© Connect Group Electronics Production | August 16, 2011

Connect Group with profit again

Connect Group NV reports 1H/2011 sales of EUR 82.5 million and a profit from operations of EUR 2.7 million. In the comparable period of 2010 sales were 31% lower and there was a loss from operations of EUR 1 million.
As already reported in 2010, sales and results in the first half of 2010 were significantly affected by shortages of components in the market, resulting in lagging sales and production inefficiencies with a corresponding weakening of results. In the second half of 2010, sales stabilized back to normal level (EUR 70.0 million), whilst in the first half of 2011 the company caught up with the backlog to achieve record sales of EUR 82.5 million.

During the first half of 2011, additional provisions of EUR 1.7 million were recorded in respect of client problems from the past. Although it is not yet certain that the claims against these clients are permanently lost, management believes the solutions presented by these clients in recent months to be insufficient and has therefore recorded a provision in the books in the full amount of the estimated risk.

At the end of 2010 only 50 percent of the risk as estimated at the time was recorded. The total amount of the provision at the end of June 2011 therefore amounts to EUR 3.3 million.

Without this extraordinary charge the operating profit for the first half would have been EUR 4.4 million, with a net profit of EUR 3.9 million. The net decrease in financial expenses is attributable to the translation differences. EUR 23k of translation gains were recorded in H1 2011, as against net translation losses of EUR 784k in the first half of 2010. This is due to the changes in the exchange rates of the Czech Koruna, Romanian Lei and the U.S. Dollar.

The company won a tax dispute dating back to 2007, making a tax provision of EUR 310k redundant.

The order book at the end of the second quarter amounted to EUR 72.0 million, compared with EUR 71.2 million at the end of 2010.

Half-year data

- Sales of EUR 82.5 million compared with EUR 62.8 million in 2010.
- Profit from operations of EUR 2.7 million compared with loss from operations of EUR 1.0 million in 2010.
- Net profit of EUR 2.2 million compared with net loss of EUR 1.6 million in 2010.

2nd quarter data

- Sales of EUR 39.3 million (EUR 30.6 million in Q2 2010).
- Profit fom operations of EUR 1.4 million compared with loss from operations of EUR 0.9 million in Q2 2010.
- Net profit of EUR 1.2 million compared with net loss of EUR 0.8 million in Q2 2010.
- Order book of EUR 72 million at end of Q2 2011 (EUR 73 million end-Q1 2011).
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