RNS Number:5327J
Perstorp AB
25 April 2000
* Operating earnings adjusted for items affecting comparability amounted to
SEK 167 m (95). Pretax earnings rose to SEK 230 m (119).
* Three strategic acquisitions strengthened Perstorp Chemicals' and Pergo's
market positions.
* Perstorp Surface Materials sold.
* Offer from Industri Kapital regarding acquisition of all of the shares in
Perstorp AB.
* The Board of Directors recommends that shareholders and holders of
convertible debentures accept the offer.
Strategic acquisitions in chemical and flooring sectors
As part of the expansion of chemical and flooring operations, Perstorp signed
agreements during the period regarding three strategic acquisitions that will
significantly strengthen the Group's market positions. The acquisitions
relate to two complementary operations within Perstorp Chemicals' polyol and
phenolic resins product areas and a minority interest in a leading
manufacturer of laminate flooring. More detailed comments on these
acquisitions, which are not consolidated during the report period, are
provided under the relevant subgroup sections below.
Divestment of Perstorp Surface Materials
Effective March 31 and as part of the Group's continued streamlining, Perstorp
sold the Perstorp Surface Materials AB subgroup to Decorative Surfaces Holding
AB, an investment company formed by DLJ Merchant Banking Partners and CVC
European Equity Partners, the principal owners of the US company Formica
Corporation, and Laminex Industries Inc. of Australia, market leaders in
decorative surface materials.
The sales price of approximately SEK 1,500 m, including assumed loans,
generated an estimated capital gain of SEK 75 m.
The divestment did not include Perstorp Laminatproduktion AB, which supplies
laminates to Pergo AB (formerly Perstorp Flooring), and the intention is to
supplement the product program with laminate products for other applications.
Offer from Industri Kapital
As shown in a separate document appended to this interim report, Industri
Kapital, a private equity fund, has made a public offer regarding the
acquisition of all the shares and convertible debentures in Perstorp AB. As
is also apparent in that document, the Board of Directors recommends that the
Company's shareholders and holders of convertible debentures accept the offer.
General conditions
The beginning of the fiscal year was generally characterized by a continuation
of favorable economic conditions in the US and a continued improvement in
Europe and Asia. In Europe, several industrial sectors are showing higher
growth, as a result of increases in exports and domestic consumption. The
American market is continuing to grow, albeit at a lower pace.
Demand for chemical products is continuing to strengthen, due to the general
economic improvement. At the same time, additional increases in the prices of
oil-based chemical raw materials are expected to result in decreased margins
for several chemical products that have a more advanced position in the
processing chain.
Demand for laminate flooring has remained favorable, particularly in the US.
However, competition has continued to intensify, mainly in Europe.
Operations
During first quarter, the Group consisted essentially of two subgroups,
Perstorp Chemicals AB and Perstorp Flooring AB. The latter company was renamed
Pergo AB during the period. Perstorp Surface Materials is included in the
accounts through March 24. The interim report contains pro forma accounts
showing Perstorp Group income statements and balance sheets based on the
assumption that Perstorp Surface Materials had been divested in the beginning
of 1999. Perstorp Laminatproduktion AB, which was formerly part of Perstorp
Surface Materials, is reported under Other operations.
Net sales by division
SEK m Q I Q I Most Full year
recent
2000 1999 12 months 1999
Perstorp Specialty 691 622 2,424 2,355
Chemicals
Perstorp Chemitec 395 362 1,446 1,413
Perstorp Construction 58 61 276 279
Chemicals
Perstorp Support 166 155 519 508
Other items, incl. -138 -114 -422 -398
eliminations
Perstorp Chemicals 1,172 1,086 4,243 4,157
Pergo 865 852 3,640 3,627
Other items, incl. -33 -77 -80 -124
eliminations
of which Perstorp 187 182 766 761
Laminatproduktion
Comparable net sales 2,004 1,861 7,803 7,660
Perstorp Surface 474 475 1,985 1,986
Materials
Perbio Science 0 248 617 865
Eliminations -64 -35 -188 -159
Group 2,414 2,549 10,217 10,352
Net sales amounted to SEK 2,414 m (Q1, 1999: 2,549). If the figures are
adjusted for the divestment of Perstorp Surface Materials and the spin-off of
Perbio Science during the preceding year, net sales rose 8%. The volume
increase was 11%, while prices and currency changes had a combined negative
impact of 3%.
Perstorp Chemicals' sales rose by 8%, mainly due to a favorable volume trend
for most of its products.
Pergo's net sales rose by 2% during the period. The low growth rate was mainly
due to lower prices within certain product segments in Europe and to the fact
that launches of new products during 2000 occurred approximately two months
later than in the preceding year.
Operating earnings by division
SEK m Q I Q I Most Full year
recent
2000 1999 12 months 1999
Perstorp Chemicals 120 87 418 385
Pergo 38 6 216 184
Other items, incl. 84 -11 -14 -109
eliminations
of which Perstorp 22 20 88 86
Laminatproduktion
Operating earnings excl.
demerged business units 242 82 620 460
Perstorp Surface 1 17 80 96
Materials
Perbio Science 0 34 61 95
Group 243 133 761 651
Operating earnings amounted to SEK 243 m, up SEK 110 m compared with the year
earlier period. The operating margin rose from 5.2% to 10.1%. The capital
gain on the sale of Perstorp Surface Materials is included in items affecting
comparability and amounted to income of SEK 75 m.
Operating earnings by division adjusted for items affecting comparability
SEK m Q I Q I Most Full
Recent year
2000 1999 12 months 1999
Perstorp Chemicals 120 87 404 371
Pergo 38 15 232 209
Other items, incl. 9 -7 -33 -49
eliminations
of which Perstorp 22 20 88 86
Laminatproduktion
Operating earnings excl.
demerged business units 167 95 603 531
Operating earnings after adjustments for items affecting comparability and
demerged units amounted to SEK 167 m (95). Based on this, the operating margin
increased from 5.1% to 8.3%.
Perstorp Chemicals' operating earnings during the first quarter were
significantly higher than in the year-earlier period, mainly as a result of
increased volumes and a larger proportion of specialty products. The operating
margin rose to 10.2% (8.0). Earnings during the quarter also exceeded those
for the final quarter of 1999, after the deduction of revenues of SEK 14 m for
an item affecting comparability.
Pergo's earnings were also significantly better than in the year-earlier
period. However, earnings declined in relation to the final quarter of 1999,
due mainly to lower prices in certain segments of the European market and
later launch of new products.
Earnings from shares in associated companies amounted to SEK 3 m (4) and
pertained to Perstorp Clariant AB.
Perstorp Surface Materials, which was part of the Group until March 24,
reported net sales of SEK 474 m and operating earnings of SEK 1 m for that
period.
Net financial items, which amounted to an expense of SEK 13 m (expense: 14),
included SEK 4 m for favorable exchange-rate effects relating to Brazil. The
SEK 17 m improvement in the Group's net interest expense compared with the
year-earlier period (expense: 20) was due to slightly lower indebtedness, at
the same time as higher interest rates were offset by a change in currency
composition. The proportion of EUR was increased, while USD was reduced.
The interest-coverage multiple was 7.2 (4.2).
Tax costs totalled SEK 93 m (42). The tax rate was 37%, adjusted for the sale
of Perstorp Surface Materials.
Earnings per share after full conversion amounted to SEK 1.94 (1.07). PERSTORP
CHEMICALS
SEK m Q I Q I Most Full
Recent year
2000 1999 12 months 1999
Net sales 1,172 1,086 4,243 4,157
Operating earnings 120 87 418 385
Profit margin, % 10.2 8.0 9.8 9.3
Depreciation 63 63 249 249
Investments 24 88 337 401
*Demand for several of Perstorp Chemicals' products continued
to increase during the quarter, due to a general improvement in economic
conditions. At the same time, rising prices were noted for several raw
materials as well as increasing product prices.
* Net sales rose by 8%, due to a favorable volume trend for
most products.Continued growth was noted for specialty products, such as
special polyols and composites as well as for the sale of formalin plants and
catalysts.
*Operating earnings rose sharply compared with the year-earlier period,due
mainly to the increase in net sales. The operating margin rose to 10.2% (8.0).
First-quarter earnings also exceeded those for the final quarter of 1999,
after the deduction of revenues of SEK 14 m due to an item affecting
comparability.
* Perstorp has signed an agreement regarding the acquisition of the Degussa-
Huls group's polyol operations, with production activities in Bruchhausen,
Germany. The operations are a leading manufacturer of Penta and di-Penta,
polyols that are used primarily in the production of paint and coatings. The
product range also includes calcium formate, which is used in the production
of high-performance cement systems and as an additive to antibiotics in animal
feed in order to reduce the amount of antibiotics required. The acquired
operations have annual sales of slightly more than SEK 300 m, with some 160
employees.
The acquisition, which will strengthen Perstorp Chemicals' positions in the
markets for Penta and di-Penta, is expected to make a positive contribution
to Group earnings during the current year. The generated profits will not
give rise to paid tax, since the Perstorp Group has unutilized tax loss
carryforwards in Germany. The acquisition will also enable a significant
increase in the efficiency of Perstorp's polyol production operations in
Europe and will thus generate considerable synergistic benefits, the full
effect of which is expected to be felt during a two-year period. The
acquisition, which is subject to approval by among others German competition
authorities, is expected to become effective on June 1.
The purchase price is approximately DEM 100 m (approx. SEK 430 m). This
corresponds to a price that is seven times the company's estimated earnings
before depreciation (EBITDA) for 2000. However, the price/earnings multiple
will be considerably lower when the full effect of the estimated synergies
is attained.
* Perstorp has also reached an agreement regarding the acquisition of the
operations of Plasta Erkner GmbH, based in Erkner, close to Berlin, which is
part of Funk Chemie, a German industrial group. The company has annual sales
of approximately SEK 240 m and is one of Europe's leading manufacturers of
phenolic resins, which are used in various applications, mainly within the
construction, automotive and engineering industries. The acquisition will
strengthen Perstorp Chemicals' position as one of Europe's largest producers
of phenol-based resins, particularly in the important German market, as well
as in Eastern Europe, while boosting the subgroup's production capacity. The
acquisition, which is subject to approval by German competition authorities,
is expected to become effective on May 1.
The purchase price for these operations corresponds to five times the
company's estimated EBITDA for 2000. The acquisition is expected to make a
favorable contribution to Group earnings as early as during the current year.
In addition, the generated profits will not give rise to paid tax, since the
Perstorp Group has unutilized tax loss carryforwards in Germany.
* A newly constructed formaldehyde plant for DuPont de Nemours (Nederland)
B.V., in Dordrecht, the Netherlands, was put into operation in January 2000.
Total investments in the plant slightly exceeded SEK 200 m.
* An order was received from Oxinova CA for the construction of a formalin
plant close to Puerta Ordaz, Venezuela. The order backlog for this type of
plant now amounts to six, of which five are scheduled for delivery during
2000. The latest order pertains to a plant that will be put into operation
during the first half of 2001.
PERGO
SEK m Q I Q I Most Full year
recent
2000 1999 12 months 1999
Net sales 865 852 3,640 3,627
Operating earnings 38 6 216 184
Profit margin, % 4.4 0.7 5.9 5.1
Depreciation 23 17 86 80
Investments 43 10 120 87
* Perstorp Flooring AB was renamed Pergo AB during the period. Accordingly,
operations are now conducted under the name of the subgroup's principal
brand, Pergo laminate flooring.
* The favorable market trend for laminate flooring continued in Europe and
the US. Both of the markets are characterized by increased competition, which
Pergo is mainly countering through intensified development of the products'
properties and design.
* Net sales rose by 2% compared with the year-earlier period. A positive
trend was noted for sales in the US, where revenues rose despite a slight
decline in prices. In Europe, sales volumes were maintained, but continued
decreasing prices in certain segments led to a decrease in sales revenues
compared with the year-earlier period. Sales were lower than in the fourth
quarter of 1999, since the launch of new products during 2000 is occurring at
a later time compared with corresponding launches in 1999. The product
launches are not expected to generate any effects until the second quarter.
* Earnings amounted to SEK 38 m, a sharp rise compared with SEK 6 m in the
year-earlier period. The operating margin declined from 5.9% in the preceding
quarter to 4.4% due mainly to lower prices in Europe, which were only partly
offset by cost reductions.
* Perstorp has signed an agreement regarding the acquisition of 25.1% of
the shares in the German laminate flooring manufacturer Witex. As a result,
Pergo's product range will be broadened to also include direct laminate
flooring. Witex is a globally active flooring company that had total sales of
approximately SEK 1 billion in its most recent fiscal year, of which flooring
products accounted for 75%. Cooperation with Witex is expected to result in
stronger market positions and more efficient production operations in Europe,
the US and Asia.
Perstorp's payment for the participation in Witex, which mainly takes the form
of a private placement of Witex shares, is based on a price that corresponds
to six times Witex's estimated EBITDA for 1999. The contributed capital will
be used for continued investments in Europe, the US and Asia. According to the
agreement, Perstorp will be able to increase its shareholding to 49% during
2002, subject to certain conditions.
Production of direct laminate flooring for Pergo will be conducted at the
Witex plant in Augustdorf, where Witex flooring will also be produced.
Capacity at the plant is being increased sharply during the current year, at
the same time as Witex is initiating a joint venture in Asia. In
addition, construction of an additional laminate flooring plant in the US is
scheduled during 2001.
* Pergo has invested SEK 50 m in the development of an e-commerce solution
for Pergo laminate flooring in Europe and the US. The first phase of the
project involves the development of new consumer-oriented Web pages on both
sides of the Atlantic, and of an electronic-commerce solution aimed at key
European customers and channels through which Pergo is marketed.
* As part of efforts to intensify product development activity, a new
design and development center with about 30 employees has been put into
operation at the complex in Trelleborg, Sweden.
A large number of new products were launched in January at the annual Surfaces
fair in Las Vegas, USA. Further product launches are scheduled during 2000,
with the aim of strengthening market positions in both Europe and the US.
PERSTORP SURFACE MATERIALS
SEK m Q I Q I Most Full year
recent
2000 1999 12 months 1999
Net sales 474 475 1,985 1,986
Operating earnings 1 17 80 96
Profit margin, % 0.2 3.6 4.0 4.8
Depreciation 19 19 78 78
Investments 12 104 110 202
As explained above, the Group divested the Perstorp Surface Materials AB
subgroup during the period. The subgroup's operations are included in the
accounts through March 24 and Perstorp Laminatproduktion AB, which was
formerly part of Perstorp Surface Materials, is reported under Other
operations.
Net sales and operating earnings for the period through March 24 amounted to
SEK 474 m and SEK 1 m, respectively.
Other operations
In addition to the Perstorp Chemicals AB and Pergo AB subgroups, Perstorp's
business operations consist primarily of Perstorp Laminatproduktion AB. This
company's operations, which were part of Perstorp Surface Materials during the
preceding year, mainly comprise the supply of flooring laminates to Pergo. The
operations, which are conducted at the complex in Perstorp, Sweden, have
slightly more than 300 employees.
Net sales amounted to SEK 187 m (182) and operating earnings to SEK 22 m (20)
during the period.
Group-wide costs, the business development company Pernovo and the capital
gain from the divestment of Perstorp Surface Materials are also reported under
"Other items, incl. eliminations."
Financial development
Total assets decreased by SEK 1,144 m compared with December 31, 1999 to SEK
7,025 m (8,169). The sale of Perstorp Surface Materials reduced total assets
by approximately SEK 1,600 m. The decrease was offset by an increase of SEK
222 m in current operating receivables, excluding Perstorp Surface Materials,
and by the fact that parts of the proceeds from the sale of Perstorp Surface
Materials led to an increase in current financial assets.
Net debt declined during the period to SEK 277 m (1,597) on March 31. The
decrease was attributable to the sale of Perstorp Surface Materials.
The change in provisions was insignificant.
Shareholders' equity rose by SEK 189 m to SEK 3,965 m (3,776), of which the
reversal of exchange-rate effects related to Perstorp Surface Materials in
1999 had a positive effect of SEK 62 m, exchange-rate changes a negative
effect of SEK 13 m and net profit for the period a positive effect of SEK 140
m.
The equity ratio rose to 57%, compared with 47% at the beginning of the fiscal
year.
The return on total capital rose from 7% to 14% due to the sale of Perstorp
Surface Materials and to an improvement in net profit from continuing
operations.
The capital turnover rate has improved, especially as regards working capital.
Investments amounted to SEK 85 m, of which Perstorp Surface Materials
accounted for SEK 12 m. Strategic investments, that is, measures that result
in a significant increase in the value of a particular subgroup, accounted for
about SEK 34 m of total investments.
The Group's commercial paper program has been expanded and now amounts to EUR
300 m.
Personnel
The number of Group employees at the end of the period was 3,458 (6,088). The
decline compared with the year-earlier period was due mainly to the divestment
of Perstorp Surface Materials and the spin-off of Perbio Science.
The Perstorp share
At the end of the report period, the price per Perstorp Series B share was SEK
101, compared with SEK 79 at the end of the preceding year, which corresponds
to an increase of 28%.
Due to negotiations with Industri Kapital, trading in the Perstorp share was
temporarily suspended for three days in April and was resumed in connection
with the publication of the offer on April 10.
Dividend, Annual General Meeting and reporting dates
As shown in the year-end report, the Board of Directors proposes a cash
dividend of SEK 4.00 (1997/98 adjusted: 3.00) per share, which corresponds to
an approximately 33% increase. The preceding year's dividend of SEK 4.00
pertained to a fiscal year that was extended to 16 months. In addition, the
Board proposes that it be authorized to repurchase a maximum of 10% of the
Perstorp shares outstanding.
Due to the current negotiations with Industri Kapital, the Annual General
Meeting scheduled for April 8, 2000 was postponed. The new date for the Annual
General Meeting is Thursday, May 25, 2000, at 4 p.m.
The preliminary publication dates for quarterly reports during 2000 are July
24 and October 20.
Outlook
The Group's operating earnings will benefit from continuing favorable general
economic conditions during 2000.
Perstorp Chemicals will also benefit from the sale of several formalin plants
and deliveries from the newly started Dutch plant in Dordrecht. The rising
prices for several chemical raw materials could have an adverse impact on the
trend of margins during the second quarter.
The continued favorable trend for laminate flooring and wide-spread product
launches are expected to offset continued price pressure for Pergo, and
contribute to a healthy earnings trend. These product launches are expected to
gain an impact as of the second quarter.
The previous assessment that the acquisitions in the chemical and flooring
sectors will make a positive contribution to earnings per share as early as
during the current year stands firm.
Perstorp, April 25, 2000
Ake Fredriksson
This interim report is unaudited.
Earnings
Consolidated Income Q I Q I Most Full year Statement
recent
SEK m 2000 1999 12 months 1999
Net sales 2,414 2,549 10,217 10,352
Cost of goods sold -1,776 -1,830 -7,303 -7,357
Gross earnings 638 719 2,914 2,995
Sales, administration and -476 -572 -2,185 -2,281
R&D costs
Items that affect 75 -15 4 -86
comparability
Other operating 3 -3 11 5
revenues and
expenses
Result from 3 4 17 18
participation in
associated companies
Operating earnings 243 133 761 651
Net financial items -13 -14 -99 -100
Earnings before taxes 230 119 662 551
Taxes -93 -42 -332 -281
Minority share in net 3 0 14 11
profit
Earnings after taxes 140 77 344 281
Earnings per share, SEK 1.96 1.08 4.81 3.93
Earnings per share 1.94 1.07 4.74 3.87
after conversion, SEK
Consolidated balance sheet
SEK m March 31, December 31, March 31,
2000 1999 1999
Long-term operating assets 3,300 3,947 4,113
Long-term financial assets 317 316 328
Inventories 1,005 1,387 1,782
Current operating 2,061 2,312 2,362
receivables
Current financial assets 342 207 262
Total assets 7,025 8,169 8,847
Shareholders' equity 3,965 3,776 4,448
Minority interests 43 56 50
Provisions 503 526 829
Long-term financial 269 271 412
liabilities
Current operating 1,670 1,802 1,607
liabilities
Current financial 575 1,738 1,501
liabilities
Total liabilities and 7,025 8,169 8,847
shareholders' equity
Key ratios
Q I Q I Most recent Full year
2000 1999 12 months 1999
Turnover rate
- total capital, 1.3 1.2 1.3 1.2
times/yr
- working capital, 5.5 4.1 5.2 4.7
times/yr
Profit margin, % 10.1 5.2 7.4 6.3
Return on
- total capital, % 14 7 10 8
- shareholders' equity, % 15 7 8 7
- capital employed, % 20 9 14 11
Debt/equity ratio 0.1 0.4 0.1 0.4
Equity ratio, % 57 51 57 47
Interest-coverage 7.2 4.2 5.9 5.1
ratio, times
Shareholders' 55 62 55 53
equity per share,
SEK
Free cash flow/net 5 3 7 9
sales, %
Number of shares 71,584,341 71,584,341 71,584,341 71,584,341
Number of shares 74,114,341 73,610,991 74,114,341 74,114,341
after full conversion
Cash flow analysis, summary
SEK m Q I Q I Most Full year
recent
2000 1999 12 months 1999
Operating earnings 243 133 761 651
Depreciation 127 124 514 511
Change in working capital -84 -48 297 333
Current investments in fixed -51 -102 -273 -324
assets
Operating cash flow 235 107 1,299 1,171
Tax related to operating -78 -43 -243 -208
earnings
Free cash flow 157 64 1,056 963
Adjustment of tax, financial 44 -107 -219 -370
items and other items
Cash flow from operations 201 -43 837 593
Strategic investments in -34 -119 -497 -582
plants and company
acquisitions
Effect of Perbio spin- 562 0 1,078 516
off/divestments
Cash flow before dividend 729 -162 1,418 527
Dividend to shareholders 0 0 -814 -814
Net cash flow 729 -162 604 -287
Free cash flow per share, SEK 2.19 0.89 14.75 13.45
Net debt at beginning of -1,597 -1,623 -1,782 -1,623
period
Net cash flow 729 -162 604 -287
Net debt in acquired/divested 601 0 923 322
operations
Currency effects -10 3 -22 -9
Net debt at end of period -277 -1,782 -277 -1,597
Quarterly data (1998 pro forma)
SEK m 1998 1999 2000
I II III IV I II III IV I
Net sales 2,885 2,931 2,580 2,346 2,549 2,792 2,544 2,467 2,414
Cost of goods sold -2,006-2,064-1,816-1,673-1,830-1,979-1,825-1,723-1,776
Gross earnings 879 867 764 673 719 813 719 744 638
Sales, -666 -666 -595 -634 -572 -605 -541 -563 -476
administration and
R&D costs
Items affecting -3 8 23 -35 -15 -48 -37 14 75
comparability
Other operating 5 0 -4 13 -3 -8 -4 20 3
revenues and
expenses
Result from 1 3 8 9 4 7 6 1 3
participations in
associated
companies
Operating earnings 216 212 196 26 133 159 143 216 243
Net financial items -16 -38 -18 -25 -14 -23 -38 -25 -13
Earnings before 200 174 178 1 119 136 105 191 230
taxes
Taxes -70 -62 -63 -34 -42 -57 -94 -88 -93
Minority share in 5 2 1 3 0 2 7 2 3
net profit
Earnings after 135 114 116 -30 77 81 18 105 140
taxes
Quarterly data, divisions
Net sales 1998 1999 2000
SEK m I II III IV I II III IV I
Perstorp Chemicals 1,116 1,152 1,046 1,0221,086 1,060 950 1,061 1,172
Pergo 803 830 822 812 852 980 887 908 865
Other items -33 -100 -47 -127 -77 -2 -13 -32 -33
incl.eliminations
of which Perstorp
Laminatproduktion 201 172 167 168 182 210 168 201 187
Total "Ongoing 1,886 1,882 1,821 1,7071,861 2,038 1,824 1,937 2,004
business"
Perstorp Surface 503 544 509 502 475 530 479 502 474
Materials
Demerged business 496 505 250 137 213 224 241 28 -64
units and
eliminations
Group 2,885 2,931 2,580 2,3462,549 2,792 2,544 2,467 2,414
Quarterly data, divisions
Operating earnings 1998 1999 2000
SEK m I II III IV I II III IV I
Perstorp Chemicals 162 152 158 90 87 89 85 124 120
Pergo 48 28 21 -45 6 66 58 54 38
Other items -30 -34 -30 -18 -11 -54 -42 -2 84
incl.eliminations
of which Perstorp
Laminatproduktion 18 16 15 16 20 24 19 23 22
Total "Ongoing 180 146 149 27 82 101 101 176 242
business"
Perstorp Surface 7 25 20 -18 17 29 16 34 1
Materials
Demerged business 29 41 27 17 34 29 26 6 0
units and
eliminations
Group 216 212 196 26 133 159 143 216 243
Effect of the sale of Perstorp Surface Materials, pro forma
The tables show the Perstorp Group's income statement and balance sheet for
1999 based on the assumption that the transaction was implemented in the
beginning of 1999. The reported figures also exclude the Perbio Science Group
which was spun off during 1999 ("Perstorp Life Science").
Operating earnings, Group 1999
SEK m Remaining Perstorp Perstorp Adjustmen Total
operations Surface Life ts
Materials Science
(Note 1)
Net sales 7,660 1,986 865 -159 10,352
Cost of goods -5,470 -1,566 -480 159 -7,357
Gross earnings 2,190 420 385 0 2,995
Sales, administration -1,676 -337 -268 -2,281
and R&D costs
Items affecting -71 0 -15 -86
comparability
Other operating -1 13 -7 5
revenues and expenses
Result from 18 0 0 18
participations in
associated companies
Operating earnings(Note 2) 460 96 95 0 651
Profit margin, % 6.0 4.8 11.0 6.3
Consolidated income statement December 31, 1999 (Note 3)
SEK m Remaining Perstorp Adjustments Total
Operations Surface
Materials
(Note 1)
Long-term operating assets 3,327 620 3,947
Long-term financial assets 314 2 316
Inventories 981 411 -5 1,387
Current operating 1,839 513 -40 2,312
receivables
Current financial assets 150 57 207
Total assets 6,611 1,603 -45 8,169
Shareholders' equity(Note 4) 3,945 538 -707 3,776
Minority interests 52 4 56
Provisions 508 18 526
Long-term financial 271 0 271
liabilities
Current operating 1,507 335 -40 1,802
liabilities
Current financial 328 708 702 1,738
liabilities
Total liabilities and 6,611 1,603 -45 8,169
shareholders' equity
1) Business units sold
2) Operating earnings include Corporate costs in the amount of SEK 13 m for
Perstorp Surface Materials and SEK 5 m for Perbio Science.
3) Perbio Science was not part of the Group at year-end
4) The net capital gain from the sale, reversal of exchange-rate
differences, estimated interest-rate effect (4.5%) and reversal of intra-Group
gains had a positive impact on shareholders' equity.
Public offer to acquire all of the shares in Perstorp AB
Offer in brief
On April 10, Industri Kapital, a private equity fund, made a public offer
through Perstorp Intressenter AB to acquire all the shares and convertible
debentures in Perstorp AB. Industri Kapital 2000 Fund owns approximately 97%
of Perstorp Intressenter AB, with a number of members of the Wendt family who
hold Series A Perstorp shares accounting for the remaining approximately 3%.
The offer is a cash offer. SEK 140 is being offered for each Perstorp Series A
share and SEK 125 for each Series B share, including dividend in both
cases. SEK 125, plus accrued interest to the date of tender, is being offered
for each convertible debenture certificate.
The offer represents a premium of 56% for the Series A share and 49% for the
Series B share, compared with the average final price during the 90 most
recent trading days. Compared with the average final price during the 30 most
recent trading days, the offer represents premiums of 39% and 33%
respectively. Compared with the final prices for the respective classes of
shares on April 4, 2000, the offer represents premiums of 32% and 17%,
respectively.
The takeover is subject to certain conditions, such as the necessary approval
from competition authorities. Industri Kapital has pledged that it will
undertake the reasonable measures that the competition authorities may require
for approval of the acquisition of Perstorp AB.
The offer will be presented in its entirety in a prospectus that is scheduled
to be distributed to Perstorp's shareholders in the beginning of May.
Recommendation of the Board of Directors of Perstorp AB
Perstorp's Board of Directors has evaluated the offer from Perstorp
Intressenter AB and has voted unanimously to recommend that the holders of
Perstorp shares and convertible debentures accept the offer on the stated
terms and conditions and during the stated subscription period. The Board's
recommendation is based on current market conditions and available
information.
In connection with its evaluation and vote, the Board has taken a number of
factors into consideration:
- The offer represents an attractive opportunity for Perstorp and its
employees to participate actively in the creation of a leading chemical
company based in the Nordic region, and to continue the development of
Pergo's flooring business.
- In the opinion of the Board, the increase in value that Perstorp can
create in the foreseeable future is smaller than that represented by the
offer, due to the limited supply of capital in the Company's current
structure.
The Board's recommendation is supported by a fairness opinion submitted by
Perstorp's financial adviser, Morgan Stanley Dean Witter.
Wilhelm Wendt, member of the Board of Directors, did not take part in the
Board's decision regarding the offer with reference to his ownership in
Perstorp Intressenter AB.
END
MSCPUUQACUPUGPA
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