RNS Number:7637C
Perstorp AB
27 April 2001
PART 2
The Perstorp Group
Comments on Pergo's accounting principles, earnings and financial position for
the report period, as well as this company's outlook for 2001, are presented
in Pergo's interim report. Comments on results, or financial position and
during the report period that pertain exclusively to Perstorp excluding Pergo
are presented in the Pro forma accounts section.
Accounting principles
The accounting principles and calculation methods used in the consolidated
financial statements are the same as those applied in the 2000 Annual Report.
Results during the report period
NET SALES amounted to SEK 2,261 m (2,414). The decrease is due to the fact
that the year-earlier period includes SEK 474 m for Perstorp Surface
Materials, which has now been divested.
OPERATING EARNINGS amounted to SEK 14 m, which is SEK 229 m lower than in the
corresponding period in 2000. Items affecting comparability amounted to a
charge of SEK 12 m (revenue: 75). The costs of SEK 12 m affecting
comparability derived mainly from the restructuring of the Group and the
takeover process. The revenue of SEK 75 m for the year-earlier period related
to the capital gain from the sale of Surface Materials operations.
OPERATING EARNINGS ADJUSTED for items affecting comparability amounted to SEK
26 m (168). The deterioration was due mainly to the operating loss reported by
Pergo for the period.
OTHER OPERATING REVENUES AND EXPENSES amounted to revenue of SEK 36 m (3),
with exchange-rate effects accounting for most of the increase, of which
Perstorp excluding Pergo accounted for SEK 25 m and Pergo for SEK 9 m.
EARNINGS FROM PARTICIPATIONS IN ASSOCIATED COMPANIES, which pertained mainly
to Witex AG, amounted to SEK 3 m (-) and were attributable to the Pergo
subgroup. Perstorp Clariant AB, an associated company within chemical
operations that manufactures water-borne dispersions, is continuing to be
affected by depressed margins, contributed earnings of SEK 1 m (3).
Accordingly, earnings from participations in associated companies totaled SEK
4 m (3).
NET FINANCIAL ITEMS amounted to revenue of SEK 9 m (expense: 13). The
improvement compared with the year-earlier period was due mainly to the
acquisition of withdrawal rights from Alecta at a price lower than nominal
value and the following redemption of the rights at nominal value. The
financial net was adversely affected by an increase in working capital and
higher interest rates compared with the year-earlier period.
TAX COSTS totaled SEK 8 m (93). Accordingly, the tax rate was 35% (40), which
is the estimated effective tax rate for the entire year. Adjusted for the sale
of Perstorp Surface Materials, the tax rate for the year-earlier period was
37%. Actual tax accounted for SEK 6 m and deferred tax for SEK 2 m of total
tax for the report period.
Financial position
TOTAL ASSETS rose by SEK 524 m compared with December 31, 2000 to SEK 8,450 m
(7,926) at the end of the period. The change in total assets was due mainly to
an increase in accounts receivable and inventories, a stronger US dollar and
the fact that deferred tax receivables are reported gross as of 2001. Pergo
accounted for most of the increase.
WORKING CAPITAL (current operating receivables and inventories less current
operating liabilities) rose by SEK 338 m during the period, mainly due to
Pergo. The working capital turnover rate declined from a multiple of 5.5 to
4.6.
INTANGIBLE FIXED ASSETS amounted to SEK 138 m (137), of which goodwill
accounted for SEK 116 m (119), which was entirely attributable to Perstorp
excluding Pergo.
PROVISIONS rose by SEK 119 m during the quarter, due mainly to the fact that
deferred tax receivables are reported gross as of 2001. In the past, the
deferred tax receivable on tax loss carryforwards, which amounted to SEK 113 m
at year-end 2000, was reduced from provisions.
NET DEBT rose during the period to SEK 2,006 m (1,509) on March 31. The
increase was mainly due to a rise in working capital requirements.
SHAREHOLDERS' EQUITY rose by SEK 128 m compared with December 31, 2000 to SEK
4,066 m (3,938) at the end of the period. Shareholders' equity was affected
positively by exchange-rate effects in an amount of SEK 111 m and by net
profit for the period of SEK 17 m.
CONTINGENT LIABILITIES rose by SEK 11 m compared with December 31, 2000, due
to an increase in sureties.
INVESTMENTS amounted to SEK 147 m, of which Perstorp excluding Pergo accounted
for SEK 88 m. Total investments included SEK 76 m for strategic investments,
meaning major investments that result in a significant increase in the value
of a particular subgroup.
FREE CASH FLOW was negative in an amount of SEK 270 m (positive: 157). The
decrease compared with the year-earlier period was attributable in part to the
high amount of working capital at the beginning of the current report period
and in part to the decrease in operating earnings compared with the
year-earlier period. Cash flow from operations was negative in an amount of
SEK 340 m (positive: 201).
Personnel
The number of Group employees at the end of the period was 3,401 (Dec 31,
2000: 3,523), of which Perstorp excluding Pergo accounted for 2,455 (Dec 31,
2000: 2,451). The change in the number of Group employees was mainly
attributable to a reduction in Pergo's work force.
Net sales Perstorp Group
SEK m Q I Q I Most recent Full year
2001 2000 12 months 2000
Perstorp Specialty Chemicals 828 700 3,176 3,048
Perstorp Chemitec 465 350 1,691 1,576
Perstorp Formox 167 148 764 745
Perstorp Composites 113 85 372 344
Other items including eliminations -148 -84 -493 -429
Perstorp excl. Pergo 1,425 1,199 5,510 5,284
Pergo 874 867 3,721 3,714
Demerged business units including -38 348 -155 231
eliminations
Group 2,261 2,414 9,076 9,229
Operating earnings Perstorp Group
SEK m Q I Q I Most recent Full year
2001 2000 12 months 2000
Perstorp chemical operations 88 120 461 493
(former Perstorp Chemicals)
Others -22 65 -13 74
Perstorp excl. Pergo 66 185 448 567
Pergo -52 56 -266 -158
Demerged business units - 2 - 2
including eliminations
Group 14 243 182 411
Operating earnings, adjusted for items affecting comparability Perstorp Group
SEK m Q I Q I Most recent Full year
2001 2000 12 months 2000
Perstorp chemical operations 88 120 444 476
(former Perstorp Chemicals)
Others -10 -10 -14 -14
Perstorp excl. Pergo 78 110 430 462
Pergo -52 56 29 137
Demerged business units - 2 - 2
including eliminations
Group 26 168 459 601
Earnings Perstorp Group
Consolidated income statement Q I Q I Most Full
recent year
SEK m 2001 2000 12 months 2000
Net sales 2,261 2,414 9,076 9,229
Cost of goods sold -1,815 -1,776 -7,119 -7,080
Gross earnings 446 638 1,957 2,149
Sales, administration and R&D costs -460 -476 -1,616 -1,632
Items affecting comparability -12 75 -277 -190
Other operating revenues and expenses 36 3 109 76
Result from participation in associated 4 3 9 8
companies
Operating earnings 14 243 182 411
Net financial items 9 -13 -50 -72
Earnings before taxes 23 230 132 339
Taxes -8 -93 -37 -122
Minority share in net profit 2 3 9 10
Earnings after taxes 17 140 104 227
Earnings per share, SEK 0.24 1.96 1.45 3.17
Earnings per share after full conversion, SEK 0.26 1.94 1.50 3.16
Consolidated Balance Sheet Perstorp Group
SEK m March 31, Dec 31, March 31,
2001 2000 2000
Intangible fixed assets 138 137 35
Tangible fixed assets 3,745 3,612 3,265
Deferred tax receivables 1) 127 31 -
Financial fixed assets 532 517 317
Inventories 1,195 1,110 1,005
Current operating receivables 2,657 2,427 2,061
Current financial assets 30 27 163
Cash and bank 26 65 179
Total assets 8,450 7,926 7,025
Restricted shareholders' equity 2) 1,936 1,783 2)
Unrestricted shareholders' equity 2) 2,130 2,155 2)
Total shareholders' equity 4,066 3,938 3,965
Minority interests 42 42 43
Provisions 1) 573 454 503
Long-term liabilities 87 58 269
Current operating liabilities 1,632 1,802 1,670
Current financial liabilities 2,050 1,632 575
Total shareholders' equity and 8,450 7,926 7,025
liabilities
1) Up to year-end 2000, the deferred tax receivable related to unutilized
tax loss carryforwards was reported among provisions as a reduction of
deferred tax liabilities.
2) The item has not been divided among restricted and unrestricted
shareholders' equity, during the comparative period.
Key Ratios Perstorp Group
Q I Q I Most Full year
recent
2001 2000 12 months 2000
Turnover rate
- total capital, times/year 1.1 1.3 1.2 1.2
- working capital, times/year 4.6 5.5 5.3 5.5
Operating margin, % 0.6 10.1 2.0 4.4
Return on
- total capital, % 3 14 3 6
- shareholders equity, % 2 15 3 6
- capital employed, % 4 20 4 8
Debt ratio, times 0.5 0.1 0.5 0.4
Equity ratio, % 49 57 49 50
Interest-coverage ratio, times 1.6 7.2 2.1 3.9
Shareholders' equity per share, SEK 57 55 57 55
Free cash flow/net sales, % -12 7 -2 3
Number of shares outstanding 71,589,720 71,584,341 71,589,720 71,589,720
Number of shares after full 74,114,341 74,114,341 74,114,341 74,114,341
conversion
Average number of shares 71,589,720 71,584,341 71,587,030 71,587,030
Cash flow analysis, summary Perstorp Group
SEK m Q I Q I Most Full
recent year
2001 2000 12 months 2000
Operating earnings 14 243 182 411
Depreciations 120 127 692 699
Change in working capital -338 -84 -814 -560
Current investments in fixed assets -71 -51 -246 -226
Adjustment for divested fixed assets 9 - 50 41
Operating cash flow -266 235 -136 365
Standard tax related to operating earnings -4 -78 -58 -132
Free cash flow -270 157 -194 233
Net financial items 9 -13 -50 -72
Reversal of standard tax 4 78 58 132
Taxes paid/change in deferred tax receivables -131 -65 -89 -23
Adjustment item, including exchange-rate 48 44 148 144
differences
Cash flow from operations -340 201 -127 414
Strategic investments in fixed assets and company -76 -34 -1,014 -972
acquisitions
Effect of divestments/dividend payments - 562 - 562
Cash flow before dividend -416 729 -1,141 4
Dividend to shareholders - - -286 -286
Net cash flow -416 729 -1,427 -282
Free cash flow per share, SEK -3.77 2.19 -2.71 3.25
Net debt at beginning of period 1) -1,509 -1,754 -433 -1,754
Net cash flow -416 729 -1,427 -282
Net debt in acquired/demerged operations - 601 - 601
Currency effects -81 -9 -146 -74
Net debt at end of period -2,006 -433 -2,006 -1,509
1. Effective the fourth quarter of 2000, a changed definition of net debt is
applied in order to adapt to the Swedish Society of Financial Analysts'
recommendations. According to the previous definition, net debt would have
amounted to SEK 1,222 m at the end and SEK 1,597 m at the beginning of
2000.
Shareholders' Equity Perstorp Group
Q1 2001 Q1
2000
SEK m Share Restricted Non-restricted Total Total 2)
capital reserves reserves
At 716 1,067 2,155 3,938 3,776
beginning
of period
Earnings 17 17 140
for the
period
Dividend
Other -156 267 111 49
changes
At end of 716 911 2,439 4,066 3,965
period
2000 Full year
SEK m Share capital Restricted Non-restricted Total
reserves reserves
At beginning 716 1,359 1,701 3,776
of period
Earnings for 227 227
the period
Dividend -286 -286
Other changes -292 513 221
At end of 716 1,067 2,155 3,938
period
2) Amounts for the comparative period have not been divided into restricted
shareholders' equity and unrestricted shareholders' equity.
Quarterly Data Perstorp Group
Consolidated income statement 1999
SEK m I II III IV
Net sales 2,549 2,792 2,544 2,467
Cost of goods sold -1,830 -1,979 -1,825 -1,723
Gross earnings 719 813 719 744
Sales, administration and -572 -605 -541 -563
R&D costs
Items affecting comparability -15 -48 -37 14
Other operating revenues and expenses -3 -8 -4 20
Results from participations in 4 7 6 1
associated companies
Operating earnings 133 159 143 216
Net financial items -14 -23 -38 -25
Earnings before taxes 119 136 105 191
Taxes -42 -57 -94 -88
Minority share in net profit 0 2 7 2
Net profit for the year 77 81 18 105
Consolidated income statement 2000 2001
SEK m I II III IV I
Net sales 2,414 2,215 2,193 2,407 2,261
Cost of goods sold -1,776 -1,627 -1,719 -1,958 -1,815
Gross earnings 638 588 474 449 446
Sales, administration and -476 -416 -364 -376 -460
R&D costs
Items affecting comparability 75 0 -45 -220 -12
Other operating revenues and 3 13 14 46 36
expenses
Results from participations in 3 3 6 -4 4
associated companies
Operating earnings 243 188 85 -105 14
Net financial items -13 -14 -19 -26 9
Earnings before taxes 230 174 66 -131 23
Taxes -93 -61 -24 56 -8
Minority share in net profit 3 4 1 2 2
Net profit for the year 140 117 43 -73 17
The Perstorp share
At the end of the period, the prices per Perstorp A and B share were SEK 102
and SEK 97.50, respectively, equal to market capitalization of SEK 7,018 m.
The corresponding prices at the end of the preceding year were SEK 75 and SEK
66, respectively, and market capitalization was SEK 4,802 m. The public
takeover offer from Sydsvenska Kemi AB has contributed to this increase by
46.1 %. The Stockholm Exchange's yield index declined by 18.1% during the
period. The Dow Jones European index for specialty chemical companies
decreased by 14.3%.
Dividend, Annual General Meeting and reporting dates
As indicated above, the Board of Directors proposes that the Annual General
Meeting approve the spin-off of all of the shares in Pergo AB to Perstorp
shareholders, in proportion to their current holdings of shares in Perstorp
AB. A cash dividend of SEK 2.00 (4.00) per share is also proposed.
The Board also proposes that the Annual General Meeting provide the Board with
renewed authorization to make decisions regarding the repurchase of Perstorp
shares corresponding to a maximum of 10% of the shares outstanding. The reason
for the repurchases is to provide the Board with an additional instrument for
use - if considered necessary - in efforts to boost shareholder value. It is
proposed that such authorization will apply until the following Annual General
Meeting.
Any such repurchases could be effected via the stock exchange or through an
offer to shareholders. It is proposed that the Board's authorization also
include permission, within the confines of Swedish legislation, to transfer
repurchased shares.
The Annual General Meeting will be held in Perstorp, Sweden, on Tuesday, June
12, 2001, at 4 p.m. The preliminary publication dates for the six-month and
nine-month interim reports are July 23 and October 23, respectively.
Perstorp, April 27, 2001
Board of Directors of Perstorp AB
This interim report is unaudited.
The recommendation issued by the Board of Directors on April 24 regarding the
public offer issued by Sydsvenska Kemi AB is hereby attached to the interim
report.
Perstorp AB's Board recommends acceptance of offer from Industri Kapital
In a press release issued on March 22, Industri Kapital announced a public
offer through Sydsvenska Kemi AB ("Sydsvenska Kemi") to the shareholders and
holders of convertible debentures of Perstorp AB ("Perstorp"). Sydsvenska Kemi
is owned by Industri Kapital's private equity fund Industri Kapital 2000.
Sydsvenska Kemi's proposed offer to holders of Series B and Series A shares
consists of the following components:
* SEK 71 per Series B share and SEK 82 per Series A share in cash; and,
* A zero-coupon debenture due 2011 issued by Sydsvenska Kemi with a
nominal value of SEK 51 per share, which, assuming a 12% required return,
equates to a present value of SEK 16.50 per share.
Shareholders in Perstorp who, at March 21, 2001, held 99 or fewer shares can
receive a pure cash payment of SEK 87.50 per B-share and SEK 98.50 per A-share
for all shares held. The Board of Directors has proposed a cash dividend of
SEK 2.00 per share for fiscal year 2000, which will be deducted from the offer
prices, if paid to other else than Sydsvenska Kemi AB.
Sydsvenska Kemi's offer is conditional upon, among other things, the demerger
of Pergo AB, whose shares Perstorp is proposing to distribute to its
shareholders, assuming that the shareholders vote in favor of such
distribution at the Annual General Meeting to be held on June 12, 2001.
Accordingly, the Perstorp shareholders will, in addition to the aforementioned
offer amounts, retain their participation in Pergo.
Sydsvenska Kemi's proposed offer to holders of Perstorp's 1996/2001
convertible debentures with a nominal amount of SEK 88.90 ("convertible
debentures") consists of SEK 23.10 in cash, in exchange for a waiver of
conversion rights. The holders of convertible debentures waiving their
conversion rights will receive, regardless of whether or not they accept
Sydsvenska Kemi's offer, the nominal value of SEK 88.90 (plus accrued
interest) from Perstorp on May 15, 2001. The consideration from Sydsvenska
Kemi together with the nominal value amounts to SEK 112.00 in cash, but those
holders accepting the offer and waiving their conversion rights will not
receive a participation in Pergo. Holders of convertible debentures should
note that the last day for conversion is April 30, 2001 and that the loan is
due for repayment on May 15, 2001.
Sydsvenska Kemi's offer is also subject to Sydsvenska Kemi receiving all
necessary regulatory approvals no later than June 25, 2001 and the offer being
accepted to such an extent that Sydsvenska Kemi becomes the owner of shares
representing more than 90% of the total number of shares and more than 90% of
the voting rights for all shares (though Sydsvenska Kemi reserves the right to
complete the offer at a lower level of acceptance). It should be noted that
Sydsvenska Kemi's offer is not conditional on financing.
AB Custos, Nordea mutual funds, SEB Fondforvaltning AB, Fourth AP-fund, SIF,
Second AP-fund, First AP-fund, Third AP-fund, Sixth AP-fund, Alecta (formerly
SPP), Vera Boning via companies, Bo Ursing, Wilhelm Wendt, Karl Lennart Wendt
och Carl Henrik Wendt who hold shares together representing around 65% of the
shares capital and around 75% of the voting rights in Perstorp have expressed
their support and intend to accept The Offer.
In order to create conditions for shareholders and holders of convertible
debentures to make a more informed decision regarding Sydsvenska Kemi's offer,
the Board of Directors of Perstorp has decided to issue the following
recommendation.
Recommendation of the Board of Directors of Perstorp
The Board of Directors has evaluated the offer from Sydsvenska Kemi and has
unanimously resolved to recommend that the shareholders and the holders of
convertible debentures accept the offer on the stated terms and conditions and
during the stated subscription period. The Board's recommendation is supported
by a fairness opinion submitted by Perstorp's financial adviser, Morgan
Stanley and a second opinion from the financial adviser Alfred Berg mainly
based on material from Morgan Stanley.
In connection with its evaluation of the offer, the Board has considered the
following:
* During recent years, Perstorp has streamlined its operations in order to
focus on activities where it has a competitive advantage and can thus
create shareholder value. The recently announced reorganisation of the
Chemicals business and the proposed spin-off of Pergo represent the
logical continuation of this strategy and the Board of Directors believes
that the separation of the consumer-oriented flooring business from the
specialty chemicals-focused chemicals business will position both entities
for growth in the future.
* Despite the good prospects for Perstorp as a specialized chemicals
company, the Board of Directors is of the opinion that the increase in
value that Perstorp can create in the foreseeable future is unlikely to
equal that being offered by Sydsvenska Kemi.
Christer Gardell, Karl Lennart Wendt and Wilhelm Wendt, members of the Board
of Directors, did not take part in the Board's decision regarding the offer
due to their participation in the negotiations between Sydsvenska Kemi AB and
major shareholders that preceded the offer.
Perstorp's Chairman, Urban Jansson, makes the following comment on the offer:
"Although Perstorp's continued evolution into a focused, highly specialized
chemicals company has positioned the company well for the future, Sydsvenska
Kemi's offer represents an opportunity to accelerate Perstorp's growth through
the combination of Perstorp's operations with those of Oxo Holding AB and
enable Perstorp and its employees to build a leading chemicals company based
in the Nordic region."
April 24, 2001
Perstorp AB
Board of Directors
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