KEMIRA'S FINANCIAL STATEMENTS FOR 2007, KEMIRA'S REVENUE UP 11% IN 2007 II/II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEMIRA GROUP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The figures are audited.

 

 

All figures in this financial report have been rounded and consequently the

 

 

sum of individual figures can deviate from the presented sum figure.

 

 

 

 

 

 

 

 

 

 

This Financial Statement has been prepared in compliance

 

 

with IFRS standards. Kemira Group has corrected a previous year error in

 

 

 

accordance with IAS 8. The nature of the error is described in the end

 

 

 

of the report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes to the accounting policies as of January 1, 2007:

 

 

 

 

– IFRS 7 (Financial Instruments: Disclosures) has been

 

 

 

 

adopted by the Group in 2007

 

 

 

 

 

 

– Revised IAS 1 (Disclosures about capital) has been

 

 

 

 

adopted by the Group in 2007

 

 

 

 

 

 

The Group assesses that the adoption of the revised standards will not

 

 

 

have any material effect on its future financial statements. However, the

 

 

 

resulting changes will add disclosures to the Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

10-12/

10-12/

 

 

 

 

INCOME STATEMENT 

2007

2006*

2007

2006*

 

 

EUR million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

654.4

669.5

2,810.2

2,522.5

 

 

Other operating

 

 

 

 

 

 

 

income

 

13.0

17.6

45.9

59.2

 

 

Expenses

 

-636.0

-631.9

-2,539.2

-2264.5

 

 

Depreciation and

 

 

 

 

 

 

 

impairments

 

-74.3

-33.6

-173.8

-123.5

 

 

Operating profit

 

-42.9

21.6

143.1

193.7

 

 

Financial income and

 

 

 

 

 

 

 

expenses

 

-15.3

-12.7

-51.9

-37.2

 

 

Income from associates

0.2

-1.1

2.1

-2.3

 

 

Profit before tax

 

-58.0

7.8

93.3

154.2

 

 

Income tax

 

12.0

-0.1

-25.8

-42.0

 

 

Net profit for the period

 

-46.0

7.7

67.5

112.2

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Equity holders of the parent

-46.8

6.8

63.7

108.6

 

 

Minority interest

 

0.8

0.9

3.8

3.6

 

 

Net profit for the period

 

-46.0

7.7

67.5

112.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET 

 

 

 

 

 

 

 

EUR million

 

 

 

 

 

 

 

 

 

 

 

31.12.

 

31.12.

 

ASSETS

 

 

 

2,007

 

2006*

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Goodwill

 

 

 

626.6

 

581.0

 

Other intangible assets

 

 

 

112.3

 

108.9

 

Property, plant and equipment

 

 

984.3

 

987.1

 

Holdings in associates

 

 

 

5.5

 

8.1

 

Available-for-sale investments

 

 

102.2

 

84.3

 

Deferred tax assets

 

 

 

5.2

 

7.7

 

Defined benefit pension receivables

 

 

34.6

 

24.6

 

Other investments

 

 

 

6.4

 

9.5

 

Total non-current assets

 

 

1,877.1

 

1,811.2

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Inventories

 

 

 

311.2

 

293.2

 

Receivables

 

 

 

 

 

 

 

  Interest-bearing receivables

 

 

3.2

 

9.1

 

  Interest-free receivables

 

 

548.1

 

565.4

 

Total receivables

 

 

 

551.3

 

574.5

 

Money market investments –

 

 

 

 

 

 

cash equivalents

 

 

 

21.4

 

35.0

 

Cash and cash equivalents

 

 

 

31.2

 

41.1

 

Total current assets

 

 

 

915.1

 

943.8

 

Non-current assets held for sale

 

 

35.7

 

14.4

 

Total assets

 

 

 

2,827.9

 

2,769.4

 

 

 

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

31.12.

 

31.12.

 

 

 

 

 

2,007

 

2006*

 

Equity attributable to equity

 

 

 

 

 

 

holders of the parent

 

 

 

1,072.0

 

1,069.9

 

Minority interest

 

 

 

15.3

 

12.6

 

Total equity

 

 

 

1,087.3

 

1,082.5

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Interest-bearing non-current liabilities

 

 

431.1

 

395.1

 

Deferred tax liabilities

 

 

 

105.5

 

105.9

 

Pension liabilities

 

 

 

74.2

 

66.8

 

Provisions

 

 

 

18.8

 

63.3

 

Total non-current liabilities

 

 

629.6

 

631.1

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Interest-bearing current liabilities

 

 

625.0

 

508.5

 

Interest-free current liabilities

 

 

473.6

 

522.9

 

Provisions

 

 

 

6.2

 

15.5

 

Total current liabilities

 

 

 

1,104.8

 

1,046.9

 

Liabilities directly associated with non-current

 

 

 

 

 

assets classified as held for sale

 

 

6.2

 

8.9

 

Total liabilities

 

 

 

1,740.6

 

1,686.9

 

Total equity and liabilities

 

 

2,827.9

 

2,769.4

 

 

 

 

 

 

 

 

 

In connection with the strategic review process, it was decided to classify the assets and liabilities of strategic business unit Chemidet as assets held for sale. The strategic business unit belongs to Kemira Specialty Business Area. There are negotiations on going for disposal. The loss recognised in the income statement amounts to EUR 9.2 million.

 

 

 

 

 

 

 

 

 

 

 

The non-current assets held for sale includes also a land area in Porkkala Finland. The sale contract was signed in 2007 but the ownership of the land will transfer in 2008.

 

 

 

 

 

 

 

 

 

 

 

* Year 2006 error has been corrected.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

EUR million

 

 

 

2007

 

2006

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

  Adjusted operating profit

 

 

281.1

 

232.0

 

  Interests

 

 

 

-36.3

 

-30.4

 

  Dividend income

 

 

 

2.0

 

2.0

 

  Other financing items

 

 

 

–

 

-1.3

 

  Income taxes paid

 

 

 

-35.6

 

-45.1

 

Total funds from operations

 

 

211.2

 

157.2

 

 

 

 

 

 

 

 

 

  Change in net working capital

 

 

-39.1

 

59.6

 

Total cash flows from operating activities

 

172.1

 

216.8

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

  Capital expenditure for acquisitions

 

-66.6

 

-297.4

 

  Other capital expenditure

 

 

-254.4

 

-164.6

 

  Proceeds from sale of assets

 

 

-0.2

 

102.9

 

  Net cash used in investing activities

 

 

-321.2

 

-359.1

 

Cash flow after investing activities

 

 

-149.1

 

-142.3

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

  Change in long-term loans

 

 

 

 

 

 

  (increase +, decrease -)

 

 

53.7

 

173.4

 

  Change in long-term loan receivables

 

 

 

 

 

 

  (decrease +, increase -)

 

 

2.5

 

1.5

 

  Short-term financing, net

 

 

 

 

 

 

  (increase +, decrease -)

 

 

117.8

 

33.8

 

  Dividends paid

 

 

 

-60.8

 

-46.3

 

  Other

 

 

 

12.3

 

-0.2

 

Net cash used in financing activities

 

 

125.5

 

162.2

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

-23.6

 

19.9

 

 

 

 

 

 

 

 

 

  Cash and cash equivalents at end of period

 

52.6

 

76.2

 

  Cash and cash equivalents at

 

 

 

 

 

 

  beginning of period

 

 

 

76.2

 

56.3

 

Net change in cash and cash equivalents

 

-23.6

 

19.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital

 

 

 

 

 

 

 

paid-in in

 

 

 

 

 

 

Share

excess of

Fair value

Exchange

 

 

 

 

capital

par value

reserve

differences

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

January 1, 2006

 

221.3

257.8

67.1

-33.9

 

 

Net profit for the financial year *

–

–

–

–

 

 

Dividends paid

 

–

–

–

–

 

 

Treasury shares issued  

 

 

 

 

 

 

 

to target group

 

–

–

–

–

 

 

Share-based compensation  

–

–

–

–

 

 

Options subscribed for shares 

0.3

0.1

–

–

 

 

Exchange differences

 

–

–

–

-1.5

 

 

Hedge of net investments

 

 

 

 

 

 

in foreign entities

 

–

–

–

4.5

 

 

Cash flow hedging: amount

 

 

 

 

 

 

entered in shareholders’ equity

–

–

-4.7

–

 

 

Acquired minority interest

–

–

–

–

 

 

Transfer between restricted and

 

 

 

 

 

 

non-restricted equity

 

–

–

0.3

–

 

 

Other changes

 

–

–

–

–

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

December 31, 2006

 

221.6

257.9

62.7

-30.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

January 1, 2007

 

221.6

257.9

62.7

-30.9

 

 

Net profit for the financial year

–

–

–

–

 

 

Dividends paid

 

–

–

–

–

 

 

Available-for-sale

 

 

 

 

 

 

 

assets – change in

 

 

 

 

 

 

 

fair value

 

–

–

7.2

–

 

 

Treasury shares issued  

 

 

 

 

 

 

 

to target group

 

–

–

–

–

 

 

Share-based compensation  

–

–

–

–

 

 

Options subscribed for shares 

0.2

–

–

–

 

 

Exchange differences

 

–

–

–

-16.2

 

 

Hedge of net investments

 

 

 

 

 

 

in foreign entities

 

–

–

–

6.0

 

 

Cash flow hedging: amount

 

 

 

 

 

 

entered in shareholders’ equity

–

–

-1.9

–

 

 

Acquired minority interest

–

–

–

–

 

 

Transfer between restricted and

 

 

 

 

 

 

non-restricted equity

 

–

–

0.2

–

 

 

Other changes

 

–

–

–

–

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

December 31, 2007

 

221.8

257.9

68.2

-41.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury

Retained

Minority

 

 

 

 

 

shares

earnings

interests

Total

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

January 1, 2006

 

-27.5

520.7

13.7

1,019.2

 

 

Net profit for the financial year *

–

108.6

3.6

112.2

 

 

Dividends paid

 

–

-43.6

-2.8

-46.4

 

 

Treasury shares issued  

 

 

 

 

 

 

 

to target group

 

0.7

-0.7

–

0.0

 

 

Share-based compensation  

–

1.1

–

1.1

 

 

Options subscribed for shares 

–

–

–

0.4

 

 

Exchange differences

 

–

–

0.4

-1.1

 

 

Hedge of net investments

 

 

 

 

 

 

in foreign entities

 

–

–

–

4.5

 

 

Cash flow hedging: amount

 

 

 

 

 

 

entered in shareholders’ equity

–

–

–

-4.7

 

 

Acquired minority interest

–

–

-2.3

-2.3

 

 

Transfer between restricted and

 

 

 

 

 

 

non-restricted equity

 

–

-0.3

–

0.0

 

 

Other changes

 

–

-0.4

–

-0.4

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

December 31, 2006

 

-26.8

585.4

12.6

1,082.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

January 1, 2007

 

-26.8

585.4

12.6

1,082.5

 

 

Net profit for the financial year

–

63.7

3.8

67.5

 

 

Dividends paid

 

–

-58.2

-2.6

-60.8

 

 

Available-for-sale

 

 

 

 

 

 

 

assets – change in

 

 

 

 

 

 

 

fair value

 

–

–

–

7.2

 

 

Treasury shares issued  

 

 

 

 

 

 

 

to target group

 

0.8

-0.8

–

0.0

 

 

Share-based compensation  

–

1.1

–

1.1

 

 

Options subscribed for shares 

–

–

–

0.2

 

 

Exchange differences

 

–

–

0.9

-15.3

 

 

Hedge of net investments

 

 

 

 

 

 

in foreign entities

 

–

–

–

6.0

 

 

Cash flow hedging: amount

 

 

 

 

 

 

entered in shareholders’ equity

–

–

–

-1.9

 

 

Acquired minority interest

–

–

0.4

0.4

 

 

Transfer between restricted and

 

 

 

 

 

 

non-restricted equity

 

–

-0.2

–

0.0

 

 

Other changes

 

0.1

0.1

0.2

0.4

 

 

Shareholders’ equity at

 

 

 

 

 

 

 

December 31, 2007

 

-25.9

591.1

15.3

1,087.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At the end of the year 2006 there were 3,979,670 treasury shares.

 

 

 

 

Of the shares that were granted in connection with the share-based

 

 

 

incentive plan 18,938 were returned to Kemira in 2007. A total of 144,143 shares

 

 

 

were issued to key persons based on the incentive plan on February 23, 2007.

 

 

 

The total equivalent book value of the shares issued amounted to approx.

 

 

 

EUR 255,133. The issue does not materially affect the distribution of ownership

 

 

 

and voting power in the company.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kemira had in its possession 3,854,465 of its treasury shares at December 31, 2007.

 

 

 

Their average acquisition share price was EUR 6.73 and the treasury shares

 

 

 

represented 3.1% of the share capital and of the aggregate number of votes

 

 

 

conferred by all the shares. The equivalent book value of the treasury

 

 

 

shares is EUR 6.8 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

*Year 2006 error has been corrected.

 

 

 

 

 

 

 

 

 

 

 

 

KEY FIGURES

 

 

 

2007

2006*

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic and

 

 

 

 

 

 

diluted, EUR

 

 

 

0.53

0.90

 

 

Earnings per share excluding write-downs,

 

 

 

 

 

 

basic and diluted, EUR

 

 

 

0.87

0.90

 

 

Cash flow from operations

 

 

 

 

 

per share, EUR

 

 

 

1.42

1.79

 

 

Capital expenditure, EUR million

 

 

321.0

462.0

 

 

Capital expenditure / revenue, %

 

 

11.4

18.3

 

 

Average number of shares (1000),

 

 

 

 

 

 

basic 1)

 

 

 

121,164

120,877

 

 

Average number of shares (1000),

 

 

 

 

 

 

diluted 1)

 

 

 

121,194

121,051

 

 

Number of shares at the end

 

 

 

 

 

 

of the period (1000), basic 1)

 

 

121,191

120,988

 

 

Number of shares at the end of the

 

 

 

 

 

 

period (1000), diluted 1)

 

 

 

121,191

121,204

 

 

 

 

 

 

 

 

 

 

Equity per share, attributable to

 

 

 

 

 

 

equity holders of the parent, EUR

 

 

8.85

8.85

 

 

Equity ratio, %

 

 

 

38.6

39.2

 

 

Gearing, %

 

 

 

92.3

76.4

 

 

Interest-bearing net liabilities, EUR million

 

 

1,003.4

827.4

 

 

Personnel (average)

 

 

 

10,008

9,186

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10-12/

10-12/

 

 

 

 

 

 

2,007

2006*

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic and

 

 

 

 

 

 

diluted, EUR

 

 

 

-0.39

0.06

 

 

Earnings per share excluding write-downs,

 

 

 

 

 

 

basic and diluted, EUR

 

 

 

-0.05

0.06

 

 

Cash flow from operations per share, EUR

 

0.48

0.90

 

 

Capital expenditure, EUR million

 

 

95.1

257.1

 

 

Capital expenditure / revenue, %

 

 

14.5

38.4

 

 

Average number of shares (1000),

 

 

 

 

 

 

basic 1)

 

 

 

121,191

120,950

 

 

Average number of shares (1000),

 

 

 

 

 

 

diluted 1)

 

 

 

121,191

121,099

 

 

Number of shares at the end of the

 

 

 

 

 

 

period (1000), basic 1)

 

 

 

121,191

120,988

 

 

Number of shares at the end of the

 

 

 

 

 

 

period (1000), diluted 1)

 

 

 

121,191

121,204

 

 

 

 

 

 

 

 

 

 

1) Number of shares outstanding, excluding the

 

 

 

 

 

 number of shares bought back.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Year 2006 error has been corrected.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE BY BUSINESS AREA

10-12/

10-12/

 

 

 

 

 

 

2007

2006

2007

2006

 

 

EUR million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kemira Pulp&Paper

 

249.8

264.0

1,018.3

993.3

 

 

Kemira Water

 

188.0

171.5

730.5

467.6

 

 

Kemira Specialty

 

102.0

117.2

425.9

456.2

 

 

Kemira Coatings

 

118.4

109.3

625.2

562.8

 

 

Other and Intra-Group

 

 

 

 

 

 

 

sales

 

-3.8

7.5

10.3

42.6

 

 

Total Group

 

654.4

669.5

2,810.2

2,522.5

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT BY

10-12/

10-12/

 

 

 

 

 

 

2007

2006*

2007

2006*

 

 

BUSINESS AREA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kemira Pulp&Paper

 

-3.2

20.1

66.8

90.8

 

 

Kemira Water

 

5.2

10.3

45.0

35.3

 

 

Kemira Specialty

 

-13.9

11.1

13.5

45.8

 

 

Kemira Coatings

 

-5.9

-1.5

73.1

72.1

 

 

Other and eliminations

 

-25.1

-18.4

-55.3

-50.3

 

 

Total Group

 

-42.9

21.6

143.1

193.7

 

 

 

 

 

 

 

 

 

 

* Year 2006 error has been corrected.

 

 

 

 

 

 

 

 

 

 

 

 

 

CHANGES IN PROPERTY, PLANT AND EQUIPMENT

2007

2006

 

 

EUR million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount at beginning of year

 

 

987.1

865.0

 

 

Acquisitions of subsidiaries

 

 

14.3

151.9

 

 

Increases

 

 

 

215.7

154.4

 

 

Decreases

 

 

 

-2.5

-42.0

 

 

Depreciation and impairments

 

 

-133.2

-106.3

 

 

Exchange rate differences and

 

 

 

 

 

 

other changes

 

 

 

-89.3

-35.9

 

 

Net carrying amount at end of period

 

 

984.3

987.1

 

 

 

 

 

 

 

 

 

 

CHANGES IN INTANGIBLE ASSETS

 

 

2007

2006

 

 

EUR million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount at beginning of year

 

 

689.9

629.7

 

 

Acquisitions of subsidiaries

 

 

32.2

71.8

 

 

Increases

 

 

 

30.4

18.1

 

 

Decreases

 

 

 

-0.3

-0.4

 

 

Depreciation and impairments

 

 

-40.6

-17.2

 

 

Exchange rate differences and

 

 

 

 

 

 

other changes

 

 

 

27.4

-12.1

 

 

Net carrying amount at end of period

 

 

738.9

689.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONTINGENT LIABILITIES

 

 

31.12.

 

31.12.

 

 

 

 

 

2007

 

2006

 

EUR million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages

 

 

 

62.1

 

64.8

 

Assets pledged

 

 

 

 

 

 

 

  On behalf of own commitments

 

 

6.0

 

19.5

 

Guarantees

 

 

 

 

 

 

 

  On behalf of own commitments

 

 

8.3

 

6.4

 

  On behalf of associates

 

 

1.4

 

32.6

 

  On behalf of others

 

 

 

2.8

 

1.4

 

Operating leasing liabilities

 

 

 

 

 

 

  Maturity within one year

 

 

22.4

 

14.9

 

  Maturity after one year

 

 

 

129.0

 

118.1

 

Other obligations

 

 

 

 

 

 

 

  On behalf of own commitments

 

 

0.4

 

0.4

 

  On behalf of associates

 

 

2.3

 

2.3

 

 

 

 

 

 

 

 

 

Major off-balance sheet investment commitments

 

 

 

 

 

 

 

 

 

 

 

 

 

Major amounts of contractual commitments for the acquisition

 

 

 

 

of property, plant and equipment on December 31, 2007 were

 

 

 

EUR 16 million for the investment of Kemira Coatings in Russia and

 

 

 

 

EUR 3 million for the environmental investment in Pori.

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group has extensive international operations and

 

 

 

 

is involved in a number of legal proceedings incidental to these operations.

 

 

 

 

 

 

 

 

 

 

 

Kemira Oyj, Kemira Chemicals, Inc. and Kemira Chemicals Canada, Inc. have received claims or were named in class action lawsuits filed by direct and indirect purchasers of hydrogen peroxide and persalts in US federal and state courts and in Canada. In these civil actions it is alleged that the US plaintiffs suffered damages resulting from a cartel among hydrogen peroxide suppliers. To avoid further litigation costs Kemira Oyj and Kemira Chemicals Inc. have made a settlement agreement, pending court approval, in the US direct purchaser class action. As regards the other claims and suits, the proceedings continue.

 

 

 

 

 

 

 

 

 

 

 

Finnish Chemicals Oy has received in August 2007 from the European Union Comission a statement of objections in respect to competition law infringements by sodium chlorate producers during 1994-2000 to which statement of objections Finnish Chemicals Oy has given its reply.

 

 

 

 

 

 

 

 

 

 

 

RELATED PARTY

 

 

 

 

 

 

 

Related party transactions have decreased due to the sale of Kemira’s 50 % stake in Swedish filler producer Scanspac (joint venture) in September 2007. Transactions with Scanspac represented about 80 % of the Group’s related party transactions. Other than that the related party transactions have not changed materially after annual closing 2006.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DERIVATIVE INSTRUMENTS

 

 

 

 

 

 

EUR million

 

 

 

 

 

 

 

 

 

 

31.12.2007

 

 

31.12.2006

 

 

 

Nominal

Fair

 

Nominal

Fair

 

 

 

value

value

 

value

value

 

Currency instruments

 

 

 

 

 

 

 

Forward contracts

 

942.9

-1.4

 

389.4

5.5

 

of which hedges of 

 

 

 

 

 

 

 

net investment

 

 

 

 

 

 

 

in a foreign operation

 

–

–

 

19.6

2.2

 

Currency options

 

123.3

0.3

 

88.1

0.2

 

  Bought

 

65.5

0.1

 

42.8

–

 

  Sold

 

57.8

0.2

 

45.3

0.2

 

Currency swaps

 

147.2

6.5

 

115.9

8.4

 

 

 

 

 

 

 

 

 

Interest rate instruments

 

 

 

 

 

 

Interest rate swaps

 

174.0

2.3

 

109.2

4.7

 

of which cash flow hedge

164.0

2.0

 

83.8

4.2

 

Interest rate options

 

10.0

–

 

–

–

 

  Bought

 

10.0

–

 

–

–

 

  Sold

 

–

–

 

–

–

 

 

 

 

 

 

 

 

 

Bond futures

 

10.0

0.2

 

10.0

-0.2

 

  of which open

 

10.0

0.2

 

10.0

-0.2

 

 

 

 

 

 

 

 

 

Other instuments

 

 

Fair value

 

 

Fair value

 

Electricity forward

 

 

 

 

 

 

 

contracts

GWh

833.6

10.0

GWh

1,227.0

10.4

 

  of which cash flow

 

 

 

 

 

 

 

  hedge

GWh

833.6

10.0

GWh

1,227.0

10.4

 

Propane swap

 

 

 

 

 

 

 

  contracts

Tons

–

–

Tons

1,000.0

-0.1

 

 

 

 

 

 

 

 

 

The fair values of the instruments which are publicly traded

 

 

 

 

are based on market valuation on the date of reporting. Other instruments

 

 

 

have been valuated based on net present values of future cash flows.

 

 

 

Valuation models have been used to estimate the fair values of options.

 

 

 

 

 

 

 

 

 

 

 

Nominal values of the financial instruments do not necessarily

 

 

 

 

correspond to the actual cash flows between the counterparties and

 

 

 

do not therefore give a fair view of the risk position of the Group.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BUSINESS COMBINATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Cytec water treatment business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kemira acquired the Cytec Industries, Inc.’s water treating and acryl amide business on October 1, 2006. Cytec’s water treatment business consists of water treatment solutions for industrial and municipal water treatment plants. The acquisition includes five production plants of which three are located in the US (Mobile/Alabama, Longview/Washington, and Fortier/Louisiana), and two in Europe (Bradford /UK and Botlek/the Netherlands).

 

 

 

 

 

 

 

 

 

 

 

The acquisition of Cytec’s water treatment chemicals business is in line with Kemira’s growth strategy. It also allows the Group to significantly broaden its current product portfolio and gain greater geographical presence in key markets and inside key customer segments. The acquired business’ market regions include the US, South America, Asia and Europe.

 

 

 

 

 

 

 

 

 

 

 

The total price of the acquisition is approx. EUR 198.5 million. The acquisition was financed with Kemira Group’s own existing financing agreements.

 

 

 

 

 

 

 

 

 

 

 

In addition to the purchase of the business through the asset purchase agreement which was closed October 1, 2006, Kemira signed a share purchase agreement to buy the shares of Cytec Manufacturing BV. The closing and payment of the share purchase agreement took place on January 11, 2007. Kemira has also signed transition service agreements with nine Cytec companies concerning certain transactional services with respect of the products of the business (Overseas units). The assets related to these transition service agreements was transferred to Kemira and paid gradually starting on April 1, 2007. One of these asset transfers was in the form of a share purchase of an existing company.

 

 

 

 

 

 

 

 

 

 

 

The control over the whole Cytec water treatment business was transferred to Kemira on October 1, 2006. The preliminary purchase price allocation was pending finalization of overseas units, working capital and liabilities. These matters have been finalized since then, resulting in an increase of goodwill mainly from indentified defined benefit pensions according to IAS 19.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair

 

 

 

 

 

 

 

values

 

Carrying

 

 

 

 

 

re-

 

amounts

 

 

 

 

 

corded

 

prior

 

 

 

 

 

on busi-

 

to busi-

 

 

 

 

 

ness

 

ness

 

 

 

 

 

combi-

 

combi-

 

 

 

 

 

nation

 

nation

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

 

15.5

 

–

 

Property, plant and equipment

 

 

91.0

 

54.7

 

Inventories

 

 

 

28.8

 

27.1

 

Trade receivables and

 

 

 

 

 

 

 

other receivables

 

 

 

40.6

 

40.6

 

Cash and cash equivalents

 

 

2.0

 

2.0

 

Total assets

 

 

 

177.9

 

124.4

 

 

 

 

 

 

 

 

 

Interest bearing current liabilities

 

 

5.4

 

5.4

 

Other liabilities

 

 

 

18.2

 

18.2

 

Deferred tax liabilities

 

 

 

1.7

 

–

 

Total liabilities

 

 

 

25.3

 

23.6

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

152.6

 

100.8

 

Cost of business

 

 

 

 

 

 

 

combination (net)

 

 

198.5

 

 

 

Goodwill

 

 

 

45.9

 

 

 

 

 

 

 

 

 

 

 

Acquisition cost

 

 

 

198.5

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

in subsidiary

 

 

 

 

 

 

 

acquired

 

 

 

-2.0

 

 

 

Cash outflow on acquisition

 

 

196.5

 

 

 

 

 

 

 

 

 

 

 

Cash outflow on acquisition 2006

 

166.2

 

 

 

Cash outflow on acquisition 2007

 

30.3

 

 

 

Cash outflow on acquisition

 

 

196.5

 

 

 

 

 

 

 

 

 

 

 

The revenue of the acquired unit for January 1 – December 31, 2007

 

 

totaled EUR 291.3 million and operating profit EUR 12.3 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Dalquim coagulant business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kemira acquired on April 20, 2007 100% of the shares of two companies (Empresa Lajeana Ltda. & Arapoti Saneamento Ltda.) conducting the coagulant business of Dalquim Industria e Comercio Ltda. Dalquim is one of the leading manufacturers of aluminum based coagulants in the South of Brazil. The revenue of the coagulant business is approximately EUR 12 million.

 

 

 

 

 

 

 

 

 

 

 

The target companies are located in the south of Brazil and have two production units. Main customer base is the paper industry and municipalities for potable and wastewater treatment. The company will be targeting the fast expanding paper industry and potable and waste water treatment sector in the Southern states of Brazil.

 

 

 

 

 

 

 

 

 

 

 

The acquisition fits extremely well in Kemira’s strategy to enhance its position and mutual synergies as a world leader in chemicals supply for both pulp&paper and water treatment customers on fast growing emerging markets.

 

 

 

 

 

 

 

 

 

 

 

Kemira Water is already present with production in the Bahia region (North East of Brazil) and in the Sao Paulo state. With this acquisition Kemira will significantly broaden its current product portfolio in Brazil and gain strong geographical presence in the southern Brazilian market.

 

 

 

 

 

 

 

 

 

 

 

The total price of the acquisition is approx. EUR 10.8 million. Capitalized acquisition costs directly attributable to the combination has not yet been finalized. The acquisition was financed with Kemira Group’s own existing financing agreements.

 

 

 

 

 

 

 

 

 

 

 

Of the total purchase price of EUR 10,8 million, EUR 1,2 million was allocated to intangible assets coming from existing customer list. The acquisition then results in EUR 9,0 million in goodwill, based on the acquired business’s expected future earnings and attainable synergies.