Shareholder magazine.

Transcription

1 Shareholder magazine

2 BioMar p. 8 Fibertex Personal Care p. 10 Fibertex Nonwovens p. 12 Grene p. 14 Hydra-Grene p. 16 n Like last year, Schouw & Co. will not be printing and distributing a conventional annual report in We have prepared this shareholder magazine containing only very general financial information and management reporting to be read in conjunction with our actual annual report. The 2012 Annual Report is available in electronic format at The shareholder magazine is a collection of articles to tell you a bit about where our businesses will be going in the years ahead. We hope it will give you a good impression and understanding of our portfolio and the very attractive businesses we constantly work to develop and optimise. Key figures (DKK million) income statement and BALANCE Revenue 12,478 11,074 9,451 8,440 9,821 Operating profit before depreciations (EBITDA) 1, EBITDA margin 9.3% 8.7% 8.0% 7.0% 7.7% Operating profit (EBIT) EBIT-margin 6.2% 5.8% 3.9% 2.3% 1.3% Associates etc Fair value adjustments of financial investments Other net financials Profit/(loss) before tax Tax on the profit/(loss) for the year Profit from continuing operations Profit for the year from discontinued operations Profit/(loss) for the year Total equity 4,627 4,230 4,395 4,753 4,635 Net interest-bearing debt (NIBD) 2,023 2,745 2,166 2,281 2,996 Total assets 10,381 9,901 8,900 9,659 10,153 The financial ratios This publication is a translation of the Danish shareholder magazine. The original Danish text shall be controlling for all purposes, and in cases of discrepancy, the Danish wording shall be applicable. Average number of employees 2,873 2,688 3,166 3,334 3,743 Return on invested capital (ROIC) 15.2% 14.1% 9.8% 5.8% 7.3% NIBD/EBITDA Dividend per share , Share price at year end Net asset value per share Price/net asset value Martin has been divested and has therefore been reclassified from a consolidated business to discontinued operations. The comparative figures for 2011 in the income statement have been restated accordingly, whereas compoarative figures for balance sheet items are not restated. 2

3 Best operating profit ever Schouw & Co. had a very good year in Several times during the year, we were quite surprised by how well our businesses were performing, returning in 2012 the best operating profit in our company s 135 year history. We are very proud of this achievement. Over the past few years, we have made a dedicated effort to help each of our businesses strengthen their market position and grow both their top and bottom lines. The highly satisfactory performance we saw in 2012 is a result of our persistent commitment to exercising active ownership with a continual focus on profitable growth, the efficient use of capital and priming each company s strategic platform for the future. Fundamentally, as the owner of our businesses, we are in for the very long term, but now and again the time comes to make changes to our portfolio. If an attractive buying opportunity comes our way, we make use of it, and we also acknowledge and accept it if one of our companies might have better opportunities to develop under someone else s ownership. Late in 2012, we sold Martin Professional to Harman of the USA, a global leader in professional audio equipment. Martin has been under Schouw & Co. s ownership since 1999 and has certainly had its ups and downs during that time. The economic crisis affected Martin more than most, but after an extensive realignment of its business model and with a strong commitment from management and staff and substantial investments in innovation and product development, the company has now emerged with its strongest platform ever. Its successful transformation together with the potential synergies in a comprehensive value proposition combining audio, light and video was one of the things that convinced Harman to invest so much in Martin. We believe that Martin will have good opportunities to continue growing and evolving under their new ownership. Given the current prospects for 2013, it looks as though we have our work cut out for us if we are to match our excellent performance of Our businesses are all strategically well positioned to tackle the challenges that may arise, and we are prepared to act swiftly and firmly if things do not progress as we expect. Schouw & Co. has the financial muscle and the commitment to make the best decisions for the long term. Jens Bjerg Sørensen, President Aarhus, March 6,

4 A historically good year Financial performance The Schouw & Co. Group had a historically good year in 2012, with both revenue and earnings fully meeting expectations. The most recent consolidated guidance for FY 2012 revenue of just over DKK 13 billion and EBIT in the DKK million range was inclusive of Martin Professional. Martin was a member of the Group for the entire year, but because on December 19, 2012, we agreed to sell the company, Martin is not recognised in our consolidated revenue and EBIT in the income statement, but is instead stated as a separate line item under discontinued operations. The companies of the Schouw & Co. Group reported revenue of DKK 13,410 million in As Martin s revenue of DKK 932 million is recognised separately, the Group s consolidated revenue amounted to DKK 12,478 million. The strong improvement relative to the comparative 2011 revenue of DKK 11,074 million was mainly provided by BioMar and the two Fibertex businesses, but the rest of the portfolio businesses also reported improvements. The Group s businesses reported aggregate EBIT of DKK 824 million for Deducting Martin s EBIT of DKK 52 million less costs relating to the divestment from this figure leaves a consolidated EBIT for the year of DKK 772 million. All portfolio businesses contributed to the improvement relative to the comparative EBIT for 2011 of DKK 644 million, with the exception of Hydra-Grene and Xergi, both reporting EBIT in line with the year before. Based on unchanged financial expense and substantial improvements in value adjustment of financial investments and profit from associated undertakings, the consolidated profit before tax improved to DKK 613 million in 2012 from a DKK 24 million loss in Revenue growth 13% EBIT growth 20% Net interestbearing debt/ EBITDA 1.7x Dividend up by DKK 1 per share DKK 5 EBIT EBIT Revenue Revenue forecast actual forecast actual DKKm BioMar c. 9,000 8,227 Fibertex Personal Care c. 1,600 1,459 Fibertex Nonwovens c Grene c. 1,400 1,353 Hydra-Grene c Others (incl. eliminations) c Total c. 13,500 12,478 4

5 Group developments The most significant event of the year was the sale of Martin Professional to US corporation Harman International Industries. Signed on December 19, 2012, the deal was valued at about DKK 917 million. The transaction was subject to regulatory approval, which was subsequently given, and the deal was finalised at the end of February In other events, several of our portfolio companies expanded their business activities during the year. In July, BioMar officially opened a new factory in Costa Rica, and production from the site was gradually increased over the second half of the year. Fibertex Personal Care expanded production during the year at its newest production line in Malaysia. The company also started up work to further expand its facility in Malaysia, which will increase capacity by about 30% in Fibertex Nonwovens acquired the majority shareholding in French nonwovens manufacturer Tharreau Industries in 2011 and bought the rest of the shares in 2012, before delisting the company. Effective at the beginning of 2012, the company changed its name to Fibertex Nonwovens S.A. and is now wholly owned by Fibertex Nonwovens. Grene completed a demerger of its Polish organisation into two units: one to run the wholesale operations, mirroring the Grene operations in other countries, the other to operate Grene s many retail outlets spread across Poland. Grene is also expanding its warehouse facilities in Poland and is working on a major expansion of its warehouse facilities in Denmark. After the end of the financial year, the Group divested its holding of 1,000,000 shares in Lerøy Seafood Group for cash proceeds of DKK 145 million. The shares were originally acquired in connection with the sale of BioMar s subsidiary Sjøtroll Havbruk in the autumn of Outlook Our portfolio companies generally had a successful year in 2012, and the substantial revenue improvement, combined with a moderate change in costs, produced good financial results. Expectations for 2013 are generally more modest, but we expect to continue a strong performance on the consolidated level. Most of our portfolio companies expect a revenue improvement in This is particularly true of BioMar, whose revenue is expected to be markedly affected by an increase in raw materials prices, and of Fibertex Personal Care, as increased business activity is expected to drive up revenue. The other businesses also expect to increase their revenue, with the exception of Hydra-Grene, which is budgeting for slightly less revenue than in In terms of EBIT, BioMar has lowered its expectations relative to 2012 due to a more competitive market. Grene and Hydra-Grene also expects a slightly lower performance, whereas the remaining companies project EBIT to be in line with or better than Overall, Schouw & Co. expects to generate consolidated revenue in the vicinity of DKK 13.5 billion in Revenue may change quite substantially due to changes in raw materials prices, without necessarily having any effect on earnings. Schouw & Co. applies a profit forecast range for each individual business, and aggregating these ranges indicates consolidated EBIT guidance for 2013 within the range of DKK million. As in previous years, earnings are expected to be unevenly distributed over the year and to be lowest in the first quarter and highest in the third quarter of the year. The profit for the year will be lifted by the gain from the sale of Martin, but this gain is not included in consolidated EBIT. We expect to provide a more detailed breakdown of the gain in the Q interim report. Dividend The Board of Directors recommend to the Annual General Meeting that the dividend for 2012 be raised by 25% to DKK 5 per share, for total dividend payments of DKK 128 million, equal to 3.4% of the market capitalisation at December 31,

6 A timely divestment Schouw & Co. s business concept consists of two main components: putting together a portfolio of businesses and developing the businesses in the portfolio. Developing the businesses in our portfolio is a continual process, and changes to the portfolio may be infrequent. The Best Owner philosophy We apply what we call our Best Owner philosophy when putting together our portfolio of businesses. Schouw & Co. is the best owner when we can strategically develop a company and ensure it has a business model that can bring out the company s long-term potential. We are the best owner if we can develop and transform the company through active ownership. We can also be the best owner if having that role is a long-term prerequisite for obtaining maximum value in a divestment of the company. When we add a new business to our portfolio, we always think long-term investment and never have a pre-planned exit date. There may be situations in which Schouw & Co. may no longer be the best owner for a portfolio company, for example, if structural changes to the value chain causes a change to the company s strategic platform or if other players could generate substantial industrial synergies and a much stronger valuation. Divesting Martin Professional Late in 2012 we announced the divestment of Martin Professional to US-based Harman International Industries. The rationale for the sale was that Harman would be in a better position to grow and develop Martin on a long-term horizon. As the world s leading manufacturer of professional audio equipment Harman saw a good opportunity to capitalise on its strong position in both mature markets and growth markets and provide integrated audio, lighting and video solutions. The total value of the transaction was about DKK 917 million, which we found very attractive. Still, a sale of Martin would not have been possible without our years of believing in the company s business model, its employees and its potential. During the time Martin was in our portfolio, we invested substantial amounts in futureproofing products and services, and even in 2009, when Martin incurred an EBIT loss of DKK 200 million, we made it a priority to spend some DKK 50 million on product development. Impressive developments Combined with a large number of other projects, Martin s persistent focus on technology innovation means that it now has the strongest LED-based product portfolio in the industry. Recent years exciting product launches paved the way for a 9% revenue increase to DKK 932 million in That is a very impressive performance in an industry still reeling from the effects of the global economic crisis. Martin s EBIT improved from a modest DKK 2 million in 2011 to DKK 55 million in 2012, and is thus at the top end of Martin s guidance range, which the company, in fact, raised several times during This highly satisfactory performance was driven especially by Martin s new products, mainly the MAC Aura and the MAC Viper. 6

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9 BioMar Global growth in fish farming BioMar is the world s third-largest manufacturer of quality feed for the industrialised fish farming industry. The company produces feed for more than 25 different species ranging from coldwater species such as salmon and trout to Mediterranean and tropical species such as sea bass, sea bream and tilapia. Fish is the world s superfood The surging global population presents a number of nutritional challenges and fish is part of the solution. Wild fish stocks in the oceans are a limited resource, but fish farming offers a sustainable alternative with huge growth potential. Over the past few decades, fish farming on a global scale has become a billion-dollar industry, and Norway alone produces about one million tonnes of salmon each year. Fish farming is a highly efficient means of food production. Fish use almost all of their energy to grow, so a very large proportion of the feed goes directly to growth. Feed for 25 different species BioMar produces annually almost one million tonnes of fish feed a year at its factories in Norway, Chile, Denmark, Scotland, France, Spain, Greece and Costa Rica. Although species-specific, all fish feed is based on the same set of basic principles, one of the most important of which is sustainability. More than 75% of BioMar s current production is salmon feed. BioMar is known and renowned for its highstandard quality feed, delivering food safety based on key factors such as traceability. Constantly optimising feed recipes and sourcing the right raw materials are key competitive parameters, and BioMar has invested heavily in recent years to build a global R&D organisation. R&D is a strategic focus area for BioMar because research can also be a major factor in developing feed types for species that currently do not form part of the company s feed range. In 2012, BioMar and a business partner built a factory in Costa Rica to produce feed for tilapia, one of the world s most predominant fish farming species. The production in Costa Rica represents only a relatively small part of BioMar s overall output. The factory was fully operational by the end of Also in Costa Rica, BioMar recently opened a tilapia research facility for testing feed under controlled conditions. The facility is the only one of its kind in Central America and expected to improve product development even more for BioMar. Focus on limited resources As the production of fish feed is a relative energyintensive process, BioMar regularly runs projects intended to minimise energy consumption. In fact, reducing its consumption of limited resources is an important objective for BioMar, whose production units filter wastewater and reduce emissions to air to reduce odour, and are also increasingly using heat recovery systems. Some of the raw materials in fish feed are in limited supply or relatively expensive, and BioMar is always looking for alternatives to such raw materials to gain a competitive edge, both for BioMar and the company s customers. Strong prospects for continuing growth Fish farming is undergoing strong growth globally, and the market is expected to grow by an estimated 5-6% per year. It takes up to three years to produce a salmon, and fish farmers release of fry depends partly on salmon prices. Although this may cause fluctuations in supply and demand, the market for fish feed is generally much less cyclical than the fish farming market, because there is no correlation between the price of fish feed and the price of fish. Schouw & Co. helps BioMar pursue a growth strategy that inherently involves continual expansion and investment, and whose main focus is profitable long-term growth. Torben Svejgård, CEO, BioMar DKK million Revenue 8,227 7,269 Operating profit (EBIT) EBIT margin 5.3% 5.0% Profit before tax Average number of employees Total assets 4,686 4,061 Equity 1,777 1,569 Net interest-bearing debt ROIC 22.8% 22.1% Revenue (DKKm) 5,321 4,854 5,419 7,269 8,227 9

10 Fibertex Personal Care Global growth in hygiene products Mikael Staal Axelsen, CEO, Fibertex Personal Care 1, ,237 1,314 Revenue (DKKm) 1, Fibertex Personal Care is one of the world s largest manufacturers of spunbond/spunmelt nonwoven fabrics for the personal care industry. The company s products are key components in nappies, sanitary towels and incontinence products. An indispensable material Fibertex Personal Care produces non-woven textiles from polypropylene, an oil-based polymer. Manufacturing nonwovens is an integrated process in which a plastic granulate is extruded into a thin film on a high-speed belt. The material is not absorbent, but its very soft surface and structure gives it a pleasant skin feel. The textiles are supplied as semi-manufactures in large rolls and processed by the personal care industry into nappies and sanitary towels, among other things. A lorry carrying 12 tonnes of nonwoven material leaves the factory every hour, 24 hours a day, 365 days a year. Every two hours, a fully loaded lorry brings new raw materials to the factory. The production process is relatively energyintensive, so Fibertex Personal Care always has an eye out for ways to save energy at its facilities in Denmark and Malaysia. Another major focus is product development and the possibilities of developing thinner products and thereby reducing the consumption of polypropylene. The production process is applied all over the world and as such is not unique. Fibertex Personal Care s core competencies lie in the ability to produce a highly uniform and pure product, in working with customers to develop new and improved products, and in providing dynamic service that is second to none. These are qualities Fibertex Personal Care has developed to the point of perfection. World s largest companies in its customer base Fibertex Personal Care has some of the world s largest companies in its customer base. One of them is Procter & Gamble, the maker of Pampers nappies and Always sanitary towels. Procter & Gamble has about 80,000 suppliers worldwide, and every year fewer than one in a thousand of them receive the company s Excellence Award. Fibertex Personal Care has won that award in four of the past five years. Fibertex Personal Care is a supplier to virtually all of the major nappy manufacturers, including SCA (Libero and Libresse) and Kimberly Clark (Huggies). Increasing the output capacity Another important parameter is the ability to time investments correctly. Setting up a new production line costs about DKK 300 million, and the company has regularly invested in expanding the output capacity, most recently in 2012, when work on a fourth production line began. This will bring Fibertex Personal Care s annual production capacity in Malaysia to about 70,000 tonnes in addition to its capacity in Denmark of about 45,000 tonnes per year. Combined, that is about 8 9% of the global consumption of spunbond material. Surging demand The extra output capacity has already been sold to customers in South East Asia, as hygiene levels are improving dramatically in that region. Market penetration for disposable nappies is close to 100% in the USA and Europe, whereas it is quite low in several parts of Asia. For example, the average Indian or Chinese family with small children does not traditionally use disposable nappies, so there is a huge growth potential. With better hygiene comes better health, so through its products Fibertex Personal Care is helping to support a very positive trend. A growing market, a streamlined organisation and lean and trimmed production plants mean that Fibertex Personal Care is well equipped to continue delivering top and bottom line results. DKK million Revenue 1, Operating profit (EBIT) EBIT margin 10.7% 11.3% Profit before tax Average number of employees Total assets 1,567 1,555 Equity Net interest-bearing debt ROIC 13.4% 13.7% 10

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13 New material with enormous potential Fibertex Nonwovens Fibertex Nonwovens is Europe s leading manufacturer of nonwovens for industrial applications. Its production facilities are in Denmark, the Czech Republic, France and South Africa, and it is a major supplier of nonwovens for the automotive, building and furniture industries. Fibertex Nonwovens also produces a number of value-added products that initially meet a niche demand but which in future may be used in large-scale projects all over the world. A unique material Nonwoven fabrics are a very light material but also a very strong one with a number of unique properties added in the production process. By combining different raw materials such as polypropylene, polyester, cotton or viscose in production technologies such as fiber spinning, polymer extrusion, carding, needling and applying various surface treatments, Fibertex Nonwovens manufactures various textiles with unlimited possible uses. Nonwovens are used as geotextile products in the building industry, as a protective lining for concrete structures, as breather-cloth in the composite industry, as carpet backing, as cover products for the furniture and mattress industry, in clothing and insulation, and for noise reduction in the auto industry. In fact, there is no end to the uses of this material. Strategic investment in value-added products The economic crisis has dealt a hard blow to many industry sectors. However, a strong commitment to developing new innovative value-added products to complement the traditional and highly competitive high-volume products is a launching pad for new growth. As unique products often spread DKK million Revenue Operating profit (EBIT) 28-7 EBIT margin 3.1% -1.0% Profit before tax 3-26 Average number of employees Total assets 986 1,058 Equity Net interest-bearing debt ROIC 3.8% neg. across the globe, this also makes Fibertex Nonwovens attractive to industries based outside Europe. The company s new strategy is expected to bring new growth and earnings in coming years. Growing market share in the auto industry In 2011, Fibertex Nonwovens acquired a majority interest in a competing French company and in 2012 bought the rest of the shares. The acquisition and the synergies achieved have provided a remarkable lift to Fibertex Nonwovens, especially in the automotive industry, where the French company is strongly positioned. There is still a great deal of growth potential for nonwovens in the auto industry. On average, every new car manufactured in Europe contains about 30 m2 of nonwoven fabrics. Nonwovens are used inside the car and for heat insulation and soundproofing of engine compartments and wheel housings. Nonwovens are also increasingly used in car manufacturing outside Europe, and especially North American carmakers are taking inspiration for their car production from Europe. Responsible production using the Danish model Fibertex Nonwovens aims to retain its position as the leading and most innovative player in the industry while also taking a highly responsible approach to the environment, its customers and its employees. The company has implemented Denmark s high environmental, safety and energy efficiency standards at each of its state-of-the-art production facilities, and the Danish management model with a high degree of autonomy and a flat management structure has earned Fibertex Nonwovens a great deal of respect among leading industry specialists. For example, Fibertex Nonwovens manufactures nonwovens in South Africa in a close partnership with IFU and also supports several initiatives to develop the local economy, such as Black Economic Empowerment. Fibertex Nonwovens will be tackling the challenges of Europe s stagnant economy in the next few years, but its long-term strategy, stronger market position and massive investments make the future look bright for Europe s nonwovens leader. Jørgen Bech Madsen, CEO, Fibertex Nonwovens Revenue (DKKm) 13

14 Grene Preferred supplier to agriculture Carsten Thygesen, CEO, Grene 1,307 1,140 1,237 1,307 1, Revenue (DKKm) Over the past 20 years, Grene has evolved into a market-leading trading and logistics company and specialist supplier to agriculture and industry in the Nordics, Poland, the Baltic States and Russia. In recent years, the company has successfully accelerated growth through a carefully timed strategy. The Nordics: Serving agriculture and industry Carrying an inventory of about 200,000 items, Grene supplies virtually anything to agricultural customers throughout the Nordic region. The company serves its customer base, consisting mainly of tractor and machinery dealerships, from central warehouses in Denmark and Sweden, offering nextday delivery through retailers or direct to the farm. Grene generates about 20% of its sales from industrial customers, including the wind turbine industry which is one of Grene s specialist fields. All products in Grene s advanced webshop are available for order 24 hours a day all year round. As much as 90% of orders are received online, and with the company s state-of-the-art automated warehouses, very little manpower is needed to make a sale. With the machines Grene provides becoming more and more complex, there is a growing need to offer consultation over the telephone. Catering to this demand gives Grene a strong competitive edge. Both agriculture and industry are stagnant in Denmark and, to some extent, in the other Nordic countries as well. However, Grene s revenue is not directly affected by the customers cyclical financial situation because a side-effect to the economic crisis is a growing demand for spare parts. Many farmers defer investments in new machinery and equipment when facing financial difficulties, DKK million Revenue 1,353 1,307 Operating profit (EBIT) EBIT margin 6.9% 6.6% Profit before tax Average number of employees Total assets 1, Equity Net interest-bearing debt ROIC 12.8% 12.5% so they need to have their equipment repaired and maintained, and that is good for Grene s business. In addition, machinery dealerships and businesses in industry have cut back considerably on their inventories in recent years in order to reduce their working capital. This also means extra revenue for Grene, because customers know that they can get what they need from one day to the next. Agriculture expanding in eastern Europe While the agricultural industry is going stagnant in the Nordic countries, it is growing in eastern and central Europe, and the potential there is huge. Denmark has 2.7 M hectares of agricultural land, whereas Poland has 13 M and Russia as much as 123 M hectares of cultivated land. Grene is a market-leading agricultural wholesaler in Poland, operating 90 retail outlets and also supplying other dealers as well. In 2012, the company launched a franchise concept that has so far grown to 12 stores carrying the Grene assortment and operating under the Grene name. Grene also operates through a partnership in Russia and is currently developing a promising business platform there. Overall, Grene s strategy is to expand to countries where both market growth and a good brand indicate a number of opportunities for growth. Horizontal expansion In the years ahead, growth will derive not only from agriculture, but also from associated sectors. Over the past three or four years, Grene has been preparing to expand into the park and gardens business, a large segment in markets where Grene is already present. Other segments are also open for Grene to apply its successful business model and strong brand through horizontal expansion. Grene plans to continue its expansion strategy in 2013, but reducing costs will still be a priority. The challenge is to accelerate and hit the brakes at the right time, so growth stays under control and the timing stays right. Current market positions need to be strengthened and expanded and new markets cultivated, and with recent years investments in logistics, infrastructure and IT, Grene stands well prepared to execute its expansion plans. 14

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17 Hydra-Grene Strong know-how and good prospects Hydra-Grene is the leader in the Danish hydraulics market and a global leader in hydraulics solutions for the wind turbine industry. The company carries more than 40,000 hydraulic components and designs and manufactures advanced hydraulic solutions for the industrial OEM and aftermarket. Hydra-Grene is known and recognised for its exceptional know-how and is becoming the strategic partner of choice to more and more customers. World-class hydraulics Hydraulics is a crucial and essential part of many companies production apparatus. Without hydraulics, the oil industry, the food industry, the building industry, the marine sector, the energy sector and a good many other sectors would not be the same, and mobile units like cranes, lifts, lifting and digging equipment would not exist at all. In other words, hydraulics is what makes societies tick all over the world, and the principle behind it liquid under pressure is relatively simple. On the other hand, hydraulics is also used for a great many sophisticated high-tech applications, and this is where Hydra-Grene really shows its true strength. Trading, production and know-how As a trading company, Hydra-Grene is the leader in Denmark when it comes to carrying hydraulic components such as hoses, fittings, filters or valves. More and more, standard products and re-orders are sold on the company s online webportal, whereas other types of product require advice and support. That same know-how is applied when Hydra- Grene designs advanced hydraulic platforms for its customers. Hydra-Grene generates much of its revenue from hydraulic blocks, and the company owes much of its success to its ability to add value to all parts of a customer s production value chain. While the economic crisis has caused industry activity to decline, it has been an opportunity for Hydra-Grene to take on a more important role. Business and industry have generally cut back considerably on their inventories due to the crisis, which means many companies increasingly rely on specialist wholesalers that master the art of inventory management, logistics and providing service. Winds softening Hydra-Grene generates almost half of its revenue from the global wind turbine industry, and being present in Europe, North America, China and India, it enjoys a unique position. The company has been involved in the Danish wind turbine industry from the very beginning, working with leading global manufacturers to design, develop and manufacture hydraulic solutions for turbine gearbox, brake, cooling and lubricating systems. Most people are aware of the challenges the wind turbine industry faces, and on the near-term horizon, Hydra-Grene will feel the negative effects of weak activity in this sector. But there is an offsetting factor even to this prospect: manufacturers are increasingly outsourcing parts of their business to strategic partners, and a growing number of wind turbines the world over require maintenance and renovation. This is good for Hydra-Grene, both in the short and long term, but a general recovery in the global wind turbine industry would naturally have a highly favourable effect. Erik Lodberg, CEO, Hydra-Grene DKK million Revenue Operating profit (EBIT) EBIT margin 12.7% 14.9% Profit before tax Average number of employees Total assets Equity Net interest-bearing debt ROIC 21.3% 24.1% Continued good prospects During 2012, Hydra-Grene negotiated with Sauer- Danfoss to become their main distributor in Denmark, and the two companies have concluded a strategic partnership agreement covering the Danish market. That will give Hydra-Grene an even stronger position in hydraulics solutions for mobile units. Although its customers are experiencing weak growth, Hydra-Grene has managed to continue to deliver decent financial results, and the company clearly expects to continue this performance in Revenue (DKKm) 17

18 Other investments Xergi Schouw & Co. has been involved in the biogas field since 2001, and today co-owns Xergi on a fifty/fifty basis together with Hedeselskabet. Xergi is one of Europe s leading suppliers of turnkey biogas systems. Its core business consists of technology development, systems design and installation, as well as turnkey system operation and maintenance. Biogas has excellent prospects as an alternative source of energy that could in future help solve the ever-growing need for energy, while also providing environmental solutions. Xergi generated revenue of DKK 118 million in 2012 and expects to increase revenue by a significant margin in Incuba Schouw & Co. has been part owener at Incuba since 2000 and currently has a 49% interest in the company. Incuba is a co-owner of the Incuba Science Park, which runs three science parks in Aarhus, Denmark and is currently building a fourth one: Navitas Park in the Port of Aarhus. In addition, Incuba has ownership interests in Østjysk Innovation, a government-approved innovation environment, and Scandinavian Micro Biodevices, a company developing and producing point-of-care veterinary diagnostic products. Financial investments Schouw & Co. has been involved in the wind turbine industry since 1994, originally as the main shareholder of what was then Micon, which became NEG Micon in 1997 and a part of Vestas in The wind turbine industry has experienced some difficult challenges in recent years, but the long-term prospects for renewable energy and Vestas position as the world s leading manufacturer of wind turbines offer some attractive perspectives. Schouw & Co. holds 4 million shares in Vestas. The stake had a market value of DKK 127 million at December 31, The holding of Vestas shares is not a strategic stake. Schouw & Co. also had one million shares in Lerøy Seafood Group at December 31, A sale of that stake in January 2013 produced cash proceeds of DKK 145 million. Property In addition to the operational properties of the portfolio companies, the parent company Schouw & Co. owns four properties directly. At December 31, 2012 two of these were the parent company s head office in Aarhus and a factory site in Lystrup outside Aarhus, which is currently leased to Schouw & Co. s former portfolio company Elopak Denmark. In connection with the divestment of Martin, Schouw & Co. took over two properties in Frederikshavn in February 2013, both of which are still being used by Martin. Financial Calender April 11, 2013 May 2, 2013 August 15, 2013 November 7, 2013 Annual general meeting Release of the Q interim report Release of the H interim report Release of the Q interim report 18

19 Jørn Ankær Thomsen, Chairman Jens Bjerg Sørensen, President Board of Directors Jørn Ankær Thomsen, Chairman Erling Eskildsen, Deputy Chairman Niels Kristian Agner Erling Lindahl Kjeld Johannesen Jørgen Wisborg Agnete Raaschou-Nielsen Executive Management Jens Bjerg Sørensen, President Peter Kjær, Vice President Schouw & Co. s web site www. schouw.dk contains press releases and company announcements, as well as more detailed information on the Group. Interested parties are also invited to subscribe to the company s news service. Schouw & Co. shares Schouw & Co. s 25.5 million issued shares are listed on NASDAQ OMX Copenhagen under the short name SCHO. At the end of 2012, the company held 1,938,363 treasury shares, equal to 7.60% of the share capital. The market value of the holding of treasury shares was DKK 289 million at December 31, The portfolio of treasury shares is recognised at DKK 0. The official price of Schouw & Co. shares at December 31, 2012 was DKK (all trades), and the total market capitalisation of the company s listed share capital amounted to DKK 3,800 million. Adjusted for the holding of treasury shares, the company s market capitalisation was DKK 3,511 million. Shareholder structure Schouw & Co. has some 7,600 registered shareholders. Schouw & Co. has at the end of 2012 registered the following shareholders as holding 5% or more of the share capital: Givesco A/S 28.09% Direktør Svend Hornsylds Legat 14.82% Aktieselskabet Schouw & Co. 7.60% Pursuant to the provisions of Section 31 of the Danish Securities Trading Act, the three shareholders Givesco A/S, Direktør Svend Hornsylds Legat and Erling Eskildsen, who holds 3.94%, are considered as a single shareholder of Schouw & Co. The three shareholders hold in aggregate 46.85% of the shares in the company. Share price in DKK Share price increase in % Published in March 2013 by Aktieselskabet Schouw & Co. Photos: Tybjerg tekst & foto, Design and production: Datagraf, jan 12 feb 12 mar 12 apr 12 may 12 jun 12 jul 12 aug 12 sep 12 oct 12 nov 12 dec 12 jan 13 feb 13 19

20 Aktieselskabet Schouw & Co. Chr. Filtenborgs Plads 1 DK-8000 Aarhus C T schouw@schouw.dk