AS NORMA

COMMENTARY TO FINANCIAL RESULTS

 

COMMENTARY TO Y1999 CONSOLIDATED AUDITED FINANCIAL RESULTS

     

Sales and revenues

 

The Y1999 consolidated net sales of AS Norma totaled  516.4

million EEK, incl. parent company with 453.1 million EEK.

Consolidated sales figure increased by 7.0% (+33.8 million EEK)

from year 1998.  Income earned by AS Norma accounted for 88%,

AS Metaprint 8%, AS Norma Maja 2% and AS Tööriistavabrik 1.4%

of the group's total income.  The group's main fields of

activity include production and sales of safety belts, car

components, tin sheet lithography and real estate

administration.

Sales structure by regions has remained unchanged from the

previous periods. Exports accounted for 90% of sales revenue, 

whereas 83% of production was exported to the Eastern markets 

and 17% to the West.

The remaining share of sales were made in Estonia (AS

Metaprint).

The average number of employees during the year was 1,159

(parent company 755).

 

Profit

 

The  company's  consolidated pre-tax profit was 126.1 million

EEK; net profit totaled 107.6 million EEK, which is  60.0  

million EEK more than Y1998. Foreign exchange gain was 13.1 

million EEK, of which 12.9 million EEK was earned in Q1. For 

purposes of hedging the currency risks, DEM is used as a base 

currency in transactions between AS Norma and its main customer 

AVTOVAZ.

To  increase the profit margin AS Norma has also reduced its 

operating expenses and changed output structure.

The groups net profit margin stood at 20.8%.  In 1998 net

profit margin was 9.8%.

 

Use of capital

 

Volume of accounts receivable at the end of the year totaled

130.2 million EEK, of which 78% are receivables from 

Eastern markets.  Compared to the standings at 31.12.98, the

volume of accounts receivable has decreased by 18.8 million

EEK.  The share of accounts in arrears of total receivables is

59%. Provision reserve formed of total Eastern market accounts

receivables is 19.7 million EEK. Due to significant increase

in sales compared to 1998, inventories of finished goods fell

5% by end-year.  At the same time inventories of raw

materials fell by 2% and work-in-progress account grew by 6%.

As of the end Y1999, the consolidated balance sheet size

amounted to 488.8 million EEK (34.8 million EEK growth),

increasing mainly due to the increase in current assets (45.3

million EEK).

The company has reduced the level of liabilities.  Total

liabilities decreased by 32.5 million EEK.  Long-term

liabilities dropped by 54.5 million EEK.  The total bank

loans for AS Norma as of 31.12.99 amounted to 53.3 million EEK,

including  26.6 million EEK with maturity of less than one

year.  Total interest paid in 1999 was 4.6 million EEK.

The group's owners' equity increased by 67.3 million EEK,

amounting to 385.3 million EEK (78.8% of balance sheet volume).

Average return on equity (ROE) during the period was 28.0%

 

Cash flow

 

Net cash and cash equivalents generated 77.0 million EEK. The

effect of exchange rates increased cash flow about 5.3 million

EEK.  Cash generated by operations increased from 67.0 million

EEK in 1998 to 149.3 million EEK in 1999.  Capital expenditure

amounted to 28.6 million EEK, compared to 69.3 million EEK

in 1998.

 

Investments

 

To support the existing production capacities and to assure the

efficiency of production processes AS Norma made in 1999 a total 

of 30.8 million EEK of invesments, of which 22.4 million EEK was 

invested in machinery and equipment; investemnst in product 

development amounted to 7.9 million EEK.

 

Net income and earnings per share

 

Net income increased by 126% to 107.6 million EEK in 1999, from

47.6 million EEK in 1998.

According to the new Income Tax Law, effective as of 1 January 

2000, there are no more differences between the taxation and 

book values of assets and liabilities.  Dividends paid by the 

company to resident natural persons and non-residents are 

subject to income tax (26/74 of net dividend amount paid).  As a 

result the deferred tax liability indicated on 1998 balance sheet 

(amounting to 15.8 million EEK) was transferred to income account 

in 1999.

Earnings per share were 8.15 EEK in 1999, compared to 3.60 EEK in 

1998

 

Significant Events

 

In October 1999 Autoliv acquired 49.5% of the shares in the AS

Norma.  The agreement also gives Autoliv the right to acquire 

another 1.5% of AS Norma shares.

 

 

Raivo Harand

Controller

+372 65 00 482