Bong Ljungdahl Ab Interim Report, January - March 2000

BONG LJUNGDAHL AB INTERIM REPORT, JANUARY - MARCH 2000 * NET SALES INCREASED TO SKr 629 MILLION (338) * OPERATING PROFIT MORE THAN DOUBLED TO SKr 63 MILLION (31) * PROFIT AFTER NET FINANCIAL ITEMS INCREASED BY 77% TO SKr 46 MILLION(26) * EARNINGS PER SHARE AFTER TAX INCREASED TO Skr 3:55 (2:81) * EUROPE'S LARGEST ENVELOPE COMPANY FORMED THROUGH ACQUISITION OF BAUWENS Bong is a rapidly growing, international envelope company. The Group has annual sales of some SKr 2.5 billion, approximately 1900 employees and an output of some 15 billion envelopes per year at its units in Sweden, Denmark, Norway, Finland, Germany, Great Britain, Ireland, Belgium, Poland and Estonia. In recent years, Bong has played an active role in the current process of restructuring in the European envelope industry, where it sees worthwhile opportunities for further expansion. The acquisition of Bauwens was an important part of this process, as it means that Bong is now Europe's leading envelope company. SALES AND RESULT The quarter's turnover increased by SKr 291 million to SKr 629 million (338) as a result of the acquisition of Bauwens. After adjustment for this acquisition and the effects of currency fluctuations, the increase was slightly less than 4 per cent. The Group's operating profit for the first quarter, traditionally a strong period, more than doubled to SKr 63 million (31). The profit margin was 10 per cent (9). The marked improvement in the result is predominantly due to the newly acquired units within Bauwens. Generally favourable market conditions in Europe, as well as continued healthy and stable development within the envelope units belonging the former Bong Group, also contributed to the sharp increase in profit. Profit after net financial items rose by SKr 20 million to SKr 46 million (26). Currency fluctuations only had a marginal effect on the result. Earnings per share after tax and full conversion increased by 26 per cent to SKr 3.55 (2.81), taking into account the full effect of the slightly more than 1.6 million shares issued in connection with the acquisition of Bauwens throughout the quarter. ACQUISITION OF BAUWENS The acquisition of Bauwens, which has been consolidated with effect from January 1st , 2000, has created a leading European envelope company with a strong position on many of the large, northern European markets. A wide- ranging process of integration has now begun with the aim of benefiting from synergies estimated at SKr 40-60 million within purchasing, production co-ordination and capital expenditure. These synergies are expected to show through gradually as of the second half of 2000, and will make their full impact towards the end of 2001. The purchase price, excluding transaction and integration costs, amounts to some SKr 500 million, of which approximately SKr 355 million was paid in cash and the rest took the form of an issue of 1,634,651 shares in Bong Ljungdahl AB to the former owner of Bauwens. The acquisition brought goodwill of some SKr 300 million onto the books, which will be depreciated over 20 years. MARKET AND SALES The growth of electronic commerce and communication would appear to be having a positive effect on the volume of mail. Demand was firm on the Group's principal markets during the first quarter. In the Nordic countries the market is estimated to have grown by a few percentage points, and Bong has maintained its strong market position. The rate of market growth in Germany and England is still rising, reaching 4-5 per cent in the early weeks of 2000. Bong's new units report a particularly strong trend, and we estimate that we have raised our market share, especially in Great Britain. PRODUCTION AND PURCHASE In Sweden envelope print-over activities have now been concentrated in Kristianstad. Binder production has been transferred to Gdansk in Poland as planned and these activities have been discontinued in Kristianstad. The structural changes have been carried out without major problems and within the planned cost budget. As part of the restructuring in Belgium the envelope print-over capacity there has been greatly enlarged following the relocation/installation of a number of printing machines. The new factory and warehouse in Warsaw were opened in January and local production is now being steadily raised. The purchasing price of paper has risen sharply. The Finnish paper workers' strike and the structural changes caused some loss of production and limited supply. Price were raised quite sharply on several occasions during the spring and this trend is expected to continue. We have been able to offset this by raising our own prices, and expect to be able to continue doing so in the future. LIQUID FUNDS AND FINANCING Closing liquid funds amounted to SKr 73 million (49) and net debt rose by SKr 686 million to SKr 971 million (285) as a result of the acquisition of Bauwens. At the end of the period, equity amounted to SKr 591 million, of which the share issue in connection with the acquisition accounted for slightly more than SKr 137 million, after deduction of issue costs. The closing equity ratio was 27 per cent (39) and the debt-equity ratio was 1.64 (0.65) CAPITAL EXPENDITURE Capital expenditure on machinery, equipment and buildings, excluding that associated with company acquisitions, amounted to SKr 34 million, of which SKr 10 million was financed by means of leasing. EMPLOYEES The average number of employees was 1,873 (1,176). Acquired units accounted for an increase of 700. OUTLOOK The year began with favourable conditions on the Group's main markets, and our newly acquired units have made very good progress. At present, we see no signs that demand will slacken, except for normal seasonal fluctuations. Conditions are such that we can expect further strong growth in earnings during the year. Kristianstad, May 8th 2000 BONG LJUNGDAHL AB (publ) Lennart Pihl Managing director This interim report has not been subject to specific examination by the company's auditors. Further information may be obtained from Bong Ljungdahl AB's MD and CEO, Lennart Pihl; telephone (company) +46 44 20 70 00, (direct) +46 44 20 70 50, (mobile phone) +46 70 594 68 66 Next financial reports Six-monthly report January-June 2000 Thursday, August 17th 2000 Interim report January-September 2000 Friday October 27th 2000 QUARTERLY ACCOUNTS BONG LJUNGDAHL GROUP JAN-MARCH 2000 Jan-MarchJan-March Jan-Dec SUMMARY PROFIT AND LOSS 2000 1999 1999 Net turnover 628,8 338,2 1 222,9 Operating -559,8 -305,8 -1 123,2 costs Operating profit before 69,0 32,4 99,7 depreciation of goodwill Depreciation of goodwill -6,1 -1,9 -7,5 Operating 62,9 30,5 92,2 profit Net financial items -17,2 -4,7 -17,2 Profit after net financial items 45,7 25,8 75,0 Tax -14,5 -5,6 -18,9 Net profit after tax 31,2 20,2 56,1 SUMMARY BALANCE SHEET 2000-03-31 1999-03-1999-12-31 31 Fixed assets 1 409,2 633,1 681,5 Receivables 382,4 214,2 202,3 Stocks 328,1 185,5 168,9 Liquid funds 72,5 48,7 29,8 Total assets 2 192,2 1 081,5 1 082,5 Equity 591,0 422,3 433,7 Interest-bearing provisions 75,8 78,1 74,8 Non interest-bearing provisions 208,7 85,1 92,1 Interest-bearing liabilities 986,8 261,9 278,8 Non interest-bearing liabilities 329,9 234,1 203,1 Total equity and liablities 2 192,2 1 081,5 1 082,5 Jan-MarchJan-March Jan-Dec FINANCIAL RATIOS 2000 1999 1999 KRONOR PER SHARE Earnings after 3,55 2,81 7,83 tax Equity 68,98 61,19 62,77 RATIOS Operating margin before 11,0% 9,6% 8,2% depreciation of goodwill Operating 10,0% 9,0% 7,5% margin Profit margin 7,3% 7,6% 6,1% Return on 21% 19% 13% equity Return on capital employed 15% 16% 12% Debt-equity 1,64 0,65 0,73 ratio Equity ratio 27% 39% 40% Interest cover 3,7 6,1 4,9 Capital 1 653,6 762,3 787,3 employed Net interest-bearing debt 970,6 284,6 315,8 Average number of shares (after 8 799 4917 164 840 7 164 840 full conversion) QUARTERLY COMPARISONS GROUP (MSEK) 1/20004/19993/19992/1999 1/1999 4/19983/1998 2/1998 1/1998 Net 628,8 316,6 265,5 302,6 338,2 336,4 228,4 255,3 275,3 turnover Operating -565,9-292,0-251,0-280,0 -307,7 -312,2-217,6 -247,0 -262,4 costs Operating 62,9 24,6 14,5 22,6 30,5 24,2 10,8 8,3 12,9 profit Capital gain on sale of subsidiary - - - - - - - - 7,0 company Net -17,2 -4,6 -3,7 -4,2 -4,7 -5,3 -3,6 -2,6 -3,9 financial items Result 45,7 20,0 10,8 18,4 25,8 18,9 7,2 5,7 16,0 after net financial items CASH FLOW ANALYSIS GROUP (MSEK) Jan-March Jan-March Jan-Dec 2000 1999 1999 Operating profit 62,9 30,5 92,2 Net financial items -13,7 -4,7 -17,2 Tax paid -14,0 -6,0 -15,2 Depreciation 33,2 16,8 65,1 Other items not affecting 2,6 - -12,7 liquidity 71,0 36,6 112,2 Change in working -12,7 12,4 21,1 capital Cash flow from current 58,3 49,0 133,3 operations Capital expenditure -25,2 -21,5 -98,3 Acquisitions -301,3 - -21,8 Cash flow after capital -268,2 27,5 13,2 expenditure etc ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/05/08/20000508BIT01060/bit0001.doc http://www.bit.se/bitonline/2000/05/08/20000508BIT01060/bit0002.pdf