AI assistant
Schouw & Co. Interim / Quarterly Report 2016
3383_rns_2016-05-03_3c7d295d-6341-41dd-8b55-0c38b9ff70df.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
2016
Interim report
2016 Q1
Company announcement No. 9/2016
3 May 2016 · 30 pages
Table of contents
- Financial highlights ... 2
- Interim report ... 3
- Our businesses ... 7
- Income statement ... 19
- Balance sheet ... 20
- Cash flow statement ... 21
- Statement of changes in equity ... 22
- Notes to the financial statements ... 23
- Management statement ... 30
schouw+c9
Highlights
- Overall, the Schouw & Co. businesses are off to a good start to 2016. Consolidated revenue was DKK 2,776 million, which is consistent with last year, and EBIT was up by 3% to DKK 157 million.
- BioMar lowers its revenue guidance and maintains its full-year EBIT forecast. Fibertex Personal Care raises its full-year EBIT guidance. All other portfolio companies maintain their full-year revenue and EBIT forecasts.
- The acquisition of GPV was completed effective 1 April 2016, and the company's financial results will be consolidated for the remainder of the year.
- Schouw & Co. now expects full-year 2016 revenue of about DKK 14.1 billion. The Group now expects EBIT in the range of DKK 810-900 million. GPV is expected to contribute EBIT of DKK 40 million, and Fibertex Personal Care has raised its EBIT forecast by DKK 10 million.
Statement by Jens Bjerg Sørensen, President of Schouw & Co.:
“Schouw & Co. had yet another good reporting period in the first quarter of 2016. While our revenue was flat, EBIT was up by 3% to the highest level in a first quarter in our company's history. The improvement was mainly driven by the effects of investment and acquisitions, as well as efficient operations and strong capacity utilisation.
The Specma acquisition took full effect in the first quarter, and we have now consolidated the company in our hydraulics operations. Effective from the second quarter, GPV also becomes a part of Schouw & Co., and the work to integrate the company is already well underway. Our focus is on realising the plans we have for growing and developing our businesses, and we are confident that by acquiring Specma and GPV, we have taken important steps in the continual efforts to ensure long-term profitability for Schouw & Co.
The first quarter is the low season for Schouw & Co., but the initial good earnings performance has enabled us to raise our EBIT guidance slightly. Schouw & Co. remains financially very strong and we are well positioned to respond to any opportunities and challenges that may arise.”
This is a translation of Schouw & Co.’s Interim Report for the three months ended 31 March 2016. The original Danish text shall be controlling for all purposes, and in case of discrepancy, the Danish wording shall be applicable.
Financial highlights and key ratios
| GROUP SUMMARY (DKK MILLION) | Q1 2016 | Q1 2015 | Total | GROUP SUMMARY (DKK MILLION) | Q1 2016 | Q1 2015 | 2015 Total |
|---|---|---|---|---|---|---|---|
| Revenue and income | Per share data | ||||||
| Revenue | 2,776 | 2,784 | 12,566 | Earnings per share (of DKK 10) | 4.95 | 5.29 | 27.48 |
| Operating profit before depreciation (EBITDA) | 256 | 246 | 1,214 | Diluted earnings per share (of DKK 10) | 4.94 | 5.28 | 27.38 |
| Depreciation and impairment losses | 99 | 95 | 383 | Net asset value per share (of DKK 10) | 284.53 | 275.41 | 282.10 |
| Operating profit (EBIT) | 157 | 152 | 831 | Share price, end of period (of DKK 10) | 409.00 | 333.00 | 387.00 |
| Profit after tax in associates and joint ventures | 14 | 19 | 86 | Price/net asset value | 1.44 | 1.21 | 1.37 |
| Financial items, net | -14 | 18 | -46 | Market capitalisation | 9,724 | 7,857 | 9,131 |
| Profit before tax | 157 | 189 | 871 | ||||
| Profit for the period | 116 | 124 | 645 | ||||
| Cash flows | Definitions of financial ratios | ||||||
| Cash flows from operating activities | 110 | 172 | 1,171 | ||||
| Cash flows from investing activities | -739 | -78 | -569 | ||||
| Of which investment in property, plant and equipment | -145 | -58 | -354 | ||||
| Cash flows from financing activities | 118 | 64 | -324 | ||||
| Cash flows for the period | -511 | 157 | 278 | ||||
| Invested capital and financing | Earnings per share (EPS) and diluted earnings per share (EPS-D) are calculated in accordance with IAS 33. Other key ratios are calculated in accordance with "Recommendations and Ratios 2015" issued by the Danish Finance Society. | ||||||
| Invested capital excluding goodwill | 5,114 | 4,755 | 4,464 | ||||
| Total assets | 10,750 | 10,372 | 10,516 | ||||
| Working capital | 1,933 | 1,862 | 1,598 | ||||
| Net interest bearing debt (NIBD) | 154 | -120 | -511 | ||||
| Share of equity attributable to shareholders of Schouw & Co. | 6,764 | 6,498 | 6,656 | ||||
| Non-controlling interests | 20 | 15 | 21 | ||||
| Total equity | 6,784 | 6,513 | 6,677 | ||||
| Financial data | Total liabilities and equity, end of period | ||||||
| EBITDA margin (%) | 9.2 | 8.9 | 9.7 | ||||
| EBIT margin (%) | 5.6 | 5.5 | 6.6 | ||||
| EBT margin (%) | 5.7 | 6.8 | 6.9 | ||||
| Return on equity (%) | 9.7 | 8.1 | 10.2 | ||||
| Equity ratio (%) | 63.1 | 62.8 | 63.5 | ||||
| ROIC excluding goodwill (%) | 18.2 | 17.5 | 18.3 | ||||
| ROIC including goodwill (%) | 14.9 | 14.5 | 15.1 | ||||
| NIBD/EBITDA | 0.1 | -0.1 | -0.4 | ||||
| Avg. number of employees during the period | 3,018 | 2,294 | 2,382 |
Interim Report - first quarter of 2016 - Schouw & Co. - 2
Interim report – first quarter of 2016
Financial performance
| (DKK million) | YTD 2016 | YTD 2015 | Change |
|---|---|---|---|
| Revenue | 2,776 | 2,784 | -8 0% |
| EBITDA | 256 | 246 | 10 4% |
| EBIT | 157 | 152 | 5 3% |
| Associates etc. | 14 | 19 | -5 -25% |
| Profit before tax | 157 | 189 | -32 -17% |
| Cash flow from operations | 110 | 172 | -62 -36% |
| Net interest-bearing debt | 154 | -120 | 274 - |
| Working capital | 1,933 | 1,862 | 72 4% |
| ROIC excl. goodwill | 18.2% | 17.5% | 0.7pp |
| ROIC incl. goodwill | 14.9% | 14.5% | 0.4pp |
Overall, the Schouw & Co. businesses are off to a good start to 2016, although there were some changes in the underlying contributions from our businesses compared with the first quarter of 2015. Obviously, the acquisitions made have also influenced the results for the reporting period.
Consolidated revenue amounted to DKK 2,776 million, against DKK 2,784 million in Q1 2015, but the largely unchanged revenue conceals several opposing factors. BioMar lost a significant amount of revenue compared with the extraordinarily strong first quarter of 2015, but the setback was offset by a large revenue improvement in the hydraulics activities, first and foremost due to the Specma acquisition. The two Fibertex businesses also increased their revenue.
EBIT was up by 3% from DKK 152 million in Q1 2015 to DKK 157 million in Q1 2016. This change is also based on several opposing factors, as BioMar and Fibertex Nonwovens both reported lower results while Fibertex Personal Care and Hydra/Specma both contributed improved earnings.
The large associate Kramp grew its revenue from DKK 1,254 million in Q1 2015 to DKK 1,291 million in Q1 2016, while its EBIT fell from DKK 112 million in Q1 2015 to DKK 102 million in Q1 2016. In the consolidated financial statements, Schouw & Co.'s 20% share of the profit in Kramp is recognised under profit/loss after tax in associates. The share of profit was recognised at DKK 15 million in Q1 2016, compared with DKK 18 million in Q1 2015.
The remaining associates and joint ventures contributed a slight combined loss after tax. This loss includes the contribution from Xergi, which as expected reported lower revenue in Q1 2016 than in Q1 2015, which also led to lower earnings.
Consolidated net financial items were an expense of DKK 14 million in Q1 2016, a DKK 32 million increase over Q1 2015. The difference was entirely due to foreign exchange adjustments. In Q1 2016, this item was a DKK 13 million loss, while in Q1 2015 it was recognised at a DKK 23 million gain. When adjusted for this factor, net interest expenses were reduced by DKK 4 million.
Liquidity and capital resources
The consolidated operating activities generated a cash inflow of DKK 110 million in Q1 2016, compared with DKK 172 million in Q1 2015. Cash flows for investing activities amounted to DKK 739 million in Q1 2016, primarily used for the acquisition of Specma, against DKK 78 million in Q1 2015.
The consolidated net interest-bearing debt, which was a DKK 120 million net deposit at 31 March 2015, grew to a net deposit of DKK 511 million at 31 December 2015. At 31 March 2016, the Group had net interest-bearing debt of DKK 154 million, the significant change being due mainly to the acquisition of Specma.
The Group's working capital increased from DKK 1,862 million at 31 March 2015 to DKK 1,933 million at 31 March 2016. The increase mainly derived from the acquired operations, which however was partly offset by a large reduction in BioMar's working capital.
Interim Report – first quarter of 2016 · Schouw & Co. · 3
Interim report – first quarter of 2016
Portfolio company highlights
The following is a brief review of portfolio company performances in the three months to 31 March 2016. See the individual company reviews on the following pages for more information.
BIOMAR posted a large revenue decline relative to the first quarter of 2015, when BioMar recorded extraordinarily high sales in Norway. Also causing the decline were reduced sales in Chile due to a natural phenomenon of severe algal blooms, which have since ended. The drop in revenue also led to a drop in EBIT.
FIBERTEX PERSONAL CARE increased its revenue due to higher volume sales from the factory in Malaysia. EBIT also improved, in part due to a positive contribution from raw materials prices.
FIBERTEX NONWOVENS improved its revenue through the positive effects of the acquisition of operations in Turkey in November 2015 and higher revenue from the other European production facilities. EBIT declined relative to Q1 2015, mainly because the South African and the US operations reported lower year-on-year earnings.
HYDRA/SPECMA is reporting from a new and much higher level following the acquisition of Specma on 4 January 2016 with no basis for a year-on-year comparison of the combined company's revenue and EBIT. The former Hydra-Grene reported like-for-like improvements in both revenue and EBIT relative to Q1 2015.
KRAMP, which is recognised as an associate, reported a further increase in revenue but with a decline in EBIT.
On 29 January 2016, Schouw & Co. signed an agreement to acquire GPV International A/S, which is Denmark's leading player in electronic manufacturing services (EMS). GPV reported 2015 revenue of about DKK 850 million, employs close to 1,000 people and has production facilities in Denmark (Tarm and Aars) and in Bangkok, Thailand.
The deal was agreed subject to the approval of the relevant authorities, and the transaction was completed on 1 April 2016. Accordingly, GPV is not recognised in the Schouw & Co. consolidated Q1 2016 income statement.
Schouw & Co. shares and shares held in treasury
Schouw & Co.'s share capital comprises 25,500,000 shares with a nominal value of DKK 10 each for a total nominal share capital of DKK 255,000,000. Each share carries one vote.
Schouw & Co. shares appreciated by 6% during the first quarter of 2016, from DKK 387.00 at 31 December 2015 to DKK 409.00 at 31 March 2016. Dividend payment of DKK 10 per share paid on 19 April 2016 reduced the share price.
At 31 December 2015, the company held 1,906,130 treasury shares, equal to 7.48% of the share capital. Schouw & Co. used 180,000 treasury shares in the first quarter of 2016 in connection with options exercised under the Group's share incentive scheme. As a result, the company currently holds 1,726,130 treasury shares, corresponding to 6.77% of the share capital.
The market value of the holding of treasury shares was DKK 706 million at 31 March 2016. The portfolio of treasury shares is recognised at DKK 0.
Events after the balance sheet date
Apart from the acquisition of GPV on 1 April 2016, Schouw & Co. is not aware of any other events occurring after 31 March 2016, other than as set out elsewhere in this interim report which are expected to have a material impact on the Group's financial position or outlook.
Special risks
The overall risk factors the Schouw & Co. Group faces are discussed in the 2015 Annual Report. The current assessment of special risks is largely unchanged from the assessment applied in the preparation of the 2015 Annual Report.
Interim Report – first quarter of 2016 · Schouw & Co. · 4
Outlook
The companies of the Schouw & Co. Group are generally well-positioned with international competitive strength, and the Group has adequate resources to facilitate the necessary business initiatives.
Current market conditions are characterised by several material sources of volatility. Europe remains challenged as a result of a weak economic environment and geopolitical tension affecting the Group's operations, biological challenges in core markets have impacted BioMar's operations, and trends in raw materials prices and foreign exchange rates are very unclear and may impact several of our businesses. Nevertheless, our portfolio companies are generally reporting healthy activity in most of their market segments, although some softness is detected in a few segments.
BIOMAR expects challenging market conditions with limited growth in the European markets and a larger volume decline in the overall market in Chile than previously anticipated. As a result, the company lowers its revenue guidance while maintaining its full-year EBIT forecast.
FIBERTEX PERSONAL CARE maintains its forecast of a revenue increase in 2016. The company raises its EBIT forecast, but still expects EBIT to be lower than in 2015 when a sharp drop in prices of raw materials towards the end of the year and unusually large, positive foreign exchange effects in the second half of 2015 produced extraordinarily good results.
FIBERTEX NONWOVENS expects its recent investments and acquisitions to contribute to the company's operations. The company continues to expect both revenue and EBIT improvements, although especially the South African operations are challenged by difficult market conditions.
HYDRA/SPECMA anticipates moderate growth in the global hydraulics market in 2016, but with very different trends in the different segments. The combined company maintains its guidance for both revenue and EBIT.
GPV is consolidated effective from 1 April 2016. For the nine-month period to 31 December 2016, GPV is expected to contribute revenue of DKK 600-650 million and EBIT of about DKK 40 million. A purchase price allocation to be prepared in connection with the acquisition will be completed in the second quarter of 2016, but the resulting adjustments are not expected to have a material influence on the full-year results.
The associate KRAMP maintains its guidance of a revenue improvement and EBIT in line with the 2015 performance.
XERGI, which is recognised as a joint venture, expects to maintain a high level of business activity in 2016, but not as high as in 2015. As always, the company relies strongly on its current projects being completed within the planned time frame, and the company continues to expect a decline in full-year EBIT relative to 2015.
Overall, Schouw & Co. now expects consolidated full-year 2016 revenue in the vicinity of DKK 14.1 billion. Compared to the previous revenue guidance of about DKK 14.2 billion, BioMar's revenue forecast is now lower, but the difference is largely offset by the addition of revenue from GPV. However, for several of the companies, revenue depends very much on prices of raw materials, and any fluctuations can significantly change revenue without necessarily having any notable effect on earnings.
Schouw & Co. applies a profit forecast range for each individual business, and on aggregating these ranges, the Group raises its consolidated full-year 2016 EBIT guidance by DKK 10 million to the range of DKK 810-900 million, which includes EBIT of DKK 40 million from GPV, from the previous forecast range of DKK 760-850 million.
The expected earnings contribution from associates and joint ventures, which are recognised at a share of profit after tax, is unchanged at DKK 75-85 million in 2016, most of which amount will consist of the share of profit in Kramp. The expected consolidated net financials for 2016 are also unchanged at an expense in the region of DKK 35 million.
Interim Report – first quarter of 2016 · Schouw & Co. · 5
| REVENUE
(DKK million) | 2016
After Q1 | 2016
Original | 2015
actual |
| --- | --- | --- | --- |
| BioMar | c. 8,500 | c. 9,200 | 8,974 |
| Fibertex Personal Care | c. 1,900 | c. 1,900 | 1,797 |
| Fibertex Nonwovens | c. 1,400 | c. 1,400 | 1,222 |
| Hydra/Specma | c. 1,700 | c. 1,700 | 603 |
| GPV | 600-650 | - | - |
| Other/eliminations | - | - | -30 |
| Total revenue | 14.1bn | 14.2bn | 12,566 |
| Kramp (100%) | c. 5,400 | c. 5,400 | 5,126 |
| EBIT
(DKK million) | 2016
After Q1 | 2016
Original | 2015
actual |
| --- | --- | --- | --- |
| BioMar | 410-450 | 410-450 | 447 |
| Fibertex Personal Care | 210-230 | 200-220 | 253 |
| Fibertex Nonwovens | 80-90 | 80-90 | 76 |
| Hydra/Specma * | 90-110 | 90-110 | 78 |
| GPV | c. 40 | - | - |
| Other | c. -20 | c. -20 | -23 |
| Total EBIT | 810-900 | 760-850 | 831 |
| Associates etc. | 75-85 | 75-85 | 86 |
| Financial items, net | c. -35 | c. -35 | -46 |
| Profit before tax | 850-950 | 800-900 | 871 |
| Kramp EBIT (100%) | 460-485 | 460-485 | 474 |
*After about DKK 25 million from Purchase Price Allocation
Accounting policies
The interim report is presented in accordance with IAS 34 “Interim financial reporting” as adopted by the EU and Danish disclosure requirements for consolidated and parent company financial statements of listed companies.
Schouw & Co. has implemented the standards and interpretations which are effective from 2016. None of those standards and interpretations have had an effect on recognition and measurement in 2016 or are expected to affect Schouw & Co.
See the consolidated financial statements and the parent company financial statements for 2015 for a full description of the accounting policies.
Judgments and estimates
The preparation of interim financial statements requires management to make accounting judgments and estimates that affect the application of accounting policies and recognised assets, liabilities, income and expenses. Actual results may differ from these judgments.
Roundings and presentation
The amounts appearing in this interim report have generally been rounded to one decimal place using standard rounding principles. Accordingly, some additions may not add up.
Financial calendar for 2016
11 August 2016
Release of H1 2016 interim report
10 November 2016
Release of Q3 2016 interim report
The company provides detailed information about contacts and times of conference calls held in connection with the release of its full-year and interim reports through company announcements and postings on its website, www.schouw.dk.
Interim Report – first quarter of 2016 · Schouw & Co. · 6
Our businesses
schouw+c9
BioMar
BioMar is the world's third-largest manufacturer of quality feed for the fish farming industry. The company divides its operations into three geographical regions: the North Sea (Norway and Scotland), the Americas (Chile and Costa Rica) and Continental Europe. BioMar is currently building up operations in Asia as well.
Financial performance
Volumes sold fell in the first quarter of 2016 relative to the first quarter of 2015, where BioMar recorded extraordinarily high sales due to final shipments on older contracts. Also causing the decline were reduced sales in Chile towards the end of the quarter, down as a result of a natural phenomenon of severe algal blooms within a relatively limited geographical area, which has reduced fish stocks. On the other hand, Continental Europe reported higher sales driven by improvements in southern Europe.
The reported revenue fell by 20% from DKK 1,909 million in Q1 2015 to DKK 1,532 million in Q1 2016. The decline was primarily due to lower volumes sold, but the lower NOK/DKK exchange rate was also a negative contributor.
Q1 2016 EBIT was DKK 22 million as compared with DKK 49 million in Q1 2015. Last year, the above-mentioned extraordinary sales in Norway lifted EBIT from the Norwegian operations. BioMar had expected lower earnings in Chile in the first quarter of 2016, but the actual performance was worsened by the algal blooms. On the other hand, Continental Europe reported improved earnings due to higher volumes sold.
BioMar's working capital fell from DKK 1,090 million at 31 March 2015 to DKK 782 million at 31 March 2016. The decline was due to a combination of fewer trade receivables resulting from lower sales, lower inventories and an increase in trade credits. Based on the reported LTM profit, ROIC excluding goodwill, at 22.3%, was down slightly at 31 March 2016, having dropped from 23.1% at 31 March 2015.
Business development
Turning to BioMar's two core markets, Norway and Chile, Norway has started the year off as expected, with good margin management and sustained growth in sales of value-added products contributing to the level of performance. In Chile, the severe algal blooms reduced feed sales sharply, especially in March, as fish farmers moved their feed inventories out of the affected geographical areas to areas not affected by the algal blooms. Continental Europe reports stable margins and a good start to the year with an increase in volumes sold.
In the Norwegian market, most of the major contracts for delivery in the important second half-year high season are usually finalised in the second quarter, so it is still too early to provide any final guidance for the full-year prospects.
In Chile, BioMar won back market share in the early months of the year, but the algal blooms have engendered a great deal of uncertainty as to the volumes that will be sold the rest of the year. It is already clear that the volume of fish being produced in 2016 will drop sharply, but on the other hand prices of farmed fish have now reached a level profitable for Chilean fish farmers.
For Continental Europe, volumes were higher in the first quarter of 2016 than in the year-before period, especially in southern Europe, where an incipient consolidation of the Greek fish farming industry has resulted in a more stable market and higher sales for BioMar. In addition, the company is reporting good sales in the western part of the region.
BioMar is currently in the process of completing a new factory in Turkey in association with Turkish company Sagun Group. The new factory is expected to begin operations in May 2016 and will initially have an expandable capacity of about 50,000 tonnes of feed. Initially, production will be for fish species that BioMar already manufactures feed for. The factory gives BioMar a natural point of entry to Turkey, which is one of Europe's most important fish farming markets.
In China, BioMar is planning to build a fish feed factory in a joint venture with major Chinese feed manufacturer Tongwei. The new factory is expected to be operational in the second quarter of 2017. The joint venture will complement Tongwei's current production, focusing on high-end feed and utilising BioMar's expertise in optimising feed composition, technology, farm management and traceability.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 8
BioMar
In its crucial Norwegian market, BioMar is constructing a new production line at its existing factory in Karmøy. Expected to be operational in the second quarter of 2017, the new production line will have an annual capacity of 140,000 tonnes.
Outlook
At the beginning of the year, BioMar expected challenging market conditions in 2016, primarily due to moderate growth in European markets and anticipated lower volumes in the Chilean market as a whole. The company's current assessment is that total feed volumes in the crucial Norwegian market will be slightly lower than previously projected. At the same time, total feed volumes in the Chilean market will decline further as a result of the algal blooms, which have had a detrimental effect of reducing fish stocks, although the blooms are now over.
Against that background, BioMar is lowering its full-year revenue forecast to about DKK 8.5 billion from the previous forecast of DKK 9.2 billion, while maintaining its EBIT guidance range of DKK 410-450 million.
| Q1 2016 | Q1 2015 | 2015 Total | |
|---|---|---|---|
| Volume (1,000 t) | 165 | 193 | 955 |
| Revenue (DKK million) | 1,532 | 1,909 | 8,974 |
| - of which North Sea | 680 | 935 | 4,279 |
| - of which Americas | 530 | 703 | 2,666 |
| - of which Cont. Europe | 322 | 271 | 2,029 |
| Q1 2016 | Q1 2015 | 2015 Total | |
| --- | --- | --- | --- |
| INCOME STATEMENT | |||
| Revenue | 1,532.1 | 1,909.0 | 8,974.2 |
| Gross profit | 162.0 | 199.5 | 1,080.5 |
| EBITDA | 56.0 | 86.3 | 592.8 |
| Depreciation and impairment | 34.0 | 37.0 | 146.1 |
| Operating profit (EBIT) | 22.0 | 49.3 | 446.7 |
| Profit after tax from ass. and joint ventures | 1.1 | 0.2 | 6.0 |
| Financial items, net | -0.1 | 2.2 | -53.6 |
| Profit before tax | 23.0 | 51.7 | 399.1 |
| Tax for the period | -10.5 | -36.1 | -131.9 |
| Profit for the period | 12.5 | 15.6 | 267.2 |
| CASH FLOWS | |||
| Cash flows from operating activities | -24.8 | -5.6 | 636.7 |
| Cash flows from investing activities | -79.2 | -13.2 | -209.5 |
| Cash flows from financing activities | -17.8 | 59.4 | -621.7 |
| BALANCE SHEET | |||
| Intangible assets * | 394.0 | 388.9 | 409.7 |
| Property, plant and equipment | 898.1 | 951.0 | 884.9 |
| Other non-current assets | 286.8 | 213.6 | 268.7 |
| Cash and cash equivalents | 325.2 | 736.3 | 457.2 |
| Other current assets | 2,534.8 | 2,757.9 | 2,812.2 |
| Total assets | 4,438.9 | 5,047.7 | 4,832.7 |
| Equity | 1,863.6 | 1,950.0 | 2,128.2 |
| Interest-bearing debt | 779.9 | 1,278.8 | 597.7 |
| Other creditors | 1,795.4 | 1,818.9 | 2,106.8 |
| Total liabilities and equity | 4,438.9 | 5,047.7 | 4,832.7 |
| Average number of employees | 896 | 912 | 897 |
| FINANCIAL KEY FIGURES | |||
| EBITDA margin | 3.7% | 4.5% | 6.6% |
| EBIT margin | 1.4% | 2.6% | 5.0% |
| ROIC excl. goodwill | 22.3% | 23.1% | 22.7% |
| ROIC incl. goodwill | 15.9% | 16.7% | 16.4% |
| Working capital | 781.7 | 1,089.6 | 752.4 |
| Net interest-bearing debt | 389.2 | 531.1 | 68.7 |
- Excluding goodwill on consolidation in Schouw & Co. of DKK 430.2 million
All amounts in DKK million
Interim Report - first quarter of 2016 · Schouw & Co. · 9
Fibertex Personal Care
Fibertex Personal Care is one of the world's largest manufacturers of spunbond/spunmelt nonwoven fabrics for the personal care industry. The company's products are key components in diapers, sanitary towels and incontinence products. The company's activities are concentrated mainly in Europe and South-east Asia.
Financial performance
Fibertex Personal Care generated revenue of DKK 458 million in Q1 2016, compared with DKK 428 million in Q1 2015. The improvement was mainly driven by a higher sales volume from the factory in Malaysia.
Q1 2016 EBIT was DKK 87 million, compared with DKK 64 million in Q1 2015. Earnings were supported by the higher volume sales, higher capacity utilisation and an increase in sales of value-added products. The performance was also lifted by a significant positive contribution from raw materials prices.
Fibertex Personal Care reduced its working capital slightly, from DKK 289 million at 31 March 2015, to DKK 288 million at 31 March 2016. Based on the sharp improvement in LTM earnings, ROIC excluding goodwill improved to 23.0% at 31 March 2016 from 15.9% at 31 March 2015.
Business development
Fibertex Personal Care sells its products all over the world, but its main focus is on Europe and South-east Asia. Sales are made directly to major international manufacturers of diapers and other hygiene products through the company's sales organisations based in Denmark and Malaysia.
It is extremely important to the company's customers that they have both a highly reliable supply and a degree of flexibility in their sourcing of nonwovens that allows them to respond to market fluctuations. The market is generally very demanding when it comes to products and product performance, and product quality is a huge priority.
Fibertex Personal Care has seven large highly efficient production lines, three in Denmark and four in Malaysia, producing high-quality nonwoven textiles. Each line has its own speciality, ranging from super-soft products and ultrathin products to products with high-performance leakage barriers. Through its German subsidiary Innowo Print, Fibertex Personal Care can also offer direct printing on nonwoven textiles.
In January 2016, Fibertex Personal Care announced plans to set up another production line in Malaysia, which will increase the company's output capacity in the country by about 20%. As there is no room for further expansion at the existing factory area in Nilai, south-east of Kuala Lumpur, a new factory unit will be built some 25 km south of the Nilai factory with room to expand in the future. Expected to be commissioned in mid-2017, the new production line will enable Fibertex Personal Care to share in the continuing growth being projected for the Asian market.
In addition to establishing a new factory unit in Malaysia, Fibertex Personal Care plans to add print facilities at the existing plant at Nilai, so as to enable the company to deliver services in South-east Asia similar to those currently being provided through Innowo Print in Germany. This expansion project had originally been scheduled for commissioning in early 2017, but due to strong demand in the region, an attempt will now be made to accelerate the launch of the print facilities to the third quarter of 2016.
Outlook
The global output capacity of nonwoven fabrics is growing constantly, which leads to excess capacity in different regions from time to time. Fibertex Personal Care sees Europe as a market with limited growth potential and a resultant strong price pressure. Asia is a growing market in which price competition is also a factor, but where growing demand absorbs the surging supply in the region.
In 2016, Fibertex Personal Care will be focused on consolidating its business, utilising its overall production capacity to ensure that ongoing investments progress to plan, while also remaining alert to opportunities for profitable growth in Southeast Asia.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 10
Fibertex Personal Care
In addition, a number of scheduled production plant upgrades will be a priority in 2016 for the purpose of increasing flexibility, output and the number of value-added products. As a result, one of the existing production lines in Denmark will be closed for a scheduled upgrade during a part of 2016.
Based on business activity in the first quarter, Fibertex Personal Care maintains its full-year 2016 guidance of revenue of about DKK 1.9 billion. The full-year EBIT will very much depend on how foreign exchange rates and prices of raw materials develop over the rest of the year. The current expectation is that the positive effects seen so far in 2016 will be eliminated later on in the year. Still, the company raises its full-year EBIT forecast to the range of DKK 210-230 million from the previous forecast of DKK 200-220 million.
| Q1 2016 | Q1 2015 | 2015 Total | |
|---|---|---|---|
| Revenue (DKK million) | 458 | 428 | 1,797 |
| - from Denmark | 186 | 201 | 795 |
| - from Malaysia | 244 | 210 | 935 |
| - from Germany | 28 | 17 | 67 |
| Q1 2016 | Q1 2015 | 2015 Total | |
| --- | --- | --- | --- |
| INCOME STATEMENT | |||
| Revenue | 458.4 | 427.9 | 1,797.2 |
| Gross profit | 124.4 | 94.0 | 381.8 |
| EBITDA | 116.2 | 99.2 | 394.7 |
| Depreciation and impairment | 28.8 | 35.7 | 142.2 |
| Operating profit (EBIT) | 87.4 | 63.5 | 252.5 |
| Financial items, net | -9.4 | 1.2 | -5.5 |
| Profit before tax | 78.0 | 64.7 | 247.0 |
| Tax for the period | -17.9 | -14.7 | -60.0 |
| Profit for the period | 60.1 | 50.0 | 187.0 |
| CASH FLOWS | |||
| Cash flows from operating activities | 111.5 | 90.8 | 342.1 |
| Cash flows from investing activities | -65.5 | -7.6 | -85.3 |
| Cash flows from financing activities | -32.1 | -55.9 | -248.1 |
| BALANCE SHEET | |||
| Intangible assets * | 65.3 | 66.7 | 76.3 |
| Property, plant and equipment | 1,057.8 | 1,134.3 | 975.1 |
| Other non-current assets | 80.8 | 131.7 | 82.0 |
| Cash and cash equivalents | 44.2 | 49.2 | 27.9 |
| Other current assets | 578.6 | 545.1 | 542.9 |
| Total assets | 1,826.7 | 1,927.0 | 1,704.2 |
| Equity | 810.1 | 752.3 | 786.2 |
| Interest-bearing debt | 637.2 | 732.7 | 511.2 |
| Other creditors | 379.4 | 442.0 | 406.8 |
| Total liabilities and equity | 1,826.7 | 1,927.0 | 1,704.2 |
| Average number of employees | 521 | 506 | 514 |
| FINANCIAL KEY FIGURES | |||
| EBITDA margin | 25.4% | 23.2% | 22.0% |
| EBIT margin | 19.1% | 14.8% | 14.1% |
| ROIC excl. goodwill | 23.0% | 15.9% | 20.7% |
| ROIC incl. goodwill | 21.3% | 14.9% | 19.2% |
| Working capital | 287.7 | 289.3 | 294.4 |
| Net interest-bearing debt | 515.3 | 683.5 | 482.4 |
- Excluding goodwill on consolidation in Schouw & Co. of DKK 48.1 million
All amounts in DKK million
Interim Report - first quarter of 2016 - Schouw & Co. - 11
Fibertex Nonwovens
Fibertex Nonwovens is among Europe's leading manufacturers of nonwovens, i.e. non-woven textiles used for a number of different industrial purposes. The company's core markets are in Europe and North America and its secondary markets are in Africa.
Financial performance
Fibertex Nonwovens reported Q1 2016 revenue of DKK 338 million, a 10% increase from DKK 306 million in Q1 2015. The revenue improvement was driven both by the acquisition of operations in Turkey in November 2015 and by a revenue increase from the other European production facilities, whereas sales from the US facility have declined. Sales from the plant in South Africa have also dropped, but as Fibertex South Africa was not consolidated until 1 March 2015, recognised revenue from South Africa was slightly higher in Q1 2016 than in Q1 2015.
Q1 2016 EBIT was DKK 22 million, as compared with DKK 27 million in Q1 2015. The Q1 2016 EBIT was based on healthy demand in the automotive segment as well as several other segments and on satisfactory capacity utilisation at the European factories. In addition, the acquisition in Turkey contributed to performance thanks to a fair level of business activity in the first quarter. On the other hand, both the South African and the US operations reported lower year-on-year earnings. However, in comparison with last year, it should be noted that the Q1 2015 financial results included non-recurring income of DKK 3 million from the purchase of 48% of the shares in Fibertex South Africa.
Due to the increase in business activity and with the Turkish operations being consolidated, working capital increased to DKK 379 million at 31 March 2016 from DKK 332 million at 31 March 2015. Based on LTM earnings and the relatively higher average invested capital, ROIC excluding goodwill fell to 7.0% at 31 March 2016 from 9.1% at 31 March 2015.
Business development
Fibertex Nonwovens is reporting a generally positive performance in its core business areas for the first quarter of 2016 based on a fair level of activity in the automotive industry and in non-European markets as well as an improved product mix and growing sales of advanced products. At the same time, product sales to the construction industry and infrastructure projects in Europe increased year-on-year. On the other hand, the US factory reported a drop in sales relative to the first quarter of 2015, but the performance is expected to normalise as the year progresses. Reduced market activity has weighed on demand in South Africa, as weak economic activity and low commodity prices have slowed infrastructure and mining projects. Instead, the South African factory is redirecting its attention to export markets with the support of the global sales organisation.
In recent years, Fibertex Nonwovens has consolidated its position as a leading manufacturer of industrial nonwovens. The company has made a number of structural investments and strengthened its business platform.
Fibertex Nonwovens has gradually expanded its output capacity for processed products through a technology upgrade of several production lines as part of its strategy to increase sales of value-added products and optimise capacity utilisation at all of its factories. Several more product lines will be upgraded during the rest of the year.
In terms of development and innovation, the company has built a solid portfolio of new projects, including products for the automotive and composite industries and for filtration and acoustic purposes, as well as products to be sold in new territories expected to offer growth opportunities. In order to develop along with its customers and capitalise on the future growth potential, Fibertex Nonwovens is expanding its output capacity in the Czech Republic by building a new production line, which is expected to be commissioned in the second quarter of 2016.
Fibertex South Africa acquired an existing line for producing fibre in 2015 and has also invested in a new nonwoven production line expected to start up in the second quarter of 2016. This investment in South Africa is expected to boost the factory's production efficiency and to provide sufficient output capacity when demand in the region recovers.
Outlook
Fibertex Nonwovens anticipates a relatively stable level of business activity in most segments and markets in 2016.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 12
Fibertex Nonwovens
South Africa will remain challenged on its earnings performance due to the current economic difficulties in the region. The general uncertainty about global growth and the resulting concerns about trends in cyclical segments may also impact full-year sales and earnings.
Fibertex Nonwovens expects to increase its full-year EBIT in 2016, relative to 2015, supported by the production lines upgraded in 2015, the new capacity established in the Czech Republic and South Africa, and the acquisition in Turkey, which will take full effect in 2016. Given the structural investments made and the company's increased efforts to work the market, with the focus on growing sales of value-added products, Fibertex Nonwovens expects to build a solid base for future earnings.
Against this backdrop, Fibertex Nonwovens maintains its full-year 2016 guidance of revenue of about DKK 1.4 billion and EBIT in the range of DKK 80-90 million.
| Q1 2016 | Q1 2015 | 2015 Total | |
|---|---|---|---|
| Revenue (DKK million) | 338 | 306 | 1,222 |
| - from Denmark | 58 | 59 | 211 |
| - from the Czech Rep. | 84 | 73 | 308 |
| - from France | 134 | 123 | 490 |
| - from other | 62 | 51 | 213 |
| Q1 2016 | Q1 2015 | 2015 Total | |
| --- | --- | --- | --- |
| INCOME STATEMENT | |||
| Revenue | 337.7 | 305.8 | 1,222.3 |
| Gross profit | 77.2 | 70.4 | 272.8 |
| EBITDA | 43.8 | 45.1 | 153.2 |
| Depreciation and impairment | 21.4 | 17.8 | 76.8 |
| Operating profit (EBIT) | 22.5 | 27.3 | 76.4 |
| Profit after tax from associates | 0.0 | -0.6 | -0.7 |
| Financial items, net | -3.2 | -3.7 | -11.7 |
| Profit before tax | 19.2 | 23.0 | 64.0 |
| Tax for the period | -6.4 | -6.7 | -17.1 |
| Profit before non-controlling interests | 12.8 | 16.3 | 46.9 |
| Non-controlling interests | 1.2 | 0.1 | 3.0 |
| Profit for the period | 13.9 | 16.4 | 49.9 |
| CASH FLOWS | |||
| Cash flows from operating activities | 10.2 | 27.5 | 97.2 |
| Cash flows from investing activities | -21.9 | -55.4 | -313.0 |
| Cash flows from financing activities | 42.2 | 55.2 | 216.0 |
| BALANCE SHEET | |||
| Intangible assets * | 164.3 | 156.3 | 168.2 |
| Property, plant and equipment | 717.2 | 578.8 | 723.0 |
| Other non-current assets | 0.0 | 0.1 | 3.9 |
| Cash and cash equivalents | 89.0 | 86.0 | 58.8 |
| Other current assets | 573.2 | 531.6 | 549.5 |
| Total assets | 1,543.7 | 1,352.8 | 1,503.4 |
| Equity | 465.3 | 429.6 | 459.6 |
| Interest-bearing debt | 832.3 | 656.5 | 793.2 |
| Other creditors | 246.1 | 266.7 | 250.6 |
| Total liabilities and equity | 1,543.7 | 1,352.8 | 1,503.4 |
| Average number of employees | 785 | 622 | 719 |
| FINANCIAL KEY FIGURES | |||
| EBITDA margin | 13.0% | 14.7% | 12.5% |
| EBIT margin | 6.6% | 8.9% | 6.2% |
| ROIC excl. goodwill | 7.0% | 9.1% | 7.8% |
| ROIC incl. goodwill | 6.3% | 8.1% | 7.0% |
| Working capital | 379.3 | 332.2 | 361.1 |
| Net interest-bearing debt | 743.3 | 570.5 | 730.4 |
All amounts in DKK million
Interim Report - first quarter of 2016 · Schouw & Co. · 13
Hydra/Specma
Effective 4 January 2016, Hydra-Grene acquired Swedish hydraulics company Specma AB, which is consolidated effective from the beginning of the year. Due to the consolidation, the reported numbers for 2016 are materially different from those of 2015.
Hydra/Specma is a specialised trading and engineering company whose core business is trading and producing hydraulic components and systems development for industry, as well as providing related services. The company's core operations are in the Nordic region and in other parts of Europe, and it serves selected business segments in overseas markets.
Financial performance
Overall, Hydra/Specma had a good first quarter of 2016 based on strong market activity, reporting combined revenue of DKK 453 million, compared with DKK 148 million in Q1 2015. The like-for-like revenue of the former Hydra-Grene improved by DKK 26 million (17%) from Q1 2015 to Q1 2016, most of the increase being due to higher sales to the wind turbine industry.
By far most of the revenue increase derived from the acquisition of Specma, which generated Q1 2016 revenue at the level recorded a year earlier. The mining and the marine sectors pose the main challenges for the Specma operations due to the current slump in those sectors, while the company grew its revenue from other business areas, such as automotive (lorries and buses).
EBIT for the Q1 2016 period was DKK 30 million as compared with DKK 16 million for the former Hydra-Grene in Q1 2015. The like-for-like EBIT of the former Hydra-Grene improved by DKK 8 million from Q1 2015 to Q1 2016, driven by the revenue increase, a changed product mix and process and production efficiency enhancements.
The rest of the EBIT was driven by the acquisition of Specma, which reported Q1 2016 EBIT of DKK 12 million compared with DKK 19 million in Q1 2015 in part due to challenging market conditions in its cyclical business areas. In addition, a DKK 6 million increase in depreciation charges resulting from the purchase price allocation weighed on the Q1 2016 results.
The overall working capital increased sharply from DKK 161 million at 31 March 2015 to DKK 491 million at 31 March 2016 as a natural effect of the Specma acquisition. Despite the significant increase in invested capital and the relatively lower earnings of the acquired operations, ROIC excluding goodwill increased to 23.6% at 31 March 2016 from 23.3% at 31 March 2015. It should be noted that the acquired operations have been recognised only for the final quarter of the LTM period used to calculate ROIC.
Business development
Previously, Denmark was Hydra-Grene's principal market, and sales to international customers were mainly to customers in the wind turbine and offshore industries or in other industries in which the company had special expertise.
Following the acquisition of the much larger Swedish peer, hydraulic company Specma, the combined company now holds a substantial share of the Nordic hydraulics market, both in the aftersales market and in the OEM segment. It also has a much stronger platform from which to serve strategic customers in international markets. The Specma acquisition has strengthened the combined company's expertise, including in hydraulic systems and in tubing and piping, while also extending its OEM capabilities to the automotive, mining and marine segments.
In order to accelerate integration of the combined organisation, a number of initiatives and projects have been launched to capitalise on immediate procurement and cross-selling synergies and for general optimisation purposes by identifying best practices and through benchmarking. The integration process will duly consider the growth and optimisation strategies launched by both companies prior to the acquisition, and the entire organisation is making a huge and constructive effort in support of the joint synergy projects that have been launched.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 14
Hydra/Specma
Outlook
Modest overall growth is expected in the global hydraulics market in 2016. Hydra/Specma expects to continue the positive sales trend to the wind turbine industry and the automotive segment and to the OEM aftersales market. In contrast, the more cyclical segments, such as offshore, marine and mining are all set to remain challenged due to the lower prices of oil and other commodities.
As a result, the combined company has moderate expectations for its 2016 earnings. The combination of the two companies is expected to produce positive synergies over time, primarily through an optimisation of procurement and cross-selling, but natural integration costs will be incurred in the short term.
Against this backdrop, Hydra/Specma maintains its guidance for full-year 2016 revenue of about DKK 1.7 billion. The full-year EBIT forecast is also unchanged in the range of DKK 90-110 million, after deduction of an increase in amortisation and depreciation of about DKK 25 million due to the purchase price allocation.
| Q1 2016 | Q1 2015 | 2015 Total | |
|---|---|---|---|
| INCOME STATEMENT | |||
| Revenue | 452.9 | 148.4 | 602.9 |
| Gross profit | 115.0 | 47.5 | 206.1 |
| EBITDA | 44.3 | 19.6 | 93.2 |
| Depreciation and impairment | 14.4 | 3.4 | 15.1 |
| Operating profit (EBIT) | 29.9 | 16.2 | 78.1 |
| Financial items, net | -3.3 | 2.5 | -0.1 |
| Profit before tax | 26.7 | 18.7 | 78.0 |
| Tax for the period | -5.5 | -4.4 | -18.3 |
| Profit before non-controlling interests | 21.2 | 14.3 | 59.7 |
| Non-controlling interests | -0.4 | -0.1 | 0.0 |
| Profit for the period | 20.8 | 14.2 | 59.7 |
| CASH FLOWS | |||
| Cash flows from operating activities | 9.2 | 44.4 | 66.8 |
| Cash flows from investing activities | -488.4 | -1.6 | -9.8 |
| Cash flows from financing activities | 533.5 | -52.5 | -71.3 |
| BALANCE SHEET | |||
| Intangible assets | 339.0 | 12.8 | 11.7 |
| Property, plant and equipment | 167.9 | 96.1 | 93.7 |
| Other non-current assets | 4.7 | 0.0 | 0.3 |
| Cash and cash equivalents | 61.8 | 12.3 | 7.8 |
| Other current assets | 767.8 | 268.6 | 295.5 |
| Total assets | 1,341.2 | 389.8 | 409.0 |
| Equity | 366.9 | 163.4 | 212.2 |
| Interest-bearing debt | 614.3 | 122.1 | 86.9 |
| Other creditors | 360.0 | 104.3 | 109.9 |
| Total liabilities and equity | 1,341.2 | 389.8 | 409.0 |
| Average number of employees | 804 | 243 | 241 |
| FINANCIAL KEY FIGURES | |||
| EBITDA margin | 9.8% | 13.2% | 15.5% |
| EBIT margin | 6.6% | 10.9% | 12.9% |
| ROIC excl. goodwill | 23.6% | 23.3% | 28.9% |
| ROIC incl. goodwill | 21.7% | 23.3% | 28.9% |
| Working capital | 491.3 | 161.2 | 202.1 |
| Net interest-bearing debt | 551.2 | 93.4 | 77.2 |
All amounts in DKK million
Interim Report - first quarter of 2016 · Schouw & Co. · 15
Kramp
Kramp is the leading supplier of spare parts and accessories to the agricultural sector in Europe.
Schouw & Co. merged its wholly owned subsidiary Grene with Dutch company Kramp in 2013 and now holds a 20% ownership interest in the continuing company.
Financial performance
Kramp has had a good start to 2016, increasing revenue by 3%, to DKK 1,291 million in Q1 2016 from DKK 1,254 million in Q1 2015, even with the farming industry under significant pressure in a number of markets.
The sales performance was broadly based on the European markets, as Kramp continues to draw support from the close partnerships its has built in recent years with leading manufacturers of agricultural machinery such as AGCO and SDF.
EBIT declined from DKK 112 million in Q1 2015 to DKK 102 million in Q1 2016, primarily due to the slightly lower contribution margin and higher costs.
Schouw & Co. recognises Kramp as an associate at a 20% share of its profit as stated after tax. The recognised share of the profit for Q1 2016 was DKK 15 million (Q1 2015: DKK 18 million).
Working capital increased by less than 1% from DKK 1,603 million at 31 March 2015, to DKK 1,614 million at 31 March 2016, a relatively smaller rate than the increase in revenue. On the other hand, net interest-bearing debt fell from DKK 1,485 million at 31 March 2015, to DKK 1,431 million at 31 March 2016, after the company paid dividends of DKK 246 million to its shareholders, of which Schouw & Co. received DKK 49 million in December 2015.
Business performance
The agricultural sector continues to face massive challenges throughout most of Europe, and farmers are generally holding back on investment and maintenance. The downturn in sales of new machinery has rubbed off on component sales to manufacturers of agricultural machinery, but demand for spare parts and accessories, which is the main component of Kramp's business, has now also begun to contract.
Despite the challenges faced in agriculture, Kramp has managed to increase sales to a number of countries, especially to France, Poland, Denmark and Sweden. Kramp's assessment is that the group has taken market share in most markets. The markets are extremely competitive, but Kramp has a significant advantage from the strong and close partnerships it has built up with leading manufacturers of agricultural machinery.
Intending to consolidate and fortify its market-leading position, Kramp is planning substantial investments in 2016 and 2017 for both new and upgraded warehouse facilities and IT solutions. Kramp's e-commerce platform is becoming an increasingly essential part of the business, requiring ever greater investment to expand the position Kramp has built up in recent years. The existing physical facilities were extended in 2015 with large expansions of the central warehouses in Konin, Poland and Poitiers, France, and further capacity expansion is expected in the upcoming period through a major investment programme. The new warehouse facilities will cater to the needs arisen after Kramp and Grene merged and to the expected business growth. Also, the new facilities will improve the quality of service and ensure added accessibility for Kramp's customers.
Outlook
Europe's agro industry continues to face several significant challenges, and while they vary from market to market, they are all the result of economic and political conditions that are dampening demand expectations.
However, Kramp's expanded physical facilities and its competitive strength give it a strong position, and the group maintains its guidance of FY 2016 revenue of about DKK 5.4 billion.
Kramp intends to allocate additional resources to securing its market position in 2016, also by investing in IT and developing new platforms. The full-year EBIT is expected to be in the DKK 460-485-million range, which is in line with the 2015 results.
Schouw & Co. expects to recognise DKK 65-75 million as its share of the profit for 2016 after estimated financial items and tax. The amount will be recognised under profit/loss after tax in associates.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 16
Kramp
| Q1 2016 | Q1 2015 | 2015 Total | |
|---|---|---|---|
| INCOME STATEMENT | |||
| Revenue | 1,290.6 | 1,253.9 | 5,126.4 |
| EBITDA | 136.5 | 143.3 | 604.0 |
| Depreciation and impairment | 34.4 | 31.3 | 129.8 |
| Operating profit (EBIT) | 102.1 | 112.0 | 474.2 |
| Financial items, net | -13.3 | -8.7 | -47.5 |
| Profit before tax | 88.8 | 103.3 | 426.7 |
| Tax for the period | -13.7 | -15.6 | -73.8 |
| Profit for the period | 75.1 | 87.7 | 352.9 |
| Profit recognised in Schouw & Co. | 15.0 | 17.5 | 70.6 |
| BALANCE SHEET | |||
| Non-current assets | 1,028.6 | 1,004.9 | 1,044.3 |
| Current assets | 2,114.3 | 2,131.3 | 1,881.6 |
| Total assets | 3,142.9 | 3,136.2 | 2,925.9 |
| Equity | 1,200.3 | 1,122.9 | 1,130.2 |
| Interest-bearing debt | 1,431.4 | 1,484.7 | 1,418.9 |
| Other creditors | 511.2 | 528.6 | 376.8 |
| Total liabilities and equity | 3,142.9 | 3,136.2 | 2,925.9 |
| Average number of employees | 2,609 | 2,541 | 2,574 |
| FINANCIAL KEY FIGURES | |||
| EBITDA margin | 10.6% | 11.4% | 11.8% |
| EBIT margin | 7.9% | 8.9% | 9.2% |
| Working capital | 1,613.8 | 1,602.7 | 1,504.8 |
| Net interest-bearing debt | 1,431.4 | 1,484.7 | 1,418.9 |
All amounts in DKK million
Interim Report - first quarter of 2016 · Schouw & Co. · 17
Consolidated financial statement
schouw+c9
Statements of income and comprehensive income
| Note | Income statement | Q1 2016 | Q1 2015 | 2015 Total |
|---|---|---|---|---|
| 1 | Revenue | 2,775.7 | 2,783.8 | 12,565.7 |
| Cost of sales | -2,295.7 | -2,371.3 | -10,619.8 | |
| Gross profit | 480.0 | 412.5 | 1,945.9 | |
| Other operating income | 7.5 | 5.3 | 23.9 | |
| 2 | Distribution costs | -200.6 | -164.4 | -696.7 |
| Administrative expenses | -130.0 | -101.6 | -441.8 | |
| Other operating expenses | -0.1 | 0.0 | 0.0 | |
| Operating profit (EBIT) | 156.8 | 151.8 | 831.3 | |
| Profit after tax in associates | 16.4 | 17.0 | 74.7 | |
| Profit after tax in joint ventures | -2.1 | 2.1 | 11.5 | |
| Financial income | 10.0 | 32.5 | 50.2 | |
| Financial expenses | -24.3 | -14.3 | -96.6 | |
| Profit before tax | 156.8 | 189.1 | 871.1 | |
| Tax on profit | -40.7 | -64.7 | -226.3 | |
| Profit for the period | 116.1 | 124.4 | 644.8 | |
| Attributable to | ||||
| Shareholders of Schouw & Co. | 117.0 | 124.5 | 647.8 | |
| Non-controlling interests | -0.9 | -0.1 | -3.0 | |
| Profit for the period | 116.1 | 124.4 | 644.8 | |
| 8 | Earnings per share (DKK) | 4.95 | 5.29 | 27.48 |
| 8 | Diluted earnings per share (DKK) | 4.94 | 5.28 | 27.38 |
| Note | Comprehensive income | Q1 2016 | Q1 2015 | 2015 Total |
| --- | --- | --- | --- | --- |
| Items that can be reclassified to the profit and loss statement: | ||||
| Exchange rate adjustment of foreign subsidiaries | -39.1 | 294.1 | 104.7 | |
| Hedging instruments recognised | -16.4 | 3.1 | 3.0 | |
| Hedging instruments transferred to cost of sales | -0.8 | 0.3 | 0.3 | |
| Hedging instruments transferred to financials | 0.2 | 0.6 | 7.0 | |
| Other comprehensive income from ass. and joint ventures | -1.3 | -5.5 | -7.9 | |
| Other adjustment on equity | -0.2 | 0.1 | -0.3 | |
| Tax on other comprehensive income | 4.1 | -1.0 | -2.9 | |
| Other comprehensive income after tax | -53.5 | 291.7 | 103.9 | |
| Profit for the period | 116.1 | 124.4 | 644.8 | |
| Total recognised comprehensive income | 62.6 | 416.1 | 748.7 | |
| Attributable to | ||||
| Shareholders of Schouw & Co. | 63.6 | 416.2 | 756.4 | |
| Non-controlling interests | -1.0 | -0.1 | -7.7 | |
| Total recognised comprehensive income | 62.6 | 416.1 | 748.7 |
All amounts in DKK million
Interim Report - first quarter of 2016 - Schouw & Co.
Balance sheet · assets and liabilities
| Note | Assets | 31/3 | 31/12 | 31/3 | 31/12 |
|---|---|---|---|---|---|
| 2016 | 2015 | 2015 | 2014 | ||
| Goodwill | 1,147.0 | 1,006.1 | 1,011.6 | 970.5 | |
| Completed development projects | 0.0 | 0.0 | 11.9 | 12.1 | |
| Development projects in progress | 0.0 | 0.0 | 13.2 | 18.4 | |
| Other intangible assets | 325.9 | 169.9 | 98.1 | 93.9 | |
| Intangible assets | 1,472.9 | 1,176.0 | 1,134.8 | 1,094.9 | |
| Land and buildings | 1,312.6 | 1,260.2 | 1,291.5 | 1,262.5 | |
| Plant and machinery | 1,129.0 | 1,152.3 | 1,315.5 | 1,251.9 | |
| Other fixtures, tools and equipment | 98.2 | 65.4 | 69.9 | 69.6 | |
| Assets under construction, etc. | 400.0 | 298.3 | 184.1 | 131.0 | |
| Property, plant and equipment | 2,939.8 | 2,776.2 | 2,861.0 | 2,715.0 | |
| Equity investments in associates | 587.0 | 570.3 | 564.4 | 561.7 | |
| Equity investments in joint ventures | 106.5 | 109.1 | 66.8 | 64.3 | |
| Securities | 110.8 | 83.9 | 130.3 | 115.0 | |
| Deferred tax | 16.4 | 18.1 | 48.7 | 51.9 | |
| Receivables | 164.3 | 177.7 | 148.8 | 144.1 | |
| Other non-current assets | 985.0 | 959.1 | 959.0 | 937.0 | |
| Total non-current assets | 5,397.7 | 4,911.3 | 4,954.8 | 4,746.9 | |
| 3 | Inventories | 1,728.1 | 1,435.1 | 1,510.6 | 1,447.5 |
| Receivables | 2,708.1 | 2,752.7 | 2,566.7 | 2,592.1 | |
| Income tax receivable | 23.7 | 5.9 | 2.9 | 8.4 | |
| Securities | 0.1 | 0.1 | 0.1 | 0.1 | |
| Cash and cash equivalents | 892.5 | 1,410.7 | 1,336.9 | 1,087.1 | |
| Total current assets | 5,352.5 | 5,604.5 | 5,417.2 | 5,135.2 | |
| Total assets | 10,750.2 | 10,515.8 | 10,372.0 | 9,882.1 | |
| Note | Liabilities and equity | 31/3 | 31/12 | 31/3 | 31/12 |
| --- | --- | --- | --- | --- | --- |
| 2016 | 2015 | 2015 | 2014 | ||
| 6 | Share capital | 255.0 | 255.0 | 255.0 | 255.0 |
| Hedge transaction reserve | -25.3 | -12.4 | -17.0 | -20.0 | |
| Exchange adjustment reserve | 224.1 | 263.1 | 447.8 | 153.7 | |
| Retained earnings | 6,055.6 | 5,895.1 | 5,608.1 | 5,478.2 | |
| Proposed dividend | 255.0 | 255.0 | 204.0 | 204.0 | |
| Share of equity attributable to the parent company | 6,764.4 | 6,655.8 | 6,497.9 | 6,070.9 | |
| Non-controlling interests | 19.7 | 20.7 | 15.0 | 2.9 | |
| Total equity | 6,784.1 | 6,676.5 | 6,512.9 | 6,073.8 | |
| Deferred tax | 201.9 | 147.9 | 158.5 | 151.3 | |
| Pensions and similar liabilities | 111.4 | 106.3 | 117.4 | 113.1 | |
| Credit institutions | 700.5 | 686.6 | 808.6 | 858.4 | |
| Non-current liabilities | 1,013.8 | 940.8 | 1,084.5 | 1,122.8 | |
| 5 | Current portion of non-current debt | 187.5 | 190.6 | 229.6 | 238.1 |
| Credit institutions | 318.4 | 109.4 | 201.7 | 77.6 | |
| Trade payables and other payables | 2,399.7 | 2,567.1 | 2,193.8 | 2,238.6 | |
| Income tax | 46.7 | 31.4 | 149.5 | 131.2 | |
| Current liabilities | 2,952.3 | 2,898.5 | 2,774.6 | 2,685.5 | |
| Total liabilities | 3,966.1 | 3,839.3 | 3,859.1 | 3,808.3 | |
| Total liabilities and equity | 10,750.2 | 10,515.8 | 10,372.0 | 9,882.1 |
Notes without reference 7 & 9.
All amounts in DKK million
Interim Report - first quarter of 2016 · Schouw & Co. · 20
Cash flow statement
| Note | Q1 2016 | Q1 2015 | 2015 Total |
|---|---|---|---|
| Profit before tax | 156.8 | 189.1 | 871.1 |
| Adjustment for operating items of a non-cash nature, etc.: | |||
| Depreciation and impairment losses | 99.3 | 94.6 | 383.0 |
| Other operating items, net | -38.2 | 42.6 | 72.9 |
| Provisions | 0.1 | -0.2 | 0.6 |
| Profit/(loss) after tax in associates and joint ventures | -14.3 | -19.1 | -86.2 |
| Financial income | -10.0 | -32.5 | -50.2 |
| Financial expenses | 24.3 | 14.3 | 96.6 |
| Cash flows from operating activities before changes in working capital | 218.0 | 288.8 | 1,287.8 |
| Changes in working capital | -59.6 | -76.3 | 198.1 |
| Cash flows from operating activities | 158.4 | 212.5 | 1,485.9 |
| Interest income received | 7.3 | 14.3 | 29.4 |
| Interest expenses paid | -12.3 | -14.4 | -53.6 |
| Cash flows from ordinary activities | 153.4 | 212.4 | 1,461.7 |
| Income tax paid | -43.9 | -40.7 | -290.5 |
| Cash flows from operating activities | 109.5 | 171.7 | 1,171.2 |
| Purchase of intangible assets | -1.7 | -0.4 | -61.9 |
| Purchase of property, plant and equipment | -145.2 | -58.2 | -354.4 |
| Sale of property, plant and equipment | 0.1 | 0.3 | 16.2 |
| Acquisition of enterprises | -565.1 | -19.5 | -124.7 |
| Acquisition of ass. and joint ventures | 0.0 | 0.0 | -36.7 |
| Received dividend from associates | 0.8 | 0.0 | 49.2 |
| Additions/disposals of other financial assets | -27.5 | -0.5 | -57.0 |
| Cash flows from investing activities | -738.6 | -78.3 | -569.3 |
| Note | Q1 2016 | Q1 2015 | 2015 Total |
| --- | --- | --- | --- |
| Debt financing: | |||
| Repayment of non-current liabilities | -27.9 | -87.7 | -275.6 |
| Proceeds from incurring non-current financial liabilities | 16.0 | 13.1 | 70.2 |
| Increase (repayment) of bank overdrafts | 89.3 | 128.9 | 46.3 |
| Shareholders: | |||
| Capital contributions, etc. by non-controlling interests | 0.0 | 0.0 | 14.9 |
| Dividend paid | 0.0 | 0.0 | -188.8 |
| Purchase/sale of treasury shares, net | 40.9 | 9.4 | 9.4 |
| Cash flows from financing activities | 118.3 | 63.7 | -323.6 |
| Cash flows for the period | -510.8 | 157.1 | 278.3 |
| Cash and cash equivalents at 1 Jan. | 1,410.7 | 1,087.1 | 1,087.1 |
| Value adjustment of cash and cash equivalents | -7.4 | 92.7 | 45.3 |
| Cash and cash equivalents at 31 March | 892.5 | 1,336.9 | 1,410.7 |
All amounts in DKK million
Interim Report - first quarter of 2016 - Schouw & Co.
Statement of changes in equity
| Share capital | Hedge transaction reserve | Exchange adjustment reserve | Retained earnings | Proposed dividend | Total | Non-controlling interests | Total equity | |
|---|---|---|---|---|---|---|---|---|
| Equity at 1 January 2015 | 255.0 | -20.0 | 153.7 | 5,478.2 | 204.0 | 6,070.9 | 2.9 | 6,073.8 |
| Other comprehensive income | ||||||||
| Exchange rate adjustment of foreign subsidiaries | 0.0 | 0.0 | 294.1 | 0.0 | 0.0 | 294.1 | 0.0 | 294.1 |
| Value adj. of hedging instruments recognised | 0.0 | 3.1 | 0.0 | 0.0 | 0.0 | 3.1 | 0.0 | 3.1 |
| Hedging instruments transferred to cost of sales | 0.0 | 0.3 | 0.0 | 0.0 | 0.0 | 0.3 | 0.0 | 0.3 |
| Hedging instruments transferred to financials | 0.0 | 0.6 | 0.0 | 0.0 | 0.0 | 0.6 | 0.0 | 0.6 |
| Other comprehensive income from associates and JVs | 0.0 | 0.0 | 0.0 | -5.5 | 0.0 | -5.5 | 0.0 | -5.5 |
| Other adjustment on equity | 0.0 | 0.0 | 0.0 | 0.1 | 0.0 | 0.1 | 0.0 | 0.1 |
| Tax on other comprehensive income | 0.0 | -1.0 | 0.0 | 0.0 | 0.0 | -1.0 | 0.0 | -1.0 |
| Profit for the period | 0.0 | 0.0 | 0.0 | 124.5 | 0.0 | 124.5 | -0.1 | 124.4 |
| Total recognised comprehensive income | 0.0 | 3.0 | 294.1 | 119.1 | 0.0 | 416.2 | -0.1 | 416.1 |
| Transactions with the owners | ||||||||
| Share-based payment, net | 0.0 | 0.0 | 0.0 | 1.4 | 0.0 | 1.4 | 0.0 | 1.4 |
| Addition/disposal of non-controlling interests | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 12.2 | 12.2 |
| Treasury shares bought/sold | 0.0 | 0.0 | 0.0 | 9.4 | 0.0 | 9.4 | 0.0 | 9.4 |
| Transactions with the owners | 0.0 | 0.0 | 0.0 | 10.8 | 0.0 | 10.8 | 12.2 | 23.0 |
| Equity at 31 March 2015 | 255.0 | -17.0 | 447.8 | 5,608.1 | 204.0 | 6,497.9 | 15.0 | 6,512.9 |
| Equity at 1 January 2016 | 255.0 | -12.4 | 263.1 | 5,895.1 | 255.0 | 6,655.8 | 20.7 | 6,676.5 |
| Other comprehensive income | ||||||||
| Exchange rate adjustment of foreign subsidiaries | 0.0 | 0.0 | -39.0 | 0.0 | 0.0 | -39.0 | -0.1 | -39.1 |
| Value adj. of hedging instruments recognised | 0.0 | -16.4 | 0.0 | 0.0 | 0.0 | -16.4 | 0.0 | -16.4 |
| Hedging instruments transferred to cost of sales | 0.0 | -0.8 | 0.0 | 0.0 | 0.0 | -0.8 | 0.0 | -0.8 |
| Hedging instruments transferred to financials | 0.0 | 0.2 | 0.0 | 0.0 | 0.0 | 0.2 | 0.0 | 0.2 |
| Other comprehensive income from associates and JVs | 0.0 | 0.0 | 0.0 | -1.3 | 0.0 | -1.3 | 0.0 | -1.3 |
| Other adjustment on equity | 0.0 | 0.0 | 0.0 | -0.2 | 0.0 | -0.2 | 0.0 | -0.2 |
| Tax on other comprehensive income | 0.0 | 4.1 | 0.0 | 0.0 | 0.0 | 4.1 | 0.0 | 4.1 |
| Profit for the period | 0.0 | 0.0 | 0.0 | 117.0 | 0.0 | 117.0 | -0.9 | 116.1 |
| Total recognised comprehensive income | 0.0 | -12.9 | -39.0 | 115.5 | 0.0 | 63.6 | -1.0 | 62.6 |
| Transactions with the owners | ||||||||
| Share-based payment, net | 0.0 | 0.0 | 0.0 | 1.9 | 0.0 | 1.9 | 0.0 | 1.9 |
| Tax on share-based payment | 0.0 | 0.0 | 0.0 | 2.2 | 0.0 | 2.2 | 0.0 | 2.2 |
| Treasury shares bought/sold | 0.0 | 0.0 | 0.0 | 40.9 | 0.0 | 40.9 | 0.0 | 40.9 |
| Transactions with the owners | 0.0 | 0.0 | 0.0 | 45.0 | 0.0 | 45.0 | 0.0 | 45.0 |
| Equity at 31 March 2016 | 255.0 | -25.3 | 224.1 | 6,055.6 | 255.0 | 6,764.4 | 19.7 | 6,784.1 |
All amounts in DKK million
Interim Report - first quarter of 2016 - Schouw & Co.
Notes to the financial statements
1 SEGMENT REPORTING
| Total reportable segments YTD 2016 | BioMar | Fibertex Personal Care | Fibertex Nonwovens | Hydra/Specma | Total |
|---|---|---|---|---|---|
| External revenue | 1,532.1 | 452.6 | 336.1 | 452.9 | 2,773.7 |
| Intra-group revenue | 0.0 | 5.8 | 1.6 | 0.0 | 7.4 |
| Segment revenue | 1,532.1 | 458.4 | 337.7 | 452.9 | 2,781.1 |
| Depreciation and impairment | 34.0 | 28.8 | 21.4 | 14.4 | 98.6 |
| EBIT | 22.0 | 87.4 | 22.5 | 29.9 | 161.8 |
| Segment assets | 4,869.1 | 1,874.8 | 1,575.7 | 1,341.2 | 9,660.8 |
| Including goodwill | 772.9 | 99.1 | 120.3 | 154.8 | 1,147.1 |
| Equity investments in associates and joint ventures | 82.8 | 0.0 | 0.0 | 2.6 | 85.4 |
| Segment liabilities | 2,575.3 | 1,016.6 | 1,078.4 | 974.3 | 5,644.6 |
| Working capital | 781.7 | 287.7 | 379.3 | 491.3 | 1,940.0 |
| NIBD | 389.2 | 515.3 | 743.3 | 551.2 | 2,199.0 |
| Cash flows from operating activities | -24.8 | 111.5 | 10.2 | 9.2 | 106.1 |
| Cash flows from investing activities | -79.2 | -65.5 | -21.9 | -488.4 | -655.0 |
| Cash flows from financing activities | -17.8 | -32.1 | 42.2 | 533.5 | 525.8 |
| Capital expenditure * | 52.8 | 65.5 | 21.9 | 416.7 | 556.9 |
| Average number of employees | 896 | 521 | 785 | 804 | 3,006 |
| Total reportable segments YTD 2015 | BioMar | Fibertex Personal Care | Fibertex Nonwovens | Hydra | Total |
| External revenue | 1,909.0 | 420.6 | 303.8 | 148.4 | 2,781.8 |
| Intra-group revenue | 0.0 | 7.3 | 2.0 | 0.0 | 9.3 |
| Segment revenue | 1,909.0 | 427.9 | 305.8 | 148.4 | 2,791.1 |
| Depreciation and impairment | 37.0 | 35.7 | 17.8 | 3.4 | 93.9 |
| EBIT | 49.3 | 63.5 | 27.3 | 16.2 | 156.3 |
| Segment assets | 5,477.9 | 1,975.1 | 1,384.8 | 389.8 | 9,227.6 |
| Including goodwill | 789.4 | 99.1 | 123.2 | 0.0 | 1,011.7 |
| Equity investments in associates and joint ventures | 44.7 | 0.0 | 0.0 | 0.0 | 44.7 |
| Segment liabilities | 3,097.7 | 1,174.7 | 923.2 | 226.4 | 5,422.0 |
| Working capital | 1,089.6 | 289.3 | 332.2 | 161.2 | 1,872.3 |
| NIBD | 531.1 | 683.5 | 570.5 | 93.4 | 1,878.5 |
| Cash flows from operating activities | -5.6 | 90.8 | 27.5 | 44.4 | 157.1 |
| Cash flows from investing activities | -13.2 | -7.6 | -55.4 | -1.6 | -77.8 |
| Cash flows from financing activities | 59.4 | -55.9 | 55.2 | -52.5 | 6.2 |
| Capital expenditure * | 13.2 | 8.0 | 90.8 | 1.6 | 113.6 |
| Average number of employees | 912 | 506 | 622 | 243 | 2,283 |
- Capital expenditure consists of additions of intangible assets and property, plant and equipment, including additions on acquisition
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 23
Notes to the financial statements
1 SEGMENT REPORTING (CONTINUED)
Schouw & Co. is an industrial conglomerate consisting of a number of sub-groups operating in various industries and independently of the other sub-groups. The group management monitors the financial developments of all material sub-groups on a regular basis. Based on management control and financial management, Schouw & Co. has identified four reporting segments, which are BioMar, Fibertex Personal Care, Fibertex Nonwovens and Hydra/Specma. In addition, the Group has acquired GPV effective from 1 April 2016, and that company will be consolidated as from the second quarter.
Included in the reporting segments are revaluations of assets and liabilities made in connection with Schouw & Co.'s acquisition of the segment in question and consolidated goodwill arising as a result of the acquisition. The operational impact of depreciation/amortisation and write-downs on the above revaluations or goodwill is also included in the profit or loss presented for each reporting segment.
All inter-segment transactions were made on an arm's length basis.
Reconciliation of consolidated revenue, EBIT, assets and liabilities
| YTD 2016 | Group revenue | EBIT | Assets | Liabilities |
|---|---|---|---|---|
| Reporting segments | 2,781.1 | 161.8 | 9,660.8 | 5,644.6 |
| Non-reporting segments | 1.9 | 1.3 | 142.2 | 35.2 |
| The parent company | 1.5 | -6.3 | 6,914.8 | 150.4 |
| Group elimination etc. | -8.8 | 0.0 | -5,967.6 | -1,864.1 |
| Total | 2,775.7 | 156.8 | 10,750.2 | 3,966.1 |
| YTD 2015 | Group revenue | EBIT | Assets | Liabilities |
| --- | --- | --- | --- | --- |
| Reporting segments | 2,791.1 | 156.3 | 9,227.6 | 5,422.0 |
| Non-reporting segments | 1.9 | 1.0 | 200.7 | 44.6 |
| The parent company | 1.4 | -5.5 | 6,658.2 | 160.3 |
| Group elimination etc. | -10.6 | 0.0 | -5,714.5 | -1,767.8 |
| Total | 2,783.8 | 151.8 | 10,372.0 | 3,859.1 |
The data on revenue by geography are based on customers' geographical location. The specification shows individual countries that account for more than 5% of the Group in terms of revenue or assets. As Schouw & Co.'s consolidated revenue is generated in some 100 different countries, a very large proportion of the revenue derives from the 'Other' category.
Revenue by country:
Revenue by segments:
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 24
Notes to the financial statements
2 costs
Share-based payment: Share option programme
The company maintains an incentive programme for the Management and senior managers, including the executive management of subsidiaries. The programme entitles participants to acquire shares in Schouw & Co. at a price based on the officially quoted price at around the time of grant plus a premium (2016 allocation: 3% p.a.) from the date of grant until the date of exercise.
| Outstanding options | Management | Other | Total |
|---|---|---|---|
| Granted in 2012 | 40,000 | 0 | 40,000 |
| Granted in 2013 | 40,000 | 44,000 | 84,000 |
| Granted in 2014 | 55,000 | 150,000 | 205,000 |
| Granted in 2015 | 55,000 | 172,000 | 227,000 |
| Outstanding options in total at 31 December 2015 | 190,000 | 366,000 | 556,000 |
| Granted in 2016 | 55,000 | 199,000 | 254,000 |
| Exercised (from the share options granted in 2012) | -40,000 | 0 | -40,000 |
| Exercised (from the share options granted in 2013) | 0 | -44,000 | -44,000 |
| Exercised (from the share options granted in 2014) | 0 | -96,000 | -96,000 |
| Outstanding options in total at 31 March 2016 | 205,000 | 425,000 | 630,000 |
| Options exercised in 2016: | Exercised from 2014 grant | Exercised from 2013 grant | Exercised from 2012 grant |
| --- | --- | --- | --- |
| Exercised number of shares | 96,000 | 44,000 | 40,000 |
| Average exercise price in DKK | 272.99 | 199.27 | 148.30 |
| Average share price in DKK on exercise | 401.16 | 401.68 | 400.00 |
| Group's cash proceeds in DKK million | 26.2 | 8.8 | 5.9 |
The expected volatility is calculated as 12 months' historical volatility based on average prices. If the optionholders have not exercised their share options within the period specified, the share options will lapse without any compensation to the holders. Exercise of the share options is subject to the holders being in continuing employment during the above-mentioned periods. If the share option holder leaves the company's employ before a share option vests, the holder may in some cases have a right to exercise the share options early during a four-week period following Schouw & Co.'s next following profit announcement. In the event of early exercise, the number of share options will be reduced proportionately.
The following assumptions were applied in calculating the fair value of outstanding share options at the date of grant:
| Presumptions for the fair value: | 2016 grant | 2015 grant | 2014 grant | 2013 grant |
|---|---|---|---|---|
| Expected volatility | 31.50% | 27.62% | 26.12% | 25.36% |
| Expected term | 48 mths | 48 mths | 48 mths | 48 mths |
| Expected dividend per share | DKK 8 | DKK 6 | DKK 5 | DKK 4 |
| Risk-free interest rate | 0.10% | 0.00% | 0.65% | 0.62% |
| Other information regarding the options: | ||||
| Strike price in DKK * | 450.88 | 379.50 | 297.50 | 211.63 |
| Fair value in DKK per option ** | 69.65 | 40.99 | 30.87 | 20.19 |
| Fair value in total in DKK millions ** | 17.7 | 9.3 | 6.9 | 4.4 |
| Can be exercised from | March 2018 | March 2017 | March 2016 | March 2015 |
| Can be exercised to | March 2020 | March 2019 | March 2018 | March 2017 |
) On exercise after four years (at the latest possible date)
*) At the date of grant
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 25
Notes to the financial statements
3 RECEIVABLES - CURRENT
| 31/3 2016 | 31/3 2015 | |
|---|---|---|
| Trade receivables | 2,425.0 | 2,398.6 |
| Other current receivables | 253.2 | 161.0 |
| Accruals and deferred income | 29.9 | 7.1 |
| Receivables current | 2,708.1 | 2,566.7 |
Trade receivables by portfolio company:
31/3 2016
31/3 2015
| 31/3 2016 | 31/3 2015 | |
|---|---|---|
| Impairment losses on trade receivables | ||
| Impairment losses at 1 January | -206.8 | -181.9 |
| Exchange adjustments | 1.0 | -3.4 |
| Additions on company acquisitions | -1.0 | 0.0 |
| Reversed impairment losses | 0.3 | 0.1 |
| Impairment losses for the period | -7.6 | -6.9 |
| Realised loss | 0.3 | 0.6 |
| Impairment losses | -213.8 | -191.5 |
| 31 March 2016 | Not due | Due between (days) |
| --- | --- | --- |
| 1-30 | ||
| Trade receivables not considered to be impaired | 1,930.9 | 199.6 |
| Trade receivables individually assessed to be impaired | 8.9 | 33.7 |
| Trade receivables in total | 1,939.8 | 233.3 |
| Impairment losses on trade receivables | -3.1 | -2.5 |
| Trade receivables net | 1,936.7 | 230.8 |
| Proportion of the total receivables which is expected to be settled | ||
| Impairment percentage | 0.2% | 1.1% |
| 31 March 2015 | Not due | Due between (days) |
| --- | --- | --- |
| 1-30 | ||
| Trade receivables not considered to be impaired | 2,001.4 | 151.3 |
| Trade receivables individually assessed to be impaired | 24.1 | 33.5 |
| Trade receivables in total | 2,025.5 | 184.8 |
| Impairment losses on trade receivables | -0.6 | -0.3 |
| Trade receivables net | 2,024.9 | 184.5 |
| Proportion of the total receivables which is expected to be settled | ||
| Impairment percentage | 0.0% | 0.2% |
A total of 13.2% (2015: 13.4%) of receivables at the balance sheet date were impaired to a greater or lesser extent. There is a continual follow-up on overdue debtors.
All amounts in DKK million
Interim Report - first quarter of 2016 - Schouw & Co.
Notes to the financial statements
4 ACQUISITIONS
| 31/3 2016 | 31/3 2016 | |
|---|---|---|
| Intangible assets | 177.7 | 4.7 |
| Property, plant and equipment | 76.5 | 52.9 |
| Financial assets | 4.2 | 0.0 |
| Inventories | 235.5 | 21.4 |
| Receivables | 204.0 | 18.0 |
| Tax asset | 0.8 | 0.0 |
| Cash and cash equivalents | 60.9 | 0.5 |
| Credit institutions | -140.6 | -16.2 |
| Deferred tax | -54.1 | 0.0 |
| Provisions | -4.3 | 0.0 |
| Trade payables | -99.6 | -17.1 |
| Other liabilities | -74.1 | -17.2 |
| Net assets acquired | 386.9 | 47.0 |
| Of which minority interests | 0.0 | -12.2 |
| Current value of original share of equity | 0.0 | -12.1 |
| Badwill | 0.0 | -2.7 |
| Goodwill | 155.8 | 0.0 |
| Cost | 542.7 | 20.0 |
| Of which cash and cash equivalents | -60.9 | -0.5 |
| Cash cost total (2016: Specma) | 481.8 | 19.5 |
| Prepayment for the purchase of GPV | 83.3 | 0.0 |
| Total cash payments regarding acquisition of enterprises | 565.1 | 19.5 |
The Group acquired Specma AB, a hydraulics business based in Sweden, on 4 January 2016 for a cash consideration of DKK 481.8 million.
Specma specialises in the production and sales of hydraulics systems and components for local and international OEM customers. Headquartered in Gothenburg, Sweden, Specma generated revenue of DKK 1.1 billion in 2015. The company employs 750 people, most of whom are based in Sweden but it also has a significant presence in Finland, the UK, China and Poland. Specma operates two independent business areas: a Global division that serves major international OEM customers and a Nordic division that serves a number of local OEM and aftermarket customers in Sweden and Finland.
The transaction has made Hydra/Specma the largest player in specialist hydraulics technology in the Nordic region, and the company serves OEM customers as well as the wind power, marine and offshore sectors.
In connection with the purchase price allocation relating to the acquisition of Specma, goodwill was calculated at DKK 155.8 million. Goodwill represents the value of labour, new customers, synergies and deferred tax on those assets.
The acquisition of Specma involved acquisition costs of DKK 3.7 million. Most of the acquisition costs were recognised as administrative expenses in the financial statements for 2015.
As described below, the Group prepaid part of the purchase price when acquiring GPV International A/S. The prepaid amount of DKK 83.3 million forms part of the total consideration paid for acquisitions in the first quarter of 2016.
The prepaid amount is recognised in the consolidated balance sheet at 31 March 2016 under other receivables.
Acquisitions made after the balance sheet date
Effective 1 April 2016, Schouw & Co acquired all shares in GPV, Denmark's largest EMS manufacturer (Electronic Manufacturing Services). GPV manufactures low-volume specialist electronics and advanced mechanics components with a high degree of flexibility, selling its products to currently some 300 international customers.
GPV's financial year closed on 31 March 2016, and the group's audited annual report is not yet available. As a result, the Schouw & Co. Group is unable to disclose the information required under IFRS 3. Information on purchase price allocation, transaction costs, etc. is expected to be disclosed in the interim report for the six months ending 30 June 2016.
In addition to the prepaid consideration for GPV, the Schouw & Co. Group subsequently paid an additional DKK 14.8 million, bringing the total consideration for the shares to DKK 98.1 million.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 27
Notes to the financial statements
5 INTEREST-BEARING DEBT
Percentage breakdown of interest-bearing debt by currency:
Consolidated interest-bearing debt since 2011:
The weighted average effective rate of interest at 31 March 2016 was 2.8% (31 March 2015: 3.6%).
6 SHARE CAPITAL
| Treasury shares | Number of shares | Cost in DKK million | Percentage of share capital |
|---|---|---|---|
| 1 January 2015 | 2,009,933 | 349.7 | 7.88% |
| Movements in Q1 2015 | |||
| Share option programme | -177,000 | -21.5 | -0.69% |
| Additions | 73,197 | 23.8 | 0.29% |
| 31 March 2015 | 1,906,130 | 352.0 | 7.48% |
| Movements in Q2-Q4 2015 | |||
| None | |||
| 31 December 2015 | 1,906,130 | 352.0 | 7.48% |
| Movements in Q1 2016 | |||
| Share option programme | -180,000 | -21.8 | -0.71% |
| 31 March 2016 | 1,726,130 | 330.2 | 6.77% |
The share capital consists of 25,500,000 shares with a nominal value of DKK 10 each. All shares rank equally. The share capital is fully paid up.
Schouw & Co. has been authorised by the shareholders in general meeting to acquire up to 5,100,000 treasury shares, equal to 20.0% of the share capital. The authorisation is valid until 1 April 2021.
The company acquires treasury shares for allocation to the Group's share option programmes.
A total of 180,000 shares held in treasury were used in connection with options exercised in 2016. The shares had an aggregate fair value of DKK 72.2 million at the time of exercise.
The Group's holding of treasury shares had a market value of DKK 706.0 million at 31 March 2016.
The share capital has remained unchanged in the past five years.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 28
Notes to the financial statements
7 FAIR VALUE OF CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES
| 31/3 2016 | 31/3 2015 | |
|---|---|---|
| Financial assets | ||
| Derivative financial instruments to hedge future cash flows – level 2 | 1.8 | 11.7 |
| Securities measured at fair value – level 3 | 110.9 | 130.4 |
| Financial liabilities | ||
| Derivative financial instruments to hedge future cash flows – level 2 | 35.2 | 33.9 |
Securities measured at fair value through other comprehensive income – level 3 amounted to DKK 84.0 million at the beginning of the year. The change for the reporting period was due to a capital injection in Salmones Austral of DKK 30.4 million and foreign exchange adjustments of DKK -3.5 million. Due to the capital injection, the ownership interest in Salmones Austral was increased from 13.6% to 18.4%.
The Group uses interest rate swaps and forward currency contracts to hedge fluctuations in interest rate levels and foreign exchange rates. Forward exchange contracts and interest rate swaps are valued using generally accepted valuation techniques based on relevant observable swap curves and exchange rates. The fair values applied are calculated mainly by external sources on the basis of discounted future cash flows.
The fair value of derivative financial instruments is calculated by way of valuation models such as discounted cash flow models. Anticipated cash flows for individual contracts are based on observable market data such as yield curves and exchange rates. In addition, fair values are based on non-observable market data, including exchange rate volatilities, or correlations between yield curve, exchange rates and credit risks. Non-observable market data account for an insignificant part of the fair value of the derivative financial instruments at the end of the reporting period.
Fair value hierarchy
Level 1 Listed shares, stated at market value of shareholding. No items are currently classified at this level.
Level 2 Financial instruments valued by external credit institutions using generally accepted valuation techniques on the basis of observable data.
Level 3 Unlisted shares, stated at estimated value.
8 EARNINGS PER SHARE (DKK)
| Q1 2016 | Q1 2015 | |
|---|---|---|
| Share of the profit for the period attributable to shareholders of Schouw & Co. | 117.0 | 124.5 |
| Average number of shares | 25,500,000 | 25,500,000 |
| Average number of treasury shares | -1,862,262 | -1,981,748 |
| Average number of outstanding shares | 23,637,738 | 23,518,252 |
| Average dilutive effect of outstanding share options * | 49,641 | 54,449 |
| Diluted average number of outstanding shares | 23,687,379 | 23,572,701 |
| Earnings per share of DKK 10 | 4.95 | 5.29 |
| Diluted earnings per share of DKK 10 | 4.94 | 5.28 |
- See note 2 for information on options that may cause dilution.
9 RELATED PARTY TRANSACTIONS
Under Danish legislation, Givesco A/S, Svinget 24, DK-7323 Give, members of the Board of Directors, the Management Board and senior management as well as their family members are considered to be related parties. Related parties also comprise companies in which the individuals mentioned above have material interests. Related parties also comprise subsidiaries, joint arrangements and associates, in which Schouw & Co. has control, significant influence or joint control of as well as members of the boards of directors, management boards and senior management of those companies.
Management's share option programmes are set out in note 2.
| YTD 2016 | YTD 2015 | |
|---|---|---|
| Joint Ventures: | ||
| During the financial year, the Group received consulting fees of Associates: | 0.0 | 0.1 |
| During the financial year, the Group sold goods of | 8.6 | 0.9 |
| During the financial year, the Group bought goods of | 0.1 | 0.7 |
| During the financial year, the Group received interest income of | 0.1 | 0.2 |
| At 31 March the Group had a receivable of | 27.7 | 10.4 |
| At 31 March the Group had debt of | 0.1 | 0.3 |
| During the financial year, the Group received dividends of | 0.8 | 0.0 |
Other than as set out above, no transactions were made during the year with related parties.
All amounts in DKK million
Interim Report – first quarter of 2016 · Schouw & Co. · 29
Interim Report – first quarter of 2016 · Schouw & Co. · 30
Management statement
The Board of Directors and Executive Management today considered and approved the interim report for the period 1 January to 31 March 2016.
The interim report, which has been neither audited nor reviewed by the company's auditors, was prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU and Danish disclosure requirements for listed companies.
In our opinion, the interim financial statements give a true and fair view of the group's assets and liabilities and financial position at 31 March 2016 and of the results of the group's operations and cash flows for the period 1 January to 31 March 2016.
Furthermore, in our opinion the management's report includes a fair review of the development and performance of the business, the results for the period and the Group's financial position in general and describes the principal risks and uncertainties that it faces.
Aarhus, 3 May 2016
Aktieselskabet Schouw & Co.
Chr. Filtenborgs Plads 1
DK-8000 Aarhus C
T +45 86 11 22 22
www.schouw.dk
[email protected]
CVR nr. 63965812
Executive Management
Jens Bjerg Sørensen
President
Peter Kjær
Board of Directors
Jørn Ankær Thomsen
Chairman
Jørgen Wisborg
Deputy Chairman
Erling Eskildsen
Niels Kristian Agner
Kjeld Johannesen
Agnete Raaschou-Nielsen