The full report, including financials, is available here.
SPYKER CARS N.V. (including SAAB AUTOMOBILE A.B.) REPORTS ITS SEMI-ANNUAL REPORT 2010
Saab manufacturing restarted and now fully operational.
New Saab 9-5 launched. Saab sales picking up. Firm liquidity.
Zeewolde, the Netherlands, 27 August 2010 – Spyker Cars N.V. (“the Group”), a holding company that owns subsidiaries which produce and sell premium automobiles under the Saab and Spyker brands, today announced its results for the first half year of 2010. The Group is listed on NYSE Euronext Amsterdam (ticker symbol SPYKR).
Corporate Development Highlights First Half Year 2010
- 23 February 2010 – The Group closed agreement to purchase Saab Automobile AB (“Saab”) from General Motors Company (“General Motors or GM”) for $74 million in cash and $326 million in redeemable preference shares (“RPSs”)
- Secured € 400 million loan facility from the European Investment Bank (“EIB”), guaranteed by the Swedish Government
- 31 May 2010 – The Group closed acquisition of Saab Great Britain Ltd. (“Saab GB”), the Saab distributor for the UK
- 5 July 2010 – Early payment of final instalment ($ 24 million) of Saab purchase price to General Motors for Saab
Operational Highlights First Half Year 2010
- Saab manufacturing restarted in late March, and now fully operational
- Global Saab controlled distribution network in place covering 50 countries worldwide
- Wholesale and retail financing secured through agreements with GMAC, Santander Consumer Bank, Banco Cetelem
- Global launch of the all new and highly acclaimed Saab 9-5 in May through July
- All Saab operational activities now centralised in Trollhättan, Sweden
Financial Highlights First Half Year 2010
- First half year sales of € 243 million (1)
- Saab sold 10,500 vehicles in first half calendar year 2010 (first half calendar year 2009: 24,300)
- EBIT of € (109) million
- Cash from operations amounted to € (24) million
- Total liquidity of € 546 million, comprising net cash of € 280 million and undrawn EIB facilities of € 266 million
- Negative equity of € (126) million does not necessitate the Group to recapitalize by means of a share issue or similar financial instruments
- Financial performance in line or above Saab business plan
“In just a few months we have delivered several critical operational milestones ranging from restarting our manufacturing and product development to rebuilding our distribution network and undertaking the global launch of the all new Saab 9-5 model, which was extremely well received. The support from our employees, dealers, customers, suppliers and other business partners has been overwhelming during this difficult period” said Jan Åke Jonsson, President & CEO of Saab.
1 – Saab Automobile AB is consolidated as from 23 February 2010, Saab GB is consolidated as from 31 May 2010
Victor R. Muller, CEO of the Group and Chairman of Saab expects this momentum to continue as “the strong brand loyalty, goodwill and interest in our cars, together with the enthusiasm of our existing and new distributors will be a major advantage in supporting the growth of our sales pipeline and reaffirms our status as a premium niche car manufacturer with global presence.”
SEMI-ANNUAL REPORT 2010 OF THE MANAGEMENT BOARD
This Semi-Annual Report 2010 of the Group, for the six months starting on 1 January 2010 and ending on 30 June 2010, consists of the Semi-Annual Report of the Management Board, the condensed consolidated Semi-Annual Financial Statements and a Management Board’s declaration. The information in this Semi-Annual Report 2010 is unaudited.
The Semi-Annual Report 2010 of Group comprises the Spyker Cars N.V. and its subsidiaries (together referred to as “the Group”, or “Group”).
Saab – Operational Review
On 23 February 2010 Saab effectively exited liquidation with no cars in production, very low global inventory, several product development projects on hold and limited marketing activities. Since then Management has focused on restarting operations and regaining the trust of dealers, customers and suppliers. Major accomplishments include:
Manufacturing was fully restarted after a complete 7 week standstill. After resolving persistent parts shortages, capacity has steadily increased from 28 cars per hour in April, to about 39 cars per hour by the end of June
Manufacturing of the Saab 9-3 convertible started in Trollhättan for the first time ever, having been produced in Austria thus far
A global Saab controlled distribution network has been established, covering 50 countries worldwide and still growing. Following the separation from General Motors, Saab needed to establish and rebuild a global distribution network under its own control. In addition to owned distribution networks in Saab’s largest markets (the US, the UK and Sweden), Saab successfully established its own controlled network in other key markets in and outside Europe
Wholesale and retail financing was secured through agreements with GMAC, Santander Consumer Bank and, Banco Cetelem, which enables Saab to finance its own and its dealer stock and offer retail financing programs to its end users
All product development activities have restarted, including safety and ‘Green’ development projects funded by EIB loan
The all new and highly acclaimed Saab 9-5 was launched around the globe from May through July and was received extremely well
All Saab operational activities have been centralised around its state-of-the-art facilities in Trollhättan, Sweden, in order to realise more efficient asset utilization, operational efficiency and reduce costs
A number of key management positions in Sales, Design and Finance have been successfully filled
Saab – Results
Given the effective shut down in Saab’s operations during the first months of 2010, the first half year 2010 cannot be seen as representative in terms of volumes and operating results, but as a necessary episode from which Saab will build going forward. Similarly, the second quarter results reflect the restart of manufacturing and sales efforts at Saab, on which the Group is confident of building increasing momentum in the coming quarters.
Summary tables not published here. See link above.
The 30 June 2010 Group balance sheet includes the recently acquired Saab and Saab GB entities. It reflects the effect of the financing of these acquisitions and the operating loss incurred during the first half of 2010, largely due to the restarting of Saab’s manufacturing operations. Under IFRS regulations the Group is required to classify the $ 326 million RPSs issued by Saab to General Motors as a liability
instead of equity. Under Swedish GAAP the RPSs are required to qualify as equity.
IFRS requires that a company that acquires another company should perform a valuation of that acquired company and finalize this in twelve months as of acquisition date (“Closing”). Until this purchase price allocation (PPA) process has been finalized, the acquirer uses a provisional PPA, which is the case in the Semi-Annual Report 2010. A PPA entails that the acquirer recognizes the assets acquired and liabilities assumed at their fair values on Closing and discloses information that enables users to evaluate the nature and financial effects of the acquisition.
Management is currently performing the PPA process of Saab, supported by an international valuation firm. This process is complex and requires significant expertise. Management has indications that the fair value of the net identifiable assets and liabilities of the acquired businesses may exceed the total purchase consideration of $ 74 million. Before any gain can be recognized, IFRS requires Management to re-assess whether it has properly identified all of the assets acquired and liabilities assumed.
As a result of this the PPA has not yet been finalized and the initial accounting of the business combination is still provisional, whereby no gain what so ever has been recognized in the Semi-Annual Financial Statements 2010.
The Group’s net working capital, excluding cash and equivalents, at the end of the second quarter was € (250) million. The Group aims for adequate management of working capital.
As part of the improvement of the liquidity, Management will actively pursue debt collection, term negotiate improved terms and conditions with suppliers, improve logistics chains and aim at strict inventory control.
The European Investment Bank (“EIB”) has provided Saab with a € 400 million loan for development purposes, guaranteed by the Swedish National Debt Office. As of 30 June 2010, € 134 million was drawn under this facility.
The Group obtained a € 74 million loan with a five year maturity provided by a large shareholder, which was partially incurred in connection with the funding of the acquisition of Saab. Additionally, it has a € 17 million convertible loan with a two year maturity provided by an investment company, which was incurred solely in connection with the funding of the acquisition of Saab.
Total liquidity as of 30 June 2010 was € 546 million, comprising € 280 million in cash and € 266 million being the undrawn part of the EIB loan facility. Drawings under the EIB loan are subject to progress and completion of specific, identified development engineering projects of Saab.
The Group expects to end the year 2010 with sufficient liquidity to support its operations.
Of the € 150 million GEM equity standby facility € 1.8 million was drawn. The Group does not intend to draw any further funds under this facility.
Further details of the consolidated balance are set out in the Semi-Annual Financial Statements.
Near Term Management Priorities
Following the intensive effort to restart Saab’s operations over the past few months, Management will continue to focus on making Saab a profitable, independent niche premium car manufacturer. Its key priorities in this respect are to:
Continue to restore confidence with dealers, suppliers and customers to support increasing sales;
Manage cash and control costs and capital expenditure tightly;
Continue to focus on initiatives to further reduce the break-even point;
Complete the General Motors separation process;
Strengthen its organisation further in the areas of Finance and Sales & Marketing.
In addition to driving the ongoing business operations, Management will continue the execution of its business plan. Saab will continue to enhanced its unique and strong brand, relying on its heritage of innovation, aircraft inspiration and the Scandinavian values. In line with the objective to shorten product lifecycles and broadening of its portfolio, the Group plans to introduce the 9-5 SportCombi (station car) and the new 9-4X (Saab’s first ever cross over) in 2011. The all new Saab 9-3 is expected to be introduced in 2012.
Management’s focus remains on the strategic positioning of Saab as a premium brand and to improve sales prices and higher profit margins through a rejuvenated product portfolio: at the end of 2012 the all new Saab 9-5, now just launched, will be the oldest car on the dealer showroom floor.
Complementing development activities in Saab’s own independent, stand-alone engineering centre, Saab continues to benefit from the technology resources of General Motors and in the future from cooperation with other OEMs. The Group expects to make further announcements later this year.
The global automotive industry is showing signs of recovery from an unprecedented decline in 2008 and 2009. In particular recent trends in the global premium segment, in which the Saab and Spyker brands compete, are encouraging. The Board continues to carefully balance the need for cash to fulfil the working capital and development plans of Spyker in view of the priorities and cash needs of the Group.
The Group’s medium term goal is to establish Saab as an independent, financially viable, niche premium car manufacturer and to achieve profitability by 2012. This goal is dependent on a return to previously achieved annual sales of 120,000 cars which Management believes is feasible in view of our product line up and funding sources. Near term, Saab’s 2010 sales volume is expected to reach 45,000 units, while the target is 80,000 units in 2011. Operational results are set to improve gradually along with higher sales volumes, new car introductions and as a result of continuous cost reductions and efficiency gains.
STATEMENT OF THE MANAGEMENT BOARD
This Semi-Annual Report 2010 of the Group, for the six months starting on 1 January 2010 and ending on 30 June 2010, consists of the Semi-Annual Report of the Management Board, condensed consolidated Semi-Annual Financial Statements and a Management Board’s declaration.
The information in this Semi-Annual Report 2010 is unaudited.
This Semi-Annual Report 2010 of the Management Board contains a selection of some of the main developments in the first six months of the financial year and should not be considered as exhaustive.
This Semi-Annual Report 2010 of the Management Board also contains the current expectations of the Management Board for the second half of the financial year. With respect to these expectations, reference is made to the disclaimer about Forward-looking Statements at the bottom of this Press Release.
In conjunction with the EU Transparency Directive as incorporated in the Dutch Financial Markets Supervision acts (Wet op het financieel toezicht), the Management Board declares that, to the best of their knowledge:
The Semi-Annual Financial Statements 2010 as at 30 June 2010 and for the six months ended at 30 June 2010 have been prepared in accordance with IFRS (IAS 34) as adopted by the European Union and give a true and fair view of the assets, liabilities, financial position and profit or loss of Spyker Cars N.V and its consolidated Group companies taken as a whole; and The Semi-Annual Report 2010 of the Management Board gives a fair review of the information required pursuant to section 5:25d (8)/(9) of the Dutch Financial Market Supervision Act.
Zeewolde, 27 August 2010
Management Board Spyker Cars N.V.
Victor R. Muller
Chief Executive Officer
D. Hans (J.) C.Y.S. Go
Chief Financial Officer