Annual Report • Feb 27, 2012
Annual Report
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Danionics A/S
Danionics A/S Dr. Tværgade 9, 1. 1302 Copenhagen K Telephone: +45 88 91 98 70 Telefax: +45 88 91 98 01 E-mail: [email protected] Web site: www.danionics.dk VAT No.: DK-71 06 47 19
The English version is provided by convenience only. In case of discrepancy, the Danish version shall prevail.
| Company information | 2 |
|---|---|
| Letter from the Chairman | 3 |
| Management's report: | |
| Financial highlights | 4 |
| Management's report | 5 |
| Risk factors | 8 |
| Corporate Governance Statement | 10 |
| Corporate Governance | 11 |
| Shareholder information | 12 |
| Financial review | 14 |
| Statement by the Management Board and the Board of Directors | 16 |
| Independent auditors' report | 17 |
| Financial statements | |
| Income statement | 19 |
| Statement of recognised income and expense | 19 |
| Balance sheet at 31 December | 20 |
| Statement of changes in equity | 22 |
| Cash flow statement | 23 |
| Notes to the financial statements | 24 |
| The company: | Danionics A/S Dr. Tværgade 9, 1. DK-1302 Copenhagen K Tel: +45 88 91 98 70 Fax: |
+45 88 91 98 01 | Auditors: | KPMG, Statsautorseret Revisionspartnerselskab Osvald Helmuths Vej 4 DK-2000 Frederiksberg |
|---|---|---|---|---|
| Website: E-mail: |
www.danionics.dk [email protected] |
Bankers: | Nordea Bank Danmark A/S Vesterbrogade 8 DK-0900 Copenhagen C |
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| CVR No.: Financial year: Reg. office: |
71 06 47 19 1 January – 31 December City of Copenhagen |
Registrar: | ComputerShare A/S Kongevejen 418 DK-2840 Holte |
|
| Board of Directors: | Karsten Borch, Chairman Frank Gad Henrik Ottosen Edward Lam |
Legal advisers: | Dahl Lawfirm Lundborgvej 18 DK-8800 Viborg |
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| Management: | Henning O. Jensen | |||
| Annual General Meeting: | 20 March 2012, at 10.00 am at | Dansk Arkitektur Center, Strandgade 27 B, 1401 Copenhagen K. |
Last year I wrote that the Board towards the end of 2010 felt time was running out for Danionics. We discussed how much longer we should maintain our efforts to save the Company.
I also explained that we early March 2011 in Hong Kong met with our good partners through many years, who convinced us to give it one more chance.
Our partners later confirmed their belief in the Company's future by subscribing all shares in a directed emission for Danionics A/S in April 2011.
And during the spring of 2011 the news were good. Optimism spread and we thought we finally might see a positive outcome on what been a hard, long slug.
But as so often before we were disappointed.
In the third quarter it all collapsed and the downturn continued during the fourth quarter.
The start of 2012 has not shown any signs of improvement.
Whilst our partners are still constructively seeking ways to improve the situation in the joint venture, we must realise that a bit of a miracle is necessary to save the situation.
The Board has therefore decided in parallel with our partners efforts, in order to try to safeguard parts of the shareholders values, to seek a sale of the Company's registration on the Stock Exchange.
Karsten Borch Chairman of the Board
| IFRS | ÅRL | ||||
|---|---|---|---|---|---|
| DKK '000 (except for financial ratios) | 2011 | 2010 | 2009 | 2008 | 2007 |
| Income statement | |||||
| Revenue | 1,678 | 325 | 219 | 54 | 0 |
| Production costs | -1,600 | -309 | -208 | -51 | 0 |
| Gross profit/(loss) | 78 | 16 | 11 | 3 | 0 |
| Administrative expenses, net | -2,765 | -4,593 | -3,038 | -2,911 | -2,776 |
| Operating profit/(loss) | -2,687 | -4,577 | -3,027 | -2,908 | -2,776 |
| Write down relating to joint venture | -337 | -5,605 | -3,020 | -8,122 | -32,029 |
| Net financials | 45 | 28 | 188 | 702 | 930 |
| Profit/(loss) before tax | -2,979 | -10,154 | -5,859 | -10,328 | -33,875 |
| Tax on profit/(loss) for the year | 0 | 0 | 0 | 0 | 0 |
| Net profit/(loss) for the year | -2,979 | -10,154 | -5,859 | -10,328 | -33,875 |
| Cash flow statement: | |||||
| Cash flows regarding operating activities | -3,002 | -3,248 | -2,917 | -3,107 | -8,787 |
| Cash flows regarding investing activities | -337 | -5,605 | -3,020 | -8,118 | -23,005 |
| Cash flows regarding financing activities | 4,134 | 4,812 | 0 | 0 | -425 |
| Balance sheet: | |||||
| Total assets | 3,574 | 2,679 | 7,733 | 13,568 | 24,862 |
| Investment in joint venture | 0 | 0 | 0 | 0 | 0 |
| Cash | 3,432 | 2,637 | 6,678 | 12,615 | 23,840 |
| Short-term liabilities | 430 | 690 | 402 | 378 | 1.344 |
| Share capital | 16,894 | 15,360 | 13,965 | 13,965 | 13,965 |
| Equity | 3,144 | 1,989 | 7,331 | 13,190 | 23,518 |
| Capital investments: | |||||
| Non-current financial assets | 337 | 5,605 | 3,020 | 8,118 | -20,264 |
| Total capital investments | 337 | 5,605 | 3,020 | 8,118 | -20,264 |
| Depreciation, amortisation and impairment, | |||||
| non-current assets | 0 | 0 | 0 | 0 | 0 |
| Financial ratios: | |||||
| EBITDA margin (%) | - | - | - | - | - |
| EBIT margin (%) | - | - | - | - | - |
| Equity ratio (%) | 88.0 | 74.2 | 94.8 | 97.2 | 94.6 |
| Return on equity (%) | -116.1 | -217.9 | -31.9 | -56.3 | -83.3 |
| Net earnings per share (EPS) (DKK) | -0.18 | -0.68 | -0.42 | -0.74 | -2.43 |
| Net asset value per share (DKK) | 0.19 | 0.13 | 0.52 | 0.94 | 1.68 |
| Market price per share, year end (DKK) | 1.61 | 3.18 | 3.71 | 2.50 | 11.60 |
| Average number of employees | 1 | 1 | 1 | 1 | 1 |
The financial highlights for 2008–2011 are presented in accordance with the International Financial Reporting Standards as adopted by the EU, whereas the financial highlights for 2007 are presented in accordance with Danish GAAP. Financial ratios have been calculated in accordance with the definitions provided on page 26.
On 30 May 2011, the Board of Directors of Danionics A/S resolved to increase the company's share capital by 1,534,422 new shares each with a nominal value of DKK 1 (for a total nominal value of DKK 1,534,422) in a directed issue against cash consideration.
The increase of the share capital by 9.99% was made pursuant to the authorisation set out in the company's articles of association. All shares were subscribed without pre-emptive rights to existing shareholders. The subscription price was fixed at DKK 2.85 per share, corresponding to the average share price (all trades) in Q1 2011.
The company received gross proceeds of DKK 4,373,103. The costs of the transaction amounted to DKK 239,000. The shares were subscribed by Surplus Enterprise Limited, Hong Kong (a company owned by GP Batteries International Ltd., Singapore).
The net proceeds from the capital increase gave Danionics sufficient financial strength to continue operations for the next 12 months.
The downturn which commenced in 3rd quarter 2011 has continued unabated.
It has still not been possible to obtain orders for the new big batteries for tablets. APPLE and SAMSUNG have a very strong grip on this market and the, predominantly Taiwan based, potential customers of Danionics have so far not been able to enter the market.
Also the market for the smaller batteries, which for the last years have been the main focus, continues to be difficult for Danionics.
At several meetings with Danionics' joint venture partner Goldpeak – in October and November 2011 and again in February 2012 –the partners have discussed how to ensure the survival of the company.
Agreement has been reached that the Danionics Asia's factory and staff in Shenzhen the next year will concentrate fully on the production of electrodes. The major effort to install new machinery and repairing older equipment is coming to an end. The factory now has considerable production capacity. All production of electrodes to the Goldpeak Group will be contracted to Danionics Asia.
This concentration of electrode production in one place with a large guaranteed turnover is a constructive step. It will lead to reduced costs and larger efficiency and competitiveness.
At the same time Danionics Asia contracts its cell assembly to a subsidiary of Goldpeak in Shenzhen (actually in the same building) which will take over this process with the same positive effects, benefitting both parties.
It was also the same time it was decided to make an effort to become more competitive in the small cell segment, which has developed into a totally price driven market. If this project is successful Danionics may be able to recover some of its lost market share.
Danionics joint venture partner still shoulders all financing costs and will continue to do so, at least for the next two quarters.
As it is not possible to predict with any accuracy whether the planned restructuring will led to increased sales, which is very dependent on the development in the marketplace and as Danionics A/S only has limited funds for the running of the company left, the Board has decided to propose to the shareholders that two initiatives should be pursued:
There is no guarantee, however, that either of these initiatives will be met with success and with the present market situation the Company's future must be considered rather doubtful. If none of the plans are successful the Board of Directors plans to let the company go into a solvent liquidation no later than by the end of 2012.
Danionics recorded a loss of DKK 2.7 million in 2011 before value adjustments of the investment in Danionics Asia Ltd. This is consistent with the expectations expressed on 25 November 2011 of a loss of DKK 3 million.
Danionics contributed DKK 0.3 million to Danionics Asia Ltd. in 2011. Based on the uncertain expectations for the future, Danionics continues to recognise the value of its investment in Danionics Asia Ltd. at DKK 0 in the balance sheet, which means that the capital injection made by Danionics in 2011 has been written down over the income statement. Due to the investment write-down, Danionics incurred an overall DKK 3.0 million loss in 2011.
In May 2011, Danionics increased the share capital by nominal DKK 1.5 million in a directed issue against cash consideration. The company received gross proceeds of DKK 4.4 million. The costs of the transaction amounted to DKK 0.2 million.
At 31 December 2011, the share capital amounted to DKK 16.9 million, while equity amounted to DKK 3.1 million. Accordingly, the share capital is not intact. At 31 December 2010, equity was DKK 2.0 million. Changes in equity reflect the loss for the year and the above-mentioned capital increase.
At the end of the year, Danionics had cash of DKK 3.4 million, compared with DKK 2.6 million at the end of 2010.
No significant events have occurred between the balance sheet date and the publication of this annual report for 2011 that have not been incorporated and disclosed in the annual report and that materially affect the income statement or the balance sheet.
The result for 2012 will be affected by costs related to marketing- and sales costs in the joint venture and administrative expenses of around DKK 3 million. Overall, Danionics expects a loss in the range of DKK 2.5 - 3 million after interest income but before recognition of any share of the profit/loss for the year or value adjustments in Danionics Asia Ltd.
Moreover, the company may continue to generate sales revenue if the sales efforts undertaken by Danionics A/S should result in the addition of new orders.
The company's equity amounted to DKK 3.1 million at 31 December 2011, which was less than 50% of the share capital. Based on the expectations of a loss of approximately DKK 3 million in 2012, equity is expected to be close to 0 at the end of 2012.
Accordingly, whether the company will have sufficient capital and cash funds to continue operations for the next 12 months is subject to substantial uncertainty. As a result the Board will seek to conclude a directed issue and in parallel with this seek to clarify whether there are buyers for the company's stock exchange shell.
It is not certain that this will be met with success. If not, the Board plans to take the Company through a solvent liquidation.
Danionics' business activity is largely restricted to the development of the activities related to the investment in Danionics Asia Ltd. Having a limited organisation, Danionics A/S has not adopted actual policies on corporate social responsibility. The company consistently endeavours to ensure that the business activities of Danionics Asia Ltd. comply with international standards for corporate social responsibility. Management encourages Danionics Asia Ltd. to apply corporate social responsibility, but due to the limited organisation, Danionics A/S does not follow up on this.
This section describes a number of risk factors that could have a material effect on the results of operations, financial position and cash flows of Danionics A/S. These factors do not constitute an exhaustive list of risks, and they are not set out in any order of priority or listed according to size or probability. However, they are the risks that management believes are the most significant.
The company's equity amounted to DKK 3.1 million at 31 December 2011, which was less than 50% of the share capital. Based on the expectations of a loss of DKK 2.5 - 3 million in 2012, equity is expected to be close to 0 at the end of 2012.
Accordingly, whether the company will have sufficient capital and cash funds with which to continue operations for the next 12 months is subject to substantial uncertainty. As a result, management will seek to conclude a directed issue and parallel with this seek to clarify whether there are buyers for the company's stock exchange shell. It is not certain that this will be met with success. If not, the Board plans to take the Company through a solvent liquidation.
The company and the joint venture have product liability insurance cover through GP Batteries' insurance programme for damages caused by defective batteries sold by the company on the Danish market. There is a risk that the insurance may be insufficient, and there can be no assurance that full cover can be achieved. The company has received no claims since the joint venture began operations in 2004.
Members of the Board of Directors and the chief executive officer are covered by directors' and executive liability insurance.
Three members of the Board of Directors and the CEO have participated intensely in recent years' developments of the company and the restructuring in 2005-2006. They possess extensive knowledge about Danionics and the joint venture, and they have also established very close relations with the business partner GP Batteries. Danionics would be vulnerable if one or more of these key persons ceased to be connected to the company.
Today, the sole activity of Danionics is the ownership interest in the Danionics Asia Ltd. joint venture; consequently, the development of the joint venture is decisive for the future of the company. If the joint venture is not successful in delivering large quantities of batteries within agreed timeframes, of an agreed quality and at competitive prices, the joint venture will experience poorer financial developments than expected. In such case, Danionics may have to inject additional capital into the joint venture.
At the present time, the company does not have sufficient financial strength to contribute additional capital to the joint venture. Until a solution has been found to the capital situation, the operations are being financed exclusively by GP Batteries, the joint venture partner, who was undertaken to do so for least the next two quarters.
The joint venture pursues a strategy of supplying products to a small number of large customers.
Accordingly, it is exposed to the risk of losing individual customers. The joint venture relies on the products of its customers being sold with success. If they are not, it may affect the capacity utilisation of the joint venture and thus its earnings.
The joint venture is competing in a market characterised by severe price pressure and growing demands from customers regarding efficiency, quality, reliability of delivery and flexibility. There is a risk that competitors may develop improved products at lower prices or that the joint venture cannot compete efficiently.
Moreover, it is difficult to predict market developments, and the joint venture is exposed to the risk of lower market growth, a sharp fall in prices and tougher competition than expected. This might be detrimental to the earnings and financial position of the joint venture.
Finally, there is a risk that non-payment or a delay in payment from debtors may lower the operating profit of the joint venture, even though the joint venture seeks to minimize this risk by only dealing with major, well-renowned groups.
Recent years have presented major challenges in achieving sufficient production volumes. If the joint venture is to become profitable, the output must be increased significantly and this requires both an extension of capacity and the appointment of new employees. If the joint venture fails to do so, it will not be able to meet the budget and in addition to poorer earnings, this may also impair its ability to retain existing customers and attract new customers.
The joint venture is dependent on the supply of critical raw materials. Large and unexpected increases in the price of raw materials such as lithium, aluminium and cobalt may have a negative effect on earnings. In respect of selected raw materials and components, the joint venture is dependent on a few suppliers that can ensure high quality standards, and any discontinuation of supplies constitutes a risk. The joint venture's production is dependent on on-time delivery of raw materials from sub-suppliers, and the joint venture's solvency and ability to pay are important factors in achieving this. The joint venture seeks to minimise these risks by making purchases through the GP Batteries purchasing organisation and sharing in the large-scale benefits and the associated security.
Any problems arising from the relations or cooperation with GP Batteries may be detrimental to Danionics' investment in the joint venture.
GP Batteries and the joint venture work closely together in a number of areas such as development, sales, marketing, purchasing, production and management/organisation. Even though the shareholders' agreement between Danionics and GP Batteries ensures a situation of equals when final decisions are made, there is also a risk of deadlock between the parties. If the cooperation is discontinued, a dispute may arise about rights to products, etc., and there is a significant risk of losing customers if GP Batteries does not contribute actively to the sales, marketing and development of the joint venture.
A number of other factors may also affect the operation of the joint venture and its financial position:
Key personnel: Retention and attraction of key employees become more difficult if the joint venture does not develop as expected, and loss of key employees may damage the future prospects.
Insurance: The joint venture has product liability and other coverage through the GP Batteries insurance portfolio, but there is a risk that the insurances do not provide adequate cover and there can be no assurance that all potential claims would be covered in full.
For more information on risks, see note 16 to the financial statements on financial risk, which describes foreign exchange risk, interest rate risk and liquidity risk.
Danionics is a very small company with the sole function of a holding company. Its chief executive officer and two external consultants are all employed part time. The only business activity is in the joint venture, in which Danionics is represented by two board members. Consequently, no written policies, instructions or actual business procedures have been drawn up for the company. Instead, developments are monitored by the Board of Directors.
The primary responsibility for Danionics' risk management and internal controls in relation to the financial reporting process rests with the Board of Directors and the Management.
The Board is in charge of ensuring efficient risk management, including the identification of material risks, that systems are developed for risk management and that a risk policy and risk limits are defined. Policies for operational and financial risk management have been adopted by the Board of Directors; and reporting significant risks is included in routine reporting to the Board.
The Management is responsible for the ongoing risk management, including to map and assess individual risks resulting from Danionics' business activities.
It is the duty of the audit committee, whose functions are handled by the entire Board of Directors, to assess whether Danionics applies well-established accounting policies, has written policies and procedures for all material business areas.
Powers and responsibilities are defined in the Board of Directors' instructions to the Management as well as in policies and procedures. The organisational structure and the internal guidelines combine with laws and other regulations to make up the control environment. The management of Danionics is responsible for establishing and approving general policies, procedures and controls in relation to the financial reporting process.
The Board of Directors and the Management Board assess on an ongoing basis significant risks and internal controls in relation to the company's operations and their potential impact on the financial reporting process.
The significant risks in relation to the financial reporting are described in Management's report, to which reference is made.
Danionics' control procedures are integrated in the accounting and reporting systems and include procedures in respect of certification, authorisation, approval and reconciliation.
The Board of Directors emphasises open communications in the company with due consideration for the confidentiality required of listed companies.
Danionics maintains information and communications systems to ensure that its financial reporting is correct and complete. The financial reporting manual and other reporting instructions are updated as and when considered necessary and are reviewed at least once a year.
Danionics monitors its business activities by means of regular assessments and controls at all levels of the company. The scope and frequency of such periodic assessments depend mainly on the risk assessments of the particular area and on the effectiveness of the regular controls.
By way of the long-form audit report, the auditors appointed by the shareholders in general meeting report to the Board of Directors on any significant weaknesses in the company's internal control systems in relation to the financial reporting process.
Danionics' corporate governance reporting is available from the company's web site http://www.danionics.dk/investorrelations/corporategovernance/redegørelse.
Remuneration of the Board of Directors consists of a fixed fee. For 2011, we propose an unchanged fee to the Board of Directors of DKK 540,000, with DKK 180,000 being payable to the Chairman and DKK 120,000 being payable to each of the other members (amounts exclude VAT).
Remuneration of the Management is payable by the hour on the basis of time spent. There is no incentivebased compensation, nor does the company have pension schemes or severance plans for members of the Board of Directors or the Management Board.
Karsten Borch, Chairman of the Board. Born in 1943. Chairman of Danionics since 1995. Number of shares held in the company: 144.609 (of which 30,000 were acquired in 2011).
Chairman of the board of C&I International GmbH.. K.T. Trading AG, KRM AG and ESI AG.
Board member of Atrium Partners A/S, Dansk Generationsskifte A/S, Danionics Asia Ltd., ECCO Holding A/S, ECCO Sko A/S and a number of subsidiaries of the ECCO group.
Frank Gad. Born in 1960. Member of the Board of Danionics since 2004. Number of shares held in the company: 27,888. Managing Director of SP Group A/S, SP Moulding A/S and Frank Gad ApS, Gadmol ApS and Gadplast ApS.
Chairman of the board and board member of a number of subsidiaries of the SP Group. Chairman of the boards of Skamol A/S and Skamol Holding A/S. Board member of Danionics Asia Ltd. and The Danish Plastics Federation.
Henrik Ottosen. Born in 1960. Board member of Danionics since 2005. Number of shares held in the company: 5,388. Lawyer and partner of the law firm DAHL in Viborg.
Chairman of the boards of A. Andersens Enke A/S, Samson Agro A/S, Samson Group A/S, Selta Viborg A/S, Unik-Funkis A/S, Airmaster A/S, Royal Danish Fish Group A/S, J.P. Group, Viborg A/S, Wind 1 A/S, World Wide Wind A/S and subsidiaries of the World Wide Wind group.
Board member of Bjerringbro Fornikling A/S, Danglas A/S, Glerup A/S, H.R. Nielsen Holding ApS, MK 2011 A/S, Holdingselskabet af 21.12.2009 A/S, SEC Scandinavia A/S, TOPO Update A/S, Unik-Funkis Ejendomme A/S, Goppe A/S, Karl Molin Stålkonstruktioner A/S and Viborg Rørteknik A/S.
Edward Lam. Born in 1969. Board member of Danionics since 2011. Number of shares held in the company: none. Head of Lithium Business Unit, Goldpeak Batteries Ltd.
Board member of Gold Peak Industries (Taiwan) Limited, GWA Energy, Inc, Amita Technologies, Inc, Vectrix International Ltd and Vectrix Holdings Ltd.
The Management Board consists of Henning O. Jensen, Chief Executive Officer. Number of shares held in the company: 3,388. Danionics has entered into a consultancy agreement with HOJE Management ApS, which is Henning O. Jensen's consultancy firm. According to this agreement, Henning O. Jensen is a part-time employee with Danionics and is paid on an hourly basis.
Henning O. Jensen was born in 1942 and has acted as CEO of Danionics since 2004. CEO of HOJE Management ApS.
Board member of LogiCon–Nordic A/S, TriNova Management II A/S and B2A s.m.b.a. (Business to Africa).
Danionics A/S is listed on NASDAQ OMX Copenhagen under the ISIN code DK0010271238 (ticker: DANIO). The company is a component of the Small Cap index of NASDAQ OMX Copenhagen.
The nominal share capital amounts to DKK 16,894,002, distributed on 16,894,002 shares, each with a nominal value of DKK 1. All shares are listed for trade, freely negotiable and no shares carry special rights.
At the end of February 2012, the company had 6,506 registered shareholders owning a total of 83.8 percent of the share capital. Since end of February 2011, the number of registered shareholders has decreased by about 350. The aggregate ownership interest of the registered shareholders has increased by 5 percentage points.
Surplus Enterprise Ltd. of Hong Kong has reported an ownership of 17.34 percent of the share capital and the voting rights in the company. The shares continue to be widely held. Hence, the 20 largest shareholders own 33.1 percent of the share capital and 39.6 percent of the registered capital. The corresponding figures last year were 23.7 per cent and 30.1 per cent.
Members of the Board of Directors and the Management Board own a total of 1.07 percent of the share capital. Despite the increase of share capital, the management increased its ownership interest during 2011 from 0.98 percent of the share capital at 31 December 2010.
The Board of Directors has been authorised to increase the share capital by up to a nominal amount of DKK 1,535 during the period until 28 April 2016.
The share started the year at a price of DKK 3.18 and ended the year at DKK 1.61.
During the year, 3.3 million shares were traded, compared with 6.8 million in 2010.
Danionics strives to provide clear, factual and true and fair information about the company's operations, results and expected developments. In addition to the Rules of Ethics of NASDAQ OMX Copenhagen, Danionics is subject to limitations in providing information to the effect that value creation depends on the ownership interest in a joint venture and that this joint venture as a sub-supplier is subject to a number of restrictions in respect of providing information about customer-specific orders.
We strive to maintain open and active relations with our shareholders and other stakeholders. Current information on the company can be found on our website, www.danionics.dk.
Henning O. Jensen, CEO E-mail: [email protected] Tel: +45 88 91 98 70.
The company's Annual General Meeting will be held on 20 March 2012 at 10.00 g.m at the Danish Centre for Architecture, Strandgade 27B, DK-1401 Copenhagen K, Denmark. Notice to convene the Annual General Meeting will be issued on 27 February 2012.
The Board of Directors recommends to the Annual General Meeting that no dividend be declared in respect of the 2011 financial year.
| 27 February 2012 | Annual Report 2011 | |
|---|---|---|
| 20 March 2012 | Annual General Meeting 2012 | |
| 23 April 2012 | Quarterly Report 1st Quarter 2012 | |
| 28 August 2012 | Interim Report 1st Half 2012 | |
| 30 November 2012 | Quarterly Report 3rd Quarter 2012 | |
| Stock exchange announcements 2011 | ||
| No. 1/2011 | 9 March 2011 | Annual Report 2010 |
| No. 2/2011 | 14 March 2011 | Reporting of transactions by senior employees and related parties |
| involving Danionics shares | ||
| No. 3/2011 | 4 April 2011 | Notice convening the Annual General Meeting of Danionics A/S |
| No. 4/2011 | 28 April 2011 | Interim report for 1st Quarter 2011 |
| No. 5/2011 | 28 April 2011 | Proceedings at the Annual General Meeting 2011 |
| No. 6/2011 | 4 May 2011 | Reporting of transactions by senior employees and related parties |
| involving Danionics shares | ||
| No. 7/2011 | 30 May 2011 | Capital increase in Danionics A/S |
| No. 8/2011 | 30 May 2011 | Major shareholder notification – Surplus Enterprise Ltd. |
| No. 9/2011 | 9 June 2011 | Cancellation of warrants |
| No. 10/2011 | 19 August 2011 | Interim report for 1st Half 2011 |
| No. 11/2011 | 6 September 2011 | Reporting of transactions by senior employees and related parties |
| involving Danionics shares | ||
| No. 12/2011 | 25 November 2011 | Interim report for 3rd Quarter 2011 |
| No. 13/2011 | 8 December 2011 | Financial Calendar 2012 |
Company structure of joint venture:
In 2004, Danionics entered into an agreement to establish the Danionics Asia Ltd. joint venture. As part of this agreement, Danionics transferred assets, operations and employees to the joint venture which at the same time took over a number of obligations from Danionics. Hence, the assets of Danionics A/S consisted of the ownership in the joint venture and a cash position.
Danionics A/S performs a number of tactical and operational activities on behalf of the joint venture. The operating income and costs of the joint venture are recognised, in accordance with the accounting policies applied, in Danionics A/S' financial statements under the line item 'Write-down of investment in joint venture'. The part of the activities that lead to customer orders from the Danish market is invoiced by Danionics A/S.
Revenue amounted to DKK 1.7 million in 2011, consisting of battery sales to Danish customers. In 2010, the revenue amounted to DKK 0.3 million.
Production costs, amounting to DKK 1.6 million, follow developments in revenue and consisted of the cost of goods relating to batteries sold.
The administrative expenses comprise general administrative expenses, remuneration to the Board of Directors, including expenses related to the Board's active protection of interests in the joint venture and other costs incurred as a result of the company's status as a listed company. Administrative expenses amounted to DKK 2.8 million in 2011, compared with DKK 4.6 million in 2010. The administrative expenses for 2010 included DKK 1.8 million expenses by the company as an adjustment of VAT deductions for the period 1 June 2007 to 31 December 2010 due to a ruling by SKAT, the Danish tax authorities, restricting the company's VAT deductions.
The company incurred an operating loss for the year of DKK 2.7 million, compared with a loss of DKK 4.6 million in 2010.
The writedown for the year equals the amount which Danionics contributed to Danionics Asia in 2011. The capital contribution totalled DKK 0.3 million in 2011 as compared with DKK 5.6 million in 2010. The investment in the joint venture is recognised at DKK 0 million after being tested for impairment and due to lack of orders to the joint venture.
Financial income and expense and similar items was an income of DKK 0.1 million against DKK 0 million in 2010. Financial income comprises interest income from the company's cash holdings placed in term deposits and net foreign exchange adjustments. Financial expense was DKK 0 million, which was unchanged from 2010.
Tax on the profit for the year was DKK 0. If the accumulated tax loss were to be utilised, the tax asset would be approximately DKK 125 million, compared with DKK 124 million in 2010. The tax asset has not been recognised in the balance sheet.
Danionics reported a loss of DKK 3.0 million for 2011 after recognition of a DKK 0.3 million write-down of the investment in Danionics Asia Ltd. The loss is consistent with the guidance provided of a loss of approximately DKK 3 million before recognition of the share of the profit or loss in Danionics Asia Ltd.
Cash flows from operating activities were an outflow of DKK 3.0 million in 2011 (2010: outflow of DKK 3.2 million). Cash flows from investing activities were an outflow of DKK 0.3 million (2010: outflow of DKK 5.6 million). For both years, the outflow related to loan capital provided to the joint venture.
Cash flows from financing activities were an inflow of DKK 4.1 million against DKK 4.8 million in 2010. For both years, the inflow related to the capital increases made.
Cash increased by a total of DKK 0.8 million in 2011, compared with a reduction of DKK 4.0 million in 2010. At 31 December 2011, cash stood at DKK 3.4 million against DKK 2.6 million as at 31 December 2010.
The company's total assets increased from DKK 2.7 million at 31 December 2010 to DKK 3.6 million at 31 December 2011. The assets consist of the value of the cash holdings of DKK 3.4 million and receivables of DKK 0.2 million.
Liabilities and equity consist of equity of DKK 3.1 million and liabilities for a total of DKK 0.4 million.
The company has no interest-bearing debt.
In 2012 Danionics A/S intends to continue the work to cultivate and develop its investment in the joint venture.
The company expects to incur a loss in the region of DKK 2.5 - 3 million in 2011. This forecast does not include the share of results in Danionics Asia Ltd.
The company's equity amounted to DKK 3.1 million at 31 December 2011, which was less than 50% of the share capital. Based on the expectations of a loss of DKK 2.5 - 3 million in 2012, equity is expected to be close to 0 at the end of 2012.
Accordingly, whether the company will have sufficient capital and cash funds to continue operations for the next 12 months is subject to substantial uncertainty. As a result, the Board will seek to conclude a directed issue and in parallel with this seek to clarify whether there are buyers for the company's stock exchange shell.
It is not certain that this will be met with success. If not the Board plans to take the company through a solvent liquidation.
The Management and the Board of Directors have today discussed and approved the annual report of Danionics A/S for the financial year 1 January - 31 December 2011.
The annual report has been prepared in accordance with the International Financial Reporting Standards as approved by the EU and Danish disclosure requirements applying to listed companies.
It is our opinion that the financial statements give a true and fair view of the company's assets, liabilities and financial position at 31 December 2011 and of the results of the Company's operations and cash flows for the financial year 1 January – 31 December 2011.
In our opinion, the management's review includes a fair account of the development and performance of the company, the results for the year and of the financial position of the company, together with a description of the principal risks and uncertainties that the company faces.
We recommend that the annual report be approved at the annual general meeting.
Copenhagen, 27 February 2012
Henning O. Jensen Managing Director
Karsten Borch Frank Gad Henrik Ottosen Edward Lam (Chairman)
We have audited the financial statements of Danionics A/S for the financial year 1 January – 31 December 2011. The financial statements comprise income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes including a summary of significant accounting policies. The financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies and for such internal control that Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company's preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit has not resulted in any qualification.
In our opinion, the financial statements give a true and fair view of the Company's financial position at 31 December 2011 and of the results of the Company's operations and cash flows for the financial year 1 January – 31 December 2011 in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
Without qualifying our opinion, we draw your attention to note 2 to the financial statements on "significant accounting estimates and judgements" in which Management has outlined the Company's capital resources and expectations and stated that Management will seek to obtain additional financing and parallel work on a sale of the Company's stock exchange shell. Management has informed that it is uncertain whether these solutions can be achieved. If these solutions are not achieved Management intends to let the Company enter in solvent liquidation. If liquidation is decided the liquidation costs will be provided for in the Financial Statements when and if the decision is taken. A potential liquidation during 2012 will according to Management most likely not results in any dividend to the shareholders.
Pursuant to the Danish Financial Statements Act, we have read the Management's review. We have not performed any further procedures in addition to the audit of the financial statements. On this basis, it is our opinion that the information provided in the Management's review is consistent with the financial statements.
Copenhagen, 27 February 2012
Finn L. Meyer Per Ejsing Olsen State Authorised State Authorised Public Accountant Public Accountant
| 2011 | 2010 | ||
|---|---|---|---|
| Note | DKK '000 | DKK '000 | |
| 3 | Revenue | 1,678 | 325 |
| Production costs | -1,600 | -309 | |
| Gross profit/(loss) | 78 | 16 | |
| 4,5 | Administrative expenses | -2,765 | -4,593 |
| Operating profit/(loss) | -2,687 | -4,577 | |
| 6 | Write down of investment in joint venture | -337 | -5,605 |
| 7 | Interest income and similar items | 50 | 35 |
| 7 | Interest expenses and similar items | -5 | -7 |
| Profit/(loss) before tax | -2,979 | -10,154 | |
| 8 | Tax on profit/(loss) for the year | 0 | 0 |
| Profit/(loss) for the year | -2,979 | -10,154 | |
| Earnings per share | |||
| 17 | Earnings per share (EPS) | -0.18 | -0.68 |
| 17 | Diluted earnings per share (EPS-D) | -0.18 | -0.68 |
| Proposed appropriation of profit/distribution of loss | |||
| Retained earnings | -2,979 | -10,154 | |
| Total | -2,979 | -10,154 |
| Statement of recognised income and expense: | ||
|---|---|---|
| Net profit/(loss) for the year | -2,979 | -10,154 |
| Other income recognised directly in equity | 0 | 0 |
| Total recognised income/(loss) for the year | -2,979 | -10,154 |
| Note | 2011 DKK '000 |
2010 DKK '000 |
|
|---|---|---|---|
| Non-current assets: | |||
| Other non-current assets: | |||
| 6 | Investments in joint venture | 0 | 0 |
| 6 | Loan capital, joint venture | 0 | 0 |
| Total investments | 0 | 0 | |
| Total fixed assets | 0 | 0 | |
| Current assets: | |||
| Other receivables | 66 | 16 | |
| Accruals | 76 | 26 | |
| 10 | Cash | 3,432 | 2,637 |
| Total current assets | 3,574 | 2,679 | |
| TOTAL ASSETS | 3,574 | 2,679 |
| 2011 | 2010 | |||
|---|---|---|---|---|
| Note | DKK '000 | DKK '000 | ||
| 9 | Equity: | |||
| Share capital | 16,894 | 15,360 | ||
| Retained earnings | -13,750 | -13,371 | ||
| Total equity | 3,144 | 1,989 | ||
| Liabilities other than provisions: | ||||
| Short-term liabilities other than provisions | ||||
| Trade payables | 198 | 150 | ||
| Other payables | 232 | 540 | ||
| Total short-term liabilities other than provisions | 430 | 690 | ||
| Total liabilities other than provisions | 430 | 690 | ||
| TOTAL EQUITY AND LIABILITIES | 3,574 | 2,679 | ||
| Share pre- mium ac- |
||||
|---|---|---|---|---|
| count and | ||||
| Share | retained | |||
| DKK'000 | capital | earnings | Total | |
| Equity | ||||
| 1 January 2010 | 13,965 | -6,634 | 7,331 | |
| Total recognised income/(loss) for the year | 0 | -10,154 | -10,154 | |
| Other income recognised directly in equity | 0 | 0 | 0 | |
| Transactions with capital owners: | 0 | |||
| Increase of share capital, directed issue | 1,395 | 3,627 | 5,022 | |
| Expenses related to directed issue | 0 | -210 | -210 | |
| Equity at 31 December 2010 | 15,360 | -13,371 | 1,989 | |
| Equity | ||||
| 1 January 2011 | 15,360 | -13,371 | 1,989 | |
| Total recognised income/(loss) for the year | 0 | -2,979 | -2,979 | |
| Other income recognised directly in equity | 0 | 0 | 0 | |
| Transactions with capital owners: | ||||
| Increase of share capital, directed issue | 1,534 | 2,839 | 4,373 | |
| Expenses related to directed issue | 0 | -239 | -239 | |
| Equity at 31 December 2011 | 16,894 | -13,750 | 3,144 |
| Note | 2011 DKK '000 |
2010 DKK '000 |
|
|---|---|---|---|
| Profit/(loss) before financial items and tax | -2,687 | -4,577 | |
| 11 | Change in working capital | -360 | 1,301 |
| Cash flows to operating activities before financial items | -3,047 | -3,276 | |
| 12 | Financial receipts and disbursements, net | 45 | 28 |
| Cash flows used for operating activities | -3,002 | -3,248 | |
| Net investments in joint venture | -337 | -5,605 | |
| Cash flows used for investing activities | -337 | -5,605 | |
| Capital increase , directed issue | 4,134 | 4,812 | |
| Cash flows used for financing activities | 4,134 | 4,812 | |
| Change in cash Cash at 1 January |
795 2,637 |
-4,041 6,678 |
|
| Cash at 31 December | 3,432 | 2,637 |
The Annual Report 2011 for Danionics A/S is presented in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the EU and Danish disclosure requirements applying to listed companies, cf. NASDAQ OMX Copenhagen's disclosure requirements for annual reports of listed companies and the Danish Statutory Order on the Adoption of IFRS issued pursuant to the Danish Financial Statements Act.
No changes in accounting policies have been implemented during 2011.
In the annual report 2011, Danionics has implemented the amendments to IFRS and IAS standards adopted by the IASB as well as new IFRIC interpretations taking effect on 1 January 2011. The implementation did not affect recognition or measurement in 2011.
Amendments to standards and IFRIC interpretations approved by the IASB to take effect over the coming years would not have had a material impact on the accounting policies for 2011.
The financial statements are presented in DKK rounded to the nearest thousand.
On initial recognition, transactions denominated in foreign currency are translated at the exchange rate ruling on the transaction date. Exchange differences arising between the exchange rate at the transaction date and the date of payment are recognised in the income statement under financial income or expenses.
Receivables, payables and other monetary items denominated in foreign currency are translated at the exchange rates ruling at the balance sheet date. The difference between the exchange rate ruling at the balance sheet date and the exchange rate at the date when the receivable or payable arose or was recorded in the most recent financial statements is recognised in the income statement under financial income or expenses.
Exchange differences arising on the translation of a foreign joint venture's opening equity using the exchange rates prevailing at the balance sheet date as well as on the translation of the income statement from average exchange rates to the exchange rates prevailing at the balance sheet date are taken directly to equity.
Revenue from the sale of goods and services is recognised in the income statement if delivery and transfer of risk to the buyer have taken place before year-end and if the income can be reliably measured and is expected to be received. Revenue is measured exclusive of VAT, taxes and any agency commission in connection with the sale.
Production costs comprise cost of goods relating to the income for the year.
Administrative expenses comprise expenses incurred during the year for management and administration of the company, including expenses for administrative functions.
The profit/loss after tax and elimination of unrealised intra-group gains/losses is recognised in the income statement.
The carrying amounts of long-term assets are tested annually to determine whether there is any indication of impairment. If such an indication exists, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less costs to sell and the value in use. The value in use is determined as the present value of expected future cash flows of the asset.
An impairment loss is recognised when the carrying amount of an asset exceeds the recoverable amount of the asset. Impairment write-downs are recognised as a separate line item in the income statement. Impairment losses are reversed to the extent changes have occurred to the assumptions and estimates on which the impairment loss was based.
Financial income and expenses include interest, capital gains and losses on relating to transactions in foreign currency.
Tax for the year, consisting of the year's current tax and movements in deferred tax, is recognised in the income statement as regards the amount that can be attributed to the profit/loss for the year and posted directly in equity as regards the amount that can be attributed to movements taken directly to equity. Interest premiums or discounts are recognised as financial items in the period to which they relate.
Investments in the joint venture are recognised and measured under the equity method. The proportionate share of the net asset value is recognised in the balance sheet. If the recoverable amount of the investment is estimated to be lower than the proportionate share of the carrying amount, the investment is written down to this lower value.
Writedowns are recognised in the income statement together with the proportionate share of the profit/loss for the year of the joint venture.
Joint ventures with negative equity are measured at DKK 0. If the company has a legal or constructive obligation to cover the negative balance of the joint venture, this obligation is recognised in liabilities.
Current tax payable but not yet paid is recognised in the balance sheet under current liabilities.
Deferred tax is calculated in accordance with the balance sheet liability method on all timing differences between the accounting and tax value of assets and liabilities. Deferred tax is calculated using the current tax rate.
Deferred tax assets are recognised in the balance sheet as investments to the extent that it is estimated that they can be utilised.
Receivables are measured at amortised cost, which usually corresponds to the nominal value. The company makes provisions for bad debts on the basis of an individual assessment of each receivable.
The segment information has been prepared in accordance with the company's accounting policies and is based on the internal management reporting.
Segment income and segment costs as well as segment assets and liabilities comprise those items that can be directly attributed to each individual segment and those items that can be allocated to the individual segments on a reliable basis.
The cash flow statement shows cash flows for the year, broken down by operating, investing and financing activities, and the year's changes in cash as well as cash at the beginning and end of the year.
Cash flows from operating activities are calculated using the indirect method as the profit/loss for the year before financial items and tax adjusted for non-cash operating items, changes in working capital, taxes paid or received and income taxes paid.
Cash flows used for investing activities comprise payments in connection with acquisitions and disposals of intangible assets, property, plant and equipment and investments.
Cash flows from financing activities comprise changes in the size or composition of the share capital and associated costs as well as the raising of loans, repayment of interest-bearing debt, and payment of dividends.
Cash comprises net bank balances and any other cash resources.
Earnings per share (EPS) and diluted earnings per share (EPS-D) are calculated in accordance with IAS 33.
Other key ratios are calculated in accordance with "Recommendations and Ratios 2011" issued by the Danish Society of Financial Analysts and as defined below.
| EBITDA margin (%) | EBITDA x 100 | |||
|---|---|---|---|---|
| Revenue | ||||
| EBIT margin (%) | EBIT x 100 | |||
| Revenue | ||||
| Equity ratio (%) | Equity at year end x 100 | |||
| Equity and liabilities | ||||
| Return on equity (%) | Profit/loss for the year x 100 | |||
| Average equity | ||||
| Earnings per share (EPS (in DKK) | Profit/loss for the year | |||
| Average number of outstanding shares | ||||
| Diluted earnings per share (EPS) (in DKK) | Diluted profit/loss | |||
| Diluted average number of outstanding shares | ||||
| Net asset value per share (in DKK) | Shareholders' equity at year end | |||
| Number of shares at year end |
The calculation of the carrying amounts of certain assets and liabilities is based on judgments, estimates and assumptions regarding future events. The applied estimates are based on past experience and other factors that the management considers appropriate under the given circumstances, but which are inherently uncertain and unpredictable. Such assumptions may be incomplete or inaccurate, and unexpected events or circumstances may occur. In addition, the company is subject to risks and uncertainties that may cause actual outcomes to deviate from these estimates. It is particularly important, in respect of the Annual Report 2011, to note the following assumptions and uncertainties, which have a significant influence on the assets and liabilities recognised in the annual report and which may necessitate corrections in subsequent financial years if the assumed course of events fails to materialise as expected.
The company's equity amounted to DKK 3.1 million at 31 December 2011, which is less than 50% of the share capital. The company's cash funds amounted to DKK 3.4 million at 31 December 2011. Due to the limited activities and financial resources of the company, the company has no liquidity in the long term to continue its operations in its current setup.
Based on the current activity level management expects a loss of DKK 2.5 – 3.0 million for 2012, and an equity of close to DKK 0 at 31 December 2012.
Accordingly it is subject to substantial uncertainly whether the Company will have sufficient capital and liquidity to continue operations the next 12 months. The Management, therefore, will seek to conclude a direct issue and in parallel with this seek to clarify whether a buyer for the Company stock exchange shell can be found. It is uncertain whether such a solution can be concluded.
Taking the costs of a controlled voluntary liquidation into account the financial resources of the company will be sufficient for ordinary operations in a part of 2012 and a controlled liquidation during 2012 or at the end of 2012 at the latest. The costs of an eventually liquidation will be recognised in the accounts when and if decision regarding the liquidation is taken.
Should it become necessary to liquidate the company during 2012, it is not likely that any dividend can be distributed to the shareholders.
Danionics Asia Ltd. is Danionics' only business activity. Accordingly, the development of the company has a crucial influence of the development of Danionics. Based on the uncertain expectations for the future, Danionics recognises the value of its investment in Danionics Asia at DKK 0 in the balance sheet.
The value of deferred tax assets is recognised at DKK 0. The recognition is based on management's estimate of the earnings for the coming years, considering the limited activity of Danionics Asia Ltd.
Management will monitor the future developments on an ongoing basis and make such adjustments of carrying amounts as may be warranted by developments.
The company only has a single segment, as per its investment strategy and risk management, which is the investment in the joint venture. The company's activity is based exclusively in Denmark and its activity is not divided by geography. The Company is not dependent on any single supplier.
The joint venture's primary segment of operation is the manufacturing of batteries in China. The joint venture pursues a strategy of supplying products to a small number of large customers. Accordingly, it is exposed to the risk of losing individual customers.
| 2011 | 2010 | |
|---|---|---|
| DKK '000 | DKK '000 | |
| 4. Employees, etc. | ||
| Board of Directors | ||
| Remuneration | 540 | 420 |
| VAT | 54 | 54 |
| 594 | 474 | |
| Management Board | ||
| Remuneration | 183 | 224 |
| VAT | 41 | 50 |
| Total | 224 | 274 |
| Total staff costs | 818 | 748 |
| Average number of employees | 1 | 1 |
| Breakdown of staff costs | ||
| Administrative expenses | 818 | 748 |
| Total | 818 | 748 |
| 5. Fees paid to auditors appointed at the Annual General Meeting | ||
| Audit: | ||
| KPMG | 181 | 351 |
| Total | 181 | 351 |
| Which is specified as follows: | ||
| Mandatory audit | 119 | 129 |
| Other qualifications with security | 16 | 16 |
| Tax- and VAT advisory | 26 | 169 |
| Other services | 20 | 37 |
| Total | 181 | 351 |
| 6. Investments | Invest- ments in joint venture |
Loan capital, joint venture |
|
|---|---|---|---|
| Cost at 1 January 2010 Addtions |
99,611 0 |
89 5,605 |
|
| Cost at 31 December 2010 | 99,611 | 5,694 | |
| Value adjustments at 1 January 2010 Value adjustment Profit/loss for the year |
-99,611 0 0 |
-89 -5,605 0 |
|
| Value adjustments at 31 December 2010 | -99,611 | -5,694 | |
| Carrying amount at 31 December 2010 | 0 | 0 | |
| Cost at 1 January 2011 Addtions |
99,611 0 |
5,694 337 |
|
| Cost at 31 December 2011 | 99,611 | 6,031 | |
| Value adjustments at 1 January 2011 Value adjustment Profit/loss for the year |
-99,611 0 0 |
-5,694 -337 0 |
|
| Value adjustments at 31 December 2011 | -99,611 | -6,031 | |
| Carrying amount at 31 December 2011 | 0 | 0 |
| 2011 | Profit for | Total | ||||
|---|---|---|---|---|---|---|
| Registered | Equity | Share | Equity | the year | assets | |
| Name | office | interest | capital 1) | DKK '000 1) | DKK '000 1) | DKK '000 1) |
| Investment in joint | ||||||
| venture: | THKD | |||||
| Danionics Asia Ltd. | Hong Kong | 50% | 137,829 | -3,847 | -7,297 | 18,835 |
| Profit/loss | |||||||
|---|---|---|---|---|---|---|---|
| 2010 | for | Total | |||||
| Registered | Equity | Share | Equity | the year | assets | ||
| Name | office | interest | capital 1) | DKK '000 1) | DKK '000 1) | DKK '000 1) | |
| Investment in joint | |||||||
| venture: | THKD | ||||||
| Danionics Asia Ltd. | Hong Kong | 50% | 137,829 | 3,504 | -8,531 | 17,465 |
1) Danionics A/S' share
The financial information about Danionics Asia Ltd. is based on an unaudited set of interim financial statements at 31 December 2011. Excerpt from the interim financial statements:
| 2011 | 2010 | ||
|---|---|---|---|
| DKK '000 | DKK '000 | ||
| Revenue | 13,735 | 13,940 | |
| EBITDA | -3,346 | -7,770 | |
| Non-current assets | 28,438 | 29,505 | |
| Current assets | 9,232 | 5,425 | |
| Current liabilities | 36,300 | 19,083 | |
| 7. Interest income and expenses and similar items | |||
| Interest income and similar items: | |||
| Interest income | 30 | 33 | |
| Foreign exchange adjustment, payables group enterprise | 20 | 2 | |
| Total | 50 | 35 | |
| Interest expenses and similar items: | |||
| Other financial expenses | -5 | -7 | |
| Total | -5 | -7 |
| 2011 DKK '000 |
2010 DKK '000 |
||
|---|---|---|---|
| 8. Tax on profit/(loss) for the year | |||
| Current tax for the year | 0 | 0 | |
| Change in deferred tax | 0 | 0 | |
| Tax for the year | 0 | 0 | |
| Tax on the profit/(loss) for the year is derived as follows: | |||
| Calculated tax on pre-tax profit (expence) | -745 | -2,539 | |
| Tax effect of: | |||
| Write down of investment in associate | 84 | 1,402 | |
| Adjustments regarding sale of property / Non-deductible costs | -13 | 0 | |
| Calculated tax for the year (expence) | -644 | -1,137 | |
| Value adjustment of tax asset | 644 | 1,137 | |
| Tax for the year | 0 | 0 | |
| Deferred tax (asset) | |||
| Deferred tax is the difference between the carrying amounts | |||
| and the amounts used for taxation purposes of the following items: | |||
| Non-current assets | -6,031 | -5,694 | |
| Tax loss carry-forwards: | |||
| At 1 January | -490,874 | -486,325 | |
| Tax loss for the year | -2,695 | -4,549 | |
| Basis for calculation | -499,600 | -496,568 | |
| Calculated deferred tax, 25% (tax asset) | -124,900 | -124,142 | |
| Value adjustment of tax asset | 124,900 | 124,142 | |
| Carrying amount of deferred tax (asset) | 0 | 0 |
The company has no deferred tax. At 31 December 2011, the company had a calculated deferred tax asset in the order of DKK 125 million (2010: DKK 124 million) based on a tax rate of 25 per cent. The tax asset relates to tax losses and the difference between the carrying amounts and the amounts used for taxation purposes of other non-current assets.
The tax asset has not been recognised as the future earnings and thus the utilisation of the tax loss are subject to uncertainty.
Total tax losses at 31 December 2011 can be carried forward indefinitely.
| 2011 | 2010 | 2009 | 2008 | 2007 | ||
|---|---|---|---|---|---|---|
| Share capital | ||||||
| Balance at 1 January | 15,360 | 13,965 | 13,965 | 13,965 | 13,946 | |
| Exercise of Warrants | 0 | 0 | 0 | 0 | 19 | |
| Private placement | 1,534 | 1,395 | 0 | 0 | 0 | |
| Contingent liabilities at 31 December | 16,894 | 15,360 | 13,965 | 13,965 | 13,965 |
The share capital consists of 16,894,002 shares each with a nominal value of DKK 1.
The company regularly reviews the capital structure. Equity as a percentage of the balance sheet total at the end of 2011 was 91 per cent (2010: 74 per cent). The return on equity for 2011 was minus 108.9 per cent (2010: minus 217.9 per cent). The objective is to enhance the return on equity.
The company has lost more than half of its share capital and is therefore, as mentioned in the management's review on page 5, comprised by the rules on capital loss of the Danish Companies Act.
The cash holdings are at the company's full disposal.
| 2011 | 2010 | ||
|---|---|---|---|
| DKK '000 | DKK '000 | ||
| 11. Change in working capital | |||
| Change in other receivables | -100 | 1,013 | |
| Change in trade payables | 48 | -19 | |
| Change in debt to associate | 0 | -73 | |
| Change in other payables | -308 | 380 | |
| Total | -360 | 1,301 | |
| 12. Financial receipts and disbursements, net | |||
| Interest income and similar items, cf. note 7 | 50 | 35 | |
| Interest expenses and similar items, cf. note 7 | -5 | -7 | |
| Total | 45 | 28 |
If the company ceases to be a shareholder of Danionics Asia, the company must discontinue using the name of "Danionics".
No pledges, security or contingent liabilities are incumbent on the company in respect of the joint venture.
In addition to members of the Board of Directors and the Management Board, the company's related parties comprise:
The following transactions have been made with related parties:
All related party transactions took place on an arm's length basis.
No warrants have been granted since 2003.
No warrants were exercised in 2010 or 2011. Warrants under the warrant programmes of January 2001 and December 2003 expired in 2010 and 2011. At 31 December 2011, the company had no outstanding warrants.
The company has no incentive plans for the management or employees of the company, and neither the Board of Directors nor the Management Board has such incentive plans. Moreover, no extraordinary bonus schemes or the like have been set up for the Board of Directors or the Management Board.
Due to the limited nature of its operations, investments and financing, the company is only to a limited extent exposed to changes in exchange and interest rates. The company does not undertake any active speculation in financial risks.
Compared to 2010 there have been no changes in the risks or risk management of the company.
While Danionics reports its financial results in DKK, the company's sole activity – the joint venture – has its earnings in USD, and the production costs and overheads are primarily denominated in RMB and purchases in USD. Thus, the translation of the financial results and value of the joint venture into DKK involves a foreign exchange risk.
Currency risks relating to the joint venture mainly involve the fact that the joint venture's purchases and sales are mainly settled in USD and its production and overhead costs are mainly settled in RMB. The joint venture is vulnerable to possible fluctuations between USD and RMB. The joint venture does not hedge such potential current risks.
Danionics has no interest-bearing debt. Accordingly, the company is subject to interest rate risk only in respect of its cash holdings. Cash holdings are mainly placed as fixed-term deposits.
The company's credit risks involve other receivables and cash. The maximum credit risk is reflected in the carrying amounts of the individual financial assets contained in the balance sheet.
Cash reserves consist of cash funds. The company aims to have sufficient cash resources to allow it to continue to operate adequately in case of unforeseen fluctuations in cash. See above.
| 2011 | 2010 | |
|---|---|---|
| DKK '000 | DKK '000 | |
| 17. Earnings per share | ||
| Profit/loss for the year | -2.979 | -10,154 |
| Average number of shares | 16,263,418 14,916,220 | |
| Average dilutive effect of outstanding warrants (no. of warrants) | 0 | 118.212 |
| Undiluted average number of outstanding shares | 16,263,418 15,034,432 | |
| Earnings per share (EPS) | -0.18 | -0.68 |
| Diluted earnings per share (EPS-D) | -0.18 | -0.68 |
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