerland, and the Benelux countries, following the substantial investments made in the switch to digital radio in previous years.
CeoTronics U.S.A.'s operating business recorded a clear upturn. After consolidation and translation from U.S. dollars to euros, CeoTronics U.S.A.'s revenues increased by 125.3% yearonyear. The order backlog rose by 156.1%.
CeoTronics, Inc.'s current business growth and prospects for fiscal year 2010/2011 do not appear to be sufficiently positive to support the original planning, due among other things to the delay that is, unfortunately, likely to occur in the availability of new products - including ones aimed at additional new customer groups - the training of new sales team members, which is a timeconsuming task for sales management, and the development of a stronger indirect sales channel.
As CeoTronics U.S.A.'s balance sheet assets were largely written down as a result of this onetime factor, no material effects are expected on longterm earnings in the coming years due to additional writedowns.
In addition to positive revenue and margin trends, the U.S. dollar exchange rate also had a positive effect on earnings in fiscal year 2009/2010. Without the onetime factor mentioned above, this would have resulted in a profit for the year of USD 16 thousand for CeoTronics U.S.A., a significant improvement on the previous year (USD -232 thousand).
CeoTronics AG continues to see earnings potential in the U.S. market. However, for the reasons given it is taking a more reserved view on the time required to realize this.
"The Board of Management analyzed in detail the order forecasts, project lists, and the order backlog (including orders placed/batches drawn down for the switch to digital radio in Berlin, Thuringia, and Hamburg that will be delivered and invoiced in Q1 and Q2 of fiscal year 2010/2011) and addressed the economic trends and budgetary position of the publicsector customers in CeoTronics' priority markets. The results of this forwardlooking assessment are positive, assuming that no unusual and currently unforeseen circumstances impact our assumptions. It appears sufficiently likely that CeoTronics will be able to significantly increase revenues and generate positive earnings again in fiscal year 2010/2011. Equally, we are currently expecting our business performance in fiscal year 2011/2012 to be positive, with rising revenues and profit for the year. CeoTronics is well positioned for the upturn," said Thomas H. Günther, Chairman of the Board of Management.
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