financial statements Declaration of the 71 Management Board Auditor’s report 72 Consolidated 73 statement of income Consolidated 74 balance sheet Consolidated 77 statement of cash flows Summary of 78 changes in equity Notes 80 to the consolidated financial statements Individual financial 134 statements of Klöckner & Co SE Subsidiary listing 148 Information 156 pursuant to sec. 160 AktG Additional 158 mandates Glossary 164
The acquisition costs for these business combinations amounted to A85.3 million. The purchase price alloca-
tion resulted in goodwill of A17.7 million and excess of
the net assets acquired over the purchase price of A1.8
million which was immediately recognized in income.
Acquisition of minority interests
2008
In the first six months of 2008, Klöckner & Co Group acquired another 22.0% of the shares in Debrunner Koenig Holding AG (DKH), Switzerland, at a purchase price of approximately A126.7 million. Klöckner & Co
now holds 100% in DKH. As a result of this transaction, the minority interests were reduced by A55.4 million.
The difference between the acquired net assets in DKH and the purchase price was debited to the control- ling equity interest and therefore has no effect on net income. Accordingly, the equity attributable to shareholders of Klöckner & Co SE was reduced by
A71.2 million.
2007
In May 2007, Klöckner & Co acquired an additional stake of 18.1% in DKH and then held a 78.0% stake as of December 31, 2007.
Disposals
2008
To further concentrate on the Group’s core business the following entities were disposed of in 2008:
With effect of July 8, 2008 the sale of the Canadian subsidiary Namasco Ltd. was completed, the primary business of which is the processing of flat-rolled metal products for the North American auto motive industry.
On September 4, 2008 the Group disposed of its inter- ests in the Koenig Verbindungstechnik AG group (KVT). KVT’s business activity is concentrated in the markets of fastening systems and sealing plugs.
Acquisitions 2007
Primary Steel LLC
In April 2007, Namasco Corporation, Wilmington, Dela- ware, USA, signed an agreement to purchase a 100% stake in the distribution corporation Primary Steel LLC (“Primary”), with head offices in Middletown, Connect- icut, USA, and two subsidiaries. Since closing on May 11, 2007, Primary has been consolidated. The cost of the acquisition amounted to A179.8 million. Primary oper-
ates seven branches in North America and employs some 400 staff. Upon completion of the purchase price allocation goodwill of A69.9 million was recognized.
Separately from goodwill, customer relationships and a trade name were recognized at A63.6 million.
Other acquisitions
Date of initial consolidation
Tournier-Holding S.A.S. Group,
Lagny-sur-Marne, France January 1, 2007 Teuling Staal B.V, Barendrecht,
The Netherlands April 1, 2007 Westok Ltd., Horbury, United Kingdom April 1, 2007 Edelstahlservice Verkaufs-
gesellschaft mbH, Frankfurt May 1, 2007 Premier Steel Inc., Shreveport, USA May 24, 2007 Max Carl GmbH & Co. KG, Coburg*) June 1, 2007 Zweygart Fachhandelsgruppe
GmbH & Co. KG, Stuttgart*) June 1, 2007 Interpipe (UK) Ltd., Dudley,
United Kingdom September 30, 2007 Farmington Group, Inc.,
Madison, USA November 1, 2007 ScanSteel Service Center, Inc.,
Jeffersonville, USA*) November 1, 2007 Lehner et Tonossi S.A.,
Siders, Switzerland December 31, 2007
94 Notes to the consolidated income statement (6) Specific items recognized in net income
In addition to the gain on sale of subsidiaries (see Note (5) Acquisitions and disposals) the Group’s net income is impacted by the following special items:
Global Settlement Balli
Based on agreement (Global Settlement) reached in the third quarter, all disputes in connection with the former shareholder Balli were settled. The reversals of provisions for risks and pending litigation, allowances for bad debt and other liabilities resulted in a net gain of
A38.7 million, which is included in other income.
Antitrust action against KDI
The French antitrust authority “Conseil de la Concur- rence” announced on December 16, 2008 that it had im - posed fines of about A575 million on steel distributors
in France, of which A169.3 million were charged against
the French subsidiary KDI S.A.S. It was alleged that the company had taken part in an anti-competitive price- fixing scheme throughout the period from 1999 until 2004. KDI S.A.S. has appealed the fine with the aim of significantly reducing the amount.
The fine negatively impacts the 2008 Group results of Klöckner & Co by a total of A79 million. Provisions had
been established in the preceding years in the amount of A20 million. In addition, the Group is entitled to a
compensation totaling A70 million towards previous
owners of the Klöckner & Co Group resulting from the sale of the Group in 2005. The expense for the increased provisions (A149 million) are presented net of the com-
pensation as other operating expense (A79 million) in
accordance with IAS 37.54.
Rescission of sale of the Valencia premises
Triggered by the real estate and financial market crises in Spain the acquirer of the Valencia premises was no longer able to meet his payment obligations, and the sale of the Valencia premises was rescinded, resulting in other operating expenses of A18.2 million.
Based on the carrying amounts as of the respective dis- posal date the impact on the consolidated financial statements was as follows:
(A million) Assets non-current 34.5 current 152.3 186.8 Liabilities non-current 6.9 current 59.9 66.8 Disposed net assets 120.0
The disposals resulted in gains of approximately A273.4
million which are largely attributable to the sale of KVT.
2007
In July 2007, Klöckner & Co sold 49% of its interest in Klöckner Information Services GmbH (KIS) to the IT consultant Bitempo GmbH, Düsseldorf. Under the share purchase agreement Bitempo GmbH has been granted a put option for its shares. The put option has been recognized at the present value of the obligation (A1.5 million) and is included in other liabilities.
95