HOLLAND COLOURS NV 2015/2016 HALF-YEARLY REPORT HOLLAND COLOURS
Stable profit at higher revenues
(this is a translation of the Dutch press release issued by the company on the same date)
Revenue of € 37.1 million (first six months 2014/2015: € 33.1 million)
Positive currency effect on revenue of € 3.2 million
2% autonomous revenue growth
Gross margin up, as well as gross margin percentage
Net result of € 1.9 million (first six months 2014/2015: € 1.9 million)
Tineke Veldhuis resigns as Director Division Americas and as Statutory Director of Holland Colours NV
Holland Colours realized revenues of € 37.1 million in the first six months of the 2015/2016 financial year. This is a € 4.0 million (12%) improvement over the same period of the prior financial year whereby favorable currency effects, mainly as a result of the stronger American dollar versus the euro, account for € 3.2 million (10%).
The first half year closed with a net profit of € 1.9 million. Which is equal to the € 1.9 million in the first half of 2014/2015. Gross margin increased by € 2.3 million to € 18.1 million of which € 1.6 million is explained by positive currency effects and € 0.7 million relates to positive price, volume and mix effects.
Total operating expenses compared to the first half of 2014/2015 increased by € 2.1 million (16%) of which
€ 1.3 million relates to a stronger US dollar while higher operating cost, especially in the division Americas (mainly personnel costs) are the main reason for the remaining cost increase.
Earnings per share ended at € 2.22, equivalent to earnings per share in the first half of 2014/2015.
Organization update
After a successful career of 36 years within the global Holland Colours organization, Tineke Veldhuis will resign and transfer her role as Director Division Americas to Jaime Gomez per January 1, 2016. Tineke will also resign from her statutory duties for Holland Colours NV per that same date. The statutory board will then consist of the CEO (Rob Harmsen) and CFO (Margret Kleinsman). For reasons of continuity, Tineke remains available as an advisor to Holland Colours.
Revenue development
The revenue development over the various markets is summarized as follows:
Revenue growth by focus market | 1th six months 2015/ 2016 vs. 1th six months 2014/ 2015 |
Focus markets | 2% |
Building & Construction | |
Packaging | 12% |
Silicones & Elastomers | -8% |
Total focus markets | 3% |
Specialities | 1% |
Currency impact | 10% |
Total sales | 12% |
The 2% revenue growth in Building & Construction was driven by the Americas division while Europe stayed almost at par and Asia was down.
The strong revenue increase in Packaging was mainly achieved in the Americas and Europe while Asia remained at par with last year.
Revenue for Silicones & Elastomers was 8% down versus prior year as the increase in Europe was more than offset by revenue declines in Americas and Asia.
The improvement in Specialties was realized in Europe and Americas.
Revenue and profit by division
Europe
Revenue for the division Europe was up 4% in the first half of this year versus prior year. A good first quarter was followed by stable revenues in the second quarter as compared to last year. The half-year revenue increased in all focus markets despite backlog in Eastern Europe. Gross margin as a percentage of revenue improved over prior year due to improved product- and geo mix as well as production efficiencies. Operating expenses increased marginally. Operating profit increased with € 0.5 million to € 1.5 million.
America's
In comparison with the first six months of 2014/2015, revenue for the Americas - as measured in US dollars- was up by 6%. After a modest increase in the first quarter, there was a marked revenue improvement in the second quarter. The increase is mainly realized in Building and Construction while also Packaging and Specialties performed better. Elastomers declined during the first six months.
As a result of the stronger US dollar, the revenue increase for the first half as measured in Euro's was 28%. The gross margin for the first half compared to last year increased by 1.9% points. Combined with an increase in operating expenses (in both US dollars and Euro's), the operating result improved by € 0.3 million, to end at € 1.3 million for the first half year.
Asia
The revenue in Asia -as measured in US dollars- stayed 14% behind that of the first half of 2014/2015. While the Asia division in the first quarter of this year showed a marked decline in revenue as compared to prior year, the backlog was stronger in the second quarter. The half year revenue is down in all focus markets compared to last year.
In euros, there was an increase of 4% in turnover, which combined with a decrease of the gross margin percentage and increased operating expenses, resulted in a decrease of the operating profit of the Asia division by € 0.6 million to end at € 0.2 million for the first half year.
Operating expenses
Total operating expenses compared to the first half of 2014/2015 increased by € 2.1 million (16%) of which €
1.3 million relates to a stronger US dollar while higher operating cost, especially in the division Americas (mainly personnel costs) are the main reason for the remaining cost increase.
Taxation
The tax burden as a percentage of income before taxes compared to the first six months of 2014/2015 increased by over 3% points to 34%, partly due to a relatively higher share of the total profit before tax in countries with relatively higher effective tax rate.
Cash flow and financing
The net cash flow for the first six months ended at € 416,000 positive compared to a positive € 459,000 for the first six months of the financial year 2014/2015.
Cash flow from operating activities was € 3.4 million positive, compared to € 2.6 million in the same period last year. Of this improvement, € 0.2 million is derived from an improved EBITDA and € 1.0 million from the reduction in working capital mainly due to the increase in accounts payable. These effects were partially off-set by the increase in taxes paid € 0.3 million.
The € 0.8 million improvement in operating cash flow was amongst others used for higher capital expenditures in Europe and Americas (€ 0.6 million).
During the first six months, the positive balance of cash plus interest-bearing debt increased further to
€ 5.7 million versus € 5.3 million at end March 2015, and € 2.6 million end of September 2014. The most important banking ratio, 12 month rolling Total debt/EBITDA was 0.5 which is equal to September 30, 2014.
In the first half of Holland Colours met all covenants agreed with the bank.
Per the end of September 2015, the working capital, excluding cash and interest bearing liabilities, was
€ 12.4 million, a decline compared to the beginning of the financial year (€ 13.1 million). After adjustment for currency impact, it is in particular the higher position on trade payables that is notable in the improvement.
The translation results on equity per the end of September 2015 were € 0.6 million negative due to the lower value of the US dollar as compared to the end of September 2014. Partly because of this translation result, the solvency of the company in the first half of the year decreased compared to March 2015 from 66.1% to 65.7%.
The return on average invested capital (ROI) increased in the first six months of the year to 18.7%. For the first half of the financial year 2014/2015 the ROI was 17.0%.
Risk management
Risk management is an integral management task and aims to recognize significant risks to which the company is exposed and to manage them with a reasonable degree of certainty, at the same time considering the size of the company and the character of the business. Such a system cannot provide absolute certainty that objectives will be realized. Neither can it definitely prevent all potential cases of material mistakes, damage, fraud or breaches of statutory laws.
The 2014/2015 annual report describes the primary strategic, operational and financial risks. In terms of the risks and uncertainties described in the annual report, there have been no notable changes over the first half of this financial year. There were no cases of material damage, fraud or breaches of law detected in the first half year.
Statutory Board statement
The Statutory Board hereby declares that, to the best of its knowledge, the summarized interim consolidated half-yearly report as of 30 September 2015, drawn up in accordance with IAS 34 'Interim financial reporting', represents a faithful rendering of the assets, liabilities, financial position and profit of Holland Colours NV and the joint companies as stated in the consolidated financial report, and that the Board report as included of this half-yearly report represents a faithful rendering of the information required in relation to item 5:25d subs 8 and 9 of the Dutch Financial Supervision Act.
Outlook for the second half year of 2014/2015
Traditionally, the revenue and results in the second half of the financial year are lower than those of the first half year, owing specifically to the seasonal trend in the Building & Construction market.
Holland Colours will not issue a forecast regarding the full 2015/2016 financial year.
Apeldoorn, October 29, 2015 Rob Harmsen
Margret Kleinsman
Tineke Veldhuis - Hagedoorn
For further information: Holland Colours NV
Rob Harmsen
CEO Holland Colours Tel: +31 (0)55 368 07 00
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