DNick Holding plc Annual Report 2005

Transcription

DNick Holding plc
Annual Report 2005
CONTENTS
Page
1. Business Review
3
Description of business activities
3
Development during the financial year
8
Business risks
14
Presentation of the financial positions and performance
17
Outlook
23
History of the Group
26
Other significant agreements concluded during the year
49
2. Group accounts
52
Balance sheet
53
Income and expenditure account
55
Schedule of changes in fixed assets
56
Statement of changes in equity
58
Cash flow statement
59
Segment reporting
60
Notes
62
3. Share Information
99
4. Directors’ Report
101
5. Audit Report
103
DNick Holding plc Group
Annual Report 2005 - Content
DESCRIPTION OF BUSINESS ACTIVITIES
The principal business activities of DNick Holding plc and its subsidiaries are the manufacture and
sale of metal products and other materials, in particular in the field of precious metals, semifinished products as well as circular blanks for coins and medals. The products are used in the
information technology, automotive, aerospace and consumer industries. The customers of the
Group are, amongst others, ABB, Bosch, Philips, Samsung Electronics and Siemens.
The Group is divided into the following operating divisions:
-
bars and wires
-
strips
-
recycling and processing of precious metals
-
blanks for coins and medals
-
cups
DNick Holding plc was formed in 2005 to act as the holding company for the former business
activities of Deutsche Nickel AG. The company is a pure investment holding company.
Set out below is a description of the areas of business activities of the operating companies within
the DNick Holding Group.
DEUTSCHE NICKEL GMBH
Deutsche Nickel GmbH is one of the leading producers in the world of products made from nickel
and nickel alloys. It has its own smelting plant used to produce nickel iron and copper nickel
blooms for the manufacture of bars and wires has a capacity of 9,000 to 10,000 tonnes p.a.
The products manufactured by Deutsche Nickel AG are used primarily in the automotive, optics,
light and electronics industries; the vast majority of the product is further refined by our customers
for use by the end user. Production is focused on specialised alloys and not on mass-produced
alloys.
The company took over the operating activities of the former Deutsche Nickel AG as from 1 March
2005, and the financial year therefore includes 10 months of operations. Sales for 2005 (from 1
March 2005) were approx. Euro 55.0 million with an EBITDA of approx. Euro -1.5 million. An
extensive action plan focusing on increasing sales and marketing activities, reducing the cost of
materials and optimising technology had already been implemented in 2005 and as a result
significant steps had been taken to improve profitability.
Annual Report 2005 - Business Review
3
DEUTSCHE NICKEL AMERICA INC.
Established in 1982 Deutsche Nickel America Inc. operates as a sales and trading company in the
North American market for Deutsche Nickel GmbH and Auerhammer Metallwerk GmbH and
supplies nickel, nickel-based alloys, soft magnetic strips and thermobimetals to a variety of
industries and customers in the USA, Canada and Mexico. This involves approx. 30% of the
products of Deutsche Nickel GmbH and approx. 10% of the products of Auerhammer Metallwerk
GmbH.
Sales in 2005 were approx. Euro 28.0 million with an EBITDA of approx. Euro 1.7 million.
AUERHAMMER METALLWERK GMBH
The company has developed into a modern production facility for specialised metallurgical
products, particularly in the strip business division, that are used in the fields of electronics,
electrical engineering, vehicle electronics, steering, measuring and regulating technology as well
as in scientific toolbuilding applications. Strip and cold bonded products as well as stamped,
drawn and wound parts complement the successful production programme of the Group.
Auerhammer Metallwerk GmbH obtains the majority of its raw materials from Deutsche Nickel
GmbH in the form of molten blooms.
Sales for 2005 were approx. Euro 46.4 million with an EBITDA of approx. Euro 3.8 million.
SAXONIA EDELMETALLE GMBH
SAXONIA Edelmetalle GmbH was acquired into the Deutsche Nickel Group in 1993. Since the
beginning of the 17th century SAXONIA Edelmetalle GmbH has continued the tradition in the
Freiberg region of extracting and using precious metals.
The company operates today in the core areas of precious metal recycling, such as gold, silver,
platinum, as well as precious metal processing and electroplating with these alloys and is
regarded as an acknowledged and reliable partner within the industry applying such technology.
In the recycling process metallic and non-metallic scrap containing precious metals are subjected
to a metallurgical and wet-chemical process through which they are turned into marketable refined
metal. The precious metals are refined into semi-finished goods in the form of blooms and strips,
wires and sheets as well as into chemicals and parts.
4
The key sales markets are the glass industry, electroplating technology, electrical engineering
technology, the film and photographic industry, jewellery and silverware as well as mints.
Sales for 2005 amounted to approx. Euro 118.9 million with an EBITDA of approx. Euro 8.2
million. As a result of the merger with EuroCoin GmbH sales include an amount of approx. Euro
12.4 million and EBITDA of approx. Euro 1.1 million attributable to business conducted by
EuroCoin GmbH prior to its cessation of trading.
SAXONIA EUROCOIN GMBH
The company was established in 2002 as a result of a spin off from SAXONIA Edelmetalle GmbH
and operated in 2005 in the fields of plastic electroplating and the production of blanks. The
plastics electroplating business segment was spun off at the end of the financial year and sold as
at 31 December 2005, as this division did not represent a core business of the Group and was not
making a significant contribution to profits while at the same time was utilising too many
resources.
The production of blanks comprises the production of blanks made of steel strips and their
subsequent electroplating coating with nickel, copper, brass and bronze as well as the
manufacture of non-ferrous blanks, at increasing levels due to the closure from the middle of the
2005 financial year of the production facilities in Schwerte. The production of gold and silver
blanks for coins and medals completes this line of business.
Taking into account that the plastics electroplating division and only part of the newly added full
coins business activity are included sales for 2005 amounted to approx. Euro 40.0 million with an
EBITA of approx. Euro 3.5 million.
DN PRESSTEC GMBH
DN PressTec GmbH was established at the end of 2001 and is therefore the youngest member of
the Deutsche Nickel Group. The company produces punched and deep-drawn parts (cups) made
from brass strips and cladded material using, in part, strips made by the Auerhammer Metallwerk
GmbH, which are used as a base product in the manufacture of ammunition for hunting, sport, the
military and the police.
In October 2005 DN PressTec GmbH acquired the cups division from Sundwiger Messingwerke
GmbH as part of an asset deal and as a result has significantly increased its market position.
Sales for 2005 amounted to approx. Euro 17.8 million with an EBITDA of approx. Euro 1.5 million.
5
SALES AND MARKETING
The Group’s customer base is extremely diversified. We use regional distribution channels to
reach our customers as quickly and as comprehensively as possible. European customers are
serviced by the direct sales and marketing department and by the sales force of each company,
American customers are serviced directly by the marketing company in the USA,
Asian
customers by sales representatives in China, Malaysia and Thailand.
representative offices / subsidiaries
foreign branches
RESEARCH AND DEVELOPMENT
The Group, partly in collaboration with customers, has continued to develop various new products
in order to improve its operating activities and to react to customer and market requirements and
has been successful in having these products accepted by customers.
In particular the smelting operations of the Group, from which most of the alloys for our products
are produced, include the application technology area, which, in our view, represents a special
form of research and development regarding new materials and manufacturing processes geared
to the customer and the market. This area was also restructured during the financial year as part
of the programme to improve operations and is becoming increasingly important. It is a
precondition for financial and qualitative competitiveness and long-term customer satisfaction.
6
ENVIRONMENTAL PROTECTION
No particular incidents occurred in 2005 in the area of environmental protection or occupational
safety. Legal requirements were complied with in all areas with the result that no additional
investments were required to be made in plant and machinery.
7
DEVELOPMENTS DURING THE FINANCIAL YEAR
The Group companies operate within the following business divisions:
-
Bars and wires
Deutsche Nickel GmbH/
Deutsche Nickel America Inc.
-
Strips
Auerhammer Metallwerk GmbH
Deutsche Nickel America Inc.
-
Recycling and processing of precious metals
SAXONIA Edelmetalle GmbH
-
Coin blanks and medals
SAXONIA EuroCoin GmbH
-
Cups
DN PressTec GmbH
-
Other
DNick Holding plc
DN Real Estate GmbH
The Group is therefore structured in such a way that a single independent Group company is
primarily responsible for each of the business lines.
Only Deutsche Nickel America Inc., as the marketing company in North America for bars/wires
and strips, is allocated to the two business lines in which it is involved.
BAR AND WIRE DIVISION
Wires are produced mainly for the automotive, optics, light and electronics industries in the wire
division. The majority of products are then subjected to further processing by our customers in
order to produce consumer goods. The constant build-up of inventories in 2004 together with an
invigorated economy in the second six months of 2004 did not continue into 2005. As increases in
raw material prices, which were substantial for this business division, are passed on to customers,
who were not able to pass these increases onto their customers in all cases, there was a
noticeable dampening in demand for wire products in 2005.
In contrast the demand for bars increased significantly, which was particularly driven by high oil
prices. Bar production capacity was increased and will be therefore significantly increased in the
future in order to be able to reliably meet future demand.
The increase in the bar business was able to compensate for the decline in the wire business.
As the only division the bar and wire division recorded operating losses in the past and was also
fundamentally restructured in 2005 from an operating standpoint in addition to the legal and
financial restructuring undertaken. The sales and marketing activities were significantly
strengthened as part of the restructuring of the operations. However, customers became
8
extremely unsettled due to the necessary Group restructuring and also extensive adjustments had
to be made to the selling prices of individual products in order to bring to an end their negative
contribution to the bottom line.
The product mix was also extensively streamlined in order to re-focus on the main product line of
the company, which is the manufacture of specialised rather than mass-produced products. As a
result of these activities the first signs of a recovery in profitability were seen. These measures will
be continued in the following years and will contribute to the generation of profitable results by all
Group divisions and units.
In 2005 a profit centre reporting structure was also introduced in the bar and wire division as part
of the restructuring of the operations. The bar and wire profit centre was subdivided into internal
operating areas of responsibility, in which the production and sales and distribution activities of
each production area were consolidated, so that any overlapping of responsibilities can be
avoided in the future and staff assigned direct responsibility for the individual product areas can
focus on the market in a targeted and specific manner. In this way the business division can
respond more effectively and more quickly to customer and market requirements.
This new
organisational structure has already produced benefits during 2005.
STRIPS DIVISION
The strips division also recorded a positive contribution in 2005 and was also able to continue the
positive trend experienced in 2004.
Total sales of Euro 40.8 million were generated in the five business fields supplying the various
markets. These include thermo-bimetals, cladded strips, metal strips, metal sheets and pins as
well as anodes for cathode ray tubes. This product range has provided stability over the last years
and enabled the division to react at short notice to market demands.
Prices also decreased in a period of increased sales volume. This was caused primarily by strong
competitive pressures and by the need to ensure that there was sufficient utilisation of production
capacity.
During the year the Group was able to develop the main area of thermo-bimetals into the market
leader.
As in past years the company maintained stable relationships with its suppliers. New suppliers,
mainly for steel strips that are to a certain extent the starting material for cladded strips, were also
approved, thereby strengthening and improving a solid base for future supplier relationships.
9
RECYCLING AND PROCESSING OF PRECIOUS METALS DIVISION
The economic environment of the precious metal industry is sensitive and yet very reliable and
stable at the same time; the demand generated by the market and customer relationships is
sustainable.
Orders received during the year were again processed partly with materials supplied by customers
and partly with precious metals acquired for our own account. Sales for the year of this division
amounted to Euro 111.4 million, against a material usage of Euro 91.3 million. Sales and precious
metal usage were below the levels of the prior year, which is attributable primarily to increased
metal prices as well as slight changes in the product mix between the use of own or customer
materials in the production process.
However, the value added by recycling operations, or rather by the individual products created
through the recycling and refining of precious metals, in the amount of approx. Euro 15.2 million
has remained constant compared to prior years and is also sustainable.
Even in the sensitive precious metals market the company was also approached by its customers
with a certain amount of concern and restraint due to the restructuring and related uncertainty.
However any negative impact, such as the defection of customers, was avoided through the
concerted efforts of management and the sales and distribution and customer service
departments and by explanations provided on the Group’s situation. The Group was again able to
sustain its position as a qualitative and reliable partner.
COIN BLANKS AND MEDALS DIVISION
The coin blanks and medals division experienced strong growth again resulting in a high degree of
production capacity utilisation during most of the year. Sales increased by 41% to Euro 36.7
million compared to the prior year. This increase is attributable to the product mix of galvanised
and non-ferrous coin blanks on a sales volume of approximately the same level as the prior year.
The utilisation of the blank production line was achieved primarily through the successful
participation in tendering throughout the world and it is now being used solely for projects since
the completion of the introduction of the Euro.
Whereas three large orders were completed in 2004, which constituted approx. 60% of the sales
volume, and the company was able to benefit from several orders from German mints, the
financial year 2005 was characterised by the following significant developments:
10
Up until 2004 the worldwide marketing and sales of blanks were exclusively carried out by
EuroCoin AG. Customers in the coin market became extremely unsettled during the restructuring
of the entire Group. Production was completely reorganised through the restructuring of the coin
sector, the closure of unprofitable production facilities and the related relocation of coin blank
production facilities to other locations. As a result of the strengthening of management required by
this situation and the clear focus placed on the key steps to be performed to re-establish the
Group as a high-performance and reliable partner in the European and international markets a
substantial number of projects were won during the year that enabled production capacity to be
utilised at a good level and that have a significant order carry-forward effect for the following year.
The international profile of the company was increased by reliable deliveries and products, yet at
the same time orders had to be accepted at unsatisfactory prices in order to strengthen market
presence resulting in a dilution of margins for the year.
Growth opportunities are limited in this business segment. Overall the coin market for both nonferrous and galvanised blanks is highly competitive. There are only a small number of worldwide
suppliers. Increases in price levels will only be achieved very gradually in the future due to the
fierce price war and only with the utmost difficulty.
CUPS DIVISION
The division recorded sales of Euro 17.7 million and manufactures ammunition cases as the
starting material for small-bore hunting, sporting, military and police ammunition. The company
was able to strengthen its position as market leader during the course of the year.
The European market is stable with regard to sales volumes; a decline in the demand for military
end products was more than compensated for by increased sales of civilian end products.
Developments within the American market were very different. Sales to the US market increased
significantly with our major customer as well as through the winning of new customers; in contrast
sales to the Canadian market declined. However, in summary, the successes achieved in the prior
year in the North American market were sustained despite the dependency on the US dollar and
the growing competition in the USA.
The order book at the end of the year guarantees work for the next four to five months. The
positive price developments of the prior year continued in the financial year and furthermore cost
reductions were achieved in process-related activities.
However, profit margins on products decreased in some cases but this was more than offset by
the positive growth in business. On the one hand it was essential to gain access to the
strategically important Spanish market, which was achieved through aggressive entry pricing, but
11
at the same time the profit margins on products manufactured by this division were adversely
impacted by the weakness of the US dollar.
During the financial year the cups division acquired a pool of customers and the associated plant
and machinery from a competitor which contributed to the further strengthening of its position as
market leader and to the significant business expansion that was already demonstrated to a
certain extent by the increase in profitability from the fourth quarter onwards.
The customers of this division were also unsettled to a certain extent by the Group restructuring.
However, this did not affect the cups business due to the strong sales and marketing activities and
the close contacts maintained with the customers.
RESTRUCTURING OF THE GROUP
Group operations were affected significantly by the legal, financial and balance sheet restructuring
of the Group. The individual steps carried out under the restructuring are described below in detail.
Under the restructuring substantial non-recurring costs were incurred, such as, for example, the
acquisition of claims under the joint and several liability of Group companies and the acquisition of
claims under mortgages as well as other expenses incurred in the acquisition of Group
companies. These are described in detail in the notes.
FINANCING OF THE GROUP
Bear Stearns plc has granted a loan in the amount of Euro 12.5 million to finance the restructuring.
This had an original maturity of 28 April 2006 but was extended to 28 October 2006. Furthermore
the bank and the company reached an agreement with regard to the commitment of additional
funds in the amount of Euro 8.0 million to be applied to finance the purchase of the joint liability
under the VDN loan for Euro 8.0 million following the completion of the CVAs for DNick Ltd. and
EU Coin Ltd..
Furthermore Bear Stearns Bank plc has taken over various loans granted to subsidiaries in the
amount of Euro 4.9 million; they become due and payable on 31 December 2006.
A so-called standstill agreement was agreed with the German banks financing the individual
Group companies with regard to the refinancing loan granted in 2003, under which principal
repayments were deferred for 2004 and 2005. These principal repayments were to be made by
the end of 2005. Under the agreed standstill overdraft lines originally made available by the
participating banks until 15 April 2006 have already been extended to 30 September 2006.
12
In 2005 the company had already begun to completely restructure the way in which the Group is
financed in order to be in the position to settle the loan amounts due in 2006 on their due dates
but also to generate funds to develop and expand the business activities of the Group companies.
Receivables continue to be financed through factoring and the asset based borrowing line,
respectively, is unchanged and remains in effect.
13
BUSINESS RISKS
The Group is subject to various risks in its operating activities, particularly fluctuations in metal
prices and foreign exchange rates. Risks inherent in the financing of the Group relate primarily to
the existing maturity dates of the financing obtained.
METAL MARKET
The individual Group companies manufacture primarily nickel or copper alloy products and
precious metals as well as to a certain extent steel to be used as the starting material for plated
products. These products are therefore extremely dependent on the movement in metal prices.
As the metal prices on each order for the main alloys are passed onto customers based on the
current daily price quoted on the LME (London Metal Exchange) and the metal prices are hedged
through exchange contracts on receipt of the order, individual profit margins are not affected by
fluctuations in metal prices. However demand for products made of these metals is affected by
fluctuations in metal prices, which as a result have an impact on Group operations.
The demand for steel and precious metal alloy components, such as nickel, has increased due to
the sustained high level of worldwide steel production. The very high price of nickel sustained since
2003 fluctuated sharply during 2005 at this high level.
In addition to the continued high level of nickel prices there were also marked increases in the price
of copper and related metals, in particular molybdenum and cobalt.
The price of precious metals such as gold, silver and platinum also increased sharply in 2005.
The price increases for wire products could not be fully passed on to the end customer in the
consumer goods industry, particularly in the automotive and electronics markets. As a result there
was a clear decline in demand for wire products.
In contrast the demand for bar products increased significantly, driven in particular by the high oil
price. The market is also stable for the recycling and processing of precious metals and there was
no decline in sales or demand.
14
FOREIGN CURRENCY
The US dollar is the most important foreign currency for the Group. Almost all sales to the
American market as well as to Asia are generated in US dollars constituting approx. 23% of total
Group sales.
As orders denominated in foreign currency are in principle hedged with forward foreign contracts
at the time the order is accepted, no significant foreign exchange differences arise on the hedged
transactions. Blue chip international banks act as the counterparties on these financing
transactions. However, it was not possible to hedge a major part of the US dollar exposure in
2005 due to the limited bank credit lines available.
Any continued depreciation of the US dollar against the Euro will result in products from the Euro
area becoming more expensive in terms of the US dollar, which can result indirectly in a reduction
for demand for European products and can therefore have a significant impact on the business
development of the Group.
CUSTOMER UNCERTAINTY
The individual business divisions of the Group were severely affected in 2005 by the legal,
financial and the balance sheet restructuring of the Group and the former parent companies. As
was the case in 2004 each individual company had to struggle constantly with these uncertainties.
The main customer concerns revolved around whether the Group is still a reliable trading partner,
whether the Group or the individual partner will still be trading in the future or whether the whole
Group might be insolvent.
As a result of this there was a great risk that the Group would not be able to retain the customers
of each business division, would lose orders or would only be able to supply customers in the
future on a short-term basis.
Driven by uncertainties regarding the continued existence of the Group companies our financing
partners, in particular with regard to trade credit insurance for our suppliers, were also to a certain
extent not prepared to provide support with the result that a large proportion of inventories,
principally metals, could only be purchased on a prepayment basis as the majority of the suppliers
would not grant credit without insurance. The loss of a large number of credit lines placed a
severe additional financial burden in 2004 and 2005 on the financing of working capital, which,
however, the companies were able to obtain at all times.
15
FINANCING OF WORKING CAPITAL
As described above, based on the sector and the type of business, the Group companies require
a high level of materials during the production cycle. Metals are the major component of inventory.
A significant amount of capital is therefore tied up in the materials inventory, in which the metals
have to be normally paid for well before the customer pays for the product. This amount of tied-up
capital or capital required is increased by price increases in the metal market. The company is
therefore dependent on ensuring that financing for working capital is obtained.
DEFAULT RISK
There is a risk of incurring a loss in the event that a trading partner defaults. The company policy
is that the company is not to bear any risk for its own account on almost all transactions entered
into. For this purpose information is obtained on new customers as regularly as for existing
customers. Payment terms for deliveries are only extended to customers who have taken out
trade credit insurance or have provided other collateral such as a L/C. Furthermore the majority of
the receivables are sold to a factoring bank, which is also an effective protection against default.
Consequently defaults occur seldomly and are not material.
REFINANCING
As substantial loans are due for repayment in the short-term a comprehensive refinancing of the
Group’s financing requirements is therefore in the process of being completed. It is essential for
the continued existence of the Group that this refinancing is successfully concluded within the
required timeframe by the maturity of each of the loans and the Group is in the overall position of
being able to make the required payments.
16
FINANCIAL POSITION AND PERFORMANCE
In order to better present the financial position, financial performance and cash flows of the Group
a pro-forma consolidated balance sheet (unaudited) was prepared as at the beginning of the
financial year as if the Group had already been operating under this structure as at 1 January
2005.
FINANCIAL POSITION
31.12.2005
Assets
Cash and cash equivalents
€ 000s
%
01.01.2005
€ 000s
Change
%
€ 000s
%
5,057
3.8%
7,948
5.1%
-2,891
-36.4%
357
0.3%
478
0.3%
-121
-25.3%
Receivables
21,529
16.0%
21,585
13.9%
-56
-0.3%
Inventories
72,048
53.6%
80,197
51.5%
-8,149
-10.2%
1,885
1.4%
1,209
0.8%
676
55.9%
100,876
75.0%
111,417
71.6%
-10,541
-9.5%
25,430
18.9%
31,390
20.2%
-5,960
19.0%
Financial assets
7,039
5.2%
11,567
7.4%
-4,528
-39.1%
Deferred tax assets
1,174
0.9%
1,302
0.8%
-128
-9.8%
Non-current assets
33,643
25.0%
44,259
28.4%
-10,616
-24.0%
134,519
100.0%
155,676
100.0%
-21,157
-13.6%
Marketable securities
Other assets
Current assets
Fixed assets
Total assets
After adjusting for the short-term receivable in the amount of Euro 4.0 million resulting from the
disposal of the plastic electroplating business short-term receivables arising from operating
activities amounted to Euro 17.5 million as at the reporting date and have therefore declined by
Euro 3.9 million.
The reduction in inventory in the amount of Euro 8.1 million compared to the prior year represents
a reduction of 10% and is primarily attributable to improvements made to the production
processes and the consequent reduction in production throughput times as well as the more
efficient use of factors of production linked with reductions in inventory. The actual effect was
offset by increases in raw material prices. As a result the inventory turnover rate increased slightly
compared to the prior year.
Other assets were higher by Euro 0.7 million compared to the prior year, the increase relates
primarily to claims for VAT reimbursements for the month of December 2005.
17
The reduction in tangible assets results primarily from the high depreciation charged in the
financial year (including impairment), combined with the lower level of investment.
As at 1 January 2005 there were amounts due from DNick Ltd. (CVA) and EU Coin Ltd. (CVA)
(included under financial assets in the pro-forma balance sheet) totalling Euro 3.2 million, which
were written off during the year. In addition loans to NordicCoin AB were reduced by scheduled
repayments of Euro 1.3 million.
FINANCIAL CONDITION
31.12.2005
€ 000s
Bank loans < 12 month
28,693
21.3%
22,241
14.3%
6,452
29.0%
Trade payables
13,307
9.9%
16,671
10.7%
-3,364
-20.2%
Provisions
13,922
10.3%
9,042
5.8%
4,880
54.0%
9,579
7.1%
11,028
7.1%
-1,449
-13.1%
65,501
48.7%
58,982
37.9%
6,519
11.1%
Bank loans > 12 month
4,656
3.5%
7,347
4.7%
-2,691
-36.6%
Provisions
3,615
2.7%
3,509
2.3%
106
3.0%
442
0.3%
987
0.6%
-545
-55.2%
Deferred tax liabilities
2,928
2.2%
2,119
1.4%
809
38.2%
Non-current liabilities
11,641
8.7%
13,962
9.0%
-2,321
-16.6%
1,086
0.8%
912
0.6%
174
19.1%
56,291
41.8%
81,820
52.6%
-25,529
-31.2%
134,519
100.0%
155,676
100.0%
-21,157
-13.6%
Current liabilities
Other liabilities
Deferred income
Equity
Total liabilities and equity
€ 000s
%
Change
liabilities
Other liabilities
%
01.01.2005
€ 000s
%
The increase in short-term liabilities to banks is caused by a short-term borrowing in the amount of
Euro 11.9 million. As at the reporting date other credit lines were utilised Euro 5.4 million less than
compared to the prior year.
Trade payables decreased compared to the prior year that is partly related to the reduction in
inventory.
After adjusting for the addition to other provisions of an amount of Euro 9.7 million in respect of
restructuring costs short-term provisions amounted to Euro 4.2 million and have therefore
decreased by Euro 4.8 million. This resulted primarily from the settlement of a provision in the
18
amount of Euro 4.1 million relating to the liquidation of the EuroCoin GmbH business (anticipated
loss) as well as the reversal of a provision for processing costs in the amount of Euro 2.4 million.
This decrease was offset by a provision made in the amount of Euro 1.3 million for an anticipated
claim under a guarantee and an increase in other provisions in the amount of Euro 0.4 million
relating to operating activities.
The change in equity capital includes the loss for the year of Euro 24.8 million as well as the
movement in revaluation reserves of Euro 0.7 million.
The equity ratio has declined from 52.6% to 41.8% as a result of the loss recorded for the year
caused by the non-recurring costs incurred as part of the restructuring. The decrease is
disproportional given the related reduction in total Group assets.
19
FINANCIAL PERFORMANCE
2005
€ 000s
Sales
256,955
Other operating income
10,044
Changes in inventory
-7,710
Gross revenue
%
259,289
100.0%
-190,173
73.3%
Personnel expense
-29,241
11.3%
Other operating expense
-22,304
8.6%
Operating EBITDA
17,571
6.8%
Depreciation/amortisation
-7,423
2.9%
-100
0.0%
Operating EBIT
10,048
3.9%
Financial result
-2,626
1.0%
7,422
2.9%
-28,704
11.1%
-1,812
0.7%
-23,094
8.9%
-1,733
0.7%
-24,827
9.6%
Cost of materials
Result from investments
Profit on ordinary activities
Exceptional result (net)
Income taxes
Net loss before profit and loss transfer
Profit and loss transfer
Net loss for the year
Prior year figures are not presented as this is the first year of operations for the Group under this
structure.
Deutsche Nickel GmbH commenced operations on 1 March 2005 following the transfer of
operations through DNick Ltd. (formerly Deutsche Nickel AG). Consequently only 10 months of the
business operations of Deutsche Nickel GmbH are included in the annual result of the Group.
The Group recorded an operating EBITDA of Euro 17.6 million for the year on sales of Euro 257.0
million. An amount of Euro 4.9 million resulting from the reversal of provisions is recorded under
other operating income, which in turn relates to the drawdown of an amount of Euro 3.2 million for
anticipated losses, against which are offset higher costs for materials and personnel. .
Systematic depreciation amounted to Euro 5.8 million and impairment loss to Euro 1.6 million.
20
Included in the exceptional result are all costs incurred by the Group during the year as part of the
restructuring and are not connected to the operating activities of the Group companies. They
relate primarily to the acquisition of claims against the Group under the joint and several liability of
Euro 12.4 million, claims from mortgages of Euro 4.0 million as well as legal and advisory fees and
other restructuring costs.
Incomes taxes relate to actual tax expense of Euro 0.6 million as well as deferred taxes of Euro
1.2 million.
The profit and loss transfer includes the Group obligations under profit and loss transfer
agreements in the amount of Euro 1.7 million, which existed against DNick Ltd. and EU Coin Ltd..
This obligation was paid for the last time and applies to the results up to and including April 2005,
the date on which the profit and loss transfer agreement was cancelled.
We refer to the explanations set out in the notes with regard to the individual profit or loss line
items.
CASH FLOW
The cash flow statement for the financial year shows that the Group generated a cash flow of Euro
13.2 million from operating activities (without taking into account exceptional items).
In addition to the operating result the cash flow was positively affected primarily by the reduction in
working capital. The change in working capital shows that inventory levels have been reduced
through targeted inventory management and as a result tied-up capital could be released. This
was achieved primarily through improvements made to the production processes, combined with
reductions in production cycle times as well as a more efficient use of materials.
In addition trade receivables were reduced by Euro 1.9 million as a result of the application of a
consistent accounts receivable management process.
There was a cash outflow resulting from the reduction of trade payables by Euro 3.7 million. This
reduction is cut-off-date-related and is attributable partly to the reduction in inventory.
The increase in other working capital by Euro 4.7 million relates primarily to the receivable arising
on the sale of the plastics electroplating business for Euro 4.0 million at the end of the year.
Euro 3.0 million of the cash flow of Euro 13.2 million generated from operating activities was
applied to finance cash flows from investing activities, primarily for the restructuring costs of Euro
17.7 million.
21
In total the short-term liabilities to banks increased by Euro 6.4 million from Euro 22.3 million to
Euro 28.6 million. This increase results from the taking up of a short-term loan facility in the
amount of Euro 12.5 million (drawdown: Euro 11.9 million), offset by lesser utilisation of the other
credit lines by approx. Euro 5.4 million as at the reporting date compared to the prior year. Cash
and cash equivalents decreased from Euro 7.9 million to Euro 5.1 million.
22
OUTLOOK
BAR AND WIRE DIVISION
The market environment and demand for bars picked up strongly in 2005. The company expects
that this situation will continue in 2006.
Following market corrections in the wire sector a stable situation comparable to the prior year is
expected. An improvement in results compared to the prior year is expected in the next financial
year as a result of the streamlining of the product mix and the adjustment of prices to market
levels for a large number of customers.
In the next financial year focus will be placed on the continued implementation of the restructuring
measures, improvements in the processes, reductions in production and delivery times, cleaning
up the portfolio as well as on intensifying the sales and marketing activities. In order to structure
the use of materials more efficiently than previously, the opportunities for purchasing at market
prices semi-finished products that cannot be manufactured internally is to be extended and fully
utilised.
For 2006 a positive result, an EBITDA of approx. Euro 2.2 million, is forecasted for the first time
since the restructuring.
STRIPS DIVISION
Sales volume and turnover for the strips division is planned to increase slightly in the year. The
order book at the year-end amounted to 41% of the planned sales volume for 2006 and is above
the prior year carryover amount.
Focus will be placed on increasing sales of cladded strips as a competitor ceased trading in these
products at the end of 2005 and the company will expand its business relationships with existing
customers.
Overall it is expected that this business activity will be very stable on the whole and be
comparable to the prior year.
RECYCLING AND PROCESSING OF PRECIOUS METALS DIVISION
The market environment for the recycling and processing of precious metals division is very
stable. Years of reliable customer relationships are of utmost importance in a business sector as
23
sensitive as precious metals. The company has established a good reputation in this market and
is expecting a constant and sustainable flow of business in the future.
The liquidation of the former EuroCoin GmbH, which had been merged with SAXONIA
Edelmetalle GmbH, was almost completed during the financial year from an operating standpoint.
The assets still remaining at the year-end have been valued as loss-free, the liquidation of these
assets will be completed in the first half of 2006.
The total amounts received on disposal of the assets should exceed the liquidation costs. The
cash surpluses are to be applied to further reduce the debts of the company.
COIN BLANKS DIVISION
The first successes were achieved in 2005 in consolidating market position through the high level
of marketing activities undertaken to publicise in the market the name EuroCoin as again a reliable
trading partner.
At the end of 2005 the order book had orders for 9 months, so that it is expected that production
capacity will be utilised to good effect during the whole year. The market and prices are highly
competitive, however they are at a relatively stable level with the effect that the company is
forecasting that the business will continue to develop positively during the whole of 2006 and that
positive results will be generated.
CUPS DIVISION
The situation in the European market will not change significantly compared to the prior year and
will remain relatively stable. In the fourth quarter of 2005 the first deliveries were successfully
made to the new customers obtained through the acquisition of a pool of customers in 2005 and
will lead to a stable and more extensive flow of business that will have a positive impact on
turnover and results for the whole of 2006.
The positive business development in the American market is based on the stabilisation of
business relationships in Canada and this despite the current foreign currency situation and the
associated strong competitive advantage thereby enjoyed by our US competitors. The objective is
to generate the same sales volume as recorded in 2005. The company has also successfully
fulfilled annual contracts in the US market both qualitatively and on schedule.
In addition to consolidating the newly acquired position as market leader the main objective for
2006 is also to ensure that unit costs are constantly improved and that the product profit margins
24
are increased. Through its market presence and reputation as a reliable trading partner the
company has a good solid foundation for building on the success of the prior year.
SUMMARY
The overall operating objective of the Group for 2006 is to turn the bars and wire division into a
profitable business again through the restructuring operating measures implemented so that all
business divisions of the company generate positive earnings.
Group sales of about Euro 280 million are planned based on the current Group portfolio of
holdings. The increase results from the inclusion of sales for 12 months for Deutsche Nickel
GmbH (compared to 10 months in the prior year) and the expected further increases in metal
prices that are passed on to customers. In addition an increase in sales is planned as a result of
the expansion of operating activities. Overall a slight improvement in the operating EBITDA is
planned for 2006 compared to the prior year.
In summary each business area of the company is operating in a stable market. Significant shortterm increases in earnings or in the flow of business are therefore not to be expected at the
present time.
REFINANCING/FINANCING OF THE BUSINESS
Group cash flow resulting from operating activities is stable and is monitored closely. The
restructuring has been completed and no exceptional items are expected to arise in 2006 as was
the case in the prior year.
The contract agreed with the factoring bank and the asset based borrowing line are unchanged
and remain in effect.
The main task of the management of DNick Holding plc for 2006 is to ensure that the restructuring
of the Group refinancing requirements already begun in 2005 is in place before the bank loans
become due and that these loans are repaid on their due dates. Another objective is the inclusion
of the long-term financing loans as well as the lines required for guarantees and hedging
instruments in the refinancing and to restructure and standardise the financial position of the
Group. Appropriate negotiations have been entered into with lenders.
25
HISTORY OF THE GROUP
DEUTSCHE NICKEL AG
DNick Ltd. as the shareholder in DNick Holding plc is the legal successor to Deutsche Nickel AG.
Deutsche Nickel AG was originally a wholly-owned subsidiary of Vereinigte Deutsche NickelWerke AG, Düsseldorf (hereinafter referred to as "VDN AG“). Deutsche Nickel AG combined in
itself and its subsidiaries the business units for the production of semi-finished products such as
wires, bars and strips of nickel alloys of all types and the production of coin blanks, the production
of munitions cases and the recycling and processing of precious metals.
VDN AG was a listed holding company. In 1999 Deutsche Nickel AG issued a debenture.
Furthermore VDN AG, Deutsche Nickel AG as well as the subsidiaries of Deutsche Nickel AG
took on substantial bank debts in order to finance their business activities. In 2004 the VDN Group
experienced severe financial difficulties as a result of high losses incurred in the coin business due
to a considerable drop in demand for new euro coins following the completion of the introduction
of the Euro, and the subsequent overcapacity in the market lead to a fierce price war.
THE DEBENTURE
In 1999 Deutsche Nickel AG (now: DNick Ltd.) issued a 7.125% Euro 120 million bearer partial
debenture with an aggregate nominal amount of Euro 104,000,000.00, divided into 10,400 equalranking partial debentures of Euro 10,000.00 each. The partial debentures were traded on the
official market of the Frankfurt stock exchange and the Düsseldorf stock exchange under ISIN
DE0002417961 / SIN 241796 and unofficially on the Berlin-Bremen stock exchange.
EuroCoin AG (now EU Coin Ltd.) is also jointly and severally liable for the debenture in addition to
Deutsche Nickel AG (following the conversion and accrual: DNick Ltd.) as issuer of the debenture.
This joint and several liability is predicated on a spin-off and transfer agreement dated 31 August
2000, under which Deutsche Nickel AG (now: DNick Ltd.) spun off its "coins and medals“ business
to EuroCoin AG (now: EU Coin Ltd.). Under this spin-off and transfer agreement EuroCoin AG
(following the conversion and consolidation: EU Coin Ltd.) assumed the joint and several liability
on the debenture for an unlimited period.
26
OVERVIEW OF THE RESTRUCTURING
As a result of the financial difficulties experienced by VDN AG and Deutsche Nickel AG (now:
DNick Ltd.) Deutsche Nickel AG was restructured with the consent of the major creditors. The
major elements of the restructuring process were as follows:
(i)
Acquisition of Deutsche Nickel AG by a new English holding company, DNick
Ltd.
(ii)
Restructuring of the DNick Group from a financial, balance sheet and corporate
perspective
(iii)
Restructuring of the operating activities of the DNick Group through in particular
-
the re-focusing on core businesses
-
the discontinuation or disposal of non-essential operating businesses
-
the closure of non-profitable business units
-
the involvement of an experienced business trouble-shooter
27
ACQUISITION OF DEUTSCHE NICKEL AG BY DNICK LTD
On 24 December 2004 DNick Ltd. acquired from VDN AG all the shares in Deutsche Nickel AG for
a cash consideration of Euro 1 million plus the waiver by Deutsche Nickel AG of the amounts
owing to VDN AG of approx. Euro 110 million. DNick Ltd. had previously acquired these liabilities
from Deutsche Nickel AG (totalling approx. Euro 90 million) as well as from various unsecured
creditor banks (totalling approx. Euro 20 million). In addition the profit and loss transfer agreement
between VDN AG and Deutsche Nickel AG was cancelled extraordinarily by both parties, and as
part of an avoidance settlement Deutsche Nickel AG waived for the financial year 2003 an amount
receivable from VDN AG of approx. Euro 41 million representing compensation for losses (approx.
6 million for Deutsche Nickel AG; approx. 35 million for EuroCoin AG).
6WUXFWXUH DVRI 'HFHPEHU 6WUXFWXUHDVRI 'HFHPEHU 9'1$*
'1,&. /WG
'HXWVFKH1LFNHO
$*
'HXWVFKH1LFNHO
$*
(XUR&RLQ $*
'HXWVFKH1LFNHO
$PHULFD,QF
(XUR&RLQ $*
'HXWVFKH1LFNHO
$PHULFD,QF
&RPFDUG *PE+
$XHUKDPPHU
0HWDOOZéUNH *PE+
&RPFDUG *PE+
$XHUKDPPHU
0HWDOOZéUNH *PE+
'H1,6\V *PE+
'HXWVFKH1LFNHO
3UHVV 7HF *PE+
'H1,6\V *PE+
'HXWVFKH1LFNHO
3UHVV 7HF *PE+
(XUR&RLQLFOHDU
*PE+
(XUR &RLQ 5H F\FOLQJ *PE+
&H&R 6$ 0D GULG 6SDQLHQ
6D[RQLD(GHOPHWDOOH
5HF\FOLQJXQG
9HUDUEHLWXQJ*PE+
6D[RQLD(XURFRLQ
*PE+*DOYDQLN
XQG5RQGHQ
(XUR&RLQLFOHDU
*PE+
(XUR &RLQ 5H G\FOLQJ *PE+
&H&R 6$ 0D GULG 6SDQLHQ
9HUUHV 6S$9HU UHV6SDQLHQ
9HUUHV 6S$9HU UHV6SDQLHQ
&RQLDO 6UO5RP
,WDOLHQ
&RQLDO 6UO5RP
,WDOLHQ
1RUGLF&RLQ$%
(VNLOVWXQD6FKZHGHQ
1RUGLF&RLQ$%
(VNLOVWXQD6FKZHGHQ
1RUGLF&RLQ2<+HO
VLQVNL)LQQODQG
1RUGLF&RLQ2<+HO
VLQVNL)LQQODQG
$VLD0RQH\)DLU
6LQJDSXU
$VLD0RQH\)DLU
6LQJDSXU
(XUR&RLQ&RQVXOWLQJ
*PE+:LHQÖVWHU
UHLFK
(XUR&RLQ&RQVXOWLQJ
*PE+:LHQÖVWHU
UHLFK
6D[RQLD(GHOPHWDOOH
5HF\FOLQJXQG
9HUDUEHLWXQJ*PE+
6D[RQLD(XURFRLQ
*PE+*DOYDQLN
XQG5RQGHQ
28
CORPORATE RESTRUCTURING OF THE DNICK GROUP
CHANGE IN LEGAL FORM OF DEUTSCHE NICKEL AG AND ACCRUAL
Following a resolution passed by the Shareholders’ Meeting and entered into the commercial
register on 10 March 2005 Deutsche Nickel AG was converted into a limited partnership under the
name of DNick Ltd. & Co. KG. The sole general partner was DNick Ltd., at that time the sole
shareholder in Deutsche Nickel AG. The sole limited partner in DNick Ltd. & Co. KG was EU Coin
Ltd., also a newly formed shelf company and later the legal successor to EuroCoin AG.
On 22 March 2005 EU Coin Ltd. withdrew from DNick Ltd. & Co. KG, the former Deutsche Nickel
AG. This had the result that all assets and liabilities of DNick Ltd. & Co. KG (formerly Deutsche
Nickel AG) were passed by way of universal succession to DNick Ltd.. At the same time shares in
the subsidiaries of the former Deutsche Nickel AG were also transferred to DNick Ltd..
CHANGE IN LEGAL FORM OF EUROCOIN AG AND ACCRUAL
EuroCoin AG, Schwerte (hereinafter referred to as "EuroCoin AG“) was originally a subsidiary of
Deutsche Nickel AG.
As a preparatory stage for the corporate restructuring measures set out below Deutsche Nickel
AG transferred under a trust deed approx. 99% of the shares in EuroCoin AG to EU Coin Ltd., that
was at that time a sister company of Deutsche Nickel AG.
Following a resolution passed by the Shareholders’ Meeting and entered into the commercial
register on 14 March 2005 EuroCoin AG was converted into a limited partnership under the
company name of EU Coin Ltd. (incorporated under English law) & Co. KG. The sole general
partner was EU Coin Ltd. The sole limited partner was DNick Ltd. & Co. KG (now through DNick
Ltd.).
On 22 March 2005 DNick Ltd. & Co. KG (now DNick Ltd.) withdrew from EU Coin Ltd.
(incorporated under English law) & Co. KG. This had the result that all assets and liabilities of EU
Coin Ltd. (incorporated under English law) & Co. KG were passed by way of universal succession
to EU Coin Ltd.. At the same time shares in the subsidiaries of the former EuroCoin AG were also
transferred to EU Coin Ltd..
29
Following the corporate restructuring set out above the DNick Group had the following structure:
'1,&./WG
(8 &RLQ/WG
&RPFDUG*PE+
'HXWVFKH1LFNHO
$PHULFD,QF
'H1,6\V*PE+
$XHUKDPPHU
0HWDOOZéUNH*PE+
(XUR&RLQLFOHDU
*PE+
(XUR &RLQ 5H
G\FOLQJ*PE+
&H&R6$0D
GULG6SDLQ
'HXWVFKH1LFNHO
3UHVV7HF *PE+
6D[RQLD(GHOPHWDOOH
5HF\FOLQJXQG
9HUDUEHLWXQJ*PE+
6D[RQLD(XURFRLQ
*PE+*DOYDQLN
XQG5RQGHQ
9HUUHV6S$9HU
UHV6SDLQ
&RQLDO6UO5RP
,WDO\
1RUGLF&RLQ$%
(VNLOVWXQD6ZHGHQ
1RUGLF&RLQ2<+HO
VLQVNL)LQODQG
$VLD0RQH\)DLU
6LQJDSRUH
(XUR&RLQ&RQVXOWLQJ
*PE+9LHQQD $XVWULD
REORGANISATION OF THE OPERATING ACTIVITIES OF DNICK LTD
On 22 March 2005 DNick Ltd. also transferred by way of a capital contribution its shares in the
subsidiaries Deutsche Nickel America Inc, Auerhammer Metallwerk GmbH, DN PressTec GmbH
and SAXONIA Edelmetalle GmbH Recycling und Verarbeitung to the subsidiary DNick Holding plc,
an additional new subsidiary of DNick Ltd. that had been established in the meantime.
In addition DNick Ltd. transferred on 22 March 2005 all assets relating to the operating activities of
the former Deutsche Nickel AG to Deutsche Nickel GmbH, Schwerte (hereinafter referred to as
"Deutsche Nickel GmbH”), a shelf company also recently established by DNick Holding plc.
Included within these assets were also customer and supplier agreements (including the resultant
liabilities) as well as other agreements relating to the operating activities of the former Deutsche
Nickel AG (now: DNick Ltd.). Under this transfer of assets the employment contracts of DNick Ltd.
were transferred with legal effect to Deutsche Nickel GmbH as well.
30
REORGANISATION OF THE OPERATING ACTIVITIES OF EU COIN LTD
On 22 March 2005 EU Coin Ltd. transferred by way of a capital contribution its shares in its
subsidiaries DeNISys GmbH, Comcard GmbH (75% shareholding), EuroCoin iclear GmbH (75%
shareholding), Euro Coin Recycling GmbH (50% shareholding) and Asia Money fair (45%
participating investment) to EU Coin Interco Ltd., London, (hereinafter referred to as "EU Coin
Interco Ltd."), another subsidiary of EU Coin Ltd..
Furthermore EU Coin Ltd. transferred on 22 March 2005 all assets relating to the operating
activities of the former EuroCoin AG to EuroCoin GmbH, a newly acquired subsidiary of EU Coin
Interco Ltd.. The factory premises in Schwerte were not included in these assets but will continue
to be used by EuroCoin GmbH and Deutsche Nickel GmbH under a licence agreement. All
customer and supplier agreements (including the resultant liabilities) as well as other agreements
relating to the operating activities of EU Coin Ltd. (formerly: EuroCoin AG) were included in the
transfer. Under this asset transfer the employment contracts of EU Coin Ltd. were transferred with
legal effect to EuroCoin GmbH as well.
Furthermore EU Coin Ltd. has transferred its shareholding in the joint venture company,
NordicCoin AB, as well as a loan amount due from NordicCoin AB to SAXONIA EuroCoin GmbH
Galvanik und Ronden, Halsbrücke, as this investment is to be allocated to the coin business.
The shareholding in CeCo S.A. , Spain, another joint venture company within the coin business, is
to be transferred from EU Coin Ltd. to SAXONIA EuroCoin GmbH Galvanik und Ronden. Basic
agreement regarding this transfer has been reached with the joint venture partner, Fábrica
Nacional de Moneda y Timbre - Real Casa de la Moneda.
SAXONIA EuroCoin GmbH Galvanik und Ronden is an indirect subsidiary of DNick Holding; 94.9%
of the company shares are held by SAXONIA Edelmetalle GmbH and the remaining 5.1%,
originally held by EuroCoin AG (now: EU Coin Ltd.), were transferred to DNick holding plc on 29
December 2005.
31
Following the transfers described above the DNick Group had the following corporate structure:
'1,&./WG
(8 &RLQ/WG
'HXWVFKH1LFNHO
*PE+
&H&R6$0D
GULG6SDQLHQ
'HXWVFKH1LFNHO
$PHULFD,QF
&RQLDO6UO5RP
,WDOLHQ
$XHUKDPPHU
0HWDOOZéUNH*PE+
1RUGLF&RLQ2<+HO
VLQVNL)LQQODQG
'1,&.
+ROGLQJSOF
(XUR&RLQ&RQVXOWLQJ
*PE+:LHQÖVWHU
UHLFK
'HXWVFKH1LFNHO
3UHVV7HF *PE+
6D[RQLD(GHOPHWDOOH
5HF\FOLQJXQG
9HUDUEHLWXQJ*PE+
6D[RQLD(XURFRLQ
*PE+*DOYDQLN
XQG5RQGHQ
(XUR&RLQ
*PE+
&RPFDUG*PE+
'H1,6\V*PE+
(8&RLQ
,QWHU&R/WG
1RUGLF&RLQ$%
(VNLOVWXQD6FKZHGHQ
9HUUHV6S$9HU
UHV6SDQLHQ
(XUR&RLQLFOHDU
*PE+
(XUR &RLQ 5H
G\FOLQJ*PE+
$VLD0RQH\)DLU
6LQJDSXU
32
CLOSURE OF UNPROFITABLE PARTS OF THE BUSINESS
The losses incurred by the Deutsche Nickel Group in 2004 are attributable to a great extent to the
unsatisfactory trading conditions in the coin business. It was therefore decided on 30 April 2005 to
cease production of coins (EuroCoin GmbH) at Schwerte, as it was not possible to identify any
positive profitable business opportunities in the global coin market and to forecast any benefits that
would accrue through restructuring this business area. The required personnel measures were
implemented in accordance with social and employment law.
However SAXONIA EuroCoin GmbH Galvanik und Ronden, Halsbrücke, will continue to operate in
the coin business and will expand its existing activities through its holdings.
MERGER OF EUROCOIN GMBH
Under a notarised share transfer agreement dated 30 August 2005 EU Coin Interco Ltd.
transferred its shares in EuroCoin GmbH, which had ceased to trade, to DNick Holding plc for
Euro 1.
EuroCoin GmbH was then merged with SAXONIA Edelmetalle GmbH Recycling und Verarbeitung
under the notarised agreement of the same day (merger through absorption). The merger became
effective on 19 September 2005 with its entry in the companies' register of SAXONIA Edelmetalle
GmbH Recycling und Verarbeitung. All legal relationships of EuroCoin GmbH were transferred to
SAXONIA Edelmetalle GmbH Recycling und Verarbeitung as a result of the merger.
RENAMING OF DENISYS GMBH
DeniSys GmbH acted as the IT company for the DNick Group and was established originally
through a spin-off from the former Deutsche Nickel AG. The business area of Group internal IT
services was re-integrated into Deutsche Nickel GmbH with effect from 1 October 2005.
Under the shareholders resolution dated 13 December 2005 Denisys GmbH was renamed DN
Real Estate GmbH and shall act in the future as the property holding company for the factory
premises located at Schwerte, which are principally used by Deutsche Nickel GmbH and DN
PressTec GmbH.
The factory premises were transferred by DNick Ltd. and EU Coin Ltd. under a notarised
agreement dated 28 December 2005.
33
CLOSURE OF COMPANIES
EuroCoin Consulting GmbH as well as NordicCoin OY, owned by EU Coin Ltd., were wound up
and closed during the year.
SALE OF SHAREHOLDINGS
The shareholding in EuroCoin Recycling GmbH was sold on 2 December 2005.
It is intended to sell the shareholding in Comcard GmbH (75%), as its manufacture of smartcards
does not belong in the future Group portfolio. For this purpose EU Coin InterCo Ltd. acquired the
remaining 25% on 29 December 2005 and as a result holds 100% of the shares. Comcard GmbH
was sold with effect from 10 January 2006.
REORGANISATION OF EU COIN INTERCO LTD
On December 16 2005 EU Coin Ltd. transferred all its shares in EU Coin Interco Ltd. to DNick
Holding plc.
34
As a result of the above the Group has the following corporate structure as at 31.12.2005:
&RPFDUG*PE+
'1,&./WG
'15HDO(VWDWH
*PE+
(8&RLQ
,QWHU&R/WG
(XUR&RLQLFOHDU
*PE+
(8 &RLQ/WG
$VLD0RQH\)DLU
6LQJDSXU
'HXWVFKH1LFNHO
*PE+
&H&R6$ 0D
GULG6SDQLHQ
&RQLDO6UO5RP
,WDOLHQ
'HXWVFKH1LFNHO
$PHULFD,QF
'1,&.
+ROGLQJSOF
$XHUKDPPHU
0HWDOOZéUNH*PE+
'HXWVFKH1LFNHO
3UHVV7HF *PE+
6D[RQLD(GHOPHWDOOH
5HF\FOLQJXQG
9HUDUEHLWXQJ*PE+
6D[RQLD(XURFRLQ
*PE+*DOYDQLN
XQG5RQGHQ
1RUGLF&RLQ$%
6FKZHGHQ
9HUUHV6S$
6SDQLHQ
FURTHER ACTIONS IN 2006
Comcard GmbH has been sold with effect from 10 January 2006.
Shares in Ceco S.A., Spain, were transferred to SAXONIA EuroCoin GmbH in March 2006.
EuroCoin iclear GmbH had already ceased trading in 2003 and was wound up during 2005. The
company was removed from the register of companies in 2006.
Shareholdings in Conial S.r.l., Italy, as well as Asia Money Fair, Singapore, were transferred to
SAXONIA EuroCoin GmbH in 2006.
35
Finally the remaining shares in DN Real Estate GmbH still held by EU Coin InterCo Ltd. are to be
transferred directly to DNick Holding plc.
As a result the ultimate Group structure will be as follows:
'1,&./WG
(8&RLQ
,QWHU&R/WG
(8 &RLQ/WG
'15HDO(VWDWH
*PE+
'HXWVFKH1LFNHO
*PE+
'1,&.
+ROGLQJSOF
'HXWVFKH1LFNHO
$PHULFD,QF
$XHUKDPPHU
0HWDOOZéUNH*PE+
'HXWVFKH1LFNHO
3UHVV7HF *PE+
6D[RQLD(GHOPHWDOOH
5HF\FOLQJXQG
9HUDUEHLWXQJ*PE+
6D[RQLD(XURFRLQ
*PE+*DOYDQLN
XQG5RQGHQ
1RUGLF&RLQ$%
6FKZHGHQ
&H&R 6$ 0D
GULG6SDQLHQ
9HUUHV6S$
6SDQLHQ
In restructuring the DNick Group the objective was to service the remaining liabilities in DNick Ltd.
and EU Coin Ltd., principally relating to the debenture and liabilities to banks, through the
exchange of liabilities for shares in the restructured Group, i.e. shares in DNick Holding plc.
This was achieved through a creditors’ agreement under English law, which is explained in more
detail below.
36
IMPLEMENTATION OF THE COMPANY VOLUNTARY ARRANGEMENTS
(CREDITORS AGREEMENT)
The creditors of DNick Ltd. and EU Coin Ltd. agreed in a creditors meeting held on 29 June 2005
in Frankfurt/Main to accept a company voluntary arrangement (CVA) under English law. 95% of the
creditors present voted in favour of the CVA.
The CVAs provided for an exchange of all debt of DNick Ltd. and EU Coin Ltd. for shares in DNick
Holding. All creditors of DNick Ltd. and EU Coin Ltd. participated in the share exchange in the ratio
of the amounts owing to them as at 29 April 2005 (date of the commencement of the administration
proceedings). The total debt included liabilities to banks, claims arising on the debenture originally
issued by Deutsche Nickel AG and other amounts owing. The nominal amount owing under the
debenture, inclusive of accumulated interest, was under the joint and several liability of the
companies Euro 116,343,240.00 for each company, i.e. Euro 232,686,480.00 in total. The nominal
amount of other claims recognised by the administrator totalled Euro 185,794,639.87. Each
creditor received shares in DNick Holding plc in the ratio of his claim to the total liabilities of DNick
Ltd. and EU Coin Ltd..
As a result a total of 5,012,713 shares were transferred to the creditors of DNick Ltd. and EU Coin
Ltd.. One share was retained by DNick Ltd. as there must always be two shareholders under
English law and all shares traded on Clearstream are formally held by a nominee for the account of
the actual owner of the shares. Furthermore DNick Ltd. was granted an option to issue up to an
additional 160,000 shares in order to be able to meet any additional claims made by creditors of
DNick Ltd.
Trading in the DNick debenture ceased on 24 March 2006. On 18 April 2006 the shares in DNick
Holding plc were issued and authorised for over the counter trading.
The CVA has therefore been concluded and the financial restructuring of the Group successfully
completed.
For completeness below is an extract from the Administrators official letter, dated 20 May 2005,
detailing the group reconstruction, and dated 8 May 2006, detailing the ending of Administration:
37
38
39
40
41
42
43
44
45
46
47
SHAREHOLDER STRUCTURE
SUMMARY OF SHAREHOLDERS
Directly following the implementation of the CVA and the conversion of debt into shares in DNick
Holding plc the future shareholder structure of DNick Holding plc was as follows:
Shareholder groups
Number of shares
Percentage of shares
Debenture creditors
Other creditors
DNick Ltd.
2,787,200
2,225,513
1
55.60 %
44.40 %
0.00002 %
The above numbers will change as a result of any future exercise of options.
SHAREHOLDINGS WITH A SHAREHOLDING OF MORE THAN 5% IN THE
AUTHORISED SHARE CAPITAL
Based on the current understanding of the company the following four shareholders will directly
receive more than 5% of the shares in DNick Holding plc under the debt for equity conversion:
Shareholder
Bear Stearns Bank plc
Goldman Sachs Credit Partners L.P.
Bear Stearns International Ltd.
Morgan Stanley & Co. International Ltd.
Varde Partners Europe
Shareholding as a %
10.04 %
17.75 %
5.47 %
11.07 %
10.27 %
EMPLOYEE SHARE OPTION SCHEME
A share option scheme for executives and / or employees of DNick Holding plc and its subsidiaries
does not yet exist at present. In the event that such a share option scheme is implemented the
shareholder structure of DNick Holding plc would change accordingly based on the options granted
under such a scheme. As part of the CVA it was decided to introduce an employee share
investment scheme under which the employees can acquire up to 5% of the share capital.
However, steps to introduce such a programme have been deferred until the annual accounts have
been issued.
48
OTHER SIGNIFICANT AGREEMENTS CONCLUDED DURING THE YEAR
ACQUISTION OF THE MORTGAGE BY DNICK HOLDING PLC
CONTRIBUTION OF THE FACTORY PREMISES LOCATED AT SCHWERTE
CONTRIBUTION OF SCHWERTE LEASE AGREEMENTS
TRANSFER OF THE LAND CHARGE TO DN REAL ESTATE GMBH
Under an agreement dated 5 August 2005 DNick Holding plc purchased receivables from a
consortium of German banks in the amount of Euro 5,765,000 constituting loan amounts owning by
DNick Ltd. under a long-term loan financing taken out by the former Deutsche Nickel AG (now:
DNick Ltd.), which were secured by a mortgage registered on the factory premises located at
Schwerte.
The purchase amount was Euro 4,070,000, which was to be paid by an immediate instalment of
Euro 2,000,000 and an instalment of Euro 2,070,000 payable on 31 October 2005. The receivable
as well the mortgage were transferred as at 31 October 2005 following payment on the due date.
As a result DNick Holding plc became the mortgagee of the factory premises located in Schwerte.
Under a notarised agreement dated 28 December 2005 DNick and EU Coin Ltd. transferred to DN
Real Estate GmbH by way of a capital contribution the land on which the factory premises in
Schwerte are situated that had been passed on to them by the former Deutsche Nickel AG and the
former EuroCoin AG.
Ownership, use and charges were transferred on the same day and effected through a capital
contribution to DNick Holding plc which in turn transferred the capital contribution to DN Real
Estate GmbH.
Under this property transfer DN Real Estate GmbH undertook to assume the mortgage liabilities on
the property that had been acquired in advance by DNick Holding plc from the former mortgagor,
Commerzbank AG.
Under an agreement dated 27 December 2005 and in conjunction with the transfer of the factory
premises located at Schwerte by DNick Ltd. and EU Coin Ltd. to DN Real Estate GmbH the
existing lease agreements entered into by DNick Ltd. and EU Coin Ltd. were transferred to DN
Real Estate GmbH by way of a capital contribution.
The transfer took effect as at 31 December 2005, at which date DN Real Estate GmbH assumes
all rights and obligations under the lease agreements, and was effected by way of a capital
contribution made by DNick Ltd. to DNick Holding plc, which in turn was passed on to DN Real
Estate GmbH in the form of a capital contribution.
49
ACQUISITION OF CLAIMS UNDER JOINT AND SEVERAL LIABILITY
SALE OF CLAIMS TO SUBSIDIARIES
Auerhammer Metallwerk GmbH, SAXONIA Edelmetalle GmbH and SAXONIA EuroCoin GmbH
subsidiaries are jointly and severally liable for certain amounts claimed by Commerzbank AG
resulting from credit arrangements entered into with the former shareholder VDN Vereinigte
Deutsche Nickel-Werke AG, Düsseldorf, (VDN loan) for the amount of approx. Euro 29.45 million
as well as with its subsidiary LPW Blasberg Anlagen GmbH (LPW loan) for the amount of approx.
Euro 4.5 million.
The subsidiaries intended to acquire all claims in order to be able to satisfy their joint and several
liabilities. The claims will expire as part of the acquisition. The financial holding company DNick
Holding plc should have acquired the total claims and sold these internally to the subsidiaries, as it
was necessary as a precondition of the expiration that the claims were held directly by the
subsidiaries.
Under the agreement with Commerzbank AG dated 19 July 2005 DNick Holding plc acquired the
claims under the LPW loan totalling Euro 4,407,000, which was repaid with an immediate payment
of Euro 1.0 million and an instalment of Euro 3,407,000 due on 31 December 2006.
Bear Stearns Bank plc has acquired the claims under the VDN loan in the amount of Euro 29.45
million. DNick Holding plc and Bear Stearns Bank plc had already agreed during the financial year
that DNick Holding plc will also acquire from Bear Stearns Bank plc claims for Euro 8.0 million
following the successful completion of the CVAs.
Under the agreement dated 31 October 2005 between DNick Holding plc and the affected subsidiaries claims on subsidiaries would be each sold for Euro 3,802,000, totalling Euro 11,406,000.
PURCHASE OF A LINE OF BUSINESS BY DN PRESSTEC GMBH
Under the purchase and transfer agreement dated 23 September 2005 Deutsche Nickel PressTec
GmbH purchased with effect from 1 October 2005 the "cups“ production line from Sundwiger
Messingwerk GmbH & Co. KG as well as the order book and the customer base and certain
receivables and liabilities relating to the business.
The purchase price amounted to Euro 1,660,000 of which Euro 1,400,000 is attributable to the
customer base and Euro 260,000 to plant and machinery.
The existing employment contracts and the associated liabilities in the amount of Euro 53,000 were
assumed by Deutsche Nickel PressTec GmbH.
50
SALE OF THE PLASTICS ELECTROPLATING DIVISION
The plastics electroplating division of SAXONIA EuroCoin GmbH, which primarily supplied the
automotive and sanitary industries, did not represent a future core business of the Group and did
not generate an adequate return on the tied-up capital and therefore had to be sold.
Under the purchase and assignment agreement dated 30 December 2005 all the plant and
machinery of the business division was sold and assigned with effect from 31 December 2005.
Under the agreement all inventories, licences, know-how, customer relationships, including all
rights and obligations, were assigned to the purchaser. All employment contracts of the affected
staff were also assigned to the purchaser under the asset transfer agreement.
The sale price amounted to Euro 3,970,000 after deduction of the amounts payable to staff.
Approved by the Board and signed on its behalf by:
Dr. Götz-Peter Blumbach
Edouard J.C. Altenhoven
Director
Director
2006
51
DNick Holding plc
Group Accounts 2005
Annual Report 2005 - Group Accounts
52
DNick Holding plc - Group
Balance Sheet as of 31/12/05
Notes
EUR
EUR
A. Current assets
I. Cash and cash equivalents
(1)
5.056.908
II. Marketable securities
356.959
1. Other securities
Total marketable securities
(2)
356.959
III. Trade receivables / other assets
1. Trade receivables
(3)
13.862.351
2. Receivables from affiliates
(4)
1.527.499
3. Receivables from associates
(5)
514.019
4. Other assets
(6)
5.625.661
Total receivables
21.529.530
IV. Inventories
1. Raw materials, consumables and supplies
13.162.126
2. Work in process
33.570.404
25.315.780
3. Finished goods and merchandise
Total inventories
V. Tax refund receivable
(7)
72.048.310
(8)
1.820.259
VI. Prepaid expenses
64.454
1. Other prepaid expenses
Total prepaid expenses
64.454
Total current assets
100.876.420
B. Non-current assets
I. Intangible assets
1.500.117
1. Concessions, industrial rights, licences, etc.
Total intangible assets
(9.1)
1.500.117
II. Property, plant and equipment
1. Land, land rights
4.238.753
2. Buildings, buildings on third-party land
7.435.199
3. Technical equipment and machinery
9.562.134
4. Other equipment, furniture, fixtures and office equipment
2.556.101
137.990
5. Prepayments and assets under construction
Total property, plant and equipment
(9.2)
23.930.177
III. Financial assets
30.000
1. Investments in affiliates
1.212.963
2. Investments in associates
Total financial assets
(9.3)
1.242.963
IV. Non-current receivables
1. Loans to affiliates
1.656.455
2. Loans to associates
3.877.931
261.525
3. Other loans
Total non-current receivables
V. Deferred tax assets
Total non-current assets
Total assets
(9.4)
5.795.910
(10)
1.173.902
33.643.069
134.519.489
53
Balance Sheet as of 31/12/05
Notes
EUR
EUR
A. Current liabilities
1. Current liabilities to banks (< 12 months)
28.693.201
(11)
2. Current finance lease liabilities
198.765
3. Prepayments received
166.065
4. Trade payables
11.413.324
(12)
5. Provisions
a) Current tax provision
(13)
1.414.372
b) Other provisions
(14)
12.507.231
(15)
1.529.393
(16)
9.578.671
6. Liabilities to affiliates
1
7. Liabilities to associates
8. Other current liabilities
Total current liabilities
65.501.023
B. Non-current liabilities
1. Long-term loans ( > 12 months)
(17)
4.656.399
(10)
2.928.606
a) Provisions for Pensions
(18)
2.146.735
b) Other provisions
(19)
1.468.725
2. Non-current finance lease obligations
441.392
3. Deferred tax liabilities
4. Non-current provisions
Total non-current liabilities
11.641.857
C. Deferred Income
(20)
1.085.948
D. Equity
I. Issued capital
72.620
II. Capital reserves
III.
93.579.614
a) Merger reserves
-12.018.191
b) Revaluation reserves
-703.154
c) Foreign exchange translation reserves
186.127
IV. Treasury shares
0
V. Retained profits / accumulated losses brought forward
0
VI. Net profit / loss for the year
-24.826.355
Total equity
(21)
56.290.661
Total equity and liabilities
134.519.489
Director
Director
2006
54
Income and Expenditure Account for the Year 2005
Notes
1. Sales
(22)
2. Other operating income
(23)
EUR
EUR
256.954.732
10.043.844
10.042.395
a) from third parties
1.449
b) from affiliates
3. Changes in inventories of finished goods and work in process
-7.709.531
Operating income
259.289.046
4. Cost of materials
-190.172.897
-181.525.740
a) Cost of raw materials, consumables and supplies and of purchased merchandise
-8.647.157
b) Cost of purchased services
5. Staff costs
-29.240.682
-24.275.232
a) Wages and salaries
-4.965.450
b) Social security and other pension costs
6. Amortisation / depreciation of intangible assets and property, plant and equipment
(24)
-7.422.965
7. Other operating expenses
a) to third parties
-22.135.191
(25)
b) to affiliates
-22.130.377
-4.813
8. Other taxes
-169.229
Sub-total (4.-8.)
-249.140.964
Profit from operations
10.148.082
9. Share in profit and loss of associates and joint ventures
accounted for at equity
-2.950
10. Amortisation of financial assets
-97.501
Income from investments (9.-11.)
-100.451
EBIT
10.047.631
11. Income from other investments and long-term loans
165.319
12. Interest receivable and similar income
505.192
13. Interest payable and similar expenses
-3.870.441
Financial result (12.-14.)
(26)
-3.199.930
14. Exchange gains / losses
(27)
574.187
Result from ordinary activities
15. Exceptional result from group restructuring
7.421.887
(28)
-31.053.286
c) Exceptional expenses
16. Income taxes
(29)
a) Actual taxes
-1.223.573
Net profit / loss for the year
Net profit / loss for the year after profit transfer
-1.812.367
-588.794
b) Deferred taxes
17. Expenses from profit and loss transfer agreements
-28.703.286
2.350.000
a) Exceptional income
-23.093.766
(30)
-1.732.589
-24.826.355
55
'1LFN +ROGLQJ SOF *URXS
6FKHGXOH RI &KDQJHV LQ )L[HG $VVHWV IRU WKH <HDU &267
LQ (85
$GGLWLRQV
&RQWULEXWLRQ 'LVSRVDOV
7UDQVIHUV
, ,17$1*,%/( $66(76
&RQFHVVLRQV LQGXVWULDO ULJKWV OLFHQVHV HWF
2WKHU LQWHUQDOO\ JHQHUDWHG LQWDQJLEOH DVVHWV
,, 3523(57< 3/$17 $1' (48,30(17
/DQG ODQG ULJKWV
%XLOGLQJV EXLOGLQJV RQ WKLUGSDUW\ ODQG
7HFKQLFDO HTXLSPHQW DQG PDFKLQHU\
2WKHU HTXLSPHQW IXUQLWXUH IL[WXUHV DQG
RIILFH HTXLSPHQW
3UHSD\PHQWV DQG
DVVHWV XQGHU FRQVWUXFWLRQ
,,, ),1$1&,$/ $66(76
,QYHVWPHQWV LQ DIILOLDWHV
,QYHVWPHQWV LQ DVVRFLDWHV
,9 121&855(17 5(&(,9$%/(6
/RDQV WR DIILOLDWHV
/RDQV WR DVVRFLDWHV
2WKHU ORDQV
$QQXDO 5HSRUW *URXS $FFRXQWV
56
6FKHGXOH RI &KDQJHV LQ )L[HG $VVHWV IRU WKH <HDU $&&808/$7(' $0257,6$7,21 '(35(&,$7,21
3URYLVLRQV 5HYDOXDWLRQ
'LVSRVDOV
7UDQVIHUV
1(7 &$55<,1* $028176
57
6WDWHPHQW RI &KDQJHV LQ (TXLW\ IRU WKH <HDU LQ (85
%DODQFH DV RI &DSLWDO EURXJKW LQ
&RQVROLGDWLRQ
5HYDOXDWLRQ
&XUUHQF\ WUDQVODWLRQ GLIIHUHQFHV
1HW ORVV IRU WKH SHULRG
7RWDO HTXLW\ DV RI '1LFN +ROGLQJ SOF *URXS
6KDUH
&DSLWDO
&DSLWDO
5HVHUYH
0HUJHU
5HVHUYH
5HYDOXDWLRQ
5HVHUYH
7UDQVODWLRQ
5HYHUVH
1HW 5HVXOW
7RWDO
58
&DVK )ORZ 6WDWHPHQW IRU WKH <HDU &DVK )ORZ 6WDWHPHQW
LQ .(85
&DVK)ORZ IURP FXUUHQW RSHUDWLRQV
3URILW IURP RSHUDWLRQV
'HSUHFLDWLRQ DPRUWLVDWLRQ RI LQWDQJLEOH DVVHWV DQG SURSHUW\ SODQW DQG HTXLSPHQW
,QFUHDVHGHFUHDVH LQ QRQFXUUHQW DFFUXDOV
RWKHU QRQFDVK LQFRPHH[SHQVHV
3D\PHQWV IRU WD[HV RQ LQFRPH
*URVV&DVK)ORZ
,QFUHDVHGHFUHDVH LQ LQYHQWRULHV
,QFUHDVHGHFUHDVH LQ WUDGH UHFHLYDEOHV
,QFUHDVHGHFUHDVH LQ WUDGH SD\DEOHV
,QFUHDVHGHFUHDVH LQ VKRUW WHUP DFFUXDOV H[FO GHIHUUHG WD[HV
,QFUHDVHGHFUHDVH LQ RWKHU ZRUNLQJ FDSLWDO H[FO GHIHUUHG WD[HV
,QWHUHVW SD\PHQWV
&DVK SURYLGHG E\ RSHUDWLQJ DFWLYLWLHV H[FOXGLQJ H[FHSWLRQDO EXVLQHVV WUDQVDFWLRQV
&DVK XVHG E\ SURYLGHG E\ H[FHSWLRQDO WUDQVDFWLRQV QHW HIIHFW H[FO GHIIHUHG WD[HV
&DVK XVHG E\ RSHUDWLQJ DFWLYLWLHV LQFOXGLQJ H[FHSWLRQDO EXVLQHVV WUDQVDFWLRQV
&DVK)ORZ IURP LQYHVWLQJ DFWLYLWLHV
&DSLWDO H[SHQGLWXUH
3URFHHGV IURP GLVSRVDO RI QRQ IL[HG DVVHWV
&DVK XVHG E\ LQYHVWLQJ DFWLYLWLHV
&DVK)ORZ IURP ILQDQFLQJ DFWLYLWLHV
&DVK UHFHLYHGSDLG IURP WKH LVVXHIRU WKH UHGHPSWLRQ RI ILQDQFH ORDQV
&DVK UHFHLYHG IURP VKRUWWHUP EDQNIDFLOLWLHV
&DVK SDLG IRU WKH UHGHPSWLRQ RI ORQJWHUP EDQNORDQV
%RUURZLQJ5HSD\PHQW SD\DEOHV RI ILQDQFH OHDVH
&DVK SURYLGHG E\ ILQDQFLQJ DFWLYLWLHV
1HW FKDQJH LQ FDVK DQG FDVK HTXLYDOHQWV
(IIHFW RI IRUHLJQ H[FKDQJH UDWH FKDQJHV
&DVK DW EHJLQQLQJ RI WKH \HDU
&DVK DQG FDVK HTXLYDOHQWV DW \HDU HQG
59
Segment Reporting for the year 2005
RECYCL / PROCEED
WIRES AND BARS
STRIPS
PRECIOUS METALS
Sales
1.
Sales from third parties
50.106.115
40.780.713
111.438.589
2.
Sales to associates
26.959.180
11.606.259
7.511.585
77.065.296
52.386.972
118.950.174
Total Sales
3.
Operating EBITDA
-252.601
4.153.693
8.181.599
4.
Amortisation / Depreciation
-556.632
-814.938
-4.164.342
5.
Income from investments
0
0
-63.833
-809.234
3.338.756
3.953.423
-54.690
-3.802.000
-7.698.237
Operating EBIT
6.
Exceptional result
7.
Financial result / currency gain / loss
-771.831
-785.264
-334.603
8.
Taxes from income
-362.459
-181.626
-786.778
-1.998.214
-1.430.134
-4.866.195
39.454.984
22.329.349
40.251.114
59.695
0
11.172.378
39.514.679
22.329.349
51.423.492
Profit / Loss
Other Informations
9.
Segmental assets
10.
Other financial assets / loans
11.
Segmental liabilities
9.740.072
7.341.722
17.632.578
12.
shortterm bank debts
5.631.734
6.106.625
3.638.452
13.
longterm bank debts
0
2.500.000
547.949
14.
equity
24.142.873
6.381.002
29.604.514
39.514.679
22.329.349
51.423.492
60
Segment Reporting for the year 2005
COIN BLANKS /
CUPS FOR
MEDALS
EMUNITION
OTHER
TOTAL
CONSOLIDATION
GROUP
36.655.634
17.687.265
286.416
256.954.732
0
256.954.732
3.344.753
144.006
523.653
50.089.437
-50.089.437
0
40.000.387
17.831.271
810.069
307.044.169
-50.089.437
256.954.732
3.547.178
1.518.046
160.976
17.308.891
262.156
17.571.047
-1.590.581
-229.230
-67.242
-7.422.965
0
-7.422.965
0
0
-97.501
-161.334
60.883
-100.451
1.956.597
1.288.816
-3.767
9.724.592
323.039
10.047.631
-3.939.533
-684.015
-11.861.543
-28.040.019
-663.267
-28.703.286
11.853
-217.538
-1.102.547
-3.199.930
574.187
-2.625.743
-52.605
-251.232
-177.667
-1.812.367
0
-1.812.367
-2.023.689
136.031
-13.145.524
-23.327.724
233.959
-23.093.766
16.110.054
8.715.349
23.588.363
150.449.212
-22.968.596
127.480.616
7.127.595
0
87.789.868
106.149.536
-99.110.663
7.038.873
23.237.649
8.715.349
111.378.231
256.598.748
-122.079.259
134.519.489
8.971.181
4.869.680
15.492.443
64.047.676
-19.168.447
44.879.228
1.460.391
0
11.856.000
28.693.201
0
28.693.201
1.608.450
0
0
4.656.399
0
4.656.399
11.197.627
3.845.669
84.029.788
159.201.472
-102.910.811
56.290.661
23.237.649
8.715.349
111.378.231
256.598.748
-122.079.259
134.519.489
61
NOTES TO THE ANNUAL ACCOUNTS
BASIS OF CONSOLIDATION
As at the reporting date DNick Holding plc, London was a wholly-owned subsidiary of DNick Ltd.,
London.
At the same time DNick Holding plc is a shareholder in other companies and owns participations;
the group structure is as follows:
DNick Ltd. (CVA)
EU Coin Ltd. (CVA)
100%
DNICK Holding plc
100%
Deutsche
Nickel
GmbH
100%
Deutsche
Nickel
America Inc.
100%
Auerhammer
Metallwerk
GmbH
100%
SAXONIA
Edelmetalle
GmbH
100%
DN PressTec
GmbH
EU Coin
InterCo Ltd
100%
100%
SAXONIA
EuroCoin
GmbH*
95%
NordicCoin AB
Verres S.p.A.
50%
17,65%
DN Real
Estate GmbH
Comcard
GmbH
Asia Money
Fair
100%
100%
45%
The following companies were included in the consolidated statements:
x
Deutsche Nickel GmbH, Schwerte / Germany
x
Deutsche Nickel America Inc., Lincoln, RI / USA
x
Auerhammer Metallwerk GmbH, Aue / Germany
x
SAXONIA Edelmetalle GmbH, Halsbrücke / Germany
x
SAXONIA EuroCoin GmbH, Halsbrücke / Germany
x
DN PressTec GmbH, Schwerte / Germany
x
EU Coin InterCo Ltd., London / UK
x
DN Real Estate GmbH, Schwerte / Germany
Annual Report 2005 - Group Accounts Notes
62
The following participation was included in the consolidated financial statements under the equity
method:
x
NordicCoin AB, Eskilstuna, Sweden
The following companies and participations were not included in the consolidated financial
statements:
x
Comcard GmbH, Falkenstein / Germany
x
Asia Money Fair, Singapore
DNick Holding plc was formed on 17 March 2005, the shares in the subsidiaries and participations
were contributed on 22 March 2005.
In order to better present the financial condition of the Group consolidated financial statements
were not prepared for the period from 17 March 2005 to 31 December 2005 but for the entire
financial year from 1 January 2005 to 31 December 2005, as on the one hand the Group
companies were integrated financially and organisationally throughout the whole financial year
through the shareholder DNick Ltd. and on the other hand profit participation rights are to be
allocated to DNick Holding plc relating to the whole year.
Therefore 1 January 2005 was selected as the initial consolidation date for all companies with their
opening balances, except for EU Coin Interco Ltd.. As the initial consolidation date for EU Coin
InterCo Ltd. the transfer date 16 December 2005 was selected.
Comcard GmbH was not consolidated as this company was sold on 10 January 2006, there were
no longer any profit participation rights and it was consequently that its more proper from an
economic standpoint to disclose the participation as a held-for-sale investment rather than
consolidating the net assets, equity and earnings of the company.
Despite the participation of 45% Asia Money Fair was not included in the consolidated financial
statements as significant control is not exercised and the earnings as well as the assets and
liabilities are also not material to the Group.
63
PRINCIPLES AND METHODS
These financial statements include only information relating to the group. Separate financial
disclosures for the holding company, DNick Holding plc, have been prepared. The group, in
addition to complying with its legal obligations to comply with the IFRS as adopted by the
European Union, has also complied with IFRS as issued by the International Accounting Standards
Board.
The consolidated financial statements have been prepared on the basis of "merger accounting“
principles as the capital contributions made by subsidiaries in 2005 do not fall within the scope of
business combinations as defined in IFRS 3 and merger accounting is the more appropriate
method to present the Group restructuring.
No other material management estimates have been used in presenting the financial statements
other than those used in the valuation of the factory premises at Schwerte, which are explained in
section 9 in the Notes.
The consolidated financial statements are presented in Euro.
The financial year is the calendar year.
The financial statements have been prepared in accordance with the provisions of the IFRS/IAS
issued by the International Accounting Standard Board (IASB) applicable as at the balance sheet
date.
The income statement has been prepared using the total cost method.
The consolidated financial statements of DNick Holding plc have been prepared for the first time
for the financial year 2005 as the company was established in the financial and had acquired
investments for the first time.
The individual financial statements included in the consolidated financial statements have been
prepared in accordance with the IFRS/IAS international accounting standards and the
interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).
The accounting and valuation principles as prescribed by the IFRS were implemented as set out in
IFRS 1 as if the IFRS/IAS standards had always been applied, i.e. retrospectively. The
adjustments required to be made on the first-time adoption of the IFRS/IAS accounting and
valuation principles were recognised in equity through retained earnings.
64
CONSOLIDATION PRINCIPLES
The consolidated financial statements include DNick Holding plc as well as all domestic and
foreign companies controlled by it, with the exception of Comcard GmbH. As a rule control is
deemed to exist if DNick Holding plc owns indirectly or directly more than 50% of the voting rights
of the subscribed capital of a company and as a result can determine the financial and business
policy of this company to its economic advantage. The company is included in the consolidation
from the date on which control is considered to exist and is excluded from the date on which
control ceases to exist.
The proportion of equity and net profit attributable to minority shareholders was not to be
disclosed.
The subsidiaries acquired during the period have been accounted for using merger accounting
principles. Each of the subsidiaries was acquired as part of the reconstruction of the former
Deutsche Nickel AG group and the CVA which is explained under History of the Group. Each
acquisition involved the transfer of companies and under common ownership, i.e. DNICK Ltd., as
is therefore considered to fall outside the scope of IFRS 3. Since this reconstruction was made to
enable those former subsidiaries of Deutsche Nickel AG acquired by DNick Holding plc to continue
their operations as going concerns, rather than a purchase by an unrelated third party, the
directors consider that merger accounting to be the most appropriate basis to inform readers of the
financial statements of the results and statement of affairs of the group.
Under merger accounting principles, no adjustment is made to fair values of the assets and
liabilities acquired, and the results are included throughout the year with no elimination of the preacquisition period. The difference between the nominal value of shares issued and shares
acquired, to effect the acquisition of subsidiaries, is taken to a merger reserve.
In principle the assets, liabilities and deferred items as well as income and expense contained in
the corresponding individual financial statements are included in the consolidated financial
statements.
Intra-Group receivables and payables are netted against each other and eliminated. Intra-Group
sales, profits and losses as well as all other income and expense are eliminated.
Intra-Group profits on inventories transferred within the Group that relate to deliveries between
Group companies are eliminated.
Intra-Group profits on the transfer of tangible fixed assets within the Group that relate to deliveries
made and services provided between Group companies are also eliminated.
65
The consolidated financial statements have been prepared applying uniform accounting and
valuation principles.
Investments in associates, which normally involve a share of between 20 and 50% in the equity
capital, and joint ventures are recognised using the equity method. The company performs an
annual review of the value of its investments in associates.
The financial year of all consolidated companies is the calendar year and is that of DNick Holding
plc.
Foreign subsidiaries included in the basis of consolidation are independent from a financial,
economic and organisational standpoint. Their reporting currency is the currency of the country in
which they are located. The balance sheets of the foreign subsidiaries are translated using the
exchange rate prevailing at the year-end, profit and loss items are translated using the average
exchange rate for the year. All resultant exchange differences are recognised in accumulated
currency differences within equity. In the event that a foreign subsidiary is sold the accumulated
amount of currency differences are recognised as income or expense in the same period in which
the profit or loss was realised.
In general transactions denominated in foreign currency are translated using the exchange rate
applicable on the date the transaction is entered into. Any exchange differences are recognised in
profit or loss.
THE GOING CONCERN BASIS AND FUTURE FUNDING
The financial statements have been drawn up on the going concern basis. Various of the group's
bank facilities are due for renegotiation between the end of September and the end of December
2006. The directors are confident that the group will secure renewed facilities, to the extent
required to continue its activities, because the group has operated within the parameters agreed
with the bankers when they agreed the current facilities that enabled the CVA and group
reconstruction to be completed. Clearly, if the bank facilities were not renewed or replaced the
group would need significantly to change its operations.
66
ACCOUNTING AND VALUATION METHODS
CASH AND CASH EQUIVALENTS
Cash includes cash on hand and balances at banks.
Cash equivalents are short-term highly liquid assets, which can be quickly converted into cash and
have an original maturity of up to 3 months or less and are not subject to any substantial
fluctuations in value. These include cash deposits amounting to 10% on the receivables sold and
assigned to a factoring company, which are released as available cash following payment of the
original receivable by the customer.
DERIVATIVE FINANCIAL INSTRUMENTS
Financial instruments entered into for the purposes of hedging price fluctuations in raw materials
and foreign currencies are disclosed under derivative financial instruments in accordance with
IAS 39.
These derivatives are measured at the balance sheet date at their positive or negative market
values, based in each case on the value of the hedged item, which are disclosed in the balance
sheet as an asset or liability.
Derivatives entered into for the purposes of hedging price fluctuations in raw materials, so-called
commodity futures, are measured subsequently as fair value hedges and any gain or loss arising
from the re-measurement is recognised in profit or loss.
Any gain or loss arising on derivatives entered into for the purposes of hedging fluctuations in
foreign currency exchange rates, so-called cash flow hedges, which only hedge the cash flows on
existing assets and not their actual value, is recognised directly in equity through the revaluation
reserve.
RECEIVABLE AND OTHER ASSETS
Receivables and other assets are recognised initially at their nominal value. Receivables
denominated in foreign currency are translated using the current daily exchange rate, unless the
exchange rate prevailing at the balance sheet date is lower. Receivables and other assets
denominated in foreign currency, that had to be translated into Euro as part of the consolidation of
foreign subsidiaries, were translated using the spot rate prevailing at the balance sheet date.
67
All receivables and other assets are reviewed annually for impairment at the balance sheet date.
Identifiable risks are provided for through the creation of appropriate individual valuation
allowances; a valuation allowance based on empirical values is set up to cover any additional
default risk.
All receivables and other assets have a residual maturity of up to one year.
INVENTORIES
Inventories, including finished goods and work in progress, are recognised in accordance with
IAS 2 at the lower of acquisition or production cost and net realisable value taking into account any
write-downs made for restricted marketability.
The weighted average cost formula is applied in accordance with IAS 2.21 as the technique for the
measurement of cost.
The production cost of work in progress and finished goods includes direct material and production
costs as well as an appropriate proportion of the necessary material and production overhead
costs including production-related depreciation. The allocable fixed and variable overheads are
based on detailed cost calculations prepared as part of the current cost accounting statements.
General administration costs were not included.
Net realisable value is the selling price less costs to completion and less any costs necessary to
make the sale.
Depending on their composition and properties metal inventories, which are used for production,
are written down on average by 15% to the relevant scrap market price.
Commodities are recognised at the lower of acquisition cost and their fair value.
DEFERRED ASSETS
These include payments made for expenses relating to future periods, these all have a term of up
to one year.
68
INTANGIBLE ASSETS
Intangible assets acquired for consideration are measured at acquisition or production cost in
accordance with IAS 38 and are amortised systematically on a straight-line basis over their useful
lives. The estimated useful life of a pool of customers acquired for consideration is 4 years,
software is amortised over a period of between 3 and 5 years.
TANGIBLE FIXED ASSETS
Tangible fixed assets, excluding land and buildings, are recognised in accordance with IAS 16 at
acquisition or production cost and are depreciated on a systematic basis over their useful lives.
The original acquisition and production costs include in addition to the purchase price any directly
attributable ancillary purchase costs as well as any costs attributable to bringing the asset to the
condition necessary for it to be capable of being operated. A proportion of overhead costs are
included in the production costs of self-constructed assets in addition to the direct costs.
Tangible fixed assets are depreciated over their estimated useful lives. To the extent permitted,
moveable assets are depreciated under the diminishing balance method. The depreciation period
and method are reviewed annually at the end of the financial year; a change is made to the
straight-line method in the year in which the straight-line method results for the first time in a higher
annual depreciation charge. The other assets are depreciated on a straight-line basis.
The depreciation periods in years are as follows:
Fixed assets
Buildings
Plant and machinery
Furniture and office equipment
years
10 – 40
3 – 20
2 – 10
Assets with an acquisition cost of up to Euro 410, so-called low-value assets, are fully depreciated
in the year of acquisition as if they had been immediately disposed of.
As a permitted alternative land and buildings are carried at their revalued amounts less any
accumulated depreciation since the last revaluation date. The revaluation is based on market
prices achievable in the market. Evidence of transactions executed close to the balance sheet date
is incorporated in the valuation; otherwise an appraisal by an expert valuer is used. The
revaluation is normally performed every 3 to 5 years. If the carrying amount of land and buildings
changes the change is recognised directly in equity through the revaluation reserve.
69
Impairment losses are recognised in accordance with IAS 36 if the net selling price or value in use
is less than the carrying amount.
LEASING ARRANGEMENTS
Under IAS 17 a lease is classified as a finance lease if it transfers substantially all of the risks and
rewards incidental to ownership to the lessee. Classification depends on the economic substance
of the individual lease agreement.
At the inception of a finance lease the assets and liabilities under the lease are recognised in the
balance sheet. The acquisition cost is the present value of the obligations under the lease. Lease
payments are apportioned using the interest rate implicit in the lease between the finance charge,
which is recognised in profit or loss, and the reduction of the outstanding liability. Furthermore the
capitalised assets are required to be depreciated.
A lease is classified as an operating lease if substantially all the risks and rewards relating to the
asset remain with the lessor. Lease payments under operating leases are recognised as expense
over the lease term.
FINANCIAL ASSETS
Investments in associates are accounted for using the equity method in accordance with IAS 28,
whereby the initial acquisition cost is adjusted annually for post-acquisition changes in the share of
equity capital, including profits and losses.
Other investments are recognised at acquisition cost. If there are indications of an impairment an
impairment loss is recognised on the financial assets. If the reasons for the impairment cease to
exist, the impairment loss is reversed up to a maximum of the original acquisition cost.
Loans are stated at the present value of the amount receivable.
DEFERRED TAXES
Deferred taxes are recognised in accordance with IAS 12 for all temporary differences between the
tax base used in the preparation of the tax balance sheet under national law and the single-entity
IFRS/IAS financial statements included in the consolidated financial statements. Consequently the
future applicable and probable tax charge or credit is recognised using current local tax rates for
temporary differences between the carrying amounts recognised in the financial statements and
the tax base of assets and liabilities.
70
Expected tax savings resulting from the future utilisation of tax losses carried forward were not
recognised. No valuation adjustments were required to be made to the regular deferred tax assets
and liabilities.
Any tax consequences arising on profit distributions are first accounted for on the date the
resolution regarding the appropriation of profits is passed.
Deferred tax assets and liabilities were not offset.
Changes between the two reporting periods are disclosed in the profit and loss statement under
income taxes.
LIABILITIES
Current liabilities are recognised at their repayment or settlement amount.
In the case of non-current liabilities to banks the discount deducted on disbursement is amortised
on a straight-line basis over the life of the loan. The unamortised discount amount, that is to be
amortised in the future over the remaining life of the loan, is deducted from the amount of the
liability disclosed on the balance sheet.
Liabilities under finance leases are disclosed at the present value of the lease obligations.
Liabilities representing losses on derivative financial instruments are measured as the difference
between the underlying hedged amount as at the balance sheet date and the market value of the
hedging instrument.
CURRENT TAX PROVISION
Tax provisions include the amounts owing for current income taxes and any additional tax
assessments resulting from tax audits, they do not include deferred taxes.
OTHER PROVISIONS
Under IAS 37 a provision is only recognised if the company has a present obligation, it is probable
that an outflow of resources will be required to settle the obligation and that the amount can be
determined reliably.
71
Provisions are reviewed at each balance sheet date and adjusted in line with the current best
estimate.
All provisions mature within one year and therefore were not required to be discounted.
Amounts owing for deliveries and services that have already been made or provided in full and
therefore have a substantially higher degree of certainty with regard to the amount and the timing
of the settlement of the obligation, so-called outstanding purchase invoices, are disclosed under
trade payables.
Amounts owing to employees in respect of obligations under employment contracts and which,
therefore, also have a higher degree of certainty with regard to the amount and the timing of the
settlement of the obligation, such as accrued vacation pay and bonuses, are disclosed under other
current liabilities.
PROVISIONS FOR PENSIONS AND SIMILAR OBLIGATIONS
The actuarial valuation of the pension liabilities is performed in accordance with the rules set out in
IAS 19 for pension benefits, whereby expected future increases in salaries and pensions are also
taken into account in addition to the known pensions and entitlements at the balance sheet date.
The liabilities are discounted using an interest rate of 4.75%.
Information disclosed in the Notes with regard to pension obligations does not contain all the
information required under IAS 19 as comparative prior year amounts are not available. Due to the
restructuring employees have been assigned together with their pension entitlements to other
Group companies and as a result comparative amounts were not calculated.
Provisions for jubilee benefits and obligations under partial retirement agreements are also
included in this amount. They represent long-term benefits and are stated at their discounted value
at the balance sheet date.
EQUITY CAPITAL
The capital reserves includes all values of transfers into the group by the shareholder during the
business year.
The merger reserves on the annual financial statements cut-off date results from the consolidation
differences at the initial consolidation between the consolidated investments in associates and the
relating equity of the subsidiaries.
72
Changes in the value of forward foreign exchange contracts designated as derivative cash flow
hedges and entered into for the purposes of hedging movements in foreign exchange rates are
recognised through the revaluation reserve at the reporting date.
Land and buildings were not revalued in the financial year.
Exchange differences arising on the translation of foreign currency financial statements included in
the consolidated financial statements are reported under the foreign exchange equalisation line
item in equity capital. Any increase or decrease in exchange differences arising on future reporting
dates is also directly recorded in this line item.
RECOGNITION OF SALES
A sale is recorded if it is probable that the transaction will result in an inflow of economic benefits to
the company and the amount can be determined reliably. This is normally the case if a delivery has
been made or a service provided and the risks and rewards incidental to ownership have been
transferred substantially to the purchaser.
The company does not enter into long-term contracts and therefore no revenue had to be
recognised in the financial statements under the percentage of completion method in accordance
with IAS 11.
Reported under this line item are sales generated on the sale of finished goods and merchandise
as well as any related ancillary services and services provided by the company, net of any
applicable VAT and less any discounts and rebates as well as credit notes issued in respect of
complaints.
FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currency are recorded in the presentation currency whereby
the foreign currency amount is translated using the applicable exchange rate between the
presentation and foreign currency.
If the presentation currency of the company to be consolidated is different to that of the parent
company the assets and liabilities are translated using the exchange rate prevailing at the balance
sheet date and profit and loss items at the average exchange rate for the year.
73
DEBT SERVICING COSTS
Costs incurred in servicing debt are not capitalised but are recognised in profit or loss as an
expense in the applicable accounting period and are disclosed under interest and similar expense.
RESEARCH AND DEVELOPMENT
Research and development costs were not capitalised in the financial year.
GRANTS FROM THE PUBLIC SECTOR
Public sector grants are only recognised in profit or loss if there is sufficient certainty that the
company has met the associated terms and conditions and that the company has actually received
the funds.
The company has received investment grants and statutory investment allowances. As a rule they
are subject to conditions under which the subsidised assets are to be held and used for operating
activities throughout the entire grant period, which is between 3 and 5 years.
The grants received are recorded under deferred liabilities and are credited annually to other
operating income on a straight-line basis based on the performance periods.
EXCEPTIONAL ITEMS
Contrary to the rules prescribed by IAS 1 exceptional items are disclosed in the profit and loss
statement as these are of significant importance with regard to the presentation of the financial
performance of the Group. Income and expense solely incurred in or arising from the restructuring
of the Group are reported as exceptional items and are not to be regarded as part of the operating
result.
INCOME TAXES
Given that the tax losses reported in the individual companies result primarily from the
restructuring it is not expected that any significant tax expense will be incurred in 2005. A deferred
tax asset was not recognised for tax loss carry forwards relating to restructuring costs not yet
accepted by the tax authorities. The deferred tax asset and liabilities disclosed in the annual
financial statements result from differences between the recognition criteria applied under IFRS
and the tax criteria applied in preparing separate financial statements under national law.
74
Taxes on income and revenue paid or owing by companies under the applicable local tax
legislation as well as deferred taxes are disclosed under this line item.
The income tax charge is calculated on the basis of the reported results taking into account any tax
losses carried forward.
Deferred taxes are determined under the liability method in accordance with IAS 12 and reflect the
tax effect of temporary differences between the carrying amount of assets and liabilities recognised
in the consolidated financial statements and in the separate tax balance sheets. Deferred tax
assets and liabilities are determined using the expected tax rates applicable for the accounting
periods in which these differences in assets and liabilities are expected to reverse. The current
applicable tax rates were applied under the assumption that these tax rates will remain in force in
the future.
CASH FLOW STATEMENT
A cash flow statement has been prepared in accordance with IAS 7. However, it was prepared on
the basis of a pro-forma balance sheet as this was the first year in which the Group existed in its
current structure and comparative prior year figures were not available.
SEGMENT REPORTING
Segment reporting was prepared and presented in the notes. The segments are defined as the
production divisions of the Group. In principle each Group company represents a separate
segment. A definition of a segment is given in the business review.
Intra-Group charges for goods and services are invoiced at market prices with the effect that the
financial results of each segment or Group company reflect the economic profitability regardless of
whether supplies and services were delivered or provided within the Group or to third parties.
All intra-Group income and expense is recorded and allocated. Income and expense and
eliminations are separately disclosed by segment in the segment reporting.
Liquidity was made available at the Group level for 2005. Therefore it was considered not
appropriate nor practical to prepare cash flow statements at the segment level.
75
EXPLANATORY COMMENTS ON THE BALANCE SHEET AND PROFIT AND
LOSS STATEMENT
1. CASH AND CASH EQUIVALENTS
€ 000s
Balances with credit institutions
Balance with the factoring bank
Cash on hand
2,293
2,744
19
Total
5,056
As at the balance sheet date Heller Bank AG, Mainz, the factoring partner, had acquired
receivables totalling Euro 11,392 k from the company, of which a balance of Euro 2,744 k was
available at the balance sheet date. Included in this amount is the contractually agreed retention
deposit amount of 10% of the receivables outstanding, amounting to Euro 1,139 K which is
released as available cash following payment of the invoices by the customers.
2. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments have a positive market value of Euro 339 k in respect of fair value
hedges entered into for the purposes of hedging risks on metal prices as well as Euro 17 k on cash
flow hedges entered into for the purpose of hedging foreign exchange risk on receivables and the
order book.
All derivatives mature within one year.
3. TRADE RECEIVABLES
Trade receivables amount to Euro 13,862 k and include impairment losses totalling Euro 1,340 k.
Income and expense of Euro 117 k and Euro 82 k, respectively, was recorded as a result of
adjustments made to impairment losses. In addition to this an amount of Euro 586 k relating
primarily to impairment losses recorded on the liquidation of the operating activities of the former
EuroCoin AG and their transfer to EuroCoin GmbH was reversed, as the amounts realised were
higher than expected.
76
Trade receivables in the amount of Euro 13,862 k represent amounts owing to the company by
customers that have not been purchased by the factoring bank, Heller Bank AG, Mainz. The trade
receivables purchased as at the balance sheet date amounted to Euro 11,392 k.
4. AMOUNTS DUE FROM AFFILIATED COMPANIES
Included under this line item is a loan plus accrued interest up to the year-end granted to Comcard
GmbH, a Group company that was not consolidated as it was sold on 10 January 2006. The
outstanding loan amount at the balance sheet date was Euro 2,157 k, against which an impairment
loss of Euro 630 k had to be recognised based on the sale and assignment agreement relating to
the shares and this loan and the purchase price contained therein. The remaining loan is to be
repaid by 30 June 2006 under this agreement.
5. ACCOUNTS DUE FROM ASSOCIATES
Amounts due from associates relate primarily to a trade receivable from Ceco S.A. and are all due
and payable within one year.
6. OTHER ASSETS
Other assets comprise the following:
€ 000s
Sale of the plastics electroplating business
Prepayment to the administrator of DNick Ltd. / EU Coin Ltd.
Metal hedge account balances
Employers’ liability insurance claims
Suppliers with debit balances
Other
3,970
600
533
241
187
95
Total
5,626
All other assets have a residual maturity of up to one year.
77
7. INVENTORIES
Inventories comprise the following:
€ 000s
Gross carrying
Impairment
amount
Net carrying
amount
Raw materials and consumables
Work in progress
Finished products and goods
14,090
34,107
25,719
928
537
403
13,162
33,570
25,316
Total
73,916
1,868
72,048
Impairment losses of Euro 1,868 k were recorded during the financial year in order to recognise
the related assets at their lower fair value; the inventory turnover rate was also taken into account
in determining this amount.
8. TAX REFUNDS
Tax refunds relate primarily to VAT reimbursement claims for the month of December 2005.
9. FIXED ASSETS
The movements in the individual fixed asset line items are presented in the schedule of changes in
fixed assets that shows the depreciation charge for the financial year. As fixed assets were
acquired in the financial year through the capital contribution of operating activities to Deutsche
Nickel GmbH and EuroCoin GmbH these additions are disclosed separately in an additional
column.
9.1. INTANGIBLE ASSETS
Included in intangible assets is the pool of customers acquired by DN PressTec GmbH as part of
the acquisition on 1 October 2005 of the cups business of Sundwiger Messingwerk GmbH. This is
being amortised on a straight-line basis over 4 years; the carrying amount as at the balance sheet
date was Euro 1,275 k. The other intangible assets included software in the amount of Euro 225 k.
78
9.2. TANGIBLE FIXED ASSETS
The additions represent assets that were acquired as a result of the capital contribution from DNick
Ltd. und EU Coin Ltd. (outside the Group) and affect the individual companies as follows:
Fixed asset category
DN GmbH
€ 000s
EC GmbH
€ 000s
Land
Buildings
Plant and machinery
Furniture and office equipment
180
47
1,580
763
4,839
807
Total
2,570
5,646
RE GmbH
€ 000s
2,096
4,234
6,330
As a result of the liquidation of the operating activities of EuroCoin GmbH that had been merged
with SAXONIA Edelmetalle GmbH tangible fixed assets, primarily plant and machinery, were
written down by Euro 1,597 k based on the estimated selling price of the assets.
The valuation of land and buildings, transferred into the DN Real Estate GmbH with an amount of
Euro 6,330 k, was made by the directors using specialists’ statements to estimate market value.
The carrying amounts of land and buildings are Euro 11,674 k, of which land and buildings with a
carrying amount of Euro 5,125 k have been provided as collateral against existing liabilities to
banks; the factory premises at Schwerte, that were transferred to DN Real Estate GmbH at a value
of Euro 6,330 k, are not affected by this.
Furthermore plant and machinery and furniture and equipment with a carrying amount of
Euro 6,865 k are also provided as collateral against existing liabilities to banks.
Liabilities to banks, against which the above-mentioned land and buildings and movable assets are
provided as collateral, relate solely to financing loans and amount to Euro 4,708 k as at the
balance sheet date.
9.3. FINANCIAL ASSETS
Additions to financial assets relate to the purchase for Euro 100 k of the remaining 25% of shares
in Comcard GmbH for Euro 100 k, which is adjusted down to Euro 30 k as at the balance sheet
date. The shares of Comcard GmbH were sold on 10 January 2006 for Euro 30 k.
79
In addition to the investment in Nordic Coin AB (Euro 658 k) that is accounted for under the equity
method, investments in associates include investments in Verres S.p.A. (Euro 500 k), Asia Money
Fair (Euro 55 k) and Conial S.p.A (Euro 0). Despite the holding of 45% in Asia Money Fair no
significant control is exercised over its activities and the company is not material to the Group. The
other investments represent holdings of less than 20%.
9.4. NON-CURRENT RECEIVABLES
Loans to affiliated companies amounting to Euro 1,656 k relate to an amount due from EU Coin
Ltd. that had to be classified as a loan during the financial year. The loan was repaid in 2006
through the transfer of shares in Ceco S.a. to SAXONIA EuroCoin GmbH.
Loans to companies with which there is an investment relationship amounting to Euro 3,878 k
relate to the loan to Nordic Coin AB and resulted from the acquisition of the loan in the amount of
Euro 5,204 k from the former EuroCoin AG as part of the preparatory stage for its conversion into
EU Coin Ltd., of which Euro 1,324 k was repaid during the year. The remaining amount
outstanding is to be repaid by 31.12.2007 on a quarterly basis.
Other loans relate to non-current receivables from insurance companies for reinsurance claims
relating to pension obligations.
10. DEFERRED TAX ASSETS AND LIABILITIES
Deferred taxes arise from differences between the valuation principles applied in preparing the
financial statements of the individual Group companies under IFRS and their tax balance sheets.
They are based solely on temporary balance sheet differences.
They are allocated to the individual balance sheet line items as follows:
Intangible assets
Tangible fixed assets
Derivative financial instruments
Inventories
Pension provisions
Liabilities
Other
Total
Asset
€ 000s
Liability
€ 000s
0
11
0
42
168
848
105
150
127
131
2,521
0
0
0
1,174
2,928
80
Tax loss carry forwards arose during the year, but these were not recognised as a deferred tax
asset.
Because no comparative amounts are available, the deferred tax charge in the income and
expenditure account does not reconcile to the balance sheet movement.
11. CURRENT LIABILITIES TO BANKS
€ 000s
Short-term loans
Overdrafts
Asset based borrowing
Current portion of long-term loan
11,856
7,124
7,161
2,552
Total
28,693
The short-term loan relates to a credit facility of Euro 12.5 million which has been granted to DNick
Holding plc in order to be able to finance the significant restructuring costs, such as the acquisition
of shares from VDN AG, the acquisition of the joint and several liability and the land charge as well
as legal fees. The loan matures on 28 October 2006 and is payable in full at maturity. The interest
rate charged on the loan is 9.0% above 3 month EURIBOR.
The overdraft facilities totalling Euro 8,000 k, of which Euro 2,157 k was drawn down as at the
balance sheet date, are secured through the assignment of inventories. The remaining overdraft
facilities totalling Euro 4,967 k , which are fully drawn down, are unsecured and mature on
December 31 2006. They bear interest rates of between 4.75% and 6.75%.
The asset based borrowing line in the amount of Euro 7,161 k is a variable rate USD credit facility
that is used to finance receivables and inventories of Deutsche Nickel America Inc. Receivables
and inventories of this company are assigned in this amount as security. The interest rate is 6.0%
p.a.
The long-term financing loans are secured through the assignment of a mortgage. This does not
affect the factory premises located at Schwerte. The interest rate charged is 4.75% p.a.
12. TRADE PAYABLES
All trade payables are due within one year, subject to the usual rights of ownership.
81
13. CURRENT TAX PROVISION
Taxes were accrued in the amount of Euro 203 k for expected income taxes for the year and Euro
1,211 k for additional tax assessments resulting from tax audits.
14. STATEMENT OF OTHER SHORT-TERM RESERVES
In € 000s
01.01
purchase J&S VDN-loan
Warranty claims
legal charges / proceedings
Utilisation
Reversal
Addition
31.12.
0
0
0
0
8,000
8,000
304
441
162
465
1,749
1,866
28
0
28
0
944
944
Interest
Discounts and bonuses
Transfer
191
0
187
0
190
195
2,437
50
21
2,466
4
4
304
3,489
316
3,319
655
813
Potential losses from
pending transactions
Recultivation / government
Obligations
Others in connection with
employees
0
510
0
510
100
100
147
0
106
41
256
256
Other
100
0
74
121
426
330
Total
3,512
4,490
894
6,923
12,324
12,507
The amounts shown under the transfer column represent the transfers of the existing provisions
made as part of the contribution of the operating activities of the former Deutsche Nickel AG and
EuroCoin AG.
The provisions transferred for guarantees (Euro 441 k), legal costs (Euro 50 k) and liabilities under
public law (Euro 510 k) were able to be reversed due to the extinguishment of the liabilities, as the
newly-formed GmbHs were not required to bear these liabilities in the future. Euro 3,319 k of the
transferred provision for anticipated losses totalling Euro 3,489 k was utilised, as the associated
unprofitable orders were finished during the year. However as the utilisation is not directly allocable
to direct costs and could not therefore be netted against them, the utilisation has been recorded as
a reversal by accordingly taking into account the full amount of the expense.
The prior year amounts also included a provision made in previous years for anticipated
repayments to the Federal Institute for Special Reunification Tasks, of which Euro 2,350 k was
able to be reversed as the law suit was settled in favour of the company. The reversal of this
provision is disclosed under the exceptional result.
Material new additions made during the year relate to the obligation of the company to acquire
from Bear Stearns plc the joint and several liability under the VDN loan for the amount of Euro 8
82
million following the completion of the CVAs. In addition interest expense of Euro 729 k on the
credit facility granted to DNick Holding plc was accrued up to the balance sheet date. The
provision for guarantees was increased substantially as a result of the anticipated drawdown of a
performance bond in the amount of Euro 1,311 k.
15. LIABILITIES TO AFFILIATED COMPANIES
Liabilities to affiliated companies relate solely to DNick Ltd. and EU Coin Ltd. and arise as the
result of the amounts owing to the former Deutsche Nickel AG and EuroCoin AG by individual
subsidiaries under profit and loss transfer agreements that were cancelled under an extraordinary
resolution with effect from 29 April 2005.
16. OTHER SHORT-TERM LIABILITIES
The other short-term liabilities include the following items:
€ 000s
Winding up former EuroCoin GmbH business
Short-term loan from third party
Salary and Wages December 2005
Social security December 2005
Redundancies
Bonuses
Social security tax December 2005
Accrued holiday entitlements
Employer’s liability insurance association
VAT December 2005
Negative values of currency hedges
Audit expenses
Negative values of metal hedges
Other
3,019
2,589
712
671
401
332
307
286
265
242
230
156
100
269
Total
9,579
The amount of kEUR 3,019 regarding winding up the business of former EuroCoin GmbH includes
redundancies (kEUR 1,658) effecting with the personal rescue company from January until April
2006, additional included are the due to the personnel rescue company outstanding December
2005 invoice (kEUR 1,065) and severance payments (kEUR 296).
During the business year the company took out a loan against metal stocks of the discontinued
business division to be wound up (EuroCoin GmbH) amounting to kEUR 2,589. Because it regards
to a third party, it is shown under the other liabilities.
83
17. NON-CURRENT LIABILITIES TO BANKS
The amount of Euro 4,656 k disclosed under non-current liabilities to banks relates to the financing
loans taken out in the amount of Euro 2,156 k that are secured by the assignment of mortgage,
excluding the factory premises located at Schwerte, and to the amount of Euro 2,500 k relating to
the financing of foreign trade receivables that is secured by the assignment of the related
receivables.
All non-current liabilities to banks have a residual maturity of between one to five years; the foreign
financing currently matures in November 2007.
€ 000s
Between one and two years
Between two and three years
Between three and four years
Between four and five years
More than five years
3,345
733
389
189
0
Total
4.656
The interest rate charged is 4.75%.
18. PROVISIONS FOR PENSIONS
Some of the Group companies provide defined benefits pension plans for its employees.
Provisions have been made for the pension obligations to be paid in the form of pensions or
widower/widow pensions. The amount and level of the benefits are based on the number of years
service and the salary paid. Employees can acquire pension rights of up to 25% of their last
monthly salary. Pension payments commence on the employee reaching the age of 65 years.
The liabilities arising under the deferred benefits pension plans are calculated based on the
qualifying period. The future liabilities are measured on the basis of the pro-rata acquired benefit
claims as at the balance sheet date.
As a result of the restructuring some employees were reassigned to companies, in particular from
the former Deutsche Nickel AG and EuroCoin AG and following the closure of EuroCoin GmbH; as
a result they were assigned to different companies compared to the prior year. As a result the
information required to be disclosed under IAS 19 relating to the change in pension liabilities
during the financial year could not be fully derived from the pension valuation report. The
information was determined retrospectively and reviewed for reasonableness.
84
Pension costs are included in personnel costs and comprise the following:
€ 000s
Service Costs
Interest expenses
Expected return on plan assets
Net actuarial losses
Past service cost
21
63
0
0
0
Staff costs
84
Movements during the year in the net liability were as follows:
€ 000s
At beginning of the year
Transferred from CVA companies (see above)
Net pension expense
Payments
1,408
726
84
-71
As at 31 December 2005
2,147
The transferred liabilities relating to re-assigned staff amounted to Euro 726 k.
Pension liabilities resulting from pension commitments have been calculated based on the
qualifying period taking into account future adjustments to salaries and pensions. The underlying
assumptions used in the calculation are as follows:
%
Discount rate
Expected return on plan assets
Expected rate of salary increases
Future pension increases
4,25
0,00
2,00
1,50
19. OTHER NON-CURRENT PROVISIONS
In € 000s
Pre-retirement part-time work
Jubilee
Total
01.01
Transfer
Utilisation
944
224
0
583
167
116
1,168
583
283
Reversal
Addition
31.12.
90
237
172
156
859
610
327
328
1,469
Provisions for partial retirement benefits and jubilee expenses in the amount of Euro 859 k and
Euro 610 k, respectively, are reported under other non-current provisions and are stated at their
discounted amounts.
85
20. DEFERRED INCOME
Deferred income only include public grants and subsidies that have been received for the purpose
of acquiring tangible fixed assets. The subsidies received are credited to income in future
accounting periods on a pro-rata basis based on the subsidy provisions that require the purchased
assets to be held for periods of between 3 and 5 years. As at the balance sheet date the residual
maturity of the deferred liabilities totalling Euro 1,086 k is as follows: Euro 579 k within one year
and Euro 507 k between one and five years.
21. SHAREHOLDERS' EQUITY
Movements in the individual line items of equity capital during the financial year are presented in
the separate appendix "Statement of changes in equity“.
The nominal capital of the company is GBP 100,000, of which 50% was issued as at the balance
sheet date, this is equivalent to Euro 72,620 (GBP 50,000) and is divided into 5 million shares of
GBP 0.01 each. The nominal capital of the shares issued is fully paid in.
The capital reserve comprises solely of the amounts contributed by the shareholder during the
course of the financial year representing shares in Group companies and also in the operating
activities of the former Deutsche Nickel AG as well as the former EuroCoin AG and the factory
premises at Schwerte. The capital reserve comprises the following:
€ 000s
Shares contributed by DNick Ltd. (formerly Deutsche Nickel AG)
Shares contributed by EU Coin Ltd. (formerly EuroCoin AG)
Operating activities contributed by DNick Ltd. (formerly Deutsche Nickel AG)
Operating activities contributed by EU Coin Ltd. (formerly EuroCoin AG)
Factory premises at Schwerte contributed by DNick Ltd. / EU Coin Ltd.
49,758
68
27,715
9,709
6,330
Total
93,580
The merger reserve includes the netting excess of cost of investment in consolidated subsidiaries
over book equity.
The revaluation reserve contains the changes in the market values compared to the prior year of
derivative instruments entered into for the purposes of hedging foreign exchange rates that are
classified as cash flow hedges and therefore were not to be recognised in profit or loss.
86
Differences arising on the equity capital amounts due to movements in foreign exchange rates
between the initial consolidation and the balance sheet date are reported under the translation
currency adjustment line item.
There are no retained earnings brought forward as it was the first year of operations under this
Group structure, balances carried forward by individual group companies were eliminated in the
capital consolidation.
At the loss for the year of Euro 28,426 k under comprehension of the exceptional result and the
transfer of profit and loss the loss per share amount to Euro -4.96.
22. SALES
Sales were generated in the following regions:
Region
€ 000s
Germany
European Union not including Germany
Rest of Europe
North America
Central and South America
Rest of the World
122,213
63,328
10,627
33,455
735
26,597
Total
256,955
Sales by segment are presented in the segment report in the Notes.
23. OTHER OPERATING INCOME
Other operating income comprises the following:
€ 000s
Reversal of provisions
Reversal of valuation allowances
Income resulting from hedging metal prices
Profits arising on the disposal of tangible fixed assets
Grants
Other
Total
4,899
704
630
610
518
2.683
10,044
The reversal of provisions includes the utilisation of provisions for anticipated losses in the amount
of Euro 3,172 k that cannot be directly allocated to individual expense line items.
87
24. DEPRECIATION
Impairment losses totalling Euro 1,597 k are included in the depreciation charge of Euro 7,423 k
for tangible fixed assets and reflect the write down of the fixed assets of the former EuroCoin
GmbH to their lower selling price.
25. OTHER OPERATING EXPENSES
Other operating expenses comprise the following:
€ 000s
Freight/packaging/commissions
Repair and maintenance costs
Insurance premiums
Legal and advisory fees/audit fees
Waste disposal
Rental and lease payments
Temporary staff
Contributions and fees
Bank charges
Travel expenses/ advertising/ trade fairs
Other third-party services
Losses arising on the disposal of tangible fixed assets
Additions to provisions
Safekeeping services
Telephone/postage /office material costs
EDP costs
Valuation adjustments
Compensation for damages
Other
Total
4,887
3,212
1,783
1,732
1,277
1,244
1,176
827
750
768
612
420
380
332
566
218
167
165
1,614
22,130
26. FINANCIAL RESULT
The financial result includes interest expense in the amount of Euro 3,870 k relating solely to the
amount charged on current and non-current liabilities to banks and factoring. Included in this line
item is an amount of Euro 944 k representing accrued interest on loans granted by Bear Stearns
Bank plc that is disclosed under other provisions.
Interest income arising on loans amounting to Euro 165 k and short-term receivables amounting to
Euro 505 k granted to DNick Ltd., EU Coin Ltd. and Comcard GmbH have been offset against the
interest expense.
88
27. EXCHANGE GAINS / LOSSES
Profits and losses resulting from foreign currency exchange differences were incurred during the
financial year as the US dollar exposure could not be fully hedged due the lack of available credit
lines. The amount of Euro 574 k includes exchange losses of Euro 256 k offset by exchange gains
of Euro 830 k.
28. EXCEPTIONAL RESULT
The exceptional result includes following items:
€ 000s
Acquisition of joint and several liability
Restructuring
Acquisition of mortgage
Valuation adjustment of amount due from EU Coin Ltd. (CVA)
Acquisition of shares in DN AG from VDN AG
Drawdown of guarantees
Addition to tax provisions
Relocation costs
Valuation adjustment of loan due from Comcard GmbH
Other
12,407
6,870
4,070
2,488
1,600
1,311
800
719
630
158
Total expenses
31,053
Reversal of provision for proceedings
Exceptional Result
2,350
28,703
The costs relating to the redemption of the amounts owing to Commerzbank AG (Euro 12,407 k)
arising on the credit agreements entered into with the prior shareholder, VDN AG, as well as the
redemption of the mortgage (Euro 4,070 k) have been charged to the holding company under the
debt reduction and restructuring programme. As part of the closure of EuroCoin GmbH additional
provisions were made in respect of an anticipated claim under a guarantee (Euro 1,311 k) and an
impairment of a loan (Euro 630 k). Following negotiations with regard to the selling price the
original loan to Comcard GmbH of Euro 2,157 k was written down to the selling price of
Euro 1,527 k.
In addition exceptional costs include the impairment loss recognised on a receivable
(Euro 2,488 k) due from EU Coin Ltd. (CVA), previously due from EuroCoin AG, as this could not
be recovered under the administration proceedings.
Furthermore income arising on the reversal of a provision for legal costs in the amount of
Euro 2,350 k following the successful conclusion of the administration proceedings has been
89
reported under the exceptional result line item, as this does not relate in any way to the operating
activities of the company.
The repurchase of the joint and several liability (Euro 4,407 k) as well as the land charge
(Euro 4,070 k), the acquisition of the shares in Deutsche Nickel AG from the prior shareholder,
VDN AG (Euro 1,600 k), the restructuring costs (Euro 6,870 k) as well as costs incurred in
relocating production facilities (Euro 719 k) were recorded under exceptional profits and losses on
a cash basis.
Provisions were made for the remaining part of the repurchase of the joint and several liability
(Euro 8,000 k) as well as the anticipated claim under a guarantee (Euro 1,311 k) that are still to be
paid. Impairment losses recognised on receivables (Euro 2,488 k; Euro 630 k and Euro 158 k) did
not involve any cash outflows.
29. TAXES ON INCOME
€ 000s
Current taxes
Deferred taxes
589
1,223
Total
1,812
The individual Group companies recorded losses, primarily attributable to the restructuring costs.
As a result no income taxes were incurred by the domestic companies or the holding company.
Given that the tax losses reported in the individual companies result primarily from the
restructuring it is not expected that any significant tax expense will be incurred in 2005. A deferred
tax asset was not recognised for tax loss carry forwards relating to restructuring costs not yet
accepted by the tax authorities.
Current tax expense includes Euro 95 k for income taxes relating to the American subsidiary and
Euro 494 k for additional tax assessments resulting from tax audits of German companies.
Deferred taxes result solely from differences between the valuation principles applied under IFRS
and for the individual tax balance sheets.
30. PROFIT & LOSS TRANSFER
Profit and loss transfer agreements were concluded between the former Deutsche Nickel AG and
the former EuroCoin AG and its subsidiaries. Under these agreements profits are to be transferred
90
to the shareholder and any losses incurred by the subsidiaries are also to be compensated for by
the shareholder.
As part of the restructuring these profit and loss transfer agreements were transferred to the
universal legal successors of both AGs, DNick Ltd. and EU Coin Ltd. These profit and loss transfer
agreements were cancelled under an extraordinary resolution dated 29 April 2005 following the
commencement of the CVAs.
The subsidiaries are obliged to transfer to DNick Ltd. or EU Coin Ltd. the results generated
reported up to the date of the cancellation of the agreements. Any future obligations under these
agreements have been fully extinguished as part of the restructuring.
The following individual amounts are to be transferred to DNick Ltd. or EU Coin Ltd. :
Company
DN PressTec GmbH
DN Real Estate GmbH
Total
€ 000s
632
795
196
110
1,733
31. POST BALANCE SHEET EVENTS
On 18 April 2006, the company was listed on Freiverkehr Exchange in Frankfurt. Upon listing on
the Freiverkehr Exchange, as part of the CVA settlement, an additional £12,714 shares were
issued.
91
OTHER INFORMATION
CONTINGENT LIABILITIES, CONTINGENT ASSETS
The termination of tax consolidation agreement between Deutsche Nickel AG and VDN Vereinigte
Deutsche Nickel-Werke AG have led to Tax demands within the CVA which were rejected by the
Joint Administrators. In case these Tax demands should prove valid, DNick Ltd. obtained an option
to cause the issue of up to 160,000 shares in DNick Holding plc in order to satisfy such demands.
Additional liabilities for the subsidiaries of DNick Holding plc may result from German Tax
regulations.
There were no additional contingent assets or liabilities as at the balance sheet date.
JOINT AND SEVERAL LIABILITY
At the beginning of 2005 DNick Ltd., EU Coin Ltd., SAXONIA Edelmetalle GmbH, SAXONIA
EuroCoin GmbH and Auerhammer Metallwerk GmbH were jointly and severally liable to
Commerzbank AG, Dortmund, for the amount of Euro 36,370 k, which was substantially
restructured in the year with the objective of extinguishing it. The former shareholder as well as
several of its other subsidiaries was responsible for the joint and several liability which was used to
collateralise the credit lines granted by Commerzbank AG.
€ 000s
Overdraft credit facility
- VDN Vereinigte Deutsche Nickel-Werke AG, Düsseldorf
29,450
- LPW Blasberg Anlagen GmbH, Neuss
4,500
- Coswig Tapeten GmbH, Coswig
1,550
- Alkor Venilia GmbH, Gräfelfing
500
Guarantee credit facility
- Alkor Venilia GmbH, Gräfelfing
370
36,370
Under an agreement dated 17 March 2005 Bear Stearns Bank plc., London, acquired from
Commerzbank AG the overdraft credit facility granted to VDN Vereinigte Deutsche Nickel AG
(VDN-loan) together with all the associated liability rights for the amount drawn down under the
facility of Euro 29,450 k.
92
Under the agreement dated 19 July 2005 DNick Holding plc acquired from Commerzbank AG the
overdraft facility granted to LPW Blasberg Anlagen GmbH (LPW-loan) together with all the
associated liability rights for the amount drawn down under the facility of Euro 4,407 k.
In return Commerzbank has also waived the remaining claims under the joint and several liability in
respect of Coswig Tapeten GmbH (Euro 1,550 k) and Alkor Venilia GmbH (Euro 500 k) as well as
the guarantee facility granted to LPW Blasberg Anlagen GmbH (Euro 370 k).
As a result the joint and several liability to Commerzbank AG has been extinguished. In future
there will be liability obligations to Bear Stearns Bank plc in the amount of Euro 29,450 k.
DNick Holding plc and Bear Stearns Bank plc have agreed that DNick Holding plc acquires the
amount of VDN-loan for Euro 8,000 k. As a result there are no longer any liability obligations to
third parties.
OTHER FINANCIAL COMMITMENTS
Orders for metals were placed to hedge the purchase risk. These purchase commitments
amounted to Euro 12.5 million as at the balance sheet date.
Guarantees issued amounted to Euro 4.2 million as at the balance sheet date.
In addition there were commitments under lease agreements amounting to Euro 119 k payable
within one year and Euro 151 k payable between one and five years.
EMPLOYEES
221 salaried staff and 518 wage earners were employed on average during the year.
93
EXECUTIVE BODIES OF THE COMPANY AND THEIR REMUNERATION
The directors during the year were:
- Dr. Götz-Peter Blumbach
- Edouard Altenhoven
Members of the non executive committee were not elected during the business year.
Mr. Altenhoven received remuneration from DNick Holding plc to the value of Euro 178 k.
Mr Blumbach invoiced the group for consultancy expenses to the amount of Euro 360 k.
Shares options and pensions payments were not incurred.
94
RELATIONSHIPS AND TRANSACTIONS BETWEEN RELATED PERSONS/COMPANIES
DNick Ltd., London, as well as EU Coin Ltd., London, are related companies to the DNick Holding
plc Group. DNick Ltd. owns all the shares in DNick Holding plc as well as EU Coin Ltd..
In addition the director of DNick Ltd. is at the same time also a director of EU Coin Ltd. as well as
DNick Holding plc. He is remunerated by DNick Holding plc, also for duties performed on behalf of
DNick Ltd. and EU Coin Ltd..
The assets of DNick Ltd. and EU Coin Ltd. were subject to a company voluntary arrangement
(CVA), which was part of the restructuring of the DNick Group. Costs incurred under this
restructuring process were mainly paid and/or assumed by DNick Holding plc as it is the
management company holding the shares in the operating companies and had the available funds.
Receivables amounted to Euro 600 k as at the balance sheet date.
In addition to the costs paid and/or assumed Auerhammer Metallwerk GmbH, SAXONIA
Edelmetalle GmbH and DN PressTec GmbH had entered into profit and loss transfer agreements
with the former Deutsche Nickel AG (now DNick Ltd. as universal legal successor). Furthermore
DN Real Estate (formerly DeNiSys GmbH) had entered into a profit and loss trasfer agreement
with EuroCoin AG (now EU Coin Ltd. as universal legal successor). Under these agreements the
subsidiaries were obliged to transfer any profits to the parent companies and the parent company
was obliged to compensate the subsidiaries for any losses they incurred. On commencing the
CVAs for DNick Ltd. and EU Coin Ltd. these profit and loss transfer agreements were cancelled
under an extraordinary resolution with effect from 29 April 2005. The profits generated up to the
date are to be transferred to DNick Ltd. und EU Coin Ltd. as follows:
Company
DN PressTec GmbH
DN Real Estate GmbH
Total
€ 000s
632
795
196
110
1,733
Liabilities to related companies resulting from profit and loss transfer agreements are due and
payable within one year and amounted to Euro 1,530 k as at the balance sheet date. In addition to
this liability SAXONIA Edelmetalle GmbH is owed an amount of Euro 203 k by DNick Ltd.
representing interest on a loan granted during the year that was repaid in full during the period.
95
In addition there were amounts owing by Group companies to DNick Ltd. and EU Coin Ltd. as
universal legal successor to the former Deutsche Nickel AG and EuroCoin AG, which had to be
written off as part of the CVAs. These amounted to Euro 2,488 k for EU Coin Ltd. and Euro 1,600 k
for DNick Ltd. resulting from the payment for the purchase of the shares in Deutsche Nickel AG
from the former shareholder VDN AG in December 2004.
There were no other material transactions with related companies.
96
LEGAL STATUS
REGISTERED OFFICE, FORMATION, SHARE CAPITAL, COMPANIES REGISTER, PURPOSE
DNick Holding plc is a public limited company incorporated under English law with its headquarters
located in the United Kingdom (U.K.). Its registered address is 75 Cannon Street, London, EC4N
5BN, United Kingdom (U.K.).
The financial year starts on 1 January of each year and ends on 31 December of the respective
calendar year.
DNick Holding plc was formed by declaration on 17 March 2005 by DNick Ltd., London, United
Kingdom (U.K.) (hereinafter referred to as "DNick Ltd.“) and Mr. Edouard Altenhoven with an
authorised share capital of GBP 100,000, divided into 100,000 registered shares with a par value
of GBP 1.00 per share.
50,000 shares were then issued with a total par value of GBP 50,000, namely 49,999 shares to
DNick Ltd. and one share to Mr. Edouard Altenhoven who is only the legal owner and holds the
share on behalf of DNick Ltd. (beneficial owner).
The company is registered at Companies House in the United Kingdom (U.K.) under the number
5398216. It was registered on 18 March 2005.
There have not been any capital increases or corporate restructurings since that date; however the
authorised capital was split into 10 million shares with a par value of GBP 0.01 per share, i.e. the
50,000 previously issued were split into 5 million shares. Furthermore a further 13,754 shares with
a total par value of 137.54 are to be issued prior to listing by way of a cash contribution of GBP
137.54.
DNick Holding plc was formed to act as a holding company for the former business activities and to
be used as the vehicle for the financial, balance sheet and legal restructuring of Deutsche Nickel
AG and its investments. The life of the company has not been limited to a specific period of time.
97
SHAREHOLDER
The parent company, DNick Ltd., is a limited liability company incorporated under English law. It
was formed as a shelf company on 30 October 2003. Mr. Edouard J. C. Altenhoven has held all
the shares in DNick Ltd. since 22 December 2004. Mr. Altenhoven is also the sole director of
DNick Ltd..
On 29 April 2005 administration proceedings were commenced with regard to the assets of DNick
Ltd.. The administrators are Mr. Simon Thomas and Mr. Steven Parker. As a result of the
circumstances described in more detail below DNick Ltd. is the legal successor to Deutsche Nickel
AG (hereinafter referred to as "Deutsche Nickel AG“) and currently holds all 5,000,000 shares in
DNick Holding plc.
Director
Director
2006
98
SHARE INFORMATION
EXCHANGE OR SUBSCRIPTION RIGHT ON SHARES IN DNICK HOLDING PLC
As part of the restructuring DNick Holding plc issued certificated options under an option
agreement dated 22 March 2005 that would entitle the option holder to receive in total 7.7% of the
total share capital of DNick Holding plc.
The options were issued to various persons who had made a decisive contribution in ensuring that
the restructuring steps undertaken to date were successfully implemented. In particular options
were granted in respect of the loan of Euro 2 million with which the acquisition by DNick Ltd. on 24
December 2004 of the shares in Deutsche Nickel AG as well as the initial liquidity requirements
were financed. The creditor under this loan was DNick Holding plc. The options issued in
connection with this loan grant the loan creditor option rights to obtain shares in the equity capital
of DNick Holding plc in addition to the repayment of the loan, done on 17 June 2005.
The options can be exercised prior to a change in shareholders, a sale, a stock exchange listing,
liquidation of the company or a capital distribution made to the shareholders of DNick Holding plc.
Exercise is effected through the submission of appropriate proof to DNick Holding plc. Following
receipt of this proof DNick Holding plc will issue the shares to the option holder. In the option
agreement DNick Holding plc undertakes to have available sufficient approved and unissued
authorised capital to service the options that have not yet been exercised and not to amend the
Articles of Association without the agreement of the option holders so that their rights under the
options would not be harmed (through a resolution of an Extraordinary Shareholders Meeting).
Furthermore DNick Holding plc has undertaken to pay the net amount to each option holder that
such person would have received if he had exercised the options prior to a future dividend
distribution. The option holders who hold in total at least 10% of the options issued have the right
to convene a meeting of the option holders in which all matters affecting the option holders can be
resolved with a majority of 75% of the voting rights issued. Such matters affecting the option
holders include any amendments to the option agreement and proposals to modify or change the
rights of the option holders. If the authorised capital of DNick Holding plc is changed, the
number/value of the options will be adjusted accordingly, so that the total number of shares on
which there is an option right and consequently also the voting rights on which an option exists
remains commensurate (dilution protection provision). A change in the authorised capital, if there
are still option rights not yet exercised, requires confirmation from the external auditors that the
proportion has been adjusted accordingly. In any change to the authorised capital the number of
shares are either rounded up down to the nearest whole number.
Annual Report 2005 - Share Information
99
FORM AND SECURITISATION
The shares are securitised in a global certificate. The shareholders have a legal claim on the
individual securitised shares. However this claim is only applicable to shareholders registered in
the company’s share register. This will be a bank that holds the shares as a nominee for the actual
shareholders. The actual shareholders who have acquired so-called beneficial ownership under
English law have no claim on the securitised shares.
ISIN, WKN, STOCK EXCHANGE IDENTIFICATION CODE
ISIN:
WKN:
Stock exchange identification code:
GB00B06ZX541
A0D9RZ
D2H
PAYING AGENT AND CUSTODIAN
The paying agent and custodian is the Bank of New York, London, United Kingdom (U.K.).
DISCLOSURE REQUIREMENTS REGARDING SHARE OWNERSHIP
Under § 198 of the 1985 English Companies Act each person that acquires or sells 3% or more of
the shares in DNick Holding plc has to notify such to DNick Holding plc in writing within two days
Under German securities trading law there are no disclosure requirements regarding the
acquisition of material investments.
Annual Report 2005 - Share Information
100
DIRECTORS’ REPORT
The directors present their report together with the audited financial statements for the year ended
31 December 2005.
The directors have also prepared an annual report in German, which is available from the
company’s registered office or from the company’s website.
The directors advise, that the German annual report will be an unaudited translation of the English
annual report.
PRINCIPAL ACTIVITY, BUSINESS REVIEW AND SIGNIFICANT CHANGES
The company's principal activities, business review and significant changes are described in the
group report.
There was a loss for the year after taxation amounting to €24,826,355. The directors do not
recommend the payment of a dividend.
DIRECTORS
The present membership of the Board is set out below. All served on the Board throughout the
year. The interests of the directors and their families in the shares of the company as at 31
December 2005 were as follows:
Ordinary shares of £0.01 each
Edouard J. C. Altenhoven
Dr. Goetz-Peter Blumbach
100
-
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and International Financial Reporting Standards as adopted by the
European Union.
Company law requires the directors to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the company and of the profit or loss of the
company for that period.
Annual Report 2005 - Directors’ Report
101
In preparing these financial statements, the directors are required to:
x
select suitable accounting policies and then apply them consistently;
x
make judgements and estimates that are reasonable and prudent;
x
state whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
x
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the company will continue in business.
In so far as the directors are aware:
x
there is no relevant audit information of which the company's auditors are unaware; and
x
the directors have taken all steps that they ought to have taken to make themselves aware of
any relevant audit information and to establish that the auditors are aware of that information.
The directors are responsible for keeping proper accounting records that disclose with reasonable
accuracy at any time the financial position of the company and enable them to ensure that the
financial statements comply with the Companies Act 1985. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
AUDITORS
Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with
Section 385 of the Companies Act 1985.
ON BEHALF OF THE BOARD
Director
Director
2006
Annual Report 2005 - Directors’ Report
102
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS
OF DNICK HOLDING PLC
We have audited the group financial statements (the ''financial statements'') of DNick
Holding plc for the period ended 31 December 2005 which comprise the principal
accounting policies, the group profit and loss account, the group balance sheet, the group
cash flow statement, the group statement of total recognised gains and losses and notes 1 to
31 on pages 53 to 102 of the group accounts. These financial statements have been prepared
under the accounting policies set out therein.
This report is made solely to the company s members, as a body, in accordance with Section
235 of the Companies Act 1985. Our audit work has been undertaken so that we might state
to the company s members those matters we are required to state to them in an auditors'
report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and the financial statements in
accordance with United Kingdom law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union are set out in the Statement of Directors'
Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and
regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view,
whether they are properly prepared in accordance with the Companies Act 1985 and Article
4 of the IAS Regulation and whether the information given in the Directors' Report is
consistent with the financial statements. We also report to you if, in our opinion, the
company has not kept proper accounting records, if we have not received all the information
and explanations we require for our audit, or if information specified by law regarding
directors' remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report, and consider whether it is
consistent with the audited financial statements. This other information comprises only the
Directors' Report. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
103
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board, except that the scope of our audit work was
limited as explained below.
An audit includes examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the significant
estimates and judgments made by the directors in the preparation of the financial statements,
and of whether the accounting policies are appropriate to the group's and company's
circumstances, consistently applied and adequately disclosed.
We planned our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable
assurance that the financial statements are free from material misstatement, whether caused
by fraud or other irregularity or error. However, as stated in the accounting policies, the
Board does not believe it is practicable to prepare the comparative group balance sheet as at
31 December 2004 or the income and expenditure account and cash flows of the group for
the period ended on that date. We are unable, therefore, to obtain sufficient appropriate
evidence regarding this comparative information. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the financial statements.
Emphasis of matter - Going concern
In forming our opinion, which is not qualified, we have considered the adequacy of the
disclosures made in the Basis of Consolidation section (page 66) concerning the group's
ability to continue as a going concern. The directors have stated that they are confident that
the bank facilities, that are due for renegotiation between the end of September and the end
of December 2006, will be renewed, to the extent required to continue its activities as a
going concern.
104
Qualified opinion arising from a limitation in scope
Except for the omission of the comparative group balance sheet as at 31 December 2004 and
the income and expenditure account and cash flows of the group for the period ended on that
date, in our opinion:
the financial statements give a true and fair view, in accordance with IFRSs as
adopted by the European Union, of the state of the group's and the parent
company's affairs as at 31 December 2005 and of the group's loss for the period
then ended;
the financial statements have been properly prepared in accordance with the
Companies Act 1985 and Article 4 of the IAS Regulation..
In respect solely of the limitation on our work relating to comparative amounts:
we have not obtained all the information and explanations that we consider
necessary for the purpose of our audit; and
we were unable to determine whether proper accounting records have been
maintained.
As explained in the "Principles and Methods" section on page 64 of the group financial
statements, the group in addition to complying with its legal obligations to comply with the
IFRSs as adopted by the European Union, has also complied with IFRSs as issued by the
International Accounting Standards Board, except as noted above.
GRANT THORNTON UK LLP
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
LONDON
26 September 2006
Note: The maintenance and integrity of the DNick Holding plc website is the responsibility of the directors: the work carried
out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from
legislation in other jurisdictions.
105

DNick Holding plc Annual Report 2005

Transcription

Similar documents

EUROPLAST – NYCAST GmbH Emergency

Flyer ESCI Conference Poland 2015

TOUROPARC ZOO

AC SAR - RWTH Aachen University

II Europejski Kongres Języków Obcych PASE

Riga Cup participation step by step:

Bulletin Vol 17 Nr 5 - October 2011

Nordic Export Economies in the Next Phase of Globalization Klas

AVS24 2.4 GHZ Wireless Audio/Video Sender

Whether construction material, protective material