Linamar Hungary Nyrt.

Transcription

1 Linamar Hungary Nyrt. INTERIM REPORT FOR THE YEAR ENDED DECEMBER 31, 2007 Linamar Hungary Nyrt. Orosháza, 5900 Csorvási út 27.

2 To the Shareholders Linamar Hungary Nyrt. Sales for the year ended December 31, 2007 were HUF 28,507 million. This compares favourably to sales of HUF 27,037 million for the same period of the previous year. The sales increase of 5.4% comprised of the decrease of HUF 201 million in the automotive component and precision machining segment and increase of HUF 1,671 million in the agricultural equipment and general machinery segment. The profit from operations for the year ended December 31, 2007 were HUF 2,042 million, the decrease by 17.7% compared to the profit from operations of HUF 2,482 million a year earlier. The Company s operations were profitable in both segments, while the gross profit decreased by 24.6%. The net earnings for 2007 were HUF 1,770 million, which is, compared to HUF 3,512 million in 2006, a decrease of 49.6%. The decrease is mainly related to the fallback in operating earnings and the variance of the deferred taxation amounting to HUF 1,405 million. 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 1

3 Linamar Hungary Nyrt. Notes to the Financial Statements For the year ended December 31, 2007 and 2006 (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. The 2006 annual data and information are audited 3. The number of shares of the Company as at September 30, 2007 was 8,580,000 units (December 31, ,580,000). 4. Segmented Sales Information Year Ended December Export Sales Automotive Components and Precision Machining Europe EU Member Countries 10,255,900 10,908,811 North America 1,216,764 1,388,567 Other Export 859,758 1,360,205 Europe non EU Member Countries - 23,690 Total Automotive Components and Precision Machining Export Sales 12,332,422 13,681,273 Agricultural Equipment and General Machinery Segment Europe EU Member Countries 5,704,739 4,915,351 North America 2,266,881 2,279,819 Europe non EU Member Countries 2,118,340 1,054,644 Other Export - 42,814 Total Agricultural Equipment and General Machinery Export Sales 10,089,960 8,292,628 Total Export Sales 22,422,382 21,973,901 Domestic Sales Automotive Components and Precision Machining 5,351,059 4,203,742 Agricultural Equipment and General Machinery Segment 733, ,083 Total Domestic Sales 6,084,253 5,062,825 Total Sales 28,506,635 27,036,726 2

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 145 million from December 31, 2006, 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 1,505 as at December Trade accounts receivable increased by 12.6% to HUF 4,373 million compared to The HUF 488 million decrease is due to the sales increase in the quarter four in the automotive component and precision machining segment. Cash, bank balances and short-term deposits increased by 9.0%, from HUF 1,925 million to HUF 2,098 million. The increase is due to the collection of trade receivables and continuous increase in sales. The level of inventories was 6.9% higher at December 31, 2007 compared to the previous year. Inventories increased from HUF 4,885 million to HUF 5,225 million. The inventories at the agricultural equipment and general machinery segment increased by HUF 271 million, the automotive inventories increased by HUF 68 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 242 million payable of the investment loan in 2008, which is a significant decrease compared to the HUF 1,282 million last year end. The decrease is due to the repayment of the investment loan. The Company does not have any long term loans as at December The HUF 241 million amount as at December decreased due to the reallocation to the current portion. The deferred tax liability in 2006 was HUF 197 million, and HUF 24 million in 2007, 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 3,470 million to HUF 3,697 million. The increase results from the increased level of operations. Explanation of the main changes in the profit and loss statement Sales Linamar Hungary Nyrt. s sales increased by 5.4% to HUF 28,507 million in 2007 compared to sales of HUF 27,037 million in 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: 62.0% automotive component and precision machining and 38.0% agricultural equipment and general machinery. Automotive component and precision machining sales decreased by HUF 202 million, or 1.1%, compared to the same period of 2006, while agricultural and general machinery sales increased by HUF 1,671 million, or 18.3%. The automotive component and precision machining export sales decreased by HUF 1,349 million. The North American sales decreased by HUF 172 million due to the lower level of vacuum pump sales. The sales to other countries significantly fell back, by HUF 500 million related to lower sales volume of common rails to Turkey. The sales value to the EU countries is lower by HUF 653 million due to the volume decrease of pump housing. Domestic automotive component and precision machining sales were HUF 5,351 million, which is a favourable 3

5 HUF 1,147 million increase compared to the same period last year especially due to the higher sales of clutch body components. Agricultural and general machinery export sales increased by HUF 1,797 million to HUF 10,090 million from the last year. The North American sales realized on a similar level while the growth in sales to EU-member countries was mainly related to the increased volumes of rotor rakes and snapping units. The sales to other European countries increased by HUF 1,020 million due to improvement of sales of corn heads to Russia. Domestic agricultural and general machinery sales decreased from HUF 859 million to HUF 733 million compared to the last year due primarily to the lower cornhead sales. Cost of sales The cost of sales increased from 81.7% of sales to 86,9%. 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-rata basis on sales. Selling, general and administrative costs In 2007 the selling, general and administrative costs amounted to HUF 1,968 million or 6.9% of sales, compared to HUF 1,953 million or 7.2% of sales in The change in SG&A costs relates to the decrease in selling and general costs; travels costs and commissions are significantly lower in comparison to the last year. Other income/expense The other income/expense balanced in 2007 to HUF 270 million income, compared to the HUF 525 million expense of the previous year. Other income/expense includes the exchange differences related to the revaluation of accounts receivable and accounts payable in the amount of HUF 177 million in 2007 (2006: HUF 237 million loss); net of provisions and impairments; which, in case of receivables and liabilities was a release, and in case of inventories was impairment addition. Profit from operations Profit from operations of HUF 2,482 million of last year decreased to HUF 2,042 million this year. Profit from operations as a percent of sales decreased from 9.2% to 7.2%. The most significant impact upon profit from operations was the gross profit decrease. Exchange gain (loss) The Company experienced an exchange loss of HUF 149 million in 2007, compared to an exchange loss of HUF 328 million in In 2006, as a result of the slight weakening of the Forint, the Company experienced exchange loss on the Euro denominated loans for HUF 91 million, while on accounts payable and receivable while it was HUF 237 million. During 2007, as a result of the strengthening of the Forint, the Company experienced HUF 26 million exchange gain on loans, and HUF 175 million exchange loss on accounts receivable and payable 4

6 Taxation The Taxation amount in the Profit and Loss Statement is detailed as follows in HUF thousands: Current tax (corporate tax) - - Local business tax 231, ,333 Solidarity tax 68,875 26,459 Deferred tax (38,000) (1,443,000) 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 December 31, 2007, the company determined it was appropriate to recognize a deferred tax asset in the amount of HUF 1,505 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 year end Net earnings The Company s net earnings at the year end 2007 were HUF 1,770 million or 6.2% of sales a decrease of 49.6% compared to the HUF 3,512 million, or 13.0% of sales in The net income has been significantly impacted partly by decreased profit from operations and partly by variance in the recognition of deferred taxes (recognition and release) for HUF 1,405 million. Explanation of the main changes in the cash flow statement In 2007, the purchases of fixed assets amounted to HUF 2,181 million. The cash payments during the period related to purchases of fixed assets totalled HUF 1,960 million. From these investments HUF 1,232 million relates to the automotive components and precision machining business segment, and HUF 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 December 31, 2007, the Company has outstanding commitments for fixed assets under purchase orders and contracts of HUF 205 million. Major events The Company held its Annual General Meeting on April 19, Public purchase offer made by Linamar Corporation for all ordinary voting shares of the Company on February 26, The price payable as consideration for the Shares is HUF 3,003 per Share. 254,920 shares was offered for public purchase offer by shareholders. The Company held its extraordinary General Meeting on July 02, 2007 about the delisting of the Company s Shares from the Budapest Stock Exchange; the proposal was supported by the requested 75pc of shareholders, so the motion was rejected. A subsequent extraordinary shareholders meeting was held on November 12, 2007, where the following motions were adopted; proposal for a new share option programme, authorization to the Board of Director for further 5 years to execute private placement, conditions of treasury shares purchase. 5

7 Other information Organizational structure During the year 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 The either strategic employees of the Company, Zoltán Laskai as Human Resources Manager left the Company on June 30, From July 23, 2007 this role is discharged by Tibor Parászka. Share Option Program There are no outstanding share options under the share option program of the Company. 6

8 PK1. General information about financial data Audited Consolidated Yes No X X Accounting principles Hungarian IFRS X Other 7

9 PK2. Consolidated companies Name Equity/Registered Interest held (%) Voting right 1 Classification 2 Capital Voting rights for decision making at the consolidated company s General Meeting 2 Full (L); Jointly Managed (K); Associated (T) 8

10 PK3. Balance Sheet (expressed in thousands of Hungarian Forints) Nine Months Ended September Change % ASSETS Non-Current Assets Property, plant and equipment 8,661,922 8,516, Deferred tax asset 1,505, (8.2) Intangible assets 80,404 76, ,247,326 10,233, Current Assets Inventories 5,224,548 4,885, Trade receivables 4,373,001 3,885, Due from related parties 248,297 1,010,142 (75.4) Deductible value added tax 326, , Other current assets 120, , Cash and cash equivalents 2,098,204 1,924, ,391,154 12,115, Total Assets 22,638,480 22,348, SHAREHOLDERS EQUITY Share capital 858, , Capital reserve 5,026,774 5,026, Accumulated profit 11,891,879 10,122, ,776,653 16,006, LIABILITIES Non-Current Liabilities Long-term bank borrowings - 241,189 (100.0) Deferred government grants 35,275 86,503 (59.2) Deferred tax liability 24, ,000 (87.8) 59, ,692 (88.7) Current Liabilities Short-term bank borrowings Current portion of long-term bank borrowings 242,193 1,281,684 (81.1) Trade payables 3,697,448 3,469, Due to related parties 192, , Other current liabilities 654, ,422 (19.5) Provisions 16,097 93,161 (82.7) 4,802,552 5,816,781 (17.4) Total Liabilities 4,861,827 6,341,473 (23.3) Total Equity and Liabilities 22,638,480 22,348,

11 Statement of Changes in Shareholders Equity for the year ended December 31, 2007 and 2006 (Expressed in Thousands of Hungarian Forints) Share Capital Capital Reserve Accumulated Profit Total Shareholder s Equity Balance as at 12/31/ ,000 5,026,774 6,610,290 12,495,064 Result for the period - - 3,511,857 3,511,857 Balance as at 09/30/ ,000 5,026,774 10,122,147 16,006,921 Share Capital Capital Reserve Accumulated Profit Total Shareholder s Equity Balance as at 12/31/ ,000 5,026,774 10,122,147 16,006,921 Result for the period - - 1,769,732 1, Balance as at 12/31/ ,000 5,026,774 11,891,879 17,776,653 10

12 PK4. Profit and Loss Statement (expressed in thousands of Hungarian Forints except per share figures) Year Ended December Change % Three Months Ended December Sales 28,506,635 27,036, ,263,079 6,096,401 Cost of Sales 24,765,890 22,076, ,852,193 5,023,620 Gross Profit 3,740,745 4,959,972 (24.6) 410,886 1,072,781 Selling expenses 903, ,923 (5.2) 201, ,855 General expenses 634, , , ,494 Administrative expenses 429, , ,036 38,429 Other operating income/expenses (269,591) 524,782 (151.4) (397,415) Profit from Operations 2,041,888 2,482,054 (17.7) 391, ,592 Finance cost (10,153) (164,405) (93.8) 8, ,661 Profit before Tax 2,031,735 2,317,649 (12.3) 399, ,253 Taxation* ( ) (121.9) 199,342 1,375,627 Net Income 1,769,732 3,511,857 (49.6) 599,218 1,733,880 Earnings per Share** Basic HUF 206 HUF 409 HUF 70 HUF 202 * 4% solidarity, industrial tax and deferred taxes ** Including effect of the deferred taxes. Without the deferred taxes EPS for 2007 is HUF 202 while the EPS for Q is HUF

13 PK5. Cash-Flow Report (expressed in thousands of Hungarian Forints) Year Ended December Net Income 1,769,732 3,511,857 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,963,814 2,057,835 Impairment net 185, ,022 Provision for warranty and other obligations (77,064) 8,835 Net (gain)/loss on sale of property, plant and equipment (2,826) 9,376 Net interest expense 47,355 80,817 Changes in operating assets and liabilities: (Increase)/decrease in inventories (231,465) (981,432) (Increase)/decrease in accounts receivable (780,745) (362,668) (Increase)/decrease in due from related parties 761,845 (389,188) (Increase)/decrease in tax receivable (35,254) 46,249 (Increase)/decrease in other current assets (1,849) (38,067) Increase/(decrease) in accounts payable 227,565 59,924 Increase/(decrease) in capex payables (212,527) Increase/(decrease) in due to related parties 33,403 (7,781) Deferred taxes 38,000 (1,443,000) Increase/(decrease) in other current liabilities (209,870) 125,104 Net interest expense (47,355) (80,817) Net cash used in operating activities 3,351, ,969 Cash-flows from investing activities Purchase of property, plant and equipment and intangibles (2,180,995) (1,163,760) Reclassification of fixed assets 8,234 Increase/(decrease) in capex payables 212,527 Proceeds on sales of property, plant and equipment 62,505 9,259 Net cash used in investing activities (1,897,729) (1,154,501) Cash-flows from financing activities Proceeds from new long-term loans Proceeds from other short-term loans Repayment of other short-term loans (6,148) Repayment of long term loans investment loan (1,280,680) (1,511,394) Net cash provided from financing activities (1,280,680) (1,517,542) Net decrease in cash and cash equivalents 173, ,023 Cash and cash equivalents at the beginning of the period 1,924,770 1,688,747 Cash and cash equivalents at the end of the period 2,098,204 1,924,770 12

14 PK6. Significant off-balance sheet items 1 Description (HUF million) Value Building expansion Installation of measuring machine 2.5 Balancing machine 27.8 Okuma ES-L 10M CNC lathe 23.9 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.) 13

15 RS1. Ownership structure, Ratio of Holdings Notes: Description of owner Total equity Opening Closing at 1 st January % Qty % Qty Domestic institution/company ,830, ,441,883 Foreign institution/company ,300, ,048,482 Domestic individual , ,634 Foreign individual Employees, senior officers , ,000 Treasury shares Government held owner International Development Institutions Other TOTAL ,580, ,580, All of Linamar Hungary Nyrt.'s shares are listed on the Budapest Stock Exchange. 2. Each share entitles the shareholder to one vote.

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

17 RS3/1. List and description of shareholders with more than 5% (at the end of the period) in reference to listed series Name Nationality 1 Activity 2 Quantity Interest (%) Remarks Linamar Corporation K C 6,012, strategic investor Budapest Alapkezelő Zrt. B I 548, financial investor Each share entitles the shareholder to one vote. 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. 1 Domestic (B), Foreign (K) 2 Custodian (L), Government (Á), International Development Institute (F), Institutional (I), Corporate (C), Individual (M), Employee, Senior Officer (D) RS3/2. List and description of shareholders with more than 5% (at the end of the period) in reference to the total share capital The listed series corresponds to the total share capital, information can be found on the RS3/1 table. 16

18 TSZ2/1, Changes in the headcount (number of persons) employed by the End of reference period Current period opening Current period closing Company 1,587 1,587 1,677 Group n.a. n.a. n.a. 17

19 TSZ3. 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) 18

20 ST1. Extraordinary reports published in the period under review Date Place of publication Subject matter, brief summary Magyar Tőkepiac Interim Report for the quarter ended December 31, Magyar Tőkepiac Linamar Hungary Nyrt. amends its Interim Report with regard to the recognition of deferred taxes under IFRS Magyar Tőkepiac Public purchase offer of Linamar Corporation for shares of Linamar Hungary Nyrt Magyar Tőkepiac Notice of the Annual General Meeting Magyar Tőkepiac Opinion of the Board Director for the public purchase offer Magyar Tőkepiac Public purchase offer of Linamar Corporation for all ordinary voting shares of Linamar Hungary Nyrt. (approved) Magyar Tőkepiac Resolutions of the Annual General Meeting Magyar Tőkepiac Announcement about the completion of the Annual Report for Magyar Tőkepiac Linamar Hungary Nyrt s Financial Statements and Annual Report under the date of Dec. 31, Magyar Tőkepiac Linamar Hungary Nyrt. publicated information from April 01, 2006 till March 31, Magyar Tőkepiac Interim Report for the first quarter ended March 31, Magyar Tőkepiac Announcement about the change in share owner structure Magyar Tőkepiac Notice of Linamar Hungary Nyrt.'s Extraordinary General Meeting Magyar Tőkepiac Linamar Hungary Nyrt s information about the change in share owner structure Magyar Tőkepiac Information about Extraordinary General Meeting Magyar Tőkepiac Resolution of the Extraordinary General Meeting Magyar Tőkepiac Interim Report for the first six month ended June 30, Magyar Tőkepiac The Articles of Association of the Company Magyar Tőkepiac Announcements about the change in share owner structure Magyar Tőkepiac Announcement of insider share transaction Magyar Tőkepiac Announcement of insider share transaction Magyar Tőkepiac Notice of Linamar Hungary Nyrt.'s Extraordinary General Meeting Magyar Tőkepiac Announcement of insider share transaction Magyar Tőkepiac Information about Extraordinary General Meeting Magyar Tőkepiac Magyar Tőkepiac Resolutions of the Extraordinary General Meeting Magyar Tőkepiac Interim Report for the nine month ended September 30,