Interim / Quarterly Report • Aug 26, 2011
Interim / Quarterly Report
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| Consolidated income statement (in millions of euro) | 30 June 2010 Unaudited |
30 June 2011 Unaudited |
|---|---|---|
| Net sales | 265.3 | 268.9 |
| EBITDA | 28.6 | 24.6 |
| EBITDA-margin (%) | 10.8% | 9.2% |
| REBITDA | 29.0 | 25.1 |
| REBITDA-margin (%) | 10.9% | 9.3% |
| EBIT | 12.7 | 11.3 |
| EBIT-margin (%) | 4.8% | 4.2% |
| EBT | 3.0 | 6.5 |
| EBT-margin (%) | 1.1% | 2.4% |
| Net profit (+)/loss (-) | 3.8 | 3.1 |
| Net profit (+)/loss (-) -margin (%) | 1.4% | 1.1% |
| Earnings per share (in euro) | 0.03 | 0.03 |
| Consolidated statement of financial position (in millions of euro) | 31 December 2010 Audited |
30 June 2011 Unaudited |
|---|---|---|
| Non-current assets | 237.6 | 225.7 |
| Current assets | 233.8 | 232.5 |
| Equity | 212.0 | 207.5 |
| Long-term provisions | 21.2 | 21.1 |
| Deferred tax liabilities | 5.1 | 4.2 |
| Long-term interest-bearing loans | 93.6 | 92.2 |
| Current liabilities | 139.5 | 133.2 |
| Balance sheet total | 471.4 | 458.2 |
| Working capital | 111.1 | 142.3 |
| Capital expenditure | 15.6 | 8.3 |
| Net debt | 100.7 | 122.7 |
| Equity/Balance sheet total (%) | 45.0% | 45.3% |
| Net profit (loss)/Equity (%) | 4.0% | 1.5% |
| Gearing (%) | 47.5% | 59.1% |
| Headcount (Temporary workers and outsourced full time equivalents included) | 31 December 2010 Audited |
30 June 2011 Unaudited |
|---|---|---|
| Total Full-Time Equivalents (FTE) | 2,821 | 2,868 |
Deceuninck's consolidated sales for the first half-year 2011 were € 268.9 million, a year-on-year increase of 1.3% (1H 2010: € 265.3 million). Mix effects (country, price and product) had a favourable impact of 6.4%. Volume decreased by 2.6%; exchange rates negatively impacted sales by 2.5%.
Western Europe: Half-year sales in Western Europe were € 117.2 million, a year-on-year increase of 6.8%. The growth for the region was driven by strong sales in Benelux, France and Italy. Market conditions continued to be weak in Spain, whereas initial signs of stabilisation of demand in UK were not confirmed in the second quarter.
Central & Eastern Europe (incl. Germany): Half-year sales were stable at € 71.8 million. The increasing sales trend witnessed in the first four months of the year was not confirmed in the traditionally stronger sales months of May and June. Sluggish demand in Russia and Central Europe contrasted with continued double digit sales growth in Germany.
Turkey: Half-year sales increased by 1.7% to € 52.6 million (1H 2010: € 51.7 million). Sales were impacted by the depreciation of the Turkish lira. At constant exchange rate sales grew 10.9%. Exports from Turkey to Northern Africa were negatively impacted by the political instability in the region. Domestic demand improved further throughout the half-year.
United States: Half-year sales fell by 15.1% to € 27.3 million. At constant exchange rate sale fell by 9.4%. Comparison base with first half-year 2010 was difficult due to 2010 renovation activity supported by various housing tax credits which ran out in April 2010 and December 2010 respectively. Residential renovation activity was additionally affected by falling housing prices, relatively high unemployment and tight credit markets.
Gross margin was 29.1% (1H 2010: 31.4%). Higher raw material costs were mostly offset by sales price increases and productivity improvements.
The operating cash flow (EBITDA) amounted to € 24.6 million against € 28.6 million last year. The EBITDA was 9.2% against 10.8% in 1H 2010.
The higher raw material costs resulted in a lower gross profit generation of € 5.0 million. Operating expenses are under control at € 67.6 million (year-onyear -3.8%)
REBITDA (recurring operating cash flow) was € 25.1 million (1H 2010: € 29.0 million).
The operating result (EBIT) was € 11.3 million (1H 2010: € 12.7 million) resulting in an EBIT margin of 4.2% compared to 4.8% in 1H 2010.
Depreciations and other non cash costs were € 13.4 million against € 15.9 million in first half of 2010. Depreciations decreased by € 1.5 million due to lower capex level of the past years. Bad debt provision was lower as a result of hands on and strict credit management.
Financial result was € -4.8 million (1H 2010: € -9.7 million), driven by the favourable exchange rate impact of USD denominated loans (€ +0.7 million versus € -3.0 million in 1H 2010) and lower net interest expenses (€ -4.8 million versus € -5.6 million in 1H 2010) as a result of debt reduction.
Income tax expense was € 3.4 million compared to an income tax benefit of € 0.8 million in first half of 2010. The tax expense relates to a year-on-year € 3.5 million higher profit before taxes, a tax rate change in Belgium as a result of the phasing out of the coordination centre and the impact of a changed legal entity mix.
The net result of 1H 2011 is a profit of € 3.1 million against a profit of € 3.8 million in the first half of 2010.
Working capital increased from € 111.1 million on 31 December 2010 to € 142.3 million on 30 June 2011.
Accounts receivables increased due to the seasonality of business.
Inventories are € 10.9m higher as compared to inventory level on 30 June 2010. Inventory increase relates to higher valuation of raw materials cost and sales volume decline at the end of the second quarter.
The operating working capital on 30 June 2011 was 21.7% of the annualized sales compared to 16.6% on 31 December 2010.
Capital expenditures during the first half of 2011 were € 8.3 million (1H 2010: € 7.8 million)
€ 6.0 million spent relates to operational capex. The remainder (€ 2.3 million) relates to new extrusion tools.
The net financial debt amounted to € 122.7 million compared to € 100.7 million in December 2010 and € 142.5 million in June 2010. The seasonal character of the business results in a working capital peak in the middle of the year. In comparison with end of June 2010 net debt is 13.9% (almost € 20 million) lower as a result of the accelerated debt reduction.
Shareholders' equity decreases € 4.5 million to € 207.5 million mainly due to currency translation adjustments (TRY)
On 30 June 2011 Deceuninck employed worldwide 2,868 full time equivalents (including temporary workers and outsourced FTEs). (30 June 2010: 2,967) At the end of the second quarter measures were taken to reduce headcount in the regions affected by the sudden drop in demand.
At the start of the third quarter, sales volumes confirm the Q2 trend, on the back of weakening macro-economic indicators. The increase of raw material prices to record levels has now stabilized and the related sales price increases now gradually offset this increased cost. To protect profitability, Deceuninck continues its productivity improvement and cost saving programmes.
Within the current macro-economic environment, Deceuninck reiterates its July guidance that Deceuninck's top and bottom line for the full year 2011 will be similar to the levels of 2010.
At Deceuninck, we believe in 'building a sustainable home'. 40% of nonrenewable fossil fuels is used for heating and cooling buildings. Plastics only use 4% and PVC uses less than 1%. Plastic building products are lightweight, long lasting and provide superior insulation. PVC and Twinson wood composite are low maintenance materials, which save energy throughout a 50+ year life cycle, and will be recycled at end of life. Deceuninck continues to invest its R& D efforts into sustainable building products to reach its sustainability goals in manufacturing, PVC recycling and new product developments.
Long term, energy-efficient construction and renovation will continue to grow as an engine of the construction industry. For energy savings, PVC windows remain the 'best value for money'. Deceuninck brings this message to the market through 'Building a sustainable home'. For more details on the Deceuninck story, see www.deceuninck.com
With reference to the risks and uncertainties management refers to the following sections in the Annual Report 2010:
These risks remain valid for both the first and the second half of the financial year 2011.
| For the six month period ended 30 June (in thousands of euro) | Notes | 2010 Unaudited |
2011 Unaudited |
|---|---|---|---|
| Net sales | 2 | 265,295 | 268,866 |
| Cost of goods sold | -182,008 | -190,623 | |
| Gross profit | 83,287 | 78,243 | |
| Marketing, sales and distribution expenses | -47,007 | -45,504 | |
| Research and development expenses | -2,786 | -2,792 | |
| Administrative and general expenses | -20,526 | -19,349 | |
| Other net operating result | -252 | 677 | |
| Operating result | 12,716 | 11,275 | |
| Financial charges | -26,740 | -14,103 | |
| Financial income | 17,001 | 9,330 | |
| Profit (+) / loss (-) before taxes | 2,977 | 6,502 | |
| Income taxes | 4 | 827 | -3,414 |
| Profit (+) / loss (-) for the period | 3,804 | 3,088 |
| The result for the period is attributable to: | ||
|---|---|---|
| Shareholders of the parent company | 3,688 | 3,039 |
| Non-controlling interests | 116 | 49 |
| Earnings (+) /loss (-) per share distributable to the shareholders of the parent company (in euro): | |||
|---|---|---|---|
| Normal earnings (+) / loss (-) per share | 0.03 | 0.03 | |
| Diluted earnings (+) / loss (-) per share | 0.03 | 0.03 |
| For the six month period ended 30 June (in thousands of euro) | 2010 Unaudited |
2011 Unaudited |
|---|---|---|
| Profit (+) / loss (-) for the period | 3,804 | 3,088 |
| Other comprehensive income (+) /loss (-): | ||
| Currency translation adjustments | 8,379 | -7,799 |
| Other comprehensive income (+) /loss (-) after tax impact | 8,379 | -7,799 |
| Total comprehensive income (+) /loss (-) | 12,183 | -4,711 |
| The total comprehensive income (+) /loss (-) is attributable as follows: | ||
| Shareholders of the parent company | 11,900 | -4,576 |
| Non-controlling interests | 283 | -135 |
| (in thousands of euro) | Notes | 31 December 2010 Audited |
30 June 2011 Unaudited |
|---|---|---|---|
| Assets | |||
| Intangible fixed assets | 4,733 | 3,932 | |
| Goodwill | 10,860 | 10,817 | |
| Tangible fixed assets | 204,574 | 194,242 | |
| Financial fixed assets | 1,310 | 1,395 | |
| Deferred tax assets | 14,475 | 13,179 | |
| Long-term receivables | 1,670 | 2,106 | |
| Non-current assets | 237,622 | 225,671 | |
| Inventories | 65,171 | 90,066 | |
| Trade receivables | 107,619 | 109,390 | |
| Other receivables | 8,433 | 10,402 | |
| Cash and cash equivalents | 5 | 43,856 | 14,758 |
| Fixed assets held for sale | 8,693 | 7,943 | |
| Current assets | 233,772 | 232,559 | |
| Total assets | 471,394 | 458,230 | |
| Equity and liabilities | |||
| Issued capital | 42,495 | 42,495 | |
| Share premiums | 46,355 | 46,355 | |
| Consolidated reserves | 141,495 | 144,684 | |
| Treasury shares | -651 | -651 | |
| Currency translation adjustments | -19,134 | -26,749 | |
| Equity excluding non-controlling interest | 210,560 | 206,134 | |
| Non-controlling interest | 1,466 | 1,331 | |
| Equity including non-controlling interest | 212,026 | 207,465 | |
| Interest-bearing loans | 93,551 | 92,224 | |
| Long-term provisions | 21,247 | 21,144 | |
| Deferred tax liabilities | 5,063 | 4,159 | |
| Non-current liabilities | 119,861 | 117,527 | |
| Interest-bearing loans | 51,054 | 45,232 | |
| Trade debts | 61,656 | 57,193 | |
| Tax liabilities | 5,149 | 7,671 | |
| Employee related liabilities | 12,130 | 13,311 | |
| Other liabilities | 9,518 | 9,831 | |
| Current liabilities | 139,507 | 133,238 | |
| Total equity and liabilities | 471,394 | 458,230 |
| (in thousands of euro) | Issued capital |
Share premiums |
Con solidated reserves |
Treasury shares |
Currency trans lation adjust ments |
Total equity attributable to shareholders of the parent company |
Non control ling interest |
Total |
|---|---|---|---|---|---|---|---|---|
| As per 31 December 2009 (Audited) | 42,495 | 46,355 | 131,512 | -651 | -23,497 | 196,214 | 1,221 | 197,435 |
| Profit (+) / loss (-) for the period | 3,688 | 3,688 | 116 | 3,804 | ||||
| Other comprehensive income (+) / loss (-) |
8,212 | 8,212 | 167 | 8,379 | ||||
| Total comprehensive income (+) / loss (-) |
0 | 0 | 3,688 | 0 | 8,212 | 11,900 | 283 | 12,183 |
| Other – deferred taxes |
1,402 | 1,402 | 1,402 | |||||
| Share based payments | 110 | 110 | 110 | |||||
| As per 30 June 2010 (Unaudited) | 42,495 | 46,355 | 136,712 | -651 | -15,285 | 209,626 | 1,504 | 211,130 |
| (in thousands of euro) | Issued capital |
Share premiums |
Con solidated reserves |
Treasury shares |
Currency trans lation adjust ments |
Total equity attributable to shareholders of the parent company |
Non control ling interest |
Total |
|---|---|---|---|---|---|---|---|---|
| As per 31 December 2010 (Audited) | 42,495 | 46,355 | 141,495 | -651 | -19,134 | 210,560 | 1,466 | 212,026 |
| Profit (+) / loss (-) for the period | 3,039 | 3,039 | 49 | 3,088 | ||||
| Other comprehensive income (+) / loss (-) |
-7,615 | -7,615 | -184 | -7,799 | ||||
| Total comprehensive income (+) / loss (-) |
0 | 0 | 3,039 | 0 | -7,615 | -4,576 | -135 | -4,711 |
| Share based payments | 150 | 150 | 150 | |||||
| As per 30 June 2011 (Unaudited) | 42,495 | 46,355 | 144,684 | -651 | -26,749 | 206,134 | 1,331 | 207,465 |
| For the six month period ended 30 June (in thousands of euro) | Notes | 2010 | 2011 |
|---|---|---|---|
| Unaudited | Unaudited | ||
| Operating activities | |||
| Profit (+) / loss (-) for the period | 3,804 | 3,088 | |
| Depreciation (in)tangible fixed assets | 14,247 | 12,727 | |
| Impairments of (in)tangible fixed assets | 692 | 216 | |
| Provision for pensions, restructuring and other risks & charges | -554 | 218 | |
| Impairments on current assets | 1,484 | 189 | |
| Net financial charges | 9,739 | 4,773 | |
| Profit on sale of tangible fixed assets | -125 | -50 | |
| Loss on sale of tangible fixed assets | 52 | 170 | |
| Income taxes | 4 | -827 | 3,414 |
| Share based payment transactions settled in equity | 110 | 150 | |
| Cash flow from operating activities before movements in working capital and provisions | 28,622 | 24,895 | |
| Decrease/(increase) in trade and other receivables | -29,362 | -3,691 | |
| Decrease/(increase) in inventories | -19,141 | -24,768 | |
| Increase/(decrease) in trade debts | 7,867 | -4,463 | |
| Decrease/(increase) in other non-current assets | 84 | -521 | |
| Decrease/(increase) in other current assets | -803 | -397 | |
| Increase/(decrease) in other non-current liabilities | 778 | -3,668 | |
| Increase/(decrease) in other current liabilities | 3,107 | 4,158 | |
| Cash flow generated from operating activities | -8,848 | -8.455 | |
| Interest received | 1,072 | 636 | |
| Income tax paid | -1,723 | -2,717 | |
| Cash flow from operating activities | -9,499 | -10.536 | |
| Investing activities | |||
| Cash receipts on sale of tangible fixed assets | 650 | 456 | |
| Purchases of tangible fixed assets | -7,803 | -8,281 | |
| Cash flow from investing activities | -7,153 | -7,825 |
| Financing activities | ||
|---|---|---|
| Repayments of long-term debts | 0 | -24,051 |
| New short-term debts | 0 | 19,467 |
| Repayments of short-term debts | -10,319 | 0 |
| Interest paid | -5,892 | -4,004 |
| Other (incl. net financial charges, other the interests) | 13,485 | -3,931 |
| Cash flow from financing activities | -2,726 | -12,519 |
| Net increase (+) / decrease (-) in cash and cash equivalents | -19,378 | -30,880 |
| Cash and cash equivalents as per 1 January 5 |
50,902 | 43,856 |
| Impact of exchange rate fluctuations | -3,385 | 1,782 |
| Cash and cash equivalents as per 30 June 5 |
28,139 | 14,758 |
These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The condensed interim financial report is in compliance with IAS 34, Interim Financial Reporting.
The interim condensed consolidated financial statements have been prepared using the same accounting policies and methods of computation as in the 31 December 2010 annual financial statements, except for the new standards and interpretations which have been adopted as of January 2011 (see "New amended IFRS standards and IFRIC interpretations" below) and which had no significant impact on the interim condensed consolidated financial statements.
• IAS 32 Financial Instruments: Presentation Classification of Rights Issues, effective 1 February 2010
• IFRIC 14 Prepayments of a Minimum Funding Requirement, effective 1 January 2011
For management purposes, the group is organized in business units based on their geographical location and has the following three reporting segments:
No operating segments have been aggregated to form the above reporting segments.
Transfer prices between the operating segments are on an 'at arm's length' basis, similar to transactions with third parties. The accounting policies for the operating segments are equal to these of the consolidated financial statements.
| 2010 | 2010 2011 |
||
|---|---|---|---|
| 32,142 | 113,366 | 364,352 358,455 |
|
| 0 | -12,108 | -99,057 -89,589 |
|
| 32,142 | 101,258 | 265,295 268,866 |
|
| 12.1% | 38.2% | 100% 100% |
|
| 2,145 | 1,614 | 12,716 11,275 |
|
| 6.7% | 1.6% | 4.8% 4.2% |
|
| 2010 | 2011 27,253 -24 27,229 10.1% 372 1.4% |
Australia 2011 104,449 -7,591 96,858 36.0% 1,002 1.0% |
Due to the seasonal nature of the construction industry, the demand is higher during the spring and summer period.
The major components of income tax expense in the interim consolidated income statement are:
| For the six month period ended 30 June (in thousands of euro) |
2010 | 2011 |
|---|---|---|
| Income taxes | ||
| Current income tax expense | -1,721 | -2,717 |
| Deferred income tax expense | 2,548 | -697 |
| Income tax reported in the income statement | 827 | -3,414 |
| Income tax recognised in other comprehensive income | 0 | 0 |
| Total income taxes | 827 | -3,414 |
| (in thousands of euro) | 31 December 2010 | 30 June 2011 |
|---|---|---|
| Cash and current bank accounts | 26,689 | 12,633 |
| Short term deposits | 17,167 | 2,125 |
| Total | 43,856 | 14,758 |
The Group uses the following hierarchical classification in determining and explaining the fair value of financial instruments by valuation technique.
During the reporting period ending 30 June 2011, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
As of 31 December 2010 the Group has the following financial instruments:
| (in thousands of euro) | 31 December 2010 | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Assets at fair value | ||||
| - FX options | 2,046 | 2,046 | ||
| - Interest options (cap) | 310 | 310 | ||
| - FX forward contracts | 707 | 707 | ||
| Liabilities at fair value | ||||
| - FX forward contracts | 188 | 188 |
As of 30 June 2011 the Group has the following financial instruments:
| (in thousands of euro) | 30 June 2011 | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Assets at fair value | ||||
| - FX options | 1,192 | 1,192 | ||
| - Interest options (cap) | 278 | 278 | ||
| - FX forward contracts | 875 | 875 | ||
| Liabilities at fair value | ||||
| - FX forward contracts | 84 | 84 |
During 2011, the Group made purchases valued at € 85 thousand (€ 85 thousand as per 30 June 2010), under normal market conditions, from companies of which directors of the company held a majority of the shares. These transactions involved purchases relating to dies and equipment, maintenance of machinery, other services and the use of meeting rooms.
There are no significant subsequent events after 30 June.
Declaration regarding the information given in this interim financial report for the 6 month period ending 30 June 2011.
The undersigned declare that:
Board of Directors Deceuninck NV
Report of the statutory auditor to the shareholders of Deceuninck NV on the review of the interim condensed consolidated financial statements as of 30 June 2011 and for the six months then ended
We have reviewed the accompanying consolidated statement of financial position of Deceuninck NV (the "Company") as at 30 June 2011 and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the six-month period then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting ("IAS 34") as adopted for use in the European Union. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.
We conducted our review ("revue limitée/beperkt nazicht" as defined by the "Institut des Reviseurs d'Entreprises/Instituut der Bedrijfsrevisoren") in accordance with the recommendation of the "Institut des Reviseurs d'Entreprises/Instituut der Bedrijfsrevisoren" applicable to review engagements. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the auditing standards of the "Institut des Reviseurs d'Entreprises/Instituut der Bedrijfsrevisoren" and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 as endorsed in the European Union.
Ghent, 25 August 2011
Ernst & Young Bedrijfsrevisoren bcvba Statutory auditor represented by Jan De Luyck
Partner
Ref: 12JDU0006
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