Nordenia International AG`s annual report 2010

Transcription

NORDENIA HOLDINGS AG
ANNUAL REPORT FOR
THE
PERIOD ENDED
DECEMBER 31, 2010
Prepared and Delivered Pursuant to Section 4.03(a) of the Indenture
Governing the 9¾% Senior Second Priority Notes due 2017
APRIL 29, 2011
NORDENIA Holdings AG
Annual Report for the Period
Ended December 31, 2010
Prepared and Delivered Pursuant to Section 4.03(a) of the Indenture Governing the 9¾% Senior Second
Priority Notes due 2017
INTRODUCTION
On July 9, 2010, NORDENIA Holdings AG (the “Issuer”) issued its 9¾% Senior Second Priority Notes
due 2017 (the “Notes”) pursuant to an Indenture, dated July 9, 2010 (the “Indenture”), by and among the
Issuer, as issuer of the Notes, Deutsche Bank AG, London Branch, as Transfer Agent, Principal Paying
Agent and Security Agent, Deutsche Bank Luxembourg S.A., as Luxembourg Paying Agent and Registrar,
and Deutsche Trustee Company Limited, as Trustee (the “Trustee”). Capitalized terms used herein that are
not otherwise defined have the meanings assigned to such terms in the Indenture.
Section 4.03(a) of the Indenture requires, among other things, so long as any Notes are outstanding, that
the Issuer furnish to the Trustee, within 120 days after the end of the Issuer’ s business year beginning with
the business year ending December 31, 2010 annual reports containing the following information with a level
of detail that is substantially comparable to the Offering Memorandum: (1) audited consolidated balance
sheet of the Issuer as of the end of the two most recent business years and audited consolidated income
statements and statements of cash flow of the Issuer for the three most recent business years, including
complete footnotes to such financial statements and the report of the independent auditors on the financial
statements; (2) pro forma income statement and balance sheet information of the Issuer, together with
explanatory footnotes, for any material acquisitions, dispositions or recapitalizations that have occurred since
the beginning of the most recently completed business year as to which such annual report relates (unless
such pro forma information has been provided in a previous report pursuant to the indenture; (3) an
operating and financial review of the audited financial statements, including a discussion of the results of
operations, financial condition and liquidity and capital resources, and a discussion of material commitments
and contingencies and critical accounting policies; (4) a description of the business, management and
shareholders of the Issuer, material affiliate transactions and material debt instruments and (5) material risk
factors and material recent developments.
Section 4.03(f) of the Indenture further requires that, contemporaneously with the furnishing of the report
discussed above to the Trustee, the Issuer will also post such report on the Issuer’s website. The Issuer will
also make available copies of such reports, if and so long as the Notes are listed on the Official List of the
Luxembourg Stock Exchange and admitted for trading on the Euro MTF market and the rules of the
Luxembourg Stock Exchange so require, at the offices of the Paying Agent in Luxembourg or, to the extent
and in the manner permitted by such rules, post such reports on the official website of the Luxembourg Stock
Exchange.
This Annual Report has been prepared, distributed to the Trustee, posted on the Issuer’s website and
posted on the official website of the Luxembourg Stock Exchange pursuant to the requirements of
Section 4.03 of the Indenture. The Issuer does not file reports with the Securities and Exchange Commission
and the preparation of this report and the posting of this Annual Report pursuant to the requirements of the
Indenture shall in no way be interpreted as an undertaking on the part of the Issuer to otherwise comply with
all of the rules and regulations that are applicable to a company subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended.
The date of this Annual Report is April 29, 2011. NORDENIA HOLDINGS AG
Annual Report for the Period
Ended December 31, 2010
TABLE OF CONTENTS
Page
CERTAIN DEFINED TERMS USED IN THIS ANNUAL REPORT
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
PRESENTATION OF FINANCIAL INFORMATION
IMPORTANT NOTE REGARDING CONFIDENTIALITY
CONSOLIDATED FINANCIAL STATEMENTS OF THE YEAR 2010 OF NORDENIA GROUP:
AUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2010
AUDITED CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM
JANUARY 1 TO DECEMBER 31, 2010
AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
PERIOD FROM JANUARY 1 TO DECEMBER 31, 2010
AUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM
AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2010
SELECTED HISTORICAL FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
BUSINESS
MANAGEMENT
PRINCIPAL SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
NON-IFRS-EU FINANCIAL INFORMATION
RISK FACTORS
APPENDICES
REPORT OF INDEPENDENT AUDITORS OF THE FINANCIAL STATEMENTS AS OF
DECEMBER 31, 2010
DECEMBER 31, 2009
DECEMBER 31, 2008
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F-1
F-73
F-125
NORDENIA HOLDINGS AG | FINANCIAL REPORT FISCAL YEAR 2010
CERTAIN DEFINED TERMS USED IN THIS ANNUAL REPORT
The following terms used in this Annual Report have the meanings assigned to them below:
“Bilateral Facilities”
The EUR 244.3 million of committed bilateral facilities (as of
June 30, 2010) that NIAG or one of its subsidiaries had with
various banks, which commitments thereunder nearly all were
terminated upon completion of the Refinancing Transactions.
The merger of NIAG with and into the Issuer pursuant to which
the Issuer will be the surviving corporation and will assume by
operation of law all of the assets and obligations of NIAG. Any
shares of capital stock of NIAG not otherwise owned by the
Issuer or NIAG prior to such merger will be converted into
shares of capital stock of the Issuer.
Collectively refers to the following payments made to the
existing equity holders of the Issuer or NIAG, as applicable,
following the completion of the Offering: (i) the purchase for
cash of shares of NIAG from certain existing shareholders that
elected to have their shares purchased by the Issuer in lieu of
exchanging them for shares of the Issuer in connection with
the Formation Transactions, (ii) a capital distribution to
shareholders of the Issuer, (iii) payments to our existing option
holders participating in our management option plan to permit
them to participate on a pro rata basis in the capital
distribution, which payments will be recorded as a reduction to
our accrued liability for our management option plan, and
(iv) the reimbursement of certain costs incurred by the Oaktree
Investment Entities in connection with their investment in
NIAG, including the Formation Transactions.
Collectively refers to: (i) the contribution by the Oaktree
Investment Entities of all of their shares of NIAG to the Issuer
in exchange for shares of the Issuer, which contribution was
completed on May 27, 2010, (ii) the exchange by other existing
shareholders of NIAG, who collectively held approximately
3.47% of the outstanding capital stock of NIAG, of all of their
shares of capital stock of NIAG for an identical number of
shares of the Issuer upon completion of the Offering and
(iii) the purchase by the Issuer of an aggregate of
approximately 0.39% of the outstanding capital stock of NIAG
from certain existing shareholders that elected to have their
shares purchased in lieu of exchanging them for shares of the
Issuer in connection with the Formation Transactions upon
completion of the Offering.
Collectively refers to NIAG and its subsidiaries (including any
of their respective predecessors) for periods prior to May 27,
2010, and to the Issuer and its subsidiaries for periods
thereafter, except in each case where the context otherwise
requires.
The new revolving bank credit facility entered into by NIAG,
those subsidiaries of NIAG named therein, and WGZ Bank AG,
as lead arranger and administrative agent, and the other
lenders named therein, upon the completion of the Offering
that provides for aggregate borrowings of up to
EUR 100.0 million for working capital purposes and other
general corporate purposes.
NORDENIA International AG, the parent company of the
NORDENIA Group until the Issuer was founded and Oaktree
“Consolidation Merger”
“Equity Distribution”
“Formation Transactions”
“Group,” “we,” “us” or “our”
“New Bank Facility”
„NIAG“
2
“Oaktree Capital Management”
“Oaktree Investment Entities”
“Offering”
“Pari Passu Bank Facility”
“Period ending December 31, 2010”
“RCF”
“Refinancing Transactions”
3
distributed its shares of NIAG into the Issuer, which became
the parent company of the NORDENIA Group at this time
Oaktree Capital Management, L.P., a global investment
management partnership.
Collectively refers to OCM/NORDENIA POF Luxembourg
S.C.A and OCM/NORDENIA Opps Luxembourg S.C.A., each
of which is organized under the laws of Luxembourg and
controlled by Oaktree Capital Management, and collectively
own approximately 96.2% of the outstanding share capital of
the Issuer following completion of the Formation Transactions.
The offering of the Notes by the Issuer.
Collectively refers to the loan agreements that NIAG had prior
to the completion of the Offering with each of
Landessparkasse zu Oldenburg and Sparkasse Bremen that
provided for aggregate borrowings of EUR 50.0 million, of
which all of the outstanding borrowings thereunder were repaid
and the related commitments terminated upon completion of
the Refinancing Transactions, and thereafter to a new loan
agreement that NIAG entered into with Landessparkasse zu
Oldenburg upon the completion of the Offering that provides
for aggregate borrowings of up to EUR 10.0 million.
Refers to two fiscal years of the Nordenia Group in 2010,
(Jan 1 to Jun 28, 2010 and Jun 29 to December 31, 2010)
The revolving bank credit facility entered into by the Issuer
(originally by NIAG) and those subsidiaries of NHAG named
therein, and WGZ Bank AG as lead arranger and
administrative agent, and the other lenders named therein,
upon the completion of the Offering that provides for aggregate
borrowings of up to EUR 100.0 million for working capital
purposes and other general corporate purposes.
Collectively refers to: (i) the use of the proceeds from the
Offering by the Issuer to (a) make an intercompany loan to
NIAG, the proceeds of which, together with borrowings under
the New Bank Facility and the Pari Passu Bank Facility and
available cash, were used by NIAG to repay substantially all of
its existing indebtedness and to correspondingly terminate the
related commitments thereunder, (b) fund the Equity
Distribution and (c) pay the fees and expenses associated with
the foregoing transactions, and (ii) the execution and
effectiveness of the agreements related thereto.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report includes forward looking statements regarding, among other things, our plans,
strategies and prospects, both business and financial. These statements are based on the beliefs and
assumptions of our management. Although we believe that our plans, intentions and expectations reflected
in or suggested by these forward looking statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions or expectations. Forward looking statements are inherently subject
to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including
statements concerning our possible or assumed future actions, business strategies, events or results of
operations, are forward looking statements. These statements may be preceded by, followed by or include
the words “believes,” “expects,” “may,” “is expected to,” “will,” “will continue,” “should,” “would be,” “seeks,”
“anticipates,” “intends,” “plans,” “estimates” or similar expressions or the negative thereof. These statements
are based on management’s current views and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or events to differ materially from those
anticipated by such statements. Factors that could cause differences in actual results include:
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our substantial leverage and our ability to meet our debt service obligations;
changes in the market conditions for our products;
competition within our industry or from products with lower cost of production;
loss of a major customer;
commoditization of our products or product substitution;
consolidation of our customers or our competitors;
price fluctuations in raw materials and energy costs;
our ability to stay abreast of changing technology in our industry;
our ability to successfully implement our business strategy of maximizing cash flow and profitability;
the costs and difficulties of acquiring and integrating complementary businesses and technologies;
fluctuations in currency rates;
material disruptions at our manufacturing facilities;
the cost of compliance with, and any liabilities under, current and future environmental, health and
safety laws and regulations;
delays or increased costs in the production or delivery of our products and services due to our
international operations;
anti-trust and similar legislation;
our ability to protect our intellectual property, including our proprietary technology;
claims that our products or processes infringe the intellectual property rights of others;
difficulties in expanding our operations;
our ability to maintain good employee relations; and
challenges by taxing authorities to our historical or future tax positions or our allocation of taxable
income among our subsidiaries, or changes in the tax laws to which we are subject.
These risks and uncertainties, as well as other risks of which we are not aware or which we currently do
not believe to be material, may cause our actual results to be materially different than those expressed in our
forward-looking statements. We caution you not to place undue reliance on these forward-looking
statements. All forward looking statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the foregoing cautionary statements. Forward looking statements speak only as
of the date they were made. We do not undertake any obligation to make any revisions to these forwardlooking statements to reflect events or circumstances after the date of this Annual Report or to reflect the
occurrence of unanticipated events, except as required by law, including the securities laws of the United
States and rules and regulations of the Securities and Exchange Commission.
4
PRESENTATION OF FINANCIAL INFORMATION
This Annual Report contains audited consolidated financial statements of the Issuer and its subsidiaries
for the period ended December 31, 2010 and the fiscal years 2009 and 2008.
The audited financial statements of the Issuer have been prepared in accordance with IFRS-EU and, in
the opinion of management, include all adjustments, consisting of normal and recurring adjustments,
necessary for a fair presentation of results.
The audited consolidated financial statements for the period 2010 were prepared with the Issuer as the
parent company of the NORDENIA Group.
On October 28, 2010, the Issuer and NIAG concluded a notarized agreement governing the
Consolidation Merger with retrospective effect from July 1, 2010. The general meetings of the Issuer and of
NIAG approved the merger agreement on December 8, 2010, and December 15, 2010, respectively. The
Consolidation Merger had not been registered in the commercial register by the date of this Annual Report
and had thus not yet become effective. The Issuer considers entry in the commercial register to be most
likely, and the consolidated financial statements were therefore prepared and audited under the assumption
of the Consolidation Merger having become effective with effect from July 1, 2010.
The first fiscal year of the Issuer ended on June 28, 2010. The second fiscal year of the Issuer started on
June 29 and ended on December 31, 2010. However, for reasons of comparability the year to date period
does not refer to the fiscal year but covers the period of January 1 until December 31, 2010, which is
described as period ending December 31, 2010.
The preparation of financial statements in conformity with IFRS-EU requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in the financial
statements.
The financial statements are presented in euro rounded to the nearest thousand. Therefore,
discrepancies in the tables between totals and the sums of the amounts listed may occur due to such
rounding. The financial statements have been prepared under the historical cost convention.
5
IMPORTANT NOTE REGARDING CONFIDENTIALITY
This Annual Report is confidential and has been prepared exclusively for use by any holder of the Notes
or any prospective investor, securities analyst, broker-dealer or any market maker in the Notes in
accordance with Section 4.03 of the Indenture. You are authorized to use this Annual Report solely for the
purpose of evaluating your investment in, or considering the purchase of, the Notes. We have provided the
information contained in this Annual Report. Neither the delivery of or access to this Annual Report implies
that any information set forth in this Annual Report is correct as of any date after the date of this Annual
Report. You may not reproduce or distribute this Annual Report, in whole or in part, and you may not
disclose any of the contents of this Annual Report or use any information herein for any purpose other than
evaluating your investment in, or considering the purchase of, the Notes. You agree to the foregoing by
accepting delivery of, or access to, this Annual Report.
6
FINANCIAL STATEMENTS
Audited consolidated balance sheet as of December 31, 2010
12/31/2010
kEUR
ASSETS
Non-current assets:
Intangible assets
Property, plant and equipment
Investment properties
Other financial investments
Deferred tax assets
Other long-term assets
12/31/2009
kEUR
12/31/2008
kEUR
10,029
212,724
0
28,738
8,486
448
260,426
9,799
212,181
129
17,452
7,302
767
247,630
8,935
223,397
131
18,240
7,724
986
259,413
100,685
72,332
19,874
747
35,404
229,042
73,996
61,246
14,935
1,449
18,010
169,635
71,906
56,224
20,412
849
7,634
157,025
TOTAL ASSETS
489,468
417,265
416,438
EQUITY AND LIABILITIES
Equity:
Subscribed capital
Revenue reserves
Profit attributable to shareholder of the parent
Currency adjustment item
Equity attributable to the shareholder of the parent
Non controlling interest
29,190
-92,821
5,438
-3,176
-61,369
-601
28,380
51,143
27,560
-8,349
98,734
11
28,380
47,433
11,207
-7,138
79,882
7
9,978
280,873
448
14,007
16,534
1,481
22,976
346,298
50,000
0
37,182
11,821
16,572
19,820
22,265
157,660
50,690
0
20,679
12,367
17,250
1,094
22,831
124,911
0
39,609
3,039
70,911
3,893
34,921
52,767
205,140
0
44,065
3,600
60,663
8,055
11,973
32,505
160,861
30,000
73,009
5,914
56,243
2,564
10,245
33,663
211,638
489,467
417,265
416,438
Current assets:
Inventories
Trade receivables
Other assets
Current income tax assets
Cash and cash equivalents
Non-current liabilities:
Subordinated loans
Liabilities from bonds
Liabilities to banks
Provisions for pensions and similar obligations
Deferred tax liabilities
Other provisions
Other liabilities
Current liabilities:
Subordinated loans
Liabilities to banks
Notes payables
Trade payables
Current income tax liabilities
Other provisions
Other liabilities
TOTAL EQUITY AND LIABILITIES
7
Audited consolidated income statement
for the period from January 1 to December 31, 2010
01/01 – 12/31
2010
kEUR
Sales
Cost of sales
Gross profit
Selling costs
Administrative costs
Research and development costs
Other operating income
Other operating expenses
Exchange rate differences from business
operations
Operating profit
Financial result
Profit before income taxes
Income tax expenses
Result from continued operations
Result from discontinued operations
Consolidated net profit
Profit attributable to non-controlling interest
Profit attributable to shareholder of the
parent
01/01 – 12/31
2009
kEUR
01/01 – 12/31
2008
kEUR
801,497
657,546
143,951
40,175
46,037
5,309
8,951
3,435
663,654
539,368
124,286
35,294
38,500
5,199
7,538
3,784
736,341
626,904
109,437
38,231
31,867
3,752
7,214
3,935
-116
406
82
57,830
-24,483
33,347
-10,820
22,527
-926
21,601
1
49,454
-10,983
38,471
-12,457
26,014
1,436
27,450
-110
38,948
-18,022
20,926
9,885
11,041
0
11,041
-166
21,600
27,560
11,207
8
Audited consolidated statement of comprehensive income
01/01 – 12/31
2010
kEUR
01/01 – 12/31
2009
kEUR
01/01 – 12/31
2008
kEUR*)
21,601
27,450
11,041
355
-170
-186
246
-246
0
-2,059
0
0
5,172
-1,215
-685
437
125
56
4,151
-1,506
-815
Total comprehensive income
25,752
25,944
10,226
thereof attributable to
Shareholder of the parent
Non-controlling shareholder
26,161
-409
26,058
-114
10,385
-159
Result from available for sale financial assets
Not affecting net profit
Result from cash flow-hedging
Not affecting net profit
Actuarial gains and losses from defined benefit
obligations
Exchange rate differences on translating foreign
operations
Income taxes relating to components of other
comprehensive income
Other comprehensive income
9
Audited consolidated cash flow statement
01/01 – 12/31
2010
kEUR
Operating profit (EBIT including discontinued operations)
Depreciation on intangible assets and property, plant
and equipment
Income taxes paid
Interest paid
Interest received
Financial expenses paid (less financial income received)
Profit from the disposal of property, plant and equipment
Other non cash-relevant income/expenditure
Changes in working capital
Change in other assets not allocated to investing or
financing activities
Change of provisions and other liabilities not allocated to
investing or financing activities
Cash flow from operating activities
Cash received from disposals of property, plant and
equipment
Cash paid for investments in property, plant and
equipment
Cash received from disposals of intangible assets
Cash paid for investments in intangible assets
Cash received from disposals of financial assets
Cash paid for investments in financial assets
Cash received from the disposal of consolidated entities
and other business units
Cash paid for investments in consolidated entities and
other business units
Cash flow from investing activities
Cash received from the supply of equity
Dividends
Cash paid for purchases of shares of other shareholders
Cash received from the borrowing of subordinated loans
Cash paid for repayments of subordinated loans
Cash paid for repayments of non-current financial loans
Cash received from the borrowing of non-current
financial loans and bonds
Transaction costs paid in economic relation to the
borrowing of bonds
Cash received from the borrowing of current financial
loans
Cash paid from the repayment of current financial loans
Transaction costs paid in economic relation to the
borrowing of current financial loans
Cash flow from financing activities
Change in cash
10
01/01 – 12/31
2009
kEUR
01/01 – 12/31
2008
kEUR
57,830
49,454
38,947
28,731
-15,417
-9,114
2,372
-2,059
-179
2,238
-30,070
30,355
-7,190
-15,512
2,400
-318
-206
-83
-875
28,716
-5,085
-17,809
1,808
-1,297
61
3,761
21,036
-1,218
1,023
144
11,246
44,360
17,561
76,609
1,764
72,046
864
910
1,000
-25,020
37
-1,167
24
-24
-19,269
120
-2,630
91
-85
-40,667
43
-828
338
-1,586
710
0
0
0
1,942
-1,323
-24,576
325
-185,126
-1,354
9,975
-50,000
-51,825
-18,921
0
0
0
0
-30,750
-26,203
-43,023
0
0
0
0
-35,617
-135,913
272,525
40,108
135,867
-5,024
0
0
253,257
0
1,062
-245,438
-30,552
-1,763
-147
-2,831
16,952
0
-47,397
10,291
0
-36,364
-7,341
Audited consolidated statement of changes in equity
Status at 01/01/2008
Exchange rate differences
Purchase of minority shares
Stock Options
Sale of treasury stock
Transfers
Measurement of financial
instruments
Profit attributable to minority interests
Dividends
Other
Status 01/01/ 2009
Purchase of minority shares
Stock Options
Transfers
Consolidated comprehensive income
Other
Subscribed
capital
kEUR
28,380
Equity attributable to shareholder of the parent company
Other
Currency
Revenue
adjustment
Capital
Consolidated
Treasury
Reserves
item
reserve
net profit
stock
kEUR
kEUR
kEUR
kEUR
kEUR
18,114
32,126
0
-6,446
-4,167
-692
-66
1,556
759
-759
-130
Minority
interest
Subtotal
kEUR
68,007
-692
-66
1,556
0
0
-130
11,041
166
0
11,041
166
28,380
20,363
31,237
11,207
-7,138
-4,167
79,882
28,380
20,363
42,033
0
-7,138
-4,167
79,882
-4,167
-6,794
0
26,058
-1
98,734
-6,794
163
28,380
2
13,734
-163
-291
-3
41,576
27,560
-1,211
27,560
-8,349
11
Minority
interests
kEUR
274
7
-43
-166
-65
7
7
44
-114
74
11
Group equity
kEUR
68,281
-685
-109
1,556
0
0
-130
11,041
0
0
-65
79,889
79,889
44
-6,794
0
25,944
73
98,745
12
Change in capital structure from
reverse acquisition of NORDENIA
Holdings GmbH by NORDENIA
International AG
Change in group of consolidated
companies
Transfers
Others
Subscribed
capital
kEUR
28,380
Capital
reserve
kEUR
13,734
Revenue
Reserves
kEUR
69,136
-3,920
-13,460
-842
126
-126
-1,516
-344
66,308
24,460
400
Transfers
Status 06/29/ 2010 after transfers
Profit carried forward
Change in capital structure from
reverse acquisition of NORDENIA
Holdings GmbH by NORDENIA
International AG
Payments by shareholders
Payments to shareholders
Profit
attributable
to the
shareholder
of the parent
kEUR
0
16,463
16,463
Other
reserves
kEUR
-8,349
available
for sale
assets
kEUR
0
8,700
2
353
248
24,460
400
66,556
16,463
4,730
7,155
300
-185,038
1,149
29,190
-177,183
-88
282
84,362
16,463
-16,463
353
Taxes
kEUR
0
0
0
-355
107
-355
107
Treasury
stock
kEUR
-4,167
Equity
attributable
to the
shareholder
of the parent
kEUR
98,734
Equity
attributable to
noncontrolling
shareholders
kEUR
11
Total
Group
equity
kEUR
98,745
4,167
-14,055
14,080
25
-313
0
0
0
23,647
-342
107,984
231
342
14,351
-313
0
23,878
0
122,335
0
0
0
107.984
0
14.351
0
122.335
0
12.959
300
-185.126
2.514
-61.369
-14.312
0
0
-640
-601
-1.353
300
-185.126
1.874
-61.970
0
-75
5,438
5,438
-3,454
-3,176
12
355
0
-107
0
0
Unaudited condensed notes to the consolidated financial statements
as of December 31, 2010
1.
Corporate information
NORDENIA Group (hereinafter also referred to as NORDENIA) is a leading developer, producer and
marketer of value-added solutions in specialty films, flexible consumer packaging, film-based components
and industrial packaging with operations in Europe, the United States and Asia. NORDENIA Holdings AG is
a limited company incorporated and domiciled in Greven, Germany, whose shares are privately held.
The business of the NORDENIA Group is not significantly affected by seasonal influence. Therefore, the
additional disclosure of financial information for the 12 month period ending on the interim reporting date as
referred to in IAS 34.21 is not provided.
The condensed consolidated financial statements of the Group for the calender year 2010 were authorized
for issue in accordance with a resolution of the Board of Directors on April 28, 2011.
2.
Basis of preparation and accounting policies
Basis of preparation
The condensed consolidated financial statements for the calendar year 2010 have been prepared in
accordance with IAS 34, as adopted in the EU.
The condensed consolidated financial statements do not include all the information and disclosures required
in the annual financial statements, and should be read in conjunction with the Group’s annual financial
statements as at December 31, 2010.
All stated amounts have been individually rounded, which may give rise to minor discrepancies when these
amounts are aggregated.
With respect to IAS 8 the interim condensed consolidated financial statements of previous periods have not
been adjusted for a change in accounting policies according to IAS 8.19b and due to a disclosure under
IFRS 5 (see note 3. Disposal of subsidiaries) in the current period due to reasons of immateriality.
Significant accounting policies
Our consolidated financial statement are prepared in accordance with the International Financial Reporting
Standards as adopted by the European Union (“IFRS-EU”) in conformity with Regulation (EC) no. 1606/2002
of the European Parliament and of the Council.
Detailed information regarding our accounting policies is provided in Note 2.1.2 to our consolidated financial
statements for the year ended December 31, 2010.
3.
Disposal of subsidiaries
On March 19, 2010, NORDENIA fully sold its 83.41 % shareholding in NORDENIA Morocco Casablanca
S.A.R.L., Casablanca, Morocco.
The purchase price for the shares totaled kEUR 735 which was paid in full. A cash balance in the amount of
kEUR 26 was transferred with the transaction. The loss from disposal amounted to kEUR 926 and is
13
14
disclosed according to IFRS 5 as discontinued operation. The assets and liabilities, except cash, that were
disposed of can be summarized as follows:
kEUR
2,600
1,154
53
1,839
Non-current assets
Current assets other than cash or cash equivalents
Non-current liabilities
Current liabilities
As a consequence of the sale of the interest in NORDENIA Morocco Casablanca S.A.R.L., Casablanca,
Morocco a non-controlling interest of 16.59 % or kEUR 314 as well as currency translation differences of
kEUR -99 were derecognized.
4.
Disclosures and explanatory comments on the consolidated balance sheet
a.
Financial Instruments
Within the year 2010 an amount of kEUR 1,767 (2009: kEUR 0, 2008: kEUR 7) was recognized as expense
in profit and loss for fair value changes of interest swaps that do not qualify as cash flow hedging
instruments.
The financial instruments of NORDENIA Group that are carried at fair value are interest swaps, foreign
currency forward contracts, and available for sale securities. The interest swaps and the foreign currency
forward contracts are categorized as “Level 2” financial instruments according IAS 39, i.e. their fair value is
based on valuation techniques that use observable market data. The available for sale securities are “Level
1” as for those financial instruments quoted marked prices were available.
Assets/Liabilities measured at fair value:
December 31, 2010
-1,767
-241
964
Level 1
Interest swaps – not hedged
Foreign currency forward – not hedged
Available for sale securities
December 31, 2009
-520
211
421
Level 1
Interest swaps – hedged
December 31, 2008
-118
1,562
1,580
Level 1
Interest swaps – hedged
b.
Level 2
0
0
0
-1,767
-241
964
Level 2
0
0
0
-520
211
421
Level 2
0
0
0
-118
1,562
1,580
Cash, Cash equivalents and Financial Liabilities
From January 1, 2009 to December 31, 2009 earnings were retained and as the cash flow continued to be
very strong, the financial net debt could be reduced substantially by kEUR 56,643. Mostly short term interestbearing loans and borrowings were repaid which reduced from kEUR 103,009 to kEUR 44,065. Whereas
long term interest-bearing loans and borrowings increased by kEUR 15,813, the level of cash and cash
equivalents increased by kEUR 10,376.
14
15
From January 1, 2010 to December 31, 2010 the level of cash and cash equivalents was increased from
kEUR 18,010 to kEUR 35,404. With the issue of the EUR 280m Notes on 9 July 2010, there was a major
increase in the net financial debt position. As the net proceeds were also used to repay nearly all of the
outstanding long-term debt, the interest bearing loans and borrowings decreased significantly. Upon closing
of the bond offering, NIAG entered into the Pari Passu Bank Facility of kEUR 10,000 and the New Bank
Facility which provides for aggregate borrowings of up to kEUR 100,000. The New Bank Facility is used for
short term borrowings. As of December 31, 2010 kEUR 35,000 were outstanding under the New Bank
Facility and together with local short term financing this aggregates to kEUR 39,609 of short term interestbearing loans and borrowings.
The following charts set our debt position:
12/31/2010
kEUR
Net financial debt
12/31/2009
kEUR
12/31/2008
kEUR
Non-current financial debt
Debentures
Interest-bearing loans and borrowings
Liabilities from finance leases
Other financial liabilities
270,379
10,426
7,928
0
0
87,182
9,130
0
0
71,369
9,868
0
Current financial debt
Debentures
Interest-bearing loans and borrowings
Other financial liabilities
0
39,609
1,545
3,039
0
44,065
1,738
3,600
0
103,009
1,822
5,914
35,404
297,522
18,010
127,704
7,634
184,347
Current financial assets
Our net financial debt of kEUR 297,522 million as of December 31, 2010 is substantially higher than the net
financial debt of kEUR 127,704 as of December 31, 2009. The increase was mainly caused by the equity
distribution of kEUR 192,374 and the fees and expenses of kEUR 13,198 for the Notes issue. Together with
the Notes, the redemption option existing NIAG was recognized (July 9, 2010: EUR 13.5 million; December
31, 2010 EUR 10.5 million); this increased the net debt at the balance sheet date by EUR 3.0 million due to
the fair value valuation. Nevertheless, the net financial debt increased not by the total amount as due to
increased earnings and cash flows some financial debt could be repaid in the meantime.
Sale & Lease back NORDENIA U.S.A.
Net Financial Debt does neither include the finance lease obligations under a sale and lease back
agreement nor the Industrial Revenue Bonds in respect to NORDENIA U.S.A Inc., Jackson, Missouri
(U.S.A.) (NUJ).
In December 2000, NUJ entered into an agreement with the County of Cape Girardeau, Missouri. As part of
the agreement, NUJ sold to the County approximately USD 17 million in property and equipment, and then
agreed to lease such assets from the County. No gain or loss was recorded on the sale. The County paid
NUJ for the assets by issuing 9.5% Industrial Revenue Bonds to NUJ for the same amounts. NUJ accounted
for this transaction as a financing agreement and recorded a finance lease obligation. Under the agreement
NUJ makes annual lease interest payments equal to the amount of interest earned annually on the bonds.
The Industrial Revenue Bonds matures on December 1, 2012, at which time NUJ will return the Bonds to the
County in payment of the principal balance outstanding on the finance lease obligation and will repurchase
15
16
the assets for USD 10, as provided for in the agreement. The agreement related to the equipment includes
fixed lease payments over the term of the lease and is non-cancellable.
At December 31, 2010 this obligation amounted to kEUR 12,705 (at December 31, 2009: kEUR 11,801; at
December 31, 2008 kEUR 12,164).
5.
Segment information
The reporting of the Group for management purposes is structured by type of product in divisions and
geographic regions. According to internal controlling, the divisions are divided into Advanced Films &
Components (AFC), Consumer Flexible Packaging (CFP), and Services (for service providers). This
classification is based on the fixed allocation of the individual companies. The AFC division manufactures
and sells a variety of specialty films and film-based components, including components for diapers and
feminine hygiene products, specialty films such as laminating films, label films and surface protection films,
and industrial packaging. The CFP division is a fully integrated manufacturer of flexible consumer packaging
and it focuses on meeting the flexible packaging requirements of multinational and regional customers. Both
operating divisions operate in the endmarkets “Hygiene”, “Converting FMCG”, “Food”, “Petcare&Garden
Products”, “Beauty & Healthcare, Detergent & Cleansing Agents” and “Industrial”.
The companies of the Service division primarily render intercompany services.
By way of resolution passed by the directors and the Supervisory Board on December 16, 2010, the
divisions were renamed; however, their contents remained the same. The divisions Advanced Films &
Components (AFC) had previously been named Industry segment; the division Consumer Flexible
Packaging (CFP) had previously been named Consumer segment. The Service division was also known as
the Other segment.
The following table presents a summary of our segment information generated by our two operating divisions
for the periods, including reconciliation to total group numbers:
2010
2009
2008
Sales volume in ktons
AFC
CFP
Total AFC&CFP
Services
Reconciliation
Group
169.9
81.2
251.2
0.0
-9.9
241.3
67.7%
32.3%
100.0%
147.9
73.0
220.9
0.0
-9.5
211.4
67.0%
33.0%
100.0%
141.7
64.7%
77.4
35.3%
219.0 100.0%
0.0
-8.5
210.5
Net sales in EUR million
AFC
CFP
Total AFC&CFP
Services
Reconciliation
Group
510.2
326.3
836.5
10.3
-45.3
801.5
61.0%
39.0%
100.0%
413.6
282.6
696.2
9.1
-41.6
663.7
59.4%
40.6%
100.0%
455.0
59.3%
312.6
40.7%
767.6 100.0%
9.5
-40.8
736.3
16
17
2010
2009
2008
EBITDA in EUR million
AFC
CFP
Total AFC&CFP
Services
Reconciliation
Group
67.7
40.0
107.7
-21.9
0.7
86.6
78.2%
46.3%
124.4%
-25.3%
0.9%
100.0%
59.2
35.2
94.4
-15.0
0.4
79.8
74.2%
44.1%
118.3%
-18.8%
0.4%
100.0%
51.1
75.5%
21.8
32.2%
72.8 107.7%
-5.6
-8.3%
0.5
0.7%
67.7 100.0%
adj. EBITDA according to RFC in
EUR million *)
AFC
CFP
Total AFC&CFP
Services
Reconciliation
Group
70.2
40.5
110.7
-4.3
0.2
106.6
65.9%
38.0%
103.9%
-4.0%
0.2%
100.0%
61.6
36.0
97.6
-2.3
-1.1
94.2
65.4%
38.2%
103.6%
-2.5%
-1.1%
100.0%
54.1
73.1%
23.5
31.7%
77.6 104.8%
-3.4
-4.5%
-0.2
-0.3%
74.0 100.0%
13.3
12.0
25.3
4.9
-3.2
27.0
49.5%
44.4%
94.0%
18.1%
-12.0%
100.0%
11.8
10.6
22.4
1.0
-0.5
22.9
51.4%
46.4%
97.9%
4.2%
-2.1%
100.0%
15.5
35.4%
27.7
63.1%
43.2
98.5%
1.2
2.7%
-0.5
-1.2%
43.9 100.0%
Capital Expenditures in EUR million
AFC
CFP
Total AFC&CFP
Services
Reconciliation
Group
*) We point out, that there has been a refinement in definition in the last quarter 2010, were a differentiation has been made between
adjusted EBITDA according to RCF, which does include adjustments related to the Factoring Facility as the RCF contracts consider it
and adjusted EBITDA, which includes all adjustments beside of P&L effects of the Factoring Facility, since this is an off-balance
sheet issue.
17
18
6.
Contingent liabilities and other financial obligations
a.
Contingent liabilities
Guarantees on customer line of credits
b.
12/31/2010
kEUR
405
12/31/2009
kEUR
1,194
12/31/2008
kEUR
5,708
12/31/2010
kEUR
12/31/2009
kEUR
12/31/2008
kEUR
Other financial obligations
Purchase commitments for investments including
commitments for future expenses
Obligations from non-cancelable operate leasing
agreements
thereof due within 1 year
thereof due between 1 - 5 years
thereof due within more than 5 years
Total
12,161
12,277
7,492
10,525
2,266
5,854
2,405
22,686
10,310
2,110
5,126
3,074
22,587
11,378
2,025
40478
3,764
18,870
Other financial obligations mainly relate to obligations from maintenance contracts.
The leasing agreements relate to leased buildings, plants and fixtures, fittings and office equipment, with
some of the existing agreements containing extension clauses. In addition, a production site (land and
buildings) was refinanced by way of a sale & leaseback transaction.
7.
Factoring Facility
There is an off-balance sheet receivables factoring arrangement under a Receivables Purchase Agreement,
dated November 8, 2001 (and last amended on December 20, 2006), between NORDENIA International AG,
as assignor, and Kaiserplatz No. 5 Limited, as assignee. The maximum aggregate purchase amount under
the Factoring Facility at any one time is limited to EUR 70 million and US$10 million.
Under the terms of this Factoring Facility, NORDENIA may sell and assign certain of its receivables that are
denominated in Euros or U.S. dollars to the counterparty thereto, who is, subject to customary conditions,
obligated to buy and accept such receivables at a purchase price of approximately 90.5% of the nominal
amount of such receivables. The outstanding amounts sold under the Factoring Facility amounted on
December 31, 2008 to kEUR 46,294, on December 31, 2009 to kEUR 37,365 and on December 31, 2010 to
kEUR 42,403 in total. The Factoring Facility expires on December 20, 2013, but is subject to an automatic
extension for an additional five year term.
8.
Taxes
Our income tax provision includes German and foreign income taxes and is based on pre-tax income or loss.
for the year 2010, the combined German income tax rate for corporations (consisting of corporate income
tax, trade tax and solidarity surcharge) was approximately 30% and the income tax rate of applicable foreign
jurisdictions ranged from 10.0% to 38.0%. Our Group effective tax rate was 33.4 % for the year ended
December 31, 2010.
18
19
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth our selected audited historical financial data for the periods ended and at the
dates indicated below. We have derived the historical consolidated financial data for the years ended
December 31, 2008, 2009 and 2010 from the consolidated financial statements of NIAG respectively the
Issuer, which are included elsewhere in this financial report. The historical consolidated financial statements
of NIAG respectively the Issuer were prepared in accordance with IFRS-EU.
The following summary financial data set forth below should be read in conjunction with “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial
statements of NIAG respectively the Issuer and notes thereto, included elsewhere in this financial report.
2010
Consolidated Income Statement Data:
Sales
Cost of sales
Gross profit
Selling costs
Exchange rate differences from business operations
Operating profit
Financial result
Income tax expenses
Profit attributable to non-controlling interest
Profit attributable to shareholder of the parent
801,497
657,546
143,951
40,175
46,037
5,309
8,951
3,435
-116
57,830
-24,483
33,347
-10,820
22,527
-926
21,601
1
21,600
2010
Consolidated Balance Sheet Data:
Working capital(3)
Total assets
Net debt(4)
Total equity
19
Year Ended December 31,
2008 (1)
2009(2)
(in thousands of euros)
663,654
539,368
124,286
35,294
38,500
5,199
7,538
3,784
406
49,454
-10,983
38,471
-12,457
26,014
1,436
27,450
-110
27,560
736,341
626,904
109,437
38,231
31,867
3,752
7,214
3,935
82
38,948
-18,022
20,926
9,885
11,041
0
11,041
-166
11,207
As of December 31,
2009
2008
35,404
103,746
212,724
489,468
297,522
-61,970
18,010
72,890
212,181
417,266
127,704
98,745
7,634
73,851
223,396
416,438
184,347
79,889
20
2010
Other Financial Data:
Capital expenditures(5)
EBITDA(6)
Adjusted EBITDA according to RCF(6)
Gross Cash flow (7)
As of December 31,
2009
2008
26,952
86,561
106,607
79,656
22,874
79,809
94,246
71,373
43,849
67,664
74,008
30,159
(1)
Financial information for the year ended December 31, 2008 is based on or derived from the audited consolidated financial
statements of NIAG and its subsidiaries for the year ended December 31, 2008, which are included elsewhere in this Bond
Reporting. In preparing the audited consolidated financial statements of NIAG and its subsidiaries for the year ended
December 31, 2009, we reclassified certain items that were previously recorded in our consolidated statement of income for
the year ended December 31, 2008 that is included in such consolidated financial statements for comparative purposes to
reflect the subsequent classification of certain of our operations as discontinued. As a result, the amounts set forth in the
consolidated statement of income of NIAG and its subsidiaries for the year ended December 31, 2008 that is included as
comparative financial information in the audited consolidated financial statements of NIAG and its subsidiaries for the year
ended December 31, 2009 is not the same as the amounts set forth in the consolidated statement of income of NIAG and its
subsidiaries included in the audited consolidated financial statements of NIAG for the year ended December 31, 2008. The
reclassification refers to a provision for legal obligations to retain data retrospectively, since the company adopted the
regulations of IAS 8.41 et seq. for the correction of material prior periods errors in the reporting year. In development of the
group for several years the provision has been restated in the earliest prior period presented and in the following years
accordingly. Due to the departure of CORONOR Composites GmbH, Peine from the scope of consolidation, its result is
shown as a result from discontinued business divisions and a corresponding adjustment of the prior year values took place.
(2)
Financial information for the year ended December 31, 2009 is based on or derived from the audited consolidated financial
statements of NIAG and its subsidiaries for the year ended December 31, 2009, which are included elsewhere in this Bond
Reporting. In preparing the audited consolidated financial statements of NIAG and its subsidiaries for the year ended June 28,
2010, we reclassified certain items that were previously recorded in our consolidated statement of income for the year ended
December 31, 2009 that is included in such consolidated financial statements for comparative purposes to reflect the
subsequent classification of certain of our operations as discontinued. As a result, the amounts set forth in the consolidated
statement of income of NIAG and its subsidiaries for the year ended June 28, 2010 that is included as comparative financial
information in the audited consolidated financial statements of NIAG and its subsidiaries for the year ended June 28, 2010 is
not the same as the amounts set forth in the consolidated statement of income of NIAG and its subsidiaries included in the
audited consolidated financial statements of NIAG for the year ended December 31, 2009. Due to the departure of Nordenia
Morocco S.A.R.L., Casablanca, Morocco from the scope of consolidation, its result is shown as a result from discontinued
business divisions and a corresponding adjustment of the prior year values took place.
(3)
We define working capital as the sum of inventories and trade receivables less trade payables. For this purpose, we adjust
trade receivables and payables as recorded on our consolidated balance sheet to reflect certain items. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Working
Capital” for additional information with respect to these adjustments and how we calculate working capital.
(4)
We define net debt as the sum of financial debt (subordinated loans (including shareholder loans), liabilities to banks (both
current and noncurrent) and notes payable) and finance lease obligations, less cash and cash equivalents and the aggregate
principal amount of industrial revenue bonds that we received as consideration in connection with a sale and leaseback of our
facility located in Jackson, Missouri (U.S.A.), in each case as such amounts are recorded on our consolidated balance sheet.
We currently do not have any outstanding shareholder loans. Net debt does not include any amounts utilized under the
Factoring Facility.
(5)
We define capital expenditures as gross additions to our property, plant and equipment and intangible assets for the
applicable period as reflected on our consolidated balance sheet as of the end of such period.
(6)
EBITDA and Adjusted EBITDA according to RCF are included in this Annual report because they are key performance
indicators relevant for the covenants in the RCF financing contracts. See “Presentation of Financial and Other Data—NonIFRS-EU Financial Information” for information on how we calculate EBITDA and Adjusted EBITDA according to RCF and the
limitations of these measures as analytical tools.
(7)
We define gross cash flow as Adjusted EBITDA according to RCF less Capital expenditures. We believe that gross cash flow
is most appropriate to reflect the performance of our conversion business not considering swings in working capital due to raw
material price changes.
20
21
The following is a reconciliation of EBITDA and Adjusted EBITDA according to RCF to consolidated net
profit, the most directly comparable IFRS-EU measure:
2010
2009
2008
Income tax expenses
Financial result
Depreciation and amortization(a)
EBITDA
Implied interest expenses on Factoring Facility(b)
Management option plan expenses(c)
Management fees(d)
Restructuring expenses (income)(e)
Severance payments
Gain/loss on disposal of assets(f)
Unusual and other items(g)
Structuring expenses Issuer/Merger related costs(h)
Adjusted EBITDA according to RCF
(a)
(b)
21,601
10,820
24,483
926
28,731
86,561
840
14,122
300
-54
102
311
567
3,858
106,607
27,450
12,457
10,983
-1,436
30,355
79,809
1,305
11,448
617
1,236
404
94
-667
0
94,246
11,041
9,885
18,022
0
28,717
67,665
2,933
1,556
465
1,585
194
0
-390
0
74,008
Includes depreciations on fixed assets (property, plant and equipment) and amortization of intangible assets.
Represents the implied interest component of the discount from the sale of receivables under the Factoring Facility. This
implied interest is not otherwise recorded in our consolidated income statement as interest expense. This amount relates to
actual funding costs incurred by the counterparty to the Factoring Facility.
(c)
Represents non-cash compensation charges recorded in connection with the vesting of stock options issued under NIAG’s
management stock option plan.
(d)
Represents advisory fees paid to Oaktree Capital Management pursuant to an advisory agreement between Oaktree Capital
Management and NIAG.
(e)
Represents the effects of reorganization and restructuring expenses or income incurred in connection with the sale or closure
of certain operations and final consolidation effects.
(f)
Represents the net gain or loss from the disposal of assets by certain operating subsidiaries.
(g)
Relates primarily to the release of accruals from prior years and the revaluation of pension provisions. In 2010 the major effect
results from professional fees in connection with the evaluation of an acquisition project.
(h)
Relates to consulting and notary costs incurred in connection with the formation of the Issuer and the preparation of the
merger NIAG/NHAG.
21
22
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion together with the audited financial statements and related notes
thereto included elsewhere in this Annual Report. The statements in this discussion regarding industry
outlook, our expectations regarding our future performance, liquidity and capital resources and other nonhistorical statements in this discussion are forward-looking statements. These forward-looking statements
are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties
described in the section “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report.
Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Overview
We are a leading developer, producer and marketer of value-added solutions in specialty films, flexible
consumer packaging, film-based components and industrial packaging with operations in Europe, the United
States and Asia. We focus on the production of technologically advanced flexible packaging solutions and
films, with an emphasis on innovation and customization. We operate fully-invested manufacturing facilities
with advanced production capabilities covering the entire production process, including resin compounding,
blown and cast film extrusion, flexographic and rotogravure printing, laminating, coating, roll-slitting, bag
making, laser cutting, incorporation of specialty features and recycling. On December 31, 2010, we had
2.884 employees.
We operate primarily through two divisions: AFC and CFP. The AFC division manufactures and sells a
variety of specialty films and film-based components, including components for diapers and feminine hygiene
products, specialty films such as laminating films, label films and surface protection films, and industrial
packaging. The CFP division is a fully integrated manufacturer of flexible consumer packaging and it focuses
on meeting the flexible packaging requirements of multinational and regional customers in the following endmarket segments: Hygiene, Converting FMCG, Food, Petcare & Garden Products, Beauty & Healthcare,
Detergent & Cleansing Agents and Industrial .
The following table presents a summary of our sales generated by our two operating divisions for the
periods presented as a percentage of the total unconsolidated sales of those divisions:
Division
Year ended December 31,
2010
2009
2008
%
%
%
Advanced Films &Components
Consumer Flexible Packaging
Total
61.0
39.0
100.0
59.4
40.6
100.0
59.3
40.7
100.0
For accounting purposes, we report the results of each of our divisions as a separate division. In
addition, we report our IT services and research and development, financing and administration activities as
an additional division that we refer to as “Services.” Historically, our sales generated by our Services division
have not been material.
We conduct all of our operations through subsidiaries. As of December 31, 2010, we had an aggregate
of 21 subsidiaries, of which 12 were located in Germany. In general, each of our principal manufacturing
facilities is held by a separate subsidiary. As of December 31, 2010, all of our subsidiaries were wholly
owned by us, except for outstanding minority interests of subsidiaries that own our facilities in Lohne,
Germany, and Barcelona, Spain. For accounting purposes, we consolidate the results of operations of these
subsidiaries with our results of operations and reflect these minority interests on our consolidated income
statements as profit attributable to minority interest. In addition, we own a 50% interest in our joint venture
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located in Dalian, China and for accounting purposes consolidate its results of operations with our results of
operations only to the extent of our pro rata 50% ownership interest.
Our global platform is currently comprised of 15 operating facilities located in eight countries across
Europe, North America and Asia. We actively manage our portfolio of manufacturing facilities to optimize our
overall operating efficiency and allocation of resources. In that regard, we have made significant investments
to expand our production capacity at certain of our facilities located in Germany, Poland and Russia. From
2006 to 2010, we made an aggregate of EUR 162 million of capital expenditures across all of our facilities, of
which more than half increased our production capacity.
During the same period, we also divested a number of under-performing facilities and businesses,
including our 50.0% ownership interest in Coronor Composites GmbH in 2009 and our facilities located in the
Netherlands and France in 2007. More recently, we sold our facility located in Morocco in February 2010.
The results of operations from these asset dispositions are reflected in our consolidated income statements
as results from discontinued operations as of the beginning of the fiscal year in which they were offered for
sale by us. In some cases, these asset dispositions affect the comparability of our results of operations from
period to period.
Factors Affecting Our Results of Operations
Our results of operations are affected by a number of external factors, including changes in prices of raw
materials, foreign currency exchange rates, general economic conditions in our principal markets and
changes in our product mix. Each of these factors is briefly discussed below.
Changes in Prices of Raw Materials
Raw materials comprise a significant portion of our sales. For the calendar year ended December 31,
2010 our raw material costs represented 66.2% of our total cost. The principal raw materials we use to
manufacture our products are polyethylene resins; other raw materials include non-wovens, purchased films,
fabrics, inks, adhesives and transit packaging materials. We purchase raw materials from a range of
suppliers with the objective of optimizing quality, service and price and securing a stable supply. We
generally purchase most of our raw materials at spot market prices and, for the most part, do not maintain
large inventories of raw materials beyond the amounts we need to meet actual orders from customers. For
the financial year ended December 31, 2010, we purchased approximately 183,000 tonnes of resins for use
in our operations. As a significant buyer of resins, we have historically been able to negotiate attractive and
flexible terms with our suppliers, such as volume discounts and annual rebates.
All of the raw materials we use in our manufacturing processes are commodities and subject to
significant price volatility. A significant driver of the volatility of the raw materials we use is, amongst others,
the price of crude oil, as the production of most of our products require crude oil based raw materials.
Despite significant fluctuation in prices of polyethylene resins in recent years, we have been successful in
substantially mitigating the effect of rising resin prices due to the resin cost pass-through provisions in our
framework agreements that cover a substantial proportion of our sales. In 2010, approximately 75% of our
sales were made under framework agreements with our customers that include a resin cost pass-through
provision. These provisions generally operate to automatically adjust our selling prices, subject to a one to
six month time lag (with an average time lag of three months), as a result of changes in spot prices in the
resin market. Over the three-year period from 2008 to 2010, our gross profit per kg sold increased from
EUR 0.52 to EUR 0.60 per kg while polyethylene resin prices experienced sharp fluctuations.
In the short term, our results of operations are significantly impacted by fluctuations in polyethylene resin
prices due to the time lag between changes in the spot prices in the resin market and the corresponding
changes to our selling prices under our framework agreements. In periods in which polyethylene resin prices
are increasing, our gross margin will be negatively impacted during the time lag period. Conversely, during
periods where polyethylene resin prices are decreasing, our gross margin will be favorably impacted during
the time lag period. For example, our results of operations in 2010 were negatively impacted by the
significant increase in the market price for resin that occurred during that period.
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Foreign Currency Exchange Rates
As a result of our global operations, we generate a significant portion of our sales and incur a significant
portion of our expenses in currencies other than the euro, including the Chinese yuan, Hungarian forint,
Malaysian ringgit, Polish zloty, Russian ruble and U.S. dollar. Our results of operations are impacted by
currency exchange rate fluctuations to the extent we are unable to match revenues received in foreign
currencies with expenses incurred in the same currency. For example, where we have significantly more
expenses than sales generated in a foreign currency, our profit from operations in that location would be
adversely affected in the event that the euro depreciates against that foreign currency. We did in the past
and will from time to time, as and when we determine it is appropriate and advisable to do so, seek to
mitigate the effect of exchange rate fluctuations through the use of derivative financial instruments.
We present our consolidated financial statements in euros. As a result, we must translate the assets,
liabilities, revenue and expenses of all of our operations into euros at then-applicable exchange rates.
Consequently, increases or decreases in the value of the euro may affect the value of these items with
respect to our non-euro businesses in our consolidated financial statements, even if their value has not
changed in their original currency. For example, a stronger euro will reduce the reported results of operations
of the non-euro businesses and conversely a weaker euro will increase the reported results of operations of
the non-euro businesses. These translations could significantly affect the comparability of our results
between financial periods and/or result in significant changes to the carrying value of our assets, liabilities
and stockholders’ equity. We record the effects of these translations in our consolidated income statements
as “Exchange rate differences from business operations.”
Consumer Spending
The principal factor affecting the demand for our products, both globally and regionally, is the general
level of economic growth and the level of consumer spending, in particular with regard to discretionary
consumer spending. Since the markets for plastic-based films and flexible packaging products in many
industrialized countries are generally maturing, there is a close correlation between consumer consumption
growth and demand for film and packaging products. For example, we experienced a decrease in the overall
demand for our products during the first half of 2009 as compared to the first half of the previous year due to
the worldwide recessionary environment that existed during that period in which overall consumer spending
declined significantly. Our sales volumes began to recover in the second half of 2009 as the recession
lessened and consumer spending returned to more historical levels. Since that time we experience
significant growth in our endmarkets with overall double digit growth rates in 2010 compared to 2009 on an
annual basis.
Changes in Product Mix
Our results of operations have in the past been, and will continue to be in the future, impacted by
changes in our product mix. We manufacture and sell a wide variety of packaging products to meet the
diverse needs of our multinational and regional customers with a focus on the production of technologically
advanced flexible packaging solutions and films and on innovation and customization. Our products have
different average selling prices and gross margins. In general, our products in technically demanding product
areas have higher average selling prices and gross margins as compared to our products used in less
demanding applications. Our strategy is to continue to innovate and improve existing products and
technologies, as well as to develop new products to prevent commoditization and replace our existing lower
valued-added products with more technically advanced products. Factors that influence our product mix in a
particular period include the timing and roll-out of new products and the demand for existing products.
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Changes in the prices for energy
Our results of operations are affected by fluctuations in the prices for energy as our production
processes and transportation of our products require significant quantities of energy. When energy prices
rise, we may, in many cases, not able to off-set or to pass on our increased energy costs to our customers
under the existing agreements. In addition, we do not actively hedge against the risk of rising energy prices
by using derivative financial instruments. Therefore, price increases directly result in increased costs for our
divisions.
Comparability of operating results
Our divestments and the translation of our foreign assets affect the comparability of our operating
results.
We divested a number of under-performing facilities and businesses in the last four years. The results of
operations from these asset dispositions are reflected in our consolidated income statements as results from
discontinued operations as of the beginning of the fiscal year in which they were offered for sale by us. In
some cases, these asset dispositions affect the comparability of our results of operations from period to
period.
In addition, we present our consolidated financial statements in euros and must translate the assets,
liabilities, revenue and expenses of all of our operations into euros at then-applicable exchange rates.
Translations could significantly affect the comparability of our results between financial periods.
Furthermore, the consolidated financial statements and the notes thereto of Nordenia Holdings AG as of
and for the fiscal year ended on December 31, 2010 contain additional audited financial information for the
full calendar year 2010 in order to provide for comparability to the financial information contained in the
audited consolidated financial statements and the notes thereto of NIAG as of and for the fiscal years ended
December 31, 2008 and 2009 (see “General Information—Presentation of Financial Information”). Such
additional audited financial information for the full calendar year 2010 contained in the consolidated financial
statements and the notes thereto of Nordenia Holdings AG as of and for the fiscal year ended on December
31, 2010 is comparable to the financial information contained in the audited consolidated financial
statements and the notes thereto of NIAG as of and for the fiscal years ended December 31, 2008 and 2009.
Components of Revenue and Expenses
Sales
We generate our sales principally from the manufacture and sale of customized, plastic flexible
packaging, films and hygiene components. During 2010, approximately 90.7% of our sales were generated
from sales of products used as either packaging for, or components in, FMCG. The remainder of our sales
were generated from other products for applications across multiple industries. The most significant end
users of our products include customers in the following end-market segments: Hygiene, Converting FMCG,
Food, Petcare & Garden Products, Beauty & Healthcare, Detergent & Cleansing Agents and Industrial.
Sales include revenues from the sale of products and services less trade discounts and rebates, as well
as incidental revenues from the sale of waste materials, commissions and revenues from the re-debiting of
setup costs, engravings and cliches. Revenue from sales of products is recognized upon transfer of
ownership and risks to the customer if the consideration is stipulated or determinable and it is probable that
the corresponding receivable will be settled.
During the years ended December 31, 2010, 2009 and 2008, our 10 largest customers represented
approximately 62.9%; 62.9% and 59.6% of our sales, respectively. During the same three years, P&G
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accounted for approximately 36.0%, 36.0% and 31.3% of our sales, respectively. No other customer
accounted for more than 10% of our total sales during these years.
During the years ended December 31, 2010, 2009 and 2008, our Advanced Films & Components
division accounted for 61.0%; 59.4% and 59.3% of our sales, respectively. Our Consumer Flexible
Packaging division accounted for 39.0%; 40.6% and 40.7% of our sales, in each case of the total
unconsolidated sales of those two divisions.
Expenses
Our operating expenses primarily consist of:
•
•
•
•
•
•
cost of sales;
selling costs;
administrative costs;
research and development costs;
other operating expenses; and
exchange rate differences from business operations.
Of the foregoing, cost of sales, selling costs and administrative costs are our primary operating
expenses, accounting collectively for 92.8%, 92.4% and 94.7% of our sales during the years ended
December 31, 2010, 2009 and 2008, respectively. Each component of our operating expenses is described
in further detail below.
Cost of Sales. Cost of sales comprises costs of sold products and services. Cost of sales includes
directly attributable costs such as material, manufacturing personnel, energy, warranty costs, depreciation
and amortization, maintenance and consumables. Our costs of sales are primarily variable in nature. Cost of
sales accounted for approximately 82.0%, 81.3% and 85.1% of our sales for the years ended December 31,
2010, 2009 and 2008, respectively.
Our raw material costs are the primary driver of our cost of sales, accounting for approximately 72.0%,
69.3% and 73.6% of our cost of sales for the years ended December 31, 2010, 2009 and 2008, respectively.
Manufacturing personnel expenses also significantly impact our cost of sales, accounting for approximately
14.5%, 15.9% and 13.6% of our cost of sales for the years ended December 31, 2010, 2009 and 2008,
respectively. Our raw material costs and personnel expenses are expected to continue to be key
components of operating expenses.
As previously discussed, we attempt to mitigate the risk of volatile resin prices by seeking to include
resin cost pass-through provisions in our customer framework agreements. These provisions generally
operate to automatically adjust our selling prices, subject to a one to six month time lag (with an average
time lag of three months), as a result of changes in spot prices in the resin market. During 2010, we estimate
that approximately 75% of our sales were covered by framework agreements that contained a resin cost
pass-through provision and that the effective time lag for resin pass-through on these sales was
approximately three months.
Selling Costs. Selling costs represent the costs associated with the marketing and shipping of our
products and services. These costs include freight and commissions, personnel expenses, depreciation and
amortization and other selling costs. Selling costs accounted for approximately 5.0%, 5.3% and 5.2% of our
sales for the years ended December 31, 2010, 2009 and 2008, respectively.
Administrative Costs. Administrative costs represent overhead costs associated with support functions,
such as finance, human resources, IT, outside professional fees (legal and accounting) and senior
management. Typically, costs of these support functions are wages and benefits, systems costs, insurance
and professional services. Administrative costs are generally fixed in nature and were approximately 5.7%,
5.8% and 4.3% of our sales for the years ended December 31, 2010, 2009 and 2008, respectively.
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Research and Development Costs. Research and development costs that are not capitalized are
directly recorded in profit or loss when they occur. These costs represent expenses related to the
development of new products, processes or technologies, including expenses of our application technique
departments and testing costs. Research and development costs also include personnel costs, material
costs, license costs, rental and leasing fees and depreciation related to our research and development
activities. Research and development costs accounted for approximately 0.7%, 0.8% and 0.5% of our sales
for the years ended December 31, 2010, 2009 and 2008, respectively.
Other Operating Income. Other operating income consists of income from asset sales, incidental
transactions, rental contracts, reversal of allowances on bad debt, provisions and accrued liabilities,
insurance refunds, compensation of damages, cost transfers and income related to other accounting
periods.
Other Operating Expenses. Other operating expenses represent a collection of all expenses which are
not allocated to other functional areas. These costs include losses from the disposal of property, plant and
equipment and intangible assets, depreciation of receivables, expenses from allowances on bad debt and
certain non-periodic expenses, such as expenses from tax audits and tax penalties.
Exchange Rate Differences from Business Operations. Exchange rate differences from business
operations represent expenses and income from the translation of foreign currency items from business
operations. In this respect, business operations include all of our activities that are not attributed to financing
activities. Exchange rate differences from business operations includes exchange rate differences from:
trade receivables and payables; intercompany cash accounts; foreign currency hedging of business
transactions; and payments in foreign currency related to other receives and payables, such as payments to
supervisory board members and auditing companies.
Financial Result
We generally classify those items that are recorded in financial result in the following categories:
Interest Income from Loans. Interest income from loans consists primarily of interest we receive on
account of industrial revenue bonds that we received as consideration in connection with a sale and
leaseback of our facility located in Jackson, Missouri (U.S.A.) that was completed in December 2000. These
industrial revenue bonds bear interest at 9.5% and are scheduled to mature on December 1, 2012. Also
included in this category is interest from loans to lessors in relation to leasing contracts and, to a lesser
extent, loans to employees.
Interest Income/Expense. Interest income includes interest that we earn from current bank accounts,
interest swaps, pension commitments and short term employee loans. Interest expense consists primarily of
interest expense on financial debt, interest rate swaps, capital lease and other financing obligations. In
addition, the interest expense from pension provisions and tax payments is reported as interest expense.
Other Financial Income/Expense. Other financial income/expense includes gains or losses from the sale
of financial assets, changes in the market value of interest rate swaps and gains or losses from the sale of
investment properties. In addition, other financial income/expense includes realized and unrealized foreign
exchange rate gains and losses resulting from loans, hedging transactions and factoring transactions.
Income Tax Expenses
Our income tax provision includes German and foreign income taxes and is based on pre-tax income or
loss. For 2010, the accumulated German income tax rate for corporations (consisting of corporate income
tax, trade tax and solidarity surcharge) was approximately 30.0% and the income tax rate of applicable
foreign jurisdictions ranged from 10.0% to 38.0%. Our aggregate effective tax rate was 33.4% and 31.2% for
the years ended December 31, 2010 and 2009, respectively.
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Recent Developments
The Issuer is a newly formed company initially formed as a limited liability company and later converted
to a German stock corporation. The Issuer serves as the ultimate parent company of the Group. On
May 27, 2010, the Oaktree Investment Entities contributed all of their shares of capital stock of NIAG to the
Issuer in exchange for shares of capital stock of the Issuer.
On July 9, 2010, the Issuer issued EUR 280.0 million in aggregate principal amount its 9¾% Senior
Second Priority Notes due 2017 (the “Notes”) in a private placement in reliance upon Rule 144A and
Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). On the same day, NIAG
entered into the New Bank Facility and the Pari Passu Bank Facility, which provide for aggregate borrowings
of up to EUR 100.0 million and EUR 10.0 million, respectively.
On July 9, 2010, we used the net proceeds from the sale of Notes, together with our available cash and
borrowings under the New Bank Facility and the Pari Passu Bank Facility, to (1) repay nearly all of the
outstanding indebtedness under the Bilateral Facilities (EUR 9 million remaining debt) and the Pari Passu
Bank Facility and the fees and expenses associated therewith, (2) fund the Equity Distribution and (3) pay
fees and expenses associated with the Offering. As of July 9, 2010, EUR 56.0 million and EUR 10.0 million
were outstanding under the New Bank Facility and the Pari Passu Bank Facility, respectively.
The following tables set forth the estimated sources and uses of cash in the Refinancing Transactions.
Uses of Funds
Sources of Funds
(in millions of euros)
56.0 Repayment of Bilateral Facilities(2)
Repayment of Pari Passu Bank
10.0 Facility(2)
280.0 Equity Distribution(3)
32.6 Fees and expenses(4)
New Bank Facility
Pari Passu Bank Facility
Notes offered hereby
Available cash(1)
Total sources of funds
EUR 378.6 Total uses of funds
123.0
50.0
192.4
13.2
EUR 378.6
(1)
Reflects our available cash from the EUR 32.6million of cash or cash equivalents we had as of July 9, 2010.
(2)
The Issuer made an intercompany loan to NIAG in an amount of EUR 75.8 million. The intercompany loan, together with
borrowings by NIAG under the New Bank Facility and Pari Passu Bank Facility and available cash, was sufficient to repay
nearly all of our outstanding borrowings under the Bilateral Facilities and the Pari Passu Bank Facility and the fees and
expenses associated therewith.
(3)
The Equity Distribution does include the distribution already paid, fees to be paid past merger, payments to options holders
and the purchase from minority shareholders.
(4)
Includes original issue discount on the Notes together with estimated expenses, initial purchasers’ discounts and
commissions related to the Notes and underwriting fees in connection with the Refinancing Transactions.
In the scope of the New Bank Facility, some standard banking covenants need to be taken into account.
Two leverage ratios are included among these, and they indicate the theoretical debt reduction period based
on the proportion of (senior) financial debt to the operating profit. An interest cover shall be maintained
together with that, and it will indicate the relative excess coverage of the interest expense by the operating
profit. As of December 31, 2010, there was sufficient headroom for all financial covenants.
In connection with the Offering, on July 15, 2010 certain of the minority shareholders of NIAG exchanged
shares of capital stock of NIAG for an identical number of shares of the Issuer. Following these transactions,
the Issuer owned approximately 91.8 % of the outstanding capital stock of NIAG.
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29
The Issuer purchased further shares of capital stock of NIAG in August 2010 from minority shareholders.
Following these transactions, the Issuer owned approximately 92.2 % of the outstanding capital stock of
NIAG pre Consolidation Merger.
The conversion of the Issuer from a limited liability company (GmbH) to a stock corporation (AG) under
German law was transacted by notarial deed on September 6, 2010 and registered with the commercial
register on September 29, 2010. The Issuer changed its name accordingly to Nordenia Holdings AG. On
October 28, 2010, the Issuer and NIAG concluded a notarized agreement governing the Consolidation
Merger with retrospective effect from July 1, 2010. The general meetings of the Issuer and of NIAG approved
the merger agreement on December 8, 2010, and December 15, 2010, respectively. The Consolidation
Merger had not been registered in the commercial register by the date of this Annual Report and had thus
not yet become effective. The Issuer considers entry in the commercial register to be most likely, and the
consolidated financial statements were therefore prepared and audited under the assumption of the
Consolidation Merger having become effective with effect from July 1, 2010.
divisions were renamed; however, their contents remained the same. The divisions Advanced Films &
Components (AFC) had previously been named Industry segment; the division Consumer Flexible
Packaging (CFP) had previously been named Consumer segment. The Service division was also known as
the Other segment.
Results of Operations
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
The table below presents consolidated income statement data, including the amount and percentage
changes for the periods indicated:
2010
Consolidated Income Statement
Data:
Sales
Cost of sales
Gross profit
Selling costs
Exchange rate differences from
business operations
Operating profit
Financial result
Income tax expenses
Profit attributable to non-controlling
interest
Profit attributable to shareholder of
the parent
29
Amount of
change
2009
Percentage
Change
801,497
657,546
143,951
40,175
46,037
5,309
8,951
3,435
663,654
539,368
124,286
35,294
38,500
5,199
7,538
3,784
137,843
118,178
19,665
4,881
7,537
110
1,412
-349
20.8%
21.9%
15.8%
13.8%
19.6%
2.1%
18.7%
-9.2%
-116
57,830
-24,483
33,348
-10,820
22,528
-926
21,601
406
49,454
-10,983
38,471
-12,457
26,014
1,436
27,450
523
8,376
-13,499
-5,123
-1,636
-3,487
-2,362
-5,848
128.6%
16.9%
-122.9%
-13.3%
-13.1%
-13.4%
-164.5%
-21.3%
1
-110
190
172.7%
21,600
27,560
-5,658
-20.5%
30
Sales
Sales increased by EUR 137.8 million, or 20.8%, to EUR 801.5 million for the year ended December 31,
2010 as compared to EUR 663.7 million for the year ended December 31, 2009. Our sales volumes in 2010
were positively impacted by the worldwide economic recovery. Sales volumes increased by approximately
14.1% from 2009 to 2010. In particular, our sales volume with respect to the Hygiene, Converting FMCG and
Petcare & Garden Products endmarkets experienced the most significant increases as compared to our
other endmarkets. Our average selling prices increased by approximately 5.8% in 2010 as compared to
2009 as a result of higher resin prices being passed through to our customers and changes in our product
mix.
Cost of Sales
Cost of sales increased EUR 118.2 million, or 21.9%, to EUR 657.5 million for the year ended December
31, 2010 as compared to EUR 539.4 million for the year ended December 31, 2009 Average cost of sales
per kg increased by 0.17 EUR/kg, or 6.8% to 2.72 EUR/kg for the year ended December 31, 2010 as
compared to 2.55 EUR/kg for the year ended December 31, 2009. Main reason for the increase are higher
resin prices being passed through to our customers and changes in product mix. The average gross profit
per kg increased by 0.01 EUR/kg or 1.5% to 0.60 EUR/kg for the year ended December 31, 2010 as
compared to 0.59 EUR/kg for the year ended December 31, 2009.
Selling Costs
Selling costs increased EUR 4.9 million, or 13.8%, to EUR 40.2 million for the year ended December 31,
2010 as compared to EUR 35.3 million for the year ended December 31, 2009. The increase in selling costs
was primarily the result of a EUR 3.1 million increase in freight and commission expenses resulting from
higher sales volume and higher operating expenses as well as from changes of cost allocations within one of
our companies. The total increase was offset by lower personnel expenses.
Administrative Costs
Administrative costs increased EUR 7.5 million, or 19.6%, to EUR 46.0 million for the year ended
December 31, 2010 as compared to EUR 38.5 million for the year ended December 31, 2009. The increase
in administrative costs was primarily the result of a EUR 3.8 million increase in personnel expenses, which
included an increase of EUR 2.7 million of non-cash charges that we recorded as the result of the vesting of
employee stock options granted under our stock option program and the increase in the equity value of
NIAG. Additionally we incurred approximately EUR 3.2 million of incremental professional fees in connection
with the audit of June 30, 2010 financials, the structuring of the Issuer, the preparation of the merger and the
evaluation of an acquisition project.
Research and Development Costs
Research and development costs increased EUR 0.1 million, or 2.1%, to EUR 5.3 million for the year
ended December 31, 2010 as compared to EUR 5.2 million for the year ended December 31, 2009, due
primarily to increases in personnel expenses.
Other Operating Income
Other operating income increased EUR 1.4 million, or 18.7%, to EUR 8.9 million for the year ended
December 31, 2010 as compared to EUR 7.5 million for the year ended December 31, 2009 due to
increases in the amount of reserves we reversed in the 2010 period with respect to duty and warranty
accruals from prior periods.
Other Operating Expenses
Other operating expenses decreased EUR 0.4 million, or 9.2%, to EUR 3.4 million for the year ended
December 31, 2010 as compared to EUR 3.8 million for the year ended December 31, 2009. This decrease
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was the result of lower additions to our bad debt reserve of approximately EUR 0.7 million, partially offset by
higher other operating expenses. In particular these expenses were influenced by property transfer tax in an
amount of EUR 1.0 million in the 2010 period in relation to the merger.
Exchange Rate Differences from Business Operations
Exchange rate differences from business operations resulted in a loss of EUR 0.1 million for the year
ended December 31, 2010 as compared to a gain of EUR 0.4 million for the year ended December 31, 2009
due primarily to year-end volatility in the value of the U.S. dollar and the Russian rubel as compared to the
euro.
Financial Result
Financial result deteriorated by EUR 13.5 million, or 123%, to EUR 24.5 million for the year ended
December 31, 2010 as compared to EUR 11.0 million for the year ended December 31, 2009. The
deterioration in financial result was primarily attributable to:
• an unfavorable increase of EUR 9.1 million in interest expense due to higher interest rates and
financial debt in relation to the refinancing transaction,
• a favorable EUR 1.8 million change in exchange rate differences. In the year ended December 31,
2009 we recorded a loss of EUR 0.8 million, while in the year ended December 31, 2010 we recorded
a gain of EUR 1.0 million,
• an unfavorable change of about EUR 2.5 million due to market valuation of interest rate hedges. In the
year ended December 31, 2009 we recorded a gain of EUR 0.8 million, while in the year ended
December 31, 2010 we recorded an expense of EUR 1.8 million, and
• an expense of EUR 3.0 million due to the evaluation of buy-back options associated with the corporate
bond and prepayment penalties in an amount of EUR 0.5 million in combination with the refinancing.
Income Tax Expenses
Income tax expenses decreased EUR 1.6 million, or 13.1%, to EUR 10.8 million for the year ended
December 31, 2010 as compared to EUR 12.5 million for the year ended December 31, 2009. The decrease
in income tax expenses was attributable to lower income taxes due as a result of lower taxable income as
well as a change in deferred taxes. In the latter we recorded a gain in the year ended December 31, 2010 of
EUR 1.1 million as compared to expenses of EUR 0.3 million in the year ended December 31, 2009.
Result From Discontinued Operations
Result from discontinued operations was a loss of EUR 0.9 million for the year ended December 31,
2010 as compared to a gain of EUR 1.4 million for the year ended December 31, 2009. The result from
discontinued operations in 2010 related to the sale of our facility in Morocco in February 2010, while result
from discontinued operations in 2009 related to the sale of Coronor Composites GmbH, Peine, which was
sold by us in March 2009.
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The table below presents consolidated income statement data, including the amount and percentage
changes for the periods indicated:
2009
Consolidated Income Statement
Data:
Sales
Cost of sales
Gross profit
Selling costs
Exchange rate differences from
business operations
Operating profit
Financial result
Income tax expenses
Profit attributable to non-controlling
interest
Profit attributable to shareholder of
the parent
Amount of
change
2008
Percentage
Change
663,654
539,368
124,286
35,294
38,500
5,199
7,538
3,784
736,341
626,904
109,437
38,231
31,867
3,752
7,214
3,935
-72,687
-87,535
14,849
-2,938
6,633
1,447
325
-151
-9.9%
-14.0%
13.6%
-7.7%
20.8%
38.6%
4.5%
-3.8%
406
49,454
-10,983
38,471
12,457
26,014
-1,435
27,450
82
38,947
-18,022
20,926
9,885
11,041
11,041
324
10,507
7,039
17,545
2,572
14,974
1,435
16,409
392.8%
27.0%
39.1%
83.3%
26.0%
135.6%
148.6%
-110
-166
56
33.7%
27,560
11,207
16,353
145.9%
Sales
Sales decreased by EUR 72.7 million, or 9.9%, to EUR 663.7 million for the year ended December 31,
2009 as compared to EUR 736.3 million for the year ended December 31, 2008. Our sales volumes in 2009
were negatively impacted by the worldwide economic recession, but most significantly during the first half of
2009 in which consumer spending declined significantly. Sales volumes decreased by approximately 4.9%
from 2008 to 2009 on a comparable basis. In particular, our sales volume with respect to Converting FMCG
and Beauty & Healthcare and Detergent & Cleansing Agent experienced the most significant decline as
compared to our other endmarkets due to lower demand from customers in the those markets. These
declines were partially offset by an increase in Hygiene sales volumes. In addition, our average selling prices
declined by approximately 5.2% in 2009 as compared to 2008 as a result of lower resin prices being passed
through to our customers and changes in our product mix.
Cost of Sales
Cost of sales decreased EUR 87.5 million, or 14.0%, to EUR 539.4 million for the year ended December
31, 2009 as compared to EUR 626.9 million for the year ended December 31, 2008 Average cost of sales
per kg decreased by 0.27 EUR/kg or 9.5% to 2.55 EUR/kg for the year ended December 31, 2009 as
compared to 2.82 EUR/kg for the year ended December 31, 2008 on a comparable basis. Main reason for
the decrease are lower resin prices being passed through to our customers and changes in product mix. The
average gross profit per kg increased by 0.10 EUR/kg, or 19.5% to 0.59 EUR/kg for the year ended
December 31, 2009 as compared to 0.49 EUR/kg for the year ended December 31, 2008 on a comparable
basis.
32
33
Selling Costs
Selling costs decreased EUR 2.9 million, or 7.7%, to EUR 35.3 million for the year ended December 31,
2009 as compared to EUR 38.2 million for the year ended December 31, 2008. The decrease in selling
costs was primarily the result of a EUR 1.6 million decrease in freight and commission expenses resulting
from lower volume, more favorable freight charges as a result of cost saving initiatives implemented during
the period and lower fuel prices and a EUR 1.4 million decrease in other selling costs from lower travel and
entertainment expenses of our sales personnel. These decreases were partially offset by a EUR 0.3 million
increase in personnel expenses resulting from the accrual of severance payments for workforce reductions
at one of our subsidiaries that we restructured during 2009.
Administrative Costs
Administrative costs increased EUR 6.6 million, or 20.8%, to EUR 38.5 million for the year ended
in administrative costs was primarily the result of a EUR 10.3 million increase in personnel expenses, which
included EUR 9.9 million of non-cash charges that we recorded as the result of the vesting of employee
stock options granted under our stock option program and the increase in the equity value of NIAG. The
increase in personnel expenses was partially offset by a EUR 2.6 million decrease in other administrative
expenses, resulting from lower travel and entertainment expenses and other cost saving initiatives, and a
EUR 0.3 million decrease in depreciation and amortization.
Research and Development Costs
Research and development costs increased EUR 1.4 million, or 38.6%, to EUR 5.2 million for the year
ended December 31, 2009 as compared to EUR 3.8 million for the year ended December 31, 2008, due
primarily to changes implemented in 2009 that resulted in certain costs at one of our subsidiaries being
allocated to research and development. In addition, research and development costs in 2008 were lower as
a result of the transfer of 15 employees from our research and development subsidiary to other subsidiaries
in that period.
Other Operating Income
Other operating income increased EUR 0.3 million, or 4.5%, to EUR 7.5 million for the year ended
December 31, 2009 as compared to EUR 7.2 million for the year ended December 31, 2008 due to
increases in the amount of reserves we reversed in the 2009 period with respect to insurance premiums and
bad debts as compared to the prior year.
Other Operating Expenses
Other operating expenses decreased EUR 0.2 million, or 3.8%, to EUR 3.8 million for the year ended
December 31, 2009 as compared to EUR 4.0 million for the year ended December 31, 2008. This decrease
was the result of lower additions to our bad debt reserve of approximately EUR 0.8 million, partially offset by
an impairment charge recorded in 2009 related to goodwill.
Exchange Rate Differences from Business Operations
Exchange rate differences from business operations increased EUR 0.3 million to EUR 0.4 million for the
year ended December 31, 2009 as compared to EUR 0.1 million for the year ended December 31, 2008 due
primarily to year-end volatility in the value of the U.S. dollar as compared to the euro.
Financial Result
Financial result improved by EUR 7.0 million, or 39.1%, to EUR (11.0) million for the year ended
December 31, 2009 as compared to EUR(18.0) million for the year ended December 31, 2008. The
improvement in financial result was primarily attributable to:
33
34
• a EUR 5.4 million decrease in interest expense due to lower interest rates and financial debt,
• a EUR 0.5 million decrease in other financial expenses,
• a EUR 0.6 million increase in other interest income due to interest income from tax audits in prior
years, cash on hand and interest rate swaps, and
• a EUR 0.6 million increase in other financial income due to the reversal of market values of interest
rate hedges.
Income Tax Expenses
Income tax expenses increased EUR 2.6 million, or 26.0%, to EUR 12.5 million for the year ended
in income tax expenses was primarily attributable to higher income taxes due as a result of higher taxable
income, partially offset by lower deferred taxes.
Result From Discontinued Operations
Result from discontinued operations were EUR 1.4 million for the year ended December 31, 2009 as
compared to no result from discontinued operations for the year ended December 31, 2008. Result from
discontinued operations in 2009 reflects the operating results attributable to Coronor Composites GmbH,
Peine, which was sold by us in March 2009. We did not have any material operations that were classified as
discontinued in 2008.
Liquidity and Capital Resources
Overview
Our principal uses of cash have been to finance working capital, capital expenditures, debt service and
repayments and acquisitions. Our principal sources of liquidity have historically been net cash provided by
operating activities and borrowings under the bank facilities and funds provided under the Factoring Facility.
As of December 31, 2010, we had approximately EUR 35.4 million of cash and cash equivalents,
EUR 35.0 million of indebtedness outstanding under the Syndicated Revolving Credit Facility and EUR 10.0
million of indebtedness outstanding under the Pari Passu Bank Facility. Borrowings under our Syndicated
Revolving Credit Facility and Pari Passu Bank Facility had a weighted average interest rate of 2.57% and
5.57%, respectively, as of December 31, 2010. We have generally used borrowings under these facilities to
finance our working capital needs. We were in compliance with all of the covenants in our existing financing
arrangements as of December 31, 2010.
Under the terms of our Factoring Facility, we may sell and assign certain of our receivables that are
denominated in Euros or U.S. Dollars to the counterparty thereto, who is, subject to customary conditions,
obligated to buy and accept such receivables at a purchase price of approximately 90.5% of the nominal
amount of such receivables. The maximum aggregate funded amount under the Factoring Facility at any one
time is limited to EUR 70 million and USD 10 million. As of December 31, 2010, the nominal amount of
receivables purchased under the Factoring Facility amounted to approximately EUR 35.8 million and
approximately USD 8.8 million. The Factoring Facility expires on December 20, 2013, but is subject to an
automatic extension for an additional five year term.
On July 9, 2010, the Company issued EUR 280.0 million in aggregate principal amount of the Notes. The
Notes bear interest at 9.75% per annum, payable semi-annually on January 15 and July 15 of each year.
The Notes will mature on July 15, 2017.
For further information regarding the terms of the Syndicated Revolving Credit Facility, the Pari Passu
Bank Facility, the Factoring Facility and the Notes, see “Material Contracts—Financing Arrangements” in the
Offering Memorandum.
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35
Based upon our current level of operations, anticipated sales growth and operating improvements, we
believe our cash generated from operations, available cash, available borrowings under our Syndicated
Revolving Credit Facility and funds provided under our Factoring Facility will be sufficient to meet our
working capital requirements, anticipated capital expenditures and scheduled debt payments for at least the
next twelve months. This belief, however, is subject to our operating performance, which if significantly
adversely affected, would adversely affect the availability of funds. See “Risk Factors—Risks relating to our
Financial Profile—To service our indebtedness, we will require a significant amount of cash, which we may
not be able to raise or generate. Our ability to generate cash depends upon many factors, some of which are
beyond our control” in the Offering Memorandum.
We are a holding company and are wholly dependent on payments or dividends from our subsidiaries to
meet our cash requirements. The payment of dividends and the making of loans and advances to us by our
subsidiaries are subject to various restrictions. The ability of our subsidiaries to make payments, loans or
advances to it may be limited by the laws of the relevant jurisdictions in which such subsidiaries are
organized or located. Under applicable German law, for example, a subsidiary in the legal form of a limited
liability company (GmbH) or, in certain circumstances, a limited partnership is generally prohibited from
paying distributions to its shareholders if and to the extent that such distributions would affect the
preservation of its registered share capital. If applicable, this would mean that we would be unable to use the
earnings of these subsidiaries to the extent they face restrictions in such jurisdictions on distributing funds or
making payments to parent organizations. In addition, existing and future debt of certain of these
subsidiaries may prohibit the payment of dividends or the making of loans or advances to us. Any of the
situations described above could make it more difficult for us to service our obligations or pay dividends.
Cash Flows
The following summarizes our primary sources of cash in the periods presented:
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
Total
2010
2009
Increase
(Decrease)
to Net Cash
Flow
Amount
44,360
-24,576
-2,832
76,609
-18,921
-47,397
-32,249
-5,655
44,565
16,952
10,291
6,661
Operating Activities. We generated cash from operating activities of EUR 44.4 million in 2010 compared
to EUR 76.6 million in 2009. In 2010, operating profit increased by EUR 8.4 million and interest payments
decreased by EUR 6.4 million compared to 2009. These favorable changes were offset by higher tax
payments of EUR 8.2 million and higher cash used for working capital of EUR 29.2 million basically due to
increasing raw material prices and higher production and sales volumes.
Investing Activities. We used cash in investing activities of EUR 24,6 million during 2010 compared to
EUR 18.9 million during 2009. EUR 4.2 million of the increase are related to higher investing activities in
tangible and intangible assets. EUR 1.2 million are the result of lower cash received from the sale of
consolidated companies. In 2010 we sold our facility in Morocco and received cash of EUR 0.7 million, while
in 2009 we received cash of EUR 1.9 million.
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36
Financing Activities. We used cash in financing activities of EUR 2.8 million during 2010 compared to
EUR 47.4 million during 2009. During the 2010 period, the cash received out of the refinancing transaction
was sufficient to repay nearly all of our outstanding borrowings, the equity distribution and all fees and
expenses associated therewith, whereas in 2009 we used cash to decrease our borrowings under the
Bilateral Facilities and the Pari Passu Bank Facility.
The following summarizes our primary sources of cash in the periods presented:
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
Total
2009
2008
Increase
(Decrease)
to Net Cash
Flow
Amount
76,609
-18,921
-47,397
72,046
-43,023
-36,364
4,563
24,102
-11,033
10,291
-7,341
17,632
Operating Activities. We generated cash from operating activities of EUR 76.6 million in 2009 compared
to EUR 72.0 million in 2008. In 2009, operating profit increased by EUR 10.5 million and interest expenses
decreased by EUR 5.6 million compared to 2008, which were partially offset by higher tax payments of
approximately EUR 2.1 million and increases in working capital of approximately EUR 18.1 million due to
increasing raw material prices and the recovery of business activity.
Investing Activities. We used cash in investing activities of EUR 18.9 million during 2009 compared to
EUR 43.0 million during 2008. Due to the recessionary environment, capital expenditures were reduced in
2009 after the completion of expansion projects in previous years.
Financing Activities. We used cash in financing activities of EUR 47.4 million during 2009 compared to
EUR 36.3 million during 2008. Our cash used in financing activities in 2009 related to the repayment of debt.
Capital Expenditures
We calculate the amount of our capital expenditures for any particular period by reference to the gross
additions to our property, plant and equipment and intangible assets for such period as reflected on our
consolidated balance sheet as of the end of such period. During the years ended December 31, 2010, 2009
and 2008, our capital expenditures were EUR 27.0, EUR 22.9 million and EUR 43.8 million, respectively.
Our 2010 capital expenditures related primarily to additional investments in our hygiene components and
petcare businesses as well as in a replacement of a printing machine at our facility in Halle, Germany. We
estimate that our aggregate capital expenditures in 2011 will be approximately EUR 35.2 million, which will
be used to purchase equipment used in the production of Hygiene diaper components, and extrusion and
laminating equipment used in production for various endmarket products and several smaller investments in
improvement projects.
Working Capital
In general, we define working capital as the sum of inventories and trade receivables less trade
payables. For this purpose, we adjust the total amount of trade receivables as recorded on our consolidated
36
37
balance sheet to deduct the amount of debtors with credit balances and working capital related provisions
and adjust the total amount of trade payables as recorded on our consolidated balance sheet to add
prepayments we have received on orders and deduct the amount of vendors with debit balances and
supplier rebates.
The table below sets forth our calculation of working capital for each of the periods presented:
December 31,
2009
2010
2008
Inventories
Total trade receivables
Debtors with credit balances
Working capital related provisions (1)
Adjusted receivables
Total trade payables
Prepayments received on orders
Vendors with debit balances and
supplier rebates
Adjusted payables
100,685
72,332
-814
-3,385
68,133
70,911
183
73,996
61,246
-410
-3,785
57,050
60,663
115
71,906
56,224
-398
-4,543
51,283
56,243
56
-6,023
65,071
-2,623
58,155
-6,962
49,338
Working Capital (2)
103,747
72,890
73,851
____________________
(1)
Refers to customer rebates that we have not yet paid.
(2)
The amounts set forth herein do not correspond to the amounts set forth in our consolidated cash flow
statement for the applicable period as those amounts have been adjusted to reflect changes in foreign
currency exchange rates on the opening balance and changes in the number of consolidated companies.
Liquidity Arrangements
Our principal uses of cash have been to finance working capital, capital expenditures, debt service and
repayments and acquisitions. Our principal sources of liquidity have historically been net cash provided by
operating activities and borrowings under the Bilateral Facilities and the Pari Passu Bank Facility and funds
provided under the Factoring Facility (as defined below). As part of the Refinancing Transactions, on July 9,
2010, our principal sources of liquidity are now the New Bank Facility, the Pari Passu Bank Facility, the
Notes and the funds provided under the Factoring Facility.
Former Bilateral Facilities and Pari Passu Bank Facility
Until July 9, 2010, we had committed Bilateral Facilities of EUR 244.3 (as of June 30, 2010) which we
generally used for borrowings to finance our working capital needs. On July 9, 2010, we used a portion of the
net proceeds from the Offering, together with borrowings under the New Bank Facility and the Pari Passu
Bank Facility and available cash, to repay most of our outstanding borrowings under the former Bilateral
Facilities and the former Pari Passu Bank Facility and terminate the commitments thereunder. The remaining
debt on July 9, 2010, was EUR 9.0 million.
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38
New Bank Facility and Pari Passu Bank Facility
As part of the Refinancing Transactions, on July 9, 2010, NIAG entered into the New Bank Facility which
provides for aggregate borrowings of up to EUR 100.0 million to be used for working capital and other
general corporate purposes. In connection with the Refinancing Transactions, we borrowed on July 9, 2010,
approximately EUR 56.0 million under the New Bank Facility. As of December 31, 2010, we could reduce the
borrowings under the New Bank Facility to EUR 35.0 million and had approximately EUR 35.4 million of cash
and cash equivalents. The New Bank Facility matures on June 30, 2013. The margin is dependent on
specified leverage ratios and is between 1.25% and 2.0%. On December 31, 2010, borrowings under the
New Bank Facility accrue interest at EURIBOR plus a 1.75% margin. As part of the Refinancing
Transactions, on July 9, 2010, NIAG entered into a new Pari Passu Bank Facility with Landessparkasse zu
Oldenburg which provides for aggregate borrowings of up to EUR 10.0 million, all of which was outstanding
as of July 9, 2010. The Pari Passu Bank Facility matures on July 31, 2014 and accrues interest at EURIBOR
plus a 4.5% margin. Borrowings under our New Bank Facility and Pari Passu Bank Facility had an interest
rate of 2.57% and 5.57%, respectively, as of December 31, 2010. We have generally used borrowings under
these facilities to finance our working capital needs. We were in compliance with all of the covenants in our
financing arrangements as of December 31, 2010.
Factoring Facility
We are a party to a receivables factoring arrangement under a Receivables Purchase Agreement, dated
November 8, 2001 (and last amended December 20, 2006) (the “Factoring Facility”) pursuant to which we
may sell and assign certain of our receivables that are denominated in Euros or U.S. dollars to the
counterparty thereto, who is, subject to customary conditions, obligated to buy and accept such receivables
at a purchase price of approximately 90.5% of the nominal amount of such receivables. The maximum
aggregate funded amount under the Factoring Facility at any one time is limited to EUR 70 million and
US$10 million. As of Dec 31, 2010, the nominal amount of receivables purchased under the Factoring
Facility amounted to approximately EUR 35.8 million and approximately US$8.8 million. The Factoring
Facility expires on December 20, 2013, but is subject to an automatic extension for an additional five year
term. The Factoring Facility remained in place following the Refinancing Transactions.
Availability of Funds
We believe that cash generated from operations together with borrowings under the New Bank Facility and
funds provided under our Factoring Facility will be sufficient to meet our working capital requirements,
anticipated capital expenditures and scheduled debt payments for at least the next twelve months. This
belief, however, is subject to our operating performance, which if significantly adversely affected, would
adversely affect the availability of funds.
9¾% Senior Second Priority Notes
On July 9, 2010, we issued EUR 280.0 million in aggregate principal amount of the Notes. The Notes
bear interest at 9.75% per annum, payable semi-annually on January 15 and July 15 of each year. The first
such payment was made on January 15, 2011. The Notes will mature on July 15, 2017. Prior to July 15,
2014, we will be entitled, at our option, to redeem all or a portion of the Notes by paying the relevant “makewhole” premium, plus accrued and unpaid interest to the redemption date. Prior to July 15, 2013, we may
redeem at our option up to 35% of the Notes with the net proceeds from certain equity offerings at a
redemption price of 109.75% of the principal amount of the Notes redeemed, plus accrued and unpaid
interest to the redemption date. At any time on or after July 15, 2014, we may redeem all or part of the Notes
at the redemption prices set forth below, plus accrued and unpaid interest to the redemption date:
Year
2014.................................................................................
2015.................................................................................
2016 and thereafter .........................................................
38
Redemption
Price
104.875%
102.438%
100.000%
39
If we undergo a change of control or sell certain of our assets, we may be required to make an offer to
purchase the Notes at a purchase price equal to 101% of the principal amount of the Notes repurchased,
plus accrued and unpaid interest to the date of repurchase. In the event of certain developments affecting
taxation, we may redeem all, but not less than all, of the Notes at a redemption price equal to 100% of the
principal amount of the Notes, plus accrued and unpaid interest to the date of redemption.
Prior to completion of the Consolidation Merger, the Notes are secured by a pledge of all of the capital
stock held by the Issuer of NIAG, and an assignment of the intercompany loan made by the Issuer to NIAG
with a portion of the net proceeds from the Offering. Following completion of the Consolidation Merger, the
Notes will be unsecured and guaranteed jointly and severally by substantially all of the Issuer’s wholly owned
subsidiaries with operations in Germany, Poland and the United States.
The indenture governing the Notes imposes significant operating and financial restrictions on the Issuer
and its restricted subsidiaries. These restrictions limit its ability, among other things, to:
•
•
•
•
•
•
•
•
incur additional indebtedness or issue preferred stock;
pay certain dividends or make certain distributions on its capital stock or repurchase its
capital stock;
make certain investments or other restricted payments;
place restrictions on the ability of subsidiaries to pay dividends or make other payments to
the Issuer;
engage in transactions with affiliates;
sell certain assets or merge with or into other companies;
guarantee indebtedness; and
create liens.
Certain of these covenants will be suspended if the Notes are assigned an investment grade rating by
both Standard & Poor’s Rating Services and Moody’s Investors Service, Inc. and no default has occurred or
is continuing. If either rating on the Notes should subsequently decline to below investment grade, the
suspended covenants will be reinstated. The covenants are subject to important exceptions and
qualifications.
The Issuer is not required to, nor does it intend to, register the Notes for resale under the Securities Act
or to offer to exchange the Notes for Notes registered under the Securities Act or the securities laws of any
jurisdiction.
We used the net proceeds from the issuance and sale of the Notes, together with our available cash and
borrowings under the New Bank Facility and the Pari Passu Bank Facility, to fund the Refinancing
Transactions. See “-Recent Developments.”
Subject to the limits contained in the indenture governing the Notes and the New Bank Facility, we may
be able to incur additional debt from time to time to finance working capital, capital expenditures,
investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt
could intensify. Our ability to make payments on and to refinance our indebtedness, including the Notes,
and to fund working capital needs and planned capital expenditures will depend on our ability to generate
cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business,
legislative, regulatory and other factors that are beyond our control.
If our business does not generate sufficient cash flow from operations or if future borrowings are not
available to us in an amount sufficient to enable us to pay our indebtedness, including the Notes, or to fund
our other liquidity needs, we may need to refinance all or a portion of our indebtedness, including the Notes,
on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional
capital, any of which could have a material adverse effect on our operations. In addition, we may not be able
to affect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to
39
40
restructure or refinance our indebtedness, including the Notes, will depend on the condition of the capital
markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates
and may require us to comply with more onerous covenants, which could further restrict our business
operations. The terms of existing or future debt instruments, including the indenture governing the Notes,
may limit or prevent us from taking any of these actions. In addition, any failure to make scheduled payments
of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating,
which could harm our ability to incur additional indebtedness on commercially reasonable terms or at all. Our
inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure
our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be
material, on our business, financial condition and results of operations, as well as on our ability to satisfy our
obligations in respect of the Notes.
Intercompany Distributions
The Issuer is a holding company and will be wholly dependent on payments or dividends from its
subsidiaries to service its obligations under the Notes and meet its other cash requirements. The payment of
dividends and the making of loans and advances to the Issuer by its subsidiaries are subject to various
restrictions. The ability of the Issuer’s subsidiaries to make payments, loans or advances to it may be limited
by the laws of the relevant jurisdictions in which such subsidiaries are organized or located. Under applicable
German law, for example, a subsidiary in the legal form of a limited liability company (GmbH) or, in certain
circumstances, a limited partnership is generally prohibited from paying distributions to its shareholders if
and to the extent that such distributions would affect the preservation of its registered share capital. If
applicable, this would mean that the Issuer would be unable to use the earnings of these subsidiaries to the
extent they face restrictions in such jurisdictions on distributing funds or making payments to parent
organizations. In addition, existing and future debt of certain of these subsidiaries may prohibit the payment
of dividends or the making of loans or advances to the Issuer. Any of the situations described above could
make it more difficult for the Issuer to service its obligations, including the Notes.
The Issuer has entered into profit and loss pooling agreements with certain of its subsidiaries pursuant to
which such subsidiaries must transfer to the Issuer their annual profits to the extent not otherwise retained as
voluntary reserves. In the event a subsidiary incurs a net loss, the Issuer must compensate the subsidiary for
such net loss. Instead of a cash payment by the Issuer to the subsidiary for the compensation of any such
loss, a set-off of such compensation claims of the subsidiary against the Issuer against any loans, notes or
other instruments or agreements may be permitted. Following the Consolidation Merger, the Issuer will have
the benefit of the profit and loss pooling agreements. A compensation claim of a subsidiary against the
Issuer in the event of a loss will rank pari passu with the rights of the holders of the Notes.
Contractual Obligations and Commercial Commitments
The following table represents our contractual commitments associated with our financial debt and other
contractual obligations as of December 31, 2010, on a pro forma basis after giving effect to the Refinancing
Transactions as if those transactions had occurred as of that date.
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41
Payments Due By Period (in thousands of euros)
Less than
More than
1 Year
5 Years
Total
1-5 Years
Contractual Obligations
Pro forma financial debt
obligations(1)
Finance lease obligations(2)
Operating lease
obligations(3)
Other financial obligations(4)
Purchase commitments(5)
Total
(1)
535,900
27,552
30,400
2,423
184,550
18,514
320,950
6,615
10,525
5,681
6,594
586,252
2,266
1,631
6,594
43,314
5,854
4,047
0
212,965
2,405
3
0
329,973
Represents principal and cash interest payments on the New Bank Facility, the Pari Passu Bank Facility and the Notes.
Variable interest rates under the New Bank Facility (which amounted to EUR 60 million in the pro formas) and Pari Passu
Bank Facility have been assumed to remain constant through the end of their respective terms.
(2)
Consists of payments under our finance leases for property, plant and equipment.
(3)
Represents payments under our operating leases for various property and equipment.
(4)
Consists of obligations under maintenance and power supply contracts.
(5)
Consists of obligations to purchase goods or services, primarily fixed assets, which are enforceable and legally binding on us.
Excludes purchase orders made in the ordinary course of business that are short-term or cancellable.
Off Balance Sheet Arrangements
Our off balance sheet arrangements primarily consist of our Factoring Facility.
Inflation
We believe inflation has not had a material effect on our financial condition or results of operations in
recent years. However, there can be no assurance that we will not be affected by inflation in the future.
Seasonality
Historically, our business has not been subject to significant seasonality.
Critical Accounting Policies and Pronouncements
Our discussion and analysis of results of operations and financial condition are based upon our audited
financial statements. These audited financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as applied in the European Union. The preparation of
these financial statements requires us to make estimates and judgments that affect the amounts reported in
those financial statements. On an ongoing basis, we evaluate estimates. We base our estimates on
historical experiences and assumptions believed to be reasonable under the circumstances. Those
estimates form the basis for our judgments that affect the amounts reported in the financial statements.
Actual results could differ from our estimates under different assumptions or conditions.
The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are addressed below:
Estimates are in particular required in the following cases
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42
-
Determination of the necessity and measurement of impairment losses on intangible assets, items
of property, plant and equipment, as well as inventories;
Recognition and measurement of pension obligations, anniversary bonuses, and stock options;
Assessment of potential deferred tax assets.
Property, plant and equipment, as well as intangible assets are measured based on estimates of the fair
value at the acquisition date, if those items were acquired in the course of a business combination.
Furthermore, the useful life of the assets has to be estimated. The fair value of assets and liabilities, as well
as the useful life of assets are determined based on management's estimates.
When determining impairment losses on items of property, plant and equipment and intangible assets,
estimates are made as well that relate – among others – to the cause, date and amount of impairment.
Impairment results from a number of factors. In principle, changes in current competition, expectations
regarding the growth in the packaging industry, increases in capital costs, changes in the availability of
financial resources, technological obsolescence, discontinuation of services, current replacement costs,
purchase prices paid in similar transactions, and other changes affecting the circumstances that indicate that
impairment has occurred are accounted for. The net realizable amount and fair values are usually
determined using the discounted cash flow method which also involves appropriate assumptions of market
participants. When identifying aspects that indicate that there is impairment, management has to make
significant estimates of future cash flows and the fair values of assets (or groups of assets).
The Group tests annually – in accordance with the accounting policy described in note 2.10a of the
financial statements at December 31, 2010 – whether goodwill has suffered an impairment. The recoverable
amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of estimates.
Management records impairment losses on doubtful accounts in order to account for expected losses
that result from customer’s insolvency. The bases used by management in order to assess the
appropriateness of the impairment losses on doubtful accounts are the maturity structure of the receivables
and past experience in respect to the derecognition of receivables, the customer’s credit rating, and changes
in terms of payment. In the event the customer’s financial situation worsens, the scope of the actual amount
to be derecognized may exceed the expected derecognition.
Since 2001, trade receivables of subsidiaries have been sold and assigned to Kaiserplatz Purchaser No.
5 Ltd., Jersey, (KP5) as factoring facility transactions. When recognizing the disposal of trade receivables,
management must evaluate whether the transferee (KP5) should be included in the consolidated group of
the NORDENIA Group and whether the disposal is deemed a disposal of receivables as defined in IAS 39.
Whether the transferee should be consolidated shall be determined based on the criteria of SIC-12
“Consolidation of Special-Purpose Entities”. The basis used by management with respect to the criteria of
SIC-12 and IAS 39 are the agreements with KP5, the credit standing of the customers, the estimated future
cash flows from the receivables sold (timing and amount), as well as a forecast of future interest and
exchange rate trends in the financial markets. Hence, management has to make estimates and forecasts
with respect to the criteria of SIC-12 and IAS 39.
Income taxes have to be estimated for each tax jurisdiction in which the Group operates. The expected
actual income tax for each taxable unit has to be calculated and temporary differences resulting from
different treatment of certain balance sheet items in the consolidated IFRS financial statements and the tax
base have to be evaluated. If temporary differences occur, those differences basically result in the
recognition of deferred tax assets and liabilities in the consolidated financial statements. Management has to
make estimates when calculating actual and deferred taxes. Deferred tax assets are recognized to the extent
that it is probable that the assets will be utilized. The utilization of deferred tax assets depends on the
possibility to generate sufficient taxable income in the respective tax category and tax jurisdiction; legal
restrictions regarding maximum loss carryforward periods have to be taken into account. When assessing
whether a future utilization of deferred tax assets is probable, various factors have to be taken into account,
e.g. earnings position in the past, operational plans, loss carryforward periods, tax plan strategies. If the
actual results deviate from those estimates or if the estimates have to be adjusted in the future, adverse
effects on the net assets, financial and earnings position may occur. In the event the impairment test of
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deferred tax assets results in a change in the assessment, impairment losses shall be recognized on the
recognized deferred tax assets in profit and loss.
Pension obligations relating to employee benefits are, in principle, covered by plans that are classified
and recognized as defined benefit plans. Expenses for old-age pensions are determined using actuarial
methods that are based on assumptions regarding the interest rate, life expectancy, and – to a limited extent
– the expected earnings from plan assets. The estimates of the expected earnings from plan assets only
affect the expenses for old-age pensions to a limited extent. They are in part based on actuarial valuations
that in turn are based on assumptions such as the interest rates that are used to calculate the pension
obligation. The assumptions regarding the expected earnings from plan assets are made on a standard
basis of long-term historical yields in the past, the asset strategy, as well as estimates of non-current income
from assets. In the event other modifications of the assumptions regarding interest rates or expected
earnings from plan benefits are required, such modification may have material impact on the amount of
expenses for old-age pensions in the future.
The recognition and measurement of the provisions and the amount of contingent liabilities relating to
pending legal proceedings or other pending claims from out-of-court settlements, mediation, arbitration or
government proceedings and other contingent liabilities, respectively, require major estimates by
NORDENIA. Hence, the assessment of whether it is probable that pending proceedings will be successful or
a liability will be incurred and the amount of the respective obligation is based on the assessment of the
respective situation and circumstances. Provisions are recognized for liabilities, if losses from pending
transactions are expected, it is probable that a loss will be incurred, and this loss can be estimated reliably.
Due to the uncertainties related to such assessment, the actual losses may deviate from the original
estimates and thus from the amount accrued. In addition, major estimates have to be made when
determining the provisions for taxes, environmental liabilities and legal risks. Those estimates may change
due to new information. NORDENIA obtains new information primarily from services of internal experts or
external experts such as actuarians or legal consultants. Changes in the estimates of those impending
losses from pending transactions may have a significant impact on the future earnings position.
The recognition and measurement of other provisions is based on the estimated probability of possible
outflows of economic benefits and on experience and the circumstances known at the balance sheet date.
The actual outflow of economic benefits may therefore deviate from the other provisions.
The merger of NORDENIA International AG by way of assumption by Nordenia Holdings was resolved in
the reporting period; however, since this merger has not yet been registered in the Commercial Register, it
has not yet become effective in the reporting period. The directors of the NORDENIA Group believe that the
registration of the merger in the Commercial Register is highly likely. Therefore, the consolidated financial
statements of Nordenia Holdings are based on the assumption that the merger will become effective.
Recent Accounting Pronouncements
Standards, interpretations and revised standards and interpretations adopted for the first time in the financial
year
The following standards, interpretations and revised standards and interpretations were adopted in the
calendar year 2010:
•
IFRS 1 - First-time adoption of the IFRS
In November 2008, the IASB published a revised IFRS 1 "First-time adoption of International
Financial Reporting Standards" that was implemented in European law on November 26, 2009. The
revised standard is effective for all financial years beginning on or after July 1, 2009.
•
IFRS 2 - Share-based payments
On June 18, 2009, the IASB published the revised IFRS 2 in which it clarifies the recognition of
share-based payments that are made in cash in the group. The revised standard has so far not been
implemented in European law. It specifies how an individual subsidiary in a group shall recognize
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certain share-based payment agreements in its own financial statements. Under these agreements,
the subsidiary receives goods or services from employees or suppliers; however, the parent or
another company of the group pays the employees or suppliers. The changes are mandatory to all
financial years that begin on or after January 1, 2010.
•
IFRS 3 and IAS 27 - Business combinations
In January 2008, the IASB published the revised version of IFRS 3 “Business combinations” and IAS
27 “Consolidated and separate financial statements" that the European Union implemented in
European law on June 12, 2009. The main changes in IFRS 3 deal with the treatment of minority
interest. The revised IFRS 3 contains the option to record minority interest at their fair value or the
prorated net identifiable assets; the option may be exercised for each business combination
separately. In the event of successive business acquisitions existing interests in the acquired entity
are revaluated through profit or loss at the date at which control is obtained. Then, the goodwill is
determined as the difference between the revalued carrying amount of the interest plus purchase
price payments on the acquisition of the new interests less acquired net assets.
Incidental acquisition costs in business combinations are recorded as expenditure. The goodwill shall
no longer be adjusted in the event of possible adjustments of the acquisition costs depending on
future events (contingent consideration) that shall be recorded in liabilities at the acquisition date.
According to the revised version of IFRS 3, effects from the processing of business relationships that
had already existed before the business combination shall not be accounted for when determining
the consideration for the business combination.
The main changes of IAS 27 deal with the presentation of changes in the percentage share without
losing control that shall now be recorded as equity transactions. In the event the parent company
does no longer control a subsidiary, the respective consolidated assets and debt shall be
derecognized. In addition, any remaining investment in the former subsidiary shall be initially
recognized at fair value; any differences resulting from such recognition shall be recorded in profit or
loss. Losses attributed to the minority interest that exceed the minority interest in the subsidiary's
equity shall be attributed to the minority interest regardless of the fact that the percentage share in
the equity is exceeded.
•
The revised IFRS 3 applies prospectively to business combinations in which the acquisition date is
during the reporting periods that begin on or after July 1, 2009; the revised IAS 27 applies to
financial years beginning after July 1, 2009
•
Annual improvement project 2009
In the course of the "Annual Improvement Process“ project 2009 the IASB published a collective
standard on April 16, 2009, revising numerous IFRS. It contains a number of minor changes
regarding accounting methods and terms, as well as changes in the wording of existing standards
that were not considered urgent. This standard was adopted by the EU on March 24, 2010. Unless
the standard prescribes otherwise, the changes shall be applied to financial years beginning on or
after January 1, 2010.
•
IAS 39 - Financial instruments: recognition and measurement
In July 2008, the IASB published a revised version of IAS 39 "Financial instruments: recognition and
measurement” that the EU implemented in European law on September 16, 2009. By revising the
definition of “eligible hedged items“ the standard clarifies that cash flow or fair value changes of a
basic transaction above or below a certain price or another variable may be designated as hedges.
The changes in IAS 39 are effective for all financial years that begin on or after July 1, 2009. The
standards shall be applied retrospectively.
•
IAS 32 – Classification of preemptive rights
In July 2009, the IASB published changes regarding the classification of preemptive rights that shall
be adopted for the first time in reporting periods beginning on or after February 1, 2010. It clarifies
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how preemptive rights are recognized when and if they are denominated in a currency other than the
enterprise's functional currency.
All of the announcements and revisions published by the IASB that were to be adopted for the first time in
the current financial year did not have any or no major impact on the Group's net asset, financial and
earnings position.
Published but not yet adopted standards, interpretations and revisions
The following standards, interpretations and revised standards and interpretations shall be adopted in
financial years beginning on or after January 1, 2011. The Group did not adopt these standards and
interpretations early:
•
In the course of the “Annual Improvement Process" the IASB published another collective standard
on May 6, 2010. This collective standard comprises a total of eleven changes of a total of six
individual standards (IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 34) and one interpretation (IFRIC
13), The changes resulting from the adoption of the collective standard apply – unless otherwise
stated – as of January 1, 2011; the IASB also agrees to companies applying these revised standards
at an earlier date. The revisions had not been endorsed by the EU at the balance sheet date.
Management is currently analyzing what impact the revisions will have. Management expects that
there will be no or no major impact on the Group’s net asset, financial and earnings position.
•
IAS 12 (revised): “Deferred Taxes: Recovery of Underlying Assets” was published by the IASB in
December 2010; this revised standard defined which type of recovery is assumed for certain assets.
This is of significance when and if there are varying tax effects depending on the type of recovery.
This revised standard refutably assumes that the carrying amount of investment property that is
recognized at fair value using the revaluation approach described in IAS 40 “Investment Properties”
is recovered upon disposal. Furthermore, it refutably assumes that the carrying amount of nondepreciable assets that are measured at revaluation using the revaluation approach defined in IAS
16 "Property, Plant and Equipment” is recovered upon disposal. As a result of this new standard,
Interpretation SIC-21 “Income Taxes – Recovery of Revalued Non-Depreciable Assets” is
suspended. It shall be adopted in financial years beginning on or after January 1, 2012; however, it
has not yet been endorsed by the EU. Management expects that there will be no or no major impact
on the Group’s net asset, financial and earnings position.
•
IAS 24 (revised): “Related Party Disclosures” was issued in November 2009 and supersedes IAS 24
(2003). The new standard is mandatory for all financial years beginning on or after January 1, 2011.
Earlier application is permitted. The revised standard clarifies and simplifies the definition of a related
party. Management is currently analyzing what impact the revisions will have. Management expects
that there will be no or no major impact on the Group’s net asset, financial and earnings position.
•
IFRS 7: “Financial instruments: Disclosures”. The revised standard extends the obligations to
disclose information related to transfers of financial assets. This revision shall improve the
transparency of transactions for the purpose of transferring assets in which the transferor retains
risks inherent in the financial assets. This revision also requires additional disclosures when and if
the transfers are not purposed consistently during the financial year. The revised standard is
mandatory for all financial years beginning on or after July 01, 2011. Management is currently
analyzing what impact the revisions will have. The revisions have not yet been endorsed by the EU.
Management expects that there will be no or no major impact on the Group’s net asset, financial and
earnings position.
•
IFRS 1 “First-time adoption of International Financial Reporting Standards”. The revision results in
two new exceptions for first-time adoption regarding assets in the oil and gas sector and the
determination whether an agreement contains a lease. The revised standard is mandatory for all
financial years beginning on or after July 01, 2010. Earlier application is permitted. The revisions
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have not yet been endorsed by the EU. The adoption of the revised IFRS 1 does not have any
impact on the Group’s consolidated financial statements due to the fact that the Group does not
adopt the IFRS for the first time.
•
The IASB published IFRS 1 "Severe High Inflation and Removal of Fixed Dates for First-Time
Adopters” in December 2010; it contains two minor revisions of IFRS 1 “First-Time Adoption of the
International Financial Reporting Standards”. The revised standard becomes effective July 1, 2011.
Earlier application is permitted. The revisions have not yet been endorsed by the EU. The adoption
of the revised IFRS 1 does not have any impact on the Group’s consolidated financial statements
due to the fact that the Group does not adopt the IFRS for the first time.
•
IFRS 9 “Financial Instruments” was published in November 2009. This standard is the first step in
the process to replace IAS 39, “Financial Instruments: Recognition and Measurement”. IFRS 9
introduces new requirements for classifying and measuring financial assets and is likely to affect the
Group’s accounting for its financial assets. The standard is not applicable until January 1, 2013 but is
available for early adoption. The revisions have not yet been endorsed by the EU. The Group is yet
to assess IFRS 9’s full impact. However, management expects that there will be no or no major
impact on the Group’s net asset, financial and earnings position.
•
IFRIC 14 “IAS 19 – Prepayments of a Minimum Funding Requirement“. The revision of Interpretation
IFRIC 14, IAS 19 “Prepayments of a Minimum Funding Requirement” is relevant when and if a
pension plan prescribes a minimum funding requirement and the company effects prepayments to
meet this requirement. Unlike under the existing provisions, the economic benefits embodied in
prepayments made by the company that reduce future payments due to the minimum funding
requirement are recognized as assets. In the event the minimum funding requirements relate to
prepayments for future services, the interpretation now prescribes that an asset be recognized that is
the aggregate of two amounts. One of the amounts is the voluntarily prepayment that reduces the
minimum funding requirement; on the other hand, the estimated future service cost have to be taken
into account. The estimated funding due to the minimum funding requirement (not taking into
account the prepayments) shall be deducted. The revision is mandatory for periods beginning on or
after January 1, 2011. The revisions should be applied to the earliest comparative period presented
in the first financial statements to which this interpretation applies. The amendments resulting from
the adoption of the revisions should be recorded in the opening balance of the retained earnings of
this comparative period. Management expects that there will be no or no major impact on the
Group’s net asset, financial and earnings position.
•
IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”, is mandatory for all financial
years beginning on or after July 1, 2010. The interpretation clarifies the accounting by an entity when
the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to
a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap), and the
creditor is an independent third party. According to IAS 39.41, a gain or loss to be recognized in
profit or loss, which is measured as the difference between the carrying amount of the repaid
financial liability and the consideration. IFRIC 19 clarifies that the equity instruments issued by the
debtor for the purpose of full or partial repayment of the financial liability are deemed part of the
consideration paid. The equity instruments are initially recognized at fair value. If the fair value of the
equity instruments issued cannot be reliably measured, the equity instruments should be measured
to reflect the fair value of the financial liability extinguished. The equity instruments issued can no
longer be recognized at the carrying amount of the financial liability extinguished, i.e. by way of a
mere reclassification of the financial liability into equity. Management expects that there will be no or
no major impact on the Group’s net asset, financial and earnings position.
These standards and interpretations shall be adopted - subject to the endorsement by the EU - at the firsttime mandatory adoption date.
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Qualitative and Quantitative Disclosures About Market Risk
We monitor market risks on an ongoing basis in order to develop mitigation measures. Our operations
are exposed to market risks primarily as a result of changes in interest rates, foreign currency exchange
rates and commodity prices. We use financial instruments to hedge financial exposure arising from the
financing of business operations and liquidity management. Derivatives that we use are primarily foreign
currency forward contracts and interest rate swaps. Our derivative activities are subject to the management,
direction, and control of our senior financial officers.
Interest Rate Risk
We are exposed to market risk from fluctuations in interest rates. At December 31, 2010, we had
approximately EUR 52.5 million of variable rate debt. Holding other variables constant (such as foreign
exchange rates and debt levels), a one percentage point change in interest rates would be expected to
increase interest expense by approximately EUR 0.5 million for the year ended December 31, 2010 before
giving effect to the interest rate swap agreement described below. The interest rate swap agreements
described below reduce our exposure to interest rate risk associated with our variable rate debt for the
periods in which the agreements are in effect.
As of December 31, 2009, we were a party to interest rate swap agreements in order to more effectively
balance our borrowing costs and interest rate risk. These interest rate swap agreements expire in 2019.
Under the terms of these interest rate swap agreements, we make payments to a number of banking
partners at an average fixed rate of 3.5% on a EUR 50.0 million notional amount of the interest rate swap
and we receive a variable rate of six month EURIBOR. In 2010, we entered into additional interest rate swap
agreements with respect to EUR 10.0 million of notional amount that expires in 2020. Therefore, at
December 31, 2010, interest rate swaps had an outstanding notional amount of EUR 60.0 million and a
negative fair value of EUR -1.8 million
Foreign Currency Risk
We conduct our business on a global basis in several international currencies, although the primary
currency in which we conduct our business is the euro, which is also our reporting currency. As a result of
our global operations, we are exposed to risk from fluctuations in currencies of foreign denominated sales
and profit. Where it is feasible, we reduce risk by denominating transactions in euros. However, material
portions of our sales and expenses have been generated by our operations in jurisdictions that have a
currency other than the euro, and we expect that these operations will account for a material portion of our
sales and expenses in the future. As a result, our financial results could be affected by factors such as
changes in foreign currency exchange rate or weak economic conditions in foreign markets in which we have
operations.
Although our operations around the world are managed on a sufficiently local basis, these currency
translations can have a considerable impact on the Group’s consolidated financials, which are reported in
euro. A substantial part of expenses and sales of our operations in the USA and in Asia are denominated in
currencies other than the euro, principally the U.S. dollar. On the basis of unconsolidated group figures
approximately 24 % of our net sales for the year ended December 31, 2010 are associated with operations
in jurisdictions that have a currency other than the euro. Translational currency risk occurs also for
conversions of operating results in non-euro zone countries in euro at the end of the reporting periods. In
the event of a decline in the value of the U.S. dollar compared to the euro, it cannot be ruled out that we
would generate lower revenues translated into euros. Based on the assumption that the euro had a 10 %
appreciation relative to actual market development against our dollar denominated business in 2010, sales
would have been reduced by approximately EUR 10.0 million and operating income would have decreased
by approximately EUR 0.9 million before giving effect to the forward contracts described below.
Exchange rate changes also affect our consolidated balance sheet. Changes in the euro values of our
consolidated assets and liabilities resulting from exchange rate movements may cause us to record foreign
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currency gains and losses. On December 31, 2010, on the basis of unconsolidated group figures
approximately 38 % of our tangible assets were associated with operations in jurisdictions that have a
currency other than the euro.
Foreign exchange transaction risks are hedged to the extent that they affect the Group’s cash flow. Our
exchange rate hedges are typically for periods of one year or less. Foreign exchange risks resulting from the
translation of the assets and liabilities accounts of foreign operations into the reporting currency of the Group
are not hedged. Receivables and liabilities of the Group are hedged for each individual transaction by way of
foreign exchange forwards to cover risks from changes in exchange rates. As of December 31, 2010, our
foreign exchange hedges had an outstanding notional amount of EUR 29.5 million and a fair value of
negative EUR(0.2) million.
Commodity Price Risk
Raw materials account for a significant portion of our sales and are subject to significant price volatility.
The principal raw materials we use in our manufacturing processes are polyethylene resins. Since a
sufficiently liquid market for financial products for resins does not exist, we are unable to enact a hedging
strategy to minimize our exposure to resin price volatility. However, approximately 75% of our sales in 2010
were made under framework agreements with customers that include a resin cost pass-through provision.
These provisions generally operate to automatically adjust our selling prices by the respective resin price
change, subject to an average 3 month time lag. Gains and losses due to the time lag are generally offset
during a calendar year under normal volatility. In addition, we manage our exposure to resin price
movements by actively working with our customers to revise product prices on an ongoing basis.
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BUSINESS
Overview
We are a leading developer, producer and marketer of highly developed specialty films, film-based
components, industrial packaging solutions and customized flexible consumer packaging products and
operate 15 facilities located in eight countries across Europe, North America and Asia. We focus on the
production of technologically advanced film and film-based products, with an emphasis on innovation and
customization. We operate fully invested manufacturing facilities with advanced production capabilities
covering the entire production process. As of December 31, 2011, we had 2,884 employees.
In the calendar year ended December 31, 2010, we generated sales of EUR 801.5 million and Adjusted
EBITDA according to RCF of EUR 106.6 million, representing a 13.3% Adjusted EBITDA according to RCF
margin.
We operate primarily through two divisions: AFC and CFP. The AFC division manufactures and sells a
variety of value added specialty films, film-based components and industrial packaging solutions. The CFP
division is a fully integrated manufacturer of customized flexible consumer packaging products. In the
calendar year ended December 31, 2010, our AFC division accounted for 61.0% and our CFP division
accounted for 39.0% of the total unconsolidated sales of those divisions. Both divisions operate in the
following six endmarkets :
•
•
•
•
•
•
Hygiene,
Converting FMCG,
Food,
Petcare & Garden Products,
Beauty & Healthcare, Detergent & Cleansing Agents, and
Industrial.
The following diagram shows a breakdown of our sales per endmarket for the calendar year ended
December 31, 2010 (in %):
Industrial
5.8%
B&HC, D&CA (1)
6.4%
Other (2)
3.5%
Petcare &
Garden
Products
10.8%
Hygiene
44.8%
Food
11.1%
Converting FMCG
17.6%
(1) Beauty & Healthcare, Detergent & Cleansing Agents
(2) Includes Disposals, Office Promotion and Art, Glass Industry, other endmarkets.
We are a leader in film and flexible packaging technology. We focus substantial resources on our
research and development platform to maintain our competitive advantage. We employed a total of
51 scientists, engineers and technical personnel as of December 31, 2011 and maintain a centralized
research and development centre in Gronau, Germany, which houses state-of-the-art equipment to support
the activities of these professionals. We currently have more than 115 new products under development and
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we believe that our technology and innovation capabilities enable us to establish leading positions in
technically demanding product areas. We believe that both our end-product differentiation and production
optimization are key factors in sustaining a pipeline of products with significant growth and attractive
margins. Our ability to innovate and upgrade existing products helps to extend the lifecycle of higher margin,
technically demanding products.
Our diversified customer base comprises mid sized and large companies, as well as multinational bluechip companies with global sourcing and production. We have established strong relationships with our
customers by offering from our view industry leading quality standards and excellent product performance.
We target customers in technically demanding niche product areas and we enjoy long-standing, strong and
expanding relationships especially with a number of leading companies in the FMCG sector, such as P&G,
Mars, Nestlé and Tyson. In 2010, approximately 90.7% of our sales were generated from sales of products
used as either packaging for, or films and film-based components in, FMCG. The remainder of our sales was
generated from other products for applications across multiple industries.
The following diagram shows a geographical breakdown of our sales for the calendar year ended
December 31, 2010 (in %):
Other
Asia/ Pacific 1.9%
10.9%
North
America
15.2%
Eastern
Europe
14.6%
Germany
33.1%
Western Europe
without Germany
24.3%
Strengths
We believe we have a number of competitive strengths that differentiate us from our competitors. These
include:
Attractive positions in growing markets. We believe we have attractive market positions within each
of our principal product areas. We are among the largest manufacturers in the fragmented European flexible
plastic consumer packaging market, with leading positions in the specific segments on which we are
focused, including a leading market position in petcare packaging in Europe. Within Hygiene, we are the
leading manufacturer of diaper closure systems globally, as well as the leading producer of silicone coated
films for individual sanitary napkins and we estimate that we account for approximately 70% of P&G’s
supplies with regard to their diaper products.
Superior relationships with globally leading manufacturers. We conduct substantial business with
the leading, global manufacturers of branded consumer goods, such as P&G, Nestlé, Mars and Tyson. We
have established strong and long-standing relationships with these blue chip customers by offering from our
view industry-leading quality, sophisticated technical solutions and outstanding product performance. We
focus on understanding customer needs and addressing them through product quality, innovation, technical
support and service. Therefore, we strongly link our research and development efforts with customer
requests and innovation. We develop new ideas and convert them into value-added products by working
closely with our customers to meet their specific needs, thus resulting in significant switching costs in terms
of investment and time for our customers. We generally enter into comprehensive framework agreements
with our major customers that range in length from one to three years or sometimes even longer or are
concluded for an indefinite period. Over the last ten years we have not lost any major customers.
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For the calendar year ended December 31, 2010, our top ten customers accounted for approximately
EUR 504.4 million, or 62.9%, of our sales. The table below presents information on our top 10 customers for
2010 in terms of sales.
Customer
Length of
relationship
37
29
Huhtamaki
Procter & Gamble
Avery Dennison
Svenska Cellulosa
Aktiebolaget (“SCA”)
Mars
UPM Raflatac
Nestle
Tyson
Bento/Ontex
Royal Canin
21
19
19
18
13
13
6
5
Endmarkets
Converting FMCG
Hygiene, Beauty & Healthcare,
Detergent & Cleansing Agents
Converting FMCG
Petcare and Garden Products,
Food
Hygiene
Converting FMCG
Petcare & Garden Products, Food
Food
Hygiene
Petcare & Garden Products
Vertically integrated world-class facilities with a global footprint. Our global platform is comprised
of 15 fully invested facilities located in eight countries across Europe, North America and Asia. Many of these
facilities are strategically located close to raw material access, connected to well developed infrastructure
and near the operations of key customers, enhancing our ability to provide a high level of customer service,
which establishes a competitive advantage in certain products and end-uses. We have made significant
investments in modern equipment to satisfy growing demand for products based on our advanced
technologies. Our capital expenditures totalled €162.0 million from 2006 to 2010, of which more than half
were used to expand our production capacity. We have concentrated capital expenditures on product areas
in which we have leading positions, technological advantages and high quality customer relationships. We
believe that our global footprint and high quality production capabilities will enable us to continue to take
advantage of attractive organic growth opportunities. Our key facilities in Gronau, Halle, Jackson, Poznan,
Barcelona and Szada have fully integrated SAP management information systems and all of our facilities are
ISO 9001 and with an exception of three facilities ISO 14001 certified. The ISO16001 certification is currently
under progress, with all but one facilities finalizing the SEDEX certification by 2013. Our facilities located in
the European Union that manufacture and process consumer packaging have received operational hygiene
management certifications and fulfill the highest hygiene and preventive food safety standards
(Packaging-Management of Hygiene in the Production of Packaging for Foodstuffs Standard DIN EN 15593).
In addition, many of our proprietary technological and manufacturing processes make it difficult for
competitors to replicate our product features. We believe we have also improved our cost position through
recent efficiency improvement programs such as the world class production programme “Six Sigma” across
all of our facilities. Furthermore, our continous improvement process is monitored via production key figures.
Technology and innovation leadership. We believe we are a leader in film, in particular in high
performance films, as well as flexible packaging technology, focusing substantial resources on our research
and development platform to maintain our competitive advantage. We currently have more than 115 new
products under development. We operate a centralized research and development centre in Gronau,
Germany, which houses state-of-the-art equipment to support the activities of our scientists, engineers and
technical personnel. We believe our technology and innovation capabilities enable us to establish leading
positions in technically demanding product areas, including diaper components, siliconized film used in
femcare hygiene products and free-standing, four-walled pouches (FlexZiBox). Our ability to provide our
customers with end-product differentiation and production optimization is a key factor in enabling us to
sustain a pipeline of products with significant growth potential and attractive margins. Although our
components and packaging form an integral part of our customers’ end products, they typically account for a
relatively small portion of the total cost of the end product. In general, we believe the cost of our products
accounts for less than 3% of the retail price of our customers’ end products. We believe our product
development capabilities, high quality products and business continuity are key factors in our ability to
maintain long term customer relationships.
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52
Track record of EBITDA growth and cash generation. Historically, our business has generated a
significant amount of cash, with our gross cash flow (Adjusted EBITDA less total capital expenditures) more
than doubling over the three-year period from 2008 to 2010 as a result of our continued focus on operational
efficiencies and prudent spending of capital expenditures. In addition, we eliminated low-margin products
from our portfolio and divested underperforming and non-core facilities. Despite our focus on improving our
working capital metrics we incurred more working capital during 2010 due to higher resin prices and higher
volumes. In addition, we have a flexible cost structure and estimate that variable costs represented
approximately 84% of our cost base in 2010. Our maintenance capital expenditures are relatively low
compared to our total capital expenditures. We generated significant gross cash flow during the recent
economic crisis. Despite significant fluctuation in prices of polyethylene resins (our main raw material) in
recent years, we have been successful in substantially mitigating the effect of rising resin prices due to the
resin cost pass-through provisions in our framework agreements that cover a substantial proportion of our
sales. In 2010, approximately 75% of our sales were made under framework agreements that include a resin
cost pass-through provision. These provisions automatically adjust our selling prices, subject to a one to six
month time lag (with an average time lag of three months), as a result of changes in spot prices in the resin
market. Over the three-year period from 2008 to 2010, our gross profit per kg sold increased from EUR 0.52
to EUR 0.60 per kg while polyethylene resin prices experienced sharp fluctuations.
Strong future sales visibility and profit growth potential. Given our significant number of framework
agreements and strong long-term customer relationships, our prediction of future sales in the past has been
accurate. Historically, volumes with our long-term customers have generally exceeded contractual volume
commitments. We believe we are well positioned to achieve attractive sales growth due to: (i) our established
platforms in growing markets, including Eastern Europe and Asia; (ii) our strong existing relationships with
key customers; (iii) our recently installed capacity and additional near-term expansion projects that address
specific customer and product opportunities; and (iv) anticipated global market share growth of certain of our
existing customers and (v) value accretive acquisitions in niche, non-consolidated segments.
Experienced and committed management team. Our management team has extensive experience in
specialty films, film-based components, industrial packaging and flexible consumer packaging and a proven
track record of successfully developing and expanding our operations. Each member of our senior
management team has been with us between 15 and 20 years. Our management team has demonstrated
both an entrepreneurial mindset in implementing a number of growth initiatives and an ability to execute
operational improvements to enhance profitability. Furthermore, our senior management is complemented by
a strong team of local operating managers with extensive experience and in-depth knowledge of the
packaging industry, together with customer relationships at the local and country level. Senior and local
management, together with employees, have developed seven shared values that frame our corporate
culture: partnership, global, independence, quality, innovation, flexibility and passion for excellence.
Strategy
We have leveraged our competitive strengths to pursue attractive product areas. Our product innovation
expertise, high quality customer base and manufacturing excellence have enabled us to successfully enter
new markets and achieve attractive volume growth in core markets. The key elements of our business
strategy are:
Continue to focus on technology and innovation. We believe our team of research and development
professionals, with state-of-the-art laboratory facilities and deep materials science and process know-how,
enables us to work closely with technical specialists in our plants and with customers to develop new
products and technologies. We intend to seek opportunities to supply technically demanding solutions in
order to capitalize on our manufacturing capabilities and concentrate on segments in which expertise and
quality are highly valued by customers. We will supplement our in-house developments with technological
capabilities obtained from third parties through corporate acquisitions or by licensing technologies. We
currently have over 115 new products under development. Our new product pipeline will increase the
percentage of our sales from products that are less than five years old. In addition, we will continue to
innovate and improve existing products and technologies to prevent commoditization and we closely monitor
and respond to current market trends, such as shift of paper packaging to plastic packaging, wet food to dry
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53
food and rolled stock to premade bags. For example, we recently introduced FlexZiBox, an innovative
packaging product historically used for pet food, into the human food market. Further, we believe we can
extend our product lifecycles by migrating mature product lines to facilities in low cost countries and
introducing them to emerging market economies.
Maximize opportunities with existing customers by replicating the P&G relationship model. We
believe our technical expertise and global reach enables us to capture incremental product and geographic
opportunities with multinational customers, including expanding into new regions with our global customers.
For example, P&G has grown to be our largest customer over the past two decades, with our sales to P&G
increasing nearly 2.5-fold from approximately EUR 114.0 million in 2000 to EUR 288.8 million in 2010. The
growth and development of our relationship with P&G is derived from our focus on four areas: (i) product
differentiation and joint development efforts; (ii) the expansion of our global manufacturing capabilities;
(iii) the ability and technical expertise to follow P&G into new product areas; and (iv) the extension of product
life cycles through the development of multiple generations of products. We are translating this model to our
existing relationships with other blue-chip multinational customers, such as Mars, Nestlé and Tyson.
Continue expansion into strategic markets. We will continue to extend our operations in strategic
markets based upon an analysis of the market opportunities, competitive landscape and the needs of our
existing blue chip customers. For example, Russia is a highly fragmented market with only a small number of
packaging companies with production technologies as advanced as those in Western Europe. As Russian
lifestyles more closely mirror Western societies, we believe the demand for flexible packaging products will
increase. We have recently completed an expansion program to address current demand from local
customers in Russia and the anticipated opportunities with multinational customers as they expand into the
Russian market. In addition, we have a world-class facility in Poznan (Dopiewo), Poland in which we
continue to invest in order to address an increasing flow of attractive opportunities with local and
multinational customers. Furthermore, we also currently operate facilities in China, Hungary and Malaysia.
We plan to increase our commitment within the Asia Pacific region by entering selected markets with
technically demanding, high-margin products, such as hygiene product components, in order to benefit from
regional market growth and demographic developments and to increase our substantial business footprint in
North America.
Maximize profitability and cash flow generation. We intend to pursue various initiatives designed to
continue to reduce costs, increase sales and improve working capital in order to maximize our profitability
and cash flow generation. Our competitiveness and long-term profitability are, to a significant degree,
dependent upon our ability to keep costs under control (including the costs of raw materials, labour,
consumables such as power and transport) and maintain efficient operations. As part of those initiatives, we
plan to continue to work to reduce our overhead costs, improve our procurement process and realize
operating efficiencies. Our production costs are also significantly affected by production volumes and,
therefore, we also plan to pursue increased production levels and maximize capacity utilization. With respect
to sales, we intend to focus on manufacturing technologically demanding products, which generate higher
margins, and progressively reduce the manufacturing of less profitable commoditized products. With respect
to working capital, we will continue to seek to improve payment terms, collections and inventory
management.
Pursue strategic acquisitions. We intend to opportunistically pursue selective acquisitions which
provide new customers and/or new technologies, and which are operationally compatible with our business.
We will continue to maintain an active dialogue with a number of family-owned businesses known to our
management that would be good strategic fits for our business, particularly in the fragmented packaging
segments in parts of Europe, Russia, Asia, North America and Latin America.
History
Our business was founded in Steinfeld, Germany in 1966. For the next two decades, we focused on
developing products for our domestic market, building technical expertise and developing a strategy to
expand internationally. In 1987, we acquired our manufacturing facilities in Halle and Gronau, Germany,
which significantly increased our geographic scope and production capabilities.
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54
In 1988, we launched our international expansion efforts with our first overseas manufacturing facility in
the United States in Jackson, Missouri. Over the next two decades, we significantly expanded our
international presence through greenfield investments and acquisitions. In 1993, we opened manufacturing
facilities in Spain and Hungary, which represented our first European manufacturing facilities outside of
Germany. In 1996, we established a new manufacturing facility in Poland, and in the following year we
entered into a joint venture in China. In 1998, we opened a second manufacturing facility in Poland and
acquired a 50% interest in a Malaysian entity. We further expanded our global reach in 2003 with the
acquisition of our Russian facility. In 2007, we acquired 100% control of our Malaysian operations from our
joint venture partner.
Since 2006, we have been majority owned by the Oaktree entities. Since that time, we have made
significant investments to expand our manufacturing facilities in Germany, Poland and Russia, and
refocused and refined our global footprint by divesting a number of under-performing facilities and
businesses, including those in Canada, France, the Netherlands and Morocco. Throughout our expansion,
we have continued to apply our technical and manufacturing expertise across all of our global operations.
We believe we have developed a global footprint of high-class facilities throughout Western and Eastern
Europe, North America and Asia. We benefit today from the rigorous and consistent application of our
technical and manufacturing expertise throughout our global operations.
Operations
We act as holding companies for 15 operating facilities located in eight countries across Europe, North
America and Asia. Six facilities are located in Germany, one in Spain, one in Hungary, two in Poland, one in
Russia, one in the United States, two in Malaysia and one in China. The manufacturing facilities in Europe
are located in close proximity to numerous customers, while the facilities in Eastern Europe and Asia provide
access to low cost production and high growth markets. We believe we are well positioned to service the
geographic growth of existing customers and access new customer demand in local markets while
maintaining a production cost advantage. The facilities have advanced capabilities enabling us to
concentrate on highly developed specialty films, film-based components, industrial packaging and
customized packaging solutions for the most attractive segments of the market. For operational and
management purposes, our operating companies are grouped into two divisions based on product focus: the
AFC division and the CFP division. The activities of both divisions are based primarily on our core technology
and production capabilities in film and film-based products for multinational and regional customers
manufacturing products for a variety of end uses.
The following diagram shows a geographical breakdown of our sales for the calendar year ended December
31, 2010:
Other
Asia/ Pacific 1.9%
10.9%
North
America
15.2%
Eastern
Europe
14.6%
54
Germany
33.1%
Western Europe
without Germany
24.3%
55
Our Endmarkets
Our divisions operate in the following endmarkets.
Hygiene. In the Hygiene-endmarket we supply film-based hygiene components to multinational
producers of diapers and sanitary napkins. We specialise in elastic diaper components and mechanicaldiaper fastening systems where we both hold a global leading position. Our technological advanced films
provide our customers with the needed characteristics to optimise their products and maximise processing
speed. In addition, we supply siliconized films for individual sanitary napkins. We also provide wicket bags
and bundle films for the outer packaging of hygiene products, especially for baby and femcare applications.
Our key customers are Bento, P&G and SCA and our key competitors in this endmarket are 3M, Aplix and
Clopay. The last three years in the Hygiene endmarket showed a steady and continous growth throughout
the global financial crisis. 2010 displayed an even stronger growth which shows the potential of this
endmarket. Within the Hygiene endmarket, we plan to maintain our market position in Europe and North
America and to increase penetration in key growth markets like Asia and Eastern Europe.
Converting FMCG. In the endmarket Converting FMCG, Nordenia mainly supplies label films, primarily
used for labelling consumer packaging products such as shampoo bottles, soap packaging and deodorants,
and laminating films for use in consumer packaging products.
Our label films are made out of polyolefins and are delivered as roll-stock. In order to improve printability,
our labels can additionally be top coated. A special kind of label film is the “VIP” label (variable information
printing) which can be printed using the ink-jet and thermo transfer methods and thus offer the opportunity to
provide each label with individual additional information, e.g. logistic information. Customers of our label films
are printers and producers of ready to use labels.
Our coextruded laminating films provide different characteristics based on the designed purpose: barrier
films protect products from drying out, prevent the intrusion of moisture, oxygen, light, smells and the loss of
flavor. Barrier films are also used as tube laminating films and as anti-fog surfaces to avoid condensation.
Our special peel films guarantee a safe and, at the same time, easy-to-open packaging. With re-closeable
films, customers can open and reclose the packaging in a convenient way and keep the products longer
fresh. Customers of our laminating films are mainly packaging converters which produce complete packaging
solutions.
Our key customers are Avery Dennison, Huhtamaki and Sichtpack and our key competitors in this
endmarket are Bemis, Orbita and RKW. The Converting FMCG endmarket showed reduced sales in 2009
due to lower resin prices and the economic downturn but new contracts with global customers in 2010 led to
significant increased volume and sales. In addition, our cost management, new product development and the
elimination of low performing products were key factors to manage such crisis. Within the Converting FMCG
endmarket, we intend to maintain our strong position in laminating films in Western Europe and in label films
in Europe and North America and to increase our market presence in laminating films in North America and
Eastern Europe and in label films in Asia and Latin America in the upcoming future.
Food. Within the Food endmarket, Nordenia supplies both multilayer and mono layers packaging. The
material used depends on the different needs such as barrier or mechanical properties related to filling
goods as well as to the filling line equipment of the customer. The structures we produce cover a very broad
range of applications. From triplex laminates for coffee or culinary applications to duplex structures for
dehydrated products and snack food applications as well as mono materials with or without cold seal for the
confectionary business. Almost all products are printed in either rotogravure or flexographic printing. The
biggest part of the food business is supplied as roll-stock material and will be converted into the final
packaging during the filling process at the customers premises (form, fill and seal technology). In addition,
Nordenia also produces pre-made bag solutions such as stand-up pouches and FlexZiBoxes with different
easy-opening and re-closure systems for the chicken industry and rice market. Our key customers are
Nestlé, Perdue and Tyson and our key competitors in this endmarket are Amcor, Bemis and Huhtamaki.
Difficult market surroundings led to a slight sales drop in the Food endmarket in 2009. Due to price
concessions with a key customer in the US market to secure volume on a multi year basis showed first
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effects on the 2010 sales figures. In addition, we undertook a strong focus on product innovation and a Food
endmarket oriented investment strategy. We seek to further follow our growth strategy within the Food
endmarket with existing global food segment customers and to realize growth opportunities within the CEE
region, mainly Russia.
Petcare & Garden Products. In the endmarket Petcare & Garden Products, Nordenia produces printed
laminates delivered as roll-stock and premade bags (FlexZiBox, FlexBox, NordiBags) with different features
such as easy opening and re-closure systems (slider, zipper) as well as handle applications. Within the
petcare market, we produce for both the dry petfood and cat litter products. In the endmarket for garden
products we mainly supply stand-up pouch solutions. In all cases, the products for this segment are printed.
Our key customers are Mars, Nestlé and Royal Canin and our key competitors in this endmarket are Bischof
+ Klein, Exopack and Veriplast. Within the Petcare & Garden Products endmarket, we had a strong
performance in 2010 with a leading petfood company by launching a new packaging concept. In addition, we
gained new customers by introducing a completely new packaging concept for cat litter in the US market. We
plan to increase our positioning in the highest growth markets (Europe, Russia, North America) in the future.
Beauty & Healthcare, Detergent & Cleansing Agents. Our key products within the Beauty & Healthcare,
Detergent & Cleansing Agents endmarket are printed packaging for wet wipe applications (babycare and
facial), as well as triplex structures for sachet applications for hair coloration. Due to the very demanding
product content (oil wipes, aggressive coloration), these products require special barrier properties and high
resistance. Nordenia’s customized PE solutions fulfill those requirements along with customer filling line
needs. We supply the Beauty & Healthcare, Detergent & Cleansing Agents endmarket with printed roll-stock
laminates for refill packaging for detergent powder as well as with mono web packaging with or without cold
seal for dish washing and textile washing tablets. Furthermore, Nordenia produces lid film packaging for
blister applications (toilette blocks) as well as printed laminates for floor wipes and refill packaging for liquid
soap. Our key customers are Henkel, Johnson&Johnson and P&G and our key competitors in this
endmarket are Amcor, Bischof + Klein and Korozo. We lost market volume within the wet wipe segment
(mainly local players in Western Europe). In addition, the market surrounding for the detergent powder
business is challenging within the CEE environment. We were recently able to compensate those losses with
our new business volume in the growing market for hair coloration. Our current business plan foresees to
secure business volumes within the Beauty & Healthcare, Detergent & Cleansing Agents endmarket with
multinational corporations with regard to the wet wipe segment by pro-active innovation management, to use
cross-selling opportunities and to leverage low cost production to provide value-added products to our
customers. In addition, we plan to introduce a new packaging concept for liquid detergent into the market,
called the “NorSpoutBag”.
Industrial and Other. Within the Industrial endmarket, we produce temporary surface protection films,
which protect sensitive surfaces (plastic sheets, aluminium, displays or optical lenses) during production,
transportation and storage against dirt, moisture and scratches. These films can be delivered with several
adhesion systems for residue-free removal. Permanent surface protection films are used as decorative
finishings or substitute primer coatings. Flexible intermediate bulk containers are mainly used for
transportation in the chemical industry, e.g. for resins, fertilizers or initial chemical products. Our Form, Fill &
Seal films are delivered as roll-stock and are used for bulk material such as resins or powdery chemicals.
Our key customers are BASF, Exxon Mobil and Johnson Controls and our key competitors in this endmarket
are Greif Group, Novacel and S.L. Packaging. In the Industrial endmarket, sales decreased in 2009 due to
the financial downturn and falling raw material prices. In 2010, new product developments in surface
protection films and further acquisition of new customers led to a strong growth in sales and volume. We
seek to increase our market penetration in the automotive industry, to continue to develop innovative
products and to maximize our global footprint for local supply and selling in the near future.
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The tables below present the sales volumes by endmarkets, the percentage of sales volumes by
endmarkets the sales by endmarkets, the percentage of sales by endmarkets and geographic regions for our
Group for each of the periods presented:
Sales volume by endmarkets
2010
2009
(in tons)
Endmarkets
2008
(unaudited)
Hygiene ..........................................................
Converting FMCG ..........................................
Food ...............................................................
Petcare & Garden Products ...........................
Beauty & Healthcare, Detergents &
Cleansing Agents...........................................
Industrial.........................................................
Other ..............................................................
Total...............................................................
78,855
65,178
19,784
13,651
68,316
55,495
18,392
10,485
64,156
63,937
19,223
10,705
13,692
12,944
16,114
16,885
33,275
241,320
16,402
29,375
211,409
17,628
18,734
210,498
Percentage of sales volume by endmarkets
2010
2009
2008
(in %)
Endmarkets
(unaudited)
Hygiene ..........................................................
Converting FMCG ..........................................
Food ...............................................................
Cleansing Agents...........................................
Industrial.........................................................
Other ..............................................................
Total...............................................................
32.7
27.0
8.2
5.7
32.3
26.3
8.7
5.0
30.5
30.4
9.1
5.1
5.7
6.1
7.7
7.0
13.8
100.0
7.8
13.9
100.0
8.4
8.9
100.0
Sales by endmarkets
Endmarkets
2010
2009
2008
(unaudited)
Hygiene ..........................................................
Converting FMCG ..........................................
Food ...............................................................
Cleansing Agents ...........................................
Industrial.........................................................
Other ..............................................................
Total...............................................................
57
358,860
141,008
88,896
86,807
51,657
306,205
105,192
80,122
64,126
49,546
295,540
145,607
87,028
63,743
63,827
46,598
27,670
801,497
38,628
19,835
663,654
48,391
32,205
736,341
58
Percentage of sales by endmarkets
Endmarkets
2010
2009
(in %)
2008
Hygiene ...........................................................
Converting FMCG ...........................................
Food ................................................................
Petcare & Garden Products ............................
Cleansing Agents............................................
Industrial..........................................................
Other ...............................................................
Total................................................................
44.8
17.6
11.1
10.8
46.1
15.9
12.1
9.7
40.1
19.8
11.8
8.7
6.4
7.5
8.7
5.8
3.5
100.0
5.8
3
100.0
6.6
4.4
100.0
(unaudited)
Percentage of sales by geographic region
2010
2009
2008
(in %)
Geographic Region
(unaudited)
Germany ........................................................
Western Europe (excluding Germany) ..........
Eastern Europe ..............................................
North America ................................................
Asia/Pacific ....................................................
Other ..............................................................
Total...............................................................
33.1
24.3
14.6
15.2
10.9
1.9
100.0
33.3
25.0
16.4
14.4
9.3
1.6
100.0
34.0
23.6
19.6
13.6
7.4
1.8
100.0
Advanced Films & Components Division
The AFC division operates eight facilities: four in Germany, two in Malaysia and one in each of Poland
and China. This broad geographic footprint provides a flexible and balanced manufacturing platform. The
AFC division has developed long-term relationships with its key customers, developing these relationships
through a consistent focus on customized solutions to help customers differentiate their products. Our largest
customer for the AFC division is P&G, accounting for 39.1% of its sales for the calendar year ended
December 31, 2010.
The AFC division manufactures value added specialty films, film-based components and industrial
packaging solutions mainly for the Hygiene, Converting FMCG and Industrial endmarkets. For the calendar
year ended December 31, 2010, 57.6% of sales were attributable to sales in the Hygiene endmarket with
another 25.7% of sales being attributable to sales in the Converting FMCG endmarket while 7.7% of sales
result from the Industrial endmarket.
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The tables below present the sales volumes by endmarkets, the sales by endmarkets, the percentage of
sales by endmarkets and geographic regions for the AFC division for each of the periods presented:
Sales volume by endmarkets in AFC
2010
2009
2008
(in tons)
Endmarkets
(unaudited)
Hygiene...........................................................
Converting FMCG...........................................
Food................................................................
Petcare & Garden Products............................
Cleansing Agents............................................
Industrial .........................................................
Other ...............................................................
Total ...............................................................
62,564
59,617
2,770
2,736
52,283
51,100
3,075
1,310
46,590
59,328
2,955
957
3,176
14,158
24,883
169,931
1,925
14,433
23,789
147,914
3,021
14,677
14,130
141,659
Sales volume in thousands of euro by
endmarkets in AFC
2010
2009
2008
Endmarkets
(unaudited)
Hygiene ..........................................................
Converting FMCG ..........................................
Food ...............................................................
Industrial.........................................................
Other ..............................................................
Total...............................................................
293,642
130,910
8,002
6,628
245,799
98,942
8,194
3,505
227,722
137,817
8,675
2,778
5,720
39,366
25,922
510,191
2,973
33,690
20,508
413,613
5,850
40,500
31,644
454,986
Percentage of sales by endmarkets in AFC
2010
2009
2008
(in %)
Endmarkets
(unaudited)
Hygiene ..........................................................
Converting FMCG ..........................................
Food ...............................................................
Industrial.........................................................
Other ..............................................................
Total................................................................
59
57.6
25.7
1.6
1.3
1.1
59.4
23.9
2.0
0.8
0.7
50.1
30.3
1.9
0.6
1.3
7.7
5.1
100.0
8.1
5.0
100.0
8.9
7.0
100.0
60
Percentage of sales by geographic region in
AFC
2010
2009
2008
(in %)
Geographic Region
(unaudited)
Germany ..........................................................
Western Europe (excluding Germany) ............
Eastern Europe ................................................
North America ..................................................
Asia/Pacific ......................................................
Other ................................................................
Total
46.5
19.6
10.6
4.3
17.1
1.9
100.0
47.6
20.4
12.5
3.5
14.9
1.1
100.0
48.0
20.7
14.7
3.1
11.9
1.5
100.0
Consumer Flexible Packaging Division
The CFP division is a fully integrated manufacturer of flexible consumer packaging. It focuses on
developing and supplying customized packaging solutions for multinational and regional customers
manufacturing products for a variety of end uses.
The CFP division operates seven facilities of which two are located in Germany and the further facilities
are located in Spain, Hungary, Poland, Russia and the United States. Its facilities have advanced capabilities
enabling us to concentrate on value-added packaging solutions for the most attractive segments of the
market. The facilities are located in close proximity to customers and in geographies with favourable
underlying growth rates. We enjoy long-standing relationships with many of our key customers, many of
whom have been customers for more than 20 years. Our largest customers for the CFP division are, in
alphabetical order: Mars, Nestlé, P&G and Tyson Foods. The CFP division’s largest customer is P&G, which
accounted for approximately 27.4% of its sales for the calendar year ended December 31, 2010.
Due to the well balanced product portfolio within the CFP business risks related to market dependencies
are limited. The CFP division manufactures a wide variety of packaging products primarily for use in four
endmarkets: Hygiene, Food, Petcare & Garden Products, Beauty & Healthcare, Detergent & Cleansing
Agents. For the calendar year ended December 31, 2010, 27.2% of sales were attributable to the Hygiene
endmarket, 26.6% to Petcare & Garden Products endmarket 24.8% to the Food endmarket and 14.1% to the
Beauty & Healthcare, Detergent & Cleansing Agents endmarket.
The tables below present the sales volume by endmarkets, the sales by endmarkets, the percentage of
sales by endmarkets and the geographic regions for the CFP division for each of the periods presented:
Sales volume by endmarkets in CFP
2010
2009
2008
(in tons)
Endmarkets
(unaudited)
Hygiene ............................................................
Converting FMCG ............................................
Food .................................................................
Petcare & Garden Products .............................
Cleansing Agents.............................................
Industrial...........................................................
Other ................................................................
Total..................................................................
60
20,496
6,054
17,067
13,614
20,432
4,679
15,337
10,491
21,997
4,884
16,316
10,704
10,566
3,369
10,067
81,234
11,101
2,799
8,158
72,998
13,094
3,579
6,794
77,367
61
Sales by endmarkets in CFP
2010
2009
Endmarkets
2008
(unaudited)
Hygiene ...........................................................
Converting FMCG ...........................................
Food ................................................................
Petcare & Garden Products ............................
Cleansing Agents ............................................
Industrial..........................................................
Other ...............................................................
Total................................................................
88,713
12,231
81,054
86,740
83,057
7,934
72,120
64,236
90,038
9,546
78,477
63,740
46,040
8,193
3,290
326,261
46,766
6,017
2,473
282,602
57,997
9,059
3,791
312,649
Percentage of Sales by Endmarkets in CFP
2010
2009
2008
(in %)
Endmarkets
(unaudited)
Hygiene(1) .........................................................
Converting FMCG............................................
Food.................................................................
Petcare & Garden Products.............................
Cleansing Agents.............................................
Industrial ..........................................................
Other ................................................................
Total ................................................................
27.2
3.7
24.8
26.6
29.4
2.8
25.5
22.7
28.8
3.1
25.1
20.4
14.1
2.5
1.0
100.0
16.5
2.1
0.9
100.0
18.6
2.9
1.2
100.0
(1) Includes diaper components for the Spanish and U.S. markets.
Percent of sales by geographic region in
CFP
2010
2009
2008
(in %)
Geographic Region
(unaudited)
Germany ..........................................................
Western Europe (excluding Germany) ............
Eastern Europe ................................................
North America ..................................................
Asia/Pacific ......................................................
Other ................................................................
Total..................................................................
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12.0
33.3
19.7
33.4
0.0
1.6
100.0
11.6
33.4
20.9
32.1
0.0
2.1
100.0
12.6
30.0
25.1
30.1
0.1
2.1
100.0
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Manufacturing Processes
The principal manufacturing processes that we utilize in the production of our products are summarized
below.
Compounding and blending. Compounding and blending is the addition of two or more resins, materials
or ingredients to a resin. This process changes the characteristics of a given resin and differentiates resins
for the end-use products for which they are used. We are able to create proprietary resin recipes through
the compounding and blending process due to our research and development capabilities, raw materials
know-how and sophisticated manufacturing infrastructure. We monitor the quality of raw materials in our
facilities, and if sufficiently high quality base materials are not available on the open market, we make use of
our own laboratory facilities to compound and blend resins.
Extrusion. Extrusion involves melting resins and forcing the molten polymer through a die to form plastic
film. The film can be single-layer or multi-layer and can be in the form of a tube in the case of blown
extrusion or in the form of a sheet in the case of cast extrusion. The film produced in the blowing and
casting process is rapidly cooled and wound onto reels ready for printing, converting and finishing. We
believe we operate some of the packaging industry’s largest and most sophisticated extruders. Our
extruders incorporate continuous measurement of film composition and thickness with the ability to make
real-time adjustments to critical extrusion process parameters.
Conversion. Following the extrusion process, we convert the plastic film into the form required by our
customers by performing one or more of the following actions: printing, coating, laminating or roll-slitting the
film, or producing bags or pouches using the film. Printing can involve either flexographic printing or
rotogravure printing. Flexographic printing uses a roller with a rubber-like surface coated with quick-drying
ink and is typically used in connection with printing flexible packaging for confectionary, frozen food and
household products. Rotogravure printing uses etched metal cylinders to apply ink directly to plastic film to
reproduce a high-quality printed image and is typically used on high-quality flexible packaging. Coating is a
process in which a thin chemical layer is applied to a film surface. We have developed a cost effective way
of coating large surfaces with silicone, which is a key technology for femcare hygiene products. In many of
our products, we laminate base films onto a variety of other materials, such as polyester, polyamide,
polypropylene, woven and non-woven materials and aluminum. Roll-slitting involves cutting roll-stock into
smaller rolls for use by customers. This allows for efficient manufacturing of larger master rolls and a high
degree of customization by adjusting roll dimensions to customers’ packaging requirements. We also
produce bags and pouches to customer specifications in a variety of formats, including the FlexZiBox. Bags
and pouches can be customized by adding zippers, sliders, handles, laser cuts and other features. Finally,
unused or residual film is recycled to reduce our raw materials consumption.
Marketing, Sales and Competitors
As of December 31, 2010, we employed approximately 186 sales and marketing professionals, 78 of
whom worked within the Advanced Films & Components division and 98 of whom worked within the
Consumer Flexible Packaging division and 10 of whom worked within the Services division. We utilize key
account managers who act as central contacts for multinational customers to which we supply large volumes
of products from multiple facilities or which represent potential development opportunities for future business.
With respect to our relationship with P&G, our sales and marketing activities are managed by our CEO and a
senior account manager based in Cincinnati, Ohio. Our other sales and marketing activities are generally
decentralized and supervised at the individual plant level, where our local sales force serves customers by
end-product and reports to the country manager for the particular facility.
Competitors to our business are specific to each of the markets in which we operate. There is no single
competitor with which we compete across all of our markets. Competition in the markets in which we operate
is based principally on quality, product performance and characteristics, service and price. There are
additional competitive pressures in some sectors due to increasing consolidation among our customers.
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With respect to higher margin value-added products, we believe that our competitive strength derives
from factors such as technological competence and support capability, product innovation and diversity, and
our ability to produce sophisticated products tailored to the specific needs of our customers and to deliver
time-sensitive products in an efficient manner. In addition, we work closely with our customers in developing
their products and it can often be costly for them to change suppliers. With respect to higher volume
products, our focus is on service, quality and price. This creates market entry barriers for competitors.
Raw Materials
The principal raw material used in our products is polyethylene resin. Other raw materials include nonwovens, purchased films, fabrics, inks, adhesives and transit packaging materials. Most of our raw materials
requirements are sourced on the open market from global leading and high quality suppliers. Although each
of our operating subsidiaries is responsible for its own raw material purchases, a lead buying organization
coordinates the group-wide purchasing of key raw materials and is responsible for consolidating and
negotiating terms and conditions with suppliers. Over the last three years, we purchased an average of
172,000 tonnes per year of resin for our operations. As a significant buyer of resins, we are able to negotiate
attractive and flexible terms with our suppliers, such as volume discounts and annual rebates. We generally
do not enter into supply contracts for raw materials or purchasing obligations, however, some of our
businesses enter into framework purchase arrangements to secure volume discounts. Raw materials
comprise a significant portion of our cost. For the calendar year ended December 31, 2010, our raw material
cost represented 66.2% of our total cost.
The raw materials we use are mainly commodity materials with readily available supply, provided by a
large number of suppliers. Accordingly, although we promote long-term partnership relationships with
suppliers, we do not have significant supplier dependencies. For the calendar year ended December 31,
2010, our largest supplier represented 11.0% of our total cost of sales.
The following diagram shows our raw material procured by cost in 2010:
Inks &
solvents
6.2%
Other
0,9%
Adhesives
6,9%
Fabrics/ nonw ovens
16.4%
Resin,
batches &
additives
53.2%
Purchased film
16.4%
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Framework Agreements
Across each of our divisions, we typically enter into framework agreements with our customers that
provide for specific pricing, quality standards and other commercial terms. These framework agreements
generally have terms ranging from one to three years, with certain agreements with significant customers
having longer periods. These agreements do not obligate our customers to purchase any minimum number
of our products or to continue to purchase some or all of their requirements from us for any specific period of
time. Historically, we have generally entered into similar agreements with updated terms upon the expiration
of the existing agreements.
In each of these framework agreements, we seek to include a resin cost pass-through provision, which
automatically adjusts our selling prices as a result of changes in the price we pay for polyethylene resin.
There is typically a time lag between changes in the market price for resin and the corresponding changes in
our selling prices under contracts containing pass-through provisions, which time lag ranges from one to six
months. During 2010, approximately 75% of our sales were made under agreements that contain a resin
cost pass-through provision, which had an average time lag of approximately three months. As a result of
these resin cost pass-through provisions, we have been successful in mitigating to a significant degree the
effect of volatile resin costs that has occurred over the last couple of years. From 2006 to 2010, our annual
gross margin ranged from 14.9% to 18.7% while polyethylene resin prices experienced significant
fluctuations. With respect to sales made under agreements that do not contain resin cost pass-through
provisions, our ability to pass through changes in the market price for resin is generally subject to
competitive market conditions at that time.
Research and Development, Patents and Licenses
Each of our divisions is supported by Nordenia Technologies GmbH, our research and development unit.
We have 51 professionals dedicated to research and development. Our strong research and development
capabilities allow us to undertake development projects for and/or together with our customers, which in turn
continues our drive toward more advanced, higher value-added projects and ensures strong relationships
with our customers.
We own 127 patents, 238 patent applications and 14 utility models. Our patents are granted in
approximately 24 different countries worldwide, including Germany, the United States, Japan, the United
Kingdom and several other European countries.
When appropriate, we license a portion of the technology that we use in certain of our products. Our
most significant license agreements are with P&G and Clopay and relate to technology that we use in the
manufacture of products we produce for those customers, which include our diaper components. In addition,
we have two license agreements with Hudson-Sharp with respect to components used in our FlexZiBox
packaging product. Of our four principal license agreements, three of them continue for the life of the
underlying patent and our license agreement with Clopay can be terminated by them on six months notice.
Our license agreements are typically non-exclusive.
Property, Plant and Equipment
Our manufacturing facilities are located in China, Germany, Hungary, Malaysia, Poland, Russia, Spain
and the United States. We occupy 15 principal facilities totalling approximately 565,266 square meters. We
own substantially all of our principal facilities. We believe that our facilities are suitable and adequate for our
business purposes for the foreseeable future.
Our corporate headquarters is located in Greven, Germany and we maintain information technology
facilities in Barleben and Steinfeld, Germany. Our most significant manufacturing facility is located in
Gronau, Germany, with sales from this facility accounting for approximately 51.0 % of our sales for the period
2010. We also maintain administrative offices at our Gronau facility. The table below lists certain
information about our principal manufacturing facilities.
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Location
Leased/Owned
Division
Endmarkets
Approximate
square
meters
Owned (1)
Advanced Films &
Components
Food
20.620
Owned/Leased
Advanced Films &
Components
100.880
Osterburken
Owned
Lohne
Leased
Emsdetten
Owned
Halle
Owned
Steinfeld
Owned
Advanced Films &
Components
Advanced Films &
Components
Advanced Films &
Components
Consumer
Flexible
packaging
Consumer
Flexible
packaging
Hygiene, Converting FMCG, Petcare &
Garden Products, Beauty & Healthcare,
Detergent & Cleansing Agents, Industrial,
Other
Converting FMCG, Other
China
Dalian
Germany
Gronau
Hungary
Szada
Malaysia
Chemor
Siput
Poland
Starogard
Poznan
Russia
Pereslavl
24,002
Industrial
6,235
Industrial, Other
24,787
Hygiene, Food, Petcare & Garden Products,
Beauty & Healthcare, Detergent & Cleansing
Agents, Industrial
Food, Petcare & Garden Products
21,995
32,709
Owned/Leased
Consumer
Flexible
packaging
Hygiene, Converting FMCG, Food, Petcare &
Detergent & Cleasing Agents
118,970
Owned
Advanced Films &
Components
Advanced Films &
Components
Industrial
18,525
Hygiene, Food, Other
8,852
Industrial
27,710
Food, Petcare & Garden Products, Beauty &
Healthcare, Detergent & Cleansing Agents
34,068
Owned
Owned
Advanced Films &
Components
Consumer
Flexible
packaging
Owned
Owned
Consumer
Flexible
packaging
Food, Petcare & Garden Products, Beauty &
Healthcare, Detergent & Cleansing Agents
42,660
Owned (2)
Consumer
Flexible
packaging
Hygiene, Converting FMCG, Food, Beauty &
Healthcare, Detergent & Cleasing Agents
35,030
Owned/Leased
(3)
Consumer
Flexible
packaging
Hygiene, Converting FMCG, Food, Petcare &
Detergent & Cleasing Agents
48,223
Spain
Barcelona
United States
Jackson
(1)
(2)
(3)
Facility is owned by our China joint venture, of which we own 50% of its outstanding equity interests.
We own a 10.4% minority interest in the entity that owns our facility in Barcelona, Spain. We consolidate this entity with
our operations for accounting purposes due to our significant control over its operations.
This facility is subject to a sale and leaseback arrangement. Upon the expiration of the finance lease in 2012, we have the
option to repurchase the facility and the other leased assets for nominal consideration.
We develop and maintain our facilities with modern equipment and extensive technical capabilities. Our
production lines are developed with industry leading machine suppliers and assemblers, and in many cases,
our own specialist engineers carry out extensive customization of the base equipment to create a proprietary
manufacturing process. We perform ongoing and regularly scheduled maintenance on each of our facilities
and we have never experienced an unplanned plant shut-down or material interruption in our operations due
to equipment failures.
All of our facilities are certified to ISO 9001 standards and all but three of our facilities are certified to
ISO 14001 standards. The ISO 9001 standard sets provisions for developing, implementing and maintaining
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an effective quality management system. The ISO 14001 standard sets provisions for compliance with
applicable environmental and safety requirements. In addition, those facilities located in the European Union
that manufacture and process consumer packaging have received operational hygiene management
certification in accordance with the Packaging-Management of Hygiene in the Production of Packaging for
Foodstuffs Standard DIN EN 15593. Hygiene management systems are used in connection with preventive
food safety.
Insurance
We hold a number of insurance policies centrally managed and adjust on an ongoing basis according to
the current circumstances. We obtain insurance based on internal risk management analyses and maintain
comprehensive insurance policies with respect to property damage, business interruption, employers’
liability, public and product liability, workers’ compensation and contract works. We believe that we maintain
a level of insurance that is appropriate for the risks of our business and is comparable to that maintained by
other companies in the packaging industry.
Employees and Pension Obligations
As of December 31, 2010, we had 2,884 employees.
Employees in certain of our facilities in Germany, Poland and Spain have established works councils or
employee representatives who have similar functions and entitlements to a works council, in accordance with
applicable local laws. Except for our facilities located in Emsdetten/Germany, Barcelona/Spain, and
Ipoh/Malaysia, none of our employees are bound by collective bargaining agreements. The collective
bargaining agreements for Emsdetten/Germany, Barcelona/Spain and Ipoh/Malaysia encompass at
December 31, 2010 approximately 517 employees, or 17.9% of our employees worldwide. We have not
experienced a strike or similar work stoppage in our facilities since 2003. We believe that our relations with
our employees are good. There have been no large-scale redundancies in the Nordenia Group in the last
few years.
In some of our companies, performance related bonus schemes are in place. The Company and its
subsidiaries also provide for defined contribution plans for the employees of our Group and for individual
defined benefit pension commitments for certain employees of our Group. A deferred compensation scheme
is in place that all Nordenia Group Companies in Germany have joined. The scheme is administered through
a relief fund (Unterstützungskasse) which has taken out insurance coverage. In Nordenia U.S.A., Inc., a
401(k) plan is in place.
According to actuarial calculations based on IAS19 as of December 31, 2010 and December 31, 2009,
we had pension obligations of EUR 21.0 and 18.2 million, respectively, and pension related assets of
EUR 7.0 and EUR 6.4 million, respectively. As a result, our balance sheet as of this date contained pension
liabilities of EUR 14.0 million and EUR 11.8 million, respectively. For the years ended December 31, 2010
and 2009, we made contributions to the 401(k) plan on the employer’s part of approximately EUR 189,000
and EUR 168,000, respectively .
For additional information regarding our pension liabilities see Note 2.19 (Provision for pensions and
similar obligations – Rückstellungen für Pensionen und ähnliche Verpflichtungen) to our financial statements
as of and for the fiscal year ended December 31, 2010.
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Legal Proceedings
We are involved in a limited number of legal proceedings that have arisen in the ordinary course of our
business. We do not expect the legal proceedings in which we are involved or with which we have been
threatened in the previous twelve months to have, or have had in the recent past, significant effects on our
Group’s financial position or profitability. The outcome of legal proceedings, however, can be extremely
difficult to predict with certainty, and we can offer no assurances in this regard.
Two minority shareholders have filed suit regarding the validity of the resolution of NIAG’s extraordinary
general meeting approving the Consolidation Merger. These legal proceedings are pending. As long as such
suits are not finally dismissed, withdrawn or settled, the Consolidation Merger must not be registered with the
commercial register in principle (register lock) and, therefore, cannot become effective. To overcome such
register lock NIAG initiated release proceedings (Freigabeverfahren) pursuant to Section 16 para. 3 of the
Transformation Act (Umwandlungsgesetz) in mid-February 2011. Such proceedings are still pending, but
should generally be completed within 3 months from its initiation.
In addition a fiscal court proceeding is pending dealing with the deductibility of payments under the
management option plan. In case of a negative outcome of such fiscal court proceeding, we could be obliged
to make additional tax payments up to approximately EUR 2.0 million (plus annual interest of 6 % thereon)
for which no tax provisions have been made in the Company’s financial statements as of December, 31
2010.
Environmental Matters, Health and Safety and Governmental Regulation
Our operations and facilities are subject to a variety of laws and regulations governing the protection of
the environment and our employees, including those governing air emissions (i.e. emissions of solvents), the
use of water, the handling of hazardous materials and disposal of wastes as well as the remediation of
contaminated sites. We could incur substantial costs, including remediation costs, fines or civil or criminal
sanctions, or third party property damage or personal injury claims, in the event of violations or liabilities
under these laws and regulations, or non-compliance with the environmental permits required at our
facilities. Potentially significant expenditures could be required in order to comply with environmental laws
that may be coming into force or imposed in the future. We are, however, not aware of any threatened or
pending material environmental investigations, lawsuits or claims involving us or our operations. As of
December 31, 2010, compliance with federal, state and local provisions which have been enacted or
adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of
the environment, has not had a material effect on our capital expenditures, earnings and competitive
position. For the business year ending December 31, 2010, we spent approximately EUR 1.0 million for
improvement measures relating to environmental, hygiene and safety matters, and for the business years
ending December 31, 2011 and 2012, we have included in our budget approximately EUR 2.0 million and
EUR 1.3 million, respectively, for such matters.
We have implemented and certified hygiene management system during last two years at all of our
European facilities that manufacture and process consumer packaging in accordance with DIN EN 15593
Packaging-Management of Hygiene in the Production of Packaging for Foodstuffs Standard, and at all of our
other facilities in accordance with Hazard Analysis and Critical Control Points standards or AIB International
standards. In December 2009, our facility in Gronau, Germany introduced an occupational health and safety
management system pursuant to the requirements of the British Standard OHSAS 18001 (Occupational
Health and Safety Assessment Series). Over 10 years ago we already started with certifications in
accordance with ISO 9001 (Quality Management System) and ISO 14001 (Environmental Management
System).
We have adopted an integrated management system (the “IMS”) in order to make continuous
improvements to our products and processes. The fundamental aspects of the IMS are requirements relating
to quality, environment, hygiene and food packaging and work safety. With respect to quality, we evaluate
not only the processes that contribute to the manufacturing of a product, but also procedures for the
planning, control and monitoring of processes, products and services. The concept of environmental
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68
protection is anchored in our company culture as a key aspect of sustainable business management. Our
objective is for our products and the connected processes to be both beneficial to our customers and
compatible with the environment. We work to maintain environmentally friendly operations by more efficiently
utilizing energy resources, operating closed cooling water circuit systems in manufacturing, striving to
minimize process-related emissions, implementing measures to retain biodiversity and securing our products
during transport. As a manufacturer of packaging for hygiene products, food and petcare products, we have
implemented hygiene management systems to meet our responsibilities under the hygiene and food
packaging requirements of the IMS. We believe that qualified and safety-conscious employees and safe
equipment are essential for failure-free production over the long term. We believe to comply with local and
international legal and regulatory requirements and we continuously strive to improve and to ensure the best
working conditions. We also work in partnership with internal employee representatives to continuously
improve employee safety.
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MANAGEMENT
In accordance with German corporate law, the Issuer and NIAG, both German stock corporations have
three governing entities: Management Board (Vorstand), Supervisory Board (Aufsichtsrat) and general
meeting (Hauptversammlung).
The members of the Management Board are appointed by the Supervisory Board for a maximum term of
five years. They may be reappointed or have their term extended for one or more consecutive terms of up to
five years each. Under certain circumstances, such as a serious breach of duty or a bona fide vote of no
confidence by the shareholders’ meeting, a member of the Management Board may be removed by the
Supervisory Board prior to the expiration of his or her term. A member of the Management Board may not
attend to, nor vote on, matters relating to proposals, arrangements or contracts between himself and the
Group.
The Management Board is responsible for managing the Company in accordance with applicable law,
the Articles of Association and the internal rules of procedure for the Management Board including the
business distribution plan (Geschäftsverteilungsplan). The Management Board represents the Company in
dealings with third parties. The Management Board is required to report regularly to the Supervisory Board,
particularly with respect to business policy and strategy, profitability and any exceptional matters that may
arise from time to time.
The Supervisory Board appoints the members of the Management Board and is entitled to dismiss them
for good cause. The Supervisory Board advises and oversees the Management Board on the management
of the Company, but is not itself authorized to manage the Company, as set out in the German Stock
Corporation Act. The Articles of Association or the Supervisory Board must, however, designate any types of
transactions that may only be executed with the approval of the Supervisory Board.
In the course of the conversion of the Issuer into a German stock corporation (Aktiengesellschaft), the
management structure of the Issuer changed. A Management Board and a Supervisory Board were installed.
As a result of the Consolidation Merger, the Issuer will become subject to the German Third-Part Act
(Drittelbeteiligungsgesetz). It is intended that the Supervisory Board of the Issuer will then consist of six
members, four of whom will be elected by the shareholders in the general meeting in accordance with the
provisions of the German Stock Corporation Act and two of whom will be elected by the employees in
accordance with the German Third-Part Act. The Oaktree Investment Entities have agreed to vote their
shares in the general meeting of the Issuer in a way such that following the Consolidation Merger, all current
members of the Supervisory Board of NIAG elected by the general meeting will be appointed to the same
positions with the Issuer. The current members of the Supervisory Board of NIAG elected by the general
meeting have indicated their willingness to appoint the current members of NIAG’s Management Board to
the same positions with the Issuer as soon as reasonably practicable following the Consolidation Merger.
Management Board of the Issuer
The Issuer’s Management Board currently consists of two members, who were elected by the
Supervisory Board. Set forth below is information as of December 31, 2010 regarding the individuals who
serve as the Issuer’s Management Board:
Heiko Keppler, 31, has been a managing director of the Issuer since September 7, 2010. Mr. Keppler is
an Assistant Vice President at Oaktree GmbH, where he has worked since 2007. Previously, Mr. Keppler
spent two years as a Manager in the Real Estate Group at Barclays Capital in London. Prior experience
includes work at LaSalle Investment Management in Germany, Automotive Lighting Sdn Bhd in Malaysia
and HSBC Trinkaus & Burkhardt in Germany. Mr. Keppler received a degree in Business Administration
(Diplom Betriebswirt) with concentrations in Finance and Investments from the University of Applied
Sciences in Munich, Germany.
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70
Christof Altendorfer, 32, has been a managing director of the Issuer since September 7, 2010. Mr.
Altendorfer is a Vice President at Oaktree GmbH, where he has worked since 2005. Previously, Mr.
Altendorfer served as an Investment Banking Analyst in the Real Estate and Leisure department of Merrill
Lynch International. Prior experience includes internships at PricewaterhouseCoopers Deutsche Revision,
KPMG Consulting AG and W.L. Gore & Associates GmbH. Mr. Altendorfer holds a degree in International
Economic Sciences from the University of Innsbruck, Austria.
Supervisory Board of the Issuer
The Issuer’s Supervisory Board currently consists of three members, who were elected by the general
meeting. Set forth below is information as of December 31, 2010 regarding the individuals who serve as the
Issuer’s Supervisory Board:
Szymon Dec, 31, has been a managing director of the Issuer since its formation on April 28, 2010. Mr.
Dec is a director at Oaktree Capital Management, where he has worked since 2006, and the head of its
Luxembourg office. Previously, Mr. Dec spent four years at MeesPierson Interust (later acquired by Fortis
Group), where he served as an Assistant Manager with the Private Banking and Corporate Service Team
and as an Account Manager, and two years at KPMG Financial Engineering. Mr. Dec holds bachelors and
masters degrees in Management from the London School of Economics and Political Science and a
Community of European Management Schools masters degree in Management.
Justin Bickle, 39, has been a managing director of the Issuer since June 2010. Mr. Bickle is a Senior
Vice President at Oaktree Capital Management, where he has worked since 2005. Previously, Mr. Bickle
spent over four years as an attorney at Cadwalader, Wickersham & Taft LLP where he was an associate and
later a partner in its financial restructuring department. Prior to that time, Mr. Bickle was an attorney at two
other law firms in the United Kingdom. Mr. Bickle graduated from the University of Exeter with an LLB (Hons)
degree in Law in 1992 and qualified as a solicitor in England and Wales in 1995.
Martin Graham, 31, has been a managing director of the Issuer since June 2010. Mr. Graham is a Vice
President at Oaktree Capital Management, where he has worked since 2007. Previously, Mr. Graham spent
three years as an attorney at Cadwalader, Wickersham & Taft LLP. Prior to that time, Mr. Graham worked at
Goldman Sachs, Freshfields Bruckhaus Deringer and Oxford University. Mr. Graham graduated from the
University of Glasgow with an LLB (Hons) degree in Scots Law and a bachelor degree in Civil Law from
Oxford University.
Compensation of the Issuer’s Management and Supervisory Boards
The Management Board members and the Supervisory Board members of the Issuer do not receive
compensation.
Management Board of NIAG
The Management Board of NIAG currently consists of three members who are appointed by the
Supervisory Board in accordance with the German Stock Corporation Act.
Each member of the Management Board is assigned a specific area of responsibility. The members of
the Management Board are nevertheless jointly responsible for managing NIAG. Furthermore, the rules of
procedure of NIAG set out certain transactions requiring a decision of the entire Management Board,
including: issues of fundamental corporate policy; the acquisition, sale or construction of long-term assets
with a value exceeding EUR 1,000,000; the formation of, the capital increase in or the appointment or
revocation of board members in subsidiaries or investment companies; medium and long term business
plans; entering into material commercial agreements; issuing bonds or other securities; and granting
guarantees, suretyships or similar liabilities. A quorum of the Management Board exists when a meeting has
been convened with due notice and at least two-third of the members are present and cast their vote.
Resolutions are passed with a simple majority of the votes cast.
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The following table sets forth information as of December 31, 2010 regarding the individuals who serve
as members of NIAG’s Management Board.
Name
Ralph Landwehr
Age
55
Andreas Picolin
49
Andreas Busacker
45
Position
Chief Executive Officer and Chairman of
Management Board
Chief Operating Officer and Vice Chairman of
the Management Board
Chief Financial Officer
Ralph Landwehr was appointed Chief Executive Officer (Vorstandsvorsitzender) in 2001. In addition, he
has been Head of the Consumer Division and a member of the Management Board since 1997. Mr.
Landwehr has been with NIAG since 1995. From 1995 to 1996 he was managing director of the Szada,
Hungary plant and from 1996 to 1997 he was managing director of the Halle, Germany plant. Prior to joining
NIAG, Mr. Landwehr held positions in Production, Technology and Sales with Harmstorf AG. He also held
positions at Schlichting Shipyard and was a member of the Management Board of Luerssen Group, where
he was responsible for Engineering, Marketing and Sales. He holds a degree in Engineering from the
University of Hannover.
Andreas Picolin has been a member of the Management Board, Head of the Industrial Division and in
charge of Strategic Purchasing since 2001. He was appointed Chief Operating Officer in 2010. Prior to this
appointment as member of the Management Board, he was Managing Director of the Steinfeld, Germany
plant from 1993 to 2001. Mr. Picolin joined NIAG in 1991 as Executive Associate to the Chairman of the
Executive Board. Prior to joining NIAG, he was Head of the Distribution and Logistics Group of ColgatePalmolive GmbH. Mr. Picolin studied Industrial Engineering at the University of Hamburg.
Andreas Busacker has been Chief Financial Officer since 2004. Mr. Busacker joined NIAG in 1996 and
held the position of Group Treasurer from 1996 to 2001. He has been a member of the Management Board
since 2004. His current responsibilities include Finance and Controlling, IT and Legal and Tax. Prior to NIAG,
Mr. Busacker led the Treasury/Capital Markets and Risk Management as well as Investor Relations divisions
at Wella AG from 1991 to 1996. Previously, he held positions in Marketing and Controlling at Carl Schenck
AG from 1990 to 1991. He holds a degree in Industrial Engineering from Darmstadt University of
Technology.
Supervisory Board of NIAG
NIAG’s Supervisory Board currently consists of six members, four of whom were elected by the
shareholders in the general meeting in accordance with the provisions of the German Stock Corporation Act
and two of whom were elected by the employees in accordance with the German Third-Part Act
(Drittelbeteiligungsgesetz). A member of the Supervisory Board elected by the general meeting may be
removed by a simple majority vote at a general meeting. A member of the Supervisory Board elected by the
employees may be removed by a majority of at least three-quarters of the votes cast by the employees
entitled to vote.
The members of the Supervisory Board are each elected for a term of approximately five years. The
term expires at the end of the shareholders’ meeting at which the shareholders discharge the Supervisory
Board for the fourth fiscal year after the beginning of the member’s term. The year in which the member’s
term begins is not counted in this calculation. Pursuant to NIAG’s articles of association, the remuneration of
the members of the Supervisory Board is fixed by a resolution of the general meeting.
The Supervisory Board appoints a chairman and a deputy chairman from among its members. The
chairman and the deputy chairman are elected by a simple majority of the votes of the Supervisory Board. A
quorum exists when at least half of the members of the Supervisory Board are present at a meeting. Unless
otherwise provided for by law or the articles of association, resolutions are passed by a simple majority of the
Supervisory Board. In the event of a tie vote, the chairman may cast the tie-breaking vote.
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72
The following table sets forth information as of December 31, 2010 regarding the individuals who serve
as members of NIAG’s Supervisory Board. The term of Mr. Flach will end in 2011 and the terms of the other
current members of the Supervisory Board will end in 2013.
Name
Uwe E. Flach
Hermann T. Dambach
Jordon L. Kruse
Gerard J. Kerins
Manfred Kasper
Ewald Unterste-Wilms
Age
67
46
39
63
52
53
Position
Chairman
Deputy Chairman
Member
Member
Employee Representative
Employee Representative
Uwe E. Flach has been a member of the Supervisory Board of NIAG since 2006. Mr. Flach advises
Oaktree GmbH and is a member of several Supervisory Boards of German companies. Mr. Flach served asa
member of the managing board of DZ BANK AG and the former DG BANK AG for 14 years, responsible for
investment banking. Prior to DZ BANK AG, he was an investment banker for six years at Dillon, Read & Co.
in New York, Paris and London. Mr. Flach holds a degree in business administration from Frankfurt
University.
Hermann T. Dambach has been a member of the Supervisory Board of NIAG since 2006. Mr. Dambach
is a Managing Director at Oaktree Capital Management, where he has worked since 2004, and the head of
its Frankfurt, Germany office. Previously, Mr. Dambach served as an Executive Director in the Financial
Sponsors department of Morgan Stanley. Previously, he spent four years at Credit Suisse First Boston in the
Global Energy Group, nine years with Chase Manhattan Bank AG and four years with Südwestdeutsche
Landesbank. Mr. Dambach holds degrees in Business Administration for Banking & Management (Diplom
Bankbetriebswirt) from Bankakademie Frankfurt e.V. and from Sparkassenakademie in Rastatt (Diplom
Sparkassenbetriebswirt).
Jordon L. Kruse has been a member of the Supervisory Board of NIAG since 2006. Mr. Kruse is a
Managing Director at Oaktree Capital Management, where he has worked since 2001, and a member of its
Principal Fund, which focuses on investments in private equity and distressed debt for control, where he is
responsible for the packaging, chemicals, building products and consumer apparel sectors. Previously, Mr.
Kruse was an attorney at the law firm of Kirkland & Ellis LLP. Mr. Kruse serves on the board of directors of
Dayton Superior Corporation, Chesapeake UK Holding Ltd, BP Clothing LLC, Cyanco Corporation, Spirit
Airlines, Inc. and CF Group Inc. Mr. Kruse holds a bachelors degree in History and Government from the
University of Virginia and a juris doctorate from Northwestern University School of Law.
Gerard J. Kerins has been a member of the Supervisory Board of NIAG since 2006. Since 2009, Mr.
Kerins has been Chairman and CEO of Chesapeake (a specialty packaging producer). Previously, he was
Chairman of Insulair, Inc. (a paper packaging company) from 2000-2006, director of ICG Commerce (a
procurement outsourcing company) from 2003-2005, director of Wellman (a chemical manufacturer) from
2000-2005, and CEO of Continental PET Technologies (a plastic bottle producer) from 1983-1998. Prior to
that, he spent ten years with Continental Group (a diversified industrial company) and two years with FS
Smithers (an investment bank). Mr. Kerins holds a bachelors degree in Economics from Fordham University
and a masters of business administration degree from the University of Virginia.
Manfred Kasper has been a member of the Supervisory Board of NIAG since 2008. Mr. Kasper has been
an employee of Nordenia Deutschland Gronau (‘‘NDG’’) since 1991, most recently in the production planning
department. Mr. Kasper has been a member of the workers council at NDG since 2000 and member of the
group workers’ council since 2008. Mr. Kasper holds a degree as a state-certified engineer.
Ewald Unterste-Wilms has been a member of the Supervisory Board of NIAG since 1998. Mr. UntersteWilms has been employee of NDG since 1988 and currently serves as staff representative. He has been a
member of the workers’ council at NDG since 1990, of which he became vice chairman in 1998 and
chairman in 2009. He was appointed as a member of the group workers’ council in 1998 and became
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73
chairman in 2002. Mr. Unterste-Wilms has received training as an office management assistant and a
software engineer.
Committees of NIAG’s Supervisory Board
In accordance with the rules of procedure of the Supervisory Board, a presidium (Präsidialausschuss) is
constituted and comprises the chairman, the deputy chairman and one further member of the Supervisory
Board to be elected by the Supervisory Board. The presidium is responsible for the conclusion, amendment
and cancellation of service agreements of members of the Management Board. Currently, Messrs. Flach,
Dambach and Kruse are members of the presidium.
Areas of Competency
The Management Board is responsible for managing NIAG and the Supervisory Board supervises the
management and both boards are solely responsible for their own areas of competency
(Kompetenztrennung). In carrying out their duties, the individual board members must exercise the standard
of care of a diligent and prudent businessman. In complying with this standard of care, the boards must take
into account a broad range of considerations, including the interests of the company, its shareholders,
employees and creditors. The members of the Management Board and the Supervisory Board also become
jointly and severally liable if they breach their duties and cause damage to our company.
Compensation of NIAG’s Management and Supervisory Boards
The following table sets forth our information regarding compensation paid to our Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer during the fiscal year ended December 31, 2010.
Name
Ralph Landwehr
Andreas Picolin
Andreas Busacker
Principal Position
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Pension
related Salary
306,775
256,000
250,000
Guaranteed
Bonus
142,916
97,916
87,916
Total
Guaranteed
Compensation
449,691
353,916
337,916
Management is also entitled to receive a variable bonus not to exceed 125% of pension related salary
upon exceeding 100% of the EBITDA target.
Pursuant to the articles of association of NIAG, the general meeting must fix the remuneration of the
members of the Supervisory Board by way of resolution. On June 29, 2006, the general meeting resolved
that as a general rule, each member of the Supervisory Board will receive remuneration in the amount of
EUR 7,700 per annum and, if such member of the Supervisory Board is also a member of any committee, an
additional EUR 2,600 per annum. It was furthermore resolved that (i) Hermann T. Dambach and Jordon L.
Kruse will receive no remuneration and that (ii) Gerard J. Kerins will receive a remuneration of EUR 300,000
per annum. The increased remuneration for Mr. Kerins was intended to compensate him for his additional
contributions to the Supervisory Board and its committees.
Service Contracts
NIAG has entered into service contracts with each of the members of its Management Board. The
following table sets forth the date of each such service contract and the date the contract terminates (unless
extended, as discussed below).
Name
Ralph Landwehr
Andreas Picolin
Andreas Busacker
Date of contract
January 27, 2011
January 28, 2011
December 21, 2005 (as amended)
73
Termination of contract
June 30, 2016
June 30, 2016
June 30, 2012
74
The material terms and conditions of the service contracts with the Management Board Members are
similar. In addition to the remuneration described above, Messrs. Landwehr, Picolin and Busacker are
entitled to certain benefits, including contributions to health insurance, a company car and benefit under a
pension plan. Unless terminated by either party at least six months prior to the expiration date, the service
contract of Mr. Busacker will be extended automatically beyond the original end date if the Supervisory
Board of the Company appoints Mr. Busacker to the Management Board for an additional term. In such a
case, the contract will be extended for the term of the appointment. According to Mr. Busacker’s service
contract both parties have the right to terminate the contract at any time. In the event of a termination by the
Company without good cause (wichtiger Grund), Mr. Busacker will be entitled to a severance payment equal
to the amount of total guaranteed compensation for 2.0 years. In the event of a revocation of Mr. Landwehr’s
and Mr. Picolin’s appointment to the Management Board (other than for reasons that would justify a
summary dismissal) their service contracts will end six month to the end of the calendar month after the
revocation (or at the Termination date as defined above, whichever occurs first). In this case, Mr. Landwehr
will be entitled to a severance payment in the amount of the total guaranteed compensation for 2.5 years and
Mr. Picolin in the amount of 2.0 years. The severance payment will be reduced for every month between the
date of the revocation and the end date of the service contract by 1/12 of the base salary. The service
contracts of all three Management Board Members (Mr. Landwehr, Mr. Picolin, Mr. Busacker) contain a postcontractual restrictive covenant for two years following the end of the Management Board Member’s
employment.
Subject to completion of the Consolidation Merger, the service contracts will be amended to the extent
the Management Board members are appointed and serve as Management Board members of the Issuer.
2006 Stock Option Plan / Stock Appreciation Rights
In 2006, a stock option plan for German and foreign members of the senior management of the Group
was implemented. This stock option plan was converted to a virtual program in 2010, providing for a right of
the option holders to a cash payment (stock appreciation right) instead of granting subscription rights to
shares. By resolution of the general meeting of NIAG dated August 27, 2010 the contingent capital which
had been created to secure the original stock option plan was cancelled. On October 27, 2010 the
management board and the supervisory board of NIAG resolved upon the continuance of the previous stock
option plan as virtual option program and the corresponding adjustment of the option terms, to which all
option holders agreed. Following the Consolidation Merger the virtual option program is continued by the
Issuer subject to certain value adjustments taking account of the merger ratio.
Upon an initial public offering of the Issuer 100% of the options granted become exercisable. Each option
grants a right to a payment in an amount equal to the issuing price per share of the Issuer minus a pro rata
allocation of costs and expenses incurred in connection with the initial public offering. However, a right to
payments only exists if the value per option exceeds an amount of at least EUR 2,76 (exercise hurdle).
Currently, a total of 2,379,094 options have been issued. The Management Board of NIAG holds a total
of 1,534,899 options. 613,959 of these options account for Mr. Landwehr, 460,470 for Mr. Picolin and
460,470 for Mr. Busacker. No options have been granted to Supervisory Board members. The option terms
provide that members of the Management Board of NIAG shall reinvest in the Company 30 percent of the
net payments received (after deduction of any taxes payable thereon) for the options.
Share Ownership
Members of the Management Board and the Supervisory Board of NIAG collectively own less than 4% of
the outstanding capital stock of the Issuer. Messrs. Picolin and Busacker own 30,000 and 17,241 shares of
the Issuer, respectively. Mr. Landwehr holds 100% of the shares in CHP Capital GmbH, which itself holds
158,085 shares in the Issuer. In addition, the Gerard J. Kerins Living Trust (the ‘‘GJK Trust’’), of which Mr.
Kerins serves as trustee, owns 748,153 shares of the Issuer. See ‘‘Principal Shareholders and Related Party
Transactions—Principal Shareholders.’’
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75
PRINCIPAL SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Principal Shareholders
The amount of subscribed capital at December 31, 2010 reflects the subscribed capital of Nordenia
Holdings as the legal parent of the NORDENIA Group. As at June 28, 2010, the share capital of the
Company that – at that date – still operated under the name Nordenia Holdings GmbH was increased
pursuant to the shareholders’ resolution dated July 15, 2010 by way of a capital increase in kind from
kEUR 24,460 by kEUR 959 to kEUR 25,419. The capital increase was recorded in the Commercial Register
on July 28, 2010.
In its resolution dated September 6, 2010, the annual general meeting of Nordenia Holding GmbH
resolved that the Company's legal form and the name be changed into Nordenia Holdings. After the change
in legal form, the Company‘s share capital totals kEUR 25,419 and is divided into 25,419,178 individual
bearer shares with an imputed share in the share capital of 1.00 EUR each. The share capital is paid in full
and each share grants one vote. This change in legal form was registered in the Commercial register on
September 29, 2010.
On October 28, 2010, the directors of Nordenia Holdings and NORDENIA International AG entered into
a notarized agreement regarding the merger of the two companies by way of assumption of NORDENIA
International AG by Nordenia Holdings. For the purpose of the merger, the extraordinary annual general
meeting of Nordenia Holdings resolved on December 8, 2010 a capital increase by kEUR 3,770 to
kEUR 29,190 by issuing a total of 3,770,401 new individual bearer shares with an imputed share in the share
capital of 1.00 EUR each. In mid-January 2011, the Company filed an application for registration of the
merger and the capital increase in the Commercial Register. Neither has been registered in the Commercial
Register yet.
The Oaktree Investment Entities currently own 96.2 % of the subscribed capital of the Issuer.
Related Party Transactions
Except as set forth below, none of the members of the management or supervisory boards or
shareholders holding greater than 1.0% of the outstanding capital stock of the Issuer has or had any interest
in any transactions with us which are or were unusual in their nature or conditions or significant to our
business taken as a whole and that were effected during the current or immediately preceding financial year,
or during any earlier financial year and which remain in any respect outstanding or unperformed. No loans
are outstanding from us to any member of the management or supervisory boards.
Investment and Shareholders Agreement
The Issuer is a party to a Shareholders Agreement, dated November 29, 2006, with the Oaktree
Investment Entities and the individuals listed in Appendix 1 thereto (the "Participants"). Pursuant to the
agreement, if the Oaktree Investment Entities approve a sale of the Issuer, each of the Participants must
vote for, consent to and not object or otherwise impede consummation of such sale. In the case of an initial
public offering, each Participant must use all reasonable efforts to take all necessary or desirable actions in
connection with the consummation of such offering. Under the Shareholders Agreement, Participants have
tag along rights. If the Oaktree Investment Entities intend to sell at least 50% of all shares to a third party,
each Participant is entitled to demand that the Oaktree Investment Entities enable such Participant to sell or
transfer a pro rata portion of such holder's shares to such third party.
Drag Along Agreements
The Oaktree Investment Entities entered into drag-along agreements with certain shareholders of the
Issuer. Generally these agreements provide that if the Oaktree Investment Entities intend to sell 50% or
more of their shares of the Issuer, they are entitled to require such minority shareholders to sell and transfer
75
76
all of their shares ot the Issuer upon the same terms and conditions. In addition, each minority shareholder
party to a drag-along agreement is entitled to tag-along rights with respect to any sales by the Oaktree
Investment Entities of 50% or more of their shares of the Issuer. If the purchaser refuses to purchase such
additional shares, then the Oaktree Investment Entities are required to acquire the excluded shares of the
Issuer upon the same terms and conditions as the Oaktree Investment Entities are selling their shares. The
Issuer is not a party to these drag-along agreements, but the Oaktree Investment Entities may elect to
transfer these agreements to the Issuer in the future.
Oaktree Consulting Agreement
The Issuer and OCM Luxembourg POF III S.à.r.l. ("OCM") are parties to a Management Consulting
Services Agreement, dated January 26, 2007. Under the agreement, OCM has agreed to provide the Issuer
with certain management consulting services. All intellectual property rights developed in connection with
the agreement will become the exclusive property of the Issuer. The term of the agreement is unlimited.
Either party may terminate the agreement with six weeks' prior notice to the other party or without prior
notice for good cause (wichtiger Grund).
As consideration for the services, OCM receives a monthly fee of up to EUR 25,000 for each calendar
month during which OCM provides services to the Issuer. Furthermore, the Issuer has agreed to reimburse
all expenses incurred by OCM in the context of the services. All payments are due on a quarterly basis.
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77
NON-IFRS-EU FINANCIAL INFORMATION
EBITDA, Adjusted EBITDA according to RCF, and the ratios related thereto, are supplemental measures
of our performance that are not specifically defined under IFRS-EU. These measures are presented because
we believe that they and similar measures are widely used in the packaging industry as a means of
evaluating a company’s operating performance and financing structure, and in the case of Adjusted EBITDA
according to RCF because we believe it presents a helpful comparison of financial performance between
periods by excluding the distorting effect of non-recurring items. These measures may not be comparable to
other similarly titled measures of other companies and are not measurements under IFRS-EU or other
generally accepted accounting principles, and they should not be considered as substitutes for the
information contained in the Group’s financial statements.
We define EBITDA as consolidated net profit before income tax expenses, financial result, result from
discontinued operations and depreciation and amortization. We define Adjusted EBITDA according to RCF
as EBITDA plus the additional supplemental adjustments identified in the table below. We point out, that
there has been a refinement in definition in the last quarter 2010, were a differentiation has been made
between adjusted EBITDA according to RCF, which does include adjustments related to the Factoring
Facility as the RCF contracts consider it and adjusted EBITDA, which includes all adjustments beside of P&L
effects of the Factoring Facility, since this is an off-balance sheet issue.
Our EBITDA and Adjusted EBITDA according to RCF measures have limitations as analytical tools, and
you should not consider them in isolation, or as a substitute for analysis of our results as reported under
IFRS-EU. Some of these limitations are:
•
•
•
•
•
•
•
•
they do not reflect our cash expenditures or future requirements for capital commitments;
they do not reflect changes in, or cash requirements for, our working capital needs;
they do not reflect the interest expense or cash requirements necessary to service interest or
principal payments on our debt;
they do not reflect any cash income taxes that we may be required to pay;
they are not adjusted for all non-cash income or expense items that are reflected in our
statements of cash flows;
they do not reflect the impact of earnings or charges resulting from matters we consider not
to be indicative of our ongoing operations;
assets are depreciated or amortized over differing estimated useful lives and often have to
be replaced in the future, and these measures do not reflect any cash requirements for such
replacements; and
other companies in our industry may calculate these measures differently than we do,
limiting their usefulness as comparative measures.
Because of these limitations, our EBITDA and Adjusted EBITDA according to RCF measures should not
be considered as measures of discretionary cash available to us to invest in the growth of our business or as
measures of cash that will be available to us to meet our obligations. You should compensate for these
limitations by relying primarily on our IFRS-EU results and using these non-IFRS-EU measures only on a
supplemental basis to evaluate our performance. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our unaudited consolidated financial statements and the related
notes included elsewhere in this Annual Report.
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78
The following is a reconciliation of EBITDA and Adjusted EBITDA according to RCF to consolidated net
profit, the most directly comparable IFRS-EU measure:
2010
Income tax expenses
Financial result
Depreciation and amortization(a)
EBITDA
Implied interest expenses on Factoring Facility(b)
Management option plan expenses(c)
Management fees(d)
Restructuring expenses (income)(e)
Severance payments
Gain/loss on disposal of assets(f)
Unusual and other items(g)
Structuring expenses Issuer/Merger related costs(h)
Adjusted EBITDA according to RCF
(a)
(b)
2009
21,601
10,820
24,483
926
28,731
86,561
840
14,122
300
-54
102
311
567
3,858
106,607
27,450
12,457
10,983
-1,436
30,355
79,809
1,305
11,448
617
1,236
404
94
-667
0
94,246
2008
11,041
9,885
18,022
0
28,717
67,665
2,933
1,556
465
1,585
194
0
-390
0
74,008
Includes depreciations on fixed assets (property, plant and equipment) and amortization of intangible assets.
Represents the implied interest component of the discount from the sale of receivables under the Factoring Facility. This
implied interest is not otherwise recorded in our consolidated income statement as interest expense. This amount relates to
actual funding costs incurred by the counterparty to the Factoring Facility.
(c)
Represents non-cash compensation charges recorded in connection with the vesting of stock options issued under NIAG’s
management stock option plan.
(d)
Represents advisory fees paid to Oaktree Capital Management pursuant to an advisory agreement between Oaktree Capital
Management and NIAG.
(e)
Represents the effects of reorganization and restructuring expenses or income incurred in connection with the sale or closure
of certain operations and final consolidation effects.
(f)
Represents the net gain or loss from the disposal of assets by certain operating subsidiaries.
(g)
Relates primarily to the release of accruals from prior years and the revaluation of pension provisions. In 2010 the major effect
results from professional fees in connection with the evaluation of an acquisition project.
(h)
Relates to consulting and notary costs incurred in connection with the formation of the Issuer and the preparation of the
merger NIAG/NHAG.
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79
RISK FACTORS
An investment in our Notes involves significant risks. This Annual Report does not include a detailed
discussion of these risks. Existing and prospective investors should refer to the risk factors set forth in the
Offering Memorandum dated July 2, 2010 relating to the Notes. Prospective investors should consider those
risks carefully before making a decision to invest in the Notes. If any of those risks actually materializes, then
our business, financial condition and results of operations would suffer. In addition, there may be risks of
which we are currently unaware or that we currently regard as immaterial based on the information available
to us that later prove to be material. These risks may adversely affect our business, financial condition and
operating results. As a result, you may lose all or part of your original investment in the Notes.
79
Index to Financial Statements
Page
Consolidated Financial Statements and Audit Opinion
Year Ended December 31, 2010
Translation of the audit opinion
F-1
Consolidated income statement for the period from January 1 to December 31, 2010
F-2
Consolidated statement of comprehensive income for the period from January 1 to
December 31, 2010
F-3
Consolidated balance sheet as of December 31, 2010
F-4
Statement of changes in group equity as of December 31, 2010
F-5
Cash flow statement as of December 31, 2010
F-6
Notes to the consolidated financial statements as of December 31, 2010
F-7
F-73
F-74
Consolidated statement of comprehensive income for the period from January 1 to
December 31, 2009
F-75
F-76
Consolidated entities
F-77
F-78
F-79
F-80
F-125
F-126
F-127
F-128
F-129
F-130
F-131
80
The following audit opinion has been issued in according with § 322 German Commercial Code
(Handelsgesetzbuch) and refers to the entire consolidated financial statements—comprising the income statement,
statement of comprehensive income, balance sheet, notes to the consolidated financial statements, statement of
changes in group equity and cash flow statement—as well as to the Group management report of NORDENIA
International AG, Greven. The Group management report is not reproduced in this financial report.
English translation of the audit opinion
We have audited the consolidated financial statements prepared by Nordenia Holdings AG consisting of an
income statement, statement of comprehensive income, a balance sheet, a cash flow statement, a statement of
changes in shareholders' equity and notes to the financial statements as well as the Group management report for the
financial year from June 29, 2010 to December 31, 2010. The preparation of the consolidated financial statements
and the Group management report in accordance with IFRSs, as adopted by the EU, and the supplementary
provisions stated in Section 315a (1) HGB, is the responsibility of the Company’s Board of Management. Our
responsibility is to express an opinion on the consolidated financial statements and the Group management report
based on our audit.
We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB, and
German generally accepted standards for the audit of financial statements promulgated by the Institut der
Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and
perform the audit such that misstatements materially affecting the presentation of net assets, financial position and
results of operations in the consolidated financial statements in accordance with the applicable financial reporting
framework and the Group management report are detected with reasonable assurance. Knowledge of the business
activities and the economic and legal environment of the Group and expectations as to possible misstatements are
taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal
control system and the evidence supporting the disclosures in the consolidated financial statements and the Group
management report are examined primarily on a test basis within the framework of the audit. The audit includes
assessing the annual financial statements of the companies included in consolidation, the determination of the
companies to be included in consolidation, the accounting and consolidation principles used, and significant
estimates made by the Board of Management, as well as evaluating the overall presentation of the consolidated
financial statements and the Group management report. We believe that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any objections.
In our opinion and based on the findings of our audit, the consolidated financial statements comply with the
IFRS as adopted by the EU and give a true and fair view of the net assets, financial position and results of operations
of the Group in accordance with these requirements. The Group management report is consistent with the
consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably
presents the opportunities and risks of future development.
Osnabrück, March 18, 2011
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
signed Dr. Gregor Solfrian
Wirtschaftsprüfer
(German Public Accountant)
F-1
signed p.p. Volker Voelcker
Wirtschaftsprüfer
Nordenia Holdings AG, Greven
Consolidated income statement
for the period from June 29 to December 31, 2010
Notes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Sales ...............................................................................................
Cost of sales ...................................................................................
Gross profit ....................................................................................
Selling costs ...................................................................................
Administrative costs.......................................................................
Research and development costs....................................................
Other operating income..................................................................
Other operating expenses ...............................................................
Exchange rate differences from business operations .....................
Operating profit ...........................................................................
Financial income............................................................................
Financial expense...........................................................................
Financial result.............................................................................
Profit before income taxes...........................................................
Income tax expenses ......................................................................
Result from continued operations ..................................................
Result from discontinued operations..............................................
Consolidated net income..............................................................
thereof attributable to:
Shareholder of the parent ...............................................................
Non-controlling shareholder ..........................................................
F-2
(3)
(4)
(5)
(6)
(7)
(9)
(10)
(8)
(11)
(12)
(13)
(14)
(16)
06/2912/31
2010
kEUR
408,086
338,804
69,282
20,276
20,176
2,624
4,339
2,843
581
27,121
3,204
21,961
(18,757)
8,364
3,567
4,797
0
4,797
01/0106/28
2010
kEUR
393,411
318,742
74,669
19,899
25,861
2,685
4,612
592
(465)
30,709
3,221
8,947
(5,726)
24,983
7,253
17,730
(926)
16,804
01/0112/31
2010
kEUR
801,497
657,546
143,951
40,175
46,037
5,309
8,951
3,435
116
57,830
6,425
30,908
(24,483)
33,347
10,820
22,527
(926)
21,601
5,439
(642)
16,462
342
21,901
(300)
Consolidated statement of comprehensive income
for the period from June 29 to December 31, 2010
1. Consolidated net income..........................................................................
2. Result from available-for-sale financial assets
affecting net income .................................................................................
not affecting net income ...........................................................................
3. Result from cash flow-hedging
affecting net income .................................................................................
not affecting net income ...........................................................................
4. Actuarial gains and losses from defined benefit obligations ......................
5. Exchange differences on translating foreign operations.............................
6. Income taxes relating to components of other comprehensive income ......
7. Other comprehensive income ..................................................................
8. Total comprehensive income ...................................................................
thereof attributable to:
Shareholder of the parent ...........................................................................
Non-controlling shareholder ......................................................................
F-3
06/2912/31
01/01-06/28 01/01-12/31
2010
2010
2010
kEUR
kEUR
kEUR
16,804
21,601
4,797
0
355
0
0
0
355
0
0
405
(3,454)
(229)
(2,923)
1,874
0
246
(2,464)
8,626
666
7,074
23,878
0
246
(2,059)
5,172
437
4,151
25,752
2,514
(640)
23,647
231
26,161
(409)
Notes
kEUR
06/28/2010
kEUR
Assets
A. Non-current assets
1. Intangible assets .................................................................................................
2. Property, plant and equipment ...........................................................................
3. Investment properties.........................................................................................
4. Other financial investments ...............................................................................
5. Deferred tax assets .............................................................................................
6. Other long-term assets .......................................................................................
(17)
(18)
(19)
(20)
(21)
(22)
10,029
212,724
0
28,739
8,486
448
260,426
9,865
214,148
122
19,388
12,247
386
256,156
B. Current assets
1. Inventories .........................................................................................................
2. Trade receivables ...............................................................................................
3. Other assets ........................................................................................................
4. Current income tax assets ..................................................................................
5. Cash and cash equivalents .................................................................................
(23)
(24)
(25)
(13)
(26)
100,685
72,332
19,874
747
35,404
229,042
489,468
90,692
81,765
33,123
447
31,489
237,516
493,672
(29)
(29)
29,190
(177,183)
84,362
5,438
(3,176)
(61,369)
(601)
(61,970)
24,460
400
66,308
16,463
353
107,984
14,351
122,335
Equity and Liabilities
A. Equity
1. Subscribed capital ..............................................................................................
2. Capital Reserve ..................................................................................................
3. Revenue Reserves ..............................................................................................
4. Profit attributable to shareholder of the parent...................................................
5. Currency adjustment item ..................................................................................
6. Share of equity attributable to the shareholder of the parent .............................
7. Share of equity attributable to non-controlling shareholder...............................
(29)
(29)
(29)
B. Non-current liabilities
1. Subordinated loans.............................................................................................
2. Bonds .................................................................................................................
3. Liabilities to banks.............................................................................................
4. Provisions for pensions and similar obligations.................................................
5. Deferred tax liabilities........................................................................................
6. Other provisions.................................................................................................
7. Other liabilities ..................................................................................................
(30)
(30)
(30)
(32)
(34)
(35)
(30)
9,978
280,873
448
14,007
16,534
1,481
22,977
346,298
50,000
0
33,316
14,312
17,060
29,899
26,603
171,190
C. Current liabilities
1. Liabilities to banks.............................................................................................
2. Notes payables ...................................................................................................
3. Trade payables ...................................................................................................
4. Current income tax liabilities.............................................................................
5. Other provisions.................................................................................................
6. Other liabilities ..................................................................................................
(30)
(30)
(30)
(37)
(35)
(30)
39,609
3,039
70,911
3,893
34,921
52,767
205,140
489,468
62,007
4,815
72,981
7,863
12,171
40,310
200,147
493,672
F-4
NORDENIA Holdings AG, Greven
Operating profit (EBIT including discontinued operations) ............................................
Depreciations on intangible assets and property, plant and equipment............................
Income taxes paid ............................................................................................................
Interest paid......................................................................................................................
Interest received ...............................................................................................................
Financial expenses paid (less financial income received)................................................
Profit/loss from the disposal of property, plant and equipment .......................................
Other non cash-relevant income/expenditure...................................................................
Changes in working capital..............................................................................................
Increase in assets and provisions, in trade payables and other liabilities not related to
investing or financing activities ...................................................................................
Cash flow from operating activities..............................................................................
Cash received from disposals of property, plant and equipment......................................
Cash paid for investments in property, plant and equipment ...........................................
Cash received from disposals of intangible assets ...........................................................
Cash paid for investments in intangible assets.................................................................
Cash received from disposals of financial assets .............................................................
Cash paid for investments in financial assets...................................................................
Cash received from the disposal of consolidated entities and other business units..........
Cash flow from investing activities...............................................................................
Cash received from the supply of equity..........................................................................
Dividends .........................................................................................................................
Cash paid for purchases of shares of other shareholders..................................................
Cash received from the borrowing of subordinated loans................................................
Cash paid for repayments of subordinated loans .............................................................
Cash paid for repayments of non-current financial loans.................................................
Cash received from the borrowing of non-current financial loans and bonds..................
Transaction costs paid in economic relation to the borrowing of bonds ..........................
Cash received from the borrowing of current financial loans .........................................
Cash paid from the repayment of current financial loans ................................................
Transaction costs paid in economic relation to the borrowing of current financial
loans.............................................................................................................................
Cash flow from financing activities ..............................................................................
Change in cash ...............................................................................................................
Change in cash funds from cash relevant transactions.....................................................
Change in cash funds from exchange rate movements ....................................................
Cash balance at the beginning of the period ....................................................................
Cash balance at the end of the period ..........................................................................
F-5
06/2912/31
2010
kEUR
27,121
14,322
(4,376)
(5,189)
1,257
(2,057)
49
1,334
(3,859)
01/0106/28
2010
kEUR
30,709
14,409
(11,041)
(3,925)
1,115
(2)
(228)
904
(26,211)
01/0112/31
2010
kEUR
57,830
28,731
(15,417)
(9,114)
2,372
(2,059)
(179)
2,238
(30,070)
2,899
10,028
7,129
35,731
8,629
44,360
390
474
864
(14,196) (10,824) (25,020)
0
37
37
(688)
(479)
(1,167)
23
1
24
(17)
(7)
(24)
710
710
0
(14,488) (10,088) (24,576)
300
25
325
(185,126)
0 (185,126)
(1,354)
0
(1,354)
9,975
0
9,975
(50,000)
0 (50,000)
(37,020) (14,805) (51,825)
272,463
62 272,525
(5,024)
0
(5,024)
66,553 186,704 253,257
(87,314) (158,124) (245,438)
(147)
(16,694)
4,549
4,549
(634)
31,489
35,404
0
13,862
12,403
12,403
1,076
18,010
31,489
(147)
(2,832)
16,952
16,952
442
18,010
35,404
Subscribed
capital
kEUR
Status at 1/1/2010 .............
28,380
Change in capital
structure from reverse
acquisition of
NORDENIA
Holdings GmbH by
NORDENIA
International AG...........
(3,920)
Change in group of
consolidated
companies.....................
Transfers.............................
Consolidated
comprehensive
income ..........................
Others .................................
24,460
Status at 06/28/2010 .........
Transfers.............................
after transfers .............
24,460
Profit carried forward.........
Change in capital
structure from reverse
acquisition of
NORDENIA
Holdings GmbH by
NORDENIA
International AG...........
4,730
Payment by shareholders ...
Payment to shareholders ....
Consolidated
comprehensive
income ..........................
29,190
Status at 12/31/2010 .........
Capital
reserves
kEUR
13,734
Revenue
reserves
kEUR
69,136
(13,460)
(842)
126
(126)
Profit
attributable
to the
shareholder
of the parent
kEUR
0
(1,516)
(344)
66,308
248
16,463
400
66,556
16,463
16,463
(16,463)
7,155
300
(185,038)
1,149
400
(177,183)
16,463
Currency
adjustment
item
kEUR
(8,349)
8,700
2
353
353
Available
for sale
financial
assets
kEUR
0
Taxes
kEUR
0
Treasury
stock
kEUR
(4,167)
Equity
attributable
to the
shareholder
of the parent
kEUR
98,734
Equity
attributable
to noncontrolling
shareholder
kEUR
11
Total
Group
equity
kEUR
98,745
4,167
(14,055)
14,080
25
0
0
(313)
(313)
0
23,647
(342)
107,984
0
231
342
14,351
0
23,878
0
122,335
0
107,984
0
14,351
0
122,335
0
12,959
300
(185,126)
(14,312)
0
0
(1,353)
300
(185,126)
2,514
(61,369)
(640)
(601)
1,874
(61,970)
0
(355)
0
107
0
(355)
107
0
(75)
(88)
282
84,362
5,438
5,438
F-6
(3,454)
(3,176)
355
0
(107)
0
0
0
1
General disclosures
The NORDENIA Group (hereinafter also referred to as NORDENIA) is an international Group in the field
of packaging that operates globally in the divisions Advanced Films & Components (AFC), Consumer Flexible
Packaging (CFP), and Services.
By way of Articles of Incorporation and Articles of Association dated April 28, 2010, Nordenia Holdings
AG (hereinafter referred to as Nordenia Holdings) was incorporated as Nordenia Holdings GmbH. The Company’s
registered office is situated in Greven. The Company is registered in the Commercial Register at the Steinfurt
Amtsgericht [Local Court] under HRB 8959. The address is Nordenia Holdings AG, Huettruper Heide 71-81, 48268
Greven.
The Company’s financial year starts on June 29 and ends on June 28 of the following year; the first
financial year is a short financial year which ended on June 28, 2010. Pursuant to the shareholders’ resolution dated
September 6, 2010, the financial year was changed and now equals the calendar year.
Due to the 6-month reporting period in the consolidated income statement and the consolidated cash flow
statement, the disclosed information is comparative to previous year’s information to a limited extent only.
Therefore, for the purpose of comparativeness, an additional column was inserted in these consolidated financial
statements comprising the accumulated figures of the 2010 calendar year.
On July 9, 2010, NORDENIA Holdings issued a high yield bond in the amount of EUR 280 million. After
the distribution of dividends to the shareholders of NORDENIA Holdings and premature repayment of short-term
loans, NORDENIA Holdings was converted into an "Aktiengesellschaft” [stock corporation] under German law
based on the resolution dated September 6, 2010.
Nordenia Holdings is the majority shareholder of NORDENIA International AG.
the reporting period; however, since this merger has not yet been registered in the Commercial Register, it has not
yet become effective. On October 28, 2010, the directors of both companies concluded a corresponding notarized
merger agreement. Upon the merger becoming effective – namely upon registration of the merger in the
Commercial Register of both companies –, NORDENIA International AG will cease to exist. The agreed-upon
merger date is July 1, 2010. However, the Group intends to postpone this date, if the merger has not become
effective by July 15, 2011. The extraordinary annual general meeting of Nordenia Holdings approved the merger
agreement on December 8, 2010, while the extraordinary annual general meeting of NORDENIA International AG
approved it on December 15, 2010. The registration of the merger in the Commercial Register of both companies is
still pending; hence, the merger has not yet become effective. The directors of the NORDENIA Group believe that
the registration of the merger in the Commercial Register is highly likely. Therefore, the consolidated financial
statements of Nordenia Holdings are based on the assumption that the merger will become effective. Upon the
merger becoming effective, Nordenia Holdings AG will change its name to NORDENIA International AG.
The comparative figures indicated in these consolidated financial statements relate to the first short
financial year of Nordenia Holding and the period from January 1 through June 28, 2010, or the balance sheet as at
June 28, 2010, respectively.
The financial statements of Nordenia Holdings on which PricewaterhouseCoopers AG WPG, Osnabrueck
issues an independent auditor's report will be publicly disclosed in the electronic Bundesanzeiger [Federal Gazette].
The directors of Nordenia Holdings released these consolidated financial statements on March 17, 2011 for
public disclosure.
F-7
2
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are
set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1
Basis of preparation
The consolidated financial statements of Nordenia Holdings as at December 31, 2010 were compiled in
accordance with Sec. 315a para. 1 HGB [German Commercial Code] in compliance with the International Financial
Reporting Standards (IFRS) as endorsed by the European Union. The consolidated financial statements have been
compiled under the historical cost convention, as modified by the revaluation of financial assets and financial
liabilities (including derivative instruments) at fair value through profit or loss
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the consolidated financial statements are disclosed in note 2.25.
For the purpose of clearer presentation, various items of the consolidated balance sheet and consolidated
statement of consolidated income were combined. These items are stated separately, together with explanatory
comments, in the notes to the consolidated financial statements. The consolidated income statement is compiled
using the cost-of-sales accounting method.
In order to ensure comparability with previous years, an additional column was inserted in the consolidated
income statement, the consolidated statement of total comprehensive income and the consolidated cash flow
statement that comprises the accumulated figures of the 2010 calendar year.
The consolidated financial statements were compiled based on the assumption that the merger of
NORDENIA International AG and Nordenia Holding will become effective.
2.1.1
Going-concern concept
As a result of the funding activities undertaken and the increased focus on working capital, despite
significant additional debt arising from the granting of corporate bonds, the Group has improved both its short-term
and medium-term liquidity position. In the financial year, the borrowing costs averaged 9.75 % of the financial
liabilities as at the year-end (incl. interest expense related to hedge transactions). Hence, they exceeded previous
year’s costs (5.42 %), but remained below management’s target. The Group planning and forecasts show that the
Group can continue to operate based on the current financing.
After making enquiries, the directors have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the goingconcern basis in preparing its consolidated financial statements.
2.1.2
Changes in recognition and measurement methods and disclosures
2.1.2.1
Standards, interpretations and revised standards and interpretations adopted for the first time in the
financial year
The following standards, interpretations and revised standards and interpretations were adopted in the
financial year beginning on June 29, 2010:
•
IAS 32 – Classification of preemptive rights
In July 2009, the IASB published changes regarding the classification of preemptive rights that shall be
adopted for the first time in reporting periods beginning on or after February 1, 2010. It clarifies how preemptive
rights are recognized when and if they are denominated in a currency other than the enterprise's functional currency.
F-8
All of the announcements and revisions published by the IASB that were to be adopted for the first time in
the current financial year did not have any or no major impact on the Group's net asset, financial and earnings
position.
2.1.2.2
Published but not yet adopted standards, interpretations and revisions
The following standards, interpretations and revised standards and interpretations shall be adopted in
financial years beginning on or after January 1, 2011. The Group did not adopt these standards and interpretations
early:

Annual improvement project 2010:
In the course of the “Annual Improvement Process" the IASB published another collective
standard on May 6, 2010. This collective standard comprises a total of eleven changes of a total of
six individual standards (IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 34) and one interpretation
(IFRIC 13), The changes resulting from the adoption of the collective standard apply – unless
otherwise stated – as of January 1, 2011; the IASB also agrees to companies applying these
revised standards at an earlier date. The revisions had not been endorsed by the EU at the balance
sheet date. Management is currently analyzing what impact the revisions will have. Management
expects that there will be no or no major impact on the Group’s net asset, financial and earnings
position.

IAS 12 (revised): “Deferred Taxes: Recovery of Underlying Assets” was published by the IASB in
December 2010; this revised standard defined which type of recovery is assumed for certain
assets. This is of significance when and if there are varying tax effects depending on the type of
recovery. This revised standard refutably assumes that the carrying amount of investment property
that is recognized at fair value using the revaluation approach described in IAS 40 “Investment
Properties” is recovered upon disposal. Furthermore, it refutably assumes that the carrying amount
of non-depreciable assets that are measured at revaluation using the revaluation approach defined
in IAS 16 "Property, Plant and Equipment” is recovered upon disposal. As a result of this new
standard, Interpretation SIC-21 “Income Taxes – Recovery of Revalued Non-Depreciable Assets”
is suspended. It shall be adopted in financial years beginning on or after January 1, 2012; however,
it has not yet been endorsed by the EU. Management expects that there will be no or no major
impact on the Group’s net asset, financial and earnings position.

IAS 24 (revised): “Related Party Disclosures” was issued in November 2009 and supersedes IAS
24 (2003). The new standard is mandatory for all financial years beginning on or after January
1, 2011. Earlier application is permitted. The revised standard clarifies and simplifies the
definition of a related party. Management is currently analyzing what impact the revisions will
have. Management expects that there will be no or no major impact on the Group’s net asset,
financial and earnings position.

IFRS 7: “Financial instruments: Disclosures”. The revised standard extends the obligations to
disclose information related to transfers of financial assets. This revision shall improve the
transparency of transactions for the purpose of transferring assets in which the transferor retains
risks inherent in the financial assets. This revision also requires additional disclosures when and if
the transfers are not purposed consistently during the financial year. The revised standard is
mandatory for all financial years beginning on or after July 01, 2011. Management is currently
analyzing what impact the revisions will have. The revisions have not yet been endorsed by the
EU. Management expects that there will be no or no major impact on the Group’s net asset,

IFRS 1 “First-time adoption of International Financial Reporting Standards”. The revision results
in two new exceptions for first-time adoption regarding assets in the oil and gas sector and the
determination whether an agreement contains a lease. The revised standard is mandatory for all
financial years beginning on or after July 01, 2010. Earlier application is permitted. The revisions
have not yet been endorsed by the EU. The adoption of the revised IFRS 1 does not have any
F-9
impact on the Group’s consolidated financial statements due to the fact that the Group does not
adopt the IFRS for the first time.

The IASB published IFRS 1 "Severe High Inflation and Removal of Fixed Dates for First-Time
Adopters” in December 2010; it contains two minor revisions of IFRS 1 “First-Time Adoption of
the International Financial Reporting Standards”. The revised standard becomes effective July 1,
2011. Earlier application is permitted. The revisions have not yet been endorsed by the EU. The
adoption of the revised IFRS 1 does not have any impact on the Group’s consolidated financial
statements due to the fact that the Group does not adopt the IFRS for the first time.

IFRS 9 “Financial Instruments” was published in November 2009. This standard is the first step in
the process to replace IAS 39, “Financial Instruments: Recognition and Measurement”. IFRS 9
introduces new requirements for classifying and measuring financial assets and is likely to affect
the Group’s accounting for its financial assets. The standard is not applicable until January 1, 2013
but is available for early adoption. The revisions have not yet been endorsed by the EU. The
Group is yet to assess IFRS 9’s full impact. However, management expects that there will be no or
no major impact on the Group’s net asset, financial and earnings position.

IFRS 14 “IAS 19 – Prepayments of a Minimum Funding Requirement“. The revision of
Interpretation IFRIC 14, IAS 19 “Prepayments of a Minimum Funding Requirement” is relevant
when and if a pension plan prescribes a minimum funding requirement and the company effects
prepayments to meet this requirement. Unlike under the existing provisions, the economic benefits
embodied in prepayments made by the company that reduce future payments due to the minimum
funding requirement are recognized as assets. In the event the minimum funding requirements
relate to prepayments for future services, the interpretation now prescribes that an asset be
recognized that is the aggregate of two amounts. One of the amounts is the voluntarily prepayment
that reduces the minimum funding requirement; on the other hand, the estimated future service
cost have to be taken into account. The estimated funding due to the minimum funding
requirement (not taking into account the prepayments) shall be deducted. The revision is
mandatory for periods beginning on or after January 1, 2011. The revisions should be applied to
the earliest comparative period presented in the first financial statements to which this
interpretation applies. The amendments resulting from the adoption of the revisions should be
recorded in the opening balance of the retained earnings of this comparative period. Management
expects that there will be no or no major impact on the Group’s net asset, financial and earnings
position.

IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”, is mandatory for all
financial years beginning on or after July 1, 2010. The interpretation clarifies the accounting by an
entity when the terms of a financial liability are renegotiated and result in the entity issuing equity
instruments to a creditor of the entity to extinguish all or part of the financial liability (debt for
equity swap), and the creditor is an independent third party. According to IAS 39.41, a gain or loss
to be recognized in profit or loss, which is measured as the difference between the carrying
amount of the repaid financial liability and the consideration. IFRIC 19 clarifies that the equity
instruments issued by the debtor for the purpose of full or partial repayment of the financial
liability are deemed part of the consideration paid. The equity instruments are initially recognized
at fair value. If the fair value of the equity instruments issued cannot be reliably measured, the
equity instruments should be measured to reflect the fair value of the financial liability
extinguished. The equity instruments issued can no longer be recognized at the carrying amount of
the financial liability extinguished, i.e. by way of a mere reclassification of the financial liability
into equity. Management expects that there will be no or no major impact on the Group’s net asset,
These standards and interpretations shall be adopted - subject to the endorsement by the EU - at the firsttime mandatory adoption date.
F-10
2.2
Consolidation standards
a)
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to
govern the financial and operating policies generally accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The cost of the
acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests
issued by the Group. Furthermore, the consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration of cost of the purchase, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the
Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the
net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the
statement of comprehensive income (see note 2.10).
Inter-company transactions, balances and unrealized gains and losses on transactions between Group
companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
b)
Transactions involving non-controlling interests (minority interests)
The Group treats transactions with non-controlling interests as transactions with equity owners of the
Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant
share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals
of non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is
remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the
initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect
of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may
mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate
share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where
appropriate.
c)
Joint ventures
The Group's interests in joint ventures are consolidated using the proportionate method of consolidation.
The Group aggregates the pro rata portion in their income and expenses, assets and liabilities, as well as cash flows
broken down by items with similar items of the Group. Gains and losses from the disposal of the Group’s assets in
joint ventures are recorded in the amount of the portion to which the other investors are entitled. The Group’s shares
in the profits and losses of the joint ventures resulting from the acquisition of assets by the Group are not recorded
F-11
until they are have been resold to an entity that is not part of the NORDENIA Group. However, losses from such
transactions are recorded upon the loss being deemed an objective indication that the net realizable value of current
assets is reduced or that they are impaired.
Group of consolidated companies
NORDENIA Group consists of the following entities:
Nordenia Holdings
Fully consolidated subsidiaries
thereof Germany
thereof other countries
Pro rata consolidated companies
thereof Germany
thereof other countries
2.3
Balance at
06/28/2010
1
20
12
9
1
0
1
Merger
-1
-1
-
Additions
-
Disposals
-
Balance at
12/31/2010
1
19
11
9
1
0
1
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the full board of executives of NORDENIA
International AG.
2.4
Foreign currency translation
a)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (functional currency). The consolidated financial
statements are presented in EUR, which is Nordenia Holdings’ presentation currency.
Unless otherwise indicated, all amounts are stated in thousands of Euros (kEUR).
b)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are remeasured. Gains and losses from the
completion of such transactions and the translation of foreign currency monetary assets and liabilities at closing
rates are recorded in profit and loss.
Foreign exchange gains and losses that relate to cash and cash equivalents and borrowings are presented in
the income statement within “Exchange gains or losses” or “finance income or cost”, respectively.
Translation differences on non-monetary items (such as equities held at fair value through profit or loss) are
recognized in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary items such
as equities classified as available for sale, where the changes in the fair value are recorded in equity, are included
under the currency adjustment item in equity.
F-12
c)
Group companies
The results and balance sheet items of the entire Group that have a functional currency other than EUR are
translated into EUR as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at
the date of that balance sheet;
-
income and expenses for each income statement are translated at average exchange rates;
-
all resulting exchange differences are recognized separately in equity (currency
adjustment item).
On consolidation, exchange differences arising from the translation of the net investment in foreign
operations, and of borrowings are recorded in equity outside profit or loss. When a foreign operation is partially
disposed of or sold, exchange differences that were recorded in equity are recognized in the income statement as
part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate.
The exchange rates of the major currencies developed as follows:
Exchange rate 1 EUR =
China
Malaysia
Morocco
Poland
Russia
Hungary
United States
2.5
Middle rate
at the balance sheet date
12/31/2010
06/28/2010
8.8205
8.3334
4.1268
3.9786
3.9604
4.1347
40.9241
38.2925
277.8400
285.2000
1.3380
1.2291
ISO
code
CNY
MYR
MAD
PLN
RUB
HUF
USD
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and
services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates
and discounts and after eliminating sales within the Group.
The Group produces and sells flexible packaging, technical films and product subassemblies. Revenues
from the sale of the products are generated upon transfer of ownership and risks to the customer if the consideration
is stipulated or can be determined reliably and it is probable that the corresponding receivable will be settled.
2.6
Cost of sales
Cost of sales comprises cost of sold products and services as well as purchase costs of sold merchandise. In
addition to direct cost of material and labor, it also includes indirect overhead costs, including depreciation on
production plants and certain items of property, plant and equipment, as well as impairment of inventories.
F-13
2.7
Research costs and non-recognizable development costs are directly recorded in profit or loss when they
occur. If the criteria set forth in IAS 38 are satisfied, development costs are recognized. For details see notes 2.10b)
and d).
2.8
Financial result
The financial result comprises interest expenses from liabilities that are determined using the effective
interest method, dividends, exchange gains and losses from financial transactions, interest income from receivables,
and gains and losses from financial instruments that are directly recorded in profit or loss. In addition, the interest
expenses from pension provisions and the measurement costs from embedded derivatives are reported as interest
expense.
The interest income is directly recorded in profit using the effective interest method. Dividends are directly
recorded in profit if a resolution regarding the distribution has been passed. The prorated interest income from
finance leases is determined using the effective interest method. Furthermore, the expected income from plan assets
as well as the measurement gains from embedded derivatives is reported as interest income from the reporting
period onwards.
2.9
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognized in the income
statement, except to the extent that it relates to items recognized in other comprehensive income or directly in
equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is
not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income
tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date
and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability
is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and
associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.
F-14
2.10
Intangible assets
a)
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the
net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries
is included in “Intangible assets”. Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made
to those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose, identified according to operating segment.
b) Software and software development costs
Acquired software licenses are recorded based on the costs incurred at the acquisition or the preparation of
the software for its intended use. These costs are amortized over the estimated useful life of 3 - 5 years.
Development costs that are directly attributable to the design and testing of identifiable and unique
software products controlled by the Group are recognized as intangible assets when the following criteria are met:

it is technically feasible to complete the software product so that it will be available for use;

management intends to complete the software product and use or sell it;

there is an ability to use or sell the software product;

it can be demonstrated how the software product will generate probable future economic benefits;

adequate technical, financial and other resources to complete the development and to use or sell
the software product are available; and

the expenditure attributable to the software product during its development can be reliably
measured.
Directly attributable costs that are capitalized as part of the software product include the software
development employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognized as an expense as incurred.
Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
Computer software development costs recognized as assets are amortized over their estimated useful lives,
which does not exceed five years.
c)
Concessions, industrial property rights
Concessions and industrial property rights are recorded at historical cost. Concessions and industrial
property rights acquired in a business combination are recognized at fair value at the acquisition date. Concessions
and industrial property rights have a finite useful life and are carried at cost less accumulated amortization.
Amortization is calculated based on the estimated useful lives of the respective agreement.
F-15
d) Development costs
Development costs that are directly attributable to the design and testing of identifiable products and
processes controlled by the Group are recognized as intangible assets when the following criteria are met:

it is technically feasible to complete the products and processes so that it will be available for use;

management intends to complete the products and processes and use or sell it;

there is an ability to use or sell the product and processes;

it can be demonstrated how the products and processes will generate probable future economic
benefits;

adequate technical, financial and other resources to complete the development and to use or sell
the products and processes are available; and

the expenses attributable to the development of the products and processes can be measured
reliably.
Directly attributable costs that are capitalized as part of the products and processes include the development
employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognized as an expense as incurred.
Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
Development costs recognized as assets are amortized over their estimated useful lives, which does not
exceed five years.
2.11
Property, plant and equipment are measured at cost less depreciation based on the estimated useful life and
impairment losses. The costs of internally generated assets comprise all costs directly attributable to the production
process and production-related overhead costs. This includes production-related depreciation, prorated productionrelated administrative costs, as well as prorated social security costs.
The costs relating to the generation of qualifying assets, i.e. assets that require a significant period of time
(more than 12 months) to be put into a ready-to-use state, include capitalized borrowing costs to the extent that they
meet the criteria set forth in IAS 23.
Government grants for the acquisition or production of property, plant and equipment do not affect the cost
but are reported separately and reversed over the estimated useful life of the subsidized item of property, plant and
equipment through profit or loss.
Depreciation on property, plant and equipment is recorded using the straight-line method and reported in
the function costs. The useful life and depreciation methods are reviewed annually and adjusted to the current
situation and circumstances.
The measurement is based on the following useful lives:
Buildings
Technical equipment, plant and machinery
Other technical equipment, fixtures, fittings, and office equipment
10-50 years
2-10 years
3-10 years
Items of property, plant and equipment are written off on a pro rata basis in the year in which they are
acquired.
F-16
If special events or market trends indicate that an asset is impaired, an impairment test is performed to
assess the carrying amount of the asset (including capitalized development costs).
In this impairment test the carrying amount of the asset and the recoverable value – which is the higher of
the fair value less costs to sell and the value in use – are compared. When determining the recoverable amount based
on the value in use, future cash flows are discounted at a risk-based interest rate. When determining the future cash
flows, the current and future earnings, as well as business segment-related, technological, economic and general
trends are taken into account. If the net carrying amount of assets exceeds the total amount of discounted cash flows,
impairment losses are recorded.
If an asset is no longer impaired, the impairment losses are reversed to the maximum amount of amortized
cost.
For details regarding the accounting of assets from leases please see the explanatory comments on the
accounting of lease agreements (note 29).
2.12
Assets are classified as financial investments if they are required for the business operation and to generate
additional income or appreciation.
In principle, investment properties are measured using the cost method; this also applies to subsequent
recognition. Investment properties are not depreciated.
2.13
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial instruments are in particular cash and cash equivalents,
trade receivables and other loans and receivables granted, financial investments held to maturity and original and
derivative financial assets held for trading. Financial obligations usually result in a repayment claim in cash or in
another financial asset. This includes in particular borrowings and other certified liabilities, trade payables, amounts
due to banks, liabilities from finance lease agreements, borrower’s note loans, and derivative financial liabilities.
Financial assets are recognized as soon as NORDENIA becomes party to an agreement regarding a
financial instrument. However, in the case of standard market acquisitions and disposals the performance date is
relevant for initial recognition and disposal in the accounts.
Classification
Financial assets are divided into the following categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also
categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current
assets.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months after
the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables
comprise “Trade and other receivables” and “Cash and cash equivalents” in the balance sheet.
F-17
(c)
Assets available for sale
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless the investment matures or
management intends to dispose of it within 12 months of the end of the reporting period.
Recognition and measurement
Financial assets that are not designated to the category “At fair value through profit or loss” are initially
recognized at their fair value less transaction costs. Financial assets carried at fair value through profit or loss are
initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are
derecognized when the rights to receive cash flows from the investments have expired or have been transferred and
the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and
financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are
subsequently carried at amortized cost using the effective interest method.
Gains and losses arising from financial assets at fair value through profit or loss are presented in the income
statement within “Financial income or expense” in the period in which they arise.
Changes in the fair value of monetary securities denominated in foreign currency classified as available for
sale are analyzed between translation differences resulting from changes in the amortized cost of the security and
other changes in the carrying amount of the security. Translation differences relating to changes in amortized cost
are recognized in profit or loss, and other changes in carrying amount are recognized in other comprehensive
income. Gains or losses arising from monetary securities are presented in the income statement outside profit or
loss; the gains or losses arising from non-monetary securities are presented in other comprehensive income. Changes
in the fair value of monetary and non-monetary securities classified as available for sale are recognized in other
comprehensive income.
When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments
recognized in equity are included in the income statement as “Financial income or expense”.
Interest on available-for-sale securities calculated using the effective interest method is recognized in the
income statement as part of interest income.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a
legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize
the asset and settle the liability simultaneously.
Impairment of financial assets
(a) Assets carried at amortized cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on
the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

significant financial difficulty of the issuer or obligor;

a breach of contract, such as a default or delinquency in interest or principal payments;

the Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to
the borrower a concession that the lender would not otherwise consider;
F-18

it becomes probable that the borrower will enter bankruptcy or other financial reorganization;

the disappearance of an active market for that financial asset because of financial difficulties; or

observable data indicating that there is a measurable decrease in the estimated future cash flows
from a portfolio of financial assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial assets in the portfolio, including:
(i) adverse changes in the payment status of borrowers in the portfolio; and
(ii) national or local economic conditions that correlate with defaults on the assets in the
portfolio.
The Group first assesses whether objective evidence of impairment exists.
In the loans and receivables category, the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have
not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset
is reduced and the amount of the loss is recognized in the consolidated income statement. If a loan or held-tomaturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current
effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment
on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s
credit rating), the reversal of the previously recognized impairment loss is recognized in the consolidated income
statement.
(b) Assets classified as available for sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (a) above.
In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value
of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for availablefor-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the
current fair value, less any impairment loss on that financial asset previously recognized in profit or loss– is
removed from equity and recognized in the separate consolidated income statement. Impairment losses recognized
in the separate consolidated income statement on equity instruments are not reversed through the separate
consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available
for sale increases and the increase can be objectively related to an event occurring after the impairment loss was
recognized in profit or loss, the impairment loss is reversed through the separate consolidated income statement.
2.14
Financial assets
The financial assets include investments in non-consolidated companies and investments where the
percentage share does not exceed 20 %. They are measured at cost due to the fact that the fair values are not
available and other applicable measurement methods do not lead to any reliable results. The respective financial
assets are recorded under “Financial assets available for sale”.
2.15
Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the
ordinary course of business. Receivables that fall due within one year are classified as current receivables;
receivables that fall due after more than one year are classified as non-current receivables.
F-19
Trade receivables are initially recognized at fair value and are classified as “Loans and receivables“(see
note 31.1). Trade receivables are subsequently measured at amortized cost using the effective interest method and
less impairment losses.
2.16
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less and bank overdrafts. In the consolidated balance
sheet, bank overdrafts are shown within borrowings in current liabilities. Cash and cash equivalents are measured
and recognized at their nominal values.
2.17
Derivative financial instruments
Derivative financial instruments are initially recognized at fair value at the closing date of the agreement.
They are recorded under “Financial assets at fair value through profit or loss” (see note 31.1). They are subsequently
recognized at fair value at the respective balance sheet date.
2.18
Inventories
Inventories are recognized at the lower of cost and net realizable value. The net realizable value is the
estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale. In
addition to the direct costs, the cost of production include production-related portions of necessary material and
production overhead costs, as well as depreciation of items of property, plant and equipment and intangible assets
attributed to the production. Administrative costs and social security expenses are taken into account to the extent
that they are attributable to the production (production-related full cost approach). Measurement is at average costs.
2.19
The actuarial measurement of pension provisions is based on the projected unit credit method described in
IAS 19 “Employee Benefits”.
In this method, not only known pensions and accrued commitments are accounted for, but also estimated
future increases in salaries and pensions. The calculation of significant pension obligations is based on actuarial
expert reports prepared by an independent expert, taking into account biometric accounting bases. Actuarial gains
and losses are offset directly against equity (OCI method).
The interest rate used to determine the present value of the obligations was assessed based on the yields of
high quality fixed-interest corporate bonds of the respective currency region.
The expenditure resulting from the measurement of the pension provisions, including the corresponding
interest portion, is attributed to the costs in the individual functions. The discounting of the pension obligations and
the estimated income from plan assets are reported in the financial result.
2.20
Other provisions
According to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, Other provisions are
recognized to the extent that the company has a present obligation as a result of a past event and it is probable that
an outflow of resources embodying economic benefits will occur and that a reliable estimate can be made of the
amount of the obligation.
Provisions are recognized for foreseeable risks and contingent liabilities in the amount of the expenditure
expected to be required to settle the obligation and are not offset against reimbursements. The expenditure required
F-20
to settle the obligation also includes increases in costs to be accounted for at the balance sheet date. Provisions are
discounted if the effect is material.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. Increases in the provisions resulting from mere discounting are recorded as interest
expenses in profit or loss.
Provisions for warranties are recognized taking into account the current or estimated future damage.
Warranty provisions are recognized based on experience in respect to similar products; they are determined as a
percentage of the sold products. Provisions for losses from orders are recognized in full in the reporting period in
which the estimated total costs resulting from the respective agreement exceed the expected revenues.
Demolition obligations are recognized at the date at which they occur at the discounted value of the
obligation and at the same time the same amount is recognized as provisions on the liabilities side.
2.21
Borrowings and liabilities
Borrowings and liabilities are initially measured at fair value. Since all borrowings and liabilities are
subsequently not measured at fair value through profit or loss, transaction costs are deducted in initial recognition.
All borrowings and liabilities are attributed to the category “Financial liability at amortized cost”.
Subsequently, all borrowings and liabilities are measured at amortized cost. Differences between the
payment net of transaction costs and the repayment amount are presented in the income statement using the effective
interest method.
Trade payables are payment obligations related to goods and services acquired in the course of ordinary
business operations. The liabilities are classified as current debt when payment is due within one year. If not, they
are presented as non-current debt.
2.22
Leases
Leases are classified as finance leases if, as a result of the terms of the lease, basically all risks and rewards
attributed to the ownership are transferred to the lessee. All other leases are classified as operating leases. The
companies of the NORDENIA Group enter into lease agreements as the lessee.
Assets held under finance leases are recorded at the lower of fair value of the asset or the present value of
the respective minimum lease payments as assets of the Group at the beginning of the lease. The corresponding
liability due to the lessor is recognized in the balance sheet as “Other liability – obligation from finance lease“. The
lease payments are attributed on a prorated basis to the financial expenses and the decrease of the lease obligation
resulting in a constant interest rate on the remaining balance of the obligation for each reporting period. The
financial expenditure is recorded directly in profit or loss unless it can be directly attributed to a qualified asset. In
those cases, the cost is recognized in accordance with the general Group guidelines for credit costs and IAS 23. The
property, plant and equipment held under a finance lease are written off over the shorter of the estimated useful life
of the asset or the term of the lease.
Lease payments resulting from operating leases are recognized directly in profit or loss over the term of the
lease using the straight-line method.
2.23
Non-current held-for-sale assets and disposal groups, and discontinued operations
Non-current assets and disposal groups are reported separately as “available for sale” in the balance sheet,
if they can be sold in their current condition and the sale is probable. When classifying the assets as “available for
sale“, they are recognized at their fair value less costs to sell in the event their fair value is lower than their carrying
F-21
amount. Depending on their classification, the liabilities on the liabilities side directly attributable to these noncurrent assets and disposal groups are reported as "held for sale". Discontinued operations are reported separately
when the operation is an independent transaction that represents a separate major line of business or geographical
area of operations, is offered for sale and the Group management has initiated an official sales process.
2.24
Stock options
Stock options involving equity instruments are measured at the fair value at the date at which the option is
granted. This fair value is recorded as personnel expenses over the vesting period. Terms and conditions for
exercising the options that do not depend on market conditions are taken into account in the assumption regarding
the number options that are expected to be exercised. The obligations from share-based payment transactions
involving cash benefits (virtual stock options) are recorded as provisions and measured at the fair value applicable at
the balance sheet date. The expenses are recorded over the vesting period. The fair value of stock options and virtual
stock options is determined using the internationally accepted Black-Scholes method.
2.25
Critical accounting estimates and judgments
When compiling consolidated financial statements in accordance with IFRS, some balance sheet items
require discretionary decisions and estimates that affect the recognition and measurement in the balance sheet and
income statement. The actual amounts may differ from those estimates.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below:
Estimates are in particular required in the following cases
-
Determination of the necessity and measurement of impairment losses on intangible assets, items of
property, plant and equipment, as well as inventories;
Recognition and measurement of pension obligations, anniversary bonuses, and stock options;
Property, plant and equipment, as well as intangible assets are measured based on estimates of the fair
value at the acquisition date, if those items were acquired in the course of a business combination. Furthermore, the
useful life of the assets has to be estimated. The fair value of assets and liabilities, as well as the useful life of assets
are determined based on management's estimates.
When determining impairment losses on items of property, plant and equipment and intangible assets,
estimates are made as well that relate – among others – to the cause, date and amount of impairment. Impairment
results from a number of factors. In principle, changes in current competition, expectations regarding the growth in
the packaging industry, increases in capital costs, changes in the availability of financial resources, technological
obsolescence, discontinuation of services, current replacement costs, purchase prices paid in similar transactions,
and other changes affecting the circumstances that indicate that impairment has occurred are accounted for. The net
realizable amount and fair values are usually determined using the discounted cash flow method which also involves
appropriate assumptions of market participants. When identifying aspects that indicate that there is impairment,
management has to make significant estimates of future cash flows and the fair values of assets (or groups of assets).
The Group tests annually – in accordance with the accounting policy described in note 2.10a) – whether
goodwill has suffered an impairment. The recoverable amounts of cash-generating units have been determined based
on value-in-use calculations. These calculations require the use of estimates. For details see note 17.
Management records impairment losses on doubtful accounts in order to account for expected losses that
result from customer’s insolvency. The bases used by management in order to assess the appropriateness of the
impairment losses on doubtful accounts are the maturity structure of the receivables and past experience in respect
to the derecognition of receivables, the customer’s credit rating, and changes in terms of payment. In the event the
F-22
customer’s financial situation worsens, the scope of the actual amount to be derecognized may exceed the expected
derecognition.
Since 2001, trade receivables of subsidiaries have been sold and assigned to Kaiserplatz Purchaser No. 5
Ltd., Jersey, (KP5) in ABS transactions (asset backed securities). When recognizing the disposal of trade
receivables, management must evaluate whether the transferee (KP5) should be included in the consolidated group
of the NORDENIA Group and whether the disposal is deemed a disposal of receivables as defined in IAS 39.
Whether the transferee should be consolidated shall be determined based on the criteria of SIC-12 “Consolidation of
Special-Purpose Entities”. The basis used by management with respect to the criteria of SIC-12 and IAS 39 are the
agreements with KP5, the credit standing of the customers, the estimated future cash flows from the receivables sold
(timing and amount), as well as a forecast of future interest and exchange rate trends in the financial markets. Hence,
management has to make estimates and forecasts with respect to the criteria of SIC-12 and IAS 39.
Income taxes have to be estimated for each tax jurisdiction in which the Group operates. The expected
actual income tax for each taxable unit has to be calculated and temporary differences resulting from different
treatment of certain balance sheet items in the consolidated IFRS financial statements and the tax base have to be
evaluated. If temporary differences occur, those differences basically result in the recognition of deferred tax assets
and liabilities in the consolidated financial statements. Management has to make estimates when calculating actual
and deferred taxes. Deferred tax assets are recognized to the extent that it is probable that the assets will be utilized.
The utilization of deferred tax assets depends on the possibility to generate sufficient taxable income in the
respective tax category and tax jurisdiction; legal restrictions regarding maximum loss carryforward periods have to
be taken into account. When assessing whether a future utilization of deferred tax assets is probable, various factors
have to be taken into account, e.g. earnings position in the past, operational plans, loss carryforward periods, tax
plan strategies. If the actual results deviate from those estimates or if the estimates have to be adjusted in the future,
adverse effects on the net assets, financial and earnings position may occur. In the event the impairment test of
deferred tax assets results in a change in the assessment, impairment losses shall be recognized on the recognized
deferred tax assets in profit and loss.
Pension obligations relating to employee benefits are, in principle, covered by plans that are classified and
recognized as defined benefit plans. Expenses for old-age pensions are determined using actuarial methods that are
based on assumptions regarding the interest rate, life expectancy, and – to a limited extent – the expected earnings
from plan assets. The estimates of the expected earnings from plan assets only affect the expenses for old-age
pensions to a limited extent. They are in part based on actuarial valuations that in turn are based on assumptions
such as the interest rates that are used to calculate the pension obligation. The assumptions regarding the expected
earnings from plan assets are made on a standard basis of long-term historical yields in the past, the asset strategy, as
well as estimates of non-current income from assets. In the event other modifications of the assumptions regarding
interest rates or expected earnings from plan benefits are required, such modification may have material impact on
the amount of expenses for old-age pensions in the future.
The recognition and measurement of the provisions and the amount of contingent liabilities relating to
pending legal proceedings or other pending claims from out-of-court settlements, mediation, arbitration or
government proceedings and other contingent liabilities, respectively, require major estimates by NORDENIA.
Hence, the assessment of whether it is probable that pending proceedings will be successful or a liability will be
incurred and the amount of the respective obligation is based on the assessment of the respective situation and
circumstances. Provisions are recognized for liabilities, if losses from pending transactions are expected, it is
probable that a loss will be incurred, and this loss can be estimated reliably. Due to the uncertainties related to such
assessment, the actual losses may deviate from the original estimates and thus from the amount accrued. In addition,
major estimates have to be made when determining the provisions for taxes, environmental liabilities and legal risks.
Those estimates may change due to new information. NORDENIA obtains new information primarily from services
of internal experts or external experts such as actuarians or legal consultants. Changes in the estimates of those
impending losses from pending transactions may have a significant impact on the future earnings position.
The recognition and measurement of other provisions is based on the estimated probability of possible
outflows of economic benefits and on experience and the circumstances known at the balance sheet date. The actual
outflow of economic benefits may therefore deviate from the other provisions.
F-23
the reporting period; however, since this merger has not yet been registered in the Commercial Register, it has not
yet become effective in the reporting period. The directors of the NORDENIA Group believe that the registration of
the merger in the Commercial Register is highly likely. Therefore, the consolidated financial statements of Nordenia
Holdings are based on the assumption that the merger will become effective.
F-24
Disclosures and explanatory comments on the consolidated income statement
3
Sales
Sales primarily comprise revenue from the sale of products less trade discounts and rebates, as well as
incidental revenues from the sale of energy and waste materials, commissions and revenues from the recharging of
setup costs, engravings and clichees. Service revenue is primarily generated as intercompany service revenue by
companies in the Services division.
06/29-12/31
01/01-06/28
2010
2010
2010
kEUR
kEUR
kEUR
Revenue from
- Films ...................................................................................
191,078
185,941
377,019
- Product components ............................................................
137,681
122,819
260,500
- Bags, FIBCs ........................................................................
66,658
65,026
131,684
- Merchandise ........................................................................
9,339
9,647
18,986
Auxiliary revenues..................................................................
10,765
16,493
27,258
Sales deductions .....................................................................
-7,435
-6,515
-13,950
408,086
393,411
801,497
4
Cost of sales
Cost of sales comprises cost of sold products, as well as purchase costs of sold merchandise. In addition to
directly attributable costs such as material, labor and energy costs, it also includes general overhead costs, including
depreciation.
Cost of sales also includes additions to warranty provisions and provisions for losses from orders.
Cost of sales breaks down as follows:
06/29-12/31
01/01-06/28
2010
2010
2010
kEUR
kEUR
kEUR
Material expenses ...................................................................
245,279
228,260
473,539
Personnel expenses.................................................................
48,524
46,575
95,099
Depreciation/amortization ......................................................
12,525
12,579
25,104
Operating expenses.................................................................
10,018
10,141
20,159
Maintenance expenses ............................................................
8,477
6,974
15,451
Energy costs ...........................................................................
8,346
8,999
17,345
Consumables ..........................................................................
4,896
4,438
9,334
Warranty expenses..................................................................
739
776
1,515
338,804
318,742
657,546
F-25
5
Selling costs
Freight and commissions........................................................
Operating expenses.................................................................
Purchased services..................................................................
Other selling costs ..................................................................
6
06/29-12/31
2010
kEUR
8,618
5,480
3,053
469
361
2,295
20,276
01/01-06/28
2010
kEUR
8,397
5,639
2,989
482
358
2,034
19,899
2010
kEUR
17,015
11,119
6,042
951
719
4,329
40,175
06/29-12/31
2010
kEUR
14,125
2,863
1,288
1,215
685
20,176
01/01-06/28
2010
kEUR
20,192
2,692
1,570
1,211
196
25,861
2010
kEUR
34,317
5,555
2,858
2,426
881
46,037
General administrative expenses
Audit and consulting services.................................................
IT expenses.............................................................................
Other general administrative expenses ...................................
Provisions related to the stock option program in the amount of kEUR 3,883 (prev. period: kEUR 10,240)
affected the personnel expenses.
7
Research costs
In addition to the research costs, this item also includes non-capitalizable development costs according to
IAS 38.
06/29-12/31
2010
kEUR
Research and development costs ............................................
8
2,624
01/01-06/28
2010
kEUR
2,685
2010
kEUR
5,309
Exchange gains and losses
This item comprises exchange gains and losses resulting from the Company’s activities that are not
attributable to financing.
The exchange gains and losses include in particular: exchange gains and losses from trade receivables,
trade payables, intercompany cash accounts, foreign currency hedges related to operating activities, as well as
foreign currency bank wires related to other receivables/liabilities.
F-26
Exchange losses from operating activities..............................
Exchange gains from operating activities...............................
9
01/01-06/28
2010
kEUR
3,630
4,095
-465
2010
kEUR
4,466
4,350
116
06/29-12/31
2010
kEUR
01/01-06/28
2010
kEUR
2010
kEUR
Income from the reversal of provisions, accruals and
deferrals ..................................................................................
Compensations .......................................................................
Income from recharging .........................................................
Income from subsidies............................................................
Rebate credit notes .................................................................
Income from retransfer of allowance......................................
Insurance reimbursements ......................................................
Proceeds from sale of non-current assets................................
Income relating to a different accounting period....................
Other operating income ..........................................................
10
06/29-12/31
2010
kEUR
1,026
445
581
2,858
423
322
142
98
70
67
18
14
327
4,339
2,570
0
182
126
342
205
17
279
410
481
4,612
5,428
423
504
268
440
275
84
297
424
808
8,951
06/29-12/31
2010
kEUR
1,074
1,032
379
358
0
2,843
01/01-06/28
2010
kEUR
126
0
199
242
25
592
2010
kEUR
1,200
1,032
578
600
25
3,435
Additions to impairment losses on doubtful accounts
Other taxes..............................................................................
Expenses relating to a different accounting period.................
Expenses relating to disposal of non-current assets................
Other operating expenses .......................................................
F-27
11
Financial income
Income from measurement of finance swaps .........................
Income from borrowings ........................................................
Other interest income .............................................................
Exchange gains from financial transactions ...........................
Other financial income ...........................................................
12
01/01-06/28
2010
kEUR
0
696
419
2,106
0
3,221
2010
kEUR
1,755
1,419
954
2,259
38
6,425
Financial expenses
Interest expenses.....................................................................
Expenses relating to measurement of options.........................
Exchange losses from financial transactions ..........................
Impairment losses on financial assets.....................................
Expenses relating to measurement of finance swaps..............
Other financial expenses.........................................................
13
06/29-12/31
2010
kEUR
1,755
723
535
153
38
3,204
06/29-12/31
2010
kEUR
17,104
2,990
986
362
0
519
21,961
01/01-06/28
2010
kEUR
5,076
0
243
105
3,523
0
8,947
2010
kEUR
22,180
2,990
1,229
467
3,523
519
30,908
Taxes on income and earnings
The income tax claims disclosed in the balance sheet are as follows:
12/31/2010
kEUR
Current income tax claims ..............................................................................................
747
06/28/2010
kEUR
447
The taxes on income and earnings at the NORDENIA Group break down as follows:
Current tax assets and liabilities .............................................
Tax assets and liabilities relating to a different accounting
period......................................................................................
Deferred tax assets and liabilities ..........................................
06/29-12/31
2010
kEUR
387
01/01-06/28
2010
kEUR
11,260
2010
kEUR
11,647
-206
3,386
3,567
519
-4,526
7,253
313
-1,140
10,820
In the short financial year, the German total income tax rate is 30.0 % (prev. period: 30.0 %).
The income tax rates of the foreign companies range between 10.0 % and 38.0 % (prev. period: 19.0 % and
38.0 %). The tax rate in Hungary fell from 19.0 % to 10.0 %. There were no other changes in tax rates.
The following chart shows the reconciliation of the tax expenses anticipated in the respective period and
the disclosed tax expenses. In order to determine the anticipated tax expenses the respective applicable German total
tax rate is multiplied by the earnings before taxes.
F-28
Earnings before income taxes on continued operations..............
Earnings before income taxes on discontinued operations .........
Earnings before taxes .................................................................
06/29-12/31
2010
kEUR
8,364
0
8,364
01/01-06/28
2010
kEUR
24,983
-926
24,057
2010
kEUR
33,347
-926
32,421
Income tax rate (incl. trade tax) of Nordenia Holdings ..............
Anticipated income tax expenditure .......................................
30.00 %
2,509
30.00 %
7,217
30.00 %
9,726
Tax difference - Foreign countries ............................................
Effects of deviating rates in Germany ........................................
Tax reductions resulting from tax-free income...........................
Increases in taxes resulting from non-deductible expenses ........
Tax increase resulting from non-deductible expenses from the
sale of consolidated units............................................................
Increases in taxes resulting from additions for trade tax
purposes......................................................................................
Tax assets and liabilities relating to a different accounting
period..........................................................................................
Effect from changes in tax rates (Hungary)................................
Impairment losses on deferred tax assets on loss
carryforwards, as well as temporary differences ........................
Utilization of adjusted deferred tax assets on loss
carryforwards..............................................................................
Other differences ........................................................................
270
2
-625
841
100
-1
-172
133
370
1
-797
974
0
332
332
550
97
647
-237
112
434
0
197
112
400
7
407
-2
-251
-840
-54
-842
-305
Disclosed income tax expenses.................................................
Effective tax burden ...................................................................
3,567
42.66 %
7,253
30.15 %
10,820
33.38 %
No income taxes are triggered by Nordenia Holdings, Greven/Germany, distributing dividends to its
shareholders.
For details regarding pending tax law disputes with the tax authorities see the disclosures in note 40.4.
The taxes in the amount of kEUR -229 recorded in other comprehensive income include actuarial gains and
losses of kEUR 122 and assets held for sale in the amount of kEUR -107.
14
Earnings/losses from discontinued operations
In the previous year, the NORDENIA Group disposed of the NORDENIA Morocco Casablanca S.A.R.L.
operation. The losses from this discontinued operation break down as follows:
F-29
06/29-12/31
2010
kEUR
NORDENIA Morocco Casablanca S.A.R.L...............................
Total from separate financial statements ....................................
Measurement at fair value/ ........................................................
Deconsolidation effect (profit/loss) ............................................
15
01/01-06/28
2010
kEUR
2010
kEUR
0
0
0
0
0
0
0
0
-926
-926
-926
-926
Other disclosures and explanatory comments on the consolidated income statement
06/29-12/31
2010
kEUR
01/01-06/28
2010
kEUR
2010
kEUR
Costs of raw material and supplies,
finished and unfinished goods, as well as merchandise ...............
Expenses for purchased services .................................................
Material expenses.......................................................................
248,728
2,682
251,410
233,762
2,489
236,251
482,490
5,171
487,661
Wages and salaries.......................................................................
Social security taxes.....................................................................
Expenses for old-age pensions.....................................................
Personnel expenses.....................................................................
06/29-12/31
2010
kEUR
58,261
10,737
830
69,828
01/01-06/28
2010
kEUR
63,187
10,165
888
74,240
2010
kEUR
121,448
20,902
1,718
144,068
Depreciation of intangible assets and property,
plant and equipment ..................................................................
14,322
14,409
28,731
For details on the breakdown by categories of assets see the schedule of non-current assets in notes 17 and
18.
16
Portion of earnings/losses attributable to non-controlling interests
Minority interests of the Company
%
NORDENIA International AG .................................. 11.64 *)
NORDENIA Deutschland Lohne GmbH ..................
10.0
Polireal S.L. ...............................................................
89.6 **)
Portion of earnings/losses attributable to noncontrolling interests .........................................................
06/29-12/31
2010
kEUR
0
-4
-638
01/01-06/28
2010
kEUR
340
2
-
2010
kEUR
340
-2
-638
-642
342
-300
*) This item relates to the minority interests resulting from the restructuring of the operations as at June 28, 2010; the
ratio is determined based on the stocks that are not held as treasury stock. Upon the merger of NORDENIA
International AG onto Nordenia Holdings effective July 1, 2010, the minority interests ceased.
**) Upon effectiveness of the new standard IAS 27 (2008), annual net losses attributable to minority interests are
attributed to the minority interests also in those cases where they do not exceed the equity portion attributable to the
minority interests and there is no obligation to make subsequent contributions. The annual net earnings of kEUR 82
attributable to the minority interests for the period from January 1 to June 28, 2010 is not disclosed but offset
against losses attributable to the minority interests until the revision of IAS 27.
F-30
17
Intangible assets
Intangible assets are goodwill, development costs, patents, software, licenses, and similar rights.
The impairment test was performed using the DCF method based on a multi-year plan of Nordenia
(Malaysia) Sdn. Bhd., Ipoh/Malaysia. While the growth rates are accounted for by the cash flow trends in the
calculation, the Company's future cash flows were measured using a discount rate of 7 % that also covers countryspecific risks.
The development costs include acquired and internally generated development costs that satisfy the criteria
of IAS 38.
Depreciation on intangible assets is included in the corresponding function costs in the consolidated income
statement. For details regarding total depreciation see note 15.
Impairment test for goodwill
Goodwill is the difference not attributable to the acquired built-in gains from the acquisition of 50 % of the
shares in NORDENIA (Malaysia) Sdn. Bdh., Ipoh/Malaysia from the former joint venture partner. The abovedescribed company was identified as the smallest cash-generating unit for the impairment test.
Goodwill is not depreciated and is subject to an annual impairment test.
The recoverable amount of the cash-generating unit was determined based on the value in use. The amount
was measured by discounting the expected cash flows of the Company. The detailed budget period runs from 2011
through 2014; it is based on assumptions with respect to future sales prices, sales volumes and costs, taking into
account the underlying economic conditions. Perpetuity at a general growth rate of 1.5 % was determined for the
period after this four-year detailed budget period. The weighted capital cost rate before taxes on which the
calculation is based is 9.22 %. The value in use so determined exceeded the carrying amount as at December 31,
2010. An impairment loss would neither have resulted from a deviation of the future cash flows by 44 %.
F-31
The intangible assets of the NORDENIA Group developed as follows in the short financial year ended
December 31, 2010 and the previous period:
Concessions
industrial
Development
DownGoodwill Software property rights
costs
payments
Total
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
Balance as at Jan. 1, 2010
7,374
17,458
2,900
562
0
28,294
Changes in currency exchange
rates..........................................
-2
119
147
0
0
264
Changes in the group of
consolidated companies ...........
0
-99
0
0
0
-99
Additions..................................
0
476
3
0
0
479
Disposals..................................
0
-36
-3
-37
0
-76
Reclassifications ......................
0
185
0
38
0
223
Balance as at June 28, 2010 /
June 29, 2010 ..........................
7,372
18,103
3,047
563
0
29,085
rates..........................................
0
-56
-52
0
0
-108
Additions..................................
0
380
121
21
166
688
Disposals..................................
-261
-25
0
0
0
-286
0
33
24
47
79
183
Balance as at Dec. 31, 2010
7,111
18,435
3,140
631
245
29,562
Accumulated depreciation
rates..........................................
Additions..................................
Disposals..................................
June 29, 2010 ..........................
rates..........................................
Additions..................................
Disposals..................................
Net carrying amount as at
Dec. 31, 2010
Net carrying amount as at
June 28, 2010
992
16,210
1,002
291
0
18,495
-2
117
66
0
0
181
0
0
0
0
-77
318
-36
0
0
253
-3
0
0
89
0
0
0
0
0
0
-77
660
-39
0
990
16,532
1,318
380
0
19,220
E
0
-261
0
730
-54
369
-25
0
16,822
-24
267
0
0
1,561
-1
41
0
0
420
0
0
0
0
0
-78
677
-286
0
19,533
6,381
1,613
1,579
211
245
10,029
6,382
1,571
1,729
183
0
9,865
F-32
18
The property, plant and equipment of the NORDENIA Group developed as follows in the short
year ended December 31, 2010 and the previous period:
Other
Technical
equipment,
Downpayments
Land,
fixtures,
equipm.,
and
leasehold
plant and
fittings and
work in
rights
Buildings machinery office equipment
process
kEUR
kEUR
kEUR
kEUR
kEUR
Balance as at Jan. 1, 2010......
7,336
114,914
380,583
61,011
8,436
rates..........................................
106
4,687
16,987
883
875
-269
-1,193
-2,483
-1,331
0
Additions..................................
0
152
2,581
1,196
5,827
Disposals..................................
0
0
-2,132
-1,495
0
0
33
1,769
148
-2,173
June 29, 2010 ..........................
7,173
118,593
397,305
60,412
12,965
rates..........................................
-12
-2,043
-6,519
-93
-479
Additions..................................
5
1,382
9,200
2,446
2,996
Disposals..................................
0
-297
-980
-579
-21
187
6,119
4,678
97
-11,139
Balance as at Dec. 31, 2010....
7,353
123,754
403,684
62,283
4,322
Balance as at Jan. 1, 2010......
rates..........................................
Additions..................................
Disposals..................................
June 29, 2010 ..........................
rates..........................................
Additions..................................
Disposals..................................
Net carrying amount as at Dec
31, 2010 ...................................
Net carrying amount as at Jun
28, 2010 ...................................
financial
Total
kEUR
572,280
23,538
-5,276
9,756
-3,627
-223
596,448
-9,146
16,029
-1,877
-58
601,396
78
34,507
282,173
43,341
0
360,099
19
1,486
12,754
645
0
14,904
0
3
0
0
-238
1,437
0
0
-1,910
9,913
-1,969
0
-923
2,396
-1,412
0
0
0
0
0
-3,071
13,749
-3,381
0
100
37,192
300,961
44,047
0
382,300
-4
4
0
0
100
-730
1,508
-23
0
37,947
-4,977
9,768
-872
0
304,880
-125
2,366
-543
0
45,745
0
0
0
0
0
-5,836
13,646
-1,438
0
388,672
7,253
85,807
98,804
16,538
4,322
212,724
7,073
81,401
96,344
16,365
12,965
214,148
Impairment losses were not recorded in the short financial year (prev. period: kEUR 14); impairment losses
were not reversed in the reporting period and the previous financial years. The impairment losses recognized in the
previous year are based on changes in the estimates of the future earnings of individual reporting units. Borrowing
costs were capitalized to the extent that they met the criteria set forth in IAS 23.
F-33
The downpayments and work in process are attributed to the following types of assets upon completion:
Technical equipment, plant and machinery ..................................................................
Other equipment, fixtures, fittings and office equipment .............................................
Buildings.......................................................................................................................
Intangible assets............................................................................................................
Land, leasehold rights...................................................................................................
12/31/2010
kEUR
3,560
432
330
0
0
4,322
06/28/2010
kEUR
5,241
196
7,122
346
60
12,965
The decrease in downpayments for buildings primarily relates to the initial operation of a production and
administrative building at the Pereslavl, Russia, location.
Property, plant and equipment in the amount of kEUR 1,434 (prev. year: kEUR 1,482) were assigned as
collateral. The carrying amount of property, plant and equipment that are not at the company's free disposal (assets
recognized as a result of a finance lease) amount to kEUR 13,285 (prev. period: kEUR 14,940).
19
The investment properties of the NORDENIA Group developed as follows in the short financial year ended
December 31, 2010 and the previous period:
kEUR
Balance as at Jan. 1, 2010......................................................................................................................
129
Changes in currency exchange rates ........................................................................................................
-7
Additions..................................................................................................................................................
0
Disposals..................................................................................................................................................
0
Reclassifications ......................................................................................................................................
0
Balance as at June 28, 2010 / June 29, 2010.........................................................................................
122
3
Additions..................................................................................................................................................
0
Disposals..................................................................................................................................................
0
Reclassifications ......................................................................................................................................
-125
Balance as at Dec. 31, 2010....................................................................................................................
0
Balance as at Jan. 1, 2010......................................................................................................................
0
0
Additions..................................................................................................................................................
0
Disposals..................................................................................................................................................
0
Balance as at June 28, 2010 / June 29, 2010.........................................................................................
0
0
Additions..................................................................................................................................................
0
Disposals..................................................................................................................................................
0
Balance as at Dec. 31, 2010....................................................................................................................
0
Net carrying amount as at Dec. 31, 2010..............................................................................................
0
122
Net carrying amount as at June 28, 2010.............................................................................................
In the previous period this item included a property in Hungary that was reclassified to the item “Land” in
the reporting period. The item was reclassified due to the fact that the criteria of IAS 40 were no longer satisfied.
F-34
20
20.1
Financial assets
Shares and investments
The shares and investments developed as follows in the short financial year ended December 31, 2010 and
the previous year:
Shares
Investments
Total
kEUR
kEUR
kEUR
Balance as at Jan. 1, 2010.....................................................
469
1,531
2,000
Changes in currency exchange rates .......................................
0
0
0
Additions.................................................................................
0
0
0
Disposals.................................................................................
0
0
0
Balance as at June 28, 2010 / June 29, 2010........................
469
1,531
2,000
Changes in currency exchange rates .......................................
0
0
0
Additions.................................................................................
0
0
0
Disposals.................................................................................
-463
0
-463
Balance as at Dec. 31, 2010...................................................
6
1,531
1,537
Balance as at Jan. 1, 2010.....................................................
469
1,301
1,770
Balance as at June 28, 2010 / June 29, 2010........................
469
1,301
1,770
Changes in currencies .............................................................
0
0
0
Additions.................................................................................
0
0
0
Disposals.................................................................................
-463
0
-463
Balance as at Dec. 31, 2010...................................................
6
1,301
1,307
Net carrying amount as at Dec. 31, 2010.............................
0
230
230
Net carrying amount as at June 28, 2010............................
0
230
230
F-35
20.2
Other financial assets
The other financial assets developed as follows in the short financial
the previous year:
Industrial
Derivative
Revenue
financial
Bonds
instruments
kEUR
kEUR
11.801
0
Changes in currency exchange rates
2.030
0
Additions
0
0
Disposals
0
0
Balance as at June 28, 2010 / June 29, 2010
13.831
0
-1.126
0
Additions
0
13.483
Disposals
0
0
12.705
13.483
Accumulated depreciation and impairment
0
0
0
0
Additions
0
0
Disposals
0
0
Balance as at June 28, 2010 / June 29, 2010
0
0
0
0
Additions
0
2.990
Disposals
0
0
0
2.990
Net carrying amount as at Dec. 31, 2010
12.705
10.493
Net carrying amount as at June 28, 2010
13.831
0
year ended December 31, 2010 and
Tenant
loans
kEUR
4.128
0
0
0
4.128
0
0
0
4.128
Other
financial
instruments
kEUR
1.925
6
7
-1
1.937
-2
17
-31
1.921
Total
kEUR
17.854
2.036
7
-1
19.896
-1.128
13.500
-31
32.237
0
0
0
0
0
0
0
0
0
4.128
4.128
634
-1
105
0
738
0
8
-8
738
1.183
1.199
634
-1
105
0
738
0
2.998
-8
3.728
28.509
19.158
The disposals to derivative financial instruments show the option to repay the bond early as agreed-upon
when the industrial revenue bond was granted. The option is classified as a derivative financial instrument as
defined in IAS 39 and thus measured at fair value through profit or loss. For details see our explanatory comments
in note 31.1.
For a description of the bond and the return price agreed upon, see note 28.2.
For details regarding the industrial revenue bonds, please see note 29.
The tenant loans contain two loans given to TGL Warehousing GmbH & Co. KG, Gronau/Westfalen.
These loans provide a surety for the borrower’s pecuniary claims from the respective relating tenant agreements for
warehouses.
The loan dated November 22, 2004 in the amount of kEUR 2,628 was granted for the construction of a
multifunctional hall. It has a maturity of 13.5 years from commencement of the tenant agreement and yields interest
of 3.95 % p.a. The multifunctional hall is considered as finance lease in the property, plant and equipment Nordenia
Deutschland Gronau GmbH, Gronau/Westf.
The loan dated March 19, 2008 in the amount of kEUR 1,500 was granted for the construction of a block
storage. It has a maturity of 10 years from commencement of the tenant agreement and yields interest of 4.95 % p.a.
The agreement relating to the block storage has been classified as operate lease.
The other financial instruments comprise financial instruments classified as “available for sale” in the
amount of kEUR 964 (prev. period: kEUR 972).
F-36
21
Deferred tax assets
Deferred taxes are determined based on the tax rates applicable in the respective countries. Changes in tax
laws passed at the balance sheet date have already been accounted for. The income tax rates of the individual foreign
companies range from 10.0 % to 38.0 % (prev. period: 19.0 % to 38.0 %).
Deferred tax assets were offset against deferred tax liabilities if they relate to taxes on income and earnings
that are imposed by the same fiscal authority and if the company is entitled to offset any actual claim for tax refund
with the actual tax liability.
The following deferred tax assets and liabilities relate to differences in the recognition and measurement of
individual balance sheet items and tax losses carried forward:
Intangible assets ...........................................................................
Property, plant and equipment......................................................
Financial assets.............................................................................
Inventories ....................................................................................
Receivables and other assets.........................................................
Pension provisions........................................................................
Trade payables..............................................................................
Other liabilities and provisions.....................................................
Tax losses carried forward and tax credits ...................................
./. Impairment losses.....................................................................
./. Offsets ......................................................................................
Disclosure.....................................................................................
Deferred tax liabilities (net)..........................................................
12/31/2010
Asset
Liability
kEUR
kEUR
260
-2
1,144
-19,643
72
-3,158
1,036
-253
4,110
-493
1,732
-42
17
-242
4,122
-76
4,664
0
-1,296
0
15,861
-23,909
-7,375
7,375
8,486
-16,534
8,048
06/28/2010
Asset
Liability
kEUR
kEUR
399
-2
1,256
-19,880
108
0
953
-243
380
-475
1,792
0
60
-306
7,363
-228
4,960
0
-950
0
16,321
-21,134
-4,074
4,074
12,247
-17,060
4,813
The net deferred taxes changed as follows:
Balance at the beginning of the financial year .............................................................
Exchange loss / gain .....................................................................................................
Disposal of subsidiaries ................................................................................................
Expenditure in profit and loss.......................................................................................
Income tax recorded in other comprehensive income...................................................
Deferred tax liabilities (net)..........................................................................................
F-37
12/31/2010
kEUR
4,813
-380
0
3,386
229
8,048
06/28/2010
kEUR
9,270
418
317
-4,526
-666
4,813
The deferred tax assets and liabilities developed as follows:
Balance at the beginning of the financial year..............................................................
Change in offsetting......................................................................................................
Balance at the end of the financial year ........................................................................
Deferred tax assets
Balance at the beginning of the financial year..............................................................
Change in offsetting......................................................................................................
Balance at the end of the financial year ........................................................................
12/31/2010
kEUR
17,060
-517
0
3,292
0
-3,301
16,534
06/28/2010
kEUR
16,572
1,050
0
-702
0
140
17,060
12/31/2010
kEUR
-12,247
137
0
94
229
3,301
-8,486
06/28/2010
kEUR
-7,302
-632
317
-3,824
-666
-140
-12,247
12/31/2010
kEUR
06/28/2010
kEUR
The aging of the deferred tax assets and liabilities is as follows:
Deferred tax liabilities ................................................................................................
Within 12 months..........................................................................................................
Within more than 12 months.........................................................................................
Deferred tax liabilities ................................................................................................
Within 12 months..........................................................................................................
Within more than 12 months.........................................................................................
Deferred tax liabilities (net) .......................................................................................
3,037
12,824
15,861
3,273
13,048
16,321
2,802
21,107
23,909
8,048
2,405
18,729
21,134
4,813
As at December 31, 2010, the Group had corporate tax loss carryforwards in the amount of kEUR 9,535
(prev. period: kEUR 9,437), trade tax loss carryforwards in the amount of kEUR 1,871 (prev. period: kEUR 2,713),
as well as tax refunds in the amount of kEUR 10,130 (prev. period: kEUR 10,795). Corporate tax loss carryforwards
in the amount of kEUR 7,782 (prev. period: kEUR 6,724) primarily relate to German subsidiaries.
The amounts comprise corporate tax loss carryforwards in the amount of kEUR 6,270 (prev. period:
kEUR 4,491) for which no deferred taxes were recorded in the balance sheet due to the fact that, at present, it is not
sufficiently probable that the deferred tax assets can be realized.
The corporate tax loss carryforwards of foreign companies in the amount of kEUR 7,782 (prev. period:
kEUR 6,724) are in part limited in their deductibility.
F-38
The existing corporate income tax loss carryforwards can be used as follows:
Forfeited within
Forfeited within
Unlimited
5 years
15 years
use
kEUR
kEUR
kEUR
178
7,033
2,324
12/31/2010 ..........................
06/28/2010 ...........................
113
5,312
4,012
Total
kEUR
9,535
9,437
The tax refunds relate to tax credits of NORDENIA (Malaysia) Sdn. Bhd., Ipoh/Malaysia. This amount's
deductibility is not limited.
The deferred taxes relating to losses carried forward include the amount of kEUR 37 (prev. period: kEUR
347) relating to companies that incurred losses in 2010. The amount was recognized, since a positive business trend
of the respective companies is expected.
Impairment losses on deferred tax assets in the amount of kEUR 1,296 (prev. period: kEUR 950) relate to
tax loss carryforwards in the amount of kEUR 1,253 (prev. period: kEUR 897), since the use of the respective loss
carryforwards is not probable. The loss carryforwards on which the impairment losses are based may mainly be used
within 15 years.
Only tax loss carryforwards in the amount of kEUR 6,275 (prev. period: kEUR 4,491) are affected. As in
the previous year, the impairment losses only relate to foreign subsidiaries.
The Group does not account for any deferred tax liabilities relating to retained profits of the subsidiaries to
the extent that these profits are likely to be regarded as permanently invested.
The temporary differences from investments in subsidiaries and joint ventures total kEUR 40,435. No
deferred taxes were recorded for the taxes on these temporary differences of kEUR 806 since the Group intends
neither to sell the investments nor make a distribution.
22
Other non-current assets
The other non-current assets developed as follows in the short financial year ended December 31, 2010 and
the previous period:
12/31/2010
kEUR
254
Tax credits ....................................................................................................................
Retention of collateral...................................................................................................
136
58
Reinsurance old-age part-time ......................................................................................
448
23
06/28/2010
kEUR
207
121
58
386
Inventories
Raw materials, consumables and supplies ....................................................................
Work in process and services in process.......................................................................
Finished goods and merchandise ..................................................................................
Downpayments .............................................................................................................
F-39
12/31/2010
kEUR
35,473
18,100
47,031
80
100,684
06/28/2010
kEUR
32,951
16,571
41,166
4
90,692
Inventories ....................................................................................................................
- thereof without impairment ........................................................................................
- thereof with impairment .............................................................................................
Impairment losses .........................................................................................................
12/31/2010
kEUR
111,584
90,708
20,876
-10,900
100,684
06/28/2010
kEUR
100,314
83,738
16,576
-9,622
90,692
In the reporting period, impairment losses were recorded on inventories in the amount of kEUR 1,278. The
impairment losses were recorded in cost of sales (material expenses) in profit and loss.
As in the previous period, no inventories were pledged as security for liabilities at the balance sheet date.
24
Trade receivables
12/31/2010
kEUR
Trade receivables ..........................................................................................................
72,332
06/28/2010
kEUR
81,765
The receivables are broken down by due date and aging at the balance sheet date as follows:
Carrying
amount
trade
kEUR
72,332
thereof
neither
impaired
nor
overdue at
the
balance
sheet date
kEUR
70,611
81,765
74,557
receivables
12/31/20
10
06/28/20
10
thereof neither impaired at the balance sheet date nor overdue within the
respective period
> 30 days > 60 days > 90 days
> 120
days
< 30 days < 60 days < 90 days
< 120
< 360
> 360
days
days
days
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
4,651
664
450
308
73
43
5,467
405
267
55
549
0
In respect to the trade receivables that are neither impaired nor overdue, there are no indications at the
balance sheet date that the debtors might not meet their payment obligations.
The maximum credit risks are reflected in the carrying amounts of the respective financial instruments. The
carrying amounts mainly correspond to the fair values. In order to avoid any risk of loss commercial credit
insurances were agreed upon. As at December 31, 2010, trade receivables in the amount of kEUR 4,463 (prev.
period: kEUR 5,925) were insured. Of the said amount kEUR 322 (prev. period: kEUR 551) relate to overdue
accounts.
Development of impairment losses on trade receivable:
Balance at
06/29/2010
kEUR
1,819
Currency
differences
kEUR
-12
Addition
kEUR
1,081
Utilization
kEUR
307
Reversal
kEUR
76
Balance at
12/31/2010
kEUR
2,505
Since 2001, trade receivables of subsidiaries are sold and assigned to Kaiserplatz Purchaser No. 5 Ltd.,
Jersey, in ABS transactions (asset backed securities). The revised agreement entered into at the end of 2006 expires
in 2013 and is automatically extended by another five years if neither party cancels the agreement within the
F-40
stipulated period of time. The agreement defines maximum accumulated acquisitions of receivables of EUR 70
million and USD 10 million. Furthermore, it stipulates that receivables be purchased at a price of approx. 90.5 % of
the nominal amount of the respective receivables. The ABS transaction results in an improvement of the liquidity
and the balance sheet structure of the Group. There is a decrease in trade receivables, on the one hand, and a
corresponding decrease in bank liabilities, on the other hand. As at December 31, 2010, receivables in the amount of
kEUR 42,403 (prev. period: kEUR 46,928) had been sold and assigned to Kaiserplatz Purchaser No. 5 Ltd., Jersey.
When determining the value of the trade receivables not sold each change in the credit standing between
the date at which the credit is granted and the balance sheet date is accounted for. There is no significant
concentration of the credit risk due to the fact that the remaining range of customers is wide and there are no
correlations. Thus, the management is of the opinion that no other risk prevention measures beyond the impairment
losses already recorded are necessary. The additions to and reversals of impairment losses were recorded under
other operating expenses through profit or loss (cf. note 10).
25
Other current assets
Suppliers’ bonuses and creditors with debit balances ....................................................
Receivables from the ABS program ..............................................................................
Receivables due from affiliated companies and related parties .....................................
Receivables from current borrowings ............................................................................
Personnel-related receivables.........................................................................................
Interest income...............................................................................................................
Income from fixed-term deposit transactions (FAHfT) ................................................
Income from insurance ..................................................................................................
Securities (AfS) .............................................................................................................
Other financial assets .....................................................................................................
Financial assets.............................................................................................................
Value added tax receivables...........................................................................................
Accruals .........................................................................................................................
Income from other taxes ................................................................................................
Sundry other assets.........................................................................................................
Non-financial assets......................................................................................................
12/31/2010
kEUR
6,441
3,380
855
341
144
129
33
8
0
319
11,650
06/28/2010
kEUR
7,429
4,240
1,001
344
189
775
443
1,084
273
226
16,004
6,054
1,008
933
229
8,224
19,874
4,417
11,526
1,007
169
17,119
33,123
The securities disclosed in the previous year are assets related to pensions that were offset against the
provisions in the reporting period.
As in the previous period, there were no material other financial assets that were overdue at the balance
sheet date.
The maximum credit loss risk is reflected in the carrying amounts of the other financial assets. The carrying
amounts mainly correspond to the fair values.
Development of impairment losses on accounts due from affiliates:
Balance at
06/29/2010
kEUR
1,069
Currency
differences
kEUR
0
Addition
kEUR
0
Utilization
kEUR
0
Reversal
kEUR
0
Balance at
12/31/2010
kEUR
1,069
When determining the value of the other current assets, each change in the credit rating between the date at
which the credit is granted and the balance sheet date is accounted for. There is no significant focus in the attribution
F-41
of the credit risk. Thus, management is of the opinion that no other risk prevention measures beyond the impairment
losses already recorded are necessary. The additions to and reversals of impairment losses are recorded in profit or
loss.
26
Cash on hand and on deposit in banking accounts.........................................................
12/31/2010
kEUR
35,404
06/28/2010
kEUR
31,489
The assets in this item have a maturity of up to three months and mainly comprise balances on deposit in
banking accounts. In addition, the amount includes minor cash balances.
The maximum credit risks are reflected in the carrying amount of the cash. The carrying amounts mainly
correspond to the fair values.
For details regarding the development of the cash see the consolidated cash flow statement (Appendix II).
27
Equity
The changes in equity of the NORDENIA Group are outlined in the consolidated statement of shareholders'
equity (Appendix II). The consolidated statement of shareholders’ equity separately and retrospectively shows the
individual elements of the other comprehensive income.
27.1
Subscribed capital
The amount as at December 31, 2010 reflects the subscribed capital of Nordenia Holdings as the legal
parent of the NORDENIA Group. As at June 28, 2010, the share capital of the Company that – at that date – still
operated under the name Nordenia Holdings GmbH was increased pursuant to the shareholders’ resolution dated
July 15, 2010 by way of a capital increase in kind from kEUR 24,460 by kEUR 959 to kEUR 25,419. The capital
increase was recorded in the Commercial Register on July 28, 2010.
In its resolution dated September 6, 2010, the annual general meeting of Nordenia Holding GmbH resolved
that the Company's legal form and the name be changed into Nordenia Holdings. After the change in legal form, the
Company‘s share capital totals kEUR 25,419 and is divided into 25,419,178 individual bearer shares with an
imputed share in the share capital of 1.00 EUR each. The share capital is paid in full and each share grants one vote.
This change in legal form was registered in the Commercial register on September 29, 2010.
On October 28, 2010, the directors of Nordenia Holdings and NORDENIA International AG entered into a
notarized agreement regarding the merger of the two companies by way of assumption of NORDENIA International
AG by Nordenia Holdings. For the purpose of the merger, the extraordinary annual general meeting of Nordenia
Holdings resolved on December 8, 2010 a capital increase by kEUR 3,770 to kEUR 29,190 by issuing a total of
3,770,401 new individual bearer shares with an imputed share in the share capital of 1.00 EUR each. In mid-January
2011, the Company filed an application for registration of the merger and the capital increase in the Commercial
Register. Neither has been registered in the Commercial Register yet.
The directors of Nordenia Holding are authorized – with the prior approval of the Supervisory Board – to
increase the share capital by September 6, 2015 against cash contribution or contribution in kind once or several
times up until the amount of kEUR 12,710.
As at December 31, 2010, the balance of authorized capital totals kEUR 12,710 (prev. period: kEUR 0).
F-42
27.2
Capital reserve
The capital reserve decreased from kEUR 400 as at June 28, 2010 to kEUR -117,183 as at December 31,
2010. This is the result of the adjustment of kEUR 7,155 related to the merger, a shareholders’ deposit of kEUR 300,
and a dividend that Nordenia Holdings distributed to its shareholders in the amount of kEUR 185,038.
27.3
Revenue reserves
12/31/2010
kEUR
Reserve for actuarial gains/losses ....................................................................................
-1,440
Other retained earnings and profits carried forward.........................................................
85,802
84,362
06/28/2010
kEUR
-1,689
67,997
66,308
Actuarial gains and losses resulting from the measurement of pension obligations based on adjusted and
modified actuarial assumptions are recorded in equity; they are recorded outside profit and loss (OCI method). In the
reporting period, actuarial gains in the amount of kEUR 405 and deferred taxes on these actuarial gains in the
amount of kEUR -122 were recorded in equity.
The revenue reserves as at June 28, 2010 include elements of other comprehensive income in the amount of
kEUR -248. In this reporting period, these elements of other comprehensive income were reclassified from other
retained earnings to other comprehensive income. For details see the presentations in the statements of shareholders’
equity (Appendix II).
27.4
Earnings of the parent’s shareholders
At the balance sheet date, the Group disclosed earnings of kEUR 5,438 (prev. period: kEUR 16,463)
attributed to the parent’s shareholders.
27.5
Other reserves
The other reserves comprise as follows:
12/31/2010
kEUR
Currency adjustment item ................................................................................................
-3,176
-3,176
06/28/2010
kEUR
353
353
The currency adjustment item comprises the differences from foreign currency translation of the foreign
subsidiaries’ separate financial statements that were recorded outside profit or loss. The changes over the previous
year mainly result from the inflation of the U.S. dollar.
27.6
Equity shares of non-controlling shareholders
As a result of the merger of NORDENIA International AG onto Nordenia Holdings, the minority interests
of NORDENIA International AG disclosed as at June 28, 2010 ceased to exist. The disclosure at December 31, 2010
relate to the non-controlling shares held by NORDENIA Deutschland Lohne GmbH, Steinfeld, and Polireal S.L.,
Polinya/Spain.
F-43
28
Liabilities
1 year
12/31/ 06/28/
2010
2010
kEUR kEUR
0
0
0
0
39,609 62,007
3,039 4,815
70,911 72,981
3,893 7,863
52,767 40,310
182
161
Due within
1 to 5 years
more than 5 years
12/31/ 06/28/
12/31/ 06/28/
2010 2010
2010 2010
kEUR kEUR
kEUR kEUR
9,978 50,000
0
0
0
0 280,873
0
448 33,267
0
49
0
0
0
0
0
0
0
0
0
0
0
0
15,987 18,139
6,990 8,464
0
0
0
0
Subordinated loans**).............................
Bonds*) ...................................................
Liabilities to banks**).............................
Notes payable**).....................................
Trade payables**) ...................................
Current income tax liabilities**).............
Other liabilities**) ..................................
- thereof downpayments......................
- thereof liabilities resulting from
accrued government grants...............
25
69
296
176
- thereof for taxes................................ 2,202 1,753
0
0
- thereof resulting from wages,
salaries and social security taxes ......
547
820
0
0
- thereof for finance leases.................. 1,545 1,795 15,470 17,719
- thereof sundry other liabilities.......... 17,400 9,016
154
177
- thereof accruals................................. 30,865 26,696
67
67
170,219 187,976 26,413 101,406
*)
**)
28.1
12/31/
2010
kEUR
9,978
280,873
40,057
3,039
70,911
3,893
75,744
182
Total
06/28/
2010
kEUR
50,000
0
95,323
4,815
72,981
7,863
66,913
161
168
0
340
2,202
413
1,753
0
0
5,164 4,721
1,807 3,575
0
0
287,863 8,513
547
22,179
19,361
30,932
484,495
820
24,235
12,768
26,763
297,895
19
0
The fair value as at December 31, 2010 is kEUR 310,072.
The carrying amounts mainly correspond to the fair values.
Subordinated loans
In conjunction with the issuing of a subordinated corporate bond on July 9, 2010 bearing interests of
9.75 %, the subordinated loans with Landessparkasse zu Oldenburg and Sparkasse Bremen – each totaling kEUR
25,000 – were repaid prematurely on July 9, 2010.
In the course of the refinancing activities, NORDENIA International AG was granted a subordinated loan
of kEUR 10,000 by Landessparkasse zu Oldenburg. The loan has a term elapsing on July 31, 2014 and is discounted
at the 6-month Euribor applicable two days prior to the expiration of the respective previous interest period plus a
surcharge of 450 basis points.
28.2
Bonds
On July 9, 2010, a corporate bond with a total volume of EUR 280 million was issued. The bond is
discounted at 9.74 %; the interests are payable semi-annually on January 15 and July 15. The first interest payment
is due on January 15, 2011.
The corporate bond is repayable on July 15, 2017. The Company may prematurely repay the bond either in
full or in installments before July 15, 2014 by paying a premium and the interests that have been accrued but not yet
paid by the exercise date.
Before July 15, 2013, 35 % of the corporate bond may be repaid by paying a redemption price of 109.75 %
plus the interests accrued but not yet paid by the redemption date. On or after July 15, 2014, the corporate bond may
be repaid either in full or in part at the following redemption prices:
F-44
Year
2014 .......................................................................................
2015 .......................................................................................
2016 and after ........................................................................
28.3
Redemption
price
104.875%
102.438%
100.000%
Liabilities due to banks
The change in the liabilities due payable to banks is primarily the result of the loans being repaid
prematurely in conjunction with the modified financing structure in the financial year.
28.4
Notes payable
This item comprises liabilities from notes payable.
28.5
Trade payables
Trade payables are payment obligations related to goods and services acquired in the course of ordinary
business operations. The liabilities are classified as current debt when payment is due within one year or less (or, if
longer, within the normal business cycle). Otherwise, they are presented as non-current debt.
28.6
Current income tax liabilities
12/31/2010
kEUR
3,893
Current income tax liabilities.....................................................................................
06/28/2010
kEUR
7,863
This item comprises current income tax liabilities. For further details regarding current and deferred taxes
see notes 13 and 21.
28.7
Liabilities resulting from accrued government grants
These liabilities primarily relate to investment grants. The grants in the amount of kEUR 340 (prev. period:
kEUR 185) at the balance sheet date are subject to conditions that may result in the requirement to repay part of the
grants in the event the conditions are not met.
28.8
Accruals
The accruals include accruals for interest, vacation, rebates and bonuses.
F-45
29
Liabilities from finance lease
The other liabilities include in particular liabilities from finance lease agreements. If the Company bears the
material risks and rewards from the lease, the leased assets are recognized at the acquisition date and measured
either at the fair value or the lower present value of the future minimum lease payments. The leased assets
recognized with regard to the finance lease agreements primarily relate to buildings, other equipment, fixtures and
fittings, and office equipment, as well as technical equipment, plant and machinery. The agreements cover periods
of 3 - 12 years.
The agreements contain extension or purchase options. All leases are based on fixed installments. No
agreements regarding contingent lease payments were entered into. The Group’s obligations from finance leases are
secured by way of retention of title by the lessor in the leased assets. The present value of the Group’s lease
obligations basically corresponds to their carrying amount.
The amounts break down as follows:
Minimum lease payments
12/31/2010
kEUR
- thereof due within one year................................................
- thereof due within one and 5 years ....................................
- thereof due within more than five years ............................
less future financing costs ....................................................
Present value of the lease obligation....................................
2,423
18,514
12,676
33,613
11,434
22,179
06/28/2010
kEUR
2,711
20,257
7,056
30,024
5,789
24,235
Present value of minimum
lease payments
12/31/2010 06/28/2010
kEUR
kEUR
1,545
15,470
5,164
22,179
N/A
1,795
17,719
4,721
24,235
N/A
The net values of the asset recognized as assets from finance leases total kEUR 13,285 at the balance sheet
date (prev. period: kEUR 14,940) and break down as follows:
Net value by categories of assets
12/31/2010
kEUR
Buildings ........................................................................................................................
9,260
Technical equipment, plant and machinery....................................................................
2,849
Other technical equipment, fixtures, fittings, and office equipment ..............................
1,176
13,285
06/28/2010
kEUR
9,809
3,724
1,407
14,940
In December 2000, NORDENIA USA Inc., Jackson, entered into a sale and lease back agreement with
Cape Girardeau, Missouri. Under this agreement, the company sold buildings and office and plant equipment worth
approx. USD 17 million in 2001 and 2000 and has leased those assets from the municipality since that date.
According to the agreement, the company is thus granted a property tax benefit. The municipality paid to the
company a 9.5 % industrial revenue bonds as a consideration. The industrial revenue bonds have a term that expires
on December 1, 2012. The lease is classified as a finance lease. The respective liability in the amount of USD 17
million (kEUR 12,705 at December 31, 2010 and kEUR 13,831 at June 28, 2010) is included in “Other non-current
liabilities”. The liability is to be repaid in one amount by offsetting against the industrial revenue bond. The leased
assets may be acquired at the end of the term in accordance with the agreement at USD 10.
30
12/31/2010
kEUR
14,007
Pension provisions
06/28/2010
kEUR
14,312
Pension provisions are recorded for obligations from commitments and current benefits to entitled active
and former employee of the NORDENIA Group and their survivors as per IAS 19 “Employee Benefits”.
F-46
Depending on the legal, economic and tax conditions in the individual countries, there are different pension
systems that are usually based on the years of service and the employees' remuneration.
The amount of pension obligations (actuarial present value of accrued pension benefits and “defined benefit
obligations” (DBO), respectively) were determined using actuarial methods, with estimates being necessary. In
addition to the assumed mortality and disability, the following premises play a role that depends on the economic
situation of the respective country:
Germany
Other countries
12/31/2010
06/28/2010
12/31/2010
06/28/2010
%
%
%
%
5.20
5.00
6.90
7.00
Interest rate ....................................................................
Anticipated return on assets...........................................
4.10
4.10
n/a
n/a
2.50
2.50
4.82
5.00
Dynamic benefits...........................................................
1.75
1.75
n/a
n/a
Dynamic pensions .........................................................
Dynamic benefits take into account anticipated future increases in salaries that – among others – are
estimated based on the inflation and the economic situation on an annual basis. The actuarial present value of the
pension obligation using the projected unit credit method is decreased in case of an externally financed pension plan
by the fair value of the valued assets of the external pension plan.
The mortalities are based on published statistics and experience in each individual country. The
assumptions in Germany are based on the Heubeck mortality tables 2005 G.
If the assets exceed the obligations from the pension commitments, usually an asset is recognized in
accordance with IAS 19 “Employee Benefits”. IAS 19.58 prescribes that in case the assets exceed the liabilities an
asset may only be recognized if NORDENIA as the committed employer had the right to distribute this excess or is
entitled to future reductions of contributions.
If the assets do not cover the liabilities the net obligation is – after deduction of the service cost not yet
accounted for – carried as a pension provision.
Actuarial gains or losses may result from increases or decreases of either the present value of the defined
benefit obligation or the fair value of the plan assets; the reasons for such gains and losses may – among others – be
changes in calculation parameters, estimates of the risks relating to the pension obligations and deviations between
the actual and the anticipated revenues from the plan assets.
F-47
Development of the defined benefit obligations (DBO):
Germany
(mid) (full)
2010 2010 2010
kEUR kEUR kEUR
Balance as at June 29
(or January 1)..........................
Current service cost ..................
Interest expense.........................
Actuarial gains (-) / losses.........
Changes in exchange rates ........
Benefits paid .............................
Balance as at December 31
(or June 28 of the previous
period)......................................
Fair value of the DBO...............
Fair value of the plan assets ......
Plan deficit ...............................
Other countries
(mid)
(full)
2010
2010
2010
kEUR kEUR kEUR
Total
(full)
2010
kEUR
(mid)
2010
kEUR
2010
kEUR
20,860 17,943 17,943
165
137
302
514
523 1,037
-458 2,726 2,268
0
0
0
-460
-469
-929
371
8
8
6
-13
-5
298
6
7
0
66
-6
298
14
15
6
53
-11
21,231
173
522
-452
-13
-465
18,241
143
530
2,726
66
-475
18,241
316
1,052
2,274
53
-940
20,621
20,621
-6,989
13,632
375
375
0
375
371
371
0
371
375
375
0
375
20,996
20,996
-6,989
14,007
21,231
21,231
-6,919
14,312
20,996
20,996
-6,989
14,007
20,860
20,860
-6,919
13,941
20,621
20,621
-6,989
13,632
Development of the fair values of the plan assets during the reporting period:
(mid)
12/31/2010
kEUR
Plan assets on June 29
Balance as at January 1...........................................................
Expected earnings on plan assets............................................
Actuarial gains / losses (-) ......................................................
Employer’s contributions .......................................................
Benefits paid by external plans during the financial year.......
Plan assets as at the balance sheet date...................................
Total
(full)
06/28/2010
kEUR
6,919
142
-175
563
-460
6,989
2010
kEUR
6,420
134
261
574
-470
6,919
6,420
276
86
1,137
-930
6,989
The plan assets mainly comprise other assets such as life insurances. They were assigned by NORDENIA
(insured) to the pension allottee. There are no pension provisions financed by way of funds.
The pension expenses of the respective period break down as follows and are recognized in the respective
item of the income statement:
Germany
(mid)
12/31/
kEUR
Current service Cost of sales
cost .................... and other
expenses.............
Interest expense . Financial result...
Expected
earnings on plan
assets.................. Financial result...
(full)
06/28/
kEUR
Other countries
12/31/
kEUR
(mid)
12/31/
kEUR
Total
(full)
06/28/ 12/31/
kEUR kEUR
(mid)
12/31/
kEUR
(full)
06/28/
kEUR
12/31/
kEUR
165
514
137
523
302
1.037
8
8
6
7
14
15
173
522
143
530
316
1,052
-142
537
-135
525
-277
1,062
-6
10
-6
7
-12
17
-148
547
-141
532
-289
1,079
Actuarial gains or losses are recorded outside profit and loss in the other earnings/losses in the statement of
comprehensive income (OCI); thus, the pension provisions always equal the actuarial present value of the obligation
F-48
("Defined Benefit Obligation") (cf. note 2.19). In total, not accounting for deferred taxes, actuarial losses in the
amount of kEUR 405 (prev. period: losses in the amount of kEUR 2,464) were recorded outside profit or loss in
other comprehensive income in the statement of comprehensive income at the end of the reporting period.
The actual gains from the plan assets of external insurances totaled kEUR -33 (prev. period: kEUR 394).
The expected total yield is derived from the weighted average of the “Other assets" contained in the plan assets. The
forecasts are based on past experience, economic data and interest forecasts.
The Group expects to pay contributions in the amount of kEUR 321 into defined benefits plan in the
coming financial year.
Amounts for the current year and the four previous years of the pension obligations, the plan assets, the
obligations exceeding the assets, as well as experience-based adjustments:
in kEUR
each as at December 31 or June 28
Pension obligations (DBO) ..........................................
Plan assets....................................................................
Plan deficit ...................................................................
Adjustments in %
Experience-based increase (+) / decrease (-) in
pension obligations ........................................................
Experience-based increase (+) / decrease (-) in plan
assets ..............................................................................
2010
20,996
-6,989
14,007
2010
F-49
06/28
2010
21,231
-6,919
14,312
06/28
2010
2009
18,241
-6,420
11,821
2008
18,465
-6,098
12,367
2007
18,330
-5,768
12,562
2009
2008
2007
0.63
1.00
-0.54
1.71
2.40
2.52
-4.12
0.29
0.6
4.07
31
31.1
Other disclosures regarding financial instruments
Carrying amounts, values and fair values by classes
Value according to balance sheet as per IAS 39
Fair
Fair
Fair
Fair
Value
Value
Value
Value
not
not
Carrying
Measurement Carrying
Fair value
Fair value
affecting affecting
affecting affecting
amount Amortized
amount Amortized
category as
cost
result IAS 17 12/31/2010 06/28/2010
cost
result IAS 17 06/28/2010
cost
result
cost
result
per IAS 39 12/31/2010
kEUR
kEUR
kEUR
kEUR kEUR
kEUR kEUR
kEUR
kEUR
kEUR
kEUR kEUR
kEUR kEUR
kEUR
ASSETS
Non-current
Financial assets
Loans and receivables ....
Available for sale ...........
Other original financial
assets
Loans and receivables ....
Held for trading..............
Current
Cash and cash
equivalents.................
Trade receivables ...........
Receivables due from
affiliated companies
(non-onsolidated).......
Other assets ....................
Financial assets—held
for trading ..................
Other original financial
assets
Available for sale ...........
EQUITY AND
LIABILITIES
Non-current
Subordinated liabilities...
Liabilities to banks .........
Other liabilities
interest bearing ..........
LaR
AfS
17,051
1,193
17,051
17,051
964
18,186
1,202
18,186
LaR
FAHfT
195
10,494
195
195
10,494
179
0
179
179
0
LaR
LaR
35,404
72,332
35,404
72,332
35,404
72,332
31,489
81,765
31,489
81,765
31,489
81,765
LaR
LaR
855
10,762
855
10,762
855
10,762
1,001
14,287
1,001
14,287
1,001
14,287
FAHfT
33
33
443
AfS
0
0
273
FLAC
FLAC
9,978
281,321
9,978
281,321
9,978
281,321
50,000
33,316
50,000
33,316
50,000
33,316
FLAC
12,785
12,7850
12,785
13,931
13,931
13,931
230
964
10,494
33
F-50
230
18,186
972
972
443
273
443
273
non-interst bearing.....
From finance leases
*) ...........................
Others ........................
Current
Liabilities to financial
institutions .................
Trade payables ...............
Notes payable.................
Liabilities due to
affiliated companies
(non-onsolidated).......
Other liabilities
non-interest bearing ...
From finance
leases*)..................
Other..........................
FLAC
FLAC
FLHfT
104
104
7,928
7,928
1,767
1,767
104
122
7,928
8,609
1,767
3,523
122
122
8,609
3,523
8,609
3,523
39,609
39,609
39,609
62,007
62,007
62,007
70,911
3,039
70,911
3,039
70,911
3,039
72,981
4,815
72,981
4,815
72,981
4,815
FLAC
0
0
0
1
1
1
FLAC
46,454
46,454
46,454
33,840
33,840
33,840
1,545
1,821
274
931
FLAC
FLAC
FLAC
FLAC
FLHfT
1,545
274
1,545
274
1,821
931
*) The classes in this table are based on IAS 39. Finance leases are usually not within the scope of IAS 39, but in the scope of IFRS 7. Therefore, finance leases are disclosed separately.
F-51
1,821
931
Thereof broken down by measurement categories as per IAS 39:
Value balance sheet
as per IAS 39
Fair
Value
Class Carrying Amortized
outside
as per
amount
historical
profit
IAS 39 12/31/2010
cost
Cost or loss
kEUR
kEUR
kEUR kEUR
Loans and
receivables .... LaR
Financial
assets—
available for
sale ................ AfS
Financial
assets—held
for trading ..... FAHfT
Financial
liabilities—
at amortized
cost................ FLAC
Financial
liabilities—
held for
trading ........... FLHfT
Value balance sheet
as per IAS 39
Fair
Fair
Fair Value
Value
Value
in
in
Carrying
outside profit
profit
amount Amortized
profit
or
cost
loss
or loss 28/06/2010
Cost or loss
kEUR
kEUR
kEUR
kEUR kEUR kEUR
136,599
136,599
0
0
0
146,907
146,907
0
0
0
1,194
0
230
964
0
1,475
0
230
1,245
0
10,527
0
0
0 10,527
443
0
0
0
443
464,201
464,201
0
0
0
271,013
271,013
0
0
0
2,041
0
0
0
2,041
4,454
0
0
0
4,454
Thereof broken down by measurement categories as per IFRS 7.27:
Level 1
*)
12/31/2010
Level 2 Level 3
**)
***)
Total
Level 1
06/28/2010
Level 2 Level 3
Total
ASSETS
Financial assets available for sale
Financial assets held for trading
AfS
FAHfT
0
0
964
10,527
0
0
964
10,527
273
0
972
443
0
0
1,245
443
Financial assets held for trading
FLHfT
0
2,041
0
2,041
0
4,545
0
4,545
*)
Level 1: The fair values are determined based on publicly quoted market prices due to the fact that the best
possible unbiased indication in respect to the fair value of a financial asset or a financial liability can be found on
an active market.
**) Level 2: If there is no active market for such financial instrument, an enterprise determines the fair value using
measurement methods such as the most recent transactions between knowledgeable, willing and independent
business partner, the comparison to the current fair value of another, basically identical financial instrument,
option price models, or the discounted cash flow method. The fair value is estimated based on the results of a
measurement method that uses the largest amount of data from the market and the smallest amount of companyrelated data.
***) Level 3: The measurement methods used at this level are also based on parameters that cannot be found on the
market.
Cash and cash equivalents, trade receivables, as well as other receivables are basically due within a short
period of time. Hence, their carrying amounts at the balance sheet date correspond to their fair value.
The fair values of the other non-current receivables that are due within more than one year correspond to
the present values of the payments relating to the assets, taking into account the respective current interest
parameters that reflect market- and partner-related changes in terms and conditions and expectations.
Trade payables, as well as other liabilities usually fall due within a short period of time; the recognized
amounts correspond to the respective fair values.
F-52
The fair values of liabilities due to financial institutions, notes payable and other financial liabilities are
determined as the present values of the payments relating to the debt and liabilities, taking into account the
respective applicable interest structure.
31.2
Net results by measurement categories
From subsequent measurement
Foreign
From
currency
From
at fair translatio Allowanc disposa
interest value
e
l
n
kEUR
kEUR
kEUR
kEUR
kEUR
Loans and receivables
(LaR)..........................
1.661
Held-to-maturity
investments (HtM) ....
0
Available for sale
financial assets
(AfS) .........................
0
held for trading
(FAHfT and FLHfT) .
0
Financial liabilities
measured at
amortized cost
(FLAC) ..................... -17.847
Net result
06/2912/31
2010
kEUR
01/0106/28
2010
kEUR
2010
0
-67
-1.259
0
335
1.003
1.338
0
0
0
0
0
0
0
-362
0
-8
0
-370
0
-370
-4.757
0
0
0
-4.757
0
-4.757
0
-123
0
0
-17.970
-4.249
-22.219
Interest from financial instruments and the other components of the net profits/loss are recorded in financial
results. Only the impairment losses on trade receivables attributed to the classes “Loans and receivables" and
currency effects are recorded in profit and loss.
The fair values are disclosed under financial result in the income statement (cf. notes 11 and 12).
32
12/31/2010
kEUR
16,534
Deferred tax liabilities .......................................................................................................
For details regarding deferred tax liabilities see note 21 "Deferred tax assets”.
F-53
06/28/2010
kEUR
17,060
33
Other current and non-current provisions
Expected to be due
Change in
consolidated group
> 12 /
Balance at
and
Interest
Reclassi- Balance at
>3/
< 24
06/29/2010 currency Addition effect Reversal Utilization fication 12/31/2010 < 3 mon. < 6 mon. > 6 mon. mon.
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
Non-current provisions
for stock options ...............................
for anniversary bonuses....................
for expenses relating to archiving
obligations ........................................
for demolition obligations ................
Current provisions
for stock options ...............................
for warranty obligations ...................
for customer bonuses........................
for compensations and bonuses .......
for impending losses.........................
for fees and charges..........................
for litigation costs.............................
for complaints/returned goods..........
for other accrued liabilities...............
> 24
mon.
kEUR
28,240
1,051
0
4
3,883
45
0
0
0
0
5,982
70
-26,141
8
0
1,038
0
0
0
0
0
0
0
154
0
884
553
55
29,899
-4
0
0
25
0
3,953
24
-12
12
183
0
183
0
15
6,067
0
0
-26,133
415
28
1,481
0
0
0
0
0
0
0
0
0
15
0
169
400
28
1,312
0
4,714
3,383
391
1,889
7
630
374
783
12,171
42,070
0
-26
-45
-14
-147
-1
0
-2
-20
-255
-255
0
0
1,891
249
236
50
3
93
763
3,285
7,238
0
0
0
0
0
0
0
0
0
0
12
0
550
106
0
1,321
0
0
0
0
1,977
2,160
0
283
1,737
102
86
31
600
372
1,225
4,436
10,503
26,141
0
0
-8
0
0
0
0
0
26,133
0
26,141
3,855
3,386
516
571
25
33
93
301
34,921
36,402
0
848
1,961
439
48
25
3
30
229
3,583
3,583
0
2,494
1,425
16
0
0
0
0
0
3,935
3,935
26,141
513
0
61
523
0
30
63
72
27,403
27,403
0
0
0
0
0
0
0
0
0
0
169
0
0
0
0
0
0
0
0
0
0
3,312
F-54
a)
Stock options
For explanatory comments regarding the stock option program and the corresponding provisions see note
36. The present value of the expected costs and the expected aging can be derived from the above table.
b)
Anniversary obligations
A provision for the obligations for employees‘ anniversaries was recorded in the present value of the
expected costs. The corresponding expenditure was recorded under personnel expenses in the income statement. The
expected aging is shown in the above table.
c)
Guaranty obligations
Guaranty obligations are usually incurred in respect of trading transactions. For a certain period of time, the
Group has a legal, contractual or constructive obligation to perform repair work or replace the products sold. These
obligations are accounted for by recording a provision in the respective amount of the expected future obligation.
The expected aging is shown in the above table.
d)
Customer discounts
Discount agreements have been entered into with a number of clients. Provisions in the expected amounts
were recorded for obligations arising from these agreements. The expected aging is shown in the above table.
Other disclosures
34 Overall presentation of financial risks
34.1
Capital risk management
The corporate policies of the NORDENIA Group aim at ensuring the Company's continuation, permanently
generate reasonable yields, and consistently increase the Company’s shareholders’ value. The Group’s goal is to
further decrease its net debt.
The net debt at the balance sheet dates is as follows:
Net debt
12/31/2010
TEUR
06/28/2010
TEUR
+/ in %
Non-current financial liabilities
Bond ............................................................................................
Interest-bearing loans and liabilities............................................
Lease liabilities............................................................................
270.379
10.426
7.928
0
83.316
8.609
n.a.
-87,5%
-7,9%
Current financial liabilities
Liabilities to banks ......................................................................
Interest-bearing loans and liabilities............................................
Lease liabilities............................................................................
39.609
1.545
3.039
62.007
1.821
4.815
-36,1%
-15,2%
-36,9%
35.404
297.522
31.489
129.079
12,4%
130,5%
Financial assets
Cash and cash equivalents ...........................................................
The cash and cash equivalents totaled kEUR 35,404 (prev. period: kEUR 31,489) at the balance sheet date.
In July 2010, the Group successfully placed a bond – due in 2017, nominal value of kEUR 280,000, 9.75 %
coupon – in the market. In addition, a subordinated loan in the amount of kEUR 10,000 was taken up pari passu to
F-55
the bond. A credit line of kEUR 100,000 serves as additional cash reserve. This credit line has been available for
three years beginning on July 9, 2010 and had been utilized in the amount of kEUR 35,000 as at December 31,
2010. The income resulting from the new financing structure was primarily used to distribute profits to the
shareholders and repay old loans. The advantages of the overall refinancing concept are: simplified financing
structure of the NORDENIA Group and a larger degree of certainty in respect of the Group's financing by way of
longer terms of the new financing arrangements. As a result of the refinancing, the NORDENIA Group is less
dependent on bank financing and can more easily adapt to fluctuations in interest rates. The refinancing also serves
the purpose of accessing the capital market and thus enhances the Group's position on the capital market. At the
same time, the Group sells its receivables without any recourse under an ABS program. The goal is short-term
financing on the money market. The NORDENIA Group may assign receivables in the maximum nominal amount
of kEUR 70,000 and kUSD 10,000. As at December 31, 2010, receivables in the total amount of kEUR 42,403
(previous period: kEUR 46,928) – converted to kEUR – were sold.
The Group manages its leverage based on generally accepted key ratios.
The net financial obligations and adjusted EBITDA ratio increased from 0.9 to 2.8 – as a result of the
issued bond and the corresponding distribution; the adjusted EBITDA is based on the earnings of the last 12 months
(LTM).
As at December 31, 2010, the ratio of the financial liabilities senior to the bond and the adjusted EBITDA
was 0.5. The improvement of the ratio from 1.0 before the issuing of the bond is the result of the repayment of
almost all previously existing, senior bilateral financial obligations.
The ratio of the adjusted EBITDA and the interest income/expense – the EBITDA Interest Coverage – in
the reporting period was 3.2 (prev. period: 16.6). This key ratio would be 5.7 based on the last 12 months.
In the reporting period, the NORDENIA Group met its contractual financial covenants with significant
headroom.
In the reporting period, two independent rating agencies awarded the NORDENIA Group with an issuer
rating. The rating agency Moody awarded a B1 (stable) issuer rating, while Standard & Poor's granted a B+ (stable)
rating.
34.2
Principles of risk management
In respect to its assets, liabilities and intended transactions, NORDENIA Group is in particular subject to
risks from changes in interest rates and exchange rates, as well as changes in prices of raw materials. The goal of the
financial risk management is to minimize those market risks resulting from current operating and finance-oriented
activities. It does so by way of mainly currency-related financing and application of selected derivative financial
instruments (interest and currency derivatives). However, in principle, only risks affecting the Group’s cash flow are
hedged. Derivative financial instruments are only used as collaterals in the economic sense. They are not held for
trading or other investment purposes.
The basic ideas of the financial policies are determined each year by the directors. The Group Treasury is
responsible for the implementation of the financial policies and the consistent risk management. The use of
derivatives is subject to a clear authorization system. In principle, transactions are coordinated by the Treasury
department of the parent company of the Group. Transaction risks are hedged locally by subsidiaries; however, they
require approval.
The NORDENIA Group uses primarily interest swaps and exchange futures. The use of these derivative
instruments and the realization of a risk minimization strategy serve the purpose of hedging and minimizing interest
rate and exchange rate fluctuations. The hedge transactions are entered into only with financial services providers
that have good credit rating. As a result of the risk-minimizing dispersion of the hedge transactions the address loss
risk is reduced.
F-56
34.3
Market price risks
The market price risk is the risk of losses resulting from changes in market prices and market parameters or
factors affecting the value of a financial instrument. The market price risk is managed via financial hedging.
34.4
Risks resulting from changes in exchange rates
Being an international company and as a result of the corresponding activities, the NORDENIA Group
faces currency-related risks. The risks that the NORDENIA Group faces in respect to changes in exchange rates
result from investments, financing measures and the operating business. If all variables had remained constant and
the EUR had appreciated by 10 % in relation to the market development compared to the activities denominated in
USD, the sales in the reporting period would have decreased by about kEUR 5,497 (prev. period: kEUR 5,650).
Under the same circumstances, the sales denominated in PLN would have dropped by approx.
kEUR 334 (prev. period: kEUR 337) in the reporting period.
Foreign exchange risks resulting from the translation of the assets and liabilities accounts of foreign
operations into the reporting currency of the Group are not hedged.
Receivables and liabilities of the NORDENIA Group are hedged for each individual transaction by way of
exchange futures to cover risks from changes in exchange rates. In case of foreign currency cash flows expected in
the future, budget data is documented and a cash flow hedge accounting is pursued; however, the criteria set forth in
IAS 39 could not be satisfied in full in the reporting period.
Exchange futures are recorded in profit or loss at the balance sheet date (no hedge accounting).
NORDENIA Group uses a portfolio approach for the hedging of cash accounts and foreign currency loans.
Individual risks are summarized and only the remaining risks are hedged by exchange futures. According to IAS 39,
this transaction shall not be recorded in the hedge accounting; the fair market values are recorded directly in profit
or loss.
34.5
Interest risks
The NORDENIA Group is refinanced by way of current time deposits, as well as an ABS program. These
products are based on transaction-related Euribor interest rates determined on the market. The risks of increasing
variable short-term interests are minimized by hedging with interest swaps. At the balance sheet date, the Group had
payer swaps in the nominal amount of kEUR 60,000 at an averaged fixed interest rate of 3.48 % (prev. period:
kEUR 60,000, 3.48 %). The negative fair value disclosed for the interest swaps was kEUR 1,767 (prev. period:
kEUR 3,523) at the balance sheet date. There was no positive market value, neither in the reporting period nor in the
previous period.
If the interest rates at the balance sheet date had been 100 basis points higher/lower and if all other
variables had remained constant, the fair value of the interest swaps would have been kEUR 4,231 higher/kEUR
4,637 lower (prev. period: kEUR 4,624 higher/kEUR 5,093 lower). If the interest rates at the balance sheet date had
been 100 basis points higher/lower and if all other variables had remained constant, the variable portion of the
financing costs would have been kEUR 321 higher (prev. period: kEUR 935, accumulated kEUR 1,259).
A corporate bond was issued in the reporting period that stipulates redemption options. Those are measured
and disclosed separately.
34.6
Raw materials price risk
At the NORDENIA Group, raw materials price risks mainly occur in the segment of granulates. According
to NORDENIA’s assessment, there was no efficient market for the minimization of the risks at the balance sheet
date. The Group continues to observe the market. Price risks are minimized by way of corresponding agreements
with business partners.
F-57
34.7
Credit risk
Credit risk is the risk of insolvency or default in settlement of receivables by business partners. A less
favorable credit rating of a business partner may result in a decrease in the value of the receivable due from the said
business partner. Credit risks are minimized by way of avoiding cluster risks.
NORDENIA faces credit risks in particular from its operating business. In this respect, receivables of the
individual companies are permanently monitored and credit risks are accounted for by recording individual
allowances and grouped individual allowances. The maximum credit risk is reflected in the carrying amounts of the
financial assets disclosed in the balance sheet (incl. derivative financial instruments with positive market value).
34.8
Liquidity risk
This refers to the tradability of financial instruments. The lack of liquidity may result in a lower
recoverability of financial instruments. The term liquidity risk also includes the question of access to cash
equivalents. The refinancing of financial liabilities, as well as interest rates payable should be taken into account in
particular. The liquidity risk is reduced by dispersing financial transactions. Top-class liquid instruments are
preferred for hedging purposes.
In order to ensure solvency at any time and financial flexibility of the NORDENIA Group reserves of cash
and cash equivalents in the form of agreed-upon credit lines in the reporting period and thus working capital in the
form of agreed-upon credit lines is available.
The table below analyzes the Group’s non-derivative financial liabilities and net-settled derivative financial
liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Items that fall due within
12 months correspond to their carrying amounts due to the fact that discounting effects have a minor impact only.
Cash flows from financial liabilities and
derivative financial liabilities
1 year
12/31/ 06/28/
2010
2010
kEUR kEUR
557 1,940
27,300
0
41,514 63,081
3,078 4,869
70,911 72,981
3,893 7,863
53,097 41,226
182
161
Due within
1 to 5 years
more than 5 years
Total
12/31/ 06/28/
12/31/ 06/28/
12/31/
06/28/
2010
2010
2010 2010
2010
2010
kEUR kEUR
kEUR kEUR
kEUR
kEUR
11,439 51,940
0
0
11,996
53,880
109,200
0 323,225
0 459,725
0
454 33,646
0
50
41,968
96,777
0
0
0
0
3,078
4,869
0
0
0
0
70,911
72,981
0
0
0
0
3,893
7,863
19,031 20,677
14,502 10,799
86,630
72,702
0
0
0
0
182
161
Subordinated loans ..................................
Bonds ......................................................
Liabilities due to banks ...........................
Notes payable ..........................................
Trade payables ........................................
Current income tax liabilities ..................
Other liabilities........................................
- thereof downpayments......................
- thereof liabilities resulting from
accrued government grants...............
25
69
296
176
- thereof for taxes................................ 2,202 1,753
0
0
- thereof resulting from wages,
salaries and social security taxes ......
547
820
0
0
- thereof for finance leases.................. 2,423 2,711 18,514 20,257
- thereof sundry other liabilities.......... 17,400 9,016
154
177
- thereof accruals................................. 30,865 26,696
67
67
200,350 191,960 140,124 106,263
19
0
168
0
340
2,202
413
1,753
0
0
12,676 7,056
1,807 3,575
0
0
337,727 10,849
547
33,613
19,361
30,932
678,201
820
30,024
12,768
26,763
309,072
In general, the Company intends to repay the above financial liabilities within the agreed-upon periods. If
the cash flows develop positively, the Company will be able to repay the liabilities due to banks prematurely.
F-58
35 Derivative financial instruments
The fair value of the financial instruments is determined by the respective partner in the derivative
transaction based on generally accepted calculation methods.
The determined fair values are reported in the balance sheet under “Other receivables and other liabilities“.
Nominal volumes are presented separately as the total amount of acquired derivatives. At the balance sheet
date, the fair values and nominal values are as follows:
Non-current
Due within
1 to 5 years
more than
5 years
12/31 06/28
12/31 06/28
2010 2010
2010 2010
kEUR kEUR
kEUR kEUR
Fair value of derivative instruments
ASSETS
Exchange futures
Redemption option
Exchange futures
Interest swaps
Nominal values of derivative instruments
ASSETS
Exchange futures
Redemption option
Exchange futures
Interest swaps
Current
1 year
Total
12/31 06/28
2010 2010
kEUR kEUR
12/31 06/28
2010 2010
kEUR kEUR
0
0
0
0
0
10,494
0
0
33
0
443
0
33
10,494
443
0
0
0
0
0
0
1,767
0
3,523
274
0
931
0
274
1,767
931
3,523
0
0
0
0
0
10,494
0
0
0
0
0
0
0
0
60,000 60,000
3,066 18,310
0
0
26,411
0
9,988
0
3,066 18,310
10,494
0
26,411 9,988
60,000 60,000
The fair values and measurement as at the balance sheet date of all derivatives form the basis of the hedge
measurement and are documented for each individual transaction.
36 Stock option program
In 2006, the annual general meeting of NORDENIA International AG resolved to introduce a stock option
program for the German and foreign executives of the Nordenia Group that was implemented the same year. This
stock option program set forth the option to choose between cash compensation or compensation in equity capital
instruments. In the 2009 financial year and after, the stock option program was disclosed in the consolidated
financial statements based on a share-based remuneration with cash compensation.
By way of resolution by the annual general meeting of NORDENIA International AG dated August 27,
2010, the conditional capital for the securitization of the stock option program was revoked with the approval of all
option holders. The directors and the Supervisory Board of NORDENIA International AG passed a resolution on
October 26 or 27, 2010, respectively, on the continuation of the program as a virtual option program and the
corresponding adjustment of the criteria for the participation in the program; all option holders granted their
approval. New stocks can therefore no longer result from the performance of the option program.
The criteria for the participation in the program were primarily based on the intended merger of
NORDENIA International AG onto Nordenia Holdings due to the fact that the stock option program is transferred to
the assuming entity (Nordenia Holdings) as a result of the merger. As a result of the continuation of the program as a
virtual stock option program that grants the option holders a cash compensation only, it is not represented in the
F-59
consolidated financial statements in a different manner due to the fact that the stock option program had already
been disclosed based on a share-based remuneration with cash compensation since the 2009 financial year.
NORDENIA International AG granted a total of 2,379,094 options to directors, members of the managing
bodies of group companies of NORDENIA International AG, and other executives of NORDENIA International AG
and its group companies. The vesting period has expired in respect of 80 % of the option rights granted to each
option holder and will expire in respect of the remaining 20 % of the option rights granted to each option holder
effective March 17, 2011. The options have a term expiring on March 17, 2026, i.e. the original term expiring on
March 17, 2016 was extended by 10 years as a result of the adjustment of the criteria for the participation in the
program. In case of an exit event, full vesting occurs even if the five-year period has not yet expired. Stock options
that have not been exercised or cannot be exercised by the end of the term on March 17, 2026 shall be forfeited
without the holder being entitled to replacement or compensation. An exit or payment event is the date at which
either the majority of the shares in NORDENIA International AG (or, at the effective date of the intended merger,
Nordenia Holdings) is sold or in case of an IPO of NORDENIA International AG (or of Nordenia Holdings at the
effective date of the intended merger). In the event the employment is terminated by NORDENIA International AG
(or, at the effective date of the intended merger, Nordenia Holdings) for due cause, the option rights are forfeited. In
the event the employment is otherwise terminated, NORDENIA International AG (or, at the effective date of the
intended merger, Nordenia Holdings) has the right to pay a compensation to the withdrawing option holder in lieu of
the options.
Prior to the merger, the options granted the holder the right to receive payment equaling the value of the
option less a virtual purchase price of EUR 4.39 per option in the case of a payment event. The value of the option
equaled the fair value of a stock of NORDENIA International AG. However, the holder was only entitled when and
if the value of the option exceeded the virtual purchase price by at least 10 %, i.e. totaled at least EUR 4.829 per
option (performance target). Since the consolidated financial statements of Nordenia Holdings are based on the
assumption that the merger will become effective, it is no longer possible to base the value of the option on the value
of the stocks of NORDENIA International AG due to the fact that NORDENIA International AG will cease to exist
as a legal entity as a result of the merger. Therefore, the option terms set forth that the option program shall be
continued with Nordenia Holdings with the option holders holding the number of options already being granted and
the value of each option being based on the fair value of a stock of Nordenia Holdings after the effective date of the
merger. For any changes in the value resulting from the merger, the option holders were granted a compensation in
accordance with the option terms by taking into account a voluntary payment of Nordenia Holding to the option
holders in August 2010 in the amount of EUR 2.51 per option (rounded down) that are credited to their rights arising
under the option program; the virtual purchase price of EUR 4.39 per option ceases to apply as of the effective date
of the merger. Hence, the Group accounts for the impairment of the option value as a result of the merger taking into
account the measurement on which the conversion ratio of the merger is based. Upon abolition of the virtual
purchase price, the performance target was also adjusted. The previous performance target according to which the
fair value per stock of NORDENIA International AG must at least total EUR 4.829 in case of a payment event was
adjusted in accordance with the conversion ratio set forth in the merger agreement in such manner that the value of
each stock of Nordenia Holdings must at least equal EUR 2.76 at the respective date.
The fair value of the issued options as at June 28, 2010 was determined using the Black-Scholes method.
At the balance sheet date, the Black-Scholes method was no longer used due to the fact that the consolidated
financial statements of Nordenia Holdings were compiled based on the assumption that the merger becomes
effective and therefore the exercise price is EUR 0. Hence, the value of a one stock option always equals the fair
value of an individual bearer share of Nordenia Holdings.
The shareholders’ value and thus the fair value of the individual bearer shares of Nordenia Holdings were
therefore determined at the balance sheet date using the DCF method as described in IDW S1. The calculation is
based on the multi-year plans of the Group. A base interest rate of 3.25 %, a risk surcharge for the operating risk of
5.5 %, and a growth rate of 1.5 % were used as a basis for the calculation.
Hence, the fair value of the outstanding virtual stock options at the balance sheet date amounts to
EUR 11.08 (prev. period: EUR 12.2).
The provision for the stock options totals kEUR 26,141 (prev. period: kEUR 28,240) at the balance sheet
date. The provision decreased as a result that – despite the compensation paid in the reporting period in the amount
F-60
of approx. EUR 2.51 per option – the amount of the NORDENIA Group’s obligation arising from the stock option
program decreased as a result of the assumed merger. In total, the provision for stock options was utilized in the
reporting period in the amount of kEUR 5,982 due to the one-time payment. An addition in the amount of
kEUR 3,883 was necessary in the reporting period.
12/31/2010
Units
Granted options in units (maximum number: 2,838,000)
Outstanding options as at June 29 or January 1.......................................
Options granted, forfeited, exercised or expired......................................
Outstanding options as at December 31 or June 28................................
Vested options as at December 31 or June 28 ........................................
2,379,094
0
2,379,094
0
06/28/2010
Units
2,379,094
0
2,379,094
0
The directors of NORDENIA International AG currently hold a total of 1,534,899 options as follows: Mr.
Landwehr 613,959 options, Mr. Picolin 460,470 options, and Mr. Busacker 460,470 options. No options have been
granted to members of the Supervisory Board.
The virtual stock options existing at as at December 31, 2010 fall due within 15 years max (prev. year: 6
years).
37 Disclosures and explanatory comments on the consolidated cash flow statement
37.1
Cash
Cash combines cash and cash equivalents that comprise cash on hand and current bank balances At the
balance sheet date, the cash totaled kEUR 35,404 (prev. period: kEUR 31,489).
Cash includes cash from pro rata consolidated companies in the amount of kEUR 915 (prev. period:
kEUR 807).
37.2
Cash flow from current operating activities
The cash flow from current operating activities increased in by kEUR 27,102 from kEUR 8,629 in the
previous period to kEUR 35,731 in the reporting period. The decrease in the EBIT by
kEUR 3,588 could be overcompensated by lower tax liabilities (kEUR 6,665) and lower payments to the working
capital (kEUR 22,352). Only higher interest expenses of kEUR 1,264 adversely affected the cash flow from current
operating activities.
37.3
Cash flow from investing activities
The outflow for investing activities increased over the previous year by kEUR 4,400 from
kEUR 10,088 to kEUR 14,488. The investments in property, plant and equipment and in intangible assets increased
by kEUR 3,581 from kEUR 11,303 in the previous period to kEUR 14,884 in the reporting period. Higher outflows
in these activities were accompanied by lower inflows from the disposal of non-current assets. The inflow from the
sale of consolidated companies of kEUR 710 in the previous year related to the sale of the shares in NORDENIA
Morocco Casablanca S.A.R.L.
37.4
Cash flow from financing activities
The cash flow from financing activities decreased over the previous year by kEUR 30,556 from kEUR
13,862 to kEUR -16,694. The cash flows from financial activities in the reporting period were primarily affected by
the transactions resulting from the new financing structure and reflect the origin and use of the cash. In the respect,
cash inflows from the issuing of the bond (kEUR 272,463) were primarily used to distribute dividends (kEUR
F-61
185,126) and the repayment of old loans. In particular, subordinated loans in the amount of kEUR 50,000 were
repaid. As a result of the positive development of the earnings, the utilization of the credit line of kEUR 100,000
was reduced in the reporting period from previously kEUR 56,034 to kEUR 35,000.
38 Segment reporting
Management based the determination of the business segments on the reports available to the directors.
The companies of the Group primarily operate in one industry, namely development, production and
processing of films and material components for packing, technical solutions and use in product components.
The reporting of the Group for management purposes is structured by type of product in divisions and
geographic regions. According to internal controlling, the divisions are divided into Advanced Films & Components
(AFC), Consumer Flexible Packaging (CFP), and Services (for service providers). This classification is based on the
fixed allocation of the individual companies. Both operating divisions operate in the endmarkets “hygiene”,
“converting”, “food”, “petcare and garden products”, “beauty and healthcare”, “industrial”, “detergents & cleansing
agents”, and “others”.
The companies of the Service division primarily render intercompany services.
divisions were renamed; however, their contents remained the same. The divisions Advanced Films & Components
(AFC) had previously been named Industry segment; the division Consumer Flexible Packaging (CFP) had
previously been named Consumer segment. The Service division was also known as the Other segment.
The directors analyze the results in the individual business segments, inter alia, based on an adjusted
EBITDA. This basis exclude effects from one-time expenses incurred by the business segments, ABS expenditure,
management fees, expenses related to the stock option program, gains and losses from the sale of non-current assets,
as well as expenditure for severance and compensations, as well as restructuring costs.
The segment reporting is compiled using the same reporting and measurement methods as the consolidated
financial statements. The reconciliation column shows the multi-segment effects resulting from consolidation
activities.
As a consequence of a review of the internal reporting and in respect of an increasing capital market
orientation the Group reviewed its key ratios. In deviation to the previous year, the following new key ratios have
been defined:
-
Gross margin
-
Adjusted EBITDA
-
Adjusted EBITDA in % of sales
-
External Working Capital.
In addition, further key figures have been added into the reporting or their derivation newly defined,
respectively. This concerns mainly:
-
Inventories
-
Assets relevant to working capital
-
Receivables relevant to working capital
-
Debts relevant to working capital
-
Liabilities relevant to working capital
-
Average number of employees.
F-62
The following key figures have been omitted due to the adjusted reporting structure:
-
Financial result
-
Operating result
-
Assets
-
Liabilities.
For purposes of comparability, the figures relating to the previous period have been adjusted accordingly.
With one external customer, sales of kEUR 152,815 (prev. period: kEUR 135,958, accumulated kEUR
288,773) were generated. The customer is served by the divisions AFC and CFP.
F-63
Segment reporting broken down by divisions
Tonnage ............................................ t
Total sales ......................................... kEUR
Internal sales of the
Divisions ........................................... kEUR
12/31
2010
83,763
261,81
2
AFC
06/28
2010
86,168
252,53
9
-2,137
250,40
2
44,840
36,226
14.5%
1,726
34,500
7,153
27,347
5,121
510,191
88,108
69,692
13.7%
2,017
67,675
14,252
53,423
13,346
2010
169,931
514,351
-4,160
2010
81,234
12/31
2010
0
Services
06/28
2010
31
2010
31
174,430 167,525 341,955
5,854
5,550
11,404
-701
-365
-1,066
12/31
2010
40,994
-8,129
CFP
06/28
2010
40,240
-7,566
-15,695
Reconciliation
12/31 06/28
2010
2010
2010
-4,880 -4,996 -9,876
0
0
0
23,157 22,135 45,292
23,157 22,135 45,292
-2,759 -4,014 -6,773
-544
717
173
2.3% -3.2% -0.4%
0
-572
-572
-544 1,289
745
-1,025
11 -1,014
481 1,278 1,759
0
0
0
12/31
2010
119,877
Group
06/28
2010
121,443
2010
241,320
442,096
425,614
867,710
-34,010
-32,203
-66,213
408,086
69,281
49,182
12.1%
7,739
41,443
14,322
27,121
16,717
393,411
74,670
56,586
14.4%
11,468
45,118
14,409
30,709
10,235
801,497
143,951
105,768
13.2%
19,207
86,561
28,731
57,830
26,952
External sales ....................................
Gross margin.....................................
Adjusted EBITDA.............................
Adjusted EBITDA in % of the sales .
Adjustments ......................................
EBITDA............................................
Depreciation/amortization.................
EBIT .................................................
Investments (CAPEX) 1) ..................
kEUR
kEUR
kEUR
%
kEUR
kEUR
kEUR
kEUR
kEUR
-2,023
259,78
9
43,268
33,466
12.9%
291
33,175
7,099
26,076
8,225
Inventories ........................................
Receivables relevant to working
capital 2) ...........................................
Assets relevant to working capital.....
Liabilities relevant to working
capital 3) ...........................................
Debts relevant to working capital......
External working capital 4) ...............
Average number of employees 5) .....
kEUR
48,723
41,726
48,723
51,377
48,050
51,377
584
916
584
0
0
0
100,684
90,692
100,684
kEUR
kEUR
41,331
90,054
50,880
92,606
41,331
90,054
26,683
78,060
27,134
75,184
26,683
78,060
111
695
300
1,216
111
695
8
8
0
0
8
8
68,133
168,817
78,314
169,006
68,133
168,817
kEUR
kEUR
kEUR
kEUR
42,901
42,901
47,153
1,400
41,810
41,810
50,796
1,391
42,901
42,901
47,153
1,396
20,798
20,798
57,262
1,393
24,341
24,341
50,843
1,360
20,798
20,798
57,262
1,377
1,849
1,849
-1,154
113
491
491
725
110
1,849
1,849
-1,154
111
-477
-477
485
0
-477
-477
477
0
-477
-477
485
0
65,071
65,071
103,746
2,906
66,165
66,165
102,841
2,861
65,071
65,071
103,746
2,884
166,301 159,959 326,260
24,217 29,353 53,570
18,577 21,610 40,187
11.2%
13.5%
12.3%
276
-136
140
18,301 21,746 40,047
7,715
6,739 14,454
10,586 15,007 25,593
7,351
4,568 11,919
5,153
5,185 10,338
4,555
4,491
9,046
-2,318 -1,966 -4,284
-45.0% -37.9% -41.4%
7,172 10,450 17,622
-9,489 -12,417 -21,906
533
506
1,039
-10,022 -12,923 -22,945
1,141
546
1,687
1)
in property, plant and equipment, and intangible assets
2)
The receivables relevant to the working capital comprise trade receivables, creditors with debit balances less deferred customer bonuses.
3)
The liabilities relevant to the working capital comprise trade payables, debtors with credit balances, as well as liabilities from suppliers‘ bonuses.
4)
The external working capital is a key ratio in the Company’s controlling and therefore all assets and liabilities related thereto are disclosed. The disclosures correspond to the reporting provided to the directors on a
regular basis.
5)
based on full-time employment, including management
F-64
Reconciliation of EBIT to earnings before taxes:
EBIT .......................................................................................
Financial expenses..................................................................
Financial income ....................................................................
Earnings before taxes .............................................................
06/29-12/31
2010
kEUR
27,121
-21,961
3,204
8,364
01/01-06/28
2010
kEUR
30,709
-8,947
3,221
24,983
2010
kEUR
57,830
-30,908
6,425
33,347
06/29-12/31
2010
kEUR
41,443
624
3,883
-47
91
492
2,887
-191
49,182
01/01-06/28
2010
kEUR
45,118
-324
10,240
-7
11
-181
971
758
56,586
2010
kEUR
86,561
300
14,123
-54
102
311
3,858
567
105,768
Reconciliation of EBITDA to adjusted EBITDA:
EBITDA .................................................................................
Management fees....................................................................
Stock option program .............................................................
Restructuring costs .................................................................
Expenses relating to compensations and severance................
Gains/losses from the disposal of non-current assets .............
Exceptional expenses from refinancing and merger...............
Other exceptional expenses ....................................................
adjusted EBITDA ...................................................................
The amounts – based on the segment assets reported to the directors – are measured in the same manner as in
this report. Those assets are attributed based on the allocation of the companies to the individual divisions.
Reconciliation of segment assets to assets as per the consolidated balance sheet:
Segment assets relevant to the working capital (excl. ABS) .................................
Property, plant and equipment...............................................................................
Cash and cash equivalents .....................................................................................
Financial assets......................................................................................................
Other assets............................................................................................................
Intangible assets ....................................................................................................
Deferred tax assets.................................................................................................
Current income tax claims.....................................................................................
Assets as per the balance sheet ..............................................................................
12/31/2010
kEUR
168,817
212,724
35,404
28,739
24,522
10,029
8,486
747
489,468
06/28/2010
kEUR
169,006
214,148
31,489
19,510
36,960
9,865
12,247
447
493,672
The amounts – based on the segment liabilities reported to the directors – are measured in the same manner as in
this report. Those liabilities are attributed based on the allocation of the companies to the individual divisions.
F-65
Reconciliation of the segment debt to the liabilities as per the consolidated balance sheet:
Segment debt relevant to the working capital........................................................
Bond ......................................................................................................................
Other liabilities and provisions..............................................................................
Liabilities due to banks..........................................................................................
Deferred tax liabilities ...........................................................................................
Provisions for pension obligations.........................................................................
Subordinated loans ................................................................................................
Current income tax liabilities ................................................................................
Notes payable ........................................................................................................
12/31/2010
kEUR
65,071
280,873
117,986
40,057
16,534
14,007
9,978
3,893
3,039
551,438
06/28/2010
kEUR
66,165
0
115,799
95,323
17,060
14,312
50,000
7,863
4,815
371,337
01/01-06/28
2010
kEUR
128,945
152,226
66,062
46,178
393,411
2010
kEUR
264,947
312,237
131,466
92,847
801,497
The sales break down by regions as follows:
Germany .................................................................................
Europe (excluding Germany) .................................................
America*)...............................................................................
Others .....................................................................................
06/29-12/31
2010
kEUR
136,002
160,011
65,404
46,669
408,086
*) kEUR 58,936 (prev. period: kEUR 61,862, accumulated kEUR 120,798) of the total sales are generated in the
United States, i.e. within the America region.
The non-current assets break down by regions as follows:
Germany ...............................................................................................................
Europe (excluding Germany) ...............................................................................
America*).............................................................................................................
Others ...................................................................................................................
*) thereof United States........................................................................................
12/31/2010
kEUR
126,550
52,216
33,952
10,191
222,909
33,952
06/28/2010
kEUR
124,706
52,567
37,353
11,086
225,712
37,353
For further details regarding the breakdown of sales by categories see note 3.
39 Related third party disclosures
Note 39 contains the disclosures required under Sec. 315a HGB [German Commercial Code].
The NORDENIA Group is controlled by OCM / Nordenia POF Luxembourg SCA, 67, boulevard Grande
Duchesse Charlotte, L-1331 Luxembourg (hereinafter referred to as “OCM / Nordenia POF”) that holds a majority
interest of more than 50 %. Furthermore, OCM / Nordenia Opps Luxembourg SCA, 67, boulevard Grande Duchesse
Charlotte, L-1331 Luxembourg (hereinafter referred to as “OCM / Nordenia Opps”) holds more than 30 % of the shares
in a company related to OCM / Nordenia POF.
The related parties include:
Executive Board of Nordenia Holdings:
Mr. Christof Altendorfer, Degree in Business Administration
Mr. Heiko Keppler, Degree in Business Administration)
Supervisory Board of Nordenia Holdings:
F-66
Mr. Szymon Dec, Director and investment expert with Oaktree Capital Management L.P.(Chairman)
Mr. Martin Graham, Vice President and investment expert with Oaktree Capital Manage-ment L.P.
Mr. Justin Bickle, Senior Vice President and investment expert with Oaktree Capital Management L.P.
Executive Board of NORDENIA International AG:
Mr. Ralph Landwehr, Degree in Engineering (Chairman)
Mr. Andreas Picolin, Degree in Industrial Engineering (Deputy Chairman)
Mr. Andreas Busacker, Degree in Industrial Engineering
Supervisory Board of NORDENIA International AG:
Mr. Uwe E. Flach, management consultant (Chairman)
Mr. Hermann Dambach, merchant (Deputy Chairman)
Mr. Gerard J. Kerins, investor
Mr. Jordon L. Kruse, investment manager
Mr. Ewald Unterste-Wilms, merchant (employee representative)
Mr. Manfred Kasper, technical clerk work preparation (employee representative)
In addition to the consolidated subsidiaries, Nordenia Holdings is directly or indirectly via its operating
activities related to the following affiliated non-consolidated companies:
Company
Status
OOO NORDENIA Samara, Samara/Russia
39.1
Affiliated – not significant
Business relations with non-consolidated and associated companies
12/31/2010
kEUR
680
Total receivables due from non-consolidated subsidiaries ........................................
Total liabilities due to non-consolidated subsidiaries................................................
0
06/28/2010
kEUR
680
1
Impairment losses were recorded in the amount of kEUR 893 on receivables due from OOO NORDENIA
Samara, Samara/Russia in the total amount of kEUR 1,573 (prev. period: kEUR 1,573).
39.2
Related third party disclosures
OCM Luxembourg POF III S.a.r.l., a company affiliated with the two shareholders of Nordenia Holdings,
namely OCM/Nordenia POF Luxembourg S.C.A. and OCM/Nordenia OPPS Luxembourg S.C.A., renders services to
NORDENIA International AG under a management consulting services agreement. The scope of those services is up to
kEUR 300 p.a. In the current period there were no expenses regarding the services agreement.
F-67
39.3
Additional information regarding the supervisory board and directors
Supervisory Board's emoluments
No remuneration was paid to the Supervisory Board of Nordenia Holdings.
The total remuneration of the Supervisory Board of NORDENIA International AG in the reporting period for
their
services
to
the
parent
and
the
subsidiaries
totaled
kEUR
168
(prev.
period:
kEUR 336).
KEUR 150 of the total remuneration paid to the Supervisory Board (prev. period: kEUR 150, accumulated
kEUR 300) relate to remuneration paid to one member of the Supervisory Board that also covers consulting services that
the member rendered to the directors. The remunerations are paid in advance on a quarterly basis.
No advance payments or loans were granted to the other members of the Supervisory Board in the last two
years. Neither did these members of the Supervisory Board receive any remuneration or benefits for personal services
such as consulting or intermediation services.
Emoluments for the directors of Nordenia Holdings
No remuneration was paid to the directors of Nordenia Holdings.
Emoluments for the directors of NORDENIA International AG
Salaries and other non-current benefits ....................................
Severance payments .................................................................
06/29-12/31
2010
kEUR
1,265
0
01/01-06/28
2010
kEUR
982
0
2010
kEUR
2,247
0
Post-employment benefits A provision in the amount of kEUR 3,505 (prev. period: kEUR 3,518) was recorded
in the consolidated financial statements for pension commitments to directors. Provisions were recorded in the
consolidated financial statements in the amount of kEUR 10,684 (prev. period: kEUR 10,922) for current pensions and
pension commitments to former directors and their survivors. The total remuneration of former directors and their
survivors totals kEUR 387 (prev. period: kEUR 394, accumulated kEUR 781). The directors received payments in the
amount of kEUR 3,859 (prev. period: kEUR 0) under the stock option program. The provision for stock options related to
the directors totals kEUR 16,865 (prev. period: kEUR 18,213).
No advance payments or loans were granted to directors during the 2010 financial year.
F-68
39.4
Group of consolidated companies and shareholdings
As at December 31, 2010, Nordenia Holdings directly or indirectly controlled the following companies:
Registered office
Name of the company
Companies included in consolidation
Nordenia Holdings
NORDENIA Deutschland Lohne GmbH
NORDENIA Deutschland Emsdetten GmbH
Dalian DANOR Printing Packaging Company
EMPAC Beteiligungs GmbH
NORDENIA Polska Starogard GD. Sp. z o.o.
NORDENIA Deutschland Gronau GmbH
NORDENIA Deutschland Osterburken GmbH
NORDENIA IT Services GmbH
NORDENIA Deutschland Halle GmbH
NORDENIA Technologies GmbH
NORDENIA International Development GmbH
ZAO NORDENIA Slavnika
Nordenia International Beteiligungs GmbH
Nordenia International Beteiligungs GmbH & Co. KG
NORDENIA U.S.A., Inc.
NORDENIA Iberica Barcelona S.A.
Polireal S. L.
NORDENIA Hungary Kft.
NORDENIA Polska Poznan Sp. z o.o.
NORDENIA (Malaysia) Sdn. Bhd.
Nordenia-Thong Fook (Australia) Pty. Ltd.
1)
1)
2)
1)
3)
1)
4)
4)
1)
1)
1)
1)
5)
1)
6)
1)
7)
1)
8)
1)
9)
Companies not included in consolidation
OOO NORDENIA Samara
10) Samara/Russia
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
Greven
Steinfeld
Emsdetten
Dalian/China
Emsdetten
Swarozyn/Poland
Gronau/Westf.
Osterburken
Barleben
Halle/Westf.
Gronau/Westf.
Greven
Pereslavl/Russia
Greven
Greven
Jackson/U.S.A.
Polinya/Spain
Polinya/Spain
Szada/Hungary
Dopiewo/Poland
Ipoh/ Malaysia
Australia
Equity interest
90.00%
100.00%
50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
10.40%
100.00%
100.00%
100.00%
100.00%
100.00%
Direct investments of Nordenia Holdings
Investment of NORDENIA Deutschland Emsdetten GmbH, pursuant to IAS 31
Joint venture consolidated on a pro rata basis
Investment of EMPAC Beteiligungs GmbH
Investment of NORDENIA Deutschland Gronau GmbH
GmbH [German Limited Liability Company] that is the general partner with unlimited liability in
the KG; investment of Nordenia Holdings
Investment of NORDENIA International Beteiligungs GmbH & Co. KG
Investment of NORDENIA Iberica Barcelona S.A.
97.5 % investment of NORDENIA Hungary Kft. and 2.5 % investment of Nordenia Holdings
Investment of NORDENIA-Thong Fook (Malaysia) Sdn. Bhd., subgroup of NORDENIA
Thong-Fook (Malaysia) Sdn. Bhd.
No consolidation due to the minor significance to the Group
Nordenia Holdings directly holds 10.40 % of the subscribed capital of Polireal S.L. This company is a specialpurpose company as defined in SIC 12. The company leases out operating assets to NORDENIA Iberica Barcelona S.A.
From the economic perspective, the company is therefore controlled by Nordenia Holding and thus fully consolidated.
39.5
Disclosures regarding the company consolidated on a pro rata basis
The Group holds a 50 % investment in the joint venture Dalian DANOR Printing Packaging Company,
Dalian/China. The following figures reflect the 50 % share of the Group in the assets and liabilities, the sales and
earnings/losses of the joint venture. The figures are also included in the consolidated balance sheet and the consolidated
income statement:
F-69
12/31/2010
kEUR
Assets
Non-current assets ....................................................................................................
Current assets ...........................................................................................................
06/28/2010
kEUR
2,878
3,414
6,292
3,175
4,097
7,272
1
961
962
5,330
1
1,319
1,320
5,952
12/31/2010
kEUR
2,411
Income......................................................................................................................
Expenses...................................................................................................................
2,704
-293
Share in the obligation of the joint ventures.............................................................
06/28/2010
kEUR
2,945
2,952
-7
Liabilities
Non-current debt ......................................................................................................
Current debt..............................................................................................................
Net assets .................................................................................................................
There are no contingent liabilities that are attributable to the Group; neither does the joint venture itself have any
contingent liabilities.
39.6
Employees
The companies of the NORDENIA Group (joint venture accounted for on a pro rata basis) had the following
numbers of employees:
Per capita
Production .............................................................................
Administration.......................................................................
Sales ......................................................................................
Research and development ....................................................
Management ..........................................................................
06/29-12/31
2010
2,444
251
201
50
19
2,965
F-70
01/01-06/28
2010
2,405
246
192
52
19
2,914
2010
2,422
248
195
51
19
2,935
The number of employees in the company consolidated on a pro rata basis is as follows (50 %):
06/29-12/31
2010
62
Production .............................................................................
Administration.......................................................................
10
5
Sales ......................................................................................
77
01/01-06/28
2010
62
10
5
77
2010
62
10
5
77
For corporate controlling purposes and the purpose of subsequent analyses of the income statement, as well as
the explanatory comments and the segment reporting, the average number of employees extrapolated to the number of
full-time employees is disclosed:
Full-time employees
Production ............................................................................
Administration......................................................................
Sales .....................................................................................
Research and development ...................................................
Management .........................................................................
06/29-12/31
2010
2,418
231
187
50
20
2,906
01/01-06/28
2010
2,381
225
184
51
20
2,861
2010
2,400
228
185
51
20
2,884
40 Contingent liabilities and other financial obligations
40.1
Contingencies
12/31/2010
kEUR
Notes payable ...........................................................................................................
405
40.2
06/28/2010
kEUR
809
Litigation
Neither Nordenia Holdings nor any of its group companies are involved in any pending or foreseeable legal or
arbitration proceedings that could have or have had a material impact on the economic situation in the last two years.
Provisions in the appropriate amount were recorded by the respective companies for any financial obligations from legal
or arbitration proceedings. No provisions were recorded, if the Group does not expect the court and arbitration
proceedings to result in any financial obligations (cf. note 40.4).
40.3
12/31/2010
kEUR
12,275
Commitments from investments, including obligations from future expenditure .....
Obligations from non-cancellable operating lease
10,525
or leasing agreements ................................................................................................
2,266
thereof due within 1 year .....................................................................................
5,854
thereof due between 1 - 5 years............................................................................
2,405
thereof due within more than 5 years...................................................................
22,800
Total ..........................................................................................................................
06/28/2010
kEUR
12,526
10,369
2,207
5,379
2,783
22,895
The minimum leases relate to leased buildings, plants and fixtures, fittings and office equipment, with some of
the existing agreements containing extension clauses. In addition, a production site (land and buildings) was refinanced
by way of a sale and leaseback transaction. The expenses from operating leases that were recognized in profit and loss
total kEUR 1,658 (prev. year: kEUR 1,701, accumulated kEUR 3,359) at the balance sheet date.
40.4
F-71
The Group incurred contingent liabilities from litigation related to its operating activities.
The Group does not expect that major liabilities for which no provisions have been recorded will actually be
occurred.
Taxes and incidental costs relating to the taxes in the total amount of kEUR 10,121 were assessed and are
payable by NORDENIA International AG for 2006 and 2008; this amount was not disclosed in the provisions or the
Company's liabilities. The Company filed an appeal against the tax assessment notes. The tax authorities and the
municipalities and towns that are authorized to impose the taxes have granted a suspension of enforcement in respect to
those amounts. The Company expects that the currently pending appeal proceedings and suits will be decided in its favor.
40.5
Auditor's fees and services
The fees recorded as expenses for the auditor of the consolidated financial statements in the short financial year
ended December 31, 2010 that shall be disclosed pursuant to Sec. 315a para. 1 HGB in context with Sec. 314 para. 1 No.
9 HGB break down as follows:
Auditing services...........................................................................................................................................
41
kEUR
199
Subsequent events
An application for registration of the merger of NORDENIA International AG by way of assumption of the
company by Nordenia Holdings that was resolved in the last quarter of 2010 was filed with the Commercial Registers of
both companies in mid-January 2011. In mid-January 2011, 2 shareholders of NORDENIA International AG filed actions
for annulment and appeal against the resolution on the approval of the extraordinary annual general meeting of
NORDENIA International AG related to the merger agreement dated December 15, 2010. NORDENIA International AG
is the defendant in these actions. On principle, the merger cannot be registered in the Commercial Register (prohibition to
register) until the actions have been finally dismissed, the petitions have been withdrawn by the plaintiffs or the dispute
has been settled. In mid-February 2011, NORDENIA International AG initiated release proceedings with the OLG
Hamm [Higher Regional Court] in accordance with Sec. 16 para. 3 UmwG [German Reorganization of Companies Act]
in order to be released from the prohibition to register. As per the legal regulations, these proceedings should be
completed no later than 3 months of initiation. If the Group succeeds, it will be released from the prohibition to register.
The court’s decision in the release proceedings is still pending.
Signed in Greven on March 17, 2011
The Directors
Christof Altendorfer
Heiko Keppler
F-72
statement of comprehensive income, balance sheet, notes to the consolidated financial statements, statement of changes
in group equity and cash flow statement—as well as to the Group management report of NORDENIA International AG,
Greven. The Group management report is not reproduced in the Preliminary Offering Memorandum.
We have audited the consolidated financial statements prepared by NORDENIA International AG, Greven—
comprising the income statement, statement of comprehensive income, balance sheet, notes to the consolidated financial
statements, statement of changes in group equity and cash flow statement—together with the Group management report
for the financial year from January 1 to December 31, 2009. The preparation of the consolidated financial statements and
the Group management report in accordance with the IFRS, as adopted by the EU, and the additional requirements of
German Commercial Law pursuant to § 315a para 1 German Commercial Code (Handelsgesetzbuch—HGB) are the
responsibility of the parent company’s board of management. Our responsibility is to express an opinion on the
consolidated financial statements and on the Group management report based on our audit. In addition, we have been
instructed to express an opinion as to whether the consolidated financial statements comply with IFRS as issued by the
IASB.
We conducted our audit of the consolidated financial statements in accordance with Sec. 317 HGB and German
generally accepted standards for the audit of financial statements promulgated by the Institute of Public Auditors in
Germany (Institut der Wirtschaftsprüfer—IDW). Those standards require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net assets, financial position and results of operations in the
consolidated financial statements in accordance with the applicable financial reporting framework and in the Group
management report are detected with reasonable assurance. Knowledge of the business activities and the economic and
legal environment of the Group and expectations as to possible misstatements are taken into account in the determination
of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the
disclosures in the consolidated financial statements and the Group management report are examined primarily on a test
basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities
included in consolidation, the determination of the entities to be included in consolidation, the accounting and
consolidation principles used and significant estimates made by the company’s board of management, as well as
evaluating the overall presentation of the consolidated financial statements and the Group management report. We
believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on our findings of our audit, the consolidated financial statements comply with the IFRS
as adopted by the EU, the additional requirements of German Commercial Law pursuant to Sec. 315a para 1 HGB and
IFRS as issued by the IASB, and give a true and fair view of the net assets, financial position and results of operations of
the Group in accordance with these requirements. The Group management report is consistent with the consolidated
financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the
opportunities and risks of future development.
Oldenburg, February 23, 2009
Grant Thornton GmbH
Signed Schur
signed Hellmers
Wirtschaftsprüfer
Wirtschaftsprüfer
F-73
NORDENIA International AG, Greven
Notes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Sales ........................................................................................................................
Cost of sales.............................................................................................................
Gross profit..............................................................................................................
Selling costs.............................................................................................................
Administrative costs ................................................................................................
Research and development costs .............................................................................
Other operating income ...........................................................................................
Other operating expenses.........................................................................................
Exchange rate differences from business operations ...............................................
Operating profit.....................................................................................................
Financial result ......................................................................................................
Profit before income taxes ....................................................................................
Income tax expenses................................................................................................
Result from continued operations............................................................................
Result from discontinued operations .......................................................................
Consolidated net income .......................................................................................
Profit attributable to minority interest .....................................................................
Profit attributable to shareholder of the parent ........................................................
F-74
(8)
(9)
(10)
(11)
(12)
(12)
(13)
(14)
(15)
(18)
kEUR
663,654
539,368
124,286
35,294
38,500
5,199
7,539
3,784
406
49,454
(10,983)
38,471
12,457
26,014
1,436
27,450
(110)
27,560
Prior year
kEUR
729,709
620,809
108,900
38,035
31,843
3,743
7,189
3,925
82
38,625
(18,038)
20,587
9,786
10,801
240
11,041
(166)
11,207
Consolidated statement of comprehensive income
1. Consolidated net income ......................................................................................................
2. Result from available-for-sale financial assets
affecting net income .............................................................................................................
not affecting net income .......................................................................................................
3. Result from cash flow-hedging
affecting net income .............................................................................................................
not affecting net income .......................................................................................................
4. Exchange differences on translating foreign operations .........................................................
5. Income taxes relating to components of other comprehensive income ..................................
6. Other comprehensive income ..............................................................................................
7. Total comprehensive income ...............................................................................................
8. Profit attributable to minority interest ....................................................................................
9. Profit attributable to shareholder of the parent .......................................................................
F-75
kEUR
27.450
Prior year
kEUR
11.041
0
(170)
0
(186)
0
(246)
(1.215)
125
(1.506)
25.944
(114)
26.058
0
0
(685)
56
(815)
10.226
(159)
10.385
Notes
kEUR
Assets
1. Intangible assets....................................................................................................
2. Property, plant and equipment ..............................................................................
3. Investment properties............................................................................................
4. Other financial investments ..................................................................................
5. Deferred tax assets ................................................................................................
6. Other long-term assets ..........................................................................................
B. Current assets
1. Inventories ............................................................................................................
2. Trade receivables ..................................................................................................
3. Other assets...........................................................................................................
4. Current income tax assets .....................................................................................
5. Cash and cash equivalents ....................................................................................
Prior year
kEUR
(19)
(20)
(21)
(22)
(23)
(24)
9,799
212,181
129
17,452
7,302
767
247,630
8,935
223,397
131
18,240
7,893
986
259,582
(25)
(26)
(27)
73,996
61,246
14,935
1,449
18,010
169,636
417,266
71,906
56,224
20,412
849
7,634
157,025
416,607
28,380
55,310
27,560
(8,349)
(4,167)
98,734
11
98,745
28,380
51,189
11,207
(7,138)
(4,167)
79,471
7
79,478
(28)
A. Equity
1. Subscribed capital .................................................................................................
2. Reserves................................................................................................................
3. Profit attributable to shareholder of the parent .....................................................
4. Currency adjustment item .....................................................................................
5. Treasury stock.......................................................................................................
Equity attributable to shareholder of the parent.......................................................
6. Minority interest ...................................................................................................
(29)
(29)
(29)
(29)
(29)
B. Non-current liabilities
1. Subordinated loans................................................................................................
2. Liabilities to banks................................................................................................
3. Provisions for pensions and similar obligations....................................................
4. Deferred tax liabilities ..........................................................................................
5. Other provisions....................................................................................................
6. Other liabilities .....................................................................................................
(30)
(30)
(32)
(34)
(35)
(30)
50,000
37,182
11,821
16,572
19,820
22,265
157,660
50,690
20,679
12,367
17,250
1,674
22,831
125,491
C. Current liabilities
3. Notes payables ......................................................................................................
4. Trade payables ......................................................................................................
5. Current income tax liabilities................................................................................
(30)
(30)
(30)
(30)
(37)
(35)
(30)
0
44,065
3,600
60,663
8,055
11,973
32,505
160,861
417,266
30,000
73,009
5,914
56,243
2,564
10,245
33,663
211,638
416,438
F-76
(29)
Name of the company
NORDENIA Deutschland Lohne GmbH.......................
NORDENIA Deutschland Emsdetten GmbH ................
EMPAC Beteiligungs-GmbH ........................................
NORDENIA Polska Starogard GD. Sp. z o.o............
NORDENIA Deutschland Gronau GmbH.....................
NORDENIA Deutschland Coating GmbH ................
NORDENIA Deutschland Halle GmbH ........................
NORDENIA Technologies GmbH ................................
Nordenia International Development GmbH.................
NORDENIA Deutschland Osterburken GmbH .............
ZAO NORDENIA Slavnika ..........................................
Nordenia International Beteiligungs GmbH ..................
Nordenia International Beteiligungs GmbH & Co. KG.
NORDENIA U.S.A., Inc. ..............................................
NORDENIA Iberica Barcelona S.A. .............................
NORDENIA Morocco Casablanca S.A.R.L..............
NORDENIA Hungary Kft. ............................................
NORDENIA Polska Poznan Sp. z o.o. ......................
Nordenia IT Services GmbH .........................................
Dalian DANOR Printing Packaging Company*)............
NORDENIA (Malaysia) Sdn. Bhd. ...............................
NORDENIA-Thong Fook (Australia) Pty. Ltd..........
Polireal S. L. ..................................................................
Not consolidated entities**)
OOO NORDENIA Samara
(previously: OOO “Nord Coating”)...........................
Label 24 GmbH i. L. (previously: NORDENIA
Deutschland Pacimex GmbH)....................................
*)
**)
Location
Kind of
investment
Investment in %
of share capital
Steinfeld
Emsdetten
Emsdetten
Swarozyn/Poland
Gronau/Westf.
Gronau/Westf.
Halle/Westf.
Gronau/Westf.
Greven
Osterburken
Pereslavl/Russia
Greven
Greven
Jackson/USA
Polinya/Spain
Casablanca/Morocco
Szada/Hungary
Dopiewo/Poland
Barleben
Dalian/China
Ipoh/Malaysia
Australia
Polinya/Spain
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Share capital
Stocks
Stocks
Stocks
Shares
Shares
Shares
Shares
Stocks
Stocks
Stocks
90.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
83.41%
100.00%
100.00%
100.00%
50.00%
100.00%
100.00%
10.40%
Samara/Russia
Shares
100.00%
Gronau
Shares
100.00%
Proportionate consolidation according to IAS 31
Waiving of consolidation due to the low materiality for the Group
F-77
Minority
interest
Equity attributable to shareholder fo the parent company
Other
Currency
Subscribed Capital revenue Consolidated adjustment Treasury
Minority Group
Subtotal interest equity
capital
reserves reserves net income
stock
item
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR kEUR
IFRS 1/1/2008 ............
28,380 18,114 32,126
0
(6,446)
(4,167)
68,007
274 68,281
Purchase of minority
interest ....................
(66)
(66)
(43) (109)
Stock options ..............
1,556
1,556
1,556
Transfers .....................
759
(759)
0
0
Consolidated
comprehensive
income ....................
(130)
11,207
(692)
10,385
(159) 10,226
(411)
(411)
(65) (476)
Otthers ........................
IFRS 12/31/2008 ........
28,380 20,363 30,826
11,207
(7,138)
(4,167)
79,471
7 79,478
IFRS 1/1/2009 ............
28,380 20,363 42,033
0
(7,138)
(4,167)
79,471
7 79,478
interest ....................
44
44
Stock options ..............
(6,794)
(6,794)
(6,794)
Transfers .....................
163
(163)
0
0
Consolidated
comprehensive
income ....................
(291)
27,560
(1,211)
26,058
(114) 25,944
2
(3)
(1)
74
73
Others..........................
IFRS 12/31/2009 ........
27,560
(8,349)
(4,167)
98,734
11 98,745
28,380 13,734 41,576
F-78
Operating profit (EBIT including discontinued operations) ...........................................................
Depreciations on fixed assets..........................................................................................................
Income taxes paid ...........................................................................................................................
Financial expenses paid (less financial income received)...............................................................
Profit/loss from the disposal of fixed assets/consolidated entities ..................................................
Other non cash-relevant income/expenditure .................................................................................
Increase/decrease in inventories, trade receivables and other assets not related to investing or
financing activities......................................................................................................................
Increase in provisions, in trade payables and other liabilities not related to investing or
Cash flow from operating activities.............................................................................................
Cash received from disposals of property, plant and equipment ....................................................
Cash paid for investments in property, plant and equipment..........................................................
Cash received from disposals of intangible assets ..........................................................................
Cash paid for investments in intangible assets................................................................................
Cash received from disposals of financial assets ............................................................................
Cash paid for investments in financial assets..................................................................................
Cash received from the disposal of consolidated entities and other business units ........................
Cash paid for the purchase of consolidated entities and other business units .................................
Cash flow from investing activities..............................................................................................
Cash paid from repayments of subordinated loans .........................................................................
Cash received and cash paid from the borrowing and for the repayment of loans..........................
Cash flow from financing activities .............................................................................................
Change in cash ..............................................................................................................................
Change in cash funds from cash relevant transactions....................................................................
Change in cash funds from exchange rate movements ...................................................................
Change in cash due to changes of consolidated companies ............................................................
Cash balance at the beginning of the period ...................................................................................
Cash balance at the end of the period .........................................................................................
F-79
2009
kEUR
49,454
30,355
(7,190)
(11,701)
(1,935)
(83)
2008
kEUR
38,947
28,716
(5,085)
(17,298)
61
3,761
(4,492)
4,108
22,201
76,609
910
(19,269)
120
(2,630)
91
(85)
1,942
0
(18,921)
(30,750)
(16,647)
(47,397)
10,291
10,291
93
(8)
7,634
18,010
18,836
72,046
1,000
(40,667)
43
(828)
338
(1,586)
0
(1,323)
(43,023)
(35,617)
(747)
(36,364)
(7,341)
(7,341)
1,700
0
13,275
7,634
1
General disclosures
NORDENIA Group (hereinafter also referred to as NORDENIA) is an international group of companies in the
packing material industry operating worldwide in the fields of industry and consumption.
The Company was registered under the firm NORDENIA International AG in the Commercial Register at the
Vechta Amtsgericht [Local Court] (HRB 1368) on April 25, 1987. Currently, the Company is registered in the
Commercial Register at the Stuttgart Amtsgericht [Local Court] (HRB 7385).
The Company’s registered office is situated in Greven, Germany. The address is NORDENIA International AG,
Huettruper Heide 71-81, 48268 Greven.
The consolidated financial statements of NORDENIA International AG, Greven/Germany as of December 31,
2009 were compiled based on Sec. 315a para. 1 HGB [German Commercial Code] in compliance with the International
Financial Reporting Standards (IFRS) as applied in the European Union. All IFRS issued by the International Accounting
Standard Board (IASB) and applicable at the date of these consolidated financial statements and applied by NORDENIA
were adopted by the European Commission for the application in the EU. Hence, the consolidated financial statements of
NORDENIA are also in compliance with the IFRS published by the IASB. Therefore, the term IFRS is applied
uniformly. All IFRS effective as at the balance sheet date as well as the standards indicated in section 7 of the
consolidated financial statements were applied.
The financial year is the calendar year. Comparative figures for one previous year are indicated in the
consolidated statement of comprehensive income, the consolidated balance sheet and the consolidated cash flow
statement.
The reporting currency is the Euro. Unless otherwise indicated, all amounts are stated in thousands of Euro
(kEUR).
For the purpose of clearer presentation, various items of the consolidated balance sheet and consolidated
statement of consolidated income were combined. These items are stated separately, together with explanatory
comments, in the notes to the consolidated financial statements. The consolidated income statement is compiled using the
cost-of-sales accounting method.
The consolidated financial statements of NORDENIA International AG that were audited by Grand
Thornton GmbH, Wirtschaftsprüfungsgesellschaft, Oldenburg, and on which an independent auditor’s report was
rendered, as well as the consolidated financial statements of NORDENIA International AG on which an independent
auditor’s report was rendered are also publicly disclosed in the electronic Bundesanzeiger [Federal Gazette].
The Board of Directors of NORDENIA International AG released these consolidated financial statements on
February 23, 2010 for public disclosure.
2….Consolidation standards
Capital consolidation is performed using the purchase method.
Income and expenses of a subsidiary are consolidated as of the acquisition date. Income and expenses of a
subsidiary remain consolidated until the date at which the parent company’s control ceases to exist. The difference
between the gain from the sale of a subsidiary and its carrying amount, including accumulated translation differences
recorded in equity, is recorded in the consolidated income statement under gain or loss from the disposal of the
subsidiary at the date at which it is sold.
When acquiring additional interests in entities that have been consolidated as subsidiaries already, the difference
between the purchase price and the prorated acquired equity is offset against the capital reserves.
The acquired assets, debt and contingent liabilities are recorded at their fair value at the acquisition date. Any
positive difference between the cost of the acquired entity and the prorated fair value of the equity is attributed to one or
several cash generating units [CGU] and recorded as goodwill. The CGU including the attributed goodwill is reviewed
annually in respect to the value; in case of an impairment, impairment losses are recorded.
F-80
Intragroup revenues, expenses and income, as well as receivables and payables are offset.
Unrealized profits/losses from intercompany deliveries and services of non-current assets or inventories are
eliminated.
Entities that NORDENIA controls together with another venturer are consolidated using the proportionate
consolidation method (joint ventures).
3 Disposition of operations
On March 19, 2009, the shares in Coronor Composites GmbH, Peine, were sold. The entity was recognized as a
discontinued operation (IFRS 5) since the intention to sell the operation was announced.
The purchase price for the shares totaled 3,138 kEUR which was paid in full. Cash in the amount of
1,196 kEUR was transferred.
4 Acquisitions
On October 15, 2009, NORDENIA Deutschland Gronau GmbH acquired the remaining 13.4% share in
NORDENIA Deutschland Coating GmbH. NORDENIA Deutschland Coating GmbH as a subsidiary has already been
part of the consolidated group since 2007. The acquisition was presented as a mere equity transaction.
5
Group of consolidated companies
In addition to NORDENIA International AG (NIAG), the consolidated financial statements include all
companies in which NIAG directly or indirectly holds the majority of the voting rights and controls the financial and
business policies under the control concept, including all special-purpose entities. Potential voting rights that may
currently be exercised as well as the possibility to actually control an entity even without the majority of the voting rights
(imputed control) are accounted for.
Subsidiaries with inactive or minor business activities that are only of minor significance for presenting a true
and fair view of the financial, net worth and earnings position of the NORDENIA group are not consolidated.
Entities in which NIAG directly or indirectly holds 50% of the interests (joint ventures) are consolidated on a
prorated basis as per the percentage share (proportionate consolidation).
Fully consolidated subsidiaries .......
thereof Germany .........................
thereof other countries ................
Proportionate consolidated
companies ...................................
thereof Germany .........................
thereof other countries ................
Balance as of
Jan. 1, 2009
23
13
10
Change in
consolidation
method
2
1
1
0
0
0
Additions
0
0
0
Disposals
1
0
1
Balance as of
Dec. 31, 2009
22
13
9
0
0
0
0
0
0
1
1
0
1
0
1
The disposal of the foreign fully consolidated subsidiary relates to OOO NORDENIA Samara (formerly OOO
“Nord Coating”), Samara/Russia, which is no longer consolidated due to its intended business development and minor
significance.
The disposal of the German proportionate consolidated companies relates to Coronor Composites GmbH, Peine
whose shares were sold during the financial year. The company is not of significance for the consolidated financial
statements of the NORDENIA group.
F-81
6 Foreign currency translation
Foreign currency transactions are translated into the respective functional currency of the respective unit at the
rate prevailing at the date of the transaction. Monetary items are translated at the rate prevailing at the balance sheet date,
while non-monetary items are translated at the rate prevailing at the date of the transaction. Any gains/losses resulting
from currency translation are basically recorded through profit or loss. During the reporting period, translation
differences in the amount of 406 kEUR (prev. year: 82 kEUR) are recorded through profit or loss in respect to the
operating activities; exchange losses in the amount of −798 kEUR (2008: −914 kEUR) are recorded in the financial
result.
The financial statements of the foreign subsidiaries are translated as per IAS 21 “The effects of changes in
foreign exchange rates” using the modified balance sheet date method.
Assets and liabilities as well as contingencies and other financial obligations are translated at the middle rate
prevailing at the balance sheet date, the items of the consolidated income statement and thus the annual net profits
reported in the consolidated income statement are translated at the annual average rate.
Translation differences are recorded outside profit or loss.
Middle rate
on the balance sheet date
China..........................................................................
Malaysia.....................................................................
Morocco.....................................................................
Poland ........................................................................
Russia.........................................................................
Hungary .....................................................................
USA ...........................................................................
ISO
code
CNY
MYR
MAD
PLN
RUB
HUF
USD
12/31/2009
9.829900
4.930000
11.326600
4.103000
43.646900
270.150000
1.440500
12/31/2008
9.535800
4.835700
11.160000
4.182000
42.420000
264.200000
1.397600
Average rate
2009
9.511340
4.904390
11.234960
4.336790
44.286930
280.608010
1.392550
2008
10.138286
4.889784
11.308252
3.515346
36.737693
250.250250
1.465781
7 Recognition and measurement principles
The consolidated financial statements are compiled based on the amortized historical cost as at the date of the
IFRS opening balance sheet, incl. the assumption
•
•
that two real property units were recorded at fair value in accordance with IFRS 1 “First-time adoption of
IFRS”, and
that derivative financial instruments were recognized at fair value.
The financial statements of the companies included in the consolidated financial statements were compiled
based on uniform recognition and measurement standards in accordance with IAS 27 “Consolidated and separate
financial statements”.
7.1
Changes in recognition and measurement methods
On September 6, 2007, the IASB published the revised version of IAS 1 “Presentation of financial statements”.
The changes were implemented into European law on December 18, 2008 and shall be applied to financial years
beginning on or after January 1, 2009. NORDENIA adjusted the presentation of the net asset, financial and earnings
situation retrospectively as follows to meet the requirements under the revised IAS 1:
All owner changes in equity are presented separately from non-owner changes in equity.
Income and expenses are presented separately from transactions with equity owners in two components of the
financial statements (consolidated income statement and consolidated statement of comprehensive income). The
transactions with equity owners are only presented in the statement of changes in shareholders’ equity.
The elements of the item “Other earnings/losses” are presented in the consolidated statement of comprehensive
income.
F-82
The revised provisions of IAS 1 also require that the amount of income taxes relating to the individual items in
other earnings/losses, including those relating to reclassifications, are presented, as well as reclassifications that relate to
the individual items in other earnings/losses.
NORDENIA applied the changes in IAS 1 to the 2009 financial year and adjusted the presentation of the
consolidated financial statements accordingly.
7.2
Opting to apply standards
Without being required to do so, NORDENIA added segment reporting to these financial statements and, for
this purpose, has already voluntarily applied IFRS 8 since the 2007 financial year. IFRS 8 “Operating segments” shall be
applied to financial years that begin on or after January 1, 2009 and replaces IAS 14. It requires entities to report
financial and descriptive information about its reportable segments. Reportable segments are operating segments or
aggregations of operating segments that meet specific criteria: Operating segments are components of an entity for which
discrete financial information is available, whose operating results are reviewed regularly by the entity’s chief operating
decision maker to make decisions about resources to be allocated to the segment and assess its performance. In general,
entities are required to report financial information based on internal reports that are regularly reviewed by the entity’s
chief operating decision maker in order to allocate resources to the operating segments.
The NORDENIA Group also opted to apply IAS 33 “Earnings per share” since its 2007 consolidated financial
statements.
7.3
First-time adoption of standards
The following standards and interpretations of the IASB were mandatory and thus had to be complied with for
the first time:
IFRS 1 and IAS 27—Cost of an investment in a subsidiary, joint venture or associate
The revised IFRS 1 published in May 2008 and implemented in European law in January 2009 prescribe that an
entity may record the carrying amount of an investment in a subsidiary, joint venture or associate in its IFRS opening
balance sheet of its separate financial statements, instead of the deemed cost, either at fair value of the investment at the
time of transition to IFRS or the carrying amount of the investment calculated at the time of transition to IFRS using the
previously applied accounting standards.
The changes are mandatory to all financial years that begin on or after January 1, 2009. Due to the fact that there
are no transactions to which IFRS 1 would have to be applied , this revised standard is not relevant to the financial
statements of the NORDENIA Group.
IFRS 2—Share-based payments (terms and conditions for exercising and cancellations)
The new provisions include clear descriptions of expressions and a more precise definition of the terms and
conditions for exercising under share-based payment agreements. Accordingly, the terms and conditions for exercising
include conditions that answer the question of whether the enterprise has received the services based on which the
counter-party is entitled to receive cash, other assets or equity instruments of the enterprise. As for the measurement of
equity instruments that are granted under share-based payment agreements, the enterprise shall also take into account
such conditions that are not deemed conditions for exercising. Furthermore, the standard prescribes how the enterprise
shall deal with cancellations of share-based payment agreements.
NORDENIA adopted the revised IFRS 2 for the first time in the reporting period. Its adoption did not have any
impact on the net asset, financial and earnings position of the NORDENIA Group.
IFRS 7—Improved disclosures regarding the fair value and the liquidity risk
The IASB published more detailed information regarding financial instruments in March 2009 that were
implemented in European law in December 2009 retrospectively January 1, 2009. The changes include additional
disclosures regarding the measurement at fair value and the liquidity risk. The revised provisions are not relevant to the
Group.
IAS 1—Presentation of the financial statements
On September 2007, the IASB published a new version of IAS 1 that was implemented in European law on
December 18, 2008. The new version prescribes revised terms for the components of the financial statements. In
F-83
addition, there is a clear distinction between non-owner changes in equity and owner changes in equity. Income and
expenses recorded in equity outside profit or loss (other comprehensive income, OCI) must therefore be presented in a
so-called statement of comprehensive income.
For additional explanatory comments regarding the impact of first-time adoption of the IAS 1 see Section 7.1.
IAS 23—Borrowing costs
The revised version of IAS 23 was published in March 2007 and implemented in European law in December
2008. It is mandatory to all financial years that begin on or after January 1, 2009. The right to opt for capitalization of
borrowing costs directly related to the financing of the acquisition or generation of a qualifying asset or for recording the
costs as expenses was replaced by the duty to capitalize such costs.
IAS 23 was also revised to the extent that the previous elements of the borrowing costs are now replaced by a
reference to the calculation of the interest expenses using the effective interest method as per IAS 39 “Financial
instruments: recognition and measurement”. Thus, potential inconsistencies between the calculation of borrowing costs
under IAS 23 and under IAS 39 are prevented. The revised provisions of IAS 23 relating to the recognition of borrowing
costs of special assets were adopted by NORDENIA in the financial year; however, they had no material impact on the
Group’s net assets, financial and earnings position.
IAS 32 and IAS 1—Cancelable financial instruments and obligations resulting from liquidation
These revisions of IAS 32 and IAS 2 published in February 2008 were implemented in European law on
January 22, 2009 and shall be adopted for the first time in financial years beginning on or after January 1, 2009. The
revised standards grant exemptions to a minor extent that enable enterprises to classify cancelable financial instruments
as equity if and only if they meet certain criteria. The revised standards did not have any impact on the Group’s net asset,
financial and earnings position due to the fact that the Group has not issued such instruments.
IFRIC 15—Agreements regarding the erection of properties
The IFRIC 15 published in July 2008 and implemented in European law in July 2009 standardizes the
accounting practices in all jurisdictions in respect to the recognition of income from the sale of units such as apartments
or individual houses “from plan” (i.e. before they are completed) by the enterprise erecting the units. Since no properties
are erected or sold at the NORDENIA Group, this standard is not relevant.
In addition to the described changes, the IASB revised several standards to a minor extent in the course of the
2008 annual improvement project that are primarily effective January 1, 2009. The majority of the changes relate to the
presentation, the recording and measurement of line items. A smaller portion includes mere editorial changes that have
hardly any impact on the accounting. The changes in the course of the 2008 annual improvement project did overall not
have any material impact on the Group’s net assets, financial and earnings position.
7.4
Published but not yet adopted standards, interpretations and modifications
IFRS 1—First-time adoption of the IFRS
In November 2008, the IASB published a revised IFRS 1 “First-time adoption of International Financial
Reporting Standards” that was implemented in European law on November 26, 2009. The revised standard is effective
for all financial years commencing on or after July 1, 2009.
On July 23, 2009, the IASB published additional revised provisions of IFRS 1 that shall be adopted in reporting
periods beginning on or after July 1, 2010. The revised provisions shall apply retrospectively to certain scenarios and
shall ensure that the enterprise adopting the IFRS does not incur any unreasonable costs or burdens in the course of the
transition. In addition, the enterprises that have lease agreements are released from their obligation to estimate the
classification of these agreements as per IFRIC 4, if the application of the national accounting standards led to the same
result.
The changes are only of editorial nature and thus do basically not affect the presentation of the net asset,
financial and earnings position of the Group.
IFRS 2—Share-based payments
F-84
On June 18, 2009, the IASB published the revised IFRS 2 in which it clarifies the recognition of share-based
payments that are made in cash in the group. The revised standard has so far not been implemented in European law. It
specifies how an individual subsidiary in a Group shall recognize certain share-based payment agreements in its own
financial statements. Under these agreements the subsidiary receives goods or services from employees or suppliers,
however, the parent or another company of the Group pays the employees or suppliers. The revised provisions shall be
adopted in reporting periods that begin on or after January 1, 2010, and are not expected to have any material impact on
NORDENIA’s net assets, financial and earnings position or its cash flows.
IFRS 3 and IAS 27—Business combinations
In January 2008, the IASB published the revised version of IFRS 3 “Business combinations” and IAS 27
“Consolidated and separate financial statements” that the European Union implemented in European law on June 12,
2009. The main changes in IFRS 3 deal with the treatment of minority interest. The revised IFRS 3 contains the option to
record minority interest at their fair value or the prorated net identifiable assets; the option may be exercised for each
business combination separately. In the event of successive business acquisitions existing interests in the acquired entity
are reevaluated through profit or loss at the date at which control is obtained. Then, the goodwill is determined as the
difference between the revalued carrying amount of the interest plus purchase price payments on the acquisition of the
new interests less acquired net assets.
Incidental acquisition costs in business combinations are recorded as expenditure. The goodwill shall no longer
be adjusted in the event of possible adjustments of the acquisition costs depending on future events (contingent
consideration) that shall be recorded in liabilities at the acquisition date. According to the revised version of IFRS 3,
effects from the processing of business relationships that had already existed before the business combination shall not be
accounted for when determining the consideration for the business combination.
The main changes of IAS 27 deal with the presentation of changes in the percentage share without losing control
that shall now be recorded as equity transactions. In the event the parent company does no longer control a subsidiary,
the respective consolidated assets and debt shall be derecognized. In addition, any remaining investment in the former
subsidiary shall be initially recognized at fair value; any differences resulting from such recognition shall be recorded in
profit or loss. Losses attributed to the minority interest that exceed the minority interest in the subsidiary’s equity shall be
attributed to the minority interest regardless of the fact that the percentage share in the equity is exceeded.
The revised IFRS 3 shall be applied prospectively to business combinations whose acquisition date is during the
annual reporting period that begins on or after July 1, 2009. The standard may only be applied earlier to financial years
that begin after June 30, 2007. The revised IAS 27 shall be applied to financial years that begin after July 1, 2009; the
standard may be also applied to financial years beginning before that date. However, an earlier application of one of the
two standards requires that the other standard be applied earlier as well. NORDENIA currently investigates how the
presentation of the net assets, financial and earnings position and the cash flows is affected.
IFRS 9—Financial instruments: revision and replacement of all existing standards: classification and measurement
On November 12, 2009, the IASB published a new IFRS 9 regarding the classification and measurement of
financial instruments that has not yet been implemented in European law. The publication of this standard marks the
completion of the first stage of a three-stage project aiming at the replacement of IAS 39 “Financial instruments:
recognition and measurement” by a new standard. IFRS 9 introduces new provisions regarding the classification and
measurement of financial assets that shall be applied to reporting periods that beginn on or after January 1, 2013. An
early adoption is permitted, also in the 2009 financial year. The IASB intends to extend IFRS 9 in 2010 in order to
include new provisions regarding the classification and measurement of debt, derecognition of financial instruments,
impairment losses and accounting of hedged. Until the end of 2010, IFRS 9 shall be completely available to replace
IAS 39. NORDENIA currently reviews what impact the adoption of the IFRS 9 may have on its net asset, financial and
earnings position.
IAS 24—Related parties and enterprises
On November 4, 2009, the revised IAS 24 was published by IASB that has not yet been implemented in
European law. The changes include the partial exemption from disclosure obligations for enterprises related to the
government, on the one hand, and also reflect the definition of a related enterprise or related party, on the other hand. The
changes are mandatory to all financial years that begin on or after January 1, 2011.
IAS 32—Classification of preemptive rights
In July 2009, the IASB published changes regarding the classification of preemptive rights that shall be adopted
for the first time in reporting periods beginning on or after February 1, 2010. It shall clarify how preemptive rights are
F-85
recognized when and if they are denominated in a currency other than the enterprise’s functional currency. The Group
expects that the revised standard will not affect the Group’s net asset, financial and earnings position.
IAS 39—Financial Instruments: Recognition and Measurement
In July 2008, the IASB published a revised version of IAS 39 “Financial Instruments: Recognition and
Measurement” that the EU implemented in European law on September 16, 2009. By revising the definition of “eligible
hedged items”the standard clarifies that cash flow or fair value changes of a basic transaction above or below a certain
price or another variable may be designated as hedges. The changes in IAS 39 are effective for all financial years that
commence on or after July 01, 2009. The standards shall be applied retrospectively. The adoption of the revised standard
is not expected to have a major impact on the presentation of NORDENIA’s net asset, financial and earnings position or
the cash flows of the Group.
IAS 39 and IFRIC 9—Clarification in respect to the recognition of embedded derivatives
In August 2008, the revised IAS 39 was published and shall be adopted for the first time in financial years
beginning on or after July 1, 2009. So far, the revised standard has not yet been implemented in European law. The
revised standard specifies how the principles set forth in IAS 39 shall be applied in respect to the presentation of hedges
with regard to the designation of a unilateral risk in a basic transaction and the designation of inflation risks as a basic
transaction. It is specified that it is permitted to designate only a portion of the changes in the fair value or the cash flow
fluctuations of a financial instrument as a basic transaction. The adoption of the revised standard is not expected to have a
major impact on the presentation of NORDENIA’s net assets, financial and earnings position or the cash flows of the
Group.
Revision of various interpretations
The IASB published various revised interpretations that shall be adopted at the earliest in financial years
beginning on or after July 1, 2009. These revised interpretations are not expected to have any major impact on
NORDENIA Group’s net assets, financial and earnings position due to their irrelevance.
In the course of the “Annual Improvement Process” project 2009 the IASB published a collective standard on
April 16, 2009, revising numerous IFRS. It contains a number of minor changes regarding accounting methods and terms
as well as changes in the wording of existing standards that were not considered urgent. The standard is expected to be
implemented in European law in the first quarter of 2010. Unless the standard prescribes otherwise, the changes shall be
applied to financial years beginning on or after January 01, 2010. The adoption of the standard is not expected to have a
major impact on the presentation of NORDENIA’s net asset, financial and earnings position or the cash flows of the
Group.
7.5
Revenues
The sales revenues include revenues from the sale of products and services less trade discounts and rebates, as
well as incidental revenues from the sale of energy and waste materials, commissions and revenues from the redebiting of
setup costs, engravings and clichees.
Revenues from the sale of products are generated upon transfer of ownership and risks to the customer, if the
consideration is stipulated or can be determined, and it is probable that the corresponding receivable will be settled.
7.6
Cost of sales
The cost of sales comprises cost of sold products and services, as well as purchase costs of sold merchandise. In
addition to direct cost of material and labor, they also include indirect overhead costs, including depreciation on
The cost of sales also include additions to warranty provisions and provisions for losses from orders. Warranty
provisions are recognized based on experience in respect to similar products; they are determined as a percentage of the
sold products. Provisions for losses from orders are recognized in full in the reporting period in which the estimated total
costs resulting from the respective agreement exceed the expected revenues.
7.7
Expenses for research and development
Research costs and non-recognizable development costs are directly recorded in profit or loss when they occur.
F-86
7.8
Financial result
The financial result comprises interest expenses from liabilities that are determined using the effective interest
method, dividends, exchange gains and losses from financial transactions, interest income from receivables, and gains
and losses from financial instruments that are directly recorded in profit or loss. In addition, the interest expenses from
pension provisions and the measurement costs from embedded derivatives are reported as interest expense.
recorded in profit, if a resolution regarding the distribution was passed. The prorated interest income from finance leases
is determined using the effective interest method. Furthermore, the expected income from plan assets as well as the
measurement gains from embedded derivatives is reported as interest income from the reporting period onwards.
7.9
Intangible assets
Intangible assets are goodwill, customer relations, development costs, patents, software, licenses and similar
rights.
The goodwill is the difference not attributable to the acquired built-in gains from the acquisition of 50% of the
shares in NORDENIA (Malaysia) Sdn. Bdh., Ipoh/Malaysia from the former joint venture partner.
The goodwill was measured at cost and is subject to an annual impairment test.
Intangible assets acquired for consideration and internally generated assets are recognized at cost less
depreciation and impairment losses.
Software..........................................................................................................
Licenses ..........................................................................................................
Clients.............................................................................................................
Concessions, industrial property rights...........................................................
Development costs..........................................................................................
7.10
3-5 years
5 years
5 years
Agreed upon term
Corresponding to the benefits from the
project, usually 3-5 years
Property, plant and equipment is measured at cost less depreciation based on the estimated useful life, and
process and production-related overhead costs. This includes production-related depreciation, prorated production-related
administrative costs, as well as prorated social security costs.
The costs relating to the generation of qualifying assets, i.e. assets that require a significant period of time to be
put into a ready-to-use state, include capitalized borrowing costs to the extent that they meet the criteria set forth in
IAS 23.
Government grants for the acquisition or production of property, plant and equipment do not affect the cost but
are reported separately and reversed over the estimated useful life of the subsidized item of property, plant and
equipment.
Depreciation on property, plant and equipment is recorded using the straight-line method and reported in the
function costs. The useful life and depreciation methods are reviewed annually and adjusted to the current situation and
circumstances.
Buildings.......................................................................................................................................................
Technical equipment, plant and machinery ..................................................................................................
Other technical equipment, fixtures, fittings and office equipment ..............................................................
10-50 years
2-10 years
1-10 years
Items of property, plant and equipment are written off on a prorated basis in the year in which they are acquired.
If special events or market trends indicate that an asset is impaired, an impairment test is performed to assess the
carrying amount of the asset (including capitalized development costs).
F-87
In this impairment test the carrying amount of the asset and the recoverable value which is the higher of the fair
value less costs to sell and the value in use are compared When determining the recoverable amount based on the value in
use, future cash flows are discounted at a risk-based interest rate. If the net carrying amount of assets exceeds the total
amount of discounted cash flows, impairment losses are recorded. When determining the future cash flows, the current
and future earnings as well as business segment-related, technological, economic and general trends are taken into
account.
If an asset is no longer impaired, the impairment losses are reversed to the maximum amount of amortized cost.
Those recognition and measurement standards apply to all groups of property, plant and equipment.
accounting of lease agreements (Section 31).
7.11
Assets held as financial investments
additional income or appreciation. On principle, assets held as financial investments are measured using the cost method;
this also applies to subsequent recognition.
7.12
Inventories
Inventories are recognized at the lower of cost and net realizable value. The net realizable value is the estimated
selling price less the estimated costs of completion and the estimated costs necessary to make the sale. In addition to the
direct costs, the cost of production include production-related portions of necessary material and production overhead
costs as well as depreciation of items of property, plant and equipment and intangible assets attributed to the production.
Administrative costs and social security expenses are taken into account to the extent that they are attributable to the
production (production-related full cost approach). Measurement is at average costs.
7.13
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial instruments are in particular cash and cash equivalents, trade accounts
receivable and other loans and receivables granted, financial investments held to maturity and original and derivative
financial assets held for trading. Financial obligations usually result in a repayment claim in cash or in another financial
asset. This includes in particular borrowings and other certified liabilities, trade accounts payable, accounts due to banks,
liabilities from finance lease agreements, borrower’s note loans, and derivative financial liabilities.
Financial assets are recognized as soon as NORDENIA becomes party to an agreement regarding a financial
instrument. In case of standard market acquisitions and disposals, however, the performance date is relevant for initial
recognition and disposal in the accounts.
7.14
Financial assets
The shares in non-consolidated affiliated companies and investments that are reported in financial assets are
recorded at cost, since fair values cannot be determined and other admissible measurement methods would not result in a
reliable amount.
7.15
Receivables and other assets
Receivables and other assets shall be initially recognized at fair value and in subsequent recognition at
amortized cost. The foreseeable individual risks are accounted for by appropriate allowances. Non-interest bearing or low
interest receivables that fall due within more than one year are discounted.
7.16
Derivative financial instruments such as exchange futures, options and swaps are basically used for hedging
purposes in order to minimize currency, interest and market value risks from operations and the corresponding funding
requirements.
According to IAS 39 “Financial instruments: recognition and measurement” all derivative financial instruments
shall be recognized at fair value at the trading date and depending on the purpose or the intention. If the criteria set forth
F-88
in IAS 39 are met, derivative financial instruments and the respective basic transaction are recognized as hedges (hedge
accounting).
If the prerequisites for hedge accounting are not satisfied, the change in the market value of the derivative
financial instrument is recorded directly in profit and loss.
For details regarding the risk management and accounting effects of derivative financial instruments see
Section 38 et seq.
7.17
Taxes
Current taxes on income and earnings are calculated based on the respective national taxable income for the year
and the national tax regulations. Furthermore, adjustments are recorded for any incurred tax payments or refunds from
not yet assessed periods.
Deferred taxes are recorded on all temporary differences existing at the balance sheet date between the
commercial base and the tax base, including differences from consolidation activities, using the balance sheet-oriented
liability method.
Deferred tax assets are recorded for all deductible temporary differences, not yet used tax loss carryforwards and
not yet used tax credits to the extent to which it is probable that taxable income will be available against which the
deductible temporary differences and not yet used tax loss carryforwards and tax credits may be applied.
The carrying amount of the deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable income will be available against which the deferred tax asset can be
offset at least in part. Not recognized deferred tax assets are reviewed at each balance sheet date and recognized to the
extent that it is probable that future taxable income will be available to realize the deferred tax asset.
Deferred tax assets and liabilities are measured at the tax rates applicable to the period in which an asset will be
realized or a liability will be settled. The Group uses the tax rates (and tax laws) applicable or announced at the balance
sheet date.
Taxes on income and earnings relating to the items that are directly recorded in equity are recorded in equity and
not separately in the statement of comprehensive income.
7.18
IAS 19 “Employee benefits”.
In this method not only known pensions and accrued commitments are accounted for but also estimated future
increases in salaries and pensions. The calculation is based on actuarial expert reports, taking into account biometric
accounting bases. Actuarial gains and losses are directly recorded in profit and loss.
The interest rate used to determine the present value of the obligations was assessed based on the yields of high
quality fixed-interest corporate bonds of the respective currency region.
The expenditure resulting from the measurement of the pension provisions, including the corresponding interest
portion, are attributed to the costs in the individual functions. The discounting of the pension obligations and the
estimated income from plan assets are reported in the financial result.
7.19
Other accrued liabilities
According to IAS 37 “Provisions, contingent liabilities and contingent assets”, other provisions are recognized
to the extent that the company has a present obligation as a result of a past event and it is probable that an outflow of
resources embodying economic benefits will occur and that a reliable estimate can be made of the amount of the
obligation.
Provisions shall be recognized for foreseeable risks and contingent liabilities in the amount of the expenditure
expected to be required to settle the obligation and shall not be offset against reimbursements. The expenditure required
to settle the obligation also includes increases in costs to be accounted for at the balance sheet date. Provisions shall be
discounted, if the effect is material.
F-89
Provisions for warranties shall be recognized taking into account the current or estimated future damage.
Demolition obligations are recognized at the date at which they occur at the discounted value of the obligation
and at the same time the same amount is recognized as provisions on the liabilities side.
7.20
Financial debt and liabilities
Financial debt are initially measured at fair value and subsequently measured at amortized cost. Differences
between the historical cost and the repayment amount are accounted for using the effective interest method.
The liabilities are recognized at nominal value or repayment amount.
7.21
Leases
Leases are classified as finance leases if as a result of the terms of the lease basically all risks and rewards
attributed to the ownership are transferred to the lessee. All other leases are classified as operating leases. The companies
of the NORDENIA Group primarily enter into lease agreements as the lessee. To an overall minor extent, the companies
are also lessors. No further disclosures are made due to the insignificance.
Assets held under finance leases are recorded at the lower of fair value of the asset or the present value of the
respective minimum lease payments as assets of the Group at the beginning of the lease. The corresponding liability due
to lessor shall be recognized in the balance sheet as an other liability—obligation from finance lease. The lease payments
are attributed on a prorated basis to the financial expenses and the decrease of the lease obligation resulting in a constant
interest rate on the remaining balance of the obligation for each reporting period. The financial expenditure is recorded
directly in profit or loss unless it can be directly attributed to a qualified asset. In those cases, the cost is recognized in
accordance with the general Group guidelines for credit costs and IAS 23.
Lease payments resulting from operate leases are recognized directly in profit or loss over the term of the lease
using the straight-line method. Outstanding or granted benefits that constitute an incentive for entering into an operate
lease are also allocated on a straight-line basis over the term of the lease.
7.22
Assets held for sale and disposal groups, as well as discontinued operations
Non-current assets and disposal groups are reported separately as “held for sale” in the balance sheet, if they can
be sold in their current condition and the sale is probable. When classifying the assets as “held for sale”, they are
recognized at their fair value less costs to sell in the event their fair value is lower than their carrying amount. Depending
on their classification, the liabilities directly attributable to these non-current assets and disposal groups are reported
separately as “held for sale” on the liabilities side. Discontinued operations are reported separately when the operation is
an independent transaction that represents a separate major line of business or geographical area of operations, is offered
for sale and the Group management has initiated an official sales process.
7.23
Discretionary decisions and estimates, as well as changes in estimates and misrepresentations
When compiling consolidated financial statements in accordance with IFRS, some balance sheet items require
discretionary decisions and estimates that affect the recognition and measurement in the balance sheet and income
statement. The actual amounts may differ from those estimates. Estimates are in particular required in the following cases
•
•
•
Determination of necessity and measurement of impairment losses on intangible assets, items of property,
plant and equipment, as well as inventories,
Recognition and measurement of pension obligations and anniversary bonuses,
Property, plant and equipment as well as intangible assets are measured based on estimates of the fair value at
the acquisition date, if those items were acquired in the course of a business combination. Furthermore, the useful life of
the assets has to be estimated. The fair value of assets and liabilities as well as the useful life of assets are determined
based on the management’s estimates.
When determining impairment losses on items of property, plant and equipment and intangible assets, estimates
are made as well that relate—among others—to the cause, date and amount of impairment. Impairment results from a
number of factors. On principle, changes in current competition, expectations regarding the growth in the packaging
industry, increases in capital costs, changes in the availability of financial resources, technological obsolescence,
discontinuation of services, current replacement costs, purchase prices paid in similar transactions, and other changes
affecting the circumstances that indicate that impairment occurred are accounted for. The net realizable amount and fair
F-90
values are usually determined using the discounted cash flow method which also involves appropriate assumptions of
market participants. Identifying aspects that indicate that there is an impairment, the estimation of future cash flows and
the determination of the fair values of assets (or groups of assets) require significant estimates that the management has
to make.
The value of goodwill is tested annually based on the smallest cash-generating unit that is attributed to the
goodwill, and the operating multi-year-planning of the NORDENIA Group, and the assumption of segment-related
growth rates for the following period.
The determination of the net realizable value of a cash-generating unit requires estimates by the management.
The methods for the determination of fair values less selling costs include methods based on the discounted cash flows
and methods that are based on quoted market prices. Those estimates, including the methods used, may have significant
impact on the fair value and eventually on the depreciation of the goodwill.
If the carrying amount of an investment exceeds the present value of its estimated future cash flow, impairment
losses shall be recognized. The determination of the present value of estimated future cash flows and estimates of
whether an impairment is not temporary depend on evaluations by the management and are based to a large extent on
estimates of future trends of the investment by the management. When determining impairment losses stock prices and
other measurement parameters based on information of the investment, if available, are used. When determining whether
an impairment is only temporary, the management evaluates the capability and intention to hold the interest in the
investment over an appropriate period of time that is sufficient in order to realize the fair value up to the carrying amount
(or beyond). Future adverse changes in the market conditions, in particular a downturn in the industry of packing material
or weak operating results of investments may result in losses or prevent the realization of a carrying amount of the
investment which in return is not accounted for in the current carrying amount of the investment. This could result in
impairment losses that may have adverse effect on future earnings.
The management records impairment losses on doubtful accounts in order to account for expected losses that
result from customer’s insolvency. The bases used by the management in order to assess the appropriateness of the
impairment losses on doubtful accounts are the maturity structure of the receivables and past experience in respect to the
derecognition of receivables, the customer’s credit rating, and changes in terms of payment. In the event the customer’s
financial situation worsens, the scope of the actual amount to be derecognized may exceed the expected derecognition.
Income taxes have to be estimated for each tax jurisdiction in which the Group operates. The expected actual
income tax for each taxable unit has to be calculated and temporary differences resulting from different treatment of
certain balance sheet items in the consolidated IFRS financial statements and the tax base have to be evaluated. If
temporary differences occur, those differences basically result in the recognition of deferred tax assets and liabilities in
the consolidated financial statements. The management has to make estimates when calculating actual and deferred taxes.
Deferred tax assets are recognized to the extent that it is probable that the assets will be utilized. The utilization of
deferred tax assets depends on the possibility to generate sufficient taxable income in the respective tax category and tax
jurisdiction; legal restrictions regarding maximum loss carryforward periods have to be taken into account. When
assessing whether a future utilization of deferred tax assets is probable, various factors have to be taken into account,
e.g. earnings position in the past, operational plans, loss carryforward periods, tax plan strategies. If the actual results
deviate from those estimates or if the estimates have to be adjusted in the future, adverse effects on the net asset, financial
and earnings position may occur. In the event the impairment test of deferred tax assets results in a change in the
assessment, impairment losses shall be recognized on the recognized deferred tax assets in profit and loss.
Pension obligations relating to employee benefits are, on principle, covered by plans that are classified and
recognized as defined benefit plans. Expenses for old-age pensions are determined using actuarial methods that are based
on assumptions regarding the interest rate, life expectancy, and—to a limited extent—the expected earnings from plan
assets. The estimates of the expected earnings from plan assets do only affect the expenses for old-age pensions to a
limited extent. They are in part based on actuarial evaluations that in turn are based on assumptions such as the interest
rates that are used to calculate the pension obligation. The assumptions regarding the expected earnings from plan assets
are made on a standard basis of long-term historical yields in the past, the asset strategy, as well as estimates of noncurrent income from assets. In the event other modifications of the assumptions regarding interest rates or expected
earnings from plan benefits are required, such modification may have material impact on the amount of expenses for oldage pensions in the future.
The recognition and measurement of the provisions and the amount of contingent liabilities relating to pending
legal proceedings or other pending claims from out-of-court settlements, mediation, arbitration or government
proceedings and other contingent liabilities, respectively, require major estimates by NORDENIA. Hence, the assessment
of whether it is probable that pending proceedings will be successful or a liability will be incurred and the amount of the
respective obligation are based on the assessment of the respective situation and circumstances. Provisions are
recognized for liabilities, if losses from pending transactions are expected, it is probable that a loss will be incurred, and
F-91
this loss can be estimated reliably. Due to the uncertainties related to such assessment, the actual losses may deviate from
the original estimates and thus from the amount accrued. In addition, major estimates have to be made when determining
the provisions for taxes, environmental liabilities and legal risks. Those estimates may change due to new information.
NORDENIA obtains new information primarily from services of internal experts or external experts such as actuarians or
legal consultants. Changes in the estimates of those impending losses from pending transactions may have a significant
impact on the future earnings position.
The recognition and measurement of other provisions is based on the estimated probability of possible outflows
of economic benefits and on experience and the circumstances known at the balance sheet date. The actual outflow of
economic benefits may there deviate from the other provisions.
In these financial statements, a provision was recorded for the first time to account for the costs relating to the
legal obligation to archive receipts, commercial correspondence and books, as well as financial statements and to
document certain transactions. In respect to the reason and the amount, the recording of the provision is not suitable to
affect the commercial decisions of the recipients that are made based on the financial statements. However, NORDENIA
opted to apply the provisions of IAS 8.42 and thus recorded a non-current other provision in the amount of 580 kEUR
outside profit or loss as of January 1, 2008. No additional balance sheet was presented in accordance with IAS 1.10
(f) due to the low value of information.
Taxes and incidental costs relating to the taxes in the total amount of 10,121 kEUR were assessed and are due
payable by NORDENIA International AG; this amount was not disclosed in the provisions or the Company’s liabilities.
The Company filed an appeal against the tax assessment notes. The fiscal authorities granted an extension of execution in
respect to the aforementioned amounts. The Company expects that the currently pending appeal proceedings will be
decided in its favor. In its 2008 tax returns and in the computation of the 2009 tax provisions, the Company assumed that
this legal opinion is accurate. Additional taxes in the amount of 3,901 kEUR for 2008 and 2009 could result from the
contested tax assessment notes. If the appeal is decided in favor of the fiscal authorities, temporary differences would
result from the non-recognition of certain aspects for tax purposes and thus result in the recording of deferred tax assets.
The impact on the consolidated financial statements under IFRS resulting from these tax matters would reduce to approx.
8,100 kEUR.
Disclosures and explanatory comments on the consolidated income statement
8
Sales
The sales are broken down by regions as follows:
Germany .................................................................................................................................................
Europe (excluding Germany)..................................................................................................................
North America ........................................................................................................................................
Others......................................................................................................................................................
2009
kEUR
221,224
274,848
100,761
66,821
663,654
2008
kEUR
250,324
310,875
107,065
61,445
729,709
The sales and their development by business segments is summarized in the segment reporting (Section 41).
9 Cost of sales
The cost of sales comprises cost of sold products and services, as well as costs of funds of sold merchandise. In
addition to directly attributable costs such as material, labor and energy costs, they also include general overhead costs,
incl. depreciation.
F-92
The cost of sales break down as follows:
Material expenses ...............................................................................................................................
Personnel expenses .............................................................................................................................
Depreciation/amortization ..................................................................................................................
Energy costs........................................................................................................................................
Maintenance expenses ........................................................................................................................
Consumables.......................................................................................................................................
Operating expenses.............................................................................................................................
Warranty expenses..............................................................................................................................
2009
kEUR
373,770
85,693
25,699
15,385
13,152
7,831
15,525
2,313
539,368
2008
kEUR
456,565
84,469
24,302
15,266
12,944
8,116
17,085
2,062
620,809
10 Selling costs
Freight and commissions ........................................................................................................................
Personnel expenses .................................................................................................................................
Depreciation/amortization ......................................................................................................................
Other selling costs...................................................................................................................................
2009
kEUR
13,964
11,977
606
8,747
35,294
2008
kEUR
15,341
11,661
620
10,413
38,035
2009
kEUR
30,471
2,527
5,502
38,500
2008
kEUR
20,137
2,845
8,861
31,843
11 General administrative expenses
Depreciation and amortization................................................................................................................
Other general administrative expenses ...................................................................................................
12 Other operating income and expenses
12.1
Income from the reversal of provisions, accruals and deferrals..................................................................
Income from adjustment of pension provisions..........................................................................................
Income from retransfer of allowance..........................................................................................................
Incidental revenues .....................................................................................................................................
Proceeds from sale of non-current assets....................................................................................................
Income relating to a different accounting period ........................................................................................
Lease income ..............................................................................................................................................
Commission and royalties...........................................................................................................................
Income from refunds...................................................................................................................................
Income from subsidies ................................................................................................................................
Rebate credit notes......................................................................................................................................
Income from deconsolidations....................................................................................................................
Income from other reimbursements ............................................................................................................
Adjustment of purchase price of Nordfolien...............................................................................................
Other operating income ..............................................................................................................................
F-93
2008
2009
kEUR kEUR
2,009 1,751
780
573
912
371
2
26
128
49
696 1,071
86
84
14
152
352
629
190
247
1,144
530
293
0
0
249
0
696
761
933
7,539 7,189
12.2
2008
2009
kEUR kEUR
750
743
363
93
1,902 2,638
40
451
0
729
3,784 3,925
Expenses relating to disposal of non-current assets....................................................................................
Expenses relating to a different accounting period .....................................................................................
Additions to allowances for doubtful accounts...........................................................................................
Other operating expenses............................................................................................................................
Impairment losses (goodwill NMI).............................................................................................................
13
13.1
Financial result
Financial income
2008
2009
kEUR kEUR
Income from long term loans...................................................................................................................... 1,321 1,234
Other interest income.................................................................................................................................. 1,079
556
138
Other financial income................................................................................................................................
773
3,173 1,928
13.2
Financial expenses
Interest expenses.....................................................................................................................................
Amortization of financial assets..............................................................................................................
Other financial expenses.........................................................................................................................
2009
kEUR
13,102
256
798
14,156
2008
kEUR
18,525
6
1,435
19,966
14 Taxes on income and earnings
Current tax assets and liabilities ...............................................................................................................
Tax assets and liabilities relating to a different accounting period ...........................................................
Deferred tax assets and liabilities*) ..........................................................................................................
*)
2008
2009
kEUR kEUR
12,526 7,495
(642)
124
573 2,167
12,457 9,786
excl. deferred tax assets and liabilities relating to a different accounting period
In the 2009 financial year, the German total income tax rate is 30% (2008: 30%).
The income tax rates of the foreign companies range between 19.0% and 38.0%.
The following chart shows the reconciliation of the tax expenses anticipated in the respective year and the
disclosed tax expenses. In order to determine the anticipated tax expenses the respective applicable German total tax rate
of 30.00% is multiplied by the earnings before taxes.
Earnings before income taxes on continued operations..................................................................................
Earnings before income taxes on discontinued operations .............................................................................
EBT ................................................................................................................................................................
Income tax rate (incl. trade tax) of NIAG.......................................................................................................
Anticipated income tax expenditure ...........................................................................................................
F-94
2008
2009
kEUR kEUR
38,471 20,587
339
1,436
39,907 20,926
30.00% 30.00%
11,972
6,278
Tax difference—Foreign countries .........................................................................................................
Effects of deviating rates in Germany ....................................................................................................
Tax reductions resulting from tax-free income.......................................................................................
Increases in taxes resulting from non-deductible expenses ....................................................................
Tax increase resulting from depreciation of goodwill from capital consolidation..................................
Tax decrease resulting from tax-free income from the sale of consolidated units ..................................
Increases in taxes resulting from additions for trade tax purposes .........................................................
Tax assets and liabilities relating to a different accounting period .........................................................
Effect from changes in tax rates..............................................................................................................
Impairment losses on deferred tax assets on loss carryforwards, as well as temporary differences .......
Utilization of adjusted deferred tax assets on loss carryforwards...........................................................
Other differences ....................................................................................................................................
Disclosed income tax expenses .............................................................................................................
Effective tax burden................................................................................................................................
*
2008
2009
kEUR kEUR
293
1,118
(5)
(5)
(736)
(530)
564
1,037
219
0
(431)
0
316
561
(642)
125
(40)
25
1,064
974
(361)
(61)
244
363
12,457 9,885*
31.21% 47.24%
incl. tax expense of 100 kEUR relating to discontinued operations
The Group does not account for any deferred tax liabilities relating to retained profits of the subsidiaries to the
extent that these profits are likely to be regarded as permanently invested. In the event these profits—where the
determination of the value is not practical—are distributed as dividends or in the event the Group sells its investment in
the respective subsidiary, an additional tax liability might be incurred.
No income taxes are triggered by NORDENIA International AG, Greven/Germany distributing dividends to its
shareholders.
15 Results from discontinued operations
The NORDENIA Group sold its business operation Coronor Composites GmbH, Peine, during the reporting
period. The losses from this discontinued operation break down as follows:
2009 2008
kEUR kEUR
240
Coronor Composites GmbH .........................................................................................................................
1
Total from separate financial statements ......................................................................................................
1
240
0
Measurement at fair value/Deconsolidation effect (profit/loss).................................................................... 1,435
Expenses relating to discontinued operations ............................................................................................... 1,436
240
The income statement of the discontinued operation is as follows:
2008
2009
kEUR kEUR
Sales ............................................................................................................................................................... 1,199 6,656
Cost of sales and other expenses .................................................................................................................... 1,191 (6,333)
Operating result ..............................................................................................................................................
8
323
16
Financial result ...............................................................................................................................................
3
EBT ................................................................................................................................................................
11
339
(99)
Taxes on income and earnings ....................................................................................................................... (10)
Annual net profit ............................................................................................................................................
240
1
Since Coronor Composites GmbH, Peine, was deconsolidated as per March 31, 2009 due to the sale, the income
statement of the discontinued operation only covers the period from January through March of the 2009 reporting period.
F-95
16 Earnings per share
in kEUR/Shares in 1,000 units
Consolidated annual net profit ............................................................................
Weighted average of outstanding shares.............................................................
Earnings per share in EUR..................................................................................
Continued
operations
11,041
27,682
0.40
2008
Discontinued
operations
Group
0 11,041
0 27,682
0
0.40
Consolidated annual net profit ............................................................................
Continued
operations
26,014
27,682
0.94
2009
Discontinued
Group
operations
1,436 27,450
27,682 27,682
0.05
0.99
In the 2006 financial year, NORDENIA International AG implemented a stock option program resulting in the
issuing of stock options. This stock option program may result in potentially diluting common stock.
Dilution effects did not have to be accounted for in the 2009 and 2008 reporting periods, since in the 2008
financial year, the criteria for exercising the stock options in part depended on future events and thus were not completely
fulfilled as of December 31, 2008. In the 2009 financial year, NIAG exercised its election right set forth in the stock
option program and converted the preemptive rights of the respective employees into virtual stock options. The virtual
stock options do not dilute the earnings per share.
17 Other disclosures and explanatory comments on the consolidated income statement
Cost of raw material and supplies.......................................................................................................
Expenses for services purchased.........................................................................................................
Material expenses..............................................................................................................................
Wages and salaries..............................................................................................................................
Social security taxes ...........................................................................................................................
Expenses for retirement benefits.........................................................................................................
Personnel expenses............................................................................................................................
Amortization and depreciation of intangible assets and property, plant and equipment ..........
2009
kEUR
368,801
3,982
372,783
111,232
18,627
1,570
131,429
28,972
2008
kEUR
442,795
7,837
450,632
99,454
19,181
1,423
120,058
28,717
18 Minority interest in current earnings/losses
Minority interests of the Company
%
NORDENIA Deutschland Lohne GmbH........................................................................................
NORDENIA Deutschland Coating GmbH .....................................................................................
OOO NORDENIA Samara.............................................................................................................
NORDENIA Morocco Casablanca S.A.R.L...................................................................................
Polireal S.L. ....................................................................................................................................
Minority interests in current profits/losses......................................................................................
10.0
—*)
—*)
16.6
89.6
*)
as of 10/2009 or 09/2009, respectively: 0%/2008: 13.4%
F-96
2009
2008
kEUR kEUR
2
(12)
(21)
(23)
(23)
(25)
(89) (135)
29
21
(110) (166)
19
Intangible assets
The intangible assets of NORDENIA Group developed as follows in the 2009 financial year and the previous
period:
Balance as of Jan. 1, 2008.................
Changes in currencies .........................
Additions ............................................
Disposals.............................................
Reclassifications .................................
Balance as of Dec. 31, 2008/Jan. 1,
2009 ................................................
Changes in the group of consolidated
companies .......................................
Additions ............................................
Disposals.............................................
Balance as of Dec. 31, 2009...............
Balance as of Jan. 1, 2008.................
Additions ............................................
Disposals.............................................
Balance as of Dec. 31, 2008/Jan. 1,
2009 ................................................
companies .......................................
Additions ............................................
Disposals.............................................
Balance as of Dec. 31, 2009...............
Net carrying amount as of Dec. 31,
2009 ................................................
Net carrying amount as of Jan. 1,
2009 ................................................
Goodwill Software
kEUR
kEUR
7,413
19,241
(43)
(44)
0
447
0
(204)
20
0
Concessions,
industrial
Development
Down
property
costs
payments
rights
kEUR
kEUR
kEUR
962
0
0
111
0
(19)
40
213
128
(63)
0
0
60
108
0
Total
kEUR
27,616
5
828
(267)
188
7,370
4
19,460
(39)
1,110
(27)
321
0
109
(3)
28,370
(65)
0
0
0
0
7,374
(5)
653
(2,830)
219
17,458
0
1,817
0
0
2,900
0
152
0
89
562
0
8
(114)
0
0
(5)
2,630
(2,944)
308
28,294
301
(43)
0
0
0
18,143
(36)
644
(131)
(29)
466
50
35
(61)
29
0
0
67
0
0
0
0
0
0
0
18,910
(29)
746
(192)
0
258
5
18,591
(35)
519
(11)
67
0
0
0
19,435
(41)
0
729
0
0
992
(5)
483
(2,824)
0
16,210
0
494
0
0
1,002
0
224
0
0
291
0
0
0
0
0
(5)
1,930
(2,824)
0
18,495
6,382
1,248
1,898
271
0
9,799
7,112
869
591
254
109
8,935
The goodwill exclusively relates to the difference not attributable to the acquired built-in gains from the
acquisition of 50% of the shares in NORDENIA (Malaysia) Sdn. Bdh., Ipoh/Malaysia from the former joint venture
partner. The goodwill is not written off on a scheduled basis but is subject to an annual impairment test that resulted in
the recording of impairment losses in the amount of 729 kEUR during the reporting period.
The amortization of intangible assets is included in the item other operating expense in the consolidated income
statement. For details regarding total depreciation see Section 17.
F-97
20 Property, plant and equipment
The property, plant and equipment of NORDENIA Group developed as follows in the 2009 financial year and
Land,
leasehold
rights and
buildings
kEUR
Balance as of Jan. 1,
2008 ............................
Changes in currencies .....
consolidated
companies ...................
Additions ........................
Disposals.........................
Reclassifications .............
Balance as of Dec. 31,
2008/Jan. 1, 2009 .......
consolidated
companies ...................
Additions ........................
Disposals.........................
2009 ............................
Accumulated
depreciation
Balance as of Jan. 1,
2008 ............................
consolidated
companies ...................
Additions ........................
Disposals.........................
2008/Jan. 1, 2009 .......
consolidated
companies ...................
Additions ........................
Disposals.........................
2009 ............................
Net carrying amount as
of Dec. 31, 2009..........
of Jan. 1, 2009............
Buildings
kEUR
Technical
equipment,
plant and
machinery
kEUR
Other equipment,
fixtures, fittings,
and office
equipment
kEUR
Downpayments
and work in
process
kEUR
Total
kEUR
7,255
(97)
108,625
(97)
359,070
(2,217)
60,321
(827)
11,473
(781)
546,744
(4,019)
0
237
0
0
0
4,467
(77)
2,324
0
24,303
(10,414)
3,455
0
5,444
(1,889)
1,942
0
8,570
(42)
(7,909)
0
43,021
(12,422)
(188)
7,395
(36)
115,242
(780)
374,197
(2,728)
64,991
(63)
11,311
(332)
573,136
(3,939)
0
4
(27)
0
(11)
814
(421)
70
(2,749)
13,455
(6,552)
4,960
(156)
2,644
(6,924)
519
0
3,326
(12)
(5,857)
(2,916)
20,243
(13,936)
(308)
7,336
114,914
380,583
61,011
8,436
572,280
66
1
29,503
171
261,994
(110)
41,801
(306)
49
(7)
333,413
(251)
0
6
0
0
0
2,731
(64)
15
0
20,139
(9,708)
(280)
0
5,094
(1,579)
265
0
0
(42)
0
0
27,970
(11,393)
0
73
(1)
32,356
(265)
272,035
(2,055)
45,275
(60)
0
0
349,739
(2,381)
0
6
0
0
(2)
2,514
(96)
0
(2,358)
20,927
(6,376)
0
(93)
4,978
(6,759)
0
0
0
0
0
(2,453)
28,425
(13,231)
0
78
34,507
282,173
43,341
0
360,099
7,258
80,407
98,410
17,670
8,436
212,181
7,322
82,886
102,162
19,716
11,311
223,397
Impairment losses in the amount of 654 kEUR (2008: 3 kEUR) were recorded on property, plant and equipment;
impairment losses were not reversed in the reporting period and in the previous financial years. The impairment losses
are based on changes in estimates of the future earnings situation of individual reporting units. Borrowing costs were
capitalized to the extent that they met the criteria set forth in IAS 23.
F-98
Property, plant and equipment in the amount of 1,522 kEUR (2008: 9,489 kEUR) were pledged as security. The
carrying amount of property, plant and equipment which are not at the company’s free disposal (assets recognized as a
result of a finance lease) amount to 15,045 kEUR (2008: 16,698 kEUR).
21
The assets held as financial investments developed as follows in the 2009 financial year and the previous period:
Balance as of Jan. 1, 2008 ..........................................................................................................................................
Changes in currencies ..................................................................................................................................................
Additions......................................................................................................................................................................
Disposals ......................................................................................................................................................................
Reclassifications...........................................................................................................................................................
Balance as of Dec. 31, 2008/Jan. 1, 2009...................................................................................................................
Additions......................................................................................................................................................................
Disposals ......................................................................................................................................................................
Reclassifications...........................................................................................................................................................
Balance as of Dec. 31, 2009........................................................................................................................................
Balance as of Jan. 1, 2008 ..........................................................................................................................................
Additions......................................................................................................................................................................
Disposals ......................................................................................................................................................................
Balance as of Dec. 31, 2008/Jan. 1, 2009...................................................................................................................
Additions......................................................................................................................................................................
Disposals ......................................................................................................................................................................
Balance as of Dec. 31, 2009........................................................................................................................................
Net carrying amount as of Dec. 1, 2009....................................................................................................................
Net carrying amount as of Jan. 1, 2009 ....................................................................................................................
kEUR
217
(10)
0
(76)
0
131
(2)
0
0
0
129
0
0
0
0
0
0
0
0
0
129
131
This item comprises real property in Hungary acquired for future business expansion purposes.
At the time of first-time adoption of the IFRS the land was subject to revaluation at fair value. The fair value as
at the balance sheet date remained the same.
The investment properties are not let and thus no expenses are incurred or income generated from the lease of
such properties.
All expenses and income relating to the financial investments are accounted for in the financial result as other
financial income or other financial expenses, respectively.
There are no restrictions regarding the sale of the assets or the transfer of proceeds and gains from sales or
contractual obligations requiring specific use of the assets. Neither are there any contractual obligations regarding the
repair, maintenance or improvement of those assets.
F-99
22 Other financial assets
22.1
The shares and investments developed as follows in the 2009 financial year and the previous year:
Investments
Shares
kEUR
kEUR
Balance as of Jan. 1, 2008..............................................................
4,458
1,649
Changes in currencies ......................................................................
0
0
Changes in the group of consolidated companies ............................
463
0
Additions .........................................................................................
0
0
(115)
Disposals..........................................................................................
(191)
Balance as of Dec. 31, 2008/Jan. 1, 2009 ......................................
4,730
1,534
0
0
6
0
Additions .........................................................................................
0
0
(3)
Disposals..........................................................................................
(4,267)
Balance as of Dec. 31, 2009............................................................
1,531
469
Balance as of Jan. 1, 2008..............................................................
4.267
1.301
0
0
463
0
Additions .........................................................................................
0
0
0
Disposals..........................................................................................
0
Balance as of Dec. 31, 2008/Jan. 1, 2009 ......................................
4.730
1.301
0
0
0
0
Additions .........................................................................................
6
0
0
Disposals..........................................................................................
(4.267)
Balance as of December 31, 2009..................................................
1.301
469
Net carrying amount as of Dec. 31, 2008......................................
0
230
Net carrying amount as of Jan. 1, 2009........................................
0
233
22.2
Total
kEUR
6,107
0
463
0
(306)
6,264
0
6
0
(4,270)
2,000
5.568
0
463
0
0
6.031
0
0
6
(4.267)
1.770
230
233
Other financial assets developed as follows in the 2009 financial year and the previous year:
Industrial
Other
Other
revenue
bonds
securities
loans
kEUR
kEUR
kEUR
Balance as of Jan. 1, 2008......................................................................
11,550
60 4,480
Changes in currencies ..............................................................................
614
3
(1)
Additions .................................................................................................
0
0 1,586
(63)
(8)
Disposals..................................................................................................
0
Balance as of Dec. 31, 2008/Jan. 1, 2009 ..............................................
12,164
0 6,057
(363)
0
0
Additions .................................................................................................
0
0
85
0
(89)
Disposals..................................................................................................
0
Balance as of Dec. 31, 2009....................................................................
0 6,053
11,801
Balance as of Jan. 1, 2008........................................................................
0
0
0
0
0
35
Additions .................................................................................................
0
0
180
0
0
Disposals..................................................................................................
0
Balance as of Dec. 31, 2008/Jan. 1, 2009 ..............................................
0
0
214
0
0
0
Additions .................................................................................................
0
0
420
0
0
Disposals..................................................................................................
0
Balance as of Dec. 31, 2009....................................................................
0
634
0
Net carrying amount as of Dec. 31, 2009..............................................
11,801
0 5,421
Net carrying amount as of Jan. 1, 2009................................................
12,164
0 5,843
F-100
Total
kEUR
16,090
616
1,586
(71)
18,221
(363)
85
(89)
17,854
0
35
180
0
214
0
420
0
634
17,222
18,007
For details regarding the industrial revenue bonds, please see Section 31.
23
Deferred tax assets
Deferred taxes are determined based on the tax rates applicable in the respective countries. Changes in tax laws
passed at the balance sheet date have already been accounted for. As in the previous period, the applied income tax rate
of the individual countries range between 19.0% and 38.0%.
Deferred tax assets were offset against deferred tax liabilities if they relate to taxes on income and earnings that
are imposed by the same fiscal authority and if the company is entitled to offset any actual claim for tax refund with the
actual tax liability.
Intangible assets.........................................................................................
Property, plant and equipment ...................................................................
Financial assets ..........................................................................................
Inventories and other receivables...............................................................
Pension provisions .....................................................................................
Provisions and other liabilities...................................................................
Tax losses carried forward and tax credits.................................................
./. Allowance..............................................................................................
./. Offsets....................................................................................................
12/31/2009
Asset
Liability
kEUR
kEUR
528
0
1,174
(19,388)
44
(9)
1,278
(768)
1,026
0
4,105
(621)
5,115
0
0
(1,754)
11,516
(20,786)
4,214
(4,214)
(16,572)
7,302
12/31/2008
Asset
Liability
kEUR
kEUR
794
(34)
1,305
(20,298)
52
(149)
1,995
(999)
1,243
0
4,684
(1,677)
4,561
0
(834)
0
13,800
(23,157)
(5,907)
5,907
7,893
(17,250)
As of December 31, 2009, the Group had corporate tax loss carryforwards in the amount of 11,864 kEUR (2008:
8,263 kEUR), trade tax loss carryforwards in the amount of 2,253 kEUR (2008: 518 kEUR), as well as tax refunds in the
amount of 9,031 kEUR (2008: 10,417 kEUR). The corporate tax loss carryforwards primarily relate to foreign
companies.
The corporate tax loss carryforwards of foreign companies in the amount of 9,733 kEUR (2008: 7,882 kEUR)
are in part limited in their deductibility.
These amounts comprise trade tax loss carryforwards in the amount of 2,033 kEUR (2008: 0 kEUR) and
corporate income tax loss carryforwards in the amount of 7,381 kEUR (2008: 3,874 kEUR) for which no deferred taxes
were recorded in the balance sheet due to the fact that at present it is not sufficiently probable that the deferred tax assets
can be realized.
12/31/2009 .....................................................................
12/31/2008 .....................................................................
Expiration
within 5 years
kEUR
920
212
Expiration
within 15 years
kEUR
5,783
4,065
Unlimited
use
kEUR
5,161
3,986
Total
kEUR
11,864
8,263
The trade tax losses can be carried forward without any limitation in time.
The tax refunds relate to tax credits of NORDENIA (Malaysia) Sdn. Bhd., Ipoh/Malaysia. This amount’s
The deferred taxes relating to losses carried forward include the amount of 470 kEUR (2008: 941 kEUR)
relating to companies that accrued losses in 2009. The amount was recognized, since a positive business trend of the
respective companies is expected.
F-101
Allowances on deferred tax assets in the amount of 1,755 kEUR (2008: 834 kEUR) comprise tax loss
carryforwards in the amount of 1,708 kEUR (2008: 834 kEUR), since the use of the respective loss carryforwards is not
probable. The loss carryforwards that were impaired may mainly be used within 15 years or can be used to the full extent
without any limitation in time.
This applies to corporate tax loss carryforwards in the amount of 7,381 kEUR (2008: 3,874 kEUR) and trade
loss carryforwards in the amount of 2,033 kEUR (2008: 0 kEUR). In the reporting period, the corporate tax loss
carryforwards are primarily attributed to foreign entities.
24 Other non-current assets
The other non-current assets developed as follows in the 2009 financial year and the previous period:
Tax credits ..............................................................................................................................................
Reinsurance old-age part-time ................................................................................................................
Retention of collateral.............................................................................................................................
2009
kEUR
488
122
157
767
2008
kEUR
772
58
156
986
2009
kEUR
26,818
13,831
33,171
176
73,996
2008
kEUR
27,886
11,005
32,947
68
71,906
2009
kEUR
84,223
68,363
15,860
(10,227)
73,996
2008
kEUR
80,564
66,312
14,252
(8,658)
71,906
25 Inventories
Raw materials, consumables and supplies ..............................................................................................
Unfinished goods ....................................................................................................................................
Finished goods and merchandise ............................................................................................................
Downpayments .......................................................................................................................................
Inventories ..........................................................................................................................................
—thereof without impairment ............................................................................................................
—thereof with impairment..................................................................................................................
Impairment..........................................................................................................................................
The carrying amount of the inventories measured at net realizable value total to 5,632 kEUR (2008:
5,594 kEUR). The impairment losses on the inventories increased by 1,569 kEUR (2008: increase by 2,349 kEUR).
As in the previous period, no inventories were pledged as security for liabilities at the balance sheet date.
26 Trade receivables
Trade receivables ....................................................................................................................................
F-102
2009
kEUR
61,246
2008
kEUR
56,224
The receivables are broken down by due date and maturity at the balance sheet as follows:
thereof neither impaired at the balance sheet date
nor overdue within the respective period
12/31/2008 .....................
12/31/2009 .....................
thereof
neither
Carrying
>
>
>
>
amount
impaired nor
30 days 60 days 90 days 120 days
Trade
overdue at
<
<
<
<
the balance
<
>
accounts
30 days 60 days 90 days 120 days 360 days 360 days
receivable
sheet date
kEUR
kEUR
kEUR kEUR kEUR
kEUR
kEUR
kEUR
56,224
44,948
6,471
1,779
523
82
75
4
61,246
56,236
3,867
539
453
54
176
(115)
In respect to the trade receivables that are neither impaired nor overdue, there are no indications at the balance
sheet date that the debtors might not meet their payment obligations.
The maximum credit risks are reflected in the carrying amounts of the respective financial instruments. The
carrying amounts mainly correspond to the fair values. In order to avoid any risk of loss commercial credit insurances
were agreed upon. As of December 31, 2009, trade receivables in the amount of 5,243 kEUR (2008: 6,666 kEUR) were
insured. 601 kEUR of said amount (2008: 672 kEUR) relate to overdue accounts.
Development of impairment losses on trade accounts receivable:
Balance as of
Jan. 1, 2009
kEUR
2,334
Change in the
consolidated group
kEUR
0
Currency
differences
kEUR
(34)
Addition
kEUR
986
Utilization
kEUR
(349)
Reversal
kEUR
(929)
Balance as of
Dec. 31, 2009
kEUR
2,008
When determining the value of the trade receivables, each change in the credit standing between the date at
which the credit is granted and the balance sheet date is accounted for. There is no significant concentration of the credit
risk due to the fact that the range of customers is wide and there are no correlations. Thus, the management is of the
opinion that no other risk prevention measures beyond the impairment losses already recorded are necessary. The
additions and reversals of impairment losses are recorded in profit or loss.
Since 2001, trade receivables of subsidiaries are sold and assigned to Kaiserplatz Purchaser No. 5 Ltd., Jersey,
in ABS transactions (asset backed securities). The agreement was modified at the end of 2006 and ends in 2011. The
ABS transaction results in an improvement of the liquidity and the balance sheet structure of the Group. There is a
decrease in trade receivables on the one hand, and a corresponding decrease in bank liabilities, on the other hand. At the
end of 2009, receivables in the amount of 37,365 kEUR (2008: 46,294 kEUR) had been sold and assigned to Kaiserplatz
Purchaser No. 5 Ltd., Jersey.
27
Receivables due from affiliated companies and related parties ..............................................................
Other assets.............................................................................................................................................
—thereof deferrals ..................................................................................................................................
Securities ................................................................................................................................................
2009
kEUR
1,006
13,508
765
421
14,935
2008
kEUR
510
19,518
1,062
384
20,412
As in the previous period, there were no material other financial assets that were overdue at the balance sheet
date.
F-103
Balance as of
Jan. 1, 2009
kEUR
176
Change in the
consolidated group
kEUR
Currency
differences
kEUR
0
0
Addition
kEUR
893
Utilization
kEUR
0
Reversal
kEUR
0
Balance as of
Dec. 31, 2009
kEUR
1,069
When determining the value of the other current assets, each change in the credit rating between the date at
which the credit is granted and the balance sheet date is accounted for. There is no significant focus in the attribution of
the credit risk. Thus, the management is of the opinion that no other risk prevention measures beyond the impairment
losses already recorded are necessary. The additions and reversals of impairment losses are recorded in profit or loss.
28
Cash and cash equivalents ........................................................................................................................
2008
2009
kEUR kEUR
18,010 7,634
The maximum credit risks are reflected in the carrying amount of the cash. The carrying amounts mainly
For details regarding the development of the cash see the consolidated cash flow statement (Appendix 1.7).
29
Equity capital
The following explanatory comments also include disclosures required as part of the Group’s management
report as per Sec. 315 para. 4 HGB [German Commercial Code]. Those disclosures were not additionally presented in the
Group’s management report.
The changes in equity of the NORDENIA Group is outlined in the consolidated statement of shareholders’
equity (Appendix 1.6)
29.1
Subscribed capital
As of December 31, 2009, the Company’s share capital totaled to 28,380 kEUR and is divided into 28,380,000
bearer shares in the nominal amount of 1.00 EUR each; it is paid in full and each share grants one voting right.
Transition of issued shares:
January 1, 2008............................................................................................................................................
Change .........................................................................................................................................................
December 31, 2008/January 1, 2009............................................................................................................
Change .........................................................................................................................................................
December 31, 2009......................................................................................................................................
Issued shares
Number
27,682,046
0
27,682,046
0
27,682,046
The remaining 697,954 shares are held by NORDENIA (treasury stock).
29.2
Authorized capital
According to Sec. 4 para. 3 of the Articles of Incorporation, the directors are authorized—with the supervisory
board’s consent—to increase the share capital several times by the total amount of up to 14,190 EUR by August 19, 2013
by issuing new bearer shares and/or preferred stock without voting rights against cash payment of payment in kind. The
shareholders are granted preemptive rights.
In the event of capital increases against contributions in kind the directors are authorized to exclude the
shareholders’ preemptive rights with the prior approval of the supervisory board.
The directors are also authorized—with the approval of the supervisory board—to exclude odd lot amounts from
being considered when granting preemptive rights or to exclude the shareholders’ statutory preemptive right to the extent
F-104
that this is necessary for the conversion of convertible bonds and/or options. This does also apply to the issuing of new
shares against cash contribution, if the issuing amount of the new shares is not significantly lower than the stock price of
the shares and the issued shares do not exceed 10% of the share capital.
As of December 31, 2009, the balance of authorized capital totals 14,190 kEUR (2008: 14,190 kEUR).
29.3
Conditional capital
The share capital is increased conditionally up to 2,838 kEUR, divided into up to 2,838,000 new individual
bearer shares. The conditional capital increase exclusively serves the purpose of satisfying preemptive rights resulting
from stock option plans that are based on a resolution by the general assembly dated June 29, 2006. The stock option
program covers a period of 5 years that commenced upon registration of the conditional capital in the Commercial
Register on August 16, 2006.
No preemptive rights were exercised under the stock option program in the reporting period. Hence, the
conditional capital did not change.
29.4
Reserves
Capital reserve ........................................................................................................................................
Reserve for revaluation of financial instruments ....................................................................................
Reserve for Cash flow hedging...............................................................................................................
Reserve for first-time adoption of the IFRS............................................................................................
Retained earnings restricted by law ........................................................................................................
Other unappropriated reserve/retained earnings .....................................................................................
29.5
2009
kEUR
13,734
(249)
(171)
(2,817)
843
43,970
55,310
2008
kEUR
20,363
(130)
0
(2,751)
843
32,864
51,189
Capital reserve
The capital reserve contains—among others—surcharges resulting from the issuing of the stocks. In addition,
this item includes stock options in the amount of 6,794 kEUR issued to directors and other executives. In the reporting
period, NORDENIA exercised its option and converted the preemptive rights into virtual stock options. The obligations
under the stock option program are therefore disclosed in provisions. The stock options that had been disclosed in equity
were reclassified accordingly.
29.6
Reserve for revaluation of financial instruments
This item comprises profits and losses from the revaluation of financial assets available for sale. When revalued
financial instruments are sold the portion of the revaluation reserve that is attributed to them is realized and recorded in
profit or loss. In the reporting period provisions in the amount of 119 kEUR (2008: 130 kEUR) were recorded.
The reserve also accounts for deferred taxes that are also recorded in this item without affecting profit and loss.
In the reporting period, deferred taxes in the amount of 55 kEUR (2008: 52 kEUR) were recorded in the reserve.
29.7
Reserve for cash flow hedges
The reserve for cash flow hedges includes profits and losses from the effective portion of cash flow hedges. The
accumulated profits and losses from the hedge transaction that is transferred to the reserve will not be transferred to the
profit or loss portion of the statement of comprehensive income until the hedged basic transaction effects the earnings or,
in case of non-financial basic transactions, the carrying amount is adjusted using the applied accounting method.
29.8
Reserve for first-time adoption of the IFRS
The reserve n for first-time adoption of IFRS includes the amount of −2,817 kEUR (2008: −2,751 kEUR) from
revaluation of property, plant and equipment as per IFRS 1. No impairment losses had to be recorded on the property,
plant and equipment subject to revaluation. The deviation from the previous year results from changes in the group of
consolidated companies.
29.9
Other unappropriated reserve/retained earnings
The other unappropriated reserve/retained earnings comprise profit carryforwards and the other accumulated
consolidated profits/losses.
F-105
29.10
The consolidated earnings comprise the profit carryforward and the consolidated annual net earnings for the
reporting period that is attributed to the parent’s shareholders.
29.11
This item comprises the differences resulting from the translation of foreign currency financial statements of the
foreign subsidiaries, not affecting the operating result. This item changed over the previous year mainly due to the
inflation of the U.S. Dollar, the Polish Zloty and the Russian Ruble.
29.12
Treasury stock
The adjustment item for treasury stock represents the value of the shares in NORDENIA International AG
acquired on the market.
By resolution of the general assembly (last one on June 25, 2009) the directors were authorized to acquire the
Company’s treasury stock in the amount of 10% of the share capital with the supervisory board’s approval. The directors
may pursue the acquisition either via a public offer addressed to all shareholders of by acquiring the shares without prior
bidding. In such case the price per acquired share of 1.00 EUR shall not be lower than 5.00 EUR and not exceed
20.00 EUR.
As of December 31, 2009, the Company still holds its 697,954 units of treasury stock. This equals a share in the
share capital of 697,954.00 EUR (approx. 2.4%). All treasury stock is held by NORDENIA International AG.
The treasury stock developed as follows:
2000 .......................................................................................................................
2001 .......................................................................................................................
2002 .......................................................................................................................
2003 .......................................................................................................................
2004 .......................................................................................................................
2005 .......................................................................................................................
2006 .......................................................................................................................
2007-2009..............................................................................................................
29.13
Sales
Acquisitions
Number
Number
277,077
0
274,614
79,225
100,097
1,500
593,889
0
131,630
0
950,000 800,100
0 748,528
0
0
Balance
Number
277,077
472,466
571,063
1,164,952
1,296,582
1,446,482
697,954
697,954
Minority interest
The minority interests increased by 4 kEUR over the previous year. The increase results from the acquisition of
additional shares in NORDENIA Deutschland Coating GmbH.
F-106
30 Liabilities
Residual maturities
Subordinated loans........................
—thereof due to banks..............
—thereof others ........................
Liabilities to financial institutions
Notes payable ...............................
Trade payables ..............................
Current income tax liabilities........
Other liabilities .............................
Downpayments received...............
Liabilities resulting from accrued
government grants ....................
Other liabilities .............................
—thereof for taxes ....................
—thereof resulting from wages,
salaries and social security
taxes ......................................
—thereof other liabilities ..........
—thereof accruals.....................
1 year
2009
2008
kEUR
kEUR
0
30,000
0
30,000
0
0
44,065
73,009
3,600
5,914
60,663
56,243
8,055
2,564
32,505
33,663
115
56
more than
1 to 5 years
5 years
2009
2008
2009
2008
kEUR
kEUR kEUR kEUR
50,000 50,690
0
0
50,000 49,940
0
0
0
750
0
0
37,053 15,523
129
5,156
0
0
0
0
0
0
0
0
0
0
0
0
17,285 17,276 4,980
5,555
0
0
0
0
Total
2009
kEUR
50,000
50,000
0
81,247
3,600
60,663
8,055
54,770
115
2008
kEUR
80,690
79,940
750
93,688
5,914
56,243
2,564
56,494
56
93
32,297
2,561
0
33,607
1,494
220
17,065
0
474
16,802
0
178
4,802
0
159
5,396
0
491
54,164
2,561
633
55,805
1,494
634
14,784
14,318
148,888
637
15,810
15,666
201,393
0
0
0
104,338
0
0
0
83,489
0
0
0
5,109
0
0
0
10,711
634
14,784
14,318
258,335
637
15,810
15,666
295,593
30.1
Subordinated loans
On June 26, 2009, the subordinated loan of WestLB AG in the amount of 30,000 kEUR was repaid. Since the
annual net profit in the consolidated financial statements of NIAG exceeded the amount of 12,000 kEUR in the 2008
financial year, the loan expired and was not extended by another year. The loan bore interest in the nominal amount of
8.57%.
The subordinated loan of Peter Mager in the amount of 750 kEUR was also repaid during the financial year.
The item also includes the extended subordinated loans of Landessparkasse zu Oldenburg and Sparkasse
Bremen in the amount of 25,000 kEUR each that expire on February 2, 2012. The loans bear interest of 2.9% based on
the 6-month Euribor applicable two days prior to the expiration of the respective previous interest period.
30.2
These liabilities primarily relate to investment grants. The grants in the amount of 237 kEUR at the balance
sheet date are subject to conditions that may result in the requirement to repay part of the grants in the event the
conditions are not met.
30.3
Accruals
The accruals include accruals for interest, vacation, rebates, bonuses as well as invoices in transit.
31 Liabilities from finance lease
The other liabilities include in particular liabilities from finance lease agreements. If the Company bears the
material risks and rewards from the lease, the leased assets are recognized at the acquisition date and measured either at
the fair value or the lower present value of the future minimum lease payments. The leased assets recognized with regard
to the finance lease agreements primarily relate to other equipment, furnitures and fittings, and office equipment, as well
as technical plant and machinery, and buildings. The agreements cover periods of 3-12 years.
The agreements contain expansion or purchase options. All leases are based on fixed installments. No
F-107
secured by way of retention of title by the lessor in the leased assets. The present value of the Group’s lease obligations
basically corresponds to their carrying amount.
Minimum lease
payments
2009
2008
kEUR kEUR
Liabilities from finance leases:
—thereof due within one year.............................................................................
—thereof due within one to five years................................................................
—thereof due within more than five years..........................................................
less future financing costs.......................................................................................
Present value of the lease obligation.......................................................................
2,713
18,685
7,497
28,895
6,225
22,670
2,882
19,722
8,379
30,983
7,129
23,854
Present value of
minimum lease
payments
2009
2008
kEUR kEUR
1,752
16,006
4,912
22,670
N/A
1,822
16,766
5,266
23,854
N/A
The net values of the asset recognized as assets from finance leases total to 15,045 kEUR at the balance sheet
date (2008: 16,698 kEUR).
In December 2000, Nordenia USA Inc., Jackson, entered into a sale & lease back agreement with Cape
Girardeau, Missouri. Under this agreement, the company sold buildings and office and plant equipment worth approx.
17 million USD in 2001 and 2000 and has leased those assets from the municipality since that date. According to the
agreement, the company is thus granted a property tax benefit. The municipality paid to the company a 9.5% industrial
revenue bonds as a consideration. The industrial revenue bonds have a term that expires on December 1, 2012. The lease
is classified as a finance lease. The respective liability in the amount of 17 million USD (11,801 kEUR on December 31,
2009 and 12,164 kEUR on December 31, 2008) is included in Other liabilities. The liability is to be repaid in one amount
by offsetting against the industrial revenue bonds. The leased assets may be acquired at the end of the term in accordance
with the agreement at 10 USD.
32 Provisions for pensions and similar obligations
Pension provisions ..................................................................................................................
12/31/2009
kEUR
11,821
12/31/2008
kEUR
12,367
Pension provisions are recorded for obligations from commitments and current benefits to entitled active and
former employee of the NORDENIA Group and their survivors as per IAS 19 “Employee benefits”.
systems that are usually based on the years of service and the employees’ remuneration.
obligations” (DBO), respectively) were determined using actuarial methods, with estimates being necessary. In addition
to the assumed mortality and disability, the following premises play a role that depends on the economic situation of the
respective country:
Other
countries
Germany
2009 2008 2009 2008
%
%
%
%
Interest rate ............................................................................................................................. 5.92 5.75 6.25 6.25
Anticipated return on assets.................................................................................................... 4.10 4.10 N/A N/A
Dynamic benefits .................................................................................................................... 2.50 2.50 5.00 5.00
Dynamic pensions................................................................................................................... 1.75 1.75 N/A N/A
Dynamic benefits take into account anticipated future increases in salaries that—among others—are estimated
based on the inflation and the economic situation on an annual basis. The actuarial present value of the pension
obligation using the projected unit credit method is decreased in case of an externally financed pension plan by the fair
value of the valued assets of the external pension plan.
If the assets exceed the obligations from the pension commitments, usually an asset is recognized in accordance
with IAS 19 “Employee benefits”. IAS 19.58 prescribes that in case the assets exceed the liabilities an asset may only be
F-108
recognized, if NORDENIA as the commited employer had the right to distribute this excess or is entitled to future
reductions of contributions.
If the assets do not cover the liabilities the net obligation is—after deduction of the service cost not yet
accounted for—carried as a pension provision.
Actuarial gains or losses may result from increases or decreases of either the present value of the defined benefit
obligation or the fair value of the plan assets; the reasons for such gains and losses may—among others—be changes in
calculation parameters, estimates of the risks relating to the pension obligations and deviations between the actual and the
anticipated revenues from the plan assets.
Actuarial gains or losses shall be recorded through profit or loss directly and thus the pension provision always
equals the actuarial present value of the obligation (“Defined Benefit Obligation”, see Section 7.18). In total, the amount
of 665 kEUR (2008: 422 kEUR) was recorded through profit or loss by the end of the reporting period—not taking into
account deferred taxes. In the reporting period, actuarial losses in the amount of 29 kEUR from plan assets (2008:
−40 kEUR) were recorded through profit or loss.
Other
Total
countries
Germany
2009
2008
2009 2008
2009
2008
kEUR kEUR kEUR kEUR kEUR kEUR
259
227 18,465 18,330
As of January 1 .............................................................................. 18,206 18,103
Current service cost .......................................................................
279
402
40
20
319
422
Interest expense .............................................................................
1,018
964
15
14
1,033
978
Expected earnings on plan assets...................................................
0
0
0
0
0
0
Employer’s contributions...............................................................
0
0
0
0
0
0
Actuarial gains (−)/losses...............................................................
(665)
(422)
0
0
(665)
(422)
Changes in exchange rates.............................................................
0
0
(5)
2
(5)
2
Paid benefits ..................................................................................
(895)
(841)
(11)
(4)
(906)
(845)
Not yet accounted past service cost ...............................................
0
0
0
0
0
0
Other changes ................................................................................
0
0
0
0
0
0
Changes in the group of consolidated companies/other changes...
0
0
0
0
0
0
0
0
0
0
0
Settlement and curtailment ............................................................
0
As of December 31 ....................................................................... 17,943 18,206
298
259 18,241 18,465
Fair value of the DBO.................................................................... 17,943 18,206
298
259 18,241 18,465
0
0 (6,420) (6,098)
Fair value of the plan assets........................................................... (6,420) (6,098)
Plan deficit.................................................................................... 11,523 12,108
298
259 11,821 12,367
Plan assets as of January 1..........................................................................................................................
Expected earnings on plan assets................................................................................................................
Actuarial gains/losses (−)............................................................................................................................
Other changes .............................................................................................................................................
Employer’s contributions............................................................................................................................
Benefits paid by external plans during the financial year ...........................................................................
Plan assets as of December 31 ....................................................................................................................
Total
2009
2008
kEUR kEUR
6,098 5,768
217
172
(29)
(40)
0
0
1,102 1,066
(968) (868)
6,420 6,098
The plan assets mainly comprise other assets such as life insurances. They were assigned by NORDENIA
(insured) to the pension allottee. There are no pension provisions financed by way of funds.
F-109
The pension expenses of the respective period break down as follows and are recognized in the respective item
of the income statement:
Other
Total
Germany
countries
2009 2008 2009 2008 2009 2008
Current service cost
Cost of sales and other expenses
279
402
40
20
319
422
Interest expense
Financial result
1,018
964
15
14 1,033
978
Expected earnings on plan assets Financial result
(217) (172)
0
0 (217) (172)
0
0 (636) (376)
Actuarial gains (−)/losses
Cost of sales and other expenses
(636) (381)
813
55
34
499
847
444
The actual gains from the plan assets of external insurances totaled 199 kEUR (2008: 142 kEUR). The expected
total yield is derived from the weighted average of the Other assets contained in the plan assets. The forecasts are based
on past experience, economic data and interest forecasts.
The Group expects to pay contributions in the amount of 1,046 kEUR into defined benefits plan in the coming
financial year.
Amounts for the current year and the three previous years of the pension obligations, the plan assets, the
obligations exceeding the assets, as well as experience-based adjustments:
in kEUR
each as of December 31
Pension obligations (DBO).....................................................................................
Plan assets...............................................................................................................
Plan deficit..............................................................................................................
2009
18,241
(6,420)
11,821
2008
18,465
(6,098)
12,367
2007
18,330
(5,768)
12,562
2006
20,503
(4,838)
15,665
Adjustments in %
Experience-based increase (+)/decrease (−) in pension obligations .......................
Experience-based increase (+)/decrease (−) in plan assets .....................................
2009
(0.54)
0.29
2008
1.71
0.6
2007
2.40
4.07
2006
(1.19)
8.19
F-110
F-111
33 Other disclosures regarding financial instruments
33.1 Carrying amounts, values and fair values by classes
ASSETS
Non-current
Financial assets
Loans and receivables ..................
Available for sale..........................
Other original financial assets
Loans and receivables ..................
Held for trading ............................
Current
Cash and cash equivalents............
Trade receivables..........................
Receivables due from affiliated
companies (non-consolidated)
Other assets...................................
Financial assets—held for
trading......................................
Available for sale..........................
Non-current
Subordinated liabilities.................
institutions ...............................
Other liabilities
interest bearing ........................
non-interst bearing...................
From finance leases .................
Other prepaid expenses and
accrued income...................
Current
institutions ...............................
Trade payables..............................
Notes payable ...............................
Liabilities due to affiliated
companies (non-consolidated)
Other liabilities
non-interest bearing.................
From finance leases .................
Other ........................................
Fair Value
not
Fair Value
affecting
affecting
Amortized
Fair value
result
cost
result
cost
IAS 17 12/31/2009
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
Measurement
category as
per IAS 39
kEUR
Carrying
amount
12/31/2009
kEUR
LaR
AfS
17,222
230
16,251
LaR
FAHfT
280
0
LaR
LaR
971
Carrying
amount
12/31/2008
kEUR
Fair Value
not
Fair Value
affecting
affecting
Amortized
Fair value
result
cost
result
cost
IAS 17 12/31/2008
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
17,222
0
18,007
233
16,811
280
280
0
215
0
215
215
0
18,010
61,246
18,010
61,246
18,010
61,246
7,634
56,224
7,634
56,224
7,634
56,224
LaR
LaR /n.a.
1,006
6,848
1,006
6,848
1,006
6,848
510
11,876
510
11,876
510
11,876
FAHfT
444
444
1,902
AfS
421
421
384
FLAC
50,000
50,000
50,000
50,690
50,690
50,690
FLAC
37,182
37,182
37,182
20,679
20,679
20,679
FLAC
FLAC
n/a
11,975
242
9,130
11,975
242
11,975
242
9,130
12,164
0
9,868
12,164
12,164
0
9,868
FLHfT
520
520
0
FLAC
FLAC
FLAC
44,065
60,663
3,600
44,065
60,663
3,600
103,009
56,243
5,914
FLAC
0
0
0
FLAC
n/a
FLHfT
25,948
1,738
233
25,948
1,738
233
28,903
1,822
318
230
444
421
9,130
520
44,065
60,663
3,600
25,948
1,738
233
F-112
1,196
18,007
0
233
1,902
1,902
384
384
9,868
0
103,009
56,243
5,914
103,009
56,243
5,914
0
28,903
1,822
318
28,903
1,822
318
33.1 Carrying amounts, values and fair values by classes
Thereof broken down by measurement categories as per IAS 39:
Value according to balance sheet
as per IAS 39
Fair Value
not
Measurement Carrying
Fair Value
affecting
category as
amount
affecting
Amortized
per IAS 39
12/31/2009
result
result
cost
cost
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
Loans and
receivables ....
Financial
assets—
Available
for Sale..........
Financial
assets—
Held for
Trading .........
Financial
liabilities
measured at
amortized
cost................
Financial
liabilities—
Held for
Trading .........
Carrying
amount
12/31/2008
kEUR
Value according to balance sheet
as per IAS 39
Fair Value
not
Fair value
affecting
affecting
Amortized
result
result
cost
cost
kEUR
kEUR
kEUR
kEUR
LaR
104,612
103,641
0
971
0
94,466
93,270
0
1,196
0
AfS
651
0
230
421
0
1,813
0
233
384
0
FAHfT
444
0
0
0
444
1,902
0
0
0
1,902
FLAC
233,675
233,675
0
0
0
277,602
277,602
0
0
0
FLHfT
753
0
0
0
753
318
0
0
318
0
Cash and cash equivalents, trade receivables, as well as other receivables are basically due within a short period
of time. Thus, their carrying amounts at the balance sheet date correspond to their fair value.
The fair values of the other non-current receivables which are due within more than one year correspond to the
present values of the payments relating to the assets, taking into account the respective current interest parameters that
reflect market- and partner-related changes in terms and conditions and expectations.
Trade payables, as well as other liabilities usually fall due within a short period of time; the recognized amounts
correspond to the respective fair values.
The fair values of liabilities to financial institutions, notes payable and other financial liabilities are determined
as the present values of the payments relating to the debt and liabilities, taking into account the respective applicable
interest structure.
33.2
from subsequent measurement
at Fair
Currency
Impairment
Value
translation
losses
kEUR
kEUR
kEUR
from
interest
kEUR
(LaR).......................
Held-to-maturity
Investments (HtM)..
Available for sale
financial assets
(AfS) .......................
Held for trading
(FAHfT and
FLHfT)....................
measured at
amortized cost
(FLAC) ...................
Net result
from
disposal
kEUR
2009
kEUR
2008
kEUR
1,654
0
(536)
(2,046)
0
(928)
527
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(9,836)
0
(528)
0
0
(10,364)
(15,482)
F-113
results. Only the impairment losses on trade receivables attributed to the classes loans and receivables and currency
effects are recorded in the operating result.
34 Deferred tax liabilities
Deferred tax liabilities ............................................................................................................
For details regarding deferred tax liabilities see Section 23 “Deferred tax assets”.
F-114
12/31/2009
kEUR
16,572
12/31/2008
kEUR
17,250
35 Other current and non-current provisions
Expected to be due
Balance as of
Jan. 1, 2009
kEUR
for stock options ................
for anniversary bonuses .....
for expenses relating to
archiving obligations......
for demolition obligations..
Current provisions
for warranty obligations.....
for customer bonuses .........
for compensations and
bonuses ..........................
for outstanding invoices.....
for impending losses ..........
for fees and charges ...........
for complaints/returned
goods..............................
for other accrued liabilities
< 100 kEUR ...................
*)
0
1,024
Changes in
consolidated
group and
Addition Reversal
currency
kEUR
kEUR
kEUR
0 18,000*)
0
134
Utilization
kEUR
Balance as of
Dec. 31, 2009 < 3 months
kEUR
kEUR
> 3 /< 6
months
kEUR
> 6 months
kEUR
> 12 / < 24
months
kEUR
>
24 months
kEUR
0
0
0
14
18,000
1,144
0
0
0
0
0
0
0
226
18,000
918
580
70
1,674
(3)
0
(3)
55
0
18,189
11
0
11
0
15
29
621
55
19,820
0
0
0
0
0
0
0
0
0
0
0
226
621
55
19,594
4,487
4,543
(27)
(159)
1,998
3,886
609
297
838
4,188
5,011
3,785
523
2,672
665
1,113
3,823
0
0
0
0
0
277
218
466
16
(7)
(18)
(13)
0
362
250
1,024
129
188
0
64
16
154
200
46
0
290
250
1,367
129
87
250
0
108
203
0
0
21
0
0
1,367
0
0
0
0
0
0
0
0
0
12
0
938
12
0
938
938
0
0
0
0
226
10,245
11,919
(49)
(273)
(276)
302
8,889
27,078
60
1,246
1,257
216
5,642
5,671
203
11,973
31,793
45
4,623
4,623
49
2,051
2,051
109
5,299
5,299
0
0
266
0
0
19,594
The additions also include the reclassification of the stock options in the amount of 6,794 kEUR that was disclosed in equity in the previous year. For details see Sections 29
and 40.
F-115
35 Current income tax liabilities
Current income tax liabilities..................................................................................................
12/31/2009
kEUR
8,055
12/31/2008
kEUR
2,564
Other disclosures
37.1
In respect to its assets, liabilities and intended transactions, NORDENIA Group is in particular subject to risks
from changes in interest rates and exchange rates, as well as changes in prices of raw materials. The goal of the financial
risk management is to minimize those market risks resulting from current operating and finance-oriented activities. It
does so by way of mainly currency-related financing and application of selected derivative hedge instruments (interest
and currency derivatives). However, on principle, only risks affecting the Group’s cash flow are hedged. Derivative
financial instruments are only used as collaterals. They are not held for trading or other investment purposes.
The basic idea of the financial policy is determined each year by the board of directors. The Group Treasury is
responsible for the realization of the financial policy and the consistent risk management. The use of derivatives is
subject to a clear authorization system. On principle, transactions are coordinated by the Treasury department of
NORDENIA International AG, Greven/Germany. Transaction risks are hedged locally by subsidiaries, however they
require approval.
The NORDENIA Group uses primarily interest swaps and exchange futures. The use of these derivative
instruments and the realization of a risk minimization strategy serve the purpose of hedging and minimizing interest rate
and exchange rate fluctuations. The hedge transactions are entered into only with financial services providers that have
good credit rating. As a result of the risk-minimizing dispersion of the hedge transactions the address loss risk is reduced.
37.2
Market price risks
37.2.1
The risks that the NORDENIA Group faces in respect to changes in exchange rates result from investments,
financing measures and the operating business. Foreign exchange risks are hedged to the extent that they affect the
Group’s cash flow. Foreign exchange risks resulting from the translation of the assets and liabilities accounts of foreign
operations into the reporting currency of the Group are not hedged.
exchange futures to cover risks from changes in exchange rates. In case of foreign currency cash flows expected in the
future budget data is documented and the transactions are basically included in the hedge accounting, usually as cash
flow hedges.
The market value of the exchange futures classified in the hedge accounting are reported at the balance sheet
date in equity to the extent that the hedge relation is highly-effective. Transactions to be recorded in profit or loss are
recorded in profit or loss at the balance sheet date. In 2009, the market value of the exchange futures reported in equity
was 316 kEUR (2008: 0 kEUR).
NORDENIA International AG uses a portfolio approach for the hedging of cash accounts and foreign currency
loans. Individual risks are summarized and only the remaining risks are hedged by exchange futures. According to
IAS 39 this transaction shall not be recorded in the hedge accounting; the market values are recorded directly in profit or
loss.
F-116
37.2.2
Interest risks
The NORDENIA Group is refinanced by way of current night money or time deposits, as well as an ABSprogram. These products are based on transaction-related EONIA/Euribor interest rates determined on the market. The
risks of increasing variable short-term interests are minimized by hedging with interest swaps.
On principle, interest swaps are attributed to refinancing transactions and the option of a hedge accounting is
reviewed. If the provisions of the hedge accounting set forth in IAS 39 are not applied the corresponding market values
are recorded in profit or loss at the balance sheet date.
In 2009, the negative market value of the exchange futures reported in equity was 520 kEUR (2008: 0 kEUR).
There was no positive market value, neither in the reporting period nor in the previous period.
A basic swap with foreign currency portion (CHF) that existed as of December 31, 2008 expired in the reporting
period and was accounted for through profit or loss.
37.3
At the NORDENIA Group, raw materials price risks mainly occur in the segment of granulates. According to
NORDENIA’s assessment, there was no efficient market for the minimization of the risks at the balance sheet date. The
Group continues to observe the market. Price risks are minimized by way of corresponding agreements with business
partners.
37.4
Credit risk
Credit risk is the risk of insolvency or default in settlement of receivables by business partners. A less favorable
credit status of a business partner may result in a decrease in the value of the receivable due from said business partner.
Credit risks are limited by way of avoiding cluster risks.
NORDENIA faces a credit risk in particular from its operating business. In this respect, receivables of the
individual companies are permanently monitored and credit risks are accounted for by recording individual allowances
and grouped individual allowances. The maximum credit risk is reflected in the carrying amounts of the financial assets
disclosed in the balance sheet (incl. derivative financial instruments with positive market value).
37.5
Liquidity risk
This refers to the tradability of financial instruments. The lack of liquidity may result in a lower recoverability
of financial instruments. The term liquidity risk also includes the question of access to cash equivalents. Primarily the
refinancing of financial liabilities as well as interest rates payable should be taken into account. The liquidity risk is
reduced by dispersing financial transactions. Top-class liquid instruments are preferred for hedging purposes.
In order to ensure solvency at any time and financial flexibility of the NORDENIA Group, reserves of liquid
funds in the form of agreed-upon credit lines and, if need be, cash are accrued.
The market value of the financial instruments is determined by the respective partner in the derivative
transaction based on recognized calculation methods.
The determined market values are reported in the balance sheet under Other receivables and Other liabilities.
F-117
Nominal volumes are presented separately as the total amount of acquired derivatives. At the balance sheet date,
the market values and nominal values are as follows:
Current
Non-current
Residual maturities
more than
1 to 5 years
1 year
5 years
2009 2008
2009
2008
2009
2008
Market value of derivative instruments
ASSETS
Exchange futures .............................................
Interest swaps ..................................................
Basic swaps......................................................
Interest swaps ..................................................
Basic swaps......................................................
ASSETS
Interest swaps ..................................................
Basic swaps......................................................
Interest swaps ..................................................
Basic swaps......................................................
Total
2009
2008
kEUR kEUR
0
0
0
0
0
0
0
0
0
0
0
0
444
0
0
2,749
0
0
444
0
0
2,749
0
0
0
0
0
0
111
0
0
520
0
0
0
0
232
0
0
1,043
0
7
232
520
0
1,043
111
7
0
0
0
0
0
0
0
0
0
0
0
0
14,787
0
0
38,715
0
0
14,787
0
0
38,715
0
0
0
0
0
0
6.750
0
0
50,000
0
0
0
0
20,017
0
625
19,304
0
0
20,017
50,000
625
19,304
6,750
0
By resolution of the general assembly dated June 29, 2006 the company’s share capital was increased on a
conditional basis by up to 2,838 kEUR by issuing up to 2,838,000 new individual bearer shares. The purpose of the
conditional capital increase is to grant stock options to the members of the board of directors and other selected
employees of the company and affiliated companies in Germany and other countries.
Accordingly, the directors were authorized to issue stock options—with the supervisory board’s consent—to
allottees that are not members of the company’s board of directors over a period of five years after the registration of the
conditional capital in the Commercial Register on August 16, 2006. The supervisory board was authorized to issue
options to the members of the board of directors.
The capital increase is only performed to the extent that options are issued and exercised. The new stocks
participate in the profits from the beginning of the financial year in which they are granted
The options may not be exercised until after the expiration of a qualifying period of two years—started at the
date of issuing of the respective options—to the extent that they are vested. Another prerequisite for exercising the
options is that the stocks or substantial assets of the company are sold (“exit event”). The options are vested over a period
of five years in tranches of 20% per year.
In case of an exit event, full vesting occurs even if the five-year period has not yet expired. The term of the
stock options is 10 years. Stock options that are not exercised or cannot be exercised by the end of the term shall be
forfeited without the holder being entitled to replacement or compensation.
Each option grants the right to purchase on stock of the company at exercise price. The exercise price per option
is 4.39 EUR. The options may only be exercised after the expiration of the qualifying period and under the
aforementioned prerequisite to the extent that the fair value of the stocks is at least 10% above the exercise price.
The terms and conditions for the exercising of the options prescribe that the company has the right to pay the
fair value of the stocks less the exercise price instead of issuing new stocks (in such case the exercise price is not
F-118
payable) or provide stocks that are treasury stocks or were acquired for this purpose against payment of the exercise
price. The Company notified the participants in the stock option program in writing that it exercises its right to make a
cash payment instead of the transfer of stocks. As a result of the exercising of the election right, the participants’
preemptive rights are converted into virtual stock options that shall be recorded in provisions at their fair value. The stock
options that had previously been disclosed in the capital reserves were reclassified and transferred to provisions.
The fair value of the stock options granted in the financial year totaled 10.01 EUR (2008: 5.03 EUR) at the
balance sheet date. Since NORDENIA is not listed at the stock exchange, a corporate valuation was performed in a first
step using a recognized capitalized earnings method. Based on this valuation, the fair value of the stock options was
determined using an option price model and taking into account the exercise price and the term of the options.
In the reporting period, the amount of 11,206 kEUR (2008: 1,555 kEUR) was recorded in the income statement
for share-based payments, affecting the operating result.
Outstanding options at January 1................................................................................................
Granted options...........................................................................................................................
Forfeited options.........................................................................................................................
Replacement by cash payment....................................................................................................
Outstanding options at December 31..........................................................................................
Exercisable options at December 31...........................................................................................
2009
Units
2,351,100
76,745
0
48,751
2,379,094
0
2008
Units
2,377,014
47,213
73,127
0
2,351,100
0
The virtual stock options existing at the end of the 2009 financial year fall due within 6.5 years on average
(2008: 7.5 years).
40
Disclosures and explanatory comments on the consolidated cash flow statement
The consolidated cash flow statement (Appendix 1.7) includes discontinued operations. As a result, the amounts
also include transactions of those operations. The cash flows from discontinued operations were not disclosed separately
due to the fact that they are not material.
40.1
Cash
The cash comprises cash and cash equivalents. At the balance sheet date, the cash totaled 18,010 kEUR (2008:
7,634 kEUR).
The cash includes cash from proportionate consolidated companies in the amount of 910 kEUR (2008:
1,907 kEUR).
40.2
Cash flow from operating activities
The cash flow from operating activities in the reporting period totaled to 76,609 kEUR (2008: 72,046 kEUR).
The operating earnings (EBIT) increased over the previous year by 10,507 kEUR (see Appendix 1.7).
The other non-cash expenses/previous year’s transaction mainly include expenses resulting from the stock
option program and exchange differences. The expenses in the financial year resulting from the stock option program
were disclosed as changes in provisions due to the change in presentation.
The increase in inventories, trade receivables and other assets in the amount of 4,492 kEUR mainly result from
an increase in receivables.
The increase in provisions, trade payables and other items of equity and liabilities in the amount of
22,201 kEUR mainly resulted from the increase in obligations from the stock option program.
The paid financial expenses (less received financial income) in the amount of 11,701 kEUR in the reporting
period year mainly include interest expenses. Interest income and other paid and received financial expenses and income
are of minor importance.
The gains/losses from the disposal of non-current assets/consolidated companies include the income from
deconsolidation of Coronor Composites GmbH, Peine, in the amount of 1,436 kEUR.
F-119
40.3
Cash flow from investment activities
The cash outflow from investment activities in the reporting period totaled 18,921 kEUR, while the cash
outflow in 2008 was 43,023 kEUR.
The investments in property, plant and equipment, intangible assets and financial assets total to 22,958 kEUR
(2008: 43,081 kEUR).
The inflow from the sale of consolidated companies and other operations in the amount of 1,942 kEUR relate to
the sale of the shares in Coronor Composites GmbH, Peine. The purchase price of 3,138 kEUR is offset against sold cash
and cash equivalents in the amount of 1,196 kEUR.
In the previous year, outflow resulting from the acquisition of consolidated companies and other operations in
the amount of 1,323 kEUR mainly included the last purchase price installment in the amount of 1,250 kEUR resulting
from the acquisition of 50% of the interest in NORDENIA (Malaysia) Sdn. Bhd., Ipoh/Malaysia in 2007.
40.4
Cash resulting from financing activities
The cash flow from financing operations in the reporting period totaled 47,397 kEUR (2008: 36,364 kEUR).
Subordinated loans in the total amount of 30,750 kEUR were repaid during the reporting period.
The inflows and outflows relating to financial loans comprise inflows from long-term bank loans in the amount
of 40,104 kEUR and outflows resulting from the repayment of long-term loans in the amount of 24,113 kEUR
Inflows and outflows relating to loans with short maturities are offset.
41
Segment information
The companies of the Group primarily operate in one industry, namely development, production and processing
of films and material components for packing, technical solutions and use in product components.
The reporting of the Group for management purposes is structured by type of product in segments and
geographic regions. Depending on internal control mechanisms the segments are divided into Industry (for industrial
solutions), Consumer (for products in the consumer good segment) and Others (for service companies).
The segment information is based on the same reporting and measurement methods as in the consolidated
financial statements. The reconciliation column includes effects resulting from consolidation activities on the one hand,
and from deviations in the definition of the contents of the segment items compared to the corresponding consolidated
items on the other hand.
There are business relations with an external customer from which at least 10% of the income is generated.
Segment information by segments
Total sales........................................
Internal segment sales .....................
External segment sales ....................
Tonnage ...........................................
EBIT ................................................
Depreciation/ amortization..............
EBITDA ..........................................
Financial result ................................
Income/losses from ordinary
operations ...................................
Expenses relating to discontinued
operations ...................................
ROS*) ..............................................
Investments**) ................................
Assets...............................................
Liabilities.........................................
Average number of employees per
year .............................................
*)
**)
kEUR
kEUR
kEUR
t
kEUR
kEUR
kEUR
kEUR
kEUR
Industry
Consumer
Others
2009
2008
2009
2008
2009
2008
416,584 455,751 292,754 326,546
10,012 10,512
(2,971) (7,421) (10,152) (13,897)
(952)
(992)
413,613 448,330 282,602 312,649
9,060
9,520
147,914 150,199
73,003
79,563
0
0
44,258 36,829
21,570
8,129 (15,983) (6,774)
14,962 13,791
13,647
13,655
997
1,128
59,220 50,620
35,217
21,784 (14,986) (5,646)
(3,520) (4,313) (4,017) (5,467)
47,016 31,040
32,516
17,553
2,662
kEUR
1
0
%
9.85
7.25
kEUR 11,746 15,528
kEUR 196,513 195,940
kEUR 141,717 141,406
0
6.21
10,167
210,973
122,585
0
0.85
27,145
216,801
135,539
1,441
1,475
kEUR
40,738
1,444
1,515
based on the result from ordinary operations
F-120
31,033
(38,857)
38,471
20,587
0
0
0
0
0.00
0.00
0.00
0.00
960
1,177
0
0
132,209 97,467 (122,430) (93,770)
193,756 197,999 (139,537) (138,395)
1
5.80
22,873
417,265
318,521
0
2.82
43,850
416,438
336,549
2,996
3,104
111
24,266
Reconciliation
Group
2009
2008
2009
2008
0
0 719,350 792,809
(41,621) (40,790) (55,696) (63,100)
(41,621) (40,790) 663,654 729,709
(9,508)
(8,528) 211,409 221,234
(391)
441
49,454
38,625
749
20
30,355
28,594
358
461
79,809
67,219
(50,462) (39,298) (10,983) (18,038)
114
(50,853)
0
0
42….Proposal for the approval of the financial statements and appropriation of the annual net profits of
NORDENIA International AG
As per Sec. 170 para. 2 sentence 1 German Stock Corporation Law [AktG], the directors present to the
supervisory board the following proposal that they intend to present to the annual general meeting regarding the
appropriation of the annual net profits:
1.
Dividends
The directors propose not to distribute any dividends for 2009.
2.
Transfer to retained earnings
The directors propose not to increase the revenue reserve.
3.
Profits carried forward
The retained earnings are carried forward to the new financial year.
4.
Annual net profits
Based on annual net profits in the amount of 15,621,712.85 EUR and retained earnings from the previous year in the
amount of 6,907,321.42 EUR, the Company’s retained earnings as per the audited financial statements total to
22,529,034.27 EUR.
43
Approval of the consolidated financial statements
On February 23, 2010, the directors of NORDENIA International AG released the consolidated financial
statements as of December 31, 2009 to be forwarded to the supervisory board. The supervisory board is responsible for
reviewing the consolidated financial statements and stating whether they grant approval to the consolidated financial
statements or not.
44
In addition to the consolidated subsidiaries, NORDENIA International AG is related directly or indirectly
through its ordinary business operations with the following affiliated non-consolidated companies.
Status
Company
Label 24 GmbH i. L., Gronau........................................................................... Affiliated—not significant
OOO NORDENIA Samara, Samara/Russia ..................................................... Affiliated—not significant
44.1
Business relations with non-consolidated companies and associated companies
Total receivables due from non-consolidated subsidiaries .....................................................
Total liabilities due to non-consolidated subsidiaries .............................................................
12/31/2009
kEUR
700
0
12/31/2008
kEUR
0
0
Impairment losses were recorded in respect to receivables in the amount of 4,581 kEUR (2008: 4,585 kEUR)
due from Label 24 GmbH i.L. Impairment losses were recorded in the amount of 893 kEUR on receivables due from
OOO NORDENIA Samara, Samara/Russia in the total amount of 1,593 kEUR (2008: 1,477 kEUR).
44.2
OCM Luxembourg POF III S.a.r.l., a company affiliated with the two aforementioned majority stockholders,
namely OCM/Nordenia POF Luxembourg S.C.A. and OCM/Nordenia OPPS Luxembourg S.C.A., renders services to
NORDENIA International AG under a management consulting services agreement. The scope of those services is
approximately 300 kEUR p.a.
F-121
45
Disclosures required under national laws and regulations
45.1
Exemption as per Sec. 264 para. 3 HGB
Pursuant to Sec. 264 para. 3 HGB, the consolidation of the following fully consolidated companies exempted
them from the obligation to publicly disclose financial statements and prepare a management’s report:
Name
NORDENIA Deutschland Gronau GmbH........................................................................................
NORDENIA Deutschland Osterburken GmbH ................................................................................
NORDENIA Deutschland Halle GmbH ...........................................................................................
NORDENIA International Development GmbH ..............................................................................
NORDENIA Technologies GmbH ...................................................................................................
NORDENIA IT Services GmbH ......................................................................................................
NORDENIA Deutschland Emsdetten GmbH ...................................................................................
EMPAC Beteiligungs GmbH............................................................................................................
Registered office
Gronau/Westf.
Osterburken
Halle/Westf.
Greven
Gronau/Westf.
Barleben
Emsdetten
Emsdetten
A list of the complete shareholdings of the Group, the consolidated financial statements and the Group’s
management report, as well as the supervisory board’s report are publicly disclosed in the electronic Federal Gazette. The
most significant group companies are listed in Appendix 1.4.
45.2
Supervisory board
The total remuneration of the supervisory board in the 2009 financial year for their services to the parent
company and the subsidiaries totaled 336 EUR (2008: 336 EUR).
No advance payments or loans were granted to members of the supervisory board in the last two years. Neither
did the members of the supervisory board receive any remuneration or benefit for personal services such as consulting or
intermediation services.
Directors
12/31/2009
kEUR
Remuneration of the board of directors ....................................................................................
2,145
12/31/2008
kEUR
2,233
Under the stock option plan, no preemptive rights (2008: 30,460) were granted to directors.
No advance payments or loans were granted to directors during the reporting period.
The total remuneration of former directors and their survivors total 740 kEUR (2008: 725 kEUR).
Provisions were recorded in the consolidated financial statements in the amount of 12,576 kEUR (2008:
10,213 kEUR) for current pensions and pension commitments to former directors and their survivors.
45.3
Employees
The companies of the NORDENIA Group (joint ventures are accounted for on a prorated basis) had the
following number of employees:
Production....................................................................................................................................
Administration .............................................................................................................................
Sales.............................................................................................................................................
Research and development ..........................................................................................................
F-122
12/31/2009 12/31/2008
2,496
2,597
254
255
196
202
50
50
3,104
2,996
45.4
Disclosures as per Sec. 313 para. 2 No. 3 HGB regarding the companies consolidated on a prorated basis
Registered
Name
office
Dalian DANOR Printing Packaging Company........................ Dalian, China
Reason for
Percentage
proportionate
in capital %
consolidation
50 Joint management
Coronor Composites GmbH that had been consolidated on a prorated basis was sold effective March 31, 2009.
The number of employees in the company consolidated on a prorated basis is as follows (100%):
Production....................................................................................................................................
Administration .............................................................................................................................
Sales.............................................................................................................................................
Research and development ..........................................................................................................
12/31/2009 12/31/2008
120
124
24
28
10
12
0
0
164
154
Other disclosures regarding joint ventures consolidated on a prorated basis as per IAS 31.56:
Total non-current assets ..........................................................................................................
Total current assets .................................................................................................................
Total non-current liabilities ....................................................................................................
Total current liabilities............................................................................................................
Total expenses ........................................................................................................................
Total income ...........................................................................................................................
46
12/31/2009
kEUR
2,734
3,656
0
1,338
5,239
5,652
12/31/2008
kEUR
3,020
3,455
0
1,693
5,885
5,933
Statement of compliance regarding the Corporate Governance Code
In November 2002, the directors and the board of directors of NORDENIA International AG resolved on a
statement regarding the recommendations of the German Corporate Governance Code and publicly disclosed it to the
stockholders permanently. The statement of compliance is published on the Internet under www.nordenia.com.
47.1
Notes payable .........................................................................................................................
Suretyships..............................................................................................................................
thereof relating to discontinued operations.............................................................................
Warranty agreements ..............................................................................................................
Collaterals...............................................................................................................................
47.2
12/31/2009
kEUR
594
0
0
600
0
1,194
12/31/2008
kEUR
383
0
0
5,325
0
5,708
Litigation
Neither NORDENIA International AG nor one of its group companies are involved in any pending or
foreseeable legal or arbitration proceedings that could have or have had a material impact on the economic situation in
the last two years. Provisions in the appropriate amount were recorded by the respective companies for any financial
obligations from legal or arbitration proceedings.
F-123
47.3
Commitments from investments, including obligations from future expenditure .........................
Obligations from non-cancellable operate lease or leasing agreements.........................................
thereof due within 1 year ...........................................................................................................
thereof due between 1-5 years ...................................................................................................
thereof due within more than 5 years.........................................................................................
Total...............................................................................................................................................
12/31/2009 12/312008
kEUR
kEUR
12,277
7,492
10,310
11,378
2,110
2,025
5,126
5,589
3,764
3,074
18,870
22,587
The minimum leases relate to leased buildings, plants and fixtures, fittings and office equipment, with some of
the existing agreements containing extension clauses. In addition, a production site (land and buildings) was refinanced
by way of a sale & leaseback transaction. The expenses from operate leases that were recognized in profit and loss total
3,060 kEUR (2008: 2,602 kEUR) at the balance sheet date.
47.4
Fees and services of auditors as per Sec. 314 para. 1 No. 9 HGB Fees and services of auditors as per Sec.
314 para. 1 No. 9 HGB
The fees of the auditors of the consolidated financial statements during the financial year were recorded in
expenses and break down as follows:
Auditing services ........................................................................................................................................................
Other consulting services............................................................................................................................................
Tax consulting services...............................................................................................................................................
Other services .............................................................................................................................................................
kEUR
222
0
0
0
222
48 Group companies
The list of all shareholdings in accordance with the specifications in Sec. 313 para. 2 No. 4 HGB is publicly
disclosed in the electronic Federal Gazette. Please see Appendix 1.4.
Signed in Greven February 23rd 2010
Board of Directors
Ralph Landwehr
(Chairman)
Andreas Picolin
(Deputy Chairman)
F-124
Andreas Busacker
balance sheet, notes to the consolidated financial statements, statement of changes in group equity and cash flow
statement—as well as to the Group management report of NORDENIA International AG, Greven. The Group
management report is not reproduced in the Preliminary Offering Memorandum.
We have audited the consolidated financial statements prepared by NORDENIA International AG, Greven—
comprising the income statement, balance sheet, notes to the consolidated financial statements, statement of changes in
group equity and cash flow statement—together with the Group management report for the financial year from January 1
to December 31, 2008. The preparation of the consolidated financial statements and the Group management report in
accordance with the IFRS, as adopted by the EU, and the additional requirements of German Commercial Law pursuant
to § 315a para 1 German Commercial Code (Handelsgesetzbuch—HGB) are the responsibility of the parent company’s
board of management. Our responsibility is to express an opinion on the consolidated financial statements and on the
Group management report based on our audit. In addition, we have been instructed to express an opinion as to whether
the consolidated financial statements comply with IFRS as issued by the IASB.
We conducted our audit of the consolidated financial statements in accordance with Sec. 317 HGB and German
generally accepted standards for the audit of financial statements promulgated by the Institute of Public Auditors in
Germany (Institut der Wirtschaftsprüfer—IDW). Those standards require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net assets, financial position and results of operations in the
consolidated financial statements in accordance with the applicable financial reporting framework and in the Group
management report are detected with reasonable assurance. Knowledge of the business activities and the economic and
legal environment of the Group and expectations as to possible misstatements are taken into account in the determination
of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the
disclosures in the consolidated financial statements and the Group management report are examined primarily on a test
basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities
included in consolidation, the determination of the entities to be included in consolidation, the accounting and
consolidation principles used and significant estimates made by the company’s board of management, as well as
evaluating the overall presentation of the consolidated financial statements and the Group management report. We
believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on our findings of our audit, the consolidated financial statements comply with the IFRS
as adopted by the EU, the additional requirements of German Commercial Law pursuant to Sec. 315a para 1 HGB and
IFRS as issued by the IASB, and give a true and fair view of the net assets, financial position and results of operations of
the Group in accordance with these requirements. The Group management report is consistent with the consolidated
financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the
opportunities and risks of future development.
Oldenburg, February 27, 2009
Grant Thornton GmbH
signed Schur
signed Hellmers
Wirtschaftsprüfer
Wirtschaftsprüfer
F-125
Notes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Revenue ................................................................................................................
Cost of sales..........................................................................................................
Gross profit...........................................................................................................
Selling costs..........................................................................................................
Administrative costs .............................................................................................
Research and development costs ..........................................................................
Other operating income ........................................................................................
Other operating expenses......................................................................................
Exchange rate differences from business operations ............................................
Operating profit..................................................................................................
Financial result ...................................................................................................
Profit before income taxes..................................................................................
Income tax expenses.............................................................................................
Profit from continued operations ..........................................................................
Result from discontinued operations ....................................................................
Consolidated net income ....................................................................................
Profit attributable to minority interest ..................................................................
Profit attributable to shareholder of the parent .....................................................
Basic and diluted earnings per share.....................................................................
F-126
(7)
(8)
(9)
(10)
(11)
(11)
(12)
(13)
(14)
(17)
(15)
kEUR
736,341
626,904
109,437
38,231
31,867
3,752
7,214
3,935
82
38,948
(18,022)
20,926
9,885
11,041
0
11,041
(166)
11,207
0.40
Prior year
kEUR
679,960
562,910
117,050
36,816
37,603
4,925
8,179
2,615
430
43,700
(10,511)
33,189
7,887
25,302
(5,394)
19,908
115
19,793
0.72
Notes
kEUR
Assets
1. Intangible assets....................................................................................................
2. Property, plant and equipment ..............................................................................
3. Investment properties............................................................................................
4. Other financial investments ..................................................................................
5. Deferred tax assets ................................................................................................
6. Other long-term assets ..........................................................................................
B. Current assets
1. Inventories ............................................................................................................
2. Trade receivables ..................................................................................................
3. Other assets...........................................................................................................
4. Current income tax assets .....................................................................................
5. Cash and cash equivalents ....................................................................................
Prior year
kEUR
(18)
(19)
(20)
(21)
(22)
(23)
8,935
223,397
131
18,240
7,724
986
259,413
8,706
213,331
217
16,629
10,541
1,093
250,517
(24)
(25)
(26)
71,906
56,224
20,412
849
7,634
157,025
416,438
86,811
47,747
20,739
2,778
13,275
171,350
421,867
28,380
51,600
11,207
(7,138)
(4,167)
79,882
7
79,889
28,380
30,447
19,793
(6,446)
(4,167)
68,007
274
68,281
(27)
A. Equity
1. Subscribed capital .................................................................................................
2. Reserves................................................................................................................
3. Profit attributable to shareholder of the parent .....................................................
4. Currency adjustment item .....................................................................................
5. Treasury stock.......................................................................................................
Equity attributable to shareholder of the parent.......................................................
6. Minority interest ...................................................................................................
(28)
(28)
(28)
(28)
(28)
B. Long-term liabilities
3. Provisions for pensions and similar obligations....................................................
4. Deferred tax liabilities ..........................................................................................
(29)
(29)
(31)
(33)
(34)
(29)
50,690
20,679
12,367
17,250
1,094
22,831
124,911
116,124
34,522
12,562
17,772
1,034
22,059
204,073
C. Short-term liabilities
3. Notes payables ......................................................................................................
4. Trade payables ......................................................................................................
5. Current income tax liabilities................................................................................
(29)
(29)
(29)
(29)
(35)
(34)
(29)
30,000
73,009
5,914
56,243
2,564
10,245
33,663
211,638
416,438
0
60,057
4,793
41,113
1,947
8,497
33,106
149,513
421,867
F-127
(28)
Name of the company
NORDENIA Deutschland Lohne GmbH.......................
NORDENIA Deutschland Emsdetten GmbH ................
EMPAC Beteiligungs-GmbH ........................................
NORDENIA Polska Starogard GD. Sp. z o.o............
NORDENIA Deutschland Gronau GmbH.....................
NORDENIA Deutschland Coating GmbH ................
OOO “Nord Coating” ................................................
NORDENIA Deutschland Halle GmbH ........................
NORDENIA Technologies GmbH ................................
Nordenia International Development GmbH.................
NORDENIA Deutschland Osterburken GmbH .............
ZAO NORDENIA Slavnika ..........................................
Nordenia International Beteiligungs GmbH ..................
Nordenia International Beteiligungs GmbH & Co. KG.
NORDENIA U.S.A., Inc. ..............................................
NORDENIA Iberica Barcelona S.A. .............................
NORDENIA Morocco Casablanca S.A.R.L..............
NORDENIA Hungary Kft. ............................................
NORDENIA Polska Poznan Sp. z o.o. ......................
Nordenia IT Services GmbH .........................................
Coronor Composites GmbH*) ........................................
Dalian DANOR Printing Packaging Company*)............
NORDENIA (Malaysia) Sdn. Bhd. ...............................
NORDENIA-Thong Fook (Australia) Pty. Ltd..........
Polireal S. L. ..................................................................
Not consolidated entities**)
1456929 Ontario Limited...............................................
NORDENIA Canada Inc. ..............................................
Label 24 GmbH i.L. (formerly NORDENIA
Deutschland Pacimex GmbH)....................................
*)
**)
Location
Kind of
investment
Investment in %
of share capital
Steinfeld
Emsdetten
Emsdetten
Swarozyn/Poland
Gronau/Westf.
Gronau/Westf.
Samara/Russia
Halle/Westf.
Gronau/Westf.
Greven
Osterburken
Pereslavl/Russia
Greven
Greven
Jackson/USA
Polinya/Spain
Casablanca/Morocco
Szada/Hungary
Dopiewo/Poland
Barleben
Peine
Dalian/China
Ipoh/Malaysia
Australia
Polinya/Spain
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Share capital
Stocks
Stocks
Stocks
Shares
Shares
Shares
Shares
Shares
Stocks
Stocks
Stocks
90.00%
100.00%
100.00%
100.00%
100.00%
86.60%
86.60%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
83.41%
100.00%
100.00%
100.00%
50.00%
50.00%
100.00%
100.00%
10.40%
Belleville/Canada
Belleville/Canada
Stocks
Stocks
100.00%
100.00%
Mitterscheyern
Shares
100.00%
Proportionate consolidation according to IAS 31
Waiving of consolidation due to the low materiality for the Group
F-128
Minority
interest
Equity attributable to shareholder fo the parent company
Other
Currency
Subscribed Capital revenue Consolidated adjustment Treasury
Minority Group
Subtotal interest equity
capital
reserves reserves net income
stock
item
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR kEUR
IFRS 1/1/2007 ...............
28,380
9,554 16,432
0
(3,487)
(4,167)
46,712
383 47,095
Currency adjustments ....
(2,959)
(2,959)
(12) (2,971)
interest .......................
(34)
222
188
(109)
79
Payments of
shareholders into the
4,557
4,557
4,557
capital reserve ............
Stock options .................
4,037 (4,037)
0
0
Sale of treasury stock.....
(284)
(284)
(284)
Cash flow-Hedging........
19,908
19,908
19,908
Consolidated net
income .......................
(115)
(115)
115
0
Profit attributable to
minority interests .......
0
(13)
(13)
0
(90)
(90)
Dividends.......................
IFRS 12/31/2007 ...........
28,380 18,114 12,333
19,793
(6,446)
(4,167)
68,007
274 68,281
IFRS 1/1/2008 ...............
28,380 18,114 32,126
0
(6,446)
(4,167)
68,007
274 68,281
Currency adjustments ....
(692)
(692)
7 (685)
interest .......................
(66)
(66)
(43) (109)
Stock options .................
1,556
1,556
1,556
Sale of treasury stock.....
0
0
Transfers ........................
759
(759)
0
0
Measurement financial
instruments.................
(130)
(130)
(130)
Consolidated net
income .......................
11,041
11,041
11,041
Profit attributable to
minority interests .......
166
166
(166)
0
Dividends.......................
0
0
0
(65)
(65)
Other ..............................
IFRS 12/31/2008 ...........
11,207
(7,138)
(4,167)
79,882
7 79,889
28,380 20,363 31,237
F-129
Operating profit (EBIT including discontinued operations) ...........................................................
Depreciations/appreciations on fixed assets ...................................................................................
Income taxes paid ...........................................................................................................................
Financial expenses paid (less financial income received)...............................................................
Loss from the disposal of fixed assets/consolidated entities...........................................................
Other non cash-relevant expenditure ..............................................................................................
Decrease/increase in inventories, trade receivables and other assets not related to investing or
Increase in provisions, in trade payables and other liabilities not related to investing or
Cash flow from operating activities.............................................................................................
thereof from discontinued operations .............................................................................................
Cash received from disposals of property, plant and equipment ....................................................
Cash paid for investments in property, plant and equipment..........................................................
Cash received from disposals of intangible assets ..........................................................................
Cash paid for investments in intangible assets................................................................................
Cash received from disposals of financial assets ............................................................................
Cash paid for investments in financial assets..................................................................................
Cash received from the disposal of consolidated entities and other business units ........................
Cash paid for the purchase of consolidated entities and other business units .................................
Cash flow from investing activities..............................................................................................
Cash received from contributions to equity and the sale of treasury stock.....................................
Dividend distributions to shareholders including minority shareholders........................................
Cash paid from repayments of subordinated loans .........................................................................
Cash received and cash paid from the borrowing and for the repayment of loans..........................
Cash flow from financing activities .............................................................................................
Change in cash ..............................................................................................................................
Change in cash funds from cash relevant transactions....................................................................
Change in cash funds from exchange rate movements ...................................................................
Cash balance at the beginning of the period ...................................................................................
Cash balance at the end of the period .........................................................................................
F-130
2008
kEUR
38,947
28,716
(5,085)
(17,298)
61
3,761
2007
kEUR
39,499
30,526
(5,017)
(14,419)
2,654
3,394
4,108
(9,393)
18,836
72,046
0
1,000
(40,667)
43
(828)
338
(1,586)
0
(1,323)
(43,023)
0
0
0
(35,617)
(747)
(36,364)
0
(7,341)
(7,341)
1,700
13,275
7,634
3,847
51,091
3,149
1,556
(38,130)
138
(511)
8,158
(313)
(306)
(10,538)
(39,946)
218
0
(13)
0
(5,801)
(5,814)
(1,626)
5,331
5,331
(164)
8,108
13,275
1
General disclosures
NORDENIA Group (hereinafter also referred to as NORDENIA) is an international group of companies in the
packing material industry operating worldwide in the fields of industry and consumer.
The Company was registered under the firm NORDENIA International AG in the Commercial Register at the
Vechta Amtsgericht [Local Court] (HRB 1368) on April 25, 1987. Currently, the Company is registered in the
Commercial Register at the Stuttgart Amtsgericht [Local Court] (HRB 7385).
The Company’s registered office is in Greven, Germany. The address is NORDENIA International AG,
Huettruper Heide 71-81, 48268 Greven.
The consolidated financial statements of NORDENIA International AG, Greven/Germany as at December 31,
2008 were compiled based on Sec. 315a para. 1 HGB [German Commercial Code] in compliance with the International
Financial Reporting Standards (IFRS) as applied in the European Union. All IFRS issued by the International Accounting
Standard Board (IASB) and applicable at the date of these consolidated financial statements and applied by NORDENIA
were adopted by the European Commission for the application in the EU. Hence, the consolidated financial statements of
NORDENIA also comply with the IFRS published by the IASB. Therefore, the term IFRS is applied uniformly. All IFRS
effective as at the balance sheet date as well as the standards indicated in section 6 of the consolidated financial
statements were applied.
The financial year is the calendar year. Comparative figures for one previous year are indicated in the
consolidated income statement, the consolidated balance sheet and the consolidated cash flow statement.
The reporting currency is the Euro. Unless otherwise indicated, all amounts are stated in thousands of Euro
(kEUR).
For the purpose of clearer presentation, various items of the consolidated balance sheet and consolidated income
statement were combined. These items are stated separately, together with explanatory comments, in the notes to the
consolidated financial statements. The consolidated income statement is compiled using the cost-of-sales accounting
method.
The consolidated financial statements of NORDENIA International AG, which was audited by Grand
Thornton GmbH Wirtschaftsprüfungsgesellschaft, Oldenburg, and on which an independent auditor’s report was
rendered, as well as the consolidated financial statements of NORDENIA International AG on which an independent
auditor’s report was rendered also are publicly disclosed in the electronic Federal Gazette (Bundesanzeiger).
The Board of Directors of NORDENIA International AG released these consolidated financial statements on
February 27, 2009 for public disclosure.
2 Consolidation standards
Capital consolidation is performed using the purchase method.
Income and expenses of a subsidiary are consolidated as of the acquisition date. Income and expenses of a
subsidiary remain consolidated until the date at which the parent company’s control ceases to exist. The difference
between the gain from the sale of a subsidiary and its carrying amount, including accumulated translation differences
recorded in equity, is recorded in the consolidated income statement under gain or loss from the disposal of the
subsidiary until the date at which it is sold.
When acquiring additional interests in entities that have been consolidated as subsidiaries already, the difference
between the purchase price and the prorated acquired equity is offset against the capital reserves.
The acquired assets, debt and contingent liabilities are recorded at their fair value at the acquisition date. Any
positive difference between the cost of the acquired entity and the prorated fair value of the equity is attributed to one or
several cash generating units [CGU] and recorded as goodwill. The CGU including the attributed goodwill is reviewed
annually in respect to the value; in case of an impairment, impairment losses are recorded.
Intragroup revenues, expenses and income, as well as receivables and payables are offset.
F-131
Unrealized profits/losses from intercompany deliveries and services of non-current assets or inventories are
eliminated.
Entities which NORDENIA controls together with another partner are consolidated using the pro rata
consolidation method (joint ventures).
3
Business combinations
On February 12, 2008 EMPAC Beteiligungs-GmbH acquired an additional 1.5% of the shares in NORDENIA
Polska Starogard GD. Sp. z o.o. and thus holds all shares in the company.
On April 8, 2008 NORDENIA International AG acquired an additional 75.4% of the shares in NORDENIA IT
Services GmbH (formerly NORDENIA International Services GmbH), Barleben, and thus holds 100% of the shares in
the company.
Both companies were already included as subsidiaries in the consolidated financial statements.
4 Consolidated companies
In addition to NORDENIA International AG (NIAG) the consolidated financial statements include all
companies in which NIAG directly or indirectly holds the majority of the voting rights and controls the financial and
business policies under the control concept, including all special-purpose entities. Potential voting rights that may
currently be exercised as well as the possibility to actually control an entity even without the majority of the voting rights
(imputed control) are accounted for.
Subsidiaries with inactive or minor business activities that are only of minor significance for presenting a true
and fair view of the financial, net worth and earnings position of the NORDENIA Group are not consolidated.
Entities in which NIAG directly or indirectly holds 50% of the interests (joint ventures) are consolidated on a
prorated basis as per the percentage share (pro rata consolidation).
Fully consolidated subsidiaries ............................
Germany ..........................................................
Foreign.............................................................
Entities consolidated on a prorated basis .............
Germany ..........................................................
Foreign.............................................................
Balance on
01/01/08
kEUR
24
14
10
2
1
1
Change in
consol.
method
kEUR
—
—
—
—
—
—
Additions
kEUR
—
—
—
—
—
—
Disposals
kEUR
1
1
—
—
—
—
Balance on
12/31/08
kEUR
23
13
10
2
1
1
The disposal of the German fully consolidated subsidiary relates to company Label 24 GmbH i.L. (formerly
NORDENIA Deutschland Pacimex GmbH) that is no longer consolidated due to its minor significance.
5 Foreign currency translation
Foreign currency transactions are translated into the respective functional currency of the respective unit at the
rate prevailing at the date of the transaction. Monetary items were translated at the rate prevailing at the balance sheet
date, while non-monetary items were translated at the rate prevailing at the date of the transaction. Any gains/losses
resulting from currency translation are basically recorded through profit or loss. During the reporting period, translation
differences in the amount of 82 kEUR (prev. year: 430 kEUR) were recorded through profit or loss in respect to the
operating activities; exchange losses in the amount of −914 kEUR (prev. year: 263 kEUR) were recorded in respect to the
financial result.
The financial statements of the foreign subsidiaries are translated as per IAS 21 The effects of changes in foreign
exchange rates using the modified balance sheet date method.
F-132
Assets and liabilities as well contingencies and other financial obligations are translated at the middle rate
prevailing at the balance sheet date, the items of the consolidated income statement and thus the annual net profits
reported in the income statement are translated at the annual average rate.
Translation differences are recorded, not affecting the operating result.
Middle rate
at the balance sheet date
China..........................................................................
Malaysia.....................................................................
Morocco.....................................................................
Poland ........................................................................
Russia.........................................................................
Hungary .....................................................................
U.S.A. ........................................................................
ISO
code
CNY
MYR
MAD
PLN
RUB
HUF
USD
12/31/08
9.535800
4.835700
11.160000
4.182000
42.420000
264.200000
1.397600
12/31/07
10.749400
4.879800
11.350000
3.582000
36.020000
252.000000
1.471800
Average rate
2008
10.138286
4.889784
11.308252
3.515346
36.737693
250.250250
1.465781
2007
10.440428
4.714274
11.215219
3.773674
35.049873
251.306894
1.376349
6 Recognition and measurement principles
The financial statements of the companies included in the consolidated financial statements were compiled
based on uniform recognition and measurement standards in accordance with IAS 27 Consolidated financial statements
and Separate financial statements.
6.1
Opting to apply standards
In November 2006 the IASB published IFRS 8 Operating Segments. This standard was endorsed by the
European Union on November 17, 2007. IFRS 8 shall be applied to financial years that start on or after January 1, 2009
and replaces IAS 14. IFRS 8 requires entities to report financial and descriptive information about its reportable
segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria:
Operating segments are components of an entity for which discrete financial information is available, whose operating
results are reviewed regularly by the entity’s chief operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance. In general, entities are required to report financial information based
on internal reports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resources
to the operating segments. NORDENIA voluntarily adopted IFRS 8 for the first time in its 2007 consolidated financial
statements.
The NORDENIA Group also opted to apply IAS 33 Earnings per Share in its 2007 consolidated financial
statements.
6.2
First-time adoption of standards
During the reporting period, NORDENA for the first time adopted the amendments relating to IFRS 7 Financial
Instruments: Disclosures and IAS 39 Financial Instruments: Recognition and Measurement: Reclassification of
Financial Assets issued by the IASB.
The first-time adoption of these amendments did not have any significant impact on the representation of the net
worth, financial and earnings position or the cash flows of NORDENIA.
6.3
Published but not yet adopted standards, interpretations and modifications
In March 2007, IASB published an amendment to IAS 23 Borrowing costs. In December 2008 the European
Union endorsed IAS 23. The main change of the standard is the removal of the option of immediately recognizing
borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as an
expense. Currently, NORDENIA exercises this right and thus recognizes these costs as an expense. In the future, entities
are therefore required to capitalize such borrowing costs as part of the cost of such qualifying assets. The entities are not
required to capitalize borrowing costs of assets that were measured at fair value and for inventories that are usually
produced in large quantities, even if the period until the assets are ready for sale is material. The standard should be
adopted for the first time when recognizing borrowing costs of qualifying assets whose first-time capitalization is on or
F-133
after January 1, 2009. The adoption of the revised standard is not expected to have a major impact on NORDENIA’s net
worth, financial and earnings position, and cash flows.
In June 2007 the IFRIC published Interpretation IFRIC 13 Customer Loyalty Programmes. In December 2008
the European Union endorsed IFRIC 13. The interpretation deals with the recognition and measurement of customer
loyalty programs under which the customer receives awards (award credits) as incentives to acquire goods or services
free of charge or at a lower price from the seller or a third party. According to the new interpretation the consideration
received or receivable should be divided into two components. One portion is allocated to the current transaction for
which awards are granted. The other portion is allocated to the future transaction resulting from the award credits. The
portion of the revenues that is allocated to the purchased service or delivery shall be recorded in profit and loss. The
portion of the revenues that is allocated to the award credit should be recorded as an advance payment until the customer
receives the loyalty award and the entity fulfills its obligation from the granted award. The interpretation applies to all
financial years that begin on or after July 1, 2008. The adoption of IFRIC 13 is not expected to have a major impact on
the presentation of the Group’s net worth, financial and earnings position or the cash flows of NORDENIA.
In September 2007, IASB published a revised IAS 1 Presentation of Financial Statements: A Revised
Presentation. The European Union endorsed the revised IAS 1 in December 2008. IAS 1 (revised) uses the terms
“statement of financial position” (formerly “balance sheet”) and “statement of cash flows” (formerly “cash flow
statement”) and introduces a calculation chart named “statement of comprehensive income”. However, it is not yet
mandatory to use the new terms. The change in IAS 1 prescribes that entities have to present comparative information of
the previous reporting period. Furthermore, the revised standard prescribes that another statement of financial position be
presented at the beginning of the first comparative period, if the entity changed the accounting and measurement methods
retrospectively or made retrospective restatements.
Other than that, all changes in equity based on transactions with shareholders shall be presented separately from
those changes in equity that do not result from transactions with shareholders. Income and expenses are presented
separately from transactions with owners either in one component of the financial statements (statement of
comprehensive income) or in two components of the financial statements (a separate income statement and a statement of
comprehensive income). The items of other comprehensive income shall be presented the in statement of comprehensive
income. The total amount shall be presented in total comprehensive income.
The revised IAS 1 also prescribes that the respective amount of income taxes per item of other comprehensive
income be indicated and reclassified amounts in other comprehensive income be presented. Reclassified amounts result
from reclassification of other comprehensive income in profit or loss. Furthermore, amounts recorded as distributed
profits and the respective per-share amounts shall either be presented in the statement of changes in shareholders’ equity
or in the notes. The revised IAS 1 shall be applied to financial years beginning on or after January 1, 2009 and will not
have any signifcant impact on the net asset, financial and earnings position or the cash flows of NORDENIA due to the
fact that it only results in a change in presentation.
In January 2008 IASB published the revised standards IFRS 3 Business Combinations and IAS 27 Consolidated
and Separate Financial Statements. The revised versions of IFRS 3 and IAS 27 have not yet been endorsed by the
European Union. The main changes in IFRS 3 deal with the treatment of minority interest. The revised IFRS 3 contains
the option to record minority interest at their fair value or the prorated net identifiable assets; the option may be exercised
for each business combination separately. In the event of successive business acquisitions existing interests in the
acquired entity are reevaluated through profit or loss at the date at which control is obtained. Then, the goodwill is
determined as the difference between the revalued carrying amount of the interest plus purchase price payments on the
acquisition of the new interests less acquired net assets.
Incidental acquisition costs are recorded as expenditure. The goodwill shall no longer be adjusted in the event of
possible adjustments of the acquisition costs depending on future events (contingent consideration) that shall be recorded
in liabilities at the acquisition date. According to the revised version of IFRS 3, effects from the processing of business
relationships that had already existed before the business combination shall not be accounted for when determining the
consideration for the business combination.
The main changes of IAS 27 deal with the presentation of changes in the percentage share without losing control
that shall now be recorded as equity transactions. In the event the parent company does no longer control a subsidiary,
the respective consolidated assets and debt shall be derecognized. In addition, any remaining investment in the former
subsidiary shall be initially recognized at fair value; any differences resulting from such recognition shall be recorded in
profit or loss. Losses attributed to the minority interest that exceed the minority interest in the subsidiary’s equity shall be
attributed to the minority interest regardless of the fact that the percentage share in the equity is exceeded.
The revised IFRS 3 shall be applied prospectively to business combinations whose acquisition date is during the
annual reporting period that begins on or after July 1, 2009. The standard may only be applied earlier to financial years
F-134
that begin after June 30, 2007. The revised IAS 27 shall be applied to financial years that begin after July 1, 2009; the
standard may be also applied to financial years beginning before that date. However, an earlier application of one of the
two standards requires that the other standard be applied earlier as well. NORDENIA currently investigates how the
presentation of the net assets, financial and earnings position and the cash flows is affected.
In January 2008, IASB published the revised version of IFRS 2 Share-based Payment—Vesting Conditions and
Cancellations. The European Union endorsed the revised IFRS 2 in December 2008. It clearly states that vesting
conditions are standard market service or performance conditions only. An (early) annulment of the plan shall be treated
the same way whether the annulment was initiated by the enterprise itself or the employee. The changes in IFRS 2 are
effective for all financial years that begin on or after January 1, 2009. The changes will not have any significant impact
on the representation of the net worth, financial and earnings position or the cash flows of NORDENIA.
In February 2008 the IASB published a revised IAS 32 Financial Instruments: Presentation and IAS 1
Presentation of Financial Statements. The European Union endorsed these revised standards in January 2009. The
changes deal with the classification of cancellable financial instruments and obligations that are only incurred in the
event of liquidation. Hence, some financial instruments that currently meet the criteria of a financial obligation will be
classified as equity. IAS 32 contains detailed criteria for the identification of such instruments. The changes are effective
for all financial years that begin on or after January 1, 2009. The adoption of the revised standards is not expected to have
a major impact on the presentation of NORDENIA’s net worth, financial and earnings position or the cash flows of the
Group.
In the course of the first “Annual Improvement Process” project, the IASB published a collective standard in
May 2008, revising numerous IFRS. It contains a number of minor changes regarding accounting methods and terms as
well as changes in the wording of existing standards that were not considered urgent. The European Union endorsed the
standard in January 2009. Unless the standard prescribes otherwise, the changes shall be applied to financial years
beginning on or after January 1, 2009. The adoption of the standard is not expected to have a major impact on the
presentation of NORDENIA’s net worth, financial and earnings position or the cash flows of the Group.
In May 2008, the IASB published a revised IFRS 1 First-time Adoption of International Financial Reporting
Standards and a revised IAS 27 Consolidated and Separate Financial Statements. The European Union endorsed the
revised standards in January 2009. The changes in IFRS 1 set forth a number of simplifications that entities that adopt the
standards for the first time may apply when measuring the cost of investments in subsidiaries, joint ventures and
associated companies in the separate financial statements in accordance with the IFRS. The changes in IAS 27 deal with
reorganizations within a group and prescribe that the cost of a new parent may equal the carrying amount of the shares of
the former parent. The new standards are effective for all financial years that begin on or after January 1, 2009. The
adoption of the revised standard is not expected to have a major impact on the presentation of NORDENIA’s net worth,
financial and earnings position or the cash flows of the Group.
In July 2008, the IFRIC published interpretation IFRIC 15 Agreements for the Construction of Real Estate.
However, IFRIC 15 has not yet been endorsed by the European Union. IFRIC 15 deals with the recognition of revenues
and the corresponding expenses at entities that construct real estate and sell the real estate before the completion.
IFRIC 15 shall be adopted to all financial years that begin on or after January 01, 2009. The adoption of IFRIC 15 is not
expected to have a major impact on the presentation of NORDENIA’s net worth, financial and earnings position or the
cash flows of the Group.
In July 2008, the IFRIC published interpretation IFRIC 16 Hedges of a Net Investment in a Foreign Operation.
However, IFRIC 16 has not yet been endorsed by the European Union. IFRIC 16 describes the recognition of hedges of
net investments in a foreign operation. The interpretation clearly states which foreign currency risk qualify as a hedged
risk and where within a group the hedging instrument can be held to qualify for hedge accounting. IFRIC 16 is effective
for all financial years that commence on or after October 1, 2008. The adoption of IFRIC 16 is not expected to have a
major impact on the presentation of NORDENIA’s net worth, financial and earnings position or the cash flows of the
Group.
In July 2008, the IASB published a revised IAS 39 Financial Instruments: Recognition and Measurement. The
changes in IAS 39 have not yet been endorsed by the European Union. By revising the definition of “eligible hedged
items” the standard clarifies that cash flow or fair value changes of a basic transaction above or below a certain price or
another variable may be designated as hedges. The changes in IAS 39 are effective for all financial years that commence
on or after July 1, 2009. The standards shall be applied retrospectively. The adoption of the revised standard is not
expected to have a major impact on the presentation of NORDENIA’s net worth, financial and earnings position or the
cash flows of the Group.
In November 2008, the IASB published a revised IFRS 1 First-time Adoption of International Financial
Reporting Standards. The changes in IFRS 1 have not yet been endorsed by the European Union. The revised standard is
F-135
effective for all financial years commencing on or after July 1, 2009. The changes are only of editorial nature and thus do
basically not affect the presentation of the net asset, financial and earnings position of the Group.
In November 2008, the IFRIC published the interpretation IFRIC 17 Distribution of Non-Cash Assets to
Owners. However, IFRIC 17 has not yet been endorsed by the European Union. The interpretation deals with the
recognition and measurement of liabilities from distributions in kind (e.g. property, plant and equipment) and clearly
states how any difference between the carrying amount of the distributed assets and the carrying amount of the dividend
shall be recognized. IFRIC 17 is effective for all financial years that commence on or after July 1, 2009. The adoption of
IFRIC 17 is not expected to have a major impact on the presentation of NORDENIA’s net worth, financial and earnings
position or the cash flows of the Group.
In January 2009, the IFRIC published the interpretation IFRIC 18 Transfer of Assets from Customers which
provides additional explanatory comments on the recognition of the transfer of an asset from a customer. However,
IFRIC 18 has not yet been endorsed by the European Union. The interpretation presents the requirements of the IFRS
regarding agreements under which an enterprise receives items of property, plant and equipment from a customer (or
cash equivalents that are used to acquire or produce the respective item) that the enterprise either has to use to connect
the customer with a distribution network and/or to grant permanent access to goods or services. IFRIC 18 is effective
prospectively for all transactions that occur on or after July 1, 2009. When certain criteria are met, the standard may also
be applied earlier. The adoption of IAS 18 is not expected to have a major impact on the presentation of NORDENIA’s
net worth, financial and earnings position or the cash flows of the Group.
NORDENIA will not apply the above standards, interpretations and modifications until they become mandatory.
6.4
Revenues
The revenues include revenues from the sale of products and services less trade discounts and rebates, as well as
incidental revenues from the sale of energy and waste materials, the redebiting of setup costs, engravings and clichees, as
well as commission income.
Revenues from the sale of products are generated upon transfer of ownership and risks to the customer, if the
consideration is stipulated or can be determined, and it is probable that the corresponding receivable will be settled.
6.5
Cost of sales
The cost of sales comprise cost of sold products and services, as well as costs of funds of sold merchandise. In
addition to direct cost of material and labor, they also include indirect overhead costs, including depreciation on
The cost of sales also include additions to warranty provisions and provisions for losses from orders. Warranty
provisions are recognized based on experience in respect to similar products; they are determined as a percentage of the
sold products. Provisions for losses from orders are recognized in full in the reporting period in which the estimated total
costs resulting from the respective agreement exceed the expected revenues.
6.6
Expenses for research and development
Research costs and non-recognizable development costs are directly recorded in profit or loss when they occur.
6.7
Financial result
The financial result comprises interest expenses from liabilities that is determined using the effective interest
method, dividends, exchange gains and losses from financial transactions, interest income from receivables, and gains
and losses from financial instruments that are directly recorded in profit or loss. In addition, the interest expenses from
pension provisions and the measurement costs from embedded derivatives in the interest expense are reported.
recorded in profit, if a resolution regarding the distribution was passed. The prorated interest income from finance leases
is determined using the effective interest method. Furthermore, the expected income from plan assets as well as the
measurement gains from embedded derivatives in the interest income is reported as of the reporting period.
6.8
Intangible assets
Intangible assets are goodwill, customer relations, development costs, patents, software, licenses and similar
rights.
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The goodwill is the difference not attributable to the acquired built-in gains from the acquisition of 50% of the
shares in NORDENIA (Malaysia) Sdn. Bhd., Ipoh / Malaysia from the former joint venture partner.
The goodwill was measured at cost and is subject to an annual impairment test.
Intangible assets acquired for consideration and internally generated assets are recognized at cost less
depreciation and impairment losses.
Software............................................................................................................ 3-5 years
Licenses .......................................................................................................... 5 years
Clients............................................................................................................. 5 years
Concessions, industrial property rights........................................................... Agreed upon term
Development costs.......................................................................................... Corresponding to the benefits from the
project, usually 3-5 years
6.9
Property, plant and equipment is measured at cost less depreciation based on the estimated useful life, and
process and production-related overhead costs. This includes production-related depreciation, prorated production-related
administrative costs, as well as prorated social security costs.
Borrowing costs are directly recorded in expenses using the benchmark method set forth in IAS 23. The revised
provisions of IAS 23 that the European Union endorsed in December 2008 will not be applied until January 1, 2009.
Government grants for the acquisition or production of property, plant and equipment do not affect the costs but
are reported separately and reversed over the estimated useful life of the subsidized item of property, plant and
equipment.
Depreciation on property, plant and equipment are recorded using the straight-line method and reported in the
function costs. The useful life and depreciation methods are reviewed annually and adjusted to the current situation and
circumstances.
Buildings...................................................................................................................................................
Technical equipment, plant and machinery ..............................................................................................
Other technical equipment, fixtures, fittings and office equipment ..........................................................
10-50 years
2-10 years
3-10 years
Items of property, plant and equipment are written off on a prorated basis in the year in which they are acquired.
If special events or market trends indicate that an asset is impaired, an impairment test is performed to assess the
carrying amount of the asset (including capitalized development costs).
In this impairment test the carrying amount of the asset and the recoverable value, as the higher of the fair value
less costs to sell and the value in use, are compared. When determining the recoverable amount based on the value in use,
future cash flows are discounted at a risk-based interest rate. If the net carrying amount of assets exceeds the total amount
of discounted cash flows, impairment losses are recorded. When determining the future cash flows, the current and future
earnings as well as business segment-related, technological, economic and general trends are taken into account.
If an asset is no longer impaired, the impairment losses are reversed to the maximum amount of acquisition cost.
Those recognition and measurement standards apply to all groups of property, plant and equipment.
accounting of lease agreements.
F-137
6.10
additional income or appreciation. On principle, assets held as financial investments are measured using the cost method;
this also applies to subsequent recognition.
6.11
Inventories
Inventories are recognized at the lower of cost and net realizable value. The net realizable value is the estimated
selling price less the estimated costs of completion and the estimated costs necessary to make the sale. In addition to the
direct costs, the cost of production include production-related portions of necessary material and production overhead
costs as well as depreciation of items of property, plant and equipment and intangible assets attributed to the production.
Administrative costs and social security expenses are taken into account to the extent that they are attributable to the
production (production-related full cost approach). Measurement is at average costs.
6.12
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial instruments are in particular cash and cash equivalents, trade receivables
and other loans and receivables granted, financial investments held to maturity and original and derivative financial
assets held for trading. Financial obligations usually result in a repayment claim in cash or in another financial asset. This
includes in particular borrowings and other certified liabilities, trade payables, liabilities to banks, liabilities from finance
lease agreements, borrower’s note loans, and derivative financial liabilities.
Financial assets are recognized as soon as NORDENIA becomes party to an agreement regarding a financial
instrument. In case of standard market acquisitions and disposals, however, the performance date is relevant for initial
recognition and disposal in the accounts.
6.13
Financial assets
The shares in non-consolidated affiliated companies and investments that are reported in financial assets are
recorded at cost, since fair values cannot be determined and other admissible measurement methods would not result in a
reliable amount.
6.14
Receivables and other assets
Receivables and other assets shall be initially recognized at fair value and in subsequent recognition at
amortized cost. The foreseeable individual risks are accounted for by appropriate allowances. Non-interest bearing or low
interest receivables that fall due within more than one year are discounted.
6.15
Derivative financial instruments such as exchange futures, options and swaps are basically used for hedging
purposes in order to minimize currency, interest and market value risks from operations and the corresponding funding
requirements.
According to IAS 39 Financial Instruments: Recognition and Measurement all derivative financial instruments
shall be recognized at fair value at the trading date and depending on the purpose or the intention. If the criteria set forth
in IAS 39 are met, derivative financial instruments and the respective basic transaction are recognized as hedges (hedge
accounting).
If the prerequisite for hedge accounting are not satisfied, the change in the market value of the derivative
financial instrument is recorded directly in profit and loss.
For details regarding the risk management and accounting effects of derivative financial instruments see
section 36 et seq.
6.16
Taxes
Current taxes on income and earnings are calculated based on the respective national taxable income for the year
and the national tax regulations. Furthermore, adjustments are recorded for any incurred tax payments or refunds from
not yet assessed periods.
F-138
Deferred taxes are recorded on all temporary differences existing at the balance sheet between the commercial
base and the tax base, including differences from consolidation activities, using the balance sheet-oriented liability
method.
Deferred tax assets are recorded for all deductible temporary differences, not yet used tax loss carryforwards and
not yet used tax credits to the extent to which it is probable that taxable income will be available against which the
deductible temporary differences and not yet used tax loss carryforwards and tax credits may be applied.
The carrying amount of the deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable income will be available against which the deferred tax asset can be
offset at least in part. Not recognized deferred tax assets are reviewed at each balance sheet date and recognized to the
extent that it is probable that future taxable income will be available to realize the deferred tax asset.
Deferred tax assets and liabilities are measured at the tax rates applicable to the period in which an asset will be
realized or a liability will be settled. The Group uses the tax rates (and tax laws) applicable or announced at the balance
sheet date.
Taxes on income and earnings relating to the items that are directly recorded in equity are recorded in equity and
not in the consolidated profit and loss.
6.17
IAS 19 Employee benefits.
In this method not only known pensions and accrued commitments are accounted for but also estimated future
increases in salaries and pensions. The calculation is based on actuarial expert reports, taking into account biometric
accounting bases. Actuarial gains and losses are directly recorded in profit or loss.
The interest rate used to determine the present value of the obligations was assessed based on the yields of high
quality fixed-interest corporate bonds of the respective currency region.
The expenditure resulting from the measurement of the pension provisions, including the corresponding interest
portion, are attributed to the costs in the individual functions. The discounting of the pension obligations and the
estimated income from plan assets are reported in the financial result.
6.18
Other provisions
According to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, other provisions are recognized
to the extent that the company has a present obligation as a result of a past event and it is probable that an outflow of
resources embodying economic benefits will occur and that a reliable estimate can be made of the amount of the
obligation.
Provisions shall be recognized for foreseeable risks and contingent liabilities in the amount of the expenditure
expected to be required to settle the obligation and shall not be offset against reimbursements. The expenditure required
to settle the obligation also includes increases in costs to be accounted for at the balance sheet date. Provisions shall be
discounted, if the effect is material.
Provisions for warranties shall be recognized taking into account the current or estimated future damage.
Demolition obligations are recognized at the date at which they occur at the discounted value of the obligation
and at the same time the same amount is recognized as provisions on the liabilities side. Via accrued depreciation of the
asset and the discounting of the provision, the expenditure is allocated over the period of estimated use.
6.19
Financial debt and liabilities
Financial debt are initially measured at fair value and subsequently measured at amortized cost. Differences
between the historical cost and the repayment amount are accounted for using the effective interest method.
F-139
6.20
Leases
Leases are classified as finance leases if as a result of the terms of the lease basically all risks and rewards
attributed to the ownership are transferred to the lessee. All other leases are classified as operating leases. The companies
of the NORDENIA Group only enter into lease agreements as the lessee.
Assets held under finance leases are recorded at the lower of fair value of the asset or the present value of the
respective minimum lease payments as assets of the Group at the beginning of the lease. The corresponding liability due
to lessor shall be recognized in the balance sheet as an other liability—obligation from finance lease. The lease payments
are attributed on a prorated basis to the financial expenses and the decrease of the lease obligation resulting in a constant
interest rate on the remaining balance of the obligation for each reporting period. The financial expenditure is recorded
directly in profit or loss unless it can be directly attributed to a qualifying asset. In those cases, the costs are recognized in
accordance with the general group guidelines for credit costs.
Lease payments resulting from operate leases are recognized directly in profit or loss over the term of the lease
using the straight-line method. Outstanding or granted benefits that constitute an incentive for entering into an operate
lease are also allocated on a straight-line basis over the term of the lease.
6.21
Assets held for sale and disposal groups, as well as discontinued operations
Non-current assets and disposal groups are reported separately as “held for sale” in the balance sheet, if they can
be sold in their current condition and the sale is probable. When classifying the assets as “held for sale”, they are
recognized at their fair value less costs to sell in the event their fair value is lower than their carrying amount. Depending
on their classification, the liabilities on the liabilities side directly attributable to these non-current assets and disposal
groups are reported as “held for sale”. Discontinued operations are reported separately when the operation is an
independent transaction that represents a separate major line of business or geographical area of operations, is offered for
sale and the Group management has initiated an official sales process.
6.22
Discretionary decisions and estimates
When compiling consolidated financial statements in accordance with IFRS, some balance sheet items require
discretionary decisions and estimates that affect the recognition and measurement in the balance sheet and income
statement. The actual amounts may differ from those estimates. Estimates are in particular required in the following cases
•
•
•
Determination of necessity and measurement of impairment losses on intangible assets, items of property,
plant and equipment, as well as inventories,
Recognition and measurement of pension obligations,
Property, plant and equipment as well as intangible assets are measured based on estimates of the fair value at
the acquisition date, if those items were acquired in the course of a business combination. Furthermore, the useful life of
the assets has to be estimated. The fair value of assets and liabilities as well as the useful life of assets are determined
based on the management’s estimates.
When determining impairment losses on items of property, plant and equipment and intangible assets, estimates
are made as well that relate—among others—to the cause, date and amount of impairment. Impairment results from a
number of factors. On principle, changes in current competition, expectations regarding the growth in the packaging
industry, increases in capital costs, changes in the availability of financial resources, technological obsolescence,
discontinuation of services, current replacement costs, purchase prices paid in similar transactions, and other changes
affecting the circumstances that indicate that impairment occurred are accounted for. The net realizable amount and fair
values are usually determined using the discounted cash flow method which also involves appropriate assumptions of
market participants. Identifying aspects that indicate that there is an impairment, the estimation of future cash flows and
the determination of the fair values of assets (or groups of assets) require significant estimates that the management has
to make.
The value of goodwill is tested annually based on the smallest cash-generating unit, a goodwill can be attributed,
and our operating 5-year budget, and the assumption of segment-related growth rates for the following period.
The determination of the net realizable value of a cash-generating unit requires estimates by the management.
The methods for the determination of fair values less selling costs include methods based on the discounted cash flows
and methods that are based on quoted market prices. Those estimates, including the methods used, may have significant
impact on the fair value and eventually on the amortization of the goodwill.
F-140
If the carrying amount of an investment exceeds the present value of its estimated future cash flow, impairment
losses shall be recognized. The determination of the present value of estimated future cash flows and estimates of
whether an impairment is not temporary depend on evaluations by the management and are based to a large extent on
estimates of future trends of the investment by the management. When determining impairment losses stock prices and
other measurement parameters based on information of the investment, if any, are used. When determining whether an
impairment is only temporary, the management evaluates the capability and intention to hold the interest in the
investment over an appropriate period of time that is sufficient in order to realize the fair value up to the carrying amount
(or beyond). Future adverse changes in the market conditions, in particular a downswing in the industry of packing
material or weak operating results of investments may result in losses or prevent the realization of a carrying amount of
the investment which in return is not accounted for in the current carrying amount of the investment. This could result in
impairment losses that may have adverse effect on future earnings.
The management records impairment losses on doubtful accounts in order to account for expected losses that
result from the customer’s insolvency. The bases used by the management in order to assess the appropriateness of the
impairment losses on doubtful accounts are the maturity structure of the receivables and past experience in respect to the
derecognition of receivables, the customer’s credit standing, and changes in terms of payment. In the event the
customer’s financial situation worsens, the scope of the actual amount to be derecognized may exceed the expected
derecognition.
Income taxes have to be estimated for each tax jurisdiction in which the Group operates. The expected actual
income tax for each taxable unit has to be calculated and temporary differences resulting from different treatment of
certain balance sheet items in the consolidated IFRS financial statements and the tax base have to be evaluated. If
temporary differences occur, those differences basically result in the recognition of deferred tax assets and liabilities in
the consolidated financial statements. The management has to make estimates when calculating actual and deferred taxes.
Deferred tax assets are recognized to the extent that it is probable that the assets will be utilized. The utilization of
deferred tax assets depends on the possibility to generate sufficient taxable income in the respective tax category and tax
jurisdiction; legal restrictions regarding maximum loss carryforward periods have to be taken into account. When
assessing whether a future utilization of deferred tax assets is probable, various factors have to be taken into account,
e.g. earnings position in the past, operational plans, loss carryforward periods, tax plan strategies. If the actual results
deviate from those estimates or do the estimates have to be adjusted in the future, adverse effects on the net worth,
financial and earnings position may occur. In the event the impairment test of deferred tax assets results in a change in
the assessment, impairment losses shall be recognized on the recognized deferred tax assets in profit and loss.
Pension obligations relating to employee benefits are, on principle, covered by plans that are classified and
recognized as defined benefit plans. Expenses for old-age pensions are determined using actuarial methods that are based
on assumptions regarding the interest rate, life expectancy, and—to a limited extent—the expected earnings from plan
assets. The estimates of the expected earnings from plan assets do only affect the expenses for old-age pensions to a
limited extent. Other material assumptions regarding expenses for old-age pensions are in part based on actuarial
evaluations that are based on assumptions such as the interest rates used to calculate the amount of our pension
obligation. The assumptions regarding the expected earnings from plan assets are made on a standard basis of noncurrent historical yields in the past, the asset strategy, as well as estimates of non-current income from assets. In the event
other modifications of the assumptions regarding interest rates or expected earnings from plan benefits are required, such
modification may have material impact on the amount of expenses for old-age pensions in the future.
The recognition and measurement of the provisions and the amount of contingent liabilities relating to pending
legal proceedings or other pending claims from out-of-court settlements, mediation, arbitration or government
proceedings and other contingent liabilities, respectively, require major estimates by NORDENIA. Hence, the assessment
of whether it is probable that pending proceedings will be successful or a liability will be incurred and the amount of the
respective obligation are based on the assessment of the respective situation and circumstances. Provisions are
recognized for liabilities, if losses from pending transactions are expected, it is probable that a loss will be incurred, and
this loss can be estimated reliably. Due to the uncertainties related to such assessment, the actual losses may deviate from
the original estimates and thus from the amount accrued. In addition, major estimates have to be made when determining
the provisions for taxes, environmental liabilities and legal risks. Those estimates may change due to new information.
NORDENIA obtains new information primarily from services of internal experts or external experts such as actuarians or
legal consultants. Changes in the estimates of those impending losses from pending transactions may have a significant
impact on the future earnings position.
The recognition and measurement of other provisions is based on the estimated probability of possible outflows
of economic benefits and on experience and the circumstances known at the balance sheet date. The actual outflow of
economic benefits may there deviate from the other provisions.
F-141
Notes on Consolidated Income Statement
7 Revenues
The revenues are broken down by regions as follows:
Germany .................................................................................................................................................
Europe (excluding Germany)..................................................................................................................
North America ........................................................................................................................................
Others......................................................................................................................................................
2008
kEUR
250,475
317,636
100,161
68,069
736,341
2007
kEUR
233,797
275,441
101,838
68,884
679,960
The revenues and their development by business segments are summarized in the segment reporting
(section 40).
8 Cost of sales
The cost of sales comprise cost of sold products and services, as well as costs of funds of sold merchandise. In
addition to directly attributable costs such as material, labor and energy costs, they also include general overhead costs,
incl. depreciation. The cost of sales are broken down as follows:
2007
2008
kEUR
kEUR
Material expenses ............................................................................................................................... 461,663 406,440
Personnel expenses .............................................................................................................................
85,047
82,931
Depreciation and amortization............................................................................................................
24,424
25,768
Energy costs........................................................................................................................................
15,334
13,161
Maintenance expenses ........................................................................................................................
13,085
11,422
Consumables.......................................................................................................................................
8,126
3,082
Operating expenses.............................................................................................................................
17,148
19,213
893
Warranty expenses..............................................................................................................................
2,077
626,904 562,910
9
Selling costs
Freight and commissions ........................................................................................................................
Amortization/Depreciation .....................................................................................................................
Other selling costs...................................................................................................................................
10
2008
kEUR
15,531
11,661
620
10,419
38,231
2007
kEUR
15,193
10,963
312
10,348
36,816
2008
kEUR
20,137
2,846
8,884
31,867
2007
kEUR
24,889
3,370
9,344
37,603
Amortization/Depreciation .....................................................................................................................
Other administrative costs ......................................................................................................................
F-142
11 Other operating income and expenses
11.1
Income from reversal of provisions and accrued liabilities ........................................................................
Income from adjustment of pension provisions..........................................................................................
Income from retransfer of allowance..........................................................................................................
Incidental revenues .....................................................................................................................................
Income relating to a different accounting period ........................................................................................
Lease income ..............................................................................................................................................
Commission and royalties...........................................................................................................................
Income from insurance premiums ..............................................................................................................
Income from subsidies ................................................................................................................................
Rebate credit notes......................................................................................................................................
Income from other reimbursements ............................................................................................................
Adjustment to acquisition costs of Nordfolien ...........................................................................................
Other operating income ..............................................................................................................................
11.2
Expenses relating to disposal of non-current assets....................................................................................
Expenses relating to a different accounting period .....................................................................................
Additions to bad debt reserves....................................................................................................................
Other operating expenses............................................................................................................................
12
12.1
2007
2008
kEUR kEUR
1,766 2,009
573 2,772
371
247
26
1
1,081
751
84
71
152
24
629
519
247
238
530
574
249
0
696
0
973
810
7,214 8,179
2007
2008
kEUR kEUR
743 1,002
93
583
2,648
745
285
451
3,935 2,615
Financial result
Financial income
2007
2008
kEUR kEUR
Income from borrowings ............................................................................................................................ 1,234 1,973
Other interest income..................................................................................................................................
573 1,345
Other financial income................................................................................................................................
138 5,048
1,945 8,366
12.2
Financial expenses
Interest expenses.....................................................................................................................................
Amortization of financial assets..............................................................................................................
Other financial expenses.........................................................................................................................
2008
kEUR
18,526
6
1,435
19,967
2007
kEUR
18,283
47
547
18,877
13 Taxes on income and earnings
2008
kEUR
Current tax assets and liabilities ............................................................................................................. 7,585
Tax assets and liabilities relating to a different accounting period .........................................................
125
Deferred tax assets and liabilities*) ......................................................................................................... 2,175
9,885
*)
excl. deferred tax assets and liabilities relating to a different accounting period
F-143
2007
kEUR
7,335
(2,499)
3,051
7,887
In the 2008 financial year, the German total income tax rate is 30.0% (2007: 38.67%).
The income tax rates for German companies range between 19.0% and 38.0%.
The following chart shows the reconciliation of the tax expenses anticipated in the respective year and the
disclosed tax expenses. In order to determine the anticipated tax expenses the respective applicable German total tax rate
of 30.0% is multiplied by the earnings before taxes.
Earnings before income taxes on continued operations..................................................................................
Earnings before income taxes on discontinued operations .............................................................................
EBT ................................................................................................................................................................
Income tax rate (incl. trade tax) of NIAG.......................................................................................................
Anticipated income tax expenditure ...........................................................................................................
Tax difference—Foreign countries.................................................................................................................
Effects of deviating rates in Germany ............................................................................................................
Tax reductions resulting from tax-free income ..............................................................................................
Increases in taxes resulting from non-deductible expenses ............................................................................
Increases in taxes resulting from additions for trade tax purposes .................................................................
Tax assets and liabilities relating to a different accounting period.................................................................
Effect from changes in tax rates .....................................................................................................................
Impairment losses on deferred tax assets on loss carryforwards ....................................................................
Utilization of adjusted deferred tax assets on loss carryforwards...................................................................
Changes in permanent differences relating to discontinued operations..........................................................
Other differences ............................................................................................................................................
Disclosed income tax expenses.....................................................................................................................
Effective tax burden .......................................................................................................................................
2008
kEUR
20,926
0
20,926
30.00%
6,278
1,118
(5)
(530)
1,037
561
125
25
974
(61)
0
363
9,885
47.24%
2007
kEUR
33,189
(5,394)
27,795
38.67%
10,748
(593)
(28)
(517)
609
738
(2,499)
(1,486)
636
0
272
7
7,887
28.38%
No income taxes are triggered by NORDENIA International AG, Greven/Germany, distributing dividends to its
shareholders.
14 Results from discontinued operations
In the 2008 financial year, no operations were discontinued that qualify for accounting under IFRS 5.
During the previous period, NORDENIA Group disposed of the operations NORDENIA France
Chaumont S.A., Chaumont/France, and NORDENIA Holland Holding B.V., Putten/Netherlands. The losses from those
discontinued operations broke down as follows:
2007
2008
kEUR kEUR
NORDENIA France Chaumont S.A. ......................................................................................................
0
(220)
(3,693)
NORDENIA Holland Holding B.V. .......................................................................................................
0
Total from separate financial statements ................................................................................................
0
(3,913)
(1,481)
Measurement at fair value/Deconsolidation effect (profit/loss)..............................................................
0
Expenses relating to discontinued operations .........................................................................................
(5,394)
0
F-144
The income statement of the discontinued operations is as follows:
2007
2008
kEUR kEUR
Revenues ......................................................................................................................................................
0 24,438
Cost of sales and other expenses ..................................................................................................................
0 (27,159)
Operating result............................................................................................................................................
0 (2,721)
Financial result.............................................................................................................................................
0 (1,192)
EBT..............................................................................................................................................................
0 (3,913)
0
Taxes on income and earnings .....................................................................................................................
0
Annual net loss.............................................................................................................................................
0 (3,913)
In the previous financial year, the income statements of the discontinued operations comprised the reporting
months January-June 2007—Nordenia Holland Holding B.V., Putten/Netherlands—and January-September 2007—
Nordenia France Chaumont S.A., Chaumont/France—since the operations were deconsolidated as per June 30, 2007 and
September 30, 2007, respectively.
15 Earnings per share
in kEUR/Shares in 1,000 units
Consolidated annual net profits ........................................................................
Weighted average of outstanding shares...........................................................
Earnings per share in EUR................................................................................
Consolidated annual net profits ..........................................................................
Continued
operations
25,302
27,682
0.91
Continued
operations
11,041
27,682
0.40
2007
Discontinued
Group
operations
(5,394) 19,908
27,682 27,682
(0.19)
0.72
2008
Discontinued
operations
Group
0 11,041
0 27,682
0
0.40
In the 2006 financial year, NORDENIA International AG implemented a stock option plan resulting in the
issuing of stock options. This stock option plan may result in potentially diluting common stock.
Dilution effects did not have to be accounted for in the 2008 and 2007 reporting periods, since the criteria for
exercising the stock options in part depend on future events and thus were not completely fulfilled at the balance sheet
date.
16
Other notes on consolidated income statement
Cost of raw material, consumables and supplies, finished and work-in-process, as well as
purchased materials ........................................................................................................................
Expenses for purchased services.........................................................................................................
Material expenses..............................................................................................................................
Wages and salaries..............................................................................................................................
Social security.....................................................................................................................................
Expenses for old age pension and benefits costs ................................................................................
Personnel expenses............................................................................................................................
Amortization/Depreciation of intangible assets and property, plant and equipment.................
F-145
2008
kEUR
2007
kEUR
442,795
7,837
450,632
99,454
19,181
1,423
120,058
28,717
402,374
5,715
408,089
101,792
18,816
1,266
121,874
30,365
17 Minority interest in current earnings/losses
Minority interests of the company
%
NORDENIA Deutschland Lohne GmbH..........................................................................................
NORDENIA Polska Starogard GD. Sp. z o.o...................................................................................
NORDENIA Deutschland Coating GmbH .......................................................................................
OOO “Nord Coating” .......................................................................................................................
NORDENIA Morocco Casablanca S.A.R.L.....................................................................................
Polireal S.L. ......................................................................................................................................
Minority interests in current profits/losses........................................................................................
10.0
—*
13.4
13.4
89.6
16.6
*
2008: 0%/2007: 1.5%
F-146
2008 2007
kEUR kEUR
(12)
(7)
—
(3)
(23)
(9)
(25)
4
(135)
(31)
161
29
115
(166)
Explanatory comments on the consolidated balance sheet
18
Intangible assets
The intangible assets of NORDENIA Group developed as follows in the 2008 financial year and the previous
period:
Balance on Jan. 1, 2007 ....................
companies .......................................
Additions ............................................
Disposals.............................................
Balance on Dec. 31, 2007/Jan. 1,
2008 ................................................
Additions ............................................
Disposals.............................................
Balance on Dec. 31, 2008 ..................
Accumulated amortization
Balance on Jan. 1, 2007 ....................
companies .......................................
Additions ............................................
Disposals.............................................
Balance on Dec. 31, 2007/Jan. 1,
2008 ................................................
Additions ............................................
Disposals.............................................
Balance on Dec. 31, 2008 ..................
Net carrying amount as at Dec. 31,
2008 ................................................
Net carrying amount as at Jan. 1,
2008 ................................................
Goodwill Software
kEUR
kEUR
282
19,793
19
(141)
Concessions,
industrial
Development
Down
property
costs
payments
rights
kEUR
kEUR
kEUR
1,031
0
0
(37)
0
0
Total
kEUR
21,106
(159)
7,112
0
0
0
0
509
(946)
26
0
2
(34)
0
0
0
(235)
235
0
0
0
0
7,112
511
(1,215)
261
7,413
(43)
0
0
0
7,370
19,241
(44)
447
(204)
20
19,460
962
111
40
(63)
60
1,110
0
0
213
0
108
321
0
(19)
128
0
0
109
27,616
5
828
(339)
188
28,298
282
19
17,550
(142)
174
(15)
0
0
0
0
18,006
(138)
0
0
0
0
1,657
(922)
0
337
(30)
0
126
(126)
0
0
0
0
2,120
(1,078)
301
(43)
0
0
0
258
18,143
(36)
644
(131)
(29)
18,591
466
50
35
(61)
29
519
0
0
67
0
0
67
0
0
0
0
0
0
18,910
(29)
746
0
(264)
19,363
7,112
869
591
254
109
8,935
7,112
1,098
496
0
0
8,706
The goodwill exclusively related to the difference not attributable to the acquired built-in gains from the
acquisition of 50% of the shares in NORDENIA (Malaysia) Sdn. Bhd., Ipoh/Malaysia, from the former joint venture
partner. The goodwill is not depreciated on schedule and is subject to an annual impairment test.
Amortization on intangible assets is included in the item cost of sales in the consolidated income statement. For
details regarding total depreciation see section 16.
F-147
19 Property, plant and equipment
The property, plant and equipment of NORDENIA Group developed as follows in the 2008 financial year and
Balance on Jan. 1, 2007
consolidated
companies ...................
Additions ........................
Disposals.........................
Balance on Dec. 31,
2007/Jan. 1, 2008 .......
consolidated
companies ...................
Additions ........................
Disposals.........................
Balance on Dec. 31,
2008 ............................
Accumulated
depreciation
Balance on Jan. 1, 2007
consolidated
companies ...................
Additions ........................
Disposals.........................
Balance on Dec. 31,
2007/Jan. 1, 2008 .......
consolidated
companies ...................
Additions ........................
Disposals.........................
Balance on Dec. 31,
2008 ............................
at Dec. 31, 2008..........
at Jan. 1, 2008............
Land,
leasehold
rights and
buildings
kEUR
6,515
(35)
Buildings
kEUR
104,851
(2,331)
Technical
equipment,
plant and
machinery
kEUR
331,327
(6,435)
Other equipment,
fixtures + fittings Downpayments
and work in
and office
equipment
process
kEUR
kEUR
53,488
9,623
(406)
84
615
33
(4)
131
1,047
3,776
(440)
1,166
9,388
17,824
(4,404)
4,633
947
5,969
(3,115)
2,502
0
10,328
0
(8,562)
11,997
37,930
(7,963)
(130)
7,255
(97)
108,069
(97)
352,333
(2,217)
59,385
(827)
11,473
(781)
538,515
(4,019)
0
237
0
0
0
4,467
(77)
2,324
0
24,303
(10,414)
3,455
0
5,444
(1,889)
1,942
0
8,570
(42)
(7,909)
0
43,021
(12,422)
(188)
7,395
114,686
367,460
64,055
11,311
564,907
32
(3)
26,912
(717)
237,596
(5,222)
38,449
(563)
46
3
303,035
(6,502)
31
6
0
0
190
2,633
(68)
(3)
6,328
20,756
(4,203)
2
610
4,850
(2,482)
1
0
0
0
0
7,159
28,245
(6,753)
0
66
1
28,947
171
255,257
(110)
40,865
(306)
49
(7)
325,184
(251)
0
6
0
0
0
2,731
(64)
15
0
20,139
(9,708)
(280)
0
5,094
(1,579)
265
0
0
(42)
0
0
27,970
(11,393)
0
73
31,800
265,298
44,339
0
341,510
7,322
82,886
102,162
19,716
11,311
223,397
7,189
79,122
97,076
18,520
11,424
213,331
Total
kEUR
505,804
(9,123)
Impairment losses in the amount of 3 kEUR (2007: 32 kEUR) were recorded on property, plant and equipment;
appreciations were not recorded in the reporting period and in the previous financial years. The impairment losses are
based on changes in estimates of the future earnings situation of individual reporting units. Interest on borrowings was
not recognized.
Property, plant and equipment in the amount of 9,489 kEUR (2007: 8,661 kEUR) were assigned as collateral.
The
F-148
carrying amount of property, plant and equipment which are not at the company’s free disposal (assets
recognized as a result of a finance lease) amount to 11,909 kEUR (2007: 11,888 kEUR). Leased assets at a carrying
amount of 4,586 kEUR serve as collateral for the liabilities over the term of the agreement.
20
The assets held as financial investments developed as follows in the 2008 financial year and the previous period:
Balance on Jan. 1, 2007 .......................................................................................................................................
Changes in currencies ............................................................................................................................................
Additions ...............................................................................................................................................................
Disposals................................................................................................................................................................
Reclassifications ....................................................................................................................................................
Balance on Dec. 31, 2007/Jan. 1, 2008 ................................................................................................................
Additions ...............................................................................................................................................................
Disposals................................................................................................................................................................
Reclassifications ....................................................................................................................................................
Balance on Dec. 31, 2008 .....................................................................................................................................
Balance on Jan. 1, 2007 .......................................................................................................................................
Additions ...............................................................................................................................................................
Disposals................................................................................................................................................................
Balance on Dec. 31, 2007/Jan. 1, 2008 ................................................................................................................
Additions ...............................................................................................................................................................
Disposals................................................................................................................................................................
Balance on Dec. 31, 2008 .....................................................................................................................................
Net carrying amount as at Dec. 31, 2008............................................................................................................
Net carrying amount as at Jan. 1, 2008..............................................................................................................
kEUR
2,929
(1)
0
(2,580)
(131)
217
(10)
0
(76)
0
131
1,439
0
16
(1,455)
0
0
0
0
0
131
217
This item comprises real property in Hungary acquired for future business expansion purposes.
At the time of first-time adoption of the IFRS the land was subject to reevaluation at fair value. The fair value as
at the balance sheet date remained the same.
During the reporting period, one piece of land in the amount of 76 kEUR was sold.
Lease income ..........................................................................................................................................
Operating expenses relating to the generation of lease income ..............................................................
Operating expenses not relating to the generation of lease income ........................................................
Let investment
property
2008
2007
kEUR kEUR
0
127
0
42
0
0
All expenses and income relating to the financial investments are accounted for in the financial result as other
financial income or other financial expenses, respectively.
There are no restrictions regarding the sale of the assets or the transfer of proceeds and gains from sales or
contractual obligations requiring specific use of the assets. Neither are there any contractual obligations regarding the
repair, maintenance or improvement of those assets.
F-149
21 Other financial assets
21.1
The shares and investments developed as follows in the 2008 financial year and the prior year:
Shares Investments Total
kEUR
kEUR
kEUR
Balance on Jan. 1, 2007 ...............................................................................................
4,294
1,649 5,943
Changes in currencies ....................................................................................................
0
0
0
Changes in the group of consolidated companies ..........................................................
0
0
0
Additions .......................................................................................................................
164
0
164
0
0
Disposals........................................................................................................................
0
Balance on Dec. 31, 2007/Jan. 1, 2008 ........................................................................
4,458
1,649 6,107
0
0
0
463
0
463
Additions .......................................................................................................................
0
0
0
(115) (306)
Disposals........................................................................................................................
(191)
Balance on Dec. 31, 2008 .............................................................................................
1,534 6,264
4,730
Balance on Jan. 1, 2007 ...............................................................................................
4,267
1,301 5,568
0
0
0
0
0
0
Additions .......................................................................................................................
0
0
0
0
0
Disposals........................................................................................................................
0
Balance on Dec. 31, 2007/Jan. 1, 2008 ........................................................................
4,267
1,301 5,568
0
0
0
463
0
463
Additions .......................................................................................................................
0
0
0
0
0
Disposals........................................................................................................................
0
Balance on Dec. 31, 2008 .............................................................................................
1,301 6,031
4,730
Net carrying amount as at Dec. 31, 2008....................................................................
0
233
233
Net carrying amount as at Jan. 1, 2008......................................................................
191
348
539
21.2
Other financial assets developed as follows in the 2008 financial year and the previous year:
Other
Other
Industrial
investments borrowings
revenue bonds
kEUR
kEUR
kEUR
Balance on Jan. 1, 2007 .......................................................
12,895
165
10,514
Changes in currencies ............................................................
(1,345)
(17)
0
Additions ...............................................................................
0
0
148
(88)
(6,182)
Disposals................................................................................
0
Balance on Dec. 31, 2007/Jan. 1, 2008 ................................
11,550
60
4,480
614
3
(1)
Additions ...............................................................................
0
0
1,586
(63)
(8)
Disposals................................................................................
0
Balance on Dec. 31, 2008 .....................................................
0
6,057
12,164
Balance on Jan. 1, 2007 .......................................................
0
0
0
0
0
0
Additions ...............................................................................
0
0
0
0
0
Disposals................................................................................
0
Balance on Dec. 31, 2007/Jan. 1, 2008 ................................
0
0
0
0
0
34
Additions ...............................................................................
0
0
180
0
0
Disposals................................................................................
0
Balance on Dec. 31, 2008 .....................................................
0
214
0
Net carrying amount as at Dec. 31, 2008............................
12,164
0
5,843
Net carrying amount as at Jan. 1, 2008..............................
11,550
60
4,480
F-150
Total
kEUR
23,574
(1,362)
148
(6,270)
16,090
616
1,586
(71)
18,221
0
0
0
0
0
34
180
0
214
18,007
16,090
For details regarding the industrial revenue bonds, please see section 30.
22
Deferred tax assets
Deferred taxes are determined based on the tax rates applicable in the respective countries. Changes in tax laws
passed at the balance sheet date have already been accounted for. As in the previous period, the applied income tax rate
of the individual countries range between 19.0% and 38.0%.
Deferred tax assets were offset against deferred tax liabilities if they relate to taxes on income and earnings that
are imposed by the same fiscal authority and if the company is entitled to offset any actual claim for tax refund with the
actual tax liability.
12/31/2008
Asset
Liability
kEUR
kEUR
794
(34)
1,305
(20,298)
52
(149)
1,995
(999)
1,243
0
4,515
(1,677)
4,561
0
0
(834)
13,631
(23,157)
5,907
(5,907)
(17,250)
7,724
Intangible assets.........................................................................................
Property, plant and equipment ...................................................................
Financial assets ..........................................................................................
Inventories and other receivables...............................................................
Provisions for pensions..............................................................................
Provisions and other liabilities...................................................................
Tax losses carried forward and tax credits.................................................
./. Allowance..............................................................................................
./. Offsets....................................................................................................
12/31/2007
Asset
Liability
kEUR
kEUR
1,177
(6)
1,268
(18,738)
5
(45)
1,675
(929)
1,363
0
3,532
(943)
5,983
0
(1,573)
0
13,430
(20,661)
(2,889)
2,889
10,541
(17,772)
As at December 31, 2008, the NORDENIA Group had corporate tax loss carryforwards in the amount of
8,263 kEUR (2007: 14,256 kEUR), trade tax loss carryforwards in the amount of 518 kEUR (2007: 5,141 kEUR), as well
as tax refunds in the amount of 10,417 kEUR (2007: 10,370 kEUR). The corporate tax loss carryforwards primarily relate
to foreign companies (2007: German companies).
The corporate tax loss carryforwards of foreign companies in the amount of 7,882 kEUR (2007: 1,833 kEUR)
are in part limited in their deductibility.
These amounts comprise trade tax loss carryforwards in the amount of 0 kEUR (2007: 4,995 kEUR) and
corporate income tax loss carryforwards in the amount of 3,874 kEUR (2007: 5,481 kEUR) for which no deferred taxes
were recorded in the balance sheet due to the fact that at present it is not sufficiently probable that the deferred tax assets
can be realized.
Expiration
within 5 years
kEUR
12/31/2008 .....................................................................
12/31/2007 .....................................................................
0
0
Expiration
within 15 years
kEUR
6,082
787
Unlimited
use
kEUR
2,181
13,469
Total
kEUR
8,263
14,256
The trade tax losses can be carried forward without any limitation in time.
The tax refunds relate to tax credits of NORDENIA (Malaysia) Sdn. Bhd., Ipoh / Malaysia. This amount’s
The deferred taxes relating to losses carried forward include the amount of 885 kEUR (2007: 366 kEUR)
relating to companies that accrued losses in 2008. The amount was recognized, since a positive business trend of the
respective companies is expected.
F-151
Allowances on deferred tax assets in the amount of 834 kEUR (2007: 1,573 kEUR) relate to tax loss
carryforwards, since the use of the respective loss carryforwards is not probable. The loss carryforwards on which the
allowances are based may mainly be used within 15 years.
This applies to corporate tax loss carryforwards in the amount of 3,874 kEUR (2007: 5,481 kEUR) and trade
loss carryforwards in the amount of 0 kEUR (2007: 4,995 kEUR). In the reporting period, the corporate tax loss
carryforwards are primarily attributed to foreign entities.
23 Other non-current assets
The other non-current assets developed as follows in the 2008 financial year and the previous period:
12/31/2008
kEUR
0
772
58
156
986
12/31/2007
kEUR
159
774
56
104
1,093
Raw materials, consumables and supplies ..............................................................................
Work-in-process and services-in-process ...............................................................................
Finished goods and merchandise ............................................................................................
Advanced payments................................................................................................................
12/31/2008
kEUR
27,886
11,005
32,947
68
71,906
12/31/2007
kEUR
34,349
14,403
38,009
50
86,811
Inventories ..............................................................................................................................
—thereof without impairment ................................................................................................
—thereof with impairment......................................................................................................
Impairment..............................................................................................................................
12/31/2008
kEUR
80,564
66,312
14,252
(8,658)
71,906
12/31/2007
kEUR
93,120
77,770
15,350
(6,309)
86,811
Derivative financial instruments .............................................................................................
Tax credits ..............................................................................................................................
Reinsurance old-age part-time ................................................................................................
Retention of collateral.............................................................................................................
24 Inventories
The carrying amount of the inventories measured at net realizable value totals 5,594 kEUR (2007: 9,041 kEUR).
The impairment losses on the inventories increased by 2,349 kEUR (2007: decrease by 4,343 kEUR).
As in the previous period, no inventories were assigned as collateral for liabilities at the balance sheet date.
F-152
25 Trade receivables
12/31/2007
12/31/2008
kEUR
kEUR
Trade receivables ....................................................................................................................
47,747
56,224
The receivables are broken down by due date and maturity at the balance sheet as follows:
Not impaired at the balance sheet date
and overdue within the respective timeframe
thereof
neither
>
>
>
>
Carrying
impaired nor
30 days 60 days 90 days 120 days
amount
overdue at
<
<
<
<
Trade
the balance
<
>
receivable
sheet date
30 days 60 days 90 days 120 days 360 days 360 days
kEUR
kEUR
kEUR kEUR kEUR
kEUR
kEUR
kEUR
12/31/2007 .....................
47,747
36,020
4,186
617
347
347
738
237
12/31/2008 .....................
56,224
44,948
6,471
1,779
523
82
75
4
In respect to the trade receivables that are neither impaired nor overdue, there are no indications at the balance
sheet date that the debtors might not meet their payment obligations.
The maximum credit risk is reflected in the carrying amount of the respective financial instrument. The carrying
amounts mainly correspond to the fair values. In order to avoid any risk of loss commercial credit insurances were agreed
upon. As at December 31, 2008 trade receivables in the amount of 6,666 kEUR (2007: 6,713 kEUR) were insured.
672 kEUR of said amount (2007: 1,139 kEUR) relate to overdue accounts.
Development of impairment losses on trade receivables:
Balance on
1/1/2008
kEUR
1,506
Change in the
consolidated group
kEUR
0
Exchange
gains
kEUR
10
Addition
kEUR
1,367
Utilization
kEUR
284
Reversal
kEUR
265
Balance on
12/31/2008
kEUR
2,334
When determining the value of the trade receivables, each change in the credit standing between the date at
which the credit is granted and the balance sheet date is accounted for. There is no significant concentration of the credit
risk due to the fact that the range of customers is wide and there are no correlations. Thus, the management is of the
opinion that no other risk prevention measures beyond the impairment losses already recorded are necessary. The
additions and reversals of impairment losses are recorded in profit or loss.
Since 2001 trade receivables of subsidiaries are sold and assigned to Kaiserplatz Purchase No. 5 Ltd., Jersey, in
ABS transactions (asset backed securities). The agreement was modified at the end of 2006 and ends in 2011. The ABS
transaction results in an improvement of the liquidity and the balance sheet structure of the NORDENIA Group. There is
a decrease in trade receivables, on the one hand, and a corresponding decrease in bank liabilities, on the other hand. At
the end of 2008 receivables in the amount of 46,294 kEUR (2007: 53,634 kEUR) had been sold and assigned to
Kaiserplatz Purchase No. 5 Ltd., Jersey.
26
Receivables due from affiliated companies and related parties ..............................................
Other assets.............................................................................................................................
—Thereof accruals..................................................................................................................
Securities ................................................................................................................................
12/31/2008
kEUR
510
19,518
1,062
384
20,412
12/31/2007
kEUR
634
19,711
1,451
394
20,739
As in the previous period, there were no material other financial assets that were overdue at the balance sheet
date.
F-153
Balance on
1/1/2008
kEUR
1,496
Change in the
consolidated group
kEUR
Exchange
gains
kEUR
0
0
Addition
kEUR
13
Utilization
kEUR
1,333
Reversal
kEUR
0
Balance on
12/31/2008
kEUR
176
When determining the value of the other current assets, each change in the credit standing between the date at
which the credit is granted and the balance sheet date is accounted for. There is no significant focus in the attribution of
the credit risk. Thus, the management is of the opinion that no other risk prevention measures beyond the impairment
losses already recorded are necessary. The additions and reversals of impairment losses are recorded in profit or loss.
27
Cash on hand and on deposit in banking accounts..................................................................
12/31/2008
kEUR
7,634
12/31/2007
kEUR
13,275
The maximum credit risk is reflected in the carrying amount of the cash. The carrying amounts mainly
For details regarding the development of the cash see the consolidated cash flow statement (Appendix 1.6).
28
Equity
The following explanatory comments also include disclosures required as part of the Group’s management
report as per Sec. 315 para. 4 HGB [German Commercial Code]. Those disclosures were not additionally presented in the
Group’s management report.
The change in equity of the NORDENIA Group is outlined in the consolidated statement of shareholders’ equity
(Appendix 1.5).
28.1
Subscribed capital
As at December 31, 2008, the Company’s share capital totaled 28,380 kEUR and is divided into 28,380,000
bearer shares in the nominal amount of 1.00 EUR each; it is paid in full and each share grants one voting right.
Transition of issued shares:
1/1/2007 .......................................................................................................................................................
Change .........................................................................................................................................................
12/31/2007–1/1/2008...................................................................................................................................
Change .........................................................................................................................................................
12/31/2008 ...................................................................................................................................................
Issued shares
Number
27,682,046
0
27,682,046
0
27,682,046
The remaining 697,954 shares are held by NORDENIA (treasury stock).
28.2
Authorized capital
According to Sec. 4 para. 3 of the Articles of Incorporation, the directors are authorized—with the supervisory
board’s consent—to increase the share capital several times by the total amount of up to 14,190 kEUR by August 19,
2013 by issuing new bearer shares and/or preferred stock without voting rights against cash payment of payment in kind.
The shareholders are granted preemptive rights.
In the event of capital increases against contributions in kind the directors are authorized to exclude the
shareholders’ preemptive rights with the prior approval of the supervisory board.
The directors are also authorized—with the approval of the supervisory board—to exclude odd lot amounts from
being considered when granting preemptive rights or to exclude the shareholders’ statutory preemptive right to the extent
F-154
that this is necessary for the conversion of convertible bonds and/or options. This does also apply to the issuing of new
shares against cash contribution, if the issuing amount of the new shares is not significantly lower than the stock price of
the shares and the issued shares do not exceed 10% of the share capital.
As at December 31, 2008 the balance of authorized capital totals 14,190 kEUR (2007: 14,190 kEUR).
28.3
Contingent capital
The share capital is increased conditionally up to 2,838 kEUR, divided into up to 2,838,000 new individual
bearer shares. The contingent capital increase exclusively serves the purpose of satisfying preemptive rights resulting
from stock option plans that are based on a resolution by the general assembly dated June 29, 2006. The stock option plan
covers a period of 5 years that commenced upon registration of the contingent capital in the Commercial Register on
August 16, 2006.
No preemptive rights were exercised under the stock option program in the reporting period. Hence, the
contingent capital did not change.
28.4
Reserves
Capital reserve ........................................................................................................................
Provision for revaluation of financial instruments..................................................................
Provision for first-time adoption of the IFRS .........................................................................
Statutory reserve (retained earnings restricted by law)...........................................................
Other unappropriated retained earnings..................................................................................
28.5
12/31/2008
kEUR
20,363
(130)
(2,751)
843
33,275
51,600
12/31/2007
kEUR
18,114
0
(2,748)
843
14,238
30,447
Capital reserve
The capital reserve contains—among others—surcharges resulting from the issuing of the stocks. In addition,
stock options issued to the directors and executives were recorded in this item in the amount of 6,794 kEUR (2007: 5,239
kEUR).
28.6
Provision for revaluation of financial instruments
This item comprises profits and losses from the revaluation of financial assets available for sale. When revalued
financial instruments are sold the portion of the revaluation provision that is attributed to them is realized and recorded in
profit or loss. In the reporting period the amount of 130 kEUR was transferred to the provision.
The provision also accounts for deferred taxes that are also recorded in this item without affecting the operating
result. In the reporting period, deferred taxes in the amount of 55 kEUR were recorded in this provision.
28.7
Provision for first-time adoption of the IFRS
The provision for first-time adoption of IFRS includes the amount of −2,751 kEUR (2007: −2,748 kEUR) from
revaluation of property, plant and equipment as per IFRS 1. No impairment losses had to be recorded on the property,
plant and equipment subject to revaluation. The deviation from the previous year results from changes in the group of
consolidated companies.
28.8
Other unappropriated retained earnings
The other unappropriated retained earnings comprise profit carryforwards and the other accumulated
consolidated profits/losses.
28.9
The consolidated profits comprise the profit carryforward and the consolidated annual net profits for the
reporting period that is attributed to the parent’s shareholders.
F-155
28.10
This item comprises the differences resulting from the translation of foreign currency financial statements of the
foreign subsidiaries, not affecting the operating result. This item changed over the previous year mainly due to the
inflation of the U.S. dollar, the Polish zloty and the Russian Ruble.
28.11
Treasury stock
The adjustment item for treasury stock represents the value of the shares in NORDENIA International AG
acquired on the market.
By resolution of the general assembly (last one on August 20, 2008) the directors were authorized to acquire the
Company’s treasury stock in the amount of 10% of the share capital with the supervisory board’s approval. The directors
may pursue the acquisition either via a public offer addressed to all shareholders of by acquiring the shares without prior
bidding. In such case the price per acquired share of 1.00 EUR shall not be lower than 5.00 EUR and not exceed
20.00 EUR.
As at December 31, 2008, the Company still held its 697,954 units of treasury stock. This equals a share in the
share capital of 697,954.00 EUR (approx. 2.42%). All treasury stock is held by NORDENIA International AG.
The treasury stock developed as follows:
2000 .......................................................................................................................
2001 .......................................................................................................................
2002 .......................................................................................................................
2003 .......................................................................................................................
2004 .......................................................................................................................
2005 .......................................................................................................................
2006 .......................................................................................................................
2007 .......................................................................................................................
2008 .......................................................................................................................
28.12
Sales
Acquisitions
Number
Number
277,077
0
274,614
79,225
100,097
1,500
593,889
0
131,630
0
950,000 800,100
0 748,528
0
0
0
0
Balance
Number
277,077
472,466
571,063
1,164,952
1,296,582
1,446,482
697,954
697,954
697,954
Minority interest
The minority interests decreased by 267 kEUR over the previous year. The decrease results from the acquisition
of additional shares in NORDENIA IT Services GmbH, Barleben.
F-156
29 Liabilities
Residual maturities
Subordinated loans.......................
—Due to banks ........................
—Others...................................
Liabilities to banks.......................
Notes payables .............................
Trade payables .............................
Current income tax liabilities.......
Other liabilities
Downpayments received..............
companies ................................
—Due to affiliated companies:
—Due to companies in which
an equity interest is held ......
Liabilities resulting from accrued
government grants ...................
Other liabilities ............................
—thereof for taxes ...................
—thereof resulting from
wages, salaries and social
security.................................
—thereof other liabilities .........
—thereof accruals....................
one year
2008
2007
kEUR
kEUR
30,000
0
30,000
0
0
0
73,009
60,057
5,914
4,793
56,243
41,113
2,564
1,947
1 to 5 years
2008
2007
kEUR
kEUR
50,690 116,124
49,940
79,940
750
36,184
15,523
28,574
0
0
0
0
0
0
more than
5 years
2008
2007
kEUR kEUR
0
0
0
0
0
0
5,156
5,948
0
0
0
0
0
0
Total
2008
kEUR
80,690
79,940
750
93,688
5,914
56,243
2,564
2007
kEUR
116,124
79,940
36,184
94,579
4,793
41,113
1,947
56
133
0
0
0
0
56
133
0
0
65
29
0
0
0
0
0
0
0
0
0
0
65
29
0
36
0
0
0
0
0
36
0
33,607
1,494
0
32,908
2,744
474
16,802
0
634
14,824
0
159
5,396
0
231
6,370
0
633
55,805
1,494
865
54,102
2,744
637
15,810
15,666
201,393
623
16,422
13,119
141,016
0
0
0
83,489
0
14,824
0
160,156
0
0
0
10,711
0
6,370
0
12,549
637
15,810
15,666
295,593
623
37,616
13,119
313,721
29.1
Subordinated loans
On August 2, 2008 the subordinated loan agreements with Landessparkasse zu Oldenburg and Sparkasse
Bremen each granting the amount of 25,000 kEUR were extended early until February 2, 2012. As of February 2, 2009
the interest rate is 2.9% based on the 6-month Euribor applicable two days prior to the expiration of the respective
previous interest period. Until the expiration of the original loan term on February 1, 2009 the interest rate continues to
be 7.05% (nominal) on the loans.
The subordinate loan of WestLB AG in the amount of 30,000 kEUR has a term that expires June 26, 2009 and
bears interest in the nominal amount of 8.57%. Since the annual net profit in the consolidated financial statements of
NIAG for the 2008 financial year is less than 12,000 kEUR, the loan elapses and will not be extended by another year.
On April 30, 2008, the other subordinate loans of OCM/Nordenia POF Luxembourg S.C.A., Luxembourg, and
OCM/Nordenia Opps Luxembourg, S.C.A, Luxembourg were repaid at once. Both items bear nominal interest of 9.75%.
29.2
These liabilities mainly relate to investment subsidies that are not subject to any conditions.
29.3
Accrued income
Deferred taxes are included in deferrals and accruals for interest, vacation, rebates, bonuses as well as invoices
in transit.
30 Liabilities from finance lease
The other liabilities include in particular liabilities from finance lease agreements. If the Group bears the
material risks and rewards from the lease, the leased assets are recognized at the acquisition date and measured either at
F-157
the fair value or the lower present value of the future minimum lease payments. The leased assets recognized with regard
to the finance lease agreements primarily relate to other equipment, furnitures and fittings, and office equipment, as well
as technical plant and machinery, and buildings. The agreements cover periods of 3-12 years.
The agreements contain expansion or purchase options. All leases are based on fixed installments. No
secured by way of retention of title by the lessor in the leased assets. The present value of the Group’s lease obligations
basically corresponds to their carrying amount.
Minimum lease payments
12/31/2008
12/31/2007
kEUR
kEUR
Liabilities from finance leases:
—thereof due within one year ...............................................
—thereof due within one to five years...................................
—thereof due within more than five years.............................
less future financing costs......................................................
Present value of the lease obligation......................................
2,882
19,722
8,379
30,983
7,129
23,854
2,534
17,931
9,419
29,884
7,256
22,628
Present value of minimum
lease payments
12/31/2008
12/31/2007
kEUR
kEUR
1,822
16,766
5,266
23,854
N/A
1,520
14,813
6,295
22,628
N/A
The net values of the asset recognized as assets from finance leases total 11,909 kEUR at the balance sheet date
(2007: 11,188 kEUR).
In December 2000, NORDENIA U.S.A. Inc., Jackson, entered into a sale & lease back agreement with Cape
Girardeau, Missouri. Under this agreement, the company sold buildings and office and plant equipment worth approx.
17 million USD in 2001 and 2000 and has leased those assets from the municipality since that date. According to the
agreement, the company is thus granted a property tax benefit. The municipality paid to the company a 9.5% industrial
revenue bonds as a consideration. The industrial revenue bonds have a term that expires on December 1, 2012. The lease
is classified as a finance lease. The respective liability in the amount of 17 million USD (12,164 kEUR on December 31,
2008 and 11,550 kEUR on December 31, 2007) is included in Other liabilities. The liability is to be repaid in one amount
by offsetting against the industrial revenue bonds. The leased assets may be acquired at the end of the term in accordance
with the agreement at 10 USD.
31 Provisions for pensions and similar obligations
Provisions for pensions...........................................................................................................
12/31/2008
kEUR
12,367
12/31/2007
kEUR
12,562
Provisions for pensions are recorded for obligations from commitments and current benefits to entitled active
and former employee of the NORDENIA Group and their survivors as per IAS 19 Employee Benefits.
systems that are usually based on the years of service and the employees’ remuneration.
obligations” (DBO), respectively) were determined using actuarial methods, with estimates being necessary.
In addition to the assumed mortality and disability, the following premises play a role that depends on the
economic situation of the respective country:
Malaysia
Germany
2008 2007 2008 2007
%
%
%
%
Interest rate ............................................................................................................................. 5.75 5.45 6.25 6.25
Anticipated return on assets.................................................................................................... 4.10 4.10 N/A N/A
Dynamic benefits .................................................................................................................... 2.50 2.50 5.00 5.00
Dynamic pension .................................................................................................................... 1.75 1.75 N/A N/A
Dynamic benefits take into account anticipated future increases in salaries that—among others—are estimated
based on the inflation and the economic situation on an annual basis. The actuarial present value of the pension
F-158
obligation using the projected unit credit method is decreased in case of an externally financed pension plan by the fair
value of the valued assets of the external pension plan.
If the assets exceed the obligations from the pension commitments, usually an asset is recognized in accordance
with IAS 19 Employee Benefits. IAS 19.58 prescribes that in case the assets exceed the liabilities an asset may only be
recognized, if NORDENIA as the committed employer had the right to distribute this excess or is entitled to future
reductions of contributions.
If the assets do not cover the liabilities the net obligation is—after deduction of the service cost not yet
accounted for—carried as a provision for pensions.
Actuarial gains or losses may result from increases or decreases of either the present value of the defined benefit
obligation or the fair value of the plan assets; the reasons for such gains and losses may—among others—be changes in
calculation parameters, estimates of the risks relating to the pension obligations and deviations between the actual and the
anticipated revenues from the plan assets.
Actuarial gains or losses shall be recorded through profit or loss directly and thus the pension provision always
equals the actuarial present value of the obligation (“Defined Benefit Obligation”) (see section 6). In total, the amount of
422 kEUR (2007: 2,957 kEUR) was recorded through profit or loss by the end of the reporting period—not taking into
account deferred taxes.
Malaysia
Total
Germany
2008
2007
2008 2007
2008
2007
227
103 18,330 20,503
Balance on January 1 .................................................................... 18,103 20,400
Current service cost .......................................................................
402
533
20
20
422
553
Interest expense .............................................................................
964
861
14
12
978
873
Expected return on plan assets.......................................................
0
0
0
0
0
0
Employer’s contributions...............................................................
0
0
0
0
0
0
Actuarial gains and losses..............................................................
(422) (2,957)
0
0
(422) (2,957)
Changes in exchange rates.............................................................
0
0
2
5
2
5
Paid benefits ..................................................................................
(841)
(734)
(4)
0
(845)
(734)
Net yet accounted past service cost ...............................................
0
0
0
(1)
0
(1)
Other changes ................................................................................
0
0
0
0
0
0
Changes in the group of consolidated companies/other changes...
0
0
0
88
0
88
0
0
0
0
0
Settlement and curtailment ............................................................
0
Balance on December 31 ............................................................. 18,206 18,103
259
227 18,465 18,330
Fair value of the DBO.................................................................... 18,206 18,103
259
227 18,465 18,330
0
0 (6,098) (5,768)
Fair value of the plan assets........................................................... (6,098) (5,768)
Plan deficit.................................................................................... 12,108 12,335
259
227 12,367 12,562
Plan assets on January 1..............................................................................................................................
Expected earnings on plan assets................................................................................................................
Actuarial gains (losses)...............................................................................................................................
Other changes .............................................................................................................................................
Employer’s contributions............................................................................................................................
Benefits paid by external plans during the financial year ...........................................................................
Plan assets on December 31........................................................................................................................
Total
2008
2007
kEUR kEUR
5,768 4,838
172
109
(40) (202)
0
798
1,066
959
(868) (734)
6,098 5,768
The plan assets mainly comprise Other assets such as life insurances. They were assigned by NORDENIA
(insured) to the pension allottee. There are no provisions for pensions financed by way of funds.
F-159
The pension expenses of the respective period break down as follows and are recognized in the respective item
of the income statement:
Malaysia
Total
Germany
2008
2007
2008 2007 2008
2007
kEURkEUR kEUR kEUR kEUR kEUR kEUR
Current service cost
Interest expense
Expected earnings on plan
assets
Actuarial gains (losses)
Cost of sales and other
expenses
Financial result
Financial result
Cost of sales and other
expenses
400
964
533
861
25
14
20
12
425
978
553
873
(172)
(108)
0
0
(172)
(108)
(376) (2,755)
816 (1,469)
0
39
0
32
(376) (2,755)
855 (1,437)
The actual gains from the plan assets of external insurances totaled 142 kEUR (2007: 95 kEUR). The expected
total yield is derived from the weighted average of the Other assets contained in the plan assets. The forecasts are based
on past experience, economic data and interest forecasts.
The NORDENIA Group expects to pay contributions in the amount of 1,072 kEUR into defined benefits plan in
the coming financial year.
Amounts for the current year and the two previous years of the pension obligations, the plan assets, the
obligations exceeding the assets, as well as experience-based adjustments
in kEUR
each as at December 31
Pension obligations (DBO).....................................................................................................
Plan assets...............................................................................................................................
Plan deficit..............................................................................................................................
2008
18,465
(6,098)
12,367
2007
18,330
(5,768)
12,562
2006
20,503
(4,838)
15,665
Adjustments in %
Experience-based increase (+)/decrease (−) in pension obligations .......................................
Experience-based increase (+)/decrease (−) in plan assets .....................................................
2008
1.71
1.03
2007
2.40
4.07
2006
(1.19)
8.19
F-160
32.1
Carrying amounts, values and fair values by classes
Class as
per IAS 39
ASSETS
Non-current
Financial assets
Loans and receivables ................
Available for sale........................
Loans and receivables ................
Held for trading ..........................
Current
Cash and cash equivalents..........
Trade receivables........................
Receivables due from affiliated
companies (nonconsolidated) .........................
Other assets.................................
Financial assets held for trading.
Available for sale........................
Non-current
Subordinated liabilities...............
Liabilities to banks .....................
Other liabilities
Discounted.............................
From finance leases ...............
Current
Liabilities to banks .....................
Trade payables............................
Notes payable .............................
companies (nonconsolidated) .........................
Other liabilities
No interest .............................
From finance leases ...............
Others ....................................
Carrying
amount
12/31/2008
kEUR
Amortized
cost
kEUR
LaR
AfS
16,811
1,429
16,811
LaR
FAHfT
215
0
215
LaR
LaR
7,634
56,224
LaR
LaR /n.a.
FAHfT
510
11,876
1,902
AfS
384
FLAC
FLAC
50,690
20,679
50,690
20,679
FLAC
n/a
12,164
9,868
12,164
FLAC
FLAC
FLAC
103,009
56,243
5,914
103,009
56,243
5,914
FLAC
0
FLAC
n/a
FLHfT
28,903
1,822
318
Value balance sheet as per IAS 39
Fair Value
Fair Value
outside
In profit or
loss
Cost profit or loss
IAS 17
kEUR
kEUR
kEUR
kEUR
Fair Value
12/31/2008
kEUR
Carrying
amount
12/31/2007
kEUR
Value balance sheet as per IAS 39
Fair Value
In profit or
Amortized
Fair Value
loss
cost
12/31/2007
Cost
IAS 17
kEUR
kEUR
kEUR
kEUR
kEUR
18,007
1,196
16,030
599
16,030
215
0
160
159
160
7,634
56,224
7,634
56,224
13,275
47,747
13,275
47,747
13,275
47,747
510
11,876
510
11,876
1,902
1,268
13,501
91
1,268
13,501
91
1,268
13,501
91
384
393
393
393
50,690
20,679
116,124
34,522
116,124
34,522
12,164
9,868
11,551
9,476
11,551
103,009
56,243
5,914
60,057
41,113
4,793
60,057
41,113
4,793
60,057
41,113
4,793
0
65
65
65
28,903
1,822
318
25,972
1,318
286
25,972
233
1,196
1,902
384
9,868
28,903
1,822
318
F-161
539
60
16,030
60
159
160
159
116,124
34,522
9,476
1,318
286
11,551
9,476
25,972
1,318
286
Thereof broken down measurement categories as per IAS 39:
Value balance sheet
as per IAS 39
Value balance sheet
as per IAS 39
Fair
Fair Value
Value
in
Class Carrying Amortized
outside profit Carrying
amount
historical
amount Amortized
as per
or
profit
Cost or loss loss 12/31/2007
Cost
cost
cost
IAS 39 12/31/2008
kEUR
kEUR
kEUR kEUR kEUR
kEUR
kEUR
kEUR
Loans and
receivabl
es.............
Financial
assets—
available
for sale ....
Financial
assets—
held for
trading.....
Financial
liabilities
—at
amortize
d cost.......
Financial
liabilities
—held
for
trading.....
Fair
Fair Value
Value
in
outside profit
or
profit
or loss loss
kEUR kEUR
LaR
94,466
93,270
0
1,196
0
91,981
91,981
0
0
0
AfS
617
0
233
1,580
0
992
0
539
0
453
FAHfT
1,902
0
0
0
1,902
250
0
0
0
250
FLAC
277,602
277,602
0
0
0
294,197
294,197
0
0
0
FLHfT
318
0
0
318
0
286
0
0
0
286
Cash and cash equivalents, trade receivables, as well as other receivables are basically due within a short period
of time. Thus, their carrying amounts at the balance sheet date correspond to their fair value.
The fair values of other non-current receivables which are due within more than one year correspond to the
present values of the payments relating to the assets, taking into account the respective current interest parameters that
reflect market- and partner-related changes in terms and conditions and expectations.
Trade payables, as well as other liabilities usually fall due within a short period of time; the recognized amounts
correspond to the respective fair values.
The fair values of liabilities to banks, notes payable and other financial liabilities are determined as the present
values of the payments relating to the debt and liabilities, taking into account the respective applicable interest structure.
F-162
32.2
From subsequent measurement
Foreign
currency
at fair value translation
Allowance
kEUR
kEUR
kEUR
From
interest
kEUR
(LaR).........................
Held-to-maturity
investments (HtM) ....
Available for sale
financial assets (AfS)
held for trading
(FAHfT and FLHfT).
measured at
amortized cost
(FLAC) .....................
Net result
From
disposal
kEUR
2008
kEUR
2007
kEUR
1,495
0
594
(1,562)
0
527
1,072
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(15,267)
0
(215)
0
0
(15,482)
(8,526)
results. Only the allowances on trade receivables attributed to the classes loans and receivables are recorded in the
operating result.
The profits and loss from subsequent measurement of financial assets that are classified as held for trading
include both interest and foreign exchange effects.
33 Deferred tax liabilities
Deferred tax liabilities ............................................................................................................
For details regarding deferred tax liabilities see section 22.
F-163
12/31/2008
kEUR
17,250
12/31/2007
kEUR
17,772
33
Other current and noncurrent provisions
Expected to be due
Balance on
1/1/2008
kEUR
Others...................................
Current provisions
for warranty obligations.......
for customer bonuses ...........
for compensations and
bonuses ............................
for outstanding invoices.......
for impending losses ............
for fees and charges .............
for other accrued liabilities
< 100 kEUR .....................
Change in
consolidated
group and
currency Addition Reversal Utilization
kEUR
kEUR
kEUR
kEUR
Balance on
12/31/2008
kEUR
< 3 mon.
kEUR
> 3 / < 6 mon.
kEUR
> 6 mon.
> 12 / <24
mon.
> 24 mon.
1,034
0
60
0
0
1,094
0
0
0
252
842
3,817
3,139
(29)
29
1,736
4,476
196
77
841
3,024
4,487
4,543
304
3,327
1,857
1,216
2,326
0
0
0
0
0
238
831
90
14
(20)
0
0
(2)
372
223
420
4
0
3
0
0
313
833
44
0
277
218
466
16
277
218
46
16
0
0
420
0
0
0
0
0
0
0
0
0
0
0
0
0
368
8,497
9,531
(17)
(39)
(39)
662
7,893
7,953
13
289
289
762
5,817
5,817
238
10,245
11,339
213
4,401
4,401
5
3,498
3,498
20
2,346
2,346
0
0
252
0
0
842
F-164
35 Current income tax liabilities
12/31/2008
kEUR
Current income tax liabilities..................................................................................................
2,564
12/31/2007
kEUR
1,947
Other disclosures
36.1
In respect to its assets, liabilities and intended transactions, NORDENIA Group is in particular subject to risks
from changes in interest rates and exchange rates, as well as changes in prices of raw materials. The goal of the
financial risk management is to minimize those market risks resulting from current operating and finance-oriented
activities. It does so by way of mainly currency-related financing and application of selected derivative hedge
instruments (interest and currency derivatives). However, on principle, only risks affecting the NORDENIA Group’s
cash flow are hedged. Derivative financial instruments are only used as collaterals. They are not held for trading or
other investment purposes.
The basic ideas of the financial policy are determined each year by the board of directors. The Group Treasury
is responsible for the realization of the financial policy and the consistent risk management. The use of derivatives is
subject to a clear authorization system. On principle, transactions are coordinated by the Treasury department of
NORDENIA International AG, Greven/Germany. Transaction risks are hedged locally by subsidiaries, however they
require approval.
The Nordenia Group uses primarily interest swaps and exchange futures. The use of these derivative
instruments and the realization of a risk minimization strategy serve the purpose of hedging and minimizing interest rate
and exchange rate fluctuations. The hedge transactions are entered into only with financial services providers that have
good credit standing. As a result of the risk-minimizing dispersion of the hedge transactions the address loss risk is
reduced.
36.2
Market price risks
36.3
The risks that the NORDENIA Group faces in respect to changes in exchange rates result from investments,
financing measures and the operating business. Foreign exchange risks are hedged to the extent that they affect the
Group’s cash flow. Foreign exchange risks resulting from the translation of the assets and liabilities accounts of foreign
operations into the reporting currency of the NORDENIA Group are not hedged.
exchange futures to cover risks from changes in exchange rates. In case of foreign currency cash flows expected in the
future budget data is documented and the transactions are basically included in the hedge accounting, usually as cash
flow hedges.
The market value of the exchange futures classified in the hedge accounting are reported at the balance sheet
date in equity to the extent that the hedge relation is highly-effective. Transactions to be recorded in profit or loss are
recorded in profit or loss at the balance sheet date. In 2008, the market value of the exchange futures reported in equity
was 0 kEUR (2007: 0 kEUR).
F-165
NORDENIA International AG uses a portfolio approach for the hedging of cash accounts and foreign currency
loans. Individual risks are summarized and only the remaining risks are hedged by exchange futures. According to
IAS 39 this transaction shall not be recorded in the hedge accounting; the market values are recorded directly in profit
or loss.
36.4
Interest risks
The NORDENIA Group is refinanced by way of current night money or time deposits, as well as an ABS
program. These products are based on transaction-related EONIA / Euribor interest rates determined on the market. The
risk of increasing variable current interests is minimized by hedging with interest swaps.
On principle, interest swaps are attributed to refinancing transactions and the option of a hedge accounting is
reviewed. If the provisions of the hedge accounting set forth in IAS 39 are not applied the corresponding market values
are recorded in profit or loss at the balance sheet date.
In 2008, the positive market value of the interest swaps recorded in equity totaled 0 kEUR (2007: 0 kEUR), the
negative market value totaled 0 kEUR (2007: 0 kEUR).
There was a basic swap with foreign currency components (CHF) at the balance sheet that was based on
individual financing. Risks resulting from the foreign currency component were minimized at the balance sheet by way
of exchange futures. The basic swap and the corresponding exchange futures are recorded in profit or loss.
36.5
At the NORDENIA Group, raw materials price risks mainly occur in the segment of granulates. According to
NORDENIA, there was no efficient market for the minimization of the risks at the balance sheet date. The Group
continues to observe the market.
Price risks are minimized by way of corresponding agreements with business partners.
36.6
Credit risk
Credit risk is the risk of insolvency or default in settlement of receivables by business partners. A less
favorable credit status of a business partner may result in a decrease in the value of the receivable due from said
business partner. Credit risks are limited by way of avoiding cluster risks.
NORDENIA faces a credit risk in particular from its operating business. In this respect, receivables of the
individual companies are permanently monitored and credit risks are accounted for by recording itemized allowances
and general itemized allowances. The maximum credit risk is reflected in the carrying amounts of the financial assets
disclosed in the balance sheet (incl. derivative financial instruments with positive market value).
36.7
Liquidity risk
This refers to the tradability of financial assets. The lack of liquidity may result in a lower valuability of
financial instruments. The term liquidity risk also includes the question of access to cash equivalents. Primarily the
refinancing of financial liabilities as well as interest rates payable should be taken into account. The liquidity risk is
reduced by dispersing financial transactions. Top-class liquid instruments are preferred for hedging purposes.
In order to ensure solvency at any time and financial flexibility of the NORDENIA Group, reserves of liquid
funds in the form of credit lines and, if need be, cash are accrued.
F-166
The market value of the financial instruments is determined by the respective partner in the derivative
transaction based on recognized calculation methods.
The determined market values are reported in the balance sheet under Other receivables and Other liabilities.
Nominal volumes are presented separately as the total amount of acquired derivatives. At the balance sheet
date, the non-offset market values and nominal values are as follows:
Current
Non-current
Residual maturities
more than
5 years
1 to 5 years
one year
2008 2007 2008 2007
2008
2007
Market value of derivative instruments
ASSETS
Exchange futures ...............................................
0
Interest swaps ....................................................
0
Basic swaps........................................................
0
0
Interest swaps ....................................................
111
Basic swaps........................................................
0
ASSETS
0
Interest swaps ....................................................
0
Basic swaps........................................................
0
0
Interest swaps .................................................... 6,750
Basic swaps........................................................
0
Total
2008
2007
kEUR kEUR
0
0
158
0
0
0
0
0
0
2,749
0
0
6
0
0
2,749
0
0
6
0
158
0
21
0
0
0
0
0
0
0
1,043
0
7
213
0
0
1,043
111
7
213
21
0
0
0
5,000
0
0
0
0
0
0
38,715
0
0
1,970
0
0
38,715
0
0
1,970
0
5,000
0
6,750
0
0
0
0
0
0
0
19,304
0
625
17,346
0
0
19,304
6,750
625
17,346
6,750
0
By resolution of the general assembly dated June 29, 2006 the company’s share capital was increased on a
conditional basis by up to 2,838 kEUR by issuing up to 2,838,000 new individual bearer shares. The purpose of the
contingent capital increase is to grant stock options to the members of the board of directors and other selected
employees of the company and affiliated companies in Germany and other countries.
Accordingly, the directors were authorized to issue stock options—with the supervisory board’s consent—to
beneficiaries that are not members of the company’s board of directors over a period of 5 years after the registration of
the contingent capital in the Commercial Register on August 16, 2006. The supervisory board was authorized to issue
options to the members of the board of directors.
The capital increase is only performed to the extent that options are issued and exercised. The new stocks
participate in the profits from the beginning of the financial year in which they are granted.
The options may not be exercised until after the expiration of a qualifying period of two years—started at the
date of issuing of the respective options—to the extent that they are vested. Another prerequisite for exercising the
F-167
options is that the stocks or substantial assets of the company are sold (“exit event”). The options are vested over a
period of five years in tranches of 20% per year.
In case of an exit event, full vesting occurs even if the 5-year period has not yet expired. The term of the stock
options is 10 years. Stock options that are not exercised or cannot be exercised by the end of the term shall be forfeited
without the holder being entitled to replacement or compensation.
Each option grants the right to purchase on stock of the company at exercise price. The exercise price per
option is 4.39 EUR.
The options may only be exercised after the expiration of the qualifying period and under the aforementioned
prerequisite to the extent that the fair value of the stocks is at least 10% above the exercise price.
The terms and conditions for the exercising of the options prescribe that the company has the right to pay the
fair value of the stocks less the exercise price instead of issuing new stocks (in such case the exercise price is not
payable) or provide stocks that are treasury stocks or were acquired for this purpose against payment of the exercise
price.
The fair value of the stock options granted in the financial year totaled 5.03 EUR (2007: 6.15 EUR) at the
balance sheet date. Since NORDENIA is not listed at the stock exchange, a corporate valuation was performed in a first
step using a recognized capitalized earnings method. Based on this valuation, the fair value of the stock options was
determined using an option price model and taking into account the exercise price and the term of the options.
In the reporting period, the amount of 1,555 kEUR (2007: 4,557 kEUR) was recorded in the consolidated
income statement for share-based payments in profit or loss.
Outstanding options on January 1...............................................................................................
Granted options...........................................................................................................................
Forfeited options.........................................................................................................................
Outstanding options on December 31.........................................................................................
Exercisable options on December 31..........................................................................................
2008
Units
2,377,014
47,213
73,127
2,351,100
0
2007
Units
1,504,439
872,575
0
2,377,014
0
The stock options existing at the end of the 2008 financial year fall due within 7.5 years on average (2007:
8.5 years).
39 Explanatory comments on the consolidated cash flow statement
The consolidated cash flow statement (Appendix 1.6) includes discontinued operations. As a result, the
amounts also include transactions of those operations.
The consolidated income statement does not include non-consolidated amounts in the financial result in respect
to the profits/losses from discontinued operations.
39.1
Cash
The cash comprises cash and cash equivalents. At the balance sheet date, the cash totaled 7,634 kEUR (2007:
13,275 kEUR).
The cash also includes cash from pro rata consolidated companies in the amount of 1,907 kEUR (2007:
1,726 kEUR).
39.2
Cash flow from ordinary operations
The cash flow from ordinary operations in the reporting period totaled 72,046 kEUR (2007: 51,091 kEUR).
F-168
The operating result (EBIT) increased over the previous year by 552 kEUR. The discontinued operations
adversely affected this amount in the previous period in the amount of 4,202 kEUR.
The other non-cash expenses mainly include expenses resulting from the stock option program and exchange
differences.
The decrease in inventories, trade receivables and other asset items in the amount of 4,108 kEUR mainly
resulted from the decrease in inventories, while trade receivables increased.
The increase in provisions, trade payables and other items of equity and liabilities in the amount of
18,836 kEUR mainly resulted from the increase in trade payables.
The paid financial expenses (less received financial income) in the amount of 17,298 kEUR in the reporting
period year mainly include interest expenses. Interest income and other paid and received financial expenses and
income are of minor importance.
The amount of 14,419 kEUR in the previous period, however, includes gains from the reversal of interest
hedge transactions in the amount of 3,666 kEUR. Other interest income or financial expenses and income, on the other
hand, are of minor significance so that the remaining amount of 18,085 kEUR mainly comprises paid interest expenses.
39.3
Cash flow from investment activities
The cash outflow from investment activities in the reporting period totaled 43,023 kEUR, while the cash
outflow in 2007 was 39,946 kEUR.
The investments in property, plant and equipment, intangible assets and financial assets total 43,081 kEUR
(2007: 38,954 kEUR). In addition, there are investments under finance lease agreements in the amount of 2,354 kEUR
so that the investments total 45,435 kEUR.
The outflows relating to the acquisition of consolidated companies and other business units decreased by
9,215 kEUR, while the inflow from the sale of financial assets decreased by 7,820 kEUR.
Outflow resulting from the acquisition of consolidated companies and other operations in the reporting period
in the amount of 1,323 kEUR mainly include the last purchase price installment in the amount of 1,250 kEUR resulting
from the acquisition of 50% of the interest in NORDENIA (Malaysia) Sdn. Bhd., Ipoh/Malaysia in the previous year.
There is the purchase price in the amount of 10,681 kEUR paid in 2007, on the one hand, and acquired cash and cash
equivalents in the amount of 285 kEUR, on the other hand.
The disposal of consolidated companies and other operations resulted in an outflow of 306 kEUR in 2007. This
amount includes amounts from the disposal of NORDENIA Holland Holding B.V., Putten/Netherlands, paid in the
previous period, and NORDENIA France Chaumont S.A., Chaumont/France, in the amount of 2,005 kEUR, on the one
hand, and sold cash and cash equivalents in the amount of 2,311 kEUR, on the other hand.
39.4
Cash resulting from financing activities
The cash flow from financing operations in the reporting period totaled 36,364 kEUR (2007: 5,814 kEUR).
Two subordinated loans in the amount of 35,617 kEUR were repaid during the reporting period.
The inflows and outflows relating to financial loans comprise inflows from non-current bank loans in the
amount of 5,060 kEUR and outflows resulting from the repayment of non-current loans in the amount of 8,422 kEUR.
Lease liabilities were settled in the amount of 1,763 kEUR.
Inflows and outflows relating to loans with short maturities are offset.
F-169
40 Segment information
The companies of the NORDENIA Group primarily operate in one industry, namely development, production
and processing of films and material components for packing, technical solutions and use in product components.
The reporting of the NORDENIA Group for management purposes is structured by type of product in
segments and geographic regions. Depending on internal control mechanisms the segments are divided into Industry
(for industrial solutions), Consumer (for products in the consumer good segment) and Others (for service companies).
The segment information is based on the same reporting and measurement methods as in the consolidated
financial statements The reconciliation column includes effects resulting from consolidation activities on the one hand,
and from deviations in the definition of the contents of the segment items compared to the corresponding consolidated
items on the other hand.
There are business relations with an external customer from which at least 10% of the income is generated.
Segment information by segments
Total revenues ..............................
Internal segment revenues ...........
External segment revenues ..........
Tonnage........................................
EBIT .............................................
Depreciation and amortization.....
EBITDA .......................................
Financial result.............................
Income/losses from ordinary
operations ................................
Expenses relating to
discontinued operations ..........
ROS*) ............................................
Investments**) ...............................
Assets ...........................................
Liabilities .....................................
Average number of employees
per year....................................
*)
**)
kEUR
kEUR
kEUR
t
kEUR
kEUR
kEUR
kEUR
Industry
Consumer
2008
2007
2008
2007
462,407 420,377 326,546 308,077
(7,421) (10,542) (13,897) (14,374)
454,986 409,835 312,649 293,703
141,642 137,576
77,294
74,210
37,152
37,092
8,129
17,158
13,914
15,585
13,655
12,803
51,066
52,677
21,784
29,961
(4,296) (3,883) (5,467) (1,883)
kEUR
32,855
33,209
2,662
kEUR
%
kEUR
kEUR
kEUR
0
7.22
15,528
195,940
141,406
(2,214)
8.10
12,726
186,172
133,766
0
0.85
27,145
216,801
135,539
1,521
1,522
1,473
number
15,274
Others
2008
2007
10,512
12,826
(992) (1,906)
9,520
10,920
0
369
(6,774) (11,710)
1,128
1,957
(5,646) (9,753)
31,040
31,067
Reconciliation
Group
2008
2007
2008
2007
0
0 799,465 741,280
(40,494) (34,498) (62,804) (61,320)
(40,815) (34,500) 736,340 679,958
(8,529)
(7,416) 210,407 204,739
441
1,160
38,948
43,700
20
20
28,717
30,365
461
1,180
67,665
74,065
(39,299) (35,812) (18,022) (10,511)
24,266
(38,857)
(3,693)
0
5.20
0.00
24,552
1,177
215,875 97,467
186,019 197,999
1,447
114
19,357
(34,651)
20,926
33,189
0
0
513
0.00
0.00
0.00
1,164
0
0
100,800 (93,770) (80,980)
215,740 (138,395) (181,938)
0
2.84
43,850
416,438
336,549
(5,394)
4.88
38,442
421,867
353,587
3,108
3,094
125
0
0
based on the result from ordinary operations
41 Pr oposal for the approval of the financial statements and appropriation of the annual net profits of
NORDENIA International AG
Pursuant to Sec. 170 para. 2 sentence 1 German Stock Corporation Law, the directors present the following
proposal for the appropriation of earnings to the supervisory board.
1.
Net profits:
According to the audited financial statements, the company’s retained earnings total 6,907,321.42 EUR and consist of
the annual net profits of 5,559,742.09 EUR and the retained earnings brought forward of 1,347,579.33 EUR.
2.
Dividends
The board of directors proposes not to distribute any dividends for 2008.
3.
Retained earnings brought forward
The remaining net profits are carried forward to the new financial year.
F-170
42
Approval of the consolidated financial statements
On February 27, 2009, the directors of NORDENIA International AG released the consolidated financial
statements as at December 31, 2008 to be forwarded to the supervisory board. The supervisory board is responsible for
reviewing the consolidated financial statements and stating whether they grant approval to the consolidated financial
statements or not.
43
In addition to the consolidated subsidiaries, NORDENIA International AG is related directly or indirectly
through its ordinary business operations with the following affiliated non-consolidated companies.
Status
Company
Label 24 GmbH i.L. (formerly NORDENIA Deutschland Pacimex GmbH),
Mitterscheyern .............................................................................................. Affiliated—not significant
43.1
Business relations with non-consolidated companies and associated companies
12/31/2008
kEUR
Total receivables due from non-consolidated subsidiaries .....................................................
0
Total liabilities due to non-consolidated subsidiaries .............................................................
0
12/31/2007
kEUR
634
65
Receivables in the amount of 4,585 kEUR due from Label 24 GmbH i.L. (formerly NORDENIA Deutschland
Pacimex GmbH), Mitterscheyern were adjusted.
43.2
The two main stockholders of NORDENIA International AG, i.e. OCM/Nordenia POF Luxembourg S.C.A.
and OCM/Nordenia Opps Luxembourg S.C.A., granted NORDENIA International AG shareholders’ loans in the total
amount of 35,816 kEUR in 2006 at interest rates typical in this sector. The shareholders’ loans were repaid in full on
April 30, 2008, including interest in the amount of 1,164 kEUR accrued until then and an early repayment
compensation in the amount of 1,100 kEUR.
OCM Luxembourg POF III S.a.r.l., a company affiliated with the two aforementioned main stockholders,
renders services to NORDENIA International AG under a management consulting services agreement. The scope of
those services is approx. 300 kEUR p.a.
Some members of the supervisory board and board of directors are or were members of the supervisory board
or board of directors of other companies during the reporting period. NORDENIA has ordinary business relations to
basically all of those companies. Products and services are sold at terms and conditions meeting the dealing-at-arm’s
length principle.
F-171
44
44.1
Disclosures required under national laws and regulations
Exemption as per Sec. 264 para. 3 HGB
Pursuant to Sec. 264 para. 3 HGB, the consolidation of the following fully consolidated companies are exempt
from the obligation to publicly disclose financial statements and prepare a management’s report:
Company
NORDENIA Deutschland Gronau GmbH........................................................................................
NORDENIA Deutschland Osterburken GmbH ................................................................................
NORDENIA Deutschland Halle GmbH ...........................................................................................
Nordenia International Development GmbH....................................................................................
NORDENIA Technologies GmbH ...................................................................................................
NORDENIA IT Services GmbH ......................................................................................................
NORDENIA Deutschland Emsdetten GmbH...................................................................................
EMPAC Beteiligungs-GmbH ...........................................................................................................
Registered office
Gronau/Westf.
Osterburken
Halle/Westf.
Greven
Gronau/Westf.
Barleben
Emsdetten
Emsdetten
A list of the complete shareholdings of the Group, the consolidated financial statements and the Group’s
management report, as well as the supervisory board’s report are publicly disclosed in the electronic Federal Gazette
(Bundesanzeiger). The most significant group companies are listed in Appendix 1.3.
44.2
Supervisory board
The total remuneration of the supervisory board in the 2008 financial year for their services to the parent
company and the subsidiaries totaled 336 kEUR (2007: 336 kEUR).
No advance payments or loans were granted to members of the supervisory board in the last two years. Neither
did the members of the supervisory board receive any remuneration or benefit for personal services such as consulting
or intermediation services.
Directors
12/31/2008
kEUR
Remuneration of the board of directors ..................................................................................
2,233
12/31/2007
kEUR
2,133
Under the stock option program, the directors were granted a total of 30,460 subscription rights (2007: 0) at a
fair value at the issuing date of 5.03 EUR (2007: 0.00 EUR) per subscription right in the 2008 financial year.
No advance payments or loans were granted to directors during the reporting period.
The total remuneration of former directors and their survivors total 725 kEUR (2007: 715 kEUR).
Provisions were recorded in the consolidated financial statements in the amount of 10,213 kEUR (2007:
10,705 kEUR) for current pensions and pension commitments to former directors and their survivors.
F-172
44.3
Employees
The companies of the NORDENIA Group (joint ventures accounted for on a prorated basis) have the following
number of employees:
2008 2007
Production.......................................................................................................................................................... 2,603 2,568
Administration ................................................................................................................................................... 255 279
Sales................................................................................................................................................................... 202 198
48
49
Research and development ................................................................................................................................
3,108 3,094
44.4
Disclosures as per Sec. 313 para. 2 No. 3 HGB regarding the companies consolidated on a prorated basis
Registered office
Company
Coronor GmbH ............................................................ Peine, Germany
Dalian DANOR Printing Packaging Company............ Dalian, China
Equity
interest
Reason for prorated
consolidation
%
50 Joint management
50 Joint management
The number of employees in the companies consolidated on a prorated basis is as follows (100%):
2008 2007
Production .......................................................................................................................................................... 148 148
Administration.................................................................................................................................................... 28
30
Sales ................................................................................................................................................................... 12
14
0
Research and development .................................................................................................................................
0
188 192
Other disclosures regarding joint ventures consolidated on a prorated basis as per IAS 31.56:
Total non-current assets..........................................................................................................
Total current assets .................................................................................................................
Total non-current debt ............................................................................................................
Total current debt....................................................................................................................
Total expenses ........................................................................................................................
Total income ...........................................................................................................................
45
12/31/2008
kEUR
3,450
5,185
49
2,102
12,342
12,631
12/31/2007
kEUR
3,614
4,790
41
2,602
11,646
12,119
Statement of compliance regarding the Corporate Governance Code
In November 2002 the directors and the board of directors of NORDENIA International AG passed a
statement regarding the recommendations of the German Corporate Governance Code and publicly disclosed it to the
stockholders permanently. The statement of compliance is published on the Internet at www.nordenia.com.
F-173
46.1
Notes payable .........................................................................................................................
Suretyships .............................................................................................................................
thereof relating to discontinued operations.............................................................................
Warranty agreements ..............................................................................................................
Collaterals...............................................................................................................................
46.2
12/31/2008
kEUR
383
0
0
5,325
0
5,708
12/31/2007
kEUR
774
0
0
600
0
1,374
Litigation
Neither NORDENIA International AG nor one of its group companies are involved in any pending or
foreseeable legal or arbitration proceedings that could have or have had a material impact on the economic situation in
the last two years. Provisions in the appropriate amount were recorded by the respective companies for any financial
obligations from legal or arbitration proceedings.
46.3
Commitments from investments, including obligations from future expenditure .......................
Obligations from non-cancellable operate lease or leasing agreements ......................................
Thereof due within one year ....................................................................................................
Thereof due between 1-5 years................................................................................................
Thereof due within more than 5 years .....................................................................................
Total.............................................................................................................................................
12/31/2008 12/31/2007
kEUR
kEUR
7,492
10,954
11,378
14,738
2,025
3,363
5,589
7,750
3,625
3,764
25,692
18,870
As a collateral in favor of third parties a purchase obligation (option) for machinery assigned as security was
entered into.
The minimum lease payments relate to leased buildings, plant and office and plant equipment. In addition, a
production site (land and buildings) was refinanced by way of a sale & leaseback transaction. Leases are entered into
for an average term of seven years. The lease is fixed for an average period of three years. There are extension clauses.
The expenses from operate leases that were recognized in profit and loss total 2,602 kEUR (2007: 2,400 kEUR) at the
balance sheet date.
47 Group companies
The list of complete shareholdings in accordance with the specifications in Sec. 313 para. 2 No. 4 HGB is
publicly disclosed in the electronic Federal Gazette (Bundesanzeiger).
Please see Appendix 1.3.
Signed in Greven, February 27, 2009
Board of Directors
(Ralph Landwehr)
Chairman
(Andreas Picolin)
Vice-Chairman
F-174
(Andreas Busacker)