Download annual report 2011 here - Dantherm

INDEX INDEXnetwork suppliers and the effect of thecompany's focus on sales to network operatorswhere sales have gone up by 59%relative to 2010.Within HVAC, revenue was stable withgrowth of 2% in 2011 relative to 2010,and the development was marked by thegenerally low growth in Europe.Increased sales efforts and ongoing productdevelopment are important competitionparameters for Dantherm. The salesand development organisation was thereforeexpanded in 2011, which is the mostimportant reason for the increasing fixedcosts. The investment in sales and developmentstaff is an important prerequisitefor the company's continued growth inthe coming years.In 2011, the operating profit (EBIT)amounted to DKK 22.5m, correspondingto 4.1% of revenue against 1.5% of revenuein 2010.Facts about ChinaMost Telecom products are manufacturedat Dantherm's factory in Suzhou, China.The products are sold in Asia and the restof the world.The Chinese company was establishedin 2001 and has around 200 employeeswithin sales, service, development, productionand administration. This makesthe company the second-largest in thegroup.The profit from continuing operationsbefore tax amounted to DKK 9.8m in 2011against a loss of DKK 44.5m in 2010.The management is satisfied with thedevelopment in 2011 following the turnaroundin 2010.Capital structure and cash flowsDantherm's equity, balance sheet and netinterest-bearing debt are roughly on a parwith figures at the end of 2010. At the endof 2011, the equity interest amounted to28.0% against 28.4% at the end of 2010.In 2011, equity was negatively affected byDKK 3.1m as a result of foreign currencytranslation adjustments and adjustmentof interest rate swaps in respect of thebuilding financing in Skive.At the company's general meeting inApril 2011, it was decided to carry outa capital reduction which among otherthings opens up the possibility of payingdividend to the shareholders in future ifthe criteria in the dividend policy are met.At the end of 2011, the net interestbearingdebt amounted to DKK 187.1mand is on a par with the level at end of2010. The net interest-bearing debt includesfinance lease commitments andmortgage debt of DKK 113.5m. The net interest-bearingdebt was 4.3 times EBITDAat the end of the year and was reducedfrom 5.9 times at the end of 2010.4.1%Dantherm's profit margin improvedfrom 1.5% in 2010 to 4.1% in 2011.In 2010, Dantherm concluded an agreementwith its primary credit institutionswhich expires on 1 May 2012. All covenantshave been met throughout theagreement term. In February 2012, theagreement was re-negotiated, and thecredit institutions granted a two-year extensionuntil 1 May 2014. The agreementis expected to contain sufficient creditlimits for the group’s operations and strategydevelopment during the agreementterm.Despite revenue growth of 18%, workingcapital was on a par with the figure at theend of 2010, constituting 17% of revenuein 2011 against 20% of revenue in 2010.Cash flow from operating activities improvedin 2011 and amount to DKK 19.8magainst DKK 3.2m in 2010.Dantherm PowerThe activities in Dantherm Power comprisethe development and sale of backuppower systems, primarily within Telecom,and micro CHP units for private householdsbased on fuel cell technology. Dantherm'sownership share in the companyis 38% and is treated as an associate.The company's business developmentcontinued its positive course in 2011, withrevenue doubling to DKK 30m relative to2010.In 2011, Dantherm Power concluded acooperation agreement with Delta PowerSolutions (India) on marketing fuel cellproducts to the Indian telecom industry.The company has also delivered a 150kilowatt fuel cell generator to AngloAmerican Platinum Limited (South Africa),which was used at the COP 17 climatesummit in Durban. Dantherm Power'sparticipation in the 'Dansk Mikrokraftvarme'project continued as planned, andin 2011 the first 24 micro CHP units weredelivered and installed in private homesin southern Jutland.Operations and cash flow in DanthermPower remain negative, and the companytherefore received funding from theshareholders in 2011, of which Danthermextended a convertible loan to the companyof DKK 9.1m.The company's business is expected todevelop positively in 2012.20 millionCash flows from operating activitiesamounted to DKK 20m in 2011.Discontinued operationsAt the end of 2009, Dantherm's managementlaunched a process concerning thedivestment of companies and activitiesthat were not core activities. In 2010,Danamics ApS, the activities in T&OStelectric A/S (name changed to StelectricEjendomme A/S) and Dantherm AirHandling Pte. Ltd. were divested, as wasthe business area Dantherm Filtration inorder to strengthen the capital base.The sale of the activities in Stelectric EjendommeA/S in 2010 comprised only theoperating activities, and Dantherm thusremained owner of the company, includingthe property in Randers with relatedfinancing.At the end of 2011, Dantherm divestedStelectric A/S with the subsidiary StelectricEjendomme A/S, which concludesthe process of divesting these non-coreactivities.The loss from discontinued and discontinuingoperations in 2011 amounted toDKK 1.4m against DKK 1.9m in 2010. Thesale of Stelectric A/S and Stelectric EjendommeA/S led to a lower balance sheettotal and improved the equity ratio byaround 2%.CFODantherm's CFO Mikael Tange Andersenpassed away on 12 March 2011 after ashort and serious illness at the age of only40.Mikael Tange Andersen had been head ofthe group's finance function since 1 September2005 and joined Dantherm A/S'sExecutive Board on 2 November 2009.Mikael Tange Andersen will be rememberedas a highly respected employeeand colleague who made a significantcontribution to Dantherm's development,including the restructuring completed in2010.Bjarke Brøns was appointed new CFO inApril 2011.Bjarke Brøns, aged 36, has an MSc in BusinessAdministration and Auditing and isa state-authorised public accountant. Hehas been with the group for five years.10 Dantherm Annual Report 2011 Annual Report 2011 Dantherm 11