Novenco A/S

Transcription

Novenco A/S

Novenco Marine & Offshore A/S
Central bus. reg. (CVR) no. DK 33 78 56 82
Annual Report for the period 12 July – 31 December 2011
The Annual Report has been
presented and approved by the
Company in general meeting
on/
2012.
Chairman of the general meeting
Annual Report 2011
Contents
Page
Management statement
1
Independent auditors’ report
2
Company information
4
Group chart
5
Financial highlights
6
Management’s statement
7
Accounting policies
13
Income statement for 12 July - 31 December
22
Balance sheet at 31 December
23
Statement of changes in equity
25
Notes to the Annual Report
27
Annual Report 2011
Management statement
On this day, the Board of Directors and Executive Board have considered and approved the
Annual Report of Novenco Marine & Offshore A/S for the financial year 12 July – 31 December
2011.
The Annual Report has been presented in accordance with the Danish Financial Statements Act.
In our opinion, the consolidated financial statements and the financial statements provide a fair
presentation of the Group’s and the Company’s assets, liabilities and financial position at
31 December 2011 and of the results of the Group’s and the Company’s operations for the
financial year 12 July – 31 December 2011.
Further, it is our opinion that the management’s review provides a fair presentation of the
development in the Group’s and the Company’s operations and financial matters, the results for
the year and the Group’s and the Company’s financial position.
We recommend that the Annual Report be approved by the annual general meeting.
Næstved, 30 April 2012
Executive Board
Steen Asferg Rasmussen
Board of Directors
Thomas Jarl Dywremose 1
Chairman
Jørgen Jensen1
Deputy Chairman
Birgitte Nielsen
Note: 1 Partner in Dania Capital K/S
Annual Report 2011
1
Independent auditors’ report
To the shareholders of Novenco Marine & Offshore A/S
Auditors’ report on the consolidated financial statements and financial statements
We have audited the consolidated financial statements and the financial statements of Novenco
Marine & Offshore A/S for the financial year 1 July – 31 December 2011. The consolidated
financial statements and the financial statements comprise accounting policies, income
statement, balance sheet, statement of changes in equity and notes for the Group as well as the
Company. The consolidated financial statements and the financial statements are prepared in
accordance with the Danish Financial Statements Act.
Management’s responsibility for the consolidated financial statements and the financial
statements
Management is responsible for the preparation of consolidated financial statements and financial
statements that provide a fair presentation in accordance with the Danish Financial Statements
Act. Management is also responsible for the internal controls regarded as necessary by
Management for preparing consolidated financial statements and financial statements that are
free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on the consolidated financial statements and the
financial statements based on our audit. We conducted our audit in accordance with international
auditing standards and additional requirements according to Danish audit legislation. They
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance as to whether the consolidated financial statements and the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence of the amounts and disclosures
in the consolidated financial statements and the financial statements. The audit procedures
selected depend on the auditors' assessment, including the assessment of the risks of material
misstatement in the consolidated financial statements and the financial statements, whether due
to fraud or error. In making the risk assessment, the auditors consider internal controls relevant
to the Company’s preparation of consolidated financial statements and financial statements that
provide a fair presentation in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal controls. An audit also includes evaluating the appropriateness of the
accounting policies applied by Management and the reasonableness of the accounting estimates
made by Management, as well as evaluating the overall presentation of the consolidated financial
statements and the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Our audit has not resulted in any qualification.
Annual Report 2011
2
Opinion
In our opinion, the consolidated financial statements and the financial statements provide a fair
presentation of the Group’s and the Company’s assets, liabilities and financial position at
31 December 2011 and of the results of the Group’s and the Company’s operations for the
financial year 12 July – 31 December 2011 in accordance with the Danish Financial Statements
Act.
Statement on the Management’s review
Pursuant to the Danish Financial Statements Act, we have read the Management's review. We
have not performed any further procedures in addition to the audit of the consolidated financial
statements and the financial statements. On this basis, it is our opinion that the information
provided in the Management's review is consistent with the consolidated financial statements and
the financial statements.
Copenhagen, 30 April 2012
KPMG
Statsautoriseret Revisionspartnerselskab
Peter Gath
state authorised public accountant
Annual Report 2011
Lisa Hagedorn
state authorised public accountant
3
Company information
The Company
Industrivej 22
DK-4700 Næstved, Denmark
Telephone: +45 70 12 42 22
Fax: +45 55 75 65 50
E-mail address: Info@novencogroup.com
Website: www.novencogroup.com
Central bus. reg. (CVR) no.: DK 33 78 56 82
Accounting period: 12 July - 31 December
Financial year: 1st financial year
Registered office municipality: Næstved, Denmark
Establishment
12 July 2011
Board of Directors
Thomas Jarl Dywremose, Chairman
Jørgen Jensen
Birgitte Nielsen
Executive Board
Steen Asferg Rasmussen
Auditors
KPMG
Statsautoriseret Revisionspartnerselskab
Osvald Helmuths vej 4
DK-2000 Frederiksberg, Denmark
Annual Report 2011
4
Group chart
Parent company
Consolidated subsidiaries
Associate
Næstved, Denmark
Nom. DKK 5,000,000
100%
Novenco AS,
Oslo, Norway
Nom. NOK 8,000,000
100%
Novenco Marine A/S.
Næstved, Denmark
Nom. DKK 500,000
100%
Novenco (S) Pte. Ltd.
608840, Singapore
Nom. SGD 200,000
100%
Novenco Hi-Pres Air Handling
Equipment (Wuxi) Co., Ltd.
Nom. USD 3,050,000
100%
Novenco (Shanghai) Commercial &
Trading,Co., Ltd.
Nom. USD 100,000
22.73%
Novenco Nippon Ltd.
Kobe, Japan
Nom. JPY 110,000,000
Dania Capital K/S is a principal shareholder in Novenco Marine & Offshore A/S via the holding
company NovCo Holding II A/S.
Annual Report 2011
5
Financial highlights
Seen over the period from 12 July – 31 December 2011, the Group’s development can be described by the
following financial highlights:
Group
2011*
DKK 1,000
Key figures
Income statement
Revenue
Profit/(loss) on ordinary operating
activities
Profit/(loss) before net financials
Net financials
Profit/(loss) for the year
Balance sheet
Balance sheet total
Equity
Investment in property, plant and
equipment
Number of employees
Ratios (%)
Gross margin ratio
Operating margin
Return on capital employed
Equity ratio
Return on equity
146,796
(12,483)
(13,819)
1,030
(11,926)
212,504
4,667
6,066
170
10.5
-9.4
-6.5
2.2
-246.8
*Financial highlights have been prepared based on four months’ activity.
Please see the definitions in the section on accounting policies.
Annual Report 2011
6
Management’s review
The Annual Report of Novenco Marine & Offshore A/S for 2011 has been presented in
accordance with the provisions of the Danish Financial Statements Act governing large reporting
class C enterprises.
The financial statements and consolidated financial statements have been prepared applying the
same accounting policies as were applied in Novenco A/S in previous years.
The financial statements of Novenco Marine & Offshore A/S and Group companies are included
in the consolidated financial statements of NovCo Holding II A/S.
Novenco Marine & Offshore A/S is ultimately owned by the private equity fund Dania Capital
K/S.
Principal activity
The Company Novenco Marine & Offshore A/S was established in 2011. At 1 September 2011
the Company acquired all marine and offshore activities from the affiliated company Novenco
A/S, including the subsidiaries in Norway, China and Singapore. The demerger was effected to
increase transparency in the Novenco Group’s overall operations.
Novenco Marine & Offshore A/S and its subsidiaries, hereinafter referred to as the Group, are
global suppliers with own development, production and sale of ventilation products and systems
for marine purposes. The Group has 65 years of experience within the ventilation industry.
Development during the year
At year-end 2011 the Group had a considerable volume of orders, DKK 577 million.
During the financial period, i.e. the last four months of 2011, activity picked up in the market
and the Group experienced increasing and heavy demand, particularly in the Offshore and
Special Vessels segments. In December 2011 the Group won a very large order for two cruisers
for delivery in the period up to 2014. The heavy demand experienced in the period has resulted
in considerable increases in the intake of orders for all Company segments, meaning that the
overall intake of order increased. The Group’s important position on the growing Chinese market
is still strong despite increasing competition. The Company has a leading position on this market
today.
The activity on the Offshore market continues to grow and the Group is positioned to take part in
this growth. The offshore part of the Group’s activities has been increasing, a development that
is expected to continue in 2012.
Annual Report 2011
7
In retrospect
The Group recorded a consolidated loss after tax of DKK (12) million, which is unsatisfactory.
Financial review
Financial results for the year
The Group reported revenues of DKK 147 million for the period, which is less than expected.
Against this background, the Group realised a gross profit of DKK 15 million.
The operating loss amounted to DKK (12) million. This was primarily attributable to less
revenue as a consequence of a lower volume of orders for delivery during the period.
The loss before net financials amounted to DKK (14) million.
The Group's loss before tax amounted to DKK (13) million.
Balance sheet development
The parent company’s balance sheet stood at DKK 151 million in 2011.
The parent company’s investments in subsidiaries are recognised at the proportionate share of
the profit and equity value.
At the end of the year, the Group’s cash and cash equivalents amounted to DKK 12 million.
Group equity stood at DKK 5 million.
Group provisions for warranty commitments amounted to DKK 3.5 million, which Management
considers to be inadequate.
Investments
During the financial year, investments in property, plant and equipment – primarily investment
in production plant – amounted to DKK 6 million.
Financial resources
Equity stood at DKK 5 million at 31 December 2011 and the equity ratio was 2.2%. The Group’s
execution of the existing volume of orders is expected to improve the results of operations for
2012. The Group budgets for a profit after tax. Against this background, Management considers
the financial resources to be adequate to carry out the plans and activities budgeted for 2012.
Annual Report 2011
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Special risks – operating and financial risks
General risks
The general risks are tied to the global world economy as the Company has activities in large
parts of the world.
Financial risks
As a consequence of its financial position and its financial resources the Company is exposed to
interest rate fluctuations. The Group’s interest rate exposure concerns its interest-bearing assets
and the Group’s limited interest-bearing liabilities. The Group’s interest-bearing assets primarily
consist of cash and cash equivalents, which at 31 December 2011 was DKK 12 million. In
addition, the Group has a cash pool arrangement with NovCo Holding II A/S.
Currency risks
As a significant portion of revenues are made up of export sales, the Company is sensitive to
changes in exchange rates. Goods are purchased using mainly Danish kroner and in the
subsidiaries their local currencies.
Currency risks associated with selling in foreign currencies are hedged by forward exchange
contracts within the hedging levels defined by the Company’s policy.
Credit risks
It is Company policy to always secure payment from external customers, either through a bank
guarantee, a letter of credit or an ongoing credit rating of the customer.
Corporate governance
The Board of Directors and Executive Board of Novenco Marine & Offshore A/S continuously
seek to ensure that the management structure and control systems of the Group are expedient and
efficient. Management currently assesses whether that is the case.
Corporate governance is largely built into the requirements laid down in the Danish Companies
Act, the Danish Financial Statements Act, the Company’s Articles of Association and good
practice for companies of a similar size and with the same international reach as Novenco
Marine & Offshore A/S.
Ownership structure
At 31 December 2011, the entire share capital of the Group was owned by NovCo Holding II
A/S. The Group’s ultimate, principal shareholder is Dania Capital K/S.
Annual Report 2011
9
The work of the Board of Directors
In 2011, the Company held one Board meeting. The Board of Directors has not found it
expedient to form any committees. The Board of Directors currently reviews the Company’s
financial performance.
Management’s remuneration
Remuneration for the Board of Directors and Executive Board is disclosed in note 19 to the
Annual Report.
Stakeholders
The Company’s primary stakeholders include Dania Capital K/S, the Company’s bankers SEB
and Tryg Garanti as well as the Company’s employees, customers and suppliers. The Company
Management holds meetings, at a regular basis and as required, with its stakeholders to
continually align expectations and communicate developments in the Company.
Objectives and outlook
At the onset of 2012, the Group has a considerable volume of orders. The Group’s strategy
regarding efficiency enhancements will be continued and strengthened in 2012. This will lead to
considerably improved results of operations. Consequently, the Group expects to realise a profit
after tax.
However, at the same time it must be pointed out that the world situation is still uncertain,
particularly in the building and construction industries where the Company primarily operates.
Basis of earnings
Research and development
The Group’s development costs amounted to DKK 5.4 million in 2011 and were concentrated on
further development of existing products, i.a. with regard to greater energy efficiency and new
products which complement the Company’s product portfolio.
Annual Report 2011
10
Knowledge resources and employees
The Group has significant knowledge resources in the area of ventilation systems. These are, to
an increasing extent, embedded in internal configuration systems, but also in the unique
technology the Group uses to manufacture ventilation systems. The Group is working actively to
retain and increase this knowledge to ensure future growth and profitability.
Staff changes:
Total
Denmark
Rest of the world
196
-21
23
198
50
-5
1
46
146
-16
22
152
Number of employees, 1 Jan. 2011
Staff departure
Staff arrival
Number of employees, 31 Dec. 2011
Production and process standards
The Group is certified under ISO 9001: 2000.
External environment
To make sure that the Group always meets external environmental requirements in relation to its
activities (metal-working industry), the Group has chosen to be environmentally certified (ISO
14001:2004) in addition to obtaining the statutory environmental approvals. The Group has
established action plans to reduce consumption in order to reduce its CO2 emission and use of
common resources, among other things. The Company’s production in China is not certified, but
works according to the same general guidelines.
Corporate social responsibility
No corporate social responsibility policies have been drawn up, but the Group has measures
within the following areas.
Novenco Marine & Offshore A/S is a globally operating Company with customers, employees,
suppliers and other business partners all over the world. Novenco is thus operating in areas with
different cultures, moral concepts, social conditions and behavioural norms, and as a
consequence a working team has been established with the task of formulating the Group’s
global CSR guidelines.
The environment:
The Company’s environmental management systems ensure that the Company makes a
continuous, targeted effort to improve its environmental performance.
Annual Report 2011
11
Working environment and employee health:
Novenco Marine & Offshore A/S complies with Danish legislation concerning working
environment and safety. At the factory in China procedures are according to local legislation and
to a large extent the same guidelines and practices as in Denmark are applied.
Events occurring after the end of the financial year
After the end of the financial year, no significant events have occurred which may have a
significant impact on the financial statements for 2011. After the end of the financial year, the
share capital was increased by DKK 20 million.
Annual Report 2011
12
Accounting policies
Basis of financial statements
The Annual Report of Novenco Marine & Offshore A/S has been presented in accordance with
the provisions of the Danish Financial Statements Act pertaining to large reporting class C
enterprises.
The accounting policies are described below.
The Annual Report for 2011 has been presented in DKK thousand (DKK 1,000).
Consolidated financial statements
The consolidated financial statements include the parent company Novenco Marine & Offshore
A/S and the subsidiaries in which Novenco Marine & Offshore A/S directly or indirectly holds
more than 50% of the voting rights or in any way exercises a controlling interest.
Companies in which the Group holds between 20% and 50% of the voting rights and exercises
significant influence, but not control, are regarded as associates, cf. the Group chart.
Basis of consolidation
The consolidated financial statements have been prepared on the basis of the financial statements
of Novenco Marine & Offshore A/S and its subsidiaries. The consolidated financial statements
have been prepared by adding together items of a uniform nature. Intercompany income and
expenses, intercompany balances and dividends as well as profit and loss from intercompany
transactions have been eliminated on consolidation. The financial statements used for
consolidation purposes have been prepared in accordance with the Group’s accounting policies.
In the consolidated financial statements, the items of subsidiaries are recognised in full.
Business combinations
Newly acquired or newly established companies are recognised in the consolidated financial
statements as of the date of acquisition.
On the acquisition of new companies, the purchase method is applied according to which the
identifiable assets and liabilities of the newly acquired companies are measured at their fair
values at the date of acquisition.
General aspects related to recognition and measurement
Assets are recognised in the balance sheet when it is probable that future economic benefits will
flow to the Group and the value of the asset can be measured reliably.
Annual Report 2011
13
Accounting policies
Liabilities are recognised in the balance sheet when they are probable and can be measured
reliably. Assets and liabilities are measured at cost on initial recognition. Assets and liabilities
are subsequently measured as described for each item below.
Certain financial assets and liabilities are measured at amortised cost implying the recognition of
a constant effective cost to maturity. Amortised cost is calculated as initial cost less any
deductions and with addition/deduction of the accumulated amortisation of the difference
between the cost price and the nominal amount. In this way, capital losses and gains are
allocated over the term to maturity.
On recognition and measurement, any gains, losses and risks arising before the time when the
Annual Report is presented and proving or disproving matters existing on the balance sheet date
are taken into account.
Income is recognised in the income statement as earned and includes value adjustments of
financial assets and liabilities measured at fair value or amortised cost. Moreover, costs incurred
to obtain the revenue for the year, including depreciation and amortisation, impairment losses
and provisions and reversals hereof due to changes in accounting estimates, are recognised in the
income statement.
Foreign currency translation
On initial recognition, transactions in foreign currencies are translated using the exchange rate
ruling at the date of the transaction. Any exchange differences arising between the rate of
exchange ruling at the date of the transaction and the rate of exchange ruling at the date of
payment are recognised in the income statement as an item under financial income and expenses,
net.
Receivables, payables and other monetary items in foreign currencies are translated using the
rate of exchange ruling at the balance sheet date. The difference between the rate of exchange
ruling at the balance sheet date and the rate of exchange ruling at the time when the receivables
or the payables arose or were recognised in the latest Annual Report is recognised in the income
statement as financial income or financial expenses.
Derivative financial instruments
Derivative financial instruments are initially recognised in the balance sheet at cost and are
subsequently measured at fair value. Positive and negative fair values of derivative financial
instruments are included under other receivables and other payables, respectively. Changes in the
fair value of derivative financial instruments designated as and qualifying for recognition as a
hedge of the fair value of a recognised asset or liability are recognised in the income statement
together with changes in the value of the hedged asset or liability.
Changes in the fair value of derivative financial instruments designated as and qualifying for
recognition as a hedge of future cash flows are recognised directly in equity. Income and
expenses relating to such hedging transactions are transferred from equity on realisation of the
hedged asset or liability and are recognised in the same item as the hedged asset or liability.
Annual Report 2011
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Accounting policies
Changes in the fair value of any derivative financial instruments that do not qualify for hedge
accounting are currently recognised in the income statement under financial income and
expenses, net.
Income statement
Revenue
Income from the sale of goods for resale and finished goods is recognised in the income
statement if delivery took place and the risk has passed to the buyer before year-end and
provided that the income can be stated reliably and payment is expected to be made.
Revenue is recognised exclusive of VAT and net of discounts relating to sales.
Contract work in progress concerning customised production of systems is recognised as revenue
when the production is completed, and the revenue thus corresponds to the selling price of the
work completed (the percentage of completion method).
Production costs
Production costs comprise the costs incurred to obtain the revenue for the year. The cost includes
raw materials, consumables, direct labour costs and indirect production costs such as
maintenance and depreciation, etc. as well as operation, administration and management of
factories.
Included in production costs are research and development costs which do not meet the criteria
for capitalisation and amortisation of capitalised development costs. Moreover, provisions for
losses on contracts are included.
Distribution costs
Distribution costs comprise costs of distribution and sales campaigns regarding goods sold
during the year, including costs relating to sales staff, marketing and depreciation/amortisation as
well as loss on trade debtors.
Administrative expenses
Administrative expenses comprise costs relating to the management, the administrative staff,
office expenses, insurance, depreciation/amortisation, etc.
Other operating income and expenses
Other operating income and other operating expenses comprise items of a secondary nature in
relation to the principal activity of the Company, including profit/loss on the sale of intangibles
and property, plant and equipment.
Annual Report 2011
15
Accounting policies
Share of profit/loss in subsidiaries and associates
The proportionate share of the post-tax results of the individual subsidiaries is recognised in the
income statement of the parent company after full elimination of intercompany profits/losses.
The proportionate share of the post-tax results of the associates is recognised in the income
statement of the parent company and the consolidated income statement after elimination of the
proportionate share of intercompany profits/losses.
Net financials
Financial income and expenses include interest, financial expenses relating to finance leases,
marketable securities adjustments, amortisation of mortgage loans as well as additions and tax
allowances under the Tax Prepayment Scheme.
Tax
The Company is covered by the Danish rules on compulsory joint taxation of the Danish
subsidiaries of the Realdania Group. The current corporation tax is distributed between the
jointly taxed companies in proportion to their taxable incomes (full absorption with refunds for
tax losses).
Tax for the year, which consists of the year’s joint taxation contribution and change in deferred
tax, is recognised in the income statement with the share attributable to the profit/loss for the
year and directly in equity with the share attributable to items recognised directly in equity.
Balance sheet
Intangibles
Development costs comprise costs, salaries and amortisation directly and indirectly attributable
to the Company’s development activities.
Development projects clearly defined and identifiable involving a demonstrable technical rate of
utilisation, adequate resources and a potential future market or a development opportunity in the
Company, and where the intention is to produce, market or employ the project, have been
recognised as intangibles provided that the cost can be stated reliably and that there is sufficient
certainty that future earnings will cover the production and selling costs, the administrative
expenses as well as the actual development costs. Other development costs are recognised in the
income statement as paid.
Capitalised development costs are measured at cost less accumulated amortisation or at a lower
recoverable amount.
Annual Report 2011
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Accounting policies
Capitalised development costs are amortised on a straight-line basis after the completion of the
project over the estimated useful economic life. The amortisation period is 5 years.
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and
impairment losses.
Depreciation is provided on a straight-line basis over the expected useful lives of the assets.
Plant and machinery
Other fixtures and fittings, tools and equipment
Leasehold improvements
4-12 years
3-12 years
10 years
Profits and losses derived from the disposal of property, plant and equipment are stated as the
difference between the selling price less selling expenses and the carrying amount at the time of
selling. Profits or losses are recognised in the income statement as an adjustment to depreciation
and impairment losses or under other operating income to the extent that the selling price
exceeds the original cost.
Lease agreements
Lease agreements for property, plant and equipment, where the Company has all substantial risks
and benefits inherent in the ownership (finance leases), are initially measured in the balance
sheet at the lower of fair value and present value of future lease payments. In calculating the
present value, the internal interest rate of the lease agreement or the alternative borrowing rate is
used as a discounting factor. Financially leased assets are subsequently treated as the Company’s
other non-current assets.
The capitalised residual lease commitment is recognised in the balance sheet as a payable, while
the interest component of the lease payment is recognised in the income statement over the term
of the lease.
All other lease agreements are considered operating leases. Rental payments made under
operating leases and other lease agreements are recognised in the income statement over the term
of the leases. The Company’s total operating lease commitments are stated under contingencies,
etc.
Impairment of non-current assets
The carrying amount of intangibles and property, plant and equipment is reviewed annually to
determine whether there is any indication of impairment exceeding the write-downs in
connection with general amortisation and depreciation. If any such indication exists, an
impairment test will be carried out to determine whether the recoverable amount is lower than
the carrying amount, and a write-down to this lower recoverable amount will be made. This
impairment test is conducted on an annual basis of in progress development projects, irrespective
of whether or not there is any indication of impairment.
Annual Report 2011
17
Accounting policies
The recoverable amount of the asset is determined as the higher of the net selling price and its
value in use. If the recoverable amount cannot be determined for the individual asset, the assets
are assessed in the smallest group of assets for which a reliable recoverable amount can be
determined based on a total assessment.
Investments in subsidiaries and associates
Investments in subsidiaries and associates are recognised and measured according to the equity
method, which means that the investments are measured at the proportionate share of the equity
value of the companies plus or less non-amortised positive and negative consolidated goodwill,
respectively, and plus or less unrealised intercompany gains and losses.
Subsidiaries and associates with a negative equity value are measured at zero value, and any
receivables from these companies are written down by the parent company’s share of the
negative equity value insofar as they are deemed uncollectible. If the negative equity value
exceeds the receivables, the remaining amount is recognised under provisions to the extent that
the parent company has a legal or constructive obligation to cover the liabilities of the company
in question.
Net revaluation of investments in subsidiaries and associates is transferred to the net revaluation
reserve to the extent the carrying amount exceeds the cost.
Goodwill
Goodwill is amortised over its estimated useful economic life, which is determined based on
Management’s experience in the individual business areas. Goodwill is amortised on a straightline basis over a period of not more than 20 years.
Inventories
Inventories are measured at cost using the FIFO method or the net realisable value for the
individual product line, whichever is lower. The net realisable value of inventories is calculated
as the selling price less the costs of completion and costs incurred to execute the sale and
determined with due consideration of marketability, obsolescence and movements in the
expected selling price.
The cost of goods for resale, raw materials and consumables comprises the cost price plus
delivery costs.
The cost of manufactured finished goods and work in progress comprises the cost of raw
materials, consumables, direct labour costs and indirect production costs. Indirect production
costs comprise indirect materials and labour costs as well as maintenance of the machinery,
Annual Report 2011
18
Accounting policies
factory buildings and equipment used in the manufacturing process and the cost of
administration and management of factories.
Receivables
Receivables are measured at amortised cost or at net realisable value, if lower, calculated on the
basis of an individual assessment of each receivable.
Prepayments
Prepayments under assets comprise paid-up expenses relating to the subsequent financial year.
Contract work in progress
Contract work in progress is recognised based on a concrete assessment using either the
percentage of completion method or the sales method.
Contract work in progress recognised according to the percentage of completion method is
measured at the sales value of the work performed less work invoiced on account and expected
losses. Contract work in progress is i.a. characterised by a high degree of individualisation with
regard to design. It is also a requirement that a binding contract is signed before the work is
begun.
The selling price is measured based on the stage of completion at the balance sheet date and the
total expected revenue from the individual contract. The stage of completion is determined based
on an assessment of the work performed, normally calculated as the relation between the costs
paid and the total, expected costs for the contract in question.
When it is probable that the total costs will exceed the total revenue, the expected loss on the
contract is immediately recognised as an expense.
Contracts where the selling price of the work performed exceeds the amounts invoiced on
account and expected losses are entered under Receivables. Contracts where the amounts
invoiced on account and the expected losses exceed the selling price are recognised as a liability.
Contract work in progress which does not fulfil the requirements for recognition according to the
percentage of completion method is recognised according to the sales method.
Proposed dividend
Dividend is recognised as a liability at the time of approval by the general meeting.
Annual Report 2011
19
Accounting policies
Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of an
event occurring on or before the balance sheet date and it is probable that an outflow of
economic benefits will be required to settle the obligation.
Warranty commitments are measured at net realisable value and include provisions for general
and expected specific warranty commitments.
Liabilities other than provisions
Payables to mortgage banks and credit institutions are recognised initially at the proceeds
received net of transaction expenses incurred. Financial liabilities other than provisions are
subsequently measured at amortised cost, corresponding to the capitalised value, using the
effective interest rate so that differences between the proceeds and the nominal value are
recognised in the income statement as financial income and expenses, net, over the period of the
borrowing.
Liabilities other than provisions, which comprise trade payables and payables to Group
companies and associates and other payables, are measured at amortised cost, which usually
equals the nominal debt.
Tax and deferred tax
Under the joint taxation rules, the subsidiaries’ liability to the tax authorities for their own
corporation taxes is settled concurrently with the payment of the joint taxation contributions to
the management company.
Joint taxation contributions payable and receivable are recognised in the balance sheet under
balances with Group companies.
Deferred tax is measured under the balance sheet liability method comprising all temporary
differences between the carrying amount and the tax base of assets and liabilities.
Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised at the value
at which they are expected to be utilised either by elimination in tax on future earnings or by setoff against deferred tax liabilities within the same legal tax unit and jurisdiction. Deferred tax is
measured in accordance with the tax rules and tax rates in the various countries that will apply
under the legislation in force at the balance sheet date when the deferred tax is expected to
crystallise as current tax.
Segment information
The segment information follows the Group’s accounting policies, risks and management
control.
Annual Report 2011
20
Accounting policies
Explanation of financial ratios
Gross margin ratio
=
Operating margin
=
Return on capital employed
=
Equity ratio
=
Return on equity
=
Annual Report 2011
Gross profit x 100
Revenue
Profit/loss before net financials x 100
Revenue
Profit/loss before net financialsx 100
T otalassets
Equity at year - end x 100
T otalassets
Profit/loss for theyear x 100
Average equity
21
Income statement for 12 July to 31 December
Note
Revenue
1
Production costs
19
Financial results for the year
DKK 1,000
18,19
4,876
0
(6,010)
(3,622)
2
2
(12,483)
0
8
(1,344)
(4,756)
0
2
0
3
4
5
6
(13,819)
0
0
604
878
(452)
(4,754)
0
(9,096)
604
618
(444)
7
(12,789)
0
863
(13,072)
0
1,146
0
00
(11,926)
19
Profit/(loss) from ordinary activities before tax
Corporation tax
DKK 1,000
15,348
00
(14,866)
(12,965)
Profit/(loss) before net financials
Share of profit/(loss) in subsidiaries after tax
Share of profit/(loss) in associates after tax
Financial income
Financial expenses
2011
98,254
00
(93,378)
Profit/(loss) on ordinary operating activities
Other operating income
Other operating expenses
2011
146,796
00
(131,448)
Gross profit/(loss)
Distribution costs
Group
Parent
company
0
(11,926)
Appropriation of loss
Proposal for appropriation of loss
Net revaluation reserve according to the equity method
Retained earnings
(8,236)
(3,690)
(11,926)
Annual Report 2011
22
Assets
Note
Completed development projects
Development projects in progress
Goodwill
Intangibles
8
Plant and machinery
Other fixtures and fittings, tools and equipment
Leasehold improvements
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
4,731
679
22,996
4,731
679
7,904
28,406
13,314
921
1,531
2,195
0
28
0
9
4,647
28
Investments in subsidiaries
Investments in associates
Other receivables
10
11
0
1,522
1,546
54,862
1,522
0
3,068
56,384
Total non-current assets
36,121
69,726
Raw materials and consumables
Work in progress
Finished goods and goods for resale
11,318
2,708
2,262
2,350
0
0
Inventories
16,288
2,350
90,353
38,727
11,516
0
4,243
1,663
1,813
45,702
19,622
5,864
1,149
600
0
17
148,315
72,954
11,780
5,509
Total current assets
176,383
80,813
Assets
212,504
150,539
Investments
Trade receivables
Receivables from Group companies
Deferred tax asset
Deposits
Other receivables
Prepayments
Receivables
Cash
Annual Report 2011
12
16
13
23
Liabilities and equity
Note
Share capital
Net revaluation reserve according to the
equity method
Retained earnings
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
5,000
5,000
663
(996)
0
(333)
Equity
14
4,667
4,667
Deferred tax
Provisions for warranty commitments
16
15
4,342
3,467
0
3,467
7,809
3,467
36,294
66.599
46.316
50,819
20,524
18,932
60,708
42,241
Current liabilities other than provisions
200,028
142,405
Liabilities other than provisions
200,028
142,405
Liabilities and equity
212,504
150,539
Provisions
Contract work in progress included under liabilities
and equity
Trade payables
Payables to Group companies
Other payables
12
Contingencies and other liabilities
Remuneration for auditors elected by the annual
general meeting
Employees
17
18
Related parties and ownership structure
Supplementary information regarding matters relating
to the financial statements
Currency risks and use of derivative financial
instruments
20
21
Annual Report 2011
19
22
24
Group
Net
revaluation
according to
Share
the equity
Retained
capital
method
earnings
Total
DKK 1,000
DKK 1,000
DKK 1,000
DKK 1,000
Cost at establishment
0
500
0
0
0
0
0
500
Non-cash contribution received
0
4,500
0
0
0
7,188
0
11,688
Transferred via allocation of profit/(loss)
0
0
0
604
0
(12,530)
0
(11,926)
0
0
0
0
0
(12)
0
(12)
0
0
0
0
0
3
0
3
0
0
0
111
0
(419)
0
(308)
Translation adjustment relating to forward
exchange contracts at market value, 31
December
Deferred tax on financial contracts, 31
December
Foreign currency translation adjustment
relating to foreign Group companies
Other adjustments
0
0
4,774
4,774
Entries on shareholders’ equity
0
in subsidiaries, etc.
Equity at 31 December 2011
0
0
5,000
0
(52)
663
0
0
0
(52)
(996)
4,667
0
Annual Report 2011
25
Parent company
Net
revaluation
according to
Share
the equity
Retained
capital
method
earnings
Total
DKK 1,000
DKK 1,000
DKK 1,000
DKK 1,000
Cost at establishment
0
500
0
Non-cash contribution received
0
4,500
Transferred via allocation of profit/(loss)
0
0
0
0
0
0
0
0
0
0
(8,236)
0
0
0
0
0
0
500
0
7,188
0
11,688
0
(3,690)
0
(11,926)
0
0
(12)
0
(12)
0
0
0
3
0
3
0
(308)
0
0
0
(308)
Translation adjustment relating to forward
exchange contracts at market value, 31
December
Deferred tax on financial contracts, 31
December
Foreign currency translation adjustment
relating to foreign Group companies
Other adjustments
4,774
0
4,774
Entries on shareholders’ equity
in subsidiaries, etc.
0
0
0
(52)
0
0
0
(52)
Retained
0
0
0
3,822
0
(3,822)
0
0
Equity at 31 December 2011
0
5,000
0
(333)
4,667
0
Annual Report 2011
26
1
Revenue
Business areas
Marine
Offshore
2
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
116,427
30,369
90,110
8,144
146,796
98,254
8
2
8
2
(1,344)
0
(1,344)
0
Other operating income and expenses
Annual Report 2011
27
3
Share of profit/(loss) in subsidiaries
Share of profit/(loss) in subsidiaries
Amortisation of Group goodwill
4
2011
2011
DKK 1,000
DKK 1,000
0
0
(8,840)
(256)
0
(9,096)
604
604
604
604
0
341
537
65
16
537
878
618
(322)
(130)
(343)
(101)
(452)
(444)
Financial income
Interest income relating to Group companies
Other financial income
Translation adjustment
6
Parent
company
Share of profit/(loss) in associates
Share of profit/(loss) in associates
5
Group
Financial expenses
Interest expenses relating to Group companies
Other financial expenses
Annual Report 2011
28
7
Corporation tax
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
Current tax for the year
Deferred tax for the year
763
100
0
1,146
Total tax for the year
863
1,146
Tax on the profit/(loss) for the year
Tax on changes in equity
863
3
1,146
3
866
1,149
Annual Report 2011
29
8
Intangibles
Group
Completed
development
projects
Development
projects
in progress
Goodwill
DKK 1,000
DKK 1,000
DKK 1,000
Cost at 12 July 2011
Additions during the year
Disposals during the year
0
5,218
0
0
848
(169)
0
23,386
0
Cost at 31 December
5,218
679
23,386
Amortisation for the year
Impairment losses and amortisation
at 31 December
(487)
(487)
0
0
(390)
(390)
Carrying amount at 31 December
4,731
679
22,996
5-20 years
-
20 years
Amortised over
2011
DKK 1,000
Impairment losses and amortisation of intangibles are recognised in the
income statement under the following items:
Production costs
(487)
(390)
(877)
Annual Report 2011
30
8
Intangibles (continued)
Parent company
Completed
development
projects
Development
projects
in progress
Goodwill
DKK 1,000
DKK 1,000
DKK 1,000
0
5,218
0
0
848
(169)
0
8,038
0
Cost at 31 December
5,218
679
8,038
Amortisation for the year
Impairment losses and amortisation
at 31 December
(487)
(487)
0
0
(134)
(134)
4,731
679
7,904
5-20 years
-
20 years
Amortised over
2011
DKK 1,000
Impairment losses and amortisation of intangibles are recognised in the
income statement under the following items:
Production costs
(487)
(134)
(621)
Annual Report 2011
31
9
Group
Plant
and
machinery
Translation adjustment at year-end
rate
Cost at 31 December
Translation adjustment at year-end
rate
Depreciation for the year
Impairment losses and depreciation on
assets disposed of
Impairment losses and depreciation
at 31 December
Depreciated over
Other
fixtures,
fittings,
tools and
equipment
Leasehold
improvements
DKK 1.000
DKK 1,000
Property,
plant and
equipment
under
construction
DKK 1,000
0
0
0
0
62
983
0
275
2,755
(197)
166
2,368
0
0
132
(132)
1,045
2,833
2,534
0
(10)
(114)
(175)
(1,320)
(19)
(320)
0
0
0
193
0
0
(124)
(1,302)
(339)
0
921
1,531
2,195
0
4-12 years
4-11 years
3-11 years
2011
DKK 1,000
Impairment losses and depreciation of property, plant and equipment
are recognised in the income statement under the following items:
Production costs
Annual Report 2011
114
1,640
1,754
32
9
Property, plant and equipment (continued)
Parent company
Other
fixtures,
fittings,
tools and
equipment
DKK 1,000
0
38
(32)
Cost at 31 December
6
Depreciation for the year
Impairment losses and depreciation
at 31 December
(10)
32
28
Depreciated over
22
4-12 years
2011
DKK 1,000
Impairment losses and depreciation of property, plant and equipment
are recognised in the income statement under the following items:
Annual Report 2011
10
10
33
10 Investments in subsidiaries
Parent
company
2011
DKK 1,000
0
59,602
Cost at 31 December
59,602
Adjustments
Other adjustments
(418)
(8,840)
4,774
Value adjustments at 31 December
(4,484)
Amortisation of goodwill
(256)
Impairment losses and amortisation at 31
December
(256)
54,862
Investments in subsidiaries can be specified as follows:
Name
Registered
office
Novenco AS
Oslo, Norway
Novenco Marine A/S
Næstved, Denmark
Novenco (S) Pte. Ltd.
608840, Singapore
Share
capital
Voting
share and
ownership
interest
NOK 8
million
DKK 0.5
million
SGD
200,000
100%
100%
100%
Novenco Hi-Pres Air Handling
Equipment (Wuxi) Co., Ltd.
Wuxi, China
USD 3
million
100%
Novenco (Shanghai) Commercial &
Trading, Co., Ltd.
Shanghai, China
USD 1,000
100%
All foreign subsidiaries are recognised and measured as separate entities.
Annual Report 2011
34
11 Investments in associates
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
0
859
0
859
Cost at 31 December
859
859
Equity adjustments
Foreign currency translation
adjustment
(52)
(52)
111
604
111
604
Value adjustments at 31 December
663
663
1,522
1,522
Investments in Group and parent company associates are specified as follows:
Name
Group
Novenco Nippon Ltd.
Registered
office
Share
capital
Kobe, Japan
JPY 110
million
Voting
share and
ownership
interest
22.73%
All foreign associates are recognised and measured as separate entities.
Annual Report 2011
35
12 Contract work in progress
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
Work in progress at 31 December
Recognised profit
Work in progress at 31 December at
selling price
Of which invoiced on account
Net value ( () = payables)
513,864
94,288
404,965
78,532
608,152
(605,719)
483,497
(484,399)
2,433
(902)
38,727
19,622
(36,294)
2,433
(20,524)
(902)
The amount is included in the financial statements
under the following items
Contract work in progress included
under assets
Contract work in progress included
under liabilities and equity
Net value ( () = payables)
13 Prepayments
Prepayments are prepaid expenses relating to rent, IT support, IT licences and non-received royalty
income, etc.
14 Equity
The Company’s share capital totals DKK 5,000,000. The share capital is not divided into shares.
There have been no changes in the share capital during the last five years.
Annual Report 2011
36
15 Provisions for warranty commitments
Novenco Marine & Offshore A/S has normal warranty commitments in connection with deliveries
of goods and services. Provisions have been made for specific expenses; however, no provisions
have been made for expenses, the scope or timing of which is uncertain.
Group
Used during the year
Reversal
Provided during the year
Parent
company
2011
2011
DKK 1,000
DKK 1,000
1,591
(1,542)
3,418
3,467
1,591
(1,542)
3,418
3,467
33
155
(1,353)
867
(12,037)
(645)
8,941
233
(532)
(4)
33
0
(1,353)
867
(4,481)
3
6,084
0
0
(4)
(4,342)
1,149
16 Deferred tax
Goodwill
Equipment
Capitalised development costs
General warranty provisions
Recognised profit on payments received on account
Financial contracts on equity
Capitalised tax loss
Trade receivables
Pension obligation
Other adjustments
Deferred tax has been provided for at the current tax rate.
Annual Report 2011
37
17 Contingencies and other liabilities
The following binding agreements, falling due within 11 years, have been
concluded:
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
Rental obligations
Operating leases
Other supplier agreements
19,646
293
51,906
12,005
0
51,906
Total liabilities
71,845
63,911
7,546
4,314
Annual rent/lease payments amount to
Bank guarantees
The subsidiary Novenco Marine & Offshore A/S has given customers warranties on goods sold,
and such warranties amount to DKK 44,873 thousand.
18 Remuneration for auditors elected by the annual general meeting
Auditors
Tax consultancy
Annual Report 2011
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
460
33
210
20
493
230
38
19
Employees
Wages and salaries
Pension
Other social security costs
Group
Parent
company
2011
2011
DKK 1,000
DKK 1,000
47,546
5,721
5,777
8,932
739
42
59,044
9,713
The Executive Board and Board of Directors receive remuneration from Novenco A/S
which pays DKK 753,000 for remuneration of the Executive Board through a
management fee.
Average number of employees
Annual Report 2011
170
50
39
20 Related parties and ownership
structure
Controlling interest
Basis
Dania Capital K/S, c/o Moalem Weitemeyer Bendtsen, Amaliegade 35, DK-1256 Copenhagen K, Denmark
Principal shareholder
Ownership structure
The following shareholders are recorded in the Company’s register of shareholders as holding at
least 5% of the votes or at least 5% of the share capital:
Dania Capital K/S, c/o Moalem Weitemeyer Bendtsen, Amaliegade 3-5, DK-1256 Copenhagen K,
Denmark
Annual Report 2011
40

Novenco A/S

Transcription

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