Linamar Hungary Nyrt.

Transcription

1 Linamar Hungary Nyrt. INTERIM REPORT FOR THE FIRST QUARTER ENDED MARCH 31, 2008 Linamar Hungary Nyrt. Orosháza, 5900 Csorvási út 27.

2 To the Shareholders Linamar Hungary Nyrt. Sales for the quarter ended March 31, 2008 were HUF 7,037 million. This compares favourably to sales of HUF 7,184 million for the same period of the previous year. The sales decrease of 2.1% comprised of the decrease of HUF 236 million in agricultural equipment and general machinery segment and increase of HUF 89 million in the the automotive component and precision machining segment. The profit from operations for the quarter ended March 31, 2008 were HUF 423 million, the decrease by 12.8% compared to the profit from operations of HUF 485 million a year earlier. The Company s operations were profitable in both segments, while the gross profit decreased by 23.9%. The net earnings for the first quarter of 2008 were HUF 307 million, which is, compared to HUF 387 million in the first quarter of 2007, a decrease of 20.7%. The decrease is mainly related to the fallback in operating earnings and the variance of the exchange rates. The management of Linamar Hungary Nyrt. has ensured that all of the data and information that is necessary to properly evaluate the Company s position has been included in this interim report and that all of the data and information is true and factual. János Ivanics General Manager János Gábriel Chief Financial Officer

3 Linamar Hungary Nyrt. Notes to the Financial Statements For the quarter ended March 31, 2008 and 2007 (NON AUDITED) 1. Management prepared these financial statements in accordance with generally accepted accounting principles using the historical cost basis of accounting and approximations and estimates based on professional judgement. These interim financial statements contain all adjustments that management believes are necessary for a fair presentation of the Company's financial position, results of operations and changes in cash flows. 2. The accounting policies used in preparing these interim financial statements are consistent with those used in preparing the annual financial statements. These statements should be used in conjunction with the Company's most recent annual financial statements. 3. The number of shares of the Company as at March 31, 2008 was 8,580,000 units (March 31, ,580,000). 4. Segmented Sales Information Quarter Ended March Export Sales Automotive Components and Precision Machining Europe EU Member Countries 3,086,555 2,520,800 North America 220, ,957 Other Export 109, ,386 Europe non EU Member Countries - - Total Automotive Components and Precision Machining Export Sales 3,416,860 3,140,143 Agricultural Equipment and General Machinery Segment Europe EU Member Countries 1,587,473 1,735,605 North America 308, ,255 Europe non EU Member Countries 275, ,409 Other Export - - Total Agricultural Equipment and General Machinery Export Sales 2,271,560 2,469,269 Total Export Sales 5,588,420 5,609,412 Domestic Sales Automotive Components and Precision Machining 1,302,452 1,489,916 Agricultural Equipment and General Machinery Segment 145,899 84,784 Total Domestic Sales 1,488,351 1,574,700 Total Sales 7,036,771 7,184,112

4 MANAGEMENT'S ANALYSIS AND OTHER REQUIRED DISCLOSURE Explanation of the main changes in the balance sheet The tangible fixed assets without deferred taxes have increased by HUF 438 million from March 31, 2007, resulted from the investments in the agricultural and general machinery segment. The value of the deferred tax assets as at December was HUF 1,640 million, the updated value is HUF 1,454 as at March Trade accounts receivable decreased by 6.7% to HUF 4,977 million compared to March The HUF 357 million decrease is due to the sales decrease in the first quarter in the general machinery segment. Cash, bank balances and short-term deposits decreased by 12.4%, from HUF 641 million to HUF 561 million. The decrease is related to higher capital expenditures. The level of inventories was 11.8% higher at March 31, 2008 compared to the same period of previous year. Inventories increased by HUF 652 million: from HUF 5,513 million to HUF 6,165 million. The inventories at the agricultural equipment and general machinery segment increased by HUF 899 million, the automotive inventories decreased by HUF 247 million. The increase at the agricultural equipment and general machinery segment resulted from the increased order level. The current portion of long-term debt contains the amount of HUF 48 million payable of the investment loan in 2008, which is a significant decrease compared to the HUF 1,259 million at March The decrease is due to the repayment of the investment loan. The Company does not have any long term loans as at March The deferred tax liability on March was HUF 185 million, and HUF 24 million in 2008, which relates to timing differences, primarily relating to differences between accounting and tax depreciation. The amount of liabilities without loans increased, from which the payables increase from HUF 3,080 million to HUF 3,370 million. The increase results from the increased level of investing activities. Explanation of the main changes in the profit and loss statement Sales Linamar Hungary Nyrt. s sales decreased by 2.1% to HUF 7,037 million in first quarter of 2008 compared to sales of HUF 7,184 million in the same period of Changes by business segment, as discussed below, can be seen under item 4 of the Notes to the Financial Statements. Segmented sales are as follows: 67.1% automotive component and precision machining and 32.9% agricultural equipment and general machinery. Automotive component and precision machining sales increased by HUF 89 million, or 1.9%, compared to the same period of 2007, while agricultural and general machinery sales decreased by HUF 237 million, or 9.3%.

5 The automotive component and precision machining export sales increased by HUF 277 million. The sales value to the EU countries is higher by HUF 566 million due to the volume increase of fuel rail and flange while the sales to other countries significantly fell back, by HUF 233 million related to lower sales volume of common rails to Turkey. The domestic automotive component and precision machining sales were HUF 1,302 million, which is a HUF 187 million decrease compared to the same period last year especially due to the lower sales of common rail parts. Agricultural and general machinery export sales decreased by HUF 298 million to HUF 2,172 million from the same period of last year. The North American sales decreased by HUF 88 million. The sales to EU-member countries decreased by HUF 88 million which was mainly related to the lower volumes of scissor machines and windrow machines. The sales to other European countries decreased by HUF 61 million due to fallback of corn head sales to Russia. Domestic agricultural and general machinery sales increased from HUF 85 million to HUF 146 million compared to the last year due to the higher cornhead and spareparts sales. Cost of sales The cost of sales increased from 84.9% of sales to 88.3%. The unfavourable change relates to both segments; the product mix changes and the costs of the starting projects caused the increase of costs on a pro-rate basis on sales. Selling, general and administrative costs In the first quarter of 2008 the selling, general and administrative costs amounted to HUF 388 million or 5.5% of sales, compared to HUF 488 million or 6.8 % of sales in the same period of The change in SG&A costs relates to the decrease in selling and general costs; travel and marketing costs are significantly lower in comparison to the last year s first quarter. Other income/expense The other income/expense balanced on March to HUF 16 million expenses, compared to the HUF 113 million expense of the previous year. Other income/expense includes the exchange differences related to the revaluation of accounts receivable and accounts payable. We realized HUF 118 million loss from this in the first quarter of 2007, while in the same period of 2008 there was no significant exchange gain/loss. Profit from operations Profit from operations of HUF 485 million of last year decreased to HUF 423 million this year. Profit from operations as a percent of sales decreased from 6.8% to 6.0%. The most significant impact upon profit from operations was the gross profit decrease.

6 Exchange gain (loss) The Company experienced an exchange loss of HUF 3 million in the first quarter of 2008, compared to an exchange loss of HUF 93 million in the same period of Beside the lower balance of the Euro denominated loans the cause of the decrease is that different currencies moved differently against Hungarian forint. Taxation The Taxation amount in the Profit and Loss Statement is detailed as follows in HUF thousands: Current tax (corporate tax) - - Local business tax 47,816 45,814 Solidarity tax 16,580 18,078 Deferred tax 51,000 46, , ,892 Based on the investments completed between 1997 and 2001, the Company is entitled, through a tax credit system, to an effective 100% income tax reduction through to December 31, At March 31, 2008, the company determined it was appropriate to recognize a deferred tax asset in the amount of HUF 1,454 million in respect of the utilization of this credit against future taxable earnings. In addition the company has established a deferred tax liability in respect of timing differences, primarily relating to differences between accounting and tax deprecation, in the amount of HUF 24 million at quarter ended on 31 st March Net earnings The Company s net earnings in the first quarter of 2008 were HUF 307 million or 4.4% of sales a decrease of 20.7% compared to the HUF 387 million, or 5.4% of sales in the first quarter The net income has been mainly impacted by the unfavourable changes in the cost structure. Explanation of the main changes in the cash flow statement In the quarter ended March , the purchases of fixed assets amounted to HUF 694 million. The cash payments during the period related to purchases of fixed assets totalled HUF 840 million. From these investments HUF 327 million relates to the automotive components and precision machining business segment, and HUF 367 million relates to the agricultural and general machinery segment. Information on shares The Company does not currently hold any of its own shares and has not held any in the past. Commitments As at March 31, 2008, the Company has outstanding commitments for fixed assets under purchase orders and contracts of HUF 563 million.

7 Major events The Company held its Annual General Meeting on April 7, Other information Organizational structure During the first quarter of 2008 there were no changes in the Company s organizational structure. Senior officers Margaret Jean Mulligan has resigned from her membership in the Supervisory Board as from April 19, The Annual General Meeting held on April 19, 2007 has elected Messrs. Pál Simák, Csaba Fehérdi, and István Molnár as members of the Supervisory Board. The Supervisory Board on its first meeting has elected Dr. Rezső Bándy as its chairman. Senior management There were no changes in management. Share Option Program There are no outstanding share options under the share option program of the Company.

8 PK1. General information about financial data Audited Consolidated Yes No X X Accounting principles Hungarian IFRS X Other Other:...

9 PK2. Consolidated companies Name Equity/Registered Capital Interest held (%) Voting right 1 Classification 2 1 Voting rights for decision making at the consolidated company s General Meeting 2 Full (L); Jointly Managed (K); Associated (T)

10 PK3. Balance Sheet (expressed in thousands of Hungarian Forints) Three Months Ended March Change % ASSETS Non-Current Assets Property, plant and equipment 8,909,417 8,460, Deferred tax asset 1,454,000 1,582,000 (8.1) Intangible assets 61,750 72,656 (15.0) 10,425,167 10,115, Current Assets Inventories 6,165,229 5,512, Trade receivables 4,576,144 4,666,759 (1.9) Due from related parties 400, ,449 (39.9) Deductible value added tax 401, , Other current assets 231, ,938 (13.3) Cash and cash equivalents 561, ,852 (12.4) 12,336,777 12,133, Total Assets 22,761,944 22,248, SHAREHOLDERS EQUITY Share capital 858, , Capital reserve 5,026,774 5,026, Accumulated profit 12,198,961 10,509, ,083,735 16,394, LIABILITIES Non-Current Liabilities Long-term bank borrowings - 46,086 (100.0) Deferred government grants 30,877 72,910 (57.7) Deferred tax liability 24, ,000 (87.0) 54, ,996 (81.9) Current Liabilities Current portion of long-term bank borrowings 48,231 1,258,976 (96.2) Trade payables 3,369,915 3,079, Due to related parties 303,379 69, Other current liabilities 895,833 1,050,583 (14.7) Provisions 5,974 91,681 (93.5) 4,623,332 5,550,288 (16.7) Total Liabilities 4,678,209 5,854,284 (20.1) Total Equity and Liabilities 22,761,944 22,248,

11 Statement of Changes in Shareholders Equity for the year ended March 31, 2008 and 2007 (Expressed in Thousands of Hungarian Forints) Share Capital Capital Reserve Accumulated Profit Total Shareholder s Equity Balance as at 03/31/ ,000 5,026,774 10,122,147 16,006,921 Result for the period 387, ,229 Balance as at 03/31/ ,000 5,026,774 10,509,376 16,394,150 Share Capital Capital Reserve Accumulated Profit Total Shareholder s Equity Balance as at 03/31/ ,000 5,026,774 11,891,879 17,776,653 Result for the period 307, ,082 Balance as at 03/31/ ,000 5,026,774 12,198,961 18,083,735

12 PK4. Profit and Loss Statement (expressed in thousands of Hungarian Forints except per share figures) Three Months Ended March Change % Sales 7,036,771 7,184,112 (2.1) Cost of Sales 6,210,024 6,098, Gross Profit 826,747 1,085,879 (23.9) Selling expenses 138, ,198 (30.1) General expenses 143, ,247 (3.0) Administrative expenses 105, ,216 (25.4) Other operating income/expenses 16, ,923 (85.7) Profit from Operations 423, ,295 (12.8) Finance cost (596) 11,826 (105.0) Profit before Tax 422, ,121 Taxation* 115, , Net Income 307, ,229 (20.7) Earnings per Share** Basic HUF 36 HUF 45 * 4% solidarity, industrial tax and deferred taxes ** Including effect of the deferred taxes. Without the deferred taxes EPS for 2008 is HUF 42 while the EPS for Q is HUF 50

13 PK5. Cash-Flow Report (expressed in thousands of Hungarian Forints) Three Months Ended March Net Income 307, ,229 Adjustments to reconcile net income to net cash provided by operating activities: 465, ,451 Depreciation and amortization (1,650) - Impairment net (10,123) (1,480) Provision for warranty and other obligations 176 5,672 Net (gain)/loss on sale of property, plant and equipment 1,928 13,406 Net interest expense Changes in operating assets and liabilities: (915,324) (627,636) (Increase)/decrease in inventories (226,850) (781,564) (Increase)/decrease in accounts receivable (152,680) 342,693 (Increase)/decrease in due from related parties (74,935) (87,237) (Increase)/decrease in tax receivable (110,954) (148,186) (Increase)/decrease in other current assets 201,712 - Increase/(decrease) in accounts payable (327,533) (448,963) Increase/(decrease) in capex payables 111,345 (119,286) Increase/(decrease) in capex payable due to related parties (56,540) - Deferred taxes 51,000 46,000 Increase/(decrease) in other current liabilities 236, ,568 Net interest expense (1,928) (13,406) Net cash used in operating activities (503,193) (1,928) (737,739) Cash-flows from investing activities Purchase of property, plant and equipment and intangibles (694,443) (332,468) Reclassification of fixed assets - - Increase/(decrease) in capex payables (145,172) - Proceeds on sales of property, plant and equipment 4,100 Net cash used in investing activities (839,615) (328,368) Cash-flows from financing activities Repayment of long term loans investment loan (193,962) (217,811) Net cash provided from financing activities (193,962) (217,811) Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period 2,098,204 1,924,770 Cash and cash equivalents at the end of the period 561, ,852

14 PK6. Significant off-balance sheet items 1 Description Value ( HUF million) Porfestő Lézer Trumpf 25.2 Szemcseszóró berendezés 35.6 HARLO DHL-300 dörzshegesztő 51.9 Doosan DHC 400 eszterga Total Any financial liabilities of material importance in respect of financial evaluation not reflected in the balance sheet (e.g. surety, guarantees given, liabilities under lien, etc.)

15 RS1. Ownership structure, Ratio of Holdings and Votes Description of owner Total share capital Listed series 1 Year Opening Year Opening Closing at 1st January at 1st January Closing % 2 % 3 Qty % 2 % 3 Qty % 2 % 3 Qty % 2 % 3 Qty Domestic ,441, ,436,139 institution/company Foreign ,048, ,048,482 institution/company Domestic individual , ,378 Foreign individual Employees, senior , ,000 officers Treasury shares Government held owner International Development Institutions 5 Other TOTAL ,580, ,580,000 1 In case listed series equal total share capital. 2 Ownership ratio. 3 Voting rights at the issuer s General Meeting. 4 E.g.: State Privatization Holding Co. Ltd., Social Security, Municipality, 100% state-owned companies etc. 5 E.g.: EBRD, EIB, etc.

16 RS2. Volume (qty) of treasury shares held in the year under review 1 January 31 March 30 June 30 September 31 December Company Subsidiaries TOTAL Consolidated subsidiaries as defined by the pertaining sections of the Capital Markets Act.

17 RS3/1. List and description of shareholders with more than 5% ownership (at the end of the period) with regard to the listed series. Remarks 5 Name Nationality 1 Activity 2 Quantity Interest (%) 3 Voting right(%) 3, 4 K C 6,012, strategic investor Linamar Corporation and intercompany Budapest Alapkezelő Zrt. B I 548, financial investor Linamar Corporation s headquarters are located in Guelph, Ontario, Canada, along with a significant percentage of the Company s manufacturing capacity. Linamar Corporation is a global manufacturer of precision machined components, assemblies and castings primarily for automotive industry. Any person holds more than 5% of the volume of securities deposited with a custodian. In case listed series equal total share capital. The ownership ratios and voting rights are identical. 1 Domestic (B), Foreign (K) 2 Custodian (L), Government (Á), International Development Institute (F), Institutional (I), Corporate (C), Individual (M), Employee, senior officer (D) 3 Figures should be rounded to two decimal points. 4 Voting rights at the issuer s General Meetings. 5 E.g. strategic investor, financial investor, etc. RS3/2. List and description of shareholders with more than 5% ownership (at the end of the period) with regard to the total share capital Remarks 5 Name Nationality 1 Activity 2 Quantity Interest (%) 3 Voting right(%) 3, 4 K C 6,012, strategic investor Linamar Corporation and intercompany Budapest Alapkezelő Zrt. B I 548, financial investor Any person holds more than 5% of the volume of securities deposited with a custodian. In case listed series equal total share capital. The ownership ratios and voting rights are identical. 1 Domestic (B), Foreign (K) 2 Custodian (L), Government (Á), International Development Institute (F), Institutional (I), Corporate (C), Individual (M), Employee, senior officer (D) 3 Figures should be rounded to two decimal points. 4 Voting rights at the issuer s General Meetings. 5 E.g. strategic investor, financial investor, etc.

18 TSZ1. Changes in the headcount (number of persons) employed by the End of reference period Current period opening Current period closing Company 1,665 1,677 1,717 Group n.a. n.a. n.a.

19 TSZ2. Senior officers, strategic employees Type 1 Name Position Beginning of assignment End/ termination of assignment No, of shares held IT Frank J. Hasenfratz Chairman of the Board ,000 IT Linda Hasenfratz Director IT Tibor Antalpéter Independent Director IT Márton Havasi Director IT Csaba Havasi Director IT János Ivanics General Manager, Member of the Board FB Rezső Bándy Dr. Chairman of the Supervisory Board FB Sándor Csontos Member FB Pál Simák Dr. Member/Audit Committee FB Csaba Fehérdi Member/Audit Committee FB István Molnár Dr. Member/Audit Committee SP János Gábriel Chief Financial Officer Undefined - SP Tibor Parászka Director of Human Undefined - Resources Own share property (pcs) TOTAL: 15,000 1 Employee in strategic position (SP), Board Member (IT), Supervisory Board Member (FB)