Improved result

The Van Leeuwen Pipe and Tube Group’s consolidated net sales were € 787 million, an increase of 25% compared to the previous financial year. Out of the total sales, the industry segment contributed 47% (2018: 55%) and the energy segment 53% (2018: 45%). The total tonnage sold as compared to 2018 increased by almost 14%, but sales from stock decreased by more than 3%. Excluding the contribution of Benteler Distribution, the net sales and the total tonnage sold increased by 19% and 9% respectively, while the sales from stock decreased by 12%.

The operating result increased by 26% to € 17 million. This included a negative foreign currency effect of € 0.3 million. The average sales price (and cost) per ton was higher than in 2018. Total expenses increased by € 14.7 million to € 118.4 million. Most of the increase in operating expenses can be attributed to the full year effect of the Ferrostaal Piping Supply acquisition, which closed in May 2018 and the operating, acquisition and integration expenses of the Benteler Distribution companies (€ 10.6 million). In addition, one-off restructuring costs of € 0.5 million were included in the total expenses. In 2018, the one-off costs were € 0.2 million. The operating result was € 17 million, an increase of € 3.5 million compared to the previous year.

The tax charge of € 3.7 million (2018: € 2.2. million) is higher than last year. The 2018 tax charge includes a one-off benefit of € 0.9 million in relation to lower statutory tax rates affecting the deferred tax assets of the Group. The remaining tax increase is the result of the appropriation of results in countries with relatively higher tax rates.

The net result for 2019 was € 10.1 million, an increase of € 0.4 million compared to the previous year. In the 2019 profit and loss account, Benteler Distribution’s contribution to the net result constituted a net loss after tax of € 1.4 million. Excluding this impact, the net result would have been € 11.5 million, an increase of € 1.8 million compared to last year.

The operating working capital increased to € 382 million, largely the result of the inventories and net trading working capital that was added as part of the Benteler Distribution acquisition, as well as higher in-transit-stocks for energy projects. Without the stock acquired from Benteler Distribution, the stock on hand decreased as a result of lower stock levels in response to lower sales volumes and shorter supply lead times.

The Benteler Distribution acquisition was recognized in the financial statements in accordance with the purchase accounting method. As a result, the assets of the Van Leeuwen Pipe and Tube Group more than doubled. Of the acquired assets, inventories and fixed assets represent approximately 65%. Since the purchase consideration paid was below the net asset value, the acquisition resulted in a substantial negative goodwill, which is recorded under provisions.

In connection with the Benteler Distribution acquisition, the capitalization of the company changed. The funding of the acquisition was realized by means of an increase in shareholder equity and by using existing bank credit facilities. The net debt position increased from € 50 million to € 85 million. The Group’s equity increased by € 81 million to € 252 million. As a result of the amended capital structure, the solvency rate decreased to almost 31%. When correcting for the negative goodwill, the solvency would be in excess of 40%. The Van Leeuwen Pipe and Tube Group’s cash position and bank facilities are adequate to meet the financing requirements.