Earnings Release • Aug 24, 2011
Earnings Release
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TKH Group NV (TKH) Interim Results 2011
Highlights first half 2011
• Expected net profit before amortization between € 55 and € 60 million for the full year 2011.
(In million € unless otherwise stated)
| 1st half 2011 |
1st half 2010 |
Difference In % |
|
|---|---|---|---|
| Turnover | 549.3 | 420.6 | + 30.6 |
| EBITA | 46.3 | 30.4 | + 52.5 |
| Net profit before amortization1) | 31.3 | 17.9 | + 74.6 |
| Net profit | 28.9 | 16.0 | + 81.3 |
| Earnings per ordinary share (in €) | 0.77 | 0.43 | + 79.1 |
| Solvency | 43.5% | 42.9% | |
| ROS | 8.4% | 7.2% | |
| ROCE | 21.1% | 13.0% |
| (In million € unless otherwise stated) | |||
|---|---|---|---|
| Q2 | Q2 | Difference | |
| 2011 | 2010 | In % | |
| Turnover | 270.7 | 221.5 | + 22.2 |
| EBITA | 23.3 | 17.8 | + 30.7 |
| Net profit before amortization 1) | 15.0 | 10.5 | + 43.8 |
| Net profit | 13.9 | 9.5 | + 47.0 |
| ROS | 8.6% | 8.1% |
1) Net profit before amortization of acquisition- related intangible assets (after tax).
Alexander van der Lof, CEO of technology company TKH: "Turnover increased substantially during the first half of 2011. In addition, through better capacity utilization the turnover was realized with better margins. The sharp rise in result of the first six months was achieved despite substantial higher costs to strengthen market positions. The R&D efforts in particular the security segment were increased. In addition, the sales force within Building Solutions was further strengthened by investments in the organization and through an increased cooperation within the TKH Group. The technology leap and market positioning this has created makes us excited about the growth opportunities that have arisen. Nevertheless, we have taken into account a possible impact due to current economic developments. "
In the first half of 2011 turnover increased by € 128.7 million (30.6%) to € 549.3 million (H1 2010: € 420.6 million), of which 24.4% was organic and 3.1% due to increased raw material prices. Acquisitions contributed 3.1% to the turnover growth. Turnover growth in the second quarter was 22.2%. Turnover growth in the first half was strongest in Industrial Solutions by 45.9%. Telecom Solutions realized a sales increase of 12.2%. Building Solutions turnover increased by 20.6%, of which 8.3% was due to acquisitions. The share of Industrial Solutions in total turnover rose due to the above-average turnover increase from 45% to 51%. The share of Building Solutions fell from 38% to 35% and the share of Telecom Solutions dropped from 17% to 14%. Innovations contributed again greatly to the turnover increases. The share of innovations in turnover was 21.1%.
The gross margin as a percentage of turnover decreased from 38.8% in 2010 to 37.8% in 2011. The relatively high share of work in progress in the turnover growth and higher raw material prices have a negative effect on gross margin. Operating expenses in the first half of 2011 increased by € 28.7 million compared to the same period in 2010, mainly due to the high level of activity and the further strengthening of the organization. As a percentage of turnover, the operating costs declined to 29.4% (H1 2010: 31.6%), despite the one-off expenses for the acquisition and integration of Siqura (formerly Optelecom-NKF) in the first half of 2011, which totalled € 2.0 million.
Depreciation amounted to € 7.4 million in the first half of 2011, slightly up compared to the first half of 2010.
Operating result before amortization (EBITA) rose by 52.5% from € 30.4 million in the first half of 2010 to € 46.3 million in the first half of 2011. EBITA within Industrial Solutions doubled compared to the first half of 2010 and Telecom Solutions showed an increase in EBITA as well. As a result of difficult market conditions, additional costs for the strengthening of the organization and the aforementioned one-off acquisition and integration costs, EBITA fell within Building Solutions.
ROS rose to 8.4% (H1 2010: 7.2%). This increase is due to the high level of innovation and improved utilization of capacity and efficiency, especially within Industrial Solutions.
Due to the acquisitions of Alphatronics and Siqura amortization expenses increased by € 0.7 million to € 6.0 million (H1 2010: € 5.3 million). Operating income after amortization (EBIT) increased in the first half of 2011 by 61.0% to € 40.4 million.
Financial expenses increased from € 2.4 million in the first half of 2010 to € 3.8 million in the first half of 2011. This increase was due to increased bank debt and in the first half of 2010 a positive exchange rate difference of € 1.2 million was realized. Share in result of associates of € 0.5 million related to the received dividends from the 5%-share in Nedap.
The effective tax rate in the first half of 2011 was 21.8% (H1 2010: 29.8%), resulting from the application of the Dutch innovation box. This includes one-off tax benefits over previous years. Normalized tax burden amounts to approximately 25%.
Net profit before amortization in the first half of 2011 was € 31.3 million, an increase of 74.6% over the first half of 2010 (€ 17.9 million). Net profit in the first half of 2011 rose to € 28.9 million, an increase of 81.3% over the comparable period in 2010 (€ 16.0 million). Ordinary earnings per share were € 0.77 (H1 2010: € 0.43).
Compared to the end of 2010, net debt increased by € 64.4 million to € 128.3 million, due to the higher level of activity, acquisitions, investments and an increase in working capital to 14.8% of turnover. The increase in working capital is due to a higher level of activity in which nearly half the growth was caused by strong sales growth in manufacturing systems and the acquisition of Siqura. With a net debt/EBITDA of 1.2 and an interest coverage ratio of 13.5, TKH operates well within the financial ratios agreed with the banks.
The number of staff (FTE) on June 30, 2011 was 3.954 (year end 2010: 3.706)
Telecom Solutions develops, produces and delivers systems for applications from basic outdoor infrastructure for telecom and CATV networks to indoor home networking. The focus is on providing customers with care-free systems due to the system guarantees we provide. Around 40% of the portfolio consists of optical fibre and copper cable for node-tonode connections. The remaining 60%, consisting of components and systems in the field of connectivity and peripheral equipment, is used mainly in the network's nodes.
| 1st half 2011 |
1st half 2010 |
Difference in% |
|
|---|---|---|---|
| Turnover | 78.9 | 70.3 | + 12.2 |
| EBITA | 6.5 | 5.4 | + 20.3 |
| ROS | 8.2% | 7.6% |
(In million € unless otherwise stated)
Turnover within the Telecom Solutions segment increased to € 78.9 million during the first half of 2011. This increase is attributable to the fibre network systems and indoor telecom systems segments. Fibre network systems showed a growth in turnover of 26.7%. Where last year sales were still under pressure due to the severe winter, this year sales were positively affected because the investments in fibre networks in Europe were less hampered by limited funding. The turnover of the copper network systems segment declined due to the sale of the GSM operations in Poland in the third quarter of 2010. In the first half of 2010, these activities contributed to the turnover and EBITA € 4.0 and € 0.4 million respectively.
In the first half 2011 EBITA rose to € 6.5 million. ROS increased from 7.6% in the first half of 2010 to 8.2% as a result of better utilization of capacity.
Turnover increased by 10.0%. The turnover increased due to a higher level of spending by consumers and an increased priority of investments in multimedia systems and peripheral devices to upgrade broadband connections.
Turnover increased by 26.7% mainly due to a strong second quarter. The financing of investments in fibre networks in Europe was more prosperous than the year before. Especially in the second quarter of 2011, the number of pipeline projects increased, which confirmed that there will be further growth of the investments in fibre networks.
Turnover fell by 3.8%. Excluding the turnover decrease as a result of the sale of GSM operations, turnover showed an increase of 14%. This increase was mainly due to the strong growth of connectivity systems due to an increased level of maintenance investments in copper networks.
Building Solutions develops, produces and delivers solutions in the field of efficient electro technical technology ranging from applications within buildings to technical systems which, linked to software, provide efficiency solutions for the care and security sectors. The knowhow focuses on connectivity systems combined with efficiency solutions to reduce the throughput-time for the realization of installations within buildings. In addition, the segment focuses on intelligent video, intercom and access monitoring systems for a number of specific sectors, including elderly care, parking and security for buildings and work sites.
(In million € unless otherwise stated) 1st half 2011 1st half 2010 Difference in% Turnover 193.3 160.3 + 20.6 EBITA 9.2 11.1 - 16.9 ROS 4.8% 6.9%
Turnover within the Building Solutions segment increased to € 193.3 million (20.6%) in the first half of 2011. Acquisitions accounted for 8.3% of the growth and higher raw material prices for 3.6%. All segments contributed to growth. The most significant increase was realized in the security segment also due to the acquisitions of Alphatronics and Siqura.
In the first half of 2011, EBITA declined to € 9.2 million. Difficult market conditions in the connectivity segment due to a decreased level of activity in the building and construction sector had a negative impact on the result particularly in the second quarter. In addition, in the first half of 2011 there were the one-off expenses associated with the acquisition and integration of Siqura in the amount of € 2.0 million. These expenses occurred in both the first and the second quarter. No additional expenses are expected for the integration. Building Technologies showed an increase in result.
The margin (ROS) decreased from 6.9% in the first half of 2010 to 4.8% in the first half of 2011.
Turnover in building technologies increased by 12.2%. This increase was primarily due to an increasing market share within the utility sector due to the introduced innovations in the area of care systems and the increasing need for efficiency solutions in the areas of energy and structured cabling systems that can save installation time. The investments in product and market development were increased in order to further strengthen the position of this promising segment.
Turnover increased by 37.6%. The organic growth in security systems was more than 10%. The integration of Optelecom-NKF (Siqura) in the security cluster, which was acquired in February, was successful. The one-off costs associated with the acquisition and integration of Siqura had a negative impact on EBITA-results of € 2.0 million. R&D and marketing were strengthened by combining activities within this cluster. The addition of Siqura has significantly strengthened the position for acquiring larger orders through high-performance proprietary technology.
Turnover increased by 15.7%. Of this increase, 7% was due to higher raw material prices. Market conditions were challenging due to the decline in market volume in the building and construction sector and the associated margin pressure. More turnover was achieved in segments with lower margins which after a while will have the potential for additional, more interesting parts of the portfolio. In Germany, the sales of solar solutions lagged severely due to reluctance of the German government to provide subsidies. Meanwhile, the market for solar systems has been restored to a high level of investment.
Industrial Solutions, develops, produces and delivers solutions ranging from specialty cable, plug and play cable systems to integrated systems for the production of car and truck tyres. Its knowledge in the field of automation of production processes and the improvement of the reliability of production systems gives TKH the distinctive ability to respond to the need in a number of specialised industrial sectors, such as tyre manufacturing, robotics, medical and machine construction industries, to increasingly outsource the construction of production systems or modules.
(In million € unless otherwise stated)
| 1st half 2011 |
1st half 2010 |
Difference In % |
|
|---|---|---|---|
| Turnover | 277.1 | 190.0 | + 45.9 |
| EBITA | 37.0 | 18.3 | + 102.1 |
| ROS | 13.4% | 9.6% |
Turnover within the Industrial Solutions segment increased to € 277.1 million during the first half of 2011; an increase of € 87.1 million, of which € 6.8 million was due to higher raw material prices. The increased turnover was realized in both connectivity systems and manufacturing systems.
EBITA rose to € 37.0 million in the first half 2011. The strong growth in sales and related utilization of capacity and efficiency resulted in the significantly increased EBITA. ROS increased from 9.6% in the first half of 2010 to 13.4%.
Turnover in specialty and cable systems increased by 29.2%. Increased raw material prices had a positive effect on sales of 7%. Turnover growth continued in the second quarter due to the high level of investment in the industrial sector. A significant increase in demand was achieved in the robotics- and the medical industry. The machine building industry, particularly in Germany, also showed strong growth. The trend towards ordering more complete modules and systems continued, which enabled an increase in market share.
Turnover rose by 64.8%, mainly driven by the tyre manufacturing systems segment. The growth was largely achieved in Asia. The tyre manufacturers, who choose our technology, gain more and more ground by the high quality and production efficiency of the technology, due to which they outperform the market. Aside from the Asian customers, several western tyre manufactures have presented investment programs for capacity- and efficiency improvements. The associated order intake increased, however the record order intake of 2010 could not be surpassed. The order intake during the second quarter amounted to € 45 million and was in line with the first quarter of 2011. The MAXX Cutter has passed the final development at our launching customer with good results and is ready for serial production and orders.
The forecast for the second half of the year for the market segments in which TKH operates shows a mixed picture.
Within Telecom Solutions the order portfolio has increased in recent months and there are fewer restrictions on the financing of new projects for the installation of fibre networks.
Within Building Solutions it is expected that investments in the utility sector in Europe will continue to decline. In contrast, the innovations of the TKH Group in the area of security and energy saving systems show perspective for market share growth, and some segments are showing growth, including the market for infrastructure projects and the market for alternative energy.
Within Industrial Solutions there is a high level of order intake in all market segments in which TKH operates. However, various segments within the industrial market are seeing signs of a weakening demand. Whether this will impact the activity level in the second half of the year is unclear. Precaution will be taken into account here.
Barring unforeseen circumstances, TKH expects on balance that over the full year 2011 a net profit before amortization between € 55 and € 60 million will be realized.
Haaksbergen, 24 August, 2011
Executive Board
For further information: JMA (Alexander) van der Lof MBA, Chairman of the Executive Board Phone +31 53 5732903 Website: www.tkhgroup.com
| 10 November 2011 | Trading update Q3 2011 |
|---|---|
| 14 March 2012 | Q4 and full year results 2011 |
| 9 May 2012 | Trading update Q1 2012 |
| 15 May 2012 | General Meeting of Shareholders 2012 |
| 22 August 2012 | Q2 and interim results 2012 |
| 8 November 2012 | Trading update Q3 2012 |
Technology company TKH Group NV (TKH) is an internationally active group of companies that specialises in the creation and delivery of innovative Telecom, Building and Industrial Solutions.
TKH specialises in solutions rather than certain types of activity. In TKH's business segments Telecom Solutions, Building Solutions and Industrial Solutions basic technologies in the fields of ICT and electro-technology from the various operating companies are combined – frequently in partnership with suppliers - to develop total solutions.
Specialists in the fields of marketing, process development, design, engineering and logistics add the final touch of advice and project implementation to enable TKH to offer its customers truly custom-made solutions. We subsequently offer these locally-developed concepts internationally, making optimal use of TKH's in-house experience and know-how.
Telecom Solutions develops, produces and supplies systems ranging from outdoor infrastructure for telecom and CATV networks through to indoor home networking applications. The focus in this business is to provide customers with systems that are totally care-free due to the accompanying system guarantees we provide. TKH Telecom Solutions operates in three distinct sub-segments: optical fibre networks, copper networks and indoor telecom systems.
Building Solutions develops, produces and supplies solutions in the field of efficient electrotechnology ranging from applications within buildings through to technical systems that – combined with software – provide efficiency solutions for the care and security sectors. Building Solutions operates in three distinct sub-segments: building technologies, security systems and connectivity systems.
Industrial Solutions, develops, produces and supplies solutions ranging from specialty cable, "plug and play" cable systems through to integrated systems for the production of care and truck tyres. Industrial Solutions operates in two distinct sub-segments: connectivity systems and manufacturing systems.
TKH's continuous focus on research and development gives the company a portfolio of products and services that guarantee technologically-advanced solutions. TKH and its various operating companies are active worldwide. Growth is concentrated in North West and Central and Eastern Europe and Asia. In 2010, TKH booked turnover of € 894 million with a workforce of 3,706 employees.
In thousands of euros
| 1 | st half year 2011 | 1st half year 2010 |
|||
|---|---|---|---|---|---|
| Net turnover 1) Other operating income Total turnover |
548,244 1,077 549,321 |
420,138 478 420,616 |
|||
| Costs of raw materials, consumables, trade products and subcontracted work |
341,413 | 257,346 | |||
| Personnel expenses | 104,293 | 84,749 | |||
| Depreciation | 7,423 | 6,912 | |||
| Amortization | 5,988 | 5,312 | |||
| Other operating expenses | 49,850 | 41,228 | |||
| Total operating expenses | 508,967 | 395,547 | |||
| Operating result | 40,354 | 25,069 | |||
| Financial income and expenses | -3,783 | -2,352 | |||
| Share in result of associates | 452 | 24 | |||
| Result before tax | 37,023 | 22,741 | |||
| Tax on profit | 8,078 | 6,777 | |||
| Net result | 28,945 | 15,964 | |||
| Attributable to: | |||||
| Shareholders of the company | 28,538 | 15,637 | |||
| Minority interest | 407 | 327 | |||
| 28,945 | 15,964 | ||||
| Earnings per share | |||||
| Weighted average number of shares (x 1,000) Weighted average number of shares for the purpose |
37,044 | 36,508 | |||
| of diluted earnings per share (x 1,000) | 37,220 | 37,198 | |||
| Ordinary earnings per share before amortization (in €) | 0,83 | 0.48 | |||
| Ordinary earnings per share (in €) | 0,77 | 0.43 | |||
| Diluted earnings per share (in €) | 0,77 | 0.42 |
1) Including change in inventory of finished goods, work in progress and construction contracts of € 63.2 million (H1 2010: € 32.0 million).
In thousands of euros
| st half year 2011 1 |
1st half year 2010 | |||
|---|---|---|---|---|
| Result for the period (ended 30 June) | 28,945 | 15,964 | ||
| Currency translation differences Effective portion of changes in fair value of cash flow |
-3,272 | 4,495 | ||
| hedges (after tax) | 2,042 | -1,979 | ||
| Net income and expense recognized directly in equity |
-1,230 | 2,516 | ||
| Total result for the period | 27,715 | 18,480 | ||
| Attributable to: | ||||
| Shareholders of the company | 27,308 | 18,153 | ||
| Minority interest | 407 | 327 | ||
| Total result for the period | 27,715 | 18,480 |
In thousands of euros
| 30-06-2011 | 31-12-2010 | |||
|---|---|---|---|---|
| Assets | ||||
| Non-current assets | ||||
| Intangible non-current assets | 173,223 | 167,770 | ||
| Tangible non-current assets | 154,598 | 153,737 | ||
| Investment property | 3,318 | 3,363 | ||
| Financial non-current assets | 15,467 | 11,346 | ||
| Deferred tax assets | 7,611 | 7,782 | ||
| Total non-current assets | 354,217 | 343,998 | ||
| Current assets | ||||
| Inventories | 168,324 | 137,336 | ||
| Receivables | 214,032 | 165,260 | ||
| Cash and cash equivalents | 19,275 | 23,027 | ||
| Total current assets | 401,631 | 325,623 | ||
| Assets held for sale | 7,165 | 7,165 | ||
| Total assets | 763,013 | 676,786 | ||
| Equity and liabilities | ||||
| Group equity | ||||
| Shareholders' equity | 330,273 | 317,465 | ||
| Minority interest | 1,675 | 1,565 | ||
| Total group equity | 331,948 | 319,030 | ||
| Non-current liabilities | ||||
| Non-current liabilities | 125,000 | 55,000 | ||
| Deferred tax liabilities | 32,258 | 30,337 | ||
| Provision for pensions | 12,127 | 12,016 | ||
| Other provisions | 7,832 | 8,511 | ||
| Total non-current liabilities | 177,217 | 105,864 | ||
| Current liabilities | ||||
| Borrowings | 22,563 | 31,943 | ||
| Trade and other payables | 223,295 | 211,554 | ||
| Current income tax liabilities | 3,950 | 5,523 | ||
| Provisions | 4,040 | 2,872 | ||
| Total current liabilities | 253,848 | 251,892 | ||
| Total equity and liabilities | 763,013 | 676,786 |
| In thousands of euros | st half 1 |
st half 1 |
|---|---|---|
| year | year | |
| 2011 | 2010 | |
| Cash flow from operating activities | ||
| Operating result | 40,354 | 25,069 |
| Depreciation and amortization | 13,411 | 12,224 |
| Share and option schemes not resulting in a cash flow | 1,360 | 601 |
| (Gain)/loss on sale or disposal of tangible assets | 0 | 576 |
| Changes in provisions | 289 | -4,369 |
| Changes in working capital | -60,868 | -29,893 |
| Cash flow from operations | -5,454 | 4,208 |
| Interest paid | -3,786 | -3,560 |
| Income tax paid | -9,639 | -2,445 |
| Net cash flow from operating activities (A) | -18,879 | -1,797 |
| Cash flow from investing activities | ||
| Dividends received from non-consolidated associates | 452 | 0 |
| Investments less disposals in tangible non-current assets | -9,700 | -5,031 |
| Result on investments and disposals of investment property | 0 | -70 |
| Disposals of assets held for sale | 0 | 78 |
| Acquisition of subsidiaries | -12,809 | -6,514 |
| Acquisition of associates | -4,179 | 0 |
| Investments in other intangible non-current assets | -1,617 | -2,608 |
| Net cash flow from investing activities (B) | -27,853 | -14,145 |
| Cash flow from financing activities | ||
| Dividends paid | -14,667 | -9,994 |
| Sold less purchased shares for share and option schemes | -1,490 | -404 |
| Proceeds from long-term debts | 70,000 | 12,500 |
| Change in borrowings | -9,380 | -19,683 |
| Net cash flow from financing activities (C ) | 44,463 | -17,581 |
| Net decrease in cash and cash equivalents (A+B+C) | -2,269 | -33,523 |
| Exchange differences | -1,483 | 933 |
| Change in cash and cash equivalents | -3,752 | -32,590 |
| Cash and cash equivalents at 1 January | 23,027 | 43,554 |
| Cash and cash equivalents at 30 June | 19,275 | 10,964 |
| Sh are ca pita l |
Sh are pr em ium |
Leg al r ese rve |
Re val res uat erv ion e |
rev Inv alu est res me atio erv nt e n |
Tra nsl res atio erv e n |
hed ge Ca res sh- erv flow e |
Oth er res erv e |
Un app rop riat pro ed fit |
Tot al |
Min orit y in ter est |
Tot al e qui ty |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2010 | 9,256 | 12,444 | 13,668 | 23,770 | 0 | 3,640 | -6,826 | 221,932 | 2,652 | 280,536 | 1,324 | 281,860 |
| Profit in financial year Reclassification of put options held by minority shareholders Changes cash-flow hedges Exchange differences Total result |
0 | 0 | 199 199 |
0 | 0 | 4,446 4,446 |
-1,979 -1,979 |
-199 -199 |
15,637 15,637 |
15,637 0 -1,979 4,446 18,104 |
327 49 376 |
15,964 0 -1,979 4,495 18,480 |
| Appropriation profit last year Dividends Dividends to minority shareholders Share and option schemes (IFRS 2) Purchased shares for share and option schemes Sold shares for share and option |
139 | -139 | 2,652 -9,842 576 -1,667 |
-2,652 | 0 -9,842 0 576 -1,667 |
-152 | 0 -9,842 -152 576 -1,667 |
|||||
| schemes Capitalized development costs and options on shares in participations that have been recognized as owned Balance at 30 June 2010 |
9,395 | 12,305 | -224 13,643 |
23,770 | 0 | 8,086 | -8,805 | 1,263 224 214,939 |
15,637 | 1,263 0 288,970 |
1,548 | 1,263 0 290,518 |
| Balance at 1 January 2011 | 9,395 | 12,305 | 11,616 | 25,271 | 1,861 | 6,449 | -6,029 | 216,392 | 40,205 | 317,465 | 1,565 | 319,030 |
| Profit in financial year Reclassification of put options held by minority shareholders Change in cash-flow hedges Exchange differences Total result |
0 | 0 | -387 -387 |
0 | 0 | -3,245 -3,245 |
2,042 2,042 |
387 387 |
28,538 28,538 |
28,538 0 2,042 -3,245 27,335 |
407 -27 380 |
28,945 0 2,042 -3,272 27,715 |
| Appropriate profit last year Dividends Dividends to minority shareholders Share and option schemes (IFRS 2) Purchased shares for share and option schemes Sold shares for share and option schemes |
93 | -93 | 40,205 -14,397 1,360 -5,095 3,605 |
-40,205 | 0 -14,397 0 1,360 -5,095 3,605 |
-270 | 0 -14,397 -270 1,360 -5,095 3,605 |
|||||
| Capitalized development costs and options on shares in participations that |
The interim financial report has been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2010. The accounting principles applied for the valuation of assets and liabilities and the determination of result are the same as those applied in the consolidated financial statements as at and for the year ended 31 December 2010.
The preparation of the condensed consolidated interim financial statements 2011 requires from management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2010.
The number of outstanding (depositary receipts of) shares as per 31 December 2010 was the equivalent of 36,888,585. As a result of the exercise of options rights and share schemes, a balance of 49,334 (depositary receipts of) shares were delivered and sold in the first half of 2011. In addition, a stock dividend of 371,408 (depositary receipts of) shares was paid out from the share premium reserve. As a result, the number of (depositary receipts of) shares outstanding with third parties as per 30 June 2011 was 37,309,327.
At the General Meeting of Shareholders the dividend over 2010 was declared at € 0.61 per (depositary receipt of) ordinary share. The dividend was proposed at the option of shareholders in cash or as a stock dividend. The dividend on the priority shares was declared at € 0.05 per share. The total amount in dividends paid in the first half of 2011 was € 14,187,813 and this amount was charged to the other reserves. For stock dividend an amount of € 92,852 was charged against the share premium reserve.
| Telecom Solutions |
Building Solutions |
Industrial Solutions |
Not attributable |
Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |
| st half year 1 |
||||||||||
| Turnover | 78,860 | 70,264 | 193,325 | 160,341 | 277,136 | 190,011 | 0 | 0 | 549,321 | 420,616 |
| Segment EBITA | 6,466 | 5,374 | 9,200 | 11,076 | 37,003 | 18,309 | -6,327 | -4,378 | 46,342 | 30,381 |
| Amortization | -570 | -443 | -3,771 | -3,000 | -1,647 | -1,862 | 0 | -7 | -5,988 | -5,312 |
| Segment operating result | 5,896 | 4,931 | 5,429 | 8,076 | 35,356 | 16,447 | -6,327 | -4,385 | 40,354 | 25,069 |
| Financial income and expenses | -3,783 | -2,352 | ||||||||
| Share of result of associates | 452 | 24 | ||||||||
| Tax on profit | -8,078 | -6,777 | ||||||||
| Net result | 28,945 | 15,964 |
| In thousands of euros | st half 1 year 2011 |
st half 1 year 2010 |
|---|---|---|
| Net profit attributable to shareholders of the company | 28,538 | 15,637 |
| Net profit attributable to minority shareholders | 407 | 327 |
| Net profit | 28,945 | 15,964 |
| Amortization of acquisition-related intangible non-current assets based on | ||
| "purchase price allocations" | 3,350 | 2,828 |
| Taxes on the amortization | -998 | -872 |
| Net profit before amortization | 31,297 | 17,920 |
| Attributable to minority interest | -407 | -327 |
| Ordinary earnings before amortization attributable to shareholders of the | ||
| company | 30,890 | 17,593 |
On 27 January 2011 TKH acquired a 100% interest in Optelecom-NKF, Inc., at Germantown, the United States. The shares, listed on the Nasdaq, have been acquired after concluding a merger agreement (cash merger) with the company. The transaction was financed with own means. The activities of Optelecom-NKF have been integrated in TKH's security-cluster, which is part of the business sector Building Solutions. Optelecom-NKF's portfolio is complementary to TKH's existing portfolio. This acquisition is also in line with TKH's objective to increase the turnover generated by the security solutions. The name of Optelecom-NKF has been changed after the acquisition into Siqura.
The transaction is accounted for according to the "purchase method of accounting". The combined net assets acquired is comprised as follows:
| Book- value |
Adjust- ments |
Fair Value |
|
|---|---|---|---|
| Intangible non-current assets | 155 | 6,761 | 6,916 |
| Tangible non-current assets | 367 | 367 | |
| Inventories | 3,181 | 3,181 | |
| Receivables | 4,840 | 4,840 | |
| Cash / (borrowings) | -5,895 | -5,895 | |
| Other provisions | -311 | -311 | |
| Deferred tax liabilities | -88 | -1,690 | -1,778 |
| Non-current liabilities | -3,214 | -3,214 | |
| Acquired net assets | -965 | 5,071 | 4,106 |
| Goodwill paid | 2,808 | ||
| Cost of acquisition | 6,914 | ||
| Bankdebt of the acquired company | 5,895 | ||
| Payment in cash | 12,809 |
The goodwill has been paid because of synergy and profit expectations. The goodwill is not deductible for income taxes. The expenses related to the acquisition, which have been recognized in the first half of 2011, were € 2.0 million, consisting of acquisition- and integration costs. The acquired company has been consolidated in the result of TKH in the first half year with a loss of 0.4 million. When this acquisition had been effected at 1 January, the revenue would be € 550.6 million.
The contingent liabilities which are not reflected in the balance sheet, as reported in the financial statements for 2010, have not essentially changed in the first half of 2011.
On 1 July 2011 TKH has reached agreement on the acquisition of 90% of the shares in Mextal BV based in Nuenen. The acquisition accounting has not yet taken place in 2011 because of the short timeframe. Consequently the precise amount of goodwill and acquired fair values of the assets and liabilities is yet unknown. Mextal specializes in the delivery of total solutions in the healthcare sector. The company's strategy is to offer various systems for observation, (acoustic) surveillance, image-based communications, social alarms and video care, integrated within a total concept. The acquisition of Mextal strengthens TKH's product portfolio of healthcare solutions. Mextal has 24 employees (FTEs) and reports an annual turnover of more than € 5 million. The activities of Mextal will be part of TKH's segment building technologies. The acquisition of Mextal will have a positive impact on TKH's earnings per share from the third quarter of 2011 onwards. TKH has financed the acquisition from existing cash in hand. Except for the acquisition mentioned before, no events of fundamental significance for insight into the financial statements and the preceding period occurred after balance sheet date.
In our Annual Report 2010 we have extensively described certain risk categories and risk factors which could have an (adverse) impact on our financial position and results. Those risk categories and risk factors are still applicable.
This report contains the interim financial report of TKH Group NV. The interim financial report ended 30 June 2011 consists of the condensed consolidated interim financial statements, the interim director's report and Executive Board declaration. The information in this interim financial report is unaudited. The condensed consolidated interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the consolidated financial statements of TKH for the year ended 31 December 2010.
The Executive Board hereby declares that to the best of their knowledge, the interim financial statements, which have been prepared in accordance with lAS 34 Interim Financial Reporting, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole, and the interim director's report gives a fair review of the information required pursuant to section 5:25d(8)/(9) of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
Haaksbergen, 23 August 2011
Executive Board J.M.A. van der Lof MBA, chairman E.D.H. de Lange MBA A.E. Dehn
The figures in the interim financial report have not been audited.
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