Interim / Quarterly Report • Aug 23, 2011
Interim / Quarterly Report
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Letter to SharehoLderS 02/2011 . Lenzing Group
Every challenge in life has its unique charm. But whether a fl eeting moment will become a lasting memory or just fade away is a matter of lifestyle. Lenzing fi bers make the event permanent: Be it in nature or at sports, be it with oneself or with and for others. Lenzing's fi ber variety offers the right choice whenever and wherever the matter of lifestyle really matters.
| Management Report | 4 |
|---|---|
| General Market Environment | 6 |
| Development of the Lenzing Group | 7 |
| Segment Reporting | 8 |
| Investor Relations | 11 |
| Outlook Lenzing Group | 12 |
| Risk Report | 13 |
| Interim Consolidated Financial Statements Income Statement |
14 17 |
| Statement of Comprehensive Income | 18 |
| Statement of Changes in Equity | 22 |
| Statement of Financial Position | 24 |
| Cash Flow Statement | 26 |
| Key Figures | 27 |
| Selected Explanatory Notes | 28 |
| Statement of the Management Board | 41 |
Beddings made of TENCEL® tempt us to drift off into a pleasant sleep. Nevertheless we stayed awake and active in the year 2011. The results speak for themselves. But the competition never sleeps. As the market leader we also want to expand our position in the future and exploit growth opportunities in the market.
Global economy
The development of the global economy proved to be robust for the most part in the fi rst half of 2011 despite a variety of geopolitical uncertainties. The International Monetary Fund (IMF) predicts an average global growth rate of 4.3% for the year 20111 .
Economic growth in the Western industrialized countries continues to be restrained, and is expected to amount to an average of 2.2% in 2011 according to IMF forecasts2 . U.S. economic data remains below expectations due to the high unemployment rate, the burden on private households resulting from the high level of debt and the ongoing negative, unstable development on the real estate market3 . The debt crisis of several EU member states in Southern Europe contributes to the uncertainty perceived by consumers and companies in Europe.
In contrast, the economies of the emerging markets continue to boom, with the IMF predicting average growth of 6.6% in 20114 . According to the IMF forecasts, China and India will report the highest GDP growth rates at 9.6% and 8.2% respectively. However, pronounced signs of overheating have become evident in many emerging markets as demonstrated by infl ationary pressures5 . Emerging markets such as China are counteracting this development by pursuing a restrictive credit policy and raising interest rates. Nevertheless, the dynamic growth in Asia, Latin America and Central and Eastern Europe is expected to remain high and thus provide substantial impetus for the global economy6 .
Demand on the world fi ber market developed extremely dynamically in the fi rst half of 2011. It was driven by strong fi rstquarter private consumption in the textile segment, particularly in the emerging markets. However, record high fi ber price levels, above all the extremely high cotton price, led to declining demand on the part of the textile chain in the course of the year. Many companies were no longer able to pass on the sharp raw material price hikes to their customers via selling price increases. Demand weakened especially in China, the world's largest buyer and consumer of cotton. Moreover, the textile pipeline was overfi lled in several key areas. Another reason for lower Chinese fi ber sales was the perceptible cooling off of private consumption as a consequence of the restrictive credit policy, which the Chinese government implemented as a means of counteracting the imminent economic overheating.
The cotton price, an important benchmark for the entire fi ber market, declined considerably following a strong wave of speculation at the beginning of the year. Price levels peaked at up to almost USD 2.5/lb in the course of the second quarter of 2011 and fell to USD 1.60/lb at the beginning of June 20117 . However, the cotton price still remained double the comparable level of the previous year. By the end of July 2011 the cotton price had further dropped to about USD 1.1/lb due to the expected high global cotton harvest. Despite this strong decline, cotton prices are still signifi cantly higher than the average prices quoted during the past decade, a development which can be seen as an indication of the long-term structural change in the fi ber market as a consequence of excess demand for cellulose fi bers ("cellulose gap").
In the fi rst half-year 2011, synthetic fi bers such as polyester and man-made cellulose fi bers such as standard viscose were able to take advantage of the high cotton price. However, neither viscose nor polyester prices were subject to the same extreme price fl uctuations as cotton and did not ultimately decline to the same extent as cotton. Prices for Lenzing Modal® and TENCEL® remained largely unaffected, and could for the most part continue their autonomous demand and price trend.
General Market Environment 6 Development of the Lenzing Group 7 Segment Reporting 8
Once again, the Lenzing Group can report record results, and look back at the most successful first half-year period in the company's history. Following a very good first quarter 2011, sales and earnings in the second quarter both climbed significantly to new record heights.
Accordingly, consolidated sales in the first half of 2011 rose by 31.0%, from EUR 821.4 mill. to EUR 1,076.2 mill. Slightly more than half of this increase can be attributed to the higher fiber prices. Furthermore, the 6-month consolidation of Biocel Paskov (compared to only two months in H1 2010) as well as the higher fiber shipment volumes contributed in particular to the sales growth.
Earnings before interest, tax, depreciation and amortization (EBITDA) in the first half of 2011 was at a new record level of EUR 247.8 mill., an increase of 65.1% from the prior-year period. In turn, this led to a new all-time high EBITDA margin of 23.0%, up from 18.3% in the first half of 2010. The half-year operating profit (EBIT) was almost doubled, rising 84.5% to EUR 199.2 mill., compared to the excellent level of EUR 108.0 mill. achieved in the previous year. This corresponds to an EBIT margin of 18.5% (H1 2010: 13.1%).
This new earnings level in a half-year comparison was made possible by the following factors: substantially higher average selling prices for fibers, higher fiber shipment volumes as well as cost advantages in the company's fiber production based on exploiting economies of scale. Furthermore, there was an earnings improvement in the smaller, non fiber-related business segments thanks to a significantly improved order situation. EBITDA rose by close to 80% in the Segment Plastics Products. The EBITDA rise in the Segment Engineering amounted to over 50% compared to the prior-year period.
The cost of material and purchased services rose slightly more than the corresponding sales growth due to higher specific raw material and energy costs, increasing by 32.4% to EUR 628.8 mill. Personnel expenditures rose by 8.7% from the first half of 2010 to EUR 137.3 mill., which can be attributed to the hiring of additional employees in connection with the capacity expansion drive as well as higher salaries in Austria mandated by the latest collective wage agreement. Depreciation was up 15.3% to EUR 50.5 mill. as a result of the increased investment activity.
Income before tax (EBT) totaled EUR 187.7 mill, a rise of 84.8% from an EBT of EUR 101.6 mill. generated in the first half of 2010. The income tax amounted to EUR 42.5 mill. in the first half-year 2011 (H1 2010: EUR 24.4 mill.), corresponding to a tax rate of 22.6%, below the comparable level of 24.0% in the prior-year. The profit for the period totaled EUR 145.3 mill. (H1 2010: EUR 77.1 mill.), a rise of 88.3%.
Earnings per share from continuing operations and discontinued operations amounted to EUR 5.39 in the first half-year 2011 (H1 2010: EUR 2.83), a rise of 90.5%. These figures are calculated on the basis of the weighted average number of shares in the particular reporting period.
Investments in intangible assets and property, plant and equipment totaled EUR 82.1 mill. in the first half of 2011, up from EUR 66.2 mill. in H1 2010. These investments almost exclusively related to the ongoing fiber and pulp production capacity expansion programs.
On the balance sheet side, equity of the Lenzing Group at the end of June 2011 amounted to EUR 884.8 mill. compared to EUR 732.0 mill. at the end of 2010. The net total of about EUR 71 mill. is related to the capital increase carried out in June 2011. Adjusted equity8 rose to EUR 912.5 mill., up from the prior-year level of EUR 758.8 mill. Non-current liabilities declined to EUR 670.9 mill. from the comparable figure of EUR 730.1 mill. at the end of 2010. As a consequence of the good cash flow development and the capital increase, net financial debt at the end of June 2011 could also be reduced to EUR 170.1 mill. compared to EUR 307.2 mill. at the end of 2010. This corresponds to a net gearing of only 18.6% (end of 2010: 40.5%). The adjusted equity ratio as of June 30, 2011
5) See IMF, World Economic Outlook Update, June 2011 6) See WIFO, Press Information, "Prognose für 2011 und 2012: Hohes Tempo des Aufschwungs verringert sich", June 30, 2011 7) Cotton A Index 8) Incl. investment grants, less proportionate deferred taxes
climbed to 42.3% of the balance sheet total as compared to 38.6% at the end of 2010.
Cash and cash equivalents at the end of June 2011 rose to EUR 394.6 mill. (December 31, 2010: EUR 254.5 mill.), and are required to fi nance the increased business volume as well as investments. Thus the entire Lenzing Group is very well positioned, also in terms of liquidity.
The number of employees working for the Lenzing Group at the end of the fi rst half of 2011 rose slightly to 6,323 (March 31, 2011: 6,244; December 31, 2010: 6,1439 ) due to the expanded business volume.
Lenzing achieved its best quarterly results in the company's history in the second quarter of 2011. All relevant performance indicators showed an improvement, not only in comparison to the prior-year period but also in relation to the very good fi rst quarter of 2011.
Second-quarter EBIT at EUR 108.5 mill. almost doubled from the already good prior-year fi gure of EUR 58.6 mill., and EBITDA climbed by 64.5% from EUR 80.8 mill. in the second quarter 2010 to EUR 132.9 mill. in the second quarter of 2011. The income before tax (EBT) at EUR 103.0 mill. was close to twice the level of EUR 55.1 mill. in the prior-year quarter.
The business development of the Segment Fibers in the Lenzing Group during the fi rst half of 2011 was characterized by an extremely strong volume demand. On the one hand, this can be attributed to the good development of the textile and nonwovens industry in all regions of the world. On the other hand, this is due to the initial structural effects of the "cellulose gap" and the related cotton price spiral, which also involved overly extreme speculative activity.
Segment sales climbed by 30.6%, from EUR 741.1 mill. in the fi rst half of 2010 to EUR 967.9 mill. in the fi rst half-year 2011. EBITDA of the Segment Fibers rose 64.6%, from EUR 143.2 mill. to EUR 235.8 mill. in the same period. Segment EBIT improved by 84.4% up to EUR 189.9 mill. from the prior-year level of EUR 103.0 mill.
In the fi rst half-year Lenzing carried out several selling price increases in both the Business Units Textile Fibers and Nonwoven Fibers. In the course of the second quarter, there was a weakening of the previously overheated demand situation for textile fi bers, especially the demand and processing of cotton, primarily as a result of the monetary policy implemented by the Chinese government to slow down the pace of economic expansion. The consequence was a consolidation of prices for standard textile viscose fi bers in Asia which did not come unexpectedly. Nevertheless, volume demand remained consistently strong throughout the entire fi rst sixmonth period of 2011. In the Business Unit Nonwoven Fibers, Lenzing reported a stable price and volume development at high level.
The development of the specialty fi bers Lenzing Modal® and TENCEL® was characterized by very strong demand throughout the entire fi rst half of the year. Lenzing's specialty General Market Environment 6 Development of the Lenzing Group 7 Segment Reporting 8
fiber prices were raised once again in the second quarter. As a consequence of the outstanding market position on the part of Lenzing's specialty fibers, the decline in cotton prices during the second quarter and the cooling off of demand in China did not have any negative effects on the price development of Lenzing Modal® and TENCEL® in the first half of 2011. This enabled Lenzing Modal® and TENCEL® to even overcompensate for the second-quarter price decreases for textile standard fibers. Subsequently, average selling prices for Lenzing fibers in the second quarter were higher than those in the very good first quarter of the year.
Fiber production of the Lenzing Group was operating at full capacity throughout the entire first half-year 2011, and inventories continued to be at a low level in mid-year 2011. Compared to the first half of 2010, additional fiber quantities were available for sale from the new fourth production line at the Indonesian subsidiary P.T. South Pacific Viscose (SPV) and as a consequence from the SPV debottlenecking program. Further volume increases for standard fibers from the prior-year period related to the debottlenecking program implemented at Lenzing's Chinese subsidiary Lenzing Nanjing Fibers. The strong demand for Lenzing Modal® could be effectively fulfilled as a result of the expansion of Modal production capacities at the plant in Lenzing, thus making a contribution to the segment's margin improvement.
The decrease in cotton prices at mid-year 2011 to a realistic level once again is now being followed by a necessary consolidation phase for almost all fiber qualities, especially for cotton. Estimates indicating a potential record harvest for cotton also contributed to the price consolidation, and put an end to the market hype about insufficient availability. Nevertheless, the structural transformation of the market based on the "cellulose gap" (long-term structural change in the fiber market as a consequence of excess demand for cellulose fibers) still fully applies, even after the end of the speculative bubble concerning cotton.
Thus the outlook for the development of the Lenzing Group's fiber business in the second half of 2011 remains positive. The weeks following the summer break should see a continuation of the price consolidation for standard viscose fibers, especially on the Asian market. Orders in the current well-filled textile pipeline should be increasingly processed towards the end of 2011 due to ongoing inventory reductions for yarns and finished products. In turn, this will lead to a renewed strong demand for Lenzing viscose. A largely stable development for Lenzing's nonwoven fibers compared to the first half of 2011 can be expected in the upcoming months.
Ongoing strong demand is also anticipated for the specialty fibers Lenzing Modal® and TENCEL® in the second half year of 2011 against the backdrop of an unchanged price level. Recently Lenzing succeeded in developing new areas of application for TENCEL® with the luxury brands Prada and Gucci as well as with Max Mara. Demand for TENCEL® on the part of home textiles producers continues to outstrip the available supplies. The Lenzing fibers TENCEL® and Lenzing Modal® are increasingly gaining in importance thanks to their "green footprint".
Accordingly, the business development of the Segment Fibers in the second half of 2011 is expected to be similar to the very successful first quarter of 2011.
The second production line in Nanjing (China) is currently in the start-up phase. The first marketable fiber qualities will be available in the third quarter of 2011. Construction work on the fifth line at SPV (Indonesia) is proceeding on schedule. As a result of the ongoing expansion and modernization activities, the Lenzing Group will be able to exploit an annual nominal capacity of about 770,000 tons of fibers at the turn of the year 2011/12 as planned, up from 710,000 tons p.a. at the turn of the year 2010/11. The Lenzing Group is determinedly pursuing its medium-term objective of raising annual capacity to over 1.1 million tons annually by the year 2015, based on the further expansion of capacities for standard as well as specialty fibers.
The market for dissolving pulp in the fi rst half-year 2011 was characterized by ongoing high prices as a consequence of the strong demand on the part of the viscose fi ber industry. The spot market prices in Asia were hovering close to an all-time high, and led to an erosion of the profi t margins for cellulose fi ber producers which exclusively rely on short-time supply contracts.
The Business Unit Pulp succeeded in securing a suffi cient raw material supply for the Lenzing Group in the fi rst half of 2011, based on its own production at the Lenzing site and longterm supply contracts with external providers. There was a general trend towards rising wood prices in Europe.
The conversion of the pulp plant Biocel Paskov is progressing on schedule. In the fi rst half of 2011 initial quantities of chemical pulp could already be shipped. The energy-related investment projects at Biocel Paskov are also proceeding as planned. The manufacturing plant for pulp at the Lenzing site ran at full capacity.
In the past few months there has been a considerable increase in primary energy prices due to the nuclear accident in Japan and the unstable political situation in North Africa. Electricity prices were also subject to signifi cant price hikes. This development is related to the announced plans on the part of Germany to phase out nuclear energy production. However, Lenzing succeeded in cushioning the price increases for primary energy on the basis of fi xed price energy contracts.
Demand for dissolving pulp in Asia recently cooled off, and led to initial price corrections for deliveries on the free market in the second half of the year. A suffi cient supply of pulp has also been secured for the Lenzing Group in the second half of 2011.
The Lenzing Group expects a sideways movement of energy prices at the current level during the second half of 2011.
The Segment Plastics Products profi ted from the ongoing economic upswing, and developed very positively. However, the high raw material costs had a negative impact. Good volume demand prevailed on the part of the construction and cable industries, whereas the polytetrafl uoroethylene (PTFE) business still remained below expectations. The Business Unit Filaments achieved good sales volumes with car tops and fi bers for awnings. Precursor production (starting materials for carbon fi bers) was operating at full capacity. On balance, the Segment Plastics Products generated satisfactory results in the fi rst half of 2011.
Accordingly, segment sales in the fi rst half of 2011 rose by close to one-third, to EUR 92.2 mill. (H1 2010: EUR 69.8 mill.). EBITDA of the Segment Plastics Products amounted to EUR 8.7 mill. in the fi rst half-year, up from the prior-year level of EUR 4.8 mill. EBIT totaled EUR 5.3 mill. compared to EUR 2.5 mill. in the fi rst half of 2010.
Investor Relations 11 Outlook Lenzing Group 12 Risk Report 13
In the Segment Engineering, the lively investment activity in the fiber and pulp industry, in particular on the part of the Lenzing Group, resulted in a very gratifying development of incoming orders. Accordingly, at mid-year 2011 the Segment Engineering featured a very high volume of orders and wellfilled order books until the end of 2011. In this way segment sales and earnings surpassed expectations.
In the first half of 2011 total segment sales amounted to EUR 53.7 mill. compared to EUR 43.6 mill.10 in the first half of 2010. Segment EBITDA improved to EUR 4.9 mill. from the prior-year level of EUR 3.2 mill., and EBIT of the segment rose from EUR 2.5 mill. to EUR 4.2 mill.
The Lenzing Group anticipates a continuation of the good development in the Segment Plastics Products as demonstrated by the first half-year performance. However, earnings will be negatively affected by the high costs of raw materials or their partly insufficient availability. The Segment Engineering should continue to profit from the ongoing investment activity in the fiber and pulp industry. Thanks to the good order situation, a gratifying sales and earnings development can be expected in Segment Engineering in the second half of 2011.
The Lenzing share closed the first half-year of trading in 2011 (June 30, 2011) at a price of EUR 90.00 per share. This corresponds to a rise of about 3% compared to the share price of EUR 87.22 on the final day of trading on December 30, 2010. The high for the second quarter was EUR 103.50 on June 1, 2011.
On March 29, 2011, the Ordinary Shareholders' Meeting of Lenzing AG resolved to pay a dividend of EUR 1.55 per share for the 2010 fiscal year (after EUR 2.0011 per share in the previous year). The members of the Management Board and Supervisory Board were granted discharge for the 2010 fiscal year.
Furthermore, the Ordinary Shareholders' Meeting elected Patrick Prügger (Managing Director of B & C Industrieholding GmbH) to the Supervisory Board for the first time. The Supervisory Board mandate of Hermann Bell, which expired on March 29, 2011, was not extended upon his own request. Mr. Bell had been a member of the Supervisory Board since the year 1972, and supported the company's expansion efforts for close to four decades. The Management Board, the other Supervisory Board members and shareholder representatives expressed their thanks to Mr. Bell at the Ordinary Shareholders' Meeting for his decade-long work on behalf of the company.
At present, the Supervisory Board consists of Michael Junghans (Chairman), Veit Sorger (Deputy Chairman), Helmut Bernkopf, Josef Krenner, Walter Lederer, Martin Payer, Patrick Prügger and Andreas Schmidradner as well as employee representatives.
Following extensive preparatory work, Lenzing launched its Re-IPO on the Vienna Stock Exchange on May 31, 2011. The combined offer consisted of a total of 6,725,000 shares, of which 825,000 were new Lenzing shares from a capital increase with subscription rights for Lenzing shares. The remaining allotment involved shares from the portfolio of the core and majority shareholder B & C Group. The Re-IPO was successfully carried out in spite of a diffi cult capital market environment and a series of delayed capital market transactions. 6,176,379 shares were allotted at a price of EUR 92, of which 5,351,379 shares were from the large shareholder B & C Group, which did not exercise its greenshoe option. The capital increase generated proceeds for Lenzing of about EUR 76 mill. less transaction costs.
Within the framework of Lenzing's rights offering, existing shareholders exercised about 67.6% of their subscription rights, with the exception of the B & C Group. The other new shares, for which existing shareholders did not exercise their subscription rights, were placed alongside the shares of the B & C Group with Austrian and international investors. Thus Lenzing gained close to 90 new international institutional investors, primarily from Great Britain, Germany, Norway, Austria and the USA.
This successful Re-IPO was the last step in a series of measures designed to give Lenzing optimal access to the international capital market. The Lenzing share became suffi ciently liquid and thus attractive for large international institutional investors due to the fact that Lenzing's free fl oat increased to about one third. In 2010, a seven-for-one share split had already been carried out, and the Lenzing share switched to the Prime Market of the Vienna Stock Exchange effective April 18, 2011.
In June 2011, Lenzing was given the Sustainability Prize of the Vienna Stock Exchange, and also took third place in the Corporate Bond Prize 2011 for the successful placement of the Lenzing bond in 2010. In addition, Lenzing won the Golden Pegasus Award 2011 in June granted to the best Upper Austrian company.
Investor Relations 11 Outlook Lenzing Group 12 Risk Report 13
The Lenzing Group confirms its last published outlook for the entire year 2011, in which the company is expected to achieve total sales between EUR 2.1 billion and EUR 2.2 billion. The expected EBITDA will be in the range of EUR 470 mill. to EUR 500 mill., corresponding to the upper half of the initial outlook. A decisive underlying factor is the very good business development of the Lenzing Group in the second quarter of 2011, which exceeded expectations, generating sales of EUR 544.1 mill. and an EBITDA margin of 24.4%. On average business development in the third and fourth quarter is expected to be similar to the first quarter's performance. The additional production volumes resulting from the capacity expansion of Lenzing Nanjing in China should have a positive effect. An ongoing high price level along with good demand is anticipated for the specialty fibers Lenzing Modal® and TENCEL® in the second half of the year. In contrast, the continuation of the short-term price consolidation trend for standard viscose fibers in Asia which is still taking place along with the resulting "pipeline effect" should have a dampening effect.
The long-term upward trend in demand for man-made cellulose fibers related to the "cellulose gap" and the very strong volume demand for Lenzing fibers will continue uninterruptedly. Even against the backdrop of a very good cotton harvest 2011/12, the structural influencing factors underlying the "cellulose gap" – population growth, increasing prosperity and sustainability – will continue to apply fully.
On November 15, 2011, we will inform you about the further development of the Lenzing Group on the occasion of reporting about the results of the first three quarters of 2011.
Despite several unexpected events in the first half-year, the overall risk outlook has not significantly changed. Global economic growth of 4.3%12 in the first quarter of 2011 and unchanged forecasts for 2011 and 2012 confirm the ongoing economic recovery following the financial crisis. Nevertheless, the debt crisis affecting several nations in the eurozone can be seen as an increased risk, as well as the debt ceiling and budget conflict in the USA and its effects on the real economy.
These developments as well as the shortage of money in China and the renewed massive uncertainties on financial and capital markets also affect Lenzing's sales markets. The expected consolidation of standard viscose fiber prices is taking place in Asia at the present time, whereas prices for specialty fibers continue to remain at a high level.
On the procurement side, the supply situation on the market is easing both for pulp as well as for other chemicals. However, energy costs continue to be subject to strong fluctuations, as described in the previous letter to shareholders.
The evaluation of all other risks such as natural catastrophes, environmental or fire hazards as well as product liability risks remains unchanged. However, they continue to comprise an inherently high loss potential for the Lenzing Group.
The expansion of production capacity for both fibers and pulp is proceeding on schedule.
On balance, the risk outlook with respect to the strategic objectives of the Lenzing Group remains unchanged.
Whoever wants to be the best in class must always be alert and diligently do his or her homework. This means Lenzing focuses on ensuring ongoing innovation, maintaining a dialog with customers and employees and developing appropriate responses to market challenges. Lenzing fi nished the fi rst half-year 2011 with the best possible marks.
| Interim Consolidated Financial Statements | 14 |
|---|---|
| Income Statement | 17 |
| Statement of Comprehensive Income | 18 |
| Statement of Changes in Equity | 22 |
| Statement of Financial Position | 24 |
| Cash Flow Statement | 26 |
| Key Figures | 27 |
| Selected Explanatory Notes | 28 |
| Note 1. Presentation of the interim fi nancial report | 28 |
| Note 2. Accounting policies | 28 |
| Note 3. Changes in estimates | 30 |
| Note 4. Scope of consolidation | 30 |
| Note 5. Segment reporting | 31 |
| Note 6. Sales | 33 |
| Note 7. Other operating income | 33 |
| Note 8. Cost of material and purchased services | 34 |
| Note 9. Personnel expenses | 34 |
| Note 10. Amortization of intangible assets and depreciation of property, plant and equipment | 34 |
| Note 11. Other operating expenses | 34 |
| Note 12. Finance costs | 34 |
| Note 13. Allocation of profi t or loss to puttable non-controlling interests | 35 |
| Note 14. Income tax | 35 |
| Note 15. Intangible assets and property, plant and equipment | 35 |
| Note 16. Inventories | 35 |
| Note 17. Trade receivables | 35 |
| Note 18. Other receivables and assets | 36 |
| Note 19. Equity | 36 |
| Note 20. Bonds, bank loans and other loans | 36 |
| Note 21. Provisions | 36 |
| Note 22. Contingent liabilities and commitments | 36 |
| Note 23. Notes on the cash fl ow statement | 37 |
| Note 24. Dividend paid | 37 |
| Note 25. Related party transactions | 38 |
| Note 26. Derivative fi nancial instruments | 38 |
| Note 27. Events after the end of the interim reporting period | 39 |
| Note 28. Corporate bodies | 40 |
Income Statement 17 Statement of Comprehensive Income 18 Statement of Changes in Equity 22
| 4-6/2011 | 4-6/20101 | 1-6/2011 | 1-6/20101 | ||
|---|---|---|---|---|---|
| Continuing operations | Note | EUR mill. | EUR mill. | EUR mill. | EUR mill. |
| Sales | (6) | 544.1 | 456.4 | 1,076.2 | 821.4 |
| Changes in inventories of finished goods and work in progress |
9.1 | 2.2 | 11.6 | (1.0) | |
| Work performed by the Group and capitalized | 9.1 | 7.6 | 16.6 | 14.7 | |
| Other operating income | (7) | 16.1 | 9.6 | 27.0 | 16.7 |
| Cost of material and purchased services | (8) | (324.3) | (276.4) | (628.8) | (475.1) |
| Personnel expenses | (9) | (68.5) | (62.9) | (137.3) | (126.3) |
| Amortization of intangible assets and depreciation of | |||||
| property, plant and equipment | (10) | (25.4) | (23.1) | (50.5) | (43.8) |
| Other operating expenses | (11) | (51.8) | (54.8) | (115.6) | (98.6) |
| Income from operations (EBIT) | 108.5 | 58.6 | 199.2 | 108.0 | |
| Income from investments in associates | 1.5 | 0.8 | 2.5 | 1.3 | |
| Other investment income | 1.0 | 1.4 | 1.6 | 3.1 | |
| Finance costs | (12) | (5.4) | (3.8) | (10.6) | (7.8) |
| Financial result | (3.0) | (1.6) | (6.6) | (3.4) | |
| Allocation of profit or loss to puttable non-controlling | |||||
| interests | (13) | (2.5) | (1.8) | (4.9) | (3.1) |
| Income before tax (EBT) | 103.0 | 55.1 | 187.7 | 101.6 | |
| Income tax | (14) | (24.6) | (13.5) | (42.5) | (24.4) |
| Profit for the period after taxes from continuing | |||||
| operations | 78.4 | 41.7 | 145.3 | 77.1 | |
| Discontinued operations | |||||
| Result from discontinued operations | 0.0 | 0.2 | 0.0 | 0.2 | |
| Profit for the period | 78.4 | 41.9 | 145.3 | 77.4 | |
| Attributable to shareholders of Lenzing AG | 76.4 | 39.0 | 139.0 | 72.8 | |
| Attributable to non-controlling interests | 2.0 | 2.9 | 6.3 | 4.5 | |
| Earnings per share | EUR | EUR | EUR | EUR | |
| Average number of shares 2) | 25,807,500 | 25,725,000 | 25,766,250 | 25,725,000 | |
| From continuing operations and discontinued operations | 2.96 | 1.51 | 5.39 | 2.83 | |
| From continuing operations | 2.96 | 1.51 | 5.39 | 2.83 |
1) Values adjusted according to IFRS 5 2) The average number of shares was calculated on a daily basis. The year-on-year/reference period change in the average number of shares resulted mainly from a capital increase carried out effective 17 June 2011 (first trading day of the new shares) by Lenzing AG
| Foreign | |||
|---|---|---|---|
| currency | |||
| Common | Capital | translation | |
| stock | reserves | reserve | |
| 1-6/2010 | EUR mill. | EUR mill. | EUR mill. |
| Profi t for the period | |||
| Exchange differences arising during the period | 39.5 | ||
| Gains/losses from the valuation of cash fl ow hedges arising during the period | |||
| Reclassifi cation adjustments for amounts from cash fl ow hedges recognized in profi t or loss | |||
| Income tax relating to components of other comprehensive income | |||
| Other comprehensive income for the period - net of tax | 39.5 | ||
| Total comprehensive income for the period | 39.5 | ||
| 1-6/2011 | |||
| Profi t for the period | |||
| Exchange differences arising during the period | (22.3) | ||
| Net result on revaluation of available-for-sale fi nancial assets during the period | |||
| Gains/losses from the valuation of cash fl ow hedges arising during the period | |||
| Reclassifi cation adjustments for amounts from cash fl ow hedges recognized in profi t or loss | |||
| Income tax relating to components of other comprehensive income | |||
| Other comprehensive income for the period - net of tax | (22.3) | ||
| Total comprehensive income for the period | (22.3) |
Income Statement 17 Statement of Comprehensive Income 18 Statement of Changes in Equity 22
| Equity total | Non-controlling interests |
Share of Lenzing AG shareholders | |||||
|---|---|---|---|---|---|---|---|
| Actuarial gains/ | |||||||
| (losses) on | Available | ||||||
| Retained | defined benefit | Cash flow | for-sale | ||||
| Total | earnings | plans | hedging reserve | financial assets | |||
| EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | |
| 77.4 | 4.5 | 72.8 | 72.8 | ||||
| 41.6 | 2.1 | 39.5 | |||||
| (13.3) | (0.2) | (13.2) | (13.2) | ||||
| 3.1 | 3.1 | 3.1 | |||||
| 2.8 | 0.0 | 2.8 | 2.8 | ||||
| 34.1 | 2.0 | 32.1 | (7.4) | ||||
| 111.5 | 6.6 | 104.9 | 72.8 | (7.4) | |||
| 145.3 | 6.3 | 139.0 | 139.0 | ||||
| (22.9) | (0.6) | (22.3) | |||||
| (0.7) | 0.0 | (0.7) | (0.7) | ||||
| (3.9) | 0.4 | (4.3) | (4.3) | ||||
| 6.6 | (0.1) | 6.8 | 6.8 | ||||
| (0.5) | (0.1) | (0.4) | (0.6) | 0.2 | |||
| (21.3) | (0.4) | (20.9) | 1.9 | (0.5) | |||
| 124.0 | 5.9 | 118.0 | 139.0 | 1.9 | (0.5) |
| Foreign | ||||
|---|---|---|---|---|
| currency | ||||
| Common | Capital | translation | ||
| stock | reserves | reserve | ||
| 4-6/2010 | EUR mill. | EUR mill. | EUR mill. | |
| Profi t for the period | ||||
| Exchange differences arising during the period | 26.4 | |||
| Gains/losses from the valuation of cash fl ow hedges arising during the period | ||||
| Reclassifi cation adjustments for amounts from cash fl ow hedges recognized in profi t or loss | ||||
| Income tax relating to components of other comprehensive income | ||||
| Other comprehensive income for the period - net of tax | 26.4 | |||
| Total comprehensive income for the period | 26.4 | |||
| 4-6/2011 | ||||
| Profi t for the period | ||||
| Exchange differences arising during the period | (4.5) | |||
| Gains/losses from the valuation of cash fl ow hedges arising during the period | ||||
| Reclassifi cation adjustments for amounts from cash fl ow hedges recognized in profi t or loss | ||||
| Income tax relating to components of other comprehensive income | ||||
| Other comprehensive income for the period - net of tax | (4.5) | |||
| Total comprehensive income for the period | (4.5) |
Income Statement 17 Statement of Comprehensive Income 18 Statement of Changes in Equity 22
| Non-controlling interests |
Share of Lenzing AG shareholders | ||||
|---|---|---|---|---|---|
| Actuarial gains/ | |||||
| (losses) on | Available | ||||
| Retained | defined benefit | Cash flow | for-sale | ||
| Total | earnings | plans | hedging reserve | financial assets | |
| EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. |
| 2.9 | 39.0 | 39.0 | |||
| 1.5 | 26.4 | ||||
| (0.2) | (9.1) | (9.1) | |||
| 4.1 | 4.1 | ||||
| 0.0 | 1.5 | 1.5 | |||
| 1.4 | 22.9 | (3.5) | |||
| 4.3 | 61.9 | 39.0 | (3.5) | ||
| 2.0 | 76.4 | 76.4 | |||
| (0.1) | (4.5) | ||||
| 0.0 | (6.2) | (6.2) | |||
| 0.1 | 3.3 | 3.3 | |||
| 0.0 | 0.6 | 0.6 | 0.0 | ||
| 0.0 | (6.8) | (2.3) | 0.0 | ||
| 2.0 | 69.6 | 76.4 | (2.3) | 0.0 |
| Foreign | ||||
|---|---|---|---|---|
| currency | ||||
| Common | Capital | translation | ||
| stock | reserves | reserve | ||
| EUR mill. | EUR mill. | EUR mill. | ||
| Balance at 1 Januray 2010 before | 26.7 | 63.6 | (18.7) | |
| Adjustments according to IAS 8 | ||||
| Balance at 1 Januray 2010 adjusted | 26.7 | 63.6 | (18.7) | |
| Total comprehensive income for the period | 39.5 | |||
| Change in scope of consolidation | ||||
| Dividends | ||||
| Balance at 30 June 2010 | 26.7 | 63.6 | 20.8 | |
| Balance at 1 Januray 2011 | 26.7 | 63.6 | (0.6) | |
| Total comprehensive income for the period | (22.3) | |||
| Increase in capital | 0.9 | 70.2 | ||
| Transfer of non controlling interests | ||||
| Change valuation dividend guarantee | ||||
| Dividends | ||||
| Balance at 30 June 2011 | 27.6 | 133.8 | (22.9) | |
Income Statement 17 Statement of Comprehensive Income 18 Statement of Changes in Equity 22
| Equity total | Non-controlling interests |
Share of Lenzing AG shareholders | |||||
|---|---|---|---|---|---|---|---|
| Actuarial gains/ | |||||||
| (losses) on | Available | ||||||
| Retained | defined benefit | Cash flow | for-sale | ||||
| Total | earnings | plans | hedging reserve | financial assets | |||
| EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | |
| 606.1 | 30.2 | 575.9 | 516.6 | (10.0) | (2.4) | 0.1 | |
| (20.7) | (20.7) | ||||||
| 585.4 | 9.5 | 575.9 | 516.6 | (10.0) | (2.4) | 0.1 | |
| 111.5 | 6.6 | 104.9 | 72.8 | (7.4) | |||
| 7.1 | 7.1 | ||||||
| (51.5) | 0.0 | (51.5) | (51.5) | ||||
| 652.5 | 23.1 | 629.4 | 538.0 | (10.0) | (9.7) | 0.1 | |
| 732.0 | 28.1 | 703.9 | 624.3 | (11.6) | 1.5 | (0.1) | |
| 124.0 | 5.9 | 118.0 | 139.0 | 1.9 | (0.5) | ||
| 71.0 | 71.0 | ||||||
| (0.3) | (0.3) | 0.0 | 0.0 | ||||
| (0.5) | (0.5) | ||||||
| (41.4) | (0.3) | (41.1) | (41.1) | ||||
| 884.8 | 32.9 | 851.9 | 722.2 | (11.6) | 3.4 | (0.6) |
| Assets | 30/06/2011 | 31/12/2010 |
|---|---|---|
| Note | EUR mill. | EUR mill. |
| Intangible assets (15) |
82.6 | 87.7 |
| Property, plant and equipment (15) |
1,015.7 | 1,002.8 |
| Investments in associates | 27.1 | 24.7 |
| Other fi nancial assets | 70.7 | 67.3 |
| Deferred tax assets | 10.5 | 10.1 |
| Other non-current assets | 2.4 | 2.5 |
| Non-current assets | 1,209.0 | 1,195.1 |
| Inventories (16) |
241.9 | 222.8 |
| Trade receivables (17) |
215.9 | 181.5 |
| Current taxes | 15.5 | 14.8 |
| Other receivables and assets (18) |
79.8 | 58.6 |
| Investments | 8.1 | 5.1 |
| Cash and cash equivalents | 386.5 | 249.4 |
| 947.6 | 732.2 | |
| Assets of discontinued operations | 0.0 | 36.1 |
| Current assets | 947.6 | 768.3 |
| 2,156.6 | 1,963.4 |
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
| Equity and Liabilities | 30/06/2011 | 31/12/2010 |
|---|---|---|
| EUR mill. | EUR mill. | |
| Common stock | 27.6 | 26.7 |
| Capital reserves | 133.8 | 63.6 |
| Currency translation reserves | (22.9) | (0.6) |
| Retained earnings and other reserves | 713.4 | 614.2 |
| Share of shareholders of Lenzing AG | 851.9 | 703.9 |
| Non-controlling interests | 32.9 | 28.1 |
| Equity (19) |
884.8 | 732.0 |
| Government grants | 35.4 | 34.3 |
| Bonds, bank loans and other loans (20) |
494.1 | 552.3 |
| Trade payables | 1.0 | 1.5 |
| Deferred taxes liabilities | 30.8 | 36.9 |
| Provisions (21) |
97.5 | 96.2 |
| Puttable non-controlling interests | 28.2 | 24.3 |
| Other liabilities | 19.4 | 18.9 |
| Non-current liabilities | 670.9 | 730.1 |
| Bank loans and other loans (20) |
121.1 | 60.5 |
| Trade payables | 135.0 | 134.1 |
| Provisions for current income tax | 58.9 | 31.8 |
| Provisions (21) |
200.9 | 162.1 |
| Puttable non-controlling interests | 6.3 | 5.4 |
| Other liabilities | 43.3 | 38.6 |
| 565.4 | 432.5 | |
| Liabilities of discontinued operations | 0.0 | 34.5 |
| Current liabilities | 565.4 | 467.0 |
| 2,156.6 | 1,963.4 |
| 1-6/2011 | 1-6/2010 | |
|---|---|---|
| Note | EUR mill. | EUR mill. |
| Gross cash fl ow | ||
| from continuing operations | 191.5 | 121.4 |
| from discontinued operations | 0.0 | 0.9 |
| (23) | 191.5 | 122.3 |
| Change in working capital | (4.7) | 7.5 |
| Net cash generated by discontinued operations | 0.0 | (4.1) |
| Operating cash fl ow (23) |
186.8 | 125.7 |
| - Acquisition of non-current assets | (85.6) | (116.7) |
| + Proceeds from the disposal/repayment of non-current assets | 0.6 | 0.5 |
| Net cash generated by discontinued operations | 0.0 | (0.5) |
| Net cash used in investing activities (23) |
(85.0) | (116.7) |
| + Capital increase | 71.0 | 0.0 |
| + Payments of puttable non-controlling interests | 1.5 | 1.7 |
| - Dividends paid to shareholders | (41.4) | (51.5) |
| + Government grants | 2.0 | 0.3 |
| + Receipts from fi nancing activities / - repayment of loans | 10.8 | 8.1 |
| Net cash generated by discontinued operations | 0.0 | 2.9 |
| Net cash used in (-)/ generated by (+) fi nancing activities | 43.9 | (38.5) |
| Change in cash and cash equivalents total | 145.8 | (29.5) |
| +/- Change in cash and cash equivalents of discontinued operations | 0.0 | 0.8 |
| Change in cash and cash equivalents of continuing operations | 145.8 | (28.7) |
| Cash and cash equivalents at beginning of the year | 254.5 | 123.8 |
| Currency translation adjustment relating to cash and cash equivalents | (5.7) | 8.6 |
| Cash and cash equivalents at the end of the reporting period | 394.6 | 103.7 |
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
| 30/06/2011 | 31/12/2010 | ||
|---|---|---|---|
| Adjusted equity 1 | EUR mill. | 912.5 | 758.8 |
| Adjusted equity in % | % | 42.3 | 38.6 |
| Net financial debt | EUR mill. | 170.1 | 307.2 |
| Net debt 2 | EUR mill. | 252.7 | 388.5 |
| Net gearing | % | 18.6 | 40.5 |
| Open credit lines | EUR mill. | 242.9 | 252.2 |
| Cash and cash equivalents at the end of the reporting period4 | EUR mill. | 445.0 | 305.6 |
| Number of employees at period end | 6,323 | 6,5303 | |
| 1-6/2011 | 1-6/2010 | ||
| EBITDA | EUR mill. | 247.8 | 150.1 |
| EBITDA margin | % | 23.0 | 18.3 |
| EBIT margin | % | 18.5 | 13.1 |
| Capital expenditure (intangible assets. property. plant and equipment) | EUR mill. | 82.1 | 66.2 |
1) Equity incl. grants less proportionally deferred taxes 2) Including employees of discontinued operations 3) Including obligations for pension and severance payments
4) Closing balance of cash and cash equivalents including current and non-current securities
These condensed interim consolidated fi nancial statements of the Lenzing Group for the period from 1 January to 30 June 2011 have been prepared in accordance with IAS 34 ("Interim Financial Reporting"). The accounting policies and valuation methods applied are in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In accordance with IAS 34 the condensed interim consolidated fi nancial statements do not provide all of the information mandatory for the annual fi nancial statements and therefore should be read along with the annual fi nancial statements of the Lenzing Group for the year ended 31 December 2010.
The fi gures provided in the interim fi nancial statements and in these notes are presented in million euros (EUR mill.) unless stated otherwise. Where rounded amounts and percentages are aggregated, rounding differences may occur due to the use of automated calculation aids.
The following new or revised IFRSs and interpretations of IFRIC were adopted by the European Union and are to be applied for the fi rst time for the business year 2011, and may be applied for the business year 2011 for the fi rst time respectively:
Amendments to IAS 32 Financial Instruments: Presentation concerning the classifi cation of rights issues
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
Amendments to various IFRSs (IFRS 1, 7, IAS 1, 34) and IFRIC 13 as a result of the annual improvement project 2010
Amendments to IAS 12 Income Taxes (not yet endorsed by the EU)
Amendments to IAS 1 Presentation of Financial Statements (not yet endorsed by the EU))
IFRS 12 Disclosure of Interests in Other Entities (not yet endorsed by the EU)
IFRS 13 Fair Value Measurement (not yet endorsed by the EU)
Future implications – especially of IFRS 9 – are currently being analyzed. Management assumes that the expected changes will mainly affect the measurement of financial assets and the presentation of changes in value of financial assets in the income statement and other comprehensive income respectively.
The amendments to the various standards concerning the presentation and measurement of financial instruments will be applied at the effective dates stated.
The other new or amended standards to be adopted from 1 January 2011 on will not lead to any changes to the interim financial report of the Lenzing Group. There have been no changes since 31 December 2010 to either the other accounting and valuation policies applied or to the methods of calculation and presentation.
The following closing rates were used to translate the assets and liabilities of subsidiaries from their functional currency to the reporting currency:
| Unit | Currency | Closing rate | ||
|---|---|---|---|---|
| 30/06/2011 | 31/12/2010 | segment Plastics Products. | ||
| 1 | EUR/USD US Dollar | 1.4460 | 1.3376 | |
| 1 | EUR/GBP GB Pound | 0.9028 | 0.8616 | |
| 1 | EUR/CZK CZ Koruna | 24.3220 | 25.0850 | |
| 1 | EUR/CNY Renminbi Yuan | 9.3476 | 8.8150 | Net result from the disposal of subsidiaries |
| 1 | EUR/HKD Hong Kong Dollar | 11.2532 | 10.3965 |
There were no changes in estimates of amounts presented in previous (interim) reporting periods during the current reporting period which had any material effect on the current interim reporting period.
On 19 January 2011 Beta LAG Holding GmbH was founded with the purpose of exercising holding functions, and transferred to B & C Industrieholding GmbH on 27 May 2011.
As of 18 February 2011 the Group sold the major part of the plastics fi laments business to a consortium of private investors under the leadership of the Global Equity Partners Group (GEP) in order to further streamline the portfolio. GEP acquired 100% of the shares of the two German companies Hahl Filaments GmbH/Munderkingen and Pedex GmbH/Affolterbach, of the US company Hahl Inc./Lexington and the Czech company Hahl Filaments s.r.o./Plana as well as the related real estate and holding companies. These entities were part of the segment Plastics Products.
| EUR mill. | |
|---|---|
| Assets of discontinued operations | 36.1 |
| Liabilities of discontinued operations | (34.6) |
| Net assets of discontinued operations | 1.5 |
| Sales price | (1.5) |
Due to the valuation of carrying amounts using the agreed sales price on 31 December 2010, there was neither a gain or loss nor an effect on earnings per share in the reporting period.
The payment of the sales price has been deferred until 2018 and the amount outstanding is included in other fi nancial assets.
Based on a purchase agreement dated 15 June 2011, the remaining 45% of the shares of Leno Electronics GmbH were taken over by Lenzing Technik GmbH. The number of consolidated entities has changed as follows:
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
| Full consolidation | Equity consolidation | |
|---|---|---|
| As at 1/1 | 43 | 7 |
| Consolidated for the first time in reporting period | 1 | 0 |
| Sold in reporting period | (9) | 0 |
| As at 30/6 | 35 | 7 |
Segment reporting in the Lenzing Group is based on business segments. For internal reporting to management the following business segments are used in the Lenzing Group:
The Segment Fibers comprises the Business Units Textile Fibers, Nonwoven Fibers, Pulp and Energy, as well as byproducts and timber trade. This segment constitutes the core business of the Group.
The Segment Plastics Products produces special plastic products for processing companies. This segment comprises the Business Units Plastics and Filaments.
Segment Engineering (= Business Unit Engineering) is the technical competence center of the Group and consists of three business divisions:
The residual segment Other mainly comprises the disclosures of BZL-Bildungszentrum Lenzing GmbH, an educational activity of the Lenzing Group.
| Segment sales | 1-6/2011 | 1-6/2010 | ||||
|---|---|---|---|---|---|---|
| Sales to | Sales to | |||||
| external | Interseg | external | Interseg | |||
| customers | ment sales | Total sales | customers | ment sales | Total sales | |
| EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | EUR mill. | |
| Fibers | 962.1 | 5.8 | 967.9 | 735.0 | 6.0 | 741.1 |
| Plastics Products | 91.2 | 0.9 | 92.2 | 69.2 | 0.7 | 69.8 |
| Engineering | 22.2 | 31.4 | 53.7 | 16.5 | 27.1 | 43.61 |
| Other | 0.7 | 0.7 | 1.4 | 0.7 | 0.7 | 1.41 |
| Consolidation | 0.0 | (38.9) | (38.9) | 0.0 | (34.6) | (34.6)1 |
| Total sales | ||||||
| Continuing operations | 1,076.2 | 0.0 | 1,076.2 | 821.4 | 0.0 | 821.4 |
| Discontinued operations2 | 9.4 | 0.0 | 9.4 | 26.1 | 0.1 | 26.2 |
| Segment result | EBIT | EBITDA | ||
|---|---|---|---|---|
| 1-6/2011 | 1-6/2010 | 1-6/2011 | 1-6/2010 | |
| EUR mill, | EUR mill, | EUR mill, | EUR mill, | |
| Fibers | 189.9 | 103.0 | 235.8 | 143.2 |
| Plastics Products | 5.3 | 2.5 | 8.7 | 4.8 |
| Engineering | 4.2 | 2.5 | 4.9 | 3.2 |
| Other | 0.1 | 0.3 | 0.2 | 0.3 |
| Consolidation | (0.4) | (0.3) | (1.8) | (1.5) |
| Segment result | ||||
| Continuing operations | 199.2 | 108.0 | 247.8 | 150.1 |
| Discontinued operations2 | 0.3 | 0.6 | 0.8 | 1.6 |
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
| Segment assets | Segment liabilities | |||
|---|---|---|---|---|
| 30/06/2011 | 31/12/2010 | 30/06/2011 | 31/12/2010 | |
| EUR mill. | EUR mill. | EUR mill. | EUR mill. | |
| Fibers | 1,505.7 | 1,424.1 | 482.1 | 429.5 |
| Plastics Products | 126.3 | 119.4 | 42.9 | 39.5 |
| Engineering | 47.6 | 43.5 | 28.9 | 25.6 |
| Other | 0.3 | 0.4 | 0.6 | 0.8 |
| Consolidation | (42.8) | (32.8) | (22.9) | (14.2) |
| Segment assets / liabilities | ||||
| Continuing operations | 1,637.0 | 1,554.7 | 531.5 | 481.1 |
| Discontinued operations | 0.0 | 36.1 | 0.0 | 34.6 |
| Reconciliation | 519.6 | 372.7 | 704.8 | 681.4 |
| Total assets / liabilities | 2,156.6 | 1,963.4 | 1,236.4 | 1,197.1 |
Due to increases in fiber shipments and selling prices for fiber as well as the full inclusion of sales from pulp producer Biocel Paskov acquired in May of last year, total sales increased by 31.0% compared to the previous year to EUR 1,076.2 mill. Sales by segment are presented in Note 5.
The increase in other operating income is primarily due to higher services rendered and compensation for green energy.
Cost of material and purchased services amounted to EUR 628.8 mill. which is an increase of 32.4% compared to the reference period 2010. The increase over the same period last year is due to higher production volumes and price increases for raw materials as well as due to the full inclusion of Biocel Paskov in the fi rst half of 2011.
In addition to the increase in outward freight and commissions caused by a higher shipping volume, the overall increase in other operating expenses can be attributed to higher maintenance costs.
Personnel expenses of EUR 137.3 mill. (reference period 2010: EUR 126.3 mill.) include EUR 6.3 mill. (reference period 2010: EUR: 4.8 mill.) in expenses for severance payments and pensions.
Note 10. Amortization of intangible assets and depreciation of property, plant and equipment
Amortization of intangible assets and depreciation of property, plant and equipment of EUR 50.0 mill. (reference period 2010: EUR 43.8 mill.) exclusively comprises amortization and depre-
Finance costs include interest and interest-like expenses of EUR 10.7 mill. (reference period 2010: EUR 8.4 mill.) and foreign exchange gains resulting from the revaluation of fi nancial liabilities of EUR 0.1 mill. (reference period 2010: foreign exchange gains of EUR 0.6 mill.).
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
The share of income attributable to other shareholders of Lenzing (Nanjing) Fibers Co., Ltd. and European Precursor GmbH respectively is recognized as an expense due to time limitations under corporate law.
Purwakarta, the modification/extension of production of modal fiber and pulp at the site in Lenzing and the investments for refitting and converting the plant in Paskov.
Commitments from open purchase orders for property, plant and equipment as at 30 June 2011 amounted to EUR 81.3 mill. (31 December 2010: EUR 53.4 mill.).
Income tax is accrued per taxable entity on the basis of estimated average tax rates. Deferred tax assets arising from unused tax loss carry forwards are recognized only to the extent that the amount carried forward is likely to be used in the foreseeable future. The tax rate of the first half of 2011 amounts to 22.6% (first half of 2010: 24.0%)
The rise in inventories by EUR 19.1 mill. relates to raw material stock of EUR 8.1 mill. and stock in semi-finished and finished products of EUR 11.0 mill. In the first half of 2011, no significant losses were recognized on inventories.
During the reporting period the Lenzing Group invested EUR 82.1 mill. (reference period in 2010: EUR 66.2 mill.) in intangible assets and property, plant and equipment. The investments mainly pertained to the construction of the new production line in Nanjing, the construction of the production line 5 in
The increase in trade receivables by EUR 34.4 million compared to 31 December 2010 is due to the increase in sales.
Note 18. Other receivables and assets
The main items for the increase in other receivables are VAT amounts due to the increased investment activity.
Net fi nancial debt was reduced from EUR 307.2 mill. to EUR 170.1 mill.
Effective 17 June 2011 (the fi rst day of trading of new shares), Lenzing AG carried out the capital increase, as approved by the Extraordinary Shareholders' Meeting of 10 December 2010. A total of 825,000 new shares were issued. The share capital was fully paid. The change in the share capital and capital reserves is attributable to this capital increase. The transaction costs were reduced by attributable income taxes and charged directly to the increase in capital reserves.
Note 21. Provisions
Contingent liabilities and commitments of the Lenzing Group developed as follows compared to the previous reporting date.
| 30/06/2011 | 31/12/2011 | |
|---|---|---|
| EUR mill | EUR mill | |
| Assumption of liability for associated companies |
1.5 | 3.3 |
These fi nancial liabilities (current and non-current) marginally increased to the amount of EUR 615.2 mill. compared to EUR 612.8 mill. as at 31 December 2010. Due to the agreed dates of repayment the maturity changed, which resulted in higher current liabilities.
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
Additionally, there are bank guarantees for liability escrow paid in the amount of EUR 4,8 mill. (31 December 2010: EUR 4.1 mill.). It is considered unlikely that the Group will be held liable as a result of these commitments.
Various legal proceedings resulting from the ordinary course of business are pending. The Management Board assumes that these proceedings will not have material adverse effects on the present and future earnings of the Group.
Gross cash flow compared to the reference periods of 2010 increased to EUR 191,5 mill. mainly due to the good profit situation. Operating cash flow in the first half year of 2011 amounts to EUR 186.8 mill.
Cash flow from investing activities in non-current assets mainly results from the investments to the construction of the new production line in Nanjing, the construction of the production line 5 in Purwakarta, the modification/extension of production of modal fiber and pulp at the site in Lenzing and the refitting and converting investments in Paskov.
Cash and cash equivalents include cash on hand, demand deposits and short-term deposits at banks. As at 31 December 2010, the Group held securities qualifying as cash equivalents i.e. with a maturity of less than three months from the time of acquisition. These securities were sold during the reporting period.
In the reporting period the following dividend was paid to the shareholders of the parent company:
| Total | Number of shares |
Dividend per share |
|
|---|---|---|---|
| EUR mill. | EUR | ||
| Dividend 2010 paid in 2011 | 39.9 | 25,725,000 | 1.55 |
| Dividend 2009 paid in 2010 | 51.4 | 3,675,000 | 14.00 |
In the fi rst half year of 2011, subsidiaries paid EUR 0.3 mill. (fi rst half year 2010: EUR 0.1 mill.) of dividends to non-controlling interests.
The group of related parties (companies and persons) did not change compared to the fi nancial statements as at 31 December 2010.
The scope and amount of signifi cant business transactions as well as outstanding balances with associated companies are as follows:
| 1-6/2011 | 1-6/2010 | |
|---|---|---|
| EUR mill. | EUR mill. | |
| Sales | 35.4 | 33.6 |
| Other operating income | 0.7 | 0.5 |
| Cost of material and purchased services | 27.6 | 23.8 |
| 30/06/2011 | 31/12/2010 | |
| Trade receivables incl. amounts due resulting from construction contracts | 9.0 | 10.2 |
| Liabilities | 8.7 | 9.0 |
In order to hedge currency exchange rate risk, the Lenzing Group makes use of foreign currency forward contracts which are measured at market value.
Statement of Financial Position 24 Cash Flow Statement 26 Key Figures 27 Selected Explanatory Notes 28
The market values of the instruments employed as at the reporting dates are as follows:
2010: EUR 0.6 mill.) and are recognized directly in other comprehensive income.
| Foreign currency forward contracts |
4.8 | (0.7) |
|---|---|---|
| EUR mill. | EUR mill. | |
| 30/06/2011 | 31/12/2010 | |
| Type of derivative financial instrument |
gain (+)/loss (-) |
There were no material events requiring disclosure after the end of the interim reporting period.
| Foreign currency forward contracts |
6.0 | 3.1 |
|---|---|---|
| EUR mill. | EUR mill. | |
| 30/06/2011 | 31/12/2010 | |
| Type of derivative financial instrument |
gain (+)/loss (-) |
The hedges as at 30 June 2011 have maturities of up to 13 months.
The Group employs futures to hedge and manage raw material price risk (natural gas). As at 30 June 2011, these hedges have maturities of up to 18 months. Unrealized gains as at 30 June 2011 from the valuation of open futures or, respectively, the gain from the closing of contracts with delivery in the subsequent period amounted to EUR 0.2 mill. (31 December
Note 28. Corporate bodies
These condensed consolidated interim fi nancial statements of Lenzing group were neither audited nor subjected to an audit review.
Lenzing, 22 August 2011
Members of the Supervisory Board
The Ordinary Shareholders' Meeting of 29 March 2011 newly elected Patrick Prügger to the Supervisory Board. Hermann Bell's seat on the Supervisory Board was not renewed at his own request.
The constitutive meeting of the new Supervisory Board held after the Ordinary Shareholders' Meeting elected Michael Junghans as Chairman and Veit Sorger as Deputy Chairman of the Supervisory Board.
The changes in the Supervisory Board of Lenzing AG can be summarized as follows:
Hermann Bell, Linz Chairman (until 29 March 2011)
Michael Junghans, Vienna Deputy Chairman (until 29 March 2011) Chairman (from 29 March 2011)
Veit Sorger, Vienna Deputy Chairman (from 29 March 2011)
Patrick Prügger, Vienna Member of the Supervisory Board (from 29 March 2011)
The Management Board:
Peter Untersperger
Friedrich Weninger
Thomas G. Winkler
Declaration of the Management Board pursuant to Section 87 para 1 subpara 3 of the Stock Exchange Act
We confi rm to the best of our knowledge that the condensed interim fi nancial statements give a true and fair view of the assets, liabilities, fi nancial position and profi t or loss of the Group as required by the applicable accounting standards and that the interim Group management report gives a true and fair view of important events that have occurred during the fi rst six months of the fi nancial year and their impact on the condensed interim fi nancial statements, of the principal risks and uncertainties for the remaining six months of the fi nancial year and of the major related party transactions to be disclosed.
Lenzing, 22 August 2011
The Management Board:
Peter Untersperger Friedrich Weninger Thomas G. Winkler
| 2011 | |
|---|---|
| Preliminary results | Monday, 21 February |
| Final results | Tuesday, 8 March |
| 67th Shareholders' Meeting, "Reitersaal" hall of OeKB, Strauchgasse 3, A-1010 Vienna | Tuesday, 29 March |
| Quotation ex dividend | Thursday, 31 March |
| Dividend distribution | Friday, 1 April |
| Results 1st quarter | Wednesday, 11 May |
| Half year results | Tuesday, 23 August |
| Results 3 rd quarter | Tuesday, 15 November |
Lenzing Aktiengesellschaft 4860 Lenzing, Austria www.lenzing.com
Lenzing Aktiengesellschaft Corporate Communications Angelika Guldt Phone: +43 (0)7672 701-2127 Fax: +43 (0)7672 918-2127 E-mail: [email protected]
Metrum Communications GmbH, Vienna
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Lenzing Aktiengesellschaft . 4860 Lenzing, Austria . Tel.: +43 (0)7672 701-0 Fax: +43 (0)7672 701-3880 . E-Mail: [email protected] . www.lenzing.com
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