PROSPECTUS DATED MARCH 25, 2011
Prospectus
for the public offering of
7,894,737 newly issued registered shares from a capital increase against contribution in cash to be resolved by an extraordinary shareholders’ meeting of the Company
and of
9,306,200 existing registered shares from the holdings of the Selling Shareholders and of
2,580,141 existing registered shares from the holdings of the Selling Shareholders to cover a potential overallotment
and at the same time for the
admission to trading on the regulated market segment (regulierter Markt) of the Frankfurt Stock Exchange with simultaneous admission to the sub-segment of the regulated market with additional
post-admission obligations (Prime Standard) of the Frankfurt Stock Exchange of
up to 7,894,737 newly issued registered shares and 24,862,400 existing registered shares each such share with no par value and a notional value ofA1.00 and full dividend rights as of
January 1, 2011 of
NORMA Group AG
Maintal, Germany Price Range:E19.00 to E24.00
International Securities Identification Number (ISIN): DE000A1H8BV3 WKN: A1H8BV
Common Code: 060704333 Trading Symbol: NOEJ
Joint Global Coordinators and Joint Bookrunners
COMMERZBANK
Deutsche Bank
Goldman Sachs International
CONTENTS
Section Page
SUMMARY . . . 1
OVERVIEW . . . 1
SUMMARY OF OURKEYSTRENGTHS . . . 2
SUMMARY OF OURSTRATEGY. . . 4
AUDITORS . . . 5
SUMMARY OF THEOFFERING. . . 6
SUMMARYCONSOLIDATEDFINANCIALINFORMATION. . . 12
SUMMARY OF THERISKFACTORS. . . 18
GERMAN TRANSLATION OF THE SUMMARY OF THE PROSPECTUS ZUSAMMENFASSUNG DES PROSPEKTS . . . 20
U¨BERBLICK. . . 20
ZUSAMMENFASSUNGUNSERER WESENTLICHENSTA¨ RKEN . . . 21
ZUSAMMENFASSUNGUNSERERSTRATEGIE . . . 23
ABSCHLUSSPRU¨ FER. . . 25
ZUSAMMENFASSUNG DESANGEBOTS . . . 26
ZUSAMMENFASSUNG DER KONSOLIDIERTENFINANZINFORMATIONEN . . . 33
ZUSAMMENFASSUNG DERRISIKOFAKTOREN. . . 39
RISK FACTORS . . . 42
RISKSRELATING TO OURBUSINESS. . . 42
LEGAL ANDREGULATORYRISKS. . . 49
RISKSRELATED TO THEOFFERING AND OURFINANCING ANDSHAREHOLDERSTRUCTURE. . . 51
GENERAL INFORMATION . . . 55
CERTAINDEFINEDTERMS. . . 55
RESPONSIBILITYSTATEMENT . . . 56
PURPOSE OF THISPROSPECTUS. . . 56
FORWARD-LOOKINGSTATEMENTS . . . 56
SOURCES OFMARKETDATA . . . 57
STATEMENT ONNON-GAAP DISCLOSURES . . . 58
DOCUMENTSAVAILABLE FORINSPECTION. . . 58
THE OFFERING . . . 59
SUBJECTMATTER OF THEOFFERING. . . 59
SELLINGSHAREHOLDERS. . . 59
PRICERANGE, OFFERPERIOD, OFFERPRICE ANDALLOTMENT . . . 59
CURRENCY OF THESECURITIESISSUE . . . 60
EXPECTEDTIMETABLE FOR THEOFFERING. . . 61
INFORMATION ON THESHARES . . . 61
TRANSFERABILITY OF THESHARES . . . 62
ALLOTMENTCRITERIA . . . 62
STABILIZATIONMEASURES, OVERALLOTMENTS ANDGREENSHOEOPTION. . . 62
MARKETPROTECTIONAGREEMENT, LIMITATIONS ONDISPOSAL(LOCK-UP) . . . 63
ADMISSION TO THEFRANKFURTSTOCKEXCHANGE ANDCOMMENCEMENT OF TRADING . . . 64
DESIGNATED SPONSORS. . . 64
INTERESTS OF THE PARTIESPARTICIPATING IN THEOFFERING. . . 64
REASONS FOR THE OFFERING AND USE OF PROCEEDS . . . 65
DIVIDEND POLICY . . . 66
GENERAL PROVISIONSRELATING TOPROFITALLOCATION ANDDIVIDENDPAYMENTS. . . 66
Section Page
CAPITALIZATION . . . 67
CAPITALIZATION. . . 67
INDEBTEDNESS. . . 69
STATEMENT ONWORKINGCAPITAL. . . 70
NOSIGNIFICANTCHANGE. . . 70
DILUTION . . . 71
SELECTED CONSOLIDATED FINANCIAL INFORMATION . . . 72
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . 78
OVERVIEW . . . 78
KEYFACTORSAFFECTING OURRESULTS OFOPERATIONS ANDFINANCIALCONDITION . . . 79
RESULTS OFOPERATIONS. . . 82
LIQUIDITY ANDCAPITALRESOURCES. . . 91
QUANTITATIVE ANDQUALITATIVEDISCLOSURE OFMARKETRISK. . . 97
CRITICALACCOUNTINGPOLICIES . . . 100
INFORMATION FROM THEUNCONSOLIDATEDFINANCIALSTATEMENTS INACCORDANCE WITHHGBFOR THE FISCALYEARENDEDDECEMBER31, 2010 . . . 102
INDUSTRY . . . 103
SOURCES OFINFORMATIONPRESENTED IN THISSECTION. . . 103
OVERVIEW OF THEGLOBALMARKET FORENGINEEREDJOININGTECHNOLOGY. . . 103
MARKET ANDINDUSTRYTRENDS . . . 104
COMPETITIVELANDSCAPE. . . 106 BUSINESS . . . 108 OVERVIEW . . . 108 KEYSTRENGTHS. . . 109 OURSTRATEGY. . . 112 OURBUSINESS . . . 114 HISTORY . . . 121
INTELLECTUAL PROPERTY ANDINFORMATIONTECHNOLOGY. . . 122
QUALITY ANDPROCESSMANAGEMENT. . . 123
EMPLOYEES . . . 124
REALPROPERTYOWNED ANDLEASED. . . 126
MATERIALCONTRACTS. . . 127
LEGALPROCEEDINGS . . . 131
INSURANCE. . . 133
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . 134
REGULATORY AND LEGAL ENVIRONMENT . . . 136
REGULATORYENVIRONMENT INGERMANY: GERMANLAW ANDEU LAW. . . 136
REGULATORYENVIRONMENT IN THEUNITEDSTATES . . . 139
OVERVIEW OFREGULATORYENVIRONMENT INOTHERJURISDICTIONS . . . 142
PRINCIPAL AND SELLING SHAREHOLDERS . . . 143
GENERAL INFORMATION ON THE COMPANY AND OUR GROUP . . . 145
FORMATION, NAME, REGISTEREDOFFICE, FISCALYEAR,ANDDURATION OF THE COMPANY. . . 145
CORPORATEPURPOSE. . . 145
GROUPSTRUCTURE . . . 145
SIGNIFICANTSUBSIDIARIES . . . 147
AUDITORS OF THEFINANCIAL STATEMENTS. . . 147
Section Page
DESCRIPTION OF SHARE CAPITAL . . . 149
PROVISIONSRELATING TO THESHARECAPITAL OF THECOMPANY . . . 149
PROVISIONSRELATING TOSTOCKPLANS . . . 150
AUTHORIZATIONS TOACQUIRE ANDSELLTREASURYSHARES. . . 150
GENERAL PROVISIONSRELATING TOPROFITALLOCATION ANDDIVIDENDPAYMENTS. . . 151
GENERAL PROVISIONSRELATING TOLIQUIDATION OF THECOMPANY. . . 151
GENERAL PROVISIONSRELATING TOINCREASES ORDECREASES IN THESHARECAPITAL. . . 151
GENERAL PROVISIONSRELATING TOSUBSCRIPTIONRIGHTS. . . 152
EXCLUSION OFMINORITYSHAREHOLDERS . . . 152
SHAREHOLDERREPORTING ANDDISCLOSUREREQUIREMENTS. . . 152
DISCLOSURE OFTRANSACTIONSINVOLVINGPERSONSHOLDINGMANAGERIAL RESPONSIBILITIES WITHINLISTED STOCKCORPORATIONS . . . 153
MANAGEMENT . . . 154
OVERVIEW . . . 154
MANAGEMENTBOARD . . . 156
SUPERVISORYBOARD . . . 159
GENERAL SHAREHOLDERS’ MEETING. . . 165
CORPORATEGOVERNANCE. . . 166
UNDERWRITING . . . 168
RELATIONSHIPS ANDTRANSACTIONS WITHDIRECTLYINTERESTEDPARTIES. . . 168
COMMISSION. . . 169
GREENSHOEOPTION ANDSECURITIESLOAN. . . 169
TERMINATION/INDEMNIFICATION . . . 169
SELLINGRESTRICTIONS. . . 170
TAXATION IN THE FEDERAL REPUBLIC OF GERMANY . . . 171
TAXATION OF THESHAREHOLDERS . . . 171
OTHERTAXES. . . 173
TAXATION IN LUXEMBOURG . . . 174
LUXEMBOURGTAXATION OFSHARES OF ANONRESIDENTCOMPANY . . . 174
INCOMETAX. . . 174
NETWEALTHTAX. . . 176
OTHERTAXES. . . 176 FINANCIAL INFORMATION . . . F-1 GLOSSARY . . . G-1 RECENT DEVELOPMENTS AND OUTLOOK . . . O-1 RECENTDEVELOPMENTS IN OURBUSINESS. . . O-1 OUTLOOK. . . O-1 SIGNATURE PAGE . . . U-1
SUMMARY
NORMA Group AG, with its registered office at Edisonstrasse 4, 63477 Maintal, Germany, and registered with the commercial register maintained by the local court (Amtsgericht) of Hanau under number HRB 93582 (formerly named DNL 1. Beteiligungsgesellschaft mbH until December 3, 2010 and, from December 3, 2010 to March 14, 2011, NORMA Group GmbH) (the “Company” and, together with its subsidiaries, “we”, “our”, “our Group”, or “NORMA Group”), along with COMMERZBANK Aktiengesellschaft, Frankfurt am Main, Germany (“COMMERZBANK”), Deutsche Bank Aktiengesellschaft, Frankfurt am Main, Germany (“Deutsche Bank”) and Goldman Sachs International, London, United Kingdom (“Goldman Sachs” and, together with COMMERZ-BANK and Deutsche Bank, the “Joint Global Coordinators”), and Joh. Berenberg Gossler & Co. KG, Hamburg, Germany (“Berenberg”) and Macquarie Capital (Europe) Limited, Frankfurt am Main, Germany (“Macquarie” and, together with Berenberg, the “Co-Lead Managers” and, together with the Joint Global Coordinators, the “Underwriters”), assume responsibility for the contents of this summary and its German translation pursuant to Section 5(2) Sentence 3 no. 4 of the German Securities Prospectus Act (Wertpapierprospektgesetz).
This summary should be read as an introduction to this prospectus. Investors are advised to read the full prospectus, which contains more detailed information than this summary, and should base their investment decision on an examination of this prospectus in its entirety. Where a claim relating to the information contained in this prospectus is brought before a court, the plaintiff investor might, under the respective national legislation of the relevant member state of the European Economic Area (“EEA”), need to bear the costs of translating this prospectus before legal proceedings are commenced. With regard to the content of this summary, civil liability attaches to the persons responsible for the summary and its German translation, but only if and to the extent that the summary is misleading, inaccurate or inconsistent when read together with the other parts of this prospectus.
OVERVIEW
Offering more than 35,000 high-quality products and innovative solutions to approximately 10,000 customers around the world, NORMA Group is in our view an international market and technology leader in attractive niche markets for engineered joining technologies. We manufacture and sell a wide range of high-quality engineered joining technology products and solutions in three product categories: clamp, connect and fluid. Our clamp products and solutions are made of mild or stainless steel and used for joining and sealing primarily elastomeric hoses. Our connect product area features mild or stainless steel connectors that partly contain elastomeric or metallic gaskets and are used to connect and seal metal and thermoplastic pipes. Finally, our fluid products and solutions are mono-or multilayer thermoplastic fluid conveyance systems/quick connectmono-ors that speed up assembly, securely transfer liquids or gases, and partially replace conventional products like elastomeric hoses. While our products account for only a small percentage (typically between 0.1% and 0.5%) of the price of our customers’ end products, they nonetheless tend to be mission-critical, in that the performance, reliability and quality of the end product depends on the performance of the products and solutions we provide.
Supported by our global network, including 17 manufacturing and distribution facilities, five additional sales and distribution centers and five further sales offices across Europe, the Americas and Asia Pacific, we supply our clamp, connect and fluid products and solutions to our diverse customer base using two distinct ways to market— Engineered Joining Technologies (“EJT”) and Distribution Services (“DS”)—an approach we believe sets us apart from our manufacturing competitors and enables us to gain optimal customer access and develop essential market intelligence.
In our EJT way to market, we deliver customized, engineered solutions meeting the specific application requirements of industrial OEM customers, building on our engineering expertise, deep understanding of customer requirements and demonstrated leadership in developing innovative, value-added solutions for our customers. Once our engineered joining technologies are incorporated into a customer end product, in our experience they tend to remain part of the design of such end product. Combined with the mission-critical nature of our engineered joining technologies in the performance of the end product, we believe that the strength of our reputation and customer relationships positions us to achieve strong and sustainable profitable growth going forward in the EJT way to market. Our engineered joining technology solutions in EJT have a diverse range of applications, including emissions control, cooling systems, air intake and induction, ancillary systems and infrastructure and are used in a wide variety of end markets, including agricultural machinery, commercial vehicles, construction equipment, engines, infrastructure/construction/water management, passenger vehicles, railway and other industries. EJT accounted for 66% of our revenue for the year ended December 31, 2010.
In our DS way to market, we sell a wide range of high-quality, standardized engineered joining technology products for a broad range of applications through various distribution channels under our well known brands, including ABA», BREEZE», Gemi», NORMA», R.G.RAY», Serflex», Serratub», TERRY» and Torca» to
customers such as distributors, OEM aftermarket customers, technical wholesalers, and hardware stores. Our DS products are sold in more than 80 countries, with product sales carried out via our own global distribution network and sales agents. Our direct and indirect DS customers comprise a different, but also highly diversified, group consisting of distributors, industrial OEMs, OEM aftermarket customers, maintenance and repair organizations, technical wholesalers, purchasing cooperatives and hardware stores around the world. Our DS way to market, we believe, benefits substantially not only from our extensive geographic presence, as well as our global manufactu-ring, distribution and sales capabilities, but also from our well known brands, which we believe the market associates with our Group’s reputation for engineering expertise, high quality and reliability. Our DS way to market accounted for 34% of our revenue for the year ended December 31, 2010, with generally attractive margins comparable to those in our EJT way to market.
We believe our broad diversification in both EJT and DS across regions, end markets and products significantly enhances the stability of our business and enables us to capture growth potential from a wide range of distinct growth trends. Since our Group’s 2006 formation through the merger of the ABA Group with the Rasmussen Group, we have successfully grown and diversified by acquiring complementary companies and assets, for example, Breeze (in 2007) and R.G. Ray and Craig Assembly (both in 2010), which together expanded especially our U.S. presence, as well as our range of products and the variety of applications for which our product range can be used. We believe we are in a strong position to gain additional market share in the fragmented market for engineered joining technology by taking advantage of attractive organic and acquisitive growth potential in the markets we serve. In addition, we expect technological megatrends (such as weight reduction, increasing engine efficiency and modularization of production processes) to continue to respond to global megatrends such as growing environ-mental awareness, tighter emission regulations, increasing fuel costs and increasing cost pressure for producers and to lead to changing customer requirements. We believe these changing customer requirements will cause demand for engineered joining technologies used in our customers’ end products to grow faster than the customer end markets themselves, driven by higher engineered joining technology content per customer end product (both in terms of units per end product and price per unit of engineered joining technology).
Our business comprises three geographical business segments: EMEA (Europe, Middle East and Africa), Americas and Asia Pacific. In 2010, our Group had an annual average headcount of 2,853 employees (excluding temporary workforce) worldwide (compared with 2,717 in 2009 and 3,416 in 2008), revenue ofA490.4 million (compared with A329.8 million in 2009 and A457.6 million in 2008) and Adjusted EBITA of A85.4 million (compared withA38.5 million in 2009 and A64.4 million in 2008).
SUMMARY OF OURKEYSTRENGTHS
We believe we distinguish ourselves by the following key competitive strengths:
We believe we are a global market and technology leader with strong growth prospects in attractive niche markets for engineered joining technologies
In EJT, we believe we are the largest provider in the clamps and connectors product areas, with a market share (albeit still small in absolute terms) significantly larger than that of our next-largest competitor in a market in which scale is an important success factor. We also believe we have an excellent market position in the fluid conveyance systems/quick connectors product area. In both EJT and DS, we believe we have the broadest global footprint in terms of regional presence, breadth of product offerings and applications, and diversity of end markets, giving us significant competitive advantages in scale and scope. We maintain close proximity to our customers with product development, application engineering, manufacturing and sales and distribution facilities in all of the regions in which we operate around the world.
We believe the engineered joining technologies market offers especially attractive growth opportunities for which we believe there are multiple sources of potential future growth. While worldwide GDP growth is expected to average 4.5% per year until 2015 (Source: International Monetary Fund, “World Economic Outlook Database” (gross domestic product for 2010-2015), January/February 2011), most of our customer end markets are forecast to grow by higher annual rates over the same period as a result of strong population growth, urbanization, rising industrialization, emerging markets growth and continued globalization. In addition, we expect technological megatrends (such as weight reduction, increasing engine efficiency and modularization of production processes) to continue to respond to global megatrends such as growing environmental awareness, tighter emission regulations, increasing fuel costs and increasing cost pressure for producers and to lead to changing customer requirements. We believe these changing customer requirements will cause demand for engineered joining technologies used in our customers’ end products to grow faster than the customer end markets themselves, driven by higher engineered joining technology content per customer end product (both in terms of units per end product and price per unit of
engineered joining technology). Based on our analysis and our knowledge of the engineered joining technology content of our customers’ end products, we expect strong average annual growth rates in engineered joining technology content between 2010 and 2015, for example 9% for passenger vehicles, 10% for commercial vehicles, 15% for construction equipment and 9% for engines.
We achieve premium pricing through technology and innovation leadership in high-quality, “mission-critical” engineered joining technology solutions
We design and manufacture “mission-critical” engineered joining technology products and solutions that, while small in terms of cost compared with the price of the finished customer end product, are of critical importance for the performance, quality and reliability of the end product of which they are a constituent part. We believe our products and solutions generate added value for our customers by serving critical joining functions and by addressing changing customer requirements for reductions in emissions, leakage, weight, space and assembly time and modularization of production processes. Our technology and innovation leadership in high-quality, mission-critical engineered joining technology solutions is indicated by our more than 250 innovations already patented and an additional 100 patent applications currently pending. We believe the mission-critical nature of the relevant engineered joining technology products, our track record of technology and innovation leadership, our solution-oriented focus on helping customers to proactively address increasingly complex technical requirements resulting from technological megatrends and evolving customer requirements, and the high quality and reliability of our products, as well as our strong reputation enable us to achieve premium pricing for our products and solutions.
Enhanced stability through broad diversification across products, end markets and regions
Our business is strongly diversified across products, end markets and regions, allowing us to participate in a wide range of different growth trends and enhancing our resilience to cyclicality in particular industries and regions. We serve approximately 10,000 customers worldwide in a great variety of industries including agricultural machinery, aviation, commercial vehicles, construction equipment, engines, infrastructure/construction/water management, passenger vehicles, railway and other industries, selling more than 35,000 products and solutions for a broad range of applications. We are strongly diversified geographically, selling our products into more than 80 countries through our own global network, including 17 manufacturing and distribution facilities, five additional sales and distribution centers and five further sales offices and sales agent networks in the various regions in which we operate around the world.
Two distinct ways to market providing strong customer access and market intelligence
We have two distinct and complementary ways to market—EJT and DS—which sets us apart from our manufacturing competitors. We believe our Group benefits from distinct types of synergies through our unique combination of well developed and wide-reaching EJT and DS capabilities: Significant economies of scale in production, proximity to our international EJT customers, knowledge transfer from EJT product development to high-quality and standardized products in DS, as well as additional diversification and resilience. We also believe that we are the only manufacturer of engineered joining technologies with its own strong distribution network with a global footprint and significant exposure to emerging markets.
Significant growth and value creation opportunity through synergistic acquisitions
Since the formation of our Group through the merger of the ABA Group with the Rasmussen Group in 2006, we have taken advantage of the fragmentation of the engineered joining technologies market by complementing our organic growth with selected acquisitions. In selecting and evaluating acquisition targets, we especially focus on addressing “white spots” in our product portfolio and global footprint (including acceleration of our ramp-up in markets we view as key for expansion), increasing customer access, strengthening our product portfolio and realizing synergies. For example, we significantly extended our American presence with acquisitions made between 2007 and 2010. In 2007, we acquired Breeze, a U.S. company offering a wide range of engineered joining technology solutions for passenger vehicles, commercial vehicles, aircraft and other industrial applications. In 2010, we built on these successful acquisitions by acquiring R.G. Ray, a manufacturer of industrial clamps, and Craig Assembly, a supplier of industrial quick connectors, quick-connect components and injection-molded products. We believe we have established a strong acquisition track record efficiently integrating our acquisitions into our global network and thus realizing substantial synergies and economies of scale. We believe that the highly fragmented market will continue to offer us further promising acquisition opportunities going forward.
Proven track record of operational excellence
Since 2007, we have optimized our manufacturing footprint by closing production at 13 sites and beginning production at 7 new facilities, especially in high-growth markets, by concentrating higher-volume, automated and more standardized production processes in selected, high-tech manufacturing facilities to benefit from economies of scale, while focusing lower-automation and manual-assembly-intensive production primarily in lower-cost countries. In addition, we launched our Global Excellence Program in 2009, where we have already achieved substantial cost savings, with further upside potential through currently more than 400 identified and ongoing improvement projects. We believe the added cost flexibility enabled by these programs, in combination with the other competitive strengths of our business, was an important reason that our Group was able to increase its Adjusted EBITA margin in 2010.
SUMMARY OF OURSTRATEGY
We strive to grow our business sustainably and to achieve above-market revenue growth, as well as strong profitability, cash flow and cash conversion. The following is a summary of the strategy we employ in furtherance of these objectives:
Exploit megatrends with innovative, mission-critical products to drive superior growth profile
We believe that joints in the end products manufactured by our customers will become more numerous and complex based on changing customer requirements in the relevant engineered joining technology markets driven by technological megatrends, such as increasing engine efficiency in response to stricter emissions regulations. Hence, this increasing demand for engineered joining technology content per customer end product (in terms of units and price per unit of engineered joining technologies) will, we believe, result in higher growth expectations for engineered joining technology than for the customer end markets themselves. We therefore plan to capture this growth opportunity by focusing on providing innovative, value-added solutions to the mission-critical joining demands that we believe will increasingly result from customers’ concerns about reduction of emissions, leakage, weight, space and assembly time, as well as compatibility with the modularized production processes some of our customers are increasingly adopting. Generally, we believe there is potential to significantly enhance our growth by generating higher revenues per customer end product, and we proactively strive to identify and address additional engineered joining technology needs within existing customer end products, both in developed and emerging markets, as well as across different end markets.
Continue global expansion to benefit from regional growth opportunities
Our goal is to expand our presence in existing markets and enter emerging markets with attractive growth potentials in both EJT and DS. In the markets we currently serve, we aim to provide solutions to our existing customers for applications that do not currently contain our joining solutions (for example, through replacement of alternative solutions based on higher product performance or quality), to increase engineered joining technology content per customer end product, and to enhance the roll-out of our existing products (for example, to significantly expand sales of our fluid conveyance solutions), in addition to identifying new customers. In emerging markets, we envision growth opportunities driven by increased industrial production and increasingly sophisticated engineered joining technology requirements, and exploiting the manufacturing and distribution presence we have built up in these markets in recent years. Our key focus countries in emerging markets include Brazil, Russia, China and India. China is one example of a market in which we have successfully transferred our Group’s know-how to an emerging market and established both production and distribution operations, having already expanded our existing facility and having plans to build an additional facility.
Enter new end markets for value-added engineered joining technology with superior growth prospects We believe that by identifying additional end markets with high growth potential adjacent to the relevant engineered joining technology end markets we now serve, we can open additional avenues for growth by transferring our know-how from established end markets to new ones. Such expansion, we believe, will enhance our diversification and thus our defensive revenue profile in terms of end-market exposure. One such successful know-how transfer involved NORMA’s entry into serving the drainage end market, where we were able to modify existing connector products to the respective requirements of the new applications and launch high-performance products efficiently. In addition, we aim to build on our expertise to increase our presence in sizeable attractive end markets into which we have recently entered and in which we believe there are substantial opportunities for us to add value and achieve profitable growth by developing innovative products and solutions.
Broaden and deepen customer base in Distribution Services
In DS, our goal is to achieve global coverage through systematic enhancement of our own distribution network, increasing our share of revenue with existing customers and gaining new customers. We plan to expand our DS network in regions in which we presently have strong market positions, including moving further downstream closer to our end customers. We also plan to expand in regions where we see strong potential for future growth (including Brazil, Southeastern Europe, Russia, Turkey, India, China, Thailand and Southeast Asia). Additionally, we intend to expand the scope of our offerings to increasingly cover additional end-market customer groups (including construction, exhaust aftermarket, industrial OEMs and infrastructure). We also believe we can further leverage our existing distribution channels and know-how to expand our DS product portfolio, and aim to enhance our DS way to market by selling complementary third-party products.
Continue growing the business through synergistic acquisitions
We believe we have established a solid track record of identifying, acquiring and integrating value-enhancing target companies and assets. Acquisitions have consistently formed a key part of our long-term strategy and we believe that we are well positioned to take advantage of the anticipated continued fragmentation of the engineered joining technologies market to be a leading consolidator. We carefully monitor the global engineered joining technologies market for suitable acquisition opportunities and employ stringent criteria in evaluating acquisition opportunities. We also believe that there is usually significant potential for cost synergies from our Group’s efficient operating principles when we acquire smaller companies.
Support profitability and cash flow through further continuous process and manufacturing optimization and economies of scale
We seek to build on our profitability improvements by further optimizing processes across all functional areas and regions. We believe that we are benefiting from significant economies of scale based on the large volume and our highly automated and aligned production facilities, and we actively seek to enhance these advantages going forward. With currently more than 400 institutionalized continuous improvement and process optimization measures already in place as part of our Global Excellence Program, we constantly look to improve our existing programs and to identify new programs that could contribute to increased sales, as well as efficiency and quality enhancements. We believe these continuous improvement initiatives are important to pro-actively protect our business from the potential effects of inflation and increasing costs of inputs and labor in order to generate sustainable margins.
AUDITORS
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftspru¨fungsgesellschaft, Olof-Palme-Str. 35, 60439 Frankfurt am Main, Germany (“PwC”), a member of the German Chamber of Public Accountants (Wirtschafts-pru¨ferkammer), Berlin, is the auditor of our consolidated financial statements as of and for the year ended December 31, 2010 prepared in accordance with the International Financial Reporting Standards as adopted by the European Union (“IFRS”), our consolidated financial statements for the year ended December 31, 2009 prepared in accordance with IFRS, and our unconsolidated financial statements as of and for the year ended December 31, 2010 prepared in accordance with the German Commercial Code (Handelsgesetzbuch, “HGB”). The audited financial information prepared in accordance with IFRS for the year ended December 31, 2008 contained in this prospectus is taken from our consolidated financial statements for the year ended December 31, 2009 prepared in accordance with IFRS.
RG TREUHAND Revisionsgesellschaft mbH Wirtschaftspru¨fungsgesellschaft, Seemenbachstrasse 3, 63654 Bu¨dingen, Germany, a member of the German Chamber of Public Accountants (Wirtschaftspru¨ferkammer), Berlin, audited our consolidated financial statements as of and for the year ended December 31, 2008 prepared in accordance with HGB.
SUMMARY OF THEOFFERING
Offering This offering consists of (i) initial public offerings in the Federal Republic of Germany and the Grand Duchy of Luxembourg and (ii) private placements in certain jurisdictions outside the Federal Republic of Germany and the Grand Duchy of Luxembourg consisting of:
• 7,894,737 newly issued registered shares from a capital increase expected to be resolved by the extraordinary general shareholders’ meeting of the Company expected to be held on April 6, 2011; • 9,306,200 existing registered shares from the holdings of the selling
shareholders of the Company immediately prior to the offering, including FIMANE Limited, funds managed by or under common control with 3i Investments plc, and certain management board, supervisory board and other individual shareholders (together, the “Selling Shareholders”); and
• 2,580,141 existing registered shares from the holdings of the Selling Shareholders to cover a potential overallotment.
In the United States of America, the shares will be offered for sale to qualified institutional buyers as defined in and in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Outside the United States of America, the shares will be offered in reliance on Regulation S (“Regulation S”) under the Securities Act.
Offered Shares The registered shares that are the subject of this offering have no par value and a notional value ofA1.00 each. All of the shares are fully paid in.
Offer Period This offering will commence on March 28, 2011 and end on April 7, 2011 (i) at 12:00 (Central European Summer Time) for retail investors and (ii) at 16:00 (Central European Summer Time) for institutional investors.
Joint Global Coordinators COMMERZBANK, Deutsche Bank and Goldman Sachs
Co-Lead Managers Berenberg and Macquarie
Underwriters COMMERZBANK, Deutsche Bank, Goldman Sachs, Berenberg and
Macquarie
Price Range The price range within which offers to purchase may be submitted is betweenA19.00 and A24.00 per share.
The Company and the Selling Shareholders reserve the right, in agreement with the Joint Global Coordinators, to reduce or increase the number of shares offered, to reduce or increase the upper/lower limits of the price range and/or to extend or curtail the offer period. The Company and the Selling Shareholders may increase the total number of shares offered in this offering in agreement with the Joint Global Coordinators up to a maximum of the total number of shares for which the application for admission to the regulated market segment (regulierter Markt) of the Frankfurt Stock Exchange is being filed in accordance with this prospectus or any supplement published. If the option to change the terms of the offering is exercised, the change will be announced through electronic media such as Reuters or Bloomberg, on the Company’s website (www.normagroup.com) and published, if required, as an ad-hoc notice and as a supplement to this prospectus.
Offer Price The Selling Shareholders and the Company expect to determine the offer price in agreement with the Joint Global Coordinators, on the basis of a bookbuilding process, on or about April 7, 2011. The offer price is expected to be published by means of electronic media, such as Reuters or Bloomberg, and on the Company’s website (www.norma-group.com). Following the publication of the offer price in the electronic media, investors may obtain the offer price from the Joint Global Coordinators.
Delivery and Payment Delivery of the shares against payment of the offer price is expected to take place on or about April 12, 2011.
Stabilization Measures, Overallotments and Greenshoe Option
In connection with the placement of the shares offered, Deutsche Bank Aktiengesellschaft, Frankfurt am Main, Germany, or persons acting on its behalf, will act as stabilization manager and may, acting in accor-dance with legal requirements, make overallotments and take stabili-zation measures to support the market price of the shares of the Company and thereby counteract any selling pressure.
The stabilization manager is under no obligation to take any stabili-zation measures and assurance can be provided that any stabilistabili-zation measures will be taken. Where stabilization measures are taken, these may be terminated at any time without notice. Such measures may be taken from the date the shares of the Company are listed on the regulated market segment (regulierter Markt) of the Frankfurt Stock Exchange and must be terminated no later than the thirtieth calendar day after this date.
Under the possible stabilization measures, investors may, in addition to the Company shares being offered, be allocated up to 2,580,141 additional shares in the Company as part of the allocation of the shares to be placed. Within the scope of a possible overallotment, Deutsche Bank Aktiengesellschaft, Frankfurt am Main, Germany, will be pro-vided for the account of the Underwriters in the form of a securities loan (Wertpapierdarlehen) with up to 2,580,141 shares of the Selling Shareholders; this number of shares will not exceed 15% of the number of shares offered excluding any overallotment.
In addition, the Selling Shareholders have granted the Underwriters an option to acquire the loaned shares at the offer price less the agreed commission (the “Greenshoe Option”). This option will terminate 30 calendar days after commencement of the stock exchange trading of the shares.
Once the stabilization period has ended, an announcement will be made within one week in various media distributed across the entire EEA as to whether stabilization measures were taken, when price stabilization started and finished, and the price range within which stabilization was taken. The price range will be made known for each occasion on which price stabilization measures were taken. The exercise of the Greenshoe Option, the timing of exercise and the number of shares concerned will also be announced promptly in the manner stated.
Allotment Criteria The allotment of shares to private investors and institutional investors will be decided after agreement with the Joint Global Coordinators. The ultimate decision rests with the Selling Shareholders and the Company. Allotments will be made on the basis of the quality of the individual investors and individual orders and other important allot-ment criteria to be determined after agreeallot-ment with the Joint Global Coordinators. The allocation to retail investors will be compatible with the “Principles for the Allotment of Share Issues to Private
Investors” published by the Commission on Stock Exchange Experts (Bo¨rsensachversta¨ndigenkommission). “Qualified investors” under the German Securities Prospectus Act (Wertpapierprospektgesetz), as well as “professional clients” and “suitable counterparties” under the German Securities Trading Act (Wertpapierhandelsgesetz) are not viewed as “private investors” within the meaning of the allocation rules.
Listing The Company expects to apply on March 28, 2011 for admission of its shares to trading in the regulated market segment (regulierter Markt) of the Frankfurt Stock Exchange and, simultaneously, in the sub-segment thereof with additional post-admission obligations (Prime Standard). An admission decision is expected to be announced on April 7, 2011. The decision on the admission of the Company’s shares for trading will be made solely in the discretion of the Frankfurt Stock Exchange. Currently, trading on the Frankfurt Stock Exchange is expected to commence on April 8, 2011.
Lock-up Agreements The Company will, in the underwriting agreement among the Com-pany, the Selling Shareholders and the Underwriters, expected to be entered into on April 6, 2011 (the “Underwriting Agreement”), commit to an obligation vis-à-vis the Underwriters in accordance with the relevant provisions of German securities law, that it will not, and will not agree to, without the prior consent of the Joint Global Coordinators, within a period of 180 days following the first day of trading of the shares of the Company:
(a) announce or effect an increase of the share capital of the Company out of authorized capital;
(b) submit a proposal for a capital increase to any meeting of the shareholders for resolution;
(c) announce to issue, effect or submit a proposal for the issuance of any securities convertible into shares of the Company, with option rights for shares of the Company;
(d) enter into any swap or other agreement that transfers in whole or in part any of the economic consequences of the ownership of the shares;
(e) sell, distribute, transfer, pledge or otherwise dispose of any of the shares (or the economic ownership in such shares) or other securities of the Company; or
(f) enter into a transaction or perform any action economically similar to those described in (a) through (e) above.
The foregoing does not apply to issuances or sales of shares or other securities as part of management participation plans of the Company or its affiliates, nor to any corporate actions undertaken for purposes of entering into joint ventures or acquiring companies, provided the respective counterparty agrees to be bound by the same lock-up restrictions vis-à-vis the Joint Global Coordinators that apply to the Selling Shareholders.
The members of the management board of the Company will, in the Underwriting Agreement, commit to an obligation vis-à-vis the Un-derwriters in accordance with the relevant provisions of German securities law, that none of them will, nor will any of them agree to, without the prior consent of the Joint Global Coordinators, within a period of 360 days following the first day of trading of the shares of the Company:
(a) offer, pledge, allot, sell, contract to sell, sell any option or contract to purchase, purchase any option to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of the Company or any other securities of the Company, including securities convertible into or exercisable or exchangeable for shares of the Company;
(b) make any demand for, or exercise any right with respect to, the registration under U.S. securities laws of any shares of the Company or any security convertible into or exercisable or exchangeable for Shares of the Company;
(c) propose any increase in the share capital of the Company, vote in favor of such a proposed increase or otherwise support any proposal for the issuance of any securities convertible into shares of the Company, with option rights for shares of the Company; or (d) enter into a transaction or perform any action economically similar to those described in (a) through (c) above, in particular enter into any swap or other arrangement that transfers to another, in whole or in part, the economic risk of ownership of shares of the Company, whether any such transaction is to be settled by delivery of shares of the Company or such other securities of the Company, in cash or otherwise.
Certain other of the Selling Shareholders, namely FIMANE Limited, funds managed by or under common control with 3i Investments plc, and Dr. Christoph Schug, will, in the Underwriting Agreement, commit to an obligation vis-à-vis the Underwriters that none of them will, nor will any of them agree to, without the prior consent of the Joint Global Coordinators, within a period of 180 days following the first day of trading of the shares of the Company:
(a) offer, pledge, allot, sell, contract to sell, sell any option or contract to purchase, purchase any option to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of the Company or any other securities of the Company, including securities convertible into or exercisable or exchangeable for Shares of the Company;
(b) make any demand for, or exercise any right with respect to, the registration under U.S. securities laws of any shares of the Company or any security convertible into or exercisable or exchangeable for shares of the Company;
(c) propose any increase in the share capital of the Company, vote in favor of such a proposed increase or otherwise support any proposal for the issuance of any securities convertible into shares of the Company, with option rights for shares of the Company; or (d) enter into a transaction or perform any action economically similar to those described in (a) through (c) above, in particular enter into any swap or other arrangement that transfers to another, in whole or in part, the economic risk of ownership of shares of the Company, whether any such transaction is to be settled by delivery of shares of the Company or such other securities of the Company, in cash or otherwise.
The foregoing lock-up restrictions do not apply to transactions bet-ween the Selling Shareholders and third parties who agree to be bound by the restrictions. The Selling Shareholders may engage in transac-tions to reduce their respective ownership of the Company after the expiration of the applicable lock-up period.
Individual Selling Shareholders not mentioned above are not subject to any lock-up restrictions.
Use of Proceeds and Costs of the Offering
Costs of the Company related to the offering and admission to trading of the shares are expected to total approximatelyA16.2 million, including fees of the Underwriters and expenses of the Joint Global Coordinators of up toA5.4 million (assuming (i) an offer price at the low point of the price range; (ii) payment in full on the discretionary fee of up to 1.25% of the aggregate gross offering proceeds; and (iii) excluding tax effects), and estimated other expenses ofA10.8 million. The fees of the Underwriters include all fees payable to the Underwriters in respect of the offering; there is no separate “placing commission”.
The Company estimates that the total fees payable to the Underwriters and expenses payable to the Joint Global Coordinators will be A5.4 million.
The Selling Shareholders will pay that portion of the costs, including fees payable to the Underwriters and expenses payable to the Joint Global Coordinators, associated with the offer and sale of the existing shares. The Company will pay all costs associated with the admission of the shares to trading on the Frankfurt Stock Exchange.
The Company will receive only the proceeds of the offering resulting from the sale of newly issued shares. The Company will not receive any proceeds from the sale of existing shares from the holdings of the Selling Shareholders. We estimate that at the low end of the price range, net proceeds to the Company would amount to approximately A133.8 million.
The Company intends to use
• approximatelyA11.9 million of its portion of the net proceeds of the offering to fully repay the shareholder loan (including accrued interest) granted by funds managed by or under common control with 3i Investments plc;
• approximatelyA53.5 million of its portion of the net proceeds of the offering to pay back its indebtedness under the Mezzanine Facility Agreement in its entirety; and
• assuming an offer price at the low point of the price range, any of the Company’s portion of the net proceeds of the offering remaining after repayment of the Mezzanine Facility Agreement and the shareholder loan, up to an amount of approximatelyA68.4 million, together with the new facilities under the New Facilities Agreement, (i) to pay back its indebtedness under the Senior Facilities Agreement, the Revolving Facility and the estimated costs of the refinancing, (ii) to repay the vendor loan granted by the former shareholders of R.G. Ray, (iii) to cancel an interest rate swap related to the existing financing structure, as well as (iv) for general corporate purposes and to strengthen the Company’s financial flexibility.
We estimate that at the low end, mid-point and high end of the price range (assuming (i) full placement of shares, (ii) full exercise of the greenshoe option, and (iii) full deduction of all fees and expenses to be paid by the Selling Shareholders in connection with the offering), net proceeds to the Selling Shareholders would amount to approximately A213.5 million, A242.2 million and A270.9 million, respectively.
Voting Rights Each of the shares is entitled to one vote at the Company’s general shareholders’ meeting.
Dividend Rights and Dividend Policy The shares carry full dividend rights as of January 1, 2011. We do not intend to pay any dividends in 2011. To the extent that any dividend will be paid in 2012, it is expected to be based on the results of 2011 and be within the range of 30% to 40% of our consolidated net profit, as adjusted for the effects relating to PPA amortizations and PPA depreciations. Any future dividend will depend on our profits and our investment policy at the time.
International Securities Identification Number (ISIN)
DE000A1H8BV3
German Securities Code
(Wertpapierkennnummer) (WKN)
A1H8BV
Common Code 060704333
Trading Symbol NOEJ
Paying Agent Deutsche Bank Aktiengesellschaft, Große Gallusstraße 10-14, 60311 Frankfurt am Main, Germany
SUMMARYCONSOLIDATEDFINANCIALINFORMATION
The financial information in the following tables is derived from the audited consolidated financial statements of the Company for the fiscal years ended December 31, 2010, and December 31, 2009. These consolidated financial statements have been prepared in accordance with IFRS. Additional information included in this prospectus has been taken from the audited unconsolidated financial statements of the Company for the fiscal year ended December 31, 2010, which were prepared in accordance with HGB. PricewaterhouseCoopers Aktiengesellschaft Wirtschaftspru¨fungsgesellschaft, Olof-Palme Str. 35, 60439 Frankfurt am Main, Germany, audited and issued an auditors’ report with respect to each of these consolidated and unconsolidated financial statements. These reports are included elsewhere in this prospectus. The audited financial information prepared in accordance with IFRS for the year ended December 31, 2008 in this prospectus is taken from our consolidated financial statements for the year ended December 31, 2009 prepared in accordance with IFRS. The aforementioned IFRS and HGB financial statements of the Company are included in this prospectus beginning at page F-2. IFRS and HGB differ in material ways. Some of the performance indicators and ratios included below were taken from the Company’s accounting records and management reporting system.
Where financial information in the following tables is labeled “audited”, this means that it was taken from the audited financial statements mentioned above. The label “unaudited” is used in the following tables to indicate financial information that was taken or derived from the Company’s accounting records or management reporting system and not included in its audited financial statements mentioned. All of the financial information presented in the text and tables in this section of the prospectus is shown in millions of euro (B million) or thousands of euro (B thousand), rounded to one decimal point. Unless expressly otherwise noted, the percentage changes that are stated in the text and the tables have been rounded to one decimal point. Because of this rounding, the figures shown in the tables do not in all cases add up exactly to the respective totals given, and the percentages shown do not always add up exactly to 100%.
Summary Data from the Consolidated Statement of Comprehensive Income
2010 2009 2008
For the years ended December 31, (audited,E thousand)
Revenue . . . . 490,404 329,794 457,603
Changes in inventories of finished goods and work in progress . . . 4,793 (3,386) (2,833) Raw materials and consumables used . . . (220,464) (143,975) (203,411)
Gross margin . . . . 274,733 182,433 251,359
Other operating income . . . 8,848 8,560 4,671 Other operating expenses . . . (77,409) (53,520) (64,630) Employee benefits expense . . . (124,435) (111,292) (128,597) Depreciation and amortization . . . (25,428) (22,843) (22,008) Impairment of intangibles . . . — (2,782) (21,132)
Operating profit . . . . 56,309 556 19,663
Financial income . . . 4,907 3,796 7,182 Financial costs . . . (19,769) (25,104) (52,380)
Financial costs—net. . . . (14,862) (21,308) (45,198) Profit/Loss before income tax . . . . 41,447 (20,752) (25,535)
Income taxes . . . (11,189) 2,725 (3,884)
Profit/Loss for the year . . . . 30,258 (18,027) (29,419)
Profit/Loss attributable to:
Shareholders of the parent . . . 30,157 (18,182) (29,637) Non-controlling interests . . . 101 155 218
Summary Data from the Consolidated Statement of Financial Position 2010 2009 2008 As of December 31, (audited,E thousand) Assets . . . . 578,783 469,705 499,713 Non-current assets . . . . 399,234 346,510 360,147 Goodwill . . . 221,704 202,789 204,609 Other intangible assets . . . 79,315 51,419 57,608 Property, plant and equipment . . . 89,387 83,058 91,238 Income tax assets . . . 2,406 2,761 3,103 Deferred income tax assets . . . 6,025 6,086 3,192
Current assets . . . . 179,549 123,195 139,566
Inventories . . . 64,709 44,700 54,026 Other non-financial assets . . . 9,218 5,310 5,162 Derivative financial assets . . . — 22 166 Income tax assets . . . 4,914 477 1,717 Trade and other receivables . . . 70,282 45,501 49,227 Cash and cash equivalents . . . 30,426 27,185 29,268
Equity and liabilities . . . . 578,783 469,705 499,713 Total equity . . . . 78,402 39,128 60,126 Non-current liabilities . . . . 364,609 363,730 386,509
Retirement benefit obligations . . . 9,063 8,058 7,939 Provisions. . . 4,584 4,183 6,140 Borrowings . . . 315,935 320,326 337,669 Derivative financial liabilities . . . — 7,968 6,638 Deferred income tax liabilities . . . 34,450 21,997 26,255
Current liabilities . . . . 135,772 66,847 53,078
Provisions. . . 3,255 3,894 3,648 Borrowings . . . 44,162 14,828 10,616 Other non-financial liabilities . . . 21,773 16,499 15,670 Derivative financial liabilities . . . 5,550 22 1,384 Trade payables . . . 48,311 29,953 18,578
Summary Data from the Consolidated Statement of Cash Flows
2010 2009 2008
For the years ended December 31, (audited,E thousand)
Net cash provided by operating activities . . . 62,116 41,992 64,111 Net cash used in investing activities . . . (56,620) (10,828) (16,434) Net cash used in/provided by financing activities . . . (3,089) (33,237) (39,951) Net decrease/increase in cash, cash equivalents and bank overdrafts . . . 2,407 (2,073) 7,726 Cash, cash equivalents and bank overdrafts at end of year . . . 30,426 27,185 29,268
Summary Other Consolidated Financial Information Year ended December 31, 2010 Change 2009-2010 Year ended December 31, 2009 Change 2008-2009 Year ended December 31, 2008 (audited, unless otherwise noted
(E thousand, unless otherwise noted)
Adjusted EBITA(1)(2) (unaudited) . . . 85,415 121.8% 38,516 (40.2)% 64,386 Adjusted EBITA margin(1)(3)(unaudited). . . 17.4% — 11.7% — 14.1% Adjusted EBITDA(1)(4). . . 99,248 87.1% 53,043 (33.3)% 79,520
Adjusted EBITDA margin(1)(5)(unaudited) . . . 20.2% — 16.1% — 17.4%
Net financial debt(1)(6)(unaudited, in
millions) . . . 344.1 8.5% 317.2 (3.5)% 328.8 Capital expenditures(1)(7) . . . 21,112 38.9% 15,200 (14.0)% 17,675 Employees(8)(headcounts) . . . 2,853 5.0% 2,717 (20.5)% 3,416
(1) We are presenting this figure on the basis that some investors may find it helpful as a measure of our performance. This figure is not recognized as a measure under IFRS and should not be considered a substitute for income statement or cash flow data, as determined in accordance with IFRS, or as a measure of profitability or liquidity. It does not necessarily indicate whether cash flow will be sufficient or available for our cash requirements, nor is it necessarily indicative of our historical or future operating results. Because not all companies define this measure in the same manner, our presentation of it is not necessarily comparable to similarly-titled measures used by other companies.
(2) Adjusted EBITA is defined as operating profit plus impairment of intangibles, amortization, restructuring costs, non-recurring/non-period-related items, other Group and normalized items, and PPA depreciation:
2010 2009 2008 For the years ended
December 31, (audited, unless otherwise
noted)
(E thousand)
Profit/Loss for the year . . . . 30,258 (18,027) (29,419)
+ Income taxes . . . 11,189 (2,725) 3,884
Profit/Loss before income tax. . . . 41,447 (20,752) (25,535)
+ Net financial costs(9). . . 14,862 21,308 45,198
Operating profit. . . . 56,309 556 19,663 + Impairment of intangibles . . . — 2,782 21,132 + Amortization(10)(unaudited) . . . 8,576 5,297 3,855 EBITA(11)(unaudited) . . . . 64,885 8,635 44,650 + Restructuring costs(12). . . 1,250 20,634 9,772 + Non-recurring/non-period-related items(13). . . 15,536 5,069 5,481 + Other group and normalized items(14). . . 725 1,159 1,464 + PPA depreciation(15)(unaudited) . . . 3,019 3,019 3,019
Adjusted EBITA (unaudited) . . . . 85,415 38,516 64,386
We are not presenting Adjusted EBITA here as a measure of our operating results. Our management considers Adjusted EBITA, along with several other performance measures, when managing our business because it deems it to be the key performance measure for managing the business of our Group. We believe that the adjustments to our EBITA allow for a comparison of our performance on a consistent basis without regard to the abovementioned one-time effects that we believe do not reflect the regular operating performance of our business. (3) Adjusted EBITA margin is defined as Adjusted EBITA divided by revenue, expressed as a percentage.
(4) Adjusted EBITDA means Adjusted EBITA plus depreciation (excluding PPA depreciation):
2010 2009 2008 For the years ended
December 31, (audited, unless otherwise
noted)
(E thousand)
Adjusted EBITA (unaudited) . . . . 85,415 38,516 64,386
+ Depreciation (excluding PPA depreciation)(15)(unaudited) . . . 13,833 14,527 15,134
Adjusted EBITDA . . . . 99,248 53,043 79,520
We are not presenting Adjusted EBITDA here as a measure of our operating results. Our management considers Adjusted EBITDA, along with several other performance measures, when managing our business because it deems it to be one of several useful measures of performance for managing the business of our Group. We believe that the adjustments to our EBITDA allow for a comparison of our performance on a consistent basis without regard to the abovementioned one-time effects that we believe do not reflect the regular operating performance of our business.
Unless stated otherwise, in this prospectus Adjusted EBITDA always refers to Adjusted EBITDA of the Group. Historically, we used Adjusted EBITDA as the key performance measure in managing our business and we are still using it as the most important of several useful measures to manage our segments. However, in order to meet the commonly accepted reporting standards of capital market oriented companies, we now use Adjusted EBITA as the key performance measure in managing our Group.
(5) Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue, expressed as a percentage.
(6) Net financial debt is defined as the sum of borrowings, other financial liabilities, and derivatives less cash and cash equivalents.
2010 2009 2008 (unaudited, unless otherwise noted) (E million) As of December 31, Borrowings . . . 360.1 335.2 348.3 + Other financial liabilities . . . 8.9 1.2 1.8 + Derivatives . . . 5.6 8.0 8.0
Financial debt . . . . 374.5 344.3 358.1
⫺ Cash and cash equivalents (audited) 30.4 27.2 29.3
Net financial debt . . . . 344.1 317.2 328.8
We are not presenting net financial debt here as a measure of our operating results. Our management considers net financial debt, along with several other performance measures, when managing our business because it deems it to be one of several useful measures of performance for managing the business of our Group.
(7) Capital expenditures is defined as the sum of purchases of property, plant and equipment and purchases of intangible assets:
2010 2009 2008 For the years ended
December 31, (audited)
(E thousand)
Purchases of property, plant and equipment . . . (17,831) (12,043) (15,004) + Purchases of intangible assets . . . (3,281) (3,157) (2,671)
Capital expenditures . . . . (21,112) (15,200) (17,675)
(8) Annual average number of employees (excluding temporary employees), calculated by taking the sum of the number of employees on the last day of each calendar month and dividing by twelve.
(9) Net financial costs means financial income less financial costs.
(10) Amortization includes amortization less impairment of intangibles assets. PPA amortization is the amortization of the difference between the fair value of intangible assets determined during the purchase price allocation process resulting from an acquisition and the book value of those assets immediately prior to the acquisition. In 2008, 2009 and 2010, our PPA amortization amounted to a total ofA2,572 thousand, A3,365 thousand and A4,011 thousand.
(11) EBITA is defined as operating profit plus impairment of intangibles and amortization. We are not presenting EBITA here as a measure of our operating results, nor does our management consider EBITA for purposes of managing our business. We are presenting this figure on the basis that some investors may find it useful in combination with other performance measures when evaluating our business. (12) Restructuring costs includes closure of facilities, relocation of production capacities and severance payments.
(13) Non-recurring/non-period-related items include primarily cost of acquisitions, cost of integrations and non-recurring items.
(14) Other Group and normalized items includes primarily costs related to the Advisory Board, expenses for management services and certain extraordinary costs.
(15) PPA depreciation is the depreciation of the difference between the fair value of the assets determined during the purchase price allocation process resulting from an acquisition and the book value of those assets immediately prior to the acquisition.
Summary Operating Segment Data Year ended December 31, 2010 % Change 2009-2010 Year ended December 31, 2009 % Change 2008-2009 Year ended December 31, 2008 (audited, unless otherwise noted)
(E thousand, unless otherwise noted) EMEA(1) Revenue . . . 360,255 39.9 257,441 (30.1) 368,273 Adjusted EBITDA(2)(3) . . . 80,995 92.7 42,038 (34.3) 63,979 Employees(4) . . . 2,025 (2.1) 2,068 (24.5) 2,739 Americas(5) Revenue . . . 130,947 80.3 72,647 (25.2) 97,173 Adjusted EBITDA(2)(3). . . 23,016 121.0 10,415 (37.1) 16,561 Employees(4) . . . 488 26.4 386 (22.6) 499 Asia Pacific(6) Revenue . . . 31,016 81.0 17,139 5.9 16,189 Adjusted EBITDA(2)(3) . . . 1,673 99.9 837 (18.0) 1,021 Employees(4) . . . 317 32.1 240 54.8 155
NORMA Group consolidated
Revenue . . . 490,404 48.7 329,794 (27.9) 457,603 Employees(4)(7). . . 2,853 5.0 2,717 (20.5) 3,416
Total Adjusted EBITDA of
segments(2)(8). . . 105,684 98.3 53,290 (34.7) 81,561
Holdings(9). . . (6,268) 3,698.8 (165) (92.6) (2,221) Eliminations(10). . . (168) 104.9 (82) — 180
Total Adjusted EBITDA of the
Group(2)(3). . . 99,248 87.1 53,043 (33.3) 79,520
Depreciation (excluding PPA
depreciation)(11)(unaudited) . . . (13,833) (4.8) (14,527) (4.0) (15,134)
Total Adjusted EBITA of the Group
(unaudited)(12) (13). . . 85,415 121.8 38,516 (40.2) 64,386
(1) EMEA includes Europe, the Middle East and Africa. In EMEA we have operations in the United Kingdom, Spain, France, Germany, Italy, Sweden, the Czech Republic, Poland, Turkey, Serbia and Russia, as well as sales into additional countries.
(2) We are not presenting Adjusted EBITDA here as a measure of our operating results. Our management considers Adjusted EBITDA, along with several other performance measures, when managing our business because it deems it to be one of several useful measures of performance for managing the business of our Group. We believe that the adjustments to our EBITDA allow for a comparison of our performance on a consistent basis without regard to the abovementioned one-time effects that we believe do not reflect the regular operating performance of our business.
Unless stated otherwise, in this prospectus Adjusted EBITDA always refers to Adjusted EBITDA of the Group. Historically, we used Adjusted EBITDA as the key performance measure in managing our business and we are still using it as the most important of several useful measures to manage our segments. However, in order to meet the commonly accepted reporting standards of capital market oriented companies, we now use Adjusted EBITA as the key performance measure in managing our Group.
(3) Adjusted EBITDA is defined as operating profit plus impairment of intangibles, depreciation and amortization, restructuring costs, non-recurring/non-period-related items, and other Group and normalized items:
2010 2009 2008 For the years ended
December 31, (audited)
(E thousand)
Operating profit. . . . 56,309 556 19,663
+ Impairment of intangibles . . . — 2,782 21,132 + Depreciation and amortization . . . 25,428 22,843 22,008 + Restructuring costs(14) . . . 1,250 20,634 9,772 + Non-recurring/non-period-related items(15). . . 15,536 5,069 5,481 + Other group and normalized items(16) . . . 725 1,159 1,464
Adjusted EBITDA . . . . 99,248 53,043 79,520
(4) Annual average number of employees, calculated by using the number of employees on the last day of each calendar month divided by twelve.
(5) Americas includes North America and South America. In the Americas we have operations in the United States and Mexico, as well as sales into additional countries.
(6) In Asia Pacific we have operations in India, Thailand, Singapore, China, South Korea, Japan and Australia, as well as sales into additional countries.
(7) Including for the years ended December 31, 2010, December 31, 2009 and December 31, 2008, 23 employees which could not be allocated to any segment.
(8) Adjusted EBITDA of the segments is defined as Adjusted EBITDA of the Group before Holdings and Eliminations. (9) Holdings consists of Norma Group GmbH, Norma Group Holding GmbH and Norma Beteiligungs GmbH. (10) At the Group level, eliminations include unrealized gains on the sale between segments of inventory and assets.
(11) PPA depreciation is the depreciation of the difference between the fair value of the assets determined during the purchase price allocation process resulting from an acquisition and the book value of those assets immediately prior to the acquisition.
(12) We are not presenting Adjusted EBITA here as a measure of our operating results. Our management considers Adjusted EBITA, along with several other performance measures, when managing our business because it deems it to be the key performance measure for managing the business of our Group.
(13) Adjusted EBITA means Adjusted EBITDA less PPA depreciation.
(14) Restructuring costs includes closure of facilities, relocation of production capacities and severance payments.
(15) Non-recurring/non-period-related items include primarily cost of acquisitions, cost of integrations and non-recurring items.
(16) Other Group and normalized items includes primarily costs related to the Advisory Board, expenses for management services and certain extraordinary costs.
SUMMARY OF THERISKFACTORS
Investors should carefully consider the following risks, in addition to the other information contained in this prospectus, when deciding whether to invest in our shares. The market price of our shares could fall if any of these risks were to materialize, in which case investors could lose all or part of their investments. The following risks, alone or together with additional risks and uncertainties not currently known to us or that we might currently deem immaterial, could materially adversely affect our business, financial condition and results of operations.
The order in which the risk factors are presented is not an indication of the likelihood of the risks actually occurring, the significance or degree of the risks or the scope of any potential impairment to our business. The risks mentioned could materialize individually or cumulatively.
Risks relating to our business
• We are affected by demand fluctuations and other developments in the broader economy, including in the manufacturing sector, and our operations and financial results could be adversely affected by future economic or credit crises.
• Cyclicality in our customers’ industries could adversely affect demand for our products. • Escalating price pressure from customers could adversely affect our business.
• A decline in the financial condition of OEMs or other customers could materially adversely affect our results. • Competition in our markets could reduce our profitability.
• Our results could suffer if we fail to innovate and develop new products that meet the increasingly complex demands of the markets in which we operate.
• Reliance on third-party contract manufacturers and logistics providers could result in disruption to our business and damage our reputation.
• Our business could suffer if our reputation for quality were damaged.
• A substantial portion of our revenue is generated from a limited number of customers with whom we do not have long-term contracts. The loss of, or a significant reduction in purchases by, such customers could significantly adversely affect our results.
• Longer product lives of OEM parts could adversely affect aftermarket demand for some of our products. • Fluctuating supply and costs of raw materials could have a material adverse effect on our business. • Reliance on a limited base of suppliers of raw materials and components could result in disruption to our
business.
• Our liquidity could be adversely affected if trade credit terms with suppliers or customers change to our disadvantage.
• We are subject to possible insolvency of financial counterparties.
• The international nature of our business exposes us to a variety of economic, political, legal and other related risks. • Our expansion strategy in emerging markets could fail.
• We might be unable to successfully integrate or achieve the expected benefits from current or future acquisitions.
• We cannot guarantee that our decentralized structure will not lead to incidents or developments that could damage our reputation, operations or financial condition.
• Our administrative capabilities might be unable to keep pace with future expansion or to adequately adjust to the increased requirements we will face upon becoming a stock-exchange listed company.
• We rely on the proper and efficient operation and functioning of our computer and data-processing systems. A large-scale information technology malfunction could disrupt our business or lead to disclosure of sensitive company information.
• Our highly customized and diverse financial reporting software could be difficult to expand and expensive to replace. • Labor unrest or work stoppages at our facilities or those of our principal customers could adversely affect the
