Financial Report and Registration Document 2010 - Groupe Seb

3 NOTES
CONSOLIDATED FINANCIAL STATEMENTS
TO THE CONSOLIDATED FINANCIAL STATEMENTS
mainly under the Supor brand. Supor employs roughly 6,600 people, of
whom 80% are production workers based at the Company’s four plants in
mainland China, in Yuhuan, Wuhan, Hangzhou and Dongguan. A significant
portion of its revenue is generated internationally through sub-contracting
agreements with major small household equipment manufacturers, including
Groupe SEB.
Supor reported revenue of €351 million in 2008 and €281 million in 2007.
Supor’s contribution to consolidated operating margin was €30 million in 2008.
Acquisition of control of Supor on 1 January 2008
Groupe SEB acquired 52.74% of the capital of Supor in two stages:
on 28 August 2007, SEB acquired 30% of the voting rights in the
group’s parent company Zhejiang Supor Co. Ltd. (ZJ Supor), listed on
the Shenzhen stock exchange under code 002032.SZ, at a total cost of
€115.8 million;
on 21 December 2007, following a public tender offer for part of the
remaining shares launched in November, SEB acquired a further 22.74%
of the capital and voting rights for €228.8 million.
For the preparation of the 2007 consolidated fi nancial statements, the
Group considered that it exercised significant influence over ZJ Supor from
1 September 2007. ZJ Supor was therefore accounted for by the equity
method in the last four months of 2007, based on the Group’s 30% interest.
In January 2008, Groupe SEB acquired control of ZJ Supor following a
General Meeting at which the Company’s shareholders elected the fi ve
directors nominated by Groupe SEB (four Groupe SEB executives and one
independent director) to the nine-member Board of Directors, thereby giving
Groupe SEB the majority. ZJ Supor and its subsidiaries have therefore been
fully consolidated from 1 January 2008.
The following table analyses the fair value of the assets acquired and liabilities
assumed and provides a reconciliation with the corresponding cash flows:
Goodwill corresponds mainly to market shares and projected synergies,
particularly in terms of manufacturing, supply chain operations and product
development, which cannot be separately identified.
Acquisition of minority interests in certain ZJ Supor
subsidiaries
During the second quarter of 2008, Groupe SEB acquired Hong Kong-based
Grain Harvest Development Ltd., which holds signifi cant stakes in three
ZJ Supor subsidiaries, as follows:
25% of Wuhan Supor Cookware;
25% of Zhejiang Supor Electrical Appliances;
30% of Dongguan Supor Electrical Appliances.
This transaction, which enabled the Group to increase its share of
ZJ Supor’s profi t, was accounted for based on the three companies’ fair
values at 31 March 2008, leading to the recognition of additional goodwill
of €35.7 million.
Exercise of stock options by certain Supor Group
executives
Prior to the acquisition, certain Supor Group senior executives were granted
options to purchase new ZJ Supor shares, which were exercisable upon
the change of control of Supor. Following administrative processing by the
Chinese authorities, the options were exercised at the end of June 2008
for a total of 12 million Supor shares, lowering Groupe SEB’s share in the
Company to 51.31%.
All the options were exercised, and there are no remaining stock options
likely to have a dilutive impact on Groupe SEB’s stake in ZJ Supor.
(in € millions) 1 January 2008
Non-current assets (a) 153.3
Inventories 38.5
Trade and other receivables 31.9
Net cash and cash equivalents 73.2
Trade and other payables (32.5)
Other liabilities (including deferred taxes) (36.8)
Minority interests (16.6)
TOTAL NET ASSETS 211.0
PERCENT INTEREST 52.74%
NET ASSETS ACQUIRED 111.3
COST OF THE BUSINESS COMBINATION 344.6
Goodwill 233.3
(a) Including the Supor brand, valued by independent experts at €75.1 million.
74 FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 GROUPE SEB