Linamar Hungary Nyrt.

Transcription

1 Linamar Hungary Nyrt. INTERIM REPORT FOR THE SECOND QUARTER ENDED JUNE 30, 2008 Linamar Hungary Nyrt. Orosháza, 5900 Csorvási út 27.

2 To the Shareholders Linamar Hungary Nyrt. Sales for the first six month ended June 30, 2008 were HUF 15,911 million. This compares favourably to sales of HUF 14,343 million for the same period of the previous year. The sales increase of 10.9% comprised of the increase of HUF 1,303 million in agricultural equipment and general machinery segment and increase of HUF 265 million in the automotive component and precision machining segment. The profit from operations for the six month ended June 30, 2008 were HUF 1,083 million, the increase by 19.0% compared to the profit from operations of HUF 911 million a year earlier. The Company s operations were profitable in both segments, the gross profit increased by 5.4%. The net earnings for the first six month of 2008 were HUF 771 million, which is, compared to HUF 648 million in the first six month of 2007, an improvement of 19.0%. The increase is mainly related to the favourable change in operating earnings. The management of Linamar Hungary Nyrt. has ensured that all of the data and information that is necessary to properly evaluate the Company s position has been included in this interim report and that all of the data and information is true and factual. János Ivanics General Manager János Gábriel Chief Financial Officer

3 Linamar Hungary Nyrt. Notes to the Financial Statements For the six month ended June 30, 2008 and 2007 (NON AUDITED) 1. Management prepared these financial statements in accordance with generally accepted accounting principles using the historical cost basis of accounting and approximations and estimates based on professional judgement. These interim financial statements contain all adjustments that management believes are necessary for a fair presentation of the Company's financial position, results of operations and changes in cash flows. 2. The accounting policies used in preparing these interim financial statements are consistent with those used in preparing the annual financial statements. These statements should be used in conjunction with the Company's most recent annual financial statements. 3. The number of shares of the Company as at June 30, 2008 was 8,580,000 units (June 30, ,580,000). 4. Segmented Sales Information Six Months Ended June Export Sales Automotive Components and Precision Machining Europe EU Member Countries 6,146,651 5,124,952 North America 374, ,100 Other Export 212, ,805 Europe non EU Member Countries - Total Automotive Components and Precision Machining Export Sales 6,734,047 6,237,857 Agricultural Equipment and General Machinery Segment Europe EU Member Countries 3,409,181 3,077,969 North America 853,725 1,378,710 Europe non EU Member Countries 1,905, ,865 Other Export - Total Agricultural Equipment and General Machinery Export Sales 6,168,427 5,025,544 Total Export Sales 12,902,474 11,263,401 Domestic Sales Automotive Components and Precision Machining 2,611,328 2,842,850 Agricultural Equipment and General Machinery Segment 397, ,719 Total Domestic Sales 3,008,383 3,079,569 Total Sales 15,910,857 14,342,970

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 940 million from June 30, 2007, resulted from the investments in the agricultural and general machinery segment. The value of the deferred tax assets as at December was HUF 1,640 million, the updated value is HUF 1,373 as at June 30, 2008 Trade accounts receivable increased by 4.8% to HUF 5,593 million compared to June 30, The increase HUF 257 million is due to the sales increase in the first six month in the general machinery segment. Cash, bank balances and short-term deposits decreased by 76.4%, from HUF 716 million to HUF 169 million. The decrease is related to higher capital expenditures. The level of inventories was 13.0% higher at June 30, 2008 compared to the same period of previous year. Inventories increased by HUF 744 million: from HUF 5,721 million to HUF 6,465 million. The inventories at the agricultural equipment and general machinery segment increased by HUF 1,107 million, the automotive inventories decreased by HUF 364 million. The increase at the agricultural equipment and general machinery segment resulted from the increased order level. The current portion of long-term debt is zero due to the repayment of the investment loan. The Company does not have any long term loans as at June 30, The deferred tax liability on June was HUF 214 million, and HUF 40 million in 2008, which relates to timing differences, primarily relating to differences between accounting and tax depreciation. The amount of liabilities without loans increased, from which the payables increase from HUF 2,952 million to HUF 3,853 million. The increase results from the increased level of investing activities.

5 Explanation of the main changes in the profit and loss statement Sales Linamar Hungary Nyrt. s sales increased by 10.9% to HUF 15,911 million in first six months of 2008 compared to sales of HUF 14,343 million in the same period of Changes by business segment, as discussed below, can be seen under item 4 of the Notes to the Financial Statements. Segmented sales are as follows: 58.7% automotive component and precision machining and 41.3% agricultural equipment and general machinery. Automotive component and precision machining sales increased by HUF 265 million, or 2.9%, compared to the same period of 2007, while agricultural and general machinery sales increased by HUF 1,303 million, or 24.8%. The automotive component and precision machining export sales increased by HUF 496 million. The sales value to the EU countries is higher by HUF 1,021 million due to the volume increase of body and flange while the sales to other countries significantly fell back, by HUF 326 million related to lower sales volume of common rails to Turkey. The domestic automotive component and precision machining sales were HUF 2,611 million, which is a HUF 231 million decrease compared to the same period last year especially due to the lower sales of common rail parts. Agricultural and general machinery export sales increased by HUF 1,143 million to HUF 6,168 million from the same period of last year. The North American sales decreased by HUF 525 million. The sales to EU-member countries decreased by HUF 331 million which was mainly related to the lower volumes of scissor machines and building constructions. The sales to other European countries increased by HUF 1,337 million due to the launching program of snapping units to Russia. Domestic agricultural and general machinery sales increased from HUF 237 million to HUF 397 million compared to the last year due to the higher cornhead and spareparts sales. Cost of sales The cost of sales increased from 85.8% of sales to 86.5%. The unfavourable change relates to automotive component segment; the costs of the starting projects caused the increase of costs on a pro-rate basis on sales. Selling, general and administrative costs In the first six month of 2008 the selling, general and administrative costs amounted to HUF 823 million or 5.2% of sales, compared to HUF 971 million or 6.8 % of sales in the same period of The change in SG&A costs relates to the decrease in selling costs; travel and marketing costs are significantly lower in comparison to the last year s first six month.

6 Other income/expense The other income/expense balanced on June to HUF 247 million expenses, compared to the HUF 161 million expense of the previous year. Other income/expense includes the exchange differences related to the revaluation of accounts receivable and accounts payable. We realized HUF 31 million loss from this in the first six month of 2008 (2007: HUF 57 million gain). Profit from operations Profit from operations of HUF 911 million of last year increased to HUF million this year. Profit from operations as a percent of sales increased from 6.4% to 6.8%. The most significant impact upon profit from operations was the favourable change in selling and administration expenses. Exchange gain (loss) The Company experienced an exchange loss of HUF 173 million in the first six month of 2008, compared to an exchange loss of HUF 139 million in the same period of The increase is caused by the strengthening of Hungarian currency. Taxation The Taxation amount in the Profit and Loss Statement is detailed as follows in HUF thousands: Current tax (corporate tax) - - Local business tax 121, ,263 Solidarity tax 44,666 38,840 Deferred tax 148, , , ,103 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 June 30, 2008, the company determined it was appropriate to recognize a deferred tax asset in the amount of HUF 1,373 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 40 million at period ended on 30 th June Net earnings The Company s net earnings in the first six month of 2008 were HUF 771 million or 4.8% of sales an increase of 19.0% compared to the HUF 648 million, or 4.5% of sales in the first six month This change is resulted by the cost saving actions. Explanation of the main changes in the cash flow statement In the six month ended June , the purchases of fixed assets amounted to HUF 1,641 million. The cash payments during the period related to purchases of fixed assets totalled HUF 1,794 million. The main part of these investments relates to the agricultural and general machinery segment.

7 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 June 30, 2008, the Company has outstanding commitments for fixed assets under purchase orders and contracts of HUF 939 million. Major events The Company held its Annual General Meeting on April 7, Other information Organizational structure During the first six month of 2008 there were no changes in the Company s organizational structure. Senior officers During the first six month of 2008 there were no changes in the Company s senior officers. Senior management There were no changes in management. Share Option Program There are no outstanding share options under the share option program of the Company.

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

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

10 PK3. Balance Sheet (expressed in thousands of Hungarian Forints) Six Months Ended June Change % ASSETS Non-Current Assets Property, plant and equipment 9,357,198 8,422, Deferred tax asset 1,373,000 1,536,000 (10.6) Intangible assets 74,647 69, ,804,845 10,028, Current Assets Inventories 6,465,016 5,721, Trade receivables 5,124,813 4,715, Due from related parties 468, ,384 (24.5) Deductible value added tax 358, , Other current assets 225, , Cash and cash equivalents 169, ,236 (76.4) 12,811,064 12,191, Total Assets 23,615,909 22,220, SHAREHOLDERS EQUITY Share capital 858, , Capital reserve 5,026,774 5,026, Accumulated profit 12,662,876 10,769, ,547,650 16,654, LIABILITIES Non-Current Liabilities Long-term bank borrowings Deferred government grants 28,159 59,316 (52.5) Deferred tax liability 40, ,000 (81.3) 68, ,316 (75.1) Current Liabilities Current portion of long-term bank borrowings - 1,105,557 (100.0) Trade payables 3,508,272 2,818, Due to related parties 344, , Other current liabilities 1,085,920 1,136,518 (4.5) Provisions 60,974 98,879 (38.3) 5,000,100 5,292,044 (5.5) Total Liabilities 5,068,259 5,565,360 (8.9) Total Equity and Liabilities 23,615,909 22,220,

11 Statement of Changes in Shareholders Equity for the period ended June 30, 2008 and 2007 (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 10,122,147 16,006,921 Result for the period 647, ,755 Balance as at 06/30/ ,000 5,026,774 10,769,902 16,654,676 Share Capital Capital Reserve Accumulated Profit Total Shareholder s Equity Balance as at 12/31/ ,000 5,026,774 11,891,879 17,776,653 Result for the period 770, ,997 Balance as at 06/30/ ,000 5,026,774 12,662,876 18,547,650

12 PK4. Profit and Loss Statement (expressed in thousands of Hungarian Forints except per share figures) Six Months Ended June Change % Three Months Ended June Sales 15,910,857 14,342, ,874,086 7,158,858 Cost of Sales 13,757,801 12,300, ,547,777 6,202,321 Gross Profit 2,153,056 2,042, ,326, ,537 Selling expenses 320, ,719 (20.5) 181, ,521 General expenses 281, ,881 (0.4) 138, ,634 Administrative expenses 220, ,181 (22.7) 115, ,965 Other operating income/expenses 246, , ,841 47,915 Profit from Operations 1,083, , , ,502 Finance cost 1,840 1, ,436 (10,765) Profit before Tax 1,085, , , ,737 Taxation 314, , , ,211 Net Income 770, , , ,526 Earnings per Share Basic HUF 90 HUF 75 HUF 54 HUF 30 * 4% solidarity, industrial tax and deferred taxes ** Including effect of the deferred taxes. Without the deferred taxes EPS for 2007 is HUF 90 while the EPS for first six month 2008 is HUF 107

13 PK5. Cash-Flow Report (expressed in thousands of Hungarian Forints) Six Months Ended June Net Income 770, ,755 Adjustments to reconcile net income to net cash provided by operating activities: 949, ,569 Depreciation and amortization 16,364 - Impairment net 44,877 5,718 Provision for warranty and other obligations (73) 9,197 Net (gain)/loss on sale of property, plant and equipment 4,625 28,042 Net interest expense Changes in operating assets and liabilities: (Increase)/decrease in inventories (1,226,261) (836,134) (Increase)/decrease in accounts receivable (782,383) (830,110) (Increase)/decrease in due from related parties (220,066) 389,758 (Increase)/decrease in tax receivable (31,765) 59,386 (Increase)/decrease in other current assets (104,724) (67,911) Increase/(decrease) in accounts payable (189,176) (651,324) Increase/(decrease) in capex payables 126,201 (102,096) Increase/(decrease) in due to related parties 152,900 (26,100) Increase/(decrease) in capex payable due to related parties 29,312 (48,463) Deferred taxes 148, ,000 Increase/(decrease) in other current liabilities 424, ,909 Net interest expense (4,625) (28,042) Net cash used in operating activities 108,164 (74,846) Cash-flows from investing activities Purchase of property, plant and equipment and intangibles (1,640,583) (720,772) Reclassification of fixed assets - - Increase/(decrease) in capex payables (155,513) - Proceeds on sales of property, plant and equipment 1,200 4,400 Net cash used in investing activities (1,794,896) (716,372) Cash-flows from financing activities Repayment of long term loans investment loan (242,193) (417,316) Net cash provided from financing activities (242,193) (417,316) Net decrease in cash and cash equivalents (1,928,925) (1,208,534) Cash and cash equivalents at the beginning of the period 2,098,204 1,924,770 Cash and cash equivalents at the end of the period 169, ,236

14 PK6. Significant off-balance sheet items 1 Description Value (HUF million) Doosan Puma 700 L lathe 327,4 Liebher LFS500 & LC 500 embassing punch 277,3 Doosan DHC 400 lathe 130,9 Powder paint 92,4 HARLO DHL-300 friction-welding machine 47,4 Shoot blasting 35,6 Skyjack overhead crane 10,3 Inducto-heat 8,7 Desclae machine 5,3 Mo-Mechatronika Murata 3,2 Összesen: 938,5 1 Any financial liabilities of material importance in respect of financial evaluation not reflected in the balance sheet (e.g. surety, guarantees given, liabilities under lien, etc.)

15 RS1. Ownership structure, Ratio of Holdings and Votes Description of owner Total share capital Listed series 1 Year Opening Year Opening Closing at 1st January at 1st January Closing % 2 % 3 Qty % 2 % 3 Qty % 2 % 3 Qty % 2 % 3 Qty Domestic ,441, ,431,709 institution/company Foreign institution/company ,048, ,063,682 Domestic individual , ,778 Foreign individual Employees, senior , officers Treasury shares Government held owner International Development Institutions 5 Other TOTAL ,580, ,580,000 1 In case listed series equal total share capital. 2 Ownership ratio. 3 Voting rights at the issuer s General Meeting. 4 E.g.: State Privatization Holding Co. Ltd., Social Security, Municipality, 100% state-owned companies etc. 5 E.g.: EBRD, EIB, etc.

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

17 RS3/1. List and description of shareholders with more than 5% ownership (at the end of the period) with regard to the listed series. Remarks 5 Name Nationality 1 Activity 2 Quantity Interest (%) 3 Voting right(%) 3, 4 K C 6,027, strategic investor Linamar Corporation and intercompany Budapest Alapkezelő Zrt. B I 548, financial investor Linamar Corporation s headquarters are located in Guelph, Ontario, Canada, along with a significant percentage of the Company s manufacturing capacity. Linamar Corporation is a global manufacturer of precision machined components, assemblies and castings primarily for automotive industry. Any person holds more than 5% of the volume of securities deposited with a custodian. In case listed series equal total share capital. The ownership ratios and voting rights are identical. 1 Domestic (B), Foreign (K) 2 Custodian (L), Government (Á), International Development Institute (F), Institutional (I), Corporate (C), Individual (M), Employee, senior officer (D) 3 Figures should be rounded to two decimal points. 4 Voting rights at the issuer s General Meetings. 5 E.g. strategic investor, financial investor, etc. RS3/2. List and description of shareholders with more than 5% ownership (at the end of the period) with regard to the total share capital Remarks 5 Name Nationality 1 Activity 2 Quantity Interest (%) 3 Voting right(%) 3, 4 K C 6,027, strategic investor Linamar Corporation and intercompany Budapest Alapkezelő Zrt. B I 548, financial investor Any person holds more than 5% of the volume of securities deposited with a custodian. In case listed series equal total share capital. The ownership ratios and voting rights are identical. 1 Domestic (B), Foreign (K) 2 Custodian (L), Government (Á), International Development Institute (F), Institutional (I), Corporate (C), Individual (M), Employee, senior officer (D) 3 Figures should be rounded to two decimal points. 4 Voting rights at the issuer s General Meetings. 5 E.g. strategic investor, financial investor, etc.

18 TSZ1. Changes in the headcount (number of persons) employed by the End of reference period Current period opening Current period closing Company 1,663 1,677 1,888 Group n.a. n.a. n.a.

19 TSZ2. Senior officers, strategic employees Type 1 Name Position Beginning of assignment End/ termination of assignment No, of shares held IT Frank J. Hasenfratz Chairman of the Board 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 Resources Undefined - Own share property (pcs) TOTAL: - 1 Employee in strategic position (SP), Board Member (IT), Supervisory Board Member (FB)