Annual 2012 Report Contents Management’s review ............................................... 4-80 Group financial highlights (5-year summary) ............................ 3 FLSmidth & Co. in brief ........................................................ 4-7 Living the strategy ........................................................... 10-13 Management’s review ...................................................... 14-29 Customer Services ........................................................... 30-33 Material Handling ............................................................ 36-39 Mineral Processing ........................................................... 42-45 Cement ........................................................................... 48-51 Risk management ............................................................ 54-59 Research and Development .............................................. 60-63 Board of Directors ........................................................... 66-69 The Executive Management ............................................. 70-71 Corporate social responsibility .......................................... 72-73 Shareholder information .................................................. 74-76 Statement by Management on the annual report .................. 77 Independent auditor’s report. ................................................ 77 Quarterly key figures ....................................................... 78-79 Company announcements .................................................... 80 Interviews Jørgen Huno Rasmussen and Vagn Ove Sørensen ................. 8-9 Customer Services: Bjarne Moltke Hansen ........................ 34-35 Material Handling: Carsten R. Lund ................................. 40-41 Mineral Processing: Peter Flanagan .................................. 46-47 Cement: Per Mejnert Kristensen ....................................... 52-53 Financial governance: Ben Guren ..................................... 64-65 Consolidated financial statements ..................... 81-136 Table of contents and list of notes ......................................... 82 Consolidated income statement ............................................ 83 Consolidated statement of comprehensive income ................ 84 Consolidated cash flow statement ........................................ 85 Consolidated balance sheet... .......................................... 86-87 Consolidated equity ......................................................... 88-89 Notes to the consolidated financial statements ............... 90-134 List of Group companies ...............................................135-136 Parent company financial statements .............. 137-145 Parent company income statement ..................................... 138 Parent company balance sheet ............................................ 139 Parent company equity ....................................................... 140 Notes to the parent company financial statements ........ 141-145 2 FLSmidth: Annual Report 2012 Group financial highlights 5-year summary DKKm 2008 3) 2009 3) 2010 3) 2011 3) 2012 2012 EUR 1) INCOME STATEMENT Revenue 23,896 21,892 18,803 20,538 24,849 3,338 Gross profit 5,216 5,043 4,784 5,248 6,078 817 Earnings before non-recurring items, depreciation, amortisation and impairment (EBITDA) 2,853 2,691 2,284 2,528 2,759 371 Earnings before amortisation and impairment of intangible assets (EBITA) 2,610 2,525 2,148 2,347 2,502 336 Earnings before interest and tax (EBIT) 2,384 2,285 1,963 2,117 1,988 267 Earnings from financial items, net (272) (133) (93) (79) (61) (8) Earnings before tax (EBT) 2,112 2,152 1,870 2,038 1,927 259 Profit/loss for the year, continuing activities 1,352 1,744 1,287 1,356 1,274 171 Profit/loss for the year, discontinued activities 163 (80) (9) 81 29 4 Profit/loss for the year 1,515 1,664 1,278 1,437 1,303 175 CASH FLOW Cash flow from operating activities 2,324 2,470 1,335 1,148 1,720 231 Acquisition and disposal of enterprises and activities (210) (286) (45) (915) (2,508) (336) Acquisition of tangible assets (627) (210) (473) (497) (739) (99) Other investments, net (34) (34) (208) (236) (151) (20) Cash flow from investing activities (871) (530) (726) (1,648) (3,398) (455) Cash flow from operating and investing activities of continuing activities 1,780 1,756 541 (470) (1,642) (220) Cash flow from operating and investing activities of discontinued activities (327) 184 68 (30) (36) (5) WORKING CAPITAL (incl. Cembrit) 207 21 878 1,620 1,950 261 WORKING CAPITAL (excl. Cembrit) (102) (247) 608 1,334 1,629 218 NET INTEREST-BEARING RECEIVABLES/(DEBT) (incl. Cembrit) (574) 1,085 1,254 (98) (3,084) (413) NET INTEREST-BEARING RECEIVABLES/(DEBT) (excl. Cembrit) (623) 1,064 1,209 (145) 4) (3,183) (427) ORDER INTAKE, CONTINUING ACTIVITIES (GROSS) 2) 30,176 13,322 20,780 24,044 27,727 3,717 ORDER BACKLOG, CONTINUING ACTIVITIES 2) 30,460 21,194 23,708 27,136 29,451 3,948 BALANCE SHEET Non-current assets 8,234 8,464 9,240 10,795 13,004 1,743 Current assets 12,495 13,438 13,359 14,745 17,327 2,323 Assets held for sale 8 0 0 0 1,544 207 Total assets 20,737 21,902 22,599 25,540 31,875 4,273 Equity 5,035 6,627 8,139 8,907 9,419 1,263 Long-term liabilities 4,103 3,338 3,145 3,533 6,178 828 Short-term liabilities 11,599 11,937 11,315 13,100 15,784 2,116 Liabilities directly associated with assets classified as held for sale 0 0 0 0 494 66 Total equity and liabilities 20,737 21,902 22,599 25,540 31,875 4,273 PROPOSED DIVIDEND TO SHAREHOLDERS 0 372 479 479 479 64 DIVIDEND PAID OUT DURING THE YEAR 372 105 262 472 471 63 FINANCIAL RATIOS Continuing activities Gross margin 21.8% 23.0% 25.4% 25.6% 24.5% 24.5% EBITDA margin 11.9% 12.3% 12.1% 12.3% 11.1% 11.1% EBITA margin 10.9% 11.5% 11.4% 11.4% 10.1% 10.1% EBIT margin 10.0% 10.4% 10.4% 10.3% 8.0% 8.0% EBT margin 8.8% 9.8% 9.9% 9.9% 7.8% 7.8% Return on equity 33% 29% 17% 32% 14% 14% Equity ratio 24% 30% 36% 35% 30% 30% ROCE (Return on capital employed) 2) 34% 34% 26% 23% 19% 19% Number of employees at 31 December, Group 11,510 10,664 11,229 13,204 15,900 15,900 Number of employees in Denmark 1,871 1,650 1,564 1,609 1,687 1,687 Share and dividend figures, the Group CFPS (cash flow per share), (diluted) 44.2 47.1 25.3 21.8 33.0 4.4 EPS (earnings per share), (diluted) 28.8 31.9 24.4 27.1 25.1 3.4 Net asset value per share, (Group) 96 126 154 169 181 24.3 Dividend per share 0 7 9 9 9 1.2 Pay-out ratio 0% 22% 37% 33% 36% 36% FLSmidth & Co. share price 181 367 532 337.5 327.2 43.9 Number of shares (1,000), 31 December 53,200 53,200 53,200 53,200 53,200 53,200 Average number of shares (1,000) (diluted) 52,544 52,429 52,693 52,550 52,136 52,136 Market capitalisation 9,629 19,524 28,302 17,955 17,407 2,333 The financial ratios have been computed in accordance with the guidelines of the Danish Society of Financial Analysts from 2010. 1) Income statement items are translated at the average EUR exchange rate of 7.4438 and the balance sheet and cash flow items are translated at the year end EUR exchange rate of 7.4604. 2) ROCE (Return on capital employed) is calculated on a before tax basis as EBITA divided by avarage capital employed including goodwill (excl. Cembrit). 3) The income statement figures have been restated as Cembrit is presented as discontinued activities. 4) Restated compared to Q1-Q3 2012 Interim Report, as Cembrit no longer includes Group internal net interest-bearing debt. 3 2012 FLSmidth & Co. in brief Business concept Vision ated in emerging markets, an invest- ment in FLSmidth is an investment in FLSmidth is a market-leading supplier We will be our customers’ preferred the emerging markets’ growth story. of equipment and services to the global full-service provider of sustainable minerals and cement industries. FLSmidth minerals and cement technologies. Share and dividend figures: supplies everything from single machine • Earnings per share (diluted) amounted units to complete minerals and cement to DKK 25.1 in 2012 (2011: DKK 27.1) plants including associated services. Fundamental • The total return on the FLSmidth & Co. FLSmidth is a global company with values share in 2012 was 0% (2011: -35%) headquarters in Denmark and a local presence in more than 50 countries • The Board of Directors plans to make Over the past 131 years, FLSmidth has including project and technology centres a total cash distribution of DKK 1bn developed a business culture based on in Denmark, India, USA and Germany. after the Annual General Meeting on three fundamental values: cooperation, 5 April 2013 in the form of: competence and responsibility. FLSmidth primarily focuses on the fol- - A proposed dividend of DKK 9 per lowing industries: copper, gold, coal, share (2011: DKK 9) corresponding iron ore, fertilizers and cement, and to 36% of the year’s profit (2011: has the ambition of being among the 33%) and a dividend yield of 2.8% leading and preferred suppliers in each Investing in (2011: 2.7%) representing a total of these industries. FLSmidth value of DKK 479m - An extraordinary distribution in the FLSmidth will differentiate itself as the FLSmidth & Co. A/S has been listed form of a share buy back program preferred full-service provider of sus- on NASDAQ OMX Copenhagen since of DKK 521m tainable products and solutions based 1968. Today, it is best characterised as • It is FLSmidth’s dividend policy to on the best technology and services in a capital goods or industrial company. pay out 30-50% of the year’s the market. profit in dividend depending on Cement