annual report 2005 financial
DESCRIPTION
Annual report 2005 FinancialTRANSCRIPT
SIOEN INDUSTRIES I FINANCIAL OVERVIEW
86
87
COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS
I. CONSOLIDATED BALANCE SHEET
II.1 CONSOLIDATED INCOME STATEMENT BY FUNCTION
II.2 CONSOLIDATED INCOME STATEMENT BY NATURE
III. CASH FLOW STATEMENT
IV. EQUITY STATEMENT
V. DISCLOSURES
V.1 KEY ACCOUNTING RULES
V.2 SEGMENT INFORMATION
V.3 EXCHANGE RATE
V.4 DETAILED INCOME STATEMENT
V.5 DETAILED BALANCE SHEET
VI. OTHER
VII. IFRS
VIII. STATUTORY AUDITOR’S REPORT
IX. STATUTORY ANNUAL ACCOUNTS OF SIOEN INDUSTRIES
X. PROPOSAL TO THE ANNUAL MEETING
FINANCIAL CALENDAR
ADDRESSES
89
92
94
95
96
97
98
106
109
110
113
132
135
143
144
147
149
150
FINANCIAL OVERVIEW
SIOEN INDUSTRIES CONSOLIDATED
88
SIOEN INDUSTRIES I COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS
In the Industrial Applications, segment, the effi ciency improve-
ment in the industrial processes made the EBIT rise by 4% to 10%
of turnover (EUR 1.3 million less personnel expenses, compared to
last year for the same turnover). Several signifi cant write-offs on
receivables, set up in 2004, could be reversed here.
The services and other goods and personnel expenses rose
slightly, due partly to the increase in energy prices. The cost
structure remains fi rmly under control.
The other operating revenue rose from EUR 1.9 million to 4.0
million, coming mainly from the gain (EUR 1.1 million) on the
sale of buildings in Antwerp (Sioen NV) and Southern France (SIP),
indemnities received in the amount of EUR 0.2 million, rental
income in Nordifa (EUR 0.3 million) and Roland (EUR 0.4 million),
government grants on R&D in Ireland and Belgium (EUR 0.2 mil-
lion) and another EUR 1.4 million for miscellaneous revenue items
under EUR 50k.
The other operating expenses rose from EUR 4.9 million to EUR
5.7 million and consist mainly of local taxes. The company made a
provision of EUR 0.8 million relating to a dispute over real estate
tax.
The depreciation method for inventories is consistently applied,
as is the case for trade receivables. The real losses on customers in
2005 amounted to only EUR 0.3 million, which represents 0.1% of
turnover.
NET PROFIT
The fi nancial result amounts to EUR -5.5 million, as compared to
EUR -7.7 million in 2004. The average net fi nancial debt position
rose at the end of the year by 7.7% to EUR 126.8 million (in 2004
EUR 117.7 million). The fi nancial charges fell under the impact of
the low interest rate and the realised exchange rate gains (EUR 0.5
million) under the current hedging contracts. Thanks to the better
fi nancial results, Sioen realised a profi t of EUR 19.9 million before
taxes, as compared to EUR 19.6 million last year.
TURNOVER
In 2005 the Sioen Industries Group realised a turnover of EUR
316.2 million, as compared to EUR 309.8 million last year, i.e. an
increase of 2%.
Thus the Coating Division remained at a status quo (+0.06%). By
contrast, the Apparel Division grew by 14,5%, with the turnover of
EUR 68.3 million in 2004 rising to EUR 78.1 million in 2005. The
“Industrial Applications” Division was confronted with a decline in
its activities by 5.2%. The turnover fell from EUR 70.9 million in
2004 to EUR 67.4 million in 2005. In this segment we are waiting
for the defi nitive attribution of a number of calls for tender won by
the Group. Probably these will contribute to the turnover of 2006.
GROSS MARGIN – EBITDA - EBIT
Last year, the operational cash fl ow (EBITDA) of the Coating
Division was strongly infl uenced by the historically high oil prices
and the uncertainty about economic development in certain
countries. This means that the whole sector continues to struggle
with a constant increase in the prices of the primary raw materials
(polyester granulates, PVC powders, plasticisers, technical fi llers,
pigments, etc.). On the whole, polymers, raw materials derived
from petroleum, constitute the bulk of the purchased raw materials.
The effects of this additional cost were mitigated as much as
possible, fi rst by implementing price increases and secondly by
making continuous efforts in the area of effi ciency increases and
cost savings. As a result, the impact of the high raw material prices
on the EBITDA was limited: the EBITDA fell to 15% of turnover
compared to 17% in 2004.
In the Apparel Division, under the impact of changes in the sales
mix and the supplementary “low end” products, the operational
cash fl ow (EBITDA) in the past year amounted to 7% compared to
8% in the previous year. The EBIT follows the same pattern as the
operating cash fl ow. The charges for depreciation and impairments
on customers and non-revolving inventories rose (7% in 2004 and
4% in 2005).
The operating cash fl ow of this division amounts to 13% of the
turnover, compared with 9% the previous year. This is primarily
attributable to a signifi cant improvement in the effi ciency of indu-
strial processes in these branches.
89
SIOEN INDUSTRIES I COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS
RISK FACTORS
Sioen Industries NV is a company listed on Euronext that does not
itself engage in any industrial activity. Sioen Industries holds
participating interests in companies active in the following sectors:
The application of coatings to technical textiles.
The design, development and production of protective clothing.
The processing of heavy technical fabrics into fi nished products.
With regard to its income, Sioen Industries is dependent on the
economic success of these divisions. In turn, these divisions are
dependent on general economic trends, and more specifi cally:
❱ The volatility of oil prices and the (more or less related)
volatility of the prices of the primary raw materials. (PVC,
Polyester, plasticisers, etc.)
❱ With regard to the processing of heavy technical fabrics, the
evolution of the company has kept pace with the development
of the truck sector.
❱ The protective clothing division follows the current trend in
industrial activity in Western Europe, where less emphasis is
being put on volume than on the technical specifi cations of the
clothing.
❱ And last but not least we may also note that there is a certain
dependence on the weather.
The consolidated actual tax rate amounted to 32% in 2005
compared to 33.19% in 2004. The reversal and the non-recognition
of tax assets on the one hand and the reversal of earlier
established tax liabilities on the other keep the actual tax rate at
the same level.
Given that in 2005 there are almost no more minority
shareholders in the subsidiaries, the net result (group‘s share)
rose to EUR 13.6 million in 2005, as compared to EUR 12.3 million
in 2004.
INVESTMENTS
The total acquisition of property, plant and equipment in 2005
amounted to EUR 16.6 million (including capital grants). The assets
under construction concerns the new coating line in Saint Frères
Enduction, the warehouse under construction in EMB and the
needle felt production line in Nordifa which was not yet in use in
2005. In 2005 a capital grant was received from the Walloon
Region for EUR 0.8 Million. This was deducted from the acquisitions.
BALANCE SHEET
The working capital rose by EUR 17 million, an increase of 4% on
turnover, and is now situated at 34% compared to 29.4% in 2004.
The inventory rose by EUR 8 million, of which EUR 6.3 million is in
the Apparel Division due to a large order that is being delivered at
the beginning of 2006. The customers increased by EUR 5.6 million,
of which EUR 3.5 million is in the Apparel Division due likewise to
partial delivery of a major order at the end of 2005.
We note that the level of the working capital at the end of 2004
was distorted by a one-time effect (liability towards minority
shareholder in the amount of EUR 5.8 million).
90
91
SIOEN INDUSTRIES I I. CONSOLIDATED BALANCE SHEET IN THOUSANDS EURO
ASSETS 2004 2005
Non-current Assets Note
Intangible assets V.5.1 2.796 2.267
Goodwill V.5.2 16.548 16.548
Property, plant & equipment V.5.4 141.442 142.278
Long-term trade receivables V.5.5 - 59
Other long-term assets V.5.5 684 524
Deferred tax assets V.5.15 9.261 7.010
TOTAL NON-CURRENT ASSETS 170.731 168.686
Current Assets
Inventories V.5.6 70.466 78.463
Trade receivables V.5.7 63.818 69.416
Other receivables V.5.8 8.477 11.118
Other investments & deposits V.5.8 1.963 260
Cash and cash equivalents V.5.8 12.923 8.312
Deferred charges and accrued income V.5.8 2.282 1.428
TOTAL CURRENT ASSETS 159.930 168.997
TOTAL ASSETS 330.661 337.683
The consolidated income state 2005 has been approved
by the Board of Directors for publication on 28 March 2006.
92
LIABILITIES 2004 2005
Equity Note
Share Capital 46.000 46.000
Retained earnings 72.439 81.318
Hedging and translation reserves V.5.14 (137) 2.046
Minority interests - 19
TOTAL EQUITY IV. 118.302 129.383
Non-current liabilities
Interest-bearing loans – payable after one year V.5.11 54.336 53.831
Provisions V.5.10 966 1.023
Pension obligations V.5.9 1.198 1.256
Deferred tax liabilities V.5.15 21.581 16.821
Finance leasing – payable after one year V.5.12 14.153 13.049
Other amounts - payable after one year V.5.11 33 33
TOTAL NON-CURRENT LIABILITIES 92.267 86.012
Current liabilities
Trade and other payables V.5.13 31.084 36.510
Interest-bearing loans - up to one year V.5.11 64.045 68.355
Provisions - up to one year V.5.10 1.521 379
Pension obligations - up to one year V.5.9 64 65
Tax liabilities V.5.13 7.216 5.589
Finance leasing - up to one year V.5.12 39 77
Other amounts - payable up to one year V.5.13 16.123 11.313
TOTAL CURRENT LIABILITIES 120.092 122.288
TOTAL LIABILITIES 330.661 337.683
SIOEN INDUSTRIES I I. CONSOLIDATED BALANCE SHEET IN THOUSANDS EURO
93
SIOEN INDUSTRIES I II.1 CONSOLIDATED INCOME STATEMENT BY FUNCTION I IN THOUSANDS OF EUROS
See note V.4 2004 % of 2005 % of
Turnover Turnover
Net sales 309.802 100,0% 316.237 100,0%
Cost of sales -242.270 -78,2% -253.214 -80,1%
Gross profi t 67.532 21,8% 63.022 19,9%
Sales and marketing expenses -16.246 -5,2% -15.896 -5,0%
Research and development expenses -2.723 -0,9% -4.217 -1,3%
General and administrative expenses -21.114 -6,8% -19.887 -6,3%
Other operating income/expenses 666 0,2% 2.940 0,9%
Non-recurrent result(1) -1.129 -0,4% -505 -0,2%
Operating result 26.987 8,7% 25.457 8,1%
Financial result -7.341 -2,4% -5.470 -1,7%
Result before taxes 19.646 6,3% 19.987 6,3%
Taxes -6.520 -2,1% -6.399 -2,0%
Result after taxes 13.126 4,2% 13.588 4,3%
Minority interests -874 -0,3% -6 0,0%
Share of the group 12.252 4,0% 13.582 4,3%
EBITDA 44.794 14,5% 43.647 13,8%
EBIT 26.987 8,7% 25.457 8,1%
Cash fl ow 31.093 10,0% 29.535 9,3%
NOPAT 20.467 6,6% 19.058 6,0%
(1) This concerns one-time restructuring costs.
94
2004 % of 2005 % of
Turnover Turnover
Net sales 309.802 316.237
Change in inventories (9.871) -3% 4.647 1%
Other operating income 1.969 1% 4.026 1%
OPERATING REVENUE 301.900 324.910
Cost of sales 141.803 46% 162.182 51%
Gross margin 51,04% 50,18%
Services and miscellaneous goods 47.511 15,3% 49.368 15,6%
Remuneration, social security and pensions 61.719 19,9% 63.450 20,1%
Depreciation 17.838 5,8% 17.899 5,7%
Amounts written off on inventories and trade receivables 1.051 0,3% 862 0,3%
Provisions for liabilities and charges (1.081) -0,3% (572) -0,2%
Other operating costs 4.945 1,6% 5.758 1,8%
Non-recurrent result 1.129 -0,4% 505 -0,2%
OPERATING RESULT 26.987 8,7% 25.457 8,1%
FINANCIAL RESULT (7.341) -2,4% (5.470) -1,7%
RESULT BEFORE TAXES 19.646 6,3% 19.987 6,3%
TAXES (6.520) -2,1% (6.399) -2,0%
RESULT AFTER TAXES 13.126 4,2% 13.588 4,3%
MINORITY INTERESTS (874) -0,3% (6) -0,0%
SHARE OF THE GROUP 12.252 4,0% 13.582 4,3%
EBIT 26.987 25.457
EBIT% 8,7% 8,1%
EBITDA 44.794 43.647
EBITDA% 14,5% 13,8%
Cash fl ow 31.093 29.535
Cash fl ow% 10,0% 9,3%
Capital employed 251.713 268.686
NOPAT 20.467 19.058
ROCE 8,13% 7,09%
SIOEN INDUSTRIES I II.2 CONSOLIDATED INCOME STATEMENT BY NATURE I IN THOUSANDS OF EUROS
95
SIOEN INDUSTRIES I III. CASH FLOW STATEMENT
2004 2005
Profi t from recurrent operating activities 28.115 25.962
Non-recurrent result (1.129) (505)
Depreciation 17.838 17.899
Impairments -
Amounts written-off on inventories and receivables 1.051 862
Changes in provisions (98) (1.026)
Changes in working capital 18.883 (16.664)
Other changes 205 (472)
Changes in deferred tax (1.316) (2.508)
Cash fl ow from operating activities 63.549 23.549
Tax (6.520) (6.399)
Net cash fl ow from operating activities 57.029 17.150
Interest received 308 343
New participations (5.828)
Investments in intangible and tangible fi xed assets (11.678) (19.571)
Desinvestments in intangible and tangible fi xed assets 961 534
Increase in investment grants 1.660 830
Net cash fl ow from investing activities (14.577) (17.865)
Net cash fl ow before fi nancing activities 42.452 (715)
Interest paid (6.925) (6.280)
Dividend distributed (4.278) (4.706)
Increase in long term interest-bearing loans 15.000 20.000
Decrease in long term interest-bearing loans (22.085) (24.293)
Increase/(Decrease) in short term interest-bearing loans (22.518) 8.097
Increase/(Decrease) in fi nance leasing 2.658 (1.066)
Other (560) (18)
Exchange rate result (163) 484
Cash fl ow from fi nancing activities (38.871) (7.781)
Effect of exchange rate fl uctuations (137) 2.182
Changes in cash and cash equivalents 3.444 (6.314)
Net cash position at start of period 11.443 14.887
Net cash position at end of period 14.887 8.572
96
2005
At the end of last fi nancial year 46.000 72.439 -137 0
Profi t of the year 13.582 6
Dividends -4.707
Hedging for increases/decreases in value
not included in profi t and loss statement -636
Deferred taxes 216
Currency differences 2.603 17
Others 4 -4
At the end of current fi nancial year 46.000 81.318 2.466 -420 19
2004
At the end of last fi nancial year 46.000 67.073 0 2.497
Profi t 12.252 874
Dividends -4.454
Hedging for increases
Deferred taxes
Currency differences -137 -4
Others(1) -2.432 -3.367
At the end of current fi nancial year 46.000 72.439 -137 0
(1 ) At the end of 2004 Sioen Industries NV purchased the remaining 25% of Coatex, Saint-Frères Confection and Bacam. The goodwill was
deducted from the consolidated reserves (see notes V.5.16).
SIOEN INDUSTRIES I IV. EQUITY STATEMENT
Cap
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Rese
rves
Conv
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on d
iffer
ence
s
Hed
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Min
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97
IFRS 2 - Share-based payment. Sioen Industries has opted to apply
the transitional measures prescribed by IFRS 2. As of 1 January
2004, no new equity instruments have been issued.
General principles
The consolidated annual accounts give a general overview of the
Group’s activities and the results obtained. They give an accurate
picture of the entity’s fi nancial position, fi nancial performance and
cash fl ow, and are drawn up on a going concern basis.
The annual accounts are stated in thousands of euros, as the euro
is the currency of the primary economic environment in which the
Group is active. The annual accounts of foreign holdings are
converted in accordance with the principles described in the
section ‘Foreign currencies’.
The consolidated accounts are presented on the basis of the
historical cost method, unless otherwise stipulated in the
accounting principles set out below.
Foreign currencies
On the basis of the Group’s relevant economic environment and its
transactions, the euro has been chosen as the reporting currency.
Foreign subsidiaries’ fi nancial statements are converted as follows:
Transactions in foreign currencies are converted at the exchange
rate which applied on the date of the transaction. On each balance
sheet date, cash assets and liabilities expressed in foreign currency
are converted at the closing rate. Non-cash assets and liabilities
which are shown at their fair value in a foreign currency are
converted at the exchange rate which applied when their fair value
was determined.
Gains and losses arising from such conversions are recorded in the
profi t and loss account. However, if they are deferred, they are
recorded as equity. Assets and liabilities from the Group’s foreign
activities are converted at the closing rate.
Income and expenses are converted at the average exchange rate
over the period, unless exchange rates have fl uctuated greatly. The
resultant exchange rate differences are recorded in equity, under
the heading “Conversion differences”.
SUMMARY OF KEY ACCOUNTING RULES
The consolidated annual accounts of Sioen Industries NV (the
‘Company’) include the annual accounts of the Company, its subsi-
diaries and those entities which are consolidated by the proportio-
nal method (together referred to as the ‘Group’ from now on).
The consolidated fi nancial statements are drawn up in conformity
with the International Financial Reporting Standards (IFRS), as
accepted within the European Union.
On the fi rst application of the IFRSs, in 2005, the consolidated
annual accounts will be drawn up in accordance with IFRS 1 –
First-time adoption of International Financial Reporting Standards.
IFRS 1 I First-time adoption of
International Financial Reporting Standards
In accordance with IFRS 1- First-time adoption of IFRSs, the
opening balance sheet has been drawn up by retroactively applying
those IFRSs which were in force on the reporting date. However,
IFRS 1 sets out a number of exceptions which can be applied.
Sioen Industries has applied the following exceptions:
Business combinations which predate the transition date do not
have to be restated retroactively. IFRS 3 – Business combinations
was not retroactively applied to business combinations which took
place before 1 January 2003. Certain tangible fi xed assets were
valued at market value. This market value is used as the presumed
cost price. This exception was used for a limited number of items in
tangible fi xed assets, mainly land.
Cumulative actuarial gains and losses were recognised in equity
on the transition date. After the transition date, Sioen Industries
will continue to apply the current ‘corridor’ as stipulated in IAS 19
- Employee benefi ts.
Previously recognised conversion differences, deriving from the
conversion into euros of foreign-currency fi nancial statements of
foreign entities, were reset to 0.
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
98
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
All intercompany transactions, intercompany balances and
unrealised profi ts on intercompany transactions are eliminated
unless they relate to a permanent write-down.
Minority interests are valued on the basis of their share in the fair
value of the recorded assets, liabilities and contingent liabilities.
Balance sheet
Intangible assets
Intangible assets are valued at cost price. Intangible assets are
recognised if it is likely that the Group will receive the associated
future economic benefi ts and if the asset’s cost price can be
reliably determined. After their initial recognition in the accounts,
all intangible assets are valued at cost price, less any accumulated
depreciation or impairments. Intangible assets are depreciated on
a straight-line basis over the best estimate of their economic life.
The remaining economic life and the depreciation method used
are reassessed at the close of every fi nancial year. Any change in
the economic life of an intangible asset is treated as a revaluation.
Internally generated intangible assets are only recognised if all the
following conditions are satisfi ed:
❱ an identifi able asset has been generated
❱ it is likely that the generated asset will yield future economic
benefi ts; and
❱ the asset’s cost price can be reliably determined.
Subsequent expenditure on capitalised intangible assets is only
included in the balance sheet if it increases the likely future
economic benefi ts associated with the asset concerned. All other
expenditure is recorded in the profi t and loss account at the time
it is incurred.
Licences, patents and similar rights
Expenditure on purchased licences, patents, trademarks and similar
rights is capitalised and depreciated on a straight-line basis over
the contractual term, where applicable, or over the estimate eco-
nomic life, which is deemed to be no more than fi ve years.
If a foreign activity is disposed of, the cumulative amount of the
exchange rate differences that was recognised in equity is recorded
in the profi t and loss account.
Goodwill and adjustments to the fair value arising on the acquisi-
tion of a foreign entity are treated as assets and liabilities of the
foreign entity and converted at the closing rate.
Consolidation principles
Subsidiaries
Subsidiaries are companies over which the Company exercises a
decisive infl uence (‘control’). Control is the power to steer an
entity’s fi nancial and operational policy in order to derive benefi t
from its activities. The consolidation of subsidiaries starts on the
date on which the Group acquires control over them and stops
when it loses that control. The companies in question are
accounted for by the full consolidation method.
Subsidiaries’ annual accounts are drawn up for the same fi nancial
year as those of the parent company and on the basis of uniform
fi nancial reporting principles for comparable transactions and other
events in similar circumstances.
Combinations of companies
If the Group takes over an entity or business activity, the
identifi able assets, liabilities and contingent liabilities of the party
which has been taken over are adopted at their fair value.
Subsidiaries’ fi nancial statements are included in the scope of
consolidation from the date of acquisition until control ceases.
The difference between the cost price and the acquiring party’s
stake in the net fair value of the identifi able assets, liabilities and
contingent liabilities is recorded as goodwill. If this difference is
negative, the surplus, after reassessment of the fair values, is
accounted for directly in the profi t and loss account.
If the group increases its interest in an investment in which it did
not yet have control, the surplus or defi cit compared with the net
asset, after adjustment to the fair value that was acquired, is
processed as if it were a new acquisition according to the
methodology explained in the above section. If the group increases
its interest in an investment in which it already had control, the
greater or lesser price that was paid vis-à-vis the share in the net
assets that was acquired, is included directly in the company’s own
equity.
99
Goodwill
Goodwill represents the additional premium paid on the
acquisition of an interest over the fair value of the Group’s interest
in the acquired assets and liabilities at the time of acquisition.
Goodwill is recorded as an asset and subjected to a impairment
test at least once a year. Any impairment loss is immediately
recorded in the profi t and loss account and is not subsequently
written back.
Negative goodwill represents the amount by which the fair value
of the Group’s interest in the acquired assets and liabilities at the
time of acquisition exceeds the price paid.
On the disposal of a subsidiary, associated undertaking or entity
over which joint control is exercised, the related goodwill is
included in the calculation of the gain or loss on disposal.
Tangible fi xed assets
Tangible fi xed assets are valued at cost price less accumulated
depreciation and impairments. A tangible fi xed asset is
recognised if it is likely that the Group will receive the associated
future economic benefi ts and if the asset’s cost price can be reliably
determined.
The cost price includes all direct costs and all directly attributable
costs incurred in order to bring the asset to the location and
condition necessary for it to function in the intended way. Interest
during construction is not capitalised.
Subsequent expenditure associated with a tangible fi xed asset is
usually recorded in the profi t and loss account as it is incurred.
Such expenditure is only capitalised if it can be clearly shown to
result in an increase in the expected future economic benefi ts
from the use of the tangible fi xed asset compared with the original
estimate. Repair and maintenance costs which do not increase the
likely future economic benefi ts are recorded as costs as they are
incurred.
The different categories of tangible fi xed assets are depreciated by
the straight-line method over their estimated economic life.
Depreciation commences once the assets are ready for their
intended use.
Computer software
Expenditure relating to the development or maintenance of
computer software is normally offset against the result of the
period in which it is incurred. Only external expenditure which is
directly related to the purchase and implementation of purchased
software is recorded as an intangible asset and depreciated on a
straight-line basis over three years. Purchased ERP software and
the associated implementation costs are depreciated on a
straight-line basis over seven years.
Research and development
Research expenditure with a view to the acquisition of new
scientifi c or technological insights or knowledge is included as
a cost in the profi t and loss account as it arises. Development
expenditure in which research results are used in a plan or design
for the production of new or substantially improved products and
processes prior to commercial production or implementation is
only recognised in the balance sheet if all the following conditions
are satisfi ed:
❱ the product or process is precisely defi ned and the expenditure is
individually identifi able and reliably measurable;
❱ the product’s technical feasibility has been suffi ciently
demonstrated;
❱ the product or process will be commercialised or used within
the company;
❱ the assets will generated future economic benefi ts (e.g. a
potential market exists for the product or its internal usefulness
has been suffi ciently proven);
❱ the appropriate technical, fi nancial and other resources are
available to fi nalise the project.
If the above criteria are not satisfi ed, the development costs are
taken to the profi t and loss account as they arise. Capitalised
development costs are depreciated on a straight-line basis over
the expected duration of the generated benefi ts from the start of
commercial production or the implementation of the product or
process.
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
100
The estimated economic life of the main tangible fi xed assets lies
within the following ranges:
Buildings: 20 years
Machines: 5 to 15 years
Equipment: 10 years
Furniture: 5 years
Hardware: 5 years
Vehicles: 5 years
If an asset’s book value is lower than the estimated realisable
value, it is immediately written down to the realisable value.
The gain or loss on the sale or disposal of an asset is determined
as the difference between the net income on disposal and the
asset’s book value. This difference is recorded in the profi t and loss
account.
Lease agreements
Financial leasing
Lease agreements which assign to the Group all the main risks
and benefi ts associated with ownership are regarded as fi nancial
leasing. The assets acquired under fi nancial leasing arrangements
are stated in the balance sheet at their fair value at the start of
the lease agreement, or, if this is lower, at the present value of
the minimum lease payments, less accumulated depreciation and
impairments.
The discount rate used in the calculation of the present value of
the minimum lease payments is the interest rate implicit in the
lease agreement, where this can be determined, or otherwise the
company’s marginal borrowing rate. Initial direct costs are included
in the capitalised amount. Lease payments are broken down into
interest charges and repayments of the principal. The interest
charges are spread over the duration of the lease agreement such
that a constant periodic interest rate is obtained on the
outstanding balance for each period. A fi nancial lease agreement
results in the recording of both a depreciation amount and an
interest charge in each period. The depreciation rules for assets
acquired under fi nancial leasing arrangements are consistent with
those for assets over which full ownership is acquired.
Operational leasing
Lease agreements in which all the main risks and benefi ts
associated with ownership reside with the lessor are regarded as
operational leasing. In operational leasing, the lease payments are
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
101
recorded as costs and spread on a straight-line basis over the lease
period. The total value of discounts or benefi ts granted by the lessor
is offset against the leasing costs and spread on a straight-line basis
over the lease period.
Property investments
A property investment, i.e. one which is maintained in order to
generate rental income, an appreciation of value or both, is shown
at fair value on the balance sheet date. Gains or losses arising from
a change in the fair value of a property investment are recorded in
the results for the period in which they arise.
Financial investments
Investments are recorded in/ removed from the accounts on the
transaction date, i.e. the date on which an entity undertakes to
buy or sell the asset in question. Financial investments are valued
at the fair value of the price paid, plus the transaction costs.
Investments held for trading or available for sale are recorded at
their fair value. If investments are maintained for trading purposes,
the gains and losses arising from changes in the fair value are taken
to the profi t and loss account for the period in question. In the
case of investments which are available for sale, gains and losses
arising from changes in the fair value are immediately recognised
in equity until the fi nancial asset is sold or subject to impairment.
In this case, the cumulative gain or loss which had previously been
recognised in equity is included in the profi t and loss account for
the period. Holdings which are not classifi ed as available for sale,
which are not listed on an active market and whose fair value
cannot reliably be determined using alternative valuation rules are
valued at cost price. Financial investments which are held until
they mature are valued at their amortised cost price, using the ef-
fective interest method. This does not apply to short-term deposits,
as these are valued at their cost price.
Investment grants
Investment grants relating to the purchase of tangible fi xed assets
are offset against the purchase price or manufacturing cost of the
assets in question. The expected amount is recorded in the balance
sheet at the time of initial approval, and, if necessary, corrected
subsequently at the time of defi nitive allocation of the grant.
The grant is recorded in the profi t and loss account in proportion
with the depreciation of the tangible fi xed assets for which it was
obtained.
Deferred taxes are taxes which are expected to be paid or
recovered on the basis of differences between the book value of
assets or liabilities in the annual accounts and their taxable value
used for the calculation of the taxable profi t. They are account for
using the balance sheet liability method. Deferred tax liabilities
are usually recognised for all taxable temporary differences and
deferred tax receivables are recognised to the extent that it is likely
that a taxable profi t will be available against which the recoverable
temporary difference can be offset. Such assets and liabilities are
not recorded if the temporary differences arise from goodwill or
from the initial recognition (other than in connection with a
business combination) of other assets and liabilities in a transaction
which has no effect on the taxable profi t or the profi t before tax.
Deferred tax liabilities are recognised for taxable temporary
differences which relate to investments in subsidiaries, associated
undertakings and enterprises accounted for by the equity method,
unless the Group can determine the time when the temporary
difference will be resolved or if it is likely that the temporary
difference will not be resolved in the near future.
The book value of deferred tax receivable is assessed at every
balance sheet date and reduced if it is no longer likely that
suffi cient taxable profi t will be available to make it possible to use
all or some of the benefi t of the deferred tax receivable.
Deferred taxes are valued on the basis of the tax rates which are
expected to apply in the period in which the tax recovery is
realised or the liability is settled. Deferred taxes are recorded as
income or expenses in the profi t and loss account for the period,
unless the taxation arises from a transaction or event that has
been directly included in equity. In this case, the deferred tax is
also accounted for in equity.
Pensions and related liabilities
In accordance with laws and practices of each country, associated
entities have either defi ned benefi t schemes or defi ned
contribution schemes.
Defi ned contribution schemes
Contributions to defi ned contribution schemes are recorded as an
expense as they fall due.
Inventories
Inventories are valued at the lower of cost price or realisable value.
The cost price includes all direct and indirect costs incurred to
bring the goods to the stage of completion they have reached
on the balance sheet date. The cost price is calculated using the
weighted average cost price method.
The realisable value is the estimated sale price minus the
estimated fi nishing costs and costs associated with marketing, sale
and distribution.
Receivables
Short-term receivables are stated at nominal value, less suitable
provisions for any debts regarded as doubtful. Long-term
receivables are valued at amortised cost price.
Cash and cash equivalents
Cash and short-term investments which are maintained until the
end of the period are stated at their cost price. Cash equivalents
are short-term, extremely liquid investments which can be
converted immediately into cash of a known amount, and which
do not carry any material risk of change of value.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classifi ed on the
basis of the economic reality of the contractual agreement. An
equity instrument is a contract which includes the residual right to
a share in the Group’s assets, after the deduction of all liabilities.
Equity instruments issued by the Company are recorded to the
amount of the received consideration, less the direct costs of issue.
Income tax
Tax expenses consist of tax due for the reporting period and
deferred taxes. The tax due for the reporting period is based on
the taxable profi t for the period. Taxable profi t differs from the net
profi t in the profi t and loss account, because it excludes certain
items of income or expenditure which are taxable or deductible in
subsequent years, or which will never be taxable or deductible.
The current tax liability is calculated on the basis of the tax rates
for which the legislative process has been (substantially)
completed by the balance sheet date.
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
102
and loss account and spread on a straight-line basis over the
average term until the benefi t rights have been acquired.
If benefi t rights can be regarded as acquired as a result of a new
scheme or changes to an existing scheme, prior service costs are
immediately recorded in the profi t and loss account.
If the liability to be recorded on the balance sheet is negative, the
asset entry that is included may not exceed the total unrecorded
cumulative actuarial net losses and prior service costs and the
present value of future repayments from the scheme or reductions
in future contributions to the scheme (the ‘asset ceiling’ principle).
In this case, however, the actuarial gains and losses are
immediately taken to the profi t and loss account if deferring them
would result in the recording of a gain purely as a consequence of
an actuarial loss in the current fi nancial year, or of a loss purely
and simply as a consequence of an actuarial gain in the current
fi nancial year. Prior service costs are in this case likewise
immediately included if spreading them out on a straight-line basis
would result in the recording of a gain purely as a consequence of
an increase in prior service costs during the current fi nancial year.
Other long-term personnel remuneration
Other long-term personnel remuneration such as long-service
bonuses is accounted for using the ‘projected unit credit’ method.
However, the accounting treatment differs from that of defi ned
benefi t schemes, in that actuarial gains and losses and prior service
costs are recorded immediately.
Provisions
Provisions are established in the balance sheet if the Group has a
legally enforceable or de facto liability on the balance sheet date
as a result of an event in the past, for which it is likely that an
outlay will be required of resources which contain economic
benefi ts, and if this outlay can be reliably estimated. The amount
recorded as a provision is the best estimate on the balance sheet
date of the outlay required to satisfy the existing liability, if
necessary discounted if the time value of money is relevant.
Provisions for reorganisation costs are recorded if the Group has a
detailed formal plan for the reorganisation that has already been
communicated to the parties concerned before the balance sheet
date.
Defi ned benefi t schemes
In defi ned benefi t schemes, the amount on the balance sheet (the
‘net liability’) corresponds to the present value of the gross liability,
adjusted for unrecorded actuarial gains and losses, after deduction
of the fair value of the scheme investments and unrecorded prior
service costs. The ‘present value of the gross liability of a defi ned
benefi t scheme’ is the present value, before deduction of the
scheme investments, of expected future payments required to
settle the liability which results from the employee’s service record
in the current and previous periods.
The discounted value of the liability arising from defi ned pension
rights and the assigned pension costs associated with the year of
service and prior service pension costs are calculated by accredited
actuaries using the projected unit credit method.
The discount rate corresponds to the rate of return on the balance
sheet date on corporate bonds with a high degree of credit-
worthiness and a remaining term comparable with the term of the
Group’s liabilities. The discount rate is adjusted annually to refl ect
the market return from high-value corporate bonds whose term is
consistent with the estimated term of the gross liabilities arising
from payments after retirement.
‘Actuarial gains and losses’ include adjustments on the basis of
experience (the consequences of differences between previous
actuarial assumptions and what has actually happened) and the
consequences of changes to actuarial assumptions. In principle,
actuarial gains and losses are not recognised at the moment they
arise, but, to the extent that the cumulative amount falls outside
a certain ‘corridor’, they are spread on a straight-line basis over the
expected average remaining working life of the employees who are
members of the scheme. This corridor is determined individually
for each defi ned benefi t scheme and has lower and upper limits of
110% and 90% respectively of the higher of the present value of
the gross liabilities and the fair value of the scheme investments.
‘Prior service costs’ refer to the increase in the present value of the
gross liability for services provided by employees in previous periods
and which result in the current period from the introduction of or
changes to payments after retirement or other long-term personnel
remuneration. Prior service costs are taken gradually to the profi t
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
103
Fair value hedging
A derivative instrument is recorded as a fair value hedge if the
instrument hedges against the risk that the fair value of the
recorded assets and liabilities may change. Derivatives accounted
for as fair value hedges and hedged assets and liabilities are
recorded at their fair value. The corresponding changes in the fair
value are recorded in the profi t and loss account. Changes in the
fair value of derivative fi nancial instruments which do not qualify
as hedging transactions are recorded in the profi t and loss account
when they arise. Hedge accounting is discontinued when the
hedging instrument expires, is sold, terminated or exercised or
when the hedging no longer satisfi es the criteria for hedge
accounting. In this case the cumulative gain or loss on the hedging
instrument which is accounted for directly in equity continues to
be recorded separately in equity until the expected future
transaction takes place. If an expected future transaction is not
expected to take place any more, the cumulative gain or loss
shown in the equity is transferred to the profi t and loss account for
the period.
Income
Income is recorded if it is likely that the company will receive the
economic benefi ts associated with the transaction and the amount
of the income can be measured reliably. Turnover is recorded after
the deduction of turnover tax and discounts.
Income from the sale of goods is recorded when the delivery and
the complete transfer of risks and benefi ts have taken place.
Interest income is recorded on a time basis that refl ects the actual
return on the asset. Royalties are included on an accrual basis in
accordance with the conditions of the agreement.
Dividends are recorded when the shareholder’s right to receive
them has arisen.
Interest-bearing fi nancing
Interest-bearing fi nancing is recorded at the value of the income
received less transaction costs incurred. It is then valued at
amortised cost price using the effective interest rate method. Any
difference between the income (after deduction of transaction
costs) and the redemption value (including premiums payable on
redemption) is recorded in the profi t and loss account over the
period of the fi nancing.
Trading accounts payable and other payables
Non-interest-bearing trade liabilities are valued at their cost price,
which represents the fair value of the amount payable.
Derivative fi nancial instruments
The Group uses various derivatives to hedge against currency risks
arising from its operating activities, fi nancing and investment
activities. The net risk of all Group subsidiaries is managed centrally
in line with the objectives and rules established by the Group
management. It is the Group’s policy to avoid engaging in
speculative transactions or transactions with a leverage effect
and not to engage in trading in fi nancial instruments under any
circumstances.
Derivative fi nancial instruments are treated as follows:
Cash fl ow hedging
Changes in the fair value of derivative fi nancial instruments which
are ascertained to provide effective hedging for future cash fl ows
are recorded directly in equity, while the non-effective element of
the gain or loss on the hedging instrument is recorded in the profi t
and loss account. If the cash fl ow hedging of a fi xed commitment
or a highly likely future transaction results in the recognition of an
asset or liability, then the associated profi ts and losses on the
derivative instrument which were formerly recorded in equity are
now included in the initial valuation of the asset or liability at the
time of recognition. For hedges which do not result in the
recognition of an asset or liability, amounts which were deferred
in equity are recorded in the profi t and loss account for the period
during which the hedged item affects the gain or loss.
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
104
Post-balance sheet events
Post-balance sheet events which provide additional information
about the company’s situation on the balance sheet date
(‘adjusting events’) are included in the annual accounts. Other
post-balance sheet events are only mentioned in the notes if they
may have a signifi cant impact.
The most important assessment criteria in the application of
the Valuation rules
In the application of the valuation rules, in certain cases an ac-
counting assessment must be made. This assessment is done by
making the most accurate assessment possible of uncertain future
evolutions. The management determines its assessment on the
basis of different realistically assessed parameters, such as future
market expectations, sector growth rates, industry studies, econo-
mic realities, budgets and multi-year plans, expected profi tability
studies, etc. The most important elements within the group that
are subject to this are: impairments, provisions and deferred tax
items.
Application of new IFRS standards
Sioen Industries Group did not yet change over to the early
application of the following new standards and interpretations
which were issued on the date of approval of these fi nancial
statements, but which were not yet applicable on the date of
closing of the fi nancial statements.
IFRS 6 Exploration for and evaluation of mineral resourcesIFRS 7 Financial instruments: disclosuresIFRIC 4 Determining whether an arrangement contains a lease IFRIC 5 Rights to interests arising from decommissioning, restoration and environmental funds IFRIC 6 Liabilities arising from participating in a specifi c market - waste electrical and electronic equipment.IFRIC 7 Applying the restatement approach under IAS 29 fi nancial reporting in hyperinfl ationary economies IFRIC 8 Scope of IFRS 2
The future application of the above-mentioned standards and
interpretations will have no material impact on the fi nancial
statements, with the exception of the impact of the notes on
fi nancial instruments of the following fi nancial year.
Miscellaneous
Impairment of tangible and intangible assets
Like goodwill, which is subjected to an impairment test every year,
intangible assets and tangible fi xed assets also undergo such a test
when there is an indication that their book value may be lower
than their realisable value. If an asset does not generate a cash
infl ux which is independent of other assets, the Group estimates
the realisable value of the cash fl ow generating unit to which the
asset belongs.
The realisable value is the highest value of the fair value minus
sales costs and the value to the business.
The method of the going concern value uses cash fl ow forecasts
based on the fi nancial budget that is approved by the manage-
ment. Cash fl ows after this period are extrapolated by making use
of the most justifi ed percentage growth over the long term for the
sector in which the cash fl ow-generating unit is active. The ma-
nagement bases its assumptions (prices, volumes, return) on past
performances and on its expectations with regard to the develop-
ment of the market. The weighted average growth percentages are
in conformity with the forecasts included in the sector reports. The
discount rate used is the estimated weighted average equity cost
of the group before taxes, and takes account of the current market
evaluations of the time value of money and the risks for which the
future cash fl ows are adapted.
If the realisable value of an asset (or cash fl ow generating unit)
is estimated to be lower than its book value, the asset’s (or cash
fl ow generating unit’s) book value is reduced to its realisable value.
An impairment loss is immediately recorded in the profi t and loss
account.
If an impairment loss is subsequently written back, the asset’s (or
cash fl ow generating unit’s) book value is increased to the revised
estimate of its realisable value, but only to the extent that the
increased book value is no higher than the book value that would
have been recorded if no impairment loss had been recorded for
the asset (or cash fl ow generating unit) in previous years. However,
impairment losses on goodwill are never written back.
SIOEN INDUSTRIES I V.1 KEY ACCOUNTING RULES
105
SIOEN INDUSTRIES I V.2.1 PRIMARY SEGMENT INFORMATION
Segments 2005 Coating Apparel Industrial Eliminations Consolidated
applications
Net sales 193.431 78.138 70.066 316.237
External sales 170.740 78.127 67.370 316.237
Intersegment sales 22.691 11 2.696 -25.398 0
Segment profi t from operational activities 15.356 3.456 6.743 25.554
Unallocated profi t from operational activities -97
Profi t from operational activities 25.457
Net fi nancial charges -5.470
Profi t before taxation 19.987
Taxes -6.399
Profi t after taxation 13.588
Group share in profi t or loss 13.582
Segment assets 229.224 69.189 55.206 -20.604 333.015
Unallocated assets 4.667
Total consolidated assets 337.683
Segment liabilities 229.224 69.189 55.206 -20.604 333.015
Unallocated liabilities 4.667
Total consolidated liabilities 337.683
Other information Coating Apparel Industrial Head Eliminations Consolidated
applications offi ce
Depreciation 13.599 1.753 1.786 740 22 17.899
Write-downs of inventories 135 516 278 - - 930
Write-downs of receivables -145 105 -28 - - (67)
Additions to/(reversals) of provisions -522 -30 -20 - - (572)
EBITDA 28.423 5.800 8.760 517 147 43.647
Impairments - - - - - -
Reorganisation costs 419 83 - 3 - 505
Investments in intangible fi xed assets 49 43 20 631 (7) 736
Investments in tangible fi xed assets 11.395 1.081 3.390 765 - 16.632
106
SIOEN INDUSTRIES I V.2.1 PRIMARY SEGMENT INFORMATION
Segments 2004 Coating Apparel Industrial Eliminations Consolidated
applications
Net turnover 189.835 68.226 74.277 - 309.802
External turnover 170.645 68.259 70.898 - 309.802
Intersegment turnover 19.190 -34 3.378 -22.534 0
Segment profi t from operational activities 19.853 4.638 2.626 - 27.117
Unallocated profi t from operational activities -130
Profi t from operational activities 26.987
Net fi nancial charges -7.341
Profi t before taxation 19.646
Taxes -6.520
Profi t after taxation 13.126
Group share in profi t or loss 12.252
Segment assets 231.737 59.831 53.263 -19.583 325.247
Unallocated assets 5.414
Total consolidated assets 330.661
Segment liabilities 231.737 59.831 53.263 -19.583 325.247
Unallocated liabilities 5.414
Total consolidated liabilities 330.661
Other information Coating Apparel Industrial Head Eliminations Consolidated
applications offi ce
Depreciation 13.295 1.222 2.294 1.026 - 17.838
Write-downs -141 -202 1.393 0 - 1.051
Additions to/(reversals) of provisions -908 -416 128 114 - -1.081
EBITDA 32.100 5.243 6.442 1.009 - 44.794
Impairments - - - - - -
Reorganisation costs - 113 1.015 - - 1.129
Investments in intangible fi xed assets 10 233 - 558 - 800
Investments in tangible fi xed assets 3.730 1.105 902 474 - 6.211
107
2005
COUNTRY Consolidated Coating Apparel Industrial applications
France 64.331 20,20% 32.197 18,84% 25.138 32,03% 6.996 10,13%
Germany 56.308 17,68% 23.358 13,67% 4.846 6,17% 28.104 40,69%
Belgium 39.087 12,27% 22.083 12,92% 9.242 11,78% 7.762 11,24%
UK 27.560 8,65% 10.150 5,94% 9.557 12,18% 7.852 11,37%
Netherlands 26.732 8,39% 11.444 6,70% 9.191 11,71% 6.097 8,83%
Eastern Europe 25.707 8,07% 22.276 13,03% 312 0,40% 3.119 4,52%
Italy 13.011 4,09% 11.724 6,86% 327 0,42% 960 1,39%
Scandinavia 10.186 3,20% 7.804 4,57% 1.407 1,79% 976 1,41%
Spain 8.357 2,62% 7.299 4,27% 514 0,65% 545 0,79%
USA 7.133 2,24% 1.209 0,71% 1.929 2,46% 3.995 5,78%
Switzerland 4.743 1,49% 3.280 1,92% 1.398 1,78% 65 0,09%
Austria 4.090 1,28% 2.217 1,30% 1.444 1,84% 430 0,62%
Ireland 3.811 1,20% 894 0,52% 2.893 3,69% 24 0,04%
Other 27.417 8,61% 14.995 8,77% 10.285 13,10% 2.138 3,10%
Total gross sales 318.473 100,00% 170.929 100,00% 78.482 100,00% 69.062 100,00%
cash discounts - 2.236
NET SALES 316.237
SIOEN INDUSTRIES I V.5.2 SECONDARY SEGMENT INFORMATION
2004
COUNTRY Consolidated Coating Apparel Industrial applications
Benelux 62.106 19,91% 31.731 18,42% 15.948 23,34% 14.427 20,22%
France 65.294 20,93% 35.130 20,39% 21.565 31,57% 8.600 12,05%
Germany 60.182 19,29% 21.109 12,25% 5.351 7,83% 33.721 47,25%
UK 27.773 8,90% 10.485 6,09% 11.060 16,19% 6.227 8,73%
Spain 9.142 2,93% 8.436 4,90% 452 0,66% 255 0,36%
Scandinavia 8.851 2,84% 7.022 4,08% 1.182 1,73% 647 0,91%
Switzerland 4.848 1,55% 2.840 1,65% 1.911 2,80% 97 0,14%
Eastern Europe 22.912 7,34% 20.708 12,02% 359 0,53% 1.844 2,58%
Austria 4.273 1,37% 2.526 1,47% 1.441 2,11% 306 0,43%
Ireland 3.622 1,16% 837 0,49% 2.749 4,02% 37 0,05%
USA 6.787 2,18% 1.017 0,59% 3.115 4,56% 2.655 3,72%
Italy 14.631 4,69% 13.247 7,69% 454 0,66% 930 1,30%
Other 21.514 6,90% 17.168 9,97% 2.730 4,00% 1.616 2,26%
Total gross sales 311.935 100,00% 172.257 100,00% 68.315 100,00% 71.363 100,00%
cash discounts - 2.132
NET SALES 309.803
108
SIOEN INDUSTRIES I V.5.3 EXCHANGE RATE
Exchange rate
Currency Rate 2004 2005
EUR average 1,0000 1,0000
end 1,0000 1,0000
USD average 1,2460 1,2400
end 1,3621 1,1797
GBP average 0,6796 0,6836
end 0,7051 0,6853
RMB average 10,3102 10,1523
end 11,2883 9,5202
PLN average 4,5163 4,0217
end 4,0845 3,8600
TDN average 1,5479 1,6114
end 1,6349 1,6112
UAH average 6,6326 6,3199
end 7,2202 5,9588
109
NET SALES
2004 2005
€ ‘000 € ‘000
Sale of goods 311.336 317.567
Subcontracting 2.012 2.156
Commissions and discounts -3.546 -3.486
Net sales 309.802 316.237
COST OF SALES
Purchases 139.297 160.425
Transport expenses 713 1.410
Changes in the level of inventories 8.237 -8.180
Subcontracting 4.215 5.206
Personnel expenses 41.163 42.199
Depreciation 15.211 14.697
Services and other goods 33.149 36.529
Write-offs on inventories 286 930
Cost of sales 242.271 253.214
SALES AND MARKETING EXPENSES
Personnel expenses 8.058 8.257
Depreciation 237 117
Services and other goods 7.186 7.590
Write-offs on trade receivables 765 -67
Sales and marketing expenses 16.246 15.896
RESEARCH AND DEVELOPMENT EXPENSES
Personnel expenses 2.019 2.876
Depreciation 87 532
Services and other goods 617 810
Research and development expenses 2.723 4.217
GENERAL AND ADMINISTRATIVE EXPENSES
Personnel expenses 10.488 10.127
Depreciation 2.304 2.554
Services and other goods 8.322 7.206
General and administrative expenses 21.114 19.887
OTHER OPERATING INCOME AND EXPENSES
Gain/loss on disposal of tangible fi xed assets -4 917
Provisions for liabilities and charges 1.081 572
Impairment 0 0
SIOEN INDUSTRIES I V.4 DETAILED INCOME STATEMENT
110
SIOEN INDUSTRIES I V.4 DETAILED INCOME STATEMENT
111
2004 2005
€ ‘000 € ‘000
Compensation received 159 155
Local taxes -1.109 -670
Other 540 1.966
Other operating income and costs 666 2.940
Restructuring costs -1.129 -505
Non-recurrent result -1.129 -505
Operating profi t 26.987 25.457
Interest paid -6.925 -6.280
Received interest 227 251
Realised exchange rate result -1.772 228
Unrealised exchange rate result 1.569 194
Other -440 136
Other fi nancial result -643 558
Tax -6.361 -8.642
Deferred tax -159 2.242
Tax -6.520 -6.399
Consolidated profi t for the year 13.126 13.588
Profi t for the group 12.252 13.582
Reconciliation between taxes and result before taxes
Profi t before taxes 19.646 19.987
Tax on profi t of fi scal entities against theoretical local tax rate 6.657 6.456
Theoretical tax rate(1) 33,88% 32,30%
Tax impact of
non-deductible expenses 346 197
specifi c tax regimes -757 -720
deferred tax assets not recognised 1.415
usage of non-recognised deferred tax assets 1.771
Regularisation of current tax on previous years -1.086 -842
Tax on distributed retained earnings 1.233 -432
Taxes on distributed reserves 166 260
Sale Sirec(2) -1.576
Other -39 -130
(1) Is the weighted average tax rate of the subsidiary(2) In 2005 Sioen Industries sold Sirec to a reinsurance company.
This resulted in the realisation of a deferred tax liability.
DIVIDENDS
Dividend for the period ending 31 December 2004 of EUR 0.22 per share.
Proposed dividend for the period ending 31 December 2005 of EUR 0.24 per share.
The proposed dividend awaits the shareholders’ approval at the annual general meeting and
is not shown as a liability in these annual accounts.
ORDINARY PROFIT PER SHARE
The calculation of the ordinary and diluted profi t per share is based on the following data:
2004 2005
€ ‘000 € ‘000
Net profi t or loss for the period 12.252 13.582
Net profi t or loss from continuing activities 12.252 13.582
Weighted average number of outstanding shares
Ordinary shares 21.391.070 21.391.070
Weighted average number of shares for ordinary profi t per share 21.391.070 21.391.070
IN EUR
Ordinary profi t per share 0,57 0,63
Ordinary profi t per share from continuing activities 0,57 0,63
DILUTED PROFIT PER SHARE
Calculation of diluted profi t per share:
Diluted elements
Net profi t or loss from continuing activities 12.252 13.582
Profi t or loss attributable to ordinary shareholders 12.252 13.582
Weighted average number of outstanding ordinary shares 21.391.070 21.391.070
Weighted average number of shares for diluted profi t per share 21.391.070 21.391.070
IN EUR
Diluted profi t per share 0,57 0,63
Diluted profi t per share from continuing activities 0,57 0,63
Profi t-increasing elements not included in the calculation
Impact on weighted average number of outstanding ordinary shares
Shares option plan -14.324 -15.942
SIOEN INDUSTRIES I V.4 DETAILED INCOME STATEMENT
112
SIOEN INDUSTRIES I V.5.1 INTANGIBLE FIXED ASSETS
Intangible fi xed assets are subject to the application of IAS 36,
Impairments, when there is an indication that their book value may
be lower than their realisable value. If an asset does not generate a
cash infl ux which is independent of other assets, the Group
estimates the realisable value of the cash fl ow generating unit to
which the asset belongs. No impairments were recorded.
The acquisition of a customer portfolio in 2004 relates to the price
paid for Plastylon. This customer portfolio is being depreciated over
four years.
Depreciation of intangible fi xed assets other than goodwill is
shown in the profi t and loss account by function. Depreciation of
goodwill is included in administration costs and is thus located on
the line labelled general and administrative costs.
Purchases of software in 2005 consist predominantly of the initial
expenditure on the ERP project (SAP). This is not yet being
depreciated. Once it is in use, purchased ERP software and
associated implementation costs will be depreciated over seven
years on a straight-line basis.
113
2005
Research and development costs: purchases - 8 - - - - - - - - 8
Concessions, patents, licences: purchases 1.629 17 - - - 7 - - - - 1.653
Software: purchases 7.693 711 - - (22) 18 - - - - 8.399
Goodwill: purchases 2.568 - - - - - - - - - 2.568
TOTAL 11.889 736 - - (22) 24 - - - - 12.628
Research and development costs: impairment - - - - - - - - - - -
Concessions, patents, licences: impairment - - - - - - - - - - -
Software: impairment - - - - - - - - - - -
Goodwill: impairment 6 - - - - - - - (6) - -
TOTAL 6 - - - - - - - (6) - -
Research and development costs: depreciation (0) - - - - - - - - - -
Concessions, patents, licences: depreciation 1.465 - - - - 3 - 44 - - 1.512
Software: depreciation 6.902 - - - (18) 10 - 440 - - 7.334
Goodwill: depreciation 720 - - - - - - 794 - - 1.514
TOTAL 9.088 - - - (18) 13 - 1.278 - - 10.361
Research and development costs - 8 - - - - - - - - 8
Concessions, patents, licences 164 17 - - - 4 - (44) - - 141
Software 790 711 - - (4) 7 - (440) - - 1.064
Goodwill 1.842 - - - - - - (794) 6 - 1.054
Intangible fi xed assets 2.796 736 - - (4) 11 - (1.278) 6 - 2.267
SIOEN INDUSTRIES I V.5.1 INTANGIBLE FIXED ASSETS
At th
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Purc
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Disp
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Tran
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Cons
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114
2004
Research and development costs: purchases - - - - - - - - - -
Concessions, patents, licences: purchases 1.425 202 (1) - - 4 - - - 1.629
Software: purchases 7.092 598 (4) - 12 (7) - - - - 7.693
Goodwill: purchases 693 - - - 1.875 - - 2.568
TOTAL 9.210 800 (6) - 12 (4) 1.875 - - - 11.889
Research and development costs: impairment - - - - - - - - - - -
Concessions, patents, licences: impairment - - - - - - - - - - -
Software: impairment - - - - - - - - - - -
Goodwill: impairment - - - - - - - 6 - 6
TOTAL - - - - - - - 6 - 6
Research and development costs: depreciation - - - - - - - - - -
Concessions, patents, licences: depreciation 1.425 - (1) - - 4 - 38 - 1.463
Software: depreciation 6.219 - (4) - 5 (3) - 685 - 6.903
Goodwill: depreciation 196 - - - - - 524 - 720
TOTAL 7.839 - (6) - 5 1 - 1.247 - - 9.088
Research and development costs - - - - - - - - - - -
Concessions, patents, licences - 202 - - - - - (38) - - 164
Software 873 598 - - 7 (4) - (685) - - 790
Goodwill 497 - - - - - 1.875 (524) (6) - 1.842
Intangible fi xed assets 1.371 800 - - 7 (4) 1.875 (1.247) (6) - 2.796
At th
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Purc
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Impa
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SIOEN INDUSTRIES I V.5.1 INTANGIBLE FIXED ASSETS
115
Consolidation goodwill
2005
Goodwill 16.548 - - - - - 16.548
2004
Goodwill 16.520 - - - - 28 16.548
SIOEN INDUSTRIES I V.5.2 GOODWILL
At th
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Incr
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Dec
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Incl
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quity
Exch
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Cons
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At th
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The realisable value of a cash fl ow-generating unit is determined
on the basis of the going concern value. For calculating the going
concern value, cash fl ow forecasts are used that are based on
fi nancial budgets and projections over a three-year period. These
projections contain extrapolations making use of the most justifi ed
growth percentage that cannot be higher than the average growth
percentage over the long term for the sector in which the cash
fl ow-generating unit is active, that is, between 2% and 3%.
The management bases its assumptions on past performances and
on its expectations over the coming years. The discount rate used
is calculated per segment and varies between 6% and 10%.
In May 2004, Plastylon was acquired. The fi gures were included in
the Group’s fi nancial statement from 1 May 2004. The purchased
assets were included in the consolidated annual accounts using the
purchase accounting method. The resultant goodwill is no longer
depreciated, in line with IFRS 3.
The book value of goodwill acquired in a business combination
must be allocated on a reasonable and consistent basis to each
cash fl ow-generating unit or the smallest group of
cash fl ow-generating units, in conformity with IAS 36.
116
Changes with respect to 2004:
Siotec BVBA has been absorbed by Sioen NV
Sioen Gmbh has merged with Roland Planen Gmbh
SIP Protection SAS has been absorbed by Sioen France SAS.
Sirec has been sold in 2005
% holding 2005 2004 Sioen n.v. Belgium Ardooie 99,47% 99,47% apparelSiotec b.v.b.a. Belgium Ardooie 0% 99,47% apparelSirec s.a. Luxembourg Luxembourg 0% 100,00% groupVeranneman Technical Textiles n.v. Belgium Ardooie 100,00% 100,00% coatingEuropean Masterbatch n.v. Belgium Bornem 100,00% 100,00% coatingCoatex n.v. Belgium Poperinge 100,00% 100,00% industrial applicationsSioen France s.a.s. France Narbonne 99,47% 99,47% apparelConfection Tunisienne de Sécurité s.a. Tunisia Tunis 99,47% 99,47% apparelDonegal Protective Clothing Ltd. Ireland Derrybeg 99,47% 99,47% apparelSioen Coating Distribution n.v. Belgium Ardooie 100,00% 100,00% coatingSioen GmbH Germany Werlte 96,00% coatingSiofab s.a. Portugal Santo Torso 100,00% 100,00% coatingP.T. Sungintex Indonesia Jakarta 100,00% 100,00% apparelSaint Frères s.a.s. France Flixecourt 99,97% 99,97% coatingSioen Fabrics s.a. Belgium Moeskroen 100,00% 100,00% coatingSaint Frères Confection s.a.s. France Flixecourt 100,00% 100,00% industrial applicationsP.T. Sioen Indonesia Indonesia Jakarta 100,00% 100,00% apparelSioen Tunisie s.a. Tunisia Tunis 99,83% 99,83% apparelSioen Fibres s.a. Belgium Moeskroen 100,00% 100,00% coating/apparelTIS n.v. Belgium Kersken 100,00% 100,00% coatingSioen UK Ltd. United Kingdom Chorley 100,00% 100,00% apparelMullion Manufacturing Ltd. United Kingdom Scunthorpe 100,00% 100,00% apparelSioen Shanghai China Shanghai 100,00% 100,00% coatingSioen Zaghouan s.a. Tunisia Zaghouan 99,50% 99,50% apparelSIP Protection s.a.s. France Foix 100,00% apparelSioen Nordifa s.a. Belgium Luik 100,00% 100,00% industrial applicationsInducolor s.a. Belgium Meslin-L’Evêque 100,00% 100,00% coatingBacam s.a.s. France Flixecourt 100,00% 100,00% industrial applicationsSioen Coating n.v. Belgium Ardooie 99,47% 99,47% coatingPennel Automotive s.a.s. France Roubaix 100,00% 100,00% coatingRoland International b.v. Netherlands Tegelen 100,00% 100,00% industrial applicationsRoland Planen GmbH Germany Werlte 100,00% 100,00% industrial applicationsRoltrans Group America Inc. United States Arlington 100,00% 100,00% industrial applicationsRoltrans Group Polska Spzoo Poland Konin 100,00% 100,00% industrial applicationsRoland Tilts UK Ltd. United Kingdom Bradford 100,00% 100,00% industrial applicationsMonal s.a. Luxembourg Luxembourg 100,00% 100,00% industrial applicationsJV Roland-Ukraine Ukraine Rivne 60,00% 60,00% industrial applicationsSioen USA Inc. United States Aberdeen 100,00% 100,00% apparelSioen Industries n.v. Belgium Ardooie 100,00% 100,00% group
SIOEN INDUSTRIES I V.5.3 SUBSIDIARIES
117
The fi xed assets under construction consist of the new coating line
at Saint Frères Enduction, the warehouse under construction at
EMB and the needle felt production line at Nordifa, which was not
yet in use in 2005.
In 2005 an investment grant of EUR 0.8 m was received from the
Walloon Region. This has been deducted from the acquisitions.
The fi xed assets under leasing relate to the buildings at Ardooie
and the Saint Frères Enduction building.
Liabilities for the purchase of tangible fi xed assets were contracted
for an amount of EUR 5.6 m, of which:
EUR 2 m for the warehouse at EMB
EUR 2 m for the needle felt production line at Nordifa
EUR 0.8 m for the new showroom and lab at
Ardooie Sioen Coating NV
and EUR 0.8 m building Saint Frères Enduction
2005
Land: purchases 16.814 - - (138) (126) 168 - - - - 16.718
Buildings: purchases 46.414 3.559 - (401) (206) 946 - - - - 50.312
Building infrastructure: purchases 16.168 622 - (1) (235) 24 - - - - 16.580
Plant, machines and equipment: purchases 139.746 10.770 - (972) 1.005 914 - - 151.462
Furniture: purchases 3.437 92 (8) (7) 6 128 - - - 3.649
Vehicles: purchases 3.727 279 - (660) (35) 95 - - 3.407
Hardware: purchases 5.043 412 - (252) (25) 158 - - - - 5.335
Leased land and buildings: purchases 19.272 516 - - 466 (9) - - - 20.245
Leased furniture: purchases 204 58 - - (9) 23 - - - - 277
Assets under construction: purchases 151 324 - - (378) 5 - - - - 102
TOTAL 250.976 16.632 (8) (2.431) 463 2.453 - - - 268.087
Buildings: depreciation 18.426 - - (206) (4) 284 - 1.862 - - 20.363
Building infrastructure: depreciation 8.776 - - (1) (3) 12 - 1.274 - - 10.057
Plant, machines and equipment: depreciation 69.388 - - (885) 52 745 11.387 - - 80.686
Furniture: depreciation 2.955 - (8) (7) 101 263 - - 3.304
Vehicles: depreciation 2.891 - - (566) (17) 68 357 - - 2.733
Hardware: depreciation 3.422 - - (232) (27) 100 - 665 - - 3.928
Leased land and buildings: depreciation 3.655 - - - 24 (3) - 998 - - 4.674
Leased furniture: depreciation 22 - - - (1) 4 - 39 - - 64
Assets under construction: depreciation 0 - - - - - - - - - -
TOTAL 109.535 - (8) (1.897) 25 1.310 - 16.844 - - 125.808
Land 16.814 - - (138) (126) 168 - - - - 16.718
Buildings(1) 35.380 4.182 - (195) (435) 675 - (3.135) - - 36.472
Plant, machines and equipment 70.358 10.770 - (87) 953 169 - (11.387) - - 70.776
Furniture and vehicles 2.940 783 - (114) (10) 112 - (1.285) - - 2.426
Fixed assets under leasing and other 15.798 574 - - 434 14 - (1.037) - - 15.784
Assets under construction and prepayments 151 324 - - (378) 5 - - - - 102
TOTAL 141.442 16.632 (0) (534) 439 1.143 - (16.844) - - 142.278
(1) The building in Tegelen is not used in production and therefore is not depreciated. The net book value amounts to 4 million EURO.
Tangible fi xed assets
The total acquisition of tangible fi xed assets in 2005 was
EUR 16.6 m (including investment grants).
The main investments in 2005 were:
❱ EUR 3.6 m in a new coating line at Saint Frères Enduction
in France
❱ EUR 1.8 m in the further expansion of the production hall
at Saint Frères Enduction
❱ EUR 2.1 m in a needle felt production line at Nordifa
❱ EUR 3 m on looms at Veranneman and TIS
❱ EUR 2 m on a new warehouse at EMB in Bornem
SIOEN INDUSTRIES I V.5.4 TANGIBLE FIXED ASSETS
At th
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Purc
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118
2004
Land: purchases 16.420 15 - (8) 267 120 - - - 16.814
Buildings: purchases 46.222 609 - (366) (190) 138 - - - 46.414
Building infrastructure: purchases 11.065 622 - (17) 4.447 - - - - - 16.168
Plant, machines and equipment: purchases 141.019 3.377 (98) (379) (3.968) (304) - - - 139.746
Furniture: purchases 3.967 291 (120) (212) (215) 15 - - - - 3.437
Vehicles: purchases 3.074 345 - (188) 574 (88) - - - - 3.727
Hardware: purchases 4.328 716 (45) (4) 97 (49) - - - - 5.043
Leased land and buildings: purchases 19.272 - - - - - - - - 19.272
Leased furniture: purchases 84 189 - - (81) 13 - - - - 204
Assets under construction: purchases 6 47 - (7) - 105 - - - - 151
TOTAL 245.456 6.211 (263) (1.479) 932 (50) - - - - 250.978
Buildings: depreciation 16.168 - - (41) 154 64 - 2.082 - 18.426
Building infrastructure: depreciation 5.813 - - (3) 2.793 9 - 164 - 8.776
Plant, machines and equipment: depreciation 60.396 - (97) (26) (2.290) (116) - 11.529 - (8) 69.388
Furniture: depreciation 3.176 - (114) (25) (302) 16 - 205 - 2.955
Vehicles: depreciation 2.282 - - (127) 427 (11) 319 - 2.891
Hardware: depreciation 2.695 - (45) (4) 91 (33) - 717 - 3.422
Leased land and buildings: depreciation 2.753 - - - (82) 5 - 1.001 - 3.655
Leased furniture: depreciation 20 - - - - - - 2 - - 22
Assets under construction: depreciation - - - - - - - - - - -
TOTAL 93.284 - (256) (225) (791) (66) - 16.016 - (8) 108.739
Land 16.420 15 - (8) - 120 - - - - 16.547
Buildings 35.306 1.231 - (338) 1.658 64 - (2.246) - - 35.728
Plant, machines and equipment 80.623 3.377 (1) (353) (1.767) (188) - (11.529) - 8 70.269
Furniture and vehicles 3.215 1.352 (6) (248) (51) (93) - (1.241) - - 2.948
Fixed assets under leasing and other 16.602 189 - - - 8 - (1.001) - - 15.798
Assets under construction and prepayments 6 47 - (7) - 105 - - - - 151
TOTAL 152.172 6.211 (7) (954) (160) 16 - (16.016) - 8 141.442
There are no mortgages secured on the tangible fi xed assets.
Tangible fi xed assets are subject to the application of IAS 36,
Impairments, when there is an indication that their book value may
be lower than their realisable value. If an asset does not generate a
cash infl ux which is independent of other assets, the Group
estimates the realisable value of the cash fl ow generating unit to
which the asset belongs. No impairments were recorded.
SIOEN INDUSTRIES I V.5.4 TANGIBLE FIXED ASSETS
At th
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Purc
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Sale
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Tran
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119
LONG-TERM TRADE RECEIVABLES
2005
Trade receivables LT - 59 - - - - - 59
Trade receivables LT: revaluation - - - - - - - -
Trade receivables LT: impairment - - - - - - - -
LONG-TERM TRADE RECEIVABLES - 59 - - - - - 59
2004
Trade receivables LT - - - - - - - -
Trade receivables LT: revaluation - - - - - - - -
Trade receivables LT: impairment - - - - - - - -
LONG-TERM TRADE RECEIVABLES - - - - - - - -
The term of these trade receivables is between two and three
years. These long-term receivables have been valued at their net
current value.
SIOEN INDUSTRIES I V.5.5 LONG-TERM TRADE RECEIVABLES
At th
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Incr
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Dec
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Impa
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At th
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OTHER LONG-TERM ASSETS
2005
Subsidiaries: receivables - - - - - - - -
Other shares: purchases - - - - - - - -
Guarantees and deposits: purchases 684 - (161) - - - - 524
Other LT receivables: purchases - - - - - - - -
OTHER LONG-TERM ASSETS 684 - (161) - - - - 524
2004
Subsidiaries: receivables - - - - - - - -
Other shares: purchases - - - - - - - -
Guarantees and deposits: purchases 1.105 - (420) - - - - 684
Other LT receivables: purchases - - - - - - - -
OTHER LONG-TERM ASSETS 1.105 - (420) - - - - 684
These other long-term assets mainly consist of a VAT deposit.
120
SIOEN INDUSTRIES I V.5.6 INVENTORIES
Gross inventories (excluding write-offs) rose EUR 9 m compared
with 2004. Write-downs on inventories increased EUR 0.9 m.
These write-offs are recorded on the basis of an ageing and
rotation analysis.
2005
Value at end of year Raw materials 32.241 Write-off raw materials (2.137)Raw materials 30.105 Consumer goods 298 Write-off consumer goods - Consumables 298 Orders in progress 7.277 Write-off orders in progress - Orders in progress 7.277 Finished products 40.065 Write-off fi nished products (3.240)Goods in transit 3.960 Write-off goods in transit - - Finished products 40.784 Inventories 78.463 Write-off included in result 930
2004
Value at end of year Raw materials 28.166 Write-off raw materials (1.443)Raw materials 26.723 Consumer goods 370 Write-off consumer goods - Consumables 370 Orders in progress 4.614 Write-off orders in progress - Orders in progress 4.614 Finished products 39.902 Write-off fi nished products (2.886)Goods in transit 1.743 Write-off goods in transit - - Finished products 38.759 Inventories 70.466 Write-off included in result 286
121
Trade receivables include amounts to be received from the sale of goods for EUR 75.2 Million. A provision is established for the estimated uncollectable amounts for EUR 5.8 Million. Compared to last year, the trade receivables rose primarily through major orders in the Apparel Division at the end of 2005.
As of 1/4/2005 the Group decided to cover itself for the credit risk by concluding a stop loss credit insurance.
2005
Value at end of year Trade receivables 75.198 Trade receivables: doubtful debts (5.782)Trade receivables 69.416
kEUR outstanding balance turnover
Customer 1 4.441 5,91% 10.976 4%
Customer 2 2.896 3,85% 7.331 2%
Customer 3 1.708 2,27% 7.084 2%
Customer 4 1.635 2,17% 4.567 1%
Customer 5 1.371 1,82% 4.378 1%
Other 63.146 83,97% 281.900 89%
Total 75.198 100% 316.237 100%
SIOEN INDUSTRIES I V.5.7 TRADE RECEIVABLES
2004
Value at end of year Trade receivables 69.779Trade receivables: doubtful debts (5.962)Trade receivables 63.818
kEUR outstanding balance turnover
Customer 1 4.593 6,58% 12.513 4%
Customer 2 1.634 2,34% 4.258 1%
Customer 3 1.346 1,93% 2.815 1%
Customer 4 1.233 1,77% 4.610 1%
Customer 5 1.016 1,46% 3.464 1%
Other 59.957 95,92% 282.142 91%
Total 69.779 100% 309.802 100%
122
SIOEN INDUSTRIES I V.5.8 OTHER CURRENT ASSETS
OTHER CURRENT ASSETS
2005 2004 Prepayments 34 488VAT to be reclaimed 8.194 6.127Tax prepayment 1.641 1.065Capital grants receivable 109 74Insurance premiums receivable 99 163Other 1.040 560Other Current Assets 11.118 8.477
Other current assets consist primarily of VAT to be reclaimed and pre-paid taxes.
The entry “Other” concerns mainly the amounts receivable relating to the sales of the buildings in Antwerp and in Foix.
INVESTMENTS Other investments and deposits 260 1.963Investments 260 1.963
The book value of this forward account refl ects its market value.
CASH AND CASH EQUIVALENTS
Cash 7.438 12.676At hand 874 248Cash and cash equivalents 8.312 12.923
DEFERRED CHARGES & ACCRUED INCOME
Deferred charges 1.343 2.274 Other 85 8 Deferred charges & accrued income 1.428 2.282
These consist primarily of pre-paid rent, insurance policies and interest charges.
123
DEFINED BENEFIT PLANS 2005 2004
Amounts recorded in balance sheet 1. Defi cit for funded plans - - Defi ned benefi t obligations - - Fair value of plan assets - - 2. Defi ned benefi t obligations - unfunded plans 1.422 1.347Financing status 3. Unrecognised past service gain - - 4. Unrecognised actuarial (losses) gains (101) (85)Net liability at balance sheet date 1.321 1.262Amounts recognised in income 1. Current service cost 119 246 2. Interest cost 60 83 3. Expected return on plan assets - - 4. Amortisation of past service cost (gain) (41) 21 5. Amortisation of actuarial net losses (gains) (30) (1) 6. Losses (gains) on curtailments (3) (7)Net periodic pension cost 105 342Movements in the net liability in the current period were as follows Net liability at opening 1.261 951Net periodic pension cost 105 342Uses for contributions paid (75) -Increase through business combinations - -Currency translation changes 30 (32)Net liability at closing 1.321 1.261The key actuarial assumptions used at the balance sheet date are 1. Discount rate 4,01% 4,48% 2. Expected return on plan assets 3. Future pension increases 60 60 4. Expected rate of salary increases 2% / 3% 2% / 3%
SIOEN INDUSTRIES I V.5.9 PENSION LIABILITIES
Defi ned benefi t schemes
In defi ned benefi t schemes, the amount on the balance sheet (the
‘net liability’) corresponds to the present value of the gross liability,
adjusted for unrecorded actuarial gains and losses, after deduction
of the fair value of the scheme investments and unrecorded prior
service costs.
The discounted value of the liability associated with defi ned
pension rights and the assigned pension costs associated with the
year of service and prior service pension costs are calculated by
accredited actuaries using the projected unit credit method.
Defi ned benefi t schemes mainly relate to pension liabilities in
France, where such schemes are required by law.
PROVISIONS FOR PERSONNEL REMUNERATION
In accordance with law and practice in each country, associated
entities have either defi ned benefi t schemes or defi ned
contribution schemes.
Defi ned contribution schemes
Contributions to defi ned contribution schemes are recorded as an
expense when they are due.
124
SIOEN INDUSTRIES I V.5.10 PROVISIONS
2005
Tax provisions - - - - - - - - - - -
Provisions for environmental contamination 219 - - (219) - - - - - - -
Provisions other 2.268 538 (647) (851) - - - 94 1.402 1.023 379
VII. Provisions 2.487 538 (647) (1.070) - - - 94 1.402 1.023 379
2004
Tax provisions 1.075 - (1.075) - - - - - - - -
Provisions for environmental contamination 195 - - - - - - 24 219 - 219
Provisions other 821 2.478 (1.187) - - - - 156 2.268 966 1.302
VII. Provisions 2.091 2.478 (2.262) - - - - 180 2.487 966 1.521
At th
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Incr
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At th
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Mor
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Up
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The provisions for other risks and charges consist mainly of a
provision relating to the soil cleanup of the grounds in Temse
belonging to TIS NV. This risk fi nds its origin in the period before
the takeover. This provision is set up for more than one year and is
discounted using the weighted average capital cost of the Group.
In 2004 there was a provision for the soil cleanup of the Ardooie
grounds, which this year appeared to be unnecessary and was
therefore reversed. In 2004 Sioen Industries signed a ruling
agreement with the Ministery of Finance concerning the fi scal
treatment of the Luxembourg insurance captive company.
125
2005
Subordinated loans -
Bank loans 53.519 20.984 36.477 9.791 4.750 1.429 1.071
Financial leasing liabilities 13.049 1.142 1.344 1.377 1.494 1.105 7.729
Other 344 - - - - - 344
Total long-term interest-bearing loans 66.912 22.126 37.821 11.168 6.244 2.534 9.144
Loans 67.290
Financial leasing liabilities 1.142
Total short-term interest-bearing loans 68.432
2004
Subordinated loans -
Bank loans 54.298 24.293 20.576 16.477 9.791 4.750 2.704
Financial leasing liabilities 14.153 - 1.341 1.344 1.377 1.241 8.850
Other 71 - - - - - 71
Total long-term interest-bearing loans 68.522 24.293 21.917 17.821 11.168 5.991 11.625
Loans 64.043
Financial leasing liabilities 39
Total short-term interest-bearing loans 64.082
SIOEN INDUSTRIES I V.5.11 INTEREST- BEARING LOANS
Valu
e at
end
of y
ear
With
in th
e ye
ar
2 ye
ars
3 ye
ars
4 ye
ars
5 ye
ars
Afte
r 5 y
ears
this bond issue, an IRS (Interest Rate Swap) was concluded on
20/12/2005. This IRS is described in the note on ‘Financial instru-
ments’, and designated as ‘cash fl ow hedging’.
Short-term accounts payable
Short-term straight loans amount to EUR 44.6 m. They consist of
EUR 36.4 m of euro loans with a weighted average interest rate of
3.24% and a dollar loan of USD 9.7 m.
There was also a tax prepayment fi nancing which expires on
10/4/2006.
No securities were issued for these fi nancial debts. Most (approx.
85%) of the Group’s fi nancial liabilities are centrally contracted
and managed.
Financial accounts payable
This note provides information about the group’s interest-bearing
loans.
Long-term accounts payable,
including fi nancial long-term leasing debts.
The weighted average interest rate of long-term debts is 4.55%.
All loans have a fi xed interest rate, apart from one EUR 20 m vari-
able-rate roll-over loan. This ‘bullet’ loan, taken up on 20/12/2005
with expiry date 30/06/2007, was repaid early on 14 March 2006
without additional cost.
On 14 March 2006, a EUR 100 m bond listed on Eurolist by
Euronext Brussels was successfully issued, with a ten-year term
and fi xed coupon interest of 4.75%. To cover the interest rate on
126
SIOEN INDUSTRIES I V.5.12 FINANCIAL LEASING DEBTS
2005
Long-term fi nancial leasing liabilities 13.049 - 1.344 1.377 1.494 1.105 7.729
Long-term fi nancial leasing liabilities due within the year 1.142 1.142 - - - - -
Financial leasing liabilities 14.191 1.142 1.344 1.377 1.494 1.105 7.729
Valu
e at
end
of y
ear
With
in th
e ye
ar2
year
s
3 ye
ars
4 ye
ars
5 ye
ars
Afte
r 5 y
ears
Leasing payments due within the year 1.657 1.142
1 - 2 years 2.188 1.543
2 - 3 years 2.228 1.643
3 - 4 years 3.480 2.526
after 5 years 8.423 7.336
Total leasing payments 17.975 14.191
Future fi nancial charges 3.784
Discounted value of leasing liabilities 14.191 14.191
Less payments due within the year 1.142
Payments due after one year 13.049
Minimumleasing payments
Discounted value of minimum leasing payments
2004
Long-term fi nancial leasing liabilities 14.192 39 1.341 1.344 1.377 1.241 8.850
Financial leasing liabilities 14.192 39 1.341 1.344 1.377 1.241 8.850
Leasing payments due within the year 39 39
1 - 2 years 2.096 1.392
2 - 3 years 1.986 1.342
3 - 4 years 3.855 2.758
after 5 years 10.163 8.661
Total leasing payments 18.138 14.192
Future fi nancial charges 3.946 0
Discounted value of leasing liabilities 14.192 0
Less payments due within the year 39
Payments due after one year 14.153
Valu
e at
end
of y
ear
With
in th
e ye
ar2
year
s
3 ye
ars
4 ye
ars
5 ye
ars
Afte
r 5 y
ears
Minimumleasing payments
Discounted value of minimum leasing payments
127
TRADE ACCOUNTS PAYABLE AND OTHER DEBTS 2005 2004
Trade accounts payable 37.425 32.947Credit notes receivable (1.213) (2.097)Prepayments received 298 234Total 36.510 31.084
Trade and other payables include outstanding amounts for tradepurchases and current charges. The increase as compared to 2004is attributable to the increased turnover and investments (primarily assets under construction).
OTHER DEBTS UP TO ONE YEAR Tax debts 5.589 7.216Other 62 6.069Social security debts 8.338 7.708Dividends payable 1.950 1.320Accrued charges and deferred income 963 1.027Total 16.902 23.340
The tax liabilities concern primarily corporate taxes and VAT to bepaid. The increase as compared to 2004 is attributable to the post ‘other’. In 2004 this concerned the liability in connection with the acquisition of the minority interest in the companies Coatex, Saint-Frères Confection and Bacam.
SIOEN INDUSTRIES I V.5.13 OTHER ACCOUNTS PAYABLE
128
SIOEN INDUSTRIES I V.5.14 FINANCIAL INSTRUMENTS
FINANCIAL DERIVATIVES 2005 2004 Notional Fair Notional Fair value value value valueForward purchase contracts Forward purchase contracts within 1 year - - 1.667 (57)
Forward sale contractsForward sale contracts within 1 year Rights 2.933 41 2.176 62 Duties 4.399 (8) 3.046 -
IRS Forward 100.000 (636)
Exchange rate risk
It is the Group’s policy to hedge against exchange risks arising from
fi nancial and operating activities centrally.
The risks are limited by compensating for transactions in the same
currency, or by fi xing exchange rates via forward contracts or
options.
Overview of exchange rate contracts on 31/12/2005
Rights from exchange rate contracts < 6 months: EUR 2.9 m
Liabilities from exchange rate contracts < 6 months: EUR 4.4 m
The fl uctuation in the market value of these exchange rate
contracts has been included in the profi t and loss account and
amounted to a EUR 32k positive balance.
Credit risk
In view of the relative concentration of credit risk (see note V.5.10
Trade receivables), Sioen has acquired hedging by taking out
stop-loss insurance. In addition, credit control strategies and
procedures have been devised in order to monitor individual
customers’ credit risk.
The Group manages a portfolio of derivatives to hedge against risks
relating to exchange rate and interest rate positions arising as a
result of operating and fi nancial activities. It is the Group’s policy
to avoid engaging in speculative transactions or transactions with
a leverage effect and not to hold derivatives for trading purposes.
Interest risk
The Group’s interest risk is relatively limited, as the interest rate
on virtually all loans is fi xed. It is the group’s strategy to arrange a
fi xed interest rate for the long-term portion of debts, and to keep
short-term debts fl oating. Thanks to an optimal portfolio of
long-term and short-term debt fi nancing, potential negative
interest-rate fl uctuations are minimised.
In connection with the group’s refi nancing, it was decided in
December 2005 to enlist the support of the capital market via
the issue of a EUR 100 m bond over ten years with fi xed coupon
interest. Because such an operation can easily take three months,
and interest rates at the end of December 2005 were very
attractive, Sioen concluded a ten-year IRS starting in April 2006,
the presumed starting date of the bond. As this IRS can be regarded
as effective cash fl ow hedging as per IAS39, the EUR 636k negative
market value fl uctuation on 31/12/2005 of this IRS has been
deducted from equity.
On 02/02/2006, the market value was up EUR 1,346k, and it was
realised following the hedge strategy at the moment of issuing of
the bond. This received premium satisfi es the conditions for cash
fl ow hedging defi ned in IAS39, and will be spread out over the
term of the bond.
129
2005 2004 2005 2004 deferred deferred tax asset tax liability
Intangible fi xed assets 47 334 Tangible fi xed assets 2.404 1.905 16.917 16.572 Inventories 1.765 1.557 Receivables 312 342 Other assets 2.004 Pension liabilities 411 313 Other provisions 329 Other liabilities 44 215 Conversion differences 1.270 Hedging reserves 216 Undistributed reserves 1.904 5.781 Tax losses carried forward 15.779 16.966 Total 21.307 21.632 20.091 24.357 Write-down on deferred tax receivable (11.027) (9.595) Balance (3.270) (2.776) (3.270) (2.776) Total 7.010 9.261 16.821 21.581 The value of carried-forward tax losses arranged by expiry date
One year Two years Three years 2.037 Four years 1.116 2.037 Five years and later No expiry date 45.481 48.267 Unrecognised carried forward tax losses 32.287 27.392
Unrecognised deferred tax on undistributed reserves 306 259
SIOEN INDUSTRIES I V.5.15 DEFERRED TAX
Current tax receivables which do not appear to be collectable in
the near future are not recognised. In this assessment the
management takes account of budgets and multi-year planning.
130
SIOEN INDUSTRIES I V.5.16 ACQUISITIONS AND DISPOSALS OF INTERESTS
EFFECTS OF ACQUISITIONS AND SALES OF INVESTMENTS
2004
Acquisition of minority interest 25% Coatex - Saint Frères apparel - Bacam
Fair value Carrying value
Non-current assets 1.701 1.701
Current assets 3.049 3.049
Long-term payables 524 524
Short-term payables 1.580 1.580
Fair value of acquired assets and liabilities 2.646
Acquisition price in dash 5.800
Goodwill(1) 3.154
Acquisition Plastylon SAS
Intangible non-current assets(2) 1.875 2.400
Current assets 19 19
Long-term payables
Short-term payables 8 8
Fair value of acquired assets and liabilities 1.886
Acquisition price in cash 1.912
Goodwill 26
2005
Sale Sirec SA
Current assets 44
Equity 8.629
Deferred tax liabilities 3.167
Short-term payables 37
Sale price in cash 10.205
Income3) 1.576
(1) Given that there is no change in audit, this goodwill was directly deducted from the equity.(2) The customer portfolio of Plastylon was booked at fair value.(3) Given that the yield of this sale arises from the reversal of a deferred tax liability, this is included in deferred tax revenue.
131
SIOEN INDUSTRIES I VI. OTHER
VI.1 OPERATIONAL LEASING LIABILITIES 2005 2004 Amounts recorded as costs 1.030 260 Payments due within 1 year 953 583 Within 1 and 5 years 956 635 After 5 years 129 Minimum future payments 2.038 1.218
Issue of bond loan
On 14 March 2006 a 10-year bond loan listed on Eurolist by
Eurolist Brussels was successfully issued in an amount of EUR 100
million and at a fi xed coupon rate of 4.75%. An IRS (Interest Rate
Swap) was concluded on 20/12/2005 to cover the interest rate of
this bond issue. Under the note ‘Financial Instruments’ this IRS is
described as ‘Cash Flow Hedging’.
VI.2 EVENTS AFTER BALANCE SHEET CLOSING DATE
Repayment of a long-term revolving credit
A EUR 20 million revolving credit with a variable interest rate,
drawn down on 20/12/2005 and maturing on 30/06/2007, was
prepaid on 14 March 2006 without penalty charges.
VI.3 OFF-BALANCE SHEET ITEMS 2005 2004 Guarantees given - - Commitments to purchase tangible and intangible fi xed assets 8.516 444
VI.4 TRANSACTIONS WITH RELATED PARTIES Transaction type 2005 Recticel Group sale 2.079Recticel Group purchase 344INCH sale 1.722SVB purchase 170
Other transactions with related parties other than directors are not
included, given the negligible amount (under EUR 70,000).
With regard to directors’ remuneration, the read is referred to
section V.6.B.
132
SIOEN INDUSTRIES I VI. OTHER
VI.5 PERSONNEL
Country 2005 2004 Belgium 902 872China 16 14Germany 18 31France 292 290Ireland 42 37Indonesia 2016 1921Netherlands 7 14Poland 490 531Portugal 25 23Tunesia 788 725UK 34 33USA 15 9Total 4645 4500
Workers 3785 862Salaried employees 860 3638Total 4645 4500
VI.6 AUDITING AND NON-AUDITING SERVICES PROVIDED IN THE CURRENT YEAR Deloitte other Audit services 274 71Remaining legal services Tax services 37 12 Remaining services 85 46
VI.7 CONTINGENT ASSETS AND LIABILITIES A number of commercial disputes are pending, albeit with a limited value in dispute.A mixed soil pollution was identifi ed at the Ardooie site.A descriptive soil study is under way to determine the scope.
133
SIOEN INDUSTRIES I VI. OTHER
❱ Mrs. Michèle Sioen received in 2005 as CEO, besides her
remuneration as a member of the board of directors a fi xed
remuneration of 300.000 Eur. She didn’t receive any variable
remuneration or any other kind of remuneration.
❱ The fees paid to the other executive directors in their capacity
as member of the executive management amounted to an overall
sum, in 2005, of EUR 2.126.123,64. This contains contributions to
pension insurance.
❱ All sums mentioned above are gross sums and contain the entire
cost to the Company.
In 2005 there were no shares, share options or other rights for the
acquisition of shares granted to the CEO and the other members
of the executive management. There are no specifi c recruitment
agreements or agreements for a golden handshake with the
members of the executive management.
VI.8 Remuneration of the directors and
the Executive Management
In 2005 the following fees were paid to the members of the board
of directors and the executive management:
❱ Non-executive and independent directors, as well as the mem-
bers of the executive management in their capacity as director:
Mr Jean-Jacques Sioen EUR 20,000
Ms Michèle Sioen EUR 20,000
Ms Jacqueline Sioen-Zoete EUR 20,000
Ms. Danielle Sioen EUR 20,000
Ms Pascale Sioen EUR 20,000
Mr Pol Bamelis EUR 27,500
Mr Wilfried Vandepoel EUR 26,000
Mr. Louis-Henri Verbeke EUR 26,000
Mr Luc Sterckx EUR 27,500
Mr Luc Vansteenkiste EUR 21,500
134
SIOEN INDUSTRIES I IFRS
IFRS 1 – First-time adoption of International
Financial Reporting Standards
In line with IFRS 1- First-time adoption of IFRSs, the opening
balance sheet has been drawn up by the retroactive application
of those IFRS standards which were in force on the reporting date.
However, IFRS 1 sets out a number of exceptions which can be
applied. Sioen Industries has applied the following exceptions:
❱ Business combinations which took place before the transition
date do not need to be revised retroactively. IFRS 3 – Business
combinations was not retroactively applied to business
combinations which took place before 1 January 2003.
❱ Certain tangible fi xed assets were valued at market value. This
market value is used as the presumed cost price. This exception
was applied for a limited number of items in tangible fi xed assets,
mainly land.
❱ Cumulative actuarial gains and losses were recognised in capital
and reserves on the transition date. After the transition date Sioen
Industries will continue to apply the current “corridor” as
stipulated in IAS 19 - Employee benefi ts.
❱ Previously recognised conversion differences, deriving from the
conversion into euros of the fi nancial statements in other
currencies of foreign entities, were reset to 0.
❱ IFRS 2 - Share-based payment. Sioen Industries has opted to
apply the transitional measures laid down by IFRS 2. As of 31
December 2004 no new capital and reserves instruments were
assigned after 7 November 2002.
Impact of the transition on the consolidated opening
balance sheet on 1 January 2004.
The net assets including minority interests according to Belgian
principles were EUR 125.8 million. In the revised opening balance
sheet according to IFRS, the net assets are EUR 115.6 million.
All adjustments are the consequence of changes in fi nancial
reporting principles, and hence not the consequence of any errors
in the application of the former GAAP (Belgian GAAP) made in
previous annual accounts.
The EUR 10.2 million decrease is accounted for in the reconciliation
table and the notes below.
Impact of the transition from Belgian fi nancial reporting
standards to IFRS
The European directive issued on 19 July 2002 (directive
1606/2002), requires all European listed companies to draw up
their consolidated fi nancial reporting in accordance with IFRS,
the International Financial Reporting Standards, approved by the
European Commission. Sioen Industries has opted to show one
year of comparative information in the fi rst consolidated fi nancial
statements drawn up in accordance with IFRS. Consequently, the
transition date to the IFRSs has been set as 1 January 2004. To
make it possible to display this comparable information, the
opening balance sheet according to Belgian standards on 1 January
2004 has had to be revised in order to calculate the IFRS opening
balance sheet on 1 January 2004. The effects of this revision are
included in the net assets on the IFRS opening balance sheet.
All fi gures are in millions of euros, unless indicated otherwise.
The IFRS opening balance sheet is based on all standards and
interpretations approved by the European Commission on 31
December 2004, apart from IFRS 2 – Share-based payment, which
was approved on 4 February 2005.
Basis for preparation of the IFRS opening balance sheet
For the transition to the IFRSs, Sioen Industries has opted for an
early application of IAS 32 - Financial instruments: disclosure and
presentation and IAS 39 - Financial instruments: recognition and
measurement
135
SIOEN INDUSTRIES I IFRS
approved by the management. Cashfl ows after the budgeted
period are extrapolated using the most appropriate growth rate,
which may not exceed the average long term growth rate for the
sector in which the cash generating unit is active.
The management bases its assumptions (regarding prices, volumes
and return) on past performance and on its expectations with
regard to the market’s development. The weighted average growth
rate is listed in the sector reports in accordance with the forecasts.
The discount rate used is the estimated weighted average cost
of capital for the group before tax, and takes account of current
market assessments of the time value of money and the risks for
which the future cashfl ows are adapted.
In accordance with IFRS 1, all goodwill recorded and recognised ac-
cording to Belgian standards has been subjected to an impairment
test for the transition to IFRS, resulting in a negative impact of EUR
0.5 million (before tax impact).
(1) Intangible fi xed assets
Patents and licences recognised according to Belgian standards are
no longer recognised if they are generated internally, in line with
the recognition criteria in IAS 38 – Intangible fi xed assets.
(2) Goodwill
All goodwill is assigned to cash generating units in a reasonable
and consistent manner. Goodwill will no longer be depreciated, in
accordance with IFRS 3 – Business combinations. However, good-
will will be impairment tested annually, in accordance with IAS 36
– Impairment of assets.
The realisable value of a cash generating unit is usually determined
with reference to the value to the business. For certain clearly
identifi ed assets, the price in a binding sale agreement in a
transaction between (independent) parties on an impartial and
objective basis may be used to determine the realisable value.
For the calculation of the value to the business, cashfl ow forecasts
are used which are based on the fi nancial budget that has been
Reconciliation of the net assets on the transition date published according to Belgian principles
with the net assets according to IFRS
Consolidated capital and reserves including minority interests according to BGAAP on 01/01/2004 125,8
Intangible assets -0,3 (1)
Goodwill -0,5 (2)
Goodwill Roltrans Group -19,9 (3)
Tangible fi xed assets 23,5 (4)
Investment grants -8,8 (5)
Long term receivables -1,0 (6)
Inventories -1,9 (7)
Provisions -0,7 (8)
Deferred tax receivable 7,4 (9)
Deferred tax liabilities -12,3 (10)
Dividends 4,3 (11)
Other adjustments - (12)
Consolidated capital and reserves including minority interests according to IFRS on 01/01/2004 115.6
136
SIOEN INDUSTRIES I IFRS
reserves, have been reclassifi ed and offset against the tangible
fi xed assets for which they were obtained, in accordance with IAS
20 - Accounting for government grants and disclosure of
government assistance.
The components approach is also applicable to tangible fi xed
assets for which government grants have been obtained. This
has led to a negative impact on the net assets of EUR 3,8 million
(before tax impact).
(6) Long term receivables
A long term receivable in the amount of EUR 1.8 million has been
treated as a fi nancial lease with the transition to IFRS. Taking ac-
count of the estimated residual value of the underlying fi xed asset,
this should be written down by EUR 1 million (before tax impact).
(7) Inventories
In application of IAS 2 – Inventories, the book value of inventories
according to Belgian standards should be reduced by EUR 1.9
million (before tax impact).
(8) Provisions
The group has certain pension liabilities, mainly in France where
there is a legal requirement in this area. These liabilities qualify as
defi ned benefi t schemes under IAS 19 and led to the recognition of
EUR 0.7 million (before tax impact) in the opening balance sheet.
(9) Deferred tax receivable
In accordance with IAS 12 – Income taxes, deferred taxes are
calculated on temporary differences between the asset’s fi scal
book value and its book value in the fi nancial statements. The
application of this standard has resulted in the additional
recording of deferred tax assets in the amount of EUR 7.4 million.
Deferred tax assets will be recorded to the extent that it is likely
that taxable profi t will be available against which the recoverable
temporary difference can be offset.
(10) Deferred tax liabilities
Deferred tax liabilities are recorded in the amount of EUR 12.3 mil-
lion, mainly on impacts identifi ed in connection with the
transition from Belgian standards to IFRS.
(3) Goodwill in Roltrans Group
According to Belgian principles and the decision of the Board of
Directors on 28 May 2004, Sioen Industries had no control over
the Roltrans Group. The goodwill consequently continued to be
recorded and depreciated in the annual accounts according to
Belgian principles.
In comparison with Belgian principles, IFRS sets stricter standards
regarding the scope of consolidation. According to SIC 12 –
Consolidation, Special Purpose Entities, the Roltrans Group
satisfi es the defi nition of a special purpose entity. In consequence,
according to IAS 27- Consolidated and Separate Financial
Statements, the Roltrans Group must be retroactively included in
the scope of consolidation of Sioen Industries, from 1999 onwards.
Because the net assets of the Roltrans Group were zero at that
point, the recorded goodwill is no longer recognised in the IFRS
opening balance sheet.
(4) Tangible fi xed assets
In accordance with IFRS 1- First-time adoption of IFRSs, it has been
decided to value certain tangible fi xed assets at market value on
the transition date, and to take this value as the presumed cost
price.
Land in Belgium, France and Poland was valued with reference to
valuation reports by qualifi ed property experts. The use of this
option, in accordance with IFRS 1, has led to an impact on the net
assets of EUR 8 million (before tax impact).
IAS 16 – Property, plant and equipment stipulates that if a signifi -
cant tangible asset consists of several components with different
useful lives, these components should be depreciated separately
(the ‘component approach’). Based on a detailed screening of the
group’s tangible fi xed assets, the signifi cant components were
identifi ed and have been depreciated over the estimated useful life.
The application of this principle results in a positive impact on the
net assets of EUR 15.5 million (before tax impact).
(5) Investment grants
Investment grants in the amount of EUR 5 million, which are
recorded in the Belgian annual accounts under capital and
137
SIOEN INDUSTRIES I VII. IFRS
(12) Other adjustments
On the grounds of immateriality, Roland Ukraine and Sioen USA
were not consolidated according to Belgian principles. It has been
decided to include these entities in the scope of consolidation in
the IFRS opening balance sheet. This results in a negative impact
on the net assets of EUR 8,000.
(11) Dividends
In contrast with Belgian principles, according to IAS 10 – Events
after the balance sheet date dividends should only be recognised
as short term liabilities when the General Meeting of Shareholders
approves them. Consequently the EUR 4.3 million dividend has
been recorded back in the net assets.
Reconciliation of the net assets as at 31/12/2004 and the net result for the period 2004 with notes
Reconciliation of the net assets (including minority interests) published according to Belgian principles as at 31/12/2004
with the net assets (including minority interests) according to IFRS as at 31/12/04
Consolidated capital and reserves including minority interests according to BGAAP on 31/12/2004 129,2
Intangible assets - 0,5 *
Goodwill -17,4 *
Tangible fi xed assets 24,8 *
Investment grants -8,5 *
Long term receivables -1,0 *
Inventories -1,8 *
Provisions -1,2 *
Deferred tax receivable 7,4 *
Deferred tax liabilities -14,3 *
Dividends 4.7 (2)
Goodwill on acquired minority interests -3,1 (1)
Consolidated capital and reserves including minority interests according to IFRS on 31/12/2004 118,3
* this impact on the net assets consists of
❱ impact on capital and reserves in the opening balance sheet
as detailed under the heading ‘Reconciliation of the net assets
on the transition date published according to Belgian principles
with the net assets according to IFRS’
❱ impact on the profi t and loss account for the period 2004
as detailed under the heading ‘Reconciliation of the net result
(including minority interests) published according to Belgian
principles for the period 2004 with the net result according to
IFRS’
(1) Goodwill on acquired minority interests
The goodwill recognised according to Belgian principles on the
acquisition of the minority interest of Coatex, Saint Freres
Confection and Bacam has been directly offset against the
consolidated capital and reserves.
(2) Dividends
In contrast with Belgian principles, according to IAS 10 – Events
after the balance sheet date dividends should only be recognised
as short term liabilities when the General Meeting of Shareholders
approves them. Consequently the EUR 4.7 million dividend has
been reincluded in the net assets as at 31/12/2004.
138
SIOEN INDUSTRIES I VII. IFRS
(4) Investment grants
The components approach is also applicable to tangible fi xed
assets for which government grants have been obtained. This has
led to a positive impact on the result of EUR 0.3 million (before tax
impact).
(5) Inventories
The application of IAS 2 – Inventories, results in a positive impact
on the result of EUR 0.1 million (before tax impact).
(6) Deferred tax liabilities
In accordance with IAS 12 – Income taxes, deferred taxes are
calculated on temporary differences between the asset’s fi scal
book value and its book value in the fi nancial statements. The
application of this standard has resulted in a negative impact on
the result of EUR 1.9 million.
Deferred tax assets have been recorded to the extent that it is
likely that taxable profi t will be available against which the
recoverable temporary difference can be offset.
(7) Bonuses
In contrast with Belgian principles, bonuses payable are not
regarded as a component of profi t distribution, but as an expense
for the year. This has resulted in a negative impact on the result of
EUR 1.3 million.
(8) Provisions
The updating of provisions for other liabilities and charges has had
a negative effect on the result of EUR 0.5 million.
(1) Intangible fi xed assets
Patents and licences recognised according to Belgian standards
have no longer been recognised in the opening balance sheet if
they are generated internally, in line with the recognition criteria in
IAS 38 – Intangible fi xed assets. In 2004 the depreciation recorded
according to BGAAP is thus not included according to IFRS.
(2) Goodwill
In accordance with IFRS 3 – Business combinations, goodwill is no
longer depreciated. This results in a positive impact on the result
of EUR 3.0 million. Goodwill will be impairment tested annually, in
accordance with IAS 36 – Impairment of assets.
(3) Tangible fi xed assets
In accordance with IFRS 1- First-time adoption of IFRSs, it has been
decided to value certain tangible fi xed assets at market value on
the transition date, and to take this value as the presumed cost
price.
IAS 16 – Property, plant and equipment stipulates that if a signifi -
cant tangible asset consists of several components with different
useful lives, these components should be depreciated separately
(the “component approach”). Based on a detailed screening of the
group’s tangible fi xed assets, the signifi cant components were
identifi ed and have been depreciated over the estimated useful
life. As a consequence of an extension of the depreciation period
of certain components, there is a positive impact on the result of
EUR 1.3 million.
Reconciliation of the net result (including minority interests) published according to Belgian principles
for the period 2004 with the net result according to IFRS
Net result including minority interests according to BGAAP on 31/12/2004 12,4
Intangible assets -0,2 (1)
Goodwill 3,0 (2)
Tangible fi xed assets 1,3 (3)
Investment grants 0,3 (4)
Inventories 0,1 (5)
Provisions -0,5 (8)
Deferred tax liabilities -1,9 (6)
Bonuses -1,3 (7)
Net result including minority interests according to IFRS on 31/12/2004 13,2
139
SIOEN INDUSTRIES I VII. IFRS
Comparison of the net result (including minority interests) published according to Belgian
principles for the period 2004 with the net result according to IFRS
Profi t and loss account for year ending 31/12/04 BGAAP Effect of transition IFRS
Operating income 303,403.00 -1,503.00 301,900.00
Operating costs 273,606.00 1,307.00 274,913.00
Operating profi t 29,797.00 -2,810.00 26,987.00
Net fi nancial costs 10,801.00 -3,460.00 7,341.00
Extraordinary costs 2,193.00 -2,193.00
Profi t before tax 16,803.00 2,843.00 19,646.00
Tax 4,423.00 2,097.00 6,520.00
Profi t after tax 12,380.00 746.00 13,126.00
Comparison of the balance sheet published according to Belgian principles for the period 2004 with the balance sheet according to IFRS
Assets as at 31/12/04 BGAAP Effect of transition IFRS
Fixed assets 167,054.00 3,677.00 170,731.00
Intangible fi xed assets 3,108.00 -312.00 2,796.00
Goodwill 32,061.00 -15,513.00 16,548.00
Tangible fi xed assets 131,176.00 10,266.00 141,442.00
Investment grants
Financial fi xed assets 709.00 -25.00 684.00
Deferred tax receivable 9,261.00 9,261.00
Current assets 164,731.00 -4,802.00 159,929.00
Accounts receivable due in more than one year 0.00
Inventories 72,277.00 -1,811.00 70,466.00
Accounts receivable due in less than one year 75,363.00 -3,068.00 72,295.00
Investments 1,963.00 1,963.00
Cash and cash equivalents 12,823.00 100.00 12,923.00
Deferred expenses and accrued income 2,305.00 -23.00 2,282.00
ASSETS 331,785.00 -1,124.00 330,661.00
140
SIOEN INDUSTRIES I VII. IFRS
Liabilities as at 31/12/04 BGAAP Effect of transition IFRS
Net assets 129,180.00 -10,878.00 118,302.00
Net assets 123,913.00 -5,611.00 118,302.00
Investment grants 5,267.00 -5,267.00
Provisions and deferred taxes 7,656.00 17,674.00 25,330.00
Provisions 2,386.00 1,363.00 3,749.00
Deferred taxes 5,270.00 16,311.00 21,581.00
Accounts payable 194,949.00 -7,920.00 187,029.00
Accounts payable due in more than one year 68,571.00 -49.00 68,522.00
Accounts payable due in less than one year 125,495.00 -7,850.00 117,645.00
Accrued expenses and deferred income 883.00 -21.00 862.00
LIABILITIES 331,785.00 -1,064.00 330,661.00
Impact of the change from Belgian GAAP to IFRS for the fi rst and second half of 2004.
Reconciliation of the net result (including minority interests) published under Belgian GAAP
for the fi rst and second half of 2004 and of the net result under IFRS for the same periods.
1 H 2004 2 H 2004
Net result at 31/12/2004 including minority interests,
in accordance with Belgian GAAP 8,2 4,2
Intangible fi xed assets -0,2 *
Goodwill 1,5 1,5 *
Tangible fi xed assets 0,7 0,6 *
Investment grants 0,3 *
Stocks -0,8 0,9 *
Provisions -0,5 *
Deferred tax liabilities -1,1 -0,8 *
Directors’ fees -0,6 -0,7 *
Other changes 0,1 -0,1 *
Net result, including minority interests under IFRS at 31/12/2004 8 5,2
* impact on the profi t and loss account, as explained in the memo
“Impact of the transition from Belgian fi nancial information
standards to IFRS” under the heading “Reconciliation of the net
result for 2004 (including minority interests) according to Belgian
principles at the net result according to IFRS”.
141
SIOEN INDUSTRIES I VII. IFRS
* The impact on shareholders’ equity consists of
❱ the impact on the shareholders’ equity in the opening
balance sheet, as explained in the memo “Impact of the transi-
tion from Belgian fi nancial reporting standards to IFRS ” under
the heading “Reconciliation of the net assets at transition date
according to Belgian principles and the net assets according to
IFRS”.
❱ the impact on the profi t and loss account for the fi rst half of
2004, as explained in the memo “Impact of the transition from
Belgian fi nancial information standards to IFRS” under the
heading “Reconciliation of the net result for 2004 (including
minority interests) according to Belgian principles and the net
result according to IFRS”.
Comparison of the shareholders’ equity (including minority interests) published in accordance with Belgian standards at 31/12/2003
and shareholders’ equity (including minority interests) in accordance with IFRS standards at 30/06/2004
Shareholders’ liability at 30/06/2004, including minority interests, in accordance with Belgian GAAP 134
Intangible fi xed assets -0,3 *
Goodwill -19,0 *
Tangible fi xed assets 24,2 *
Investment grants -8,4 *
Amounts payable after one year -1,0 *
Stocks -2,7 *
Provisions -0,7 *
Deferred tax assets 7,4 *
Deferred tax liabilities -13,4 *
Consolidated shareholders’ equity, minority interests under IFRS at 30/06/2004 120,1
142
SIOEN INDUSTRIES I VIII. STATUTORY AUDITOR’S REPORT
information required for our audit. We have examined, on a test basis, the evidence supporting the amounts in the consolidated fi nancial statements. We have assessed the basis of the accounting methods used, the consolidation policies and signifi cant estimates made by management as well as evaluating the presentation of the consolidated fi nancial statements taken as a whole. We believe that our audit, together with the reports of other auditors on which we have relied, provides a reasonable basis for our opinion. In our opinion, and based, to the extent necessary upon the reports of other auditors, the consolidated fi nancial statements give a true and fair view of the group’s fi nancial position as of 31 December 2005, and of its results and its cash fl ows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the EU and with the legal and regulatory requirements applicable in Belgium.
Additional attestationsWe supplement our report with the following attestations which do not modify our audit opinion on the consolidated fi nancial statements:
❱ The directors’report on the consolidated fi nancial statements includes the information required by law and is
in agreement with the consolidated fi nancial statements. However, we are unable to express an opinion on the
description of the principle risks and uncertainties confronting the group, or on the status, future evolution, or signifi cant infl uence of certain factors on its future development. We can, nevertheless, confi rm that the information given is not in obvious contradiction with any information obtained in the context of our appointment.
❱ Relating to note VII “Impact of the transition from Belgian fi nancial reporting standards to IFRSs”, we refer to the statutory auditor’s reports issued respectively on 28 May 2004 and 23 March 2005 on the consolidation fi nancial statements of the group in accordance with Belgian fi nancial reporting standards as of 31 December 2003 and 2004.
29 March 2006The Statutory Auditor
DELOITTE Reviseurs d’EntreprisesSC s.f.d. SCRL represented by Guy Wygaerts and Geert Verstraeten
To the Shareholders
As required by law and the company’s articles of association, we are pleased to report to you on the audit assignment which you have entrusted to us.
We have audited the accompanying consolidated fi nancial state-ments of Sioen Industries NV (“the company”) and its subsidiaries ( jointly “the group”), prepared in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. Those consolidated fi nancial statements comprise the consolidated balance sheet as at 31 December 2005, the consoli-dated income statement, the consolidated statement of changes in equity and the consolidated cash fl ow statement for the year then ended, as well as the summary of signifi cant accounting policies and other explanatory notes. The consolidated balance sheet shows total assets of EUR 337.683 (000) and a consolidated profi t (group share) for the year then ended of EUR 13.582 (000). We have also performed those specifi c additional audit procedures required by the Companies Code.
The Board of Directors of the company is responsible for the preparation of the consolidated fi nancial statements and the directors’report on the consolidated fi nancial statements, for the assessment of the information that should be included in the directors’report on the consolidated fi nancial statements, and for the company’s compliance with the requirements of the Companies Code and the articles of association.
Our audit of the consolidated fi nancial statements was conductedin accordance with legal requirements and auditing standards applicable in Belgium, as issued by the “Institut des Reviseurs d’Entreprises/Instituut der Bedrijfsrevisoren”.
The fi nancial statements of several signifi cant entities included in the scope of consolidation which represent 21,2% of total assets and 28,3% of total sales have been audited by other auditors. Our opinion on the accompanying consolidated fi nancial statements, insofar as it relates to the amounts contributed by those entities, is based solely upon the reports of those other auditors.
Unqualifi ed audit opinionon the consolidated fi nancial statementsThe forementioned auditing standards require that we plan and perform our audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement.In accordance with these standards, we considered the group’s administrative and accounting organization as well as its internal control processes. We have obtained the explanations and
143
SIOEN INDUSTRIES I IX. STATUTORY ANNUAL ACCOUNTS OF I SIOEN INDUSTRIES NV
Without qualifying the unqualifi ed opinion expressed above, we
draw the attention to the annual report. Sioen Industries NV has
per December 31, 2005, a total outstanding receivable of 17,5 mio
EUR on the Roltrans group, a 100% subsidiary of Sioen Industries
NV. In addition, Sioen Coating Distribution NV, a 100% subsidiary
of Sioen Industries NV, has outstanding receivables on the Roltrans
group for an amount of 15,5 mio EUR. The realisation of these
amounts is dependent of the further successful development of
the realised recovery plan. The accompanying fi nancial statements
do not included any less values or provisions relating to the above.
The statutory annual accounts of the parent company Sioen
Industries n.v. are shown below in condensed form. In June 2006,
the annual report and annual accounts of Sioen Industries n.v. and
the auditor’s report will be fi led with the National Bank of Belgium
in accordance with Articles 98-102 of the Companies Act.
These reports are available on request at the following address:
Sioen Industries n.v. – Fabriekstraat 23 – 8850 Ardooie.
The statutory auditor has issued an unqualifi ed opinion with
explanatory paragraph on the statutory fi nancial statements of
Sioen Industries NV. The explanatory paragraph is as follows:
Condensed balance sheet of Sioen Industries n.v. after appropriation of profi t
(in thousands EUR) 2005 2004 2003 2002December 31 (000) EUR (000) EUR (000) EUR (000) EUR
Fixed assets 65.910 81.976 81.990 56.531
II. Intangible fi xed assets 3.656 3.477 3.472 3.989III. Tangible fi xed assets 1.136 681 555 504IV. Financial fi xed assets 61.118 77.818 77.963 52.038 Current assets 139.941 139.630 136.381 132.578
VII. Amounts receivable within one year 138.611 139.207 136.205 125.800IX. Cash at hand and in bank 1.045 286 46 6.544X. Deferred charges and accrued income 285 137 130 234
Total assets 205.851 221.606 218.371 189.109
Capital and reserves 78.034 80.052 79.660 69.265
I. Capital 46.000 46.000 46.000 46.000IV. Legal reserves 3.339 3.174 2.910 2.167V. Profi t brought forward 28.695 30.878 30.750 21.098 Creditors 127.817 141.554 138.711 119.844
VIII. Amounts payable after one year 51.613 60.284 61.828 68.831IX. Amounts payable within one year 76.100 81.107 76.784 50.787X. Accrued charges and deferred income 104 163 99 226
Total liabilities 205.851 221.606 218.371 189.109
144
SIOEN INDUSTRIES I IX. STATUTORY ANNUAL ACCOUNTS OF I SIOEN INDUSTRIES NV
Condensed income statement of Sioen Industries n.v. (in thousands EUR) 2005 2004 2003 2002Years ended December 31 (000) EUR (000) EUR (000) EUR (000) EUR
I. Operating income 5.954 5.599 5.229 5.528
A.Sales 5.889 5.317 5.010 5.383D.Other operating income 65 282 219 145
II. Operating charges (6.113) (5.886) (5.075) (4.934)
B.Services and other goods 2.110 2.325 1.762 1.545C.Renumeration 3.236 2.579 2.256 1.986D.Depreciation and amounts written off 754 901 1.023 1.392G.Other operating charges 13 81 34 11
III. Operating profi t/loss (159) (287) 154 594
IV. Financial income 16.923 15.758 21.201 19.433
V. Financial charges (6.416) (6.531) (6.012) (5.058)
Financial result 10.507 9.227 15.189 14.375
VI. Profi t on ordinary activities 10.348 8.940 15.343 14.969
VII. Extraordinary result (6.739) (3.596) - -
IX. Profi t before tax 3.609 5.344 15.343 14.969
X. Income taxes (293) (71) (495) (766)
XI. Profi t for the fi nancial year 3.316 5.273 14.848 14.203
145
SIOEN INDUSTRIES I IX. STATUTORY ANNUAL ACCOUNTS OF I SIOEN INDUSTRIES NV
The extraordinary income relates to the capital gain on the
disposal of the participating interest in Sirec.
Accounting principles
The accounting principles and translation rules applied to the sta-
tutory annual accounts of Sioen Industries are the same as those
used for the consolidated annual accounts.
Statement of capital
In accordance with Articles 1 to 4 of the Act of March 2, 1989
concerning the disclosure of important holdings in listed companies
and regulating take-over bids, the applicable quotas were set at,
one the one hand, 5 percent or a multiple thereof and on the other
hand at 3 percent or a multiple thereof. (Article 8 of the Articles
of Association). In accordance with Article 4 of the Act of March 2,
1989, the following notifi cations of shareholdings in the company
were received:
Activity of Sioen Industries
The function of Sioen Industries is essentially to outline the
strategy of the three divisions. It also appoints the management
of the Group companies and supports the Group companies in the
areas of personnel management, fi nancial and treasury manage-
ment, budgeting and controlling, MIS and IT, and legal affairs.
Comments
The turnover of the holding company rose by 10.8% to EUR 5.9
million. Other operating income fell to EUR 0.065 million, as
compared to EUR 0.28 million in 2004. In 2005 the operating loss
amounted to EUR 0.159 million, compared with an operating loss
in 2004 of 0.287 million EUR. Income rose to EUR 10.5 million, as
compared to EUR 9.2 million in 2004, as a result of higher dividend
payments from the various subsidiaries.
These extraordinary results include a permanent impairment of
EUR 8.3 million recorded against the participating interest in TIS
and EUR 5 million against the interest in Pennel, and a long-term
impairment of EUR 2.6 million on the claim against Sungintex.
Situation at 1 May 2006
Notifying party Date of notifi cation Number of shares Percentage of total
number of shares
Sihold n.v.,(1)
Fabriekstraat 23, 8850 Ardooie 18 October 1996 13.365.010 62,5%
Notifi cation of change of percentage shareholding
Sihold n.v. 12 October 2005 12.715.010 59,4%
Shell pension fund 12 October 2005 726.320 3,4%
Sihold n.v. 30 January 2006 12.906.212 60,33%
Total number of shares 21.391.070 100,0%
(1) Sihold n.v. is controlled by Sicorp n.v., which is controlled in turn by the Dutch foundation Stichting Administratiekantor Midapa. This foundation is controlled by the Sioen family.
146
SIOEN INDUSTRIES I X. PROPOSALS TO THE ANNUAL MEETING
Proposals to the Annual Meeting of
Sioen Industries n.v. of May 26, 2006
The board of directors of Sioen Industries proposes to the annual
meeting to approve the annual accounts at December 31, 2005
and to consent to the appropriation of profi t.
The profi t for the fi nancial year ended is 3.315.435,84 EUR,
compared to a profi t of 5.273.005,05 EUR for the fi nancial year
2004. The profi t brought forward from the previous fi nancial year
is 30.878.787,74 EUR. The profi t available for appropriation is
consequently 34.194.223,58 EUR.
The board of directors proposes to appropriate the profi t available for appropriation of 34.194.223,58 EUR as follows:
(in EUR)
Gross dividends for the 21.391.070 shares 5.133.856,80
Directors’ fees 200.000,00
Transfer to the legal reserves 165.771,79
Profi t to be carried forward 28.694.594,99
The proposed net dividend per share is calculated as follows:
(in EUR)
Net dividend per share 0,1800
Withholding tax 25/75 0,0600
Gross dividend per share 0,2400
Pay-out ratio (1) 37,80%
The proposed dividend is 9% higher than that of 2004.
The pay-out ratio amounts to 37,80%.
If this proposal is accepted, the net dividend of 0,18 EUR per share
will be made payable as from June 9, 2006 onwards at the counters
of Dexia Bank, ING Bank, Fortis Bank and KBC Bank on presentation
of coupon n°8.
(1) Gross dividend in relation to the share of the Group in the consolidated result
147