4th Quarter 1997
| HIGHLIGHTS
FINANCIALS TOMRA had another good year in 1997 with progress in several areas. Operating revenues increased to NOK 1,201 million, up from NOK 784 million in 1996 while the operating profit increased by 39% to NOK 212 million. The annual tax expenses came in slightly lower than estimated with 31.6% and earnings per share increased from NOK 2.72 in 1996 to NOK 3.52 in 1997. The balance sheet shows an increase of 59% and totals NOK 1,409 million while the equity ratio stands at 73%. At the Annual General Meeting in April 1997 TOMRA made a private placement of shares to management in Norway, which resulted in a social security expense of NOK 5.6 million. This expense, along with other expenses connected to share issues, has been charged directly against equity. Oslo Stock Exchange is of the opinion that social security premiums should be expensed. This question is of great importance to Norwegian technology companies. TOMRA along with six other companies disagree with the Oslo Stock Exchange. ANNUAL REPORT There are no changes in consolidation or accounting principles from what was presented in the annual report of 1996. The financial statement is audited. Segment information Sales in Europe amounted to NOK 515 million against NOK 438 million in 1996, an increase of 18%. The sales increase in Europe is entirely generated from the acquisitions of the Austrian distributor and Halton. The slow development in the rest of Europe is mainly explained by reduction of sales in Sweden and Finland which both had extraordinary high activity in 1996 due to changes of the deposit systems. TOMRA`s market share in Europe is, after the acquisition of Halton, in excess of 95%. Growth in Europe for 1998 is expected to be on the level of 1997. Sales in America amounted to NOK 686 million against NOK 345 million in 1996, an increase of 99%. The growth has been less influenced by acquisitions in 1997 and organic growth represents 77%. The number of new machine installations was, as expected, lower than in 1996. In February 1998 TOMRA signed a letter of intent with Wise Recycling LLC to acquire the west-coast operations of the former Reynolds Recycling Division. The Division has significant activities in California along with the non-deposit states Colorado, Washington, New Mexico and Hawaii. 1997 revenues were USD 40 million with an operating profit of USD 0.9 million. It is anticipated that the transaction will be an asset only acquisition with no goodwill. Negotiations are expected to be finalized before the end of February. A positive conclusion of this acquisition will be an important element in TOMRA`s California strategy and also for development of a non-deposit strategy. TOMRA`s market share of new machine installations remained in excess of 90% in 1997, while the accumulated market share increased to 80%. We remain optimistic towards the market opportunities and expect continued strong growth in the US market. As reflected in the activity based table above, material handling is the fastest growing area in 1997 and represents 30% of total revenues. This development is expected to continue also into 1998. Material handling currently has lower margins than the remaining business. Operating expenses Following the acquisition of Halton, TOMRA has had expenses estimated to NOK 4.5 million connected to integration of the European sales and service network. This process is now finalized. In the US market TOMRA had startup costs estimated to NOK 4,2 million connected to material handling in Massachusetts and Michigan. TOMRA has a bonus system for all employees divided between a share and a cash element. The Board of Directors has authori-zation from the Annual General Meeting to issue up to 150.000 shares at a price of NOK 74.50 for the share element. For the cash element, a total of NOK 7.4 million is included in the Profit & Loss statement. Financial items and taxes Net interest expenses amounted to NOK 13.3 million in 1997, currency gains amounted to NOK 3.3 million and profit from affiliated companies NOK 1.9 million. The actual tax level for 1997 came out at 31.6% against an estimate of 32%. In 1998 the tax level is expected to increase to 34%. SHAREHOLDERS TOMRA had 4,673 shareholders by the end of 1997. The largest were: State Street Bank 11.1%, Chase Manhattan - UK Clients 8.1%, Deutsche Bank 3.7%, Caisse des Depots et Consignations 3.3%, Morgan Guarantee Trust 3.2%. The distribution of shareholders by country shows; Norway 30.1%, USA 23.2%, UK 17.9%, Germany 6.1% and France 6.0%. The share price increased from NOK 99.50 to NOK 165.00 during 1997. Number of shares traded during 1997 was 55.9 million against 72.5 million in 1996. The Board recommends a dividend per share of NOK 0.40 (+33%) representing a distribution ratio of 12%. The Annual General Meeting will be held April 21, 1998 in Asker. Asker, 19 February 1998 |