Annual Report • Mar 7, 2012
Annual Report
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The Picanol Group is an international, customer-oriented group specialized in development, production and sale of weaving machines and other high-tech, industrial products, systems and services.
Picanol develops, manufactures and sells high-tech weaving machines based on air (airjet) or rapier technology. Picanol supplies weaving machines to weaving mills worldwide, and also offers to its customers products and services as weaving accessories, training, upgrade kits, spare parts and service contracts. For seventy-five years, Picanol has played a pioneering role in the industry worldwide, and is one of the current world leaders in weaving machine production.
Proferro comprises all foundry activities and the group's machining activities. It produces cast iron parts for e.g. compressors, pumps and agricultural machinery, and parts for Picanol weaving machines. Through PsiControl Mechatronics, the group specializes in the design, development, manufacturing and support of technological components, services and mechatronical system solutions for original equipment manufacturers in various industries. Melotte develops and produces innovative product solutions using Direct Digital Manufacturing (DDM) and Near-to-Net-Shape Manufacturing (NNSM) technologies.
The Picanol Group employees operate all over the world to serve their customers. The 1,909 employees together cover a wide range of high-tech products, systems and services, giving customers a lead over their competitors and creating added value.
In addition to the head office in Ypres (Belgium), the Picanol Group has production facilities in Asia and Europe, linked to its own worldwide sales and service network.
In 2011, the Picanol Group celebrated its 75th anniversary.
The Picanol Group in 2011:
| Consolidated turnover: | 466.95 million euros |
|---|---|
| Employment | 1,909 |
NYSE Euronext Brussels: PIC Web www.picanolgroup.com
| PRESENTATION OF THE PICANOL GROUP | 4 |
|---|---|
| At the service of customers worldwide Organizational chart of the group Profile Weaving Machines Profile Industries Human Resources Environment, Health & Safety Quality & World Class Manufacturing |
4 4 5 7 8 |
| REPORT BY THE BOARD OF DIRECTORS | 9 |
| Letter to the Shareholders Main events 2011 Activities report Weaving Machines Activities report Industries Corporate Governance |
9 10 11 13 14 |
| CONSOLIDATED FINANCIAL STATEMENTS | 25 |
| Definitions Financial statements Notes to the consolidated financial statements |
26 27 32 |
| STATUTORY FINANCIAL STATEMENTS OF PICANOL NV |
74 |
| REPORT BY THE AUDITOR | 76 |
| INFORMATION FOR SHAREHOLDERS | 78 |
| Shares & listing Annual information Glossary Addresses |
78 79 80 81 |
The Picanol Group aims to be present in all important markets at the service of customers. For this purpose the group has a worldwide service and sales network that is continually adapted to the changing markets and the specific needs of customers. Through its network of highly trained, specialized and results-oriented employees and agents, the Picanol Group aims to create value for its customers all over the world. A number of crucial functions that depend on the know-how of the headquarters in Belgium are managed centrally. Matters specifically related to products made in the foreign production plants are dealt with locally. This ensures not only uniform implementation of the strategy and consistency of sales and marketing policy in the various markets, but also faster exchange of information between customers and personnel all over the world.
The Weaving Machines division (Picanol) covers all activities regarding development, production and sale of high-tech weaving machines and supplementary products and services. Picanol develops, manufactures and sells high-tech weaving machines based on air or rapier technology (rapier). For seventy-five years, Picanol has played a pioneering role in the industry worldwide, and it is one of the current world leaders in weaving machine production. All development and production related activities of the weaving machines are concentrated in Ypres (Belgium) and Suzhou (China).
The division Weaving Machines consists of three parts:
Picanol has for many decades served the entire world market, both for rapier and for airjet technology. The high-tech Picanol weaving machines and supplementary products and services are sold through its own branches and through a network of agents worldwide. Picanol sells weaving machines, spare parts and weaving accessories to weaving mills worldwide in various textile segments. There are three main segments for fabric products, namely apparel (clothing), household textiles and technical textiles (e.g. airbags, medical textile, parachute and tire cord). Due to a continued focus on achieving a maximum production rate in combination with a minimum consumption of raw materials and energy, Picanol has managed to consolidate a solid market share in the apparel segment. Within the household segment, Picanol was able to strengthen its position, especially with the successful launch of the OptiMax and GTMax for weavers of interior textiles. Picanol's growing presence in the technical textiles segment offers attractive growth niches, thanks to significant investments in the development of customized machines.
Airjet weaving machine Rapier weaving machine
OMNIplus Summum
OMNIplus 800
TERRYplus 800
GTXplus
Picanol also offers its customers upgrade kits, spare parts, preventive maintenance programs and service contracts. In addition, it also brings a number of weaving accessories on the market such as reeds, air reeds, frames and heddles. The production of these accessories takes place in Belgium, France and Mexico under the brand names Burcklé and GTP.
OptiMax
Industries comprises all companies that develop and produce industrial products for original equipment manufacturers.
Proferro comprises the foundry and the machining activities (Engineered Casting Solutions) of the Picanol Group. The ambition of Proferro is to offer engineered casting solutions for medium sized series (500 to 20,000 pieces), in a long-term, value-driven partnership. Proferro aims to be the preferred partner for applications in which the customer focuses on modules and components with high added value.
Proferro produces cast iron (lamellar and nodular) parts for compressors, pumps and agricultural machinery, and parts for Picanol weaving machines. When it comes to mechanical finishing, the group has various facilities both for prototyping and for series production using a very wide range of technologies including CNC machining, gear cutting, grinding, thermal treatment and welding.
Proferro supplies other original equipment manufacturers in various market segments worldwide such as agricultural machinery, earthmoving equipment, compressors, textile machinery and general engineering. By combining casting, mechanical finishing, assembly and co-design it is able to cater successfully to the growing demand for larger, more technically difficult coreintensive parts.
PsiControl Mechatronics covers mechatronics with locations in Ypres (Belgium), Rasnov (Romania) and Suzhou (China). PsiControl Mechatronics concentrates on design, development, production and support for electronic and mechatronic systems.
PsiControl Mechatronics offers custom solutions engineered around real-time controllers, power electronics and electronically-controlled motors. By using its own platforms it is able to reduce development times and permit high-performance, cost-effective solutions. For this purpose PsiControl Mechatronics has R&D and prototyping departments in Ypres and procurement, production and service activities in its branches in Belgium, Rasnov and Suzhou.
PsiControl Mechatronics concentrates mainly on original equipment manufacturers in sectors where reliable performance is crucial. PsiControl Mechatronics currently acts as supplier to various sectors such as textile machinery, compressors and fleet management.
Melotte in Zonhoven (Belgium) develops and produces innovative product solutions using Direct Digital Manufacturing (DDM) and Near-to-Net-Shape Manufacturing (NNSM) technologies. Direct Digital Manufacturing is a symbiosis between two different manufacturing methods: the analogue one that produces through means of degenerative processes (material removal) and the digital processes where material growth is used. DDM combines both methods, low impact material growth and high-end finishing.
Melotte offers solutions in the form of high-tech components characterized by high precision, complex shapes, special materials, short delivery times and great reliability of operation. Melotte has specialized know-how in DDM and NNSM technologies in metals, concentrating on titanium, Inconell, cobalt-chromium, ceramics, tool steel and aluminum. The range is completed by related support services such as reverse engineering and modeling, magnesium molding, laser scanning, optical measurement and thermodynamic analysis.
Melotte supplies a highly diversified international market, including the petrochemical industry, construction of specialist medical equipment, chemicals and pharmaceuticals. With the introduction of new production processes it is able to tackle new markets in addition to the existing customer segments.
The Picanol Group's position as market leader and its technological leadership - in various areas with so many products - are due entirely to its members of personnel. The employees in the Picanol Group work together over a wide range of high-tech products, systems and services, giving customers a lead over competitors and creating added value. At the end of 2011 the Picanol Group worldwide employed 1,909 people.
The Picanol Group is convinced that its employees are what make the difference and are crucial for the group's competitiveness. Its committed Human Resources policy is therefore designed to develop the Picanol Group into an organization in which all employees can develop themselves for the benefit of the Picanol Group and their personal skills.
Care for the environment forms an essential part of the corporate policy. The Picanol Group systematically takes account of the environment in its operating processes, and tries to minimize the impact of its activities on the environment by constantly paying close attention to more energy consumption and waste management. The health and safety of employees are also of great concern to the Picanol Group, including such aspects as ergonomics, accident prevention and protection on the work floor. Numerous safety questions are examined and dealt with each year in collaboration with the Committee for Prevention, Protection and Welfare at Work. One important part of the policy is the voluntary participation of many members of personnel, including first aiders, the internal firefighting team and the safety monitors who ensure that the necessary training courses are given annually in each department.
Quality is a priority for all subsidiaries and employees worldwide. The group has a team of internal ISO 9001 auditors who form a crucial link in the quality process. Every year various internal audits are carried out with a view to continually fine-tuning the quality system. In addition the Picanol Group focuses worldwide on World Class Manufacturing (WCM). World Class Manufacturing or WCM stands for constantly striving to eliminate losses, with the involvement of all employees, so as to become a world class company. The Picanol Group began its WCM program in 1998 to obtain its purpose. Currently it focuses on the themes of cost development, continuous improvement, self-management, planned maintenance, total quality, training, health and safety and the environment. Various management audits are held on an annual basis, with the management of the different departments following the implementation of WCM. The Picanol Group also has a suggestion system that enables employees to put forward proposals for workrelated improvements. In recent years, further steps have been taken in the implementation of self-managing teams within the Picanol Group.
Dear shareholder,
Like the year before, 2011 proved to be another good year for the Picanol Group. As previously announced, the Picanol Group realized a consolidated turnover of 466.95 million euros over the full financial year, which represented an increase in turnover of 18% compared to 395.77 million euros in 2010.
The Weaving Machines division had another strong year. The first half of 2011 was characterized by a sustained high global demand for Picanol weaving machines, supported by the favorable exchange rate of the yen and the weaker euro. This resulted in a strong demand for weaving machines produced in Ypres, whereby increased attention was paid to handling the various production peaks caused by the strong order book. Sales of spare parts and accessories also did well. In the second half of the year, global demand for weaving machines slowed, under the influence of the increasing uncertainty due to the European debt crisis and limited availability of funding for investments.
R&D and product innovation continued to play a central role in the further development of the high-technology activities of the Picanol Group in 2011. The company celebrated its 75th anniversary with the introduction of two new products at ITMA Barcelona, the four-yearly textile machinery exhibition.
In 2011, the Industries division was able to continue the positive trend of 2010 by taking full advantage of its new molding line (Proferro), and its controller capacities (PsiControl Mechatronics).
As a result of the strong turnover growth in both divisions and sustained cost control, the Picanol Group managed to close 2011 with a net profit of 61.01 million euros, compared to a net profit of 35.24 million euros in 2010.
The Board of Directors will propose to the General Meeting on 18 April 2012 not to pay out a dividend for the 2011 financial year. The Board believes that more value can be created within the group by investing in R&D, automation and robotics, and other investment projects.
For 2012, the Picanol Group takes into account a further slowdown of the weaving machine market. This is partly because of the growing economic uncertainty and limited availability of funding for investments, which means that customers are more cautious and investment decisions may be delayed or postponed. For 2012, the Picanol Group expects a further growth in the Industries activities, albeit differentiated into the different markets. The Picanol Group remains cautious, as it is active as an export-oriented company in a volatile world economy. In view of the cyclical nature of the textile market, strict cost control remains of the essence.
2012 promises to be another challenging year and both we and our employees are looking forward to taking on this challenge. Through the commitment, flexibility and enthusiasm of our employees, the Picanol Group was able to continue growing in 2011. The basis of the success of the Picanol Group, now more than ever, is the quality, professionalism and motivation of all our employees worldwide.
Managing Director Chairman
Luc Tack Stefaan Haspeslagh
As was the case in 2010, the Weaving Machines division again experienced a strong year in 2011.
The first half of the year was characterized by a persistent high global demand for Picanol weaving machines, supported by the favorable exchange rate of the yen and the weakened euro. This resulted in a strong demand for weaving machines produced in Ypres, whereby increased attention was paid to handling the various production peaks caused by the strong order book. The sale of parts and accessories also did well.
In the second half of the year, global demand for weaving machines slowed, under the influence of the increasing uncertainty due to the European debt crisis and limited availability of financial resources for investment.
In 2011, Picanol continued to focus on R&D and product innovation to expand its technological market leadership. From 22 September to 29 September 2011, Picanol participated in the 16th edition of the quadrennial ITMA, the largest exhibition for textile machinery manufacturers, which this time was staged in Barcelona. This event saw Picanol introduce the new high-end airjet weaving machine OMNIplus Summum. In addition, Picanol launched the first positive reaper (a new version of the OptiMax), which in particular offers prospects for the weaving of technical textiles (e.g. coatings, geogrids etc) and very wide fabrics (up to 540 cm). The new weaving machines were very well received and clearly demonstrate the technological leadership of Picanol. For further information regarding the new Picanol weaving machines, please visit http://fittowin.picanol.be/and http://www.picanol.be.
In 2011, Picanol was also able to present itself as a technological market leader in both airjet and rapier weaving machines at a number of other international trade fairs, such as DTH - Dhaka International Textile & Garment Machinery Exhibition (Bangladesh), Techtextil Frankfurt (Germany), Vietnam Saigon Textile & Garment Industry Expo, and Techtextil India in Mumbai.
Throughout 2011, Picanol further expanded its product range with new market-oriented features that focus on the one hand on the efficient use of the globally increasingly costly commodities and energy, while on the other hand the focus is on the growing shortage of specialized workers in the textile industry.
In 2011 the Picanol Group has signed an agreement with Groz-Beckert KG regarding the sale of the Steel Heddle activities of GTP Greenville. Groz-Beckert KG has taken over all shares of GTP Greenville (Steel Heddle division) as of 20 September 2011. The production of section frames and special heddles for the PMC (paper making cloth) industry was however transferred to Burcklé, a subsidiary of the Picanol Group in France. Burcklé will be further developed into an accessories center for reeds, section frames and twin wire heddles. The GTP brand will be used on frames produced in Ieper, and section frames and brazed eye heddles produced in Burcklé. Verbrugge continues to focus on the production of frames like the HybridPower 158, the XLF 152 and the AluPower 124, both for Picanol and other weaving machines. The Picanol gravity point in Greenville, responsible for sales and service of Picanol weaving machines and spare parts in the US continues its operations under a new legal entity, Picanol of America Inc.
For 2012, the Group has taken a further potential slowdown into account in the weaving machine market. This is partly because of the growing economic uncertainty and limited availability of financial resources for investment, which means that customers are more cautious and investment decisions may be delayed or postponed. The slowdown on the Western export markets of the Asian weavers will not yet be fully compensated for by the growth of local Asian markets. Meanwhile, Picanol will continue to expand its role as technological market leader in 2012 by expanding the product range of its weaving machines and by offering applications for new market segments. The main challenge remains to strengthen the performance, quality and cost competitiveness of our customers.
In 2011, the Industries division again succeeded in continuing the positive trend of 2010 by fully taking advantage of its new molding line (Proferro), and its controller capacities (PsiControl Mechatronics)
In 2011, Proferro was able to further meet the growing demand for larger and technically more difficult castings. With its two modern molding lines - the HWS and the Taccone - Proferro is able to deliver cast iron products in both large and small series of castings, with a weight ranging from 5 kg to 500 kg. Proferro's three-pillar strategy of casting, finishing and assembling is increasingly appreciated by the market. As part of furthering the automation and robotization, Proferro invested in the enhanced development of its mechanical finishing department in 2011. This involved, among other things, the purchase of two new 5-axis multitasking machining centers. This allows Proferro to offer the customer a total solution, from development to subassemblies that are ready to be assembled. By strongly focusing on a broader political presence in the market and supported by a positive investment climate, Proferro managed to expand its customer portfolio in 2011 with new customers in various sectors for both casting and for the finishing of castings. This resulted in an increase in the activities in several sectors, such as compressors, agricultural and earthmoving machinery, and textile machinery.
Last year, PsiControl Mechatronics again strongly focused on its customized controllers, putting the emphasis on large customers and growth segments, such as HVAC (heating, ventilation & air conditioning). This resulted in an increase in R&D activities and an increasing demand for electronic products and assemblies. This had a positive effect on employment in the factories in Ypres (Belgium) in tandem with Rasnov (Romania). The production of large-volume series in Romania has become an important part of PsiControl Mechatronics in recent years.
In autumn 2011, the Picanol Group purchased the high-tech machinery of TBP Electronics Belgium NV from Geel (Belgium). The key elements include four SMD lines, two wave soldering lines, and two selective soldering lines for surface mounting and soldering printed circuit boards. In addition, the Picanol Group purchased a large amount of high-tech laboratory and test equipment. The purchase fits into the growth plans of PsiControl Mechatronics, which focuses on the further expansion of its controller capacities.
Melotte experienced a strong diversification in both chemical and biomedical industries in 2011. The total integration of the digital factory was further optimized and the business model of integrated digital solutions is clearly appreciated by the market. The expansion of the digital activities has strengthened Melotte's market position, and has had a cross-fertilizing effect. In 2011, Melotte was awarded the 'All Star Innovation Award' by the Chamber of Commerce.
With the growing economic uncertainty and increased volatility in commodity prices (cokes, steel scrap etc), the Industries division is remaining cautious as regards 2012. Due to the expected slowdown in the weaving machine market, Industries will mainly focus on further growth at external customers, albeit differentiated into various distinct markets. In 2012, the Picanol Group will continue on the path of further expanding its Industries activities through targeted investments in automation and robotics. For example, for 2012, further investments are planned at Proferro in new CNC-machines for the processing of larger castings in nodular as well as lamellar cast iron. In 2012, PsiControl Mechatronics will also focus on integrating the machinery of TBP Electronics in Ypres and Rasnov. Melotte expects stable growth for both activities, and a strong international presence in new markets during 2012.
The Picanol Group applies the Belgian Corporate Governance code 2009 as reference code. This chapter presents the application of this policy in 2011.
For the general operations of the Board of Directors, the subcommittees of the Board of Directors and the Management Committee as far as they relate to corporate governance policy, readers are referred to the Corporate Governance Charter on the website www.picanolgroup.com.
| BOARD OF DIRECTORS Chairman |
Mr. Stefaan Haspeslagh (1) | |
|---|---|---|
| Directors | Mr. Luc Tack (1) | Managing Director |
| Mr. Luc Van Nevel permanent representative of The Marble BVBA (2) until 20 April 2011 |
Chairman of the Audit Committee Member of the Nomination & Remuneration Committee |
|
| Baron Hugo Vandamme permanent representative of HRV NV (2) |
Chairman of the Nomination & Remuneration Committee Member of the Audit Committee |
|
| Mr. Frank Meysman, permanent representative of M.O.S.T. BVBA (2) |
Member of the Audit Committee Until 20 April 2011 Chairman of the Audit Committee As from 21 April 2011 Member of the Nomination & Remuneration Committee |
|
| Mr. Jean Pierre Dejaeghere permanent representative of NV Kantoor Torrimmo (2) |
Member of the Audit Committee Member of the Nomination & remuneration committee As from 21 April 2011 |
|
| Mr. Patrick Steverlynck (1), permanent representative of Pasma NV |
Director |
(1) executive director (2) non-executive independent director
Mss. Karen D'Hondt, Group Controller
The Board of Directors is made up of six members, three of them being non-executive directors. Three of the directors are independent in the sense of art. 524 of the Company Code, as required by the Corporate Governance Charter of the Picanol Group.
Under the guidance of the Chairman the directors assessed the operation of the Board of Directors and the collaboration with the Management Committee, in order to ensure that it functions efficiently.
As part of the inclusion of women with the required competencies according to our Corporate Governance-rules in the Board of Directors, the Picanol Group will comply with the statutory regulations and deadlines, and therefore commence the search in due time.
The Board of Directors met six times in 2011, Mr. Frank Meysman and Mr. Hugo Vandamme were both once excused
In 2011 the Board of Directors dealt with among others the following matters:
The Board of Directors, led by the Chairman, makes an annual self-assessment to determine the efficient operating of the Board and its committees. The evaluation has following objectives:
The Nomination and Remuneration Committee receives notes from the Directors and annually reports to the Board of Directors with an assessment of the operating of the Board.
The members of the Audit Committee are Messrs. Luc Van Nevel (as permanent representative of The Marble BVBA, until 20 April 2011), Frank Meysman (as permanent representative of M.O.S.T. BVBA), Baron Hugo Vandamme (as permanent representative of HRV NV) and Jean Pierre Dejaeghere (as permanent representative of NV Kantoor Torrimmo, as from 21 April 2011).
In accordance with art. 526 bis of the Company Code, the Picanol Group declares that the Chairman of the Audit Committee, Mr. Luc Van Nevel (until 20 April 2011) and Frank Meysman (as from 21 April 2011), meet the requirements of independence and have the necessary expert skills in accounting and auditing.
The Committee met four times in 2011. Apologies for absence were received once from Mr. Frank Meysman.
Special attention was paid to:
The half-yearly and annual results, with the auditor's report;
After each meeting the Audit Committee reported through its Chairman to the Board of Directors about the above mentioned matters, and gave its advice with a view to decisions by the Board.
Each year, the Chairman of the Committee reports to the Board of Directors on the operation of the Audit Committee, which is checked against the Corporate Governance Charter and other relevant criteria approved by the Board of Directors.
The members of the Nomination & Remuneration Committee are Mr. Luc Van Nevel (as permanent representative of The Marble BVBA, until 20 April 2011)), Frank Meysman (as permanent representative of M.O.S.T. BVBA), Baron Hugo Vandamme (as permanent representative of HRV NV) and Jean Pierre Dejaeghere (as permanent representative of NV Kantoor Torrimmo, as from 21 April 2011).
The Committee met two times during the report year. The following subjects were discussed, among others:
The Chairman of the Nomination & Remuneration Committee reported on these matters to the Board of Directors after the meetings, and gave its advice with a view to decisions by the Board.
Each year, the Chairman of the Committee reports to the Board of Directors on the operation of the Nomination & Remuneration Committee, which is checked against the Corporate Governance Charter and other relevant criteria approved by the Board of Directors.
The Management Committee is made up as follows:
The Management Committee meets weekly to determine the day-to-day management of the company.
The procedure for developing a remuneration policy and establishment of the remuneration levels for the members of the Board of Directors and the Management Committee is defined by the Board at the proposal of the Nomination & Remuneration Committee.
At the proposal of the Nomination and Remuneration Committee, in 2010 the Board of Directors reviewed the remunerations of non-executive directors. The compensation in 2011 remained unchanged as compared to 2010.
At the proposal of the Nomination and Remuneration Committee, in 2011, the remunerations of the members of the Executive Management were approved by the Board of Directors in so far as they involved changes to the running contracts.
The remuneration of non-executive directors comprises a fixed annual fee plus fees for attendance at Committee and Board meetings.
The remuneration of executive directors consists of a fixed fee only. Executive directors receive neither a variable remuneration nor performance awards in shares.
The remuneration of executive managers consists of a fixed fee plus a variable fee based on company results. The variable fee for 'on target' performance lies between 25% and a maximum 50% of the fixed fee. Executive managers do not receive performance awards in shares. Currently, no recovery right has been determined through which the company may reclaim variable fees that have been awarded on the basis of inaccurate financial data.
We do not expect any material changes in the remuneration policy in the next two years.
| In EUR | Fixed Remun eration |
Attendance fees |
Manag ement Remun eration |
Other | Total 2011 |
|
|---|---|---|---|---|---|---|
| Stefaan Haspeslagh * | executive | 60,000 | - | - | 60,000 | |
| Luc Tack | executive | - | - | - | - | |
| Patrick Steverlynck, as representative of Pasma NV |
executive | - | 246,000 | - | 246,000 | |
| Frank Meysman, as representative of M.O.S.T. BVBA |
non executive |
10,000 | 10,000 | - | 20,000 | |
| Hugo Vandamme, as representative of HRV NV |
non executive |
10,000 | 10,000 | - | 20,000 | |
| Luc Van Nevel, as representative of The Marble BVBA |
non executive |
5,000 | 4,000 | - | 9,000 | |
| Jean Pierre Dejaeghere, as representative of NV Kantoor Torrimmo |
non executive |
5,000 | 8,000 | 13,000 |
* Chairman of the Board of Directors
Several financial services were billed by Findar BVBA for 270 kEur in regard to the 2011 financial year. This company is a related party in the sense that Mr. Stefaan Haspeslagh is also a director.
With the exception of executive directors, executive managers receive a variable fee based on company results. The criteria for the 2011 variable fee are laid down in a contract and are based on:
The criteria are established and evaluated annually, whereby the performance-related criteria are based on the group budget. The evaluation of the performance criteria is carried out by the Managing Director in consultation with the Remuneration Committee.
| In EUR | |
|---|---|
| Name | Luc Tack |
| Fixed remuneration | - |
| Variable remuneration | - |
| Total | - |
| Pension | - |
| Other benefits | - |
The Managing Director doesn't receive long-term cash incentive plans.
| In EUR | |
|---|---|
| Fixed remuneration | 840,110 |
| Variable remuneration | 320,000 |
| Total | 1,160,110 |
| Pension | Fixed contribution: 58,450 |
| Other benefits * |
7,855 |
* remuneration company car
The level and structure of the remuneration of other members of the Management Committee seek to enable the company to attract and motivate qualified managers. The remuneration is regularly checked to ensure that it corresponds with market trends.
The other members of the Executive Management do not receive long term cash incentive plans.
The members of the Management Committee do not receive directors' fees for the companies where they fulfill a director's position.
Neither the Managing Director nor the members of the Executive Management are awarded shares or share options. No share option plans for the Managing Director or the other executive managers exist at present.
No termination fees exist for the Managing Director or the other executive managers. A notice period of twelve to eighteen months applies for the other executive managers.
At the General Meeting of Shareholders on 20 April 2011, the shareholders proposed to vote on a deviation from the provisions set out in the Corporate Governance, with regard to provisions on bonuses. Furthermore, the shareholders approved the Board of Directors to deviate from the provisions of the Corporate Governance in relation to provisions on the distribution of bonuses in time. The bonuses of the other members of the executive management were therefore paid out in one sum.
The auditor received an amount of 140,000 euros for performance of his audit task in 2011.
In the course of 2011 the auditor and the Auditor related parties charged 11,000 euros for tax and legal advice.
The Picanol Group internal control system aims at safeguarding:
Internal control is built on five pillars: the control environment; risk analysis and control activities; information and communication and finally, supervision and corrective action.
The Audit Committee is charged with monitoring the efficacy of the control and risk management systems. The responsibilities of the Audit Committee as regards financial reporting, internal control and risk management are detailed in the Corporate Governance Charter (available on the website www.picanolgroup.com).
The Audit Committee also supervises the activities of the Internal Auditor. The latter prepares an annual planning based on a risk analysis and carries out specific audit assignments at the request of the Management Committee or the Board of Directors. He reports his findings and recommendations directly to the Audit Committee.
Management information control is the competence of the controlling team. The compliance function is performed by the Company Secretary.
For each position, the company has defined a clear competence framework as well as distinct management responsibilities.
The Company has defined a Corporate Governance Charter and a code of good practice.
Picanol performs regular analyses of the risks involved in its activities. In 2010, a risk analysis was carried out. All of the key employees were asked to review their risk assessment and the evolution of several risk factors was determined. An estimate of the risks according to their impact and company vulnerability subsequently resulted in action plans that are regularly monitored by the Management Committee. The entire set of risk factors and action plans was evaluated by the Audit Committee. In 2011 an evaluation was made of the progress on the various action plans. This evaluation was discussed in the Audit Committee.
This analysis ultimately led to the identification of risks and definition of measures described below.
The company faces heavy competition and is subject to technological developments, and this will remain so in the future. If the company fails to keep up with these technological developments, this could limit the market opportunities for its products or potential products, with a negative impact on its operating and financial results. The market for Picanol's products is highly competitive. Competitors include established companies with possibly greater financial, R&D, sales, marketing and personnel resources than Picanol, and which may also have more experience in developing, producing, marketing and supporting new technologies and products. The fields in which the company operates are characterized by technological development and innovations. There can be no guarantee that competitors are not already developing technologies and products that are as just as efficient and/or as cheap – or even more so – than anything the company has now or may develop in future. Competing products may be accepted more readily by the market than the company's own products, and technological progress by competitors may lead to the company's products becoming uncompetitive or obsolescent before the company is able to recover its R&D and marketing costs. If the company is not able to compete effectively, then its activities may suffer considerably.
The company's future success depends to a large extent on its ability to protect its existing and future brands and products, and similarly to protect its intellectual property rights, including trademarks, patents, domain names, trade secrets and know-how. Picanol has managed to register various trademarks and patents to cover its brands and products, and it has applied to register other trademarks and patents to cover its newly developed brands and products, and expects to apply for further brand names and patents in future. However, Picanol cannot be certain of obtaining registration of the trademarks and patents applied for. There is also the risk of Picanol failing to renew a trade mark or patent in time, or competitors being able to invalidate or circumvent any existing or future trademarks or patents granted to Picanol or licensed by it. Picanol cannot be certain that the steps taken by it to protect its portfolio of intellectual property rights (including trade mark registrations and domain names) will be sufficient, or that third parties will not violate these property rights or illegally appropriate them. Furthermore, some countries in which Picanol operates offer less protection for intellectual property rights than in Europe. If Picanol is unable to protect its property rights against violation or misappropriation, this could have a significant negative impact on its activities, operating results, cash flows or financial situation, and in particular Picanol's ability to further develop its activities.
In 2011 Picanol earned the majority of its income from countries that use currency other than the euro. Consequently, since Picanol presents its consolidated results in euros, any fluctuation in the exchange rates between the operating currencies of its competitors and the euro has an impact on its consolidated income statement and balance sheet when the results of these operating companies are converted into euros for reporting purposes. In addition to the exchange rate risk, Picanol is exposed to currency transaction risks whenever one of its operating companies carries out transactions in a currency other than its own operating currency; this includes sale and purchase operations, as well as the issuing or creation of debt. In particular, part of Picanol's operating costs (including raw materials costs) are expressed in or linked to the US dollar. Falls in the value of the operating currencies used by Picanol's operating companies, against the currencies in which their costs and expenditure are expressed, generally result in higher costs and expenditures for these operating companies and have a negative effect on their operating margins. The company manages a portfolio of derivatives in order to hedge against exchange rate-related risks arising from operational and financial activities. Currency risks are hedged to the extent that they affect the company's cash flows. However, the company cannot guarantee that this policy will offer effective cover against the effects of exchange rates, especially in the longer term. Risks attendant upon the translation of the assets and obligations of foreign activities into the company's reporting currency are not hedged against.
Picanol does not have any customers that account for more than 10% of its turnover, and so is not exposed to specific customer risk.
Picanol mainly operates in the weaving machine sector, offering products used for the production activities of companies in the textile industry. Accordingly, the company's future results are strongly dependent on developments in the textile industry. Unexpected changes in the economic climate, the investment cycles of customers, significant developments in the development of technology and its acceptance by the market can all have an influence on this industry, and consequently on the company's results. After the very difficult years 2008 and 2009 the demand for new weaving machines experienced a strong revival in 2010 and 2011. Picanol however acknowledges the possibility that demand for weaving machines worldwide could be lower in the coming years.
A significant proportion of Picanol's activities, representing some 75% of its turnover in 2011 – is derived from growth economies such as China, Turkey, Brazil, Pakistan, Indonesia and India, as well as other rapidly-developing South American and Asian markets. Picanol's activities in these markets are subject to the usual risks associated with doing business in developing economies, such as political and economic uncertainties, currency controls, nationalization or expropriation, crime and disorder, political unrest, external intervention, exchange rate fluctuations and shifts in government policy. Such factors can influence Picanol's results by disrupting its activities or raising its operating costs in these countries, or by limiting Picanol's ability to repatriate its profits. The financial risks in growth economies also include risks associated with liquidity, inflation, devaluation, price volatility, non-convertibility of currency and failure to meet payment obligations. These various factors can negatively impact Picanol's activities, operating results and financial situation. As a result of Picanol's specific exposure, these factors may influence its position more than that of customers with lower exposure to developing economies, and any dip in the growth economies as a whole may have a relatively greater impact on Picanol than on its competitors.
To develop, support and sell its products Picanol must be able to attract and retain skilled employees with specialist know-how. Picanol's strategy could be undermined by the company's inability to attract or retain employees in key positions, or by the unexpected loss of experienced employees. Picanol's success also depends on its ability to maintain good relations with its members of personnel. A significant majority of Picanol employees in various of its activities are members of labor unions. Walkouts or strikes – which tend to occur during renegotiation of collective labor agreements – could impair Picanol's ability to carry out its activities. No guarantees can be given against an increase in labor costs negatively impacting Picanol's activities, operating results or financial results
The Picanol activities are subject to the environmental regulations of national, federal and local authorities, which in some cases may even impose no-fault liability. Consequent liability on the part of Picanol could negatively impact its activities. The environmental regulations in the markets where Picanol operates are becoming ever stricter, with growing emphasis on compliance. While Picanol has set aside a budget for compliance with environmental legislation in its future capital expenditure and operating expenditure, no guarantees can be given against Picanol incurring significant environmental liability, or against the relevant environmental legislation or regulations changing or becoming even stricter in future.
The cost of some of Picanol's insurance policies may increase in future. Furthermore, certain types of loss e.g. due to war, terrorist attack or natural disasters are usually not insured, because insurance to cover them is either unobtainable or economically unfeasible. Indeed, insurance companies are increasingly unwilling to cover these types of events. If an uninsured loss occurs, or if the amount of the loss is greater than the cover, then this may negatively impact the activities, operating results and financial situation of Picanol.
The company depends on outsourcing arrangements for certain activities, mainly in IT. Although the company always strives to contract out its activities only to reputable companies with the relevant specialist experience, it has no or only limited control over such third parties, and so cannot guarantee that they will meet their obligations in full and in good time. Should such third parties fail to meet their obligations, then this could have a significant negative impact on Picanol's activities.
Picanol may be obliged to raise additional financing to meet its future capital needs or to refinance its present debt burden, by means of public or private financing, strategic relationships or other agreements. There is no guarantee that the financing – should it be necessary – will be available at attractive conditions, or even available at all. Furthermore, any debt financing – if available – may result in restrictive conditions being imposed. Should Picanol be unable to carry out a capital increase or to finance its debt whenever necessary, this could negatively impact its activities, operating results and financial situation.
The solutions offered by Picanol incorporate various products (hardware and/or software), technologies and services (hardware and/or software) which may contain hidden production defects. Since these products, technologies and services represent substantial investments and changes to operating activities on the part of customers, any serious defects or faults could damage the company's reputation. Furthermore, the company might be required to carry out expensive, time-consuming repairs. Production defects or malfunctions could also lead to losses being suffered by customers, in which case the customers could demand compensation from Picanol. Defending against such claims could be time-consuming and expensive, as well as generating adverse publicity, causing the company to lose customers. Although the company's sales & service agreements generally contain clauses intended to limit its exposure to product liability claims, certain laws or unfavorable court decisions could impair the effectiveness of such liability limitation. The company has product liability insurance which it considers commensurate with practice in the industry, but it cannot guarantee that its present coverage is sufficient to meet potential product liability claims against it, or that it will be able to obtain or maintain sufficient insurance at acceptable conditions in the future. The company currently does not have any outstanding substantial claims against it for the supply of goods and services. During the past 3 years no claims were pronounced at the expense of the company.
Picanol's products are made up of materials and components from various suppliers. To be able to produce, sell and deliver its products, Picanol has to rely on correct and timely delivery by third parties. Should the company's suppliers fail to supply correctly, in time or indeed at all, this could lead to Picanol's deliveries in turn being delayed or incomplete, which could lead to lower turnover. For some key components Picanol is dependent on a single supplier, but in all such cases the supplier is an established company that can be relied upon not to stop production of the products concerned or to make changes to its product range. The company has fully charted all these key components and evaluated their criticality. For the most critical of these it tries to line up a second supplier, so as to limit the company's dependence on suppliers. Although the company has identified alternative suppliers, there is no guarantee against these suppliers stopping production of the products concerned or making changes to their product range, or against Picanol being able to obtain alternative products at acceptable conditions. The group is dependent on its three largest suppliers for 13% of its turnover.
Picanol is exposed to credit risks on trade accounts receivable from certain co-contractors. Should one of the present or future large co-contractors not be able to meet its trade debts, then the company could suffer loss as a result. There is no certainty of the company being able to limit its potential losses of income from customers who are not able to pay in time.
The company is involved in three ongoing disputes.
The first dispute concerns an environmental claim. Although the Picanol management considers it unlikely for this dispute to be decided against Picanol, such an eventuality cannot be ruled out. A decision against Picanol could have a substantial impact on the company's results. A provision of 1.4 million euros has been set aside to cover this dispute, based on the company's own estimate of the clean-up costs if the company is obliged to clean up the ground on the Roeselare site. This in-house estimate is based on the last known indicative soil survey, adjusted for inflation. The 2 other disputes concern a claim concerning the execution of a sales contract and a possible dispute on an environmental issue. The management considers these claims unjust and therefore hasn't constructed a provision.
An important factor in control activities is the annual budgeting process that involves a check of the company's strategy, risk factors, business plans and targeted results. The realization of set targets is being monitored by the controlling team on a monthly basis and thoroughly discussed with the individual business units during dashboard meetings.
Operational risks are safeguarded through periodical audits carried out by an Internal Auditor, who also monitors compliance with processes and procedures. Special attention is given to the security of IT systems, segregation of duties, clear job descriptions for all employees and the existence of distinct procedures and guidelines.
In order to provide reliable financial information, Picanol uses a globally standardized reporting structure as well as globally applied IFRS valuation rules (which are published in the annual report). The controlling team is responsible for checking the coherence of the reported figures submitted by the subsidiary firms.
The information system for financial data management is backed up on a daily basis and access to the system is limited.
Supervising authority is vested in the Board of Directors and executed through the Audit Committee via control of the quarterly reports, validation of the internal audit program and evaluation of the risk factors and related action plans.
| HOLDERS OF VOTING RIGHTS |
NUMBER OF VOTES | % OF VOTES |
|---|---|---|
| Mr. Patrick Steverlynck | 550 | 0.00% |
| Oostrotex NV | 10,649,021 | 60.16% |
| Symphony Mills NV | 1,740,431 | 9.83% |
| Stichting Administratiekantoor Picanol |
3,262,461 | 18.43% |
| TOTAL | 15,652,463 | 88.43% |
Oostrotex NV is controlled by Mr. Luc Tack. Mr. Luc Tack controls Symphony Mills NV, that together with Sofines BV and Pasma NV (both controlled by Mr. Patrick Steverlynck) jointly controls STAK Picanol.
The Trading Regulations lay down the conditions under which shares in the company can be acquired or disposed of by directors and key employees, in compliance with the relevant legislation. The Trading Regulations are being explained in the Corporate Governance Charter available on the website www.picanolgroup.com.
There were no new transactions in 2011 that required the application of Article 523.
There were no new transactions in 2011 that required the application of Article 524.
Declaration concerning the information given in this report for the 12 months ending on 31 December 2011.
The undersigned declare that:
Luc Tack, Managing Director
Stefaan Haspeslagh, Chairman of the Board of Directors
| I. DEFINITIONS | 26 | |
|---|---|---|
| II. FINANCIAL STATEMENTS | 27 | |
| II.1. | CONSOLIDATED INCOME STATEMENT | 27 |
| II.2. | CONSOLIDATED BALANCE SHEET | 29 |
| II.3. | CONSOLIDATED CASH FLOW STATEMENT | 30 |
| II.4. | STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | 31 |
| III. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE YEAR ENDING 31 DECEMBER 2011 |
32 | |
| III.1. | SUMMARY OF THE VALUATION RULES | 32 |
| III.2. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION | |
| CERTAINTY | 41 | |
| III.3. | CHANGES IN ACCOUNTING PRINCIPLES APPLIED | 41 |
| III.4. | CHANGES IN SCOPE OF CONSOLIDATION | 41 |
| III.5. | SEGMENT INFORMATION | 41 |
| III.6. | INCOME STATEMENT | 45 |
| III.7. | BALANCE SHEET | 51 |
| III.8. | MISCELLANEOUS | 70 |
| STATUTORY FINANCIAL STATEMENTS OF PICANOL NV | 74 | |
| STATUTORY AUDITOR'S REPORT | 76 | |
| INFORMATION FOR SHAREHOLDERS | 78 |
| I. DEFINITIONS | |
|---|---|
| Associated companies | Companies in which Picanol has a significant influence and which are accounted for under the equity method. |
| Shareholders' equity | Shareholders' equity, including minority interests, for the calculation of ratios. |
| Joint ventures | Entities under joint control and which are proportionally consolidated. |
| Net assets | Net liabilities + shareholders' equity |
| EBIT | Operating result |
| EBITDA | EBIT + depreciation and impairment of assets + adjustments of write-offs on inventories and trade receivables + adjustments of other provisions. |
| Subsidiaries | Entities under the control of Picanol and which are fully consolidated. |
| Working capital | Inventories + trade receivables – trade payables – down payments received – remuneration and social security contributions – taxation at source on remuneration. |
| Gross margin | Sales – cost of sales |
| Export finance | Bank loans to refinance credit granted to our customers, secured by bills of exchange or promissory notes accepted by our customers. |
The consolidated financial statements were approved for publication by the Board of Directors on 24 February 2012.
| PICANOL GROUP ( in '000 euros) | NOTES (*) | 31/12/2011 | 31/12/2010 |
|---|---|---|---|
| Sales | III.5. | 466,953 | 395,774 |
| Cost of sales | -365,814 | -313,832 | |
| GROSS PROFIT | 101,139 | 81,942 | |
| Gross profit % on sales | 21.7% | 20.7% | |
| General and administrative expenses | -17,538 | -18,011 | |
| Selling and marketing expenses | -16,337 | -16,337 | |
| Other operating income | III.6.1. | 9,721 | 609 |
| Other operating expenses | III.6.2. | -916 | -1,474 |
| OPERATING RESULT | III.5.2. | 76,069 | 46,730 |
| Total interest income | III.6.4. | 1,138 | 1,077 |
| Total interest expenses | III.6.4. | -750 | -1,116 |
| Other financial income | III.6.4. | 892 | 1,178 |
| Other financial expenses | III.6.4. | -621 | -978 |
| PROFIT OR LOSS BEFORE TAXES | 76,728 | 46,891 | |
| Income taxes | III.6.5. | -15,716 | -11,648 |
| PROFIT OR LOSS | 61,013 | 35,244 | |
| SHARE OF THE GROUP IN PROFIT OR LOSS | 61,013 | 35,244 |
(*) The accompanying notes are an integral part of this income statement.
| PICANOL GROUP (in '000 euros) | TOELICHTING | 31/12/2011 | 31/12/2010 |
|---|---|---|---|
| Basic earnings per share | III.6.7. | 3.45 | 1.99 |
| Diluted earnings per share | III.6.8. | 3.45 | 1.99 |
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2010 |
|---|---|---|
| PROFIT/(LOSS) FROM THE PERIOD | 61,013 | 35,244 |
| Other elements of the total result from the period |
2,868 | 2,771 |
| Exchange rate differences | 2,868 | 2,771 |
| Other elements of the total result after taxes from the period |
2,868 | 2,771 |
| TOTAL RESULT | 63,881 | 38,015 |
| PICANOL GROUP (in '000 euros) | NOTES (*) | 31/12/2011 | 31/12/2010 |
|---|---|---|---|
| FIXED ASSETS | 62,386 | 67,032 | |
| Intangible assets | III.7.1. | 5,306 | 5,902 |
| Goodwill | III.7.2. | 0 | 0 |
| III.7.3. & | |||
| Tangible fixed assets | III.7.4. | 52,484 | 55,215 |
| Other financial investments | III.7.6. | 79 | 77 |
| Non-current receivables | III.7.7. | 911 | 3,693 |
| Deferred tax assets | III.6.5. | 3,606 | 2,143 |
| CURRENT ASSETS | 225,877 | 153,639 | |
| Inventories and contracts in progress | III.7.8. | 43,996 | 47,741 |
| Trade receivables | III.7.9. | 46,703 | 56,473 |
| Other receivables | III.7.9. | 24,555 | 21,662 |
| Cash and cash equivalents | III.7.10. | 110,623 | 27,763 |
| TOTAL ASSETS | 288,263 | 220,671 | |
| SHAREHOLDERS' EQUITY | II.4. | 162,828 | 98,948 |
| Share capital | III.7.11. | 21,720 | 21,720 |
| Share premiums | III.7.12. | 1,518 | 1,518 |
| Reserves | 134,695 | 73,683 | |
| Translation differences | 4,895 | 2,027 | |
| Equity attributable to the shareholders of the group | 162,828 | 98,948 | |
| Minority interests | 0 | 0 | |
| NON-CURRENT LIABILITIES | 25,778 | 22,559 | |
| Employee benefit obligations | III.7.13. | 9,138 | 10,076 |
| Provisions | III.7.14. | 1,790 | 1,754 |
| Deferred tax liabilities | III.6.5. | 8,618 | 2,209 |
| Interest-bearing debt | III.7.15. | 6,232 | 8,520 |
| Financial leases | III.7.17. | 5,696 | 7,363 |
| Credit institutions | III.7.15. | 536 | 1,157 |
| Other liabilities | III.7.16. | 0 | 0 |
| CURRENT LIABILITIES | 99,657 | 99,167 | |
| Employee benefit obligations | III.7.13. | 1,276 | 1,276 |
| Provisions | III.7.14. | 6,917 | 5,741 |
| Interest-bearing debt | III.7.15. | 2,506 | 4,073 |
| Trade payables | III.7.19. | 49,676 | 49,386 |
| Income taxes payable | III.7.19. | 2,290 | 2,778 |
| Other current liabilities | III.7.19. | 36,992 | 35,913 |
| TOTAL LIABILITIES | 288,263 | 220,671 |
(*)The accompanying notes are an integral part of this balance sheet.
| PICANOL GROUP (in '000 euros) | 31/12/2011 | 31/12/2010 |
|---|---|---|
| Operating result | 76,069 | 46,730 |
| Depreciation on intangible and tangible fixed assets | 8,951 | 9,176 |
| Impairment losses of assets | 438 | 260 |
| Write-offs on assets Changes in provisions |
-385 274 |
2,020 -2,271 |
| (Profit)/loss on the disposal of assets |
1,815 | 324 |
| Gross cash flow from operating activities | 87,162 | 56,239 |
| Changes in working capital | 5,692 | -29,228 |
| Cash flow from operating activities | 92,853 | 27,011 |
| Income taxes | -11,561 | -1,815 |
| Net cash flow from operating activities | 81,292 | 25,196 |
| Divestments | 9,466 | 0 |
| Interest received | 1,138 | 1,077 |
| Acquisitions of intangible fixed assets | -552 | -1,055 |
| Acquisitions of tangible fixed assets | -6,874 | -3,722 |
| Net cash flow from investment activities | 3,178 | -3,700 |
| Interest paid | -750 | -1,116 |
| Increase/(decrease) of export financing Repayments of interest-bearing financial debt |
-1,860 -1,995 |
-3,451 -10,007 |
| Cash flow from finance activities | -4,605 | -14,374 |
| Effect of exchange rate fluctuations | 2,994 | 1,796 |
| Adjustments to cash and cash equivalents | 82,860 | 8,918 |
| Net cash position - opening balance |
27,763 | 18,845 |
| Net cash position - closing balance |
110,623 | 27,763 |
| 82,860 | 8,918 |
| PICANOL GROUP (in '000 euros) |
Share capital |
Share premiums |
Retained earnings |
Translation differences |
Total before minority interests |
Minority interests |
Total after minority interests |
|---|---|---|---|---|---|---|---|
| At the end of the preceding period | 21,720 | 1,518 | 73,683 | 2,027 | 98,948 | 0 | 98,948 |
| Changes in scope of consolidation | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Result over the reporting period | 0 | 0 | 61,013 | 0 | 61,013 | 0 | 61,013 |
| Translation differences | 0 | 0 | 0 | 2,868 | 2,868 | 0 | 2,868 |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total recognized profits and losses | 0 | 0 | 61,013 | 2,868 | 63,881 | 0 | 63,881 |
| Dividends | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| At the end of the reporting period | 21,720 | 1,518 | 134,695 | 4,895 | 162,829 | 0 | 162,829 |
For the year ending on 31 December 2010
| PICANOL GROUP (in '000 euros) |
Share capital |
Share premiums |
Share premiums |
Translation differences |
Total before minority interests |
Minority interests |
Total after minority interests |
|---|---|---|---|---|---|---|---|
| At the end of the preceding period | 21,720 | 1,518 | 38,440 | -744 | 60,934 | 0 | 60,934 |
| Changes in scope of consolidation | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Result over the reporting period | 0 | 0 | 35,244 | 0 | 35,244 | 0 | 35,244 |
| Translation differences | 0 | 0 | 0 | 2,771 | 2,771 | 0 | 2,771 |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total recognized profits and losses | 0 | 0 | 35,244 | 2,771 | 38,015 | 0 | 38,015 |
| Dividends | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| At the end of the reporting period | 21,720 | 1,518 | 73,684 | 2,027 | 98,948 | 0 | 98,948 |
The increase in the translation differences is due to the positive evolution of the RMB (both Chinese plants) compared to the historic exchange rates.
Since 1 January 2005, the consolidated financial statements of the Picanol Group have been compiled in accordance with the International Financial Reporting Standards (IFRS), as drawn up by the International Accounting Standards Board (IASB) and approved by the European Union.
The consolidated financial statements are expressed in thousands of euros. They have been compiled on the basis of the historical cost convention.
The application of the above-mentioned standards has an impact on the presentation of the financial statements in terms of the accounting principles, but has not led to any significant changes.
The valuation rules have consistently been applied to the year 2011, and also to the previous financial year and the opening balance on the IFRS transition date, except for the following standards that came into application in 2011.
IFRS 13 Fair Value Measurement (applicable for annual periods beginning on or after 1 January 2013)
Amendments to IFRS 1 First Time Adoption of International Financial Reporting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (applicable for annual periods beginning on or after 1 July 2011)
The presentation currency of the Picanol Group is EUR.
Transactions denominated in foreign currencies are accounted for at the exchange rates prevailing at the date of the transaction. At each balance sheet date, any monetary assets and liabilities that are expressed in foreign currency are translated at the closing rate.
Any non-monetary assets and liabilities carried at fair value and denominated in a foreign currency are translated at the rate of exchange applicable at the time when their fair value was determined. Any profits and losses which result from these transactions are recognized in the income statement as part of the financial result.
Assets and liabilities of the group's foreign operations are translated at the closing rate. Profits and losses are translated at the average exchange rate over the period. Any currency exchange differences resulting from this will be recognized in shareholders' equity, under 'translation differences'. Upon disposal of the foreign operation, the accumulated exchange rate differences as recorded in equity, will be recognized in the income statement
The consolidated financial statements include all subsidiaries of which the group has acquired control. Control means that Picanol NV has the power to control the financial and operational strategy of the entity in order to benefit from its activities. Such control is supposed to exist when Picanol NV holds, either directly or indirectly, over 50% of the voting rights of the entity. The existence and effect of potential voting rights, practicable or convertible at that time, are taken into consideration when evaluating if the group has the power to control the financial and operational strategy of another entity.
Subsidiaries are those companies in which Picanol NV holds, either directly or indirectly, more than 50% of the voting rights or in which Picanol NV can exert, either directly or indirectly, a deciding influence on company strategy.
Acquisitions of subsidiaries are accounted for on the basis of the purchase method.
The transferred remuneration of a business combination is valued at the total fair value on the date of the acquisition, of transferred assets, liabilities entered into or taken over, and the equity interests issued by the acquirer. As of 2010 the transfer related costs are being charged to the results. The identifiable assets, liabilities and contingent liabilities of the acquirer that meet the conditions for recognition under IFRS 3 Business combinations are recognized at the fair value on the purchase date with the exception of the fixed assets (or groups of assets disposed of) classified as held for sale in accordance with IFRS 5 Fixed assets held for resale and discontinued operations. Each minority interest in the acquired party will be recognized at the minority share of the net fair value of the identifiable assets, liabilities and contingent liabilities.
The financial statements of the subsidiaries are recognized in the consolidation scope from the moment that Picanol NV acquires control until the date on which this control ceases.
The financial statements of the subsidiaries bear the same reporting date as that of the parent company. These financial statements are compiled on the basis of uniform principles for financial reporting for comparable transactions and other events in similar circumstances. Balances and transactions, profits and losses within the group are totally eliminated.
Intangible assets are valued at cost less accumulated depreciation and any impairment losses.
Research expenditure is charged to the income statement when incurred. Internally generated development expenses are only recognized as intangible assets if they meet the following criteria:
Capitalized development costs are depreciated on a straight-line basis over a period of 5 years, from the moment a weaving machine is launched onto the market. This is in line with the average lifecycle of a weaving machine.
The costs of acquired patents and licenses are depreciated on a straight-line basis over their useful life, with a maximum useful life of 5 years.
External and internal costs directly linked to the purchase of or to the installation of business software applications for ERP, Supply Chain, CRM, etc. are capitalized as intangible assets. These are depreciated on a straight-line basis over their useful life, which is equivalent to 5 years
The acquirer shall recognize goodwill as of the acquisition date measured as the excess of the aggregate of the consideration transferred, which generally requires acquisition-date fair value, the amount of any non-controlling interest in the acquiree and in a business combination achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Goodwill is measured at cost less any accumulated impairment losses.
The cash generating unit to which goodwill is allocated is checked every year for impairment, and whenever there is an indication that the unit has experienced impairment. The impairment test is performed by comparing the book value of a unit with the realizable value. If the realizable value is lower than the book value, the impairment is first imputed against the goodwill allocated to the
unit, and then to the other assets of the unit in direct proportion to the book value of each asset in the unit. An impairment loss recorded for goodwill cannot be reversed at a later date.
If the interest of the Picanol Group in the recognized net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, then:
Tangible fixed assets are recognized in the balance sheet at the historical cost of acquisition less accumulated depreciation and any impairment. The historical cost of acquisition includes the actual purchase price plus any incidental costs incurred to bring the asset to its working condition and location for it intended use. Borrowing costs are not capitalized.
Any subsequent costs associated with tangible fixed assets are generally immediately expensed within the period in which they occur. Such costs are only capitalized if it can be demonstrated that the economic benefits generated by this expenditure will be higher than their initial estimated performance standard, and that the cost of the asset can be measured reliably.
The costs of dismantling and removing tangible fixed assets and the costs of regular maintenance are viewed as later expenditures that do not generate any additional economic benefits for these assets. As laid down in the accounting principles, these costs are immediately charged to the result for the period in which they arise. If there are material dismantling costs of major overhauls, then these are treated in accordance with IAS 16.13-14.
Depreciation is calculated on a straight-line basis as follows:
The residual value and the useful life of an asset are reviewed at least at the end of each financial year and if the expectations differ from previous estimates, adjustments are processed as an adjustment in estimate in accordance with IAS 8 Principles of financial reporting, changes in estimates and errors.
Lease agreements are classified as financial leases if the group substantially bears all the risks and rewards associated with the agreement. Tangible fixed assets acquired by means of a financial lease are recognized in the balance sheet at:
The corresponding liability to the lessor is presented in the balance sheet as a financial liability.
Lease payments are partly presented as financial expenses and partly as settlement of the outstanding liability, so that a constant interest charge in comparison with the outstanding capital is created over the full term.
The depreciation rules for assets acquired in form of a financial lease are consistent with those for assets acquired as property. If there is any uncertainty as to whether the company will own the asset at the end of the lease, then the asset must be written off in full over the lease period or over the useful life should this be shorter.
All lease agreements not classified as financial leases are operating leases. Payments made under an operating lease contract are expensed on a straight-line basis over the term of the agreement. Benefits received or which will be received upon termination or at the renewal of an operating lease will also be recognized on a straight-line basis as a reduction of the rental costs over the lease term.
The company does not act as lessor. On the other hand it permits long-term repayment of trade debts. These debts are financed by means of export financing and are guaranteed by Delcredere.
The assets of the Picanol Group, other than inventories, deferred tax assets, employee benefits and financial instruments, are reviewed for impairment whenever if there are indications that the carrying amount of an asset or a cash generating unit is possibly no longer recoverable. These indicators are at least yearly revised.
If the carrying amount of an asset or a cash generating unit exceeds its realizable value, an impairment loss will be recognized in the income statement.
The realizable value of an asset or of a cash generating unit is equal to the higher of the fair value minus the costs to sell and the value in use of the asset or a cash generating unit, whereby the fair value is equal to the amount that can be obtained from its sale in a transaction between knowledgeable, willing, and independent parties, and of which the value in use corresponds to the discounted value of the estimated future cash flows which would be expected to flow from the asset or a cash generating unit.
Impairment losses recognized in previous financial years are reversed in the income statement if there are any indications that a previously recognized impairment of an asset no longer exists or has decreased. Impairment losses on goodwill are not reversed.
Fixed assets or groups of assets that are being disposed of are classified as available for sale if their carrying amount will primarily be realized in a sale transaction and not through its continued use. This only applies when the assets (or the group of assets being disposed of) are immediately available for sale in their present condition and if the sale is highly probable. A sale is only considered as highly probable if the appropriate management level has committed itself to a plan to sell the asset.
Fixed assets (or group of assets which are being disposed of) are valued at the lower of carrying amount or fair value minus the selling costs.
All borrowing costs are expensed in the period in which they are incurred.
Inventories are valued at the lower of cost or net realizable value. The net realizable value is the estimated sale price within the normal course of business less the estimated costs for completion selling expenses.
The Picanol Group uses an inventory valuation method which approaches the FIFO method. This approach involves a method in which the stock is valued at regular intervals at the most recent purchase price. In view of the rapid stock rotation of raw materials on the one hand, and the strict application of write-downs of slow-rotating stock items on the other, this valuation method is a reasonable approximation of the FIFO method. Furthermore write-downs are being recognized depending on the age of the items. This method ensures that there is no over-valuation of stock.
The cost of the inventory includes all the purchase costs, conversion costs, and any other costs necessary to bring the inventory to its present location and condition.
Minority interests are a share in the profit or the loss and the net assets of a subsidiary which are attributable to the equity interests that are not held directly or via subsidiaries held by the parent company.
At the time of acquisition, the minority interest is initially recognized as the minority share of the fair value of the identifiable assets, liabilities and contingent liabilities of the acquired party. This will later also include the minority share of the profits or losses.
The group has primarily defined contribution plans, as well as defined benefit plans in Picanol NV, Proferro NV, PsiControl Mechatronics NV and Verbrugge NV.
The contribution obligations to the defined contribution plans are expensed by the group in the income statement as they incur. With regard to the minimal return because of the appropriate legislation in Belgium, the risk is in fact carried by external insurance companies.
For defined benefit plans the pension liability of the financial year has to be calculated on the basis of the 'projected unit method'.
The amount recognized as a net liability of a defined benefit plan is the net total of the following amounts:
The corridor approach entails that the actuarial gains and losses which, at the end of the previous reporting period, exceeded the larger of 10% of the discounted value of the gross liability in respect of the defined benefit rights on that date and 10% of the fair value of the fund investments on that date, are recognized in the income statement over the expected average remaining service life of the plan participants involved.
The discounted value of the gross liability in respect of defined benefit plans is calculated by discounting the gross liabilities at a discount rate which is based on the market yield of high quality company bonds at the balance sheet date.
A provision for current early retirements is recognized as a liability and as a charge if the entity has demonstrably committed itself to either:
If redundancy payments are due only 12 months at least after the balance sheet date, they will be discounted. If an offer is made to encourage voluntary redundancy, the valuation of the redundancy payments will be based on the number of employees who are expected to accept the offer.
In the income statement, pension costs for the year in respect of past service are included in 'cost of sales' and 'general and administrative expenses', while the interest cost is recognized under 'total interest expenses'. The Picanol Group does not have any constructive liability for future early retirement, with as result that no provision is made for such obligation.
Provisions are recognized at the balance sheet date if the group has a present obligation (legal or constructive) due to a past event, if it is probable that this liability will require a future outflow of resources embodying economic benefits in order to settle the obligation and if a reliable estimate can be made of the amount of the obligation.
Provisions are recognized at the best estimate of the expenditure required to settle the existing obligation at the balance sheet date.
A provision for warranty costs will be made for products under warranty on the basis of historical data with regard to repairs and returned goods. The provision for warranty costs will be made on the basis of historical data on repairs and returned goods and on the basis of sold weaving machines. A provision is being made for performance warranties based on the individual analysis.
A provision for restructuring will only be made if the group has drawn up a detailed and formal restructuring program and if the expectation is being created with the relevant parties that the group will be implementing the restructuring program, either by the group already having started its implementation, or by having informed the relevant parties of its main features prior to the balance sheet date.
After the initial valuation, these are valued at cost less any incidental impairment losses.
The company applies write-downs to accounts receivable if there is any sign of them not being collectable, either wholly or partly. The company considers each claim on a case-by-case basis, using specific information about the claim concerned as well as general historic information. It also takes into account its own share of risk for the claim concerned when setting the depreciation.
Available-for-sale financial assets are initially recognized at fair value plus any transaction costs directly attributable to their acquisition. Following their initial recognition, these assets are valued at fair value without any deduction of incidental transaction costs incurred by the sale or any other form of disposal. Any profit or loss generated by these assets is immediately recognized in shareholders' equity with the exception of impairment losses and foreign currency gains or losses until the financial asset is derecognized, and with any cumulative gain or loss previously recognized through shareholders' equity transferred to profit or loss.
Financial liabilities and equity instruments issued by the group are classified in accordance with the economic reality of the contractual agreement and with the definitions of a financial liability and shareholders' equity instruments.
Equity instruments issued by the company are recognized in accordance with the amounts received, minus any direct issue costs.
Interest-bearing bank loans and fixed advances are recognized on the basis of the amounts received, less any direct issue costs. Financial charges, including premiums payable upon settlement or redemption and direct issue costs, are recognized proportionally through the income statement in accordance with the effective interest method and are added to the recognized amount of the instrument to the degree that they are not settled in the relevant period.
The Picanol Group does not apply hedge accounting to derivatives. These are recognized in the income statement at fair value.
Should hedge accounting be applied in the future, the following rules would be applied:
Cash flow hedges protect against the effect of foreign currency fluctuations on the fair value of recognized assets and liabilities. The profit and loss from both the revaluation of the hedging instrument (e.g. forward contracts) and the revaluation of the hedged assets and liabilities are immediately recognized through the income statement.
Cash flow hedges protect against any variation in cash flow which (i) is attributable to a particular risk associated with a recognized asset or liability or a highly probable expected future transaction and (ii) which could have an impact on the profit or loss. The share of profit or loss on the hedge instrument which has been established as an effective hedge is recognized directly in shareholders' equity and the non-effective share of the profit or loss on the hedge instrument will be recognized through the income statement.
If the hedge of an expected future transaction leads to the recognition of a non-financial asset or a non-financial liability, or if an expected future transaction concerning a non-financial asset or non-financial liability becomes a firm undertaking for which administrative processing of fair value hedge transactions is applied, then the entity will take the following action:
Financial instruments are not used at all for speculative purposes. The Picanol Group does not hold other derivatives in any form.
Revenue is measured at the fair value of the consideration received or receivable.
Revenue from the sale of goods is recognized when all the following criteria are met:
In many cases the group sells its weaving machines including installation costs. The cost component for these services can be reliably estimated, and is limited in relation to the sales price of the machine (1 to 2% of sales price). The installation component is not viewed as an essential part of the sales transaction, so that revenue is recognized on the basis of delivery of the weaving machines. At the time of revenue recognition, the installation costs are charged against the income statement through accrued charges on the liabilities side of the balance sheet.
If the result of a transaction involving the rendering of services can be measured reliably, the revenue associated with those services has to be recognized in direct proportion to the services rendered at the balance sheet date. The services provided are mainly for the installation of weaving machines. The costs of the service and the turnover generated by it are recognized at the time when the service is provided. The turnover from services associated with installation of weaving machines is recognized when the machines are delivered. This turnover is insignificant compared with the company's total turnover. In the case of services unconnected with installing weaving machines, the turnover is recognized at the time when the service is provided. These are short projects lasting a few days, and are insignificant compared with the company's total turnover. Services which have been invoiced but not yet provided, or provided but not yet invoiced, are recorded as trade receivables.
Interest is recognized in accordance with the effective interest method (IAS39).
Dividend income is recognized when the shareholders' right to receive payment is established.
The tax expense of the period represents the sum of the current tax expense and deferred tax expense. The current tax expense is based on the taxable profit of the financial year. Taxable profit differs from the net profit as stated in the income statement because it excludes income or expenditure that is taxable or deductible in other years, and it further excludes components which will never be taxable or deductible. The Picanol Group's liability for current tax is calculated using tax rates enacted or substantively enacted at the balance sheet date.
Deferred taxes are taxes payable or recoverable on the differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the calculation of taxable profit, and these are recognized on the basis of the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized when the temporary differences originate from goodwill (or negative goodwill) or from the initial recognition of an asset or of a liability in a transaction that is not a business combination and which, at the time of the transaction, affects neither the accounting profit not the taxable profit or loss (taxable loss).
Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, interests in joint ventures and associated companies, except when the Picanol Group is able to control the timing of the reversal of the temporary difference and when it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of the deferred tax assets is reviewed at each balance sheet and reduced to the extent that is no longer probable that sufficient taxable profit will be available to allow all or part of the tax assets to be recovered.
The carrying amount of the deferred tax assets is reviewed at each balance sheet and reduced to the extent that is no longer probable that sufficient taxable profit will be available to allow all or part of the tax assets to be recovered.
Deferred tax assets and liabilities are recognized if they relate to income tax levied by the same tax authority and if the group has the intention to settle its current tax assets and liabilities on a net basis.
In some cases, the application of valuation rules requires an accounting assessment. In the course of the current fiscal year, the group has not had to make any accounting assessments.
Under IFRS, for preparation of the group's consolidated financial statements, the group must use estimates and suppositions that may affect the amounts of the assets and liabilities, the amounts of the contingent assets and liabilities, and the amounts of costs and revenues. The actual results may deviate from these estimates. Estimates are particularly important for, but not restricted to the determination of the obligations regarding stipulated pension schemes, impairments, provisions and deferred taxes.
The realizable value of Picanol's global business is based upon a business value approach. The projections used in the model for discussing this business value are based on a 5-year period. In this context management revised its business plan to arrive at the best possible estimate for the following years. The plan for 2012 expects a revenue decline for the Weaving Machines division and further growth in the Industries division in terms of external sales. The assumptions contained in the business plan were used in assessing the risks for the purpose of asset valuation. The main assets, of which the valuation is impacted by the assumptions of the business plan are deferred tax assets, intangible assets (more particularly capitalized development costs), tangible fixed assets and goodwill.
There were no changes in accounting principles applied in the financial year 2011 in comparison with the financial year 2010.
In 2011 the liquidation of Te Strake Textile was completed and GTP Greenville was sold.
The two divisions - Weaving Machines and Industries – make up the primary segmentation of the group. More information on these divisions can be found in the first part of this report. Sales between segments are carried out at arm's length.
The supporting Corporate, Finance, IT and HR activities are allocated to the business segments on the basis of various factors (activity, contribution to turnover %, etc.), in accordance with the management reporting.
Segmented information on these pillars can be found hereafter.
| 2011 | ||||
|---|---|---|---|---|
| PICANOL GROUP (in '000 euros) | Weaving Machines |
Industries | Eliminations | Consolidated |
| External sales | 403,420 | 63,532 | 466,953 | |
| Inter-segment sales | 904 | 57,158 | -58,062 | 0 |
| TOTAL SALES | 404,324 | 120,691 | -58,062 | 466,953 |
| OPERATING PROFIT | 68,523 | 7,546 | 76,069 | |
| Financial result | 659 | |||
| PROFIT OR LOSS BEFORE TAXES | 76,728 | |||
| Income taxes | -15,716 | |||
| PROFIT OR LOSS AFTER TAXES | 61,013 | |||
| Share of minority interests | 0 | |||
| SHARE OF THE GROUP | 61,013 |
| PICANOL GROUP (in '000 euros) | Weaving Machines |
Industries | Eliminations | Consolidated |
|---|---|---|---|---|
| External sales | 340,734 | 55,040 | 395,774 | |
| Inter-segment sales | 2,282 | 52,344 | -54,626 | 0 |
| TOTAL SALES | 343,016 | 107,384 | -54,626 | 395,774 |
| OPERATING PROFIT | 46,670 | 70 | 46,730 | |
| Financial result | 161 | |||
| PROFIT OR LOSS BEFORE TAXES | 46,891 | |||
| Income taxes | -11,648 | |||
| PROFIT OR LOSS AFTER TAXES | 35,244 |
| Share of minority interests | 0 |
|---|---|
| SHARE OF THE GROUP | 35,244 |
The increase of the total group operating profit is a result of a strong profit growth realized in the Weaving Machine division (+ 21.9 million euros) and the Industries division (+ 7.5 million euros). This positive profit development is the result of a strong turnover growth. In addition, the operating profit of the Weaving Machines division included in 2011 other operating income linked to the sale of GTP Greenville, for an amount of 9.5 million euros.
The Weaving Machines segment realized a 18% turnover increase, despite the loss of sales of the Steel Heddle activities from 1 September 2011, which results into a strong profit increase. The profit ratio (excluding revenue from the sale of GTP Greenville) rose slightly from 14% in 2010 to 15% in 2011
The Industries segment realized a further growth of the external turnover (+ 15% vs. 2010). Thanks to increased productivity and as costs did not rise in proportion with the turnover increase, the profit ratio rose from 0% in 2010 to +6% in 2011. The result of Industries does not include tangible non-recurrent costs or profits.
| PICANOL GROUP (in '000 euros) | Weaving Machines |
Industries | Consolidated |
|---|---|---|---|
| Depreciation and amortization | 5,988 | 2,963 | 8,951 |
| Impairment losses recognized in profit or | |||
| loss | 438 | 438 | |
| Acquisitions | 3,536 | 3,889 | 7,426 |
| PICANOL GROUP (in '000 euros) | Weaving Machines |
Industries | Consolidated |
|---|---|---|---|
| Depreciation and amortization | 5,020 | 4,156 | 9,176 |
| Impairment losses recognized in profit or | |||
| loss | 260 | 260 | |
| Acquisitions | 3,590 | 1,187 | 4,777 |
| PICANOL GROUP (in '000 euros) |
Weaving Machines |
Industries | Non segment |
Eliminations | Consolidated |
|---|---|---|---|---|---|
| 2011 | |||||
| Total consolidated assets | 129,981 | 63,824 | 109,314 | -14,857 | 288,263 |
| Total consolidated liabilities | 78,294 | 31,231 | 193,594 | -14,857 | 288,263 |
| 2010 | |||||
| Total consolidated assets | 147,972 | 62,930 | 34,956 | -25,186 | 220,671 |
| Total consolidated liabilities | 76,777 | 30,326 | 138,740 | -25,173 | 220,671 |
The group's activities can mainly be divided between Europe, America & Africa on the one hand, and Far & Middle East on the other.
The table below shows the sales and fixed assets of the Picanol Group by geographical market.
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2010 |
|---|---|---|
| Europe, America and Africa Far & Middle East |
170,370 296,582 |
125,916 269,858 |
| TOTAL | 466,953 | 395,774 |
| PICANOL GROUP (in '000 euros) |
Net carrying value | Acquisitions | ||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| Europe, America and Africa Far & Middle East |
48,520 9,270 |
52,448 8,669 |
6,307 1,119 |
3,760 1,018 |
| TOTAL | 57,790 | 61,117 | 7,426 | 4,777 |
The company does not have customers that realize more than 10% of the turnover.
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Net capital gain on sale GTP Greenville Reversal provision restructuring costs Other |
9,466 256 |
426 184 |
| TOTAL | 9,721 | 609 |
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Extraordinary write-downs | 438 | |
| Provision for onerous contracts | 264 | 324 |
| Loss on the disposal of assets | 850 | |
| Reorganization costs | 108 | |
| Other | 214 | 192 |
| TOTAL | 916 | 1,474 |
The extraordinary write-downs in 2011 include impairment losses on fixed assets in Picanol of America and Verbrugge NV.
The extraordinary write-downs in 2010 include provisions for leases of unused company spaces in Ypres and Romania and an exceptional valuation allowance of a production machine.
| PICANOL GROUP (in '000 euros) | 2011 | 2010 |
|---|---|---|
| Sales | 466,953 | 395,774 |
| Purchases of goods and changes in inventories | -243,620 | -199,160 |
| Amortization, depreciation and impairment | -9,389 | -9,436 |
| Amounts written off on inventories & receivables | 385 | -2,020 |
| Other goods and services | -59,356 | -52,345 |
| Personnel costs | -87,436 | -82,530 |
| Provisions | -274 | -2,689 |
| Other operating income | 9,721 | 609 |
| Other operating expenses | -916 | -1,474 |
| TOTAL OPERATING RESULT | 76,069 | 46,730 |
Sales increased by 18% compared with 2010. The ratio of purchases of goods and changes in inventory to sales increased to 52% (versus 50% in 2010)
Personnel costs and to a lesser extent the other goods and services that form part of the costs of sales, rose as a result of the strongly increased volume. More specifically, there was a strong increase in maintenance costs due to a number of large maintenance works. The marketing costs also increased substantially, mainly due to the ITMA exhibition.
The provisions remained relatively stable, since the decrease in pension provisions (-0.9 million euros) was offset by an increase in guarantee fees, partially due to the increased turnover (+ 1.2 million euros).
The strong increase in other operating income was related to the sale of GTP Greenville
| PICANOL GROUP (in '000 euros) | 2011 | 2010 |
|---|---|---|
| Interest on export finance | -168 | -201 |
| Interest on other loans | -23 | -208 |
| Interest on financial leases | -559 | -708 |
| Total interest expenses | -750 | -1,116 |
| Interest income from bank deposits | 396 | 138 |
| Interest income from financial receivables | 742 | 939 |
| Total interest income from financial receivables & | ||
| cash and cash | ||
| Equivalents | 1,138 | 1,077 |
| Interest income / (-expenses) | 388 | -39 |
| Exchange rate differences | 892 | 1,178 |
| Profit on revaluation of derivatives | 0 | 0 |
| Other financial income | 892 | 1,178 |
| Exchange rate differences | -566 | -943 |
| Loss on revaluation of derivatives | -55 | -35 |
| Dividend taxes | 0 | |
| Other financial expenses | -621 | -978 |
| Other financial result |
271 | 200 |
| FINANCIAL RESULT | 659 | 161 |
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Current tax: | ||
| TOTAL | -11,073 | -3,543 |
| Deferred tax: | ||
| (Under)/ over provision in previous year | 0 | 0 |
| Recognition and reversal of temporary differences | -2,201 | -3,257 |
| Utilization of previous year's losses | 5,403 | |
| Impairments on deferred taxes on losses of current Impairments on deferred taxes on losses of current |
-38 | |
| and previous reporting periods | -7,854 | -5,057 |
| Inclusion deferred tax assets | 10 | 247 |
| TOTAL | -4,642 | -8,105 |
| TOTAL INCOME TAXES | -15,716 | -11,649 |
| PICANOL GROUP (in '000 euros) | 2011 | % | 2010 | % |
|---|---|---|---|---|
| Profit before tax and before income from associates | 76,728 | 46,891 | ||
| Tax at the domestic tax rate of 33.99% | -26,080 | 33.99% | -15,938 | 33.99% |
| Tax effects of non-deductible expenses | ||||
| Non-tax-deductible expenses | -727 | -0.95% | -783 | 1.67% |
| Other | -1,579 | -2.06% | -98 | 0.21% |
| Tax effects of tax-exempt revenues | 0.00% | |||
| Non-taxable financial and other income | 2,078 | 2.71% | 248 | -0.53% |
| Notional interest deduction | 330 | 0.43% | 135 | -0.29% |
| Capital gain divestments | 3,516 | 4.58% | 0 | 0.00% |
| Deferred tax effect resulting from a change in tax rates | 0 | 0.00% | 0 | 0.00% |
| Tax effects of corrections to deferred and current tax of previous periods |
0.00% | -72 | 0.15% | |
| Effects of different tax rates of group entities in other jurisdictions |
2,196 | 2.86% | 4,591 | -9.79% |
| Tax effect of utilization of tax losses not previously recognized |
4,551 | 5.93% | 308 | -0.66% |
| Valuation allowance on deferred tax assets | 0.00% | -38 | 0.08% | |
| Tax expense and effective tax rate for the period | -15,716 | 20.48% | -11,648 | 24.84% |
In 2011 no deferred tax credits were directly included in the equity.
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2010 | |||
|---|---|---|---|---|---|
| DEFERRED TAX ASSETS |
DEFERRED TAX LIABILITIES |
DEFERRED TAX ASSETS |
DEFERRED TAX LIABILITIES |
||
| Intangible assets | 0 | -1,377 | 0 | -1,521 | |
| Tangible fixed assets | 0 | -5,557 | 0 | -5,899 | |
| Inventories | 997 | 0 | 328 | 0 | |
| Other assets | 59 | -296 | 12 | -54 | |
| Employee benefit obligations | 23 | 0 | 66 | 0 | |
| Other provisions | 5 | -467 | 983 | 0 | |
| Other liabilities | 8 | -1,103 | 0 | -1,367 | |
| Tax loss carryforwards/ tax credits | 4,299 | 0 | 12,236 | 0 | |
| Notional interest deduction carryforwards | 0 | 0 | 673 | 0 | |
| Other adjustments | 0 | -1,602 | 0 | -1,101 | |
| TOTAL | 5,391 | -10,403 | 14,298 | -9,942 | |
| Valuation allowance | -4,422 | 0 | |||
| Offset (*) | -1,785 | 1,785 | -7,733 | 7,733 | |
| TOTAL (as reported in the balance sheet) | 3,606 | -8,618 | 2,143 | -2,209 |
(*) IAS 12 (Income Tax) requires that deferred tax assets and deferred tax liabilities should, under certain conditions, be offset against each other..
The change in deferred tax between 31/12/2011 and the end of 2010 is primarily due to:
Deferred tax assets that cannot be recovered over a period of 5 years are not recognized or are subject to a valuation adjustment. The expected tax results are based on the business plan as explained under III.2
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Within 1 year | 0 | 0 |
| Within 2 years | 0 | 0 |
| Within 3 years | 0 | 0 |
| Within 4 years | 0 | 0 |
| Within 5 years or more | 271 | 2,129 |
| Without time limit | 3,084 | 18,996 |
| PICANOL GROUP (in '000 euros) |
GROSS AMOUNT |
TOTAL DEFERRED TAX ASSETS |
RECOGNIZED DEFERRED TAX ASSETS |
NON RECOGNIZED DEFERRED TAX ASSETS |
|---|---|---|---|---|
| Tax loss carryforward | 3,354 | 1,140 | 0 | 1,140 |
| Inventories | 0 | 0 | 0 | |
| Other temporary differences | 0 | 0 | 0 | |
| TOTAL | 3,354 | 1,140 | 0 | 1,140 |
With the exception of the already planned dividend payments in 2012 no liabilities or assets were recognized for temporary differences relating to non-calculated or distributed earnings of subsidiaries and joint ventures controlled by the group as the group determines itself the timing of the reversal of the temporary differences. Furthermore no reversal will be executed in the near future. Undistributed reserves of subsidiaries and the related unrecognized deferred tax liability amount to 21.1 million euros and 1.5 million euros respectively at 31 December 2011.
In 2011, no dividend was paid for the annual period 2010. The Board of Directors will propose to the Annual General Meeting of 18 April 2012 not to pay a dividend
The calculation of the basic and diluted earnings per share is based on the following data:
| PICANOL GROUP | 2011 | 2010 |
|---|---|---|
| (in '000 euros) | ||
| Net profit or loss over the period | 61,013 | 35,244 |
| Net profit or loss from continuing operations | 61,013 | 35,244 |
| 2011 | 2010 | |
| (number of shares) | ||
| Ordinary shares per 01/01 | 17,700,000 | 17,700,000 |
| Ordinary shares per 31/12 | 17,700,000 | 17,700,000 |
| Weighted average number of outstanding ordinary | ||
| shares | 17,700,000 | 17,700,000 |
| 2011 | 2010 | |
| (in euros) | ||
| Basic earnings per share | 3.45 | 1.99 |
| Basic earnings per share from continuing operations | 3.45 | 1.99 |
The diluted earnings per share of the Picanol Group are equivalent to the basic earnings per share, for both 2011 and 2010.
| PICANOL GROUP | 2011 | 2010 |
|---|---|---|
| (in '000 euros) | ||
| Net profit or loss over the period | 61,013 | 35,244 |
| Profit or loss attributable to the ordinary shareholders of | ||
| the company | 61,013 | 35,244 |
| Weighted average number of outstanding ordinary | ||
| shares | 17,700,000 | 17,700,000 |
| Weighted average number of shares for the diluted | ||
| earnings per share | 17,700,000 | 17,700,000 |
| 2011 | 2010 | |
| (in euros) | ||
| Diluted earnings per share | 3.45 | 1.99 |
| Diluted earnings per share from continuing operations | 3.45 | 1.99 |
| Development expenses |
Concessions, Patents and Licenses |
Goodwill | Other Intangible assets |
Assets under Con struction and Advance |
Total | |
|---|---|---|---|---|---|---|
| PICANOL GROUP (in '000 euros) |
Payments | |||||
| At the end of the previous reporting period | ||||||
| Gross book value | 9,273 | 17,884 | 122 | 0 | 0 | 27,278 |
| Accumulated depreciation | -4,798 | -15,859 | -122 | 0 | 0 | -20,779 |
| Accumulated impairment losses | -64 | -533 | 0 | 0 | 0 | -597 |
| Net book value | 4,411 | 1,491 | 0 | 0 | 0 | 5,902 |
| Movements during the reporting period | ||||||
| Acquisitions | 340 | 212 | 0 | 0 | 0 | 552 |
| Investments resulting from business combinations | 0 | 0 | ||||
| Expensed depreciation | -732 | -451 | 0 | 0 | 0 | -1,183 |
| Impairment losses | 0 | 0 | 0 | 0 | 0 | 0 |
| Disposals and retirements | 0 | 0 | 0 | 0 | 0 | 0 |
| Transfers | 0 | -3 | 0 | 0 | 0 | -3 |
| Exchange rate differences | 0 | 38 | 0 | 38 | ||
| At the end of the reporting period | -392 | -205 | 0 | 0 | 0 | -596 |
| Gross book value | 9,613 | 12,421 | 0 | 0 | 0 | 22,034 |
| Accumulated depreciation | -5,530 | -10,601 | 0 | 0 | 0 | -16,131 |
| Accumulated impairment losses | -64 | -533 | 0 | 0 | 0 | -597 |
| Net book value | 4,019 | 1,287 | 0 | 0 | 0 | 5,306 |
Acquisitions of intangible assets in the Picanol Group in 2011 consist mainly of the further capitalization of development expenses at Picanol NV.
The 2011 acquisitions contain 0.3 million euros of own production. This own production comprises the fully capitalized development costs within Picanol NV regarding a new control system: VGS. This project concerns development of a new control box for airjet and rapier weaving machines, which was completed and put on the market in 2011. The related costs for development of this platform were capitalized since 2008 and are since October 2011 being depreciated.
The amount for research & development and engineering posted as costs in the Income statement was 10.2 million euros in 2011.
Capitalized development costs are subject to an impairment test according to the assumptions included in the business plan (see III.2)
The total net book value of 5.3 million euros of the intangible assets at 31 December 2011 consists primarily of the following components:
The depreciation of the intangible assets is recognized under the depreciation heading, partly as a component of the cost of sales and partly under general and administrative costs, whereas the impairment losses are recognized in other operating income/expenses.
At the end of 2011 there are no contractual commitments for the purchase of intangible assets.
| Development expenses |
Concessions, Patents and Licenses |
Goodwill | Other Intangible Assets |
Assets Under Con |
Total | |
|---|---|---|---|---|---|---|
| PICANOL GROUP (in '000 euros) |
||||||
| At the end of the previous reporting period | ||||||
| Gross book value | 8,288 | 17,772 | 113 | 0 | 0 | 26,173 |
| Accumulated depreciation | -4,265 | -15,279 | -91 | 0 | 0 | -19,635 |
| Accumulated impairment losses | -64 | -533 | 0 | 0 | 0 | -597 |
| Net book value | 3,958 | 1,960 | 22 | 0 | 0 | 5,941 |
| Movements during the reporting period | ||||||
| Acquisitions | 985 | 70 | 0 | 0 | 0 | 1,055 |
| Investment due to business combination | 0 | 0 | ||||
| Expensed depreciation | -533 | -595 | -24 | 0 | 0 | -1,151 |
| Impairment losses | 0 | 0 | 0 | 0 | 0 | 0 |
| Disposals and retirements | 0 | 0 | 0 | 0 | 0 | 0 |
| Transfers | 0 | 0 | 0 | 0 | 0 | 0 |
| Exchange rate differences | 0 | 56 | 2 | 58 | ||
| At the end of the reporting period | 452 | -469 | -22 | 0 | 0 | -38 |
| Gross book value | 9,273 | 17,884 | 122 | 0 | 0 | 27,278 |
| Accumulated depreciation | -4,798 | -15,859 | -122 | 0 | 0 | -20,779 |
| Accumulated impairment losses | -64 | -533 | 0 | 0 | 0 | -597 |
| Net book value | 4,411 | 1,491 | 0 | 0 | 0 | 5,902 |
| PICANOL GROUP (in '000 euros) | 2011 | 2010 |
|---|---|---|
| At the end of the previous reporting period |
||
| Net book value | 0 | 0 |
| Movements during the reporting period | ||
| Acquisitions and entering the consolidation | ||
| scope | 0 | 0 |
| Impairment losses | 0 | 0 |
| Disposals and leaving the consolidation |
||
| scope | 0 | 0 |
| Mergers and asset deals | 0 | 0 |
| Exchange rate differences | 0 | 0 |
| At the end of the reporting period | 0 | 0 |
| Net book value | 0 | 0 |
There were no changes in the net book value in 2011.
| Assets | |||||
|---|---|---|---|---|---|
| Land | Plant, | Furniture | Other | under | Total |
| 34,599 | 176,728 | 10,925 | 1,998 | 100 | 224,349 |
| -13,565 | -144,968 | -9,576 | -1,025 | 0 | -169,134 |
| 0 | 0 | 0 | 0 | 0 | 0 |
| 21,033 | 31,760 | 1,348 | 973 | 100 | 55,215 |
| 0 | 0 | 0 | 0 | 0 | 0 |
| 128 | 3,121 | 818 | 70 | 2,737 | 6,874 |
| 0 | |||||
| -1,510 | -5,473 | -634 | -151 | 0 | -7,768 |
| 0 | 0 | 0 | -438 | 0 | -438 |
| -266 | -1,458 | -42 | -5 | -44 | -1,815 |
| 0 | -37 | 18 | 0 | 19 | 0 |
| 376 | 89 | 25 | -22 | -50 | 419 |
| -1,272 | -3,758 | 184 | -545 | 2,662 | -2,729 |
| 34,345 | 171,891 | 10,801 | 1,580 | 2,762 | 221,380 |
| -14,584 | -143,891 | -9,268 | -1,153 | 0 | -168,896 |
| 0 | 0 | 0 | 0 | 0 | 0 |
| 19,761 | 28,001 | 1,532 | 428 | 2,762 | 52,484 |
| And Buildings |
Equipment and Machinery |
And Vehicles |
Tangible Fixed Assets |
Construction and Advance Payments |
The total acquisitions of tangible fixed assets amount to 6.9 million euros compared with 3.7 million euros in the previous period.
The 2011 acquisitions in installations, machinery and equipment mainly concerned investments in the automated warehouse of Picanol (0.9 million euros), and production machinery at Proferro NV (1.2 million euros) and Melotte NV (0.5 million euros).
The acquisitions of assets under construction and advanced payments include the investment in a new SMD line for PsiControl Mechatronics in Ypres and Romania, the construction of a new office building for Picanol India, and an additional investment in production machinery for Proferro.
An impairment loss was recognized in capitalized improvement works in the leased premises of Picanol of America, which in time will be abandoned, and in buildings in Verbrugge that are no longer being used.
The transfers and disposal of assets include the fixed assets sold in connection with the sale of GTP Greenville for an amount of 1.4 million euros.
Tangible fixed assets included at 31 December 2011 own produced assets for an amount of 0.4 million euros. This regards own produced molds.
| Land and | Plant | Furniture | Other | Assets | Total | |
|---|---|---|---|---|---|---|
| Buildings | Equipment | and | Tangible | Under | ||
| And | Vehicles | Fixed | Construction | |||
| PICANOL GROUP (in '000 euros) |
Machinery | Asses | and | |||
| Advance | ||||||
| At the end of the previous reporting period | Payments | |||||
| Gross value | 33,686 | 174,972 | 10,710 | 1,722 | 188 | 221,278 |
| Accumulated depreciations | -12,003 | -140,362 | -9,120 | -725 | 0 | -162,209 |
| Accumulated impairment losses | 0 | 0 | 0 | 0 | 0 | 0 |
| Net book value | 21,683 | 34,610 | 1,590 | 997 | 188 | 59,069 |
| Movements during the reporting period | ||||||
| Changes in the consolidation scope | 0 | 0 | 0 | 0 | 0 | 0 |
| Acquisitions | 0 | 2,493 | 550 | 71 | 607 | 3,722 |
| Investments resulting from business combinations | 0 | |||||
| Expensed depreciations | -1,473 | -5,633 | -691 | -227 | 0 | -8,025 |
| Impairment losses | 0 | 0 | 0 | 0 | 0 | 0 |
| Disposals and retirements | -23 | -334 | -200 | -24 | -4 | -584 |
| Transfers | 332 | 279 | 2 | 84 | -697 | 0 |
| Exchange rate differences | 514 | 345 | 96 | 71 | 6 | 1,034 |
| -650 | -2,850 | -242 | -24 | -88 | -3,853 | |
| At the end of the reporting period | ||||||
| Gross value | 34,599 | 176,728 | 10,925 | 1,998 | 100 | 224,349 |
| Accumulated depreciations | -13,565 | -144,968 | -9,576 | -1,025 | 0 | -169,134 |
| Accumulated impairment losses | 0 | 0 | 0 | 0 | 0 | 0 |
| Net book value | 21,033 | 31,760 | 1,348 | 973 | 100 | 55,215 |
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2010 |
|---|---|---|
| Land and buildings - Gross value |
0 | 0 |
| Land and buildings – Accumulated depreciation |
0 | 0 |
| Land and buildings – Net book value |
0 | 0 |
| Plant, equipment and machinery - Gross value Plant, equipment and machinery - Accumulated |
13,843 | 15,972 |
| depreciation | -3,283 | -3,137 |
| Plant, equipment and machinery - Net book value |
10,559 | 12,835 |
| Furniture and vehicles - Gross value |
0 | 0 |
| Furniture and vehicles - Accumulated depreciation |
0 | 0 |
| Furniture and vehicles - Net book value |
0 | 0 |
| Intangible assets - Gross value |
0 | 0 |
| Intangible assets - Accumulated depreciation |
0 | 0 |
| Intangible assets - Total |
0 | 0 |
| Total assets under financial lease | 10,559 | 12,835 |
The assets under financial leasing reported in 'plant, equipment and machinery' include primarily a molding line and a machining center at Proferro NV.
During the financial year 2011, no new financial lease contracts were concluded.
| Shareholding % | |||
|---|---|---|---|
| 2011 | 2010 | ||
| 1. FULLY CONSOLIDATED ENTITIES | |||
| Belgium | |||
| Proferro NV | Steverlyncklaan 15, 8900 Ypres | 100.00% | 100.00% |
| PsiControl Mechatronics NV | Steverlyncklaan 15, 8900 Ypres | 100.00% | 100.00% |
| Verbrugge NV | Steverlyncklaan 15, 8900 Ypres | 100.00% | 100.00% |
| Melotte NV | Industrieweg 2019 , 3520 Zonhoven | 100.00% | 100.00% |
| France | |||
| Burcklé ET CIE SAS | Rue de Bourbach-le-haut 9 , 68290 Bourbach-Le-Bas | 100.00% | 100.00% |
| Germany | |||
| Günne Webmaschinenfabrik GmbH & CO, KG | Möhnestrasse 2 , 59519 Möhnesee-Günne | 100.00% | 100.00% |
| Günne Webmaschinenfabrik GmbH | Möhnestrasse 2 , 59519 Möhnesee-Günne | 100.00% | 100.00% |
| Turkey | |||
| Picanol Tekstil Makinalari | Merkez Mah., Yildirim Beyazid Cad. 179/2 | 100.00% | 100.00% |
| 34197 Yenibosna – Istanbul | |||
| Romania | |||
| PsiControl Mechatronics Srl | Campului Street 1, 505400 Rasnov, Brasov County | 100.00% | 100.00% |
| People's Republic of China | |||
| Picanol (Suzhou Ind. Park) Textile Machinery Co. Ltd. | Fengting Road/ Songzhuan Road, SIP, Suzhou | 100.00% | 100.00% |
| Picanol (Suzhou) Trading Co. Ltd. | Fengting Avenue/ Songzhuan Road, SIP, Suzhou | 100.00% | 100.00% |
| Indonesia | |||
| PT GTP Bandung | Jl. Moh. Toha KM 5.3 , 56 40261 Bandung | 100.00% | 100.00% |
| Netherlands | |||
| Te Strake Textile BV | Dr. H. Van Doorneweg 26, 5753 PM Deurne | 0.00% | 100.00% |
| United States | |||
| GTP Greenville | 1801 Rutherford Road, Greenville S.C. 29609 | 0.00% | 100.00% |
| Picanol of America | 1801 Rutherford Road, Greenville S.C. 29609 | 100.00% | 0.00% |
| México | |||
| GTP Mexico SA DE CV | Avena 475 Col. Granjas, Iztacalco, 08400, México D.F. |
100.00% | 100.00% |
| Brazil | |||
| Rua Treze de Maio,164, CEP13471-030 | |||
| GTP São Paulo | Americana/SP | 100.00% | 100.00% |
| India | |||
| Block B-1, Janak Puri, Community Centre, New Delhi | |||
| Picanol India Private Limited | 110058 | 100.00% | 100.00% |
| 2. NON-CONSOLIDATED ENTITIES | |||
| Belgium | |||
| Symatex CVBA | A. Reyerslaan 80 , 1030 Brussels | 34.00% | 34.00% |
| Bedrijvencentrum Westhoek | Albert Dehemlaan 31, 8900 Ypres | 12.82% | 12.82% |
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Fair value at the end of the previous reporting period | 79 | 79 |
| Movements during the reporting period | ||
| Changes in the consolidation scope | 0 | 0 |
| Acquisitions | 0 | 0 |
| Disposals and retirements |
0 | 0 |
| Reductions in fair value | 0 | 0 |
| Exchange rate differences | 0 | 0 |
| Fair value at the end of the reporting period | 79 | 79 |
This heading contains all the non-consolidated investments, which are also non-listed entities. The fair value equals the historical cost corrected with impairment losses.
Non-current receivables are broken down below into interest-bearing trade receivables, guarantees and other interest-bearing receivables:
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2010 | ||
|---|---|---|---|---|
| Interest- | Interest | |||
| bearing | bearing | |||
| trade | trade | |||
| receivables | Guarantees | receivables | Guarantees | |
| At the end of the previous reporting period |
||||
| Gross value | 3,558 | 135 | 3,127 | 154 |
| Accumulated amounts written off | ||||
| Net book value | 3,558 | 135 | 3,127 | 154 |
| Movement during the reporting period |
||||
| Changes in the consolidation scope | ||||
| Acquisitions | 50 | 45 | 2,850 | |
| Discount effect | ||||
| Reimbursement | -19 | |||
| Write-off | ||||
| Write-back | ||||
| Transfers | -2,877 | -2,419 | ||
| Exchange rate differences | ||||
| Other | ||||
| At the end of the reporting period | ||||
| Gross value | 731 | 180 | 3,558 | 135 |
| Accumulated amounts written off | 0 | 0 | 0 | 0 |
| Net book value | 731 | 180 | 3,558 | 135 |
The interest-bearing trade receivables consist entirely of the export financings recognized by Picanol NV.
Interest-bearing receivables at the end of the reporting period consist of 0.3 million euros, an amount in Yen of 0.4 million denominated in euros. These outstanding Yen amounts are covered with commitments to the bank in the same currency.
The non-current interest-bearing trade receivables are insured for a total of 0.6 million, resulting in a total outstanding risk from 0.1 million euros at 31 December 2011 or 20% of the total outstanding amount of interest-bearing trade receivables.
The interest-bearing trade receivables at 31 December 2010 include a total amount of 2.91 million euros, an amount in Yen of 0.52 million denominated in euros and an amount in USD of 0.13 million denominated in euros. The non-current interest-bearing trade receivables at 31 December 2010 were insured for a total of 3.1 million, resulting in a total outstanding risk from 0.5 million at 31 December 2010 or 13% of the total interest-bearing trade receivables.
None of the non-current interest-bearing trade receivables have passed their due dates..
| PICANOL GROUP | (in '000 euros) | 31-12- 2011 |
31-12-2010 |
|---|---|---|---|
| Raw materials and auxiliaries | Gross value | 48,584 | 50,612 |
| Raw materials and auxiliaries Raw materials and |
Amounts written off | -22,644 | -22,527 |
| auxiliaries | 25,940 | 28,085 | |
| Goods in progress | Gross value | 6,861 | 10,111 |
| Goods in progress | Amounts written off | -73 | -273 |
| Goods in progress | 6,788 | 9,838 | |
| Finished goods | Gross value | 14,189 | 13,573 |
| Finished goods | Amounts written off | -3,156 | -3,824 |
| Finished goods | 11,033 | 9,750 | |
| Trade goods | Gross value | 0 | 0 |
| Trade goods | Amounts written off | 0 | 0 |
| Trade goods | 0 | 0 | |
| Downpayments | Gross value | 235 | 68 |
| Downpayments | Amounts written off | 0 | 0 |
| Downpayments | 235 | 68 | |
| Contracts in progress | Gross value | 0 | 0 |
| Contracts in progress | Amounts written off | 0 | 0 |
| Contracts in progress | 0 | 0 | |
| Total inventories | 43,996 | 47,742 |
Despite a strong revenue growth, we saw a decrease in consolidated stocks of 3.7 million euros. However, this is attributable to the sale of the stock of the Steel Heddle activities of GTP Greenville, which was included in the inventory as at 31 December 2010 for an amount of 3.8 million euros. On a comparable basis, the stock remained relatively stable.
Similarly on a comparable basis, we saw a decrease in raw materials and supplies (-1.1 million euros) and goods in progress (-0.8 million euros). The decrease was mainly visible in Picanol, where the production rate slowed in the last months of 2011. At PST, stock also decreased significantly due to a targeted reduction of working capital.
The increase in finished goods is mainly related to an increase in the weaving machines ready for dispatch at PST and Picanol. Customer contracts have been signed for these weaving machines and these will be delivered early 2012.
The total increase of the depreciated stocks included in the profit and loss account for 2011, after adjustment for the sale of the Steel Heddle activity of GTP Greenville, is 0.6 million euros.
At 31 December 2011, no inventory was pledged for any obligations. Other than in the usual course of business, the Picanol Group has no contractual commitments with regard to inventory at the end of 2011.
Trade and other receivables can be broken down into the following categories:
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Trade receivables | 46,703 | 56,473 |
| Other receivables | ||
| Recoverable VAT | 3,031 | 3,265 |
| Prepaid taxes | 3,672 | 423 |
| Deferred expenses and accrued income* | 808 | 449 |
| Miscellaneous receivables | 17,043 | 17,525 |
The decrease in trade receivables is mainly due to lower volume in the last months of 2011 compared to end 2010.
The categories of trade receivables and marked-to-market derivatives are considered as financial instruments, the other headings not.
Trade receivables at the balance sheet date consist of the amounts receivable from the sale of goods and the supply of services to the value of 52.9 million euros (2010: 56.5 million euros). An allowance has been created for irrecoverable amounts from the sale of goods to the value of 6.1 million euros (2010: 5.8 million euros). This allowance has been determined based on historical data concerning non-payments, applying group valuation rules and individual assessment. Movements in the provision for doubtful debtors are included in the income statement under 'selling and marketing expenses'.
Movements in the provision for doubtful debtors during the reporting period can be summarized as follows:
| PICANOL GROUP (in '000 euros) | 2011 | 2010 |
|---|---|---|
| At the end of the previous reporting period |
5,782 | 6,719 |
| Write-downs recorded | 1,358 | 464 |
| Utilizations or reversals of write-downs Translation differences |
-971 -22 |
-1,435 33 |
| At the end of the reporting period | 6,147 | 5,782 |
The outstanding short-term trade receivables at 31 December 2011 for impairment are interestbearing for a total of 4.1 million euros, which represents 9% of the total outstanding gross shortterm trade receivables.
7.3 million euros of the trade receivables at 31 December 2010 before write-offs were interest bearing which represents 12% of the total outstanding gross short term trade receivables at this date.
The ageing analysis of the carrying amount of trade receivables can be summarized as follows:
| PICANOL GROUP (in '000 euros) |
Net book value |
Not yet due | Overdue < 1 year |
Overdue > 1 year |
|---|---|---|---|---|
| 2011 Short-term trade receivables |
46,703 | 30,340 | 16,303 | 61 |
| 2010 Short-term trade receivables |
56,473 | 47,373 | 8,701 | 399 |
The other receivables are interest-bearing for an amount of 15.9 million euros and consist solely of receivables which did not pass their due dates, at end-December 2011 and at end-December 2010.
The deferred expenses and accrued income consist mainly of prepaid expenses.
General information on the credit risk can be found under III.8.9.
Picanol NV's credit policy is continuously monitored. A credit assessment is carried out on any counterparty requesting major credit amounts. The credit risk is also covered by credit insurance policies concluded with credit insurance companies and by the systematic use, where possible, of trade financing instruments. The other group companies also apply credit policies, but according to their own needs, as their trade receivables are of minor importance.
Since the large majority of trade receivables are covered by a credit insurance, the credit risk is only limited to outstanding trade receivables not covered by such insurance.
The gross, short and long-term trade receivables of Picanol NV represent 65% (68% in 2010) of the consolidated gross trade receivables, or 34.7 million euros. Of these, 3.0 million euros (5.2 million euros in 2010) or 8 % of the gross trade receivables are not covered through credit insurance. The gross trade receivables of P(SIP)T represent 4% (4% in 2010) of consolidated trade receivables, which are not exposed to any risk, given the general rule of delivery against payment. A provision of 6.1 million euros has been provided against the total uninsured consolidated open risk (2010: 5.8 million euros). The uncovered long-term credit risk is discussed in III.7.7.
As at 31 December 2011 off-balance sheet receivables amounting to 2.9 million euros were included, since they had been transferred to Delcredere. Picanol retains only a risk of 5% until the customer pays the first installment of the outstanding receivable.
The credit risk on cash is limited, being linked to traditional bank deposits placed with banks.
Cash and cash equivalents comprise cash held by the group and short-term bank deposits with an original maturity of up to 3 months. The carrying amount of these assets is approximately equivalent to their fair value:
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2010 |
|---|---|---|
| Cash in bank and in hand | 110,623 | 27,763 |
| Total cash and cash equivalents | 110,623 | 27,763 |
| PICANOL GROUP (in '000 euros) | 31/12/2011 | 31/12/2010 |
|---|---|---|
| Issued shares | ||
| 17,700,000 ordinary shares without nominal value | 21,720 | 21,720 |
| Fully paid-up shares | ||
| 17,700,000 ordinary shares without nominal value | 21,720 | 21,720 |
| PICANOL GROUP (in '000 euros) | |
|---|---|
| Balance at 31 December 2010 | 1,518 |
| Premium on the issue of shareholders' equity in 2011 | 0 |
| Expenses on the issue of shareholders' equity in 2011 | 0 |
| Balance at 31 December 2011 | 1,518 |
Various entities within the Picanol Group operate defined benefit plans and/or defined contribution plans.
Defined benefit plans which typically provide retirement benefits related to remuneration and service are included only in the Belgian entities. These plans are insured.
Amounts contributed by the Picanol Group to the defined contribution plans:
| PICANOL GROUP (in '000 |
||
|---|---|---|
| euros) | 2011 | 2010 |
| Paid contributions | 777 | 681 |
In 2011 and 2010, premium payments consist only of recurrent amounts.
Reconciliation between the recorded provision for employee benefits and net liability for defined benefit plans:
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Balance sheet Provisions – employee benefits – long-term Provisions – employee benefits – short-term |
9,138 1,276 |
10,076 1,276 |
| Provisions recorded in subsidiaries, but not included in the notes given their immateriality |
226 | 312 |
| Net liability for defined benefit plans | 10,188 | 11,040 |
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Present value of funded obligations | 1,533 | 2,137 |
| Fair value of plan assets | 1,448 | 2,060 |
| Deficit for funded plans | 85 | 77 |
| Defined benefit obligations – unfunded plans Unrecognized actuarial profits and losses |
10,103 | 10,963 |
| Net liability at balance sheet date | 10,188 | 11,040 |
| Recorded in the balance sheet | ||
| Net liability at balance sheet date | 10,188 | 11,040 |
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Current service costs | 113 | 158 |
| Interest costs | 578 | 752 |
| Expected return on plan assets | -66 | -139 |
| Amortization of the actuarial losses (profits) Past service costs |
301 | 420 |
| Integration of subsidiaries' defined benefit plans Curtailment (gain)/loss recognized Settlement (gain)/loss recognized Total pension cost recognized in the income |
||
| statement | 926 | 1,191 |
| Actual return on plan assets in the current period | 66 | 139 |
| Changes in the benefit obligations: | ||
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
| Benefit obligations at the beginning of the financial | ||
| year | 13,100 | 17,599 |
| Current service costs | 113 | 158 |
| Interest costs | 578 | 752 |
| Contribution of the participants | 0 | 0 |
| Past service costs | 0 | 0 |
| Reclassification from restructuring costs | 0 | 0 |
| Actuarial (losses)/profits | 302 | -1,059 |
| Paid benefit obligations | -2,432 | -4,322 |
| Paid premiums | -24 | -28 |
| Plan curtailments | 0 | 0 |
| Plan settlements | 0 | 0 |
| Benefit obligations at the end of the financial year | 11,637 | 13,100 |
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Fair value of plan assets at the beginning of the year | 2,060 | 4,675 |
| Expected return on plan assets | 66 | 139 |
| Actuarial (profits)/losses on plan assets | 0 | 0 |
| Employer contributions | 1,778 | 1,597 |
| Member contributions | 0 | 0 |
| Paid benefit obligations | -2,432 | -4,322 |
| Paid premiums | -24 | -29 |
| Plan settlements | 0 | 0 |
| Fair value of plan assets at the end of the year | 1,448 | 2,060 |
The underlying assets consist of assets with fixed interest rates.
| 2011 | 2010 | |
|---|---|---|
| Discount rate | 4.00% | 4.00% |
| Expected return on plan assets | 4.00% | 4.00% |
| Estimated rate of salary increases | 2.00% | 2.00% |
The expected return on plan assets is based on the interest rate guaranteed by the insurer and the expected profit sharing on insurance contracts.
| PICANOL GROUP (in '000 euros) |
2011 | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| Defined – benefit obligations – funded plans |
1,533 | 2,137 | 5,084 | 5,253 |
| Fair value of plan assets | 1,448 | 2,060 | 4,675 | 4,792 |
| Deficit for funded plans | 85 | 77 | 409 | 461 |
| PICANOL GROUP (in '000 euros) |
Product warranties |
Environ risks |
mental Restructuring costs |
Litigation | Other risks | Total |
|---|---|---|---|---|---|---|
| At the start of the reporting period |
4,396 | 1,738 | 309 | 20 | 1,031 | 7,495 |
| More than 1 year | 16 | 1,738 | 0 | 0 | 0 | 1,754 |
| Up to 1 year | 4,381 | 0 | 309 | 20 | 1,031 | 5,741 |
| Total | 4,396 | 1,738 | 309 | 20 | 1,031 | 7,495 |
| Movements during the reporting period | ||||||
| Increases | 1,546 | 0 | 0 | 0 | 786 | 2,332 |
| Utilizations | -3 | 0 | -309 | -20 | -219 | -551 |
| Reversals | -430 | 0 | 0 | 0 | -160 | -590 |
| Transfers | 0 | 0 | 0 | 0 | 0 | 0 |
| Exchange rate differences | 21 | 0 | 0 | 0 | 0 | 21 |
| At the end of the reporting period | 5,530 | 1,738 | 0 | 0 | 1,438 | 8,707 |
| More than 1 year | 43 | 1,738 | 0 | 0 | 9 | 1,790 |
| Up to 1 year | 5,487 | 0 | 0 | 0 | 1,430 | 6,917 |
| Total | 5,530 | 1,738 | 0 | 0 | 1,438 | 8,707 |
The provisions for product warranties primarily relate to warranties associated with the sale of weaving machines. The provisions are calculated on the basis of historical costs of product warranties related to the supply of goods and services. They are recalculated annually on the basis of actual costs incurred in the previous financial year.
The provision for environmental risks only covers pollution risks associated with land located in Belgium.
The provision for restructuring costs at the end of 2010 includes provisions for redundancy payments and early retirement pensions for the restructuring operations carried out for Picanol NV, Proferro NV, PsiControl NV and Verbrugge NV. These provisions were fully spent in 2011.
The other risks and charges include provisions for onerous contracts and other obligations regarding taxes and the environment under the sales agreement of GTP Greenville. Since the discussions regarding the aforementioned other obligations are ongoing, no further explanations will be provided.
| PICANOL GROUP (in '000 euros) |
Product warranties |
Environ- mental risks |
Restructuring Costs |
Litigation | Other risks | Total |
|---|---|---|---|---|---|---|
| At the start of the reporting period |
2,520 | 1,738 | 4,857 | 20 | 29 | 9,165 |
| Movements during the reporting period | ||||||
| Increases | 1,973 | 0 | 0 | 0 | 1,023 | 2,996 |
| Utilizations | 0 | 0 | -4,236 | 0 | 0 | -4,236 |
| Reversals | -130 | 0 | -312 | 0 | -20 | -462 |
| Transfers | 0 | 0 | 0 | 0 | 0 | 0 |
| Exchange rate differences | 33 | 0 | 0 | 0 | 0 | 33 |
| At the end of the reporting period | 4,396 | 1,738 | 309 | 20 | 1,031 | 7,495 |
| More than 1 year | 16 | 1,738 | 0 | 0 | 0 | 1,754 |
| Up to 1 year | 4,381 | 0 | 309 | 20 | 1,031 | 5,741 |
| Total | 4,396 | 1,738 | 309 | 20 | 1,031 | 7,495 |
| PICANOL GROUP (in '000 euros) |
Due within 1 year |
Due between 1 and 5 years |
Due after more than 5 years |
Total long-term |
|---|---|---|---|---|
| Financial leases Credit institutions Export finance |
1,667 0 839 |
5,696 1 535 |
0 0 0 |
5,696 1 535 |
| Total interest-bearing debt > 1 year |
2,505 | 6,232 | 0 | 6,233 |
| Credit institutions | 0 | |||
| Total interest-bearing debt < 1 year |
0 | |||
| Total short-term interest-bearing debt |
2,505 |
| PICANOL GROUP (in '000 euros) |
Due within 1 year |
Due between 1 and 5 years |
Due after more than 5 years |
Total long-term |
|---|---|---|---|---|
| Financial leases Credit institutions Export finance |
1,790 0 2,083 |
7,363 6 1,151 |
0 0 0 |
7,363 6 1,151 |
| Total interest-bearing debt > 1 year |
3,872 | 8,520 | 0 | 8,520 |
| Credit institutions | 200 | |||
| Total < 1 year interest-bearing debt |
200 | |||
| Total short-term interest-bearing debt |
4,073 |
The table of due dates together with the list of due dates for future interest charges represent the total future cash flows for the existing financial obligations.
The group's interest-bearing loans amount to 8.7 million euros, compared with 12.6 million at the end of 2010. Since the export financing is a mirror image of the financed trade amounts receivable, and the agreed interest rates are the same, the net market value of this item is zero.
The fall in interest bearing loans compared with 2010 is due to the further reduction of leasing debt and export financing.
Long-term export financing is entered into at fixed rates. The outstanding balance is denominated 26% (58% in 2010) in EUR and for 74 % in Yen (42% in 2010). The average remaining term at 31 December 2011 was 18 months (20 months in 2010) for the borrowings in EUR, and 30 months for the borrowings in Yen.
Total future interest charges were payable as follows from 01/01/2012 onwards:
| Due within 1 year |
Due between 1 and 5 years |
Due after more than 5 years |
||
|---|---|---|---|---|
| Financial leases | 365 | 553 | 0 | 918 |
| Credit institutions Export finance |
80 | 13 | 0 93 |
|
| TOTAL | 445 | 566 | 0 | 1,011 |
Total future interest charges are payable as follows from 01/01/2011 onwards:
| Due within 1 year |
Due between 1 and 5 years |
Due after more than 5 Years |
||
|---|---|---|---|---|
| Financial leases | 463 | 918 | 0 | 1,381 |
| Credit institutions Export finance |
330 | 35 | 0 365 |
|
| TOTAL | 793 | 953 | 0 | 1,746 |
The majority of the group's financial obligations are entered into and managed centrally by Picanol NV.
Financial debts do not include borrowings subject to debt covenants.
| Present value |
Present value |
|||
|---|---|---|---|---|
| Minimum lease |
of minimum lease |
Minimum lease |
minimum lease |
|
| payments | payments | payments | payments | |
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2011 | 31/12/2010 | 31/12/2010 |
| Lease payments due within the year | 2,031 | 1,667 | 2,253 | 1,790 |
| Between 1 and 5 years After 5 years |
6,249 0 |
5,696 0 |
8,281 0 |
7,363 0 |
| Total lease payments | 8,281 | 7,363 | 10,534 | 9,153 |
| Future interest charges | -918 | 0 | -1,381 | 0 |
| Present value of the lease obligations | 7,363 | 7,363 | 9,153 | 9,153 |
| Less payments due within the year Payments due after 1 year |
-1,667 5,696 |
-1,790 7,363 |
||
The consolidated financial leases primarily relate to the plant and equipment of Proferro NV and Verbrugge NV. The total interest charges vary between 4.7% and 5.9% per annum. The fair value of the underlying assets amounted to 10.6 million euros at the end of 2011 compared with 12.8 million euros at 31 December 2010.
The various categories of financial assets and obligations that apply to the company are limited to loans and accounts receivable, financial obligations valued at the amortized cost price and financial assets/liabilities entered at their real value in the income statement. As regards the financial assets/liabilities valued at their real value in the income statement, their inclusion is shown separately under the section 'trade and other accounts receivable,' with further explanations under the section 'financial derivatives.' The other categories are discussed in the respective explanations for each section.
The Picanol Group does not apply hedge accounting to derivative financial instruments.
The Picanol Group manages a portfolio of derivatives in order to cover risks relating to exchange rate fluctuations resulting from operating and financial activities. Currency risks are hedged in so far as they influence the group's cash flows. Risks resulting from the conversion of assets and liabilities of the foreign activities into the presentation currency of the Picanol Group are not hedged.
It is the company policy not to engage in speculative or leveraged transactions or to hold or issue derivatives for trading purposes.
Picanol NV has foreign currency hedges in the form of forward contracts. These primarily concern forward sales contracts related to expected cash inflows, whereby the USD is sold forward. The change in market value is recognized in the income statement. The marked-to-market value of these forward contracts for which no underlying assets or liabilities exist is justified by orders placed but not yet invoiced.
The valuation method is based on the valuation models as defined by the banks with which the forward contracts are placed.
The marked-to-market value of the derivative financial instruments is presented on the liabilities side of the balance sheet 'other current liabilities.
| PICANOL GROUP (in '000 euros) |
Notional amount (*) |
Marked-to market |
|---|---|---|
| Forward sales contracts < 6 months | 2,150 | -89 |
| Forward sales contracts > 6 months | 0 | 0 |
| Sub-total forward sales contracts | 2,150 | -89 |
| Interest Rate Swaps (IRS) | 0 | 0 |
| Sub-total Interest Rate Swaps (IRS) | 0 | 0 |
| TOTAL | 2,150 | -89 |
Overview of forward exchange contracts at 31 December 2010:
| PICANOL GROUP (in '000 euros) |
Notional amount (*) |
Marked-to market |
|---|---|---|
| Forward sales contracts < 6 months | 2,104 | -35 |
| Forward sales contracts > 6 months | 0 | 0 |
| Sub-total forward sales contracts | 2,104 | -35 |
| Interest Rate Swaps (IRS) | 0 | 0 |
| Sub-total Interest Rate Swaps | 0 | 0 |
| TOTAL | 2,104 | -35 |
The adjustment to the marked-to-market value of the financial instruments is recognized in the income statement under 'other financial income and expenses'.
Trade and other payables can be broken down into the following categories:
| PICANOL GROUP (in '000 euros) |
2011 | 2010 |
|---|---|---|
| Trade payables | 49,676 | 49,386 |
| Other payables | ||
| Income taxes payable | 2,290 | 2,778 |
| Downpayments received | 18,319 | 18,246 |
| Remuneration & social security | 14,697 | 14,166 |
| Accrued expenses and deferred income | 3,690 | 3,268 |
| Marked-to-market derivatives | 89 | 35 |
| Other liabilities | 197 | 198 |
'Trade payables' and 'other liabilities' in the above table are regarded as financial instruments.
The remaining liabilities are regarded as non-financial liabilities. The maturity schedule of the short term trade payables can be summarized as follows:
| PICANOL GROUP (in '000 euros) |
Net book Value |
Due within 2 months |
Due within 2 and 4 months |
Due within 4 and 6 months |
Due within 6 and 12 months |
|---|---|---|---|---|---|
| 2011 Short-term trade payables |
49,676 | 48,903 | 284 | 131 | 359 |
| 2010 Short-term trade payables |
49,386 | 48,581 | 436 | 18 | 350 |
Both the short-term trade and other payables are non-interest bearing liabilities both at 31 December 2011 as at end 2010.
| PICANOL GROUP (in '000 euros) |
31/12/2011 | 31/12/2010 |
|---|---|---|
| Payments due within the year Between 1 and 5 years After 5 years |
1,251 983 |
1,759 1,049 |
| Minimum future lease payments | 2,234 | 2,808 |
Operating lease payments represent rentals payable by the group for certain production, logistics and/or administration equipment.
An amount of 2.1 million euros was recognized as a rental cost in the income statement in 2011, compared with 2.4 million euros in 2010.
There are no important events after balance sheet date.
| COUNTERPARTY | BALANCE SHEET POSITION |
INCOME STATEMENT |
COSTS |
|---|---|---|---|
| Affiliated parties to the STAK |
7,693 | 232,373 | -571,015 |
| Non-affiliated parties to the STAK |
-269,860 |
The amounts mentioned above include the remunerations chargeable to the Picanol Group for services and various commercial transactions at market conditions in the course of 2011. The amounts above include amongst other remunerations that are also covered in the corporate governance sections. For the remunerations of the Board of Directors, see page 16.
| In EUR | |
|---|---|
| Name | Luc Tack |
| Basic remuneration | - |
| Variable remuneration | - |
| Total | - |
| Pension | - |
| Other benefits | - |
The Managing Director does not receive long-term cash incentive plans.
| 840,110 |
|---|
| 320,000 |
| 1,160,110 |
| Fixed contribution: 58,450 |
| 7,855 |
* remuneration company car
The level and structure of the remuneration of other members of the Management Committee seek to enable the company to attract and motivate qualified managers. The remuneration is regularly checked to ensure that it corresponds with market trends.
The other members of the Executive Management do not receive long term cash incentive plans.
The members of the Management Committee do not receive directors' fees for the companies where they fulfill a director's position.
At the General Meeting of Shareholders of 20 April 2011, the shareholders approved the Board of Directors proposal to deviate from the provisions of the Corporate Governance in relation to provisions on the distribution of bonuses in time. The bonuses of the other members of the executive management were therefore paid out in one sum.
| in euros | Average exchange rates | Closing exchange rates | |||
|---|---|---|---|---|---|
| ISO | 2011 | 2010 | 2011 | 2010 | |
| Brazilian Real Chinese Yuan (Renminbi) Indonesian Rupee (1000) Indian Rupee Mexican Peso Romanian Leu Turkish Lira |
BRL CNY IDR INR MXN RON TRY |
0.4261 0.1114 0.0815 0.0152 0.0573 0.2359 0.4269 |
0.4311 0.1121 0.0834 0.0166 0.0599 0.2374 0.5002 |
0.4139 0.1226 0.0852 0.0146 0.0554 0.2313 0.4093 |
0.4509 0.1134 0.0833 0.0167 0.0604 0.2346 0.4832 |
| US Dollar | USD | 0.7195 | 0.7573 | 0.7729 | 0.7484 |
| 31/12/2011 | 31/12/2010 | |||||
|---|---|---|---|---|---|---|
| In units | Fully consolidated |
Proportionally consolidated |
Total | Fully consolidated |
Proportionally consolidated |
Total |
| Management | 6 | 0 | 6 | 6 | 0 | 6 |
| White collars | 561 | 0 | 561 | 599 | 0 | 599 |
| Blue collars | 1,348 | 0 | 1,348 | 1,477 | 0 | 1,477 |
| Average number of personnel employed |
2,036 | 0 | 2,036 | 2,008 | 0 | 2,008 |
| Average number of personnel employed in Belgium |
1,356 | 0 | 1,356 | 1,288 | 0 | 1,288 |
| Remuneration and social charges (in '000 euros) |
87,436 | 87,436 | 83,515 | 83,515 |
The auditor received an amount of 140,000 euros for performance of his audit task in 2011.
In the course of 2011 the auditor and the auditor related parties charged 11,000 euros for tax and legal advice.
The Picanol Group has no material contingent assets and liabilities at 31 December 2011.
The Picanol Group is exposed to risks deriving from movements in exchange rates, interest rates and market prices that affect its assets and liabilities. These are the main market risks to which the group is exposed. Picanol Group's financial risk management seeks to limit the effects of these market risks from its operating and financial activities. The group is also confronted with interest and liquidity risks, for which it applies the necessary means to control.
The Picanol Group incurs currency risks mainly on sales and purchase and, to a lesser degree, on financial debt that is expressed in a currency other than the subsidiary's functional currency.
The Picanol Group manages a portfolio of derivatives which match the currency risks deriving from business and financial activities. These are discussed in III.7.17.
The currencies in which the main Picanol Group subsidiaries operate are the US dollar and the Chinese renminbi. Based on the volatility of these currencies against the euro in 2011, we give below the sensitivity of a 5% positive/negative fluctuation of the US dollar and Chinese renminbi exchange rates:
| Company | Balance sheet position |
Amount in local currency |
Currency | Effect +5% |
Effect - 5% |
|---|---|---|---|---|---|
| GTP Greenville (USD) P(Sip)T (RMB) |
Trade payables Trade receivables |
950 863 |
EUR EUR |
47.5 -43.2 |
-47.5 43.2 |
| Trade payables | 1,269 | EUR | 63.4 | -63.4 | |
|---|---|---|---|---|---|
| GTP Mexico (MPE) | Other payables | 225 | EUR | 11.3 | -11.3 |
| GTP Istanbul (YTL) | Trade receivables | 167 | EUR | -8.4 | 8.4 |
| Trade payables | 188 | EUR | 9.4 | -9.4 | |
| 80.0 | -80.0 |
Changes in the euro exchange rate during 2011 within the above-mentioned volatilities would have given a 80 thousand euros higher/lower consolidated profit.
By the end of 2011 interest-bearing debt consisted solely of interest bearing loans finance leases (fixed rate) and export financing.
Given the fixed interest rates on the long-term receivables, and due to the fact that the export financing is simultaneously concluded with the correspondent accounts receivable, the interest rate sensitivity is nil. The volume of interest-bearing trade receivables outstanding at 31 December 2011 against which export financing has been concluded at the same fixed interest rate amounts to 1.4 million euros (2010: 3.2 million euros).
The group's most important current financial assets are its cash and cash equivalents and its trade and other receivables. These represent the group's maximum exposure to the credit risk of financial assets.
The group's credit risk lies primarily in its trade receivables. The amounts shown in the balance sheet are presented including the provisions for doubtful debtors. These are estimated by group management based upon historical data and estimates of the current economic environment. The maximum exposure to credit risk is equal to the book value of all financial assets. For a detailed discussion of this risk the reader is referred to III.7.9.
In order to guarantee its liquidity and financial flexibility at all times, the Picanol Group has various unutilized credit lines in euros in amounts that are considered adequate to current and future financial needs. The Picanol Group has total credit lines excluding bank guarantees available to it of 67.1 million euros (2010: 121.1 million euros) of which export financing is representing 31.0 million euros and 36.1 million euros straight loans. At balance sheet date the credit lines were used for an amount of 1.4 million euros excluding bank guarantees.
The credit line for bank guarantees amounts to 14.0 million euros (2010: 14.0 million euros), with 3.7 million euros of bank guarantees outstanding at 31 December 2011. The Picanol Group uses these bank guarantees primarily for commercial purposes (tender process delivery guarantee).
The capital management of the Picanol Group aims essentially at:
The capital of the group is formed in accordance with the outstanding risk, which changes according to economic developments and the risk profile of the underlying assets. The Picanol Group can change the dividend to shareholders, issue new shares or sell assets in order to maintain or change the capital structure.
| PICANOL NV (in '000 euros) |
2011 | 2010 |
|---|---|---|
| FIXED ASSETS | 60,136 | 62,446 |
| Intangible assets | 646 | 847 |
| Tangible fixed assets | 7,576 | 7,749 |
| Financial fixed assets | 51,913 | 53,850 |
| CURRENT ASSETS | 143,289 | 79,490 |
| TOTAL ASSETS | 203,425 | 141,936 |
| SHAREHOLDERS' EQUITY | 123,091 | 59,601 |
| Share capital | 22,200 | 22,200 |
| Share premium account | 1,518 | 1,519 |
| Reserves | 45,136 | 43,656 |
| Profit/(loss) carried forward | 54,236 | -7,774 |
| Investment grants | 0 | 0 |
| PROVISIONS AND DEFERRED TAXES | 15,807 | 12,698 |
| LIABILITIES | 64,527 | 69,637 |
| Amounts payable after one year | 535 | 1,151 |
| Amounts payable within one year plus accrued expenses and deferred income |
63,992 | 68,486 |
| TOTAL LIABILITIES | 203,425 | 141,936 |
| SALES | 348,869 | 264,085 |
| OPERATING RESULT | 44,072 | 21,023 |
| FINANCIAL RESULTS | 10,089 | 2,057 |
| EXTRAORDINARY RESULTS | 16,161 | 50 |
| TAXES | -6,832 | -3 |
| PROFIT FOR THE FINANCIAL YEAR | 63,490 | 23,127 |
The balance sheet total of Picanol NV increased by 61.5 million euros, from 141.9 million euros at the end of 2010 to 203.4 million euros at 31 December 2011. This increase was mainly due to a considerable increase of cash resulting from the strong increase in operating profit and the sale of the Steel Heddle activities of GTP Greenville.
The turnover of Picanol NV increased by 32% in 2011 compared with 2010, from 264.1 million euros to 348.9 million euros. This evolution in turnover is mainly caused by an increase in the volume of machines sold. The gross margin (operating revenue less the purchases of raw materials and auxiliaries, services and various goods) increased from 61.7 million euros in 2010 to 86.8 million euros in 2011. The gross margin, as a percentage of turnover increased from 23.4% in 2010 to 24.9% in 2011. The operating result rose from 23.0 million euros to 44.1 million euros at the end of 2011.
The net financial result increased by 8.0 million euros, mainly due to dividends paid out by both Chinese companies.
Net extraordinary items increased by 16.1 million euros, mainly through the sale of the Steel Heddle activities of GTP Greenville.
The net book value of participations in associated companies and the receivables on the relevant companies were valued and ratified by the Board of Directors.
As a world player, the Picanol Group is faced with the geo-political situations that its customers are coping with. In addition, the financial competitiveness is highly dependent on structural exchange rate fluctuations. Permanent technological development is also vital to safeguard Picanol's position as world player in the sector.
See paragraph III.2 on the valuation of the risks of going concern and asset valuation.
Picanol NV practices foreign currency hedges through forward contracts. These forward contracts have a total nominal value of 2.2 million euros and a positive marked-to-market of -0.1 million euros at 31 December 2011. This marked-to-market is recognized in the income statement of the company at 31 December 2011 to the extent that it relates to balance sheet positions existing at 31 December 2011. Forward contracts for which no underlying balance sheet position existed at 31 December 2011 are treated as cash flow hedges. These positions are justified by orders received but not yet invoiced. For the financial year 2011, all outstanding forward contracts are cash flow hedges. Under no circumstances derivative instruments are used for speculative purposes. The company otherwise uses no other form of financial instruments whatsoever.
The company has no branch offices.
See chapter 'Corporate Governance' in this annual report.
The statutory auditor has issued an unqualified opinion on the statutory financial statements of Picanol NV.
As required by law and the company's articles of association, we are pleased to report to you on the audit assignment which you have entrusted to us. This report includes our opinion on the consolidated financial statements together with the required additional comment.
We have audited the accompanying consolidated financial statements of Picanol 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. Those consolidated financial statements comprise the consolidated balance sheet as at 31 December 2011, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, as well as the summary of significant accounting policies and other explanatory notes. The consolidated balance sheet shows total assets of 288,263 (000) EUR and the consolidated income statement shows a consolidated profit (group share) for the year then ended of 61,013 (000) EUR.
The board of directors of the company is responsible for the preparation of the consolidated financial statements. This responsibility includes among other things: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with legal requirements and auditing standards applicable in Belgium, as issued by the "Institut des Réviseurs d'Entreprises/Instituut van de Bedrijfsrevisoren". Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.
In accordance with these standards, we have performed procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our 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, we have considered 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. We have assessed the basis of the accounting policies used, the reasonableness of accounting estimates made by the company and the presentation of the consolidated financial statements, taken as a whole. Finally, the board of directors and responsible officers of the company have replied to all our requests for explanations and information. We believe that the audit evidence we have obtained, together with the reports of other auditors on which we have relied, provides a reasonable basis for our opinion.
In our opinion the consolidated financial statements give a true and fair view of the group's financial position as of 31 December 2011, and of its results and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the EU and with the legal and regulatory requirements applicable in Belgium.
The preparation and the assessment of the information that should be included in the directors' report on the consolidated financial statements are the responsibility of the board of directors. Our responsibility is to include in our report the following additional comment which does not
change the scope of our audit opinion on the consolidated financial statements: • The directors' report on the consolidated financial statements includes the information required by law and is in agreement with the consolidated financial statements. However, we are unable to express an opinion on the description of the principal risks and uncertainties confronting the group, or on the status, future evolution, or significant influence of certain factors on its future development. We can, nevertheless, confirm that the information given is not in obvious contradiction with any information obtained in the context of our appointment.
Kortrijk, 27 February 2012 The statutory auditor DELOITTE Bedrijfsrevisoren / Reviseurs d'Entreprises BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by Kurt Dehoorne Mario Dekeyser
| NYSE Euronext, Brussels code: | BE0003807246 |
|---|---|
| Mnemo: | PIC |
ICB Sector classification:
Industry: 2000, Industrials Sector (raw): 2700, Industrial Goods & Services Sector: 2750, Industrial Engineering Subsector: 2757, Industrial Machinery
The Picanol Group has been listed on the Brussels stock exchange since 1966. After the merger of the Amsterdam, Brussels and Paris stock exchanges in September 2000, it has been listed on Euronext Brussels under the abbreviation PIC. NYSE Euronext Brussels has included the Picanol Group in the continuous market, compartment B. Since 20 June 2011, the Picanol Group has been part of the BEL Small Index.
On 31 December 2011, the share capital was represented by 17,700,000 Picanol shares. During the course of 2011 no changes occurred in Picanol's share capital.
As regards the present capital structure there were no outstanding share options, warrants or convertible bonds as at 31 December 2011.
The stock exchange capitalization on 31 December 2011 amounted to 178.770 million euros.
The shareholder structure is shown on page 24.
| Annual General Meeting |
18/04/2012 |
|---|---|
| Trading update Q1 | 18/04/2012 (after stock exchange close) |
| Announcement of half-yearly results | 28/08/2012 (before opening of the stock exchange) |
| Trading update Q3 | 30/10/2012 (before opening of the stock exchange) |
| Announcement of annual results 2012 | 27/02/2013 (before opening of the stock exchange) |
| Annual General Meeting | 17/04/2013 |
Announcement of half-yearly results 28/08/2012 (before opening of the stock exchange) Trading update Q3 30/10/2012 (before opening of the stock exchange) Announcement of annual results 2012 27/02/2013 (before opening of the stock exchange)
The dividend policy of the Picanol Group is based on an annual judgment concerning the return for shareholders, maintaining a free cashflow and opportunities for financing further growth.
In accordance with the Act of 16 June 2006 here follows a summary of the 'annual information' as laid down in art. 66 of this Act. This 'annual information' is a summary of all the information published by the Picanol Group in the period from 1 January 2011 to 31 December 2011. The full document mentioned in the summary can be found at www.picanolgroup.com under the heading Investor Relations. The Picanol Group points out that some of the information contained in certain documents mentioned therein may now be out of date.
On 20 April 2011, the General Meeting took place. As part of this, the following information was published:
Annual reports – the annual reports of the Picanol Group are published on http://www.picanolgroup.com/PICGROUPSITE/EN/INVESTORS/DOWNLOADS/
Statutory annual account – the statutory annual account of the Picanol Group is published on http://www.picanolgroup.com/PICGROUPSITE/EN/INVESTORS/STATUTORY+ANNUAL+ACCOUNTS/
Financial calendar – the financial calendar of the Picanol Group is regularly updated (http://www.picanolgroup.com/PICGROUPSITE/EN/INVESTORS/FINANCIAL+CALENDAR/)
Articles of association – After each change in the articles of association, a new version is published on the website (http://www.picanolgroup.com/PICGROUPSITE/EN/INVESTORS/ONTWERPEN/)
Shareholder structure – the shareholder structure of the company is published on http://www.picanolgroup.com/PICGROUPSITE/EN/INVESTORS/SHAREHOLDERS+STRUCTURE/
| CNC | Computer Numerical Control. This refers to the computer |
|---|---|
| controlled system of the machine tool | |
| Features | Machine characteristics (standard or as option) |
| Heddle | Each warp runs through a heddle. The heddles are mounted in groups on the weaving frame |
| IAS | International Accounting Standards |
| IFRS | International Financial Reporting Standards |
| Frame | see weaving frame |
| Dropwire | Steel strip which is suspended from the warp thread. |
| When a warp thread breaks, the dropwire drops due to | |
| its own weight activating the switch that stops the | |
| machine. | |
| Lamellar or grey cast iron | An alloy based on iron and carbon with at least 2.0% but |
| usually more than 3.0% carbon. It is the most common | |
| sort of cast iron | |
| Nodular cast iron | Grey cast iron where the graphite is in the form of spherical nodules. |
| Nodular cast iron has much better mechanical properties than lamellar | |
| cast iron, it is tougher and very resistant to cracking. | |
| OEM | Original Equipment Manufacturer, i.e. a manufacturer |
| that supplies products or components used in another |
|
| company's products | |
| R&D | Research & Development |
| Reed | Comb-like device through which the warp ends are threaded. Each |
| time a pick is inserted, the reed pushes it up against the material |
|
| already woven, a process known as 'beating up' |
|
| SMD | Surface mounted device (mounted directly on the |
| surface of printed circuit boards.) |
|
| Tire cord | Fabric used as reinforcement in vehicle tires |
| Versatility | Ability of a weaving machine to produce different types |
| of fabric | |
| WCM | World Class Manufacturing |
| Weaving machine | Machine on which a fabric is made using two groups of threads. |
| The threads running lengthwise are known as warp threads, |
|
| those running perpendicular to the warp threads are the weft |
|
| threads. | |
| Weaving frame | The weaving frame or frame moves a warp thread up and down in a weaving machine |
Picanol - headquarters Steverlyncklaan 15 8900 Ypres Tel +32 57 22 21 11 Fax +32 57 22 22 20
Proferro Steverlyncklaan 15 8900 Ypres Tel +32 57 22 21 11 Fax +32 57 22 22 00
Verbrugge Steverlyncklaan 15 8900 Ypres Tel +32 57 22 21 11 Fax +32 57 22 22 55
PsiControl Mechatronics Steverlyncklaan 15 8900 Ypres Tel +32 57 40 96 96 Fax +32 57 40 96 97
Industrieweg 2019 3520 Zonhoven Tel +32 11 53 99 40 Fax +32 11 81 39 54
GTP São Paulo Rua Treze de Maio, 164 CEP 13471-030 Americana/ SP Tel +55 19 3478-9600 Fax +55 19 3478-9608
Burcklé Rue de Bourbach-le-Haut 9 68290 Bourbach-le-Bas Tel +33 3 89 82 8989 Fax +33 3 89 82 8359
Picanol India Private Ltd Third Floor, Plot No. 23 Block - B1 Community Centre Janak Puri New Delhi 110058 Tel +91 11 45595332 Fax +91 11 45595334
GTP Bandung Jl. Moh. Toha Km 5,3 no. 56 Bandung 40261 West Java Indonesia Tel +62 22 521 1865 Fax +62 22 520 0591
GTP Mexico Avena 475, Col. Granjas México, Iztacalco, 08400, Mexico D.F. Tel +52 55 56 57 1740 Fax +52 55 56 57 0041
PsiControl Mechatronics Srl Campului Street 1 505400 Rasnov Brasov County Tel +40 268 230081 Fax +40 268 230015
Picanol Tekstil Makinalari Dunya Ticaret Merkezi A2 blok kat:5 no:210 Ataturk Havalimani Karsisi 34149 Yesilkoy/Istanbul Tel. +90 212 465 88 08 Fax +90 212 465 88 11
Picanol of America 1801 Rutherford Road, Greenville SC 29609 P.O. Box 1867 Greenville SC 29602 Tel +1 864 288 5475 Fax +1 864 987 0972
Picanol (Suzhou Industrial Park) Textile Machinery Co. Ltd. 2, Songzhuang Road, FengTing Avenue Suzhou Industrial Park Suzhou 215122 Tel +86 512 6287 0688 Fax +86 512 6287 0710
Picanol (Suzhou) Trading Co., Ltd. 2, Songzhuang Road, FengTing Avenue Suzhou Industrial Park Suzhou 215122 Tel +86 512 6287 0688 Fax +86 512 6287 0981
Picanol Guangzhou Sales Office Room 701, Office Tower China Hotel, Liuhua Road Guangzhou 510015 Guangdong Province Tel +86 20 86 266110 Fax +86 20 86 66604
General and financial information on the Picanol Group (press releases, annual reports, annual accounts, financial calendar, corporate governance charter etc.) can be found on the corporate website www.picanolgroup.com, in English and in Dutch. For more information, please contact the department Corporate Communication.
The annual report is available in Dutch and English on the website of the Picanol Group www.picanolgroup.com.
The Dutch version of this annual report is to be considered as the reference.
Responsible editor: Luc Tack Managing Director Steverlyncklaan 15 8900 Ypres Belgium
Picanol NV Steverlyncklaan 15 8900 Ypres Tel. +32 57 222 111 E-mail [email protected] www.picanolgroup.com
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