FLS Industries A/S

1
FLS Industries A/S
Year 2000
8 March 2001 Peter Assam, CEO, and Birgitte
Nielsen,CFO
2
AGENDA FOR 8 MARCH 2001

• 2000 - a landmark year
• Ratio for merging FLS with APH
• DEF 1994
• 4 Core businesses
• Group financials
• 2001 and onwards

3
YEAR 2000 - A LANDMARK YEAR

• New strategy - actively focussing, restructuring
  and streamlining the Group
• - Selling RMIG
• - Transferring Johannes Möller
• - New FLSmidth
• - Purchase of 50 of Aalborg Portland A/S
• Announcing FLS-APH merger aligning Group
  structure with stock market requirements
• - concentrating operating assets in one company
• Disappointing EBIT of DKK - 458mill.
• CFFO was DKK -26mill.
• Result reflects a year with restructuring costs
  and major one off costs

4
STABLE MARKET CAPS OF FLS APH OPERATING UNITS
Merger is announced 21/11-2000
5
SHARP HIKE IN MARKET CAP OF APH OPERATING UNITS
Return since 20 Nov 2000 FLS
-18 KFX
-3 Ind. Comp. -7 MSCI Build Mat
9 APH 15 APH ex. NKT 116
6
THE MARKET SETS THE RATIO - FLS APH OPERATING
UNITS
Ratio
1,2
(DKK) 21.02-06.03 Today APH
308 295 - dividend
5 5 - 0,1 NKT 172
155 APH ex NKT and div. 131 135 FLS
115 115 -
dividend 3 3 FLS
ex dividend 112 112 Ratio
1.17 1.20
7
TRANSFERRING BUILDING MATERIAL OPERATIONS TO FLS
INDUSTRIES
FLS Industries pays with 6,713,115 new B shares
38,115 old B shares Share capital increases to
DKK 1,064 mill with 7,200,000 A shares and
46,000,000 B shares
8
OWNERSHIP STRUCTURE - POST MERGER IN MAY
9
DEF94 DEVELOPMENTAL DEFECTS CASE
Why an explanation of the course of events?
- The decision to apply for a suspension of
payments order for DEF 1994 should be viewed in
the full context of the developmental defect
case - The Groups employees, shareholders and
other stakeholders should know the full course
of events
10
DEF94 DEVELOPMENTAL DEFECTS CASE

• The reasons behind the DEF 1994 suspension of
  payments
• The High Court judgement in June 2000 extends
  liability for damages impossible to estimate
  financial consequences
• Pending arbitration case abroad will result in
  further claims being raised against DEF 1994
• - High Court judgement appealed to the Supreme
  Court
• Why suspension of payments?
• Freeze DEF 1994 funds until the Supreme Court
  passes judgement (October 2001)
• - all creditors on an equal footing

11

• DKKm 1998 1999 2000
• Net turnover 6,738 6,671 7,456
• Gross profit 1,493 1,365 1,117
• EBIT 267 83 -269
• Result for the year 221 57 -333
• Capital Employed, average 2,977 3,223 3,341
• Cash flows from operating activities -135 512 -37
• Cash flows from operating an investing
  activities -380 408 -105
• Turnover Order intake Order Backlog
• 2000 2000 2000
• Cement 75 73 82
• Mineral processing 12 16 10
• Pyroprocessing 3 3 2
• Chemical and petrochemical 2 3 1
• Power generation 3 2 3
• Other 5 3 2

12
- NET SALES
Asia
America
15
41
Africa
24
Denmark
Europe
1
19
13
Order Intake 1990-2000 Major and Basic orders,
Sales
DKK Mill.
14

• US joint ventures
• 1 handed over to customer
• 1 running tests according to plan

After-market sales of DKK 2bn with growth Order
intake on budget with satisfactory order
backlog Good prospects for new order
Integration as planned Key account management
established
15

• DKKm 1998 1999 2000
• Net turnover 2,324 4,621 5,621
• Gross profit 1,007 2,059 2,377
• EBIT 384 461 429
• Result for the year 495 1,119 1,638
• Capital Employed, average 3,545 5,871 7,681
• Cash flows from operating activities 473 741 673
• Cash flows from operating and investing
  activities -700 42 -1,313

16
- NET SALES
Europe
34
America
25
Asia
1
Africa
1
Denmark
39
17

• Aalborg Portland
• White strategy progressing in Sinai, Malaysia and
  Aalborg
• -Sinai on target/before schedule
• -Malaysia on target
• Sale of grey cement at full capacity
• Unicon Group
• Unicons turnaround in the US - progress
  according to plan
• Unprofitable Philippine r-m-c operation closed
• Exit loss making Spanish concrete product
  activities
• Best result ever in Scandinavia

18

• Dansk Eternit Holding
• Polish acquisition in a bolt-on European
  expansion
• New capacity successfully on steam in Czech
  Republic and Denmark
• New cross-border organisation cuts costs
• Densit
• New off-shore orders - wind turbines and oil
  platforms
• Joint venture in UK to strengthen market presence
• All time high order backlog

19

• DKKm 1998 1999 2000
• Net turnover 1,688 2,962 3,282
• Gross profit 531 750 301
• EBIT -39 -146 -375
• Result for the year -134 -212 -562
• Capital Employed, average 1,677 2,486 2,808
• Cash flows from operating activities -3 -216 -423
  
• Cash flows from operating and investing
  activities -588 -826 -764

Profit in Q4, EBIT DKK 50 mill., EBT DKK 5
mill. Formula 1 gathers pace across the
organisation Better prices for improved
products and services at less costs
20
- NET SALES
America
11
Asia
1
Africa
2
Denmark
Europe
6
80
21

• DKKm 1998 1999 2000
• Net turnover 1,891 1,958 1,533
• Gross profit 337 367 179
• EBIT 14 15 -193
• Result for the year -6 11 -207
• Capital Employed, average 439 426 496
• Cash flows from operating activities -86 -119 -228
  
• Cash flows from operating and investing
  activities -105 -164 -260
• Turnover Order intake Order Backlog
• 2000 2000 2000
• Power stations, biomass 15 4 6
• Power stations, fossil fuel 45 46 62
• Waste incineration 4 2 1
• Industrial 27 38 13
• Operation and maintenance 9 10 18
• Sales 1,533 1,236 2,147

22
- NET SALES
America
Asia
18
11
Africa
2
Denmark
18
Europe
51
23

• New management focussing on key skills
• Leverage technological edge via international
  partners
• Restructuring of business units and outsourcing
  continues unabated to improve efficiency
• Present order backlog is weak but several large
  scale projects may materialise

24
PROFIT LOSS ACCOUNT

• DKKm 1998 1999 2000
• Net Sales 22,238 20,993 19,205
• EBITDA 1,636 1,394 545
• EBIT 858 475 -458
• EBT 1,147 2,756 729
• Profit for the year 794 2,540 843

25
FLS GROUP - NET SALES
FLSmidth
Other
39
7
FLS
Aerospace
17
FLS miljø
8
APH
29
26
FLS GROUP - NET SALES
America
27
Europe
40
Asia
7
Africa
10
Denmark
16
27
CASH FLOW

• DKKm 1998 1999 2000
• Cash flow from operations 602 794 -26
• Cash flow from investments -2,174 321 -2,500
• Cash flow from financing 1,399 -948 2,175
• Change in cash funds -173 167 -351
• Operations Lack of orders, poor results
  
• Investments NKT share buy-back, large
  acquisitions in APH
• Financing Dividend, increase in NIBD
  and reduction in cash funds

28
CAPITAL EXPENDITURES
DKK/mill. F.L.Smidth FLS miljø APH Aerospace Intan
gible 7 - 51 - Tangible Land
Building - 2 85 20 Plant Machinery 41 1 250 21
Other fixtures 36 8 130 57 Rotables - - - 292
Other 6 - 1 - Acquisitions 52 - 2.063 - Total 14
2 11 2.580 390

29
BALANCE SHEET - ASSETS

• DKKm 1998 1999 2000
• Intangible fixed assets 351 151 1.308
• Tangible fixed assets 7.141 7,337 8,028
• Fixed assets investments 2.370 2,878 4,284
• Stocks 1,890 2,868 2,989
• Debtors 5,691 5,111 4,931
• Cash, bonds and other securities 861 1,049 651
• Total assets 18,304 19,394 22,191

30
BALANCE SHEET - LIABILLITIES

• DKKm 1998 1999 2000
• Equity (incl. minority interests share)
  5,791 8.083 7,966
• Provisions 1,413 1,373 1,467
• Long term liabilities 3,804 2,432 5,180
• Short term liabilities 7,296 7,506 7,578
• Total liabilities 18,304 19,394 22,191

31
2001 AND ONWARDS

• Distributing NKT-shares and DKK 1bn in
  dividends while merging FLS Industries with APH
• Very sound order book in FLSmidth with service
  etc. growing at 10 annually
• Synergies and optimising on three centres will
  improve financial performance
• White cement capacity doubles in 18 months to 1½
  mill tonnes and to 3 mill tonnes in 2005
• Unicon US is being turned around through 2001 and
  2002
• DEH benefits from upgraded plants hiking
  productivity and quality
• Densit grows internationally according to
  strategy
• FLS Aerospace ensures strategic value in a
  consolidating industry by normalising
  profitability by end of 2001
• New CEO in FLS miljø continues to reshape and
  focus the company looking for partners to
  leverage technological edge

OUTLOOK FOR 2001 EBIT DKK 0.7bn PBT DKK
0.5bn Sales DKK 21bn