AN Templates


[PDF]AN Templates - Rackcdn.comhttps://84e1202b204d21a1cb9b-0e1ab5244fd095dbeb138ed6f973369e.ssl.cf3.rackc...

2 downloads 145 Views 341KB Size

Akzo Nobel Sweden Finance AB (publ)

Half yearly report 2010 Akzo Nobel Sweden Finance AB (publ) Registration number 556768-4062

General information The company Akzo Nobel Sweden Finance AB (publ), referred to as “the company”, was incorporated on October 13, 2008. The company is a wholly-owned subsidiary of Akzo Nobel N.V, which is a public limited liability company (Naamloze Vennootschap) incorporated in the Netherlands, with registered office at Strawinskylaan 2555, 1077 ZZ Amsterdam (telephone number +31 20 502 7555). Akzo Nobel N.V. has subsidiaries in more than 80 countries and employs 55,000 people through its various Decorative Paints, Performance Coatings and Specialty Chemicals businesses. Akzo Nobel N.V. and its subsidiaries together are referred to as “AkzoNobel” or the “AkzoNobel group”. Akzo Nobel Sweden Finance AB and its subsidiaries are referred to as the “AkzoNobel Sweden group”. The purpose of the company is to act as a holding company for selected AkzoNobel entities.

Bond loan and Cross-guarantee On December 12, 2008, the company placed a 7.75% €1 billion bond with an issue price of 99.552% of the principal amount. The bond has annual interest payments and will mature on January 31, 2014. The company has entered into contracts (“Cross-guarantee”) pursuant to which it irrevocably and unconditionally guarantees parts of the payment obligations of Akzo Nobel N.V. relating to public debt and external credit and guarantee contracts. The amount of public debt and external credit arrangements covered by this guarantee outstanding at December 31, 2009, amounted to €2,963 million. At June 30, 2010, the amount outstanding was €2,942 million. At the same time Akzo Nobel N.V. has irrevocably and unconditionally guaranteed the payment obligations of Akzo Nobel Sweden Finance AB relating to the 7.75% €1 billion bond. The purpose of this Crossguarantee is to ensure that the creditors of both companies are placed in substantially equivalent structural position regarding the debt covered by the guarantee.

Acquisition of the Swedish units in AkzoNobel In January 2009, the company acquired all Swedish subsidiaries of the AkzoNobel group including all subsidiaries held by these Swedish subsidiaries. In total 40 companies were acquired. The consideration for the transferred units was €1,115 million. This value was determined by external appraisers. The transaction was financed by using the funds raised through the €1 billion bond loan placed in 2008 and by an additional capital injection from Akzo Nobel N.V. of €101 million. The units are consolidated as of January 1, 2009.

Consolidation method – companies under common control Since the transfer was made between companies under common control, the acquired units are consolidated following the specific guidance for such situations as included in IFRS 3, Business Combinations. Consequently, the acquired assets, provisions and liabilities in these financial statements are recorded at the same book value as in the consolidated financial statements of Akzo Nobel N.V. The difference between the book value and the transfer value was recorded as a reduction of the AkzoNobel Sweden group’s equity.

Capital guarantee Akzo Nobel N.V. has undertaken to make a capital contribution in order to ensure that the equity of Akzo Nobel Sweden Finance AB will at all time amount to at least the registered share capital.

2

Financial highlights during the first 6 months of 2010 Revenue amounted to €896 million (€791 million). Operating income amounted to €86.2 million (€38 million). In the operating income, incidental charges were included for €5.1 million (€28 million). The major part of these relate to restructuring costs for closure of units and staff reductions. Earnings after tax were a net profit of €29.6 million (€-1 million). Earnings per share for the first half of 2010 were a gain of €29,832 (€-1,168).

Consolidated statement of income In € millions

Revenue Cost of sales Gross profit Selling expenses Research and development expenses General and administrative expenses Other operating income/(expenses) Operating income Financing income

2010 January-June

2009 January-June

2009 Full year

896.0 (667.8) 228.2

791.3 (609.5) 181.8

1,588.5 (1,268.4) 320.1

(73.0) (26.1) (34.3) (8.6) 86.2

(73.6) (28.4) (34.4) (7.1) 38.3

(142.7) (53.0) (76.2) 6.2 54.4

0.1

0.3

1.1

Financing expenses Profit/(loss) before tax

(44.2) 42.1

(42.3) (3.7)

(87.8) (32.3)

Income tax Net income

(12.5) 29.6

2.7 (1.0)

12.7 (19.6)

29.4 0.2

(1.2) 0.2

(19.1) (0.5)

29,412 29,412 1,000

(1,168) (1,168) 1,000

(19,053) (19,053) 1,000

2010 January-June

2009 January-June

2009 Full year

Attributable to: - Shareholders of the company - Minority interests Earnings per share (in €): - Basic - Diluted Number of shares outstanding

Statement of comprehensive income/change in equity In € millions

Profit/(loss) for the period Exchange differences arising on translation of foreign operations Cash flow hedges reported in equity Taxes related to comprehensive income Comprehensive income for the period

1)

29.6

(1.0)

(19.6)

51.1 10.9 (2.9) 88.7

6.4 4.9 (1.3) 9.0

37.4 17.6 (4.6) 30.8

88.5 0.2

8.8 0.2

30.3 0.5

Attributable to: - Shareholders of the company - Minority interests 1

1

Including operations with Swedish krona as a functional currency.

3

Comments to the statement of income General development We are emerging from the global economic crisis. The first half of 2010 was characterized by increasing global demand in all segments. Both domestic demand and demand in export markets started to increase, which affected the group positively. The bleaching chemicals and specialty product activities were particularly strong globally even though the developed markets remain challenging. Overall volume improvement, favourable currency impact and cost reductions, more than offset the effect of the decline in average prices. Raw material price pressure and shortages are expected to continue into the third quarter. We will keep a careful eye on the trading environment and costs will continue to be managed aggressively.

Acquisitions/divestments All revenue generated by the group relate to the units acquired from Akzo Nobel N.V. During the first half of 2010 the Specialty Chemicals businesses divested its Australian entity together with its New Zeeland branch; however the divested units did not have a material impact on the AkzoNobel Sweden group. In Performance Coatings the acquisition of the powder coatings activities of the former Rohm & Haas business of Dow Chemicals was completed in June. The expected turnover amounts to approximately €3 million. The acquired business does not have a material impact on the AkzoNobel Sweden group.

Incidental items – restructuring measures In 2009, various restructuring measures were introduced and implemented in order to adapt to the decrease in global demand. During the first half of 2010 the restructuring measures continued to some extent. A total of €5.1 million in incidental cost was included in operating income. €2.4 million relates to the reorganization of the Nordic markets organization. The closure of the plant in Skoghall, Sweden, has also contributed by €2.6 million to incidental cost, which relates to a write down of intangible assets.

4

Financing The AkzoNobel Sweden group’s major source of financing is the €1 billion bond loan issued in 2008. €38.7 million of the financing expenses related to this loan. Financing is also provided by the AkzoNobel group through cash pool and internal bank arrangements as well as through intercompany long-term borrowing. The net financing expenses to other AkzoNobel companies were €4.3 million in the period.

Taxes The tax burden was lower, 19.4%, than nominal tax, 26.3%, which is due to corrections of taxes related to earlier years.

Operating segments - management structure The AkzoNobel Sweden group is an integrated part of the AkzoNobel group. There is no separate management for units in the AkzoNobel Sweden group. Management and control is carried out through the organizational structure in the AkzoNobel group, therefore the same operational reporting structure is used. AkzoNobel is organized in three business areas: Decorative Paints Performance Coatings Specialty Chemicals Other activities include activities in the holding companies and group wide services.

Information on segments and employees 2010 January-June

2009 January-June

2009 Full year

90.5 203.5 602.0 896.0

81.8 156.6 552.9 791.3

154.2 312.7 1,121.6 1,588.5

Operating income Decorative Paints Performance Coatings

0.9 15.9

0.7 6.0

1.6 18.3

Specialty Chemicals Total

69.4 86.2

31.6 38.3

34.5 54.4

Incidentals included in operating income Decorative Paints

(2.4)

(3.1)

(1.6)

Performance Coatings Specialty Chemicals Total

0.0 (2.6) (5.1)

(1.7) (23.6) (28.5)

(0.1) (1.0) (2.7)

Number of employees

3,787

3,910

3,663

In € millions Revenue Decorative Paints Performance Coatings Specialty Chemicals Total

5

Workforce At the end of Q2, 2010, we employed 3,787 staff for ongoing activities (year-end 2009: 3,663 employees). The increase was due to seasonal impact. The changes are detailed below: A seasonal increase of 194. A net decrease of 17 due to acquisitions and divestments. A decrease of 49 due to ongoing restructuring. A net decrease of 4 due to new hires and other changes.

Condensed consolidated balance sheet June 30 2010

June 30 2009

December 31 2009

Intangible assets Property, plant and equipment Other financial non-current assets Total non-current assets

167.5 286.6 5.6 459.7

128.6 295.8 18.7 443.1

152.5 281.5 16.9 450.9

Inventories

176.0

175.8

167.6

Trade and other receivables Cash and cash equivalents Other current assets Total current assets

317.2 248.9 14.3 756.4

274.1 236.4 36.3 722.6

276.0 216.4 17.3 677.3

Total assets

1,216.1

1,165.7

1,128.2

Shareholders' equity Minority interest Total equity

(358.0) 1.3 (356.7)

(483.2) 0.4 (482.8)

(447.9) 0.7 (447.2)

Provisions and deferred tax liabilities Long-term borrowings Total non-current liabilities

57.4 1,144.8 1,202.2

137.2 1,157.4 1,294.6

63.9 1,111.5 1,175.4

32.7 185.2 152.7 370.6

38.5 268.9 46.5 353.9

82.2 174.9 142.9 400.0

1,216.1

1,165.7

1,128.2

In € millions

Short-term borrowings Trade and other payables Other short-term liabilities Total current liabilities Total equity and liabilities

Comments to the consolidated balance sheet Intangible assets Intangible assets mainly consist of goodwill relating to acquisitions made by the AkzoNobel group prior to the transfer to Akzo Nobel Sweden Finance AB. The foreign currency effects have also impacted the balance, foremost due to the weakening euro.

Cash and cash equivalents €224.1 million of the liquid funds is placed with the AkzoNobel group.

6

Borrowings €149.9 million was borrowed from the AkzoNobel group at June 30, 2010.

Changes in equity In € millions

Subscribed share Additional paid-in Cash flow hedge capital capital reserve

Balance at Janury 1, 2009 Profit/loss for the period Other comprehensive income Comprehensive income for the period

0.1

0.0

Capital injection from Akzo Nobel N.V. Acquisition of units from AkzoNobel Changes in minority interest in subsidiaries Balance at January 1, 2010 Profit/loss for the period Other comprehensive income Comprehensive income for the period

10.0

0.0

0.0 13.0 13.0

Cumulativ e translation reserve 0.0 37.4 37.4

0.1

0.0

111.1

13.0

37.4

0.0

8.0 8.0

51.1 51.1

111.1

21.0

88.5

Total equity

0.2

10.3

0.0

10.3

(20.1)

(20.1) 50.4 30.3

0.5 0.0 0.5

(19.6) 50.4 30.8

(589.8) 0.2

101.1 (589.8) 0.2

0.0 0.0 0.2

101.1 (589.8) 0.4

(609.5)

(447.9)

0.7

(447.2)

29.4

29.4 59.1 88.5

0.2

29.4 (0.5) 1.9

0.1

Minority interests

(20.1)

101.1

Acquisitions and div estments Transfer from other AkzoNobel companies Changes in minority interest in subsidiaries Balance at June 30, 2010

Other Shareholders´e reserves quity

(578.7)

0.2

29.6 59.1 88.7

(0.5) 1.9 0.0

0.4

(0.5) 1.9 0.4

(358.0)

1.3

(356.7)

Comment to changes in equity The group uses energy forwards to secure the price level of electricity in the coming 3 to 5 years. The unrealized change in fair value of these contracts is reported as a change in equity in accordance with the rules for cash flow hedge accounting as included in IAS 39. At June 30, 2010, a value of €8.0 million (net after tax) was included in the group’s equity. Changes from acquisitions and divestment include the divestment of the Australian company and its New Zeeland branch. The divestment has had an impact amounting to €-0.5 million on the equity. Transfer of funds from other AkzoNobel companies is attributable to the Indonesian company. The Indonesian company has received €1.9 million from its fellow AkzoNobel subsidiaries. There has been an increase in the cumulative translation reserves by €51.1 million due to the weakening euro. The functional currency of most units in the group is the Swedish krona and therefore the movement in the Swedish krona/euro exchange rate affects equity.

7

Consolidated statement of cash flows 2010 January-June

2009 January-June

2009 Full year

Cash and cash equivalents opening balance

216.4

1,003.3

0.0

Operating income for the period Amortization, depreciation and impairments Paid financial items and paid taxes Changes in working capital Changes in provisions Other changes Net cash from operating activities

86.3 26.3 (98.9) (28.1) (9.8) 11.1 (13.2)

38.3 32.8 (3.2) 8.5 2.5 (5.5) 73.4

54.5 87.4 (0.4) 49.6 (47.7) 0.4 143.8

Capital expenditure Acquisitions and divestments Other changes Net cash from investing activities

(15.4) 13.3 0.2 (1.9)

(20.4) (855.4) 0.3 (875.5)

(83.4) (817.3) 1.1 (899.6)

In € millions

Changes in borrowings

36.5

(66.3)

867.8

Capital injection from Akzo Nobel N.V. Other changes Net cash from financing activities

0.0 2.0 38.5

101.1 0.0 34.8

101.1 0.0 968.9

Net change in cash and cash equivalents

23.4

(767.3)

213.1

9.1

0.4

3.3

248.9

236.4

216.4

Effects of exchange rate changes Cash and cash equivalents at end of period

Comments to the statement of cash flows Net cash from operations amounted to an outflow of €13.2 million. The operating income includes €5.1 million in incidental charges. The deterioration in working capital mainly concerns increases in inventories and trade receivables. Acquisitions and divestments include the divestment of the Australian entity and its New Zeeland branch in the Specialty Chemicals business. Furthermore, changes from acquisitions and divestments include the sale of the customer list. During the close down of the plant in Skoghall, Sweden, the customer list was sold to AN Industrial Chemicals BV for €13.2 million. Financing is provided by the AkzoNobel group through the short-term borrowing and overdraft facilities of the AkzoNobel inhouse bank and cash pool systems. The changes in borrowings are changes in positions with the AkzoNobel group.

8

Notes to the condensed financial statements Principle risks and uncertainties An overview of the principal (top five) risks is provided in the table below. In respect of the principal risks for the second half of 2010, we consider that the description of these top five risks is still valid. As the units are managed within the AkzoNobel group structure, the risks have been derived from the AkzoNobel risk assessment process. One of the principal uncertainties facing our company is the

Adapt to economic conditions economic conditions

Failure to adapt adequately and

development of the global economy. Economic recovery remains

in time to economic conditions

fragile and it continues to be difficult to predict customer demand.

can have a harmful impact on our business and results of

For planning and budgeting we apply various scenarios to be best

operations.

prepared for further changes in economic conditions. Focus continues to be placed on customers, cost reduction and cash generation actions so that we are well positioned to meet the current challenges. We operate some energy intensive businesses. A non-level playing field for energy and emission trading rights can affect the competitive position of these businesses. We are pro-actively

Differences in energy prices Energy

pose a risk to the

pricing

competitiveness of several of our chemical businesses.

managing energy usage and costs. We operate several cogeneration units which enable us to make efficient use of combined heat and power. We are implementing our carbon policy, working on energy efficiency programs and investing in energy from waste and biomass. We have policies for energy contracts and have long-term purchase contracts in place. We practice pro-active pension risk management. Our pension

Contributions to pension funds

Various external developments

policy is to offer defined contribution schemes to new employees

may affect assets and liabilities

and, where appropriate, to existing employees. Our biggest defined

of pension funds, causing higher

benefit schemes have been closed to new entrants. We measure

postretirement charges and

and monitor our pension risks frequently and adopt investment

pension premiums payable.

strategies designed to reduce financial risks. We are committed to further de-risking over time. Pension activities are overseen by the Board Committee Pensions.

Inability to access sufficient raw materials, growth in cost and

Sourcing of raw materials

expenses for raw materials, energy and changes in product mix may adversely influence the future results and growth of our company.

We may be impacted by business interruption or product discontinuation at some of our key suppliers. We aim to use our purchasing power and long-term relationships with suppliers to acquire raw materials and safeguard their constant delivery in a sustainable manner. We have inventoried single and sole sourced raw materials and are actively pursuing plans to improve this situation. We have diversified contract length and supplier base. Our strengthened global sourcing strategy enables us to bundle the purchasing power both in product related and non product related

9

requirements. We continuously monitor the markets in which we operate for developments and opportunities and adapt our purchasing strategy accordingly.

International operations

Because AkzoNobel conducts

We spread our activities geographically and serve many sectors to

international operations, we are

benefit from opportunities and reduce the risk of instability.

exposed to a variety of risks,

Unfavorable political, social or economic developments and

many of them beyond our

developments in laws, regulations and standards could adversely

control, which could adversely

affect our businesses and results of operations. Political, economic

affect our business.

and legislative conditions are carefully monitored. The Board of Management decides on the countries and industry segments in which AkzoNobel conducts its business.

Seasonality Revenue and results in Decorative Paints are impacted by seasonal influences. Revenue and profitability tend to be higher in the second and third quarter of the year as weather conditions determine whether paints and coatings can be applied. In Performance Coatings, revenue and profitability vary with building patterns from original equipment manufacturers. In Specialty Chemicals, the Functional Chemicals business experiences seasonal influences. Revenue and profitability are affected by developments in the agricultural season and tend to be higher in the first half of the year.

Transaction with related parties The AkzoNobel Sweden group is an integrated part of the AkzoNobel group. A significant part of the turnover of the Swedish units is with other parts of the AkzoNobel group. Sales to other parts of the AkzoNobel group amounted to €160.2 million in the period. There are also a number of shared services within the AkzoNobel group for example sourcing, legal, human resources and financing. Pricing for such services is on an at arm’s length basis.

Accounting policies Akzo Nobel Sweden Finance AB (publ.) has prepared the half-yearly report in compliance with IAS 34, Interim Financial Reporting. This report is unaudited. Compared with the accounting principles as applied in the 2009 financial statements, the main change was the adoption of the revised IFRS 3 “Business Combinations". This has not materially affected the computation of our results. The separate financial statements for the parent company have been prepared in compliance with the Swedish Financial Reporting Board’s recommendation RFR 2.3 Accounting for legal entities. The accounting policies as applied in 2009 can be found in the financial statements. The accounting policies for the consolidated financial statements of the AkzoNobel Sweden group are the same as those of the AkzoNobel group. Therefore, reference is made to the AkzoNobel 2009 Report, a copy of which can be found on www.akzonobel.com.

10

Safe Harbor Statement This report contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecast and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion on the risk factors affecting the business, please see the AkzoNobel 2009 Report, a copy of which can be found on www.akzonobel.com.

11

Condensed separate financial statements for Akzo Nobel Sweden Finance AB (publ) Statement of income - Akzo Nobel Sweden Finance AB 2010 January-June

2009 January-June

2009 Full year

(0.1) 0.5 0.4

0.0 0.0 0.0

(0.2) 0.0 (0.2)

Net finance expenses Profit/(loss) before tax

(38.8) (38.4)

(33.4) (33.4)

(143.5) (143.7)

Income tax Net income

10.1 (28.3)

8.8 (24.6)

19.9 (123.8)

(28.3)

(24.6)

(123.8)

2010 January-June (28.3)

2009 January-June (24.6)

2009 Full year (123.8)

0.0 (28.3)

0.0 (24.6)

0.0 (123.8)

In € millions

June 30 2010

June 30 2009

December 31 2009

Shares in consolidated companies Total non current assets

1,046.5 1,046.5

1,114.9 1,114.9

1,046.7 1,046.7

0.0 19.1 25.8 44.9

0.0 0.1 8.7 8.8

141.6 0.1 0.0 141.7

1,091.4

1,123.7

1,188.4

42.1 42.1

86.8 86.8

63.1 63.1

993.5 993.5

996.8 996.8

993.2 993.2

Short term borrowings Trade and other payables

32.5 0.3

0.9 0.0

81.5 0.0

Other short-term liabilities Total current liabilities

23.0 55.8

39.2 40.1

50.6 132.1

1,091.4

1,123.7

1,188.4

In € millions General and administrative expenses Other results Operating income/(expenses)

Attributable to: - Shareholders of the company

Statement of comprehensive income - Akzo Nobel Sweden Finance AB In millions € Earnings for the period Other changes in comprehensive income Comprehensive income for the period

Financial expenses mainly relate to the €1 billion bond loan.

Balance sheet - Akzo Nobel Sweden Finance AB

Trade and other receivables Cash and cash equivalents Other current assets Total current assets Total assets Shareholders' equity Total equity Long-term borrowings Total non-current liabilities

Total equity and liabilities

12

The main assets of the company are shares in subsidiaries acquired from the AkzoNobel group in 2009. Other short-term borrowings include accrued interest and financing fees. Changes in equity - Akzo Nobel Sweden Finance AB In € millions Balance at Janury 1, 2009 Comprehensive income for the period Capital injection from Akzo Nobel N.V. Group contribution Balance at January 1, 2010

Subscribed share Additional paid-in Cash flow hedge capital capital reserve 0.1

10.0

Cumulative translation reserve

0.0

0.0

0.0

0.0

Other Shareholders´e reserves quity 0.2 (123.8)

(28.3) 7.4

(28.3) 7.4

(69.1)

42.1

101.1 0.1

111.1

Comprehensive income for the period FX variances in group contribution Balance at June 30, 2010

75.5 (48.1)

10.3 (123.8) 101.1 75.5 63.1

0.1

111.1

0.0

0.0

Akzo Nobel N.V. has undertaken to make a capital contribution in order to ensure that the equity of Akzo Nobel Sweden Finance AB will at all time amount to at least the registered share capital. The change in the parent company’s equity is mainly attributable to the group contributions including the exchange rate differences. The exchange rate differences on the group contribution relate to the transfer of the group contributions from group companies.

Statement of cash flows - Akzo Nobel Sweden Finance AB In € millions Cash and cash equivalents at begin of period

2010 January-June

2009 January-June

2009 Full year

(1.1)

1,003.3

0.0

Net cash from operating activities

(89.9)

9.7

5.2

Acquisition of shares in subsidaries Net cash from investing activities

0 0.0

(1,114.9) (1,114.9)

(1,114.9) (1,114.9)

0.2 0 109.9 110.1

0.9 101.1 0.0 102.0

1,007.5 101.1 0.0 1,108.6

20.2

(1,003.2)

(1.1)

0.0

0.0

0.0

19.1

0.1

(1.1)

Changes in borrowings (Inhouse bank) Capital injection from Akzo Nobel N.V. Other changes Net cash from financing activities Net change in cash and cash equivalents Effects of exchange rate changes Cash and cash equivalents at December 31

Net cash from operating activities is mainly attributable to interest payments on the bond loan. Other changes in the cash flow consist of the group contribution from other group subsidiaries.

13

Statement of affirmation We have prepared the half-yearly financial report 2010 of Akzo Nobel Sweden Finance AB (publ.) and the undertakings included in the consolidation taken as a whole in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Swedish disclosure requirements for half-yearly financial reports. To the best of our knowledge the condensed financial statements in this half-yearly financial report 2010 give a true and fair view of our assets and liabilities, financial position at June 30, 2010, and of the result of our consolidated operations for the first half year of 2010, and describes the principal risks and uncertainties that the company and the companies in the Akzo Nobel Sweden group face. Stockholm, August 31, 2010 The Board of Directors

Harry Blok, Chairman Bjarne Kristiansson, Managing director Gijsberth De Ruiter, Board member Pernilla Heidenvall, Board member Jacq Derckx, Board member

This report has not been the subject of review by the company’s auditors.

14