Laundry Systems Group

Transcription

LAUNDRY SYSTEMS GROUP
ANNUAL REPORT 2001
Annual report 2001
The Banking and Finance Commission has authorized LSG on April 9, 2002 to use the present annual report as reference
document each time it solicits funds from the public in the context of title II of the Royal Decree n° 185 of July 9, 1935 by means
of the procedure of dissociated information, and such until publication of its next annual report.
In the context of this procedure, a transaction note needs to be attached to the annual report. The annual report together with the
transaction note constitute the issue prospectus in the sense of article 29 of the Royal Decree n° 185 of July 9, 1935.
In accordance with article 29ter, §1, par. 1, of the Royal Decree n° 185 of July 9, 1935, this prospectus must be submitted to the
Banking and Finance Commission.
Only the Dutch version of the annual report has legal force, the English version representing a translation of the original in Dutch.
The correspondence between the different language versions has been verified by LSG under its own responsibility.
Message to the shareholders
The year 2001 was the year of integration and implementation of the measures
that were taken in the last quarter of 2000. After a period of expansion and a
merge in 2000 our objective was to consolidate during 2001.
The overall recession became visible in March 2001 which encouraged us to
control cost as well as implementing a strict working capital program which has
had considerably success already.
The results of 2001 are not satisfactory, however, we showed that we were
able to react quickly to the new market conditions and we are able to manage
our cash adequately. The main factors for our decreased operating results have
been the drop in sales, low sales of coin machines in the US, poor contribution
margin on dryers as well as an underabsorption of our sales and marketing cost
in our new sales and service companies.
We closed our plant in Cincinnati and concentrated our US Washer Extractor
production in our new plant in Florida. All US sales operations were transferred
to LSG North America who is now responsible for both heavy-duty and
commercial sales and service in the important US market.
The construction of our new heavy-duty plant in Germany, as a result of our
lease of the old Senking building being terminated, was finished in time and
according to the budget. The new plant is housing our Business Unit Washroom
Technology as well as our Sales and Service Center for the German market.
Our new Chief Financial Officer took office in September 2001, thus
streamlining of our finances, treasury and monthly reporting is under way
resulting in improved financial controls, which will enhance our reactivity further.
3 ANNUAL REPORT 2001
We expect the overall trends to more tourism and travel to recover during 2002,
which will support a higher demand for equipment and services during 2003.
The healthcare market is not affected by the recession and we expect the
healthcare market segment to grow in the developing countries. The
concentration of our heavy-duty customer base will continue, however,
with our leading market position and international presence we expect to
sustain our market share.
For the year 2002, we will maintain our strategy of consolidation. Minor
adaptations to the plan can be anticipated as we adapt to market conditions.
We expect to improve our operating result and maintain our market share.
We are well positioned with strong brands, market leadership and a leaner cost
structure than ever.
On behalf of the Board of Directors, we would like to thank our
shareholders and other stakeholders for their confidence during a
challenging year.
Jesper M. Jensen
Jan P. Brantjes
Chief Executive Officer
Chairman of the Board
ANNUAL REPORT 2001 4
LEGAL STRUCTURE
Commercial Laundry Division
LSG South-Africa Pty.
IPSO-LSG
nv
WMC Holding
Heavy-Duty Laundry Division
D’Hooge-ILG nv
(South-Africa)
(Belgium)
(USA)
(Belgium)
100%
100%
100%
100%
IPSO USA
Inc.
(USA)
100%
Jensen Industrial
Jensen
Group A/S
Netherlands BV
(Denmark)
(Netherlands)
100%
100%
Jensen-Senking GmbH
Jensen Holding AG
Jensen UK Ltd.
(Germany)
(Switzerland)
(United Kingdom)
100%
100%
100%
Global Fox
Financial
Jensen Denmark A/S
(USA)
(Denmark)
100%
100%
Cissell Manufacturing
Jensen Sweden AB
Naicom Techn.
Polymark Jensen sa
Company
(Sweden)
(Denmark)
(France)
(USA)
100%
24,1%
100%
100%
Jensen AG Burgdorf
(Switzerland)
100%
Jensen USA
Inc. (USA)
100%
Jensen Asia Pte
(Singapore)
100%
Scantag Systems
(Denmark)
100%
Intermax
(Japan)
15%
Profile of the Group
Business foundation
LSG is a worldwide market leader in supplying equipment and services to the laundry industry. It is the purpose of LSG to assist coin laundries, on-premise laundries and heavy-duty laundries on a worldwide level
to economically produce their services.
Mission
"LSG will set the standards for the laundry industry as an AAA company, supplying Automation, Availability
and Assistance".
Organization
LSG is organized in three divisions : the Heavy-Duty Laundry Division (HDLD), the Commercial Laundry
Division (CLD) and LSG North America (LSG NA).
LSG NA is the US Sales and Marketing organization for both Heavy-Duty and Commercial Laundry products.
Therefore, the results of this division are split over both activities and the result of each activity is included
in the Heavy-Duty Laundry Division and the Commercial Laundry Division respectively.
Divisional sales figures :
Manufacturing
Million EUR
CLD
HDLD
2001
67.7
139.4
2000
72.1
143.9
1999 pro-forma
62.6
113
LSG has a manufacturing platform of 10 companies in 8 countries, specialized in 5 individual laundry technologies. Selected companies (e.g. Ipso USA and Jensen Netherlands) manufacture both commercial and
heavy-duty laundry equipment.
Distribution
The most important market, the US, is served through the LSG North America division for both Heavy-Duty
and Commercial Laundry products. In other markets, distribution is organized through own sales and
service companies or independent distributors. The Heavy-Duty Laundry Division realizes approximately
70% of its turnover through own sales companies, whereas in the Commercial Laundry Division, most of the
turnover is realized through independent distributors.
Competitive advantage
LSG is the only supplier in the market who can deliver a full product range of equipment and services in all
geographical markets.
Markets
LSG realizes its turnover geographically as follows :
Million EUR
Europe
North America
Em. Markets
2001
112.1
75
20
2000
115
75
26
1999 pro forma
82.1
75.9
17.6
Commercial Laundry Division
Profile
Commerial Laundry Division
Wevelgem (Bel.)
IPSO
Marketing & Sales
Wevelgem (Bel.)
Cissell
Business Unit
Commercial Finishing Equipment
Washer Extractors & Dryers
Portland (USA)
Ipso-LSG
Wevelgem (Bel.)
Cissell (Dryers)
Louisville (USA)
Coin Laundries are one of the three
major markets
Ipso USA
of the CLD Division.
Panama-City (USA)
D’Hooge
Ghent (Bel.)
The Commercial Laundry Division is based in Wevelgem (Belgium) and markets
laundry and finishing equipment for the commercial laundry, the on-premise
laundry and the dry-cleaning markets, worldwide.
The CLD is directly responsible for sales in Europe, the Middle East and Africa.
Ipso and Cissell sales in North and South America are handled by LSG NA, the
North American sales division of LSG, in order to be able to add more value to
local distributors.
For the same reason, sales in South East Asia are handled by Jensen Asia, a Sales
and Service Center of the Heavy-Duty Laundry Division of LSG.
Both transfers have been finalized during 2001 and today customers clearly
benefit from this by getting faster response times, shorter delivery terms and
better service. Today we are starting to see the results of this improved
structure. After a slow first half-year in 2001 in those regions, sales have clearly
picked up and customer satisfaction has improved.
More precisely the CLD commercializes the following products:
• Washer-Extractors with a capacity of 5.5 kg up to 125 kg, including medical
executions
• Dryers: with a capacity of 9 kg to 86 kg
• Ironers: with a working width between 1.4 m and 2.6 m
• Commercial finishing equipment (dry-cleaning equipment), being different
kinds of presses, irons and ironing boards, form finishers, vacuum spotting
boards, steam finishing boards, pant toppers, etc.
The washer-extractors and dryers are developed and produced within the CLD,
in the business unit Washer-Extractors, containing the following production
plants:
• Ipso-LSG in Wevelgem, Belgium
• Ipso USA in Panama City, Florida
• Cissell (dryer production) in Louisville, Kentucky
The ironers are produced at Jensen Netherlands, a company of the Heavy-Duty
Laundry Division.
The commercial finishing equipment is produced in the Portland site of Cissell.
Other products are sourced outside the group. These are mostly less strategic
or low volume products that complete the internal product range.
Activities 2001
2001
2000
Turnover, million EUR
67.7
72.1
EBIT, million EUR
-1.6
3.1
Investments, million EUR
0,8
2.2
Number of employees
486
544
As expected, the Commercial Laundry Division suffered from a slow start of the
year 2001, which explains the 6% decrease in turnover. This lower activity was
mainly caused by the USA and Austria, where high stock levels needed to be
reduced. By the third quarter activity picked up again and the fourth quarter
showed satisfactory turnover mainly thanks to higher activity at Ipso-LSG.
The decrease in production volume in the three production locations (excl.
D’Hooge) is the major explanation for the negative EBIT. On top of this reduced
activity, insufficient cost reductions have negatively influenced Cissell’s result in
the third quarter, when a sudden sales drop occurred. The effect of an unfavorable product mix and inventory control issues at Ipso-LSG are other major
reasons for the negative EBIT. These inventory control issues at Ipso-LSG have
now been resolved.
In all CLD production locations operational and financial improvements have
been implemented. On average, personnel was reduced by 11% or 58
people, comparing year-end figures, this is even 22% or 126 people.
Ipso 2, the rented production location of Ipso-LSG was closed and all
production was transferred to the main production halls.
The rented Cincinnati plant, producing L-Tron heavy-duty washers, was also
closed and the activity was transferred to Ipso USA in Panama City. Overhead
at Ipso USA was reduced to the minimum, making it one of the leanest
production sites of the division.
At Cissell, management has been replaced and severe measures have been
taken to reduce costs. The sales organization was transferred to LSG NA which
will lead to important synergies. The major problem remains the low
contribution margin realized on dryers. Thanks to better outsourcing, and
higher efficiency, the contribution margin on dryers will improve in 2002.
D’Hooge has joined the business unit washer-extractors and dryers of the CLD
during 2001. The rationale for this shift mainly lies in operational matters, where
more synergies exist between the D’Hooge and the other CLD companies than
between D’Hooge and the HDLD companies, since D’Hooge is also mainly
producing washer-extractors. D’Hooge figures are not yet included in the 2001
results.
The results of all these measures are not yet fully reflected in the 2001 figures,
since the implementation of these measures results in additional costs and
(limited) investments. It is expected that the positive impact on results will
materialize itself during 2002, if the sales activity remains at the actual level.
The working capital in the CLD has been reduced considerably during 2001
compensating for the EBIT decrease, and hence, avoiding liquidity problems.
On the product development side a full range of medical machines is now
available to our customers.
The new softmount washer extractor HW55 from Ipso-LSG has been released
as well. As opposed to the HF55, the previous model, this machine is fully
professional and contains most of the cost improvements that the future
product line with higher capacities will contain.
Next to that, most attention has gone to cost improvements, standardization
and the preparation of new product releases for 2002 and 2003.
On the commercial side, the transfer of sales responsibility in the US and in Asia
was finalized and a Dealer Service Site was launched for our dealer network.
This is a private website containing all service information about our machines.
Outlook 2002
The major markets remain positive about the future degree of activity and thanks
to the measures taken during 2001, an improvement of the results for 2002 is
expected.
The new HW55 softmount washer from Ipso-LSG
More synergies within the business unit washers-extractors and dryers will be
realized, which should lead to continued result improvements.
Continued attention will also go to the reduction of working capital.
Profile
Brussels (Bel.)
Sales and Service Centers
SSC - France
Polymark Jensen
Business Units
BU - Washroom Technology
SSC - UK
Jensen UK
Jensen-Senking
SSC - Asia
Jensen Asia
SSC - SA
LSG South-Africa
BU - Materials
Handling Technology
Jensen Projects
LSG
Jensen UK
SSC - Germany
Jensen-Senking
Jensen Sweden
SSC - Switzerland
Jensen AG
The Jensen booth at the Clean Show in New Orleans
BU - Finishing Technology
Jensen Denmark
Jensen Switzerland
Jensen Netherlands
BU - Jensen
Information Technology
The Heavy-Duty Laundry Division is based in Brussels (Belgium) and markets
heavy-duty laundry equipment and services to the industrial and textile industry, commercial laundries, institutional health care laundries and large onpremise hotel laundries worldwide.
The Heavy-Duty Laundry Division is directly responsible for sales in Europe, Asia
and Africa. Therefore, it relies on a worldwide web of distributors and on own
Sales & Service Centers (SSC’s) covering together all the significant mature and
emerging markets (over 50 countries worldwide). The fully owned SSC’s are
ideally located at the heart of our major markets such as France, UK, US,
Switzerland and Germany.
Sales in North America are handled by LSG-NA, the North American sales
division of LSG.
The HDLD commercializes the following products :
• Tunnel washers with 5 to 20 compartments of 25 to 90 kg each
• Extraction presses and centrifugal extractors for tunnel washers
• Dryers with a capacity from 25 to 240 kg
• Washer extractors from 90 to 545 kg
• Material handling, storage and sorting systems
• Feeding, ironing, folding and stacking equipment
• Garment finishing, conveying and sorting systems
L-TRON
• Software applications, tailor-made for heavy-duty laundries (includes,
amongst others, radio frequency identification and production planning
systems).
FUTURAIL
All the heavy-duty products are developed and produced within
the HDLD, in different business units, containing the following
production plants :
• Jensen Senking in Harsum, Germany
• Jensen Netherlands in Kerkdriel, The Netherlands
• Jensen Denmark in Rønne, Denmark
• Jensen AG in Burgdorf, Switzerland
• Jensen Futurail in Banbury, United Kingdom
• Jensen Metricon in Borås, Sweden
The washer extractors are produced in D’Hooge and Ipso USA, companies of
the Commercial Laundry Division.
Heavy-Duty customers are assisted in their laundry needs from single machines
to turnkey project engineering including feasibility studies, planning and design,
delivery and installation, training of the personnel, management and long-term
maintenance. For every project undertaken, a multidisciplinary team of skilled
professionals is gathered to analyze and provide the most meaningful solution
for each client.
JENSEN projects based in Brussels is specialized in consulting on-premise
laundries in particular hotel, hospital, industrial and cruise-ship laundries. The
projects team has completed laundry projects worldwide in cooperation with
architects, consultants, contractors, governmental organizations (Ministry of
Health) and with major hotel groups such as the Hilton, Marriott, Mövenpick,
Sheraton, Hyatt, Shangri-La and others.
Under the Heavy-Duty Laundry Division, we also operate a separate business
unit serving the confectionary textile industry, making specialized folding
equipment for finished products.
ACTIVITIES 2001
Turnover, million EUR
EBIT, million EUR
2001
2000
139.4
143.9
6.4
7.2
Investments, million EUR
9,5
2.6
Number of employees
988
1,012
During 2001, the turnover of the Heavy-Duty Laundry Division slowed down
compared to the year before, which was the general market trend.
The lower turnover, combined with provisions for bad debt and inefficiencies
as a consequence of the shifting of some products from one factory to
another, also caused the EBIT to be lower than last year.
Also during the year 2001, a new production facility for Senking in Germany was
built, housing 10.000m2 of production and 2.200m2 of offices (administration
and SSC Germany).
OUTLOOK 2002
The objective for 2002 is to consolidate the market position in all major markets,
thereby expanding the range of products and services that is offered to the
customer base.
Furthermore, the objective is to realize a bigger proportion of the turnover
through the fully owned Sales and Service Companies (SSC’s) in order to
improve profitability.
Continued attention will also go to the reduction of working capital.
LSG North America
Profile
Activity
LSG-NA is the sales and service division of the Laundry Systems Group serving
the important North American markets and some select South American
markets.
In line with LSG’s business foundation and strategies, the divisional foundation
and strategy is to provide the North American markets with the full range of
products and services available from both the HDL and CL Divisions of LSG and
complementary products from outside vendors.
The Division markets products and services to the dry cleaning market under the
Cissell brand name, the coin store market under the Ipso label, the distribution
of OPL and Heavy-Duty laundry machinery via dual branding under the Ipso and
Jensen labels and Direct Sales to large industrial and commercial laundry groups
under the Jensen label.
Operations
LSG-NA is located in Fort Mill, South Carolina, USA. Most of the support staff,
top management and the financial staff are located at this facility, while some
sales and service staff travel out of their home base.
Structure
The Division consists of the following sales & marketing and sales
support groups:
• Coin distribution sales division.
• Dry cleaning, OPL & heavy-duty distribution sales division.
• Direct sales division marketing JENSEN, METRIC, SENKING,
FUTURAIL & L-TRON products.
• Global Fox Financial.
• Textile sales division.
• Sales support and spare parts sales.
Product range
LSG-NA markets the complete product range and systems designed and
manufactured by LSG companies and supplement these products by offering
ancillary equipment from non-group vendors.
Markets
LSG-NA functions as a distributor for LSG in the North American markets and
appoints sub-distributors covering smaller geographical territories, in particular
when marketing the coin and OPL products.
Product development
The staff of LSG-NA provides pertinent market information to LSG manufacturing
centers relating to market trends, new product development by competitors
and assists the Product Development centers of both HDL and CL Divisions in
planning and prioritizing new product development.
Activities 2001
Sales
2001 was the year of consolidation of all sales activities in North America under
one organization and while this task was successfully implemented the events
of September 11 and the slowing economy resulted in a poor fourth quarter
for LSG-NA. The order backlog of the Division was sufficient, in particular in the
HDL products, to carry this Division into the new year with guarded optimism
and the new order activities in December 2001 and January 2002 firmed up the
optimism.
Outlook 2002
The customer activities in 2002 are focused on larger projects, some which
were temporarily postponed in the fourth quarter of 2001. These projects,
while large in nature require more man-hour consumption in presenting the
project proposals and are very price sensitive due to heavy competition.
The hospitality and food & beverage market sector is still flat, but the coin store
investment activity is accelerating.
The sum of all these activities indicates a healthy sales growth for the LSG
companies for 2002, however skewed to areas of lower profitability for
LSG-NA.
Corporate Governance considerations
Composition of the Board of Directors
According to the articles of association the Board of Directors must be composed of at least three and no more than eleven members.
The articles do not contain any specific provisions for the composition of the Board of Directors, the age of the directors or the terms
on which people can become director.
However, in the spirit of Corporate Governance an effort is being made within the Board of Directors to achieve a balance in the
profile of the different members (executive members versus independent directors and representatives of shareholders; industrial
versus financial background). Furthermore, in the context of the merger with Jensen, agreements have been concluded regarding the
composition of the Board up to the Annual General Meeting of May 2003.
The Board of Directors, which was appointed by the Extraordinary General Meeting on February 28, 2000, consists of:
Name
Function
End term
Main occupation outside LSG
of office
Membership
Committee
1. Representatives of the majority shareholders
Jørn Munch Jensen
Director
2003
(Jensen Invest A/S)
Founder of JENSEN Group
Remuneration committee
Board member of ETSA
(European Textile Services Association)
Guy Mampaey
Director
2003
Director of Corporate Investment GIMV
Appointments committee
Director
2003
Managing Director of Axcel IndustriInvestor A/S
Appointments committee
Jan Brantjes
Chairman
2003
Board member of SLC Technology Inc.
Remuneration committee
Geert Duyck
Director
7/11/2001
Managing Director of CVC Capital Partners Belgium
Niels Olav Johannesson
Director
2003
Managing Director of Icopal A/S
Luc Van Nevel
Director
2003
President and CEO of Samsonite Corporation
(GIMV)
Christian Frigast
(Axcel IndustriInvestor A/S)
2. Independent Directors
(part of the Berwin Group)
3. Representatives of the management
Jesper Munch Jensen
Man. Director 2003
Audit committee
• Secretaryship:
Gunter Vanden Neucker, Investor Relations Manager
Christian Møller, Managing Director of Jensen Invest A/S
• Statutory auditor:
KPMG Bedrijfsrevisoren C.V., represented by Mr. Theo Erauw
Functioning of the Board of Directors
The Board of Directors acts independently but on the proposal of the
Management Team in determining the strategy of the group, and exercizes
supervision over its day-to-day management.
The day-to-day management is entrusted to the Management Team. The
Management Team ensures that the strategic policy lines are translated into
everyday management.
The Board of Directors met four times during the past year and had telephone
conference calls at several occasions. The members of the Management Team
are invited to participate in the meetings of the Board of Directors and can give
advice.
Committees established by the Board
Remuneration Committee
The Remuneration Committee consists of the Chairman of the Board (Mr. Jan
Brantjes) and a representative of the reference shareholder (Mr. Jørn Munch
Jensen).
The Committee meets at least once a year and makes recommendations to the
Board of Directors regarding the fees for the Management Team and the senior
management.
Audit Committee
The Audit Committee is composed of Geert Duyck (independent director until
November 7, 2001), Christian Møller (Secretary of the Board), and Erik
Vanderhaegen (Chief Financial Officer). A new member to the Audit Committee
will be appointed.
The purpose of the Committee is to assist the Board in its supervisory function
and, more specifically, in the supervision of:
• The financial information which is intended both for the shareholders and
other interested parties.
• The system of internal control which the Board and the management have set up.
• The audit process.
The Audit Committee meets at least twice a year in the presence of the
statutory auditor.
Appointments Committee
The Appointments Committee is composed of two directors (Christian Frigast
and Guy Mampaey).
The task of the Appointments Committee is to evaluate candidates for top
management positions for the Board.
The Appointments Committee only meets when necessary.
Remuneration
The external directors receive a fixed fee. Total remuneration paid to the
executive and non-executive directors amounted in 2001 up to 421,015 EUR.
No performance-related remuneration or other benefits have been attributed to
the directors in the year 2001. No loans have been granted to the members of
the Board.
No unusual transactions have taken place in which the Board
members of the company were involved. Total number of shares owned by
the Board members and the Management amounts up to 3,000, total number
of warrants owned amounts up to 5,000.
Next to his mandate, the statutory auditor received over the year 2001
additional fees of 83,262 EUR (excl. VAT) in his capacity as a tax advisor for LSG.
The statutory auditor received fees of 68,120 EUR (excl. VAT) for the execution
of his mandate on the statutory and consolidated accounts of LSG.
Day-to-day management
The day-to-day management is entrusted to the Management Team. The
Management Team ensures that the strategic policy lines are translated into
everyday management.
The Management Team meets every month. Some Directors participate in the
Management Team which precedes a meeting of the Board of Directors. The
members of the Management Team are invited to participate in the meetings of
the Board of Directors and can give advice on certain topics.
The Management Team is composed of :
• Jesper Jensen, Chief Executive Officer
• Steen Nielsen, President Heavy-Duty Laundry Division
• Jean-Marc Vandoorne, President Commercial Laundry Division
• Jens Voldbaek, President LSG North America
• Erik Vanderhaegen, Chief Financial Officer
Jesper Jensen (36) started his career at Swiss Bank Corporation and worked as
a stockbroker on the Swiss Stock Exchange (1984-1987). After obtaining an
MBA degree of Business School Lausanne, he joined the Jensen Group as an
From left to right: Erik Vanderhaegen, Jesper Jensen,
Jean-Marc Vandoorne, Jens Voldbaek, Steen Nielsen
assistant general manager of Jensen Holding (1991). He became CEO of the
Jensen Group in 1996 and CEO of LSG in September 2000.
Steen Nielsen (50) holds a degree in civil engineering and a Bachelor of
Commerce & Finance. In the period 1978-1987, he worked for F.L. Smidth &
Co. as a sales and divisional manager. He joined the Jensen Group in 1987 as
sales and marketing director. He is now president of the Heavy-Duty Laundry
Division.
Jean-Marc Vandoorne (33) holds a degree in commercial engineering from the
Ecole de Commerce Solvay. After his studies, he joined Arthur Andersen as an
audit senior and consultant (1992-1998). Afterwards, he worked for Mobil
Plastics as a supply chain manager (1998). He joined Ipso-ILG in 1999 and a
COD, became managing director of Ipso-LSG in 2000 and is president of the
Commercial Laundry Division since July 1, 2001.
Jens Voldbaek (56) holds a Master of Science-degree from Portland State
University. He started his career as a high school mathematics instructor (19681974). Afterwards he worked for Oregon Portland Cement (1975-1977) as a
divisional manager. He held various sales and administrative positions with F.L.
Smidth & Co. (1977-1987) and became president of Jensen USA (1987). He
is now president of LSG North America.
Erik Vanderhaegen (38) obtained a commercial engineering-degree from the
Catholic University of Leuven. He started his career at Arthur Andersen where
he worked for nine years as CPA and consultant in various financial and nonfinancial projects. He then joined N.V. Bekaert S.A., world’s largest producer of
steel wires as corporate tax, audit and mergers and acquisitions manager. After
three years at Bekaert, he started his own consulting company in the new economy. He joined LSG in 2001 as CFO.
Over the year 2001, total remuneration paid to the management team amounted to 1,380,000 EUR. Total remuneration for directors and managers is not just
the sum of both above mentioned remunerations. The managing director and
CEO is member of both the Board and the management team.
Policy relating to the appropriation of the result
No specific policy exists. However, the Board strives to provide the
shareholders with a reasonable return.
Protocol to prevent insider trading
To prevent privileged information from being used unlawfully by directors or
members of the Management Team all the members involved have signed a protocol to prevent insider trading.
Relationship with the shareholders
On February 28, 2000 the Extraordinary Shareholders’ Meeting of LSG NV
approved the merger with the Danish Jensen Group and the corresponding
increase in capital. Through this transaction 2,004,224 new LSG shares were
issued and the shareholdership of Ipso-ILG was thoroughly changed. Until the
merger, only GIMV had a participation above the 5% limit and almost 80% of
the shares were free floated. Jensen Invest A/S is now clearly a reference
shareholder, who is holding 48.5% of the shares and in this way, can ensure
stability in the shareholdership.
In order not to harm the autonomous character of LSG NV and to protect the
shareholders’ interests, a shareholders’ agreement between GIMV and Jensen
Invest A/S has been concluded for a period of 3 years. This agreement contains
rules for the composition of and conditions for changes in the Board of
Directors and the Management Committee as well as a number of limitations
relating to the transfer of shares by GIMV and by Jensen Invest A/S.
Information for the shareholders
and investors
The LSG share is quoted on the Euronext Stock Exchange (Reuters code
IPSO.BR) since June 1997. The price of LSG shares can be found online at the
following internet sites :
• LSG : http://www.LSG.be
• Euronext : http://www.Stockexchange.be
The LSG stock price declined from 13.2 EUR at the end of 2000 to 8 EUR at
the end of 2001, with an average daily trading volume of 1,987 shares
(see graph 1). The LSG share moved in line with the Belgian All Shares return
index and the Belgian Smallcaps index until mid August 2001. Afterwards, the
LSG share clearly underperformed both indices (see graph 2).
On January 2, 2002 Euronext launched the NextPrime quality label for small- and
mid-cap companies that live up to severe information disclosure criteria. LSG
has been included in the NextPrime segment since January 2, 2002.
Therefore, the corporate website www.lsg.be has been updated with
following information :
• Financial calendar
• Share ownership, including relationship among controlling shareholders
• Management trade reports.
Furthermore, quarterly reporting has been introduced since the 1st quarter of
2001. LSG also continues to report in English and to organize at least 2 analysts’
meeting per year.
LSG will have to adopt International Accounting Standards (IAS) by January 1,
LSG Shareholders
2004. As a result, and since sufficient comparables will have to be given, an IAS
introduction planning will be made during the first semester of 2002. The
10,5 %
financial statements per December 31, 2002 will be restated according to IAS
during 2003.
48,5 %
41 %
In December 2001, LSG has been awarded the prize for the best financial
communication among small cap companies. Every year, the ‘Vlaamse Federatie
voor Beleggers en Beleggingsclubs (VFB)’ (Flemish Federation for private
investors and investment clubs) awards a prize for the best communicating
Jensen Invest
GIMV
Free float
small cap company (with a market capitalization below 120 million EUR) on
Euronext. The VFB particularly praizes the quality of LSG’s reporting and the early
disclosure of annual and half-year results. Furthermore, LSG is one of the few
small cap companies who publishes quarterly results and who splits turnover
and profitability information by activity and by geographical region.
0
22-08-2001
19-07-2001
18-06-2001
11-05-2001
04-04-2001
05-03-2001
01-02-2001
02-01-2001
20-12-2001
20
18-12-2001
40
29-11-2001
60
06-11-2001
80
29-10-2001
100
09-10-2001
120
24-09-2001
Graph 2: Relative price performance
11-09-2001
14-08-2001
17-07-2001
05-06-2001
08-05-2001
10-04-2001
13-03-2001
13-02-2001
02-01-2001
Graph 1: LSG Share price and volume
20.000,00
16
18.000,00
14
16.000,00
14.000,00
12
12.000,00
10
10.000,00
8
8.000,00
6
6.000,00
4.000,00
4
2.000,00
2
0,00
0
Shareholders’ diary :
• May 13, 2002 : 10 AM : General Assembly
• May 31, 2002 : first quarter 2002 results
• August 29, 2002 : Semi-annual 2002 results
(press conference and analysts’ meeting)
• November 29, 2002 : third quarter 2002 results
• March 2003 : year 2002 results (press conference and analysts’ meeting)
Furthermore, the Investor Relations Manager is available to individual
shareholders, analysts, specialized journalists and institutional investors for
meeting them and enabling them to see LSG’s short- and long-term potential
both as a whole and relating to specific activities. Lectures, meetings and site
visits can be organized on request.
LSG’s Annual Report, press releases and other information are available on the
internet (http://www.LSG.be).
Shareholders and investors who want to receive the Annual Report, detailed
Annual Accounts of LSG N.V. or other information concerning LSG, can contact:
Laundry Systems Group N.V.
Gunter Vanden Neucker
Investor Relations Manager
‘t Hofveld 6 F2
1702 Groot-Bijgaarden
Tel. +32.2.482.33.80
Fax +32.2.482.33.90
E-mail : [email protected]
Consolidated key figures
LSG
Ipso-ILG
2001
2000
1999
1998/99
1999
(in millions of EUR)
(12 months)
(12 months)
(12 months) (5)
(17 months)
(12 months) (4)
Turnover
207,1
216,0
175,6
108,0
78,2
Operating profit
4,8
10,3
19,6
14,0
10,9
Operational cash flow (EBITDA) (1)
7,8
20,8
23,6
16,9
13,0
-1,9
5,5
16,5
10,5
8,6
0,0
-4,3
9,9
4,6
3,7
Profit from ordinary operating activities
Net profit (share of the group)
Net cash flow
4,3
7,4
15,2
9,2
6,9
Current profit after taxes (2)
1,3
5,0
12,1
7,3
5,9
31,2
30,5
34,5
27,4
27,4
Capital and reserves (6)
Net financial indebtedness
Total assets
71,7
74,4
52,9
40,3
40,3
166,4
170,5
151,5
92,4
92,4
Consolidated key figures per share
(in EUR)
Operating profit
2001
2000
1999
1998/99
1999
(12 months)
(12 months)
(12 months) (5)
(17 months)
(12 months) (4)
1,16
2,48
4,74
6,62
5,13
Operational cash flow (EBITDA) (1)
1,88
5,03
5,70
8,01
6,10
0,32
1,21
2,92
3,44
2,78
Net profit (share of the group)
0,00
-1,04
2,40
2,14
1,74
Net cash flow
1,03
1,80
3,68
4,34
3,25
Capital and reserves
7,55
7,39
8,36
12,96
12,96
Gross dividend
Number of shares outstanding (3)
0,00
0,00
0,59
0,59
0,59
4.132.421
4.132.421
4.132.421
2.128.197
2.128.197
(1) EBITDA : Earnings before depreciation, interest, taxes and amortization. Operating profit plus amounts written down
on stocks, trade debtors and provisions for liabilities and charges.
(2) The current profit after tax is the same as the net profit excluding extraordinary gains and losses (both adjusted for
taxes) and including the amortization of consolidation differences.
(3) On May 27, 1997, there was a 20 for 1 share split of Ipso-ILG shares. In order to make comparisons with prior
years, the effect of the share split is also taken into account. As a result of the merger between Ipso-ILG and Jensen on
February 28, 2000 , 2.004.224 new shares have been issued resulting in a total number of shares of 4.132.421.
(4) In order to have comparable figures for the past and the future, 12-month unaudited figures for the calendar year
1999 have been prepared.
(5) Pro-forma, unaudited figures for the calendar year 1999 have been drown-up for LSG to make historic
comparisons.
(6) The goodwill that has been created as a result of the merger between LSG and Jensen Group will not be
capitalized and amortized, but deducted from the equity instead. The Commission for Banking and Finance gave its
approval for this accounting method on December 1, 1999.
Investments and Capital Expenditures
The past 3 years have been years of significant investments that have contributed to the growth of Laundry Systems Group.
Year 2001 :
• Acquisition of Swiss distributor Rosal for an amount of 0.5 million EUR
• Construction of new production facility for Jensen-Senking for an amount
of 7.9 million EUR
• Various investments in plant, machinery and equipment for 0.8 million EUR
Year 2000 :
• Acquisition of Jensen Group : 80.1 million EUR (capital increase)
• Acquisition of Polymark Jensen : 2.5 million EUR
• Various investments in plant, machinery and equipment (at Ipso LSG, Ipso
USA and Jensen Denmark) and in land and buildings (at Jensen Netherlands)
for a total amount of 4.8 million EUR
Year 1999 :
• Investments in a new production facility (Ipso USA), in land and buildings
(Jensen Netherlands) and in information technology (ERP at Ipso LSG, Ipso
USA, Jensen Netherlands and D’Hooge) for a total amount of 11.9 million EUR
Outlook 2002
No major investments are planned for the year 2002.
Litigation
Customer Claims
• Warranty claim from Les Papillons Blancs versus Amko (now Jensen
Netherlands B.V.) and D’Hooge
Product Liability
• 2 claims in the US
Transport claim
• One transport claim for a transport in the US
Patent claim
• Claim from a competitor concerning a feeding device
The Management does not expect these claims to have a significant impact on
the Group’s profitability, if any. Any major claims that would arise, would be
adequately provisioned for.
Human resources
The average number of employees has known the following evolution :
1996/97 : 556
1997/98 : 548
1998/99 : 680
2000 :
Commercial Laundry Division : 544
Heavy-Duty Laundry Division : 1,012
LSG Holding :
6
Total :
2001 :
1,562
Commercial Laundry Division : 486
Heavy-Duty Laundry Division : 908
LSG North America :
80
LSG Holding :
8
Total :
1,482
1800
1600
LSG
1400
CLD
1200
1000
LSG
CLD
LSG NA
800
600
400
HDLD
HDLD
2000
2001
Ipso-ILG
200
0
1998/99
Research and Development
Laundry Systems Group’s key technologies are based on laundry process
technology spanning from the washroom, over the logistics of transporting the
linen and textiles, finishing the textiles by feeders, ironers and folders as well as
software technologies which serve the process of recycling dirty linen and
textiles into clean linen.
As various technologies are needed to cater for the needs of our customer
base, we do not get involved in primary research and development. Our focus
is to take existing technologies and adapt it to our industry for both commercial
and heavy-duty purposes.
In the last years we have invested in further upgrading our product program as
well as investing heavily into new software applications for our industry.
Software for the process control as well as production monitoring are crucial
for offering our customer base a total solution from one supplier.
Our group has various patents on features of our machinery and our product
development teams in our various competence centers look into the
possibility of protecting our developments continuously.
Patents are used primarily to prove prior art. We protect our patents on a
case-by-case basis and primarily in the larger markets.
Laundry Systems Group invests 1-3% of its turnover in Product Development
per year. We expect this figure to be slightly above the industry average.
LSG over the world
Jensen
Netherlands
Cissell
Jensen UK
Jensen USA
Jensen
Senking
LSG
Ipso LSG
D'Hooge
Ipso USA
Jensen Sweden
Jensen Denmark
Polymark
Jensen
Jensen
AG Burgdorf
Jensen
Asia
LSG
South-Africa
Sales per region
Turnover (million EUR)
250
200
26
20
75
75
115
112,1
2000
2001
17,6
150
75,9
100
50
82,1
0
1999 PF
Financial report 2001
Contents of the financial report
31
Introduction
32
Consolidated financial statements of LSG
32
Consolidated balance sheets
34
Consolidated income statements
36
Consolidated statements of cash flows
37
Comments to the consolidated financial statements
42
Notes to the consolidated financial statements
Consolidation scope
Consolidation criteria
Valuation rules
Notes
53
Report of the Board of Directors
56
Report of the Statutory Auditor
58
Summary balance sheet
and income statements of LSG N.V.
Introduction
In order to understand the financial statements evolution over the years, the
following has to be taken into account :
On February 28, 2000 the Extraordinary Shareholders’ Meeting of LSG N.V.
approved the merger between the former ‘Ipso-ILG’ and the Danish group
‘Jensen Industrial Group’ to form ‘Laundry Systems Group’. Since then,
consolidated financial statements of both groups have been made.
For comparison reason, pro forma figures over the calendar year 1999 have
been published. However, these pro forma figures are not audited. In the 1999
pro forma figures, the last 12 months of the 17 months accounting year of the
former Ipso-ILG have been consolidated with the 1999 accounting year of the
Jensen Industrial Group (from May 1, 1999 until December 31, 1999),
together with the 4-month period between January 1, 1999 and April 30,
1999. The result over this 4-month period was calculated on a pro rata base for
the audited figures between October 31, 1998 and April 30, 1999.
The year 2000 accounts have been specifically affected by the Board of
Director’s decision to no longer capitalize expenses for Research &
Development and to write-off all historically capitalized R&D costs. As a
consequence, exceptional charges of the year 2000 include the write-off of the
R&D expenses that have been capitalized until December 31, 1999. The R&D
expenses of the year 2000 have been treated as operational charges. The
valuation rule not to capitalize Research and Development expenses has been
applied consistently over 2001.
CONSOLIDATED BALANCE SHEETS (in thousands of EUR)
12M pro forma
ASSETS AS AT
31 December 2001
31 December 2000
31 December 1999
unaudited
Fixed assets
I.
Formation expenses
II.
Intangible assets
III.
Consolidation differences
IV.
41.857
46.567
119
167
208
219
171
5.856
7.051
8.317
8.533
Tangible fixed assets
38.241
32.981
31.789
A. Land and buildings
25.083
18.463
18.246
B. Plant, machinery and equipment
11.762
12.413
11.419
1.028
730
1.240
298
360
398
C. Furniture and vehicles
D. Leasing and other similar rights
E. Other tangible fixed assets
F. Assets under construction and advance payments
V.
45.846
66
4
1.015
486
216
221
182
80
81
57
80
81
57
136
140
125
136
140
125
120.566
128.628
104.971
11.964
8.624
3.898
A. Trade debtors
285
79
164
1. Customers
285
79
164
3.734
Financial assets
A. Companies accounted for using the equity method
1. Investments
2. Amounts receivable
B. Other companies linked by participating interests
1. Investments
2. Amounts receivable
C. Other financial fixed assets
1. Other shares
2. Amounts receivable and cash guarantees
Current assets
VI.
Amounts receivable after one year
B. Other amounts receivable
3.983
3.816
C. Deferred taxes
7.696
4.729
44.855
53.098
48.553
44.855
53.098
48.553
18.639
19.921
19.774
7.571
10.462
10.574
VII. Stocks and contracts-in-progress
A. Stocks
1. Raw materials and consumables
2. Work-in-progress
3. Finished goods
7.510
11.237
15.197
11.135
9.798
2.507
1.680
501
55.587
58.510
44.036
51.700
54.221
38.427
3.887
4.289
5.609
Investments
1
1
B. Other investments and deposits
1
1
4. Goods purchased for resale
6. Advance payments
VIII. Amounts receivable within one year
A. Trade debtors
B. Other amounts receivable
IX.
X.
Cash at bank and in hand
6.655
5.776
7.208
XI.
Deferred charges and accrued income
1.504
2.619
1.276
166.412
170.485
151.538
TOTAL ASSETS
12M pro forma
LIABILITIES AS AT
31 December 2001
31 December 2000
31 December 1999
unaudited
31.213
30.521
34.554
I.
21.350
21.350
21.350
II.
IV.
Capital
A. Issued capital
21.350
21.350
21.350
Share premium account
71.140
71.161
71.219
Retained earnings
7.003
6.956
12.600
-
Carried forward from previous years
6.956
11.240
5.925
-
Profit / loss of the year
47
(4.284)
6.675
2.002
2.002
2.002
(73.190)
(73.190)
(74.229)
2.889
2.179
1.433
19
63
177
Provisions and deferred taxes
18.598
22.481
15.868
IX.
17.543
20.396
11.924
7.170
7.319
7.078
25
232
V.
Vbis. Imputation of positive consolidation differences
VI.
Translation differences
VII. Investment grants
A. Provisions for liabilities and charges
1. Pensions and similar obligations
2. Taxation
3. Major repairs and maintenance
2.371
2.282
1.248
4. Other liabilities and charges
7.977
10.563
3.598
1.055
2.085
3.944
B. Deferred taxes
Debts
X.
116.601
117.483
101.116
Amounts payable after one year
32.328
45.370
45.500
A. Financial debts
32.328
45.370
45.497
1. Subordinated loans
9.916
10.156
9.916
2. Unsubordinated loans
3.047
5.256
4.398
133
195
185
19.232
29.763
30.989
3. Leasing and other similar obligations
4. Credit institutions
5. Other loans : b. third parties
9
D. Other amounts payable
XI.
Amounts payable within one year
A. Current portion of amounts payable after one year
B. Financial debts
1. Credit institutions
3
79.789
66.910
48.116
6.455
5.943
3.784
39.533
28.879
10.729
39.533
28.879
10.729
C. Trade debts
19.924
17.053
18.706
1. Suppliers
19.924
17.053
17.362
3. Accrued intercompany payables
1.344
D. Advances received on contracts-in-progress
3.400
3.015
219
E. Taxes, remuneration and social security
6.340
6.980
9.041
1. Taxes
2.515
2.946
4.090
2. Remuneration and social security
3.825
4.034
4.951
F. Other amounts payable
XII. Accrued charges and deferred income
TOTAL LIABILITIES
4.137
5.040
5.637
4.484
5.203
7.499
166.412
170.485
151.538
CONSOLIDATED INCOME STATEMENTS (in thousands of EUR)
12M pro forma
FINANCIAL YEAR ENDED
31 December 2001
31 December 2000 31 December 1999
unaudited
I.
Operating income
202.109
221.675
185.888
A. Turnover
207.056
216.041
175.590
work- and contracts-in-progress
(8.078)
(572)
3.300
C. Fixed assets - own construction
222
142
5.257
2.909
6.064
1.741
(197.297)
(211.414)
(166.307)
95.224
105.639
85.682
94.128
110.531
86.399
1.096
(4.892)
(717)
B. Services and other goods
28.222
23.928
20.430
C. Remuneration, social security and pensions
68.856
65.865
55.749
5.367
5.198
4.609
359
4.546
202
(2.788)
783
(766)
G. Other operating charges
2.057
5.455
403
Operating profit
4.812
10.261
19.581
Financial income
2.781
2.578
3.225
B. Increase (+), decrease (-) in stocks, finished goods,
D. Other operating income
II.
Operating charges
A. Raw materials, consumables and goods for resale
1. Purchases
2. Increase (-) , decrease (+) in stocks
D. Depreciation and other amounts written off, formation
expenses, intangible and tangible fixed assets
E. Increase (+) ; decrease (-) in amounts written off,
stocks, contracts-in-progress and trade debtors
F. Increase (+) ; decrease (-) in provisions for
liabilities and charges
III.
IV.
A Income from financial fixed assets
B. Income from current assets
C. Other financial income
V.
VI.
Financial charges
156
572
899
292
2.209
1.679
2.777
(9.514)
(7.298)
(6.351)
A. Interest and other debt charges
5.836
3.745
2.191
B. Amortization of positive consolidation differences
1.266
1.201
1.168
D. Other financial charges
2.412
2.352
2.992
(1.921)
5.541
16.455
Profit on ordinary activities before taxes
12M pro forma
31 December 2001
31 December 2000 31 December 1999
unaudited
VI.
Profit on ordinary activities before taxes
(1.921)
VII. Extraordinary income
5.541
16.455
69
175
E. Gain on disposal of fixed assets
35
F. Other extraordinary income
34
175
(13.601)
(1.877)
VIII. Extraordinary charges
A. Extraordinary depreciation of and amounts
written off on formation expenses,
tangible and intangible fixed assets
5.846
D. Provisions for extraordinary liabilities and charges
6.741
F. Other extraordinary charges
1.014
1.877
IX.
Profit for the year before taxes
(1.921)
(7.991)
14.753
X.
Transfer from/to deferred taxes
3.997
8.160
935
Income taxes
(2.029)
(4.453)
3.910
A. Taxes
(2.029)
(4.453)
3.910
XI.
B. Adjustment of income taxes and write-back
of tax provisions
XIV. Consolidated profit
B. Group share in the profit
-
47
(4.284)
9.908
47
(4.284)
9.908
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of EUR)
31 december 2001
31 december 2000
7.750
20.788
16.919
Operating profit
4.812
10.261
13.951
Depreciation and amortization
5.367
5.198
3.530
Cash flows from operating activities
Amounts written off
31 december 1999**
359
4.546
202
Changes in provisions
(2.788)
783
(764)
Changes in working capital
12.543
(25.513)
(9.648)
Changes in stocks*
7.884
(9.225)
(4.152)
Changes in long- and short-term amounts receivable*
3.665
(16.853)
(5.070)
994
565
(426)
(10.627)
(5.865)
(15.261)
Changes in amounts payable to suppliers, social amounts
payable and deferral and accrual accounts*
Cash flows from investing activities
Net investment in intangible assets*
(112)
(385)
(5.223)
(10.515)
(5.480)
(10.038)
Cash flow from participating interests
5
(84.251)
-
Changes in guarantees*
5
Net investment in tangible assets*
Acquisitions - Polymark
53
(2.592)
Acquisitions - Jensen Group
-
(81.631)
Naicom/Intermax
(81)
Cashflow from financing transactions
(7.343)
92.437
9.610
Financial result
(6.733)
(4.720)
(3.504)
1.266
1.201
1.654
including amortization of the consolidation difference
Changes in long-term debt*
Changes in short-term debt*
(13.042)
(99)
13.525
11.166
19.974
(2.230)
Changes in equity (including warrants)
80.111
1.430
Dividends
(4.030)
(1.266)
874
(4.683)
(13.532)
(1.822)
5.846
268
Other transactions
(1.449)
Extraordinary result
including extraordinary provisions amortization of intangibles
including restructuring provisions
Income taxes
including deferred taxes
6.741
1.968
3.706
(4.064)
935
(3.997)
(8.160)
Changes in provisions*
(65)
6.392
Movement on opening retained earnings
645
(119)
Net changes in cash equivalents
879
(1.530)
(3.063)
Opening balances
5.776
3.803
6.708
Closing balances
6.655
5.776
3.803
Exchange difference on the opening balance
Cash acquired through acquisitions
(159)
3.503
* LSG closing position as at December 31, 2000 adjusted for balances included through
acquisitions (i.e. January 1, 2000 with respect to the Jensen Group and September 1,
2000 with respect to Polymark France)
** This is the cash flow statement of the 17 months figures of Ipso-ILG as there was no pro
forma balance sheet available on January 1, 2000.
Comments on the consolidated financial statements
Intangible assets
In the past, intangible assets consisted mainly of capitalized costs for research
and development. However, the Board of Directors decided to write off all
historically capitalized research and development costs (as extraordinary
charges) and to take into profit and loss all the R&D costs that have been
incurred during the year 2000 (1 million EUR as operational charges). The
write-off of the historically capitalized R&D costs explains the decrease of
5.5 million EUR in the year 2000. During the year 2001, LSG has incurred 6.1 million EUR as product development expenses. Part of these is to be considered
as Research and Development expenses.
During 2001, an asset deal in Jensen Switzerland, whereby the business of the
former distributor “Rosal” was taken over, resulted in additional goodwill for an
amount of 0.2 million EUR.
The positive consolidation differences result from goodwill on the acquisition of
D’Hooge in a gross amount of 2.8 million EUR, Cissell Manufacturing Company in
a gross amount of 2.4 million EUR, Jensen Netherlands (previously Amko) in a
gross amount of 6.6 million EUR and Jensen France in a gross amount of
1 million EUR.
All of these consolidation differences are being amortized over a period of
10 years. The decrease of 1.3 million EUR corresponds to the depreciation
charge taken in 2001.
The goodwill that has been created as a result of the merger between LSG and
Jensen Group has not been capitalized and amortized, but visibly deducted
from the equity instead. The Banking and Finance Commission gave its approval
for this accounting method on December 1, 1999. The positive consolidation
differences calculated in the 1999 pro forma consolidated figures were
preliminary, and have been adapted properly according to the final calculations.
If this goodwill were, like all the other goodwill, amortized over 10 years,
amortizations on consolidation differences (included under financial charges)
would increase by 7.32 million EUR.
The negative consolidation differences relate to the acquisition of Ipso Finance
N.V. in 1996, for an amount of 2 million EUR.
During the financial year 2001, tangible fixed assets increased in net value with
5.3 million EUR. The most important capital expenditure (7.9 million EUR) is due
to the construction of a new production facility in Jensen-Senking. The
construction of this facility started in March 2001 and was terminated by
December 2001. The decision to construct a new plant was taken since the
landlord terminated the lease of the former plant. Other capital expenditures
are primarily related to replacements. With its current production capacity, LSG
can absorb an increase in turnover, dependent upon the mix, between 10 and
20% without any significant additional capital expenditures.
The total depreciation on tangible fixed assets amounts to 5.3 million EUR.
Working capital
After a rise in the working capital of 25.5 million EUR in 2000, working capital has
decreased by 12.5 million EUR. A special internal program has been set up in
order to decrease the working capital by at least 25 million EUR between June
30, 2001 and December 31, 2003. This will bring our working capital on sales
ratio in-line with the industry. Actions that are being taken are standardization,
more regular interim billing on projects, alignment of sales terms, more
just-in-time deliveries by our suppliers, etc. This working capital reduction
program has been labelled “W-Care” and the awareness has reached all levels
in the organization.
The share capital as at December 31, 2001 was 21.4 million EUR and was
represented by 4,132,421 ordinary shares without nominal value.
The share premium, resulting primarily from the merger with the Jensen Group,
amounts to 71.1 million EUR as at December 31, 2001. Furthermore, the share
premium account contains both the amounts which the company has received
as a price for the warrants it has issued in the framework of a share option plan
for the management and a share premium of 1.3 million EUR created through an
increase in capital. Due to the cancellation of certain warrants, the share
premium amount decreased.
The movements in the retained earnings are as follows:
(in ‘000 EUR)
2001
Consolidated retained earnings as at December 31, 2000
6,956
Results for the financial year
47
Consolidated retained earnings as at December 31, 2001
7,003
The translation differences include differences arising from the conversion of the
financial statements of the currencies of the companies that are not based in the
Euro-zone to EUR. The exchange rates used for the conversion were as follows:
Currency
Average rate (per EUR)
Closing rate (per EUR)
2001
2000
1998/99
2001
2000
1998/99
USD
0.8954
0.9241
1.0844
0.8842
0.9305
1.0045
DKK
7.4523
7.4537
7.4357
7.4632
GBP
0.6228
0.6095
0.6102
0.6241
SEK
9.2472
8.4441
9.3074
8.8314
SGD
1.6044
1.5924
1.6324
1.6126
SAR
7.6059
6.3921
10.6856
7.0391
CHF
1.5103
1.5581
1.4823
1.5232
Provisions for liabilities and charges
The provisions for pensions and similar rights are mainly provisions for
prepension in D’Hooge, Jensen-Senking, Ipso-LSG and Cissell. The provisions
are based on actuarial calculations of the expected amounts to be paid. The
provision for other risks and charges consists mainly of provisions for guarantees
and for unresolved disputes. The decrease in provisions for restructuring and
major repairs compared to last year is mainly caused by the use of provisions
on a consolidated level for restructuring costs (Cissell and Jensen USA), slow
moving inventories (Jensen Netherlands and D’Hooge) and major repairs
(Jensen-Senking).
Deferred taxes
The deferred tax liabilities are presented under the caption “Provisions and
Deferred Taxes” of the liabilities’ side of the balance sheet and amount up to
1.1 million EUR.
The deferred tax assets are presented under the caption “Amounts receivable
after one year” of the assets’ side of the balance sheet and amount up to
7.7 million EUR. The deferred tax assets are presented under this caption of the
balance sheet, because the Management and the Board are convinced that, in
accordance with the Company’s changed valuation rule, the asset can be
realized within a reasonable time frame.
The increase in the net deferred tax asset position is due to losses that were
incurred in Cissell Manufacturing Company, Ipso USA, Jensen Netherlands and
D’Hooge. Management has taken measures in order to facilitate the realization
of the deferred tax assets in some cases. As such, Ipso USA has been merged
with Jensen USA per January 1, 2002.
We refer to “Provisions for deferred taxes” under consolidation criteria for
comments on the changed valuation rule.
Net financial indebtness
The net financial indebtedness (long- and short-term financial debt less
investments and cash) decreased from 74.4 million EUR as at December 31,
2000 to 71.7 million EUR as at December 31, 2001.
The decrease compared to the 2000 figures is primarily due to the
reimbursement of loans in Ipso-LSG, Cissell, Ipso USA and D’Hooge. These
reimbursements have been largely offset by the increase in indebtedness in
Jensen-Senking due to the construction of a new plant, for a total amount of 7.7
million EUR.
Financial indebtedness in the Group is primarily located at Jensen USA
(12.6 million EUR), LSG N.V. (11.3 million EUR), Cissell Manufacturing Company
(10.6 million EUR), Ipso-LSG N.V. (10.5 million EUR) and Jensen-Senking
(9.9 million EUR).
At Jensen USA 69% of the loans are revolving and short term and the
remainder needs to be reimbursed in 2004. The facilities are used for financing
the working capital, since Jensen USA has known an exponential increase
in its turnover.
At LSG N.V., 9.9 million EUR corresponds to a subordinated bond given by NIB
Capital Bank (75%) and GIMV (25%). This bond expires in November 2003 and
has an interest rate of 3.5%, and 2.5% additional interest if certain covenants are
not met. This was the case in 2001. Attached to this bond are 135,600
warrants at a price of 73.13 EUR per warrant. Each warrant corresponds to the
right to buy one new share.
At Cissell Manufacturing Company, the majority of the loans are with Rabo/BBL.
Of these, 5.7 million EUR are revolving and are related to the financing of the
working capital. The remainder are term loans associated to the building and
machinery in Louisville.
Ipso-LSG has long-term loans for 2.7 million EUR, and the remainder is short
term. The short-term loans are related to the financing of the working capital.
The loans in Jensen-Senking are related to the construction of the new building
and related equipment. As of balance sheet date, the loans in Jensen-Senking
are short term, but will be replaced, to a large extent, by a regular mortgage
over 15 and 20 years.
The financial liabilities can be summarized as follows:
Outstanding amount
Average
Character
interest rate
of interest rate
Long term :
Investment loans and term loans
17,548
3.5%-6.6%
Mortgage
7,396
4.2%-4.75%
Fixed
Subordinated bond
9,916
6%
Fixed
Industrial bond GE Capital
3,684
5.76%
Fixed
239
Incl.
Fixed
Leasing
Fixed/Floating
38,783
Outstanding amount
Average
Character
interest rate
of interest rate
Short term :
Revolving and straight loan
Short term loan
39,191
Floating
342
Floating
39,533
Of these loans, 34% are US Dollar denominated.
Statement of cash flows
The cash flows from operating activities have decreased by 13.0 million EUR
compared to last year. This is in line with the lower operating profit and the fact
that some provisions have been used.
The most important change, however, is the decrease in working capital. Last
year, the working capital increased by 25.5 million EUR due amongst others to
the acquisitions of the Jensen UK sales and service center and of Polymark
Jensen. This year, a special working capital reduction program called “W-Care”
was launched. Detailed instructions were sent out and targets per company
have been set for 2001 and 2002. The total working capital reduction over a
period of 3 years should be around 25 million EUR.
The net financial charges amounted to 6.7 million EUR in 2001, including the
amortization of goodwill for 1.3 million EUR. Net financial charges increased
since the average outstanding loans increased and some covenants on them
were not met, resulting in additional penalties.
The capital expenditures amounted to 10.6 million EUR of which the principal
was located in Jensen-Senking.
Other, small capital expenditures, were
primarily done in sales offices or as replacement of capital expenditures in other
Group companies.
Due to the decrease in working capital, the net debt situation of the Group
improved in a year with lower cash flow from operations and high capital
expenditures.
Notes on the consolidated financial statements
Consolidation scope as at December 31, 2001
Fully consolidated
Registered office
enterprises
VAT or national
Participating
number
percentage
BE 440.449.284
Parent company
BE 453.859.040
100%
BE 450.666.750
100%
NL007.324.546.BO1
100%
Belgium
LSG N.V.
Nieuwstraat 146
8560 Wevelgem
Ipso-LSG N.V.
Nieuwstraat 146
8560 Wevelgem
D’Hooge – ILG N.V.
G. Crommenlaan 2
9050 Ghent
The Netherlands
Jensen Netherlands B.V
Kerkstraat 108
5331 CJ Kerkdriel
O.G. De Kerkstraat B.V.
Kerkstraat 108
100%
5331 CJ Kerkdriel
USA
WMC Holdings Inc.
Corporation Trust Center
100%
Orange Street 1209
Wilmington - Delaware
Cissell Manufacturing Company
South First Street 831,
100%
KY 40203 Louisville
Cissell Distribution Center Corp.
Davis Street 130
100%
37148 Portland Tennessee
Ipso USA Inc.
Aberdeen Loop 99
100%
FL 32405 Panama City
Global Fox Financial Inc.
Aberdeen Loop 99
100%
FL 32405 Panama City
Jensen USA
4211 Pleasant Road
100%
Fort Mill, SC 29715
South Africa
LSG South-Africa Pty.
Vanguard Rigging
Drostdy St, The Gables Cleveland
Johannesburg
100%
United Kingdom
Jensen UK
6a Thorpe Way
100%
Banbury
Oxfordshire OX 16 8 XL
Singapore
Jensen Asia PTE
12 Devonshire Road
100%
Singapore 239847
Denmark
Jensen Industrial Group A/S
Industrivej 2
100%
3700 Rønne
Jensen Denmark A/S
Industrivej 2
100%
3700 Rønne
Scantag Systems Aps
Industrivej 2
100%
3700 Rønne
Switzerland
Jensen AG Burgdorf
Buchmattstraße 8
100%
3400 Burgdorf
Jensen AG Holding
Buchmattstraße 8
100%
3400 Burgdorf
Sweden
Jensen Sweden AB
Företagsgatan 68
100%
504 94 Borås
France
Polymark Jensen S.A.
2 « Village d ‘entreprises »
100%
Avenue de la Mauldre
ZA de la Couronne des Près
78680 Epone
Germany
Jensen-Senking GmbH
Jørn Jensenstraße 1
100%
31177 Harsum
Companies accounted for
Registered office
at cost
VAT or national
Participating
number
percentage
Denmark
Naicom Technologies Aps
Ejnar Jensen Vej 1
24.1%
3700 Rønne
Japan
Intermax
Gotanda I.S. Building
15%
5-1-11, Ohsaki, Shinagawa-ku
Tokyo 141
Consolidation criteria
Scope of application
The consolidating company, LSG N.V., and all the subsidiaries that it controls are
included in the consolidation.
Closing date and length of accounting year
The accounting years 2001 and 2000 ran from January 1until December 31. The
accounting year 1998/99 for LSG (at that time Ipso-ILG) ranged from August 1,
1998 until December 31, 1999 and thus (exceptionally) covered 17 months.
The accounting year 1999 for the Jensen group companies ranged from May 1,
1999 and thus covered 8 months. The 1999 figures from both companies have
been used pro rata temporis to calculate the 1999 pro forma figures (see also
introduction p. 31).
Consolidation method
The full consolidation method is applied for all companies in which LSG is
holding 100%. The other companies, Intermax and Naicom, are accounted for
at cost.
Valuation rules
The consolidated accounts are prepared on the basis of the valuation rules of
the Group. If the application of these valuation rules differs from the local
valuation rules then restatements have been done locally. All intercompany
accounts and transactions have been eliminated.
Translation of the financial statements of foreign companies
In this annual report the consolidated financial statements are expressed in
thousand of EUR.
All balance sheet captions of foreign companies are translated into EUR using
closing rates at the end of the accounting year, except for capital and reserves,
which are translated at historical rates. The income statement is translated at
average rates for the year. The resulting translation difference, arising from the
translation of capital and reserves and the income statement, is shown
separately on the liabilities’ side of the balance sheet under the caption –
translation differences.
The consolidated balance sheet and income statement in BEF for the
pro forma accounting year 1999 have been subsequently converted into EUR
at the fixed rate of 40.3399 BEF/EUR.
Valuation rules
Formation expenses
The costs relating to the issue of loans are capitalized and amortized over
the term of the loan. Costs relating to an increase in the capital are directly
included in the result.
Intangible fixed assets
Research and Development expenses
Research and Development costs are charged to the income statement in the
year in which they are incurred. This rule applies as from January 1, 2000.
Previously, Research and Development costs were capitalized and amortized.
Licenses, patents, know-how, etc.
Investments in licenses, trademarks, etc. are capitalized and amortized over
5 years.
Goodwill on asset deal
The goodwill on the acquisition of the assets of Rosal is amortized over
10 years.
On the acquisition of a new participating interest, the difference between the
acquisition price and the group share of the net assets of the consolidated
subsidiary, after adjustments to reflect fair value, is recorded in the consolidated balance sheet. If that difference is negative, it is recorded on the liabilities’ side of the balance sheet under the caption – Consolidation differences.
Where, however, the difference is positive, it is recorded under assets as a
consolidation difference, and is amortized using a rate decided upon by the
Board of Directors in function of the expected economic life of the asset. The
maximum amortization period is 20 years.
In practice, all consolidation
differences that exist are being amortized over 10 years. This amortization
period is considered by the Board of Directors as being the normal and fair
recovery period for the goodwill acquired.
With respect to the goodwill created by the merger of LSG with Jensen
Industrial Group in February 2000, the “Commission for Banking and Financing”
gave permission on December 1, 1999 not to capitalize and amortize this
positive consolidation difference, but instead to visibly deduct it from the
consolidated reserves and/or share premiums.
The tangible fixed assets are recorded at their acquisition value or construction
cost increased, where appropriate, by ancillary costs.
Tangible fixed assets are depreciated on a straight-line basis over their
estimated useful life from the month of acquisition onwards.
The annual depreciation percentages are as follows:
Buildings
3.3 - 10 %
Installations, plant and machinery
6.7 - 33 %
Office equipment and furnishings
10.0 - 20 %
Vehicles
20.0 - 33 %
Stocks
Raw materials and consumables are valued at purchase price using the FIFO
method. Goods purchased for resale are also valued at purchase price on an
individual basis. Manufactured goods (work-in-progress and finished goods)
are valued at full cost, including indirect production costs. If the work in
progress concerns a larger project, the completed contract method is applied.
Appropriate write-downs are applied to stocks to reflect not only decreases in
market value, but also the risks inherent in the nature of the products or
activities concerned.
Amounts receivables (after one year and within one year)
Trade amounts receivable and other amounts receivable are carried at nominal
value. Allowances are made to amounts receivable where uncertainty exists as
to the recovery of whole or a part of the balance.
Investments and cash at bank and in hand
Deposits with financial institutions are carried at nominal value. Write-downs are
applied where the realizable value at the balance sheet date is lower than the
historical cost.
Provisions for liabilities and charges are assessed on an individual basis to
address the risks, which they are intended to cover. They are only maintained to
the extent that they are required following an actual judgment relating to the
liabilities and charges for which they were created. If a provision becomes
unnecessary, it is reversed. Provisions are only set up for risks that are likely but
for which the outcome is difficult to quantify with certainty.
Provisions for deferred taxes
During the Board of Directors’ meeting of March 11, 2002, it has been decided
to adapt the valuation rules with respect to deferred taxes towards international accounting standards (IAS).
This resulted in the elimination of the
limitation of the realization of deferred tax assets within 3 years. The new
valuation rule will be :
Deferred taxes are computed on the entire amount of timing differences that are
existing between the tax records of the companies and the financial statements
in accordance with the Group’s valuation rules. Deferred taxes are always
computed on the basis of the actual tax rates in the country of the subsidiary.
Where, for specific Group companies, deferred tax assets exceed deferred tax
liabilities, a net deferred tax asset is shown in the balance sheet. Deferred
tax assets are only recorded if there is reasonable assurance that the assets will
be realized in the foreseeable future.
As opposed to last year, where foreseeable future was defined as being a
period of three years, this qualification has been excluded in the valuation rules,
and this in accordance with IAS. During 2002, more changes in valuation rules
will be made in order to bring them in-line with IAS. This is the result of the will
of LSG to fulfill the requirements for NextPrime.
Should LSG apply its former valuation rule requiring a realization of the deferred
tax assets within three years, the net result of the year would have been
negatively affected by 1.1 million EUR.
Amounts payable (after one year and within one year)
Amounts payable are carried at nominal value at the balance sheet date.
The only elements, which are recorded in the accrued charges and deferred
income accounts are charges to be paid at the balance sheet date, which relate
to prior years.
Foreign currencies
The conversion of assets, liabilities and commitments, which are denominated
in foreign currencies, is carried out on the basis of the following guidelines:
• Monetary asset and liability balances, which are denominated in foreign
currencies, are converted at closing rates;
• Transactions in foreign currencies are converted at the rate in force at
the date of the transaction;
• Foreign exchange differences are recorded in the income
statement; and
• Conversion differences are also recorded in the income statement.
Notes to the accounts (in thousands of EUR)
VI.B. DEFERRED TAXES
Deferred tax assets
7.696
Deferred tax liabilities
-1.055
of which :
deferred taxes
-1.043
beneficial deferred tax amounts
-12
Net deferred taxes
6.641*
* Subsidiaries with largest net deferred tax assets
Company
Reason
Amount
Ipso USA **
Start-up losses
3.428
Jensen USA
Timing differences on goodwill amortization
1.128
Cissell
Deferred taxes on operating losses
882
LSG N.V.
Deferred taxes on operating losses
730
6.168
** On January 1, 2002, IPSO USA merged with Jensen USA
whereby all tax loss carry forwards can be used by the
merged company. Jensen USA has taxable income.
VII. SCHEDULE OF FORMATION EXPENSES
Net book value at the end of the preceding period
167
Movements during the period
New expenses incurred
0
Amortization
-62
Other movements
7
Translation differences
7
Net book value at the end of the period
119
whereof expenses of formation or capital increase, loan
issue expenses, discounts and other formation expenses
119
VIII. SCHEDULE OF INTANGIBLE FIXED ASSETS
Research and
Concessions,
development
patents,
Goodwill
Advances
expenses
licences, etc.
6.834
1.019
50
128
36
152
Acquisition cost
At the end of the preceding period
Acquisitions, including produced fixed assets
Additions
Sales and disposals
Transfers from one heading to another
-132
Translation adjustments
44
Other movements*
16
3
4
1.115
205
0
At the end of the period
6.834
Research and
development
expenses
Concessions,
patents,
licences, etc.
Goodwill
Advances
6.834
949
31
46
31
19
Depreciation and amounts written down
At the end of the preceding year
Recorded
Written down following sales and disposals
Transfer from one heading to another
-48
32
Other movements*
39
2
6.834
1.051
50
0
0
64
155
0
* Mutations that relate to changes in the scope of consolidation (art 11 R.D. December 3 1993)
IX. STATEMENT OF TANGIBLE FIXED ASSETS
Land &
Plant
Furniture &
Leasing &
Buildings
machinery &
vehicles
other similar
equipment
rights
Other Assets under
tangible
construction
assets and advance
payments
Acquisition cost
29.075
35.037
2.672
1.515
1.015
6.768
3.059
283
82
168
-465
-1.866
-118
-920
479
-479
998
132
201
-1,199
574
656
37
1
3
20
36.431
36.407
3.872
810
204
4
10.612
22.624
1.942
1.155
1.063
3.521
395
146
Acquisitions, including produced fixed assets
Additions
Sales and disposals
Other movements*
Depreciations and amounts written down
Recorded
-808
-525
-836
-1.008
1.002
46
6
124
316
30
1
2
11.348
24.645
2.844
512
138
25.083
11.762
1.028
298
66
Written down following sales and disposals
-451
130
Other movements*
* Mutations that relate to changes in the scope of consolidation (art 11 R.D. December 3 1993)
4
X. STATEMENT OF FINANCIAL FIXED ASSETS
Companies
Equity method
Other companies
Participations
81
Movements during the year
Additions
0
Reimbursements
Translation adjustment
-1
80
Amounts receivable
140
Additions
12
Reimbursements
-16
136
XI. STATEMENT OF CONSOLIDATED RETAINED EARNINGS
6.956
Group share in the consolidated result
47
Other movements
0
7.003
XII. STATEMENT OF CONSOLIDATION DIFFERENCES
Positive
differences
Negative
differences
8.317
2.002
As the result of an increase in equity stake
0
As the result of a decrease in equity stake
Amortization
-1.266
7.051
2.002
XIII. STATEMENT OF AMOUNTS PAYABLE
Analysis by current portions of amounts initially
Not more
Between 1
Over
than 1 year
and 5 years
5 years
125
9.916
Unsubordinated loans
636
1.783
Leasing and other similar obligations
105
133
payable after more than one year
Financial debts
Subordinated loans
Credit institutions
Total
1.264
5.589
16.265
2.966
6.455
28.097
4.230
Debts coverd by real guarantees
Financial debts
Subordinated loans
9.916
Unsubordinated loans
3.684
Credit Institutions
Total
59.401
73.001
XIV.A2. TOTAL TURNOVER OF THE GROUP IN BELGIUM
8.942
XIV.B AVERAGE PERSONNEL AND BREAKDOWN OF PERSONNEL CHARGES
Fully consolidated
enterprises
Average personnel (number)
1.482
Hourly-paid employees
900
Monthly-paid employees
562
Management
20
Personnel charges
Remuneration and social benefits
Pensions
67.437
1.419
Average number of staff employed in Belgium by group enterprises
274
XIV.D INCOME TAXED ON THE RESULT
Differences between taxes calculated on the consolidated income statement of the financial year
and the previous financial years, and taxes paid, or to be paid, for these financial years, in so far
as the difference is material with respect to taxes payable in the future
-3.997
XV. OFF-BALANCE SHEET RIGHTS AND COMMITMENTS
Real guarantees given or irrevocably promised by the enterprises included in the consolidation
on their own assets as guarantees for liabilities and commitments of enterprises included in
the consolidation
107.558
Other significant commitments :
Share option scheme
At the occasion of the Initial Public Offering (June 27, 1997), the General Meeting of Shareholders of LSG NV
created a share option scheme in favour of management, by virtue of which 63.600 warrants were issued giving the
right to subscribe for 63,600 shares ; of which 23,800 were already allocated at this time. Further allocations of the
warrants are decided upon by the Remuneration Committee which compromises the Chairman of the Board of
Directors and one other director. The option price amounts to 5% of the exercise price. A maximum of 20%
of total amount of warrants can be executed every year. The exercise price is EUR 37.18 per warrant attributed at
the time of the IPO, or the arithmetic average of the share price for the 30 days previous to the future award of
warrants. One warrant gives the right to subscribe for one new share. The exercise period is
5 years and a maximum of 20 % can be exercised in any one year.
Currency hedging
Per December 31, 2001, currency hedges existed for the following amounts (in thousands of EUR) :
Currency bought forward
Currency sold forward
356
11.584
It is the Group's policy only to sell or buy forward for existing orders. No speculative transactions are done.
Hedging is merely used to secure the margins on sales.
Obligation to repurchase
Under certain leasing schemes, some companies of the Group have committed to taking back machinery
sold if and when the final customer should not meet its lease obligations.
1.667
XIX. FINANCIAL RELATIONSHIPS WITH DIRECTORS AND MANAGERS
The amount of direct and indirect remuneration and pensions, included in the income statement as
long as this disclosure does not concern exclusively or mainly, the situation of a single identifiable person
- to the managers and directors
421
Report of the Board of Directors
The year 2001 was characterized by consolidation after years of expansion and
acquisition. The overall economical situation worked to the detriment of LSG as
the slowdown of the economy became apparent after the first quarter
of 2001.
The new structure, with a separate third division reflecting the specific market
approach in the United States was fully implemented by mid 2001. In order to
react to the rapid changing market conditions and the high indebtedness of the
group, more defensive measures needed to be taken: a first wave of cost
reductions in overhead and direct labor in accordance with the evolution in the
order backlog and a severe working capital reduction program. The number of
employees in the Group decreased from 1579 in December 2000 to 1420 in
December 2001. An important decrease in overall working capital of
12.5 million EUR was realized. In certain cases, these working capital reductions
were made at the detriment of the EBIT.
We were able to sustain our market share in Europe for both HDLD and CLD. In
the US, where the market environment was difficult, HDLD turnover increased by
10% however CLD turnover was hit by the restructuring of our sales organization handling the on-premise laundry and coin laundry market.
To the contrary of the general trend of reducing overheads, we have continued
to invest in sales and marketing activities as well as in product development.
With respect to marketing and sales, our presence at the bi-yearly US Clean
Show in New Orleans was a major success. With respect to product development, a number of new products and services will be launched during 2002.
Our US sales and service organization, LSG North America, has gone through
numerous integrations during 2001 and is fully operational since January 1,
2002. On the production side, we closed our plant in Cincinnati and transferred
the operations to our plant in Panama City, Florida.
Our new plant in Germany, Jensen-Senking, was completed on time and on
budget in December 2001. The new factory is housing our Business Unit
Washroom Technology as well as our German HDLD sales organization. The plant
comprises 10,000 m2 production and 2,200 m2 offices.
Results
We were not able to sustain the record level turnover of 2000 at 216 million EUR
and reached a turnover of 207 million EUR in 2001. The drop in sales including
USD effect amounts to 6%.
The sales by region followed last years pattern : 53% of our sales are in Western
Europe, 35% in North America and the rest in the emerging markets.
Our operating results decreased to 4.8 million EUR compared to 10.3 million
EUR in 2000 due to the drop in overall sales and some operational issues. The
decrease in sales in HDLD, combined with the investments that were made in
order to build-up a bigger sales and service organization in certain countries in
Europe, led to the under-absorption of these overheads. Also the additional
capacity that exists in Jensen Netherlands remained underutilized. In CLD, Cissell
was hit by the decline in the dry cleaning market and the rising cost of its
manufacturing of dryers. In the business unit washer extractors, Ipso-LSG
suffered from the decrease in orders in the US linked to the overstocks that
existed at its distributors.
Other, non-recurring expenses were linked to an increase in bad debt provisions as well as inventory write-offs.
The net financial loss increased from 4.7 million EUR in 2000 to 6.7 million EUR
in 2001, due to the higher average debt level as well as the increase in interest
rates due to the overall negative banking climate.
In line with the accounting policies of the Group, which will be further adapted
in 2002 in order to become IAS compliant, no exceptional results were
recorded in 2001.
As a result of the above, net earnings amounted to 47 thousand EUR in 2001
compared to a net loss of 4.3 million EUR in 2000.
Outlook 2002
Due to the slow recovery of the tourism and travel sector, which directly or indirectly make up for approximately 30% of our turnover, we expect an overall flat
market in 2002. The healthcare sector remains stable in developed countries
and will grow in developing countries. The industrial workwear sector is
expected to show a modest growth even considering the ongoing consolidation of our customers’ base.
At current sales levels, LSG expects to increase the operational result due to a
leaner cost structure. Per division, the outlooks are as follows :
The Heavy-Duty Laundry Division is expected to keep its leading market share
and to benefit more from sales through own sales and service companies. The
Heavy-Duty Laundry Division is showing a record high order backlog for France
and is gaining market share in the UK and Switzerland. The very competitive
German market is expected to remain stable. The restructuring of the Dutch
facility, Jensen Netherlands, is further being implemented and a break-even
situation is expected for 2002.
The Commercial Laundry Division is expected to perform better in 2002. The
origin of the earning deficiency at Cissell has been identified and a new
management team has been appointed which is realizing a remarkable
turn-around. Ipso-LSG is expected to show higher sales due to a better US
market penetration in addition to an excellent European market position.
LSG NA is expected to keep the current HDLD market share at slightly lower
turnover levels and grow by 5 – 10 percent in the CLD.
Continued special attention will be given to the working capital reduction program, further reducing debt and the improvement of the contribution margins.
Investments and capital expenditures
During 2001, we acquired the operations of our Swiss distributor Rosal. No
other investments were made.
As to the capital expenditures, except for the construction of the new plant in
Germany, only minor replacement capital expenditures were done.
Appropriation of the result
LSG N.V. closes the accounting year 2001 with a loss of 3.1 million EUR, linked
especially to the less-value recorded on the shares of D’Hooge. We propose to
appropriate these losses to the retained earnings, bringing them from 8.1 million
EUR to 5.0 million EUR.
The consolidated result of the Group, 47,000 EUR, will also be appropriated to
the retained earnings, bringing them from 6.96 million EUR to 7.0 million EUR.
Significant post balance sheet events
• During the Board of Directors meeting per March 11, 2002, it was
decided to:
1. call an extraordinary shareholders meeting, proposing them to make a
capital increase of maximum 22.2 million EUR through the issuance of a
maximum of 4,291,821 new shares at a price of 5.17 EUR per share.
Preference rights will be respected and every existing share or warrant
that is converted to a share, will give the right to subscribe to one new
share.
2. record deferred tax assets for losses that will be utilized in a foreseeable
future instead of three years. The application of this accounting rule
resulted in 1.1 million EUR more net profit. The change is inspired by the
gradual introduction of IAS.
• Legal restructuring
Per January 1, 2002 Ipso USA and Jensen USA have merged. The new legal
entity will be called LSG NA.
Dividend proposal
In view of the negative results of LSG N.V., we propose not to distribute any
dividend.
Other information in accordance with Art. 95, 96, 98, 608 and 624
(formerly Art. 77) of the Belgian Company Law
1. the company did not acquire any of its own shares in 2001.
2. next to the audit fees, the auditor received additional fees of 83,262 EUR in
his capacity as a tax advisor for Belgian companies of the LSG group.
3. the company did not increase the share capital in 2001.
Statutory Auditor’s (Commissaire/Commissaris) report
on the consolidated accounts of the group
LSG NV
submitted to the general shareholders’ meeting
Consolidated accounts for the year ended December 31, 2001
In accordance with legal and regulatory requirements, we are reporting to you
on the completion of the mandate which you have entrusted to us.
We have audited the consolidated financial statements as of and for the
year ended December 31, 2001 which show a balance sheet total of
EUR 166.412 (000) and a consolidated profit for the year of EUR 47 (000). The
audit of the financial statements of the subsidiaries Jensen Industrial Group A/S,
Jensen Denmark A/S, Scantag Systems A/S, Jensen USA Inc., Ipso USA Inc.,
Global Fox Financial Inc., Jensen UK Ltd, Jensen AG, Jensen Holding AG, Jensen
Sweden AB, Polymark Jensen SA and Senkingwerk GmbH has been conducted
by other auditors. We relied on their audit reports. These consolidated financial
statements have been prepared under the responsibility of the Board of
Directors of the Company. In addition we have reviewed the directors’ report.
Unqualified audit opinion on the consolidated financial statements
Our audit was performed in accordance with the standards of the Institut des
Reviseurs d’Entreprises-Instituut der Bedrijfsrevisoren. Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement,
taking into account the Belgian legal and regulatory requirements relating to the
consolidated financial statements.
In accordance with these standards we have considered the administrative and
accounting organisation of the group as well as the system of internal control.
The group’s management have provided us with all explanations and
information which we required for our audit. We have examined on a test basis,
the evidence supporting the amounts included in the consolidated financial
statements. We have assessed the accounting policies used, the significant
accounting estimates made by the Company and the overall presentation of the
We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements of LSG NV for the year
ended December 31, 2001 present fairly the financial position of the group and
the results of its operations, in conformity with the prevailing legal and
regulatory requirements, and the disclosures made in the notes to the accounts
are adequate.
Additional assertions
As required by generally accepted auditing standards the following additional
assertions are provided. These assertions do not alter our audit opinion on the
• The consolidated directors’ report contains the information required by law
and is in accordance with the consolidated financial statements.
Ghent, April 17, 2002
Klynveld Peat Marwick Goerdeler
Bedrijfsrevisoren/Reviseurs d’Entreprises,
Statutory Auditor
represented by
Theo Erauw
Bedrijfsrevisor/Reviseur d’Entreprises
SUMMARY BALANCE LSG N.V.
December 31
December 31
December 31
2001
2000
1999
120.699
124.504
34.197
Formation expenses
11
14
19
Intangible assets
19
24
0
ASSETS AS AT
Fixed assets
112
100
0
120.557
124.366
34.178
483
2.039
1.763
Amounts receivable after one year
0
0
0
Stocks and contracts-in-progress
0
0
0
316
2.002
1.763
0
0
0
Cash at bank and on hand
77
32
0
Deferred charges and accrued income
90
5
0
121.182
126.542
35.960
December 31
December 31
December 31
2001
2000
1999
98.204
101.283
22.267
Capital
21.350
21.350
10.996
Share premium account
71.140
71.161
1.404
Financial assets
Current assets
Amounts receivable within one year
Investments
TOTAL ASSETS
LIABILITIES AS AT
Reserves
Accumulated profits
Investment grants
Provisions and deferred taxes
702
702
702
5.012
8.070
9.165
0
0
0
0
0
0
0
0
0
Deferred taxes
0
0
0
Amounts payable
22.978
25.259
13.693
Amounts payable after one year
15.751
18.756
9.916
Amounts payable within one year
6.587
6.241
3.620
640
262
157
121.182
126.542
35.960
Accrued charges and deferred income
TOTAL LIABILITIES
SUMMARY INCOME STATEMENT LSG N.V. (in thousands of EUR)
December 31
December 31
December 31
2001
2000
1999
Operating income
2.039
1.609
38.431
Turnover
2.020
1.598
40.004
0
0
(2.028)
0
0
372
19
11
83
(2.202)
(1.522)
(29.445)
0
0
16.634
1.488
823
3.438
672
674
7.964
Depreciation
32
11
1.362
Write-downs
0
0
0
Increase (+), decrease (-) in stocks finished goods,
work- and contracts-in-progress
Fixed assets- own construction
Other operating income
Operating charges
Raw materials, consumables and goods for resale
Services and other goods
Remuneration, social security and pensions
0
0
0
10
14
47
(163)
87
8.986
Financial result
(597)
(361)
(871)
Financial income
454
52
1.259
Financial charges
(1.051)
(413)
(2.130)
(760)
(274)
8.115
(2.304)
(822)
(2.009)
Other operating charges
Operating profit
Profit on ordinary activities for the year before taxes
Extraordinary result
Extraordinary income
0
0
0
Extraordinary charges
(2.304)
(822)
(2.009)
(3.064)
(1.096)
6.106
Taxes
6
0
(2.572)
Transfer from deferred taxes
0
0
16
Income taxes
6
0
(2.588)
Profit for the year
(3.058)
(1.096)
3.534
Profit for year before taxes
APPROPRIATION ACCOUNT OF LSG N.V.
December 31
December 31
December 31
2001
2000
1999
Profit to be appropriated
5.012
8.070
10.608
Profit for the period available for appropriation
-3.058
-1.096
3.533
8.070
9.166
7.076
Appropriations to capital and reserves
0
0
-177
to legal reserves
0
0
177
Result to be carried forward
5.012
-8.070
(9.166)
Profit to be carried forward
-5.012
8.070
9.166
Distribution of profit
0
0
-1.266
Dividends
0
0
1.266
Profit brought forward
Key figures per share LSG N.V.
(In EUR)
Number of shares outstanding (2)
2001
2000
(12 months)
(12 months)
-0,18
-0,14
4.132.421
4.132.421
(1) The current profit after tax is the same as the net profit excluding extraordinary gains and losses (both adjusted
for taxes) .
(2) As a result of the merger between Ipso-ILG and Jensen on February 28, 2000, 2,004,224
new shares have been issued resulting in a total number of shares of 4,132,421
STATUTORY FINANCIAL STATEMENTS OF LSG N.V.
In accordance with article 105 of the Belgian Company Law, a summary version of the statutory financial statements
of LSG N.V. is presented. The management report and statutory financial statements of LSG N.V. and the report of
the statutory auditor thereon are filed with the appropriate authorities, and are also available at the company’s
registered offices.
The statutory auditor has issued an unqualified audit opinion on the statutory financial
statements of LSG N.V.
DROP-DOWN OF ACTIVITY OF IPSO WEVELGEM
On February 28, 2000 the Extraordinary Shareholders’ Meeting of LSG N.V. decided to accommodate the business
line relating to ‘Engineering, production, commercialization and distribution of industrial textile cleaning machines’ of
Ipso in Wevelgem in a previously dormant subsidiary of LSG N.V. As a result the parent company LSG N.V. will hence
fulfil only a holding function. The accounting date on which this drop-down was processed is November 1, 1999.
As a result, the single balance sheet of LSG N.V. as at December 31, 1999 and at December 31, 2000 only
contains the assets and liabilities of the holding activity (mainly investments and financing). The profit and loss
account by contrast still contains 15 months’ operational results of Ipso-ILG as per December 31,1999, while the
results of the holding activity as per December 31, 2000 and 2001 are presented in the short profit and loss
accounts. As a result, comparisons with the financial year ending December 31, 1999 and ratios in which data from
both the balance sheet and from the profit & loss account are used have little significance.
VALUATION RULES
The valuation rules used for the statutory financial statements of LSG N.V. are the same as the rules used for the
consolidated financial statements, with the exception of the depreciations on tangible fixed assets.
In the statutory financial statements an accelerated depreciation plan is used in accordance with the fiscal
provisions in this matter. The following depreciation percentages have been used:
Caption
Method
Rate
Buildings
Reducing balance
10%
Plant, equipment and machinery
Reducing balance
40%
Office equipment and furniture
Reducing balance
40%
Straight line
20%
Vehicles
CAPITAL STATEMENT (position as at December 31, 2001)
Amounts
Number of
shares
A. Capital
1. Issued capital
- At the end of the previous year
21.350
- Changes during the year
0
- At the end of this year
21.350
2. Capital representation
2.1 Shares without par value
21.350
4.132.421
2.2 Registered or bearer shares
- Registered
2.097.821
- Bearer
2.034.600
C. Own shares held by
- The company
0
- Its subsidiairies
0
D. Commitments to issue shares
1. As a result of the exercise of CONVERSION RIGHTS
Amount of the current convertible loans
Amount of capital to be issued
Maximum number of shares to be issued
2. As a result of the exercise of WARRANTS
Number of warrants in circulation
-
Number of warrants not attributed
199.200
39.800
Amount of capital to be issued
10.922
Maximum number of shares to be issued
E. Authorized capital not issued
-
199.200
21.350
-
In application of article 4 of the Law of March 2, 1989, the following declarations have been received, on October 27, 2000 of
holdings in the company's share capital :
Declarers :
GIMV N.V.
Jensen Invest A/S
Karel Oomsstraat 37
Sankt Anna Plads 10
2018 Antwerpen
DK - 1250 Kopenhagen
GIMV
Total
- number of shares
- number of shares through warrants
- total of shares + warrants
434.695
4.132.421
10,52%
33.900
199.200
17,02%
468.595
4.331.621
10,82%
Total
% Jensen Invest A/S
2.010.038
4.132.421
48,64%
0
199.200
0,00%
2.010.038
4.331.621
46,40%
Total
% Jensen Invest A/S + GIMV
2.444.733
4.132.421
59,16%
33.900
199.200
17,02%
2.478.633
4.331.621
57,22%
Jensen Invest A/S
- number of shares
GIMV & Jensen Invest A/S, in shareholder agreement
- number of shares
% GIMV
1. Identification :
• Name : Laundry Systems Group N.V.
• Registered office : Nieuwstraat 146, 8560 Wevelgem
• Administrative office : ’t Hofveld 6F2, 1702 Groot-Bijgaarden
• The company was founded on April 23, 1990 and exists for an unlimited
period of time
• The company has the legal form of a “naamloze vennootschap/société
anonyme” and operates under the Belgian Company Law
• Purpose (art. 3 of articles of association) : The purpose of the company consists in the following, both in Belgium and abroad, on its own behalf or in the
name of third parties, for its own account or for the account of third parties:
1. any and all operations related directly or indirectly or connected with the
engineering, production, purchase and sale, distribution, import, export
and representation of laundry machines and systems and the manufacture thereof;
2. providing technical, commercial, financial and other services for affiliated
businesses, including commercial and industrial activities in support;
3. obtaining an interest, in any manner, in any and all businesses that pursue
the same, a similar or related purpose or that are likely to further its
own business or facilitate the sale of its products or services, also
cooperating or merging with these businesses and, in general, investing,
subscribing, purchasing, selling and negotiating financial instruments
issued by Belgian or foreign businesses;
4. managing investments and participations in Belgian or foreign businesses,
including the standing of sureties, guaranteeing bills, payments in
advance, loans, personal or material sureties for the benefit of these
businesses and acting as their proxyholder or representative;
5. acting in the capacity of director, providing advice, management and
other services for the benefit of the management and other services
for the benefit of other Belgian or foreign businesses, by virtue of
contractual relations or statutory appointment and in the capacity of
external consultant or governing body of any such business.
The company may materialize both in Belgium and abroad, any and all industrial, trade, financial, bonds and stocks and real property transactions, that are likely to extend or further its business directly or indirectly or that are related therewith. It may acquire any and all movable and real property items, even if these
are related neither directly nor indirectly with the Purpose of the company.
It may obtain, in any manner, an interest in any and all associations, ventures,
business or companies that pursue the same, a similar or related purpose or that
is likely to further its business or facilitate the sale of its products or services, and
it may cooperate or merge therewith.
• The company is registered in the Commercial Register of Kortrijk under
the number 121.188 and is submitted to VAT under the number
BE 440.449.284.
• The articles of association of the company can be consulted at the registered office of the company. The annual accounts are submitted with the
National Bank of Belgium. Financial reports of the company are published in
the financial press. Other documents that are publicly available and that are
mentioned in the reference document, can be consulted at the registered
office of the company. The annual report of the company is sent every year
to the holders of registered shares as well as to the holders of bearer shares
who wish to receive it.
• The Company did not acquire own shares during the year 2001.
2. Share capital
• The registered capital amounts to 21,349,943.26 EUR and is represented by
4,132,421 shares without nominal value. There are no shares which do not
represent the share capital. All shares are ordinary shares, there are no
preferential shares. The shares are bearer or registered shares, depending on
the shareholder’s preference. The company may issue dematerialized
shares, either by way of an increase of capital or by exchanging existing
registered or bearer shares for dematerialized shares. Each shareholder may
request the exchange, either into bearer shares or into registered shares or
into dematerialized shares. A bearer share will be signed by two directors,
at least, the signatures may be replaced by signature stamps.
• A warrant plan exists for granting a maximum of 63,600 warrants to
employees, directors or consultants to the company. Each warrant represents the right to subscribe to one new share. The beneficiary employees,
directors or consultants of the warrants are indicated by the Board of
Directors. Exercise price of the warrants amounts up to the arithmetic, nonweighted average closing price of the LSG share on the Brussels Stock
Exchange during the 30 days preceding the offer of the warrants to the
beneficiary employees, directors or consultants of the company. Warrants
can be exercized in the period between June 1 and June 15 and between
December 15 and December 31 of each year.
• Within Laundry Systems Group N.V., a private bond loan of 9.9 million EUR
exists with 135,600 warrants attached without preferential subscription
rights. Each warrants gives the right to subscribe to a new share. The warrants
can be exercized between the 1st and 20th day of the months of June and
December, for the first time on December 1, 2001. Exercise price of the warrants amounts up to 73,13 EUR.
• Evolution of the share capital :
Date
Share Capital
Currency
Number of shares
23/04/1990
35,000,000
BEF
100,000
31/07/1997
440,024,000
BEF
2,111,129
31/07/1998
440,024,000
BEF
2,111,129
31/12/1999
10,998,000
EUR
2,128,197
31/12/2000
21,349,943
EUR
4,132,421
31/12/2001
21,349,943
EUR
4,132,421
design and printing van de maele - geraardsbergen
tel. 0032 54 41 66 13 - e-mail: [email protected]

Laundry Systems Group

Transcription

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