AAK interimrapport Oktober December 2005 Year end Proforma 2005

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AAK interimrapportOktober December 2005Year
end Proforma 2005

• Jerker Hartwall
• President and CEO

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This is AarhusKarlshamn AB

• A merger between Aarhus United andKarlshamns AB
• Total sales SEK 10,6 billion
• 2,500 employees
• Production plants in seven countries
• To be traded at Stockholm Exchange O-list
• quarter three 2006.

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Prime supplier to

• The chocolate and confectionery industry
• The food industry
• The foodservice industry
• The cosmetic industry
• The feed industry
• The technical industry

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The merger rationale

• To accelerate growth
• To improve competitiveness
• To optimize investments and improve
  cash flow

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AAK in the World
AAK Sweden
AAK Norway
AAK Poland
AAK Czech Republic
AAK Denmark
AAK UK
AAK Netherlands
AAK Croatia
AAK Russia
AAK Canada
AAK US
AAK Hong Kong
AAK Mexico
AAK Latin America Sao Paolo, Brazil
AAK Ivory Coast
AAK Benin
AAK Australia
AAK Latin America Montevideo, Uruguay
AAK Ghana
Ceylon Trading Company
AAK Asia-Pacific Malaysia
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Applications
Chocolate Confectionery Fats
Food Ingredients
Technical Products Feed
Other Business

• Chocolate
• Fillings

• Dairy, Bakery
• Food Service

• Lubricants
• Feed Materials

• Skin care
• Hair care

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World leader of vegetable speciality fats
Chocolate Confectionery Fats
Food Ingredients
Technical Products Feed
0,9 billion SEK 300 000 ton Gross margin 200
MSEK EBIT 50 MSEK
3.1 billion SEK 310 000 ton Gross margin1000
MSEK EBIT 220 MSEK
6.2 billion SEK 940 000 ton Gross margin 1600
MSEK EBIT 300 MSEK
Note Numbers are proforma 2005
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Vision
The fastest growing most innovative and
profitable speciality oils fats company in the
world
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Strategic direction how to compete

• Low margin High margin

ADM Bunge Cargill
Speciality Fats
AAK
Accelerate development of speciality products
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How to grow when markets dont? Designing
innovative, speciality products for
substitution cocoa-butter ? CBE cow
milk-butter ? DFA trans fatty acids ?
trans-free solutions
Slow-growing total food market in mature markets
(Europe and North America)
Market size
High growth niches
Cocoa-Butter Equivalents
Trans-free alternatives
Dairy-Fat Alternative
Time
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Synergies fully implemented 2008 150 MSEK in the
whole value chain
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AAK Reconstruction in Europe
AAK Sweden
AAK UK HUll
AAK UK
AAK Denmark
AAK Netherlands
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News

• The integration process has proceeded on
  schedule, and synergies in the neighbourhood of
  SEK 150 million are expected to yield full
  effects from 2008 onwards.
• A decision was made on a substantial increase in
  the production capacity for CBE (Cocoa Butter
  Equivalents).

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Pro forma result 2005

• Net sales grew by 9, from SEK 9,720 million in
  2004 to SEK 10,573 million in 2005.
• The Groups operating profit excluding items
  affecting comparability totalled SEK 530 million
  (414), an increase of 28.
• Earnings are impacted by items affecting
  comparability to the amount of SEK 201 million
  principally restructuring expenses related to the
  merger.
• Profit before tax and exclusive of non-recurring
  items amounted to SEK 461 million (360).
• Earnings after tax amounted to SEK 340 million
  (274) exclusive of non-recurring items.

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Financial Statements for the period October
December 2005 the first financial year of the
new AarhusKarlshamn Group

• Net sales reached SEK 2,990 million.
• The operating profit exclusive of non-recurring
  items, and IAS39, amounted to SEK 153 million.
• Non-recurring items had a SEK 201 million impact
  on earnings the majority of which were
  restructuring costs related to the merger, and
  the implementation of IAS39 had a negative effect
  of SEK 8 million, attributable to raw material
  and currency derivatives, totalling 209 MSEK.

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Financial Statements for the period October
December 2005 the first financial year of the
new AarhusKarlshamn Group

• Operating result including these items amounted
  to -56 MSEK.
• Earnings before tax and inclusive of items
  affecting comparability, totalled SEK -64
  million.
• Income after tax amounted to -46 MSEK.
• Earnings per share was -1,23 SEK.

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Financial review Q 4 2005operational excl one
offs

• Net sales at 2.990 MSEK up 333 MSEK or 13
• Oper profits 153 MSEK up 86 MSEK
• Good business in general
• CBE Crushing
• Strong UK
• 100 MSEK project (old Karlshamn project)

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Seasonality in AAKQ4 is our strongest quarter
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Income Statement, pro forma
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One off costs
MSEK

• Acquisitions costs (consultants) 20
• Sales bonus DK 40
• Early retirm./severance pay 25
• Write off (UK Holland) 52
• Other 15
• Subtotal 151
• Inventory PPA 50
• TOTAL ONE OFFS 201
• In addition we have activated in the balance
  sheet 59 MSEK in accordance with IFRS.

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The bridge to full year 2005 proforma
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Income Statement, pro forma
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Operating income comparison 2005
MSEK

• Oper. Income 2004 414
• Increased sales 853
• Less increase COGS - 596 257
• Increased external costs -96
• Decreased personnel costs 22
• Increased depreciation -26
• Decrease in other income - 30
• Other costs - 11
• Oper Income 2005 530

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Application segments
Chocolate Confectionery Fats
Food Ingredients
Technical Products Feed
Other Business

• Chocolate
• Fillings

• Dairy, Bakery
• Food Service

• Lubricants
• Feed Materials

• Skin care
• Hair care

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Chocolate Confectionery Fats

• Volumes 311 000 ton 11
• Net sales 3081 MSEK 6
• Gross contr. 1039 MSEK 14
• Op profit 222 MSEK 33

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Food Ingredients

• Volumes 943 000 ton 10
• Net sales 6191 MSEK 14
• Gross contr. 1559 MSEK 13
• Op profit 294 MSEK 27

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Technical Products Feed

• Volumes 293 000 ton - 8
• Net sales 902 MSEK - 10
• Gross contr. 196 MSEK - 4
• Op profit 54 MSEK - 14

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Balance Sheet proforma
In MSEK
2005 IFRS
2004 proforma

• Assets
• Non-current assets 3 491 3 196
• Current assets 3 346 3 162
• Total assets 6 837 6 331
• Equity and liabilities
• Equity 3 504 3 265
• Minority 50 46
• Long-term liabilities 1 421 905
• Current liabilities 1 854 2 115
• Total equity and liabilities 6 837 6 331
• Equity / Total assets 52 52
• Net debt 1 629 1 208
• Net debt/ EBITDA excl one offs 1,9 1,8

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Cash Flow 2005Operating (proforma)

• 2005 2004
• Operating income 530 414
• Depreciation write downs 307 281
• Changes in working capital -349 - 16
• Operating capital investments -485 -261
• Operating cashflow 3 418

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Dividend 2005

• The Board of Directors of AarhusKarlshamn
  proposes an ordinary dividend of 4 SEK per share
  for the year 2005. In addition the board proposes
  an extra dividend of 25 SEK per share aiming to
  bring the company's capital structure in line
  with its needs. Technically the ordinary and the
  extra dividend cannot be decided until the extra
  ordinary shareholders meeting.

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The future 06/07/08

• 2008
• Full effect of synergies
• More speciality- More global

• 2007
• Implementation
• of synergies
• - Business development projects

• 2006
• Synergies under development
• Strategic direction clear

Organic growth and acquisitions
Productivity program
Organisation development
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Remember short term

• Purchasing shea
• Internal reconstruction costs
• Energy
• Limited synergy impact

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