Result for Aarhus Oliefabrik A/S

Transcription

1 Aarhus Oliefabrik A/S M. P. Bruuns Gade 27 Postboks 50 DK-8100 Århus C Danmark Telephone: Direct line: Fax: Telex: palmf dk ehh@aarhus.com CVR-no Giro Result for 2002 Aarhus Oliefabrik A/S CVR-no Announcement no. 6/2003 to the Copenhagen Stock Exchange Contact persons: Erik Højsholt Esben Vibe Managing Director (CEO) Director, CFO Telephone: Telephone: Mobile: Mobile: The announcement is available at Aarhus Oliefabrik s home page: Requests for a copy can be directed to investor@aarhus.com Visit the Aarhus Olie Investor Relations section at the address: Translation into English in case of variations, the original version in Danish will apply.

2 Aarhus Oliefabrik A/S Result for 2002 Page 2 of 9 Result for 2002 On Wednesday 5 March 2003, the Board of Directors of Aarhus Oliefabrik A/S considered and approved the annual accounts for Highlights Consolidated operating income of DKK 231 million and pre-tax income of DKK 190 million are in line with expectations. The results are considered satisfactory for the year. The result after tax totalled DKK 144 million. The result reflects a 10.5% return on invested capital, which is in accordance with the overall goal of creating value in relation to the market s required rate of return was characterised by continued growth within significant strategic focus areas such as, speciality fats for the chocolate industry and vegetable oils for the catering industry in the United Kingdom and Northern Europe. The development programme in the new business area, health care, was concluded on time with satisfactory results. The market for bulk oils was characterised by severe price competition in Combined with the global economic downturn, this reduced net margins and volumes sold. The production companies in Denmark, the United Kingdom, the USA and Mexico contributed a total operating income of DKK 230 million equal to 99% of consolidated operating income. Aarhus Olie s share of profit from the associate United Plantations Berhad in Malaysia amounted to DKK 31 million, after tax. This was a significant improvement over the DKK 17 million share in The DKK 144 million result for 2002 includes a tax asset of DKK 26 million. The value of the tax asset has been included in the 2002 result as it is estimated that accumulated tax losses will be absorbed by future profitability. In the light of this, an effective taxation rate of around 30% is to be expected in the years ahead. During the year, the group s market capitalisation on the Copenhagen Stock Exchange increased by 25% to DKK 1,204 million. In 2003, progress is expected to continue, with operating income of DKK million and a pre-tax result of DKK million. The result, after tax, is expected to amount to DKK million.

3 Aarhus Oliefabrik A/S Result for 2002 Page 3 of 9 The past year 2002 was an active year for Aarhus Olie, with a series of important initiatives consolidating the group s position as a leader in its field. These initiatives included investments in production facilities and development activities; the implementation of Balanced Scorecard and a common set of values at group level; further education of employees; continuous adjustment of internal processes; a more professional approach to customer relations and the implementation of SAP in the parent company in Denmark. The year was characterised by further market share growth in strategic areas such as the supply of speciality fats for the chocolate industry. On the bulk oil side of the business, the group has been under pressure from increased price competition which, combined with the global economic downturn in 2002, reduced tonnage sales and income in this sector. In the catering sector, which is primarily served by the UK company, Anglia Oils, volume sales and income for the year increased. The annual result is thus regarded as satisfactory. In addition, the share price rose notwithstanding a generally negative stock market sentiment prevailing in The group undertook a number of large investments in In Malaysia, the associated company United Plantations acquired the particularly well-managed Malaysian plantation company United International Enterprises (Malaysia) Berhad, an acquisition that is expected to promote considerable synergy. In the UK, Anglia Oils invested in a new, modern baking margarine factory, which is to secure the company a solid foothold in this business area. In the USA, a major upgrade of Aarhus Inc. s existing production plant has been concluded, whilst at the factory in Aarhus, speciality oil production facilities continue to be expanded. Goals and strategy The company regularly updates its 3-year strategy plan, which will continue to focus on market development. The aim is to develop the core business, increase market shares and exploit the full potential of the current business segments. Main strategic aims 1. To defend and develop the company s position as the leading supplier of speciality fats for chocolate and other confectionery products. 2. To increase turnover in the catering segment by at least 50% as a result of growth in northern Europe. 3. To bring about targeted geographical expansion based on the strengths and know-how that exist within the group. 4. To promote the development and commercialisation of speciality oils for health care, including cosmetics and dietary supplements.

4 Aarhus Oliefabrik A/S Result for 2002 Page 4 of 9 Key figures and ratios for the group DKK million Turnover 4,886 4,811 4,565 4,922 4,822 Value added 1,394 1,419 1,312 1,160 1,128 Net margin 1,035 1, Operating income Net financing costs Profit on ordinary activities before tax and minority interests Profit for the year Fixed assets 1,839 1,948 1,922 1,854 1,601 Current assets 1,546 1,935 1,750 1,750 1,743 Total assets 3,383 3,883 3,672 3,604 3,344 Share capital Shareholders equity 1,424 1,531 1,355 1, Provisions Long-term debt 868 1,147 1,179 1,042 1,342 Current liabilities 966 1,051 1,013 1, Capital investments Depreciation Net cash provided by operating activities Net cash used in investment activities Net cash provided by financing activities Average number of employees 1,743 2,126 2,025 3,928 4,458 Profit margin ration , Return on assets Net margin Acid test ration Equity ratio Return on equity Return on invested capital Average number of shares of DKK 100 (1,000 shares) 4,000 4,000 4,000 4,000 4,000 Market price year-end (DKK) Equity value (DKK) Price/equity value Price Earnings (PE) Price Cash Flow (PCF) Earnings Per Share (EPS) (DKK) Cash Flow Per Share (CFPS) (DKK) Dividend per share (%) Pay-out ratio (%) It should be noted that only the 2001 comparative figures have been adjusted to accord with the new accounting standards.

5 Aarhus Oliefabrik A/S Result for 2002 Page 5 of 9 Comments on developments in the period under review Accounting policies have been changed in relation to previous years following the introduction of the new Danish Financial Statement Act and the new accounting standards. These changes are described in the first quarter report for 2002 dated 29 May 2002 (stock exchange announcement no. 8/2002). In 2002, the Aarhus Olie group achieved a satisfactory result after tax of DKK 144 million, compared with DKK 166 million in The result lies within the expectations for the year, which anticipated a profit between DKK 140 and 160 million, as stated in the third quarter report, dated 25 November 2002 (stock exchange announcement no. 15/2002). Consolidated net turnover for 2002 was almost the same as for 2001 and reflects the fact that the group s lower sales in terms of tonnage were compensated for by the higher price of raw materials. The value-added decline totalled DKK 25 million in 2002, primarily due to the generally lower volume sales within the bulk oil segment. The net margin, calculated by subtracting the value added from direct production costs, was DKK 42 million lower than in 2001 (no figures for comparison exist prior to 2001). In total, consolidated fixed costs declined in 2002 by DKK 38 million relative to the previous year. Consolidated operating income declined from DKK 282 million in 2001 to DKK 231 million in When comparing these figures, it is important to note that the result for 2001 includes non-recurring income totalling DKK 48 million. Among other things, this derived from the sale of property in Denmark. Pre-tax income of DKK 37.4 million from participating interests was more than doubled in This improvement stems primarily from United Plantations Berhad in Malaysia and is due to considerably higher prices for palm oil. Consolidated financing costs in 2002 were DKK 79 million DKK 12 million less than in This decline, largely attributable to Aarhus Olie, Aarhus, and Santa Lucia, is due to lower interest rates in Denmark and Mexico and trading profits realised from bonds. The pre-tax profit totalled DKK 190 million, compared with DKK 208 for the previous year. The result for 2002 includes an accumulated tax asset worth some DKK 26 million in the parent company. As this tax asset is absorbed within the parent company income for 2002, an effective taxation rate of around 30% can be expected in the years ahead. The tax charge totalled DKK 43 million for the year, compared with DKK 42 million in It should be noted that the result for 2001 included non-recurring income of DKK 48 million, after tax.

6 Aarhus Oliefabrik A/S Result for 2002 Page 6 of 9 The group s investments totalled DKK 189 million in 2002, compared with DKK 119 million in Shareholders equity Consolidted shareholders equity declined by DKK 107 million to DKK 1,424 million. The net effect of the year s result, less the dividend distributed, was an increase of DKK 96 million, whereas the translation into Danish Kroner of shareholders equity in subsidiaries resulted in a decline of DKK 202 million. Of this decline DKK 43 million relates to Santa Lucia, S.A. de C.V., in Mexico; DKK 27 million to Anglia Oils Limited in the UK; DKK 84 million to Aarhus (Malaysia) Sdn Bhd (United Plantations Berhad) in Malaysia; DKK 40 million to Aarhus Inc. in the USA and DKK 8 million in respect of other subsidiaries. Own shares Due in part to several years of increased profits, the company s share price increased by 25 % in 2002 to DKK 310 at year-end equivalent to a market value of DKK 1,240 million. Own shareholdings numbered 144,782 on 31 December 2002, equivalent to 3.6 % of share capital. These shares are included in shareholders equity at the purchase price, which is DKK 19 million below the year-end market price. Cash flow Operating income and depreciation together resulted in a positive cash flow of DKK 370 million DKK 53 million less than in Total cash flow from operating activities was DKK 246 million, compared with DKK 293 million the previous year. Consolidated cash flow from operating and investment activities in 2002 was DKK 56 million, compared with DKK 165 million in Consolidated negative cash flow from financing totalled DKK 339 million. The two main consituents were DKK 278 million in payments on long-term bank and mortgage loans and dividends of DKK 48 million paid out to shareholders. Annual result for the group s production companies Key figures and ratios are set out in enclosure 5. Aarhus Olie, Denmark The company in Denmark represents the group s technological and development centre. In 2002, the focus was again concentrated on developing the market for speciality fats particularly for the chocolate industry and for a new key area, health care. The company had a good year, characterised by continued market share growth in strategic areas. Internally, considerable attention was paid to consolidating the company s strategies and values at all levels. Balanced Scorecard is now in its third year of use, having proven a successful instrument in strategy implementation. SAP R3 is employed throughout the company.

7 Aarhus Oliefabrik A/S Result for 2002 Page 7 of 9 Anglia Oils Limited, United Kingdom Anglia Oils enjoyed a satisfactory year in The acquisition of the Scottish margarine factory Rowallan Creamery Ltd. and its relocation to the Hull-based refinery posed a major challenge that was successfully met. The move involved building a new state-of-the-art factory in Hull. By the end of 2002, this was complete and now stands as one of the world s most modern factories for producing baking margarine. The company is today well geared to maintain and expand its leading position on the UK bakery margarine market. The bulk oil business, the biggest area for Anglia Oils in terms of volume, came under strong pressure due to increased price competition. This resulted in a downturn both in tonnage and income. In the catering area, the company reported continued growth in turnover and income from sales of deep-frying and other speciality oils for domestic and export markets. Aarhus Inc., USA Aarhus Inc. occupies a leading position on the US market for so-called lauric oils, such as palm kernel and coconut oil. These oils are used in chocolate coatings and many other food products. An initial investment of USD 5 million was made to improve the company s ability to handle other oil types, such as palm oil, and was commissioned in Through this investment, the company is well equipped to supply the growing American market for oils that are low in trans fatty acids. The year produced a highly satisfactory result with a major rise in volume and income. Santa Lucia, S.A. de C.V., Mexico The company in Mexico produces a broad range of oil products for the large domestic market. Speciality fats for the chocolate industry account for a significant proportion of the company s income, in line with the focus placed by the group on this market segment. An increased emphasis on speciality fats is planned to secure added refinement through specialisation. During the year, strong price competition has come from soya oil, reducing income from products based on palm oil, which nevertheless continue to comprise the company s core business. The company has gained a new Danish managing director who, with his many years of experience from Aarhus Olie in Denmark, is working towards additional value creation. A series of good Danish management principles have already been successfully implemented. Other subsidiaries performed as anticipated. BSP Pharma reached the first of three significant milestones in its business plan, namely the conclusion of the pre-clinical programme for the products treating rheumatic diseases and eczema, with exceptionally good results. The development of the new products is on schedule to be concluded within the next two years. Associates Consolidated profits, after tax, include DKK 23.5 million of profit shares from the associates Maritex AS in Norway and United Plantations Berhad in Malaysia. Outlook for the full year The satisfactory developments of recent years, which have focused on income and growth, are to be continued and further strengthened. The group vision is to be the customer s preferred

8 Aarhus Oliefabrik A/S Result for 2002 Page 8 of 9 supplier in these areas where it operates. To achieve this vision, considerable investments will be required in the years ahead. These investments will be determined in relation to the group s value-creating goal, namely the return on invested capital (ROIC) must exceed the weighted average capital cost by at least 2 % every year for the next 3-5 years. At present interest rate levels, the ROIC has to be around 9 %. The growth strategy over the next 3-5 years is expected to increase invested capital by % following investments in rationalisations and extra capacity and the associated increasing need for working capital. On the basis of a ROIC of 9 %, this would over the period serve to increase operating income by the order of DKK 100 million relative to It is also the goal to maintain the equity ratio in the region of 40 %. In relation to the market, co-operation with the largest customers will be intensified. By the end of the year, all customers will be able to link up to the group s e-business services. The strong position in Russia will be consolidated further. Possibilities for expansion in other main markets are currently under investigation. BSP Pharma is to expand its range during 2003 with two more large research projects related to treatments for cold sores (herpes simplex) and psoriasis will be the year when significant progress will be made towards showing the outside world that Aarhus Olie is a consolidated group united by common values. This development will require a major communication effort, initially in relation to the group s employees and, then, customers, suppliers, shareholders and analysts. Expectations for a marginally higher turnover in 2003 than in 2002 are based on unchanged raw material price levels and higher tonnage sales. In 2002, the turnover amounted to DKK 4.9 billion. Continued positive developments are expected for 2003 with operating income of DKK million and pre-tax profits of DKK million. Profits, after tax, are expected to amount to DKK million. Elements of risk It is group policy to ensure the best possible hedge of raw material and currency exposures in order to minimise the effect of changes in raw material and currency prices on consolidated profit. Through the associate United Plantations Berhad in Malaysia, the group is exposed to palm oil price fluctuations. A change in palm oil prices of MYR 100 a tonne is estimated to affect consolidated profits by DKK 5 million per year. A 10% change in relevant currencies (GBP, USD, MXN and MYR) against Danish Kroner is estimated to have a net effect of DKK 10 million per year on consolidated

9 Aarhus Oliefabrik A/S Result for 2002 Page 9 of 9 profits and a net effect of DKK 115 million on consolidated shareholders equity. For 2003, a 1% rise in interest rates will increase consolidated financing costs by approximately DKK 5 million. A 10% change in all relevant raw material prices will increase the group working capital requirements by approximately DKK 100 million. Annual General Meeting The result, after tax, amounted to DKK 144 million. The allocation is proposed as follows: 12 % dividend DKK 48 million Participating interests net revaluation reserve DKK 56 million Retained profit DKK 40 million The Annual General Meeting will be held on Friday 25 April 2003, am. The printed annual report will be available on 14 April Kjeld Ranum Chairman Erik Højsholt Managing Director Encl.: 1. Profit & Loss Account 2. Balance Sheet 3. Shareholders Equity 4. Cash Flow Statement 5. Key figures and ratios for group production companies

10 Consolidated financial statements for 1 January to 31 December Encl. 1 Profit & Loss Account Group Parent Company DKKm DKKm DKKm DKKm Turnover 4, , , ,200.2 Cost of raw materials 3, , Value added 1, , Direct production costs Net margin 1, , Indirect production overheads Distribution costs Administrative expenses Other operating income Operating income Pre-tax income from participating interests Net financing costs Pre-tax profit on ordinary activities Tax on profit on ordinary activities Tax, participating interests Profit on ordinary activities Minority shareholders share of the profit Profit for the year Proposed allocation of profits Proposed dividends Participating interests net revaluation reserve Retained profit/free reserves

11 Balance Sheet Encl. 2 ASSETS Group Parent Company DKKm DKKm DKKm DKKm Intangible fixed assets Tangible fixed assets Land and buildings Technical plant and machinery Other assets Assets under construction Total tangible fixed assets 1, , Financial fixed assets Interests in subsidiaries - 1, ,343.5 Loans to subsidiaries Interests in associates Loans guaranteed by related parties Other securities Tax asset Total financial fixed assets , ,518.0 TOTAL FIXED ASSETS 1, , , ,970.5 Stocks Raw materials and consumables Work in progress Finished goods Total stocks Receivables Trade debtors Subsidiaries Associates Exchange adjustments of contracts Other receivables Accruals and deferred costs Total receivables Listed investments Cash at bank and in hand TOTAL CURRENT ASSETS 1, , TOTAL ASSETS 3, , , ,

12 Balance Sheet LIABILITIES Group Parent Company DKKm DKKm DKKm DKKm Shareholders equity Share capital Participating interests net revaluation reserve Retained profit/free reserves Proposed dividends Shareholders equity, in total 1, , , ,531.4 Minority shareholders Provisions Deferred tax Pension obligations Restructuring costs at Anglia Oils Limited Total provisions Long-term debt Bank loans Mortgage debt Total long-term debt , Current liabilities Bank loans Short-term mortgage debt Trade creditors Subsidiaries Tax Exchange adjustments of contracts Other creditors Accruals and deferred income Total current liabilities , TOTAL LIABILITIES 3, , , ,795.2 Guarantees and financial liabilities 3

13 Shareholders equity Encl. 3 Participating interests net Retained Share revaluation profit/free Proposed Total capital reserve reserves dividends equity Group DKKm DKKm DKKm DKKm DKKm Shareholders equity as at 1 January ,355.2 Changes in accounting policies Adjusted shareholders equity as at 1 January ,372.1 Exchange adjustments, participating interests Dividends paid Dividends on own shares Profits for the year Profit share from associates Dividends from associates Own shares, acquisition of 94,013 numbers Employee shares, 17,787 numbers Price adjustment of own shares Hedging instruments at year-start, carried back Hedging instruments at year-end Goodwill depreciation, BSP Pharma A/S Proposed dividends for Shareholders equity as at 1 January ,531.4 Exchange adjustments, participating interests Currency hedging of result from participating interests Dividends paid Dividends on own shares Profits for the year Profit share from associates Dividends from associates Employee shares, 10,864 numbers Price adjustment of own shares Hedging instruments at year-start, carried back Hedging instruments at year-end Hedging instruments, tax Proposed dividends for Shareholders equity as at 31 December ,

14 Shareholders equity Participating interests net Retained Share revaluation profit/free Proposed Total capital reserve reserves dividends equity Parent Company DKKm DKKm DKKm DKKm DKKm Shareholders equity as at 1 January ,355.2 Changes in accounting policies Adjusted shareholders equity as at 1 January ,372.1 Exchange adjustments, participating interests Dividends paid Dividends on own shares Profits for the year Income from participating interests Dividends from participating interests Own shares, acquisition of 94,013 numbers Employee shares, 17,787 numbers Price adjustment of own shares Hedging instruments at year-end Goodwill depreciation, BSP Pharma A/S Proposed dividends for Shareholders equity as at 1 January ,531.4 Exchange adjustments, participating interests Currency hedging of result from participating interests Dividends paid Dividends on own shares Profits for the year Income from participating interests Dividends from participating interests Employee shares, 10,864 numbers Price adjustment of own shares Hedging instruments at year-start, carried back Hedging instruments at year-end Hedging instruments, tax Proposed dividends for Shareholders equity as at 31 December ,423.9 Acquisition Market Number price price Own shares DKKm DKKm Holding as at 1 January , Acquisition 94, Employee shares -17, Price adjustment at year-end Holding as at 1 January , Employee shares -10, Price adjustment at year-end Holding as at 31 December , Own shares are not included in the Balance Sheet. 5

15 Cash flow statement Encl. 4 Group Parent Company DKKm DKKm DKKm DKKm Cash flows from operating activities Operating income Depreciation Provisions for restructuring and pension obligations Adjustment relative to capital increase in Maritex AS Decrease (Increase) in stocks Decrease(Increase) in receivables Increase (Decrease) in trade creditors Increase (Decrease) in other creditors Increase (Decrease) in hedging instruments value Net financing income (costs) Dividends received Tax paid Net cash from operating activities Cash flows from investment activities Investment in intangible fixed assets Investment in tangible fixed assets Investment in financial fixed assets Net cash used in investment activities Net cash flows from operating and investment activities Cash flows from financing activities etc. Increase (Decrease) in minority shareholders share Increase (Decrease) in long-term loans Dividends to shareholders in parent company Own shares Minority shareholders share of losses (profits) Exchange adjustments Net cash provided by financing activities etc Net increase (decrease) in cash Net cash and cash equivalents at year-start Net cash and cash equivalents at year-end Net cash and cash equivalents include listed investments and cash at bank and in hand less short-term bank loans and mortgage debt. 6

16 Key figures and ratios for the group s production companies Encl. 5 Aarhus Olie, Denmark DKKm DKK DKK DKK DKK DKK Turnover 1, , , , ,577.9 Value added Net margin Operating income Pre-tax profit on ordinary activities Profit for the year Capital investments Shareholders equity at year-end Total assets at year-end 1, , , , ,156.1 Profit margin ratio (%) Return on assets (%) Return on invested capital (%) Total business volume (tonnes) 169, , , , ,917 Number of employees Anglia Oils Ltd, UK DKKm DKK GBP GBP GBP GBP GBP Turnover 1, Value added Net margin Operating income Pre-tax profit on ordinary activities Profit for the year Capital investments Shareholders equity at year-end Total assets at year-end Profit margin ratio (%) Return on assets (%) Return on invested capital (%) Total business volume (tonnes) 366, , , , ,662 Number of employees

17 Aarhus Inc., USA DKKm DKK USD USD USD USD USD Turnover Value added Net margin Operating income Pre-tax profit on ordinary activities Profit for the year Capital investments Shareholders equity at year-end Total assets at year-end Profit margin ratio (%) Return on assets (%) Return on invested capital (%) Total business volume (tonnes) 117, , , , ,162 Number of employees Santa Lucia, Mexico DKKm DKK MXN MXN MXN MXN MXN Turnover Value added Net margin Operating income Pre-tax profit on ordinary income Profit before minority interests Aarhus Olie's share of profit Capital investments Shareholders equity at year-end Aarhus Olie's share of equity at year-end Total assets at year-end Profit margin ratio (%) Return on assets (%) Return on invested capital (%) Total business volume (tonnes) 130, , , ,424 89,362 Number of employees