Jukka Harju, CEO

Financial Development in 2014

The net sales grew and operating profit in 2014 improved clearly from the previous year

EB's net sales during 2014 grew by 12.5 per cent year-on-year to EUR 224.1 million (EUR 199.3 million, in 2013). Operating profit was EUR 16.8 million including EUR 1.1 million non-recurring income resulting from the reorganization cases of TerreStar companies, and non-recurring costs of EUR 0.6 million resulting from Wireless Business Segment's personnel layoffs and from the acquisition costs of SafeMove (EUR 8.1 million, in 2013, including the non-recurring cost of approximately EUR 0.8 million resulting from the cost saving measures in the Wireless Business Segment). The growth in net sales and operating profit was mainly due to the good development of the Automotive Business Segment.

Cash flow from operating activities was EUR 10.5 million (EUR 34.7 million, in 2013). Net cash flow was EUR 0.3 million (EUR 28.7 million, in 2013, including non-recurring net cash flow of about EUR 28 million resulting from the sale of the Test Tools product business and the repayment of capital of EUR 14.3 million, distributed in December 2013).

At the end of 2014, equity ratio was 62.3 % (65.1 %, December 31, 2013) and net gearing was -37.4 % (-46.1 %, December 31, 2013).

Cash and other liquid assets at the end of the reporting period were EUR 43.3 million (EUR 43.0 million on December 31, 2013). In July EB signed a EUR 10 million credit facility agreement with Nordea Bank Finland Plc. and a EUR 10 million credit facility agreement with Pohjola Bank Plc. These agreements, intended for general financing purposes, are valid until June 30, 2017. At the end of the review period, EUR 3.0 million of these facilities was in use.

Research and development

The total R&D investments in 2014 were EUR 20.1 million (EUR 18.5 million, in 2013), equaling 9.0% of the net sales (9.3%, in 2013). The share of R&D investments in the Automotive Business Segment was EUR 13.2 million (EUR 14.3 million, in 2013) and in the Wireless Business Segment EUR 6.9 million (EUR 4.2 million, in 2013).

EUR 2.1 million of R&D investments was capitalized (EUR 0.0 million, in 2013), and these capitalizations were R&D investments made in the Wireless Business Segment. The amount of capitalized R&D investments at the end of December 2014 was EUR 12.2 million (EUR 12.0 million, 31.12.2013). A significant part of these capitalized R&D investments is related to customer agreements in the Automotive Business Segment, where future license fees, based on the actual car delivery volumes, are expected to accumulate in the coming years. Depreciations of R&D investments were EUR 1.8 million during the reporting period (EUR 1.6 million, in 2013).

The total negative effect, caused from research and development investments, their capitalizations and their depreciation, on EB´s income statement in 2014 was EUR -19.8 million (EUR -20.1 million, in 2013).

The 2013 figures presented in comparison in this Annual Report include the figures of Continuing Operations only.