Annual Report • Mar 28, 2014
Annual Report
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The Dutch language text of the annual report is the official version. The English language version is provided as a courtesy to our shareholders. JENSEN-GROUP has verified the two language versions and assumes full responsibility for matching both language versions.
In this report, the terms "JENSEN-GROUP" or "Group" refer to JENSEN-GROUP NV and its consolidated companies in general. The terms "JENSEN-GROUP NV" and "the Company" refer to the holding company, registered in Belgium. Business activities are conducted by operating subsidiaries throughout the world. The terms "we", "our", and "us" are used to describe the Group.
| Key figures per share | 4 |
|---|---|
| Key figures | 6 |
| Message to the shareholders | 8 |
| Profile of the Group | 10 |
| JENSEN-GROUP Profile We think globally and act locally |
13 |
| Activities 2013 Outlook 2014 |
|
| Information for shareholders and investors Share price evolution Communication strategy Change in shareholdings Shareholders' calendar |
16 |
| Litigation | 18 |
| Human Resources | 18 |
| Product Development | 19 |
| Investments and Capital Expenditures Outlook 2014 |
19 |
| Financial report | 21 |
| Key figures per share | December 31 | December 31 |
|---|---|---|
| Financial year ended (in euro) | 2013 | 2012 |
| Operating cash flow (EBITDA) | 2,19 | 2,90 |
| Net profit share of the Group, continuing operations (= earnings per share) | 1,23 | 1,31 |
| Net cash flow continuing operations | 1,55 | 1,99 |
| Equity (= book value) | 7,83 | 6,82 |
| Gross dividend | 0,25 | 0,25 |
| Number of shares outstanding (average) | 7.999.536 | 8.002.968 |
| Number of shares outstanding (year-end) | 7.943.200 | 8.002.968 |
| Share price (high) | 13,46 | 12,28 |
| Share price (low) | 9,79 | 7,24 |
| Share price (average) | 10,96 | 8,91 |
| Share price (December 31) | 13,15 | 11,55 |
| Price/earnings (high) | 10,90 | 9,40 |
| Price/earnings (low) | 8,00 | 5,50 |
| Price/earnings (average) | 8,90 | 6,80 |
| Price/earnings (December 31) | 10,70 | 8,80 |
BELAS: Brussels All Shares
| Consolidated key figures Financial year ended (in thousands of euro) |
December 31 2013 |
December 31 2012 |
|---|---|---|
| Revenue | 221.416 | 229.705 |
| Operating profit (EBIT) | 15.001 | 17.464 |
| Operating cash flow (EBITDA) | 17.518 | 23.230 |
| Net interest charges | 754 | 581 |
| Profit before taxes | 13.523 | 15.239 |
| Net profit continuing operations | 9.874 | 10.499 |
| Profit discontinued operations | -72 | -103 |
| Net profit (= share of the Group) | 9.802 | 10.396 |
| Added value | 92.186 | 96.909 |
| Net cash flow continuing operations | 12.391 | 15.922 |
| Equity | 62.210 | 54.585 |
| Net financial debt | -2.720 | 10.878 |
| Working capital | 68.253 | 75.450 |
| Non-Current Assets (NCA) | 24.951 | 23.683 |
| Capital Employed (CE) | 93.204 | 99.133 |
| Market capitalization (high) | 107.674 | 98.276 |
| Market capitalization (low) | 78.315 | 57.941 |
| Market capitalization (average) | 87.675 | 71.342 |
| Market capitalization (December 31) | 104.453 | 92.434 |
| Entreprise value (December 31) (EV) | 101.733 | 103.312 |
| RATIOS | ||
| EBIT/Revenue | 6,78% | 7,60% |
| EBITDA/Revenue | 7,91% | 10,11% |
| ROCE (EBIT/CE) | 15,60% | 17,28% |
| ROE (Net profit/Equity) | 16,91% | 18,32% |
| Gearing (Net debt/Equity) | - | 19,93% |
| EBITDA Interest coverage | 23,23 | 39,98 |
| Net financial debt/EBITDA | 0,23 | 0,55 |
| Working capital/Revenue | 32,45% | 33,05% |
| EV/EBITDA (December 31) | 5,81 | 4,45 |
After a record first half year, we were not able to sustain the momentum in the second half of 2013, as several projects were postponed or delayed. We continue to focus on cost reduction and improved project management. We increased our global presence by expanding our activities in Japan and acquiring our Austrian distributor.
The overall heavy-duty laundry market continues to be very competitive. For this reason, we seek to match the expectations of our customers at all times by developing new products that enable us to be unique in the market place. We have been able to take advantage of our experience with new product introductions and services and continued to use these in product development in 2013.
In our "Go East" strategy, we reached the milestone of a second full year's operations of our plant in Xuzhou, China and the incorporation of Jensen Japan. As a next step, we plan to extend local manufacturing with more products dedicated to the Chinese market. In China we continue to develop our own service organisation.
Revenues, EBIT and net income decreased as a result of the lower activity in the second half of 2013. The size of our sales structure requires a certain volume of activity to utilize our manufacturing capacity fully. We also need a good mix of activity among the various technology centers to maximize our utilization and not to lose production slots. In addition, we would remind readers that the 2012 results include special non-recurring profit items.
Net debt decreased as a result of the lower activity in the second half, tight working capital control and stable cash generation. At year end this results in the Group being debt free. Following our capital decrease of 12 MEUR in December 2012, the Group announced in November 2013 a program to buy back 10% of its shares.
Continued investment in product development and in market presence enables us to better meet customers' needs. Many of these development efforts are targeted at reducing consumption of energy and water as well as increasing the availability of our products and services. Our CleanTech products enable our customers to reduce their average water consumption below 4 liters per kg linen. Our energy reduction efforts have made it possible to operate below 1 KW/h per kg linen processed. Our CleanTech efforts are pushing the benchmarks in our industry and are becoming state of the art.
A second important area of development is automation, where the integration of technologies allows customers to monitor and track production in heavy-duty laundry operations in real-time. Our Cockpit software for large turnkey projects is well received by our customers. Cockpit ties our equipment and information together into a seamless laundry solution and positions us perfectly as a "One stop Shop" for our customers all over the world.
JENSEN-GROUP continues to invest in building a strong JENSEN culture within our many operations worldwide. The Group is managed by a truly international JENSEN Management Team. During 2013, JENSEN-GROUP continued its leadership development program. This program focuses on providing better guidance to local operations and on better overall alignment with the group strategy of aiming to be the best global laundry solution provider with a local presence in each important market.
During the past decade, the Group has been through various economic recessions, mergers, divestments as well as a number of acquisitions. All of this has enhanced the experience of our management, staff and employees, while our continuing success demonstrates our ability to adapt quickly to different market conditions, making our brand, our products and our employees stronger. 2013 confirmed that our investments in Asia and in distribution are leading to a brighter future. We believe that the results for 2013 can be qualified as satisfactory considering the impact of the slower second half year.
We start 2014 with a smaller order backlog than at the beginning of 2013. Customers are taking more time to order or are experiencing difficulties in financing larger projects, the latter phenomenon being most noticeable in certain parts of Europe. Our investments in Asia and increased activity in the USA reduce our dependency on Europe. We rely on a highly motivated staff that will continue to pursue each and every business opportunity in our existing markets. We have further expanded our worldwide presence by acquiring our Austrian distributor ÖWM and starting our own presence in Japan. Broadening our presence makes the Company less vulnerable to a downturn in any given region of the world.
We thank our customers for their continued trust and loyalty. We will strive to meet their expectations in terms of the productivity, reliability and environmental impact of our products.
We also thank our staff throughout the world for their dedication and ability to constantly adapt and improve. As we set higher performance standards, we expect more from our human resources. We will continue to invest in our employees in order to make sure that we can continue to grow our company.
Last but not least, we thank our shareholders for their support to the Board of Directors and to management in our journey to be the leader in this industry.
Jesper Munch Jensen Raf Decaluwé
Chief Executive Officer Chairman of the Board of Directors
It is the aim of the JENSEN-GROUP to offer the best solutions to our customers worldwide in the heavy-duty laundry industry. We work for and with our customers to provide preferred laundry processing solutions by supplying sustainable single machines, systems and integrated solutions. We will continuously grow our people and our efficiency so that we can offer environmental friendly innovative products and services. By combining our global skills and offering local presence to our customers, we will be able to create profitable growth and responsible industry leadership.
Through technical excellence, significant investment in product development and specialized industry knowledge, the JENSEN-GROUP is able to plan, develop, manufacture, install and service everything from single machines and processing lines to complete turnkey solutions. Our partners include textile rental suppliers, industrial laundries, central laundries as well as hospital and hotel on-premise laundries. We believe that our customers know their laundry better than anybody else and that with the help of the JENSEN-GROUP's comprehensive laundry competence and experience we are able to find the right solution for their specific requirements.
During 2012, the Swiss production was transferred to Denmark and Germany. As a consequence, all products designed and manufactured by JENSEN are under the responsibility of two technology centers: washroom technology and finishing technology (flatwork and garment). Next to this, JENSEN-GROUP is organized into 4 Business Regions spanning the world. The 2 technology centers develop, manufacture and deliver a full, innovative and competitive range of JENSEN products to our customers through our worldwide network of Sales and Service Centers (SSCs) and authorized local distributors. This worldwide distribution network together with our laundry design capabilities, project management expertise and our after sales service capability make JENSEN-GROUP uniquely positioned to act locally while meeting our customer's expectations fast and reliably whether his requirement is for a single machine or a complete turn-key solution anywhere in the world.
| 2013 | 221 | |
|---|---|---|
| 2012 | 230 |
The JENSEN-GROUP has a manufacturing platform of 5 factories in 5 countries. Each manufacturing site focuses on a specific technology for the heavy-duty laundry industry.
The JENSEN-GROUP sells its products and services under the JENSEN™ brand through wholly-owned sales and service centers and through independent distributors worldwide.
Our market coverage, our extensive know-how, our turnkey project expertise and our range of heavy-duty machines and systems are unique for the heavy-duty laundry industry.
The JENSEN-GROUP generates its revenue geographically as follows:
| In million euro | Europe | North America | Other | Total |
|---|---|---|---|---|
| 2013 | 132 | 44 | 45 | 221 |
| 2012 | 153 | 45 | 32 | 230 |
JENSEN-GROUP is present with its own Sales and Service Centers in the most important markets and sells a range of single machines, systems and turnkey projects.
JENSEN-GROUP produces equipment and solutions in the following manufacturing companies:
• JENSEN GmbH in Harsum, Germany and JENSEN USA in Panama City, FL, USA – Washroom Technology
• JENSEN Denmark in Rønne, Denmark, JENSEN China in Xuzhou, China and JENSEN Sweden in Borås, Sweden – Finishing Technology
JENSEN-GROUP sells equipment and solutions through own sales and service centers (SSCs) and through independent distributors. The relative share of sales through our own SSCs has increased in recent years because they operate in the most important heavy-duty markets like Benelux, Germany, United Kingdom, Sweden, France, Italy, Singapore, China, Australia, Switzerland, Austria, Brazil, Japan and North America. Sales and service centers play a critical coordination role for the increasing number of complex installation projects involving several of our production companies simultaneously. Local presence enables us to deliver after-sales services on demand to our customers. On top of that, we have an experienced distributor network base in more than 40 countries.
| In million euro | 2013 | 2012 | |
|---|---|---|---|
| Revenue | 221.4 | 229.7 | |
| EBIT | 15.0 | 17.5 | |
| Investments | 5.2 | -3.5 | |
| Number of employees | 1,130 | 1,160 |
Revenue decreased owing to the lower activities in the second half of the year, with several projects postponed or delayed. This reflects among other things the difficulties experienced by certain customers in finding appropriate financing.
These fluctuations in demand throughout the year called for fine-tuning of capacity in our various entities. The Group enjoyed the benefit of flexible employment systems in various countries and of a very flexible workforce.
The own sales and service centers (SSC) continue to generate the majority of our turnover, confirming the importance of having our own local presence in the main markets. We further strengthened our position in the European markets by acquiring our distributor in Austria and we are increasing our presence in many emerging markets like Dubai and Brazil.
JENSEN-GROUP is a credible one-stop supplier for large turnkey projects worldwide.
Profitability is lower than in 2012. This is due to a lower activity level, producing less revenue to absorb overheads and the absence of significant one-time non-recurring items that improved the profit in 2012 by 1.9 million euro.
For 2013, JENSEN-GROUP reports net investment of 5.2 million euro, mainly in the acquisition of its Austrian distributor and in equipment. The net investment of -3.5 million euro in 2012 related to the sale of the Swiss building and some machinery following the transfer of the production from Switzerland to Denmark and Germany.
The order backlog is 17% lower than at December 31, 2012. The decrease occurred during the year in various markets primarily in Southern European countries most affected by the economic downturn. JENSEN-GROUP still considers the order backlog adequate to get off to a good start in 2014. The main business risks have not changed materially from last year. Major risk factors are the volatility in the financial markets that affects our customers' investment decisions and capacity to find financing, as well as competitive pressure. Other risks are exchange rate volatility and fluctuating raw material prices, energy and transportation costs. We refer to the separate section in the report of the Board of Directors, setting out the risk factors associated with our business and industry.
The operational objectives for 2014 are to continue the growth in Asia, North and South America and to keep our sales and market share stable in Europe. In product development we are focusing our activities on further automation and on efficiency gains for our customers when using our products or systems. Our internal processes are another area of improvement, where we are working to enhance our quotation process and our project management process.
The JENSEN-GROUP share has been quoted on the Euronext Stock Exchange under the ticker JEN (Reuters: JEN.BR Bloomberg JEN.BB) since June 1997. The price of the JENSEN-GROUP shares can be found online on the following websites:
The JENSEN-GROUP stock price increased from 11.55 euro at the end of 2012 to 13.15 euro at the end of 2013, with an average daily trading volume of 3,692 shares compared with 3,509 in 2012 (see graph page 5).
The JENSEN-GROUP will maintain its communication strategy based on the following principles:
There were no changes in ownership during 2013.
The ownership structure as per December 31, 2013 is set out below:
The Investor Relations Manager is also available to meet individual shareholders, analysts, specialized journalists and institutional investors and enable them to see the JENSEN-GROUP's short and long-term potential, in respect of both the business as a whole and/or specific activities. Presentations, meetings and site visits are organized on request.
The JENSEN-GROUP's Annual Report, press releases and other information are available on the corporate website (http://www. jensen-group.com).
Shareholders wishing to convert registered shares into dematerialized shares can contact the Investor Relations Manager.
Shareholders and investors who want to receive the Annual Report, the financial statements of JENSEN-GROUP NV, press releases or other information with respect to the JENSEN-GROUP can also contact the Investor Relations Manager.
JENSEN-GROUP NV Mrs Scarlet Janssens Bijenstraat 6 BE 9051 Ghent (Sint-Denijs-Westrem) Belgium Tel. +32.9.333.83.30 E-mail: [email protected]
Provisions have been set up in respect of all claims that, based on prudent judgment, are reasonably founded. We keep track of all potential litigation and pending legal cases at a central level. In this chapter, we only cover cases against the Company or one of its subsidiaries. Pending issues per major category are:
Product liability claims:
Claims from employees:
• 1 claim from employees in the USA
Public liability:
Environmental risk:
• One pending matter in the USA
Most of these claims are covered by insurance. Based on legal advice taken, management does not expect these claims to significantly impact the Group's financial position or profitability.
The number of employees at year-end has developed as follows:
| 2013 | 1,130 |
|---|---|
| 2012 | 1,160 |
The JENSEN-GROUP's key technologies encompass the entire laundry process, including the washroom itself, the logistics of moving linen and textiles, finishing with feeders, ironers and folders, as well as software technology to control the overall process. In short, a large number of different technologies are used in the process of recycling soiled linen and textiles into clean linen.
Given the wide range of technologies needed to cater for the needs of our customer base, we do not focus on fundamental research and development. Our task is to take existing technologies and incorporate them into our industry processes.
In recent years we have invested in further upgrading and expanding our product range and in particular in new software applications for our industry and in environmentally friendly products. Many developments that target resource savings for our customers are grouped under our CleanTech brand. Process control and production monitoring software are crucial in offering the customer a total laundry-operation solution.
Our Group has numerous patents on features of our machinery, and our product development teams in our various competence centers are continuously examining the possibility of protecting our developments.
Patents and notarial depositions are used primarily to prove prior art. We protect our patents on a case-by-case basis and primarily in the larger markets.
The JENSEN-GROUP invests around 2-3% of its turnover in Product Development every year. We believe this figure represents more or less the industry average.
During 2013, JENSEN-GROUP invested 5.2 million euro, mainly in the acquisition of its Austrian distributor and in equipment.
During 2012, JENSEN-GROUP reported a net investment of -3.5 million euro: after the transfer of the production from Switzerland to Denmark and Germany, the Swiss building and some machines were sold to a third party. At the same time, JENSEN-GROUP invested during the year, mainly in equipment.
The Group expects capital expenditure in line with depreciation charges.
FINANCIAL REPORT 2013
Report of the Board of Directors 24
Results 2013
Outlook 2014
Risk factors
Conflict of Interest
Investments and Capital Expenditures
Use of financial instruments
Product Development
Corporate Governance Statement
Policy with respect to the appropriation of the result
Shareholding structure
Acquisition of own shares
Relationship among shareholders
Statutory Auditor
Issued capital
Dividend proposal
Appropriation of result
Significant post-balance sheet events
Statement of the Responsible Persons 52
Report of the Statutory Auditor 53
Notes to the consolidated financial statements 63
JENSEN-GROUP's net profit from continuing operations remained stable (9.9 million euro compared to 10.5 million euro in 2012), despite the lower activity level in the second half of the year and without significant non-recurring items such as in 2012. This result has been achieved in a period of uncertain economic conditions and strong competition for projects and market share all over the world.
EBIT of 2012 included a non-recurring income of 1.9 million euro, mainly resulting from the sale of fixed assets in Switzerland (0.9 million euro) and from the release of provisions.
The financial result was 0.7 million euro better than prior year: JENSEN-GROUP recorded a currency gain as compared to a loss in 2012.
JENSEN-GROUP changed the valuation rules regarding the allocation of currency gains and losses. In order to have a better matching of the result on transactions in foreign currency, the Audit Committee approved in November 2012 changing the way currency gains and losses are recorded. Depending on the nature of the currency effect, it is presented in operating or financial result. Under the new rules, as per December 2013, 0.08 million euro currency loss is classified in the operating result. In the comparable figures of 2012, 0.3 million euro currency loss is classified in operating result.
On the balance sheet, working capital at closing date decreased by 7.2 million euro compared to last year because of the lower activity in the second half of the year. The cash flow generated by the business and the lower working capital resulted in a lower net debt. Compared to December 2012, the net financial debt decreased by 13.6 million euro, from 10.9 million euro net debt it turned to 2.7 million euro net cash. JENSEN-GROUP is debt-free at the end of 2013. The JENSEN-GROUP is in full compliance with its bank covenants.
Headcount decreased from 1,160 to 1,130 because of the lower activity level.
Revenue and operating profit decreased by 4% and 14% respectively as compared to 2012.
Net financial result improved: in 2013, JENSEN-GROUP reported a currency gain compared to a currency loss in 2012.
The above-mentioned factors together resulted in nearly the same net profit as in previous year (from 10.5 million euro to 9.8 million euro).
The order backlog is 17% lower than at December 31, 2012. The decrease occurred during the year in various markets, primarily in Southern European countries most affected by the economic downturn. JENSEN-GROUP still considers the level of orders adequate to get off to a good start in 2014.
The main business risks have not changed materially from last year. Major risk factors are the volatility in the financial markets that affects our customers' investment decisions and capacity to find financing, as well as competitive pressure. Other risks are exchange rate volatility and fluctuating raw material prices, energy and transport costs.
Any major drop of activity has an immediate effect on operating profits.
The Group has 5 production sites, in the following countries:
Each production and engineering center ("PEC") is specialized in a specific part of the laundry operation (Washroom, Finishing Technology) or in a specific type of linen (flatwork, garment or special applications such as mats, continuous roller towels or wipers).
The Group has its own distribution channels (Sales and Service Centers – or "SSC") in the most important markets:
Next to the SSCs, JENSEN-GROUP has sales representatives in:
On top of that, JENSEN-GROUP has an experienced distributor network in more than 40 countries.
Each SSC is staffed to handle turnkey projects and systems as well as single machine sales and after sales services.
In each PEC and SSC we have the supporting functions needed to administer the legal entity. In order to absorb these overheads, sufficient volume is needed. The activity level determines production volume and can be influenced by factors beyond our control. Since our products are investment goods, the international investment climate, be it in healthcare but especially in hospitality (hotels and restaurants) and in industrial clothing, can have a significant influence on the overall market and sales opportunities. The impact of a sudden decrease in turnover cannot be fully offset by a decrease in overheads and infrastructure costs and as such can have a negative impact on our activity level, our financial condition and our operating results.
An important part of the business is to deliver solutions and machines to the textile rental industry. The ongoing consolidation and internationalization in this industry is making a significantly greater part of the business dependent on relations with these larger groups.
JENSEN-GROUP purchases a large number of different components as well as raw materials such as black iron, stainless steel and aluminum. The price and availability of these raw materials and components are subject to market conditions affecting supply and demand. In a competitive market, there is no assurance that increases or decreases in raw material and other costs can be translated quickly into higher sales or lower purchase prices. Nor can there be any assurance that the loss of suppliers or components would not have a material adverse effect on our business, financial condition and results of operations. We currently do not undertake commodity hedging.
Within the worldwide heavy-duty laundry market, JENSEN-GROUP encounters several competitors. There can be no assurance that significant new competitors or increased competition from existing competitors will not have an adverse effect on our business, financial condition and results of operations.
In addition, the Group may face competition from companies outside of the United States or Europe who have lower costs of production (including labor or raw materials). These companies may pass on these lower production costs as price decreases to customers and as a result, our revenues and profits could be adversely affected.
Sales of equipment and projects to international customers represent a major part of the net revenues. Demand for our products is and may be affected by economic and political conditions in each of the countries in which we sell our products and by certain other risks of doing business abroad, including fluctuations in the value of currencies (which may affect demand for products priced in euro). We do hedge exchange rate fluctuations between the major currencies for our operations, these being the EUR, USD, CHF, GBP, DKK, SEK, SGD, CNY, JPY and AUD.
JENSEN-GROUP sells to industrial laundries which handle, amongst others, linen for the healthcare sector. Policy
choices can affect the standards of hygiene. This may influence product development in order to find solutions for the most stringent hygiene requirements.
JENSEN-GROUP is dependent on the continued services and performance of the senior management team and certain other key employees. The employment agreements with senior management and key employees are for an indefinite period of time. The loss of any key employee could have a material adverse effect on the business, financial condition and results of operations because of their experience and knowledge of our business and customer relationships.
The Group is subject to comprehensive and frequently changing federal, state and local environmental, health and safety laws and regulations, including laws and regulations governing emissions of air pollutants, discharges of waste and storm water and the disposal of hazardous wastes. We cannot predict the environmental liabilities that may result from legislation or regulations adopted in the future, the effect of which could be retroactive. The enactment of more stringent laws or stricter interpretation of existing laws could require additional expenditures by us, some of which could have an adverse effect on our business, financial condition and results of operations.
The Group is also subject to liability for environmental contamination (including historical contamination caused by other parties) at the sites we own or operate. As a result, we are involved, from time to time, in administrative and judicial proceedings and inquiries related to environmental matters. There can be no assurance that we will not be involved in such proceedings in the future, and we cannot be sure that our existing insurance or additional insurance will provide adequate coverage against potential liability resulting from any such administrative and judicial proceedings and inquiries. The aggregate amount of future clean-up costs and other environmental liabilities could have a material adverse effect on our business, financial condition and results of operations.
For the past several years, JENSEN has strictly followed an environmental remediation plan relating to our former Cissell manufacturing facility. The last sampling tests done by a third party environmental-engineering company each year, with an exhaustive review every five years, are in line with expectations. The latest projected end date for this remediation plan is 2025. However, there can be no complete assurance that significant additional civil liability or other costs will not be incurred by us in the future with respect to the Cissell facility or other facilities.
The operations are also subject to various hazards incidental to the manufacturing and transportation of heavy-duty laundry equipment. These hazards can cause personal injury and damage to and destruction of property and equipment. There can be no assurance that as a result of past or future operations, there will not be injury claims by employees or third parties. Furthermore, we also have exposure to present and future claims with respect to worker safety, workers' compensation and other matters. There can be no assurance as to the actual amount of these liabilities or the timing of them. Regulatory developments requiring changes in operating practices or influencing demand for, and the cost of providing, our products and services or the occurrence of material operational problems, including but not limited to the above events, may also have an adverse effect on our business, financial condition and results of operations.
The Group is exposed to potential product liability risks that arise from the sale of our products. In addition to direct expenditures for damages, settlements and defense costs, there is a possibility of adverse publicity as a result of product liability claims. We cannot be sure that our existing insurance or any additional insurance will provide adequate coverage against potential liabilities and any such liabilities could adversely affect our business, financial condition and results of operations.
At any given time, JENSEN-GROUP is a defendant in various legal proceedings and litigation arising in the ordinary course of business. Although we maintain insurance coverage, there is no assurance that this insurance coverage will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that these levels of insurance coverage will be available in the future at economical prices or for that matter, available at all. A significant judgment against us, the loss of a significant permit or other approval or the imposition of a significant fine or penalty could have an adverse effect on our business, financial condition and future prospects.
The Group is exposed to market risk associated with adverse movements in interest rates. JENSEN-GROUP maintains long term interest rate hedges in order to limit this risk, but a general increase in interest rates might have an unfavorable effect on the overall investment climate and as such on our business, financial condition and results of operations.
The JENSEN-GROUP's major financial institution partners are Nordea, Credit Suisse and KBC. The Group's borrowing agreements include financial covenants with some of the financial institutions. These covenants could have a restricting effect on our financial capacity.
The ability to make scheduled payments of principal and interest with respect to our indebtedness, to fund our planned capital expenditures and our research and development efforts and to finance our expansion in capacity, will depend on our ability to generate cash, on future financial results and the development of the major financial institutions we work with. These institutions, to a certain extent, are subject to the risk factors mentioned above.
Under Belgian company law, the members of the Board of Directors are required to give the Chairman prior notice of any agenda items in respect of which they have a conflict of interest with the Company, either direct or indirect, whether of a financial or other nature and to refrain from participating in the discussions of and voting on those items. This is also a standard item on the agenda of each Board meeting. Two such potential conflicts arose in the course of 2013. A first conflict of interest was notified at the meeting of the Board of Directors which was held on March 12, 2013 and at which meeting the re-election of directors was discussed. The second potential conflict of interest was notified at the meeting of the Board of Directors which was held on November 14, 2013 and at which the Board decided to implement the share buy-back program.
On March 12, 2013 at 1.30 p.m. the Board of Directors of JENSEN-GROUP NV held a meeting at the Corporation's principal office at Bijenstraat 6 in 9051 Sint-Denijs-Westrem, Belgium.
Mr. Decaluwé presided. Mrs. Janssens acted as Secretary. The Chairman pointed out that notice of the meeting had been given by email of March 5, 2013, that all of the directors were present and that the meeting was validly constituted. The Chairman then suggested that the meeting consider the following items of business:
The Chairman reminded the members of the Board of their fiduciary duties with regard to conflicts of interest and to the applicable statutory provisions under Belgian Corporate Law.
SWID AG represented by Mr. J. Jensen and TTP bvba, represented by Mr. Vanderhaegen then indicated that the item on the agenda relative to the re-election of directors raised a conflict of interest and that they would abstain from the deliberation and vote on that item.
…
The Chairman informed the Board that the Remuneration Committee at its meeting held on March 11, 2013 had been apprised that the terms of 3 incumbent directors, i.e. The Marble bvba, SWID AG and TTP bvba are expiring at the forthcoming Annual Shareholders' Meeting. Mr. Luc Van Nevel then informed the Board on his intention not to seek re-election as a Board member of the JENSEN-GROUP. The Chairman informed that SWID AG and TTP bvba are up for re-election. After submitting to the Board the resolution adopted by the Remuneration Committee at its meeting and after informing the Board of the specific terms of such re-election, the Chairman moved for a decision and the Board resolved as follows:
"Upon a motion duly made, the Board of Directors resolved unanimously but with Messrs. Jensen and Vanderhaegen abstaining from the deliberation and vote, to propose SWID AG, represented by Mr. Jesper M. Jensen and TTP bvba, represented by Mr. Erik Vanderhaegen, for re-election by the Shareholders to the Board of Directors, for a term of 4 years and for TTP bvba to be qualified as independent director; resolved further to submit such proposal for approval by the shareholders at its annual meeting to be held on May 21, 2013."
The Chairman thanked Mr. L. van Nevel for his valued contribution during his mandate as board member and as member of the committees.
There being no further business to discuss, the meeting was adjourned at 2.45 p.m.
On November 14, 2013 at 10.00 a.m. the Board of Directors of JENSEN-GROUP NV held a meeting at JENSEN Denmark, Ejnar Jensens Vej, 3700 Rønne, Denmark.
Mr. Decaluwé presided. Mrs. Janssens acted as Secretary. The Chairman pointed out that notice of the meeting had been given by email of November 7, 2013, that all of the directors were present and that the meeting was validly constituted. The Chairman then suggested that the meeting consider the following items of business.
The Chairman informed the members of the Board that he had received notice from SWID A.G. represented by Mr. Jesper Munch Jensen, informing him of a conflict of interest with regard to the item on the agenda on the proposed share buy-back program. The Chairman referred the Board to a letter on the subject dated November 7, 2013 that is addressed to the Chairman and to the Corporation's statutory auditor and that was handed over to the Secretary for filing with the Board's records. He confirmed that SWID A.G. represented by Mr. Jesper Munch Jensen would abstain from the discussion and the vote relative to that item. The Chairman further referred the members of the Board to the item on the agenda relative to share buy-back program and the outline of the applicable procedure under Article 524 of the Company Code relative thereto.
The other members of the Board then confirmed that none of the items on the present agenda raised a conflict of interest.
…
With reference to the statement on a potential conflict of interest as reported by one Board member at the outset of the meeting, the Chairman explained to the Board the applicable procedure including the Special Report of the Committee of three independent directors and the Report of the external expert, pursuant to article 524 of the Company Code.
The Chairman then turned the floor to Mr. Schalch who provided the Board with the relevant financial background information for the buyback transaction and buyback mandate. Following the presentation by Mr. Schalch, the Board then engaged in a general discussion of the proposed transaction and mandate and the Board members reviewed article 11 of the Corporation's by-laws, the advice of the Committee of the three independent directors and the advice of the external expert. In concluding the discussion of this item, the Chairman moved for a decision and the Board resolved as follows:
"Upon a motion duly made, the Board of Directors resolved unanimously but with SWID A.G. represented by Mr. Jesper Munch Jensen abstaining from the discussion and the vote to approve the buy-back-mandate and to appoint an investment bank to whom the buy-back mandate will be granted, thereby respecting the price parameters and conditions as set forth in Article 11 of the Corporation's by-laws and discussed at the meeting; resolved further to direct the Secretary to file the execution copy of the Special Reports with the minutes of this meeting."
...
There being no further business to discuss, the meeting was adjourned at 1.00 p.m.
The advice of the committee of independent directors and of the independent expert, BDO Atrio represented by Mrs. Veerle Catry, in compliance with Article 524 of the Company Code, attached to the minutes of the Board of Directors of November 14, 2013 described the financial impact of the transaction as follows: "…Based on a current share price of 11.03 euro per share (closing price as per November 5, 2013), the buy-back of the shares will result in a decrease of the cash position amounting to 8.827.309 euro and a not available reserve will be accounted for the same amount. As a consequence, the profit available to distribute, will decrease. "
The conclusion of the advice of the committee of independent directors and of the independent expert stated that "… the committee is of the opinion that, based on the interest of the Company, the share buy-back program can be justified and that it does not disadvantage the Company."
The Auditors' judgment is as follows: "We have compared the financial information included in the advice of the committee and in the minutes of the board of directors, with the underlying supporting documents and we have reviewed if the information is in accordance with the requirements prescribed by article 524 of the Companies' Code. Based on these procedures, we confirm that the information included in the advice of the committee and in the minutes of the board of directors, gives a fair view."
Capital expenditures in 2013 amounted to 5.2 million euro (-3.5 million euro in 2012), consisting primarily of the acquisition of the group's Austrian distributor and of equipment. Capital expenditure in 2012 consisted primarily of the sale of the Swiss building as well as some Swiss machinery and investments in machinery.
The Company uses derivative financial instruments to reduce its exposure to adverse fluctuations in interest rates and foreign exchange rates. It is the company's policy not to hold derivative instruments for speculative and trading purposes.
At December 31, 2013, currency bought forward hedges existed in an amount of 6.2 million euro and currency sold forward hedges existed in an amount of 10.8 million euro. The Company also had Interest Rate Swaps (IRS) outstanding in amounts of 20.7 million DKK with maturities from 2022 to 2024 and fixed rates ranging from 4.86% to 5.11%.
The JENSEN-GROUP does not perform fundamental research, but undertakes continuous product development. These expenses in respect of the continued operations amounted to 6.3 million euro in 2013 (6.0 million euro in 2012). The JENSEN-GROUP does not capitalize development expenses since its business reality makes it very difficult to distinguish product enhancements from adaptations to specific circumstances, and to define the future cash flows that will originate from these efforts. Since furthermore the development expenses are relatively stable and are a continuous process, the JENSEN-GROUP does not capitalize these efforts but expenses them as incurred.
JENSEN-GROUP (also referred hereinafter as "the Group") has adopted the Belgian Corporate Governance Code in its revised 2009 version as its reference Code. The Code 2009 is available on www.corporategovernancecommittee.be. The Group has implemented the Belgian Corporate Governance Code since 2004, reviewing the major requirements of and evolution in the Code and evaluating the degree of compliance within the JENSEN-GROUP. To the best of our knowledge and belief, JENSEN-GROUP is compliant with the Corporate Governance Code.
As a result of these efforts, the Board of Directors of JENSEN-GROUP has adopted and has published the following charters:
These Charters can be found on our website www.jensen-group.com under Investor Relations/Corporate Governance. They are regularly reviewed and evaluated by the Board of Directors. The Charters are part of the day-to-day proceedings of the JENSEN-GROUP Board of Directors and Board Committees, and are to the best of our knowledge and belief compliant with the Code.
According to the "comply or explain" principle, the Company may deviate from the Code provided it duly explains the reasons for such deviation. Reasons could be linked to the company's nature, organization and/or size. Based on its internal risk assessment as well as on the size of its operations, JENSEN-GROUP has outsourced the internal audit function to an external party. JENSEN-GROUP does not have an internal audit manager because:
The JENSEN-GROUP Audit Committee has decided that an in-house internal audit function would not be an effective function. As an alternative, in consultation with the external auditor and on the basis of a risk analysis, the Audit Committee develops internal audit priorities and retains an independent outside audit firm for specific internal audit projects. It is considered that this approach is more effective than an in-house internal audit function. The Audit Committee can outsource the internal audit activity to a locally competent audit service provider.
Because of the change in the composition of the Board of Directors during 2013, the Remuneration Committee and the Audit Committee consisted of two members.
The information found in the Corporate Governance Charter is provided "as is" and is solely intended for clarification purposes. The recommendations and policies found in the Charters are in addition to and are not intended to change or interpret any law or regulation, or the Certificate of Incorporation or Bylaws of the Company. By adopting these Charters, attachments and possible sub-charters, the Company does not enter into any obligation or contractual or unilateral commitments whatsoever. The Charters are intended as a guideline in the day-to-day proceedings of the Company. Competences and tasks attributed to the Board of Directors are to be seen as enabling clauses, not as mandatory rules or a compelling line of conduct.
In accordance with the provisions on corporate governance in the Law of December 17, 2008 and in the so-called Corporate Governance Law of April 6, 2010 (hereinafter referred to as "the Law"), JENSEN-GROUP has adopted and implemented a risk management and internal control process.
The following description of risk management and internal control is based on the Integrated Internal Control Framework and the Enterprise Risk Management Framework as published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Board of Directors supervises the proper functioning of risk management and internal control through the Audit Committee. The Board of Directors has delegated to the Executive Management Team the task of implementing a risk management process and an internal control system and of reporting back to the Board on both topics at regular intervals.
Based on a framework model prepared by an external consultant, the Executive Management Team has developed a risk map describing the financial, operational, strategic and legal risks. This risk map was prepared for the first time in 2008 and is now reviewed on a regular basis. The map outlines both the probability of the different risks occurring, and the impact of their occurrence on the results. Measures to mitigate the risk exposure are evaluated. The Executive Management Team has presented the conclusions of this risk management exercise to the Audit Committee and to the Board of Directors. The Board discusses the major risks with management on an as needed basis, but at least once a year.
The Executive Management Team discloses quarterly a certain number of risk areas as perceived by the Executive Management Team. The Executive Management Team then re-examines those risks and formulates approaches to mitigate the risk and looks at various forms of transferring these risks to third parties in the areas in which a material risk exposure to the Company remains.
Internal control is a process, effected by the Board of Directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: a) Effectiveness and efficiency of operations; b) Reliability of financial reporting; and c) Compliance with laws and regulations.
The Board of Directors and the Executive Management Team have approved and adopted the JENSEN-GROUP Ethical Business Statement (hereinafter referred to as "the Statement"). The Statement sets forth the JENSEN-GROUP's mission as well as ethical values; it describes rules of conduct as well as the transactions that are permissible between JENSEN-GROUP and third parties to the extent that these transactions are not covered by the legal provisions on conflict of interest. Implementation of the JENSEN-GROUP Ethical Business Statement is mandatory for all the Companies of JENSEN-GROUP. The review of the Statement is integrated in every training session that is organized. The Statement is available on the corporate website www.jensen-group.com under Investor Relations/ Corporate Governance.
JENSEN-GROUP consists of several entities which are closely monitored by local management teams. JENSEN-GROUP headquarters further monitors the local management teams through quarterly operational and financial reviews. In addition, the Company's Group Control and Reporting reviews the different entities on a quarterly basis.
JENSEN-GROUP monitors its business with a view toward achieving a certain level of ROCE (Return on Capital Employed).
All IFRS accounting principles, guidelines and interpretations are grouped in the accounting manual, which is part of the JENSEN-GROUP Procedures and Guidelines. The JENSEN-GROUP Procedures and Guidelines are available on the JENSEN intranet and accessible by all local management and staff of the Group. The accounting manual is updated on a regular basis. Additional reporting is undertaken as requested by management and/or the Audit Committee and where appropriate is included in the accounting manual.
The Financial Managers of the Group meet at regular intervals. During each such seminar, the Financial Managers are informed of relevant changes in IFRS. Training is provided on an as needed basis to ensure correct implementation of such changes.
A majority of the Group companies use the same ERP system. The policy has been adapted to move all of the Group companies to the same ERP system over time. All companies of the Group use the same software to report the financial data for consolidation purposes.
Group management has introduced, after discussion with the Audit Committee, a set of key controls to provide reasonable assurance about the reliability of financial reporting and of the financial statements made available to external parties starting in 2009. Local management has implemented these key controls.
Group Control and Reporting reviews every quarter all data submitted for consolidation for financial accuracy, consistency with and any deviations from budgets and the explanations given, in order to ensure the accuracy of the reported data. Group Management then ensures proper follow up and actions for deviations from budget.
Monitoring is performed during the Business Board Reviews. These quarterly reviews include a financial review which specifically focuses on major changes in P&L and balance sheet items, deviations from budgets as well as consistency in applying IFRS rules. The internal control system is monitored on a quarterly basis.
Management's monitoring of internal control is performed on a continuous basis. The performance of the individual companies is measured and compared to budgets and previous years' figures which may identify anomalies indicative of a control failure. Failures are promptly remedied.
All JENSEN-GROUP companies are audited or reviewed by the same accounting firm and significant risk factors are reviewed consistently in the external audits of the different subsidiaries. The external auditor reports to the Audit Committee twice a year on their findings and on significant issues.
Relevant findings by the Internal Audit (which is outsourced as described above) and/or by the Statutory Auditor are reported to both the Audit Committee and to the related management. Periodic follow-up is performed to ensure that corrective action has been taken.
All relevant financial information is presented to the Audit Committee and to the Board of Directors so as to enable them to analyse the financial statements. Prior to external reporting, all press releases and other financial information is subject to:
The JENSEN-GROUP Audit Committee has decided that an in-house internal audit function would not be an effective function. In consultation with the external auditor and on the basis of a risk analysis, the Audit Committee has worked out an internal audit plan and retains an independent outside audit firm for specific internal audit projects. It is considered that this approach is more effective than an in-house internal audit function. The Audit Committee can outsource the internal audit activity to a locally competent audit service provider.
In 2013, an independent audit firm performed an internal audit at JENSEN GmbH, Germany. The audit findings were discussed during the Audit Committee meeting of November 14, 2013.
Group Controlling provides management with transparent and reliable management information in a form and timeframe that enables them to effectively carry out their responsibilities.
Every year, Group Controlling prepares a financial calendar for reporting in consultation with the Board of Directors and the Executive Management Team. The financial calendar is designed to allow accurate and timely reporting.
In the first and third quarters, a trading update is released. At half-year, condensed consolidated interim information is reported and at year-end the full annual report is published. Prior to external reporting, all press releases and other financial information are subject to appropriate controls by JENSEN-GROUP headquarters and to review by the Audit Committee and require approval of the Board of Directors.
The members of the Board of Directors are appointed by the shareholders, voting by simple majority, during the general meeting of shareholders.
The Company´s bylaws allow for appointment by cooptation. If cooptation occurs, it is considered as a transitional arrangement whereby the director-elect completes the mandate of the outgoing director as opposed to taking on a new mandate. For this reason the transition period is not considered as a mandate in the independence rule review, where the Company looks at total years of service on the Board of Directors.
The Company´s bylaws require the Board of Directors to have at least three but not more than eleven members. Board members are elected for terms of office of no more than four years.
The Company´s bylaws are supplemented by the Charter of the Board of Directors. This Charter outlines and details the Board's role and responsibilities and is revised from time to time. This Charter includes 4 major chapters:
For more details, please consult our website on www.jensen-group.com under Investor Relations/Corporate Governance.
As in the past, the JENSEN-GROUP selects its Board members in a manner that allows for a balance in the profiles of the different members. A balance is sought between executive and non-executive directors, directors representing shareholders and independent directors, and also in respect of directors' professional backgrounds and gender. A majority of the members of the Board of Directors are not related to the Company's controlling shareholders.
Currently, JENSEN-GROUP has no female board members. The Company opts not to change the composition of the Board of Directors in the current set up; there is a balance in respect of skills and capability. When a vacancy on the Board occurs and a proposal for a new member needs to be made, the Remuneration Committee will see to it that the new law of July 28, 2011 on gender diversity is taken into account in order to ensure due and timely compliance by the Company with the deadline imposed by the new law.
The composition of the Board of Directors of the JENSEN-GROUP, the attendance records of the individual Directors, as well as their remuneration packages, is as follows:
| Name | Independent | Function | Term Expiry |
Attendance Board meetings |
Commit- tees |
Attendance committees |
Remuneration |
|---|---|---|---|---|---|---|---|
| GOBES c.v.1 | V | Chairman | 2016 | 100% | AC | 100% | 94.000 |
| represented by Mr. Raf Decaluwé | RC | 100% | |||||
| The Marble b.v.b.a.3 | Director | 2013 | 100% | AC | 100% | 24.500 | |
| represented by Mr. Luc Van Nevel | RC | 100% | |||||
| Hans Werdelin1 | V | Director | 2016 | 100% | RC | 100% | 39.500 |
| SWID AG2 | Director | 2017 | 100% | - | |||
| represented by Mr. Jesper Munch Jensen | |||||||
| TTP b.v.b.a.1 | V | Director | 2017 | 100% | AC | 100% | 42.500 |
| represented by Mr. Erik Vanderhaegen | |||||||
| Mr. Christoph Ansorge4 | V | Director | 2013 | 100% | 29.000 | ||
| Total | 229.500 | ||||||
| 1: Non-executive director |
2: Executive director, CEO, representing the reference shareholder
3: Non-executive director until May 21, 2013
4: Non-executive director until September 30, 2013; executive director as from October 1, 2013 until December 31, 2013
AC: Audit committee
RC: Remuneration Committee
From left below: Jesper Munch Jensen and Hans Werdelin. From right below: Raf Decaluwé, Erik Vanderhaegen and Christoph Ansorge.
Gobes Comm.V., represented by Raf Decaluwé. Mr. Decaluwé is the former CEO of the Bekaert Group. He held senior positions at Black & Decker and Fisher Price Toys prior to joining the Bekaert Group. Mr. Decaluwé is a board member in various companies.
Hans Werdelin is the former CEO of Sophus Berendsen A/S. Mr. Werdelin holds positions as chairman or member of the Board in various companies.
TTP bvba, represented by Erik Vanderhaegen. Mr. Vanderhaegen is the former CFO of the JENSEN-GROUP and is currently Managing Director of NIBC Bank NV. Prior to that, he was M&A manager at Univeg NV/SA and corporate tax, audit and M&A manager at Bekaert NV/SA.
SWID AG, represented by Jesper Munch Jensen. Mr. Jensen is the CEO of the JENSEN-GROUP.
The Marble bvba, represented by Luc Van Nevel. Mr. Van Nevel is the former President and CEO of Samsonite Corporation. Mr. Van Nevel holds positions as chairman or member of the Board of various companies.
Christoph Ansorge is former Vice President at Agfa-Gevaert and former Member of the BOM Agfa-Gevaert Aktiengesellschaft für Altersversorgung. He held senior positions in Strategy, Finance & Administration and Operations within the Agfa-Gevaert Group. Prior to that, he was Manager at Bayer AG Germany. As from October 1, 2013, Mr. Ansorge became general manager of JENSEN GmbH. Mr. Ansorge will join the Executive Management Team of JENSEN-GROUP as per January 1, 2014 as Vice President of Washroom Technology.
The Board of Directors held 5 meetings in 2013. The topics of discussion included:
Depending on the items on the agenda, members of senior management were invited to the meetings of the Board of Directors and to the meetings of the Board Committees. Mrs. Scarlet Janssens is the Company Secretary. Mr. Werner Vanderhaeghe, senior counsel at Morgan, Lewis & Bockius LLP in Brussels and Frankfurt, acts as General Counsel.
The Board of Directors and the Board Committees conduct from time to time a self-evaluation exercise to determine whether the Board and its Committees are functioning effectively. This process includes the completion by all members of a self-evaluation questionnaire. The Company General Counsel summarizes the results, trends and comments from the individual replies. The results, trends and comments are discussed in the Board meeting and focus on the Board's and the Committees' contribution to the Company and specifically on areas in which the Board or Executive Management believes that the Board or its Committees could improve. Action points are derived and implemented.
Individual assessments of the Board members are made on an ongoing basis during Board meetings in an informal way.
In 2012, the Board of Directors conducted a self-assessment exercise. The results of the Board's self-assessment and the proposed action points for improvement were discussed at the meeting of the Board of Directors of March 2013. These included a request to make an update of the strategic plan, which was presented in November 2013.
The Remuneration Committee consists of Gobes Comm.V. represented by Mr. Raf Decaluwé, who acts as Chairman of the Committee, Mr. Hans Werdelin and The Marble bvba, represented by Mr. Luc Van Nevel until May 2013. Because of the change in the composition of the Board of Directors during the year, the Remuneration Committee consisted of two members.
Two of the three Committee's members qualify as independent directors. The Remuneration Committee met twice in the course of 2013. The Committee analyzed and reviewed the remuneration and the bonuses of the Executive Management of the Group, discussed and approved the remuneration report and changes to its Charter and proposed the re-election of directors.
In 2013, the Remuneration Committee conducted a self-assessment exercise. The results of the Remuneration Committee's self-assessment and the proposed action points for improvement will be discussed at the meeting of the Board of Directors of March 2014.
The Remuneration Committee uses its Charter as terms of reference. The Charter can be found on our website www. jensen-group.com under Investor Relations/Corporate Governance. The Charter covers:
The Audit Committee consists of The Marble bvba, represented by Mr. Luc Van Nevel (Chairman) until May 2013, Gobes Comm. V., represented by Mr. Raf Decaluwé, and TTP bvba, represented by Mr. Erik Vanderhaegen (Chairman as from May 2013). Because of the change in the composition of the Board of Directors during the year, the Audit Committee consisted of two members.
Two members of the Committee qualify as independent directors. The Audit Committee met four times in the course
of 2013. Two meetings were held in the presence of the external auditor PwC, represented by Mr. Filip Lozie. Items on the agenda of the Audit Committee included:
In 2012, the Audit Committee conducted a self-evaluation exercise to determine whether the Committee is functioning effectively. The results of the Audit Committee's self-assessment and the proposed action points for improvement were discussed at the Audit Committee meeting of March 2013 and at the meeting of the Board of Directors of March 2013. The Audit Committee members concluded that the Committee's performance is good and effective.
The Audit Committee uses its Charter as terms of reference. The Charter is published on our website www.jensen-group. com under Investor Relations/Corporate Governance. The Charter includes such items as:
Senior management attends each Audit Committee meeting in part, with the remainder of the meeting reserved for an executive session with the external auditor and for the Audit Committee members only.
As required under Belgian Company law, the members of the Board of Directors are expected to give the Chairman prior notice of items on the agenda in respect of which they have a direct or an indirect conflict of interest with the Company, either of a financial or other nature, and to refrain from participating in the discussion and vote on those items. The Chairman and the Board monitor constantly potential conflicts of interest that do not fall within the definition as set forth by Company Law. The review of a potential conflict of interest is a standard item on the agenda of each Board meeting.
Two such potential conflicts arose in the course of 2013. A first conflict of interest was notified at the meeting of the
Board of Directors which was held on March 12, 2013 and at which meeting the re-election of directors was discussed. The second potential conflict of interest was notified at the meeting of the Board of Directors which was held on November 14, 2013 and at which meeting the Board of Directors decided to implement a share buy-back program. The minutes of these meetings are therefore included in the report of the Board of Directors.
In case of doubt, written confirmation is sought from the director or the senior executive involved, stating the reasons for the absence of a conflict of interest as more broadly defined.
To prevent privileged information from being used unlawfully by Directors or members of senior management, all persons involved have signed a policy to prevent insider trading.
The Company defines two periods during which trading in the Company's shares by Directors, by members of the Executive Management Team or by local management is restricted. These two restricted periods are between mid-January and the reporting of the annual results and between mid-July and the reporting of the half-year results.
All trading in JENSEN-GROUP shares requires prior authorization from the Compliance Officer. In addition, all Directors and members of the Executive Management Team are required to inform the Compliance Officer on a quarterly basis of any trading respectively to confirm any non-trading in the Company's shares. Mrs. Scarlet Janssens is the Compliance Officer of JENSEN-GROUP NV. As of December 31, 2013, the members of the Board of Directors and senior management together held 210 shares. No warrants are outstanding.
The policy to prevent insider trading is included in the Charter of the Board of Directors. The Charter can be found on our website www.jensen-group.com under Investor Relations/Corporate Governance.
In 2005 the bylaws of the Company were amended so as to authorize the Board of Directors to delegate its powers of day-to-day management to an executive committee in conformity with art. 524 bis of the Company Law. The Board of Directors has not acted on that authorization to date.
In the course of 2009, an Executive Management Team (EMT) was appointed. The EMT consists since 2012 of the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), the Executive Director Sales and Innovations, the Executive Director Washroom Technology and the Executive Director Finishing Technology. The CEO chairs the Executive Management Team meetings.
TThe Executive Management Team is responsible for:
The preparation of the financial statements and disclosures;
The report of the CEO and CFO to the Board of Directors with respect to the financial situation of the Group;
The Executive Management Team meets at least every quarter and consists of:
Starting January 1, 2014, Mr. Christoph Ansorge will join the EMT as Executive Director Washroom Technology and Mr. Martin Rauch will be Executive Director Sales and Innovations.
From left to right: Steen Nielsen, Christoph Ansorge, Jesper Munch Jensen, Markus Schalch, Martin Rauch.
Jesper Munch Jensen, permanent representative of SWID AG, started his career at Swiss Bank Corporation and worked as a stockbroker on the Swiss Stock Exchange (1984-1987). After obtaining an MBA degree from Lausanne Business School, he joined the JENSEN-GROUP as an assistant general manager of JENSEN Holding (1991). Mr. Jensen became CEO of the JENSEN-GROUP in 1996.
Steen Nielsen holds a degree in Civil Engineering and a Bachelor of Commerce & Finance. Between 1978 and 1987 he worked for F.L. Smidth & Co. as a sales and divisional manager. Mr. Nielsen joined the JENSEN-GROUP in 1987 as sales and marketing director and has been Director of Flatwork Technology since 2006.
Martin Rauch holds a Bachelor of Science degree in Electrical Engineering. After his studies in 1989, he joined JENSEN AG Burgdorf and held various positions in the technical and commercial areas. Mr. Rauch became General Manager of JENSEN AG Burgdorf in 2003 and Managing Director of JENSEN SWEDEN AB following the formation of the Garment Technology Business Unit in 2006. Mr. Rauch joined the JENSEN-GROUP Management Team as Director of Garment Technology that year and is, at December, 2013 Executive Director Washroom Technology.
Markus Schalch has a Master of Arts in Finance and Accounting from the Hochschule St. Gallen. He then started his career in an audit firm for two years prior to joining the Alstom Group in various finance positions. In 2000, Mr. Schalch joined a leading Swiss telecommunication firm where he became CFO of Swisscom Systems Ltd. (2002-2004) and was then appointed CFO of Swisscom Solutions AG (2005 till August 2007). Mr. Schalch joined the JENSEN-GROUP in September 2007 as CFO.
The remuneration policy is intended to attract and retain the qualified and talented employees that are needed to support the long term development and growth of the Company.
By offering a competitive compensation package, the Company intends to stimulate individual performance and to align the employees' individual interests with those of the shareholders and other stakeholders.
The compensation of the Board, the CEO and the Executive Management Team are reviewed by the Remuneration Committee and approved by the Board of Directors. The shareholders approve the Remuneration Report.
The market conformity of compensation packages of the Board of Directors and of the Executive Management Team is periodically checked with the support of external, independent advisors.
The fees for non-executive Directors, with the exception of the Chairman, consist of a fixed remuneration of 17,000 euro and an attendance fee of 2,000 euro per Board meeting and 1,000 euro if the Board meeting is by telephone. Members of Board Committees receive a fixed fee of 7,500 euro per year and an attendance fee of 1,500 euro per meeting. This does not apply to the Chairman of the Board of Directors. The Chairman of the Board of Directors receives a fixed fee of 94,000 euro per year. Directors do not receive any variable compensation. The CEO does not receive any compensation as a member of the Board. The total fees paid to Board members and members of the Board Committees amount to 229,500 euros, which is within the amount of 350,000 euro approved by the shareholders.
The following Director received additional compensation for services and assistance rendered in connection with specific projects and assignments as an advisor to the Company, on top of his Board fees: Mr. Christoph Ansorge 45,054.99 euro for consultancy services.
None of the members of the Board of Directors hold JENSEN-GROUP shares.
The Remuneration Committee prepares all recommendations relating to the appointment and the remuneration of the Executive Management Team based on proposals by the Chief Executive Officer. The Committee discusses in detail the remuneration policy, pay levels and the individual performance evaluations of members of the Executive Management Team. The external auditor reviews the conformity of the remuneration paid out to the Executive Management Team with the amounts proposed by the Remuneration Committee and approved by the Board of Directors. The Remuneration Report is approved by the Shareholders.
Executive Management remuneration consists of a base salary and variable compensation that are paid out in cash, pension plans depending on managers' country of residence, life insurance, other customary insurances and benefits. Appointments to the board of directors of certain subsidiaries can also be remunerated. Executive managers are provided with all resources needed to perform their duties.
The variable compensation is in a range of 20% to 30% of the total remuneration, except for the Chief Executive Officer, whose variable compensation is targeted to amount up to 50% of total remuneration. There is a cap above and a minimum target below which no variable compensation is paid. The variable remuneration of Executive Management (CEO and EMT) is based on performance against the following objectives:
The Group targets that are to be achieved are defined by the Board of Directors, as part of the annual budget review process, whereby the budget is first evaluated in the context of the strategic plan.
For the year 2013 the Group targets were operating profit and working capital performance.
The Remuneration Committee compares quantitative targets for the year and actual results after completion of the audit of the consolidated financial statements. The resulting variable compensations are calculated, with the evaluation of EMT members' qualitative targets undertaken by the CEO and discussed with the Chairman. Proposals are reviewed and discussed by the Remuneration Committee and approved by the Board of Directors. There is no specific claw back clause on the variable compensation in the event of subsequent, proven misstatement of the financial statements, except for the various legal claw back provisions that are applicable in case of fraud, gross fault and negligence, under the Laws of July 7, 1978, April 12, 1965 and February 10, 2003.
There are no long-term incentive plans such as share option plans or other long-term incentive plans.
In preparing the variable compensation plan for 2014, the Remuneration Committee noted that the exemption from the application of the law on corporate governance of April 6, 2010, approved by the shareholders in the Annual Meeting of May 17, 2011, expires in May 2014.
The Committee assessed the current procedure whereby objectives are set on an annual basis but within a long term strategic framework, with the payment of variable compensation linked to this, but without spreading the payments over several years.
The Committee reconfirmed its belief that the above procedure remains the best approach. Such procedure creates alignment between the interest of management, shareholders and other stakeholders, leads to a long term value creation and meets the criteria of good governance.
The Committee therefore recommends to the Board of Directors to ask the shareholders, at the annual meeting of May 2014, to approve an extension of the exemption from the law on corporate governance of April 6, 2010 in relation to spreading the objectives and variable compensation payment over several years.
Based on its experience over the past three years and its wish to maintain stability and continuity in the process of setting objectives and variable compensation targets and pay-out, the Committee recommends extending the exemption for a five year period ending at the annual meeting of May, 2019.
Acting on a recommendation by the Remuneration Committee, the Board of Directors, whilst in general subscribing to the provisions of the Law, therefore decided to seek shareholder approval of an exemption from the deferred bonus payment provision of the Law. In the interest of shareholder transparency, the Board of Directors further decided to seek an exemption for five years as opposed to making use under the Law of the option to secure an exemption with no time limitation through a change of the Company's Bylaws.
Where pension plans are customary, Executive Management participates in such pension plans.
As set forth in the section on Remuneration of the Board of Directors, the CEO does not receive any compensation as a member of the Board.
The CEO invoices his services through a separate company 'SWID AG'. The other Executive Management Team members are salaried employees.
Total gross salaries paid to the Executive Management Team, including the CEO, in the course of 2013 amounted to 1,619,472 euro and are composed as follows:
| 2013 | 2013 | 2012 | 2012 | |
|---|---|---|---|---|
| In euro | CEO | EMT, | CEO | EMT, |
| excluding CEO | excluding CEO | |||
| Basic remuneration | 721,350 | 714,372 | ||
| Invoiced services | 449,100 | 413,250 | ||
| Variable remuneration | 182,560 | 202,697 | 48,900 | 56,658 |
| Fixed expenses | 19,495 | 19,912 | ||
| Fringe benefit | 29,204 | 29,396 | ||
| Pension plan | 15,066 | 14,067 | ||
| Total | 631,660 | 987,812 | 462,150 | 834,404 |
The basic remuneration includes the salaries of the salaried EMT members. It represents their total fixed compensation before local taxes and obligatory pension contributions. The basic remuneration includes the remuneration received for appointments to the Board of Directors of certain subsidiaries.
The CEO invoices his services through a separate company SWID AG. The amounts disclosed above include the amounts, totaling 631,660 euro (462,150 euro in 2012) that SWID AG invoiced to the Company. Invoiced services include basic remuneration, variable remuneration, fixed expenses, fringe benefits and pension plans.
Fixed expenses relate primarily to representation allowances.
The variable remuneration is based on performance against objectives as described above. The amount paid out in 2013 is based on the performances of 2012. The variable remuneration is paid out in cash or in the employees' pension plan depending on the applicable legislation and on the preference of the employee.
The fringe benefits include the value of the company cars of the employees as well as the related car insurance premiums.
The pension plan is the contribution of the employer to a pension plan above contributions required by law.
One manager participates in a defined contribution pension plan. Two managers participate in a defined benefit plan. As required by law, salaries of the Executive Management Team members are disclosed on a global basis. The Remuneration Committee discusses all individual salaries and checks whether the remuneration paid is in line with market conditions. The market conformity of compensation packages is periodically checked with the help of external, independent advisors. The Board of Directors approves the remuneration amounts. The last remuneration report was approved by the shareholders.
The agreements with respect to termination of senior managers vary from country to country, subject to the applicable legislation. Legal conditions apply in countries where there is a given practice, and for countries where there is no such practice, a severance payment of up to, but not exceeding, two years' salary is granted. Mr. Steen Nielsen has a 24 months termination agreement and Mr. Jesper Munch Jensen has an 18 months termination agreement. There are no change of control clauses included in the management contracts. Three managers have two-year non-competition clauses exercisable at the request of the Company. No special compensation is given in the event of voluntary departure.
No loans have been granted to members of the Executive Management Team. No unusual transactions or conflicts of interest have occurred.
The Executive Management Team holds a total of 210 shares:
No warrants are outstanding. There are no stock option plans.
The Company has adopted a policy of distributing 0.25 euro per share annually unless the results or the financial situation do not allow such dividend.
The major shareholders are:
JENSEN INVEST: 51.60% Petercam: 8.66% Free float: 39.74%
The voting rights are described in note 9 - equity.
The Board of Directors of November 14, 2013 decided to implement a share repurchase program to buy back a maximum of 800,300 or 10% of its shares. The shares are bought at the stock exchange by an investment bank mandated by the Board of Directors. The buy-back mandate expires on October 4, 2017. As per December 31, 2013, JENSEN-GROUP holds 59,768 treasury shares.
There is no agreement between the reference shareholders listed above.
The statutory auditor is PwC Bedrijfsrevisoren, represented by Mr. Filip Lozie.
The statutory auditor received worldwide fees of 315,000 euro (excl. VAT) for auditing the statutory accounts of the various legal entities of the Group and the consolidated accounts of the JENSEN-GROUP. Apart from his mandate, the statutory auditor received during 2013 additional fees of 53,426 euro (excl. VAT). Of this amount, 18,794 euro was invoiced to JENSEN-GROUP NV and relates to tax advice. The JENSEN-GROUP has appointed a single audit firm for the audit of the consolidated financial statements.
At December 31, 2013, the issued share capital is 30.7 million euro, represented by 8,002,968 ordinary shares without nominal value. The special shareholders' meeting of October 4, 2012 resolved to reduce the capital by 12 million euro. The capital decrease was paid out in December 2012.
There are no preference shares.
The bylaws allow for the purchase of own shares. The Board of Directors of November 14, 2013 decided to implement a share repurchase program to buy back a maximum of 800,300 or 10% of its shares. The shares are bought at the stock exchange by an investment bank mandated by the Board of Directors. The buy-back mandate expires on October 4, 2017. As per December 31, 2013, JENSEN-GROUP holds 59,768 treasury shares.
Pursuant to article 74, §6, of the Law of April 1, 2007, JENSEN INVEST A/S disclosed to both the FSMA and to JENSEN-GROUP NV that, at September 1, 2007, it held in concert more than 30% of the shares with voting rights in JENSEN-GROUP NV.
Further details of the shareholders' notification are disclosed in note 9 - equity.
The Board proposes to distribute a dividend of 0.25 euro per share on the results of 2013, amounting in total to 1,985,800 euro, based on the number of shares as per December 31, 2013. No dividend will be distributed to the treasury shares.
JENSEN-GROUP NV, the parent Company, reported in its statutory accounts a net profit of 2,353,829.74 euro. The Board proposes to appropriate this result as follows:
| In euro | ||
|---|---|---|
| Profit of the year | 2,353,829.74 | |
| Treasury shares | 724,462.70 | |
| Dividend | 1,985,800 | |
| Withdrawals from legal reserve | -1,200,445.19 | |
| Appropriation to retained earnings | 844,012.23 | |
This brings the total amount of retained earnings to 71,915,150.82 euro.
There are no significant post-balance sheet events.
Ghent, March 12, 2014
We hereby certify, to the best of our knowledge, that the consolidated financial statements as of December 31, 2013, prepared in accordance with International Financial Reporting Standards, as adopted by the European Union, and with the legal requirements applicable in Belgium, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the entities included in the consolidation taken as a whole, and that the management report includes a fair review of the development and performance of the business and the position of the Company and the entities included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Jesper M. Jensen Markus Schalch Chief Executive Officer Chief Financial Officer
STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS' MEETING ON THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31 December 2013
In accordance with the legal requirements, we report to you on the performance of our mandate of statutory auditor. This report includes our opinion on the consolidated financial statements, as well as the required additional statement. The consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2013 and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
We have audited the consolidated financial statements of Jensen-Group NV ("the Company") and its subsidiaries (jointly "the Group"), prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. The consolidated accounts of the Group are set forth on pages 56 to 107. The total of the consolidated statement of financial position amounts to KEUR 137.429 and the consolidated statement of comprehensive income shows a profit for the year of KEUR 9.802.
The board of directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines, is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the group's preparation and fair presentation of the consolidated financial statements 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 group's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the consolidated financial statements.
We have obtained from the board of directors and the company's officials the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the group's net equity and consolidated financial position as at 31 December 2013 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium.
The board of directors is responsible for the preparation and the content of the directors' report on the consolidated financial statements.
In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we provide the following additional statement which does not impact our opinion on the consolidated financial statements:
The directors' report on the consolidated financial statements includes the information required by law, is consistent with the consolidated financial statements and does not present any material inconsistencies with the information that we became aware of during the performance of our mandate.
Antwerp, 12 March 2014
The Statutory Auditor PwC Bedrijfsrevisoren BCVBA Represented by
Filip Lozie* Bedrijfsrevisor
* Filip Lozie BVBA Board member, represented by its fixed representative, Filip Lozie
| (in thousands of euro) | notes | December 31, 2013 | December 31, 2012 |
|---|---|---|---|
| Total Non-Current Assets | 30.592 | 29.860 | |
| Intangible assets | 5.1 | 6.121 | 4.865 |
| A. Land and buildings | 10.766 | 11.437 | |
| B. Plant, machinery and equipment | 4.288 | 4.412 | |
| C. Furniture and vehicles | 2.493 | 1.580 | |
| D. Other tangible fixed assets | 1.185 | 1.389 | |
| E. Assets under construction and advance payments | 98 | 0 | |
| Property, plant and equipment | 5.2 | 18.830 | 18.818 |
| A. Trade debtors | 198 | 229 | |
| B. Other amounts receivable | 625 | 636 | |
| Trade and other long term receivables | 8 | 823 | 865 |
| Deferred taxes | 6 | 4.818 | 5.312 |
| Total Current Assets | 106.837 | 118.361 | |
| A. Raw materials and consumables | 15.429 | 16.927 | |
| B. Goods purchased for resale | 10.287 | 10.345 | |
| C. Advance payments | 765 | 1.137 | |
| Inventories | 26.481 | 28.409 | |
| A. Trade debtors | 46.192 | 47.015 | |
| B. Other amounts receivable | 2.622 | 3.381 | |
| C. Gross amounts due from customers for contract work | 7 | 16.917 | 29.059 |
| D. Derivative Financial Instruments | 233 | 232 | |
| Trade and other receivables | 8 | 65.964 | 79.687 |
| Cash and cash equivalents | 19 | 14.029 | 9.886 |
| Assets held for sale | 22 | 363 | 379 |
| TOTAL ASSETS | 137.429 | 148.221 |
| (in thousands of euro) | notes | December 31, 2013 | December 31, 2012 |
|---|---|---|---|
| Equity attributable to equity holders | 9 | 62.210 | 54.585 |
| Share Capital | 35.799 | 36.523 | |
| Other reserves | -4.222 | -4.770 | |
| Retained earnings | 30.633 | 22.832 | |
| Non-Current Liabilities | 15.107 | 20.800 | |
| Borrowings | 10 | 3.441 | 7.219 |
| Finance lease obligations | 10 | 0 | 71 |
| Deferred income tax liabilities | 6 | 205 | 274 |
| Provisions for employee benefit obligations | 11 | 11.006 | 12.608 |
| Derivative financial instruments | 455 | 628 | |
| Current Liabilities | 60.112 | 72.836 | |
| Borrowings | 10 | 7.795 | 13.328 |
| Finance lease obligations | 10 | 73 | 146 |
| Provisions for other liabilities and charges | 12 | 11.619 | 10.884 |
| A. Trade debts | 14.075 | 19.538 | |
| B. Advances received for contract work | 7 | 7.262 | 9.495 |
| C. Remuneration and social security | 9.624 | 8.965 | |
| D. Other amounts payable | 1.158 | 1.601 | |
| E. Accrued expenses | 5.022 | 5.658 | |
| F. Derivative financial instruments | 44 | 635 | |
| Trade and other payables | 13 | 37.185 | 45.892 |
| Current income tax liabilities | 3.440 | 2.586 | |
| TOTAL EQUITY AND LIABILITIES | 137.429 | 148.221 |
| (in thousands of euro) | notes | December 31, 2013 | December 31, 2012 |
|---|---|---|---|
| Revenue | 7 | 221.416 | 229.705 |
| Raw materials and consumables used | -102.223 | -110.701 | |
| Services and other goods | -25.307 | -25.596 | |
| Employee compensation and benefit expense | -74.668 | -73.679 | |
| Depreciation, amortisation, write downs of assets, impairments | 14 | -4.430 | -3.834 |
| Total expenses | -206.628 | -213.810 | |
| Other Income / (Expense) | 213 | 1.569 | |
| Operating profit before tax and finance (cost)/ income | 15.001 | 17.464 | |
| Financial income | 3.123 | 3.342 | |
| Interest income | 1.444 | 1.249 | |
| Other financial income | 1.679 | 2.093 | |
| Financial charges | -4.601 | -5.567 | |
| Interest charges | -2.198 | -1.830 | |
| Other financial charges | -2.403 | -3.737 | |
| Net financial charges | 15 | -1.478 | -2.225 |
| Profit before tax | 13.523 | 15.239 | |
| Income tax expense | 16 | -3.649 | -4.740 |
| Profit for the year from continuing operations | 9.874 | 10.499 | |
| Result from discontinued operations | 22 | -72 | -103 |
| Consolidated profit for the year | 9.802 | 10.396 |
| (in thousands of euro) | notes | December 31, 2013 | December 31, 2012 |
|---|---|---|---|
| Other comprehensive income: | |||
| Items that may be subsequently reclassified to Profit and Loss | |||
| Financial instruments | 939 | 183 | |
| Currency translation differences | -1.276 | 16 | |
| Items that will not be reclassified to Profit and Loss | |||
| Actual gains/(losses) on Defined Benefit Plans | 1.667 | -2.840 | |
| Tax on items taken directly on or transferred from equity | -782 | 797 | |
| Other comprehensive income for the year | 548 | -1.844 | |
| Total comprehensive income for the year | 10.350 | 8.552 | |
| Profit attributable to: | |||
| Equity holders of the company | 9.802 | 10.396 | |
| Total comprehensive income attributable to: | |||
| Equity holders of the company | 10.350 | 8.552 | |
| Basic and diluted earnings per share (in euro's) | 17 | 1,23 | 1,30 |
| Weighted average number of shares | 7.999.536 | 8.002.968 |
| (In thousands of euro) | Capital T |
Share premium |
Reclassifi- T cation of reasury shares |
Capital | otal Translation Share differences |
Hedging Reserves |
Actuarial T gains and losses on Defined Benefit Plans |
otal other Reserves |
Retained T earnings E |
otal quity |
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2011 | 42.715 | 5.813 | 0 | 48.528 | 993 | -1.105 | -2.814 | -2.926 | 14.437 | 60.039 |
| Result of the period | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 10.396 | 10.396 |
| Other comprehensive income | ||||||||||
| Currency Translation Difference | 0 | 0 | 0 | 0 | 16 | 0 | 0 | 16 | 0 | 16 |
| Financial instruments | 0 | 0 | 0 | 0 | 0 | 183 | 0 | 183 | 0 | 183 |
| Defined Benefit Plans | 0 | 0 | 0 | 0 | 0 | 0 | -2.840 | -2.840 | 0 | -2.840 |
| Tax on items taken directly to | 0 | 0 | 0 | 0 | 0 | -55 | 852 | 797 | 797 | |
| or transferred from equity | ||||||||||
| Total other comprehensive income/ | 0 | 0 | 0 | 0 | 16 | 128 | -1.988 | -1.844 | 0 | -1.844 |
| (loss) for the year, net of tax | ||||||||||
| Dividend paid out | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2.001 | -2.001 |
| Capital decrease | -12.005 | 0 | 0 | -12.005 | 0 | 0 | 0 | 0 | 0 | -12.005 |
| December 31, 2012 | 30.710 | 5.813 | 0 | 36.523 | 1.009 | -977 | -4.802 | -4.770 | 22.832 | 54.585 |
| (In thousands of euro) | Capital T |
Share premium |
Reclassifi- T cation of reasury shares |
Capital | otal Translation Share differences |
Hedging Reserves |
Actuarial T gains and losses on Defined Benefit Plans |
otal other Reserves |
Retained T earnings E |
otal quity |
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2012 | 30.710 | 5.813 | 0 | 36.523 | 1.009 | -977 | -4.802 | -4.770 | 22.832 | 54.585 |
| Result of the period | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 9.802 | 9.802 |
| Other comprehensive income | ||||||||||
| Currency Translation Difference | 0 | 0 | 0 | 0 | -1.276 | 0 | 0 | -1.276 | 0 | -1.276 |
| Financial instruments | 0 | 0 | 0 | 0 | 0 | 939 | 0 | 939 | 0 | 939 |
| Defined Benefit Plans | 0 | 0 | 0 | 0 | 0 | 0 | 1.667 | 1.667 | 0 | 1.667 |
| Tax on items taken directly to | 0 | 0 | 0 | 0 | 0 | -282 | -500 | -782 | 0 | -782 |
| or transferred from equity | ||||||||||
| Total other comprehensive income/ | 0 | 0 | 0 | 0 | -1.276 | 657 | 1.167 | 548 | 0 | 548 |
| (loss) for the year, net of tax | ||||||||||
| Dividend paid out | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2.001 | -2.001 |
| Treasury shares | 0 | 0 | -724 | -724 | 0 | 0 | 0 | 0 | 0 | -724 |
| December 31, 2013 | 30.710 | 5.813 | -724 | 35.799 | -267 | -320 | -3.635 | -4.222 | 30.633 | 62.210 |
| (in thousands of euro) | notes | December 31, 2013 | December 31, 2012 |
|---|---|---|---|
| Cash flows from operating activities | 19.110 | 21.166 | |
| Profit for the year from continuing operations | 9.874 | 10.499 | |
| Adjusted for | |||
| - Current and deferred tax | 4.074 | 4.664 | |
| - Interest and other financial income and expenses | 1.478 | 2.568 | |
| - Depreciation, amortization and impairments | 14 | 3.192 | 3.244 |
| - Write downs of trade receivables | 14 | -153 | 1.013 |
| - Write downs of inventory | 14 | 345 | 995 |
| - Changes in provisions | 300 | -1.817 | |
| Changes in working capital | 7.278 | 502 | |
| Changes in stocks | 1.583 | -1.076 | |
| Changes in long- and short-term amounts receivable | 13.918 | 2.827 | |
| Changes in trade and other payables | -8.223 | -1.249 | |
| Corporate income tax paid | -2.795 | -4.891 | |
| Corporate income tax paid | -2.795 | -4.891 | |
| Net cash flow from operating activities - continuing operations | 23.593 | 16.777 | |
| Net cash flow from operating activities - discontinued operations | -56 | -96 | |
| Net cash flow from operating activities - total | 23.537 | 16.681 | |
| Net cash flow from investment activities | -5.184 | 3.534 | |
| Treasury shares | -724 | ||
| Purchases/sales of intangible and tangible fixed assets | -3.220 | 3.534 | |
| Acquisition of subsidiaries (net of cash acquired) | 24 | -1.240 | 0 |
| Cash flow before financing | 18.353 | 20.215 | |
| Net cash flow from financial activities | -5.014 | -20.873 | |
| Net other financial charges | 15 | -724 | -1.987 |
| Dividend | -2.001 | -2.001 | |
| Capital decrease | -12.005 | ||
| Repayments of borrowings | -1.535 | -4.299 | |
| Interest paid | 15 | -754 | -581 |
| Net Change in cash and cash equivalents | 13.339 | -658 | |
| Cash, cash equivalent and bank overdrafts at the beginning of the year | -976 | -334 | |
| Exchange gains/(losses) on cash and bank overdrafts | -1.276 | 16 | |
| Cash, cash equivalent and bank overdrafts at the end of the year | 19 | 11.087 | -976 |
The JENSEN-GROUP (hereafter "the Group") is one of the major suppliers to the heavy-duty laundry industry. The Group markets its products and services under the JENSEN brand and is the leading supplier to the heavy-duty market. The product range varies from transportation and handling systems, tunnel washers, separators, feeders, ironers and folders to complete project management for fully-equipped and professionally managed industrial laundries. The JENSEN-GROUP has operations in 19 countries and distributes its products in more than 40 countries. Worldwide, the JENSEN-GROUP employs 1,130 people.
JENSEN-GROUP NV (hereafter "the Company") is incorporated in Belgium. Its registered office is at Bijenstraat 6, 9051 Sint-Denijs-Westrem, Belgium.
The JENSEN-GROUP shares are quoted on the Euronext Stock Exchange.
The Board of Directors approved the present consolidated financial statements for issue on March 12, 2014.
These consolidated financial statements are for the 12 months ended December 31, 2013 and are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. These annual financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and adopted in anticipation as at December 31, 2013 and which have been adopted by the European Union.
These consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
These consolidated financial statements are prepared on an accrual basis and on the assumption that the Group is a going concern and will continue in operation for the foreseeable future.
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The areas involving a higher degree of judgment or complexity, or where assumptions and estimates are significant to the consolidated financial statements, are disclosed in the accounting policies.
The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2013 and are applicable for JENSEN-GROUP:
The following new standards and amendments to standards have been issued and have been endorsed by the European Union, but are not mandatory for the first time for the financial year beginning 1 January 2013. Only those standards that will be applicable to JENSEN-GROUP are listed below:
The following new standard, amendments to standards and interpretation have been issued, but are not mandatory for the first time for the financial year beginning 1 January 2013 and have not been endorsed by the European Union. Only those standards that will be applicable to JENSEN-GROUP are listed below:
agement activities in the financial statements more closely as it provides more opportunities to apply hedge accounting.
The Group is currently assessing the impact of these standards.
The main accounting policies defined by the Group are as follows:
The accounts of JENSEN-GROUP and its directly and indirectly controlled subsidiaries are fully consolidated. The consolidated financial statements are presented in euro and rounded to the nearest thousand. Intercompany transactions are eliminated in consolidation, as well as intercompany unrealized gains and losses.
The full consolidation method is applied for all companies in which JENSEN-GROUP holds more than 50%.
The preparation of the financial statements involves the use of estimates and assumptions, which may have an impact on the reported values of assets and liabilities at the period-end as well as on certain items of income and expense for the period. Estimates are based on economic data, which are likely to vary over time, and are subject to a degree of uncertainty. They mainly concern income recognition on contracts in progress and pension liabilities.
The consolidated financial statements presented in this report have been prepared in euro.
The conversion of assets, liabilities and commitments which are denominated in foreign currencies is based on the following guidelines:
monetary assets and liabilities are translated at closing rates;
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
case income and expenses are translated at the rates of the dates of the transactions); and
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders' equity. When a foreign operation is sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Contract costs are recognized when incurred.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable.
When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognized over the period of the contract. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.
The Group uses the 'percentage of completion method' to determine the appropriate amount to recognize in a given period. The stage of completion is measured by reference to the contract costs incurred up to the balance sheet date as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. They are presented as inventories, prepayments or other assets, depending on their nature.
The Group presents as an asset the gross amount due from customers for contract work for all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceed progress billings. Progress billings not yet paid by customers and retentions are included within 'trade and other receivables'.
The Group presents as a liability the gross amount due to customers for contract work for all contracts in progress for which progress billings exceed costs incurred plus recognized profits (less recognized losses).
Royalties and rentals are recognized as income when it is probable that the economic benefits associated with the transaction can be sufficiently measured and will flow to the Group. The income is recognized on an accrual basis in accordance with the substance of the relevant agreement.
Research costs are charged to the income statement in the year in which they are incurred.
The JENSEN-GROUP does not capitalize development expenses since its business reality makes it very difficult to distinguish product enhancements from adaptations to specific circumstances, and to define the future cash flows that will originate from these efforts. Since furthermore the development expenses are relatively stable and are a continuous process, the JENSEN-GROUP does not capitalize these efforts but expenses them as incurred.
Investments in licenses, trademarks, etc. are capitalized with a minimum amount of 50.000 euro and amortized over 5 years.
On the acquisition of a new subsidiary, the difference between the acquisition price and the Group share of the identifiable assets, liabilities and contingent liabilities of the consolidated subsidiary, after adjustments to reflect fair value, is recorded in the consolidated balance sheet under assets as goodwill. Goodwill is not amortized but tested for impairment annually, or more frequently, if events or changes in circumstances indicate a possible impairment. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to a cash-generating unit for the purpose of impairment testing.
Property, plant and equipment are recorded at their acquisition value or construction cost less accumulated depreciation and impairment losses and increased, where appropriate, by ancillary costs.
The Group has broken down the cost of property plant and equipment into major components. These major components, which are replaced at regular intervals, are depreciated over their useful lives.
The cost of property, plant and equipment does not include any borrowing costs.
Tangible fixed assets are depreciated on a straight-line basis over their estimated useful lives from the month of acquisition onwards. If necessary, tangible fixed assets are considered as a combination of various units with separate useful lives.
The annual depreciation rates are as follows:
| Buildings | 3.33% | 30y |
|---|---|---|
| Infrastructure | 10% | 10y |
| Roof | 10% | 10y |
| Installations, plant and machinery | 10% – 33% | 3y – 10y |
| Office equipment and furnishings | 10% – 20% | 5y – 10y |
| Computer | 20% - 33% | 3y – 5y |
| Vehicles | 20% - 33% | 3y – 5y |
Annual Depreciation rates
Assets other than inventories, deferred tax assets, employee benefits and derivative financial instruments and assets arising from construction contracts are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
Whenever the carrying amount of an asset exceeds its recoverable amount (being the higher of its fair value less cost to sell and its value in use), an impairment loss is recognized in the profit and loss statement. The value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the assets belong.
Reversal of impairment losses recognized in prior years is recorded in income up to the initial amount of the impairment loss, when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. Goodwill is tested for impairment at least once a year. Impairment on goodwill can never be reversed at a later date.
A financial lease is a lease that transfers substantially all risks and rewards incident to ownership of an asset to the lessee. When a fixed asset is held under a financial lease, its value is recorded as an asset at the present value, at the beginning of the lease term, of the future minimum lease payments during the lease term. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability in order to obtain a constant rate of interest on the debt over the lease term.
Property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.
When assets are leased out under a finance lease, the present value of the lease payments is recognized as a receivable. The difference between the gross receivable and the present value of the receivable is recognized as unearned finance income. Lease income is recognized over the term of the lease using the net investment method, which reflects a constant periodic rate of return.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.
Inventories are valued at the lower of cost or net realizable value. Cost is determined by the first-in, first-out (FIFO) method. For produced inventories, cost means the full cost including all direct and indirect production costs required to bring the inventory items to the stage of completion at the balance sheet date. Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and variable selling expenses.
A provision is recognized in the balance sheet when the Group has a present obligation (legal or constructive) as a result of a past event, and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount of the provision is the best estimate of the expenditure required to settle the present value of the obligation at the balance sheet date. The provisions are discounted when the impact of the time value of money is material.
Some of the Group's employees are eligible for retirement benefits under defined contribution and defined benefit plans.
Contributions to defined contribution plans are recognized as an expense in the income statement as incurred.
For defined benefit plans, the amount recorded in the balance sheet is determined as the present value of the benefit obligation less any past service costs not yet recognized and the fair value of any plan assets.
The actuarial gains and losses are recognized in the period in which they occur outside profit and loss, in the consolidated statement of comprehensive income.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the value of assets and liabilities for tax purposes and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Accrued charges are costs that have been charged against income but not yet disbursed at balance sheet date. Deferred income is revenue that will be recognized in future periods.
Financial instruments are recorded at trade date. The fair value of the financial instruments is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date.
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.
Cash and cash equivalent includes cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
Amounts payable are carried at nominal value at the balance sheet date.
The Company uses derivative financial instruments to reduce the exposure to adverse fluctuations in interest rates and foreign exchange rates. It is the Company's policy not to hold derivative financial instruments for speculative or trading purposes.
Derivative financial instruments are recognized initially at fair value. Subsequent to initial recognition, derivative financial instruments are stated at fair value. Recognition of any resulting gain or loss depends on the nature of the item being hedged. Derivative financial instruments that are either hedging instruments that are not designated or do not qualify as hedges are carried at fair value, with changes in value included in the income statement.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognized asset or liability, a firm commitment or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognized directly in equity. When the firm commitment or forecasted transaction results in the recognition of an asset or liability, the cumulative gain or loss is removed from equity and included in the initial measurement of the acquisition cost or other carrying amount of the asset or liability.
Otherwise the cumulative gain or loss is removed from equity and recognized in the income statement at the same time as the hedged transaction. The ineffective part of any gain or loss is recognized in the income statement immediately. Any gain or loss arising from changes in the time value of the derivative financial instrument is excluded from the measurement of hedge effectiveness and is recognized in the income statement immediately.
When a hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognized in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer probable, the cumulative unrealized gain or loss recognized in equity is recognized in the income statement immediately.
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.
Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through a continuing use.
The consolidated cash flow statement reports the cash flow during the period classified by analyzing the cash flow from operating, investing and financing activities.
On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.
The Company is operating in a single business segment: Heavy-Duty Laundry Division.
All accounting periods presented represent 12 months of operations starting on January 1 of each year.
There are no changes in the accounting policies compared with the accounting policies used in the preparation of the consolidated financial statements as per December 31, 2012 except for the classification of currency result:
Based on the prior accounting policy, the sales and purchase transactions in foreign currency were accounted for at spot rate. During year-end closing, the revaluation of the balance sheet positions and of the hedging contracts at closing rate resulted in a currency gain or loss that was recorded in the financial result. As a consequence, the gain or loss of FX hedging transactions designed to protect the margin on sales was not included in the operating profit.
In order to improve the classification of the result on transaction in foreign currency, the Audit Committee approved in November 2012 a change in the presentation of currency result. Depending on the nature of the currency result, it is now recorded in operating or financial result.
The table below gives on overview of the impact of this change in classification on the different lines of the comprehensive income statement: under the new rules, as per December 31, 2013, a 0.08 million euro currency loss is reclassified from net financial charges to operating result. In the comparable figures of 2012, 0.3 million euro currency loss is reclassified from net financial charges to operating result.
| (in thousand of euro) | December 2013 | December 2013 | December 2012 | December 2012 |
|---|---|---|---|---|
| New rules | Old rules | New rules | Old rules | |
| Operating result | 15.001 | 15.080 | 17.464 | 17.807 |
| Net financial charges | -1.478 | -1.557 | -2.225 | -2.568 |
| Profit before taxes | 13.523 | 13.523 | 15.239 | 15.239 |
The parent Company, JENSEN-GROUP NV, and all the subsidiaries that it controls are included in the consolidation.
There were no changes during 2012 in the scope of consolidation.
On June 11, 2013 JENSEN Brasil and on July 3, 2013 JENSEN Japan Co. have been incorporated. On August 16, 2013 JENSEN-GROUP took over its Austrian distributor ÖWM.
The total laundry industry can be split up into Consumer, Commercial and Heavy Duty laundry. The JENSEN-GROUP entities serve end-customers in the Heavy Duty laundry segment. They follow the same process. The JENSEN-GROUP sells its products and services under the JENSENTM brand through own sales and service companies and independent distributors worldwide. In this way the JENSEN-GROUP operates only in one single segment.
The following table presents revenue and certain asset information based on the Group's geographical areas. The basis for attributing revenues is based on the location of the customer:
| (in thousand of euro) | Europe + CIS | America | Middle East, Far East and Australia | TOTAL OPERATIONS | ||||
|---|---|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |
| Revenue from external customers 132.069 | 153.018 | 44.044 | 44.450 | 45.303 | 32.237 | 221.416 | 229.705 | |
| Other segment information | ||||||||
| Non-current assets | 20.548 | 18.543 | 2.581 | 2.967 | 2.645 | 3.038 | 25.774 | 24.548 |
| Non allocated assets | 111.655 | 123.673 | ||||||
| Total assets | 137.429 | 148.221 | ||||||
| Capital expenditure: | -5.126 | 3.566 | -11 | -5 | -47 | -27 | -5.184 | 3.534 |
The difference between non-current assets in the table above (25.8 million euro) and the non-current assets as per the consolidated statement of financial position (30.6 million euro) relates to the deferred tax assets (4.8 million euro).
The total number of employees (full time equivalent) at December 31, 2013 was 1,130. These broke down into:
| (FT equivalent) | 2013 | 2012 | |
|---|---|---|---|
| Production | 641 | 707 | |
| Product Development | 78 | 75 | |
| Sales & Marketing | 188 | 177 | |
| Installation and services | 135 | 122 | |
| General Administration | 88 | 79 | |
| Total | 1.130 | 1.160 |
| (in thousands of euro) | Know how | Goodwill | Other intangibles | Licenses | TOTAL |
|---|---|---|---|---|---|
| Gross carrying amount January 1, 2012 | 346 | 6.640 | 0 | 341 | 7.327 |
| Translation differences | -1 | 37 | 0 | -12 | 24 |
| Additions | 0 | 0 | 0 | 0 | 0 |
| Gross carrying amount December 31, 2012 | 345 | 6.677 | 0 | 329 | 7.351 |
| Translation differences | -2 | -60 | 0 | 32 | -30 |
| Additions | 0 | 852 | 432 | 251 | 1.535 |
| Disposals | 0 | 0 | 0 | 0 | 0 |
| Gross carrying amount December 31, 2013 | 343 | 7.470 | 432 | 612 | 8.857 |
| Accumulated amortization, write-downs, | 239 | 1.946 | 0 | 232 | 2.417 |
| impairments January 1, 2012 | |||||
| Additions | 69 | 0 | 0 | 0 | 69 |
| Accumulated amortization, write-downs, | 308 | 1.946 | 0 | 232 | 2.486 |
| impairments December 31, 2012 | |||||
| Additions | 35 | 0 | 150 | 65 | 250 |
| Accumulated amortization, write-downs, | 343 | 1.946 | 150 | 297 | 2.736 |
| impairments December 31, 2013 | |||||
| Net carrying amount December 31, 2012 | 37 | 4.731 | 0 | 97 | 4.865 |
| Net carrying amount December 31, 2013 | 0 | 5.524 | 283 | 315 | 6.121 |
The know-how relates to the technology for specific folding equipment, purchased in the acquisition of JENSEN Italia s.r.l.
The goodwill arises mainly from the acquisitions of JENSEN France, JENSEN Switzerland, JENSEN Australia, JENSEN SIPANO (Sweden), JENSEN Benelux, JENSEN Italia and ÖWM, Austria.
JENSEN-GROUP identifies the cash flow-generating units as being the Group. JENSEN-GROUP assists the heavy-duty laundry industry worldwide by designing and supplying sustainable single machines as well as systems and integrated solutions. The success of JENSEN-GROUP results from combining the global skills with the local presence. The non-current assets of the plants are managed together and the cash flows generated by the usage of these plants come from one group of global customers that are approached with same deliverable, being the optimization of the heavy duty laundry activity. Therefore the non-current assets of the plants are allocated to one CGU for impairment testing purposes.
Goodwill is subject to a yearly impairment test that is based on a number of critical judgments, estimates and assumptions, based on fair value and applying a discounted free cash flow approach. JENSEN-GROUP believes that its estimates are very reasonable; they are based on the past experience, external sources of information (such as long-term growth rate and discount rate) and reflect the best estimates by management. The recoverable amount of the goodwill is determined based on a calculation of its value in use to the cash-generating unit to which it is allocated.
The main judgments, assumptions and estimates for the cash-generating unit are:
The test includes a sensitivity analysis on key assumptions used, among them the WACC, free cash flow and long-term growth percentage: a WACC between 5% and 11%, free cash flow between 95% and 100% and a long term growth between 1% and 2% are applied. A change in the estimates used does not lead to a potential impairment situation.
Although JENSEN-GROUP believes that its judgments, assumptions and estimates are appropriate, actual results may differ from these estimates under different assumptions or conditions.
The other intangible fixed assets amounting to 0.3 million euro relate to the acquisition of ÖWM.
The licenses relate to the capitalization of the license costs of the ERP system and for other IT tools.
Development costs of 6.3 million euro (6.0 million euro in 2012) were expensed during the year.
| (In thousands of euro) | Land & Buildings |
Plant machinery and equipment |
Funiture and vehicules |
Ohter tangible assets |
Assets under construction |
TOTAL |
|---|---|---|---|---|---|---|
| Gross carrying amount January 1, 2012 | 33.677 | 19.223 | 4.855 | 2.000 | 0 | 59.755 |
| Translation differences | -80 | -20 | 21 | -13 | 0 | -92 |
| Additions | 230 | 742 | 1.150 | 12 | 0 | 2.134 |
| Disposals | -7.252 | -2.098 | -1.464 | -13 | 0 | -10.827 |
| Transfers | 0 | 0 | 0 | 0 | 0 | 0 |
| Gross carrying amount December 31, 2012 | 26.575 | 17.847 | 4.562 | 1.986 | 0 | 50.970 |
| Translation differences | -363 | -272 | 48 | -24 | 0 | -611 |
| Additions | 405 | 1.180 | 1.936 | 4 | 98 | 3.623 |
| Disposals | 0 | -548 | -369 | 0 | 0 | -917 |
| Transfers | 10 | 0 | -10 | 0 | 0 | 0 |
| Gross carrying amount December 31, 2013 | 26.627 | 18.207 | 6.167 | 1.966 | 98 | 53.065 |
| Accumulated depreciation, write down | 16.143 | 13.923 | 3.705 | 433 | 0 | 34.204 |
| and impairment January 1, 2012 Translation differences |
-110 | 158 | -115 | -14 | 0 | -81 |
| Depreciation | 1.079 | 1.340 | 521 | 178 | 0 | 3.118 |
| Disposals | -1.974 | -1.986 | -1.129 | 0 | 0 | -5.089 |
| Accumulated depreciation, write down | 15.138 | 13.435 | 2.982 | 597 | 0 | 32.152 |
| and impairment December 31, 2012 | ||||||
| Translation differences | -246 | -38 | -81 | 13 | 0 | -352 |
| Depreciation | 959 | 637 | 1.078 | 171 | 0 | 2.845 |
| Disposals | 0 | -115 | -295 | 0 | 0 | -410 |
| Transfers | 10 | 0 | -10 | 0 | 0 | |
| Accumulated depreciation, write down | 15.861 | 13.919 | 3.674 | 781 | 0 | 34.235 |
| and impairment December 31, 2013 | ||||||
| Net carrying amount December 31, 2012 | 11.437 | 4.412 | 1.580 | 1.389 | 0 | 18.818 |
| Net carrying amount December 31, 2013 | 10.766 | 4.288 | 2.493 | 1.185 | 98 | 18.830 |
During 2013, the net carrying amount of tangible fixed assets remained stable. Excluding depreciation charges in the income statement of 3.2 million euro, tangible fixed assets increased by 3.2 million euro.
The capital expenditures in 2013 related mainly to equipment upgrades and to the acquisition of the Austrian distributor ÖWM.
During 2012, the Swiss production was transferred to Denmark and Germany. As a result of this transfer, the factory building and some of the machines of JENSEN AG Burgdorf were sold to a third party. This sale led to a positive result of 0.9 million euro.
The financial leasing covers mainly machinery and equipment of JENSEN GmbH.
Machinery includes the following amounts where the Group is a lessee under a finance lease:
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Cost capitalized finance leases | 1.502 | 1.506 |
| Accumulated depreciation | -1.020 | -914 |
| Net book amount | 482 | 592 |
The carrying value of the property, plant and equipment pledged as security for liabilities amounts to 21.7 million euro.
Deferred tax assets and liabilities are attributable to the following items:
| (In thousands of euro) | December 31, 2011 |
Charged/credited to the income statement |
Charged/ credited to equity |
Exchange differences |
December 31, 2012 |
|---|---|---|---|---|---|
| Inventories | -248 | 798 | 0 | 0 | 550 |
| Fixed assets | -1.476 | 1.420 | 0 | 811 | 755 |
| Provisions | 829 | 1.591 | 852 | 0 | 3.272 |
| Tax losses | 3.191 | -1.814 | 0 | -946 | 431 |
| Deferred taxes on differences between | 2.741 | -2.504 | 0 | 0 | 237 |
| tax and local books | |||||
| Currency result in other comprehensive income | -342 | 128 | 0 | -214 | |
| Change in tax rate | 0 | 65 | 0 | 65 | |
| Financial instruments | 268 | -271 | -55 | 0 | -58 |
| Total deferred tax assets (net) | 4.963 | -587 | 797 | -135 | 5.038 |
| (In thousands of euro) | December 31, 2012 |
Charged/credited to the income statement |
Charged/ credited to equity |
Exchange differences |
December 31, 2013 |
|---|---|---|---|---|---|
| Inventories | 550 | 84 | 0 | 0 | 634 |
| Fixed assets | 755 | -304 | 0 | 0 | 451 |
| Provisions | 3.272 | 360 | -500 | 0 | 3.132 |
| Tax losses | 431 | -12 | 0 | 368 | 787 |
| Deferred taxes on other differences between | 237 | -208 | 0 | 0 | 29 |
| tax and local books | |||||
| Currency result in other comprehensive income | -214 | -155 | -369 | ||
| Change in tax rate | 65 | -65 | 0 | 0 | 0 |
| Financial instruments | -58 | 289 | -282 | 0 | -51 |
| Total deferred tax assets (net) | 5.038 | -11 | -782 | 368 | 4.613 |
The split between long term and short term deferred taxes is as follows:
| (in thousands of euro) | Deferred taxes | |
|---|---|---|
| Long term | 1,784 | |
| Short term | 2,829 | |
| Total deferred tax assets | 4,613 |
The deferred tax assets originate mainly from JENSEN GmbH (1.3 million euro), JENSEN USA (1.3 million euro), JENSEN Italia (0.6 million euro) and JENSEN Denmark (0.5 million euro).
Deferred tax assets have been recorded because Management and the Board are convinced that, in accordance with the Company's valuation rules, the assets can be realized within a reasonable time frame.
The deferred tax assets decreased because of release of deferred tax assets recognized on timing differences.
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Contract revenue | 221.416 | 229.705 |
| Balance sheet information of pending projects: | ||
| Gross amounts due from customers for contract work | 16.917 | 29.059 |
| Advances received | 7.262 | 9.495 |
Construction contracts are valued based on the percentage of completion method. At December 31, 2013 gross amounts due from customers for contract work included 3.1 million euro of accrued profit (5.9 million euro at December 31, 2012).
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Trade debtors | 50.012 | 51.351 |
| Provision for doubtful debtors | -3.622 | -4.107 |
| Taxes | 310 | 1.049 |
| Other amounts receivable | 1.897 | 1.601 |
| Gross amounts due from customers for contract work | 16.917 | 29.059 |
| Deferred charges and accrued income | 1.040 | 1.367 |
| Derivative financial instruments | 233 | 232 |
| Total trade and other receivables | 66.787 | 80.552 |
| Less non-current portion | ||
| Trade debtors | 198 | 229 |
| Other amount receivable | 625 | 636 |
| Non-current portion | 823 | 865 |
| Current portion | 65.964 | 79.687 |
The other amounts receivable include cash guarantees in an amount of 0.6 million euro.
Advances received from customers, mainly on project activities, are recognized in "Accounts and notes payable" in accordance with the accounting principle whereby receivables and payables may not be netted off.
The Group has factored 1.1 million euro of its receivables in France with a financial institution under a factoring program. The corresponding debt is accounted for under current borrowings.
The special shareholders' meeting of October 4, 2012 resolved to reduce the capital by 12,004,452.00 euro. The capital decrease was paid out in December 2012.
At December 31, 2012, share capital was 30.7 million euro, represented by 8,002,968 ordinary shares without nominal value. There are no preference shares. All shares are fully paid.
At December 31, 2013, the issued share capital was 30.7 million euro and was represented by 8,002,968 ordinary shares without nominal value. There were no preference shares. All shares are fully paid.
Detailed information on the capital statement as per December 31, 2013 is set out below.
| CAPITAL STATEMENT (position as at December 31, 2013) | Amounts (in thousand of euro) |
Number of shares |
|---|---|---|
| A. Capital | ||
| 1. Issued capital | ||
| - At the end of the previous year | 30.710 | |
| - Changes during the year | 0 | |
| - At the end of this year | 30.710 | |
| 2. Capital representation | ||
| 2.1 Shares without nominal value | 30.710 | 8.002.968 |
| 2.2 Registered or bearer shares | ||
| - Registered | 4.141.218 | |
| - Bearer/dematerialized | 3.861.750 | |
| B. Own shares held by | ||
| - the company or one of its subsidiaries | 724 | 59.768 |
| C. Commitments to issue shares | ||
| 1. As a result of the exercise of CONVERSION RIGHTS | 0 | 0 |
| 2. As a result of the exercise of WARRANTS | 0 | 0 |
| D. Authorized capital not issued | 42.715 |
The following declarations have been received of holdings in the company's share capital:
JENSEN INVEST A/S, Ejnar Jensen Vej 1, 3700 Rønne, Denmark
| Number of shares | Total shares | % | |
|---|---|---|---|
| - number of shares | 4.131.576 | 8.002.968 | 51,63% |
| - Voting rights | 4.131.576 | 7.943.200 | 52,01% |
The chain of control is as follows: 51,6% of the shares in JENSEN-GROUP are held by JENSEN Invest A/S and 0,02% by the heirs of Mr. Jørn M. Jensen. JF Tenura Aps holds 100% of the shares in Jensen Invest A/S. SWID AG, represented by Mr. Jesper M. Jensen holds and controls 51% of the shares in JF Tenura Aps. The other 49% of the shares in JF Tenura Aps are held by Mrs Anne Munch Jensen and Mrs Karine Munk Finser as the ultimate beneficial owners of the Jörn Munch Jensen and Lise Munch Jensen Family Trust.
| Petercam NV | |||
|---|---|---|---|
| Petercam NV, Place Sainte Gudule 19, 1000 Brussel, Belgium | |||
| Number of shares | Total shares | % | |
| - number of shares | 693.344 | 8.002.968 | 8,66% |
| - Voting rights | 693.344 | 7.943.200 | 8,73% |
The chain of control is as follows: Petercam NV has 100% participation in PMS. Petercam NV has 100% participation in Petercam Luxembourg.
Each share has one vote. The voting rights are in line with the Companies' Code. The articles of association do not include other regulations with respect to voting rights.
The regulations with respect to transfer of shares are in line with the Companies' Code. The articles of association do not include other regulations with respect to transfer of shares.
The share premium results primarily from the merger of LSG, which then took the name of JENSEN-GROUP.
The ending balance of the share premium is 5.8 million euro.
The articles of association (art. 11) allow the Board of Directors to buy back own shares.
The Board of Directors of November 14, 2013 decided to implement a share repurchase program to buy back a maximum of 800,300 or 10% of its shares. The shares are bought at the stock exchange by an investment bank mandated by the Board of Directors. The buy-back mandate expires on October 4, 2017. As per December 31, 2013, JENSEN-GROUP holds 59,768 treasury shares.
In this annual report the consolidated financial statements are expressed in thousands of euro. All balance sheet captions of foreign companies are translated into euro, which is the Company's functional and presentation currency, using closing rates at the end of the accounting year, except for capital and reserves, which are translated at historical rates. The income statement is translated at average rates for the year. The resulting translation difference, arising from the translation of capital and reserves and the income statement, is shown in a separate category of equity under the caption 'translation differences'.
The exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. In total, 0.5 million euro of currency losses are transferred from financial result to other comprehensive income.
| Currency | Average rate (per euro) | Closing rate (per euro) | ||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |
| USD | 1.3281 | 1.2856 | 1.3920 | 1.3791 | 1.3194 | 1.2939 |
| DKK | 7.4579 | 7.4438 | 7.4507 | 7.4593 | 7.4610 | 7.4342 |
| GBP | 0.8493 | 0.8111 | 0.8679 | 0.8337 | 0.8161 | 0.8353 |
| SEK | 8.6515 | 8.7067 | 9.0289 | 8.8591 | 8.5820 | 8.9120 |
| SGD | 1.6619 | 1.6062 | 1.7492 | 1.7414 | 1.6111 | 1.6819 |
| CHF | 1.2311 | 1.2053 | 1.2332 | 1.2276 | 1.2072 | 1.2156 |
| AUD | 1.3777 | 1.2413 | 1.3485 | 1.5423 | 1.2712 | 1.2723 |
| CNY | 8.1646 | 8.1094 | 8.9968 | 8.3491 | 8.2207 | 8.1588 |
| JPY | 129.66 | 144.72 | ||||
| BRL | 2.8687 | 3.2576 |
The exchange rates used for the translation were as follows:
The Group designates foreign exchange contracts and interest rate swaps as 'cash flow hedges' of its foreign currency and interest exposure. Any change in fair value of the hedging instrument and the hedged item (attributable to the hedged risk), as of inception of the hedge, is deferred in equity if the hedge is deemed effective (note 21).
At year-end, an amount of 0.3 million euro was deferred in equity.
Gains and losses recognized in the hedging reserve in equity on forward foreign exchange contracts as of December 31, 2013 will be released to the income statement at various dates between one and six months.
Gains and losses recognized in the hedging reserve in equity on interest rate swap contracts as of December 31, 2013 will be continuously released to the income statement until the repayment of the bank borrowings.
The JENSEN-GROUP has four defined benefit plans. In line with prior years, the Group has chosen to adopt the amended IAS 19 'Employee Benefits' and to recognize all actuarial gains and losses directly in equity. The accumulated loss of the four plans amounts to 3.6 million euro.
The Board proposes to distribute a dividend of 0.25 euro per share on the results of 2013, amounting in total to 1,985,800.00 euro. No dividend will be distributed to the treasury shares.
JENSEN objectives when managing capital are to safeguard JENSEN's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal structure to reduce the cost of capital.
The non-current and current borrowings can be summarized as follows:
| 0 | 71 | |
|---|---|---|
| 3.441 | 7.219 | |
| 3.441 | 7.290 | |
| December 31, 2013 | December 31, 2012 | |
|---|---|---|
| 3.771 | 500 | |
| 73 | 146 | |
| 2.942 | 10.862 | |
| 1.082 | 1.966 | |
| 7.868 | 13.474 | |
| 11.309 | 20.764 | |
Total borrowings decreased from 20.8 million euro at December 31, 2012 to 11.3 million euro at December 31, 2013. The cash and cash equivalents increased from 9.9 million euro to 14.0 million euro. All this together resulted in a decrease in net debt by 13.6 million euro, from 10.9 million euro net debt it turned to 2.7 million euro net cash. JENSEN-GROUP is debt-free at the end of 2013.
The Group factored trade receivables in a total amount of 1.1 million euro. As the risks and rewards are not substantially transferred to the related party, the factoring arrangement does not result in the derecognition of any item from the balance sheet.
The following table gives the maturities of the non-current debt:
| (in thousands of euro) | December 31, 2013 | December 31, 2012 | |
|---|---|---|---|
| Between 1 and 2 years | 331 | 3.834 | |
| Between 2 and 5 years | 1.000 | 977 | |
| Over 5 years | 2.110 | 2.479 | |
| Total non-current borrowings | 3.441 | 7.290 |
The exposure of the Group's borrowings to interest rate changes and the contractual re-pricing dates before and after the effect of the IRS (interest rate swaps) at balance sheet date is as follows:
| (In thousands of euro) | Less than 1 year |
Between 1 and 2 years |
Between 2 and 5 years |
Over 5 years | Total |
|---|---|---|---|---|---|
| Credit institutions | 6.713 | 331 | 1.000 | 2.110 | 10.154 |
| Leasing | 73 | 0 | 0 | 0 | 73 |
| Payments received (factoring) | 1.082 | 0 | 0 | 0 | 1.082 |
| Total | 7.868 | 331 | 1.000 | 2.110 | 11.309 |
| IRS covered | 0 | 278 | 1.111 | 1.392 | 2.780 |
| Total | 7.868 | 53 | -111 | 718 | 8.529 |
Management believes that the carrying value of the loans at fixed rate approximates to the fair value.
For details on the IRS we refer to note 21.
The carrying amounts of the Group's borrowings are denominated in the following currencies:
| (in thousands of euro) | December 31, 2013 December 31, 2012 |
||
|---|---|---|---|
| EUR | 8.384 | 13.606 | |
| USD | 106 | 417 | |
| DKK | 2.819 | 3.242 | |
| CHF | 0 | 3.314 | |
| Other | 0 | 185 | |
| Total | 11.309 | 20.764 |
With respect to the Group's borrowings, debt covenants are in place (equity ratio and EBITDA multiple). During the year, there were no breaches of these covenants.
One of the credit facilities makes provision for an early termination of the facility in case of change of control.
| (in thousands of euro) | December 31, 2013 | December 31, 2012 | |
|---|---|---|---|
| Mortgages | 2.265 | 3.114 | |
| Pledges on assets | 106 | 251 | |
| Guarantee by parent company | 6.192 | 11.854 | |
| Total | 8.563 | 15.219 |
The carrying value of the property, plant and equipment pledged as security for liabilities amounts to 21.7 million euro.
| (in thousands of euro) | December 31, 2013 | December 31, 2012 | |
|---|---|---|---|
| Provisions for Defined Benefit Plan | 10.280 | 11.769 | |
| Provisions for other employee benefits | 726 | 839 | |
| Total provisions for employee benefit obligations | 11.006 | 12.608 |
The provision for other employee benefits relate to a defined contribution plan in Austria and pre-pensions in Germany and in the Benelux.
JENSEN GmbH, JENSEN France, JENSEN Italia and JENSEN AG Burgdorf maintain defined retirement benefit plans. These plans generally provide benefits that are related to an employee's remuneration and years of service.
The weighted average duration of the defined benefit obligation is 15 years.
The Group recognizes all actuarial gains and losses directly in Other Comprehensive Income (OCI). The accumulated actuarial loss of the 4 plans amounts to 3.6million euro.
At December 31, 2013, the total net liability amounted to 10.3 million euro. The net liability decreased because of changes in the assumptions, especially an increase in the discount rate.
For the defined benefit plans, the net outcome for 2013 was 0.7 million euro.
| (in thousands of euro) | 2013 | 2012 |
|---|---|---|
| Current service cost | 402 | 534 |
| Interest cost | 411 | 591 |
| Interest income on plan assets | -83 | -199 |
| Administrative expenses and taxes | 19 | 0 |
| Pension expenses | 749 | 926 |
The change in net liability recognized during 2013 and 2012 is set out in the table below:
| (in thousands of euro) | 2013 | 2012 |
|---|---|---|
| Net (liability)/assets at the start of the year | ||
| Unfunded status | -11.770 | -9.072 |
| Pension expenses recognized in the income statement | -749 | -926 |
| Employer contribution or benefits paid by employer | 181 | 409 |
| Benefits paid directly by the company | 493 | 523 |
| Amounts recognised in OCI | 1.532 | -2.699 |
| Translation differences | 33 | -5 |
| Net (liability) at December 31 | -10.280 | -11.770 |
The changes in defined benefit obligations and plan assets can be summarized as follows:
| (in thousands of euro) | 2013 | 2012 |
|---|---|---|
| Change in Defined Benefit Obligation (DBO) | ||
| DBO at January 1 | 15.939 | 16.895 |
| Current service costs | 402 | 534 |
| Interest cost | 411 | 591 |
| Benefits paid | -1.061 | -523 |
| Premiums paid | -69 | -180 |
| Participants' contribution | 152 | 337 |
| Effect of changes in demographic assumptions | 9 | 0 |
| Effect of changes in financial assumptions | -1.205 | 2.780 |
| Effect of experience adjustments | -294 | 126 |
| Curtailment (gain) / loss | 0 | 0 |
| Business combinations | 397 | 86 |
| Plan settlements | 0 | -4.772 |
| Exchange rate differences | -99 | 65 |
| DBO at December 31 | 14.582 | 15.939 |
| (in thousands of euro) | 2013 | 2012 |
|---|---|---|
| Change in Plan Assets | ||
| Fair value of plan assets at January 1 | 4.170 | 7.823 |
| Contributions | 826 | 1.270 |
| Actuarial gains/(losses) | 37 | 207 |
| Interest income on plan assets | 83 | 199 |
| Benefits paid | -1.061 | -523 |
| Premiums paid | -69 | -180 |
| Plan settlements | 0 | -4.772 |
| Business combinations | 397 | 86 |
| Administrative expenses | -12 | 0 |
| Translation differences | -69 | 60 |
| Fair value of plan asset at December 31 | 4.302 | 4.170 |
| (in thousands of euro) | 2013 | 2012 |
|---|---|---|
| Defined Benefit Obligation at the end of the period | -14.582 | -15.939 |
| Fair value of plan assets at the end of the period | 4.302 | 4.170 |
| Unfunded status | -10.280 | -11.769 |
The major assumptions made in calculating the provisions can be summarized as follows:
| Expected return assets | Expected rates of salary increase | |||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |||
| Switzerland | 2,60% | 2,00% | 1,50% | 1,50% | ||
| France | -'* | -'* | 3,00% | 3,00% | ||
| Germany | -'* | -'* | 3,00% | 3,00% | ||
| Italy | -'* | -'* | 0,00% | 0,00% |
| Discount rate | Rate of price inflation | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Switzerland | 2,60% | 2,00% | 0,80% | 0,50% |
| France | 3,40% | 2,90% | 2,00% | 2,00% |
| Germany | 3,40% | 2,90% | 2,00% | 2,00% |
| Italy | 3,40% | 2,90% | 2,00% | 2,00% |
* relates to the German, Italian and French pension plan for which no assets are allocated
For the Swiss plan, the assets match the liabilities.
Through its defined benefit plans, the Group is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If plan assets underperform this yield, this will create a deficit.
The sensitivity of the defined benefit obligation to changes in the assumptions is:
| (in thousands of euro) | Change in assumption | Impact on DBO | |
|---|---|---|---|
| Discount rate | -25bp | 586 | |
| +25bp | -541 | ||
| Salary increase rate | -25bp | -164 | |
| +25bp | 29 | ||
| Pension increase rate | -25bp | -202 | |
| +25bp | 210 | ||
| Mortality | -1 | -102 | |
| +1 | 482 |
The above sensitivity analyses are based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated.
The percentage of plan assets by asset allocation is as follows:
Equity securities: 1.7% Debt securities: 48.2% Real estate: 17.0% Other: 33.1%
The contributions expected to be paid to the plan during the annual period beginning after the reporting period is estimated to 0.7 million euro.
There is one pension plan in place in Belgium that is legally structured as a Defined Contributions plan. Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called " Vandenbroucke Law "), all Belgian Defined Contribution plans have to be considered under IFRS as Defined Benefit plans. The Vandenbroucke Law states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions.
Because of this minimum guaranteed return for Defined Contributions plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as a Defined Benefit plans under IAS 19.
In the past the Company did not apply the Defined Benefit accounting for these plans because higher discount rates were applicable and the return on plan assets provided by insurance companies was sufficient to cover the minimum guaranteed return. As a result of the continuously low interest rates offered by the European financial markets, employers in Belgium effectively assumed a higher financial risk related to the pension plans with a minimum fixed guaranteed return than in the past, requiring them to measure the potential impact of Defined Benefit accounting for these plans.
We made an estimate of the potential additional liabilities as at December 31, 2013 and these are assessed as not significant.
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Provisions for warranties | 8.203 | 7.978 |
| Provisions for take-back obligations | 270 | 216 |
| Other provisions | 3.146 | 2.690 |
| Provisions for other liabilities and charges | 11.619 | 10.884 |
Changes in provisions can be analyzed as follows:
| (in thousands of euro) | December 31, 2012 |
Additions | Reversals (Utilizations) |
Translation Differences |
December 31, 2013 |
|---|---|---|---|---|---|
| Provisions for warranties | 7.978 | 6.321 | -6.003 | -93 | 8.203 |
| Provisions for take-back obligations | 216 | 52 | 0 | 2 | 270 |
| Other provisions | 2.690 | 1.101 | -613 | -32 | 3.146 |
| Total provisions | 10.884 | 7.474 | -6.616 | -123 | 11.619 |
A provision is recorded for expected warranty claims on products sold during the year. Assumptions used to calculate the provision for warranty claims are based on current sales levels and current information on warranty calls under the standard warranty period (up to 18 months) for the main products.
A provision for take-back obligations is recorded when JENSEN-GROUP sells equipment to a customer for which the customer wants to enter into a leasing contract with a Leasing Company. In some cases, the Leasing Company requires a take-back clause.
The other provisions are set up for legal claims that, based on prudent judgment, are reasonably funded. Most of these claims are covered by insurance. Based on legal advice taken, management does not expect these claims to significantly impact the Group's financial position or profitability.
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Trade debts | 14.075 | 19.538 |
| Advances received for contract work | 7.262 | 9.495 |
| Remuneration and social security | 9.624 | 8.965 |
| Other amounts payable | 1.158 | 1.601 |
| Accrued expenses | 5.022 | 5.658 |
| Derivative financial instruments | 44 | 635 |
| Total trade and other payables | 37.185 | 45.892 |
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Depreciation, amortization | 3.192 | 3.244 |
| Write downs on trade debtors | -153 | 1.013 |
| Write downs on inventory | 345 | 995 |
| Change in provisions | 1.046 | -1.418 |
| Total depreciation, amortization, write downs of assets | 4.430 | 3.834 |
Financial income and expenses and other financial income and expenses break down as follows:
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Financial income | 3.123 | 3.342 |
| Interest income | 1.444 | 1.249 |
| Other financial income | 218 | 240 |
| Currency gains | 1.461 | 1.853 |
| Financial cost | -4.601 | -5.567 |
| Interest charges | -2.198 | -1.830 |
| Other financial charges | -982 | -863 |
| Currency losses | -1.421 | -2.874 |
| Total net finance cost | -1.478 | -2.225 |
JENSEN-GROUP has changed the valuation rules regarding the allocation of the currency gains and losses in order to have a better matching of the result on transactions in foreign currency, the Audit Committee approved in November 2012 to change the recording of currency gains and losses. Depending on the nature of the currency effect, it is presented in operating or financial result. As per December 2013, 0.08 million euro of currency loss is classified from financial result to operating result. The comparable reclassification for 2012 is the reclassification of a 0.3 million euro currency loss from financial result to operating result.
The currency result disclosed in the table above, represents only the currency result related to the financial result.
The other financial charges relate especially to bank charges.
Income tax expenses can be analyzed as follows:
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Current taxes | -3.638 | -4.153 |
| Deferred taxes | -11 | -587 |
| Total income tax expense | -3.649 | -4.740 |
Relationship between tax expense and accounting profit as per December 31, 2013 and December 31, 2012:
Reconciliation of effective tax rate:
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Accounting profit before taxes | 13.523 | 15.239 |
| Theoretical income tax expense | 3.531 | 4.710 |
| Theoretical tax rate | 26% | 31% |
| Tax effect of disallowed expenses | 531 | 30 |
| Tax effect of use of tax losses | -413 | 0 |
| Actual tax expenses | 3.649 | 4.740 |
| Effective tax rate | 27% | 31% |
The theoretical tax rate is the weighted average of the theoretical tax rates of the different entities.
The theoretical tax rate decreased from 31% in 2012 to 26% in 2013. This is because of the decrease in tax rate in Sweden (from 26% to 22%) and because the percentage is the weighted average of the theoretical tax rates of all the individual entities. Profit decreased in countries with high theoretical tax rates and increased in countries with low theoretical tax rates.
Basic earnings per share are calculated by dividing the Group share in the profit for the year of 9.8 million euro (10.4 million euro in 2012) by the weighted average number of ordinary shares outstanding during the years ended December 31, 2013 and 2012. The treasury shares acquired during the year are taken into account for the calculation of the weighted average number of shares outstanding.
| 2013 | 2012 | |
|---|---|---|
| Basic earnings per share (in euro) | 1.23 | 1.30 |
| Weighted avg shares outstanding | 7,999,536 | 8,002,968 |
Most of the JENSEN-GROUP leases relate to buildings, vehicles and computer equipment under a number of operating lease agreements. The future lease payments under these operating leases are due as follows:
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| < 1 year | 1.548 | 1.614 |
| >1 year < 5 years | 2.721 | 3.053 |
| > 5 years | 453 | 613 |
| Total operating leases | 4.722 | 5.280 |
The profit for the year includes operating lease expenses of 1.8 million euro.
Cash, cash equivalents and bank overdrafts include the following for the purpose of the cash flow statement:
| (in thousands of euro) | December 31, 2013 | December 31, 2012 |
|---|---|---|
| Cash and cash equivalent | 14.029 | 9.886 |
| Overdraft | -2.942 | -10.862 |
| Net cash and cash equivalents | 11.087 | -976 |
The consolidated statements of cash flows are presented on a consistent basis. As such, they do not isolate the effect of currencies on individual line items but only in total via the 'translation gains/(losses) on cash and bank overdrafts' caption. With respect to the evolution, the following comment can be made:
Cash increased because of the lower working capital.
JENSEN-GROUP has given the following commitments.
| (in thousands of euro) | December 31, 2013 | December 31, 2012 | |
|---|---|---|---|
| Letters of intent | 6.192 | 11.854 | |
| Bank guarantees | 5.516 | 4.988 | |
| Mortgages | 2.265 | 3.114 | |
| Repurchase agreements | 2.688 | 2.163 |
Management does not expect these contingencies to significantly impact the Group's financial position or profitability.
Exposure to foreign currency, interest rate and credit risk arises in the normal course of the JENSEN-GROUP business. The Company analyzes each of these risks individually and defines strategies to manage the economic impact on the JENSEN-GROUP's performance in line with its internal policies.
Financial instruments are valued on the basis of the quoted prices for similar assets and liabilities on liquid markets. The financial instruments have level 1.
The JENSEN-GROUP incurs currency risk on borrowings, investments, (forecasted) sales, (forecasted) purchases whenever they are denominated in a currency other than the functional currency of the subsidiary. The currencies giving rise to risk are primarily the US Dollar, Swiss Franc, Swedish Krona, Danish Krone, Chinese Yuan and Australian Dollar.
The main derivative financial instruments used to manage foreign currency risk are forward exchange contracts.
It is the company's policy not to hold derivative instruments for speculative or trading purposes.
With respect to currencies, the JENSEN-GROUP adopts the policy of:
As such these hedges are considered as cash flow hedges. They are contracted as a matter of procedure regardless of any expectations with regard to foreign currency developments.
All foreign exchange contracts are centralized within the JENSEN-GROUP treasury department and are contracted purely on the basis of the input of the different subsidiaries.
The currency risks resulting from translations of the financial statements of non-euro based companies are not hedged (note 9 – Equity).
The table below provides an indication of the company's net foreign currency positions per December 31, 2013 and December 31, 2012 as regards firm commitments and forecasted transactions. The open positions are the result of the application of JENSEN-GROUP risk management policy. Positive amounts indicate that the Company has a long position (net future cash inflows) while negative amounts indicate that the Company has a short position (net future cash outflows).
During 2012, JENSEN-GROUP decided to hedge also the open position in DKK against the euro because of the uncertainty on the financial market with respect to stability of the DKK/EUR rate. As described above, the Audit committee approved in November 2012 changing the policy and hedging only based on firm commitments. This explains the high open position on the DKK/EUR as per December 31, 2012.
| 2013 (in thousands of euro) | Total exposure | Total derivatives | Open position | |
|---|---|---|---|---|
| USD/EUR | 1.546 | -1.759 | -213 | |
| GBP/EUR | 2.034 | -1.900 | 134 | |
| AUD/EUR | 4.526 | -4.533 | -7 | |
| CHF/EUR | -685 | 697 | 12 | |
| SEK/EUR | -2.188 | 1.670 | -518 | |
| CNY/EUR | -1.200 | 1.208 | 8 |
| 2012 (in thousands of euro) | Total exposure | Total derivatives | Open position |
|---|---|---|---|
| USD/EUR | -3.731 | 2.791 | -941 |
| GBP/EUR | - | -300 | -300 |
| AUD/EUR | 5.904 | -6.100 | -196 |
| CNY/EUR | 2.330 | -2.330 | 0 |
| CHF/EUR | 0 | 750 | 750 |
| SEK/EUR | -4.636 | 5.700 | 1.064 |
| DKK/EUR | 1.385 | 24.500 | 25.885 |
Except for a part of the Washroom Technology, all production is generated in European subsidiaries of which the activities are conducted in euro (or euro related currencies) and in Swedish Krone.
The table below gives an overview of the sensitivity analysis as per 2013:
| (in thousand of euro) | Change in currency | Impact EBIT1 |
|---|---|---|
| USD | -7,73% | -923 |
| 7,73% | 1.078 | |
| SEK | -9,23% | 548 |
| 9,23% | -660 | |
| CHF | -5,36% | 65 |
| 5,36% | -72 | |
| AUD | -26,56% | -1.945 |
| 26,56% | 3.352 | |
| GBP | -8,65% | -891 |
| 8,65% | 1.060 | |
| DKK | -0,15% | 72 |
| 0,15% | -72 |
1: The estimation is based on the standard deviation of daily volatilities of the foreign exchange rates during the past 360 days at December 31, 2013 and using a 95% confidence interval.
These calculations are a purely theoretical calculation and do not take into account the gain or loss of sales resulting from the increased relative weakness or strength of currencies.
At December 31, 2013, the Group held the following foreign exchange contracts. Balances due within 12 months equal their carrying balances as the impact of the discount is not significant.
| Curr | Sell | Avg exchange rate | Maturity | Fair value (in thousands of euro) |
|---|---|---|---|---|
| USD | 5.667.592 | 1,36 | 4-02-14 | 68 |
| GBP | 1.607.360 | 0,85 | 4-03-14 | -27 |
| AUD | 6.861.306 | 1,51 | 10-03-14 | 111 |
| SEK | 1.995.302 | 8,68 | 20-01-14 | 5 |
| Curr | Buy | Avg exchange rate | Maturity | Fair value (in thousands of euro) |
| CHF | 850.000 | 1,22 | 6-01-14 | -5 |
| SEK | 16.991.571 | 8,94 | 5-02-14 | 17 |
| CNY | 10.000.000 | 8,28 | 30-06-14 | 15 |
| USD | 3.335.703 | 1,38 | 14-03-14 | 13 |
All of these foreign exchange contracts are designated and effective as cash flow hedges. The changes in fair value over 2013 amounting to -0.07 million euro after taxes have been deferred in equity. No ineffectiveness has been recorded.
At December 31, 2012, the Group held the following foreign exchange contracts. Balances due within 12 months equal their carrying balances as the impact of the discount is not significant.
| Curr | Sell | Avg exchange rate | Maturity | Fair value (in thousands of euro) |
|---|---|---|---|---|
| USD | 9.746.945 | 1,28 | 7-03-13 | 238 |
| GBP | 245.261 | 0,82 | 15-03-13 | 0 |
| AUD | 7.649.471 | 1,25 | 3-03-13 | 97 |
| CNY | 19.000.000 | 8,16 | 2-07-13 | 47 |
| Curr | Buy | Avg exchange rate | Maturity | Fair value |
| (in thousands of euro) | ||||
| CHF | 906.081 | 1,21 | 18-01-13 | 0 |
| SEK | 49.966.164 | 8,77 | 19-03-13 | 102 |
| USD | 6.175.000 | 1,28 | 12-03-13 | -137 |
| DKK | 181.425.830 | 7,41 | 28-05-13 | -159 |
All of these foreign exchange contracts were designated and effective as cash flow hedges. The changes in fair value over 2012 amounting to 0.3 million euro after taxes were deferred in equity. No ineffectiveness was recorded.
The Company uses derivative financial instruments to reduce exposure to adverse fluctuations in interest rates. It is the Company's policy not to hold derivative instruments for speculative or trading purposes.
With respect to interest rates, the JENSEN-GROUP adopts the policy of having:
All financing within the JENSEN-GROUP is centralized in the treasury department. This makes it easier for the JENSEN-GROUP to respect its policy of hedging using IRS.
As per December 31, 2012, JENSEN-GROUP had only 35% of the total outstanding loans with long-term maturities.
This was discussed during the Audit Committee of November 2012 where the Audit Committee agreed to give JENSEN-GROUP an exemption to deviate from the policy of having between 40% and 70% long term loans.
Also as per December 31, 2013, JENSEN-GROUP did not reach the internal ratio and had only 30% of the total outstanding loans with long-term maturities. In December 2013, JENSEN-GROUP signed a long-term credit facility that will enable the Group to fulfil this ratio in the future.
In respect of interest-bearing financial liabilities, the table below indicates their effective interest rates at balance sheet date as well as the periods in which they roll over. Balances due within 12 months equal their carrying balances as the impact of the discount is not significant.
| 2013 (in thousands of euro) |
Effective interest rate |
Carring amount | < 1 month | > 1 month < 3 months |
> 3 months < 12 months |
1–5 years | > 5 years |
|---|---|---|---|---|---|---|---|
| Floating rate | |||||||
| EUR | 0%-1,52% | 4.097 | 4.097 | 0 | 0 | 0 | 0 |
| USD | 0 | 0 | 0 | 0 | 0 | 0 | |
| DKK | 0%-1,52% | 2.160 | 0 | 52 | 155 | 824 | 1.130 |
| CHF | 0 | 0 | 0 | 0 | 0 | ||
| SEK | 0 | 0 | 0 | 0 | 0 | ||
| Total | 6.257 | 4.097 | 52 | 155 | 824 | 1.130 | |
| Fixed rate | |||||||
| EUR | 1,32%-2,8% | 4.288 | 0 | 16 | 3.297 | 253 | 723 |
| USD | 5,76% | 106 | 0 | 27 | 80 | 0 | 0 |
| DKK | 2,5%-5,11% | 658 | 0 | 37 | 110 | 254 | 257 |
| CHF | 0 | 0 | 0 | 0 | 0 | 0 | |
| Total | 5.052 | 0 | 79 | 3.486 | 507 | 980 | |
| 2012 (in thousands of euro) |
Effective interest rate |
Carring amount | < 1 month | > 1 month < 3 months |
> 3 months < 12 months |
1–5 years | > 5 years |
| Floating rate | |||||||
| EUR | 1,5%-2,5% | 9.441 | 8.725 | 162 | 485 | 70 | 0 |
| USD | 1,5%-2,5% | 166 | 166 | 0 | 0 | 0 | 0 |
| DKK | 1,5%-2,5% | 2.990 | 0 | 64 | 192 | 1.052 | 1.682 |
| CHF | 1,3%-2,3% | 3.314 | 0 | 0 | 3.314 | 0 | 0 |
| Total | 15.911 | 8.891 | 226 | 3.991 | 1.122 | 1.682 | |
| Fixed rate | |||||||
| EUR | 1,32% - 2,8% | 4.350 | 0 | 15 | 44 | 3.494 | 797 |
| USD | 5,76% | 251 | 0 | 35 | 105 | 111 | 0 |
| DKK | 2,50% | 252 | 0 | 42 | 126 | 84 | 0 |
| Total | 4.853 | 0 | 92 | 275 | 3.689 | 797 |
The following table sets out the conditions of the interest rate swaps:
| 2013 Curr |
SWAP amount | Fixed interest | Maturity | Fair value (in thousands of euro) |
|---|---|---|---|---|
| DKK | 9.204.116 | 4,86% | 30-12-22 | -183 |
| DKK | 11.531.068 | 5,11% | 30-12-24 | -271 |
| TOTAL in EUR | 2.779.776 | -455 |
The interest rate swaps are designated and effective as cash flow hedges. The changes in fair value over 2013 amounting to 0.7 million euro after taxes have been deferred in equity. No ineffectiveness has been recorded.
| 2012 Curr |
SWAP amount | Fixed interest | Maturity | Fair value (in thousands of euro) |
|---|---|---|---|---|
| EUR | 375.000 | 0,99% | 1-10-13 | -3 |
| DKK | 10.773.103 | 4,71% | 30-12-22 | -255 |
| DKK | 13.310.859 | 5,04% | 30-12-24 | -374 |
| CHF | 4.000.000 | 3,50% | 10-07-13 | -589 |
| Total | 6.916.433 | -1.220 |
The interest rate swaps were designated and effective as cash flow hedges. The changes in fair value over 2012 amounting to -0.2 million euro after taxes were deferred in equity. No ineffectiveness was recorded.
As disclosed in the above table, 6.3 million euro of the Company's interest bearing financial liabilities bear a variable interest rate; 2.8 million euro are covered by an Interest Rate Swap resulting in a net variable interest rate exposure of 3.5 million euro. The Company estimates that the reasonably possible change of the market interest rates applicable to its floating rate debt is as follows:
| (in thousands of euro) | Carring amount Effective interest rate |
Possible rates at December 31, 2013 |
||
|---|---|---|---|---|
| EURO | 3,478 | 0%-1.5% | 0.07% – 1.57% |
Applying the reasonably possible increase/decrease in the market interest rate mentioned above to our floating rate debt at December 31, 2013, with all other variables held constant, 2013 profit would have been 0.002 million euro lower/higher.
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.
Under the Group's credit policy, project customers are required to either provide an advance payment or to provide a guarantee (ex. L/C, bank guarantees). We examine the creditworthiness of each new customer and of existing customers that start buying higher amounts.
There are no important concentrations above 15% of the total outstanding receivables with respect to a single (group of) customer(s).
The consolidated ageing balance of the trade receivables is as follows. Balances due within 12 months equal their carrying balances as the impact of the discounting is not significant.
| 2013 (in thousands of euro) |
Current | < 60 days | > 60 days < 90 days overdue < 120 days overdue |
> 90 days | > 120 days overdue |
Total |
|---|---|---|---|---|---|---|
| Outstanding trade receivables | 36.945 | 4.629 | 1.403 | 860 | 5.977 | 49.814 |
| Collateral held as security | 0 | 0 | ||||
| Net exposure | 36.945 | 4.629 | 1.403 | 860 | 5.977 | 49.814 |
| Provisions accounted for | -3.622 | |||||
| Total | 46.192 |
| 2012 (in thousands of euro) |
Current | < 60 days | > 60 days < 90 days overdue < 120 days overdue |
> 90 days | > 120 days overdue |
Total |
|---|---|---|---|---|---|---|
| Outstanding trade receivables | 33.911 | 7.890 | 2.127 | 1.796 | 5.627 | 51.351 |
| Collateral held as security | 0 | 0 | 0 | 0 | 0 | 0 |
| Net exposure | 33.911 | 7.890 | 2.127 | 1.796 | 5.627 | 51.351 |
| Provisions accounted for | -4.107 | |||||
| Total | 47.244 |
Management reviews on a timely basis whether specific provisions are needed based on the ageing list. Trade receivables are recorded at their nominal value, less provision for impairment. The provision for impairment reflects both the likelihood of being paid and the timing of the cash flow. The total provision for doubtful debtors recorded as per December 31, 2013 amounts to 3.6 million euro.
The roll forward of the provision for doubtful debtors is set out below:
| Provision Doubtful Debtors opening balance | 4.107 | |
|---|---|---|
| Additions | 90 | |
| Reversals | -412 | |
| Exchange difference | -163 | |
| Provision Doubtful closing balance | 3.622 |
The bank credit ratings (Moody's) as per December 31, 2013 are as follows:
Nordea: Aa3 KBC: A3 Credit Suisse: A1
The assets held for sale amounting to 0.4 million euro relate to the building in Kentucky (prior CLD activities).
The shareholders of the Group as per December 2013 are:
JENSEN INVEST: 51.60% Petercam: 8.66% Free float: 39.74%
JENSEN INDUSTRIAL GROUP A/S and JENSEN DENMARK A/S are part of a tax consolidation in Denmark together with JENSEN INVEST, the majority shareholder of the group. The tax consolidation regime obliges all Danish resident companies that are members of the same domestic or international group to file a joint group tax return which enables them to manage the impact of tax losses in Denmark within the group. As a result of this, JENSEN INVEST received for 2013 a reimbursement of 0.3 million euro of taxes. This was not to the detriment of the JENSEN-GROUP shareholders in 2013.
Key management compensation can be summarized as follows:
| In thousands of euro | 2013 | 2012 | |
|---|---|---|---|
| Fees paid to Board members | 230 | 268 | |
| Gross salaries paid to senior managers | 1,619 | 1,297 |
In addition to their board fees, the Board member Mr. Christoph Ansorge received 45,054.99 euro for consultancy activities.
On August 16, 2013 JENSEN-GROUP took over its Austrian distributor ÖWM, retro-actively as from April 1, 2013.
JENSEN-GROUP took over the distribution of JENSEN machinery, the servicing of its equipment in Austria and approximately 12 employees.
Revenues will remain nearly unchanged, as revenues from JENSEN machinery sold in Austria are already included in the consolidated figures.
The table below gives an overview of the acquisition-date fair value of the total consideration transferred and the remaining amount of goodwill recognized for the acquisition:
| 602 | |
|---|---|
| 1371 | |
| -325 | |
| -1260 | |
| 388 | |
| 388 | |
| 852 | |
| 1240 | |
| 1240 | |
The statutory auditor is Pwc Bedrijfsrevisoren, represented by Mr. Filip Lozie.
The statutory auditor received worldwide fees of 315,000 euro (excl. VAT) for auditing the statutory accounts of the various legal entities of the Group and the consolidated accounts of the JENSEN-GROUP. Apart from its mandate, it received during 2013 additional fees of 53,426 euro (excl. VAT). Of this amount, 18,794 euro was invoiced to JENSEN-GROUP NV and relates to tax advice. The JENSEN-GROUP has appointed a single audit firm for the audit of the consolidated financial statements.
There are no significant post-balance sheet events.
| Fully consolidated companies |
Registered office | Participating percentage |
|---|---|---|
| Belgium | ||
| JENSEN-GROUP NV | Bijenstraat 6 | Parent Company |
| 9051 Sint-Denijs-Westrem | ||
| US | ||
| JENSEN NA Inc. | Corporation Trust Center | 100% |
| Orange Street 1209 | ||
| Wilmington - Delaware | ||
| JENSEN USA, Inc. | Aberdeen loop 99 | 100% |
| Panama City, FL 32405 | ||
| 831 South 1st Street | 831 South 1st Street | 100% |
| KU 40203 Louisville | ||
| United Kingdom | ||
| JENSEN UK Ltd. | Unit 5, Network 11 | 100% |
| Thorpe Way Industrial Estate | ||
| Banbury, Oxfordshire OX16 4XS | ||
| Singapore | ||
| JENSEN Asia PTE Ltd. | No. 6 Jalan Kilang #02-01 | 100% |
| Dadlani Industrial House | ||
| Singapore 159406 | ||
| Denmark | ||
| JENSEN Industrial Group A/S | Industrivej 2 | 100% |
| 3700 Rønne | ||
| JENSEN Denmark A/S | Industrivej 2 | 100% |
| 3700 Rønne | ||
| Switzerland | ||
|---|---|---|
| JENSEN AG Burgdorf | Buchmattstrasse 8 | 100% |
| 3400 Burgdorf | ||
| JENSEN AG Holding | Buchmattstrasse 8 | 100% |
| 3400 Burgdorf | ||
| Sweden | ||
| JENSEN Sweden AB | Företagsgatan 68 | 100% |
| 504 94 Borås | ||
| JENSEN SIPANO AB | P.O. Box 1088 | 100% |
| 171 22 Solna | ||
| JENSEN Sweden Holding AB | Box 363 | 100% |
| 503 12 Borås | ||
| France | ||
| JENSEN France SAS | 2 "Village d'entreprises" | 100% |
| ZA de la Couronne des Près | ||
| Avenue de la Mauldre | ||
| 78680 Epône | ||
| Germany | ||
| JENSEN GmbH | Jörn-Jensen-Straße 1 | 100% |
| 31177 Harsum | ||
| Australia | ||
| JENSEN Laundry Systems Australia PTY Ltd. | Unit 16, 38-46 South Street | 100% |
| Rydalmere NSW 2116 | ||
| Italy | ||
| JENSEN Italia s.r.l. | Strada Provinciale Novedratese 46 | 100% |
| 22060 Novedrate | ||
| China | ||
|---|---|---|
| JENSEN Industrial Laundry Technology | Phoenix Avenue, | 100% |
| (Xuzhou) Co., Ltd | Xuzhou Clean Technology Zone | |
| 221121 Xuzhou, | ||
| Jiangsu Province, | ||
| P.R. China | ||
| Austria | ||
| JENSEN Austria Holding GmbH | Julius-Raab-Platz 4 | 100% |
| 1010 Wien | ||
| ÖWM GmbH | Reinhartsdorfgasse 9 | 100% |
| A-2324 Schwechat-Rannersdorf | ||
| Japan | ||
| JENSEN Japan Co., Ltd. | 4-9-1-203 Imagawa, Urayasu-city | 100% |
| 279-0022 Japan | ||
| Brazil | ||
| JENSEN-GROUP BRASIL COMERCIO | Rua Riachuelo 460 | 100% |
| E SERVICOS DE EQUIPAMENTOS | CEP 18035-330 Sorocaba-SP | |
| DE LAVANDERIA LTDA |
SUMMARY STATUTORY FINACIAL STATEMENTS JENSEN-GROUP NV
| Assets as at | December 31 | December 31 | |
|---|---|---|---|
| (in thousands of euro) | 2013 | 2012 | |
| Fixed assets | 89.122 | 101.547 | |
| Intangible assets | - | 161 | |
| Tangible fixed assets | 232 | 147 | |
| Financial fixed assets | 88.890 | 101.239 | |
| Current assets | 28.764 | 20.234 | |
| Stocks and contracts in progress | 986 | 1.220 | |
| Amounts receivable within one year | 2.708 | 3.713 | |
| Treasury shares | 724 | - | |
| Cash at bank and on hand | 24.314 | 13.776 | |
| Deferred charges and accrued income | 32 | 1.525 | |
| TOTAL ASSETS | 117.886 | 121.781 |
| Liabilities as at | December 31 | December 31 | |
|---|---|---|---|
| (in thousands of euro) | 2013 | 2012 | |
| Capital and reserves | 112.234 | 111.867 | |
| Capital | 30.710 | 30.710 | |
| Share premium account | 5.814 | 5.814 | |
| Reserves | 3.795 | 4.272 | |
| Accumulated profits | 71.915 | 71.071 | |
| Provisions and deferred taxes | 1.324 | 1.371 | |
| Provisions for liabilities and charges | 1.324 | 1.371 | |
| Amounts payable | 4.328 | 8.543 | |
| Amounts payable within one year | 3.787 | 7.232 | |
| Accrued charges and deferred income | 541 | 1.311 | |
| TOTAL LIABILITIES | 117.886 | 121.781 |
| Financial year ended (in thousands of euro) |
December 31 2013 |
December 31 2012 |
|
|---|---|---|---|
| Operating income | 18.445 | 23.818 | |
| Turnover | 18.398 | 24.944 | |
| finished goods and contracts in progress | -263 | -1.535 | |
| Other operating income | 310 | 409 | |
| Operating charges | -17.613 | -23.110 | |
| Raw materials, consumables and goods for resale | 10.800 | 15.295 | |
| Services and other goods | 4.385 | 5.383 | |
| Remuneration, social security and pensions | 2.130 | 2.299 | |
| Depreciation | 271 | 229 | |
| Write-downs | 40 | -64 | |
| Provisions for liabilities and charges | -47 | -60 | |
| Other operating charges | 34 | 28 | |
| Operating profit | 832 | 708 | |
| Financial result | 1.679 | 1.477 | |
| Financial income | 2.186 | 1.747 | |
| Financial charges | -507 | -270 | |
| Profit on ordinary activities for the year | |||
| before taxes | 2.511 | 2.185 | |
| Extraordinary result | 4 | 0 | |
| Extraordinary income | 4 | 0 | |
| Extraordinary charges | 0 | 0 | |
| Profit for the year before taxes | 2.515 | 2.185 | |
| Taxes | -161 | -14 | |
| Income taxes | -161 | -14 | |
| Profit for the year | 2.354 | 2.171 |
| Financial year ended | December 31 | December 31 | |
|---|---|---|---|
| (in thousands of euro) | 2013 | 2012 | |
| Profit to be appropriated | 73.425 | 73.072 | |
| Profit (loss) for the period available for appropriation | 2.354 | 2.171 | |
| Profit (loss) brought forward | 71.071 | 70.901 | |
| Appropriations to capital and reserves | 476 | - | |
| to legal reserves | 1.200 | - | |
| to reserves for own shares | -724 | - | |
| Result to be carried forward | -71.915 | -71.071 | |
| Profit to be carried forward | 71.915 | 71.071 | |
| Distribution of profit | -1.986 | -2.001 | |
| Dividends | -1.986 | -2.001 |
| (in euro) | 2013 (12 months) |
2012 (12 months) |
|
|---|---|---|---|
| Current profit per share after taxes (1) | 0,29 | 0,27 | |
| Number of shares outstanding (average) | 7.999.536 | 8.002.968 | |
| Number of shares outstanding (yearend) | 7.943.200 | 8.002.968 |
(1) The current profit after tax is the same as the net profit excluding extraordinary gains and losses (both adjusted for taxes).
In accordance with article 105 of the Belgian Companies Act, a summary version of the statutory financial statements of JENSEN-GROUP NV is presented. These have been drawn up in accordance with Belgian Accounting Standards. The management report and statutory financial statements of JENSEN-GROUP NV and the report of the statutory auditor thereon are filed with the appropriate authorities, and are also available at the Company's registered offices.
The statutory auditor has issued an unqualified opinion on the statutory financial statements of JENS-EN-GROUP NV.
JENSEN-GROUP NV has both a holding function and a commercial function as the sales and service company for the Benelux area.
The operating result of JENSEN-GROUP NV remained stable.
The Board of Directors of November 14, 2013 decided to implement a share repurchase program to buy back a maximum of 800,300 or 10% of the company's shares. The shares are bought at the stock exchange by an investment bank mandated by the Board of Directors. The buy-back mandate expires on October 4, 2017. As per December 31, 2013, JENSEN-GROUP holds 59,768 treasury shares.
The special shareholders' meeting of October 4, 2012 resolved to reduce the capital by 12,004,452.00 euro.
The full version of the statutory financial statements of JENSEN-GROUP NV is available on the corporate website www.JENSEN-GROUP.com.
The valuation rules are in accordance with the Royal Decree of January 31, 2001.
Since JENSEN-GROUP NV has a holding function, we emphasize that, in accordance with our valuation rules and accounting legislation in Belgium, financial fixed assets are valued at their initial acquisition price or paid-in capital. Write-offs on the financial fixed assets are taken when they are deemed to be of a permanent nature. If it appears that write-offs taken previously are no longer needed, they are reversed. Financial fixed assets are never valued above acquisition price or paid-in capital.
The intangible fixed assets consist of goodwill that arises from the acquisitions of the distribution activity in the Benelux. For statutory purposes, goodwill is amortized over a period of five years.
Tangible fixed assets are recorded at their acquisition value or construction cost, increased, where appropriate, by ancillary costs. Tangible fixed assets are depreciated on a straight-line basis over their estimated useful life from the month of acquisition onwards.
On tangible fixed assets, the depreciation rules are:
| Caption | Method | Rate |
|---|---|---|
| Infrastructure | Straight line | 10% |
| Installations, machinery and equipment | Straight line | 20% |
| Office equipment and furniture | Straight line | 20% |
| Vehicles | Straight line | 20% |
Inventories are valued at the lower of cost or net realizable value. Cost is determined by the first-in, first-out (FIFO) method. For produced inventories, cost means the full cost including all direct and indirect production costs required to bring the inventory items to the stage of completion at the balance sheet date. Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and variable selling expenses.
The Company uses the 'percentage of completion method' to determine the appropriate amount to recognize in a given period. The stage of completion is measured by reference to the contract costs incurred up to the balance sheet date as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. They are presented as inventories, prepayments or other assets, depending on their nature.
Trade amounts receivable and other amounts receivable are carried at nominal value. Allowances are made to amounts receivable where uncertainty exists as to the receipt or payment dates of the whole or a part of the balance. Supplementary write-offs are also recorded where the realizable value at the balance sheet date is lower than the carrying value.
Deposits with financial institutions are carried at nominal value. Write-downs are applied where the realizable value at the balance sheet date is lower than the historical cost.
Provisions for liabilities and charges are assessed on an individual basis to address the risks and future costs which they are intended to cover. They are maintained only to the extent that they are required following an updated assessment of the liabilities and charges for which they were created.
Amounts payable are carried at nominal value at the balance sheet date. The only elements which are recorded in the accrued charges and deferred income accounts are charges payable at the balance sheet date in respect of past or prior years.
The Company uses derivative financial instruments to reduce its exposure to adverse fluctuations in interest rates and foreign exchange rates. It is the company's policy not to hold derivative instruments for speculative or trading purposes.
Derivative financial instruments are recognized initially at cost, their premium is amortized pro rata temporis. At year-end, the financial instruments are calculated at market value using the mark-to-market mechanism. The unrealized losses are recognized in the income statement whereas the unrealized gains are deferred.
The hedged balance sheet positions (outstanding receivables and payables) are recorded at the hedging rate.
The Company may undertake both in Belgium and abroad, any and all industrial, trade, financial, bonds and stocks and real property transactions that are likely to extend or further its business directly or indirectly or that are related therewith. It may acquire any and all movable and real property items, even if these are related neither directly nor indirectly to the Purpose of the Company.
It may obtain, in any manner, an interest in any and all associations, ventures, business or companies that pursue the same, a similar or related purpose or that are likely to further its business or facilitate the sale of its products or services, and it may cooperate or merge therewith.
| Date | Share Capital | Currency | Number of shares |
|---|---|---|---|
| 24/05/2002 | 42,714,560 | euro | 8,264,842 |
| 20/05/2008 | 42,714,560 | euro | 8,252,604 |
| 13/01/2009 | 42,714,560 | euro | 8,039,842 |
| 30/11/2011 | 42,714,560 | euro | 8,002,968 |
| 04/10/2012 | 30,710,108 | euro | 8,002,968 |
www.jensen-group.com
JENSEN-GROUP N.V. · Bijenstraat 6 · 9051 Sint-Denijs-Westrem (Gent) - Belgium T +32 (0)9 333 83 30 · F +32 (0)9 333 83 39 · www.jensen-group.com
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