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Rias Annual Report 2018
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Annual Report
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RIAS
ANNUAL FINANCIAL ACCOUNT STATEMENT
2017/18
Announcement of full-year results 2017/18
NASDAQ Copenhagen A/S
Post Box 1040
1007 Copenhagen K
Denmark
- December 2018
ANNOUNCEMENT OF FULL-YEAR RESULTS FOR THE FINANCIAL YEAR 2017/18
The Board of RIAS A/S has today considered and approved the annual report for 2017/18, which includes the following information:
- Turnover was DKK 275 million, which is an increase of DKK 10.6 million, showing growth in both the building division and the industry division.
- The balance sheet reflects a stable gross contribution margin despite increases in raw material costs and intensified competition.
- Profit before tax was DKK 8.6 million, compared with DKK 8.0 million the previous year.
- EBIT guidance for the financial year 2018/19 is in the range of DKK 8.5 – 10.0 m.
CEO Henning Hess observes in his comments on the balance sheet:
"We can look back on a positive but also unstable year in a highly competitive market.
We respond to increased digitisation and the need to make use of artificial intelligence by upgrading our employees' qualifications. One of the new initiatives we have taken is to link machine data, e-mails and registration of orders with SAP. And close customer relations have been converted into value-creating collaboration on product innovation in the Swedish market.
Investment in the latest technology, combined with solid expertise, enables us to meet the demand for production in the high end of the market, where we now deliver complex solutions with very high precision. Consequently, and despite the pressure on prices, we have both increased our market share and moved higher up the value chain.
The solidarity of the group has strengthened knowledge-sharing and local capacity, so that we have been able to maintain and develop our business momentum.
All this has helped us to raise our top line in the past financial year without compromising earnings.
With regard to the environment, we have continued focus on optimisation, recycling and research into new types of plastic. Our optimisation of re-use continues, and all left-over material from production is collected, so that our exploitation level is now above 90%."
The annual report for 2017/18 can be read at www.rias.dk from 12 December 2018, and a printed version can also be requested from the head office.
The annual general meeting will be held on Wednesday 23 January 2019, at 1 pm at the company's address in Roskilde.
RIAS Annual Financial Account Statement 2017/18
Management's Review
Financial highlights
| 2017/18 | 2016/17 | 2015/16 | 2014/15 | 2013/14 | |
|---|---|---|---|---|---|
| Income statement (DKK million) | |||||
| Revenue | 275,0 | 264,4 | 266,2 | 265,8 | 279,4 |
| Production Costs | 191,2 | 184,4 | 185,4 | 185,7 | 195,7 |
| Gross profit | 83,8 | 80,0 | 80,8 | 80,1 | 83,7 |
| Capacity costs | 72,1 | 68,8 | 69,3 | 70,6 | 69,8 |
| Depreciation and amortisation | 2,6 | 2,8 | 3,3 | 3,6 | 4,2 |
| Profit before financial income and expenses | 9,1 | 8,4 | 8,2 | 5,9 | 9,7 |
| Net financials | -0,5 | -0,4 | -0,4 | -0,3 | -0,2 |
| Profit before tax | 8,6 | 8,0 | 7,9 | 5,6 | 9,5 |
| Corporation tax | 1,9 | 1,8 | 1,7 | 1,3 | 2,3 |
| Net profit for the year | 6,7 | 6,2 | 6,3 | 4,3 | 7,2 |
| Balance sheet at 30 September (DKK million) | |||||
| Non-current assets | 98,5 | 97,8 | 100,3 | 99,5 | 102,6 |
| Current assets | 110,0 | 108,6 | 108,8 | 101,5 | 103,0 |
| Assets | 208,5 | 206,4 | 209,1 | 201,0 | 205,6 |
| Equity | 166,1 | 164,1 | 162,5 | 160,5 | 160,7 |
| Deferred tax | 9,3 | 9,3 | 9,4 | 9,7 | 10,0 |
| Short-term liabilities | 33,1 | 33,0 | 37,2 | 30,8 | 34,9 |
| Liabilities and equity | 208,5 | 206,4 | 209,1 | 201,0 | 205,6 |
| Cash flows (DKK million) | |||||
| Cash flows from operating activities | 7,2 | 9,9 | 15,8 | 3,7 | 4,3 |
| Cash flows from investing activities | -4,1 | -1,2 | -4,7 | -0,8 | -1,8 |
| Including investments in property, plant and equipment of | -4,1 | -1,2 | -4,7 | -0,5 | -1,9 |
| Cash flows from financing activities | -4,6 | -4,6 | -4,2 | -4,6 | -4,6 |
| Total cash flows | -1,5 | 4,1 | 6,9 | -1,7 | -2,1 |
| Average number of fulltime employees | 102 | 96 | 93 | 95 | 90 |
- Capacity costs include distribution and administrative expenses.
Revenue (DKK million)
Profit before tax (DKK million)
RIAS Annual Financial Account Statement 2017/18
Management's Review
Ratios
| 2017/18 | 2016/17 | 2015/16 | 2014/15 | 2013/14 | |
|---|---|---|---|---|---|
| Gross margin | |||||
| Gross margin | 31% | 30% | 30% | 30% | 30% |
| Profit margin | 3% | 3% | 3% | 2% | 3% |
| Return on assets | 5% | 5% | 5% | 3% | 5% |
| Profit per DKK 100 share | 29 | 27 | 27 | 20 | 31 |
| Dividend per DKK 100 share | 25 | 20 | 20 | 18 | 20 |
| Equity value per DKK 100 share | 721 | 711 | 705 | 697 | 697 |
| Return on equity before tax | 5% | 5% | 5% | 4% | 6% |
| Return on equity after tax | 4% | 4% | 4% | 3% | 4% |
| Solvency ratio | 80% | 80% | 78% | 80% | 78% |
| Market price per DKK 100 share at 30 September | 448 | 430 | 390 | 460 | 503 |
The ratios have been calculated in accordance with the "Recommendations and Ratios 2015" issued by the Finansforeningens "Anbefalinger og nogletal 2015" expect for profit per share which has been calculated in accordance with IAS 33.
Definition of financial ratios:
Gross margin is calculated as gross profit in percentage of revenue.
Profit margin is calculated as profit before financials in percentage of revenue.
Return on assets is calculated as profit before financials in percentage of average operating assets for the year, ie of total assets less cash at bank and in hand and fixed asset investments.
Profit per DKK 100 share is calculated as profit for the year divided by 1/100 of the share capital after deduction of the Company's holding of treasury shares at 30 September.
Dividend per DKK 100 share is calculated as dividend divided by 1/100 of the share capital after deduction of the Company's holding of treasury shares at 30 September.
Equity value per DKK 100 share is calculated as equity at 30 September divided by 1/100 of the share capital after deduction of the Company's holding of treasury shares at 30 September.
Return on equity before tax is calculated as profit before tax in percentage of average equity for the year.
Return on equity after tax is calculated as net profit for the year in percentage of average equity for the year.
The solvency ratio it calculated as equity at 30 September in percentage of total assets at 30 September.
RIAS Annual Financial Account Statement 2017/18
Management's Review
Review
Mission
RIAS A/S's mission is to provide high-quality plastic materials and processing of these in Scandinavia.
The Company operates within two product areas:
- Sale, processing and distribution of semi-finished plastic products for all sectors of the building and construction industry.
- Sale processing and distribution of semi-finished plastic products for industry and the public sector.
Long-term objectives
RIAS A/S's long-term objectives are to increase the market value through organic growth and to give the shareholders a competitive return on their invested capital.
It is the Company's ambition to maintain its position as Denmark's largest supplier of semi-finished plastic products.
A summary of our expectations for 2017/18 published in the Annual Report for 2016/17 shows that the Company has met the announced earnings expectations relating to EBIT in the range of DKK 7.5 - 9.5 million. This should not least be seen in the light of the very competitive market and, thus, increasing pressure from competitors.
Expectations for 2018/19
In the financial year 2018/19, we will continue to concentrate on optimising the organisation and increasing growth in market shares and earnings. On this basis, the Board of Directors expects EBIT for 2018/19 to be in the range of DKK 8.5 - 10.0 million.
Special risks
Operating risks
Unforeseen price fluctuations and the loss of trading with major customers might affect the Company negatively compared to the earnings expectations; however, these are common risks in a commercial enterprise.
Financial risks
The Company does not speculate in financial risks, and thus the Company's risk management is only directed towards control of financial risks that are a direct result of RIAS A/S's operations and financing. The Company has no derivative financial instruments.
Interest rate risks
The Company does not take any interest rate positions to hedge interest rate risks as moderate changes in the interest rate level will not have any material effect on earnings.
Credit risks
The Company's credit risks relate to trade receivables.
It is the Company's policy to take out credit insurance in respect of trade receivables to the extent possible. Trade receivables are assessed on a current basis, and provisions for bad debts are made to the extent necessary. The Company's banks are Dansk Bank and Handelsbanken, and the Company has deposits exceeding the deposit guarantee provided by the State.
Foreign exchange risks
The Company is only to a limited extent affected by exchange rate developments. Nearly all trading is effected in DKK, SEK or EUR.
As the foreign exchange risk as regards DKK/EUR is considered very small, the Company does not hedge its net debt in EUR. The Company also has purchases and sales in SEK, and these transactions are affected by the SEK exchange rate.
Management considers the risk in this respect to be minimal as the number of transactions in SEK is limited and does not justify hedging of future purchases and sales in SEK. Management is monitoring the development in the exchange rate closely.
Liquidity risks
The Company only has debt that falls due within one year; see the balance sheet. The amount payable, DKK 33.1 million, can be fully covered by payments from trade receivables and bank deposits.
Intellectual capital resources
The Company has specific knowledge and skills within the trading in semi-finished plastic products as well as processing knowledge.
The Company has focus on attracting, retaining and developing highly educated and motivated employees who may contribute to securing one of the Company's core values: to provide the best service to the customers.
The Company had an average of 101.5 full-time employees in 2017/18, which is 5 more than in 2016/17. The Company has 103 full-time employees at 30 September 2018, which is 3 more than at 30 September 2017.
Environmental aspects
The Company endeavours to reduce environmental impact at any time and participates in return schemes through WUPPI, which arranges for recycling of plastic scrap.
The environmental impact is, however, immaterial in itself as the Company's activities mainly comprise the distribution and sale of semi-finished plastic products but not production.
The Company is not involved in any environmental cases.
Research and development activities
The Company has no special research activities, but is developing its business and skills on a current basis.
Incentive schemes
The Company has no incentive schemes.
RIAS Annual Financial Account Statement 2017/18
Management's Review
Financial Review
Income statement
Revenue
Revenue increased by DKK 10,591k from DKK 264,429k in 2016/17 to DKK 275,020k in 2017/18.
Revenue in the Industry Division increased by DKK 3,868k, and revenue in the Building & Construction Division increased by DKK 6,723k in 2017/18.
The positive development in the Industry Division reflects the increasing activity in the industrial sector, including our own processing department; moreover, demand for the technical plastic products has increased slightly.
Sales within the processing area are in line with expectations and contribute positively to our bottom line.
The development in sales of the Company's building and construction products was above expectations; thus, the declining revenue recorded in the first six months has been turned into a positive revenue development. Higher activity is seen with building merchants and DIY chains within the Company's products. However, the earnings margin remains under pressure as a result of the fierce competition.
Gross profit
The gross margin ratio remains unchanged from 2016/17 despite a very competitive market and increasing freight charges.
Distribution and administrative expenses
The expenses have increased by DKK 3,146k from DKK 71,612k in 2016/17 to DKK 74,758k in 2017/18, which is attributable to an increase in employees and trade fair attendance.
Tax on profit for the year
Tax on profit/loss for the year
The effective tax rate for 2017/18 is 22.3%.
Balance Sheet
Intangible assets
Intangible assets have decreased due to amortisation from DKK 56,791k at 30 September 2017 to DKK 56,130k at 30 September 2018. The most material intangible asset is goodwill of DKK 53,085k, which is attributable to the acquisitions of the activities in Rodena A/S and Nordic Plastic A/A. An impairment test has been performed of the goodwill values, which has been detailed in note 10 of the Financial Statements.
Software amounts to DKK 2,382k at 30 September 2018 compared to DKK 3,306k at 30 September 2017.
Property, plant and equipment
Property, plant and equipment increased from DKK 41,063k at 30 September 2017 to DKK 42,373k at 30 September 2018.
Inventories
Inventories decreased by DKK 476k from DKK 26,291k at 30 September 2017 to DKK 25,815k at 30 September 2018. The Company has continuous focus on adjusting inventories to match the current market.
Receivables
Receivables increased by DKK 3,838k from DKK 49,845k at 30 September 2017 to DKK 53,683k at 30 September 2018, which is primarily attributable to higher sales in the Building & Construction Division after the summer period in 2018 compared to last year.
Liabilities
Liabilities remained constant at DKK 42,317k at 30 September 2017 and DKK 42,391k at 30 September 2018.
Cash flows
Operating activities
Cash flows from operating activities decreased by DKK 2,708k from DKK 9,923k in 2016/17 to DKK 7,215k in 2017/18. The cash flow difference is primarily attributable to changes in working capital.
Investing activities
In 2017/18, the Company made various investments in fixtures and fittings, tools and equipment. Cash flows from investing activities increased by DKK 2,974k from last year.
Cash resources
The Company's total cash at bank and in hand has decreased by DKK 1,873k from a balance of DKK 28,658k at 30 September 2017 to a balance of DKK 26,785k at 30 September 2018. Management considers the Company's cash resources adequate.
RIAS Annual Financial Account Statement 2017/18
Management's Review
Shareholder Information and Corporate Governance
Shareholder information
Statutory Statement on Corporate Governance under section 107b of the Danish Financial Statements Act
Company Management believes that corporate governance is a key element and currently seeks to improve the Company's management structure. The overall framework for the Management of RIAS A/S has been planned with a view to ensuring that the Company meets its obligations towards shareholders, customers, employees, authorities and other stakeholders in the best possible way and that long-term value creation is supported.
The Board of Directors of RIAS A/S currently works on ensuring that the Company complies with the policies and procedures laid down by the Committee of Corporate Governance which NASDAQ Copenhagen requires be applied. The Board of Directors discusses how the Company's corporate governance in practice at any time ensures that the management of RIAS A/S meets the highest standard and that the work of the Board of Directors supports the Company's future business potential. Openness is a key factor.
The Board of Directors has chosen to publish the Statutory Statement on Corporate Governance under section 107b of the Danish Financial Statements Act on the Company's website.
Links to the Statutory Statement on Corporate Governance:
Current Statement (2018): riasnordic.com/cg/2018/
Committee of Corporate Governance: https://corporategovernance.dk/sites/default/files/media/anbefalinger_for_god_selskabsledelse_2017.pdf
Thus, the Board of Director's overall position on the recommendations for corporate governance of NASDAQ Copenhagen may be found on RIAS A/S's website. The Statutory Statement on Corporate Governance covers the financial period 1 October 2017 to 30 September 2018 and forms a part of Management's Review.
In this connection, RIAS A/S has chosen to compare the Company's Statutory Statement on Corporate Governance with the recommendations issued by the Committee on 23 November 2017 in order to provide the best possible overview of the recommendations with which RIAS A/S fully complies and the recommendations which the Company has chosen not to follow or which are still in the implementation process.
Work and responsibilities of the Board of Directors
The work of the Board of Directors has been laid down in rules of procedure which are assessed at least once a year. Thus, RIAS A/S meets the recommendations for members and the rules of procedure to be aligned with the requirements of the Company. The Board of Directors holds meeting four times a year or more frequently, if required. This process ensures that Management is able to react quickly and efficiently to external factors. In the financial year 2017/18, five meetings were held, including the Company's Annual General Meeting.
Composition of the Board of Directors
The Board of Directors consists of six members of whom two are employee representatives. The board members elected at the General Meeting are elected for one year at a time.
The Board of Directors has considered the personal capacity of each board member and finds that they perform their work on the Board of RIAS A/S in an appropriate manner -- despite the fact that none of the board members elected at the General Meeting are independent as defined by the recommendations, due to the company's ownership.
Executive Board
The Executive Board is appointed by the Board of Directors, and the Board of Directors determines the employment terms of the Executive Board. The Executive Board is responsible for the day-to-day operation of RIAS A/S, including the Company's development and results of activities and operations as well as internal affairs. The Board of Directors' delegation of responsibilities to the Executive Board has been laid down in the Company's rules of procedure and by the rules of the Danish Companies Act. The Executive Board of RIAS A/S consists of one person.
Remuneration to the Board of Directors and the Executive Board
The Board of Directors has adopted a very simple remuneration policy for both the Board of Directors and the Executive Board. The remuneration policy does not comprise any incentive programmes to the board or other variable components.
The Board of Directors of RIAS A/S is not comprised by any bonus or option schemes. The total annual remuneration to the Board of Directors is approved by the General Meeting in connection with the adoption of the Annual Report.
In 2017/18, the remuneration to the Executive Board consisted of a base salary including the usual benefits such as company car, telephone and yearly bonus. The employment terms of the Executive Board, including remuneration and resignation terms, are considered in accordance with the general standards for such positions.
Audit Committee
The Board of Directors of RIAS A/S also acts as Audit Committee.
The overall purpose of the Audit Committee is to minimise the risk of material misstatement of financial information – internally and externally. In practice, this is done by analysing the internal control environment, financial reporting, audit, accounting policies applied and presentation of interim financial statements and financial statements in general.
The Audit Committee focuses on a continued development of the control environment and a continuous assessment of procedures and financial and accounting issues of material importance to the financial information. The external auditors may be called in to participate in a meeting with the Audit Committee. Four meetings were held in 2017/18.
Statutory Statement on Corporate Social Responsibility under section 99(a) and (b) of the Danish Financial Statements Act
RIAS A/S wants to carry on its activities in a responsible manner and continuously works on creating a linkage between the Company's strategy and responsibility with respect to the society in which the Company operates. For RIAS A/S, the work relating to corporate social responsibility is an ongoing process, and in 2017/18 the Company continued to focus on such work and to structure the required internal processes.
Based on an assessment of materiality, the Company is working on areas such as staff, environment, suppliers and anti-corruption. On the next page, we describe the overall policy for how the policy has been turned into action and, where possible, what has been achieved.
RIAS Annual Financial Account Statement 2017/18
Management's Review
Shareholder Information and Corporate Governance
Social conditions
Securing good social conditions for the employees is a focus area of the Company. Follow-up on sickness absence is made on a monthly basis in order to improve health and safety at work, and the Company is generally working at ensuring an optimum working environment.
In cooperation with a group of employees from different departments, Management is focusing on addressing social conditions and working environment. Knowledge sharing across departments has been in focus during 2017/18.
Environment
The Company's impact on the environment is limited and mainly consists of PVC waste from products and CO2 consumption related to the Company's buildings. The Company is making a targeted effort to reduce the environmental impact from PVC waste, and the Company cooperates with the Wuppi organisation which collects and disposes of PVC waste in a sustainable way. RIAS's share is included together with other plastic distributors in Denmark. No specific figures per distributor are available and, therefore, we are not able to state any result.
The Company has current focus on reducing energy consumption in inventories, production and administration. Efforts are made to reduce heat consumption by optimising the existing plant. It is, however, not yet possible to measure the effect since the investment is done at year end.
Suppliers and human rights
The Company typically enters into long-term supplier relations, and the suppliers are primarily located in Europe. Apart from financial and quality assessments, the overall assessment of a supplier also includes an assessment of whether the supplier shows general social responsibility, including that the supplier does not use child labour etc. All suppliers are requested to fulfill a Supplier Compliance questionnaire once a year which among other issues includes questions in regards to human rights. In the fiscal year only suppliers who fulfill the requirements has been used.
Anti-corruption
The Company has implemented a whistleblower hotline where employees have the possibility of informing impartial persons in a law firm about breach or suspicion of breach of law, including corruption or cartel formation. The hotline has not received any calls in 2017/18. The management has also not via other ways been informed about issues relating to corruption.
All new employees must conduct an online training in Antitrust and Anti-Corruption within the first 3 months of their employment and all employees are frequently being updated in Antitrust and Anti-Compliance.
In the fiscal year all new employees have conducted the online training and the company has conducted two online compliance training sessions for all employees who could be disposed to corruption or antitrust issues in their daily work. Compliance is also a topic in all board meetings. ry or are aware of such issues.
Policy on gender representation on the Board of Directors and the Executive Board.
The incumbent members of the Board of Directors stand for election every year, and the members are elected based on their combined qualifications. During the year, a woman was elected Chairman of the Board of Directors resulting in a 25% female representation, which is above the specified target of 15%. Thus, equal representation has been achieved in the supreme governing body. At this time, the Board of Directors has four members, three men and one woman who is the Chairman. As the registered Executive Board consists of only one member at present, no target for gender representation has been set for the Executive Board.
It is part of RIAS A/S's staff policy that the female representation in the other management bodies should be increased.
RIAS A/S is making the following efforts to achieve a more equal gender representation in the other management bodies:
- Work towards having a minimum of 25% female managers in the Company within four years. This is pursued by using a recruitment agency to find the most suitable employees and to ensure that prospective candidates include well-qualified women. There have been no changes to the management team during the year; the female representation remains 20% and is thus unchanged from 2016/17 (20%). There has been no need for replacement; consequently, no active efforts have been made to change the gender representation during the year.
- Make the Company attractive to executives of both genders, eg by ensuring a staff policy which promotes the career opportunities of women and men.
- Create a framework for the career development of the individual person through networks with executives in other companies.
Share capital
The Company's share capital of DKK 23,063k is distributed on DKK 3,125k A-shares and DKK 19,938k B-shares.
The A-shares, which are non-negotiable, carry 10 votes per DKK 100 share, see clause 11 of the articles of association.
The B-shares, which are negotiable, carry 1 vote per DKK 100 share, see clause 11 of the articles of association.
The B-shares are listed on NASDAQ Copenhagen, and at 30 September 2018 the price corresponding to the market price of the B-shares was DKK 89.3 million.
The Company has more than 200 shareholders registered by name.
The following shareholders have stated that they own 5% or more of the total capital: thyssenkrupp Facilities Service GmbH, Germany, a nominal amount of DKK 3,125,000 A-shares and a nominal amount of DKK 9,363,000 B-shares, corresponding to 54.15% of the total capital. thyssenkrupp Facilities Service GmbH holds 79.34% of the votes.
SmallCap Danmark A/S, a nominal amount of DKK 5,772,800 B-shares, corresponding to 25.03% of the total capital. SmallCap Danmark A/S holds 11.28% of the votes.
The Board of Directors and the Executive Board do not hold any shares in the Company.
"Change of control" clauses
The Company has an agreement with thyssenkrupp about the use of SAP. If the control of the Company changes due to an implemented takeover bid, the Company expects however to be able to reestablish an appropriate new agreement about the use of SAP in such a situation.
In case of a takeover bid, the period of notice will be extended by six months to the Executive Board.
RIAS Annual Financial Account Statement 2017/18
Management's Review
Shareholder Information and Corporate Governance
Amendment of the articles of association
An amendment of the Company's articles of association requires that 2/3 of the share capital is represented at the General Meeting and that the proposed amendment is adopted by both 2/3 of the votes cast and of the share capital represented at the General Meeting.
Annual General Meeting
The Annual General Meeting will be held on 23 January 2019, at 01.00 pm CET, at the Company's address, Industrivej 11, Roskilde, Denmark.
Proposals for the General Meeting:
- The Board of Directors proposes that for the financial year 2017/18 dividend be distributed to the shareholders in the amount of DKK 25 per DKK 100 share of the share capital at 30 September 2018 of DKK 23,063,000, corresponding to a total proposed dividend of DKK 5,765,750.
- The Board of Directors proposes to the General Meeting that the present elected board members be reelected.
- The Board of Directors proposes to the General Meeting that Pricewaterhouse-Coopers be reelected.
Expected Stock Exchange Announcements in 2018/19
RIAS A/S expects to publish the following Stock Exchange Announcements:
12 December 2018: Announcement of financial results 2017/18
23 January 2019: Announcement of interim results
23 January 2019: Annual General Meeting
22 May 2019: Announcement of results for the first six months
21 August 2019: Announcement of interim results
Contact person – Investor relations
Inquiries concerning investor relations and the share market may be directed at:
Henning Hess, CEO
Telephone: +45 46 77 00 00
E-mail: [email protected]
Company information
RIAS A/S
Industrivej 11
DK-4000 Roskilde
Telephone: +45 46 77 00 00
Facsimile: +45 46 77 00 10
Website: www.rias.dk
Email: [email protected]
VAT no.: 44065118
Founded: 1 February 1959
Municipality of registered office: Roskilde
Board of Directors
Gudrun Degenhart (Chairman)
Steen Raagaard Andersen (Vice-chairman)
Peter Swinkels (Board Member)
Dieter Wetzel (Board Member)
June Svendsen (Employee Representative)
Søren Koustrup (Employee Representative)
Executive Board
Henning Hess, CEO
Auditors
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
Strandvejen 44
DK-2900 Hellerup
RIAS Annual Financial Account Statement 2017/18
Statement of Comprehensive Income
| Statement of comprehensive income 1 October to 30 September | Amounts in DKK '000 | ||
|---|---|---|---|
| Note | |||
| 2017/18 | 2016/17 | ||
| 3 | Revenue | 275,020 | 264,429 |
| Production Cost | 191,133 | 184,467 | |
| Gross profit | 83,887 | 79,962 | |
| 4-5 | Distribution expenses | 58,759 | 56,674 |
| 4-5 | Administrative expenses | 15,999 | 14,938 |
| Profit before financial income and expenses | 9,129 | 8,350 | |
| 6 | Financial income | 136 | 208 |
| 7 | Financial expenses | 675 | 590 |
| Profit before tax | 8,590 | 7,968 | |
| 8 | Corporation tax | -1,915 | -1,773 |
| Net profit for the year | 6,675 | 6,195 | |
| Other comprehensive income | 0 | 0 | |
| Total comprehensive income | 6,675 | 6,195 | |
| 9 | Earnings per share | ||
| Earnings per DKK 100 share | 28.94 | 26.86 | |
| Earnings per DKK 100 share, diluted | 28.94 | 26.86 |
RIAS Annual Financial Account Statement 2017/18
Balance sheet
| Balance sheet assets at 30 September | Amounts in DKK '000 | ||
|---|---|---|---|
| Note | 2018 | 2017 | |
| Assets | |||
| Non-current assets | |||
| 10 | Intangible assets | ||
| Goodwill | 53,085 | 53,085 | |
| Customer relations | 338 | 400 | |
| Software | 2,382 | 3,306 | |
| Assets under construction | 325 | 0 | |
| 56,130 | 56,791 | ||
| 11 | Property, plant and equipment | ||
| Land and buildings | 32,037 | 32,785 | |
| Plant and machinery | 7,937 | 6,034 | |
| Other fixtures and fittings, tools and equipment | 2,322 | 2,244 | |
| Assets under construction | 77 | 0 | |
| 42,373 | 41,063 | ||
| Total non-current assets | 98,503 | 97,854 | |
| Current assets | |||
| 12 | Inventories | 25,815 | 26,291 |
| 13 | Receivables | 53,683 | 49,845 |
| Prepayments | 3,781 | 3,783 | |
| Cash at bank and in hand | 26,785 | 28,658 | |
| Total current assets | 110,064 | 108,577 | |
| Total assets | 208,567 | 206,431 |
RIAS Annual Financial Account Statement 2017/18
Balance sheet
Balance sheet liabilities and equity at 30 September
Amounts in DKK '000
Note
| 2018 | 2017 | ||
|---|---|---|---|
| Liabilities and equity | |||
| 14 | Equity | ||
| Share capital | 23,063 | 23,063 | |
| Revaluation reserve | 1,898 | 1,898 | |
| Retained earnings | 135,449 | 134,540 | |
| Proposed dividend | 5,766 | 4,613 | |
| Equity | 166,176 | 164,114 | |
| Liabilities | |||
| Non-current liabilities | |||
| 15 | Deferred tax | 9,272 | 9,300 |
| Total non-current liabilities | 9,272 | 9,300 | |
| Current liabilities | |||
| 16 | Trade payables and other payables | 31,264 | 31,206 |
| Corporation tax | 1,855 | 1,811 | |
| Total current liabilities | 33,119 | 33,017 | |
| Total liabilities | 42,391 | 42,317 | |
| Total liabilities and equity | 208,567 | 206,431 | |
| 17 | Contingencies and other financial commitments | ||
| 18-23 | Other notes |
RIAS Annual Financial Account Statement 2017/18
Statement of Changes in Equity
Amounts in DKK '000
| Share capital | Revaluation reserve | Retained earnings | Proposed dividend | Total | |
|---|---|---|---|---|---|
| 2017/18 | |||||
| Equity at 1 October 2017 | 23,063 | 1,898 | 134,540 | 4,613 | 164,114 |
| Change in equity in 2017/18 | |||||
| Total comprehensive income | 0 | 0 | 6,675 | 0 | 6,675 |
| Dividend paid to shareholders | 0 | 0 | 0 | -4,613 | -4,613 |
| Proposed dividend to shareholders | 0 | 0 | -5,766 | 5,766 | 0 |
| Total changes in equity in 2017/18 | 0 | 0 | 909 | 1,153 | 2,062 |
| Equity at 30 September 2017 | 23,063 | 1,898 | 135,449 | 5,766 | 166,176 |
| 2016/17 | |||||
| Equity at 1 October 2016 | 23,063 | 1,898 | 132,958 | 4,613 | 162,532 |
| Change in equity in 2016/17 | |||||
| Total comprehensive income | 0 | 0 | 6,195 | 0 | 6,195 |
| Dividend paid to shareholders | 0 | 0 | 0 | -4,613 | -4,613 |
| Proposed dividend to shareholders | 0 | 0 | -4,613 | 4,613 | 0 |
| Total changes in equity in 2016/17 | 0 | 0 | 1,582 | 0 | 1,582 |
| Equity at 30 September 2017 | 23,063 | 1,898 | 134,540 | 4,613 | 164,114 |
RIAS Annual Financial Account Statement 2017/18 13
Cash flow statement
Amounts in DKK '000
| 2017/18 | 2016/17 | |
|---|---|---|
| Net profit for the year | 6,675 | 6,195 |
| Adjustment for non-cash operating items etc: | ||
| Tax on profit for the period | 1,915 | 1,773 |
| Depreciation and amortisation | 3,480 | 3,615 |
| Profit or loss on sale of property, plant and equipment and financial assets | 0 | 0 |
| Financial income | -136 | -208 |
| Financial expenses | 675 | 590 |
| Cash flows from operating activities before changes in working capital | 12,609 | 11,965 |
| Changes in inventories | 477 | 2,432 |
| Changes in receivables (and prepayments) | -3,836 | 1,644 |
| Changes in trade payables and other payables | 59 | -4,052 |
| Cash flows before financial income and expenses and tax | 9,309 | 11,989 |
| Financial income, paid | 65 | 93 |
| Financial expenses, paid | -259 | -203 |
| Corporation tax paid | -1,900 | -1,956 |
| Cash flows from operating activities | 7,215 | 9,923 |
| Purchase of intangible assets | -325 | 0 |
| Sale of intangible assets | 0 | 0 |
| Purchase of property, plant and equipment | -3,805 | -1,156 |
| Sale of property, plant and equipment | 0 | 0 |
| Purchase of financial assets | 0 | 0 |
| Cash flows from financing activities | -4,130 | -1,156 |
| Cash and cash equivalents at 30 September | -4,613 | -4,613 |
| Cash flows from financing activities | -4,613 | -4,613 |
| Cash flows for the year | -1,528 | 4,154 |
| Cash and cash equivalents at 1 October | 28,658 | 24,776 |
| Currency regulation cash | -345 | -272 |
| Cash and cash equivalents at 30 September | 26,785 | 28,658 |
RIAS Annual Financial Account Statement 2017/18
RIAS Annual Financial Account Statement 2017/18
15
Notes
Note 1. Accounting policies
RIAS A/S is a public limited company registered in Denmark. The Annual Report covers the period 1 October 2017 – 30 September 2018.
The Annual Report of RIAS A/S for 2017/18, which comprises Management's Review and Financial Statements for the period 1 October 2017 – 30 September 2018, is prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
On 12 December 2018, the Board of Directors and the Executive Board discussed and adopted the Annual Report of RIAS A/S for 2017/18. The Annual Report will be presented to the shareholders of RIAS A/S for adoption at the Annual General Meeting on 23 January 2019.
Basis of preparation
The Annual Report is presented in DKK rounded off to the nearest DKK 1,000.
The Annual Report is prepared under the historical cost convention.
The accounting policies described below have been applied consistently for the financial year and for the comparative figures.
Description of accounting policies
Translation policies
Transactions in foreign currencies are translated at the exchange rates at the dates of transaction or at an approximate rate. Gains and losses arising due to differences between the transaction date rates and the rates at the dates of payment are recognised in financial income and expenses in the income statement.
Receivables, payables and other monetary items in foreign currencies are translated at the exchange rates at the balance sheet date. Any differences between the exchange rates at the balance sheet date and the rates at the date of contracting the receivable or payable or the rates in the latest Annual Report are recognised in financial income and expenses in the income statement.
Fixed assets acquired in foreign currencies are translated at the exchange rates at the transaction date.
Income statement
Revenue
The sale of goods for resale and finished goods is recognised in revenue provided that delivery and transfer of risk have been made to the buyer before year end and provided that the income can be measured reliably and is expected to be received.
Revenue is measured at the fair value of the agreed consideration exclusive of VAT and indirect taxes collected on behalf of a third party. All types of discounts provided are recognised in revenue as deductions.
Segment reporting
The Company has one operating segment and carries on activities within two product areas:
- Sale, processing and distribution of semi-finished plastic products to all sectors of the building and construction industry (Building & Construction).
- Sale, processing and distribution of semi-finished plastic products to the industrial and the public sector (Industry).
Based on IFRS 8, "Operating Segments", and internal reporting to Management in connection with its assessment of the profit and financial position of the Company as well as allocation of resources, an operating segment has been identified with functions within sale, processing and distribution of semi-manufactured plastic products. This reflects Management's access to allocating resources and managing the organisation. Revenue is allocated to the product areas Building & Construction and Industry.
Production Costs
Cost of sales comprises costs incurred to achieve revenue for the year. This includes direct and indirect costs for raw materials and consumables.
Distribution expenses
Distribution expenses comprise expenses incurred for the distribution of goods sold during the year and for sales campaigns etc conducted in the year. This includes expenses for sales staff, advertising and fair costs as well as depreciation and impairment losses.
Administrative expenses
Administrative expenses comprise expenses incurred in the year for Management and administration, including expenses for administrative staff and office premises as well as depreciation and impairment losses. Also provisions for bad debts are included.
Financial income and expenses
Financial income and expenses comprise interest, price/exchange gains and losses as well as impairment of securities, debt and transactions in foreign currencies. Also extra payments and repayments under the on-account taxation scheme are included.
Tax on profit for the year
RIAS A/S is jointly taxed with all Danish companies in the thyssenkrupp Group. The current Danish corporation tax is distributed among the jointly tax companies in proportion to their taxable incomes.
The jointly tax companies are comprised by the joint taxation scheme. See note 23.
The tax for the year consists of current tax and movements in deferred tax for the year. The tax relating to the profit for the year is recognised in the income statement, whereas the tax directly relating to items recognised in equity is recognised directly in equity.
Balance Sheet
Intangible assets
Goodwill is recognised initially at cost in the balance sheet. Subsequently, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised.
The carrying amount of goodwill is allocated to the Company's cash generating units at the date of takeover.
Other intangible assets are measured at cost less accumulated amortisation and less any accumulated impairment losses. Other intangible assets are amortised on a straight-line basis over the expected useful lives, which are:
| Customer relations | 16 years |
|---|---|
| Software | 5-10 years |
Property, plant and equipment
Land and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost comprises the cost of acquisition and expenses directly related to the acquisition up until the time when the asset is ready for use.
Subsequent expenses, eg. to replace parts of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that payment will result in future economic benefits to the Company. The replaced parts are derecognised in the balance sheet and the carrying amount is transferred to the income statement. All other expenses for ordinary repair and maintenance are recognised in the income statement as incurred.
The cost of an aggregate asset is broken down by separate components which are depreciated individually if the useful lives of the individual components are not the same. Property, plant and equipment are depreciated on a straight-line basis over the expected useful lives of the assets, which are:Office and warehousebuildings10 - 30 yearsPlant and machinery8 - 10 yearsOther fixtures and fittings,tools and equipment3 - 10 yearsThe residual value of office and warehouse buildings is reassessed on a current basis and is at present 40% of cost.
Land is not depreciated.
The basis for depreciation is calculated taking into account the residual value of the asset and is reduced by any impairment losses. The residual value is determined at the date of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation ceases.
In the event of changes to the depreciation period or the residual value, the effect on depreciation is recognised prospectively as a change of accounting estimate.
Deprecation is recognised in the income statement under distribution and administrative expenses, respectively.
Impairment of non-current assets
Goodwill is tested for impairment on an annual basis, for the first time before the end of the year of acquisition.
The carrying amount of goodwill is tested for impairment in the cash-generating unit to which the goodwill has been allocated and is written down to the recoverable amount over the income statement if the carrying amount is higher than the recoverable amount. The recoverable amount is stated as the net present value of future net cash flows from the enterprise or the activity (cash-generating unit) to which the goodwill is allocated.
The carrying amounts of other non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.
Value in use is calculated as the net present value of expected future cash flows from the asset or the cash-generating unit of which the asset forms part.
Impairment losses are recognised where the carrying amount of an asset or a cash-generating unit exceeds the recoverable amount of the asset or the cash-generating unit. Impairment losses are recognised in the income statement under distribution and administrative expenses, respectively. Impairment of goodwill is recognised on a separate line in the income statement.
Impairment of goodwill is not reversed. Impairment of other assets is reversed to the extent that assumptions and estimates underlying the impairment change. Impairment losses are reversed only where the new carrying amount of the asset does not exceed the carrying amount that the asset would have had after depreciation if the asset had not been impaired.
Inventories
Inventories are measured at the lower of cost under the FIFO method and net realisable value.
The cost of goods for resale equals landed cost with addition of any customs.
The net realisable value of inventories is calculated at selling price with deduction of costs to sell and is determined allowing for marketability, obsolescence and development in expected sales sum.
Receivables
Receivables are measured at amortised cost. Provisions for bad debts are made if it is assessed that objective evidence of impairment of an individual receivable has occurred.
Impairment is calculated as the difference between the carrying amount and the expected cash flows, including the net realisable value of any security received.
Prepayments
Prepayments are measured at cost.
Equity
Dividend
Dividend is recognised as a liability at the time of adoption at the Annual General Meeting (the time of declaration). Dividend expected to be distributed for the year is disclosed as a separate equity item.
Reserve for revaluation
Reserve for revaluation comprises value adjustments relating to reassessment of the value of buildings in connection with transition to the Danish Financial Statements Act.
Current tax and deferred tax
Current tax liabilities and receivables are recognised in the balance sheet at the amount calculated on the taxable income for the year adjusted for tax on taxable incomes for prior years and for taxes paid on account.
Deferred tax is measured under the balance sheet liability method in respect of all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised in respect of temporary differences relating to goodwill not amortisable for tax purposes and other items in respect of which temporary differences -- expect for business acquisitions - have arisen at the time of acquisition without affecting the profit for the year or the taxable income. In cases where the computation of the tax base may be made according to different tax rules, deferred tax is measured on the basis of the Management's intended use of the asset and settlement of the liability, respectively.
Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised under other non-current assets at the value at which they are expected to be realised, either by elimination in tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity and jurisdiction.
RIAS Annual Financial Account Statement 2017/18
17
Notes
Deferred tax assets relating to tax liabilities are set off if the Company has a legal right to set off current tax liabilities and assets or intends to either settle current tax liabilities or assets on a net basis or to realise the assets and liabilities at the same time.
Deferred tax is measured on the basis of the tax rules and tax rates in the countries concerned that will be effective under the legislation at the balance sheet date when the deferred tax is expected to crystallise as current tax. Changes to deferred tax due to changed tax rates are recognised in the statement of comprehensive income for the year.
Provisions
Provisions are recognised when - in consequence of an event occurred before or on the balance sheet date - the Company has a legal or constructive obligation and it is probable that economic benefits must be given up to settle the obligation.
Provisions are measured based on the Management's best estimate of the amount expected to be required to settle the obligation.
Financial liabilities
Loans from credit institutions etc are recognised initially at fair value net of transaction expenses incurred. Subsequently, the financial liabilities are measured at amortised cost using the "effective interest method"; the difference between the proceeds and the nominal value is recognised in financial expenses in the income statement over the loan period.
Leases
For accounting purposes, leases are classified as either finance leases or operating leases.
A lease is classified as a finance lease when substantially all risks and rewards of owning the leased asset are transferred to the lessee. All other leases are classified as operating leases.
Lease payments relating to operating leases are recognised on a straight-line basis in the income statement over the term of the lease.
Cash flow statement
The cash flow statement shows cash flows for the year broken down by operating, investing and financing activities, changes for the year in cash and cash equivalents as well as cash and cash equivalents at the beginning and end of the year.
Cash flows from operating activities are calculated under the indirect presentation method as profit after tax adjusted for non-cash operating items, changes in working capital, interest received and paid and corporation tax paid.
Cash flows from investing activities comprise cash flows from acquisition and disposal of intangible assets, property, plant and equipment and other non-current assets as well as acquisition and disposal of securities which are not included in cash and cash equivalents.
Cash flows from financing activities comprise changes to the raising of loans, repayment of interest-bearing debt as well as dividend distribution to shareholders.
Cash and cash equivalents comprise cash at bank and in hand as well as short-term special-term deposits which may easily be converted into cash and which are subject to only immaterial risks of value changes.
Financial ratios
Earnings per share and diluted earnings per share are calculated in accordance with IAS 33.
Other ratios have been calculated in accordance with the "Recommendations and Ratios 2015" issued by the Danish Society of Financial Analysts.
Note 2. Estimates and assessments
The uncertainty of estimates
Calculation of the carrying amount of certain assets and liabilities requires estimates, judgements and assumptions with respect to future events.
The estimates and assumptions made are, among other things, based on historical experience and other factors which Management deems justifiable in the circumstances, but which are inherently uncertain and unpredictable. The assumptions may be incomplete or inaccurate, and unexpected events or circumstances may arise. Due to the risks and uncertainties to which the Company is subject the actual results may deviate from the estimates made.
It may be necessary to change previous estimates due to changes in the circumstances on which the previous estimates were based or due to new knowledge or subsequent events.
Estimates which are material to the financial reporting are made by, among other means, valuation and impairment test of goodwill, receivables and write-down of inventories.
Impairment test of goodwill
In connection with the annual impairment test of goodwill, or when indication of impairment occurs, it is assessed whether the Company will be able to generate adequate positive future net cash flows to support the value of goodwill and other net assets. The carrying amount of goodwill is DKK 53 million.
Due to the nature of the business, the estimate of expected future cash flows covers many years, which naturally gives rise to uncertainty. The uncertainty relates to Management's expectations relating to future growth and the possibility of achieving the planned cost savings and optimisations.
The impairment test is described in detail in note 10.
Write-down for inventory obsolescence
The estimation uncertainty with respect to inventories relates to write-down to net realisable value. During 2017/18 a regulation has been done due to scrapping of already written off material.
The Company continues to focus on further improvement of the inventory control which is supported by changes to the ERP system and procedures.
The write-down for obsolescence amounts to DKK 2,246k and is further described in note 12.
Notes
Amounts in DKK '000
| 2017/18 | 2016/17 | |
|---|---|---|
| Note 3. Revenue | ||
| Revenue, Industry | 181,825 | 177,957 |
| Revenue, Building and construction | 93,195 | 86,472 |
| 275,020 | 264,429 |
Sales outside Denmark amount to 11,3% of the Company's revenue. All non-current assets are placed in Denmark.
The Group's products are mainly sold to Danish customers. Sales are distributed on a large number of different products and customers. No single customer accounts for more than 10% of total sales.
The operating segment consists of two sales departments for Building & Construction and Industry, respectively, which are supported by a number of joint functions such as purchasing, logistics and production, and the purchased products are used for re-sale in both Industry and Building & Construction. There are also a number of employees who carry out production and processing of products for both Industry and Building & Construction, and this also applies to employees in the two sales offices. Based on this, Management has assessed that RIAS A/S only has one operating segment. The Building & Construction Division primarily deals in finished plastic products, eg roof plates, thermo roofs, etc. The Industry Division deals in semi-finished plastic products, eg tubes, plastic rods and processing of these.
Note 4. Depreciation and amortisation
| Depreciation and amortisation are included in productions cost as follows: | ||
|---|---|---|
| Depreciation of property, plant and equipment | 878 | 835 |
| Depreciation and amortisation are included in distribution expenses as follows: | ||
| Amortisation of intangible assets | 9 | 34 |
| Depreciation of property, plant and equipment | 1,498 | 1,526 |
| 1,507 | 1,560 | |
| Depreciation and amortisation are included in administrative expenses as follows: | ||
| Amortisation of intangible assets | 977 | 1,074 |
| Depreciation of property, plant and equipment | 118 | 146 |
| 1,095 | 1,220 | |
| Total depreciation and amortisation | 3,480 | 3,615 |
| Note 5. Staff | ||
| Wages and salaries | 40,182 | 38,328 |
| Pensions, defined contribution plan | 5,138 | 5,017 |
| Remuneration to the Executive Board | 2,196 | 2,203 |
| Pension to the Executive Board | 167 | 167 |
| Fee to the Board of Directors | 90 | 90 |
| Other social security expenses | 1,271 | 1,218 |
| 49,044 | 47,023 | |
| Average number of fulltime employees | 102 | 96 |
| Number of fulltime employees at 30 September | 103 | 100 |
| Total remuneration to the Executive Board | 2,363 | 2,370 |
| Total remuneration to the Executive Board and the Board of Directors | 2,453 | 2,460 |
| The CEO has 1 year notice period with salary in case of a termination of the contract. In case of a take over the period is 1.5 year | ||
| Salaries are included in productions cost as follows: | 0 | 0 |
| Salaries are included in distribution expenses as follows: | 42,346 | 40,629 |
| Salaries are included in administrative expenses as follows: | 6,698 | 6,394 |
| Note 6. Financial income | ||
| Interest, cash at bank and in hand, etc | 65 | 93 |
| Exchange gains | 71 | 115 |
| 136 | 208 |
RIAS Annual Financial Account Statement 2017/18
Notes
| Amounts in DKK '000 | ||
|---|---|---|
| 2017/18 | 2016/17 | |
| Note 7. Financial expenses | ||
| Interest, credit institutions etc | 259 | 203 |
| Exchange losses | 416 | 387 |
| 675 | 590 | |
| Note 8. Corporation tax | ||
| Current tax for the year | 1,943 | 1,860 |
| Deferred tax for the year | -28 | -87 |
| 1,915 | 1,773 | |
| 22% tax calculated on profit for the year | 1,890 | 1,753 |
| Tax effect of non-deductible costs | 25 | 20 |
| Adjustment of deferred tax due to reduction of the tax rate | 0 | 0 |
| 1,915 | 1,773 | |
| Effective tax rate | 22.30% | 22.30% |
| Note 9. Earnings per share | ||
| Net profit for the year | 6,675 | 6,195 |
| Average number of shares, DKK 100 | 230,630 | 230,630 |
| Earnings per DKK 100 share | 28.94 | 26.86 |
| Earnings per DKK 100 share, diluted | 28.94 | 26.86 |
RIAS Annual Financial Account Statement 2017/18
Notes
Amounts in DKK '000
| Note 10. Intangible assets | Goodwill | Customer relations | Software | Under construction | Total |
|---|---|---|---|---|---|
| Cost at 1 October 2017 | 53,085 | 1,000 | 23,624 | 0 | 77,709 |
| Additions for the year | 0 | 0 | 0 | 325 | 325 |
| Disposals for the year | 0 | 0 | -10,015 | 0 | -10,015 |
| Cost at 30 September 2018 | 53,085 | 1,000 | 13,609 | 325 | 68,019 |
| Amortisation at 1 October 2017 | 0 | -600 | -20,318 | 0 | -20,918 |
| Amortisation for the year | 0 | -62 | -924 | 0 | -986 |
| Reversed depreciations on the disposals og the year | 0 | 0 | 10,015 | 0 | 10,015 |
| Amortisation at 30 September 2018 | 0 | 662 | -11,227 | 0 | -11,889 |
| Carrying amount at 30 September 2018 | 53,085 | 338 | 2,382 | 325 | 56,130 |
| Cost at 1 October 2016 | 53,085 | 1,000 | 23,624 | 0 | 77,709 |
| Additions for the year | 0 | 0 | 0 | 0 | 0 |
| Disposals for the year | 0 | 0 | 0 | 0 | 0 |
| Cost at 30 September 2017 | 53,085 | 1,000 | 23,624 | 0 | 77,709 |
| Amortisation at 1 October 2016 | 0 | -537 | -19,223 | 0 | -19,810 |
| Amortisation for the year | 0 | -63 | -1,050 | 0 | -1,108 |
| Reversed depreciations on the disposals og the year | 0 | 0 | 0 | 0 | 0 |
| Amortisation at 30 September 2017 | 0 | -600 | -20,318 | 0 | -20,918 |
| Carrying amount at 30 September 2017 | 53,085 | 400 | 3,306 | 0 | 56,791 |
Impairment test
Goodwill
The most material intangible asset is goodwill of DKK 53,085k, which is attributable to the acquisitions of the activities in Rodena A/S and Nordic Plastic A/S. At 30 September 2018, Management tested the carrying amount of goodwill for required write-down for impairment based on the allocation made to the cash-generating unit of the cost of goodwill. In Management's opinion, RIAS A/S has only one cash-generating unit, which is the legal entity.
Amounts in DKK '000
| RIAS A/S | 2018 | 2017 |
|---|---|---|
| 53,085 | 53,085 |
The recoverable amount is based on the value in use determined by using expected net cash flows on the basis of approved budgets as well as substantiated projections for the remaining period.
Key assumptions
Revenue estimate for the budget period is based on approved budget and forecast for the next three years based on Management's experience and expectations for the future. Revenue growth in the budget and forecast periods is based on expectations for an increase in revenue of 7.2% which will, among other things, be achieved through our activities in Sweden, where we can see that the market is growing, and the development in the processing department.
A growth rate of 2% is estimated for years 4 and 6, as well as a growth rate of 2% in the terminal period (2016/17: 2%). In Management's assessment this is a realistic level of growth for the building and construction market as well as the industrial sector, in which RIAS A/S is operating.
EBIT is estimated with a steady increase from the current level of DKK 9.1 million to DKK 14.2 million in the terminal period. The increase is attributable to increased sales, see above, and focus on product groups with higher gross profit, increased efficiency and cost savings, which are achieved through improved utilisation of IT systems and focus on improved use of the Company's resources. The measures were already initiated in 2017/18.
A discount rate of 8% (2016/17: 8.01%) has been applied as, in Management's assessment, this is in line with the risk profile of RIAS A/S. The discount rate has been adjusted as a result of the development in the risk-free interest rate.
Sensitivity analysis
The difference between the calculated recoverable amount, DKK 176.4 million, and the carrying amount of equity, DKK 175.4 million, is DKK 1 million. In Management's assessment, the discount rate may increase to 8.04% before write-down for impairment is required, and Management is monitoring the development in the risk-free interest rate closely. Another key assumption of the impairment test is our expectations for an increase in EBIT to DKK 14.2 million in the terminal period. EBIT may decrease to DKK 14.1 million in the terminal period before write-down for impairment is required. Due to the fact that expected future cash flows are based on an estimate, the impairment test is inherently subject to uncertainty.
RIAS Annual Financial Account Statement 2017/18
Notes
Amounts in DKK '000
| Land and buildings | Plant and machinery | Other fixtures and fittings tools and equipment | Under construction | Total | |
|---|---|---|---|---|---|
| Note 11. Property, plant and equipment | |||||
| Cost at 1 October 2017 | 61,906 | 18,165 | 22,698 | 0 | 102,769 |
| Additions for the year | 0 | 3,051 | 677 | 77 | 3,805 |
| Disposals for the year | 0 | -320 | 1,942 | 0 | -2,262 |
| Cost at 30 September 2018 | 61,906 | 20,896 | 21,433 | 77 | 104,312 |
| Depreciation at 1 October 2017 | -29,121 | -12,131 | -20,454 | 0 | -61,706 |
| Depreciation for the year | -748 | -1,148 | -599 | 0 | -2,495 |
| Reversed depreciation on disposals for the year | 0 | 320 | 1,942 | 0 | 2,262 |
| Depreciation at 30 September 2018 | -29,869 | -12,959 | -19,111 | 0 | -61,939 |
| Carrying amount at 30 September 2018 | 32,032 | 7,937 | 2,322 | 77 | 42,373 |
| Cost at 1 October 2016 | 61,906 | 17,481 | 22,226 | 0 | 101,613 |
| Additions for the year | 0 | 684 | 472 | 0 | 1,156 |
| Disposals for the year | 0 | 0 | 0 | 0 | 0 |
| Cost at 30 September 2017 | 61,906 | 18,165 | 22,698 | 0 | 102,769 |
| Depreciation at 1 October 2016 | -28,373 | -11,043 | -19,782 | 0 | -59,198 |
| Depreciation for the year | -748 | -1,088 | -672 | 0 | -2,508 |
| Reversed depreciation on disposals for the year | 0 | 0 | 0 | 0 | 0 |
| Depreciation at 30 September 2017 | -29,121 | -12,131 | -20,454 | 0 | -61,706 |
| Carrying amount at 30 September 2017 | 32,785 | 6,034 | 2,244 | 0 | 41,063 |
| Note 12. Inventories | 2018 | 2017 | |||
| --- | --- | --- | |||
| Inventories are specified as follows: | |||||
| Goods for resale | 27,755 | 28,355 | |||
| Work in progress | 306 | 482 | |||
| Inventories at 30 September | 28,061 | 28,837 | |||
| Write-down at 1 October | -2,546 | -2,922 | |||
| Reversed write-down made in previous years | 300 | 376 | |||
| Write-down for the year | 0 | 0 | |||
| Write-down at 30 September | -2,246 | -2,546 | |||
| 25,815 | 26,291 | ||||
| Cost of goods sold included in production costs. | 174,249 | 167,942 |
Adjustments relating to write-down of inventories are included in Production Costs.
RIAS Annual Financial Account Statement 2017/18
Notes
| Amounts in DKK '000 | ||
|---|---|---|
| Note 13. Receivables | 2018 | 2017 |
| Trade receivables | 53,577 | 48,519 |
| Receivables from group enterprises | 1 | 2 |
| Other receivables | 105 | 1,337 |
| 53,683 | 49,858 | |
| Insured trade receivables | 39,598 | 36,766 |
| Trade receivables not insured | 14,626 | 12,185 |
| Trade receivables at 30 September | 54,224 | 48,951 |
| Provisions for bad debts are specified as follows: | ||
| Provisions at 1 October | -430 | -382 |
| Realised in the year | 123 | 138 |
| Reversed | 0 | 0 |
| Provisions for the year | -249 | -186 |
| Provisions at 30 September | -556 | -430 |
| Moreover, trade receivables which are overdue at 30 September but not provided for are included as follows: | ||
| Period overdue: | ||
| Up to 30 days | 2,224 | 2,199 |
| Between 30 and 90 days | 282 | 929 |
| More than 90 days | 542 | 655 |
| 3,048 | 3,783 | |
| Including insured receivables of | 1,901 | 1,980 |
Provisions for bad debts are made on a current basis. Adjustments to the provisions are included in distribution expenses.
RIAS Annual Financial Account Statement 2017/18
Notes
Note 14. Equity
Share capital
The Company's share capital of DKK 23,063k is distributed on DKK 3,125k A-shares and DKK 19,938k B-shares. The share capital is fully paid up. The A-shares, which are non-negotiable, carry 10 votes per DKK 100 share, see clause 11 of the articles of association.
The B-shares, which are negotiable, carry 1 vote per DKK 100 share, see clause 11 of the articles of association.
Capital management
RIAS A/S assesses on a current basis the need to adjust the capital structure to balance the high requirements to return on equity against the increased uncertainty related to loan capital. The equity share of total assets was 80% at 30 September 2018 (30 September 2017: 80%). The solvency ratio target is 70-80%.
The target for return on equity is 8-10%. Realised return on equity before tax was 5% in 2017/18 (2016/17: 5%).
It is RIAS A/S's dividend policy that the shareholders should earn a return on their investments in the form of price increases and dividend which exceed a risk-free bond investment. Payment of dividend should be made with consideration to the required consolidation of equity as basis for the Company's continued expansion.
Dividend
Dividend of DKK 5,766k (2016/17: DKK 4,613k) is proposed, corresponding to dividend per share of DKK 25 (2016/17: DKK 20).
On 25 January 2018, RIAS A/S paid dividend to its shareholders of DKK 4,613k (2016/17: DKK 4,613k), corresponding to dividend per share of DKK 20 (2016/17: DKK 20).
The distribution of dividend to the shareholders of RIAS A/S has no tax consequences for RIAS A/S.
| Amounts in DKK '000 | ||
|---|---|---|
| 2018 | 2017 | |
| Note 15. Deferred tax | ||
| Balance at 1 October | 9,300 | 9,387 |
| Adjustment for the year of deferred tax | -28 | -87 |
| Balance at 30 September | 9,272 | 9,300 |
| Deferred tax relates to: | ||
| Buildings | 4,663 | 4,630 |
| Operating equipment | 601 | 457 |
| Intangible assets | 3,855 | 4,070 |
| Other temporary differences | 153 | 143 |
| 9,272 | 9,300 |
RIAS Annual Financial Account Statement 2017/18
Notes
Amounts in DKK '000
| 2018 | 2017 | |
|---|---|---|
| Note 16. Trade payables and other payables | ||
| Trade payables | 11,894 | 11,589 |
| Payables to group enterprises | 375 | 122 |
| Accrued VAT | 4,266 | 4,800 |
| Holiday pay obligation | 4,853 | 4,654 |
| Accrued promotion expenses | 7,367 | 7,390 |
| Other payables | 2,509 | 2,651 |
| 31,264 | 31,206 |
The Company has no payables to the Parent Company.
Note 17. Contingencies and other financial commitments
The Company is a party to a few pending complaints. In the Management's opinion, the outcome of these complaints will not affect the Company's financial position except for the receivables and commitments, which have been recognised in the balance sheet at 30 September 2018.
The Company as lessee
The Company leases properties and operating equipment under operating leases.
The lease term is typically a period of between two to six years with the possibility of extension after expiry. Under the terms of the leases there are no conditional lease payments.
Payments under interminable operating leases appear as follows:
| 2018 | 2017 | |
|---|---|---|
| 0-1 year | 3,279 | 3,103 |
| 1-5 years | 658 | 1,276 |
| 3,937 | 4,379 |
For 2017/18 DKK 4,610 has been recognised in the Company's income statement. (2016/17: tkr. 4.969)
Note 18. Fees to auditors appointed at the General Meeting
| 2018 | 2017 | |
|---|---|---|
| PWC: | ||
| Statutory audit | 365 | 380 |
| Tax advisory services | 56 | 52 |
| Non-audit services | 150 | 127 |
| 572 | 559 |
Fee for Non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab consists of general accounting and tax advice, mainly related to IFRS and tax.
RIAS Annual Financial Account Statement 2017/18
Notes
Note 19. Financial risks
Financial risks
The Company does not speculate in financial risks, and the Company's management of such exposures focuses exclusively on managing financial risks that are a direct consequence of the Company's operations and financing.
The Company has no derivative financial instruments.
Interest rate risks
The Company does not enter into interest rate positions to hedge against interest rate exposures as moderate changes in the interest rate level will have no material effect on the Company's earnings and equity. The sensitivity to interest rate risks is low and mainly relates to cash at bank and in hand.
Credit risks
The Company's credit risks relate to trade receivables which arise when the Company carries through sales in respect of which prepayments are not received. The Company's policy for assuming credit risks implies that all customers are credit rated upon creation and on a current basis. If the credit rating of the customer is not satisfactory, separate security in respect of the sale is required. The primary instrument to hedge unsecure payments is to take out credit insurance which covers up to 90% of the total receivable exclusive of VAT. Credit insurance is taken out with COFACE credit insurance. If credit insurance cannot be taken out in respect of a customer, the customer is carefully assessed based on internal credit limits, or prepayment is requested.
The management of the credit exposure is based on internal customer credit limits. The credit limits are determined on the basis of the creditworthiness of the customers with consideration to the current market situation.
Provisions for bad debts are made to the extent necessary.
Non-insured trade receivables amounts to 13,493
The company has deposit above state warranty and therefore there is a credit risk of 25,006
Only banks with low risk are being used.
Amounts in DKK '000
| Classes of financial assets and liabilities | 2017/18 | 2016/17 |
|---|---|---|
| Financial assets: | ||
| Lending and receivables | 53,683 | 49,845 |
| Cash at banks | 26,785 | 28,658 |
| Financial liabilities: | ||
| Financial liabilities at amortised cost | 30,798 | 30,687 |
Foreign exchange risks
The Company is only to a limited extent exposed to the development in foreign exchange. Almost all trading takes place in DKK or EUR. As the foreign exchange risk relating to DKK/EUR is considered very low, the Company does not hedge its net debt in foreign currency.
Liquidity risks
The Company's liquidity reserve consists of cash holdings. The Company's aim is to have adequate liquidity resources to be able to carry on appropriate operating activities in case of liquidity fluctuations.
The Company only has debt which falls due within one year, cf. the balance sheet. The payment of this debt, DKK 33 million, can be fully covered by payments from receivables.
RIAS Annual Financial Account Statement 2017/18
Notes
Note 20. Related parties and related party transactions
Controlling interest: thyssenkrupp Facilities Services GmbH, which holds all the A-shares of RIAS A/S, exercises control over the Company.
RIAS A/S has registered the following shareholders as holding 5% or more of the share capital:
- 54.15% thyssenkrupp Facilities Services GmbH
Other related parties:
The Company's related parties comprise the Company's Board of Directors and the Executive Board and family members of these persons. Moreover, related parties include the thyssenkrupp Group.
There have been no transactions with the Board of Directors, the Executive Board, senior officers, significant shareholders or other related parties, except for the payment of remuneration, including legal assistance.
The Annual Report of the ultimate Consolidated Financial Statements in which RIAS A/S is included as a subsidiary may be obtained from: thyssenkrupp AG, thyssenkrupp Allee 1, 45143 Essen, Germany, or may be obtained at: http://www.thyssenkrupp.com/en/investor/index.html
Amounts in DKK '000
| 2017/18 | 2016/17 | |
|---|---|---|
| Trade with companies in thyssenkrupp: | ||
| Other related parties | ||
| Other income | 1,870 | 1,780 |
| Sale of goods and services | 14 | 7 |
| Purchase of goods and services | 4,589 | 5,121 |
| There are no transactions with the Parent Company | ||
| Payables to companies in thyssenkrupp | 375 | 122 |
| Receivables with companies in thyssenkrupp | 2 | 7 |
| Key management personnel | ||
| Legal assistance from Lund Elmer Sandager (Board Member) | 122 | 236 |
Note 21. Subsequent events
No material events have occurred after 30 September 2018.
Note 22. Accounting regulation
A number of new IFRS standards and interpretations have been issued which are not yet mandatory for RIAS A/S at the time of preparation of the Annual Report for 2017/18, including IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases.
Management has investigated the effect of implementation of the standards mentioned.
IFRS 9, "Financial Instruments", becomes effective for financial years beginning on or after 1 January 2018 and will thus apply to RIAS as from financial year 2018/19. The standard is not expected to have material influence on the financial statements going forward.
IFRS 15, "Revenue from Contracts with Customers", was issued in May 2014 and amended in April 2016. It becomes effective for financial years beginning on or after 1 January 2018 and will thus apply to RIAS as from financial year 2018/19. The standard is not expected to have material influence on the financial statements going forward.
IFRS 16 "Leases" was issued in January 2016 and becomes effective as from 1 January 2019. Thus, it will apply to RIAS as from financial year 2019/20. The standard regulates the accounting treatment of leases and is expected to affect the financial statements as recognition of leased building and minor assets is expected. Assets and liabilities that will be affected by the new standard have been identified, and Management is in the process of investigating the effect on the financial statements.
Note 23. Contingent liabilities
The Company is jointly and severally liable for the tax on the Danish jointly taxed income. thyssenkrupp Elevator A/S acts as administration company in the Danish joint taxation. Accrued corporation tax in the Danish joint taxation amounts to DKK 4,619k at 30 September 2018.
RIAS Annual Financial Account Statement 2017/18
Management's statement
Management's Statement
The Board of Directors and the Executive Board have today considered and adopted the Annual Report of RIAS A/S for 2017/18.
The Annual Report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for listed companies.
In our opinion, the Financial Statements give a true and fair view of the financial position of the Company at 30 September 2018 and of the results of the Company operations and cash flows for the financial year 1 October 2017 – 30 September 2018.
In our opinion, Management's Review provides a true and fair account of the development of Company's activities and financial circumstances, the profit for the year, cash flows and financial position as well as a description of the most material risks and uncertainties that may affect the Company.
We recommend that the Annual Report be adopted at the Annual General Meeting.
Roskilde, the 12th of December 2018
RIAS Annual Financial Account Statement 2017/18
for some it is just plastic
- for us it represents 100,000 opportunities
RIAS A/S
Industrivej 11
DK - 4000 Roskilde
Tlf. +45 46 77 00 00
Fax +45 46 77 00 10
www.rias.dk
VAT no. DK 44065118