HALF YEAR REPORT 2010
HALF YEAR REPORT OF THE BOARD OF DIRECTORS Sioen Industries is the world’s leading producer of coated technical textiles, European market leader in industrial protective clothing, a niche specialist in fine chemicals and a major world player in processing technical textiles into semi-finished products and technical end products. > Net sales: At the end of the first half of 2010 the Sioen Industries Group realized sales from continuing operations of EUR 145.8 million compared to EUR 128.7 million over the same period in 2009 or a growth of 13.2%. Successful introduction of new products and product lines and a slow revival of the economy are the driving forces behind the growth. > Gross margin: Expressed as a percentage over net sales, gross margin increased slightly to 52.15% compared to 51.21% at the end of the same period last year. In Euro this results in an increase of EUR 10.1 million compared to the same period in 2009. > Services and other goods: The substantial growth of sales has as a logical consequence that some variable costs evolved likewise: energy costs (+ EUR 1 million), consumables (+ EUR 0.9 million), transport charges (+ EUR 0.4 million), etc. > Remuneration, social security and pensions: As a result of increased activity, personnel costs increased from EUR 29.5 million at the end of the first half of 2009 to EUR 30.6 million over the same period this year. > Other operating charges: These charges consist primarily of non-profit related taxes and import duties.
2 # SIOEN half year report 2010
> Write off inventories and receivables: Under this section we recorded, according to our accounting policies, reversals of existing provisions or additional write downs for obsolete stocks and doubtful debtors. > Operating result: The operating result at the end of the first half of 2010 amounted to EUR 13.6 million compared to EUR 6.6 million over the same period last year or more than a duplication of the amount of last year. > Financial result: Financial result of the Group for the first half of 2010 amounted to EUR -3.8 million compared to EUR -1.9 million over the same period last year. The main reason for the decreased financial result is related to the revaluation of general accounts (unrealized exchange gains/losses) compared to the same period last year. > Profit for the period from continuing operations: The Group recorded a profit from continuing operations of EUR 9.3 million for the first half of 2010, which is more than twice the amount of last year (EUR 4.0 million at the end of the first half of 2009). > Net cash flow from continuing operations: The net cash flow from continuing operations amounted to EUR 14.6 million compared to EUR 12.2 million over the same period last year.
developments by division Coating Division The coating division specializes in the coating (applying a protective layer) of textiles. This division is fully vertically integrated. Everything starts with the extrusion of technical yarns (polyester), which are woven into technical fabric and then coated with various polymers (PVC, silicons, etc.). The group is the only player in the world with full proficiency in various coating technologies, each with its own specific products and markets. In the first half of 2010 the coating division achieved sales from continuing operations of EUR 75.5 million versus EUR 62.5 million over the same period last year or a growth ratio of 20.8%. The growth of the past half year was driven mainly by technological developments and the improving economic conditions in various markets.
Transport tarpaulins and side curtains Transportation (side curtains and tarpaulins for trucks and trains) is the largest market, representing approximately 40% of the sales of the coating division. Sales are mainly in Western Europe, for both new tarpaulins and the replacement market. After last year’s dip, this year shows a clear revival. Analysts are also predicting substantial growth in coming years. This prognosis is based on three factors; - Capacity utilization of the truck fleet is already 50% higher than last year and continues to rise. - The average life of a truck fleet is 5 to 6 years which means that trucks purchased in 2005 or 2006 (last peak period) need to be replaced in 2011/2012. - Historical analysis shows that transport companies start investing in/replacing vehicles again approximately 2 years after the trough of a cycle.
Bioenergy and agriculture Last year’s R&D efforts are paying off. The new range is well received in the market and meets all technical requirements. With green/alternative energy becoming increasingly important we also expect steady growth in this segment in coming years.
Sports Significant progress was also made in this segment. The range of phthalate-free products are child- and environmentally friendly, which is the foundation of the success. Customers are sports clubs, nursery schools, etc.
Geotextiles and roofing With the long winter this product line got off to a relatively late start. From April, however, construction resumed and has been rising ever since.
Flexible, breathable technical textiles Newly developed products and improved existing ones are the key to success and growth in these markets (transfer coating materials for protective clothing and mattress protection).
Pool covers and liners Sioen is the largest supplier of technical textile in this segment. The primary market is France where the largest manufacturers of swimming pool covers and liners are located.
Textile architecture and camping These are membranes for tents and structures in sailcloth. Textile architecture is one of the fastest growing markets for coated textiles. Advanced technical quality and a 5-year warranty create a high entry threshold.
SIOEN half year report 2010 # 3
Apparel Division
Pigment pastes
This division stands for ‘technical protective clothing’. The apparel division is an innovative producer of a wide range of high-quality technical protective clothing that meets all European standards. Sioen Apparel is active in various sectors where attention to safety is a priority. Attention to customer needs, strong quality consciousness and continuing research and development, combined with technically advanced products, are the basis of the successful development of this division. Largely immune to the economic climate, the apparel division succeeded, after a strong first half of 2009, in again increasing sales by 4%.
As a supplier to coating companies this product line follows its customers’ business cycle. New developments and a positive economic development have also increased sales in these products.
Industrial protective clothing In this context, the division operates in almost all economic sectors (industry, agriculture, services, etc.) with a full range of products tailored to the needs of its customers. Sales in this segment follow the economic trend.
Specific markets (police, firefighters, army, etc.) In the market for specialized protective clothing, technical requirements are an absolute priority. The efforts of recent years are the driving force behind the successes and growth today.
Leisure clothing A well controlled diversity of customers and products, impeccable quality and the fulfilling of promises guarantee the continued growth of this product line.
Chemicals Division Sioen Chemicals processes basic raw materials (PVC powders, pigments, etc.) into high quality technical semi-finished products (pigment pastes and inks) for a wide range of applications. This division increased its sales by 18% compared to the same period last year.
4 # SIOEN half year report 2010
Inks Digital inks: Last year Sioen Chemicals developped a complete new range of digital printing inks. Today these are gradually introduced into the market. Initial reactions are very positive. Decorative Inks: Sioen Chemicals has succeeded in further reinforcing its position in Eastern Europe, explaining the current growth figures.
Industrial Applications Division In this division we process technical textiles and produce filter cloth (felt) and industrial filters.
Filters and filter cloth The Group has, in Liège, a facility producing needle felt and derived products like filter cloth and even fully ready-to-use filters. These are used mainly in the food, heavy industry, metallurgy, paper-making and chemicals sector. Excellence, reliability and delivery guarantees are ensuring a steady growth in sales.
Accessories and services By way of extension of the production of PVC coated material, Sioen is also the obvious partner for the production of industrial accessories like cadors, sio-steel cloth and carapax. The Group also provides a number of additional services such as pond liner cutting and welding. Completing the range , there is also a limited production of highly specialized applications such as roll-up doors, silos and camouflage cloth.
Balance sheet and cash flow statement
MANAGEMENT STATEMENT
Continuous and maintained efforts to control the working capital level allowed the Group to keep the working capital, expressed as a percentage of net sales, at level compared to the end of last year (32.0% as per 30 June 2010 against 31.7% as per 31 December 2009). In nominal amounts, working capital needs increased by EUR 12 million at the end of June 2010. Given the net sales trend (increase by 13.2% compared to the same period last year) and the increased need of working capital, the company succeeded in decreasing the net financial debt from EUR 109 million, at the end of last year, to EUR 107 million at the end of June 2010.
Obligations to provide periodic information under the Transparency Directive effective from 1 January 2008
Outlook Early signs of an economic revival, the launch of newly developed products, a rigorous monitoring of costs and working capital employed are the driving forces behind the current results. The Sioen Group is back on a growth track and feels that, except for an adverse change in the current economic evolution, it will be able to preserve this trend throughout the year.
The undersigned declare that: - The half year accounts, prepared in accordance with the applicable standards for annual financial statements, give a true and fair view of the net assets, financial condition and results of Sioen Industries and the companies included in the consolidation. - The half year report gives a true and fair overview of the development and results of the company and the position of Sioen Industries and the companies included in the consolidation, and a description of the principal risks and uncertainties that they face.
Michèle Sioen, CEO Geert Asselman, CFO
The full financial report with the management statement will be available from 31 August 2010 in the ‘Investor Relations’ section of our website www.sioen.com.
SIOEN half year report 2010 # 5
6 # SIOEN half year report 2010
INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 JUNE 2010 unaudited
CONTENT > Condensed consolidated statement of financial position
8
> Condensed consolidated statement of comprehensive income by function and earnings per share 10 > Condensed consolidated statement of comprehensive income by nature
12
> Condensed consolidated statement of other comprehensive income
13
> Condensed consolidated statement of cash flows
14
> Condensed consolidated statement of changes in equity
15
> Notes to the condensed consolidated financial statements
16
SIOEN half year report 2010 # 7
Condensed consolidated statement of financial position IN THOUSANDS OF EUROS six months ended ASSETS
twelve months ended
30 June 2010
31 December 2009
unaudited
audited
Intangible assets
11 317
12 856
Goodwill
17 552
17 557
124 657
129 508
7 244
7 282
Non-Current assets
Property, plant and equipment Investment property Interests in associates Long term trade receivables Other long term assets Deferred tax assets
2
2
16
15
530
565
3 443
3 272
Total non-current assets
164 761
171 057
Inventories
77 841
68 926
Trade receivables
52 691
42 199
Other receivables
2 887
3 135
Current Assets
Other financial assets
288
288
28 988
29 574
Deferred charges and accrued income
1 703
1 498
Assets classified as held for sale
6 889
11 184
Cash and cash equivalents
Total current assets
171 287
156 804
TOTAL ASSETS
336 048
327 861
8 # SIOEN half year report 2010
six months ended EQUITY & LIABILITIES
30 June 2010
twelve months ended 31 December 2009
unaudited
audited
Share capital
46 000
46 000
Retained earnings
90 786
82 712
1 356
145
Total equity
138 142
128 857
Equity attributable to the owners of the Company
138 142
128 857
0
0
Borrowings
99 685
100 400
Provisions
1 456
1 245
Retirement benefit obligation
1 091
960
Deferred tax liabilities
8 518
10 373
18 179
19 401
3
3
128 932
132 382
Equity
Hedging and translation reserves
Minority interests
Non-Current liabilities
Obligations under finance leases Other amounts payable Total non current liabilities
Current liabilities Trade and other payables
25 964
24 163
Borrowings
17 125
16 623
Provisions
3 320
3 491
Retirement benefit obligation
39
39
Current income tax liabilities
3 069
2 040
Social debts
8 314
7 724
Other amounts payable
3 875
4 849
Obligations under finance leases
2 482
2 821
Accrued charges and deferred income
1 966
1 374
Liabilities directly associated with assets classified as held for sale
2 820
3 498
68 974
66 622
Total current liabilities TOTAL EQUITY AND LIABILITIES
336 048
327 861
SIOEN half year report 2010 # 9
Condensed consolidated statement of comprehensive income by function | IN THOUSANDS OF EUROS six months ended 30 June
2010
2009
unaudited
unaudited
145 769
128 721
-112 752
-102 106
33 017
26 615
Net sales Cost of sales Manufacturing contribution Sales and marketing expenses
-7 988
-8 156
Research and development expenses
-2 766
-2 537
Administrative expenses
-10 162
-10 720
Financial income
3 060
4 183
Financial charges
-6 811
-6 045
2 734
1 882
-1 207
-454
0
0
9 877
4 768
-582
-724
9 295
4 044
492
-3 511
Group profit/loss
9 787
533
Group profit/loss attributable to shareholders of Sioen Industries
9 787
533
0
0
9 787
533
Other income Other expenses Non recurring result Profit or loss before taxes Income tax Profit or loss for the period from continuing operations Profit or loss for the period from discontinued operations
Group profit/loss attributable to minority interests Group profit/loss
Other comprenhensive income for the period, net of tax: 824
-238
0
0
824
-238
Total comprehensive income for the period
10 611
295
Attributable to shareholders of Sioen Industries
10 611
295
0
0
Exchange differences arising on translation of foreign operations
Net value gain on cash flow hedges Other comprehensive income for the period, net of tax
Attributable to minority interests EBIT EBITDA Net cash flow
10 # SIOEN half year report 2010
13 628
6 630
22 672
16 619
14 588
12 172
earnings per share six months ended 30 June
2010
2009
unaudited
unaudited
Basic earnings per share From continuing operations
0.43
0.19
From continuing and discontinued operations
0.46
0.02
Diluted earnings per share From continuing operations
0.43
0.19
From continuing and discontinued operations
0.46
0.02
SIOEN half year report 2010 # 11
Condensed consolidated statement of comprehensive income by nature | IN THOUSANDS OF EUROS six months ended 30 June Net sales Changes in stocks and WIP (work in progress) Other operating income (1) Raw materials and consumables used
2010 unaudited
2009 unaudited
145 769 4 741 2 906
128 721 -4 851 1 883
74 490
57 952
Gross margin
52.15%
51.21%
Services and other goods Remuneration, social security and pensions Depreciations Write off inventories and receivables Other operating charges (2) Non recurring result
-21 942 -30 608 -9 509 369 -3 608 0
-18 578 -29 457 -9 637 -621 -2 878 0
Operating result
13 628
6 630
Financial result Financial income Financial charges
-3 751 3 060 -6 811
-1 862 4 183 -6 045
9 877
4 768
-582
-724
9 295
4 044
492
-3 511
9 787 9 787 0
533 533 0
Group profit/loss 9 787 Other comprenhensive income for the period, net of tax: Exchange differences arising on translation of foreign operations 824 Net value gain on cash flow hedges 0
533
-238 0
Other comprehensive income for the period, net of tax
824
-238
10 611 10 611 0
295 295 0
13 628
6 630
22 672
16 619
14 588
12 172
Profit or loss before taxes Income tax Profit or loss for the period from continuing operations Profit or loss for the period from discontinued operations Group profit/loss Group profit/loss attributable to shareholders of Sioen Industries Group profit/loss attributable to minority interests
Total comprehensive income for the period Attributable to shareholders of Sioen Industries Attributable to minority interests EBIT EBITDA Net cash flow
(1) Other operating income mainly consists of received rent for buildings, transport recharges and received indemnities (2) Other operating charges mainly consist of taxes on tangible assets, local taxes and import duties
12 # SIOEN half year report 2010
condensed consolidated statement of other comprehensive income IN THOUSANDS OF EUROS six months ended 30 June
2010
2009
Exchange differences on translating foreign operations Exchange difference arising during the period 1 248
-360
Cash flow hedges Gains arising during the period 0 Reclassification adjustment for amounts recognised in profit or loss 0
0 0
Income tax relating to components of other comprehensive income Total comprehensive income for the period Attributable to shareholders of Sioen Industries Attributable to minority interests
-424
123
824 824 0
-238 -238 0
SIOEN half year report 2010 # 13
Condensed consolidated statement of cash flows IN THOUSANDS OF EUROS Group profit/loss
six months ended 30 June 2010
2009
unaudited unaudited 9 787
533
Income tax expenses recognised in profit or loss
594
627
Finance costs recognised in profit or loss
6 129
5 973
Investment revenue recognised in profit or loss
-2 533
-3 504
Group operating result
13 977
3 629
Depreciation and amortisation of non-current assets
9 734
10 407
Impairment of non-current assets
0
261
Write off inventories and receivables
-445
760
Provisions
-907
-1 017
Inventories
-7 584
7 802
Trade receivables
-7 597
Other receivables, interests in associates & deferred charges
-25
4 712
Trade and other payables
1 777
1 191
Current income tax liabilities, social debts, other amounts payable & accrued charges and deferred income
1 466
2 722
Amounts written off inventories and receivables
843
-91
Cash flow from operating activities
11 239
30 274
Income taxes paid
-940
-1 007
Net cash flow from operating activities
10 299
29 267
Interest received
29
Acquisitions of subsidiaries
0
0
Investments in intangible and tangible fixed assets
-3 049
-3 311
Disposal and sale of intangible and tangible fixed assets
125
638
Increase in capital grants
0
0
Translation adjustments on intangible and tangible assets
5
-374
Net cash flow from investing activities
-2 890
-3 010
Net cash flow before financing activities
7 409
26 257
Interest paid
-3 272
-3 368 -1 762
Movements in working capital: -102
37
Disbursed dividend
-1 691
Increase long term borrowings
0
0
Decrease long term borrowings
-714
-1 039
Increase/(decrease) short term borrowings
501
-20 192
Increase/(decrease) obligations under finance leases
-1 585
-1 271
Other
-20
-161
Currency result
-2 379
-242
Net cash flow from financing activities
-9 160
-28 035
Impact of cumulative translation adjustments and hedging
1 216
-296
Change in cash and cash equivalents
-535
-2 074
Cash and cash equivalents at the beginning of the reporting period
30 223
14 545
Cash and cash equivalents at the end of the reporting period
29 688
12 471
14 # SIOEN half year report 2010
Share capital
Reserves
Foreign currency translation reserve
Hedging reserves
Equity before minority interests
Minority interests
Equity
Condensed consolidated statement of changes in equity IN THOUSANDS OF EUROS
46 000
82 711
-454
600
128 857
0
128 857
six months ended 30 June 2010 Balance at 1 January 2010
Group profit/loss
9 787
9 787
0
9 787
Available for sale financial assets Hedging Deferred tax Currency translation adjustments
1 210
1 210
0
1 210
Change in consolidation scope Transfer to profit on cash flow hedges Total comprehensive income for het period 46 000
92 497
600
139 854
0
139 854
Payment of dividends
-1 711
-1 711
0
-1 711
Balance at 30 June 2010
757
46 000
90 786
757
600
138 142
0
138 142
46 000
95 541
125
695
142 361
0
142 361
533
533
0
533
six months ended 30 June 2009 Balance at 1 January 2009
Group profit/loss
Available for sale financial assets Hedging Deferred tax Currency translation adjustments
-303
-303
0
-303
Change in consolidation scope Transfer to profit on cash flow hedges Total comprehensive income for het period 46 000
96 074
695
142 591
0
142 591
Payment of dividends
-1 711
-1 711
0
-1 711
Balance at 30 June 2009
94 362
140 879
0
140 879
46 000
-178
-178
695
SIOEN half year report 2010 # 15
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
REPORTING ENTITY The condensed consolidated interim financial statements of Sioen Industries NV (the ‘Company’) include the financial statements of the Company and its subsidiaries (together referred to as the ‘Group’). The consolidated interim financial statements give a general overview of the Group’s activities and the results obtained. They give an accurate picture of the entity’s financial position, financial performance and cash flow, and are drawn up on a going concern basis. The consolidated interim financial statements are stated in thousands of euros, as the euro is the currency of the primary economic environment in which the Group is active. The condensed financial statements of foreign participations are converted in accordance with the principles described in the section ‘Foreign currencies’ of the annual report 2009.
STATEMENT OF COMPLIANCE WITH IFRS These condensed interim consolidated financial statements are for the six months ended 30 June 2010. They have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. The condensed interim consolidated financial statements do not include all of the information required in annual financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009.
- IAS 27 Consolidated and Separate Financial Statements (Revised 2008) The adoption of IFRS 3R required that the revised IAS 27 (IAS 27R) is adopted at the same time. IAS 27R introduced changes to the accounting requirements for transactions with non-controlling (formerly called ‘minority’) interests and the loss of control of a subsidiary. The Group did not have transactions with non-controlling interests in the current period and did not dispose of any of its equity interests in its subsidiaries. Therefore, the adoption of IAS 27R did not have an impact in the current period financial statements. - Improvements to IFRSs 2009 The Improvements to IFRSs 2009 (‘2009 Improvements’) made several minor amendments to IFRSs. The only amendment relevant to the Group relates to IAS 17 Leases. The amendment requires that leases of land are classified as finance or operating applying the general principles of IAS 17. Prior to this amendment, IAS 17 generally required a lease of land to be classified as an operating lease. The Group has reassessed the classification of the land elements of its unexpired leases at 1 January 2010 on the basis of information existing at the inception of those leases and has determined that none of its leases require reclassification. The mandatory application of all other amendments to or improvements of standards and interpretations listed above did not give rise to any major effects on the Group’s financial position and financial performance. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.
SIGNIFICANT ACCOUNTING POLICIES These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2009. The following standards and interpretations revised or newly published by the IASB were mandatory as of the beginning of financial year 2010: - IFRS 3 Business Combinations (Revised 2008) The revised standard (IFRS 3R) introduced major changes to the accounting requirements for business combinations. It retains the major features of the purchase method of accounting, now referred to as the acquisition method.
16 # SIOEN half year report 2010
SEASONALITY OF INTERIM OPERATIONS The consolidated income statement of the continuing operations used to reflect the seasonality of the coating business, as a result of which positive earnings were primarily generated in the first and second quarter of any one year. However, the apparel division (textile business), of which sales remain at level and positive earnings are primarily generated in the third and fourth quarter of any one year, has become more significant within the Group.
SIGNIFICANT EVENTS AND TRANSACTIONS The Group’s management believes that the Group is well positioned in the current economic circumstances. Factors contributing to the Group’s strong position are: - the Group does not expect to need additional borrowing facilities in the next 12 months, as a result of its significant financial resources, existing facilities and strong liquidity reserves. The Group has no debt covenants to comply with. - the Group’s major customers have not experienced financial difficulties. Credit quality of trade receivables as at 30 June 2010 is considered to be good. Overall, the Group is in a strong position despite the current economic environment, and has sufficient capital and liquidity to service its operating activities and debt. The Group’s objectives and policies for managing capital, credit risk and liquidity risk are described in its recent annual financial statements.
ASSESSMENT CRITERIA IN THE APPLICATION OF THE VALUATION RULES In the application of the valuation rules, in certain cases an accounting assessment must be made. This assessment is done by making the most accurate assessment possible of uncertain future evolutions. The management determines its assessment on the basis of different realistically assessed parameters, such as future market expectations, sector growth rates, industry studies, economic realities, budgets and multi-year plans, expected profitability studies, etc. The most important elements within the Group that are subject to this are: impairments, provisions and deferred tax items. Impairment test for the six months ended 30 June 2010 In order to provide the stakeholders with in-depth knowledge as to the financial strength of the Group, we reassessed the recoverable amount of assets. Key assumptions related to all divisions of the Group, as described in our annual report of 2009, are still valid and review based on the latest developments did not result in any adverse changes. There are no impairment indicators during the first half of the year.
SIOEN half year report 2010 # 17
SEGMENT INFORMATION | in thousands of euros The Group has adopted IFRS 8 Operating Segments. In identifying its operating segments, management generally follows the Group’s service lines, which represent the main products and services provided by the Group. Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches. The adoption of IFRS 8 has not affected the identified operating segments for the Group compared to the recent annual financial statements. Under IFRS 8, reported segment profits are based on internal management reporting information that is regularly reviewed by the chief operating decision maker (management approach), and is reconciled to Group profit or loss on the following page. The chief operating decision maker assesses segment profit or loss using a measure of operating profit. The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements, except
that certain items are not included in arriving at the operating profit of the operating segments (some headquarter operating results). In addition, corporate assets, which primarily apply to the Group’s headquarters, have been allocated to the segments as far as possible. The Group operates in four main business segments: coating, apparel, chemicals and industrial applications. These divisions are the basis on which the Group reports its segment information. The principal products and services of each of these divisions are described in the annual report of 2009. Intersegment sales are undertaken at prevailing market conditions. During the six month period to 30 June 2010, there have been no changes from prior periods in the measurement methods used to determine operating segments and reported segment profit or loss.
segment revenues and results Coating Apparel Industrial Chemicals Other Total from applications continuing operations six months ended 30 June 2010 Revenue from external customers
65 898
38 535
19 929
21 407
Intersegment revenues
9 559
9
254
3 755
Segment operating profit
7 946
3 734
1 712
1 783
Revenue from external customers 105 054
145 769 15 175
year ended 31 December 2009 74 129
35 257
37 475
3
Intersegment revenues
18 530
6
9 222
5 580
3
Segment operating profit
2 125
3 380
1 194
1 422
Revenue from external customers
52 783
36 943
20 538
Intersegment revenues
9 676
14
296
2 808
Segment operating profit
1 787
3 184
1 516
755
251 918 8 121
six months ended 30 June 2009 18 454
3
128 721 7 242
Segment operating profit represents the operating profit earned by each segment without allocation of central administration costs, financial result and tax result. This is the measure reported to the chief operation decision maker for the purposes of resource allocation and assessment of segment performance.
18 # SIOEN half year report 2010
Segment operating profit can be reconciled to Group’s profit or loss as presented in its financial statements as follows:
six months
year ended
six months ended
ended 30 June 2010
31 December 2009
30 June 2009
15 175
8 121
7 242
Segment operating profit
Reconciling items: Elimination of intersegment profits Operating result
-1 547
-2 688
-612
13 628
5 433
6 630
Financial charges
-6 811
-10 259
-6 045
Financial income
3 060
4 373
4 183
Profit or loss before tax
9 877
-453
4 768
segment assets, equity and liabilities Coating Apparel Industrial Chemicals Relating to Unallocated/ Total applications discontinued eliminations operations six months ended 30 June 2010 Segment assets
166 349
62 318
25 024
43 848
6 889
31 620
336 048
Segment equity and liabilities
166 349
62 318
25 024
43 848
2 820
35 689
336 048
Segment assets
175 387
57 987
35 110
42 825
11 184
5 367
327 861
Segment equity and liabilities
175 387
57 987
35 110
42 825
3 497
13 054
327 861
year ended 31 December 2009
other segment information Coating Apparel Industrial applications
Chemicals Head office Total
six months ended 30 June 2010 Depreciations
5 590
620
610
2 018
671
9 509
Additions to non-current assets
1 509
335
84
197
261
2 386
Depreciations
11 299
1 122
1 069
4 192
1 564
19 246
Additions to non-current assets
5 096
1 365
1 753
383
932
9 529
Depreciations
5 497
562
667
2 155
756
9 637
Additions to non-current assets
3 373
828
1 663
216
646
6 726
year ended 31 December 2009
six months ended 30 June 2009
SIOEN half year report 2010 # 19
exchange rates Currency
Rate
30 June 2010
31 December 2009
30 June 2009
EUR
average
1.00000
1.00000
1.00000
closing
1.00000
1.00000
1.00000
USD
average
1.31415
1.39631
1.33792
closing
1.22710
1.44060
1.41340
GBP
average
0.86380
0.88996
0.89000
closing
0.81740
0.88810
0.85210
RMB
average
8.96178
9.53698
9.14068
closing
8.32148
9.83497
9.65447
PLN
average
4.00413
4.34692
4.53018
closing
4.14700
4.10450
4.45200
TDN
average
1.88206
1.88179
1.86211
closing
1.86161
1.90042
1.88676
UAH
average
10.45828
11.24025
10.67600
closing
9.76677
11.54521
10.82966
income tax | in thousands of euros Reconciliation between income tax and profit or loss before taxes:
six months
six months
ended 30 June 2010
ended 30 June 2009
Profit or loss before taxes
9 877
4 768
Income tax expense calculated at theoretical tax rate (1)
2 838
1 372
28,7%
28,8%
Tax impact of: Effect of expenses that are not deductible in determining taxable profit Effect of revenue that is exempt from taxation Deferred tax assets not recognised Tax assets recognised on current year losses Tax assets recognised on previously not recognised losses
148
1,5%
176
3,7%
- 237
-2,4%
- 248
-5,2%
246
2,5%
1 048
22,0%
- 2
0,0%
- 770
-16,1%
-1 317
-13,3%
-1,8%
- 172
-3,6%
-10,7%
- 682
-14,3%
New valuation allowance on previously recognised deferred tax assets Adjustments recognised in current year in relation to the current tax of prior years - 177 Notional interest deduction
-1 055
Tax on distributed profits (DBI) (2)
Other
138
1,4%
Income tax expense recognised in profit or loss
582
5,9%
(1) is the weighted average tax rate (2) reserves will not be distributed to the parent company unless this could be done at a zero tax rate
20 # SIOEN half year report 2010
724
15,2%
discontinued operations | in thousands of euros Plan to dispose of the ‘end-market, truck cover’ business Since the decision on 30 November to dispose the Group’s ‘end-market, truck cover’ business, the Group is still actively seeking a buyer for this activity. No final agreement was reached after the latest profound negociations with interested parties. The ‘end market, truck cover’ business related to the division industrial applications.
Abandoning of the ‘specialised automotive foils in small batches’ business
automotive foils in small batches’ business, consistent with the Group’s long-term policy to focus on its core activities in the automotive market. Details of the assets and liabilities abandoned are disclosed in the disclosure ‘Assets classified as held for sale’. The ‘specialised automotive foils in small batches’ business related to the division coating.
Analysis of profit (loss) of the year from discontinued operations The combined results of the discontinued operations included in the statement of comprehensive income are set out below.
As per 31 December 2009, the Group abandoned its ‘specialised
six months ended 30 June 2010
2009
Net sales
3 723
7 797
Other operating income
207
118 -12 480
Profit or loss for the period from discontinued operations
Expenses
-3 426
Gain/(loss) on remeasurement to fair value less costs to sell
956
Profit or loss before tax
504
-3 609
Attributable income tax
-12
98
Profit or loss for the period from discontinued operations
492
-3 511
Cash flows from discontinued operations
Net cash flow from operating activities
-36
Net cash flow from investing activities
-22
-1 594 15
Net cash flow from financing activities
141
-265
Net cash flow
83
-1 844
SIOEN half year report 2010 # 21
debt and equity securities There were no issurances, repurchases and repayments of debt and equity securities for the six months ended 30 June 2010.
dividends The Board of Directors does not propose to pay an interim dividend for the six months ended 30 June 2010.
property, plant and equipment During the reporting period, the Group invested for approximately EUR 2.3 milion on assets compared to EUR 6.7 million over the same period ended 30 June 2009. Investments in 2010 mainly relate to the construction of a new building for a new varnish production line in Moeskroen, the set-up of a new showroom ‘coating’, machinery in Indonesia and the implementation of a new ERP system at an entity of the Group. In 2009 investments mainly related to buildings under leasing amounting to EUR 3.4 million, expansion of the second floor in the Indonesian production factory and the implementation of a new ERP system at 4 entities of the Group.
22 # SIOEN half year report 2010
Assets that were sold and disposed during the reporting period related to certain machinery and tools with a net value of EUR 0.2 million. An impairment analysis has been done at the end of June 2010 (see ‘impairment test’ review). The Group did not enter into any significant contractual commitments during the first half of 2010.
changes in inventories | in thousands of euros
six months ended 30 June 2010
year ended 31 December 2009
21 970
gross inventory Raw materials
25 554
Consumables
138
157
Work in progress
3 550
1 975
Finished goods
52 066
49 559
Goods in transit TOTAL
4 718
3 701
86 026
77 362
-4 226
-3 686
amounts written off Amounts written off raw materials Amounts written off consumables
Amounts written off work in progress Amounts written off finished goods
-3 959
-4 750
-8 185
-8 436
Raw materials
21 328
18 283
Consumables
138
157
Amounts written off goods in transit
TOTAL
NET inventory
Work in progress
3 550
1 976
Finished goods
48 107
44 809
Goods in transit
4 718
3 701
77 841
68 926
TOTAL
Amounts (Other) written off Exchange rate movements or inventory 31 December 2009 write-down reversal differences adjustments
8 436
791
-1 367
325
Six months ended 30 June 2010
Amounts (Other) written off Exchange rate movements or inventory 31 December 2008 write-down reversal differences adjustments
8 335
167
Gross inventories (excl. write-off) in respect of continuing operations increased by EUR 8.7 million or 11.2%. Increased activity resulted in an inventory increase in the coating division, chemicals division and the apparel division. In the division industrial applications stock decreased by 3.2% . Obsolescence reserves on inventories in respect of the continuing operations decreased by EUR 0.2 million and amount to
-102
36
8 185 Six months ended 30 June 2009
8 436
EUR 8.2 million at the end of the reporting period compared with EUR 8.4 million at the end of 2009. The decrease is explained by the sale of obsolete stock in the apparel division. There was no significant write-down of obsolete inventory to net realisable value in 2010. Obsolescence reserves are recorded on the basis of a detailed aging and rotation analysis per unit. SIOEN half year report 2010 # 23
Total
4 736
151
-5
60
2 369
-115
-52
2 407
-119
-52
60
4 776
113
2 294
1 456
3 320
-78
97
2 162
1
-1 709
2 574
1
-1 787
4 736
Provisions for environmental issues
2 763
-620
Provisions for other liabilities and charges
2 527
3 164
-958
-451
Total
5 290
3 164
-1 578
-451
More than one year
97
Within one year
Provisions for environmental issues
1 131
1 030
Provisions for other liabilities and charges
114
2 461
1 245
3 491
Provisions
Reversal
Exchange rate differences
31 December 2008
Provisions
31 December 2009
Provisions for other liabilities and charges
Reductions arising from payments
1 026
Additional provision recognised
1 343
Unwinding of discount and effect of changes in the discount rate
Within one year
Provisions for environmental issues
Classified as held for sale liabilities
More than one year
six months ended 30 June 2010
2 574
Unwinding of discount and effect of changes in the discount rate
Provisions for other liabilities and charges
Classified as held for sale liabilities
151
Exchange rate differences
2 163
Reversal
Additional provision recognised
Provisions for environmental issues
Reductions arising from payments
31 December 2009
provisions | in thousands of euros
Provisions in respect of continuing operations amount to EUR 4.8 million at the end of the reporting period. The carrying amount of the provisions reflects the net present value of future liabilities discounted at the weighted average cost of capital, applicable for the operating unit. Provisions for environmental issues mainly consist of a provision relating to the sanitation of polluted soils in Temse belonging to TIS NV and the land in Ardooie belonging to Sioen Industries NV. For more information we refer to section III.6.13 ‘Provisions’ of the annual report 2009. Provisions for other liabilities and charges mainly relate to a provision for reimbursement of grants from the French authorities in the coating division (EUR 2.2 million). For more information we refer to section III.6.13 ‘Provisions’ of the annual report 2009. There have not been any significant changes in provisions of the Company compared to those disclosed in the consolidated financial statements of the Group for the year ended 31 December 2009. 24 # SIOEN half year report 2010
borrowings Long-term interest bearing loans, including financial long-term leasing debt
Short-term interest bearing loans As per 30 June 2010, short-term straight loans amounted to EUR 14.2 million. They only consist of dollar loans of USD 17.6 million, used for hedging purposes, with a weighted average interest rate of 1.5%.
There were no other significant changes in the long term borrowings of the Company compared to those disclosed in the consolidated financial statements of the Group for the year ended 31 December 2009.
At 30 June 2009, short-term straight loans amounted to EUR 18.5 million.
obligations under financE leases There were no new commitments for the acquisition of intangible and tangible assets at the end of the reporting period.
share capital Share capital as at 30 June 2010 amounted to EUR 46 million. There were no movements in the issued captial of the Company in either current or the prior interim reporting periods.
assets classified as held for sale | in thousands of euros The major assets and liabilities of the discontinued operations at the end of the reporting period are as follows:
30 June 2010
Specialised automotive End-market foils in small batches
truck cover
Intangible assets
51
51
Goodwill
41
26
15
Property, plant and equipment
1 045
158
887
Inventories
3 655
1 089
2 566
Trade receivables
605
1 014
-409
Other receivables
792
457
334
Cash and cash equivalents
700
173
527
6 889
2 907
3 982
Provisions
932
823
109
Trade and other payables
833
339
494
Current income tax liabilities
652
241
411
403
130
273
2 820
1 533
1 287
Total assets held for sale
Deferred tax liabilities Other amounts payable Total liabilities held for sale
Net assets held for sale
4 069
1 374
2 695
SIOEN half year report 2010 # 25
financial instruments | in thousands of euros The Group manages a portfolio of derivatives to hedge against risks relating to exchange rate and interest rate positions arising as a result of operating and financial activities. It is the Group’s policy to avoid engaging in speculative transactions or transactions with a leverage effect and not to hold derivatives for trading purposes.
six months
six months
ended 30 June 2010
ended 30 June 2009
Notional Value (1) Fair Value
Notional Value (1) Fair Value
Forward sales contracts Forward sales contracts within 1 year Rights
0
0
0
0
Obligations
0
0
7 400
278
IRS Forward
0
0
0
0
(1) Nominal value equals foreign currency amount*contract rate
related party transactions | in thousands of euros
Nature of transaction
six months ended 30 June 2010
Recticel Group
Sale
644
Recticel Group
Purchase
91
INCH
Sale
555
SVB
Purchase
59
Plama
Purchase
0
Nature of
six months ended
transaction
30 June 2009
Recticel Group
Sale
586
Recticel Group
Purchase
99
INCH
Sale
520
SVB
Purchase
83
Plama
Purchase
16
These transactions consist of construction project services (SVB) and commercial transactions (Inch, Recticel Group) and are done on an ‘at arm’s length’ basis. Other transactions with related parties, other than directors, are not included given the negligable amount (under EUR 10 000).
26 # SIOEN half year report 2010
BUSINESS COMBINATIONS AND DISPOSAL OF BUSINESS As per 1 January 2010, the Group sold a part of the truck cover business in the USA. The sales price exceeded the carrying value of business, classified as discontinued at the end of 2009. The gain on the transaction is not substantial. Net assets (excluding the building) amount to EUR 0.9 million.
CONTINGENT ASSETS AND LIABILITIES Changes in contingent liabilities or contingent assets since the end of the last annual reporting period: - Although the court verdict at first instance was in favor of Sioen Industries, the coating division has been condemned to pay EUR 0.2 million related to a commercial dispute. Appeal has been lodged.
Roland Curtains USA Inc. & Roltrans Group America
There were no other significant changes in the contingencies of the Company and its subsidiaries from those described above and those disclosed in the consolidated financial statements of the Group for the year ended 31 December 2009.
in thousands of euros Intangible assets Property plant and equipment
247 62
Inventories
461
Trade receivables
218
Total net asset value
988
EVENTS AFTER REPORTING DATE
CASH AND CASH EQUIVALENTS | in thousands of euros For the purposes of the statement of cash flows, cash and cash equivalents include cash at hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows: Cash and cash equivalents Bank overdraft Cash and cash equivalents (excl. assets classified as held for sale) Cash and cash equivalents classified as held for sale Cash and cash equivalents at the end of the reporting period
30 June 2010 29 449 -461
28 988
700
29 688
There were no material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period.
FINANCIAL RISK MANAGEMENT The Group’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2009.
APPROVAL OF INTERIM FINANCIAL STATEMENTS These condensed interim consolidated financial statements have been approved for issue by the Board of Directors on 27 August 2010. We hereby confirm, to the best of our knowledge, that the condensed consolidated interim financial statements give a true and fair view of the financial position of the Group as at 30 June 2010, as well as of the financial performance and cash flows for the said period, fully in compliance with the accounting standards adopted for use in the EU for interim financial statements (EU adopted IAS 34, Interim Financial Reporting);
Michèle Sioen CEO
Geert Asselman CFO
SIOEN half year report 2010 # 27
SIOEN INDUSTRIES Fabriekstraat 23 B-8850 Ardooie T +32(0)51 74 09 80 F +32(0)51 74 09 79 E corporate@sioen.be W www.sioen.com BTW BE 441.642.780 RPR 0441.642.780 Brugge JAARVERSLAG / ANNUAL REPORT Dit jaarverslag is beschikbaar in het Nederlands en het Engels. This annual report is available in English and Dutch. FINANCIAL INFORMATION AND INVESTOR RELATIONS For all further information, institutional investors and financial analysts are advised to contact: Geert Asselman, CFO. FINANCIAL CALENDAR Trading update third quarter results 2010 - friday 29 october 2010
Realisation: www.kliek.be - T +32 (0)51 40 43 12 - 10 0782